October 22, 2025 • 38 mins
Chuck Zodda and Marc Fandetti discuss the reasons why the US is getting involved in Argentina and what role China has to play in all this. What are the economic impacts if the shutdown drags on? Why has insurance rates skyrocketed since 1980? The AWS outage had broader impacts on daily life than most believe.
Mark as Played
Transcript
Episode Transcript
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Speaker 1 (00:00):
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(00:42):
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(01:05):
Zada and Mark Fandetti.
Speaker 2 (01:10):
Kicking things off here. It's Chuck, Mark and Tucker with you.
And nothing too exciting happening in markets today, but the
little movement here and there. S and P five hundred
down eleven points, not even a quarter percent, Dow Jones
Industrial Average down eighty one points, not even a quarter percent.
Now's de Composite down one hundred and one points, almost
(01:31):
half a percent. So you get a little bit of
movement in the Nasdaq. Uh and we can talk about,
you know, kind of why that's happening as well. The
US ten year Treasury up nine tenths of a basis
point to three point nine seven to two percent. US
Dollar Index is down point zero two percent, so basically flat.
(01:52):
Not much movement on the dollar. Gold continuing its sell
off over the last couple of days, down another one
point nine to four percent, four nine dollars and twenty cents.
And we've got crude oil West Texas Intermediate up a
dollar thirty eight a barrel to two i'm sorry, to
fifty eight to sixty two at the moment, triple a
(02:15):
national average for gas prices moving back up. Some of
this due to continue to refinery outages in the Midwest,
but back up to three oh six and six ten.
So it looks like, at least for this week, we're
gonna have to put on hold the idea that the
nationwide average is gonna drop below three dollars a gallon.
(02:35):
Just can't quite get there at the moment. But that
is what is moving in markets broadly at the moment.
Let's talk a little bit about this piece from the
Wall Street Journal. It's a Wall Street Journal exclusive, and
I'll quote here Trump administration is pushing officials in Argentina
(02:57):
to limit China's influence over the distressed South American nation.
At the same time, the US and Wall Street banks
are working on a forty billion dollar lifeline for Buenos Aires.
And basically, like if if you look at the reporting
on this, the thinking in terms of, you know, the
question that I've asked, quite honestly, is Okaylake Argentina Mark
(03:23):
is it fair? That is it fair to say that
Argentina has one of the worst fiscal, monetary and governance
track records out of any country. That is, that's at
least one hundred years. They're serious.
Speaker 3 (03:40):
One hundred twenty or so years ago, they were as
wealthy and per capita terms as the United States.
Speaker 2 (03:44):
It's really the last hundred years that's kind of been
the problem.
Speaker 3 (03:47):
That's always the kicker.
Speaker 2 (03:48):
Yeah, just a future.
Speaker 3 (03:50):
They've been a serial defaulter, and I'm not exaggerating that
might be understating how chronically ineptley they've managed their finances.
They oscillate from a center right government, which is i'll
characterize malay cut spending, get inflation under controled. He's done
those things. He's also pegged the PAYSO to the dollar YEP,
at what most analysts think is too high a level
(04:12):
for the PAYSO. Speculators are attacking it. That's why he
needs dollars. They're running out of dollars to pay the
IMF to cover the fifty million to pay foreign credit,
So you need to export to get dollars, or you
can get them from the IMF. That's where they got
the fifty million dollar loan from. We're apparently going to
give them another forty billion, twenty billion of which will
be guaranteed by taxpayers, all in an effort to push
(04:33):
up the value to keep the value of the PAYO
artificially high, which you need to do if you're an
Argentinian Argentinian policy maker to keep inflation under wraps low
at more pesos it takes to buy.
Speaker 2 (04:44):
Argentine is a big importer of stuff that it needs,
and so when the paso devalues, it creates inflation, and
it's it's kind of this whole problem for them.
Speaker 3 (04:52):
So now where and so this this is not new.
This happens every several years, this cycle of a center
right government coming in succeeding a parentist which was the
he was the FDR with a real authoritarian bent leader
of the forties and fifties. Okay, so they oscillate from
left wing parentist populist money printing government to center right
government which they have today. The center right government pegs
(05:13):
that beeso to keep inflation under control. Speculators attack the peg,
and invariably they have to devalue. In many cases they've defaulted.
We've seen this movie many times before, Chuck.
Speaker 2 (05:25):
So you mentioned, Look, the US Treasury is now effectively
on the hook for about twenty billion dollars in a
currency swap theial out there, but they are also trying
to work with private investors to wrangle up another twenty billion,
and banks are naturally sitting there kind of like you
want us to do. What Now. The rationale for this,
(05:45):
as it's been laid out by a few people, is, hey,
look two things on this front. Number One, you want
to be able to counter Chinese influence in the region.
Number Two, Argentina is rich in mineral resources, and if
you can, you know, work with them, you can potentially
provide an additional supply of some of the stuff that
(06:06):
we get from China right now that you know, could
be held through another country that could be producing, another
country that is not as hostile to American interests. On
the first one, countering China, that the problem that I
have there is, look that there is no long storied
history of the United States in Argentina being like great
partners in doing anything for the last hundred years. And
(06:31):
because of Argentina's economic size at this point, it against
not particularly large, and we're not huge importers or exporters
from them. If you really wanted to counter Chinese influence
in South America, Brazil's probably you know, the place that
you would tend to look due to its size and
also vast mineral resources, and like you can kind of
go down the list there and the fact that it's
(06:52):
not Argentina. I mean, it's it's Brazil, which presents its
own slate of problems just from a ability and governance perspective.
But those are different, far different problems from what Argentina
faces on a fairly regular basis. So I think you're
left kind of looking at this saying, Hey, the upside
(07:14):
on this, if it were to work, is yes, you potentially,
you know, start to unlock another trading partner in the region.
But like gosh, I mean, it really doesn't seem like
there that's a long path. I mean, this is something
that's not going to be achieved in any sizeable way
(07:37):
in the next you know, three to five years, Like
this is a multi decade project to stabilize Argentina.
Speaker 3 (07:43):
Malay Is party is facing elections in several days, which
is the reason they're desperately trying to keep the PAYESO.
Speaker 2 (07:50):
They don't want infuation before the election.
Speaker 3 (07:52):
Well, if there's a if there's a massive if they
let the peg go and it's a crawling peg, so
it goes up and it's not quite a it's not
a firm peg. It moves the band expands it by
like a percent a month or something, so they are
letting the PAYESO go down only in an orderly way.
If there's a massive successful attack in the payso before then,
it could be destabilizing and will certainly sour further sour
(08:16):
malays parties electoral chances and the regional elections coming up
in a few days. So we're just trying to desperately
get him to hold on for the next few days
through these extraordinary efforts, in addition to the swap line,
which is technically alone, but they could default on them. Correct,
That's where the risk gets yes, right, We've also bought
like a half a billion dollars in paysos directly, the
US Treasury has, so we're on the hook for an
(08:37):
increasing amount of money here for for unclear, very unclear
at this point political gains. The regime in Argentina could
change soon and we could end up with a party
effectively ruling the state because Malay will become neutered. If
opposition takes Congress their their equivalent of Congress, they may
not be friendly to us. So far, as far as
(09:00):
I know, we've got no assurances, never mind a written
agreement for rare earth minerals or anything along those lines, right.
Speaker 2 (09:08):
And so the problem here is China does have deeper
ties with Argentina economically than we do. They are the
second biggest trading partner of Argentina behind Brazil. So Argentina,
on one hand is kind of like, hey, we can't
just stop that because we don't do anything with the
US and any sizeable scale right now. And that's kind
(09:31):
of a problem if you can't commit to fill that
gap from China at the moments.
Speaker 3 (09:34):
Again, there's no political consensus in Argentina to move closer
to US.
Speaker 2 (09:38):
You need that.
Speaker 3 (09:38):
Malay is powerful. The chief executive there is powerful, but
he's not a dictator. Sure, And if power continues to
tilt towards the parentis the left wing progressive print a
lot of money, be reckless fiscally party as it always
has historically correct center right president Malay now Macree before him,
has imposed reforms. Those reforms generate pain. People tolerate it
(10:01):
for so long, then they get sick of it, they
throw the center right government out, they swing back towards
the paradise. It's no different than people here switching from
Democrat to Republican based on sentiment they're they're they're feeling
about how the economy and how they are doing personally.
So without any assurances that there will be consistency in
dealing with the US as a result of US putting
(10:22):
forty billion effectively on the line, because we're going to
backstop the big banks if they if they hop on
this wagon with us, we have to, I say, we
have to. It'll be informal, but I presumably we're not
going to let a big bank go under because of
a bad bet in Argentina, which.
Speaker 2 (10:39):
I don't think so, but if but if it shows
upon an earning statement, it's like, hey, what's this? Well,
you know, Argentina, what are you gonna do?
Speaker 3 (10:49):
Nothing anybody would, a person of sound mind would do
of their own free will.
Speaker 2 (10:53):
That's insane.
Speaker 3 (10:53):
You're throwing good money after bad.
Speaker 2 (10:55):
There's a there's a reason why the big US banks
don't normally take twenty billion dollars and be like, hey, Argentina,
we're willing to lend this to you, chuck.
Speaker 3 (11:07):
Argentina has not been able to cat tap global capital
markets for almost a generation. I think since two thousand
and three.
Speaker 2 (11:13):
They're viewed think they've had either two or three defaults
since they've had.
Speaker 3 (11:16):
Three this century, I know for several in the preceding
fifty years. They're on the hook for another fifty billion,
as we talked about earlier from the IMF. I'm sorry,
we wish them well, but.
Speaker 2 (11:28):
It's kind of like if you've got that like member
of your family who they're great, you love them, but
they're just not good with money, and every time that
you make a loans them, you know it's really a
gift because you're not getting the money back. Yeah, that's
effectively what Argentina is from an economic perspective. It's it's
(11:49):
not that like, it's not that you don't want to
help the people or like help to promote stability there.
It's just there's no track record of the money being
able to be utilized in any fashion that promotes stability
or the ability to pay it back.
Speaker 3 (12:03):
And there's no there's no there's nothing remotely analogous to
a familial tie here either. We've explored very very little
to Argentina. We did the same thing from Mexico, by
the way, thirty years ago with mid nineties we used
money from the Exchange Stabilization Fund, which is what the
Treasury's doing.
Speaker 2 (12:17):
It's a kiddy.
Speaker 3 (12:17):
Effectively, they swapped pesos Mexican pesos at the time for
US dollars. Mexico returned the dollars at the exchange rate
at the time of the deal, so it was a
loan that was paid back in full and it worked out.
But the circumstances there, as I was talking about with
Mike yesterday, are very different. Mexico's a much bigger trading
partner like twenty x bigger right, and there we of
(12:38):
course share border with Mexico, So a failed state Mexico
is in nobody's interest Argentina harder to make the case.
Speaker 2 (12:46):
Quick break here when we return, We've got trivia. Next.
Speaker 1 (12:52):
Here The Financial Exchange every day from eleven to noon,
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(13:14):
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Speaker 4 (13:25):
All right time for trivia here in the Financial Exchange,
And on this day. In twenty sixteen, AT and T
agreed to buy Time Warner for eighty five point four
billion dollars. The purchase by AT and T came sixteen
years after Time Warner engaged in a famously failed merger
with an internet provider company. So sure, good question today
(13:47):
in two thousand, which internet company merged with Time Warner?
Once again in two thousand, which internet company merged with
Time Warner. Be the seventh person today to text us
at six to one thirty six to two thirteen eighty
five with correct answer, and you went a Financial Exchange
showed T shirt and once again, the seventh correct correct
(14:08):
response to textas to the number six one seven thirty
six to two thirteen eighty five will win that T shirt.
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (14:20):
Piece from The New York Times shutdown with no clear
end poses new economic threat. And I don't think I'm
quite there yet. I think that that's uh. I'm just
not there quite honestly. But here's what I will say.
The longest shutdown that we've ever had was thirty four
days at the end of twenty eighteen, And do you
(14:40):
see all these estimates that are out there that hey,
for each week the shutdown goes, it's maybe a point
one two point two percent hit to GDP. And I
find those estimates kind of funny, to be honest, because
most shutdowns last anywhere from one to six days. And
so yeah, like, how do you even measure the impact
of like a three day shutdown? You can't accurately do it.
(15:03):
Beyond that, I think that there are some compounding forces
at work here that mean that this doesn't move in
a linear fashion, in that a one week shutdown relative
to a two week shutdown might be you know, half
as bad, but an eight weeks shutdown might not be
(15:24):
four times as bad for the economy as a two
week shutdown. It might be ten or fifteen times. Because
here's the thing. Yeah, we talked about like government workers
that are furloughed, and it's like, Okay, you're gonna get
paid when you come back to work for that work
or for that lack of work. Government contractors don't work
(15:44):
the same way. If you are a private company that
contracts with the federal government that doesn't have work going on,
so you're not being paid by the federal government and
you are not paying your workers. A couple things happen. First,
You're probably not going to end up paying your workers
for that time anyways, because you're not getting paid anything
for work that you didn't do. You are a contracting firm,
(16:07):
not a firm that is being paid, you know, an
hourly rate as an employee. It's different. Like you have
a fixed government contract to deliver X, Y, and z,
you are not delivering it during that time. The federal
government does not make you whole. If that's the case
those contractors. If it's a two or three day window,
(16:30):
nothing happens. If we're sitting here, and I don't think
we will be, but who knows. If it's been sixty
days and eighty percent of your work comes from government
contracts and you haven't been paid, then how are you
making payroll? Do you make the decision to lay people
off for close your doors? These are the things that
can happen as things go longer. So I think it's
(16:51):
fair to say that to this point. Quite honestly, the
economic impact in the aggregate is really minimal. I don't
think there's much meat there. If we're sitting here at
Thanksgiving and this thing is still going on. I don't
know exactly what the impacts look like then, and I
suspect that they move up in a fashion that looks
(17:14):
more like an exponential curve than just a linear weekly price.
Speaker 3 (17:18):
I think this is you just I think encapsulated in
the way you just phrased it right there. The problem
that comes that that attends trying to model something like this,
we never hit the part of the relationship where it
changes correct, so we don't know how to estimate what
the relationship. I'm doing a little curvy thing with my hand.
Speaker 2 (17:38):
I know it's great for the radio listeners, because.
Speaker 3 (17:40):
Yeah, but with I think I don't think I could
add anything to the way you just said it where
other than to say that we, as an analyst, I
have no way of telling you what the relationship no
look like beyond a certain point, because you're effectively an
uncharted waters.
Speaker 2 (17:54):
And we also don't know where that point is. Like
it is point, it's those two things. It might be
at forty five days, it might be at ninety days.
Don't know where where that point is, and don't know
what happens after it.
Speaker 3 (18:07):
So other than that, nothing to worry about.
Speaker 2 (18:10):
Well, it's like, how can you worry about it? It
is to quote I believe it was Donald Rumsfeld. It's
an unknown unknown you know, Yeah, it is.
Speaker 3 (18:21):
You sense that people are complacent. Market's been up for
the president. It seems to like the shutdown because he's from.
Speaker 2 (18:27):
An economic perspective. No one in the aggregate it cares. Now,
if you're listening to us and you're a government contractor
or someone who's furloughed and you're not getting paid, you're
sitting there, you like, chuck, This matters to me a lot.
I hear you. I get that. I'm not saying it
doesn't matter to individuals. What I am saying is that
in the aggregate to this point, the economic impact has
(18:47):
been minimal. But the longer this goes on, the bigger
the chance that that goes from being minimal too meaningful,
too significant.
Speaker 1 (18:57):
Yeah.
Speaker 3 (18:58):
And the rub here is that we won't be able
to extrapolate from this experience. Probably like zuppose, after day
sixty five, they're all different than go. Yeah, I don't
know that because the sample is so small, we'll be
able to take anything away from.
Speaker 2 (19:09):
This current estimate on internet betting markets. This one from
Calci is the shutdown is the over under right now
is forty days is where we are. We'll see quick
break here when we return. We've got the trivia answer
and Wall Street Watch.
Speaker 1 (19:32):
Okay, bringing the latest financial news straight to your radio.
Every day. It's the Financial Exchange on the Financial Exchange
Radio Network. Time now for Wall Street Watch. A complete
look at what's moving market so far today right here
(19:55):
on the Financial Exchange Radio Network.
Speaker 4 (19:57):
As third quarter earning season continues to show bug long
markets are now in negative territory. The Dow down by
one hundred and thirty five points, or three tenths of
one percent. SMP five hundred is down nearly half a percent,
or about thirty points lower. NASDAK now selling off nearly
one percent or two hundred and eighteen points at the moment.
(20:18):
Rustles on thousand, down one point three percent. Ten year
treasure real this flat at three point nine six six percent,
and crude oil up about two percent higher, trading at
fifty eight dollars and thirty six cents a barrel. Netflix
reported third quarter earnings that disappointed. While its revenue match
street estimates, the streaming giant cut its expected operating margin
(20:41):
for the year to twenty nine percent, setting an expense
related to a dispute with Brazilian tax authorities. Netflix shares
it down about ten percent. Following up on a developing
story where CNBC is reporting that Warner Brothers Discovery rejected
three paramount sky Dance offers as a few Cold's broad
buyout interest. Yesterday's reports said Warner had received unsolicited interest
(21:06):
from multiple parties. Warner Brothers shares are up about one percent. Meanwhile,
Beyond Meat is the latest meme stock with wild gains
this week. Yesterday, shares in the plant based meat alternative
company rocketed one hundred and forty percent higher after it's
signed a deal with Walmart to expand distribution. Earlier this week,
(21:27):
Round Hill Investments added the stock to its meme stock.
ETF shares are quite volatile today, now up twenty nine percent. Today,
it's at its GM Forward event. General Motors announced a
suite of new software initiatives for its vehicles over the
next three years, including an in vehicle AI system from
(21:48):
Google and a driver assistant system which will allow drivers
to be hands free and take their eyes off the
road under certain circumstances. In twenty twenty eight, GM is
up about a half a pent in after today's close,
we'll see earnings from Tesla. I'm Tucker Silva and that
is Wall Street Watch. And in the previous segment, we
asked the trivia question in two thousand, which internet company
(22:11):
merged with Time Warner. They'll be aol. Robin from Elliot,
Maine is our winner today taking on a Financial Exchange
Show t shirt. Congrats to Robin, and we play trivia
every day here in the Financial Exchange See complete contest
rules at Financial Exchange Show dot com.
Speaker 2 (22:27):
Tucker, the time that you were talking beyond me went
from being up twenty nine percent, up fifteen percent just to.
Speaker 4 (22:32):
Yeah, and last hour is up one hundred percent, just to.
Speaker 2 (22:34):
Give a sense of the volatility there. This is, by
the way, is a company that in Q four of
twenty one had done four hundred and sixty four million
dollars in revenue in the prior twelve months. It now
has done three hundred and one million dollars in the
revenue in the prior twelve months, So revenue is declining
at about a ten percent a year clip. The company
(22:56):
is free cash flow negative to the tune of one
hundred and twenty five million dollars in get a free
cash flow in the last year and as one hundred
million dollars in cash on hand, and yet you're seeing
this kind of activity. To me, it says only one thing.
Fed's got a hike. Yeah, it is a tribute.
Speaker 3 (23:14):
I know you're being half I'm always being like.
Speaker 2 (23:18):
Joking, sly silly.
Speaker 3 (23:19):
No I said the same thing a couple times yesterday,
and Mike Armstrong probably just zones me out at this point.
But yeah, it is symptomatic, chuck. If you look at
the bankruptcies by lenders who making loans they shouldn't have
been making. You look at record I stock prices, you
look at the until very recent massive run up in
precious metals. There are a number of symptoms, including financial conditions,
(23:44):
which the FED does directly control. We have indices that
measure those. They're at all time accommodative levels.
Speaker 2 (23:50):
Go ahead, do those do those financial conditions measures suck?
Speaker 1 (24:00):
Well?
Speaker 2 (24:00):
Like you know, just like hey, are stocks upper down?
Speaker 4 (24:05):
Well?
Speaker 3 (24:05):
Stocks? Are stocks are part of the index, but they're
acutely aware of the feedback, right, the circular reasoning that
could result from that feedback, so they have to be
part of it. Because the FED looks at it, and
when stocks go up, firms do have more capital. That's
the whole point of going public. But there's other stuff
in there too, bank lenders, stringency or liberality, by that,
(24:31):
how willing they are to extend credit, stuff like that.
So I guess you could even throw that out because
it's problematic. But by any measure, financial conditions are quite accommodative.
Markets are very frothy. The word bubbles getting now that
we may not be in a bubble, A bubble being
circumstances whereby prices are so far removed from fundamentals they
couldn't possibly be justified by a serious person using a
(24:53):
computer under any circumstances. Well, you don't know if you're
in a bubble until what I mean, Yeah, I'm not
passing judgment. I'm just saying you hear the word a lot,
but don't know till after the fact.
Speaker 2 (25:01):
Sometimes you do know during the fact. Actually, like in
twenty twenty one, got to say we called it. We
were like, hey, all these SPACs are getting out of control.
We got you know, Trevor Milton pushing you know, Uh,
that's so fringy though, No, no, but we were like, listen,
there is like, what's happening in evs looked bubbly. Yeah,
And it turned out it was yeah, because you had
(25:22):
companies that had never made a vehicle. They were being
valued at like fifty billion dollars okay, and you're like, guy,
this is kind of a problem today. If you want
to know where it is, it's some of the AI
adjacent stuff fair enough, I won't even say like AI,
but the stuff where it's like, hey, we're gonna maybe
make small modular nuclear reactors and we've never made one
(25:44):
and we're valued at tens of billions of dollars.
Speaker 3 (25:46):
Okay, So you're gonna have little bubbles like pockets micro
bubble talking about Yeah, that's fine, that's actually great way
to think about it. So you just described a few
that are so detached from any reasonable estimate of present
value of future cash flows that yeah, it's probably a bubble.
I'm talking about the broad market, but people are throwing
the word bubble around with respect to the stock market
as a whole. Because Schuller, so called Chiller pe and
(26:06):
other measures of price to long term inflation adjusted earnings
are nearly as high as they've ever been. The only
comparison point being the so called dot com bubble. So
by any measure, Chuck, things look quite frothy and elevate
underlying inflation trend inflation. We I use medium for that
because it's the go to metric for researchers. There are others, though,
(26:28):
measures of the of the trend and inflation that filters
out the noise attendant with month to month data that
point to ongoing elevated inflation. So it's a little odd
unless you have a very strong belief, which Fed Governor
Waller does, as one of the stories in our stack
talks about that the labor market is weakening quickly. Unless
you have very high confidence in that belief, it's unclear
(26:51):
why the that should be easy, folks.
Speaker 2 (26:52):
The Armstrong Advisory Group has a guide available this month.
It's titled Understanding Required minimum Distributions. AH good old rmds. Well,
if you've got questions about rmds and your financial situation,
this is the guy that can help give you some
answers about whether or not you need to take rmds,
(27:13):
about how big those rm ds may or may not be,
and what can the penalties be in the event that
you don't take an R and D when you're supposed to.
There are little less than seventy days left in twenty
twenty two. I'm twenty twenty two, Tucker. Can you like
hit the reset button on me? Or something like? What
just happened? Plus three? Did I just glitch back three years? Well,
(27:36):
but my goodness, it's only about seventy days left in
twenty twenty five, Thank you very much. And so in
order to make sure that you've got things buttoned up,
this guy is a great place to start again. It's
titled Understanding Required Minimum Distributions. The rules surrounding them have
changed a number of times in the last five or
six years, and this guy can give you some of
(27:58):
the information to help make you this help make decisions
for yourself about do I need to take an arm
D this year? How much is it going to be?
And what do I do? Then? The guide again is
titled Understanding required minimum Distribution. There are two ways that
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(28:18):
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Speaker 1 (28:24):
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Speaker 2 (28:40):
Mark, I want to skip ahead and talk about health
insurance here, just because Tucker put a couple of health
insurance pieces in the stack, and I don't want to
just save him for stack roulette. I'm going to start
with this Wall Street Journal one. The average cost of
a family health insurance plan is now twenty seven thousand dollars.
That's according to the Kaiser Family Foundation. And I have
(29:02):
a few different thoughts about this. The first is everyone
loves to hate insurance companies, but no one ever like
says like how they would fix it or run an
insurance company themselves that would be better. I'm not saying
that insurance companies are like great, like raw ra Ye insurance,
but what I am saying is, okay, like tell me
(29:23):
how you would fix this so that things are cheaper,
and most people can't actually do that. The problem that
we have, in my opinion, is not that health insurance
is too expensive. It's that incomes are too low relative
to overall health care spending. And specifically, like when you
look at healthcare spending as a percentage of GDP, it's
(29:45):
been on a freaking rocket ship for the last forty years.
It's just gone up and up and up. So it's
a bigger portion of our spending is going towards health
care and it's not happening with improvements in outcomes the
way that you would exp It's not like life spans
have dramatically increased during that time. And so the place
(30:07):
where I get to on this is and again, like
people have looked at trying to fix this, and everyone
basically it comes to the same conclusion, which is like,
don't know what to do, but it's a mess because
you basically have this hybrid of let's take the worst
parts of public health care and the worst parts of
private health care and put them together. And that's what
(30:29):
the US healthcare system basically looks like. It's, hey, we
have to expand coverage to cover more people, but we're
not going to do anything to increase the supply of
doctors because forget if it's the American Medical Association or
whoever it is it's one of the big doctor groups
limits the number of med school residency spots that you have,
(30:50):
and so you can't get enough doctors that are trained,
which means mark according to supply and demand, if you
increase demand for healthcare, but don't increase apply for healthcare,
what happens. Prices should go up to ration and they
tend services. Okay, and and so you have And that's
just one example. But basically what you have, you've got
(31:11):
a whole mess. It's not the insurance company's fault that
these prices are this high. It's the overall system as
a whole. Is why this is happening, Because there is
nothing out there that says, hey, like, here's how we're
going to make sure that you know, pricing is being
you know, effectively implemented. There's not enough competition in many states.
(31:35):
You look at the New England region where our show
is based, just as an example, you have one or
two large conglomerates that basically run like healthcare systems now
and there's not a ton of competition out there on
pricing and things like that. And it's just a very
messy situation. So it's not to say like, oh, like
insurance plans are like properly priced, like get over it.
(31:56):
When I'm what I'm more saying is, no, this is
a problem, but the insurance cost is the symptom of
the problem. It's not actually cause of it.
Speaker 3 (32:05):
No, you're absolutely right.
Speaker 2 (32:06):
We not the cause of it.
Speaker 3 (32:07):
Yeah, we spend twice as much. I'm just dividing here
personal consumption expenditures, that is spending on healthcare, dividing that
by total spending. We spend about twice as much as
we did in nineteen eighty on healthcare today. And as
you point out, and we don't live twice, we're just
we're advancing like which.
Speaker 2 (32:24):
We wouldn't expect to Yeah, no, but no, Yeah.
Speaker 3 (32:26):
You're absolutely right. The gains we're making are I'm sure special.
You know healthcare economist would say, no, you're getting this
all wrong in terms of terminology. But the gains we're
making are really really incremental. We're picking up you know,
inches here as opposed to yards in earlier waves of innovation.
Speaker 2 (32:45):
And this is also before we even get to the
issues with you know, we're talking now about improving quantity
of life in terms of life span. Are we seeing
like what are we seeing in terms of quality of life,
like even for folks who maybe living longer, is the
quality diminished because of you? X Y. I don't even
know how you measure it. So let's take a quick break,
(33:08):
and then when we come back, let's do stack roulette
and talk about something more uplifting than twenty seven thousand
dollars for health insurance.
Speaker 1 (33:15):
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Speaker 4 (33:53):
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Speaker 2 (34:26):
Mark. I got to start off with a piece that
I just found a little while agoes. You guys, what
just happened? What?
Speaker 1 (34:36):
Oh?
Speaker 2 (34:36):
Sorry, my my sound? You can't hear anything? No, you,
I can hear you loud. Don't about something? Maybe I
just like lean the wrong way or something. No, I
hear you being okay. Anyways, you guys remember the AWS
outage from Monday? Oh? Yeah, yeah, you forget? Uh did
you have your sleep disrupted by it? No? It's interesting
(34:58):
because there's a company by the name of eight Sleep,
and I wasn't familiar with them before this. The number
eight yes, eight eight sleep, Yeah, well like seven eight nine. Anyways,
it's this company called eight Sleep and what they do
They make this like little portable thing that sits next
to your bed. And then a cover for your bed,
(35:19):
and it can heat and cool your bed to the
right temperature if you're like a hot or cool sleeper cool.
It's a smart bed. And this thing, by the way,
costs for you know, a king sized bed. It's thirty
three hundred dollars, not for like the mattress or the
bed or anything. This is the cover and the cooling thing.
But it basically like then monitors and heats and cools
(35:42):
as you need. I don't know that this is useful
in any way, shape or form, but it's a product,
and so it exists. When AWS went down, these smart
beds run on AWS, and so basically the whatever setting
things were stuck on is the one that it just
ended on. And so like these smart beds pretty much
(36:03):
ended up either like overheating in a lot of cases
are overcooling, and so people were just like either freezing
or like so hot. And it obviously then gets to
the question of okay, if if a simple AWS outage
can turn your smart bed into an oven. I don't
know that we're quite ready for self driving cars that
(36:25):
use cloud based technology to be like driving us around here.
I'm just not sure I'm comfortable with it. It's like
we should, you know, slow down a little bit. You know,
if your smart bed is being bricked by an AWS outage,
maybe we should just take it a little slower on
the whole self driving vehicles thing.
Speaker 4 (36:45):
I mean, there are appliances that operate in Wi Fi
technology too, Like, oh, I'm sure that some of these
fridges and ovens, like washing machines, for some reason, they
have to have Internet connected.
Speaker 2 (36:56):
Honestly, why does everything need to be connected? Now? Now
I understand like some things, but here's like washing machines
is a great example. Unless like I can push a
button and have the laundry moved from the washing machine
to the dryer, right, which would be useful.
Speaker 1 (37:14):
Nice?
Speaker 2 (37:14):
Actually, what do I need like my washing machine on
my phone?
Speaker 1 (37:18):
For?
Speaker 2 (37:18):
Am I gonna be like yeah, run it again? No,
Like that's kind of dumb. You know how long your
wash takes? Oh, hey, I'm gonna be home in a
little bit. Turn the oven on. Gee, that seems kind
of dangerous being like on the road, you're not home
and you're just turning the oven on. Maybe you shouldn't
do that, just wait, right, Like you know that there's
(37:39):
there's stuff that you can do on all this Now,
there are other things that I think could be like
useful from a smart technology perspective, but like my fridge
doesn't need to be connected to the.
Speaker 4 (37:51):
Internet, Well you gotta see if you have milk in
there or not, Chuck, Why.
Speaker 2 (37:55):
Don't I just use my eyes in my hand? I can?
I can? I can open this called a door and
be like, hey, milk, you're there. Oh you're not. I'm
gonna go out and get one of your friends. We're
done for the day. We do have Tesla earnings after
the Belt today, so we'll be covering that on tomorrow's
(38:15):
show and can't wait to see y' all then
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(01:05):
Zada and Mark Fandetti.
Speaker 2 (01:10):
Kicking things off here. It's Chuck, Mark and Tucker with you.
And nothing too exciting happening in markets today, but the
little movement here and there. S and P five hundred
down eleven points, not even a quarter percent, Dow Jones
Industrial Average down eighty one points, not even a quarter percent.
Now's de Composite down one hundred and one points, almost
(01:31):
half a percent. So you get a little bit of
movement in the Nasdaq. Uh and we can talk about,
you know, kind of why that's happening as well. The
US ten year Treasury up nine tenths of a basis
point to three point nine seven to two percent. US
Dollar Index is down point zero two percent, so basically flat.
(01:52):
Not much movement on the dollar. Gold continuing its sell
off over the last couple of days, down another one
point nine to four percent, four nine dollars and twenty cents.
And we've got crude oil West Texas Intermediate up a
dollar thirty eight a barrel to two i'm sorry, to
fifty eight to sixty two at the moment, triple a
(02:15):
national average for gas prices moving back up. Some of
this due to continue to refinery outages in the Midwest,
but back up to three oh six and six ten.
So it looks like, at least for this week, we're
gonna have to put on hold the idea that the
nationwide average is gonna drop below three dollars a gallon.
(02:35):
Just can't quite get there at the moment. But that
is what is moving in markets broadly at the moment.
Let's talk a little bit about this piece from the
Wall Street Journal. It's a Wall Street Journal exclusive, and
I'll quote here Trump administration is pushing officials in Argentina
(02:57):
to limit China's influence over the distressed South American nation.
At the same time, the US and Wall Street banks
are working on a forty billion dollar lifeline for Buenos Aires.
And basically, like if if you look at the reporting
on this, the thinking in terms of, you know, the
question that I've asked, quite honestly, is Okaylake Argentina Mark
(03:23):
is it fair? That is it fair to say that
Argentina has one of the worst fiscal, monetary and governance
track records out of any country. That is, that's at
least one hundred years. They're serious.
Speaker 3 (03:40):
One hundred twenty or so years ago, they were as
wealthy and per capita terms as the United States.
Speaker 2 (03:44):
It's really the last hundred years that's kind of been
the problem.
Speaker 3 (03:47):
That's always the kicker.
Speaker 2 (03:48):
Yeah, just a future.
Speaker 3 (03:50):
They've been a serial defaulter, and I'm not exaggerating that
might be understating how chronically ineptley they've managed their finances.
They oscillate from a center right government, which is i'll
characterize malay cut spending, get inflation under controled. He's done
those things. He's also pegged the PAYSO to the dollar YEP,
at what most analysts think is too high a level
(04:12):
for the PAYSO. Speculators are attacking it. That's why he
needs dollars. They're running out of dollars to pay the
IMF to cover the fifty million to pay foreign credit,
So you need to export to get dollars, or you
can get them from the IMF. That's where they got
the fifty million dollar loan from. We're apparently going to
give them another forty billion, twenty billion of which will
be guaranteed by taxpayers, all in an effort to push
(04:33):
up the value to keep the value of the PAYO
artificially high, which you need to do if you're an
Argentinian Argentinian policy maker to keep inflation under wraps low
at more pesos it takes to buy.
Speaker 2 (04:44):
Argentine is a big importer of stuff that it needs,
and so when the paso devalues, it creates inflation, and
it's it's kind of this whole problem for them.
Speaker 3 (04:52):
So now where and so this this is not new.
This happens every several years, this cycle of a center
right government coming in succeeding a parentist which was the
he was the FDR with a real authoritarian bent leader
of the forties and fifties. Okay, so they oscillate from
left wing parentist populist money printing government to center right
government which they have today. The center right government pegs
(05:13):
that beeso to keep inflation under control. Speculators attack the peg,
and invariably they have to devalue. In many cases they've defaulted.
We've seen this movie many times before, Chuck.
Speaker 2 (05:25):
So you mentioned, Look, the US Treasury is now effectively
on the hook for about twenty billion dollars in a
currency swap theial out there, but they are also trying
to work with private investors to wrangle up another twenty billion,
and banks are naturally sitting there kind of like you
want us to do. What Now. The rationale for this,
(05:45):
as it's been laid out by a few people, is, hey,
look two things on this front. Number One, you want
to be able to counter Chinese influence in the region.
Number Two, Argentina is rich in mineral resources, and if
you can, you know, work with them, you can potentially
provide an additional supply of some of the stuff that
(06:06):
we get from China right now that you know, could
be held through another country that could be producing, another
country that is not as hostile to American interests. On
the first one, countering China, that the problem that I
have there is, look that there is no long storied
history of the United States in Argentina being like great
partners in doing anything for the last hundred years. And
(06:31):
because of Argentina's economic size at this point, it against
not particularly large, and we're not huge importers or exporters
from them. If you really wanted to counter Chinese influence
in South America, Brazil's probably you know, the place that
you would tend to look due to its size and
also vast mineral resources, and like you can kind of
go down the list there and the fact that it's
(06:52):
not Argentina. I mean, it's it's Brazil, which presents its
own slate of problems just from a ability and governance perspective.
But those are different, far different problems from what Argentina
faces on a fairly regular basis. So I think you're
left kind of looking at this saying, Hey, the upside
(07:14):
on this, if it were to work, is yes, you potentially,
you know, start to unlock another trading partner in the region.
But like gosh, I mean, it really doesn't seem like
there that's a long path. I mean, this is something
that's not going to be achieved in any sizeable way
(07:37):
in the next you know, three to five years, Like
this is a multi decade project to stabilize Argentina.
Speaker 3 (07:43):
Malay Is party is facing elections in several days, which
is the reason they're desperately trying to keep the PAYESO.
Speaker 2 (07:50):
They don't want infuation before the election.
Speaker 3 (07:52):
Well, if there's a if there's a massive if they
let the peg go and it's a crawling peg, so
it goes up and it's not quite a it's not
a firm peg. It moves the band expands it by
like a percent a month or something, so they are
letting the PAYESO go down only in an orderly way.
If there's a massive successful attack in the payso before then,
it could be destabilizing and will certainly sour further sour
(08:16):
malays parties electoral chances and the regional elections coming up
in a few days. So we're just trying to desperately
get him to hold on for the next few days
through these extraordinary efforts, in addition to the swap line,
which is technically alone, but they could default on them. Correct,
That's where the risk gets yes, right, We've also bought
like a half a billion dollars in paysos directly, the
US Treasury has, so we're on the hook for an
(08:37):
increasing amount of money here for for unclear, very unclear
at this point political gains. The regime in Argentina could
change soon and we could end up with a party
effectively ruling the state because Malay will become neutered. If
opposition takes Congress their their equivalent of Congress, they may
not be friendly to us. So far, as far as
(09:00):
I know, we've got no assurances, never mind a written
agreement for rare earth minerals or anything along those lines, right.
Speaker 2 (09:08):
And so the problem here is China does have deeper
ties with Argentina economically than we do. They are the
second biggest trading partner of Argentina behind Brazil. So Argentina,
on one hand is kind of like, hey, we can't
just stop that because we don't do anything with the
US and any sizeable scale right now. And that's kind
(09:31):
of a problem if you can't commit to fill that
gap from China at the moments.
Speaker 3 (09:34):
Again, there's no political consensus in Argentina to move closer
to US.
Speaker 2 (09:38):
You need that.
Speaker 3 (09:38):
Malay is powerful. The chief executive there is powerful, but
he's not a dictator. Sure, And if power continues to
tilt towards the parentis the left wing progressive print a
lot of money, be reckless fiscally party as it always
has historically correct center right president Malay now Macree before him,
has imposed reforms. Those reforms generate pain. People tolerate it
(10:01):
for so long, then they get sick of it, they
throw the center right government out, they swing back towards
the paradise. It's no different than people here switching from
Democrat to Republican based on sentiment they're they're they're feeling
about how the economy and how they are doing personally.
So without any assurances that there will be consistency in
dealing with the US as a result of US putting
(10:22):
forty billion effectively on the line, because we're going to
backstop the big banks if they if they hop on
this wagon with us, we have to, I say, we
have to. It'll be informal, but I presumably we're not
going to let a big bank go under because of
a bad bet in Argentina, which.
Speaker 2 (10:39):
I don't think so, but if but if it shows
upon an earning statement, it's like, hey, what's this? Well,
you know, Argentina, what are you gonna do?
Speaker 3 (10:49):
Nothing anybody would, a person of sound mind would do
of their own free will.
Speaker 2 (10:53):
That's insane.
Speaker 3 (10:53):
You're throwing good money after bad.
Speaker 2 (10:55):
There's a there's a reason why the big US banks
don't normally take twenty billion dollars and be like, hey, Argentina,
we're willing to lend this to you, chuck.
Speaker 3 (11:07):
Argentina has not been able to cat tap global capital
markets for almost a generation. I think since two thousand
and three.
Speaker 2 (11:13):
They're viewed think they've had either two or three defaults
since they've had.
Speaker 3 (11:16):
Three this century, I know for several in the preceding
fifty years. They're on the hook for another fifty billion,
as we talked about earlier from the IMF. I'm sorry,
we wish them well, but.
Speaker 2 (11:28):
It's kind of like if you've got that like member
of your family who they're great, you love them, but
they're just not good with money, and every time that
you make a loans them, you know it's really a
gift because you're not getting the money back. Yeah, that's
effectively what Argentina is from an economic perspective. It's it's
(11:49):
not that like, it's not that you don't want to
help the people or like help to promote stability there.
It's just there's no track record of the money being
able to be utilized in any fashion that promotes stability
or the ability to pay it back.
Speaker 3 (12:03):
And there's no there's no there's nothing remotely analogous to
a familial tie here either. We've explored very very little
to Argentina. We did the same thing from Mexico, by
the way, thirty years ago with mid nineties we used
money from the Exchange Stabilization Fund, which is what the
Treasury's doing.
Speaker 2 (12:17):
It's a kiddy.
Speaker 3 (12:17):
Effectively, they swapped pesos Mexican pesos at the time for
US dollars. Mexico returned the dollars at the exchange rate
at the time of the deal, so it was a
loan that was paid back in full and it worked out.
But the circumstances there, as I was talking about with
Mike yesterday, are very different. Mexico's a much bigger trading
partner like twenty x bigger right, and there we of
(12:38):
course share border with Mexico, So a failed state Mexico
is in nobody's interest Argentina harder to make the case.
Speaker 2 (12:46):
Quick break here when we return, We've got trivia. Next.
Speaker 1 (12:52):
Here The Financial Exchange every day from eleven to noon,
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Speaker 4 (13:25):
All right time for trivia here in the Financial Exchange,
And on this day. In twenty sixteen, AT and T
agreed to buy Time Warner for eighty five point four
billion dollars. The purchase by AT and T came sixteen
years after Time Warner engaged in a famously failed merger
with an internet provider company. So sure, good question today
(13:47):
in two thousand, which internet company merged with Time Warner?
Once again in two thousand, which internet company merged with
Time Warner. Be the seventh person today to text us
at six to one thirty six to two thirteen eighty
five with correct answer, and you went a Financial Exchange
showed T shirt and once again, the seventh correct correct
(14:08):
response to textas to the number six one seven thirty
six to two thirteen eighty five will win that T shirt.
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (14:20):
Piece from The New York Times shutdown with no clear
end poses new economic threat. And I don't think I'm
quite there yet. I think that that's uh. I'm just
not there quite honestly. But here's what I will say.
The longest shutdown that we've ever had was thirty four
days at the end of twenty eighteen, And do you
(14:40):
see all these estimates that are out there that hey,
for each week the shutdown goes, it's maybe a point
one two point two percent hit to GDP. And I
find those estimates kind of funny, to be honest, because
most shutdowns last anywhere from one to six days. And
so yeah, like, how do you even measure the impact
of like a three day shutdown? You can't accurately do it.
(15:03):
Beyond that, I think that there are some compounding forces
at work here that mean that this doesn't move in
a linear fashion, in that a one week shutdown relative
to a two week shutdown might be you know, half
as bad, but an eight weeks shutdown might not be
(15:24):
four times as bad for the economy as a two
week shutdown. It might be ten or fifteen times. Because
here's the thing. Yeah, we talked about like government workers
that are furloughed, and it's like, Okay, you're gonna get
paid when you come back to work for that work
or for that lack of work. Government contractors don't work
(15:44):
the same way. If you are a private company that
contracts with the federal government that doesn't have work going on,
so you're not being paid by the federal government and
you are not paying your workers. A couple things happen. First,
You're probably not going to end up paying your workers
for that time anyways, because you're not getting paid anything
for work that you didn't do. You are a contracting firm,
(16:07):
not a firm that is being paid, you know, an
hourly rate as an employee. It's different. Like you have
a fixed government contract to deliver X, Y, and z,
you are not delivering it during that time. The federal
government does not make you whole. If that's the case
those contractors. If it's a two or three day window,
(16:30):
nothing happens. If we're sitting here, and I don't think
we will be, but who knows. If it's been sixty
days and eighty percent of your work comes from government
contracts and you haven't been paid, then how are you
making payroll? Do you make the decision to lay people
off for close your doors? These are the things that
can happen as things go longer. So I think it's
(16:51):
fair to say that to this point. Quite honestly, the
economic impact in the aggregate is really minimal. I don't
think there's much meat there. If we're sitting here at
Thanksgiving and this thing is still going on. I don't
know exactly what the impacts look like then, and I
suspect that they move up in a fashion that looks
(17:14):
more like an exponential curve than just a linear weekly price.
Speaker 3 (17:18):
I think this is you just I think encapsulated in
the way you just phrased it right there. The problem
that comes that that attends trying to model something like this,
we never hit the part of the relationship where it
changes correct, so we don't know how to estimate what
the relationship. I'm doing a little curvy thing with my hand.
Speaker 2 (17:38):
I know it's great for the radio listeners, because.
Speaker 3 (17:40):
Yeah, but with I think I don't think I could
add anything to the way you just said it where
other than to say that we, as an analyst, I
have no way of telling you what the relationship no
look like beyond a certain point, because you're effectively an
uncharted waters.
Speaker 2 (17:54):
And we also don't know where that point is. Like
it is point, it's those two things. It might be
at forty five days, it might be at ninety days.
Don't know where where that point is, and don't know
what happens after it.
Speaker 3 (18:07):
So other than that, nothing to worry about.
Speaker 2 (18:10):
Well, it's like, how can you worry about it? It
is to quote I believe it was Donald Rumsfeld. It's
an unknown unknown you know, Yeah, it is.
Speaker 3 (18:21):
You sense that people are complacent. Market's been up for
the president. It seems to like the shutdown because he's from.
Speaker 2 (18:27):
An economic perspective. No one in the aggregate it cares. Now,
if you're listening to us and you're a government contractor
or someone who's furloughed and you're not getting paid, you're
sitting there, you like, chuck, This matters to me a lot.
I hear you. I get that. I'm not saying it
doesn't matter to individuals. What I am saying is that
in the aggregate to this point, the economic impact has
(18:47):
been minimal. But the longer this goes on, the bigger
the chance that that goes from being minimal too meaningful,
too significant.
Speaker 1 (18:57):
Yeah.
Speaker 3 (18:58):
And the rub here is that we won't be able
to extrapolate from this experience. Probably like zuppose, after day
sixty five, they're all different than go. Yeah, I don't
know that because the sample is so small, we'll be
able to take anything away from.
Speaker 2 (19:09):
This current estimate on internet betting markets. This one from
Calci is the shutdown is the over under right now
is forty days is where we are. We'll see quick
break here when we return. We've got the trivia answer
and Wall Street Watch.
Speaker 1 (19:32):
Okay, bringing the latest financial news straight to your radio.
Every day. It's the Financial Exchange on the Financial Exchange
Radio Network. Time now for Wall Street Watch. A complete
look at what's moving market so far today right here
(19:55):
on the Financial Exchange Radio Network.
Speaker 4 (19:57):
As third quarter earning season continues to show bug long
markets are now in negative territory. The Dow down by
one hundred and thirty five points, or three tenths of
one percent. SMP five hundred is down nearly half a percent,
or about thirty points lower. NASDAK now selling off nearly
one percent or two hundred and eighteen points at the moment.
(20:18):
Rustles on thousand, down one point three percent. Ten year
treasure real this flat at three point nine six six percent,
and crude oil up about two percent higher, trading at
fifty eight dollars and thirty six cents a barrel. Netflix
reported third quarter earnings that disappointed. While its revenue match
street estimates, the streaming giant cut its expected operating margin
(20:41):
for the year to twenty nine percent, setting an expense
related to a dispute with Brazilian tax authorities. Netflix shares
it down about ten percent. Following up on a developing
story where CNBC is reporting that Warner Brothers Discovery rejected
three paramount sky Dance offers as a few Cold's broad
buyout interest. Yesterday's reports said Warner had received unsolicited interest
(21:06):
from multiple parties. Warner Brothers shares are up about one percent. Meanwhile,
Beyond Meat is the latest meme stock with wild gains
this week. Yesterday, shares in the plant based meat alternative
company rocketed one hundred and forty percent higher after it's
signed a deal with Walmart to expand distribution. Earlier this week,
(21:27):
Round Hill Investments added the stock to its meme stock.
ETF shares are quite volatile today, now up twenty nine percent. Today,
it's at its GM Forward event. General Motors announced a
suite of new software initiatives for its vehicles over the
next three years, including an in vehicle AI system from
(21:48):
Google and a driver assistant system which will allow drivers
to be hands free and take their eyes off the
road under certain circumstances. In twenty twenty eight, GM is
up about a half a pent in after today's close,
we'll see earnings from Tesla. I'm Tucker Silva and that
is Wall Street Watch. And in the previous segment, we
asked the trivia question in two thousand, which internet company
(22:11):
merged with Time Warner. They'll be aol. Robin from Elliot,
Maine is our winner today taking on a Financial Exchange
Show t shirt. Congrats to Robin, and we play trivia
every day here in the Financial Exchange See complete contest
rules at Financial Exchange Show dot com.
Speaker 2 (22:27):
Tucker, the time that you were talking beyond me went
from being up twenty nine percent, up fifteen percent just to.
Speaker 4 (22:32):
Yeah, and last hour is up one hundred percent, just to.
Speaker 2 (22:34):
Give a sense of the volatility there. This is, by
the way, is a company that in Q four of
twenty one had done four hundred and sixty four million
dollars in revenue in the prior twelve months. It now
has done three hundred and one million dollars in the
revenue in the prior twelve months, So revenue is declining
at about a ten percent a year clip. The company
(22:56):
is free cash flow negative to the tune of one
hundred and twenty five million dollars in get a free
cash flow in the last year and as one hundred
million dollars in cash on hand, and yet you're seeing
this kind of activity. To me, it says only one thing.
Fed's got a hike. Yeah, it is a tribute.
Speaker 3 (23:14):
I know you're being half I'm always being like.
Speaker 2 (23:18):
Joking, sly silly.
Speaker 3 (23:19):
No I said the same thing a couple times yesterday,
and Mike Armstrong probably just zones me out at this point.
But yeah, it is symptomatic, chuck. If you look at
the bankruptcies by lenders who making loans they shouldn't have
been making. You look at record I stock prices, you
look at the until very recent massive run up in
precious metals. There are a number of symptoms, including financial conditions,
(23:44):
which the FED does directly control. We have indices that
measure those. They're at all time accommodative levels.
Speaker 2 (23:50):
Go ahead, do those do those financial conditions measures suck?
Speaker 1 (24:00):
Well?
Speaker 2 (24:00):
Like you know, just like hey, are stocks upper down?
Speaker 4 (24:05):
Well?
Speaker 3 (24:05):
Stocks? Are stocks are part of the index, but they're
acutely aware of the feedback, right, the circular reasoning that
could result from that feedback, so they have to be
part of it. Because the FED looks at it, and
when stocks go up, firms do have more capital. That's
the whole point of going public. But there's other stuff
in there too, bank lenders, stringency or liberality, by that,
(24:31):
how willing they are to extend credit, stuff like that.
So I guess you could even throw that out because
it's problematic. But by any measure, financial conditions are quite accommodative.
Markets are very frothy. The word bubbles getting now that
we may not be in a bubble, A bubble being
circumstances whereby prices are so far removed from fundamentals they
couldn't possibly be justified by a serious person using a
(24:53):
computer under any circumstances. Well, you don't know if you're
in a bubble until what I mean, Yeah, I'm not
passing judgment. I'm just saying you hear the word a lot,
but don't know till after the fact.
Speaker 2 (25:01):
Sometimes you do know during the fact. Actually, like in
twenty twenty one, got to say we called it. We
were like, hey, all these SPACs are getting out of control.
We got you know, Trevor Milton pushing you know, Uh,
that's so fringy though, No, no, but we were like, listen,
there is like, what's happening in evs looked bubbly. Yeah,
And it turned out it was yeah, because you had
(25:22):
companies that had never made a vehicle. They were being
valued at like fifty billion dollars okay, and you're like, guy,
this is kind of a problem today. If you want
to know where it is, it's some of the AI
adjacent stuff fair enough, I won't even say like AI,
but the stuff where it's like, hey, we're gonna maybe
make small modular nuclear reactors and we've never made one
(25:44):
and we're valued at tens of billions of dollars.
Speaker 3 (25:46):
Okay, So you're gonna have little bubbles like pockets micro
bubble talking about Yeah, that's fine, that's actually great way
to think about it. So you just described a few
that are so detached from any reasonable estimate of present
value of future cash flows that yeah, it's probably a bubble.
I'm talking about the broad market, but people are throwing
the word bubble around with respect to the stock market
as a whole. Because Schuller, so called Chiller pe and
(26:06):
other measures of price to long term inflation adjusted earnings
are nearly as high as they've ever been. The only
comparison point being the so called dot com bubble. So
by any measure, Chuck, things look quite frothy and elevate
underlying inflation trend inflation. We I use medium for that
because it's the go to metric for researchers. There are others, though,
(26:28):
measures of the of the trend and inflation that filters
out the noise attendant with month to month data that
point to ongoing elevated inflation. So it's a little odd
unless you have a very strong belief, which Fed Governor
Waller does, as one of the stories in our stack
talks about that the labor market is weakening quickly. Unless
you have very high confidence in that belief, it's unclear
(26:51):
why the that should be easy, folks.
Speaker 2 (26:52):
The Armstrong Advisory Group has a guide available this month.
It's titled Understanding Required minimum Distributions. AH good old rmds. Well,
if you've got questions about rmds and your financial situation,
this is the guy that can help give you some
answers about whether or not you need to take rmds,
(27:13):
about how big those rm ds may or may not be,
and what can the penalties be in the event that
you don't take an R and D when you're supposed to.
There are little less than seventy days left in twenty
twenty two. I'm twenty twenty two, Tucker. Can you like
hit the reset button on me? Or something like? What
just happened? Plus three? Did I just glitch back three years? Well,
(27:36):
but my goodness, it's only about seventy days left in
twenty twenty five, Thank you very much. And so in
order to make sure that you've got things buttoned up,
this guy is a great place to start again. It's
titled Understanding Required Minimum Distributions. The rules surrounding them have
changed a number of times in the last five or
six years, and this guy can give you some of
(27:58):
the information to help make you this help make decisions
for yourself about do I need to take an arm
D this year? How much is it going to be?
And what do I do? Then? The guide again is
titled Understanding required minimum Distribution. There are two ways that
you can request it. First is by going to Armstrong
Advisory dot Com. There's a button there where you can
(28:18):
request it. Second, you can call eight hundred three nine
three for zero zero one.
Speaker 1 (28:24):
The proceeding was paid for by Armstrong advisory group a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 2 (28:40):
Mark, I want to skip ahead and talk about health
insurance here, just because Tucker put a couple of health
insurance pieces in the stack, and I don't want to
just save him for stack roulette. I'm going to start
with this Wall Street Journal one. The average cost of
a family health insurance plan is now twenty seven thousand dollars.
That's according to the Kaiser Family Foundation. And I have
(29:02):
a few different thoughts about this. The first is everyone
loves to hate insurance companies, but no one ever like
says like how they would fix it or run an
insurance company themselves that would be better. I'm not saying
that insurance companies are like great, like raw ra Ye insurance,
but what I am saying is, okay, like tell me
(29:23):
how you would fix this so that things are cheaper,
and most people can't actually do that. The problem that
we have, in my opinion, is not that health insurance
is too expensive. It's that incomes are too low relative
to overall health care spending. And specifically, like when you
look at healthcare spending as a percentage of GDP, it's
(29:45):
been on a freaking rocket ship for the last forty years.
It's just gone up and up and up. So it's
a bigger portion of our spending is going towards health
care and it's not happening with improvements in outcomes the
way that you would exp It's not like life spans
have dramatically increased during that time. And so the place
(30:07):
where I get to on this is and again, like
people have looked at trying to fix this, and everyone
basically it comes to the same conclusion, which is like,
don't know what to do, but it's a mess because
you basically have this hybrid of let's take the worst
parts of public health care and the worst parts of
private health care and put them together. And that's what
(30:29):
the US healthcare system basically looks like. It's, hey, we
have to expand coverage to cover more people, but we're
not going to do anything to increase the supply of
doctors because forget if it's the American Medical Association or
whoever it is it's one of the big doctor groups
limits the number of med school residency spots that you have,
(30:50):
and so you can't get enough doctors that are trained,
which means mark according to supply and demand, if you
increase demand for healthcare, but don't increase apply for healthcare,
what happens. Prices should go up to ration and they
tend services. Okay, and and so you have And that's
just one example. But basically what you have, you've got
(31:11):
a whole mess. It's not the insurance company's fault that
these prices are this high. It's the overall system as
a whole. Is why this is happening, Because there is
nothing out there that says, hey, like, here's how we're
going to make sure that you know, pricing is being
you know, effectively implemented. There's not enough competition in many states.
(31:35):
You look at the New England region where our show
is based, just as an example, you have one or
two large conglomerates that basically run like healthcare systems now
and there's not a ton of competition out there on
pricing and things like that. And it's just a very
messy situation. So it's not to say like, oh, like
insurance plans are like properly priced, like get over it.
(31:56):
When I'm what I'm more saying is, no, this is
a problem, but the insurance cost is the symptom of
the problem. It's not actually cause of it.
Speaker 3 (32:05):
No, you're absolutely right.
Speaker 2 (32:06):
We not the cause of it.
Speaker 3 (32:07):
Yeah, we spend twice as much. I'm just dividing here
personal consumption expenditures, that is spending on healthcare, dividing that
by total spending. We spend about twice as much as
we did in nineteen eighty on healthcare today. And as
you point out, and we don't live twice, we're just
we're advancing like which.
Speaker 2 (32:24):
We wouldn't expect to Yeah, no, but no, Yeah.
Speaker 3 (32:26):
You're absolutely right. The gains we're making are I'm sure special.
You know healthcare economist would say, no, you're getting this
all wrong in terms of terminology. But the gains we're
making are really really incremental. We're picking up you know,
inches here as opposed to yards in earlier waves of innovation.
Speaker 2 (32:45):
And this is also before we even get to the
issues with you know, we're talking now about improving quantity
of life in terms of life span. Are we seeing
like what are we seeing in terms of quality of life,
like even for folks who maybe living longer, is the
quality diminished because of you? X Y. I don't even
know how you measure it. So let's take a quick break,
(33:08):
and then when we come back, let's do stack roulette
and talk about something more uplifting than twenty seven thousand
dollars for health insurance.
Speaker 1 (33:15):
The Financial Exchange Show podcast drops every day on Apple, Spotify,
and iHeartRadio. Hit that subscribe button and leave us a
five star review. You're listening to the Financial Exchange Radio Network.
The Financial Exchange is life on Series XM's Business Radio
Channel one thirty two weekdays from eleven to noon. Get
the latest business and financial news from across the country
(33:38):
and around the world, and keep up to date on
how it might affect your wallet. That's the Financial Exchange
weekdays from eleven to noon on Series XM's Business Radio
Channel one thirty two. Face He's the Financial Exchange Radio Network.
Speaker 4 (33:53):
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Speaker 2 (34:26):
Mark. I got to start off with a piece that
I just found a little while agoes. You guys, what
just happened? What?
Speaker 1 (34:36):
Oh?
Speaker 2 (34:36):
Sorry, my my sound? You can't hear anything? No, you,
I can hear you loud. Don't about something? Maybe I
just like lean the wrong way or something. No, I
hear you being okay. Anyways, you guys remember the AWS
outage from Monday? Oh? Yeah, yeah, you forget? Uh did
you have your sleep disrupted by it? No? It's interesting
(34:58):
because there's a company by the name of eight Sleep,
and I wasn't familiar with them before this. The number
eight yes, eight eight sleep, Yeah, well like seven eight nine. Anyways,
it's this company called eight Sleep and what they do
They make this like little portable thing that sits next
to your bed. And then a cover for your bed,
(35:19):
and it can heat and cool your bed to the
right temperature if you're like a hot or cool sleeper cool.
It's a smart bed. And this thing, by the way,
costs for you know, a king sized bed. It's thirty
three hundred dollars, not for like the mattress or the
bed or anything. This is the cover and the cooling thing.
But it basically like then monitors and heats and cools
(35:42):
as you need. I don't know that this is useful
in any way, shape or form, but it's a product,
and so it exists. When AWS went down, these smart
beds run on AWS, and so basically the whatever setting
things were stuck on is the one that it just
ended on. And so like these smart beds pretty much
(36:03):
ended up either like overheating in a lot of cases
are overcooling, and so people were just like either freezing
or like so hot. And it obviously then gets to
the question of okay, if if a simple AWS outage
can turn your smart bed into an oven. I don't
know that we're quite ready for self driving cars that
(36:25):
use cloud based technology to be like driving us around here.
I'm just not sure I'm comfortable with it. It's like
we should, you know, slow down a little bit. You know,
if your smart bed is being bricked by an AWS outage,
maybe we should just take it a little slower on
the whole self driving vehicles thing.
Speaker 4 (36:45):
I mean, there are appliances that operate in Wi Fi
technology too, Like, oh, I'm sure that some of these
fridges and ovens, like washing machines, for some reason, they
have to have Internet connected.
Speaker 2 (36:56):
Honestly, why does everything need to be connected? Now? Now
I understand like some things, but here's like washing machines
is a great example. Unless like I can push a
button and have the laundry moved from the washing machine
to the dryer, right, which would be useful.
Speaker 1 (37:14):
Nice?
Speaker 2 (37:14):
Actually, what do I need like my washing machine on
my phone?
Speaker 1 (37:18):
For?
Speaker 2 (37:18):
Am I gonna be like yeah, run it again? No,
Like that's kind of dumb. You know how long your
wash takes? Oh, hey, I'm gonna be home in a
little bit. Turn the oven on. Gee, that seems kind
of dangerous being like on the road, you're not home
and you're just turning the oven on. Maybe you shouldn't
do that, just wait, right, Like you know that there's
(37:39):
there's stuff that you can do on all this Now,
there are other things that I think could be like
useful from a smart technology perspective, but like my fridge
doesn't need to be connected to the.
Speaker 4 (37:51):
Internet, Well you gotta see if you have milk in
there or not, Chuck, Why.
Speaker 2 (37:55):
Don't I just use my eyes in my hand? I can?
I can? I can open this called a door and
be like, hey, milk, you're there. Oh you're not. I'm
gonna go out and get one of your friends. We're
done for the day. We do have Tesla earnings after
the Belt today, so we'll be covering that on tomorrow's
(38:15):
show and can't wait to see y' all then
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