October 14, 2025 • 38 mins
Mike Armstrong and Paul Lane discuss the great debasement debate is rippling across world markets. A historic crypto selloff erased over $19B, but two accounts made $160M. Most investors say AI stocks are in a bubble. Why Broadcom's OpenAI bet is a big risk. The shutdown's consuquences for the BLS are dire. Protein is showing up in Doritos, waffles, and Pop Tarts, why?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
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(00:43):
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(01:06):
Armstrong and Paul Lane.
Speaker 2 (01:11):
Good morning, Welcome back to the Financial Exchange. It's Mike,
Paul and Tucker with you on a Tuesday morning here
where markets are trying to stage a comeback here again.
We had markets off nearly three SMP was off two
point seven percent on Friday, rallied yesterday. This morning on
further escalation from China, we saw them selling off. We
(01:32):
had the S and P five hundred at one point
at least in pre markets was down by one and
a quarter percent. We're now only down about a third
of a percent on the SMP, flat on the Dow,
still down eight ten percent on the NASDAQS.
Speaker 3 (01:45):
We'll keep you.
Speaker 2 (01:46):
Updated on where things are going. But you know, someone
out there buying stocks in spite of the concerns of
China and US trade escalation. Got a dump of Wall
Street earnings this morning from the likes of Goldman, Sachs, JP,
Morgan Wells, Fargo, and City Group, who, as they always do,
reported beats pretty much across the board. But stocks are
(02:06):
kind of all over the place in reaction to them,
some reacting positively on beats on expectations, others clearly missing
where some of the analysts wanted to see things. In
terms of the rest of this week, we will have
continued earnings reports coming out.
Speaker 3 (02:21):
Today after the bell.
Speaker 2 (02:23):
Not much, but tomorrow we will hear from Bank of America,
Morgan Stanley, Abbott Labs, Progressive. I'm interested in anyone in
the insurance space right now, just based on yesterday's or
the weekend warning from SMP Global to insurance companies specifically.
Speaker 3 (02:42):
About their exposure to private credits.
Speaker 2 (02:44):
So I'll be interested to hear from any you know,
any companies that participate in the insurance industry, want to
hear from them and their exposure to this private credit
blip that we've been seeing. PNC is also reporting tomorrow
before the bell Thursday. I don't think we have a
whole lot. Charles Schwab reporting before the bell Thursday, Bank
of New York Mellon also and then Friday, we do
(03:07):
have American Express reporting, so we'll see if we get
that confirmation that we've been hearing from other companies that
really service a high net worth clientele like American Express does,
which is high net worth folks keep on spending in
spite of their lower income counterparts pulling back quite a bit.
Anything else catching your eye this morning, Paul in markets, No,
(03:31):
I think.
Speaker 4 (03:31):
You hit on some of the main aspects there.
Speaker 2 (03:33):
So we've had this piece published a couple times Bloomberg
speaking about the Great Debasement debate and the trade that's
rippling across global markets. And to be clear here, what
you're talking about is a rise in asset prices, especially
compared to global currencies. We talked about silver in the
first hour of the show. Anybody that's missed it has well,
(03:56):
it's tough to have missed where gold has gone over
the course of the.
Speaker 3 (03:59):
Last several months.
Speaker 2 (04:00):
Cryptocurrencies, stock prices, and others are appreciating dramatically, and the
question becomes, well, if you're seeing every heart asset price
move up at the same time, or even assets that
aren't traditionally deemed herd assets like cryptocurrencies moving up, what
(04:20):
does that say about investor's confidence in holding their own
currency or holding assets that are denominated in their own currencies.
And this piece at least makes the case that, hey,
investors are growing increasingly concerned about global borrowing and country's
abilities to pay back that future that future cost.
Speaker 5 (04:41):
Yeah, Basically, what you have is United States government with
I believe, you know, some thirty six trillion dollars outstanding
from a debt perspective, and for the longest time this has.
Speaker 4 (04:54):
Not been an issue.
Speaker 5 (04:55):
Well, you know, you might hear pun ins talk about
it in economists talk about it, but it has isn't
really warranted any sort of economic issue.
Speaker 2 (05:04):
Now, if you have bet on the US economy struggling
because of how much debt we've taken, you would have
been much wrong for the last fifty years. In spite
of the legitimate concerns that I personally have. Any of
those concerns, if you put them into a trading thesis,
you've been wrong exactly.
Speaker 5 (05:20):
And so now you are facing a period of time
where there's potential for upward pressure on interest rates.
Speaker 4 (05:27):
Certainly, we went through an interest rate.
Speaker 5 (05:28):
Cycle of a fifteen to twenty year span of time
where interest rates were incredibly low. Who's to say what
the next twenty years look like. But if there is
thirty six trillion dollars of debt outstanding and all of
a sudden, from a United States standpoint, it's questioned as
to the viability of the United States government paying back
its debt, which has never really been an issue. And
if you look at financial markets, the risk free rate
(05:51):
of return that's assessed in finance is based on a
US treasury. It is the gold standard, you know, pun
intended with the gold chatter of being able to pay
back principle. But as a result of all these debt concerns,
you do see that potentially some of the market movements
this year would lead to the fact that people are
(06:11):
concerned about that debt level, and maybe that is what's
driving up these natural metals. I don't know if I'm
willing to make that leap just yet based on one
tremendous year to be clear of performance for silver and gold,
but if you were looking for ways to try and
de emphasize the impact of the US debt in your portfolio,
(06:35):
maybe that's these would be the places that people would pivot.
Speaker 3 (06:38):
To me.
Speaker 2 (06:39):
This is not just a US centric focus issue, sure right,
I mean plenty is being written about the dollar and
Treasury losing its reserve currency status or Treasury is losing
their safe haven status.
Speaker 3 (06:53):
Many people are voicing that opinion.
Speaker 2 (06:55):
But I think part of it, I think at least
part of what's driving all of this is the same
decision being made by many other countries. Right, you have
most of the European Union lifting any caps that they
had on deficit spending in order to boost defense spending.
You have that occurring in Japan, you have that occurring elsewhere.
And so what was a it wasn't just a United
(07:20):
States issue, but we were definitely the you know, the
biggest issuer of this debt, and that has certainly not
slowed down. In fact, it's accelerated over the course of
the last ten years when you look at deficit to GDP,
even this year with the tariff revenue coming in, it
has grown even further. But when you have every country
(07:40):
in the world doing it at the same time, you know,
if you're sitting in France trying to evaluate, hey, what's
the future value of my own currency and the future
value of a bond that I'm buying, and what will
I be paid back in will the Euro still be
worth what it is now? You might be making the
same bet that's some US and best are. And so
(08:01):
even if it doesn't result in complete debasement.
Speaker 3 (08:04):
Of the dollar or or you know, a new normal
for what US treasuries actually mean in global markets, it
can still lead to asset price inflation and that can
cause a number of its own problems.
Speaker 5 (08:18):
Ultimately, I'm just not, you know, ready to make the
full jump yet. I think in a period of time
this is a reasonable case to write out this article.
But with just years of history in the size of
the treasury market, perhaps there is a setback, but there
are resources in place to correct this issue. I'd rather
they address it sooner rather than later. But I don't
(08:40):
think it's necessarily a long term trend just yet.
Speaker 3 (08:42):
Let's take a quick break when we come back.
Speaker 2 (08:45):
Somebody made one hundred and sixty million dollars in crypto
markets on Friday, and the timing of the trades were
pretty interestingly placed. We're going to be covering that and
allegations of cider trading and crypto markets next on The
Financial Exchange.
Speaker 1 (09:04):
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Speaker 6 (09:48):
All right's for sure of you here on the Financial
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Speaker 2 (10:45):
So we hear on the Financial exchange have been focused
on equity markets and the reaction to the president's announcement
on tariffs on China. What has also been making a
very big splash that we focus a little bit less
on typically is what's happened and in crypto markets since then.
And to be clear, the sell off that occurred, total
(11:07):
liquidations on crypto derivative exchanges hit an all time high,
and frankly, it wasn't even close on Friday. It was
the biggest liquidation event you've ever seen in crypto. Doesn't
mean it was the biggest sell off you've ever seen
on a percentage basis, but it was a massive event.
It raised over nineteen billion dollars in value from the
(11:27):
cryptocurrency we were sitting at around nine thirty am. Crypto
bitcoin especially was sitting at one hundred twenty two thousand,
four hundred and forty seven dollars per coin. By what
time is that? By around five PM you got to
(11:47):
a low of one hundred eight thousand, a massive self.
It recovered some of that today you're sitting about one
hundred eleven thousand dollars per coin, but you had this
massive sell off occurring seemingly sparked by the President's and
now announcements on tariffs. And because of the way that
crypto trades, we're able to tell something very specific, which
(12:09):
is two accounts made one hundred and sixty million dollars
in trades on this specific information, and many of them
very suspiciously timed with the announcement from the president.
Speaker 5 (12:27):
Yeah, one hundred and sixty million of profit on these
two particular trades. One was placed a minute before Trump's
tariff announcements, sparking speculation as you would imagine that this
was an insider trading move. The other was slightly earlier.
(12:48):
But between these two it was deposits of eighty million
and thirty million were put into accounts that were betting
on bitcoin going down. And then, Mike, like you mentioned,
within minutes after the announcement that Trump made against China
for potentially one hundred percent tariffs, you saw a twelve
(13:08):
percent drop in bitcoin. Making these positions that they took,
which were short positions basically betting on bitcoin going down
incredibly lucrative. So like has been an issue historically with
the stock market, issues with insider trading, you know, but.
Speaker 2 (13:26):
At least with the stock market, like when you have
something like this happened, so you know, for folks that
aren't familiar, Let's say you had buy shares in an
individual company and minutes later it moves up on an
announcement by the company when it comes to, you know,
some material fact that they had to disclose, the sec
(13:48):
tracks all of those transactions to your brokerage account and
goes and.
Speaker 3 (13:52):
Talks to those folks.
Speaker 2 (13:52):
There was actually a local police officer in Massachusetts who
was charged with insider trading based on this exact series
of facts. Actually got some insider information from someone. I
think it was at a biotech company, if memory serves me,
placed a bunch of trades. I think the guy went
to prison. If you personally own crypto today, this should
(14:14):
make you furious because this is profiting at your expense.
If again, I find it hard to believe that the
timing of these trades right a minute before the president's
announcements on shorting a bunch of crypto, I find it
really hard to believe that that was not somebody that
had some sort of inside information. I'm not making, you know,
(14:36):
allegations that it was a member of you know, anyone's family.
Speaker 3 (14:39):
But like you know.
Speaker 2 (14:39):
It could be a press reporter, it could be you know,
somebody who knew this announcement was coming.
Speaker 3 (14:44):
It could be a social.
Speaker 2 (14:45):
Media manager who knows. But if you invest in crypto personally,
this type of thing should make you absolutely furious because
it is costing you money as somebody who you know
believes this stuff, so this stuff should make It's also
where I lead to my belief that eventually this is
(15:06):
going to piss off enough people that this stuff's going
to be regularly just like stocks, right, and frankly, stuff
like that should be right if it's proven that you're
in fact trading on inside information, you know, that's that's
illegal and it should be you know, gone after. But
because of the nature of the regulatory environment for crypto,
it makes it much easier to do in this space,
(15:28):
whereas you just cannot pull that sort of thing off
in the stock market.
Speaker 5 (15:32):
What's so funny is that it would move this much
on a policy announcement on you know, economically unrelated to crypto, right.
I mean, that was the whole focus behind crypto in
the first place. It was something that was supposed to
be not correlated to anything you know, economic or in
the markets. And yet you have it moving significantly off
of something that the stock markets would move equally quickly.
Speaker 3 (15:54):
Yeah, you know, it is.
Speaker 2 (15:56):
It is very clear to me that at this stage,
you know, most of the at least the major care
and we didn't even you know, we were talking about
bitcoin here. We didn't even talk about some of the
smaller coins that got completely wiped out on Friday. But
at this stage, you know, for most of its time,
if you go and track this and chart it against
like the NASDAK, it's basically trading as a leveraged Nasdaq
(16:19):
type of holding.
Speaker 3 (16:19):
Right.
Speaker 2 (16:20):
It's just a very volatile read on what's going on
in the stock market. There can be other outside things
that move it in one direction or another, but that's
that's what it's looked like. And yeah, so when you
have a massive announcement that you know is going to
move stocks, it's a very easy thing to trade on
with far fewer ramifications than making the same bed on stocks,
(16:40):
because you can be sure if somebody had shorted a
bunch of the S and P five hundred right before
this announcement, they'd be getting a call.
Speaker 5 (16:46):
Oh yeah, big time. Just to expand further on the
Lever's piece. What Mike's alluding to is this idea that, hey,
if the Nasdaq were to go down one two percent,
that typically something crypto related that has more enhanced volatility
characteristics would go down five six percent, multiple times what
you'd see from the major indices out there. And that's
the deal with investing crypto. It's very volatile.
Speaker 2 (17:07):
So, according to a Bank of America survey, most investors
say that AI stocks are in a bubble, which now
makes me question my narrative about AI stocks being in
a bubble because of the retail that's the consensus, then
we're probably wrong, is kind of where I land on
all of this. So one Bank of America performed a
(17:29):
survey about fifty four fifty four percent of participants in
the October poll indicated that tech stocks were looking too expensive,
which was a pretty significant about turn from where they
had been, you know, just a few months or just
last month rather and so you now have the sentiment
(17:50):
clearly shifting more towards the idea that, oh, what sort
of concerns should we have here about the state of
crypto markets, Sorry, not about state of crypto marks. We're
talking about that last about the state of these AI
bets that are being made and what it means for
the overall industry. But again, I guess I go back
to if you have a majority of responding saying this,
(18:14):
it makes it tough for the real crisis to happen
in that moment. If everybody's worried about it, then everybody's
preparing for it, presumably right, Or.
Speaker 3 (18:22):
Maybe they're not. Maybe they're just saying they know it's
a bubble and they're just going to ride that wave.
Speaker 5 (18:26):
What it probably what it might do is enhance sensitivity
around any news related to AI that is more pessimistic
in nature. I don't know if you get that anytime soon,
but perhaps it does just have investors a little bit more.
Speaker 2 (18:43):
The biggest argument I get from folks that this isn't
some sort of bubble is one, it's super innovative technology
that's going to change the world, and I dismiss that one.
But you know, earnings are still growing on it. And
my counterpoint is, so did they back during the tech
bubble until they stopped growing and that is the point
where stocks started collapsing. So I don't like to use
(19:05):
the evidence that, oh yeah, earnings are growing as evidence
that this continued rally can continue. Of course it can
so long as that, you know, so long as that
continued growth happens, then of course it can keep going.
The question is when does that growth on earning start
to slow down and pivot to shrinking earnings. Quick break,
(19:25):
We're gonna have a full market recap coming up next.
Stocks trying to mount a bit of a comeback at
least earlier.
Speaker 3 (19:31):
During the eleven o'clock hour. We'll cover that in more 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 market so far today right here on the
Financial Exchange Radio Network.
Speaker 6 (19:58):
Market's currently in negative territory after tensions between the US
and China increased. Beijing moved to effectively banned Chinese companies
from doing business with US subsidiaries of a South Korea
ship building giant. Outside of trade, Wall Street's also sifting
through third quarter bank earnings posted earlier this morning. Right now,
(20:20):
the Dow is down modestly, now only down eight points,
trying to claw back its earlier losses. SMP five hundred
is down nearly half a percent or thirty points, Nasdaq
down over nine tenths of one percent or two hundred
and nine points lower. RUSSA two thousand is now edging higher.
A ten year treasure reel is flat currently a four
(20:41):
point zero four six percent, and crude oil down nearly
two percent lower. Trading a fifty eight dollars in thirty
four cents a barrel. JP Morgan b third quarter expectations,
where it's trading revenue hit a record of nine billion dollars.
JP Morgan shares are up by almost or excuse me,
down by two percent. Goldman Sachs also exceeded estimates, posting
(21:03):
better than expected investment banking activity and bond trading. Goldman
stock is down by three percent. Wells Fargo b third
quarter expectations as well, where the bank raised its profitability targets,
sending that stock up now over six percent higher. Black
Rock in City Group also beat third quarter forecast. Those
stocks are seeing modest gains outside of bank earnings. Johnson
(21:26):
and Johnson beat third quarter estimates and raised its annual
sales outlook. The healthcare giant also said it plans to
split off its orthopedics unit. Within two years. Johnson and
Johnson shares are down almost two percent. Meanwhile, Boeing said
it delivered fifty five aircraft to customers last month, putting
it on track for its best year since twenty eighteen.
(21:49):
Forty of the deliveries were seven thirty seven maxes. Boeing
stock is edging higher, and Dominos Pizzas said its third
quarter US same store sales grew five point two percent
from a year ago, beating analysts expectations. The pizza chain
said promotions and a new stuff Cruss Pizza we're helping
boost us carry out and delivery sales. Domino shares are
(22:11):
up over three percent. I'm Tucker Silva and that is
Wall Street Watch and A the previous segment, we asked
you the trivia question how many James Bond movies did
Roger Moore make? That would be seven seven movies. Jack
from Portland, Maine is our winner today taking on the
Financial Exchange Show T shirt. Congrats to Jack, and we
(22:31):
play trivia every day here in the Financial Exchange See
complete contest rules at Financial Exchange Show dot com.
Speaker 2 (22:37):
Well as every day goes on, we seemingly get a
new announcements between open Ai and some other company that's
going to be responsible for providing them with semiconductors, mainframe computers,
power generation to power all of this stuff. And the
most recent has been Broadcom, and on the announcement their
(22:58):
stocks stored on Monday after this deal was announced with
open Ai, the maker of chat GPT together. The announced
deals that have been put together so far with open
Ai includes Nvidia, Advanced micro Devices and others. They would
involve filling data centers with chips and computing infrastructure that
(23:21):
would consume twenty six gigawatts of electricity. If it doesn't
mean anything to you, it doesn't mean anything to me either.
To give you a sense, that is substantially more electricity
than what New York City currently uses at peak demand
during the summer. Yeah, so it's a lot of electricity.
It would seem to power all the air conditioning in
(23:42):
New York City. It seems like a lot of electricity,
and a lot needs to go right for all this
to work. Waltreet Journal is writing today about how this
is a special risk for Broadcom. I don't think they
have much of an choice for their investors but to
participate in this. But I guess what is the risk
(24:02):
for these chip suppliers when making these deals with open ai,
because you know, obviously this is the company who is
at the forefront of artificial intelligence development. Yes, they're burning
through cash, but they seemingly have a bunch of investors
who are willing to throw more and more cash at them.
So what is the risk to a company like Broadcom
that signs a deal that inks a deal to do
(24:24):
business with open ai.
Speaker 5 (24:25):
You're basically putting the cart in front of the horse
where you're going to have to spend a significant amount
of investment in capex to build out these custom chips
to assist with the build out of the computing that's
required behind this. For a company that, don't get me wrong,
you know, was one of the fastest apps or products
(24:46):
out there to reach one hundred million users. Ever, I
mean there's scaling of the use of open aishat GPT
has amazed many out there, and now they're standing at
about seven hundred million weekly users. So there certainly is
a lot of justified enthusiasm behind what they're doing. But
it's a company also that is projected to do about
(25:06):
thirteen billion of revenue.
Speaker 4 (25:08):
I've heard.
Speaker 5 (25:08):
Maybe it's a private company, So we don't know if
that number is exact, but I've heard maybe closer run
rate of twenty billion. But regardless, you're talking about hundreds
of billions of dollars of commitment for build out on
infrastructure that mike. The risk is, is open ai good
to pay back all of this debt and investment that
(25:30):
they're asking for many technology peers to take on as
part of this initiative. You're really banking on exponential revenue
growth for open ai once out everything up and running.
Speaker 3 (25:43):
Yeah. Clear.
Speaker 2 (25:44):
I mean to be clear, the deal that open ai
is striking with Broadcom is not saying, hey, here's a
one hundred million dollars go build this stuff out. It's
if you build the chips based on our custom designs
that we need, then we will pay you for them.
Speaker 1 (25:58):
Right.
Speaker 2 (25:58):
That's years of buildout broad Comedies to design and go
forward with in order to actually someday sell these things.
And if they happen to be and it happens to
be the biggest growth industry that we've seen since the Internet,
then it could be huge business for them. But if
any number of things happens, Broadcom doesn't execute on the
design of the chips properly. If open Ai turns out
(26:22):
to not have the revenue to pay them, there's any
number of things that could go wrong for these companies,
and Broadcom is in a position of, Hey, we have
to spend this money in order to get to the
point where we could sell it.
Speaker 5 (26:33):
And now with all the deals they've made, Mike, you've
got the whole technology, not the whole A lot of
the technology sector is intertwined with this. Oracle had tremendous
growth in its stock from announcing the five year, three
hundred billion dollar deal that it struck with open Ai.
So all of this investment is on the optimism that
they will turn out to be richly profitable and incredibly successful,
(26:56):
and I think for all of us as investors, you
want that ultimately, but there's a lot of risks that
are in line there.
Speaker 4 (27:02):
It costs fifty.
Speaker 5 (27:03):
Billion dollars to build out a gigawatt capacity of power
you were just talking about, you know, twenty six gigawatts
that will need to be use. They're going to invest
over the course the next five years a trillion dollars
to build out the power capacity that they're looking for,
and ultimately, you got to have the revenue to back
this up. And what's probably not talked about a lot
(27:24):
is that's just the installation of these data centers. It's
not the ongoing maintenance and replacement of the chips within
them too that will come from this. So it's fascinating.
It's the biggest story right now in the market. It
is truly a huge bet that a lot of these
companies are making on this technology, Paul.
Speaker 2 (27:45):
Not only is it a huge bet for the markets
at this moment, it's a huge bet for the overall economy.
Our economy would not be growing in the way it
is today without the actual spend that's occurring on artificial
intelligence build out. If this topic fascinates, if you're interested
in the direction this is going, we do have a
few spots left for our event on Thursday of this
(28:07):
week at the Showcase super Lucks in Chestnut Hill. We're
doing a live broadcast of the Financial Exchange, followed by
a free lunch and meeting with the Armstrong Advisory Group
as we give our perspective on what has happened so
far this year, the number of different markets we've already
been through, just getting through October, and what we may
see as we head into the end of year and
(28:27):
twenty twenty six.
Speaker 3 (28:28):
We'd love for you to join us.
Speaker 2 (28:29):
There's a few spots left again chestnut Hill Showcase super
Lucks Thursday of this week, that's the sixteenth of October.
Kick things off right at ten am when the show starts,
But we'd love for you to join us for all
or some of the program. You can call us at
eight hundred three to nine three for zero zero one
to reserve your spot. You can get a bunch of
details at Armstrong Advisory dot com. There's a banner right
(28:52):
at the top of the page with the details on
the event eight hundred three nine three for zero zero one.
Speaker 1 (28:58):
The proceeding was paid for by our Strong Advisory Group,
a registered investment advisor. Nothing in the ad or in
any Armstrong guide a specific financial, legal, or tax advice.
Consult your own financial, tax into state planning advisors before
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Speaker 2 (29:14):
All right, Well, I'm meeting maybe the over exaggeration of
the week here with the shutdown government shutdown, consequences for
the Bureau of Labor Statistics being dire, but I will
admit that we are on the cusp of maybe losing
out on a whole bunch of information here. So again,
the BLS puts together a number of reports on the
state of the economy, including the Consumer Price Index and
(29:34):
the Jobs Report, two of the ones that we cite
most frequently on this program.
Speaker 3 (29:38):
First off, that Job's report.
Speaker 2 (29:39):
We missed the one for September, but the BLS did
compile all the data for it, so presumably we will still.
Speaker 3 (29:46):
Get that report.
Speaker 2 (29:47):
YEP, at some point. The survey period for these reports
occurs in the middle of the month, meaning if the
government remains shut there's a good chance that we just
won't get a report for October because they do need
to survey these businesses and these households, which.
Speaker 3 (30:04):
Is currently not happening, and it usually would be.
Speaker 2 (30:07):
So even if the government managed to reopen tomorrow, which
doesn't seem likely, I would suspect that the data gathering
process is going to be shortened and it's going to
be difficult to get a good read on the labor market.
The longer it goes on, the bigger the chances like,
oh yeah, you just can't put together an October jobs
report because it doesn't make a ton of sense to
(30:28):
ask people in December what the state of their hiring
was back in October. So there is that chance, I think,
you know, look, the bigger risk overall is that this
type of data gets called into question. It already has
the President fired the old head of the BLS and
has put somebody in there who's been questioning the methodology
and questioning you know, where it all comes from. I
(30:50):
think most experts would agree that their methodology and the
way that they do all this, while imperfect, is probably
the best that you could do. And so do we
get a large absence of this data and it does
it further call into question the credibility of this data
in the future is what is on my mind. My
answers largely know. I think if they were going to
do that, then you would have seen evidence of it.
(31:12):
But you know, that is a threat over there. And
I think these types of data points that you can
rely upon, that are released regularly and that you don't
have to question like you do with every data point
coming out of China makes the US economy and markets
work in an efficient way that can't exist in other
parts of the world.
Speaker 3 (31:31):
And so this is to a huge benefit.
Speaker 4 (31:33):
Yeah, and no question.
Speaker 5 (31:34):
And the other concern that I have is for the
Federal Reserve, who is effectively flying blind for longer and
longer periods of times. The more that this drags on,
that is certainly a challenge for them in what was
already a very challenging environment.
Speaker 3 (31:49):
Let's take a quick break.
Speaker 2 (31:51):
When we come back, we'll touch on markets again, which
are again trying to rally into positive territory as that stack.
Speaker 1 (31:57):
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Speaker 6 (32:31):
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Speaker 2 (33:04):
We've got markets staging a comeback here. Dow Jones Industrial
Average currently up one hundred and twenty six points, about
a quarter of a percent, the SMP still down, but
now only nine points a little more than a tenth
of a percent, and the Nasdaq down about one hundred
and twenty nine points, close to six tenths of a percent.
But you know, both the SMP and NASDAK were off
substantially more, as was the Dow, but all three major
(33:26):
indices staging a bit of a comeback and early trading again.
The concern for markets this morning was doked by further
escalation between the United States and China on the trade
tariff front, and specifically China targeting some US owned ship
making assets in South Korea. So what do you have
for US for a stack roulette, Poul Mike, we've been talking.
Speaker 4 (33:45):
A lot about perhaps there's an AI bubble out there.
Speaker 5 (33:48):
We'll see on that. One thing that I think is
a bubble that's not getting talked about enough is protein
and food.
Speaker 4 (33:54):
Okay, it's getting out of control. Whathere?
Speaker 5 (33:56):
You've got the likes of Douredo's sing that it has
a higher protein version of its product. You now have
pop Tarts announcing that they have a higher protein version
of their product.
Speaker 4 (34:08):
You've got Aggle waffles, You've got.
Speaker 2 (34:10):
Is this everybody trying to make a product for like
Jim rats?
Speaker 3 (34:15):
Like, what's going on?
Speaker 6 (34:16):
A lot of this conscious?
Speaker 5 (34:17):
A lot of this ties in exactly what Tucker's mentioned
is health conscious.
Speaker 4 (34:21):
The fears around.
Speaker 2 (34:22):
How does me eating a dorita with more protein make
me healthy?
Speaker 6 (34:26):
Because they think you're dumb. That's why that's literally what
it is. They put protein on the box like, oh, well, any.
Speaker 3 (34:32):
I mean Jerry's going to buy this? Jerry's out. I
might be dumb. It might do.
Speaker 4 (34:39):
Many users can't donate.
Speaker 3 (34:41):
His chicken last night, I'm gonna give hm a pop tart.
Speaker 6 (34:43):
Yeah, same thing.
Speaker 5 (34:44):
It's got protein in it, babe, don't worry about it. It
has sixty percent of his daily sugar intake, but it
has a little bit more protein. Okay, many users of
GLP ones are allegedly looking to increase their protein intake
to retain muscle mass. So that's part of this push
as well, sort of betting on this idea that those
drugs for weight loss become more popular and as a
(35:04):
result catering their products to those consumers.
Speaker 2 (35:09):
But somehow, how many years do you give it before
the protein additive that they have to put in there,
we'd learn is just as harmful as the artificial colors.
I can't speculate on that, but I can five year
under I can predict that there's no way we're still
doing this protein craze a year or two from now.
Speaker 4 (35:26):
I just don't think now.
Speaker 5 (35:28):
The experts may be against me here because I apparently
they claim that there is a long way to go.
The global market for foods fortified with protein is estimated
to reach more than one hundred billion by twenty thirty,
up from sixty seven billion and twenty twenty three, according to.
Speaker 4 (35:42):
Grand View Research.
Speaker 2 (35:44):
ID like to bet the under on that. I'm just
picturing again. There's a lot of reasons I don't go
to the gym, but I don't go to the gym.
But I'm just picturing, you know, one of those giant
dudes with a huge arms, tiny little chicken legs, and
you know, muscle milk in one hand and a bag
of Tritos and you've got the dusty orange stuff getting
all over the weights and just it doesn't seem.
Speaker 5 (36:05):
Not only that, but Mike, fittingly, it's Dorito's jacked jacks,
like a very good image for those those gym guys
to have. But the same thing applies with Ego waffles
and pop tarts.
Speaker 4 (36:24):
It's everywhere.
Speaker 2 (36:25):
There's a coworker that I have who Paul knows immediately
who comes to mind. But I'm just gonna have to
load up on all of this stuff and and put
it right in his office for him, because not only
you know, is he a workout enthusiast, but he frequently
does eat pop tarts, so now he.
Speaker 3 (36:42):
Can get his proteins.
Speaker 2 (36:43):
Have to I will have to make this clear to
him and just stuff his office with it.
Speaker 3 (36:49):
You're putting too much solar on your roof.
Speaker 2 (36:51):
I don't think anybody will be over the course of
the next uh several years, here as a lot of
those tax credits now phase out. But I do recall
when I was putting it on my own roof, a
number of companies talking to me about how much they
that I should put on there. And you know, especially
my father in law in Arizona when he was doing
his they were you know, proposing like, hey, you know,
(37:12):
put these extra panels on your roof. You can sell
it back to the grid and you know, put up
one hundred and thirty percent of what you actually need,
and you know you can you can make a killing
on this stuff. Some people calling that into question now
because what many of those utilities are finding is, yeah,
during the peak generation times, we don't need to buy
all of this solar back from you. We have no
(37:33):
use for it, We have no need to take all
of this extra capacity.
Speaker 3 (37:38):
It is not helping us in any meaningful way.
Speaker 2 (37:40):
And so when I did it on my own, it
was primarily because the tax breaks. But you know, it
is probably going to pay back in about six years.
But I specifically targeted like sixty percent of what I
might use so that I'm not reliant on selling it
back to the utility company to make my money on
all of this companies they don't want it in some
(38:03):
places during certain times of the day, they don't need it.
They don't want it, and they can't store it. The
storing stuff, Yeah, quick break markets making that comeback I mentioned.
We'll have a full recap for you tomorrow. Have a
great rest of the day, folks,
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
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(01:06):
Armstrong and Paul Lane.
Speaker 2 (01:11):
Good morning, Welcome back to the Financial Exchange. It's Mike,
Paul and Tucker with you on a Tuesday morning here
where markets are trying to stage a comeback here again.
We had markets off nearly three SMP was off two
point seven percent on Friday, rallied yesterday. This morning on
further escalation from China, we saw them selling off. We
(01:32):
had the S and P five hundred at one point
at least in pre markets was down by one and
a quarter percent. We're now only down about a third
of a percent on the SMP, flat on the Dow,
still down eight ten percent on the NASDAQS.
Speaker 3 (01:45):
We'll keep you.
Speaker 2 (01:46):
Updated on where things are going. But you know, someone
out there buying stocks in spite of the concerns of
China and US trade escalation. Got a dump of Wall
Street earnings this morning from the likes of Goldman, Sachs, JP,
Morgan Wells, Fargo, and City Group, who, as they always do,
reported beats pretty much across the board. But stocks are
(02:06):
kind of all over the place in reaction to them,
some reacting positively on beats on expectations, others clearly missing
where some of the analysts wanted to see things. In
terms of the rest of this week, we will have
continued earnings reports coming out.
Speaker 3 (02:21):
Today after the bell.
Speaker 2 (02:23):
Not much, but tomorrow we will hear from Bank of America,
Morgan Stanley, Abbott Labs, Progressive. I'm interested in anyone in
the insurance space right now, just based on yesterday's or
the weekend warning from SMP Global to insurance companies specifically.
Speaker 3 (02:42):
About their exposure to private credits.
Speaker 2 (02:44):
So I'll be interested to hear from any you know,
any companies that participate in the insurance industry, want to
hear from them and their exposure to this private credit
blip that we've been seeing. PNC is also reporting tomorrow
before the bell Thursday. I don't think we have a
whole lot. Charles Schwab reporting before the bell Thursday, Bank
of New York Mellon also and then Friday, we do
(03:07):
have American Express reporting, so we'll see if we get
that confirmation that we've been hearing from other companies that
really service a high net worth clientele like American Express does,
which is high net worth folks keep on spending in
spite of their lower income counterparts pulling back quite a bit.
Anything else catching your eye this morning, Paul in markets, No,
(03:31):
I think.
Speaker 4 (03:31):
You hit on some of the main aspects there.
Speaker 2 (03:33):
So we've had this piece published a couple times Bloomberg
speaking about the Great Debasement debate and the trade that's
rippling across global markets. And to be clear here, what
you're talking about is a rise in asset prices, especially
compared to global currencies. We talked about silver in the
first hour of the show. Anybody that's missed it has well,
(03:56):
it's tough to have missed where gold has gone over
the course of the.
Speaker 3 (03:59):
Last several months.
Speaker 2 (04:00):
Cryptocurrencies, stock prices, and others are appreciating dramatically, and the
question becomes, well, if you're seeing every heart asset price
move up at the same time, or even assets that
aren't traditionally deemed herd assets like cryptocurrencies moving up, what
(04:20):
does that say about investor's confidence in holding their own
currency or holding assets that are denominated in their own currencies.
And this piece at least makes the case that, hey,
investors are growing increasingly concerned about global borrowing and country's
abilities to pay back that future that future cost.
Speaker 5 (04:41):
Yeah, Basically, what you have is United States government with
I believe, you know, some thirty six trillion dollars outstanding
from a debt perspective, and for the longest time this has.
Speaker 4 (04:54):
Not been an issue.
Speaker 5 (04:55):
Well, you know, you might hear pun ins talk about
it in economists talk about it, but it has isn't
really warranted any sort of economic issue.
Speaker 2 (05:04):
Now, if you have bet on the US economy struggling
because of how much debt we've taken, you would have
been much wrong for the last fifty years. In spite
of the legitimate concerns that I personally have. Any of
those concerns, if you put them into a trading thesis,
you've been wrong exactly.
Speaker 5 (05:20):
And so now you are facing a period of time
where there's potential for upward pressure on interest rates.
Speaker 4 (05:27):
Certainly, we went through an interest rate.
Speaker 5 (05:28):
Cycle of a fifteen to twenty year span of time
where interest rates were incredibly low. Who's to say what
the next twenty years look like. But if there is
thirty six trillion dollars of debt outstanding and all of
a sudden, from a United States standpoint, it's questioned as
to the viability of the United States government paying back
its debt, which has never really been an issue. And
if you look at financial markets, the risk free rate
(05:51):
of return that's assessed in finance is based on a
US treasury. It is the gold standard, you know, pun
intended with the gold chatter of being able to pay
back principle. But as a result of all these debt concerns,
you do see that potentially some of the market movements
this year would lead to the fact that people are
(06:11):
concerned about that debt level, and maybe that is what's
driving up these natural metals. I don't know if I'm
willing to make that leap just yet based on one
tremendous year to be clear of performance for silver and gold,
but if you were looking for ways to try and
de emphasize the impact of the US debt in your portfolio,
(06:35):
maybe that's these would be the places that people would pivot.
Speaker 3 (06:38):
To me.
Speaker 2 (06:39):
This is not just a US centric focus issue, sure right,
I mean plenty is being written about the dollar and
Treasury losing its reserve currency status or Treasury is losing
their safe haven status.
Speaker 3 (06:53):
Many people are voicing that opinion.
Speaker 2 (06:55):
But I think part of it, I think at least
part of what's driving all of this is the same
decision being made by many other countries. Right, you have
most of the European Union lifting any caps that they
had on deficit spending in order to boost defense spending.
You have that occurring in Japan, you have that occurring elsewhere.
And so what was a it wasn't just a United
(07:20):
States issue, but we were definitely the you know, the
biggest issuer of this debt, and that has certainly not
slowed down. In fact, it's accelerated over the course of
the last ten years when you look at deficit to GDP,
even this year with the tariff revenue coming in, it
has grown even further. But when you have every country
(07:40):
in the world doing it at the same time, you know,
if you're sitting in France trying to evaluate, hey, what's
the future value of my own currency and the future
value of a bond that I'm buying, and what will
I be paid back in will the Euro still be
worth what it is now? You might be making the
same bet that's some US and best are. And so
(08:01):
even if it doesn't result in complete debasement.
Speaker 3 (08:04):
Of the dollar or or you know, a new normal
for what US treasuries actually mean in global markets, it
can still lead to asset price inflation and that can
cause a number of its own problems.
Speaker 5 (08:18):
Ultimately, I'm just not, you know, ready to make the
full jump yet. I think in a period of time
this is a reasonable case to write out this article.
But with just years of history in the size of
the treasury market, perhaps there is a setback, but there
are resources in place to correct this issue. I'd rather
they address it sooner rather than later. But I don't
(08:40):
think it's necessarily a long term trend just yet.
Speaker 3 (08:42):
Let's take a quick break when we come back.
Speaker 2 (08:45):
Somebody made one hundred and sixty million dollars in crypto
markets on Friday, and the timing of the trades were
pretty interestingly placed. We're going to be covering that and
allegations of cider trading and crypto markets next on The
Financial Exchange.
Speaker 1 (09:04):
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Speaker 6 (09:48):
All right's for sure of you here on the Financial
Exchange And today would have been Roger Moore's ninety eighth birthday.
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(10:12):
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Speaker 2 (10:45):
So we hear on the Financial exchange have been focused
on equity markets and the reaction to the president's announcement
on tariffs on China. What has also been making a
very big splash that we focus a little bit less
on typically is what's happened and in crypto markets since then.
And to be clear, the sell off that occurred, total
(11:07):
liquidations on crypto derivative exchanges hit an all time high,
and frankly, it wasn't even close on Friday. It was
the biggest liquidation event you've ever seen in crypto. Doesn't
mean it was the biggest sell off you've ever seen
on a percentage basis, but it was a massive event.
It raised over nineteen billion dollars in value from the
(11:27):
cryptocurrency we were sitting at around nine thirty am. Crypto
bitcoin especially was sitting at one hundred twenty two thousand,
four hundred and forty seven dollars per coin. By what
time is that? By around five PM you got to
(11:47):
a low of one hundred eight thousand, a massive self.
It recovered some of that today you're sitting about one
hundred eleven thousand dollars per coin, but you had this
massive sell off occurring seemingly sparked by the President's and
now announcements on tariffs. And because of the way that
crypto trades, we're able to tell something very specific, which
(12:09):
is two accounts made one hundred and sixty million dollars
in trades on this specific information, and many of them
very suspiciously timed with the announcement from the president.
Speaker 5 (12:27):
Yeah, one hundred and sixty million of profit on these
two particular trades. One was placed a minute before Trump's
tariff announcements, sparking speculation as you would imagine that this
was an insider trading move. The other was slightly earlier.
(12:48):
But between these two it was deposits of eighty million
and thirty million were put into accounts that were betting
on bitcoin going down. And then, Mike, like you mentioned,
within minutes after the announcement that Trump made against China
for potentially one hundred percent tariffs, you saw a twelve
(13:08):
percent drop in bitcoin. Making these positions that they took,
which were short positions basically betting on bitcoin going down
incredibly lucrative. So like has been an issue historically with
the stock market, issues with insider trading, you know, but.
Speaker 2 (13:26):
At least with the stock market, like when you have
something like this happened, so you know, for folks that
aren't familiar, Let's say you had buy shares in an
individual company and minutes later it moves up on an
announcement by the company when it comes to, you know,
some material fact that they had to disclose, the sec
(13:48):
tracks all of those transactions to your brokerage account and
goes and.
Speaker 3 (13:52):
Talks to those folks.
Speaker 2 (13:52):
There was actually a local police officer in Massachusetts who
was charged with insider trading based on this exact series
of facts. Actually got some insider information from someone. I
think it was at a biotech company, if memory serves me,
placed a bunch of trades. I think the guy went
to prison. If you personally own crypto today, this should
(14:14):
make you furious because this is profiting at your expense.
If again, I find it hard to believe that the
timing of these trades right a minute before the president's
announcements on shorting a bunch of crypto, I find it
really hard to believe that that was not somebody that
had some sort of inside information. I'm not making, you know,
(14:36):
allegations that it was a member of you know, anyone's family.
Speaker 3 (14:39):
But like you know.
Speaker 2 (14:39):
It could be a press reporter, it could be you know,
somebody who knew this announcement was coming.
Speaker 3 (14:44):
It could be a social.
Speaker 2 (14:45):
Media manager who knows. But if you invest in crypto personally,
this type of thing should make you absolutely furious because
it is costing you money as somebody who you know
believes this stuff, so this stuff should make It's also
where I lead to my belief that eventually this is
(15:06):
going to piss off enough people that this stuff's going
to be regularly just like stocks, right, and frankly, stuff
like that should be right if it's proven that you're
in fact trading on inside information, you know, that's that's
illegal and it should be you know, gone after. But
because of the nature of the regulatory environment for crypto,
it makes it much easier to do in this space,
(15:28):
whereas you just cannot pull that sort of thing off
in the stock market.
Speaker 5 (15:32):
What's so funny is that it would move this much
on a policy announcement on you know, economically unrelated to crypto, right.
I mean, that was the whole focus behind crypto in
the first place. It was something that was supposed to
be not correlated to anything you know, economic or in
the markets. And yet you have it moving significantly off
of something that the stock markets would move equally quickly.
Speaker 3 (15:54):
Yeah, you know, it is.
Speaker 2 (15:56):
It is very clear to me that at this stage,
you know, most of the at least the major care
and we didn't even you know, we were talking about
bitcoin here. We didn't even talk about some of the
smaller coins that got completely wiped out on Friday. But
at this stage, you know, for most of its time,
if you go and track this and chart it against
like the NASDAK, it's basically trading as a leveraged Nasdaq
(16:19):
type of holding.
Speaker 3 (16:19):
Right.
Speaker 2 (16:20):
It's just a very volatile read on what's going on
in the stock market. There can be other outside things
that move it in one direction or another, but that's
that's what it's looked like. And yeah, so when you
have a massive announcement that you know is going to
move stocks, it's a very easy thing to trade on
with far fewer ramifications than making the same bed on stocks,
(16:40):
because you can be sure if somebody had shorted a
bunch of the S and P five hundred right before
this announcement, they'd be getting a call.
Speaker 5 (16:46):
Oh yeah, big time. Just to expand further on the
Lever's piece. What Mike's alluding to is this idea that, hey,
if the Nasdaq were to go down one two percent,
that typically something crypto related that has more enhanced volatility
characteristics would go down five six percent, multiple times what
you'd see from the major indices out there. And that's
the deal with investing crypto. It's very volatile.
Speaker 2 (17:07):
So, according to a Bank of America survey, most investors
say that AI stocks are in a bubble, which now
makes me question my narrative about AI stocks being in
a bubble because of the retail that's the consensus, then
we're probably wrong, is kind of where I land on
all of this. So one Bank of America performed a
(17:29):
survey about fifty four fifty four percent of participants in
the October poll indicated that tech stocks were looking too expensive,
which was a pretty significant about turn from where they
had been, you know, just a few months or just
last month rather and so you now have the sentiment
(17:50):
clearly shifting more towards the idea that, oh, what sort
of concerns should we have here about the state of
crypto markets, Sorry, not about state of crypto marks. We're
talking about that last about the state of these AI
bets that are being made and what it means for
the overall industry. But again, I guess I go back
to if you have a majority of responding saying this,
(18:14):
it makes it tough for the real crisis to happen
in that moment. If everybody's worried about it, then everybody's
preparing for it, presumably right, Or.
Speaker 3 (18:22):
Maybe they're not. Maybe they're just saying they know it's
a bubble and they're just going to ride that wave.
Speaker 5 (18:26):
What it probably what it might do is enhance sensitivity
around any news related to AI that is more pessimistic
in nature. I don't know if you get that anytime soon,
but perhaps it does just have investors a little bit more.
Speaker 2 (18:43):
The biggest argument I get from folks that this isn't
some sort of bubble is one, it's super innovative technology
that's going to change the world, and I dismiss that one.
But you know, earnings are still growing on it. And
my counterpoint is, so did they back during the tech
bubble until they stopped growing and that is the point
where stocks started collapsing. So I don't like to use
(19:05):
the evidence that, oh yeah, earnings are growing as evidence
that this continued rally can continue. Of course it can
so long as that, you know, so long as that
continued growth happens, then of course it can keep going.
The question is when does that growth on earning start
to slow down and pivot to shrinking earnings. Quick break,
(19:25):
We're gonna have a full market recap coming up next.
Stocks trying to mount a bit of a comeback at
least earlier.
Speaker 3 (19:31):
During the eleven o'clock hour. We'll cover that in more 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 market so far today right here on the
Financial Exchange Radio Network.
Speaker 6 (19:58):
Market's currently in negative territory after tensions between the US
and China increased. Beijing moved to effectively banned Chinese companies
from doing business with US subsidiaries of a South Korea
ship building giant. Outside of trade, Wall Street's also sifting
through third quarter bank earnings posted earlier this morning. Right now,
(20:20):
the Dow is down modestly, now only down eight points,
trying to claw back its earlier losses. SMP five hundred
is down nearly half a percent or thirty points, Nasdaq
down over nine tenths of one percent or two hundred
and nine points lower. RUSSA two thousand is now edging higher.
A ten year treasure reel is flat currently a four
(20:41):
point zero four six percent, and crude oil down nearly
two percent lower. Trading a fifty eight dollars in thirty
four cents a barrel. JP Morgan b third quarter expectations,
where it's trading revenue hit a record of nine billion dollars.
JP Morgan shares are up by almost or excuse me,
down by two percent. Goldman Sachs also exceeded estimates, posting
(21:03):
better than expected investment banking activity and bond trading. Goldman
stock is down by three percent. Wells Fargo b third
quarter expectations as well, where the bank raised its profitability targets,
sending that stock up now over six percent higher. Black
Rock in City Group also beat third quarter forecast. Those
stocks are seeing modest gains outside of bank earnings. Johnson
(21:26):
and Johnson beat third quarter estimates and raised its annual
sales outlook. The healthcare giant also said it plans to
split off its orthopedics unit. Within two years. Johnson and
Johnson shares are down almost two percent. Meanwhile, Boeing said
it delivered fifty five aircraft to customers last month, putting
it on track for its best year since twenty eighteen.
(21:49):
Forty of the deliveries were seven thirty seven maxes. Boeing
stock is edging higher, and Dominos Pizzas said its third
quarter US same store sales grew five point two percent
from a year ago, beating analysts expectations. The pizza chain
said promotions and a new stuff Cruss Pizza we're helping
boost us carry out and delivery sales. Domino shares are
(22:11):
up over three percent. I'm Tucker Silva and that is
Wall Street Watch and A the previous segment, we asked
you the trivia question how many James Bond movies did
Roger Moore make? That would be seven seven movies. Jack
from Portland, Maine is our winner today taking on the
Financial Exchange Show T shirt. Congrats to Jack, and we
(22:31):
play trivia every day here in the Financial Exchange See
complete contest rules at Financial Exchange Show dot com.
Speaker 2 (22:37):
Well as every day goes on, we seemingly get a
new announcements between open Ai and some other company that's
going to be responsible for providing them with semiconductors, mainframe computers,
power generation to power all of this stuff. And the
most recent has been Broadcom, and on the announcement their
(22:58):
stocks stored on Monday after this deal was announced with
open Ai, the maker of chat GPT together. The announced
deals that have been put together so far with open
Ai includes Nvidia, Advanced micro Devices and others. They would
involve filling data centers with chips and computing infrastructure that
(23:21):
would consume twenty six gigawatts of electricity. If it doesn't
mean anything to you, it doesn't mean anything to me either.
To give you a sense, that is substantially more electricity
than what New York City currently uses at peak demand
during the summer. Yeah, so it's a lot of electricity.
It would seem to power all the air conditioning in
(23:42):
New York City. It seems like a lot of electricity,
and a lot needs to go right for all this
to work. Waltreet Journal is writing today about how this
is a special risk for Broadcom. I don't think they
have much of an choice for their investors but to
participate in this. But I guess what is the risk
(24:02):
for these chip suppliers when making these deals with open ai,
because you know, obviously this is the company who is
at the forefront of artificial intelligence development. Yes, they're burning
through cash, but they seemingly have a bunch of investors
who are willing to throw more and more cash at them.
So what is the risk to a company like Broadcom
that signs a deal that inks a deal to do
(24:24):
business with open ai.
Speaker 5 (24:25):
You're basically putting the cart in front of the horse
where you're going to have to spend a significant amount
of investment in capex to build out these custom chips
to assist with the build out of the computing that's
required behind this. For a company that, don't get me wrong,
you know, was one of the fastest apps or products
(24:46):
out there to reach one hundred million users. Ever, I
mean there's scaling of the use of open aishat GPT
has amazed many out there, and now they're standing at
about seven hundred million weekly users. So there certainly is
a lot of justified enthusiasm behind what they're doing. But
it's a company also that is projected to do about
(25:06):
thirteen billion of revenue.
Speaker 4 (25:08):
I've heard.
Speaker 5 (25:08):
Maybe it's a private company, So we don't know if
that number is exact, but I've heard maybe closer run
rate of twenty billion. But regardless, you're talking about hundreds
of billions of dollars of commitment for build out on
infrastructure that mike. The risk is, is open ai good
to pay back all of this debt and investment that
(25:30):
they're asking for many technology peers to take on as
part of this initiative. You're really banking on exponential revenue
growth for open ai once out everything up and running.
Speaker 3 (25:43):
Yeah. Clear.
Speaker 2 (25:44):
I mean to be clear, the deal that open ai
is striking with Broadcom is not saying, hey, here's a
one hundred million dollars go build this stuff out. It's
if you build the chips based on our custom designs
that we need, then we will pay you for them.
Speaker 1 (25:58):
Right.
Speaker 2 (25:58):
That's years of buildout broad Comedies to design and go
forward with in order to actually someday sell these things.
And if they happen to be and it happens to
be the biggest growth industry that we've seen since the Internet,
then it could be huge business for them. But if
any number of things happens, Broadcom doesn't execute on the
design of the chips properly. If open Ai turns out
(26:22):
to not have the revenue to pay them, there's any
number of things that could go wrong for these companies,
and Broadcom is in a position of, Hey, we have
to spend this money in order to get to the
point where we could sell it.
Speaker 5 (26:33):
And now with all the deals they've made, Mike, you've
got the whole technology, not the whole A lot of
the technology sector is intertwined with this. Oracle had tremendous
growth in its stock from announcing the five year, three
hundred billion dollar deal that it struck with open Ai.
So all of this investment is on the optimism that
they will turn out to be richly profitable and incredibly successful,
(26:56):
and I think for all of us as investors, you
want that ultimately, but there's a lot of risks that
are in line there.
Speaker 4 (27:02):
It costs fifty.
Speaker 5 (27:03):
Billion dollars to build out a gigawatt capacity of power
you were just talking about, you know, twenty six gigawatts
that will need to be use. They're going to invest
over the course the next five years a trillion dollars
to build out the power capacity that they're looking for,
and ultimately, you got to have the revenue to back
this up. And what's probably not talked about a lot
(27:24):
is that's just the installation of these data centers. It's
not the ongoing maintenance and replacement of the chips within
them too that will come from this. So it's fascinating.
It's the biggest story right now in the market. It
is truly a huge bet that a lot of these
companies are making on this technology, Paul.
Speaker 2 (27:45):
Not only is it a huge bet for the markets
at this moment, it's a huge bet for the overall economy.
Our economy would not be growing in the way it
is today without the actual spend that's occurring on artificial
intelligence build out. If this topic fascinates, if you're interested
in the direction this is going, we do have a
few spots left for our event on Thursday of this
(28:07):
week at the Showcase super Lucks in Chestnut Hill. We're
doing a live broadcast of the Financial Exchange, followed by
a free lunch and meeting with the Armstrong Advisory Group
as we give our perspective on what has happened so
far this year, the number of different markets we've already
been through, just getting through October, and what we may
see as we head into the end of year and
(28:27):
twenty twenty six.
Speaker 3 (28:28):
We'd love for you to join us.
Speaker 2 (28:29):
There's a few spots left again chestnut Hill Showcase super
Lucks Thursday of this week, that's the sixteenth of October.
Kick things off right at ten am when the show starts,
But we'd love for you to join us for all
or some of the program. You can call us at
eight hundred three to nine three for zero zero one
to reserve your spot. You can get a bunch of
details at Armstrong Advisory dot com. There's a banner right
(28:52):
at the top of the page with the details on
the event eight hundred three nine three for zero zero one.
Speaker 1 (28:58):
The proceeding was paid for by our Strong Advisory Group,
a registered investment advisor. Nothing in the ad or in
any Armstrong guide a specific financial, legal, or tax advice.
Consult your own financial, tax into state planning advisors before
making any investment decisions. Armstrong may contact you to offer
investment advisory services.
Speaker 2 (29:14):
All right, Well, I'm meeting maybe the over exaggeration of
the week here with the shutdown government shutdown, consequences for
the Bureau of Labor Statistics being dire, but I will
admit that we are on the cusp of maybe losing
out on a whole bunch of information here. So again,
the BLS puts together a number of reports on the
state of the economy, including the Consumer Price Index and
(29:34):
the Jobs Report, two of the ones that we cite
most frequently on this program.
Speaker 3 (29:38):
First off, that Job's report.
Speaker 2 (29:39):
We missed the one for September, but the BLS did
compile all the data for it, so presumably we will still.
Speaker 3 (29:46):
Get that report.
Speaker 2 (29:47):
YEP, at some point. The survey period for these reports
occurs in the middle of the month, meaning if the
government remains shut there's a good chance that we just
won't get a report for October because they do need
to survey these businesses and these households, which.
Speaker 3 (30:04):
Is currently not happening, and it usually would be.
Speaker 2 (30:07):
So even if the government managed to reopen tomorrow, which
doesn't seem likely, I would suspect that the data gathering
process is going to be shortened and it's going to
be difficult to get a good read on the labor market.
The longer it goes on, the bigger the chances like,
oh yeah, you just can't put together an October jobs
report because it doesn't make a ton of sense to
(30:28):
ask people in December what the state of their hiring
was back in October. So there is that chance, I think,
you know, look, the bigger risk overall is that this
type of data gets called into question. It already has
the President fired the old head of the BLS and
has put somebody in there who's been questioning the methodology
and questioning you know, where it all comes from. I
(30:50):
think most experts would agree that their methodology and the
way that they do all this, while imperfect, is probably
the best that you could do. And so do we
get a large absence of this data and it does
it further call into question the credibility of this data
in the future is what is on my mind. My
answers largely know. I think if they were going to
do that, then you would have seen evidence of it.
(31:12):
But you know, that is a threat over there. And
I think these types of data points that you can
rely upon, that are released regularly and that you don't
have to question like you do with every data point
coming out of China makes the US economy and markets
work in an efficient way that can't exist in other
parts of the world.
Speaker 3 (31:31):
And so this is to a huge benefit.
Speaker 4 (31:33):
Yeah, and no question.
Speaker 5 (31:34):
And the other concern that I have is for the
Federal Reserve, who is effectively flying blind for longer and
longer periods of times. The more that this drags on,
that is certainly a challenge for them in what was
already a very challenging environment.
Speaker 3 (31:49):
Let's take a quick break.
Speaker 2 (31:51):
When we come back, we'll touch on markets again, which
are again trying to rally into positive territory as that stack.
Speaker 1 (31:57):
Roulette Fundani 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
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(32:20):
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 6 (32:31):
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Speaker 2 (33:04):
We've got markets staging a comeback here. Dow Jones Industrial
Average currently up one hundred and twenty six points, about
a quarter of a percent, the SMP still down, but
now only nine points a little more than a tenth
of a percent, and the Nasdaq down about one hundred
and twenty nine points, close to six tenths of a percent.
But you know, both the SMP and NASDAK were off
substantially more, as was the Dow, but all three major
(33:26):
indices staging a bit of a comeback and early trading again.
The concern for markets this morning was doked by further
escalation between the United States and China on the trade
tariff front, and specifically China targeting some US owned ship
making assets in South Korea. So what do you have
for US for a stack roulette, Poul Mike, we've been talking.
Speaker 4 (33:45):
A lot about perhaps there's an AI bubble out there.
Speaker 5 (33:48):
We'll see on that. One thing that I think is
a bubble that's not getting talked about enough is protein
and food.
Speaker 4 (33:54):
Okay, it's getting out of control. Whathere?
Speaker 5 (33:56):
You've got the likes of Douredo's sing that it has
a higher protein version of its product. You now have
pop Tarts announcing that they have a higher protein version
of their product.
Speaker 4 (34:08):
You've got Aggle waffles, You've got.
Speaker 2 (34:10):
Is this everybody trying to make a product for like
Jim rats?
Speaker 3 (34:15):
Like, what's going on?
Speaker 6 (34:16):
A lot of this conscious?
Speaker 5 (34:17):
A lot of this ties in exactly what Tucker's mentioned
is health conscious.
Speaker 4 (34:21):
The fears around.
Speaker 2 (34:22):
How does me eating a dorita with more protein make
me healthy?
Speaker 6 (34:26):
Because they think you're dumb. That's why that's literally what
it is. They put protein on the box like, oh, well, any.
Speaker 3 (34:32):
I mean Jerry's going to buy this? Jerry's out. I
might be dumb. It might do.
Speaker 4 (34:39):
Many users can't donate.
Speaker 3 (34:41):
His chicken last night, I'm gonna give hm a pop tart.
Speaker 6 (34:43):
Yeah, same thing.
Speaker 5 (34:44):
It's got protein in it, babe, don't worry about it. It
has sixty percent of his daily sugar intake, but it
has a little bit more protein. Okay, many users of
GLP ones are allegedly looking to increase their protein intake
to retain muscle mass. So that's part of this push
as well, sort of betting on this idea that those
drugs for weight loss become more popular and as a
(35:04):
result catering their products to those consumers.
Speaker 2 (35:09):
But somehow, how many years do you give it before
the protein additive that they have to put in there,
we'd learn is just as harmful as the artificial colors.
I can't speculate on that, but I can five year
under I can predict that there's no way we're still
doing this protein craze a year or two from now.
Speaker 4 (35:26):
I just don't think now.
Speaker 5 (35:28):
The experts may be against me here because I apparently
they claim that there is a long way to go.
The global market for foods fortified with protein is estimated
to reach more than one hundred billion by twenty thirty,
up from sixty seven billion and twenty twenty three, according to.
Speaker 4 (35:42):
Grand View Research.
Speaker 2 (35:44):
ID like to bet the under on that. I'm just
picturing again. There's a lot of reasons I don't go
to the gym, but I don't go to the gym.
But I'm just picturing, you know, one of those giant
dudes with a huge arms, tiny little chicken legs, and
you know, muscle milk in one hand and a bag
of Tritos and you've got the dusty orange stuff getting
all over the weights and just it doesn't seem.
Speaker 5 (36:05):
Not only that, but Mike, fittingly, it's Dorito's jacked jacks,
like a very good image for those those gym guys
to have. But the same thing applies with Ego waffles
and pop tarts.
Speaker 4 (36:24):
It's everywhere.
Speaker 2 (36:25):
There's a coworker that I have who Paul knows immediately
who comes to mind. But I'm just gonna have to
load up on all of this stuff and and put
it right in his office for him, because not only
you know, is he a workout enthusiast, but he frequently
does eat pop tarts, so now he.
Speaker 3 (36:42):
Can get his proteins.
Speaker 2 (36:43):
Have to I will have to make this clear to
him and just stuff his office with it.
Speaker 3 (36:49):
You're putting too much solar on your roof.
Speaker 2 (36:51):
I don't think anybody will be over the course of
the next uh several years, here as a lot of
those tax credits now phase out. But I do recall
when I was putting it on my own roof, a
number of companies talking to me about how much they
that I should put on there. And you know, especially
my father in law in Arizona when he was doing
his they were you know, proposing like, hey, you know,
(37:12):
put these extra panels on your roof. You can sell
it back to the grid and you know, put up
one hundred and thirty percent of what you actually need,
and you know you can you can make a killing
on this stuff. Some people calling that into question now
because what many of those utilities are finding is, yeah,
during the peak generation times, we don't need to buy
all of this solar back from you. We have no
(37:33):
use for it, We have no need to take all
of this extra capacity.
Speaker 3 (37:38):
It is not helping us in any meaningful way.
Speaker 2 (37:40):
And so when I did it on my own, it
was primarily because the tax breaks. But you know, it
is probably going to pay back in about six years.
But I specifically targeted like sixty percent of what I
might use so that I'm not reliant on selling it
back to the utility company to make my money on
all of this companies they don't want it in some
(38:03):
places during certain times of the day, they don't need it.
They don't want it, and they can't store it. The
storing stuff, Yeah, quick break markets making that comeback I mentioned.
We'll have a full recap for you tomorrow. Have a
great rest of the day, folks,
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