Power Struggles
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What is the main topic discussed in this episode?
Hello, I'm Alan Kohler, editor-at-large of Intelligent Investor and finance presenter, columnist and podcaster for the ABC.
And I'm Stephen Mayne, contributor at Intelligent Investor, founder of Crikey and shareholder activist.
And what are we?
We are the Money Cafe, aren't we?
We are.
Now, I've been up since five o'clock watching the French get smashed by the Spanish in the World Cup semi 2-0.
2-0.
Total upset. The French were hot favourites. had smashed all before them, had the best attacking four the world has ever seen, and they're up against the best defence the world has ever seen, and the defence prevailed. The Spanish are through 2-0, and they've conceded one goal in seven games. So best ever defence against best ever attack, and it's the Spaniards. Trump won't be happy, and the English are down to the last three, and if the English can get over Argentina, it's an England-Spain final. So very excited about England-Argentina tomorrow morning. A replay of the most famous soccer game in history, the Maradona Hand of Gold, Hand of God.
Oh, yeah, that's right. Is Spain going to win the tournament, do you think?
Hot favourites now after taking out the French, absolute hot favourites. But anything can happen in a game of soccer. I mean, the French were the hot favourites today. So two teams, it's a game of chances, soccer. Soccer just produces more upsets because, you know, it's such a fine line between a goal and no goal.
Not many goals are kicked, right? So if you kick one… kick a goal, you're in a good chance to win.
That's right. And then when you go down, you start attacking too much and then you're exposed to another goal, which is sort of what happened to the French to a degree. But yeah, look, best ever World Cup. It's been absolutely spectacular. I'll be very sad in a week when it's over. But back to dreary winter in Australia. But we should move on from soccer. This is not a soccer podcast. So where do we start? Overnight markets, you reckon?
All happened on Wall Street last night. Firstly, IBM shares down 25%. That was the biggest fall ever. It was bigger than the fall that IBM shares suffered in the 1987 Black Monday crash. And it was all because they had a proper warning based on, because of AI and the CEO, whose name escapes me, basically said they mucked up the transition. They're mucking it up. So what's his name? Avid Krishna. We did not adapt and move quickly enough and numerous large deals failed to close on their timelines we expected, driving the majority of our shortfall.
And that's because a lot of the clients are reallocating their spend to the AI boom. So a bit of an old mainframe type company like IBM is It's getting crowded out by the need to spend money elsewhere. Your IT budget can only go so far. But this is not the SaaSpocalypse necessarily because on the same day, we've seen all these cyber companies hitting record highs because it's basically cyber and chips are sort of the big part of the boom. So the SK Hynix, extraordinary to boo on Wall Street, the Korean chipmaker. So it's winners and losers, but certainly IBM, the most storied US or global IT company, 25% in one day. It's just breathtaking. That's right.
And on the other hand, the Wall Street banks, JP Morgan, Goldman Sachs, Citigroup and Bank of America all reported their quarterlies. And it was a total, they reported, combined equities trading revenue of $19.3 billion, far more, a lot more than analysts had expected, and 72% up on a year ago. Amazing. I mean, the shares didn't all go up. I mean, I think Citigroup shares fell, but Goldman Sachs was up 8% or 9% or something.
Yeah, so to a, you know, it's almost tripled in 18 months now. Goldman Sachs up 9%. Market cap, it's still, the market cap's only like 340 billion US dollars, even up 9%. So it's nowhere in that, you know, Nvidia 5 trillion, you know. It's not like, the big banks are nothing like big tech, but they certainly have had a big quarter clipping the ticket on the AI boom. And I thought David Solomon, that was an interesting comment, the boss of Goldman Sachs said that,
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:12–9:56
2
What happened on Wall Street overnight and why did IBM shares plunge 25%?
9:56–19:21
3
How are Wall Street banks profiting from the AI boom and record trading revenues?
19:21–35:22
4
What is Trump proposing for the Strait of Hormuz and how could it affect oil prices?
35:22–46:29
5
What does the new CSIRO GenCost report say about future electricity and renewables costs?
46:29–47:50