December 30, 2025 • 38 mins
Paul Lane and Marc Fandetti discuss the unexpected winner of rising American tariffs is Mexico. The housing market is moving in favor of Gen Z. EVs had a bumpy road in 2025, and one pleasant surprise. After a year of blistering growth, AI chip makers get ready for a bigger 2026. The stealth tactic bosses are using to get back to the office. How did Americans in 1998 think would happen in 2025? The case of the $400,000 Massachusetts lobster heist.
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Transcript
Episode Transcript
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Speaker 1 (00:00):
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(01:06):
and Mark Vandetti.
Speaker 2 (01:11):
Kicking off the second hour of the Financial Exchange. Paul Lane,
Mark Vendetti, and Tucker Silva here with you as we
head into this second to last trading day of the year.
Tomorrow will be the last trading day of twenty twenty five.
We have markets relatively flat at the moment after the
S and P five hundred had posted back to back losses,
but overall it has been another very strong year for stocks.
(01:36):
We kick off the second hour of our program focusing
a little bit more on tariffs, and we are now
about close to twelve eight months into the tariffs that
we're announced back in April, and one unintended or perhaps
unintended consequence of some of these tariffs has been a
beneficiary that sits to the south of US, which is Mexico.
(01:59):
They have seen a significant uptick in terms of exportation
of manufactured goods that exclude auto's. Auto exports to the
United States have fallen about six percent from where they
were over the twenty twenty four period from January through November,
but manufacturing exports of other goods have risen about seventeen
(02:21):
percent in that same span of time. We're expected to
reach trading goods between the US and Mexico of about
nine hundred billion dollars this year. The effective teart rate
from Mexico sits at about four point seven percent, and
the claim here made by US Trade Representative Jamison Greer
is that Mexico has captured about twenty five percent of
(02:43):
the reduction in the US trade deficit with China through
being sort of the more local provider of goods that
are not being exported from China.
Speaker 3 (02:55):
So where do we go with this? Do we I mean,
do we expect to What is what's your sense of
the point of tariffs at this stage? What is your
sense of the objective?
Speaker 2 (03:07):
The objective as stated by the administration was to try
and bring manufacturing back to the United State.
Speaker 3 (03:13):
Okay, kind of just on that point, we've lost eighty
thousand manufacturing jobs in the last year, more accurately since
this administration came into office. So fail, So what I
don't know, Okay, So raising revenue I don't know. By
the way, I'm not I'm not going to harp on
that right now because that could have Yeah.
Speaker 2 (03:30):
It's too small to sample sized till I'm not wrong, No,
it isn't.
Speaker 3 (03:32):
It's fair though we've lost eighty thousand manufacturers. I'm not
ready to grade that out yet, Yeah, but I'm willing
to say so. Maybe right raising revenue, We've raised two
hundred billion dollars in tariffs, but that wasn't the stated rationale,
and he may the administration may have to give that
back if the Supreme Court says actually Congress should have
approved those tariffs. So we don't know whether.
Speaker 2 (03:53):
We can keep that right.
Speaker 1 (03:54):
Right.
Speaker 3 (03:56):
So shifting in shifting investment into the United States, well,
investment actually detracted from GDP in the in the last quarter.
So there's no there's no manufacturing employment or investment boom.
But as you said, maybe that'll take that year.
Speaker 2 (04:11):
That I'm willing to give a couple of years before
you see that because the announcements, and to be fair,
this can cut both ways, right. There can be announcements
that there's going to be manufacturing investment, but there can
be very slow stall progress to that manufacturing investment, and
so at some point you do have to pull out
the report card and eventually make an assessment off. But
(04:31):
Eli Lilly, there's been other there, you know, pharmaceutical manufacturers
that are trying to make investment here. There's other areas
of the economy that there has been the semiconductor fabs
out in Arizona, there are areas where there has been
that that was all.
Speaker 3 (04:47):
Pre the chips, which I didn't like either right.
Speaker 2 (04:50):
But ultimately too soon to really to score that out yet.
Here's where I'll go is. I was always skeptical on
this idea that you could truly bring back a ton
of manufacturing to the United States. It's a very difficult
challenge to maybe when you're talking about the shortage of
labor here relatives to some of the other countries, and
the costs that that labor comes with. Whether you're looking
(05:12):
at minimum.
Speaker 3 (05:13):
You'll be willing to pay two hundred dollars for a toaster.
Jdvanis thinks you should.
Speaker 2 (05:16):
Thirty seven hundred bucks for an iPhone. Was one that
was thrown out if you wanted to manufacture it here. Domestically.
I get it all understood points, and I think that
people have to have a realistic view on supply chains
that all manufacturing. I think most would acknowledge it. It's
not as if all manufacturing can be done here. I
am behind this idea that there are certain aspects of
(05:38):
the economy for national security purposes that I would like
to see more investment in domestic manufacturing to keep our
country safe, whether that be on the semiconductor side, those
initiatives I can get behind, because I do think that
there's a big difference between a chip that goes into
an ANDROL droint drone, for example, compared to a T
(06:00):
shirt or sweatshirt. You know that that's we have.
Speaker 3 (06:02):
To make everything that could be viewed as important for
national security here?
Speaker 2 (06:06):
What about about that's broadbush?
Speaker 3 (06:09):
What about well, I don't, I mean, I say everything
some Why why just semiconductors? Why not the steel that
goes into tanks?
Speaker 2 (06:16):
I can't go.
Speaker 3 (06:17):
Can we make all the steel here that goes into tanks? There?
They're important?
Speaker 2 (06:19):
You have to have diversification. How about that in the supply?
Speaker 3 (06:22):
What about the fuel that's used for tanks and airplanes?
Should we be totally independent when it comes to not
just providing for consumption, but but for potential military The.
Speaker 2 (06:31):
Difference between independence are solely reliant upon you know.
Speaker 3 (06:34):
So with respected chips, can we buy some chips from
abroad even if they have chips with potential military application?
Speaker 2 (06:40):
To one in office, making these You.
Speaker 3 (06:43):
Just said there could be exceptions. I'm just wondering where
you draw.
Speaker 2 (06:45):
The line exceptions on which on.
Speaker 3 (06:48):
Tariffs and what we should be and where we should
aim for independence? Autonomy?
Speaker 2 (06:54):
Uh not autonomy. I say autonomy, so.
Speaker 3 (06:57):
Some chips we can import?
Speaker 2 (06:59):
Sure, Okay, to have the capability to be able to
do it. You don't agree with having the capability to
do things domestic welloth.
Speaker 3 (07:05):
Fully or just partially.
Speaker 2 (07:07):
I mean of what use is partially? Of?
Speaker 3 (07:09):
What use is partial capability in a two ocean war
if we're fighting with Europe against Russia in the East,
which is entirely conceivable right now, and fighting China over Taiwan,
entirely conceivable. In fact, you could argue that the odds
of both those scenarios are greater than fifty Those are nods,
but the chance is greater than fifty percent in the
(07:30):
next five years. Arguably we should be totally And I'm
not sure how I feel about this. If war is
imminent in Europe, there's already a war in Europe, there
could be a war in the Pacific. Are we going
to be looked at by posterity as stupid for not
being for not aiming for more autonomy. I'm not sure
tariffs are the right way to do it, but should
there be more urgency. I'm turning the conversation a little
(07:52):
bit here because I'm not trying to corner you over tariffs.
I mean, I don't like them. No economists likes tariffs
for the same reason they don't like price control, like
we talked about in the last hour. They stifle innovation,
they reduce productivity. They we can never go back to
being a manufacturer and economy any sooner than we could
revert to being an agricultural economy. These trends are global.
(08:12):
But all that aside, I mean, is there a case
for more urgency and something more effective than than tariffs?
If the rationale is national security, isn't that rationale more
compelling than ever? We could be looking at a two
front war here in the next five to seven years.
This is a little bit more geopolitically than we usually get.
Speaker 2 (08:31):
But what the heck, I'm ready to punt on the
commentary on potential war and.
Speaker 3 (08:41):
National security is a potential war though.
Speaker 2 (08:44):
If that's the rationale, so other measures outside of tariffs
not for me to decide, Not for me to decide.
Speaker 3 (08:50):
I have opinions about tariffs that you were ready to.
Speaker 2 (08:53):
That's the economy, that's the stuff that we cover every
single day.
Speaker 3 (08:55):
Yeah, but I'm saying, are they the most effective way.
Speaker 2 (08:57):
To I don't think so. I don't think that we
definitely agree on I don't think that the most effective way.
Speaker 3 (09:04):
Yeah, well, I agree, it's like a second or third
best solution. If you want to encourage more manufacturing, specifically
for military purposes, then just and here, the Department of
Defense is making private sector investments. They've done it. It
made some it's been on a half measure basis, but.
Speaker 2 (09:21):
It's the same. It's similar to the real estate conversation
that we're having at the end of the first segment.
Is that, yeah, you know, controlling prices or you know,
establishing rent control or in this case, imputing tariffs into
sort of dissuade people from exporting certain items. Here, does
that really.
Speaker 3 (09:40):
Really blunt an imperfect way to do it?
Speaker 1 (09:41):
Right?
Speaker 3 (09:41):
And if we're really worried about national security.
Speaker 2 (09:43):
You should control the focus on the supply side. Initiatives too,
give some incentives to have manufacturing mount.
Speaker 3 (09:49):
Like the idea of government own steel company, which, by
the way, we have this administration has a share in
the nipon Steel. US steel a combinentity. But just go
all out and if I all the steel mills, if
that's now in production, will be inefficient. Nobody's gonna want
to nobody's gonna want to deal with the federal government.
We're making big steel purchases. But if it's if the
(10:10):
argument is that compelling, then just do it.
Speaker 2 (10:13):
We're going to take a break here on the Finished Exchange.
When we come back, we're going to be talking a
little bit about the housing market as well as the
state of electric vehicles. That's right after this break.
Speaker 1 (10:23):
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Speaker 4 (11:07):
This segment of the Financial Exchange is powered by Circle
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Speaker 2 (12:23):
Talking a little bit about the housing market here. This
is a piece from Bloomberg by Connor Sen. The housing
market is moving in favor of gen Z. There has
been a lot of negative sentiment about the housing market
over the last year or so. In the last year
was a pretty dismal year for the housing market in general.
But Connor Sen outlines a couple different points in here
(12:45):
that perhaps is striking a more optimistic tone for those
people in gen Z who those oldest members of gen
Z will be turning thirty in twenty twenty seven, so
they're sort of reaching that household formation a there. We're
seeing that there is more inventory that has been growing
over the course of this year, largely due to an
(13:08):
oversupply of housing in Florida in the South as well
as some of the Sunbelt area. And also what we're
seeing is that there is a tremendous amount of the
US populations in the baby boomers now its oldest members
are turning eighty. So the mortgage giant Freddy Mack estimates
that the number of boomers owning households has declined by
(13:30):
four hundred thy and twenty twenty five, and that will
continue to offer decline in home ownership that will exceed
eight hundred thousand a year by twenty thirty. So perhaps
some some signs of optimism out there with inventory climbing
back up, who knows where we'll go from an interest
rate perspective, as well as the shift in demographics going
(13:52):
on throughout the country with more baby boomers perhaps stepping
away from that single family home residence out there. I'm
not sure if I'm willing to ring the victory bell
just yet on the housing front, but some reasonable points
that perhaps could be a catalyst, perhaps not next year,
but maybe the following year for the housing market. The
(14:13):
biggest thing that isn't addressed is the supply side piece
that really we have not seen tremendous growth in the
amount of increased when when on the new construction home.
Speaker 3 (14:27):
Yeah, yeah, this is one of those be careful what
you wish for situations. Home prices coming down may be
a result of broader economic weakness. In fact, that's probably
going to be the trigger.
Speaker 2 (14:40):
It certainly could be there. Who knows on the other
side of factors with interest rates, if that could perhaps
be a catalyst to get more buyers into the market.
But that is not the economics, Yeah not if it
comes typical home prices increase on employment and decrease on
the tenure Treasury. It's it's challenging to see. Yeah, I
(15:01):
don't know that would mean a boon for housing.
Speaker 3 (15:04):
Yeah. Me, I don't have the data in front of me,
and the Schiller series only goes back to eighty seven.
But I'd be shocked if there was ever a period
when home prices were either stable or falling and the
broader environment was not characterized by economic weakness. This is
a tricky thing. Is it demand or supply? That's and
(15:25):
I'm not really asking, it's kind of rhetorical because there
are people who specialize in this area. We haven't been
able to tease out a satisfactory answer. But is demand
too hot or is supply restrained by local restrictions or
is it both? Probably both?
Speaker 2 (15:43):
Yeah, it's challenging. If you look at the dynamics, Like
you said, it's hard to grasp which side of it
is really making more of an impact from a pricing standpoint.
If we look at the US National Home Price Index,
it rose just about one point three percent in September
from a year ago, So that is below some of
the growth that we've seen in average hourly earnings of
(16:05):
American workers, But that down payment still looms as a
big challenge for a lot of homers out there. Electric
vehicles had a bumpy road in twenty twenty five and
one pleasant surprise here. Electric vehicles is an area that
was of tremendous focus and investment during the Biden administration,
but obviously with the sunset of the federal tax credit
(16:27):
for seventy five hundred dollars that occurred in the fall
of this year, there has sort of been dwindling demand.
You also have global pressure. This is not impacting the
US market directly, but China is pumping a lot of
these very subsidized electric vehicles in Europe and other parts
of the global economy, the global sphere, and really on
(16:49):
the United States side of things, you just haven't really
seen the same demand that was once thought for electric
vehicles out there, and as a result, CEOs like GMS
what's her name, mar I think is her name are
who have reduced investment within the electric vehicle space. Yeah.
Speaker 3 (17:09):
I guess it's a little harsh to say nobody wants them,
because some consumers clearly do. We couldn't buy a nice,
cheap ev I don't particularly want one, but we couldn't
buy one from say, manufactured in China if we wanted it.
Another reason why how another example of how trade restrictions
decrease welfare. I can't get something now. I don't personally
want one, but I'm sure a lot of people would
(17:31):
consider an inexpensive Chinese ev You just can't get it.
So the market's so distorted, I guess, is my point,
both by trade restrictions and by these wild changes in
government policy. You got towns installing chargers, and now the
subsidies are being pulled away and fewer people are driving
these things. So there's this these vacant spaces with charges
(17:52):
on them, and my town of rent them and elsewhere.
These wild swings and policy are just not helpful.
Speaker 2 (18:00):
To the point. On the policy changes, we had Cox
Automotive estimate that electric vehicles hit an all time high
of eleven point seven percent of the new vehicle market
in September, but then sales crashed by fifty percent in October,
and that's directly tied to the sunsetting of that seventy
five hundred dollars federal tax credit that I was alluded
(18:21):
to alluding to earlier. Here it seems as if JD
Power indicates that there is some new car shoppers that
are still very interested in buying an EV. But to
your point, it is challenging to keep up with all
of the policy changes. And then you have the infrastructure
side of things, which is not perfect in terms.
Speaker 3 (18:39):
Of always a big impediment or deterrent, maybe more accurately,
and now with the radical change in regime from Biden
to Trump, clearly this is the sector. This concept, if
you will, is out of favor. Would I make an
investment like that, not knowing if charging, knowing, if arging
(19:00):
infrastructure was going to continue to be developed.
Speaker 2 (19:02):
Yeah, there certainly has been more focus on those more
profitable SUVs from some of the big US car manufacturers
out there. Sure to adding into the break here, markets
in relatively flat territory really not a ton of action
going on there. The metals though, continue to swing up significantly,
Silver up eight percent today and gold is up close
(19:25):
to one percent as well. We're going to take a
quick break here, but when we come back, we'll have
Wall Street Watch as well as the answer to the
trivia question right after this break.
Speaker 1 (19:39):
Bringing the latest financial news straight to your radio. Every day.
It's the Financial Exchange on the Financial Exchange Radio Network
Time now for Wall Street watch a complete look at
what's moving markets so far today right here on the
Financial Exchange Radio network.
Speaker 4 (19:58):
Markets are mixed and quiet, as Wall Straight awaits minutes
from the Fed's December meeting duout this afternoon.
Speaker 2 (20:06):
At two o'clock.
Speaker 4 (20:07):
Right now, the Dow is down about a tenth of
percenter sixty one points, SMP five hundred is edging two
points higher, NASDAC up up about a tenth of a percenter,
twenty nine points higher, RUSS two thousands down two tenths
of one percent ten Your treasury yield is flat at
(20:28):
four point one one eight percent, and crude oil is
edging higher, trading a fifty eight dollars and nineteen cents
a barrel. Some acquisition news from Meta this morning, after
the Facebook parent announced it has acquired Singapore based AI
startup Manus, The Wall Street Journal reported that Meta is
closing the deal at more than two billion dollars. In
(20:49):
a statement, Metas said that its acquisition was aimed at
accelerating AI innovation for businesses and integrating advanced automation into
its consumer and enterprise products and including its Meta AI assistant.
Meta shares are up over one percent Meanwhile, Bloomberg is
reporting that Walmart customers are having issues accessing the retailers
(21:09):
online services. More than six thousand customers reported they were
unable to access the app or website around seven o'clock
this morning in New York. According to data collected by
the Website down Detector, about seventy percent of those problems
were linked to the mobile app, while a quarter flagged
issues with the website. Walmart shares are dipping at the moment. Elsewhere,
(21:31):
Applied Digital set of plans to spin out its cloud
business and combine it with Exo Bionics. Applied Digital shares
are now up two percent, while XOS stock is rallying
one hundred and twenty three percent, and mining stocks including
Neumont and Barrack are bouncing back and up anywhere between
one and two percent after metals rebounded from yesterday's tumble.
(21:54):
I'm Tucker Silva and that is Wallstree watch. In the
previous segment, we asked you the Trivi question who entity
replaced on the half dollar coin? That would be Benjamin Franklin,
ED from Enfield, Connecticut, is our winner today taking on
the Financial Exchange Show t shirt. Congrats to Ed and
we play trivia every day here in the Financial Exchange.
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (22:18):
By far, the biggest story of this year from a
market perspective has been the artificial intelligence trade, and the
AI chip makers have seen a tremendous amount of growth
in their revenue, with the semiconductor companies achieving over four
hundred billion dollars in combined sales in twenty twenty five.
Driven by that AI growth, Goldman Sachs estimates that Nvidia
(22:40):
alone will sell more than three hundred and eighty billion
in GPUs in twenty twenty six, and the analysts from
facts that are anticipating that some of the big companies
that do a lot of the chip semiconductor work will
top over five hundred and forty billion of sales of
chips in twenty twenty six. Really, it's an interesting point.
It's probably my favorite story to track and sort of cover,
(23:03):
is all of the investment and just significant demand around
artificial intelligence. And right now twenty twenty six seems to
bode to be moving to a bit of a transition
where in video was able to take so much market
share and reach these astronomical valuations of four and a
half trillion of market cap because of just tremendous revenue growth.
(23:23):
Even over the course of the last year it doubled
its revenue. It has really been one of the biggest
beneficiaries if you look at the artificial intelligence story in general,
and they designed the graphics processing units or GPU chips
that are used in training all these models. If for
people out there that use CHATTBT or any of the
(23:44):
other ones, Gemini, any of these artificial large language models,
the training portion is really where in Video's chips were
used extensively basically training these models on everything that's on
the Internet and just copious amounts of texts. And now
the shift will be because these models have been relatively
well trained, is to one of more what's called inference,
(24:05):
which is basically trying to figure out how to respond
to a certain question based off all of the knowledge
that these large language models have a mass. And so
as a result of that, you've seen strategic postering by
Nvidia to try and get more of a foothold on
the chips that are behind that inference work rather than
just being the dominant player in training. And all the
(24:28):
other effects that trickle down here are the sort of shovel,
the pick and shovel sort of approach to building out
these data centers, which could be facing some significant constraints.
We've talked a lot about on the program that to
build out these data centers that are used within artificial intelligence,
it requires, first of all, a significant amount of capital investment,
(24:50):
but also there's a lot of materials, whether you're talking
about HVAC or just the building materials in general, that
are required. So it's a fascinating story to monitor for
twenty twenty six, and I do think some of the
demand for more of these hard assets such as power
and electricity could play a big factor in what we
see for twenty twenty six.
Speaker 3 (25:10):
Here.
Speaker 2 (25:13):
How do they use inference inferences? So basically, let's think
of a much smaller example. All the information that you
and I have accumulated throughout our career is our training
and being taught on economic textbooks or anything finance related.
The inference is going back into your memory reserve and
pulling out an answer to a certain response. That is
(25:34):
the inference is you've been trained on all this information,
it's going back in there and picking out the right
pieces of information that will answer a certain question, and
so that is a different process than just feeding all
of the information to train a model. It's going back
and picking out selective So one.
Speaker 3 (25:52):
Of those areas where I don't think anybody outside of
coders knows what they're talking about. So it's very hard
for and forgive me, but they don't. It's very hard
for an invest person to make a determination as to
whether any of this stuff is for real absent tangible
results bottom line type results increases in productivity and profits
(26:14):
that are directly attributed to some process that was improved
by AI. Because the computer part of this is so
arcane that only a programmer can make a credible pronouncement
about whether or not something is working or is likely
to work. So everybody in finance, the people that blow
(26:35):
on a writing these data centers, all these folks that
Oracle for example, that's effectively become a data center operating
management company. As I interpret what's been in the news lately,
they're all just sort of taking experts coders words for it,
and that to me is just huge gap between the
(26:58):
promise and what it's actually going to do for the economy.
And there's no way of evaluating whether or not some
of the more optimistic claims are bs.
Speaker 2 (27:09):
That's usually the common refrain. And I'm not saying that
there are a million examples out there. It's still in
this infancy. But if you look at H. Robinson Worldwide,
which is a global logistics provider, they started investing in
artificial intelligence systems back in twenty twenty two and have
reported recently in their Q three numbers back in the
end of October that they did see revenue and productivity
(27:30):
gains from the system that they had implemented over the
course of the three years. So that's highlighting well, you know,
it's attributable to that though they stayed in there. I
had to take I can't just say that they're making MIT.
Speaker 3 (27:42):
Folks at MIT did a study six months ago or so.
They concluded that a very small fraction less than five
percent of investments in generative AI were actually useful. Now,
this is not unusual. By the way, you have to experiment.
So I guess if we see more examples like that,
(28:02):
it will validate the investment. But it has to be verifiable.
That's six A huge focus is going to be and
how long will investors be patient? Who can't I certainly
don't claim to understand it. I submit that nobody in
finance with an MBA or a generalist could understand it
because coding is so complicated. We're going to need to
(28:26):
see tangible results at some point in the next how
many years for investors to continue to throw capital at
this and maybe those tangible results are already manifested. And
say the big jump in productivity that apparently happened in
the second quarter of this year, unemployment went up GDP
went up by a lot. The only explanation there is
that people are producing more.
Speaker 4 (28:46):
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Speaker 2 (29:21):
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Speaker 2 (29:55):
Not sure how I feel about this next story. The
stealth tactic bosses are using to get you back to
the office. A piece here out of the Wall Street Journal,
where basically the outline there was a huge wave of
return to office mandates that were sort of mixed in
terms of their results. Now they're pulling out something called
a hybrid creep. This is the idea that you could
(30:16):
use a combination of carrot and stick approach that will
encourage people to get back into the office. So it's
tying promotions to office and attendance According to a human
resources consultant, Jay Johnson, rewarding someone who shows up more
than required sends a message to the whole team. I
just don't. I just I'm not behind that. I really,
(30:36):
whether someone shows up to the office or not, ultimately,
you should be judged on the productivity that you have
and just the metrics that you reach within your job.
Whether you're there or not, the results are going to
speak for themselves. So just because someone shows up to
the office more doesn't make them a better more productive
employee than someone who doesn't. You have to judge them
(30:59):
on the merits of their work, not just some sort
of arbitrary thing. Do you show up to the office
more than the I think it's like missing the mark.
Speaker 3 (31:07):
It's mismanagement too, it's managing. It's frontline manager level laziness
to an extent. It's easy to track attendance, right, it's
easy to quantify. It's inherently it's it's it's it's it's
arguably the definition the essence of what's quantifiable, and you
don't actually have to dig into somebody.
Speaker 2 (31:25):
It doesn't improve How does that improve your business? You know?
Just tracking someone's attendants? How how can you tie that
in no.
Speaker 3 (31:32):
For for junior. Look, if you're running a big firm
like tens of thousands of people junior more junior employees
who need to who are effectively learning on the job
and through mentoring, of course they have to to be there.
Speaker 2 (31:46):
I agree with that. Yeah, I agree with that. That's
something that when you're starting on your career, there's something
to be said about being in the office and getting
that face to face contact. But eventually, as you develop
in your career, you should just be judged on, you know,
whether you're oct none. We're gonna take a quick break
here on the Financial Exchange. When we come back, we're
gonna be doing a little bit of stack roulette. Stick
with us right after this break.
Speaker 1 (32:08):
Here the Financial Exchange every day from eleven to noon
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Speaker 4 (32:42):
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Speaker 2 (33:18):
Time for a little bit of stack roulette and Mark,
I'll let you bet lead off here.
Speaker 3 (33:23):
This story comes via Drudge Report, not one of our
usual sources, but when I peruse Drudge links to a
story about a nineteen ninety eight gallop and USA Today
survey asked Americans, what is the probability you think X
will occur? With what probability will ex occur by twenty
(33:43):
twenty five? Oh interesting, So this is like nearly thirty
years ago. So probability that, for example, emergence of a
deadly new disease which we kind of had seventy five
percent of it. You don't, oh no, no, yeah, okay, okay,
yeah yeah, because I was on the fence, I think
COVID's pretty dead late seventy five percent interesting, yes, And
there are some other sort of socio political things, you know,
(34:04):
will this type of marriage be commonplace? Will we have
a president from this ethnicity? Most of these things, if
a lot of them, are social, not financial, or of
broader interest, so I'm not going to get into them.
I guess my point here is that most of the
things that people and you can find this if you
just google, if you're a Drudge viewer, he links to it,
or if you just google Gallop nineteen ninety eight what
(34:24):
Americans expected to happen by twenty twenty five or something
like that, it'll take you to this story. And the
headline of this story is Americans were surprisingly I always
want to say prescient. It might be prescient, but you
know what I mean, they've made pretty good predictions, and
indeed we did. It speaks to the wisdom of crowd's idea.
It's not really wisdom of crowds, but is.
Speaker 2 (34:46):
There one other one in there that stands out? People.
Speaker 3 (34:48):
Yeah, I mean we were wrong about a lot of
things too. Illicit drug use marijuana well is common. Sixty
five percent of people thought it would be. They also
thought cocaine use would be not really socially accepted as
marijuana has become so wrong about that. People routinely living
to one hundred years old. What would you if you
had a big thirty year forecast, you'd probably say more likely,
(35:11):
Oh sure, but routinely's a little bit strong. Yeah, sixty
one percent thought that they would yep, by now obviously
not happening. Life expectancy has creeped up like a couple
of years. But wanted one hundred. Sure, So a lot
of interesting and many surprisingly they're sort of optimistic predictions.
Speaker 2 (35:27):
That's that's the way you got to be. This is
a fascinating the case of the four hundred thousand dollars
Massachusetts lobster heist. So a four hundred thousand truckload of
lobster was stolen from a Massachusetts facility with a sophisticated
fishing stam scam. No pun intended with that, not a
(35:47):
seafood time. But basically what this culprit did is altered
the email name of a real trucking company, so took
that real trucking company slightly altered it. Then a logistics
firm hired this trucking company, which turned out to be
fraudulent just because they had tweaked the email a little bit.
On December twelfth, the fraudulent the perpetrator arrived to a
(36:08):
town and mass cold center and presented a fake commercial
drivers a CDL license, and then the culprit's tractor trailer
had a real trucking company name on it and a
trailer number on the side. He then picked up the
lobster meat, which was destined for warehouses for Costco in
Minnesota and Illinois, turned off the GPS trackers, and they
(36:29):
haven't found the lobsters since the FBI is now involved
looking into the incident. I mean, even if they find
them now that they're no longer good so who knows
what happened to them since then? But the local police
department saying that this is not a mom and pop shop,
and Costco and the time police department have not responded
(36:50):
for for comment. But it moved fastening. Fascinating. Okay, do
you know how do you move it?
Speaker 1 (36:57):
Though?
Speaker 2 (36:57):
That's great, great question. I mean, what would you and
I do with four hundred thousand dollars of lobster? I mean,
I can't even think how I could unload that, And
you got to do it quickly too. You've got to
have some I don't know, contexts in the black market
lobster space to be able to unload that much of
it a truckload is a pretty significant undertaking. But hats
(37:21):
off to the perpetrator for all sorts of the improvement.
I don't approve of it. It interesting novel, an interesting story, nonetheless,
for the lobster that was yanked away from this ton
cold storage facility here. Kyrothsts account for fifteen billion to
thirty five billion in annual losses according to the Department
(37:44):
of Homeland Security, So who knows whatever happened to those lobsters.
Taking a look around at markets as we prepare for
the Fed Reserve Meeting minutes to be released at two
o'clock this afternoon in relatively mixed territorial and only the
slightly down on the S ANDP of four points, the
Dow Jones off about one hundred points and the Nasdaq
(38:04):
off about eight points. That's all the time that we
have for today's show, but we'll be right back at
it on Friday of this week. Have a fantastic new year,
thank you so much for joining us, and cheers to
a great twenty twenty six
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
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heroes by visiting dav I dot Boston and making a
donation today. This is the Financial Exchange with Paul Lane
(01:06):
and Mark Vandetti.
Speaker 2 (01:11):
Kicking off the second hour of the Financial Exchange. Paul Lane,
Mark Vendetti, and Tucker Silva here with you as we
head into this second to last trading day of the year.
Tomorrow will be the last trading day of twenty twenty five.
We have markets relatively flat at the moment after the
S and P five hundred had posted back to back losses,
but overall it has been another very strong year for stocks.
(01:36):
We kick off the second hour of our program focusing
a little bit more on tariffs, and we are now
about close to twelve eight months into the tariffs that
we're announced back in April, and one unintended or perhaps
unintended consequence of some of these tariffs has been a
beneficiary that sits to the south of US, which is Mexico.
(01:59):
They have seen a significant uptick in terms of exportation
of manufactured goods that exclude auto's. Auto exports to the
United States have fallen about six percent from where they
were over the twenty twenty four period from January through November,
but manufacturing exports of other goods have risen about seventeen
(02:21):
percent in that same span of time. We're expected to
reach trading goods between the US and Mexico of about
nine hundred billion dollars this year. The effective teart rate
from Mexico sits at about four point seven percent, and
the claim here made by US Trade Representative Jamison Greer
is that Mexico has captured about twenty five percent of
(02:43):
the reduction in the US trade deficit with China through
being sort of the more local provider of goods that
are not being exported from China.
Speaker 3 (02:55):
So where do we go with this? Do we I mean,
do we expect to What is what's your sense of
the point of tariffs at this stage? What is your
sense of the objective?
Speaker 2 (03:07):
The objective as stated by the administration was to try
and bring manufacturing back to the United State.
Speaker 3 (03:13):
Okay, kind of just on that point, we've lost eighty
thousand manufacturing jobs in the last year, more accurately since
this administration came into office. So fail, So what I
don't know, Okay, So raising revenue I don't know. By
the way, I'm not I'm not going to harp on
that right now because that could have Yeah.
Speaker 2 (03:30):
It's too small to sample sized till I'm not wrong, No,
it isn't.
Speaker 3 (03:32):
It's fair though we've lost eighty thousand manufacturers. I'm not
ready to grade that out yet, Yeah, but I'm willing
to say so. Maybe right raising revenue, We've raised two
hundred billion dollars in tariffs, but that wasn't the stated rationale,
and he may the administration may have to give that
back if the Supreme Court says actually Congress should have
approved those tariffs. So we don't know whether.
Speaker 2 (03:53):
We can keep that right.
Speaker 1 (03:54):
Right.
Speaker 3 (03:56):
So shifting in shifting investment into the United States, well,
investment actually detracted from GDP in the in the last quarter.
So there's no there's no manufacturing employment or investment boom.
But as you said, maybe that'll take that year.
Speaker 2 (04:11):
That I'm willing to give a couple of years before
you see that because the announcements, and to be fair,
this can cut both ways, right. There can be announcements
that there's going to be manufacturing investment, but there can
be very slow stall progress to that manufacturing investment, and
so at some point you do have to pull out
the report card and eventually make an assessment off. But
(04:31):
Eli Lilly, there's been other there, you know, pharmaceutical manufacturers
that are trying to make investment here. There's other areas
of the economy that there has been the semiconductor fabs
out in Arizona, there are areas where there has been
that that was all.
Speaker 3 (04:47):
Pre the chips, which I didn't like either right.
Speaker 2 (04:50):
But ultimately too soon to really to score that out yet.
Here's where I'll go is. I was always skeptical on
this idea that you could truly bring back a ton
of manufacturing to the United States. It's a very difficult
challenge to maybe when you're talking about the shortage of
labor here relatives to some of the other countries, and
the costs that that labor comes with. Whether you're looking
(05:12):
at minimum.
Speaker 3 (05:13):
You'll be willing to pay two hundred dollars for a toaster.
Jdvanis thinks you should.
Speaker 2 (05:16):
Thirty seven hundred bucks for an iPhone. Was one that
was thrown out if you wanted to manufacture it here. Domestically.
I get it all understood points, and I think that
people have to have a realistic view on supply chains
that all manufacturing. I think most would acknowledge it. It's
not as if all manufacturing can be done here. I
am behind this idea that there are certain aspects of
(05:38):
the economy for national security purposes that I would like
to see more investment in domestic manufacturing to keep our
country safe, whether that be on the semiconductor side, those
initiatives I can get behind, because I do think that
there's a big difference between a chip that goes into
an ANDROL droint drone, for example, compared to a T
(06:00):
shirt or sweatshirt. You know that that's we have.
Speaker 3 (06:02):
To make everything that could be viewed as important for
national security here?
Speaker 2 (06:06):
What about about that's broadbush?
Speaker 3 (06:09):
What about well, I don't, I mean, I say everything
some Why why just semiconductors? Why not the steel that
goes into tanks?
Speaker 2 (06:16):
I can't go.
Speaker 3 (06:17):
Can we make all the steel here that goes into tanks? There?
They're important?
Speaker 2 (06:19):
You have to have diversification. How about that in the supply?
Speaker 3 (06:22):
What about the fuel that's used for tanks and airplanes?
Should we be totally independent when it comes to not
just providing for consumption, but but for potential military The.
Speaker 2 (06:31):
Difference between independence are solely reliant upon you know.
Speaker 3 (06:34):
So with respected chips, can we buy some chips from
abroad even if they have chips with potential military application?
Speaker 2 (06:40):
To one in office, making these You.
Speaker 3 (06:43):
Just said there could be exceptions. I'm just wondering where
you draw.
Speaker 2 (06:45):
The line exceptions on which on.
Speaker 3 (06:48):
Tariffs and what we should be and where we should
aim for independence? Autonomy?
Speaker 2 (06:54):
Uh not autonomy. I say autonomy, so.
Speaker 3 (06:57):
Some chips we can import?
Speaker 2 (06:59):
Sure, Okay, to have the capability to be able to
do it. You don't agree with having the capability to
do things domestic welloth.
Speaker 3 (07:05):
Fully or just partially.
Speaker 2 (07:07):
I mean of what use is partially? Of?
Speaker 3 (07:09):
What use is partial capability in a two ocean war
if we're fighting with Europe against Russia in the East,
which is entirely conceivable right now, and fighting China over Taiwan,
entirely conceivable. In fact, you could argue that the odds
of both those scenarios are greater than fifty Those are nods,
but the chance is greater than fifty percent in the
(07:30):
next five years. Arguably we should be totally And I'm
not sure how I feel about this. If war is
imminent in Europe, there's already a war in Europe, there
could be a war in the Pacific. Are we going
to be looked at by posterity as stupid for not
being for not aiming for more autonomy. I'm not sure
tariffs are the right way to do it, but should
there be more urgency. I'm turning the conversation a little
(07:52):
bit here because I'm not trying to corner you over tariffs.
I mean, I don't like them. No economists likes tariffs
for the same reason they don't like price control, like
we talked about in the last hour. They stifle innovation,
they reduce productivity. They we can never go back to
being a manufacturer and economy any sooner than we could
revert to being an agricultural economy. These trends are global.
(08:12):
But all that aside, I mean, is there a case
for more urgency and something more effective than than tariffs?
If the rationale is national security, isn't that rationale more
compelling than ever? We could be looking at a two
front war here in the next five to seven years.
This is a little bit more geopolitically than we usually get.
Speaker 2 (08:31):
But what the heck, I'm ready to punt on the
commentary on potential war and.
Speaker 3 (08:41):
National security is a potential war though.
Speaker 2 (08:44):
If that's the rationale, so other measures outside of tariffs
not for me to decide, Not for me to decide.
Speaker 3 (08:50):
I have opinions about tariffs that you were ready to.
Speaker 2 (08:53):
That's the economy, that's the stuff that we cover every
single day.
Speaker 3 (08:55):
Yeah, but I'm saying, are they the most effective way.
Speaker 2 (08:57):
To I don't think so. I don't think that we
definitely agree on I don't think that the most effective way.
Speaker 3 (09:04):
Yeah, well, I agree, it's like a second or third
best solution. If you want to encourage more manufacturing, specifically
for military purposes, then just and here, the Department of
Defense is making private sector investments. They've done it. It
made some it's been on a half measure basis, but.
Speaker 2 (09:21):
It's the same. It's similar to the real estate conversation
that we're having at the end of the first segment.
Is that, yeah, you know, controlling prices or you know,
establishing rent control or in this case, imputing tariffs into
sort of dissuade people from exporting certain items. Here, does
that really.
Speaker 3 (09:40):
Really blunt an imperfect way to do it?
Speaker 1 (09:41):
Right?
Speaker 3 (09:41):
And if we're really worried about national security.
Speaker 2 (09:43):
You should control the focus on the supply side. Initiatives too,
give some incentives to have manufacturing mount.
Speaker 3 (09:49):
Like the idea of government own steel company, which, by
the way, we have this administration has a share in
the nipon Steel. US steel a combinentity. But just go
all out and if I all the steel mills, if
that's now in production, will be inefficient. Nobody's gonna want
to nobody's gonna want to deal with the federal government.
We're making big steel purchases. But if it's if the
(10:10):
argument is that compelling, then just do it.
Speaker 2 (10:13):
We're going to take a break here on the Finished Exchange.
When we come back, we're going to be talking a
little bit about the housing market as well as the
state of electric vehicles. That's right after this break.
Speaker 1 (10:23):
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are covering. This is the Financial Exchange Radio Network. The
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Stay informed about the latest from Wall Street, fiscal policy,
(10:46):
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Speaker 4 (11:07):
This segment of the Financial Exchange is powered by Circle
K convenience stores. Circle K is now the official convenience
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Circle K. Thank you veterans for all you've done. It's
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(11:30):
half dollar in honor of John F. Kennedy. Before Kennedy
was honored with his likeness on the half dollar, the
half dollar coin featured the face of one of this
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(11:51):
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Speaker 2 (12:07):
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Speaker 2 (12:18):
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Speaker 2 (12:23):
Talking a little bit about the housing market here. This
is a piece from Bloomberg by Connor Sen. The housing
market is moving in favor of gen Z. There has
been a lot of negative sentiment about the housing market
over the last year or so. In the last year
was a pretty dismal year for the housing market in general.
But Connor Sen outlines a couple different points in here
(12:45):
that perhaps is striking a more optimistic tone for those
people in gen Z who those oldest members of gen
Z will be turning thirty in twenty twenty seven, so
they're sort of reaching that household formation a there. We're
seeing that there is more inventory that has been growing
over the course of this year, largely due to an
(13:08):
oversupply of housing in Florida in the South as well
as some of the Sunbelt area. And also what we're
seeing is that there is a tremendous amount of the
US populations in the baby boomers now its oldest members
are turning eighty. So the mortgage giant Freddy Mack estimates
that the number of boomers owning households has declined by
(13:30):
four hundred thy and twenty twenty five, and that will
continue to offer decline in home ownership that will exceed
eight hundred thousand a year by twenty thirty. So perhaps
some some signs of optimism out there with inventory climbing
back up, who knows where we'll go from an interest
rate perspective, as well as the shift in demographics going
(13:52):
on throughout the country with more baby boomers perhaps stepping
away from that single family home residence out there. I'm
not sure if I'm willing to ring the victory bell
just yet on the housing front, but some reasonable points
that perhaps could be a catalyst, perhaps not next year,
but maybe the following year for the housing market. The
(14:13):
biggest thing that isn't addressed is the supply side piece
that really we have not seen tremendous growth in the
amount of increased when when on the new construction home.
Speaker 3 (14:27):
Yeah, yeah, this is one of those be careful what
you wish for situations. Home prices coming down may be
a result of broader economic weakness. In fact, that's probably
going to be the trigger.
Speaker 2 (14:40):
It certainly could be there. Who knows on the other
side of factors with interest rates, if that could perhaps
be a catalyst to get more buyers into the market.
But that is not the economics, Yeah not if it
comes typical home prices increase on employment and decrease on
the tenure Treasury. It's it's challenging to see. Yeah, I
(15:01):
don't know that would mean a boon for housing.
Speaker 3 (15:04):
Yeah. Me, I don't have the data in front of me,
and the Schiller series only goes back to eighty seven.
But I'd be shocked if there was ever a period
when home prices were either stable or falling and the
broader environment was not characterized by economic weakness. This is
a tricky thing. Is it demand or supply? That's and
(15:25):
I'm not really asking, it's kind of rhetorical because there
are people who specialize in this area. We haven't been
able to tease out a satisfactory answer. But is demand
too hot or is supply restrained by local restrictions or
is it both? Probably both?
Speaker 2 (15:43):
Yeah, it's challenging. If you look at the dynamics, Like
you said, it's hard to grasp which side of it
is really making more of an impact from a pricing standpoint.
If we look at the US National Home Price Index,
it rose just about one point three percent in September
from a year ago, So that is below some of
the growth that we've seen in average hourly earnings of
(16:05):
American workers, But that down payment still looms as a
big challenge for a lot of homers out there. Electric
vehicles had a bumpy road in twenty twenty five and
one pleasant surprise here. Electric vehicles is an area that
was of tremendous focus and investment during the Biden administration,
but obviously with the sunset of the federal tax credit
(16:27):
for seventy five hundred dollars that occurred in the fall
of this year, there has sort of been dwindling demand.
You also have global pressure. This is not impacting the
US market directly, but China is pumping a lot of
these very subsidized electric vehicles in Europe and other parts
of the global economy, the global sphere, and really on
(16:49):
the United States side of things, you just haven't really
seen the same demand that was once thought for electric
vehicles out there, and as a result, CEOs like GMS
what's her name, mar I think is her name are
who have reduced investment within the electric vehicle space. Yeah.
Speaker 3 (17:09):
I guess it's a little harsh to say nobody wants them,
because some consumers clearly do. We couldn't buy a nice,
cheap ev I don't particularly want one, but we couldn't
buy one from say, manufactured in China if we wanted it.
Another reason why how another example of how trade restrictions
decrease welfare. I can't get something now. I don't personally
want one, but I'm sure a lot of people would
(17:31):
consider an inexpensive Chinese ev You just can't get it.
So the market's so distorted, I guess, is my point,
both by trade restrictions and by these wild changes in
government policy. You got towns installing chargers, and now the
subsidies are being pulled away and fewer people are driving
these things. So there's this these vacant spaces with charges
(17:52):
on them, and my town of rent them and elsewhere.
These wild swings and policy are just not helpful.
Speaker 2 (18:00):
To the point. On the policy changes, we had Cox
Automotive estimate that electric vehicles hit an all time high
of eleven point seven percent of the new vehicle market
in September, but then sales crashed by fifty percent in October,
and that's directly tied to the sunsetting of that seventy
five hundred dollars federal tax credit that I was alluded
(18:21):
to alluding to earlier. Here it seems as if JD
Power indicates that there is some new car shoppers that
are still very interested in buying an EV. But to
your point, it is challenging to keep up with all
of the policy changes. And then you have the infrastructure
side of things, which is not perfect in terms.
Speaker 3 (18:39):
Of always a big impediment or deterrent, maybe more accurately,
and now with the radical change in regime from Biden
to Trump, clearly this is the sector. This concept, if
you will, is out of favor. Would I make an
investment like that, not knowing if charging, knowing, if arging
(19:00):
infrastructure was going to continue to be developed.
Speaker 2 (19:02):
Yeah, there certainly has been more focus on those more
profitable SUVs from some of the big US car manufacturers
out there. Sure to adding into the break here, markets
in relatively flat territory really not a ton of action
going on there. The metals though, continue to swing up significantly,
Silver up eight percent today and gold is up close
(19:25):
to one percent as well. We're going to take a
quick break here, but when we come back, we'll have
Wall Street Watch as well as the answer to the
trivia question right after this break.
Speaker 1 (19:39):
Bringing the latest financial news straight to your radio. Every day.
It's the Financial Exchange on the Financial Exchange Radio Network
Time now for Wall Street watch a complete look at
what's moving markets so far today right here on the
Financial Exchange Radio network.
Speaker 4 (19:58):
Markets are mixed and quiet, as Wall Straight awaits minutes
from the Fed's December meeting duout this afternoon.
Speaker 2 (20:06):
At two o'clock.
Speaker 4 (20:07):
Right now, the Dow is down about a tenth of
percenter sixty one points, SMP five hundred is edging two
points higher, NASDAC up up about a tenth of a percenter,
twenty nine points higher, RUSS two thousands down two tenths
of one percent ten Your treasury yield is flat at
(20:28):
four point one one eight percent, and crude oil is
edging higher, trading a fifty eight dollars and nineteen cents
a barrel. Some acquisition news from Meta this morning, after
the Facebook parent announced it has acquired Singapore based AI
startup Manus, The Wall Street Journal reported that Meta is
closing the deal at more than two billion dollars. In
(20:49):
a statement, Metas said that its acquisition was aimed at
accelerating AI innovation for businesses and integrating advanced automation into
its consumer and enterprise products and including its Meta AI assistant.
Meta shares are up over one percent Meanwhile, Bloomberg is
reporting that Walmart customers are having issues accessing the retailers
(21:09):
online services. More than six thousand customers reported they were
unable to access the app or website around seven o'clock
this morning in New York. According to data collected by
the Website down Detector, about seventy percent of those problems
were linked to the mobile app, while a quarter flagged
issues with the website. Walmart shares are dipping at the moment. Elsewhere,
(21:31):
Applied Digital set of plans to spin out its cloud
business and combine it with Exo Bionics. Applied Digital shares
are now up two percent, while XOS stock is rallying
one hundred and twenty three percent, and mining stocks including
Neumont and Barrack are bouncing back and up anywhere between
one and two percent after metals rebounded from yesterday's tumble.
(21:54):
I'm Tucker Silva and that is Wallstree watch. In the
previous segment, we asked you the Trivi question who entity
replaced on the half dollar coin? That would be Benjamin Franklin,
ED from Enfield, Connecticut, is our winner today taking on
the Financial Exchange Show t shirt. Congrats to Ed and
we play trivia every day here in the Financial Exchange.
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (22:18):
By far, the biggest story of this year from a
market perspective has been the artificial intelligence trade, and the
AI chip makers have seen a tremendous amount of growth
in their revenue, with the semiconductor companies achieving over four
hundred billion dollars in combined sales in twenty twenty five.
Driven by that AI growth, Goldman Sachs estimates that Nvidia
(22:40):
alone will sell more than three hundred and eighty billion
in GPUs in twenty twenty six, and the analysts from
facts that are anticipating that some of the big companies
that do a lot of the chip semiconductor work will
top over five hundred and forty billion of sales of
chips in twenty twenty six. Really, it's an interesting point.
It's probably my favorite story to track and sort of cover,
(23:03):
is all of the investment and just significant demand around
artificial intelligence. And right now twenty twenty six seems to
bode to be moving to a bit of a transition
where in video was able to take so much market
share and reach these astronomical valuations of four and a
half trillion of market cap because of just tremendous revenue growth.
(23:23):
Even over the course of the last year it doubled
its revenue. It has really been one of the biggest
beneficiaries if you look at the artificial intelligence story in general,
and they designed the graphics processing units or GPU chips
that are used in training all these models. If for
people out there that use CHATTBT or any of the
(23:44):
other ones, Gemini, any of these artificial large language models,
the training portion is really where in Video's chips were
used extensively basically training these models on everything that's on
the Internet and just copious amounts of texts. And now
the shift will be because these models have been relatively
well trained, is to one of more what's called inference,
(24:05):
which is basically trying to figure out how to respond
to a certain question based off all of the knowledge
that these large language models have a mass. And so
as a result of that, you've seen strategic postering by
Nvidia to try and get more of a foothold on
the chips that are behind that inference work rather than
just being the dominant player in training. And all the
(24:28):
other effects that trickle down here are the sort of shovel,
the pick and shovel sort of approach to building out
these data centers, which could be facing some significant constraints.
We've talked a lot about on the program that to
build out these data centers that are used within artificial intelligence,
it requires, first of all, a significant amount of capital investment,
(24:50):
but also there's a lot of materials, whether you're talking
about HVAC or just the building materials in general, that
are required. So it's a fascinating story to monitor for
twenty twenty six, and I do think some of the
demand for more of these hard assets such as power
and electricity could play a big factor in what we
see for twenty twenty six.
Speaker 3 (25:10):
Here.
Speaker 2 (25:13):
How do they use inference inferences? So basically, let's think
of a much smaller example. All the information that you
and I have accumulated throughout our career is our training
and being taught on economic textbooks or anything finance related.
The inference is going back into your memory reserve and
pulling out an answer to a certain response. That is
(25:34):
the inference is you've been trained on all this information,
it's going back in there and picking out the right
pieces of information that will answer a certain question, and
so that is a different process than just feeding all
of the information to train a model. It's going back
and picking out selective So one.
Speaker 3 (25:52):
Of those areas where I don't think anybody outside of
coders knows what they're talking about. So it's very hard
for and forgive me, but they don't. It's very hard
for an invest person to make a determination as to
whether any of this stuff is for real absent tangible
results bottom line type results increases in productivity and profits
(26:14):
that are directly attributed to some process that was improved
by AI. Because the computer part of this is so
arcane that only a programmer can make a credible pronouncement
about whether or not something is working or is likely
to work. So everybody in finance, the people that blow
(26:35):
on a writing these data centers, all these folks that
Oracle for example, that's effectively become a data center operating
management company. As I interpret what's been in the news lately,
they're all just sort of taking experts coders words for it,
and that to me is just huge gap between the
(26:58):
promise and what it's actually going to do for the economy.
And there's no way of evaluating whether or not some
of the more optimistic claims are bs.
Speaker 2 (27:09):
That's usually the common refrain. And I'm not saying that
there are a million examples out there. It's still in
this infancy. But if you look at H. Robinson Worldwide,
which is a global logistics provider, they started investing in
artificial intelligence systems back in twenty twenty two and have
reported recently in their Q three numbers back in the
end of October that they did see revenue and productivity
(27:30):
gains from the system that they had implemented over the
course of the three years. So that's highlighting well, you know,
it's attributable to that though they stayed in there. I
had to take I can't just say that they're making MIT.
Speaker 3 (27:42):
Folks at MIT did a study six months ago or so.
They concluded that a very small fraction less than five
percent of investments in generative AI were actually useful. Now,
this is not unusual. By the way, you have to experiment.
So I guess if we see more examples like that,
(28:02):
it will validate the investment. But it has to be verifiable.
That's six A huge focus is going to be and
how long will investors be patient? Who can't I certainly
don't claim to understand it. I submit that nobody in
finance with an MBA or a generalist could understand it
because coding is so complicated. We're going to need to
(28:26):
see tangible results at some point in the next how
many years for investors to continue to throw capital at
this and maybe those tangible results are already manifested. And
say the big jump in productivity that apparently happened in
the second quarter of this year, unemployment went up GDP
went up by a lot. The only explanation there is
that people are producing more.
Speaker 4 (28:46):
When the holidays roll in and the cold settles over
New England, find your escape in the US Virgin Islands.
Trade the freezing tempts and gray skies from more warm sun,
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the Second Land. This December through early January, Saint Croix
ignites with the Crucian Christmas Festival, a celebration over a
century old. Frederick Stead comes alive with colorful parades, live
(29:10):
reggae and streets filled with the sites and flavors of
real Caribbean culture. It's the holiday season with the tropical
beat from there. Explore Saint Thomas with its duty free
shopping and the legendary.
Speaker 2 (29:21):
Views at Megan's Bay.
Speaker 4 (29:23):
Or slow down on Saint John, where quiet beaches and
National Park trails make every day feel like your own
private adventure. Getting there could not be easier. There's no
passport needed, no money to exchange. Just pack light and
step out of the cold into pure sunshine. This holiday season,
let yourself fall naturally in rhythm with the heartbeat of
(29:43):
the islands. Visit America's Caribbean paradise the US Virgin Islands.
Go to visit USVII dot com and book your trip today.
That's visit USVII dot com.
Speaker 2 (29:55):
Not sure how I feel about this next story. The
stealth tactic bosses are using to get you back to
the office. A piece here out of the Wall Street Journal,
where basically the outline there was a huge wave of
return to office mandates that were sort of mixed in
terms of their results. Now they're pulling out something called
a hybrid creep. This is the idea that you could
(30:16):
use a combination of carrot and stick approach that will
encourage people to get back into the office. So it's
tying promotions to office and attendance According to a human
resources consultant, Jay Johnson, rewarding someone who shows up more
than required sends a message to the whole team. I
just don't. I just I'm not behind that. I really,
(30:36):
whether someone shows up to the office or not, ultimately,
you should be judged on the productivity that you have
and just the metrics that you reach within your job.
Whether you're there or not, the results are going to
speak for themselves. So just because someone shows up to
the office more doesn't make them a better more productive
employee than someone who doesn't. You have to judge them
(30:59):
on the merits of their work, not just some sort
of arbitrary thing. Do you show up to the office
more than the I think it's like missing the mark.
Speaker 3 (31:07):
It's mismanagement too, it's managing. It's frontline manager level laziness
to an extent. It's easy to track attendance, right, it's
easy to quantify. It's inherently it's it's it's it's it's
arguably the definition the essence of what's quantifiable, and you
don't actually have to dig into somebody.
Speaker 2 (31:25):
It doesn't improve How does that improve your business? You know?
Just tracking someone's attendants? How how can you tie that
in no.
Speaker 3 (31:32):
For for junior. Look, if you're running a big firm
like tens of thousands of people junior more junior employees
who need to who are effectively learning on the job
and through mentoring, of course they have to to be there.
Speaker 2 (31:46):
I agree with that. Yeah, I agree with that. That's
something that when you're starting on your career, there's something
to be said about being in the office and getting
that face to face contact. But eventually, as you develop
in your career, you should just be judged on, you know,
whether you're oct none. We're gonna take a quick break
here on the Financial Exchange. When we come back, we're
gonna be doing a little bit of stack roulette. Stick
with us right after this break.
Speaker 1 (32:08):
Here the Financial Exchange every day from eleven to noon
non Serious XM's Business radio Channel one thirty two. Keep
it here for the latest business and financial news and
the trends on Wall Street. The Financial Exchange is now
life on Serious XM's Business Radio channel one thirty two.
Faces the Financial Exchange Radio Network. The Financial Exchange streams
(32:30):
live on YouTube. Subscribe to our page and stay up
to date on breaking business news all morning. Long Face
is the Financial Exchange Radio network.
Speaker 4 (32:42):
The Financial Exchange is a proud partner up the Disabled
American Veterans Department of Massachusetts. Planning is well underway for
the twenty twenty six DAV five k. And if you
weren't able to attend this year's race, but still like
to help our great American heroes, please visit DAV five
k dot Boston and make a donation. Your participation helps
(33:04):
provide vital services like free transportation to medical appointments in
safe housing for single veterans and their families. Donate today
a DAV fivek dot Boston. That's DAV fivek dot Boston.
Speaker 2 (33:18):
Time for a little bit of stack roulette and Mark,
I'll let you bet lead off here.
Speaker 3 (33:23):
This story comes via Drudge Report, not one of our
usual sources, but when I peruse Drudge links to a
story about a nineteen ninety eight gallop and USA Today
survey asked Americans, what is the probability you think X
will occur? With what probability will ex occur by twenty
(33:43):
twenty five? Oh interesting, So this is like nearly thirty
years ago. So probability that, for example, emergence of a
deadly new disease which we kind of had seventy five
percent of it. You don't, oh no, no, yeah, okay, okay,
yeah yeah, because I was on the fence, I think
COVID's pretty dead late seventy five percent interesting, yes, And
there are some other sort of socio political things, you know,
(34:04):
will this type of marriage be commonplace? Will we have
a president from this ethnicity? Most of these things, if
a lot of them, are social, not financial, or of
broader interest, so I'm not going to get into them.
I guess my point here is that most of the
things that people and you can find this if you
just google, if you're a Drudge viewer, he links to it,
or if you just google Gallop nineteen ninety eight what
(34:24):
Americans expected to happen by twenty twenty five or something
like that, it'll take you to this story. And the
headline of this story is Americans were surprisingly I always
want to say prescient. It might be prescient, but you
know what I mean, they've made pretty good predictions, and
indeed we did. It speaks to the wisdom of crowd's idea.
It's not really wisdom of crowds, but is.
Speaker 2 (34:46):
There one other one in there that stands out? People.
Speaker 3 (34:48):
Yeah, I mean we were wrong about a lot of
things too. Illicit drug use marijuana well is common. Sixty
five percent of people thought it would be. They also
thought cocaine use would be not really socially accepted as
marijuana has become so wrong about that. People routinely living
to one hundred years old. What would you if you
had a big thirty year forecast, you'd probably say more likely,
(35:11):
Oh sure, but routinely's a little bit strong. Yeah, sixty
one percent thought that they would yep, by now obviously
not happening. Life expectancy has creeped up like a couple
of years. But wanted one hundred. Sure, So a lot
of interesting and many surprisingly they're sort of optimistic predictions.
Speaker 2 (35:27):
That's that's the way you got to be. This is
a fascinating the case of the four hundred thousand dollars
Massachusetts lobster heist. So a four hundred thousand truckload of
lobster was stolen from a Massachusetts facility with a sophisticated
fishing stam scam. No pun intended with that, not a
(35:47):
seafood time. But basically what this culprit did is altered
the email name of a real trucking company, so took
that real trucking company slightly altered it. Then a logistics
firm hired this trucking company, which turned out to be
fraudulent just because they had tweaked the email a little bit.
On December twelfth, the fraudulent the perpetrator arrived to a
(36:08):
town and mass cold center and presented a fake commercial
drivers a CDL license, and then the culprit's tractor trailer
had a real trucking company name on it and a
trailer number on the side. He then picked up the
lobster meat, which was destined for warehouses for Costco in
Minnesota and Illinois, turned off the GPS trackers, and they
(36:29):
haven't found the lobsters since the FBI is now involved
looking into the incident. I mean, even if they find
them now that they're no longer good so who knows
what happened to them since then? But the local police
department saying that this is not a mom and pop shop,
and Costco and the time police department have not responded
(36:50):
for for comment. But it moved fastening. Fascinating. Okay, do
you know how do you move it?
Speaker 1 (36:57):
Though?
Speaker 2 (36:57):
That's great, great question. I mean, what would you and
I do with four hundred thousand dollars of lobster? I mean,
I can't even think how I could unload that, And
you got to do it quickly too. You've got to
have some I don't know, contexts in the black market
lobster space to be able to unload that much of
it a truckload is a pretty significant undertaking. But hats
(37:21):
off to the perpetrator for all sorts of the improvement.
I don't approve of it. It interesting novel, an interesting story, nonetheless,
for the lobster that was yanked away from this ton
cold storage facility here. Kyrothsts account for fifteen billion to
thirty five billion in annual losses according to the Department
(37:44):
of Homeland Security, So who knows whatever happened to those lobsters.
Taking a look around at markets as we prepare for
the Fed Reserve Meeting minutes to be released at two
o'clock this afternoon in relatively mixed territorial and only the
slightly down on the S ANDP of four points, the
Dow Jones off about one hundred points and the Nasdaq
(38:04):
off about eight points. That's all the time that we
have for today's show, but we'll be right back at
it on Friday of this week. Have a fantastic new year,
thank you so much for joining us, and cheers to
a great twenty twenty six
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