The Best One Yet - “The Hamilton Musical (for economies)” — Europe’s $2T joint bank account. Starbucks’ free lattes. Coca-Cola’s “new news” stock bump.

Episode Date: July 22, 2020

Europe just whipped up a $2T stimulus package that looks a lot like what the United states pulled off… in 1790. Starbucks changed its Rewards Program and Wendy’s just launched the 1st ever rewards app for a burger chain. We think the Loyalty Wars are coming. And Coca-Cola jumped 2% after its earnings report because of new news. Ignore old news.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, July 22nd. Nick, I don't have any time. We have to get to this T-boy right now. The best one yet, Jack, first story, what do we got? Europe just whipped up a $2 trillion

euro stimulus package for the continent, which is good news for everyone. It's also basically opening up a joint bank account for 27 countries to share. That's adorable. That's a nice move. Joint bank account, big step in the relationship. You call mom and dad and you say you opened a joint bank account.

This is a good one. This is a good one. They're going to be happy. Second story, Starbucks's rewards loyalty program is bigger than a lift. We're calling it right now. The loyalty points wars are coming. Third and final story, Coca-Cola shares rose 2%, even though it had one of its worst earnings reports in 30 years. But that is the old news. We're talking about the new news, which Wall Street way prefers to talk about. But Snackers, before we hit those three fantastic stories. Wonderful mix today. Jeff Bezos has never felt more alive. in his life. Yes. This guy has never felt smoother. He gets to the shower. Doesn't even use shampoo.

On Monday Snackers, Amazon stock rose by so much that Jeff Bezos, his personal net worth rose by $13 billion. 13B with a billion now stands for Bezos, not billion. Biggest single day jump in wealth for anyone in history. Only possible exception I'm thinking here when Rome like overthrew the Babylonians. Right. This is definitely an empire situation. He moved one empire on Monday. I got to say Snackers, Jeff Bezos doesn't get everything right. And with a lot of things going right for him, we wanted to point out something he was very wrong about. We're going to reach kind of far and kick a guy while he's up right now. We've got a fantastic quote. Jeff Bezos laid on us back in 2009. Jack, the honors. He said that advertising is the price that you pay for having an unremarkable product

or service. Like six business school professors just had hemorrhages when they heard that news. He's thinking, if you need to force people who don't want to watch your 30-second sales, pitch, force them to watch it during a commercial, seems kind of desperate. Yeah, if you have to add at the end and you see a doctor if it lasts longer than five hours, it's not a fun experience for anyone. Feels like he's kind of thrown shade at pharmaceutical companies, car companies, booze companies that are jamming your TV shows with ads. It's like a roundabout circuit. But get this, Snackers. According to Cantar Media, Amazon is now the largest spender on advertising in the United States. That's right. Jeff Bezos thinks ads are for basically terrible companies and

Now Amazon is the biggest ad spender in the United States. They splurge $7 billion on commercials and ads last year, mainly to convince you that Alexa isn't creepy. Now, this leads us to our favorite quote from Jeff Bezos from just a few weeks ago. I changed my mind. I changed my mind. And Snackers, when Jeff Bezos changes his mind, billions of dollars moves from one place to another.

Let's hit our three stories. You're tuned in the snacks daily. We spoke to the lawyers. The snacks about the hair 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. 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 FINRA slash SIPC. For our first story, Starbucks just made huge moves to their rewards programs. We're talking big. And we're thinking the loyalty program wars are coming. Can you smell what's in the air over there. No. Can you get that scent? Do you feel it? Do you kind of be a sense it? You know what are you talking about? We got PSL. Pumpkin spice latte season is like four weeks away, which feels bizarre. You're kidding. It doesn't feel right. It does not feel like we're on the eve of PSL season. No, I feel, am I supposed to put on cashmere now? I don't know. It's weird. Anyway, Starbucks's loyalty program has sneakily become the FinTech product of an entire generation. Nineteen million Americans use the Starbucks loyalty app.

Huge. That's 19 million Americans. That's an insane number. Nick, it's actually the number three app in the food and drink category in the app store, which makes it the only, like, restaurant. The restaurant delivery app. Everything else is delivery. This delivery. Starbucks, though, has secured its place in like a pantheon right now. And get this, Starbucks announced that the last week of May, 48% of sales at their U.S. locations were from rewards members. Almost half of sales are Starbucksinista passionistas. A We did the math. They're actually on pace to have $8 billion of sales at Starbucks per year. Yeah. Just from rewards members using their apps, which means... I know where you're going with this, Jack. Starbucks andistas are worth more than a lift. Those huge numbers are why Jack and I were so fascinated with the latest move from Starbucks to make a subtle but powerful change in its loyalty program. Full disclosure, I am a Starbucks rewards loyalty member, Nick. And I got to say, the most annoying part of the transaction is when your app has... run out of cash and you need to like charge on a new $25 digital gift card. It feels weird. It feels like telling your grandma, I can't accept a check. I would prefer cash kind of a situation. You're standing there. Your phone doesn't have service. You have to connect to the Starbucks Wi-Fi to charge your app.

They're yelling out like coffee. Yon Kramer, Yon Kramer. The whole thing's getting awkward. So in the past, Starbucks requires that you can only pay with these preloaded gift cards. In the future, they're letting you pay with anything. In the fall, it's happening. It's happening. extremely quickly. You can link your credit card, your debit card, your PayPal within the app, and you can now pay for anything you want at Starbucks. However you pay, you can use your Starbucks reward app and get the points so that that free latte is somewhere down the road. You can even walk in and pay in cash at the register and then bring out your app and still get points from Starbucks. All right, so Starbucks is going all in on their rewards app. Separately, Wendy's,

the powerful square-shaped burger company, just became the first burger chain to launch a food rewards. They're just against anything with the circumference. It's got to have right edges, Jack. Now, you're going to get 10 points for each dollar you end up spending at Wendy's. Feels very arcade-like, very arcade-like. Like ski ball. You hit that middle hole and you get like four little tickets that you can redeem for prizes. And then you got to go up to that guy, Jack, you know, at the front or you hand him the tickets and he's like, he's not happy. They're never happy when you're redeeming the tickets. He doesn't count the tickets, Nick. He weighs the tickets. Yes. And that scales little conversion from like a piece of page.

paper to points is pretty impressive. You spent three hours playing the games. You have 2,000 tickets and you get a pencil. It's underwhelming. Here's how the rewards work. 150 points gets you a free frosting. Not bad. 700 points gets you a bacon. Yes, very calorie-based, it seems like where they're going with the theme here. Actually, it's not that good a deal, though. That means you need to spend $15 at Wendy's to get a free frosty. Yeah. Doesn't sound like they're giving me enough bang for that buck. No, it doesn't. But Wendy's is doing this because points become a dynamic digital way for the chain to like tell you to do what it wants you to do. Think about it, Snackers. If Wendy's wants to boost their sales of breakfast sandwiches, what do they have to do? Just boost the number of rewards points you get if you get that sausage biscuit sandwich. And if Wendy's is like,

hey, this sausage is kind of going bad. We need to get rid of these biscuits. Let's call up Jerry and get them to off the points on the biscuits. Yeah. The sausage is going bad. A thousand points for sausage sandwiches. It's like a Hogwarts game. So Jack, what's the takeaway for our buddies? over at Starbucks. Rewards programs used to be a differentiator. They're becoming the norm, and that is awesome for you and me as consumers. Snackers, innovations are only innovations for a bit, but then they just become mainstream standard. When Netflix made streaming video possible in like 2009, that was the only company with streaming video, but now it's the norm. Everyone has it. That's why we've got ourselves the streaming wars, and Starbucks used to be the only food chain

with an app rewards program. Now that's becoming the norm. Panera bread has 40 million loyalty members. Holtley has 8 million loyalty members just in the first year. And now even Wendy's has launched their own app. Honestly, Jack and I are looking at this. If fast food's adopting a trend, you're kind of in the late stages of this trend. Restaurants are fighting so hard for our spending that they're giving us free lattes. Oh yeah.

Free bagels. Not bad. Free burritos. We'll take it. It's pretty great. Now that everyone has a loyalty program, though, get ready for loyalty points wars. We're telling you they're coming. Consumers will win in this points war because of it.

if Wendy doesn't change the price of a frosty down to 100 points, I'm getting a McFle. And if Deborah doesn't change the points for the hazelnut, we're not getting four pumps, Jack. Debra! For our second story, Europe just passed a $2 trillion stimulus package to basically, you know, save its entire economy. And it makes the European Union look more like the United States of Europe. Now, Angela Merkel, we know you're listening, we know you're a snacker, and we also know that you probably got a Disney Plus account and just watched Hamilton,

other weekend. Yeah, because Angola Miracle just helped Europe do what our founding father did in the U.S. way back in the 1790s. Not too shabby. She's singing like the scores with Macron in the shower these days. It's wild. I'm not going to lose my shot. Lynn Manuel's been

like hanging out in Brussels working on this stimulus plan the last two months. It shows because Europe just committed $2 trillion of government spending across its 27 member countries. And the goal, very straightforward, jumpstart the economy to offset COVID- crushed jobs and lost spending. Now, to pay for all that, the European Union is going to do something

it's never done before. Bold move here, they're setting up a joint bank account among all 27 EU countries. All right, Nick, I'm going to stop you right there and rewind by a couple of bicentennial. Okay? Yes, please, let's round up. Thanks to early moves by Alexander Hamilton, the American states pooled their finances when we signed our Constitution. The result was the financial solidarity of our 50 states, which is why the U.S. is the strong financial entity in the world. It's true. We have 50 states, but one federal government that taxes everybody and spends on behalf of all American citizens. In Europe, though, it's like, it's a little bit different. If the United States is a family, it's more of like a roommate

situation across the pond. Sweden doesn't want to pay taxes that'll end up going to like unemployment benefits in Croatia. It's like when you come home and your buddy Timmy, also your roommate stashed the fridge with like 40 types of like smoked salmon. You're like, what's going on? here that came out of the roommate budget. It's like, Timmy, that's my shampoo. I didn't buy it for you. I bought it for me. Timmy, you can no longer go to Trader Joe's unaccompanied. The 27 member countries of the European Union is in every man for himself situation. It's like United-ish, it's Union E. The main thing the European Union did for the 27 members until now is pretty much set up house rules that all 27 members had to follow. It was all for one occasionally, one for all

when it's convenient. Until now, the European Union will issue huge amount of debt from the European Union to pay for the stimulus bill. It's a continent-wide crisis that they're addressing with a continent-wide bond solution. They're not issuing German bonds, Greek bonds, and Italian bonds. They're going to issue European Union bonds stamped, branded, and logoed with a made-in-Europe thing. Not too shabby. So, Jack, what's the takeaway for our buddies over in the European Union? Stability and international cooperation is a positive sum game. Snackers, some European politicians voted against this deal because they don't want their tax money going to help citizens from another country. Right, they're thinking money moving from my pocket to somebody else's pocket means I lose. Now,

your college polysci professor is going to say that is a zero-sum outlook on life. Your win is my loss. But the decision that just happened this week to launch European Union bonds is a positive sum game. Your win is also my win too. And the benefit, of this is that everyone gets stability. And that's good, not just for Europe, but that's also good for global markets. Imagine what would happen to the American economy if, like, North Carolina declared bankruptcy because they had debt in their state and they couldn't pay for it. Yeah, no more pulled pork. That would be hugely destabilizing in all the other 49 states. One federal government, like we have in the U.S., and like we're sort of getting in Europe, can move resources to the states that need it,

which makes everyone else better off. So now Europe has some of that Hamilton's. in love too. I am not throwing away my shot. I am not throwing away my shot. Perfect. For our third and final story, second quarter earning season will be horrible. Netflix and Coca-Cola have already announced their second quarter earnings and they show us you shouldn't get distracted by old news. No, no, no, no, no. You got to stay focused on the new news. It's all about new news. The only thing that matters, the new news. Now, Snackers, 9% of companies in the S&P 500 have already reported their corona quarter earnings already. Yeah, so that means like 50 of the most valuable U.S. companies have handed out their like quarterly report card to tell you how April, May, and June went.

Now, we all expect horrible results because COVID's biggest impact was on April, May, and June. More specifically, we're expecting a 44% drop in profits across the S&P 500 compared to last year. And that would be the worst quarter for America. American companies since the fourth quarter of 2008. Oh yeah. Nick and I were in college. It was brutal. We weren't paying attention to the news. We were having fun though. But it was horrible for the economy. We were applying for like internships at Lehman Brothers. Let's just say that. So as we're looking at the rest of the 450 companies that are about to announce earnings, some will do better than expected. Others will do worse than expected. But that may have little to do with how their stock prices actually react. Case in point, Netflix and Coca-Cola had opposite earnings reports and then opposite. at stock reactions that seem to make no sense. So Netflix is based in Las Gattas, California,

which is the Wawatosa of California. Don't you dare call it Los Gatos? No, okay. You'll be lost out of the Gatos. It's Los Gattas. And it turns out Netflix added 10 million subscribers crushing expectations last quarter. I'll tell you, the pandemic has been really, really good for Netflix. Reed Hastings doesn't even go to the office anymore. He doesn't want people to catch him smiling so much, so he tries to avoid everyone's games. It's awkward. He's working from home because it's so awkward. Okay, so Netflix had a fantastic quarter, and then the stock fell by 10%. It fell by 10%. So now let's head southeast to Atlanta-based Coca-Cola,

whose profits plummeted 33% last quarter, way worse than expected. It's easy to explain because half of Coca-Cola sales occur outside of the home. In other words, restaurants, movie theaters, sports stadiums, for example. And Jack, what are the three things that have been canceled in the corona economy? restaurants, movie theaters, and sports theaters, for example. Which is why Coca-Cola experienced its biggest decline in sales since 1990. That was a different era. Nick, I was two. You were two. We were all two.

Millennials were pre-millennial. We're dating ourselves, man, but I'm comfortable with it. So after Coca-Cola reported those horrendous earnings, the stock price rose by 3%. So Netflix impressed and the stock got punished. Coke disappointed, then the stock got rewarded. Feels like a takeaway moment. So, Jack, what's the takeaway for our buddies over Coca-Cola and Netflix? Don't be fooled by old news.

Investors only care about new news. Snacker, sometimes it feels like Wall Street's an arbitrary mess of like stocks randomly just moving up and down. But Netflix having a great quarter and Coca-Cola having a really bad quarter, we all could have predicted that, couldn't we? The key, though, is what we didn't know, which was Netflix's prediction about its upcoming quarter. They think they'll only add 2.5 million subscribers, which is a fraction of the number of subscribers they had in the last two quarters. And when it comes to Coca-Cola, they introduced

another thing we didn't know, which is that they're confident that the worst is over for Coca-Cola sales. That's right. The CEO was quite confident that things are going to get a lot better starting now for Coke. So basically, the best is over for Netflix and the worst is over for Coke. That was the new news we got from these earnings reports, and that's what drove for the stock price reactions. It's all about the new news. Jack and you whip up the takeaways for us over there. Starbucks is whipping up more payment options for its 19 million rewards members. And rewards program wars will mean more food and drink for you and me. It's a good thing. More free food and drink. Yes, clarification critical. For our second story, the European Union's

27 members are more united than ever. They took a book and maybe a couple stanzas out of Hamilton's pooling of finances, which is a positive sum. move. I am not going to sing anymore. I thought it was working. I thought you did great. Third and five. Sorry, Coca-Cola and Netflix's earnings, frustratingly did the opposite to their stocks, as you would have expected. It's new news that move stocks, not the old news. Now, time for our snack fact of the day. This one tweeted in by Trent Miller in lovely Edgefield County, South Carolina. He's a county guy. Georgia may get all the credit as the peach state, but it turns out South Carolina is the largest producer.

of peaches east of the Mississippi. It's the second largest producer in the country, which, Jack, I don't have my compass on me, but I'm going to gander that the other one is west of the Mississippi. I actually looked it out before. It's California's number one, but like, that's not fair because California is so much bigger. It's basically four states and one. By the way, Trent wanted us to point out that most of those peaches are grown in South Carolina in Edgefield County, his favorite county. I can't wait for someone from Georgia to be like, Hey, South Carolina, we have more gamecocks than you do in South Carolina. Now, Snackers, before we go, happy birthday to Minoge from Mountain View, California.

And Melanie Shatiansky from North Carolina. Melanie, North Carolina was a random choice for a state to go bankrupt in our exam. No, we don't think it's going to have. Don't take it person. It wasn't personal. Great state. Also, CJ from Louisville, Kentucky, home of Muhammad Ali. And then Epic Lala Girl from Dallas, Texas.

Epic or Lala Girl or just Epic Lala Girl. Snackers, that was a fun pod. if you got buddies not snacking yet, please ask them HY HYS D. And they'd be like, why are they buddies with me if they're not snacking? Have you had your snacks daily? We'll see you tomorrow. If you know, this is Nick and I own shares of Chipotle and Jack own shares of Amazon. 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.