2025 Market Predictions: Tariff Impact, Crypto, Mega-Mergers and More
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December 31, 2024
TLDR: In Episode 486, Neal and Toby discuss market-moving stories for 2025 with Ann Berry from Brew Markets, including Fed rate cuts, Nvidia performance, Trump's impact on business, crypto staying power, and expected mega-mergers.

In the latest podcast episode of Brew Markets, hosts Neal and Toby sit down with financial expert Ann Berry to dissect potential trends and shifts anticipated in the markets for 2025. The discussion encompasses key points like the impacts of tariffs, the resilience of cryptocurrency, the future of mega-mergers, and the stock performance expectations surrounding leading companies. Here’s a brief overview of the episode's highlights and insights.
The Incoming Administration and Tariffs
One of the major topics discussed is the potential impact of tariffs proposed by the incoming Trump administration, particularly the plans to impose:
- 25% tariffs on imports from Mexico and Canada
- 10% tariffs on China
Anticipated Economic Shock
- A significant portion of the conversation centered on the anticipated shock to the economy that such tariffs could cause, including potential consumer price increases and disruptions to global supply chains.
- Historical context was provided by Ann, noting that the previous tariff implementations only raised costs by approximately $200 to $400 per year per household, suggesting that while impactful, it may not lead to a catastrophic fallout.
Sectors to Watch
- Specific sectors likely to feel the brunt of these tariffs include automotive, agriculture (fruits and vegetables), and electronics, especially given their current reliance on imports from Mexico and China.
- However, Ann hinted at potential investment opportunities as companies reposition their supply chains in response to the tariffs, particularly in electronics where manufacturers are already looking at diversification strategies.
Cryptocurrency: An Asset Class Here to Stay
During the discussion, the resilience of cryptocurrency was also examined, especially in light of:
- Bitcoin's performance, which recently broke the $100,000 mark.
- The sentiment surrounding the incoming administration's more favorable stance towards crypto assets under potential SEC chair Paul Atkins.
Legitimate Players and Infrastructure
- Ann emphasized the importance of identifying legitimate players in the crypto market, citing companies like MicroStrategy and Coinbase as strategic considerations for potential investors moving into 2025.
- She further mentioned the growing mainstream adoption of cryptocurrencies, suggesting that even skeptics may need to reassess their positions going into the new year.
Nvidia and the AI Market’s Future
Another focal point of the conversation was the expectations for Nvidia, which has become one of the stock market's hottest assets, largely driven by the AI boom. Some key insights included:
- Nvidia's anticipated Blackwell chip launch, expected to dramatically improve performance metrics.
- Discussion around potential regulatory scrutiny amidst growing competition in the chip sector and how it might shape Nvidia's market momentum.
Market Composition
- The hosts also touched upon the tech sector's volatility versus stability in dividend-yielding stocks like utilities, predicting a more diversified performance across the S&P 500 in 2025.
Broader Market Dynamics
As 2025 approaches, the conversation highlights several broader dynamics expected to play out:
- Federal Reserve Policies: Ann expressed that the Fed is likely to maintain higher interest rates for longer, especially if inflationary actions, like potential corporate tax cuts from the new administration, come into play. Higher rates could stymie growth in speculative tech but boost increases in dividend-yielding sectors.
- CEO Changes and Activism: The episode concluded with reflections on substantial leadership changes across major corporations in 2024, emphasizing the role of activist investors in reshaping company strategies. Ann and the hosts speculated about the future trajectories of companies like Starbucks and Nike in their efforts to reinvigorate growth in a competitive landscape.
Final Thoughts
In summarizing the discussion, listeners are advised to keep an eye on:
- Tariff implications on various sectors and consumer prices.
- Developments in the cryptocurrency market and the positioning of key players.
- Nvidia's potential expansion driven by ongoing AI advancements.
- Shifts under the influence of the Federal Reserve’s monetary policy and how they could directly affect investment strategies in 2025.
This dynamic dialogue provides a roadmap for investors and stakeholders looking to navigate the stirring waters of the financial markets in the upcoming year.
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Good morning, weird daily show. I'm Neil Fryman. And I'm Toby Howell. Today, what does 2025 hold for the stock market? We broke it down with investing expert and Barry. It's Tuesday, December 31st. Let's ride.
Holy cow, it's the last day of the year, what a ride it has been. Toby, favorite memory from 2024. Wow, favorite memory from 2024. It's got to be that three would I hit on 18, 265 uphill care. No, I'm just kidding. Probably it is related to the podcast seeing Spotify wrapped come out recently. That was a highlight doing the in-person trivia night. We hosted in New York. That was a highlight, two minute choose from. So I'm just going to say my favorite memory is doing the podcast every day with you.
To wrap up the year, we are continuing our special holiday episodes with a show all about markets. The stock market had a bang and year in 2024. But what should you be looking out for in 2025? To help, we had a chat with the incredible Ann Berry, the host of the Bruce Markets Focus podcast after earnings. Ann's LinkedIn is like reading what your parents thought your employment history would end up looking like. She's been a CEO, founder, broadcaster on TV channels like Bloomberg.
invested billions of dollars as a private equity dealmaker. And we're grateful to have her on the show, which we taped in mid December. Okay. And thanks so much for joining us.
I'm ready to dig in, guys. This is going to be exciting 2025. And we're about to dig in right now. One of the biggest themes for markets in 2025 is going to be the policies of the incoming administration, particularly Trump's signature policy proposal to enact sweeping tariffs. Just a recap for everyone, Trump has pledged on day one that will impose
25% tariffs on Mexico and Canada, the US is two largest trading partners, and an additional 10% tariffs on China. On the campaign trial, he also mentioned slapping across the board tariffs on 10% on all goods coming into the US, but we haven't really heard any more details on that. And tariffs of this scale would provide a major shock to the economy, upending global supply chains, and likely raising consumer prices for Americans. How do we think about the stock market's response to Trump's ultra-aggressive trade
I think we've already seen the star market response, right? Because you remember, originally when he came out, he said, I'm going to slap 60 to 100% tariffs across the board on China. And guess what the market did? Well, we've just been going through all time high after all time high after all time high. So I think people just really
anticipate that at this moment in time and probably early in the new administration, this is Trump posturing. He's throwing the maximum possible punitive policy out there. And then he's doing things like he's been doing in Mexico. He's gone over there and said, OK, what are you going to do for me on immigration guys? I bet he's going to go to Europe and say, what are you going to do on NATO spending guys? And hey, China, what are you going to do on cybersecurity and privacy? So I think this is negotiation. We need to see what really shakes out. So you're saying investors are expecting the tariffs to not materialize.
I think that we're expecting some tariffs to materialize. I just don't think they expect to see it at the scale that's being thrown out there right now. And actually, I went back, I nerd it out on this because I just love to nerd out on this stuff. I went back to see what happened under the last tariff program. Came to around $200 to $400 impact per US household per year, which is not nothing that's meaningful, but it wasn't, you know, as catastrophic as people thought. So people are saying we'll be okay.
Let's dive into some of the sectors, though, that could be most affected. A sector of the economy, like the auto market, a lot of auto imports come from Mexico and China. Same thing with fruits and vegetables. A lot of imports come from Mexico meat and dairy coming in from Canada as well. I guess my follow-up, though, is are there any specific investment opportunities that actually might arise as a result of these policy changes rather than just sectors that could be impacted by the tariffs?
But when it comes to fruit and dairy and food, I think that's a little bit tougher. I think it's hard to see opportunity there. And I think you just say, OK, we need to see how the shakes out. This could be tough to go back to the policy thing. That's really interesting, though, that the agricultural community actually supported the tax. Remember, at the beginning, last go around. So even despite the economic pain, it's unclear what the reaction is going to be.
When it comes to Auto but also Toby, let's talk about electronics more broadly, we've actually seen these public company CEOs come out and already say we're doing two things. We're starting to accelerate our imports from these nations before Trump comes into office and we are looking at near shoring but we've done it before and we did it last time so we're better prepared this time so I think we're okay.
But during the last, if these tariffs were to materialize, I mean, it could have an impact on the market. I mean, I just went back to the last Trump administration as well. And on the days that tariffs were announced, I remember this very clearly because I was writing the morning for your newsletter at the time, the markets would absolutely tank. They fell 11.5% on days when the tariffs were announced.
his first term. So, if you're saying now that the markets are pricing in the tariffs materializing, then we could be in for some shocks. We could be in for some shocks, but I don't think they're going to be the scale that we had. So, let's go back to that moment when you were seeing the reaction for the newsletter, Neil. A lot of the companies that were impacted, well, what did they go and do? Right, they moved their supply chains to Vietnam.
They moved some of their supply chains back over. They onshored it again. They brought it back to the U.S. So definitely that's quite best by, for example, best by which had its own issues. The CEO said in the earnings call, like electronics prices will definitely go up. 60% of best byproducts in terms of cost of goods, so it's come from China. By the way, 25% of U.S. electronics imports from China, 17 and a half percent from Mexico. So yes, if it materializes, it's going to have an impact, but I don't think it's going to be the 11% drop that you just mentioned.
Let's just broaden the scope here a little bit and talk about BRICS nations, which are those nations that include Brazil and Russia. They've expressed some interest in actually potentially moving away from the U.S. dollar, which caused Trump to float this idea of levitating tariffs against those nations as well. Do you see these tariff wars having some downstream effects, like potentially this pushback against the U.S. dollar's like hedge money over the global financial system?
Are you thinking of that widespread about the potential impacts from Trump's like, you know, tariff war? Okay. So let's see what Trump said in response. I've got this little print out here because I saw this too. When the BRICS nations came out and said, you know, perhaps we'll start looking at a different anchor currency other than the dollar, which is a sort of derivative effect to tell you what you're saying. Trump basically came out and said, any country that does this should wave goodbye to America.
So I think it's pretty clear that even if we do go down the tariff route, I don't think we're going to try and reach a point where we have this very, very weak dollar as a result. And look at who Trump wants to appoint as Treasury Secretary and as Commerce Secretary. These are folks. They're Wall Street guys. They don't want to see mass tariffs coming and they want to see negotiation, I think.
Yeah. And then finally, just looking specifically at the markets again, are there some companies that you think have navigated this period before the Trump administration, particularly well? One company that comes to mind is Walmart. They say two thirds of their items are made in the US versus maybe a company like Target that is a little bit more
exposed to a importing goods from Mexico and China, et cetera. Is there any names that you're kind of looking at to say, okay, these, they have their ducks in a row here. They think they're going to weather the storm pretty well. I think all of them have lived through this before. I'm not trying to dodge the question. Is it one versus another? They literally have lived through this before. And let's look what happened, right? They lived through the last Trump administration. The tariffs came in. People either adjusted their supply chains or they adjusted their prices, right? That's number one.
Number two, it's not like the Biden administration came in and then abolished all those tariffs. Do you remember there was tacit agreement across the aisle. There were crickets. There was a little bit of a reaction when the tariffs came in, but once they were in and they were in effect, there were crickets. There was tacit agreement that, yeah, we need to get tough on China. We need to get tough. This is what we need to do.
They weren't reversed, which means we've been living with it. So the question is, what does the incremental amount do? And I just think the incremental amount just means that we just incrementally get more from the places that we moved our supply chains to.
Let's move on to our next category. So every year, there's this bank called Saxo Bank. This is this annual list. It calls outrageous predictions where it picks a few events that, while unlikely, could potentially happen. One of those predictions is that NVIDIA will balloon to twice the value of Apple in 2025. Some of the restaurants are now behind that prediction. NVIDIA has this next-gen Blackwell chip in the pipeline that represents this 25-fold increase in performance compared to his existing lineup.
There also seems to be no signs at the AR arms race going on in big tech is slowing down. Companies like Meta, Google, Open Air are all vying against each other for these all-important NVIDIA chips. Those tailwinds have turned NVIDIA into this bell of the stock market ball. It's up over 180% in 2024, but Ann, I'm curious to get your thoughts. Is NVIDIA going to continue to capture more of this AI market or are some of the headwinds maybe regulatory scrutiny going to slow it down as we enter 2020?
First of all, how excited are you guys for the watch parties? The Nvidia earnings watch parties coming out next year. I just wish we had the idea. Yeah, I do. Right? So Nvidia earnings have become this blockbuster event on par with Fed interest rate decisions and jobs reports, kind of out of nowhere that people were hosting literal watch parties at New York City bars for its third quarter earnings reports. I do wonder whether those, well, maybe we've reached peak Nvidia earnings as sort of those year on year comps get a little more.
reasonable and you don't see things like this $3 trillion company is growing at 300% anymore, but it was a really fun time this year. Well, we've got to host them. I feel like I see a host party or live streams in our future. So let's quite what happened with respect to Blackwell in Nvidia this year, right? The promise of Blackwell, you just said it to be like unbelievable capacity, the speed of processing, and also it's like more energy efficient, which is which is good news for everybody.
And so the promise of it has been out there. And finally 2025 is when it ships, right? The volume comes out, it gets real. So my thinking is the following. NVIDIA has blown past expectations in most of the earnings releases with the exception of the last one, when it hit expectations. And there was this muted response, which is absurd, right? Because the outlook was fantastic. And they were like punished for just being really good students. Well, I think what's gonna happen in 2025 is
There's going to be this aversion to the sort of forward-looking statements of NVIDIA, because Blackwell actually ships. Don't forget NVIDIA does not manufacture its chips, right? Which means whatever happens in 2025 is related to two things. One, making sure that their manufacturing partners are getting the stuff out on time and to their clients on time.
there have been delays as long as that happens on time I think Nvidia continues to be stable. So what causes Nvidia to pop? Well, they need another generation of a chip or they need to say we're going to accelerate our production and this is how we're going to do it because we're going to change our manufacturing. I don't know how they're going to do that to be perfectly honest. So I don't know that we're going to see the same explosion in Nvidia where I do see a concern and by the way, I don't think they're going to be twice the value of Apple for what it's worth. I do think that we're going to start seeing in 2025
All of this talk about competitive chips, either materialising or not. And if it's not, I think Nvidia jumps up again because then it will become clear it's the only game in town for even longer.
How do you think about Nvidia in relation to the broader stock market? I mean, for the first half of the year, AI dominated and most of the S&P 500 gains came from Nvidia and just a couple of the other magnificent seven. Towards the second half of the year, the stock market seems to have broadened out and things like utilities and other sectors are growing faster than the tech sector. Do you see that as a good thing and maybe a way for this market not to be in a bubble like the .com version of it?
So utility two decades ago. Yeah, well, that's a great question. So let's go out utilities. There are sectors like utilities. So utilities historically have yielded dividends. Right. So when you've been in an environment where you had really high interest rates and it's almost as effective for you to go take your cash, put it in a high yield savings account.
keep it in the bank, money has tended to go there. With interest rates coming down, I do think, Neil, that the dividend yielding stocks are going to become slightly more favourable, things like utilities being one of them. Also, people are saying, oh, great energy deregulation because we've got Trump coming in. That's probably going to be good for utilities too. I think broadening out is going to really depend on a couple of things.
I'm not sure it's going to be broadening out necessarily by sector, but I do think it's going to be broadening out by winners and losers within sectors. For example, all these folks have been talking about investing in AI and the promise that it's going to bring greater productivity. I think everyone in 2025 is going like, wait, now show us the money. Where is it? Where are the results? And if you don't have them, I think you start to see those share prices start to go down. But if you're actually delivering in the way that sales forces to pick a name out of the blue, I think that continues to pop.
as a perfect segue into my next question. Actually, you recently interviewed Salesforce CEO Mark Benioff and you got his take on AI and you really straight up asked him, do you think the AI market is currently in a bubble right now? Take us through what he had to say as the CEO of Salesforce, as a CEO of a company that is betting a lot on AI.
But what was fascinating is he broke it down into two different buckets. So he said, let's start with the private market. And so like lurking inside Salesforce, by the way, also lurking inside Nvidia, are these big venture capital firms because these big corporations are investing into startups where they have real visibility into how those startups could function.
And Mark said, look, Salesforce has got about $5 billion under management right now inside startups. And we're seeing some really great activity in the AI space. People are really breaking the mold. There's real innovation. He also called out companies like inflections that there was no there there. And when there's no there, the emperor's going to have no clothes and the market's going to start calling it out. So I think he said there has been a bubble in certain applications of an AI. He said, does he didn't name names in the public market? He did said that there are some now where the fundamentals are not proving out in the public companies.
I happen to agree with him, but I don't know that it's until maybe the middle of 2025 when we start really seeing who's been bluffing, not with mal-intent, with hope as a strategy and hope as not a strategy, and I think we start seeing that come to fruition next year. Just to put you on the spot, are there any particular names that you think are bluffing or have maybe been talking a big AI game and will not be able to prove it out next year?
Well, I've been so wrong on this. I'll give you where I've been really wrong. So I thought for the longest time, and Alex Karp, if you're listening to this, please come onto the show and talk to me about it. For the longest time, I thought Palantir, I know it's a consulting business, and it talks about AI, but it's not a software company. Why does it trade where it's done? It's that share price, guys, this year, you've seen it, right? Right, top five performer and that's top five performer.
I'm still not 100% clear on the exact, repeatable use of AI. So I'd like to see more evidence there, but that's what I got it completely wrong. Like, I thought that was Hope's a strategy in Alex Copicani for listening come, has proven me sort of wrong. I do think that there are
other companies where they've talked vaguely about AI as something that is going to be really important to them, but we haven't yet seen it being adopted at scale. So let's take, for example, in the manufacturing side, I've been this really big believer that whether it's medical devices or it's in farming equipment, we're going to see what's been going on with consumer electronics, where the next generation of
Combine harvest as the next generation of scanning machines in hospitals are going to have more AI capabilities. I think that's coming. I think it has to come. I'm just not sure what the timing is going to be. It's totally okay. Last year, there was something called the inverse Toby index where everything I predicted that was going to happen next year. The reverse ended up happening. I'm right there with you. We need to get you your own ETF.
I know the inverse tell me the inverse Jim Kramer, people will make a lot of money or lose a lot. So another hotter than hot sector this past year has been crypto. The price of Bitcoin finally broke through that and faunted $100,000 barrier, which also propelled it to become the best performing asset of the last decade. Meme coins are still all the rage right now with those coin carrying a higher market cap than target. Can't believe that's a real sentence.
Part of the reason behind all this frothiness and the record highs is this perception that the incoming Trump administration, particularly his pick for the chair of the SEC, Paul Atkins, are much more crypto-friendly than past administrations. Do you see crypto carrying all this momentum into 2025 and beyond, or is it going to get maybe a rude awakening?
Okay, since we're in confessional territory, I feel I have a confession. It's a safe space. It's a safe private space, no one's listening. I have never bought crypto. Okay, for lots of reasons, I'm happy to go into another time, but I've never bought crypto. And I've looked at the adoption and said, okay, it's getting more mainstream. It's getting more mainstream. It's getting more mainstream. I do think 2025 is the year when people like me have to get over themselves and say, it's not going anywhere. Figure out how you're going to ride
The wave doesn't necessarily need to have the same momentum that we've seen over the last couple of weeks. You're right. I think it feels like there's a sea change. Gary Gensler, who's the current head of the SEC, has been vehemently anti-crypto. That's going to change probably with Paul Atkins coming into the seat. We've got David Sachs being appointed as the sort of unofficial AI and cryptosar. You've got Elon. Don't get me started on meme coins. But he clearly is a very influential powerful voice in the next administration. He's all for it.
I do think now looking for legitimate ways to get around the infrastructure of this and I was actually, I was book launch party of a friend of my Anthony Scaramucci who's been a Bitcoin evangelist for a long time and Michael Saylor was there talking about, there's this mic drop payment waste and I invested 25 million bucks in Bitcoin or whatever it was and now it's like billions of dollars worth of value. So I think looking at companies like MicroStrategy, looking at companies like Coinbase, non-investment advice,
But I think finding legitimate players around the infrastructure. I think we're going to have to do it. I'm going to have to do it. I don't want to. If I was thinking about investing in crypto, why would I? Is it just because I think the price is going to go up? Because you say there's more mainstream adoption, there's been ETFs from the most institutional of institutional investors like BlackRock. We still haven't found any real
proper use case for Bitcoin, maybe some other crypto does have some applications. But for Bitcoin itself, it just seems like it is a store of value. It's very similar to gold, where people will just buy into it because they think that other people will buy into it in perpetuity.
That seems to be the case. I did go back to my point on adding up. I did go and read the Satoshi white paper. I did, and that's exactly it. It's a store of value. There's a finite amount. Some people would argue more finite in terms of discoverability than gold. And if you have something that rare and finite and known amount, then that's what they're using it for.
I think it's just worth reminding people that there was a crypto winter two years ago where the price of Bitcoin plunged 75% the head of a crypto exchange stole $10 billion and is now serving a 25 year sentence. So we'll see what happens in the next few years with Bitcoin. And don't go anywhere. We'll be right back after this break.
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Let's turn to the Federal Reserve, which may have a bigger impact on markets and the economy than anything we've talked about so far. As of this taping in mid-December, the Fed has cut interest rates two times this year and is expected to slash rates one more time at its next meeting later this month. Sure seems like Jay Powell has nailed the mythical soft landing. Inflation has returned to just about normal levels while the job market has remained healthy. Meanwhile, there appears to be some stability at the top after Trump said he wouldn't try to remove Powell.
with whom he's had some beef before. And what can we expect from the Fed this year? I think we see gentle cuts, but I think we see Jay Powell. I'm a big fan of Jay Powell, by the way. I do think he stuck the landing under really difficult circumstances. I think we see him trying in the next three to six months to very carefully and cautiously feel out what fiscal policy is going to look like. My gut
And I could be wrong. I've been wrong many times is that we're going to see interest rates remain higher than expected for longer than expected for the following reason. If Trump goes ahead and drops corporate tax rates, you know, he wants sort of 15% blanket rate, that is an inflationary action. Okay, if we have tariffs and there isn't as rapid an adjustment as we think, I think we'll be okay. But if there isn't, that is an inflationary policy. Yes, we're going to have those trying to look at cost cutting. But if we don't get there in time, we've got inflationary forces at work.
and possibly quite quickly. And I think if you're Jay Powell, you've still got to hit that 2% inflation target. That's your job. So I don't see in that scenario how he's able to cut rates as quickly as you thought he might do. So what are some downstream effects? Take our listeners through some downstream effects. If we do actually enter next year in the years following with higher for longer industries, what might happen or what are some effects that will broaden out from that?
Well, let's talk about mortgage. Let's talk about real estate. Everyone's been talking about how difficult it is for people to, if they're already a home owner, if they've already got that privilege. It's been really hard to say, I'm going to sell my home, lose as a result my juicy 30-year mortgage that I looked down four years ago at really attractive interest rates earlier, and try and now get a 6% mortgage, which is just crippling in terms of the math.
on covering your costs. So if we're stuck with interest rates higher for longer, I think you've got people without the ability to change homes or, you know, for our audience to go buy their first home, right? And to get on the property ladder, which has been this huge source of wealth creation for our parents' generation or grandparents' generation. So I think that's problem number one. Problem number two is I think there's a ton of noise around the real estate at the consumer right now. So on our sister podcast, After Earnings, I spoke to the CEO of Upstart,
A couple of months ago, an upstart is this digital lending platform that's trying to find new and creative AI-driven ways to figure out how credit-worthy you are, not just the FICO school, but actually what is your jobs, what is your trajectory. And it's very interesting, they've done a bunch of analysis around what's truly the state of the consumer when you look at default rates, what is not known about by now Pay Later and how much money people are borrowing using that kind of mechanism.
And he said, look, the data's not as brilliant as we all think sentiment feels pretty good, but the consumer, some of them are really struggling.
Part of one thing that you mentioned earlier too is that falling rates mean that cash accounts or like money market funds are not going to be as popular because they used to be yielding five and a half percent. Now that's creeping it downwards. Every day we get like an email saying like, oh, your yield is going down. What do you think some of the effects are from that? Who are maybe some winners and losers of those yields being a little less juicy?
I think it goes back to looking at those stocks that are creating quite attractive dividend yields. The traction of dividend yielding stocks, and I've been a fan of them, and by the way, again, not investment buys, but I've gone into a bunch of ETFs because you don't have to do the work on every stock and you can get high dividend yielding ones. You've got the upside potential.
It's a potential appreciation while still getting some dividends. In the meantime, if you shove your cash into a money market account, you're not going to get the upside appreciation. You're just going to kind of clip the coupons and hope that that's sort of good relative to everything else you could have done. So I think you continue to see that shift. I do also think back to the conversation we had earlier, let's talk about tech companies again and let's talk about what drives their share prices.
If you go back in history, the lower interest rates have been, the more people have been willing to take a risk on speculative technologies, on innovation, and that's part of the reason why some of these tech companies did so well, because people are willing to say they don't create cash now and some cases.
The opportunity cost of me putting my money into these stocks is relatively low. The problem is when you've got rates that are still high, your appetite for risk relative to that isn't as high as it would be, which I think increases the pressure back to what are we going to see in 2025 for these companies promising AI, for promising innovation, for promising margin, for promising cash. Toby, you're going to be sitting there going, all right, show me the money, guys. Why aren't I having my money in the money market account still?
So this is the last day of 2024. And I think I will remember this year as the one went long time, American corporate titans were brought to their knees, Boeing, Starbucks, Nike, Intel will even throw in red lobster all struggled mightily and either replaced or are in the process of replacing their CEOs. And is there a company out of the group that I mentioned that you think has an easier path to a turnaround?
amongst all of those. I think Starbucks got a shot because they hired a really fantastic CEO in the form of the former Chipotle CEO. But you've touched on something, Neil, that you framed it as 2024, was like the year of the CEO change. Can I frame it a little bit differently also? I think it was the year that activists...
shaped some of the biggest stories in the market. Starbucks changed force by an activist. Nike changed force by an activist. Boeing was different. There was a real crisis, sir. And define what you mean by activist in this context. Right. So you've got these big funds that have pots and pots of money, folks like Bill Ackman, Nelson Peltz, funds like Elliot Management, and the specific mandate of these funds to be is they look at companies that are in the public domain and they say, OK,
What is the management team like? Are they doing their job to find us? Are they finding growth opportunities? Are they finding cost reduction opportunities? They look at the strategies and say, how are these companies doing relative to their competitors? Do they have the right product lines? Are they too diversified? Are they not diversified enough? And what these activists do is they go out, they build positions, they buy the shares of these companies large enough.
that they start to have real influence. They write often very articulate, sharply worded letters, and often they'll reach the point where they say, look, we're going to put a presentation out there, and we're going to say to you management team, here's a bunch of things we think you should do differently.
Please go do them. And if you don't, we're going to start shaking our say, rattling our sabers and shaking up your board. Southwest Airlines, right? Another one we saw, the CEO survived. I think he's on borrowed time for what it's worth. But the board changed out. So that's what the activists do. Some mixed feelings about them. I've got a very specific view on them.
So one person you did mention is the new CEO of Starbucks, which is Brian Nickel. He's been described by some analysts as the LeBron James and the Tom Brady of the restaurant industry. Do you think that he has the ability to steer Starbucks in the right direction? Because
Starbucks is facing a lot of headwinds, slowing growth in China, pretty poor store experience right now. But how much can one executive or one CEO really change the fortunes of a company? Or is it more just like the structural issues are going to be what they are and they can only do so much?
So I'm going to give you a little bit of context to my answer. I've been a CEO of a company over 6,000 people, and I've sort of said this over and over again. Execution really is the key to driving performance. There's lots you can't control, right? Brian, he can't control what's going on in China. He can't control what's going on with his competitors. He can only control what's right in front of him. And where I salute him is he has spent time going around to different starbucks'
Is that even the right way to say plural Starbucks? And really paid attention. How long do I have to wait for my coffee? What does the food like? What does the line look like? I don't know if you saw Maxin or Max, which is it did a great video. Philange is a great video with timing how.
how quickly coffees come out. That attention to detail, as opposed to just delegating this out, is really critical. And getting in the weeds and going around and seeing what's wrong and saying, okay, here are the things we can change. Here's what is in our control. We can get our wait times down. Why aren't we doing it? Food and Starbucks, it's terrible.
I didn't last time you tried it. I never had it. I rarely do. Why? Why? Why have you rarely? It does not look good. The presentation, everything about it. Yeah. He's also a Duncan guy, though. So tell me, too. I get why America runs on Duncan. It's my favorite coffee. But to your point on stuff, what you've just said, though, that's real. That's real consumer feedback, right? You've just talked about the user experience. It doesn't look good. You're not going to buy it. A good CEO, Toby. In my opinion, you can go around, listen to the meals of the world and say, we're going to change that. We're going to change that.
Neil's an activist investor. Yeah. Toby, I actually want to hear your opinion too. Which one of these five companies do you think you could go into and do a good job? They pay you a hundred dollars. But you personally, if you're giving me a hundred million, honestly, Nike is probably the one because, I mean, it's called like dog fooding the product. Like you go and test out the product. I've probably worn, I've worn Nike my entire life running and soccer as well. So that's definitely like a company that I do feel like
I would want to have the chance to just because I do love their products and have tried them out. So I think Nike is one that I could just give me the reins, people. We could turn this puppy around. Wait, wait, wait. We're not going to let you go. I'm going to let you go. No, let's eat old Toby. We're doing Toby.
But underrama, Kevin Plank's CEO went over to China to go back to China, I think is leaning in there with Steph Curry, right? So is it Nike, the product or is it Nike because you have this nostalgic attachment to everything it represented with the NBA and other great, you know? Well, I think they have a huge opportunity to regain their market share of the running market. I mean, Nike was like the thing that brought running back to or
like basically help create the running boom in America, but then they've lost their way. They have these run clubs, don't interact with Nike anymore. They've pulled back out of a lot of these wholesalers. So I think there's a huge opportunity there for them to get back in touch with their roots and just say like, hey, runners, we see you again. So I think there's a lot of opportunity there that even, and I'm not so worried about like the underarmors of the word like that, because they don't have like the heritage that that Nike does. So that's why I mean, you put me on the spot, but that is generally probably the position I'd like to be in.
Look at that, we're all CEOs these days. You and me and we're going to turn things around. We're going to finish off the show with some rapid fire questions. These kind of run the gamut and we are going to ask you to speculate a bit. None of this is financial advice, but we'll put you on the spot here. Are you ready to rip these rapid fire? I know my temperature is going to.
All right, first question, which of these private companies will go public first this year, in your opinion, SpaceX, Stripe, Klarna, Corweev, or StubHub? Klarna. Oh. And Klarna is a buy now pay later giant. Because you've had insight into, you've talked to some of these buy now pay later CEOs, and you think that it's just time for them?
Well, the Klarna CEO has been out there talking about all of the things that he's been doing in preparation for an IPO. It was speculated to go out last year, so it's behind. It's kind of time. But this was an interesting one. Do you remember, the Klarna came out and said, we have basically fired our software providers like the sales, and we've taken it all in house, and it's way more productive. We've taken our cost out. That, to me, is pre-IPO preparation talk. That's like getting everyone amped up and ready to see them come out. That gets the market very excited, yeah.
Will Google be broken up? The DOJ wants to it to sell off Chrome and the judge will rule on this next summer.
No, I don't think so. I think there's going to be a really long and protracted lawsuits going to go on and on. I think if I were Alphabet, I'd be delighted that there's a change in administration coming. And I'd be going back in there. And look, I think Ruth Porat, by the way, brilliant operator, like that whole group over at Google and Alphabet, they're going to be arguing, are you kidding me? Have you seen what's going on with chat GPT for search? Have you seen what's going on with perplexity? Have you seen what's going on with Bing? The game's going to change.
Kind of on the same question, do you think TikTok will actually be banned? Then rumored for a long time, do you think that will come through in 2025? I do not. I do think it will be banned. I do think there's going to be battle to force Biden to sell it to a US owner. What is a merger that could happen in 2025 that no one will have seen coming?
Oh, I'm stumped. I hate being stumped. No, it's fine. I've never stumped. No, I'm going to try and I'm trying to come up with an answer for you. One that no one ever saw coming. Okay. Here's one that I think is not like crazy creative, but I think needs to happen. All these companies are going to die. Do you know all of these direct to consumer brands that went out in 2020, 2021, they went out the iPad.
I think rent the runway, revolve, stitch fix. All of these fashion type brands need to find a way to get together. I love that answer too, because we have talked about the rise of like vintage closing in this past year. So I do think some of these vintage sites will- Yeah, the real real. Yeah, the real real shop up. Like these do have an audience. So I love that answer. Consolidate or die. That's why I say to them. We just needed to give you a little time. You have one. Thanks. This won't take you a lot of time. What's your favorite ticker symbol?
Why is that more stumping than the others? I don't get it. What's my favorite tickers? I like spot for Spotify. I don't know why aesthetically it's like nice looking letters, curvaceous. And you can say it. Like it's an actual word. It means something. Yeah. What is Harley Davison's hog? HOG. That's a pretty good one there too as well.
Why have they got it as hog? Because they call them hogs. I don't know why. Why do they call motorcycles hogs? That's just what they call them though. I don't know. It's something very mad max and unsettling about that. I'm not sure. Yeah. I go on like sports better. There's this character I grew up in London in England. I get to spot the dog was like a very beloved character when it's growing up. So it's like an nostalgic thing. Speaking of that, what is the biggest difference between New York and London?
the pace. New York has got this energy. I've got this, I've got a really clear thesis on New York and I've been living here for a long time now. New York's a really difficult place to live in. I don't know if you guys, it's dirty, it's crowded, it's claustrophobic, it's expensive, some things are really convenient, other things are not.
But everyone wants to come in, not everyone. Lots of people want to come here and lots of people stay. And so I think as a result, when you've got a city that's really densely populated and it's filled with people who've chosen to stay here and withstand all of that and they've survived it, these are resilient, creative, energetic people. And I love that energy and you don't have that, I think, either in London or anywhere else.
I'd hire you as a spokesperson right there. That makes me want to move to Eric Adams, if you want this thing. And I already live here. Yeah. All right. Best book to learn about investing. If I'm a listener listening to this one book, you would tell me to list or to read one book.
Can I cheat? I really don't. There's no rules on the show. I'm going to tell you another story. So when I started my career in investing, guess who I wrote you to say you inspired me to go into investing and you equipped me. You taught me to be an investor. Who do you think? Roaring Kitty. Warren Buffett.
Both great answers. Thank you, Neil. I wrote my English literature teacher in high school. And the reason I wrote my English teacher, I said, do you know what I had to do in high school? We've all had to do this. You have to take random pieces of poetry, random pieces of prose. And you need to come up with an opinion. You need to break it down. You need to analyze this. And you need to articulate and justify your view. OK?
Investing is the exact same thing. Yes, it's with numbers, but it's also with judgment. You need to take something you've never seen before. You need to come up with a perspective and you need to justify. If you can't justify it, don't put your money there. That's my rule. So that's my cheat answer. That is a great answer. And I'm going to, I saw my English teacher from high school's number. So maybe I might get out Mr. Mr. Flanagan.
I know you remember yours as well. That is all the time we have today and thank you so much for hopping on the show. Everyone make sure you follow Broom Markets on social media. You'll see and dropping some knowledge on their Instagram and TikTok. Also listen to after earnings to hear and chopping it up with some of the biggest executives in business and it was a pleasure and I hope you have a happy 2025. Happy New Year guys. Thanks. Happy New Year. Happy New Year.
Wait, wait, wait, before you go, Neil has one more thing to tell you. It's time to calm a clean. Hosting Morning Brew Daily isn't my only job. Wait, are you Batman? No. When I'm not here sitting next to Toby, I'm also the executive editor of Morning Brew's free daily newsletter. If you love the pod, you'll love the newsletter. Not only does it give you your daily dose of news, but it also has cross words and trivia and jokes written by people way funnier than me and Toby.
I hate to admit it, but it's true. I read it every day and I think you all will love adding it to your routine as well.
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