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Why is Nissan rejecting Honda again? · The Financial Exchange Show

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Speaker 2: the first time now at twenty nine oh two after
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Speaker 2: cooking on all cylinders to kick off twenty twenty five.
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Speaker 2: Speaking of cylinders, see what I did there, Paul, Yeah.
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Speaker 3: I don't even have my but it was good.
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Speaker 2: So this story is messy. Actually, the Wall Street Journal
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Speaker 2: has this the headline. There is Nissan to reject Honda
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Speaker 2: deal to create world's number three automaker. I have a
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Speaker 2: buddy of mine who lives in Japan, and he had
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Speaker 2: sent this to me last night actually, like when it
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Speaker 2: was reported first by Japanese papers. But the reporting on
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Speaker 2: this afterwards there is Honda and Nissan initially were like, no,
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Speaker 2: like this was we don't know where this came from.
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Speaker 2: We're not, you know, saying this. Nissan's saying that they
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Speaker 2: have various different discussions that they are under way with
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Speaker 2: they're planning to make an announcement in mid February, and
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Speaker 2: that they are you know, one of the options is
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Speaker 2: that they may end up ending these merger talks with Honda.
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Speaker 2: But this story has been kind of messy for the
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Speaker 2: last twenty four hours, so I don't know exactly what
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Speaker 2: to make of it. But this deal was only announced.
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Speaker 2: When was this originally announced? December twenty third, so it's
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Speaker 2: been six weeks and I have no idea what's actually
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Speaker 2: going on here. But the reporting from the Wall Street journalist, Okay,
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Speaker 2: Honda was saying that, you know, we want to make
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Speaker 2: Nissan a subsidiary instead of you know, kind of a
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Speaker 2: merger of equals. But I mean, isn't that basically where
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Speaker 2: this is going to end up anyways, Like they're not
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Speaker 2: on equal footing. Honda is the far superior financial company.
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Speaker 2: They are the producer of way more vehicles. I don't
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Speaker 2: really know what Nissan's endgame is on this in terms
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Speaker 2: of trying to extract concessions here. They don't really have
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Speaker 2: a backup plan.
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Speaker 3: No, they have no leverage in this situation. Really, Honda
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Speaker 3: is doing them a favor in a sense because of
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Speaker 3: the situation that they find themselves in. Nissan had just
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Speaker 3: laid off nine thousand workers in November and slashed its
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Speaker 3: fount factory capacity by one fifth to cut down some
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Speaker 3: of the costs. If you look at their sales numbers
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Speaker 3: specific to Nissan within the US and China, they've lagged
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Speaker 3: significantly over the last couple of years. So this idea
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Speaker 3: that the offer offends Nissan is something that they're just
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Speaker 3: negotiating from a position of very little strength. And it
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Speaker 3: seemed like, I don't know if your friend comment on this,
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Speaker 3: but it seemed like this was something that the Japanese
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Speaker 3: government would like.
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Speaker 2: To see happen.
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Speaker 3: Is that a fair way to sort of say that
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Speaker 3: there may have been some prodding on the Japanese government
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Speaker 3: side of things to influence Honda.
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Speaker 2: Has that vibe to it, But I don't know. Here's
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Speaker 2: what I'll say, Nissan cannot survive on its own right.
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Speaker 2: It's not big enough, and they are threatened in two
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Speaker 2: clear in their two key markets China, they are being
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Speaker 2: absolutely destroyed in because of Chinese EV startups that are
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Speaker 2: taking market share from everyone, and in the US their
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Speaker 2: bread and butter the twenty tens, back when what's his name,
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Speaker 2: Carlos Gohan was running the company, the Niss Sound Rogue
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Speaker 2: was one of the best selling small SUVs out there.
7:09
Speaker 2: They're getting their launch eating on that platform by the
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Speaker 2: Honda CRV and the Toyota RAV four. So if your
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Speaker 2: key products in your two biggest markets are being you know,
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Speaker 2: or seeing their sales decline significantly and quickly from their peaks,
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Speaker 2: your plan is if you're an automaker, because you need
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Speaker 2: to spend a lot of money to stay competitive.
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Speaker 3: The other piece that I that I hit on because
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Speaker 3: of the prompting of the the Japanese government, is this
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Speaker 3: idea that there aren't these huge synergies between the two
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Speaker 3: companies here. They kind of compete in the same space,
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Speaker 3: and to your point, their Nissan is weaker in that
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Speaker 3: space of competition. So what are you really getting from
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Speaker 3: Honda's perspective with this merger. The idea that was mentioned
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Speaker 3: is that they'd be able to go to suppliers and
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Speaker 3: perhaps be able to renegotiate more favorable deals on supplies
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Speaker 3: that they were purchasing for their cars. But it just
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Speaker 3: didn't seem like a slam dug mergay. It'll be interesting
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Speaker 3: to see what happens, but obviously some turbulence on the
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Speaker 3: negotiation floor.
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Speaker 2: A little bit messy there, a little bit messy. Take
8:12
Speaker 2: a quick break here. When we come back, we've got
8:15
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Speaker 2: Paul, do you know how many postmasters General there have
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Speaker 2: been in the United States. I do not seventy five,
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Speaker 2: which is actually fewer than I would have thought. It
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Speaker 2: seems like a job with a short shelf life, you know,
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Speaker 2: like it doesn't really seem like a place that you
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Speaker 2: For that long. I'm kind of surprised that we don't
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Speaker 2: are some guys that served for you know, pretty long
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Speaker 2: periods of time. Actually, I mean again, kind of the
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Speaker 2: with Donaldson, That's what you knew. John Gronowski two years
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Speaker 2: he was all right, Yeah, he was, he was okay.
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Speaker 2: you the male in nineteen sixty four not great. Could
11:23
Speaker 2: have been better, could have been better? Just saying could
11:25
Speaker 2: have been better? Uh, I digress. Let's let's talk a
11:30
Speaker 2: little bit about mawana To and Disney. So they reported
11:33
Speaker 2: their their earnings last night, and the earnings were pretty good. Actually,
11:37
Speaker 2: I would say it's a company that seems to be
11:40
Speaker 2: turning the corner and you know, delivering at least a
11:44
Speaker 2: little bit more consistency among results. Stocks down about one
11:48
Speaker 2: percent today. It was up a few percent in UH
11:50
Speaker 2: after hours yesterday. But overall, it seems the story here
11:55
Speaker 2: is the theme park business is pretty good, the studios
12:00
Speaker 2: are starting to crank out hits again, yep. And the
12:04
Speaker 2: streaming business, which was where five years ago everyone thought
12:07
Speaker 2: the growth was going to come from, is basically tapped
12:10
Speaker 2: out I think at this point, and not really a
12:13
Speaker 2: major source of profit or loss. It's just kind of there.
12:17
Speaker 3: That's a fair assessment. It is noteworthy to point out
12:20
Speaker 3: on the streaming side of things that they did report
12:22
Speaker 3: a three one hundred twelve million dollar profit, down from
12:26
Speaker 3: a loss, but you're right, I mean, that profit line
12:29
Speaker 3: is not as significant as what people thought it was
12:32
Speaker 3: going to be from a growth perspective there on the
12:35
Speaker 3: streaming side of things. And I think the other reason
12:37
Speaker 3: why the stock is trending a little bit down today
12:39
Speaker 3: is they're up to one hundred and seventy eight million
12:41
Speaker 3: paid subscribers between Hulu Plus or Hulu and Disney Plus.
12:45
Speaker 3: And they did report that they're going to see a
12:47
Speaker 3: bit of a decline in those numbers for Q two.
12:50
Speaker 3: So it seems like that decline has investors perhaps a
12:54
Speaker 3: little concern. But there were some other positives that I
12:56
Speaker 3: thought came from this report. The profit billion streaming, the
13:00
Speaker 3: theme parks in other areas that did okay. The linear
13:03
Speaker 3: cable business continues to be a weak spot. That was
13:07
Speaker 3: down about eleven percent.
13:09
Speaker 2: Yeah, big thing, just like looking through it. So if
13:11
Speaker 2: you look at when they were really cranking, like twenty
13:15
Speaker 2: eighteen twenty nineteen, So twenty eighteen, the three biggest movies
13:18
Speaker 2: were Disney, and five out of the top ten were
13:21
Speaker 2: So this is in terms of annual US box office
13:25
Speaker 2: twenty nineteen. You take a look at it, the top
13:28
Speaker 2: six movies were Disney and seven out of the top eight. Wow.
13:33
Speaker 2: The only one wasn't was Spider Man Far from Home.
13:35
Speaker 2: And that even Disney owned like a minority stake in
13:38
Speaker 2: in terms of how the Marvel deal was structured. Twenty
13:41
Speaker 2: twenty not really a real year for movies. Let's just
13:45
Speaker 2: skip twenty twenty. Twenty twenty one. Again, this is where
13:48
Speaker 2: they kind of ran into some trouble here. They had
13:50
Speaker 2: three out of the top ten, but the dollar values
13:54
Speaker 2: were all much smaller. The biggest one they had was
13:55
Speaker 2: like two hundred and twenty five million dollars domestically twenty
13:59
Speaker 2: twenty sorry hang on accidentally clicked on twenty three, twenty
14:03
Speaker 2: twenty two, they only had two out of the top ten.
14:07
Speaker 2: The biggest was four thirty six and the next one
14:09
Speaker 2: was you know, three forty three, so again not really
14:12
Speaker 2: reaching the heights they did previously. Twenty twenty three, again
14:17
Speaker 2: three out of the top ten, the biggest one was
14:19
Speaker 2: three fifty eight, and previously they'd been doing like six
14:21
Speaker 2: seven hundred million last year. Okay, kind of a return
14:26
Speaker 2: to dominance. Three out of the top four with two
14:29
Speaker 2: of them over six hundred million. Yeah, that's the kind
14:31
Speaker 2: of stuff that you need to be able to deliver.
14:34
Speaker 2: And obviously a year to date so far nothing matters
14:36
Speaker 2: because it's been you know a month.
14:40
Speaker 3: Well Molana too, I guess to point out, did gross
14:43
Speaker 3: has grossed over a billion? So yeah, so yeah, that's
14:46
Speaker 3: fantastic to see there. I'm sure Moana three is is
14:49
Speaker 3: coming soon.
14:50
Speaker 2: Have you either of you seen the second one.
14:52
Speaker 4: I haven't heard if it's not better than the first.
14:54
Speaker 2: Well, so the big thing is, uh, they took lin
14:57
Speaker 2: Manuel Miranda off the song so he didn't do the
15:00
Speaker 2: songs whereas he did for the first. And so I've
15:02
Speaker 2: heard that the overall you know, catchiness and quality isn't
15:06
Speaker 2: quite the same that it wasn't the first. I haven't
15:08
Speaker 2: heard any bad things about the movie, but just hey,
15:11
Speaker 2: it's not quite up to stuff. But the bar was
15:13
Speaker 2: pretty high because the first one is fantastic. Let's talk
15:17
Speaker 2: a little bit about app Lay, or Apple as they're
15:20
Speaker 2: more commonly referred to. So China is reportedly going to
15:25
Speaker 2: probe Apple's app store fees in an anti trust probe.
15:31
Speaker 2: And you better believe that this is connected to the
15:34
Speaker 2: imposition of tariffs from the United States earlier this week.
15:38
Speaker 2: And here's this is actually kind of interesting, just how
15:41
Speaker 2: the two countries are playing off each other. So the
15:44
Speaker 2: United States imposes ten percent tariffs on all imports from China.
15:48
Speaker 2: There was They also removed the deminimus exception, saying that
15:52
Speaker 2: goods under eight hundred dollars originally were not subject to that.
15:56
Speaker 2: Now they said they are, but we'll talk about the
15:59
Speaker 2: post off just a little bit, because it's all confusing
16:01
Speaker 2: as to whether or not this may have actually been
16:03
Speaker 2: rescinded in terms of that deminimous exception coming back. But
16:07
Speaker 2: the message from the United States is, look, there are
16:11
Speaker 2: two real ways that China has grown their economy in
16:14
Speaker 2: the last couple decades, exporting a bunch of stuff and
16:18
Speaker 2: building real estate. Now the real estate side of things
16:21
Speaker 2: is already in the toilet in China right now. But okay,
16:23
Speaker 2: if we're going to impose tariffs on you, that's kind
16:25
Speaker 2: of going right after the lifeblood of the Chinese economy
16:28
Speaker 2: being able to export stuff and make money off of it.
16:31
Speaker 2: The United States is not a big exported to China.
16:33
Speaker 2: So the initial response yesterday was, hey, China, you know,
16:37
Speaker 2: slap fifteen percent tariffs on like a small volume of
16:40
Speaker 2: US goods. The US economy does like if today China
16:47
Speaker 2: said we're not importing anything from the US. Again, I'm
16:50
Speaker 2: just talking like first order, not like the larger things
16:52
Speaker 2: that it would sound. Yeah, there'd be some companies that
16:56
Speaker 2: have issues, but ultimately the US economies just fine not
16:59
Speaker 2: exporting stuff to China. It's not a meaningful source of
17:02
Speaker 2: economic growth. For US instead. Pretty savvy here in terms of,
17:08
Speaker 2: you know, kind of how they're hitting back. Hey, the
17:10
Speaker 2: lifeblood of the Chinese economy, it's those two things, real
17:12
Speaker 2: estate and exports. Lifeblood of the US economy, it's tech
17:17
Speaker 2: and the stock market, right Like, that is where the
17:20
Speaker 2: meat is right now. So if you want to punish
17:22
Speaker 2: the United States, you don't impose a bunch of tariffs
17:25
Speaker 2: on stuff that the US is exporting to China because
17:28
Speaker 2: the US doesn't export enough to China for it to matter. Instead,
17:31
Speaker 2: you say, no, we're gonna go after the tech companies.
17:34
Speaker 2: Yesterday it was Google, today it's Apple, and Ida has
17:38
Speaker 2: been throwing the mix too correct, So like this is
17:41
Speaker 2: what you are going to see here, and it's why. Look,
17:47
Speaker 2: China is not in a good situation. It always bothers
17:50
Speaker 2: me when people are like, oh, like the Chinese have
17:51
Speaker 2: the upper hand in this because we buy so much
17:53
Speaker 2: to them. The Chinese economy sucks and if you make
17:56
Speaker 2: it suck more, it's going to be painful for them.
18:00
Speaker 2: China's not just sitting there going all like we can do.
18:03
Speaker 2: They're not evil geniuses, you like, it's just like they're
18:07
Speaker 2: normal people that just happen to have like a government
18:10
Speaker 2: that is really repressive and authoritarian, and generally it's something
18:13
Speaker 2: that I don't agree with. But whatever, it's neither here
18:16
Speaker 2: nor there. They're not super geniuses that are like going
18:19
Speaker 2: to somehow conquer the world because everyone else is dumb. Instead,
18:23
Speaker 2: like they've had a good run of like a couple
18:25
Speaker 2: decades and they're running into some real issues right now.
18:29
Speaker 2: So this here is exactly how if you're trying it.
18:33
Speaker 2: If I were a foreign country trying to fight a
18:37
Speaker 2: trade war with the US and I didn't import a
18:39
Speaker 2: lot from the US, fine, I'm going straight after your
18:42
Speaker 2: capital structure like that. That's exactly where I'm going because
18:46
Speaker 2: that's where the meat of growth is for the US
18:49
Speaker 2: at this particular point in time.
18:50
Speaker 3: Yeah, you're probably talking about twenty percent of the S
18:52
Speaker 3: and P five hundred with those three companies right there,
18:54
Speaker 3: and from a waiting perspective.
18:56
Speaker 2: Right, and this is where if China really wants to
18:58
Speaker 2: punish the US, they they certainly can. They can inflict
19:02
Speaker 2: some pain on this and the question and this is
19:05
Speaker 2: why this is like an uninvestible theme. It's like you
19:08
Speaker 2: don't have any idea who blinks first on this? It's
19:12
Speaker 2: purely a game of chicken, and there's no way that
19:15
Speaker 2: you can hypothesize who's going to blink first based on
19:18
Speaker 2: more pain being inflicted.
19:19
Speaker 3: They pull TikTok. That will get some people pretty upset.
19:24
Speaker 2: That would I was hoping we could get through an
19:26
Speaker 2: entire show without talking TikTok, but now we haven't. Thanks,
19:30
Speaker 2: I appreciate that quick break here. When we come back,
19:33
Speaker 2: we get the trivia answer. We're talking Post Office.
19:41
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20:05
Speaker 4: Trivia question today was who was the first post Master General?
20:11
Speaker 4: That would be Benjamin Franklin. Dottie from Wareham, mass is
20:14
Speaker 4: our winner today, taking home a Financial Looks Shane Show
20:17
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20:20
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20:24
Speaker 4: at Financial Looks shangeeshow dot com.
20:26
Speaker 2: Speaking of post mm hmmm hm.
20:32
Speaker 1: So.
20:33
Speaker 2: In a story that has played out over the last
20:35
Speaker 2: twenty four hours now. Yesterday, this was I think around
20:40
Speaker 2: like six pm, the USPS said that they would stop
20:44
Speaker 2: accepting parcel part Can we just restart the segment? Yeah?
20:49
Speaker 2: Can you play the bumper again? The US Postal Service
20:52
Speaker 2: said that they would stop accepting parcels from China and
20:56
Speaker 2: Hong Kong. And the reason for this was simple. At
20:58
Speaker 2: twelve oh one am yesterday, the Trump administration put in
21:02
Speaker 2: place a ten percent tariff on all imports from China.
21:07
Speaker 2: But beyond that and why they said all parcels would
21:09
Speaker 2: would not be accepted anymore from there. Previously there had
21:13
Speaker 2: been what's called a deminimus exception, which stated, hey, if
21:17
Speaker 2: the thing that you're shipping is valued at under eight
21:20
Speaker 2: hundred dollars, tariffs do not apply. And so why this
21:25
Speaker 2: mattered is there are all kinds of businesses that are
21:28
Speaker 2: based in the US, Canada, based wherever, that don't actually
21:31
Speaker 2: have any inventory of their own, but rather just have
21:34
Speaker 2: a third party handle the shipping direct from China. It's
21:37
Speaker 2: called determine. And look, this can be any business that
21:40
Speaker 2: like sells something but doesn't have inventory in its own
21:43
Speaker 2: warehouses or in any warehouse that it's you know, even handling.
21:47
Speaker 2: It's called a drop shipper. Basically someone else handles all
21:49
Speaker 2: of that. So if you were a drop shipper that
21:53
Speaker 2: had your warehouses in China, think of companies like Timu Shine,
21:57
Speaker 2: you know, things like that. Hey, if you had this
22:00
Speaker 2: dominimus exception in place, which by the way, you did,
22:02
Speaker 2: because remember even before this, there were tariffs on Chinese
22:06
Speaker 2: imports that the Trump administration had imposed the first time
22:10
Speaker 2: around with the Deminimus exception. So immediately what you get is, okay,
22:16
Speaker 2: we've got to send this stuff into So let's say
22:19
Speaker 2: that someone, just as an example, is trying to buy
22:21
Speaker 2: a ten dollars good from Timu and it's being shipped
22:26
Speaker 2: directly from Timu in China. Okay, gets shipped over and
22:30
Speaker 2: it lands at Lax and it goes through customs and whatever.
22:35
Speaker 2: We're going to deliver this. Now you have the issue
22:39
Speaker 2: of okay, how do we make sure that the claimed
22:43
Speaker 2: value of goods is actually having the proper tariff applied.
22:49
Speaker 2: How do we know, just as an example, that Timu
22:51
Speaker 2: isn't saying, hey, this package has ten dollars of goods
22:54
Speaker 2: when it actually has twenty. And this is why the
22:57
Speaker 2: whole diminimus exception generally makes sense is because there are
23:02
Speaker 2: the estimates that I've seen in between one point two
23:04
Speaker 2: and one point seven billion packages per year shipped directly
23:07
Speaker 2: from China into the United States. Now, Paul, on a
23:10
Speaker 2: given day, let's say that you were working for US
23:12
Speaker 2: Customs and Border Patrol, how many packages do you think
23:16
Speaker 2: you could inspect in a regular let's even say like
23:20
Speaker 2: a ten hour shift in order to verify the contents
23:24
Speaker 2: and their value to fifty three hundred, So at two
23:30
Speaker 2: hundred and fifty to three. And remember, let's take the
23:31
Speaker 2: midpoint and say there's one point four billion packages that
23:35
Speaker 2: are coming from China each year for three hundred and
23:38
Speaker 2: sixty five days, that's three point eight million. And if
23:41
Speaker 2: you're gonna do three hundred, was that three hundred a day? Yeah,
23:44
Speaker 2: that's three hundred three day shift.
23:46
Speaker 1: Yep.
23:47
Speaker 2: You need twelve tho eight hundred people just looking at
23:51
Speaker 2: packages from China in order to process that volume, Paul,
23:55
Speaker 2: do we have twelve thousand, eight hundred people who are
23:58
Speaker 2: in Customs more ENROLAG just looking at Chinese packages coming in?
24:02
Speaker 3: No, I wonder what the whole department is a size.
24:04
Speaker 2: So the US Postal Service initially suspended these the shipping
24:10
Speaker 2: of parcels from China and Hong Kong this morning. It
24:14
Speaker 2: was sometime between like seven and nine am. I don't
24:16
Speaker 2: know the exact time. They reversed course and said we
24:19
Speaker 2: are going to accept it and like, we'll figure out
24:22
Speaker 2: how to do this. So couple things that I'm trying
24:25
Speaker 2: to figure out, a like, how did they suddenly figure
24:27
Speaker 2: out how to do it when twelve hours before they
24:29
Speaker 2: told everyone no, we can't b Has there been a
24:35
Speaker 2: change on that deminimous exception that we just don't know
24:38
Speaker 2: about yet? Yeah, and it's going to come out in
24:40
Speaker 2: an executive order today where hey, we're reinstating the deminimus
24:44
Speaker 2: exception on this.
24:45
Speaker 3: That has to be it.
24:46
Speaker 2: It like, that's how could get resolve that because otherwise
24:50
Speaker 2: I don't know how you can enforce this properly. So
24:54
Speaker 2: we'll see if we get any further news on this.
24:56
Speaker 2: But it's been a wild twelve hours for the Post
24:59
Speaker 2: Office and I don't know, We'll just have to see
25:04
Speaker 2: kind of how it goes here.
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26:09
Speaker 2: Paul, we got the Jolts report yesterday. I'm sure you
26:11
Speaker 2: and Mike covered it, but one of the key things
26:15
Speaker 2: there is that not even a key thing. Look, it's
26:18
Speaker 2: the same thing Jay Powell said when the FED meeting
26:20
Speaker 2: happened a couple weeks ago. If you've got a job
26:23
Speaker 2: right now, you're generally pretty safe. If you don't have
26:27
Speaker 2: a job, it's pretty hard to get one.
26:30
Speaker 3: Yeah, I think that's that sums up really well what
26:33
Speaker 3: we saw with the Jolts report yesterday. Just to focus
26:36
Speaker 3: on this ratio of open jobs to available workers, because
26:39
Speaker 3: that's one that's pretty easy to sort of break down.
26:41
Speaker 3: Back in the peak of March of twenty twenty two,
26:44
Speaker 3: we reached this point in the United States where there
26:46
Speaker 3: was two jobs open for every one worker that was
26:49
Speaker 3: looking for a position. So that was at you know,
26:51
Speaker 3: the peak of powers in terms of the labor market.
26:53
Speaker 3: The ratio has now as of this recent report declined
26:56
Speaker 3: down to basically one to one, one point one to
26:58
Speaker 3: one job jobs open to available worker looking for jobs.
27:02
Speaker 3: We posted about seven point six million of jobs available
27:07
Speaker 3: in that Jolt Support yesterday, And it speaks to your point, Chuck,
27:10
Speaker 3: where if I were asked to categorize the labor market
27:13
Speaker 3: at this point, it is not in a troubled state,
27:17
Speaker 3: I wouldn't say, you know, unemployment has been at a
27:19
Speaker 3: pretty static level for the last couple months. You've had
27:23
Speaker 3: limited layoffs. But what we have seen is it's nowhere
27:26
Speaker 3: near as hot as it was in some of those
27:28
Speaker 3: prior years. The percentages of new jobs that are being
27:32
Speaker 3: hired into the labor market is down to about three
27:34
Speaker 3: and a half percent through twenty twenty four. It was
27:38
Speaker 3: higher a peak of about four point four percent back
27:41
Speaker 3: in twenty one.
27:42
Speaker 2: To take a quick break here, when we return, we'll
27:45
Speaker 2: do a little bit of stack root.
27:47
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28:23
Speaker 2: Before we get to stack Roulette, Paul, the sp has
28:26
Speaker 2: just now turned positive. It's a point six points or
28:30
Speaker 2: point zero zero one percent. But again, just a really
28:35
Speaker 2: boring day overall, even though there's a lot of churn
28:37
Speaker 2: happening under the surface in terms of where different sectors
28:42
Speaker 2: and different companies are moving. But from the top down,
28:45
Speaker 2: looks pretty quiet, but there's a lot moving underneath, underneath
28:48
Speaker 2: the hood. What do you got for me?
28:50
Speaker 3: Super Bowl is coming up and the American population will
28:54
Speaker 3: bet a record one point four billion dollars on this
28:57
Speaker 3: upcoming Super Bowl. In particular, what stood out now is
29:01
Speaker 3: we have about thirty eight states where it is legal
29:04
Speaker 3: for sports gambling, about seventy percent of the adult population,
29:08
Speaker 3: and New York has really overtaken Nevada as the top
29:12
Speaker 3: market in the space. I mean, obviously from a population size,
29:15
Speaker 3: you can understand it. But what we've seen in terms
29:17
Speaker 3: of the shifts in betting over the last couple of
29:20
Speaker 3: years is that New York is really the pre eminent
29:22
Speaker 3: market from a sports gambling perspective, where sports betting for
29:26
Speaker 3: this Super Bowl will reach up to one hundred and
29:28
Speaker 3: eighty three million dollars in New York alone, followed by
29:32
Speaker 3: another one hundred and seventy million from Nevada and one
29:35
Speaker 3: hundred and forty seven million from New Jersey. So it
29:39
Speaker 3: was a number last year that came in I believe
29:41
Speaker 3: at one point two five billion set to increase even
29:45
Speaker 3: more this year. You still have got twelve more states
29:48
Speaker 3: out there for legalization, but it's become a huge market
29:51
Speaker 3: out there.
29:52
Speaker 2: The fascinating thing about the legality of sports betting right
29:57
Speaker 2: now is when you look at the state it's where
30:00
Speaker 2: it is not allowed. California and Texas don't allow it.
30:04
Speaker 2: The two biggest states of the country do not allow it,
30:08
Speaker 2: and so it's kind of remarkable that you're getting these
30:10
Speaker 2: numbers despite those two not being involved. I like, having
30:17
Speaker 2: seen this play out for the last several years in
30:20
Speaker 2: the Northeast. Now it's clear to me that we have
30:24
Speaker 2: a real gambling problem, in a real sports gambling problem
30:28
Speaker 2: in the United States. And it's not to say that
30:31
Speaker 2: I think it should, you know, go back to being illegal.
30:34
Speaker 2: I don't believe that, but I think we have some
30:37
Speaker 2: real issues with what I'm seeing, particularly, I mean again, like,
30:41
Speaker 2: if you look at the data, it's mostly young men
30:44
Speaker 2: between the ages of twenty and thirty that have the
30:48
Speaker 2: biggest problems here, and there are not nearly enough resources
30:52
Speaker 2: dedicated to either a supporting them or b basically like
30:55
Speaker 2: cutting them off if they are ending up in debt
30:59
Speaker 2: to legal online sports books. Which is what you're seeing
31:02
Speaker 2: at an increasing rate, so that there's a real problem
31:06
Speaker 2: on that side of things. I don't know what the
31:08
Speaker 2: answer to it is, but I've seen it popping up
31:12
Speaker 2: more and more with people either in my life or
31:15
Speaker 2: adjacent to my life that are ending up in a
31:18
Speaker 2: really bad spot because of sports gambling. And I don't
31:23
Speaker 2: know what we're gonna do about it, because it is
31:25
Speaker 2: a systemic issue at this point from what I can tell.
31:30
Speaker 3: Yeah, usually you know, you have legalization and then there
31:34
Speaker 3: needs to be a correction in terms of the promotion
31:36
Speaker 3: and some of the guardrails around it. So we'll see.
31:39
Speaker 2: I want to talk a little bit about waffle House.
31:41
Speaker 2: Waffle House announced yesterday that they are putting a fifty
31:45
Speaker 2: cent per egg searcharge in place due to the price
31:49
Speaker 2: of eggs and what that is doing to their business
31:52
Speaker 2: as a result of the bird flu that is going
31:55
Speaker 2: through the United States right now. My general rule of
31:58
Speaker 2: thumb is when waffle House does something, it means it's
32:02
Speaker 2: really bad the reason why, and not not that like
32:05
Speaker 2: waffle House is doing it, but hey, it means there's
32:07
Speaker 2: a real problem waffle House. If you're not familiar with them,
32:11
Speaker 2: they're mostly located throughout the southeastern part of the country.
32:13
Speaker 2: As a result, they have a ton of experience dealing
32:15
Speaker 2: with hurricanes, namely, and one of the ways that a
32:19
Speaker 2: lot of people who are trying to see the impact
32:22
Speaker 2: of a storm measure the impact is through whether or
32:25
Speaker 2: not waffle House closes locations in various areas. And the
32:29
Speaker 2: reason why is waffle House has, like, literally, I'm not
32:32
Speaker 2: making this up, they have like a hurricane preparedness center
32:36
Speaker 2: where they help to direct their operations and basically they
32:40
Speaker 2: like they are one of the last stores to close
32:43
Speaker 2: in the event of a hurricane, in the first to
32:44
Speaker 2: reopen because they're so good at it. And so when
32:47
Speaker 2: waffle House says, hey, we've got a problem with the
32:50
Speaker 2: price of eggs, I look at it and I go, okay,
32:53
Speaker 2: we got a problem with the price of eggs. Yeah.
32:55
Speaker 3: I mean particularly, you'd think, I don't know the details
32:58
Speaker 3: of the resources on their eggfront, but you'd think that
33:00
Speaker 3: they have a lot of supplier relations in terms of
33:03
Speaker 3: the amount that they're purchasing on a yearly basis. They
33:06
Speaker 3: have as much access to eggs you typically as any
33:10
Speaker 3: other institution in the country, just because of the amount
33:12
Speaker 3: of consumption that occurs there. But like you said, it
33:15
Speaker 3: absolutely is an issue from what we're seeing at grocery
33:18
Speaker 3: stores where we're at. Back in December, it was four
33:21
Speaker 3: dollars and fifteen cents for a dozen eggs. We now
33:24
Speaker 3: sit wholesale at six seventy per dozen as of January
33:29
Speaker 3: thirty first, So it is a huge issue. You're seeing
33:32
Speaker 3: in California eggs almost exceeding nine dollars for a dozen,
33:37
Speaker 3: and between seven and a quarter and seven sixty three
33:40
Speaker 3: for the Midwest and New York.
33:42
Speaker 2: Uh, do you know where what states produce the most eggs? No?
33:49
Speaker 2: Let me let me back up. Even before that, in
33:52
Speaker 2: twenty twenty three, which is the last year that I
33:54
Speaker 2: have data on this from. This is from the US
33:56
Speaker 2: Department of Agriculture, How many eggs did the United States
34:00
Speaker 2: in twenty twenty three? Either of you.
34:06
Speaker 4: Six billion?
34:08
Speaker 2: Six billion? Yes, possible, Like you're not gonna get it right,
34:13
Speaker 2: But I'm just curious where both of you end up
34:15
Speaker 2: going five hundred million, one hundred and nine billion, Wow,
34:21
Speaker 2: one hundred and nine billion. I was closer, Yes, you were.
34:25
Speaker 2: You were closer. Do you do either of you have
34:28
Speaker 2: any idea which states produce the most eggs. Georgia. Georgia,
34:33
Speaker 2: I think it looks like is top ten. They do
34:35
Speaker 2: about five billion a year, so five percent of US
34:37
Speaker 2: production comes from Georgia.
34:39
Speaker 3: California.
34:40
Speaker 2: California's three billion. The biggest ones I'm eyeballing this sexis
34:46
Speaker 2: Texas is about six billion, six and a half. So
34:48
Speaker 2: they're up there. The biggest ones that I'm seeing. I've
34:51
Speaker 2: got Iowa at thirteen, I've got Ohio at eleven, I've
34:56
Speaker 2: got Indiana at ten. And those are your biggest ones.
35:02
Speaker 2: Massachusetts is an example, produces that that's ten billion. By
35:06
Speaker 2: the way, Massachusetts produces forty one million per year. So
35:10
Speaker 2: I had someone the other day come up to me
35:12
Speaker 2: and they were asking about egg prices and they're like,
35:15
Speaker 2: I don't get why egg prices are high in the Northeast,
35:17
Speaker 2: Like this bird flu is not affecting the Northeast right now.
35:21
Speaker 2: And the answer is, we don't get most of our
35:23
Speaker 2: eggs in the Northeast from the Northeast. It's like it's
35:28
Speaker 2: just how it is, I know, like the whole thing
35:29
Speaker 2: about you know, oh, what was it like brown legs,
35:32
Speaker 2: brown eggs or local eggs, and you know, no, there's
35:36
Speaker 2: almost no local eggs that are sold in the Northeast
35:39
Speaker 2: because there aren't enough chickens laying eggs in the Northeast.
35:42
Speaker 2: Because if you're trying to run a legitimate, commercial sized
35:46
Speaker 2: chicken farm, there are way more, way cheaper and way
35:50
Speaker 2: more hospitable places that you can do it than around here.
35:54
Speaker 2: Is kind of what I'm getting at. But yeah, one
35:56
Speaker 2: hundred and nine, one hundred and nine billion eggs per year,
36:01
Speaker 2: it's a lot. It's kind of wild. It's kind of wild.
36:05
Speaker 2: Think about that's a lot of chickens, just like popping
36:08
Speaker 2: those puppies out, you know, Really, do they get any
36:11
Speaker 2: like weeks off or anything? How does it work?
36:14
Speaker 3: Is there no vacations? No vacations day they have unlimited PTO?
36:19
Speaker 2: If they get laid off, do they get severance? I
36:22
Speaker 2: mean that's hard work, just laying those eggs all the time.
36:25
Speaker 2: He's sitting I guess, don't you get bored? Ah, you're chicken?
36:31
Speaker 2: All right? Another day? Another egg?
36:32
Speaker 4: Here you go, Jimmy, I'm a chicken.
36:34
Speaker 1: What I didn't.
36:35
Speaker 3: Realize is that this isn't The piece about the eggs
36:37
Speaker 3: is that the US only imports about fifteen percent of
36:39
Speaker 3: its food supply from other countries that that was news
36:42
Speaker 3: to me.
36:42
Speaker 2: I would have guessed a higher percentage, mostly on the
36:44
Speaker 2: produce side. Yeah, yeah, it's mostly on the and it's
36:46
Speaker 2: mostly in the winter, you know, when you can't produce
36:49
Speaker 2: it in the Southeast or in California. So yeah, it's
36:53
Speaker 2: most of the food is produced domestically still. And the
36:56
Speaker 2: amazing thing about that, I go back to this stat
36:59
Speaker 2: over and over. In the nineteen hundreds and nineteen tens,
37:03
Speaker 2: we had about seven million people domestically that were responsible
37:06
Speaker 2: for food production. Today it's about a million people. So
37:09
Speaker 2: the population has obviously grown exponentially over that time, but
37:13
Speaker 2: we've gotten so efficient with the technology that we're using,
37:16
Speaker 2: you know, fourteen percent of the workers to produce many
37:20
Speaker 2: multiples of the amount of food that we did one
37:22
Speaker 2: hundred years ago.
37:23
Speaker 3: It's probably only going to get more efficient with some
37:24
Speaker 3: of the technology stuff that's rumored.
37:26
Speaker 2: And this is why I push back on some of
37:27
Speaker 2: the stuff where it's like, oh, like we want to
37:29
Speaker 2: you know, push back on automation imports and things like that. No,
37:33
Speaker 2: don't you want to be able to like feed your
37:35
Speaker 2: people with less work. Don't you want to be able
37:37
Speaker 2: to have more goods with less work. Isn't that the
37:39
Speaker 2: whole promise of technology? And yes, we need to figure
37:42
Speaker 2: out how to make sure that the impacts to families
37:45
Speaker 2: that lose jobs because of new technology aren't too big.
37:49
Speaker 2: But you want progress like I got. Yeah, I don't
37:53
Speaker 2: want to be sitting here like, hey, we can't use
37:56
Speaker 2: drills on the job site because then we need fewer carpenters.
38:00
Speaker 3: We need to keep typewriters like you just you can't.
38:02
Speaker 3: You gotta innovate.
38:04
Speaker 2: I'm glad the Carpenter's union didn't say, like, you know,
38:07
Speaker 2: no drills or no power tools like that, that would
38:09
Speaker 2: have been bad, like they realized. No, this helps us
38:11
Speaker 2: do more. Let's take a quick break here for the
38:13
Speaker 2: rest of the day. We'll see it tomorrow on the
38:15
Speaker 2: Financial Exchange.