August 19, 2025 • 38 mins
Chuck Zodda and Paul Lane discuss the under-the-radar number that's a huge red flag for America's job market. Sarah Foster, Bankrate.com, joins the show to share the latest wage vs inflation index numbers. What is causing the casual-dinning boom? Is a prediction market just a gambling workaround? Big business came prepared for this White House.
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Episode Transcript
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Speaker 1 (00:00):
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(01:05):
Chuck Zada and Paul.
Speaker 2 (01:06):
Lane, Chuck, Paul and Tucker with you, and we got
equity markets mixed today. The Dow Jones Industrial Average, he's
up one hundred and eleven points right now.
Speaker 3 (01:19):
The SMP, though, is down twenty one, about.
Speaker 2 (01:22):
A third of a percent, and it's being dragged by tech,
with the Nasdaq currently off one point zho nine percent,
or about two hundred and thirty eight points. What's really
lagging on the day, It's a lot of the stuff
that has been fun for the last six months or so.
Core Weave down another seven percent today, Palanteer down six
(01:42):
percent today, AMD down three, Netflix down three, and Vidia
down too, Meta down two, Microsoft and Google and Amazon
all down one and a half. So again, kind of
your big tech stocks down today. And the interesting thing is,
despite you know, the SMP being down a third of
a percent, you actually have two hundred and eighty four
more stocks up than down in the index today, and
(02:05):
so the S and P five hundred on an equal
weighted basis instead of market cap weighted, is actually up
almost two thirds of a percent. So again, kind of
one of these things where, hey, you know, you can
complain about the big boys being down, but they're being
up and missing out on them. But if the big
boys turned down, even if everything else is moving up,
it's kind of hard for the index to hold up there.
(02:26):
So that's a bit of what we're seeing in equities today.
On the bond side of things. Tenure Treasury down three
basis points to four point three one percent. With oil
right now, West Texas Intermediate is down seventy one cents
a barrel to sixty two to seventy one. Gold is
down nine to seventy and ounced to thirty three, sixty
eight and thirty cents. And that is what we have
(02:50):
moving markets today from Business Insider this morning, Paul. The
under the radar number that's a huge red flag for
America job market. Is it Daniel Jones passer rating with
the Indianapolis cults?
Speaker 4 (03:06):
That is concerning for Danny Dimes, But no, check. What
it is is all about labor supply. So the concern
that's outlined in this piece is that just like in
your regular economics course or you know concept that you
hear thrown off and is supply and demand. You know,
you need to have enough supply to meet the demand
in place. What this article goes to describe is the
(03:28):
importance of having enough people participating in the labor market
to satisfy the demand for businesses out there. And what
it goes to say is that typically there was the
number of people entering the labor market exceeded those people
who were leaving it since two thousand and seven, but
more recently, what they've seen on a trend basis is
(03:50):
that more people have been leaving rather than entering, and
it's something that certainly the population decline is an an
idea that we've talked about. From our longer term trend perspective,
I'm not so sure I share the same concern that's
outlined in this article on labor supply that I think
(04:12):
it's worth worrying about necessarily, just because I do feel
like from a technological perspective, there could be a lot
of advancements that we could see that could help minimize
perhaps some of that labor supply deficit. And or you
can always have the ebb and flow and change of
(04:32):
immigration policies what cite in this article here is perhaps
a further crackdown and immigration. It would be relatively easy
to change policy to get more workers into the system
too that's another factor.
Speaker 2 (04:45):
So this is a really interesting topic to dig in
on in my opinion, and I have a few different
thoughts on this, so let's start. I saw an interesting
theory put out this morning, which is it's on this
exact topic. So this is just like great that this is,
you know, kind of the big one that we're talking
about here back in twenty twenty two. Uh, let's tucker,
(05:07):
can you fire up the time machine for a minute
for me by stand by? All right, we're getting it
all queued up. So it's the summer of twenty twenty two.
Speaker 4 (05:17):
Things are really expensive.
Speaker 2 (05:19):
It's really hot. Prices are going up nine percent a year.
The dog that cost you, well, no was there was
there dog inflation.
Speaker 4 (05:28):
There was a lot of demand for pets, uh post COVID.
Speaker 3 (05:31):
So we'll roll with it.
Speaker 2 (05:33):
It's hot, it's the middle of the summer in twenty
twenty two. Even the hot dogs you don't even need
a griddle to cook him on. You're just cooking them
on the street. And the price of the hot dogs
is is you know, tripled, because that's what it feels
like to us. And then inflation starts, you know, kind
of going down on an annual basis. It's not that
it goes away, but we don't see nine percent inflation,
(05:53):
you know, continuing. And one of the theories that I've
seen positive on this is, look, you had this huge
surge in immigration, which I'm not asking you know, anyone
to you know, think of immigration as good, bad, or whatever.
I'm just saying, we had this big surge in immigration,
some of it legal, some of it illegal, and what
it resulted in, one of the things was a bunch
(06:14):
of people coming into the country into the labor force.
And so the theory that I saw basically says, Look,
one of the reasons why we avoided what's called this
wage price spiral, which is, hey, as prices go up,
labor demands more in order to you know, pay for
those things, and that drives prices up more because companies
maintain margins and YadA, YadA. One of the reasons we
(06:35):
avoided this wage price spiral is because of that huge
surge in immigration, which subsequently, particularly this year, has abated
and in some cases, you know, there's questions whether it's
even reversed. And so the question that is out there
now that I think is looming is, Look, Paul mentioned look,
there's a bunch of new technology that might end up,
you know, being able to help us be more productive
(06:58):
in the future. Is it fair to say, Paul, that
we think that a lot of that's not quite ready
for primetime right now?
Speaker 4 (07:05):
That's fair over the next six to twelve months.
Speaker 2 (07:07):
No, Yeah, And so the question that I see out
there now is, Okay, there's still is work that needs
to be done now, but there are fewer people. We
have this inflationary impulse that in theory can be a
one time change in the price level because of tariffs.
But if the labor supply is diminished relative to where
(07:27):
it was previously, does this end up kind of spooling
that that inflation up and making it not such a
one time thing. And maybe the evidence that we're seeing
of this is that services inflation is starting to pick
up in multiple data sets now, and so the lack
of available labor could actually act as a force to
(07:50):
maintain inflation going forward.
Speaker 3 (07:52):
Here your thoughts, Paul.
Speaker 4 (07:54):
The services piece is something that that could make sense,
that could play out that way we see currently saw
it back in twenty twenty two when we hopped in
the time machine, there was a tremendous amount of demand
for labor in the services and leisure sector of things,
because so much job loss was incurred over twenty twenty
(08:14):
and twenty twenty one during the COVID era, and you
did see just a tremendous demand for workers and all
sorts of issues that restaurants and other hospitality businesses ran into. Here.
I just find that it's it's a bit of a
far jump to just sort of have all these things
perhaps work in sick I'm not going to spell the
probability of it not occurring at all, but I just
(08:34):
wonder if you could have all of those things align
at once. To me, it just seems a little bit
far fetched that that would be the case to occur.
Speaker 2 (08:45):
I think the big thing that we are seeing is
a labor market that is different from one that at
least I've seen at any point in my lifetime, you know,
at least since I knew what labor markets were.
Speaker 3 (08:56):
I mean, maybe when I was three something like this
was going on, but I don't know.
Speaker 2 (09:00):
So I think you have this this really interesting situation now,
and again it gets at the question of like what
should the FED do, because let's say that job growth
is slowing. But let's say it's also slowing because the
labor market is not growing at the rate that it
was previously. The FED doesn't have a jobs per month target.
The FED has an unemployment rate target. And the reason why, like,
(09:23):
if you think through this, Let's say that you live
in a country with the population of one hundred people
and four of them are unemployed. If one person leaves
the country, and let's say that you fill one more job,
let's say that you let's say that one person leaves
the countries. Now you've got ninety nine people in the country.
(09:44):
One of the unemployed people left, and let's say that
you lose one job on a net basis, and now
there's ninety five people out of ninety nine that are employed.
You lost one job on a net basis. Should the
central bank of that country be cutting Yeah? I mean again,
like this is a fictional country with one hundred people.
It probably doesn't have a central bank.
Speaker 3 (10:04):
But like they're looking on it. You get the general
premise of this.
Speaker 2 (10:09):
So like when you have a population that isn't moving,
you're not concerned in the same way about hey, what's
the total number of jobs being added? Because you could
have very few jobs added, but unemployment is stable and
low still, as opposed to, Hey, if you got one
hundred people, but now you've got one hundred and ten
(10:29):
and the unemployment rate no new jobs are at now,
the unemployment rates fifteen percent. The FED might say, Okay,
we got to, you know, cut rates because we got
all these unemployed people running around and that's generally not
good for anyone. So the rate of population growth does matter,
and it can.
Speaker 3 (10:46):
Distort all of these things.
Speaker 2 (10:48):
And part of me is wondering, Look, is this just
a different environment between the shift and immigration that we've
seen this year. You still have, you know, a bunch
of baby boomers that are retiring and there aren't enough
gen zers to replace all them.
Speaker 3 (11:00):
Is there a case in the short.
Speaker 2 (11:02):
Term for more labor demand than supply, even though that
labor demand is relatively tepid? Maybe is kind of the
answer is it's just kind of a wild thing to
think about because we've never seen an economy and a labor.
Speaker 3 (11:15):
Market quite like this. Let's take a quick break here.
Speaker 2 (11:18):
When we return, Sarah Foster from Bank Grade is going
to kind of continue this conversation sort of in a
little bit, but it's different. It's tangential, but I think
some really interesting stuff talking about wage growth versus inflation.
Bank rad did a bunch of studies on this, and
she's going to share what they learned with us right
after this.
Speaker 1 (11:39):
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Speaker 2 (12:46):
As promised, We're now joined by Sarah Foster from Bank
Right Here to talk about their twenty twenty five wage
two inflation index survey. Sarah, thanks for joining us today.
Speaker 3 (12:57):
How are you?
Speaker 6 (12:58):
Thanks for having me. It's great to be here.
Speaker 3 (13:00):
Always enjoy it, fantastic.
Speaker 2 (13:02):
Tell us a little bit about what this survey studied
and what you found from it.
Speaker 7 (13:07):
Yeah, so it's a really complicated question that I think
a lot of people have been wondering, have your wages
kept pace with post pandemic inflation. We wanted to look
into that, and the best way to do it was
indexing inflation and wage growth to the beginning of twenty
twenty one, because that's when the economy reopened and that's
when inflation first took off. And what we found is
(13:29):
that actually Americans' wages are still in the hole. That
gap is closing, but it signifies that Americans have less
purchasing power today than they did a few years ago.
Speaker 2 (13:40):
In terms of how this is being felt, Are there
any demographic breakdowns or industry breakdowns that show this is
happening the same.
Speaker 3 (13:48):
Way to everyone or different groups feeling it differently.
Speaker 7 (13:52):
Yeah, so there are actually some industries where workers' wages
did keep pace and actually beat inflation. Those were retail,
food services, leisure and hospitality, and then healthcare. You know,
I think it's it's wage growth is always kind of
this reflection of how much bargaining power workers have, and
if companies are looking for workers and workers have lots
(14:14):
of options, that's when they're able to negotiate and get
bigger pay raises, and when companies are more likely to
lift pay to lure talent. That's exactly what happened for
those service sectors coming out of the pandemic, when jobs
came back much faster than the workers did. In healthcare especially,
that's been driving most of the job growth over the
past twelve months. So that's probably why you've seen that
(14:35):
be such a you know, a better kind of wage
growth story for these workers.
Speaker 2 (14:40):
What's the situation look like now, I've heard today's labor
market you know, referred to as you know, being more
sluggish kind of this you know, slow, higher no fire,
you know, situation that's going on. What is that doing
to wage growth relative to inflation or do we just
not have enough data on it for this year yet.
Speaker 6 (14:58):
Yeah, you're right.
Speaker 7 (14:59):
This job market, the economists and workers themselves were stuck
in it. Describe it as just frozen in place. It's
really hard for entry level people to find better jobs,
it's really hard for people who are still employed to
move up the ladder. It results in everybody just getting
kind of stuck in place. And so that's why you've
seen actually wage growth slow and slow even more than.
Speaker 6 (15:20):
Prices have over the past couple of months.
Speaker 7 (15:23):
Something that we really like to do is kind of
project out when the gap between inflation and wages will close,
and that has been taking longer year after year as
inflation stays stubborn, and now as the labor market slows.
It's also impacting how quickly Americans were covered from inflation.
Speaker 2 (15:43):
What kinds of things are people doing in order to
try to still find ways to grow their wages during
a more challenging labor market like this one.
Speaker 7 (15:54):
Yeah, well, we do know from surveys that many workers,
about half of them, plan to look for a new
job and the next twelve months and we also find
that mini workers are also interested in negotiating for a raise,
asking their employer for more money. I think you know,
from an economists perspective, when I'm asked how do I
get a raise in twenty twenty five, I often say
(16:15):
that because it's so much harder to find a new
job elsewhere, it probably is easier for you to at
least get a pay increase if you're still employed with
your current employer. Something I always like to say is
that top performers are always rewarded, and the ones who
remained agile, the ones who are always trying to get
better at their jobs, improve their value, They're the ones
(16:36):
who will be rewarded even in tougher job markets.
Speaker 2 (16:40):
Fantastic, Sarah, Thank you so much for the time today.
We really appreciate it, and thanks for all the information
that you were able to share with us.
Speaker 6 (16:47):
Thanks for having me. It's always great to be on here.
Speaker 2 (16:50):
That is Sarah Foster from bank Rate talking about wages
and inflation.
Speaker 5 (16:55):
All right, time for trivia here on the financial exchange
in our run of World War two. Trivia continues today
with a look at some of the leaders during the war.
Trivia question for today was who is the Prime Minister
of Great Britain during World War Two? Once again, who
is the Prime Minister of Great Britain during World War Two?
Be the ninth person today to text us at six
(17:18):
one seven three six two thirteen eighty five with the
correct answer, And when a Financial Exchange Show t shirt
once again, the ninth correct response to textas to the
number six one seven three six two thirteen eighty five
will win that T shirt. See complete contest rules at
Financial Exchange Show dot com.
Speaker 2 (17:36):
Paul, I want to talk a little bit about restaurants.
We get a couple pieces here, one from Bloomberg about
Chipotle and shake Shack, another one from the Wall Street
Journal about you know, casual dining restaurants, think Cheesecake Factory, Chili's,
Olive gard, you know, more sit down style. And I
(17:57):
think that when we look at what we're seeing here,
there are definitely some things that you can tell from
how American's restaurant tastes are changing. What does this piece
or these pieces, what do they tell us here?
Speaker 4 (18:11):
There seems to be a lot of focus check on value.
You know, the reason why Chili's has been successful in
this environment is their development of the three for me
value deals starting at ten ninety nine. It's not necessarily
the cheapest out there, but the value that they're providing
with that, the CEO has stated, has really worked well
(18:33):
with consumers and it's really supercharged kind of their marketing efforts.
And I think you compare that to an area like Chipotle,
which is pretty pricey when you, you know, check out
for their ultimate breedable whatever you're looking at, closing in
probably closer at fifteen dollars or so, and you're just
(18:54):
not getting the same value. And it seems like that
is really the split that we're seeing there for consumers
look looking for value and sort of beat some of
the pricing pressure that they've seen post inflation, versus you know,
those higher end ones struggling a little bit to keep up.
Speaker 2 (19:09):
Yeah, it's kind of you want me to pay that
for this, No, I'm gonna go and yeah, I might
have to pay a dollar or two more, but I'm
sitting down.
Speaker 3 (19:15):
Someone's gonna refill my water.
Speaker 2 (19:17):
You know, like that seems to be something that makes
sense just intuitively, I guess when you look at how
all of this pricing is is compared just take a
quick break here. When we come back, we'll got the
trivia answer, and we got Wall Street.
Speaker 1 (19:33):
Watch, bringing the latest financial news straight to your radio.
Every day. It's the Financial Exchange on the Financial Exchange
Radio Network. Time now for Wall Street Watch. A complete
(19:54):
look at what's moving market so far today right here
on the Financial Exchange Radio Network.
Speaker 5 (20:00):
Nasdaq selling off at the moment. The Dow and SMP
five hundred mixed as investors digest a first wave of
a major retailer earnings from the home depot posted earlier
this morning with mixed results. Right now, the Dow is
off by two tenths of one percent or ninety nine
points higher. S and P five hundred is down a
quarter for percent or fifteen points lower. NASDAK down nearly
(20:23):
one percent or two hundred and seven points lower. Russell
two thousand is off by nearly three tenths of one percent.
Ten year Treasure reeled down two basis points at four
point three one percent, and crude oil off one percent
today training at sixty two dollars and seventy nine cents.
A barrel home depot reported disappointing second quarter results with
(20:43):
a home improvement retailer said that consumers were still delaying
big ticket projects in that it would make modest price increases. However,
Home Depot backed its annual outlooks, setting shares up by
three percent. Meanwhile, Intel shares up over seven percent after
Japan's Soft Bank agreed to invest two billion dollars in
(21:03):
the struggling chip maker. This comes after news that the
US government has been considering taking a stake in Intel.
Sticking with Chips wherein Video shares are off over two
percent after the AI and chip giants said that it
is evaluating several products following a report that the company
is working on a new AI chip for China that
(21:24):
is more powerful than the currently available Age twenty chip. Elsewhere,
Palo Alto Networks reported courtly results that Beach Street forecasts
and offered full year guidance that was stronger than expected.
That stock is up by four percent. Shares of Viking
Therapeutics down forty percent after the company released mid stage
trial data on its obesity pill that disappointed investors. And
(21:48):
Robinhood announced this morning that the online broker is launching
prediction markets for professional in college football. It will be
available to customers in the coming days. Robin Hood shares
are trading three percent lower at the moment. I'm Tucker
Silva and that is Wall Street Watch. And in the
previous segment we asked you the trivia question who is
the Prime Minister of Great Britain during World War Two?
(22:11):
That's of course Winston church Hill. Glenn from wood Woodsholl
is our winner today taking home the Financial Exchange Show
t shirt. Congrats to Glenn, and we play trivia every
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at Financial Exchange Show dot com.
Speaker 4 (22:26):
Can having a prediction market? Chuck? Does that just shorten
out not being a gambling company? If you create a
prediction market? Is that like a way to work around it?
Speaker 2 (22:35):
So here's this is actually a really interesting topic. So
we're basically heading to something, Paul. It feels like where
whether you want to call it gambling or not, I
think there are just so many and this is just
from talking with people like in their twenties.
Speaker 3 (22:56):
There are so many people.
Speaker 2 (22:57):
In their twenties, and you can even say, like early
thirties that have two hundred and fifty dollars that are
just willing to take a flyer on anything for hope
that it gets them somewhere economically right now that you
can basically just run that whole dopamine program for oh, like,
this is exciting even if it goes badly.
Speaker 3 (23:19):
Yep, And people were fine with it.
Speaker 2 (23:21):
I saw someone yesterday and look, it's it's not my bag,
Like I don't get involved in any of this stuff.
Speaker 3 (23:27):
I don't understand it.
Speaker 2 (23:29):
But someone yesterday was talking about, you know, the fact
that look, in crypto, there's like all this scamming that
goes on, right, And someone made the point like, look,
if you're you know, upset about people in their twenties
and thirties, you know, investing in crypto and getting scammed,
you're missing kind of the point for them, which is
(23:49):
ultimately they're trying to take a little amount of money
and turn it into a large amount. Sure, and if
they get scammed doing it, it's not really any different
to them from you and I going to the casino
and playing blackjack and getting a.
Speaker 3 (24:01):
Bad beat right on a hand, right, And And.
Speaker 2 (24:04):
When I thought about it that way, it's like, okay, Like, yeah,
I kind of get that.
Speaker 3 (24:07):
They're not talking about you know, we're.
Speaker 2 (24:10):
Not talking about sophisticated investors who are like taking a
million dollars and thinking something's gonna, you know, come out
of it. It's hey, here's a hundred bucks, and hopefully
it goes well. But otherwise I put it into fart coin,
and jokes on me for investing in fart coin.
Speaker 4 (24:24):
I think that's a good way to phrase it. When
I came out of college, I had a couple stocks
that I bought that, you know, pharmaceutical hopes of FDA approval,
you know, these long shot pipe dream models, and and
you lose and you take a bath on them, and
you're not putting a big amount of money in it.
But then you learn, gee, maybe I should look for
a more durable and sustainable business and invest in that
(24:45):
rather than taking the fire. So it's interesting when you
put it that way. We've all had those learning lessons
and maybe it just comes through a different form that
I'm not accustomed to now. But I don't know regulatory wise,
how you get prediction first is gambling, but it doesn't
Robin Hood's doing it. So here it goes.
Speaker 3 (25:04):
It doesn't feel good.
Speaker 2 (25:05):
I completely agree, and I don't know where that line
is because again, like, what what makes a prediction different?
For like, if I'm betting on Aaron Judge to hit
sixty home runs. That's gambling. But if I'm betting on
who the next Prime Minister of Norway is going to be,
that's a prediction. What's the difference here, right?
Speaker 3 (25:29):
You know?
Speaker 7 (25:30):
So?
Speaker 3 (25:30):
Yeah, I kind of struggle with that too.
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Speaker 3 (26:50):
Peas in Bloomberg.
Speaker 2 (26:51):
This Big Business came prepared for this White House. It
talks about how earnings have grown meaningfully to despite any
questions about where the economy may be as a result
of tariffs or anything else. Paul, what do you make
of this piece and what we're seeing from companies trying
to navigate this world right now?
Speaker 4 (27:12):
It's important for us to point out that this earning
season has been quite strong relative to what Wall Street forecasted.
As much as we will highlight potential economic concerns out
there when we do the program, you also have to
acknowledge that these earnings reports have been really great. For
the most part, we've seen a surge of about ten
and a half percent on earnings from a year earlier
(27:33):
that was well above Wall Street's forecast of about a
two point eight percent gain according to Bloomberg Intelligence. You've
had a lot of contribution from the major players that
we talk about a lot, the Metal metas, the Googles,
the Microsofts, etc. But also there's been some earnings growth
across some of the other major S and P five
(27:54):
hundred sectors. And the other piece that I want to
hit on here, other than acknowledging that hey, earnings have
been better than anticipated, there was a lot of pessimism
when tariffs were initially announced. They've been pared down significantly
from where they came out the initial rates, so that's
part of it, and estimates were pulled back and maybe
that just makes an easier bar to clear. But the
other piece I want to talk about is perhaps this
(28:15):
divergence between big businesses of the S and P five
hundred that you and I talk about so frequently on
this program versus kind of that middle market business. And
I was listening to a podcast recently which just had
mentioned that, you know, just if you think about large
retailers like Walmart and Target and others, they have a
lot of strategic positioning and supply chain flexibility that smaller
(28:37):
businesses don't have, And I just wonder if we are
seeing that further split that the big businesses that we
follow so closely on the S and P five hundred
side of things are faring are right here, but you
have other smaller to mid side businesses that may be
struggling more that we don't necessarily cover as much in
the show. And if you look at the Russell two thousand,
(28:58):
which is that smaller side of things, it has not
had anywhere near the robust earnings growth that we talked about,
with the S and P five hundred only posing about
a three percent earnings growth year over years. So it's
just something that I've been looking for more and more
evidence of it, and I haven't found the perfect statistic,
but it's just the thought that has crossed my mind
(29:19):
that maybe these midside businesses are struggling when these large
ones are being a little bit more successful than anticipated.
Speaker 2 (29:25):
Let's take a quick break here. When we come back,
we'll do a little bit of stack through.
Speaker 1 (29:29):
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Speaker 3 (30:07):
All right, Paul, what do you got for me for
stacker lot.
Speaker 4 (30:09):
I'm gonna go totally off script, Chuck, but I know
you can handle it. This is in regards to an
old New York Times piece. Old is a couple of
months ago, but the concept is still the same. Gen
Z doesn't want to start a bar tab, to the
chagrin of many bartenders. These twenty something year olds are
not willing to start a bar tab.
Speaker 3 (30:28):
Now.
Speaker 4 (30:28):
The gen Z has been accused of, or statistically found
to not drink as much as their older counterparts, but
they also feel there's some sort of entrapment by starting
a bar tab. And the reason I brought up this
piece is because, unfortunately, though I'm not in gen Z,
I fall guilty of this too. I have the worst
time committing to start a bar tab, and I just
(30:51):
I can't explain it, but I just share these fears
with them where I'm unwilling to do it, and I
always go one by one and it probably ticks off
bartenders quite a bit. Tucker and I are here to help, Okay,
So where do you guys stand on this?
Speaker 3 (31:05):
I'm very pro tab Okay.
Speaker 2 (31:07):
I believe even if you know you're only getting one drink, yep,
open a tab because you never know you might.
Speaker 3 (31:14):
Want another, right, you know?
Speaker 2 (31:16):
And again I don't like going through the hole. Oh
I gotta get my card out again? And you know
this and that what's why why did gen Zers say
they don't want to start a tab?
Speaker 3 (31:26):
They think it's entrapmant Well, do they know what that
word means?
Speaker 1 (31:31):
You know?
Speaker 4 (31:31):
I just like to keep it fancy on the show here.
But if you want to leave and the bar is
packed and you got to find someone, you're trying to
wave them down to close out your tab, versus if
you go one by one. And this is the reason
why I've had an issue with it. I'm just out
the door. You know, I'm paid up and I can
go versus trying to wave and flag someone down to
(31:52):
close out.
Speaker 5 (31:52):
I mean, that's what it comes down with me, is like,
how busy is the bar? Because if it's packed and
I'm not convinced I'm staying for more than one drink,
I'm closing it out because I don't want to like
sit there for ten minutes waiting for the busy bar
to die down so I can get the bartender's attention, because.
Speaker 4 (32:09):
Okay, go ahead, no sorry, two things would need to
happen there. You need to flag someone down, and you
need to say I got to close out my tap,
so they have to come over to you. And then
also they have to go back and close out your taps.
Speaker 5 (32:19):
So mention it's hard to find some writing room right
on the bar if they don't give you a little
the yeah pamphlet.
Speaker 2 (32:28):
Cher Tucker, I spent my entire my entire childhood thinking
I was going to be a professional athlete.
Speaker 3 (32:34):
You know what that meant? Meant? I practiced signing baseball's
left and right.
Speaker 4 (32:38):
Sure, and we've all done it.
Speaker 2 (32:40):
Nevertheless, my signature looks great on a baseball, but I've
never been asked to sign one. It's very convenient when
you're in a crowded bar and you have very little
room to sign, you can make it work. I guess
where I end up on this is. Look, when I
was twenty two, never did I go out just for
one drink, right, So it wasn't a thing. Now that I'm,
you know, twenty years older, I don't go out at
(33:03):
the times where.
Speaker 3 (33:03):
It gets crowded too.
Speaker 2 (33:05):
That's you know, like, oh, it's it's two o'clock on
a Saturday. Great, if it's if Like if it's if
it's two pm, yeah, I'm there having.
Speaker 3 (33:13):
My drinks because there's no one else there.
Speaker 2 (33:16):
If it's two am on a Saturday, I've been in
bed for six hours.
Speaker 4 (33:19):
Now, that's true, you know.
Speaker 3 (33:21):
So I don't deal with crowded bars.
Speaker 2 (33:24):
The I look at a place where there's a line
out the door, I'm like, oh, those poor people, like
wouldn't want to be you. But I guess people like
going where other people are.
Speaker 3 (33:32):
I don't.
Speaker 2 (33:33):
At this point, I'm like, no, find me the quiet
bar that might go out of business tomorrow.
Speaker 3 (33:37):
And and that's my jam. At this point, I'm I'm
looking for.
Speaker 4 (33:40):
That that makes sense, that makes sense.
Speaker 3 (33:43):
I've got a good one here.
Speaker 2 (33:44):
Uh So Shamath is back with a new spack because
we're in spac world at this point, and the disclosure
that is available on this is fantastic, if I may
say so myself. So this is from the actual filing
for the SPACK. We will be attempting to find a
(34:06):
great company at a great valuation. If you're not familiar
with the SPACK, Basically, you put a bunch of money
into this shell that then goes out of the shell's
publicly traded, then goes out and finds a company to buy.
That's the premise from it. It has fewer regulatory requirements
and this and that, but you still have to file
for the SPACK. So they're trying to raise two hundred
and fifty million dollars to go and buy something. Quote,
(34:29):
we'll be attempting to find a great company at a
great valuation to take public. But without doubt, the investment
will entail substantial risk, including the possibility of total loss. Okay,
Basically every equity says that fine. Unlike my private portfolios
which hold many companies thereby provide diversification, the American Exceptionalism
Acquisition Corporation will be an investment vehicle into a single
(34:50):
operating company.
Speaker 3 (34:52):
Okay.
Speaker 2 (34:52):
Finally, again pre standard stuff here. Consequently, we believe that
this investment is most suitable for institutional investors, and retail
should approach.
Speaker 3 (35:01):
This with caution if at all.
Speaker 2 (35:03):
Well, if that's true, you probably wouldn't be buying setting
up a spack, you know, first of all.
Speaker 3 (35:07):
But this is where we get we get fun.
Speaker 2 (35:10):
We believe that retail investors should only participate if A
this investment is part of a small, otherwise diversified portfolio.
B this investment is a quantum of capital they can
afford to completely.
Speaker 3 (35:24):
Lose quantum of capital? What defines a quantum of capital? Paul?
Is that three? Is it for? Like? What is it? Four?
Speaker 2 (35:34):
Penny loafers? Like, what's a quantum of capital? And see
if they do lose their entire capital? They will embody
the adage from President Trump that there can be quote
no crying in the casino. I mean, this isn't like
an actual regulatory document.
Speaker 4 (35:52):
How many pages was this buried in or is this
right front and center? This isn't even the disclosure this
discussion from before this was front and center.
Speaker 3 (35:59):
Uh don't know.
Speaker 2 (35:59):
I don't have a page number on this, but I
did confirm it is legit and in here. I just
I don't have the page number. Oh my goodness on this,
but this is what we're getting in disclosures at this point.
And look, Shamath the big thing is back in when
was it that he went through his hole? I'm the
man in arena, in the arena trying things phase. It
(36:22):
was twenty one or twenty one probably, and a lot
of the things he tried just didn't work, which again,
like he's the man in the arena. Great, but ultimately
he's putting up your money, not his, So like how
much is he really the man in the arena is
the question?
Speaker 4 (36:34):
I think, right, Yeah, we need to know his capital
commitment to this correctential quantum loss In.
Speaker 2 (36:39):
Any case, I found that to be funny. Yes, the
loss of quantums is it could be devastating.
Speaker 4 (36:46):
Peace in here. When it comes to tipping, are we
heading back down to fifteen percent? What they've noticed for
from some data from Toast, which is a provider for
a lot of restaurant payment systems out there, that they
saw a decline in tipping at full service restaurants to
nineteen percent on average. That was the lowest level that
they've seen since they began tracking it seven years ago.
(37:09):
It peaked at highest at twenty percent in twenty twenty
one for obvious reasons. Of course, restaurants and staffing during
the post COVID era it was a very challenging time,
so that some of the theories kicked around our people
are tipping tired. And I will say that there is
not that I'm in agreement full service restaurants. I'm a
standard twenty percent guy for the most part, unless you
(37:31):
really are screwing things up. But there is something when
you do go to those kiosks. And this is focusing
on full serve restaurants. So it's not when we bump
into this at a coffee stop or something like that,
But that does We've talked about that before. That does
bother me. When I'm at Fenway Park and you spend
twenty dollars for a beer and then they asked for
a tip. You know, no offense to those people working there,
(37:52):
but it's like, come on, I just shelled out twenty
bucks for a beer. I really don't feel like tipping.
Speaker 2 (37:56):
On top of this, I want to talk about I
know we only have a couple of seconds left, but
quiet cracking. Apparently this is when people feel overwhelmed at
work and having lots of pressure to do more with less.
I'm not sure that this is worthy of a new phrase,
because I think this is burnout. Yes, we don't need
to reinvent the burnout is kind of where I'm going.
(38:18):
We're done for the day, back at it tomorrow.
Speaker 3 (38:20):
We'll see you then
The Financial Exchange is produced by Money Matters Radio and
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(01:05):
Chuck Zada and Paul.
Speaker 2 (01:06):
Lane, Chuck, Paul and Tucker with you, and we got
equity markets mixed today. The Dow Jones Industrial Average, he's
up one hundred and eleven points right now.
Speaker 3 (01:19):
The SMP, though, is down twenty one, about.
Speaker 2 (01:22):
A third of a percent, and it's being dragged by tech,
with the Nasdaq currently off one point zho nine percent,
or about two hundred and thirty eight points. What's really
lagging on the day, It's a lot of the stuff
that has been fun for the last six months or so.
Core Weave down another seven percent today, Palanteer down six
(01:42):
percent today, AMD down three, Netflix down three, and Vidia
down too, Meta down two, Microsoft and Google and Amazon
all down one and a half. So again, kind of
your big tech stocks down today. And the interesting thing is,
despite you know, the SMP being down a third of
a percent, you actually have two hundred and eighty four
more stocks up than down in the index today, and
(02:05):
so the S and P five hundred on an equal
weighted basis instead of market cap weighted, is actually up
almost two thirds of a percent. So again, kind of
one of these things where, hey, you know, you can
complain about the big boys being down, but they're being
up and missing out on them. But if the big
boys turned down, even if everything else is moving up,
it's kind of hard for the index to hold up there.
(02:26):
So that's a bit of what we're seeing in equities today.
On the bond side of things. Tenure Treasury down three
basis points to four point three one percent. With oil
right now, West Texas Intermediate is down seventy one cents
a barrel to sixty two to seventy one. Gold is
down nine to seventy and ounced to thirty three, sixty
eight and thirty cents. And that is what we have
(02:50):
moving markets today from Business Insider this morning, Paul. The
under the radar number that's a huge red flag for
America job market. Is it Daniel Jones passer rating with
the Indianapolis cults?
Speaker 4 (03:06):
That is concerning for Danny Dimes, But no, check. What
it is is all about labor supply. So the concern
that's outlined in this piece is that just like in
your regular economics course or you know concept that you
hear thrown off and is supply and demand. You know,
you need to have enough supply to meet the demand
in place. What this article goes to describe is the
(03:28):
importance of having enough people participating in the labor market
to satisfy the demand for businesses out there. And what
it goes to say is that typically there was the
number of people entering the labor market exceeded those people
who were leaving it since two thousand and seven, but
more recently, what they've seen on a trend basis is
(03:50):
that more people have been leaving rather than entering, and
it's something that certainly the population decline is an an
idea that we've talked about. From our longer term trend perspective,
I'm not so sure I share the same concern that's
outlined in this article on labor supply that I think
(04:12):
it's worth worrying about necessarily, just because I do feel
like from a technological perspective, there could be a lot
of advancements that we could see that could help minimize
perhaps some of that labor supply deficit. And or you
can always have the ebb and flow and change of
(04:32):
immigration policies what cite in this article here is perhaps
a further crackdown and immigration. It would be relatively easy
to change policy to get more workers into the system
too that's another factor.
Speaker 2 (04:45):
So this is a really interesting topic to dig in
on in my opinion, and I have a few different
thoughts on this, so let's start. I saw an interesting
theory put out this morning, which is it's on this
exact topic. So this is just like great that this is,
you know, kind of the big one that we're talking
about here back in twenty twenty two. Uh, let's tucker,
(05:07):
can you fire up the time machine for a minute
for me by stand by? All right, we're getting it
all queued up. So it's the summer of twenty twenty two.
Speaker 4 (05:17):
Things are really expensive.
Speaker 2 (05:19):
It's really hot. Prices are going up nine percent a year.
The dog that cost you, well, no was there was
there dog inflation.
Speaker 4 (05:28):
There was a lot of demand for pets, uh post COVID.
Speaker 3 (05:31):
So we'll roll with it.
Speaker 2 (05:33):
It's hot, it's the middle of the summer in twenty
twenty two. Even the hot dogs you don't even need
a griddle to cook him on. You're just cooking them
on the street. And the price of the hot dogs
is is you know, tripled, because that's what it feels
like to us. And then inflation starts, you know, kind
of going down on an annual basis. It's not that
it goes away, but we don't see nine percent inflation,
(05:53):
you know, continuing. And one of the theories that I've
seen positive on this is, look, you had this huge
surge in immigration, which I'm not asking you know, anyone
to you know, think of immigration as good, bad, or whatever.
I'm just saying, we had this big surge in immigration,
some of it legal, some of it illegal, and what
it resulted in, one of the things was a bunch
(06:14):
of people coming into the country into the labor force.
And so the theory that I saw basically says, Look,
one of the reasons why we avoided what's called this
wage price spiral, which is, hey, as prices go up,
labor demands more in order to you know, pay for
those things, and that drives prices up more because companies
maintain margins and YadA, YadA. One of the reasons we
(06:35):
avoided this wage price spiral is because of that huge
surge in immigration, which subsequently, particularly this year, has abated
and in some cases, you know, there's questions whether it's
even reversed. And so the question that is out there
now that I think is looming is, Look, Paul mentioned look,
there's a bunch of new technology that might end up,
you know, being able to help us be more productive
(06:58):
in the future. Is it fair to say, Paul, that
we think that a lot of that's not quite ready
for primetime right now?
Speaker 4 (07:05):
That's fair over the next six to twelve months.
Speaker 2 (07:07):
No, Yeah, And so the question that I see out
there now is, Okay, there's still is work that needs
to be done now, but there are fewer people. We
have this inflationary impulse that in theory can be a
one time change in the price level because of tariffs.
But if the labor supply is diminished relative to where
(07:27):
it was previously, does this end up kind of spooling
that that inflation up and making it not such a
one time thing. And maybe the evidence that we're seeing
of this is that services inflation is starting to pick
up in multiple data sets now, and so the lack
of available labor could actually act as a force to
(07:50):
maintain inflation going forward.
Speaker 3 (07:52):
Here your thoughts, Paul.
Speaker 4 (07:54):
The services piece is something that that could make sense,
that could play out that way we see currently saw
it back in twenty twenty two when we hopped in
the time machine, there was a tremendous amount of demand
for labor in the services and leisure sector of things,
because so much job loss was incurred over twenty twenty
(08:14):
and twenty twenty one during the COVID era, and you
did see just a tremendous demand for workers and all
sorts of issues that restaurants and other hospitality businesses ran into. Here.
I just find that it's it's a bit of a
far jump to just sort of have all these things
perhaps work in sick I'm not going to spell the
probability of it not occurring at all, but I just
(08:34):
wonder if you could have all of those things align
at once. To me, it just seems a little bit
far fetched that that would be the case to occur.
Speaker 2 (08:45):
I think the big thing that we are seeing is
a labor market that is different from one that at
least I've seen at any point in my lifetime, you know,
at least since I knew what labor markets were.
Speaker 3 (08:56):
I mean, maybe when I was three something like this
was going on, but I don't know.
Speaker 2 (09:00):
So I think you have this this really interesting situation now,
and again it gets at the question of like what
should the FED do, because let's say that job growth
is slowing. But let's say it's also slowing because the
labor market is not growing at the rate that it
was previously. The FED doesn't have a jobs per month target.
The FED has an unemployment rate target. And the reason why, like,
(09:23):
if you think through this, Let's say that you live
in a country with the population of one hundred people
and four of them are unemployed. If one person leaves
the country, and let's say that you fill one more job,
let's say that you let's say that one person leaves
the countries. Now you've got ninety nine people in the country.
(09:44):
One of the unemployed people left, and let's say that
you lose one job on a net basis, and now
there's ninety five people out of ninety nine that are employed.
You lost one job on a net basis. Should the
central bank of that country be cutting Yeah? I mean again,
like this is a fictional country with one hundred people.
It probably doesn't have a central bank.
Speaker 3 (10:04):
But like they're looking on it. You get the general
premise of this.
Speaker 2 (10:09):
So like when you have a population that isn't moving,
you're not concerned in the same way about hey, what's
the total number of jobs being added? Because you could
have very few jobs added, but unemployment is stable and
low still, as opposed to, Hey, if you got one
hundred people, but now you've got one hundred and ten
(10:29):
and the unemployment rate no new jobs are at now,
the unemployment rates fifteen percent. The FED might say, Okay,
we got to, you know, cut rates because we got
all these unemployed people running around and that's generally not
good for anyone. So the rate of population growth does matter,
and it can.
Speaker 3 (10:46):
Distort all of these things.
Speaker 2 (10:48):
And part of me is wondering, Look, is this just
a different environment between the shift and immigration that we've
seen this year. You still have, you know, a bunch
of baby boomers that are retiring and there aren't enough
gen zers to replace all them.
Speaker 3 (11:00):
Is there a case in the short.
Speaker 2 (11:02):
Term for more labor demand than supply, even though that
labor demand is relatively tepid? Maybe is kind of the
answer is it's just kind of a wild thing to
think about because we've never seen an economy and a labor.
Speaker 3 (11:15):
Market quite like this. Let's take a quick break here.
Speaker 2 (11:18):
When we return, Sarah Foster from Bank Grade is going
to kind of continue this conversation sort of in a
little bit, but it's different. It's tangential, but I think
some really interesting stuff talking about wage growth versus inflation.
Bank rad did a bunch of studies on this, and
she's going to share what they learned with us right
after this.
Speaker 1 (11:39):
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Speaker 5 (12:18):
This segment of The Financial Exchange is brought to you
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Speaker 2 (12:46):
As promised, We're now joined by Sarah Foster from Bank
Right Here to talk about their twenty twenty five wage
two inflation index survey. Sarah, thanks for joining us today.
Speaker 3 (12:57):
How are you?
Speaker 6 (12:58):
Thanks for having me. It's great to be here.
Speaker 3 (13:00):
Always enjoy it, fantastic.
Speaker 2 (13:02):
Tell us a little bit about what this survey studied
and what you found from it.
Speaker 7 (13:07):
Yeah, so it's a really complicated question that I think
a lot of people have been wondering, have your wages
kept pace with post pandemic inflation. We wanted to look
into that, and the best way to do it was
indexing inflation and wage growth to the beginning of twenty
twenty one, because that's when the economy reopened and that's
when inflation first took off. And what we found is
(13:29):
that actually Americans' wages are still in the hole. That
gap is closing, but it signifies that Americans have less
purchasing power today than they did a few years ago.
Speaker 2 (13:40):
In terms of how this is being felt, Are there
any demographic breakdowns or industry breakdowns that show this is
happening the same.
Speaker 3 (13:48):
Way to everyone or different groups feeling it differently.
Speaker 7 (13:52):
Yeah, so there are actually some industries where workers' wages
did keep pace and actually beat inflation. Those were retail,
food services, leisure and hospitality, and then healthcare. You know,
I think it's it's wage growth is always kind of
this reflection of how much bargaining power workers have, and
if companies are looking for workers and workers have lots
(14:14):
of options, that's when they're able to negotiate and get
bigger pay raises, and when companies are more likely to
lift pay to lure talent. That's exactly what happened for
those service sectors coming out of the pandemic, when jobs
came back much faster than the workers did. In healthcare especially,
that's been driving most of the job growth over the
past twelve months. So that's probably why you've seen that
(14:35):
be such a you know, a better kind of wage
growth story for these workers.
Speaker 2 (14:40):
What's the situation look like now, I've heard today's labor
market you know, referred to as you know, being more
sluggish kind of this you know, slow, higher no fire,
you know, situation that's going on. What is that doing
to wage growth relative to inflation or do we just
not have enough data on it for this year yet.
Speaker 6 (14:58):
Yeah, you're right.
Speaker 7 (14:59):
This job market, the economists and workers themselves were stuck
in it. Describe it as just frozen in place. It's
really hard for entry level people to find better jobs,
it's really hard for people who are still employed to
move up the ladder. It results in everybody just getting
kind of stuck in place. And so that's why you've
seen actually wage growth slow and slow even more than.
Speaker 6 (15:20):
Prices have over the past couple of months.
Speaker 7 (15:23):
Something that we really like to do is kind of
project out when the gap between inflation and wages will close,
and that has been taking longer year after year as
inflation stays stubborn, and now as the labor market slows.
It's also impacting how quickly Americans were covered from inflation.
Speaker 2 (15:43):
What kinds of things are people doing in order to
try to still find ways to grow their wages during
a more challenging labor market like this one.
Speaker 7 (15:54):
Yeah, well, we do know from surveys that many workers,
about half of them, plan to look for a new
job and the next twelve months and we also find
that mini workers are also interested in negotiating for a raise,
asking their employer for more money. I think you know,
from an economists perspective, when I'm asked how do I
get a raise in twenty twenty five, I often say
(16:15):
that because it's so much harder to find a new
job elsewhere, it probably is easier for you to at
least get a pay increase if you're still employed with
your current employer. Something I always like to say is
that top performers are always rewarded, and the ones who
remained agile, the ones who are always trying to get
better at their jobs, improve their value, They're the ones
(16:36):
who will be rewarded even in tougher job markets.
Speaker 2 (16:40):
Fantastic, Sarah, Thank you so much for the time today.
We really appreciate it, and thanks for all the information
that you were able to share with us.
Speaker 6 (16:47):
Thanks for having me. It's always great to be on here.
Speaker 2 (16:50):
That is Sarah Foster from bank Rate talking about wages
and inflation.
Speaker 5 (16:55):
All right, time for trivia here on the financial exchange
in our run of World War two. Trivia continues today
with a look at some of the leaders during the war.
Trivia question for today was who is the Prime Minister
of Great Britain during World War Two? Once again, who
is the Prime Minister of Great Britain during World War Two?
Be the ninth person today to text us at six
(17:18):
one seven three six two thirteen eighty five with the
correct answer, And when a Financial Exchange Show t shirt
once again, the ninth correct response to textas to the
number six one seven three six two thirteen eighty five
will win that T shirt. See complete contest rules at
Financial Exchange Show dot com.
Speaker 2 (17:36):
Paul, I want to talk a little bit about restaurants.
We get a couple pieces here, one from Bloomberg about
Chipotle and shake Shack, another one from the Wall Street
Journal about you know, casual dining restaurants, think Cheesecake Factory, Chili's,
Olive gard, you know, more sit down style. And I
(17:57):
think that when we look at what we're seeing here,
there are definitely some things that you can tell from
how American's restaurant tastes are changing. What does this piece
or these pieces, what do they tell us here?
Speaker 4 (18:11):
There seems to be a lot of focus check on value.
You know, the reason why Chili's has been successful in
this environment is their development of the three for me
value deals starting at ten ninety nine. It's not necessarily
the cheapest out there, but the value that they're providing
with that, the CEO has stated, has really worked well
(18:33):
with consumers and it's really supercharged kind of their marketing efforts.
And I think you compare that to an area like Chipotle,
which is pretty pricey when you, you know, check out
for their ultimate breedable whatever you're looking at, closing in
probably closer at fifteen dollars or so, and you're just
(18:54):
not getting the same value. And it seems like that
is really the split that we're seeing there for consumers
look looking for value and sort of beat some of
the pricing pressure that they've seen post inflation, versus you know,
those higher end ones struggling a little bit to keep up.
Speaker 2 (19:09):
Yeah, it's kind of you want me to pay that
for this, No, I'm gonna go and yeah, I might
have to pay a dollar or two more, but I'm
sitting down.
Speaker 3 (19:15):
Someone's gonna refill my water.
Speaker 2 (19:17):
You know, like that seems to be something that makes
sense just intuitively, I guess when you look at how
all of this pricing is is compared just take a
quick break here. When we come back, we'll got the
trivia answer, and we got Wall Street.
Speaker 1 (19:33):
Watch, bringing the latest financial news straight to your radio.
Every day. It's the Financial Exchange on the Financial Exchange
Radio Network. Time now for Wall Street Watch. A complete
(19:54):
look at what's moving market so far today right here
on the Financial Exchange Radio Network.
Speaker 5 (20:00):
Nasdaq selling off at the moment. The Dow and SMP
five hundred mixed as investors digest a first wave of
a major retailer earnings from the home depot posted earlier
this morning with mixed results. Right now, the Dow is
off by two tenths of one percent or ninety nine
points higher. S and P five hundred is down a
quarter for percent or fifteen points lower. NASDAK down nearly
(20:23):
one percent or two hundred and seven points lower. Russell
two thousand is off by nearly three tenths of one percent.
Ten year Treasure reeled down two basis points at four
point three one percent, and crude oil off one percent
today training at sixty two dollars and seventy nine cents.
A barrel home depot reported disappointing second quarter results with
(20:43):
a home improvement retailer said that consumers were still delaying
big ticket projects in that it would make modest price increases. However,
Home Depot backed its annual outlooks, setting shares up by
three percent. Meanwhile, Intel shares up over seven percent after
Japan's Soft Bank agreed to invest two billion dollars in
(21:03):
the struggling chip maker. This comes after news that the
US government has been considering taking a stake in Intel.
Sticking with Chips wherein Video shares are off over two
percent after the AI and chip giants said that it
is evaluating several products following a report that the company
is working on a new AI chip for China that
(21:24):
is more powerful than the currently available Age twenty chip. Elsewhere,
Palo Alto Networks reported courtly results that Beach Street forecasts
and offered full year guidance that was stronger than expected.
That stock is up by four percent. Shares of Viking
Therapeutics down forty percent after the company released mid stage
trial data on its obesity pill that disappointed investors. And
(21:48):
Robinhood announced this morning that the online broker is launching
prediction markets for professional in college football. It will be
available to customers in the coming days. Robin Hood shares
are trading three percent lower at the moment. I'm Tucker
Silva and that is Wall Street Watch. And in the
previous segment we asked you the trivia question who is
the Prime Minister of Great Britain during World War Two?
(22:11):
That's of course Winston church Hill. Glenn from wood Woodsholl
is our winner today taking home the Financial Exchange Show
t shirt. Congrats to Glenn, and we play trivia every
day here in the Financial Exchange See complete contest rules
at Financial Exchange Show dot com.
Speaker 4 (22:26):
Can having a prediction market? Chuck? Does that just shorten
out not being a gambling company? If you create a
prediction market? Is that like a way to work around it?
Speaker 2 (22:35):
So here's this is actually a really interesting topic. So
we're basically heading to something, Paul. It feels like where
whether you want to call it gambling or not, I
think there are just so many and this is just
from talking with people like in their twenties.
Speaker 3 (22:56):
There are so many people.
Speaker 2 (22:57):
In their twenties, and you can even say, like early
thirties that have two hundred and fifty dollars that are
just willing to take a flyer on anything for hope
that it gets them somewhere economically right now that you
can basically just run that whole dopamine program for oh, like,
this is exciting even if it goes badly.
Speaker 3 (23:19):
Yep, And people were fine with it.
Speaker 2 (23:21):
I saw someone yesterday and look, it's it's not my bag,
Like I don't get involved in any of this stuff.
Speaker 3 (23:27):
I don't understand it.
Speaker 2 (23:29):
But someone yesterday was talking about, you know, the fact
that look, in crypto, there's like all this scamming that
goes on, right, And someone made the point like, look,
if you're you know, upset about people in their twenties
and thirties, you know, investing in crypto and getting scammed,
you're missing kind of the point for them, which is
(23:49):
ultimately they're trying to take a little amount of money
and turn it into a large amount. Sure, and if
they get scammed doing it, it's not really any different
to them from you and I going to the casino
and playing blackjack and getting a.
Speaker 3 (24:01):
Bad beat right on a hand, right, And And.
Speaker 2 (24:04):
When I thought about it that way, it's like, okay, Like, yeah,
I kind of get that.
Speaker 3 (24:07):
They're not talking about you know, we're.
Speaker 2 (24:10):
Not talking about sophisticated investors who are like taking a
million dollars and thinking something's gonna, you know, come out
of it. It's hey, here's a hundred bucks, and hopefully
it goes well. But otherwise I put it into fart coin,
and jokes on me for investing in fart coin.
Speaker 4 (24:24):
I think that's a good way to phrase it. When
I came out of college, I had a couple stocks
that I bought that, you know, pharmaceutical hopes of FDA approval,
you know, these long shot pipe dream models, and and
you lose and you take a bath on them, and
you're not putting a big amount of money in it.
But then you learn, gee, maybe I should look for
a more durable and sustainable business and invest in that
(24:45):
rather than taking the fire. So it's interesting when you
put it that way. We've all had those learning lessons
and maybe it just comes through a different form that
I'm not accustomed to now. But I don't know regulatory wise,
how you get prediction first is gambling, but it doesn't
Robin Hood's doing it. So here it goes.
Speaker 3 (25:04):
It doesn't feel good.
Speaker 2 (25:05):
I completely agree, and I don't know where that line
is because again, like, what what makes a prediction different?
For like, if I'm betting on Aaron Judge to hit
sixty home runs. That's gambling. But if I'm betting on
who the next Prime Minister of Norway is going to be,
that's a prediction. What's the difference here, right?
Speaker 3 (25:29):
You know?
Speaker 7 (25:30):
So?
Speaker 3 (25:30):
Yeah, I kind of struggle with that too.
Speaker 5 (25:33):
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Speaker 3 (26:50):
Peas in Bloomberg.
Speaker 2 (26:51):
This Big Business came prepared for this White House. It
talks about how earnings have grown meaningfully to despite any
questions about where the economy may be as a result
of tariffs or anything else. Paul, what do you make
of this piece and what we're seeing from companies trying
to navigate this world right now?
Speaker 4 (27:12):
It's important for us to point out that this earning
season has been quite strong relative to what Wall Street forecasted.
As much as we will highlight potential economic concerns out
there when we do the program, you also have to
acknowledge that these earnings reports have been really great. For
the most part, we've seen a surge of about ten
and a half percent on earnings from a year earlier
(27:33):
that was well above Wall Street's forecast of about a
two point eight percent gain according to Bloomberg Intelligence. You've
had a lot of contribution from the major players that
we talk about a lot, the Metal metas, the Googles,
the Microsofts, etc. But also there's been some earnings growth
across some of the other major S and P five
(27:54):
hundred sectors. And the other piece that I want to
hit on here, other than acknowledging that hey, earnings have
been better than anticipated, there was a lot of pessimism
when tariffs were initially announced. They've been pared down significantly
from where they came out the initial rates, so that's
part of it, and estimates were pulled back and maybe
that just makes an easier bar to clear. But the
other piece I want to talk about is perhaps this
(28:15):
divergence between big businesses of the S and P five
hundred that you and I talk about so frequently on
this program versus kind of that middle market business. And
I was listening to a podcast recently which just had
mentioned that, you know, just if you think about large
retailers like Walmart and Target and others, they have a
lot of strategic positioning and supply chain flexibility that smaller
(28:37):
businesses don't have, And I just wonder if we are
seeing that further split that the big businesses that we
follow so closely on the S and P five hundred
side of things are faring are right here, but you
have other smaller to mid side businesses that may be
struggling more that we don't necessarily cover as much in
the show. And if you look at the Russell two thousand,
(28:58):
which is that smaller side of things, it has not
had anywhere near the robust earnings growth that we talked about,
with the S and P five hundred only posing about
a three percent earnings growth year over years. So it's
just something that I've been looking for more and more
evidence of it, and I haven't found the perfect statistic,
but it's just the thought that has crossed my mind
(29:19):
that maybe these midside businesses are struggling when these large
ones are being a little bit more successful than anticipated.
Speaker 2 (29:25):
Let's take a quick break here. When we come back,
we'll do a little bit of stack through.
Speaker 1 (29:29):
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Speaker 3 (30:07):
All right, Paul, what do you got for me for
stacker lot.
Speaker 4 (30:09):
I'm gonna go totally off script, Chuck, but I know
you can handle it. This is in regards to an
old New York Times piece. Old is a couple of
months ago, but the concept is still the same. Gen
Z doesn't want to start a bar tab, to the
chagrin of many bartenders. These twenty something year olds are
not willing to start a bar tab.
Speaker 3 (30:28):
Now.
Speaker 4 (30:28):
The gen Z has been accused of, or statistically found
to not drink as much as their older counterparts, but
they also feel there's some sort of entrapment by starting
a bar tab. And the reason I brought up this
piece is because, unfortunately, though I'm not in gen Z,
I fall guilty of this too. I have the worst
time committing to start a bar tab, and I just
(30:51):
I can't explain it, but I just share these fears
with them where I'm unwilling to do it, and I
always go one by one and it probably ticks off
bartenders quite a bit. Tucker and I are here to help, Okay,
So where do you guys stand on this?
Speaker 3 (31:05):
I'm very pro tab Okay.
Speaker 2 (31:07):
I believe even if you know you're only getting one drink, yep,
open a tab because you never know you might.
Speaker 3 (31:14):
Want another, right, you know?
Speaker 2 (31:16):
And again I don't like going through the hole. Oh
I gotta get my card out again? And you know
this and that what's why why did gen Zers say
they don't want to start a tab?
Speaker 3 (31:26):
They think it's entrapmant Well, do they know what that
word means?
Speaker 1 (31:31):
You know?
Speaker 4 (31:31):
I just like to keep it fancy on the show here.
But if you want to leave and the bar is
packed and you got to find someone, you're trying to
wave them down to close out your tab, versus if
you go one by one. And this is the reason
why I've had an issue with it. I'm just out
the door. You know, I'm paid up and I can
go versus trying to wave and flag someone down to
(31:52):
close out.
Speaker 5 (31:52):
I mean, that's what it comes down with me, is like,
how busy is the bar? Because if it's packed and
I'm not convinced I'm staying for more than one drink,
I'm closing it out because I don't want to like
sit there for ten minutes waiting for the busy bar
to die down so I can get the bartender's attention, because.
Speaker 4 (32:09):
Okay, go ahead, no sorry, two things would need to
happen there. You need to flag someone down, and you
need to say I got to close out my tap,
so they have to come over to you. And then
also they have to go back and close out your taps.
Speaker 5 (32:19):
So mention it's hard to find some writing room right
on the bar if they don't give you a little
the yeah pamphlet.
Speaker 2 (32:28):
Cher Tucker, I spent my entire my entire childhood thinking
I was going to be a professional athlete.
Speaker 3 (32:34):
You know what that meant? Meant? I practiced signing baseball's
left and right.
Speaker 4 (32:38):
Sure, and we've all done it.
Speaker 2 (32:40):
Nevertheless, my signature looks great on a baseball, but I've
never been asked to sign one. It's very convenient when
you're in a crowded bar and you have very little
room to sign, you can make it work. I guess
where I end up on this is. Look, when I
was twenty two, never did I go out just for
one drink, right, So it wasn't a thing. Now that I'm,
you know, twenty years older, I don't go out at
(33:03):
the times where.
Speaker 3 (33:03):
It gets crowded too.
Speaker 2 (33:05):
That's you know, like, oh, it's it's two o'clock on
a Saturday. Great, if it's if Like if it's if
it's two pm, yeah, I'm there having.
Speaker 3 (33:13):
My drinks because there's no one else there.
Speaker 2 (33:16):
If it's two am on a Saturday, I've been in
bed for six hours.
Speaker 4 (33:19):
Now, that's true, you know.
Speaker 3 (33:21):
So I don't deal with crowded bars.
Speaker 2 (33:24):
The I look at a place where there's a line
out the door, I'm like, oh, those poor people, like
wouldn't want to be you. But I guess people like
going where other people are.
Speaker 3 (33:32):
I don't.
Speaker 2 (33:33):
At this point, I'm like, no, find me the quiet
bar that might go out of business tomorrow.
Speaker 3 (33:37):
And and that's my jam. At this point, I'm I'm
looking for.
Speaker 4 (33:40):
That that makes sense, that makes sense.
Speaker 3 (33:43):
I've got a good one here.
Speaker 2 (33:44):
Uh So Shamath is back with a new spack because
we're in spac world at this point, and the disclosure
that is available on this is fantastic, if I may
say so myself. So this is from the actual filing
for the SPACK. We will be attempting to find a
(34:06):
great company at a great valuation. If you're not familiar
with the SPACK, Basically, you put a bunch of money
into this shell that then goes out of the shell's
publicly traded, then goes out and finds a company to buy.
That's the premise from it. It has fewer regulatory requirements
and this and that, but you still have to file
for the SPACK. So they're trying to raise two hundred
and fifty million dollars to go and buy something. Quote,
(34:29):
we'll be attempting to find a great company at a
great valuation to take public. But without doubt, the investment
will entail substantial risk, including the possibility of total loss. Okay,
Basically every equity says that fine. Unlike my private portfolios
which hold many companies thereby provide diversification, the American Exceptionalism
Acquisition Corporation will be an investment vehicle into a single
(34:50):
operating company.
Speaker 3 (34:52):
Okay.
Speaker 2 (34:52):
Finally, again pre standard stuff here. Consequently, we believe that
this investment is most suitable for institutional investors, and retail
should approach.
Speaker 3 (35:01):
This with caution if at all.
Speaker 2 (35:03):
Well, if that's true, you probably wouldn't be buying setting
up a spack, you know, first of all.
Speaker 3 (35:07):
But this is where we get we get fun.
Speaker 2 (35:10):
We believe that retail investors should only participate if A
this investment is part of a small, otherwise diversified portfolio.
B this investment is a quantum of capital they can
afford to completely.
Speaker 3 (35:24):
Lose quantum of capital? What defines a quantum of capital? Paul?
Is that three? Is it for? Like? What is it? Four?
Speaker 2 (35:34):
Penny loafers? Like, what's a quantum of capital? And see
if they do lose their entire capital? They will embody
the adage from President Trump that there can be quote
no crying in the casino. I mean, this isn't like
an actual regulatory document.
Speaker 4 (35:52):
How many pages was this buried in or is this
right front and center? This isn't even the disclosure this
discussion from before this was front and center.
Speaker 3 (35:59):
Uh don't know.
Speaker 2 (35:59):
I don't have a page number on this, but I
did confirm it is legit and in here. I just
I don't have the page number. Oh my goodness on this,
but this is what we're getting in disclosures at this point.
And look, Shamath the big thing is back in when
was it that he went through his hole? I'm the
man in arena, in the arena trying things phase. It
(36:22):
was twenty one or twenty one probably, and a lot
of the things he tried just didn't work, which again,
like he's the man in the arena. Great, but ultimately
he's putting up your money, not his, So like how
much is he really the man in the arena is
the question?
Speaker 4 (36:34):
I think, right, Yeah, we need to know his capital
commitment to this correctential quantum loss In.
Speaker 2 (36:39):
Any case, I found that to be funny. Yes, the
loss of quantums is it could be devastating.
Speaker 4 (36:46):
Peace in here. When it comes to tipping, are we
heading back down to fifteen percent? What they've noticed for
from some data from Toast, which is a provider for
a lot of restaurant payment systems out there, that they
saw a decline in tipping at full service restaurants to
nineteen percent on average. That was the lowest level that
they've seen since they began tracking it seven years ago.
(37:09):
It peaked at highest at twenty percent in twenty twenty
one for obvious reasons. Of course, restaurants and staffing during
the post COVID era it was a very challenging time,
so that some of the theories kicked around our people
are tipping tired. And I will say that there is
not that I'm in agreement full service restaurants. I'm a
standard twenty percent guy for the most part, unless you
(37:31):
really are screwing things up. But there is something when
you do go to those kiosks. And this is focusing
on full serve restaurants. So it's not when we bump
into this at a coffee stop or something like that,
But that does We've talked about that before. That does
bother me. When I'm at Fenway Park and you spend
twenty dollars for a beer and then they asked for
a tip. You know, no offense to those people working there,
(37:52):
but it's like, come on, I just shelled out twenty
bucks for a beer. I really don't feel like tipping.
Speaker 2 (37:56):
On top of this, I want to talk about I
know we only have a couple of seconds left, but
quiet cracking. Apparently this is when people feel overwhelmed at
work and having lots of pressure to do more with less.
I'm not sure that this is worthy of a new phrase,
because I think this is burnout. Yes, we don't need
to reinvent the burnout is kind of where I'm going.
(38:18):
We're done for the day, back at it tomorrow.
Speaker 3 (38:20):
We'll see you then
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