Latest news with #JasonMoser
Yahoo
05-05-2025
- Business
- Yahoo
A Steady Business During Uncertain Times
In this podcast, Motley Fool analyst Jason Moser and host Ricky Mulvey discuss: How trade disputes are impacting the Port of Los Angeles. What PayPal's advertising business means for its growth story. Earnings from Spotify. Then, Motley Fool personal finance expert Robert Brokamp joins Ricky to discuss how to diversify your savings. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Before you buy stock in PayPal, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and PayPal wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $623,685!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $701,781!* Now, it's worth noting Stock Advisor's total average return is 906% — a market-crushing outperformance compared to 164% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 5, 2025 This video was recorded on April 29, 2025Ricky Mulvey: The ships are slowing down. You're listening to Motley Fool Money. 'm Ricky Mulvey joined today by Jason Moser, the man who can do it all by himself. Jason, thanks for being here, man. Jason Moser: Thank you for having me, Ricky. How's everything going? Ricky Mulvey: It's going pretty well. I'm going to Casa Bonita tonight, which I feel like is a real introduction to Denver, and I will tell you about what that is maybe after the show, because we got a lot of news to break down. Jason Moser: Yes, we do. Ricky Mulvey: Let's get to this story. We have a lot of earnings going on, but I think this macro story is worthy of investors attention. Gene Seroka is the executive director of the Port of Los Angeles, and anytime you start getting port directors going on cable news, it's usually not a great sign for the economy, JMo. He went on CNBC's Squawk Box, and he said that he expects cargo volume to be down by more than a third next week, compared to last year, and that a number of major American retailers are stopping all shipments from China based on the tariffs. To lay out the law, who's getting hurt by this? Jason Moser: Maybe the better question is, who isn't getting hurt by this? Because it does seem like something that is going to hurt an awful lot of folks covering the spectrum there. I think, generally speaking, small businesses stand out as ones getting a bit more hurt by this, at least in the near term. They tend to not have the same financial resources and are a little bit more dependent on imports and whatnot. I think large companies like Walmart, your Costcos of the world, they're able to shoulder the burden more just because of their scale. Now, with that said, I will say Walmart is particularly levered to China, for example. It's estimated that 60-70% of Walmart's globally sourced products actually come from China. Even more noteworthy, I think there is market research that suggests that figure could be closer to 70-80% for merchandise sold in the US so they're not immune, but they have the ability to shoulder that burden. They can handle it and bye their time as all of this tariff stuff plays out. I think ultimately that really points to the biggest question mark in regard to all of this is just when is this going to ultimately be resolved? And that is still just very unclear, but there's just no question, small businesses are going to feel the brunt of this very quickly. Ricky Mulvey: Well, I think there will at least be an inflection point when these decreased shiploads lead to empty shelves in physical stores and on online stores like Amazon. I've noticed that these looming tariffs have absolutely impacted my shopping habits. Are you doing any pre tariff shopping in the Moser household right now? Jason Moser: I have not yet, but it is still early. Now, when I start seeing Chewy telling me that our dog and cat food is out of stock and that shipment's not coming, then I know I've got serious problems because I have three dogs and a cat that won't stand for that, and I can't explain it to him either. But as of now, listen, I've got a garage full of toilet paper and paper towels so I think we at least have the necessities for now. Ricky Mulvey: You've got a big yard, and you just might need to learn how to hunt in order to provide for your dogs. I've noticed it over here, I just bought a set of AirPods because I'm like, Oh, these are made in China and better get them while I can, first of all, get them and while they're on sale. I've been stocking up on clothes just because I don't know what's going to happen to the shelves. I don't know if my size is going to be impacted, but yeah, it's absolutely impacted my shopping habits, Apollo's chief economist Torsten Slok released a presentation earlier this month, and he laid out a timeline for tariffs, and there's a slide with the spicy title for a PowerPoint slide, the voluntary trade reset recession. Points out early mid May, that's when you start seeing those containerships come to a stop. Then in mid to late May, that's when trucking demand also comes to a halt a fewer trucks are taking things off containerships. Then right in that late May, early June window, that's when you're going to see empty shelves and companies responding to lower sales. What do you think about that timeline? Jason Moser: I think it's certainly a potential outcome in theory. Now, if that happens, I think there will be massive political consequences. We have to look at this and say well, This is self inflicted. We started this, and it's a matter of trying to figure out, ultimately what the goal is here, and I think that is still unclear, and we're operating just on this day to day headline economy, so to speak. My hope is that this is a worst case scenario and that cooler heads prevail sooner rather than later. But listen, we're just getting ready to start May here, very soon so that's not far off and if that happens, clearly, the consumer will have their say. Ricky Mulvey: Let's take a look at PayPal reported this morning, and JMo is an investor in this company. I'm pretty happy to own a company that's not making big moves on earnings right now. I'll take some stability that seems to be what PayPal is offering, revenue up 2% on a currency neutral basis. Transaction margin dollars, which is just direct transaction revenue minus transaction expenses. Think things like payment processing, and PayPal likes that is a core measure of its profitability. That was up 7% to about $3.7 billion. Free cash flow, and adjusted free cash flow, both down from last year by about 45% in a quarter respectively. There's some cash flow questions, some operating profitability targets happening. What are your big takeaways from the quarter? Jason Moser: Yeah, I think it was an OK quarter. It was right in that meaty part of the curve, as George Costanza might say. Not showing off, not falling behind. It was their fifth consecutive quarter of profitable growth, which I think is really encouraging for Alex Chriss. As you mentioned, revenue growth was really non existent, but I wouldn't really look into that as much. I think what we're seeing with PayPal, they're doing a very good job of bringing things down to the bottom line. We saw GAAP earnings per share, up 56%, non GAP earnings per share, up 23%, and really just flew past the guidance that they offered from a quarter ago. I think when you look at the metrics that really matter for the business, things like total payment volume that was up 3%. $417 billion going through those networks there. This is up 4% currency neutral, payment transactions and payment transactions per active account saw a little bit of a decrease, but that's in regard to the payment service provider part of PayPal so, ultimately, those numbers actually excluding that payment service provider part of the business were up as well, and active accounts grew 2% to 436 million. Remember, they went through just a period not too long ago of trying to call a lot of those inactive accounts that really aren't using the service, so to speak. But returned 1.5 billion dollar to shareholders with share repurchases, which I think was very encouraging. In regard to cash flow, I think the one thing with cash flow with PayPal, it's going to ebb and flow a little bit, particularly because of the buy now pay later side of the business, that fell a little bit, just because of some timing stuff between originating some European buy now pay later receivables and then the ultimate sale of those receivables so I wouldn't read too much into that. This is still a business that generates a ton of cash. The one thing that stood out to me, though in the quarter that I just can't help but wonder what the future holds for this, because PayPal is building out this little ads part of the business right now, PayPal ads, and they're making some progress. I don't know is this a sneaky ad play? It could be, they're starting to introduce programmatic advertising, and they're starting to launch offsite ads, which ultimately those are ads that are generated from all of this data that PayPal and Venmo and those properties get. that's the beauty of this company. They generate a ton of data because of the consumers that use these services so it reminds me a little bit of Amazon back in the day. If you remember with Amazon, several years back, we knew they were getting into advertising, but didn't really know if it was going to be anything material so it was starting from nothing. But you fast forward to today, Amazon is generating they're on a $70 billion run rate for their advertising business alone. Now, I'm not saying that PayPal could get to that scale. But I do think PayPal could get to meaningful scale relative to its business, and that is very high margin revenue. I think that's going to be something fun to follow with this company as time goes on, particularly as they're launching this offsite advertising business. Ricky Mulvey: I think one of my big questions then for PayPal's future is the buy now pay later initiative. You see here, Alex Chriss, touting the growth in that in that people are when they use buy now pay later, they're making more transactions. But if we're skidding into a self induced recession, there may be consequences for that, and on a personal level, I'm not super thrilled about buy now pay later. I understand it's part of the business. But speaking strictly as an investor is a growth lever. If you're looking at the growth in that and you're also seeing credit card delinquencies going up, maybe that's not a great thing for that part of PayPal's business. Jason Moser: I think that's a very valid point. Buy now pay later is just credit card ultimately in another form and you have to count on the fact that some of those loans, so to speak, are not going to pan out, and they're going to write off delinquencies and non payments there. We are seeing consumers relying more and more on buy now pay later for. Buy now pay later, it's a clever product for things that maybe aren't necessities, but when you start seeing data that shows consumers are using buy now pay later for things like their groceries, that's where you start wondering what is the real condition or what is the real state of the consumer? And when you see consumers resorting to BNPL for necessities like groceries, that starts to raise at least some yellow flags in the near term. Ricky Mulvey: What do you think about CEO Alex Chriss reaffirming the full year guidance? We talked about the macro pressures that will have an impact on this company. A lot of PayPal transactions are consumer spending. If you're in the office of the CEO, what are you telling him? Are you telling him to pool lower guidance? What's going on with that? Jason Moser: I wouldn't tell him to pull guidance necessarily. I think that what we've seen with Chriss over the couple of years that he's been with the company at this point, he seems to at least like to underpromise and overdeliver I like that. Now, some people will call that sandbagging. I don't care, whatever you want to call it, it's fine on me. But he sets the bar fairly reasonably so he's not setting these super high aspirations, and we know how that works. You set the bar high, eventually, you miss it, and the market really punishes you. But if you set the bar just not low, but just right there in that mid range, that goldilocks range you can hit those targets, you can continue to grow at modest rates, and you're not disappointing the market in the near term. You're not really thrilling everybody in the near term either, but at least you're able to hit those targets and keep on moving the business in the direction that you intend. I don't mind them maintaining that guidance because it does seem like they are offering relatively modest expectations. But as we know, and we're seeing as the headlines change day to day, things can materialize very quickly so it'll be something to keep an eye on for sure. Ricky Mulvey: Let's go to Spotify real quick. Monthly active users growing 10% for the company. Premium subs grew 12%, but the analysts did not like the user growth projections. That's why the stock is getting punished a little bit. CEO Daniel Ek quickly on the conference call saying we could be impacted by tariffs, but people still want to be entertained. They want to learn stuff they want to listen to music. Before we get into the meat of this conversation, JMo, we have a content partnership with Spotify. The Motley Fool actively recommends the stock, I own the stock. How's that for bias? I also want their algorithm to promote this podcast, as well. I'm speaking from a pretty biased perspective but still, in my view, a pretty strong company when you're looking into the actual business results, anything there stand out to you from Spotify's quarter. Jason Moser: The stock has been on a heck of a run here recently so a little pullback is understandable. There was a bit of a miss on operating income there, and that was due to what they were calling social charge, what they call social charges, which are ultimately payroll taxes associated with employees salaries and benefits in other countries. But to me, this is still just such a strong business. You see the growth in the users, whether it's premium or ad supported. It's amazing to see what this business has become, and it's evolving so far beyond being like a music streaming app. I think that when you consider that you consider the fact that Spotify has such strong market share in the entertainment industry at large, to me I understand there are some macro concerns there in the near term, but I think when you look at it, at the end of the day, Spotify and things like Netflix, those are the subscriptions that consumers will probably cut last. The value-focused consumer is looking for value and understanding what are they getting for their dollar. That monthly charge for Spotify or for something like Netflix, given how much we all use those, they, I think, give this company a resiliency that probably more don't have. Ricky Mulvey: We'll leave it there. Jason Moser, thanks for being here. Appreciate your time and your insight. Jason Moser: Thank you. Ricky Mulvey: Hey, it's Ricky, and I want to shout out another podcast called Radical Candor. Based on the New York Times best selling book, Radical Candor talks about how to be a great boss without losing your humanity. Kim Scott, Amy Sandler and Jason Rozov deliver actionable insights each week to help you improve your career and relationships. They have other business experts, including Guy Kawasaki and Steven Covery to stop in and share how they use Radical Candor concepts and their work. Their guidance will help you move beyond ineffective flattery and brutal criticism toward guidance that drives real growth and development. Listen every Wednesday for new episodes wherever you get your podcasts and see how you can apply Radical Candor in your life. Are you feeling a little concentrated? Up next, Robert Brokamp joins me to discuss some ways to diversify your portfolio. This year has been a reminder that stocks can be volatile. In 2023 and 2024, investors were treated to 20% plus returns in the S&P 500. This year, both the NASDAQ and the Russell 2000 were in bear market territory, and the S&P 500 got pretty close. That's if we define a bear market is a drop of 20% or more from all time highs. A drop that in and of itself is the cost of doing business in the stock market, even if the reason this time is, well, you can decide for yourself. Still, it's a good time to ask some questions. If you're near retirement, are you too concentrated in tech stocks? This is a question that even indexers should ask since about one-third of the S&P 500's market value lies in just seven companies. Should I follow the lead of institutional investors spreading their bets outside of the United States, or even Berkshire Hathaway, which now has the most cash on the books of any company Bro ever? All of this is to say, how can I diversify my portfolio to take some of the bite out of bear markets? Robert Brokamp: Well, there are plenty of investments that may add some balls to your portfolio, and we're going to talk about the most popular candidates. But I first want to talk a little bit about diversification in general. We're going to talk about what diversifies a portfolio for what I see as the typical Motley Fool investor who owns stocks primarily in the S&P 500, which, as you mentioned, Ricky, has a tilt toward growth leaning tech-oriented, tech adjacent companies, and a lot of our listeners also own those companies outright. That's the starting point here. I do want to emphasize that diversification is somewhat of a double-edged sword. You often have to own a diversifying asset through many stretches of, frankly, pretty mediocre ho-hum performance in order to eventually get the payoff. Then as I talk about these various things, I do think it's important that when you're looking for a diversifier, it's helpful to know how they perform basically during past market downturns, and over the last 25 years, there's been a good range of examples to see how investments perform during different types of bear markets. We had longer ones such as the dotcom crash and the Great Recession of 2007-2009. Market dropped more than 50% then. I took more than five years for the market to recover. But then we've also had shorter ones like the pandemic panick and 2022. With all that said, here are some diversifiers to consider, and I'm going to give each a letter grade. Ricky Mulvey: What's the grade then for the dividend payers? Robert Brokamp: I'm going to give dividend payers A, B, and here I'm talking about a diversified mix of companies that have paid a consistent and growing dividend for many years, and many have an above average yield. With the current yield on the S&P 500 being 1.3%, it doesn't take much to have an above average yield. It's not necessarily the dividends themselves that make these good diversifiers, though, getting a reliable stream of income is nice, especially since historically that stream will outpace inflation, it's that these types of companies tend to be more value-oriented, a little less volatile than the overall market, and score high on other factors such as quality, which is dined by different people in different ways. But basically comes down to a company that is profitable. The earnings growth is less volatile and they have a strong balance sheet, meaning not a lot of debt. I recently looked at the returns of the 10 biggest dividend focus ETFs, and they're all down this year, but not as much as the overall market. In 2022, when the S&P 500 was down almost 20%, NASDAQ was down more than 30%. The losses in these ETFs were in the single digits, and a couple actually made money. That's it. The diversification among dividend payers is important. During the Great Recession, some of the best dividend payers were financial stocks, and they got walloped. You definitely want a diversified portfolio of dividend payers. Ricky Mulvey: Our colleagues, Matt Argersinger and Anthony Shavon, who run our dividend investing in service would also tell you that dividends are great for companies to pay because they make them a little bit more disciplined on capital allocation decisions when they're not maybe pursuing growth at all costs, and they have to return a little something to their shareholders. Another idea, international stocks, getting outside the United States. Bro, how are you feeling about these? What's the grade right now? Robert Brokamp: I'm going to give them a C plus, which doesn't sound great, though, I think most people should have a little bit of international exposure. I'm giving them a C plus because, frankly, over the past 15 years, it's been tough to argue for international stocks. US stocks have outperformed them by some measure, it's a historical amount. But looking longer-term, there are many long-term periods, several years, even a decade or more, when international stocks outperform US stocks. You could saw it in parts of the '70s, the '80s, and the early 2000s, and looking very short-term, the total non-US stock market is actually up 8% so far this year, while US stocks are down, developed market stocks are doing even better, returning almost 11%. I do think there's something special about the American economy, and it explains why US stocks have outperformed the vast majority of other national stock markets over the last century or so, which is why I'm giving international stocks a C plus when it comes to diversification. But there's no question that there are long stretches when international stocks will do well, and they're certainly a lot cheaper these days than US stocks when you look at P/E or dividend yield or anything like that, which is why I personally have between 15 and 20% of my portfolio overseas. Ricky Mulvey: The next one is a big one. We could be talking multifamily REITs, rental properties, office buildings. We could be talking about the Vanguard entire real estate index fund, but I'll make it easy for you, Bro. How are you feeling about real estate? Robert Brokamp: As you hinted at, there are all real estate, so I'm going to give it a range of grades from C plus to B plus, depending on the type of real estate. A few weeks ago, we did an episode on what happens to different types of assets during a recession. We cited research which actually found that home prices actually hold up well. In fact, they tend to do better during bear markets and stocks than during bull markets with the very notable exception, of course, a 2007-2009 recession when both the economy, the stock market, and home prices collapsed. But usually, over the long-term, residential real estate, whether it's your own home or perhaps investing in rentals, can provide some excellent diversification. Now, you hinted at REITs, real estate investment trust. These are stocks and companies that own and operate real estate. It can be all real estate: apartment buildings, medical facilities, office facilities, storage, and they can be a good portfolio diversifier as well, though, like international stocks, man, they have lagged the S&P 500 for a good while now. Their diversification benefits can be mixed. They did very well during the dotcom crash and the ensuing recession, but also they were part of the real estate bubble, and boy, they got pummeled in 2008. As a starting point, I think it makes sense to have maybe a 5% allocation to REITs, and you can use that Vanguard ETF that you suggested. That's what I choose, especially if you're close to in retirement since they have above average yields, but they're still moderately to highly correlated to the overall stock market, so the diversification benefits are going to be mixed. Ricky Mulvey: This next one has been on a run. Two investments over the past 12 months. One of these has returned about 7%. The one that I'm talking about now has returned 42%. Bro, this is the comparison between what the S&P 500 has done over the past year and gold. Robert Brokamp: It's been quite remarkable. I'm going to give gold a diversifying grade of C plus, though I could easily be moved to a B minus on this. Gold has been in the news a lot lately because, as you pointed out, the return has been exceptional. It's up 26% so far this year, based on the performance of the SPDR Gold Shares ETF, and as you may have seen on social media, it's actually returned about the same as the S&P 500 over the past 20 years, almost identical. Why am I giving it a C plus? Well, first of all, part of it is just philosophical. We at the full believe in owning businesses with products, services, innovations, they generate a growing stream of cash. Gold, on the other hand, just a piece of metal, pass some decorative industrial uses, but mostly you're just betting that someone will be willing to pay a higher price for it in the future, not because it's going to be generating more cash in the future, but you're just hoping that there'll be more demand. Gold has gone through some really long stretches of lousy performance. It did really well in the 1970s due to the high inflation, peaked in 1980, went the other direction, and it took around 25 years to get back to its 1980 peak. All that said, it is true that gold has done well during bear market in stocks. We're seeing that this year, saw in 2022, 2008, and in two of the three bad years during the dotcom crash. It's fine to own some Gold as a hedge against bear markets, which is why I own little myself. I own some of that SPDR Gold Shares ETF. Ricky Mulvey: By the time you notice it's outperforming, maybe that means you're a little late to the party on gold, Bro? It is you're betting on someone to pay more for it than you are today. However, gold has been around for thousands of years that people have been accepting it is a store of value. A little bit more of a track record there than something like crypto or even the tulip bulbs I was trying to sell you before we were recording. Let's get to crypto, because this is one that is interesting, and some investors still see it as a store of value. Let's talk for hours about Bitcoin as a digital gold in this economy we live in. Robert Brokamp: We could talk for hours. In terms of a grade, I'm giving this one incomplete. I'm going back to my teaching days. I just feel like I can't give it a grade right now because it's just too soon to say what diversification benefit you're going to get from crypto. We'll talk mostly about Bitcoin, but as you know, there's so many varieties of it. It just doesn't have a long enough history for me. Bitcoin is flat for the year, which means it's doing better than in the stock market, so that's good news. But in 2022, it plummeted more than 60%. For me, the jury's still out. There's no question that it is gaining wider adoption, both in terms of by investors, by countries, and it's boosted by the availability of ETFs to make it easier to invest. I'm more comfortable investing in it than I would have been maybe three or four years ago. But the value of it as a diversifier is pretty much still unproven. Ricky Mulvey: How about as a strategic reserve? Moving on. Let's get to alternatives, however you define them. Robert Brokamp: This is a very broad category that can include really all investments that aren't commonly held by everyday investors. We're talking commodities, managed futures, currencies, hedge funds, private equity, and so on. For the most part, it's difficult or expensive for the regular investor to buy into these types of investments, and you're often not getting the cream of the crop. You're getting what's left over. Depending on how you invest in them, they keep illiquid and/or endure really long periods of bad or at least mediocre performance. For most people, I don't think they're necessary. However, I will add that the proponents of these types of investments do make some good points. Primarily, they say that a standard portfolio of stocks and bonds isn't as diversified as some people think because they often rely on a single factor like the overall economy or maybe just the movement of interest rates. We saw that in 2022 when interest rates skyrocketed and stocks and bonds fell. If you have the time and the inclination to research more about alternatives, you actually might find some things that strike your fancy. Just be prepared to pay higher fees to hold on to something that will behave very differently from a standard portfolio, which, I guess is the whole point. Ricky Mulvey: The next one is Uncle Warren's one of his favorites right now, and that is just cash, Bro. Robert Brokamp: Cash is boring, but I'm going to give it at an A, front of the class. I won't belabor this, cash is king or queen when times get tough. It's the only investment that you can feel reasonably sure won't drop in value. Just make sure you're putting in the effort to get the highest yields possible, which these days is close to or around 4%, and you're going to have to accept the fact that returns will never be great. When you invest in cash, you're making a trade-off. You're choosing lower return certainty over the unpredictable possibility, and you can even say historical probability that you'd earn a higher return in stocks given enough time. But for money you need in the next few years that you want to make sure holds up in value, it's hard to beat cash. Ricky Mulvey: Another way you can take your money out of the stock market is to put it in bonds. Bro, there are some higher-yielding bond funds that look pretty attractive to me. Robert Brokamp: This is why I'm giving this a range of grades, actually, from C minus to A. Because when it comes to bonds, the returns will depend on the issuer, the duration, meaning short or long-term, shorter-term bonds are going to be less volatile, longer-terms are much more volatile and how you own them, individual bonds versus bond funds. But let's start with the safest and move on to the riskiest. US treasuries are considered very safe, maybe not as safe as they were like five years ago, Fitch and S&P have downgraded them, and Moody's made some announcement recently about they might be doing some things as well, but they're still considered the safest investments in the world. Investment grade corporates are considered safe. Not super safe, but safe. Then you have below investment grade corporates, otherwise known as junk, and they're very risky. This is where you get the higher yields. You'll get much higher yields from junk bonds and somewhat higher yields from corporates, but you got to understand that they will often go down during recessions, and junk bonds really go down. I'm going to talk about 20% or more during the tough times. Bonds are holding up pretty well this year, by the way, returning around 3%, but they've been disappointing over the past several years. In fact, it's really been one of the worst stretches for bonds in US history. I would say the future looks brighter, but if you want more certainty from bonds, explore investing in individual bonds because you know exactly how much interest you're going to get. How much you're going to get back when the bond matures at maturity date, assuming the issuer is still in business, of course. I would also explore what are known as either target date bond funds or defined maturity bond funds. These only owned bonds that mature in the same year. That way you have a little bit more certainty about what they'll be worth when that year arrives. The two biggest issuers of these ETFs are iShares and Invesco. Ricky Mulvey: Bro, junk bonds are how I started my casino chain. Let's wrap it up with annuities. Robert Brokamp: Yes, annuities. Not everyone's favorite topic, but let me explain. I'm going to give these an A for the right people. When I mean annuity, I'm saying anything that sends you a regular check in retirement for the rest of your life. In the original versions of annuities, you'd get that check or that payment every year. You'd get it annually, which is why they're called annuities. We all get some of this. By this, I'm talking about Social Security. Yes, Social Security is in trouble. People in their 50s and younger may not get everything they're promised, but you'll get most of what you're promised, and you'll get that check every month, regardless of what's happening in the stock and bond markets, it adjusts for inflation. It's partially tax-free. I think if you can maximize your Social Security benefit to some degree, that is a great diversifier in retirement. Same principle if you're getting a defined benefit pension, the traditional pension. If you can maximize that, that's good. Now, you can buy more, actually buying annuity from an insurance company. But the only annuity that appeals to me personally it's called a single premium Immediate annuity. You hand over a lump sum, say, $100,000, and you'll get $68,000 a year for the rest of your life. You give up a lot of liquidity, so don't do it without understanding the loss of liquidity when you do that. If you choose to go that way, you take that money from the portion of your portfolio that would otherwise have been taken from the bond part of your portfolio. Ricky Mulvey: Very good. Robert Brokamp, appreciate being here. Thanks for your time and insight. Robert Brokamp: My pleasure, Ricky. Ricky Mulvey: As always, people on the program may have interests in the stocks they talk about in the Motley Fool may have formal recommendations for or against, don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and are not approved by advertisers. The Motley Fool only picks products that would personally recommend to friends like you. I'm Ricky Mulvey. Thanks for listening. We'll be back tomorrow. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jason Moser has positions in Amazon and PayPal. Ricky Mulvey has positions in Chewy, Netflix, PayPal, and Spotify Technology. Robert Brokamp has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Berkshire Hathaway, Bitcoin, Chewy, Costco Wholesale, Moody's, Netflix, PayPal, Spotify Technology, and Walmart. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short June 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy. A Steady Business During Uncertain Times was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
25-04-2025
- Business
- Yahoo
Google Faces a Potential Breakup
In this podcast, Motley Fool analyst Jason Moser and host Ricky Mulvey discuss: Why Apple could lose the "easiest $20 billion" from any Alphabet breakup. General Motors' big bet on electric vehicles. Bill Ackman's hedge fund, Pershing Square, buying a 20% stake in Hertz. Then, Motley Fool personal finance expert Robert Brokamp answers listener questions about tariffs, capital accumulation plans, and 401(k)s. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Before you buy stock in Alphabet, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Alphabet wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $566,035!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $629,519!* Now, it's worth noting Stock Advisor's total average return is 829% — a market-crushing outperformance compared to 155% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 21, 2025 This video was recorded on April 22, 2025 Ricky Mulvey: Is Google a little too dominant? You're listening. It's Motley Fool Money. I'm Ricky Mulvey, joined today by a very well dressed Jason Moser in a full dress shirt. Very rare for you. Thanks for being here, man. Jason Moser: Well, it was from earlier in the morning. Ricky, I had another media thing I had to do, so I had to actually look presentable, represent the company as they say. Ricky Mulvey: I thought you were just starting to take this work a little more seriously. I'm sorry to hear that it was for someone else. Jason Moser: Well, maybe I will. Now that you say it, maybe I will. You're inspirational guy. I take what you say seriously. Ricky Mulvey: Well, you're dressed up like you're ready to go to a courtroom, and you know what? Is Google. Because the next phase of its anti trust case is underway. At the same time, Meta having its own issues with the FTC, but we're going to focus on Google and Alphabet for now. Last year, a US district judge ruled that Google maintained an illegal monopoly in online search. Now they're figuring out what to do about it. Google pays billions and billions of dollars to be the default search engine on Apple. According to the Department of Justice, this helped make the company a monopoly in online search. Now, what do you do? Well, the DOJ has some asks. Number 1, sell Chrome. Number 2, terminate the default search engine agreements with companies including Apple. Also give data to competitors. It's a whole lot of setup, J. Mo. But what does this mean for alphabet if the Department of Justice gets its way here? Jason Moser: I must say, thankfully, I'm not getting ready to head to a courtroom. With that said, I think looking at these different remedies, they take a wide range of outcomes. I think selling Chrome would be a real attention getter. Google Chrome holds the largest share of the global browser market with approximately 66% of users worldwide, and that breaks down fairly evenly along desktop and mobile devices. That would be a hit. I don't suspect that is what will happen. I think terminating agreements seems like a bit more of an interesting solution there. Also, in regard to Google habits are tough to break, Ricky, and I think a lot of us use Google today just because it's so ingrained. It's out of habit. I do think Google's pretty darn good. It's really helpful in a lot of ways. Data is quite valuable, of course. I think knowing what to do with that data is a different thing altogether. That wouldn't be an automatic win for competitors if that were the solution. But I think some out there would certainly find ways to benefit. I'm not saying it would necessarily be a good thing for Google, but it's like if I said, Ricky, here's $1 trillion. Now go build the next Meta. It's going to be a little bit more difficult than that. Money doesn't solve the entire problem. It does really speak to what Google has been able to achieve over these last decades, just becoming the search engine of choice for most. Ricky Mulvey: Well, this case started during the first Trump administration, I believe, and there's been changes since then. Now you have ChatGPT eating a little bit of Google's lunch within the search landscape. Things have happened not just within the government regulating this place or trying to regulate this space. Google still is a little worried about competitors coming it's lawyers basically saying competitors would be able to use Google's search engine to build and train their own products, while Google is essentially forbidden from making the deals and investments required to keep winning. They're saying, if we just give our data to everyone, then yes, you could go out and build the next Google. Do you think the lawyers for Google have a point there? If you're Judge Jason, how are you ruling on this? Jason Moser: They definitely have a point. Again, I think giving that data away or making that data accessible really opens up the lanes for a lot of competition. You mentioned ChatGPT, of course, obviously, a tremendous tool, these AI chatbots. I think Google's made a lot of progress on this front as well with Gemini. If I'm ruling on this, thing goodness, I'm not. This is really tough. Generally, I'm not one to hold a company's success against it. I think I encourage that. With that said, obviously, there are some concerns there in regard to monopolistic practices. I think for me, I would definitely focus going forward on any acquisition. I think that's a no brainer and that's something that could be a little bit more proactive because I think a lot of these companies have benefited from some very shrewd acquisitions in their history. I can see the data sharing and or search agreements as a more reasonable target, as well. Again, going back to the Chrome thing. I just have a hard time seeing that get split off. As soon as I say that, watch that be the recommendation. But I don't know that that's the most achievable outcome in my mind. Ricky Mulvey: Then as you're watching this case play out, one potential ripple effect that Dilar Lewis pointed out is that Apple could lose the easiest $20 billion that a company can make. That's what Google pays Apple to be the default search engine. But there's a lot of other big tech observers seeing what's happening here. What ripple effects are you watching? Jason Moser: That money for Apple, unbelievably is just a drop in the bucket. It obviously wouldn't impair the business. But I think, to me, we're watching Meta go through this as well, right now. I think these are the signs that Big Tech is really under the microscope. I think that after we look at Google and we look at Meta, it's just going to be very interesting to follow how all of these companies fall into these anti trust examinations because it's not like Google is doing anything that a lot of companies aren't. It's just a big company very successful has a massive reach, but there are a lot of companies out there that do, as well. My suspicion is we'll probably see them come under the microscope here in the near future. Ricky Mulvey: Let me push back on that. You said the 20 billion is a drop in the bucket for Apple. I would disagree with that. That's about 16% of their pre tax income because there's no costs on that payment. That's $20 billion for freezes. This is also a company, Apple, which the growth story for that company has slowed a bit. If you have an impact like that, and it slows down the growth story even more for investors. I could see that causing some concern among Apple shareholders. Jason Moser: Well, you're correct. Absolutely. that's very high margin free money. There's no question there. Maybe drop in the bucket wasn't the correct phrase. But I still believe, if that agreement goes away, Apple has got a number of different ways to make their money. I don't think it's something that ultimately would impair their business. Ricky Mulvey: Fair enough. Let's go to this GM story. There's a saucy headline in Business Week and a good story, in my opinion, from David Welch. It's GM's Mary Barra has to make a $35 billion EV bet work in Trump's America. There's a few ways of spinning this. One is that GM is selling a lot more EVs. The second is that it's a tough political landscape. The third is that they're still selling these electric vehicles at a loss, Jason. It's a long article. I appreciate you reading it. But any big takeaways for you when you were going through it. Jason Moser: I think, to me, it's this ongoing story of GM trying to developing their own battery technology and ultium. Ultimately, that is to drive down costs and increase production efficiency. They are really investing heavily in their own battery technology, and that is just not easy to do. a doff of the Foolish cap to them for really making those investments, and it appears they're succeeding. Ricky Mulvey: Mine was basically just how much 4D chess lobbying is going on behind the scenes. One thing that GM doesn't like is the way that incentives are structured for EV leases where people can get a tax credit for leasing, which helps their international competitors. If you take that away, it would hurt GM, but it would hurt their competition more. There's stuff going on in this market, especially in Colorado that's just weird. I benefited from it, Jason, where I got a low cost EV lease where it was all done, $1,500 down, and then 100 bucks a month. Even when I was getting that, I was like, There's no way this thing is going to last forever. This really doesn't feel sustainable. But there's a lot of work going on behind the scenes. Jason Moser: Absolutely. I don't know that it is sustainable, but a lot of these companies are really trying to get EVs out in the market, and that is that loss leader behavior in the early days. You're doing what you can to get it out there, create the demand, and then hopefully down the road, consumers see the virtue, the value, and you start to realize a little bit more pricing power as things progress. Ricky Mulvey: You mentioned that these EVs are being sold at a loss. For a big company like General Motors EVs have been around for a while. Now, their work started on it in the 1990s, and there was a big gap there. I don't want to discount that. But for a big auto company like GM, which sells a lot of cars, why do they need to sell electric vehicles at a loss? Jason Moser: I don't think that is ultimately what they want to do for the long term, Ricky eventually, they hope that's not always the case. But when we look at EVs and the differences there, there are a lot of upfront costs that come with developing these vehicles and ultimately getting them out to market. Talking about heavy research and development spending. There's manufacturing, headwinds, hurdles to clear, factory retooling to account for these different bodies, these different vehicles and ultimately how they can make them. Battery costs, of course, have always been a real issue, and those costs are coming down. Then the softer costs involved, like gaining market share, building the brand. They want to be seen as a credible EV provider, and that just takes time to do. Now, the goal ultimately is to get to where you've got that market share. You've got your manufacturing processes in place, and you can start to realize more profitability per vehicle, but that just takes time. Ricky Mulvey: Also worth mentioning, Tesla, the politically divisive company, it does make a profit when it sells electric vehicles. that's a part of this story. There's a little bit of a bank shot here, which is that as Elon Musk becomes more politically divisive, fewer people tend to be buying Teslas. At the same time, last year, General Motors went from 6% of the EV market share in the United States at the beginning of 2024 to 12% by the end. Its EV sales doubled. That seems to be maintaining at nearly the same pace in the first quarter of 2025. Maybe GM eating a little bit of Tesla's lunch here. You blame Musk or you credit Barra for this. Jason Moser: Can I hedge my bets and say a little for both. Ricky Mulvey: Hedge it. Jason Moser: I think it is a little bit of both, but I don't know if you saw. There was a recent CNBC poll just came out this morning that showed that basically half of Americans now hold a negative view toward Tesla. Now, that clearly is up significantly, and that's compared to, I think, around 24% with an actual positive or 27%, and the rest are basically neutral, but the bottom line is that certainly Musk's actions here over the last year or so have had an impact on the business, and I think that really shows the dangers of business leaders wearing their politics on their sleeves. You just got to understand that does come with a cost. I do think that Mary Barra deserves a lot of credit, though, in pursuing this strategy and gaining share. When you look at the reasons why she feels that GM needs to pursue this, electricity, she says simply makes for a better car, represents the future of transportation. They see electric vehicles as a corporate imperative. That, I think, says a lot right there. That's where they are steering this company. Ultimately, they are looking to provide customers with a wider choice of vehicles. I think that is something that's really important because this doesn't strike me, at least in the near term as like an all or nothing. It's not going to be all EVs and no gas. Maybe years from now, that'll be the case. But I think today we're looking at some folks want EVs, some want hybrids, some want all gas. As an automaker, you want to be able to open yourself up to the widest market possible, and that makes a lot of sense from GMs strategy perspective. Ricky Mulvey: You said 27% have a neutral view on Tesla, 27? Jason Moser: Either 27 or 24, yeah. Ricky Mulvey: Something like that. I want to hang out with them. They sound like some chill people. You talk about movies, sports with. You don't have to bring up politics all the time. Shout out to the neutral people. I want to chat with you. Jason Moser: That's my crew. Ricky Mulvey: After you read this story, Long Form article a lot about innovation and how they're really working on battery adoption, playing in this EV lane, did it get you any more interested in General Motors as a stock? Jason Moser: Not particularly, but that's not a GM thing. It's just I'm not really an auto stock guy. I love my car. To me, yeah, autos aren't the most exciting market opportunity for me. I've never owned car stock, and I don't suspect I ever will. A little bit too cyclical for me, Ricky. Ricky Mulvey: Fair enough. Let's move on to this last story quickly, which is about Hertz. Another kind of an auto stock. It's an auto rental stock, and it has flying lately, up almost 150%. Tough to tell, given the extreme moves in this stock. It's on Bill Ackman's hedge fund buying up about 20% of the company, and that's according to CNBC. There's a lot of forces going against this company where people may not want to be traveling as much. You have international tourism going down. Car rental businesses are really difficult. There's a lot of debt on Hertz's balance sheet, but what the heck is Ackman seeing here? Jason Moser: I think for him, this is where he sees a company that maybe was mispriced. Hertz made a big blunder a few years back when they really went all in on Teslas. They were trying to reshape their vehicle portfolio and really lean into EVs and Teslas in particular. That just didn't work for a number of reasons. But ultimately, he sees the business recovering from this mistake. He feels like there's a return to what he called rational consumer behavior. They've got new leadership in CEO Gil West, who came on in April of last year. You mentioned a balance sheet. Yes, it is absolutely highly levered. But that debt is staggered out pretty nicely over the next several years, so I think that affords the company some financial flexibility. Ricky Mulvey: Ackman likes posting on X. He gives out his thesis. You know, if the price of used cars goes up, that is a big impact for the balance sheet of Hertz as they would own a lot of used cars, and who knows? Maybe if there's self driving dreams for Uber in the future, here's a fleet of cars that Uber could use. All of this is to say, Ackman says this is a $30 stock. Right now, it's about a $9 stock. Any advice to retail investors that want to tail this acclaimed investor on a turnaround story. Jason Moser: First and foremost, I think it's always worth your while to do your own work and come to your own decisions. But you said it at the top. This stock has taken off. It's up a lot in a short period of time. My suspicion is this isn't a company that he plans to hold onto for a long time. It seems more of a value thesis, where he sees a short term catalyst maybe offering an attractive risk reward situation. If you want to jump in, more power to you, but he's got a big head start, and like you said, stock has already seen a pretty good bit of price appreciation. Ricky Mulvey: Jason Moser. Thanks for your time and insight. Appreciate being here. Jason Moser: Thank you. Schwab trading is now powered by Ameritrade to give you a new elevated trading experience tailor-made for trader minds. Go deeper with Think or Swim, the powerful award winning trading platforms now at Schwab. Unlock support from The Trade Desk, our team of passionate traders who live and breathe trading like you do and sharpen your skills with an expanding library of online education crafted for traders. All designed to help you trade brilliantly. Learn more at Ricky Mulvey: Up next, Robert Brokamp answers some of the questions you emailed us about tariffs, 401(k)s, and backdoor Roths. If you have a question for the show, shoot us an email at podcasts@ That's podcasts with an S at The first question comes from Fool Up North. I have a basic question about how tariffs work. Let's say US company, A, buys widgets from a foreign company, B. Let's also say that company B charges company A $100 for the widget. Now, that foreign company has a 10% tariff levied against it, which means that if company A wants to buy the widget from company B, they must now pay $110 for it. Who gets the other 10 bucks, and what do they do with it? If a branch of the US government receives the $10, then which branch? What is that money earmarked for since it's essentially all new revenue that wasn't already planned for a budget somewhere? Bro, this feels like an SAT question, but I'll let you take a crack at it. Robert Brokamp: [laughs] Well, so here's how it works. When an item crosses into the US, whether by air, land, or sea, a division of the Department of Homeland Security called US Customs and Border Protection, otherwise known as CBP, classifies the item and assesses any tariffs, although often it's actually classified before even comes in. It's the importer who classifies it, and then sometimes the CBP checks to make sure they got it right. CBP employs more than 60,000 people to monitor the 320 official ports of entry into the US. Classifying the item can be tricky because sometimes something is assembled in one country, but it has parts from many other countries. There's a huge compendium called our harmonized tariff schedule that helps with the classification. If it were printed, it would be more than 4,400 pages long. Many if not most importers actually hire customs brokers to help with this process of getting stuff into the US, properly classifying it, and then paying the relevant tariffs. As our Foolish questioner points out, the tariff is paid by the company that imports the goods, which most often is a US company. The foreign company that made the item does not pay the tariff. Where does the tariff money go? Well, it gets collected by CBP, and then it gets sent to the US Treasury and goes into what's called the general fund, which the treasury department actually affectionately calls America's Checkbook. From there, it could be used in all kinds of ways, such as maybe paying for future tax cuts or supporting companies hurt by tariffs as happened during the first Trump administration, when money was sent to farmers hurt by a drop in trade with China. Basically, the money can be used on pretty much anything. Ricky Mulvey: The next question comes from Anonymous. I listen to the Motley Fool podcast every day on the drive to work. Great to hear. I recently switched jobs and encountered the issue of rolling over my 401(k). I have a few questions about this. First, my current earnings at my new job put me over the eligible limit to contribute to a Roth IRA. My financial advisor mentioned doing a backdoor Roth IRA contribution. Can you explain more about what a backdoor Roth is? What do I need to watch out for to make sure I avoid additional taxes? Additionally, I was told I could not do a backdoor Roth IRA as I still had my traditional part of my 401(k) balance in my account. Is that true? I appreciate when you guys take the time to answer questions from lesser Fools. Anonymous, you are not a lesser Fool, but we will still answer your question. Robert Brokamp: That is very true. Yes, Anonymous, congrats on the new job, by the way, and the higher pay. First of all, I want you to know that you can still contribute to the Roth 401(k) if available at your new job because there are no income restrictions on that. Yes, if you make too much to contribute directly to a Roth IRA, you might consider doing what's known as the backdoor Roth. Here's how it works. You contribute to a nondeductible, traditional IRA, and then very soon after you convert it to a Roth. If that's your only traditional IRA, there are really little to no tax consequences. Because the money you contributed to the nondeductible traditional IRA was already taxed, and there isn't much time for the IRA to grow very much, so there should not be much in the way of taxable investment earnings to worry about when you convert. Here's the tricky part. If you have other assets in traditional IRAs, and this includes employer plans that sort of act like IRAs, like the SEP and the simple plans, then every conversion you make will essentially be considered proportionately made across all your accounts due to something called the pro rata rules. Consequently, some or maybe even most of the conversion will be taxable. That's confusing. Let's go over an example. Let's say you already had 63,000 in pre-tax traditional IRAs. Then you made a $7,000 contribution to a nondeductible after tax traditional IRA, so that brings your total to $70,000. 10% of your total is after tax, 90% is pre-tax. If you then do a Roth conversion, even if it's in just one of your many IRAs, 10% will be tax free, but 90% is taxable. Now, there's one way to get around this, and that is to roll the money that you have in traditional IRAs into your 401(k) if your plan allows it, because money in a 401(k) is not considered when it comes to the pro rata rules for IRA conversions. Now, the pro rata rules can apply to 401(k)s when converting 401(k) traditional money to a Roth within the plan, but not when doing the backdoor Roth IRA. As you can tell, this can get very complicated. Speak with your financial advisor about doing this to make sure that it actually makes sense for you and that everything is done right. Ricky Mulvey: The next question comes from V. Can a parent open Roth IRAs for grandparents with a grandson as the beneficiary, then use that money to pay for college. I thought the last question was complex, Bro, but this one doesn't seem easy, either. Robert Brokamp: No. A lot of moving parts with this one. Let's start with grandparents opening Roth IRAs. They could do it if they have earned income, and that is income from a job, so not interest, dividends, capital gain, Social Security, pension, anything like that. They have to sign all the documents themselves. I suppose if someone had power of attorney, they could open the accounts for them, but I would check with the IRA provider to find out if that's possible. Now, once the IRA is open, the money can come from anywhere. It doesn't have to come from the grandparents' bank accounts. As for using it for college, it's possible because contributions to a Roth IRA, not 401(k), Roth IRA can be withdrawn, tax and penalty free at any time, and then the money can be used for whatever, including college. Also a rule unique to IRAs, not 401(k)s or 403(b)s, but IRAs, withdrawals from IRAs can be used for qualified higher education expenses for the IRA owner, their spouse, children or grandchildren, and it would bypass the 10% early distribution penalty if the owner is not yet 59.5. But the money still will be taxed if it comes from a traditional IRA, and it might be taxed if it comes from a Roth IRA depending on how long the account has been open and the age of the owner. A likely better way to do all of this would be for the grandparents to contribute to a 529 college savings plan. If they don't have the money, you can give the money to them, and then they open the plan. The growth and withdrawals would be tax free if used for qualified expenses, and any unused money can be gradually rolled over to a Roth IRA for the grandson. But this is subject to a lot of rules, including the total that is gradually rolled over can't exceed $35,000, and the account has to have been open for at least 15 years. There are plenty other rules to consider, so understand all of them before trying the rollover to the Roth. But I think most financial planners would recommend the 529 over and Roth IRA when it comes to saving for collage. Ricky Mulvey: Is there a general advantage to having a grandparent contribute to a grandchild's 529 plan versus just having the parent do it? Some of this seems like we're just doing this on hard mode. Robert Brokamp: Yes, there actually is. This is a relatively new development, and I'm surprised at it. I almost feel like it's a loophole that's going to be closed. But when you apply for financial aid, you have to put the child's assets and the parents' assets. You don't have to put the grandparents' assets. Basically, if it's a grandparent-owned 529, it's invisible when it comes to financial aid, which is a nice little benefit. Ricky Mulvey: The next question comes from Karen. Is there a book on the origin story of the 401(k)? I'm curious why pensions disappeared and how we got here with self funding retirement. Wish we saved more. It's hard. Robert Brokamp: There are a few books, Karen, but I'll instead recommend a podcast episode. It was the December 7, 2021 episode of Motley Fool Answers, a show that no longer exists, but the episodes are still available out there. In that episode, I interviewed Ted Benna, who is the father of the 401(k). Here's the short story. Ted Benna was a benefits consultant working for a company outside of Philadelphia. There was a law passed in 1979. He's sitting in his office on a Saturday in 1980, working for a banking client. This new law allowed for employer contributions to a tax deferred account. This new law, by the way, was codified in Section 401(k) of the IRS Code. He figured the law would allow employees to make pre-tax contributions, and these accounts would be done in such a way that employers could match those contributions. But it wasn't written for that. It was not designed to create a retirement savings plan for the average show, but he thought it could be possible. He proposed it to the banking client. The client's attorney said, no, they didn't want to be the first company to try this new benefit. Benna's company actually decided to try it. They created the first 401(k) on January 1, 1981. Fortunately, for those of us who like 401(k), it was helpful that one of the clients of Benna's company had a connection to the Reagan administration who then put Benna in contact with some folks at the Treasury department, and that helped get Uncle Sam's blessing. It took a few years for the 401(k) to catch on, but then when it did, it just took off. As for why companies move from traditional defined benefit pensions to defined contribution plans like the 401(k), I think it ultimately comes down to costs and complexity. It's just easier for a company to say, you know what? I'm going to give you a 3%, 4%, 5% match, and then be done. As opposed to when you have a pension, you're constantly doing calculations about whether there's enough money, and you're essentially responsible for the employer till the day they die. I think it's just easier they decide, that's just too complex. We're just going to give you some money, and then you do with it what you want. I do understand that it's hard to figure all this out. I think most people, once they get to a certain age, wish they had saved more. Karen says that she wished she had saved more. When you look at surveys that ask older Americans about their financial regrets, in almost every case, the Number 1 or Number 2 response is they wish they had saved more. Karen, you're not alone. I know it's complicated, especially since once we've moved to the 401(k) system, people have to decide how much to save, how to invest it, how much to withdraw when they retire. Unfortunately, though, the good old days of traditional pensions just aren't coming back. I recommend that you just learn as much as you can, and in the meantime, follow some rules of thumb, such as, you should be saving probably 15% of your household income for retirement that includes the match. If you're not yet an experienced investor, start with target date funds as a starting point, which have a prudent mix of cash bonds and stocks based on your age. Then once you retire, I think the old 4% rule is still a good starting point. It's probably too low for most people, but I think it's a good place to start. Ricky Mulvey: Companies really like getting long-term liabilities off their balance sheet, Bro. Our last question comes from Jonathan. A potential new employer offers a capital accumulation plan. I've never heard of these. They offer an 8% contribution of your pay after the first year. It seems almost too good to be true because I don't need to contribute to get the 8%. Do these function like a retirement account? If I left after a few years, would I be able to roll it over to an IRA or a 401(k) plan? For more background information, the organization is a nonprofit which sells life insurance. Robert Brokamp: Jonathan, these plans aren't very common, but you're onto something when you say that they really are similar to a 401(k), except that the employer makes the contribution, often as a profit-sharing arrangement. Each company will have its own criteria, but in some cases, if the firm reaches a certain level of profitability, all eligible employees get money deposited in their accounts. There usually is a vesting schedule. If you leave the company within a certain number of years, you won't be able to take all the money with you. Often, any money that is left behind is often used by the company to cover the costs of administering the plan. Also, you may see more restrictions on how soon the money can be withdrawn. Like I said, there aren't that many of them, but one example of such a plan is the NFL. NFL players have a capital accumulation plan. Their team deposits the money, and it invests after three seasons. The player determines how it's invested, and they can choose from among several mutual funds, just like a 401(k). The way it works now is your first season. The team deposits nothing. Seasons 2 and 3, the team deposits $2,500. But after Seasons 4 or more, they're depositing $40,000 or more each year. You got to stay in the NFL for a while to really get the benefit. In most situations, they can't withdraw the money before the later of age 40 or five years after a lapse since the players last full season, like a 401(k) or IRA, the money could be rolled over to another plan, like an IRA or 41k. Withdrawals will be taxed as ordinary income and withdrawals before age 59.5, maybe penalized. Again, very similar to an IRA or 401(k). The NFL's plan is just an example of a capital accumulation plan. Definitely dig into the details of your plan so you know how to make the most of it. Ricky Mulvey: Any advice on how to stay in the NFL for more than three seasons, Bro? Robert Brokamp: I'll call up my friend Tom Brady later on, and I'll pass along what he says. Ricky Mulvey: I'll say stretch. We'll leave it there. Thanks, Bro. Thank you. As always, people on the program may have interests in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and are not approved by advertisers. The Motley Fool only picks products that we personally recommend to friends like you. I'm Ricky Mulvey. Thanks for listening. We'll be back tomorrow. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Charles Schwab is an advertising partner of Motley Fool Money. Jason Moser has positions in Alphabet, Apple, and The Trade Desk. Ricky Mulvey has positions in Charles Schwab, Meta Platforms, and The Trade Desk. Robert Brokamp has positions in Tesla. The Motley Fool has positions in and recommends Alphabet, Apple, Meta Platforms, Tesla, The Trade Desk, and Uber Technologies. The Motley Fool recommends Charles Schwab and General Motors and recommends the following options: short June 2025 $85 calls on Charles Schwab. The Motley Fool has a disclosure policy. Google Faces a Potential Breakup was originally published by The Motley Fool Sign in to access your portfolio
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21-04-2025
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Management Weighs in on the Macro
As earnings season picks up, we're starting to get a feel for the different ways company leadership teams are talking -- or not talking -- about tariffs. In this podcast, Motley Fool analysts Jason Moser and Matt Argersinger and host Dylan Lewis discuss: Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » What's been going on over the past few weeks, and how tariff anticipation is playing into consumer behavior. Earnings results and macro commentary from United Airlines, Bank of America, Goldman Sachs, JPMorgan Chase, and Prologis. Two stocks worth watching: Alphabet and Ryman Hospitality Properties. We're entering the age of sophisticated robotics. Daniela Rus -- author of The Heart and The Chip and The Mind's Mirror -- talks through the nature of developing truly autonomous robots, and how most cutting-edge robotics work gets funded. To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Before you buy stock in Bank of America, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Bank of America wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $524,747!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $622,041!* Now, it's worth noting Stock Advisor's total average return is 792% — a market-crushing outperformance compared to 153% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 21, 2025 This video was recorded on April 18, 2025 Dylan Lewis: Ding, ding, ding. It's earning season. This week's Motley Fool Money radio show starts now. It's the Motley Fool Money radio show. I'm Dylan Lewis. Joining me over the airwaves. Motley Fool Senior Analysts, Jason Moser and Matt Argersinger. Fools, wonderful to have you both here. Jason Moser: Dylan. Matt Argersinger: Dylan. Dylan Lewis: We are kicking off earning season with a look at results from the big banks. We've also got a glimpse at our robotics future with one of MIT's leading experts, and, of course, you guys have brought your stocks on your radar this week. Matt, Jason, I have been away since late March getting married, galivanting around Europe on my honeymoon. I return a little tanner, a belly full of oysters and Portuguese wine. My first show back in the host seat in a little while, Jason, what have I missed? Jason Moser: Belly full of oysters. Are you rubbing it in, Dylan? I love oysters. Golly. Hey, listen, congratulations, by the way. We've been talking about this a lot. It's a lot of work leading up to that event, so congratulations to you and your wife for a successful wedding and hopefully what was a very enjoyable honeymoon. It's a great stage of life. Dylan Lewis: Can I just add congrats on being away for the last few weeks? That's been the right place to be. Jason Moser: It's been the right thing for my portfolio. Dylan Lewis: Yes. Jason Moser: I think that's exactly right. Oftentimes we talk about the best thing to do is usually nothing, and it feels like these last few weeks have really have really put that to the task, but, there obviously has been a lot going on. We've talked a lot over the last couple of years here in regard to the magnificent 7. How about those magnificent 7 this year? All of them down. All of them underperforming the market year to day. Tesla down close to 40%, NVIDIA down close to 23% now. That's been an amazing turnaround. Now, granted, I think there was a lot of enthusiasm that was brought forward into those stocks through 2024, to be sure, they're wonderful companies, but it just goes to show that it's not always a straight line up, and I think those magnificent 7 serve as an example of that. What did you miss? I can't believe you missed it. I have to believe you at least saw a headline or two in regard to tariffs. That's been the point of discussion for so many for the last few weeks, and it's created a ton of market volatility. You start to wonder, remember how this all started? This was a couple of months ago when we were talking about Canada, Mexico, China. There were border issues, and it was fentanyl. Now, this has gone global with 180 countries in play and just deals out the Yin Yang, and nobody really knows ultimately what is going to happen here. You ask yourself the question of why this is happening, and there's the trade deficit conversation, and I get that. We certainly do import more than we export, and there are risks that come with that. You can see shrinking production domestically, job losses, higher deficit spending, things like. But then all of a sudden, you also hear at least this conversation out there in regard to maybe the administration is really doing this to try to get interest rates pulled back down. I'm not saying that's why they're doing it, but the conversation is certainly out there. It just leads to a ton of uncertainty and headline risk. Everything could change tomorrow. We just don't know, because one headline, one tweet could change the whole course of things, so it's been a fascinating time to be an investor, for sure. Other than that, how is the play. Mrs. Lincoln? Over to Matt. Matt Argersinger: [laughs] Hey, Dylan. More congrats as well on the wedding. Jason hinted at this, but, the MAG 7 is down, the market's down, and here, the S&P 500, as we taped this, it's still down roughly 15% year to date. Really rough. But what investors haven't been doing, which is unusual, is they haven't really been buying the safe haven assets like treasuries. If you look at treasury yields, for example, they're actually up since April 2nd. If you go back to April 2nd before the tariff announcement, the yield on the 10 year treasury was just below 4%. As we tape, it's 4.3%. I think that is not going as planned, or at least as the administration planned it, which is they expected maybe that interest rates would fall. That would maybe be a boost and help alleviate the pressure, so to speak, from these tariffs and the implications for the economy, but that's not what's happening. I think there's a real danger to that. I mentioned this last week, but if rates stay high, and if countries like China, Japan, UK, various countries in EU, aren't exporting as much to the US, and not buying as many treasuries or worse they actively decide to stop buying US treasuries, I think we're in trouble. The housing market is already slow. That would certainly get worse. Small to mid-sized businesses that rely on credit and bank financing, their costs would go up, their access to credit would go down. You have consumers with very high auto and credit card debt, that could become a problem. I understand why the administration pivoted about a week ago when the 10-year yield popped over 4.5%. I think interest rates is what you got to pay attention to, and I think, to me, that's the bigger story over the last three weeks, Dylan. But then there's this, guys. Have you looked at the price of gold lately? [laughs] Because I couldn't believe this. This is Wednesday, and as we tape, and I looked at a 20-year chart of the S&P 500 versus gold, and guess what's winning. Dylan Lewis: Is it gold? Matt Argersinger: It is gold. [laughs] Gold over the last 20 years, I'm just using the GLD, by the way, the Spider Gold shares ETF. That ETF is up 571% over the last 20 years. The S&P 500 total return is 565%. Gold in 20 years has tipped over the market. Dylan Lewis: What are we doing here looking at the stocks? Matt Argersinger: What are we doing, talking about stocks? Dylan Lewis: We can just be buying rocks. Matt Argersinger: Go to Costco and buy gold bars. Dylan Lewis: I think with that backdrop, plenty of things in the macro picture for us to Zoom in on, and we now have the benefit of a lot of companies giving some commentary alongside their earnings, touching on topics like tariffs and rates. We also have some updates on consumer behavior and how folks are processing tariffs with their dollars, and it seems we are seeing some consumers out there, Jason, trying to get ahead of the expected tariff impact and expected price increases that might come with tariffs. Jason Moser: Absolutely, consumers and providers. We saw some auto data out here today based on data from Cox Automotive, they said the day's supply of new vehicles has fallen from 91 days at the beginning of March to just 70 days this month, and the supply of used vehicles actually, has declined by four days to just 39 days now. To me, the first thing that came to mind when I read this data, if I thought about anecdotally, my wife and I went through 2021, I think we were buying a new car for the family, and it was not the easiest process supply. It was very limited. Prices were high unless you could actually work out a pretty good financing deal, which thankfully we were able to do, but not a lot of people are able to. Sometimes you get to take what they're going to give you, but it just reminds me a lot of these COVID years, and if you look at from mid 2020 until the beginning of 2022, where we saw the supply chains really constrained for an obvious reason. Look at Ford and GM. Both companies, their shares hit five-year highs at that point. CarMax, same thing, and CarMax I think is exclusively used vehicles. You look at all three stocks today, I think GM a little bit less so, but all three relatively press levels today, even Tesla. Supply chains are in flux, obviously, for different reasons, and I think there could be a headline or two tomorrow or next week that changes everything, but you have to wonder if there's not an opportunity developing here in the near term, at least, because it does feel there's a lot of demand being pulled forward, predicting the challenges that are going to be in maybe Q3 and Q4. As an investor, I like to find a short-term catalyst or a long-term trend. I think this falls more into the short-term catalyst value style of investment here, but I think it's absolutely something to keep an eye on in regard to automakers. Dylan Lewis: Switching over to earning season, Matt, we saw some results out from United this week, helping us usher in the formal beginning of earning season. They're one of the early reporters. They had good results, but also some warnings about the state of domestic travel. Are the skies looking friendly right now for the airline companies? Matt Argersinger: Not really, Dylan, but, in United's case, and we heard from Delta a week ago, it's not as dire or cloudy as we might expect it to be so far. In fact, I like that United's management team was willing to do something that Delta was not willing to do, which is actually provide guidance for the year. IS that's what you want to call this? Dylan Lewis: It was like two-stage guidance, right? Matt Argersinger: United provided two scenarios for its 2025 earnings. In a stable scenario, I guess that's economic stability, they see earnings per share between $11 and 50 cents and $13 and 50 cents. In the recession scenario, full-year earnings will be 7-$9 a share. That is quite a range, but you know what? I give management credit for providing that because I think coming into earning season, all of us are wondering, which companies would be brave enough to even provide guidance, and would they do something like provide scenario-based guidance? United did. Going back to United's results were really quick, they were pretty decent. Record revenue in the quarter, earnings per share were ahead of expectations. They also talked about the last two weeks. The last two weeks when all this tariff tantrum was happening, both premium cabin bookings and international bookings were higher and better than expected. Those are the areas you'd expect to be most impacted by what's going on with the uncertainty, and those are holding up. It looks like it's going to be a pretty resilient year for United and maybe for the airline industry as well, and it'll be interesting to see what earnings they actually hit this year. Dylan Lewis: Matt, I am with you on this one. I think the options for management teams at this point are no guidance, a single range that, let's be honest, very unlikely to hit or scenario analysis. I will take scenario analysis over no guidance or a single range any day. Matt Argersinger: I agree. I love that. I love it. Let's see more of those. Dylan Lewis: Maybe we'll later this earning season. More earnings results coming up after the break. We've got looks at big banks and everyone's favorite industrial rep. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Dylan Lewis. Here on air with Jason Moser and Matt Argersinger. The big banks are out with fresh earnings numbers this week. We got quarterly updates from J.P. Morgan, Bank of America and Goldman Sachs. Jay Mo, where do you want to start with this one? Jason Moser: I think the common theme we've seen with the big banks, listen, volatility isn't bad for everyone, Dylan. Investors might have a hard time making sense of things, but hey, these big banks are raking in some fees as investors continue to reposition their portfolios, given the levels of uncertainty in the economy today, and, of course, that mean a lot of that, most of it's all tied to tariff talk and in-trade relationships and how this is ultimately going to shake out. But Goldman Sachs, Morgan Stanley, J.P. Morgan, Bank of America, all, recognized record equities trading revenue in the first quarter here of this year, and I think that is poised to continue given the fact that it feels we're probably going to hang around these uncertain times for a little while. Maybe there is a headline that comes out tomorrow that changes things, but I'm not betting on that. But I think when you look at the banks in particular, we look at J.P. Morgan and Bank of America, for example, the J.P. Morgan a strong quarter revenue was up 8% from a year ago, earnings per share grew 14%, they repurchased $7 billion of common stock, which I thought was really interesting. Stock has been some elevated levels here recently and Jamie Dimon wasn't exactly the biggest fan of repurchases at those levels. But I guess he sees the return there, and they announced a 12% increase in the dividend. You now have a yield there at about 2.4%, the group book value it was up 12% from a year ago, but getting back to the trading revenue, the markets revenue for the business was up 21% year of year, fixed income was up 8%, but equity markets were up 48%, which I just found incredible. Now, there was some recession talk in the call, not a lot, though. It wasn't like a word that was just bandied about 50 times. But right now, based on their research, they're pegging a recession in 2025 at basically 50/50, so a coin flip. You look at Bank of America, very similar in a lot of regards. Revenue grew a little bit better than 6%, earnings per share up about 18.5% from a year ago. Brian Moynihan, CEO, the company noted in the call that based on their research, they actually don't believe we'll see a recession in 2025. But going back to the trading revenue there, their global market segment, that revenue was up 12% driven primarily by higher sales and trading revenue, and they grew book value 8% from a year ago, which is really encouraging. I think with these companies, what they continue to do very well, they're obviously strong dividend payers, but they're doing a good job of returning value to shareholders with share repurchases. You look at Bank of America. That share count is down 12.5% since 2020, and JPM is down 9%. Now, both stocks have underperformed here year to date. Both are valued in tandem with less than 12 times earnings, though, which that's historically not crazy one way or the other, but I think there's a lot to be said for stability, and these could be a couple of nice ways to get that. Dylan Lewis: Jay Mo, you brought up the trading revenue there. Saw that with Goldman, we also saw that with Interactive Brokers this week, a very good week for them when they reported earnings. I'm guessing that as we see other brokerage businesses over the course of earning season reporting, like Robin Hood, we're going to see a lot of trading activity pop up there. One thing I wanted to point out here as we're looking at bank results, net interest income, helping out a lot of these banks, as well. That rate picture you mentioned there earlier, Matt, giving some nice spread for companies like Bank of America. Matt Argersinger: Big banks are in a good position, and I think it's funny how measured they are about the tariff situation, as well. Wells Fargo's CEO, Charlie Scharf last week, we support the administration's willingness to look at barriers to free trade, and then Goldman Sachs this week, went out of their way not to use the word tariff in any of their disclosures to investors or on their conference call. In fact, I love the New York Times. They called it " A deft feat of linguistics," [laughs] and by "David Solomon and other executives." Instead of tariffs, you had Solomon saying, this is all from New York Times as well, "There are landscape changes, uncertainty about how certain things that are close will proceed forward, and a change in constructs that impacted how international businesses interact to the US and global economic system." Sounds like Alan Greenspan giving a conference call at the Fed. I just think they know it's a good situation. They're trying to not bug the administration. But I guarantee you, even though they love the trading revenue, they love the interest income that you talked about, behind the scenes, they don't like the whole tariff situation and the uncertainty it creates for a lot of customers they're lending to, for businesses that they're investing in. I just want to see how measured they'll stay as long as this uncertainty continues. Dylan Lewis: Solomon gets a lot of headlines for his beats. It's nice to know that he's also a lyricist. He's capable of putting pen to paper and writing pretty well, as well. Matt Argersinger: That's right. Dylan Lewis: Bring us home on our earnings rundown here. Another early reporter, Prologis, Matt, this is one of your favorites to follow, and it is the industrial Reid. Amid all the tariff uncertainty, they are standing firm on their guidance and outlook for the year. Matt Argersinger: I was very surprised in a positive way about that, Dylan. This is a bellwether for me. You think about Prologis' business serves so many markets. Amazon is one of the biggest tenets of their warehouses, and it was a solid quarter. Core FFO, that's read speak for earnings. That was up 9%. They leased 58 million square feet during the quarter. That was close to another record. Average occupancy across the portfolio up to almost 95%. But you said it, Dylan, they didn't change their guidance at all for 2025. In fact, they said, if it wasn't for the tariff uncertainty caused by the April 2nd announcements, they would have actually raised their guidance. They saw improving fundamentals across the industrial real estate space. That was pretty impressive to me, and look, stock's down a lot, it remains one of my top holdings. If you use the guidance, if you trust the guidance that management's holding onto, the stock trades for less than 17 times its earnings expectations for this year. It currently yields 4.1% for the dividend, and here's a nice little tidbit from the conference call. There was an analyst who asked about Amazon and what they might be doing in the industrial marketplace right now. The response from Prologis Management was, "We have definitely seen Amazon in the market. As a matter of fact, we signed some pretty good deals with them this year." Things are looking pretty good for Prologis despite all the trade and tariff uncertainty. I hope that maintains, and so far, management's not budging on guidance. Dylan Lewis: Matt, you talked about them being a bellwether. This is obviously a business that has a little bit more of a build-out period to a lot of what they do. Do you expect that they may slow down some of their growth and build-out expectations to help moderate their risk a little bit as we look out to a cloudy world? Matt Argersinger: Definitely, Dylan. In fact, they actually pulled down some of their guidance for development starts. Not their operating metrics, but just the amount of development construction that they're going to be doing this year. They did pull that down a little bit. Dylan Lewis: Matt, Jason, fellows. We are going to see you guys a little bit later in the show. Up next, we've got a glimpse into the future of robotics with MIT Professor Daniel LaRose. Stay right here. You were listening to Motley Fool Money. ... Welcome back to Motley Fool Money. I'm Dylan Lewis. Fools, we are rapidly approaching the age of sophisticated robotics. Autonomous vehicles have been road testing for years, and companies are pursuing humanoid robots to take on rote work and manufacturing applications. Better understand all the work that's going on in this space, I caught up with Daniela Rus. She oversees MIT's computer science and artificial intelligence laboratory. Daniela talked me through how rethinking the materials that we use to make robots can open up more potential applications for them, the nature of developing truly autonomous robots and how most cutting edge robotics work actually gets funded. I've followed some of your work in soft robotics and some of the different materials that you're using to create robots and I think change the concept of what a robot maybe even is for a lot of people. Can you talk a little bit about? Daniela Rus: The millions of robots that are deployed in factories today are masterpieces of engineering, and they can do so much more than humans can, but they remain isolated from people on the factory floor because they are heavy and dangerous to be around. The question is, can we make machines that are much gentler that can operate side by side with people and that are safer to be around and inspired by this idea, we have begun to imagine robots made out of a wide range of materials. We began to imagine going beyond metals and hard plastics to think about silicone and paper and even food for making new classes of robots. The idea is to use the material that makes most sense. We have built soft robotic arms and robotic hands that are inspired both by the human hand, but also by things like the elephant trunk and with these notions, we can indeed imagine these new tools that can help people with physical work in a very safe way. Dylan Lewis: I feel like that's particularly important because there's a tract of robotics work that is purely robotics work. But there's also a lot of work where humans and robots are working together or a human is being assisted by a robot. We see that with things like surgical robots and the DaVinci where there's a mix of what the human is capable of doing and then being aided by machinery is the hope that you can create more seamless interactions between who is using it and what's being used. Daniela Rus: In my mind, I want the machines to adapt to people rather than the other way around, which is the state of the art today. But more broadly thinking, robots, you can imagine robots as being employed in three different types of roles. We can have assisting robots. These are robots that follow people and help them do their tasks faster. We can have robots that augment the human capabilities. You can think about exoskeletons as falling in this category. Exoskeletons allow you to lift heavier things, allow you to move faster, etc. Then we can also imagine robots that operate fully autonomously. While full automation works in controlled environments, this notion of robots working side by side and these robots teaming with people, we call them co-bots. This notion is especially powerful because it allows humans and robots to form tightly integrated teams, and it allows humans to do what they're best at, while the robots do what they're best at. There are so many exciting ways in which this notion of co-bot is emerging even as products. There are companies that are building warehouse robots, where you have a robot following the worker and the worker picks up the objects and puts them in boxes carried by robots. This is because robots can move very well, but they have a much harder time at grasping and manipulating objects. This notion has been deployed at Amazon in Amazon fulfillment centers for a long time, and there are new emerging companies that are doing the same. I was in a lounge at an airport recent and I saw a robot that followed the servers. The servers would pick up the dishes from the table and put them on the robot, and then the robot carried everything to the kitchen. This is an example of symbiosis between what the machine is good at and what the person is good at. Dylan Lewis: The topic of full autonomy has come up a couple times, and artificial intelligence has come up a couple of times. How does that technology play into true full autonomy for machines and how we actually train those machines and have them start to do more and more for us. Daniela Rus: Well, so autonomy means that the machine is doing a task fully by itself. For instance, in warehousing, you can have these machines that can work side by side with people. But we also have robots that do things autonomously. For instance, in the symbotic warehouse system, there are thousands of robots that are able to run around and pick up boxes and move them from one place to another. These robots are fully autonomous. They operate in this enclosed environment, and they really operate really fast, but doing simple things. Now, if you think about autonomous driving, where we really aspire to have robot taxi, here, the environment is much more complex. You have people who often do not follow the traffic rules. You have other cars. You have things that are moving around this notion of an autonomous car much faster. In these circumstances, the robot is not so ready to reason about the surrounding world and act safely. Level 5 autonomy refers to this notion that you have a machine that can drive in any environment anytime. This remains a challenge in our field. But level 4 autonomy, where the robot is deployed in a controlled and carefully mapped environment, such as maybe geofenced urban areas in parts of the country where it doesn't rain much or industrial sites or close loop transit systems, in these cases, the vehicles can move at moderate speeds with minimum exposure to high speed interactions and complexity. This part is ready to go. You see, when you think about autonomy, you have to think about where is the robot operating and what is the task of the robot? Even in a warehouse, when you just move from point A to point B and the environment is pretty static, autonomy is quite easy. But in your home or in Boston, at rush time, the robot cars would have a much more difficult time. There are so many exciting ways in which we can think about tackling this Level 5 autonomy challenge. From my point of view, rather than wait for all the technologies that are needed to make this grand leap, we are working on embracing something we call a guardian or a shared autonomy approach, where we are gradually increasing the intelligent driver assist component of the robot. You can think about a parallel autonomy system. You're the driver, and then you have an AI system that drives in parallel and warrants you if you're about to drive into traffic because you have a vehicle in your blind spot that you cannot see, but the sensors surrounding the car can see. This notion that we can embrace a progressive path where every step we have gradually more and more capability is what we are following with the hope that we will get to the promised land sometime. Dylan Lewis: It sounds like you are a big time believer in level 4 autonomy and continuing to bring more and more functionality and help that way, but that Level 5 is still quite a bit of a leap? Daniela Rus: I certainly believe that there is a path to Level 5, but it's not now. I think the road to Level 5 is long, and our research really aims to bring us closer to a future where we may have level 5 autonomy and even more. Actually, my dream is to have a car that will be your friend. That will never be responsible for a collision. I want my vehicle to be more than a mechanism that drives me from point A to point B. I want my vehicle to do more for me. I want my vehicle to advise me. I want my vehicle to detect that, and my voice is a little bit sad, and maybe the vehicle could suggest, hey, Daniela, you had a hard day. Should we stop for an ice cream or something like that? Dylan Lewis: It wasn't my idea. It was the vehicle's idea to get the ice cream. That's a perfect excuse. You just reimagined a little bit there, what I think even most people would have in their heads for autonomy. I'm curious, being on the cutting edge of this, what type of robotic assistance do you see coming to people's lives, maybe in the next ten or 20 years that maybe is on our radar or not on our radar, but something that, you can imagine being in people's homes or assisting them less of a clear manufacturing capacity or something like that, more of a consumer capacity. Daniela Rus: Well, ten to 20 years is a long way into the future, Dylan. If you give me a long time, then I will say that we are going to have our laundry folding robots. We are going to have robots that can help us with our dishes, we're going to have even robots that can help us in the kitchen with food prep. We can have robots that will help tidy up a space after your kids have scattered the toys everywhere. For many of these problems, we actually have prototype research grade solutions. The challenge is scaling them up and delivering them at a price point that is affordable. Dylan Lewis: One of the things I've heard you talk about is the funding nature of a lot of this work. I think you just hit on it a little bit there. The challenge of doing a lot of upfront work, so that some of these things can be available to the mass market and be available at an affordable level. What does the funding environment look like for a lot of this? For cutting edge work, is it primarily a lot of research institutions and education institutions? Are you seeing a lot of private companies really lead the charge with this? Where are a lot of the dollars and efforts coming from? Daniela Rus: Right now, funding for robotics is coming from a mix of private industry, government research grants, and academic institutions. But this landscape is not really even and that's because unlike pure software AI, which scales very quickly and attracts massive private investment, robotics faces very high upfront costs. Also, robotics has much longer development cycles, and it has infrastructure challenges. We see many robotic start-ups that secure funding from corporations, and these corporations often have clear commercial applications in mind, and they invest because they see a direct benefit for their operations by investing in start-ups. We also see government investment from agencies like DRPA and the National Science Foundation and the DOE. These agencies are funding robotics research in academia and also in companies because this is a very critical step before we can have products. These agencies also have translation funds that help move the research grade prototype toward an MVP, a minimum viable product. But you see, I do want to emphasize that the advancement really comes from the deep thinking in research laboratories, whether they are in academic settings or industry settings. That is absolutely necessary in order for new ideas to emerge and new industries to be shaped up by these ideas. It's absolutely critical that this funding continues. Dylan Lewis: Listeners, if you want to hear more from Daniella, she's got two books out recently, the Heart and the Chip, which looks at the intersection of AI and robotics and the Mind's Mirror, which is a survey of AI development and our future. In your future, you've got two radar stocks coming up from Matt Argersinger and Jason Moser. They'll be back with me in just a minute after the break. Stay right here. You're listening to Motley Fool money. [MUSIC] As always, people in the program may have interests in the stocks they talk about and the Motley Fool may have formal recommendations for or against. Don't buy sell anything based only on here. All personal finance content follows Motley fool editorial standards. It's not approved by advertisers. Motley Fool only picks products it would personally recommend a friends like you. Matt Jason, appreciate you joining me for the back part of the show. We are going to head over to Radar Stocks in just a minute. But first, a quick update from new Starbucks CEO Brian Nichol and his plans to bring the chain back to Glory. Company out with a presser this week indicating they are updating their dress code to the company's green apron partners, and they are saying, we want to see a black shirt for everyone behind the coffee bar, along with khaki, black or blue pants. Jason, does this update in uniform feel like a step on the way back to Starbucks? Jason Moser: I don't know that it recovers everything, but I definitely get it. I mean, it feels like it's in line with maybe what he did at Chipotle. It does seem like when you go into Chipotle, there's a consistency with the way folks are dressed there behind the counter, and listen, I mean, you got a job. You work there. You don't have to work there if you don't want to abide by the dress code. But I think a lot of us recognize that Starbucks green apron. It's one of the few things that you think about. You think Starbucks. Honestly, I mean, one of the things that comes to mind is that green apron. I absolutely appreciate wanting some consistency there in the operation. I think that's always been a little bit of a difficult challenge with Starbucks, given the company-owned stores versus the licensed stores. I'm not exactly sure how that's going to work for them, but sure, I get it. I'm OK with. Dylan Lewis: Your black shirt will be in the mail after we wrap up today's episode Jason. Matt Argersinger: And the green apron. Dylan Lewis: And the green apron. I love it. Over to stocks on our radar for the week. As he does, each week, our man behind the glass is going to hit you with a question. Matt, you're up first. What are you looking at this week? Matt Argersinger: Dylan, I'm looking at Ryman Hospitality Properties, Ticker RHP. This is a bit of a risky one right now. But I think there's enough margin of safety built into the stock. If you don't know Ryman, this is a Rt that owns large scale resorts, very large scale resorts, mostly under the Gaylord brand name. You've got, for example, Gaylord Opryland in Nashville. It's actually one of the biggest resorts in the world. It also owns the famous Ryman Auditorium in Nashville. There's the Gaylord National Resort and Convention Center in National Harbor, just outside Washington DC. These properties are built with large scale conventions and events in mind, and you say to yourself, Well, Matt, isn't this a business that's going to suffer in an economic downturn? Well, yes, of course it will, but I think the advantage Ryman has is that corporations, large groups, they book these rooms out for many months in advance, often years in advance. It's one thing for you and I to cancel a vacation that we plan next month, but it's much harder to cancel an event that you've got planned for 300 employees or hundreds of customers that you've planned out for many months. When big groups cancel with Ryman, Ryman earns a big cancellation fee when they do. There's a stickiness to the revenue. They've got, unique world class assets, and now you have a stock that trades for less than 11 times management's earnings estimate and a dividend yield of 5.5%. Even if management has to reduce guidance a little bit because of the economy, I think that's a cheap enough valuation where you can get into the stock, start getting that dividend yield and wait for the environment to improve. Dylan Lewis: Dan, if I'm not mistaken, you have been on site at a Ryman Hospitality property. With some of our fool events, a question about Ryman Hospitality Properties. Ticker RHP. Dan Boyd: Not really a question. More of a comment, Dylan, but we just had our annual meeting just last week or the week before. That's right, the week before and I got to tell you, Maddy, I am done with hospitality properties for a while. Thank you very much, Pal. Dylan Lewis: Jason, seems like you have an easy one to beat this week. What's on your radar? Jason Moser: Well, I'm counting on a comment, not a question from Dan, talking about alphabet this week and Alphabet, at the same time, it's the dominant force in global search. But it's also facing a lot of challenges on multiple fronts in regard to competition, growing in the AI space as well as ongoing antitrust litigation that really does leave the company's future in a bit of an uncertain place. There's an interesting stat here, stab counter data show that Google share of the global search market fell below 90%. During the final three months of 2024, marking the first time since 2015. Now, you add to that the fact that they are trying to go through this acquisition of cybersecurity firm Wiz, again, paying through the nose for it. Is that going to be worth it? We don't know. Well, regulators even allow it. We do not know. But right now we are waiting for alphabet reports. They come out on April 24 after the market closes. Dylan Lewis: Dan, a question about Alphabet Ticker GOOG or GOOGL, if you're into voting shares? Dan Boyd: Classic fumble. Should have stuck with Google. Alphabet's a terrible name for this company. I don't care. Dylan Lewis: Dan, I got to be honest. Usually, I know which way you're leaning with radar Socks. This is a tough one. I don't know which way you're going to go. Dan Boyd: I mean, Alphabet isn't going anywhere, so they're going to win, but I don't have to like it, Dylan. Dylan Lewis: I just have to weigh in, and thank you for doing so. Matt and Jason, thanks for bringing your stocks. That's going to do it for this week's Motley Fool radio show. Show was mixed by Dan Boyd. I'm Dylan Lewis. Thanks for listening. See you next. Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Wells Fargo is an advertising partner of Motley Fool Money. Dan Boyd has positions in Amazon, Chipotle Mexican Grill, and Costco Wholesale. Dylan Lewis has no position in any of the stocks mentioned. Jason Moser has positions in Alphabet, Amazon, Chipotle Mexican Grill, Prologis, and Starbucks. Matthew Argersinger has positions in Alphabet, Amazon, Chipotle Mexican Grill, Prologis, Ryman Hospitality Properties, Starbucks, and Tesla and has the following options: short June 2025 $100 puts on Prologis and short June 2025 $90 puts on Starbucks. The Motley Fool has positions in and recommends Alphabet, Amazon, Bank of America, CarMax, Chipotle Mexican Grill, Costco Wholesale, Goldman Sachs Group, Interactive Brokers Group, JPMorgan Chase, Nvidia, Prologis, Starbucks, and Tesla. The Motley Fool recommends General Motors and Ryman Hospitality Properties and recommends the following options: long January 2026 $90 calls on Prologis and short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy. Management Weighs in on the Macro was originally published by The Motley Fool
Yahoo
15-04-2025
- Business
- Yahoo
An Investor's Take on the Latest Tariff News
President Donald Trump announced a 90-day pause on some tariffs. Meanwhile, the trade dispute with China is heating up. In this podcast, Motley Fool analyst Jason Moser and host Ricky Mulvey discuss: The market's extreme reactions to tariff news. China's "nuclear option" for the U.S. economy. The key themes coming up this earnings season. Looking for opportunities in an uncertain environment. To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $287,099!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $38,396!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $502,231!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of April 14, 2025 This video was recorded on April 9, 2025 Ricky Mulvey: Buckle up. This trade war might be a long ride. You're listening to Motley Fool Money. I'm Ricky Mulvey. Back with me today. I saw him in person a few days ago, but it's good to see you on the Internet. Jason Moser, thanks for being here. Jason Moser: Ricky, I think I like seeing you more in person, man, but still great to see you today anyway. Glad you got back safely. Ricky Mulvey: Got back safely. Okay to see you on the Internet. Better to see you in your physical form and know that you're a real person. Jason Moser: I'm with you. Ricky Mulvey: Twelve minutes before we were going to record this show. Something happened. I got a whole outline. Twelve minutes before we got a truth social post. At real Donald Trump on truth, truth posted, basically that based on the lack of respect that China has shown to the world's markets, I'm hereby raising the tariff charged to China by the United States of America to 125% effective immediately. At some point, hopefully in the near future, China will realize that the days of ripping off the United States and other countries is no longer sustainable or acceptable. This is what the market got excited about. Conversely, and based on the fact that more than 75 countries have called representatives of the United States Yada Yada, to negotiate a solution to the subjects being discussed relative to trade, trade barriers, tariffs, currency manipulation, and non monetary tariffs, and that these countries have not at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day pause and a substantially lowered reciprocal tariff during this period of 10% also effective immediately, thank you for your attention to this matter. Always good to be thanked when your 401K is getting rocked a little bit, Jason, thank you for your attention during that time. Markets are celebrating this announcement. I know you haven't had a whole lot of time to prepare, but what is your first blush reaction to this tariff pause at the majority of the World. Jason Moser: I think the pause actually sounds like it could be the title of a Seinfeld episode. The pause. I don't know. Maybe I'm just a Seinfeld nerd and it feels right there. The nature of what we've been going through over the last several days. It has been very emotional for a lot of investors. It's been very difficult stretch for a lot of investors, particularly newer investors who have not been through these types of stretches. But we talk about this often, and I think it just bears repeating. We talk about staying invested in the merits, the virtue in doing that, because the facts are that oftentimes the worst stays in the market. Are followed up very shortly thereafter by some of the best days in the market. If you're not invested during those best days, you really are killing your returns. I'm going to repeat myself here. But going back and just looking at the data over the last, what, 30 years, if you just missed out on the ten best days of the market, your returns basically get cut in half. If you amp that up to 30 days, if you miss the 30 best days, your returns get cut by close to 80%. It just really, I think, speaks to. It's a testament to why we invest the way we invest here at the full, taking that long view, making sure we get invested and stay invested because we know there are going to be bad days, but we also know there are going to be a lot of great days. This seems like obviously we have not closed yet, but this does seem like a headline that's going to stick, so I would imagine we should finish up with probably one of those better days today, and that for investors should feel pretty good, at least. Ricky Mulvey: Hear me out. You had the contest. You could have the pause. I could see a way where George somehow insults a trade representative of another country and incites a tariff war that he finds himself in the middle of that he has to reverse in some way. You could do that if you want to bring that show back in 2025. Jason Moser: Let me listen. Art Vandelay was an exporter or importer. Was he a exporter? Is one or the other, but, yeah, point remains. Ricky Mulvey: When we were at full Palooza, that's our all company event, where we were for the past couple of days because everyone who works on the show was at the all company event. That's why we were off. It was an interesting time to see our colleagues, but also to watch the market where this 90 day pause was actually hinted at on, I believe, Monday, where it becomes a tweet that's on some lower ranked ex finance account that gets picked up by other accounts that then gets picked up by CNBC. It's a headline trillions of dollars in movement in the stock market. Then the White House comes out and says, No, that's fake news. We're not negotiating. These tariffs are in effect. We had that roller coaster from plus 4% to -1% in one day. Now we're having trillions of dollars moving again on this truth social post. This is a roller coaster ride that is a market driven president driven return. Are there any lessons that you're taking from that, just the sheer violence in the market happening right now? Jason Moser: Lessons, yeah, well I think obviously, that initial it has obviously been a very volatile time. That initial post seemed to be based on something where Bessant said something to the extent of the administration is going to do whatever the administration is going to do. Then somehow that was parsed and interpreted as like, well, there's going to be a pause. Then someone gets out there on the social media. They say there's going to be a 90 day pause. It then goes viral, and of course, the markets react immediately because stuff just gets picked up so quickly. I think for me honestly, it's a good reminder of you have to be able to take everything with a grain of salt and make sure that you don't overreact or react too quickly because oftentimes, when it comes to financial media or when it comes to even social media, people love to be able to be the first one to break the story. That's just like I want to be the one that breaks this story. There are often times where it's the case where it's actually not a story at all, and it turned out to be that that was not correct. There was not a 90 day pause announced at that time. Then we saw the markets quickly correct again because we found out it was flawed information. I think to me, it goes back to that old Silicon Valley axiom, move fast and break things. I think for investors, we need to look at it from the other side of the coin there, move slowly. Don't get emotional. Don't sit there and just make hasty decisions based on something that you are not even sure whether it may or may not be the case, because in that case, it turned out to be not true. Now, we've seen today where it does seem like this information we've gotten is verified and actually is true. But if you made a hasty decision based on that information yesterday, you could have really put yourself into a hole that had been very difficult to climb out of. Ricky Mulvey: It was a rumor. It was fake news, then it was real news. I'm not about to throw stones here. I made two mistakes on the show last week that I want to correct now when we were first doing the day after liberation Day. Which liberation Day seems much longer ago than about a week ago. I didn't give enough context that one of the trade barriers that was being punished were trade deficits, which can be a good thing. I have a trade deficit with the Spotify corporation. I have a trade deficit with Costco. I'm trying to break this stuff down and basically, mentioning that dairy from the US to Canada gets this crazy tariff if it's above quota. In 2024, the US exported more than a billion dollars in dairy products to Canada, and currently, American producers do not export enough dairy to meet the Canadian tariff quota. There's different issues with non monetary tariffs, but you're trying to take all of this information in and deliver it to listeners. I made a couple of mistakes last week that I'm correcting right now, and you know what? It's good to be here and not see NBC where we're not moving trillions and trillions of dollars, Jason. Jason Moser: Ricky, I think that's a great lesson for people, by the way, we all get things wrong in being able to say that can make all the difference in the world. I think it makes you think a little bit more going forward and investing. We have to admit we get things wrong all the time. That's part of the deal. But once you get to the point where you can actually make those mistakes and embrace those inevitable mistakes, I think it ultimately makes you a much stronger investor going forward because you know that you're learning, you're keeping an open mind and being willing to change your mind when the facts change. To me, that is a key part of being a good investor. Stay humble. Ricky Mulvey: For newer listeners, I think we're getting an influx of newer listeners that just want to find out what's going on, and there's a feeling that markets are moving on these truth posts, charts, headlines about phone calls between the president and other world leaders. I'm going to get political for a sec. Our president does have a meme coin. He is involved in the markets. I think there can be a feeling that the stock market is rigged, and this is one big casino, especially as I'm looking at these big movements. For a newer listener, for a newer investor, what would you say to them if they're having that feeling right now? Because in some ways it's not entirely wrong. Jason Moser: No, I don't think it is. I think in today's day and age, with things like meme coins and meme stocks and stonks and all that stuff, it can definitely feel more rigged or more like a casino than it did perhaps 20 years ago. I get it. It can feel that way sometimes. I think part of it really boils down to understanding what game you as the individual investor are playing. Because in most cases, we are just not playing the same game as your money managers and big institutions out there. It reminds me, it takes me back to that old Ben Graham saw where, he says, In the short run, the market is a voting machine, but in the long run, it is a weighing machine. This really is true. We are focused on being owners of businesses over time that will continue to get heavier, in a good way. But we have no edge when it comes to getting in and out of positions. There's so much information that flows so quickly, we just simply aren't privy to it. Then the costs that come with being wrong in the trading game are simply not worth it, when you're trying to trade you're wrong an awful lot of times. It just doesn't make a lot of sense. Now, if you look at the chart, it tells the tale. Sure, the S&P is well, before this 90 day pause was announced to me is down around 15% year to date. It's only up maybe 11% over the last three years. But look over the last 10 years. It's up 140%. Over the last 30 years, it's up 882%. Now, there are a lot of bumps along that journey, of course. But getting invested, and then the key here, staying invested is the only way that you can ensure that you'll actually be a part of that. Ricky Mulvey: Our co founder, David Gardner is on X. I encourage you to follow him. He's our chief rulebreaker. He wrote, "In my 58 years, not sure I can remember a market drop more akin to a self inflicted gunshot wound. Wound, mind you. It's a two day, actually two month drop. Let's do even more tariffs. Am I right? We got a good thing going. Pour it on. Sarcasm is the wit of fools". I think there's two elements here I want to talk to you about. We talk about a lot of market crashes in the past lessons from them. Some things are the same, the feelings of panic, people wanting to move to cash, people wanting to trade more often when they're experiencing the pain of seeing months and months of hard work vanish in their 401K and stock portfolios. What seems to be different this time is that it is not systemic. It's not like 2008. It's not like the carry trade, even from a couple of months ago. What's it mean for stock investors that the market dropped and the ups and downs we're seeing right now is self inflicted and not systemic? Jason Moser: Well, I think this is something where ultimately, what that means, this is something that there was a choice in what to do, and also how to do it. You can imagine if we weren't going through all of this tariff stuff, then the market likely wouldn't be performing the way it's been performing over the last few months. We might end up being in the same position we are today. Who knows? But the volatility, I have to imagine would have been far lower. It's funny just based on the timing of this because of this 90 day pause that just came out. But imagine if a headline came out tomorrow saying these tariffs are suspended. Indefinitely or 90 days or whatever and countries are negotiating ways to move forward on a more sustainable path together. That would certainly have an impact, and lo and behold, we saw this headline that just came out, and that at least I think has the marks encouraged that we might be on that path for productive negotiations toward more sustainable solutions. Ricky Mulvey: What would you say to the investor who sees today's very large market increase says, this is my chance to get out for a little bit. We just had one of the best days, and this is going to be followed by more tit for tat trade war negotiations with China, which is still heating up despite the large increase. That could be very bad for the US economy. I want to get more cash or I want to get out of my US stock position and put myself into more international equities. Jason Moser: Yeah, I think a lot of this. First and foremost, I would encourage folks granted the headline today has obviously had a very positive impact on markets. I would not say that, Okay, well, everything's taken care of. Now, problem solved because I don't think that's going to be the case. I think we're going to see more volatility as time goes on here, but I do think a lot of this boils down to what stage of your investing life that you're in. We talked about this on the show before. If you're younger and you're working and you're going to grow your wealth mode, well getting out of the market makes zero sense, and makes no sense whatsoever. You need to continue to add, continue to diversify your holdings as well as you can in order to offer some stability there to help offset some of this volatility. Dividend stocks. I know they're really boring sounding, Ricky, but dividend stocks are great for investors of all ages. Keep that in mind. If you're in more protect your wealth mode. You're a little bit older, you're looking toward retirement, you need to make sure you're protecting that wealth. Well, then absolutely, you need to make sure that you're allocated accordingly and have more stability in your portfolio. The cash is always nice to have, and it's a nice way to hedge these downturns. It's also a good reminder to make sure that your money you know that you're going to need over the next 3-5 years. If you've got college tuition bills to pay or whatever else it may be, something over the course of the next three to five years, if you know you need that money, probably shouldn't have that money in the market, or at the very least, it should be in a stable instrument that while offers lower returns, it isn't subject to the vagaries of the market. Ricky Mulvey: We're going to talk about the trade war heating up with China and what's going on with Walmart just after this. Jane Perles: As a longtime foreign correspondent, I've worked in lots of places, nowhere as important to the world as China. But these days, few journalists are able to get the inside story. That's because China has shut the door to much of the media. I'm Jane Perles, former Beijing bureau chief for the New York Times. On Face-Off the US versus China, we're trying to break through. We'll talk about Trump and Xi Jinping, AI, TikTok, and even Hollywood. New episodes of Face-Off are available now wherever you get your podcasts. Ricky Mulvey: J Mo, we got too much news today. No B segment, we're sticking to our A segment outline. The trade war with China continues to heat up. According to the Wall Street Journal, this was before the 125% tariff from the United States a few minutes ago, China said it was going to increase tariffs on all US imports to 84%. But the thing that's important for this is that it may go beyond tariffs, and the situation may not just be import/export duties. It could go to other things, it could go to export controls of critical minerals used to make chips, could be more regulatory investigations to punish US companies, blacklist more US companies from the Chinese market, and the big one, which is a economic nuclear option, is that as of January, China had about $761 billion in US government bonds. There is a nuclear option where they just want to sell all of those into the market and crush the price of US bonds, which increases the interest rates on those bonds, that's the one I'm worried about. How about you? Jason Moser: I wouldn't say that I'm worried, but I'm really glad that you framed that the way you did, because I think what you did is you made the point that this is a very complex issue with a lot of moving parts. But to the bond question specifically, I wouldn't say I'm worried, but it's something to watch for sure. I mean, normally, during these volatile times, I mean, we would see a flight to safety, and money would be flowing from higher risk instruments like stocks to more risk free type instruments like government bonds. But there are certainly some questions regarding bonds today, particularly as those prices continue to fall. I mean, there are a couple of different perspectives. There's this conversation about the basis trade, for example, where the basis trade is basically the basis, the difference between the price of a government bond and its future contract, which is an agreement to buy that bond at a later date for a specific price. Hedge funds institutional money when they see a meaningful delta there, they'll buy the cheaper bond and then they'll short the more expensive future contract in order to try to play a little bit an arbitrage deal. At some point when the prices converge, then they will go ahead and cash out and make a little bit of a profit there. I think it's interesting to know in regard to this basis trade, Apollo Global's chief economist noted recently here, the basis trade today represents about $800 billion and growing, so it's not insignificant at all. But to your point about China and other countries dumping US bonds, I think that's a great observation as well. I'll give a shout out to Matt Argersinger who earlier today, he noted on our website that traditionally, larger buyers of those treasuries, countries like China and Japan, they obviously have been prime targets of the tariffs, and it could materialize where these countries decide to unload those bonds and unload those bonds, prices go down, yields go up, and now all of a sudden, we're stuck in a little bit more of a tricky interest rate environment, which then begs the question, what does the Fed do? Going back to what I was giving you kudos for at the very beginning there, it is a very complex situation with a lot of different outcomes. Ricky Mulvey: I'm sure it's a busy day for Jerome Powell. Speaking of institutional investors, I think it's important for all investors to zoom out on what's going on right now. We talked about the danger of reacting to headlines, but there could be fundamental paradigm shifts happening. We already know about some of them, like artificial intelligence, and Ray Dalio wrote about it in an article on X, spicily titled Don't Make the Mistake Of Thinking That What's Now Happening is Mostly About Tariffs. I got an edit for that headline if he's looking for any. One idea is that the debt that the US has taken on is unsustainable and that, "It is obviously incongruous to have both large trade imbalances and large capital imbalances in a deglobalizing world in which the major players can't trust that the other major players won't cut them off from the items they need, which is the American worry or pay them the money that they are owed, which is the Chinese worry." Basically, the US has taken on a bunch of debt to buy goods from China, and now that order is getting fundamentally restructured. Dalio can be a perma bear. I'm not saying I'm a smarter investor than him, but that's just an observation. He likes to call a market crash. Any observations about what he wrote in that article or any takes based on what he's saying here? Jason Moser: Yeah, I get it. I really like reading Ray Dalio's stuff. He can come across as a little more glass half empty at times, I guess. I get where he's coming from, though. I think he makes some really good points here, though, in regard to instability and unsustainability on several fronts. Economic, in the sense of debt levels. I think we all probably agree that our debt levels are unsustainable, you have to figure out a way to crack that code. Domestic political order is very chaotic and very polarizing, to say the least right now, and this certainly then extends out to geopolitics and relationships with other countries. Then the constant evolution of technology and how that's changing our lives and careers. I think he raises a lot of great points there, things to be concerned with to follow and keep our eyes on. By the same token, I don't think the world is coming to an end, and I think these issues will very likely persist in the future, but hopefully just to a lesser degree. Ricky Mulvey: We've done a lot of big macro and there's still big macro to talk about. But let's get to some of the individual companies, and one of those is Walmart. I think it was last week or the week before we were talking about, if you're a company that sells stuff and you're importing stuff, why are you issuing guidance right now? You have no idea what's going on. Walmart did that. This is what they said in the press release. I'm going to let you translate it. They said, "The company expects Q1 sales growth to continue to be in line with its 3-4% outlook in annual sales and operating income growth, guidance remains unchanged. The range of outcomes for Q1 operating income growth has widened due to less favorable category mix, higher casualty claims expense, and the desire to maintain flexibility, to invest in price as tariffs are implemented." The headlines we're seeing on this is that Walmart is cutting guidance, but that doesn't seem to be entirely true. What's Walmart telling Wall Street here? Jason Moser: Well, I think Walmart is telling Wall Street that they are unsure as to how the costs of doing business are ultimately going to impact their bottom line. I think, in regard to Walmart and how they get their stuff, their supply chain, I think it's important to note that, I mean, it's estimated that about 60-70% of Walmart's globally sourced products actually come from China. Now, if you go one layer down, that figure could be close to 70-80% of merchandise sold in the actual US and so the US is even a little bit more susceptible to that. That's not surprising. Walmart is very dependent on China in regard to their supply chain. But by the same token, Walmart plays a very interesting role in the global economy, clearly here domestically, but globally as well. I think that this is a situation, we see these situations a lot where companies enter these stretches, some fare way better than others. But these are situations where I think the strong can get even stronger. I thought it was really interesting to see that Walmart shares were actually up 5% on this release. Now, that was before the 90 day delay headline just came out. Now Walmart shares are up 10%, which that's a big move for a stock like this. There was just a noteworthy conference from Chief Financial Officer John Rainey said in an investor presentation here, that he believes that the company emerges with greater share when it leans in to periods of economic uncertainty, and that goes back to my point of the strong only gets stronger because they have the scale to deal with this situation. They can take a little bit of a hit on pricing in the near term in order to gain share in the long term and if you take that to the Nth degree years ago, that's what Amazon did, that was their playbook. We're going to lose money to gain share because we know 10, 20 years down the road, it's going to be the share that matters, and that's ultimately what's going to help us make money. Walmart obviously is a little bit of an older business than Amazon, but I think they're still playing a little bit from that playbook there and so it doesn't surprise me to see the market receiving Walmart's news the way it is because typically, when you see companies get out there and withdraw guidance, much less cut guidance, the market doesn't typically receive it very well, but today, we're seeing George Costanza, it's the opposite. Ricky Mulvey: The Seinfeld references are in full force right now. To put that in context, Walmart jumps 10%. It's more than a $700 billion company. That means that the jump just today is the entire market cap of Kroger, which is one of its larger grocery competitors. Jason Moser: It's pretty astounding. Ricky Mulvey: Just on this announcement, it is a wild time to be an investor. I don't have anything smart to say on that. Big banks are kicking off earning season this week, and you can be sure that a lot of the Wall Street analysts are going to be looking, Jason, for clarity, clarity on what's going on. The poor corporate executives, very poor, we should feel bad for them, it's going to be cloudy outlooks, lot of questions for these retailers, really for any company. When you're looking through the earnings transcripts that are about to come out, what are you going to be control fing for? What are the terms? What are you looking to see from the companies you follow as earning season kicks off? Jason Moser: First and foremost, for me, it's going to be the R word, recession. I think the main reason why I say that is because now all of a sudden, we're seeing a lot of these banking leaders come out and really start calling for the likelihood of us entering a recession if we're not already in a recession. We saw Larry Fink say something to that extent the other day, Jamie Dimon came out and said that here recently, Morgan Stanley saying basically the same thing. I think, to me, it's going to be very interesting to see how these leaders feel about the economy and a recession. Then ultimately, it's the relationship that the Fed plays with this because there is this notion, I'm not saying this is what's happening, but there is this notion that the Trump administration is trying to force the Fed's hand into cutting rates a little bit and that has played into some of the decision making here. I'm not saying that's the case, but I'm saying that's a notion that's out there, and it'll be very interesting to see if they have anything to say about that, as well. But for me, I think the recession talk is going to be what'll be top of mind for a lot of folks. Ricky Mulvey: For me, it's going to be supply chain, right before this recording. Let's say I'm Nike, and I make more than half of my shoes in Vietnam, and these tariffs, this 46% tariff that was previously going to come into effect in Vietnam, maybe I'm thinking about opening a factory in the United States of America. Now I've got a 90 day pause. What am I going to be doing about this capital investment that is hot and cold, yes and no, in and out? Are companies really going to bring more manufacturing to the United States given the unevenness of these announcements and trade disputes? Jason Moser: Yeah, I think that's a great question. It seems like that's clearly a part of this. It's about reassuring and attempting to bring manufacturing back to the US, which I think is a great long term goal. I think we'd all probably be on board with that. But that's not something that happens overnight either. If that is something that's really steering this ship, that takes a while and really that, I think, adds to a lot of uncertainty, particularly when it seems like the headlines change every single day. Ricky Mulvey: I want to finish off by talking about one company I know you follow closely, one I've started to take more of a look at because it seems like people are getting more negative on it, and that's Adobe. Now trades at about 16 times free cash flow, and that was before whatever happened during this recording. Also has a $25 billion share repurchase authorization, which is a lot. I think the total market cap is around $140-ish billion. There's a storyline that companies are going to cut back spending, maybe some of their subscription software that they offer is going to get steam rolled by AI. Who needs Photoshop when you can just have AI edit your photo, that kind of thing? Jason Moser: That's true. Ricky Mulvey: But as we close out, maybe, how are you looking for any opportunities right now, any thoughts on Adobe? Just for me as your colleague and co-worker looking at stocks. Jason Moser: Well, as your colleague, Ricky, I will say I'm also an Adobe shareholder and I've recommended the stock and our services as well. It's a company that I'm still fond of and I still believe in. AI has been a big point of conversation with many of us on the investing team when it comes to Adobe. That said, it's not like they aren't chasing that opportunity, they most certainly are. Anecdotally, people I speak with who use these tools like them a lot. But it's clearly a much more competitive market for digital content and creation. Adobe is going to have to work to maintain its position in the market and figure out ways to grow it. As I said, it's one I own personally and I intend to continue holding. But I think for investors, it's just keeping an eye on signs that they are losing meaningful share. If we see signs that that's happening, then we need to reassess. The company's still growing the top line at a double digit rate and they continue to bring even more down to the bottom line, which is encouraging. Makes a ton of cash, the balance sheet is still in very good shape with plenty of cash in low rate long term debt that staggered out nicely. As you said, they continue to utilize that cash to buy back shares, and they bring that share account down. I think it's just going to be paying attention to how sticky that subscriber base remains because that's one of the great parts about Adobe historically as an investment is this sticky subscriber base. But as the market becomes more competitive and there are more options out there, you have to ask yourself, are there really switching costs? I don't know, we're going to find out here, I think, soon enough. But I like the things that they're doing and I'm willing to give this company some leash here to let them go do their thing. As far as other companies, I've not changed my investing behavior really at all through this. I haven't sold anything, I've continued to invest by virtue of just making sure my paycheck is contributing to my 401K, and I'm investing in my Vanguard Total Stock Market Index Fund there. Individual stocks, I've come to find, and this is really one of the greater lessons David Gardner's ever taught me, it's I'm really only interested in these companies that I already own. I like adding to positions that have done very well for me through the years and I think of companies like Home Depot and UPS on the dividend side, for example, where those share prices are depressed, but these are long term successful businesses. On the growth side, I look toward companies like Shopify and Exxon Enterprise as examples of companies would be very happy to add to those positions as well. But I'm taking it very slow. Like I said, back, the beginning of the show there we're doing the opposite of what Silicon Valley does, Ricky. We're not breaking things fast, we're not moving fast and breaking things. I'm going to take it slow and make sure we don't let our emotions. Ricky Mulvey: He's an expert on imports and exports. Art Vandelay I appreciate you being here. Thank you for your time and insight. Jason Moser: You got it, happy to be here. Ricky Mulvey: As always, people on the program may have interests in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. While personal finance content follows Motley Fool editorial standards and are not approved by advertisers, the Motley Fool only picks products that it would personally recommend to friends like you. I'm Ricky Mulvey. Thanks for listening. We'll be back tomorrow. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jason Moser has positions in Adobe, Amazon, Nike, and Shopify. Ricky Mulvey has positions in Kroger, Shopify, Spotify Technology, and Vanguard Total Stock Market ETF. The Motley Fool has positions in and recommends Adobe, Amazon, Costco Wholesale, Nike, Shopify, Spotify Technology, Vanguard Total Stock Market ETF, and Walmart. The Motley Fool recommends Kroger. The Motley Fool has a disclosure policy. An Investor's Take on the Latest Tariff News was originally published by The Motley Fool
Yahoo
09-04-2025
- Business
- Yahoo
Earnings, Acquisitions, Partnerships, Tariffs... A Lot for Investors to Think About
In this podcast, Motley Fool analysts Ron Gross, Asit Sharma, and Jason Moser discuss earnings, acquisitions, partnerships, and tariffs. And Motley Fool Chief Investment Officer Andy Cross talks to Schwab Chief Investment Strategist Liz Ann Sonders. To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $249,730!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $32,689!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $469,399!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of April 5, 2025 This video was recorded on April 04, 2025 Ron Gross: Did someone say tariffs? Motley Fool Money starts now. From Fool global headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio Show. I'm Ron Gross sitting in for Dylan Lewis. Joining me today are senior analysts Jason Moser and Asit Sharma. Fools, how you doing? Jason Moser: Ron, how are you doing? Asit Sharma: Doing all right. Ron, how are you doing? Ron Gross: I'm well, guys. Today, we're going to talk earnings, acquisitions, and partnerships, but we must begin with the big macro, and it's a doozy. On Wednesday afternoon, the Trump administration revealed the details around what it is calling reciprocal tariffs, which, by the way, they are not sending the stock market down sharply on Thursday and Friday. Jason, let's unpack this. What did the administration actually announce, and what are they actually trying to achieve? Jason Moser: A very hectic couple of days, very understandable for investors to be on edge here. I think we go back to the beginning here and ask, why is this happening? Do you remember this all started really with Canada, Mexico, and China. Tariffs were worth brought to the table as a way to help control border issues, concerns of fentanyl crossing the border and whatnot, but now it's obviously gone virtually global with about 180 countries in play here. I think there's maybe 195 countries in the world, so that's a lot. To me, I think trade deficits are part of this. I think there's a lot that has to do with this. It's not just one thing. It can be confusing, but trade deficits are one piece of the puzzle, I think, here. That's where we as an economy, we import more than we export. We'd like to see more of a balance there, but right now, we're just importing more than we're exporting, and that ultimately can lead to things like shrinking production domestically, job losses, higher deficit spending. One thing to note here, too, in regard to that, while we've heard the word reciprocal a lot in regard to these tariffs, they don't really seem like they're necessarily reciprocal. I mean, you got this 10% number that applies to everyone, but then you got a lot of other countries they deem as bad actors, where these numbers are all over the place. It seems that many of these tariffs are adhering to a calculation based on these very trade deficits. So that's one way to look at it. Another, and this is just something to keep in mind, there are those who believe that he may, at least in part, be doing this to ultimately try to bring interest rates down. During recessionary times, that tends to be the case. They want to free up spending, make life a little easier for consumers. It would allow to refinance much of the higher cost national debt. We have, I think, about $1 trillion in interest payments on the federal debt alone this year in 2025. I'm not saying that's what he's doing. I'm saying that line of thinking exists, and ultimately, I think what that leads me to is there are a lot of reasons why this is going on, and there's all speculation out there. I think it's worth investors pulling back a little bit and saying, you know what? There's a lot going on. I want to make sure I acknowledge there's a lot of stuff that I don't know here. If you peruse social media, there are a lot of experts out there these days, Ron. Ron Gross: Stay away from social media. Jason Moser: We want to try to be a little bit humble about this. Remember, there are a lot of things that we just don't know. This is just a very complex process and I suspect it will get worse before it gets better. But, I mean, I think it's interesting to know we already saw where Vietnam is out there saying, hey, we want to negotiate and bring these tariffs down to zero, and lo and behold, right now, you see companies like Nike and Wayfair and even Under Armour in the green today on what is otherwise a very red day. Ron Gross: Asit, stocks are obviously getting slammed, not all of them, but most of them. What do you think the short and midterm consequences are for US companies? And then I'll ask you, what should an individual investor do, if anything? Asit Sharma: The short term consequences are going to be a hit to earnings for many companies because the tariffs are effective. This morning, we heard that China is going to have retaliatory tariffs of 34%, which is the effective rate that they've been slapped with, and there's no easy way in the short term to navigate these waters. So we can just expect that the landscape of earnings is going to be pitted with mea culpas. Those mea culpas really won't be about, we didn't conduct our business correctly. It's going to be about, we just didn't see this risk. It came out of the blue. We expected some tariffs, not this much. For individual investors, what's going to be the impact is we're going to see lots of security valuations near term, across the board, get whacked because it's very confusing right now. As details emerge, as negotiations happen, then we'll start to see some companies bouncing back and some that now are going to have longer term effects, they'll still be relatively underwater. My caution here to investors is not to just jump out of the market out of fear unless you really need that money or have to make that personal decision to get out. Let this take its course and study it as we go along. We'll be doing that here at The Motley Fool. There may also be some opportunities going forward. Ron Gross: I'll remind investors that 100% of the time, stocks have come back, rebounded and moved higher through wars, depressions, pandemics. I don't see any reason why this would be any different. And if it is, we've got more to worry about than stock prices. I think there's some optimism you can take based on history. Let's move on to some earnings. On Wednesday, RH reported fourth quarter earnings that were worse than expected, and CEO Gary Friedman actually used the S word on a call with analysts when he saw that his stock was down 40%. Asit, the stock got smacked on the tariff news, but how did the quarter actually look to you and how bad will the tariffs hurt RH? Asit Sharma: The quarter looked fine, Ron. The top line, we saw an increase of about 10%, so RH booked about 812 million bucks on that revenue line. But earnings per share of $3.92 was about 25% below the consensus estimate. So more in costs than investors were expecting, bottom line didn't look as healthy, and the stock would have been for a bad day, but this was being released and talked about in the conference call the same time that President Trump was rolling out his tariff structure in the Rose Garden. As you just alluded to, CEO Gary Friedman asked his colleagues to pull up the screen while he was talking to analysts so he could see the stock price. And he said, Oh, chisels. Well, we can abbreviate that. Ron Gross: Fascinating. Asit Sharma: Put a few asterisk by that, "Oh Blank, I just looked at the screen." The reason that the stock was getting hammered as he pointed out, hey, we've been transparent in our sourcing. Seventy two percent of the goods that RH brings into the US come from Asia. I will point out 35% from Vietnam, 23% from China. As Jason pointed out, when Vietnam came out today and said, we want to negotiate, suddenly, RH, which that stock was down considerably again today, shot up a bit. I'm not sure it's quite green yet. But I wanted to point out a few things really quickly. First of all, Gary Friedman is such a colorful character. He also quoted Pablo Picasso and Teddy Roosevelt in that same conference call. But the company is a little stretched in my eyes. They've taken on about $2.6 billion in debt over the last few years to buy back shares. They only have $400 million in working capital. They've got negative free cash flow because they're spending a lot to build out these great flagship stores. So the company's a little stretched right now. You may be tempted to maybe buy on the dip here, but with those headwinds from tariffs and with the company's balance sheet, I'd be a little cautious here. Ron Gross: Sounds good. On Tuesday, mortgage giant Rocket Companies moved one step closer to becoming a one stop shop for home owners when they announced it would acquire Mr. Cooper Group, the country's largest mortgage servicer for $9.4 billion. Jason, investors must have liked this deal because Rocket shares were actually up on the news. Not something we typically see from the perspective of the acquirer. Do you agree? Is this a good deal for Rocket? Jason Moser: I think at least it makes sense when you consider what Rocket is ultimately trying to build. There's an important quote from the call, CEO Varun Krishna said, "Home search, brokerage, financing, title, closing and servicing should be seamless, but today, they're not." I think we could all probably agree they're as homeowners. But but then he went on to say, "If we truly want to fix that, we have to own the client experience from beginning to its true end." That's what this deal is really all about, I think, in my eyes. Now, the combined company would service about one in every six mortgages here in the US, and that would ultimately equate to about $2.1 trillion in loan volume. Then one final point, the housing market activity has dried up since 2021, it's lowest level since 1995. There's a catalyst on the horizon here when housing starts to improve. Not if, Ron, when. We just don't know when that's going to be, but when it does, that could serve as a nice catalyst for this combined entity and really make more sense of a deal. Ron Gross: Sounds good. Coming up, we'll talk gaming, fintech and a bit of a stumble for Tesla. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Ron Gross here with Jason Moser and Asit Sharma. On Tuesday, Roblox launched a new format of video advertising on its gaming platform and announced a partnership with Google to help boost the growth of its developing ad business. Gamers can choose to watch video advertisements up to 30 seconds long in exchange for boosts, lifelines, or resources in a particular game through rewarded videos. Asit, I know next to nothing about this space, but it seems to actually make good sense to me. What's your take? Asit Sharma: Yeah, fellow old timer, makes good sense to me, too. I mean, we came up in an age where you put a quarter into a machine to play a video game, and there was, for the longest time, no way to extend your lives. After a while, they figured out you could put another quarter in, and that was a way ticket to get more lives. But yeah, I think this makes sense from a business perspective. I mean, the demographic they're trying to target here is Gen Z, which is all into this thing called immersive experiences, where you take on a persona and you play with other people in your persona. So this is the immersive ad space. Now, that's paradoxical because if you're immersed in your persona, are you going to step out of that persona and remove the veil of illusion to watch an ad and then continue playing? Ron Gross: Perhaps. Asit Sharma: But I can tell you what, the teenage mind is really good at this, going from fantasy to reality, back to fantasy. So I get that. I also get the stats that Roblox released in the test they've done of these 32nd full screen video ads run a completion rate of over 80% with some experiences seeing a 90% completion rate, which means the kids are sticking through. This is a really great way to tap into that programmatic style advertising space and really get into that gear that Roblox has, for a long time, been predicting it could hit. Ron Gross: On Tuesday, fintech company nCino's shares got absolutely smacked after reported weak fourth quarter results and issued guidance for the current year that fell short of Wall Street's expectations. Jason, the shares were down more than 30%. Was it really that bad of a quarter? Jason Moser: No. I mean, it was a heavy reaction for sure, but I thought these were pretty encouraging results. The company hit their targets on everything, save one item, which was non GAAP earnings per share. That was just essentially due to currency impacts, but as always, investing is about the future, and the market wanted more than the guidance and leadership provided for the coming year. As a reminder, nCino is a SAS company that provides cloud based software to financial institutions in the US and internationally. I'm talking to customers like Bank of America, Barclay, Santander, TD Bank. But revenue for the quarter up 14% from a year ago, subscription revenue up 16% from a year ago, and I thought these metrics were really impressive; these customer metrics. They ended fiscal 2025 with 549 customers that contributed greater than $100,000 to subscription revenues for the year. That was up 10% from a year ago. Of those, 105 contributed more than $1 million. That was up 22% from a year ago, and 14 contributed more than $5 million to subscription revenues. That was up 27% from a year ago. So these guys are growing. Again, it was just about the guidance. It's not profitable on a GAAP basis. While they're technically cash flow positive, if you account for stock based compensation, it's not. So expect volatility with this one, but it does seem like a good business that's doing a lot of good things. Ron Gross: I haven't looked at valuation, but I'm guessing it was priced somewhat to perfection, and that's why people head for the hills when they didn't get the future guidance that they needed. Jason Moser: I think that's safe to say, yeah. Ron Gross: On Monday, OpenAI announced that it had raised up to $40 billion in new funding from investors led by Softbank Group, valuing the ChatGPT maker at $300 billion. Asit, OpenAI is not getting all of this money up front. It's got some work to do, yeah? Asit Sharma: Yeah. So they're going to receive $10 billion upfront from Softbank and its syndicate partners. But look, OpenAI, if you want this next $30 billion, you got to get out of this non profit business, not for profit business. What this means is OpenAI has been saying for a while that it's going to convert to for profit status. So basically, the deal is, look, go ahead and complete that by the end of the year, and you'll get the rest of your money because who wants to throw tens of billions around for a nonprofit to keep growing and making money? Ron Gross: Am I right that Elon Musk has been very vocal about that he does not want that to happen in terms of turning into a for profit? Asit Sharma: Yeah. So there's some back history here. Elon Musk was an original investor in OpenAI and famously parted ways with Sam Altman. So he's been doing everything he can to detract from their success, not just with his words, but, of course, he's invested tens of billions of dollars of money he's raised into his own AI platform, the now well known Grok feature. ChatGPT keeps on just trudging along and honestly, some days are really great versus some days that are bad. A really great day, I'll just quickly say here was just a few days ago with a release of this viral feature that let users on the free version make, like, studio Ghibli type images. They added as many users in an hour as they did in their first several weeks, if you remember when they went viral in 2023. Another day at the office in some ways for Sam Altman. Ron Gross: Just yesterday, ChatGPT helped me relandscape in my backyard. I now know more about blue star junipers than I ever thought I would know, but it was actually fantastic. Jason Moser: Well, we use these tools all the time on the team, and what I'm finding is there's a lot of parody there. They all work pretty well. Ron, what's your AI interface of choice? Are you chat GPT guy? Are you a Gemini guy or Grok? Ron Gross: I have Gemini on my phone where you can keep it on live and have conversations back and forth with it. If I'm on my computer and I'm typing, then I'm a ChatGPT guy. Jason Moser: What about you, Asit? Asit Sharma: Claude's my friend. Jason Moser: Claude. Asit Sharma: I use a few of them, but I think Claude is my favorite. Ron Gross: Sounds good. On Wednesday, Tesla reported that its first quarter sales fell 13% to the weakest in nearly three years, hurt by a backlash against CEO Elon Musk's politics, increasing global competition, and people waiting for a refresh to its highest selling electric vehicle model Y. Jason, Tesla's stock price has basically been cut in half since the end of 2024, and one analyst actually called this a fork in the road moment for Tesla. Where do you think Tesla goes from here? Jason Moser: I think that depends on exactly where Musk goes from here, but those numbers were not encouraging. I mean, investors were expecting Tesla to report deliveries around 365,000 at the midpoint, coming in at 336,681, and certainly questions about the competitive landscape going forward. Now, there were some partial factory shutdowns as the company upgrades its production lines to get that new model Y going, so that will take a little time. But I think there's this news that Musk may be moving away from DOGE here soon and focusing more on his companies again. Honestly, I think that's the right call. The question is, is it too late? His big political presence has made his bed, so to speak, and he's laid his cards on the table there. The question is, is that a permanent loss of capital, so to speak? I don't know. Time will tell there. It's clearly become a far more competitive market, so that's one question. But the other, I think, is just in regard to the reputational risk and what impact that'll ultimately have. I think they can get by it, but we may need a pack a lunch because I think it's going to take a little while. Asit Sharma: Musk has been very vocal that the attention that he's been putting toward government work has hurt the company, has hurt the stock, and I think investors would most likely agree with that. Ron Gross: No question. Ron Gross: Fools, we'll see you a little bit later in the show. Up next, a conversation with Charles Schwab's chief investment strategist Liz Ann Sonders on some lessons from past market corrections that can help investors with this one. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Ron Gross. Liz Ann Sonders is the chief investment strategist at Charles Schwab. The Motley Fool's chief investment officer, Andy Cross, caught up with Liz Ann for the Fool's market volatility summit. They break down why markets were surprised by the Liberation Day tariff announcements and how she is guiding clients right now. Motley Fool members can access the full interview and replays from the event at Andy Cross: Liz Ann, we're so fortunate to have you today. Thank you for being here. I know you've been all over the place talking about these, and it's just a real pleasure to have you. We got to start with what you're seeing today in the markets as a reaction to the scope of that tariff policy. How are you interpreting what we saw, and what guidance are you giving to investors who are trying to navigate all this news in the market when they look out the next few years? Liz Ann Sonders: Well, there were a lot of scenarios that were laid out in advance of yesterday's announcement, usually characterized as base case, best case, worst case. I would say the base case was something more along the lines of some blanket tariff at maybe some percent. It was still lofty but could be navigated around. The worst case scenario was some sort of reciprocal tariff structure, plus maybe against bats. What was announced is well beyond any worst case scenario that I saw laid out, especially given what has caused a lot of consternation over the last less than 24 hours, which is the math behind the numbers, the percentages that were declared, and that being just an import-export relationship, not about trade barriers, not about tariffs. Now everybody is doing the digestion of, OK, this is massive. What is the hit to the US economy? What is the hit to the global economy in a backdrop where we were already seeing pre-Liberation Day weakness showing up, not just in the soft economic data, but the hard economic data. Recession probabilities have gone up. Then the other, I think, takeaway is even though you saw a big jump in probabilities that the Fed might have the ammunition to move back to easing mode, maybe as soon as the May meeting, it begs the question, well, how does that type of stimulus actually help under these tariff set of circumstances? I'm not sure anybody has a good answer for that. There's a lot that's going on into the market action today, but clearly it's ugly. Andy Cross: On a scale of 1-100, one being, we were completely shocked and surprised by what came out yesterday from the White House, and 100 like, no, we added 100%. We got everything right. Where do you think the investing analysts in the investing world is? How surprised were we with what came out yesterday? Liz Ann Sonders: I got to think maximum of 10 out of 100. I think it was a huge surprise. I didn't see any prognosticator lay out this scenario. Andy Cross: Do you do you think is there something that the market is missing? How right do you think the market has this right now when you think about the stocks today? Liz Ann Sonders: I don't know that the market is missing anything. When you think about corrections that have happened throughout the course of history, and we clearly already had a correction, and now we're making that more significant courtesy of the action today. You look at those historical corrections that have bottomed out within that correction territory and then recovered versus corrections that morph into bear markets. Every cycle is different. Every correction is different in terms of its drivers and what might be the differentiator. But if there's one clear differentiator of corrections that stay just that or corrections that morph into bear markets, it's recession. As a result of a pretty big acceleration in recession probabilities, that develops a weakness in the market and elevates concern rightly so for this morphing into a bear market, not just a correction. I think that the correction as it stood, probably did have priced in what might be deemed the best base case scenario that existed prior to four o'clock yesterday. I think even at this point we're not quite at it's discounting most of the negative implications of what was announced. Now we're just dealing with digesting the actual announcement. The hard work now comes in figuring out just how much damage this is going to do to the US economy and or the global economy. Andy Cross: Liz Ann, how do you think about guiding and talking to clients today or to our listeners or viewers of this? As we're thinking we're long term investors at the Fool, we're trying to look out three, five years plus, and now we're digesting this news of the stock prices today and trying to figure out, how do we take this information into it to make decisions? Liz Ann Sonders: Well, when you're thinking right in the moment on a day like today, what do I do right now, maybe the best piece of advice is a reminder that panic is not an investing strategy. I think maybe the type of advice that we always give and certainly have been giving over the past year or so, things like don't have all your eggs in one basket, whether that was all US equity exposure versus not having any international exposure or letting your Magnificent Seven exposure get to a point where you had as big a concentration problem as the S&P 500 did, or just staying all in on tech and tech adjacent. It's our perpetual reminders. This is not me saying, hey, we were telling you that this was going to happen. It's just those tried and true disciplines, including rebalancing and trimming when you have profits, and when asset classes get outsized as a weight in your portfolio, driven by excessive outperformance relative to other components of the asset classes. It's those types of moves that help investors ride through a difficult period. What specifically we have been saying, particularly as we came into this year, anticipating that we were going to see an increase in volatility, that we had policy related risk ahead of us was to not only continue to stay factor focused, as you know, Andy, we've been very factor focused, so invest based on characteristics. But we didn't shift our attention away from a quality wrapper around factors, strength of balance sheet and stability and profit margins and high interest coverage, those traditional quality-based factors. But really you may want to consider adding factors like low volatility. In a backdrop that we anticipated would likely be a bit more volatile. That's the way we have suggested investors navigate within the swirl of the US equity asset class, but also reminding investors why it is beneficial to have diversification outside of just US equities. I often say, sometimes we learn the hard way that there's a peril to not going through those disciplines, especially around rebalancing, is rebalancing forces us to do a version of what we know we're supposed to do, which is not so much buy low sell high. That sometimes sends a message of get in, get out, which is not an investing strategy, but add low trim high. It just makes the ride a bit smoother. But we sometimes forget about those disciplines when we're riding high on certain asset classes or segments of the market that are doing well. Andy Cross: We need to have some of our spinach to go along with that chocolate mousse that we've all enjoyed. As you mentioned, international exposure, too, because International has really lagged the US over the last I don't know how many years. Liz Ann Sonders: Quite a few years, but you do tend to go in multiyear cycles of either US outperformance or international outperformance. They have secular cycles. We were saying last year, be mindful of not keeping all your eggs in the US basket. There were signs that we could see a shift underway. My colleague, Jeff Kleintop talks about that because that's his bailiwick, the international side of things. We don't know for sure whether this is truly the beginning of a secular cycle in favor of non-US, but it certainly was a support for a reminder of the benefits of international diversification. Andy Cross: Liz Ann, just one more question on the tariffs, then we'll get to some more general topics. But when you look at the tariffs and you think about all the factors that are going into that, do you have any key questions that you're asking yourself or thinking about the markets today that we can all learn from? Liz Ann Sonders: Yes. I guess, there's been a lot of focus on the math behind what was announced yesterday, not all of it in a positive way given that we're not really talking about reciprocal tariffs here. The math was basically comparing what the United States exports with a country to what the United States imports from that country. Here's an example. I think the highest tariff rate as it was defined on that table was against Cambodia. Goods being imported from Cambodia to the United States. I think their biggest export is something in the textiles and garment area. Well, Cambodia is a pretty poor country. They have about $7,000 per capita GDP compared to, I think, $85,000 for the US. Part of the reason why they export more to us in dollar terms than we export to them is because they're an incredibly poor country. They can't afford what we have to export, services, innovation, technology, but their ability to build an export market in things like textiles has helped their economy and given something for their workers to have in terms of the ability to earn wages. The real question associated with that is not so much why do you want to punish a country like that. But the question is more when you talk about what concessions the United States might want from these countries on which there's been a high tariff applied to their exports, is how do you negotiate there? What is a concession that a Cambodia or a Sri Lanka or a Madagascar or a Bangladesh or even a Vietnam can offer in order to bring those tariffs down? That's where I think the question should start to get geared toward, but so far, you're only seeing that on the periphery. Andy Cross: When you think about all of the experiences you've had as the chief investment strategist at Schwab for almost 25 years and many more years in the industry, too, you've been through certainly bear markets and pullbacks before. What is driving this one is different than all the rest, but there are things that might rhyme with it or learnings that individual investors can take away. What are you hearkening back to from your experiences? Liz Ann Sonders: Andy you're right. Every bear market, every recession, every crisis has different characteristics associated with it. What we're at least not facing right now is some financial system crisis or certainly not a policy era of the monetary variety, which can often be a precursor to problems, and sometimes they're related in terms of when you get a crisis within the financial system. This is a policy choice that has significant economic dislocations. I think what makes this a unique environment is that given the increased probability of recession happing sooner rather than later, that would generally mean you unleash looser monetary policy on the part of the Fed. They probably will do that if the deterioration in the economy, particularly the labor market is significant enough, but that also means they would be potentially fighting against the other part of their dual mandate, which is the inflation side, which this tariff policy has implications for that. It does put the Fed in a somewhat unique position in trying to battle stagflationary type backdrop with traditional monetary policy tools. I also think that there are maybe some memories of the 2000, 2001, 2002 period that should be thought about in the context of what we're experiencing today because in 2000 at the peak in the market, at that time, households exposure to equities was at an all time high. The 2001 recession that ultimately happened, I think, wouldn't have happened were it not for the bear market and stocks. We didn't have a lot of economic dislocations. We didn't have a financial system crisis. We had a serious wealth effect crisis by virtue of the bear market and stocks, and I think that needs to be considered today, too, because we have an even higher share of exposure to equities by households, an all time record high. At every income level over the last several years, you've seen an increase in exposure to equities, whether it's through direct holdings or 401Ks or pension plans, whatever that exposure looks like. I think the tentacle from market performance to economic performance is a bit tighter than we've seen in the past, save for maybe that 2000-2001 period. Ron Gross: Coming up after the break, Jason Moser and Asit Sharma return with a couple of stocks on their radar. Stay right here. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and are not approved by advertisers. The Motley Fool only picks products that it would personally recommend to friends like you. Welcome back to Motley Fool Money, Ron Gross here with Jason Moser and Asit Sharma. Fools, we've got time for one quick story before we hit stocks on our radar. Subway is adding nachos to its menu, but with an unusual twist. The chain is partnering with Doritos to sell foot long nachos for five dollars. The new dish is freshly prepared using nacho cheese flavored Doritos, cheddar cheese, jalapeno slices, diced tomatoes, red onions, drizzled with chipotle sauce. You can get a scoop of chicken or steak for no extra charge or a scoop of avocado for an additional cost. Jason, are you in? Jason Moser: Ron, I absolutely tip my cap to Subway for experimenting and trying new things. That's what this is all about, and I love the fact that they're leveraging materials that they've already get there. A million bags of Doritos in those stores anywhere you go. I have one little hold up here, something I've got to nitpick about. How in the world are you using cheddar cheese on these things? That just sounds absurd. It just sounds like you don't know what you're doing. It just doesn't melt good. It's queso or bust in my eyes. Ron Gross: Asit? Asit Sharma: Kids, I know times are hard, and this comfort food looks good, but look, buy yourself a party bag size of Doritos. Take it home, [LAUGHTER] get you some cheese whiz if we're going to go cheddar here, get a generous handful, throw it in a bowl. Do all this stuff at home. You'll save a lot of money and, frankly, a lot of time. Ron Gross: Dan, can I entice you into trying this? Dan Boyd: No, Subway is terrible. I will not go. Ron Gross: Well, there you have it. Time for stocks on our radar. With a couple minutes left, I'll bring in our man, Dan Boyd, to ask a question and pick his favorite. Asit, you're up first. What have you got? Asit Sharma: Speaking of food, let's talk about DoorDash, symbol D-A-S-H. This company may seem like not a great stock to have on your radar as consumers start pulling back on those discretionary spins, but hear me out, this is a free cash flow monster. Generated two billion dollars of free cash flow in the last 12 months. It has a stellar balance sheet with about three billion dollars of working capital, no long term debt. Better yet, DoorDash is proving itself out. I think Uber Eats has been losing a little bit of ground, and so with this expansion into retail deliveries, DoorDash is looking good. Lastly, just inked a deal with Domino's of all chains to bring pizzas to your door. Ron Gross: Dan, you got a question about DoorDash? Dan Boyd: No, but I do have a comment. All I want to say is never underestimate the laziness of the American consumer. [LAUGHTER] Ron Gross: I love that. Jason, what are you looking at? Jason Moser: Sure. Taking a look at Pure Storage. Ticker is P-S-T-G. Pure Storage might fly under the radar of many investors, but I'm actually very excited about its data storage opportunity because that's what they do, Ron. They're in data storage. The value proposition is pretty simple. Data centers consume a lot power. But Pure Storage has an all-flash alternative to the traditional data storage methods and like the hard disk drives and whatnot, that ultimately helps lower data centers power consumption. Therefore, the total cost of ownership, not to mention positive environmental impacts. It's profitable. It's cash flow positive. They've got a healthy balance sheet. Ron, the stock just hit. Surprise, surprise. It's 52-week low this week. It's starting to get on my radar there. It's one that several of our analysts here at the Fool like a lot. It's one that I'm continuing to keep an eye on. Then, question or comment. Dan Boyd: Not going to lie. I thought when you brought this to the radar here, Jason, I thought it was going to be a physical storage company. Like you see on the side of the road and everything, and I got excited because I understand that business. But then I read a little bit more, and it's Data Centers, and I'm like, what? Ron Gross: Jason count me as one of the fans of this business. Jason Moser: Data matters, Dan. Data Matters. Ron Gross: Dan, what are you going to put on your watch list? We got Pure Storage and DoorDash. Dan Boyd: I'm not putting DoorDash on because I have integrity. I do not use DoorDash, so we're going to go Pure Storage. Ron Gross: Thanks, Fools for being here. That's going to do it for this week's Motley Fool Money. Our engineer is Dan Boyd. I am Ron Gross. Thanks for listening. Charles Schwab is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Andy Cross has positions in Charles Schwab, Roblox, and Tesla. Asit Sharma has positions in Roblox. Dan Boyd has no position in any of the stocks mentioned. Jason Moser has positions in Nike, Under Armour, and Wayfair. Ron Gross has positions in Charles Schwab and Nike. The Motley Fool has positions in and recommends Bank of America, DoorDash, Nike, Pure Storage, Roblox, Tesla, and nCino. The Motley Fool recommends Barclays Plc, Charles Schwab, RH, Under Armour, and Wayfair and recommends the following options: short June 2025 $85 calls on Charles Schwab. The Motley Fool has a disclosure policy. Earnings, Acquisitions, Partnerships, Tariffs... A Lot for Investors to Think About was originally published by The Motley Fool