Global Trade This Week – Episode 126
-
Keenan Brugh 0:00
You're watching global trade this week with Pete mento and Doug Draper.
Doug Draper 0:10
Welcome to a another edition of global trade this week. This is the post Turkey hangover edition that we'd like to like to jump into. So, before we dive into our topics, obviously I'm Doug Draper, one of the CO hosts and my partner in crime on the other side of the great states of the United States of America is Pete mento. Pete, what's going on my friend? How are you doing?
Pete Mento 0:39
Groovy, Doug. Yeah, post Thanksgiving hangover is a great way to put it. It is Cyber Monday. My phone has been incredibly quiet, which can only be good news. It's been haven't had a lot of people whining and complaining about anything. So it's been a good good Cyber Monday, my friend. Thanksgiving was good. My daughter and I went to Virginia. Had a wonderful time. I went to two different Thanksgiving dinners. And one of the key components of dinner this year was alcohol. So that made everything much better.
Doug Draper 1:11
Yes, yeah. Yeah, we were swapping some, some memes over the break. And they were both enlightening and factual and funny. So how
Pete Mento 1:24
to start an argument. Safe, safe conversations that you can have they were they were pretty darn good duck. Yeah,
Doug Draper 1:30
yeah. Pretty, probably pretty boring nonetheless. So well, hey, I'm on a time limit, which means our audience only gets a one two punch of this week show. So we'll just get this thing started. Pete and I open so you, you start off.
Pete Mento 1:48
So my first topic this week is both unsettling and fascinating all at once there is a new respiratory issue that is going around China. So let's let's just calm everyone down right off the bat, according to the Chinese health ministry. Ah, according to Chinese health ministry, this is not a novel virus. But it is a collection of both VEC bacterias. And I think they said other other diseases. It's like a super cold, but it's affecting children. So the hospitals are overrun in Beijing, and a couple of other cities can show with children, not old fat people, this time duck, but children who are suffering from what's first starts as a fever, and then becomes a respiratory issue. So whereas with COVID, we got the warning that it was a cough first. So this is fascinating. Because in typical Chinese fashion, we're being told everything's cool. Don't freak out everyone. It's all good, everything's fine. And then at the same time, everyone else around the world is saying we don't believe you. Can we get some insight into this? Now, the World Health Organization, put out a statement today that, from what I understand is backing up the claims of the Chinese health ministers. But this is, I mean, spreading like crazy through China. And people are back to wearing masks, people are back to, you know, not wanting to go to work. It's, it's interesting to me that because as we've said on the show over and over and over again, there has never been a pandemic that was not immediately followed by another pandemic, within 10 years. And more to the point, I keep saying, what are we going to do if another one were to happen? Are we going to freak out? Are we going to shut down the economy? So I'm waiting, Doug, no, you and I, the whole relationship with this show started when we call the pandemic wrecking the global economy. So I'm not ready to do that yet. But I am telling you that there will be If this ends up being exported around the world, there's going to be some people freaking out about how we're supposed to respond to it, and that will affect trade.
Doug Draper 4:01
Yeah, I think I love the term exporting. In that sense, because you're right, I've from what I've read a little bit about this over the weekend is everybody's kind of waiting to see what I mean, everybody I'm talking about other nation, transportation and logistics providers and things of that nation are a thing of that notion. And if this does get exported, and all of a sudden this conversation starts happening in Brazil, or anywhere in in the European Union, then things could rapidly change. And it could have some some impact, right? When I initially heard about this one is kind of equated to breaking news and the government shutdown in the sense that if you ever watch the nightly news and my kids make fun of me because I like to watch the nightly news on regular TV, no cable. Everything is breaking news, literally if you watch the free Just 15 minutes, every headline is breaking this. So it becomes not breaking news. And the other thing that we spoke about a couple of weeks ago was government shutdown, right is that it's been talked about so much that people don't pay any attention to it. So if it gets exported, like you said, and it pops up in mass and other parts of the world, that's when we're going to see immediate reaction. But for now, I think it's a holding pattern, wait and see.
Pete Mento 5:27
But let's comment about it. Doug is much like with COVID, you have a lot of people who'll be traveling home from China for the holidays, followed by Chinese New Year, with everyone leaving and going back home. So you want to talk about an opportunity to spread the hell out of something, the timing could not be worse. So yeah, I will watch this one closely.
Doug Draper 5:50
Yeah, the timing thing is, is key. I have not thought about that. So my first topic, Pete is I just started off, which, with three words, well, well, well, Black Friday, crushed it beat Black Friday, crushed it. Some statistics I saw, and read about $9.8 billion of transactions on Friday, which is about a seven and a half percent increase from 2022. They're saying that Cyber Monday, which is today is expected to be in the $12 billion realm. So before I jump into that, I wanted to give a couple of cool statistics on Black Friday. mobile purchases, were more than 50% of all the purchases out there. So people are shopping on their phone more and more, it's more than old guys like you and me, breaking out the laptop and waiting for things to to start up. So that was a milestone. The other piece of it that has been a trend, and I've used it personally, is buy now pay later, that is becoming more of a trend. And the other thing that was interesting is that store branded credit cards, nobody cares about those anymore. And those are going down even when you say hey, an extra 10% to sign up for the Nordstroms credit card or whatever. Nobody's paying attention to that anymore, to the level that it was. So this weekend, Black Friday, Cyber Monday. And the thing about this Peter is number one, it's going to push out the glut of inventory, right electronics are up to 30% off and there's everything else is discounted, right discount, discount, discount, get it out of my warehouse, get it out of my warehouse, get it out of my warehouse. So the calling of all of this inventory is happening as we speak. And I think that it's enough of a momentum swing, that it's going to have macro economic effects. In q1, we spoke a little bit about that last week or the week prior about how this surge and the prediction of having a good Black Friday weekend and Cyber Monday, in and of itself is not going to push us out of the doldrums that we're in. But it will have an impact. And I think it's going to have an absolute impact based on initial numbers from this weekend.
Pete Mento 8:18
I'm gonna ask again, are those numbers adjusted for inflation?
Doug Draper 8:22
It was not stated?
Pete Mento 8:25
Well, well, well. Well, well, well, I guess. But I do agree with you that it's only a good thing. Right to have all this inventory cleared out. I think that there's still a lot of consumer confidence right now. I don't think it's going to have a catapulting lasting macro effect on the US economy just it's not big enough. It's not big enough, as long as housing remains where it is, as long as you know, energy costs and now cars are going down. There's it's just a matter of time, my friend February 2024.
Doug Draper 9:01
Well, the fact that you asked the question, and I could not answer it with and it was not identified in the information I was reading, probably not factored in inflation. So because that because just on my whole point, that is a big number. It draws attention. And if you tap it down, tamper it down with oh, well, you got to factor in inflation, which is right around that 7% Then it's a net net. So anyway, you're probably right, Pete. We'll see
Pete Mento 9:33
ya. And that brings us to halftime here at global trade this week. Brought to you by our good friends at CAP logistics. Capital has six is been kind enough now for years to financially support and logistically support this podcast this video television show, and we do thank them so much for that. To learn more about them and their services, please do visit them online at www dot cap logistics.com. And as I'm always happy TSA doesn't I don't work for CAP logistics either one of us, but they still give us this platform, they still give us an opportunity. And we can't thank them enough for their support. So Doug,
Doug Draper 10:09
who's going first? I'll go first. So did you even know so this is about cruises, right. And I'll give you my personal take on cruise and I want to get yours as well. But apparently, there was a company that was out there selling a three year cruise where you could get on a boat sail around the world for three years. And I hyped it that it was about the equivalent of normal living expenses, but you could be on this boat and see the world and yada yada, yada. Well, that was supposed to launch in first part of November, I think November 1, then it got bumped to like the eighth, and it got bumped to the 20th. And now it's been canceled. The Cruise has been canceled. And when you peel back the onion Pete, they didn't even really have a vessel confirmed. Right. They bought they bought like, this reminds me of the of the fire festival festival. Yeah, yes. Like they kind of had a boat there was in drydock, it was getting repaired. It was a used, you know, vessel that they acquired and they were working on it didn't quite happen, the investors that they needed to finish it kind of backed out. And then the CEO of the company said, Hey, we're too small of an organization to really float the total charges for this thing. So we're canceling it, and she resigned. So there's these people that have dropped a lot of money that have positioned themselves to be in Istanbul, which is where it was initially supposed to, to sail from. So now they're kind of like, what do I do? I potentially sold my house or took a break because I wanted to spend three years at sea. And the company said, we'll pay you back in monthly installments. So if you know who knows, who knows where that's gonna go. But this excuse me, Pete validates the fact that I hate cruises, and I just cannot fathom anybody that would want to go on a cruise, and have no control of your situation while you're on the water. And speaking of pandemics, and sicknesses and how it spreads. Oh my god, I can't even fathom somebody want to spend three years on a boat. And then this whole thing just makes me laugh. So what's your take on on cruises? Pete? Have you been on one? And would you ever go on one?
Pete Mento 12:33
I've never been on a cruise. And the reason for that is largely because I think I would feel uncomfortable. Think I feel uncomfortable being on a ship and not working. Like I'm supposed to be going you know, I mean, I lived a significant period of my life working on ships. So the idea of being on a ship and not working. Second of all, I do not like manufactured fun. I hate it as a matter of fact, you know, the idea of I don't have enough of my own creativity or, or a personality to be able to go out and find my own fun. I have to go to some captured environment or people are going to tell me Julie, the cruise director is going to tell me how to have a good time. And then lastly, as I've mentioned many times Doug for someone in sales I really don't like people. So the idea of of being endlessly surrounded by a group of people that I don't want to be around and having no escape would drive me absolutely mad ducks. No, I don't. I don't see myself. Yeah,
Doug Draper 13:34
yeah, the lack of control and no way to escape. But if they had Captain Stubing running the show, maybe maybe, maybe I'd give it a
Pete Mento 13:43
go for doc. Yeah, yeah. Love your
Doug Draper 13:47
your halftime you've mentioned it many many times about your enjoyment of the film industry saw it Yeah, rip it up
Pete Mento 13:56
as usual. had some free time, nothing to do on a down day. So like the loser I am dug. I went to a movie by myself, which is kind of how I keep myself from drinking on the road all week. And I saw Napoleon which is just for some quick bullet points. It's the most expensive movie ever made. And it is it is considered to be like the the most sweeping biopic ever made. But even more so than then Oppenheimer. I, I loved it. I loved it. It was not as good as Oppenheimer. We all know how much Oppenheimer is, in my opinion, the greatest film maybe ever maybe better than godfather. I mean, it was it was it was incredible from start to finish. However, I am I'm in Napoleon. I'm a fanboy. I'm gonna try to get everyone to see it. And here's the reason for that. We many men like we're talking about how they all think about the Roman Empire. Right. We've We've grown up hearing about the viciousness of battle and this movie does a particularly They give justice to the idea of what it must have been like, pardon me in the 19th century to be on the march for France and how horrible it must have been. But also gets into the technical brilliance of this man. But it shows him as a flawed human being. It really does an excellent job of not turning him into the God he turned himself into. And it goes deep into the relationship that he had with Josephine. I think it's a brilliant film, and I can't recommend it enough. It is bloody, don't bring your kids.
Doug Draper 15:31
Oh, how long is it? How long is the movie? Maybe
Pete Mento 15:35
two hours? It's not it's not over the top. And it's really Scott. So it's like Gladiator. I mean, stuffs getting blown up falling apart. It is it is grisly. But it's what I imagined. I don't know. But what I imagined war back then must have been like,
Doug Draper 15:51
Yeah, interesting. I will maybe have to go check one out the fact that it's not three and a half hours long. I might be interested in seeing it. But that seems to be the trend. So thank you for that.
Pete Mento 16:03
Appreciate just destroying the duck, you'll be fine. Yeah. Now my second topic is pretty interesting. I got a text from a friend of mine today, with a you know, a stock tip associated with it. And I'm watching all this. And I had not known that Amazon was going to start selling cars. I don't know if you knew that, Doug, nope. So the idea is to kind of disrupt the market in what Carvana and Carmax had tried to do, they have a relationship now with just Hyundai and there's a probably a very logical reason for that. If they were to sell all the cars, they would have a monopoly. And that would be an issue. But if you just pick one car company, and you get people used to the idea of buying a car without a negotiation, for the price, the price is the price. And then you either go pick it up at your local dealership, but they have it delivered to you by your local dealership. Easy peasy, right? And they'll be doing it with Hyundai, I think it's only a matter of time before a company with that kind of a reach is able to go deeper. Now why this is so freakish is they're going to take trade ins. And they're going to be able to do use car sales for all these trade ins across the country from one centralized place. I think about this in such a broad sense, Doug, of what it means for the auto industry and how we do have a rather backwards way of managing it right now. But I think more importantly, what it's going to mean for us cars, and then keep going down the line. At what point are trucks sale is going to be done this way us Truck Sales gonna be done this way. Is this an opportunity for them to bring pickup trucks and things into their fleet through these 30 speculating there might be a part of this right? Is having this come in for certain types, you've suddenly got a whole bunch of cars you bought at a discount that you can put into delivery service. It's a really interesting, bizarre kind of out of left field thing that we gotten used to expecting from Amazon. But more than anything, Hyundai has agreed to a 10 year agreement to only use Amazon Web Services. And no one else. So imagine if they could do that with companies like Ford, or Daimler Chrysler, the list goes on and on. This is going to be a fascinating story. And we'll be watching it pretty closely, Doug. Yeah.
Doug Draper 18:14
So the things that popped in my mind on that, number one, just now when you said truck sales. So with Amazon being vertically integrated with being able to source your product, you and I have this great widget, they'll source it, they'll get it over here for us the warehouses, they'll ship it, they'll deal with the returns, what if they say, Hey, Pete, we will give you one hell of a discount on a truck, but you have to use that for X percentage to make deliveries for our company. Yeah, you know, it could be to assist with the barrier to entry. Like, I want to have a job with Amazon. My Hyundai cannot fit all the packages. But if I had a cargo van or whatever, I could use the same type of service. So that that caught me of interest. The other piece, I think the bigger story is what this impact is going to have and continue to have on the dealership network, right? Carvana Carmax, they're starting to, you know, create this whole separate disrupter kind of like Uber did with with the taxi services. But I think that the bigger picture is that nobody cares about a dealership anymore. Nobody buys them. Well, I shouldn't say nobody, but they are going to be hit the hardest. Because what's the point of going in dealership and has this preconceived notions of pushy salesman and I gotta go talk to my manager. Let me come back. And I'll tell you a funny story about my daughter and how she bought her car at a later date. But I think the auto industry and the dealer distribution network, I think is going to take another blow. There's a left cross coming across that industry that I don't think that we've seen the fallout of quite yet
Pete Mento 19:55
and move that like another step out from what you were just talking about. Doug what If they were to say, we'll give you a lower term for your financing. If you deliver for us, we'll give you a lower term to your financing. If you make moves for us, you know that people are going to pick them up mean, if it means hundreds of dollars less a month to do a couple hours of deliveries a month, I think people might consider that. Yeah,
Doug Draper 20:18
absolutely. Interesting. We'll see how that plays out. All right, man, I'm gonna bring it home for a topic that, that I love to poke fun at. This is probably drone ish for me. And it's the wonderful delivery system by our federal government called the United States Postal Service. And it just, it baffles me of the opportunities that is in front of this organization in this company, that they continue time and again, to miss. They miss the opportunities, right, I get you miss 100% of the shots you never take but Good lord, the post office. So here, here's the gist. Shocker. They're taking an increase just because they're following suit with FedEx and UPS. It's around five and a half, I think 5.4 to 5.9%. Here's a big thing. Pete, they are raising the stamp from 66 cents to 68 Step cents. I take just raise it to like 75 cents, right? I mean, how many stamps Do you buy? Nobody's gonna balk. At 75 cents or 80 cents? I don't know. I think it's okay, there's about two cents, right? It just shows that they're under under delivering or just don't understand the opportunity, right. They also lost $6 billion in the last fiscal year that ended I think, in September. And the joy, who's the Postmaster General, is like we're still working on this rebranding. And we're still, excuse me, not rebranding but reengineering the company. And we're early on. If there was any company in the world that operated like the USPS, people would be fired, there would be a complete overhaul of the organization, in the simple way that the post office is set up and the regulatory BS that goes along with it. It is I mean, they could crush it, they could crush it. Nobody is not ordering less things online. Right. And they just don't seem to understand the opportunity that's in front of them. And it's disappointing. is disappointing.
Pete Mento 22:24
Doug, I don't know why you hate the post office so much. It's unsettling. Yeah, the amount of work that they do, and the and the consistency with which they do it is impressive. It is a public utility. Let's just call it what it is. It's a public utility. And public utilities are notoriously inefficient. Now, where they do make a lot of money is outside of that public utility piece, which is the International ecommerce and the express services. And they're, they're not as they're not as crushing anything as how you put it as the publicly traded companies, because the pressure is just not the same. And it's not their core competency. You really hate the post office. And I think it's I think it's a short sighted take, honestly, to the short side of take to not give them credit where credit's due. They do an amazing job for very little money. And I think you get more credit than you do. Yeah.
Doug Draper 23:20
I don't hate them. I'm disappointed in them. They have all the opportunity in front of them. It's like your kid, right? You have so much opportunity and they just they fail. That's the bottom line. I don't hate them. I'm disappointed them in them. Disappointed in the post office.
Pete Mento 23:37
The fact that you spend this much time being upset about a public utility may just shocked me. Yeah. Well, of course on that sour note from my partner, Doug Draper. That's going to do it this week for global trade this week, if it's happening, global trade. We'll talk about it next week on another great edition. Thanks to Kenan back in the booth and all the folks at CAP logistics for their never ending support of the show. Thank you for listening and for watching. Tell your friends subscribe, and we'll see you again next week. Take it easy.
Doug Draper 24:06
Excellent. All right.
Transcribed by https://otter.ai