The Best One Yet - “Half of America has a Chase account” — JP Morgan’s record profit. Visa acquires Plaid. BlackRock fights climate

Episode Date: January 15, 2020

It’s big bank earnings season, so we went financial on this one. JPMorgan Chase apparently covers half of America, which led to its record profit (more than the value of 2 Lyfts). Visa dropped $5.3B to acquire Plaid, the fintech app that sits on a treasure trove of financial info, like your Venmo account. And BlackRock’s CEO whips up a new mandate: $7T to fight climate change through good, clean, financial pressure.Learn 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 Wednesday, January 15th already. This is a finance heavy pot. This is the best snacks daily we've done yet. You're going to want to put on a pantsuit, whip up the tie shave your cheeks on this one. I just unlocked my old discounted cash flows so I could do some 4x arbitrage.

Can we benchmark this thing against the old fixed income desk already? Snackers, what we're getting at is we're covering bank earnings on this pot. It's not quite bonus season, but Jack can hit us with the three stories over here. JP Morgan Chase headed some. biggest profit ever in 2019. And half of Americans are now JPMorgan Chase customers. Jack and I are look at each other. We got one question here. How did they get all these customers? A lot of acquisitions. Three keys there. We're going to jump into it next. Our second story is Plaid. This is the plumbing behind your Venmo account. And it just got acquired by Visa for $5.3 billion. This is the old classic saying

keep your friends close, keep your enemies acquired. Acquired. Yeah. Third and final story. Black Rock just announced its fighting climate change with its seven trillion dollars of your money. CEOs don't listen to protesters. They do listen to BlackRock. By the way, throw that on a pillow already, Black Rock. Now, before we get into those stories, we have one gigantic thank you to the Snackers. Two words, thank you because we hit 10 million Snacks Daily podcast downloads. That was last month. Today, we are thanking it for you, and we are telling you, what is 10 million podcast download? Let that sink in from one. It's a huge number. Daily has been downloaded 10 million times.

If we have a 15-minute pot and there are 10-minute downloads, if so facto, get the whiteboard, do a little math, maybe an abacus. I think that's 150 million minutes. But let me tell you what else that is. Okay, talk to it. It equals 151 years on Mars. Yes. Because it takes Mars about two times as long to spin around the sun. Everyone knows that.

They also know that Spice Girls want to be is about three minutes and 55 seconds, I believe. Carry the one, move the three. I think X means that 38 million. 298,000, 524 Spice Girl songs could have been played during the 10 million downloads. Another one. A Harry Potter movie marathon, you could do it 127,000 times over the course of 10 million pounds. Let's say you want to walk around the world. How about you do it?

I don't know, 301 times while listening to Snacks Daily. That's because the Earth's circumference is 7.5 million miles. And if you're walking three miles per hour with your AirPods in, listen to Snacks Daily, You could do it 301 times. All right, so Jack, what's the takeaway for the fact that we have 10 million pods? And please tell me it's a number for how many years this is. Okay, 1735. If you took our 10 million pods and went all the way back in time, it bring you to 1735.

George Washington was a three-year-old beautiful baby ball. We're talking about 285 years. Snackers, this is our announcement, but it was your actions that got us there. Thank you for listening. Here's your snacks daily. We got to get something legal out the way. It snacks about to hear ain't food. It's 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. 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.

Robohood Financial, LLC, member FINRA slash SIPC. For our first story, JPMorgan Chase announces record profits because it's basically become America's bank. Nick, you know the Radhilling Company Lyft? Talk to me. You know how it's worth about $14 billion? Give or take, give or take. We check this every day. Guess how many lifts of profit J.P. Morgan Chase made last year?

Why don't you just throw me a big number here? Almost three. Boom. Three lifts worth of just profit just last year. You've heard of the Dallas Cowboys. This has become America's financial institution. JP Morgan's retail bank, which is called Chase. You probably have a credit card in your wallet right now.

Fun story. Background on Chase, it started out as like a water company in the 1700s. Half of all American consumers are customers of Chase. Let that sink in. You and a person next to you right now, one of you is probably a Chase customer. Now, we're going to talk about how half of America became a JP Morgan Chase customer. All right, so here's how this went down. It went down over the course of two decades. It's actually a beautiful story. It starts with an acquisition back in 2000. When J.P. Morgan Chase acquired Chase. Sorry, it was just J.P. Morgan. at the time. It acquired Chase, which at the time was the number three largest bank in the country. And that's because Chase had merged with chemical bank back in 1996. All right. Four years later, Bank one was the number six bank in America.

Ironically, they had the number one, number six. It was kind of a weird thing. It's confusing. But now it's all just buried beneath J.P. Morgan Chase branding because they acquired it. 2008, as the financial crisis was happening and bank valuations dropped, J.P. Morgan came around and just scooped up Bear Stearns and Washington Mutual, aka Wamu. Okay, so J.P. Morgan probably got like 30 to 50 or 100 million Americans as customers just because they acquired the companies where their bank accounts were. But they're kind of like your one uncle who randomly bought like a condo in Fort Lauderdale 30 years ago. They have got a real estate situation going on. Yes, they do. Great segue, Nick. 4,900 Chase Bank branches across 30 states. That's insane. I only can't even compute that number.

16,000 ATMs according to our good buddies at Nerdwall. like the number of ATMs you could fit in a stadium. They could all see the game. So clearly people, you know, some of them like to just go to the bank that's right around the corner. If you're wondering how big those numbers are, J.P. Morgan Chase is now second only to Wells Fargo in that real estate department. The third way.

That half of Americans are Chase customers? Are you thinking the P-word on this? The perks. The perks. Give me the perks. Okay, Chase Sapphire card has become super popular with a very specific type of person. The TSA Precheck Global Entry Clear Crowd. if you know what I'm saying. Yeah, raise your hand if you've been at that dinner where like you turn next to you and Laura goes,

oh, let me put this on my Chase Sapphire reserve. Jack, you have a Chase, right? You're getting Sapphire? And you're like, oh, I don't have it. She's like, oh, my God. Well, if you sign it with my code, I'll get a zillion points. I'll get a trillion points. If I put this dinner on my card, I'll get a bagillion points.

So, Jack, what's the takeaway for our buddy Laura and our friends over at J.P. Morgan Chase? J.P. Morgan Chase stock is a barometer of Wall Street and Main Street. Snackers' profits are at record highs right now for three reasons, and they basically drive J.P. Morgan Chase, too. First of all, Wall Street is doing well. Stocks are at record highs. Second of all, Main Street is doing well, too. Unemployment rate, it's at a record low. Finally, never forget the tax cut. It's basically overnight made companies become far more profitable. J.P. Morgan Chase's tax rate last year was just 18%. So it's keeping more of its profits. For our second story, it's our unicorn of the day plaid, which was just a lot.

acquired by Visa for a cool $5.3 billion. You use Plaid every day. Very true. But you didn't even realize it exists. Kind of like a kidney. Just like a kidney. Jack and I really like the kidney analogy. Plaid was founded by two associates who used to work at the consulting company, Bain.

Fun fact, they've got a real interest in rock climbing. So they made their office on a rock climbing wall. Kind of. They actually have a rock climbing wall in the office. On belay. On belay. Bley on? Belaire on.

Timmy, meet me at 30,000 feet for this one-on-one. To the Snackers who have never rock-clam, do you have no idea what we're talking about? We don't either. Yeah, we barely know what we're talking about either. Plaid is the plumbing behind lots of financial transactions. Get this, Snackers. 25% of Americans connected their bank account with a fintech app via Plaid.

If you have a Venmoor account, which we all do, or if you have a Robin Hood or Coinbase account, you need to connect those accounts to bank accounts like Bank of America, Citibank, or Wells Fargo. That's how your money's going from your older bank account to your newer fancier app. And Plaid makes that connection. Now that Visa's acquired the company, Visa wants to take this internationally where they're basically saying, hey, taking you out of the U.S., we're going to bring you 15 times as big a market. They're like, you've got 200 million fintech users in the United States.

Let's hang out. 15 times more than that outside the United States. Now, a lot of people like to talk about Plaid, like it's, you know, the plumbing behind the financial system. Jack and I are way more interested in how it's like a bar bouncer. It basically checks your money's ID, and then it lets you party inside the app. That's basically what it's doing. There are 200 million bank accounts at 11,000 banks that can now connect to 2,600 apps because of Plaid.

This bouncer probably knows your bank account. This bouncer is at the bar where you like to tell people you actually went, but you kind only got it a couple times. It's like, oh, Chase personal check account? Come right in. I know the guy over there. He's a good friend. I'm on the list.

It's under there. Chase brings a date into the business. bar they're like, I know this guy. I don't know. I guess they forgot to put me on the list tonight, but I was definitely here a couple weeks ago. So if you're like opening up a Robin Hood account, for example, you need to put money in it to actually do anything. Yeah.

You'll select like, I have a Wells Fargo account. You'll type in your username and password, and then you can transfer money thanks to Platt. Right. They're safely going to go to the bank, check that you're the same person who gave that username and password and then say, all right, this is okay, you can now transfer money. Good to go. Get in the bar. See?

You're using Plaid and you didn't even know it like a campaign. Now, this bouncer, that is Plaid, isn't just for transferring money. Take Lending Club, for instance, and suppose they're thinking about offering you a loan. They might want to know what your spending habits are. Well, here's where Plaid comes in with them. It's going to give them access to your bank accounts if you give it permission. And then Lending Club is going to go in and not just verify that it's you, but maybe take a look at, you know, what you've been up to? Oh, you spend $56 on a Tuesday morning at Urban Outfitts.

What do you do? Okay. It's early. You usually shop on weekends, but that's quite. Okay, $42 every month, first day of the month on your car payment. It's reasonable, respectful, consistent. What is this ATM fee at MGM Grand at 4 a.m. on Saturday night? We're going to send this loan opportunity to the rejection department.

So a lending club gets a glimpse at your spending habits and can decide whether to offer you a loan. So, Jack, what's the takeaway for our buddies over at Plaid? Keep your friends close. Keep your enemies acquire. That's what Visa did here. Now, Plaid may have the richest treacher trove of financial information of any fintech company. I'm guessing Plaid has a glimpse at all of my bank accounts. That's why the other investors in Plaid were Goldman Sachs, Citibank, Amex, MasterCard, and even Visa, which acquired it.

One day, Plaid could have used that data that it has to turn itself into a credit card company because it knows you better than anyone else. But today and for tomorrow, Plaid is Visa. By the way, Snackers, this Snacks Daily podcast is part of Robin Hood. For our third and final story, Black Rock is promising to use its $7 trillion to fight climate change. Snackers, this is an important story. Yes.

And I know what you're thinking. What is Black Rock? It's not Blackstone. No, this is like when people... Blackstone is a different company. Are you Todd McConey? No, I'm Todd Maloney. Classic situation there.

Black Rock creates funds of stocks that make it easy for people to invest. And they've got seven times. trillion dollars that's being invested through their funds of like yours and my money if you have like a retirement account now their most well probably the most famous fund here is the uncreatively named i shares s and p 500 kind of needs to rebrand i shares lowercase i capital s like an ip fund um the i shares s and p 500 fund is like a smoothie and its ingredients are every single s and p 500 company it's like it's like a project juice or jama juice came around threw a little mango, a little chia, maybe some goji berries on top of that thing.

And it's got a little bit of every company in those 500 in the index. That fund has $201 billion of Americans' money in it. And there are 799 other stock smoothies that BlackRock offers. This is literally the juice cleansing cafe of financial products. Now, since BlackRock holds so much of American stocks, it can vote for the boards of the companies and has power to enact change. Classic case of With Great Power. comes great responsibility. Speaking of responsibility, there's criticism that BlackRock has not

used that great power to like force companies to do the right thing. So here's the news. CEO Larry Fink of BlackRock wrote a letter to other CEOs with a very specific title. The letter is called a fundamental reshaping of finance. We know what was happening. He was relaxing over the holidays, probably had an orange bathing suit on. I was wondering, do I look at an orange? Do I not look in an orange? You know what? I'm going to spend some time thinking of the future of finance. He thought about the responsibility and the power that Nick and I just mentioned. And he wrote down a bunch of reasons why climate change is changing the financial system. He's like scribbling away on this.

He's like, you know what? Fires, insurance, floods, inflation, interest rates, economies, they're all affected by climate change. And he made the bold claim that companies that have good environmental practices are better stocks to own. And then he ordered another banana daughery and said, you know what, this isn't even up for debate. Even if only a fraction of the climate science is right today, which is what he crafted directly into his letter between Sips of the Banana Declaration. There is a much more structural long-term crisis related to climate change. So Larry used the letter to announce new policies at BlackRock.

The first is to make investment decisions with environmental sustainability as the end goal. Right. Basically, the stocks that go into those stock smoothies, he's going to think about their environmental records. Did that mango come from like an organic harvested mangrove? Second, he is going to exit. it certain investments from his funds that have high sustainability related risks. So maybe he's taking the coal stock out of one of those smoothies. And then he's going to introduce new funds that don't include any fossil fuel-oriented stock. So like you're not getting any coal or any oil

in this fund. So I want to see like the I shares S&P 500 fund minus the oil companies. Yeah, subtract it out like sitting on the bench right now. So Jack, what's the takeaway for our buddies over at Black Rock? Because of this change, you and I, if we want, can finally boycott fossil fuel of stocks. Honk, if you've seen the bumper sticker, I want to be part of the solution, not part of the problem. Thanks. We all remember that South Park. Everyone does. Everyone's seen it twice.

There's a lot of people who aren't fans of climate change and want to put their money where their mouth is by not owning oil and coal stocks. But they can't because nearly all popular stock smoothies, those funds we mentioned, they probably include stocks of oil companies or someone related to oil companies. So if BlackRock creates a stock smoothie, a stock fund that's basically the SMP 500, then you can easily, finally invest oil-free. Jack, can you whip up the takeaways for us over there? J.P. Morgan Chase has accounts with half of America half and just made two and a half lifts of profit in 2019. And it got all those customers through acquisitions, branches, and perks.

Plaid is the bouncer checking your bank accounts ID before letting it into Venmo. And it got acquired by Visa to stop it from becoming a competitor to Visa. Black Rock is using it $7 trillion of yours and my money to pressure companies on climate change. TBD, unlike the whole vegan-friendly stock smoothie thing, by the way. Now, Snackers, time for the snack fact of the day. This one set in second time by Kelly Johnson in lovely Chicago, Illinois. Watch out for the wins. They're bad this time of year, Kelly.

This one's going to blow your mind. 20% of Americans are participating in dry January, aka dry. Someone just spat out their grape juice margarita. No alcohol for the first month of the year. is the new alcohol. Snackers, send us your snack facts at Robin Hood Snacks. And thank you for getting us to 10 million downloads. We love you. 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.