TRANSCRIPT
hey everybody it’s Jeff and Ron here
with the sense of things and we’re
starting off another week discussing all
kinds of things market and certainly
economic as we talk so on today’s show
Ron’s got some really interesting data
for us about one of the big holders of
Alibaba we’re going to talk a little bit
about that we’re also going to talk
about AI patents and how China is
starting to kick our butt in the United
States in that world I’m going to finish
up today with a little bit of a rant on
government data because there was some
numbers coming out this week from the
Commerce department or the Bureau of
Labor Stat or statistics that revised
the job numbers and massively so stick
around we’ll be right back with you
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hey everybody it’s Jeff and Ron here Ron
how you doing my friend good morning
getting into the we hours of the summer
kids are back to school and Jackson Hall
is kicking off this morning and oh no
kidding they talked about uh future rate
Cuts what a surprise interesting yeah
we’ve not been talking about them up to
this point so I I don’t know why why all
of a sudden they’re discussing
them it’s all good all right let’s jump
right why don’t we kick off with your
stuff and then I we’ll get to my
rant so Michael bur as you can see the
screen now Michael bur is famous for one
of the few people that was part of The
Big Short featured by Michael Lewis in
the movie and I thought it was just very
interesting if you just take a look that
with his Scion investment that’s his
hedge fund as far as his inflows and the
outflows where he was at the end of the
quarter and where he is now and I
thought it was quite interesting that if
you take a look at this on how he’s
reduced his real estate his financials
and his consumer staple positions and
have increased
significantly in consumer discretionary
Industrials and energy yeah and look
he’s one of the smartest guys out there
he certainly sift through the noise and
and cuts out the noise for his own
convictions so I thought this was this
was pretty interesting and why he was
raising his Alibaba stake I don’t know
because Alibaba if anybody knows
anything about their common stock are no
voting rights yeah as far as their
classes share so I thought this was
interesting yeah and say I say one other
interesting piece of it is his real
estate position this is something that
kind of came on my radar that I’d really
not been watching for a while because
it’s been it’s literally been a a dead
place to put money for going on three or
four years now and all of a sudden
within the last month real estate has
really shot up it’s as a sector it’s up
like 16% in a month well when they were
raising interest rates I don’t
understand it but the new home builders
got to all-time highs yeah and a lot of
that was luxury homeowners because they
weren’t financing but with the with
30-year fix has come down and with the
potential of rate cuts and cutting and
the 30-year fix going down even more I
guess does make sense to go into the
real estate sector yeah and I’m guessing
too he’s probably got some reats and
things like that which the yields tend
to stay up while yields on treasuries
and everything else are going down so
that yield spread’s going down that
that’s the only reason I can figure out
that real estates had such a a jump up
here recent yeah no I agree I agree so I
thought this was interesting too credit
card spending by category and if you’re
looking at this you’re checking out
where people are SP spending less money
so let’s just check three things here
look at the red lines entertainment you
would figure throughout the entire
summer people would just be spending
money yeah and the precipitous drop in
entertainment is pretty significant and
what else do you do during the summer
travel drive around gas people are
spending less on gas and the last one
which was very big during uh covid and
whatever people love putting money into
their houses yeah Home Improvement is
down significant down we all know are
spending money on their credit cards not
really taking cash out of their pocket
yeah so this is a pretty good indicator
of where things are yeah look at the
numbers for general merchandise and
groceries you know people putting credit
you putting groceries on credit that’s
really interesting and sad at this point
because it’s getting out of hand I’ll
share this next week because I don’t
know if I can find the chart again but I
was I was interviewed by a reporter and
we were talking a little bit about some
of the some of what’s going on with
credit and everything else and I IID
found a chart that I shared from the St
Louis fed that showed credit card
default rates and credit card default
rates have now reached the really well
they’ve reached the high since
2012 at that point and and in 2012 they
were on the way down now they’re on
their way up and they’re precipitously
going up and I honestly with rates
coming down I don’t really see credit
card companies reducing their rates why
would they why yeah why would they and
they’re at risk because they’re yeah
nobody’s forcing them to and they’re at
risk because if default rates are going
up somebody’s got to pay for those
defaults and it’s us that have credit
cards that are paying our bills there
was two areas with the credit cards and
we’ve covered this almost ad nauseum in
last year number one was the the the
carryover credit card balance is over
1.1 trillion but in a recent podcast we
talked about the 30 60 and 90day credit
card default had spiked up in the last
couple of
months yeah and the credit card
companies are just licking their chops
sure yeah crazy somebody’s gonna pay
their bills and they’ll pay them I
thought this was fun and interesting
visual capitalist we featured many of
their charts over the year over many
podcasts in the last year and look AI
look I always always chuckle I know we
talked about it a prior podcast that
people think AI is this new funny fun
shiny object AI has been around decades
30 40 50 plus years just the computing
power today and the amount of data that
we have to rely on producing good AI
results is Leaps and Bounds where it was
decades ago but I find it interesting
four out of the top five holders of
patents are Chinese companies
yeah Alibaba is interesting because
they’re in e-commerce where’s Amazon on
this list yeah I know like where is
Amazon which is supposed to be the
biggest biggest bang you don’t see
Microsoft in yeah you do see microft in
there but I don’t see okay there I
thought Google would be much higher yeah
yeah because they’re they’ve been on the
ball but I think honestly I think Google
I think got caught flat-footed a little
bit because I don’t think they thought
that it was going to be as big as quick
as it has so I they’re making up for
ground fast and I think some of their
stuff is good but I me I write books I
use AI for a lot of stuff from research
to just helping craft the message and
everything else to get started and that
at least from a language model
perspective there’s really no compar
from chat GP to to Gemini Gemini is
great for just Gathering data but as far
as a language model it’s really not that
good it’s where chat was probably this
time last year when it really got off
and got started launching so they’re
probably a year behind now they’ve got
the money to they’ve got the money and
the smarts to I think get them there but
it’s it’s amazing how I heard per
perplexity even though they’re not a
public
I heard is probably the best out of all
of them where they are right now but I
find it to be interesting the number
four company which was a company that
was left for dead in the last 10 or 15
years is IBM yeah and then I thought
about it they were one of the originals
with mainframe computers and building
algorithms back in the 50 60s and 70s so
they’ve been ahead of the curve they
just haven’t had the technology and the
bench of employees really amazing part
that they really were doing a lot of
this AI stuff with Watson when it wasn’t
cool I that’s what
the understand I remember them
advertising Watson five six seven years
ago and talking about how it’s being
used in the medical industry and things
like that I just I think people it was
not stuff that was available to the
general public you had to be a company
or something like that to use those data
analytics but they’ve been in the game
for quite a while think about it 2025
plus years ago Watson was used for two
things to prove its worth y number one
to play chess against the greatest chess
players in the world and number two I
don’t know if you remember this Jeopardy
remember they used Watson as a Jeopardy
and it was so damn quick it was it beat
like the top Champions yeah in Jeopardy
so again why AI is not a shiny new
object it is a shiny new object because
it’s become something that the common
man can use more mainstream yes it’s
more mainstream and people oh my God I
can see how great this is It’s been
around for a long
time it has and I thought this was
interesting too this is uh inflows into
the market and it was a stat I think two
weeks ago Warren Buffett l or call it
birkshire because it’s not just Warren
owns more
treasuries than our US Government so if
you take a look at the inflows here of
just government securities what is this
telling Market markets near all-time
Highs but meanwhile people are still
fearful and buying risk-free products at
low interest rates yeah tell please
connect the dots for me I think Uncle
Warren’s just sitting there waiting for
the blood to hit the streets and then
he’ll sell all that you know I want him
to find an anti-aging formula so he
could have another 50 years on the
market so we could follow absolutely
yeah gonna be 94 in October I know and
he’s still going strong Charlie always
looked a lot older but Warren he his
brain is just a machine he’s the guy
that you want to Lop his you want to Lop
his head off and then figure out a way
to attach it to another a younger body
and keep going hey they did that with
Ted Williams and Walt Disney maybe they
could do that with Warren absolutely
maybe we’ll find a way to sew it back on
to something else but another perfect
example of the the argument that the
president he’s was because of his age no
it’s not because of his age there’s
people that are in their 90s I think of
people like suer Redstone and all these
guys that they just never stopped
working
it’s there’s a lot to be said about that
yeah there’s something be you’re not
doing 50 60 hour power weeks but to keep
involved to keep busy to get the mind
going that cognitive reasoning is huge
yeah I was telling somebody this morning
that I A friend of mine that was here we
were talking about retirement income and
he was saying something about older
people or people that look older and I
was like in this industry and I know
you’ve probably seen it too I know some
of the youngest 80y olds and the oldest
60 year olds that I’ve ever met and it’s
all how you take life and those people
that have continually okay they finished
a career but then they started something
else because they wanted to keep in the
game they wanted to keep their that’s
what keeps you young is that connection
with other people keeping your brain
going and everything else Jeff I told
you this my father is 83 yeah he works
in he works in my business now he’s not
doing 4050 hour weeks no but he’s
putting in his time and he’s still
working with many of his clients that
are still around that he’s had for 35 40
plus years that are as old as he is and
they’re just they’re keeping on yeah
absolutely so that’s what I got I will
turn it over to you let me pop it up on
my screen for my little rant here
because just a little just a little rant
it’s just a small little rant today let
me see here share
screen this so my rant is on the
wonderful world of our government data
collection and Reporting this week it
was announced that the labor department
had to revise their figures for the last
12 months through March that there were
88,000 less jobs fewer jobs than they
had reported earlier so when we think
about that 88,000 jobs on 2.9 Million is
31%
less than what had been reported
and the funniest part I think of this
week
was the what this really means is this
incompetence is it lies from the
government take your pick so let me give
you a comparison If you flew from Los
Angeles to New York and it was off by
31% you would end up in Chicago it’s
1,090 miles
away if your doctor gives you six months
to live and it’s 31% % wrong you have
4.2 months so that’s massive and from
the government I’ve seen several people
come out but the best of all was if I
can get this thing to advance I’m having
some weird computer issues today so come
on I thought it was interesting while
you’re doing that I had heard that this
was the largest
revision since
2009 yeah yeah we all know what happened
in 08 and 09 yeah all right hang on
second I’m just bringing this back up
here maybe not
okay so my favorite part of this was the
Commerce Secretary was interviewed
during the the convention and she said
oh no it’s a trump misinformation and
they’re like no ma’am this actually came
from the labor department which I hate
to tell you this you actually oversee
this at that point Spin Doctors yeah
spin doctor it once again we’re off why
is this important because the FED says
you know what we’re data dependent now
the FED did not revise these numbers but
they’re having to rely on these numbers
from other departments and if they’re
massively wrong that means that the
fed’s been utilizing these numbers and
going oh the employment sh situation
still strong and it’s not so much now
when it comes to
the was it just a weird anomaly so
that’s the other thing I’ve heard it’s a
weird anomaly in
2023 they were actually off by
439,000 jobs which was only 20% off that
year 21% off that year how does this
affect the markets it really doesn’t
it’s not going to affect the markets the
markets aren’t going to change as a
result of this companies aren’t going to
adjust what they’re doing because of
these numbers companies are going to
figure out what to do the stock
companies already know their numbers
yeah but if we cannot rely on these
people and like I said it’s one of two
things it can only be incompetence or
untruth there is no in between there is
no oops we did a we carried it one or
something like that no this is massive
incompetence and we demand we we should
have more out of our government that
we’re paying a massive amount out of
these people should know all this stuff
and they’re not getting it right they’re
getting itong and in our pre-show we
were talking and I was saying you know
what if they were off this much 30 40
plus years
ago that’s one thing but with the
technology yeah the ability to get the
data as quickly as we can and hopefully
as accurately as we can there’s no
excuse yeah there is none yeah stop
spending billions and billions of
dollars on crap and start spending some
money apparently with Watson and IBM
because they’ve got a lot of patents
spend some money that will help you at
least it’s a us-based company yeah yeah
not the Chinese companies that have all
the patents but the top us company with
the patents is IBM maybe you need to
spend a little bit of money with them to
figure out how to make this work better
because this is it’s
absolutely insane why you would be off
that much and and I love hearing some of
the spin on this from the media but it
was still 2.1 million jobs yes but it’s
31% off that is insane how could you be
off that much I I just don’t get it but
they still say there’s 152 million
people working versus 153 big freaking
deal there is no excuse you’re still
wrong it doesn’t matter if it oh it’s
still great because we have all these
people it doesn’t matter you’re still
massively wrong and you got caught being
wrong again so my rant over I just had
to say this was all right did you have
your medication standing by you’re gonna
be yeah I know I have my Prozac standing
by it’s just insane like I said I’m just
you know it’s something that it hit the
numbers and I looked and I was like okay
yeah it’s off a little bit 800,000
doesn’t seem like that much until you do
the math and I’m like how can you be a
third off that’s insane
hey well welcome to the US what can I
tell welcome to the US I I remember
listening to something I’m a big Rick
Steves fan and he was talking about in
the Scandinavian countries when he was
there he you they pay a lot of taxes and
all this and they demand a lot of their
government I’m like you know what we
need to start doing the same
thing I demand a lot out of my
government because just accepting them
doing whatever they want to do and I I
can guarantee I could probably go back
into you know know Republican
administrations and the same crap has
gone on because it’s the same people
that have been in the bureau election
season yeah yeah it’s the same people
that have been in the bureaucracy so
they’re just yeah once again just
they’re you can’t get people that are
politically neutral to work in these
important statistical jobs yeah
everybody’s got an opinion like a belly
button right so at the end of the day
can you believe I remember before at
least the last three or four elections
the other side that was not in power
couldn’t wait for the Labor Statistics
because they wanted to try and use that
but as we all know look at the revisions
so unfortunately the people out there
and here’s my quick rant are just sheep
yeah they vote either red they vote blue
right and then when a number comes out
they just read a headline they don’t
read the article yeah the scary thing is
now the now the computers are reading
the headlines and reacting at that point
it’s that I never thought I would say I
would say at any point it’s a good thing
that we have humans still involved in
the process you would think computers
would be rational and would look at
everything and then take that into
account but no they’ve been programmed
to on a dime change and they want to be
the first one out when everybody else
gets out but don’t forget too the humans
can be bought the computers can’t that’s
exactly correct although the humans that
could be bought programed the computer
so that’s even better folks thanks for
joining us par pardon the rant but I
just had to do it great information from
Ron today I it was really interesting on
the patents I think that’s it’s
something that says hey we’ve got to get
on the ball more and we need to support
some of these companies to help them
let’s not pass any legislation that
screws them over because somebody’s G to
get the patents and somebody’s G to be
in charge of AI and I really don’t think
it’s probably a good thing that our
probably biggest our biggest
competitor is the one that’s really
controlling AI at this point so thanks a
lot and we will see you guys back here
the very next time