October 10, 2025 • 38 mins
Chuck Zodda and Mike Armstrong discuss the stunning drop in markets in reaction to President Trump's tweet about China and canceling a meeting with President Xi. Tripp Mickle (New York Times) joins the show to talk about Intel's big bet. Insurers prepare for wave of First Brands claims. Americans are falling behind on their car payments. Paul LaMonica (Barron's) stops by for a chat about Gemini's first few months on markets.
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Episode Transcript
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Speaker 1 (00:00):
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(00:42):
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(01:06):
and Mike Armstrong, Chuck, Mike.
Speaker 2 (01:10):
And Tucker with you on about eight am this morning.
I did an interview on WGR in New Hampshire and
I was in a cranky mood. And I was in
a cranky mood because I was talking to Chris Ryan.
That's not why I was in a cranky mood, but
I was talking to Chris and basically I was like, Chris,
(01:30):
I don't know why, Like we got up this week,
like there's no data, there's no exciting earnings, like nothing's
really happening. I wasted five clean shirts, like what is
my life? It was kind of like the place I
was in now.
Speaker 3 (01:43):
I'm just wondering if you don't wear shirts when you
don't come to work. But let's go on.
Speaker 2 (01:48):
There's no need to wonder about that, Michael. And you know,
it was just like, you know, futures are set to
open flat, there's nothing exciting going on, blah blah blah,
blah blah. And about ten minutes ago, President Trump decided
to fire up the old social media machine, and this
is what came out. Some very strange things are happening
(02:08):
in China. They are becoming very hostile and sending letters
to countries throughout the world that they want to expose
export controls on each and every element of production having
to do with rare earths and virtually anything else they
can think of, even if it's not manufactured in China.
Nobody has ever seen anything like this, but essentially it
would clog markets and make life difficult for virtually every
country in the world, especially for China. We've been contacted
(02:28):
by other countries who are extremely angry at this great
trade hostility which came out of nowhere. Our relationship with
China over the past six months has been a very
good one, thereby making this move on trade an even
more surprising one. I've always felt they've been lying in wait,
and now, as usual, I've been proven right. There's no
way that China should be allowed to hold the world captive.
But it seems that this has been their plan for
(02:49):
quite some time. Starting with magnets and other elements, they've
quietly amassed into somewhat of a monopoly position, a rather
sinister and hostile move, to say the least. But the
US has monopoly positions also, much strong, unger, and more
far reaching than China's, and I have just chosen not
to chosen not to use them until now. The letter
they sent is many pages long and details with great specificity,
(03:11):
each and every element they want to withhold from other nations.
Things that were routine are no longer routine at all.
I've not spoken to President G because there was no
reason to do so. This was a real surprise, not
only to me, but to all the leaders of the
free world. I was to meet President G in two
weeks at Apec in South Korea, but now it seems
to be there's no reason to do so. The Chinese
letters were especially inappropriate, and that this was the day
after after three thousand years of bed women fighting, there's
(03:34):
peace in the Middle East. I wonder if the timing
was coincidental, depending on what China says about the hostile
order they've just put out. I will be forced as
President of the United States to financially counter their move.
For every element they've been able to monopolize, we have too.
I never thought it would come to this, but perhaps,
as with all things, the time has come. Ultimately, though
potentially painful, it will be a very good thing in
(03:54):
the end for the USA. One of the policies that
we are calculating at this time is a massive increase
of tariff's on Chinese products coming into the United States
of America. There are many other countermeasures that are likewise
under serious consideration. Thank you for your attention to this matter.
Donald J. Trump, President of the United States of America. So,
in the two minutes that followed that, the S and
(04:14):
P five hundred promptly fell from sixty seven to fifty
seven down to sixty six seventy five, so about an
eighty point reversal or about one point two percent in
a couple minutes. And now it's hanging out right around
sixty six eighty four, so not really mounting any meaningful rebound.
So we're left with the question of does this mean
(04:34):
anything and does this matter to markets in the economy,
Because in the first four months of the Trump presidency
this did matter. The tweets about tariffs and the relationship
with China, in relationship with any country, they mattered. Yep.
For the last six they have not. Is this a
(04:56):
fundamental shift in the t matter of how the Trump
administration is going to approach things now? And look, you
can make the case markets are at all time highs,
consumer spendings, remain strong, like there's some economic ammunition potentially
to use to say yeah, like we could potentially do this.
There are other concerns that you have about you know,
housing market and job market. I'm not putting those, you know,
(05:19):
totally to the side, but you know, you could say, okay,
with markets at all time highs, he's got, you know,
the ability to push back on China in this case
and deal with a little bit of financial pain. Or
is this just public negotiating in advance of this October
meeting that still may end up happening and it doesn't
(05:40):
mean anything because this is all going to be negotiated
away in two weeks.
Speaker 3 (05:42):
Anyways, the last six months would tell you to bet
on the ladder.
Speaker 2 (05:46):
Correct, But when to do it. When's the last time
we had a Trump tweet in markets actually sold off?
I think it's April. I mean it's been a minute.
Speaker 3 (06:00):
Yeah, but we're talking about a three quarters of a
percent sell off less now.
Speaker 2 (06:04):
Well, no, it's yeah, right, and and against it's it's one.
It's almost one to quarter percent from where the S
and P was. Like that, that's market moving. I'm not
gonna poop poo this and be like nothing happened here.
I mean, I'm looking at my chart and I'm like, oh,
like that's that's that's not nothing. Uh So, you know,
does this dip get bought? Does does this actually matter?
(06:25):
Does any of this go into effect? These are the
questions that are out there because honestly, I don't know
the last time that we had a social media post
from the president that moved markets negatively in this fashion.
It's it's been a lot, been a lot.
Speaker 3 (06:38):
I'm seeing April, Yeah, it's yeah. I don't know what
you do about this as an investor because obviously, look,
if if tariffs go back up to one hundred percent
on Chinese manufactured goods are above there, it doesn't really matter.
Once you're at that level, it's irrelevant because no trade
is happening. If that actually sticks, then it is absolutely meaningful.
Speaker 2 (06:59):
But it hasn't stuck.
Speaker 3 (07:00):
It has not even come close to sticking anytime for
the last well since they've been talking about it.
Speaker 2 (07:07):
Correct has not stuck. So I don't know.
Speaker 3 (07:11):
Yeah, I don't know how you I don't know how
you trade this. I don't know how you approach it.
Speaker 2 (07:16):
It's a game of chicken, and there is no stable equilibrium.
In a game of chicken, it is the question of
who blinks first, and you don't know who is going
to blink first. So game of chicken, I've been saying,
like you can go back to, you know, the first
Trump administration, and I've said the same things on multiple occasions.
In a game of chicken, you can't predict what's going
to happen. It's it's not something like well, or you know,
(07:38):
are are three hundred million people gonna make the decision
to buy more or less beef? You can you can
figure that out. You can't figure out who blinks first
because you like, like, you don't know if like someone
wakes up on like the wrong side of the bed
one day and says, well, I guess I'll blinker. I
won't like it's it's it's just too narrow for anyone
(07:58):
to predict. So this stuff hasn't mattered to markets for
the last six months. I'm not sure that it does
still look but I know what you do with this.
Speaker 3 (08:11):
The Chinese announcement yesterday was, as the President pointed out,
surprising and big, but we took it in the context
of this is posturing ahead of a negotiation, and I
don't know that the reply from President Trump should be
thought of in any different way.
Speaker 2 (08:27):
Correct, And so if you do think it's just posturing
in front of a negotiation, then you do nothing.
Speaker 3 (08:33):
It's perfectly logical for the Trump administration to come in
with their own ammunition, which is massive increase in tariffs
and sink your industrial economy.
Speaker 2 (08:41):
Correct.
Speaker 3 (08:42):
The question that I find interesting, or the piece of
his tweet that I find most interesting, is what sort
of conversations did you actually have with other world leaders
and how frustrated are they by this? Because I've been
hoping since the beginning of this year that what you
end up getting here out of all of the these
negotiations is some sort of coherent message between the United States,
(09:05):
European allies and North American allies to say, we're not
putting up with this stuff anymore, and we're going to
have a coherent message against China. I doubt this is
the moment that we're going to get it, but that's
what the President alluded to, and that's what would make
me most excited out of all this.
Speaker 2 (09:23):
The most likely outcome is that this is posturing from
both sides, probably, and if that's the case, then This
is going to be a very brief thing in markets.
But like, look, the only reason that I even noted
is because it actually moved markets. Yeah yeah, and nothing
like this has moved markets in six months, so it's different.
(09:44):
If nothing else. Take a quick break. When we come back,
we're joined by Trip mikel from The New York Times
talking about Intel.
Speaker 1 (09:52):
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Speaker 4 (10:35):
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Speaker 3 (11:06):
Joining us now is Trip mikel from the New York
Times to talk to us a bit about Intel in
their new fab being developed in the Phoenix area. Trip,
thanks for joining us, appreciate it.
Speaker 5 (11:15):
Thanks for having me so.
Speaker 3 (11:16):
Based on your reporting, I'm assuming you or other members
of the staff got a tour of this facility. How
deep into the process, how are they of building this
and when are they hoping to bring it online?
Speaker 5 (11:30):
On Fab fifty two, which is the first of two
factories that they've built to manufactured semiconductors, they're done and
they've actually started production already, and so we were able
to visit that facility and take a few steps inside
and see see what they've constructed. It's interesting in the
sense that it's a larger factory than what they've had
(11:51):
previously because they're putting taller machines from ASML, the Dutch
lithography company inside to etch and make new wafers with
this new process they've developed.
Speaker 3 (12:03):
So clearly this is strategically important to Intel your piece
this morning, Intel's big bet inside the chip maker's make
or break factory. At this stage, though, this isn't just
Intel's big bet. I mean, this is the US taxpayer's
big bet with the government's investment into Intel. It's in
Vidia's big bet with their promised investment into Intel as well.
(12:24):
The company has clearly fallen pretty far behind at this
stage when it comes to manufacturing the latest and greatest.
What confidence should outside investors have that this is going
to be not necessarily this one facility, but that Intel
is going to be able to actually make this turnaround?
Speaker 5 (12:44):
What confidence should investors have? I mean, US taxpayers have.
You know, it's a wait and see honestly, you know,
I mean, you know, journalists, we're all skeptical until we
see something come out the other side and we know,
you know, confidently that there's been changed. And right now,
given Intel's track record and the choices that's made over
(13:05):
the past decade that caused it devolved behind and manufacturing
and the struggles it's had with developing this new manufacturing process.
You know, I think there's just a collective you know,
step back moment here where the industry is saying, Okay,
prove to us that you can do this, and Intel's
(13:25):
trying to do that by making its own chips first.
If it can do so, then others may come on board.
You mentioned Apple, you mentioned in video. They may decide
all right, you've shown us that you can actually manufacture
these chips. We're willing to uh to run the risk
of having you manufacture our chips in the future. Trip.
Speaker 3 (13:44):
I remember reading a few months ago about the challenges
TSMC has been finding when it comes to semiconductor manufacturing
in the US and really just the the cultural and
skill gap that they found with US workers compared to
manufacturing back in Taiwan. How did you uncover any of
that in your reporting, just in terms of where they're
(14:05):
able to find labor for this and do those do
those people have the skills required to do this job.
Speaker 5 (14:12):
That really wasn't a focus here. It wasn't on the
labor or the workforce, So I mean, you're.
Speaker 1 (14:15):
Right that.
Speaker 5 (14:18):
TSMC has you know, I guess made some complaints about
that they've brought a lot of engineering talent into the
country to help with the factory that they're building or
they've built in Arizona. But by the same token, you know,
Intel has been set up in Arizona in this facility
since nineteen eighty. It takes very few people to run
(14:40):
and manage these factories, so they have the talent for it.
And the process that they've developed was actually developed in Oregon,
where Intel has its research and development development facility, and
so it really developed the process there. And now it's
it's taking that process which it you know, developed to
miniature and it's it's enlarging it and beginning to produce
(15:04):
semiconductors at scale in Arizona.
Speaker 3 (15:06):
I think, obviously, as you mentioned, if they are able
to attract customers like Apple, like Nvidia, those are some
crucial benchmarks. Are there other benchmarks Intel set for themselves
in terms of hey, this is how we define success
with these new plants.
Speaker 5 (15:20):
I think that's the most important thing here. You know,
there's there's not the only other benchmark that they'll be
assessed on is when they begin to produce this new
chip called Panther Lake. Panther Lake is going to be
Intel's latest laptop chip. As you may recall, and those
of you have PCs may may be aware of this.
Like Intel's laptop chips began to fall behind in recent years.
(15:44):
Part of the reason that Apple kind of decided to
shelve Intel and begin developing its own chips was because
of frustration with with the performance of those chips. You know,
they cause computers over heat. The battery life wasn't sufficient
to run all day, and the fan was really really loud.
To try to keep the laptop cool, Apple came out
(16:07):
with its own series of chips and that really addressed
a lot of those problems. And now Intel has been
trying to catch up. So the first thing off this
factory line is going to be a PC chip that
Intel has developed called Panther Lake. It's it's kind of
the first chip, that PC chip that Intel has made
in its own factory to try to keep pace with
(16:28):
Apple and others in that sector, and that will begin
to go into machines in January of this year. Those
machines will go into reviewers' hands at CS early next year,
and once those reviewers have it, we'll get some sense
of whether or not Intel has developed at chip that
(16:49):
is competitive and satisfying for really power users, and it'll
all flow down from there.
Speaker 3 (16:56):
Trip Nickel from the New York Times piece today Intel's
bet Trips. Thanks so much for joining us, appreciate it.
We'll talk to again soon, Thanks so much.
Speaker 4 (17:05):
All right, time for trivia here on the Financial Exchange
and today is David Lee Roth's seventy first birthday. David
Lee Roth was Van Halen's lead singer from the band's
creation until he left the group to try his luck
as a solo performer and an actor. So our trivia
question today, what year did David Lee Roth quit Van Halen?
(17:28):
Once again? What year did David Lee Roth quit Van Halen?
Be the third person today to text us at six
one seven three six two thirteen eighty five with the
correct answer, and he win a Financial Exchange Show T shirt.
Speaker 2 (17:43):
Once again.
Speaker 4 (17:43):
The third correct response to text us to the number
six one seven three six two thirteen eighty five, we'll
win that T shirt. See complete contest rules at Financial
eks Change Show dot com.
Speaker 2 (17:55):
Mike just taking a look around markets as we head
towards the bottom of the hour sell off that started
about a half hour ago, deepening. Now the Dow's off
four hundred and eleven points, the SMP is off eighty four,
Nasdaq off four hundred and twenty three, so anyway from
about a one to two percent decline in major US markets. Again,
this is coming on the back of a post from
(18:17):
President Trump indicating potentially renewed economic hostilities with China. Whether
this is just negotiation in advance of the scheduled meeting
between the two groups in a couple of weeks or
something more is open for speculation. But it's moving markets
in a way that we haven't seen Trump posts move
(18:38):
markets downward in at least six months or so, and
so I think it's it's noteworthy from that respect. Ten
Yere treasury trading to a wow, big move in tenure.
Now Tenure is down eight point three basis points to
four point zero six five percent at the moment. We've
got gold in response to that, up fifty four dollars
(18:59):
and sixty cent, so now it's back above four thousand
after dipping below briefly yesterday. A classic risk off move
right now, and we've got and not classic risk off, Chris,
Classic risk off Gold would be selling off too, because
all correlations go to one when like when hedge funds
have to sell everything, that's where everything, like even gold's
being sold. And we've got oil down a dollar ninety
seven a barrel to fifty nine to fifty four. First
(19:21):
time in a while we've had a fifty handle on
West Texas Intermediate. And that's what we're seeing in markets
right now. Quick break, we've got the Trivia Answer and
Wall Street Watch next.
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 markets so far today right here on the
Financial Exchange Radio Network.
Speaker 4 (20:00):
The markets have now reverse course and are selling off
after President Trump took to social media in a lengthy
post last hour saying he saw no reason to meet
Chinese President Jijing paying and threatened a massive increase of
tariffs on Chinese goods, citing recent hostile export controls on
rare earth minerals. Right now, the Dow is down by
(20:23):
just over one percent, or five hundred and twenty four
points SMP five hundred down one point seven percent or
one hundred and sixteen points, Nasdaq down two and a
half percent now we're five hundred and seventy one points lower,
Russell two thousands down eight tenths of one percent, ten
year Treasurreel down eight basis points at four point zero
(20:45):
five to nine percent, and crude oil down three and
a half percent, trading below sixty dollars a barrel at
fifty nine dollars and thirty seven cents. Qualcom pulling back
nearly five percent after China said earlier it is conducting
an anti monopy probe into the chip maker over the
purchase of Israeli startup Auto Talks. Sticking with the chip sector,
(21:06):
we're in Video shares down about three percent after the
Senate passed legislation yesterday aimed at ensuring US companies get
priority access to AI chips ahead of China. Meanwhile, apply
Digital stock is up thirteen percent after the data center
build A reported revenue in its fiscal first quarter was
up eighty four percent from the same period a year ago.
(21:28):
The company also said it finalized a new lease agreement
with a cloud computing company. Core weave Levi down twelve percent,
after it posted weaker than expected earning guidance for the
current quarter, and jeep maker Staalanta saw its shipment's climb
about thirteen percent in the third quarter, driven by a
strong rebound in North America. However, that stock now down
(21:50):
by over six percent, so we're seeing a broad based
sell off across the board at the moment four Markets.
I'm Tucker Silva and that is Wall Street Watch. And
our trivia question we asked in the prior segment was
what year did David lee Roth quit van Halen. That'll
be nineteen eighty five. Paul from Fitchburg, Mass is our
winner today, taking home a Financial Exchange Show t shirt.
(22:10):
Congrats to Paul. We play trivia every day here in
the Financial Exchange. See complete contest rules at Financial Exchange
Show dot com.
Speaker 2 (22:19):
Peace In the Financial Times, insurers prepare for wave of
First Brands claims. Remember First Brands is the autoparts manufacturer
that went belly up with their creditors thinking they had about,
you know, six billion dollars in debt outstanding, and it
turns out it's somewhere in double digits. I do have
to also just read something from Matt Levine. Do either
(22:40):
of you read his stuff on a regular basis.
Speaker 3 (22:43):
Have to, because I know you do and bring it
up frequently.
Speaker 2 (22:45):
So Matt Levine, in my opinion, is the best writer
in finance these days. And his Bloomberg page, okay, it
was give me an era for a second. So he
wrote this yesterday to twenty seven pm. It's titled First
Brands is missing some Like Matt's just really like kind
of he has my sense of humor. It's kind of
dry and like just like but he understands this stuff
(23:08):
better than I do, and so he just writes it
like really really well. But this is the big thing
that like has come to light here. So it's we
covered this on our show yesterday. There's like potentially like
two point three billion dollars in assets that's just missing
from First Brands. And this is what he writes. He goes.
The latter allegation came into demand for an investigation from Raystone,
(23:31):
a trade finance platform. The request for an appointment of
an independent examiner follows an October second email exchange in
which a bankruptcy lawyer for First Brands told Raystone that
advisors don't know if the autopart supplier has received estimated
one point nine billion dollars. Quote, First, do we know
whether FBG actually received one point nine billion, no matter
(23:52):
what happened to it? Raystone lawyer Emmanuel Grillo asked in
an October second email. Second, would you tell us how
much of is in the segregated accounts in respect of
the factored receivables today? So like, how much of that
money's actually there? The first brands were Structuring lawyer Sunny
Singh said in response, number one, we don't know number
two zero, So like they don't know how much money
(24:17):
actually came in and there's nothing sitting in the account
that's referenced there.
Speaker 3 (24:22):
Somebody's going to jail like this. It's gonna be some
low level accountant, but he's going to jail.
Speaker 2 (24:28):
This is no longer a story about a company that
just borrowed too much and got out over at SKIS. Yeah,
there is very likely criminal activity going on here in
some form of the accounting. It may be you know, embezzlement,
it may be just you know, like bad report. Either way,
(24:49):
after you know Enron and everything, CFOs, are you supposed
to be held personally liable for this kind of stuff?
And they're like, this is the kind of thing where
if you here's the deal, if you don't have accurate
financial reporting, whether a public or private company, then you
don't have an economy because you can't trust anyone to
(25:10):
make deals.
Speaker 3 (25:10):
With so important question. In my view, when this first
came out, my point was this has the possibility of
sending reverberations through the private credit industry. We saw some
of that with lenders being down this year. Generally, the
private credit and private equity companies that play in this
space have struggled with their stock prices. Does the fact
(25:35):
that this is pointing more and more towards fraud alleviate
any concerns in the private credit side of things.
Speaker 2 (25:42):
No, In my mind, it worsens them, because effectively, the
reason why private credit is attractive is the underwriting's easy.
Like you've taken all this stuff away from banks who
like if you've ever tried to get a loan for
a bank as a business, it's just like relentless. It's
just like okay, one thing after another, like, oh, keep
giving me this, Oh can you send me like your
(26:02):
most recent statements? Why I just did that last week? Yes,
send me your next one, like you know, it just
it keeps coming, like because banks are nervous by nature,
they're just like they're scared of losing money. Private credit
is the wild West. They're wildcatters. They're just out there
like okay, fine, like throw it in the portfolio, we
can repack it, like and here's the evidence of that.
(26:23):
And this is nobody detected it. No, like all of
these companies that were lending money to first brands, they
didn't know there was a problem. And so if they
didn't know there was a problem in first brands, do
you think this is the only place where this happened
in the private credit world. I do not. I'm not
that naive.
Speaker 3 (26:41):
Yeah, I don't think it's the only place that outright
fraud has happened. But even if it is, there are
other situations you have to worry about then outright fraud
as a lender.
Speaker 2 (26:53):
Right, the dry collar situation was not a situation of
outright fraud like that happened two weeks before this. We're
not sitting here in any way shape or for being
like well, like Tricolor had like a bunch of fraud
in this and that and YadA YadA, like well, actually
a little I take it back. It might not have
been on the tricolor side, but we do have instances
recorded of vehicle vins that have been claimed to back
(27:15):
different tranches of loans from them. So look, quite honestly,
I've been saying for the last week or two something
in the auto sector stinks. I hope you all are
smelling what I'm smelling right now, because it's not coming
up roses like something stinks in the auto sector, and
it's it's getting stronger here when you just have two
(27:36):
billion dollars in assets missing.
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are dealing with financial pressure or legal issues like a divorce.
The guide also explains how a major gift like a
home or vacation property could come with hidden tax consequences
that may impact your entire estate plan. Before you make
(28:22):
any big moves, arm yourself with the facts in this
new guide from Cushing and Dolan. It's called making the
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eight four eight five six nine nine right now to
get your copy. That's eight sixty six eight four eight
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their website legal exchange show dot com.
Speaker 1 (28:46):
The proceeding was paid for and the views expressed 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
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Speaker 2 (28:58):
Let's stick with the auto industry for a second, Mike.
Yesterday we talked about the there's a piece that we
covered about the increase in foreclosures in the housing industry. Sure,
and we made the point, hey, for closures are still
like fifty to seventy percent below the lowest levels they've
been at in the last twenty years. So like, even
(29:18):
though for closures are up twenty percent in the last year,
doesn't matter. It's not something that is worth worrying about.
It's not a problem. On the other hand, I'll quote here,
the portion of subprime auto loans that are more than
sixty days that are sixty days or more overdue on
their payments hit a record of more than six percent
this year according to Fitch Ratings. That's not a record low,
(29:40):
that's a record high. There is a problem in the
auto market with loans there. And I got to tell you,
these stories just keep bubbling up in different areas because
here's the other thing is, once these start popping up,
every good financial investigative journalist out there is looking around
in the auto sector right now, being like, who else,
(30:02):
what's going on here? Like they're trying to get the scoop,
and once they start poking around, they're gonna find something.
Speaker 3 (30:09):
I'll make this a bigger story too. If you are
defaulting on your car payment, it means you've already defaulted
on your credit card, in any other debt that you
have other.
Speaker 2 (30:18):
Than your mortgage.
Speaker 3 (30:19):
Your mortgage is probably the last payment that you're gonna skip,
but the car payment you might not, might not. There
are plenty of people that are renters that have car
payments one hundred percent, and so I guess that would
be my point is in many of these people cases,
people's cases, this is the last payment that you default
on because you know you need that vehicle to.
Speaker 2 (30:37):
Get to work.
Speaker 3 (30:39):
If you're not making the payment there, then you have
already missed payments in many other places.
Speaker 2 (30:44):
So like there's something ugly in the auto sector. How
big it gets, I don't know, But like these stories
are not going away, that they're continuing to come at us,
and there's a problem there. Quick break. Paul Monica from
Barons joins Us.
Speaker 1 (31:02):
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Speaker 5 (31:35):
Ladies and gentlemen, the weekend.
Speaker 2 (31:47):
Alrighty has promised Paul Monica from Barons joins Us to
basking the globe of the New York Giants victory over
the Philadelphia Eagles last night. Paul, how are you doing today?
Speaker 6 (31:58):
I'm good? Thanks, Yeah, lessons the sting of the Yankees
getting knocked out by the Blue Jays. So yes, we're
all camp Scatabo fans right now.
Speaker 2 (32:09):
How can you not be a Camp Scatabo fan? I mean,
my goodness, it's you know, it's it's very exciting. Let's
talk a little bit about Gemini, the crypto brokerage firm
went through an IPO earlier this year. It's had a
roller coaster ride, I think is probably the right way
to put it, which I guess is not hat a
(32:29):
character for a crypto firm. What's good about them? What's
bad about them? What's Wall Street think about them?
Speaker 5 (32:36):
Yeah?
Speaker 6 (32:37):
Great, great questions. You know, stock popped on the first
day of trading, you know, but quickly faded even on
its debut day, and you know, now it's below it's
IPO price. This is the company that is run by
Cameron and Tyler winkleboss of Facebook, the social network fame
the Twins. And you know, I think that there is
(33:00):
still some skepticism about the business models. They are losing
money even though revenue growth is pretty strong. Crypto companies
are very volatile, but you know, Wall Street initiated coverage
this week, mostly positive reviews from the sell side analysts,
(33:21):
which you know, isn't surprising a lot of the companies
that you know initiated coverage or the banks that were
involved with the IPO. But when you look at Gemini,
some of the things that stand out that differentiated a
little bit from other crypto brokerage firms. They have a
thriving credit card business. You know, Gemini credit cards that
(33:42):
are issued that can give users crypto rewards, and that's
I think a growing trend in the credit card industry.
But what's interesting for Gemini is that people that sign
up for those credit cards, a lot of them, then
tend to also start trading crypto on the Gemini brokerage platform.
(34:04):
So that whole sort of kind of cross selling is
what Gemini I think is banking on to generate more
users and more revenue and eventually profits. But again, they're
not going to be profitable for a while, and there's
a lot of competition in this industry. You've got Coinbase,
You've got robinhood E, Toro, There's a Galaxy Digital, which
(34:27):
is now a publicly traded company, as well. You know,
finding a place to buy and sell crypto isn't that
difficult on the internet these days.
Speaker 2 (34:35):
Well, and this is even before you get to the
more conventional brokerages. I saw one of them this morning
had loosened restrictions on you know, how advisors could advise
you know, clients on crypto, and so even the big
banks maybe starting to make inroads in this area in
the next couple of years as well.
Speaker 7 (34:52):
Correct, Yeah, I think that is definitely the case, especially
given that the current regulatory environment is now very pro crypto,
very friendly on like what we saw probably with Gary
Gensler in charge of the SEC.
Speaker 6 (35:08):
You know, Paul Atkins is a you know, a fan
of crypto. We know that the president and members of
his family are fans and investors in various crypto ventures.
So I don't think that we're going to see a
change anytime soon that's negative from Washington with regards to crypto.
(35:28):
And you would think that Gemini eventually would benefit from that.
But you know, this is stock that has you know,
clearly lagged in the past months since it's ipo, despite
the enthusiasm for bitcoin and other digital currencies.
Speaker 2 (35:44):
Very good, Paul, we appreciate you joining us. Hope you
have a great weekend and we will catch up with
you soon.
Speaker 6 (35:50):
Thanks a lot. I have a good one guys.
Speaker 2 (35:52):
That is paul A Monica from Barons. What do you
got for me?
Speaker 5 (35:57):
Mike?
Speaker 2 (35:57):
College grants.
Speaker 3 (35:59):
I want to revisit this because this has been a
story we have covered a lot this year, which is
the struggle that recent college grads have been having finding
a job. And I don't think we always put it
in this context, but I think the story that has
been going out there has been you know, hey, they're
finding it not quite worth the college degree, and even
compared with some other demographics, you know, might college degree
(36:23):
holders be having a tougher time finding a job even
than those without a degree. I don't think we put
it that way, but I think it has been put
that way that, yeah, the folks with the college degree
are having an even tougher time. Financial Times took a
look at the data and what they found is that
people are oftentimes citing some data that shows that, you know,
people without a college degree in their early twenties have
(36:48):
seen a smaller unemployment gain, a smaller increase in unemployment
than those with a college degree. And the Financial Times
points out, but that's not relevant. What's relevant is comparing
an eighteen year old, for instance, without a college degree
entering the labor force for the first time compared to
a college degree holder in their early twenties. And what
they found is that, yeah, the college degree holder has
(37:09):
seen their unemployment rate increase by one point three percentage points,
but those new entrants without a degree almost double two
point four percent increase in unemployment. For that demo, that
new entrant to the labor force without a degree is
finding it even tougher than those with a degree. Not
great for anyone newly entering the workforce, but this remains
a story of little firing, but very little hiring right now.
(37:33):
And you are, according to this data, at least better
off with that degree in terms of your ability to
find that job right now.
Speaker 2 (37:40):
Taking a look at markets as we head towards the
top of the hour, still a bunch of red on
the board, the Dows off four hundred and fifty nine points,
the S and P off ninety one, NASDAC off four
hundred and thirteen, So a little bit of a sell
off happening today. Again, like one to quarter percent on
the s and P five hundred right now. Yes, it's
a bigger sell off a single day than we've seen
(38:01):
in recent months. But let's not make this into you know,
early April or anything like that in March of twenty twenty.
Quite yet. Markets can't have volatility. That is the price
of admission for the returns they may generate longer term.
We're done for the day, done for the weekend. Have
a great weekend. We'll see a Monday
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
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the hosts. Do not reflect the opinions of Armstrong Advisory
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(01:06):
and Mike Armstrong, Chuck, Mike.
Speaker 2 (01:10):
And Tucker with you on about eight am this morning.
I did an interview on WGR in New Hampshire and
I was in a cranky mood. And I was in
a cranky mood because I was talking to Chris Ryan.
That's not why I was in a cranky mood, but
I was talking to Chris and basically I was like, Chris,
(01:30):
I don't know why, Like we got up this week,
like there's no data, there's no exciting earnings, like nothing's
really happening. I wasted five clean shirts, like what is
my life? It was kind of like the place I
was in now.
Speaker 3 (01:43):
I'm just wondering if you don't wear shirts when you
don't come to work. But let's go on.
Speaker 2 (01:48):
There's no need to wonder about that, Michael. And you know,
it was just like, you know, futures are set to
open flat, there's nothing exciting going on, blah blah blah,
blah blah. And about ten minutes ago, President Trump decided
to fire up the old social media machine, and this
is what came out. Some very strange things are happening
(02:08):
in China. They are becoming very hostile and sending letters
to countries throughout the world that they want to expose
export controls on each and every element of production having
to do with rare earths and virtually anything else they
can think of, even if it's not manufactured in China.
Nobody has ever seen anything like this, but essentially it
would clog markets and make life difficult for virtually every
country in the world, especially for China. We've been contacted
(02:28):
by other countries who are extremely angry at this great
trade hostility which came out of nowhere. Our relationship with
China over the past six months has been a very
good one, thereby making this move on trade an even
more surprising one. I've always felt they've been lying in wait,
and now, as usual, I've been proven right. There's no
way that China should be allowed to hold the world captive.
But it seems that this has been their plan for
(02:49):
quite some time. Starting with magnets and other elements, they've
quietly amassed into somewhat of a monopoly position, a rather
sinister and hostile move, to say the least. But the
US has monopoly positions also, much strong, unger, and more
far reaching than China's, and I have just chosen not
to chosen not to use them until now. The letter
they sent is many pages long and details with great specificity,
(03:11):
each and every element they want to withhold from other nations.
Things that were routine are no longer routine at all.
I've not spoken to President G because there was no
reason to do so. This was a real surprise, not
only to me, but to all the leaders of the
free world. I was to meet President G in two
weeks at Apec in South Korea, but now it seems
to be there's no reason to do so. The Chinese
letters were especially inappropriate, and that this was the day
after after three thousand years of bed women fighting, there's
(03:34):
peace in the Middle East. I wonder if the timing
was coincidental, depending on what China says about the hostile
order they've just put out. I will be forced as
President of the United States to financially counter their move.
For every element they've been able to monopolize, we have too.
I never thought it would come to this, but perhaps,
as with all things, the time has come. Ultimately, though
potentially painful, it will be a very good thing in
(03:54):
the end for the USA. One of the policies that
we are calculating at this time is a massive increase
of tariff's on Chinese products coming into the United States
of America. There are many other countermeasures that are likewise
under serious consideration. Thank you for your attention to this matter.
Donald J. Trump, President of the United States of America. So,
in the two minutes that followed that, the S and
(04:14):
P five hundred promptly fell from sixty seven to fifty
seven down to sixty six seventy five, so about an
eighty point reversal or about one point two percent in
a couple minutes. And now it's hanging out right around
sixty six eighty four, so not really mounting any meaningful rebound.
So we're left with the question of does this mean
(04:34):
anything and does this matter to markets in the economy,
Because in the first four months of the Trump presidency
this did matter. The tweets about tariffs and the relationship
with China, in relationship with any country, they mattered. Yep.
For the last six they have not. Is this a
(04:56):
fundamental shift in the t matter of how the Trump
administration is going to approach things now? And look, you
can make the case markets are at all time highs,
consumer spendings, remain strong, like there's some economic ammunition potentially
to use to say yeah, like we could potentially do this.
There are other concerns that you have about you know,
housing market and job market. I'm not putting those, you know,
(05:19):
totally to the side, but you know, you could say, okay,
with markets at all time highs, he's got, you know,
the ability to push back on China in this case
and deal with a little bit of financial pain. Or
is this just public negotiating in advance of this October
meeting that still may end up happening and it doesn't
(05:40):
mean anything because this is all going to be negotiated
away in two weeks.
Speaker 3 (05:42):
Anyways, the last six months would tell you to bet
on the ladder.
Speaker 2 (05:46):
Correct, But when to do it. When's the last time
we had a Trump tweet in markets actually sold off?
I think it's April. I mean it's been a minute.
Speaker 3 (06:00):
Yeah, but we're talking about a three quarters of a
percent sell off less now.
Speaker 2 (06:04):
Well, no, it's yeah, right, and and against it's it's one.
It's almost one to quarter percent from where the S
and P was. Like that, that's market moving. I'm not
gonna poop poo this and be like nothing happened here.
I mean, I'm looking at my chart and I'm like, oh,
like that's that's that's not nothing. Uh So, you know,
does this dip get bought? Does does this actually matter?
(06:25):
Does any of this go into effect? These are the
questions that are out there because honestly, I don't know
the last time that we had a social media post
from the president that moved markets negatively in this fashion.
It's it's been a lot, been a lot.
Speaker 3 (06:38):
I'm seeing April, Yeah, it's yeah. I don't know what
you do about this as an investor because obviously, look,
if if tariffs go back up to one hundred percent
on Chinese manufactured goods are above there, it doesn't really matter.
Once you're at that level, it's irrelevant because no trade
is happening. If that actually sticks, then it is absolutely meaningful.
Speaker 2 (06:59):
But it hasn't stuck.
Speaker 3 (07:00):
It has not even come close to sticking anytime for
the last well since they've been talking about it.
Speaker 2 (07:07):
Correct has not stuck. So I don't know.
Speaker 3 (07:11):
Yeah, I don't know how you I don't know how
you trade this. I don't know how you approach it.
Speaker 2 (07:16):
It's a game of chicken, and there is no stable equilibrium.
In a game of chicken, it is the question of
who blinks first, and you don't know who is going
to blink first. So game of chicken, I've been saying,
like you can go back to, you know, the first
Trump administration, and I've said the same things on multiple occasions.
In a game of chicken, you can't predict what's going
to happen. It's it's not something like well, or you know,
(07:38):
are are three hundred million people gonna make the decision
to buy more or less beef? You can you can
figure that out. You can't figure out who blinks first
because you like, like, you don't know if like someone
wakes up on like the wrong side of the bed
one day and says, well, I guess I'll blinker. I
won't like it's it's it's just too narrow for anyone
(07:58):
to predict. So this stuff hasn't mattered to markets for
the last six months. I'm not sure that it does
still look but I know what you do with this.
Speaker 3 (08:11):
The Chinese announcement yesterday was, as the President pointed out,
surprising and big, but we took it in the context
of this is posturing ahead of a negotiation, and I
don't know that the reply from President Trump should be
thought of in any different way.
Speaker 2 (08:27):
Correct, And so if you do think it's just posturing
in front of a negotiation, then you do nothing.
Speaker 3 (08:33):
It's perfectly logical for the Trump administration to come in
with their own ammunition, which is massive increase in tariffs
and sink your industrial economy.
Speaker 2 (08:41):
Correct.
Speaker 3 (08:42):
The question that I find interesting, or the piece of
his tweet that I find most interesting, is what sort
of conversations did you actually have with other world leaders
and how frustrated are they by this? Because I've been
hoping since the beginning of this year that what you
end up getting here out of all of the these
negotiations is some sort of coherent message between the United States,
(09:05):
European allies and North American allies to say, we're not
putting up with this stuff anymore, and we're going to
have a coherent message against China. I doubt this is
the moment that we're going to get it, but that's
what the President alluded to, and that's what would make
me most excited out of all this.
Speaker 2 (09:23):
The most likely outcome is that this is posturing from
both sides, probably, and if that's the case, then This
is going to be a very brief thing in markets.
But like, look, the only reason that I even noted
is because it actually moved markets. Yeah yeah, and nothing
like this has moved markets in six months, so it's different.
(09:44):
If nothing else. Take a quick break. When we come back,
we're joined by Trip mikel from The New York Times
talking about Intel.
Speaker 1 (09:52):
Right after this, find daily interviews in full shows of
the Financial Exchange on now our YouTube page. Subscribe to
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you might have missed. This is the Financial Exchange Radio Network.
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(10:14):
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Channel one thirty two. This is the Financial Exchange Radio Network.
Speaker 4 (10:35):
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Speaker 3 (11:06):
Joining us now is Trip mikel from the New York
Times to talk to us a bit about Intel in
their new fab being developed in the Phoenix area. Trip,
thanks for joining us, appreciate it.
Speaker 5 (11:15):
Thanks for having me so.
Speaker 3 (11:16):
Based on your reporting, I'm assuming you or other members
of the staff got a tour of this facility. How
deep into the process, how are they of building this
and when are they hoping to bring it online?
Speaker 5 (11:30):
On Fab fifty two, which is the first of two
factories that they've built to manufactured semiconductors, they're done and
they've actually started production already, and so we were able
to visit that facility and take a few steps inside
and see see what they've constructed. It's interesting in the
sense that it's a larger factory than what they've had
(11:51):
previously because they're putting taller machines from ASML, the Dutch
lithography company inside to etch and make new wafers with
this new process they've developed.
Speaker 3 (12:03):
So clearly this is strategically important to Intel your piece
this morning, Intel's big bet inside the chip maker's make
or break factory. At this stage, though, this isn't just
Intel's big bet. I mean, this is the US taxpayer's
big bet with the government's investment into Intel. It's in
Vidia's big bet with their promised investment into Intel as well.
(12:24):
The company has clearly fallen pretty far behind at this
stage when it comes to manufacturing the latest and greatest.
What confidence should outside investors have that this is going
to be not necessarily this one facility, but that Intel
is going to be able to actually make this turnaround?
Speaker 5 (12:44):
What confidence should investors have? I mean, US taxpayers have.
You know, it's a wait and see honestly, you know,
I mean, you know, journalists, we're all skeptical until we
see something come out the other side and we know,
you know, confidently that there's been changed. And right now,
given Intel's track record and the choices that's made over
(13:05):
the past decade that caused it devolved behind and manufacturing
and the struggles it's had with developing this new manufacturing process.
You know, I think there's just a collective you know,
step back moment here where the industry is saying, Okay,
prove to us that you can do this, and Intel's
(13:25):
trying to do that by making its own chips first.
If it can do so, then others may come on board.
You mentioned Apple, you mentioned in video. They may decide
all right, you've shown us that you can actually manufacture
these chips. We're willing to uh to run the risk
of having you manufacture our chips in the future. Trip.
Speaker 3 (13:44):
I remember reading a few months ago about the challenges
TSMC has been finding when it comes to semiconductor manufacturing
in the US and really just the the cultural and
skill gap that they found with US workers compared to
manufacturing back in Taiwan. How did you uncover any of
that in your reporting, just in terms of where they're
(14:05):
able to find labor for this and do those do
those people have the skills required to do this job.
Speaker 5 (14:12):
That really wasn't a focus here. It wasn't on the
labor or the workforce, So I mean, you're.
Speaker 1 (14:15):
Right that.
Speaker 5 (14:18):
TSMC has you know, I guess made some complaints about
that they've brought a lot of engineering talent into the
country to help with the factory that they're building or
they've built in Arizona. But by the same token, you know,
Intel has been set up in Arizona in this facility
since nineteen eighty. It takes very few people to run
(14:40):
and manage these factories, so they have the talent for it.
And the process that they've developed was actually developed in Oregon,
where Intel has its research and development development facility, and
so it really developed the process there. And now it's
it's taking that process which it you know, developed to
miniature and it's it's enlarging it and beginning to produce
(15:04):
semiconductors at scale in Arizona.
Speaker 3 (15:06):
I think, obviously, as you mentioned, if they are able
to attract customers like Apple, like Nvidia, those are some
crucial benchmarks. Are there other benchmarks Intel set for themselves
in terms of hey, this is how we define success
with these new plants.
Speaker 5 (15:20):
I think that's the most important thing here. You know,
there's there's not the only other benchmark that they'll be
assessed on is when they begin to produce this new
chip called Panther Lake. Panther Lake is going to be
Intel's latest laptop chip. As you may recall, and those
of you have PCs may may be aware of this.
Like Intel's laptop chips began to fall behind in recent years.
(15:44):
Part of the reason that Apple kind of decided to
shelve Intel and begin developing its own chips was because
of frustration with with the performance of those chips. You know,
they cause computers over heat. The battery life wasn't sufficient
to run all day, and the fan was really really loud.
To try to keep the laptop cool, Apple came out
(16:07):
with its own series of chips and that really addressed
a lot of those problems. And now Intel has been
trying to catch up. So the first thing off this
factory line is going to be a PC chip that
Intel has developed called Panther Lake. It's it's kind of
the first chip, that PC chip that Intel has made
in its own factory to try to keep pace with
(16:28):
Apple and others in that sector, and that will begin
to go into machines in January of this year. Those
machines will go into reviewers' hands at CS early next year,
and once those reviewers have it, we'll get some sense
of whether or not Intel has developed at chip that
(16:49):
is competitive and satisfying for really power users, and it'll
all flow down from there.
Speaker 3 (16:56):
Trip Nickel from the New York Times piece today Intel's
bet Trips. Thanks so much for joining us, appreciate it.
We'll talk to again soon, Thanks so much.
Speaker 4 (17:05):
All right, time for trivia here on the Financial Exchange
and today is David Lee Roth's seventy first birthday. David
Lee Roth was Van Halen's lead singer from the band's
creation until he left the group to try his luck
as a solo performer and an actor. So our trivia
question today, what year did David Lee Roth quit Van Halen?
(17:28):
Once again? What year did David Lee Roth quit Van Halen?
Be the third person today to text us at six
one seven three six two thirteen eighty five with the
correct answer, and he win a Financial Exchange Show T shirt.
Speaker 2 (17:43):
Once again.
Speaker 4 (17:43):
The third correct response to text us to the number
six one seven three six two thirteen eighty five, we'll
win that T shirt. See complete contest rules at Financial
eks Change Show dot com.
Speaker 2 (17:55):
Mike just taking a look around markets as we head
towards the bottom of the hour sell off that started
about a half hour ago, deepening. Now the Dow's off
four hundred and eleven points, the SMP is off eighty four,
Nasdaq off four hundred and twenty three, so anyway from
about a one to two percent decline in major US markets. Again,
this is coming on the back of a post from
(18:17):
President Trump indicating potentially renewed economic hostilities with China. Whether
this is just negotiation in advance of the scheduled meeting
between the two groups in a couple of weeks or
something more is open for speculation. But it's moving markets
in a way that we haven't seen Trump posts move
(18:38):
markets downward in at least six months or so, and
so I think it's it's noteworthy from that respect. Ten
Yere treasury trading to a wow, big move in tenure.
Now Tenure is down eight point three basis points to
four point zero six five percent at the moment. We've
got gold in response to that, up fifty four dollars
(18:59):
and sixty cent, so now it's back above four thousand
after dipping below briefly yesterday. A classic risk off move
right now, and we've got and not classic risk off, Chris,
Classic risk off Gold would be selling off too, because
all correlations go to one when like when hedge funds
have to sell everything, that's where everything, like even gold's
being sold. And we've got oil down a dollar ninety
seven a barrel to fifty nine to fifty four. First
(19:21):
time in a while we've had a fifty handle on
West Texas Intermediate. And that's what we're seeing in markets
right now. Quick break, we've got the Trivia Answer and
Wall Street Watch next.
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 markets so far today right here on the
Financial Exchange Radio Network.
Speaker 4 (20:00):
The markets have now reverse course and are selling off
after President Trump took to social media in a lengthy
post last hour saying he saw no reason to meet
Chinese President Jijing paying and threatened a massive increase of
tariffs on Chinese goods, citing recent hostile export controls on
rare earth minerals. Right now, the Dow is down by
(20:23):
just over one percent, or five hundred and twenty four
points SMP five hundred down one point seven percent or
one hundred and sixteen points, Nasdaq down two and a
half percent now we're five hundred and seventy one points lower,
Russell two thousands down eight tenths of one percent, ten
year Treasurreel down eight basis points at four point zero
(20:45):
five to nine percent, and crude oil down three and
a half percent, trading below sixty dollars a barrel at
fifty nine dollars and thirty seven cents. Qualcom pulling back
nearly five percent after China said earlier it is conducting
an anti monopy probe into the chip maker over the
purchase of Israeli startup Auto Talks. Sticking with the chip sector,
(21:06):
we're in Video shares down about three percent after the
Senate passed legislation yesterday aimed at ensuring US companies get
priority access to AI chips ahead of China. Meanwhile, apply
Digital stock is up thirteen percent after the data center
build A reported revenue in its fiscal first quarter was
up eighty four percent from the same period a year ago.
(21:28):
The company also said it finalized a new lease agreement
with a cloud computing company. Core weave Levi down twelve percent,
after it posted weaker than expected earning guidance for the
current quarter, and jeep maker Staalanta saw its shipment's climb
about thirteen percent in the third quarter, driven by a
strong rebound in North America. However, that stock now down
(21:50):
by over six percent, so we're seeing a broad based
sell off across the board at the moment four Markets.
I'm Tucker Silva and that is Wall Street Watch. And
our trivia question we asked in the prior segment was
what year did David lee Roth quit van Halen. That'll
be nineteen eighty five. Paul from Fitchburg, Mass is our
winner today, taking home a Financial Exchange Show t shirt.
(22:10):
Congrats to Paul. We play trivia every day here in
the Financial Exchange. See complete contest rules at Financial Exchange
Show dot com.
Speaker 2 (22:19):
Peace In the Financial Times, insurers prepare for wave of
First Brands claims. Remember First Brands is the autoparts manufacturer
that went belly up with their creditors thinking they had about,
you know, six billion dollars in debt outstanding, and it
turns out it's somewhere in double digits. I do have
to also just read something from Matt Levine. Do either
(22:40):
of you read his stuff on a regular basis.
Speaker 3 (22:43):
Have to, because I know you do and bring it
up frequently.
Speaker 2 (22:45):
So Matt Levine, in my opinion, is the best writer
in finance these days. And his Bloomberg page, okay, it
was give me an era for a second. So he
wrote this yesterday to twenty seven pm. It's titled First
Brands is missing some Like Matt's just really like kind
of he has my sense of humor. It's kind of
dry and like just like but he understands this stuff
(23:08):
better than I do, and so he just writes it
like really really well. But this is the big thing
that like has come to light here. So it's we
covered this on our show yesterday. There's like potentially like
two point three billion dollars in assets that's just missing
from First Brands. And this is what he writes. He goes.
The latter allegation came into demand for an investigation from Raystone,
(23:31):
a trade finance platform. The request for an appointment of
an independent examiner follows an October second email exchange in
which a bankruptcy lawyer for First Brands told Raystone that
advisors don't know if the autopart supplier has received estimated
one point nine billion dollars. Quote, First, do we know
whether FBG actually received one point nine billion, no matter
(23:52):
what happened to it? Raystone lawyer Emmanuel Grillo asked in
an October second email. Second, would you tell us how
much of is in the segregated accounts in respect of
the factored receivables today? So like, how much of that
money's actually there? The first brands were Structuring lawyer Sunny
Singh said in response, number one, we don't know number
two zero, So like they don't know how much money
(24:17):
actually came in and there's nothing sitting in the account
that's referenced there.
Speaker 3 (24:22):
Somebody's going to jail like this. It's gonna be some
low level accountant, but he's going to jail.
Speaker 2 (24:28):
This is no longer a story about a company that
just borrowed too much and got out over at SKIS. Yeah,
there is very likely criminal activity going on here in
some form of the accounting. It may be you know, embezzlement,
it may be just you know, like bad report. Either way,
(24:49):
after you know Enron and everything, CFOs, are you supposed
to be held personally liable for this kind of stuff?
And they're like, this is the kind of thing where
if you here's the deal, if you don't have accurate
financial reporting, whether a public or private company, then you
don't have an economy because you can't trust anyone to
(25:10):
make deals.
Speaker 3 (25:10):
With so important question. In my view, when this first
came out, my point was this has the possibility of
sending reverberations through the private credit industry. We saw some
of that with lenders being down this year. Generally, the
private credit and private equity companies that play in this
space have struggled with their stock prices. Does the fact
(25:35):
that this is pointing more and more towards fraud alleviate
any concerns in the private credit side of things.
Speaker 2 (25:42):
No, In my mind, it worsens them, because effectively, the
reason why private credit is attractive is the underwriting's easy.
Like you've taken all this stuff away from banks who
like if you've ever tried to get a loan for
a bank as a business, it's just like relentless. It's
just like okay, one thing after another, like, oh, keep
giving me this, Oh can you send me like your
(26:02):
most recent statements? Why I just did that last week? Yes,
send me your next one, like you know, it just
it keeps coming, like because banks are nervous by nature,
they're just like they're scared of losing money. Private credit
is the wild West. They're wildcatters. They're just out there
like okay, fine, like throw it in the portfolio, we
can repack it, like and here's the evidence of that.
(26:23):
And this is nobody detected it. No, like all of
these companies that were lending money to first brands, they
didn't know there was a problem. And so if they
didn't know there was a problem in first brands, do
you think this is the only place where this happened
in the private credit world. I do not. I'm not
that naive.
Speaker 3 (26:41):
Yeah, I don't think it's the only place that outright
fraud has happened. But even if it is, there are
other situations you have to worry about then outright fraud
as a lender.
Speaker 2 (26:53):
Right, the dry collar situation was not a situation of
outright fraud like that happened two weeks before this. We're
not sitting here in any way shape or for being
like well, like Tricolor had like a bunch of fraud
in this and that and YadA YadA, like well, actually
a little I take it back. It might not have
been on the tricolor side, but we do have instances
recorded of vehicle vins that have been claimed to back
(27:15):
different tranches of loans from them. So look, quite honestly,
I've been saying for the last week or two something
in the auto sector stinks. I hope you all are
smelling what I'm smelling right now, because it's not coming
up roses like something stinks in the auto sector, and
it's it's getting stronger here when you just have two
(27:36):
billion dollars in assets missing.
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Speaker 1 (28:46):
The proceeding was paid for and the views expressed are
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Speaker 2 (28:58):
Let's stick with the auto industry for a second, Mike.
Yesterday we talked about the there's a piece that we
covered about the increase in foreclosures in the housing industry. Sure,
and we made the point, hey, for closures are still
like fifty to seventy percent below the lowest levels they've
been at in the last twenty years. So like, even
(29:18):
though for closures are up twenty percent in the last year,
doesn't matter. It's not something that is worth worrying about.
It's not a problem. On the other hand, I'll quote here,
the portion of subprime auto loans that are more than
sixty days that are sixty days or more overdue on
their payments hit a record of more than six percent
this year according to Fitch Ratings. That's not a record low,
(29:40):
that's a record high. There is a problem in the
auto market with loans there. And I got to tell you,
these stories just keep bubbling up in different areas because
here's the other thing is, once these start popping up,
every good financial investigative journalist out there is looking around
in the auto sector right now, being like, who else,
(30:02):
what's going on here? Like they're trying to get the scoop,
and once they start poking around, they're gonna find something.
Speaker 3 (30:09):
I'll make this a bigger story too. If you are
defaulting on your car payment, it means you've already defaulted
on your credit card, in any other debt that you
have other.
Speaker 2 (30:18):
Than your mortgage.
Speaker 3 (30:19):
Your mortgage is probably the last payment that you're gonna skip,
but the car payment you might not, might not. There
are plenty of people that are renters that have car
payments one hundred percent, and so I guess that would
be my point is in many of these people cases,
people's cases, this is the last payment that you default
on because you know you need that vehicle to.
Speaker 2 (30:37):
Get to work.
Speaker 3 (30:39):
If you're not making the payment there, then you have
already missed payments in many other places.
Speaker 2 (30:44):
So like there's something ugly in the auto sector. How
big it gets, I don't know, But like these stories
are not going away, that they're continuing to come at us,
and there's a problem there. Quick break. Paul Monica from
Barons joins Us.
Speaker 1 (31:02):
Next 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 livee on Serious XM's Business radio channel one thirty two.
Face He's the Financial Exchange Radio Network. The Financial Exchange
(31:25):
streams live on YouTube. Like our page and stay up
to date on breaking business news all morning long. This
is the Financial Exchange Radio Network.
Speaker 5 (31:35):
Ladies and gentlemen, the weekend.
Speaker 2 (31:47):
Alrighty has promised Paul Monica from Barons joins Us to
basking the globe of the New York Giants victory over
the Philadelphia Eagles last night. Paul, how are you doing today?
Speaker 6 (31:58):
I'm good? Thanks, Yeah, lessons the sting of the Yankees
getting knocked out by the Blue Jays. So yes, we're
all camp Scatabo fans right now.
Speaker 2 (32:09):
How can you not be a Camp Scatabo fan? I mean,
my goodness, it's you know, it's it's very exciting. Let's
talk a little bit about Gemini, the crypto brokerage firm
went through an IPO earlier this year. It's had a
roller coaster ride, I think is probably the right way
to put it, which I guess is not hat a
(32:29):
character for a crypto firm. What's good about them? What's
bad about them? What's Wall Street think about them?
Speaker 5 (32:36):
Yeah?
Speaker 6 (32:37):
Great, great questions. You know, stock popped on the first
day of trading, you know, but quickly faded even on
its debut day, and you know, now it's below it's
IPO price. This is the company that is run by
Cameron and Tyler winkleboss of Facebook, the social network fame
the Twins. And you know, I think that there is
(33:00):
still some skepticism about the business models. They are losing
money even though revenue growth is pretty strong. Crypto companies
are very volatile, but you know, Wall Street initiated coverage
this week, mostly positive reviews from the sell side analysts,
(33:21):
which you know, isn't surprising a lot of the companies
that you know initiated coverage or the banks that were
involved with the IPO. But when you look at Gemini,
some of the things that stand out that differentiated a
little bit from other crypto brokerage firms. They have a
thriving credit card business. You know, Gemini credit cards that
(33:42):
are issued that can give users crypto rewards, and that's
I think a growing trend in the credit card industry.
But what's interesting for Gemini is that people that sign
up for those credit cards, a lot of them, then
tend to also start trading crypto on the Gemini brokerage platform.
(34:04):
So that whole sort of kind of cross selling is
what Gemini I think is banking on to generate more
users and more revenue and eventually profits. But again, they're
not going to be profitable for a while, and there's
a lot of competition in this industry. You've got Coinbase,
You've got robinhood E, Toro, There's a Galaxy Digital, which
(34:27):
is now a publicly traded company, as well. You know,
finding a place to buy and sell crypto isn't that
difficult on the internet these days.
Speaker 2 (34:35):
Well, and this is even before you get to the
more conventional brokerages. I saw one of them this morning
had loosened restrictions on you know, how advisors could advise
you know, clients on crypto, and so even the big
banks maybe starting to make inroads in this area in
the next couple of years as well.
Speaker 7 (34:52):
Correct, Yeah, I think that is definitely the case, especially
given that the current regulatory environment is now very pro crypto,
very friendly on like what we saw probably with Gary
Gensler in charge of the SEC.
Speaker 6 (35:08):
You know, Paul Atkins is a you know, a fan
of crypto. We know that the president and members of
his family are fans and investors in various crypto ventures.
So I don't think that we're going to see a
change anytime soon that's negative from Washington with regards to crypto.
(35:28):
And you would think that Gemini eventually would benefit from that.
But you know, this is stock that has you know,
clearly lagged in the past months since it's ipo, despite
the enthusiasm for bitcoin and other digital currencies.
Speaker 2 (35:44):
Very good, Paul, we appreciate you joining us. Hope you
have a great weekend and we will catch up with
you soon.
Speaker 6 (35:50):
Thanks a lot. I have a good one guys.
Speaker 2 (35:52):
That is paul A Monica from Barons. What do you
got for me?
Speaker 5 (35:57):
Mike?
Speaker 2 (35:57):
College grants.
Speaker 3 (35:59):
I want to revisit this because this has been a
story we have covered a lot this year, which is
the struggle that recent college grads have been having finding
a job. And I don't think we always put it
in this context, but I think the story that has
been going out there has been you know, hey, they're
finding it not quite worth the college degree, and even
compared with some other demographics, you know, might college degree
(36:23):
holders be having a tougher time finding a job even
than those without a degree. I don't think we put
it that way, but I think it has been put
that way that, yeah, the folks with the college degree
are having an even tougher time. Financial Times took a
look at the data and what they found is that
people are oftentimes citing some data that shows that, you know,
people without a college degree in their early twenties have
(36:48):
seen a smaller unemployment gain, a smaller increase in unemployment
than those with a college degree. And the Financial Times
points out, but that's not relevant. What's relevant is comparing
an eighteen year old, for instance, without a college degree
entering the labor force for the first time compared to
a college degree holder in their early twenties. And what
they found is that, yeah, the college degree holder has
(37:09):
seen their unemployment rate increase by one point three percentage points,
but those new entrants without a degree almost double two
point four percent increase in unemployment. For that demo, that
new entrant to the labor force without a degree is
finding it even tougher than those with a degree. Not
great for anyone newly entering the workforce, but this remains
a story of little firing, but very little hiring right now.
(37:33):
And you are, according to this data, at least better
off with that degree in terms of your ability to
find that job right now.
Speaker 2 (37:40):
Taking a look at markets as we head towards the
top of the hour, still a bunch of red on
the board, the Dows off four hundred and fifty nine points,
the S and P off ninety one, NASDAC off four
hundred and thirteen, So a little bit of a sell
off happening today. Again, like one to quarter percent on
the s and P five hundred right now. Yes, it's
a bigger sell off a single day than we've seen
(38:01):
in recent months. But let's not make this into you know,
early April or anything like that in March of twenty twenty.
Quite yet. Markets can't have volatility. That is the price
of admission for the returns they may generate longer term.
We're done for the day, done for the weekend. Have
a great weekend. We'll see a Monday
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