Morning Brew Daily - Markets React to Donald Trump's Presidential Win & Wellness Industry Booms to $6.3T

Episode Date: November 6, 2024

Episode 447: Neal and Toby recap market reactions from Trump’s 2024 presidential victory, including Trump Trades soaring, Tesla and bank stocks surging from a boost of potential deregulations. Also, is the clean energy business in jeopardy? Meanwhile, the global wellness industry reaches a record high of $6.3T thanks to its very broad definition of “wellness”. Next, Walmart rolls out new tech that can unlock security cases for items using the cellphone. Lastly, other headlines including Palantir crushing its Q3 earnings, Oregon remains No. 1, Home Depot founder passes at 95, and move over, Moo Deng, it’s Baby Haggis time.  Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Download the Yahoo! Finance App (on the Play and App store) for real-time alerts on news and insights tailored to your portfolio and stock watchlists. Get your Morning Brew Daily T-Shirt HERE: https://shop.morningbrew.com/products/morning-brew-radio-t-shirt?_pos=1&_sid=6b0bc409d&_ss=r&variant=45353879044316  Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good morning brew daily show. Raymond. And I'm Toby Howell. Today, we have a winner in the presidential election. Donald Trump is headed back to the White House. Then how markets are reacting to the incoming administration. It's Wednesday, November 6th. Let's ride. Former President Trump can soon drop the former. About a half hour ago at around 5.30 a.m. Eastern time, news outlets projected that he was elected as the 47th president of the United States in a historic political comeback. It's an unprecedented or nearly unprecedented. Precedented victory. At 78, Trump is the oldest person ever to win a U.S. presidential election. He's the first president in 132 years since Grover Cleveland to serve two non-consecutive terms in office, and he's also the first president, current or former, to be convicted of crimes. And we will dig into all the results and all the reactions from markets in just a bit.

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Hasbro is not a sponsor of this promotion. Okay, let's dive into the results of this election and what it could mean for business and the economy. As we record this at 6 a.m. Eastern, Trump has won 277 electoral votes, putting him over the 270 threshold needed to win. Kamala Harris, a Democrat, has 224. She was aiming to become the first woman president of the United States, but like Hillary Clinton before her in 2016, lost to Trump. Polls showed this race being a coin flip, but in the end, Trump blanketed the men. map in red. He won key swing states, including Pennsylvania, Georgia, North Carolina, and Wisconsin, with some close races like Arizona and Michigan left to be called. In the coming days, pundits will analyze this race to death to try and explain what went so right for Trump

and so wrong for Harris, because this was a clear-cut victory as they come. Here is a crazy stat. According to CNN, there wasn't a single county in the U.S. where Harris outperformed Biden in 2020 by 3 percent or more. Before the race was officially called, Trump gave a victory speech in Palm Beach, Florida, where he pledged to fix everything about our country. He also offered plenty of praise for his supporter Elon Musk, the SpaceX and Tesla CEO, who is poised to have a prominent role in a second Trump administration. Toby, what has been the market's response to this? Yeah, so the Trump trades have been doing very well.

Obviously, they were kind of tracking his election odds all evening. Shares of Trump media, his media company that he owns a large stake in, were surging a lot throughout the night. They finished up around 34% in the after-hours trading. They fluctuated throughout the day as his election odds ebbed and flowed, but they settled into a nice gain as it became clear that Trump was going to win. Bitcoin also surged Trump as promised to be this very crypto-friendly, embrace the crypto community candidate.

So Bitcoin actually reached an all-time high, crossed the $75,000 threshold. Dogecoin also jumped 16% as well. that's a trade that is kind of within the Trump-Elon orbit, if you will. And then also the U.S. dollar jumped as well, especially compared to the currencies of several major Asian economies, especially compared to the Mexican peso, because the idea is that Trump is going to bring these tariffs, bring these tax cuts that could potentially reignite inflation and keep borrowing costs high, et cetera, et cetera. Right. And that's why you see Treasury yields spike as well.

They went straight up. This is a bet that Trump's policies in a second term, like those tariffs, like a lot of deficit spending, will actually reignite inflation and keep borrowing costs higher. Maybe the Fed is not going to cut rates as aggressively as it would otherwise. Another stock that we've been watching, too, is Tesla. Tesla went way up. Its stock is up nearly 14% in early after hours, early morning trading, whatever you want to call it.

And that is a bet that, you know, Musk will have a very prominent role in. in the Trump administration. We don't know exactly what that's going to look like yet. He has claimed to want to cut government regulation, cut government spending by $2 trillion as the head of Doge, the Department of Government Efficiency. And Trump is expected to roll back regulations or rollback incentives that have spurred electric vehicles. And you're wondering, hey, why is that good for Tesla?

Well, Tesla is the market leader. So perhaps by rolling back incentives for other EVs, Tesla, might benefit. Big banks are also another potential winner under a Trump presidency. He's expected to maybe pursue a little bit lighter regulatory stance for banks. So that means maybe blocking some of the new requirements, including those increased capital requirements that were proposed under those Basel three endgame regulations that we have talked about. So you saw shares in JPM Morgan Chase, tick higher after hours, Bank of America as well, Wells Fargo, all were up in that 7 to 8% range this morning. Let's zoom out to the entire stock market, though. One thing to remember is that

the stock market does tend to just consistently go up even across different administrations. If you start at November 1st of each election year and you go through October 31st, four years later, the average index price return is a cumulative 34%. So the joke is that stocks go up. And it does kind of tracing back all the way to 1928, you do see that across a wide span of administrations. Right. And stocks are surging this morning. The Dow is up over 1100 points as investors digest what a second Trump administration might mean for the markets. One industry, we talked about a lot of financial corporate winners, and that's because the Trump administration is expect to rollback regulations. But one industry that is expected to sort of lose a lot of

funding and not do well at all is clean energy. Remember, the Biden administration did this massive inflation reduction act, which spurred $450 billion in private investment that flowed into the U.S. energy sector since it was passed in 2022. Well, Trump wants to terminate the inflation reduction act. He's going to stop offshore wind projects. He's pledged on day one, if reelected, those offshore wind projects are very susceptible to who is president because they have to give out permits. And Trump has just said that, you know, Trump has not, does not believe in climate change that it's a big issue at all. So renewable energy, clean energy, definitely a big loser as a result of this election. And then conversely, a Trump presidency

could boost things like industrial manufacturers, fossil fuel companies as well, because if those investments flow out of green energy, they will probably flow into supporting things like the fossil fuel industry. One other big winner from last night was prediction markets. This election was a massive win for the prediction markets, things that allow you to bet on presidential election on sites like Kalshi, Polly Market, predicted. While polls going into the election definitely showed this essentially a toss-up, the race was essentially a toss-up, prediction markets all were kind of giving some hints that there was more of a delta between Trump and Harris than maybe the polls were showing.

And they seemed just to be a little bit of ahead of the curve all night. As votes started to come in around 7, 8, 9 p.m., you could see a huge jump in Trump's odds on things like Cal Shee, on things like Polymarket. And people started gravitating towards those sites rather than the traditional media outlets like the New York Times Needle that we spoke about to see kind of what the general direction of the election was heading. And it looked like they were consistently ahead of the curve. So we talked about would they be accurate or would the polls be more accurate?

It looks like prediction markets came out on top. They did. I mean, I was using those as an indicator. I was refreshing call sheet and polymarket because I didn't know whether they were going to be accurate or not because they were clearly showing something different than what I had been seeing as I was just refreshing the results. I was also looking at DJT stock as a proxy. So we've got these whole new indicators coming in that are rivals to polls. And they would say that we're not, you know, we don't rival polls. We show a different thing. But they've been a huge

factor or at least they played a big role in this election in people investing and betting on the results in a way that they have not before billions. had been spent on this. So you have to expect this going forward. Meanwhile, the presidential election wasn't the only thing that was decided yesterday. Remember, we were talking about the control of Congress, the Senate and the House, and those would determine whether the new president would be able to implement their policies. Well, currently as it stands, the Democrats control the Senate, the Republicans control the House. But that, at least one of the chambers, is going to be flipped because the Republicans did take back the House. They were.

a bunch of seats, including in key states, Ohio and West Virginia. And that matter, we don't know what's going to happen with the House yet. There are dozens of races still out there. Still too close to call. But we know now that Trump is the president or Republican and the Republicans do control the Senate. And that has major implications for things like taxes. Yeah, probably the first thing that will likely move pretty quickly under a Republican-controlled Senate and a presidential seat is that they will move fast to extend those tax cuts. Remember, 2017 tax cuts were set to expire at the end of next year, but they'll probably move very quickly to get those approved. And then another thing, too, is potentially rolling back the IRA, some of that green energy investment that we spoke about,

putting more of that promotion and energy into fossil fuel. So those are probably the first two things that you'll see a Republican Senate and Republican president try to move on is taxes and energy. And we'll see if there's any movement in the House race, which will update you on. I also want to circle back to some of the other ballot measures that we had talked about across various states, things like medical marijuana and abortion. So Florida was a very expensive race regarding legalizing recreational marijuana that pitted Governor Ron DeSantis and the billionaire Ken Griffin against this cannabis company that poured $145 million outspending the other side 9 to 1. Well, Florida voters rejected the measure, so it will not become the 25th state to legalize recreational marijuana. So that is a setback for the cannabis industry, but a big win for Ken Griffin, who just seems to be winning all over the place right now. And Governor Ronda Santis, 10 states were also voting on measures that would protect abortion rights.

As of early this morning, six passed, and Florida, South Dakota's and Nebraska at least were projected to fail. So that's a little bit of a breakdown from the president on down in what was a historic day in the United States. Up next, some stores are letting shoppers unlock display cases with their phones. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179, like the next grill three-burner gas grill, or get $50 off a select Weber Spirit grill

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retailers might be backtracking on those annoying cases they lock deodorant in to prevent theft, kind of. According to a report by Bloomberg, Walmart is experimenting with new technology at hundreds of stores that would let people open security locks themselves using their cell phones. It's only being tested by employees for now, but the unlocking feature could be extended to Walmart plus loyalty members in the future, Bloomberg said. To combat increased theft in recent years, retailers have locked up everyday products like toiletries and cleaning supplies and required customers to summon workers to open the cases for them.

But turning a convenience store into a New Jersey gas station has been backfiring. Chains like Walgreens and CVS are losing business to Amazon and frustrating both customers and employees with all the extra world. So they're looking for fixes that keep those anti-theft measures in place without compromising sales. Enter the self-service unlock. And Walmart is not the only retailer trying this out. Yeah, CVS is also piloting a similar program in New York City. One of our Morning Brew employees, a retail brew rider, actually went down to go test out the system, C&N action.

And he liked it a lot. He said that there were signs on the cases that they could be unlocked using the CVS app if you had Bluetooth and location services. on and you just go to the apps menu, you click unlock product of your phone does it for you, it unlocks a case. And he went around the store asking some of the employees how they liked it. They said, way better. We don't have to get summoned at your every beck and call. This is a huge pain point for a lot of customers. I mean, if you have shopped in a CVS recently or Walmart recently, you know the headache of going to you. You're like, I just want some toothbrush. I just want some deodorant, and yet you have to press a button, get an employee to come over and unlock it. So

it was only a matter of time before these stores started either rolling back those anti-theft measures or finding a different way to a different system to make it less annoying. So I think that this is good on both the shopper side and the store side. Right. And just to put some numbers on how big of a headache this is, according to a survey from Consumer World, upon discovering a product that they want to purchase is locked, fewer than one in three shoppers, summon an employee to unlock the case. So two-thirds, of customers are just getting lost right there. More than half decide that instead of seeking a similar unlocked product,

they'll just go to try to find it in another store. And then it also takes, if you are the one-third of people who do some an employee, it does take 1.5 minutes on average for customers to retrieve a product behind a locked case. So that is time that you just don't want to spend when you go into something called a convenience store. So this is just all of the reasons that. that this policy, whatever had been going on for the last three years to prevent theft or other things like that is not working. And retailers are leaning into new technology that could end up

benefiting them actually. Right. On the shopper side, boom, way quicker to unlock without waiting. But on the store side, oh boy, do you get a treasure trove of data? Because now you know what kind of products that I shop for, where I shop, who I am, because you have to sign into the app. That can all get fed into these algorithms that maybe push better deals to you within the app. And since it's so much more convenient, I think a lot of people are going to be 100% okay with that tradeoff. They know that they are probably feeding over more data to these companies than they previously did, but anything to prevent the fact that prevent the old scenario of waiting for an employee to come by and unlock it. So I think the real beneficiaries here aren't just consumers but retailers,

especially when you throw in those sales numbers too, that you typically lose 15 to 25% of their sales if you have to wait for one of these cases. to be unlocked. So huge boom time for retailers and also maybe a reduction of headaches for shoppers. One solution we hadn't talked about is just removing the cases. I know. Yeah. I think it's because they put so many of them in that now they can't take them out. So they really backed themselves into a corner, but I actually think that this new unlocking system will lead to a better business outcome for them because of the data that they get. So I think they found their way out of it if this program. Right. It is still a small pilot program that is being used by CVS and some other retailers like Kroger. Let's move on. Feeling good and living longer is now a $6.3 trillion business,

according to a new report from the Global Wellness Institute. That means that the wellness industry is now 25% larger than it was in 2019, and it also means it has surpassed the pharmaceutical and sports industries in terms of size. The authors of the report pointed out that the focus on health and well-being, as we exited the pandemic, helped supercharge growth, as well as things like an aging population and an increased focus on mental health. But this report also applied a very broad definition to wellness, stuffing 11 sectors worth of economic activity into that $6.3 trillion number, tracking spending on everything from tourism and real estate to actual public health initiatives.

A similar report from McKinsey assigned just a $1.8 trillion value to the industry, which is giving some people some pause. But still, Neil, this is a big number, and directionally it speaks to a wider truth that we are more, focused on our health and well-being, or it reveals that every industry wants to pass off what they are doing as wellness. Directionally, I think that's the way to look at it, because you can raise your eyebrows, as I did at this number, and all of the things that they're including in the wellness industry,

they define it as the active pursuit of activities, choices, and lifestyles that lead to a state of holistic health, which in it of itself is a very holistic definition of wellness. But I'm not, so I'm not paying attention so much to that $6.3 trillion number, but I'm I am paying attention to this number that is 25% larger than it was in 2019. And so what you say about this is the way things are going directionally, I think that's correct. So you can put whatever big number you want on it. But when you see something like 25% growth, which I think anecdotally, I think we're all feeling with whether it's the rise of fitness trackers, everyone is buying one, or the growth of spas and health amenities

on your vacation, I think there's no doubt that this. industry is absolutely booming. Yeah, just off the top of my head, I mean, you have this huge explosion in GLP1 drugs like OZMPIC, Wagovi. You have this big explosion in wearables like ORA ring, Apple Watch that gives you real-time health data. Biomonering companies like levels which does real-time glucose monitoring are big now. In-person fitness is big once more. We see that in surging gym revenues and memberships. Even Peloton is seeing an upswing recently as they kind of come back from the dead. Sleep is a huge industry as well. I mean, think about all the the smart mattresses companies, eight sleep is one that comes to mind. People have sleep stacks

these days. So it is big. We are definitely seeing a huge upswing, whether it's $6 trillion big or if it's $1.1 trillion big, it is big. It is big. And I think a lot of people are also worried about scams in this industry and fads. And you're starting to see that with changing purchase decisions. So in that McKinsey study of wellness, they surveyed consumers and they began to see a shift away in when they're buying wellness products, consumers are shifting away from clean and natural ingredients and shifting toward those with clinically proven ingredients. They want to see that the science backs up what they're buying and they don't seem to care less that it's quote unquote clean and they want to know more that a scientist has

approved it. Roughly half of UK and U.S. consumers surveyed by McKinsey reported that clinical effectiveness was a top purchasing factor. And then finally, just going back to that global wellness. Institute survey. The sector that they said contributed most of the overall number was personal care and beauty at $1.21 trillion. So truly that manny-petti, that facial that you get is a wellness activity. So whenever you're feeling bad for maybe going and getting your nails center, go and getting to pedicure, I mean, I don't know why you'd feel bad about doing that. Just know that

you are contributing to the wellness industry and your own wellness as well. Okay, let's sprint to the finish with some final headlines. Palantir wasn't feeling any anxiety. during election day. After reporting blowout earnings, the AI data analytics company stock popped 23% to reach an all-time high, and it's now worth $114 billion. After the report, CEO Alex Karp was feeling as bombastic as Chad Ochosinko. He said, and I quote, we absolutely eviscerated this quarter driven by unrelenting AI demand that won't slow down. The world will be divided between AI haves and have-nots. At Palantir, we plan to power the winners. He talks a big game, but hey, they absolutely backed it up.

They're one of the companies that can offer solid proof that they're making money on generative AI. I mean, U.S. revenue grew 44% year over year. So, of course, you had Alex Carb taking this victory lap. He said at the beginning of the earnings call, given how strong our results are, I feel like, I almost feel like we should all just go home and not even do the earnings call. So he has definitely been criticized in the past. He's definitely a little bit of a wonky character in the Silicon Valley kind of archetype. but he has met every ounce of skepticism with an even bigger kind of return on becoming just

one of the most important AI companies right now. So Palantir is definitely a name to think about when you're thinking about the AI race in general. DIYers everywhere are pouring one out for Bernie Marcus this week after the co-founder of Home Depot passed away at the age of 95. He is credited with transforming the home improvement landscape by pioneering a model of buying products directly from manufacturers. cutting out the middlemen and warehouses in the process. The resulting low prices and warehouse

field turned Home Depot into a customer hit and spawned an empire stretching 2,300 stores that Marcus oversaw as the company's first CEO for 19 years. Fascinating backstory here. So he co-founded Home Depot with Arthur Blank, who is now the owner of the Atlanta Falcons. They were working together at a hardware business in the 1970s called Handy Dan Hope Improvement Centers, which I think is a great name. They got fired from that business for sketchy reasons, as according to them. And so they decided to start Home Depot, and now it has 2,300 stores across North America and more than $100 billion, $150 billion in annual revenue revenue revenue. It is the largest home improvement chain in the entire world.

And Marcus was also a philanthropist. He donated a lot to right-wing causes, but he also gave $250 million to the city of Atlanta for the Georgia Aquarium, which anybody who goes to Atlanta, maybe has visited is one of the world's largest aquariums that open in 2005. And now for the other big poll that everyone was watching yesterday, the very first college football playoff rankings were released. Remember, this year, the playoff field has expanded from four teams to 12, no doubt because there is so much more TV money to be made with more games.

So who's on top? Undefeated Oregon is number one, followed by Ohio State, Georgia, Miami, Texas, and Penn State. Toby, got any gripes with this ranking. It was really funny when these rankings dropped on Twitter yesterday because obviously the election was still going on. So you couldn't tell if someone was mad about Florida in the election sense or Florida in the college football sense. No, no real gripes for me. The only gripe I potentially have is that undefeated Indiana comes in at only the nine spot. And remember, I adopted the Hoosiers earlier this year because I went into the year with no college football team.

Our listeners, you guys set me a lot of compelling cases on why I should root for your team. I chose Indiana, and they have done nothing but reward my faith so far. So hopefully by the end of the season, we see the Hoosiers maybe creep up into that top four seed. It might be a little tough, but they are still undefeated. So go Hoosiers. Finally, a new bombshell has entered the Pygmy Hippo Villa. Haggis from the Edinburgh Zoo is going viral, giving Moodang the OG Pygmy Hippo from

Thailand a run for her money. People on the internet immediately started pitting the two porkers against each other with the Edinburgh Zoo leaning into the trash talking before eventually issuing a tongue-in-cheek apology to Moodang saying, there is space in the world for two beautiful Pygmy Hippo divas, and we should celebrate them all. But overall, both Haggis and Moodang are good news for the Pygmy Hippo conservation efforts, considering there are only about 2,500 to 2,000 remaining in the wild. So who do you think is cuter? I'm still team Moodang. Haggis is a little small for me. Mu Dang still has that kind of

just, I don't know, she's got the Zinisei squash, she's got the initial She's the OG. She's the OG right there, so. And meanwhile, people are probably wondering what Haggis means. Do you know, Haggis? So it's this Scottish pudding that you prepare by cooking sheep organs inside the animal's stomach, and then that's where it's served

as well. So an interesting, interesting choice of name for our little haggis here. But Mu Dang is also named after a Thai dish. It means bouncing pork. So they both kind of went the name root of a dish within their kind of respective countries. I have had haggis. I haven't had the bouncing pork that Moodang is named after, so maybe I got to give both a try. All right, let's wrap it up there. Thanks so much for spending your morning with us and hope you have a

good day. For any questions, comments, or feedback, send an email to Morningbrewdaily at morningbrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lue is our producer. Olivia Graham is our associate producer. Yuchinawa Ogu is our technical director. and it's his birthday today, so send him some B-Day wishes in the YouTube comments, please. Billy Minino is on audio, hair and makeup wants a piece of this wellness industry.

Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.