August 7, 2024 • 35 mins
Chuck Zodda and Marc Fandetti explain why consumer spending is one of, if not the biggest factor, in the country avoiding a recession. Is the Fed in for a bumpy ride over the next couple of months? Why should workers expect a much smaller raise this year? Disney posts first-ever streaming profit, but the theme-parks are proving to be a drag. Microsoft fires back at Delta after massive outage says airline declined 'repeated' offers for help.
Mark as Played
Transcript
Episode Transcript
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Speaker 1 (00:00):
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(00:21):
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(00:42):
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by Veterans Development Corporation face is the financial exchange with
Chuck Zada and Mark Vandetti.
Speaker 2 (01:13):
Chuck, Mark and Tucker with you here, and the markets
continue to rally after you challenging few weeks, culminating in
Monday's selloff. But the Dow Jones Industrial Average is now
up four hundred and forty seven points today about one
(01:33):
point one percent. The S and P five hundred is
up eighty three points about one point six percent. In
the Nasdaq up three hundred and fifteen points are about
two percent today, So all three major US indices are
in the process of rallying right now. If you take
a look at the S and P five hundred at
the moment, it's hips right now at fifty three twenty two,
(01:56):
which is about six point one six point two percent off.
It's all time high. So if you're wondering, you know,
how far have thing's fallen, about six percent at this
point from the peak. It's not to say that things
won't get worse. None of us know what's going to
happen tomorrow, the next week, or the next month. But
where we stand right now didn't even get to a
(02:18):
ten percent correction in markets. We stopped just shy of
that think about nine point six nine point seven percent
intra day on Monday and now off a little bit
more than six percent currently with the S and P
five hundred being back right now to where it was
in early June. I'd just like to say that to
contextualize where we are. If you were looking at your
(02:39):
portfolio in June and saying, gee, I'm pretty happy with
how this year's gone so far, you're right there. You've
just given back, you know, six weeks of games or so.
Speaker 3 (02:47):
Otherwise we're a little spoiled, at least I am. There've
been an abnormally there've been abnormally few down days, extreme
down days really over the past twenty twenty two was
an exception, but over the mouth to say, over the
past several years, with a couple of very big exceptions,
markets have. If you look at so called volatility, which
is a fancy way of saying spread around the average,
(03:11):
how dispersed something is, which is how people in finance
think about risk, they say volatility. Sometimes, if you want
to fancy your term, you can say standard deviation and
you can blow somebody socks off.
Speaker 2 (03:21):
I have to tell people, I take the square of
very square variance and that's you know the square root
of yeah, square roots.
Speaker 3 (03:28):
Sorry, yeah, you're right, yeah, right, right right.
Speaker 2 (03:31):
You know that really blows people's hair back when you
start talking like that. It's like, oh, that's when they
walk away. This guy. I'm not hanging out with these concepts.
Speaker 3 (03:38):
By the way, if I can get them, anybody can
get them.
Speaker 2 (03:40):
The terms like the actual is the terms are more
intimidating the than the math.
Speaker 3 (03:47):
That total is totally most of it is like eighth
grade algebra or before. To be fully honest, the day
to day stuff anyway, So it's been unusually placid lately,
with the a few exceptions the past a few years.
Twenty twenty, twenty twenty two. So you've said this a lot, Chuck.
You showed some great illustrations internally this morning of the
(04:07):
frequency of big draw downs and the point you tried
to make, and you make it a lot you and
Mike Armstrong do on the show is volatility is normal.
It's why we get paid to hold stocks. You don't
get the eleven to twelve percent a year that we've
gotten out of big cap stocks anyway, a little more
out of small over the past century now for less
(04:28):
risk than bonds.
Speaker 2 (04:29):
If you want something with no market volatility, there's a
savings account with your name on it. You know, it's
a there's an investment choice for everyone, depending on your
risk tolerance. But it's it's something where when you're buying stocks,
you are buying volatility. That's like that. It's it's yes,
you are, it's a pri American component. That's where you are.
Boxing's right, that's right. So you just have to expect
(04:52):
that stuff like this. It's gonna happen from time to time.
Speaker 3 (04:55):
And a good rule of thumb is when somebody promises
you seems like a pretty high rate of return, even
a bank, you got to ask, how is it that
you're able to generate that? What risks am I getting
paid for? So when a bank offers a high yield
savings account, it's worth backing up and saying I'm getting
two percent more at the co op than I am
at Citizens or wherever. What is backing that deposit? What
(05:15):
is bet? Do you have a riskier book of business
than another bank does. You can't untangle risk and return.
They're inherently intertwined. Risk.
Speaker 2 (05:25):
Another great quote, I don't know who said it originally,
but I won't take credit for it. Risk is neither
created or destroyed. It's just transformed into something else. It
just ends up somewhere else in terms of what type
of risk you're ultimately taking on. Taking a look at
other parts of the market, the US tenure treasury up
seven basis points to three point nine six percent. We've
(05:45):
got oil today up two dollars and ten cents barrel
to seventy five thirty triple a national averageur gas prices
continuing to slide down another three tenths of ascent to
three forty five and nine tenths right now. And we've
got gold today up eight dollars an ounce twenty four
to thirty nine and sixty cents mark. There's a piece
in the New York Times today that on one level,
(06:09):
the headline is, you know, very factual. On the other
it's you know, somewhat dehumanizing. It kind of reminds me, well,
I'll talk about this in a little bit, but the
headline is to avoid recession, consumer spending is key, and
the piece itself, you know, is really talking about, hey,
we're a consumer spending economy, a consumer based economy, and
(06:30):
as you know, household spend that tends to drive you know,
the vast majority of growth in the United States. It
can be in the form of borrowing, it can be
in the form of spending income, but it's generally you know,
household spending is a big component of spending. And it
talks about look if if you start to see that
weeken further, you know, that could be something that triggers
(06:52):
a recession, with the implication being, hey, spend money if
you want to avoid recession, which I always hate because
it's just one of the most dehumanizing things out there, Like,
I don't exist to prevent a recession in the United States.
I still remember after nine to eleven, Yeah, I.
Speaker 3 (07:10):
Was gonna talk. I was just gonna bring this up.
It go go.
Speaker 2 (07:13):
One of the most infuriating things I've ever seen. And
I was like fifteen years old at the time, and
I'm like, oh my goodness, this is wrong. George W.
Bush comes out and you know, they're talking about like, hey,
you know, what can we do, Like everyone's like all
everyone's all together at this point for like the only
time since like World War Two. Basically everyone's like, hey,
we all got to, you know, fix this. And someone
(07:34):
interviews me it's like, hey, what should we do to
like get out of this, And he's like, go out
and spend some money, Like that's the best thing you
can do. Like are you kidding me? Like that's the
that's the advice at a time like this, And this
headline just comes off kind of the same way, very subtly, like, hey,
spend money if you want to save the economy. Well, no,
that's not that's not why I exist as a person,
(07:55):
is to save the economy.
Speaker 3 (07:57):
Sorry, yeah, I get it. That's what his economists, his
Accouncil of Economic Advisors, was telling him at the time.
They were cutting taxes at the time. That was part
of his campaign pledge. But it turned out to be
really well timed, not just because nine eleven, but because
the economy was slowing and we had a recession in
two thousand and one. It was shallow, but we had one,
and it was underway before nine to eleven. It was
(08:19):
over almost by the time eleven open anyway, anyway, So yeah,
that's all policy is predicated on that. But to say
it in such crass terms rubbed a lot of people
at the time the wrong way. But in fact, as
you point out in an accounting sense. The way we
measure economic growth, which is gross domestic product or GDP,
(08:39):
is seventy percent consumption demand spending. So it's unavoidable. But
at the same time, looking back, and I'll show this
slide internally tomorrow morning, Chuck, and obviously I can't share
it with you, but we'll look at it here at
I'm Stark Advisory Group in the morning. In most recessions,
spending actually does not go down interestingly into negative territory.
Most recessions are invent or investment driven. That's where the
(09:02):
biggest drops occur in what pulls GDP into negative or
recessionary territory. So yeah, spending, if you do enough of it,
can pull you out or mitigate the brunt of it.
But there are other components to GDP, and some of
those components are of course spending driven. So this is all,
ultimately the end of the day, one big pot of
money if you like. But in recessions it's often inventories
(09:25):
and investment, including housing, that drag GDP down.
Speaker 1 (09:30):
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Speaker 2 (09:54):
Bill Dudley ran the New York branch of the Federal
Reserve for about ten years, finishing up in twenty eighteen.
A couple of weeks ago, he published an op ed
that we covered where he said, Hey, I think it's
time to start cutting interest rates. And I noted that
it was notable that someone like him was saying that,
because he's a pretty prominent voice in monetary policy circles.
(10:15):
And today he's got another op ed in Bloomberg and
it talks about how, hey, as we go over the
next couple of months, we're not really gonna know whether
or not we're in recession or not in real time. Again,
the NBER doesn't declare it as it's happening. It's often
looking backwards, not often, it's always looking backwards at the
(10:35):
data that they do. And so he maintains, look, we've
got this risk here. The inflation picture is, you know,
better than it was before. But the risk that we pod,
the risk that we have is unemployment when it starts
to rise tends to end up rising very quickly, and
so you've got a nip it in the bud before
it becomes a real problem.
Speaker 3 (10:56):
Your thoughts, Mark, Yeah, his rationale there is Recessions can
sometimes be shallow and fast. We were talking off air
about two thousand and one. Even though it took capital
markets a long time to recover and unemployment remained high,
it was a relatively short recession, happened over a couple
of quarters, and the negative GDP growth quarters, though that
(11:16):
is not the trigger for the definition of a recession.
They were actually apart from one another. Nineteen ninety another example.
I think it was two July to March, so a
few quarters, but pretty shallow. Though it took unemployment a
long time to get low again, so the scars were severe.
These guys are desperate too, I say guys, I mean
guys and women the Federal Open Market Committee and people
(11:38):
like Dudley who chirped from the I don't mean that
in a demeaning way. He's pre eminent, he's a giant.
But people who chirp, for lack of a better way
to put it, from the sidelines, they desperately want to
avoid recessions because they've had a few in their lifetime
that have left behind wreckage for the two years to
clean up. It's not clear we're in one. It never is.
(11:59):
As you point out, some leading indicators have perked up
over the past few months. Some are problematic, like some
labor market indicators that we talked about last week. He
seems to think that the weight of the evidence, the
balance of the evidence, points toward a slow down or worse.
And his point is that you can't control slowdown, so
(12:19):
you don't want them to snowball into recessions. So the
Fed aught to act now. Anything they do today won't
affect the real economy for months, maybe several quarters, So
get started today, guys. That's how I read it.
Speaker 2 (12:30):
The other thing that is interesting, just when you talk
about where we are right now, the idea of the
soft landing, and we've talked about, you know, kind of
how we would define it, you know, on the show,
I think we said we don't want to see, you know,
unemployment or the inflation rate get back above four and
a half percent this Year's that's kind of how we
would define it. But the actual landing part of the
(12:53):
soft landing is going to be characterized ultimately by a
period of time where you're not sure if you are
going into recession or not because you're landing a no
landing like what we went through last year. That was
not the soft landing, Like you never actually saw the
economy land it ever got to the point where it
(13:16):
had slowed down enough to conclusively be done with inflation.
We were saying that for quite a while. So there
are going to be questions if you actually, you know,
kind of go through a soft landing period. Asking the
question of hey, are we in recession or not is
going to be a feature of that time period in
my opinion as well, because that's the only way that
you actually get to a real landing in the economy
(13:37):
is even you know, asking those questions about hey, are
we heading to recession or not? And we haven't really
asked those seriously, at least on this show in the
last couple of years.
Speaker 3 (13:46):
GDP's pretty a lot of economic series measures are very persistent,
so slow downs tend to be followed by further deceleration,
and the opposite is also true. You can't just put
the brakes on and then take your foot off the brakes.
There is no throttle, well there is. It's like monetary policy,
(14:06):
but it's it's as if every time you put your
foot on the gas you don't know exactly how much
fuel you're putting into the chamber. So it's a really
unreliable throttle. Government can't find tune and the Fed, I'll
include in government can't fine tune the economy. So once
you start slow, you might not be able to stop it.
Once you start stimulating it, it might get out of
hand and run hot too. This is the challenge for
(14:30):
policy makers.
Speaker 2 (14:31):
Along these lines. There's a piece in the Wall Street Journal.
It's titled Prepare for your next rays to be smaller
than you hoped? Okay, And this is the exact headline
that the FED wants to be seeing in terms of, hey,
how do we stamp out inflation On the demand side,
it's through stuff like this.
Speaker 3 (14:51):
Yeah, I very well put. They need to see weight.
They want to see wage grow. As cruel as it sounds,
they need to see real wage growth, uh slow down
to reduce demand, reduce price pressures, virtuous circle.
Speaker 2 (15:05):
They need to see nominal slow down, not real you.
Speaker 3 (15:09):
Could say, have real wage, real wage growth could.
Speaker 2 (15:11):
Real wage growth is great because it means that you're
you're growing spending power without necessary.
Speaker 3 (15:15):
What if you're what if real growth well okay, yeah.
Speaker 2 (15:18):
Real wage growth is I don't think it's inherently good
or bad.
Speaker 3 (15:22):
Well, maybe it's good for maybe you think it like
unit labor costs with your productivity adjusted like that would
be you know, So.
Speaker 2 (15:28):
Let's say, let's let's look at real wage growth just
as an example. Let's say that wages go up two
percent inflation zero. That would not be a bad scenario
where real wages are growing.
Speaker 3 (15:39):
And that example. No, but what if that was an
excess of the economy's growth potential. I guess it should
just continue. Yeah, real nominal They need to see wage
growth slow.
Speaker 2 (15:48):
They want to Yeah, let's what they want to wage
growth slow?
Speaker 1 (15:51):
You know.
Speaker 2 (15:51):
Yeah, I don't mean you know, tomato tomato, and it
kind of is what.
Speaker 3 (15:56):
So, Yeah, they're happy with this phenomenon.
Speaker 2 (15:58):
And this is something where when we talk about the
tools that the FED has to deal with inflation, unfortunately
they are blunt and typically induce a recession or get
pretty close to it in order to slow the economy.
It's not something how it works. Yeah, like, that's kind
of the nature of the beast. They don't have anything
they can specifically target, and you wouldn't want them to
be like micro targeting sectors of the economy or this
(16:20):
and that, because then you get into you know, central planning,
which doesn't really work for anyone.
Speaker 3 (16:25):
As we all know, some treatments for bad diseases make
you sick. They have terrible after a fac I don't
want to cite a specific example because some of you
out there are dealing with this, but you all know
what I mean by this. Sure, this is the medicine
you take for inflation is unpleasant and has bad side effects.
The question is getting the right dosage.
Speaker 2 (16:44):
So that's where we stand at the moment. Again, the
economy is slowing by you know a number of different
data points that we look at. It still is unclear
whether a recession is going to happen or not, but
it's a higher probability now than I've seen in the
last couple Yeah, I.
Speaker 3 (17:00):
Wish people would let up a little bit because of
the self fulfilling nature of the doomsday prophecy.
Speaker 2 (17:06):
Totally.
Speaker 3 (17:06):
You get people warrior. You say, the more you say recession,
the more it's on all of our minds. The more
weaker tail spending we may as a consequence, reduced demand
too much. Getting back to the balance, the FED is
trying to strike and talk of recession can be fulfilled,
It can become self fulfilling.
Speaker 2 (17:23):
Should we talk about an expansion then instead? Actually, if
you do want one bright sign, the FED released their
survey of loan officers. The FED goes out and they
survey a bunch of banking loan officers four times a year,
every quarter, and their most recent one for July just
came out earlier this week. It kind of got lost
in the shuffle on Monday. It showed some meaningful improvement
(17:47):
in banks reporting better growth in loan requests from businesses
and companies.
Speaker 4 (17:56):
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Speaker 2 (18:19):
Marke. Let's talk a little bit about some earnings that
we have received. First, let's talk a little bit about Disney.
They reported earnings before the open today and they posted
earnings of one point thirty nine to share above estimates.
Revenue came in a touch above estimates as well. They
guide it a little bit higher for the future in
(18:42):
terms of growth rate and things like that. But Disney's
knocked down a couple percent today. And this is kind
of a common theme that we've seen over the course
of this quarter, which is, hey, even if you're beating
on earnings, unless you're doing it by knockout margins, you're
not really doing enough to keep your stock price moving
forward right now.
Speaker 3 (19:00):
Well, Parks and this is from the Financial Times, not
off the top of my head. Business Parks unit contributed
seventy percent of operating profit, which is one measure of profitability, and.
Speaker 2 (19:11):
They did warrant that would be slowing down.
Speaker 3 (19:13):
So yeah, that was this. This is my point. I
mean streaming, the the operating margin on streaming like less
than a tenth of a percent. Overall, it's like thirteen
And this again just to be celebrating that.
Speaker 2 (19:25):
They finally got the profit on streaming.
Speaker 3 (19:28):
Overall, it's like thirteen percent. And to put that in perspective,
apples this is like thirty Microsoft's. It's like forty five.
Again a measure of profitability of of of what after
paying normal operating expenses, which is most stuff. How much
of your revenue is profit after paying normal ongoing expenses.
So yeah, not exactly impressive. I guess.
Speaker 2 (19:50):
No, it's again, the company's fine. It's not really indicating
that it's going anywhere good or bad. It's just kind
of we're here, you know, we're we're doing all right,
but there's not really anything new that's happening.
Speaker 3 (20:07):
You could put this, I guess in the slow down
column though, evidence of a slow down.
Speaker 2 (20:11):
I think so.
Speaker 3 (20:11):
Yeah, getting indications everybody from McDonald's to other retailers that
you guys covered last week, other other consumer oriented companies,
evidence pointing to cautious statements made during these earnings calls.
Speaker 2 (20:25):
And a trip to you know, a Disney park is
absolutely something that falls into the discretionary category. I mean,
you talk about I'm not even sure. I'm pulling it
up right now just because I'm curious. What do you
think it costs to do a day at Disney World
right now? For like a family of four, just a
a single part, like one ticket, one and five dollars
(20:46):
you got one twenty five in the pool. Yeah, what
do you think?
Speaker 3 (20:50):
I might stay closer to two, but I have no
reference point.
Speaker 2 (20:53):
All right, let's see. I'm just pulling it up right.
Speaker 3 (20:55):
Now because I got it through reasonable.
Speaker 2 (20:57):
Let's see, and we're doing single day ticket.
Speaker 5 (21:00):
Yeah, I think that's fair.
Speaker 2 (21:02):
Let's see. It looks like they start at one oh
nine a day. Okay, but I'm gonna see if that's
like the week of July thirty first in Florida or
something like that, because obviously this can wow, you've really
got to click like a million different things. Yeah, So
if you want to go on a Wednesday in August,
it's one hundred and nine dollars a ticket. Let's say
(21:23):
that you want to go when it gets a little
bit cooler, even just you know, September Saturday and September
you're up to one forty five Saturday. In October you're
up to one fifty five.
Speaker 5 (21:34):
Give me the February one. I mean that's when everybody
goes to Disney, like February March, somewhere in that range.
Speaker 2 (21:39):
Not as high as you would think. I mean it is,
but it's not. It's it's one hundred and sixty nine dollars. Okay,
it says one sixty nine plus though, so let me
click on it. Okay, hang on, fake news. Oh no,
that's if you want to go to Animal Kingdom. If
you want to go to Magic Kingdom, then it is
one hundred and eighty nine dollars for a one day time.
Speaker 1 (21:58):
Nice.
Speaker 3 (21:58):
So Mark was closer, pure luck.
Speaker 2 (22:01):
And but again that's for one day. If you stretched
out to four Let's say you're doing you know, you
need four days of goofy because that's kind of your thing.
Then you are I.
Speaker 5 (22:13):
Would I need to see goofy all four days?
Speaker 1 (22:16):
Just goofy?
Speaker 2 (22:17):
I need coofee. Then you are looking at what how
do I even do this?
Speaker 5 (22:26):
You want to know the cost of going to Disney, No,
just come on in. You don't need to know the cost.
Speaker 3 (22:30):
Just come on down.
Speaker 4 (22:31):
Okay.
Speaker 2 (22:31):
I guess when you buy a multi day ticket, it
doesn't matter which park you go to, they're all just
the same cost. And that becomes one hundred and fifty
eight dollars a ticket. So you get an eleven dollars
a day discount by buying a four day ticket. Okay,
you're not again discretionary purchase like these things are not.
Speaker 3 (22:47):
It's a point I'm making something that was crying out
for dynamic pricing. It would be that because you don't know,
what do they address prices on the fly, maybe they
are doing it. Excuse me, I like on a rainy day.
Speaker 2 (23:00):
I think proud, and I think that the way that
they do that might be through like their speed pass
things or fast passer Genie and all that stuff, which
they then you pay to get on rides more quickly
if you need to, okay, And so that is that.
Speaker 3 (23:15):
By saying in the experience, okay, and.
Speaker 2 (23:18):
Look, a lot a lot of people listening to be
like one hundred and sixty dollars a day for Disney,
like that's crazy, And my answer to be, yeah, it
probably is. But we all do kind of dumb, crazy
things that cost way more money than you know, we
would normally say, like, you know, some some of us
spend money on I don't know, you're a big sports
fan and oh like I went to this game and okay,
(23:38):
like that was way more than your thought. Or hey,
I'm really into golfing and look at this course I played,
or hey, you know, I'm you know, really into hunting
and you know, I spent X number of dollars trying
to get, you know, a bear tag for this fall,
and you know, because it was a lottery in this
like we all spend money.
Speaker 3 (23:55):
I tag that entitled you to hunt bear.
Speaker 2 (23:57):
Yes, actually moosetag is the one that's usually a lottery
up in Maine. I think bears. I don't think you
have to go through a lottery in a lot of cases.
I think you can basically get what you want. But
in I believe it's Maine and maybe New Hampshire, they
have a lottery system in parts of the States for
moose where basically you put in a ticket and say, okay,
(24:17):
I'm hoping I'm gonna get this, and then if you do,
I can't remember if it's you have it might be
like three days, it might be a week. I can't remember,
just because I haven't looked at it in a while.
But if you get it, great, If not, you didn't,
so that's the deal.
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That's visit USVII dot com.
Speaker 2 (25:32):
Let's talk about some other earnings here. CVS, which is
again New England based company that just has been really
really struggling for quite some time now. They had a
brief reprieve in kind of late twenty twenty through early
twenty two, largely on the back of you know, a
(25:55):
lot of visits coming through because of COVID nineteen shots
and boosters and things like that, but otherwise ten years,
the total return on CVS stock dating back ten years
right now, again this is total return including dividends, is
negative one point five to three percent, which is not
good over a ten year period in which the S
(26:16):
and P five hundred has seen a total return of
two hundred and twenty eight point one percent. So there's
a problem here. And no matter what CBS has tried
to do, whether it was you know, buying ETNA or
changing their you know approach to you know, trying to
get more online focused, they're just not executing very well
right now. And part of the problem that's developed as
(26:38):
a result of this, they're also alienating a lot of
the pharmacists that work there through longer work schedules, making
them do more stuff, putting them into roles where you know,
they're giving vaccinations and things like that more often, and
taking their time away from you know, fulfilling prescriptions and
things like that. It really is a challenging time at
the company.
Speaker 3 (26:57):
I think lukewarm revenue growth growing costs. If you use
that operating profit margin, which is just operating income divided
by revenue, it's going in the wrong direction, has been
for several years. That This is not a deep insight. Obviously,
I'm not an analyst covering this sector, but if you
(27:17):
look at basic measures of profitability and efficiency, everything seems
to be moving in the wrong direction. And this is
true of others too, like Walgreens.
Speaker 2 (27:27):
It really makes you wonder kind of what the long
term future is for pharmacies in the United States. Not
that CVS is in danger of going out of business
or anything like that, but you've got so much of
the pharmacy market that's now consolidated just between CVS and Walgreens.
If one of them decides, hey, we're going to start
closing lots of locations in order to stay afloat, hey,
(27:49):
what does that mean for the availability of pharmacies in
those communities, just because there aren't really that many local
options that can take over at this point.
Speaker 3 (27:57):
Hard my ignorance, but you know individual companies much better
than I do. What business lines in a pharmacy are
typically highest margin. Whatever your favorite profitability metric is is
it the is it the pharmacy itself. I don't believe so,
okay it's not.
Speaker 2 (28:12):
I believe it's typically any front of store of the
retail stuff snacks, okay, soda, stuff like that. But I
I honestly I haven't looked close.
Speaker 3 (28:20):
Because what if that? How might it be different? How
might this industry that we all depend on. We're all
in CBS or Walgreens like once a week, Yeah, how
might it look different in five years or ten years
or whenever this reckoning whatever the post reckoning period is.
Speaker 2 (28:33):
Don't know. I mean, it might be that the move
ends up being more towards you know, mail order pharmacies
becoming you know, more and more the norm. I know,
a lot of folks already use them, you know, in
a lot of cases predominantly might be using them. But
maybe that's where we end up heading with a lot
of this. But I think that's a major loss for
if you want to be able to talk to the
pharmacists and sit in there with them and say, hey,
(28:54):
you know, how is this going to work with something
else that I'm taking? Those are things that pharmacists are
trained to answer right right now. If you're just putting
an order in on a computer, you lose a little
bit of that.
Speaker 3 (29:05):
Yeah, okay, s take a quick break here.
Speaker 2 (29:08):
When we come back, it's time for stack Roulettes.
Speaker 1 (29:12):
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Speaker 5 (29:37):
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Speaker 2 (30:12):
Do you have for stack Roulette?
Speaker 3 (30:13):
For me interesting article in Bloomberg that sums up a
Federal Reserve Bank of New York study on where the
job openings are the big picture, and I'll just read it.
A growing portion of job openings are being posted in smaller,
not bigger metro areas, and it's a pretty dramatic shift.
(30:37):
In twenty seventeen, for example, the dis sample is actually
twenty seventeen to twenty nineteen forty six percent, so nearly
half of openings we're in large metro area. I don't
have the definition that they use here on the tip
of my tongue, but you can use your imagination and
associated with places like Boston, New York and Dallas, etc.
(30:57):
I guess that number is down to about thirty eight
percent today. It doesn't sound like a lot, but several
percentage points of several million openings is a lot. So
my takeaway from this for the labor market and even
the fight against inflation, which has come down a lot
but is not yet at the Fed's target, is it
(31:17):
allows us to maintain a lower unemployment rate without pushing
up inflation if people have more choices, if they're able
to work at the job of their choice in a
cheaper area, it lowers the so called natural rate of unemployment.
Anything that makes the labor market more flexible or attractive
to either side of the labor bargain in a way
(31:39):
in the long run makes the fed's job easier, in
addition to giving people more choices and allowing them to
live more desirable from their point of view, lifestyle. So
I take this as good news as anybody probably reading
the article would.
Speaker 2 (31:51):
I want to talk a little bit more about the
situation with Delta Airlines following their disruptions a couple of
weeks ago after the CrowdStrike bug uh reake tavoc with
Computer Systems Worldwide. Microsoft yesterday joining the fray by basically saying, hey,
we offered to help Delta in awful lot during that time,
(32:13):
and they repeatedly rebuffed us and said, no, we're not interested.
And Microsoft also said quote our preliminary review suggests that Delta,
unlike its competitors, apparently has not modernized its IT infrastructure,
either for the benefit of its customers or for its
pilots and flight teams. So Microsoft pretty much saying two things.
(32:34):
Number one, Hey, we tried to help you while this
was going on, and you weren't interested, and b hey,
why didn't you pay for those upgrades before your three
cycles behind Delta? What's going on? Which I do find
that to be kind of humorous because again you kind
of interpret this reading. They're saying, Okay, they didn't modernize
their I infrastructure. Who would handle that? It's Microsoft. Microsoft
(32:56):
is pretty much saying we didn't like you didn't pay
us for the upgrades that we said you needed.
Speaker 3 (33:00):
You normally chastise your customers publicly like that. Couldn't they
both parties resolve this behind the scenes? Why air your
dirty laundry?
Speaker 2 (33:08):
Delta is a Delta started this, we know.
Speaker 3 (33:10):
But still they're the customer. Don't you have to sort
of suck it up and take it when the customer
bad mouths you.
Speaker 2 (33:16):
You're as big as Microsoft?
Speaker 3 (33:17):
Okay, I mean that's telling. That's telling. That's indicative how
much market power they at.
Speaker 2 (33:21):
Well. And also, here's the thing. Microsoft knows how much
it'll cost Delta to switch. What are you gonna do?
You're gonna change your IT infant? Okay? Where are the
margin is gonna come from for an airline to do.
Speaker 3 (33:33):
That much power? Maybe there is something to these antitrust
uh rants against Microsoft.
Speaker 2 (33:41):
As someone who's been through a few different system overhauls
and switches and things like that at a much smaller
company than Delta, it's not something I would wish on
my worst enemy. It's just it's it's miserable. It's absolutely
miserable to go through. And and Microsoft knows that, like
(34:02):
they know that Delta is not going to switch.
Speaker 3 (34:03):
The people are your partners, though you dress them down publicly,
how do you then the whole world's becoming like Trumpefied
where everybody airs their dirty laundry and you're a dummy
and you're a low IQ boob and it was your fault,
not mine. Are we getting that? Yeah, we're getting more
coarse these things behind that? Is it social media? Is it?
It's Look, it's a little surprised that somebody would deride
(34:28):
a customer like that. But maybe I'm not. I think
I'm old fashioned.
Speaker 2 (34:31):
I think part of it is that Delta has pretty
much said we're going to sue you for damages. Okay,
and when when they say that publicly, what what what
do you do? I mean, look, you could just be
quiet and deal with it quietly, which again there's nothing.
Maybe there is something to But when Delta said publicly
and their CEO says, hey, we think you are responsible
(34:55):
and we're going to seek damages where we need to, you.
Speaker 3 (34:58):
Just say we're not and we're going to vigorous defend
our position. Period. It's just the public spat nature is
weird to me.
Speaker 2 (35:06):
Do I agree, it's it's not something that's constructive.
Speaker 3 (35:10):
But what I mean, yeah, maybe that's just where we
are now.
Speaker 2 (35:14):
I mean, I don't know. I mean, this is stuff
I don't think it's unique to right now necessarily. I mean,
what was it you know, you had this stuff back
in uh was it the eighteen hundreds, Charles Summer being
caned and you know in Congress and stuff like that.
Speaker 3 (35:31):
I mean, yeah, different different technology, But I was gonna
say different issue. People felt very strongly about slavery one
where the other.
Speaker 2 (35:39):
Yes, but I'm just saying we've always been, you know,
more aggressive than we'd like to be.
Speaker 3 (35:44):
A civil war followed that, that's not a good exactly.
Speaker 2 (35:47):
Let's take a quick break for the rest of the day.
We'll see you tomorrow on the Financial Exchange
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is hosted by employees of the Armstrong Advisory Group, a
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(01:04):
by Veterans Development Corporation face is the financial exchange with
Chuck Zada and Mark Vandetti.
Speaker 2 (01:13):
Chuck, Mark and Tucker with you here, and the markets
continue to rally after you challenging few weeks, culminating in
Monday's selloff. But the Dow Jones Industrial Average is now
up four hundred and forty seven points today about one
(01:33):
point one percent. The S and P five hundred is
up eighty three points about one point six percent. In
the Nasdaq up three hundred and fifteen points are about
two percent today, So all three major US indices are
in the process of rallying right now. If you take
a look at the S and P five hundred at
the moment, it's hips right now at fifty three twenty two,
(01:56):
which is about six point one six point two percent off.
It's all time high. So if you're wondering, you know,
how far have thing's fallen, about six percent at this
point from the peak. It's not to say that things
won't get worse. None of us know what's going to
happen tomorrow, the next week, or the next month. But
where we stand right now didn't even get to a
(02:18):
ten percent correction in markets. We stopped just shy of
that think about nine point six nine point seven percent
intra day on Monday and now off a little bit
more than six percent currently with the S and P
five hundred being back right now to where it was
in early June. I'd just like to say that to
contextualize where we are. If you were looking at your
(02:39):
portfolio in June and saying, gee, I'm pretty happy with
how this year's gone so far, you're right there. You've
just given back, you know, six weeks of games or so.
Speaker 3 (02:47):
Otherwise we're a little spoiled, at least I am. There've
been an abnormally there've been abnormally few down days, extreme
down days really over the past twenty twenty two was
an exception, but over the mouth to say, over the
past several years, with a couple of very big exceptions,
markets have. If you look at so called volatility, which
is a fancy way of saying spread around the average,
(03:11):
how dispersed something is, which is how people in finance
think about risk, they say volatility. Sometimes, if you want
to fancy your term, you can say standard deviation and
you can blow somebody socks off.
Speaker 2 (03:21):
I have to tell people, I take the square of
very square variance and that's you know the square root
of yeah, square roots.
Speaker 3 (03:28):
Sorry, yeah, you're right, yeah, right, right right.
Speaker 2 (03:31):
You know that really blows people's hair back when you
start talking like that. It's like, oh, that's when they
walk away. This guy. I'm not hanging out with these concepts.
Speaker 3 (03:38):
By the way, if I can get them, anybody can
get them.
Speaker 2 (03:40):
The terms like the actual is the terms are more
intimidating the than the math.
Speaker 3 (03:47):
That total is totally most of it is like eighth
grade algebra or before. To be fully honest, the day
to day stuff anyway, So it's been unusually placid lately,
with the a few exceptions the past a few years.
Twenty twenty, twenty twenty two. So you've said this a lot, Chuck.
You showed some great illustrations internally this morning of the
(04:07):
frequency of big draw downs and the point you tried
to make, and you make it a lot you and
Mike Armstrong do on the show is volatility is normal.
It's why we get paid to hold stocks. You don't
get the eleven to twelve percent a year that we've
gotten out of big cap stocks anyway, a little more
out of small over the past century now for less
(04:28):
risk than bonds.
Speaker 2 (04:29):
If you want something with no market volatility, there's a
savings account with your name on it. You know, it's
a there's an investment choice for everyone, depending on your
risk tolerance. But it's it's something where when you're buying stocks,
you are buying volatility. That's like that. It's it's yes,
you are, it's a pri American component. That's where you are.
Boxing's right, that's right. So you just have to expect
(04:52):
that stuff like this. It's gonna happen from time to time.
Speaker 3 (04:55):
And a good rule of thumb is when somebody promises
you seems like a pretty high rate of return, even
a bank, you got to ask, how is it that
you're able to generate that? What risks am I getting
paid for? So when a bank offers a high yield
savings account, it's worth backing up and saying I'm getting
two percent more at the co op than I am
at Citizens or wherever. What is backing that deposit? What
(05:15):
is bet? Do you have a riskier book of business
than another bank does. You can't untangle risk and return.
They're inherently intertwined. Risk.
Speaker 2 (05:25):
Another great quote, I don't know who said it originally,
but I won't take credit for it. Risk is neither
created or destroyed. It's just transformed into something else. It
just ends up somewhere else in terms of what type
of risk you're ultimately taking on. Taking a look at
other parts of the market, the US tenure treasury up
seven basis points to three point nine six percent. We've
(05:45):
got oil today up two dollars and ten cents barrel
to seventy five thirty triple a national averageur gas prices
continuing to slide down another three tenths of ascent to
three forty five and nine tenths right now. And we've
got gold today up eight dollars an ounce twenty four
to thirty nine and sixty cents mark. There's a piece
in the New York Times today that on one level,
(06:09):
the headline is, you know, very factual. On the other
it's you know, somewhat dehumanizing. It kind of reminds me, well,
I'll talk about this in a little bit, but the
headline is to avoid recession, consumer spending is key, and
the piece itself, you know, is really talking about, hey,
we're a consumer spending economy, a consumer based economy, and
(06:30):
as you know, household spend that tends to drive you know,
the vast majority of growth in the United States. It
can be in the form of borrowing, it can be
in the form of spending income, but it's generally you know,
household spending is a big component of spending. And it
talks about look if if you start to see that
weeken further, you know, that could be something that triggers
(06:52):
a recession, with the implication being, hey, spend money if
you want to avoid recession, which I always hate because
it's just one of the most dehumanizing things out there, Like,
I don't exist to prevent a recession in the United States.
I still remember after nine to eleven, Yeah, I.
Speaker 3 (07:10):
Was gonna talk. I was just gonna bring this up.
It go go.
Speaker 2 (07:13):
One of the most infuriating things I've ever seen. And
I was like fifteen years old at the time, and
I'm like, oh my goodness, this is wrong. George W.
Bush comes out and you know, they're talking about like, hey,
you know, what can we do, Like everyone's like all
everyone's all together at this point for like the only
time since like World War Two. Basically everyone's like, hey,
we all got to, you know, fix this. And someone
(07:34):
interviews me it's like, hey, what should we do to
like get out of this, And he's like, go out
and spend some money, Like that's the best thing you
can do. Like are you kidding me? Like that's the
that's the advice at a time like this, And this
headline just comes off kind of the same way, very subtly, like, hey,
spend money if you want to save the economy. Well, no,
that's not that's not why I exist as a person,
(07:55):
is to save the economy.
Speaker 3 (07:57):
Sorry, yeah, I get it. That's what his economists, his
Accouncil of Economic Advisors, was telling him at the time.
They were cutting taxes at the time. That was part
of his campaign pledge. But it turned out to be
really well timed, not just because nine eleven, but because
the economy was slowing and we had a recession in
two thousand and one. It was shallow, but we had one,
and it was underway before nine to eleven. It was
(08:19):
over almost by the time eleven open anyway, anyway, So yeah,
that's all policy is predicated on that. But to say
it in such crass terms rubbed a lot of people
at the time the wrong way. But in fact, as
you point out in an accounting sense. The way we
measure economic growth, which is gross domestic product or GDP,
(08:39):
is seventy percent consumption demand spending. So it's unavoidable. But
at the same time, looking back, and I'll show this
slide internally tomorrow morning, Chuck, and obviously I can't share
it with you, but we'll look at it here at
I'm Stark Advisory Group in the morning. In most recessions,
spending actually does not go down interestingly into negative territory.
Most recessions are invent or investment driven. That's where the
(09:02):
biggest drops occur in what pulls GDP into negative or
recessionary territory. So yeah, spending, if you do enough of it,
can pull you out or mitigate the brunt of it.
But there are other components to GDP, and some of
those components are of course spending driven. So this is all,
ultimately the end of the day, one big pot of
money if you like. But in recessions it's often inventories
(09:25):
and investment, including housing, that drag GDP down.
Speaker 1 (09:30):
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Speaker 2 (09:54):
Bill Dudley ran the New York branch of the Federal
Reserve for about ten years, finishing up in twenty eighteen.
A couple of weeks ago, he published an op ed
that we covered where he said, Hey, I think it's
time to start cutting interest rates. And I noted that
it was notable that someone like him was saying that,
because he's a pretty prominent voice in monetary policy circles.
(10:15):
And today he's got another op ed in Bloomberg and
it talks about how, hey, as we go over the
next couple of months, we're not really gonna know whether
or not we're in recession or not in real time. Again,
the NBER doesn't declare it as it's happening. It's often
looking backwards, not often, it's always looking backwards at the
(10:35):
data that they do. And so he maintains, look, we've
got this risk here. The inflation picture is, you know,
better than it was before. But the risk that we pod,
the risk that we have is unemployment when it starts
to rise tends to end up rising very quickly, and
so you've got a nip it in the bud before
it becomes a real problem.
Speaker 3 (10:56):
Your thoughts, Mark, Yeah, his rationale there is Recessions can
sometimes be shallow and fast. We were talking off air
about two thousand and one. Even though it took capital
markets a long time to recover and unemployment remained high,
it was a relatively short recession, happened over a couple
of quarters, and the negative GDP growth quarters, though that
(11:16):
is not the trigger for the definition of a recession.
They were actually apart from one another. Nineteen ninety another example.
I think it was two July to March, so a
few quarters, but pretty shallow. Though it took unemployment a
long time to get low again, so the scars were severe.
These guys are desperate too, I say guys, I mean
guys and women the Federal Open Market Committee and people
(11:38):
like Dudley who chirped from the I don't mean that
in a demeaning way. He's pre eminent, he's a giant.
But people who chirp, for lack of a better way
to put it, from the sidelines, they desperately want to
avoid recessions because they've had a few in their lifetime
that have left behind wreckage for the two years to
clean up. It's not clear we're in one. It never is.
(11:59):
As you point out, some leading indicators have perked up
over the past few months. Some are problematic, like some
labor market indicators that we talked about last week. He
seems to think that the weight of the evidence, the
balance of the evidence, points toward a slow down or worse.
And his point is that you can't control slowdown, so
(12:19):
you don't want them to snowball into recessions. So the
Fed aught to act now. Anything they do today won't
affect the real economy for months, maybe several quarters, So
get started today, guys. That's how I read it.
Speaker 2 (12:30):
The other thing that is interesting, just when you talk
about where we are right now, the idea of the
soft landing, and we've talked about, you know, kind of
how we would define it, you know, on the show,
I think we said we don't want to see, you know,
unemployment or the inflation rate get back above four and
a half percent this Year's that's kind of how we
would define it. But the actual landing part of the
(12:53):
soft landing is going to be characterized ultimately by a
period of time where you're not sure if you are
going into recession or not because you're landing a no
landing like what we went through last year. That was
not the soft landing, Like you never actually saw the
economy land it ever got to the point where it
(13:16):
had slowed down enough to conclusively be done with inflation.
We were saying that for quite a while. So there
are going to be questions if you actually, you know,
kind of go through a soft landing period. Asking the
question of hey, are we in recession or not is
going to be a feature of that time period in
my opinion as well, because that's the only way that
you actually get to a real landing in the economy
(13:37):
is even you know, asking those questions about hey, are
we heading to recession or not? And we haven't really
asked those seriously, at least on this show in the
last couple of years.
Speaker 3 (13:46):
GDP's pretty a lot of economic series measures are very persistent,
so slow downs tend to be followed by further deceleration,
and the opposite is also true. You can't just put
the brakes on and then take your foot off the brakes.
There is no throttle, well there is. It's like monetary policy,
(14:06):
but it's it's as if every time you put your
foot on the gas you don't know exactly how much
fuel you're putting into the chamber. So it's a really
unreliable throttle. Government can't find tune and the Fed, I'll
include in government can't fine tune the economy. So once
you start slow, you might not be able to stop it.
Once you start stimulating it, it might get out of
hand and run hot too. This is the challenge for
(14:30):
policy makers.
Speaker 2 (14:31):
Along these lines. There's a piece in the Wall Street Journal.
It's titled Prepare for your next rays to be smaller
than you hoped? Okay, And this is the exact headline
that the FED wants to be seeing in terms of, hey,
how do we stamp out inflation On the demand side,
it's through stuff like this.
Speaker 3 (14:51):
Yeah, I very well put. They need to see weight.
They want to see wage grow. As cruel as it sounds,
they need to see real wage growth, uh slow down
to reduce demand, reduce price pressures, virtuous circle.
Speaker 2 (15:05):
They need to see nominal slow down, not real you.
Speaker 3 (15:09):
Could say, have real wage, real wage growth could.
Speaker 2 (15:11):
Real wage growth is great because it means that you're
you're growing spending power without necessary.
Speaker 3 (15:15):
What if you're what if real growth well okay, yeah.
Speaker 2 (15:18):
Real wage growth is I don't think it's inherently good
or bad.
Speaker 3 (15:22):
Well, maybe it's good for maybe you think it like
unit labor costs with your productivity adjusted like that would
be you know, So.
Speaker 2 (15:28):
Let's say, let's let's look at real wage growth just
as an example. Let's say that wages go up two
percent inflation zero. That would not be a bad scenario
where real wages are growing.
Speaker 3 (15:39):
And that example. No, but what if that was an
excess of the economy's growth potential. I guess it should
just continue. Yeah, real nominal They need to see wage
growth slow.
Speaker 2 (15:48):
They want to Yeah, let's what they want to wage
growth slow?
Speaker 1 (15:51):
You know.
Speaker 2 (15:51):
Yeah, I don't mean you know, tomato tomato, and it
kind of is what.
Speaker 3 (15:56):
So, Yeah, they're happy with this phenomenon.
Speaker 2 (15:58):
And this is something where when we talk about the
tools that the FED has to deal with inflation, unfortunately
they are blunt and typically induce a recession or get
pretty close to it in order to slow the economy.
It's not something how it works. Yeah, like, that's kind
of the nature of the beast. They don't have anything
they can specifically target, and you wouldn't want them to
be like micro targeting sectors of the economy or this
(16:20):
and that, because then you get into you know, central planning,
which doesn't really work for anyone.
Speaker 3 (16:25):
As we all know, some treatments for bad diseases make
you sick. They have terrible after a fac I don't
want to cite a specific example because some of you
out there are dealing with this, but you all know
what I mean by this. Sure, this is the medicine
you take for inflation is unpleasant and has bad side effects.
The question is getting the right dosage.
Speaker 2 (16:44):
So that's where we stand at the moment. Again, the
economy is slowing by you know a number of different
data points that we look at. It still is unclear
whether a recession is going to happen or not, but
it's a higher probability now than I've seen in the
last couple Yeah, I.
Speaker 3 (17:00):
Wish people would let up a little bit because of
the self fulfilling nature of the doomsday prophecy.
Speaker 2 (17:06):
Totally.
Speaker 3 (17:06):
You get people warrior. You say, the more you say recession,
the more it's on all of our minds. The more
weaker tail spending we may as a consequence, reduced demand
too much. Getting back to the balance, the FED is
trying to strike and talk of recession can be fulfilled,
It can become self fulfilling.
Speaker 2 (17:23):
Should we talk about an expansion then instead? Actually, if
you do want one bright sign, the FED released their
survey of loan officers. The FED goes out and they
survey a bunch of banking loan officers four times a year,
every quarter, and their most recent one for July just
came out earlier this week. It kind of got lost
in the shuffle on Monday. It showed some meaningful improvement
(17:47):
in banks reporting better growth in loan requests from businesses
and companies.
Speaker 4 (17:56):
Bringing the latest financial news straight to your radio every day,
It's the Financial Exchange on the Financial Exchange Radio Network.
Text us six one seven, three, six two thirteen eighty
five with your comments and questions about today's show and
let us know what you think about the stories we
are covering. This is the Financial Exchange Radio Network.
Speaker 2 (18:19):
Marke. Let's talk a little bit about some earnings that
we have received. First, let's talk a little bit about Disney.
They reported earnings before the open today and they posted
earnings of one point thirty nine to share above estimates.
Revenue came in a touch above estimates as well. They
guide it a little bit higher for the future in
(18:42):
terms of growth rate and things like that. But Disney's
knocked down a couple percent today. And this is kind
of a common theme that we've seen over the course
of this quarter, which is, hey, even if you're beating
on earnings, unless you're doing it by knockout margins, you're
not really doing enough to keep your stock price moving
forward right now.
Speaker 3 (19:00):
Well, Parks and this is from the Financial Times, not
off the top of my head. Business Parks unit contributed
seventy percent of operating profit, which is one measure of profitability, and.
Speaker 2 (19:11):
They did warrant that would be slowing down.
Speaker 3 (19:13):
So yeah, that was this. This is my point. I
mean streaming, the the operating margin on streaming like less
than a tenth of a percent. Overall, it's like thirteen
And this again just to be celebrating that.
Speaker 2 (19:25):
They finally got the profit on streaming.
Speaker 3 (19:28):
Overall, it's like thirteen percent. And to put that in perspective,
apples this is like thirty Microsoft's. It's like forty five.
Again a measure of profitability of of of what after
paying normal operating expenses, which is most stuff. How much
of your revenue is profit after paying normal ongoing expenses.
So yeah, not exactly impressive. I guess.
Speaker 2 (19:50):
No, it's again, the company's fine. It's not really indicating
that it's going anywhere good or bad. It's just kind
of we're here, you know, we're we're doing all right,
but there's not really anything new that's happening.
Speaker 3 (20:07):
You could put this, I guess in the slow down
column though, evidence of a slow down.
Speaker 2 (20:11):
I think so.
Speaker 3 (20:11):
Yeah, getting indications everybody from McDonald's to other retailers that
you guys covered last week, other other consumer oriented companies,
evidence pointing to cautious statements made during these earnings calls.
Speaker 2 (20:25):
And a trip to you know, a Disney park is
absolutely something that falls into the discretionary category. I mean,
you talk about I'm not even sure. I'm pulling it
up right now just because I'm curious. What do you
think it costs to do a day at Disney World
right now? For like a family of four, just a
a single part, like one ticket, one and five dollars
(20:46):
you got one twenty five in the pool. Yeah, what
do you think?
Speaker 3 (20:50):
I might stay closer to two, but I have no
reference point.
Speaker 2 (20:53):
All right, let's see. I'm just pulling it up right.
Speaker 3 (20:55):
Now because I got it through reasonable.
Speaker 2 (20:57):
Let's see, and we're doing single day ticket.
Speaker 5 (21:00):
Yeah, I think that's fair.
Speaker 2 (21:02):
Let's see. It looks like they start at one oh
nine a day. Okay, but I'm gonna see if that's
like the week of July thirty first in Florida or
something like that, because obviously this can wow, you've really
got to click like a million different things. Yeah, So
if you want to go on a Wednesday in August,
it's one hundred and nine dollars a ticket. Let's say
(21:23):
that you want to go when it gets a little
bit cooler, even just you know, September Saturday and September
you're up to one forty five Saturday. In October you're
up to one fifty five.
Speaker 5 (21:34):
Give me the February one. I mean that's when everybody
goes to Disney, like February March, somewhere in that range.
Speaker 2 (21:39):
Not as high as you would think. I mean it is,
but it's not. It's it's one hundred and sixty nine dollars. Okay,
it says one sixty nine plus though, so let me
click on it. Okay, hang on, fake news. Oh no,
that's if you want to go to Animal Kingdom. If
you want to go to Magic Kingdom, then it is
one hundred and eighty nine dollars for a one day time.
Speaker 1 (21:58):
Nice.
Speaker 3 (21:58):
So Mark was closer, pure luck.
Speaker 2 (22:01):
And but again that's for one day. If you stretched
out to four Let's say you're doing you know, you
need four days of goofy because that's kind of your thing.
Then you are I.
Speaker 5 (22:13):
Would I need to see goofy all four days?
Speaker 1 (22:16):
Just goofy?
Speaker 2 (22:17):
I need coofee. Then you are looking at what how
do I even do this?
Speaker 5 (22:26):
You want to know the cost of going to Disney, No,
just come on in. You don't need to know the cost.
Speaker 3 (22:30):
Just come on down.
Speaker 4 (22:31):
Okay.
Speaker 2 (22:31):
I guess when you buy a multi day ticket, it
doesn't matter which park you go to, they're all just
the same cost. And that becomes one hundred and fifty
eight dollars a ticket. So you get an eleven dollars
a day discount by buying a four day ticket. Okay,
you're not again discretionary purchase like these things are not.
Speaker 3 (22:47):
It's a point I'm making something that was crying out
for dynamic pricing. It would be that because you don't know,
what do they address prices on the fly, maybe they
are doing it. Excuse me, I like on a rainy day.
Speaker 2 (23:00):
I think proud, and I think that the way that
they do that might be through like their speed pass
things or fast passer Genie and all that stuff, which
they then you pay to get on rides more quickly
if you need to, okay, And so that is that.
Speaker 3 (23:15):
By saying in the experience, okay, and.
Speaker 2 (23:18):
Look, a lot a lot of people listening to be
like one hundred and sixty dollars a day for Disney,
like that's crazy, And my answer to be, yeah, it
probably is. But we all do kind of dumb, crazy
things that cost way more money than you know, we
would normally say, like, you know, some some of us
spend money on I don't know, you're a big sports
fan and oh like I went to this game and okay,
(23:38):
like that was way more than your thought. Or hey,
I'm really into golfing and look at this course I played,
or hey, you know, I'm you know, really into hunting
and you know, I spent X number of dollars trying
to get, you know, a bear tag for this fall,
and you know, because it was a lottery in this
like we all spend money.
Speaker 3 (23:55):
I tag that entitled you to hunt bear.
Speaker 2 (23:57):
Yes, actually moosetag is the one that's usually a lottery
up in Maine. I think bears. I don't think you
have to go through a lottery in a lot of cases.
I think you can basically get what you want. But
in I believe it's Maine and maybe New Hampshire, they
have a lottery system in parts of the States for
moose where basically you put in a ticket and say, okay,
(24:17):
I'm hoping I'm gonna get this, and then if you do,
I can't remember if it's you have it might be
like three days, it might be a week. I can't remember,
just because I haven't looked at it in a while.
But if you get it, great, If not, you didn't,
so that's the deal.
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Speaker 2 (25:32):
Let's talk about some other earnings here. CVS, which is
again New England based company that just has been really
really struggling for quite some time now. They had a
brief reprieve in kind of late twenty twenty through early
twenty two, largely on the back of you know, a
(25:55):
lot of visits coming through because of COVID nineteen shots
and boosters and things like that, but otherwise ten years,
the total return on CVS stock dating back ten years
right now, again this is total return including dividends, is
negative one point five to three percent, which is not
good over a ten year period in which the S
(26:16):
and P five hundred has seen a total return of
two hundred and twenty eight point one percent. So there's
a problem here. And no matter what CBS has tried
to do, whether it was you know, buying ETNA or
changing their you know approach to you know, trying to
get more online focused, they're just not executing very well
right now. And part of the problem that's developed as
(26:38):
a result of this, they're also alienating a lot of
the pharmacists that work there through longer work schedules, making
them do more stuff, putting them into roles where you know,
they're giving vaccinations and things like that more often, and
taking their time away from you know, fulfilling prescriptions and
things like that. It really is a challenging time at
the company.
Speaker 3 (26:57):
I think lukewarm revenue growth growing costs. If you use
that operating profit margin, which is just operating income divided
by revenue, it's going in the wrong direction, has been
for several years. That This is not a deep insight. Obviously,
I'm not an analyst covering this sector, but if you
(27:17):
look at basic measures of profitability and efficiency, everything seems
to be moving in the wrong direction. And this is
true of others too, like Walgreens.
Speaker 2 (27:27):
It really makes you wonder kind of what the long
term future is for pharmacies in the United States. Not
that CVS is in danger of going out of business
or anything like that, but you've got so much of
the pharmacy market that's now consolidated just between CVS and Walgreens.
If one of them decides, hey, we're going to start
closing lots of locations in order to stay afloat, hey,
(27:49):
what does that mean for the availability of pharmacies in
those communities, just because there aren't really that many local
options that can take over at this point.
Speaker 3 (27:57):
Hard my ignorance, but you know individual companies much better
than I do. What business lines in a pharmacy are
typically highest margin. Whatever your favorite profitability metric is is
it the is it the pharmacy itself. I don't believe so,
okay it's not.
Speaker 2 (28:12):
I believe it's typically any front of store of the
retail stuff snacks, okay, soda, stuff like that. But I
I honestly I haven't looked close.
Speaker 3 (28:20):
Because what if that? How might it be different? How
might this industry that we all depend on. We're all
in CBS or Walgreens like once a week, Yeah, how
might it look different in five years or ten years
or whenever this reckoning whatever the post reckoning period is.
Speaker 2 (28:33):
Don't know. I mean, it might be that the move
ends up being more towards you know, mail order pharmacies
becoming you know, more and more the norm. I know,
a lot of folks already use them, you know, in
a lot of cases predominantly might be using them. But
maybe that's where we end up heading with a lot
of this. But I think that's a major loss for
if you want to be able to talk to the
pharmacists and sit in there with them and say, hey,
(28:54):
you know, how is this going to work with something
else that I'm taking? Those are things that pharmacists are
trained to answer right right now. If you're just putting
an order in on a computer, you lose a little
bit of that.
Speaker 3 (29:05):
Yeah, okay, s take a quick break here.
Speaker 2 (29:08):
When we come back, it's time for stack Roulettes.
Speaker 1 (29:12):
Find daily interviews and full shows of the Financial Exchange
on our YouTube page. Like us on YouTube and get
caught up on anything and everything you might have missed.
This is the Financial Exchange Radio Network. There's only one
show that follows well Street's continued volatility. Keep it here
all morning long on the Financial Exchange Radio Network.
Speaker 5 (29:37):
The Financial Exchange has built an incredible partnership with the
Disabled American Veterans Department of Massachusetts. We can't wait to
take part in this year's DAV five K, set for
Saturday November ninth at Fort Independence on Castle Island and
registrations now open. You can help our great American heroes
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(30:00):
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Boston is presented by Veterans Development Corporation Mark What.
Speaker 2 (30:12):
Do you have for stack Roulette?
Speaker 3 (30:13):
For me interesting article in Bloomberg that sums up a
Federal Reserve Bank of New York study on where the
job openings are the big picture, and I'll just read it.
A growing portion of job openings are being posted in smaller,
not bigger metro areas, and it's a pretty dramatic shift.
(30:37):
In twenty seventeen, for example, the dis sample is actually
twenty seventeen to twenty nineteen forty six percent, so nearly
half of openings we're in large metro area. I don't
have the definition that they use here on the tip
of my tongue, but you can use your imagination and
associated with places like Boston, New York and Dallas, etc.
(30:57):
I guess that number is down to about thirty eight
percent today. It doesn't sound like a lot, but several
percentage points of several million openings is a lot. So
my takeaway from this for the labor market and even
the fight against inflation, which has come down a lot
but is not yet at the Fed's target, is it
(31:17):
allows us to maintain a lower unemployment rate without pushing
up inflation if people have more choices, if they're able
to work at the job of their choice in a
cheaper area, it lowers the so called natural rate of unemployment.
Anything that makes the labor market more flexible or attractive
to either side of the labor bargain in a way
(31:39):
in the long run makes the fed's job easier, in
addition to giving people more choices and allowing them to
live more desirable from their point of view, lifestyle. So
I take this as good news as anybody probably reading
the article would.
Speaker 2 (31:51):
I want to talk a little bit more about the
situation with Delta Airlines following their disruptions a couple of
weeks ago after the CrowdStrike bug uh reake tavoc with
Computer Systems Worldwide. Microsoft yesterday joining the fray by basically saying, hey,
we offered to help Delta in awful lot during that time,
(32:13):
and they repeatedly rebuffed us and said, no, we're not interested.
And Microsoft also said quote our preliminary review suggests that Delta,
unlike its competitors, apparently has not modernized its IT infrastructure,
either for the benefit of its customers or for its
pilots and flight teams. So Microsoft pretty much saying two things.
(32:34):
Number one, Hey, we tried to help you while this
was going on, and you weren't interested, and b hey,
why didn't you pay for those upgrades before your three
cycles behind Delta? What's going on? Which I do find
that to be kind of humorous because again you kind
of interpret this reading. They're saying, Okay, they didn't modernize
their I infrastructure. Who would handle that? It's Microsoft. Microsoft
(32:56):
is pretty much saying we didn't like you didn't pay
us for the upgrades that we said you needed.
Speaker 3 (33:00):
You normally chastise your customers publicly like that. Couldn't they
both parties resolve this behind the scenes? Why air your
dirty laundry?
Speaker 2 (33:08):
Delta is a Delta started this, we know.
Speaker 3 (33:10):
But still they're the customer. Don't you have to sort
of suck it up and take it when the customer
bad mouths you.
Speaker 2 (33:16):
You're as big as Microsoft?
Speaker 3 (33:17):
Okay, I mean that's telling. That's telling. That's indicative how
much market power they at.
Speaker 2 (33:21):
Well. And also, here's the thing. Microsoft knows how much
it'll cost Delta to switch. What are you gonna do?
You're gonna change your IT infant? Okay? Where are the
margin is gonna come from for an airline to do.
Speaker 3 (33:33):
That much power? Maybe there is something to these antitrust
uh rants against Microsoft.
Speaker 2 (33:41):
As someone who's been through a few different system overhauls
and switches and things like that at a much smaller
company than Delta, it's not something I would wish on
my worst enemy. It's just it's it's miserable. It's absolutely
miserable to go through. And and Microsoft knows that, like
(34:02):
they know that Delta is not going to switch.
Speaker 3 (34:03):
The people are your partners, though you dress them down publicly,
how do you then the whole world's becoming like Trumpefied
where everybody airs their dirty laundry and you're a dummy
and you're a low IQ boob and it was your fault,
not mine. Are we getting that? Yeah, we're getting more
coarse these things behind that? Is it social media? Is it?
It's Look, it's a little surprised that somebody would deride
(34:28):
a customer like that. But maybe I'm not. I think
I'm old fashioned.
Speaker 2 (34:31):
I think part of it is that Delta has pretty
much said we're going to sue you for damages. Okay,
and when when they say that publicly, what what what
do you do? I mean, look, you could just be
quiet and deal with it quietly, which again there's nothing.
Maybe there is something to But when Delta said publicly
and their CEO says, hey, we think you are responsible
(34:55):
and we're going to seek damages where we need to, you.
Speaker 3 (34:58):
Just say we're not and we're going to vigorous defend
our position. Period. It's just the public spat nature is
weird to me.
Speaker 2 (35:06):
Do I agree, it's it's not something that's constructive.
Speaker 3 (35:10):
But what I mean, yeah, maybe that's just where we
are now.
Speaker 2 (35:14):
I mean, I don't know. I mean, this is stuff
I don't think it's unique to right now necessarily. I mean,
what was it you know, you had this stuff back
in uh was it the eighteen hundreds, Charles Summer being
caned and you know in Congress and stuff like that.
Speaker 3 (35:31):
I mean, yeah, different different technology, But I was gonna
say different issue. People felt very strongly about slavery one
where the other.
Speaker 2 (35:39):
Yes, but I'm just saying we've always been, you know,
more aggressive than we'd like to be.
Speaker 3 (35:44):
A civil war followed that, that's not a good exactly.
Speaker 2 (35:47):
Let's take a quick break for the rest of the day.
We'll see you tomorrow on the Financial Exchange
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