November 21, 2024 • 38 mins
Chuck Zodda and Paul Lane discuss Nvidia's earnings and how markets are reacting. Is the Trump stock euphoria starting to fade? Should Google be forced to sell off Chrome browser? Does TikTok get a new lease on life under Trump? According to Paul Lane, art is a scam.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
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(00:20):
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(00:42):
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(01:04):
by Veterans Development Corporation. This is the Financial Exchange with
Chuck Zada and Paul Lane.
Speaker 2 (01:12):
Chuck, Paul Tucker with you here on a Thursday. It's
the day after in Video's earnings reports, and we got
kind of a weird day of trading so far in markets,
and I think a lot of it does stem from
in Videos. So le's dive right into that earnings report
and what we saw there. Paul, what were your takeaways
(01:34):
from what they reported after the close yesterday and then
what they talked about on their conference call.
Speaker 3 (01:40):
My takeaways is that in Vidia is a company that
has been priced for perfection for a really long time.
If you look at the numbers underneath the hood, this
was a very strong quarter, but they've set themselves such
high expectations that beating analysts forecasts is not enough anymore.
It has to be by wide margins because they had
just crushed them in prior quarters. In terms of what
(02:02):
we saw from this Arnience report, Chuck, they came in
with thirty five billion in quarterly revenue that was up
ninety four percent from a year ago. In the same quarter,
to give a basis of comparison, what they had printed
in terms of revenue increases year over year for quarters
one and two of this year was one hundred and
(02:23):
twenty two percent revenue increase in Q two year over
year around two hundred and fifty percent revenue increase in
Q one and Q four of last year two hundred
and sixty five percent. So I mentioned that to indicate
that was the level of revenue growth that they were seeing,
you know, doubling and tripling of revenue. It slowed down,
but still to a ninety four percent year over year
(02:44):
growth In terms of Q four what they're projecting in
this current quarter, they came in a thirty seven point
five billion, which was slightly over forecast. Initially in the aftermarket,
it looked like in video would be trading negative on
the news that they were not beating in less expectations
by enough. But now we head into the first half
hour plus of trading or so, it does indicate that
(03:08):
they are up slightly. There clearly is incredible demand according
to the CEO for their new chips, but ultimately it
seems like the markets are having a mixed reaction to this.
It seemed like initially some cause for perhaps challenges ahead,
but then after there was a little time to digest this.
The stock has rallied a bit.
Speaker 4 (03:29):
Well.
Speaker 2 (03:29):
It's interesting because even just as you talked, it's given
up those games now and so it's just really chopping.
And I think this is a market that isn't quite
sure what to do with this number. And the problem
is that there's so much in terms of the overall
market performance, the S and P five hundred performance that's
riding on this. Then I think it affects you know,
other holdings around it in terms of and I'm not
(03:52):
talking about how individuals handle this, but let's say that
you're a hedge fund, just as an example, and hedge
funds one of the things that they they try to
focus on, and again it depends on you know, the
specific fund, but they really try to manage the specific
risk within positions. And one of the ways that they
measure that risk is basically looking at the performance of
(04:13):
a position and the projected volatility of that. And that's
that's where hedge funds will you know, say, okay, we
might be out over our skis on this is not
necessarily because a position is done you know, badly or well,
but hey, how much volatility, Like what's the projected range
that we could see this position in and how much
could that affect our overall bottom line.
Speaker 4 (04:33):
And so when you.
Speaker 2 (04:34):
See a position like h in video that's reporting immediately
afterwards for the entire S and P five hundred this morning,
like in pre market, you basically saw all of this
concern that we can measure through what's called the VIX,
which is also known as you know, kind of the
fear index for for markets. I don't know that that's
the best term for it, but it's it's, you know,
(04:55):
what's what's tossed around. And basically when you see the
vi moving down, it's a sign that, hey, those market
participants that are nervous about the S and P five
hundred falling, they have become less concerned with that, and
as such the market may rise because they're closing out
hedges and things. Well, once that happened this morning, that's
(05:15):
when in videos started falling in. It's when the S
and P five hundred started falling again, and so it
suggests that one of the things that was causing that
early move was really just some hedging in the overall
market burning off, rather than investors being thrilled with in
video's performance. Again, I think we can say it's a
really good quarter. They're printing money hand over fist, But
(05:39):
as you noted, Paul, when they're worth three and a
half trillion dollars, you can't just have a good quarter.
Speaker 4 (05:45):
Yeah, you gotta do better.
Speaker 2 (05:47):
And I don't think they did better. And it's not
to say they're a bad business. It's just, hey, what
drives the company's stock forward. You have to do better,
You have to do you know more, Like that's that's
just what the market is saying. And so two things
can be true, and video can still be a company
(06:08):
that's making a ton of money. I mean, but you
look at they're trailing twelve month numbers, free cash flow
forty six billion dollars, net income fifty three billion dollars,
revenue ninety six billion dollars. I mean, it's as close
as you can come to printing money with an actual company.
It's you know, it's like you just don't. These are
video game numbers from a company that makes you know,
(06:31):
the use that started, yeah, that started making graphics cards
for video games. So yeah, it's it's one where there's
so much gravity just in this company and how it
moves markets that I think it's kind of like, okay,
if the company doesn't go up or down, you know,
eight to ten percent. I think part of it is
the market just looks at is like, well what do
(06:53):
we do now? You're like, what do we do with this?
And that's kind of where we are at this point.
So again, I think that this is something where there's
clearly just this monster market for these chips right now.
I'm still not sure if it's just gonna be a
couple of year cycle or if this is gonna be
how it is in perpetuity, because we've seen this before
(07:15):
from tech companies where they spend a bunch of money
for a couple of years on new tech, they get
to a point where they're like, Okay, we can't really
make any more money off this, so you know, onto
the next and then you kind of go from there.
So it's it's hard to tell where it's gonna go.
But it's still a company that's just printing money right now.
Speaker 3 (07:30):
I was thinking about that statement earlier this morning, Chuck
and prepping for the show, and I just with all
the smart people at all these respective companies, and I
don't think we've seen anything to this size and scale
of spend that we're witnessing here with these companies. For example, Microsoft, Facebook, Google,
and Amazon are doing about two hundred and forty two
(07:50):
billion of capital expenditures this year, and then what's projected
at to eighty five billion next year. Again, not all
of that is going necessarily to these types of chips,
but a whole heck of a lot of it is.
And I just wonder not to say that, oh, it's
different this time, but there's so much money behind this,
you'd have to think that all these people and all
these respective companies believe in the power of this or
(08:13):
else it's gonna be the most epic failure of capital
end you in an economic history, just because the number
is being thrown around here. But I was just thinking
kicking that around, it has to succeed with all the
money that they've thrown at it.
Speaker 2 (08:25):
And ultimately what it's going to be. The question that
needs to be answered is can you replace an employee
with AI? Now you can't do it for you know,
a lot of manual labor jobs. I'm not saying that,
but for the white the jobs like my own, where
(08:46):
I'm sitting in front of a computer doing stuff all
day and I don't have to, you know, do backbreaking
work day in and day out.
Speaker 4 (08:55):
That's gonna be the job that the question exists for.
And so.
Speaker 2 (09:00):
Because ultimately, look Microsoft right now, look they charge like
twenty dollars a month for chat GPT if you want
their copilot program. I think it's like thirty it's like
four hundred bucks for the year. Instead, they're not gonna
make enough money selling twenty dollars a month subscriptions to
chat GPT. Like, they're just not gonna do that. But
(09:25):
the question for them and why they're investing this money is, Hey,
your company there, you've got you know, an accounting department,
or you've got a billing department, or you've got a
claims processing department and an insurance company. How much do
you pay the people in that department right now? Oh,
(09:47):
you pay them, you know, sixty thousand a year. What
about with benefits? Oh, you pay them eighty thousand a year.
We have an AI agent that can do what they do,
and it can do the work of two people at
the cost of forty thousand a year. That's the selling
proposition for Microsoft is not how many twenty dollars subscriptions
(10:10):
can I sell because Microsoft doesn't want to be in
that business. That's a crappy business, right, I mean, it's
not like a crappy business. But when you're worth three
trillion dollars, okay, you sold an extra twenty dollars subscription Yahoo, wonderful.
Speaker 4 (10:25):
What's that do for anyone? Nothing?
Speaker 2 (10:27):
You say, Hey, I've got a Fortune five hundred company
that wants five hundred AI agents at forty thousand dollars
a year. I just made a twenty million dollar sale.
And if I do that for half of the Fortune
five hundred, two hundred and fifty companies, now I got
(10:48):
five billion in revenue for the year. Oh, that's more
interesting to me than needing to sell two hundred and
fifty million, you know, twenty dollars a month subscriptions or
something like that to chat GPT.
Speaker 3 (11:01):
And you have a bit client base that you can
continue to upsell to once you have them locked in
and again these additional features and things of that nature.
Speaker 2 (11:09):
And that was looking at you know, five hundred employees
for a company. How many companies are there where they say, hey,
we've got you know, ten thousand employees, we can do
ten x that scale, We'll do this and it will
be a two hundred million dollar contract for you. That's
what Microsoft wants to sell, not twenty dollars subscriptions to
chat GPT like they're doing to me, Like they don't
(11:29):
make enough money off me. For all the you know
pictures of dinosaurs playing poker that I make, there's no
money in that for them. So's take a quick break
here and when we come back, talk about what we're
seeing in the markets overall.
Speaker 4 (11:44):
Immediately after the election, we saw this move upward, the.
Speaker 2 (11:47):
Trump bump, if you will, talk about, Hey, the market's
kind of faded a little bit in the last week
and a half.
Speaker 4 (11:54):
What gives man When we return.
Speaker 1 (11:57):
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Speaker 5 (12:20):
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Speaker 2 (12:52):
Let's talk a little bit about what we've seen from
markets in the last two plus weeks now. So immediately
after the election, we saw a you know, decent sized
bump in the equity markets. You know, the S and
P five hundred went from around fifty seven hundred up
to around six thousand, So it's about a five percent
bump that you saw there.
Speaker 4 (13:11):
And subsequently, you know has given.
Speaker 2 (13:13):
Back about you know, two percent, one and a half
two percent of that, and it's pretty much back to
where it was in mid October. Remember, markets had fallen
about three percent in late October and early November before
the election. So I think ultimately we're in a position
now where stocks are kind of treading water, and I
(13:34):
think a lot of it comes back to something that
we talked about earlier in the week, which is just
that we still don't have many details when it comes
to specifics on the policies from the incoming Trump administration.
We know, hey, you know what you want to cut
red tape. We know that you know you've talked about
tax cuts and things like that. Those things are potentially
(13:56):
stimulative to the economy, but you've also talked about things
that might create some drag in terms of tariffs, deportations,
things like that. And until we have some clarity on
the size, magnitude, and timing of all these it's kind
of hard to make a plan for what you think
the market's going to do because there's a really wide
(14:16):
range of outcomes here.
Speaker 3 (14:18):
There really is, and ultimately what's been pushed to the
back burner a little bit, Chuck here is the focus
that we had prior to the election from an economic
standpoint was the labor market, and we talked about the
October jobs report was obviously quite weak, but one of
the biggest focuses from the Federal Reserve was inflation. They
seem to feel comfortable that that is under control. The
(14:40):
labor market was the area of utmost focus, and October
was really hard to glean anything from in terms of
the labor market because of the hurricanes and strikes really
impacted that number. That's something that looms out here as well.
That's been put on the back burner temporarily. So that's
something that there hasn't been a lot of data on recently.
So that's why you perhaps are seeing markets treading water
(15:02):
a little bit here. You certainly have from a valuation standpoint.
The one piece that's mentioned here.
Speaker 4 (15:08):
Is a pe ratio.
Speaker 3 (15:10):
However, you look at it for the S and P
five hundred, that is significantly elevated. So it's a time
where markets have rallied quite a bit. But there is
a lot of sort of wait and see out there
on the table. And that applies for the interest rate
side of things too on the Federal Reserve, where there
was early indications that perhaps we'd be in a continued
(15:31):
rate cutting cycle, but Jerome Powell had come out recently
sort of putting splashing a little bit of water on that, saying,
with where the economy stands right now and the data
that we've gathered, there's not necessarily a need to potentially cut,
but all that is to bear out in the future here.
Speaker 2 (15:46):
Yeah, and I think you make a good point that
look the business cycle as a whole, there's some uncertainty
still about where exactly we are there. Two months ago,
you had you know, people generally smart people going on
Bloomberg and CNBC being like, the FED needs to cut
seventy five basis points today and in an emergency meeting
(16:09):
they got to do another one later at the real meeting.
And we've gone from that in early September to hey,
maybe the Fed shouldn't cut anymore, maybe they should actually
be hiking again, and that's not a healthy place to be, Like,
we all got to chill a little bit on trying
to extrapolate where the broad economy is going because of
(16:31):
a few weeks of data they get. Everyone wants to
be first, because if you're first, especially in the social
media world, you get to be like I called it,
listen to me, pay me, and it's like, dude, like
you were wrong on ninety six other things before you
got that one right. If you're not first your last
(16:51):
sometimes when you're first to your last two that's the
problem is when you're first to be wrong. And so again,
like these are smart people like Jeremy Siegel. I've called
him for the last couple of months, because again he's
got a degree, like a PhD from Wharton. He's smarter
than me in basically any way that you can measure.
I'm sure he's no dummy. And by the way, Jeremy
(17:11):
Siegal typically one of the biggest bulls in like the
stock market and like the periphery of it. And he's
out there calling for one hundred and fifty basis points
and cuts in September because of a bad jobs report.
Speaker 4 (17:27):
Well, where is he now? Where is he now?
Speaker 3 (17:31):
You know, were in hiding?
Speaker 2 (17:33):
Like this is the thing we all need to chill
out and not make every single data point a referendum
on what exactly the Fed needs to do. It's just
not healthy, and it's not it's not right for markets either.
And so I think in terms of where the economy
is right now, hey, basically the same place it's been in.
Speaker 4 (17:57):
For the last two years.
Speaker 2 (18:01):
There's some parts of it that are hot, there's some
parts of it that are cool, the parts that are
cooling the labor market. It's concerning and you need to
pay attention to it. But it still has been an
economy that's been more resilient than anyone could.
Speaker 4 (18:15):
Have imagined over that time.
Speaker 2 (18:18):
And as such, you have to, you know, be kind
of careful when you're calling for these big turning points
because it just like it just hasn't happened that way
this time. And I know, especially in September, we got
all these indicators that you know, oh this is you know,
this normally happens right before recession and this and that.
But there's no hard and fast rules in economics. They're
(18:41):
just aren't it. It's not physics, it's not hard science
like that. It's social science with numbers. And so when
we start quoting, you know, the some rule whose own
creator has said, hey, this might not work forever, maybe
we should listen to her a little bit.
Speaker 4 (18:58):
Certainly a fair point. That's all I have to say.
Speaker 2 (19:01):
Is, you know, let's let's all pump the brakes a
little bit on. You know, hey, jobless claims came in
today and they were lower than you know, last week.
Does that mean that inflation's back. No, it means that
they were lower for one week. It doesn't have to
have some broader meaning in the you know, the world
economy or the US economy. Let's take a quick break here,
(19:23):
and when we come back we'll do a little bit
of Wall Street Watch, and then the Justice Department saying
what they want Google to do as a result of
Google losing their anti trust case.
Speaker 4 (19:34):
We'll fill you in on that right after this.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch. A complete look at what's moving market so
far today right here on the Financial Exchange Rate Network.
Speaker 5 (20:03):
Markets are pulling back after earlier gains as investors digest
third quarter earnings from AI in Chip Giant, in Nvidia.
At the moment that now is actually up by seventy
three points. However, SMP five hundred is down by over
a third of a percent, or twenty one points, in
a Nasdaq selling off by over one percent or two
(20:24):
hundred and sixteen points. Russell two thousand is up by
nearly one percent on the day, ten year treasure reeled
is off by two basis points at four point three
eight percent, and crude oil up nearly one and a
half percent higher, trading at sixty nine dollars and seventy
cents a barrel, well after earlier gains. And video shares
(20:45):
currently down by three percent after the chip maker beat
third quarter earnings expectations, posting a jumping quarterly profit and revenue. However,
the company failed to meet some investors' lofty expectations. Meanwhile,
data cloud company Snowflake beat earnings expectations for the third quarter.
Snowflake's guidance also beat esmonds, though losses grew. That stock
(21:09):
is surging by thirty percent on the day. Elsewhere, Palo
Alto Networks issued fiscal second quarter guidance largely in line
with expectations and also announced a two for one stock split.
That company, or the shares in the cybersecurity company, are
down by over one and a half percent. Several crypto
related stocks are seeing attention this morning, including micro Strategy
(21:33):
and coinbase, after bitcoin hit ninety eight thousand dollars for
the first time but has now pulled back to ninety
six thousand dollars. Micro Strategy also said it has sold
two point six billion dollars of convertible bonds to purchase
more bitcoin. Micro Strategy shares down by three percent and
Bjy's Wholesale Club up by seven percent after the warehouse
(21:56):
club posted a third quarter earnings beat and hiked its
full year guidance. BJ's also announced a one billion dollar
share repurchase program and said it will raise its membership fee.
I'm Tucker Silva and that's Wall Street.
Speaker 4 (22:10):
Watch Tucker. You also buried the lead on micro Strategy.
Speaker 5 (22:15):
Oh I did Okay, I missed something there?
Speaker 4 (22:17):
You did?
Speaker 2 (22:18):
What The stock is nineteen percent off it's intra day
high from where it opened. The sye Oh oh okay,
so things are kind of wild there. Coinbas is getting
whack too, right.
Speaker 4 (22:27):
Yeah, it's actually sorry.
Speaker 2 (22:28):
Micro Strategy just lost another two percent now twenty one
percent off of its intra day high.
Speaker 4 (22:33):
So it's uh, pretty bumpy. Look, here's the thing.
Speaker 2 (22:38):
Things that typically go parabolic up in markets, they rarely
just stop and level off. They tend to get a
little bit bump delicious. So uh, it's it's it's a
little bit dodgy out there right now in some of
these areas, and you just have to be very careful because, man,
(22:58):
all I can tell you is hearing from crypto people
right now the same way I was. You know, the
last couple peaks and it's uh again, who knows where
it goes. But man, once everyone's paying attention, to something.
It's it's usually not. It's usually not the time where
(23:20):
you see, like, wow, the most robust games ever are
yet to come, you know, like it's you know, just
buyer beware on all stuff.
Speaker 4 (23:27):
Right now, let's talk a little bit about Google.
Speaker 2 (23:31):
They lost an anti trust case earlier this year, and
the DOJ spent the last couple months writing their remedies
that they want to give to the judge. In terms
of what they want the judge to do, Paul, would
they say they would like to see?
Speaker 3 (23:47):
This is pretty meaty stuff here, Chuck. There's a lot
to kind of go over, but basically, what they're a
couple of the noteworthy points here is the Justice Departments
wants to enable and encourage unfettered and un confettered search ecosystem.
They want to allow for other competitors to make inroads
in this market. Google has you know, eighty percent market
(24:08):
share or maybe even more than that, eighty to ninety
percent market share. They they really are the major player
in the space. And what the Justice Department particularly was
going after was the fact that on Google products such
as an Android phone system or a pixel device phone,
the default search browser if you just are in to
(24:28):
type into. First of all, the default browser is Google
Chrome on those devices and all searches go through Google.
Google also pays tens of billions of dollars to Apple
to be the default search engine on the Safari on
iPhones out there, and the same applies for other many
other different vehicles out there. That Google is able to
pay to be the only game in town from a
(24:49):
search perspective. So they want to separate its products, which
are the Android phone system, from the search engine. They
want the browser of Chrome to to be spun off
and sold off so that they don't have this overwhelming
dominance in the search engine space. And so what Google
(25:11):
makes a lot of its money from is the fact
that it is the widely acknowledged search engine out there
on all these different platforms, and fifty seven percent of
their three hundred and seven billion of revenue comes from
ads next to search. So if you are Google and
you're not able to generate as much search capacity as
you were previously because some of these edicts from the
(25:32):
Justice Department, that would hit it huge hit on revenue
if that were to go through.
Speaker 4 (25:38):
This.
Speaker 2 (25:39):
Obviously, these are just recommendations from the Justice Department, And
again there's a number of them. So the again selling
off Chrome is part of it, maybe needing to sell
off Android if Google violates some rules in the future.
So there's some different pieces here. Ultimately, the judge is
going to say, yes, this is what I am going
(26:01):
to say, is you know.
Speaker 4 (26:03):
Gonna be the law of the land.
Speaker 2 (26:05):
And then from there it's obviously going to be appealed
by Google.
Speaker 4 (26:09):
It's like good, there's there's too much money for.
Speaker 2 (26:12):
Google to just be like, yep, we're cool with its
good guys, we'll see you later.
Speaker 3 (26:18):
Some money from that three hundred and seven billion of
revenue to to dish around to pay some legal fees.
Speaker 2 (26:22):
Yeah, So this is something that again is pretty meaty here.
And the other thing that we do need to be
aware of is, look, there's going to be a new
head of the DOJ coming in with the incoming Trump administration,
and so the question that's out there is, look, does
the new DOJ continue to push this case in the
(26:42):
same way. And I don't I don't know any specifics,
Like none of us do we like, we don't even know.
There's no one confirmed to lead you know, the DJ.
We're not at that point. But what I do know
is have Republicans been you know friendly in conversation to
big tech recently? Not really, right, No, it's kind of hey, like,
(27:06):
we don't really like you that much. And so I
wouldn't be surprised if the incoming administration says, yeah, like,
we're not going to do anything to change this.
Speaker 4 (27:16):
Now.
Speaker 2 (27:16):
They they certainly may you know, have some some changes
around the margin. But remember the first DOJ suit against Alphabet,
the parent of Google, was filed by the Trump administration
in twenty twenty. So it's not something where the Trump
administration previously has you know, veered away from actually you know,
(27:40):
undertaking anti trust actions against big tech. I wouldn't be
surprised if they continue to push this case. It wouldn't
surprise me one bit here. So this is kind of interesting.
And look, the market's taking this seriously too. Alphabet stock
down five point three percent today, yep, So the market
is saying, huh, there's there's something there. And by the way,
(28:02):
that five point three percent dip is the biggest percentage
dip for any S and P five hundred component. As
I am looking at it right now, I'm just trying
to make sure that's correct.
Speaker 4 (28:13):
But I'm pretty sure.
Speaker 3 (28:15):
I see now off six yes, six six plus percent,
so so certainly taking it very seriously.
Speaker 2 (28:20):
Here I get six point three now and the next
closest is Ulti Beauty down two point seven.
Speaker 3 (28:26):
So it's interesting to know that in the EU they
had enforced a choice screen where basically people have the
choice to utilize different search engine providers, and Duck Duck
go Chuck's favorite search engine, saw seventy five percent increase
after that choice screen was made available. So it's it's
serious if this were to go through, but it's got
a long way to go.
Speaker 2 (28:45):
Can I tell you something about search though, because I've
been I've been poking around, like all over the place now,
I've been, I've been banging, I've been Duck Duck going,
I've been I've been googling. I'm sure they all suck,
They're all horrible. Search is broken because of AI. Honestly,
the amount of AI generated crap that floats to the
top of search engines now that is completely useless for
(29:07):
what I'm trying to actually find.
Speaker 4 (29:10):
The Internet is broken.
Speaker 2 (29:12):
I don't know if if you guys have had similar experiences,
but in googling.
Speaker 4 (29:17):
Stuff that should be you know like that.
Speaker 2 (29:20):
Historically, hey I google this, like one of the first
two results comes up and it's exactly what I need.
It's it's one of two things now. Either the stuff
that's making it onto the internet is just AI generated
crap and search engines are selecting for it because their
algorithms are broken. The other thing that I'm starting to
see a lot of companies are pulling down resources that
(29:42):
used to be on the web. They're just not set
up the same way with the same content that used
to be out there. And this is ultimately going to
be a bigger problem for Google than this. If people
just say, hey, search engines are broken and they're not
giving me the information that I need as a effect
actively as I want. That's a bigger problem when people
(30:03):
stop using them, because like, have you guys had this
experience where you're just finding AI.
Speaker 5 (30:09):
Generatord I definitely have to double check some of my
searches in terms of if it's actually accurate, because you
can see the two blurbs like above, and sometimes it's
not accurate in terms of like one thing is saying
one thing and the other saying X, Like it's.
Speaker 4 (30:25):
It's fifty to fifty I'd say.
Speaker 3 (30:27):
Yeah, sometimes the Google AI Assistant piece is effective the
way it summarizes with both points at the top.
Speaker 4 (30:33):
But Tucker is right.
Speaker 3 (30:35):
Sometimes it's exactly what I'm looking for up there, but
then other times I'm like, wait a minute, I kind
of gotta poke around a little bit further.
Speaker 2 (30:41):
I'm not even saying that like the Google summary. I'm
saying the stuff that's floating to the top in terms
of you know after that, that the number one, two,
three search responses. A lot of times they're just AI
stuff that has nothing at all to do with the
topic in any meaningful way. And I'm finding that to
(31:02):
be more and more problematic because it's getting so easy
to write stuff using AI that you've just got people
that are using it for everything, and it's diluting the
quality of search, in my opinion, and that's bad for
the Internet, like you, for multiple reasons. The other being, Hey, eventually,
if all you have to train your AI stuff on
(31:23):
is a bunch of other AI stuff that isn't right,
it's not really a good feedback loop to be in.
Let's take a quick break here. When we return, let's
talk a little bit about TikTok. We've been talking Google,
Let's talk TikTok next.
Speaker 1 (31:38):
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Speaker 4 (32:05):
Paul, do you TikTok?
Speaker 3 (32:08):
I do not TikTok?
Speaker 4 (32:10):
Do you tick?
Speaker 3 (32:12):
My family likes tiktoks a lot. They've been a huge
hit with the kids.
Speaker 2 (32:15):
But you don't tick nor talk no okay. In any case,
TikTok is a if you're not familiar with them. They
are a social media app that is owned by a
company that has direct ties to the Chinese government and
through that direct ties to the Chinese military in terms
of how Chinese law works and how information.
Speaker 4 (32:35):
Is required to be shared as such.
Speaker 2 (32:38):
For basically the last six or seven years, we have
seen questions about whether or not TikTok should be banned
in the United States, including in twenty twenty when then
President Trump attempted to ban TikTok unless it could be
sold to a US fire Now there is a federal
law that was signed earlier this year. It says TikTok
has to be sold to a non Chinese company by
(33:00):
January nineteenth, which by the way, also happens to be
a day before President Trump's second inauguration, or TikTok will
be banned in the United States.
Speaker 4 (33:10):
So the question is what's gonna happen with TikTok.
Speaker 3 (33:14):
Paul, It seems like as much as you mentioned in
twenty twenty, Trump was behind trying to block the app
and for sale to an American company, that he's done
a bit of a turnaround on the platform. He during
this recent campaign joined TikTok and had fourteen point four
million followers and seems to have some ties to donors
(33:38):
who are connected to TikTok. For example, Jeffyass, who's a
billionaire investor and a Republican mega donor who has a
significant share of Byteedance, the parent company of TikTok. They
have had a relationship Jeffass and President Trump. You also
have others that are connected to TikTok that have a
(33:59):
reasonably close relationship with President Trump. So there now is
some optimism out there that perhaps with President Trump getting
back into office and his turnaround on TikTok in general,
that there may be perhaps an easier solution for TikTok
to stay present in the United States. But again, this
is one of these items that it's really hard to
(34:21):
determine where this is going to go from a direction standpoint.
It could get tied up in the courts again as well,
because I think we're waiting on some additional legal decisions
here that could come before the January nineteenth deadline.
Speaker 2 (34:37):
Gotta say, don't love the idea of it's sticking around
under its current ownership.
Speaker 4 (34:42):
Don't love it.
Speaker 2 (34:43):
I've been pretty consistent on that since day one, But
we'll see what happens here.
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Speaker 4 (35:48):
Paul, You ever eaten a banana? Yes? I have? What
do you think of banana costs? Uh?
Speaker 1 (35:57):
Oh boy, Paul?
Speaker 3 (36:01):
Just one single one seventy nine cents.
Speaker 2 (36:04):
It's probably about a quarter of that, but you're you're
at least in the right ballpark here. Generally a bunch
of bananas is usually somewhere in the ballpark at two dollars.
So there is a very special banana though, that has
been duct taped to a wall in Miami for the
last five years. Italian artist Mauricio Catalan did this as
(36:26):
an installation there, and in fact, it's not just one banana.
You actually have to change it every few days because
you know that the banana goes bad.
Speaker 5 (36:34):
I I was wondering that they do have to change
it every few days.
Speaker 2 (36:38):
But they they finally sold the banana off and it
was auctioned off by Southey's and it received six point
two million dollars at auction on Wednesday night. In conclusion,
the FED needs to hike What the heck? Well, no,
so here's the thing. So again a lot of people
(36:59):
are like, oh, like, what the heck? It was just
a banana duct tape to a wall, and it is
just a banana duct tape to a wall. But ultimately,
here's the thing. And I'm a big believer in art,
and and art's kind of weird. That's that's kind of
the point of it is to use it's it's weirdness
to express something inside of you that other people can
relate to. In this case, the entire point that he
(37:21):
was trying to make, and he's said this in interviews
is look, I hate like what art's become where it
has to be this giant thing I want art to
be something that's simpler, that more people can understand, and
we have to do the way to do that is
by making fun of what art has become.
Speaker 4 (37:38):
And I personally really love that.
Speaker 2 (37:40):
Now, would I pay six point two billion dollars for
a banana the whatever it should be? Six point two billion?
It's underpriced in my opinion. Would I pay that money?
Speaker 5 (37:48):
No?
Speaker 2 (37:49):
I wouldn't. But ultimately, any art is about trying to
convey a message, and in this case, the message is
the medium, which is a banana tape to a duct
tape to the that.
Speaker 3 (38:00):
Has not given anyone a better understanding of art.
Speaker 2 (38:03):
I think I just gave people a great understanding of art.
Maybe just don't like art.
Speaker 4 (38:07):
It's a scam. Art is a scam. Paul, have you
no soul? Have you no heart?
Speaker 2 (38:16):
No, We're gonna take a quick break where hopefully we
can see if Paul can cry, and when we come back,
we'll have more financial exchange.
Speaker 1 (38:26):
Right after this
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
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(01:04):
by Veterans Development Corporation. This is the Financial Exchange with
Chuck Zada and Paul Lane.
Speaker 2 (01:12):
Chuck, Paul Tucker with you here on a Thursday. It's
the day after in Video's earnings reports, and we got
kind of a weird day of trading so far in markets,
and I think a lot of it does stem from
in Videos. So le's dive right into that earnings report
and what we saw there. Paul, what were your takeaways
(01:34):
from what they reported after the close yesterday and then
what they talked about on their conference call.
Speaker 3 (01:40):
My takeaways is that in Vidia is a company that
has been priced for perfection for a really long time.
If you look at the numbers underneath the hood, this
was a very strong quarter, but they've set themselves such
high expectations that beating analysts forecasts is not enough anymore.
It has to be by wide margins because they had
just crushed them in prior quarters. In terms of what
(02:02):
we saw from this Arnience report, Chuck, they came in
with thirty five billion in quarterly revenue that was up
ninety four percent from a year ago. In the same quarter,
to give a basis of comparison, what they had printed
in terms of revenue increases year over year for quarters
one and two of this year was one hundred and
(02:23):
twenty two percent revenue increase in Q two year over
year around two hundred and fifty percent revenue increase in
Q one and Q four of last year two hundred
and sixty five percent. So I mentioned that to indicate
that was the level of revenue growth that they were seeing,
you know, doubling and tripling of revenue. It slowed down,
but still to a ninety four percent year over year
(02:44):
growth In terms of Q four what they're projecting in
this current quarter, they came in a thirty seven point
five billion, which was slightly over forecast. Initially in the aftermarket,
it looked like in video would be trading negative on
the news that they were not beating in less expectations
by enough. But now we head into the first half
hour plus of trading or so, it does indicate that
(03:08):
they are up slightly. There clearly is incredible demand according
to the CEO for their new chips, but ultimately it
seems like the markets are having a mixed reaction to this.
It seemed like initially some cause for perhaps challenges ahead,
but then after there was a little time to digest this.
The stock has rallied a bit.
Speaker 4 (03:29):
Well.
Speaker 2 (03:29):
It's interesting because even just as you talked, it's given
up those games now and so it's just really chopping.
And I think this is a market that isn't quite
sure what to do with this number. And the problem
is that there's so much in terms of the overall
market performance, the S and P five hundred performance that's
riding on this. Then I think it affects you know,
other holdings around it in terms of and I'm not
(03:52):
talking about how individuals handle this, but let's say that
you're a hedge fund, just as an example, and hedge
funds one of the things that they they try to
focus on, and again it depends on you know, the
specific fund, but they really try to manage the specific
risk within positions. And one of the ways that they
measure that risk is basically looking at the performance of
(04:13):
a position and the projected volatility of that. And that's
that's where hedge funds will you know, say, okay, we
might be out over our skis on this is not
necessarily because a position is done you know, badly or well,
but hey, how much volatility, Like what's the projected range
that we could see this position in and how much
could that affect our overall bottom line.
Speaker 4 (04:33):
And so when you.
Speaker 2 (04:34):
See a position like h in video that's reporting immediately
afterwards for the entire S and P five hundred this morning,
like in pre market, you basically saw all of this
concern that we can measure through what's called the VIX,
which is also known as you know, kind of the
fear index for for markets. I don't know that that's
the best term for it, but it's it's, you know,
(04:55):
what's what's tossed around. And basically when you see the
vi moving down, it's a sign that, hey, those market
participants that are nervous about the S and P five
hundred falling, they have become less concerned with that, and
as such the market may rise because they're closing out
hedges and things. Well, once that happened this morning, that's
(05:15):
when in videos started falling in. It's when the S
and P five hundred started falling again, and so it
suggests that one of the things that was causing that
early move was really just some hedging in the overall
market burning off, rather than investors being thrilled with in
video's performance. Again, I think we can say it's a
really good quarter. They're printing money hand over fist, But
(05:39):
as you noted, Paul, when they're worth three and a
half trillion dollars, you can't just have a good quarter.
Speaker 4 (05:45):
Yeah, you gotta do better.
Speaker 2 (05:47):
And I don't think they did better. And it's not
to say they're a bad business. It's just, hey, what
drives the company's stock forward. You have to do better,
You have to do you know more, Like that's that's
just what the market is saying. And so two things
can be true, and video can still be a company
(06:08):
that's making a ton of money. I mean, but you
look at they're trailing twelve month numbers, free cash flow
forty six billion dollars, net income fifty three billion dollars,
revenue ninety six billion dollars. I mean, it's as close
as you can come to printing money with an actual company.
It's you know, it's like you just don't. These are
video game numbers from a company that makes you know,
(06:31):
the use that started, yeah, that started making graphics cards
for video games. So yeah, it's it's one where there's
so much gravity just in this company and how it
moves markets that I think it's kind of like, okay,
if the company doesn't go up or down, you know,
eight to ten percent. I think part of it is
the market just looks at is like, well what do
(06:53):
we do now? You're like, what do we do with this?
And that's kind of where we are at this point.
So again, I think that this is something where there's
clearly just this monster market for these chips right now.
I'm still not sure if it's just gonna be a
couple of year cycle or if this is gonna be
how it is in perpetuity, because we've seen this before
(07:15):
from tech companies where they spend a bunch of money
for a couple of years on new tech, they get
to a point where they're like, Okay, we can't really
make any more money off this, so you know, onto
the next and then you kind of go from there.
So it's it's hard to tell where it's gonna go.
But it's still a company that's just printing money right now.
Speaker 3 (07:30):
I was thinking about that statement earlier this morning, Chuck
and prepping for the show, and I just with all
the smart people at all these respective companies, and I
don't think we've seen anything to this size and scale
of spend that we're witnessing here with these companies. For example, Microsoft, Facebook, Google,
and Amazon are doing about two hundred and forty two
(07:50):
billion of capital expenditures this year, and then what's projected
at to eighty five billion next year. Again, not all
of that is going necessarily to these types of chips,
but a whole heck of a lot of it is.
And I just wonder not to say that, oh, it's
different this time, but there's so much money behind this,
you'd have to think that all these people and all
these respective companies believe in the power of this or
(08:13):
else it's gonna be the most epic failure of capital
end you in an economic history, just because the number
is being thrown around here. But I was just thinking
kicking that around, it has to succeed with all the
money that they've thrown at it.
Speaker 2 (08:25):
And ultimately what it's going to be. The question that
needs to be answered is can you replace an employee
with AI? Now you can't do it for you know,
a lot of manual labor jobs. I'm not saying that,
but for the white the jobs like my own, where
(08:46):
I'm sitting in front of a computer doing stuff all
day and I don't have to, you know, do backbreaking
work day in and day out.
Speaker 4 (08:55):
That's gonna be the job that the question exists for.
And so.
Speaker 2 (09:00):
Because ultimately, look Microsoft right now, look they charge like
twenty dollars a month for chat GPT if you want
their copilot program. I think it's like thirty it's like
four hundred bucks for the year. Instead, they're not gonna
make enough money selling twenty dollars a month subscriptions to
chat GPT. Like, they're just not gonna do that. But
(09:25):
the question for them and why they're investing this money is, Hey,
your company there, you've got you know, an accounting department,
or you've got a billing department, or you've got a
claims processing department and an insurance company. How much do
you pay the people in that department right now? Oh,
(09:47):
you pay them, you know, sixty thousand a year. What
about with benefits? Oh, you pay them eighty thousand a year.
We have an AI agent that can do what they do,
and it can do the work of two people at
the cost of forty thousand a year. That's the selling
proposition for Microsoft is not how many twenty dollars subscriptions
(10:10):
can I sell because Microsoft doesn't want to be in
that business. That's a crappy business, right, I mean, it's
not like a crappy business. But when you're worth three
trillion dollars, okay, you sold an extra twenty dollars subscription Yahoo, wonderful.
Speaker 4 (10:25):
What's that do for anyone? Nothing?
Speaker 2 (10:27):
You say, Hey, I've got a Fortune five hundred company
that wants five hundred AI agents at forty thousand dollars
a year. I just made a twenty million dollar sale.
And if I do that for half of the Fortune
five hundred, two hundred and fifty companies, now I got
(10:48):
five billion in revenue for the year. Oh, that's more
interesting to me than needing to sell two hundred and
fifty million, you know, twenty dollars a month subscriptions or
something like that to chat GPT.
Speaker 3 (11:01):
And you have a bit client base that you can
continue to upsell to once you have them locked in
and again these additional features and things of that nature.
Speaker 2 (11:09):
And that was looking at you know, five hundred employees
for a company. How many companies are there where they say, hey,
we've got you know, ten thousand employees, we can do
ten x that scale, We'll do this and it will
be a two hundred million dollar contract for you. That's
what Microsoft wants to sell, not twenty dollars subscriptions to
chat GPT like they're doing to me, Like they don't
(11:29):
make enough money off me. For all the you know
pictures of dinosaurs playing poker that I make, there's no
money in that for them. So's take a quick break
here and when we come back, talk about what we're
seeing in the markets overall.
Speaker 4 (11:44):
Immediately after the election, we saw this move upward, the.
Speaker 2 (11:47):
Trump bump, if you will, talk about, Hey, the market's
kind of faded a little bit in the last week
and a half.
Speaker 4 (11:54):
What gives man When we return.
Speaker 1 (11:57):
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Speaker 5 (12:20):
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Speaker 2 (12:52):
Let's talk a little bit about what we've seen from
markets in the last two plus weeks now. So immediately
after the election, we saw a you know, decent sized
bump in the equity markets. You know, the S and
P five hundred went from around fifty seven hundred up
to around six thousand, So it's about a five percent
bump that you saw there.
Speaker 4 (13:11):
And subsequently, you know has given.
Speaker 2 (13:13):
Back about you know, two percent, one and a half
two percent of that, and it's pretty much back to
where it was in mid October. Remember, markets had fallen
about three percent in late October and early November before
the election. So I think ultimately we're in a position
now where stocks are kind of treading water, and I
(13:34):
think a lot of it comes back to something that
we talked about earlier in the week, which is just
that we still don't have many details when it comes
to specifics on the policies from the incoming Trump administration.
We know, hey, you know what you want to cut
red tape. We know that you know you've talked about
tax cuts and things like that. Those things are potentially
(13:56):
stimulative to the economy, but you've also talked about things
that might create some drag in terms of tariffs, deportations,
things like that. And until we have some clarity on
the size, magnitude, and timing of all these it's kind
of hard to make a plan for what you think
the market's going to do because there's a really wide
(14:16):
range of outcomes here.
Speaker 3 (14:18):
There really is, and ultimately what's been pushed to the
back burner a little bit, Chuck here is the focus
that we had prior to the election from an economic
standpoint was the labor market, and we talked about the
October jobs report was obviously quite weak, but one of
the biggest focuses from the Federal Reserve was inflation. They
seem to feel comfortable that that is under control. The
(14:40):
labor market was the area of utmost focus, and October
was really hard to glean anything from in terms of
the labor market because of the hurricanes and strikes really
impacted that number. That's something that looms out here as well.
That's been put on the back burner temporarily. So that's
something that there hasn't been a lot of data on recently.
So that's why you perhaps are seeing markets treading water
(15:02):
a little bit here. You certainly have from a valuation standpoint.
The one piece that's mentioned here.
Speaker 4 (15:08):
Is a pe ratio.
Speaker 3 (15:10):
However, you look at it for the S and P
five hundred, that is significantly elevated. So it's a time
where markets have rallied quite a bit. But there is
a lot of sort of wait and see out there
on the table. And that applies for the interest rate
side of things too on the Federal Reserve, where there
was early indications that perhaps we'd be in a continued
(15:31):
rate cutting cycle, but Jerome Powell had come out recently
sort of putting splashing a little bit of water on that, saying,
with where the economy stands right now and the data
that we've gathered, there's not necessarily a need to potentially cut,
but all that is to bear out in the future here.
Speaker 2 (15:46):
Yeah, and I think you make a good point that
look the business cycle as a whole, there's some uncertainty
still about where exactly we are there. Two months ago,
you had you know, people generally smart people going on
Bloomberg and CNBC being like, the FED needs to cut
seventy five basis points today and in an emergency meeting
(16:09):
they got to do another one later at the real meeting.
And we've gone from that in early September to hey,
maybe the Fed shouldn't cut anymore, maybe they should actually
be hiking again, and that's not a healthy place to be, Like,
we all got to chill a little bit on trying
to extrapolate where the broad economy is going because of
(16:31):
a few weeks of data they get. Everyone wants to
be first, because if you're first, especially in the social
media world, you get to be like I called it,
listen to me, pay me, and it's like, dude, like
you were wrong on ninety six other things before you
got that one right. If you're not first your last
(16:51):
sometimes when you're first to your last two that's the
problem is when you're first to be wrong. And so again,
like these are smart people like Jeremy Siegel. I've called
him for the last couple of months, because again he's
got a degree, like a PhD from Wharton. He's smarter
than me in basically any way that you can measure.
I'm sure he's no dummy. And by the way, Jeremy
(17:11):
Siegal typically one of the biggest bulls in like the
stock market and like the periphery of it. And he's
out there calling for one hundred and fifty basis points
and cuts in September because of a bad jobs report.
Speaker 4 (17:27):
Well, where is he now? Where is he now?
Speaker 3 (17:31):
You know, were in hiding?
Speaker 2 (17:33):
Like this is the thing we all need to chill
out and not make every single data point a referendum
on what exactly the Fed needs to do. It's just
not healthy, and it's not it's not right for markets either.
And so I think in terms of where the economy
is right now, hey, basically the same place it's been in.
Speaker 4 (17:57):
For the last two years.
Speaker 2 (18:01):
There's some parts of it that are hot, there's some
parts of it that are cool, the parts that are
cooling the labor market. It's concerning and you need to
pay attention to it. But it still has been an
economy that's been more resilient than anyone could.
Speaker 4 (18:15):
Have imagined over that time.
Speaker 2 (18:18):
And as such, you have to, you know, be kind
of careful when you're calling for these big turning points
because it just like it just hasn't happened that way
this time. And I know, especially in September, we got
all these indicators that you know, oh this is you know,
this normally happens right before recession and this and that.
But there's no hard and fast rules in economics. They're
(18:41):
just aren't it. It's not physics, it's not hard science
like that. It's social science with numbers. And so when
we start quoting, you know, the some rule whose own
creator has said, hey, this might not work forever, maybe
we should listen to her a little bit.
Speaker 4 (18:58):
Certainly a fair point. That's all I have to say.
Speaker 2 (19:01):
Is, you know, let's let's all pump the brakes a
little bit on. You know, hey, jobless claims came in
today and they were lower than you know, last week.
Does that mean that inflation's back. No, it means that
they were lower for one week. It doesn't have to
have some broader meaning in the you know, the world
economy or the US economy. Let's take a quick break here,
(19:23):
and when we come back we'll do a little bit
of Wall Street Watch, and then the Justice Department saying
what they want Google to do as a result of
Google losing their anti trust case.
Speaker 4 (19:34):
We'll fill you in on that right after this.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch. A complete look at what's moving market so
far today right here on the Financial Exchange Rate Network.
Speaker 5 (20:03):
Markets are pulling back after earlier gains as investors digest
third quarter earnings from AI in Chip Giant, in Nvidia.
At the moment that now is actually up by seventy
three points. However, SMP five hundred is down by over
a third of a percent, or twenty one points, in
a Nasdaq selling off by over one percent or two
(20:24):
hundred and sixteen points. Russell two thousand is up by
nearly one percent on the day, ten year treasure reeled
is off by two basis points at four point three
eight percent, and crude oil up nearly one and a
half percent higher, trading at sixty nine dollars and seventy
cents a barrel, well after earlier gains. And video shares
(20:45):
currently down by three percent after the chip maker beat
third quarter earnings expectations, posting a jumping quarterly profit and revenue. However,
the company failed to meet some investors' lofty expectations. Meanwhile,
data cloud company Snowflake beat earnings expectations for the third quarter.
Snowflake's guidance also beat esmonds, though losses grew. That stock
(21:09):
is surging by thirty percent on the day. Elsewhere, Palo
Alto Networks issued fiscal second quarter guidance largely in line
with expectations and also announced a two for one stock split.
That company, or the shares in the cybersecurity company, are
down by over one and a half percent. Several crypto
related stocks are seeing attention this morning, including micro Strategy
(21:33):
and coinbase, after bitcoin hit ninety eight thousand dollars for
the first time but has now pulled back to ninety
six thousand dollars. Micro Strategy also said it has sold
two point six billion dollars of convertible bonds to purchase
more bitcoin. Micro Strategy shares down by three percent and
Bjy's Wholesale Club up by seven percent after the warehouse
(21:56):
club posted a third quarter earnings beat and hiked its
full year guidance. BJ's also announced a one billion dollar
share repurchase program and said it will raise its membership fee.
I'm Tucker Silva and that's Wall Street.
Speaker 4 (22:10):
Watch Tucker. You also buried the lead on micro Strategy.
Speaker 5 (22:15):
Oh I did Okay, I missed something there?
Speaker 4 (22:17):
You did?
Speaker 2 (22:18):
What The stock is nineteen percent off it's intra day
high from where it opened. The sye Oh oh okay,
so things are kind of wild there. Coinbas is getting
whack too, right.
Speaker 4 (22:27):
Yeah, it's actually sorry.
Speaker 2 (22:28):
Micro Strategy just lost another two percent now twenty one
percent off of its intra day high.
Speaker 4 (22:33):
So it's uh, pretty bumpy. Look, here's the thing.
Speaker 2 (22:38):
Things that typically go parabolic up in markets, they rarely
just stop and level off. They tend to get a
little bit bump delicious. So uh, it's it's it's a
little bit dodgy out there right now in some of
these areas, and you just have to be very careful because, man,
(22:58):
all I can tell you is hearing from crypto people
right now the same way I was. You know, the
last couple peaks and it's uh again, who knows where
it goes. But man, once everyone's paying attention, to something.
It's it's usually not. It's usually not the time where
(23:20):
you see, like, wow, the most robust games ever are
yet to come, you know, like it's you know, just
buyer beware on all stuff.
Speaker 4 (23:27):
Right now, let's talk a little bit about Google.
Speaker 2 (23:31):
They lost an anti trust case earlier this year, and
the DOJ spent the last couple months writing their remedies
that they want to give to the judge. In terms
of what they want the judge to do, Paul, would
they say they would like to see?
Speaker 3 (23:47):
This is pretty meaty stuff here, Chuck. There's a lot
to kind of go over, but basically, what they're a
couple of the noteworthy points here is the Justice Departments
wants to enable and encourage unfettered and un confettered search ecosystem.
They want to allow for other competitors to make inroads
in this market. Google has you know, eighty percent market
(24:08):
share or maybe even more than that, eighty to ninety
percent market share. They they really are the major player
in the space. And what the Justice Department particularly was
going after was the fact that on Google products such
as an Android phone system or a pixel device phone,
the default search browser if you just are in to
(24:28):
type into. First of all, the default browser is Google
Chrome on those devices and all searches go through Google.
Google also pays tens of billions of dollars to Apple
to be the default search engine on the Safari on
iPhones out there, and the same applies for other many
other different vehicles out there. That Google is able to
pay to be the only game in town from a
(24:49):
search perspective. So they want to separate its products, which
are the Android phone system, from the search engine. They
want the browser of Chrome to to be spun off
and sold off so that they don't have this overwhelming
dominance in the search engine space. And so what Google
(25:11):
makes a lot of its money from is the fact
that it is the widely acknowledged search engine out there
on all these different platforms, and fifty seven percent of
their three hundred and seven billion of revenue comes from
ads next to search. So if you are Google and
you're not able to generate as much search capacity as
you were previously because some of these edicts from the
(25:32):
Justice Department, that would hit it huge hit on revenue
if that were to go through.
Speaker 4 (25:38):
This.
Speaker 2 (25:39):
Obviously, these are just recommendations from the Justice Department, And
again there's a number of them. So the again selling
off Chrome is part of it, maybe needing to sell
off Android if Google violates some rules in the future.
So there's some different pieces here. Ultimately, the judge is
going to say, yes, this is what I am going
(26:01):
to say, is you know.
Speaker 4 (26:03):
Gonna be the law of the land.
Speaker 2 (26:05):
And then from there it's obviously going to be appealed
by Google.
Speaker 4 (26:09):
It's like good, there's there's too much money for.
Speaker 2 (26:12):
Google to just be like, yep, we're cool with its
good guys, we'll see you later.
Speaker 3 (26:18):
Some money from that three hundred and seven billion of
revenue to to dish around to pay some legal fees.
Speaker 2 (26:22):
Yeah, So this is something that again is pretty meaty here.
And the other thing that we do need to be
aware of is, look, there's going to be a new
head of the DOJ coming in with the incoming Trump administration,
and so the question that's out there is, look, does
the new DOJ continue to push this case in the
(26:42):
same way. And I don't I don't know any specifics,
Like none of us do we like, we don't even know.
There's no one confirmed to lead you know, the DJ.
We're not at that point. But what I do know
is have Republicans been you know friendly in conversation to
big tech recently? Not really, right, No, it's kind of hey, like,
(27:06):
we don't really like you that much. And so I
wouldn't be surprised if the incoming administration says, yeah, like,
we're not going to do anything to change this.
Speaker 4 (27:16):
Now.
Speaker 2 (27:16):
They they certainly may you know, have some some changes
around the margin. But remember the first DOJ suit against Alphabet,
the parent of Google, was filed by the Trump administration
in twenty twenty. So it's not something where the Trump
administration previously has you know, veered away from actually you know,
(27:40):
undertaking anti trust actions against big tech. I wouldn't be
surprised if they continue to push this case. It wouldn't
surprise me one bit here. So this is kind of interesting.
And look, the market's taking this seriously too. Alphabet stock
down five point three percent today, yep, So the market
is saying, huh, there's there's something there. And by the way,
(28:02):
that five point three percent dip is the biggest percentage
dip for any S and P five hundred component. As
I am looking at it right now, I'm just trying
to make sure that's correct.
Speaker 4 (28:13):
But I'm pretty sure.
Speaker 3 (28:15):
I see now off six yes, six six plus percent,
so so certainly taking it very seriously.
Speaker 2 (28:20):
Here I get six point three now and the next
closest is Ulti Beauty down two point seven.
Speaker 3 (28:26):
So it's interesting to know that in the EU they
had enforced a choice screen where basically people have the
choice to utilize different search engine providers, and Duck Duck
go Chuck's favorite search engine, saw seventy five percent increase
after that choice screen was made available. So it's it's
serious if this were to go through, but it's got
a long way to go.
Speaker 2 (28:45):
Can I tell you something about search though, because I've
been I've been poking around, like all over the place now,
I've been, I've been banging, I've been Duck Duck going,
I've been I've been googling. I'm sure they all suck,
They're all horrible. Search is broken because of AI. Honestly,
the amount of AI generated crap that floats to the
top of search engines now that is completely useless for
(29:07):
what I'm trying to actually find.
Speaker 4 (29:10):
The Internet is broken.
Speaker 2 (29:12):
I don't know if if you guys have had similar experiences,
but in googling.
Speaker 4 (29:17):
Stuff that should be you know like that.
Speaker 2 (29:20):
Historically, hey I google this, like one of the first
two results comes up and it's exactly what I need.
It's it's one of two things now. Either the stuff
that's making it onto the internet is just AI generated
crap and search engines are selecting for it because their
algorithms are broken. The other thing that I'm starting to
see a lot of companies are pulling down resources that
(29:42):
used to be on the web. They're just not set
up the same way with the same content that used
to be out there. And this is ultimately going to
be a bigger problem for Google than this. If people
just say, hey, search engines are broken and they're not
giving me the information that I need as a effect
actively as I want. That's a bigger problem when people
(30:03):
stop using them, because like, have you guys had this
experience where you're just finding AI.
Speaker 5 (30:09):
Generatord I definitely have to double check some of my
searches in terms of if it's actually accurate, because you
can see the two blurbs like above, and sometimes it's
not accurate in terms of like one thing is saying
one thing and the other saying X, Like it's.
Speaker 4 (30:25):
It's fifty to fifty I'd say.
Speaker 3 (30:27):
Yeah, sometimes the Google AI Assistant piece is effective the
way it summarizes with both points at the top.
Speaker 4 (30:33):
But Tucker is right.
Speaker 3 (30:35):
Sometimes it's exactly what I'm looking for up there, but
then other times I'm like, wait a minute, I kind
of gotta poke around a little bit further.
Speaker 2 (30:41):
I'm not even saying that like the Google summary. I'm
saying the stuff that's floating to the top in terms
of you know after that, that the number one, two,
three search responses. A lot of times they're just AI
stuff that has nothing at all to do with the
topic in any meaningful way. And I'm finding that to
(31:02):
be more and more problematic because it's getting so easy
to write stuff using AI that you've just got people
that are using it for everything, and it's diluting the
quality of search, in my opinion, and that's bad for
the Internet, like you, for multiple reasons. The other being, Hey, eventually,
if all you have to train your AI stuff on
(31:23):
is a bunch of other AI stuff that isn't right,
it's not really a good feedback loop to be in.
Let's take a quick break here. When we return, let's
talk a little bit about TikTok. We've been talking Google,
Let's talk TikTok next.
Speaker 1 (31:38):
The Financial Exchange Show podcast drops every day on Apple, Spotify,
and iHeartRadio. Hit that subscribe button then leave us a
five star review. You're listening to the Financial Exchange Radio Network,
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here on the Financial Exchange Radio Network.
Speaker 4 (32:05):
Paul, do you TikTok?
Speaker 3 (32:08):
I do not TikTok?
Speaker 4 (32:10):
Do you tick?
Speaker 3 (32:12):
My family likes tiktoks a lot. They've been a huge
hit with the kids.
Speaker 2 (32:15):
But you don't tick nor talk no okay. In any case,
TikTok is a if you're not familiar with them. They
are a social media app that is owned by a
company that has direct ties to the Chinese government and
through that direct ties to the Chinese military in terms
of how Chinese law works and how information.
Speaker 4 (32:35):
Is required to be shared as such.
Speaker 2 (32:38):
For basically the last six or seven years, we have
seen questions about whether or not TikTok should be banned
in the United States, including in twenty twenty when then
President Trump attempted to ban TikTok unless it could be
sold to a US fire Now there is a federal
law that was signed earlier this year. It says TikTok
has to be sold to a non Chinese company by
(33:00):
January nineteenth, which by the way, also happens to be
a day before President Trump's second inauguration, or TikTok will
be banned in the United States.
Speaker 4 (33:10):
So the question is what's gonna happen with TikTok.
Speaker 3 (33:14):
Paul, It seems like as much as you mentioned in
twenty twenty, Trump was behind trying to block the app
and for sale to an American company, that he's done
a bit of a turnaround on the platform. He during
this recent campaign joined TikTok and had fourteen point four
million followers and seems to have some ties to donors
(33:38):
who are connected to TikTok. For example, Jeffyass, who's a
billionaire investor and a Republican mega donor who has a
significant share of Byteedance, the parent company of TikTok. They
have had a relationship Jeffass and President Trump. You also
have others that are connected to TikTok that have a
(33:59):
reasonably close relationship with President Trump. So there now is
some optimism out there that perhaps with President Trump getting
back into office and his turnaround on TikTok in general,
that there may be perhaps an easier solution for TikTok
to stay present in the United States. But again, this
is one of these items that it's really hard to
(34:21):
determine where this is going to go from a direction standpoint.
It could get tied up in the courts again as well,
because I think we're waiting on some additional legal decisions
here that could come before the January nineteenth deadline.
Speaker 2 (34:37):
Gotta say, don't love the idea of it's sticking around
under its current ownership.
Speaker 4 (34:42):
Don't love it.
Speaker 2 (34:43):
I've been pretty consistent on that since day one, But
we'll see what happens here.
Speaker 5 (34:47):
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Speaker 4 (35:48):
Paul, You ever eaten a banana? Yes? I have? What
do you think of banana costs? Uh?
Speaker 1 (35:57):
Oh boy, Paul?
Speaker 3 (36:01):
Just one single one seventy nine cents.
Speaker 2 (36:04):
It's probably about a quarter of that, but you're you're
at least in the right ballpark here. Generally a bunch
of bananas is usually somewhere in the ballpark at two dollars.
So there is a very special banana though, that has
been duct taped to a wall in Miami for the
last five years. Italian artist Mauricio Catalan did this as
(36:26):
an installation there, and in fact, it's not just one banana.
You actually have to change it every few days because
you know that the banana goes bad.
Speaker 5 (36:34):
I I was wondering that they do have to change
it every few days.
Speaker 2 (36:38):
But they they finally sold the banana off and it
was auctioned off by Southey's and it received six point
two million dollars at auction on Wednesday night. In conclusion,
the FED needs to hike What the heck? Well, no,
so here's the thing. So again a lot of people
(36:59):
are like, oh, like, what the heck? It was just
a banana duct tape to a wall, and it is
just a banana duct tape to a wall. But ultimately,
here's the thing. And I'm a big believer in art,
and and art's kind of weird. That's that's kind of
the point of it is to use it's it's weirdness
to express something inside of you that other people can
relate to. In this case, the entire point that he
(37:21):
was trying to make, and he's said this in interviews
is look, I hate like what art's become where it
has to be this giant thing I want art to
be something that's simpler, that more people can understand, and
we have to do the way to do that is
by making fun of what art has become.
Speaker 4 (37:38):
And I personally really love that.
Speaker 2 (37:40):
Now, would I pay six point two billion dollars for
a banana the whatever it should be? Six point two billion?
It's underpriced in my opinion. Would I pay that money?
Speaker 5 (37:48):
No?
Speaker 2 (37:49):
I wouldn't. But ultimately, any art is about trying to
convey a message, and in this case, the message is
the medium, which is a banana tape to a duct
tape to the that.
Speaker 3 (38:00):
Has not given anyone a better understanding of art.
Speaker 2 (38:03):
I think I just gave people a great understanding of art.
Maybe just don't like art.
Speaker 4 (38:07):
It's a scam. Art is a scam. Paul, have you
no soul? Have you no heart?
Speaker 2 (38:16):
No, We're gonna take a quick break where hopefully we
can see if Paul can cry, and when we come back,
we'll have more financial exchange.
Speaker 1 (38:26):
Right after this
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