October 30, 2024 • 36 mins
Chuck Zodda and Marc Fandetti discuss Google's earnings report that showed big growth in cloud sectors but unremarkable results in advertising. AMD shares fall as forecast fails to impress despite strong AI growth. Jobs report on eve of election will be among the most distorted in years. Mortgage rates rise to highest level since July. Was the government right to intervene in airline refunds?
Mark as Played
Transcript
Episode Transcript
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Speaker 1 (00:01):
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(00:43):
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Veterans Development Corporation faces the Financial Exchange with Chuck Zada
and Mark Van Betty.
Speaker 2 (01:14):
It's Chuck, Mark and Tucker with you here, And as
we get into the second hour of our show, we've
got markets with a little bit of modest upward drift. Overall.
The Dow is up one hundred and eleven points right now,
the S and P's up seven, NASDAC up twenty three.
All three indices were down by anywhere from a third
(01:35):
to a half percent at one point in this morning's trading.
So it is something where we're off the lows of
this morning, but not really with any clear direction. And
in particular, we're just seeing an awful lot of chop
in individual names as we go through this earning season.
Here as an example, Eli Lilly at one point was
down eleven percent, now down about six and change after
(01:59):
missing on their earnings estimates and guiding lighter. Remember Eli
Lilly has been one of the companies on the forefront
of these GLP one drugs that are quite honestly some
of the more miraculous drugs that I've ever seen, just
in terms of the data as I can interpret it.
Speaker 3 (02:18):
Do you know anyone who's had success with those.
Speaker 2 (02:21):
I know in numbers of people that yes, they're swearing
by them. I mean, the weight loss thing is one aspect,
but the other studies that are done in terms of hey,
there's these weird say side effects where people who are
on them are also reporting you know, lower levels of
addiction than previously reported and things like that. So it's
like helping on that side of things. It's I don't
(02:44):
understand the mechanism for how it all works, but these
drugs quite honestly, and yes, while there are side effects
and things like that, they have the potential to be
one of the most miraculous medical discoveries we've ever met made.
If you look at the potential to shift all cause
mortality over the next couple decades, I mean you're talking again.
(03:11):
You look at the stuff that we both spend money
on to treat and that kills people, like in large numbers.
It's basically heart disease and cancer. That's where the bulk
of our spending and bulk of our mortality comes from today,
and these go right to treating that. I mean, especially
like you will get so many cancers that are caused
(03:33):
by obesity and overweight like it's a huge risk factor
for a number of cancers and you'd get rid of that,
not to mention all the cardiac benefits and stuff like that.
It's potentially just massive the shift that this is, and
I don't know if that's fully appreciated yet. I also
caveat this with look, we might find something out five
years from now. It's like, oh, yeah, it's good for
(03:53):
these reasons, but here's the bad stuff. When you're actually
on these for like five to ten years. I don't
know where we go there. But honestly, to this point,
the data that I'm seeing is nothing short of amazing.
It's absolutely wild what we're seeing there. But in any case,
Eli Lelly was not a great quarter, and so the
(04:15):
company stocked down about six percent. Now, AMD reported earnings,
they're down about nine percent. Google or Alphabet who we're
going to talk about in a minute, they reported they're
up five, Visa reported they're up three, Caterpillar reported there
down two. So really wide dispersion. It's not something where you're,
you know, consistently seeing hey we beat and everyone's up.
It's just kind of, hey, you really got to look
(04:37):
at the earnings right now and see what companies are
actually doing, and so we're going to do that with
the company formerly known as Google, now known as Alphabet
and they reported revenue growth of fifteen percent year over year,
faster revenue growth actually than the prior quarter. And in particular,
they are seeing their cloud division, which is where their
(04:59):
AI business is housed, that revenue up thirty five percent
from the previous year, in acceleration from twenty eight percent
revenue growth in the previous quarter. So Google at least saying, yeah,
we're seeing, you know, good revenue growth in the places
that you'd like to if you want to believe that
AI is going to have a meaningful positive impact on
our business.
Speaker 3 (05:17):
So the shift to the cloud has happened, and it's
now the incremental revenues coming from selling businesses that store
their data anyway on AI. Just could you guys follow
you and Mike Armstrong follow companies and no companies a
lot better than I do. It's just so I understand
this right now, they're selling these companies on AI tools
(05:39):
that can allow them to do whatever they're doing that
they need to store in the cloud more efficiently.
Speaker 2 (05:43):
Yeah, and Microsoft's doing the same thing now. Just as
an example, last week, maybe two weeks ago, I picked
up a subscription for Microsoft Copilot. It's their office based
tool that helps you use AI for you know, Word
and PowerPoint and Excel. And I did it. It's a
one year contract, it's four hundred bucks. And I did
it just to be like, hey, is there anything here
(06:08):
that is useful?
Speaker 1 (06:10):
Like?
Speaker 2 (06:10):
Can it help me to write stuff better? Can it
help me to analyze data and Excel better than I do?
I don't really know what I'm gonna do in PowerPoint
because like what am I making like large you know,
long PowerPoint presentations and this and that. But I was
just curious, you know, what it's gonna do. And I
don't know if I'm gonna find that there's anything there
(06:30):
or not. But these companies Microsoft and Salesforce, they started
rolling out what they're calling AI agents in the last
week or two month or two and those the premise is, hey,
you tell this agent a business function that you know
that someone normally does, and it can do it for
you instead of a person doing it for you. That's
(06:53):
the premise behind it. Now can't do complex things like hey,
walk to the water bubbler and talk about the web, No,
like it's it's in your computer and in the software,
So it has to be something that that software can
actually touch and understand. So it might be I don't know, hey,
like in our business, Hey, every week on Thursday, we
(07:16):
get the report on initial jobbles claims in the I'm
assuming that there's some way that you have, like an API,
where you can pull the data from those jobless claims
into you know, some other program that these agents can use. Okay,
on Thursday at eight thirty one, pull in this data
and write me a report about what you saw in
the weekly jobles claims data. That could be something that
(07:38):
an AI agent does. In theory, just like thinking about
it for two minutes, it could be, Hey, every month,
you know, analyze trends in you know, all this data
and spit out you know what you think the economies do.
I'm not thinking hard enough about it, but that's that's
what these companies are trying to do, because the business
(07:58):
spend is where they think they're going to make their
money on AI. It's not from you and I like what, Hey,
draw a picture of a cat. Well, I'm not gonna
pay for you to make a picture of you know,
a cat smoking a fish or something like that. Like
that's just not who's who's gonna pay for that? No one.
But if you're a company and like this this is
(08:22):
the part that's transformational but also kind of scary. If
you're a company and you're paying an entry level worker
forty thousand dollars a year to do extra fifty thousand
dollars a year to do why you know, in like
a white collar setting, and Microsoft comes to you and says, hey,
I can give you an AI agent that'll do all
(08:43):
that for twenty thousand a year. It's a huge incremental
revenue boost to Microsoft. It's a huge cost cut for
your business. And that's like, that's the premise of it
and also the thing that makes you know, people a
little bit scared when they talk about how AI could
displace workers at large scale. You see where it could
(09:04):
go potentially, Yeah, does it actually work well enough to
do that? No clue, But companies are going to try
this stuff out just to see because hey, if it
does work and you're on that cutting edge, man, think
about the potential boost of profits and things like that,
That is what companies are going to look for. It's
that productivity edge. It's any automation exactly.
Speaker 3 (09:25):
Still, you'll still need people to supervise the process.
Speaker 2 (09:28):
Maybe there's actually something really interesting that's going on right
now where you have insurance companies that are trying these
things out as part of their claims process. Yeah, And
where you're running into potential problems is that if you
end up just with this cycle of AI agents talking
(09:49):
to each other, how do you actually know that they're
getting anywhere. So let's say that you have an auto accident,
just as an example, and mark, you have Company X
and I have Company Y that are our insurance companies. Normally,
the way it works right now, in order to settle
the claim is okay, Company X calls Company Y. Okay,
here's you know, the report of the accident, here's blah
blah blah. Insurance companies are looking at hey, can we
(10:12):
just have an AI agent, you know, do that for
so that we don't have to have people doing those conversations. Well,
if you end up with just a bunch of ais
talking to each other, you potentially end up with this
feedback loop where they can't get anywhere.
Speaker 3 (10:27):
It's not different for most of it. And then at
people though.
Speaker 2 (10:29):
But then you need a person to come in and
be like, what's actually happening here, Like, hey, I'd like
to speak to the manager. Yeah, and and so you
might not get the efficiencies that you think theyre. So
these are the things that we're going to have to
sort out over the next five to seven years. And again,
I know that a lot of us get scared by
this stuff, and I understand it's scary because hey, the
(10:50):
potential for disruption in jobs, it's significantly huck.
Speaker 3 (10:55):
I can't wait that we do a lot of content
and Armstrong Advisory Group you know this, and a lot
of it goes into power Point and word and we
spend you and I personally countless hours just formatting stuff.
I can't wait for office to recognize that I'm trying
to do the same thing to every I don't need
AI to tell me what to chart, because often you
don't know until sure hands on the data. But I
do need it to help me make it look good.
(11:17):
And to have to do the same thing over and
over again to an object like a chart or a
formula is infuriating. It's so monotonous. That would be wonderful.
Speaker 2 (11:26):
Well, and the other thing is, look, with every technological innovation,
someone is always displaced from their job. I say it jokingly,
you know, but look when when Gutenberg came out with
this printing press, you better believe the stone tablet makers
their union. It was like, don't let those things into
our city. Don't put one of those in our city,
(11:49):
probably saying the same thing that port workers are saying
right now about you know the other man.
Speaker 3 (11:53):
The sheep were happy because it took like twenty thousand
sheep to make a Bible or something. But they may
not have vellum, right, was the is parchment?
Speaker 2 (12:02):
Well, yeah, I guess I guess it wouldn't. Yeah, you
were making a stone.
Speaker 3 (12:05):
Tablet by the skin, and then describes the monks the
only literate ones would.
Speaker 2 (12:10):
Well, I was just talking about the tablet makers. I
wasn't getting into it.
Speaker 3 (12:13):
I think they were had the book phased out at that.
Speaker 2 (12:15):
Point, not bookmakers. That's a different union.
Speaker 3 (12:17):
Well yeah, coo, yeah, of course. Well this is Massachusetts.
Speaker 1 (12:21):
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Speaker 2 (12:46):
Market's talk a little bit about a MD Advanced micro Devices.
They are a semiconductor manufacturer, and they reported earnings last
night that met on earnings per share, and we're a
little bit better on revenue new but their overall revenue
guidance didn't have any increase from you know, current expectations,
and so shares are actually down about nine percent in
(13:09):
trading today. A key example of hey, it's not just
how good were your earnings, but how good are they
relative to your expectations? As well as how good is
your guidance relative to expectations.
Speaker 3 (13:20):
We use the expression priced in a lot. We don't
often define it, but we simply mean the markets are
already expecting something any ass This can apply to any
security And to your point, the only explanation here is
that this news or better news was priced in so paradoxically,
though the quarter was strong, not as strong as people
wanted or they had already expected it, and there's just
(13:42):
a natural release that occurs. I don't really know exactly
how to explain it, but it's something along those lines.
Speaker 2 (13:48):
So I don't know that you can necessarily tell a
ton about the semiconductor sector as a whole because of
what AMD is reporting, because they're not the largest chip
maker for any particular type of chip that's a key
focus right now. Like they're not the biggest PC chip maker,
they're not the biggest AI chip maker. I don't know
where their business is for like RAM and stuff like that,
(14:08):
but maybe maybe that's where, like they, you know, have
some of their bread buttered at this point. But I
don't know that you can tell a ton, as you know,
as to the sector as a whole. But what I
can tell you is that the semiconductor sector as a
whole is selling off today. In videos down one point
three percent, broad calms down point six uh, Texas Instruments
is down. Who else? Analog devices down, Micron is down,
(14:32):
Intel like literally every semiconductor company in the S and
P five hundred aside from O N Semiconductor. I guess
maybe they're called on I don't know, SI it's capitalized.
Speaker 3 (14:44):
It's talk about themselves.
Speaker 2 (14:46):
They're the only one in the S and P five
hundred semiconductor sector that is up today, and it it
could be this. It also could be we covered last
hour super Micro computer their auditor uh basically away saying hey,
we can't make any sense out of these books and
we're out. And so super Micro who is they're involved in?
(15:09):
Basically like they're a contractor that does a lot of
work with AI projects in terms of buying semiconductors and
setting up servers and things like that. And so I
guess a read could also be, Hey, if you can't
understand how their business works, maybe there isn't as much
demand for their services as people think in the semiconductor
(15:29):
sector is weaker than people think as a result. So
I don't know exactly how you read through all this,
but semis are getting hit today, and basically, aside from
Eli Lilly and Chipotle, semis are really the only place
that's getting hit hard today in the market. You look
at other sectors at the moment, and quite honestly, basically,
(15:50):
I'm going through and healthcare is down because of Eli Lilly,
Utilities are floating around, and consumer staples are pretty flat,
but everything else is up today in the S and
P five huh undred for your sectors. So I think
that there's a little bit of nerves creeping in around
what's going on with semiconductors, and hey, is the demand
still there for you know, these continued earnings beats and
(16:12):
increases in guidance. That's one read that I think you
can have on this.
Speaker 3 (16:16):
Maybe another phrase we use a lot is priced for perfection,
and this is related to something, to the notion of
something being priced in, and companies like AMD have been
on a tremendous tear so arguably priced for best possible outcome,
priced for perfection, that makes them fragile.
Speaker 2 (16:31):
Taking a look at markets as we head towards the
bottom of the hour, we still have all three major
US industries in positive territory. That Dows up one thirty
five s and p up ten, Nasdaq up forty one tenure.
US Treasury is flat today at four point two seventy four.
It was down around four point two earlier today. But
with a stronger than expected eighty p report on job growth,
(16:54):
which most economists don't really look at it that strongly.
Is that a fair way to phrase it.
Speaker 1 (17:01):
I think so.
Speaker 2 (17:02):
Most economists don't really put a ton of weight in
that report. But with a stronger than expected ADP report.
Maybe you get a stronger jobs report Friday. It could
be the thinking, and so you've got to again in
the ten year flat oil West Texas Intermediate up a
dollar fifty four barrel to sixty eight seventy five, so
a little bit of a rebound after selling off for
(17:23):
the last couple of days, after no further attacks between
Israel and Iran in direct confrontation at least the TRIPA
national average for gas price is up one tenth of
a cent to three thirteen and five tenths and gold
today is up seven dollars and ten cents. Now it's
making another new all time high, currently trading at twenty
(17:45):
seven eighty eight.
Speaker 4 (17:47):
On the Nose, bringing the latest financial news straight to
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Speaker 1 (18:08):
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the Financial Exchange Radio Network. Mark.
Speaker 2 (18:21):
We get a jobs report coming out this Friday, and
I've been saying for the last month we're not really
gonna know what to make of it because the data
collection point for this is going to include people that
were disrupted by both Hurricane Helene and Hurricane what was
the second one? Oh, Milton, Milton, Yeah, there you go.
(18:46):
And so it's going to be something where it's unclear
exactly what this is going to show because in prior
hurricanes that have been large enough to cause the level
of devastation that we've seen, you can have a range
of you know, negative impacts from twenty thousand fewer jobs
to one hundred and fifty thousand fewer jobs, and you
(19:07):
don't really know where the impact is going to end
up landing. So I think ultimately it's coming at a
time where we want more clarity from the labor market,
but we're not going to get it because of these
hurricanes impacting the data collection time.
Speaker 3 (19:22):
Yeah, it's a good reminder that we call these things statistics,
not because we look for a fancy way to refer
to them, but because that means estimate. It means we're
not really sure what the population value is. They always
come with big errors, so to speak. Every month we
say there were X number of jobs created, we said
there were two hundred and fifty four thousand. I think
it was I only know that at the top of
my head because I was writing something about it this morning,
(19:44):
But that that's a plus or minus one hundred thirty
thousand jobs with nine percent confidence. So a better example
might be if we if the number was one hundred
and thirty reported, the actual number could be zero or
it could be twice. That you really don't know, which
is why you and Mike Armstrong always say don't read
too much into a single data point. I call Mike
(20:04):
Armstrong moving average Mike because he loves to do the
three month and annual. It's not quite a moving but
it's the only alliteration I could come up with. He
likes to annualize. You probably do that too. I think
it's a good practice. So either way, you know, chill out.
It's what we talked about this Mike Armstrong and I
did yesterday morning with Jolts. One data point. We're not
even sure if it helps with forecasts. First of all,
it probably does, but not everybody agrees. And secondly, you
(20:27):
need several months, as you like to say, for a trend, So.
Speaker 2 (20:31):
Yes, you cannot have a trend of one does not exist.
That's a point, not a trend. So just like to
point that out. Speaking of the trend mortgage rates right now,
you know what we're seeing that their highest level since July.
According to Mortgage News Daily, we're now at seven point
three percent on the thirty year fixed rate mortgage nationally.
(20:52):
That's not really doing home buyers a lot of favors.
Speaker 1 (20:55):
At the moment.
Speaker 3 (20:55):
It's amazing how that can coexist with record upon record
in price appreciation month over month, and by some metrics,
a languishing a word I'm using a lot today for
some reason. Home market for home sound in terms of prices,
but in terms of activity, as evidenced by the detraction
(21:17):
that residential fixed investment part of GDP, which you reported
on earlier. The degree to that to which that detracted
from GDP not a lot like two tenths, but it
detracted nevertheless last quarter.
Speaker 2 (21:30):
And this also we have some I was just taking
a look at some of the data just that's out
there from an inventory perspective, because ultimately inventory leads sales.
It's just a question of how long it takes it
to end up leading sales. But this is data from
Mike Simonson, who we've had on the show quite a bit.
As far as you know, just looking at single family
(21:51):
housing data, and what we're seeing right now is unsold inventory.
And this is for single family You're currently it's seven
hundred thirty eight thousand units nationwide, and this compares normally,
like twenty seventeen through twenty nineteen, you were at about
nine hundred to nine hundred and fifty thousand units. So
you're only off about fifteen to twenty five percent now.
(22:13):
I say only because the last few years you've been
off forty five to fifty percent, so you're you're getting
closer to normal nationwide inventory levels. The problem is it's
all like disjointed in terms of where it is. Connecticut
is still like twenty two percent of pre pandemic inventory.
All the New England states are between thirty Aside from
(22:34):
Connecticut between like thirty and sixty five percent. Florida, Texas
are already way above pre pandemic levels, like you're seeing
prices rolling over in the Dallas area now and stuff
like that, and so ultimately it still is a very
local market, but it is something where hey, nationally, you've
got these inventory levels that are propping up. And if
(22:56):
that's the case, especially in those areas where you're now
you know again, Texas, Florida, Arizona, places like that. Prices
are already starting to come down now. If you take
a look at Dallas, just as an example. This is
more data from Mike Simonson, because I don't know kind
of ows his stuff. If you take a look at
(23:16):
where Dallas is in terms of price per square foot
for penning home sales two percent below last year now
and falling. So these are the things that we're seeing
at the moment.
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Speaker 2 (24:33):
Mark anything else to add on housing before we go
a little far.
Speaker 3 (24:36):
Oh, I just wonder if it's a harbinger of something
broader as it was in eight and I think the
answer is now versus a return to kind of normalcy
a fragmented There is no such thing, or at least
wasn't historically as a national housing market outside of events
like like nationwide depressions. Historically the market has been pretty
(24:59):
as you called it, disjointed, and I think that's a
good thing. It makes housing economists might tell me I'm
an idiot on this one, but I think that makes
it more robust.
Speaker 2 (25:08):
Peace in the New York Times day, it's type of
automatic refunds for significant flight disruptions. New airline rule goes
into effect. So the DOT has a new rule that
airlines are going to have to provide automatic refunds to
passengers who are going through significant flight disruptions. To clarify
what this means. Before this, airlines could set their own
(25:32):
concept of what a significant delay is. And now the
DOT is stepping in and saying, here's the threshold. It's
three hours for domestic flights and six hours for international.
So a qualifying flight is delayed by more than three
hours domestically and six hours internationally. And before, what you
had to do, like let's say that you wanted compensation
for this, you got to get on the phone, or
(25:54):
you're waiting in line at the gate, or you're emailing
someone back and forth. With these new rules from the
refunds are required to be automatic, so if your flight
is delayed by this amount, refund has to come back.
They are due within seven days for credit card purchases
(26:14):
and twenty days for other payments if you have other
itinerary changes. Let's say that you're downgraded to a lower
service class, so you had booked a first class ticket
and hey, you're getting thrown into economy that falls into
this category as well. And if you have significantly delayed bags,
so hey, we all know that when there are weather
(26:37):
delays or other things like sometimes you're flying to Florida
and your bags don't make it there. If your luggage
is missing for more than twelve hours on a domestic
flight or fifteen on international baggage, fees are required to
be refunded as well. So that is what we're seeing
here and overall, I think, look, my view is when
(26:59):
it comes hey, where should the government make rules and not? Hey,
the government needs to make rules for places where individuals
don't have the power or agency to the government acts
in place where individuals can't act adequately for themselves. Like
this is why the US has the army and the
air force is because you don't want you and I
being like, hey, let's buy a plane and defend you know,
(27:21):
our airspace like that? Would we would? We would? Would
you be? Do you see yourself as more of a
pilot or like a tail gunner?
Speaker 3 (27:31):
That's not something I've thought about. I'm sorry, Chuck, I
can't answer that on the spot.
Speaker 2 (27:34):
Okay, In any case, you don't want Mark and I patrol,
which one you're good at. If we're doing this, my
eyesight's not great, so you probably don't want me flying
or shooting. I could I could do the radar exactly.
I could do the radar.
Speaker 3 (27:47):
What use would you be on this mission? I could
be goose Oh glad that didn't end well.
Speaker 2 (27:51):
But no, but I could be goose dead. That's that's
where I would end up. So in this case, when
we talk about, you know, flight delays and things like that,
I think that ultimately the scale of the problem is
one where for a lot of families, Look, you've booked
a vacation, You've spent a fair chunk of your annual
(28:14):
take home pay, and your flight doesn't get somewhere, and
you're like, hey, what gives I spent all this money
to go somewhere and now I can't go or my
hotel is you know, this is a fairly substantial financial
problem for families that happens. Does it rise to the
level of, hey, do you need to automatically be refunded? Well,
(28:37):
in a world where there's more competition amongst airlines, the
ones with the best service and best customer experience, yeah,
would be the ones that survive. Think but in a
world where we're unwilling to have an appropriate level of
competition amongst airlines, where we say, hey, we won't allow
(29:00):
Jet Blue and Spirit to merge because they'll be too big,
but we already allowed all these other mergers that have
restricted competition, and so Jet Blue and Spirit are potentially
going out of business because they can't compete with the
big boys. Well, in a world where we won't properly
size our airlines to allow more competition, I do think
this is something where hey, if you're you know, delayed
(29:22):
by you know, two days for you know, what was
going to be a five day vacation. Yeah, I don't
really see you know, an issue on this, uh, in
terms of having a consistent standard and requiring a rebate
in these cases. Because in a perfect world, what I'd
love to do is, hey, let's have more competition in
(29:43):
the airline space. But otherwise, Yeah, this is kind of
a big deal for folks.
Speaker 3 (29:49):
Yeah, I think you just have to concede that at
this point the industry is so heavily regulated, in the precedent,
so well established that it's pointless to question does the
government have the authority to do it? We don't. Even
as Lutskin and I were talking about this earlier, nobody
even asks anymore, does the federal goverment have authority here
or should it be states or should it be neither?
Nobody even asks.
Speaker 2 (30:07):
So we're that the airlines we not.
Speaker 3 (30:10):
I guess it's interstate commerce, so it's probably clear, but
no one, no one even asks whether constitutionally where that
power should lie. But that horse left the barn like
during the new deal, so it's pointless. In three to
five years, we'll know if it raised or lowered fares,
and we'll know, based on data that will have rolled in,
whether or not people are better or worse off than
having to say, haggle on their own. I'm sure this
(30:32):
is something that economists who studied transportation will have a
field day with.
Speaker 2 (30:35):
Well, here's the place that we probably end up is
because there's only so there are only so many airlines
flying to and from, flying you know each route. Ultimately,
it's probably like banks, Okay, you get rid of overdraft fees. Fine,
we're giving you less interest. All right, you're gonna make
us refund people when we're late. Fine, Baggage fees are.
Speaker 3 (30:55):
Going on unintended consequences.
Speaker 2 (30:58):
It's gonna be stuff like that thing. Yeah yeah, but
well know, take a quick break here. When we come back,
we'll do a little bit of stack roulette.
Speaker 1 (31:08):
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Speaker 5 (31:37):
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Speaker 2 (32:09):
You know, I generally try to be pretty understanding of
different people. We're all figuring out life as we go, Like, no,
none of us have any idea what the heck we're
doing here, if we're being honest, like, it's it's hard,
it's confusing, and we're all just trying to get through
the day. So again, we might have different views or
different ways of going about things, but hey, none of
(32:30):
us have the perfect way to do anything. So we
give people some slacker at least we should because hey,
like just how life is, yeah, Tucker. Occasionally we do
run into complete idiots, though, and this is one of
those cases. And we talked about this a few weeks
ago where there were these people that were going on
TikTok and they were bragging about this quote free money
(32:54):
glitch that they found at Chase Bank, where if you
deposit a really really big check, JP Morgan gives you
some of the money right away, even though the check
hasn't officially cleared, and then you can withdraw the proceeds
and go and spend it. And that was the glitch
for infinite money. Now in the real world, this is
(33:15):
called check kiting and fraud and it's illegal. And the
fact that these people he thought this was a way
that they could just get free money from the bank,
because Hey, the bank's just not going to notice I
don't know, like three hundred thousand dollars missing or something
like that. Really dumb and b what made it even
dumber was, hey, let's go brag about this on social media.
(33:38):
Now the bank already knew, like who was doing this,
because if you're withdrawing money from your account, it's you, Like,
they don't need your social media posts in order to
prove it, but when you do it, it makes it obvious.
So yesterday JP Morgan, Chase strikes back, and look, it's
rare for me to root for you know, giant banks,
(33:58):
you know, like I'm not really for them. But the
whole basis of the entire you know, economy, just a
little thing like that, is that we have to have
a baseline level of trust. And so when you deliberately
perpetrate fraud in the system, I don't really root for you.
So JP Morgan suing four different people in federal court.
One is a defendant in Texas who owns the bank
(34:19):
two hundred and ninety thousand dollars. One's in California owing
ninety thousand, and two in Florida owing one hundred and
forty one and one hundred and thirty eight thousand dollars.
So these people are not, you know, trying to make
off with like five hundred bucks. They were trying to
make off with hundreds of thousands of dollars and bragging
about it on TikTok. My guess is none of them
actually have the money to pay this back because they
(34:41):
probably spent a decent chunk of it already. And long
story short, these are just civil claims, but I don't
know how these people are ever going to be able
to open a bank account again. Two, there are probably
going to be criminal court cases that follow, and these
people are probably going to jail for an extended period
of time. And three, don't fraud.
Speaker 1 (35:06):
No.
Speaker 2 (35:08):
Chuck.
Speaker 3 (35:08):
If you want to racket, run for office and grift.
Speaker 2 (35:12):
That's edgie, Mark, that's very edgy. You should go. That's
so lame, or have like here's my political newsletter, you
know something. Yeah, just something that's like adjacent so you
don't even have any responsibility, you know, something like that,
because here's here's the problem is if you run for
office like that and then you win, you do have
(35:34):
to govern. If all you do is like you you
have to again, you have to pretend to govern. If
all you're doing is like, hey, I'm running a political podcast,
you don't have to do anything. That's it. That's the
whole game. But yeah, so JP Morgan going after the fraudsters,
and uh, good for them, because yet don't commit fraud.
(35:57):
We're done for the day. Back at it tomorrow with
more financial exchange
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is hosted by employees of the Armstrong Advisory Group, a
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the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
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your own financial, tax, and estate planning advisors before making
(00:21):
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(01:05):
Veterans Development Corporation faces the Financial Exchange with Chuck Zada
and Mark Van Betty.
Speaker 2 (01:14):
It's Chuck, Mark and Tucker with you here, And as
we get into the second hour of our show, we've
got markets with a little bit of modest upward drift. Overall.
The Dow is up one hundred and eleven points right now,
the S and P's up seven, NASDAC up twenty three.
All three indices were down by anywhere from a third
(01:35):
to a half percent at one point in this morning's trading.
So it is something where we're off the lows of
this morning, but not really with any clear direction. And
in particular, we're just seeing an awful lot of chop
in individual names as we go through this earning season.
Here as an example, Eli Lilly at one point was
down eleven percent, now down about six and change after
(01:59):
missing on their earnings estimates and guiding lighter. Remember Eli
Lilly has been one of the companies on the forefront
of these GLP one drugs that are quite honestly some
of the more miraculous drugs that I've ever seen, just
in terms of the data as I can interpret it.
Speaker 3 (02:18):
Do you know anyone who's had success with those.
Speaker 2 (02:21):
I know in numbers of people that yes, they're swearing
by them. I mean, the weight loss thing is one aspect,
but the other studies that are done in terms of hey,
there's these weird say side effects where people who are
on them are also reporting you know, lower levels of
addiction than previously reported and things like that. So it's
like helping on that side of things. It's I don't
(02:44):
understand the mechanism for how it all works, but these
drugs quite honestly, and yes, while there are side effects
and things like that, they have the potential to be
one of the most miraculous medical discoveries we've ever met made.
If you look at the potential to shift all cause
mortality over the next couple decades, I mean you're talking again.
(03:11):
You look at the stuff that we both spend money
on to treat and that kills people, like in large numbers.
It's basically heart disease and cancer. That's where the bulk
of our spending and bulk of our mortality comes from today,
and these go right to treating that. I mean, especially
like you will get so many cancers that are caused
(03:33):
by obesity and overweight like it's a huge risk factor
for a number of cancers and you'd get rid of that,
not to mention all the cardiac benefits and stuff like that.
It's potentially just massive the shift that this is, and
I don't know if that's fully appreciated yet. I also
caveat this with look, we might find something out five
years from now. It's like, oh, yeah, it's good for
(03:53):
these reasons, but here's the bad stuff. When you're actually
on these for like five to ten years. I don't
know where we go there. But honestly, to this point,
the data that I'm seeing is nothing short of amazing.
It's absolutely wild what we're seeing there. But in any case,
Eli Lelly was not a great quarter, and so the
(04:15):
company stocked down about six percent. Now, AMD reported earnings,
they're down about nine percent. Google or Alphabet who we're
going to talk about in a minute, they reported they're
up five, Visa reported they're up three, Caterpillar reported there
down two. So really wide dispersion. It's not something where you're,
you know, consistently seeing hey we beat and everyone's up.
It's just kind of, hey, you really got to look
(04:37):
at the earnings right now and see what companies are
actually doing, and so we're going to do that with
the company formerly known as Google, now known as Alphabet
and they reported revenue growth of fifteen percent year over year,
faster revenue growth actually than the prior quarter. And in particular,
they are seeing their cloud division, which is where their
(04:59):
AI business is housed, that revenue up thirty five percent
from the previous year, in acceleration from twenty eight percent
revenue growth in the previous quarter. So Google at least saying, yeah,
we're seeing, you know, good revenue growth in the places
that you'd like to if you want to believe that
AI is going to have a meaningful positive impact on
our business.
Speaker 3 (05:17):
So the shift to the cloud has happened, and it's
now the incremental revenues coming from selling businesses that store
their data anyway on AI. Just could you guys follow
you and Mike Armstrong follow companies and no companies a
lot better than I do. It's just so I understand
this right now, they're selling these companies on AI tools
(05:39):
that can allow them to do whatever they're doing that
they need to store in the cloud more efficiently.
Speaker 2 (05:43):
Yeah, and Microsoft's doing the same thing now. Just as
an example, last week, maybe two weeks ago, I picked
up a subscription for Microsoft Copilot. It's their office based
tool that helps you use AI for you know, Word
and PowerPoint and Excel. And I did it. It's a
one year contract, it's four hundred bucks. And I did
it just to be like, hey, is there anything here
(06:08):
that is useful?
Speaker 1 (06:10):
Like?
Speaker 2 (06:10):
Can it help me to write stuff better? Can it
help me to analyze data and Excel better than I do?
I don't really know what I'm gonna do in PowerPoint
because like what am I making like large you know,
long PowerPoint presentations and this and that. But I was
just curious, you know, what it's gonna do. And I
don't know if I'm gonna find that there's anything there
(06:30):
or not. But these companies Microsoft and Salesforce, they started
rolling out what they're calling AI agents in the last
week or two month or two and those the premise is, hey,
you tell this agent a business function that you know
that someone normally does, and it can do it for
you instead of a person doing it for you. That's
(06:53):
the premise behind it. Now can't do complex things like hey,
walk to the water bubbler and talk about the web, No,
like it's it's in your computer and in the software,
So it has to be something that that software can
actually touch and understand. So it might be I don't know, hey,
like in our business, Hey, every week on Thursday, we
(07:16):
get the report on initial jobbles claims in the I'm
assuming that there's some way that you have, like an API,
where you can pull the data from those jobless claims
into you know, some other program that these agents can use. Okay,
on Thursday at eight thirty one, pull in this data
and write me a report about what you saw in
the weekly jobles claims data. That could be something that
(07:38):
an AI agent does. In theory, just like thinking about
it for two minutes, it could be, Hey, every month,
you know, analyze trends in you know, all this data
and spit out you know what you think the economies do.
I'm not thinking hard enough about it, but that's that's
what these companies are trying to do, because the business
(07:58):
spend is where they think they're going to make their
money on AI. It's not from you and I like what, Hey,
draw a picture of a cat. Well, I'm not gonna
pay for you to make a picture of you know,
a cat smoking a fish or something like that. Like
that's just not who's who's gonna pay for that? No one.
But if you're a company and like this this is
(08:22):
the part that's transformational but also kind of scary. If
you're a company and you're paying an entry level worker
forty thousand dollars a year to do extra fifty thousand
dollars a year to do why you know, in like
a white collar setting, and Microsoft comes to you and says, hey,
I can give you an AI agent that'll do all
(08:43):
that for twenty thousand a year. It's a huge incremental
revenue boost to Microsoft. It's a huge cost cut for
your business. And that's like, that's the premise of it
and also the thing that makes you know, people a
little bit scared when they talk about how AI could
displace workers at large scale. You see where it could
(09:04):
go potentially, Yeah, does it actually work well enough to
do that? No clue, But companies are going to try
this stuff out just to see because hey, if it
does work and you're on that cutting edge, man, think
about the potential boost of profits and things like that,
That is what companies are going to look for. It's
that productivity edge. It's any automation exactly.
Speaker 3 (09:25):
Still, you'll still need people to supervise the process.
Speaker 2 (09:28):
Maybe there's actually something really interesting that's going on right
now where you have insurance companies that are trying these
things out as part of their claims process. Yeah, And
where you're running into potential problems is that if you
end up just with this cycle of AI agents talking
(09:49):
to each other, how do you actually know that they're
getting anywhere. So let's say that you have an auto accident,
just as an example, and mark, you have Company X
and I have Company Y that are our insurance companies. Normally,
the way it works right now, in order to settle
the claim is okay, Company X calls Company Y. Okay,
here's you know, the report of the accident, here's blah
blah blah. Insurance companies are looking at hey, can we
(10:12):
just have an AI agent, you know, do that for
so that we don't have to have people doing those conversations. Well,
if you end up with just a bunch of ais
talking to each other, you potentially end up with this
feedback loop where they can't get anywhere.
Speaker 3 (10:27):
It's not different for most of it. And then at
people though.
Speaker 2 (10:29):
But then you need a person to come in and
be like, what's actually happening here, Like, hey, I'd like
to speak to the manager. Yeah, and and so you
might not get the efficiencies that you think theyre. So
these are the things that we're going to have to
sort out over the next five to seven years. And again,
I know that a lot of us get scared by
this stuff, and I understand it's scary because hey, the
(10:50):
potential for disruption in jobs, it's significantly huck.
Speaker 3 (10:55):
I can't wait that we do a lot of content
and Armstrong Advisory Group you know this, and a lot
of it goes into power Point and word and we
spend you and I personally countless hours just formatting stuff.
I can't wait for office to recognize that I'm trying
to do the same thing to every I don't need
AI to tell me what to chart, because often you
don't know until sure hands on the data. But I
do need it to help me make it look good.
(11:17):
And to have to do the same thing over and
over again to an object like a chart or a
formula is infuriating. It's so monotonous. That would be wonderful.
Speaker 2 (11:26):
Well, and the other thing is, look, with every technological innovation,
someone is always displaced from their job. I say it jokingly,
you know, but look when when Gutenberg came out with
this printing press, you better believe the stone tablet makers
their union. It was like, don't let those things into
our city. Don't put one of those in our city,
(11:49):
probably saying the same thing that port workers are saying
right now about you know the other man.
Speaker 3 (11:53):
The sheep were happy because it took like twenty thousand
sheep to make a Bible or something. But they may
not have vellum, right, was the is parchment?
Speaker 2 (12:02):
Well, yeah, I guess I guess it wouldn't. Yeah, you
were making a stone.
Speaker 3 (12:05):
Tablet by the skin, and then describes the monks the
only literate ones would.
Speaker 2 (12:10):
Well, I was just talking about the tablet makers. I
wasn't getting into it.
Speaker 3 (12:13):
I think they were had the book phased out at that.
Speaker 2 (12:15):
Point, not bookmakers. That's a different union.
Speaker 3 (12:17):
Well yeah, coo, yeah, of course. Well this is Massachusetts.
Speaker 1 (12:21):
Find daily interviews and full shows of the Financial Exchange
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This is the Financial Exchange Radio Network text US six one, seven, three, six,
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(12:41):
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Radio Network.
Speaker 2 (12:46):
Market's talk a little bit about a MD Advanced micro Devices.
They are a semiconductor manufacturer, and they reported earnings last
night that met on earnings per share, and we're a
little bit better on revenue new but their overall revenue
guidance didn't have any increase from you know, current expectations,
and so shares are actually down about nine percent in
(13:09):
trading today. A key example of hey, it's not just
how good were your earnings, but how good are they
relative to your expectations? As well as how good is
your guidance relative to expectations.
Speaker 3 (13:20):
We use the expression priced in a lot. We don't
often define it, but we simply mean the markets are
already expecting something any ass This can apply to any
security And to your point, the only explanation here is
that this news or better news was priced in so paradoxically,
though the quarter was strong, not as strong as people
wanted or they had already expected it, and there's just
(13:42):
a natural release that occurs. I don't really know exactly
how to explain it, but it's something along those lines.
Speaker 2 (13:48):
So I don't know that you can necessarily tell a
ton about the semiconductor sector as a whole because of
what AMD is reporting, because they're not the largest chip
maker for any particular type of chip that's a key
focus right now. Like they're not the biggest PC chip maker,
they're not the biggest AI chip maker. I don't know
where their business is for like RAM and stuff like that,
(14:08):
but maybe maybe that's where, like they, you know, have
some of their bread buttered at this point. But I
don't know that you can tell a ton, as you know,
as to the sector as a whole. But what I
can tell you is that the semiconductor sector as a
whole is selling off today. In videos down one point
three percent, broad calms down point six uh, Texas Instruments
is down. Who else? Analog devices down, Micron is down,
(14:32):
Intel like literally every semiconductor company in the S and
P five hundred aside from O N Semiconductor. I guess
maybe they're called on I don't know, SI it's capitalized.
Speaker 3 (14:44):
It's talk about themselves.
Speaker 2 (14:46):
They're the only one in the S and P five
hundred semiconductor sector that is up today, and it it
could be this. It also could be we covered last
hour super Micro computer their auditor uh basically away saying hey,
we can't make any sense out of these books and
we're out. And so super Micro who is they're involved in?
(15:09):
Basically like they're a contractor that does a lot of
work with AI projects in terms of buying semiconductors and
setting up servers and things like that. And so I
guess a read could also be, Hey, if you can't
understand how their business works, maybe there isn't as much
demand for their services as people think in the semiconductor
(15:29):
sector is weaker than people think as a result. So
I don't know exactly how you read through all this,
but semis are getting hit today, and basically, aside from
Eli Lilly and Chipotle, semis are really the only place
that's getting hit hard today in the market. You look
at other sectors at the moment, and quite honestly, basically,
(15:50):
I'm going through and healthcare is down because of Eli Lilly,
Utilities are floating around, and consumer staples are pretty flat,
but everything else is up today in the S and
P five huh undred for your sectors. So I think
that there's a little bit of nerves creeping in around
what's going on with semiconductors, and hey, is the demand
still there for you know, these continued earnings beats and
(16:12):
increases in guidance. That's one read that I think you
can have on this.
Speaker 3 (16:16):
Maybe another phrase we use a lot is priced for perfection,
and this is related to something, to the notion of
something being priced in, and companies like AMD have been
on a tremendous tear so arguably priced for best possible outcome,
priced for perfection, that makes them fragile.
Speaker 2 (16:31):
Taking a look at markets as we head towards the
bottom of the hour, we still have all three major
US industries in positive territory. That Dows up one thirty
five s and p up ten, Nasdaq up forty one tenure.
US Treasury is flat today at four point two seventy four.
It was down around four point two earlier today. But
with a stronger than expected eighty p report on job growth,
(16:54):
which most economists don't really look at it that strongly.
Is that a fair way to phrase it.
Speaker 1 (17:01):
I think so.
Speaker 2 (17:02):
Most economists don't really put a ton of weight in
that report. But with a stronger than expected ADP report.
Maybe you get a stronger jobs report Friday. It could
be the thinking, and so you've got to again in
the ten year flat oil West Texas Intermediate up a
dollar fifty four barrel to sixty eight seventy five, so
a little bit of a rebound after selling off for
(17:23):
the last couple of days, after no further attacks between
Israel and Iran in direct confrontation at least the TRIPA
national average for gas price is up one tenth of
a cent to three thirteen and five tenths and gold
today is up seven dollars and ten cents. Now it's
making another new all time high, currently trading at twenty
(17:45):
seven eighty eight.
Speaker 4 (17:47):
On the Nose, bringing the latest financial news straight to
your radio every day. It's The Financial Exchange on the
Financial Exchange Radio Network.
Speaker 1 (18:08):
Miss any of the show. The Financial Exchange Show podcast
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button and leave us a five star review. This is
the Financial Exchange Radio Network. Mark.
Speaker 2 (18:21):
We get a jobs report coming out this Friday, and
I've been saying for the last month we're not really
gonna know what to make of it because the data
collection point for this is going to include people that
were disrupted by both Hurricane Helene and Hurricane what was
the second one? Oh, Milton, Milton, Yeah, there you go.
(18:46):
And so it's going to be something where it's unclear
exactly what this is going to show because in prior
hurricanes that have been large enough to cause the level
of devastation that we've seen, you can have a range
of you know, negative impacts from twenty thousand fewer jobs
to one hundred and fifty thousand fewer jobs, and you
(19:07):
don't really know where the impact is going to end
up landing. So I think ultimately it's coming at a
time where we want more clarity from the labor market,
but we're not going to get it because of these
hurricanes impacting the data collection time.
Speaker 3 (19:22):
Yeah, it's a good reminder that we call these things statistics,
not because we look for a fancy way to refer
to them, but because that means estimate. It means we're
not really sure what the population value is. They always
come with big errors, so to speak. Every month we
say there were X number of jobs created, we said
there were two hundred and fifty four thousand. I think
it was I only know that at the top of
my head because I was writing something about it this morning,
(19:44):
But that that's a plus or minus one hundred thirty
thousand jobs with nine percent confidence. So a better example
might be if we if the number was one hundred
and thirty reported, the actual number could be zero or
it could be twice. That you really don't know, which
is why you and Mike Armstrong always say don't read
too much into a single data point. I call Mike
(20:04):
Armstrong moving average Mike because he loves to do the
three month and annual. It's not quite a moving but
it's the only alliteration I could come up with. He
likes to annualize. You probably do that too. I think
it's a good practice. So either way, you know, chill out.
It's what we talked about this Mike Armstrong and I
did yesterday morning with Jolts. One data point. We're not
even sure if it helps with forecasts. First of all,
it probably does, but not everybody agrees. And secondly, you
(20:27):
need several months, as you like to say, for a trend, So.
Speaker 2 (20:31):
Yes, you cannot have a trend of one does not exist.
That's a point, not a trend. So just like to
point that out. Speaking of the trend mortgage rates right now,
you know what we're seeing that their highest level since July.
According to Mortgage News Daily, we're now at seven point
three percent on the thirty year fixed rate mortgage nationally.
(20:52):
That's not really doing home buyers a lot of favors.
Speaker 1 (20:55):
At the moment.
Speaker 3 (20:55):
It's amazing how that can coexist with record upon record
in price appreciation month over month, and by some metrics,
a languishing a word I'm using a lot today for
some reason. Home market for home sound in terms of prices,
but in terms of activity, as evidenced by the detraction
(21:17):
that residential fixed investment part of GDP, which you reported
on earlier. The degree to that to which that detracted
from GDP not a lot like two tenths, but it
detracted nevertheless last quarter.
Speaker 2 (21:30):
And this also we have some I was just taking
a look at some of the data just that's out
there from an inventory perspective, because ultimately inventory leads sales.
It's just a question of how long it takes it
to end up leading sales. But this is data from
Mike Simonson, who we've had on the show quite a bit.
As far as you know, just looking at single family
(21:51):
housing data, and what we're seeing right now is unsold inventory.
And this is for single family You're currently it's seven
hundred thirty eight thousand units nationwide, and this compares normally,
like twenty seventeen through twenty nineteen, you were at about
nine hundred to nine hundred and fifty thousand units. So
you're only off about fifteen to twenty five percent now.
(22:13):
I say only because the last few years you've been
off forty five to fifty percent, so you're you're getting
closer to normal nationwide inventory levels. The problem is it's
all like disjointed in terms of where it is. Connecticut
is still like twenty two percent of pre pandemic inventory.
All the New England states are between thirty Aside from
(22:34):
Connecticut between like thirty and sixty five percent. Florida, Texas
are already way above pre pandemic levels, like you're seeing
prices rolling over in the Dallas area now and stuff
like that, and so ultimately it still is a very
local market, but it is something where hey, nationally, you've
got these inventory levels that are propping up. And if
(22:56):
that's the case, especially in those areas where you're now
you know again, Texas, Florida, Arizona, places like that. Prices
are already starting to come down now. If you take
a look at Dallas, just as an example. This is
more data from Mike Simonson, because I don't know kind
of ows his stuff. If you take a look at
(23:16):
where Dallas is in terms of price per square foot
for penning home sales two percent below last year now
and falling. So these are the things that we're seeing
at the moment.
Speaker 5 (23:28):
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Speaker 2 (24:33):
Mark anything else to add on housing before we go
a little far.
Speaker 3 (24:36):
Oh, I just wonder if it's a harbinger of something
broader as it was in eight and I think the
answer is now versus a return to kind of normalcy
a fragmented There is no such thing, or at least
wasn't historically as a national housing market outside of events
like like nationwide depressions. Historically the market has been pretty
(24:59):
as you called it, disjointed, and I think that's a
good thing. It makes housing economists might tell me I'm
an idiot on this one, but I think that makes
it more robust.
Speaker 2 (25:08):
Peace in the New York Times day, it's type of
automatic refunds for significant flight disruptions. New airline rule goes
into effect. So the DOT has a new rule that
airlines are going to have to provide automatic refunds to
passengers who are going through significant flight disruptions. To clarify
what this means. Before this, airlines could set their own
(25:32):
concept of what a significant delay is. And now the
DOT is stepping in and saying, here's the threshold. It's
three hours for domestic flights and six hours for international.
So a qualifying flight is delayed by more than three
hours domestically and six hours internationally. And before, what you
had to do, like let's say that you wanted compensation
for this, you got to get on the phone, or
(25:54):
you're waiting in line at the gate, or you're emailing
someone back and forth. With these new rules from the
refunds are required to be automatic, so if your flight
is delayed by this amount, refund has to come back.
They are due within seven days for credit card purchases
(26:14):
and twenty days for other payments if you have other
itinerary changes. Let's say that you're downgraded to a lower
service class, so you had booked a first class ticket
and hey, you're getting thrown into economy that falls into
this category as well. And if you have significantly delayed bags,
so hey, we all know that when there are weather
(26:37):
delays or other things like sometimes you're flying to Florida
and your bags don't make it there. If your luggage
is missing for more than twelve hours on a domestic
flight or fifteen on international baggage, fees are required to
be refunded as well. So that is what we're seeing
here and overall, I think, look, my view is when
(26:59):
it comes hey, where should the government make rules and not? Hey,
the government needs to make rules for places where individuals
don't have the power or agency to the government acts
in place where individuals can't act adequately for themselves. Like
this is why the US has the army and the
air force is because you don't want you and I
being like, hey, let's buy a plane and defend you know,
(27:21):
our airspace like that? Would we would? We would? Would
you be? Do you see yourself as more of a
pilot or like a tail gunner?
Speaker 3 (27:31):
That's not something I've thought about. I'm sorry, Chuck, I
can't answer that on the spot.
Speaker 2 (27:34):
Okay, In any case, you don't want Mark and I patrol,
which one you're good at. If we're doing this, my
eyesight's not great, so you probably don't want me flying
or shooting. I could I could do the radar exactly.
I could do the radar.
Speaker 3 (27:47):
What use would you be on this mission? I could
be goose Oh glad that didn't end well.
Speaker 2 (27:51):
But no, but I could be goose dead. That's that's
where I would end up. So in this case, when
we talk about, you know, flight delays and things like that,
I think that ultimately the scale of the problem is
one where for a lot of families, Look, you've booked
a vacation, You've spent a fair chunk of your annual
(28:14):
take home pay, and your flight doesn't get somewhere, and
you're like, hey, what gives I spent all this money
to go somewhere and now I can't go or my
hotel is you know, this is a fairly substantial financial
problem for families that happens. Does it rise to the
level of, hey, do you need to automatically be refunded? Well,
(28:37):
in a world where there's more competition amongst airlines, the
ones with the best service and best customer experience, yeah,
would be the ones that survive. Think but in a
world where we're unwilling to have an appropriate level of
competition amongst airlines, where we say, hey, we won't allow
(29:00):
Jet Blue and Spirit to merge because they'll be too big,
but we already allowed all these other mergers that have
restricted competition, and so Jet Blue and Spirit are potentially
going out of business because they can't compete with the
big boys. Well, in a world where we won't properly
size our airlines to allow more competition, I do think
this is something where hey, if you're you know, delayed
(29:22):
by you know, two days for you know, what was
going to be a five day vacation. Yeah, I don't
really see you know, an issue on this, uh, in
terms of having a consistent standard and requiring a rebate
in these cases. Because in a perfect world, what I'd
love to do is, hey, let's have more competition in
(29:43):
the airline space. But otherwise, Yeah, this is kind of
a big deal for folks.
Speaker 3 (29:49):
Yeah, I think you just have to concede that at
this point the industry is so heavily regulated, in the precedent,
so well established that it's pointless to question does the
government have the authority to do it? We don't. Even
as Lutskin and I were talking about this earlier, nobody
even asks anymore, does the federal goverment have authority here
or should it be states or should it be neither?
Nobody even asks.
Speaker 2 (30:07):
So we're that the airlines we not.
Speaker 3 (30:10):
I guess it's interstate commerce, so it's probably clear, but
no one, no one even asks whether constitutionally where that
power should lie. But that horse left the barn like
during the new deal, so it's pointless. In three to
five years, we'll know if it raised or lowered fares,
and we'll know, based on data that will have rolled in,
whether or not people are better or worse off than
having to say, haggle on their own. I'm sure this
(30:32):
is something that economists who studied transportation will have a
field day with.
Speaker 2 (30:35):
Well, here's the place that we probably end up is
because there's only so there are only so many airlines
flying to and from, flying you know each route. Ultimately,
it's probably like banks, Okay, you get rid of overdraft fees. Fine,
we're giving you less interest. All right, you're gonna make
us refund people when we're late. Fine, Baggage fees are.
Speaker 3 (30:55):
Going on unintended consequences.
Speaker 2 (30:58):
It's gonna be stuff like that thing. Yeah yeah, but
well know, take a quick break here. When we come back,
we'll do a little bit of stack roulette.
Speaker 1 (31:08):
If you missed any of today's show, catch up whenever
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search for the Financial Exchange. This is your home for
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(31:30):
news all morning long. This is the Financial Exchange Radio Network.
Speaker 5 (31:37):
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(31:58):
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Speaker 2 (32:09):
You know, I generally try to be pretty understanding of
different people. We're all figuring out life as we go, Like, no,
none of us have any idea what the heck we're
doing here, if we're being honest, like, it's it's hard,
it's confusing, and we're all just trying to get through
the day. So again, we might have different views or
different ways of going about things, but hey, none of
(32:30):
us have the perfect way to do anything. So we
give people some slacker at least we should because hey,
like just how life is, yeah, Tucker. Occasionally we do
run into complete idiots, though, and this is one of
those cases. And we talked about this a few weeks
ago where there were these people that were going on
TikTok and they were bragging about this quote free money
(32:54):
glitch that they found at Chase Bank, where if you
deposit a really really big check, JP Morgan gives you
some of the money right away, even though the check
hasn't officially cleared, and then you can withdraw the proceeds
and go and spend it. And that was the glitch
for infinite money. Now in the real world, this is
(33:15):
called check kiting and fraud and it's illegal. And the
fact that these people he thought this was a way
that they could just get free money from the bank,
because Hey, the bank's just not going to notice I
don't know, like three hundred thousand dollars missing or something
like that. Really dumb and b what made it even
dumber was, hey, let's go brag about this on social media.
(33:38):
Now the bank already knew, like who was doing this,
because if you're withdrawing money from your account, it's you, Like,
they don't need your social media posts in order to
prove it, but when you do it, it makes it obvious.
So yesterday JP Morgan, Chase strikes back, and look, it's
rare for me to root for you know, giant banks,
(33:58):
you know, like I'm not really for them. But the
whole basis of the entire you know, economy, just a
little thing like that, is that we have to have
a baseline level of trust. And so when you deliberately
perpetrate fraud in the system, I don't really root for you.
So JP Morgan suing four different people in federal court.
One is a defendant in Texas who owns the bank
(34:19):
two hundred and ninety thousand dollars. One's in California owing
ninety thousand, and two in Florida owing one hundred and
forty one and one hundred and thirty eight thousand dollars.
So these people are not, you know, trying to make
off with like five hundred bucks. They were trying to
make off with hundreds of thousands of dollars and bragging
about it on TikTok. My guess is none of them
actually have the money to pay this back because they
(34:41):
probably spent a decent chunk of it already. And long
story short, these are just civil claims, but I don't
know how these people are ever going to be able
to open a bank account again. Two, there are probably
going to be criminal court cases that follow, and these
people are probably going to jail for an extended period
of time. And three, don't fraud.
Speaker 1 (35:06):
No.
Speaker 2 (35:08):
Chuck.
Speaker 3 (35:08):
If you want to racket, run for office and grift.
Speaker 2 (35:12):
That's edgie, Mark, that's very edgy. You should go. That's
so lame, or have like here's my political newsletter, you
know something. Yeah, just something that's like adjacent so you
don't even have any responsibility, you know, something like that,
because here's here's the problem is if you run for
office like that and then you win, you do have
(35:34):
to govern. If all you do is like you you
have to again, you have to pretend to govern. If
all you're doing is like, hey, I'm running a political podcast,
you don't have to do anything. That's it. That's the
whole game. But yeah, so JP Morgan going after the fraudsters,
and uh, good for them, because yet don't commit fraud.
(35:57):
We're done for the day. Back at it tomorrow with
more financial exchange
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