1 00:00:06,200 --> 00:00:12,240 Speaker 1: This is America's Trucking Network with Kevin Gordon. Love them aboard. 2 00:00:12,480 --> 00:00:16,560 Speaker 2: Thanks for tuning in on this Wednesday morning. Well, I 3 00:00:16,600 --> 00:00:20,279 Speaker 2: hope everybody had a great Saint Patrick's Day yesterday. A 4 00:00:20,320 --> 00:00:24,000 Speaker 2: lot of revelry and uh, of course, with the looming 5 00:00:24,200 --> 00:00:26,560 Speaker 2: and what's going on over in the Middle East kind 6 00:00:26,560 --> 00:00:28,640 Speaker 2: of put a damper on things to a certain extent, 7 00:00:28,720 --> 00:00:31,680 Speaker 2: or had that Paul over it, so to speak. But 8 00:00:32,000 --> 00:00:35,840 Speaker 2: things seem to be going fairly well over there, except 9 00:00:36,000 --> 00:00:38,880 Speaker 2: we can't seem to get some cooperation from our NATO 10 00:00:39,040 --> 00:00:41,479 Speaker 2: allies and the people that depend the most on the 11 00:00:41,520 --> 00:00:43,680 Speaker 2: oil coming out of that region, but we'll talk about 12 00:00:43,680 --> 00:00:47,680 Speaker 2: that later on. We got some good news regarding home sales, pending, 13 00:00:47,760 --> 00:00:52,840 Speaker 2: home sales, builder expectations and so on, so let's dig 14 00:00:52,880 --> 00:00:56,800 Speaker 2: into that, which is kind of contrary. And I keep 15 00:00:56,840 --> 00:00:59,680 Speaker 2: going back to this number that we got for gross 16 00:00:59,680 --> 00:01:03,320 Speaker 2: to me stick product and the adjustment down too point 17 00:01:03,480 --> 00:01:07,000 Speaker 2: seven percent, and I keep saying that I don't understand 18 00:01:07,160 --> 00:01:10,039 Speaker 2: how that number is that low given the fact of 19 00:01:10,080 --> 00:01:12,440 Speaker 2: what we've seen as far as retail sales, what we're 20 00:01:12,440 --> 00:01:16,360 Speaker 2: seeing from consumer spending, and all these other positive signs 21 00:01:16,360 --> 00:01:20,000 Speaker 2: in the economy. I don't understand why the gross domestic 22 00:01:20,080 --> 00:01:23,640 Speaker 2: product was down so low, and I have to wonder 23 00:01:23,959 --> 00:01:26,560 Speaker 2: that somewhere along the lines that there's going to be 24 00:01:26,640 --> 00:01:30,080 Speaker 2: some major correction to that. Let's get again, let's get 25 00:01:30,120 --> 00:01:34,399 Speaker 2: into these stories. US pending home sales climbed one point 26 00:01:34,480 --> 00:01:38,720 Speaker 2: eight percent in February. Now, again this is important from 27 00:01:38,840 --> 00:01:45,039 Speaker 2: the aspect of the trucking industry again because a lot 28 00:01:45,080 --> 00:01:48,160 Speaker 2: of the stuff when people buy homes, they buy new 29 00:01:48,200 --> 00:01:52,800 Speaker 2: stuff for in the homes, the durable goods, the refrigerators, couches, 30 00:01:53,600 --> 00:01:57,640 Speaker 2: all kinds of furnishings, remodeling, painting, all kinds of stuff 31 00:01:57,840 --> 00:02:00,920 Speaker 2: that goes on as far as stuff that has to 32 00:02:00,960 --> 00:02:04,120 Speaker 2: be trucked to the individual stores. And so with the 33 00:02:04,200 --> 00:02:07,680 Speaker 2: moving of all that and all that going into it 34 00:02:07,720 --> 00:02:11,680 Speaker 2: is good, very good for the trucking industry as a whole. 35 00:02:12,120 --> 00:02:15,440 Speaker 2: And then with a builder confidence up, what we'll be 36 00:02:15,480 --> 00:02:18,560 Speaker 2: seeing shortly and of these one of the stories will 37 00:02:18,600 --> 00:02:21,960 Speaker 2: be covering the fact that the builders are looking at 38 00:02:22,360 --> 00:02:25,280 Speaker 2: the ability to go out and start construction. Is good 39 00:02:25,320 --> 00:02:29,200 Speaker 2: for the flatbed truck industry because all those building materials 40 00:02:29,240 --> 00:02:31,920 Speaker 2: that are going to have to be transported, well, not 41 00:02:31,960 --> 00:02:35,960 Speaker 2: only to the location of the distribution point, but then 42 00:02:36,040 --> 00:02:39,640 Speaker 2: from the distribution point to the actual home site, the 43 00:02:39,720 --> 00:02:43,120 Speaker 2: job site, et cetera. So again let's get into the numbers. 44 00:02:43,160 --> 00:02:46,919 Speaker 2: And oh, by the way, the Federal Reserve is ending 45 00:02:47,160 --> 00:02:50,040 Speaker 2: their meeting later on today and they will come out 46 00:02:50,400 --> 00:02:53,160 Speaker 2: Lion Jerry Powell will come out about well at two 47 00:02:53,160 --> 00:02:57,040 Speaker 2: o'clock and give his press conference talking about what they 48 00:02:57,120 --> 00:02:59,480 Speaker 2: determined to do and why they determined to do, what 49 00:02:59,680 --> 00:03:01,079 Speaker 2: interest rates are going to be. 50 00:03:01,560 --> 00:03:04,320 Speaker 1: Now, on the optimistic. 51 00:03:03,639 --> 00:03:07,240 Speaker 2: Side, if the Federal Reserve was concerned about the economy, 52 00:03:07,280 --> 00:03:11,440 Speaker 2: concerned about sparking the economy, spurring the economy on, they 53 00:03:11,480 --> 00:03:16,239 Speaker 2: should do a quarter percent interest rate reduction. One hundred 54 00:03:16,320 --> 00:03:18,600 Speaker 2: percent of the people that are looking at this and 55 00:03:18,639 --> 00:03:22,080 Speaker 2: making estimates and guessing as far as what the Federal 56 00:03:22,120 --> 00:03:25,600 Speaker 2: Reserve is going to do, they are talking about that 57 00:03:25,720 --> 00:03:27,920 Speaker 2: they are going to be holding rates steady. There's no 58 00:03:28,040 --> 00:03:31,960 Speaker 2: talk about raising interest rates or even lowering interest rates. Basically, 59 00:03:31,960 --> 00:03:35,520 Speaker 2: one hundred percent of the consensus, actually the consensus, which 60 00:03:35,560 --> 00:03:38,680 Speaker 2: would be one hundred percent, is that nothing is done 61 00:03:38,720 --> 00:03:42,480 Speaker 2: with the interest rate. I think that if they were smart, 62 00:03:42,520 --> 00:03:45,240 Speaker 2: they would reduce it by at least a quarter percent. Again, 63 00:03:45,720 --> 00:03:47,840 Speaker 2: when we talk about some of these numbers in here, 64 00:03:48,000 --> 00:03:50,480 Speaker 2: you'll know what I'm talking about. So again we'll see 65 00:03:50,520 --> 00:03:52,760 Speaker 2: later on this afternoon what happens about that, and of 66 00:03:52,760 --> 00:03:56,800 Speaker 2: course we'll talk about it tomorrow morning. Now, National Associational 67 00:03:56,800 --> 00:03:58,880 Speaker 2: Realtors and of course these are some of the headlines 68 00:03:58,880 --> 00:04:02,040 Speaker 2: that were showing this pending home sales report shows one 69 00:04:02,120 --> 00:04:07,160 Speaker 2: point eight percent increase in February reiters, which is generally 70 00:04:07,160 --> 00:04:08,640 Speaker 2: a bubble or two left of center. 71 00:04:09,200 --> 00:04:10,720 Speaker 1: US pending home sales. 72 00:04:10,720 --> 00:04:16,880 Speaker 2: Unexpectedly rebound in February on lower mortgage rates. Again, lower 73 00:04:16,960 --> 00:04:24,680 Speaker 2: mortgage rates spurring the pending home sales. So it's pretty 74 00:04:24,680 --> 00:04:27,320 Speaker 2: clear that lower interest rates spur people in. We had 75 00:04:27,320 --> 00:04:29,240 Speaker 2: the story the other day, well what was it last 76 00:04:29,240 --> 00:04:32,640 Speaker 2: week or the week before, where for every percentage point 77 00:04:32,800 --> 00:04:37,360 Speaker 2: that the interest rate comes down, five point five million 78 00:04:37,520 --> 00:04:40,840 Speaker 2: people jump into the market or decide to buy a home. 79 00:04:41,000 --> 00:04:44,640 Speaker 2: And of that one point five million of that five 80 00:04:44,680 --> 00:04:49,000 Speaker 2: point five million are first time home buyers, people just 81 00:04:49,160 --> 00:04:52,719 Speaker 2: getting into the home, younger people with young families and 82 00:04:52,760 --> 00:04:55,359 Speaker 2: so on their first time that they're buying a house, 83 00:04:55,880 --> 00:04:59,640 Speaker 2: which is a giant step for that generation or that 84 00:04:59,680 --> 00:05:02,520 Speaker 2: group of young people, and the fact that a one 85 00:05:02,600 --> 00:05:07,640 Speaker 2: percentage point drop spurs that much inform, that much activity. 86 00:05:08,160 --> 00:05:10,600 Speaker 2: And I keep emphasizing the fact when you look at 87 00:05:10,600 --> 00:05:13,760 Speaker 2: our mortgage rates compared to the mortgage rates in France, 88 00:05:13,839 --> 00:05:17,920 Speaker 2: in England and all these other developed Western countries, we 89 00:05:18,080 --> 00:05:21,280 Speaker 2: are at least two percent to two and a half 90 00:05:21,320 --> 00:05:24,760 Speaker 2: percent higher as far as our mortgages are concerned to 91 00:05:24,839 --> 00:05:28,279 Speaker 2: what they spend. So imagine that one percent one and 92 00:05:28,279 --> 00:05:31,920 Speaker 2: a half percent down, every one percent five point five 93 00:05:32,000 --> 00:05:35,440 Speaker 2: percent of five point five million people jump into the 94 00:05:35,440 --> 00:05:38,799 Speaker 2: housing market, one point five million of that being first 95 00:05:38,800 --> 00:05:41,680 Speaker 2: time home buyers. So again, when we talk about home 96 00:05:41,920 --> 00:05:44,000 Speaker 2: let me see, you know, the various headlines were all 97 00:05:44,120 --> 00:05:48,840 Speaker 2: very good and it was, you know, nothing nasty in there, 98 00:05:49,120 --> 00:05:51,200 Speaker 2: So that's good. I mean, at least the press is 99 00:05:51,440 --> 00:05:54,760 Speaker 2: doing their job. Now as far as pending home sales, 100 00:05:54,800 --> 00:05:58,760 Speaker 2: and I kind of set the stage here, pending home 101 00:05:58,800 --> 00:06:01,760 Speaker 2: sales is a leading in dedicator, which again when you're 102 00:06:01,839 --> 00:06:06,200 Speaker 2: talking about you've got leading economic indicators, you've got lagging 103 00:06:06,279 --> 00:06:10,640 Speaker 2: economic indicators, but leading economic indicators what people kind of 104 00:06:10,839 --> 00:06:13,920 Speaker 2: tend to look at because that gives you an indication 105 00:06:14,000 --> 00:06:17,239 Speaker 2: of what's going to happen two months, three months, six 106 00:06:17,279 --> 00:06:20,520 Speaker 2: months down the road. So pending home sales is a 107 00:06:20,640 --> 00:06:24,799 Speaker 2: leading indicator for the housing sector based on pending homes, 108 00:06:25,120 --> 00:06:27,400 Speaker 2: based on pending sales of existing homes. 109 00:06:27,760 --> 00:06:29,720 Speaker 1: The sale is listed as pending when the. 110 00:06:29,680 --> 00:06:33,880 Speaker 2: Contract has been signed but the transaction has not closed yet, 111 00:06:34,160 --> 00:06:36,919 Speaker 2: though the sale usually is finalized with one to two months. 112 00:06:37,000 --> 00:06:40,200 Speaker 2: So once that tells you that if it's a pending 113 00:06:40,240 --> 00:06:44,320 Speaker 2: home sale, the sale then generally occurs a month or 114 00:06:44,320 --> 00:06:47,880 Speaker 2: two later. So when you see pending home sales, you 115 00:06:47,960 --> 00:06:50,800 Speaker 2: know that home sales will be up later on, a 116 00:06:50,880 --> 00:06:54,840 Speaker 2: month or two down the road. Now, sometimes variations depend 117 00:06:54,880 --> 00:06:57,920 Speaker 2: on how quickly something that is a pending home sale 118 00:06:58,160 --> 00:07:01,719 Speaker 2: wants the contract is signed, wants it actually closes. Of course, 119 00:07:01,760 --> 00:07:05,880 Speaker 2: you can be anything from issues as far as the 120 00:07:05,920 --> 00:07:12,000 Speaker 2: buyer get getting obtaining a mortgage, financing, home inspections problems, 121 00:07:12,080 --> 00:07:15,360 Speaker 2: or appraisal issues. Any of that kind of thing can 122 00:07:15,480 --> 00:07:19,040 Speaker 2: hold up pending home sales and the sale not go through. 123 00:07:19,320 --> 00:07:21,239 Speaker 1: But generally it's a leading, as they say. 124 00:07:21,040 --> 00:07:24,600 Speaker 2: A leading economic indicator that within a month or two 125 00:07:24,800 --> 00:07:27,400 Speaker 2: home sales are going to go up. So look in 126 00:07:27,440 --> 00:07:29,640 Speaker 2: the next month or so when you see home sales up, 127 00:07:29,840 --> 00:07:32,080 Speaker 2: you know that the pending home sales were up a 128 00:07:32,120 --> 00:07:36,000 Speaker 2: month or two before that. Penning home sales in February 129 00:07:36,160 --> 00:07:38,880 Speaker 2: increased by one point eight percent from the prior month 130 00:07:38,960 --> 00:07:42,120 Speaker 2: and decline point eight percent from a year over year, 131 00:07:42,240 --> 00:07:45,080 Speaker 2: So compared to this time last year, we were down 132 00:07:45,120 --> 00:07:49,160 Speaker 2: point eight percent, less than one percent, according to National 133 00:07:49,200 --> 00:07:55,679 Speaker 2: Association of Realtors Penning Home Sales Report. The report provides 134 00:07:55,760 --> 00:07:59,239 Speaker 2: real estate ecosystem including agents and home buyers and sellers 135 00:07:59,560 --> 00:08:03,120 Speaker 2: with data on the level of home sales under contract. 136 00:08:03,520 --> 00:08:06,400 Speaker 2: Month over month, pending home sales rose in the Midwest, 137 00:08:06,760 --> 00:08:11,520 Speaker 2: South and West, and declined in the Northeast. Year over year, 138 00:08:11,640 --> 00:08:14,520 Speaker 2: pending home sales rose in the South and West and 139 00:08:14,600 --> 00:08:18,120 Speaker 2: declined in the Northeast and Midwest. So you know, when 140 00:08:18,120 --> 00:08:20,560 Speaker 2: we see what's going on in the Northeast because of 141 00:08:20,920 --> 00:08:25,120 Speaker 2: rising property taxes, especially in the New York, especially in 142 00:08:25,200 --> 00:08:28,400 Speaker 2: New York City itself, what we're seeing in terms of 143 00:08:28,440 --> 00:08:32,520 Speaker 2: out of control governments or city spending up there. People 144 00:08:32,559 --> 00:08:36,680 Speaker 2: are fleeing the Northeast because the tax increases and two 145 00:08:37,120 --> 00:08:40,000 Speaker 2: expensive costs of living, and people are going to the 146 00:08:40,080 --> 00:08:43,480 Speaker 2: South and into the Midwest and other places. So that's 147 00:08:43,520 --> 00:08:46,000 Speaker 2: why you're seeing a shift there. You're seeing home prices 148 00:08:46,120 --> 00:08:49,520 Speaker 2: or pending sales going down in the Northeast, but rising 149 00:08:49,559 --> 00:08:52,880 Speaker 2: in the West and in the Midwest, and of course 150 00:08:52,920 --> 00:08:58,480 Speaker 2: in the South. And National Association Whealtor's chief economists, doctor 151 00:08:58,800 --> 00:09:03,280 Speaker 2: Lawrence Euan said the slight gain impending contracts appears to 152 00:09:03,280 --> 00:09:07,400 Speaker 2: be driven by improved affordability conditions. The Midwest, the most 153 00:09:07,400 --> 00:09:10,840 Speaker 2: affordable region of the country, was the strongest performer in February, 154 00:09:11,120 --> 00:09:13,680 Speaker 2: but the Northeast was held back by a combination of 155 00:09:14,080 --> 00:09:19,440 Speaker 2: higher home prices and shortage of supplies. Affordability seems to 156 00:09:19,440 --> 00:09:22,360 Speaker 2: be the big key up there for first time home buyers. 157 00:09:22,360 --> 00:09:24,920 Speaker 2: Purchasing a home is not a snap decision, Yung said. 158 00:09:25,480 --> 00:09:28,520 Speaker 2: It takes time to build credit, save for a down payment, 159 00:09:28,520 --> 00:09:31,960 Speaker 2: and fulfill existing rental lease obligations. Still, there is a 160 00:09:32,000 --> 00:09:36,240 Speaker 2: sizable pent up demand, pent up demand that could be 161 00:09:36,280 --> 00:09:39,600 Speaker 2: released into the market though. Although job gains have been 162 00:09:39,679 --> 00:09:43,959 Speaker 2: sluggish in recent months, there are still six million more 163 00:09:44,080 --> 00:09:48,080 Speaker 2: jobs in the country than in pre COVID period. 164 00:09:48,559 --> 00:09:49,760 Speaker 1: Let me repeat that. 165 00:09:50,160 --> 00:09:54,400 Speaker 2: Six million more jobs in the country than in the 166 00:09:54,440 --> 00:09:59,480 Speaker 2: pre COVID period. And let's not forget again the least 167 00:09:59,520 --> 00:10:03,120 Speaker 2: of greements still there is a sizeable pent up demand. 168 00:10:03,640 --> 00:10:08,439 Speaker 2: Pent up demand because people are waiting for interest rates 169 00:10:08,480 --> 00:10:11,640 Speaker 2: to come down to jump in again. One percent drop, 170 00:10:11,880 --> 00:10:15,920 Speaker 2: five point five percent, five point five million people jump 171 00:10:16,000 --> 00:10:19,360 Speaker 2: into the market. One point five million of those young people. 172 00:10:20,160 --> 00:10:23,800 Speaker 2: Talk a little bit more about this and some other things. 173 00:10:23,920 --> 00:10:32,080 Speaker 2: I'm Kevin Gordon, Americastrucking Network seven hundred WLW. I'm Kevin Gordon, 174 00:10:32,080 --> 00:10:36,280 Speaker 2: America Destructing Network, seven hundred WLW. You know, talking about 175 00:10:36,320 --> 00:10:40,120 Speaker 2: these pending home sales again leading economic indicator for home 176 00:10:40,320 --> 00:10:43,520 Speaker 2: sales in the near future. It generally takes about a 177 00:10:43,559 --> 00:10:45,360 Speaker 2: one to two month period of time once it's a 178 00:10:45,440 --> 00:10:48,680 Speaker 2: pending home sale. Once the contract is signed, of course, 179 00:10:48,720 --> 00:10:50,960 Speaker 2: you got to get past all of the you know, 180 00:10:51,360 --> 00:10:56,600 Speaker 2: possible financing, home inspections, any adjustments or any problems that 181 00:10:56,640 --> 00:10:59,600 Speaker 2: may occur from the time that the contract is signed 182 00:10:59,600 --> 00:11:02,400 Speaker 2: to one is the closing. So a lot of that. 183 00:11:02,760 --> 00:11:05,920 Speaker 2: But it's interesting. I pulled off a couple of stories, 184 00:11:05,960 --> 00:11:08,960 Speaker 2: you know, not only from the National Association of Realtors 185 00:11:09,240 --> 00:11:12,120 Speaker 2: in terms of their explanation and their discussion on what's 186 00:11:12,160 --> 00:11:15,680 Speaker 2: going on. I also pulled out the Wall Street Journal 187 00:11:16,000 --> 00:11:19,119 Speaker 2: and Reuters to get a couple of pieces of information 188 00:11:19,200 --> 00:11:21,880 Speaker 2: from that. And what's interesting is that as far as 189 00:11:21,880 --> 00:11:25,120 Speaker 2: he's pending home sales are concerned, they went up one 190 00:11:25,160 --> 00:11:30,120 Speaker 2: point eight percent to seventy two point one. Again the 191 00:11:30,600 --> 00:11:34,360 Speaker 2: numbers of the adjustments and so on, But economists at 192 00:11:34,400 --> 00:11:38,439 Speaker 2: Wall Street Journal had forecast a point six percent decline, 193 00:11:39,000 --> 00:11:43,200 Speaker 2: so they had expected home sales to actually go down 194 00:11:43,360 --> 00:11:46,800 Speaker 2: point six or only increased point six. So they were 195 00:11:46,920 --> 00:11:51,320 Speaker 2: off by two, well actually double if you've taken a 196 00:11:51,400 --> 00:11:55,600 Speaker 2: consideration point six voice versus the point let me say 197 00:11:55,600 --> 00:11:58,640 Speaker 2: they had forecasted. Now this is even worse because they 198 00:11:58,640 --> 00:12:02,040 Speaker 2: had forecasted a claw of point six when in fact 199 00:12:02,040 --> 00:12:05,000 Speaker 2: it went up point eight. So they blew that by 200 00:12:05,880 --> 00:12:09,560 Speaker 2: what five times or four times something like that, because 201 00:12:09,720 --> 00:12:12,480 Speaker 2: they had predicted a point six percent decrease and had 202 00:12:12,520 --> 00:12:15,280 Speaker 2: actually gone up zero point eight. So that's a two 203 00:12:15,360 --> 00:12:19,120 Speaker 2: point four percent difference in terms of their expectations as 204 00:12:19,160 --> 00:12:22,880 Speaker 2: to what actually happened. So again, when you're seeing even 205 00:12:22,920 --> 00:12:27,719 Speaker 2: the economists or people that are involved in the business 206 00:12:28,320 --> 00:12:31,680 Speaker 2: predicting economists and that type of thing, if their numbers 207 00:12:31,720 --> 00:12:35,680 Speaker 2: are off again, that is going to reflect in their stories. 208 00:12:35,720 --> 00:12:37,120 Speaker 1: Wall Street Journal of course. 209 00:12:36,960 --> 00:12:38,800 Speaker 2: Is going to be talking down what's going to happen 210 00:12:39,000 --> 00:12:41,920 Speaker 2: in the housing market. But when the numbers actually come out, 211 00:12:42,080 --> 00:12:47,079 Speaker 2: it actually is better than expected. So that's very interesting Reuters. 212 00:12:47,360 --> 00:12:50,840 Speaker 2: They talked in terms of, let me see contracts purchased 213 00:12:50,840 --> 00:12:55,320 Speaker 2: previously on US homes unexpectedly increase. They didn't expect that, 214 00:12:56,120 --> 00:12:59,000 Speaker 2: they talk in here about in the coming up to 215 00:12:59,040 --> 00:13:02,440 Speaker 2: the November mid terms. Trump last week signed in order 216 00:13:02,480 --> 00:13:06,120 Speaker 2: to improve the access of mortgage credit and remove regulatory 217 00:13:06,200 --> 00:13:10,680 Speaker 2: barriers to the construction of affordable homes. Economists and realtors 218 00:13:10,720 --> 00:13:14,839 Speaker 2: had increased to say increasing housing supply would address the 219 00:13:14,880 --> 00:13:19,920 Speaker 2: affordability challenge faced by potential home buyers. Now this is 220 00:13:20,000 --> 00:13:23,439 Speaker 2: interesting because of what they choose to focus on. There 221 00:13:23,520 --> 00:13:28,520 Speaker 2: is a critical shortage of starter homes. Builders have not 222 00:13:28,679 --> 00:13:32,400 Speaker 2: ramped up single family construction because of Now listen to 223 00:13:32,440 --> 00:13:36,959 Speaker 2: the listen to the reasons for this. Expensive materials resulting 224 00:13:36,960 --> 00:13:41,839 Speaker 2: from Trump's import tariffs, Labor shortages because of the administration's 225 00:13:41,920 --> 00:13:46,439 Speaker 2: immigration crackdown are also adding to costs for builders. There 226 00:13:46,520 --> 00:13:51,000 Speaker 2: is also a shortage of building lots. While sluggish new 227 00:13:51,000 --> 00:13:54,760 Speaker 2: home sales have left an oversupply of unsold properties on 228 00:13:54,840 --> 00:13:59,880 Speaker 2: the market, constraining builders' ability to break ground. Oversupply of 229 00:14:00,280 --> 00:14:04,240 Speaker 2: unsold properties, so they've got these properties that are sold. 230 00:14:04,320 --> 00:14:07,720 Speaker 2: Number Well, first of all, let's focus on the number 231 00:14:07,720 --> 00:14:11,760 Speaker 2: of building lots. It doesn't matter whether the cost to 232 00:14:11,840 --> 00:14:14,559 Speaker 2: build a home is down or if there's a number 233 00:14:14,600 --> 00:14:18,720 Speaker 2: of people available, the immigrants being able to be on 234 00:14:18,800 --> 00:14:22,560 Speaker 2: the construction site. If you don't have the lot, you 235 00:14:22,640 --> 00:14:26,000 Speaker 2: can't build the home. That should have been the number 236 00:14:26,200 --> 00:14:30,400 Speaker 2: one reason why why builders are not building these single 237 00:14:30,440 --> 00:14:33,000 Speaker 2: family homes. If you don't have lots, if you don't 238 00:14:33,040 --> 00:14:34,840 Speaker 2: have the ground to build a home, you just can't 239 00:14:34,840 --> 00:14:36,120 Speaker 2: build it in the middle of the street. 240 00:14:36,360 --> 00:14:37,120 Speaker 1: You can't build it. 241 00:14:37,320 --> 00:14:39,000 Speaker 2: You have to have a plot of land, and if 242 00:14:39,040 --> 00:14:41,040 Speaker 2: you don't have a plot of land, you can't do 243 00:14:41,160 --> 00:14:44,160 Speaker 2: any of this. So blaming it on higher building costs 244 00:14:44,280 --> 00:14:47,080 Speaker 2: or lack of workers, that means nothing if you don't 245 00:14:47,080 --> 00:14:49,880 Speaker 2: have the land to begin with. Now, when they talk 246 00:14:49,920 --> 00:14:53,360 Speaker 2: about oversupply of homes, in other words, they have built 247 00:14:53,360 --> 00:14:56,120 Speaker 2: too many homes and there are too many homes on 248 00:14:56,200 --> 00:14:59,160 Speaker 2: the market. So if you've got too many homes on 249 00:14:59,200 --> 00:15:01,400 Speaker 2: the market, you're not going to want to add to 250 00:15:01,440 --> 00:15:02,000 Speaker 2: that supply. 251 00:15:02,320 --> 00:15:03,520 Speaker 1: So that's holding you back. 252 00:15:03,720 --> 00:15:06,800 Speaker 2: So the number one reason and the number two reason 253 00:15:06,920 --> 00:15:10,120 Speaker 2: are put as number four and five in terms of 254 00:15:10,160 --> 00:15:13,640 Speaker 2: their reasons why the starter homes are not being built, 255 00:15:13,720 --> 00:15:18,240 Speaker 2: which in my opinion, is journalistic malpractice because you want 256 00:15:18,240 --> 00:15:21,520 Speaker 2: to focus on Trump tariffs and you want to Trump 257 00:15:22,040 --> 00:15:27,560 Speaker 2: focus on immigration concerns, when in fact, it's other factors 258 00:15:27,680 --> 00:15:30,120 Speaker 2: that are creating the shortage that you don't want to 259 00:15:30,120 --> 00:15:35,200 Speaker 2: focus on, because of course, you know, you can't have 260 00:15:35,240 --> 00:15:39,480 Speaker 2: a story of economy or economic stories without having the 261 00:15:39,600 --> 00:15:43,840 Speaker 2: spoon fed regurgitators in main street media taking potshots at Trump. 262 00:15:44,000 --> 00:15:47,280 Speaker 2: They won't blame themselves, they won't blame the interest rates, 263 00:15:47,400 --> 00:15:50,680 Speaker 2: they won't build blame anything else other than Trump. So 264 00:15:50,880 --> 00:15:55,520 Speaker 2: it's very interesting to see how those things pan out. Also, 265 00:15:55,600 --> 00:15:58,240 Speaker 2: we had information regarding builder sentiment. 266 00:15:58,640 --> 00:15:59,720 Speaker 1: Now you may. 267 00:15:59,600 --> 00:16:02,800 Speaker 2: Recall the other day we had a story where they 268 00:16:02,800 --> 00:16:08,359 Speaker 2: were talking about that again with the GDP sluggish economy, 269 00:16:08,920 --> 00:16:14,040 Speaker 2: purchases of homes, sales of homes because builder sentiment is down. 270 00:16:14,360 --> 00:16:15,760 Speaker 1: And I mentioned at the time. 271 00:16:15,840 --> 00:16:19,560 Speaker 2: That that was a flat out lie because when you 272 00:16:19,600 --> 00:16:22,240 Speaker 2: look at the builder sentiment and what's going on there 273 00:16:22,600 --> 00:16:25,280 Speaker 2: last month, it was good, And of course now we've 274 00:16:25,320 --> 00:16:28,880 Speaker 2: got the one from this month and it's interesting that 275 00:16:28,920 --> 00:16:31,760 Speaker 2: they will just throw things into a story to make 276 00:16:31,840 --> 00:16:33,560 Speaker 2: things seem worse than they are. 277 00:16:33,920 --> 00:16:35,840 Speaker 1: And I have to go back to the fact that it. 278 00:16:35,800 --> 00:16:38,720 Speaker 2: Seems to me that the spoon fed regurgitators in the 279 00:16:38,760 --> 00:16:42,040 Speaker 2: mainstream media are doing everything they can do to talk 280 00:16:42,120 --> 00:16:44,800 Speaker 2: down the economy, to not make it a sound as 281 00:16:44,840 --> 00:16:48,040 Speaker 2: good as it actually is. And again I keep referring 282 00:16:48,080 --> 00:16:53,880 Speaker 2: back to Rick Santelli from CNBC. He is a floor reporter, 283 00:16:53,960 --> 00:16:57,360 Speaker 2: he's a business reporter for them. He may recall he 284 00:16:57,480 --> 00:16:59,760 Speaker 2: is the one back in two thousand and eight when 285 00:16:59,760 --> 00:17:04,440 Speaker 2: the housing crisis came down because of the mortgage rate, 286 00:17:04,480 --> 00:17:07,880 Speaker 2: the subprime loans and stuff that was being done, that 287 00:17:07,960 --> 00:17:12,160 Speaker 2: housing market actually collapsed. He was dumbfounded. I mean Wall 288 00:17:12,200 --> 00:17:14,520 Speaker 2: Street was in a meltdown during that period of time. 289 00:17:14,720 --> 00:17:18,400 Speaker 2: Stocks were coming down tremendously and everybody was freaking out. 290 00:17:18,520 --> 00:17:20,919 Speaker 2: This was in two thousand and eight, and on the 291 00:17:20,960 --> 00:17:24,840 Speaker 2: floor of the trading the New York Stock Exchange, He's 292 00:17:24,960 --> 00:17:27,800 Speaker 2: like bewildered, and he said, you know, he was talking 293 00:17:27,800 --> 00:17:33,000 Speaker 2: about how we've been told and what is very interesting. 294 00:17:33,040 --> 00:17:36,240 Speaker 2: I mean, it was extremely It was a turning point 295 00:17:36,320 --> 00:17:40,800 Speaker 2: I think in terms of what news reporters did in 296 00:17:40,880 --> 00:17:44,080 Speaker 2: real time, because he was saying at that time that 297 00:17:44,320 --> 00:17:48,360 Speaker 2: this regulatory situation in the housing market should have never 298 00:17:48,400 --> 00:17:52,359 Speaker 2: gotten out of whack that created this housing crisis, and 299 00:17:52,400 --> 00:17:56,479 Speaker 2: he said it is about time for a new tea party. 300 00:17:57,040 --> 00:17:59,720 Speaker 2: And then that gave rise to people going around and 301 00:17:59,760 --> 00:18:02,520 Speaker 2: saying saying, you know, we have put you guys in office. 302 00:18:02,680 --> 00:18:05,440 Speaker 2: You have gone around and you've told us how wonderful 303 00:18:05,480 --> 00:18:07,800 Speaker 2: you are, what great things you're going to do to us. 304 00:18:08,040 --> 00:18:10,399 Speaker 1: Don't worry about this. We got this covered. 305 00:18:10,440 --> 00:18:13,640 Speaker 2: You just go about your individual lives, raising your families, 306 00:18:13,680 --> 00:18:16,400 Speaker 2: going to work, paying your taxes. We got your back. 307 00:18:16,440 --> 00:18:19,200 Speaker 2: Everything's cool. But then when we come to find out 308 00:18:19,400 --> 00:18:22,000 Speaker 2: that they really don't have our backs, that they didn't 309 00:18:22,040 --> 00:18:25,159 Speaker 2: put in rules and regulations to stop something that was 310 00:18:25,200 --> 00:18:27,760 Speaker 2: so simple that could have been fixed and should have 311 00:18:27,840 --> 00:18:32,040 Speaker 2: never happened anyway, and the whole market came down. We 312 00:18:32,119 --> 00:18:35,800 Speaker 2: suffered forty percent decrease in terms of our valuations of 313 00:18:35,840 --> 00:18:39,439 Speaker 2: our homes, and people were asking questions. So as a 314 00:18:39,480 --> 00:18:42,480 Speaker 2: result of that, people started going to meetings, town hall meetings, 315 00:18:42,520 --> 00:18:45,639 Speaker 2: et cetera, and started asking questions, why are you doing this, 316 00:18:45,960 --> 00:18:46,840 Speaker 2: what are you spending this? 317 00:18:46,960 --> 00:18:48,240 Speaker 1: Money on it all this sort of. 318 00:18:48,160 --> 00:18:53,480 Speaker 2: Thing people, everyday citizens that had been you know, allowing 319 00:18:53,560 --> 00:18:57,040 Speaker 2: these politicians to tell us that they've got our backs 320 00:18:57,080 --> 00:18:59,320 Speaker 2: when in fact we find out that they don't. And 321 00:18:59,359 --> 00:19:01,800 Speaker 2: then all of a sudd and when we started questioning them, 322 00:19:02,040 --> 00:19:05,119 Speaker 2: we became the bad guys. Then they wanted to turn 323 00:19:05,200 --> 00:19:08,359 Speaker 2: the focus on, oh that these people are just a 324 00:19:08,359 --> 00:19:12,280 Speaker 2: bunch of anarchists, anti government, etc. No, what the Tea 325 00:19:12,359 --> 00:19:15,600 Speaker 2: Party was and still is and what we are today 326 00:19:16,000 --> 00:19:19,679 Speaker 2: still people that want accountability from our elected officials. But 327 00:19:19,720 --> 00:19:23,000 Speaker 2: again this is again some of the stuff that happens 328 00:19:23,160 --> 00:19:26,159 Speaker 2: as a result of some of this consumer sentiment. And 329 00:19:26,280 --> 00:19:29,160 Speaker 2: Rix Antelly the other a couple of months ago was saying, 330 00:19:29,200 --> 00:19:32,960 Speaker 2: you can take because of what we're seeing in terms 331 00:19:32,960 --> 00:19:35,919 Speaker 2: of actual economic numbers during that period of time, with 332 00:19:36,040 --> 00:19:41,440 Speaker 2: GDP being up at that point, of housing prices coming down, 333 00:19:42,400 --> 00:19:47,680 Speaker 2: affordability changing a bit, also inflation coming down, he said, 334 00:19:47,720 --> 00:19:50,680 Speaker 2: you can take these consumer sentiment numbers and take a 335 00:19:50,720 --> 00:19:53,679 Speaker 2: big shovel and shove them into the waistcan because the 336 00:19:53,840 --> 00:19:57,800 Speaker 2: economic numbers that are coming out disprove anything having to 337 00:19:57,840 --> 00:20:01,280 Speaker 2: do with a decrease in sentiment. Consumer sentiment as far 338 00:20:01,280 --> 00:20:04,160 Speaker 2: as what's going on and that's the result of the 339 00:20:04,200 --> 00:20:10,760 Speaker 2: mainstream media polluting the well and it was very it 340 00:20:10,800 --> 00:20:13,880 Speaker 2: was amazing comment by him that I think has been 341 00:20:13,920 --> 00:20:15,919 Speaker 2: overlooked by a lot of people, but not here. On 342 00:20:15,960 --> 00:20:19,600 Speaker 2: america'struct A Network. Coming up, we'll talk about this builder 343 00:20:19,600 --> 00:20:23,240 Speaker 2: of sentiment. I'm Kevin Gordon, americastruck A Network, seven hundred w. 344 00:20:23,640 --> 00:20:29,639 Speaker 1: L seven hundred w l W. I Kevin Gordon is 345 00:20:29,640 --> 00:20:30,840 Speaker 1: americastruct A Network. 346 00:20:31,000 --> 00:20:33,399 Speaker 2: While we're talking in the previous segment, said we're going 347 00:20:33,440 --> 00:20:37,399 Speaker 2: to be talking about builder sentiment, and again, the headlines 348 00:20:37,440 --> 00:20:40,760 Speaker 2: on that seem to be very positive. All the different 349 00:20:40,760 --> 00:20:44,919 Speaker 2: reporting agencies reporting media are kind of on board with 350 00:20:44,960 --> 00:20:49,520 Speaker 2: this and talking positive about that. Builder sentiment inches higher, 351 00:20:49,520 --> 00:20:52,600 Speaker 2: but affordability concerns persist. We talked about that a little 352 00:20:52,640 --> 00:20:56,159 Speaker 2: bit in the previous segment as to why the affordability 353 00:20:56,160 --> 00:20:59,520 Speaker 2: concerns exist, again having to do with interest rates, nothing 354 00:20:59,560 --> 00:21:02,879 Speaker 2: more than that. Again, you take in terms of what 355 00:21:03,040 --> 00:21:06,280 Speaker 2: it happens as far as affordability with a one percent 356 00:21:06,359 --> 00:21:09,520 Speaker 2: drop and it's the numbers are astounding. We've covered that 357 00:21:09,560 --> 00:21:12,000 Speaker 2: several times on this program. So let's dig into the 358 00:21:12,080 --> 00:21:14,800 Speaker 2: numbers here and dig into the individual stories build a 359 00:21:14,880 --> 00:21:18,000 Speaker 2: sentiment inched up in March, even as builders continue to 360 00:21:18,040 --> 00:21:23,080 Speaker 2: express affordability concerns stemming from elevated construction costs and shortage 361 00:21:23,080 --> 00:21:27,520 Speaker 2: of building lots and labor. You would think that the 362 00:21:27,600 --> 00:21:30,240 Speaker 2: number one concern that if you're having a problem with 363 00:21:30,440 --> 00:21:33,800 Speaker 2: building homes, the number one thing would be that you 364 00:21:33,920 --> 00:21:36,920 Speaker 2: have a building lot. That should be If that's shortage, 365 00:21:37,000 --> 00:21:39,240 Speaker 2: that should be your number one problem. You fix that, 366 00:21:39,520 --> 00:21:42,600 Speaker 2: then you worry about whether or not you got building materials, 367 00:21:42,800 --> 00:21:44,760 Speaker 2: and then you worry about whether or not you got 368 00:21:44,760 --> 00:21:47,080 Speaker 2: builders in order to build that or the workers to 369 00:21:47,119 --> 00:21:51,760 Speaker 2: do that. Maybe building materials and the labor pool can 370 00:21:51,800 --> 00:21:54,560 Speaker 2: be flipped, but the number one issue is that if 371 00:21:54,600 --> 00:21:57,200 Speaker 2: you don't have building lots, if you don't have land 372 00:21:57,320 --> 00:21:59,800 Speaker 2: on which to build a home, that's going to be 373 00:21:59,800 --> 00:22:02,760 Speaker 2: your first problem. But in every one of these stories, 374 00:22:02,840 --> 00:22:06,000 Speaker 2: that's either the third or fourth problem, or in this 375 00:22:06,080 --> 00:22:11,720 Speaker 2: particular case, the second problem. Again, it's amazing how these 376 00:22:12,680 --> 00:22:15,720 Speaker 2: spoon fed regurgitators in the mainstream media try to couch 377 00:22:15,760 --> 00:22:18,840 Speaker 2: some of these stories to make a problem seem different 378 00:22:18,880 --> 00:22:21,359 Speaker 2: than what it actually is. Build a confidence in the 379 00:22:21,400 --> 00:22:25,240 Speaker 2: market is for newly built single family homes rose one 380 00:22:25,320 --> 00:22:29,199 Speaker 2: point to thirty eight in March, following a revised upward 381 00:22:29,320 --> 00:22:32,560 Speaker 2: one point revision in February, according to National Association of 382 00:22:32,600 --> 00:22:37,680 Speaker 2: Homebuilders National Homebuilder, as well as Fargo Housing Market Index 383 00:22:37,880 --> 00:22:42,680 Speaker 2: HMI released today. All this course, this was yesterday. All 384 00:22:42,720 --> 00:22:47,840 Speaker 2: responses to March survey were reviewed received after the conflict 385 00:22:47,920 --> 00:22:51,200 Speaker 2: with Iran started, so all of this is before the 386 00:22:51,240 --> 00:22:54,800 Speaker 2: actual turmoil or the actual war going on with Iran. 387 00:22:55,880 --> 00:22:59,800 Speaker 2: National Association of Homebuilders Chairman Bill Owens, a homebuilder and 388 00:23:00,160 --> 00:23:05,160 Speaker 2: modeler from Worthington, Ohio. Affordability for buyers and builders remains 389 00:23:05,200 --> 00:23:08,840 Speaker 2: a top concern. Many buyers remain on the fence waiting 390 00:23:08,880 --> 00:23:12,959 Speaker 2: for lower interest rates. Gosh, where have you heard that 391 00:23:13,080 --> 00:23:16,600 Speaker 2: before talking about interest rates and affordability for homes? Oh, 392 00:23:16,840 --> 00:23:20,560 Speaker 2: that probably probably America's truck a network. 393 00:23:20,600 --> 00:23:21,240 Speaker 1: What do you think? 394 00:23:21,640 --> 00:23:26,200 Speaker 2: And due to economic concertainty, builders are facing elevated land, labor, 395 00:23:26,240 --> 00:23:29,359 Speaker 2: and construction costs are nearly two thirds continue to offer 396 00:23:29,520 --> 00:23:33,679 Speaker 2: sales incentives in a bid to firm up the market. 397 00:23:33,960 --> 00:23:38,200 Speaker 2: The latest HMI survey also revealed that thirty seven percent 398 00:23:38,280 --> 00:23:41,879 Speaker 2: of builder's cut prices in March, up slightly from thirty 399 00:23:41,880 --> 00:23:46,080 Speaker 2: six percent in February, the average price reduction remains stable 400 00:23:46,160 --> 00:23:52,240 Speaker 2: at six percent. Now, that is an interesting admission that 401 00:23:52,359 --> 00:23:55,480 Speaker 2: when you look at a home builder, if they've gone 402 00:23:55,480 --> 00:23:58,760 Speaker 2: out and they've bought or obviously they have the land, 403 00:23:59,119 --> 00:24:01,360 Speaker 2: they've gone out and they've built a building, or they've 404 00:24:01,400 --> 00:24:05,440 Speaker 2: built a thing, sometimes on spec or sometimes in a development, 405 00:24:05,480 --> 00:24:08,360 Speaker 2: and wanting to try to sell those homes. Now as 406 00:24:08,440 --> 00:24:11,359 Speaker 2: part of that, they've priced those homes at a certain 407 00:24:11,440 --> 00:24:14,640 Speaker 2: amount to where they can make money if they've got 408 00:24:14,680 --> 00:24:18,720 Speaker 2: a cushion enough that they can cut prices by six 409 00:24:18,840 --> 00:24:22,359 Speaker 2: percent and still make money. Because they're not talking in 410 00:24:22,440 --> 00:24:24,840 Speaker 2: any of these stories. This is like the second or 411 00:24:24,880 --> 00:24:28,240 Speaker 2: third month that we've talked about this where builders are 412 00:24:28,280 --> 00:24:31,719 Speaker 2: cutting prices in order to sell homes and they're not 413 00:24:31,800 --> 00:24:34,880 Speaker 2: talking about, well, you know, our margins are so low 414 00:24:34,920 --> 00:24:39,160 Speaker 2: that we can't that we can't go much lower. I mean, 415 00:24:39,200 --> 00:24:41,760 Speaker 2: when you look at different segments of the economy, when 416 00:24:41,760 --> 00:24:44,720 Speaker 2: you look at gasoline prices, when you look at food prices, 417 00:24:44,760 --> 00:24:48,639 Speaker 2: when you look at furniture prices or anything, there is 418 00:24:48,760 --> 00:24:52,760 Speaker 2: always that margin between what the cost of the to 419 00:24:52,840 --> 00:24:56,280 Speaker 2: produce or to perform that service and what the sale 420 00:24:56,400 --> 00:24:59,320 Speaker 2: price is usually what they refer to as a gross margin. 421 00:25:00,200 --> 00:25:03,280 Speaker 2: That in the trucking industry, you know what your expenses are, 422 00:25:03,560 --> 00:25:06,399 Speaker 2: you know what rate you have to charge per mile 423 00:25:06,640 --> 00:25:10,400 Speaker 2: in order to make a profit. Well, in certain businesses, 424 00:25:10,640 --> 00:25:15,040 Speaker 2: those numbers are very small. The margins are extremely small. 425 00:25:15,320 --> 00:25:18,720 Speaker 2: When you look at food prices, there is generally about 426 00:25:18,760 --> 00:25:21,879 Speaker 2: a one point seven to two percent margin there in 427 00:25:22,000 --> 00:25:24,840 Speaker 2: terms of the food costs and what they sell those for. 428 00:25:25,240 --> 00:25:28,439 Speaker 2: In gasoline at the service stations and stuff. 429 00:25:28,640 --> 00:25:29,800 Speaker 1: The National. 430 00:25:31,240 --> 00:25:34,520 Speaker 2: Gas Dealers Association they look at the numbers and say 431 00:25:34,800 --> 00:25:39,320 Speaker 2: that their margins are generally pennies on the dollar as 432 00:25:39,320 --> 00:25:42,960 Speaker 2: opposed to you know, you look at a couch, for instance, 433 00:25:43,200 --> 00:25:47,480 Speaker 2: and if that couch costs one thousand dollars, the purchase 434 00:25:47,520 --> 00:25:51,720 Speaker 2: price of that couch from the wholesaler is about five 435 00:25:51,800 --> 00:25:55,000 Speaker 2: hundred bucks, so you got a big markup on that. 436 00:25:55,240 --> 00:25:59,920 Speaker 2: There are certain items that have extremely large markups. Air Jordan, 437 00:26:01,359 --> 00:26:04,880 Speaker 2: the Nike shoes, there's a huge margin on those. There's 438 00:26:05,000 --> 00:26:08,320 Speaker 2: huge margins on electronic products. That's why you can see 439 00:26:08,359 --> 00:26:11,040 Speaker 2: some of these companies that go in and slash you know, 440 00:26:11,160 --> 00:26:14,439 Speaker 2: thirty three percent off, fifty percent off sales, and stuff 441 00:26:14,480 --> 00:26:17,400 Speaker 2: like that because they have such a great margin. If 442 00:26:17,480 --> 00:26:20,560 Speaker 2: the homebuilders are able to cut six percent off the 443 00:26:20,600 --> 00:26:23,000 Speaker 2: price in order to try to move these homes, they 444 00:26:23,080 --> 00:26:25,840 Speaker 2: must have a pretty decent margin to work. 445 00:26:25,640 --> 00:26:28,880 Speaker 1: With, not like the food, not like gas line. 446 00:26:29,000 --> 00:26:31,960 Speaker 2: And you know when you look at the National Association 447 00:26:32,080 --> 00:26:35,960 Speaker 2: of Gas Station Dealers, Dealers Associations and stuff like that, 448 00:26:36,880 --> 00:26:39,040 Speaker 2: it's not the gas that they make money on. It's 449 00:26:39,119 --> 00:26:42,440 Speaker 2: the trips into the store, the convenience store there where 450 00:26:42,480 --> 00:26:46,040 Speaker 2: people buy a beer or soft drinks or chips or whatever. 451 00:26:46,359 --> 00:26:49,639 Speaker 2: In those convenience stores, it's to draw people in. So 452 00:26:49,760 --> 00:26:52,359 Speaker 2: the gas prices in a lot of instances, they're not 453 00:26:52,440 --> 00:26:53,160 Speaker 2: making much. 454 00:26:53,000 --> 00:26:54,520 Speaker 1: Money on that at all. 455 00:26:55,119 --> 00:26:58,080 Speaker 2: But you know, I get to that because of you know, 456 00:26:58,119 --> 00:27:00,679 Speaker 2: when they talk about the profit more margin and some 457 00:27:00,720 --> 00:27:03,720 Speaker 2: of these companies, and when they're talking about being able 458 00:27:03,760 --> 00:27:06,480 Speaker 2: to drop the price by six percent in order to 459 00:27:06,520 --> 00:27:09,000 Speaker 2: sell theselves, they must have a pretty decent margin in 460 00:27:09,119 --> 00:27:11,439 Speaker 2: order to do that, because none of these stories have 461 00:27:11,480 --> 00:27:14,639 Speaker 2: been talking about the home builders are suffering or that 462 00:27:15,000 --> 00:27:18,760 Speaker 2: they are selling price or selling houses at or below 463 00:27:19,160 --> 00:27:22,760 Speaker 2: their costs just to move the product. So again that's 464 00:27:22,800 --> 00:27:27,480 Speaker 2: an interesting dynamic in here. Also through the major HMI 465 00:27:27,560 --> 00:27:32,920 Speaker 2: indices posted gains in March. The HMI index gauging current 466 00:27:33,040 --> 00:27:38,280 Speaker 2: sales conditions increase one point to forty two, now again 467 00:27:39,160 --> 00:27:45,159 Speaker 2: increasing the actual current sales conditions increase from let me 468 00:27:45,160 --> 00:27:48,960 Speaker 2: see one point for February March, the index measuring future 469 00:27:49,040 --> 00:27:52,840 Speaker 2: sales gain two points up to forty nine. Charting traffic 470 00:27:52,880 --> 00:27:57,480 Speaker 2: of perspective buyers posted three point increase to twenty five. Now, 471 00:27:57,800 --> 00:28:01,560 Speaker 2: as far as these gauges are concerned, anything below fifty 472 00:28:01,600 --> 00:28:06,400 Speaker 2: is kind of not as good, But with numbers coming up, 473 00:28:06,480 --> 00:28:10,919 Speaker 2: they're approaching that that fifty number and looking better. As 474 00:28:11,000 --> 00:28:13,919 Speaker 2: far as what's going on, reading below fifty means builder 475 00:28:14,080 --> 00:28:18,440 Speaker 2: perceptions of current sales and sales perspectives are net negative. 476 00:28:18,720 --> 00:28:19,520 Speaker 1: But as these. 477 00:28:20,920 --> 00:28:23,880 Speaker 2: Conditions go from a thirty five to a thirty six, 478 00:28:24,000 --> 00:28:26,800 Speaker 2: thirty seven, thirty eight, they're headed in the right direction. 479 00:28:27,680 --> 00:28:31,040 Speaker 2: Talking about a couple of other things before, I'm going 480 00:28:31,080 --> 00:28:33,679 Speaker 2: to talk about oil and gas prices coming up. But 481 00:28:35,080 --> 00:28:38,640 Speaker 2: February Class eight orders surged one hundred and fifty six 482 00:28:38,720 --> 00:28:40,480 Speaker 2: percent from the prior year. 483 00:28:40,880 --> 00:28:42,600 Speaker 1: That's very good news and. 484 00:28:42,600 --> 00:28:45,239 Speaker 2: Kind of an indication of what people are thinking in 485 00:28:45,320 --> 00:28:49,400 Speaker 2: terms of freight rates going forward. North American Class eight 486 00:28:49,440 --> 00:28:53,280 Speaker 2: truck orders jumped year over year in February, climbing more 487 00:28:53,360 --> 00:28:57,000 Speaker 2: than one hundred and fifty percent, according to ACT Research. 488 00:28:57,040 --> 00:29:01,080 Speaker 2: Preliminary data show now ACT Research stands for America's commercial 489 00:29:01,120 --> 00:29:06,280 Speaker 2: transportation research company Plumbinary data show orders rose one hundred 490 00:29:06,280 --> 00:29:10,360 Speaker 2: and fifty six percent to forty six thy two hundred units. 491 00:29:10,560 --> 00:29:14,440 Speaker 2: The results were also up fifty percent from the orders 492 00:29:14,480 --> 00:29:18,360 Speaker 2: reported in January, so year over year increase of one 493 00:29:18,480 --> 00:29:22,120 Speaker 2: hundred and fifty six percent and an increase in month 494 00:29:22,160 --> 00:29:26,400 Speaker 2: to month of fifty percent. The report attributed the strength 495 00:29:26,440 --> 00:29:31,960 Speaker 2: to expected cost increase tied to upcoming emissions regulations, aging fleets, 496 00:29:32,000 --> 00:29:36,960 Speaker 2: and growing confidence around rising spot price spot rates. That's 497 00:29:37,080 --> 00:29:42,520 Speaker 2: important to note because they're looking forward towards rising spot rates, 498 00:29:42,760 --> 00:29:46,440 Speaker 2: which helps move the demand and would actually push the 499 00:29:46,520 --> 00:29:51,040 Speaker 2: need for these trucks. February's intake let me see. According 500 00:29:51,040 --> 00:29:55,480 Speaker 2: to Carter Weiss Research analysts that ACT Research, February's intake 501 00:29:55,560 --> 00:29:59,560 Speaker 2: represents the eighth best order month in the five hundred 502 00:29:59,640 --> 00:30:04,560 Speaker 2: and third thirty months ACT Research has been collecting data. Arguably, 503 00:30:04,600 --> 00:30:07,640 Speaker 2: the most important factor for the order turnaround has been 504 00:30:07,640 --> 00:30:11,640 Speaker 2: the sustained run up in spot rates that started in 505 00:30:11,920 --> 00:30:14,360 Speaker 2: late November. We'll pick this up and talk a little 506 00:30:14,400 --> 00:30:16,880 Speaker 2: bit more about it. Coming up. I'm Kevin Gordon, America's 507 00:30:16,880 --> 00:30:24,360 Speaker 2: Trucking Network, seven hundred WLW. This is america'struck a Network, 508 00:30:24,440 --> 00:30:28,400 Speaker 2: seven hundred WLW, talking a little bit more about this. 509 00:30:28,680 --> 00:30:32,840 Speaker 2: February Class eight orders surging one hundred and fifty six 510 00:30:32,960 --> 00:30:35,800 Speaker 2: percent from the prior year. Talking about that in the 511 00:30:35,840 --> 00:30:37,760 Speaker 2: previous segment. By the way, if you missed any of 512 00:30:37,800 --> 00:30:39,840 Speaker 2: our previous segments or ane of our shows, hit up 513 00:30:39,840 --> 00:30:42,400 Speaker 2: that iHeartRadio app brought to you by our friends at 514 00:30:42,440 --> 00:30:47,440 Speaker 2: Rush Truck Centers. Again they are I mean, this is 515 00:30:47,560 --> 00:30:52,160 Speaker 2: kind of astounding, taking into consideration that they're talking about 516 00:30:52,600 --> 00:30:55,320 Speaker 2: these prices or that these sales. 517 00:30:55,040 --> 00:30:58,240 Speaker 1: Are going up. And again, I can't emphasize enough. 518 00:30:58,280 --> 00:31:01,640 Speaker 2: The report attributed the strength to expected to cost increases 519 00:31:01,880 --> 00:31:06,520 Speaker 2: tied to upcoming emission regulations, aging fleets, and growing confidence 520 00:31:06,880 --> 00:31:11,520 Speaker 2: around spot rate increases. Again, carter Wise, he talked about 521 00:31:11,520 --> 00:31:14,880 Speaker 2: that arguably the most important factor in order turnaround has 522 00:31:14,920 --> 00:31:18,200 Speaker 2: been a sustained run up of spot rates. Viif also 523 00:31:18,280 --> 00:31:21,240 Speaker 2: said that those factors may have encouraged dealers in large 524 00:31:21,240 --> 00:31:26,200 Speaker 2: fleets to budget for equipment sooner rather than later. According 525 00:31:26,200 --> 00:31:29,680 Speaker 2: to Magnus Coke, vice president of Strategy, Marketing and brand 526 00:31:29,680 --> 00:31:34,000 Speaker 2: Management for Volvo Trucks North America, the US and Canadian 527 00:31:34,080 --> 00:31:38,680 Speaker 2: Class eight truck orders showed unexpected strength in February with 528 00:31:38,880 --> 00:31:42,120 Speaker 2: orders being reported and he talked about the numbers forty 529 00:31:42,160 --> 00:31:46,600 Speaker 2: three thousand plus units that going on, which again bodes 530 00:31:46,640 --> 00:31:50,520 Speaker 2: well for the industry. Coke views the balance between freight 531 00:31:50,560 --> 00:31:55,120 Speaker 2: demand and capacity is currently solid solid. Again, this is 532 00:31:55,160 --> 00:31:59,200 Speaker 2: coming from a manufacturer. Demand and capacity is currently solid. 533 00:31:59,400 --> 00:32:02,040 Speaker 2: He suspects that spike and orders may be driven by 534 00:32:02,040 --> 00:32:07,360 Speaker 2: aggressive pricing to fill factories, front loading around tariff exposed 535 00:32:07,400 --> 00:32:13,280 Speaker 2: manufacturers and upcoming twenty twenty seven heavy duty truck emission regulations. 536 00:32:13,840 --> 00:32:17,680 Speaker 2: Strong market could be driven by heavy dealer stock according 537 00:32:17,680 --> 00:32:22,480 Speaker 2: to or orders or fear of missing out that fom 538 00:32:23,520 --> 00:32:26,640 Speaker 2: fom fear of missing out, or. 539 00:32:26,560 --> 00:32:28,120 Speaker 1: Retail orders for the end of the year. 540 00:32:28,760 --> 00:32:31,240 Speaker 2: This would again, you've got to get these orders in 541 00:32:31,320 --> 00:32:33,320 Speaker 2: early because if you wait too late, you're not going 542 00:32:33,360 --> 00:32:35,240 Speaker 2: to be able to get those orders in. They're not 543 00:32:35,280 --> 00:32:37,680 Speaker 2: going to be able to take those So any companies 544 00:32:37,680 --> 00:32:40,600 Speaker 2: that are trying to take advantage of the rates now 545 00:32:41,640 --> 00:32:45,480 Speaker 2: possibly with the increased costs in the coming year because 546 00:32:45,520 --> 00:32:47,360 Speaker 2: of emissions control, trying. 547 00:32:47,160 --> 00:32:50,600 Speaker 1: To upgrade their free fleets to the latest that they have. 548 00:32:50,680 --> 00:32:54,239 Speaker 2: Now so that the more expensive trucks are then postponed 549 00:32:54,280 --> 00:32:57,200 Speaker 2: to another buying period. Strong market could be driven by 550 00:32:57,240 --> 00:33:00,400 Speaker 2: heavy dealer stock again fear of missing out. This would 551 00:33:00,400 --> 00:33:04,600 Speaker 2: explain why orders on the record levels while retails very 552 00:33:04,720 --> 00:33:08,560 Speaker 2: very low in January with elevated inventories. Regardless of what 553 00:33:08,680 --> 00:33:11,720 Speaker 2: is causing this uptake and orders, we are very positive, 554 00:33:11,880 --> 00:33:13,320 Speaker 2: very well positioned with. 555 00:33:13,400 --> 00:33:14,720 Speaker 1: Our new Volvo. 556 00:33:17,520 --> 00:33:23,680 Speaker 2: VNL and Volvo v R trucks, So the Volvo group 557 00:33:24,040 --> 00:33:29,440 Speaker 2: is extremely excited about what they're seeing. FTR Transportation Intelligence 558 00:33:29,840 --> 00:33:34,080 Speaker 2: FDR stands for Freight Transportation Research Associates found that Class 559 00:33:34,080 --> 00:33:37,640 Speaker 2: A preliminary orders surge one hundred and fifty nine percent, 560 00:33:38,040 --> 00:33:40,320 Speaker 2: and one of the I wish in one of these 561 00:33:40,320 --> 00:33:43,160 Speaker 2: stories when they talk about these orders and they talked 562 00:33:43,160 --> 00:33:46,200 Speaker 2: about ACT Research and their numbers that they come up 563 00:33:46,240 --> 00:33:49,400 Speaker 2: with and FTR with their numbers that they come up 564 00:33:49,640 --> 00:33:52,200 Speaker 2: I wish they would explain why there is a difference 565 00:33:52,240 --> 00:33:54,960 Speaker 2: month after month in terms of how they calculate that. 566 00:33:55,240 --> 00:33:57,520 Speaker 2: There's got to be some formula that each one of 567 00:33:57,560 --> 00:34:00,000 Speaker 2: them are using, but again they're usually within a few 568 00:34:00,080 --> 00:34:04,200 Speaker 2: percentage points, and their research is in such a way 569 00:34:04,280 --> 00:34:06,320 Speaker 2: that at least you get a little bit of flavor 570 00:34:06,320 --> 00:34:08,920 Speaker 2: from ACT and a little bit of flavor from FTR. 571 00:34:09,440 --> 00:34:12,800 Speaker 2: In terms of what's going on, Dan Moyer, senior analysts 572 00:34:12,800 --> 00:34:16,520 Speaker 2: at Commercial Vehicles at FTR, February is very solid year 573 00:34:16,600 --> 00:34:20,360 Speaker 2: over year increase in that orders extended the firmer tone 574 00:34:20,600 --> 00:34:23,920 Speaker 2: that has been building since late last year. While a 575 00:34:23,960 --> 00:34:28,799 Speaker 2: portion of demand still reflects previously deferred replacement purchases re 576 00:34:28,960 --> 00:34:32,600 Speaker 2: entering the market, the consistency and breadth of recent order 577 00:34:32,680 --> 00:34:38,000 Speaker 2: activity suggests momentum is now being driven more meaningfully by 578 00:34:38,120 --> 00:34:42,800 Speaker 2: improving freight fundamentals. Again, a lot of words to explain 579 00:34:42,840 --> 00:34:46,600 Speaker 2: the fact that companies that have been putting off replacing 580 00:34:46,680 --> 00:34:50,040 Speaker 2: their vehicles. Again, we've been talking about pretty much since 581 00:34:50,440 --> 00:34:53,960 Speaker 2: the pandemic, how this has been pushed off and disrupted 582 00:34:54,239 --> 00:34:58,080 Speaker 2: companies as how they are replacing their fleets generally. It 583 00:34:58,160 --> 00:35:00,360 Speaker 2: used to be a situation where a lot of stuff 584 00:35:00,360 --> 00:35:03,040 Speaker 2: that I read, people generally try and tend to try 585 00:35:03,040 --> 00:35:07,040 Speaker 2: to replace a quarter of their fleet every year, so 586 00:35:07,520 --> 00:35:10,440 Speaker 2: every four years you wind up with new vehicle, turning 587 00:35:10,440 --> 00:35:14,040 Speaker 2: over your inventory as far as vehicles, but with the pandemic, 588 00:35:14,080 --> 00:35:17,680 Speaker 2: with factories closed in twenty twenty, the supply chain issues 589 00:35:17,680 --> 00:35:21,360 Speaker 2: in twenty twenty one, and the supply chain issues extending 590 00:35:21,360 --> 00:35:24,520 Speaker 2: into twenty twenty two, you had some of these things deferred. 591 00:35:24,719 --> 00:35:28,560 Speaker 2: Again reflecting back looking at why those and one of 592 00:35:28,560 --> 00:35:30,800 Speaker 2: the things that we saw during that period of time 593 00:35:31,160 --> 00:35:36,239 Speaker 2: was the extremely high resale value of late model vehicles 594 00:35:36,280 --> 00:35:40,160 Speaker 2: to where they doubled in value versus what they were previously. 595 00:35:40,239 --> 00:35:44,520 Speaker 2: So again, some of this working through and replacing inventories, 596 00:35:44,719 --> 00:35:47,920 Speaker 2: dealing with older fleets and trying to renew those is 597 00:35:48,120 --> 00:35:51,120 Speaker 2: something again that has to be balanced off again when 598 00:35:51,160 --> 00:35:54,919 Speaker 2: you take into consideration the actual costs to replace those 599 00:35:55,200 --> 00:35:58,320 Speaker 2: plus the return on investment. A lot of these fleets 600 00:35:58,360 --> 00:36:01,240 Speaker 2: are going to have to purchase these with interest rates 601 00:36:01,560 --> 00:36:05,120 Speaker 2: or by borrowing money, and of course with interest rates 602 00:36:05,120 --> 00:36:07,400 Speaker 2: being what they are, that has to factor into it. 603 00:36:07,480 --> 00:36:10,279 Speaker 2: Of course, you got to balance that off with if 604 00:36:10,320 --> 00:36:13,160 Speaker 2: you have an aging fleet, how many days off the 605 00:36:13,200 --> 00:36:15,440 Speaker 2: work you're going to be because of maintenance and repairs 606 00:36:15,480 --> 00:36:17,600 Speaker 2: and so on, and so that's you know, you've got 607 00:36:17,640 --> 00:36:19,680 Speaker 2: to go through those numbers, taking a look at oil 608 00:36:19,719 --> 00:36:21,920 Speaker 2: and gas prices really quick before we have to get 609 00:36:21,920 --> 00:36:24,600 Speaker 2: out of here again. What's going on in the Middle 610 00:36:24,640 --> 00:36:26,520 Speaker 2: East and what's going on with the war in Iraq 611 00:36:26,920 --> 00:36:31,440 Speaker 2: or Iran. Rather, it is obviously creating some disruptions. All 612 00:36:31,520 --> 00:36:34,200 Speaker 2: prices rose more than one actually up close to two 613 00:36:34,200 --> 00:36:38,480 Speaker 2: percent on Tuesday as renewed Iranian attacks on a United 614 00:36:38,560 --> 00:36:42,440 Speaker 2: Arab Emirates heightened concerned about the worstening outlook for global 615 00:36:42,760 --> 00:36:46,640 Speaker 2: supply if there is no quick resolution to the US 616 00:36:46,760 --> 00:36:50,600 Speaker 2: Israeli war on Iran, which appears as though that a 617 00:36:50,640 --> 00:36:55,040 Speaker 2: lot of the discussion has been that Iran's capability is lessening, 618 00:36:55,360 --> 00:36:58,520 Speaker 2: but there's still tie ups with the straight of horror moves. 619 00:36:58,960 --> 00:37:02,640 Speaker 2: Looking at the gas, the oil prices itself. West Texas 620 00:37:02,640 --> 00:37:05,239 Speaker 2: Intermediate crew at ninety five dollars and sixty five cents 621 00:37:05,239 --> 00:37:08,239 Speaker 2: of barrel is up two dollars and fifteen cents or 622 00:37:08,280 --> 00:37:11,360 Speaker 2: two point three percent. Brent crude is at one h 623 00:37:11,480 --> 00:37:15,400 Speaker 2: two eighty three, up two point six two dollars and 624 00:37:15,440 --> 00:37:19,520 Speaker 2: sixty two cents a barrel or two point six one percent. Now, 625 00:37:19,520 --> 00:37:23,960 Speaker 2: it's interesting that the difference between West Texas Intermediate crude, 626 00:37:24,000 --> 00:37:28,560 Speaker 2: which is based off the Western and more driven by 627 00:37:28,760 --> 00:37:32,560 Speaker 2: US production. How much lower that is than Brent. That 628 00:37:32,719 --> 00:37:36,239 Speaker 2: spread is getting wider and wider, and indicative of the 629 00:37:36,280 --> 00:37:40,640 Speaker 2: dependence on Brent crude as far as foreign distributors are 630 00:37:40,680 --> 00:37:44,440 Speaker 2: concerned versus West Texas intermediate crud, which is produced in 631 00:37:44,480 --> 00:37:47,520 Speaker 2: the United States. Right now, there's a seven dollars per 632 00:37:47,600 --> 00:37:51,520 Speaker 2: barrel difference between the two. Looking at gasoline prices real quickly, 633 00:37:51,560 --> 00:37:53,839 Speaker 2: and we'll get back to what's causing or what's going 634 00:37:53,880 --> 00:37:56,560 Speaker 2: on as far as the oil price is concerned. Currently, 635 00:37:56,960 --> 00:38:01,000 Speaker 2: a nationwide average for gasoline is seven dollars three dollars 636 00:38:01,000 --> 00:38:03,879 Speaker 2: and seventy nine cents a gallon. Diesel is at five 637 00:38:04,080 --> 00:38:08,759 Speaker 2: oh four. Again, those numbers are up. Gasoline is up 638 00:38:08,800 --> 00:38:11,479 Speaker 2: almost ninety cents from where it was a year ago. 639 00:38:12,600 --> 00:38:16,800 Speaker 2: As far as diesel, that's up almost a dollar thirty 640 00:38:17,040 --> 00:38:19,320 Speaker 2: five what it was a year ago. 641 00:38:19,520 --> 00:38:19,800 Speaker 1: Now. 642 00:38:20,120 --> 00:38:23,200 Speaker 2: One of the things that I've noticed, and again nationwide 643 00:38:23,200 --> 00:38:25,759 Speaker 2: average is at five dollars and fifty four cents in 644 00:38:25,800 --> 00:38:28,600 Speaker 2: California to a low of three dollars and twenty one 645 00:38:28,640 --> 00:38:32,279 Speaker 2: cents in Kansas, which is amazing that California is so 646 00:38:32,360 --> 00:38:35,040 Speaker 2: much higher. But we've talked about that but what's going 647 00:38:35,080 --> 00:38:37,759 Speaker 2: on too is in individual neighborhoods. I want to caution 648 00:38:37,960 --> 00:38:40,600 Speaker 2: you that just in my zip code alone, it's not 649 00:38:40,640 --> 00:38:43,800 Speaker 2: even in the entire county. There is becoming a wide 650 00:38:43,960 --> 00:38:46,960 Speaker 2: range of difference between the highest and the low even 651 00:38:47,080 --> 00:38:50,440 Speaker 2: gas prices and diesel prices in my neighbor in my 652 00:38:51,040 --> 00:38:54,040 Speaker 2: in my zip code alone, gas is at three dollars 653 00:38:54,360 --> 00:38:56,920 Speaker 2: averaging three dollars and thirty eight cents, which is up 654 00:38:57,040 --> 00:39:00,560 Speaker 2: nineteen cents to three dollars and forty nine is not 655 00:39:00,719 --> 00:39:03,520 Speaker 2: much of a difference. But look at diesel. Diesel is 656 00:39:03,560 --> 00:39:06,240 Speaker 2: it four to twenty nine, which is up thirty cents 657 00:39:06,239 --> 00:39:09,279 Speaker 2: from last week to a high of four dollars and 658 00:39:09,360 --> 00:39:10,840 Speaker 2: ninety nine cents. 659 00:39:10,600 --> 00:39:11,720 Speaker 1: Which is up a dollar. 660 00:39:12,200 --> 00:39:14,960 Speaker 2: But you look at that difference between four dollars and 661 00:39:15,000 --> 00:39:17,840 Speaker 2: twenty nine cents versus four dollars and ninety nine cents, 662 00:39:18,200 --> 00:39:21,600 Speaker 2: seventy cents more per gallon. So it does pay to 663 00:39:21,640 --> 00:39:24,040 Speaker 2: look at those gas apps and to pay attention to 664 00:39:24,080 --> 00:39:26,640 Speaker 2: what's going on so that you don't get burned. As 665 00:39:26,640 --> 00:39:30,120 Speaker 2: far as gas line prices are concerned. Again, you just 666 00:39:30,200 --> 00:39:33,200 Speaker 2: to RALI attract on show no signs of abating, while 667 00:39:33,239 --> 00:39:35,759 Speaker 2: oil prices have not repeated the brief surge to one 668 00:39:35,800 --> 00:39:38,080 Speaker 2: hundred and twenty dollars a barrel from earlier in the 669 00:39:38,120 --> 00:39:41,840 Speaker 2: month series of attacks on oil installations by Iran in 670 00:39:41,920 --> 00:39:45,280 Speaker 2: the ongoing disruption on shipping through the Strait of Hormuz, 671 00:39:45,719 --> 00:39:49,799 Speaker 2: vital gateway to about twenty percent of the world's oil 672 00:39:49,960 --> 00:39:53,360 Speaker 2: and liquified national gas, that is what's causing some of 673 00:39:53,360 --> 00:39:57,560 Speaker 2: the issues. And what boggles my mind is the fact 674 00:39:57,600 --> 00:40:00,279 Speaker 2: of these number of countries and will probably have get 675 00:40:00,280 --> 00:40:03,240 Speaker 2: into that tomorrow as to how many of these countries 676 00:40:03,520 --> 00:40:07,080 Speaker 2: that depend on oil that is a disruption don't want 677 00:40:07,120 --> 00:40:10,640 Speaker 2: to participate in freeing up the Strait of Hormuz in 678 00:40:10,760 --> 00:40:14,440 Speaker 2: order to keep the gasoline and oil supplies coming to 679 00:40:14,480 --> 00:40:18,200 Speaker 2: their countries. It is just an absolute abdication of their 680 00:40:19,480 --> 00:40:24,200 Speaker 2: duty to their countrymen and to the world economy. But anyway, 681 00:40:24,200 --> 00:40:26,759 Speaker 2: we'll talk about that tomorrow, folks. That does it for us. 682 00:40:26,800 --> 00:40:29,640 Speaker 2: Stay tuned for Redie Radio toop the hour. I'm Kevin Gordon, 683 00:40:29,640 --> 00:40:33,000 Speaker 2: America Struck in Network seven hundred Wow.