October 3, 2025 • 38 mins
Chuck Zodda and Mike Armstrong discuss AI data centers sending power bills soaring. What are the benefits of having a data center near you? Jess Bezos says AI is in an industrial bubble but society will get 'gigantic' benefits from the tech. Boeing likely to record billions in charges over 777X debut delay. Paul LaMonica (Barron's) joins the show to chat about pest control company that is AI proof.
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Episode Transcript
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Speaker 1 (00:00):
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(00:20):
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(00:42):
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(01:06):
and Mike Armstrong.
Speaker 2 (01:11):
Chuck, Mike and Ben with you. And as we take
a look around the markets today, we've got equities continuing
to push indices two new all time highs. The Dow
Jones Industrial Average up three hundred and seventy eight points
about three quarters of a percent. SP five hundred up
twenty seven points about zero point four percent. NAZDAK actually
(01:34):
lagging a little bit today, only up point two percent
or forty five points, but overall, all three major US
indices in positive territory, and even the cute little Russell
two thousand getting in on the action up about one
and a half percent today. Also up today yields on bonds,
which means prices on bonds are down. We've got the
ten year Treasury right now. It is up two point
(01:57):
one basis points to four point one point one one percent.
According to Mortgage News Daily, the national thirty year fixed
rate mortgage stands at six point three six percent, down
one basis point since yesterday, in a little bit lower
than the six and a half range that it was
at throughout much of the early part of September before
it dipped into the low sixes later in the month.
(02:18):
Post FED meeting, taking a look at commodity markets. Oil
West Text Intermediate up sixty one cents an ounce, not
sixty one cents nounce sixty one cents a barrel, hope
not announce, but we're up per ounce. That'd be very expensive.
Oil six sixty one cents a barrel to sixty one
to oh nine on West textas Intermediate, and Gold is
(02:39):
up thirty five dollars announced to thirty nine oh three
and ten cents. Not a new all time high yet,
but knocking on the door again after getting north of
that thirty nine hundred mark for the first time ever
on Wednesday. So we'll see where gold ends up moving
and if it can close the week with another all
(03:00):
time high. Mike, anything catching your eye in markets at all?
Speaker 3 (03:04):
Uh No, But I had one stat that I just
saw during the break that I thought was worth mentioning.
Nearly one in five US homeowners with a mortgage today
now has a rate of at least six percent. That's
the highest share since twenty fifteen, and it also now
exceeds the portion of mortgages that are under three percent.
Speaker 2 (03:22):
Yeah, so you have a fewer people that are mortgage
locked into their homes it still, you know, does suggest
that the vast majority of people with mortgages do have
some you know, mortgage lock. That is probably you know,
creating a little bit of friction in the housing market.
But every month that you go that is going to
be improving because there still are people that say, well,
(03:43):
I don't want to give up my three percent mortgage,
but the job I'm taking is across the country, and
so I've got to sell the place, move and you know,
pay those higher mortgage rates. And so even though they
don't want to, there are people each month that are
making those decisions. And so you'll continue to see these
share of mortgages north of six percent growing overall, as
(04:04):
you know, at least as long as we continue to
see national mortgage rates in that ballpark.
Speaker 3 (04:08):
Yeah maybe I know you get this question too, but
I get the question all the time. What's going to
fix the housing market? Where am I going to see
inventory tick up? And what I'm going to see mortgage
rates come down? My answer is, you would really not
like to see the economy that will cause that happen.
Speaker 2 (04:22):
If you want mortgage rates back in mortgage rates in
the fives, you could probably get briefly with a mild recession,
mortgage rates in the fours, it's gotta be ugly. You
need something pretty ugly going on, because remember, mortgage rates
in the fours mean that you need the ten year
treasury probably in the mid twos, if not a little
(04:45):
bit lower. Long, long way to go to get there,
is what I'm saying. Peace from Bloomberg AI. Data centers
are sending power bills soaring. The subhetter wholesale electricity costs
as much as two hundred and sixty seven percent more
than it did five years ago in areas near data centers.
That is being passed on to customers. And yeah, this
(05:09):
is something that we've been talking about for quite a
while now, and it's just the data that you're getting
on It is very much suggesting that this is going
to get much worse because the scale of construction of
data centers is moving up exponentially over the next couple
(05:29):
of years from where it was in the last couple.
Speaker 3 (05:32):
One thing I don't fully understand about this is just
how hyper localized these markets are. Like I don't know
of a lot of businesses that are really excited about
building data centers here in New England, so I'm curious
if we're going to be more insulated to the price
hikes on electricity than say Wisconsin. That I chose Wisconsin
(05:53):
because I know of at least one data center going
in there, But I'm sure that there are other markets
that are more attract Dave Hawaii. They're not going to
build a ton of data centers in Hawaii, would be
my guess. And so are those markets there for more
insulated to price hike?
Speaker 4 (06:10):
Say, I'm just not sure.
Speaker 2 (06:12):
Yeah, And and and the question that goes along with this,
like what's going to matter is it's two pieces. Really,
It's can you in those areas keep up with construction
of power plants to supply the additional generation that you need.
The answer to this point has been no, but maybe
you start to see, you know, some improvements on the
(06:34):
permitting process that can speed that up. But the other
piece then is, Okay, it's not just the power generation
that you need, it's the fuel for the power generation.
Does that shift things when it comes to cost of fuel?
And not just on that side, but remember the other
piece that we've largely enjoyed in the Northeast, that again,
(06:56):
even though we've we've always had kind of a higher
we've we've had higher electricity prices because of how we
get net gas to the Northeast, but ultimately cheapernt gas
in the United States still allows us to have, you know,
cheaper fuel than we otherwise would, even though it's no
more expensive because we've taken on a big ship and
make it really cold and ship it around in everything.
(07:19):
If you start seeing that gas prices moving up on
a consistent basis, which the reason why that could happen
is because of a decline in fracking activity in the US,
which is where the vast majority of nat gas is
produced in the US, and the US is by far
the largest producer of gnat gas in the world. If
that declines at the same time that you're building more
(07:40):
gnat gas plants to power new data center construction, look.
Speaker 3 (07:44):
Out, Yeah, I do wonder about this. Forget about this
from an artificial intelligence perspective, even from an electricity cost perspective. Sure,
for those cities that are attracting these data centers, is
this an attractive development opportunity?
Speaker 2 (08:00):
Right?
Speaker 3 (08:00):
Like if you are I don't know anywhere in the
Ross Belt. Really, some of these areas that have just
been decimated over the course of the last few decades,
Detroit comes to mind, where you have very cheap land,
relatively cheap electricity.
Speaker 4 (08:17):
Is this the I guess, what does this.
Speaker 3 (08:20):
Do for long term development for your area? Because it's
not as though these are going to be long term
jobs that are coming to your area.
Speaker 2 (08:29):
Right.
Speaker 3 (08:30):
If you build a data center, you're going to need
to house the workers that are building it. If you
build electricity generation plants to support those data centers, you're
going to need those.
Speaker 4 (08:39):
Construction costs as well.
Speaker 3 (08:42):
But are you actually adding anything long term to your
economy if they're just data centers that pay a little
bit of property taxes and suck up a whole lot
of electricity and don't actually hire anybody.
Speaker 2 (08:53):
So let's talk about the benefits, because there are some
that I do think are out there. The first is
you do still need people to maintain the data center. Yep,
these things don't just happen in a vacuum. There are
things that break on a regular basis. You need to
make sure they're functioning properly. I don't know exactly how
many people you necessarily need per you know, you know
(09:16):
semiconductor that you're using, or you know, per server racker
you know, however you want to measure it, but you
do need people to maintain these, so there is you know,
some job growth that does happen as a result of that.
The other piece, if you are saying, hey, this is
going to be a hub for data center construction in
the future, then it's very possible that suppliers and related
(09:39):
businesses move closer to have shorter supply lines to supply
future growth, and you get the people that work in
those businesses.
Speaker 3 (09:46):
So if I want to have be a data center hub,
I may also have semiconductor manufacturers in the area.
Speaker 4 (09:52):
As the argument, not even manufacturing.
Speaker 2 (09:54):
You could have you know, companies that make server racks,
companies that make cooling fans, companies that make uh, you
know whatever else goes into these things that I can't
think of right now, all those other you know, supplemental pieces.
You can need those other things that this does. Hey,
if you have you know, a big data center, doesn't
it kind of send a big signal to the world, Hey,
(10:16):
we're you know, a high tech hub, and maybe you
get tech companies you know that may be on the
software side of things that say, yeah, we want to
locate in an area that is, you know, you know,
trying to develop technologies of the future.
Speaker 3 (10:30):
You could get some of that that goes on. Yeah,
I'm not sure about that part, or maybe think so.
I don't think of a data center as the innovation hub.
Speaker 2 (10:40):
Let's think of it not not in terms of data center,
but let's think of it this way. If I tell people, hey,
open eye, Open AI is building in our town, do
other AI related businesses say, yeah, we want to be
close to that because this is a city that is
committed to help AI companies build, right like that kind
(11:03):
of thing, you know, like those things.
Speaker 4 (11:06):
I definitely don't think it's a net negative.
Speaker 3 (11:08):
I'm just wondering how much of a positive is it
for these areas that are promoting this development.
Speaker 4 (11:16):
It's tough for me to read.
Speaker 2 (11:18):
Another thing that I'd be curious about. And I don't
think we're at this point yet. But what if you
have something that's kind of the reverse of what we
normally see for you know how, when when sports teams
go to try to build new stadiums, they basically try
to suck up a bunch of tax revenue to do it,
and it's generally a horrible investment for localities. What if
(11:38):
you can actually but like, what if we've turned so
much against data center construction now because we've talked about
this a lot on our show, Like they're huge, you know,
costs in terms of resources, whether you're talking water, electricity.
You know, we've had, you know, a couple of new
data center projects that have been voted down in recent
months nationwide. What if it gets to the point where hey,
(12:02):
open Ay says, yeah, we want to build a new
data center near your town and we're gonna throw in
a billion dollars for local infrastructure improvement.
Speaker 3 (12:12):
Then I've got a great idea for the Muzzy Forward
site right down the road here.
Speaker 2 (12:15):
Right like it's you say, oh, like this is interesting. Now,
I don't think I've seen much along those lines to
this point, but maybe that's where this goes and and
and that could be you know, another positive for localities.
So we'll have to see how it evolves from here.
But ultimately, electricity costs are gonna be one of the
things that we reckon with on this because we're not
(12:37):
prepared to uh to build out that kind of capacity
on such short notice. Let's take a quick break here.
When we come back let's do a little bit of trivia,
and then we're also talking a little bit about Jeff
Bezos' comments on the AI boom right after this.
Speaker 1 (12:54):
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Speaker 2 (13:33):
All right. Time.
Speaker 5 (13:33):
Now for a little trivia here on the Financial Exchange,
and we can do a little run of stock market
related trivia questions here. So today's trivia question is, over
the past twenty five years, how often did the S
and P five hundred have a down year? Over the
past twenty five years, how often did the S and
(13:54):
P five hundred have a down year? Be the third
person to text us six seven three six two one
three five with the correct answer, and you'll win a
Financial Exchange Show t shirt. The third correct response will
be our winner. See the complete contest rules at Financial
Exchange Show dot com.
Speaker 2 (14:11):
Jeff Bezos is out in Italian Tech Week right now
in tour in Italy and gave a speech talking about
what he's seeing in artificial intelligence right now, and I'll
just give you his quotes just so they can speak
for themselves. This is kind of an industrial bubble. The
first thing that happens is that stock prices get disconnected
(14:34):
from the fundamentals of a business. The second thing that
happens is people get very excited, like they like they're
taught today about artificial intelligence. And during bubbles, every experiment
or idea gets funded, the good ideas and the bad ideas,
and investors have a hard time in the middle of
this excitement distinguishing between the good ideas and the bad ideas.
And that's also probably happening today. But that doesn't mean
(14:55):
that anything that is happening isn't real. AI is real,
and it's going to change every industry.
Speaker 3 (15:01):
I don't always agree with Bezos, but I feel as
though he does sum up my views on what we're
seeing right now pre succinctly.
Speaker 2 (15:08):
Yeah, two things can be true. Number One, there is
going to be massive change that we can not even
comprehend right now because of AI, and we're also probably
wasting a whole bunch of money doing it.
Speaker 4 (15:19):
By the way, Italian Tech Week, what about it? Can
you name an Italian tech company?
Speaker 3 (15:26):
Maybe that's why they're having Italian Tech Week, Michael, Maybe
I had Google's Gemini tell me who are the big
tech players? They named a few, including Bending Spoons and
companies like NETSI and sc Scallop.
Speaker 2 (15:41):
Hey, what about Ferrari.
Speaker 4 (15:44):
Yeah, I don't think that counts.
Speaker 2 (15:45):
It's technology, yeah, very fast technology.
Speaker 3 (15:49):
So but yeah, I mean, yeah, two things that once
can be true. We could be in a bubble and
it can still be the most innovative technology since the Internet.
Speaker 4 (15:58):
See the Internet, the.
Speaker 2 (16:00):
Internet was a bubble. It still is amazing, you know.
It's it's you can still have a whole bunch of
good come out of a bubble afterwards, even if there's
a lot of wealth that ends up being destroyed, because
not all the investment ends up going to you know,
worthwhile sources. It's just kind of how it is.
Speaker 3 (16:20):
If the if AI is the most innovative technology since
the Internet, what was the previous most innovative technology before
the Internet.
Speaker 2 (16:30):
Oh, good question. So I don't think so, because I
don't think nuclear power changed the world.
Speaker 4 (16:38):
Nuclear weapons did, yes.
Speaker 2 (16:42):
But no nuclear power. I don't think was that I'm
going to go with. I mean, given like just how
the Internet did change things, I think you probably have
to look at either traveler, the internal combustion engine that
(17:03):
far back.
Speaker 3 (17:03):
Huh when did the mainframe computer come out late fifties,
early sixties. I mean that led to eventually interconnected Internet.
Speaker 2 (17:12):
That's like saying that the alphabet led to the typewriter.
Speaker 4 (17:15):
Yeah, you know, yeah, I.
Speaker 2 (17:19):
Might go airplane or internal combustion engine.
Speaker 4 (17:22):
Yeah.
Speaker 2 (17:23):
I mean you got to remember think about how much
the Internet changed things, right, yeah.
Speaker 4 (17:27):
Yeah, no, no, you're right. Air travel might be it.
Speaker 2 (17:31):
I was talking to someone yesterday about this. But when
when you were a kid and there was no Internet,
if you're trying to like plan a family vacation, you
kind of had three ways that you could go about it.
You could find a travel agent, you could buy, you know,
a travel guide, or you could go to Triple A
(17:51):
and they'd have like these books that they would give
you about like different things. Except the Triple A books
weren't just like hey, here are the hotels to stay in.
It's like take a left of this house, and the
farm next to it loves to take people in for
you know, vacations.
Speaker 3 (18:06):
If you have a more innovative technology. Again, this is
pre internet post either internal combustion engine or flight textas
show at six one, seven three, six, two thirteen eighty five.
I'm just curious what we're missing in between there, because
there's gotta be something.
Speaker 4 (18:25):
Yeah, it's.
Speaker 2 (18:28):
It's so you're looking for something from like the sixties. Yeah, yeah,
I mean, look, if if you want to go this direction,
you could talk about like polio vaccine or something like that.
It's not the sixties. That was I want to say, No,
I think that was like forty one. Yeah, yeah, let
me see when it was? Yeah was Sulk was the
(18:52):
guy who did it? History? Here we go, let's see, uh,
yeah it was. It was it forty eight. Let's go
fifty two, fifty two like that. That that might be
up there.
Speaker 3 (19:08):
First nuclear bomb was tested in forty five. Yeah, we're
in that ballpark.
Speaker 2 (19:13):
Yeah think Okay, So anyways, Mike, what's the text number again?
Speaker 4 (19:16):
Six one, seven, three, six, two, thirteen eighty five.
Speaker 3 (19:19):
You can text us with what you think was the
most innovative technology prior to the Internet.
Speaker 2 (19:23):
Let's take a quick break. When we come back, we
got Wall Street Watch, we got the trivia answer, and
we're talking about why job seekers and hiring managers hate
using AI for the process.
Speaker 1 (19:40):
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 look at
what's moving market so far today right here on the
Financial Exchange Radio Network.
Speaker 5 (20:00):
Well, market are in positive territory as they look to
close out the week on a positive note. The Dow
Jones is up three hundred and forty one points, or
zero point seventy five percent. The S and P five
hundred is up over twenty six points or four tenths
of a percent, The Nasdaq's up over fifty six points
or one quarter of a percent, and the Russell two
(20:20):
thousand is up over one point three four percent as
Day three of the government's shutdown rolls on. Right now,
Rare Earth Minor USA Rare Earth is up seventeen percent
after CEO Barbara Humpton told CNBC that the company is
in quote close communication with the White House. Game Stop
shares are off one point eight percent after the company
(20:41):
said in a filing it's selling a combination of assets
ranging from common stock to debt for an undisclosed amount.
Applied Material shares are down two point three percent after
the company acknowledged in a regulatory filing that new US
export restrictions will hurt revenue. Applied Materials said the restrictions
will lower fourth quarter revenue by about one hundred and
ten million dollars and its fiscal year twenty twenty six
(21:03):
revenue by around six hundred million dollars. Uranium Energy is
down two point eight percent after planning a secondary offering
of fifteen point five million shares. Goldman Sachs is the
sole underwriter. Entergy shares are up two point seven percent
after announcing plans to provide power for Google's plan technology
investment worth around four billion dollars in Arkansas. As part
(21:25):
of the investment, Google will develop a new data center
in West Memphis, Arkansas. The companies first in the state,
and finally, Gordon Hasket Research Advisors upgraded Zillo to buy
from hold sending the real estate platform up over three
and a half percent. The Wall Street researcher said the
recent sell off is overdone, creating an attractive buying opportunity.
Zillo has declined seventeen percent over the past two weeks
(21:47):
on concerns regarding competitive encroachment and legal woes. I'm Ben Kitchen,
and that is Wall Street Watch, and we still don't
have a winner for the trivia question. So let me
throw that at you one more time.
Speaker 2 (21:59):
Here.
Speaker 5 (22:00):
Over the past twenty five years, how often did the
S and P five hundred have a down year? It's
more than five and less than ten. That should be
enough of a hint.
Speaker 4 (22:10):
For you, Ben.
Speaker 3 (22:12):
I mean, if nobody got the answer yet, I think
there's no winner. We had some text responses to our
question about the biggest innovations in the world since prior
to the Internet.
Speaker 4 (22:24):
Yes, what do we got, Ben?
Speaker 5 (22:27):
We've got mostly cell phones that seems to be the
popular one. We've got television, refrigeration, interchangeable parts for the
steam engine, wireless telephones. But I think the one here
that was the most interesting that I saw that came
from the two six to two area code is the
introduction of plastics in the nineteen thirties completely changed consumer
products and many other things.
Speaker 2 (22:48):
Yep, yeah it did.
Speaker 3 (22:50):
Cell Phones is an interesting one, but I can't say
that it revolutionized things quite as much as the Internet
did nearly as much. Rather, no plastics did. Oh, plastics
absolutely did. I mean it's you don't get the Internet
without plastics. It literally could not exist. Yeah, those are
(23:10):
some good ones.
Speaker 4 (23:11):
Yeah, thank you for those.
Speaker 2 (23:14):
Bike mechanic James Peregrine applied online for a job at
ARII last year and was pleased to get an email
inviting him to an interview, but the interview turned out
to be a series of recorded questions from ARII managers
asked by an artificial intelligent app that video recorded his answers.
The thirty four year old Malden resident tried twice but
said he couldn't bear talking to the app. And basically,
(23:35):
what you're getting here, and this is not just happening
in job hunting, but what you have there is hiring
managers saying Okay, we can interview more people if we
use AI to interview them. You have people not writing
their own resume but having AI write their resume for them,
and then you basically end up with like the extension
(23:57):
of this is then hey, do you get one AI
talking to the and then you need another AI to
tell you what they were saying to each other. This
is not just happening here the other place. And look,
I'm not plugged into this world at this point just
because like I'm married, but apparently online dating is gone
this way as well. Oh good. Where it's just like
profiles are just all AI generated and you know, people
(24:19):
are not writing their own text messages to each other,
They're just using AI to write like what they think
they should. But like, so this is where we're running
into a problem that I think the ultimate resolution is
going to end up, unfortunately for AI, being we're gonna
stop trusting each other online even like more than we
already do, and it's just gonna be a return to hey,
(24:42):
let's do this in person, because that's the only way
that I know that you're you.
Speaker 3 (24:46):
I was talking to some people at a conference recently
which is all about AI and his financial services, But
the interesting conversations I was having was about other people
with teenage kids, and they were kind of explaining like
the use cases that their kids are using for AI,
and I just found it, I guess, weird but unsurprising.
(25:08):
It was almost like remember Magic eight Balls, Yes, it
was like that, by using AI for it? What should
I do today? Do you think it's a good idea
for me to apply to this school?
Speaker 2 (25:19):
Like? What bad?
Speaker 4 (25:20):
What terrible?
Speaker 3 (25:21):
Uses for artificial intelligence? But I guess unsurprising as a
you know, easily influenced teenager that you would be using
for that sort of thing.
Speaker 4 (25:28):
But many of the people I.
Speaker 3 (25:31):
Was sitting with with teenage children were like, oh, yeah,
this is the type of thing they're using for. And therefore, yeah,
I'm sure while you don't tell your parents about how
you write text to a potential, uh, somebody that you're
looking to go on a date with, I am sure
that it's all over that too. And yeah, what just
a strange dystopian future we're looking at.
Speaker 2 (25:51):
And the thing is, ultimately, in any of this, what
you're trying to find is a person who brings certain
traits to the table, whether it is, you know, hiring
for a job or in a relationship or whatever it
may be. And so if it gets to the point
where hey, everything's just being so aiified to the point
(26:11):
where you don't know what's real, you're gonna say, Okay,
I'm not gonna do this anymore. You got to come
in and sit down for the interview. Yeah, it's gonna
be wild when all of this technological innovation ends in
us not using it.
Speaker 3 (26:27):
Yeah, and look, we've seen some of that with the
Internet too.
Speaker 2 (26:33):
Totally totally, but it could be where this thing goes.
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Cushing and Armstrong do not endorse each other and are
not affiliated.
Speaker 2 (27:42):
Boeing's seven seven seven X is now slated to fly
commercially for the first time in early twenty twenty seven
instead of next year. This according to Bloomberg and people
familiar with the matter. The launch customer for the plane
is Luftanza, and they are reportedly already making plans for
(28:05):
these delays. This obviously is going to result in some
charges to Boeing because of you know, revenue they can't
book and additional costs related to the development. The estimates
are somewhere between two and a half and four billion
dollars in charges that they'll need to take. The plane
is also, by the way, already six years late, as
(28:25):
Bone has been kind of busy dealing with the seven
thirty seven Max and issues related to that aircraft for
you know, pretty much that whole time. And so it
does seem that you know, Boeing is still in the
process of trying to you know, turn the ship when
it comes to getting everything in order there and this
(28:46):
kind of the latest in additional issues for the aircraft manufacturer.
Speaker 3 (28:51):
Here's one thing I will say, it's kind of the
the first piece of really bad news we've had on
Boeing in some time. When's the last time we talked
about Boeing on this program in a negative light.
Speaker 2 (29:03):
It's been a while.
Speaker 3 (29:04):
Alaska Airlines situation and that was the beginning of last year.
Speaker 2 (29:07):
Yeah, a year and a half ago, almost two years ago.
Speaker 3 (29:10):
It feels like it's been a couple years of just
exactly what you want out of an airplane manufacturer, which
is silence.
Speaker 2 (29:17):
Yeah, which is good, like silent companies. So give them
credit on that front. And look if the biggest problem is, hey,
they're delays because we need to get this just right, fine,
you can deal with that. Yep, you can deal with that.
Just take a quick break. When we return, we're going
to be joined by Paul Almonica from Barons right after this.
Speaker 1 (29:39):
The Financial Exchange streams live on YouTube. Subscribe to our
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The Financial Exchange is life on Series XM's Business Radio
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the latest business and financial news from across the country
(30:01):
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Channel one thirty two. Face He's the Financial Exchange Radio Network.
Ladies and gentlemen the weekend.
Speaker 5 (30:20):
This segment of the Financial Exchange is brought to you
by the US Virgin Islands Department of Tourism. Looking for
a getaway that's easy, warm and unforgettable, Discover the magic
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and let's play off our trivia here. The question was
over the past twenty five years, how often did the
S and P five hundred have a down year? Winzer
(31:00):
was eight and that includes twenty eleven when it was
down by two one thousandths of a percent. Corey in
Westport is our winner and he will be taking home
a Financial exchangeow T shirt as promised.
Speaker 2 (31:12):
We're now joined by paul A Monica from Baron's here
to talk a little bit about Rollin's Incorporated stock. Paul,
how are you doing today?
Speaker 6 (31:22):
I'm good?
Speaker 2 (31:23):
Thanks, How are you doing well? So? Rollins is up
twenty six percent today. They are the company that owns
this year, yes, this year, not today. They're the company
that owns Orcin, Critic control a bunch of other exterminator brands.
Are there just more pest this year or what's going
on with them? Paul?
Speaker 6 (31:42):
Yeah, there's an analyst report from JP Morgan that I
wrote about where they initiated coverage and had a pretty
lofty price target of seventy you know, you know, significant
upside from current levels, and they were talking about how
this is really in somewhat of an AI proof stock. Yes,
it's true. You could probably go to Gemini or chat
(32:05):
GPT and ask hey, I saw some mouse droppings or
I've got bugs in the kitchen, how do I get
rid of them? But at the end of the day,
are you going to actually try and do that yourself
or are you going to spend for a professional and
exterminator to come and take care of those, you know,
(32:25):
rodents and insects. So that the bowl case on Rollins
is that this is a somewhat ai proof business and
you know, sales and earnings growth are pretty solid and steady,
and I don't think it's because there are more pests
out there. It's just that consumers want to get rid
of them.
Speaker 2 (32:45):
And is there a lot of consolidation in this space
that allows them to have pricing power as well? Or
is this you know, pretty well diversified when you look
at it.
Speaker 6 (32:57):
Yeah, no, that's a great point. I mean this is
still I think a fragmented business. A lot of mom
and pop, you know, local exterminators out there. But you know,
Rollins is by far, you know, the market leader. There
are some competitors, you know, Eco Lab, and then you've
got a publicly traded company called Rent to Kill, which
(33:20):
has you know, it owns Terminix and other big exterminator
brand but I think in the case of Rollins, with
Working and a lot of the other brands that it owns,
you know, it really does have that market power. So
I think that does help with regards to pricing and
sales growth.
Speaker 2 (33:39):
Well, we talked about the company as a whole. They
do about three and a half billion dollars in revenue
over the last twelve months. Margins are around twenty percent,
so it's it's a good business. Like, there's clearly money
that's that's being made there by the company. It's a
pest control company that's trading fifty times forward earnings. Help
me work through that, though, Paul, that.
Speaker 6 (34:01):
Is I think the biggest knock on the stock and
JP Morgan, their analysts are willing to give that a
pass and say that this is a company that has
outperformed its peers and deserves its valuation. But the rest
of the street is I think, you know understandably more
(34:21):
concerned like you are about that. You know, dare I
say exorbitant valuation for a company that you know, let's
face it is not in Nvidia. So that's why when
you look at the stock, this is not one that's
universally loved about almost you know, forty seven percent I
believe have a buy, forty seven percent have a hole,
(34:42):
and that remaining six if I'm doing my math correctly,
that adds up to one hundred. They actually have a
sell on the stock. So sometimes, you know, there are
cases where stocks that aren't universally loved by Wall Street
can actually be better values, you know, for investors, because
you have more side, more potential room for an analysts
(35:03):
to change their mind and say, hey, I'm going to
upgrade this stock because it's actually performing really well. But
that is I think a risk that investors need to
be aware of that this is a company that has
a stretched valuation. To put it mildly, the performance is great,
but you know, you can't go up and extend your
you know, multiple forever, especially in you know, a business
(35:26):
that again solidly growing. But we're not talking about you know.
Speaker 2 (35:31):
Ai, Paul, do you know if they're local branches? Are
they all owned corporately or are they franchised out to
local owners.
Speaker 6 (35:39):
That's I don't I don't know that that's a good
question that you know, I can look into for any
potential follow ups. And I'm not sure if this is
like a franchise model or if it's you know that
the corporation that rollins itself owns all of those you
know particular you know Exterminator, you know brands, you know
in them, you know the people that work for them.
(36:01):
But you know that's that is a great question.
Speaker 2 (36:03):
Very good, Paul. We appreciate you joining us today. Thank
you so much for the time. And a big congratulations
to the New York Yankees who had a nice little
night last night and uh put our our Red Sox
to bed in uh pretty impressive fashion actually when it
comes to what they did. So hope you enjoyed that night, Paul,
I did.
Speaker 6 (36:23):
I wasn't gonna bring it up, but that's very gracious
of you. We'll see if we can, you know, take
out the Blue Jays next. But uh, yeah, I mean
it was a it was a heck of a series.
Speaker 2 (36:33):
I was.
Speaker 6 (36:34):
I was worried last night, even though we apparently had
the better rookie pitcher on the mound. So that's nice.
Speaker 2 (36:40):
The thing about sports rivalries, Paul, you always got to
come meet in the middle at the end. It's just sports.
You gotta have fun with it. So yeah, you know,
I'll call you some names in the middle. You know,
we'll go at it, but uh yeah, when it's over, hey,
like we're we're just trying to enjoy the night. So
I appreciate you joining us today and have a great weekend.
Speaker 6 (36:56):
All right, thanks Sam, You guys appreciate it.
Speaker 2 (36:58):
That is Paul lamon Good talking about Rollins Incorporated. Mike,
what do you got for me?
Speaker 4 (37:04):
Do you think all nine of the Blue Jays fans
are gonna be at that game?
Speaker 2 (37:10):
Honestly, here's the thing he has ever been to a game. So, Mike,
you say that not Jase popular? Untrue. They're not popular
when they're not good. Yeah, the last time the Blue
Jays went on a real run might have the most
Ben probably knows exactly what I'm referencing, might have the
most impressive single play that like I've ever seen in
(37:31):
a in a in a playoff series, including just the
fans going nuts. Ben, you know what I'm referencing, Yes, sir, flip.
Oh my goodness, I still have dreams about that bat
flip it like it's It's one of my favorite sports
clips to watch, just because, first of all, that was
the series against the Texas Rangers where all these calls
(37:52):
were just all over the place from the umps and
Batista hits that home run, and just like the eight
different emotions that go through his face in the second
that he did, You're just like, oh whatstic Oh my goodness,
it's great. We are done for the day, done for
the week. Stocks broadly up still. We'll see if we
get any kind of shutdown resolution over the weekend. Either way,
(38:14):
the Financial Exchange is not shut down. We'll be back
on Monday and we will see you then.
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
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:20):
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Armstrong and Money Matters Radio do not compensate each other
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(00:42):
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(01:06):
and Mike Armstrong.
Speaker 2 (01:11):
Chuck, Mike and Ben with you. And as we take
a look around the markets today, we've got equities continuing
to push indices two new all time highs. The Dow
Jones Industrial Average up three hundred and seventy eight points
about three quarters of a percent. SP five hundred up
twenty seven points about zero point four percent. NAZDAK actually
(01:34):
lagging a little bit today, only up point two percent
or forty five points, but overall, all three major US
indices in positive territory, and even the cute little Russell
two thousand getting in on the action up about one
and a half percent today. Also up today yields on bonds,
which means prices on bonds are down. We've got the
ten year Treasury right now. It is up two point
(01:57):
one basis points to four point one point one one percent.
According to Mortgage News Daily, the national thirty year fixed
rate mortgage stands at six point three six percent, down
one basis point since yesterday, in a little bit lower
than the six and a half range that it was
at throughout much of the early part of September before
it dipped into the low sixes later in the month.
(02:18):
Post FED meeting, taking a look at commodity markets. Oil
West Text Intermediate up sixty one cents an ounce, not
sixty one cents nounce sixty one cents a barrel, hope
not announce, but we're up per ounce. That'd be very expensive.
Oil six sixty one cents a barrel to sixty one
to oh nine on West textas Intermediate, and Gold is
(02:39):
up thirty five dollars announced to thirty nine oh three
and ten cents. Not a new all time high yet,
but knocking on the door again after getting north of
that thirty nine hundred mark for the first time ever
on Wednesday. So we'll see where gold ends up moving
and if it can close the week with another all
(03:00):
time high. Mike, anything catching your eye in markets at all?
Speaker 3 (03:04):
Uh No, But I had one stat that I just
saw during the break that I thought was worth mentioning.
Nearly one in five US homeowners with a mortgage today
now has a rate of at least six percent. That's
the highest share since twenty fifteen, and it also now
exceeds the portion of mortgages that are under three percent.
Speaker 2 (03:22):
Yeah, so you have a fewer people that are mortgage
locked into their homes it still, you know, does suggest
that the vast majority of people with mortgages do have
some you know, mortgage lock. That is probably you know,
creating a little bit of friction in the housing market.
But every month that you go that is going to
be improving because there still are people that say, well,
(03:43):
I don't want to give up my three percent mortgage,
but the job I'm taking is across the country, and
so I've got to sell the place, move and you know,
pay those higher mortgage rates. And so even though they
don't want to, there are people each month that are
making those decisions. And so you'll continue to see these
share of mortgages north of six percent growing overall, as
(04:04):
you know, at least as long as we continue to
see national mortgage rates in that ballpark.
Speaker 3 (04:08):
Yeah maybe I know you get this question too, but
I get the question all the time. What's going to
fix the housing market? Where am I going to see
inventory tick up? And what I'm going to see mortgage
rates come down? My answer is, you would really not
like to see the economy that will cause that happen.
Speaker 2 (04:22):
If you want mortgage rates back in mortgage rates in
the fives, you could probably get briefly with a mild recession,
mortgage rates in the fours, it's gotta be ugly. You
need something pretty ugly going on, because remember, mortgage rates
in the fours mean that you need the ten year
treasury probably in the mid twos, if not a little
(04:45):
bit lower. Long, long way to go to get there,
is what I'm saying. Peace from Bloomberg AI. Data centers
are sending power bills soaring. The subhetter wholesale electricity costs
as much as two hundred and sixty seven percent more
than it did five years ago in areas near data centers.
That is being passed on to customers. And yeah, this
(05:09):
is something that we've been talking about for quite a
while now, and it's just the data that you're getting
on It is very much suggesting that this is going
to get much worse because the scale of construction of
data centers is moving up exponentially over the next couple
(05:29):
of years from where it was in the last couple.
Speaker 3 (05:32):
One thing I don't fully understand about this is just
how hyper localized these markets are. Like I don't know
of a lot of businesses that are really excited about
building data centers here in New England, so I'm curious
if we're going to be more insulated to the price
hikes on electricity than say Wisconsin. That I chose Wisconsin
(05:53):
because I know of at least one data center going
in there, But I'm sure that there are other markets
that are more attract Dave Hawaii. They're not going to
build a ton of data centers in Hawaii, would be
my guess. And so are those markets there for more
insulated to price hike?
Speaker 4 (06:10):
Say, I'm just not sure.
Speaker 2 (06:12):
Yeah, And and and the question that goes along with this,
like what's going to matter is it's two pieces. Really,
It's can you in those areas keep up with construction
of power plants to supply the additional generation that you need.
The answer to this point has been no, but maybe
you start to see, you know, some improvements on the
(06:34):
permitting process that can speed that up. But the other
piece then is, Okay, it's not just the power generation
that you need, it's the fuel for the power generation.
Does that shift things when it comes to cost of fuel?
And not just on that side, but remember the other
piece that we've largely enjoyed in the Northeast, that again,
(06:56):
even though we've we've always had kind of a higher
we've we've had higher electricity prices because of how we
get net gas to the Northeast, but ultimately cheapernt gas
in the United States still allows us to have, you know,
cheaper fuel than we otherwise would, even though it's no
more expensive because we've taken on a big ship and
make it really cold and ship it around in everything.
(07:19):
If you start seeing that gas prices moving up on
a consistent basis, which the reason why that could happen
is because of a decline in fracking activity in the US,
which is where the vast majority of nat gas is
produced in the US, and the US is by far
the largest producer of gnat gas in the world. If
that declines at the same time that you're building more
(07:40):
gnat gas plants to power new data center construction, look.
Speaker 3 (07:44):
Out, Yeah, I do wonder about this. Forget about this
from an artificial intelligence perspective, even from an electricity cost perspective. Sure,
for those cities that are attracting these data centers, is
this an attractive development opportunity?
Speaker 2 (08:00):
Right?
Speaker 3 (08:00):
Like if you are I don't know anywhere in the
Ross Belt. Really, some of these areas that have just
been decimated over the course of the last few decades,
Detroit comes to mind, where you have very cheap land,
relatively cheap electricity.
Speaker 4 (08:17):
Is this the I guess, what does this.
Speaker 3 (08:20):
Do for long term development for your area? Because it's
not as though these are going to be long term
jobs that are coming to your area.
Speaker 2 (08:29):
Right.
Speaker 3 (08:30):
If you build a data center, you're going to need
to house the workers that are building it. If you
build electricity generation plants to support those data centers, you're
going to need those.
Speaker 4 (08:39):
Construction costs as well.
Speaker 3 (08:42):
But are you actually adding anything long term to your
economy if they're just data centers that pay a little
bit of property taxes and suck up a whole lot
of electricity and don't actually hire anybody.
Speaker 2 (08:53):
So let's talk about the benefits, because there are some
that I do think are out there. The first is
you do still need people to maintain the data center. Yep,
these things don't just happen in a vacuum. There are
things that break on a regular basis. You need to
make sure they're functioning properly. I don't know exactly how
many people you necessarily need per you know, you know
(09:16):
semiconductor that you're using, or you know, per server racker
you know, however you want to measure it, but you
do need people to maintain these, so there is you know,
some job growth that does happen as a result of that.
The other piece, if you are saying, hey, this is
going to be a hub for data center construction in
the future, then it's very possible that suppliers and related
(09:39):
businesses move closer to have shorter supply lines to supply
future growth, and you get the people that work in
those businesses.
Speaker 3 (09:46):
So if I want to have be a data center hub,
I may also have semiconductor manufacturers in the area.
Speaker 4 (09:52):
As the argument, not even manufacturing.
Speaker 2 (09:54):
You could have you know, companies that make server racks,
companies that make cooling fans, companies that make uh, you
know whatever else goes into these things that I can't
think of right now, all those other you know, supplemental pieces.
You can need those other things that this does. Hey,
if you have you know, a big data center, doesn't
it kind of send a big signal to the world, Hey,
(10:16):
we're you know, a high tech hub, and maybe you
get tech companies you know that may be on the
software side of things that say, yeah, we want to
locate in an area that is, you know, you know,
trying to develop technologies of the future.
Speaker 3 (10:30):
You could get some of that that goes on. Yeah,
I'm not sure about that part, or maybe think so.
I don't think of a data center as the innovation hub.
Speaker 2 (10:40):
Let's think of it not not in terms of data center,
but let's think of it this way. If I tell people, hey,
open eye, Open AI is building in our town, do
other AI related businesses say, yeah, we want to be
close to that because this is a city that is
committed to help AI companies build, right like that kind
(11:03):
of thing, you know, like those things.
Speaker 4 (11:06):
I definitely don't think it's a net negative.
Speaker 3 (11:08):
I'm just wondering how much of a positive is it
for these areas that are promoting this development.
Speaker 4 (11:16):
It's tough for me to read.
Speaker 2 (11:18):
Another thing that I'd be curious about. And I don't
think we're at this point yet. But what if you
have something that's kind of the reverse of what we
normally see for you know how, when when sports teams
go to try to build new stadiums, they basically try
to suck up a bunch of tax revenue to do it,
and it's generally a horrible investment for localities. What if
(11:38):
you can actually but like, what if we've turned so
much against data center construction now because we've talked about
this a lot on our show, Like they're huge, you know,
costs in terms of resources, whether you're talking water, electricity.
You know, we've had, you know, a couple of new
data center projects that have been voted down in recent
months nationwide. What if it gets to the point where hey,
(12:02):
open Ay says, yeah, we want to build a new
data center near your town and we're gonna throw in
a billion dollars for local infrastructure improvement.
Speaker 3 (12:12):
Then I've got a great idea for the Muzzy Forward
site right down the road here.
Speaker 2 (12:15):
Right like it's you say, oh, like this is interesting. Now,
I don't think I've seen much along those lines to
this point, but maybe that's where this goes and and
and that could be you know, another positive for localities.
So we'll have to see how it evolves from here.
But ultimately, electricity costs are gonna be one of the
things that we reckon with on this because we're not
(12:37):
prepared to uh to build out that kind of capacity
on such short notice. Let's take a quick break here.
When we come back let's do a little bit of trivia,
and then we're also talking a little bit about Jeff
Bezos' comments on the AI boom right after this.
Speaker 1 (12:54):
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(13:16):
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Speaker 2 (13:33):
All right. Time.
Speaker 5 (13:33):
Now for a little trivia here on the Financial Exchange,
and we can do a little run of stock market
related trivia questions here. So today's trivia question is, over
the past twenty five years, how often did the S
and P five hundred have a down year? Over the
past twenty five years, how often did the S and
(13:54):
P five hundred have a down year? Be the third
person to text us six seven three six two one
three five with the correct answer, and you'll win a
Financial Exchange Show t shirt. The third correct response will
be our winner. See the complete contest rules at Financial
Exchange Show dot com.
Speaker 2 (14:11):
Jeff Bezos is out in Italian Tech Week right now
in tour in Italy and gave a speech talking about
what he's seeing in artificial intelligence right now, and I'll
just give you his quotes just so they can speak
for themselves. This is kind of an industrial bubble. The
first thing that happens is that stock prices get disconnected
(14:34):
from the fundamentals of a business. The second thing that
happens is people get very excited, like they like they're
taught today about artificial intelligence. And during bubbles, every experiment
or idea gets funded, the good ideas and the bad ideas,
and investors have a hard time in the middle of
this excitement distinguishing between the good ideas and the bad ideas.
And that's also probably happening today. But that doesn't mean
(14:55):
that anything that is happening isn't real. AI is real,
and it's going to change every industry.
Speaker 3 (15:01):
I don't always agree with Bezos, but I feel as
though he does sum up my views on what we're
seeing right now pre succinctly.
Speaker 2 (15:08):
Yeah, two things can be true. Number One, there is
going to be massive change that we can not even
comprehend right now because of AI, and we're also probably
wasting a whole bunch of money doing it.
Speaker 4 (15:19):
By the way, Italian Tech Week, what about it? Can
you name an Italian tech company?
Speaker 3 (15:26):
Maybe that's why they're having Italian Tech Week, Michael, Maybe
I had Google's Gemini tell me who are the big
tech players? They named a few, including Bending Spoons and
companies like NETSI and sc Scallop.
Speaker 2 (15:41):
Hey, what about Ferrari.
Speaker 4 (15:44):
Yeah, I don't think that counts.
Speaker 2 (15:45):
It's technology, yeah, very fast technology.
Speaker 3 (15:49):
So but yeah, I mean, yeah, two things that once
can be true. We could be in a bubble and
it can still be the most innovative technology since the Internet.
Speaker 4 (15:58):
See the Internet, the.
Speaker 2 (16:00):
Internet was a bubble. It still is amazing, you know.
It's it's you can still have a whole bunch of
good come out of a bubble afterwards, even if there's
a lot of wealth that ends up being destroyed, because
not all the investment ends up going to you know,
worthwhile sources. It's just kind of how it is.
Speaker 3 (16:20):
If the if AI is the most innovative technology since
the Internet, what was the previous most innovative technology before
the Internet.
Speaker 2 (16:30):
Oh, good question. So I don't think so, because I
don't think nuclear power changed the world.
Speaker 4 (16:38):
Nuclear weapons did, yes.
Speaker 2 (16:42):
But no nuclear power. I don't think was that I'm
going to go with. I mean, given like just how
the Internet did change things, I think you probably have
to look at either traveler, the internal combustion engine that
(17:03):
far back.
Speaker 3 (17:03):
Huh when did the mainframe computer come out late fifties,
early sixties. I mean that led to eventually interconnected Internet.
Speaker 2 (17:12):
That's like saying that the alphabet led to the typewriter.
Speaker 4 (17:15):
Yeah, you know, yeah, I.
Speaker 2 (17:19):
Might go airplane or internal combustion engine.
Speaker 4 (17:22):
Yeah.
Speaker 2 (17:23):
I mean you got to remember think about how much
the Internet changed things, right, yeah.
Speaker 4 (17:27):
Yeah, no, no, you're right. Air travel might be it.
Speaker 2 (17:31):
I was talking to someone yesterday about this. But when
when you were a kid and there was no Internet,
if you're trying to like plan a family vacation, you
kind of had three ways that you could go about it.
You could find a travel agent, you could buy, you know,
a travel guide, or you could go to Triple A
(17:51):
and they'd have like these books that they would give
you about like different things. Except the Triple A books
weren't just like hey, here are the hotels to stay in.
It's like take a left of this house, and the
farm next to it loves to take people in for
you know, vacations.
Speaker 3 (18:06):
If you have a more innovative technology. Again, this is
pre internet post either internal combustion engine or flight textas
show at six one, seven three, six, two thirteen eighty five.
I'm just curious what we're missing in between there, because
there's gotta be something.
Speaker 4 (18:25):
Yeah, it's.
Speaker 2 (18:28):
It's so you're looking for something from like the sixties. Yeah, yeah,
I mean, look, if if you want to go this direction,
you could talk about like polio vaccine or something like that.
It's not the sixties. That was I want to say, No,
I think that was like forty one. Yeah, yeah, let
me see when it was? Yeah was Sulk was the
(18:52):
guy who did it? History? Here we go, let's see, uh,
yeah it was. It was it forty eight. Let's go
fifty two, fifty two like that. That that might be
up there.
Speaker 3 (19:08):
First nuclear bomb was tested in forty five. Yeah, we're
in that ballpark.
Speaker 2 (19:13):
Yeah think Okay, So anyways, Mike, what's the text number again?
Speaker 4 (19:16):
Six one, seven, three, six, two, thirteen eighty five.
Speaker 3 (19:19):
You can text us with what you think was the
most innovative technology prior to the Internet.
Speaker 2 (19:23):
Let's take a quick break. When we come back, we
got Wall Street Watch, we got the trivia answer, and
we're talking about why job seekers and hiring managers hate
using AI for the process.
Speaker 1 (19:40):
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 look at
what's moving market so far today right here on the
Financial Exchange Radio Network.
Speaker 5 (20:00):
Well, market are in positive territory as they look to
close out the week on a positive note. The Dow
Jones is up three hundred and forty one points, or
zero point seventy five percent. The S and P five
hundred is up over twenty six points or four tenths
of a percent, The Nasdaq's up over fifty six points
or one quarter of a percent, and the Russell two
(20:20):
thousand is up over one point three four percent as
Day three of the government's shutdown rolls on. Right now,
Rare Earth Minor USA Rare Earth is up seventeen percent
after CEO Barbara Humpton told CNBC that the company is
in quote close communication with the White House. Game Stop
shares are off one point eight percent after the company
(20:41):
said in a filing it's selling a combination of assets
ranging from common stock to debt for an undisclosed amount.
Applied Material shares are down two point three percent after
the company acknowledged in a regulatory filing that new US
export restrictions will hurt revenue. Applied Materials said the restrictions
will lower fourth quarter revenue by about one hundred and
ten million dollars and its fiscal year twenty twenty six
(21:03):
revenue by around six hundred million dollars. Uranium Energy is
down two point eight percent after planning a secondary offering
of fifteen point five million shares. Goldman Sachs is the
sole underwriter. Entergy shares are up two point seven percent
after announcing plans to provide power for Google's plan technology
investment worth around four billion dollars in Arkansas. As part
(21:25):
of the investment, Google will develop a new data center
in West Memphis, Arkansas. The companies first in the state,
and finally, Gordon Hasket Research Advisors upgraded Zillo to buy
from hold sending the real estate platform up over three
and a half percent. The Wall Street researcher said the
recent sell off is overdone, creating an attractive buying opportunity.
Zillo has declined seventeen percent over the past two weeks
(21:47):
on concerns regarding competitive encroachment and legal woes. I'm Ben Kitchen,
and that is Wall Street Watch, and we still don't
have a winner for the trivia question. So let me
throw that at you one more time.
Speaker 2 (21:59):
Here.
Speaker 5 (22:00):
Over the past twenty five years, how often did the
S and P five hundred have a down year? It's
more than five and less than ten. That should be
enough of a hint.
Speaker 4 (22:10):
For you, Ben.
Speaker 3 (22:12):
I mean, if nobody got the answer yet, I think
there's no winner. We had some text responses to our
question about the biggest innovations in the world since prior
to the Internet.
Speaker 4 (22:24):
Yes, what do we got, Ben?
Speaker 5 (22:27):
We've got mostly cell phones that seems to be the
popular one. We've got television, refrigeration, interchangeable parts for the
steam engine, wireless telephones. But I think the one here
that was the most interesting that I saw that came
from the two six to two area code is the
introduction of plastics in the nineteen thirties completely changed consumer
products and many other things.
Speaker 2 (22:48):
Yep, yeah it did.
Speaker 3 (22:50):
Cell Phones is an interesting one, but I can't say
that it revolutionized things quite as much as the Internet
did nearly as much. Rather, no plastics did. Oh, plastics
absolutely did. I mean it's you don't get the Internet
without plastics. It literally could not exist. Yeah, those are
(23:10):
some good ones.
Speaker 4 (23:11):
Yeah, thank you for those.
Speaker 2 (23:14):
Bike mechanic James Peregrine applied online for a job at
ARII last year and was pleased to get an email
inviting him to an interview, but the interview turned out
to be a series of recorded questions from ARII managers
asked by an artificial intelligent app that video recorded his answers.
The thirty four year old Malden resident tried twice but
said he couldn't bear talking to the app. And basically,
(23:35):
what you're getting here, and this is not just happening
in job hunting, but what you have there is hiring
managers saying Okay, we can interview more people if we
use AI to interview them. You have people not writing
their own resume but having AI write their resume for them,
and then you basically end up with like the extension
(23:57):
of this is then hey, do you get one AI
talking to the and then you need another AI to
tell you what they were saying to each other. This
is not just happening here the other place. And look,
I'm not plugged into this world at this point just
because like I'm married, but apparently online dating is gone
this way as well. Oh good. Where it's just like
profiles are just all AI generated and you know, people
(24:19):
are not writing their own text messages to each other,
They're just using AI to write like what they think
they should. But like, so this is where we're running
into a problem that I think the ultimate resolution is
going to end up, unfortunately for AI, being we're gonna
stop trusting each other online even like more than we
already do, and it's just gonna be a return to hey,
(24:42):
let's do this in person, because that's the only way
that I know that you're you.
Speaker 3 (24:46):
I was talking to some people at a conference recently
which is all about AI and his financial services, But
the interesting conversations I was having was about other people
with teenage kids, and they were kind of explaining like
the use cases that their kids are using for AI,
and I just found it, I guess, weird but unsurprising.
(25:08):
It was almost like remember Magic eight Balls, Yes, it
was like that, by using AI for it? What should
I do today? Do you think it's a good idea
for me to apply to this school?
Speaker 2 (25:19):
Like? What bad?
Speaker 4 (25:20):
What terrible?
Speaker 3 (25:21):
Uses for artificial intelligence? But I guess unsurprising as a
you know, easily influenced teenager that you would be using
for that sort of thing.
Speaker 4 (25:28):
But many of the people I.
Speaker 3 (25:31):
Was sitting with with teenage children were like, oh, yeah,
this is the type of thing they're using for. And therefore, yeah,
I'm sure while you don't tell your parents about how
you write text to a potential, uh, somebody that you're
looking to go on a date with, I am sure
that it's all over that too. And yeah, what just
a strange dystopian future we're looking at.
Speaker 2 (25:51):
And the thing is, ultimately, in any of this, what
you're trying to find is a person who brings certain
traits to the table, whether it is, you know, hiring
for a job or in a relationship or whatever it
may be. And so if it gets to the point
where hey, everything's just being so aiified to the point
(26:11):
where you don't know what's real, you're gonna say, Okay,
I'm not gonna do this anymore. You got to come
in and sit down for the interview. Yeah, it's gonna
be wild when all of this technological innovation ends in
us not using it.
Speaker 3 (26:27):
Yeah, and look, we've seen some of that with the
Internet too.
Speaker 2 (26:33):
Totally totally, but it could be where this thing goes.
Speaker 5 (26:37):
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Speaker 2 (27:14):
From Cushing and Dolan.
Speaker 5 (27:16):
Call eight six six eight four eight five six nine
nine right now to get your copy. That's eight six
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Speaker 1 (27:31):
The proceeding was paid for and the views express are
solely those of Cushing and Dolan. Cushing and Dolan and
or Armstrong Advisory may contact you offering legal or investment services.
Cushing and Armstrong do not endorse each other and are
not affiliated.
Speaker 2 (27:42):
Boeing's seven seven seven X is now slated to fly
commercially for the first time in early twenty twenty seven
instead of next year. This according to Bloomberg and people
familiar with the matter. The launch customer for the plane
is Luftanza, and they are reportedly already making plans for
(28:05):
these delays. This obviously is going to result in some
charges to Boeing because of you know, revenue they can't
book and additional costs related to the development. The estimates
are somewhere between two and a half and four billion
dollars in charges that they'll need to take. The plane
is also, by the way, already six years late, as
(28:25):
Bone has been kind of busy dealing with the seven
thirty seven Max and issues related to that aircraft for
you know, pretty much that whole time. And so it
does seem that you know, Boeing is still in the
process of trying to you know, turn the ship when
it comes to getting everything in order there and this
(28:46):
kind of the latest in additional issues for the aircraft manufacturer.
Speaker 3 (28:51):
Here's one thing I will say, it's kind of the
the first piece of really bad news we've had on
Boeing in some time. When's the last time we talked
about Boeing on this program in a negative light.
Speaker 2 (29:03):
It's been a while.
Speaker 3 (29:04):
Alaska Airlines situation and that was the beginning of last year.
Speaker 2 (29:07):
Yeah, a year and a half ago, almost two years ago.
Speaker 3 (29:10):
It feels like it's been a couple years of just
exactly what you want out of an airplane manufacturer, which
is silence.
Speaker 2 (29:17):
Yeah, which is good, like silent companies. So give them
credit on that front. And look if the biggest problem is, hey,
they're delays because we need to get this just right, fine,
you can deal with that. Yep, you can deal with that.
Just take a quick break. When we return, we're going
to be joined by Paul Almonica from Barons right after this.
Speaker 1 (29:39):
The Financial Exchange 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.
The Financial Exchange is life on Series XM's Business Radio
Channel one thirty two weekdays from eleven to noon. Get
the latest business and financial news from across the country
(30:01):
and around the world, and keep up to date on
how it might affect your wallet. That's the Financial Exchange
weekdays from eleven to noon on Series XM's Business Radio
Channel one thirty two. Face He's the Financial Exchange Radio Network.
Ladies and gentlemen the weekend.
Speaker 5 (30:20):
This segment of the Financial Exchange is brought to you
by the US Virgin Islands Department of Tourism. Looking for
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and let's play off our trivia here. The question was
over the past twenty five years, how often did the
S and P five hundred have a down year? Winzer
(31:00):
was eight and that includes twenty eleven when it was
down by two one thousandths of a percent. Corey in
Westport is our winner and he will be taking home
a Financial exchangeow T shirt as promised.
Speaker 2 (31:12):
We're now joined by paul A Monica from Baron's here
to talk a little bit about Rollin's Incorporated stock. Paul,
how are you doing today?
Speaker 6 (31:22):
I'm good?
Speaker 2 (31:23):
Thanks, How are you doing well? So? Rollins is up
twenty six percent today. They are the company that owns
this year, yes, this year, not today. They're the company
that owns Orcin, Critic control a bunch of other exterminator brands.
Are there just more pest this year or what's going
on with them? Paul?
Speaker 6 (31:42):
Yeah, there's an analyst report from JP Morgan that I
wrote about where they initiated coverage and had a pretty
lofty price target of seventy you know, you know, significant
upside from current levels, and they were talking about how
this is really in somewhat of an AI proof stock. Yes,
it's true. You could probably go to Gemini or chat
(32:05):
GPT and ask hey, I saw some mouse droppings or
I've got bugs in the kitchen, how do I get
rid of them? But at the end of the day,
are you going to actually try and do that yourself
or are you going to spend for a professional and
exterminator to come and take care of those, you know,
(32:25):
rodents and insects. So that the bowl case on Rollins
is that this is a somewhat ai proof business and
you know, sales and earnings growth are pretty solid and steady,
and I don't think it's because there are more pests
out there. It's just that consumers want to get rid
of them.
Speaker 2 (32:45):
And is there a lot of consolidation in this space
that allows them to have pricing power as well? Or
is this you know, pretty well diversified when you look
at it.
Speaker 6 (32:57):
Yeah, no, that's a great point. I mean this is
still I think a fragmented business. A lot of mom
and pop, you know, local exterminators out there. But you know,
Rollins is by far, you know, the market leader. There
are some competitors, you know, Eco Lab, and then you've
got a publicly traded company called Rent to Kill, which
(33:20):
has you know, it owns Terminix and other big exterminator
brand but I think in the case of Rollins, with
Working and a lot of the other brands that it owns,
you know, it really does have that market power. So
I think that does help with regards to pricing and
sales growth.
Speaker 2 (33:39):
Well, we talked about the company as a whole. They
do about three and a half billion dollars in revenue
over the last twelve months. Margins are around twenty percent,
so it's it's a good business. Like, there's clearly money
that's that's being made there by the company. It's a
pest control company that's trading fifty times forward earnings. Help
me work through that, though, Paul, that.
Speaker 6 (34:01):
Is I think the biggest knock on the stock and
JP Morgan, their analysts are willing to give that a
pass and say that this is a company that has
outperformed its peers and deserves its valuation. But the rest
of the street is I think, you know understandably more
(34:21):
concerned like you are about that. You know, dare I
say exorbitant valuation for a company that you know, let's
face it is not in Nvidia. So that's why when
you look at the stock, this is not one that's
universally loved about almost you know, forty seven percent I
believe have a buy, forty seven percent have a hole,
(34:42):
and that remaining six if I'm doing my math correctly,
that adds up to one hundred. They actually have a
sell on the stock. So sometimes, you know, there are
cases where stocks that aren't universally loved by Wall Street
can actually be better values, you know, for investors, because
you have more side, more potential room for an analysts
(35:03):
to change their mind and say, hey, I'm going to
upgrade this stock because it's actually performing really well. But
that is I think a risk that investors need to
be aware of that this is a company that has
a stretched valuation. To put it mildly, the performance is great,
but you know, you can't go up and extend your
you know, multiple forever, especially in you know, a business
(35:26):
that again solidly growing. But we're not talking about you know.
Speaker 2 (35:31):
Ai, Paul, do you know if they're local branches? Are
they all owned corporately or are they franchised out to
local owners.
Speaker 6 (35:39):
That's I don't I don't know that that's a good
question that you know, I can look into for any
potential follow ups. And I'm not sure if this is
like a franchise model or if it's you know that
the corporation that rollins itself owns all of those you
know particular you know Exterminator, you know brands, you know
in them, you know the people that work for them.
(36:01):
But you know that's that is a great question.
Speaker 2 (36:03):
Very good, Paul. We appreciate you joining us today. Thank
you so much for the time. And a big congratulations
to the New York Yankees who had a nice little
night last night and uh put our our Red Sox
to bed in uh pretty impressive fashion actually when it
comes to what they did. So hope you enjoyed that night, Paul,
I did.
Speaker 6 (36:23):
I wasn't gonna bring it up, but that's very gracious
of you. We'll see if we can, you know, take
out the Blue Jays next. But uh, yeah, I mean
it was a it was a heck of a series.
Speaker 2 (36:33):
I was.
Speaker 6 (36:34):
I was worried last night, even though we apparently had
the better rookie pitcher on the mound. So that's nice.
Speaker 2 (36:40):
The thing about sports rivalries, Paul, you always got to
come meet in the middle at the end. It's just sports.
You gotta have fun with it. So yeah, you know,
I'll call you some names in the middle. You know,
we'll go at it, but uh yeah, when it's over, hey,
like we're we're just trying to enjoy the night. So
I appreciate you joining us today and have a great weekend.
Speaker 6 (36:56):
All right, thanks Sam, You guys appreciate it.
Speaker 2 (36:58):
That is Paul lamon Good talking about Rollins Incorporated. Mike,
what do you got for me?
Speaker 4 (37:04):
Do you think all nine of the Blue Jays fans
are gonna be at that game?
Speaker 2 (37:10):
Honestly, here's the thing he has ever been to a game. So, Mike,
you say that not Jase popular? Untrue. They're not popular
when they're not good. Yeah, the last time the Blue
Jays went on a real run might have the most
Ben probably knows exactly what I'm referencing, might have the
most impressive single play that like I've ever seen in
(37:31):
a in a in a playoff series, including just the
fans going nuts. Ben, you know what I'm referencing, Yes, sir, flip.
Oh my goodness, I still have dreams about that bat
flip it like it's It's one of my favorite sports
clips to watch, just because, first of all, that was
the series against the Texas Rangers where all these calls
(37:52):
were just all over the place from the umps and
Batista hits that home run, and just like the eight
different emotions that go through his face in the second
that he did, You're just like, oh whatstic Oh my goodness,
it's great. We are done for the day, done for
the week. Stocks broadly up still. We'll see if we
get any kind of shutdown resolution over the weekend. Either way,
(38:14):
the Financial Exchange is not shut down. We'll be back
on Monday and we will see you then.
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