June 6th, 2026 - SpaceX is Coming!

Hosts Steven Van Wie and Joey Loss dive into the ups and downs of the stock market, discussing dramatic shifts led by technology stocks and the impact of a surprisingly strong jobs report. They also explore the much-anticipated SpaceX IPO, highlighting the buzz and potential of Elon Musk’s ventures. They wrap up with a quirky trivia question about AI’s unseen resource consumption.

Transcript

Copy Transcript Copied

Steven Van Wie 0:01

It's Saturday morning. It's 10 o'. Clock. This is the Van Wie Financial Hour. I'm Steve Van Wie. And Adam is away on vacation this week and hopefully having the time of his life and will return in some form or fashion one of these first days. When he's ready.

Joey Loss 0:06

And I'm Joey Loss.

Joey Loss 0:20

When he's ready. Yeah. He asked us not to disclose the location, which I understand he doesn't want fans coming to bother him.

Steven Van Wie 0:27

I hate it when everybody's beating on your door, asking advice and all that. That's why he's got you. Let him take the heat.

Joey Loss 0:34

That's right. I'm the Kevlar for the month.

Steven Van Wie 0:39

All right, we digress, as usual. Anyway, I want to remind everybody, lines are open, 904-222-8255.

Steven Van Wie 0:48

We will have a trivia question as usual after the first break and want to welcome everybody, the long timers and regulars. Please just keep listening, we'll keep talking. And if you're new to the show, I trust you'll enjoy it. But try to stick around for the whole thing. Maybe you'll learn something. And if you do, or even if you're a longtime listener, please tell your friends. We know it's growing by leaps and bounds and we want to keep doing it and it's fun and interesting. So that said, we were really having a good time this week until Friday.

Joey Loss 1:26

Yeah,

Steven Van Wie 1:28

I'm gonna let you describe Friday. Yeah, I have words for it that I can't say on a microphone.

Joey Loss 1:33

It was an interesting week. Friday was bad. I logged in and saw the market tickers and was like, whoa, okay, so here's, here's what's going on. So this was a week where the economy's own strength became its undoing. We started with records on Monday and then rotation underneath the surface. And then by Friday, we had a plunge set off of all things by good news. So to set the table Monday, the market was firing on every cylinder. The S&P 500, the NASDAQ and the Dow all closed at fresh record highs. At that Monday peak, the S and P was up about 11% on the year. The NASDAQ 100 was up over 20% for the year, and the Dow was up over 6%. But underneath those records, the ground was shifting. Through midweek, money started rotating out of technology and into everything else of which the Dow was a benefactor. And surged nearly 900 points to another record on Wednesday, even as the chip names started rolling over. Then Friday, as Steve says, the floor gave way. A Semiconductor selloff that had been building all week became a full on route and the S&P 500 fell 2.6%. On the day, the Nasdaq fell over 4.2%, which is its worst session since the tariff turmoil of last April. The dow shed nearly 700 points. Marvell and Micron were down double digits. Broadcom was off 7%. And Nvidia, the titan we keep talking about, was down about 6%. If you step back to the full week, you can see the rotation in the numbers. The dow finished down just 4.10of a percent. The S&P lost 2.6% on the week, and the NASDAQ lost 5% on the week. Also, emerging markets, which has been a quiet titan for this whole year so far, was down almost 8% on the week, and then Bitcoin a stunning 15%.

Steven Van Wie 3:20

That one was interesting to me.

Joey Loss 3:21

It was because it kind of completes the story.

Steven Van Wie 3:23

Yeah, it does. And I might have had a contradictory thought going into it. Like if you're selling out of this NASDAQ stuff like that, maybe these are the kind of people who would like to pick up some bitcoin, which was on sale by then. But boy, did that not work out for them, huh?

Joey Loss 3:41

No, it didn't. And I think it's a show like this is about risking off. I mean, because bitcoin is kind of the last frontier on the risk on territories. So that spread having the the Dow barely down crypto down 15%, it's not a uniform sell off. Its investors fleeing the riskiest, most stretched corners of the market first. And yet the year is still green almost everywhere. Crude oil is up 57% on the year, emerging markets still up 18%, small caps up 14%. And the S&P is still up nearly 8%. The one asset class that's actually red for 2026 is that Bitcoin, which is still down 31% for the year. Now, how does good news become bad news? For Friday morning, the Department of Labor reported that the economy had added 172,000 jobs in May, which is more than double what economists had expected. And unemployment held at 4.3%. On its face, that should be good news. But a strong jobs report does two things to interest rates. It removes any urgency for the Fed to cut, and it raises the prospect of a hike if inflation won't cooperate. And inflation is not necessarily cooperating. Official CPI ran at 3.8% in April. This is the hottest in nearly three years and driven almost entirely by energy. With gasoline up over 20%, 28% as the oil shock pushed crude near $90 a barrel and pump prices back to over $4 a gallon. The consensus for next Wednesday's May reading is probably somewhere in the neighborhood of 4.2. So the market did the math. It said hot jobs Plus a likely 4% inflation print equals no rate cut. And honestly, it kind of introduces a greater conversation about a potential rate hike. Yields jumped and the most rate sensitive growth stocks took the brunt of the damage. A word on that inflation number. Because it matters. The official figure is being driven overwhelmingly by energy. If you strip out the oil shock, the picture is much cooler. Real time measures like truflation, which track the broader basket daily instead of the government's one month lag, have been running below the official headline. So a 4% print this month is a story about gasoline and the war premium on oil. Not broken, broad runaway inflation.

Steven Van Wie 3:46

Yeah, I think you're right.

Steven Van Wie 5:51

Trueflation this morning, 1.84.

Joey Loss 5:53

Yeah, it's a totally different story.

Steven Van Wie 5:55

Right. We're in the Fed Target. Yeah.

Joey Loss 5:57

So this all lands at a pivotal moment for the Fed. Obviously we have Kevin Warsh, who was sworn in AS chair on May 22nd, and his very first policy meeting will be on June 16th and 17th, which is under two weeks a day away.

Steven Van Wie 6:11

I don't see him making a change in his first meeting.

Joey Loss 6:13

I think he has to just hang tight. I would be surprised if he came in. I mean, that would be a pretty big.

Steven Van Wie 6:14

Yeah, absolutely.

Steven Van Wie 6:19

Well, it's the only way, the only way he can win because if he does one thing, he's hated by the other half. If he does the other thing, he's hated by that half. So the only way he can win, be hated by everybody, is to do

Joey Loss 6:32

nothing, which is probably in character for that role. Probably, yeah. And historically he's an inflation hawk, but his kind of unspoken mandate is not to be a hawk. And so I think doing nothing is likely what we're going to see.

Joey Loss 6:49

Market still put a roughly 97% probability of no change at this meeting. But with his first remarks as chair landing the day after a potential 4% inflation print, the language that comes out of that room might matter more than that decision itself. So to close out the wrap, the entire rally was built almost entirely on technology, to the point that tech now makes up nearly 40% of the S&P 500. At the start of 2024, this figure was 29% and it was 32% at the beginning of 2025. It's worth noting that this focuses on information technology. If you add in communication services like Alphabet and meta, that number jumps to 50% of the index. So this concentration powered the records on Monday, and it's exactly what dragged us down by Friday. So, Steve, given the run over the last few months, it feels like some kind of pullback was inevitable and maybe healthy. I'll take the good job news over the absence of it. What do you think?

Steven Van Wie 7:44

I couldn't put it any better. The thing that I look at is people are so reactive to they act and then they think or something like that. And I don't see why they bother technically. I do know traders make money by trading. Traders only make money when that trading is volatile. That won't be as volatile unless they trade. So they're their own worst enemies and their own best friends. And the rest of us ought to just sit back and laugh at them because they're so ridiculous in our eyes that the speculative money in the market is what makes them money. Staying in the market as we do, that's what makes us money long term. 

Joey Loss 8:35

I mean, look at the last five years.

Steven Van Wie 8:37

Yeah. Yeah. Now if you want to play a little bit, fine, do it. But that's not the smart way. Okay. Lots more when we come back. Got to take a quick break. This is the Van Wie Financial Hour. Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Joey Loss 8:49

And I'm Joey Loss.

Steven Van Wie 8:51

And as I mentioned earlier, Adam will be back someday, I promise. Today, before we go any further, I'd like to recognize 82 years ago, today was D day. It was actually supposed to be 82 years ago yesterday, but bad weather made them hang up for overnight and they hit the beaches the next day. 160,000

Steven Van Wie 9:18

young people, average age 22, came ashore. Another 20,000 parachuted in behind the lines. They because what the ground troops were doing was trying to make way to be able to get back behind the line. And 4,400 people perished that day. Wow. That's a lot of people. You know, I grew up in a town of 3,000 people. It would be like having a hurricane or a tornado come through and take the town I grew up in and the one next to it just overnight. Well.

Joey Loss 9:35

Wow.

Joey Loss 9:49

Yeah. And every one of those gentlemen knew that all the odds were against them as they went to work that day.

Steven Van Wie 9:54

Yeah. When you got your assignment, you're going to hit the beach running, you're dead. But enough of them live to get. Get the COVID fire off the top of the cliff so that people could get in behind them and squeeze them out. And it made victory.

Joey Loss 9:58

Yeah.

Joey Loss 10:12

It sure did. Have you been to Normandy? I, I went there a couple years ago and when you stand on the beach, you're, you realize, oh, my God, this is what a certain demise, you know, I mean, I can't believe how brave they were.

Steven Van Wie 10:14

I have not.

Steven Van Wie 10:25

Go straight over and then it goes straight up. Yeah, you just supposed to go there. they're shooting at you up there.

Joey Loss 10:29

Running up a hill with these and Man made turret protection thing is awful.

Steven Van Wie 10:35

Unbelievable, isn't it? And yet it was a military coup pulled by a guy who knew what he was doing. And it sort of paid him back for the rest of his life, too, I think. So we want to recognize that today. And now we'll say welcome back. And lines are open. 904-222-8255.

Steven Van Wie 11:00

And we do have a trivia question as usual, brought to you by Paul Lloyd, First Coast Alarm. You can call Paul at 904-636-7888.

Steven Van Wie 11:11

I'm going to do an AI on today because the NASBACS NASDAQ has been all over the news. AI has been all over the news. So we're, why not? We, we know that AI is a power grabber as an industry like no other, I believe. So I got another question that's sort of related to that. The average chat that a person has with AI chat, GPT or whatever, the average chat runs from 20 to 50 questions. Hmm.

Steven Van Wie 11:50

What is the amount of. Ready for this one water consumed per chat? Everybody talks about electricity, but what is the amount of water consumed on average for a chat with AI? I love it. If anybody. I get this. All right, let's talk a little bit more about the market wrap. Well, first off, I got another announcement too. After the bottom of the hour break, Joey's going to talk about the, the other real news of the week, that being the upcoming SpaceX IPO. And he not only has an opinion on it, he actually knows a lot about it, apparently because he did a podcast yesterday.

Joey Loss 11:56

Oh, gosh.

Joey Loss 12:32

Yeah, as much as one can now. I hope that information still solidifying.

Steven Van Wie 12:38

You do the telling, I'll do the speculating. Sounds like teamwork to me. But back to this week in the news. It was jobs day and as Julian mentioned, it came in unexpectedly strong, adding fuel to the fire of the Chicken Littles that are constantly crying about the sky falling and everything else. But let's see, what really happened, really happened, is they prove the naysayers Wrong. What was supposed to happen? According to the people that I call them in air quotes, the so called experts who forecast everything and never get it right. In fact, these are the only people I can think of as a group that make weather forecasters look brilliant. They are so bad at predicting this stuff. So the headline number came through and it was about double what they expected. But that wasn't done yet. March and April were revised upward by an additional 93,000 which made this at three month average, 188,000

Joey Loss 12:40

All right, that sounds like a deal.

Steven Van Wie 13:54

jobs per month. Now this to them is horrible news and the Fed is, has absolutely zero reason to lower rates. And as you also mentioned, in fact they might be getting a reason to raise rates, which I don't think they'll do because they know so much of this is artificial. And as we've spoken on the show many times, this is not true inflation. It is an elevated price level brought on by an energy price shock. The problem is the longer it goes on, the more it works into an actual inflationary cycle. When you let businesses raise their prices

Steven Van Wie 14:40

and can hold onto them, that's one part of it. And when people see that their paycheck doesn't go as far as it should anymore, then they demand labor increases. And those are inherently inflationary under most circumstances. So I, I don't think that Warsh has any intention of making any changes right now because he's still in the initial part of his learning curve. Although he has sat on the Fed in the past, I believe. Yeah. Oh, geez.

Joey Loss 15:07

Yeah. Under Bernanke.

Steven Van Wie 15:11

What out of the Frank panel you wanted to hear? Yeah, yeah. There's a cartoon that goes around the Internet once in a while. It's the, the. I don't even know what the name of them is, but they're the, the animated guys. One of them, one episode of it was the guy's bragging about Bernanke. The funny one says, let's see, is Bernanke. He calls him the Ben Bernank. Has the Ben Bernank ever gotten anything right? Let me think. No.

Joey Loss 15:44

Well, if it makes you feel better, Bernanke just kind of. It put out a big diss on Warsh regarding his love for the balance sheet because Bernanke just thinks it doesn't matter. And so I'm glad if he doesn't like Warshaw. That may be a positive.

Steven Van Wie 15:58

Never know. Anyway, I digress again, as usual. What happened in this whole thing was it's explainable, but not by the experts. The economics of the day, which I'm going to go in. I won't go into them right this minute, but I'm going to go into why conventional economics is not seeming to work right now. And it's one of the explaining items is called

Steven Van Wie 16:31

Jevons Paradox. I love the word paradox, by the way. Back when I grew up, it was Casey and Kildare, but only people over 60 are likely to remember that. But Jevons Paradox more or less explains

Steven Van Wie 16:48

partly why people believe as they do and feel like what's going to happen. And the other part is more of the truth with a good explanation to it. I've got a lot of data to back it up, but I don't want to get into it with just a few seconds left in the first half of the show. So when we come back, we'll talk about the space ex ipo, but then we'll go into why Trump's economy is outperforming on so many levels. But what is outperforming is expectations. As an economy, it's doing fine. The other, the naysayers and his mortal enemies want you to think we're sliding into a recession and people can't afford anything and all that, and these things are just not true, not even close to true. So I'll get into a little of that and the explanation after the next break. And I think it'd be kind of interested because when you get down into it, it's actually sensible. Like so many things, we take the conventional wisdom as gospel in economics. And since economics is what it has always been, and that's called the dismal science, economists aren't happy unless they can forecast gloom and doom. They really detest handing out good news. This is from decades of observations made by me as to the economists, there are a few exceptions, of course, but in general, that you would swear, and I think I'm probably pretty much right over the target on this one, you would swear that they really hope that this economy will fail because they hate Trump that bad. Well, that's no way to approach economics. You should be approaching economics with the knowledge of what should happen if certain things do occur, and then the data that backs up what did occur, instead of just trying to be, I don't know, negative. What are the negative nabobs? I can't remember because Nancy's right, Negative Yeah, that's the modern one. But Spiro Agnew, back years ago, the nattering nabobs of negativity.

Joey Loss 19:10

Nancy's, you know, that's.

Joey Loss 19:19

That predates me for sure.

Steven Van Wie 19:20

Yeah, well, that was before he was forced to resign because he was a crook. But that's a whole other story. Anyway, I will get into it later in the show about the real economics of what's going on right now and why so many of the predictions are untrue and reasons that you should not be unhappy about that. There's also a little guidance for young people here that may be pointing a slightly different direction than most people are talking about. I've got some thoughts on that, too, so don't go anywhere. We'll be right back. And Joey's going to dig into the SpaceX IPO and then we'll go on to other things and the. The trivia question will be there too. So we'll be right back. This is the Van Wie Financial Hour. Welcome back to the Van Wie Financial. It's easy for me to say, we're chuckling a little bit in the background. I'm Steve Van Wie. 

Joey Loss 20:16

And I'm Joey Loss.

Steven Van Wie 20:17

And I want to remind everyone that the lines are open. 904-222-8255.What is the typical water consumption per chat with AI, you can measure it a couple of different ways and I'll know if you're right or if you're even close. All right. The talk of the town is SpaceX is going to go public and people are really excited.

Joey Loss 20:44

Yeah, we've been getting a lot of questions about it. And so the ticker for the IPO will be spcx. It will be listed on the NASDAQ Exchange. The final pricing numbers will be announced on June 11, and trading will begin on June 12. That is next Friday. And it will go down as the largest IPO in US history, not just by hype, although I think that would qualify as well, but based on the valuation that is expected at this point. And that valuation would place SpaceX on day one as a publicly traded company at $1.75 trillion. And I would not be shocked if you saw that valuation go wild for a while. I mean, it could go way up, way down. There's a period after an IPO that has that, that is called seasoning. And it's when a stock is settling into a. A valuation that the market collectively agrees is worthy enough to be a little bit more stable. If you look at certain IPOs historically, like Meta or Snapchat, other big IPOs, there's a lot of volatility in the beginning. And so for anybody who plans on participating in the secondary market, just be aware that the price could be pretty choppy for quite some time.

Joey Loss 22:01

But I wanted to spend a few minutes to talk about what is SpaceX. I did a 30 minute podcast on this yesterday and if you want to take a listen on any podcast player, you can look up Wealth Unplugged and you'll see my ugly mug there and that's how you'll know you're in the right place. And there's an episode talking about it.

Steven Van Wie 22:18

You should substitute your wife's picture for that.

Joey Loss 22:20

Yeah, that would get a lot more lit ins.

Steven Van Wie 22:22

There you go.

Joey Loss 22:24

So let's talk about what SpaceX is, because obviously we know it's Elon Musk, it's rockets, but there's three parts that are a part of the SpaceX business and one of them recently joined. So the classic element is space. You have rockets and launch, you have Falcon 9 Starship reusable boosters. This is the legacy business and it is currently profitable, believe it or not. Connectivity, that's part two of the business and that is Starlink. You've probably heard of this. You might have a friend who has a Starlink satellite on his boat or a receiver on his boat.

Steven Van Wie 22:56

Yeah, they're getting into the airline industry now too.

Joey Loss 22:59

They're very popular. And for rural areas, I mean, it is a phenomenal solution.

Steven Van Wie 23:03

And what used to happen on airplanes is you could barely download a movie and you were already on the other coast and now it's going to be as quick as it is in your living room.

Joey Loss 23:12

Yeah, it's amazing. And so they already have millions of subscribers and it's recurring revenue and it is profitable. So two pieces so far of the three are profitable. The third one is the one that hurts, and that is artificial intelligence. So you have Xai, also known as Grok, to the consumer user, and that merged into SpaceX in February and it also pulled with it the X or Twitter social platform. And that is the money loser. So overall, SpaceX loses money today, but revenue is growing pretty rapidly from the other two legs that are doing well. And so this valuation is really made up on the directional elements of what you can see in the numbers. But there's not really a profit multiple to look at and say, well, here's what it's worth, as you would for an older, more seasoned stock that is profitable today. It's pretty interesting. The market tends to be very kind to Elon Musk when it comes to these things because of his track record of making things happen.

Steven Van Wie 24:09

It hasn't been shown to be a good idea to bet against him.

Joey Loss 24:13

Right.

Joey Loss 24:16

The short version of this,

Joey Loss 24:19

that's appropriate for radio is just. I think if people are going to participate, just make sure you really want to participate for a long time. I mean, this is not an investment recommendation. It's just a cautionary tale. I think trading this is going to be really hard. Firstly, the limited supply may seem like a favor in the short term, but what will happen day to day for the first few years, especially until it's profitable, is hard to say. And so I think if you believe in the mission, you believe in Elon Musk, maybe there's a case for your situation to go ahead and to own it and keep it. But there will be other ways to own this stock, just as people own Nvidia. Through index funds over time, SpaceX will work its way into an array of index funds that many listeners may hold. The Nasdaq will bring SpaceX into the fold for funds like QQQ and qqqm over the first. After the first 15 days, they actually change their rules to make it so that they could get in by the 15th day instead of at the end of three months, which is traditionally how that works. And then for the S and P index indexes like VO or Spy, they'll have. It'll be over a year before SpaceX manages to get into that. But on day one, based on a $1.75 trillion valuation, the company would be the seventh largest public company company in America. That's its debut.

Steven Van Wie 25:44

Sort of auspicious.

Joey Loss 25:46

That's incredible.

Steven Van Wie 25:48

Elon did something that is not normally done. He. He set an actual price, not a range, but a price that he did. And I have a funny feeling with his clout, that's what's going to happen. Now. Will that be over subscribed on day one? I don't know for sure, but I bet it is. There's so much interest. I don't think we've ever seen anything like this. There's so much interest in this company and this guy. And I don't remember ever seeing a group of people, a larger group of people that are so excited about getting involved with it, when what they're really doing is financing the giant debt of a giant company without any reward. It's 99 all over again, the way I see it. And I am not willing to invest in technology in 1999 or in this. I will have a great time watching it for a while.

Joey Loss 26:48

Well, here's a contra story that I think is interesting. This doesn't mean SpaceX is what I'm about to say, but in 1998 I believe there was a company that filed an S1 to go public with the SEC and it said online bookstore as its complete description of what it did. It was worth a couple hundred million dollars at the time and it lost money. But they said, we have ambitions to become the infrastructure of the Internet and many listeners will know that this company is Amazon and it was successful in its ambitions to become the infrastructure of the Internet in many regards. And it's worth a ton more than that. I mean trillions at this point. And so I think that's the kind of sentiment people are looking at SpaceX with. It's not what it is today. Even though what it is today is pretty exciting. It's. It's what it could become.

Steven Van Wie 27:35

I remember back in those days I made one of my most prescient announcements. I said, the problem with Amazon, they sell everything so cheaply that there is no way on God's green earth that that company's ever going to make a nickel of profit. Kind of missed that one, didn't I?

Joey Loss 27:54

Yeah, well, he did. I mean, his whole strategy is just take the cost centers of their business, the that are a pain point and affecting margins, do it better than anyone else at a loss until it becomes profitable, and then sell it back to the entire market and kill everybody that was doing it for you. I mean, it's crazy and sort of

Steven Van Wie 28:13

been a bad idea to bet against him too, hasn't it?

Joey Loss 28:16

Yeah, yeah. I mean, he's now got the biggest logistics company in America.

Steven Van Wie 28:19

Yeah, it's amazing actually, for anybody who has a kid about to go to college or if you're in one of them. Logistics is one of the things that I think has a bright spot for the whole, basically for the whole world. Look what happened to companies like FedEx and Amazon and so on. Getting information from one place to another is a lot easier than getting hard goods from one place to another. And that's been shown in many, many ways. I think fred Schultz at FedEx kind of went out with the last lab because he got a very bad grade on that paper. In college when he was presenting his concept for a delivery service like that, the professor was underwhelmed substantially for a while. Wow. And then it became FedEx and he became a billionaire.

Steven Van Wie 29:16

It's easy to be judgmental and percentage wise you're probably better off if you think everything that's coming out new is going to be bad. You probably win more than you lose because most things don't work out. But man, they only need one or Two hits and things are good. So we'll see.

Joey Loss 29:37

Yeah, we'll see. I think for most investors, just owning a healthy combination of indexes is going to be enough exposure.

Steven Van Wie 29:45

And that's my philosophy of life anyway. But it's absolutely true. I, I only remember one serious regret that I have over many, many years of not buying a stock. And that was when the Green Bay packers sold their shares. Oh yeah, for 10 bucks a piece. And I didn't do it. And I've kicked myself every football season since. It's not worth anything except the paper that it's printed on. You can't vote, doesn't pay any dividends or anything, but sentimental value is off the charts. So I will, I will always remember that I didn't do the one that counted the other ones. Yeah, I'm perfectly fine with having Amazon, SpaceX and everybody else Nvidia in my QQQM funds and that kind of thing. Yeah, it. No problem. But for those of you who are seriously interested,

Steven Van Wie 30:47

Joey was telling me that we are seeing what we could do about getting a block of stock and we've. I've never done this personally and our company's never done it. What, what is the easiest and soonest way we could get clients into it or do you know yet?

Joey Loss 31:03

We basically what happens is you, you put a,

Joey Loss 31:08

a request for an allocation. And honestly our expectation is that like our request as good as anybody's but based on the demand versus supply. I'd be shocked if we get any, to be honest. And I think that's what we're telling people. But of course we're happy to put them in.

Steven Van Wie 31:22

Many years ago I had a broker that was back before we did things the way we do now and he put in for the class B shares of Berkshire. Of course I wasn't involved in it, but he had two leftover. So he called me and said, I got two leftover if you want them. They were like 1100 bucks. I said sure, throw them in. And they went to 22 and I sold them. That was dumb too. It's like mea culpa day. We'll be right back. Don't go anywhere. This is the Van Wie Financial Hour. Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie. 

Joey Loss 31:55

And I'm Joey Loss.

Steven Van Wie 31:56

And lines are open. 904-222-8255. Trivia question. During a normal GPT type chat, an AI chat, there's 20 to 50 questions exchanges with the system in it. And during the average chat, like that how much water is consumed. We know it burns electricity, but takes some water too, to run these things. All right, let's look at what's going on there. There is a renaissance in manufacturing going on right under your nose. It should surprise no one, because when Trump was running for office on the platform that we need to bring manufacturing back on shore, and if we didn't know that in the first Trump administration, we certainly should have learned it during COVID There are things that we cannot get except by the grace of someone who might not be a natural friend of the country. So I've been looking into a lot about how did this happen and how to fix it and so on, and I really learned a lot. A lot of it was counter to the economics that I had been taught, but some of it makes a lot of sense. So one of the things that's going on right now, and this is another consideration of the administration, the foreign born civilian population dropped by roughly 532,000 people over the past 12 months. That's a lot. And the foreign born labor force was also smaller, although not all those people were in the labor force, but the actual labor force dropped 94,000. Also, the federal government added 1,000 jobs in May after two consecutive months of shrinking payrolls. But the federal government jobs are down by 346,000.

Joey Loss 33:37

Yeah.

Steven Van Wie 34:03

So all this employment data has a headwind on it by the government downsizing. That's important to know.

Steven Van Wie 34:14

The manufacturing area that Trump was targeting, partly by the laws that have been passed, is preceded, of course, by a lot of construction. First you got to build it and then you can staff it and make things. And that is happening. If you looked at the jobs distribution this past month, it was across all sizes and across nearly all segments of the economy. Only the worst portion was financial service types. But almost everything else is working. And construction and manufacturing employment is going up really nicely. But it's not just adding jobs. Real durable goods output grew at 5.8%

Steven Van Wie 35:03

and productivity surged at 5.5%, meaning factory workers are are having real wage increases, unlike most times in the past. And this is going to do nothing but increase. And one of the reasons it's going to increase is because of Jevons Paradox.

Steven Van Wie 35:25

The conventional wisdom is when demand is growing, say for a certain input, then what's going to happen is it's going to raise the price of that, which is going to have less people seeking it. So the price increase is supposedly going to lead to basically a recession in that area, which will bring the price back down. And Jevons paradox says maybe not so fast. What really happens here in many cases is improvements in resource efficiency, which we just saw at five and a half percent, can lead to overall increases in resource consumption. So what's happening is this increased demand winds up actually reducing the price of things which goes into the market and increases overall consumption. So rather than leading to layoffs and inflation, it, it actually has the net effect of being at least negative, maybe even deflationary over time with increasing numbers of people working and that it seems like a paradox, but the more you get into it, the more it seems to make sense. What are the long term repercussions of what's going on now in building our factories? We're going to have more and more people with jobs that are not just new, but they're new, they're high paying and the wages are going up fast. You know how hard it's going to be with a population that's mostly stable to fire up these hundreds of factories that are going up. And that means labor is going to have a real serious impact on all of that, price wise. That's good for you people who are young and those who have kids. Good morning, Lane,

Lane 37:31

how are you doing?

Steven Van Wie 37:32

I'm doing fine. How are you?

Lane 37:35

Pretty good. I just wanted to let you all know that Pat and I will be standing on the beaches of Normandy on July 10th.

Steven Van Wie 37:43

Great, wonderful. Call us from there if it's a great time.

Lane 37:50

We might have to do that.

Steven Van Wie 37:53

That would be a lot of fun.

Lane 37:53

So with respect to the trivia and well, I'll let you discuss power consumption and water consumption of this industry, which is really going to be brutal, particularly in areas of Florida where we're already facing shortages of water. But anyhow, I thought I'd at least throw this out. You said you can handle the different units of measure, so how about beer barrels? Maybe 4 billionths of a beer barrel.

Steven Van Wie 38:30

My math skills are pretty good.

Lane 38:32

That came up. That's it.

Steven Van Wie 38:35

I'd rather stick to a more conventional way because then, then I can be right.

Joey Loss 38:41

I forgot my beer to fluid ounce.

Steven Van Wie 38:43

Yeah, me too. Hook up with AI and calculator,

Lane 38:49

But I figured less than a cup.

Steven Van Wie 38:53

Well, are we going to call that close enough? No, we can't. It's outside the range.

Lane 39:01

Okay. I didn't want to win, but I just thought it would be fun to talk about some of the units. But just to set the range. Is it kind of smallish?

Steven Van Wie 39:14

You, you're low, but you're not so low that it's ludicrous. 

Lane 39:22

Right. Okay. Yeah.

Steven Van Wie 39:23

All right. And you're going to love the answer. So if nobody else calls in and tries in a couple of minutes, I'll give it out. And I know you're going to love the answer.

Lane 39:30

Yeah. All right. You all have a great one.

Steven Van Wie 39:33

Thank you very much. Have a good trip too.

Lane 39:36

Yeah, bye.

Steven Van Wie 39:38

Yeah, I. I had to do some quick measurement math in my head, but like I said, you're gonna love this one. That's why I used it, of course, because when things catch my eye and I have to chuckle or learn or whatever, that's what I really like. Anyway, what's happening here, it's showing up. And I get real tired of the naysayers out there that are trying to convince everybody that we're in a recession and nobody can afford to do anything. And here we go, our jobs back. Well, we already know from yesterday that we've had 188,000 people go back to work every month for the last three on average, the jolts. The job openings were expected to stay about even and they didn't. These guys missed again. They were expecting it to stay around 7 point or about 6.9 million. That's what the forecaster said. It came in at 7.6 million. So over that time, we put how many people back to work last month? And 700,000 new jobs opened up at the same time. Is this a failing economy? I don't think so, no.

Joey Loss 41:00

And I think it's tough for the AI doomers who are determined to say that AI is just going to destroy jobs. Is the market shifting in different pockets? Sure, but I think one of the first places they expected jobs to be disintegrating was in the coding development field. And all we've seen there is significant hikes in compensation because of the increase in their ability to have output. Now, there is an argument that at the lower end, the entry level for coders, it is a little bit harder because their value proposition is different. But I'm pretty confident that at least right now, directionally, these companies that hire coders and they realize that they need people running systems of AI, they can't just have AI running itself.

Steven Van Wie 41:40

Exactly. You got to watch it. It's like a temperamental young child.

Joey Loss 41:45

Yeah. So I think there's real shift happening at the lower end of the entry level job market for, for some of these white collar jobs. But I don't think it's nearly as bad as people have said. And I think it's a similar transition.

Steven Van Wie 41:58

I started in the computer industry in 1972. And at that point, we had key punchers on big machines. But that key puncher is now AI it went away, but it got replaced. And that's what happens with all these technological developments. They don't wind up crashing the job market at all. They change jobs. Jobs evolve to fit the new economy, and that's what's happening here. Right now, there are 1.03 jobs for every employed unemployed person, and that ratio hasn't been above 1 since last June. So things are not deteriorating in the market. Things are getting better in the market. And that's. I just want to bring all these things up so that people understand that what you hear you have to take with a great deal of skepticism these days.

Joey Loss 42:53

Right. And ironically, that is what makes the Fed feel a little bit more confident about potentially raising rates, which is what the market didn't like on Friday.

Steven Van Wie 43:00

Exactly. Well, the answer to the trivia question is in my left hand. It says right here, kirkland signature purified water, 16.9 fluid ounces. The typical conversation uses 17 ounces of water. So if you want a real easy visual, every time you check out the. Enter a chat with the GPT or whoever you're using, just look at the water bottle in your hand and say, that's all being consumed by me and by the system. Interesting. I thought, all right, we've had a good time today. We'll see you again next week at the same time. And everybody be careful out there. This is the Van Wie Financial Hour.