November 6, 2025 • 38 mins
Chuck Zodda and Mike Armstrong explain why you don't want tax payers backstopping the AI industry. UBS to liquidate funds with substantial exposure to First Brands. 'Jenga Tower' US economy teeters as middle class pulls back spending. Job cuts in October hit highest level for the month in 22 years. Paul LaMonica (Barron's) joins the show to chat about Robinhood.
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Speaker 1 (00:00):
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(00:42):
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donation today. This is the Financial Exchange with Chuck Zada
(01:06):
and Mike Armstraw, Chuck, Mike.
Speaker 2 (01:09):
And Tucker with you here.
Speaker 3 (01:10):
And as we kick things off, we've got stocks selling
off just a little bit, nothing huge, but sp is
down fifty eight points, a little less than one percent.
The Dow was off three hundred and forty six points,
about three quarters of a percent, and the nasdak can
posit down three hundred and twenty nine points about one
and a half percent. So you do have some tech
stocks that are kind of feeling it today. And this
(01:34):
comes on the back of, quite honestly, like some comments
and things in the last week or so that has
me wondering, you know, if we look back on this
week as the point where the tide turned, if things
start to go against the you know what has been
the prevailing AI story, the prevailing AI narrative. Obviously, look,
(01:56):
we could be sitting here a year from now and say, yeah, this,
you know, isn't the case. And these stocks have you know,
continued to move to all new all time highs. But
there's some stuff this week that just has me feeling
like maybe this is the moment where it starts to turn.
You had Satni Nadella come out over the weekend or
maybe it was late last week and say, hey, the
critical bottleneck isn't compute anymore getting you know chips, it's
(02:20):
getting enough electricity. Okay, that's not a great sign for
you know, the semiconductor manufacturers. Jensen Wang says yesterday to
the Financial Times, China is going to win the AI race.
He then tried to walk it back, and you know, say,
the US is running hand in hand. But remember, China
is not buying in vidio chips right now, at least
they're not admitting to buying them if they're you know,
(02:40):
somehow making their way into their ecosystem. And so the
question that you ask is, hey, if Jensen Wang says
China is gonna win the AI race, if they're gonna
win it without his chips, then why would you need
his chips?
Speaker 2 (02:53):
Here?
Speaker 3 (02:54):
Just the question that you would naturally follow up with
Open AI. Yesterday, their CFO at a Wall Street Journalist
investment conference said hey, we'd really like to, you know,
find some more creative ways to finance this growth, including
maybe looking at, you know, a government backstop for loans
to the AI sector, to which I say, there is
absolutely no way I want to be involved. In backstopping
(03:19):
loans to AI companies with taxpayer dollars full stop, And
the question obviously then becomes, wait, I thought everything was fine.
Why do you need a government backstop on AI loans?
I thought, I thought this sector was so robust, Like,
shouldn't everyone be lining up to loan the money?
Speaker 2 (03:35):
Are you saying the loans are gonna go bad?
Speaker 3 (03:36):
Like? It makes you wonder about that, and then like,
you just look at some of the price action in
some of these companies. Oracle is an example who about
two months ago came out and said, hey, we've got
an extra like three hundred billion dollars in revenue commitments
compared to what we previously had. Well, their stock has
now retraced all of the gain since then. It went
from two forty up to three hundred and forty five
(03:58):
that day and now it's back down to two four.
Meta had earnings last week where they, you know, said
our capex is going to be heavier, and they issued
you know, twenty five billion dollars in bonds to help
with that capex, and their stock has promptly fallen almost
twenty five I'm sorry, almost twenty percent since then. And
so you just kind of look at the convergence here
(04:19):
and say, hey, are we going to look back at
this first week in November as a critical point in
time for the AI story and for these AI stocks?
Speaker 2 (04:28):
And I think it's very possible.
Speaker 3 (04:30):
That we do, because all of those stories are things
that we haven't heard in the last six months.
Speaker 4 (04:35):
Michael, No, they aren't on the side of China and
in Vidia, just to play that one out a little
bit more. Obviously, in Vidia and now the largest company
in the world, largest company in the s and P
five hundred, quite concentrated in there. And I do wonder though,
you know, for China to win the AI race, which
is just kind of a nonsense statement because it's something
(04:56):
that is constantly moving and evolving. But if they do
actually get to the point where they are successfully producing
chips that are as good or better than NVIDIAs and
then are pushing out generative AI and whatever AI tools
for the future that are as good or better than
US companies, I guess my question is who's going to
use them outside of China?
Speaker 2 (05:18):
And so can China win?
Speaker 4 (05:19):
I mean, like if you are a the German government
or if you are the French, if you are air
bus and you are looking to develop an in house
generative AI system. I would think that even with all
the ties to China, you're going to be pretty suspicious
about welcoming in to your ecosystem a generative AI system
(05:44):
developed by a Chinese company.
Speaker 2 (05:46):
I disagree. Yeah, maybe not.
Speaker 3 (05:48):
Because the Germans have basically said, hey, we like to
make we like to make cars, that's what we do.
Come in Chinese electric vehicle manufacturers and take our business.
Speaker 2 (05:58):
Yeah yeah, it's so.
Speaker 4 (06:00):
Maybe the facts aren't in evidence, but yeah, that's been
the thing that I've gone back on is who's going
to really allow these semiconductors into their market? I get,
I get that, you know, the Middle East might, and
you know other nations that the Belton Roads Initiative has
really gone deep into might. But I'm yeah, maybe maybe
(06:21):
we are on an island here where they won't come
into the US, but it doesn't really matter if they're
able to flood every other market with it.
Speaker 3 (06:29):
The other piece that I like come back to is
isn't AI kind of going to be commoditized?
Speaker 2 (06:39):
You know, like, go on, does anyone really look.
Speaker 3 (06:43):
At like for the average person, which remember, the average
person is the person who's going to use this stuff
the most? Does the average person really care which model
they use?
Speaker 1 (06:54):
No?
Speaker 4 (06:54):
And in fact, when I attend conferences and they talk
about artificial intelligence and the tools that they're developing, it's
been pointed out that, hey, the crucial thing when you
are using one of these tools for you know, a
corporate setting, is the ability to switch between systems in
the back end for generating this stuff, because who knows
which one's gonna be better five years from now.
Speaker 3 (07:16):
So, like, how do you make money on that? Commoditized
products usually have really low margins. See grocery stores, see
every other semiconductor you know, like no one sitting has
anyone been sitting there for the last like twenty years
being like, you know what I want to do. I
want to build a business getting into making memory chips. No,
(07:38):
because the margins are horrible. The companies that do it
are like, yeah, well, well we'll do it because there's
a business and it will help us, you know, get
the capital that we need in order to do the
other stuff that we really.
Speaker 2 (07:48):
Like to do.
Speaker 4 (07:48):
If it was a great margin business, the Chips Act
wouldn't have needed to exist.
Speaker 3 (07:52):
More importantly, here's the thing that happens with any high
margin business. A bunch of people see it, a bunch
of people get into it, and the margins go down.
This is what happened with semiconductors. They originally were a
high margin business, and look what happened. Same thing with
the personal computing revolution. Do you remember all of the
uh PC makers back in the nineties. You had del
(08:12):
you had HP, you had Compac, you had Gateway, you
had like there were hundreds of them. They were like
they were just everywhere, and you're basically left with like
three of them now. And it's because the margins went down.
They had to consolidate in order to you know, maintain
their businesses, and all that competition drove the profits out
(08:33):
of those businesses. It's it's just what happened, and that's fine.
Like that, that's how you eventually, it's part of the
way that you get things to be cheaper is when
when profit margins go away, that helps to make things
cheaper through economies of scale, and that's that's how these
things get broadly distributed out to households. But if you're
(08:54):
talking about this and the question of AI, like do
we think that AI is going to have the margins
that you know, software traditionally has well, no, if it's
cloud based and most people don't want to pay for it,
and you're talking about like okay, we're gonna use like
ad revenue or you know, revenue from transaction, the margins
(09:18):
aren't going to be that fat if people are willing
to hop between different areas, If if they have no
allegiance and they're just looking based on pricing, Ask Amazon
how well that works out as a pricing as a
model for you. Yeah, like, yeah, you can grow, But
their core business is not why Amazon stock is where
it is. It's because of aws and all the other
stuff that is sticky.
Speaker 2 (09:39):
You know, talk to Walmart.
Speaker 3 (09:41):
Yeah, they built a great business, but it's because they're
like freaking huge and they have those economies of scale. Ultimately,
it still is a business that runs in mid signal
digit margins. You're not gonna have like fifty percent profit
margins on AI.
Speaker 2 (09:53):
If that's the case.
Speaker 4 (09:54):
I'll make the statement that I have been highly skeptical
of the frothiness of this market and move of the
AI trade generally. I'm also fairly skeptical that right now
happens to be the turning point of that overall narrative,
But I take your point there there are some new
comments that are being made from leadership in the AI
space that we I agree, find surprising today the.
Speaker 2 (10:18):
Most, like not the most.
Speaker 3 (10:21):
If like, if there is a concept of you know,
momentum in markets and things like that, then there's a
pretty good chance that what I said is not like right,
you know, like it's okay. These these are people that
are you know, smarter than me, that'll they're building all
this stuff, you know, And and I get how the
financial incentives are aligned, because look, if you are any
of these companies building these things, I totally get why
(10:44):
you would spend two hundred and fifty billion dollars in capex.
Sure Zuck's basically he's laid it out. He's like, yeah,
the upside's too great, and if it doesn't work, we'll
figure it out. And he's not wrong about that. Like,
I don't think anyone looks at Meta's business or Google's
business or Microsoft and said, as hey, if this fails,
you're gonna go on. They're like, no, that's not the case.
(11:04):
But it is one where you look at and say, hey,
if this fails, yeah, all that upside that's being priced
in isn't there. But that's just a question of the
stock price not Does the company still exist Open Ai
on the other hand, and the reason I think they're
trying to sign all these partnerships is right now. If
it doesn't work out for them, then they do cease
to exist. Yeah, they don't have anything else to fall
back on. They're not Open Excel, they're Open AI. Quick
(11:28):
break here when we return, We've got trivia and then
we'll talk about Jenga when we come back.
Speaker 1 (11:36):
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Speaker 5 (12:17):
It's time for trivia here on the Financial Exchange.
Speaker 2 (12:19):
And on this day.
Speaker 5 (12:20):
In two thousand and one, Fox aired the premiere of
the premiere episode of twenty four. Key for Sutherland received
six major awards for his performance on twenty four, including
an Emmy for Outstanding Lead Actor in a Drama Series
back in two thousand and six. So our trivia question
today is simply what was key for Sutherland's Character's name
(12:43):
on twenty four? Once again, what was key for Sutherland's
Character's name on twenty four? Be the sixth person today
to text us at six one seven three six two
thirteen eighty five with the correct answer, and you win
a Financial Exchange Show T shirt.
Speaker 2 (12:58):
Once again.
Speaker 5 (12:59):
The six correct response to Texas 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. And if you've missed any of our
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We stream the show live every day, but also archive
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(13:21):
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subscribe button.
Speaker 2 (13:27):
Chuck, just a bit.
Speaker 4 (13:28):
Of breaking news on a story that we've given a
lot of coverage over the last few months. Out sure
Financial Times reporting that UBS is going to liquidate the
funds with substantial First Brands exposure. If you recall there
was do you remember the name of the UBS fund
group that had.
Speaker 2 (13:43):
The UBS one, the one that Jeffreys was Point Bonita. Yeah.
Speaker 4 (13:47):
So in any case, just a bit of an additional
story on that front, where one of the major holders
here and had a fair bit of concentration in this
First Brands probably forced now to go and liquidate that
fund as a result.
Speaker 3 (14:03):
The Swiss banks, for better for worse, tend to be
the canary and the coal mine on this stuff. You know,
it used to be Credit Sweet before they were forced
to be bought before that force to be acquired by UBS.
So you don't get quite as pure of a signal
because it used to be like you'd see the name
Credit Sweet in the headline just to be like, oh no,
what is it now? Tell me what'd you do? And
(14:25):
you know now it's it's watered down a little bit,
but the legend lives on with UBS. Let's see piece
from Bloomberg here Jenga Tower. US economy teeters as middle
class pulls back spending.
Speaker 2 (14:41):
This is I gotta tell you. For the last week
and a half, this is.
Speaker 3 (14:44):
All that my friends want to talk about because I
feel like it's making its way into mainstream discourse now,
the seda of this K shaped economy. I feel like
it's everywhere that you're seeing this chatter now. And it's
very simple. The household the high end of the income
spectrum are spending like crazy still. And you know, we
see this in earnings reports, we see this with you know,
(15:07):
basically all the economic data that's out there. The households
that are in the bottom fifty to seventy percent of
income are really really struggling. And it's a you know
situation where you know, McDonald said, lower income households are
continuing to pull back at almost a double digit pace.
You've got Delta saying, you know, main cabin bookings are
(15:29):
down six percent, Marriott's saying that, you know, their cheaper
selection of hotels is down low single digits.
Speaker 2 (15:36):
Year over year.
Speaker 3 (15:37):
So like you're, you're, you're seeing this across the board.
And so the question that's being asked is how long
can this continue? And because here's the big thing is
broadly in the aggregate consumer spending remains fine. It's running
four to six percent growth year over year. Inflation's at
three so it's like one to three percent real growth.
(15:57):
It's just that growth is basically all happening from the
top ten to twenty percent of spenders.
Speaker 4 (16:02):
Yeah, I was gonna say the entire economy is balancing
on that one jenga brick of the high income consumer.
Speaker 2 (16:11):
You can measure this in other ways too.
Speaker 4 (16:12):
We've talked about the earnings FIKO is reporting now that
increasingly consumers are scoring either in the very highest or
the very lowest score ranges instead of a normal distribution.
You're basically seeing the K shaped economy in the actual
numbers of credit scores as well.
Speaker 3 (16:30):
So you know, the question is how long can this continue?
And the answer is, look, we're in kind of an
unprecedented situation from a number of different respects. The first is, hey,
we've talked about the US population getting older for a while.
Older populations don't rely on earned income. They rely on
social security, pensions and portfolio income. And so even if,
(16:53):
like the economy you know, has more job losses, is
the US economy more resilient to those because a higher
percentage of our spending is coming from people that are
not in the workforce because they're retired. Maybe, like maybe
that can continue. The Also, the level of wealth disparity
has gotten pretty darn big. And so you look at
(17:14):
that and you say, okay, even if you see more
job losses in that top ten percent, if Jeff Bezos
needs new yacht that makes them you know, that's that's
a big purchase. You know, like how much activity does
that create. It's not really a good way to build
an economy for a number of ways. And this is
before you even get into, you know, the societal impacts
(17:34):
and things like that, where you're like, gee, generally having
large concentrations of wealth in the hands of a small
number of people while everyone else is trying to figure
out how to pay for groceries.
Speaker 2 (17:43):
Is kind of a bad thing.
Speaker 3 (17:46):
Like, it's before you even get to those impacts. Yeah,
so there's definitely a shelf life to what's going on here.
But the counter on this is, look, you're still not
really seeing it showing up in any major shift in
the labor market. The labor mark continues to weaken, but
there hasn't been you know, the falling off a cliff
that you normally see in recessions. Housing's been a dumpster
(18:09):
fire for the last couple of years, and there's just
no change there. It's just still bad. The things that
are keeping this economy afoot right now are high income
spenders and artificial intelligence. And the problem is if one
of those goes, I don't know what picks up the baton.
It's not housing, it's not housing, it's not the labor
market right away. It's like you can be hundreds of
(18:32):
billions of dollars of terraces getting refunded.
Speaker 2 (18:33):
I guess I don't know if that's really something to
root for.
Speaker 4 (18:39):
No, no, yeah, Look, when you have a bifurcation in
society like we have now, there are all sorts of
unpredictable results. I mean, we just saw a whole bunch
of elections over the course of the last few nights
and a big SUITEP for Democrats on that front. I mean,
there's all sorts of potential implications here and more and
more we are talking about that bifurcation of consumer spending,
(19:03):
and that is very purely a symptom of where we
are right now in terms of income and wealth differences
between Americans.
Speaker 2 (19:13):
Stocks continue to struggle.
Speaker 3 (19:14):
The S and P now down about seventy points a
little over one percent. NASDAK composite down three hundred and
ninety five points, closing in on one and three quarters
percent in negative territory. We're going to take a quick break.
Speaker 2 (19:27):
When we come back. We got the trivia answer. We
got Wall Street Watch after.
Speaker 1 (19:30):
This, 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
(19:52):
look at what's moving market so far today right here
on the Financial Exchange Radio Network.
Speaker 5 (19:58):
Let me see an acceler creation of today's sell off
as traders continue to keep a close eye on AI stocks,
which have seen some volatility this week over high evaluation concerns.
Wall Street's also awaiting developments from the Supreme Courts hearing
on tariffs right now. The Dow is now down just
over nine tenths of one percent, or four hundred and
thirty four points. SMP five hundred down about one percent
(20:22):
or sixty six points lower, Nasdaq selling off one point
six percent or three hundred and eighty four points. Rusted
two thousand down by just over one and a half percent.
Ten Your Treasure reeled down seven basis points at four
point zero eighty five percent. Ankreude Oil down about half
a percent lower, trading a fifty nine dollars and twenty
(20:43):
eight cents a barrel. Qualcom down four percent after the
semiconductor maker reported stronger than projected earnings. However, the company
took a five point seven billion dollar non cash charge
linked to the one Big Beautiful Bill. Sticking with the
tip chip sett excuse me where Marvel Technology shares a
jumping one percent after Bloomberg reported that Japan's SoftBank has
(21:07):
explored a potential takeover of the chip maker. Meanwhile, CarMax
down by eighteen percent after the used car retailer announced
a weak preliminary outlook for its current fiscal quarter and
also said CEO Bill Nash would be unexpectedly unexpectedly stepping
down Elsewhere, Door Dash posted mixed third quarter results. The
(21:28):
food delivery company also said it expects to send several
hundred million dollars on new initiatives in development in twenty
twenty six. Door Dashed down by fifteen percent. App Leven
up by three percent after the ad platform posted stronger
than expected quarterly results and issued an optimistic outlook for
the fourth quarter, and shares a snap jumping by ten
(21:50):
percent after it posted strong third quarter results. Snap also
announced a four hundred million dollars deal with Perplexity AI.
The social media company said it specs to start seeing
revenue from that deal in twenty twenty six. I'm Tucker Silvan.
That is Wallstreet Watching. In the previous segment, we asked
you the trivia question what was key for Sutherland's character's
(22:11):
name on the show twenty four? That would be Jack Bauer.
Jason from Kingston, New Hampshire is our winner today taking
home the Financial Exchange Show T shirt and we play
trivia every day here in the Financial Exchange See complete
contest rules at Financial Exchange Show dot com.
Speaker 3 (22:28):
Couple things I've actually been rewatching twenty four with my
wife over the last couple months.
Speaker 2 (22:33):
Really hold on, Yeah, never saw it holds up.
Speaker 3 (22:36):
Okay, It's there's definitely parts that like given like the
landscape of TV and what we've gotten since then, that
you kind of watch and you're like, okay, this is
kind of and look, you have to suspend disbelief that
you know, Jack's always gonna go into everything you know
with you know, no body armor, no helmet, no nothing
(22:56):
in like comes out on scathes. But even before like
getting into that. It's just like, okay, like this has
been done better by you know, other other things since
so it's it holds up. Okay, the peaks are still
really high, but a lot of it's just kind of like, Okay,
this is fine.
Speaker 2 (23:10):
You know, it's it's fine.
Speaker 3 (23:12):
The other thing that I do think is quite funny
either you guys, Chuck, you still a baseball fan kind
of core?
Speaker 2 (23:19):
Yeah?
Speaker 5 (23:19):
Yeah.
Speaker 3 (23:20):
There was a Major League Baseball draft prospect this year
with the name Jack Bauer, which means like you think
about it and it's it's basically his parents were watching
twenty four in the mid two thousands had the last
name Bower, and we're like, we're gonna name him Jack
because it was it was like right in line with it.
Speaker 2 (23:40):
Kind of like.
Speaker 3 (23:40):
It's sometimes you're like, oh, like how could this be
a thing, But it's kind of like how there are
a bunch of like shacks that were born after Shaquille
O'Neal went to the NBA.
Speaker 2 (23:49):
A ton of elsa's running around right now.
Speaker 3 (23:51):
Well, the ones that you feel bad for are all
of the dinarises, you know, from like twenty seventeen, twenty eighteen,
because by twenty nineteen twenty twenty, you couldn't have Adannaris.
Speaker 2 (24:00):
Yeah you know, but what are you gonna do?
Speaker 3 (24:04):
Let's see, so we talked about K shaped economy. Oh,
let's talk about this because I've been seeing this making
the roundsday. US companies announce the most job cuts for
any October more than two decades, according to data from
outplacement firm Challenger Gray in Christmas. So it's not to
say the Challenger Gray and Christmas is wrong, but this
(24:25):
report typically has absolutely no signal value in terms of
what it means for the next month, quarter, or year.
Uh And so as such, I don't think this is
a valuable signal in any way, shape or form. They
can be useful in hindsight, but hindsight is not something
that you can make investment decisions based on. So I
(24:48):
know that like, this has been getting a lot of
chatter today since it was released, but I'm just not
sure there's much meat on this bone. I'm not saying
that this is good Like, no, this is still a
bad number. You don't want to see this, but it's
not indicative of where the US economy may or may
not be heading, right.
Speaker 4 (25:04):
I mean, if you think about it for a moment.
It's not as though layoffs only occur in October. So
first things first, what use is there in comparing single
month layoff announcements across multiple years. I don't find much
value in that. If you have data on the full year,
and they do and it is still elevated, I get that, But.
Speaker 2 (25:25):
There's just better.
Speaker 4 (25:26):
Data points for us to look at, right Like, you know,
how many people are actually filing for unemployment? Great number
to look at to try and confirm are we seeing
an elevated firing market right now? Are we seeing elevated
problems at this moment. We don't get that data compiled
right now because the government shut down. But I'm just
not finding this to be terribly useful information. All of
(25:47):
that haven't been said. The economy and the markets have
been on a direct upswing really since the return out
of COVID recepsion back in twenty twenty, with very few
blips on the radar, right I mean, I mean, realistically,
you had a inflation fuel downturn back in twenty twenty two,
(26:10):
a tariff fuel downturn back in April of this year,
but other than that, you haven't had much and quite Frankly,
if I look beyond the COVID recession, which if you blinked,
you missed it, we have not had any sort of
prolonged economic and market downturn since the Great Recession? Am
(26:30):
I stretching the truth by saying something like that, Chuck?
Speaker 2 (26:33):
In any meaningful way?
Speaker 4 (26:34):
I mean prolonged. There hasn't been a recession since then, right,
I mean twenty twenty twenty twenty Desidator recession. But in
terms of any sort of prolonged economic effects, there weren't any.
Speaker 2 (26:48):
Well, there were, but they weren't recessionary ones.
Speaker 3 (26:50):
We just threw a bunch of money at the thing,
and okay, like within a year, it was like wow,
Like now the big problem we have is we have
too much money chasing too few goods inflation, you know, Like, yeah,
it's we haven't had a recession in seventeen years.
Speaker 4 (27:04):
And what's wild about that is it means that the
entire population under the age of forty has really.
Speaker 2 (27:09):
Never invested through a real recession. No, they haven't.
Speaker 4 (27:14):
And look, plenty of folks that are listening right now
in seventy years old know what that's like and have
been through it. But for those who are working today
and funding their future and looking ahead. You have to
acknowledge that for the vast majority of people, right, everybody
under the age of forty, have never truly worked and
(27:35):
invested through a prolonged economic downturn like we've seen.
Speaker 2 (27:41):
On many occasions.
Speaker 3 (27:42):
Sucks, by the way, It's like recessions are not fun
in any way, shape or form.
Speaker 4 (27:49):
The question to be asking yourself if you find yourself
in that position, or even if you have lived through
them and invested through them before, is how prepared do
you feel? Because they aren't predictable in terms of they come.
But I can tell you that one of the best
times to be preparing for them is when the economy
is still chugging along and markets are near all time highs. Right,
that is the time to do the prep work, not
(28:10):
when the market's already fallen by thirty percent and you're
threatening to lose your job.
Speaker 2 (28:15):
If you aren't feeling as.
Speaker 4 (28:18):
Prepared as you could be for the possibility of a downturn,
please give the folks at Armstrong Advisory Group a call.
It's not that we have any idea when one is coming,
but we sure do have the tools and knowledge to
help you build a plan to address a future downturn.
We work with clients across the country. We have offices
(28:39):
located throughout New England and we offer free consultations on
this very subject. If you would like to book one,
call us at eight hundred three nine three for zero
zero one. You can book time for us to call
you back at Armstrong Advisory dot com. But that number
once again eight hundred three nine three for zero zero one.
Speaker 1 (28:55):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or any Armstrong
guide to specific financial, legal or tax advice. Consult your
own financial, tax into state planning advisors before making any
investment decisions. Armstrong may contact you to offer investment advisory services.
Speaker 3 (29:10):
Mike wall Street journalized the list of airports that may
start to see flight cancelations as of tomorrow.
Speaker 2 (29:17):
Oh, I hadn't seen that. It's forty of them, so
just bear with me.
Speaker 3 (29:21):
Should just try to go through All of them are
just like the big anyones we need to be aware of.
Speaker 2 (29:26):
Phoenix Sky Harbor.
Speaker 4 (29:27):
Just list every airport in the country and tell us
whether or not there will be a shutdown.
Speaker 3 (29:31):
Phoenix Sky Harbor, Lax, San Diego International, San Francisco, Denver,
Fort Lauderdale, Hollywood, Orlando, Miami, Tampa, Atlanta, Honolulu, Chicago, Midway
and O'Hare, Indianapolis, Cincinnati, Louisville, Logan, BWI, Detroit, Minneapolis, Saint Paul, Charlotte, Newark, JFK, LaGuardia, mccaren, Portland, Philadelphia, Memphis, Dallas,
(29:59):
Love And and Fort Worth, Houston, Hobby, Houston, Bush, Salt
Lake City, Reagan, Dulles, and Seattle, Tacoma. So all of them,
it's your biggest airports in the country. And hear Boston, Uh, Logan, h.
Speaker 2 (30:13):
Boston Logan Did you say Logan?
Speaker 4 (30:15):
I said Logan. Yeah, for those in the logan is Boston.
He announced the cities of every other airport.
Speaker 2 (30:21):
That's not true.
Speaker 3 (30:22):
You mixed because if I saw b w Y, the
Baltimore people are like, yeah, you see us, And I'm like,
of course, I do. You know the people that are
out in Uh you know what else did we do?
Speaker 2 (30:34):
Yeah? We did.
Speaker 3 (30:35):
I did a little lax like people know that. You
know it's lax. So you know, you gotta you gotta
give the people what they want. That's what this is
all about it's a you know, give and take. And
with that in mind, let's take a quick break and
then we are going to have Paul A Monica from
Barons on after this and uh, we'll chat with him.
Speaker 1 (30:55):
Here The Financial Exchange every day from eleven to noon
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(31:17):
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Speaker 3 (31:39):
As promised, we're now joined by the one and only
Paul Monica from Barons. We're gonna be talking a little
bit about prediction markets and brokerage firms.
Speaker 2 (31:51):
Paul, How you doing today? Good?
Speaker 6 (31:54):
Thanks?
Speaker 2 (31:54):
How you guys doing good?
Speaker 3 (31:56):
So, I think one of the things that a lot
of people don't realize about prediction markets. They are regulated
futures contracts correct, correct.
Speaker 6 (32:04):
Yes, the ones that you're seeing all places like robin
Hood which have really you know, increased their presence in
this market over the past couple of months. They are
regulated by the CFTC, so you have to be careful
and make sure that you if you're on any platform
that doesn't have the blessing of the CFTC, you gotta
(32:26):
be careful.
Speaker 3 (32:28):
So I naturally get my old fogy hat on, and
when I see brokerages trying to offer you know, futures
bets on their platforms, immediately I say, well, this is
boring the line between gambling and investing, and this isn't
gonna end well, I mean, right, like, that's that's kind
of how I feel. But obviously these companies think they
(32:48):
can make a bunch of money on it, and I
understand the financial incentives from their perspective.
Speaker 6 (32:53):
Yeah, it's any investor that is doing this does have
to be very careful because it is increasingly blurring the
line between investing for the long term and making short
term trades that might be considered by some to be gambling,
(33:14):
legalized gambling. I mean there's a reason that uh, you know,
one of the companies that is stepping up in prediction markets,
uh the you know, the the CME there. They have
a partnership with FanDuel with you know, the company that
owns that popular sports betting site. So it's hard not
(33:35):
to think of these as uh, you know, kind of gambling.
But what you're doing with poly Market and call She
you call she is uh, you know, partnering with Robinhood,
You're you're getting the ability to make these binary calls
on certain events. And some of them are important, uh
(33:57):
you know, financial and economic indicators, like what's going to
happen with fed raid cuts, But you know there are
some that are sports related and pop culture related, and
you know that I think, you know that may be
a little bit less about hardcore investing, but I think
you're right. Robin Hood Interactive Brokers another firm that is
(34:19):
stepping up its presence in this market. They do see
it as potentially a new lucrative revenue stream, particularly from
younger users. And then you have other companies like Schwab
that are taking a lot more of a careful and
cautious approach to this business that have not yet stepped
their dip their toe in it.
Speaker 3 (34:40):
Paul, I'm old enough at this point now that I
no longer fall into you know that twenty five you
know to thirty five demo and you know, I'm not
the lazy millennial anymore. Now, I'm the mature you know,
the mature millennial who you know knows what's going on.
Speaker 6 (34:57):
Obviously, Yeah, the geriatric millennial.
Speaker 2 (35:00):
I believe exactly exactly that that's me.
Speaker 3 (35:03):
So what I do know is, you know, from the
twenty five twenty seven year olds that I interact with,
I would say a significant majority of men in that
demo have a sports gambling problem at this point. And
I'm just trying to look at this and figure out
how this, like adding this stuff into brokerage accounts can
(35:26):
be in any way a positive, because we're seeing that
when you have access to this just in your pocket,
it becomes a problem in a way where if you
have to go to a casino to place a bet,
it's it's just it's different. You don't have the same accessibility.
I just am I wrong in that this just feels
like it's going to create additional societal problems? Or am
(35:46):
I just old fogying way too hard on this?
Speaker 6 (35:50):
I mean maybe it's it's a.
Speaker 2 (35:53):
Little bit in between. I mean, I think you.
Speaker 6 (35:55):
Are on right that the brokerage firms that decided to
get involved in this business they need to do a
very good job of educating their consumers about how this
is different from investing, how you don't want to get
out of control. But I don't think that's any different
(36:16):
than obviously what anyone that's uh you know already you know,
using DraftKings or FanDuel to to bend on sports need
to be doing as well. And bottom line, I mean,
there are risky types of investments even in the stock
market that you know, you know, anyone can get out
(36:40):
of hand if they go overboard, whether or not it's
buying something like Apple or Microsoft or a you know
other mature magnificent seven company, or you know, betting on
meme stocks. I think, you know, the the issue isn't
necessarily that the practice is bad. It's just that people
have to obviously keep in mind that you know that
(37:03):
they have to show good digital hygiene if you will,
and not go overboard with these types of speculative bets,
whether or not it's on you know, the next NBA
game or you know, the next fed raid cut.
Speaker 3 (37:21):
Very good, Paul, appreciate the time and have a great
rest of the day in a great weekend.
Speaker 6 (37:26):
Great thanks a lot. YouTube Chuck appreciate it.
Speaker 3 (37:29):
That is Paul Monica from Barons taking a quick look
at markets as we head towards the top of the hour.
Dow is now off four hundred and sixty five points
almost one percent, the S and P's off seventy nine
points almost one a quarter percent, and the nasdak can
Posite down four hundred and fifty points about one point
nine percent.
Speaker 2 (37:46):
So still continuing to.
Speaker 3 (37:47):
See some growing red through equity markets right now. We
do have the ten year treasury coming back in a
little bit, down seven point six basis points to four
point eight one percent, so that has the potential to
help mortgage rates a little bit heading into the weekend,
but equities struggling so far this week just has not
(38:07):
been their best showing to this point. We are done
for the day, but don't worry. Smorrows Friday, we're gonna
be back, so you can hang out with us then
and we'll see you on tomorrow's show.
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
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your own financial, tax, and estate planning advisors before making
(00:20):
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(01:06):
and Mike Armstraw, Chuck, Mike.
Speaker 2 (01:09):
And Tucker with you here.
Speaker 3 (01:10):
And as we kick things off, we've got stocks selling
off just a little bit, nothing huge, but sp is
down fifty eight points, a little less than one percent.
The Dow was off three hundred and forty six points,
about three quarters of a percent, and the nasdak can
posit down three hundred and twenty nine points about one
and a half percent. So you do have some tech
stocks that are kind of feeling it today. And this
(01:34):
comes on the back of, quite honestly, like some comments
and things in the last week or so that has
me wondering, you know, if we look back on this
week as the point where the tide turned, if things
start to go against the you know what has been
the prevailing AI story, the prevailing AI narrative. Obviously, look,
(01:56):
we could be sitting here a year from now and say, yeah, this,
you know, isn't the case. And these stocks have you know,
continued to move to all new all time highs. But
there's some stuff this week that just has me feeling
like maybe this is the moment where it starts to turn.
You had Satni Nadella come out over the weekend or
maybe it was late last week and say, hey, the
critical bottleneck isn't compute anymore getting you know chips, it's
(02:20):
getting enough electricity. Okay, that's not a great sign for
you know, the semiconductor manufacturers. Jensen Wang says yesterday to
the Financial Times, China is going to win the AI race.
He then tried to walk it back, and you know, say,
the US is running hand in hand. But remember, China
is not buying in vidio chips right now, at least
they're not admitting to buying them if they're you know,
(02:40):
somehow making their way into their ecosystem. And so the
question that you ask is, hey, if Jensen Wang says
China is gonna win the AI race, if they're gonna
win it without his chips, then why would you need
his chips?
Speaker 2 (02:53):
Here?
Speaker 3 (02:54):
Just the question that you would naturally follow up with
Open AI. Yesterday, their CFO at a Wall Street Journalist
investment conference said hey, we'd really like to, you know,
find some more creative ways to finance this growth, including
maybe looking at, you know, a government backstop for loans
to the AI sector, to which I say, there is
absolutely no way I want to be involved. In backstopping
(03:19):
loans to AI companies with taxpayer dollars full stop, And
the question obviously then becomes, wait, I thought everything was fine.
Why do you need a government backstop on AI loans?
I thought, I thought this sector was so robust, Like,
shouldn't everyone be lining up to loan the money?
Speaker 2 (03:35):
Are you saying the loans are gonna go bad?
Speaker 3 (03:36):
Like? It makes you wonder about that, and then like,
you just look at some of the price action in
some of these companies. Oracle is an example who about
two months ago came out and said, hey, we've got
an extra like three hundred billion dollars in revenue commitments
compared to what we previously had. Well, their stock has
now retraced all of the gain since then. It went
from two forty up to three hundred and forty five
(03:58):
that day and now it's back down to two four.
Meta had earnings last week where they, you know, said
our capex is going to be heavier, and they issued
you know, twenty five billion dollars in bonds to help
with that capex, and their stock has promptly fallen almost
twenty five I'm sorry, almost twenty percent since then. And
so you just kind of look at the convergence here
(04:19):
and say, hey, are we going to look back at
this first week in November as a critical point in
time for the AI story and for these AI stocks?
Speaker 2 (04:28):
And I think it's very possible.
Speaker 3 (04:30):
That we do, because all of those stories are things
that we haven't heard in the last six months.
Speaker 4 (04:35):
Michael, No, they aren't on the side of China and
in Vidia, just to play that one out a little
bit more. Obviously, in Vidia and now the largest company
in the world, largest company in the s and P
five hundred, quite concentrated in there. And I do wonder though,
you know, for China to win the AI race, which
is just kind of a nonsense statement because it's something
(04:56):
that is constantly moving and evolving. But if they do
actually get to the point where they are successfully producing
chips that are as good or better than NVIDIAs and
then are pushing out generative AI and whatever AI tools
for the future that are as good or better than
US companies, I guess my question is who's going to
use them outside of China?
Speaker 2 (05:18):
And so can China win?
Speaker 4 (05:19):
I mean, like if you are a the German government
or if you are the French, if you are air
bus and you are looking to develop an in house
generative AI system. I would think that even with all
the ties to China, you're going to be pretty suspicious
about welcoming in to your ecosystem a generative AI system
(05:44):
developed by a Chinese company.
Speaker 2 (05:46):
I disagree. Yeah, maybe not.
Speaker 3 (05:48):
Because the Germans have basically said, hey, we like to
make we like to make cars, that's what we do.
Come in Chinese electric vehicle manufacturers and take our business.
Speaker 2 (05:58):
Yeah yeah, it's so.
Speaker 4 (06:00):
Maybe the facts aren't in evidence, but yeah, that's been
the thing that I've gone back on is who's going
to really allow these semiconductors into their market? I get,
I get that, you know, the Middle East might, and
you know other nations that the Belton Roads Initiative has
really gone deep into might. But I'm yeah, maybe maybe
(06:21):
we are on an island here where they won't come
into the US, but it doesn't really matter if they're
able to flood every other market with it.
Speaker 3 (06:29):
The other piece that I like come back to is
isn't AI kind of going to be commoditized?
Speaker 2 (06:39):
You know, like, go on, does anyone really look.
Speaker 3 (06:43):
At like for the average person, which remember, the average
person is the person who's going to use this stuff
the most? Does the average person really care which model
they use?
Speaker 1 (06:54):
No?
Speaker 4 (06:54):
And in fact, when I attend conferences and they talk
about artificial intelligence and the tools that they're developing, it's
been pointed out that, hey, the crucial thing when you
are using one of these tools for you know, a
corporate setting, is the ability to switch between systems in
the back end for generating this stuff, because who knows
which one's gonna be better five years from now.
Speaker 3 (07:16):
So, like, how do you make money on that? Commoditized
products usually have really low margins. See grocery stores, see
every other semiconductor you know, like no one sitting has
anyone been sitting there for the last like twenty years
being like, you know what I want to do. I
want to build a business getting into making memory chips. No,
(07:38):
because the margins are horrible. The companies that do it
are like, yeah, well, well we'll do it because there's
a business and it will help us, you know, get
the capital that we need in order to do the
other stuff that we really.
Speaker 2 (07:48):
Like to do.
Speaker 4 (07:48):
If it was a great margin business, the Chips Act
wouldn't have needed to exist.
Speaker 3 (07:52):
More importantly, here's the thing that happens with any high
margin business. A bunch of people see it, a bunch
of people get into it, and the margins go down.
This is what happened with semiconductors. They originally were a
high margin business, and look what happened. Same thing with
the personal computing revolution. Do you remember all of the
uh PC makers back in the nineties. You had del
(08:12):
you had HP, you had Compac, you had Gateway, you
had like there were hundreds of them. They were like
they were just everywhere, and you're basically left with like
three of them now. And it's because the margins went down.
They had to consolidate in order to you know, maintain
their businesses, and all that competition drove the profits out
(08:33):
of those businesses. It's it's just what happened, and that's fine.
Like that, that's how you eventually, it's part of the
way that you get things to be cheaper is when
when profit margins go away, that helps to make things
cheaper through economies of scale, and that's that's how these
things get broadly distributed out to households. But if you're
(08:54):
talking about this and the question of AI, like do
we think that AI is going to have the margins
that you know, software traditionally has well, no, if it's
cloud based and most people don't want to pay for it,
and you're talking about like okay, we're gonna use like
ad revenue or you know, revenue from transaction, the margins
(09:18):
aren't going to be that fat if people are willing
to hop between different areas, If if they have no
allegiance and they're just looking based on pricing, Ask Amazon
how well that works out as a pricing as a
model for you. Yeah, like, yeah, you can grow, But
their core business is not why Amazon stock is where
it is. It's because of aws and all the other
stuff that is sticky.
Speaker 2 (09:39):
You know, talk to Walmart.
Speaker 3 (09:41):
Yeah, they built a great business, but it's because they're
like freaking huge and they have those economies of scale. Ultimately,
it still is a business that runs in mid signal
digit margins. You're not gonna have like fifty percent profit
margins on AI.
Speaker 2 (09:53):
If that's the case.
Speaker 4 (09:54):
I'll make the statement that I have been highly skeptical
of the frothiness of this market and move of the
AI trade generally. I'm also fairly skeptical that right now
happens to be the turning point of that overall narrative,
But I take your point there there are some new
comments that are being made from leadership in the AI
space that we I agree, find surprising today the.
Speaker 2 (10:18):
Most, like not the most.
Speaker 3 (10:21):
If like, if there is a concept of you know,
momentum in markets and things like that, then there's a
pretty good chance that what I said is not like right,
you know, like it's okay. These these are people that
are you know, smarter than me, that'll they're building all
this stuff, you know, And and I get how the
financial incentives are aligned, because look, if you are any
of these companies building these things, I totally get why
(10:44):
you would spend two hundred and fifty billion dollars in capex.
Sure Zuck's basically he's laid it out. He's like, yeah,
the upside's too great, and if it doesn't work, we'll
figure it out. And he's not wrong about that. Like,
I don't think anyone looks at Meta's business or Google's
business or Microsoft and said, as hey, if this fails,
you're gonna go on. They're like, no, that's not the case.
(11:04):
But it is one where you look at and say, hey,
if this fails, yeah, all that upside that's being priced
in isn't there. But that's just a question of the
stock price not Does the company still exist Open Ai
on the other hand, and the reason I think they're
trying to sign all these partnerships is right now. If
it doesn't work out for them, then they do cease
to exist. Yeah, they don't have anything else to fall
back on. They're not Open Excel, they're Open AI. Quick
(11:28):
break here when we return, We've got trivia and then
we'll talk about Jenga when we come back.
Speaker 1 (11:36):
Find daily interviews and full shows of the Financial Exchange
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(11:56):
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Speaker 5 (12:17):
It's time for trivia here on the Financial Exchange.
Speaker 2 (12:19):
And on this day.
Speaker 5 (12:20):
In two thousand and one, Fox aired the premiere of
the premiere episode of twenty four. Key for Sutherland received
six major awards for his performance on twenty four, including
an Emmy for Outstanding Lead Actor in a Drama Series
back in two thousand and six. So our trivia question
today is simply what was key for Sutherland's Character's name
(12:43):
on twenty four? Once again, what was key for Sutherland's
Character's name on twenty four? Be the sixth person today
to text us at six one seven three six two
thirteen eighty five with the correct answer, and you win
a Financial Exchange Show T shirt.
Speaker 2 (12:58):
Once again.
Speaker 5 (12:59):
The six correct response to Texas 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. And if you've missed any of our
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We stream the show live every day, but also archive
every hour in all of our most newsworthy interviews, go
(13:21):
to YouTube search for the Financial Exchange and hit that
subscribe button.
Speaker 2 (13:27):
Chuck, just a bit.
Speaker 4 (13:28):
Of breaking news on a story that we've given a
lot of coverage over the last few months. Out sure
Financial Times reporting that UBS is going to liquidate the
funds with substantial First Brands exposure. If you recall there
was do you remember the name of the UBS fund
group that had.
Speaker 2 (13:43):
The UBS one, the one that Jeffreys was Point Bonita. Yeah.
Speaker 4 (13:47):
So in any case, just a bit of an additional
story on that front, where one of the major holders
here and had a fair bit of concentration in this
First Brands probably forced now to go and liquidate that
fund as a result.
Speaker 3 (14:03):
The Swiss banks, for better for worse, tend to be
the canary and the coal mine on this stuff. You know,
it used to be Credit Sweet before they were forced
to be bought before that force to be acquired by UBS.
So you don't get quite as pure of a signal
because it used to be like you'd see the name
Credit Sweet in the headline just to be like, oh no,
what is it now? Tell me what'd you do? And
(14:25):
you know now it's it's watered down a little bit,
but the legend lives on with UBS. Let's see piece
from Bloomberg here Jenga Tower. US economy teeters as middle
class pulls back spending.
Speaker 2 (14:41):
This is I gotta tell you. For the last week
and a half, this is.
Speaker 3 (14:44):
All that my friends want to talk about because I
feel like it's making its way into mainstream discourse now,
the seda of this K shaped economy. I feel like
it's everywhere that you're seeing this chatter now. And it's
very simple. The household the high end of the income
spectrum are spending like crazy still. And you know, we
see this in earnings reports, we see this with you know,
(15:07):
basically all the economic data that's out there. The households
that are in the bottom fifty to seventy percent of
income are really really struggling. And it's a you know
situation where you know, McDonald said, lower income households are
continuing to pull back at almost a double digit pace.
You've got Delta saying, you know, main cabin bookings are
(15:29):
down six percent, Marriott's saying that, you know, their cheaper
selection of hotels is down low single digits.
Speaker 2 (15:36):
Year over year.
Speaker 3 (15:37):
So like you're, you're, you're seeing this across the board.
And so the question that's being asked is how long
can this continue? And because here's the big thing is
broadly in the aggregate consumer spending remains fine. It's running
four to six percent growth year over year. Inflation's at
three so it's like one to three percent real growth.
(15:57):
It's just that growth is basically all happening from the
top ten to twenty percent of spenders.
Speaker 4 (16:02):
Yeah, I was gonna say the entire economy is balancing
on that one jenga brick of the high income consumer.
Speaker 2 (16:11):
You can measure this in other ways too.
Speaker 4 (16:12):
We've talked about the earnings FIKO is reporting now that
increasingly consumers are scoring either in the very highest or
the very lowest score ranges instead of a normal distribution.
You're basically seeing the K shaped economy in the actual
numbers of credit scores as well.
Speaker 3 (16:30):
So you know, the question is how long can this continue?
And the answer is, look, we're in kind of an
unprecedented situation from a number of different respects. The first is, hey,
we've talked about the US population getting older for a while.
Older populations don't rely on earned income. They rely on
social security, pensions and portfolio income. And so even if,
(16:53):
like the economy you know, has more job losses, is
the US economy more resilient to those because a higher
percentage of our spending is coming from people that are
not in the workforce because they're retired. Maybe, like maybe
that can continue. The Also, the level of wealth disparity
has gotten pretty darn big. And so you look at
(17:14):
that and you say, okay, even if you see more
job losses in that top ten percent, if Jeff Bezos
needs new yacht that makes them you know, that's that's
a big purchase. You know, like how much activity does
that create. It's not really a good way to build
an economy for a number of ways. And this is
before you even get into, you know, the societal impacts
(17:34):
and things like that, where you're like, gee, generally having
large concentrations of wealth in the hands of a small
number of people while everyone else is trying to figure
out how to pay for groceries.
Speaker 2 (17:43):
Is kind of a bad thing.
Speaker 3 (17:46):
Like, it's before you even get to those impacts. Yeah,
so there's definitely a shelf life to what's going on here.
But the counter on this is, look, you're still not
really seeing it showing up in any major shift in
the labor market. The labor mark continues to weaken, but
there hasn't been you know, the falling off a cliff
that you normally see in recessions. Housing's been a dumpster
(18:09):
fire for the last couple of years, and there's just
no change there. It's just still bad. The things that
are keeping this economy afoot right now are high income
spenders and artificial intelligence. And the problem is if one
of those goes, I don't know what picks up the baton.
It's not housing, it's not housing, it's not the labor
market right away. It's like you can be hundreds of
(18:32):
billions of dollars of terraces getting refunded.
Speaker 2 (18:33):
I guess I don't know if that's really something to
root for.
Speaker 4 (18:39):
No, no, yeah, Look, when you have a bifurcation in
society like we have now, there are all sorts of
unpredictable results. I mean, we just saw a whole bunch
of elections over the course of the last few nights
and a big SUITEP for Democrats on that front. I mean,
there's all sorts of potential implications here and more and
more we are talking about that bifurcation of consumer spending,
(19:03):
and that is very purely a symptom of where we
are right now in terms of income and wealth differences
between Americans.
Speaker 2 (19:13):
Stocks continue to struggle.
Speaker 3 (19:14):
The S and P now down about seventy points a
little over one percent. NASDAK composite down three hundred and
ninety five points, closing in on one and three quarters
percent in negative territory. We're going to take a quick break.
Speaker 2 (19:27):
When we come back. We got the trivia answer. We
got Wall Street Watch after.
Speaker 1 (19:30):
This, 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
(19:52):
look at what's moving market so far today right here
on the Financial Exchange Radio Network.
Speaker 5 (19:58):
Let me see an acceler creation of today's sell off
as traders continue to keep a close eye on AI stocks,
which have seen some volatility this week over high evaluation concerns.
Wall Street's also awaiting developments from the Supreme Courts hearing
on tariffs right now. The Dow is now down just
over nine tenths of one percent, or four hundred and
thirty four points. SMP five hundred down about one percent
(20:22):
or sixty six points lower, Nasdaq selling off one point
six percent or three hundred and eighty four points. Rusted
two thousand down by just over one and a half percent.
Ten Your Treasure reeled down seven basis points at four
point zero eighty five percent. Ankreude Oil down about half
a percent lower, trading a fifty nine dollars and twenty
(20:43):
eight cents a barrel. Qualcom down four percent after the
semiconductor maker reported stronger than projected earnings. However, the company
took a five point seven billion dollar non cash charge
linked to the one Big Beautiful Bill. Sticking with the
tip chip sett excuse me where Marvel Technology shares a
jumping one percent after Bloomberg reported that Japan's SoftBank has
(21:07):
explored a potential takeover of the chip maker. Meanwhile, CarMax
down by eighteen percent after the used car retailer announced
a weak preliminary outlook for its current fiscal quarter and
also said CEO Bill Nash would be unexpectedly unexpectedly stepping
down Elsewhere, Door Dash posted mixed third quarter results. The
(21:28):
food delivery company also said it expects to send several
hundred million dollars on new initiatives in development in twenty
twenty six. Door Dashed down by fifteen percent. App Leven
up by three percent after the ad platform posted stronger
than expected quarterly results and issued an optimistic outlook for
the fourth quarter, and shares a snap jumping by ten
(21:50):
percent after it posted strong third quarter results. Snap also
announced a four hundred million dollars deal with Perplexity AI.
The social media company said it specs to start seeing
revenue from that deal in twenty twenty six. I'm Tucker Silvan.
That is Wallstreet Watching. In the previous segment, we asked
you the trivia question what was key for Sutherland's character's
(22:11):
name on the show twenty four? That would be Jack Bauer.
Jason from Kingston, New Hampshire is our winner today taking
home the Financial Exchange Show T shirt and we play
trivia every day here in the Financial Exchange See complete
contest rules at Financial Exchange Show dot com.
Speaker 3 (22:28):
Couple things I've actually been rewatching twenty four with my
wife over the last couple months.
Speaker 2 (22:33):
Really hold on, Yeah, never saw it holds up.
Speaker 3 (22:36):
Okay, It's there's definitely parts that like given like the
landscape of TV and what we've gotten since then, that
you kind of watch and you're like, okay, this is
kind of and look, you have to suspend disbelief that
you know, Jack's always gonna go into everything you know
with you know, no body armor, no helmet, no nothing
(22:56):
in like comes out on scathes. But even before like
getting into that. It's just like, okay, like this has
been done better by you know, other other things since
so it's it holds up. Okay, the peaks are still
really high, but a lot of it's just kind of like, Okay,
this is fine.
Speaker 2 (23:10):
You know, it's it's fine.
Speaker 3 (23:12):
The other thing that I do think is quite funny
either you guys, Chuck, you still a baseball fan kind
of core?
Speaker 2 (23:19):
Yeah?
Speaker 5 (23:19):
Yeah.
Speaker 3 (23:20):
There was a Major League Baseball draft prospect this year
with the name Jack Bauer, which means like you think
about it and it's it's basically his parents were watching
twenty four in the mid two thousands had the last
name Bower, and we're like, we're gonna name him Jack
because it was it was like right in line with it.
Speaker 2 (23:40):
Kind of like.
Speaker 3 (23:40):
It's sometimes you're like, oh, like how could this be
a thing, But it's kind of like how there are
a bunch of like shacks that were born after Shaquille
O'Neal went to the NBA.
Speaker 2 (23:49):
A ton of elsa's running around right now.
Speaker 3 (23:51):
Well, the ones that you feel bad for are all
of the dinarises, you know, from like twenty seventeen, twenty eighteen,
because by twenty nineteen twenty twenty, you couldn't have Adannaris.
Speaker 2 (24:00):
Yeah you know, but what are you gonna do?
Speaker 3 (24:04):
Let's see, so we talked about K shaped economy. Oh,
let's talk about this because I've been seeing this making
the roundsday. US companies announce the most job cuts for
any October more than two decades, according to data from
outplacement firm Challenger Gray in Christmas. So it's not to
say the Challenger Gray and Christmas is wrong, but this
(24:25):
report typically has absolutely no signal value in terms of
what it means for the next month, quarter, or year.
Uh And so as such, I don't think this is
a valuable signal in any way, shape or form. They
can be useful in hindsight, but hindsight is not something
that you can make investment decisions based on. So I
(24:48):
know that like, this has been getting a lot of
chatter today since it was released, but I'm just not
sure there's much meat on this bone. I'm not saying
that this is good Like, no, this is still a
bad number. You don't want to see this, but it's
not indicative of where the US economy may or may
not be heading, right.
Speaker 4 (25:04):
I mean, if you think about it for a moment.
It's not as though layoffs only occur in October. So
first things first, what use is there in comparing single
month layoff announcements across multiple years. I don't find much
value in that. If you have data on the full year,
and they do and it is still elevated, I get that, But.
Speaker 2 (25:25):
There's just better.
Speaker 4 (25:26):
Data points for us to look at, right Like, you know,
how many people are actually filing for unemployment? Great number
to look at to try and confirm are we seeing
an elevated firing market right now? Are we seeing elevated
problems at this moment. We don't get that data compiled
right now because the government shut down. But I'm just
not finding this to be terribly useful information. All of
(25:47):
that haven't been said. The economy and the markets have
been on a direct upswing really since the return out
of COVID recepsion back in twenty twenty, with very few
blips on the radar, right I mean, I mean, realistically,
you had a inflation fuel downturn back in twenty twenty two,
(26:10):
a tariff fuel downturn back in April of this year,
but other than that, you haven't had much and quite Frankly,
if I look beyond the COVID recession, which if you blinked,
you missed it, we have not had any sort of
prolonged economic and market downturn since the Great Recession? Am
(26:30):
I stretching the truth by saying something like that, Chuck?
Speaker 2 (26:33):
In any meaningful way?
Speaker 4 (26:34):
I mean prolonged. There hasn't been a recession since then, right,
I mean twenty twenty twenty twenty Desidator recession. But in
terms of any sort of prolonged economic effects, there weren't any.
Speaker 2 (26:48):
Well, there were, but they weren't recessionary ones.
Speaker 3 (26:50):
We just threw a bunch of money at the thing,
and okay, like within a year, it was like wow,
Like now the big problem we have is we have
too much money chasing too few goods inflation, you know, Like, yeah,
it's we haven't had a recession in seventeen years.
Speaker 4 (27:04):
And what's wild about that is it means that the
entire population under the age of forty has really.
Speaker 2 (27:09):
Never invested through a real recession. No, they haven't.
Speaker 4 (27:14):
And look, plenty of folks that are listening right now
in seventy years old know what that's like and have
been through it. But for those who are working today
and funding their future and looking ahead. You have to
acknowledge that for the vast majority of people, right, everybody
under the age of forty, have never truly worked and
(27:35):
invested through a prolonged economic downturn like we've seen.
Speaker 2 (27:41):
On many occasions.
Speaker 3 (27:42):
Sucks, by the way, It's like recessions are not fun
in any way, shape or form.
Speaker 4 (27:49):
The question to be asking yourself if you find yourself
in that position, or even if you have lived through
them and invested through them before, is how prepared do
you feel? Because they aren't predictable in terms of they come.
But I can tell you that one of the best
times to be preparing for them is when the economy
is still chugging along and markets are near all time highs. Right,
that is the time to do the prep work, not
(28:10):
when the market's already fallen by thirty percent and you're
threatening to lose your job.
Speaker 2 (28:15):
If you aren't feeling as.
Speaker 4 (28:18):
Prepared as you could be for the possibility of a downturn,
please give the folks at Armstrong Advisory Group a call.
It's not that we have any idea when one is coming,
but we sure do have the tools and knowledge to
help you build a plan to address a future downturn.
We work with clients across the country. We have offices
(28:39):
located throughout New England and we offer free consultations on
this very subject. If you would like to book one,
call us at eight hundred three nine three for zero
zero one. You can book time for us to call
you back at Armstrong Advisory dot com. But that number
once again eight hundred three nine three for zero zero one.
Speaker 1 (28:55):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or any Armstrong
guide to specific financial, legal or tax advice. Consult your
own financial, tax into state planning advisors before making any
investment decisions. Armstrong may contact you to offer investment advisory services.
Speaker 3 (29:10):
Mike wall Street journalized the list of airports that may
start to see flight cancelations as of tomorrow.
Speaker 2 (29:17):
Oh, I hadn't seen that. It's forty of them, so
just bear with me.
Speaker 3 (29:21):
Should just try to go through All of them are
just like the big anyones we need to be aware of.
Speaker 2 (29:26):
Phoenix Sky Harbor.
Speaker 4 (29:27):
Just list every airport in the country and tell us
whether or not there will be a shutdown.
Speaker 3 (29:31):
Phoenix Sky Harbor, Lax, San Diego International, San Francisco, Denver,
Fort Lauderdale, Hollywood, Orlando, Miami, Tampa, Atlanta, Honolulu, Chicago, Midway
and O'Hare, Indianapolis, Cincinnati, Louisville, Logan, BWI, Detroit, Minneapolis, Saint Paul, Charlotte, Newark, JFK, LaGuardia, mccaren, Portland, Philadelphia, Memphis, Dallas,
(29:59):
Love And and Fort Worth, Houston, Hobby, Houston, Bush, Salt
Lake City, Reagan, Dulles, and Seattle, Tacoma. So all of them,
it's your biggest airports in the country. And hear Boston, Uh, Logan, h.
Speaker 2 (30:13):
Boston Logan Did you say Logan?
Speaker 4 (30:15):
I said Logan. Yeah, for those in the logan is Boston.
He announced the cities of every other airport.
Speaker 2 (30:21):
That's not true.
Speaker 3 (30:22):
You mixed because if I saw b w Y, the
Baltimore people are like, yeah, you see us, And I'm like,
of course, I do. You know the people that are
out in Uh you know what else did we do?
Speaker 2 (30:34):
Yeah? We did.
Speaker 3 (30:35):
I did a little lax like people know that. You
know it's lax. So you know, you gotta you gotta
give the people what they want. That's what this is
all about it's a you know, give and take. And
with that in mind, let's take a quick break and
then we are going to have Paul A Monica from
Barons on after this and uh, we'll chat with him.
Speaker 1 (30:55):
Here The Financial Exchange every day from eleven to noon
non Serious XM's business radio Channel one thirty two. Keep
it here for the latest business and financial news and
the trends on Wall Street. The Financial Exchange is now
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(31:17):
streams live on YouTube. Subscribe to our page and stay
up to date on breaking business news all morning long.
Face is the Financial Exchange Radio Network.
Speaker 3 (31:39):
As promised, we're now joined by the one and only
Paul Monica from Barons. We're gonna be talking a little
bit about prediction markets and brokerage firms.
Speaker 2 (31:51):
Paul, How you doing today? Good?
Speaker 6 (31:54):
Thanks?
Speaker 2 (31:54):
How you guys doing good?
Speaker 3 (31:56):
So, I think one of the things that a lot
of people don't realize about prediction markets. They are regulated
futures contracts correct, correct.
Speaker 6 (32:04):
Yes, the ones that you're seeing all places like robin
Hood which have really you know, increased their presence in
this market over the past couple of months. They are
regulated by the CFTC, so you have to be careful
and make sure that you if you're on any platform
that doesn't have the blessing of the CFTC, you gotta
(32:26):
be careful.
Speaker 3 (32:28):
So I naturally get my old fogy hat on, and
when I see brokerages trying to offer you know, futures
bets on their platforms, immediately I say, well, this is
boring the line between gambling and investing, and this isn't
gonna end well, I mean, right, like, that's that's kind
of how I feel. But obviously these companies think they
(32:48):
can make a bunch of money on it, and I
understand the financial incentives from their perspective.
Speaker 6 (32:53):
Yeah, it's any investor that is doing this does have
to be very careful because it is increasingly blurring the
line between investing for the long term and making short
term trades that might be considered by some to be gambling,
(33:14):
legalized gambling. I mean there's a reason that uh, you know,
one of the companies that is stepping up in prediction markets,
uh the you know, the the CME there. They have
a partnership with FanDuel with you know, the company that
owns that popular sports betting site. So it's hard not
(33:35):
to think of these as uh, you know, kind of gambling.
But what you're doing with poly Market and call She
you call she is uh, you know, partnering with Robinhood,
You're you're getting the ability to make these binary calls
on certain events. And some of them are important, uh
(33:57):
you know, financial and economic indicators, like what's going to
happen with fed raid cuts, But you know there are
some that are sports related and pop culture related, and
you know that I think, you know that may be
a little bit less about hardcore investing, but I think
you're right. Robin Hood Interactive Brokers another firm that is
(34:19):
stepping up its presence in this market. They do see
it as potentially a new lucrative revenue stream, particularly from
younger users. And then you have other companies like Schwab
that are taking a lot more of a careful and
cautious approach to this business that have not yet stepped
their dip their toe in it.
Speaker 3 (34:40):
Paul, I'm old enough at this point now that I
no longer fall into you know that twenty five you
know to thirty five demo and you know, I'm not
the lazy millennial anymore. Now, I'm the mature you know,
the mature millennial who you know knows what's going on.
Speaker 6 (34:57):
Obviously, Yeah, the geriatric millennial.
Speaker 2 (35:00):
I believe exactly exactly that that's me.
Speaker 3 (35:03):
So what I do know is, you know, from the
twenty five twenty seven year olds that I interact with,
I would say a significant majority of men in that
demo have a sports gambling problem at this point. And
I'm just trying to look at this and figure out
how this, like adding this stuff into brokerage accounts can
(35:26):
be in any way a positive, because we're seeing that
when you have access to this just in your pocket,
it becomes a problem in a way where if you
have to go to a casino to place a bet,
it's it's just it's different. You don't have the same accessibility.
I just am I wrong in that this just feels
like it's going to create additional societal problems? Or am
(35:46):
I just old fogying way too hard on this?
Speaker 6 (35:50):
I mean maybe it's it's a.
Speaker 2 (35:53):
Little bit in between. I mean, I think you.
Speaker 6 (35:55):
Are on right that the brokerage firms that decided to
get involved in this business they need to do a
very good job of educating their consumers about how this
is different from investing, how you don't want to get
out of control. But I don't think that's any different
(36:16):
than obviously what anyone that's uh you know already you know,
using DraftKings or FanDuel to to bend on sports need
to be doing as well. And bottom line, I mean,
there are risky types of investments even in the stock
market that you know, you know, anyone can get out
(36:40):
of hand if they go overboard, whether or not it's
buying something like Apple or Microsoft or a you know
other mature magnificent seven company, or you know, betting on
meme stocks. I think, you know, the the issue isn't
necessarily that the practice is bad. It's just that people
have to obviously keep in mind that you know that
(37:03):
they have to show good digital hygiene if you will,
and not go overboard with these types of speculative bets,
whether or not it's on you know, the next NBA
game or you know, the next fed raid cut.
Speaker 3 (37:21):
Very good, Paul, appreciate the time and have a great
rest of the day in a great weekend.
Speaker 6 (37:26):
Great thanks a lot. YouTube Chuck appreciate it.
Speaker 3 (37:29):
That is Paul Monica from Barons taking a quick look
at markets as we head towards the top of the hour.
Dow is now off four hundred and sixty five points
almost one percent, the S and P's off seventy nine
points almost one a quarter percent, and the nasdak can
Posite down four hundred and fifty points about one point
nine percent.
Speaker 2 (37:46):
So still continuing to.
Speaker 3 (37:47):
See some growing red through equity markets right now. We
do have the ten year treasury coming back in a
little bit, down seven point six basis points to four
point eight one percent, so that has the potential to
help mortgage rates a little bit heading into the weekend,
but equities struggling so far this week just has not
(38:07):
been their best showing to this point. We are done
for the day, but don't worry. Smorrows Friday, we're gonna
be back, so you can hang out with us then
and we'll see you on tomorrow's show.
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