Morning Brew Daily - 2025 Market Predictions: Tariff Impact, Crypto, Mega-Mergers and More

Episode Date: December 31, 2024

Episode 486: Neal and Toby chat with Brew Markets’ Ann Berry to preview potential market-moving stories to lookout for in 2025. Will the Fed keep cutting rates? Can Nvidia stay hot? And of course, how the incoming Trump presidency will shape the business landscape. Also, some insights on why crypto is here to stay and what mega-mergers can be expected.  Listen to Ann's podcast, After Earnings: https://open.spotify.com/show/5I5q3LIg1ueDWoTM8AZsHQ Subscribe to Brew Markets: https://www.morningbrew.com/brew-markets/subscribe?utm_campaign=bm&utm_medium=podcast&utm_source=mbd Follow Ann and Brew Markets on social: X: https://x.com/brewmarkets Instagram: https://instagram.com/brewmarkets/ TikTok: https://www.tiktok.com/@brewmarkets YouTube: https://www.youtube.com/@brewmarkets Learn more about your ad choices. Visit megaphone.fm/adchoices

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Terms and conditions apply. Good morning, Brew, Daily Show. Fryman. And I'm Toby Howell. Today, what does 2025 hold for the stock market? We broke it down with investing expert and Barry. It's Tuesday, December 31st. Let's ride. Holy cow, it's the last day of the year. What a ride it has been. Toby, favorite memory from 2024. Wow, favorite memory from 24. It's got to be that three wood I hit on 18, 265 uphill carry. No, I'm just kidding. Probably it is related to the podcast. Seeing Spotify wrapped come out recently. That was a highlight doing the in-person trivia night we hosted in New York.

That was a highlight. Too many to choose from. So I'm just going to say, my favorite memory is doing the podcast every day with you. To wrap up the year, we are continuing our special holiday episodes with a show all about markets. The stock market had a bang in year in 2024. But what should you be looking out for in 2025? To help, we had a chat with the Incredible Ann Barry, the host of the Bruce's Markets Focus podcast after earnings. in is like reading what your parents thought your employment history would end up looking like. She's been a CEO founder, broadcaster on TV channels like Bloomberg, invested billions of dollars as a private equity dealmaker, and we're grateful to have her on the show, which we taped in

mid-December. Okay, Anne, thanks so much for joining us. I'm ready to dig in, guys. This is going to be exciting 2025. And we're about to dig in right now. One of the biggest themes for markets in 2025 is going to be the policies of the incoming administration, particularly Trump's signature policy proposal to enact sweeping tariffs. Just to recap for everyone, Trump has pledged on day one that he'll impose 25% tariffs on Mexico

and Canada, the U.S.'s two largest trading partners, and an additional 10% tariffs on China. On the campaign trial, he also mentioned slapping across the board tariffs on 10% on all goods coming into the U.S., but we haven't really heard any more details on that. And tariffs of this scale would provide a major shock to the economy, upending global supply chains, and likely raising consumer prices for Americans. How should we think about the stock market's response to Trump's ultra-aggressive trade posturing? I think we've already seen the stock market response, right? Because you remember originally when he came out, he said, I'm going to slap 60 to 100% tariffs

across the board on China. And guess what the market did? Well, we've just been going through all-time high, after all-time high, after all-time high. So I think people just really anticipate that at this moment, moment in time and probably early in the new administration. This is Trump posturing. He's throwing the maximum possible punitive policy out there. And then he's doing things like he's been doing in Mexico. He's gone over there and said, OK, what are you going to do for me on immigration guys? I bet he's going to go to Europe and say, what are you going to do on NATO spending guys?

And, hey, China, what are you going to do on cybersecurity and privacy? So I think this is negotiation. We need to see what really shakes out. So you're saying investors are expecting the tariffs to not materialize? I think they're expecting some tariffs to materialize. I just don't think they expect to see it at the scale that that's being thrown. grown out there right now. And actually, I went back, I nerded out on this because I just loved to nerd out on this stuff. I went back to see what happened under the last tariff program. Came to around $2 to $400 impact per U.S. household per year, which is not nothing. That's meaningful, but it wasn't, you know, as catastrophic as people thought. So people are saying we'll be

okay. Let's dive into some of the sectors, though, that could be most affected sector of the economy like the auto market. A lot of auto imports come from Mexico and China. Same thing with fruits and vegetables. A lot of imports come from Mexico, meat and dairy coming in from Canada as well. I guess my follow-up, though, is there are there any specific investment opportunities that actually might arise as a result of these policy changes rather than just sectors that could be impacted by the tariffs? Well, when it comes to fruit and dairy and food, I think that's a little bit tougher. I think it's hard to see opportunity there, and I think you just say, okay, we need to see how this shakes out. This could be tough. To go back to the policy thing, that's really

interesting though, that the agricultural community actually supported the tax. Remember, at the beginning last go around, so even despite the economic pain, it's unclear what the reaction is going to be. When it comes to auto, but also, Toby, let's talk about electronics more broadly. We've actually seen these public company CEOs come out and already say we're doing two things. We're starting to accelerate our imports from these nations before Trump comes into office. And we are looking at near shoring, but we've done it before. And we did it last time. So we're better prepared this time. So I think we're okay. But during the last, if these tariffs were to materialize, I mean, it could have an impact on the market.

I mean, I just went back to, I went back to the last Trump administration as well. And on the days that tariffs were announced, I remember this very clearly because I was writing the morning of your newsletter at the time. The markets would absolutely tank. They fell 11.5% on days when the tariffs were announced during his first term. So if you're saying now that the markets are pricing, you're saying, you're saying, in the tariffs materializing, then we could be in for some shocks. We could be in for some shots, but I don't think they're going to be the scale that we had. So let's go back to that moment when you were seeing the reaction for the newsletter, Neil.

A lot of the companies that were impacted, well, what did they go and do? Right. They move their supply chains to Vietnam. They move some of their supply chains back over it. They ensured it. Again, they brought it back to the U.S. So definitely, let's talk about Best Buy, for example, Best Buy, which had its own issues. The CEO said in their earnings call.

Like, electronics prices will definitely go up. 60% of Best Buy products in terms of cost of goods solds come from China. By the way, 25% of US electronics imports from China. 17.5% from Mexico. So yes, if it materializes, it's going to have an impact. But I don't think it's going to be the 11% drop that you just mentioned. Let's just broaden the scope here a little bit and talk about BRICS nations, which are those nations that include Brazil and Russia.

They've expressed some interest in actually potentially moving away from the US dollar, which caused Trump to float this idea of levying tariffs against those nations as well. do you see these tariff wars having some downstream effects, like potentially this pushback against the U.S. dollars like hedge money over the global financial system? Like, are you thinking that widespread about the potential impacts from Trump's like, you know, tariff war? Okay, so let's see what Trump said in response that I've got this little print out here because I saw this too.

When the BRICS nations came out and said, you know, perhaps we'll start looking at a different anchor currency other than the dollar, which is the sort of derivative effect, Toby, of what you're saying. basically came out and said any country that does this should wave goodbye to America. Right. So I think it's pretty clear that even if we do go down the tariff route, I don't think we're going to try and reach a point where we have this very, very weak dollar as result. And look at who Trump wants to appoint, right, as Treasury Secretary and as Commerce Secretary. You know, these are folks, they're Wall Street guys. They don't want to see

mass tariffs coming and they want to see negotiation, I think. Yeah. And then finally, just looking specifically at the markets again, are there some companies, that you think have navigated this period before the Trump administration particularly well. One company that comes to mind is Walmart. They say two-thirds of their items are made in the U.S. versus maybe a company like Target that is a little bit more exposed to importing goods from Mexico and China, et cetera. Is there any names that you're kind of looking at to say, okay, they have their ducks in a row here.

They think they're going to weather the storm pretty well. I think all of them have lived through this before. I'm not trying to dodge the question, is it one versus another? It's just they literally have lived through this before. And let's look what happened, right? They lived through the last Trump administration. The tariffs came in. People either adjusted their supply chains or they adjusted their prices, right?

That's number one. Number two, it's not like the Biden administration came in and then abolished all those tariffs. Do you remember there was tacit agreement across the aisle. There were crickets. There was a little bit of, you know, a reaction when the tariffs came in. But once they were in and they were in effect, there were crickets. There was tacit agreement that, yeah, we need to get tough on China. We need to get tough.

This is what we need to do. They weren't reversed, which means we've been living with it. So the question is, what does the incremental amount do? And I just think the incremental amount just means that we just incrementally get more from the places that we moved our supply chains to. Let's move on to our next category. So every year, there's this bank called Saxo Bank that releases this annual list. It calls outrageous predictions where it picks a few events that, while unlikely, could potentially happen. One of those predictions is that

Nvidia will balloon to twice the value of Apple in 2025. Some of the rationale behind that prediction, Nvidia has this next-gen Blackwell chip in the pipeline that represents this 25-fold increase in performance compared to its existing lineup. There also seems to be no signs

that the AR-arms race going on in big tech is slowing down. Companies like meta, Google, open-air are all vying against each other for these all-important Nvidia chips. Those tailwinds have turned Nvidia into this bell of the stock market ball. It's up over 180% in 2024.

But Ann, I'm curious to get your thoughts. Is InVinia going to continue to capture more of this AI market or are some of the headwinds, maybe regulatory scrutiny, going to slow it down as we enter 2025? First of all, how excited are you guys for the watch parties? The Nvidia earnings watch parties coming out next year. I just wish we had the idea. Yeah, I know.

So Envidia earnings have become this blockbuster event on par with Fed interest rate decisions and jobs. reports, kind of out of nowhere that people were hosting literal watch parties at New York City bars for its third quarter earnings reports. I do wonder whether those, well, maybe we've reached peak Nvidia earnings as sort of those year-on-year comps get a little more reasonable and you don't see things like this $3 trillion company is growing at 300% anymore, but it was a really fun time this year. Well, we've got to host some.

I feel like I see a host party or live streams in our future. So let's talk about what happened with respect to Blackwell and Invidia this year, right? The promise of Blackwell, you just said it, Toby, like unbelievable capacity, the speed of processing, and also it's like more energy efficient, which is good news for everybody. And so the promise of it has been out there. And finally 2025 is when it shifts, right? The volume comes out, it gets real. So my thinking is the following.

Invidia has blown past expectations in most of the earnings releases, with the exception of the last one, when it hit expectations. and there was this muted response, which is absurd, right, because the outlook was fantastic and they were, like, punished for just being really good students. Well, I think what's going to happen in 2025 is there's going to be this reversion to the sort of forward-looking statements of invidia, because Blackwell actually ships. Don't forget, Nvidia does not manufacture its chips, right? Which means whatever happens in 2025 is related to two things.

One, making sure that their manufacturing partners are getting the stuff out on time and to their clients on time. And there have been delays. As long as that happens on time, I think, Involveillance. video continues to be stable. So what causes Nvidia to pop? Well, they need another generation of a chip. Or they need to say we're going to accelerate our production,

and this is how we're going to do it because we're going to change our manufacturing. I don't know how they're going to do that, to be perfectly honest. So I don't know that we're going to see the same explosion in Nvidia, where I do see a concern, and by the way, I don't think they're going to be twice the value of Apple for what it's worth. I do think that we're going to start seeing in 2025 all of this talk about competitive chips either materializing or not.

And if it's not, I think Nvidia jumps up again because then it will become clear it's the only game in town for even longer. How do you think about Nvidia in relation to the broader stock market? I mean, for the first half of the year, AI dominated and most of the S&P 500 gains

came from Nvidia and just a couple of the other magnificent seven. Towards the second half of the year, the stock market seems to have broadened out and things like utilities and other sectors are growing faster than the tech sector. Do you see that as a good thing? and maybe a way for this market not to be in a bubble like the dot-com version of it two decades ago.

Yeah, well, that's a great question. So, let's go out utilities. And sectors like utilities. So utilities historically have yielded dividends, right? So when you've been in an environment where you've had really high interest rates and it's almost as effective for you to go take your cash, put it in a high yield savings account, keep it in the bank, money has tended to go there. With interest rates coming down, I do think, Neil, that the dividend yielding stocks are going to

become slightly more favourable things like utilities being one of them. Also, people are saying, oh, great energy deregulation because we've got Trump coming in. That's probably going to be good for utilities too. I think broadening out is going to really depend on a couple of things. I'm not sure it's going to be broadening out necessarily by sector, but I do think it's going to be broadening out by winners and losers within sectors. For example, all these folks have been talking about investing in AI and the promise that it's going to bring greater productivity. I think everyone in 2025 is going to like, great, now show us the money. Where is it? Where are the results? And if you don't have them, I think you start to see those share prices start to go down. But if you're actually

delivering in the way that Salesforce is to pick a name out of the blue, I think that continues to pop. That's a perfect segue into my next question. Actually, you recently interviewed Salesforce CEO Mark Benioff and you got his take on AI. And you really straight up asked him, do you think the AI market is currently in a bubble right now? Take us through what he had to say as the CEO of Salesforce, as a CEO of a company that is betting a lot on AI. But what was fascinating, is he broke it down into two different buckets. So he said, let's start with the private market. And so, like, lurking inside Salesforce, by the way,

also lurking inside Nvidia, are these big venture capital firms because these big corporations are investing into startups where they have real visibility into how those startups could function. And Mark said, look, Salesforce has got about $5 billion under management right now inside startups. And we're seeing some really great activity in the AI space. People are really breaking the mold.

There's real innovation. He also called out companies like inflections said there was no there there there. And when there's no there, you know, the emperor's going to have no clothes and the market's going to start calling it out. So I think he said there has been a bubble in certain applications of an AI. He said he didn't name names in the public market. He did say that there are some now where the fundamentals are not proving out in the public companies. I happen to agree with him. But I don't know that it's until maybe the middle of 2025 when we start really seeing who's been bluffing, not with malintent, with hope as a strategy, and hope is not a

strategy, and I think we start seeing that come to fruition next year. Just to put you on the spot, are there any particular names that you think are bluffing or have maybe been talking a big AI game and will not be able to prove it out next year? Oh, I've been so wrong on this. I'll give you where I've been really wrong. So I thought for the longest time, and Alex Carp, if you're listening to this, please come on to the show and talk to me about it. For the longest time, I thought, Palantir AI, I know it's a consulting business and it talks about AI, but it's not a software company.

Why does it trade where it's done? It's that share price, guys, this year, you've seen. It's a top five performer in the S&500. Top five performer. I'm still not 100% clear on the exact repeatable use of AI. So I'd like to see more evidence there, but that's what I got it completely wrong. Like I thought that was hopes of strategy. And Alex Carpagan, if you're listening, come, has proven me sort of wrong.

I do think that there are other companies where they've talked vaguely about, AI as something that is going to be really important to them, but we haven't yet seen it being adopted at scale. So let's take, for example, in the manufacturing side, I've been this really big believer that whether it's medical devices or it's in farming equipment, we're going to see what's been going on with consumer electronics, where the next generation of combine harvesters, the next generation of scanning machines in hospitals are going to have more AI capabilities. I think that's coming. I think it has to come. I'm just not sure what the timing is going to be. And it's totally okay. Last year, there was something called the inverse

Toby index where everything I predicted that was going to happen the next year, the reverse ended up happening. Oh, wow. I'm right there with you. Oh, we need to get you your own ETF. I know. The inverse to me, the inverse Jim Kramer. People will make a lot of money or lose a lot. So another hotter than hot sector this past year has been crypto. The price of Bitcoin finally broke through that vaunted $100,000 barrier, which also propelled it to become the best performing asset of the last decade. Meme coins are still all the raids right now with those coin carrying a higher market cap than Target. Can't believe that's a real sentence. Part of the reason behind all this frothiness and the record highs is this perception that

the incoming, Trump administration, particularly his pick for the chair of the SEC, Paul Atkins, are much more crypto-friendly than past administrations. Do you see crypto carrying all this momentum into 2025 and beyond, or is it going to get maybe a rude awakening? Okay, since we're in confessional territory, I feel I have a confession. It's a safe space. It's a safe private space. No one's listening. I have never bought crypto.

Okay, for lots of reasons, I'm happy to go into another time, but I've never bought crypto. And I've looked at the adoption and said, okay, it's getting more mainstream. It's getting more mainstream. It's getting more mainstream. I do think 2025 is the year when people like me have to get over themselves and say, it's not going anywhere. Figure out how you're going to ride the way. The wave doesn't necessarily need to have the same momentum that we've seen over the last couple of weeks. You're right. I think it feels like there's a sea change.

Gary Gensler, who's the current head of the SEC, has been vehemently anti-crypto. That's going to change probably with Paul Atkins coming into the seat. We've got David Sachs being appointed as this sort of unofficial AI and CryptoSar, right? You've got Elon, don't get me started on meme coins. But he clearly is a very influential, powerful voice in the next administration. He's all for it. So I do think now looking for legitimate ways to get around the infrastructure of this. And I was actually book launch party of a friend of my Anthony Scaramucci who's been a Bitcoin

advantage for a long time. And Michael Saylor was there talking about, there's this mic drop moment where he said I invested 25 million bucks in Bitcoin or whatever it was. And now it's like billions of dollars worth of value. So I think looking at companies like micro strategy, looking at companies like Coinbase, not investment advice, but I think finding legitimate players around the infrastructure, I think we're going to have to do it. I'm going to have to do it. I don't want to. If I was thinking about investing in crypto, you know, why would I? Is it just because I think the

price is going to go up? Because you say there's more mainstream adoption. There's been ETFs from like the most institutional of institutional investors like BlackRock. We still haven't found any real proper use case for Bitcoin. Maybe some other crypto does have some applications. But for Bitcoin itself, it just seems like it is a store of value, very similar to gold, where people will just buy into it because they think that other people will buy into it in perpetuity. That seems to be the case, right? That's exactly. I did go back to my point on nerding up, I did go and read the Satoshi White Paper.

I did, and that's exactly it. It's a store of value. There's a finite amount. Some people would argue more finite in terms of discoverability than gold. And if you have something that rare and finite and known amount, then that's what they're using it for. I think it's just worth reminding. people that there was a crypto winter two years ago where the price of Bitcoin plunged 75%. The head of a crypto exchange stole $10 billion and is now serving a 25-year sentence.

So we'll see what happens in the next few years with Bitcoin. And don't go anywhere. We'll be right back after this break. Studies and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the Unreal College deal, everything you need, to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 premium and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller.

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thank you. One size absolutely does not fit all. Get a quote or find an agent today at thehartford.com slash small business. Let's turn to the Federal Reserve, which may have a bigger impact on markets and the economy than anything we've talked about so far. As of this taping in mid-December, the Fed has cut interest rates two times this year and is expected to slash rates one more time at its next meeting later this month. It sure seems like Jay Powell has nailed the mythical soft landing. Inflation has returned to just about normal levels while the job market has remained healthy. Meanwhile, there appears to be some stability at the top after Trump said he wouldn't try to remove Powell with whom he's had some beef before. And what can

we expect from the Fed this year? I think we see gentle cuts, but I think we see Jay Powell. I'm big fan of J-Powl. By the way, I do think he stuck the landing under really difficult circumstances. I think we see him trying in the next three to six months to very carefully and cautiously feel out what fiscal policy is going to look like. My gut, and I could be wrong, I've been wrong many times, is that we're going to see interest rates remain higher than expected for longer than expected for the following reason. If Trump goes ahead and drops corporate tax rates, he wants a sort of 15% blanket rate. That is an inflationary action. Okay, if we have tariffs, and there isn't as rapid an adjustment as we think, I think it will be okay. But if there isn't,

that is an inflationary policy. Yes, we're going to have Doge trying to look at cost cutting, but if we don't get there in time, we've got inflationary forces at work. And possibly quite quickly, and I think if you're Jay Powell, you've still got to hit that 2% inflation target. That's your job. So I don't see in that scenario how he's able to cut rates as quickly as we thought he might do. So what are some downstream effects? Take our listeners through some downstream effects if we do actually enter next year in the years following with higher for longer interest rates. What might happen or what are some effects that will broaden out from that? Well, let's talk about mortgages.

Let's talk about real estate. Everyone's been talking about how difficult it is for people to, if they're already a homeowner, if they've already got that privilege, it's been really hard to say, I'm going to sell my home, lose as a result, my juicy 30-year mortgage that I looked down four years ago at really attractive interest rates earlier and try and now get a 6% mortgage, which is just crippling in terms of the math on covering your costs. So if we're stuck with interest rates higher for longer, I think you've got people without the ability to change homes or, you know, for our audience to go buy their first home, right?

And to get on the property ladder, which has been this huge source of wealth creation for our parents' generation, our grandparents' generation. So I think that's problem number one. Problem number two is I think there's a ton of noise around the real state of the consumer right now. So on our sister podcast, after earnings, I spoke to the CEO of Upstart a couple of months ago. And Upstart is this digital lending platform

that's trying to find new and creative, AI-driven ways to figure out how credit-worthy you are, not just the FICO school, but actually, you know, what is your jobs, what's your trajectory. And it's very interesting. They've done a bunch of analysis around what's truly the state

of the consumer when you look at default rates, what is not known about buy now, pay later, and how much money people are borrowing using that kind of mechanism. And he said, look, the data's not as brilliant as we all think sentiment feels pretty good, but the consumers, some of them are really struggling. Part of one thing that you mentioned earlier, too, is that falling rates mean that cash accounts or like money market funds are not going to be as popular because they used to be, you know,

yielding 5.5% now that's creeping downwards. Every day we get like an email saying like, oh, your yield is going down. What do you think some of the effects are from that? Who are maybe some winners and losers of those yields being a little less juicy? I think it goes back to looking at those stocks that are creating quite attractive dividend yields. So the attraction of dividend yielding stocks, and I've been a fan of them. And by the way, again, not investment advice, but I've gone into a bunch of ETFs because you don't have to do the work on every stock. And you can get high dividend yielding ones.

You've got the upside potential, right? some potential appreciation while still getting some dividends in the meantime. If you shove your cash into a money market account, you're not going to get that upside appreciation. You're just going to kind of clip the coupons and hope that that's sort of good relative to everything else you could have done. So I think you continue to see that shift. I do also think back to the conversation we had earlier, let's talk about tech companies again and let's talk about what drives their share prices. If you go back in history, the lower share prices, the lower interest rates have been, the more people have been willing to take a risk on speculative technologies, on innovation.

And that's part of the reason why some of these tech companies did so well, because people are willing to say they don't create cash now in some cases. The opportunity cost of me putting my money into these stocks is relatively low. The problem is when you've got rates that are still high, your appetite for risk relative to that isn't as high as it would be, which I think increases the pressure back to what are we going to see in 2025. for these companies promising AI, for promising innovation, for promising margin, for promising cash, Toby, you're going to be sitting there going, all right, show me the money, guys.

I'm going to, or why aren't I having my money in the money market account still? So this is the last day of 2024. And I think I will remember this year as the one went long time American corporate titans were brought to their knees. Boing, Starbucks, Nike, Intel, will even throw in red lobster. All struggled mightily and either replaced or are in the process. of replacing their CEOs. And is there a company out of the group that I mentioned that you think has an easier

path to a turnaround? Amongst all of those? Yeah. I think Starbucks got a shot because they hired a really fantastic CEO in the form of the former Chipotle CEO. But you've touched on something, Neil, that you framed it as 2024 was like the year of the CEO change. Can I frame it a little bit differently?

Go ahead. I think it was the year that activists shaped some of the biggest stories. in the market. Starbucks changed forced by an activist. Nike change forced by an activist. Boeing was different. There was a real crisis there. And define what you mean by activists in this context. Right. So you've got these big funds that have pots and pots of money, folks like Bill Ackman, Nelson Peltz, funds like Elliott Management. And the specific mandate of these funds, Toby, is they look at companies that are in the public domain and they say, okay, what is the management team like? are they doing their job to finders? Are they finding growth opportunities? Are they finding cost

reduction opportunities? They look at the strategies and say, how are these companies doing relative to their competitors? Do they have the right product lines? Are they too diversified? Are they not diversified enough? And what these activists do is they go out, they build positions, they buy the shares of these companies large enough that they start to have real influence. They write often very articulate, sharply worded letters. And often they'll reach the point where they say, look, we're going to put a presentation out there. And we're going to say to you management team, here's a bunch of things we think you should do differently. Please go do them. And if you don't, we're going to start shaking our savers and shaking up your board. Southwest Airlines, right? Another one, we saw this.

The CEO survived. I think he's on Borrowed time for what it's worth. But the board changed out. So that's what the activists do. Mixed feelings about them. I've got a very specific view on them. So one person you did mention is the new CEO of Starbucks, which is Brian Nicol. He's been described by some animalists as the LeBron James of the Tom Brady of the restaurant industry. Do you think that he has the ability to steer Starbucks in the right direction? Because Starbucks is facing a lot of headwinds, slowing growth in China, pretty poor store experience right now. But how much can one executive or one CEO really change the fortunes of a company? Or is it more just like the structural issues are going to be what they are and they can only do so much?

So I'm going to give you a little bit of context of my answer. been a CEO of a company. There are 6,000 people. And I've sort of said this over and over again. Execution really is the key to driving performance. There's lots you can't control, right? Brian, he can't control what's going on in China. He can't control what's going on with his competitors. He can only control what's right in front of him. And where I salute him is he has spent time going around to different Starbucks is that even the right way to say plural Starbucks and really paid attention. How long do I have to wait for my coffee? What is the food like? What does the line look like? I don't know if you saw Maxonomics, which is, it did a great video. Philandu's a great video with timing how quickly coffee's come out.

That attention to detail, as opposed to just delegating this out is really critical. And getting in the weeds and going around and seeing what's wrong and saying, okay, here are the things we can change. Here's what isn't our control. We can get our wait times down. Why aren't we doing it? Food and Starbucks is terrible. I didn't last time you try. I've never had it.

I rarely do. Why? Why have you rarely? It does not look good. The presentation, everything about it. Yeah. He's also a Duncan guy, though. I get why America runs on Duncan's my favorite coffee.

But to your point on stuff, what you've just said, though, that's real. That's real consumer feedback, right? You've just talked about the user experience. It doesn't look good. You're not going to buy it. A good CEO, Toby, in my opinion, you can go around, listen to the Neals of the world, and say, we're going to change that. We're going to change that.

Neil's an activist investor. Yeah. Toby, I actually want to hear your opinion, too. Which one of these five companies do you think you could go into and do a good job? They pay you $100 million. But you personally. If you're giving me a hundred million, honestly, Nike is probably the one because, I mean, it's called like dog fooding the product. Like, you go and test out the product.

I've probably worn Nike my entire life running and soccer as well. So that's definitely like a company that I do feel like I would want to have the chance to just because like I do like love their products and have tried them out. So I think Nike is one that I could just give me the reins people. We could turn this, turn this puppy. Wait, wait, wait, wait. We're not going to let's let's need old Toby. We're noodling Toby. But underrama, right, Kevin Plank's CEO, went over to China to go back to China, I think is leaning in there with Steph Curry, right?

So is it Nike the product or is it Nike because you have this like nostalgic attachment to everything it represented with the NBA and other great, you know. Well, I think they have a huge opportunity to regain their market share of the running market. I mean, Nike was like the thing that brought running back to or like basically helped create the running boom in America. but then they've lost their way. They have these run clubs don't interact with Nike anymore. They've pulled back out of a lot of these wholesalers. So I think there's a huge opportunity there for them to get back in touch with their roots and just say like, hey, runners, we see you again.

So I think there's a lot of opportunity there. And I'm not so worried about like the underarmors of the word like that because they don't have like the heritage that Nike does. So that's why, I mean, you put me on the spot, but that is generally probably the position I'd like to be in. Look at that. We're all CEOs these days. me, Anne. We're going to turn things around. We're going to finish off the show with some

rapid fire questions. These kind of run the gamut, and we are going to ask you to speculate a bit. None of this is financial advice, but we'll put you on the spot here. Are you ready to rip these rapid fires? I know. My temperature's gone up. It's a little warm. It's a little toast. It is a little toasty. All right. First question, which of these private companies will go public first this year, in your opinion? SpaceX, Stripe, Klarna, Korweave, or Stubbhub? Klana. Oh. And Klanah is a buy now pay later giant.

Because you've had insight into, you've talked to some of these by now pay later CEOs and you think that it's just time for them? Well, the Klanah CEO's been out there talking about all of the things that he's been doing in preparation for an IPO. It was speculated to go out last year, so it's behind its kind of time. But this was an interesting one. Do you remember Klanah came out and said, we have basically fired our software providers like the sales forces and we've taken it all in-house and it's way more productive.

slash we've taken our cost down. That, to me, is pre-IPO preparation talk. That's like getting everyone amped up and ready to see them come out. That gets the market very excited, yeah. Will Google be broken up? The DOJ wants to, uh, to, uh, to sell off Chrome and the judge will rule on this next summer. No, I don't think so. I think there's going to be a really long and protracted lawsuits. It's going to go on and on. I think there, if I were alphabet, I'd be delighted that there's a change in administration coming, and I'd be going back in there. And look, I think Ruth Porat, by the way, brilliant operator, like that whole group over at Google and Alphabet, they're going to be arguing.

Are you kidding me? Have you seen what's going on with chat GPT for search? Have you seen what's going on with perplexity? Have you seen what's going on with Bing? The game's going to change. Kind of on the same question. Do you think TikTok will actually be banned? Been rumored for a long time?

Do you think that will come through in 2025? I do not. I don't think it'll be banned. I do think there's going to be battled to force bite dance to sell it to a US owner. What is a merger that could happen in 2025 that no one will have seen coming? Oh, I'm stumped. I hate being stumped. No, it's a tough question.

I'm never stumped. No, I'm going to try. You can have a second. And I'm trying to come up with an answer for you, one that no one ever saw coming. Okay, here's one that I think is not like crazy, creative, but I think needs to happen. All these companies are going to die. Do you know all of these direct-to-consumer brands that went out in 2020, 2021? They went out the iPod by a spam.

I think rent the runway, revolve, stitch, fix. All of these fashion-type brands need to find a way to get together. I love that answer too, because we have talked about the rise of, like, vintage closing this past year. So I do think some of these vintage sites will have. Yeah, the real real. Yeah, the real shop-up. Like, these do have an audience. So I love that answer.

Consolidate or die. That's what I say to them. We just needed to give you a little time. You have one. This won't take you a lot of time. What's your favorite ticker symbol? Why is that more stumping than the others? I don't get it.

What's my favorite tickets? I like Spot for Spotify. I don't know why aesthetically. It's like nice looking letters, curvaceous. And you can say it. Like, it's an actual word. It means something. Yeah.

What is Harley Davidson's hog? H-O-G? That's a pretty good one there too as well. Why have they got it as hog? Because they call them hogs. I don't know. Why do they call motorcycles hogs? That's just what they call them, though.

I don't know. It's something very mad max and unsettling about that. I'm not sure. Yeah. I go on like sports better. There's this character. I grew up in London and England. I got spot the dog was like a very beloved character and I was growing up. So it's like a nostalgic thing. Speaking of that, what is the biggest difference between New York and London? The pace. New York has got this energy. I've got this, I've got a really clear thesis on New York and I've been living here for a long time now.

New York's a really difficult place to live in. I don't know if you guys, it's dirty, it's crowded, it's claustrophobic, it's expensive. Some things are really convenient. Other things are not. But everyone wants to come in. Not everyone. Lots of people want to come here and lots of people stay. And so I think as a result, when you've got a city that's really densely populated and it's filled with people who've chosen to stay here and withstand all of that and they've survived it. These are resilient, creative, energetic people.

And I love that energy. And you don't have that, I think, either in London or anywhere else. I'd hire you as a spokesperson right there. That makes me want to move to work. Eric Adams, if you're listening. And I already live here. Yeah. All right, best book to learn about investing.

If I'm a listener and listening to this, what is one book you would tell me to read? One book. Can I cheat? I really don't. Cheat away. There's no rules on the show. I'm going to tell you another story.

So when I started my career in investing, guess who I wrote to say you inspired me to go into investing and you equipped me, you taught me to be an investor. Who do you think I think? Roaring Kitty. Warren Buffett. Both great answers. Thank you, Neil.

I wrote my English literature teacher in high school. And the reason I wrote to my English teacher, I said, you know what I had to do in high school? We've all had to do this. You have to take random pieces of poetry, random pieces of prose, and you need to come up with an opinion. You need to break it down. You need to analyze this.

And you need to articulate and justify your view. Okay. Investing is the exact same thing. Yes, it's with numbers, but it's also with judgment. You need to take something you've never seen before. You need to come up with a perspective and you need to justify it. If you can't justify it, don't put your money there. That's my rule.

So that's my cheat answer. That is a great answer. And I'm going to, I still have my English teacher from high school's number. So maybe I might hit up Mr. Flanagan. I know you remember yours as well. That is all the time we have today. And thank you so much for hopping on the show. Everyone, make sure you follow Brew Markets on social media. You'll see and dropping some knowledge on their Instagram and TikTok. Also, listen to after earnings to hear and chopping it up with some of the biggest executives in business. And it was a pleasure. And I hope you have a happy 2025. Happy New Year, guys. Thanks having me on. Happy New Year. Spring is the season everyone refreshes everything except their blinds. People put it off because they think it's complicated. But at Blinds.com, we've spent 30 years proving it's not. Right now, you can save big during the Spring Cyber Monday sale.

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