August 22, 2025 • 38 mins
Chuck Zodda and Paul Lane believe Millennials are now at the consumer culture epicenter. Ernie Tedeschi, Director of Economics - Yale Budget Lab, joins the show to share his insight into tariffs impacts on the economy. Why did US tourism fail to slump like so many expected. Paul LaMonica, Barron's, joins the show to chat QXO and Brad Jacobs.
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Speaker 1 (00:00):
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(01:05):
Zada and Paul Lane.
Speaker 2 (01:09):
This unusual situation suggests that downside risks to employment are rising,
and if those risks materialize, they can do so quickly
in the form of sharply higher layoffs and rising unemployment.
Speaker 3 (01:23):
Chuck, Paul and Tucker with you today and at ten
am this morning, Jay Powell kicked off his Jackson Hole
speech and big thing. Big takeaways the quote there and
a couple more that really suggests that the Fed is
pretty convinced to begin a rate cutting a series in September.
(01:45):
And so the questions obviously still are out there about
the data in the interim, but otherwise, markets basically pricing
in all systems go for rate cuts on the fixed
income side of things and on equities stocks basically responding
hey rate cuts mean that the economy will be able
to continue to grow, and as such, equities responding with
(02:08):
a monster move upward. Today, the Dow Jones industrially average
up eight hundred and fifty two points one point nine percent,
the S and P five hundred up one hundred and
three points about one point six percent, the NASDAK composite
four hundred and thirty three points two point zero five percent,
and even the Russell two thousand, which has basically just
(02:29):
been a dumpster fire for you know, quite a while,
just trailing the other major US indicies, that is up
three and three quarters percent today as small caps obviously
assumed to be beneficiaries of a rate cutting cycle. Here
when we look at fixed income markets, tenure Treasury down
eight basis points, not quite as much as you would
(02:51):
think given the magnitude of move the move in equities,
suggesting that yeah, the fixed income markets are buying this,
but maybe a bunch of people on the equity side
we're just positioned, you know, a little bit more bearishly
heading into today. That could explain some of the sell
off that we saw over the previous four to five
days was people just cleaning up positioning heading into this
(03:13):
Jackson Hole symposium. Also oil, we've got West Texts, Inner
Media up eighteen cents a barrel today, and then gold
is up thirty seven to ninety, up one point two
to thirty four to nineteen. This on the back of
a big downward move in the dollar, which is off
(03:35):
zero point nine to six percent right now. That's a
huge single day move. Uh, and so the dollar getting
hit pretty hard on this uh with the Fed again
kind of moving forward with the idea that they'll be
cutting rates. They haven't guaranteed anything, they haven't put it
in writing. We're definitely going to cut rates. Jay Powell
wouldn't do that, but suggesting pretty strongly. Yeah, I think
(03:58):
we're going to start a rate cut cycle in September.
Anything else to add Paul on that item.
Speaker 4 (04:04):
No, I think he had all the major points there.
Speaker 3 (04:06):
Chuck, make sure that you stick with us, because in
a little bit we're going to be joined by Ernie Tedeski,
who is the director of economics at the Budget Lab
at Yale University is also a former Chief economist for
the Council of Economic Advisors. He's going to be talking
to us about tariffs in just a little bit. But
we are going to kick things off this hour with
(04:28):
a piece from Bloomberg. It's titled boomers are the next
big consumer culture Frontier and I gotta be honest, don't agree. Paul?
Speaker 4 (04:41):
Oh okay, why not?
Speaker 3 (04:42):
Well, first not to you know, get all you know. No, actually, look,
let's let's put all the generations against each other, because
that's just kind of what happens. Right. Here's the thing,
the boomers had their day as the center of consumer attention.
Do you know what it was, Paul, No, you don't. No,
(05:05):
I'll tell you. It was the late nineties and early
two thousands. Do you know how and why? I know this?
Speaker 4 (05:10):
Based on average age of most consumption are the biggest
target demographic for businesses out there?
Speaker 3 (05:15):
No, it was based on the products that were being sold,
the cultural trends that were out there, and the music
that was being played on advertisements. And what I mean
by this is if you look at you know, kind
of the big you know, products that made their way
mainstream in the late nineties and early two thousands, look
no forward than the automotive industry, where two of the
most popular entrants during that time that subsequently faded out
(05:39):
were Remember the Volkswagen New Beetle, Sure boomers reliving their
glory days of the late sixties early seventies. The Fourth Thunderbird.
Remember they came out with the retro styled version of
that as well. Sure big seller during that time. Clear
targeting of boomer nostalgia. Other things that you saw during
that time, You remember bell bottoms came back.
Speaker 4 (06:00):
I do not remember that.
Speaker 3 (06:01):
You don't remember late nineties Bell Bottoms made a comeback.
Speaker 4 (06:04):
I barely remember the cars, but I just went along.
Speaker 3 (06:06):
They made a comeback again. Another cultural thing other things
that you saw. Do you guys remember when Paul McCartney
played the Super Bowl?
Speaker 4 (06:14):
That I do remember Paul.
Speaker 3 (06:15):
McCartney was not relevant to you know, eighteen year old Chuck,
but sure was relevant to fifteen to fifty year old
Chuck's parents. Okay, you know, like you saw multiple instances
of this in different areas where culturally that was the
demo that was being sold to then. And I also
have been like, I've picked this up also just in
(06:36):
terms of what we're seeing now where as a proud millennial. Remember,
millennials are no longer twenty years old, they're generally anywhere
from like thirty two to forty seven at this point,
as a proud millennial, I see my generation being marketed
to because we're now the biggest generation out there with
an increasing share of the wealth. Pie. And you see
this again in terms of, hey, what are you seeing
(06:59):
in turn? You know, as far as you know, product
development and things like that. You know, we talked yesterday
Paul about Hey that you know, granted I know that
it's from a tech perspective, But hey, that that kid's
landline phone. How many of us remember talking to our
friends on the landline phone as kids. Of course you're
going to try to sell that because you want your
(07:20):
kids to have the same experience that you did. You
see it in terms of music and advertisements. Do you
ever wonder why, like the Backstreet Boys are showing up
in Super Bowl commercials? Now, it's not because fifteen year
olds think the Backstreet Boys are cool. It's because forty
year olds remember. Oh yeah, the Backstreet Boys. I remember them. Everybody.
Speaker 4 (07:41):
Well, they're also on tour too.
Speaker 3 (07:43):
Right, Okay, but our fifteen year old's obsessed with them?
Speaker 4 (07:45):
No, no, but it's a good way that they're doing. You're
going after someone with a big wallet, shit correct to
do the nostalgia tours. Those are really popular. And then
the super Bowl with out in La you had all
the all the nine, these two thousands popular musicians.
Speaker 3 (08:02):
You know who you don't see playing the super Bowl
right now? Mick Jagger. And it's not because he's dead.
He's still alive. It's just because that's not who is
making the big buying decisions at this point. So yes,
I do agree with this piece here that Okay, I
understand that boomers do have an awful lot of wealth
(08:22):
and they've got, you know, a bunch of money to spend.
But the fact is they're not making buying decisions for
families now at this point, and that's going to prevent
them from being the target of most advertising and being
the next big consumer culture frontier because again like not
to be actually no, I will be age just here
(08:43):
because it's a just against myself. Once you get above thirty,
you're not cool anymore.
Speaker 4 (08:49):
In the eyes of advertisers.
Speaker 3 (08:51):
Correct. Yeah, like advertisers want to sell not even to
eighteen that quite honest, advertisers want to sell to like
fifteen twenty four. That's the sweet spot because for that
high school demo, their parents are gonna buy the stuff
for them. For that college and early adult Hey, it's
your first chance at freedom. Here's the stuff that you
(09:12):
can buy and make your choices on. That's the demo
they want to sell into. Because once you're making those
choices at those ages, they're locking you into those choices
for the next fifty years. See the Backstreet Boys on tour. Now,
if you sell to a fifteen year old, they will
still like the stuff when they are forty.
Speaker 4 (09:29):
It is worth noting, though, just from a numbers perspective,
the demographic shift in the country that this Bloomberg piece
outlines were. Back in twenty twenty, Americans who were over
the age of sixty five there was about fifty four
and a half million, and there was seventy four million
Americans under the age eighteen. You look at that figure
in twenty twenty four, the Americans over sixty five jump
(09:51):
from fifty four million to sixty one million, and the
Americans under the age of eighteen went from seventy four
million to seventy three million. And you now have eleven
states out there where older adults outnumber children. So there
definitely is the shift there in terms of just the
numbers of people that we're talking about in those demographics.
Speaker 3 (10:13):
Yes, I make the case though that numbers aren't what matter.
Dollars ultimately dollars in spending choices, and quite honestly, like
coolness matters when it comes to advertising. I know that
we don't want to believe that. I know we want
to believe that. It's like no, I buy things based
on the product, not on of course, we buy things
(10:34):
based on the coolness. How do you think Apple made
its entire business because they sold cool It's what they did.
Take a quick break here. When we return, we are
going to be joined by Ernie Tdeski, the director of
Economics at the Budget Lab at Yale University. He joins
us right after this.
Speaker 1 (10:55):
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Speaker 3 (11:31):
As promised, we are now joined by Ernie Tedesky. He
is the director of Economics at the Budget Lab at
Yale University, also a former Chief Economist for the Council
of Economic Advisors. Ernie, thank you so much for joining
us today.
Speaker 5 (11:46):
Thanks so much for having me.
Speaker 3 (11:48):
Absolutely, Ernie, when we kind of try to price out
the cost of tariffs to the average American family, I
know you and your group have done a bunch of
work on this this year. As it stands with current
tariff rates, what are we looking at as far as
the potential additional cost of families on an annual basis.
Speaker 5 (12:06):
Yeah, So if you look at all the tariffs that
have been announced in twenty twenty five to date, beginning
with the initial announcement in February on Canada, Mexico, and China,
and then everything that's been done since then, the total
would on average come to twenty four hundred dollars per
family per year. Now, a couple of things. It will take,
(12:30):
you know, about two or three years for tariffs to
fully phase in and pinch families by that full amount.
Right now, families and businesses are timing a lot of
their purchases, so we're not seeing the full effect of
tariffs yet, but eventually it'll we think it'll get to
that full twenty four hundred dollars. The other thing is
that when you open up the hood and you look
(12:50):
beneath that number, it's not going to be the same
for every family, which I think makes sense to most people. Actually,
for lower income people, they are going to get hit
harder as a share of their income than higher income
people will. That's because lower income families spend a greater
share of their income in general, and they spend the
larger share of their budget on imports in particular. You know,
(13:15):
So whereas a top income family might get hit by
roughly one percent of their income as a result of
twenty twenty five tariffs to date, a lower income family
is going to get hit three times that. So there's
really a lot of you know, difference among American families.
Speaker 3 (13:32):
Is there any sense I know that you mentioned it
might take two to three years for the full phase
and to take effect here, any sense as to kind
of how far along we are in that process just
from a dollar perspective, a percentage perspective right now? I
know that you know, in the recent CPI data, we've
started to see a few categories that are showing some
price increases there. But are we really seeing it showing
(13:53):
up on store shelves yet or not yet?
Speaker 5 (13:56):
Yeah, So if it's showing up in CPI, then that's
a sign that's showing up in store shelves somewhere on average, right,
And so look CPI is a national average, so that's
not necessarily the lived experience of everyone at any given time.
But you're absolutely right, you know, in particular, when you
look at durable goods, so things like household appliances, electronics, furniture,
(14:23):
those prices, believe it or not, as measured by CPI
usually fall a little bit year to year. That behavior
has completely gone to different the opposite direction so far
this year, and those prices are up so far. So
it's a it's a it's good circumstantial evidence that something
(14:45):
new is weighing on durable goods prices this year, and
it's almost certainly tariffs. Based on what we've seen, we
think that consumers as of June or July are paying roughly,
you know, half to three quarters of the tariffs so far.
We think that eventually that'll stabilize it around eighty percent
(15:06):
of the tariffs. That is that American businesses will eat
maybe a quarter to a fifth of the tariffs and
American consumers will will shoulder the rest. They'll they'll pay
seventy five to eighty percent of them, with foreign producers
paying virtually none of them. So you know, that process
has probably you know, to go back to your original question,
(15:29):
we're we're actually fairly far along in that process now,
but we have a little bit further to go before
families are paying, you know, what we expect to be
the full amount that they're paying.
Speaker 3 (15:42):
Ernie, Do you think there are convincing cases for the
tariff related price increases generating either a one time increase
in inflation or becoming a perpetual problem. Is there a
reasonable case that both of those could be considered?
Speaker 5 (15:56):
I think both of them are reasonable. And look, you
know what I tell people all the time is the
last time that we had tariff increases of this magnitude
was the Smooth Holly tariff in nineteen thirty. Yeah, exactly.
None of us were alive, and our economic data back
then was not nearly as good as as it is now.
So a lot of this is terra incognita for us.
(16:19):
We are all, you know, we all just need to
sort of, you know, have wide uncertainty bands and pay
attention to the data and be humble about what we
think we know or what we don't know. All of that.
So the case that tariffs are a one time price
increase is what you're going to find in virtually any
economics textbook. Right, A tariff is a tax. You put
(16:40):
that tax on and as long as you don't change it,
you know that should manifest itself as a one time
price increase. And that's the that's the rational, for example,
in the Federal Reserve among officials who think that they
should ignore the price effects on tariff right because their
mandate is inflation, the growth or the change in prices.
(17:02):
And their argument is, all right, once we get through this,
like there's not going to be any more change on
the other side. But there is convincing research elsewhere that
it's not just the one time price level shift from tariffs.
Tariff's weigh on supply chains, things that will persistently affect
not just the level of prices but inflation over time.
(17:22):
And I think that that is what Chair Powell and
some other Fed officials are worried about. They haven't decided
whether that's happening yet or not, but they're keeping they're
keeping a keen eye out for whether they see evidence
of that happening.
Speaker 3 (17:37):
Are a couple minutes left here. I have a non
tariff question for you, specifically focusing on labor supply, because
we're seeing signs now that labor supply is stagnating, maybe
even shrinking, depending on how you look at it. So
two questions, and I know this is a lot to
get through. Here are there signs that this may create
conditions for higher wages that could lead to inflation spiraling,
(18:00):
But also if you have lower labor supply, could it
also lead to lower demand for products that then prevents
inflation from spiraling.
Speaker 5 (18:08):
You're right, no, great question.
Speaker 3 (18:10):
So the.
Speaker 5 (18:14):
Slow down or possibly even the decline and labor supply
is in great heart being driven by changes in immigration,
because immigration was a big driver of the increase in
labor supply that we had seen over the last several years.
And you really put your thumb on it. Immigration increases
(18:36):
both demand and supply. So when people say, ah, well,
if we reduce immigration, then wages will go up, right,
because there's less labor supply. What you're forgetting is that
when an immigrant comes here, right, they bring both their
labor supply but also their consumer demand at the same time.
And so if they leave, or if you're talking about
(18:56):
slowing immigration down, right, putting aside the merits of those policies,
just from an economic perspective, it's actually ambiguous, right what
happens with wages or with growth over time, because of
those two things happening at the same time. Research in
the past has basically said, yeah, you know, when you
when you when you have a surgeon immigration, when you know,
(19:20):
economic papers have studied specific regions that have had surges immigration.
It is a little bit.
Speaker 3 (19:25):
Of I apologize, we've got to get out. We got
a heartbreak here. But I do appreciate you joining us. Yeah,
I appreciate all the information. Thanks so much for the
time today.
Speaker 5 (19:33):
Thanks so much. I have a great day.
Speaker 3 (19:34):
Ernie Titsky from the Budget Lab at Yale.
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 and
what's moving markets so far today right here on the
Financial Exchange Radio Network.
Speaker 6 (19:59):
Markets a roaring following fitchairman Jerome Palace speech from Jackson
Hole earlier this morning, where Powell left the door open
for a rate cut next month, citing the rising risks
for the labor market. Right now, the Dow is up
over two percent, or nine hundred and thirty three points higher.
S and P five hundred is up nearly one point
seven percent. NASDAC up over two percent or four hundred
(20:23):
and thirty six points higher, Russell two thousand up nearly
four percent. Ten year Treasreeld is down eight basis points
at two point excuse me, four point two four to
six percent, and crude oil is mostly flat today edging higher.
According to a report from the Information and Video told
suppliers to halt some production of its H twenty chips
(20:46):
after Chinese authorities pushed companies to avoid the product. Furthermore,
Video is also reportedly having conversations with the US government
about shipping a more advanced chip to China, and Video
shares are up nearly two percent, with their earning on
deck next week. Meanwhile, tax preparation software company in two
It said it expects sales growth between fourteen and fifteen
(21:08):
percent in its current quarter, below Street forecast into its
stock is tumbling over four percent. Elsewhere, ra Store is
up one percent after the discount department store chain reported
a rebound in sales in July. Ross also said terror
related costs hadn't pinched profits as much as expected, and
Zoom Communications raised its full year outlook, sending that stock
(21:31):
up by ten percent. I'm Tucker Silva and that is
Wall Street Watch and we haven't done trivia yet, so
let's do that. Continue our World War two trivia theme.
Question today, which was the first axis power to surrender?
Once again? Which was the first axis power to surrender?
Be the second person today to text us at six
(21:53):
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Speaker 3 (22:10):
Paul, we got a piece of here from the Financial
Times is titled the US tourism Slump that Never happened,
And I'll make the case it wasn't one that never happened,
but one that just has been more moderate than I
think people thought it could be. And basically what we
saw is that when we look at air travel and
hotel bookings year over year for the full year, they
are both still down, but showing some signs of stability
(22:33):
and even improvement in a few places. And most of
the decline appears to have been driven by a decline
in international travelers coming to the US rather than domestic travelers.
Altering their plans in any dramatic fashion. The other thing
that I will say, and this is even from data
from Marriott that we covered a few weeks back, most
(22:53):
of the strength that we are seeing is in high
end luxury segments. As you go down market, trends tend
to worsen, and that messages with what we're hearing just
about the overall state of the US economy as well.
Speaker 4 (23:07):
Yeah, we had quoted that statistic from the Marriott data
of a revenue per available room on the luxury side
that's up three percent this year through the end of July,
versus the economy and mid size of combinations think like
a fair filled in or something like that. They had
seen a one and a half percent decline there. On
the foreign traveler front, like you mentioned, we've seen about
(23:28):
a four percent drop through the first seven months of
twenty twenty five according to the US National Travel and
Tourism Office. A lot of those are people not coming
across the border from Canada, but other parts of the
globe as well. It really has been just ringing a
head check that almost the stock market feels like it
is very critical for this leisure and hospitality side of things.
(23:51):
You know, we've talked about that statistic before the top
percent of income earners accounting for half the spending, and
when you look at the tourism data here, it's it
seems like because the market has fared so well this
year and you have wealthier consumers making up a bigger
share of the profitability of these hotel companies, that is
becoming a very critical ingredient to tourism spend. Again, that's
(24:15):
just kind of an anecdotal take from me, but it
just does seem like that luxury traveler is really critical
for the leisure in hospitality space.
Speaker 6 (24:24):
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Speaker 3 (25:22):
Paul, let's talk about I don't want to talk about AI, Like,
I just is there anything left to talk about with
AI at this point? Like some people think it's gonna work,
some people don't, like what what? What are we really
gonna talk about whether like there's a Wall Street firm
that's arguing, Hey, we came up with a really complex
(25:43):
model that we think will outperform really simple ones. Is
there anything other to say on that other than who knows,
We'll have to see how it's gonna play out.
Speaker 4 (25:50):
That that's totally but appropriate for for that one. I mean,
everyone and their brothers trying to come up with some
right model. And outside of restlance technology, which goes back decades,
there really hasn't been a case of that over history.
Speaker 3 (26:04):
Okay, here's what else we have for AI. Google is
trying everything to sell AI to skeptics. Great, hope it
works for you. Meta poaches Apple AI executive even as
it plans hiring slowdown. So I guess you didn't really
slow down that much.
Speaker 4 (26:17):
Apple has an AI executive.
Speaker 3 (26:19):
One you know, he's not human.
Speaker 4 (26:22):
They're just taking everybody. They're taking everybody in their brother
We should just retitle ourselves as AI experts and hope
to get a bag from Meta.
Speaker 3 (26:29):
Well, Texas robot I'm sorry, Will Tesla robotaxis kill auto insurers? Hardly? Okay? Again,
like I have no clue. Probably not is the answer,
but I don't know, Like, maybe we get to a
point where self driving is actually, you know, a thing
that is broadly available to this point, it's in a
few niche areas and we'll see how it goes, but
(26:53):
it does seem to be making more progress. I don't
know why it has to be exclusive to Tesla.
Speaker 4 (26:56):
What does Tesla have to get this headline? This is
Waimo's ballpark.
Speaker 3 (27:00):
Like Waimo's, they're the dudes who actually are operating this
thing in more places, and yet you know Tesla gets
it just because they have a few operating in like.
Speaker 4 (27:09):
One and a half eleven taxis or something like that. Yeah,
that just doesn't seem fair to Wei Mo. That business
is so much more under the radar than all of
the publicity that the robotaxis get for Tesla.
Speaker 3 (27:20):
Anything else that we want to add when it comes
to AI or did we just speed run the whole thing?
Speaker 4 (27:24):
We did that pretty fast and efficient for a friday.
I don't think that we've we've missed anything.
Speaker 3 (27:30):
Okay, I'm glad that we did that. Let's take a
quick break then, and when we return, we're gonna be
joined by paul A Monica from Barons on the back end. Here.
Speaker 1 (27:40):
The Financial Exchange streams live on YouTube. Like our page
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(28:01):
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Speaker 7 (28:11):
Ladies and gentlemen, the weekend, now's a great time to
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That's Saturday November eighth for this year's DAV five k.
(28:44):
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Speaker 4 (28:48):
As promised, we are joined by Paul Lamonica from Barons
here to talk to us about a little known company,
but an entrepreneurial titan that who probably should be a
little bit more well well known than he is. Paul,
thanks so much for joining us today. Really appreciate it.
Speaker 8 (29:04):
Yeah, thanks a lot for having me come on talk
about qx So.
Speaker 4 (29:07):
I'm excited to talk about this, Paul, because Brad Jacobs,
who is the CEO of QXO, had wrote a book
How to Make a Few Billion Dollars, which I've read,
which is fantastic. Maybe give our listeners a little bit
of summary of who is Brad Jacobs, because he really
should be talked about sort of similarly to Warren Buffett
in terms of the success he's had over his entrepreneuri career.
Speaker 8 (29:28):
Yeah, this is another mega billionaire. I think at last check,
worth just under seventeen billion dollars. And he has a
history of kind of using a roll up strategy to
buy companies in fragmented businesses and turn them into powerhouses.
So this is something that he did with United Rentals,
(29:52):
you know, the big company. Also logistics firm XPO. He
did this with company called United Waste Systems, which became
eventually a part of waste management. So now he's trying
to do this with QXO. In the building products industry,
which is incredibly fragmented. There are a fair number of
(30:16):
public companies but also some private mom and pop firms
as well, and QXO is starting the process. Earlier this year,
it bought Beacon roofing supply and is hoping to use
that as the springboard to do more deals in the
building and construction related businesses you've mentioned.
Speaker 4 (30:36):
Yeah, his strategy is all about M and A and
trying to take efficiencies through the use of technology to
kind of build his businesses. But it seems like the
trade secrets out a little bit in the sense that
he has this tremendous track record, and from where the
stock is trading right now, how would you view it
in terms of its pricing, because it does seem like
he has a lot of fanfare behind him and a
(30:58):
lot of analysts and investors that are jumping on his
historical track record.
Speaker 8 (31:03):
Yeah, definitely. I mean, many of the Wall Street firms
that cover QXO are incredibly bullish, but it may not
be too late to get in. There's another analyst that
just launched coverage today at Benchmark, putting a fifty dollars
price target and a buy rating on QXO, in part
(31:24):
because of the Brad Jacobs playbook. He thinks that there
will be more deals ahead and that the company will
use Beacon as a means to grow. So that's one thing.
But what I was really struck by is that there
is this one money manager, Orbis Investment Management, that is
(31:45):
the largest shareholder. They have almost a fifteen percent steak
excuse me, fifteen percent stake in QXO, and they wrote
in a post last year that they were buying QXO
before they did even any deal. So this was before Beacon.
It was a bet on the notion that eventually Jacobs
(32:05):
would find a series of companies to acquire, and that's
turned out to be a pretty good bet. And when
you look at what they were saying in their report,
it also still suggests more upside ahead because they were saying,
you know, the company should probably trade in a range
maybe of two to five times book value. It's currently
(32:29):
at about one point six, so if you take the
median there, you know, three and a half times book value,
that still gives you upside of you know, forty six
dollars a share, you know, more than double where it's
trading at now. Though it's having a great day today
along with the rest of the market. It's about six
and a half percent today.
Speaker 4 (32:48):
That's Paul A Monica from Baron's talking to us about
QXO and they're sort of little known named CEO, but
who should be probably a bigger name out there. Paul,
thanks so much for the time. Really appreciate it, have
a great weekend.
Speaker 8 (32:59):
Thanks you to appreciate it.
Speaker 3 (33:00):
Guys.
Speaker 6 (33:01):
All right, in the previous segment, we asked you the
trivia question related to World War Two, which was, uh,
who was the first access power to surrender that would
be Italy. Gil from Sandwich is our winner today, taking
home a Financial Looks Change Show T shirt. Congrats to Gel.
Speaker 3 (33:16):
We played trivia every day.
Speaker 6 (33:18):
Here in the Financial Looks Change See complete contest rules
at Financial Looks Chain Show dot com.
Speaker 3 (33:24):
Paul, do you want to talk about the FTC suing
gyms to make it easier to cancel? Or battery flavored chips?
Speaker 4 (33:33):
I want the gyms because I had this circled myself, Chuck,
Let's let's talk about it.
Speaker 3 (33:38):
So, first thing, I think it was either last year
or the year before, the FTC put out what they
called a was their click to Cancel rule, which basically said, look,
if you can sign up for a product online or
in any medium, you have to be able to use
that same medium to cancel the subscription, basically saying you
can't make it harder for someone to cancel signing up
(33:59):
for some thing than it was for them originally to
sign up for it. That rule was then put It
was supposed to go into effect in July of this year.
There was a court I forget who that struck it
down earlier this year, and so it has not gone
into effect. So now the FTC coming out, and they
filed a lawsuit against a few gym operators, pretty much saying, look,
(34:23):
you've made it really hard to cancel, because I'll just
quote here like how ridiculous it is for Starters, members
are required to log into their website and print off
a cancelation form. Then you had, But the thing is
you had to sign up at you know, using the
La Fitness app or a QR code, so you might
not actually have your log in information for the website
(34:45):
because you can't just get the form through the app.
And then if you don't know how to log in,
you have to go and provide the original email address
that you used, get what's called a key tag number
that gets handed out when you sign the first five
digit of the bank account credit card listed, and then
you can finally figure out how to cancel, oh, by
(35:07):
bringing the form in to a physical location where you
have to go through a whole bunch of other things.
Speaker 4 (35:13):
The reason I wanted to cover this story is because
we had a similar experience in my household with this
type of thing, where my wife was a member at
Gold's gym and the pandemic hit and obviously a lot
of people canceled their gym memberships. I was able to
get out with a phone call. But since then, in
that remaining weeks, the gym changes policy where my wife
would have to print out a form, hand a physical signature,
(35:36):
bring it in to the gym in order to cancel it,
and I do that. It was a handwritten letter. Actually, yeah,
so this process is not unique. It seems like a
bunch of gyms we're doing this. Granted we're years removed
from the pandemic, which even in that instance not that
I agreed with that. You could understand why gyms were
(35:58):
kind of hanging on by a thread, so they were
trying anything they could to delay membership cancelation. But in
twenty twenty five, here it should not be this difficult.
So that's the reason why I wanted to cover this,
because if it's easy to sign up, it should be
easy to cancel too, and they they've got to change this.
Speaker 3 (36:13):
I mean, look, I know that like this could a
lot of things could be reduced to this, but I
also believe that a lot of things should be reduced
to this. We put a man on the freaking moon,
we can figure out how to cancel gym memberships with
one click of a button at this point. The only
reason that we don't is because the companies know that
(36:35):
a certain percentage of people just won't come in and
they can keep getting the revenue from them. Yeah, planning,
which in honestly, this model like honestly sucks, like it's
it's just kind of it's it's just parasitic more than
anything else. And so look, if you really want to
make this, you know, like fool proof, find Congress, get
(36:55):
together and pass this stuff. Like how big is the
gym lobby? You know, is there that money being thrown
at Congress by Planet Fitness in La Fitness In order
to you know, prevent that from happening, probably not get
together and just actually legislate the thing then, because otherwise
it's like you're playing whack a mole on all this stuff.
(37:17):
And hey, I'm a big believer. Look, you know what
would increase Congress's popularity an awful lot. Write legislation on
this and figure out some kind of legislation that bans
spam phone calls and spam text getting because because you
can do it if you actually decide to work at it,
And it's just there's no incentive for anyone to do
(37:39):
it right now. So you know, it's no different from, Hey,
you want to be a good mayor of a city.
Fill the potholes, keep you know, the police fire and
schools funded and people will love you. Hey, you want
to be you know good in terms of you know, Congress,
make things less annoying that businesses are doing that. We
can't stop them from doing ourselves. But that's just me. Uh.
(38:02):
Taking a look at markets as we wrap up, Downs
up two percent, Smps up one and a half, Nasdaq
up two percent, Russell two thousand and four percent. A
lot of green on the board heading into the weekend.
Not bad, we'll we'll take it. It's a good, good start.
At least we're done for the day, done for the week.
Have a wonderful weekend, and we'll see you on Monday.
The Financial Exchange is produced by Money Matters Radio and
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(01:05):
Zada and Paul Lane.
Speaker 2 (01:09):
This unusual situation suggests that downside risks to employment are rising,
and if those risks materialize, they can do so quickly
in the form of sharply higher layoffs and rising unemployment.
Speaker 3 (01:23):
Chuck, Paul and Tucker with you today and at ten
am this morning, Jay Powell kicked off his Jackson Hole
speech and big thing. Big takeaways the quote there and
a couple more that really suggests that the Fed is
pretty convinced to begin a rate cutting a series in September.
(01:45):
And so the questions obviously still are out there about
the data in the interim, but otherwise, markets basically pricing
in all systems go for rate cuts on the fixed
income side of things and on equities stocks basically responding
hey rate cuts mean that the economy will be able
to continue to grow, and as such, equities responding with
(02:08):
a monster move upward. Today, the Dow Jones industrially average
up eight hundred and fifty two points one point nine percent,
the S and P five hundred up one hundred and
three points about one point six percent, the NASDAK composite
four hundred and thirty three points two point zero five percent,
and even the Russell two thousand, which has basically just
(02:29):
been a dumpster fire for you know, quite a while,
just trailing the other major US indicies, that is up
three and three quarters percent today as small caps obviously
assumed to be beneficiaries of a rate cutting cycle. Here
when we look at fixed income markets, tenure Treasury down
eight basis points, not quite as much as you would
(02:51):
think given the magnitude of move the move in equities,
suggesting that yeah, the fixed income markets are buying this,
but maybe a bunch of people on the equity side
we're just positioned, you know, a little bit more bearishly
heading into today. That could explain some of the sell
off that we saw over the previous four to five
days was people just cleaning up positioning heading into this
(03:13):
Jackson Hole symposium. Also oil, we've got West Texts, Inner
Media up eighteen cents a barrel today, and then gold
is up thirty seven to ninety, up one point two
to thirty four to nineteen. This on the back of
a big downward move in the dollar, which is off
(03:35):
zero point nine to six percent right now. That's a
huge single day move. Uh, and so the dollar getting
hit pretty hard on this uh with the Fed again
kind of moving forward with the idea that they'll be
cutting rates. They haven't guaranteed anything, they haven't put it
in writing. We're definitely going to cut rates. Jay Powell
wouldn't do that, but suggesting pretty strongly. Yeah, I think
(03:58):
we're going to start a rate cut cycle in September.
Anything else to add Paul on that item.
Speaker 4 (04:04):
No, I think he had all the major points there.
Speaker 3 (04:06):
Chuck, make sure that you stick with us, because in
a little bit we're going to be joined by Ernie Tedeski,
who is the director of economics at the Budget Lab
at Yale University is also a former Chief economist for
the Council of Economic Advisors. He's going to be talking
to us about tariffs in just a little bit. But
we are going to kick things off this hour with
(04:28):
a piece from Bloomberg. It's titled boomers are the next
big consumer culture Frontier and I gotta be honest, don't agree. Paul?
Speaker 4 (04:41):
Oh okay, why not?
Speaker 3 (04:42):
Well, first not to you know, get all you know. No, actually, look,
let's let's put all the generations against each other, because
that's just kind of what happens. Right. Here's the thing,
the boomers had their day as the center of consumer attention.
Do you know what it was, Paul, No, you don't. No,
(05:05):
I'll tell you. It was the late nineties and early
two thousands. Do you know how and why? I know this?
Speaker 4 (05:10):
Based on average age of most consumption are the biggest
target demographic for businesses out there?
Speaker 3 (05:15):
No, it was based on the products that were being sold,
the cultural trends that were out there, and the music
that was being played on advertisements. And what I mean
by this is if you look at you know, kind
of the big you know, products that made their way
mainstream in the late nineties and early two thousands, look
no forward than the automotive industry, where two of the
most popular entrants during that time that subsequently faded out
(05:39):
were Remember the Volkswagen New Beetle, Sure boomers reliving their
glory days of the late sixties early seventies. The Fourth Thunderbird.
Remember they came out with the retro styled version of
that as well. Sure big seller during that time. Clear
targeting of boomer nostalgia. Other things that you saw during
that time, You remember bell bottoms came back.
Speaker 4 (06:00):
I do not remember that.
Speaker 3 (06:01):
You don't remember late nineties Bell Bottoms made a comeback.
Speaker 4 (06:04):
I barely remember the cars, but I just went along.
Speaker 3 (06:06):
They made a comeback again. Another cultural thing other things
that you saw. Do you guys remember when Paul McCartney
played the Super Bowl?
Speaker 4 (06:14):
That I do remember Paul.
Speaker 3 (06:15):
McCartney was not relevant to you know, eighteen year old Chuck,
but sure was relevant to fifteen to fifty year old
Chuck's parents. Okay, you know, like you saw multiple instances
of this in different areas where culturally that was the
demo that was being sold to then. And I also
have been like, I've picked this up also just in
(06:36):
terms of what we're seeing now where as a proud millennial. Remember,
millennials are no longer twenty years old, they're generally anywhere
from like thirty two to forty seven at this point,
as a proud millennial, I see my generation being marketed
to because we're now the biggest generation out there with
an increasing share of the wealth. Pie. And you see
this again in terms of, hey, what are you seeing
(06:59):
in turn? You know, as far as you know, product
development and things like that. You know, we talked yesterday
Paul about Hey that you know, granted I know that
it's from a tech perspective, But hey, that that kid's
landline phone. How many of us remember talking to our
friends on the landline phone as kids. Of course you're
going to try to sell that because you want your
(07:20):
kids to have the same experience that you did. You
see it in terms of music and advertisements. Do you
ever wonder why, like the Backstreet Boys are showing up
in Super Bowl commercials? Now, it's not because fifteen year
olds think the Backstreet Boys are cool. It's because forty
year olds remember. Oh yeah, the Backstreet Boys. I remember them. Everybody.
Speaker 4 (07:41):
Well, they're also on tour too.
Speaker 3 (07:43):
Right, Okay, but our fifteen year old's obsessed with them?
Speaker 4 (07:45):
No, no, but it's a good way that they're doing. You're
going after someone with a big wallet, shit correct to
do the nostalgia tours. Those are really popular. And then
the super Bowl with out in La you had all
the all the nine, these two thousands popular musicians.
Speaker 3 (08:02):
You know who you don't see playing the super Bowl
right now? Mick Jagger. And it's not because he's dead.
He's still alive. It's just because that's not who is
making the big buying decisions at this point. So yes,
I do agree with this piece here that Okay, I
understand that boomers do have an awful lot of wealth
(08:22):
and they've got, you know, a bunch of money to spend.
But the fact is they're not making buying decisions for
families now at this point, and that's going to prevent
them from being the target of most advertising and being
the next big consumer culture frontier because again like not
to be actually no, I will be age just here
(08:43):
because it's a just against myself. Once you get above thirty,
you're not cool anymore.
Speaker 4 (08:49):
In the eyes of advertisers.
Speaker 3 (08:51):
Correct. Yeah, like advertisers want to sell not even to
eighteen that quite honest, advertisers want to sell to like
fifteen twenty four. That's the sweet spot because for that
high school demo, their parents are gonna buy the stuff
for them. For that college and early adult Hey, it's
your first chance at freedom. Here's the stuff that you
(09:12):
can buy and make your choices on. That's the demo
they want to sell into. Because once you're making those
choices at those ages, they're locking you into those choices
for the next fifty years. See the Backstreet Boys on tour. Now,
if you sell to a fifteen year old, they will
still like the stuff when they are forty.
Speaker 4 (09:29):
It is worth noting, though, just from a numbers perspective,
the demographic shift in the country that this Bloomberg piece
outlines were. Back in twenty twenty, Americans who were over
the age of sixty five there was about fifty four
and a half million, and there was seventy four million
Americans under the age eighteen. You look at that figure
in twenty twenty four, the Americans over sixty five jump
(09:51):
from fifty four million to sixty one million, and the
Americans under the age of eighteen went from seventy four
million to seventy three million. And you now have eleven
states out there where older adults outnumber children. So there
definitely is the shift there in terms of just the
numbers of people that we're talking about in those demographics.
Speaker 3 (10:13):
Yes, I make the case though that numbers aren't what matter.
Dollars ultimately dollars in spending choices, and quite honestly, like
coolness matters when it comes to advertising. I know that
we don't want to believe that. I know we want
to believe that. It's like no, I buy things based
on the product, not on of course, we buy things
(10:34):
based on the coolness. How do you think Apple made
its entire business because they sold cool It's what they did.
Take a quick break here. When we return, we are
going to be joined by Ernie Tdeski, the director of
Economics at the Budget Lab at Yale University. He joins
us right after this.
Speaker 1 (10:55):
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(11:16):
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Speaker 3 (11:31):
As promised, we are now joined by Ernie Tedesky. He
is the director of Economics at the Budget Lab at
Yale University, also a former Chief Economist for the Council
of Economic Advisors. Ernie, thank you so much for joining
us today.
Speaker 5 (11:46):
Thanks so much for having me.
Speaker 3 (11:48):
Absolutely, Ernie, when we kind of try to price out
the cost of tariffs to the average American family, I
know you and your group have done a bunch of
work on this this year. As it stands with current
tariff rates, what are we looking at as far as
the potential additional cost of families on an annual basis.
Speaker 5 (12:06):
Yeah, So if you look at all the tariffs that
have been announced in twenty twenty five to date, beginning
with the initial announcement in February on Canada, Mexico, and China,
and then everything that's been done since then, the total
would on average come to twenty four hundred dollars per
family per year. Now, a couple of things. It will take,
(12:30):
you know, about two or three years for tariffs to
fully phase in and pinch families by that full amount.
Right now, families and businesses are timing a lot of
their purchases, so we're not seeing the full effect of
tariffs yet, but eventually it'll we think it'll get to
that full twenty four hundred dollars. The other thing is
that when you open up the hood and you look
(12:50):
beneath that number, it's not going to be the same
for every family, which I think makes sense to most people. Actually,
for lower income people, they are going to get hit
harder as a share of their income than higher income
people will. That's because lower income families spend a greater
share of their income in general, and they spend the
larger share of their budget on imports in particular. You know,
(13:15):
So whereas a top income family might get hit by
roughly one percent of their income as a result of
twenty twenty five tariffs to date, a lower income family
is going to get hit three times that. So there's
really a lot of you know, difference among American families.
Speaker 3 (13:32):
Is there any sense I know that you mentioned it
might take two to three years for the full phase
and to take effect here, any sense as to kind
of how far along we are in that process just
from a dollar perspective, a percentage perspective right now? I
know that you know, in the recent CPI data, we've
started to see a few categories that are showing some
price increases there. But are we really seeing it showing
(13:53):
up on store shelves yet or not yet?
Speaker 5 (13:56):
Yeah, So if it's showing up in CPI, then that's
a sign that's showing up in store shelves somewhere on average, right,
And so look CPI is a national average, so that's
not necessarily the lived experience of everyone at any given time.
But you're absolutely right, you know, in particular, when you
look at durable goods, so things like household appliances, electronics, furniture,
(14:23):
those prices, believe it or not, as measured by CPI
usually fall a little bit year to year. That behavior
has completely gone to different the opposite direction so far
this year, and those prices are up so far. So
it's a it's a it's good circumstantial evidence that something
(14:45):
new is weighing on durable goods prices this year, and
it's almost certainly tariffs. Based on what we've seen, we
think that consumers as of June or July are paying roughly,
you know, half to three quarters of the tariffs so far.
We think that eventually that'll stabilize it around eighty percent
(15:06):
of the tariffs. That is that American businesses will eat
maybe a quarter to a fifth of the tariffs and
American consumers will will shoulder the rest. They'll they'll pay
seventy five to eighty percent of them, with foreign producers
paying virtually none of them. So you know, that process
has probably you know, to go back to your original question,
(15:29):
we're we're actually fairly far along in that process now,
but we have a little bit further to go before
families are paying, you know, what we expect to be
the full amount that they're paying.
Speaker 3 (15:42):
Ernie, Do you think there are convincing cases for the
tariff related price increases generating either a one time increase
in inflation or becoming a perpetual problem. Is there a
reasonable case that both of those could be considered?
Speaker 5 (15:56):
I think both of them are reasonable. And look, you
know what I tell people all the time is the
last time that we had tariff increases of this magnitude
was the Smooth Holly tariff in nineteen thirty. Yeah, exactly.
None of us were alive, and our economic data back
then was not nearly as good as as it is now.
So a lot of this is terra incognita for us.
(16:19):
We are all, you know, we all just need to
sort of, you know, have wide uncertainty bands and pay
attention to the data and be humble about what we
think we know or what we don't know. All of that.
So the case that tariffs are a one time price
increase is what you're going to find in virtually any
economics textbook. Right, A tariff is a tax. You put
(16:40):
that tax on and as long as you don't change it,
you know that should manifest itself as a one time
price increase. And that's the that's the rational, for example,
in the Federal Reserve among officials who think that they
should ignore the price effects on tariff right because their
mandate is inflation, the growth or the change in prices.
(17:02):
And their argument is, all right, once we get through this,
like there's not going to be any more change on
the other side. But there is convincing research elsewhere that
it's not just the one time price level shift from tariffs.
Tariff's weigh on supply chains, things that will persistently affect
not just the level of prices but inflation over time.
(17:22):
And I think that that is what Chair Powell and
some other Fed officials are worried about. They haven't decided
whether that's happening yet or not, but they're keeping they're
keeping a keen eye out for whether they see evidence
of that happening.
Speaker 3 (17:37):
Are a couple minutes left here. I have a non
tariff question for you, specifically focusing on labor supply, because
we're seeing signs now that labor supply is stagnating, maybe
even shrinking, depending on how you look at it. So
two questions, and I know this is a lot to
get through. Here are there signs that this may create
conditions for higher wages that could lead to inflation spiraling,
(18:00):
But also if you have lower labor supply, could it
also lead to lower demand for products that then prevents
inflation from spiraling.
Speaker 5 (18:08):
You're right, no, great question.
Speaker 3 (18:10):
So the.
Speaker 5 (18:14):
Slow down or possibly even the decline and labor supply
is in great heart being driven by changes in immigration,
because immigration was a big driver of the increase in
labor supply that we had seen over the last several years.
And you really put your thumb on it. Immigration increases
(18:36):
both demand and supply. So when people say, ah, well,
if we reduce immigration, then wages will go up, right,
because there's less labor supply. What you're forgetting is that
when an immigrant comes here, right, they bring both their
labor supply but also their consumer demand at the same time.
And so if they leave, or if you're talking about
(18:56):
slowing immigration down, right, putting aside the merits of those policies,
just from an economic perspective, it's actually ambiguous, right what
happens with wages or with growth over time, because of
those two things happening at the same time. Research in
the past has basically said, yeah, you know, when you
when you when you have a surgeon immigration, when you know,
(19:20):
economic papers have studied specific regions that have had surges immigration.
It is a little bit.
Speaker 3 (19:25):
Of I apologize, we've got to get out. We got
a heartbreak here. But I do appreciate you joining us. Yeah,
I appreciate all the information. Thanks so much for the
time today.
Speaker 5 (19:33):
Thanks so much. I have a great day.
Speaker 3 (19:34):
Ernie Titsky from the Budget Lab at Yale.
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 and
what's moving markets so far today right here on the
Financial Exchange Radio Network.
Speaker 6 (19:59):
Markets a roaring following fitchairman Jerome Palace speech from Jackson
Hole earlier this morning, where Powell left the door open
for a rate cut next month, citing the rising risks
for the labor market. Right now, the Dow is up
over two percent, or nine hundred and thirty three points higher.
S and P five hundred is up nearly one point
seven percent. NASDAC up over two percent or four hundred
(20:23):
and thirty six points higher, Russell two thousand up nearly
four percent. Ten year Treasreeld is down eight basis points
at two point excuse me, four point two four to
six percent, and crude oil is mostly flat today edging higher.
According to a report from the Information and Video told
suppliers to halt some production of its H twenty chips
(20:46):
after Chinese authorities pushed companies to avoid the product. Furthermore,
Video is also reportedly having conversations with the US government
about shipping a more advanced chip to China, and Video
shares are up nearly two percent, with their earning on
deck next week. Meanwhile, tax preparation software company in two
It said it expects sales growth between fourteen and fifteen
(21:08):
percent in its current quarter, below Street forecast into its
stock is tumbling over four percent. Elsewhere, ra Store is
up one percent after the discount department store chain reported
a rebound in sales in July. Ross also said terror
related costs hadn't pinched profits as much as expected, and
Zoom Communications raised its full year outlook, sending that stock
(21:31):
up by ten percent. I'm Tucker Silva and that is
Wall Street Watch and we haven't done trivia yet, so
let's do that. Continue our World War two trivia theme.
Question today, which was the first axis power to surrender?
Once again? Which was the first axis power to surrender?
Be the second person today to text us at six
(21:53):
one seven three six two thirteen eighty five with the
correct answer, and you win a Financial Exchange Show T
shirt once again. The second can correct response to textas
to the number six one seven three six two thirteen
eighty five will win that T shirt. See complete contest
rules at Financial Exchange Show dot com.
Speaker 3 (22:10):
Paul, we got a piece of here from the Financial
Times is titled the US tourism Slump that Never happened,
And I'll make the case it wasn't one that never happened,
but one that just has been more moderate than I
think people thought it could be. And basically what we
saw is that when we look at air travel and
hotel bookings year over year for the full year, they
are both still down, but showing some signs of stability
(22:33):
and even improvement in a few places. And most of
the decline appears to have been driven by a decline
in international travelers coming to the US rather than domestic travelers.
Altering their plans in any dramatic fashion. The other thing
that I will say, and this is even from data
from Marriott that we covered a few weeks back, most
(22:53):
of the strength that we are seeing is in high
end luxury segments. As you go down market, trends tend
to worsen, and that messages with what we're hearing just
about the overall state of the US economy as well.
Speaker 4 (23:07):
Yeah, we had quoted that statistic from the Marriott data
of a revenue per available room on the luxury side
that's up three percent this year through the end of July,
versus the economy and mid size of combinations think like
a fair filled in or something like that. They had
seen a one and a half percent decline there. On
the foreign traveler front, like you mentioned, we've seen about
(23:28):
a four percent drop through the first seven months of
twenty twenty five according to the US National Travel and
Tourism Office. A lot of those are people not coming
across the border from Canada, but other parts of the
globe as well. It really has been just ringing a
head check that almost the stock market feels like it
is very critical for this leisure and hospitality side of things.
(23:51):
You know, we've talked about that statistic before the top
percent of income earners accounting for half the spending, and
when you look at the tourism data here, it's it
seems like because the market has fared so well this
year and you have wealthier consumers making up a bigger
share of the profitability of these hotel companies, that is
becoming a very critical ingredient to tourism spend. Again, that's
(24:15):
just kind of an anecdotal take from me, but it
just does seem like that luxury traveler is really critical
for the leisure in hospitality space.
Speaker 6 (24:24):
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(25:06):
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Speaker 3 (25:22):
Paul, let's talk about I don't want to talk about AI, Like,
I just is there anything left to talk about with
AI at this point? Like some people think it's gonna work,
some people don't, like what what? What are we really
gonna talk about whether like there's a Wall Street firm
that's arguing, Hey, we came up with a really complex
(25:43):
model that we think will outperform really simple ones. Is
there anything other to say on that other than who knows,
We'll have to see how it's gonna play out.
Speaker 4 (25:50):
That that's totally but appropriate for for that one. I mean,
everyone and their brothers trying to come up with some
right model. And outside of restlance technology, which goes back decades,
there really hasn't been a case of that over history.
Speaker 3 (26:04):
Okay, here's what else we have for AI. Google is
trying everything to sell AI to skeptics. Great, hope it
works for you. Meta poaches Apple AI executive even as
it plans hiring slowdown. So I guess you didn't really
slow down that much.
Speaker 4 (26:17):
Apple has an AI executive.
Speaker 3 (26:19):
One you know, he's not human.
Speaker 4 (26:22):
They're just taking everybody. They're taking everybody in their brother
We should just retitle ourselves as AI experts and hope
to get a bag from Meta.
Speaker 3 (26:29):
Well, Texas robot I'm sorry, Will Tesla robotaxis kill auto insurers? Hardly? Okay? Again,
like I have no clue. Probably not is the answer,
but I don't know, Like, maybe we get to a
point where self driving is actually, you know, a thing
that is broadly available to this point, it's in a
few niche areas and we'll see how it goes, but
(26:53):
it does seem to be making more progress. I don't
know why it has to be exclusive to Tesla.
Speaker 4 (26:56):
What does Tesla have to get this headline? This is
Waimo's ballpark.
Speaker 3 (27:00):
Like Waimo's, they're the dudes who actually are operating this
thing in more places, and yet you know Tesla gets
it just because they have a few operating in like.
Speaker 4 (27:09):
One and a half eleven taxis or something like that. Yeah,
that just doesn't seem fair to Wei Mo. That business
is so much more under the radar than all of
the publicity that the robotaxis get for Tesla.
Speaker 3 (27:20):
Anything else that we want to add when it comes
to AI or did we just speed run the whole thing?
Speaker 4 (27:24):
We did that pretty fast and efficient for a friday.
I don't think that we've we've missed anything.
Speaker 3 (27:30):
Okay, I'm glad that we did that. Let's take a
quick break then, and when we return, we're gonna be
joined by paul A Monica from Barons on the back end. Here.
Speaker 1 (27:40):
The Financial Exchange streams live on YouTube. Like our page
and stay up today on breaking business news all morning long.
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(28:01):
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Serious XM's Business Radio Channel one thirty two. This is
the Financial Exchange Radio Network.
Speaker 7 (28:11):
Ladies and gentlemen, the weekend, now's a great time to
register for the DAV five k, taking place Saturday November
eighth at.
Speaker 6 (28:22):
Fort Independence on Castle Island. The race has sold out
each of the past four years and slots are continuing
to fill up, so don't delay. Visit DAV five k
dot Boston and reserve your spot, or join our team
here at the Financial Exchange by registering under Team TFE.
That's Saturday November eighth for this year's DAV five k.
(28:44):
Sign up now at DAV five k dot Boston.
Speaker 4 (28:48):
As promised, we are joined by Paul Lamonica from Barons
here to talk to us about a little known company,
but an entrepreneurial titan that who probably should be a
little bit more well well known than he is. Paul,
thanks so much for joining us today. Really appreciate it.
Speaker 8 (29:04):
Yeah, thanks a lot for having me come on talk
about qx So.
Speaker 4 (29:07):
I'm excited to talk about this, Paul, because Brad Jacobs,
who is the CEO of QXO, had wrote a book
How to Make a Few Billion Dollars, which I've read,
which is fantastic. Maybe give our listeners a little bit
of summary of who is Brad Jacobs, because he really
should be talked about sort of similarly to Warren Buffett
in terms of the success he's had over his entrepreneuri career.
Speaker 8 (29:28):
Yeah, this is another mega billionaire. I think at last check,
worth just under seventeen billion dollars. And he has a
history of kind of using a roll up strategy to
buy companies in fragmented businesses and turn them into powerhouses.
So this is something that he did with United Rentals,
(29:52):
you know, the big company. Also logistics firm XPO. He
did this with company called United Waste Systems, which became
eventually a part of waste management. So now he's trying
to do this with QXO. In the building products industry,
which is incredibly fragmented. There are a fair number of
(30:16):
public companies but also some private mom and pop firms
as well, and QXO is starting the process. Earlier this year,
it bought Beacon roofing supply and is hoping to use
that as the springboard to do more deals in the
building and construction related businesses you've mentioned.
Speaker 4 (30:36):
Yeah, his strategy is all about M and A and
trying to take efficiencies through the use of technology to
kind of build his businesses. But it seems like the
trade secrets out a little bit in the sense that
he has this tremendous track record, and from where the
stock is trading right now, how would you view it
in terms of its pricing, because it does seem like
he has a lot of fanfare behind him and a
(30:58):
lot of analysts and investors that are jumping on his
historical track record.
Speaker 8 (31:03):
Yeah, definitely. I mean, many of the Wall Street firms
that cover QXO are incredibly bullish, but it may not
be too late to get in. There's another analyst that
just launched coverage today at Benchmark, putting a fifty dollars
price target and a buy rating on QXO, in part
(31:24):
because of the Brad Jacobs playbook. He thinks that there
will be more deals ahead and that the company will
use Beacon as a means to grow. So that's one thing.
But what I was really struck by is that there
is this one money manager, Orbis Investment Management, that is
(31:45):
the largest shareholder. They have almost a fifteen percent steak
excuse me, fifteen percent stake in QXO, and they wrote
in a post last year that they were buying QXO
before they did even any deal. So this was before Beacon.
It was a bet on the notion that eventually Jacobs
(32:05):
would find a series of companies to acquire, and that's
turned out to be a pretty good bet. And when
you look at what they were saying in their report,
it also still suggests more upside ahead because they were saying,
you know, the company should probably trade in a range
maybe of two to five times book value. It's currently
(32:29):
at about one point six, so if you take the
median there, you know, three and a half times book value,
that still gives you upside of you know, forty six
dollars a share, you know, more than double where it's
trading at now. Though it's having a great day today
along with the rest of the market. It's about six
and a half percent today.
Speaker 4 (32:48):
That's Paul A Monica from Baron's talking to us about
QXO and they're sort of little known named CEO, but
who should be probably a bigger name out there. Paul,
thanks so much for the time. Really appreciate it, have
a great weekend.
Speaker 8 (32:59):
Thanks you to appreciate it.
Speaker 3 (33:00):
Guys.
Speaker 6 (33:01):
All right, in the previous segment, we asked you the
trivia question related to World War Two, which was, uh,
who was the first access power to surrender that would
be Italy. Gil from Sandwich is our winner today, taking
home a Financial Looks Change Show T shirt. Congrats to Gel.
Speaker 3 (33:16):
We played trivia every day.
Speaker 6 (33:18):
Here in the Financial Looks Change See complete contest rules
at Financial Looks Chain Show dot com.
Speaker 3 (33:24):
Paul, do you want to talk about the FTC suing
gyms to make it easier to cancel? Or battery flavored chips?
Speaker 4 (33:33):
I want the gyms because I had this circled myself, Chuck,
Let's let's talk about it.
Speaker 3 (33:38):
So, first thing, I think it was either last year
or the year before, the FTC put out what they
called a was their click to Cancel rule, which basically said, look,
if you can sign up for a product online or
in any medium, you have to be able to use
that same medium to cancel the subscription, basically saying you
can't make it harder for someone to cancel signing up
(33:59):
for some thing than it was for them originally to
sign up for it. That rule was then put It
was supposed to go into effect in July of this year.
There was a court I forget who that struck it
down earlier this year, and so it has not gone
into effect. So now the FTC coming out, and they
filed a lawsuit against a few gym operators, pretty much saying, look,
(34:23):
you've made it really hard to cancel, because I'll just
quote here like how ridiculous it is for Starters, members
are required to log into their website and print off
a cancelation form. Then you had, But the thing is
you had to sign up at you know, using the
La Fitness app or a QR code, so you might
not actually have your log in information for the website
(34:45):
because you can't just get the form through the app.
And then if you don't know how to log in,
you have to go and provide the original email address
that you used, get what's called a key tag number
that gets handed out when you sign the first five
digit of the bank account credit card listed, and then
you can finally figure out how to cancel, oh, by
(35:07):
bringing the form in to a physical location where you
have to go through a whole bunch of other things.
Speaker 4 (35:13):
The reason I wanted to cover this story is because
we had a similar experience in my household with this
type of thing, where my wife was a member at
Gold's gym and the pandemic hit and obviously a lot
of people canceled their gym memberships. I was able to
get out with a phone call. But since then, in
that remaining weeks, the gym changes policy where my wife
would have to print out a form, hand a physical signature,
(35:36):
bring it in to the gym in order to cancel it,
and I do that. It was a handwritten letter. Actually, yeah,
so this process is not unique. It seems like a
bunch of gyms we're doing this. Granted we're years removed
from the pandemic, which even in that instance not that
I agreed with that. You could understand why gyms were
(35:58):
kind of hanging on by a thread, so they were
trying anything they could to delay membership cancelation. But in
twenty twenty five, here it should not be this difficult.
So that's the reason why I wanted to cover this,
because if it's easy to sign up, it should be
easy to cancel too, and they they've got to change this.
Speaker 3 (36:13):
I mean, look, I know that like this could a
lot of things could be reduced to this, but I
also believe that a lot of things should be reduced
to this. We put a man on the freaking moon,
we can figure out how to cancel gym memberships with
one click of a button at this point. The only
reason that we don't is because the companies know that
(36:35):
a certain percentage of people just won't come in and
they can keep getting the revenue from them. Yeah, planning,
which in honestly, this model like honestly sucks, like it's
it's just kind of it's it's just parasitic more than
anything else. And so look, if you really want to
make this, you know, like fool proof, find Congress, get
(36:55):
together and pass this stuff. Like how big is the
gym lobby? You know, is there that money being thrown
at Congress by Planet Fitness in La Fitness In order
to you know, prevent that from happening, probably not get
together and just actually legislate the thing then, because otherwise
it's like you're playing whack a mole on all this stuff.
(37:17):
And hey, I'm a big believer. Look, you know what
would increase Congress's popularity an awful lot. Write legislation on
this and figure out some kind of legislation that bans
spam phone calls and spam text getting because because you
can do it if you actually decide to work at it,
And it's just there's no incentive for anyone to do
(37:39):
it right now. So you know, it's no different from, Hey,
you want to be a good mayor of a city.
Fill the potholes, keep you know, the police fire and
schools funded and people will love you. Hey, you want
to be you know good in terms of you know, Congress,
make things less annoying that businesses are doing that. We
can't stop them from doing ourselves. But that's just me. Uh.
(38:02):
Taking a look at markets as we wrap up, Downs
up two percent, Smps up one and a half, Nasdaq
up two percent, Russell two thousand and four percent. A
lot of green on the board heading into the weekend.
Not bad, we'll we'll take it. It's a good, good start.
At least we're done for the day, done for the week.
Have a wonderful weekend, and we'll see you on Monday.
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