Business Matters Full Broadcast (May 27)

Elon Musk's firm X.A.I. raises $6 billion in funding. Meanwhile, China aims to dominate Boeing. We'll tell you more coming up on Business Matters. Today is Memorial Day and markets, of course, are closed. So we're starting off with passenger traffic at U.S. airports. Could be making records. It's on pace to be the busiest Memorial Day weekend in history. That's based on the latest screening data from the Transportation Security Administration. Friday, by the way, was already the number one screening day in TSA history, with nearly 3 million people. And more than 2.4 million people passed through TSA checkpoints each day this weekend. And this could be a precursor to a chart-busting summer of travel. President Biden commemorated Memorial Day today at the annual wreath-laying ceremony at Arlington National Cemetery. In his remarks, Biden noted that the nation gathers each Memorial Day to remember and honor the sacrifice of the hundreds of thousands of men and women who gave their lives to defending America. Have a listen. America is the only country in the world founded on an idea, an idea that all people are created equal, deserve to be treated equally throughout their lives. We've never fully lived up to that, but we've never, ever, ever walked away from it. Every generation, our fallen heroes have brought us closer. Today, we're not just fortunate heirs of their legacy. We have a responsibility to be the keepers of their mission. Biden also spoke about the anniversary this week of the death of his son, Beau, who served in Iraq and later died from brain cancer. Biden believes the cause of Beau's cancer was due to exposure to toxic burn pits during his service in Iraq. Before the ceremony began, Biden, joined by Vice President Kamala Harris and Defense Secretary Lloyd Austin, placed a wreath at the tomb of the unknown soldier. A never-before-seen showdown at Tesla. Shareholders have to decide yet again if CEO Elon Musk should be paid $56 billion. The amount is already unusual, but, you know, so is this push, both privately and publicly for the pay vote. Tesla shareholders actually approved the pay package for Musk in 2018. The compensation was tied to Tesla's performance, but a Delaware judge struck down the compensation. Shareholders are set to vote at the June 13th annual meeting on Musk's pay package, among other things. Proxy advisory firm Glass-Lewis has suggested for them to vote against it. And staying on Elon Musk, his artificial intelligence firm xAI raises $6 billion in company says it is focused on maximally benefiting humanity. And this is a trait that one AI researcher says is very rare. Elon Musk's AI firm xAI raised $6 billion in its latest round of funding, boosting its valuation from $18 billion to $24 billion, heating up the AI arms race. Investors include Prince Alawit bin Talal and Kingdom Holding, Sequoia Capital, and Anderson Horowitz. In xAI's press release, the company said it's focused on AI that is truthful, competent, and maximally beneficial for all of humanity. It says its mission is to understand the true nature of the universe. It's nice that, you know, some people, organizations are thinking about it. Many firms are going to be optimized, kind of, let's look after our own first, rather than this worldwide thing. AI researcher Bill Wong says it's rare for organizations to say they want to benefit humanity as a strategic principle. He also says much of that goal is subjective. Truth, unfortunately, is in the eye of the beholder. I think the thing is, yes, you can be truthful, but I think the bigger thing is to be responsible with it. Wong says many in the industry are adopting responsible AI. His own organization, Infotech Research Group, highlights six characteristics of responsible AI. Validity and reliability, accountability, fairness, safety, privacy, and transparency. The company says this framework provides safeguards for potential risks, hopefully leading it toward a more positive situation for humanity. In that scenario, there will be universal high income. Not universal basic income, universal high income. There will be no shortage of goods or services. Last week at the VivaTech conference in France, Elon Musk predicted most people in the future would have no job while prospering materially. AI researcher Bill Wong isn't so sure. I don't think anybody's imagined that it would be a high universal income. Governments would have to get involved. And, again, you would have to maybe set aside a pool of funds. And we all know many countries are very skittish when it comes to legislation. So, again, I don't see it happening. Wong says he would like to see it happen, but he says it would take a lot of cooperation and government action. Now, let me go through with you some China-related stories here today. A rare summit for three East Asian countries happening. Leaders from China, Japan, and South Korea met for the first time in years. Three-way talks were held between Chinese Premier Li Qiang, South Korean President Yun Suk-kyo, and Japanese Prime Minister Fumio Kishida. Li described the meeting as both a, quote, a restart and new beginning. The three Asian neighbors agreed to launch a diplomatic and security dialogue, as well as resuming free trade talks and discussing tensions around Taiwan. South Korea and Japan are both U.S. allies, and the two and China are trying to manage rising distrust between Beijing and Washington, and as well over tensions over democratically ruled Taiwan, which China claims as its own territory, despite never having ruled it. Stay on China here. The country wants to be the global leader in the aerospace industry. And to do this, it will displace Boeing and Airbus. This is according to a new article by the Epoch Times. So, for more details on this, I spoke to the author of the article, Rick Fisher, senior fellow at the International Assessment and Strategy Center. Have a listen. Rick, thank you so much. This afternoon, Memorial Day. So, you wrote an article on the Epoch Times China Aims to Dominate Boeing by 2049. You talked about some very serious matters in that article. So, tell us, for our viewers who may not have read it specifically, what does China want to do? Okay, Don. First, thanks for having me on again. And to answer your question, a slide has been floating around the Chinese internet. And it apparently comes from an air show exhibition that was held in Shanghai. And it depicts how China's airliner maker, the Commercial Airline Corporation of China, or COMAC, intends to dominate the global market for by 2049. So, Boeing is facing multiple challenges today. But what Boeing does not want to talk about is how COMAC intends to be displacing Boeing and Airbus by the middle of this century. The slide that I mentioned makes very clear that it sees either Boeing or Airbus will not be a competitor by the end of the 2030s. And that COMAC, the Chinese airline maker, intends to be globally dominant over Boeing and Airbus by the middle of the century. Aerospace is very important in terms of prestige, in terms of proving to the world that China is capable of mastering and sustaining innovation in this very demanding high technology field. It has so many implications for military power. All of the airliners that China would be developing would be used for military missions. It also wants to be independent of airliner supplies supplied by foreigners. It doesn't want to be dependent on Boeing and Airbus for very much longer. And if it's going to create, subsidize the development of a series of ever larger airliners, then it's also going to want to dominate foreign sales for these airliners in order to subsidize its domestic industry. Is COMAC's ambitions to dominate this market, is it purely business in nature? No, it is not. The Chinese Communist Party wants all of this. It wants to dominate the global market for airliners in order to advance its much larger goals for global hegemony, global political, economic, and military hegemony. In order to do so, China has to have the largest nuclear force, it has to have the largest navy, the largest deployable army, and it has to dominate aerospace markets in order to be the hegemon. And this is just one more tick on the CCP's list on the way to global hegemony. In your expertise, what are the chances that China is actually capable of accomplishing this? Well, it doesn't look very positive today. COMAC took 15 years to get the C919 into a Chinese airliner. The Chinese Communist Party would subsidize COMAC to become a dominant competitor that it hopes will be achieved within its timeline. Or if not, they'll just keep pushing. And if they achieve it after 100 years instead of 50, they won't lose that goal as long as they exist. Thank you very much for your insight. Always very helpful. Don, thank you again. And staying on China here a bit longer, the largest fund in China to boost its own semiconductor industry, Beijing, putting together another state-backed investment fund with billions of dollars to try to achieve self-sufficiency in chips. NTD's Sean Marshall has details. $47.5 billion is going into China's biggest semiconductor investor fund ever. The tens of billions of dollars invested underscores the Chinese regime leader Xi Jinping's drive to achieve self-sufficiency for China and semiconductors. China's finance ministry is the biggest backer of the fund, along with major state-owned banks and organizations. Also known as Big Fund 3, this is part of the National Chip Fund started about a decade ago with around $13 billion invested. It has provided financing to some of China's chip foundries. Stefano Zelle, vice president of the ITF, believes China's aggressive subsidies are particularly concerning. China's policies could seriously disrupt the innovation economics of the industry by permitting Chinese competitors to subsist in the sector while earning below market rates of return because they are heavily subsidized and can so underprice their goods, depriving true innovators of the revenue needed to invest in future generations of R&D. The global chips war is intensifying. The U.S. and European Union have channeled nearly $81 billion towards manufacturing the next generation of semiconductors. The U.S. is also planning to slap tariffs on $18 billion of Chinese imports, including electric vehicles, computer chips, and medical products. The White House cited what it described as, quote, unacceptable risks to U.S. economic security. Sean Marshall, NTD News. So a lot of things happening right now in China. And I want you to know this too, the latest measures to prop up the country's struggling property market could actually be risky for local banks in lower tier cities. And this is according to a new report by S&P Global. The measures include cutting down payment requirements and removing the floor for mortgage rates. And this is expected to temporarily, if at all, increase property demand. But the report says that increasing leverage could also cause an uptick in mortgage defaults. Meanwhile, Chinese e-commerce giant Alibaba teaming up with soccer legend David Beckham to score more global sales. Alibaba is an e-commerce site owned by Alibaba. It has signed Beckham as a brand ambassador as it plays catch-up with rival Timu. As domestic sales slow, Alibaba is investing aggressively to boost global sales. Alibaba has also signed on to sponsor the 2024 UEFA Euro tournament. The company plans to invest millions of dollars in discounts, deals and engagement to attract customers online. And on top of all that, it's going to run ads featuring Beckham in conjunction with the tournament. And this marketing strategy comes after Timu's major success, apparently airing multiple Super Bowl commercials. Moving on from China. Another Boeing incident. 12 people were injured when a Qatar Airways flight bound for Ireland encountered turbulence. The Boeing 787 Dreamliner landed safely in Dublin, as scheduled. Dublin Airport says six of those injured yesterday were passengers, and the other six were crew members. The flight originated in Doha and experienced turbulence while flying over Turkey. Qatar Airways did not directly comment on the turbulence, but said the matter is subject to an internal investigation. The incident comes days after dozens of passengers were injured and a man with a heart condition died during turbulence on a Singapore Airlines flight. And after the break, big retailers are offering big discounts, as the summer season heats up. We'll tell you which retailers. And what are the best car deals this Memorial Day? We talked to a car expert on everything you need to know when looking for a new vehicle. After the break. And welcome back. Thank you sticking around. Let me go through some rapid-fire headlines to keep you as up-to-date as possible. Daily power consumption in Texas set a new record for the month of May on Sunday. That's the fourth time this month homes and businesses are cranking up their air conditioners to escape a heat wave over the long weekend. As well, the G7 will explore ways to use the future income from frozen Russian assets to boost funding for the war-torn train. This is according to the group of seven countries over the weekend. And the European Union should follow the example of the United States and protect its industry by imposing tariffs on Chinese products, the Italian industry minister said on Saturday. And as the weather starts to heat up, so too are the sales. Major retailers are slashing prices to win over customers who are burnt out over inflation. Many price-conscious customers are cutting back to attract shoppers. Major retailers are stepping up discounts into the summer months. For example, Walmart has maintained strong sales in recent quarters with its rolled back prices. And as well as rival Target slashing prices on thousands of items to compete. And as well, low-cost supermarket chain Aldi offering promotions through Labor Day. And speaking of deals, it's a buyer's market again for new cars. The tradition of slashing prices on new rides during the Memorial Day weekend is back. For years, the industry and supply chains were catching up with COVID disruptions. So, you know, cars were selling above the manufacturer's suggested retail price. But deep discounts have returned to dealerships. For example, Ford is offering average incentives of up to $1,500 according to Cox Automotive. That's six times last year's offer. So, you know, for more on how you can get the best deals, if you're looking to buy a car, I spoke to automotive expert Lauren Fix from Car Coach Reports. She had some really amazing insight that that is definitely going to be useful for your next purchase. You're going to want to hear what she said. Here it is. Is it a good time right now to buy a car, seeing how there are some deals happening right now? Yeah, there's absolutely some deals that you wouldn't have expected because for the longest time we had the chip shortage, couldn't get cars, used cars got expensive. But now there's an inventory of cars sitting on lots and some that they're not going to make next year. So that's where the sweet spot is for you. And of course, interest rates are high. So people that are thinking about a new car, there are some really good deals out there. Mazda's got a lot of discounts. Their sales have been off. I'm not really sure why they have good product. It's very reliable. It's Japanese made. Certainly look at the Mazda CX 30. You can get into that for a pretty reasonable price. If you read the big print on their websites, all the manufacturers have it. So go to every single website, go to Ford, go to General Motors, go check their website, then go to your local dealer. If you're going to go to Joe's Chevrolet, go and see what kind of deals they have because the Bolt isn't going to be made anymore. And there's a high demand for that. If you want an electric vehicle, small, reasonably priced, under $30,000, there's where your deals are. There's better zero percent interest rates as well. And the $7,500 tax credit, that makes that car almost, as we say in our business, almost free. It isn't. But the price then drops off dramatically. You'll see the same good deals on the Ford Lightning truck and the Mustang Mach-E. Sales are off on those, as well as the Hyundai Ioniq 5 and 6 and the Kia EV6. They're selling them. They're just not selling as many as they'd want. People that are looking at electric cars are looking at more reasonably priced cars like a Kona EV. And so when you start looking at what's selling and what's not, that's an important factor. Also, what's not being made next year. You want a performance vehicle? Look at the Alfa Romeo Quadrifoglio, both the Giulia and the Stelvio. They're gone. So there's some great deals to be had there as well. Is it better to buy a used car or a new car right now? Well, it's always better to buy a used car, but then you don't get to pick the color and all the options. The reason for that is there's depreciation. The moment you start that vehicle and drive it off a lot, you've lost a few thousand dollars. Buying a car that's a certified pre-owned is always your best bet. That's what I buy personally. Go to the dealer of that brand. If you're looking at a Honda, go to a Honda dealer. Going to a Mitsubishi, go to a Mitsubishi dealer because they'll have it all backed up and you're going to get your best bet and you create a relationship with the dealer. And I'm just personally curious here, is Memorial Day the best day comparatively throughout the year to buy a new car? Are there any other time that's better? Well, Labor Day is another time you'll see the same type of deals. But the best thing to note is any time of year you're thinking, you know, I need a car. My car was in an accident. My leases do whatever it is. Look at the end of the month and here we are Memorial Day. It's the end of the month. So we're looking, you know, at the 27th. You've got three, four more days to make a deal because the first of June, all those deals go away. And the reason they do is they have what's called floor planning. They pay interest rates on every vehicle. They don't own the vehicles. They pay interest. And if they pay interest rates on the first and you come in on the second, they're not going to be so negotiable because they've already paid those finance charges. But at the end of the month, they're really interested in getting rid of them. Also, at the end of the cycle, in other words, 2025s are starting to come to dealer by September. They're going to want to get rid of anything that's 24. So if you've got a 2023 in the lot or a 2024 by September, that's where you're going to find your deal. You may not have the options. You may not be able to build one, but there'll be vehicles there for you to choose. And they'll be very incentivized to negotiate the number or offer you a better interest rate. And if you're returned from the service, newly married, newly graduated, all those things, there's additional discounts and you have to ask for them or you don't get them. Wow. Great insight here, Lauren. I'm coming to you for my next car purchase. Thank you very much today. Thank you. And let's talk movies to finish off today's show. A post-apocalyptic action thriller and an animated family film duped it out at the weekend box office. We have their early estimates for the long weekend box office. That's me, Colt Seavers. And this is my hero's journey. The Fall Guy landed in fifth place, earning $5.9 million. Kingdom of the Planet of the Apes took in $13.4 million for a fourth place finish. If went from first to third, grossing $16.1 million. You don't have a home, do you? The Garfield movie opened in second place, gobbling up $24.8 million. Only one thing's going to do that for you. Not hug. Hide. Furiosa, a Mad Max saga, debuted with $25.6 million, well below expectations, but enough to win the weekend. All right. That's all the stories we have for you today. Thank you very much for being here with me on Memorial Day. If you have any feedback for the episode, you can email us at business at ntd.com. I read them all. Don't forget, as I always say, business matters. See you tomorrow.