September 26, 2025 • 38 mins
Mike Armstrong and Paul Lane discuss the core inflation rate coming as expected. Trump imposing new tariffs on pharma and big trucks. Will the massive spending on AI ever pay off? How many Americans actually have a financial plan written down?
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Speaker 1 (00:00):
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(01:06):
Armstrong and Paul Lane.
Speaker 2 (01:10):
Good morning, Happy Friday, Welcome back to the Financial Exchange.
If you weren't happy about markets yesterday, you're getting a
bit of a turnaround today with all three major indssees
in the green so far. Will be filling you in
later during the show on where markets land for the day,
but breaking a bit of a trend for the last
few We had a new inflation read out this morning
(01:32):
at eight thirty am, and that's where we're going to
start the program today. It's Mike, Paul and Tucker with you.
And market Watch wrote this morning the Fed doesn't think
inflation will run a muck again. The PCE price gauge
will help clue us in. So Paul, did the PCE
price gauge clue us in on whether or not inflation
is going to run a muck?
Speaker 3 (01:51):
We still have no clue, Mike, still have no idea
in what direction it's going to go. In terms of
the numbers that we saw today, everything came in right
in line with expectations. We saw the month over month
number rise zero point two percent. That was, like I said,
in line with expectations. And the annual figure for core
PC sits at two point nine percent, again right on
(02:13):
in line with what economists had estimated. The problem with
the PCE is that a lot of it is telegraphed
in the earlier CPI report that gets reported earlier in
the month. I believe it was the eleventh this month,
So there's often not a lot of surprises. A lot
of it is very easy to sort of interpret what
the number is going to come in at. So oftentimes
(02:34):
we sit here at the end of the month and
we prep for the core PCE and then there's very
little of insightful commentary to be made other than it is.
Speaker 4 (02:43):
What it is.
Speaker 2 (02:44):
Yeah, no, no offense to mister Bartash and market Watch,
but this PCE price index did not clue us in
to the direction of inflation, nor does it really ever
clue us into the actual direction of inflation, or it
hasn't for the last several years anyway. But we do
talk about it because the Fed cares a bit more
about this inflation reading than they do the CPI. They
(03:04):
use it as their main gage for the direction of
prices and just how far away from their target we
actually are. And so that's I think the context that
we can look at this taking a look at all
the four inflation readings that we get between CPI and PCEE,
we are now showing a reading of two point seven
percent a year over year at the low three point
(03:25):
one percent if you strip out food and energy on
CPI at the high. And what I think is safe
to say here is compared to the first quarter of
this year, prices are running up faster during the second
quarter than they were in the first. And really where
we saw this start to take off is more at
the end of the second quarter June July August is
(03:46):
when we saw prices on a month over month basis
getting to levels that I think normally the FED would
be concerned about. The three month average for most of
these price in disease. In fact, if you look at
core CPIP, core PC, the three month average for all
three right there at three point two percent, and so
I think that is the piece that has some folks
(04:08):
hung up about cutting in this environment. But in any case,
I think very clearly the FED is on this path
of lowering interest rates into this environment. I think they
are today justified in doing so. But I think right
now I'm trying to contextualize this right now, more than
(04:31):
I think anytime in the last few years, the FED
is justifiably confused about what to do next. I think
they were confused about what to do next back in
twenty twenty two, but they shouldn't have been. It's kind
of my conclusion, like it was a pretty obvious prescription.
I know that sounds obvious in hindsight, but we were
saying at the time too that look, you just had
Russia invade Ukraine, you had a massive amount of spending shutdowns,
(04:54):
We're going to have inflation. You need to be raising
interest rates. Today the waters are very muddy. It is
really unclear what comes next. There are definitively concerns about
the pace of hiring in the private sector, even the
public sector. The pace of hiring obviously is pretty low,
given the administration's goals to reduce headcount. And at the
same time, there is still a tremendous amount of spending
(05:16):
going on. GDP is getting revised upwards, there's a lot
of infatuation with the stock market, with artificial intelligence, and
all of those things are the possibility of being inflationary
and running away to the upside here. And so I
was listening to an interview with Stephen Myron with I
believe Bloomberg. Just yesterday he whipped out the word transitory
once again, you know, throwing it around on top of us.
(05:40):
I thought that they had, yeah, put that word away
and decided not to use it anymore.
Speaker 3 (05:44):
But this is probably too nice of a place for it,
maybe just.
Speaker 2 (05:47):
Six the garbage can. Yeah, but that word was pulled
back out by the newest voting member of the Federal
Reserve to describe what they are seeing in terms of
price increases right now. And it's kind of the trillion
dollar question with all of this is can they get
away with modestly lowering interest rates or you know, in
Myron's opinion, dramatically lowering interest rates. I don't think he's
(06:09):
going to get it, but that's his goal and not
spark off a period of uncomfortable inflation. And to me,
you know, these numbers are trending towards three percent. If
you get much higher than that, then you start having
people get frustrated. I think people are already frustrated, but
you know, you start getting to three and a half
(06:30):
four percent range, that is when the Fed is going
to have to take a very serious look at their policy.
Speaker 4 (06:34):
Strategy.
Speaker 3 (06:34):
It's been really challenging over the course of the last
six months or so to really gauge what direction the
economy is going. Just when you think you have a
beat on sort of where the economic data is trending,
it's sort of reverse.
Speaker 2 (06:46):
Let's give some examples here.
Speaker 3 (06:47):
Yeah, I think this is a good example of it, really,
where all of the statements in the week prior was
jobs data had been revised down significantly. Nine hundred and
eleven thousand jobs had been taken away from March of
twenty four through March of twenty twenty five. You had
the jobless claims number that came out I believe that
was the first week of September that was in the
(07:08):
elevator to high two hundred, Yeah, two fifty maybe range
or maybe two mid two thirties. And then you had
a number this week that was much lesser than anticipated
on those continuing unemployment claims jobless claims that were being filed.
So and then you also had a GDP number that
came in revised to three point eight percent in gas.
Speaker 2 (07:30):
Which, by the way, that GDPER revision was primarily due
to all of us.
Speaker 4 (07:33):
Spending more money exactly.
Speaker 2 (07:35):
It wasn't some nuanced like imports versus exports. I think
it was really easy to explain. Turned out when we
actually measured it. All the consumers in the US spent
more money in Q two than we previously thought.
Speaker 3 (07:46):
Right, So you have a consumer spending continually with a
lot of resiliency. That's been the story for the last
two or three years. But the week before I would
have told you, oh, there are there is some data
point to the labor market weakening. Not to say that these,
you know, job as claims are the end all be all.
They're noisy. But again this week you had indications that
the consumer's still spending, the jobless claims aren't as bad
(08:08):
as anticipated, at least for this week. So you sort
of pause for a moment. That, paired with the Q
two GDP numbers, say perhaps some of these trends aren't
really materializing. And I continue to sit here and debate
whether or not we've seen the full impact from tariffs.
I had read earlier that Ken Griffin from a Citadel
(08:28):
had been on saying that we're only fifty percent of
the way there in terms of the impact of tariffs
on the economy. I don't think anyone really knows how
far along the line we are. I would have told
you in April that by this date we would have
known the answer to that question, but we still don't
have a clear, conclusive read on that yet.
Speaker 4 (08:47):
On the inflationary side of it, that is the reality here.
Speaker 2 (08:50):
I don't think that's bad news necessarily. There's oftentimes that
kind of fog of the moment where it's really tough
to tell exactly what the biggest looming issue could be.
But right now it just happens to be a tie
between the two things that the FED is really in
charge of at the moment, and so I do think
they're gonna move cautiously. I don't think that the President
is going to get the cuts that he wants. I
(09:11):
don't think Stephen Myron, the President's appointee to the FED,
is going to get the cuts that he wants. I
think if there is a I always like to look
at this from a perspective of what could really surprise everybody,
and the answer would be no more rate cuts, or
dramatically fewer than are being priced in, because right now
you go take a look at markets, they are very
clearly pricing in definitively two more cuts this year and
(09:33):
probably more starting next year. And so if you want
one thing that could surprise investors, it's that it's that
data comes out that reverses the Fed's mind on where
rates need to be, and they don't need to hike rates,
they just pause.
Speaker 3 (09:47):
It's got to be inflation. That's the only way you'd
have that is run away inflation.
Speaker 2 (09:51):
And run away again. We're not talking about eight percent here, right,
We're not talking about twenty twenty two. It doesn't need
to get that bad for the FED to have to
pause what they're doing here. Let's take a quick break
when we come back. New tariff announcements this morning overnight.
When did these actually come out? Tuger, It was after
I was asleep. I don't know when precisely it was,
but new tariff announcements. We got to cover that next
here on the Financial Exchange.
Speaker 1 (10:13):
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Speaker 2 (10:41):
So, as I mentioned this morning, we learned of new
tariffs being imposed on the pharmaceutical industry. I want to
start there. There's also something about trucks, but starting on
the pharmaceutical industry because I think this has been in
focus for a lot of families over the course of
the last several years, realizing that oh yeah, like a
lot of my arts are being made in China or
(11:01):
other parts of the world. And so I know for
certainty that this story is going to get misinterpreted, and
so I want to cover it specifically what it's going
to do here. So starting October first, the United States
will be imposing a one hundred tariff on some pharmaceuticals.
But we're talking about branded or patented pharmaceutical product unless
(11:25):
a company is building their pharmaceutical manufacturing plant in the
United States. So that was the post from President Trump
on Truth Social and so obviously your mind goes to, Okay,
what precisely does that mean. The answer is that there
are very few drugs that are patented or.
Speaker 4 (11:44):
Or or what's what's the other word it was.
Speaker 2 (11:48):
Brand that are manufactured outside the United States. Nine out
of ten of these drugs are done in the United States,
and then also nine out of ten ten prescriptions in
the US are actually filled with generics, not branded drugs.
Those generics are the ones that are heavily manufactured outside
of the United States and are not affected by this. Overall.
(12:12):
From what I was seeing the other day, only about
five percent of the branded drugs that the United States
imports come from China or come from Asia. Rather the
rest of them primarily coming from Europe, and many of
those European companies are already in the process of developing
US manufacturing or have already done so, and so market
reaction has been very muted on this. Not many companies
(12:34):
are getting hit with this. I think the logical question
is do they go after generics eventually? Right? Is this
a first step? And I think that's a fair question
to ask. But I think the very first thing people
are going to react to is what's happening with the
drugs that I take? And the answer is probably nothing,
because you're probably on a generic.
Speaker 3 (12:51):
YEP, that's a good way to look at it. The
spillover effects. You can see that over the course of
the last couple of days. It's interesting that this story
dovetails with Eli Lilly announcing that they were going to
build another manufacturing plant in Houston. That's for six point
five billion for weight loss drugs, and just you have
a collective of farmer companies out there who have pooled
(13:12):
together three hundred and fifty billion dollars to invest in
US manufacturing and research and development over the course of
the next decare. So it's not as if a lot
of the big pharma players aren't already at least committing
from you know, verbal commitments to invest in manufacturing research.
So I think you take the story as a whole,
you have companies that have been committed to do this
(13:34):
in the first place, and you have minimal impact on
the drugs that are out there. It's not as significant
of a tariff story because it is not attached to
generics at this point.
Speaker 2 (13:46):
This is really look, this is kind of the story
of a lot of the tariffs that have been put
into place thus far, which is make a big splash,
but intentionally don't make it terribly impactful on American spending.
Like that's been. When I look through the actual policies
that have put it into place, there's a lot of
give and take, but ultimately it's been we announce something.
(14:07):
We then announced the exceptions, and when you look at
the broader policy, you can see why, oh yeah, okay,
this is actually not going to drive prices all that
much higher in the United States because of the exceptions
on these key components or these key pieces to the
overall policy. And so that's how I'm kind of looking
at this one too, is Yeah, it's making a splash.
It's maybe a shot across the bow of some pharmaceutical
(14:29):
makers that hey, we might be able to do this
on generics too, so watch out. But for the time being,
no big impact other than probably a few very specific
drugs that are going to be more difficult for insurance
companies and all that. If it does get hit with
this one hundred percent terrify.
Speaker 3 (14:43):
Yeah, it feels like the whip on a racehorse being
cracked down, you know, the whip gets cracked down of hey,
we're coming after pharmaceutical companies unless you invest in manufacturing
the United States. And then often it seems like companies
sort of react over the few weeks by putting together
some sort of dealer initiative to it to do just that.
Speaker 2 (15:01):
Moving over, Sorry, actually we didn't cover the big the
big trucks, big trucks, so I don't know how big
they have to be, but that is the other piece
that they're going to be looking at commercial truck manufacturers
where they are making those outside the United States, once
again getting a look at tariffs here, so Germany's Dommler
North America unit assemble some freighter freight liner brands in Mexico,
(15:24):
those would be looking at some tariff. And so honestly,
the auto industry is such a mess with tariffs that
I have no idea what happens next on this. This
has been the constant bane of for General Motors and
many others, and I know that they are working as
quickly as they can to push the administration to create
(15:45):
exceptions for their vehicles and moving manufacturing and changing things
at the same time. I would think that in the
event the United States can get a attractive deal with
Canada and Mexico, that this is the first thing that
gets put away in terms of like negotiable tariffs. I
would think that having vehicles made under the North American
(16:10):
what is the new NAFTA. It's not new, it's like
ten years old now, but the North American Trade Agreement
that we have with these allies, I would think that
anything that we're going to announce here, whether it's on
heavy trucks or cars, is something that ultimately the administration
is going to negotiate on because it is so impactful
for Big American Manufacturing USMCA. Yes, thank you, Tucker, USMCA.
(16:35):
That seems very likely to me because as it stands now,
many of these domestic auto manufacturers are at a legitimate
disadvantage to Korean manufacturers, to European manufacturers right like, those
countries have navigated and negotiated deals for their cars to
come into the United States, even if they are not
manufactured in the US, whereas American manufacturers of vehicles, if
(16:59):
they're doing it in Mexico, are getting hit with way
bigger tariffs. And so I think there's still a lot
to be worked out on this. I am concerned about
the auto market generally, and this is again a bit
of a stumbling block for many of those companies, but
I don't think is a show stopper for any of them.
Speaker 3 (17:19):
Also worth only the last thing on the tariff front.
There also were some tariffs announce on kitchen cabinets, bathroom vanities,
and other similar products. A fifty percent tariff and a
thirty percent tariff will be imposed on upholstered furniture. So
you have the likes of URH and others down slightly
on that news today.
Speaker 2 (17:38):
So taking in all this context, Paul, this is what
I have to wonder about.
Speaker 5 (17:42):
Right.
Speaker 2 (17:42):
We just had that GDP revision yesterday that was primarily
on the back of the US consumer, And at the
same time, we've had all this bad data about the
labor market and everything else pulling on people's views of
the economy is pretty abysmal. All of this stuff is
remaining true. And so if I'm looking at Q two
data April through June data on consumer spending, is it
(18:07):
just still a whole bunch of front running tariffs? You know,
like you think about that. Logically, we didn't see yet
the big price arrangements. We still had very big uncertainty
on where teriffs were going to be. I certainly heard
from people who were saying, heck, I actually did it myself, right.
I've talked about it how I was buying a bunch
of stone for a project that we were doing, and
(18:30):
I rushed that shipment to get it to me well
ahead of time. In case, it stopped getting imported, and
so I just kind of wonder, hey, is that what
we were seeing in the second quarter, and is that
about to dry up and you know, shrink since Frankly,
at this stage, I think that tariffs have been normalized
to a large degree and consumers are not thinking about
(18:52):
them every day in the way that they were in
the second quarter.
Speaker 3 (18:54):
Did the AM I remember that that recent GDP report
that revision did show that that saw a big uptick
in sort of those durable goods. Yeah, as a result,
like those categories of you know, washing machines or you know, stones,
items like that that have a longer lifespan.
Speaker 2 (19:12):
Again, anybody that's trying to put together narrave on this
is just guessing at the stage. We won't know until
we see consumer spending for the next few months. But
that kind of fits in with how I perceive things,
how when I talk to people about terriffs, how they
perceive things as well. Quick Break, we're gonna cover Wall
Street next with Wall Street. Watch with Chucker.
Speaker 1 (19:41):
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Speaker 4 (19:43):
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Speaker 5 (19:45):
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Speaker 6 (20:01):
Well after its recent pullback, markets today are in mixed
territory after the Core PCE index showed it climbed zero
point two percent last month, in line with expectations. Right now,
the Dow is up by three tenths of one percent,
or one hundred and forty three points, SMP five hundred
edging four points higher, Nasdaq is retreating about a third
(20:25):
of a percent or seventy two points lower. Russell two
thousand is up half a percent. Ten year treasureeled I
cannot find that. I'm not sure what's going on there
with CNBC. Crude oil is up over one and a
half percent, rating just above sixty six dollars a barrel.
Furniture and home good stocks including Williams, Sonoma, Wayfair, and
(20:45):
RH are seeing modest losses on the day after President
Trump announced tariffs on imported items such as kitchen cabinets
and upholstered furniture. President Trump also announced that he will
impose a twenty five percent tariff on imported heavy trucks,
sending shares in Peter Built and Kenworth owner packar up
over four percent. Pharmaceutical stocks are also garnering attention after
(21:09):
Trump announced a one hundred percent tariffront branded patented imported drugs,
exempting companies building plants in the US. ELI, Lilly, ABV,
and Mark are all edging higher, while Nova Noorda's shares
are down nearly two percent. Meanwhile, Intel stock climbing another
two percent, now on pace for a fourth straight day
(21:30):
of gains following report from the Wall Street Journal that
CEO Lipputan has approached Apple, Taiwan Semiconductor and other companies
about investments or partnerships, and Costco shares falling nearly three
percent at the moment after the warehouse retailer posted higher
sales and profit in the previous quarter. However, same store
sales growth missed street expectations. Costco also noted that newly
(21:55):
extended store hours were paying off. I'm Tucker still and
that is Wall Street Watch.
Speaker 2 (22:01):
So, Tucker, you remember the story yesterday we covered with
Intel approaching Apple. You just mentioned it, but Intel approaching
Apple about a potential investment there and my comment at
the time Chuck was doing the show was Intel only
does this if they are getting the nod from one
of their new shareholders, which is the United States government.
(22:22):
It's the White House, right, They have a big steak
in it, and Vidia now has a stake in it.
And my answer now as to why they're doing this
is this announcement here where the Trump administration is now
taking aim at chip makers with a new plan to
throttle imports. Here is the plan. Trump administration is considering
a plan that would force US companies to maintain a
(22:48):
one to one ratio of chips imported from overseas to
chips made in the United States. So timeline, we don't
know how long they have to do this, how big
the tariff would be for those that don't comply. All
of these are questions, but all of a sudden, the
context of the Nvidia investment in Intel, the Apple investment
(23:09):
in Intel, the rumored Apple investment, but you know they
have clearly approached Apple about this, all of a sudden,
all those things make sense. I don't know that any
of them will happen. I don't know if this policy
will happen, but nonetheless, it is a clear I don't
know to me, this is a clear one. For one
line of okay, Intel was basically given this information or
(23:31):
somebody was given the information that's something like this is
in the works, and so go make some more deals
because companies are going to be willing to pay for it.
I think that's my kind of conclusion on the connection here.
Speaker 3 (23:41):
Domestic manufacturing of semiconductors is an important issue for national security,
and we can all agree that it is something that
really it has Byparson approval in terms of.
Speaker 2 (23:55):
All.
Speaker 3 (23:56):
However, this way of going about it I disagree with.
I think that the idea of subsidy and encouragement for
manufacturing through through grants and loans and other avenues is
better than this idea of tariffing or doing this one
for one change exchange of semiconductors one.
Speaker 2 (24:17):
This way of doing it would be extremely complicated. Yeah,
I also to use this technique at the same time
that well, I don't know, but if they're using the
same emergency Act that the Supreme Court is currently weighing,
then it has to risk there.
Speaker 4 (24:31):
That's another piece of this.
Speaker 2 (24:32):
So I think there are some fair questions there, but
I'm not necessarily opposed to a carrot and a stick.
I'm not sure that this is the right stick, but
Nonetheless this, like you said, I think it's important that
we focus on getting more domestic chip manufacturing, But I
think most national security experts would also tell you that
(24:53):
probably the most important thing is staying ahead on AI
chip innovation. Exactly where if that prohibits you from doing
in the UNI States that, oh.
Speaker 3 (25:01):
Well, that's where my christians one lie is that you
still need to be on the cutting edge. And let's
understand the reality of the situation that these supply chains
are incredibly complex and intricate, and it is an extremely
difficult process the manufacturing side.
Speaker 4 (25:16):
It's going to take a long time.
Speaker 3 (25:17):
For the US to catch up. So you need to
allow for that process to occur rather than taking out
the stick just yet because it's going to take some time.
Speaker 2 (25:26):
And by the way, I mean the reason that Intel
has been taking these investments that Intel uh no longer
manufacturers chips for Apple, by the way, is because they
haven't been competitive.
Speaker 4 (25:35):
They've been a disaster. They've been an absolute disaster.
Speaker 2 (25:38):
That's the reality here is if you're trying to be
competitive with the overall idea that we are going to
manufacture here and do a good job. Intel has proven
for a good decade now that they're incapable of doing so.
Speaker 3 (25:50):
Missed Mobile and missing the GPUs that Nvidia is behind
right now.
Speaker 4 (25:54):
So yeah, they've been behind. Story that.
Speaker 2 (25:59):
I hesitate to bring up because we've almost been asking
this question seemingly every day. But the Wall Street Journal
has another piece here today on spending in AI and
what the path really looks like. And this is Look,
this is the whole game, right When you talk about
markets being at all time highs, when you talk about
(26:19):
valuations where they are, when you talk about the continued
acceleration of the US economy, all of it is on
the back of artificial intelligence promises.
Speaker 4 (26:28):
And so.
Speaker 2 (26:30):
Accurately, I think many people from journalists to economists to
market analysts are asking the question, great, we see the impact,
we see the investment that they do a really good
piece on this new AI factory in North Dakota, tiny town,
eleven hundred people, population, two motels, dollar general, a small college,
(26:55):
and now fifteen billion dollar AI factory.
Speaker 4 (26:59):
That's going to be bigger.
Speaker 2 (27:00):
And ten home depots, ten home depots big Just think
about that.
Speaker 3 (27:03):
You get exhausted walking around one home depot, let alone ten.
Speaker 2 (27:07):
But these data centers are really fueling the economic growth
in this country. Right now. These things are being built domestically,
They are needing massive energy requirements, and so the electricity
generation facilities are being beefed up and built new in
order to facilitate all of this. But the question keeps
(27:31):
getting asked and nobody's got a great answer yet, which is,
no one really knows how and when these investments will
be paid back.
Speaker 4 (27:41):
I thought this was a fantastic piece.
Speaker 3 (27:42):
I know you guys have probably covered it exhaustively this
week with just Nvidia and open AI and some of
the deals that have been done. Just the focus on
the investment in infrastructure and the hundreds of billions of
dollars that are being spent. What I liked him particularly
about this is that in order to justify the amount
of spending that my and I are speaking about here,
the three hundred or four hundred billion of CAPEX that's
(28:03):
going into building these data centers, you have different consultants
and a comments out there estimating that, for example, the
revenue generated by AI would have to reach two trillion
dollars according to Baye an annual revenue by twenty thirty
to justify this wave of infrastructure spending. And right now,
if you look at the revenues of Amazon, Alphabet, Microsoft, Meta,
(28:27):
and Nvidia, that two trillion dollar number isn't even all
four of those or all six of those companies combined,
And it's five times the size of the global subscription
software market. And so as much as all of us
have used probably chatch ept or other sorts of AI
chatbot prompts, how do we get enough revenue to substantiate
(28:49):
that capital expensures? And the comparisons to the fiber optics
cables back in the late nineties are great studies of
what seems like eerily similar of times.
Speaker 2 (29:01):
This it's the it's the field of dreams. Promise, if
you build it, he will come.
Speaker 4 (29:06):
Yeah. Yeah, And.
Speaker 2 (29:10):
To be fair like kind of happened with the Internet.
Speaker 3 (29:14):
It did, it just took longer to take hold, and
you had a lot of companies that invested heavily.
Speaker 2 (29:21):
That were the ones that actually profited exactly.
Speaker 3 (29:25):
Think of Global Crossings, WorldCom, three sixty networks companies that
you don't talk about now, but it's really Google and
Facebook and others that benefited from the fiber optic buildout
in the mid two thousands that occurred in the mid nine.
Speaker 2 (29:40):
The multi trillion dollar question. Will it be Google, Facebook,
and Video and Open AI that profit on the infrastructure
that they are all investing heavily in, or will it
is small.
Speaker 3 (29:50):
Not names that just leverage all the hundreds of billions
of dollars that these other big hyperscalers spend to build
out this infrastructure.
Speaker 4 (29:56):
Yeah, and just do it in a smarter way.
Speaker 2 (29:58):
I mean the credit piece here, and the piece that
I am a little bit concerned about is you're not
hearing about a lot of those startups like you were
in the Internet stage. You're not hearing about some brand
new upstart who has manufactured a really compelling AI product.
You're instead seeing ai Google focusing on their AI product,
(30:19):
You're seeing Apple focusing on it. And I haven't really
come across a whole lot of brand new, unknown companies
that put something in front of me, the user, and say,
look at this, this is compelling, this is something you
should pay for. And I think that's what everybody's waiting
for and looking for and also questioning who's going to
make it.
Speaker 3 (30:39):
Chat GPT would be the biggest argument with seven hundred
million users. But I get what you're saying that there
are to be clear, there are hundreds of startups out
there doing this stuff, but it probably hasn't made the
way to our faces just yet.
Speaker 4 (30:51):
In front of us.
Speaker 2 (30:52):
Let's take a quick break here. When we come back,
we can move on from the AI virtuous circle. Let's
go over to Americans in their financial plans. This is
this is an interesting one for me. Quick break. We'll
be back with that next on the Financial Exchange.
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Speaker 2 (32:13):
Almost half of Americans forty seven percent, don't have a
written financial plan, according to a recent study from the
Orleans Center for the Future of Retirement. And my next
question is, allions, who on earth did you speak to?
Because there's no way that fifty three percent of Americans
have a written financial plan. No, there's no chance. No,
what are you talking about. There's no way that fifty
(32:35):
three percent of Americans have a written financial plan. If
you're listening right now, like who that you know? If
you pulled ten of your friends, do you honestly think
half of them would have a written financial plan? I
know a certainty that people in my age demographic would not.
Speaker 4 (32:52):
Oh definitely. I'm not saying they shouldn't, yeah, but they don't.
No chance.
Speaker 2 (32:57):
So I don't know who aleons talk to here. I
don't buy the data i've and get his way off.
I would be willing to bet that seventy five to
eighty percent of Americans do not have a written financial plan,
probably more because most people until they have a really
difficult decision, wing it and frankly, a lot of the
time that works out all right, but there are scenarios
(33:17):
where it doesn't. The piece from CNBC then goes into
like how to potentially address that, how to figure out
how to find a financial advisor? What you should be
looking for. I guess my point would be any professional
that you work for, that you work with, is going
to cost you money. Obviously, not a lot of financial
planners do this for free, nor should they. But before
(33:43):
you go just hunting for one, because I think that's
oftentimes what happens is like, oh, I'm sixty.
Speaker 4 (33:48):
Two years old.
Speaker 2 (33:49):
Time now to find me a financial advisor, really ask
yourself what it is you're trying to accomplish, right like,
because if you go in blindly, then those the circumstances
where I see people getting over sold and a little
bit starstruck by all the fancy, all the fancy verbiage
and everything else, and they end up just making bad decisions.
(34:10):
Like if I'm going to meet with the financial advisor,
what am I trying to accomplish. What am I trying
to answer? What questions do I have that I don't
know the answer to? And then from there you can
try to hone it down right, like, Okay, I have
a ton of questions about how to fund my kids college.
You probably shouldn't be talking to your uncle's financial advisor
that manages money for everybody only worth twenty million dollars plus.
(34:32):
He might be the best investor out there, but he's
not gonna have a lot of great advice in all
likelihood to how to do a faft sapp. Likewise, you know,
if your goal is to build a plan around how
to successfully retire and you're talking to a financial advisor
that primarily helps out on managing debt repayment, again, might
(34:53):
not be the best match there. And so that I
think is the most important piece is why do I
need a financial advisor? What questions do I have? And
then just admit, like, what things do I not know?
Like I have no idea how much your insurance I
should have? Okay, great, Yeah, certain financial advisors can help
you with that, but not all of them, and it's
(35:14):
important to kind of check the background and ask them
those questions like what do you specialize in. I know
you help my uncle or my parents, but do you
actually have any expertise and the things that I have
questions on.
Speaker 3 (35:23):
Right, And for some people, it's outsourcing the capability to
a professional because maybe you just don't want to spend
the time to do it yourself, you know, similar to
things around the house or other services that you find
yourself just not having the time for and not having
the interest in it because you don't have the requisite
background for it. So that can be a driving factor,
but you have to assess if it's right for you,
(35:45):
because not everybody needs one, but there are some people
who really benefit folks.
Speaker 2 (35:51):
Markets near all time are at all time highs near
all time high from evaluation perspective, economy at a seeming
turning point, and I know folks have questions about it.
That's why people tune into our show. If you tune
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(36:11):
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(36:32):
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(36:54):
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Speaker 1 (37:16):
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Speaker 2 (37:31):
As we head up to the top of the hour,
markets are seemingly losing some of their esteem here. The Dow,
which was up more than half percent, is up only
a quarter of a percent. SMP five hundred up a
little bit less than one fifth of one percent, the
NASDAK currently down thirty points, or about point one four percent.
The Rustle two thousand is still in the positive for
the day. The ten year treasury yield, which I was
(37:54):
also having a tough time pulling up Tucker, is about
flat for the day, slightly down to point zero zero
six percent. As we close in on the top of
the hour, we got a lot more to cover in
the second hour the show. Folks, stay tuned, We'll be
right back
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(01:06):
Armstrong and Paul Lane.
Speaker 2 (01:10):
Good morning, Happy Friday, Welcome back to the Financial Exchange.
If you weren't happy about markets yesterday, you're getting a
bit of a turnaround today with all three major indssees
in the green so far. Will be filling you in
later during the show on where markets land for the day,
but breaking a bit of a trend for the last
few We had a new inflation read out this morning
(01:32):
at eight thirty am, and that's where we're going to
start the program today. It's Mike, Paul and Tucker with you.
And market Watch wrote this morning the Fed doesn't think
inflation will run a muck again. The PCE price gauge
will help clue us in. So Paul, did the PCE
price gauge clue us in on whether or not inflation
is going to run a muck?
Speaker 3 (01:51):
We still have no clue, Mike, still have no idea
in what direction it's going to go. In terms of
the numbers that we saw today, everything came in right
in line with expectations. We saw the month over month
number rise zero point two percent. That was, like I said,
in line with expectations. And the annual figure for core
PC sits at two point nine percent, again right on
(02:13):
in line with what economists had estimated. The problem with
the PCE is that a lot of it is telegraphed
in the earlier CPI report that gets reported earlier in
the month. I believe it was the eleventh this month,
So there's often not a lot of surprises. A lot
of it is very easy to sort of interpret what
the number is going to come in at. So oftentimes
(02:34):
we sit here at the end of the month and
we prep for the core PCE and then there's very
little of insightful commentary to be made other than it is.
Speaker 4 (02:43):
What it is.
Speaker 2 (02:44):
Yeah, no, no offense to mister Bartash and market Watch,
but this PCE price index did not clue us in
to the direction of inflation, nor does it really ever
clue us into the actual direction of inflation, or it
hasn't for the last several years anyway. But we do
talk about it because the Fed cares a bit more
about this inflation reading than they do the CPI. They
(03:04):
use it as their main gage for the direction of
prices and just how far away from their target we
actually are. And so that's I think the context that
we can look at this taking a look at all
the four inflation readings that we get between CPI and PCEE,
we are now showing a reading of two point seven
percent a year over year at the low three point
(03:25):
one percent if you strip out food and energy on
CPI at the high. And what I think is safe
to say here is compared to the first quarter of
this year, prices are running up faster during the second
quarter than they were in the first. And really where
we saw this start to take off is more at
the end of the second quarter June July August is
(03:46):
when we saw prices on a month over month basis
getting to levels that I think normally the FED would
be concerned about. The three month average for most of
these price in disease. In fact, if you look at
core CPIP, core PC, the three month average for all
three right there at three point two percent, and so
I think that is the piece that has some folks
(04:08):
hung up about cutting in this environment. But in any case,
I think very clearly the FED is on this path
of lowering interest rates into this environment. I think they
are today justified in doing so. But I think right
now I'm trying to contextualize this right now, more than
(04:31):
I think anytime in the last few years, the FED
is justifiably confused about what to do next. I think
they were confused about what to do next back in
twenty twenty two, but they shouldn't have been. It's kind
of my conclusion, like it was a pretty obvious prescription.
I know that sounds obvious in hindsight, but we were
saying at the time too that look, you just had
Russia invade Ukraine, you had a massive amount of spending shutdowns,
(04:54):
We're going to have inflation. You need to be raising
interest rates. Today the waters are very muddy. It is
really unclear what comes next. There are definitively concerns about
the pace of hiring in the private sector, even the
public sector. The pace of hiring obviously is pretty low,
given the administration's goals to reduce headcount. And at the
same time, there is still a tremendous amount of spending
(05:16):
going on. GDP is getting revised upwards, there's a lot
of infatuation with the stock market, with artificial intelligence, and
all of those things are the possibility of being inflationary
and running away to the upside here. And so I
was listening to an interview with Stephen Myron with I
believe Bloomberg. Just yesterday he whipped out the word transitory
once again, you know, throwing it around on top of us.
(05:40):
I thought that they had, yeah, put that word away
and decided not to use it anymore.
Speaker 3 (05:44):
But this is probably too nice of a place for it,
maybe just.
Speaker 2 (05:47):
Six the garbage can. Yeah, but that word was pulled
back out by the newest voting member of the Federal
Reserve to describe what they are seeing in terms of
price increases right now. And it's kind of the trillion
dollar question with all of this is can they get
away with modestly lowering interest rates or you know, in
Myron's opinion, dramatically lowering interest rates. I don't think he's
(06:09):
going to get it, but that's his goal and not
spark off a period of uncomfortable inflation. And to me,
you know, these numbers are trending towards three percent. If
you get much higher than that, then you start having
people get frustrated. I think people are already frustrated, but
you know, you start getting to three and a half
(06:30):
four percent range, that is when the Fed is going
to have to take a very serious look at their policy.
Speaker 4 (06:34):
Strategy.
Speaker 3 (06:34):
It's been really challenging over the course of the last
six months or so to really gauge what direction the
economy is going. Just when you think you have a
beat on sort of where the economic data is trending,
it's sort of reverse.
Speaker 2 (06:46):
Let's give some examples here.
Speaker 3 (06:47):
Yeah, I think this is a good example of it, really,
where all of the statements in the week prior was
jobs data had been revised down significantly. Nine hundred and
eleven thousand jobs had been taken away from March of
twenty four through March of twenty twenty five. You had
the jobless claims number that came out I believe that
was the first week of September that was in the
(07:08):
elevator to high two hundred, Yeah, two fifty maybe range
or maybe two mid two thirties. And then you had
a number this week that was much lesser than anticipated
on those continuing unemployment claims jobless claims that were being filed.
So and then you also had a GDP number that
came in revised to three point eight percent in gas.
Speaker 2 (07:30):
Which, by the way, that GDPER revision was primarily due
to all of us.
Speaker 4 (07:33):
Spending more money exactly.
Speaker 2 (07:35):
It wasn't some nuanced like imports versus exports. I think
it was really easy to explain. Turned out when we
actually measured it. All the consumers in the US spent
more money in Q two than we previously thought.
Speaker 3 (07:46):
Right, So you have a consumer spending continually with a
lot of resiliency. That's been the story for the last
two or three years. But the week before I would
have told you, oh, there are there is some data
point to the labor market weakening. Not to say that these,
you know, job as claims are the end all be all.
They're noisy. But again this week you had indications that
the consumer's still spending, the jobless claims aren't as bad
(08:08):
as anticipated, at least for this week. So you sort
of pause for a moment. That, paired with the Q
two GDP numbers, say perhaps some of these trends aren't
really materializing. And I continue to sit here and debate
whether or not we've seen the full impact from tariffs.
I had read earlier that Ken Griffin from a Citadel
(08:28):
had been on saying that we're only fifty percent of
the way there in terms of the impact of tariffs
on the economy. I don't think anyone really knows how
far along the line we are. I would have told
you in April that by this date we would have
known the answer to that question, but we still don't
have a clear, conclusive read on that yet.
Speaker 4 (08:47):
On the inflationary side of it, that is the reality here.
Speaker 2 (08:50):
I don't think that's bad news necessarily. There's oftentimes that
kind of fog of the moment where it's really tough
to tell exactly what the biggest looming issue could be.
But right now it just happens to be a tie
between the two things that the FED is really in
charge of at the moment, and so I do think
they're gonna move cautiously. I don't think that the President
is going to get the cuts that he wants. I
(09:11):
don't think Stephen Myron, the President's appointee to the FED,
is going to get the cuts that he wants. I
think if there is a I always like to look
at this from a perspective of what could really surprise everybody,
and the answer would be no more rate cuts, or
dramatically fewer than are being priced in, because right now
you go take a look at markets, they are very
clearly pricing in definitively two more cuts this year and
(09:33):
probably more starting next year. And so if you want
one thing that could surprise investors, it's that it's that
data comes out that reverses the Fed's mind on where
rates need to be, and they don't need to hike rates,
they just pause.
Speaker 3 (09:47):
It's got to be inflation. That's the only way you'd
have that is run away inflation.
Speaker 2 (09:51):
And run away again. We're not talking about eight percent here, right,
We're not talking about twenty twenty two. It doesn't need
to get that bad for the FED to have to
pause what they're doing here. Let's take a quick break
when we come back. New tariff announcements this morning overnight.
When did these actually come out? Tuger, It was after
I was asleep. I don't know when precisely it was,
but new tariff announcements. We got to cover that next
here on the Financial Exchange.
Speaker 1 (10:13):
The Financial Exchange streams live on YouTube. Subscribe to our
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Speaker 2 (10:41):
So, as I mentioned this morning, we learned of new
tariffs being imposed on the pharmaceutical industry. I want to
start there. There's also something about trucks, but starting on
the pharmaceutical industry because I think this has been in
focus for a lot of families over the course of
the last several years, realizing that oh yeah, like a
lot of my arts are being made in China or
(11:01):
other parts of the world. And so I know for
certainty that this story is going to get misinterpreted, and
so I want to cover it specifically what it's going
to do here. So starting October first, the United States
will be imposing a one hundred tariff on some pharmaceuticals.
But we're talking about branded or patented pharmaceutical product unless
(11:25):
a company is building their pharmaceutical manufacturing plant in the
United States. So that was the post from President Trump
on Truth Social and so obviously your mind goes to, Okay,
what precisely does that mean. The answer is that there
are very few drugs that are patented or.
Speaker 4 (11:44):
Or or what's what's the other word it was.
Speaker 2 (11:48):
Brand that are manufactured outside the United States. Nine out
of ten of these drugs are done in the United States,
and then also nine out of ten ten prescriptions in
the US are actually filled with generics, not branded drugs.
Those generics are the ones that are heavily manufactured outside
of the United States and are not affected by this. Overall.
(12:12):
From what I was seeing the other day, only about
five percent of the branded drugs that the United States
imports come from China or come from Asia. Rather the
rest of them primarily coming from Europe, and many of
those European companies are already in the process of developing
US manufacturing or have already done so, and so market
reaction has been very muted on this. Not many companies
(12:34):
are getting hit with this. I think the logical question
is do they go after generics eventually? Right? Is this
a first step? And I think that's a fair question
to ask. But I think the very first thing people
are going to react to is what's happening with the
drugs that I take? And the answer is probably nothing,
because you're probably on a generic.
Speaker 3 (12:51):
YEP, that's a good way to look at it. The
spillover effects. You can see that over the course of
the last couple of days. It's interesting that this story
dovetails with Eli Lilly announcing that they were going to
build another manufacturing plant in Houston. That's for six point
five billion for weight loss drugs, and just you have
a collective of farmer companies out there who have pooled
(13:12):
together three hundred and fifty billion dollars to invest in
US manufacturing and research and development over the course of
the next decare. So it's not as if a lot
of the big pharma players aren't already at least committing
from you know, verbal commitments to invest in manufacturing research.
So I think you take the story as a whole,
you have companies that have been committed to do this
(13:34):
in the first place, and you have minimal impact on
the drugs that are out there. It's not as significant
of a tariff story because it is not attached to
generics at this point.
Speaker 2 (13:46):
This is really look, this is kind of the story
of a lot of the tariffs that have been put
into place thus far, which is make a big splash,
but intentionally don't make it terribly impactful on American spending.
Like that's been. When I look through the actual policies
that have put it into place, there's a lot of
give and take, but ultimately it's been we announce something.
(14:07):
We then announced the exceptions, and when you look at
the broader policy, you can see why, oh yeah, okay,
this is actually not going to drive prices all that
much higher in the United States because of the exceptions
on these key components or these key pieces to the
overall policy. And so that's how I'm kind of looking
at this one too, is Yeah, it's making a splash.
It's maybe a shot across the bow of some pharmaceutical
(14:29):
makers that hey, we might be able to do this
on generics too, so watch out. But for the time being,
no big impact other than probably a few very specific
drugs that are going to be more difficult for insurance
companies and all that. If it does get hit with
this one hundred percent terrify.
Speaker 3 (14:43):
Yeah, it feels like the whip on a racehorse being
cracked down, you know, the whip gets cracked down of hey,
we're coming after pharmaceutical companies unless you invest in manufacturing
the United States. And then often it seems like companies
sort of react over the few weeks by putting together
some sort of dealer initiative to it to do just that.
Speaker 2 (15:01):
Moving over, Sorry, actually we didn't cover the big the
big trucks, big trucks, so I don't know how big
they have to be, but that is the other piece
that they're going to be looking at commercial truck manufacturers
where they are making those outside the United States, once
again getting a look at tariffs here, so Germany's Dommler
North America unit assemble some freighter freight liner brands in Mexico,
(15:24):
those would be looking at some tariff. And so honestly,
the auto industry is such a mess with tariffs that
I have no idea what happens next on this. This
has been the constant bane of for General Motors and
many others, and I know that they are working as
quickly as they can to push the administration to create
(15:45):
exceptions for their vehicles and moving manufacturing and changing things
at the same time. I would think that in the
event the United States can get a attractive deal with
Canada and Mexico, that this is the first thing that
gets put away in terms of like negotiable tariffs. I
would think that having vehicles made under the North American
(16:10):
what is the new NAFTA. It's not new, it's like
ten years old now, but the North American Trade Agreement
that we have with these allies, I would think that
anything that we're going to announce here, whether it's on
heavy trucks or cars, is something that ultimately the administration
is going to negotiate on because it is so impactful
for Big American Manufacturing USMCA. Yes, thank you, Tucker, USMCA.
(16:35):
That seems very likely to me because as it stands now,
many of these domestic auto manufacturers are at a legitimate
disadvantage to Korean manufacturers, to European manufacturers right like, those
countries have navigated and negotiated deals for their cars to
come into the United States, even if they are not
manufactured in the US, whereas American manufacturers of vehicles, if
(16:59):
they're doing it in Mexico, are getting hit with way
bigger tariffs. And so I think there's still a lot
to be worked out on this. I am concerned about
the auto market generally, and this is again a bit
of a stumbling block for many of those companies, but
I don't think is a show stopper for any of them.
Speaker 3 (17:19):
Also worth only the last thing on the tariff front.
There also were some tariffs announce on kitchen cabinets, bathroom vanities,
and other similar products. A fifty percent tariff and a
thirty percent tariff will be imposed on upholstered furniture. So
you have the likes of URH and others down slightly
on that news today.
Speaker 2 (17:38):
So taking in all this context, Paul, this is what
I have to wonder about.
Speaker 5 (17:42):
Right.
Speaker 2 (17:42):
We just had that GDP revision yesterday that was primarily
on the back of the US consumer, And at the
same time, we've had all this bad data about the
labor market and everything else pulling on people's views of
the economy is pretty abysmal. All of this stuff is
remaining true. And so if I'm looking at Q two
data April through June data on consumer spending, is it
(18:07):
just still a whole bunch of front running tariffs? You know,
like you think about that. Logically, we didn't see yet
the big price arrangements. We still had very big uncertainty
on where teriffs were going to be. I certainly heard
from people who were saying, heck, I actually did it myself, right.
I've talked about it how I was buying a bunch
of stone for a project that we were doing, and
(18:30):
I rushed that shipment to get it to me well
ahead of time. In case, it stopped getting imported, and
so I just kind of wonder, hey, is that what
we were seeing in the second quarter, and is that
about to dry up and you know, shrink since Frankly,
at this stage, I think that tariffs have been normalized
to a large degree and consumers are not thinking about
(18:52):
them every day in the way that they were in
the second quarter.
Speaker 3 (18:54):
Did the AM I remember that that recent GDP report
that revision did show that that saw a big uptick
in sort of those durable goods. Yeah, as a result,
like those categories of you know, washing machines or you know, stones,
items like that that have a longer lifespan.
Speaker 2 (19:12):
Again, anybody that's trying to put together narrave on this
is just guessing at the stage. We won't know until
we see consumer spending for the next few months. But
that kind of fits in with how I perceive things,
how when I talk to people about terriffs, how they
perceive things as well. Quick Break, we're gonna cover Wall
Street next with Wall Street. Watch with Chucker.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter.
Speaker 4 (19:43):
Act TFE show.
Speaker 5 (19:45):
Breaking business news is always first right here on the
Financial Exchange Radio Network. Time Now for Wall Street watch
a complete look at what's moving markets so far today
right here on the Financial Exchange Radio Network.
Speaker 6 (20:01):
Well after its recent pullback, markets today are in mixed
territory after the Core PCE index showed it climbed zero
point two percent last month, in line with expectations. Right now,
the Dow is up by three tenths of one percent,
or one hundred and forty three points, SMP five hundred
edging four points higher, Nasdaq is retreating about a third
(20:25):
of a percent or seventy two points lower. Russell two
thousand is up half a percent. Ten year treasureeled I
cannot find that. I'm not sure what's going on there
with CNBC. Crude oil is up over one and a
half percent, rating just above sixty six dollars a barrel.
Furniture and home good stocks including Williams, Sonoma, Wayfair, and
(20:45):
RH are seeing modest losses on the day after President
Trump announced tariffs on imported items such as kitchen cabinets
and upholstered furniture. President Trump also announced that he will
impose a twenty five percent tariff on imported heavy trucks,
sending shares in Peter Built and Kenworth owner packar up
over four percent. Pharmaceutical stocks are also garnering attention after
(21:09):
Trump announced a one hundred percent tariffront branded patented imported drugs,
exempting companies building plants in the US. ELI, Lilly, ABV,
and Mark are all edging higher, while Nova Noorda's shares
are down nearly two percent. Meanwhile, Intel stock climbing another
two percent, now on pace for a fourth straight day
(21:30):
of gains following report from the Wall Street Journal that
CEO Lipputan has approached Apple, Taiwan Semiconductor and other companies
about investments or partnerships, and Costco shares falling nearly three
percent at the moment after the warehouse retailer posted higher
sales and profit in the previous quarter. However, same store
sales growth missed street expectations. Costco also noted that newly
(21:55):
extended store hours were paying off. I'm Tucker still and
that is Wall Street Watch.
Speaker 2 (22:01):
So, Tucker, you remember the story yesterday we covered with
Intel approaching Apple. You just mentioned it, but Intel approaching
Apple about a potential investment there and my comment at
the time Chuck was doing the show was Intel only
does this if they are getting the nod from one
of their new shareholders, which is the United States government.
(22:22):
It's the White House, right, They have a big steak
in it, and Vidia now has a stake in it.
And my answer now as to why they're doing this
is this announcement here where the Trump administration is now
taking aim at chip makers with a new plan to
throttle imports. Here is the plan. Trump administration is considering
a plan that would force US companies to maintain a
(22:48):
one to one ratio of chips imported from overseas to
chips made in the United States. So timeline, we don't
know how long they have to do this, how big
the tariff would be for those that don't comply. All
of these are questions, but all of a sudden, the
context of the Nvidia investment in Intel, the Apple investment
(23:09):
in Intel, the rumored Apple investment, but you know they
have clearly approached Apple about this, all of a sudden,
all those things make sense. I don't know that any
of them will happen. I don't know if this policy
will happen, but nonetheless, it is a clear I don't
know to me, this is a clear one. For one
line of okay, Intel was basically given this information or
(23:31):
somebody was given the information that's something like this is
in the works, and so go make some more deals
because companies are going to be willing to pay for it.
I think that's my kind of conclusion on the connection here.
Speaker 3 (23:41):
Domestic manufacturing of semiconductors is an important issue for national security,
and we can all agree that it is something that
really it has Byparson approval in terms of.
Speaker 2 (23:55):
All.
Speaker 3 (23:56):
However, this way of going about it I disagree with.
I think that the idea of subsidy and encouragement for
manufacturing through through grants and loans and other avenues is
better than this idea of tariffing or doing this one
for one change exchange of semiconductors one.
Speaker 2 (24:17):
This way of doing it would be extremely complicated. Yeah,
I also to use this technique at the same time
that well, I don't know, but if they're using the
same emergency Act that the Supreme Court is currently weighing,
then it has to risk there.
Speaker 4 (24:31):
That's another piece of this.
Speaker 2 (24:32):
So I think there are some fair questions there, but
I'm not necessarily opposed to a carrot and a stick.
I'm not sure that this is the right stick, but
Nonetheless this, like you said, I think it's important that
we focus on getting more domestic chip manufacturing, But I
think most national security experts would also tell you that
(24:53):
probably the most important thing is staying ahead on AI
chip innovation. Exactly where if that prohibits you from doing
in the UNI States that, oh.
Speaker 3 (25:01):
Well, that's where my christians one lie is that you
still need to be on the cutting edge. And let's
understand the reality of the situation that these supply chains
are incredibly complex and intricate, and it is an extremely
difficult process the manufacturing side.
Speaker 4 (25:16):
It's going to take a long time.
Speaker 3 (25:17):
For the US to catch up. So you need to
allow for that process to occur rather than taking out
the stick just yet because it's going to take some time.
Speaker 2 (25:26):
And by the way, I mean the reason that Intel
has been taking these investments that Intel uh no longer
manufacturers chips for Apple, by the way, is because they
haven't been competitive.
Speaker 4 (25:35):
They've been a disaster. They've been an absolute disaster.
Speaker 2 (25:38):
That's the reality here is if you're trying to be
competitive with the overall idea that we are going to
manufacture here and do a good job. Intel has proven
for a good decade now that they're incapable of doing so.
Speaker 3 (25:50):
Missed Mobile and missing the GPUs that Nvidia is behind
right now.
Speaker 4 (25:54):
So yeah, they've been behind. Story that.
Speaker 2 (25:59):
I hesitate to bring up because we've almost been asking
this question seemingly every day. But the Wall Street Journal
has another piece here today on spending in AI and
what the path really looks like. And this is Look,
this is the whole game, right When you talk about
markets being at all time highs, when you talk about
(26:19):
valuations where they are, when you talk about the continued
acceleration of the US economy, all of it is on
the back of artificial intelligence promises.
Speaker 4 (26:28):
And so.
Speaker 2 (26:30):
Accurately, I think many people from journalists to economists to
market analysts are asking the question, great, we see the impact,
we see the investment that they do a really good
piece on this new AI factory in North Dakota, tiny town,
eleven hundred people, population, two motels, dollar general, a small college,
(26:55):
and now fifteen billion dollar AI factory.
Speaker 4 (26:59):
That's going to be bigger.
Speaker 2 (27:00):
And ten home depots, ten home depots big Just think
about that.
Speaker 3 (27:03):
You get exhausted walking around one home depot, let alone ten.
Speaker 2 (27:07):
But these data centers are really fueling the economic growth
in this country. Right now. These things are being built domestically,
They are needing massive energy requirements, and so the electricity
generation facilities are being beefed up and built new in
order to facilitate all of this. But the question keeps
(27:31):
getting asked and nobody's got a great answer yet, which is,
no one really knows how and when these investments will
be paid back.
Speaker 4 (27:41):
I thought this was a fantastic piece.
Speaker 3 (27:42):
I know you guys have probably covered it exhaustively this
week with just Nvidia and open AI and some of
the deals that have been done. Just the focus on
the investment in infrastructure and the hundreds of billions of
dollars that are being spent. What I liked him particularly
about this is that in order to justify the amount
of spending that my and I are speaking about here,
the three hundred or four hundred billion of CAPEX that's
(28:03):
going into building these data centers, you have different consultants
and a comments out there estimating that, for example, the
revenue generated by AI would have to reach two trillion
dollars according to Baye an annual revenue by twenty thirty
to justify this wave of infrastructure spending. And right now,
if you look at the revenues of Amazon, Alphabet, Microsoft, Meta,
(28:27):
and Nvidia, that two trillion dollar number isn't even all
four of those or all six of those companies combined,
And it's five times the size of the global subscription
software market. And so as much as all of us
have used probably chatch ept or other sorts of AI
chatbot prompts, how do we get enough revenue to substantiate
(28:49):
that capital expensures? And the comparisons to the fiber optics
cables back in the late nineties are great studies of
what seems like eerily similar of times.
Speaker 2 (29:01):
This it's the it's the field of dreams. Promise, if
you build it, he will come.
Speaker 4 (29:06):
Yeah. Yeah, And.
Speaker 2 (29:10):
To be fair like kind of happened with the Internet.
Speaker 3 (29:14):
It did, it just took longer to take hold, and
you had a lot of companies that invested heavily.
Speaker 2 (29:21):
That were the ones that actually profited exactly.
Speaker 3 (29:25):
Think of Global Crossings, WorldCom, three sixty networks companies that
you don't talk about now, but it's really Google and
Facebook and others that benefited from the fiber optic buildout
in the mid two thousands that occurred in the mid nine.
Speaker 2 (29:40):
The multi trillion dollar question. Will it be Google, Facebook,
and Video and Open AI that profit on the infrastructure
that they are all investing heavily in, or will it
is small.
Speaker 3 (29:50):
Not names that just leverage all the hundreds of billions
of dollars that these other big hyperscalers spend to build
out this infrastructure.
Speaker 4 (29:56):
Yeah, and just do it in a smarter way.
Speaker 2 (29:58):
I mean the credit piece here, and the piece that
I am a little bit concerned about is you're not
hearing about a lot of those startups like you were
in the Internet stage. You're not hearing about some brand
new upstart who has manufactured a really compelling AI product.
You're instead seeing ai Google focusing on their AI product,
(30:19):
You're seeing Apple focusing on it. And I haven't really
come across a whole lot of brand new, unknown companies
that put something in front of me, the user, and say,
look at this, this is compelling, this is something you
should pay for. And I think that's what everybody's waiting
for and looking for and also questioning who's going to
make it.
Speaker 3 (30:39):
Chat GPT would be the biggest argument with seven hundred
million users. But I get what you're saying that there
are to be clear, there are hundreds of startups out
there doing this stuff, but it probably hasn't made the
way to our faces just yet.
Speaker 4 (30:51):
In front of us.
Speaker 2 (30:52):
Let's take a quick break here. When we come back,
we can move on from the AI virtuous circle. Let's
go over to Americans in their financial plans. This is
this is an interesting one for me. Quick break. We'll
be back with that next on the Financial Exchange.
Speaker 1 (31:08):
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Speaker 6 (31:36):
This segment of The Financial Exchange is brought to you
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Speaker 2 (32:13):
Almost half of Americans forty seven percent, don't have a
written financial plan, according to a recent study from the
Orleans Center for the Future of Retirement. And my next
question is, allions, who on earth did you speak to?
Because there's no way that fifty three percent of Americans
have a written financial plan. No, there's no chance. No,
what are you talking about. There's no way that fifty
(32:35):
three percent of Americans have a written financial plan. If
you're listening right now, like who that you know? If
you pulled ten of your friends, do you honestly think
half of them would have a written financial plan? I
know a certainty that people in my age demographic would not.
Speaker 4 (32:52):
Oh definitely. I'm not saying they shouldn't, yeah, but they don't.
No chance.
Speaker 2 (32:57):
So I don't know who aleons talk to here. I
don't buy the data i've and get his way off.
I would be willing to bet that seventy five to
eighty percent of Americans do not have a written financial plan,
probably more because most people until they have a really
difficult decision, wing it and frankly, a lot of the
time that works out all right, but there are scenarios
(33:17):
where it doesn't. The piece from CNBC then goes into
like how to potentially address that, how to figure out
how to find a financial advisor? What you should be
looking for. I guess my point would be any professional
that you work for, that you work with, is going
to cost you money. Obviously, not a lot of financial
planners do this for free, nor should they. But before
(33:43):
you go just hunting for one, because I think that's
oftentimes what happens is like, oh, I'm sixty.
Speaker 4 (33:48):
Two years old.
Speaker 2 (33:49):
Time now to find me a financial advisor, really ask
yourself what it is you're trying to accomplish, right like,
because if you go in blindly, then those the circumstances
where I see people getting over sold and a little
bit starstruck by all the fancy, all the fancy verbiage
and everything else, and they end up just making bad decisions.
(34:10):
Like if I'm going to meet with the financial advisor,
what am I trying to accomplish. What am I trying
to answer? What questions do I have that I don't
know the answer to? And then from there you can
try to hone it down right, like, Okay, I have
a ton of questions about how to fund my kids college.
You probably shouldn't be talking to your uncle's financial advisor
that manages money for everybody only worth twenty million dollars plus.
(34:32):
He might be the best investor out there, but he's
not gonna have a lot of great advice in all
likelihood to how to do a faft sapp. Likewise, you know,
if your goal is to build a plan around how
to successfully retire and you're talking to a financial advisor
that primarily helps out on managing debt repayment, again, might
(34:53):
not be the best match there. And so that I
think is the most important piece is why do I
need a financial advisor? What questions do I have? And
then just admit, like, what things do I not know?
Like I have no idea how much your insurance I
should have? Okay, great, Yeah, certain financial advisors can help
you with that, but not all of them, and it's
(35:14):
important to kind of check the background and ask them
those questions like what do you specialize in. I know
you help my uncle or my parents, but do you
actually have any expertise and the things that I have
questions on.
Speaker 3 (35:23):
Right, And for some people, it's outsourcing the capability to
a professional because maybe you just don't want to spend
the time to do it yourself, you know, similar to
things around the house or other services that you find
yourself just not having the time for and not having
the interest in it because you don't have the requisite
background for it. So that can be a driving factor,
but you have to assess if it's right for you,
(35:45):
because not everybody needs one, but there are some people
who really benefit folks.
Speaker 2 (35:51):
Markets near all time are at all time highs near
all time high from evaluation perspective, economy at a seeming
turning point, and I know folks have questions about it.
That's why people tune into our show. If you tune
in and you'd like to catch our live broadcast of
the Financial Exchange, please join us on one of two dates,
October ninth and October sixteenth. The ninth will be at
(36:11):
the Margaritaville Resort on Cape Cod, the sixteenth at the
Showcase super Lux and chestnut Hill. The folks from the
Financial Exchange and Armstrong will be doing a live broadcast.
You can sit in. We'll talk to you in between breaks,
and you know, I can do a show of hands
for things like this when I just asked the general public.
We'll also be doing a free lunch and a chat
(36:32):
with the folks from Armstrong Advisory Group about our true
perspective on where this market is right now and where
it may be headed, and then, most importantly, what it
all means for you, the listener out there. You can
register at Armstrong Advisory dot com. You do need to
reserve your spot. It is a completely free event. October
ninth or October sixteenth. First one down, cape Cod, Second
(36:54):
one over in chestnut Hill. The number if you have
questions or you want to register over the phone is
eight hundred three nine three for zero zero one. I'll
give that number out again in a minute, but again
October ninth, October sixteenth, Cape Cod at the Margaritaville, chestnut
Hill at the showcase Superlux Armstrong Advisory dot com or
eight hundred three nine three four zero zero one.
Speaker 1 (37:16):
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
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Speaker 2 (37:31):
As we head up to the top of the hour,
markets are seemingly losing some of their esteem here. The Dow,
which was up more than half percent, is up only
a quarter of a percent. SMP five hundred up a
little bit less than one fifth of one percent, the
NASDAK currently down thirty points, or about point one four percent.
The Rustle two thousand is still in the positive for
the day. The ten year treasury yield, which I was
(37:54):
also having a tough time pulling up Tucker, is about
flat for the day, slightly down to point zero zero
six percent. As we close in on the top of
the hour, we got a lot more to cover in
the second hour the show. Folks, stay tuned, We'll be
right back
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