September 4, 2025 • 38 mins
Chuck Zodda and Mike Armstrong dive into this morning's data releases that focus in on the labor market. Is the data raising any alarms? Why is Massachusetts's unemployment numbers much higher than the rest of New England? Is the Fed seeing little to no growth across the country? Google's recent loss-yet-victory in court is frustrating for Chuck. What are precious metals saying about the economy right now?
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Episode Transcript
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Speaker 1 (00:00):
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(01:06):
and Mike Armstrong.
Speaker 2 (01:10):
Chuck, Mike, and talker with you as we continue through
a busy, busy week economic data.
Speaker 3 (01:18):
This morning.
Speaker 2 (01:18):
We got a few different pieces that we're going to
talk about. We got eighty p jobs data at eight
fifteen am. We got Balance of Trade data at eight
thirty am. We got weekly jobless claims data at eight
thirty am. We got ism services data at ten am.
And Michael, it is a dealer's choice. Where do you
(01:42):
want to start today?
Speaker 4 (01:44):
You know, simplest and quickest, and the weekly data we get,
let's start there at the weekly jobless claims of two
hundred and thirty seven thousand, a decent size increase from
the previous week of two twenty nine, but still keeps
that four week moving average in that I guess two
thirty one range now, which again bit of an uptick,
(02:04):
but in my mind at least we can file this
one under no significant change in the overall trend line.
Is that where you would put it? Or are you
worried about an eight thousand uptick?
Speaker 2 (02:15):
I am unexcited about this. Where I am with you know,
weekly jobless claims. We've seen these wiggles between you know,
two hundred and ten and two hundred and fifty thousand.
Speaker 3 (02:25):
For basically the last three years now, yep.
Speaker 2 (02:28):
In order for me to think that there's anything meaningful
afoot in terms of, hey, should I be worried about
what's happening with, you know, initial jobless claims, I need
at least back to back weeks over two sixty and
even then it's more like, Okay, is there anything you know,
really going on here? You know, if you really want
to get me, you know, all this looks not good.
(02:52):
I think we're talking like three to four weeks north
of two hundred and seventy five thousand, and then I'm saying, yeah,
there's there's.
Speaker 3 (02:58):
Problems going out there.
Speaker 2 (02:59):
Yeah, but at this point, you know, we're we're still
well within a normal range. If you look at prior years,
we're actually, you know, even with the uptick here, we're
in line with last year from a seasonal perspective. It's
just the last few weeks we are much better than
last year. And so I'm just I'm I'm unconvinced that
there's anything interesting happening with initial claims, even though the
(03:21):
trend has been upward for the last month or so.
These wiggles more often than not work themselves out, and
it's not worth, you know, getting your intestines all twisted
just because you know, claims went up.
Speaker 3 (03:34):
For a couple of weeks.
Speaker 2 (03:35):
Here, good continuing claims also pretty consistent right now, one
point nine to four million. If you do the math
and compare it to last year, it's about five percent
higher than last year, which is pretty much where we've
been for most this year. It doesn't make you feel great,
it doesn't make you feel terrible.
Speaker 3 (03:55):
It just is.
Speaker 2 (03:56):
And so I think, ultimately, all right, it's it's fine,
it's not a huge problem. It's not suggesting, you know,
the labor market's improving. It's not suggesting it's worsening in
a clip that's going to cause real problems. Once again,
sorry to all the doomers out there, it's not the
end of the world. To all the people who think
it's the best economy ever, it's not that either. It's
(04:18):
just nah, like that's that's what this this week says,
which is kind of what the labor data has been
showing since last August. Quite honestly, Should we stay on
labor then and go to ADP Yes, let's continue laboring ADP,
which no one pays attention to, even though to be
to be fair, the interesting thing is, even though no
one pays attention to ADP, uh, it's got a pretty
(04:40):
you know, good track record recently, at least for the
last you know, six months or so of trending. You know,
with the BLS data on a three month moving average,
they're pretty much you know, in line. So hey, they're
they're pretty good at you know, predicting where that's going
to go, not month to month. But again that three
month averages is pretty spot on.
Speaker 3 (04:59):
Right now.
Speaker 2 (05:00):
ADP employment change came in at fifty four thousand for
the month, that is blow expectations of sixty five thousand. Again,
no one really cares about ADP, so this is not,
you know, a tradable event. It's not, you know, something
that people get all hyped up about. But if you're
just trying to say, hey, you know, what does this
say about you know, what Friday could mean? Not really
(05:23):
suggesting any meaningful shift in job growth as well. But
the thing that I keep coming back to, we need
to spend less time focusing on job growth right now
and more time focusing on the unemployment rate because the
unemployment rate is what the.
Speaker 3 (05:37):
FED cares about.
Speaker 2 (05:38):
Ultimately, job growth is not something that they can influence.
The unemployment rate is something. I know that that's you know,
kind of a weird distinction. But the reason why is
the FED cannot add to the population or add to
the you know, the working age population. They don't have
that tool in their quiver. Anything that Jay Powell does
(05:58):
on that side is outside his duties as FED chair
and so as such, it's something where the FED focuses
on the unemployment rate, not on the pace of job growth,
because the population is not something that they can control.
Speaker 4 (06:13):
And that's the piece that I think everybody's that looks
at this closely as scratching their head on is what
are we going to see happen with this unemployment rate?
Given the changes A and baby boomers retiring, but more
significantly in the massive change in the trend line on immigration.
Last two years, I think we were averaging what three
million new people entering the United States per year and
(06:38):
this year we're at something like negative three hundred thousand.
Speaker 2 (06:40):
Yeah, well, no one knows. I don't think we're very
good at you know, knowing exactly. Yeah, the numbers I mean,
it's a best guess. Here's the thing, if you knew,
then you probably you know, would have a better sense
of exactly like what's going on from an immigration perspective,
which it's clear that we haven't.
Speaker 3 (06:57):
So interesting piece on this.
Speaker 2 (06:59):
One of the things in the Joltz report yesterday that
a lot of people are talking about in social media
is the quits rate in the construction industry. And I
don't know if you happen to see this mic, but
like everyone's talking about this because the quits rate in
the construction industry fell to under one percent. The last
(07:22):
time the quits rate was that low in the construction
industry was two thousand and nine.
Speaker 3 (07:27):
So you look at.
Speaker 2 (07:28):
It, you know, and and naturally you get, you know,
everyone who's all gloom and doom saying, oh, the quits
rate is the lowest since the Great Financial Crisis. We're
gonna like the S and p's going to eight, you know,
Like that's what you get, like the people saying that's
the voice they used to ye and all them. I
think the interesting read through on this to me is, okay,
(07:51):
one read on this, quits rates tend to go down
when people are nervous about losing their jobs, and so sure,
if there's less construction activity, which by the way, there is.
You look across the board year over year, now residential manufacturing,
all private construction is now contracting year over year, so
that that is happening. So I can understand, Okay, maybe
(08:13):
the quits rate falls a bit on the construction side.
But here's the thing about this, this jolt's number that
I want to point out. The first is when you
look at industry specific quits rates, they're really volatile month
to month, Like you can see like half a percent
wiggles within a trend. So it's very possible that with
(08:33):
next month survey this bounces back up to like one
point two or one point three percent. And I'm not
saying that's good. I'm just saying it's not. You know,
one data point does not necessarily mean a ton here.
But the other piece is, if you think about this
from the perspective of, hey, of the undocumented workers that
(08:53):
are working in you know, the United States, a lot
of them are you know, focused in two major areas,
agriculture and construction. Yes, if a lot of those workers
either have been deported or are nervous about being deported,
and so they're not showing up to work. Then the
(09:13):
remaining workers are saying, great, pay me more in order
to get me to show up, and so they're not
necessarily quitting at the.
Speaker 3 (09:21):
Rate they used to.
Speaker 2 (09:23):
I'd buy that we've been conditioned over the entirety of
the data, that we have to believe that labor demand
is the only thing that matters, because we've always had
not an unlimited labor supply, but a consistently growing one.
Speaker 4 (09:38):
And that's been kind of what has set by the way,
like you take a look at American demographics compared to
most other developed nations, that's part of what has set
us apart here. I mean, there's plenty of other things
about the US economy that make it unique, but the
supply of labor and our birth rates has been one
of them that has bucked the trend of other developed nations.
Speaker 3 (09:58):
Right.
Speaker 2 (09:58):
I'm not saying that you know, our you know, birth
rates and everything are great, but they're better than just
about everywhere else that is, you know, broadly developed. And
so I think the interesting thing is to look at
some of this data not through the lens of oh, gee,
does this mean that labor demand is cratering in construction. Hey,
what if labor supply is moving down significantly too, And
(10:19):
this is something that we have never had to consider, never,
Like the working age population has always been growing in
the United States. Yeah, I'm not saying this is going
to be a long term trend, but what if there's
a couple of years here where the working age population shrinks?
Speaker 4 (10:37):
Then it works in the same direction as a few
other things when it comes to inflation.
Speaker 2 (10:41):
We have to think about you know, these data sets
a little differently. So I'm not saying this is good
or bad. I'm just saying, hey, this is something that
we need to think about when we're looking at some
of this data. So we got through weekly jobless claims,
we got through.
Speaker 4 (10:54):
ADP Chuck, I know we need to shift to other things,
but there's one other piece on the labor market I
think I want to cover when we come back, and
that specifically the labor market in Massachusetts in particular. I
know we don't usually get state by state here, but
there seems to be something unique going on in mass
I don't know how much you've covered it, but I
want to cover that when we come back. Is Massachusetts
(11:16):
labor market and maybe some trends that are differing from
the national scenario that we should talk about.
Speaker 3 (11:21):
Ticks.
Speaker 1 (11:22):
Do that.
Speaker 3 (11:22):
We're right back.
Speaker 1 (11:24):
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Speaker 4 (12:23):
So Chuck, Earlier this year we were kind of just
wondering and talking about like, Okay, you know, government funding
cuts R and D cuts. How does this affect different
economies in particular, you know, I think you and I
folks a little bit on the Boston based biotech and
education economy and labor markets, said that could be interesting
(12:44):
in terms of how it shapes out. I was then,
you know, just over the last week, having meeting up
with a few people that work in the biotech industry
and either had lost their job or were nervous about
potentially losing their job. And then we had the Harvard
news from yesterday about the funding cuts to Harvard, and
so I wanted to take a look again at what's
(13:06):
been the trend line on Massachusetts versus national unemployment. And
as we've spoken about, when it comes to the national
unemployment scenario, over the course of the last year, you've
been in a very narrow range.
Speaker 3 (13:18):
I think the high has.
Speaker 4 (13:19):
Been four point two, the low's been four point zero,
So you haven't really gone anywhere on total national unemployment.
But taking a look at the Massachusetts data, and Chuck,
I'm comparing all the seasonally adjusted data here. The last
time the national and Massachusetts unemployment rate were the same
was back in December. Since then, like I said, national
(13:42):
scenario just been kind of bumping around, but right around
four one four two, Massachusets now climbed to four point
eight percent. I just find that interesting. I don't think
you can look at that and definitively say, hey, here's
the stuff we were talking about, but it would certainly
fit in with that narrative. We don't, I believe, get
the state by state level data when it comes to
(14:04):
certain industries, so we can't really tie that piece out.
But I took a look at the surrounding New England area.
None of the other states are experiencing something like this,
and so something to monitor, I guess for those of
us that make our living here in New England, make
our living here in the Boston area, might we be
seeing a bit of a change in the trend line
(14:26):
when it comes to what has historically been a labor
and housing market that does not fluctuate quite as much
as the national market.
Speaker 2 (14:36):
Let's talk about a couple alternate explanations. Sure, we've talked
about how nationally, if it weren't for the labor force
participation rate going down, the unemployment rate over the last
six months would have risen to four point eight four
point nine percent. Yes, pretty much in line with what
we would have seen in Massachusetts.
Speaker 3 (14:54):
Yep.
Speaker 2 (14:56):
Could one hypothesis be because Massachusetts has fewer people in
industries that are typically staffed with higher percentages of undocumented workerstruction, construction,
and agriculture, food processing.
Speaker 3 (15:10):
Could it be that we.
Speaker 2 (15:11):
Are not seeing similar reductions in the labor force and
so Massachusetts is behaving as the rest of the country
would if the labor force weren't shrinking the way it is.
Speaker 4 (15:21):
Yeah, that could be. In either case, It doesn't. I
guess that if it makes you feel great about anything, right,
it doesn't. It doesn't matter a whole bunch if you
still have the unemployment rate climbing for one reason or
another because of you know, your concentration in a specific
industry or lack of concentration in an industry. But something
to certainly keep an eye on, because let's be honest, tck.
(15:43):
If this had been the national trend on unemployment, people
would be bringing out the som rule again. People would
be very concerned about recession on the national stage.
Speaker 2 (15:53):
Yeah, I'm just pulling up a couple other ones here,
give me just one second while I pull this up.
So I'm pulling up unemployment rates in Florida, Texas, and California,
and I have no idea what I'm going to see. Yeah,
uh so come on, where are you California? I know
you're here, you do exist. Okay, here we thank you, Tucker.
It's on the West coast. You're I had no idea.
(16:16):
Unemployment California, Okay, that one just does not here.
Speaker 3 (16:20):
We go there it is.
Speaker 2 (16:22):
Okay, So we got all three, all four of these.
Now if we take a look right now, and I'll
start from where do you want me to start? From
the beginning of this year, beginning.
Speaker 3 (16:29):
Of last year. I compared December to now, so grab this. Okay.
Speaker 2 (16:33):
So December, Massachusetts was four point one, Texas was four
to two, Florida was three four, California was five to five.
As of today, Texas has gone from four to two
to four zero. That meshes if you think that, sure
bunch of people have been deported from Texas. If you
(16:55):
look at Florida, we've gone from three four to three seven. Okay,
modest move up, not quite what we've seen in Massachusetts.
California you've gone from five to five two five five,
No change, big conclusion. I don't know that you can
tell anything from any of this at a state level
(17:16):
right now.
Speaker 3 (17:17):
Yeah, I don't know.
Speaker 2 (17:19):
Listen, all we do when we look at this stuff,
you try to come up with a story that might
make sense, right. I don't know that there's a coherent
story on any of these at the moment. The biotech
thing could be with Massachusetts because you're not seeing you know, a.
Speaker 3 (17:33):
Well, maybe you want maybe.
Speaker 4 (17:35):
Let's be honest, too, California, Texas, and Florida, because of
the size of their states, their unemployment or their employment
scenario is just much more diversified than.
Speaker 3 (17:43):
Massachusetts it is, you know, I mean.
Speaker 4 (17:46):
You wouldn't expect to see necessarily as big a change
because if california unemployment rate had risen by one percent,
then the national unemployment rate risen by quite a bit.
Speaker 3 (17:55):
That's true as well.
Speaker 4 (17:56):
So I don't know, I don't know what to make
of it, but I definitely think it is worth keeping
an eye on, especially for those of us who either
own a restaurant in the Boston area or you know,
you don't necessarily need to work in biotech to want
to be focused on this and mean and keep an
eye on what it could be changing here.
Speaker 2 (18:16):
Yeah, I'm I'm I'm curious, Tucker, what's the text line again?
Speaker 3 (18:19):
Six one, seven, three, six, two thirteen eighty five. I'm
not Mike. My name's not Tucker, but it was right
in front of me, so I knew the answer to
that one.
Speaker 2 (18:26):
Just interested to hear from any business owners in terms
of what you're seeing as far as you know, hiring,
firing trends, as far as business activity you know in
the New England region.
Speaker 3 (18:34):
I'm I'm interested.
Speaker 2 (18:35):
I'm always looking for, you know, just anecdotes and things
like that. So if you've got anything, what's that text
line again? Uh, Tuck or Mike or both?
Speaker 3 (18:44):
Should we do it in unison six five? Can one
of you do it? Because that was awful? That was terrible.
Let's not do that again. Six one, seven three, six
two thirteen eighty five.
Speaker 2 (18:55):
Okay, So, uh, anything else that we want to talk
about as far as as labor market, I know we've
got some Bayes book stuff that we want to get
through now.
Speaker 4 (19:06):
I think the big story will be tomorrow's jobs report,
and then also we've got big revisions coming. What the
seventh of September is when they do the annual revisions.
Speaker 3 (19:16):
In I don't know the exact date to be honest.
Speaker 4 (19:19):
So those are the t big labor market pieces coming
up over the course of the next week or so,
and we'll see if any of them move the trend
line again.
Speaker 3 (19:28):
Quick break Fallstreet Watch.
Speaker 1 (19:40):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look at what's moving market so
far today right here on the Financial Exchange Radio Network.
Speaker 5 (20:00):
Markets are modestly higher as Wall Street reacts to a
lower than expected eightp private payrolls report ahead of the
all important August jobs report DUO tomorrow morning at eight thirty.
Right now, the Dow is up by nearly two tenths
of one percent. SMP five hundred is up two tenths
of one percent, thirteen points higher. Nasdaq also up by
(20:22):
about two tenths of one percent or thirty eight points higher.
RUSTED two thousand is edging higher, a ten year treasure
reeled down one basis point at four point one nine
seven percent, and crude oil down over one percent lower
today trading just above sixty three.
Speaker 1 (20:39):
Dollars a barrel.
Speaker 5 (20:41):
Salesforce is weighing on the Dow, with shares down over
six percent after the cloud company posted a second quarter
earnings beat on both the top and bottom lines. However,
its quarterly revenue outlook was weaker than expected. Meanwhile, recently,
iPod software company Figma reported a double digit rise in
quarterly revenue, but profit missfecasts, sending that stock tumbling by
(21:05):
nineteen percent. Sticking with tech, where Hewlett Packard Enterprise posted
a fifty four percent jump in quarterly networking revenue, boosted
by its acquisition of Juniper Networks. Shares in the server
and cloud software company are climbing four percent. Elsewhere, American
Eagle Outfitters said it anticipates a sales boost from marketing
(21:26):
campaigns featuring actress Sidney Sweeney and NFL star Travis Kelsey.
The retailer also beat second quarter earnings in revenue estimates,
sending shares flying by thirty percent See what I did there.
Shares in C three dot Ai are sinking four percent
after the maker of custom AI applications posted a wider
(21:48):
than expected quarterly adjusted loss while it's revenue missed the mark,
and get Lab is retreating eight percent after the provider
of software development tools swung to a loss but raised
its annual outlook. The company CFO is also leaving to
join Snowflake. I'm Tucker Silva and that is Wallstree Watch Mike.
Speaker 2 (22:08):
Yesterday, the Fed put out their Beije Book, which is
named because the cover is beige, presumably one of J.
Speaker 3 (22:17):
Powell's favorite callers, but not purple. Uh.
Speaker 2 (22:22):
It basically is a not a measure, but it's a
survey of businesses within all of the Federal Reserve Branch regions,
asking them about what's going on with their businesses. And
I'll quote here. Most of the twelve Federal Reserve districts
reported little or no change in economic activity since the
prior Beige Book period. Across districts, contacts reported flat to
(22:45):
decline in consumer spending because for many households, wages were
failing to keep up with rising prices. So this is
where we have to kind of reconcile a whole bunch
of different things.
Speaker 3 (22:55):
The first is that.
Speaker 2 (22:57):
When you look at credit card data, payment process data,
you know, basically anything banking related, it shows pretty consistent
four to five percent year over year growth compared to
last year. Trying to reconcile that with this showing Hey,
(23:17):
you know, flat to decline in consumer spending. How do
we do that? I have a couple thoughts. Do you
want me to give mine or do you want to
give yes? Okay, couple thoughts that I have on this.
The first is the bulk of that consumer spending growth
is being driven by families in the top twenty percent
(23:38):
of income.
Speaker 3 (23:39):
Sure, we're seeing this.
Speaker 2 (23:41):
We're seeing this whether you're talking about travel anything else.
The remaining eighty percent, in particular the bottom fifty percent,
are really struggling and are needing to pull back. So
this could very easily be something where in terms of,
you know, the quantity of businesses reporting bad news, it
could be high because there are only so many businesses
(24:02):
that sell that, you know, luxury, high end item. So
I think that could be something that's that's realistic. Here
another piece, that four to five percent spending growth is
nominal if you assume that inflation is running somewhere between.
And again this is just looking at the inflation data
(24:23):
that we have, because well it's it's the data that
we have. If you assume that inflation is running somewhere
between two point seven and three point three percent, which
is what we're seeing on you know, the big price indices,
call it three percent. Hey, if if you've got consumer
spending growing at four but inflation's three, in real terms,
(24:46):
you're only seeing you know, one percent actual growth in
product sales. And that's not uniform across all businesses, obvious, Right,
So I think you can reconcile it that way. But
the big thing that I come back to is, can
you find me, aside from AI capex, where the where
are the real bright spots in the US economy right now? Like,
(25:07):
what's the part that you look at and you're like,
that thing is growing like crazy at the moment.
Speaker 3 (25:13):
Yeah, it's few and far between. Check.
Speaker 4 (25:14):
I Mean, the good news on the AI capex is
that it infiltrates into more areas than just buying semiconductors,
So it does spread out across the economy, whether it's
construction or you know, utilities and electricity and energy production.
Speaker 3 (25:31):
But I mean it's doing that and we're still getting
these numbers. Yeah.
Speaker 2 (25:35):
Yeah, So like I think that the big takeaway is, Look,
the economy is not falling off a cliff. It's it's
not growing particularly fast either. Yeah, it's just I'm meddling
along which is, Look, if you were concerned about recession
from tariffs, and the worst that you get is, hey,
(25:56):
the economy slows to like one percent GDP growth for
a year or so, that's not terrible.
Speaker 3 (26:03):
No, no, no, it's not so.
Speaker 2 (26:06):
I think that in terms of, you know, looking at
all this, there's nothing right now that points to the
economy decelerating further. There's nothing that points to it really
perking up. It's just kind of how it's been, which
I'm sorry that this has been. Like, I know, the
year in markets has been really exciting, and I'm sure
that you know for individuals, you know, whether you own
(26:28):
a business or working, you know, trust me, it hasn't
been like a boring year in the micro sense of
it from a broad sense of, hey, like, how's the
US economy doing?
Speaker 3 (26:40):
Eh? Fine, could be better, could be worse. About the
same as last year.
Speaker 2 (26:43):
Yeah, but it's growing not as fast as you'd like
to see, not as slowly as it could.
Speaker 3 (26:47):
Like it's I was gonna say, fine, check that.
Speaker 4 (26:49):
The commentary from the Beige Book kind of aligns with
a number of other things that we've been talking about,
such as the national unemployment rate just kind of where
it's been for the last year or so, not ticking up.
Total employment is growing, but not substantially, kind of just
where it is. The The other thing that occurs to
me is we I think we got an email or
(27:10):
a text from a listener a couple of weeks ago
asking us to try and measure or estimate, like, hey,
you know what a bubble and pop on the artificial
intelligence valuations and just overall attitude towards AI. Would that
be enough to dramatically reshape the US economy?
Speaker 3 (27:30):
And to what degree?
Speaker 4 (27:32):
I think the answer, you know, based on what we
just talked about is yeah, most certainly, because what we
are seeing that's you know, people are drawing optimism from,
is that artificial intelligence spend an innovation, and without it,
there's not a whole lot of other you know, real
shining bright spots at the moment.
Speaker 3 (27:48):
No, No, it's just it's kind of what it is,
not to say they won't come right.
Speaker 4 (27:52):
Like, you know, we are talking about a massive change
in a number of different things being driven by the
White House and men. Facturing in tariffs is just one
of them. And so we've been open to the idea
that five ten years from now, that looks different. But
for this moment in time, it ain't housing, it's not
business hiring, it's it's nothing. It's not you know, energy investment.
(28:16):
It's really the AI investment that's keeping this thing chugging along.
Speaker 3 (28:19):
Quick break here.
Speaker 2 (28:20):
When we come back, we're talking about Google anti trust
and why this ruling sucks.
Speaker 1 (28:28):
Text es six one seven, three six two one three
eight five with your comments and questions about today's show.
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Speaker 5 (28:53):
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Speaker 2 (29:28):
Couple pieces in the Wall Street Journal. The first Google
ruling shows anti trust tools struggle to keep up with
tech markets. The second is AI wins the Google anti
trust suit. The first headline is wrong because anti trust
tools didn't struggle to keep up with tech markets. The
judge just decided, Hey, I'm here's the best quote that
I've seen on it. Quite honestly, the judge effectively decided that, hey,
(29:53):
you know what, if you find someone guilty of robbing
the bank, send it them to writing a thank you
note for the.
Speaker 3 (29:59):
Loot, because that's basically what happened here.
Speaker 2 (30:03):
And like, I gotta tell you, like, it's been a
long time since I've been this upset about something anti
trust related. And the reason why is the judge a
year ago found that Google engaged in anti competitive practices
basically by you know, paying Apple a bunch of money
to have its search engine as the default on Apple devices,
(30:26):
and by using its Chrome browser to you know, collect
a bunch of information and then share that with Google's
ad business. And then the judge said, no, you can
continue doing all of that, and like, that's kind of
the ridiculous part of this whole thing. And so so
like the most ridiculous piece inness the more I've like
read on this and thought about it, the judge said, hey,
(30:49):
you know what, you can keep paying Apple the twenty
billion dollars a year to be the default search engine
because otherwise Apple might be harmed and might not be
able to make as good a phone. That's literally, so
you did something illegal, but you did something with the money,
and so now because someone else might be harmed, we
can't take that money back. That's basically saying, hey, Bernie
(31:11):
madeof you ran a Ponzi scheme, but we can't call
any of the money back because someone might be harmed
by that.
Speaker 4 (31:18):
Yeah, so I'm with you on the piece about Frankly,
they committed a crime, they became an as they committed
a crime, and then he did not punish them for
it whatsoever. And that piece, to me is just confounding. Like, Okay,
so because you think there's some threat to their business
(31:40):
artificial intelligence, you're not going to take any action.
Speaker 3 (31:43):
At the very minimum, you.
Speaker 4 (31:46):
Find them some severe dollar amount for past behavior that
was unacceptable, and god knows Google can afford it. I
don't know if he has the capability to do that
or not. And I'm getting a little bit out of
my you know, out of my expertise when it comes
to anti trust cases and what the judge can enforce
versus not enforce. I buy the argument that breaking up
(32:06):
the company at this stage is unnecessary because of the
threat of artificial intelligence. I think it's a weak argument.
But let's be honest, you and I aren't as close
to this judge disagree, is no, Mike, here's the worst part.
Speaker 2 (32:17):
A year ago in his writing, the judge said that
generative AI is not a capable threat to search. A
year ago, he did, how can you come back a
year later and be like.
Speaker 3 (32:29):
Well, you know what, well it is.
Speaker 4 (32:32):
That's exactly what he did, because I know metacredited the
rise of nasson competitors such as open ai andthropic in
Perplexity with posing a threat to Google Search business in
those companies. Quote changed the course of this case.
Speaker 3 (32:43):
It sounds to me.
Speaker 4 (32:45):
Like the last year worth of development made him change
his mind, and had he known about the direction of
AI a year ago and done enough research and to
understanding it might not have found them to be a monopoly,
which I don't know how you do that given what
they were found guilty, But nonetheless that seems to be
what the judge mike.
Speaker 2 (33:04):
In the last year, Google stock is up forty seven percent. Like,
how can you say credibly the business has been like
under threat? Yeah, when it's not like it's not like
they're making less money. Their earnings are up, their revenue
is up. We talked about how great their quarter was
(33:26):
just you know, a couple of weeks ago. I'm sorry,
this is out in la la land, Like, this is insane.
This you literally the judge found them guilty and then
said keep doing what you were doing.
Speaker 3 (33:42):
That I didn't like. Yep, this is insane.
Speaker 2 (33:47):
If any actual human being and not a two point
seven trillion dollar company did this, you'd be in jail, jail,
you get your crime jail. That's what happens. It happens
to Google. What what what do they get?
Speaker 3 (34:00):
You know what? Here's the other part that's just ridiculous
on this.
Speaker 2 (34:04):
In the the decision, Google cannot use the same anti
competitive playbook for gen Ai products that it used for
search so why is it okay for them to use
it for search but not generative AI?
Speaker 3 (34:19):
Like what, it's either wrong or it's not.
Speaker 2 (34:23):
And furthermore, if you wanted to make a case, shouldn't
they be allowed to use it for generative AI because
they don't have any market power in that space where
as they do in search.
Speaker 3 (34:32):
Is that what he's saying is that they can't do
it because they have no market power. I don't know.
Like either way, it's just insane. It is.
Speaker 4 (34:43):
I would agree with you that we have had a
complete utter failure of the anti the of US laws
and judges to understand and then police big tech companies.
And I one hundred percent agree with you Chuck that
for Google to have been found to break the law
for the last more than a decade and have literally
(35:04):
no punishment is is pretty obscene. This is why can't
don't like big companies because, like Chuck's no, here's the
problem is, any normal human being breaks the law and
they have to pay consequences, whatever those are. It might
be a ten dollars fine, it might be spending you know,
(35:25):
thirty days in jail, it might be a.
Speaker 2 (35:26):
Pre trial diversion program. But you have to do something right.
Google was found to break the law and the punishment
was keep doing it, man, do it.
Speaker 3 (35:40):
Again, because we don't want to hurt you.
Speaker 2 (35:42):
Do it again because Apple needs that twenty billion dollars. Yeah,
like Tim Cook couldn't find twenty billion dollars under his seat.
Speaker 4 (35:51):
Folks, want to talk to you about an upcoming event
that we would love for you to attend. There's actually
two of them this fall. We are hosting a live
broadcast of this show, The Financial Exchange, followed by a
couple of seminars. Chuck is gonna be there. I'm gonna
be there. We're doing one of them down on Cape Cod,
another one at the Showcase super Lucks in Chestnut Hill.
(36:12):
The first date for Cape Cod it's at the Margaritaville
Resort on Cape Cod on October ninth.
Speaker 3 (36:19):
Following that, we're gonna do one a.
Speaker 4 (36:20):
Week later at the Showcase super Lucks in Chestnut Hill
on October sixteenth. If you're in the area, whether you've
been to one of these in the past, they are
a fun time. You can sit down chat with other
listeners and fans of the show, and then we'll be
sitting down with folks after the fact to talk about
our views on just where this economy is headed. And
I know there are a lot of question marks. That's
what we talk about every day on this program. If
(36:42):
you would like to get more information on potentially attending,
please give us a ring at eight hundred three nine
three four zero zero one. Those dates once again October
ninth on Cape cod at the Margaritaville. October sixteenth at
the Showcase, Super Lucks and Chestnut Hill. We'd love for
you attend. Give us a call at eight hundred three
nine three for zero zero one.
Speaker 1 (37:03):
The proceeding was paid for by Armstrong Advisory Group, a
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Armstrong guide a specific financial, legal, or tax advice. Consult
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Speaker 2 (37:19):
The Golden Canary. What pressures medals are saying about the economy?
Gold hit a new all time high yesterday. It's off
a little bit in trading today, but still, you know,
pretty darn close there, above thirty six hundred dollars per
Troy ounce.
Speaker 3 (37:32):
What does this mean? Michael?
Speaker 2 (37:34):
What are precious metals, saying about the you tell me, man,
choose your own adventure. One is, hey, if the FED cuts,
there's going to be more inflation, and you got to
watch out for that. Two, if the economy weakens, then
there's going to be more money printed, and you got
to watch out for that.
Speaker 3 (37:52):
Right like that, That's basically the two reads that you
can have on gold in my opinion. Yeah, people are
more nervous about global.
Speaker 4 (38:01):
Inflation currencies than they were a couple of years ago,
and that's potentially moving gold around.
Speaker 3 (38:08):
Yeah, that would seem to be.
Speaker 2 (38:10):
You know, those are the kind of explanations either growth
is worse or better than expected. In either case, something's off.
Let's take a quick break.
Speaker 3 (38:18):
We had our two coming up in just a little bit.
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
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(00:20):
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(01:06):
and Mike Armstrong.
Speaker 2 (01:10):
Chuck, Mike, and talker with you as we continue through
a busy, busy week economic data.
Speaker 3 (01:18):
This morning.
Speaker 2 (01:18):
We got a few different pieces that we're going to
talk about. We got eighty p jobs data at eight
fifteen am. We got Balance of Trade data at eight
thirty am. We got weekly jobless claims data at eight
thirty am. We got ism services data at ten am.
And Michael, it is a dealer's choice. Where do you
(01:42):
want to start today?
Speaker 4 (01:44):
You know, simplest and quickest, and the weekly data we get,
let's start there at the weekly jobless claims of two
hundred and thirty seven thousand, a decent size increase from
the previous week of two twenty nine, but still keeps
that four week moving average in that I guess two
thirty one range now, which again bit of an uptick,
(02:04):
but in my mind at least we can file this
one under no significant change in the overall trend line.
Is that where you would put it? Or are you
worried about an eight thousand uptick?
Speaker 2 (02:15):
I am unexcited about this. Where I am with you know,
weekly jobless claims. We've seen these wiggles between you know,
two hundred and ten and two hundred and fifty thousand.
Speaker 3 (02:25):
For basically the last three years now, yep.
Speaker 2 (02:28):
In order for me to think that there's anything meaningful
afoot in terms of, hey, should I be worried about
what's happening with, you know, initial jobless claims, I need
at least back to back weeks over two sixty and
even then it's more like, Okay, is there anything you know,
really going on here? You know, if you really want
to get me, you know, all this looks not good.
(02:52):
I think we're talking like three to four weeks north
of two hundred and seventy five thousand, and then I'm saying, yeah,
there's there's.
Speaker 3 (02:58):
Problems going out there.
Speaker 2 (02:59):
Yeah, but at this point, you know, we're we're still
well within a normal range. If you look at prior years,
we're actually, you know, even with the uptick here, we're
in line with last year from a seasonal perspective. It's
just the last few weeks we are much better than
last year. And so I'm just I'm I'm unconvinced that
there's anything interesting happening with initial claims, even though the
(03:21):
trend has been upward for the last month or so.
These wiggles more often than not work themselves out, and
it's not worth, you know, getting your intestines all twisted
just because you know, claims went up.
Speaker 3 (03:34):
For a couple of weeks.
Speaker 2 (03:35):
Here, good continuing claims also pretty consistent right now, one
point nine to four million. If you do the math
and compare it to last year, it's about five percent
higher than last year, which is pretty much where we've
been for most this year. It doesn't make you feel great,
it doesn't make you feel terrible.
Speaker 3 (03:55):
It just is.
Speaker 2 (03:56):
And so I think, ultimately, all right, it's it's fine,
it's not a huge problem. It's not suggesting, you know,
the labor market's improving. It's not suggesting it's worsening in
a clip that's going to cause real problems. Once again,
sorry to all the doomers out there, it's not the
end of the world. To all the people who think
it's the best economy ever, it's not that either. It's
(04:18):
just nah, like that's that's what this this week says,
which is kind of what the labor data has been
showing since last August. Quite honestly, Should we stay on
labor then and go to ADP Yes, let's continue laboring ADP,
which no one pays attention to, even though to be
to be fair, the interesting thing is, even though no
one pays attention to ADP, uh, it's got a pretty
(04:40):
you know, good track record recently, at least for the
last you know, six months or so of trending. You know,
with the BLS data on a three month moving average,
they're pretty much you know, in line. So hey, they're
they're pretty good at you know, predicting where that's going
to go, not month to month. But again that three
month averages is pretty spot on.
Speaker 3 (04:59):
Right now.
Speaker 2 (05:00):
ADP employment change came in at fifty four thousand for
the month, that is blow expectations of sixty five thousand. Again,
no one really cares about ADP, so this is not,
you know, a tradable event. It's not, you know, something
that people get all hyped up about. But if you're
just trying to say, hey, you know, what does this
say about you know, what Friday could mean? Not really
(05:23):
suggesting any meaningful shift in job growth as well. But
the thing that I keep coming back to, we need
to spend less time focusing on job growth right now
and more time focusing on the unemployment rate because the
unemployment rate is what the.
Speaker 3 (05:37):
FED cares about.
Speaker 2 (05:38):
Ultimately, job growth is not something that they can influence.
The unemployment rate is something. I know that that's you know,
kind of a weird distinction. But the reason why is
the FED cannot add to the population or add to
the you know, the working age population. They don't have
that tool in their quiver. Anything that Jay Powell does
(05:58):
on that side is outside his duties as FED chair
and so as such, it's something where the FED focuses
on the unemployment rate, not on the pace of job growth,
because the population is not something that they can control.
Speaker 4 (06:13):
And that's the piece that I think everybody's that looks
at this closely as scratching their head on is what
are we going to see happen with this unemployment rate?
Given the changes A and baby boomers retiring, but more
significantly in the massive change in the trend line on immigration.
Last two years, I think we were averaging what three
million new people entering the United States per year and
(06:38):
this year we're at something like negative three hundred thousand.
Speaker 2 (06:40):
Yeah, well, no one knows. I don't think we're very
good at you know, knowing exactly. Yeah, the numbers I mean,
it's a best guess. Here's the thing, if you knew,
then you probably you know, would have a better sense
of exactly like what's going on from an immigration perspective,
which it's clear that we haven't.
Speaker 3 (06:57):
So interesting piece on this.
Speaker 2 (06:59):
One of the things in the Joltz report yesterday that
a lot of people are talking about in social media
is the quits rate in the construction industry. And I
don't know if you happen to see this mic, but
like everyone's talking about this because the quits rate in
the construction industry fell to under one percent. The last
(07:22):
time the quits rate was that low in the construction
industry was two thousand and nine.
Speaker 3 (07:27):
So you look at.
Speaker 2 (07:28):
It, you know, and and naturally you get, you know,
everyone who's all gloom and doom saying, oh, the quits
rate is the lowest since the Great Financial Crisis. We're
gonna like the S and p's going to eight, you know,
Like that's what you get, like the people saying that's
the voice they used to ye and all them. I
think the interesting read through on this to me is, okay,
(07:51):
one read on this, quits rates tend to go down
when people are nervous about losing their jobs, and so sure,
if there's less construction activity, which by the way, there is.
You look across the board year over year, now residential manufacturing,
all private construction is now contracting year over year, so
that that is happening. So I can understand, Okay, maybe
(08:13):
the quits rate falls a bit on the construction side.
But here's the thing about this, this jolt's number that
I want to point out. The first is when you
look at industry specific quits rates, they're really volatile month
to month, Like you can see like half a percent
wiggles within a trend. So it's very possible that with
(08:33):
next month survey this bounces back up to like one
point two or one point three percent. And I'm not
saying that's good. I'm just saying it's not. You know,
one data point does not necessarily mean a ton here.
But the other piece is, if you think about this
from the perspective of, hey, of the undocumented workers that
(08:53):
are working in you know, the United States, a lot
of them are you know, focused in two major areas,
agriculture and construction. Yes, if a lot of those workers
either have been deported or are nervous about being deported,
and so they're not showing up to work. Then the
(09:13):
remaining workers are saying, great, pay me more in order
to get me to show up, and so they're not
necessarily quitting at the.
Speaker 3 (09:21):
Rate they used to.
Speaker 2 (09:23):
I'd buy that we've been conditioned over the entirety of
the data, that we have to believe that labor demand
is the only thing that matters, because we've always had
not an unlimited labor supply, but a consistently growing one.
Speaker 4 (09:38):
And that's been kind of what has set by the way,
like you take a look at American demographics compared to
most other developed nations, that's part of what has set
us apart here. I mean, there's plenty of other things
about the US economy that make it unique, but the
supply of labor and our birth rates has been one
of them that has bucked the trend of other developed nations.
Speaker 3 (09:58):
Right.
Speaker 2 (09:58):
I'm not saying that you know, our you know, birth
rates and everything are great, but they're better than just
about everywhere else that is, you know, broadly developed. And
so I think the interesting thing is to look at
some of this data not through the lens of oh, gee,
does this mean that labor demand is cratering in construction. Hey,
what if labor supply is moving down significantly too, And
(10:19):
this is something that we have never had to consider, never,
Like the working age population has always been growing in
the United States. Yeah, I'm not saying this is going
to be a long term trend, but what if there's
a couple of years here where the working age population shrinks?
Speaker 4 (10:37):
Then it works in the same direction as a few
other things when it comes to inflation.
Speaker 2 (10:41):
We have to think about you know, these data sets
a little differently. So I'm not saying this is good
or bad. I'm just saying, hey, this is something that
we need to think about when we're looking at some
of this data. So we got through weekly jobless claims,
we got through.
Speaker 4 (10:54):
ADP Chuck, I know we need to shift to other things,
but there's one other piece on the labor market I
think I want to cover when we come back, and
that specifically the labor market in Massachusetts in particular. I
know we don't usually get state by state here, but
there seems to be something unique going on in mass
I don't know how much you've covered it, but I
want to cover that when we come back. Is Massachusetts
(11:16):
labor market and maybe some trends that are differing from
the national scenario that we should talk about.
Speaker 3 (11:21):
Ticks.
Speaker 1 (11:22):
Do that.
Speaker 3 (11:22):
We're right back.
Speaker 1 (11:24):
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(11:44):
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Speaker 4 (12:23):
So Chuck, Earlier this year we were kind of just
wondering and talking about like, Okay, you know, government funding
cuts R and D cuts. How does this affect different
economies in particular, you know, I think you and I
folks a little bit on the Boston based biotech and
education economy and labor markets, said that could be interesting
(12:44):
in terms of how it shapes out. I was then,
you know, just over the last week, having meeting up
with a few people that work in the biotech industry
and either had lost their job or were nervous about
potentially losing their job. And then we had the Harvard
news from yesterday about the funding cuts to Harvard, and
so I wanted to take a look again at what's
(13:06):
been the trend line on Massachusetts versus national unemployment. And
as we've spoken about, when it comes to the national
unemployment scenario, over the course of the last year, you've
been in a very narrow range.
Speaker 3 (13:18):
I think the high has.
Speaker 4 (13:19):
Been four point two, the low's been four point zero,
So you haven't really gone anywhere on total national unemployment.
But taking a look at the Massachusetts data, and Chuck,
I'm comparing all the seasonally adjusted data here. The last
time the national and Massachusetts unemployment rate were the same
was back in December. Since then, like I said, national
(13:42):
scenario just been kind of bumping around, but right around
four one four two, Massachusets now climbed to four point
eight percent. I just find that interesting. I don't think
you can look at that and definitively say, hey, here's
the stuff we were talking about, but it would certainly
fit in with that narrative. We don't, I believe, get
the state by state level data when it comes to
(14:04):
certain industries, so we can't really tie that piece out.
But I took a look at the surrounding New England area.
None of the other states are experiencing something like this,
and so something to monitor, I guess for those of
us that make our living here in New England, make
our living here in the Boston area, might we be
seeing a bit of a change in the trend line
(14:26):
when it comes to what has historically been a labor
and housing market that does not fluctuate quite as much
as the national market.
Speaker 2 (14:36):
Let's talk about a couple alternate explanations. Sure, we've talked
about how nationally, if it weren't for the labor force
participation rate going down, the unemployment rate over the last
six months would have risen to four point eight four
point nine percent. Yes, pretty much in line with what
we would have seen in Massachusetts.
Speaker 3 (14:54):
Yep.
Speaker 2 (14:56):
Could one hypothesis be because Massachusetts has fewer people in
industries that are typically staffed with higher percentages of undocumented workerstruction, construction,
and agriculture, food processing.
Speaker 3 (15:10):
Could it be that we.
Speaker 2 (15:11):
Are not seeing similar reductions in the labor force and
so Massachusetts is behaving as the rest of the country
would if the labor force weren't shrinking the way it is.
Speaker 4 (15:21):
Yeah, that could be. In either case, It doesn't. I
guess that if it makes you feel great about anything, right,
it doesn't. It doesn't matter a whole bunch if you
still have the unemployment rate climbing for one reason or
another because of you know, your concentration in a specific
industry or lack of concentration in an industry. But something
to certainly keep an eye on, because let's be honest, tck.
(15:43):
If this had been the national trend on unemployment, people
would be bringing out the som rule again. People would
be very concerned about recession on the national stage.
Speaker 2 (15:53):
Yeah, I'm just pulling up a couple other ones here,
give me just one second while I pull this up.
So I'm pulling up unemployment rates in Florida, Texas, and California,
and I have no idea what I'm going to see. Yeah,
uh so come on, where are you California? I know
you're here, you do exist. Okay, here we thank you, Tucker.
It's on the West coast. You're I had no idea.
(16:16):
Unemployment California, Okay, that one just does not here.
Speaker 3 (16:20):
We go there it is.
Speaker 2 (16:22):
Okay, So we got all three, all four of these.
Now if we take a look right now, and I'll
start from where do you want me to start? From
the beginning of this year, beginning.
Speaker 3 (16:29):
Of last year. I compared December to now, so grab this. Okay.
Speaker 2 (16:33):
So December, Massachusetts was four point one, Texas was four
to two, Florida was three four, California was five to five.
As of today, Texas has gone from four to two
to four zero. That meshes if you think that, sure
bunch of people have been deported from Texas. If you
(16:55):
look at Florida, we've gone from three four to three seven. Okay,
modest move up, not quite what we've seen in Massachusetts.
California you've gone from five to five two five five,
No change, big conclusion. I don't know that you can
tell anything from any of this at a state level
(17:16):
right now.
Speaker 3 (17:17):
Yeah, I don't know.
Speaker 2 (17:19):
Listen, all we do when we look at this stuff,
you try to come up with a story that might
make sense, right. I don't know that there's a coherent
story on any of these at the moment. The biotech
thing could be with Massachusetts because you're not seeing you know, a.
Speaker 3 (17:33):
Well, maybe you want maybe.
Speaker 4 (17:35):
Let's be honest, too, California, Texas, and Florida, because of
the size of their states, their unemployment or their employment
scenario is just much more diversified than.
Speaker 3 (17:43):
Massachusetts it is, you know, I mean.
Speaker 4 (17:46):
You wouldn't expect to see necessarily as big a change
because if california unemployment rate had risen by one percent,
then the national unemployment rate risen by quite a bit.
Speaker 3 (17:55):
That's true as well.
Speaker 4 (17:56):
So I don't know, I don't know what to make
of it, but I definitely think it is worth keeping
an eye on, especially for those of us who either
own a restaurant in the Boston area or you know,
you don't necessarily need to work in biotech to want
to be focused on this and mean and keep an
eye on what it could be changing here.
Speaker 2 (18:16):
Yeah, I'm I'm I'm curious, Tucker, what's the text line again?
Speaker 3 (18:19):
Six one, seven, three, six, two thirteen eighty five. I'm
not Mike. My name's not Tucker, but it was right
in front of me, so I knew the answer to
that one.
Speaker 2 (18:26):
Just interested to hear from any business owners in terms
of what you're seeing as far as you know, hiring,
firing trends, as far as business activity you know in
the New England region.
Speaker 3 (18:34):
I'm I'm interested.
Speaker 2 (18:35):
I'm always looking for, you know, just anecdotes and things
like that. So if you've got anything, what's that text
line again? Uh, Tuck or Mike or both?
Speaker 3 (18:44):
Should we do it in unison six five? Can one
of you do it? Because that was awful? That was terrible.
Let's not do that again. Six one, seven three, six
two thirteen eighty five.
Speaker 2 (18:55):
Okay, So, uh, anything else that we want to talk
about as far as as labor market, I know we've
got some Bayes book stuff that we want to get
through now.
Speaker 4 (19:06):
I think the big story will be tomorrow's jobs report,
and then also we've got big revisions coming. What the
seventh of September is when they do the annual revisions.
Speaker 3 (19:16):
In I don't know the exact date to be honest.
Speaker 4 (19:19):
So those are the t big labor market pieces coming
up over the course of the next week or so,
and we'll see if any of them move the trend
line again.
Speaker 3 (19:28):
Quick break Fallstreet Watch.
Speaker 1 (19:40):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look at what's moving market so
far today right here on the Financial Exchange Radio Network.
Speaker 5 (20:00):
Markets are modestly higher as Wall Street reacts to a
lower than expected eightp private payrolls report ahead of the
all important August jobs report DUO tomorrow morning at eight thirty.
Right now, the Dow is up by nearly two tenths
of one percent. SMP five hundred is up two tenths
of one percent, thirteen points higher. Nasdaq also up by
(20:22):
about two tenths of one percent or thirty eight points higher.
RUSTED two thousand is edging higher, a ten year treasure
reeled down one basis point at four point one nine
seven percent, and crude oil down over one percent lower
today trading just above sixty three.
Speaker 1 (20:39):
Dollars a barrel.
Speaker 5 (20:41):
Salesforce is weighing on the Dow, with shares down over
six percent after the cloud company posted a second quarter
earnings beat on both the top and bottom lines. However,
its quarterly revenue outlook was weaker than expected. Meanwhile, recently,
iPod software company Figma reported a double digit rise in
quarterly revenue, but profit missfecasts, sending that stock tumbling by
(21:05):
nineteen percent. Sticking with tech, where Hewlett Packard Enterprise posted
a fifty four percent jump in quarterly networking revenue, boosted
by its acquisition of Juniper Networks. Shares in the server
and cloud software company are climbing four percent. Elsewhere, American
Eagle Outfitters said it anticipates a sales boost from marketing
(21:26):
campaigns featuring actress Sidney Sweeney and NFL star Travis Kelsey.
The retailer also beat second quarter earnings in revenue estimates,
sending shares flying by thirty percent See what I did there.
Shares in C three dot Ai are sinking four percent
after the maker of custom AI applications posted a wider
(21:48):
than expected quarterly adjusted loss while it's revenue missed the mark,
and get Lab is retreating eight percent after the provider
of software development tools swung to a loss but raised
its annual outlook. The company CFO is also leaving to
join Snowflake. I'm Tucker Silva and that is Wallstree Watch Mike.
Speaker 2 (22:08):
Yesterday, the Fed put out their Beije Book, which is
named because the cover is beige, presumably one of J.
Speaker 3 (22:17):
Powell's favorite callers, but not purple. Uh.
Speaker 2 (22:22):
It basically is a not a measure, but it's a
survey of businesses within all of the Federal Reserve Branch regions,
asking them about what's going on with their businesses. And
I'll quote here. Most of the twelve Federal Reserve districts
reported little or no change in economic activity since the
prior Beige Book period. Across districts, contacts reported flat to
(22:45):
decline in consumer spending because for many households, wages were
failing to keep up with rising prices. So this is
where we have to kind of reconcile a whole bunch
of different things.
Speaker 3 (22:55):
The first is that.
Speaker 2 (22:57):
When you look at credit card data, payment process data,
you know, basically anything banking related, it shows pretty consistent
four to five percent year over year growth compared to
last year. Trying to reconcile that with this showing Hey,
(23:17):
you know, flat to decline in consumer spending. How do
we do that? I have a couple thoughts. Do you
want me to give mine or do you want to
give yes? Okay, couple thoughts that I have on this.
The first is the bulk of that consumer spending growth
is being driven by families in the top twenty percent
(23:38):
of income.
Speaker 3 (23:39):
Sure, we're seeing this.
Speaker 2 (23:41):
We're seeing this whether you're talking about travel anything else.
The remaining eighty percent, in particular the bottom fifty percent,
are really struggling and are needing to pull back. So
this could very easily be something where in terms of,
you know, the quantity of businesses reporting bad news, it
could be high because there are only so many businesses
(24:02):
that sell that, you know, luxury, high end item. So
I think that could be something that's that's realistic. Here
another piece, that four to five percent spending growth is
nominal if you assume that inflation is running somewhere between.
And again this is just looking at the inflation data
(24:23):
that we have, because well it's it's the data that
we have. If you assume that inflation is running somewhere
between two point seven and three point three percent, which
is what we're seeing on you know, the big price indices,
call it three percent. Hey, if if you've got consumer
spending growing at four but inflation's three, in real terms,
(24:46):
you're only seeing you know, one percent actual growth in
product sales. And that's not uniform across all businesses, obvious, Right,
So I think you can reconcile it that way. But
the big thing that I come back to is, can
you find me, aside from AI capex, where the where
are the real bright spots in the US economy right now? Like,
(25:07):
what's the part that you look at and you're like,
that thing is growing like crazy at the moment.
Speaker 3 (25:13):
Yeah, it's few and far between. Check.
Speaker 4 (25:14):
I Mean, the good news on the AI capex is
that it infiltrates into more areas than just buying semiconductors,
So it does spread out across the economy, whether it's
construction or you know, utilities and electricity and energy production.
Speaker 3 (25:31):
But I mean it's doing that and we're still getting
these numbers. Yeah.
Speaker 2 (25:35):
Yeah, So like I think that the big takeaway is, Look,
the economy is not falling off a cliff. It's it's
not growing particularly fast either. Yeah, it's just I'm meddling
along which is, Look, if you were concerned about recession
from tariffs, and the worst that you get is, hey,
(25:56):
the economy slows to like one percent GDP growth for
a year or so, that's not terrible.
Speaker 3 (26:03):
No, no, no, it's not so.
Speaker 2 (26:06):
I think that in terms of, you know, looking at
all this, there's nothing right now that points to the
economy decelerating further. There's nothing that points to it really
perking up. It's just kind of how it's been, which
I'm sorry that this has been. Like, I know, the
year in markets has been really exciting, and I'm sure
that you know for individuals, you know, whether you own
(26:28):
a business or working, you know, trust me, it hasn't
been like a boring year in the micro sense of
it from a broad sense of, hey, like, how's the
US economy doing?
Speaker 3 (26:40):
Eh? Fine, could be better, could be worse. About the
same as last year.
Speaker 2 (26:43):
Yeah, but it's growing not as fast as you'd like
to see, not as slowly as it could.
Speaker 3 (26:47):
Like it's I was gonna say, fine, check that.
Speaker 4 (26:49):
The commentary from the Beige Book kind of aligns with
a number of other things that we've been talking about,
such as the national unemployment rate just kind of where
it's been for the last year or so, not ticking up.
Total employment is growing, but not substantially, kind of just
where it is. The The other thing that occurs to
me is we I think we got an email or
(27:10):
a text from a listener a couple of weeks ago
asking us to try and measure or estimate, like, hey,
you know what a bubble and pop on the artificial
intelligence valuations and just overall attitude towards AI. Would that
be enough to dramatically reshape the US economy?
Speaker 3 (27:30):
And to what degree?
Speaker 4 (27:32):
I think the answer, you know, based on what we
just talked about is yeah, most certainly, because what we
are seeing that's you know, people are drawing optimism from,
is that artificial intelligence spend an innovation, and without it,
there's not a whole lot of other you know, real
shining bright spots at the moment.
Speaker 3 (27:48):
No, No, it's just it's kind of what it is,
not to say they won't come right.
Speaker 4 (27:52):
Like, you know, we are talking about a massive change
in a number of different things being driven by the
White House and men. Facturing in tariffs is just one
of them. And so we've been open to the idea
that five ten years from now, that looks different. But
for this moment in time, it ain't housing, it's not
business hiring, it's it's nothing. It's not you know, energy investment.
(28:16):
It's really the AI investment that's keeping this thing chugging along.
Speaker 3 (28:19):
Quick break here.
Speaker 2 (28:20):
When we come back, we're talking about Google anti trust
and why this ruling sucks.
Speaker 1 (28:28):
Text es six one seven, three six two one three
eight five with your comments and questions about today's show.
This is the Financial Exchange Radio Network. Find daily interviews
and full shows of the Financial Exchange on o our
YouTube page. Subscribe to our page and get caught up
on anything and everything you might have missed. This is
the Financial Exchange Radio Network.
Speaker 5 (28:53):
This segment of The Financial Exchange is brought to you
by the US Virgin Islands Department of Tourism. Looking for
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(29:16):
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Speaker 2 (29:28):
Couple pieces in the Wall Street Journal. The first Google
ruling shows anti trust tools struggle to keep up with
tech markets. The second is AI wins the Google anti
trust suit. The first headline is wrong because anti trust
tools didn't struggle to keep up with tech markets. The
judge just decided, Hey, I'm here's the best quote that
I've seen on it. Quite honestly, the judge effectively decided that, hey,
(29:53):
you know what, if you find someone guilty of robbing
the bank, send it them to writing a thank you
note for the.
Speaker 3 (29:59):
Loot, because that's basically what happened here.
Speaker 2 (30:03):
And like, I gotta tell you, like, it's been a
long time since I've been this upset about something anti
trust related. And the reason why is the judge a
year ago found that Google engaged in anti competitive practices
basically by you know, paying Apple a bunch of money
to have its search engine as the default on Apple devices,
(30:26):
and by using its Chrome browser to you know, collect
a bunch of information and then share that with Google's
ad business. And then the judge said, no, you can
continue doing all of that, and like, that's kind of
the ridiculous part of this whole thing. And so so
like the most ridiculous piece inness the more I've like
read on this and thought about it, the judge said, hey,
(30:49):
you know what, you can keep paying Apple the twenty
billion dollars a year to be the default search engine
because otherwise Apple might be harmed and might not be
able to make as good a phone. That's literally, so
you did something illegal, but you did something with the money,
and so now because someone else might be harmed, we
can't take that money back. That's basically saying, hey, Bernie
(31:11):
madeof you ran a Ponzi scheme, but we can't call
any of the money back because someone might be harmed
by that.
Speaker 4 (31:18):
Yeah, so I'm with you on the piece about Frankly,
they committed a crime, they became an as they committed
a crime, and then he did not punish them for
it whatsoever. And that piece, to me is just confounding. Like, Okay,
so because you think there's some threat to their business
(31:40):
artificial intelligence, you're not going to take any action.
Speaker 3 (31:43):
At the very minimum, you.
Speaker 4 (31:46):
Find them some severe dollar amount for past behavior that
was unacceptable, and god knows Google can afford it. I
don't know if he has the capability to do that
or not. And I'm getting a little bit out of
my you know, out of my expertise when it comes
to anti trust cases and what the judge can enforce
versus not enforce. I buy the argument that breaking up
(32:06):
the company at this stage is unnecessary because of the
threat of artificial intelligence. I think it's a weak argument.
But let's be honest, you and I aren't as close
to this judge disagree, is no, Mike, here's the worst part.
Speaker 2 (32:17):
A year ago in his writing, the judge said that
generative AI is not a capable threat to search. A
year ago, he did, how can you come back a
year later and be like.
Speaker 3 (32:29):
Well, you know what, well it is.
Speaker 4 (32:32):
That's exactly what he did, because I know metacredited the
rise of nasson competitors such as open ai andthropic in
Perplexity with posing a threat to Google Search business in
those companies. Quote changed the course of this case.
Speaker 3 (32:43):
It sounds to me.
Speaker 4 (32:45):
Like the last year worth of development made him change
his mind, and had he known about the direction of
AI a year ago and done enough research and to
understanding it might not have found them to be a monopoly,
which I don't know how you do that given what
they were found guilty, But nonetheless that seems to be
what the judge mike.
Speaker 2 (33:04):
In the last year, Google stock is up forty seven percent. Like,
how can you say credibly the business has been like
under threat? Yeah, when it's not like it's not like
they're making less money. Their earnings are up, their revenue
is up. We talked about how great their quarter was
(33:26):
just you know, a couple of weeks ago. I'm sorry,
this is out in la la land, Like, this is insane.
This you literally the judge found them guilty and then
said keep doing what you were doing.
Speaker 3 (33:42):
That I didn't like. Yep, this is insane.
Speaker 2 (33:47):
If any actual human being and not a two point
seven trillion dollar company did this, you'd be in jail, jail,
you get your crime jail. That's what happens. It happens
to Google. What what what do they get?
Speaker 3 (34:00):
You know what? Here's the other part that's just ridiculous
on this.
Speaker 2 (34:04):
In the the decision, Google cannot use the same anti
competitive playbook for gen Ai products that it used for
search so why is it okay for them to use
it for search but not generative AI?
Speaker 3 (34:19):
Like what, it's either wrong or it's not.
Speaker 2 (34:23):
And furthermore, if you wanted to make a case, shouldn't
they be allowed to use it for generative AI because
they don't have any market power in that space where
as they do in search.
Speaker 3 (34:32):
Is that what he's saying is that they can't do
it because they have no market power. I don't know.
Like either way, it's just insane. It is.
Speaker 4 (34:43):
I would agree with you that we have had a
complete utter failure of the anti the of US laws
and judges to understand and then police big tech companies.
And I one hundred percent agree with you Chuck that
for Google to have been found to break the law
for the last more than a decade and have literally
(35:04):
no punishment is is pretty obscene. This is why can't
don't like big companies because, like Chuck's no, here's the
problem is, any normal human being breaks the law and
they have to pay consequences, whatever those are. It might
be a ten dollars fine, it might be spending you know,
(35:25):
thirty days in jail, it might be a.
Speaker 2 (35:26):
Pre trial diversion program. But you have to do something right.
Google was found to break the law and the punishment
was keep doing it, man, do it.
Speaker 3 (35:40):
Again, because we don't want to hurt you.
Speaker 2 (35:42):
Do it again because Apple needs that twenty billion dollars. Yeah,
like Tim Cook couldn't find twenty billion dollars under his seat.
Speaker 4 (35:51):
Folks, want to talk to you about an upcoming event
that we would love for you to attend. There's actually
two of them this fall. We are hosting a live
broadcast of this show, The Financial Exchange, followed by a
couple of seminars. Chuck is gonna be there. I'm gonna
be there. We're doing one of them down on Cape Cod,
another one at the Showcase super Lucks in Chestnut Hill.
(36:12):
The first date for Cape Cod it's at the Margaritaville
Resort on Cape Cod on October ninth.
Speaker 3 (36:19):
Following that, we're gonna do one a.
Speaker 4 (36:20):
Week later at the Showcase super Lucks in Chestnut Hill
on October sixteenth. If you're in the area, whether you've
been to one of these in the past, they are
a fun time. You can sit down chat with other
listeners and fans of the show, and then we'll be
sitting down with folks after the fact to talk about
our views on just where this economy is headed. And
I know there are a lot of question marks. That's
what we talk about every day on this program. If
(36:42):
you would like to get more information on potentially attending,
please give us a ring at eight hundred three nine
three four zero zero one. Those dates once again October
ninth on Cape cod at the Margaritaville. October sixteenth at
the Showcase, Super Lucks and Chestnut Hill. We'd love for
you attend. Give us a call at eight hundred three
nine three for zero zero one.
Speaker 1 (37:03):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax, and estate planning advisors before making
any investment decisions. Armstrong make contact you to offer investment
advisory services.
Speaker 2 (37:19):
The Golden Canary. What pressures medals are saying about the economy?
Gold hit a new all time high yesterday. It's off
a little bit in trading today, but still, you know,
pretty darn close there, above thirty six hundred dollars per
Troy ounce.
Speaker 3 (37:32):
What does this mean? Michael?
Speaker 2 (37:34):
What are precious metals, saying about the you tell me, man,
choose your own adventure. One is, hey, if the FED cuts,
there's going to be more inflation, and you got to
watch out for that. Two, if the economy weakens, then
there's going to be more money printed, and you got
to watch out for that.
Speaker 3 (37:52):
Right like that, That's basically the two reads that you
can have on gold in my opinion. Yeah, people are
more nervous about global.
Speaker 4 (38:01):
Inflation currencies than they were a couple of years ago,
and that's potentially moving gold around.
Speaker 3 (38:08):
Yeah, that would seem to be.
Speaker 2 (38:10):
You know, those are the kind of explanations either growth
is worse or better than expected. In either case, something's off.
Let's take a quick break.
Speaker 3 (38:18):
We had our two coming up in just a little bit.
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