WEBVTT - Closing Bell: IBM Gains, SOX falls

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>This is the closing bell on the stock Movers report

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<v Speaker 2>the company's making moves at the close of US trading

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<v Speaker 2>with Carol Masser, Tim Stenebeck, Romain Bostik, and Katie Greyfell.

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<v Speaker 3>Let's get to some individual gainers. IBM a top gainer

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<v Speaker 3>in the S and P five hundred today, that stock

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<v Speaker 3>up about five percent in the Tuesday trade. JP Morgan

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<v Speaker 3>upgrading it to overweight from neutral. Separately, the company announced

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<v Speaker 3>has joined the Open AI Daybreak cyber Partner program. The

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<v Speaker 3>analyst over at JP Morgan says the upgrade reflects greater

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<v Speaker 3>confidence and software acceleration ahead. Price target set to two

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<v Speaker 3>ninety one, the stock closing at two sixty four and change. IBM,

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<v Speaker 3>by the way, has about sixteen by six holes and

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<v Speaker 3>one cell rating among analyst tracked by Bloomberg. That press release,

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<v Speaker 3>though after a close on Monday, that we also got

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<v Speaker 3>from IBM, noted that this packed with open AI, would

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<v Speaker 3>bring advanced AI capabilities into security operations to help enterprises

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<v Speaker 3>counter machine speed threats. I don't know what that means,

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<v Speaker 3>but let's go to some earnings.

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<v Speaker 4>Crossing the Bloomberg.

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<v Speaker 1>Terminal FedEx, the shipping company reporting earnings right now for

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<v Speaker 1>the most recent quarter. This is their fiscal fourth quarter

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<v Speaker 1>that just ended. It does look like a beat. Federal

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<v Speaker 1>Express revenue up twenty one point five seven billion. That's

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<v Speaker 1>a fourteen percent jump. That's just for the FedEx business.

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<v Speaker 1>And I say that because they just spun off their

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<v Speaker 1>freight business. If you include that freight business, A revenue

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<v Speaker 1>was up thirteen percent to twenty five billion dollars. Operating

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<v Speaker 1>margins expanded to eight point four percent. Operating income was

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<v Speaker 1>also up about three point four percent. EPs also looked

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<v Speaker 1>like it beat at six point three one. Now we

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<v Speaker 1>should point out these fourth quarter numbers include the freight business,

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<v Speaker 1>which has just been spun out. They're given a forecast

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<v Speaker 1>for the full year that excludes the freight business, as

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<v Speaker 1>you will. They're also moving from a fiscal year to

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<v Speaker 1>the full calendar year reporting, so it gets a little tricky.

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<v Speaker 1>Where they're saying for the full calendar year twenty twenty six,

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<v Speaker 1>they expect to see adjusted EPs from continuing operations of

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<v Speaker 1>sixteen dollars and ninety cents to share to eighteen dollars

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<v Speaker 1>and ten cents a share. It's going to take us

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<v Speaker 1>a while to get you a good comparison here on

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<v Speaker 1>how that stacks up with analyst estimates here. But overall

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<v Speaker 1>for the most recent quarter, it does look like a

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<v Speaker 1>slight beat on several of the key metrics.

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<v Speaker 3>Yeah, keep in mind FedEx on quite a tear this year,

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<v Speaker 3>up about thirty six percent here to date. We are

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<v Speaker 3>seeing the stock trend about one point six percent lower.

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<v Speaker 3>Raj Supermamium, he is a FedEx president and CEO in

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<v Speaker 3>the press release saying this a direct quote, are profitable

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<v Speaker 3>growth strategy is working. We are building momentum across our

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<v Speaker 3>global industrial network, driving structural improvements and winning in high

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<v Speaker 3>value growth markets. With the successful spin off of FedEx Freight,

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<v Speaker 3>we are entering this next chapter position to grow while

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<v Speaker 3>further optimizing our network, lowering our cost to serve, creating

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<v Speaker 3>meaningful long term value, and driving robust free cash flow.

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<v Speaker 3>So some optimism there, and just to kind.

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<v Speaker 1>Of put a point a sorry, Jim, I just want

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<v Speaker 1>to put a point on that too, what Carol was

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<v Speaker 1>talking about, because this is a company that's really pivoted

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<v Speaker 1>towards higher margin businesses, getting rid of some of that

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<v Speaker 1>those lower margin of packages that you or I would

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<v Speaker 1>get on our doorstep, focusing a lot more on the bTB,

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<v Speaker 1>and you saw that with a huge jump in revenue.

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<v Speaker 1>It was like ten percent just on the FedEx side,

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<v Speaker 1>but if you look at actual volumes that was only

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<v Speaker 1>up two percent. So you had a huge gap there

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<v Speaker 1>between the actual revenue side and the volume side, which

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<v Speaker 1>seems to suggests if you're reading between the lines a

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<v Speaker 1>little bit more pricing power.

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<v Speaker 4>Well, the company actually addressing this, Romaine, I'm glad you

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<v Speaker 4>went there. The company cited improved improved segment operating results

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<v Speaker 4>driven by higher US domestic international priority package yields, talking

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<v Speaker 4>about continued cost savings from those transformation initiatives that you

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<v Speaker 4>reference Romaine increase US domestic and international export package volume. However,

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<v Speaker 4>those factors were partially offset by increased purchase, transportation and

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<v Speaker 4>wage rates, higher variable incentive compensation expenses, and the financial

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<v Speaker 4>impacts of global trade policy changes. So some of those

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<v Speaker 4>macro and micro factors affecting the bottom line.

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<v Speaker 3>Two.

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<v Speaker 5>And FedEx is seen as this economic barometer because it's

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<v Speaker 5>parcel business. Really just carries this huge array of stuff

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<v Speaker 5>for all kinds of consumers and all kinds of places.

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<v Speaker 5>But I wonder if after the spinoff they will still

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<v Speaker 5>be looked at upon as an economic barometer, especially after

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<v Speaker 5>I mean, to be Romaine's point earlier, it's going to

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<v Speaker 5>take a while for us to compare it to something.

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<v Speaker 3>Hey, here's something that's interesting too. Under Cash and capital Returns,

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<v Speaker 3>they talked about cash and cash equivalents balance of about

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<v Speaker 3>thirteen point three billion, including a four point one billion

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<v Speaker 3>dollar cash dividend from the FedEx Freight spinoff, But it

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<v Speaker 3>also says, in addition, the reported cash balance includes approximately

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<v Speaker 3>eight hundred million dollars in IIPA TI free funds held

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<v Speaker 3>for refund to customers, so that process is certainly happening.

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<v Speaker 1>Yeah, a few of those dollars I think belong to me.

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<v Speaker 4>So way, how are you going to get those?

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<v Speaker 1>Because I think I don't know, I have no idea

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<v Speaker 1>how any of this works. But let's just say, yeah,

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<v Speaker 1>AYIPA got a lot.

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<v Speaker 3>It'll be in your Venmo account. I think that's how

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<v Speaker 3>it's going to work.

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<v Speaker 1>I do just want to point out too real quickly.

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<v Speaker 1>We are going to hear from FedEx Freight. They report

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<v Speaker 1>after the bell on Thursday the twenty fifth, just to

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<v Speaker 1>be clear, so we'll get a sense here how that

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<v Speaker 1>side of the business is holding up as a standalone company.

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<v Speaker 3>Okay, let's go back to some other gainers. I mentioned IBM,

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<v Speaker 3>so I'm going to move on from that. I should

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<v Speaker 3>point out the whole quantum area too. President Trump has

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<v Speaker 3>been keen on that too, made some comments and some

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<v Speaker 3>executive orders signed. Yesterday. You also had IBM's CEO there

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<v Speaker 3>and Alphabet President Ruthportt there at the White House, still.

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<v Speaker 1>Getting interested in this. And when I first started hearing

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<v Speaker 1>all the quantum stuff, I just thought this was a

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<v Speaker 1>gobbling book. But the more I like I read about it,

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<v Speaker 1>it seems like there is a little bit more proof

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<v Speaker 1>of life there. I don't know when it actually translates

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<v Speaker 1>into real revenue and profitability, but it does appear there's

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<v Speaker 1>a lot going on there.

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<v Speaker 3>I mean, we're still kind of making our way through AI, Like,

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<v Speaker 3>where does it fit into all of this?

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<v Speaker 1>Yeah, well, it's just kind of an extension of that.

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<v Speaker 1>And I actually had a chance to interview our the

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<v Speaker 1>CEO just a couple of weeks ago, and he basically

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<v Speaker 1>said that some of his sort of proof of life

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<v Speaker 1>targets the idea that IBM hardware would be used to

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<v Speaker 1>hit some of those key targets in quantum that we

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<v Speaker 1>would actually see that in twenty twenty six by the

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<v Speaker 1>end of the year.

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<v Speaker 3>All right, all right, so we're keeping an eye on that.

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<v Speaker 3>Some interesting stuff. I agree, there's a lot more activity

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<v Speaker 3>going back to Avis budget though, this one up about two.

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<v Speaker 2>No.

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<v Speaker 1>This is weird because it's like one of those days

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<v Speaker 1>where I feel like Tim should start and do all

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<v Speaker 1>the decliners, given that, you know, three percent down day

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<v Speaker 1>in the next Andre, this.

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<v Speaker 3>Is your clothes. Whatever you want to do.

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<v Speaker 4>Yeah, No, KEI Isabelle and I just like watching this.

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<v Speaker 1>Keep going, keep going. That's what we will show Finley.

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<v Speaker 3>What should I do?

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<v Speaker 2>What should I do?

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<v Speaker 5>Okay?

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<v Speaker 3>Avis two point two percent hired in today's session. They

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<v Speaker 3>were up as much as almost six percent intra day high.

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<v Speaker 3>Earlier in the day, Avis entered into a settlement agreement

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<v Speaker 3>with Pentwater Capital Management and affiliated persons to resolve a

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<v Speaker 3>lawsuit seeking recovery of short swing profits. The company says

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<v Speaker 3>this in a filing. Keep in mind the stock is

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<v Speaker 3>up about fifty percent year to date. Thirty two percent

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<v Speaker 3>though of the float is short and one more for you.

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<v Speaker 3>It's not something we talk about tickers EPC Edge Well

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<v Speaker 3>Personal that stock up about fifteen percent after Bloomberg News

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<v Speaker 3>reported the make Care of Ship Raisers rejected rejected an

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<v Speaker 3>unsolicited takeover offer of thirty dollars a share from pe

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<v Speaker 3>firm Yellowood Partners. Okay him, all.

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<v Speaker 4>Yours, all right, Let's talk about some of these decliners

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<v Speaker 4>very quickly. There were so many stocks in the chip

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<v Speaker 4>in the chip sector that declina just did. The entire index.

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<v Speaker 4>All thirty names in the socks fell today down seven

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<v Speaker 4>point nine percent. Let's round that up to eight percent.

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<v Speaker 4>It's still up ninety percent this year, though, but that

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<v Speaker 4>the slump today followed what we saw in Asia overnight,

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<v Speaker 4>with Samsung and sk hi Nix plunging more than ten percent.

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<v Speaker 4>This is the one I really want to talk about, though, guys.

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<v Speaker 4>Robinhood and DraftKings both fell today. This after The New

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<v Speaker 4>York Times reported that Meta Platform CEO Mark Zuckerberg directed

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<v Speaker 4>a small team to create a smartphone app similar to

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<v Speaker 4>similar to call She and Polymarket. You had Robinhood fall

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<v Speaker 4>by two point three percent, DraftKings fall by two percent.

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<v Speaker 4>Here's the thing, though, this app will probably use a

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<v Speaker 4>video game like points system, and it would not wager

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<v Speaker 4>any money. Does this actually produce results that are accurate

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<v Speaker 4>with predicting the future if you don't have any actual

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<v Speaker 4>skin in the game.

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