The Best One Yet - 🤦 “Carnival’s Panama Problem” — HBO’s Hulu coup. McCormick spice’s seesaw situation. And Carnival’s bailout problem.

Episode Date: April 2, 2020

Attend our 1st ever LIVE “Snacks Break” virtual event @ 3pm EST on Friday 4/3 by registering at rbnhd.co/snacks-break — We’ll be whipping up our 3 mega takeaways on the corona-conomy.On today���s pod… Carnival Cruises was already facing a no-one-is-cruising-right-now moment — but now its Panama corporate citizenship is messing with its desperate bailout needs. HBO just made a critical hire for CEO of Warnermedia during the most important month for streaming of the year. And McCormick spices dipped 2% after its earnings because it’s facing what we’re calling the “seesaw situation” in the corona-conomyLearn 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. And this is Snacks Daily. It is Thursday, April 2nd. Dow dipped by a thousand points yesterday. Nonetheless, yep. Unlike yesterday, this is actually the best one. Yeah.

Yesterday's was the worst one yet. That was also an April Fool's joke that apparently nobody got. Right. Nobody tweeted at us. We expected some people to. We'll forget about it. And let's move on. We assume it was underappreciated.

In the meantime, we made this one way better than whatever it was we did yesterday. Our first story, you already knew that Carnival Cruises had serious problems right now. We're talking crash ships, quarantine ships, and then overall empty and not cruising ships. But now it has managed to somehow have a uniquely worse situation than we even realized. Turns out this company is not bailout eligible. Our second story, HBO just made a critical new hire. The HR team just snagged the Hulu founder to be HBO Max CEO. Now, this guy is bringing new school media talent at the most.

perfect moment for HBO. Turns out April is launch your own streaming service month. Who had any idea? Third and final story. McCormick has been making spices since the days of your great, great, great grandparents. You got baby spicy. He had sporty spice, scary spice,

ginger spice. Now you got McCormick spice. This publicly traded salt and pepper company perfectly highlights one side effect of the corona economy. We're talking about the seesaw situation. We kind of made that up, but we noticed it's a thing. Now before we jump into all that, Jack and I have been talking a lot about how we are appreciative of a bunch of things right now. My favorite part of my day, whipping up the context and whipping up the takeaways right here on Snacks Daily for you every day.

We also happen to love our plant-based self-driving streaming network delivery apps that are all over the news right now. But we also love connecting with Snackers, not just in a one-way scenario of Nick and me talking to you through this podcast. It's a little indirect. We want to have a little bit more of a relationship with you during these strange, and hard time. So Jack and I sat down, got in front of a fire, whipped up some kombucha, and came up with the idea of something new. We're calling Snacks Brakes. This is an online event on Zoom between you and us. We're going to be whipping up our three mega takeaways we've put together on the Corona economy so far in our first ever live event like this. Yeah, March was a crazy month and actually

April could be even worse. So we're taking this moment to connect with you, talk about the economy, talk about markets, talk about the situation. We also made it. It's a lot. It's a lot of It's going to be free. It's going to be super easy to join. You're just going to go to one simple website. RBNhd.co slash snacks dash break. Now, Snackers. Yeah. That was a tough one to remember. We actually wrote down that link in the description of this episode. Impressive if you happened to run it down yourself, but we typed it up for you in the description so you can be happy. Oh, by the way, like half of this event, which is Friday afternoon at 3 o'clock Eastern Time, half of the event is going to be you asking us questions about like whatever you want newswise. Now we can't promise there

will be no Zoom bomb. We can promise that we will have hideous facial hair because we haven't shaved in a month. Or like bears for the bear market. It's kind of a life goal. We're really excited for this snacks break. We hope you can check us out Friday afternoon at 3 o'clock Eastern Time. It's going to be the best one yet. It's also going to be the first one yet. Now one more time, that link is RBNHD.com slash snacks dash break. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. food is air candy they don't reflect the views of the robberhood family it's all informational just so you know we're not recommending any securities nope it's not a research report or investment advice not an offer or sale of a security right snacks is digestible business news for you robberhood financial LLC member fenra slash sipc for our first story jack whip your face out of the all you can eat ice cream buffet over there

I love those self-serve soft-surf machines. Who doesn't? Carnival Cruise is just awkwardly realized it's not bailout eligible. So it's desperately borrowing money and it's literally mortgaging away. It's crucied. This is like the date you planned months ago, you show up to the concert, you go to pull out the tickets. Turns out you didn't print them. This is like my recurring nightmare every night. In which I'm adding away football game and I forgot all my equipment at home.

Get back on the bus. It's a long drive back to Vermont. It's also the equivalent of, hey, I'm Carnival Cruises. Can I please borrow $100? Sure. What can you offer as collateral? Pretty much just a bunch of tower-sized cruise ships that you can't do anything with. That's literally what's happening right now at Carnival Cruises. All right, Snackers, we've gone over the not-fun anti-resumet of Carnival Cruises lately. What's happened so far this year, Jeff?

So far, it had a fender bender in a Mexican harbor between two tower-sized cruise ships belong to Carnival Cruises. Oh, and then three of its ships got turned into quarantine hotels because of the COVID-19 outbreaks. But Carnival will be fine because there was this huge stimulus package and part of it's a government bailout, right? Yeah, everything's going to be fine. Everything's going to be fine. No, nothing is going to be fine in this situation. Turns out, like, the entire cruise industry, although their offices headquarters are in Miami, Florida,

they're technically incorporated in Panama. Interesting, sneaky little move there because that way they can avoid U.S. minimum wage laws while they're at sea and then pay fewer taxes. And it turns out only U.S.-based companies can get the emergency loans and bailouts that are part of the $2 trillion stimulus bill. We're talking about the kind of like corporate work here that the lawyers over a carnival got a really nice bonus for pulling off and did not see the situation coming along. Seriously backfiring right now. Now, what Jack and I found fascinating about this is that it really is a unique situation. Carnival's getting no U.S. business for the foreseeable future, and it's getting no bailout funds from the U.S. either.

And yet, every month, it has giant debt repayments it has to do because those ships that it cruises on cost about $2 billion each, and they borrowed to pay for them. Yeah, you're not going to just drop cash on this thing and walk away with a $2 billion cruiser. So they have to borrow even more to bail themselves out of this deep pickle that they're in. Oh, and in terms of timing, that means they're taking on debt at the worst possible moment. Carnival is asking investors,

to lend it $3 billion. And these lenders are like, they know the situation's risky, so they're offering a very casual interest rate of 12.5% to pay back those loans. That is brutally high. I think we can all realize that. Plus, Carnival is offering a very unique type of hard collateral. If Carnival can't pay back the money to the investors, it'll give away its cruise ships instead. Which is the big question.

Now, if you're lending to a company like Carnival, who actually wants a cruise ship potentially is collateral? basically need your own Great Lake just to park this thing. It's bigger than a football field. It's bigger than like the football season and you basically don't know where to put it. Now, the way this will really go down is some lawyer will be designated to represent all the investors and it'll do its best to find somebody to buy these cruise ships and then split the money across all the lenders. We basically thought of three options here. The first one is China. They'll probably just buy this because it'd be cool to have. China's probably going to become a cruise company now. Or maybe Elon Musk buys these

ships. Interesting. So that it can destroy them because they are horrible for the environment. Third option here, throwing it out there. Maybe Oprah. She's got some stuff to do with her cash. That's a good option. So Jack, what's the takeaway for our buddies over at Carnival? If only Carnival weren't based in Panama. Snackers, you don't think of it that much, but your headquarters kind of matters. And American companies right now have $500 billion available as part of this stimulus bill we told you. Companies that borrow through the stimulus bill, they can take super low interest rates on one condition. You don't buy your own stock because that's not a cool move while you're borrowing money from taxpayers. And since Carnival's technically not American, it's basically wrapping up like a horrible credit card bill until the cruise industry returns to normal whenever that'll be.

And if the cruise industry doesn't return to normal, it'll lose all of its ships. And those ships are kind of only important to the cruise industry. For our second story, HBO Max just hired the Hulu founder as its new HBO Max CEO. This is a month before it enters the epic streaming wars. But before we jump into all that, we've got to talk in prose and let you know it is April, which is National Poetry Month. Nick, that was a disgrace to the poetry world. But my goal is to memorize one poem from Robert Frost and or one poem from Walt Whitman.

Jack, I got a better setup for you. I actually wrote you a surprise haiku. Snackers, I didn't tell Jack this before the pod. You ready to hear this? thing, ready? Do it. Go ahead. All right, here's the snacks I kill. Here it goes. I'm very nervous. We speak, you listen.

But what do microphones think? Is it their T-boy? Bravo. Snackers, we'll tweet that out tomorrow. That's actually really good. In the meantime, it also happens to be National TV Binging Month. Yeah, poetry's great, but TV binging is available for everybody right now, and they're all doing it. Also, it happens to be part of the National Launcher Randomly Named Streaming Service.

season, which is going on right now. Exhibit, which launches April 6th. You binge on your phone, it's five bucks a month, but they went with the like Casper Mattress style 90-day free trial. That is a generous free trial. I think it's going to have all of America as customers for at least 90 days. Number two, you got NBC's Peacock launching on April 15th. Only for Comcast cable users doesn't launch April 15th. Then in July, it's happening for everyone else who's a human being. This is the only place you'll be able to get parks and wreck. Parks and rec and the office office, I think, are leaving Netflix. Not too shabby. And then finally, rounding all this out for the season, you've got HBO Max to be named HBO Max coming out in late May at 15 bucks a month.

Sounds pricey, but let's be honest. It's not TV. It's HBO. They can get away with a lot. We're not going to give you a raise, Jenna, because we're HBO. Now, adding on to the national crisis is that Friends is not available to stream on any platforms until HBO Max launches. There was literally like a friend's hole in the economy right now going on. I know. An editorial note to the people at HBO Max, maybe you should have moved up your launch date from late May to like right now because we could all really use HBO Max and friends. Call the marketing team this seems to be the moment.

In the meantime, we're going to sprinkle a little bit of context on what's going on with HBO Max that you should definitely know. HBO used to be a part of Time Warner and Time Warner got acquired by AT&T a couple years ago in 2018. Ipso facto transitive property that thing. That means HBO is owned by AT&T, the telecom company. Right. And HBO's leader, its longtime leader, was a guy named Richard Plepper, who's responsible for Game of Thrones. Not bad. The wire. Impressive. Big little lies and a whole bunch of other top shelf binging content. The only problem was after HBO got acquired by AT&T, the new AT&T corporate parent wanted to change the beautiful HBO. He basically said we want more.

More quantity, less quality. Be more like Netflix. They're like, can we stretch out this game of throne things until like a dating spinoff with wives of Westeros going on? Where am I 30 dragons? Who am I giving my dragons to? So Richard Plepper was basically like, I'm out of here.

That's not how I will. Yeah, the PLEPRA left. In the meantime, just yesterday, HBO Max finally announced a new leader for Warner Media, which is AT&T's division, doing a lot of stuff like streaming video, which is HBO. You got movies.

Which is Warner Brothers. And cable TV. CNN, TNT, TBS. Enter Hulu founder, Jason Killar, who's taken the position. Pretty sure it's pronounced Killer. Jason Killer. Nicknamed there, run with it, Jay. So, Jack, what's the takeaway for our buddies who are definitely not TV over at HBO Max?

AT&T is an old school company that really needs some new school talent. Yeah, AT&T Snackers, its CEO and COO, are exactly what you'd imagine the AT&T's CEO and CEO to look like. Pretty much MBA holding, conservative suit wearing, long-time company men. And streaming is the future of media, but they don't have the streaming talent right now to jump on that future. Killar, aka The Killer, was at Amazon for nine years before founding Hulu in 2007, which was a godsend to Nick and me when we were freshman year roommates at Middlebury College. Streaming a real large amount of family guy in that thing. In the meantime, Hulu's become owned by Disney and NBC and Fox jointly. Right.

Now Hulu is just owned by Disney, but it's a lot of. It shows that Killer knows how to handle like different power people in the media industry. Case in point, our buddy Jay the Killer had this quote in 2011 that basically summed up the whole thing. Oh, it was incredible. History has shown that incumbents tend to fight trends that challenge their established ways. And in the process, they lose focus on what matters most customers. AT&T needs a little bit of this guy. Snackers, we got to give a little update here.

We're a little over halfway done today's Snacks Daily Pot. So if you're doing a snacks challenge and seeing how far you can run in the course of one episode, I'm exhausted already. Time to turn around and run back and you've got to go back. Take a water break. Do yourself a favor. We're going to hate our third story. McCormick Spices is having a seesaw Corona Economy moment.

A little bit of good. Yep. A little bit of bad. It's a seesaw moment. Snackers, every kitchen should probably have a drawer. Stuff with McCormick. You know your mom would want it that way. I can't believe this is a publicly trade stock on Wall Street.

They've got aggressive kitchen real estate. We're talking oregano, turmeric, curry paste, coriander seeds. We've even got coriander powder. I have no idea why because we have the seeds. Nick's always picking the fancy stuff. I like the classic salt and pepper combo back for like $199 at every grocery store. Snackers, a little spoiler alert here. Jack's got the taste buds of like a three-year-old turtle.

I am not a connoisseur of spices. Now, this company is proudly based in Baltimore, Maryland, since 1880. where they've been making spices mixed with lacrossticks from like the St. Albans School. State law requires a 15-minute break every four hours of work so you can sprinkle some old bay on yourself. It's a critical thing. Now, the biggest flaw on the resume for McCormick is the old 1916 U.S. Burrow of Chemistry investigation where they were investigated for black pepper purity problems. They call this at McCormick Peppergate and they don't like talking about it. It's not in. We actually shouldn't even have brought it up.

The most famous product of McCormick, in my opinion, is Old Bay, which is like in the state constitution of Maryland. Now about a quarter of its business is not spices, but like condiments. Right. They got Frank's red hot sauce as made by McCormick and French's classic yellow mustard. The rest of its business is like some fancy kind of custom stuff going on that you wouldn't expect them to be doing. They got a section of their website bragging that they've teamed up with IBM on artificial

intelligence. It all seems like they're overselling us because basically they're just like helping you concoct special sauces like for McDonald's special sauce. Yeah, if you're the cheesecake factory, you need something to sprinkle on your stuff. You're going to the guys at McCormick. The earnings report for McCormick and its annual report, they show a helpful breakdown of the business. The funny thing we noticed about the annual report, though, is they actually show what's in the gift bag for all the shareholder intendees. And last year, they were given away truffle salt. Just want to point that out. That is an adorable detail to include in the annual The other thing we noticed when we jumped into the earnings report is that they love saying

flavoring the future pretty much as often as they can say this. We noticed that McCormick is always playing like a supporting role in whatever it is that you're eating. Yeah, they got a big picture of sushi, but then the little sesame seeds are buys McCormick. They got a delicious-looking chicken leg with barbecue sauce that's supplemented by McCormick's spices. They're like the third cameraman at the end of the movie. He was like, please wait till you see all the credits he could see my name, Deborah.

That's what you see that? The second thing we noticed that was helpful is that the business is pretty evenly balanced. If you look at the earnings, about half of its business is home goods sales like to you and your pantry. And then half of its business is away from home like restaurants and caterers. Now, it's expecting some interesting differences between the two. For example, it's expecting double-digit sales growth for its home consumption business. Right, because there's all sorts of pantry hoarding going on because people are cooking at home during the recession and during the public health crisis. But restaurants, sales from McCormick are expected to pretty much plum. The Cheesecake Factory has furloughed like its entire workforce. It's telling its landlord that it's not even going to pay rent. True. And even mom and pop

restaurants are shutting down and not cooking. That means less spices that McCormick's selling out to restaurants and others. All right, so good business for the at home, bad business for the away from home. Overall, this is a net negative for McCormick because its sales are down 2%. So Jack, what's the takeaway for our buddies flavor and flavor the future over McCormick? McCormick's experiencing a classic seesaw situation. Snackers, this seesaw situation, you're going to start seeing this ying-yang around with a bunch of other companies right now. One side of the business is surprisingly surges in the corona economy, but the other side of the business is plummet. For example, we've noticed PayPal seen a surge in people wanting to pay digitally or with touchless payments. But that's offset by

the fact that fewer people are buying things in general, so overall transactions are going down. So Snackers, when you hear that one company's business is living its best life in the coronavirus, don't just settle for that information. There could be another side of the story where part of its business is living its worst life. Classic seesaw situation. Jack and you'll whip up the salt and pepper and tell us the takeaways over there. Carnival Cruises cannot borrow money or accept bailout funds from the government because it's technically Panamanian. It was an impressive move to dodge labor laws and taxes, a really bad move if you eventually needed a bailout. For a second story, HBO Max launches next.

month. So does HBO Max's new top guy, the founder of Hulu, Jason Kallar. Jay, the killer, AT&T is an old media company that needs some new media talent. Enter GA. For our third and final story, I can't emphasize this enough. Salt and pepper is the best products of McCormick. It's been seasoning scramble egg since the 19th century. Half of its business is gaining. Half is falling. It's a classic seesaw situation. Now, Snackers, time for our snack pack to the day. This one sent in by Catherine Bill, who is doing incredible work as a physician in Detroit. Yes, Detroit. Home of Henry Ford Hospital, which fun fact is where my Nana was born.

We've got fun facts on snack facts inside of the snack facts. All right. So Catherine tells us, the first ventilators, which is that crucial medical device that is in huge demand to fight COVID-19. The first ventilators came out in 1928, and they were known back then as iron lungs. But their first use back then was to help patients who are struggling to. to breathe because of polio. Interestingly, those polio ventilators, they use negative pressure,

but today's ventilators use positive pressure. We're going to leave it at that because we don't know what that means. I am glad Catherine is the physician and not us. Snackers, love being with you today, but we want to see you tomorrow at 3 p.m. Eastern with our snacks breaks. You can register at rbnh.c.c.com slash snacks dash break. And to make it as easy as possible, we threw it up there right in the description of today's podcast you can click and register. We will see you tomorrow. Can't wait. This is Jack. I must confess, I own stock of Carnival Cruises. The Robin Hood Snacks podcast you just

heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets, Inc, or any of its subsidiaries or affiliates. The podcast is for informational purposes only and is not intended to serve as a recommendation to buy or sell any security and is not an offer or sale of a security. The podcast is also not a research report and is not intended to serve as the basis of any investment decision. Robin Hood Financial LLC, member FINRA, SIPC.