The Best One Yet - ⚓️ “Biggest cruise ship, biggest mortgage” — Carnival's 11% boat interest. Hermes’ supremium fashion. BMW’s battery belt.

Episode Date: October 24, 2022

Royal Caribbean is building the largest cruise ship in the history of the world, but the more interesting story is how they paid for the gigantic vessel. Apparently there’s a waitlist for $10,000 belts… because French fashion brand Hermes is in a different economy. And BMW’s next product isn’t a car — It’s part of the Battery Belt across America.$CCL $RCL $HESAY $BMWYYFollow The Best One Yet on Instagram, Twitter, and Tiktok: @tboypodAnd now watch us on YoutubeWant a Shoutout on the pod? Fill out this formGot the Best Fact Yet? We got a form for that tooLearn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. Welcome back. It is Monday, October 24th. And today's pot, out of every pod we've ever done, is the best one yet. It's a T-boy. It's a T-boy. To all the Yetis celebrating today.

Happy Dua. And to all the besties who stayed up listening to Taylor Swift. Happy midnight. Jack, toss on some red lipstick. What's our first story, man? Royal Caribbean is building the largest cruise ship the world has ever seen. But here's the more interesting story. Oh, Jack, how are they going to pay for this thing?

$2 billion. Put that on the credit card. I owe you. I got this. For our second story. You know who's not worried about a recession? Yeah. Hermes.

Sorry. Hermes. Hermes. They're not just selling $10,000 bracelets. They have a wait list. And our third and final story is BMW. They're building something new and it's not a beamer. No, it's America's first battery belt.

But before we hit that wonderful mix of stories. Before we build up more momentum for those three stories. It is hoarder's Almanac Week 134. Things were running at it because the pandemic jack and I just keep keeping track for you. This week we're running out of Halloween candy. Halloween candy yetis we are running out of the

trick-or-treats. Because candy companies they're short on sugar. Yeah, they're low on the licorice. And that's translating to crazy candy prices for us. The cost and a kick-cat, they are cuckoo right now. Halloween candy prices have surged by 13% in price compared to last Jack, that's just a sad number for a jolly rancher.

We're getting crushed by the Crunch Bar. Oh, Henry Bar is, oh, Henry, wow. And buying in bulk, we know what you're thinking. Costco Yetis, that's not gonna save you. Because variety packs, they're feeling the inflage, too. 120 Snickers bars and a huge bag on Amazon? Jack, that's gonna cost you 20% more than last year. That's right, our worst fears have been realized.

Starburst is bursting the budget. Am and, oh my God. So people, they're hoarding their Hershey's, understandable. People, they are stashing their skittles. They're treating their trick-or-treats like an investment. Yiddies, your candy bucket, that is a treasure chest. Because Tutsi-roll prices are beating our portfolios. Bitcoin is down.

Blow pops are up. Peloton down, PCs of Rees are up. Milk duds, they are literally paying out dividends right now. Laffy Taffy's literally laughing at our tap. Jack, don't you take your finger off of that butterfinger? Yetis, pour that candy and let's hit our three stories. For 15 years before this song, two boys from the Northeast met in the dawn. They had an idea that cost a cultural 50%.

That's a fat tip. Tea Boy City on your at list. If you know, you know, because we're ready to go. We can't wait no more. So just start the show. Start the show. For our first story, you think your mortgage is bad in this economy? At least you're not a cruise ship.

Carnival and Royal Caribbean are paying double. what you're paying for your mortgage. Okay, Jack, first of all, the second largest cruise company on Earth, Royal Caribbean. But they're building the number one largest cruise ship on Earth. Ah, the number one largest cruise ship in the history of the world, the icon of the seas. What's going to be on this thing? 5,600 passengers, 2,300 cruise members. Wow.

250,000 tons. Can we sprinkle on some more numbers here, Jack? Seven pools, six water slides, two men. many people. All on one vessel. The unlimited shrimp are extra unlimited. They call it the largest water park at sea. Yeah, they do.

We call it an ocean on an ocean. The oysters on this thing. They're going to shut themselves. Now, one slide is called the frightening bowl, which is a great name. We should point that out. This is the kind of thing you're going to wear an adult diaper on. It's aggressive. And according to Royal Caribbean's website, you should expect everything except the expected.

Which would include the one duplex cabin with a slide in order to get down. stairs if you want to be that guy on the cruise. Even the rooms have water slides. Now we know what you're thinking, Yetis. In this economy? In this economy? Bold move, Royal Caribbean. This ship is going to cost $2 billion to build. Yeah. And here's what Jack and I find fascinating about this new ship. They don't have $2 billion to build this thing. No, they don't. No, they do not. So you know what that means. What are they going to do, Jack? A mortgage. They're going to do a classic mortgage to build the world's biggest ship in its history. That's right. Royal Caribbean and Carnival Cruise Lines,

they both mortgage out their vessels as if they were home. They're not paying for these things in cash. They're going to issue long-term bonds. That's right. IOUs backed by the ships. Just like a mortgage, this is a collateralized loan. If Carnival doesn't pay, the lenders get to keep the boat. I am decaptain now.

That's what's going to happen. I am to captain now. But here's the problem. The cruise lines, they're going to pay a way worst interest rate on their mortgage. than you or we are. Get this, Carnival just said they're going to pay off a five-year mortgage at a 10.75% interest rate. That five-year interest rate is way worse than the 30-year interest rates we get in the mortgage mark. And we assume Royal Caribbean is paying for its brand new, huge super yacht in the same way with long-term bonds.

So let me grab my TIE 83 for a second. Doing the calculation. A $2 billion mortgage with an 11% interest, that's $220 million. a year just in interest. Sit down, stand up, sit back down again. $220 million just to pay to borrow the money to build that water park on the sea. That's a lot of interest. I don't want to be the captain.

So Jack, what's the takeaway for our buddies over in the cruise industry? Prepare for a bankruptcy boom on the Starboard back. Yeties, for 15 years, companies have been able to borrow at super low interest rates, super cheaply for next to nothing. But that era of low interest. rates is over. And the icon of the seas paying 200 million in just interest a year proves it. Companies with big debt like cruise lines, airlines, car companies, telecom, they're all going to have these huge interest costs. And for some, those huge interest costs may be too much.

They could break the bank and lead to insolvency. And that is why bankruptcy lawyers do pretty, pretty good during a recession, Jack. It's not the end. It's the beginning of a lot of profits for my business right now. So besties, an upcoming recession, it would look different. than the previous recession from during the pandemic. Because higher interest rates may lead to a bankruptcy boom. For our second story, everyone's talking about a recession right now, except for one company, Hermes. The French fashion brand has created a new word.

Yes, they have. Supremium. Okay, Jack, this is like our kind of tutorial. This should be in duolingo. The best way to pronounce the French word Hermes, how do you do it? Gargles champagne in your mouth and then try. Hermes, that's how you do it with the Viv Clicoe. The way I do it is I just find Nick.

I'm like, Nick, I can't do this. I think you're doing fantastic. 185 years old, Armease has a $130 billion stock valuation. And they call their $10,000 burkin bags the ultimate display of prowess. They make a handbag that judges you. Yeah, and their earnings would make you think that everyone is living their best life on a yacht in the Mediterranean right now. Revenues for this ultra fashion brand, they didn't rise. They surged by 24% to a record last quarter.

Elon has 22,000 extra Teslas that didn't sell last quarter. Ermease has the opposite situation. That's right. Hermes has a wait list. Jack, and I interest you in the Armease ostrich leather Kelly Retournay Birkenbag with the bamboo handles? Sure, I'll take a look. Get in line, buddy. That's right.

They're going to write you when. that bag's ready for you. Also, big tech is firing people. Air Mays, they're hiring right now. So Americans are flocking to dollar stores batting down the hatches for the recession. On the other hand, the most expensive fashion designer right now literally cannot make enough $600 belts. Are you getting Hunger Games vibes? Jack, are you getting Hunger Games vibes over here? Mandy Hand, the Yeti, tweeted us that she's getting Hunger Games vibes and so are we. We're all getting Hunger Games vibes right now.

We're all mining coal in District 12 while the capital is flaunting fabulous. Jack, Katniz isn't buying 18-carat Arameas watches right now. No, Primrose would be pissed if she did. But Stanley Tucci, ah, he's buying Gucci. I volunteer my dainty scarf as tribute. So, Yetis, we're looking at this situation. And Jack and I are like, hey, Arameas is another example of what we mentioned to you just last week. Two economic realities.

Both are true. Yeah, Amazon is baddening down the hatches because, a recession is going to hurt your average American. Meanwhile, Tesla is peddled to the metal because the wealthy don't change their spending habits during a recession. However, here's what we find fascinating. Ermease sees a third reality. A third reality.

So, Jack, what's the takeaway for our buddies over at Armaze? Yadis, we are seeing the rise of a new category, Supremium. Okay, besties. It's one thing for luxury brands to survive a recession. It's another thing when they thrive during one. Yeah, Bentley's $300,000 cars, they just had record sales again. The most expensive cars are thriving. Chanel's $15,000 handbags, they just had record sales again.

The most expensive handbags are thriving. Because astonishing growth in asset prices during the pandemic, it left a whole new breed of incredibly wealthy, ultra wealthy, extra wealthy. So Armeys can't build enough $20,000 bangles. Join the wait list, Wendy. A new state of economic inequality means we need a new product category. The most expensive products anymore aren't just premium. They're suprimium.

Now a word about our sponsor, Robin Hood. A lot of Yetis don't realize how much prep work goes into this pot. We spend hours every morning jumping in T-boy style to earnings reports, CEO tweets, breaking news, heaven. Yeah, Jack and I are toggling tabs like you toggled IM Convo's in 2004. Having eight tabs open can be stressful. You don't need that, especially when invest. Robin Hood offers it all in one app.

Whether you want to trade options, ETFs, or stocks through Robin Hood Financial, or you want to buy some Bitcoin on Robin Hood Crypto. You can do it all on the Robin Hood app. If you're not investing in Robin Hood yet, to get started, go to robin hood.com slash T-Boy and choose your free stock. That's robinood.com slash T-B-O-Y. Limitations apply. Robin Hood Financial LLC, member SIPC, all investments involve risk.

By the way, this podcast is not owned or part of Robin Hood. We are not employees of Robin Hood. For our third and final story, BMW is dropping $1.7 billion to build a battery mecca in America. We're about to see the first ever nationwide battery belt. All right, so Jack, before we were dealing with French pronunciation, this feels like more your area, the German pronunciation here, right? Biarysia motorverca. Okay, well, we need a Google translate on that thing.

Baira motorverca. Okay, you just repeated it just more slowly. I was actually looking for translation, which is BMW, the German car company that you know. The biggest factory, though, isn't in Bavaria. No. It's not in Zepaerlana. It's down south in South Carolina. South Carolina, Spartanburg, South Carolina.

That is where the world's X-Series BNW SUVs are actually made. Barbecues and beamers, that's what Carolina does. Well, now that BMW is going electric, it's investing $1.7 billion. Not into beamers. No. Into batteries. Into batteries. Yetty, sometimes the parts are just more important than a product is.

Sometimes you prioritize the pieces, not the polish. And that is why BMW is focusing less on the car and more on the battery that is in the car. And it's not building that $1.7 billion battery factory in its homeland. It's building it in the USA. And it's doing that because of tons and taxes. All right, first the tons. Batteries are heavy. Yeah, they're heavy.

They're like, how much jack? A thousand pounds is the weight of an electric car battery. Get on the scale, get off the scale. That's half a ton per car. Yeah, it is not fun nor cheap nor easy to ship tons of batteries across the Atlantic Ocean. We're not talking double A's. Energizer Bunny is going to like pull a hammy lifting that thing. And the second reason BMW is building their batteries in America is taxes.

Taxes. Like the tax credit you'd get for. $7,500 if you buy an electric car in the United States. In order to get the $7,500 electric car discount, the batteries must be made in North America. So, Yetis, BMW, they're focused on batteries, not beamers. And it's because of tons and taxes. And we've run out of alliteration. So, Jack, what's the takeaway for our buddies over at BMW?

America is building the first nationwide battery belt. Not the rust belt, the sun belt, or the Bible belt. We're talking about the battery belt, a new thing. The Department of Energy announced last week that the government is giving grants to 20 companies for battery factories. And Jack, what's the result? 12 states. Each time zone is becoming a battery hub in America that didn't exist before. The Inflation Reduction Act and the infrastructure bill, both of those are incentivizing all these big battery bucks.

And it's resulting in a battery belt. We have one more in all iteration. Interestingly, those batteries aren't clustered in one region like previous. industries, they're actually spread out coast to coast. You got Orbia batteries in Louisiana. You got battery tech over in Nevada. And you got Talon Battery up in North Dakota. Because America's new manufacturing muscle is the battery belt. Jack, can you whip up the takeaways for us to kick off the week? Royook Ribbon is getting a mortgage on its new ship and it's going to pay $220 million a year just in interest. Prepare for a bankruptcy boom off the starboard bow. Our second story

is Aramaze. Needs a new business. word to describe their situation. Supremium. That's the word. A new category of ultra-premium. And our third and final story is BMW. It's building batteries for its beamers down in Carolina. And it's all part of the brand new first ever nationwide

battery belt. Now time for the best fact yet. This one sent in by John Killen Jr. in lovely Winona Minnesota. Pose and play. Let's do it. Hi, Snackers. As temperatures begin to drop, the citizens of Minneapolis will turn to the largest continuous

system of enclosed second level bridges in the world. These are known as skyways and there's over 9.5 miles of them connecting 80 city blocks. These skyways connect many global businesses and brands like Target, U.S. Bank, Sleep Number, the Minnesota Vikings, Timberwolves, and twins. Stay warm, everyone. It's like a tunnel but above ground. It's like logistics but not done in Chicago. Leave the Canada geese up in Canada. That's what John Kill and John. Junior says. Yetis, you look fantastic to start the week. And remember if you see a Twix bar, grab that thing,

hold that thing. Cherish it. Jack and I will eat you tomorrow. And before we go, congratulations to Yeti Grace King, who's walked 10,000 steps every single day for two years straight in Ohio. And congratulations to Cordell Zelensky, a proud

Papa with a new baby boy down in Arkansas. And happy 50th anniversary to the Special Olympics of the state of Florida. And congrats to Brian and Kevin who just recorded their 100th episode of their pod, Life in the Row. Oh, and Kevin just hit a hole in one. Not too shabby.

These guys spend more time in the sand than Hasselhoff. And Santiago Segura, congrats on the new job at a fintech startup over in Amsterdam. And happy birthday to Paola, over in Los Angeles. And happy birthday to Uvala in Irvine, California. Happy 32nd birthday to Mike Becker, over in Boston. And Sandra Lugashova, happy birthday in Toronto, Canada. And happy first birthday as a dad to Alejandro Contreras,

Kansas City, Missouri. And Kellan McCluskey is driving to work right now on her birthday in Centerville, Maryland. And to anyone else celebrating something today, make it a T-boy. Celebrate the wins. This is Jack. I own stock of Amazon and Nick and I both own stock of Peloton and Robin Hood, as well as some Bitcoin. Now, a word about our sponsor, Robin Hood. A lot of you listen to our show while you're driving.

Two hands on the wheel. Keep it 10 and 2. You might be cruising, Chris, no rush. Stay in the right lane. Or you might be Dahlene for me. Duncan, dotting from lane to lane. And there are different drivers on the road. They're different investors too. Maybe you're cruising

down the long-term lane with stock investing, or maybe you're a more advanced full-speed trader. Well, the Robin Hood app helps put you in the driver's seat wherever you're at in your investing journey. If you're not investing on Robin Hood yet, to get started, go to robin hood.com slash T-Boy and choose your free stock. That's Robinhood.com slash T-B-O-Y. Limitations apply.

Robin to Financial LLC, member SIPC, all investments involve risk. By the way, this podcast is not owned by or part of Robin Hood, and we are not employees of Robinhood.