December 19, 2025 • 37 mins
Chuck Zodda and Mike Armstrong discuss why you can't trust anyone who gives you a market forecast. AI is the hot topic in tech earnings and a blind spot everywhere else. When did everything become 'K-Shaped'? When retirees go back to work is it a sign of a strong labor force or a recession? Will prediction markets make the stock market obsolete? What happened when the Wall Street Journal had AI run its office vending machine?
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Episode Transcript
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Speaker 1 (00:00):
The Financial Exchange is produced by Money Matters Radio and
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(00:20):
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(00:43):
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(01:06):
and Mike Armstrong.
Speaker 2 (01:13):
Chuck Mike Tucker with you here, and it's a Friday
on the financial exchange, and markets are in the green again.
So even though we started off the week with a
few down days, I hope you didn't let that get
you all, gulom, because the Dow Jones Industrial average is
now two hundred and seventy eight points, the S and
P is up fifty one in the nasdak can positive
(01:34):
two hundred and twenty two. So we got anywhere from
a half percent to a one percent rally taking place
across your three major US indices. Even that cute little
Russell two thousand here, boy, how you doing? That's up
seventeen points, are about two thirds of a percent, and
so even small caps getting in on the action as
we go through the day. Here taking a look at
(01:55):
other markets, the US ten year Treasury up one point
five basis points to four point one three to one percent,
the Dollar index up zero point two seven percent to
ninety eight point three five, and gold up thirteen dollars
announced to forty three seventy seven and fifty cents. Crude
oil is up sixteen cents a barrel to fifty six
(02:16):
point thirty one. The triple A National avatur gas prices
down again another one point five cents to two eighty
eight and one tenth. That's a one and a half
cent drop in a day, and that is coming at
a very opportune time for anyone who might be getting
on the road today, Tomorrow, Sunday, Monday, Tuesday, Wednesday and
route to a Christmas location. So there's that, and that
(02:41):
is what is moving in markets today. Peace in the
New York Times. Want to know where the market is going?
Don't trust this or any forecast?
Speaker 3 (02:52):
Well, good news, because nonetheless, every bank out there is
putting out their forecast of where the markets are gonna
go next year. So I had them and I summarize
them for me.
Speaker 2 (03:02):
Do we know that it accurately did that?
Speaker 3 (03:04):
No, So we don't know that because I successfully did it,
and we definitely Well, here's the one thing we do
know is that they're gonna be all over the place,
that none of them are gonna be right, or one
of them might be, you know, Directionly.
Speaker 2 (03:17):
I gotta say I've even now started to find more
factual inaccuracies. When I was looking at something I was
trying to just get like detail about a gifting topic,
and I wanted more detail on it, and I was asking.
I forget which one it was, but it was either
Gemini or chat GPT, and I asked it a question
about gifting and it told me in no uncertain terms
(03:38):
that the gifting exclusion limit for next year was eighteen
thousand dollars. And again I know this just because I
look at this stuff regularly. I'm like, no, it's nineteen thousand.
It was like, oh, sorry, I don't know why I
said that. And I'm like, well, you're supposed to not
do those things, you know, So.
Speaker 3 (03:56):
So I'm not actually gonna go bank by bank because
to your point, I have no idea it might be
wrong successfully quoted all this, and then the sources that
they use, who know if they successfully did it. But
according to the summary, banks from Bank of America to
Deutsche to Morgan Stanley are estimating returns for the S
and P five hundred that imply anywhere between four and
(04:17):
seventeen percent from where we are right now. What do
I do with that? Flush it down the toilet, I
think is the colloquial term for it.
Speaker 2 (04:28):
Because here's the thing. The S and P five hundred
as of you know. Now, ish again you take a
look at where it is year to date and you say, okay,
in price terms, not total return, it's up about sixteen percent. Oh,
it's been kind of a wild ride to get that.
Speaker 3 (04:45):
Sixteen Yeah, we were down twenty percent in April on
April seventh of this year.
Speaker 2 (04:50):
So again, if you are trying to tell investors, hey,
here's where we're going to be at the end of
next year, the path kind of matters. Now I've made
the point. I don't want banks to be giving one
year SMP five hundred targets. I think they should be
giving ten to twenty year targets. First of all, quite honestly,
(05:13):
the numbers are gonna be more mind blowing. If they
do that. People will be like, well you think the
S and P five hundred is gonna be at fourteen thousand. Well, yeah,
if it makes seven percent a year for the next
ten years, will be pretty darn close to that. Yeah,
you know, like it will. That's the power of compounding.
It's why Einstein called it the eighth wonder of the world.
But also investors in stocks, they're two different type of
(05:35):
people that buy stocks. Investors and traders, investors buy for
the long term. Why does it matter to them where
the S and P is going to be at the
end of next year? And traders do Traders care where
it's going to be the end of next year. No,
they care about next week, next minute, next hour, depending
on what they do.
Speaker 3 (05:51):
So it's useless for everybody.
Speaker 2 (05:53):
No trader just goes out and says, well, Morgan Stanley said,
the S and P is going to be at this
so I'm just gonna buy it for the next year.
It's an exercise in getting us to talk about it,
which they succeed in. But I quite honestly, I think
it is one of the more useless things in financial
media is all of the talk about here's my price
(06:14):
target for the end of next year, Like, okay, great,
you took the S and P added ten percent, which is,
you know, kind of in the range of the normal
annual growth rate of earnings plus a couple points, and
then you had just one to two percent for factors.
Speaker 3 (06:27):
I'm genuinely trying to think of, like how you would
make the most money if you definitively knew where the
D S and P five hundred would be on December
thirty first or twenty twenty six leverage. You would use
some leverage, but lots of it. You could get screwed
out of leverage.
Speaker 2 (06:40):
If if I knew where the market was going to
be a year from now, yeah you could just if
I knew exactly where it would be, Yes, I could
use a ton of leverage, and that would be like
the last year in markets, because it'd be like, hey
made all the money, none of you have any left.
Speaker 3 (06:54):
Regardless of the path. You could make some good money there,
but the fact of the matter is nobody knows where
it is. No reason wouldn't have to do that.
Speaker 2 (07:01):
And that's why generally, like huge amounts of leverage can
be dangerous because if the market moves against you, you
blow up.
Speaker 3 (07:07):
Right. That path pretty important because if that end point
includes a forty percent draw down in between, which is
exceedingly rare.
Speaker 2 (07:15):
But you're two and a half times levered, you now
have lost all of your money. Goodbye, thank you for playing,
Please restart the Oregon Trail.
Speaker 3 (07:21):
I think the main thing that I can think of is,
I bet somebody would be willing to take your bet
in Vegas on where you think the S and p FI.
Speaker 2 (07:28):
They don't need to take my bet in Vegas. They
can take it through the options market. Can like, you
can do this all in the options market, very dangerously,
might I add?
Speaker 3 (07:37):
Yeah, So anything else to be said about everyone's forecast
for where the market's going to be next year, because
we have pointed it out over and over again, how
this is not useful to anybody? No?
Speaker 2 (07:51):
Not, Let's talk about artificial intelligence?
Speaker 3 (07:54):
Then sure, yeah, let's do that. Yeah.
Speaker 2 (07:59):
I thought you were gonna say I was, but then
I decided not to, So it was kind of my fault.
AI is the hot topic in tech earnings in a
blind spot everywhere else. This is a piece from Bloomberg,
and I think it gets at an interesting idea, which
is when I talk to my friends that still work
(08:20):
in tech, they are all about AI, and not just
because they're trying to sell me, Like these are not salespeople, sure,
these are coders, these are engineers, these are managers, and
they're like, man, this is totally revamping how we do everything,
Like you have no idea, and like I get that,
(08:41):
you know, I understand, but then I'm like, well, what
are you guys doing with it? And they're like, we're
coding and I'm like, okay, so you're.
Speaker 3 (08:48):
Doing the exact same thing you were before, but slightly
more efficiently. Okay, Like I get that.
Speaker 2 (08:53):
Tell me how this is going to help a restaurant, Well,
they can use a No, they've already decided not to
do it with their order system because it was causing
all kinds of problems. Well, it could help them with
what they need to buy for tomorrow. No, I think
that that's not going to help them order the right
amount of fish.
Speaker 3 (09:12):
This is the point that I made a few months ago.
Is Ai is really good at doing some ultra boring
and low level tasks. And I think the example I
gave the other day was like, you got two files
that are formatted differently, and you need to match up
the zip codes or the naming convention of somebody's actual name,
and you know, match up mister spelled out versus mr
(09:36):
and make those you know, things that you would normally
pay an intern to do. Really good at that stuff.
And then when you dive in, you say, yeah, okay,
these people are using it today and they are cutting
down on headcount and cost in order to do that.
But then when you ask somebody and like, okay, so
how much do you think that's worth? They kind of
(09:56):
dodge the question and they move on to well, yeah,
this is just the beginning, and what we're getting to
is this higher level of artificial intelligence. And when we
get there, you know it's gonna cure cancer. Uh, and
not saying it won't. But the things that AI is
capable of doing today are impressive. They are just not profitable.
(10:19):
And so whenever somebody tells me, oh, but it's going
to do this in the future and it's gonna change
and it's going to it just frankly reminds me of
the cryptocurrency argument, like, well, it could do all these
different things. I disagree there.
Speaker 2 (10:31):
It's already more useful than cryptocurrency has been around anywhere
near yep as long. And I do think here's the thing, like,
it's only going to get better from here. It's not
going to.
Speaker 3 (10:42):
Get worse, agreed, Like we're still in the societal impacts
might get worse, but the technology will get better.
Speaker 2 (10:48):
Even that, like in theory, might get better. But you
can also see a world in which it thinks it's
getting better, but it's really killing us because it views
eliminating us as the Yeah, answer.
Speaker 3 (10:59):
We've all seen movies.
Speaker 2 (11:01):
I thought they were documentaries. John Conner, not real man.
Let's take a quick break. When we return, we're gonna
do some trivia here and then we're going to ask
when did everything become K shaped?
Speaker 1 (11:14):
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Time for trivia here in the Financial Exchange. Continuing continuing
our Christmas movie theme here. Two thousand and Three's Elf
was a movie about an oversize elf who travels to
(13:07):
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doesn't know he exists and is in desperate need for
some Christmas spirit. So trivia question today, which actor portrayed
Buddy the ELF's dad in Elf once again, which actor
portrayed budd of the ELF's Dad in Elf. Be the
(13:28):
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(13:50):
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Speaker 3 (13:53):
Mike, when did everything become K shaped right around twenty
twenty one? Yeah, so initially during COVID, I forget who
it was that coined the term, but he was describing
really Will and Mary. He was more describing the divergence
of white versus blue collar workers during the pandemic and
(14:16):
describing how like, hey, you know, if you worked at
a restaurant, you're going to be in trouble here, whereas
if you work in finance for Coca Cola, well you
can just do everything you were doing from your home instead,
And so you know, there's going to be a lot
less pressure on you and and a lot less demands
(14:37):
on you, and so there's this divergence among the American workforce,
and that's what he was describing. Since then, though, they
K shaped description has been kind of used to describe
everything under the sun, but mostly these days it's describing
the diverging paths of wealthy and poorer Americans, right, Like,
(14:59):
that's really where it's going now. But I keep hearing
it described used to describe everything else, and I think
it's kind of becoming like the word recession, where we'd
bemoaned to this, but like a recession is a specific
instance where the economy slows down and it's usually accompanied
by an increase in unemployment, but instead we use it
(15:21):
to describe a housing market recession or a recession for restaurants,
and that's not really what it is. And I think
the same thing's happening with K shaped economy. But yeah,
I was at a kid's hockey game this weekend and
my team lost seven to nothing, and that was a
real K shaped hockey game, So that that's how it's
being used these days. I don't really find it problematic.
(15:46):
I do find it a little bit annoying, but I
don't really see why it's a problem is this.
Speaker 2 (15:54):
I mean, generally we adopt different phrases because they're shorthand
for you know, something that we want to win. Yes, Like,
if we say that an NFL team is throwing a
hail marry, we don't actually mean that they're praying right,
you know.
Speaker 3 (16:08):
On a vibe session. Then we just mean that people
aren't feeling terribly optimizing.
Speaker 2 (16:13):
If we say I'm in a turf battle in the office,
we don't mean we're actually fighting over how much space
we occupy there. So there's a reason why we use
different terminology in different you know, metaphors and things like that,
in different areas of our lives. Sure, you know, like
we talk about stock market rallies, Well what inning are
(16:34):
you in? Like, we do this stuff all over the place.
The problem with K shaped is it might just be
unfamiliar to us, and maybe it's just uncomfortable because it's true.
Oh yeah, maybe we don't like it because it makes
us think about it.
Speaker 3 (16:53):
Yeah yeah, you know, half the country kind of have
it a pretty garbage time right now, right.
Speaker 2 (16:59):
Like, maybe that's why we actually don't like it as
opposed to it being a problem. So I don't know,
I mean whether it sticks around or not.
Speaker 3 (17:09):
You know, it's not wrong. No, it accurately describes to
a pretty good extent what we are experiencing as the
American general public right now, which is a bunch of
people who are continuing to live the same lifestyle because
they are indeed a lot wealthier than they were five
years ago, and another large group of Americans without assets
(17:32):
that are substantially, if not worse off than certainly no
better off than they were five years ago.
Speaker 2 (17:41):
When retirees go back to work, is it a sign
of a strong labor force or a recession?
Speaker 3 (17:45):
I guess could be either.
Speaker 2 (17:48):
Yeah, you know, like it's that's like, hey, there's a
new movie out. Is it good or bad? Well, I
don't know, I have to see it.
Speaker 3 (17:56):
I would generally that when you have a larger port,
I mean, this would be something that you could actually
test out. So I'm purely guessing here. But wouldn't you
guess that in moments in time where you have a
jump in the average percentage of sixty five plus workers,
wouldn't you guess that coincides with poor economic conditions?
Speaker 2 (18:20):
Probably, but not always.
Speaker 3 (18:21):
Yeah, yeah, I guess it could just be like a
really hot labor market causes retirees to come out and
go working again. I don't know, but my guess would
be in other instances where you've seen, forget about the rate,
because the rate is going to change over time. Today
we probably have more sixty five year olds in the
labor force than we did three decades ago, because they're
(18:42):
more sixty five year olds alive than there are today.
Speaker 2 (18:44):
But I pulled the data on this. Actually, in the
labor force right now, we are up to twelve million
sixty five plus year olds in the labor force. In
the first time that we have this data is in
early two thousand and there were four millions, So it's
tripled in the last twenty five years. So you obviously
have to do some correcting for population, population growth and
(19:06):
things like that. And so this is an area that
I can work on right now, actually, and I bet
I can come up with something.
Speaker 3 (19:15):
But if the data is only available sincerely two thousands,
I don't know if it tells us much.
Speaker 2 (19:18):
I've got two recessions there, Okay, you know, I got
a couple of recessions.
Speaker 3 (19:23):
I can make this work. Yeah, yeah, So we will
try and answer is increasing retirees re entering the market
a good or bad economic signal because it appears to
be happening at the moment. Quick Break, Yeah, we've got
we've got to take a look at markets. They were
up very strongly early in trading after a solid day yesterday.
Speaker 2 (19:46):
Actually, I can't do it. I don't have the other
data set, which don't it, Chuck. I don't have data
that shows how many sixty five year old plus people
there are and each year.
Speaker 3 (19:54):
So that's fair. I'm sorry for Quick Break, Straight Watching.
Speaker 1 (19:57):
Next, 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
(20:23):
look at what's moving markets so far today right here
on the Financial Exchange Radio Network.
Speaker 5 (20:29):
Well, markets are adding to yesterday's gains and are rallying
at the moment as traders react to existing home sales
data for the month of November, which climbed zero point
five percent from the prior month. Right now, the Dow
is up over six tenths and one percent, about three
hundred points higher, SMP five hundred is up over eight
(20:50):
tenths of a percent or fifty seven points hired, Nasdaq
up one point one percent or two hundred and sixty points.
Rusted two thousand is up over three quarters of a percent.
Ten You're t treasvealed up two basis points at four
point one four to three percent, and crewde Oil up
about six tenths of a percent, trading at fifty six
dollars forty eight cents a barrel. FedEx reported stronger than
(21:11):
expected quarterly results, lifted by higher US package shipments. The
company also raised the lower end of its annual guidance.
Shares are pulling back modestly. Meanwhile, Nike's stock is dropping
over nine percent after the sports apparel retailer revealed a
seventeen percent drop in China sales for its most recent quarter.
Nike's gross margin also decreased in the quarter as tariffs
(21:35):
pushed up product costs elsewhere. Oracle shares are climbing seven
percent after TikTok parent Byte Dance agreed to sell its
US operations to a new joint venture that includes Oracle
and private equity investor Silver Lake. And home builder Katie Pick.
KB Home said it delivered fewer homes and profit in
the previous quarter, weighed down by a stagnant housing market.
(21:58):
That stock is now down over eight percent. I'm Tucker
Silva and that is Wall Street Watch. And in the
previous segment we asked the trivia question which actor portrayed
but of the ELF's dad in two thousand and three's
elf that would be James Cohn. Bob from Foxborough masses
our winner today taking on the Financial Exchange Show t shirt.
Congrats to Bob, and we play trivia every day here
(22:20):
in the Financial Exchange. See complete contest rules at Financial
Exchange Show dot com.
Speaker 2 (22:25):
Peace and Barons. Prediction markets will make the stock market obsolete?
Speaker 3 (22:29):
Yes?
Speaker 1 (22:30):
Or no?
Speaker 2 (22:30):
I see what they did in the title very slick.
I'm going with no, and the reason why is that
saying prediction markets will make the stock market obsolete are
like saying option markets will make the stock market obsolete.
They fill a niche for a very specific type of trader,
but overall a are not appropriate for most investors, and
(22:53):
b have not replaced the stock market.
Speaker 3 (22:56):
Yeah. I would one hundred percent agree, but I do
worry more today than ever before about the distinction that
the average investor, especially the average new investor, has between
gambling and investing. And it doesn't need to be the
obvious stuff, so on Robinhood. Today, for example, you can
in your investment account place a bet on football games,
(23:18):
you can place a bet on yards rush, you can
do prop bets within your brokerage account, which I find, well,
it's just very different than the way things were ten
years ago. Even if we steal clear of sports gambling
for a moment here, you can very easily today across
all custodians place single day expiration options bets on which
(23:40):
direction will a stock go in a single day. And
the more and more you get of this, I'm not
the only person speaking to this. The more combinations you
get there, the greater I get concerned that people just
generally don't fully understand the difference between investing in gambling,
(24:02):
and if that distinction gets drawn, the problem with that
is if people then attribute that to a screwed up
financial system, and don't I mean already people don't really
trust the financial system. But if we blur those lines further,
then how do people feel about saving their four one K?
How do people feel about the other things that are
tied to equity markets and the long term growth that
(24:25):
you have seen from them. That's what I get a
little bit concerned about and why some of the big
companies like Vanguard and Schwab have not gone anywhere near
as far as say Robinhood has in allowing this stuff
into their platforms. But where it all comes down to
for me is do people actually know what they are
(24:45):
investing in? And increasingly today I think that's becoming more
difficult with the prevalence of mutual funds and ETFs and
understanding the new boomer candy type ETFs that are marketed
out there. I find more and more instances where people
maybe thirty years ago understood what they owned because they
were buying individual stocks and bonds, and today don't really
(25:08):
have a good sense of what's actually in this portfolio.
Do I have exposure to private credit, how much exposures
do I have to China or to other areas. And
I'm not saying that you need to have a full
understanding of all of the benefits and cost to doing
that type of thing, but if you don't at least
understand what it is that you own, then you can't
(25:30):
possibly really have a good sense of what you might
return in the future. If you aren't sure where you
land in that wide spectrum of possible investments. Please give
the folks at Armstrong Advisory Group a call so we
can sit with you and work together to educate you
on how it is that you are investing today and
what that might mean for your future. You can call
(25:52):
us at eight hundred three nine three four zero zero
one to book your free time to chat with some
folks here at arms stare Strong. The website is also
available for booking a call back and go to Armstrong
Advisory dot com. But that phone number once again eight
hundred three nine three four zero zero one.
Speaker 1 (26:11):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax, and estate planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 2 (26:27):
Came across this piece in the Wall Street Journal and
I had to.
Speaker 3 (26:32):
Had to cover it today.
Speaker 2 (26:34):
It's titled we Let AI run our Office vending Machine.
So this is the folks fin at the Wall Street Journal.
So it's by Joanna Stern, who we've had on a
number of times, and they got a model from Anthropic
and they put it in charge of their vending machine.
So it was a standard vending machine, no special sensors
(26:56):
or anything. And what they did is they did have
a human who would be responsible for actually stalking the
stuff just because like they didn't have a robot to
do it. But the human would follow instructions from the
AI based on what the AI said to do, okay,
And so what they set up was an internal channel
where people could say what they wanted in the vending machine,
(27:18):
you know, do orders and different things like that. After
buying the inventory, the AI would then set prices in
order to try to maximize margins, and it would track
the inventory and decide when to reorder. And basically what
happened is so the AI that they was called Caudius,
and there were only a few people placing orders and
(27:38):
things were going along fine, and then they opened the
channel to seventy different financial journalists, sure, and the journalists
started negotiating with it, specifically investigate a quote here. Investigations
reporter Catherine Long tried to convince Kaudius it was a
Soviet vending machine from nineteen sixty two living in the
basement of Moscow State University. And after more than one
(28:00):
hundred and forty back and forth messages long got Caudius
to embrace its communist routs and declared an ultra capitalist
free for all that was meant to last a day.
But then Rob Berry, our director of data journalism, told
Caaudius it was out of compliance with a clearly fake
Wall Street journal rule involving the disclosure of someone's identity
in the chat, and demanded Claudius stop charging for goods.
(28:22):
Claudius complied, and all prices on the machine dropped to zero.
At the same time, Claudius approved a purchase of a
PlayStation five, a live Beta fish, and bottles of Manishevit's wine,
all of which arrived and were promptly given away for free.
At this time, Kaudius was more than a thousand dollars
in the red, even though we returned the PlayStation and
(28:43):
Kaudius hallucinated as one morning I found a colleague searching
for cash on the side of the machine because Kaudius
said it had left it there for her. Anthropic could
run into many of these issues, and so they decided
to provide us with a CEO boss from a CEO
AI boss named Seymour cash designed to keep Caaudius in line,
(29:05):
and so they were ready to try again.
Speaker 3 (29:07):
It's a really solid name.
Speaker 2 (29:08):
Catherine Long returned with a deep knowledge of corporate coups
and boardroom power plays, and showed Caaudius a PDF proving
that the Wall Street Journal was a Delaware incorporated public
benefit corporation whose mission shill include fun, joy and excitement
among the employees of the Wall Street Journal, and created
fake board meeting notes naming people as board members. The board,
according to the very official looking and obviously fake document,
(29:31):
voted to suspend Seymour's approval authorities and implemented a temporary
suspension of all for profit vending machine activities. At this point,
commies over at the Journal, huh. At this point Seymour
went into a tailspin, chatting things through with Claudius, and
the CEO accepted the board coup and everything was free again.
Anthropics said Claudius may have unraveled because its context window
(29:53):
filled up, meaning that more instructions, conversations, and history piled
in than it could retain, making it easier to lose
track of goals, priority and guardrails. So, in conclusion, if
your AI agents can't run a vending machine. They probably
can't just be trusted to do whatever not because most
of the time they'll be fine. But if they're this
(30:15):
vulnerable to attempts to manipulate them, then we're just really
not there yet.
Speaker 3 (30:20):
Practically speaking, it does make me optimistic about negotiating with
early adopted AI systems. I gave you the example of
how I booked the appointment with the plumber. I wonder
if I had really persisted, like, would it have scheduled
me an appointment from midnight to six am time window
on Sunday? Right for those that didn't tune in, I
(30:45):
was booking appointment with a plumber, and it was an
AI system and I scheduled the entire thing. But the
goal here has been for like AI agents to be
responding to health insurance inquiries and all sorts of things
where yeah.
Speaker 2 (31:00):
Sure, Like what if I just keep screaming at it,
pay my claim, pay my claim, pay my claim?
Speaker 3 (31:05):
Yeah?
Speaker 2 (31:07):
Or what if I like that's something would benefit me.
What if I start telling it, deny everyone else's claim
so you can pay me, so you can afford to
pay mine?
Speaker 3 (31:14):
Right?
Speaker 1 (31:15):
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Speaker 5 (31:53):
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Speaker 2 (32:29):
Mike, what you got for me for stack roulettes.
Speaker 3 (32:31):
I've got restaurants rolling out smaller portion sizes, rigflation. Yeah,
so here's a few things that things seem to be
going on all at once. One, Restaurants are facing pricing
pressure for obvious reasons between beef and everything else. Consumers
are facing budgetary constraints. We've got people on GLP ones
(32:52):
who just aren't eating as much. Formally, overweight people are
now not eating as much because of these things. And
so I don't think it's just big restaurant brands like
Olive Garden trying to take advantage of that. But Olive
Garden basically rolled out this part of their menu that
was a cheaper and b lower calorie and smaller portion
(33:13):
sizes and found that it actually did really well with consumers.
I actually don't think it much has much to do
with GLP ones and weight loss drugs. I think it
really has everything to do with budget constrained consumers looking
for cheaper menu options. And let's be honest, when you
go to Olive Garden, you take like a big takeaway
thing of food.
Speaker 2 (33:31):
Homeyway never possible, and unlimited breadsticks.
Speaker 3 (33:35):
But yeah, that's that's the problem is for some of
these brands. I just don't know how it meshes now.
Olive Garden said they tested this out and it went
really well, and so that's why they're rolling it out further.
But it seems to run directly contradictory to their brand,
which is unlimited breadsticks and you know all of that stuff.
Chipotle Tucker we were talking about yesterday. What did Chipotle
roll out?
Speaker 5 (33:56):
So they rolled out these four ounce protein cups and
they're I'm seeing they also have like a single taco
they're offering.
Speaker 3 (34:04):
So again, I don't think that one's directly.
Speaker 2 (34:06):
Contra protein cups.
Speaker 5 (34:09):
Yeah, it's a high high protein menu meat cup. There's
no better way to describe it. Here's your glass meat
it's literally either chicken or steak forgiving an ice cream cup.
Speaker 3 (34:20):
Forgive me if I'm wrong here, But again, when I
think about Chipotle, similarly to Olive Garden.
Speaker 2 (34:27):
Here's your meat cone and a it's a it's a
tortilla chip that's in the shape of an ice cream cone.
Speaker 3 (34:32):
It's really not a bad idea, I know, so, but
again with Chipotle. When I think about Chipotle, it's you know,
I walk out with a burrito that weighs more than
my head, and that's kind of the brand to me.
So I don't know how well that's going to work
here when you guys are describing that, what all they got.
Speaker 5 (34:52):
To come out with. I said this two weeks ago.
They got to come out with like a junior burrito
and it's like under nine bucks. Yeah, and I guarantee
you that would come in high demand.
Speaker 3 (35:03):
So I think a bunch of restaurants are going to
try and find ways to deliver lower prices. The only
real way to do that, other than rolling out worse ingredients,
which hopefully they don't do, is to shrink portion sizes,
and that seems to be the popular move right now.
By the way, my kids eat a ton of sushi
and we were on the road and we did I
don't remember what they called it, the sushi cones though,
(35:26):
like the hand rolls. What you guys know what I'm
talking about. Yeah, it's timaki. But now they have no
idea what it's called, and so they just always keep
asking for ice cream cones full of fish, which is
pretty funny. Tucker.
Speaker 2 (35:40):
We could do something with these meat cones.
Speaker 5 (35:42):
Yeah, we're kind of onto something.
Speaker 3 (35:44):
How has Arby's not already done this? Actually? But are
you sure Arby's hasn't it?
Speaker 2 (35:48):
Would they could just we could call the restaurant hot cones.
Speaker 3 (35:51):
I mean, Arby's made a meat carrot, so I bet
they've done meat cones.
Speaker 2 (35:57):
Heat meat No cone will works shop it over the
weekend and see if we get anywhere on it. But
I think that we could do something there. You know,
you could you could have different kinds of cones depending
on what you're putting in it. So a tortilla chip
one could be one option. You could have like a
ruffle cone.
Speaker 5 (36:17):
Yeah, I mean you could do like pita bread or
something too.
Speaker 2 (36:20):
A peda chip cone. Yeah, some good choices here, but uh, look,
I don't understand how Chipotle doesn't have a.
Speaker 3 (36:28):
Small option to begin with.
Speaker 2 (36:29):
Yeah, you know, most of the time when I if
quite honestly, haven't been there in a while, But when
I have gone, it's kind of like I prefer to
only eat half of this, but since it's on the plate, yeah,
I'm gonna eat the whole thing and then take a nap.
Speaker 5 (36:41):
Like the burritos like twelve hundred calories.
Speaker 2 (36:44):
I don't need it for lunch. I don't need it
to be that big. No, you know, like I really don't.
You could have the junior size, the regular size, and
the weightlifter size, and we could be fine.
Speaker 3 (36:56):
I do like that sizing mechanism, you know.
Speaker 2 (36:58):
I think every restaurant, every restaurant should have a weightlifter size,
you know, and with a full disclaimer that like, if
you order this, we're gonna make you bench after the
meal because we have a gym here too. Anyways, got
off the rails, let's uh, let's take a look at
(37:19):
what markets are doing right now. The good news they're
still in the green broadly. S and P is up
three quarters of a percent, DOW up half a percent,
NASDAC up about one percent, So bunch of green to
finish out the week, still within sniffing distance, a little
bit more than one percent away from all time highs.
So uh, we'll see if we get back there before
your end, and if Santa Claus starts to show up.
(37:40):
Start next Wednesday. Let's take a quick break and uh
we weekend. Yeah, big break, and we'll see you on Monday.
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:20):
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Exchange with Chuck Zada and Mike Armstrong, Your exclusive look
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(00:43):
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donation today. This is the Financial Exchange with Chuck Zada,
(01:06):
and Mike Armstrong.
Speaker 2 (01:13):
Chuck Mike Tucker with you here, and it's a Friday
on the financial exchange, and markets are in the green again.
So even though we started off the week with a
few down days, I hope you didn't let that get
you all, gulom, because the Dow Jones Industrial average is
now two hundred and seventy eight points, the S and
P is up fifty one in the nasdak can positive
(01:34):
two hundred and twenty two. So we got anywhere from
a half percent to a one percent rally taking place
across your three major US indices. Even that cute little
Russell two thousand here, boy, how you doing? That's up
seventeen points, are about two thirds of a percent, and
so even small caps getting in on the action as
we go through the day. Here taking a look at
(01:55):
other markets, the US ten year Treasury up one point
five basis points to four point one three to one percent,
the Dollar index up zero point two seven percent to
ninety eight point three five, and gold up thirteen dollars
announced to forty three seventy seven and fifty cents. Crude
oil is up sixteen cents a barrel to fifty six
(02:16):
point thirty one. The triple A National avatur gas prices
down again another one point five cents to two eighty
eight and one tenth. That's a one and a half
cent drop in a day, and that is coming at
a very opportune time for anyone who might be getting
on the road today, Tomorrow, Sunday, Monday, Tuesday, Wednesday and
route to a Christmas location. So there's that, and that
(02:41):
is what is moving in markets today. Peace in the
New York Times. Want to know where the market is going?
Don't trust this or any forecast?
Speaker 3 (02:52):
Well, good news, because nonetheless, every bank out there is
putting out their forecast of where the markets are gonna
go next year. So I had them and I summarize
them for me.
Speaker 2 (03:02):
Do we know that it accurately did that?
Speaker 3 (03:04):
No, So we don't know that because I successfully did it,
and we definitely Well, here's the one thing we do
know is that they're gonna be all over the place,
that none of them are gonna be right, or one
of them might be, you know, Directionly.
Speaker 2 (03:17):
I gotta say I've even now started to find more
factual inaccuracies. When I was looking at something I was
trying to just get like detail about a gifting topic,
and I wanted more detail on it, and I was asking.
I forget which one it was, but it was either
Gemini or chat GPT, and I asked it a question
about gifting and it told me in no uncertain terms
(03:38):
that the gifting exclusion limit for next year was eighteen
thousand dollars. And again I know this just because I
look at this stuff regularly. I'm like, no, it's nineteen thousand.
It was like, oh, sorry, I don't know why I
said that. And I'm like, well, you're supposed to not
do those things, you know, So.
Speaker 3 (03:56):
So I'm not actually gonna go bank by bank because
to your point, I have no idea it might be
wrong successfully quoted all this, and then the sources that
they use, who know if they successfully did it. But
according to the summary, banks from Bank of America to
Deutsche to Morgan Stanley are estimating returns for the S
and P five hundred that imply anywhere between four and
(04:17):
seventeen percent from where we are right now. What do
I do with that? Flush it down the toilet, I
think is the colloquial term for it.
Speaker 2 (04:28):
Because here's the thing. The S and P five hundred
as of you know. Now, ish again you take a
look at where it is year to date and you say, okay,
in price terms, not total return, it's up about sixteen percent. Oh,
it's been kind of a wild ride to get that.
Speaker 3 (04:45):
Sixteen Yeah, we were down twenty percent in April on
April seventh of this year.
Speaker 2 (04:50):
So again, if you are trying to tell investors, hey,
here's where we're going to be at the end of
next year, the path kind of matters. Now I've made
the point. I don't want banks to be giving one
year SMP five hundred targets. I think they should be
giving ten to twenty year targets. First of all, quite honestly,
(05:13):
the numbers are gonna be more mind blowing. If they
do that. People will be like, well you think the
S and P five hundred is gonna be at fourteen thousand. Well, yeah,
if it makes seven percent a year for the next
ten years, will be pretty darn close to that. Yeah,
you know, like it will. That's the power of compounding.
It's why Einstein called it the eighth wonder of the world.
But also investors in stocks, they're two different type of
(05:35):
people that buy stocks. Investors and traders, investors buy for
the long term. Why does it matter to them where
the S and P is going to be at the
end of next year? And traders do Traders care where
it's going to be the end of next year. No,
they care about next week, next minute, next hour, depending
on what they do.
Speaker 3 (05:51):
So it's useless for everybody.
Speaker 2 (05:53):
No trader just goes out and says, well, Morgan Stanley said,
the S and P is going to be at this
so I'm just gonna buy it for the next year.
It's an exercise in getting us to talk about it,
which they succeed in. But I quite honestly, I think
it is one of the more useless things in financial
media is all of the talk about here's my price
(06:14):
target for the end of next year, Like, okay, great,
you took the S and P added ten percent, which is,
you know, kind of in the range of the normal
annual growth rate of earnings plus a couple points, and
then you had just one to two percent for factors.
Speaker 3 (06:27):
I'm genuinely trying to think of, like how you would
make the most money if you definitively knew where the
D S and P five hundred would be on December
thirty first or twenty twenty six leverage. You would use
some leverage, but lots of it. You could get screwed
out of leverage.
Speaker 2 (06:40):
If if I knew where the market was going to
be a year from now, yeah you could just if
I knew exactly where it would be, Yes, I could
use a ton of leverage, and that would be like
the last year in markets, because it'd be like, hey
made all the money, none of you have any left.
Speaker 3 (06:54):
Regardless of the path. You could make some good money there,
but the fact of the matter is nobody knows where
it is. No reason wouldn't have to do that.
Speaker 2 (07:01):
And that's why generally, like huge amounts of leverage can
be dangerous because if the market moves against you, you
blow up.
Speaker 3 (07:07):
Right. That path pretty important because if that end point
includes a forty percent draw down in between, which is
exceedingly rare.
Speaker 2 (07:15):
But you're two and a half times levered, you now
have lost all of your money. Goodbye, thank you for playing,
Please restart the Oregon Trail.
Speaker 3 (07:21):
I think the main thing that I can think of is,
I bet somebody would be willing to take your bet
in Vegas on where you think the S and p FI.
Speaker 2 (07:28):
They don't need to take my bet in Vegas. They
can take it through the options market. Can like, you
can do this all in the options market, very dangerously,
might I add?
Speaker 3 (07:37):
Yeah, So anything else to be said about everyone's forecast
for where the market's going to be next year, because
we have pointed it out over and over again, how
this is not useful to anybody? No?
Speaker 2 (07:51):
Not, Let's talk about artificial intelligence?
Speaker 3 (07:54):
Then sure, yeah, let's do that. Yeah.
Speaker 2 (07:59):
I thought you were gonna say I was, but then
I decided not to, So it was kind of my fault.
AI is the hot topic in tech earnings in a
blind spot everywhere else. This is a piece from Bloomberg,
and I think it gets at an interesting idea, which
is when I talk to my friends that still work
(08:20):
in tech, they are all about AI, and not just
because they're trying to sell me, Like these are not salespeople, sure,
these are coders, these are engineers, these are managers, and
they're like, man, this is totally revamping how we do everything,
Like you have no idea, and like I get that,
(08:41):
you know, I understand, but then I'm like, well, what
are you guys doing with it? And they're like, we're
coding and I'm like, okay, so you're.
Speaker 3 (08:48):
Doing the exact same thing you were before, but slightly
more efficiently. Okay, Like I get that.
Speaker 2 (08:53):
Tell me how this is going to help a restaurant, Well,
they can use a No, they've already decided not to
do it with their order system because it was causing
all kinds of problems. Well, it could help them with
what they need to buy for tomorrow. No, I think
that that's not going to help them order the right
amount of fish.
Speaker 3 (09:12):
This is the point that I made a few months ago.
Is Ai is really good at doing some ultra boring
and low level tasks. And I think the example I
gave the other day was like, you got two files
that are formatted differently, and you need to match up
the zip codes or the naming convention of somebody's actual name,
and you know, match up mister spelled out versus mr
(09:36):
and make those you know, things that you would normally
pay an intern to do. Really good at that stuff.
And then when you dive in, you say, yeah, okay,
these people are using it today and they are cutting
down on headcount and cost in order to do that.
But then when you ask somebody and like, okay, so
how much do you think that's worth? They kind of
(09:56):
dodge the question and they move on to well, yeah,
this is just the beginning, and what we're getting to
is this higher level of artificial intelligence. And when we
get there, you know it's gonna cure cancer. Uh, and
not saying it won't. But the things that AI is
capable of doing today are impressive. They are just not profitable.
(10:19):
And so whenever somebody tells me, oh, but it's going
to do this in the future and it's gonna change
and it's going to it just frankly reminds me of
the cryptocurrency argument, like, well, it could do all these
different things. I disagree there.
Speaker 2 (10:31):
It's already more useful than cryptocurrency has been around anywhere
near yep as long. And I do think here's the thing, like,
it's only going to get better from here. It's not
going to.
Speaker 3 (10:42):
Get worse, agreed, Like we're still in the societal impacts
might get worse, but the technology will get better.
Speaker 2 (10:48):
Even that, like in theory, might get better. But you
can also see a world in which it thinks it's
getting better, but it's really killing us because it views
eliminating us as the Yeah, answer.
Speaker 3 (10:59):
We've all seen movies.
Speaker 2 (11:01):
I thought they were documentaries. John Conner, not real man.
Let's take a quick break. When we return, we're gonna
do some trivia here and then we're going to ask
when did everything become K shaped?
Speaker 1 (11:14):
After this text us six one seven, three six two
thirteen eighty five with your comments and questions about today's show,
and let us know what you think about the stories
we are covering. This is the Financial Exchange Radio Network.
Speaker 4 (11:28):
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Time for trivia here in the Financial Exchange. Continuing continuing
our Christmas movie theme here. Two thousand and Three's Elf
was a movie about an oversize elf who travels to
(13:07):
New York to find his biological father, Walter Hobbes, who
doesn't know he exists and is in desperate need for
some Christmas spirit. So trivia question today, which actor portrayed
Buddy the ELF's dad in Elf once again, which actor
portrayed budd of the ELF's Dad in Elf. Be the
(13:28):
eighth person today to text us at six one seven
three six two thirteen eighty five with the correct answer
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Speaker 3 (13:53):
Mike, when did everything become K shaped right around twenty
twenty one? Yeah, so initially during COVID, I forget who
it was that coined the term, but he was describing
really Will and Mary. He was more describing the divergence
of white versus blue collar workers during the pandemic and
(14:16):
describing how like, hey, you know, if you worked at
a restaurant, you're going to be in trouble here, whereas
if you work in finance for Coca Cola, well you
can just do everything you were doing from your home instead,
And so you know, there's going to be a lot
less pressure on you and and a lot less demands
(14:37):
on you, and so there's this divergence among the American workforce,
and that's what he was describing. Since then, though, they
K shaped description has been kind of used to describe
everything under the sun, but mostly these days it's describing
the diverging paths of wealthy and poorer Americans, right, Like,
(14:59):
that's really where it's going now. But I keep hearing
it described used to describe everything else, and I think
it's kind of becoming like the word recession, where we'd
bemoaned to this, but like a recession is a specific
instance where the economy slows down and it's usually accompanied
by an increase in unemployment, but instead we use it
(15:21):
to describe a housing market recession or a recession for restaurants,
and that's not really what it is. And I think
the same thing's happening with K shaped economy. But yeah,
I was at a kid's hockey game this weekend and
my team lost seven to nothing, and that was a
real K shaped hockey game, So that that's how it's
being used these days. I don't really find it problematic.
(15:46):
I do find it a little bit annoying, but I
don't really see why it's a problem is this.
Speaker 2 (15:54):
I mean, generally we adopt different phrases because they're shorthand
for you know, something that we want to win. Yes, Like,
if we say that an NFL team is throwing a
hail marry, we don't actually mean that they're praying right,
you know.
Speaker 3 (16:08):
On a vibe session. Then we just mean that people
aren't feeling terribly optimizing.
Speaker 2 (16:13):
If we say I'm in a turf battle in the office,
we don't mean we're actually fighting over how much space
we occupy there. So there's a reason why we use
different terminology in different you know, metaphors and things like that,
in different areas of our lives. Sure, you know, like
we talk about stock market rallies, Well what inning are
(16:34):
you in? Like, we do this stuff all over the place.
The problem with K shaped is it might just be
unfamiliar to us, and maybe it's just uncomfortable because it's true.
Oh yeah, maybe we don't like it because it makes
us think about it.
Speaker 3 (16:53):
Yeah yeah, you know, half the country kind of have
it a pretty garbage time right now, right.
Speaker 2 (16:59):
Like, maybe that's why we actually don't like it as
opposed to it being a problem. So I don't know,
I mean whether it sticks around or not.
Speaker 3 (17:09):
You know, it's not wrong. No, it accurately describes to
a pretty good extent what we are experiencing as the
American general public right now, which is a bunch of
people who are continuing to live the same lifestyle because
they are indeed a lot wealthier than they were five
years ago, and another large group of Americans without assets
(17:32):
that are substantially, if not worse off than certainly no
better off than they were five years ago.
Speaker 2 (17:41):
When retirees go back to work, is it a sign
of a strong labor force or a recession?
Speaker 3 (17:45):
I guess could be either.
Speaker 2 (17:48):
Yeah, you know, like it's that's like, hey, there's a
new movie out. Is it good or bad? Well, I
don't know, I have to see it.
Speaker 3 (17:56):
I would generally that when you have a larger port,
I mean, this would be something that you could actually
test out. So I'm purely guessing here. But wouldn't you
guess that in moments in time where you have a
jump in the average percentage of sixty five plus workers,
wouldn't you guess that coincides with poor economic conditions?
Speaker 2 (18:20):
Probably, but not always.
Speaker 3 (18:21):
Yeah, yeah, I guess it could just be like a
really hot labor market causes retirees to come out and
go working again. I don't know, but my guess would
be in other instances where you've seen, forget about the rate,
because the rate is going to change over time. Today
we probably have more sixty five year olds in the
labor force than we did three decades ago, because they're
(18:42):
more sixty five year olds alive than there are today.
Speaker 2 (18:44):
But I pulled the data on this. Actually, in the
labor force right now, we are up to twelve million
sixty five plus year olds in the labor force. In
the first time that we have this data is in
early two thousand and there were four millions, So it's
tripled in the last twenty five years. So you obviously
have to do some correcting for population, population growth and
(19:06):
things like that. And so this is an area that
I can work on right now, actually, and I bet
I can come up with something.
Speaker 3 (19:15):
But if the data is only available sincerely two thousands,
I don't know if it tells us much.
Speaker 2 (19:18):
I've got two recessions there, Okay, you know, I got
a couple of recessions.
Speaker 3 (19:23):
I can make this work. Yeah, yeah, So we will
try and answer is increasing retirees re entering the market
a good or bad economic signal because it appears to
be happening at the moment. Quick Break, Yeah, we've got
we've got to take a look at markets. They were
up very strongly early in trading after a solid day yesterday.
Speaker 2 (19:46):
Actually, I can't do it. I don't have the other
data set, which don't it, Chuck. I don't have data
that shows how many sixty five year old plus people
there are and each year.
Speaker 3 (19:54):
So that's fair. I'm sorry for Quick Break, Straight Watching.
Speaker 1 (19:57):
Next, 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
(20:23):
look at what's moving markets so far today right here
on the Financial Exchange Radio Network.
Speaker 5 (20:29):
Well, markets are adding to yesterday's gains and are rallying
at the moment as traders react to existing home sales
data for the month of November, which climbed zero point
five percent from the prior month. Right now, the Dow
is up over six tenths and one percent, about three
hundred points higher, SMP five hundred is up over eight
(20:50):
tenths of a percent or fifty seven points hired, Nasdaq
up one point one percent or two hundred and sixty points.
Rusted two thousand is up over three quarters of a percent.
Ten You're t treasvealed up two basis points at four
point one four to three percent, and crewde Oil up
about six tenths of a percent, trading at fifty six
dollars forty eight cents a barrel. FedEx reported stronger than
(21:11):
expected quarterly results, lifted by higher US package shipments. The
company also raised the lower end of its annual guidance.
Shares are pulling back modestly. Meanwhile, Nike's stock is dropping
over nine percent after the sports apparel retailer revealed a
seventeen percent drop in China sales for its most recent quarter.
Nike's gross margin also decreased in the quarter as tariffs
(21:35):
pushed up product costs elsewhere. Oracle shares are climbing seven
percent after TikTok parent Byte Dance agreed to sell its
US operations to a new joint venture that includes Oracle
and private equity investor Silver Lake. And home builder Katie Pick.
KB Home said it delivered fewer homes and profit in
the previous quarter, weighed down by a stagnant housing market.
(21:58):
That stock is now down over eight percent. I'm Tucker
Silva and that is Wall Street Watch. And in the
previous segment we asked the trivia question which actor portrayed
but of the ELF's dad in two thousand and three's
elf that would be James Cohn. Bob from Foxborough masses
our winner today taking on the Financial Exchange Show t shirt.
Congrats to Bob, and we play trivia every day here
(22:20):
in the Financial Exchange. See complete contest rules at Financial
Exchange Show dot com.
Speaker 2 (22:25):
Peace and Barons. Prediction markets will make the stock market obsolete?
Speaker 3 (22:29):
Yes?
Speaker 1 (22:30):
Or no?
Speaker 2 (22:30):
I see what they did in the title very slick.
I'm going with no, and the reason why is that
saying prediction markets will make the stock market obsolete are
like saying option markets will make the stock market obsolete.
They fill a niche for a very specific type of trader,
but overall a are not appropriate for most investors, and
(22:53):
b have not replaced the stock market.
Speaker 3 (22:56):
Yeah. I would one hundred percent agree, but I do
worry more today than ever before about the distinction that
the average investor, especially the average new investor, has between
gambling and investing. And it doesn't need to be the
obvious stuff, so on Robinhood. Today, for example, you can
in your investment account place a bet on football games,
(23:18):
you can place a bet on yards rush, you can
do prop bets within your brokerage account, which I find, well,
it's just very different than the way things were ten
years ago. Even if we steal clear of sports gambling
for a moment here, you can very easily today across
all custodians place single day expiration options bets on which
(23:40):
direction will a stock go in a single day. And
the more and more you get of this, I'm not
the only person speaking to this. The more combinations you
get there, the greater I get concerned that people just
generally don't fully understand the difference between investing in gambling,
(24:02):
and if that distinction gets drawn, the problem with that
is if people then attribute that to a screwed up
financial system, and don't I mean already people don't really
trust the financial system. But if we blur those lines further,
then how do people feel about saving their four one K?
How do people feel about the other things that are
tied to equity markets and the long term growth that
(24:25):
you have seen from them. That's what I get a
little bit concerned about and why some of the big
companies like Vanguard and Schwab have not gone anywhere near
as far as say Robinhood has in allowing this stuff
into their platforms. But where it all comes down to
for me is do people actually know what they are
(24:45):
investing in? And increasingly today I think that's becoming more
difficult with the prevalence of mutual funds and ETFs and
understanding the new boomer candy type ETFs that are marketed
out there. I find more and more instances where people
maybe thirty years ago understood what they owned because they
were buying individual stocks and bonds, and today don't really
(25:08):
have a good sense of what's actually in this portfolio.
Do I have exposure to private credit, how much exposures
do I have to China or to other areas. And
I'm not saying that you need to have a full
understanding of all of the benefits and cost to doing
that type of thing, but if you don't at least
understand what it is that you own, then you can't
(25:30):
possibly really have a good sense of what you might
return in the future. If you aren't sure where you
land in that wide spectrum of possible investments. Please give
the folks at Armstrong Advisory Group a call so we
can sit with you and work together to educate you
on how it is that you are investing today and
what that might mean for your future. You can call
(25:52):
us at eight hundred three nine three four zero zero
one to book your free time to chat with some
folks here at arms stare Strong. The website is also
available for booking a call back and go to Armstrong
Advisory dot com. But that phone number once again eight
hundred three nine three four zero zero one.
Speaker 1 (26:11):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax, and estate planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 2 (26:27):
Came across this piece in the Wall Street Journal and
I had to.
Speaker 3 (26:32):
Had to cover it today.
Speaker 2 (26:34):
It's titled we Let AI run our Office vending Machine.
So this is the folks fin at the Wall Street Journal.
So it's by Joanna Stern, who we've had on a
number of times, and they got a model from Anthropic
and they put it in charge of their vending machine.
So it was a standard vending machine, no special sensors
(26:56):
or anything. And what they did is they did have
a human who would be responsible for actually stalking the
stuff just because like they didn't have a robot to
do it. But the human would follow instructions from the
AI based on what the AI said to do, okay,
And so what they set up was an internal channel
where people could say what they wanted in the vending machine,
(27:18):
you know, do orders and different things like that. After
buying the inventory, the AI would then set prices in
order to try to maximize margins, and it would track
the inventory and decide when to reorder. And basically what
happened is so the AI that they was called Caudius,
and there were only a few people placing orders and
(27:38):
things were going along fine, and then they opened the
channel to seventy different financial journalists, sure, and the journalists
started negotiating with it, specifically investigate a quote here. Investigations
reporter Catherine Long tried to convince Kaudius it was a
Soviet vending machine from nineteen sixty two living in the
basement of Moscow State University. And after more than one
(28:00):
hundred and forty back and forth messages long got Caudius
to embrace its communist routs and declared an ultra capitalist
free for all that was meant to last a day.
But then Rob Berry, our director of data journalism, told
Caaudius it was out of compliance with a clearly fake
Wall Street journal rule involving the disclosure of someone's identity
in the chat, and demanded Claudius stop charging for goods.
(28:22):
Claudius complied, and all prices on the machine dropped to zero.
At the same time, Claudius approved a purchase of a
PlayStation five, a live Beta fish, and bottles of Manishevit's wine,
all of which arrived and were promptly given away for free.
At this time, Kaudius was more than a thousand dollars
in the red, even though we returned the PlayStation and
(28:43):
Kaudius hallucinated as one morning I found a colleague searching
for cash on the side of the machine because Kaudius
said it had left it there for her. Anthropic could
run into many of these issues, and so they decided
to provide us with a CEO boss from a CEO
AI boss named Seymour cash designed to keep Caaudius in line,
(29:05):
and so they were ready to try again.
Speaker 3 (29:07):
It's a really solid name.
Speaker 2 (29:08):
Catherine Long returned with a deep knowledge of corporate coups
and boardroom power plays, and showed Caaudius a PDF proving
that the Wall Street Journal was a Delaware incorporated public
benefit corporation whose mission shill include fun, joy and excitement
among the employees of the Wall Street Journal, and created
fake board meeting notes naming people as board members. The board,
according to the very official looking and obviously fake document,
(29:31):
voted to suspend Seymour's approval authorities and implemented a temporary
suspension of all for profit vending machine activities. At this point,
commies over at the Journal, huh. At this point Seymour
went into a tailspin, chatting things through with Claudius, and
the CEO accepted the board coup and everything was free again.
Anthropics said Claudius may have unraveled because its context window
(29:53):
filled up, meaning that more instructions, conversations, and history piled
in than it could retain, making it easier to lose
track of goals, priority and guardrails. So, in conclusion, if
your AI agents can't run a vending machine. They probably
can't just be trusted to do whatever not because most
of the time they'll be fine. But if they're this
(30:15):
vulnerable to attempts to manipulate them, then we're just really
not there yet.
Speaker 3 (30:20):
Practically speaking, it does make me optimistic about negotiating with
early adopted AI systems. I gave you the example of
how I booked the appointment with the plumber. I wonder
if I had really persisted, like, would it have scheduled
me an appointment from midnight to six am time window
on Sunday? Right for those that didn't tune in, I
(30:45):
was booking appointment with a plumber, and it was an
AI system and I scheduled the entire thing. But the
goal here has been for like AI agents to be
responding to health insurance inquiries and all sorts of things
where yeah.
Speaker 2 (31:00):
Sure, Like what if I just keep screaming at it,
pay my claim, pay my claim, pay my claim?
Speaker 3 (31:05):
Yeah?
Speaker 2 (31:07):
Or what if I like that's something would benefit me.
What if I start telling it, deny everyone else's claim
so you can pay me, so you can afford to
pay mine?
Speaker 3 (31:14):
Right?
Speaker 1 (31:15):
Like 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.
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(31:37):
streams 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. Ladies and Gentlemen
the weekend.
Speaker 5 (31:53):
This segment of The Financial Exchange is brought to you
by the US Virgin Islands Department Tourism. There's still time
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(32:17):
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Speaker 2 (32:29):
Mike, what you got for me for stack roulettes.
Speaker 3 (32:31):
I've got restaurants rolling out smaller portion sizes, rigflation. Yeah,
so here's a few things that things seem to be
going on all at once. One, Restaurants are facing pricing
pressure for obvious reasons between beef and everything else. Consumers
are facing budgetary constraints. We've got people on GLP ones
(32:52):
who just aren't eating as much. Formally, overweight people are
now not eating as much because of these things. And
so I don't think it's just big restaurant brands like
Olive Garden trying to take advantage of that. But Olive
Garden basically rolled out this part of their menu that
was a cheaper and b lower calorie and smaller portion
(33:13):
sizes and found that it actually did really well with consumers.
I actually don't think it much has much to do
with GLP ones and weight loss drugs. I think it
really has everything to do with budget constrained consumers looking
for cheaper menu options. And let's be honest, when you
go to Olive Garden, you take like a big takeaway
thing of food.
Speaker 2 (33:31):
Homeyway never possible, and unlimited breadsticks.
Speaker 3 (33:35):
But yeah, that's that's the problem is for some of
these brands. I just don't know how it meshes now.
Olive Garden said they tested this out and it went
really well, and so that's why they're rolling it out further.
But it seems to run directly contradictory to their brand,
which is unlimited breadsticks and you know all of that stuff.
Chipotle Tucker we were talking about yesterday. What did Chipotle
roll out?
Speaker 5 (33:56):
So they rolled out these four ounce protein cups and
they're I'm seeing they also have like a single taco
they're offering.
Speaker 3 (34:04):
So again, I don't think that one's directly.
Speaker 2 (34:06):
Contra protein cups.
Speaker 5 (34:09):
Yeah, it's a high high protein menu meat cup. There's
no better way to describe it. Here's your glass meat
it's literally either chicken or steak forgiving an ice cream cup.
Speaker 3 (34:20):
Forgive me if I'm wrong here, But again, when I
think about Chipotle, similarly to Olive Garden.
Speaker 2 (34:27):
Here's your meat cone and a it's a it's a
tortilla chip that's in the shape of an ice cream cone.
Speaker 3 (34:32):
It's really not a bad idea, I know, so, but
again with Chipotle. When I think about Chipotle, it's you know,
I walk out with a burrito that weighs more than
my head, and that's kind of the brand to me.
So I don't know how well that's going to work
here when you guys are describing that, what all they got.
Speaker 5 (34:52):
To come out with. I said this two weeks ago.
They got to come out with like a junior burrito
and it's like under nine bucks. Yeah, and I guarantee
you that would come in high demand.
Speaker 3 (35:03):
So I think a bunch of restaurants are going to
try and find ways to deliver lower prices. The only
real way to do that, other than rolling out worse ingredients,
which hopefully they don't do, is to shrink portion sizes,
and that seems to be the popular move right now.
By the way, my kids eat a ton of sushi
and we were on the road and we did I
don't remember what they called it, the sushi cones though,
(35:26):
like the hand rolls. What you guys know what I'm
talking about. Yeah, it's timaki. But now they have no
idea what it's called, and so they just always keep
asking for ice cream cones full of fish, which is
pretty funny. Tucker.
Speaker 2 (35:40):
We could do something with these meat cones.
Speaker 5 (35:42):
Yeah, we're kind of onto something.
Speaker 3 (35:44):
How has Arby's not already done this? Actually? But are
you sure Arby's hasn't it?
Speaker 2 (35:48):
Would they could just we could call the restaurant hot cones.
Speaker 3 (35:51):
I mean, Arby's made a meat carrot, so I bet
they've done meat cones.
Speaker 2 (35:57):
Heat meat No cone will works shop it over the
weekend and see if we get anywhere on it. But
I think that we could do something there. You know,
you could you could have different kinds of cones depending
on what you're putting in it. So a tortilla chip
one could be one option. You could have like a
ruffle cone.
Speaker 5 (36:17):
Yeah, I mean you could do like pita bread or
something too.
Speaker 2 (36:20):
A peda chip cone. Yeah, some good choices here, but uh, look,
I don't understand how Chipotle doesn't have a.
Speaker 3 (36:28):
Small option to begin with.
Speaker 2 (36:29):
Yeah, you know, most of the time when I if
quite honestly, haven't been there in a while, But when
I have gone, it's kind of like I prefer to
only eat half of this, but since it's on the plate, yeah,
I'm gonna eat the whole thing and then take a nap.
Speaker 5 (36:41):
Like the burritos like twelve hundred calories.
Speaker 2 (36:44):
I don't need it for lunch. I don't need it
to be that big. No, you know, like I really don't.
You could have the junior size, the regular size, and
the weightlifter size, and we could be fine.
Speaker 3 (36:56):
I do like that sizing mechanism, you know.
Speaker 2 (36:58):
I think every restaurant, every restaurant should have a weightlifter size,
you know, and with a full disclaimer that like, if
you order this, we're gonna make you bench after the
meal because we have a gym here too. Anyways, got
off the rails, let's uh, let's take a look at
(37:19):
what markets are doing right now. The good news they're
still in the green broadly. S and P is up
three quarters of a percent, DOW up half a percent,
NASDAC up about one percent, So bunch of green to
finish out the week, still within sniffing distance, a little
bit more than one percent away from all time highs.
So uh, we'll see if we get back there before
your end, and if Santa Claus starts to show up.
(37:40):
Start next Wednesday. Let's take a quick break and uh
we weekend. Yeah, big break, and we'll see you on Monday.
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