July 11, 2025 • 38 mins
Chuck Zodda and Marc Fandetti discuss the Nasdaq showing signs of mirroring the 90's but could it avoid the same bubble? Jamie Dimon has a blunt message for Europe: ‘You’re losing’. Ford breaks another record, this time it isn't a good one. Nintendo's use of rare-earth materials could it expose it to the whims of China. Paul LaMonica, Barron's, joins the show to chat about copper pricing.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
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(00:43):
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(01:06):
Zada and Mark Vandebti, Chuck.
Speaker 2 (01:13):
Mark and Tucker with you here.
Speaker 3 (01:15):
And as we wrap up the week, we got stocks
selling off very very modestly, kind of similar to what
we saw on the first day of the week, where
the Dow was off two hundred and seventy four points,
which is about two thirds of a percent, the SMP
is off twenty four points, about a third of a percent,
and the NASDAK holding up better than both of those,
(01:35):
down thirty eight points or about a quarter percent. Bonds
in sell off mode as well. Tenure Treasury back up
above four point four percent, up six point one basis
points to four point four oh seven. And we've got
oil today also moving up a dollar fifty six a
barrel on West Text Intermediate to sixty eight thirteen a barrel.
(01:58):
And we've got gold on the move as well, moving up.
Let's see, come on, there we go. We got gold
moving up as well, now up forty seven to ninety
an ounce, or about one point four percent. So this
comes on the back of President Trump late yesterday indicating
in a letter that he was set to raise the
(02:20):
rate of tariffs on Canadian imports that are not compliant
with USMCA from twenty five percent to thirty five percent
as of August first, And so we're once again in
this waiting game where it's like, is this going to
be imposed or is this going to get waved away,
you know, at the last minute or shortly after it
(02:41):
was set to be imposed. Because this is kind of
what we've seen on quite honestly, like a monthly basis
since since early February, is this type of things. So
we'll see what ends up happening here. But what I
can tell you, market's not really reacting too seriously to it,
just because I don't think they believe it's going to happen.
Speaker 4 (03:01):
Yeah, I'll repeat myself if you'll allow it, Chuck from
the last hour, if I should pause there and make
sure that's okay, I'm gonna make that point.
Speaker 2 (03:09):
Okay, move it along.
Speaker 4 (03:11):
Tucker's given me the hey, move it along.
Speaker 2 (03:13):
Jack.
Speaker 4 (03:14):
Look, if you think tariff should be used to raise revenue,
you're probably and I would put myself in this camp.
Maybe replace the income tax eventually, which would be a
miracle and probably pro growth. But I'll stop proselytizing for now.
But if you're in that camp, you're a little disappointed.
You want to see tariffs put into place and do
their thing raising revenue. If you want to see tariffs
(03:37):
encourage people to buy domestically produced goods, i e. Reshore manufacturing,
restore the golden air of the economy that some people
think happened in the fifties and sixties. Sixties. That's misguided,
but honest people can disagree. You're also disappointed because you
want to see tariffs put into place and have the
effect of getting people to substitute from foreign to domestic goods.
(04:01):
So I can't imagine who other than people in the
media who are given a lot of fodder content that is,
to infuse into their programs like we do here talking
about tariffs. I can't imagine who's happy about where we
are today relative to where we were six months ago
or three months ago on Liberation Day. A lot of activity,
but nothing's actually changed.
Speaker 3 (04:22):
Let's talk a little bit about this piece from Barons.
This one really caught my eye. The headline is the
Nasdaq is mirroring the nineteen nineties. It isn't a bubble
this time. How does one know whether one's in a
bubble or not?
Speaker 4 (04:36):
You don't until after the fact. As your question implied,
should we define bubble?
Speaker 3 (04:42):
I was just gonna say, do we have a firm
definition for bubble?
Speaker 4 (04:46):
It's unsatisfactory and vague as you'd expect. Generally speaking. It's
when prices in anything, it could be a house, it
could be a stock, bond, whatever, depart from any reasonable
estimate of fundamental value. So what is that? Raises another question?
What is a reasonable estimate? That's usually some discounted cash
(05:06):
flow model based estimate. That is to say, you take
expected future dividends or rents if your own investment property,
or whatever the asset is, and you bring them back
to the present at some interest rate. The interest rate
is itself a subject to a judgment, but within a
range you can estimate what is a reasonable present value
(05:27):
of an asset. And when things depart a lot from that,
you could say markets have gone haywire.
Speaker 2 (05:32):
Can we talk about.
Speaker 3 (05:33):
Like good real examples of things that were bubbles that
that quite honestly we called out as bubbles at the time.
Speaker 4 (05:40):
Well, a lot of people in nineteen ninety eight ninety nine.
They were early of course, some of them even went
out of business. Most of them lost money, They lost
investors called the tech what we now call the tech bubble.
We take it for granted. That's it wasn't called well,
some people called it the tech bubble at the time,
but now everybody agrees that it was a tech bubble.
Florida real estate in the twenties, and just about every
(06:01):
decade from the twenties to the present has in pockets
experienced bubbles that then collapsed.
Speaker 3 (06:07):
I was gonna be the one I was gonna give
was ev Manufacturers in twenty twenty one, and all these
startups that were being valued tens of billions of dollars,
they hadn't made one car, and a lot of them
still haven't made one car.
Speaker 2 (06:18):
Yeah, you have gone out a bit like it was.
Speaker 4 (06:20):
Yeah.
Speaker 3 (06:21):
Clear, And we said at the time, like this the
auto business, you don't just throw like ten billion dollars
at it and make ten billion dollars. It's kind of
a hard thing to get into. And that's what we've seen.
The question on on you know, the the Nasdaq right now,
it's it's a one. There's one question that you need
to ask, will capex spending on semiconductors continue?
Speaker 2 (06:46):
It's the whole ballgame. It's the whole ball game.
Speaker 3 (06:50):
And if Microsoft continues to spend eighty billion dollars this
year and then one hundred billion dollars next year and
one hundred and twenty of the year after, the party
can keep going. If at some point it becomes untenable
for them to do so, party.
Speaker 2 (07:04):
Has to stop. Which one are we gonna get?
Speaker 3 (07:07):
I have no idea, But that's that's the whole ballgame,
and not just Microsoft.
Speaker 2 (07:12):
But you know, Microsoft spending.
Speaker 3 (07:14):
Eighty billion, metas spending fifty billion, Like if if these
companies can keep spending that money on in Vidia semiconductors,
the party's gonna keep going. If they don't, it won't.
And so this is the whole question here. Is this
just another Capex cycle or is this how it's gonna be?
M I don't have the answer on it, but it's
(07:39):
you know, earlier earlier this year, even before April second,
when the tariffs were announced, Since mid July of last year,
from like July first or July fifteenth through April one,
magnificent seven stocks were getting nowhere. You know, you had
in Nvidia, Microsoft stuck in neutral, Tesla was kind of
(08:02):
off doing its own thing just because of you know,
Elon Musk obviously, but Amazon was kind of in the toilet.
Apple was just floating around, not really doing too much.
It was just kind of sitting there because there was
this idea, Hey, things are gonna kind of you know,
roll over. We're not gonna see this increase in spending.
And this was even through Q one. And the big
(08:24):
thing that's happened in the last couple of months in
particular is specifically with regards to Nvidia, the Trump Administration's
talking about all kinds of loosening of semiconductor export restrictions,
potentially opening up new markets for you know, sovereign countries
to go and buy a bunch of Nvidia chips and
stuff like that. And again the question is like how
(08:46):
long does this go on? Because you know, you just
sit there and wonder, Okay, is this something that can
go in perpetuity? And and beyond that, Hey, and Vidio's
got fat margins right now. But if there's one thing
we know about the computer hardware business, fat margins.
Speaker 2 (09:01):
Usually don't last very long.
Speaker 3 (09:03):
You know, We've we've seen this before with like the
dominant semiconductor companies. Look at Intel just as an example.
Intel was an absolute monster through the nineteen nineties and
early two thousands. It wasn't vapor where they were a
hugely profitable company with fat margins, a bunch of profit,
and a greatness that they were selling. Eventually the margins
(09:24):
came down and growth stabilized and you know, plateaued, and
that was kind of in an Intel is still a
major semiconductor company now.
Speaker 2 (09:32):
But does anyone like.
Speaker 3 (09:34):
When's the last time Mark that you woke up and
like had a big smile on your face and were like.
Speaker 4 (09:38):
Every morning, every morning. Oh, I'm sorry, there was more
to that.
Speaker 2 (09:41):
Yes, So.
Speaker 3 (09:44):
I'm not saying that in Vidia becomes Intel, but I'm
just saying it's one path that they could take.
Speaker 2 (09:49):
There's another path.
Speaker 4 (09:50):
Check I'll go. Can I go a little farther and
say that is very likely?
Speaker 2 (09:54):
It is?
Speaker 3 (09:55):
But historically speaking, what matters is the timing on it. Well,
and this is the part that because if a video
keeps rocking and rolling for the next five years, I
don't think you really like call this a bubble like that.
If something like goes on for a while with it,
it's not a bubble. It's just like, okay, that was
you know the economic cycle.
Speaker 4 (10:14):
And can we say too, not every bubble is bad.
Railroad bubble left behind a lot of good infrastructure. The
internet bubble left behind some good fiber optic infrastructure, and
it was resulted in a lot of necessary trial and
error experimentation with different business models product lines. Some worked,
some didn't. I think you could say a bubble maybe
is bad when it is the result of the Federal Reserve,
(10:36):
which every ill in the world comes back to for
a fanatic about monetary policy like me, when the Federal
Reserve aids and A bets it and it becomes unnaturally frothy.
So now we're getting into degrees of bubbliness, degrees of
bubble frothiness. When policy is.
Speaker 3 (10:53):
When does the bubble become Champagne? Right, that has to
be made in the Champagne region of Maybe maybe a.
Speaker 4 (10:58):
Better way to say it is when they're are yes,
important important technicality there are. When bubble is when bubbles
are the result of policy, And if the Fed is
wrong that rates are restrictive right now, it is keeping
certain bubbly pockets of the economy overinflated, and government policy
is to blame, Like some people think government policy was
(11:20):
to blame for the bubble in the late nineteen nineties. Unfortunately, again,
we don't know. These distinctions don't make much of a
difference after a bubble pops. If there's real economic damage,
we don't know until after the fact.
Speaker 3 (11:32):
I think where I kind of land at this point,
just with regards to the monetary policy piece here, I'll
be honest, I think you can make a case that
FED policy is probably in the right spot just because
you've got parts of the economy that are clearly being
hurt by it housing, namely, you got other parts that
aren't being bothered by it, financial investments.
Speaker 4 (11:52):
Well, you know it's yeah, I think. Okay, So the
FED is trying to balance the forces of inflation and unemployment.
Unemployment is changed in the past twelve months, Inflation has
been pretty stable in the past twelve months.
Speaker 3 (12:03):
But we were talking about you were talking about the
FED and its impact on asset price.
Speaker 4 (12:07):
Yes, I'm gonna take it, That's what I was saying. Yeah, yeah, yeah.
And if that doesn't look at the FED says they don't.
Speaker 3 (12:11):
Know, But I'm talking about it in the context of
is the FED aiding and abetting this bubble? Yeah, okay,
I would I would say no, because I think they're
having a restrictive impact on housing prices right now and
a neutral to positive impact on asset prices. And I
think that comes out in the wash when we're looking
at it in terms of, you know, is the FED
aiding and a betting a bubble in that cost.
Speaker 4 (12:32):
So maybe my point complemented yours if you look at
it from a macroeconomic aggregate fancy way of saying what
the economy is doing as we measure it. If you
if you look at it from a macroeconomic aggregate point
of view inflation and unemployment, which are the tool the
two parts of the FED dual mandate, it also suggests
that policy might be in the right place. Problem is,
you don't know how this structure the economy is changing.
(12:55):
So the FED kind of has to guess not just
whether it's policy is right today, but right for thenomy
as it will be evolving over the next three, six,
et cetera.
Speaker 2 (13:03):
Months. Take a quick break here.
Speaker 3 (13:05):
When we come back, we will do a little bit
of trivia next.
Speaker 1 (13:10):
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trivia here on the Financial Exchange, and on this day.
Back in nineteen forty four, FDR announced that he would
run for a fourth term as US president. FDR is
(14:25):
the only president to serve three and four terms as president.
Only two US presidents served non consecutive terms as president,
with Trump being the latest trivia question today which US
president was the first to serve to excuse me to
serve non consecutive terms as president once again? Which US
(14:46):
president was the first to serve non consecutive terms as president.
Be the fifth person today to text us at six
one seven three six two thirteen eighty five with correct
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number six one seven three six two thirteen eighty five
(15:06):
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Speaker 3 (15:11):
Mark, do you want to talk about social security or
Jamie Diamond calling out Europe?
Speaker 4 (15:17):
We can do the Europe story right.
Speaker 2 (15:20):
Piece from CNBC.
Speaker 3 (15:21):
The headline is Jamie Diamond has a blunt message for Europe,
quote You're losing. Basically, what he says is that, look,
USGDP over the last fifteen years has grown dramatically faster
than what we've seen in Europe. And so obviously this
is something that has impacted a whole bunch of investment
(15:41):
decisions and capital flows and this and that, And I
think the question that is out there in my mind is, look,
it's it's the one that's out there all the time.
Speaker 2 (15:52):
In investing. Is this temporary or is it a permanent shift?
Speaker 3 (15:56):
And I think where I land and on this is
the US likely has structural factors that allow for greater
GDP growth than the EU over long periods of time,
but probably not as consistently and as to this magnitude
for an extended period of time.
Speaker 2 (16:18):
What are your thoughts there?
Speaker 4 (16:19):
Well, we know it's not I can tell you what
researchers have found. You'll find this in like chapter one
of any economics book macrobook. It's not differences in capital levels.
It's not that we have more factories and machines. They
don't generally account for most When you do growth accounting,
as the researchers like to do, that's not where it lies.
So it's not that we have more factories or anything
like that. It generally comes down to productivity growth. And
(16:41):
we talk about this from time to time. The determinants
of long run economic growth differences in productivity growth, which
are complicated to explain. There's no consensus there. And productivity
is just output per hour, doing more year after year
with the same amount of stuff, and some of that
is technology driven, and then some of it is labor
force growth to which is attributable partly to immigration and
(17:02):
some of it is organic. We have grown about a
percentage point faster per year on average than Europe since
nineteen ninety five, which is the longest data series I
could find. That may not sound like a lot, just
a percentage point more. But in the twenty five year span,
a thirty year span, excuse me that I looked at. Yeah, cumulatively,
the difference is like thirty five percent. To put that
(17:25):
in perspective, imagine if we were twenty five percent. Because
of the way the math works out, it's not thirty
five but twenty five percent less wealthier than we are
today in terms of GDP. That's not per capita, that's overall,
but it works out to about the same thing. So yeah,
it's a dramatic difference and standard of living. My rebuttal
to buy a diamond, if I may, would be, hey, hey, Jamie,
(17:46):
Europeans don't care. They are worth They like to trade
off more leisure for consumption than we do. We're fanatics
here about working and consuming. Europeans are totally different.
Speaker 2 (17:59):
I don't know that I would say they don't care.
Speaker 4 (18:02):
I don't think they care too much. About the growth difference, Chuck,
you ask your average European. Okay, I'm going out on
a limb.
Speaker 3 (18:07):
I haven't done this, but I think I think what
I would say, like, yes, from just you know, an overall,
you know, work life balanced type perspective. I get what
you're saying, but I think a lot of the problems
that Europe is facing from a social unrest perspective in
the last several years relates to the fact that the
pie isn't growing rapidly enough to you know, basically provide
(18:31):
the level of growth that people want to see.
Speaker 4 (18:34):
Yeah, that could be. I'm not this is I'm out
of my depth here. All I can tell you is
that I know the pace of life is slower there.
When Europeans come here, they're shocked at how frantic we are.
Speaker 2 (18:43):
All oh, you go to Europe in August and no
one's working there's Yeah, they seem to like that you
can't do anything in August.
Speaker 3 (18:49):
If you go to Europe, it's basically like, well this
is closed, Well that's closed, but you know, it's everything's
just kind of shut down, which we can kind of
kind of nice, but it depends they're there's different approaches everywhere,
and it certainly is something where Yeah, the whole European
summer vacation mode. It's it's a thing, and I've not
(19:10):
seen anything like it in the United States.
Speaker 4 (19:13):
But Europe's not losing. That's the wrong way to frame it.
I have no idea what Jamie Diamond's talking about. Economies
don't compete in that sense, assuming Europeans even care about
the differential.
Speaker 2 (19:22):
Sure sure.
Speaker 3 (19:23):
Taking a look at markets, DAWs off three point thirty
one s ANDP down twenty six, Nasdaq down forty four.
Speaker 2 (19:28):
Quick break, We've got the trivia answer. Next.
Speaker 1 (19:42):
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 and
what's moving markets so far today right here the Financial
Exchange Radio Network.
Speaker 5 (20:02):
More tariff developments to report today after President Trump threatened
a thirty five percent levy on Canadian imports to begin
on August first, up from the current twenty five percent rate.
Right now, Dow is off by nearly seven tenths of
one percent, or three hundred points s and P five
hundred is off three tenths of one percent or twenty
(20:24):
three points. Nasdaq is down a tenth of a percent
or thirty one points. Russell two thousand now down over
one percent lower or twenty four points. Tenure Treasure reeled
up five basis points, now at four point four zero percent.
In crude oil up nearly three percent higher on the day,
trading at sixty eight dollars and forty seven cents a barrel.
(20:44):
Levi Straussher is up over ten percent after the genes
maker reported strong results for the first half of the year.
The company also increased its dividend and raise its full
year guidance on several key metrics. Levi's said it was
still able to raise guidance despite tariffs because consumers, especially women,
are buying more directly with the company. Meanwhile, Energy Giant
(21:08):
BP said it anticipates up to one and a half
billion dollars in after tax impairment charges and said lower
oil and gas prices will drag on its quarterly results. However,
that stock is up by three percent. Elsewhere, robotics company
real Sense completed its spinoff from Intel, closing a fifty
million dollar funding round. Intel stock is retreating two percent today,
(21:32):
and shares in movie theater chain AMC Entertainment, jumping ten
percent higher after Wedbush upgraded the stock to outperform from neutral,
saying AMC is poised to benefit from a more consistent
release slate over the next several quarters. I'm Tucker Silva
and that is Wall Street Watch. And the trivia question
(21:52):
we asked in the prior segment was which US president
was the first to serve non consecutive terms as US president?
Speaker 2 (22:00):
Answer?
Speaker 5 (22:01):
Grover Cleveland, Rob from Summers, Connecticut is our winner today
taking home a Financial Exchange Show T shirt. Congrats to Rob,
and we played trivia every day here on the Financial
Exchange See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (22:16):
You don't see many Grovers these days.
Speaker 5 (22:19):
I actually know a Grover. Do you doesn't go by Grover?
Speaker 1 (22:22):
Though?
Speaker 2 (22:22):
What's you go by? JJ?
Speaker 3 (22:26):
Naturally totally fine, not gg JJ, totally fine. Let's talk
about something historic that we just saw. Through the first
six months of the year, Ford Motor Company has issued
eighty eight different safety recalls, which is now an all
(22:47):
time high for a single car company for a full year.
In just six months. It's kind of impressive. Now, Ford,
I'll quote here from their chief operating officer, the increase
in recall reflects our intensive strategy to quickly find and
fix any hardware and software issues and go the extra
mile to protect customers. Okay, so this is this is
(23:10):
a new strategy to have more recalls. Is that what
I'm what I'm gathering, Mark, That's.
Speaker 4 (23:15):
Yeah, that is quite the spin. That's the one I
would have given to it. What else can you say
other than that we're proactively, We're identifying proactively and addressing
aggressively flaws as long as none is so serious as
to cry out for a deeper explanation, I guess.
Speaker 3 (23:33):
But most of the things are minors. So overall, last
year you had a thousand recalls across different automakers, and
a lot of them are I'm just reading it from
the Wall Street Journal, faulty interiorites, a sun visor that
might break off or something like that. Those type of things.
The vast majority of them are not you know, Takata
airbags that might kill you, or you know, the GM
(23:55):
ignition switch problem and things like that. So it is
safe to say that, look, a lot of these are
not necessarily you know, hugely you know, important things, And okay,
I can I can buy some of that but I
think the question is, look, why are you seeing so many?
And I get to two different answers, and I'm curious
just to get your thoughts, because neither of us know
(24:17):
for certain. The first is carmakers are using a ton
of new technology and it might just be not fully
up to snuff because they're you know, trying a whole
bunch of new stuff right now and it hasn't gone
through you know, the length of testing, and so it
might just be new stuff breaks because we've got new
stuff in cars that hasn't been in them before. The
(24:39):
second piece, and this I actually think is the bigger one,
just because again, like when you hear about like sunvisor's
breaking off, that's not a new technology. There's one thing
you know about the car business. It's a low margin,
high volume business. It's the only way you survive there.
And in the last few years, car companies have faced
huge cost pressures because of you know, general inflation in
(25:02):
this and that, and I suspect many of them finding
any way that they can in order to get cost down,
whether it's hey, we made the material that attaches the
sun visor, you know, a millimeter thinner, and we think
that'll work and that'll save US eight cents per vehicle,
which ends up saving US you know, eight million dollars
over the next decade. Like you know, stuff like that
(25:25):
is what I could absolutely buy. As you know the
issue just because any way that you can get the
cost down on cars right now you have to do
because it's so competitive out there and costs have been
pushed so high by the inflation of the last few years.
Speaker 4 (25:41):
Yeah, I certainly don't have the answer, but I suspect
auto manufacturers as they examine, as they look back at
the end of the year on recalls and what those
recalls costs versus what they thought they were saving, they
that may they may tweak their their cost saving strategy.
Of this doesn't sound doesn't sound like, if any this
is attributable to cost savings, that it was well thought out,
(26:04):
because the opposite appears to be happening. But again, I
don't know you'd need the data.
Speaker 5 (26:10):
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Speaker 3 (27:06):
Tucker, you're a big fan of the Nintendo Switch console.
Speaker 5 (27:11):
Correct, A big fan is pushing it, but yeah, I
been who was? I owned the first console?
Speaker 2 (27:18):
Yep.
Speaker 3 (27:19):
So the Switch to UH is out now and they've
sold three and a half million units in the four
days that since they released. It's been out more than
four days now, but the first four days they had
three and a half million sales.
Speaker 5 (27:33):
They're crushing it from one I hear, yeah, which is
is quite good.
Speaker 2 (27:37):
Uh. But the thing that is interesting is that apparently.
Speaker 3 (27:42):
Uh there is a uh neo dimium based magnet that
holds the controllers in place. And neodymium is a rare
earth material that obviously with rare earth materials typically they're
you know, made and refined in China right now. And
so despite the switch you know, not really being something
(28:04):
that you know, you would think of as far as
you know, having some kind of dependence on rare earth materials,
might actually have a problem if China continues to kind
of weaponize the export of them in order to gain
concessions from trading partners and other companies and things like that.
And this is just kind of wild to me that
this is, you know, a video game console that we're
talking about here that potentially has a rare earth problem.
Speaker 2 (28:28):
It's kind of wild.
Speaker 4 (28:29):
So what are you saying that Tucker's hobby could be
impacted by this and he needs to find a new
way to to wile away the time?
Speaker 5 (28:37):
I barely play the thing?
Speaker 4 (28:39):
Why'd you buy it?
Speaker 2 (28:41):
Kids?
Speaker 4 (28:42):
Oh?
Speaker 5 (28:42):
Yeah, we play a lot of Mario in the house. Well,
I mean not a lot Can you buy the new one?
Speaker 2 (28:46):
Did you? No?
Speaker 5 (28:47):
No, I didn't. I just I literally just bought the
first edition in a couple months, you know, in the
holiday season or whatever. But yeah, no, I mean this
price points a little too high for you know, a
younger kids. But yeah, it's four hundred and fifty bucks
forget that.
Speaker 2 (29:04):
Whoa.
Speaker 5 (29:06):
But yeah, it's wildly popular. It's a great technology for
video game consoles. It's a tablet that can separate from
a doc and it's really innovative.
Speaker 2 (29:15):
Just take a quick break here.
Speaker 3 (29:16):
When we return, we're going to be joined by Paul
Amonica from Barons and we're talking copper after this.
Speaker 1 (29:23):
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(29:45):
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Speaker 6 (29:57):
Ladies and gentlemen, weekend.
Speaker 3 (30:06):
Alrighty, as promised, We're now joined by Paul A Monica
from Barons and we're gonna be talking a little bit
of copper with Paul.
Speaker 2 (30:16):
Paul, How you doing today?
Speaker 1 (30:18):
Oh?
Speaker 6 (30:18):
Good?
Speaker 2 (30:19):
Thanks? How you guys doing? We're doing well.
Speaker 3 (30:21):
So copper's obviously been in the news this week with
the potential fifty percent tariff going into effect. What kind
of stuff are we seeing people looking at? Because I
feel like, you know, everyone loves to talk about investing,
you know, in copper somehow, but I feel like most
people are kind of like, well, how does any of
this work? And like, what are you know, some ways
(30:43):
for me to actually do this? And beyond that, there's
always the question, hey, is this even a good idea?
And do I have any idea what I'm doing here?
Speaker 1 (30:51):
Right?
Speaker 6 (30:51):
No, these are all great questions. There's not a lot
of ways to directly invest in, say copper, the metal itself,
and I guess you could try and buy copper's futures.
You could buy physical copper, but you know, that's sort
of a cumbersome, complicated way of investing. There is an
ETF called the United States Copper Index ticker CPER that
(31:14):
gives you probably your best pure play a way to
kind of leverage what's going on with copper prices. But
there are several copper miners that are publicly traded and
ETFs that own those miners that are probably a better
way to invest in copper, and Freeport Macmaran is by
(31:35):
far the most prominent in the US and probably the
one that could benefit the most from any tariffs from
President Trump because it is a company that is based
in Phoenix in Arizona and has a lot of its
mining exposure to the US market, so it should benefit
directly from any tariffs. If you know, people look to
(31:59):
buy and copper is supposed to copper from say Chile, Peru, Mexico,
et cetera.
Speaker 3 (32:06):
How complicated is it in terms of figuring out, you know,
how the price of copper is going to even move
and how it may be impacted by this, simply because
it's a global market still and obviously you've got big
demand drivers in Asia. You know, historically, it seems like
it's a very a very complex equilibrium that you're getting into,
(32:27):
and there's just a lot to consider and it might
not be as straightforward as a lot of people think, though.
Speaker 1 (32:32):
No exactly.
Speaker 6 (32:33):
I mean, what's been, you know, very difficult I think
for a lot of people to kind of reconcile is
that you do have copper that trades on the nine
x as a commodity in the United States, but then
also copper trading in London, and right now there's a
pretty big gap because of the expectation of tariffs. There's
(32:55):
this huge premium that the US copper price is trading
at to where copper is in London. Usually there's not
that big of a difference between the two prices, but
right now investors are betting that there's going to be
some tariff. Even if it's not fifty percent, say it's
twenty five or you know, somewhere between twenty five and fifty,
(33:18):
that's still higher them where it is now, so that
there will likely be a premium on US copper prices.
But again, the way to play that is probably more
through these mining companies or minor ETFs and less through
the metal itself.
Speaker 3 (33:35):
Paul, one of the things I've noticed historically is that
when dealing with minors of any any kind, it feels
like you just kind of get bludgeoned over the head.
A few different times like it's it's just a hard
business to invest in. It's kind of like how airlines
were historically or automakers, like it just seems messy, like
(33:56):
it's such capital that needs to get used. How do
you have any trust that, even in an era of
higher prices, if it materializes that these companies can figure
out how to make money off of it.
Speaker 6 (34:06):
Yeah, No, it's a great question. I mean, when you
have a company in a very capital intensive business that
is also subject to the whims of you know, global
commodity prices, that does make it inherently riskier. I think
where analysts are a little more upbeat about copper now
(34:27):
is that if you are able to toss aside all
of the drama about tariffs and there's you know, considerable
noise with all of the headlines there, demand for copper
is pretty healthy right now and should continue as well.
Data centers need copper, and they are building out aggressively
(34:49):
because data centers are you know, a big part of
the AI story. You have electric vehicles that need copper.
You know, you're upgrading the electrical grid. Smart Phones also
you know, require copper. So there's a lot of good
consumer and industrial demand right now for copper as well.
That should keep prices higher, even though they may pull
(35:12):
back in the near term from the inflated levels they're
at because of all the tariff talk. But you know,
analysts that I know cided in my piece today, you know,
we're of the mindset that any big dip that comes
in copper prices is probably a good buying opportunity for
the mining stocks that may get hit, including Freeport.
Speaker 3 (35:31):
Fantastic Paul, appreciate you joining us today and we'll catch
up with you soon.
Speaker 2 (35:35):
I hope you have a fantastic weekend.
Speaker 6 (35:37):
YEP, send you guys.
Speaker 5 (35:38):
Thanks a lot.
Speaker 3 (35:40):
That is Paul Monica from Barons talking about copper. Mark
what else we got that we haven't gotten to today.
Speaker 4 (35:47):
Oh, I wanted to follow up on copper if if
I could, but absolutely because the one of the President's
stated reasons for imposing the tariff, if they actually go through,
is that he wants to make a copper US that
is a dominant copper producer, or maybe at least independent.
But the Wall Street Journal points out today that permitting,
building and permitting a copper smelter can take more than
(36:10):
five years, and then developing a new mind takes on
average thirty years. So this policy, if that's what it is,
would have to be followed through on by several administrations
to be realized. The country's really got to be prepped
for this commitment. And maybe that's why the mining stocks
over the past five days, after popping initially on the news,
(36:30):
they're down on average two or three percentage points. I'm
looking just at the ETFs of companies like Freeport mcwell
Ran MCMA.
Speaker 2 (36:37):
I just boched the name. I'm not even to bother.
Speaker 4 (36:39):
It's fine, but you know what I mean. So it's
not clear to me that the intended objectives can be
achieved here in the amount of time that people are
likely to have patients with no it.
Speaker 3 (36:50):
Takes quite a while to get these things spooled up.
And the other piece, it's pooled up, and yeah, I'm
glad you appreciate that. The other thing that I come
back to and look, this is neither good nor bad.
I'm just saying that it is. Open pit mining is generally,
especially when you're talking about for stuff like copper, it's
(37:11):
generally horrible for the regional vicinity in terms of the
health impacts and stuff like that. The largest copper mine
in uh the United States at one point was a
mine in Butte, Montana called the Berkeley Pit. And the
Berkeley Pit is about a mile long and about half
(37:32):
a mile wide, and it got to a third of
a mile deep by the time they finally stopped mining there,
and it was active for about thirty years or so
from the mid nineteen fifties until the mid nineteen eighties.
And at this point it basically has become like a
super fun site just because, like the water is incredibly acidic.
(37:53):
If birds land there and drink from it, like half
of them die pretty much Like it's pretty nasty stuff
that you get when you talk about the effects of this. Now,
I'm not saying this means don't do this here, but
I'm simply saying there are very real environmental costs to
mining materials in the US, and it's part of the
reason why we've pushed this stuff overseas is just so
(38:13):
we don't have to see it. There's clearly a demand
for domestic production, but it comes with some costs too,
and we just need to be aware of that. We're
done for the day, done for the week. Next week
is a huge week of data in earnings. We'll see
you on Monday.
The Financial Exchange is produced by Money Matters Radio and
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(01:06):
Zada and Mark Vandebti, Chuck.
Speaker 2 (01:13):
Mark and Tucker with you here.
Speaker 3 (01:15):
And as we wrap up the week, we got stocks
selling off very very modestly, kind of similar to what
we saw on the first day of the week, where
the Dow was off two hundred and seventy four points,
which is about two thirds of a percent, the SMP
is off twenty four points, about a third of a percent,
and the NASDAK holding up better than both of those,
(01:35):
down thirty eight points or about a quarter percent. Bonds
in sell off mode as well. Tenure Treasury back up
above four point four percent, up six point one basis
points to four point four oh seven. And we've got
oil today also moving up a dollar fifty six a
barrel on West Text Intermediate to sixty eight thirteen a barrel.
(01:58):
And we've got gold on the move as well, moving up.
Let's see, come on, there we go. We got gold
moving up as well, now up forty seven to ninety
an ounce, or about one point four percent. So this
comes on the back of President Trump late yesterday indicating
in a letter that he was set to raise the
(02:20):
rate of tariffs on Canadian imports that are not compliant
with USMCA from twenty five percent to thirty five percent
as of August first, And so we're once again in
this waiting game where it's like, is this going to
be imposed or is this going to get waved away,
you know, at the last minute or shortly after it
(02:41):
was set to be imposed. Because this is kind of
what we've seen on quite honestly, like a monthly basis
since since early February, is this type of things. So
we'll see what ends up happening here. But what I
can tell you, market's not really reacting too seriously to it,
just because I don't think they believe it's going to happen.
Speaker 4 (03:01):
Yeah, I'll repeat myself if you'll allow it, Chuck from
the last hour, if I should pause there and make
sure that's okay, I'm gonna make that point.
Speaker 2 (03:09):
Okay, move it along.
Speaker 4 (03:11):
Tucker's given me the hey, move it along.
Speaker 2 (03:13):
Jack.
Speaker 4 (03:14):
Look, if you think tariff should be used to raise revenue,
you're probably and I would put myself in this camp.
Maybe replace the income tax eventually, which would be a
miracle and probably pro growth. But I'll stop proselytizing for now.
But if you're in that camp, you're a little disappointed.
You want to see tariffs put into place and do
their thing raising revenue. If you want to see tariffs
(03:37):
encourage people to buy domestically produced goods, i e. Reshore manufacturing,
restore the golden air of the economy that some people
think happened in the fifties and sixties. Sixties. That's misguided,
but honest people can disagree. You're also disappointed because you
want to see tariffs put into place and have the
effect of getting people to substitute from foreign to domestic goods.
(04:01):
So I can't imagine who other than people in the
media who are given a lot of fodder content that is,
to infuse into their programs like we do here talking
about tariffs. I can't imagine who's happy about where we
are today relative to where we were six months ago
or three months ago on Liberation Day. A lot of activity,
but nothing's actually changed.
Speaker 3 (04:22):
Let's talk a little bit about this piece from Barons.
This one really caught my eye. The headline is the
Nasdaq is mirroring the nineteen nineties. It isn't a bubble
this time. How does one know whether one's in a
bubble or not?
Speaker 4 (04:36):
You don't until after the fact. As your question implied,
should we define bubble?
Speaker 3 (04:42):
I was just gonna say, do we have a firm
definition for bubble?
Speaker 4 (04:46):
It's unsatisfactory and vague as you'd expect. Generally speaking. It's
when prices in anything, it could be a house, it
could be a stock, bond, whatever, depart from any reasonable
estimate of fundamental value. So what is that? Raises another question?
What is a reasonable estimate? That's usually some discounted cash
(05:06):
flow model based estimate. That is to say, you take
expected future dividends or rents if your own investment property,
or whatever the asset is, and you bring them back
to the present at some interest rate. The interest rate
is itself a subject to a judgment, but within a
range you can estimate what is a reasonable present value
(05:27):
of an asset. And when things depart a lot from that,
you could say markets have gone haywire.
Speaker 2 (05:32):
Can we talk about.
Speaker 3 (05:33):
Like good real examples of things that were bubbles that
that quite honestly we called out as bubbles at the time.
Speaker 4 (05:40):
Well, a lot of people in nineteen ninety eight ninety nine.
They were early of course, some of them even went
out of business. Most of them lost money, They lost
investors called the tech what we now call the tech bubble.
We take it for granted. That's it wasn't called well,
some people called it the tech bubble at the time,
but now everybody agrees that it was a tech bubble.
Florida real estate in the twenties, and just about every
(06:01):
decade from the twenties to the present has in pockets
experienced bubbles that then collapsed.
Speaker 3 (06:07):
I was gonna be the one I was gonna give
was ev Manufacturers in twenty twenty one, and all these
startups that were being valued tens of billions of dollars,
they hadn't made one car, and a lot of them
still haven't made one car.
Speaker 2 (06:18):
Yeah, you have gone out a bit like it was.
Speaker 4 (06:20):
Yeah.
Speaker 3 (06:21):
Clear, And we said at the time, like this the
auto business, you don't just throw like ten billion dollars
at it and make ten billion dollars. It's kind of
a hard thing to get into. And that's what we've seen.
The question on on you know, the the Nasdaq right now,
it's it's a one. There's one question that you need
to ask, will capex spending on semiconductors continue?
Speaker 2 (06:46):
It's the whole ballgame. It's the whole ball game.
Speaker 3 (06:50):
And if Microsoft continues to spend eighty billion dollars this
year and then one hundred billion dollars next year and
one hundred and twenty of the year after, the party
can keep going. If at some point it becomes untenable
for them to do so, party.
Speaker 2 (07:04):
Has to stop. Which one are we gonna get?
Speaker 3 (07:07):
I have no idea, But that's that's the whole ballgame,
and not just Microsoft.
Speaker 2 (07:12):
But you know, Microsoft spending.
Speaker 3 (07:14):
Eighty billion, metas spending fifty billion, Like if if these
companies can keep spending that money on in Vidia semiconductors,
the party's gonna keep going. If they don't, it won't.
And so this is the whole question here. Is this
just another Capex cycle or is this how it's gonna be?
M I don't have the answer on it, but it's
(07:39):
you know, earlier earlier this year, even before April second,
when the tariffs were announced, Since mid July of last year,
from like July first or July fifteenth through April one,
magnificent seven stocks were getting nowhere. You know, you had
in Nvidia, Microsoft stuck in neutral, Tesla was kind of
(08:02):
off doing its own thing just because of you know,
Elon Musk obviously, but Amazon was kind of in the toilet.
Apple was just floating around, not really doing too much.
It was just kind of sitting there because there was
this idea, Hey, things are gonna kind of you know,
roll over. We're not gonna see this increase in spending.
And this was even through Q one. And the big
(08:24):
thing that's happened in the last couple of months in
particular is specifically with regards to Nvidia, the Trump Administration's
talking about all kinds of loosening of semiconductor export restrictions,
potentially opening up new markets for you know, sovereign countries
to go and buy a bunch of Nvidia chips and
stuff like that. And again the question is like how
(08:46):
long does this go on? Because you know, you just
sit there and wonder, Okay, is this something that can
go in perpetuity? And and beyond that, Hey, and Vidio's
got fat margins right now. But if there's one thing
we know about the computer hardware business, fat margins.
Speaker 2 (09:01):
Usually don't last very long.
Speaker 3 (09:03):
You know, We've we've seen this before with like the
dominant semiconductor companies. Look at Intel just as an example.
Intel was an absolute monster through the nineteen nineties and
early two thousands. It wasn't vapor where they were a
hugely profitable company with fat margins, a bunch of profit,
and a greatness that they were selling. Eventually the margins
(09:24):
came down and growth stabilized and you know, plateaued, and
that was kind of in an Intel is still a
major semiconductor company now.
Speaker 2 (09:32):
But does anyone like.
Speaker 3 (09:34):
When's the last time Mark that you woke up and
like had a big smile on your face and were like.
Speaker 4 (09:38):
Every morning, every morning. Oh, I'm sorry, there was more
to that.
Speaker 2 (09:41):
Yes, So.
Speaker 3 (09:44):
I'm not saying that in Vidia becomes Intel, but I'm
just saying it's one path that they could take.
Speaker 2 (09:49):
There's another path.
Speaker 4 (09:50):
Check I'll go. Can I go a little farther and
say that is very likely?
Speaker 2 (09:54):
It is?
Speaker 3 (09:55):
But historically speaking, what matters is the timing on it. Well,
and this is the part that because if a video
keeps rocking and rolling for the next five years, I
don't think you really like call this a bubble like that.
If something like goes on for a while with it,
it's not a bubble. It's just like, okay, that was
you know the economic cycle.
Speaker 4 (10:14):
And can we say too, not every bubble is bad.
Railroad bubble left behind a lot of good infrastructure. The
internet bubble left behind some good fiber optic infrastructure, and
it was resulted in a lot of necessary trial and
error experimentation with different business models product lines. Some worked,
some didn't. I think you could say a bubble maybe
is bad when it is the result of the Federal Reserve,
(10:36):
which every ill in the world comes back to for
a fanatic about monetary policy like me, when the Federal
Reserve aids and A bets it and it becomes unnaturally frothy.
So now we're getting into degrees of bubbliness, degrees of
bubble frothiness. When policy is.
Speaker 3 (10:53):
When does the bubble become Champagne? Right, that has to
be made in the Champagne region of Maybe maybe a.
Speaker 4 (10:58):
Better way to say it is when they're are yes,
important important technicality there are. When bubble is when bubbles
are the result of policy, And if the Fed is
wrong that rates are restrictive right now, it is keeping
certain bubbly pockets of the economy overinflated, and government policy
is to blame, Like some people think government policy was
(11:20):
to blame for the bubble in the late nineteen nineties. Unfortunately, again,
we don't know. These distinctions don't make much of a
difference after a bubble pops. If there's real economic damage,
we don't know until after the fact.
Speaker 3 (11:32):
I think where I kind of land at this point,
just with regards to the monetary policy piece here, I'll
be honest, I think you can make a case that
FED policy is probably in the right spot just because
you've got parts of the economy that are clearly being
hurt by it housing, namely, you got other parts that
aren't being bothered by it, financial investments.
Speaker 4 (11:52):
Well, you know it's yeah, I think. Okay, So the
FED is trying to balance the forces of inflation and unemployment.
Unemployment is changed in the past twelve months, Inflation has
been pretty stable in the past twelve months.
Speaker 3 (12:03):
But we were talking about you were talking about the
FED and its impact on asset price.
Speaker 4 (12:07):
Yes, I'm gonna take it, That's what I was saying. Yeah, yeah, yeah.
And if that doesn't look at the FED says they don't.
Speaker 3 (12:11):
Know, But I'm talking about it in the context of
is the FED aiding and abetting this bubble? Yeah, okay,
I would I would say no, because I think they're
having a restrictive impact on housing prices right now and
a neutral to positive impact on asset prices. And I
think that comes out in the wash when we're looking
at it in terms of, you know, is the FED
aiding and a betting a bubble in that cost.
Speaker 4 (12:32):
So maybe my point complemented yours if you look at
it from a macroeconomic aggregate fancy way of saying what
the economy is doing as we measure it. If you
if you look at it from a macroeconomic aggregate point
of view inflation and unemployment, which are the tool the
two parts of the FED dual mandate, it also suggests
that policy might be in the right place. Problem is,
you don't know how this structure the economy is changing.
(12:55):
So the FED kind of has to guess not just
whether it's policy is right today, but right for thenomy
as it will be evolving over the next three, six,
et cetera.
Speaker 2 (13:03):
Months. Take a quick break here.
Speaker 3 (13:05):
When we come back, we will do a little bit
of trivia next.
Speaker 1 (13:10):
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Back in nineteen forty four, FDR announced that he would
run for a fourth term as US president. FDR is
(14:25):
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Only two US presidents served non consecutive terms as president,
with Trump being the latest trivia question today which US
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serve non consecutive terms as president once again? Which US
(14:46):
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Be the fifth person today to text us at six
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(15:06):
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Speaker 3 (15:11):
Mark, do you want to talk about social security or
Jamie Diamond calling out Europe?
Speaker 4 (15:17):
We can do the Europe story right.
Speaker 2 (15:20):
Piece from CNBC.
Speaker 3 (15:21):
The headline is Jamie Diamond has a blunt message for Europe,
quote You're losing. Basically, what he says is that, look,
USGDP over the last fifteen years has grown dramatically faster
than what we've seen in Europe. And so obviously this
is something that has impacted a whole bunch of investment
(15:41):
decisions and capital flows and this and that, And I
think the question that is out there in my mind is, look,
it's it's the one that's out there all the time.
Speaker 2 (15:52):
In investing. Is this temporary or is it a permanent shift?
Speaker 3 (15:56):
And I think where I land and on this is
the US likely has structural factors that allow for greater
GDP growth than the EU over long periods of time,
but probably not as consistently and as to this magnitude
for an extended period of time.
Speaker 2 (16:18):
What are your thoughts there?
Speaker 4 (16:19):
Well, we know it's not I can tell you what
researchers have found. You'll find this in like chapter one
of any economics book macrobook. It's not differences in capital levels.
It's not that we have more factories and machines. They
don't generally account for most When you do growth accounting,
as the researchers like to do, that's not where it lies.
So it's not that we have more factories or anything
like that. It generally comes down to productivity growth. And
(16:41):
we talk about this from time to time. The determinants
of long run economic growth differences in productivity growth, which
are complicated to explain. There's no consensus there. And productivity
is just output per hour, doing more year after year
with the same amount of stuff, and some of that
is technology driven, and then some of it is labor
force growth to which is attributable partly to immigration and
(17:02):
some of it is organic. We have grown about a
percentage point faster per year on average than Europe since
nineteen ninety five, which is the longest data series I
could find. That may not sound like a lot, just
a percentage point more. But in the twenty five year span,
a thirty year span, excuse me that I looked at. Yeah, cumulatively,
the difference is like thirty five percent. To put that
(17:25):
in perspective, imagine if we were twenty five percent. Because
of the way the math works out, it's not thirty
five but twenty five percent less wealthier than we are
today in terms of GDP. That's not per capita, that's overall,
but it works out to about the same thing. So yeah,
it's a dramatic difference and standard of living. My rebuttal
to buy a diamond, if I may, would be, hey, hey, Jamie,
(17:46):
Europeans don't care. They are worth They like to trade
off more leisure for consumption than we do. We're fanatics
here about working and consuming. Europeans are totally different.
Speaker 2 (17:59):
I don't know that I would say they don't care.
Speaker 4 (18:02):
I don't think they care too much. About the growth difference, Chuck,
you ask your average European. Okay, I'm going out on
a limb.
Speaker 3 (18:07):
I haven't done this, but I think I think what
I would say, like, yes, from just you know, an overall,
you know, work life balanced type perspective. I get what
you're saying, but I think a lot of the problems
that Europe is facing from a social unrest perspective in
the last several years relates to the fact that the
pie isn't growing rapidly enough to you know, basically provide
(18:31):
the level of growth that people want to see.
Speaker 4 (18:34):
Yeah, that could be. I'm not this is I'm out
of my depth here. All I can tell you is
that I know the pace of life is slower there.
When Europeans come here, they're shocked at how frantic we are.
Speaker 2 (18:43):
All oh, you go to Europe in August and no
one's working there's Yeah, they seem to like that you
can't do anything in August.
Speaker 3 (18:49):
If you go to Europe, it's basically like, well this
is closed, Well that's closed, but you know, it's everything's
just kind of shut down, which we can kind of
kind of nice, but it depends they're there's different approaches everywhere,
and it certainly is something where Yeah, the whole European
summer vacation mode. It's it's a thing, and I've not
(19:10):
seen anything like it in the United States.
Speaker 4 (19:13):
But Europe's not losing. That's the wrong way to frame it.
I have no idea what Jamie Diamond's talking about. Economies
don't compete in that sense, assuming Europeans even care about
the differential.
Speaker 2 (19:22):
Sure sure.
Speaker 3 (19:23):
Taking a look at markets, DAWs off three point thirty
one s ANDP down twenty six, Nasdaq down forty four.
Speaker 2 (19:28):
Quick break, We've got the trivia answer. Next.
Speaker 1 (19:42):
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 and
what's moving markets so far today right here the Financial
Exchange Radio Network.
Speaker 5 (20:02):
More tariff developments to report today after President Trump threatened
a thirty five percent levy on Canadian imports to begin
on August first, up from the current twenty five percent rate.
Right now, Dow is off by nearly seven tenths of
one percent, or three hundred points s and P five
hundred is off three tenths of one percent or twenty
(20:24):
three points. Nasdaq is down a tenth of a percent
or thirty one points. Russell two thousand now down over
one percent lower or twenty four points. Tenure Treasure reeled
up five basis points, now at four point four zero percent.
In crude oil up nearly three percent higher on the day,
trading at sixty eight dollars and forty seven cents a barrel.
(20:44):
Levi Straussher is up over ten percent after the genes
maker reported strong results for the first half of the year.
The company also increased its dividend and raise its full
year guidance on several key metrics. Levi's said it was
still able to raise guidance despite tariffs because consumers, especially women,
are buying more directly with the company. Meanwhile, Energy Giant
(21:08):
BP said it anticipates up to one and a half
billion dollars in after tax impairment charges and said lower
oil and gas prices will drag on its quarterly results. However,
that stock is up by three percent. Elsewhere, robotics company
real Sense completed its spinoff from Intel, closing a fifty
million dollar funding round. Intel stock is retreating two percent today,
(21:32):
and shares in movie theater chain AMC Entertainment, jumping ten
percent higher after Wedbush upgraded the stock to outperform from neutral,
saying AMC is poised to benefit from a more consistent
release slate over the next several quarters. I'm Tucker Silva
and that is Wall Street Watch. And the trivia question
(21:52):
we asked in the prior segment was which US president
was the first to serve non consecutive terms as US president?
Speaker 2 (22:00):
Answer?
Speaker 5 (22:01):
Grover Cleveland, Rob from Summers, Connecticut is our winner today
taking home a Financial Exchange Show T shirt. Congrats to Rob,
and we played trivia every day here on the Financial
Exchange See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (22:16):
You don't see many Grovers these days.
Speaker 5 (22:19):
I actually know a Grover. Do you doesn't go by Grover?
Speaker 1 (22:22):
Though?
Speaker 2 (22:22):
What's you go by? JJ?
Speaker 3 (22:26):
Naturally totally fine, not gg JJ, totally fine. Let's talk
about something historic that we just saw. Through the first
six months of the year, Ford Motor Company has issued
eighty eight different safety recalls, which is now an all
(22:47):
time high for a single car company for a full year.
In just six months. It's kind of impressive. Now, Ford,
I'll quote here from their chief operating officer, the increase
in recall reflects our intensive strategy to quickly find and
fix any hardware and software issues and go the extra
mile to protect customers. Okay, so this is this is
(23:10):
a new strategy to have more recalls. Is that what
I'm what I'm gathering, Mark, That's.
Speaker 4 (23:15):
Yeah, that is quite the spin. That's the one I
would have given to it. What else can you say
other than that we're proactively, We're identifying proactively and addressing
aggressively flaws as long as none is so serious as
to cry out for a deeper explanation, I guess.
Speaker 3 (23:33):
But most of the things are minors. So overall, last
year you had a thousand recalls across different automakers, and
a lot of them are I'm just reading it from
the Wall Street Journal, faulty interiorites, a sun visor that
might break off or something like that. Those type of things.
The vast majority of them are not you know, Takata
airbags that might kill you, or you know, the GM
(23:55):
ignition switch problem and things like that. So it is
safe to say that, look, a lot of these are
not necessarily you know, hugely you know, important things, And okay,
I can I can buy some of that but I
think the question is, look, why are you seeing so many?
And I get to two different answers, and I'm curious
just to get your thoughts, because neither of us know
(24:17):
for certain. The first is carmakers are using a ton
of new technology and it might just be not fully
up to snuff because they're you know, trying a whole
bunch of new stuff right now and it hasn't gone
through you know, the length of testing, and so it
might just be new stuff breaks because we've got new
stuff in cars that hasn't been in them before. The
(24:39):
second piece, and this I actually think is the bigger one,
just because again, like when you hear about like sunvisor's
breaking off, that's not a new technology. There's one thing
you know about the car business. It's a low margin,
high volume business. It's the only way you survive there.
And in the last few years, car companies have faced
huge cost pressures because of you know, general inflation in
(25:02):
this and that, and I suspect many of them finding
any way that they can in order to get cost down,
whether it's hey, we made the material that attaches the
sun visor, you know, a millimeter thinner, and we think
that'll work and that'll save US eight cents per vehicle,
which ends up saving US you know, eight million dollars
over the next decade. Like you know, stuff like that
(25:25):
is what I could absolutely buy. As you know the
issue just because any way that you can get the
cost down on cars right now you have to do
because it's so competitive out there and costs have been
pushed so high by the inflation of the last few years.
Speaker 4 (25:41):
Yeah, I certainly don't have the answer, but I suspect
auto manufacturers as they examine, as they look back at
the end of the year on recalls and what those
recalls costs versus what they thought they were saving, they
that may they may tweak their their cost saving strategy.
Of this doesn't sound doesn't sound like, if any this
is attributable to cost savings, that it was well thought out,
(26:04):
because the opposite appears to be happening. But again, I
don't know you'd need the data.
Speaker 5 (26:10):
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to trade the daily routine for something extraordinary, say he
lo to the US Virgin Islands, America's Caribbean paradise explore
the vibrant history and flavor of Saint Croix Lounge on
the stunning beaches of Saint Thomas, or find your peace
on the quiet shores of Saint John. From the moment
you arrive, you'll feel it. You're naturally in rhythm with
the heartbeat of the islands. There's no passport needed, no
(26:33):
currency to exchange, just warm weather, clear blue water, and
unforgettable experiences waiting for you. Whether you're planning a romantic escape,
a family adventure, or a little bit of both, this
is the summer to make it happen. Go to visit
USVII dot com to learn more and start planning. That's
visit USVII dot com. Your island getaway is closer than
(26:57):
you think, the US Virgin Islands where never ends. Book
your trip today at visit USBI dot com.
Speaker 3 (27:06):
Tucker, you're a big fan of the Nintendo Switch console.
Speaker 5 (27:11):
Correct, A big fan is pushing it, but yeah, I
been who was? I owned the first console?
Speaker 2 (27:18):
Yep.
Speaker 3 (27:19):
So the Switch to UH is out now and they've
sold three and a half million units in the four
days that since they released. It's been out more than
four days now, but the first four days they had
three and a half million sales.
Speaker 5 (27:33):
They're crushing it from one I hear, yeah, which is
is quite good.
Speaker 2 (27:37):
Uh. But the thing that is interesting is that apparently.
Speaker 3 (27:42):
Uh there is a uh neo dimium based magnet that
holds the controllers in place. And neodymium is a rare
earth material that obviously with rare earth materials typically they're
you know, made and refined in China right now. And
so despite the switch you know, not really being something
(28:04):
that you know, you would think of as far as
you know, having some kind of dependence on rare earth materials,
might actually have a problem if China continues to kind
of weaponize the export of them in order to gain
concessions from trading partners and other companies and things like that.
And this is just kind of wild to me that
this is, you know, a video game console that we're
talking about here that potentially has a rare earth problem.
Speaker 2 (28:28):
It's kind of wild.
Speaker 4 (28:29):
So what are you saying that Tucker's hobby could be
impacted by this and he needs to find a new
way to to wile away the time?
Speaker 5 (28:37):
I barely play the thing?
Speaker 4 (28:39):
Why'd you buy it?
Speaker 2 (28:41):
Kids?
Speaker 4 (28:42):
Oh?
Speaker 5 (28:42):
Yeah, we play a lot of Mario in the house. Well,
I mean not a lot Can you buy the new one?
Speaker 2 (28:46):
Did you? No?
Speaker 5 (28:47):
No, I didn't. I just I literally just bought the
first edition in a couple months, you know, in the
holiday season or whatever. But yeah, no, I mean this
price points a little too high for you know, a
younger kids. But yeah, it's four hundred and fifty bucks
forget that.
Speaker 2 (29:04):
Whoa.
Speaker 5 (29:06):
But yeah, it's wildly popular. It's a great technology for
video game consoles. It's a tablet that can separate from
a doc and it's really innovative.
Speaker 2 (29:15):
Just take a quick break here.
Speaker 3 (29:16):
When we return, we're going to be joined by Paul
Amonica from Barons and we're talking copper after this.
Speaker 1 (29:23):
The Financial Exchange is now available every day from eleven
to noon on Serious Exms Business Radio Channel one thirty two.
Stay informed about the latest from Wall Street, fiscal policy,
and breaking business news. Every day. The Financial Exchange is
life on Serious Exms Business Radio Channel one thirty two.
This is the Financial Exchange Radio Network. Find daily interviews
(29:45):
in full shows of the Financial Exchange on our YouTube page.
Subscribe to our page and get caught up on anything
and everything you might have missed. This is the Financial
Exchange Radio Network.
Speaker 6 (29:57):
Ladies and gentlemen, weekend.
Speaker 3 (30:06):
Alrighty, as promised, We're now joined by Paul A Monica
from Barons and we're gonna be talking a little bit
of copper with Paul.
Speaker 2 (30:16):
Paul, How you doing today?
Speaker 1 (30:18):
Oh?
Speaker 6 (30:18):
Good?
Speaker 2 (30:19):
Thanks? How you guys doing? We're doing well.
Speaker 3 (30:21):
So copper's obviously been in the news this week with
the potential fifty percent tariff going into effect. What kind
of stuff are we seeing people looking at? Because I
feel like, you know, everyone loves to talk about investing,
you know, in copper somehow, but I feel like most
people are kind of like, well, how does any of
this work? And like, what are you know, some ways
(30:43):
for me to actually do this? And beyond that, there's
always the question, hey, is this even a good idea?
And do I have any idea what I'm doing here?
Speaker 1 (30:51):
Right?
Speaker 6 (30:51):
No, these are all great questions. There's not a lot
of ways to directly invest in, say copper, the metal itself,
and I guess you could try and buy copper's futures.
You could buy physical copper, but you know, that's sort
of a cumbersome, complicated way of investing. There is an
ETF called the United States Copper Index ticker CPER that
(31:14):
gives you probably your best pure play a way to
kind of leverage what's going on with copper prices. But
there are several copper miners that are publicly traded and
ETFs that own those miners that are probably a better
way to invest in copper, and Freeport Macmaran is by
(31:35):
far the most prominent in the US and probably the
one that could benefit the most from any tariffs from
President Trump because it is a company that is based
in Phoenix in Arizona and has a lot of its
mining exposure to the US market, so it should benefit
directly from any tariffs. If you know, people look to
(31:59):
buy and copper is supposed to copper from say Chile, Peru, Mexico,
et cetera.
Speaker 3 (32:06):
How complicated is it in terms of figuring out, you know,
how the price of copper is going to even move
and how it may be impacted by this, simply because
it's a global market still and obviously you've got big
demand drivers in Asia. You know, historically, it seems like
it's a very a very complex equilibrium that you're getting into,
(32:27):
and there's just a lot to consider and it might
not be as straightforward as a lot of people think, though.
Speaker 1 (32:32):
No exactly.
Speaker 6 (32:33):
I mean, what's been, you know, very difficult I think
for a lot of people to kind of reconcile is
that you do have copper that trades on the nine
x as a commodity in the United States, but then
also copper trading in London, and right now there's a
pretty big gap because of the expectation of tariffs. There's
(32:55):
this huge premium that the US copper price is trading
at to where copper is in London. Usually there's not
that big of a difference between the two prices, but
right now investors are betting that there's going to be
some tariff. Even if it's not fifty percent, say it's
twenty five or you know, somewhere between twenty five and fifty,
(33:18):
that's still higher them where it is now, so that
there will likely be a premium on US copper prices.
But again, the way to play that is probably more
through these mining companies or minor ETFs and less through
the metal itself.
Speaker 3 (33:35):
Paul, one of the things I've noticed historically is that
when dealing with minors of any any kind, it feels
like you just kind of get bludgeoned over the head.
A few different times like it's it's just a hard
business to invest in. It's kind of like how airlines
were historically or automakers, like it just seems messy, like
(33:56):
it's such capital that needs to get used. How do
you have any trust that, even in an era of
higher prices, if it materializes that these companies can figure
out how to make money off of it.
Speaker 6 (34:06):
Yeah, No, it's a great question. I mean, when you
have a company in a very capital intensive business that
is also subject to the whims of you know, global
commodity prices, that does make it inherently riskier. I think
where analysts are a little more upbeat about copper now
(34:27):
is that if you are able to toss aside all
of the drama about tariffs and there's you know, considerable
noise with all of the headlines there, demand for copper
is pretty healthy right now and should continue as well.
Data centers need copper, and they are building out aggressively
(34:49):
because data centers are you know, a big part of
the AI story. You have electric vehicles that need copper.
You know, you're upgrading the electrical grid. Smart Phones also
you know, require copper. So there's a lot of good
consumer and industrial demand right now for copper as well.
That should keep prices higher, even though they may pull
(35:12):
back in the near term from the inflated levels they're
at because of all the tariff talk. But you know,
analysts that I know cided in my piece today, you know,
we're of the mindset that any big dip that comes
in copper prices is probably a good buying opportunity for
the mining stocks that may get hit, including Freeport.
Speaker 3 (35:31):
Fantastic Paul, appreciate you joining us today and we'll catch
up with you soon.
Speaker 2 (35:35):
I hope you have a fantastic weekend.
Speaker 6 (35:37):
YEP, send you guys.
Speaker 5 (35:38):
Thanks a lot.
Speaker 3 (35:40):
That is Paul Monica from Barons talking about copper. Mark
what else we got that we haven't gotten to today.
Speaker 4 (35:47):
Oh, I wanted to follow up on copper if if
I could, but absolutely because the one of the President's
stated reasons for imposing the tariff, if they actually go through,
is that he wants to make a copper US that
is a dominant copper producer, or maybe at least independent.
But the Wall Street Journal points out today that permitting,
building and permitting a copper smelter can take more than
(36:10):
five years, and then developing a new mind takes on
average thirty years. So this policy, if that's what it is,
would have to be followed through on by several administrations
to be realized. The country's really got to be prepped
for this commitment. And maybe that's why the mining stocks
over the past five days, after popping initially on the news,
(36:30):
they're down on average two or three percentage points. I'm
looking just at the ETFs of companies like Freeport mcwell
Ran MCMA.
Speaker 2 (36:37):
I just boched the name. I'm not even to bother.
Speaker 4 (36:39):
It's fine, but you know what I mean. So it's
not clear to me that the intended objectives can be
achieved here in the amount of time that people are
likely to have patients with no it.
Speaker 3 (36:50):
Takes quite a while to get these things spooled up.
And the other piece, it's pooled up, and yeah, I'm
glad you appreciate that. The other thing that I come
back to and look, this is neither good nor bad.
I'm just saying that it is. Open pit mining is generally,
especially when you're talking about for stuff like copper, it's
(37:11):
generally horrible for the regional vicinity in terms of the
health impacts and stuff like that. The largest copper mine
in uh the United States at one point was a
mine in Butte, Montana called the Berkeley Pit. And the
Berkeley Pit is about a mile long and about half
(37:32):
a mile wide, and it got to a third of
a mile deep by the time they finally stopped mining there,
and it was active for about thirty years or so
from the mid nineteen fifties until the mid nineteen eighties.
And at this point it basically has become like a
super fun site just because, like the water is incredibly acidic.
(37:53):
If birds land there and drink from it, like half
of them die pretty much Like it's pretty nasty stuff
that you get when you talk about the effects of this. Now,
I'm not saying this means don't do this here, but
I'm simply saying there are very real environmental costs to
mining materials in the US, and it's part of the
reason why we've pushed this stuff overseas is just so
(38:13):
we don't have to see it. There's clearly a demand
for domestic production, but it comes with some costs too,
and we just need to be aware of that. We're
done for the day, done for the week. Next week
is a huge week of data in earnings. We'll see
you on Monday.
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