The Best One Yet - 🦇 “The Fed’s Batman move backfired” — Waymo snags $2.25B. Honeywell’s supercomputer. The Fed’s 0.5% interest rate cut.

Episode Date: March 4, 2020

Alphabet’s self-driving car division, Waymo, grabbed $2.25B in outside funding for the first time as it adds 5 new godparents. Honeywell doesn’t just make charming thermostats — the historic company is now building (allegedly) the world’s most powerful supercomputer. And the Federal Reserve acts like the economy’s Batman, but the latest/shocking interest rate move had the opposite effect that it intended.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, March 4th. We're bringing you the top three stories of the day in an entertaining, informative, and digestible format. This also happens to be a way better snacks daily than we did yesterday. This is the best one, yeah. Our first story is about Google self-driving car division, which is called Waymo, which just hit a key milestone.

Waymo's taking some outside money, not too shabby. And that means outside love. It's a new form of SaaS. Software as a service. We're calling it Stass. S-D-A-A-S. Self-driving as a sales. serves. Kind of rolls off the tongue barely. Our second story is about Honeywell, which makes those charming thermostats where you try to get the needle right on 71. So close, but they're not the fancy

digital ones that Google makes. No, not talking. This isn't fancy. This is old school. You got to register for a nest. Better get married. Well, this old school company just unveiled a new division supercomputer. And apparently first client, J.P. Morgan. So we're going to talk about Honeywell. Third and final story, Jack? The Federal Reserve Bank of the United States is actually the Batman for the American economy. It used a little bit way too much gunpowder on the American economy. They made an announcement yesterday that was basically like the American economy was coughing a little bit, and the Fed comes in, jumps behind him and starts heimulicking the heck out of the economy. Clear, we're going to need a defrivolator. Get the defibrill. Too much,

too strong, stock freaked out. Snackers, before we jump into that wonderful mix of stories, we got to talk about our buddy, not Timmy, not Dave, who's struggling right now. Kale, Kale. Kale's love in America is slipping. According to Google search data, people are searching for Kail less. That's an exact number. By the way, less exact. Apparently it's sweet green. They data suggest that sales are slipping of kale. Now, kale is a harsh leaf. If you don't cook it, it's very rough on the belly. No, it kind of attacks your throat on the way down. And guess he's eating up the share of throat that kale is giving up? Classics. Spinach and Brussels sprouts. Their demand, their interest on Google continues to grow. We think, though, that we've identified the new food, the new superfood, the new kale. It's mushroom. Mushrooms are consumed at an all-time high in America right now.

Average price of mushrooms just jumped to $4.19 a pound. And that's due to increased demand. Get this. 60% of mushroom cultivation in the United States comes from one county. We're talking Chester, Pennsylvania, aka mushroom mecca. You go down there. All you're having is sauteed mushrooms on mushrooms at the side of mushrooms. Now, if you're a verb and you're like 30 and you're looking back at your life and you're wondering if you made it, I love verbs.

When you have your own verb for like harvesting, you've made it. And guess what it means to harvest a mushroom? What are you talking? You're a forage. Boom, you're a forester. It's a forager. You're not a mushroomologist. You're a forager on this thing.

My favorite is Forsigmatic. My wife loves this. You apparently turn mushrooms into tea. Also, she wouldn't adeated me if I wasn't into mushrooms. Foursigmatic sounds like a dangerous thing. I started out with oyster mushrooms. They're a good go-to. Beach mushrooms you saw Tam.

This weekend I was messing around with Lions Main, which you like throw some butter and sage on. Boom. If you're thinking about naming your puppy or baby kale right now, don't do it. You might want to go with Chauta. You heard it here first. Snackers, let's hit our three. three stories.

Our first story, the Federal Reserve's latest big move just completely backfired. It tried to calm investors. Just relax. But it freaked them out instead. It did the exact opposite of what it was intended to do. We're talking about the Federal Reserve Bank of the United States, which is America's central bank, which is nicknamed the Fed. Or what Jack and I like to call it, the Batman to America's economy.

It's the watchful eye, silent guardian. Love where you're going with this. It's not taking orders from City Hall. Gotham, keep doing what you're doing. Batman's here. Its job is to fight the bad guy, which in this case is economic recession. And it happens to have a few direct superpowers to influence the money supply to support the economy. One direct superpower is called quantitative easing.

Right, it basically prints money in this case. It's spending money on government bonds to lower interest rates, which adds cash to the system. Or it also can directly reduce short-term interest rates without having to print cash or buy things. Alfred, turn down the interest rate lever. charmed, sir, on top of it. That's what happened yesterday. But let's travel back to 2008 during the financial crisis. Jack and I had sideburns.

It was a wild time. It was also when we were in college, and it was the beginning, unfortunately, of the financial crisis. It was a code red situation. Where's Lehman? Lehman Brothers actually was going out of business. We don't know where Lehman was. September 15th, 2008, that's when Lehman Brothers, which was one of the top investment banks at the time, declared bankruptcy. It was a huge deal.

It was about to cause a domino effect in the financial. industry and then the economy, so the Fed, aka Batman, showed up in the Cape. They immediately cut, well, not immediately. Over six months, they cut interest rates from 5% to zero, and they started printing money right away to buy bonds. Alfred, turn it down slowly. Now, the result, that bazooka of cash helped boost financial markets and rebound the economy. We're still, by the way, in like an 11-year bull market run, and a lot of that is driven by what the Fed did just after the financial crisis. All right. So let's fast forward 11 years. Back to this week, Monday night, the Federal Reserve

Chairman and a bunch of chairpeople had a video conference and made it a very big and dramatic and monumental decision. It was the first emergency rate cut since back in 2008 that we just told you about with Lehman. It was a unanimous decision. They cut the federal funds rate by 0.5 percentage points, which lowers interest rates on the short term, like across the board. So we know what you're thinking, like if the Fed's lowering interest rates, how am I going to feel that? You're going to probably. start noticing variable interest rates that affect your life, changing two as a result. So a lot of people have like checking or savings accounts that have short-term variable interest

rates or credit cards. Those are probably going to change because of the Fed's decision yesterday. But here's the funny thing about what the Fed did yesterday, Snackers. Instead of stocks rising because the Fed cut rates and was jumping in to save them like Batman, stocks did the opposite. The Dow fell by, I think, 700 or 800 points. So, Jack, what's the takeaway for our buddies, the chair people over at the Fed. The Fed tried to play a mind game with the American markets, and it lost. Snackers, in our opinion, the Fed didn't really need to prop up the economy quite yet like it had done in 2008. No, the Fed takes out its bazooka to fight economic recessions, not to fight stock drops. And remember, markets are down 10% in the last week, but it's still

a bull market in the last 10 years. 0.5% lower interest rates isn't going to reopen the factories in the Wuhan problem. And it's not going to prevent the spread of coronavirus. The Fed was hoping that their bold and swift action would instill confidence in the market. And it's like, look, Batman's here. Batman's got your back. No one's going to get hurt. But instead, the opposite happened. People were like, oh my God, I cannot believe Batman just showed up. Wait, do Batman just show up? I didn't realize things were in such a crisis. So instead of calming people down, it just freaked them out. It's kind of like the National Guard showing up in your neighborhood to like put out of fire. It's like, whoa, that was more than I expected. Or the Fed's

on an airplane sitting in seat 26D and gets up and says, hey, everyone, the plane is not going to go It's like, wait, what? The plane was going to go down? The economy's just got a belly-ac right now. It didn't need the heimlich. For our second story, Jack, left or right? Left. That's right.

Are you kidding right over here? Waymo just got $2.25 billion in fresh cash to become the vortex of self-driving cars. Speaking of left. Yes. Samoa, American Samoa, also participated in Super Tuesday yesterday. One of our snackers pointed that out. We forgot to mention. We got to give American Samoa.

Shame on us, but I'm glad we mentioned it. In the meantime, we've got to talk about our buddies over at Waymo. That is Alphabet self-driving car division. It came out of Google's moonshot laboratory, aka Lab X. This is like that one kid in your preschool who was getting straight A's before you knew anything was getting graded. Boom, next thing you know they got a four-year degree. Waymo announced some news, but before they did, they also said that Waymo is the world's most experienced driver. It's easy because, you know, it's a robot.

But it's driven like 10 million miles. It seems like they're trying to antagonize baby boomers on this one. of those miles were in Scottsdale, Arizona. Everyone has one uncle who's like, oh, you can't touch my car. I've been driving it everywhere. Snacker Scott from Scottsdale knows what we're talking about. Great guy. Now, this also could become a business that is S-D-A-A-S.

That. Self-driving as a service. Now, let's get to the news. Yeah, let's talk about this. Waymo just got its first outside investment by raising $2.25 billion. Keyword there is outside because this company has had one parent company for the last few years, and that's Alphabet.

But it's not the only parent. company anymore because there are a few other investors that now own part of Wayma. Now it's got two venture capital firms, a Canadian pension fund, and two companies in the car industry also invested along with Alphabet. Those are the five new investors. One of them is Canadian car parts company, which is called Magna. Actually kind of a cool name because it sounds like magma. And they specialize in car sensors, which are like the eyeballs of a self-driving car. Other company here is Auto Nation, which is a nationwide car dealership where they can do the oil changes and the checkups on the self-driving robotaxy fleet.

So if you're looking at the health of Waymo right now, you've got to think of this is more of like a, we're talking like a family dynamic. It's a family affair. Instead of just being Alphabet's baby, Waymo now has five new godparents who also love Waymo just as much as the parents. It's like Waymo just had a bar mitzvah, found out it's got all these relatives, and now it's getting flush with cash. Let's talk about the relatives.

The two venture capitalist investors, they're just there for the big, checks once a year. This is like the rich aunt, the rich uncle. You see them once. You get an envelope. There's a nice card, but let's be honest, you're cashing whatever. You want the check. You check the cash first, and then you read the card. Meanwhile, the automotive companies that have invested, they're more like they're offering strategic skills to really develop Waymo. It's like the family friend who's also an SAT tutor. Right. Always circle C. The answer is C like 90% of the time. It's clear here. It takes a village of deep-pocketed investors to raise a self-driving car. Now, Snackers, we don't know Waymo's valuation, although it's probably around

billion dollars from what we've heard. But let's say Alphabet still owns 90% of Waymo after this new funder's. If Waymo eventually becomes profitable, then 90% of the profits will go to Alphabet. And the other 10% will be split among these five new godparents. So Jack, what's the self-driving takeaway for our buddies over at Waymo? Waymo wants to become the Gortex of self-driving cars. Snackers, if you're thinking Gortex, we're thinking that Gortex, the one that's definitely inside your North face right now if you open it up. Gortex is the only brand that tells you, skier or snowboarder, this thing is definitely waterproof. It's ensconced in like every possible high-end park you can imagine. I'm not a lawyer here, but I think it's polar bear proof. Here's the funny thing,

though, Gortex doesn't make jackets. They're not making that North Face jacket. No, in fact, they're just making that liner that's like anti-cold in a bunch of jackets for a bunch of brands. Similarly, Waymo wants to be the one brand that says to customers, this is truly safe self-driving car technology. But just like Gortex doesn't make the jackets, Waymo doesn't make the cars. Waymo's just going to make the software at the sensors, just like Gortex makes the waterproofness. Waymo will sell its self-driving tech to the car and truck companies. Just like Gortex sells the waterproofness to jacket and mitten companies. It's competing against Tesla, Uber, GM's crews to get there to become the Gortex of

self-driving tech. For our third and final story, this one's wild. Honeywell is going from the thermostats in your living room to quantum computing. Honeywell's like, I know I have this lot of green. But I really think there's a place for me in Cirque Solette. The answer is there's always a place for you in Cirque du Soleil. Now, we looked at the ticker symbol of Honeywell. H-O-N.

Snackers. You know what Jack and I were thinking. H-O-N. Are you kidding us, Honeywell? Well, these guys are famous for the thermostat. Right. So you could have gone with TEMP, temp. Or it's too cold in here.

Turn up the thermostat. Or you could have had A shares that ticker symbol had was cold and B shares whose ticker symbol was warm. But they're also in the HVAC business. Oh, so true. Which is heating ventilations. and air conditioning. Run with this, Honeywell. This is gold.

Everybody's got an Uncle Bob who's in the HVAC business. Now, Snackers, Jack and I jumped and snacked out of this one. And Honeywell is kind of like that quiet friend in college who you want to invite to a party, but it turns out they're building a rocket ship in their dorm room. Yeah, they're doing quantum computing. But let's go back to 1895. Great year.

When they were founded in Morris Plains, New Jersey. Right. They were focusing at the time at a basic version of a thermostat, which was for coal furnaces. You toss rocks in there and you burn the rocks. And that creates heat. And then when you want to make things cold, you got to run in and get more rocks. Get them out of there. Get them out of there.

By the way, Snackers, they moved last year, their headquarters from New Jersey to Charlotte, North Carolina. I believe it's a vinegar-based barbecue sauce jack. By World War II, though, they delved into submarine periscopes, and they were making airplane gasoline gages. Apparently, they got really hooked on the war stuff because during the Vietnam War, they were working on cluster bombs and landmines. A lot of industrial companies had shocking roles to play in the war effort. Now, they don't make those landmines anymore.

But today they're accompanied probably of 110,000 employees worldwide. Their biggest division is aerospace, but they also have building technology, as I said, HVAC. They've got performance materials, HVAC, and they've got productivity solutions, kind of like what we're about to talk about. Now, according to their HVAC section of their website, they have the only IP HVAC controller with O.T. integration. Wait, did you say O.T. integration? Uncle Bob knows what you're talking about.

Exactly. Snackers, what we're trying to get across here, this is not just a thermostat company. Yesterday, they announced in a press release that they're working on the world's most powerful quantum computer. And it turns out this is the quote-unquote best kept secret in quantum computing. Apparently, in Morris Plains, New Jersey, and now in Charlotte, North Carolina, they've been working on this for like a decade. And it's going to come out in just the next three months. The reason this is a big deal, regular computer store information in a series of zeros and ones. We've all seen the matrix. You've seen the matrix.

But quantum computers use quibits, which is better. It's better. Neo would appreciate quibbitts. Now, they're launching next quarter their supercomputing division with their first client, J.P. Morgan Chase Bank, for financial applications. It's unclear what J.P. Morgan's going to use it for, but it is clear they think it's going to be impactful. They could figure out trading algorithms, trends, and stock updates faster so that J.P. Morgan Chase can be a superior financial athlete.

It's all about super competing. So, Jack, what's the takeaway for our buddies who are reasonably warm, reasonably cold over at Honeywell? This is a much-needed competition in the supercomputing space. Snackers, the supercomputer market was previously dominated really just by one company, IBM. They kind of had a monopoly since 1954 when IBM Big Blue was working on supercomputers. But in the last couple decades, Google has jumped in, which was really the first early big competitor. And now Honeywell is jumping in as well. The reason we thought this was so fascinating is that competition is the key ingredient to capitalism.

We're happy to see it come to supercomputing and can't wait to cover it more on snacks. competition room temperature. Jack, can you whip up the takeaways for us over there? The Fed busted out the ultimate cure for coronavirus, a 0.5% interest rate. But instead of calming investors, Batman scared investors. Our second story, Alphabet just opened up the circle of trust for Waymo by inviting five new outside investors. Waymo doesn't want to build self-driving cars. It's building self-driving tech. And somebody else can make the car or Mittner's true. Third and final takeaway, Jack. Honeywell is doing a little less age back, a little more supercomputer. And supercomputing's finally got some competition. We approve.

Snackers. Time for our snack facts of the day. This one is a rare family combo. Two sisters sent it in. Lily did it on behalf of her sister. They snack together, by the way. What's Lily's sister's name? Lily's sister. We'll mention it on another pot. So the Oreo was not the original cream-filled chocolate sandwich cooking. No. Apparently there was a horribly named alternative that came out four years earlier. It's called Hydrox. Hydrox was like the same as an Oreo, except. it was called hydrox. Shocker, no one to drop hydrox in their milk because it would kill them.

Hydrox was unveiled in 1908. Oreo came in 1912. Oreo had a much less toxic sounding name. Honestly, you get a little hydrox in your eye. I assume you're going blind. Snackers, Friday is National Oreo Day. Also, a snacker from Tampa named Nick Flint has a big dog named Tilly, who's a huge snacker. Turns out Tilly turns four years old today or in Snacker Dog years, 28? Rough, rough, rough, rough, rough, rough, rough. Tilly, you know. know what we're talking about. This is Tilly and I use shares of chewy.com. Happy birthday, Tilly, and thank you for sending in those snacks.

Snackers, loved having you with us today. Jacksbring is fantastic slamming salmon shirt. And you know our question, HY, HYSD. Have you had your snacks daily? We'll see you tomorrow. If you know, you know. 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.