April 22, 2025 • 38 mins
Paul Lane and Marc Fandetti discuss what is causing markets to swing back up today. Trump lays the groundwork to blame Powell for any downturn. Justice Department urges tough action to break Google's search dominance. US bound goods are stuck in tariff limbo. Trump hosts Walmart, Target, and Home Depot CEOs for tariff meeting.
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Speaker 1 (00:00):
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(01:06):
and Mark Fandetti.
Speaker 2 (01:10):
Welcome to this Tuesday edition of the Financial Exchange. Paul Lane,
Mark Fandetti, and Ben Kitchen here with you, and we
continue to see up and down action on Wall Street.
We saw sell offs of more than two percent across
the major induses during yesterday's trading, but today they are
bouncing back in the other direction, with all the major
industries Dow Jones, S and P five hundred and the
(01:31):
Nasdaq up over one and a half percent. There is
no real significant news unless I have missed something and
been asleep of the switch mark that indicates as to
why we're seeing a bit of a bump today. Obviously,
the volatility that we've seen this month has been quite
tremendous and sort of out of the norms that we
(01:52):
saw back in late fall and early this year. But ultimately,
regardless of the action that we've seen over to or
the last couple of weeks, it is going to be
on track for one of the worst aprils that we've
seen if we're looking at the DAO specifically since nineteen
thirty two, and this stems from just a lot of
(02:13):
uncertainty economically in the United States at the moment.
Speaker 3 (02:16):
Yeah, it's not even You're right, it is uncertainty, but
it's we know exactly what to pin it on. The
White House wants to fundamentally change some of our institutions.
You can agree or disagree. That's almost a political question.
Do you want an independent FED?
Speaker 2 (02:30):
Do you not?
Speaker 3 (02:31):
I don't think I certainly wouldn't understand what the heck
was going on if I wasn't a long time student
of the FED monetary policy generally, so I'm not sure
how anybody could have the foggiest how to interpret this.
It'd be like telling me whether or not the FDA
should approve a drug or something. So I'm sort of
(02:51):
impressed that most people seem to understand, at least if
the market's reaction is any guide, that an independent FED
is important because you don't want to put control of
the money supply in the hands of anyone politician. And
that's ultimately The FED has some regulatory responsibilities too, But
what's the issue here is who should control the supply
of money. We think about the fedest setting interest rates,
(03:14):
but that's only indirectly what they do. They target a
short term interest rate by controlling the supply of money
when they want a lower interest rates, They increase the
supply of money, and they use that to buy securities
like treasuries that banks have on their balance sheet. That
allows banks to loan the money that they're buying those
(03:34):
securities with. That's effectively how monetary policy, which is what
the FED does, is called. That's how it works. And
Congress has the power to create money under the Constitution,
they gave that to the FED. So now there's this
sort of power struggle which really should be between the
President and Congress, but it's being framed as between the
President and the Fed. And I'll say again, I'm impressed
(03:56):
that that market participants seem to understand that monetary policy
should be kept independent of the will of any one politician,
not independent from oversight. Maybe the Fed's a little bit
too independent in some ways. I tend to agree with
those arguments, but clearly markets understand that if it got
into the hands of any one politician, anybody, they would
be tempted, overwhelmingly tempted to print money without warrying about
(04:21):
the long term inflation consequences.
Speaker 2 (04:23):
Yeah, that's the problem with four year terms in a sense,
is that the president in office is always going to
be very motivated to achieve any of their objectives for
short term gain and not worrying about the longer term
ramifications of actions like printing money throwing the US into
a talesman. And we find ourselves at a point, and
(04:45):
this is not news, that we are heavily extended on
the debt front and a place where already we've sort
of taken advantage of that power to print money over
an extended period of time. And the reason that we
were able to do it it is because of the
stability and safety that the US market economic market has
(05:06):
typically found itself in. But those fears have been shaken about.
Speaker 3 (05:10):
Okay, so that's the issue. Yeah, So what you're bringing
up is foreign ownership of things like treasuries and the
dollar generally. Yeah, it's definitely connected. You wouldn't want to
own treasuries if you thought the interest payments were going
to be made with money conjured up out of thin air.
They're going in real terms, you're going to lose purchasing power.
(05:34):
This is true of domestic investors too. So that's a
slightly different but equally important angle. And there are many
such angles, which is why the volatility that we are
witnessing is is permeating many different markets currents. We've heard
You've heard about the dollar weakening, which might be due
to the effects that you were talking about, Paul. We've
(05:56):
heard about treasury yields rising related to the dollar weakening
of core and related perhaps to lack of confidence in
in in the US maintaining the purchasing power of the dollar.
It gets it gets complicated, is my point.
Speaker 2 (06:10):
Yeah, The US Dollar Index now sits at its lowest
level in the last three years in terms of the
S and P five hundred mark. I've been out for
a couple of days. Are we sitting at what was
it six or seven percent down year to date on
the SMP.
Speaker 3 (06:25):
It's twelve at this point, isn't it? After yesterday?
Speaker 2 (06:28):
Three?
Speaker 3 (06:28):
Twelve point one year to date? I'm rounding up a
little bit month to date. You're right, month to date,
we're down about eight several percentage points month to date.
Speaker 2 (06:36):
As you've talked about the beginning one and a half
and then potentially it's hard to keep it's hard to
keep track at this point because the moves have been
so large.
Speaker 3 (06:44):
As you pointed out.
Speaker 2 (06:45):
This is the would be the worst S and P
five hundred performance since inauguration day for any president, since
the data that we had going back to nineteen twenty eight,
and some of the other areas of the market that
have been impacted and been moving significantly. Gold has really
risen dramatically over the course of the last several months
or so. It had top thirty five hundred dollars an ounce.
(07:07):
Now today it sits at just shy of thirty five hundred,
but still up close to about zero point six percent
on today's trading.
Speaker 3 (07:16):
So, and another way to think about that is the
dollar is weakening relative to gold. Gold is a currency
of sorts. It is a store value of sorts for
historical reasons, it maintains that characteristic if you like. So
when gold goes up, it takes more dollars to purchase,
say an ounce of gold. That's just a different way
of saying the dollar is weakening relative to gold, just
(07:39):
like when we say the exchange rate goes down. I
think when most people hear that, they think that means
the dollar is somehow weakening, which just means it takes
more dollars to buy a Japanese yen or a euro
or a Great Britain pound or whatever.
Speaker 2 (07:55):
The biggest story that we've covered over the last couple
of days or so, is is President Trump going after
Frederick chairman Jerome Powell. And Mark alluded to it in
some of his comments, and it does seem like here.
There's a piece in the Wall Street Journal titled Trump
is laying the groundwork to blame Powell for any downturn,
and that shares our echos sentiments that sort of rattle
(08:15):
around in my head when I saw the initial news
come out that President Trump had posted on his true
social on Monday that there is virtually no inflation, calling
Jerome Powell mister toolate and a major loser for not
reducing interest rates immediately. And let's just tackle this from
the economic perspective piece here, where you have tariffs looming
(08:39):
out there this summer already in place, but you know
even more significant ones looming which would create inflationary pressure.
So to counter the point that there's virtually no inflation, yes,
inflation has come down from the highs that it was
at in twenty twenty two. However, there are things on
the economic horizon that could make inflation much more substant
(09:00):
than we've seen, which leads to the fact that's why
the Federal Reserve.
Speaker 3 (09:04):
Look, I'm glad the President's bringing this up because it
allows us to think about what monetary policy is, what
the FED is for, why it's independent in the first place.
So he says there's no inflation, Well, that's obvious, that's
actually there was no inflation last month. So in a
way that's true. We know the consumer price index went
down minus point one tenth of a percent month over
(09:25):
a month. That's likely to be fleeting. But in a
very narrow way, what the President said is actually right.
There was disinflation. There was deflation technically last month. Now
your point is, yeah, but we know that's not representative
of the real picture. What's the trend in inflation, what's
underlying inflation. That's why we have core, which strips out
food and energy. There are other measures like the median
(09:46):
that we talk about a lot, that filter out big
price increases or decreases, no matter what sector they originate from,
that better gets at the trend in inflation. So the President,
in a very strict sense, was actually right, and I
think it's good that the issues at least being raised.
Speaker 2 (10:02):
Now.
Speaker 3 (10:02):
I don't agree with compromising the Fed's independence. I think
that would probably be devastating. Every researcher who's ever looked
at any country and its degree of central bank which
is what the FED is, its degree of central bank independence,
has concluded that the degree of independence is positively related
to the degree to which inflation is under control. Everybody
(10:24):
who's ever looked at it in any time in any
country has concluded that. So the president's wrong in that sense.
But he's right. We've had some deflation very recently. Can
we count on that continuing? Probably not. Should the Fed,
in a knee jerk fashion, lower rates in response to
one month's deflation? Probably not. But I think it's it's
not illegitimate to have the discussion. Too many people when
(10:46):
the president comes up, they have a knee jerk, and
I sometimes do it too, because he's so provocative. But
it's good to step back and think about what is
the point there, what's the counterpoint? Let's talk through this rationally. No,
he's wrong in this case, but it is good to
think about the direction of which inflation might be heading
in what the appropriate response of the FED should be.
(11:07):
There are so there are almost two issues. You can
make a case that the Fed should be easy. I
don't agree with it. I don't think. I think the
bulk of the evidence is on the other side of
that argument right now.
Speaker 2 (11:15):
Well, would the case to easing be that we've made
so much progress on the inflationaorty front?
Speaker 3 (11:19):
I think. Look, a FED policy maker has has to
weigh two things, output and the degree to which it's
above or below trend, and inflation and the degree to
which it's belova above or below the Fed's target. This
is a common construct for central bank policy makers.
Speaker 2 (11:36):
Employment.
Speaker 3 (11:37):
Kind of that employment is in the output gape. So
there are two terms, if you like, in the Feds.
I'm going to put this in quotes. Function. We all
have a welfare function. Yours is am I taking care
of the kids? Am I doing what I need to?
The Fed's welfare function is output. One eye is on output.
The other eye, so to speak, is on inflation. The
(12:00):
argument for lowering the FED funds rate target right now
is that the output gap has narrowed a lot. We
went from maybe overheating a little bit last couple of years,
or to perhaps undershooting right now. A lot of forecasters
are calling for very slow growth in the next say,
six months. They might be wrong of course, if you
put more weight on that outcome, you ignore that inflation
(12:22):
might still be a little elevated, and you cut preemptively.
As the President I think said, I don't agree with
his interpretation of the evidence, but it's not like he's
not making a valid point if the next the problem
is is that he's impinging on FED independence when he
calls Powell a loser and says he can't wait till
he gets terminated. That's where he goes too far right right,
(12:43):
and that's why markets sort of freaked out yesterday. But
he makes there is a legitimate point underneath all the
bluster there.
Speaker 2 (12:50):
There's certainly a lot to get to with this topic,
so we'll touch on that a little bit more here.
We're going to take a break right here. We'll touch
a little bit more on Jerome Powell, the FED chairman,
and President Trump, then the ongoing wars back and forth,
a mostly from Trump's side of things, and we'll also
be talking about some guys get hit in the face
today thing, and then we'll also talk about the Justice Department,
(13:10):
which has a big case with Google coming up. That's
right after this break here.
Speaker 1 (13:15):
Market volatility is at its highest point since the pandemic.
Keep it here for the most comprehensive coverage of the
global trade war. This is the Financial Exchange Radio Network,
breaking business and financial news first throughout the day, only
here on the Financial Exchange Radio Network.
Speaker 4 (13:37):
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Speaker 2 (14:05):
Before the break, we were discussing President Front's recent comments
regarding FED Chairman Jerome Powell and his lack of action
in taking proactive measures to cut interest rates, and the
things that we were discussing that loom out there as
concerns for the Federal Reserve is certainly the impact of
tariffs on the inflationary front, as well as trying to
(14:29):
just monitor the US economic growth and what impact it
could have on the labor market here, anything else mark
that you want to touch upon, just on the independence
of the FED and sort of where where we go
from here. I mean, certainly these messages to me, I
do think it is worth reitering that clearly a bit
(14:50):
of laying the ground for the FED to be the
scapegoat with these types of messages leading into some of
the economic policies that could be coming down the road.
Speaker 3 (14:58):
It could be I don't I think that's gonna work.
People know the economy was strong a few months ago.
They know forecasts deteriorated in response to tariffs. At the time,
the proponents of tariffs were saying they might cause economic pain.
They were very candid about it. They probably should have
stuck to that line rather than now scrambling to find
(15:20):
another party to blame for things somewhat coming apart it.
The seems relative again to the position we found ourselves
at the beginning of the year, I'll see again. I
think a conversation about FED independence is good. It's healthy
because we take it for granted and because it's not
something we've had to talk about in the past thirty years,
(15:41):
it's been taken as kind of revealed truth that it
was a good thing to the point where we got
this great inheritance of stable inflation until COVID, but that
has since subsided. I don't like the way Powell handled it,
but the blame was not entirely with him, certainly not
for the surge and inflation. Arguably he didn't tamp it
down quickly enough, but there are plenty of accomplished scholars
(16:03):
who don't think he could have done anything different, who
should have or could have, for that matter, done anything differently.
So I think the conversation is healthy. Raising the prospect
of depriving the FED of independence for reasons we discussed
in the last segment is not healthy as evidence by
market reaction, and that's really all you can say at
this point. Maybe the president drops it. He dropped it
(16:25):
in twenty eighteen and twenty. I mean this was a
common feature of his first term, brow beating the he
replaced the FED chair. We forget this, but Paul's's guy.
Speaker 2 (16:35):
He took Jenny ironic part.
Speaker 3 (16:37):
Most presidents have reappointed FED chairs unless they were utterly
incompetent or unsuited for the role. It's hard to think
of one in recent history that didn't get reappointed for
solely political reasons. In fact, I can't think of one.
Reagan inherited Vulgar, reappointed him, then he didn't, but that
was okay. Vulgar served two terms. There was no love loss,
(16:58):
I don't think between him and the Reagan administration. But anyway,
Clinton reappointed green Span Obama jumping ahead a little bit.
Obama reappointed Bernanky. It's just something that you typically do.
Trump fired effectively Janet Yelling unclear why Powell's his guy,
and almost immediately soured on Powell. He is who he
(17:21):
The president is who he is, and this is why
many of his supporters like him. He is mercurial and
keeps other people on their toes. Some people like that,
markets generally don't, and people making long term investments generally don't.
So hopefully this all just kind of goes away. Sure,
I don't know if that's a realistic prospect. Probably just
wishful thinking.
Speaker 2 (17:40):
We'll continue to follow it. The Justice Apartment urges tough
action to break Google's search dominance, so the anti trust
case headlines have really been heating up over the course
of the last couple of weeks specific to Google, we
had a federal judge last Thursday ruled that Google created
a monopoly that allowed it to control parts of the
(18:02):
online advertising industry. Google has about ninety percent of the
global search market, so in terms of its percentage of
market share, it is right up there from a monopoly perspective.
But the tricky thing we'll be here is that that
federal judge ruling is the second one that we've seen
in the last eight months that have indicated some sort
(18:24):
of correlation or credence to the idea that Google created
a monopoly. The Justice Department is different. These other cases
that I'm alluding to here by federal judges don't have
a direct impact on the case that we're about to
hear with the Justice Department. But some of the measures
that have been mentioned as part of this Justice Department
(18:44):
case is forcing the sale of some of the company's
advertising products for Google, forcing the sell off of its
Google Chrome browsing business, and not allowing Google to be
the default search engine on your smartphone. So for any
phone user out there, if you are to search something
in the Safari browser in your iPhone, Google is the
(19:06):
default search engine that you'll get. If you say pizza
joints in Portland, Maine or Cape cod you are going
to get Google search results. And Google pays twenty billion
dollars a year for that privilege of being the default
search browser on Apple Safari. A lot of people execute
many Google searches on their phone, so being that default
browser is really important.
Speaker 1 (19:26):
There.
Speaker 2 (19:27):
We're gonna take a quick break here on the Financial Exchange.
When we come back, we're gonna cover Wall Street Watching
a little bit more on anti trust and some free
trade zone talk. That's right after this break.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look at what's moving market so
far today right here on the Financial Exchange Change Radio Network.
Speaker 4 (20:02):
All right, markets are largely in the green. Right now.
The Dow Jones is up just under seven hundred points,
s and P five hundreds up over eighty seven points
or one point seven percent, and then the Nasdaq is
up over three hundred points or one point nine one percent.
Ge Aerospace stock has moved up over four percent after
ge Aerospace reported adjusted earnings of a dollar forty nine
(20:25):
per share, topping the dollar twenty seven per share. Anticipated revenue, however,
came in just shy of expectations. Hertz Global Hurts Global
Holding shares are up over eleven percent after the rental
car company rallied one hundred and twelve percent last week
on Bill Ackman's big investment in the company. Pershing Square
has taken a nineteen point eight percent stake in Hurts
(20:48):
with outright share ownership and total return swap. The stock
had fallen over five percent yesterday. Three M shares are
up over seven and a half percent after first quarter
results beat expectation on an adjusted basis. Three M earned
a dollar eighty eight per share on five point seventy
eight billion of revenue. Analysts had penciled in a dollar
(21:08):
seventy seven per share and five point seven to six
billion of revenue. Amazon shares are up just under three
percent after even though Amazon had delayed some commitments around
new data center leases, particularly international ones. Verizon shares are
down over one percent after Verizon said it lost more
postpaid net phone subscribers during the last quarter than we're expected.
(21:30):
The company still beat forecasts for first quarter earnings in
revenue and said it remains confident in achieving its year
end goals. Lockheed Martin shares are down over two percent,
even after Lockheed posted a strong first quarter profit and
reaffirmed its forecast for the year, driven by resilient demand
for its missile systems and fighter jets. I am ben
(21:51):
Kitchen and that was Wall Street Watch.
Speaker 2 (21:53):
Touching a little bit more on the antitrust case that
we see here tied to Google. The Justice Department is
set to hear arguments over the course of the next
couple weeks here as to whether or not Google should
break up some of its global advertising business, claiming that
they have a monopoly on the search market. As I
(22:14):
was mentioning before the break, ninety percent of the global
search market is through Google, and they pay a significant
sum to Apple to be the default search engine on
its browser. Some of the measures that have been mentioned
are the idea of selling off Google Chrome, as well
as divesting of some of the companies advertising products. And
(22:35):
it seems to be a different day for anti trust market.
It's always been very challenging for in the United States
any company to get any sort of real charges levied
against them on the anti trust front, but certainly back
in the nineteen nineties it really did some harm to
(22:57):
Microsoft's business, though it did not have to break up.
There were a lot of time and effort and energy
spent trying to battle the Anti Trust Department. So it'll
be interesting to see what happens here on Google's front, yeah.
Speaker 3 (23:10):
And what precedent that sets for other tech giants. These
companies are so much bigger in today's dollars than companies
that we associate with monopoly practices and past eras at Amazon, Apple, Google.
They're all worth between two one and two trillion dollars
standard oil. Somebody wrote recently Rockefeller's oil monopoly monopoly in
(23:32):
illegal sense that was busted up thirty three billion, so
a fraction literally of the market value in today's dollars
of today's tech giants. The argument for breaking them up
is that it's killing innovation. They buy competitors. I know,
Chuck can you and Mike Armstrong talk about this all
(23:53):
the time, so I'm probably starting at two elementary level here,
but they can snuff potential competitors out in the cradle.
I know that's a horrible analogy, but that's effectively what
they do, and they put this in an Zuckerberg puts
this kind of stuff in emails. We got to buy them,
they could compete with us. It's basically what he said.
So it's no secret, So it's probably better. Is reluctant
(24:15):
as a free market fanatic like me is to interfere.
If a company gets really big, God bless them. More
power to him. Fact is, they often use that power
for ends that are economically, in an overall welfare sense, detrimental.
So when something gets too big, you just got to
break it up and shareholders could benefit. You get stock
and on a pro rate a basis as I understand it,
(24:37):
in the newly created companies, and they'll probably not guaranteed,
but probably grow faster because they've got more freedom to innovate.
Speaker 2 (24:44):
The challenging thing has always been for the Justice Department
is to prove harm to US consumers, certainly businesses. On
the innovation side, I think it's easy to make those arguments,
but on the consumer side of things, it can be
a little bit more difficult to make that justify cation.
In general, it seems as if all companies are trying
to get a sense for what the mergers and acquisition
(25:06):
markets is going to look like under Trump's administration. There
was a lot of optimism when he was elected that
there would be a huge push for deregulation and perhaps
this would open up the floodgates in terms of activity
on the financial industry and the merger side of things.
Though we did see some pretty big mergers over the
course of the last couple months or so, the deal
(25:27):
activity is not nearly what we've seen in the past.
The notable ones, of course, were Capital One and Discover.
That was a significant merger that may have seen more
scrutiny under the Biden administration. That was a thirty five
billion dollar acquisition that just received approval within the last
week or so. And then it will be interesting to
see Google not only are they battling this ant trust case,
(25:49):
but also they have gone out and acquired a cybersecurity startup,
wiz for thirty two billion dollars. How that gets through
from an approval perspective will be something to track as well.
Speaker 3 (25:58):
Yeah, the standard here's interesting because it's not really consumer
welfare anymore. You would think that you'd have to document
in a sort of concrete way harm to look, you
bought this company and then prices went up. Right, the
degree to which prices went up as a pretty concrete,
black and white measure of how worse off people were.
That's not really the standard that they applied here though,
this is not my area, but a quick Google search
(26:21):
reveals the maybe there, Oh yeah, it's my first Where
else do you go? Do you go anywhere else? When
you want a quick fact?
Speaker 2 (26:29):
What do you what? Do you know? What I was
going to say is that they are facing competition from
chat TBT. I really feel like these large language models
out there are going to make inroads.
Speaker 3 (26:38):
Let me ask you a question. When you ask chat
GBT a question, does it give you a source for
its answer or does.
Speaker 2 (26:43):
It just give you the answer?
Speaker 1 (26:44):
It does.
Speaker 2 (26:45):
It does give a list of sources a little comparable
to the yes.
Speaker 3 (26:49):
To the results you get from Google, but it's it's
more texts.
Speaker 2 (26:52):
It's more text that's provided and less of the the sourcingrying.
Speaker 3 (26:57):
To drive you to somebody's website from money exactly, which
is Google's bread and butter.
Speaker 2 (27:02):
Yeah, okay, And the clarity of the answer.
Speaker 1 (27:05):
You know.
Speaker 2 (27:05):
I was having this discussion with family recently where the
amount of information and the way it's delivered is much
more clear and thoughtfully articulated as opposed to what Google
Search has become, and I was reluctant to admit this.
Chuck was the one who really pushed this hard that
Google Search has worsened significantly over the last decade. So
I couldn't wrap my mind around that, because you think
(27:27):
the more searches that they have, just the more powerful
the engine becomes supposed to work. But ultimately, to your point,
it seems the focus is much more driving traffic to
a specific area, and the idea of Chuck had posed
this out googling what is the cost of an avocado
would more likely to merit you places to go purchase avocas,
rather than just answering your question of what is the
(27:48):
average cost of an avocado, for example, Whereas on chat GPT,
probably because it's in its infancy and they just want
to get mass adoption, there is none of that is
much more thoroughness of interest answers.
Speaker 3 (28:01):
So the hope and breaking them up is is that
we get better results from small or more innovative company.
It my guess is we're going to converge on the
same to the same place where we are today. Given
the economics, the attractive economics from directing people to prefer
sure websites. Well, this isn't my air. I'm not even
gonna speculate. All I can conclude from all this is
(28:22):
if a company gets too big, and maybe this is
a good rule, we're just going to break it up.
If you've got a ninety percent that seems to be
the overriding imperative here when something gets too big ninety
percent or I don't know if ninety percent is the threshold,
maybe it is quantifiable, maybe it isn't. We're going to
break it up. Bigness is unhealthy. It's stifles competition. I'm
looking at the Justice Department's complaint, which the judge echoed
(28:43):
in their decision. I don't know whether it was the
browser or digital advertising of finding of a monopoly decision,
but the alleged harm was it hurts publishing consumers. I
guess this is in the case of search, hurts the
competitive process, et cetera, et cetera. All very vague.
Speaker 2 (28:57):
Can we even come up with the three of us
more than two other search engines besides Google? There's just
the number one.
Speaker 4 (29:04):
YouTube is actually the number two, and people seve that
out of the equation, it's overwhelmingly number two. But I
actually have a list of the top ten search engines
in the world.
Speaker 2 (29:12):
All right, I'll try and see if I can get
a couple duc duck go. Does that crack the top ten?
Number six, bing number two? Then it's going to be
international ones that I'm not as familiar with. So I'm
gonna bow out here and mark unless you can throw
any of the top ten together.
Speaker 4 (29:27):
Well, we've got yandex dot. Are you of a Russian
search engine? It's not going to come up with that one.
That's number three by do out of China. Oh sure,
number five Yaver out of South Korea, number seven, AOL.
Speaker 2 (29:39):
Hey, hey, look at you.
Speaker 4 (29:40):
AOL number eight, quant from France at number nine, and
Ecosia from Germany at number ten.
Speaker 2 (29:45):
Gotcha. That rounds out the top ten. But still, as
we were mentioning, Google taking ninety percent of the global
market share. So while there may be a top ten list,
Google is a behemoth there. So it'll be interesting to
see what we get out of all these court cases,
and specifically the Justice Department here as we fall it,
(30:05):
I mean, this will take a long time to sort out.
We're going to take a quick break here on the
Financial Exchange, but when we come back, we're going to
be talking a little bit more about Tariff's as well
as vance's call for closer US India ties as trade
talks are progressing. That's right after this break here on
the Financial Exchange.
Speaker 1 (30:24):
Tariff's fears continue to grip markets. Get the latest straight
from Wall Street right here on the Financial Exchange Radio Network.
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(30:45):
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Speaker 2 (30:59):
Coming back from break here, we've still got markets rallying
quite a bit today. The Dow jones up over seven
hundred points, the S and P five Hunter is up
almost close to two percent, and the Nasdaq is up
a little over two percent today as Wall Street looks
to rebound from what was a rough Monday where major
indices were off over two percent. We shift our gears
(31:19):
back to discussing just a piece out of the Wall
Street journal that kind of gauges the impact of some
individual companies out there of these recent one hundred and
forty five percent tariffs on Chinese goods. In this piece,
they discuss a truck full of fake eyelashes that came
to a screeching halt in Mexico. I'm disappointed I won't
(31:41):
be able to get my eyelashes from this company in time,
as they've been shelved here. But they all sorts of
various knickknack goods like this have have been put on
pause for the time being, just trying to await further
clarification on what trade policies are going to look like
(32:02):
going forward. So in this instance of the fake eyelashes,
they have been halted and sort of stored in Mexico,
just shy of the US border. They had been imported
from China, which is a specialist in a particular area
to make these fake elishes. And the same applies for
some other businesses out there, both in the children's toy
sector and others that really are just solely either based
(32:28):
in China or even if you wanted to manufacture the
goods here, many of the products come from China.
Speaker 3 (32:36):
Yeah, everything's topsy turvy right now. There are lots of examples,
not all of them are as colorful or disturbing. If
you think about a cargo container full of allegedly fake
eyelash as they mean, it's China.
Speaker 1 (32:50):
So they.
Speaker 3 (32:53):
Just to claric could be plucked off political dissidence in China.
We don't know where they came from, I guess, But anyway,
lots of anecdotes like this. I guess this isn't an anecdote.
There's well it is and it isn't. It's just an
example of the uncertainty that the on again, off again
tariff policy is reaking. It's not tariffs per se that
are although I don't like them. That there are first
(33:14):
best solutions, and there's a tariffs are like a third
best solution. They're not the best way to bring manufacturing
back if that's your goal or whatever. If your goal
is to plug the deficit, there are better ways to
do it. That aside, there are also better ways to
implement tariffs, which is announce them and stick with them
and stop the on again, off again changing by the
day or by the weak rhythm we've seen so far.
(33:37):
Nobody knows what to rely on.
Speaker 2 (33:40):
Right now and when you're at I mean, one hundred
and forty five percent is almost effectively an embargo, just
with how financially detrimental me to businesses out there where
you know these For this company here, it's going to
be more than the cost of the goods on the
cargo itself to pay that type of tariff. So certainly
will continue to monitor a lot of businesses out there
(34:02):
impacted by those tariffs.
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Speaker 2 (35:12):
President Trump hosted CEOs of Walmart, Target, and Home Depot
for a tariff meeting. I believe that was held yesterday.
There was it seemed to be positive sentiment from discussions,
but really nothing concrete here that was taken away from
any of the meetings. Obviously, these companies out there, Walmart,
(35:34):
for example, imports about one third of its import sorry,
one third of its imports come from around the globe,
China and Mexico being some of the most significant suppliers
out there. Target for example, certainly has a lot of
impact here on the import front. So some major CEOs
(35:55):
trying to get to see the table discuss some of
these terraffts, but nothing here that was, you know, significant
takeaway from this meeting here.
Speaker 3 (36:03):
Yeah, this is an example of one of the sad
side effects of the way tariff policy is being conducted
right now. Economists refer to this type of behavior is
rent seeking, and that sounds like a fancy term, but
it just means we all start to do things not
to grow our own wealth and grow the economy, but
just protect what we've got. Rent seeking. It's called that,
I think because rents are typically viewed as non earned
(36:26):
income and somehow less noble than somebody rolling up their
sleeves and going to work. Oh, you're just a rent seeker.
You're a capitalist sitting around earning your interest. Those aren't
entirely the same things, but that's what rent seeking means.
And I use this as kind of a teachable moment,
not that I'm qualified to teach anybody this stuff. I'm
kind of reteaching myself this stuff too. This is an
example of how things get directed redirected. Resources get redirected,
(36:49):
and these CEO's time is presumably a valuable resource given
what they get paid, get redirected in toward inefficient things
like having to suck up to the president, which is
what they're doing. They're going there to suck up and
begging for exceptions. Yep, that's not helpful to long term
growth and probably not helpful to short term economics. Not innovative,
Yeah sure, yeah right, it's just it's a waste their time.
(37:12):
The politician likes it, of course, because they feel important.
Look who's coming to bend the knee and expression you
hear a lot now, which you probably shouldn't in a
free country, but we're hearing it a lot now. And
again it's just from an economic solely from an economic
point of view, forgetting about the political angle. It's sad
because we're it's because it's going to be a drag
on long term growth if we don't clean up our act.
Speaker 2 (37:32):
Here, taking a look around at markets, the major industries
are rallying quite a bit today. We've got the Dow
Jones up over seven hundred points or one point nine
two percent, The S and P five hundred also up
close to one hundred points or about two percent, and
the Nasdaq is up over two percent through early training here.
The Russell two thousand also is up close to about
(37:54):
one and a half percent. Taking a look at the
US ten year Treasury, it still sits in and around
zero point four percent, not really moving significantly today, and
oil is up about one and a half percent, with
its sitting around sixty four dollars a barrel. That's all
the time that we have for the first hour of
the Financial Exchange, but we've got a jam packed second hour,
(38:15):
including a preview of Tesla's earnings and much much more
that's right after this break here on the Financial Exchange.
Stick with US
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and Mark Fandetti.
Speaker 2 (01:10):
Welcome to this Tuesday edition of the Financial Exchange. Paul Lane,
Mark Fandetti, and Ben Kitchen here with you, and we
continue to see up and down action on Wall Street.
We saw sell offs of more than two percent across
the major induses during yesterday's trading, but today they are
bouncing back in the other direction, with all the major
industries Dow Jones, S and P five hundred and the
(01:31):
Nasdaq up over one and a half percent. There is
no real significant news unless I have missed something and
been asleep of the switch mark that indicates as to
why we're seeing a bit of a bump today. Obviously,
the volatility that we've seen this month has been quite
tremendous and sort of out of the norms that we
(01:52):
saw back in late fall and early this year. But ultimately,
regardless of the action that we've seen over to or
the last couple of weeks, it is going to be
on track for one of the worst aprils that we've
seen if we're looking at the DAO specifically since nineteen
thirty two, and this stems from just a lot of
(02:13):
uncertainty economically in the United States at the moment.
Speaker 3 (02:16):
Yeah, it's not even You're right, it is uncertainty, but
it's we know exactly what to pin it on. The
White House wants to fundamentally change some of our institutions.
You can agree or disagree. That's almost a political question.
Do you want an independent FED?
Speaker 2 (02:30):
Do you not?
Speaker 3 (02:31):
I don't think I certainly wouldn't understand what the heck
was going on if I wasn't a long time student
of the FED monetary policy generally, so I'm not sure
how anybody could have the foggiest how to interpret this.
It'd be like telling me whether or not the FDA
should approve a drug or something. So I'm sort of
(02:51):
impressed that most people seem to understand, at least if
the market's reaction is any guide, that an independent FED
is important because you don't want to put control of
the money supply in the hands of anyone politician. And
that's ultimately The FED has some regulatory responsibilities too, But
what's the issue here is who should control the supply
of money. We think about the fedest setting interest rates,
(03:14):
but that's only indirectly what they do. They target a
short term interest rate by controlling the supply of money
when they want a lower interest rates, They increase the
supply of money, and they use that to buy securities
like treasuries that banks have on their balance sheet. That
allows banks to loan the money that they're buying those
(03:34):
securities with. That's effectively how monetary policy, which is what
the FED does, is called. That's how it works. And
Congress has the power to create money under the Constitution,
they gave that to the FED. So now there's this
sort of power struggle which really should be between the
President and Congress, but it's being framed as between the
President and the Fed. And I'll say again, I'm impressed
(03:56):
that that market participants seem to understand that monetary policy
should be kept independent of the will of any one politician,
not independent from oversight. Maybe the Fed's a little bit
too independent in some ways. I tend to agree with
those arguments, but clearly markets understand that if it got
into the hands of any one politician, anybody, they would
be tempted, overwhelmingly tempted to print money without warrying about
(04:21):
the long term inflation consequences.
Speaker 2 (04:23):
Yeah, that's the problem with four year terms in a sense,
is that the president in office is always going to
be very motivated to achieve any of their objectives for
short term gain and not worrying about the longer term
ramifications of actions like printing money throwing the US into
a talesman. And we find ourselves at a point, and
(04:45):
this is not news, that we are heavily extended on
the debt front and a place where already we've sort
of taken advantage of that power to print money over
an extended period of time. And the reason that we
were able to do it it is because of the
stability and safety that the US market economic market has
(05:06):
typically found itself in. But those fears have been shaken about.
Speaker 3 (05:10):
Okay, so that's the issue. Yeah, So what you're bringing
up is foreign ownership of things like treasuries and the
dollar generally. Yeah, it's definitely connected. You wouldn't want to
own treasuries if you thought the interest payments were going
to be made with money conjured up out of thin air.
They're going in real terms, you're going to lose purchasing power.
(05:34):
This is true of domestic investors too. So that's a
slightly different but equally important angle. And there are many
such angles, which is why the volatility that we are
witnessing is is permeating many different markets currents. We've heard
You've heard about the dollar weakening, which might be due
to the effects that you were talking about, Paul. We've
(05:56):
heard about treasury yields rising related to the dollar weakening
of core and related perhaps to lack of confidence in
in in the US maintaining the purchasing power of the dollar.
It gets it gets complicated, is my point.
Speaker 2 (06:10):
Yeah, The US Dollar Index now sits at its lowest
level in the last three years in terms of the
S and P five hundred mark. I've been out for
a couple of days. Are we sitting at what was
it six or seven percent down year to date on
the SMP.
Speaker 3 (06:25):
It's twelve at this point, isn't it? After yesterday?
Speaker 2 (06:28):
Three?
Speaker 3 (06:28):
Twelve point one year to date? I'm rounding up a
little bit month to date. You're right, month to date,
we're down about eight several percentage points month to date.
Speaker 2 (06:36):
As you've talked about the beginning one and a half
and then potentially it's hard to keep it's hard to
keep track at this point because the moves have been
so large.
Speaker 3 (06:44):
As you pointed out.
Speaker 2 (06:45):
This is the would be the worst S and P
five hundred performance since inauguration day for any president, since
the data that we had going back to nineteen twenty eight,
and some of the other areas of the market that
have been impacted and been moving significantly. Gold has really
risen dramatically over the course of the last several months
or so. It had top thirty five hundred dollars an ounce.
(07:07):
Now today it sits at just shy of thirty five hundred,
but still up close to about zero point six percent
on today's trading.
Speaker 3 (07:16):
So, and another way to think about that is the
dollar is weakening relative to gold. Gold is a currency
of sorts. It is a store value of sorts for
historical reasons, it maintains that characteristic if you like. So
when gold goes up, it takes more dollars to purchase,
say an ounce of gold. That's just a different way
of saying the dollar is weakening relative to gold, just
(07:39):
like when we say the exchange rate goes down. I
think when most people hear that, they think that means
the dollar is somehow weakening, which just means it takes
more dollars to buy a Japanese yen or a euro
or a Great Britain pound or whatever.
Speaker 2 (07:55):
The biggest story that we've covered over the last couple
of days or so, is is President Trump going after
Frederick chairman Jerome Powell. And Mark alluded to it in
some of his comments, and it does seem like here.
There's a piece in the Wall Street Journal titled Trump
is laying the groundwork to blame Powell for any downturn,
and that shares our echos sentiments that sort of rattle
(08:15):
around in my head when I saw the initial news
come out that President Trump had posted on his true
social on Monday that there is virtually no inflation, calling
Jerome Powell mister toolate and a major loser for not
reducing interest rates immediately. And let's just tackle this from
the economic perspective piece here, where you have tariffs looming
(08:39):
out there this summer already in place, but you know
even more significant ones looming which would create inflationary pressure.
So to counter the point that there's virtually no inflation, yes,
inflation has come down from the highs that it was
at in twenty twenty two. However, there are things on
the economic horizon that could make inflation much more substant
(09:00):
than we've seen, which leads to the fact that's why
the Federal Reserve.
Speaker 3 (09:04):
Look, I'm glad the President's bringing this up because it
allows us to think about what monetary policy is, what
the FED is for, why it's independent in the first place.
So he says there's no inflation, Well, that's obvious, that's
actually there was no inflation last month. So in a
way that's true. We know the consumer price index went
down minus point one tenth of a percent month over
(09:25):
a month. That's likely to be fleeting. But in a
very narrow way, what the President said is actually right.
There was disinflation. There was deflation technically last month. Now
your point is, yeah, but we know that's not representative
of the real picture. What's the trend in inflation, what's
underlying inflation. That's why we have core, which strips out
food and energy. There are other measures like the median
(09:46):
that we talk about a lot, that filter out big
price increases or decreases, no matter what sector they originate from,
that better gets at the trend in inflation. So the President,
in a very strict sense, was actually right, and I
think it's good that the issues at least being raised.
Speaker 2 (10:02):
Now.
Speaker 3 (10:02):
I don't agree with compromising the Fed's independence. I think
that would probably be devastating. Every researcher who's ever looked
at any country and its degree of central bank which
is what the FED is, its degree of central bank independence,
has concluded that the degree of independence is positively related
to the degree to which inflation is under control. Everybody
(10:24):
who's ever looked at it in any time in any
country has concluded that. So the president's wrong in that sense.
But he's right. We've had some deflation very recently. Can
we count on that continuing? Probably not. Should the Fed,
in a knee jerk fashion, lower rates in response to
one month's deflation? Probably not. But I think it's it's
not illegitimate to have the discussion. Too many people when
(10:46):
the president comes up, they have a knee jerk, and
I sometimes do it too, because he's so provocative. But
it's good to step back and think about what is
the point there, what's the counterpoint? Let's talk through this rationally. No,
he's wrong in this case, but it is good to
think about the direction of which inflation might be heading
in what the appropriate response of the FED should be.
(11:07):
There are so there are almost two issues. You can
make a case that the Fed should be easy. I
don't agree with it. I don't think. I think the
bulk of the evidence is on the other side of
that argument right now.
Speaker 2 (11:15):
Well, would the case to easing be that we've made
so much progress on the inflationaorty front?
Speaker 3 (11:19):
I think. Look, a FED policy maker has has to
weigh two things, output and the degree to which it's
above or below trend, and inflation and the degree to
which it's belova above or below the Fed's target. This
is a common construct for central bank policy makers.
Speaker 2 (11:36):
Employment.
Speaker 3 (11:37):
Kind of that employment is in the output gape. So
there are two terms, if you like, in the Feds.
I'm going to put this in quotes. Function. We all
have a welfare function. Yours is am I taking care
of the kids? Am I doing what I need to?
The Fed's welfare function is output. One eye is on output.
The other eye, so to speak, is on inflation. The
(12:00):
argument for lowering the FED funds rate target right now
is that the output gap has narrowed a lot. We
went from maybe overheating a little bit last couple of years,
or to perhaps undershooting right now. A lot of forecasters
are calling for very slow growth in the next say,
six months. They might be wrong of course, if you
put more weight on that outcome, you ignore that inflation
(12:22):
might still be a little elevated, and you cut preemptively.
As the President I think said, I don't agree with
his interpretation of the evidence, but it's not like he's
not making a valid point if the next the problem
is is that he's impinging on FED independence when he
calls Powell a loser and says he can't wait till
he gets terminated. That's where he goes too far right right,
(12:43):
and that's why markets sort of freaked out yesterday. But
he makes there is a legitimate point underneath all the
bluster there.
Speaker 2 (12:50):
There's certainly a lot to get to with this topic,
so we'll touch on that a little bit more here.
We're going to take a break right here. We'll touch
a little bit more on Jerome Powell, the FED chairman,
and President Trump, then the ongoing wars back and forth,
a mostly from Trump's side of things, and we'll also
be talking about some guys get hit in the face
today thing, and then we'll also talk about the Justice Department,
(13:10):
which has a big case with Google coming up. That's
right after this break here.
Speaker 1 (13:15):
Market volatility is at its highest point since the pandemic.
Keep it here for the most comprehensive coverage of the
global trade war. This is the Financial Exchange Radio Network,
breaking business and financial news first throughout the day, only
here on the Financial Exchange Radio Network.
Speaker 4 (13:37):
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Speaker 2 (14:05):
Before the break, we were discussing President Front's recent comments
regarding FED Chairman Jerome Powell and his lack of action
in taking proactive measures to cut interest rates, and the
things that we were discussing that loom out there as
concerns for the Federal Reserve is certainly the impact of
tariffs on the inflationary front, as well as trying to
(14:29):
just monitor the US economic growth and what impact it
could have on the labor market here, anything else mark
that you want to touch upon, just on the independence
of the FED and sort of where where we go
from here. I mean, certainly these messages to me, I
do think it is worth reitering that clearly a bit
(14:50):
of laying the ground for the FED to be the
scapegoat with these types of messages leading into some of
the economic policies that could be coming down the road.
Speaker 3 (14:58):
It could be I don't I think that's gonna work.
People know the economy was strong a few months ago.
They know forecasts deteriorated in response to tariffs. At the time,
the proponents of tariffs were saying they might cause economic pain.
They were very candid about it. They probably should have
stuck to that line rather than now scrambling to find
(15:20):
another party to blame for things somewhat coming apart it.
The seems relative again to the position we found ourselves
at the beginning of the year, I'll see again. I
think a conversation about FED independence is good. It's healthy
because we take it for granted and because it's not
something we've had to talk about in the past thirty years,
(15:41):
it's been taken as kind of revealed truth that it
was a good thing to the point where we got
this great inheritance of stable inflation until COVID, but that
has since subsided. I don't like the way Powell handled it,
but the blame was not entirely with him, certainly not
for the surge and inflation. Arguably he didn't tamp it
down quickly enough, but there are plenty of accomplished scholars
(16:03):
who don't think he could have done anything different, who
should have or could have, for that matter, done anything differently.
So I think the conversation is healthy. Raising the prospect
of depriving the FED of independence for reasons we discussed
in the last segment is not healthy as evidence by
market reaction, and that's really all you can say at
this point. Maybe the president drops it. He dropped it
(16:25):
in twenty eighteen and twenty. I mean this was a
common feature of his first term, brow beating the he
replaced the FED chair. We forget this, but Paul's's guy.
Speaker 2 (16:35):
He took Jenny ironic part.
Speaker 3 (16:37):
Most presidents have reappointed FED chairs unless they were utterly
incompetent or unsuited for the role. It's hard to think
of one in recent history that didn't get reappointed for
solely political reasons. In fact, I can't think of one.
Reagan inherited Vulgar, reappointed him, then he didn't, but that
was okay. Vulgar served two terms. There was no love loss,
(16:58):
I don't think between him and the Reagan administration. But anyway,
Clinton reappointed green Span Obama jumping ahead a little bit.
Obama reappointed Bernanky. It's just something that you typically do.
Trump fired effectively Janet Yelling unclear why Powell's his guy,
and almost immediately soured on Powell. He is who he
(17:21):
The president is who he is, and this is why
many of his supporters like him. He is mercurial and
keeps other people on their toes. Some people like that,
markets generally don't, and people making long term investments generally don't.
So hopefully this all just kind of goes away. Sure,
I don't know if that's a realistic prospect. Probably just
wishful thinking.
Speaker 2 (17:40):
We'll continue to follow it. The Justice Apartment urges tough
action to break Google's search dominance, so the anti trust
case headlines have really been heating up over the course
of the last couple of weeks specific to Google, we
had a federal judge last Thursday ruled that Google created
a monopoly that allowed it to control parts of the
(18:02):
online advertising industry. Google has about ninety percent of the
global search market, so in terms of its percentage of
market share, it is right up there from a monopoly perspective.
But the tricky thing we'll be here is that that
federal judge ruling is the second one that we've seen
in the last eight months that have indicated some sort
(18:24):
of correlation or credence to the idea that Google created
a monopoly. The Justice Department is different. These other cases
that I'm alluding to here by federal judges don't have
a direct impact on the case that we're about to
hear with the Justice Department. But some of the measures
that have been mentioned as part of this Justice Department
(18:44):
case is forcing the sale of some of the company's
advertising products for Google, forcing the sell off of its
Google Chrome browsing business, and not allowing Google to be
the default search engine on your smartphone. So for any
phone user out there, if you are to search something
in the Safari browser in your iPhone, Google is the
(19:06):
default search engine that you'll get. If you say pizza
joints in Portland, Maine or Cape cod you are going
to get Google search results. And Google pays twenty billion
dollars a year for that privilege of being the default
search browser on Apple Safari. A lot of people execute
many Google searches on their phone, so being that default
browser is really important.
Speaker 1 (19:26):
There.
Speaker 2 (19:27):
We're gonna take a quick break here on the Financial Exchange.
When we come back, we're gonna cover Wall Street Watching
a little bit more on anti trust and some free
trade zone talk. That's right after this break.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look at what's moving market so
far today right here on the Financial Exchange Change Radio Network.
Speaker 4 (20:02):
All right, markets are largely in the green. Right now.
The Dow Jones is up just under seven hundred points,
s and P five hundreds up over eighty seven points
or one point seven percent, and then the Nasdaq is
up over three hundred points or one point nine one percent.
Ge Aerospace stock has moved up over four percent after
ge Aerospace reported adjusted earnings of a dollar forty nine
(20:25):
per share, topping the dollar twenty seven per share. Anticipated revenue, however,
came in just shy of expectations. Hertz Global Hurts Global
Holding shares are up over eleven percent after the rental
car company rallied one hundred and twelve percent last week
on Bill Ackman's big investment in the company. Pershing Square
has taken a nineteen point eight percent stake in Hurts
(20:48):
with outright share ownership and total return swap. The stock
had fallen over five percent yesterday. Three M shares are
up over seven and a half percent after first quarter
results beat expectation on an adjusted basis. Three M earned
a dollar eighty eight per share on five point seventy
eight billion of revenue. Analysts had penciled in a dollar
(21:08):
seventy seven per share and five point seven to six
billion of revenue. Amazon shares are up just under three
percent after even though Amazon had delayed some commitments around
new data center leases, particularly international ones. Verizon shares are
down over one percent after Verizon said it lost more
postpaid net phone subscribers during the last quarter than we're expected.
(21:30):
The company still beat forecasts for first quarter earnings in
revenue and said it remains confident in achieving its year
end goals. Lockheed Martin shares are down over two percent,
even after Lockheed posted a strong first quarter profit and
reaffirmed its forecast for the year, driven by resilient demand
for its missile systems and fighter jets. I am ben
(21:51):
Kitchen and that was Wall Street Watch.
Speaker 2 (21:53):
Touching a little bit more on the antitrust case that
we see here tied to Google. The Justice Department is
set to hear arguments over the course of the next
couple weeks here as to whether or not Google should
break up some of its global advertising business, claiming that
they have a monopoly on the search market. As I
(22:14):
was mentioning before the break, ninety percent of the global
search market is through Google, and they pay a significant
sum to Apple to be the default search engine on
its browser. Some of the measures that have been mentioned
are the idea of selling off Google Chrome, as well
as divesting of some of the companies advertising products. And
(22:35):
it seems to be a different day for anti trust market.
It's always been very challenging for in the United States
any company to get any sort of real charges levied
against them on the anti trust front, but certainly back
in the nineteen nineties it really did some harm to
(22:57):
Microsoft's business, though it did not have to break up.
There were a lot of time and effort and energy
spent trying to battle the Anti Trust Department. So it'll
be interesting to see what happens here on Google's front, yeah.
Speaker 3 (23:10):
And what precedent that sets for other tech giants. These
companies are so much bigger in today's dollars than companies
that we associate with monopoly practices and past eras at Amazon, Apple, Google.
They're all worth between two one and two trillion dollars
standard oil. Somebody wrote recently Rockefeller's oil monopoly monopoly in
(23:32):
illegal sense that was busted up thirty three billion, so
a fraction literally of the market value in today's dollars
of today's tech giants. The argument for breaking them up
is that it's killing innovation. They buy competitors. I know,
Chuck can you and Mike Armstrong talk about this all
(23:53):
the time, so I'm probably starting at two elementary level here,
but they can snuff potential competitors out in the cradle.
I know that's a horrible analogy, but that's effectively what
they do, and they put this in an Zuckerberg puts
this kind of stuff in emails. We got to buy them,
they could compete with us. It's basically what he said.
So it's no secret, So it's probably better. Is reluctant
(24:15):
as a free market fanatic like me is to interfere.
If a company gets really big, God bless them. More
power to him. Fact is, they often use that power
for ends that are economically, in an overall welfare sense, detrimental.
So when something gets too big, you just got to
break it up and shareholders could benefit. You get stock
and on a pro rate a basis as I understand it,
(24:37):
in the newly created companies, and they'll probably not guaranteed,
but probably grow faster because they've got more freedom to innovate.
Speaker 2 (24:44):
The challenging thing has always been for the Justice Department
is to prove harm to US consumers, certainly businesses. On
the innovation side, I think it's easy to make those arguments,
but on the consumer side of things, it can be
a little bit more difficult to make that justify cation.
In general, it seems as if all companies are trying
to get a sense for what the mergers and acquisition
(25:06):
markets is going to look like under Trump's administration. There
was a lot of optimism when he was elected that
there would be a huge push for deregulation and perhaps
this would open up the floodgates in terms of activity
on the financial industry and the merger side of things.
Though we did see some pretty big mergers over the
course of the last couple months or so, the deal
(25:27):
activity is not nearly what we've seen in the past.
The notable ones, of course, were Capital One and Discover.
That was a significant merger that may have seen more
scrutiny under the Biden administration. That was a thirty five
billion dollar acquisition that just received approval within the last
week or so. And then it will be interesting to
see Google not only are they battling this ant trust case,
(25:49):
but also they have gone out and acquired a cybersecurity startup,
wiz for thirty two billion dollars. How that gets through
from an approval perspective will be something to track as well.
Speaker 3 (25:58):
Yeah, the standard here's interesting because it's not really consumer
welfare anymore. You would think that you'd have to document
in a sort of concrete way harm to look, you
bought this company and then prices went up. Right, the
degree to which prices went up as a pretty concrete,
black and white measure of how worse off people were.
That's not really the standard that they applied here though,
this is not my area, but a quick Google search
(26:21):
reveals the maybe there, Oh yeah, it's my first Where
else do you go? Do you go anywhere else? When
you want a quick fact?
Speaker 2 (26:29):
What do you what? Do you know? What I was
going to say is that they are facing competition from
chat TBT. I really feel like these large language models
out there are going to make inroads.
Speaker 3 (26:38):
Let me ask you a question. When you ask chat
GBT a question, does it give you a source for
its answer or does.
Speaker 2 (26:43):
It just give you the answer?
Speaker 1 (26:44):
It does.
Speaker 2 (26:45):
It does give a list of sources a little comparable
to the yes.
Speaker 3 (26:49):
To the results you get from Google, but it's it's
more texts.
Speaker 2 (26:52):
It's more text that's provided and less of the the sourcingrying.
Speaker 3 (26:57):
To drive you to somebody's website from money exactly, which
is Google's bread and butter.
Speaker 2 (27:02):
Yeah, okay, And the clarity of the answer.
Speaker 1 (27:05):
You know.
Speaker 2 (27:05):
I was having this discussion with family recently where the
amount of information and the way it's delivered is much
more clear and thoughtfully articulated as opposed to what Google
Search has become, and I was reluctant to admit this.
Chuck was the one who really pushed this hard that
Google Search has worsened significantly over the last decade. So
I couldn't wrap my mind around that, because you think
(27:27):
the more searches that they have, just the more powerful
the engine becomes supposed to work. But ultimately, to your point,
it seems the focus is much more driving traffic to
a specific area, and the idea of Chuck had posed
this out googling what is the cost of an avocado
would more likely to merit you places to go purchase avocas,
rather than just answering your question of what is the
(27:48):
average cost of an avocado, for example, Whereas on chat GPT,
probably because it's in its infancy and they just want
to get mass adoption, there is none of that is
much more thoroughness of interest answers.
Speaker 3 (28:01):
So the hope and breaking them up is is that
we get better results from small or more innovative company.
It my guess is we're going to converge on the
same to the same place where we are today. Given
the economics, the attractive economics from directing people to prefer
sure websites. Well, this isn't my air. I'm not even
gonna speculate. All I can conclude from all this is
(28:22):
if a company gets too big, and maybe this is
a good rule, we're just going to break it up.
If you've got a ninety percent that seems to be
the overriding imperative here when something gets too big ninety
percent or I don't know if ninety percent is the threshold,
maybe it is quantifiable, maybe it isn't. We're going to
break it up. Bigness is unhealthy. It's stifles competition. I'm
looking at the Justice Department's complaint, which the judge echoed
(28:43):
in their decision. I don't know whether it was the
browser or digital advertising of finding of a monopoly decision,
but the alleged harm was it hurts publishing consumers. I
guess this is in the case of search, hurts the
competitive process, et cetera, et cetera. All very vague.
Speaker 2 (28:57):
Can we even come up with the three of us
more than two other search engines besides Google? There's just
the number one.
Speaker 4 (29:04):
YouTube is actually the number two, and people seve that
out of the equation, it's overwhelmingly number two. But I
actually have a list of the top ten search engines
in the world.
Speaker 2 (29:12):
All right, I'll try and see if I can get
a couple duc duck go. Does that crack the top ten?
Number six, bing number two? Then it's going to be
international ones that I'm not as familiar with. So I'm
gonna bow out here and mark unless you can throw
any of the top ten together.
Speaker 4 (29:27):
Well, we've got yandex dot. Are you of a Russian
search engine? It's not going to come up with that one.
That's number three by do out of China. Oh sure,
number five Yaver out of South Korea, number seven, AOL.
Speaker 2 (29:39):
Hey, hey, look at you.
Speaker 4 (29:40):
AOL number eight, quant from France at number nine, and
Ecosia from Germany at number ten.
Speaker 2 (29:45):
Gotcha. That rounds out the top ten. But still, as
we were mentioning, Google taking ninety percent of the global
market share. So while there may be a top ten list,
Google is a behemoth there. So it'll be interesting to
see what we get out of all these court cases,
and specifically the Justice Department here as we fall it,
(30:05):
I mean, this will take a long time to sort out.
We're going to take a quick break here on the
Financial Exchange, but when we come back, we're going to
be talking a little bit more about Tariff's as well
as vance's call for closer US India ties as trade
talks are progressing. That's right after this break here on
the Financial Exchange.
Speaker 1 (30:24):
Tariff's fears continue to grip markets. Get the latest straight
from Wall Street right here on the Financial Exchange Radio Network.
Miss any of the show, catch up at your convenience
by visiting Financial Exchange Show dot com and clicking the
on demand icon, where you'll find all of our interviews
in full showers. This is your home for the latest
(30:45):
business and financial news in New England and around the country.
This is the Financial Exchange Radio Network.
Speaker 2 (30:59):
Coming back from break here, we've still got markets rallying
quite a bit today. The Dow jones up over seven
hundred points, the S and P five Hunter is up
almost close to two percent, and the Nasdaq is up
a little over two percent today as Wall Street looks
to rebound from what was a rough Monday where major
indices were off over two percent. We shift our gears
(31:19):
back to discussing just a piece out of the Wall
Street journal that kind of gauges the impact of some
individual companies out there of these recent one hundred and
forty five percent tariffs on Chinese goods. In this piece,
they discuss a truck full of fake eyelashes that came
to a screeching halt in Mexico. I'm disappointed I won't
(31:41):
be able to get my eyelashes from this company in time,
as they've been shelved here. But they all sorts of
various knickknack goods like this have have been put on
pause for the time being, just trying to await further
clarification on what trade policies are going to look like
(32:02):
going forward. So in this instance of the fake eyelashes,
they have been halted and sort of stored in Mexico,
just shy of the US border. They had been imported
from China, which is a specialist in a particular area
to make these fake elishes. And the same applies for
some other businesses out there, both in the children's toy
sector and others that really are just solely either based
(32:28):
in China or even if you wanted to manufacture the
goods here, many of the products come from China.
Speaker 3 (32:36):
Yeah, everything's topsy turvy right now. There are lots of examples,
not all of them are as colorful or disturbing. If
you think about a cargo container full of allegedly fake
eyelash as they mean, it's China.
Speaker 1 (32:50):
So they.
Speaker 3 (32:53):
Just to claric could be plucked off political dissidence in China.
We don't know where they came from, I guess, But anyway,
lots of anecdotes like this. I guess this isn't an anecdote.
There's well it is and it isn't. It's just an
example of the uncertainty that the on again, off again
tariff policy is reaking. It's not tariffs per se that
are although I don't like them. That there are first
(33:14):
best solutions, and there's a tariffs are like a third
best solution. They're not the best way to bring manufacturing
back if that's your goal or whatever. If your goal
is to plug the deficit, there are better ways to
do it. That aside, there are also better ways to
implement tariffs, which is announce them and stick with them
and stop the on again, off again changing by the
day or by the weak rhythm we've seen so far.
(33:37):
Nobody knows what to rely on.
Speaker 2 (33:40):
Right now and when you're at I mean, one hundred
and forty five percent is almost effectively an embargo, just
with how financially detrimental me to businesses out there where
you know these For this company here, it's going to
be more than the cost of the goods on the
cargo itself to pay that type of tariff. So certainly
will continue to monitor a lot of businesses out there
(34:02):
impacted by those tariffs.
Speaker 4 (34:05):
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Speaker 1 (35:01):
The proceeding was paid for and the views expressed are
solely those of Cushing and Dolan. Cushing and Dolan and
or Armstrong Advisory may contact you offering legal or investment services.
Cushing and Armstrong did not endorse each other and are
not affiliated.
Speaker 2 (35:12):
President Trump hosted CEOs of Walmart, Target, and Home Depot
for a tariff meeting. I believe that was held yesterday.
There was it seemed to be positive sentiment from discussions,
but really nothing concrete here that was taken away from
any of the meetings. Obviously, these companies out there, Walmart,
(35:34):
for example, imports about one third of its import sorry,
one third of its imports come from around the globe,
China and Mexico being some of the most significant suppliers
out there. Target for example, certainly has a lot of
impact here on the import front. So some major CEOs
(35:55):
trying to get to see the table discuss some of
these terraffts, but nothing here that was, you know, significant
takeaway from this meeting here.
Speaker 3 (36:03):
Yeah, this is an example of one of the sad
side effects of the way tariff policy is being conducted
right now. Economists refer to this type of behavior is
rent seeking, and that sounds like a fancy term, but
it just means we all start to do things not
to grow our own wealth and grow the economy, but
just protect what we've got. Rent seeking. It's called that,
I think because rents are typically viewed as non earned
(36:26):
income and somehow less noble than somebody rolling up their
sleeves and going to work. Oh, you're just a rent seeker.
You're a capitalist sitting around earning your interest. Those aren't
entirely the same things, but that's what rent seeking means.
And I use this as kind of a teachable moment,
not that I'm qualified to teach anybody this stuff. I'm
kind of reteaching myself this stuff too. This is an
example of how things get directed redirected. Resources get redirected,
(36:49):
and these CEO's time is presumably a valuable resource given
what they get paid, get redirected in toward inefficient things
like having to suck up to the president, which is
what they're doing. They're going there to suck up and
begging for exceptions. Yep, that's not helpful to long term
growth and probably not helpful to short term economics. Not innovative,
Yeah sure, yeah right, it's just it's a waste their time.
(37:12):
The politician likes it, of course, because they feel important.
Look who's coming to bend the knee and expression you
hear a lot now, which you probably shouldn't in a
free country, but we're hearing it a lot now. And
again it's just from an economic solely from an economic
point of view, forgetting about the political angle. It's sad
because we're it's because it's going to be a drag
on long term growth if we don't clean up our act.
Speaker 2 (37:32):
Here, taking a look around at markets, the major industries
are rallying quite a bit today. We've got the Dow
Jones up over seven hundred points or one point nine
two percent, The S and P five hundred also up
close to one hundred points or about two percent, and
the Nasdaq is up over two percent through early training here.
The Russell two thousand also is up close to about
(37:54):
one and a half percent. Taking a look at the
US ten year Treasury, it still sits in and around
zero point four percent, not really moving significantly today, and
oil is up about one and a half percent, with
its sitting around sixty four dollars a barrel. That's all
the time that we have for the first hour of
the Financial Exchange, but we've got a jam packed second hour,
(38:15):
including a preview of Tesla's earnings and much much more
that's right after this break here on the Financial Exchange.
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