Shaky Housing Market Hurting Lowe’s & Gold Has Never Been More Valuable

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0:27Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, putting off your addition is leading to major subtraction at Home Depot and Lowe's. Then more teenagers than ever are putting off getting their licenses, so moms and dads, get ready to carpool. It's Wednesday, August 21st. Let's ride.

0:50If you live in the Northeast, you might be rocking a hoodie and jeans this morning because it sure feels like fall. Highs in the 70s, no humidity, a cool breeze. But don't get used to it. New York Metro Weather calls this fake fall, the season that comes after sweaty, moist hellscape. And the one before, it should be fall, but it's too hot, which is what's coming down the pike. Still, I'm going to enjoy this while it lasts. I even had hot coffee this morning. You are a sweater guy at heart. See, growing up in Florida, I want to take you through our seasons. So you have winter, which is sunny in 75.

1:23Spring, which is sunny in 85. Then you have summer, which is sunny in 1 ,000 degrees, 10 ,000 % humidity. And then there's fall, which is sunny in 77. But yes, everyone moves to New York for the weather, right? Yeah, well, that summer in Florida is why I am never moving there, even if that spring does sound pretty nice. Now a word from our sponsor, Mass Mutual. So we got some athletic Morning Brew daily listeners who are into sports, and they know that the most important part of winning championships is... Having a superstar on your team. No, it's defense. Defense wins championships. Never bought into that, but I guess you do need defense paired with a good offense, too.

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3:18The problem? Everyone spiffed up their houses during COVID, and with interest rates at 23-year highs, no one is rushing to start a new project. Take a look at these ugly numbers. Lowe's Q2 sales fell 5.1 % more than expected for its seventh straight quarter of sales declines. Home Depot didn't have a much better time of it, recording a 3.3 % drop in sales for also its seventh straight quarter of negative sales growth. Neither retailer had an optimistic forecast for the rest of the year, admitting that homeowners are content with not putting in that addition until things get cheaper. For as much as they were in the right place, right time when people were stuck in their homes during the pandemic, Home Depot and Lowe's are on the wrong place, wrong time now when belts are getting tightened.

4:03Both company stocks have lagged the S &P 500 by 18 percentage points over the last year. Toby, it seems more people are doing what I do when going to Home Depot. You walk in, look at all the cool power tools, and then walk out without buying anything. That's exactly true. It does have a nice vibe in there, and it's all tied to the clogged up housing market as well. I mean, people are waiting for interest rates to fall to buy houses, and if no one's buying houses, then there's no houses that need fixing up, that need renovating. Oddly enough, though, for a minute, their high interest rates were actually driving home improvement sales because if you lived in an old house and you were confronted with the decision with fixing it up or buying a new one, a lot of people started fixing them up instead.

4:45But it kind of comes in waves, though, because there's only so many home improvement. There's only so many kitchen renovations you can do before it's one too many. So we're just seeing a little bit of a lull right now. And it makes sense, given all the improvement that happened during COVID in the years after. I would consider it way more than a lull, because if you go across the board, it's not just Home Depot and Lowe's. You just go to any company that has a direct hand in renovation or buying stuff for your home. And they're all saying, like, we are in a very bad place right now. Earlier this summer, Wayfair said people aren't buying furniture to a degree that hasn't been felt since the Great Recession of 2008.

5:23So the trough that they're feeling right now is literally at great financial crisis levels. Go down the board. Stanley Black and Decker, floor and decor, tractor supply. They all had very soft sales. So this is across the board. You do not want to be a company that has a hand in this industry right now because your home sales are frozen over. So nobody's buying a new house that they need to upgrade. There was this great pull forward, what they call in economists speak, of demand during the pandemic where anybody who was going to do a project just did it in 2020 and 2021. I think the only person who's doing a renovation project right now is my mom with our kitchen for absolutely no reason.

6:02But I think just so you know, you are literally the only person doing a home upgrade right now. It's going to look great. It's also just another window into the confusing world that is the U.S. consumer right now. Because if you look at some of the other companies, like let's just look at Walmart, they had an absolute blowout quarter, which means a lot of people are bargain hunting. People are still spending on stuff like electronics, stuff outside the home. So there is still consumer spending happening. It's just not happening as much within the home unless you are Neil's mom. Now let's hit a rundown of some of the headlines you will probably see circling around today.

6:40To start off, an update on the super yacht that sank off the coast of Sicily on Monday. The Italian Coast Guard said that the bodies of six missing people, including Mike Lynch, the British tech billionaire who sold his company to HP in 2011 for$11 billion, his daughter Hannah, and Jonathan Blumer, the chairman of Morgan Stanley International, are among those likely trapped in the hole. According to sources the Wall Street Journal spoke to, they are presumed dead. Meteorologists and eyewitnesses believe a water spout, which is a tornado at sea, dismasted the vessel and likely caused it to sink.

7:14Rescuers are still searching the boat, trying to get through the wreckage, blocking them from exploring the hole to find the missing members, but it's been over 36 hours at this point, so it's not looking good. Neil, until they can raise the yacht, it'll be hard to find the precise reason it sank. Right now, all we know is a violent storm hit it Monday morning, and it's laying in water around 170 feet deep. Yeah, that seems like a very, very complicated rescue operation, retrieval operation down 170 feet at the bottom of the ocean. They interviewed a lot of meteorologists and sailors who have been going around the Mediterranean, and they said this freak storm, it may have been a freak, but it really was no accident this year because the temperature of the Mediterranean feels more like the Caribbean these days.

7:56It's three degrees hotter than normal around Sicily, And so sailors are like, yeah, I mean, we've been seeing massive storms because hot temperatures fuel storms and we've been seeing hot storms all across this ocean. So that has certainly contributed to the spike in like weird freak storms. But yes, obviously a tragedy because these they were ostensibly on this boat celebrating Lynch's acquittal in one of the biggest fraud trials in decades earlier this year. And then they got caught up in this in this freak storm. Right. People nearby said that they'd never seen a yacht of that size go down as quickly that it did.

8:34It was 184 feet long. Another detail that could have contributed is that this yacht had one of the tallest aluminum mass in the world. And if there was this freak storm with lightning involved, that could have contributed as well. So definitely one of those things. They're working to raise it right now so they'll have more details about it. But you're right. It's definitely a tragedy. Tragedy. Disney is not immune to peer pressure. The company is backing off its attempt to dismiss a wrongful death lawsuit because the victim's family had signed up for its streaming service, Disney+. Remember this uproar from last week?

9:07A man sued Disney after his wife suffered a fatal allergic reaction following a meal at one of its properties. But Disney said he couldn't sue in part because when he signed up for Disney Plus five years ago, he accepted terms that requires users to settle any lawsuits against the company out of court. The man's lawyers called this argument absurd. All 150 million Disney Plus subscribers waive the rights to sue the company and its subsidiaries in perpetuity because they wanted to watch Coco. Are you seriously going to play that game? And when the public heard about Disney's legal conniving, they agreed with the victim's lawyers that this was indeed absurd, and Disney is now allowing the suit to proceed.

9:45Yeah, the craziest part of this saga is that he thought he only signed up for a month subscription. He was just going to dabble in Disney Plus, and then suddenly that covers it in perpetuity. It is just a truly insane thing to do if you are Disney. I will say, though, that you are probably entered into more of these court arbitration clauses than you think. They're kind of all around us. cell phone contracts, brokerage agreements. A lot of these companies are in the fine print saying that we reserve the right to settle outside of court. So maybe read the fine print next time you're signing up for anything because they are more common than you would think.

10:20I do think a lot of people who read this story or heard this story were thinking, well, I have no idea what I'm consenting to when I just click. Yes, agree and continue because I just want to watch something on this streaming service. This is one of the biggest examples of the Streisand effect I can remember where Disney just wanted to settle this in third-party arbitration out of court and instead it blew up in their face became this massive global story and now it's backing off and saying uh yeah we'll let this proceed in court we like completely understand uh what the victim's family wants and uh we just want this you to all stop talking about it our final headline of the day is that alex cooper the host of call her daddy just got an absolute bag from sirius xm cooper was part of the initial podcast boom wave at spotify who reportedly paid $60 million to bring her pod exclusively into its ecosystem.

11:08And it worked as she was the second biggest podcast on the platform in 2023 behind only Morning Brew Daily. Just kidding. The Joe Rogan experience. But SiriusXM just backed up the money trucks to the tune of$125 million for three years to lure the media star its way. Neil, maybe podcasting isn't dead. It's not dead. I mean, And what is this,$125 million? And this is just the sort of the end of a massive spending spree by SiriusXM. They brought SmartList, which is hosted by Will Arnett, Jason Bateman, and Sean Hayes, over from Amazon in a three-year deal valued at$100 million. They brought Team Coco, which is Conan O 'Brien's podcast company, over for$150 million.

11:54They bought Stitcher, which is a podcast company. So whatever Spotify was doing a couple years ago in trying to buy up the podcast space, it seems like SiriusXM is doing something similar in order to gain more subscribers. And their stock shot up 7 % yesterday. Investors really like this move. But we can talk about it. It's very different than the model Spotify tried a few years ago that didn't seem to work. Right. Spotify was bringing them exclusively onto their platform. They paid a ton of money for Joe Rogan. They paid a ton of money to Alex Cooper as well. But SiriusXM holds the advertising rights to Call Her Daddy and her actually entire Unwell network, which includes some other podcasts.

12:34But the podcast will still be available on Spotify where the majority of listeners are. So they are taking a little bit of a different approach. It's an absolutely great deal for Alex Cooper. She loses none of the exclusivity. She can distribute wherever she wants. But she now has$125 million coming her way. So she came out on top. It feels, investors did react positively to this, but to me, it seems like they are running back the Spotify playlist, or not Spotify playlist, playbook in a way with a little bit of a different, with less exclusivity. So I don't know what they're seeing. They're saying that they're doubling down on its commitment to podcasting, even as Spotify is pulling back.

13:15So it's just interesting to see the different approaches from different players in this industry. Up next, gold is entering its golden era. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS. After an initial dosing phase, about 4 in 10 people taking EBCLIS achieved itch relief and clear or almost clear skin at 16 weeks. And most of those people maintain skin that's still more clear at one year with monthly dosing. EbGliss, Librikizumab, LBKZ, a 250 milligram per two milliliter injection is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema.

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14:26Tuesday on NBC, Jimmy Fallon and Bozema St. John host a highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon. Series premiere Tuesday on NBC.

14:58It's 1849 all over again. A gold rush is heating up in a big way. And on Monday, the yellow medal hit a historic milestone. Gold bars are now worth more than$1 million a piece. The threshold was hit when benchmark gold prices in London topped$2 ,500 a troy ounce for the first time. Since the standard weight of gold bars held by the Bank of England and the Fed are about 400 ounces, you don't need to be a Nobel Prize winner to work out that 2 ,500 times 400 is 1 million. Gold is considered, well, the gold standard when it comes to safe haven investments, places you can park your money when the world outside gets hairy.

15:37Wars in the Middle East and Ukraine have driven investors to seek shelter in gold, and so has the anticipation for the Fed's rate cuts. When the Fed cuts rates, yields on bonds go down, and gold looks more shiny than ever. Toby, seems like a great investment. I just don't know how I'm going to lug a 25-pound gold brick to my apartment. I don't think we have to worry about that quite yet, Neil, unless you also sign a bag deal with SiriusXM. But yeah, gold, multiple things are really driving this rally. Gold is also used in, it doesn't have a ton of use cases, but one of its big use cases is that it's used in semiconductors, which are obviously all the rage right now with the AI revolution.

16:16But then you also have these nations that are just looking at the geopolitical landscape right now and saying, we're going to increase our strategic gold holdings. China, India, other countries have been doing that because they just see the tension arising across the globe. Interestingly enough, gold is not attracting that much retail investor interest. Money in gold ETFs, which is probably the easiest way to get exposure to it if you are a retail investor, it actually peaked in 2020 and has been declining ever since. So it is interesting that this gold mania hasn't captured the normal everyday trader as much as maybe institutional investors.

16:54So gold is not a meme stock. It's not a meme stock yet. A million dollars a bar, that's an expensive meme stock. Oh, yeah. Speaking of meme stocks, though, Bitcoin is considered the digital gold, right? Or that's what its proponents think it is. When times get hairy, you go to Bitcoin because it'll be there and you think it'll just people. It's a hedge against what's going on in equities or bonds or other investments. But in terms of when you look at performance between gold and Bitcoin, it is gold is kind of trounced it. So actual gold is is working better than digital gold. Bitcoin prices are down about 10 % in the past month, while gold prices are up 6 % since mid-July, 20 % since March, and up two-thirds since 2019.

17:35So as the world has taken a little bit of a turn here, gold has benefited. And you're right, in large part, it is due to central banks buying up a lot of gold at the expense of the U.S. dollar. Now, we have this theory out there that when the Fed hikes interest rates, gold goes down, and the opposite. it. So when the Fed is about to cut, gold is rising in price. But researchers have looked at this trend over the last decades and they're like, honestly, I don't think this is the case, or at least there are way more factors involved than just the Fed cutting interest rates. I mean, in the 1970s, the Fed jacked up interest rates because inflation was way higher than it is now.

18:13And at the same time, gold was on a major bull run. So the relationship is not so clear, even though when you read articles about gold rising in price, they're like, oh, it's because the Fed cutting interest rates, there are a little other factors at play. And remember, if you do want to get your hands on physical gold, probably your best bet is Costco. They started selling those one ounce 24 karat gold bars. They sold$100 million worth in the first quarter that they offered them. So if you really want physical gold, Costco is your best bet. Think back to when you were 15 turning 16. That might mean an extra stubborn pimple or two popping up.

18:45But for most Americans, it means the first year you can get your driver's license. But something odd is happening with the youth today. No one is really that excited to drive. Gen. G's share of new and used car sales dropped 0.1 % between 2022 and so far in 2024, according to J.D. Power data. Now, it might not seem like much, but a VP of data and analytics at J.D. Power told the Wall Street Journal that it's extraordinarily rare demographically for this to be going backwards. A lot of teenagers' reticence is tied to finances. Cars are expensive. Average new car prices are up 32 % since 2019 to come in at$44 ,600 as of July, not to mention auto insurance, but they need to get around somehow.

19:31So they are either rerouting that cash to pay for ride shares or just having their parents drive them instead. Neil, what do you make of the youth not driving anymore? This stat is truly crazy. 87 % of 19 year olds had a driver's license in 1983, 87%. In 2022, it was 69%. So almost a 20 percentage point decrease in 19-year-olds having their license. It's very interesting. I mean, when I first saw this headline, I was like, okay, they're all just taking Ubers and Lyfts. Like that is one of the big changes that we've experienced in the past decade or so. But researchers looking into the trend say, no, it's not really that.

20:11It is tied to obviously cost. Prices are up over 30%, not just the price of a vehicle. I think people are learning that once you buy the car, that's just the beginning of the money pit that you are sinking all of your cash into. You have insurance, which insurance is the highest and increases the fastest among this age group because they're more prone to get into accidents. And there's maintenance and upkeep. And if you live in a city, there's parking. So there are all these costs associated with driving a vehicle. There's also a lot of safety danger. I think people are becoming more aware of how dangerous driving a car is.

20:44And, you know, these researchers also say that parents are more willing to drive their kids around, which I've been thinking about that for a little bit. I don't quite know how to explain it, but that is certainly a thing. And the Uber Lyft part is just not a big deal. These parents are a little baffled, though, because they remember like lining up outside the DMV to get their license as soon as they turn 16, because it was this really big marker of freedom. You finally can control the way you get around. But the teens these days the Wall Street Journal talked to are so unbothered by it all, it seems like.

21:16I mean, they talked to this one 19-year-old who said that one is happy that his family is happy he's not driving because of the auto insurance. And then he also said he once walked 10 miles to a Thanksgiving celebration. He also says that if he wants to hang out with his friends, he just hops on Discord to talk to them. So there's definitely something to be said about the shrinking of social circles right now with technology. but just a little bit confusing because I remember being pretty excited for my driver's license. But we've just been seeing this decline steadily for years. I mean, the Wall Street Journal has been writing about this trend since 2019.

21:49So we've clearly seen this downward trend in kids wanting their license. And it could be a good thing because, you know, America is historically extremely car centric. And some of them are saying, I'm moving to cities. They have public transportation. So maybe it is a larger cultural shift or maybe at some point kids will want to drive again. I'll tell you that kids born now, I don't think they're going to even I think this rate is going to go to like next to zero or not next to zero, but like maybe 20, 30 percent because self-driving cars are coming. I mean, Waymo reported this week that it's now providing more than 100 ,000 paid robo taxi rides per week in the U.S.

22:25in four cities, San Francisco, Phoenix, Austin, Los Angeles. And that is double what it was in May. So the robo taxis are coming. And so I think that'll be another factor in saying people saying, I don't really need a car of my own. Hold on to your driver's license. It might be a relic that you show your kids like we used to have to show these in order to drive around. This is going to be the worst take of all time. And we listen to 10 years and like, you know, everyone has a car again when prices come down a little bit. Finally, Pablo Sanchez and his hilariously small strike zone are coming back.

22:55Family entertainment company Playground Productions confirmed that Backyard Sports video games will be relaunched in the coming months, featuring your favorite cartoon Little Leaguers like Pablo, Stephanie Morgan, Pete Wheeler, and the rest of the squad. If you're a millennial like me, you might have just gotten full-body goosebumps. First released in 1997, Backyard Baseball and offshoots like Backyard Football were staples of the millennial childhood. And even now, I can remember leaving dinner early to play those games on a really old desktop in the basement. Playground Productions said it took great care to preserve the look and feel of the original games while updating them with features and gameplay that modern kids expect.

23:31The goal here, of course, is to hook a new generation on the games just like we old folks were. Toby, is this a home run? It's relatively a home run. I feel bad speaking on this, though, because I never played backyard baseball. I feel like I missed a big part of my childhood, but it is an incredibly smart thing to do. We know that nostalgia sells. I mean, it's a bedrock of our entire entertainment industry right now. You look at Hollywood, you look at TV shows, they're rebooting like the 90s show. Fuller House have come back in certain regards. So one person I do feel badly, though, for this is Jason Kelsey on his podcast, New Heights.

24:08He has been very vocal about trying to do exactly this, which is bring backyard baseball back. Someone beat him to the punch. He's not involved in this particular reboot. But I'm sure a lot of people, including you, are very happy that they're getting another crack at their childhood. Yeah, I don't feel bad for Jason Kelsey. I don't feel bad for Jason Kelsey. But I think the fact that he spoke about backyard sports, backyard baseball on his podcast with his brother in February showed how this has stayed in the public consciousness for decades. And I think that speaks to the power of this IP. And we'll see what this company can do with this IP.