6/10/25 Robots, Refineries, and Rising Costs: California's Money Reality

The Moneywise Radio Show and Podcast Tuesday, June 10th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Guys" podcast call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Manageme

• 0:00Speaker 00

  From the Garo Ellis padded radio room off Stockdale Highway, here is Money Wise. Call or text into the show 24/7 at 396-1000.

• 0:39Speaker 00

  Here is Money Wise. Money, money, money, money.

• 0:43Speaker 01

  Welcome to the Money Wise Show. We are live from the Garo Ellis padded radio room off Stockdale Highway on ESPN Bakersfield, 12:30 a.m., 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. Today, we're your hosts. I'm Sharad Wade and...

• 1:04Speaker 02

  Frank Lee.

• 1:05Speaker 01

  Frank Lee, how you doing, man?

• 1:06Speaker 02

  Good, good. I'm doing good.

• 1:08Speaker 01

  Chugging along?

• 1:09Speaker 02

  I'm chugging along, yeah. It's been a while.

• 1:11Speaker 01

  It does, you know, I haven't told you this yet, but it looks like you're a little bit more awake.

• 1:18Speaker 02

  Is it that apparent? I can carry a conversation a little longer.

• 1:22Speaker 01

  There have been times, you know, you got that young, young baby. Well, he's still a baby, right? Six months old now?

• 1:28Speaker 02

  Yeah, definitely, definitely, yeah. Wait, oh my gosh, it's great.

• 1:32Speaker 00

  They're a baby until they're 18 at least.

• 1:34Speaker 02

  Yeah, that's true. From certain people, certain standards, I know. But it's crazy to see how much he's grown so much in this past month or so, and it's just like nonstop. Every time I go home, it's like, holy crap, how are you, how are you this big already?

• 1:49Speaker 01

  Yeah, wait till he start talking and walking and...

• 1:51Speaker 02

  It's crazy you say that because he's, the sounds that he's making, they're more clear. They're not just like, oh, they're like, oh.

• 2:01Speaker 00

  Oh, yeah, he's getting there. He's getting there.

• 2:04Speaker 02

  What's crazy too is like, we'll say mama, dada, and then like, his face brights up. It's just like, oh.

• 2:10Speaker 00

  Hey, some, uh, some, some work over here. Michelle wants to know if it's still leaking in there.

• 2:16Speaker 02

  Oh, uh... Is my shirt not wet?

• 2:17Speaker 01

  I haven't seen any leaks. You haven't felt anything, right?

• 2:22Speaker 02

  Frank?

• 2:23Speaker 00

  I think we're good. All right, cool. Back to the show.

• 2:25Speaker 01

  We're okay. Yeah, yeah, interesting. Yeah, we did yesterday. Actually, you were on the show when we had something.

• 2:31Speaker 02

  When it was leaking, yeah, yeah, I was with Chris, I think.

• 2:35Speaker 01

  Like a champ, you just kept on going. I saw the picture, your shirt was soaked by the end of the show.

• 2:40Speaker 02

  Yeah, they're lying, by the way.

• 2:43Speaker 01

  Well, we got a listener message. We love getting comments and questions. Keep them coming our way. 661-396-1000, that's the number that people can call or text. Do you have the message there, Frank?

• 2:54Speaker 02

  I'm calling, I got it, yeah, okay. So the message is, with new state climate regulations starting in California on 7/1, I'm hearing we can expect gas prices to go up between 65 to 85 cents overnight. Is that true? Rebecca in the Dale. Thank you, Rebecca.

• 3:16Speaker 01

  Thank you, Rebecca, from the Dale. I'm assuming that's Oil Dale. That's awesome. Love the question. This is always a good time. I think it's always good for us to re, I guess, re-explain what makes up the cost of a gallon of gasoline in California. It's always a surprise to me, because, you know, it's just, there's a lot involved in just, you know, what you would think would be more simple, but a gallon of gasoline is made up of lots of different costs. And in the state of California, we have the highest tax on gasoline in the country.

• 3:58Speaker 01

  And what Rebecca is referring to is there was a law in the state of California that was just passed last year, and this rule, or this, I guess, Assembly Bill, which was Assembly Bill 218. Was just takes effect on July 1st of this year. Now, under AB 218 or 218, operators of oil and gas wells have to submit where on like a site map where their sensitive receptors are or where where sensitive locations are

• 4:43Speaker 01

  around their well. So this would be think of hospitals, schools, things that are could be potentially sensitive to some pollution or some reaction or something that could happen from a from a well site. So AB 218 is just now starting to require that that information be submitted. And it's a slow rollout that over over the period of about three years, then those those eventually, you know, the the law gets more and more implemented where not only did they have to report where these receptors are, but then the data will have to start being reported. So they'll have to start looking basically

• 5:26Speaker 01

  tech testing and detecting leaks. And that is supposed to go into effect fully on July 1st of 2028. So, you know, this was a this was a law that I actually was not familiar with, but it seems like this is something that California has been doing a lot over the last 10 years, potentially squeezing and and regulating much more the oil and gas industry in the state. I couldn't find anything legitimate that explained what the increased cost would be to gasoline purchasers, to you and I, you know, filling up our tank. Well, you don't, you got an electric car, but.

• 6:06Speaker 02

  Yeah.

• 6:07Speaker 01

  But for us who are using gas, I couldn't find anything that would directly relate to AB 218. However, I did look into what is more common, and that is the fuel standards the state of California has. Are do have changed and they've become more restrictive. And those fuel standards change when we when we when we change seasons into into summer and then back into to winter. There's different standards that are required by refiners, which does increase the cost. And that is through California's low carbon fuel standards or LCFS program.

• 6:49Speaker 01

  And that that low carbon fuel standard has has already added on to retail gasoline prices 65 cents a gallon. And that's that's happening now. It's going to increase to 85 cents a gallon by 2030 and then nearly a dollar 50 a gallon by 2035. So that's a significant portion of the cost of a gallon of gasoline. These changes are just taking effect this year. These higher standards are just now taking effect. And some estimates are saying that this is going to drive up the price of a gallon of

• 7:32Speaker 01

  gasoline ultimately to over $8 a gallon. Some estimates say $8.43 a gallon. And that's not just because of the standards, but also because of refineries and the and the limited capacity of the few refineries that we have left in the state of California. They're they're just they're closing down. They're having they're they're struggling to to to basically stay open. And so when you have a lack of, you know, refining, that's a big part of the cost of a ga- of a gallon of gasoline is just the cost of refining. It's actually a a fairly it's a it's a minor part of the overall cost of gasoline is the

• 8:14Speaker 01

  cost of the of the raw material of of crude oil. You you once you start tacking on these taxes, these fees, refining costs, transportation costs, then, you know, it it it overcomes the overall cost of just the the crude material that gets refined. Find.

• 8:35Speaker 02

  Yeah, yeah. To me, it seems like from my limited understanding is that there's a huge supply and demand portion of it as well. Right. And I feel like some of these policies can affect that supply and demand by limiting the the refinery procedures or putting in place the California.

• 9:04Speaker 02

  What was it?

• 9:05Speaker 01

  Fuel standards.

• 9:05Speaker 02

  Yeah, fuel standards.

• 9:06Speaker 01

  Yeah.

• 9:07Speaker 02

  So that in itself can affect a chain reaction of things.

• 9:11Speaker 01

  Yes, and this is a concern for, I think it should be a concern for both sides of the political spectrum. Because this is a tax, this is a cost that is disproportionately hurts those who can afford it the least.

• 9:28Speaker 02

  Yeah.

• 9:28Speaker 01

  You know, most people have to pay for gas and it doesn't affect somebody who is wealthy versus somebody who is just barely getting by. You add another $2, $3 a gallon. We're talking about for a family, it could be hundreds of dollars a month more in fuel costs. And that's a significant blow and could have a very detrimental impact on society and on their ability to buy food and to, you know, maintain their life.

• 9:59Speaker 02

  So I wonder if used car or EV sales are gonna skyrocket after this.

• 10:04Speaker 01

  Gosh, that's the big question because certainly economically speaking, it, you can drive behavior and consumer behavior behavior by upping the price, you know, and making it more attractive to not have a combustion engine vehicle. And, and, and we are seeing EVs, prices come down substantially.

• 10:29Speaker 02

  That's true. Tesla had a slash a lot of that.

• 10:32Speaker 01

  Tesla's got some fire sales going on. Apparently the Cybertruck is not selling. I guess all their sales are down like 20, 25% like globally in the last quarter.

• 10:43Speaker 02

  I think the last. Quarter itself, they they had a slash their forward guidance by a lot. I forgot. I forget how much, but

• 10:51Speaker 01

  A lot.

• 10:51Speaker 02

  Yeah, a lot.

• 10:52Speaker 01

  Yeah. And part of it is that, you know, Elon Musk's Doge stuff and

• 10:57Speaker 02

  Now he's out of it.

• 10:58Speaker 01

  Yeah, I guess.

• 11:01Speaker 02

  Oh, my gosh, it feels like it's high school all over again.

• 11:03Speaker 01

  Totally.

• 11:04Speaker 02

  You know?

• 11:04Speaker 01

  Totally.

• 11:05Speaker 02

  Going, going, going back to the, the whole EV thing. Have you heard of, uh, Slate?

• 11:09Speaker 01

  Hmm, no.

• 11:10Speaker 02

  The new EV company?

• 11:12Speaker 01

  No.

• 11:12Speaker 02

  Led by Jeff Bezos?

• 11:14Speaker 01

  Oh, yeah, where it's a truck?

• 11:15Speaker 02

  Yeah.

• 11:15Speaker 01

  Like a pickup, small pickup truck?

• 11:17Speaker 02

  It is, it is.

• 11:17Speaker 01

  It's supposed to be under 20 grand?

• 11:19Speaker 02

  Yes. So 20 grand starting, but with the federal, uh, incentives.

• 11:24Speaker 01

  Yeah.

• 11:25Speaker 02

  The 75, you're looking at, what, 13?

• 11:28Speaker 01

  13 grand?

• 11:28Speaker 02

  Yeah, 12, 12, yeah.

• 11:30Speaker 01

  A pickup truck? And it's supposed to be like, um, customizable?

• 11:33Speaker 02

  Highly customizable.

• 11:34Speaker 01

  The individual can customize it, which I think that's really cool.

• 11:38Speaker 02

  It's, it's a new spin on it. You see, cause like, uh, this is, this is pretty interesting, cause it's not innovating in itself already. We've had EV cars for a while now. We've had pickups. We've, it's, it's been out, but what the company Slate, uh, uh, decides to do is that, here, we're gonna give you a blank slate. It's just completely, you know, bare bones. This is the essentials that you need. You, you don't even have an automatic, uh,

• 12:05Speaker 01

  Windows, right?

• 12:06Speaker 02

  You got that ghetto crank.

• 12:07Speaker 01

  Yeah.

• 12:08Speaker 02

  Yeah. Literally just like took the, took a blank slate and says, here, you can customize this in thousand different ways. And it shows like, you can go from a two-seater truck, the standard, the basic, to a five-car, uh, SUV.

• 12:25Speaker 01

  Five, five C.

• 12:25Speaker 02

  Like a, like a mid-sized SUV.

• 12:27Speaker 01

  Five passenger.

• 12:27Speaker 02

  Yeah.

• 12:28Speaker 01

  Yeah.

• 12:28Speaker 02

  Yeah, five, five car, uh, five C, yeah. Uh, so it's, it's pretty interesting to see this, uh, and I, I think. I'm really interested to see how well this hits the market when it does come out.

• 12:39Speaker 01

  Yeah.

• 12:40Speaker 02

  Because someone like me, I would want to customize my car the way I would want to. Because like when I first got the Model 3, I'm like, man, like, everyone has a Model 3.

• 12:52Speaker 01

  There's a lot of Model 3s out there.

• 12:54Speaker 02

  Everyone has a white Model 3.

• 12:55Speaker 01

  And all white.

• 12:56Speaker 02

  It's so boring. Yeah. So when they come out with Slat, it's like, oh, this is cool. You can customize it to your personality, to what your interests are and just like.

• 13:07Speaker 02

  I think it'd be pretty interesting to see, again, how this hits the market. But there is a lot of doubts, of course, with any new product.

• 13:18Speaker 01

  Yeah.

• 13:18Speaker 02

  That launches, but a lot of the material is very cheap.

• 13:23Speaker 01

  Yeah.

• 13:23Speaker 02

  You're not going to get the best of the best. It's just going to be a lot of plastic around, but it's supposed to be affordable. The most affordable EV car.

• 13:31Speaker 01

  That's what I'm excited about is the price wars that are happening globally with electric vehicle manufacturers. And we're not seeing it quite yet here in the United States. I mean, the prices are coming down, but in BYD, the Chinese auto manufacturer, there is an $8,000 car that they sell. I think it gets 100, it can go 150 miles or 175 miles on a charge. But like, reviews are good. Like, this is a good car. It's not, it's not like the Yugo of my day, which was just like a piece of crap that's not going to go anywhere. This is a legitimate car that is under $10,000. That's, that's, that's crazy. And that's a new, brand new car.

• 14:16Speaker 02

  Yeah.

• 14:17Speaker 01

  You know, that you should get, you know, 100, 200,000 miles off of. Of course, they don't, they're not allowed to sell here in North America or in the United States yet. But eventually, you're going to see companies like Slat or some of these other manufacturers get these cheaper cars. And then we're going to start to see a lot of these used EVs on the market that I'm assuming are going to be really cheap. We're starting to see what some of the Teslas, there's just overproduction of, specifically, I was thinking of the Cybertruck. But I'm sure there's other models that there's just like a, you know, sort of a backlog because they haven't sold as much as they were hoping to this last quarter.

• 14:51Speaker 02

  Yeah, that's true. Yeah. Possibly more incentives, more deals later down the line, just as, you know, get as many cars off the lot.

• 14:58Speaker 01

  Yeah.

• 14:58Speaker 02

  Uh, but yeah, going, going back to slate, it's, it's pretty interesting on like what you can do. Like, uh, I, I think it doesn't have a dashboard. So you don't have your regular gauge or anything like that. I, I think it comes with a, with one speedometer, but your.

• 15:14Speaker 01

  That's all you need, man.

• 15:15Speaker 02

  Yeah, your phone serves as the main dashboard. So you, you put your phone in, you have an app and it links up and it just.

• 15:22Speaker 01

  Tells you your speed and everything that's going on.

• 15:24Speaker 02

  Again, bare bones, just like nothing, but it's highly customizable in a sense that you can do whatever you want.

• 15:31Speaker 01

  I think they look cool. I've seen a picture of the, of the pickup. I'm a fan of just like little, little pickups. I, I, I drive a small, a small pickup and I've always, I've always liked it.

• 15:40Speaker 02

  Yeah.

• 15:40Speaker 01

  And, um, you know, I, I, but you know, the big question is how you don't. It's still not economically feasible for a lot, for people who are, you know, are below the, the average wage. To be able to buy an electric vehicle. And, and you also don't have the, still do not have the infrastructure for people to, for example, charge their, their, their car. At their apartment.

• 16:06Speaker 02

  Yeah.

• 16:06Speaker 01

  You know, or at their rental. And you have the cost of, of power, which is still going up. At least in the state of California, we still have high energy costs. And so it's not necessarily cheap even just to charge your, charge your vehicle. And it's not getting cheaper if you can find a way to, to charge it.

• 16:23Speaker 02

  Yeah.

• 16:23Speaker 01

  So it, it, you know, we're definitely in a weird transition. I mean, between the EVs and the robots. And AI, which I want to talk more about AI later in the show.

• 16:35Speaker 02

  Yeah, yeah. Did you, did you see, uh, Tesla's new, uh, Optimus Prime robot, AI robot dancing?

• 16:41Speaker 01

  I've seen it, yeah. It's come a long way from when they just like rolled it out onto the, onto the stage a couple of years ago. Somebody was controlling it. I think there was, wasn't there one where somebody was actually inside? It was like. Like a

• 16:55Speaker 02

  They pull the C three PO.

• 16:56Speaker 01

  Yeah.

• 16:59Speaker 01

  Exactly. No, they've those robots have come a long way and it's not just Tesla that's in the race for, you know, creating that. Amazon recently also announced that they're training their robots for delivery.

• 17:10Speaker 02

  Oh, yeah. Yeah. Packaging and

• 17:12Speaker 01

  Package delivery.

• 17:13Speaker 02

  Yeah.

• 17:13Speaker 01

  They're already using robots like crazy in their warehouses. It may not be like a humanoid robot. They have those too.

• 17:21Speaker 02

  Yeah.

• 17:21Speaker 01

  But there's robots all over in those in their warehouses.

• 17:24Speaker 02

  Right.

• 17:25Speaker 01

  And then Amazon Rovers that go around everywhere.

• 17:27Speaker 02

  Yeah, those are, those are pretty insane because you see pillars of like those shells just moving around. You're like, whoa, that's crazy.

• 17:32Speaker 01

  Yeah.

• 17:32Speaker 02

  Well, I guess that's great for Amazon because then they won't have to worry about their workers skipping bathroom breaks and just using bottles to pee in.

• 17:42Speaker 01

  They're basically treating their workers like robots anyway.

• 17:44Speaker 02

  Yeah, exactly.

• 17:45Speaker 01

  I mean, it's

• 17:46Speaker 02

  Why didn't we make this move earlier? It's like, we should just hire robots or made robots.

• 17:49Speaker 01

  I mean, this is the same, the same line of discussion we're talking about would be going from, you know, combustion engines to electric vehicles.

• 17:56Speaker 02

  Yeah.

• 17:57Speaker 01

  It's still, humans are the biggest expense for any company is the cost of labor and, and paying for a human to show up and work. It's not just their hourly rate. It's all the benefits. It's all the liability. It's a life that you're responsible for. So, you know, we've, we've created these problems ourselves. Us humans have created these problems. And I'm optimistic. I'm actually very optimistic about

• 18:22Speaker 02

  Prime?

• 18:22Speaker 01

  About the future.

• 18:23Speaker 02

  Optimus Prime.

• 18:24Speaker 01

  Oh, Optimus Prime?

• 18:25Speaker 02

  Way to roll that in.

• 18:27Speaker 01

  Yeah, baby. All right. We're going to do this. We'll take our first break of the day. When we come back, I've a lot more to talk about, including what's going on in the markets and what's going on with AI. We're Money Wise. Don't go anywhere.

• 18:37Speaker 00

  If you're a business owner who provides a retirement plan for your employees, contact Money Wise Wealth Management to see if you're maximizing your options and minimizing your liabilities. Money Wise 401k plans are customized to you and your company's needs. 661-847-1000.

• 19:00Speaker 01

  Welcome back to Money Wise. I'm Sharad, that's Frank. Got a listener question or comment here. Frank?

• 19:07Speaker 02

  Yep, got it. So, the comment is, "I don't understand what the long-term plan is to us in California that are living check to check and people that are going to get punched with an extra $400 or $500 in gas costs that we don't have. I think a lot of people are not going to sit there and pay it. There'd be a lot of upset people that are hard-working people."

• 19:30Speaker 01

  Yeah, yeah. I mean, this is the concern that I have. It's essentially a regressive tax. If you aren't able to control the cost of a commodity, or something like this, like gasoline for your car, or electricity for your home, you know, these are life... Like, you can't... It's very difficult to get by in life without it.

• 19:58Speaker 02

  Basic human needs. It's like the Maslow's hierarchy. Like, we need this to survive.

• 20:03Speaker 01

  Yeah, food, shelter, transportation. I get the idea of, like, we need to incentivize healthier behavior. You know, you think about taxes that are on alcohol or on tobacco. Okay, that makes a little bit more sense. But, something like this, especially in Kern County, like, I'm all for a better public transportation system, easier access to biking and walking. Like, you know, study after study shows that we're healthier as a society and individually when we can walk, when we don't have to drive so much,

• 20:44Speaker 01

  when we have these communities where you can actually, you know, be around people and create community. Like, that's great, that's fantastic. But, we have a long ways to go, and the infrastructure just isn't there yet. Even as progressive as California is, I just did a little research, found that, according to California's Energy Commission, and they did a study looking into home charging access in the state, they found that approximately 67% of Californians currently lack adequate home charging access.

• 21:18Speaker 01

  Sixty-seven percent. So, I mean, there's, that's,

• 21:21Speaker 02

  Yeah.

• 21:22Speaker 01

  That's, that means only thirty-three percent of people would even have access to be able to charge their EV. They don't have a way of, even if they could afford it, they wouldn't have a way of charging it. I don't know how you, I guess, I suppose you can, with some planning, you can always charge your EV at a, you know, a charging station, right?

• 21:46Speaker 02

  Yeah, yeah.

• 21:47Speaker 01

  And, and we have, we have a lot of those around town, nowhere near, I think, as many as we should.

• 21:52Speaker 02

  Yeah.

• 21:53Speaker 01

  But, do you ever charge in town, or do you always just?

• 21:55Speaker 02

  I've tried, yeah. I've, I actually have a couple of times, uh, when I really needed to. But again, I think you have to consider the planning that goes into it, making sure you have enough to go from A to B to C, and then charge, and the wait time.

• 22:10Speaker 01

  Yeah.

• 22:11Speaker 02

  Because you're not, it's not gas.

• 22:13Speaker 01

  Right.

• 22:13Speaker 02

  You can't just plug and then fill up and then leave in a couple of minutes. It's gonna take, take quite a bit.

• 22:18Speaker 01

  Yeah, thirty minutes.

• 22:19Speaker 02

  Right.

• 22:20Speaker 01

  Sometimes, on average, thirty, forty minutes, maybe.

• 22:22Speaker 02

  Yeah.

• 22:23Speaker 01

  If you're, if you're empty.

• 22:24Speaker 02

  Yeah.

• 22:25Speaker 01

  But, you know, when, when we had our electric vehicle, Emily had her, her car, we had a, and we had our home charger. I don't think she ever had to use, I never had to charge in town. It was, anytime we were going out of town, but in town, it would be, it would be, it would be, it would be more, much more difficult to own an EV if we had to, if we didn't have a home charger. Like, I don't know if we would do it.

• 22:46Speaker 02

  Yeah. No, a hundred percent. I think the, the fact that we were able to have a home charger, um, and just charge the car at home whenever we need to, eliminates the need to go to the gas station, fill up, and then come back, cause Jackie, Jackie hates the, the gas station. She hates filling up her gas.

• 23:02Speaker 01

  Oh, yeah.

• 23:03Speaker 02

  And, and rightfully so, cause like, you hear all these stories of people, you know, getting mugged or kidnapped.

• 23:08Speaker 01

  They're shady.

• 23:09Speaker 02

  Yeah, exactly. So, it's like, yeah, just stay at home. Like, you don't need to go to the gas station.

• 23:13Speaker 01

  Emily's the same way, and now she has a, she has a, a hybrid, so she has to get gas. Her car gets almost five hundred miles on a tank of gas, and it's, it's less than ten gallons, or about a ten gallon tank. And so, when, when we're together, I'll always, I'll, I'll be the one to pump it. I have no problem. I'll get out, I'll pump it. And I'm always like, man, this fills up quick. I have a twenty gallon tank.

• 23:33Speaker 02

  Yeah.

• 23:33Speaker 01

  I feel like I'm there forever. But, it, also, these gas stations are shady.

• 23:38Speaker 00

  Yes.

• 23:38Speaker 01

  I, I, I would say-

• 23:39Speaker 00

  Welcome to the rural world.

• 23:40Speaker 01

  Over half the time, I get approached by a panhandler. Somebody who's looking, looking for cash. You know, "Hey, I need a couple bucks for gas. Do you have any cash?" You know, and it's just like, it's like, "Sorry, I don't."

• 23:53Speaker 00

  You get that everywhere you go. I, I can't even go to Target or get food for the family. I'm leaving the grocery store. I'm walking into the grocery store. I'm walking out of the grocery store.

• 24:03Speaker 01

  Yeah.

• 24:04Speaker 00

  I mean, it's getting pretty bad.

• 24:06Speaker 01

  I'm gonna be a little controversial here. I don't care. I'll put it out there because I do believe this. That we oftentimes do more harm than good when we give cash. And there are even some cities that say, "Just don't." Like, there's panhandling laws. "Don't do it." Because what you're doing is you're diverting them away from the social services that we have, that they should be going to.

• 24:27Speaker 00

  Yeah.

• 24:27Speaker 01

  And, and you're incentivizing behavior that doesn't lead them towards getting help, true help.

• 24:33Speaker 00

  Oh, 100%.

• 24:34Speaker 01

  And I, I always, I mean, I always feel a little bad, you know, I never have cash on me anyways. That's the other thing. I've started saying, "If you take Venmo."

• 24:43Speaker 02

  They're upgrading, man.

• 24:44Speaker 01

  Yeah. I haven't had one say, "Yeah, I got Venmo here," you know? They're all like, "Ah."

• 24:49Speaker 02

  I got a, I got a square. I got a square blocking. You swipe your card.

• 24:53Speaker 01

  Yeah, I want to swipe here.

• 24:54Speaker 02

  But no, I, I agree because I think there was a, a study that, or a, a video that I saw a while back where a man went out to multiple homeless individuals and told them, "It's like, hey, I have a job offer for you. You can show up. Here's a bus ticket. You know, show up to the place and I offer you some work and I'll pay you."

• 25:17Speaker 01

  Yeah.

• 25:17Speaker 02

  And I think he did this for, like, it was a small sample group, but it was like 10 to 20 homeless people. He did that. Only one homeless person showed up for work. Right. And then the, the man asked, is like, "Hey, like, out of all this, I'm curious, like, do you know why they, they didn't show up?" Or things like that. It's like, "Well, do you know how much a bus ticket can cost and you know what they can get out of it?" It's like, they can sell that and then buy liquor or, you know, cigarettes or something like that.

• 25:46Speaker 01

  Yeah.

• 25:47Speaker 02

  So yeah, you are, you're feeding into a behavior that's not fit for them, whereas

• 25:53Speaker 01

  Yeah.

• 25:53Speaker 02

  they should be seeking these, uh, the, the, the type of rehabilitation or help. That's beneficial instead of be like, oh, here's, here's money or here's, you know.

• 26:04Speaker 01

  In, in a weird way, I'm not, it's kind, it's kind of selfish behavior to give money. Cause it, it does feel good. You're like, I'm helping, I'm helping a brother out. I'm helping him out. Here you go. You know, here's five bucks. It feels good to help somebody out that's down and out, but yeah. And, and, and sometimes I think that's, that's appropriate. I'm, I'm not saying this is, this is all, all bad, but.

• 26:27Speaker 00

  See, I, I don't ever give money.

• 26:31Speaker 01

  You give food?

• 26:31Speaker 00

  I will give them, you know, especially when I see the dogs. Cause I'm a sucker for them.

• 26:36Speaker 01

  Yeah.

• 26:37Speaker 00

  When they have dogs, I always, I'll, I'll turn around and go get dog food and, but.

• 26:42Speaker 01

  Have you noticed how?

• 26:43Speaker 02

  See, that's a, that's a sweet spot that they know.

• 26:44Speaker 01

  Yeah. Here's some food for your dog.

• 26:46Speaker 00

  Yeah, but I don't get them anything. I don't get them anything.

• 26:49Speaker 02

  You give the dog?

• 26:49Speaker 00

  I just get it for the dog.

• 26:51Speaker 01

  Have you guys noticed how well behaved home, uh, homeless people's dogs are? They, they seem like, like they're never on leash. They're always just like following right behind them. If they're on a bike, they're on a busy road and they're sometimes like right on the shoulder and that dog is just like,

• 27:08Speaker 02

  Yeah.

• 27:08Speaker 01

  totally chill, just walking along, or they're sid, they're camped out on an island, like a, a road, you know, an island in the middle of the road. And cars flying by and there's this dog just taking a nap, just like laying there and it's like, man, this is, the, the dogs are so well behaved.

• 27:25Speaker 02

  Yeah.

• 27:26Speaker 01

  I think they just bond. They just bond real quickly to their owner and they're like, you're my human and I'm going with you, ride or die. Human.

• 27:34Speaker 02

  Oh my gosh. Yeah.

• 27:36Speaker 01

  Yeah, we got off, we got off track a little bit. Let's take a break again. We come back, we will be talking about AI. There's some really interesting news coming out. We're Money Wise. Don't go anywhere.

• 27:46Speaker 00

  Have you been putting off your finances? Seize the day. Call the Money Wise office at 661-847-1000. Or email [email protected] for more information.

• 28:04Speaker 01

  Welcome back. We're Money Wise. Congratulations, stock market. You're on a three-day winning streak. Did you know, Frank, the S and P 500 and actually all major indices are very close to reaching their new all-time highs? The S and P 500 set its all-time high on February 19th of this year at 6,144. The S and P 500 today closed up just above 6,000. It looks like it is...

• 28:38Speaker 02

  6,038.

• 28:39Speaker 01

  There you go. There you go. So we are within striking distance

• 28:43Speaker 02

  Yeah.

• 28:44Speaker 01

  of coming back nearly 20% from its low in February of this year. That's a, that's a pretty remarkable turnaround.

• 28:53Speaker 02

  It is, and it's, I think, one of the fastest recovery within the stock market history since, since ever? I'll have to look back.

• 29:02Speaker 01

  Yeah, it's a good, that's a good question. We've had, we've had a few zinger of, of drops and recoveries here in the last five years.

• 29:10Speaker 02

  Yeah. Well, at least for the last decade is the fastest, fastest recovery.

• 29:14Speaker 01

  I would, I mean, this is, it is remarkable. I mean, if you, if you, if you go back, I talked about this yesterday a little bit on the show, but, you know, but most people in February of this year were very nervous. They were very nervous about the trade talks, about tariff talk and, you know, inflation. And now it's, boy, what, what a remarkable recovery so far. Of course, this could all change, change tomorrow. This, this has been, you know, we, we still have, we've had pretty resilient corporate earnings. And there's been some optimism over some of the potential over the tariff deals. And some of the growth forecasts are a little bit more positive. So, you know, we'll, we'll, we'll take it.

• 29:57Speaker 01

  There's also a gauge that the small business, it's called the small business.

• 30:05Speaker 01

  optimism gauge and this is a survey of small businesses in the United States. They typically ask around 600 to 800 small business owners throughout the country and they they do this survey every month and they ask them various aspects of their business conditions and their expectations. So they they ask about their current business conditions, what their sales expectations are, their inventory levels, their job openings. Then they ask them about their future expectations, what they're expecting to sell over the next

• 30:43Speaker 01

  three months and what their plans to buy inventory is, their plans to spend, what they're planning on buying or purchasing and credit conditions and their earnings trends. So they ask like the good, you know, good general questions. And this survey again is released every month. This is important because in the United States, about half of the jobs that are available in the United States in the in the private sector are small businesses. Most people, very close to most people, work for a small business.

• 31:24Speaker 01

  And as you know, small business, I don't know what the official definition is, but you know, it's, I think it's, I want to say it's under 100 million in sales, something like that. So maybe it's maybe it's even more.

• 31:41Speaker 02

  I don't know. I don't know that number.

• 31:43Speaker 01

  It's but it's it's oftentimes people think of small businesses like, you know, five, five, 10 employees, you know, two, two or three employees. Really, small businesses can have hundreds of employees. They're just not, you know, publicly traded, they're not massive and they're privately owned. And so, you know, this is, this is, this is important because the the small business optimism gauge came in higher in in May. The numbers just came out for the information that they gathered in May. And it's the first time that there's been an increase in optimism since September of last year. So meaning you go back to September.

• 32:26Speaker 02

  Holy crap.

• 32:28Speaker 01

  Every month, it was the optimism was was negative.

• 32:31Speaker 02

  Yeah.

• 32:32Speaker 01

  So it's a gauge of 100. If it's above 100, that means business, small business owners are optimistic. If it's below 100, that means that they're pessimistic.

• 32:40Speaker 02

  Yeah.

• 32:40Speaker 01

  They're not looking positive. And it's been below 100 since September, just a long run of pessimism.

• 32:48Speaker 02

  Yeah, yeah.

• 32:49Speaker 01

  Furthermore, what I was shocked to see when I'd looked at the data of the US small business optimism, the average for this gauge has is 98, which means it's averages in a pessimistic view. Which is like, is that just?

• 33:07Speaker 02

  Makes sense.

• 33:07Speaker 01

  Yeah, small business owners are just eternally pessimistic.

• 33:10Speaker 02

  Yeah.

• 33:10Speaker 01

  For the most part, you know, having an average around 98, historically, that's what it's been. It's like, wow, that's fascinating.

• 33:19Speaker 02

  Yeah.

• 33:20Speaker 01

  I don't know.

• 33:22Speaker 02

  I was looking up, I think revenue size for gross revenue, you're looking at eight to 40, 41 million. And then less than 500 employees.

• 33:30Speaker 01

  Oh, there you go.

• 33:31Speaker 02

  Yeah.

• 33:32Speaker 01

  Less than 500 employees.

• 33:33Speaker 02

  It's still a lot.

• 33:35Speaker 01

  Somewhere between eight and.

• 33:36Speaker 02

  Eight to 41 million.

• 33:38Speaker 01

  Eight to 41 million in gross revenues.

• 33:40Speaker 02

  Yeah.

• 33:41Speaker 01

  Yeah. So I mean, you could have, they could have a sizable company, right? You've got, you're making 40 million a year in revenues and 150 employees.

• 33:50Speaker 02

  Still considered a small business.

• 33:51Speaker 01

  Yeah. But and it's, that's half, that's half of employees in the country, in the private sector at least.

• 33:57Speaker 02

  Yeah.

• 33:58Speaker 01

  You know, kind of along these lines, CPI, Consumer Price Index, is going to be released tomorrow.

• 34:04Speaker 02

  Oh, yeah.

• 34:05Speaker 01

  And expectations for the Consumer Price Index are that it's going to be slightly higher in May than it was in April. So in April, the Consumer Price Index, this is our inflation gauge, was 2.3%. And in May, it's expected to go up to 2.4. So not huge, but you know, there's, there's an increase there. This is, um, this is the lowest yearly increase since February of 2021, which is like, that's when we were just like, COVID was just like, kind of starting to. Settle a little bit. Month over month prices are estimated to rise 0.2%.

• 34:50Speaker 01

  That's the same increase that we saw in April. Now, more importantly is the core. So what I just mentioned, the headline inflation for consumer prices. But the core, I think, is much more reasonable because they take out volatile prices of certain items like food and energy costs. So it gives you a better overall cost. It doesn't, obviously, I'm not saying, we're just talking about fuel costs, right? Fuel and food is like a big part of a household's, you know, cost. But it's so volatile that it can skew the true inflation numbers. And CPI, at least the core CPI, is expected to be to rise to 2.9% over May of last year.

• 35:35Speaker 01

  And that's a, that's a, you know, slightly higher than April's, which was 2.8. So, you know, still, historically speaking, and we do this as financial advisors when we're planning. Historically, you know, 3% inflation has kind of been a kind of a standard. At least it was when I was in college.

• 35:56Speaker 02

  Yeah.

• 35:56Speaker 01

  3% was sort of like, okay, that's kind of like what, you know, you kind of, you kind of expect. I think the Fed, I think the Fed's mandate is three or under three where they want it, between two and three.

• 36:09Speaker 02

  Target is two and three, yeah, two and three, yeah.

• 36:11Speaker 01

  Two to 3%. And so, you know, hey, we're right there. And, you know, if you look at all of the, all of the tariff concerns, you know, we're still not through it.

• 36:20Speaker 02

  No.

• 36:20Speaker 01

  Still not through all that stuff, but at least, at least we're, you know, we'll find out tomorrow. Tomorrow, we could get some surprise number, but so far, it's, it's good to see inflation come down. Inflation peaked in, I'm looking at it right now, June of 2022 at 9%. We had 9% inflation for that quarter. That's insane.

• 36:45Speaker 02

  Wow, not too long ago, too.

• 36:47Speaker 01

  That's a pretty good drop we've seen.

• 36:50Speaker 02

  Do you think the, do you think Jerome Powell is gonna talk about in his next, next meeting? Do you think they're gonna talk about reducing the rate hikes or reducing the rate?

• 37:02Speaker 01

  You know, he'll, yeah, he'll talk about it. The question, will they do it? Probably not.

• 37:08Speaker 02

  No.

• 37:08Speaker 01

  Because there's still, there just doesn't seem to be enough evidence. And that's what Jerome Powell always says. When we have the data, then we'll make that decision.

• 37:16Speaker 02

  Data-driven.

• 37:17Speaker 01

  Yeah, we're, yeah, we're not, which I'm glad. I don't want somebody who's emotional in there making these decisions, you know?

• 37:23Speaker 02

  No, but yeah, again, you've pointed out the uncertainty with still the trade concerns looming and then the inflation number in itself. Maybe if it shows a very, you know, a low rating, a number, then yeah, maybe, maybe Jerome Powell might suggest something, but at this point, it seems like that's not going to be the case.

• 37:46Speaker 01

  Right, right. That is, that would be nice. It would be nice to have some, some sort of surprise. I think that could potentially help the markets. Although the markets have been trading so much over the last several years of like good news being bad news and bad news being good news because of basically what, where they want the Fed to be and what they want rates to be. And so, you know, you have some conflicting, you know, you would normally think, wow, this is great news for the economy. It turns out, oh, no, it's not because that doesn't incentivize the Fed to lower rates. And a lot of people make a lot of money when the rates are lower because then you can borrow and build your business.

• 38:22Speaker 02

  Yeah.

• 38:22Speaker 01

  Do whatever.

• 38:23Speaker 02

  There's no rhyme or reason to it at all.

• 38:25Speaker 01

  No.

• 38:26Speaker 02

  Yeah. Speaking of reasoning.

• 38:27Speaker 01

  Yeah.

• 38:28Speaker 02

  Have you heard of Apple's AI report?

• 38:32Speaker 01

  What, the report?

• 38:33Speaker 02

  The, the AI, Apple's AI researchers.

• 38:36Speaker 01

  Uh-uh.

• 38:37Speaker 02

  The, I think, well, we were talking about AI in a sense. And I, I think this is a good segue is that AI or Apple released a report from their own department of AI researchers saying that the AI model, the reasoning model, not just the AI open language, the reasoning model is overly stated on its potential as a

• 39:08Speaker 02

  For its capabilities.

• 39:09Speaker 01

  Oh.

• 39:10Speaker 02

  So like OpenAI, Anthropic, or Google's Gemini, how a lot of these are saying that their advanced AI reasoning capabilities are going to be the the next generation or the next product forward in in reasoning capabilities. But Apple is contradicting what they're saying.

• 39:32Speaker 01

  Yeah.

• 39:32Speaker 02

  Like, no, that's not the case from our own independent research. So it's like, they're saying that these these AI models can handle very complex problems or like equations, but it turns out that the more complex it gets, the slower the model becomes and the more inaccurate.

• 39:59Speaker 01

  Uh huh.

• 39:59Speaker 02

  Or like some for some of the.

• 40:01Speaker 01

  Hallucinations.

• 40:02Speaker 02

  Yes, the the problems that it's trying to solve. So I think it, I I don't know if Apple's known for this, but it's it's sort of begs the questions, like, are they just moving the goalposts because they don't want to divert a lot of R and D bunny into this AI research and come out with the model when they could just wait for the market to develop something and then they can adapt?

• 40:23Speaker 01

  Yeah, or buy it.

• 40:24Speaker 02

  Or buy it.

• 40:25Speaker 01

  Because they're sitting on billions and billions, hundreds of billions of dollars of cash.

• 40:29Speaker 02

  Yeah.

• 40:29Speaker 01

  And they could literally just buy. This is funny, I'm not funny, but it's interesting because this this was released in the news just in the last few days about Metas and Metas move and investment into AI.

• 40:43Speaker 02

  Mm hmm.

• 40:44Speaker 01

  And Mark Zuckerberg, the CEO of Meta, has recently said that that in in referencing AI, quote, potentially one of the most important innovations in history. And he said, this is going to set the course for the future. Mark Zuckerberg said that in February of this year. And this is after Meta has announced that they are investing billions of dollars into a leading AI company right now and.

• 41:18Speaker 01

  They're, you know, we're talking about tens of billions of dollars that Meta is investing. And they're offering seven to nine-figure comp packages to dozens of researchers from the other leading AI companies like OpenAI and Google. You know, they're trying to recruit. Apparently, they have this, this, this rock star AI person researcher that they're, that they're kind of hanging their hat on. That to, to help scale their AI business. And they're really working towards what they're calling superintelligence or artificial general intelligence, which is the ability to function just like a human brain.

• 41:57Speaker 01

  To be able to, to figure out and problem solve and, and multitask like the human brain can. And that's their, that's what a lot of these companies are really moving towards and pushing to get to that point. Last year, Google paid $3 billion to license technology, to hire technologists and executives from Character.ai, which is a startup. Have you heard of Character.ai? They're the company that builds chatbots for personal conversations, like your friends, you know, relationships, friends.

• 42:30Speaker 02

  You know what? This, this, this is a great topic to talk about because I just recently saw a video about a psychologist warning the, or sounding the alarms on AI in itself. And, and these chat box, chat boxes, bots, because a lot of the younger generations now are, they're not communicating with real human beings. They're not developing friends or like building that friendship, going out.

• 42:54Speaker 01

  Right.

• 42:55Speaker 02

  You know, the, the, the stuff that kids were doing back in the days versus now where they're just developing these emotional connections to AI chatbots.

• 43:04Speaker 01

  Right.

• 43:05Speaker 02

  It's insane.

• 43:06Speaker 01

  Which, you know, the, the chatbots are going to be like, you kind of need that friend every once in a while. It's just like, no, stupid. No, don't do that. I would fear that some of these chatbots would know how to do that necessarily, especially when it's like it's built, these models are built after just to like. Satisfy your, just all of your dreams and, and you know.

• 43:29Speaker 02

  Well, you, you bring up a, a good point is that a lot of times these chatbots, they're, they're not going to be there to be like, no dummy, why'd you do that? Or like, they're not going to give you the hard truth. They're going to always be able to, uh, uh, carry, say things in a way that confirms your behavior. Or maybe it's not like, oh, like, I don't think that was a good idea.

• 43:53Speaker 01

  Right.

• 43:54Speaker 02

  You know, like, it, it's just going to reward. Hurt your feelings? Yeah.

• 43:58Speaker 01

  They'll never break up with you.

• 43:59Speaker 02

  I think this will be great for you.

• 44:02Speaker 01

  Well, you mentioned Apple kind of taking a different route than some of these other giants, which have been pumping a ton of money into startups, AI labs. Microsoft has invested more than 13 billion into OpenAI, which is the chat GPT company. Amazon has plowed $8 billion into AI startup Anthropic. That's what is Claude. But both of those are, are, are technologies that I'm, I'm a big fan of. They're, they're amazing technologies. Both of those, those large language models are, are just phenomenal. And, you know, have saved me countless number of hours at work. I, I just, I'm, I'm a huge fan of it. But it's an interesting gamble that Apple is taking. They're no dummies.

• 44:45Speaker 01

  I mean, this is a very, very smart company. I, I, I would guess, just when I was hearing you talk about kind of their, because yesterday was their worldwide developer conference?

• 44:55Speaker 02

  Yeah.

• 44:55Speaker 01

  Or the start of it?

• 44:56Speaker 02

  Yeah, it was.

• 44:57Speaker 01

  And it was lacking any AI stuff, really. It was all just about like visually.

• 45:02Speaker 02

  Yeah, yeah. It kind of just seemed like an update, more so than like, here's some innovating technology. You know, the thing that you would see Steve Jobs come out with is like, oh, here is the, the iPod, you know, something you've never seen but need.

• 45:18Speaker 01

  Yeah.

• 45:19Speaker 02

  So it lacks a lot of that innovation, but I can see where they're sort of making those more strategic and method, like mythological or.

• 45:31Speaker 01

  Methodical.

• 45:31Speaker 02

  Methodical approach to, to things. It kind of reminds me of, um, oh, who's that? Who's that one Japanese?

• 45:42Speaker 02

  Oh my god, I'm forgetting the name, but

• 45:44Speaker 01

  Toyota.

• 45:44Speaker 02

  No, no, he was, he was one of the main founders or developers of Nintendo.

• 45:50Speaker 01

  Oh, yeah.

• 45:50Speaker 02

  Uh, but basically, the concept was this, is that, uh, during the time where gaming consoles were sort of becoming a big hit, this individual took a different approach. Uh, I think the approach was called lateral, um, oh my gosh. Anyways, he was taking old technology and making a product to where it's more durable, more easy to use, um, for someone, for people like us to just adapt to, because the whole point of people wanting to game was just so they can game, uh, with their friends or family, but a lot of these new gaming companies, it, it just wasn't as reliable. It didn't,

• 46:30Speaker 02

  it wasn't as durable. It wasn't that innovating. So like, he was able to take a more simplified approach and be like, hey, we have this product from this company. Let's just adapt this and there's this product and just make this. So you're, you're reducing a lot of the, uh, R and D spending that, that goes into developing these new type of products. When it's like, hey, let's, let's just take this old technology that we have, create something that's still fun, uh, but that's lasting.

• 46:58Speaker 01

  Yeah. And boy, Nintendo has done that.

• 47:00Speaker 02

  Yeah.

• 47:01Speaker 01

  They have just released their new, uh, console.

• 47:05Speaker 02

  Uh, yeah, Nintendo two, Switch.

• 47:06Speaker 01

  Is it the, is it the second Switch?

• 47:08Speaker 02

  I think so.

• 47:09Speaker 01

  Two or three.

• 47:10Speaker 00

  Switch two.

• 47:11Speaker 01

  Gosh, it's got me thinking, I, I wouldn't mind having a little one of those. They're, they're cool. Like, those games are just timeless. Oh, really?

• 47:17Speaker 00

  Yeah.

• 47:18Speaker 01

  They're hard to come by?

• 47:19Speaker 00

  Yeah, they're out of stock everywhere.

• 47:20Speaker 01

  That's like the other, what was it? The PlayStation?

• 47:23Speaker 00

  The PS5.

• 47:24Speaker 01

  PS5 that came with, did they come out during COVID or close to it? There was like, it was crazy how much people were reselling those, which that's another weird market, right? Where people go and they buy either a bunch of concert tickets or a new shoe.

• 47:38Speaker 00

  Bath water.

• 47:39Speaker 01

  Or ba- oh my gosh. What is the deal with that? What's her name?

• 47:44Speaker 00

  Uh, Sydney Sweeney.

• 47:45Speaker 01

  Sydney Sweeney is selling soap.

• 47:48Speaker 00

  They went on sale. They sold out in seconds. Now people are selling them for two grand.

• 47:53Speaker 01

  Two grand for a bar of soap?

• 47:55Speaker 00

  Yep.

• 47:55Speaker 01

  And it's made out of her bath water. It's like she takes a bath in it and then they make the soap out of it?

• 48:00Speaker 00

  That's what they say.

• 48:00Speaker 01

  That's pretty genius.

• 48:02Speaker 00

  Yes. People are like, it's so gross. I'm like, if, it was gross, but somebody, a lot of people are buying it.

• 48:08Speaker 01

  Well, yeah, can soap get dirty?

• 48:12Speaker 02

  So it's like that question, if you drop the soap on the floor, is the soap dirty or is the floor clean?

• 48:16Speaker 01

  Yeah. That's right. I mean, it's like, if it's all soap, isn't it like always clean?

• 48:22Speaker 02

  Yeah.

• 48:23Speaker 01

  You should be able to eat off soap all the time. It's just, literally, it's just clean. Oh, my gosh. Yeah, that Sydney Sweeney, Sydney Sweeney bathwater soap thing is hilarious. I get a kick out of celebrities that just leverage their celebrityhood to the max and just like, you know, some of them are really good at it, like Snoop Dogg, Shaquille O'Neal. These are just like serial entrepreneurs that are just willing to take their celebrityhood and just, you know.

• 48:55Speaker 02

  Yeah, they have the platform to do it. It's like, why not?

• 48:58Speaker 01

  Yeah, market it, market it, baby. Well, good. Thanks, Frank. Good stuff. Thanks so much. Want to thank all our listeners for tuning in. If you'd like to listen to this show or any of our past programs, subscribe to the Money Wise Guys podcast, commercial free, on all podcast platforms like iTunes, Apple Podcasts, or Spotify. And as we leave, remember these three things: be smart, be safe, and always be money wise.

• 49:25Speaker 03

  Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through LPL Financial. LPL Financial and Money Wise Wealth Management are independently owned and operated.