The Best One Yet - JPMorgan’s “anti-dad” case sets a record, fresh Mexico tariffs will hurt your Chipotle, and non-hotel companies jump into hotels

Episode Date: June 3, 2019

In a record settlement of $5M for a parental leave case, JPMorgan’s giving new moms and dads a more equal policy (although the US is still way behind). The fresh US tariffs on Mexico announced Thursday will hit cars, avocados, and Coronas. And a bunch of brands you know aren’t in the hotel business, but they’re opening hotels -- So we look at West Elm, Shinola, and LVMH.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 Monday, June 3rd, and this is the best snacks daily we've ever done. We got three incredible stories, even though markets fell for their fourth straight week last week. Count it up, we've been here every Monday even though they've fallen. Jack, what is the wonderful mix we've got to? J.P. Morgan Chase had an anti-dad case go to like a trial. Very catchy name. And it ended, and it's the biggest settlement in parental leave ever in the United States. We're saying it's a big win for moms and humans do. Second story, brands are building their own hotels. We're going to look at why, and we're going to get really excited with you about it. And it's not just about getting you to, like, buy the couch after a four nights day.

Third and final story, trade war numero dose. First, it was China. Now it's Mexico. We're having a trade war with both countries. This is a huge deal. If you are a car, an avocado, or a corona, you have a problem here. But before we get into those dramatic and big stories. Jack loved saying this word all weekend long. He could not stop saying this word. Have you heard about scuba? Can you tell me about scuba? This is Uber's self-contained scuba apparatus. And it's making waves in Australia. We're talking about a ride-chair submarine, you know, off the coast of like Sydney. So it's kind of a publicity stunt that Uber, the ride-share company is putting on. It fits two people. It's a real submarine. And you go underwater and you look at the great.

Barrier Reef. The question I have is when you get in the scuba, do they offer you a bottle of water and does it smell like some kind of a car freshener? It's a charity to raise awareness for the depletion of the Great Barrier Reef, I think. And it's a pretty good situation when you're at the point, you're a company and for charity, you're building submarines for people that are vaguely related to your company. The two takeaways we have here is that scooper's probably more profitable than Uber and scuba is the greatest word to say. Before you call your scuba, listen to these keywords. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way.

The snacks about to hear ain't food. It's air candy. They don't reflect the views of the Robin Hood family. It's all informational just so. 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. Robahood Financial, LLC, member FINRA slash SIPC. For our first story, J.P. Morgan's anti-dad case just ended with the biggest settlement ever in parental leave case like history. Can I set the scene for you? Please, let's get the lights. Let's get some action. Let's get some cameras. Here's the legal dramatics. Back in 2017, Derek Rotondo, congratulations. He had a boy or a girl. I don't know which. I think she's got a two-year-old now if I do the math correct. So Derek applied for his standard 16 weeks off from work at J.P. Morgan Chase as a primary caregiver of that new boy.

baby. Now, here's the key you got to understand about the way J.P. Morgan Chase's parental leave policy worked. If you're a woman, you default to becoming the primary caregiver. And that's important because the primary caregiver of the child gets 16 weeks off at J.P. Morgan Chase. But if you're the man, you need to prove you're the primary caregiver if you want 16 weeks off. Otherwise, you're getting two. The non-primary caregiver only gets two weeks off. So J.P. Morgan's HR department said to Derek, you want 16 weeks off? Send me a certificate from your wife's employer proving that she got back in the office because I don't believe you. I think you're just trying to take time off. And then the quote from J.P. Morgan ended up

being the reason why, quote unquote, men as biological fathers were presumptively not the primary caregiver. A lot of prejudice, lot of bias in this reaction from J.P. Morgan, Jace. So Jack, let's get a little deeper into Derek here. They picked the wrong freaking guy. Derek didn't go home and mope about this decision. He teamed up with the ACLU, the American Civil Liberties Union and filed a freaking class action lawsuit. And then a couple years later, Jack, we finally get the settlement announced last week. What were the results? All right.

First, J.P. Morgan Chase will no longer assume that the woman is the primary caregiver. And then second? Second. Six weeks off for non-primary caregivers, not that paltry two that you were getting before. And then the money figure, $5 million were sent into a fund so that hundreds of men from J.P. Morgan who filed for primary caregiving leave and didn't. get it in the last seven years, they now get a piece of that five. This is a huge deal for J.P. Morgan Chase because the context is this is the United States,

and we are one of just a few developed countries that doesn't have a law of requiring employers to give you a few weeks off, paid weeks off after you have a baby. Jack, I feel like this is a snack fact of the day within the story, like a double situation here. Only 15% of Americans are even lucky enough to have jobs that get parental leave paid for by their employer. In other words, 85% of Americans who have a job still get punished in the workplace when you have a baby. Now, $5 million isn't like a lot of money for J.P. Morgan. This isn't going to, like, affect its earnings. But this sends a signal. So, Jack, what's the takeaway for our buddies over at J.P. Morgan? This isn't just a win for working dads. It's also a win for working moms.

Policies like J.P. Morgan's two weeks for, like, non-primary caregivers to get men back in the office. That got men back in the office like a lot quicker than it got women back in the moms. Yeah. If Derek was in after two weeks, he'd be making it. money again and fighting for that promotion again, which is much quicker than female Derek would have. Mrs. Derek. Let's go with Mrs. Derek. Let's go with Mrs. Derek. So by making time off for moms and dads more equal, there's a key thing happening. It's making men's and women's treatment in the workplace a little bit more equal. For our second story, the U.S. just announced a fresh round of tariffs, this time on Mexico. Yeah, you know why this is different from the tariffs on China? Please.

Well, first, it's Mexico, not China. We now have. Two trade wars. We have a two front war. This is like World War II or something. Totally. Country's coming out of nowhere. You've got flags here and there. It's like throwing darts on a board. The second difference, these tariffs on Mexico, they apply to everything. Not discriminating here. Five percent tax essentially is what the tariffs are. And it would begin on June 10th, which is Friday. And that 5 percent is going to increase by another 5 percentage points every month until they hit 25 percent in October. Jack, the third reason why these Mexico tariffs are a little different from their Chinese cousins?

These are purely political. It's not about business, not about economics, not about trade. These tariffs, according to President Trump, they will end once Mexico stopped sending illegal immigrants to the United States. So, Jack, the biggest victims here we got to talk about because everyone wants to know who's hit the hardest if it's on everyone. It's my old clients, man. I used to be a banker and I worked with these car companies. there are a $115 billion worth of cars and car parts that come to the U.S. from Mexico every year. If you're in the business of, or I guess life moment of purchasing a car, this is probably going to affect you. Yeah, our buddies Ford, General Motors, Volkswagen, Daimler, BMW. They all have plants in Mexico, and because of these tariffs, they have two options now.

Option one, raise prices of cars, which probably results in losing some sales. Exactly. No one likes expensive cars. or option number two, don't raise the prices on the cars and just make less profit because you're paying these taxes to the government. Great example of not having great options. So there are a few less obvious victims there because snack style, Jack and I jumped into this and we're like, all right, so who's getting affected that you wouldn't think is getting affected?

Well, Taco Tuesday is going to be a little bit less taco-y because Chipotle, Chipotle's dock dropped by 2% on Friday because they have 450,000 avocados they consume per day. And let's say you want to wash down that barbaco a bowl that I know Jack and I like to hit on Taco Tuesday. And you want to do with, I don't know, a nice Corona. Constellation Brands, the brewer that owns Corona, fell 6% Friday because Corona is brewed in Mexico. Okay, so avocados come from Mexico. Corona's come from Mexico. Last but what are you wearing?

Your jeans might come from Mexico. Every fifth pair of Levi's jeans is made in either China or Mexico are two trade war enemies. And then Levi's fell 7% on Friday. because of that. So, Jack, what's the takeaway for our buddies over in Mexico and the U.S.? These trade war tariffs have become the biggest tax in America in 30 years. 30 years, three decades, pre us. Remember, tariffs are just taxes on imports. They are taxes. And as our friends over at Axias pointed out, by both dollar amount and percentage of GDP, these tariffs are the biggest increase since George H.W. Bush was president. So we're talking, again, 30 years. In taxes. So we're

raising taxes on Americans, the most of the most. in 30 years. Remember, taxes, you know, they slow down the economy. They hurt profits. They reduce investment. It's not good for markets. They increase prices for you and us. As we said this a hundred times. We love saying, we should throw this on a pillow at this point, Jack. My econ professor would be proud, and it is nobody wins with tariffs. For our third and final story, a bunch of non-hotel companies you know are launching hotels and filling them with their stuff. It all started in Detroit. Specifically, Woodward Avenue.

You Michiganers know what I'm talking about. Shinola built a hotel and it's open for business in Detroit. We're talking about a watch company getting into hotels. And then we're going to get a little more mid-modern. What do you think? Mid-century modern. Yes. West Elm, the furniture company, is also opening a hotel in Detroit and like four other cities.

And in case you're wondering how this trend goes further, Jack, a little more luxury element here. Louis Vuitton acquired a hotel. company in December. And so now they have over 300 hotels themselves. And then maybe a step down, make me a half a step in luxury. Taco Bell, we announced this a few weeks ago, is also opening a hotel in California because you need those taco vibes at the pool. All right. This is weird. I don't know why these hotels are being built by non-hotel companies. Please clarify. So Jack and I snack style jumped into this little further. And we're noticing that it's straight up front, first an immersive brand experience when you've got a hotel.

packed with all of your stuff. Yes, you are much more likely to buy a West Elm bed and a West Elm couch if you slept and sat on them for four nights during your amazing New York City weekend. Now, this is also like the ultimate of ultimate product trials. Yes. You're going to be on this couch, on this bed for an entire trip. And everything in the room at the end of your trip, you're going to realize it's shoppable. Now, let's say you're Westdown from this perspective.

It's not just about driving sales. This becomes like your Petri dish to accomplish. experiment with your guests. They're seeing how consumers are interacting with their products. You could try something out with kind of a low stakes environment and see how customers react. They're looking, they're like, hey, this velvet customer we whipped up, no one's actually sitting on it. Maybe that's a sign because it's not worn out. But we just made our pillows not just down, but virgin down feathers. The best kind of down. And people are buying more. So let's expand that product line. Let's talk to the product team. Every company is looking for one thing, though. And this is the key. A brand moment.

How do you find your brand moment? So for West Elm, they're going to have a hotel in downtown Detroit right near all the stadium. It's right by the new Red Wing Stadium. It's near where the Detroit Lions play, the Detroit Tigers. Everybody in the city of Detroit, and probably the state of Michigan is talking about the Shinella Hotel. So this is the brand moment because the city's talking about it, the press is talking about it, and then snacks daily ends up talking. Now, this is actually called earned media. It's when you're not putting out any advertisements, but effectively your company is being advertised because so many people are talking about it. And for these brands, they're getting talked about in like a very cool, very creative way.

Major cool factor points by these hotels. So, Jack, what's the takeaway for all these non-hotel companies that are now turning into hotel companies? While sales continue to go online, loyalty for brands is being built offline. Companies are finding more and more of these like physical offline creative. ways that are kind of expensive to interact with all of their customers and get their customers interacting with each other. Couple of our favorites, rent the runway and Bumble. They're both launching women's clubs in their top cities to get people to come in,

interact, and just fall in love with the brand. Restoration Hardware built a $50 million flagship store in New York, and that thing's got like two bars stuck up in it. When you get invited to a happy hour on the rooftop of Restoration Hardware's meatpacking flagship store, that is Restoration Hardware having a brand. moment. I like that date night, and that's how you build a lifestyle brand. Jack, can you whip up the takeaways to start the week for us? Post-class action lawsuit. J.P. Morgan is updating parental leave to treat men and women more equally.

Mom and dad should be there to plan the one-month birthday party anniversary thing. Yes. Second, the new front on the trade war is going to hurt the automotive, avocado, and Corona Industries. This is going to hurt Taco Tuesday. It's going to hurt driving to Taco Tuesday. And companies are randomly building their own hotels to win customer loyalty and get like the cool factor points. We're talking Shinola, West Elm, LVMH, and Taco Bell. That is a very nice group. Why don't they do it all together? Taco Bell's such a non-sequitur there.

So time for our snack fact today. This one, full disclosure from a colleague of ours at Robin Hood, a great guy named Tristan Hader, who were a huge fan of. From Mountain View, California. Born and raised in Silicon Valley. We talked on the pod a few weeks ago about a 5,000-year-old yeast beer that was brewed so you could drink the same thing as like King Arthur. I remember it fondly. It seemed impressive. It doesn't seem that impressive anymore.

No, it doesn't. That's because Tristan brought to our attention a 45 million-year-old yeast that is being used to brew beer. Now, in case you're wondering how this happened, it was basically a yeast found in amber, which is like tree sap that's been fossilized. and they were able to pull out the yeast, revive it, and then use it in the beer. Yes. Think about that opening scene when, like, Dr. Grant is explaining in Jurassic Park how they're reproducing dinosaurs. It's because of that yeast. This IPA is literally the plot of Jurassic Park turned into a functional beer.

Perfect name for the beer company, by the way, based in California, called Fossil Fuels Beer Company. We're going to try to try this thing. In the meantime, we love to have you guys on with us to start the week. And, Jack, I can't wait for tomorrow. I will be there, and so will neck. So will you look forward to snack? Sounds like a plan.

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.