Big names in tech including Amazon (AMZN) and Microsoft (MSFT) will report their latest quarterly earnings this week. Investors will be watching the results closely following some mixed results from Tesla (TSLA) and Alphabet (GOOG,GOOGL)
Allspring Global Investments Senior Portfolio Manager Bryant VanCronkhite joined the show to give insight into the upcoming tech earnings from Big Tech names and what investors should keep in mind moving forward.
The option to buy now, pay later has grown popular in recent years as consumers seek alternatives to credit card debt. Affirm CFO Michael Linford joined the show and explained that consumers are still feeling uneasy about their financial choices.
The healthcare industry is massive and can be confusing for some Americans to navigate as they are hit with medical bills from various entities. Yahoo Finance health reporter Anjalee Khemlani joins Wealth! to explain who the players are, what they do, and why your medical bills are so confusing.
The outstanding federal student loan balance has reached a staggering $1.62 trillion, with over 91% of this sum comprising student loan debt, according to the Education Data Initiative. However, there may be tax-advantaged strategies for individuals to finance their college education. To shed light on these options Jere Doyle, BNY wealth tax and estate planning strategist, joined the show.
The 2024 Paris Olympics are well underway. Data from the Paris Organizing Committee reveal $9.7 billion has been spent on the games, but does that truly represent the total cost?
Smith College Professor of Economics Andrew Zimbalist joins Wealth! to give insight into the money spent to host the Olympics and why many cities are truly prepared for the impact it has on them.
I’m Brad Smith and this is Yahoo Finance’s guide to building your financial footprint.
Our community of experts will give you the resources, the tools, the tips and the tricks that you need to grow your money.
Hey, on today’s show, it’s all about the tech trade with earnings from big name companies like Meta Microsoft and Apple.
A portfolio manager is going to give you the tips that you need to navigate the market.
And fast food chains are still seeing a cautious consumer mcdonald’s Golden Arches, their earnings reveal how much value meals are going to pay off.
I’ll talk to a firm CFO about the popularity of the future and how it’s impacting consumers all that much more coming up on today’s show, but it’s a big week for monetary policy as the Fed holds its next meeting on Wednesday for more on what we could hear on future rate cuts is Yahoo Finances Josh S Lipton.
Hey, Josh Brad, it is a busy week for investors.
Let’s start with the Fed here which is going to announce its latest monetary policy decision on Wednesday markets, we know largely expect our central bank to hold rates steady at its July meeting.
That says the inflation picture does seem to be improving in June, the core P CE index which is closely monitored by the FED rose 2.6% over the prior year was its lowest annual increase in more than three years.
Of course, the FED is also watching our labor market as well.
So on Friday morning, we’re gonna get the July Jobs report, which is expected to show that 100 and 75,000 non farm payroll jobs were added to the US economy with unemployment holding steady at 4.1% according to data from Bloomberg.
Remember back in June, the US economy added 206,000 jobs.
Bottom line, the labor market is showing signs of moderating last month.
The unemployment rate hit its highest level since November 2021.
Still some economists we have spoken to here at Yahoo Finance say they are not concerned for now with what they’re seeing in the data.
Here’s what Thomas Simons at Jeffries told us.
One of the things that gives me confidence is corporate profit margins have still been quite healthy.
They’ve come down a little bit, but they’ve also gone through recent periods where they’ve gone down and then gone back up.
There’s always sort of a, you know, culling of the herd or, you know, some sort of refresh that goes on, excuse me, with, with bigger businesses.
But uh there isn’t evidence to me just yet that there’s this big push that’s gonna be looking for cost cutting that way added up.
And what does our cooling labor market and the inflation picture mean?
For fed, Chief Jay Powell and our policy makers, KPMG S chief economist Diane Swonk tells her clients that the message is clear in her opinion, the FED is not ready to pull the trigger now in July, but is willing to think about rate cuts a few more months of favorable inflation data make a move September easier to justify.
She argues indeed, traders are pricing in a nearly 90% chance that the FED will cut interest rates in September according to the CME group’s Fed Watch tool Brad be so perhaps we’ll just be paying close attention to the press conference as always.
All right, Josh, thanks so much teeing up this week’s activity and what we’re set to hear from the FED.
It’s a big week for tech companies as Microsoft Meta Apple and Amazon all report their latest earnings here to help us talk through all things.
Tech.
We’ve got Bryant Van Cronkite who is the offspring Global Investment, senior portfolio manager?
So is there one of these tech names that could really kind of be the make or break for the broader earnings season good to be with you today, Brad.
Uh I think all of them are incredibly important.
There’s a tremendous amount of capital that has chased these big A I early winter trades.
And right now, investors are worried about two things.
They’re worried about the slowing of the growth rate.
So the second derivative is slowing and they’re also worried about the return on investment.
Is there going to be enough early return over the next 12 or three years to justify these major investments?
And investors are listening very carefully for that.
I don’t think any one name matters at all, but I think those two big themes that are across all those names.
And so the theme that we have seen at least in earning seasons past for some of these major tech companies has been, hey, what the heck are they gonna say about generative A I?
What are the investments look like?
What are the real technological, technological advancements that are gonna be put into their customers, whether that be business customers or just consumers who are at their house trying to figure out?
Ok, what can generative A I do for this recipe that I’m trying to make all these things considered?
That was the theme of earnings season past what, what is the theme going forward from here that investors should be paying attention to the theme now is how do we make money?
And in theory, they can help drive revenue, help improve margin profiles by reducing costs, but we’re not seeing it show up yet.
It’s time to show me the money when it comes to these A I trades.
And my fear as we go up cap is that it’s not there.
Now down cap, we’re going to start seeing more and more companies being going to talk about that.
They’re going to start putting real world examples to work here.
And I think you might see that A I money move down cap.
But the reality is no one to be showing you a very few companies will show you right now that we’re actually making money.
We’re saving costs in a material way at this point in this A I life cycle.
All right, we love a good Jerry Maguire reference to begin the week.
So thank you for that, Brian.
You know, as we’re thinking further out to some of the broader plays outside of tech that investors perhaps should be keeping close tabs on as well, if there is a rotation is there, if there is some profit taking that really comes into light right now, where else could that either be put back to work?
Or ultimately, investors start to kick the tires on other trades.
Well, I’ve been calling for this value rotation going back a couple of weeks now and it’s starting to play out, but there could be more legs to this and it makes a lot of sense.
With a lot of money being concentrated in a narrow market.
We only get there for one of two reasons.
We either get there because of greed or exuberance, which we have today are on the A I trade where you get there out of fear.
When you’re worried about the overall economy, maybe the fed being late to react, pushing us into a recession.
You want to get more and more capital around a fewer and fewer set of companies when you have the most visibility.
So both fear and greed have pushed capital into a narrow market, but those will both get resolved eventually.
And I think that the cool inflation prints is giving the market the belief the fed can begin to act, giving them the chance to jump through that ever closing window to avoid a recession.
And as that happens, the natural rotation is out of the concentrate names into the value trade into the broader market.
That’s what we’re seeing now that I think will continue.
But we need to be aware of what we’re buying.
You cannot just go out there and buy the lowest quality companies in small cap land, the non earners, you want to buy companies that are not dependent on a generous fed companies that are controlling their own destiny by deploying capital in a wise way.
Companies are acting offensively even if we’re going to go into a defensive world you know, even as the focus this or new season as it is every year, new season, but it seems like more outside this earning season, the focus really being about and around net profit margins right now, especially across some of these big tech names who have already talked about the big investments that they’re making for their businesses to really spur that next leg of growth.
You know, as you’re thinking about securitizing some of those margins, where do you expect these big tech companies to be able to lean or pull a lever in order to show investors that they have other areas where they can drum up profits in the face of a consumer that that seems battle weary right now, at least.
Yeah, I think anytime you worry about a slowing top line, if we’re going to go into a slowing overall economic environment, which is plausible and maybe probable at this point in time, companies to show other levers.
And so one of the best places to show is in your margins, but you’re gonna have deleveraging as top lines fall because your fixed costs aren’t changing materially.
And here’s where things get a little dicey for the overall market.
If companies need to start pulling the lever of reducing labor, unemployment will rise, and that’s gonna cause concern across the broader market.
So my view on this to answer your question is they’re going to start pulling back on labor, which is gonna push unemployment higher, which is, it suggests the fed has missed their window.
And ultimately, we’re going to push into recession.
That’s the biggest concern.
Now, on the other side of that, labor costs are beginning to come down.
So the inflation and labor is dropping some of the chemicals and the materials and the uh the metals are dropping.
So some of the cost of goods sold and industrial materials could be improving.
So there’s other ways to play that.
But the most direct way that companies have unfortunately is reducing head count, which is gonna put pretty much a significant concern into the broader markets and to be watching for any kind of uh concerted announcements around head count reduction uh over the course of this earning season, especially from those tech companies as we know you will be as well.
Brian Van Cronkite, who is the offspring global investments, senior portfolio manager.
Well mcdonald’s customers are tightening their belts yet again.
The fast food chain falling short of Wall Street’s estimates.
Now it aims to double down on its position as a value leader to get consumers back in the door.
Yahoo, finance senior reporter Brooke Dipalma has been all across the brand of the Golden Arches.
Brooke, what do we know, here mcdonald’s is really looking to change American’s perception that it’s unaffordable that it has increased prices too much.
It’s really looking to double down on that keyword value.
In fact, it was mentioned nearly 100 times on a call with the mcdonald’s investors this morning as the company really waited on that $5 meal deal that they introduced back at the end of Q two on June 25th and they indicated why exactly it’s doing well.
Here are three reasons why it’s resonating well, with low income consumers, it’s driving incremental sales growth with the average spend of over $10 for that $5 meal deal.
So consumers are adding more, perhaps getting multiple of those $5 meal deals.
And now we know that 93% of us restaurants have agreed to extend the deal until August and that’s ultimately going to bridge the gap until mcdonald’s introduces a new longer term national value menu platform and just think the dollar menu that ran for 10 years, the 12 $3 menu now is still in place and that’s been around for six years now.
And so mcdonald’s really saying that it’s time to come out with a new national value menu platform that perhaps has more offerings.
They’re saying that this one here is a bit too narrow for consumers.
They’re looking for more here and perhaps one that leans a little bit more into rewards.
It seems like rewards platforms have really garnered a lot of attention among investors for mcdonald’s though, if we kind of paint a broad stroke on expectations for the remainder the year, how do they expect to perform here?
Look, here’s the deal here here, mcdonald’s is competing with food at home, they’re competing with the price of groceries.
And so the CEO is saying that there is a continued gap between food at home and food away from home that consumers are being more discretionary still as they uh approach how they’re going to go to restaurants.
And they’re also seeking more deals when they do go to restaurants.
But us President Joe Ehlinger really painted a picture here.
Take a listen to what he said on the call at the end of the day, we expect customers will continue to feel the pinch of the economy and a higher cost of living for at least the next several quarters in this very competitive landscape.
So we believe it’s critical for us to consider these factors in order to grow market share and return to sustainable guest count, led growth for the brand and they’re competing with consumers, not just at who are going to the grocery store, but also across the fast food landscape.
We heard from so many companies like Burger King and KFC and Taco Bell, introducing these value meal deal bundles in order to gain not only that lower income cohort, but also all consumers right now who are really thinking twice about where they’re spending their money abroad.
All right, Brooke, Dipalma, I’ve been tracking all things shares.
Well, more than half of Americans believe the US is currently in a recession according to a Harris poll.
And that’s despite the fact that we’re actually not in a recession and to help alleviate the pressure of inflation and higher cost of living, more people are turning to buy.
Now pay later services.
76% of people believe that buy now pay later helps them improve their overall financial situation to discuss what the rise of buy.
Now pay later services signal about the state of the consumer, Michael Linford, who is the affirm CFO here on Yahoo Finance to discuss with us, Michael.
Great to connect with you once again and thanks for joining the show here with us.
I mean, there’s a lot of thought that buy now pay later helps you offset or at least relieve some pressure where there’s this existing thought of where inflation is impacting cost of living where higher rents or even home costs are impacting what you can actually go out and buy in discretionary spend.
So what is the real time calculus that you’re seeing households and individuals work through right now that pushes them towards buy?
Now, pay later.
See, you know, look so long as consumers feel like we’re in a recession.
It actually doesn’t matter if we’re in one, our survey that we recently conducted shows that consumers have a strong sense of unease and uncertainty about the economy right now and what a firm offers is a sense of certainty and control in these very uncertain times.
It’s not surprising but nearly all consumers cite having predictable expenses as a key part in maintaining their household budgets and that’s what a firm offers and what credit cards can’t.
And so we feel like we’re really well positioned to help consumers manage their financial outcomes in these very uncertain times, Michael.
I mean, I’m sure you’ve just heard our conversation around mcdonald’s and what their struggles are with the consumer.
I mean, I doubt people are doing buy now pay later on their mcdonald’s fries.
But I mean, it seems like we’re, we’re getting to this point where we’re trying to figure out exactly where the consumer is leveraging, buy.
Yeah, in our last quarter, we grew at a growth rate that was four times that of us e commerce consumers are still in the early stages of what we consider to be a secular shift away from credit cards away from revolving debt with uncertain outcomes and moving towards certain outcomes with we deliver with the firm.
Um And, and so I think we’re, we’re pretty early in in that cycle and so some of the macroeconomic trends aren’t necessarily showing up in our category data.
You know, all of our categories were growing last quarter except for sporting goods.
But what’s clear to us is that consumers are looking for more control and more certainty as they look around and see some uncertain times and, and it’s a feeling more than it is a fact.
I mean, you, you pointed out the top, the, the, the data indicates consumers think that we’re in a recession and you know, credit to Kyla Scanlan for coining the phrase vission.
That’s where we’re at.
There’s a vibe here and, and consumers are trying to, to be reactive to that.
Um And, and so predictability and control are really important to them right now.
You know, 11 choice uh merchants have is to use discounting as you discuss with, with some fast food chains.
Another approach is to give consumers certainty.
Um It’s not surprising that half of consumers say that a 0% financing offer from a, from a company like a firm will impact their decision to make a purchasing decision.
That’s because we give consumer certainty and, and when they look around the economy right now and they see lots of uncertainty everywhere and they see somebody providing that certainty that encourages them to, to continue to engage Michael while we have you.
And I think, you know, you and I talk about this time and time again here, but I think it’s more prevalent even more so given some of the data that we’re rattling off here.
And I’m thinking about the near term relief versus long term risk for consumers for buy.
Now, pay later and the impact to consumer credit scores.
How are we ensuring that, you know, if people are looking for that near term relief that they’re not layering on long term risk and pricing themselves out because of the impact to a credit score later on down the line.
If they’re unable to pay on one of the buy, now pay later purchases that they’re making.
Yeah, I, I think it’s really important to think about the buy now pay later industry in, in long term and short term um obligations in the, in the short term sense where where the pay and for product is so profitable, there’s really little risk in accumulating long term liabilities just because those things move so quickly, they turn over 17 times a year.
But for longer term obligations, it’s true that consumers need to be very aware of these obligations are taking on what’s important about firm though is our business model is such that we’re so aligned with the consumer, we can’t win unless the consumer wins because we offer consumers immutable uncertainty when they check out the total obligation is known they can’t revolve, there are no late fees with our product, we can’t win unless the consumer is, is also winning.
And so our company is built behind making sure that we can reliably predict and deliver credit outcomes for our consumers, which is really important for our merchant partners who want, who want us to help them grow their business and for our capital partners who are investing in the loans.
You know, it’s interesting, we were having a conversation with the conference board’s chief economist who said that this is a consumer that is battle weary.
How would you describe the consumer right now?
Yeah, I think the consumer is experiencing a lot of mixed signals.
So inflation is cooling and yet prices remain very high.
Real wages have actually kept up really strong over the past 12 months.
But unemployment is beginning to tick up and everybody on shows like this have been talking about a recession now for a very long time.
And as the adage goes, economists have predicted nine of the past five recessions.
I do think that the consumer is, is bombarded with all of these mixed messages.
And our data suggests that the consumer more than anything is just uncertain and, and they’re looking to somebody like a firm to provide that certainty.
And just lastly while we have you here, I mean, when we think about the business itself for a firm, I know we’re in quiet period, we can’t get into any financials.
We don’t want to get anybody in trouble here.
But, you know, even as we’re thinking about this earnings season and margins as a whole right now.
I mean, companies like buy now pay later companies like a firm.
You know, how do you guys go about pulling certain levers to ensure investors that the margins are secure, that they can come to expect what this company has been able to show them in its own growth rate over time.
A firm has done a phenomenal job in pivoting the the economics of the business into this current macro environment.
The past 12 years, in my opinion, has been a clinic on how to how to manage the macroeconomic risk in the business and create really strong units.
We did that through uh really strong control of credit outcomes.
We did that through pricing initiatives with merchants and consumers.
If you look at last quarter, we posted extremely strong unit economics and an incredible amount of operating leverage and we feel like we’re, we’re gonna continue to do that from, from here on out.
Well, we all know the health care industry is extremely complicated and if you’ve ever had to advocate for yourself with an insurer or provider or a pharmacy, then you know just how disconnected and confusing and discombobulating it can all be.
So Yahoo financing your health reporter, Angeli Kani is here to break down some of the intricacies of the industry.
So let’s start with different parts of the health care industry.
Just tell us how it works and how it affects our wallets at the end of the day.
Yeah, we all know it’s complicated but I’m gonna, I, I can’t promise, I’m gonna make it uncomplicated, but I’m gonna explain to you why the infighting that cons consistently and constantly happens is a affecting you.
So let’s take a look at what the different parts are that I’m gonna talk about.
First of all, you have to think about the way that uh everyone is being paid within the industry.
You’ve got the health providers and tech service providers like your telehealth and the like they are being paid by insurers, then you’ve got the pharmacies.
Now they’re technically being banned by insurers as well because the pharmacy benefit managers sit underneath them and those are the entities that negotiate with the pharma companies.
So those are the drug companies and the money is being exchange back and forth.
So I’ll give you the health service providers because I think that’s the most uh popular sort of interaction that you as a consumer would have with industry, health providers constantly negotiate with insurers in order to get paid.
So when a health provider, especially those who are publicly traded, we see when they have strong quarters what that means is they got more of your money either through directly out of pocket for you or through the insurer.
That means their reimbursements were higher.
They were able to negotiate better with the insurers.
They saw more patients or more volumes, they could charge more and more volume means more procedures done.
So while that does come with a cost and expense to them, they were able to cover their costs with the money that came into their pockets.
And why that’s important to understand is because it’s not as simple as you go to the doctor, get a visit, a claim gets submitted and then they get reimbursed.
It’s actually an ongoing negotiation.
Despite the fact that insurers already have a negotiation, a great set with these providers, they still continue that negotiation process.
So let’s look at the insurers and how they make money off of you.
If you think about insurance companies, you pay a premium every month.
Well, that premium goes towards covering costs and is part of a pooled set of money that goes towards costs and claims.
Now when an insurer has a strong quarter and we know they’ve been having those, that means they have more of your money.
And because they are these vertically integrated really, really broad uh companies, now that money also gets shifted inside of it.
They kept it uh on the books for longer the days uh of payment claims is also there and also, if fewer members utilize the health system, the health services that also is good for them because it means they kept more of your money.
And all of this is just to tell you that that is not necessarily the best use of the money.
And they have a specific number that they’re supposed to pay out every single month.
And if they don’t meet that, then they’re technically supposed to give it back to you.
But because they’re these complex systems right now, they’re able to move it around internally and keep that money inside.
So take, for example, some of the biggest uh insurers are also service providers.
So they’re also PB M. So they’re dealing with your prescriptions as well, all that goes into the flow.
Meanwhile, pharmacies are battling it out with the PB MS.
They’re constantly negotiating the same way the health service providers are with the insurance companies.
The pharmacies are doing the same thing.
They’re constantly having to negotiate for these drugs and the payment that they get for them.
In some instances, if you get a prescription filled, that pharmacy could get a negative reimbursement in the sense that it costs them more to fill your prescription than the money that they’re getting in for it.
So they’re working at a loss sometimes.
And we’ve got some big health care companies that are, of course, reporting over the course of this week.
And it’s gonna be interesting where as they continue to really look across the consumer set right now.
How many consumers are opting in continuing to be able to pay certain health care procedures or health care services and where that’s also impacting their wall or their pocketbook at the end of the day because of the costs that the health insurers are pushing down to them as well for servicing.
All right, I, I think I, I think I got it all there and thanks so much for breaking this down.
You’re watching Yahoo Finance, the outstanding federal loan balance is over $1.6 trillion and accounts for over 91% of student loan debt.
That’s according to the education data initiative.
So once you get into the student debt hole, it takes a while to get out.
But there might be some tax advantage ways for people to pay for their loved ones, college tuitions to discuss.
Let’s bring in Jerry Boyle, who is the Bny Wealth tax and estate planning strategist here with us, Jerry.
So what do people need to know about some of the tax advantages that, you know, they might just need to give a phone call to a loved one or phone a friend.
Uh If they’re looking to pay down some of this debt as far as paying down the debt goes.
Uh I think the planning that you have to do is what you have to do before you actually go to school.
For example, a lot of people should be thinking about doing 529 accounts, open up accounts.
Now, putting money into the accounts to save for college when the disbursements are made from the 529 plan to pay for tuition, et cetera.
That’s a tax free distribution.
So that’s one thing a lot of people should be looking at right now.
The other thing people should be looking at is also if they have a, a relative that has a substantial amount of wealth, that relative can make a direct payment of tuition to the college of the university.
And that is a tax free gift.
And a lot of people overlook the fact that somebody can make a tax free gift in the amount of tuition.
And the key there is obviously that it’s gonna be made directly to the educational institution if you made it to the student and the student paid uh the the tuition bill that does not count for the gift tax exclusion.
But that’s something that’s frequently overlooked by people.
If, if it is then given to the students, then the student goes and pays who is taxed there?
Is it the gift giver or is it the student receiving the gift?
It would be the gift giver.
The donor would have to pay that that would be deemed to be a gift from the donor to the student.
And so it wouldn’t be tax free.
Now, you do have exclusions from gift tax and the exclusion is quite large right now.
Right now, it’s 13 million $610,000.
So it may not be a big deal for a lot of people, but people ought to take advantage of the fact that you, if you follow the rules, you can make a direct transfer to the universe for somebody’s tuition and that’s gift tax rate.
And so if you are making that direct transfer to a university on behalf of a student, what is the criteria?
What’s the data that you need to hold on to and not data, but the perhaps paperwork or receipts that you need to have once you’re filing that gift as well.
Well, what somebody would have to do if they did do the uh if they did do that uh transfer to the university, you’d probably want to keep your checks to show that the check was actually paid directly to the university as opposed to being paid to the student and the student turning around and sending the check to the university.
So I think the most important thing is to have some type of evidence that shows that the payment was made direct.
And if it’s made by check, obviously, if it’s made out to Xyuxyz University, that would be enough substantiation.
Otherwise some electronic transfer from a bank account if you kept your bank statements, you just have to have some proof that it was made directly to the college of the university.
How many people are actively doing this right now?
From what from what we can estimate at least Jerry?
And and is it expected to grow the number of gifts being made directly to universities on students behalf?
Considering the the rising costs or the high price of tuition right now?
I think that most people that are taking advantage of this provision of the tax law are wealthier people because uh most people just can’t pat with that amount of money.
You know, if, if somebody’s going to school, for example, in Boston where I am, where the tuitions are about $90,000 a year, that’s a lot of money to transfer directly to university.
So for the most part, this provision is for pretty much wealthy people, not for the uh you know, the regular uh person that’s going to school blue collar type of uh family Jerry Doyle, who is the BNY wealth tax and estate planning strategist, Jerry.
You’re watching Yahoo finance financial opportunities, whether through nil or other brand deals are becoming available for student athletes at younger and younger ages.
That’s why IMG Academy, the world’s leading sports education brand and one of the top athletic high schools in the country is partnering with Merrill Wealth Management to build a financial education curriculum to help prep young student athletes for the opportunities coming their way in the future.
For more, we welcome in Greg mcgauley, who is the Bank of America, head of Merrill Private Wealth Management and Brent Richard, who is the IMG Academy CEO.
What made this partnership make sense and what can students expect?
Well, uh Maryland Img Academy, you know, announced a three year partnership to offer more education and resources around financial awareness to student athletes and their families.
You know, we’ve been serving clients in the sports industry, players, owners, coaches and agents for a long time.
And a few years ago, Merrill created a dedicated sports and entertainment group of advisors who have experienced providing strategies for our, our clients.
This program is going to allow us to provide a great amount of financial education to the students at a young age in order to help them better prepare for life in general.
Brent.
Uh First, congratulations to some of the success that you’ve seen over at Img Academy.
I was taking a look at of course, this most recent NBA draft that kind of cemented uh 10 year status of IMG Academy, seeing at least two alumni selected in the NBA draft seven times including uh 2014, 2015, 2020 2021 2022 23 and 24 here.
I mean, this is kind of an incredible track record that you’re really lining up here, but it comes back to not just sports preparedness but financial preparedness too.
You know, what do you want the students to take away from their experience off the quarter off the, the pitch or the mound or wherever and whichever sport they may be competing.
Uh first of all, and it has been uh incredible success at IMG Academy.
Um One of the more interesting stats is actually that we send as many student athletes every year to the Ivy leagues as we do the professional leagues.
And so on one hand, we have 15 current or former student athletes that are currently in the Olympics.
On the other hand, we had almost 30 student athletes last year that went to top 25 US news ranked academic schools.
So, you know, for all of our products, both on campus and online, we have camps, boarding school, online recruiting and coaching.
We share uh uh one purpose which is to empower student athletes to win their future.
Um We are in incredibly intentional about teaching life skills.
We have staff on this campus that all they do is teach resilience.
The same way that uh we teach algebra.
So I think this is what sets us apart in a lot of ways, this combination of uh sports and school and uh life skills.
And it’s just very obvious, especially in this moment that the next frontier of building this base of life skills is financial education.
Uh It is a critical life skill.
It always has been a critical life skill, I would say in this moment, it’s very relevant to today’s student athletes.
Um There’s more financial opportunity coming sooner than it ever has before to student athletes all around uh all around the country and we have to be great in this area.
And I think with Merrill, we think that we can be and part of one of the reasons, at least for that financial opportunity and, and wealth building coming earlier is really kind of pegged to nil name image and likeness deals that young athletes are seeing if they have a large following or if they go to the right school and are able to use.
That is a platform as well, you know, keeping a pulse on the athletes, the student athletes at your school, what is the talk around, the the hallways or, you know, even on the campuses, around students and how they’re being approached and the brands that they wanna work with as well as you’re evaluating what opportunities are right for them and trying to coach them financially as well.
Brent.
So most of the conversation has been really around that path to college and the opportunity uh in college and it used to be uh tuition and books, which was a tremendous financial opportunity for student athletes.
And today, it’s not only tuition in books, it is now uh not only name image likeness, but as you’ve seen recently, the Power Four and some of the settlements going on uh potentially moving into revenue sharing uh as well.
And so uh there are a lot of questions from families.
We are getting pulled into these conversations from families asking what does this mean in my college decision process?
And when uh financial opportunity comes, uh how do I think about it?
Um And as we say at IMG Academy, it’s um we work on both sides of that equation.
The first question is who am I?
So we have character development as a core part of our curriculum.
You have to say, who am I before you can say what brand do I want to attach myself to?
And only after that, do you get to start to talk about?
Well, what do I do with um the income that I’m now getting as a result of uh name, image likeness, revenue share or some of these other opportunities that are coming uh sooner and sooner to student athletes, Greg.
I, I wonder from your perspective on the wealth management side are there, are there pitfalls that you’ve seen at least in the early innings, especially compared to, you know, where we are on the, on the broader scale of some of these deals coming about for student athletes.
Some of the pitfalls that you’ve seen in the past that students can avoid at this juncture.
I, I think that the idea of the financial education starting in an early age prevents a lot of those pitfalls from happening.
But more specifically, it’s like understanding, you know, the f that financial decisions have an impact on your bottom line.
So the decisions that they make early are going to impact their future in a major way.
I also think that, you know, um understanding how they’re going to get compensated and the full impact of taxes um can lead to a better understanding of how to manage cash flow, things like develop, not developing a budget and staying within that budget and living to a lifestyle that you’re able to continue to save money for um for the present and the future helps as well.
And then, you know, protecting their, their information, um even from things like cyber threats, you know, um help them preserve their wealth and, and not have it deteriorated or taken from them very, very quickly.
And then really around, you know, understanding at an early age, different investment options.
You we’ve all seen athletes and, and even young adults get involved in things that they necessarily shouldn’t from an investment standpoint.
And so having investments that match their goals and objectives are really important even at a young age.
Just lastly while we have you here, Brent, I mean, I’m looking across IMG Academy and the success that we talked about at the start of this.
How, how far are we from looking at Img Academy as a type of program that has different locations?
I mean, primarily in Florida right now.
But are we gonna be looking at Img Academy East or Img South or Img West at some point?
What’s the expansion look like?
We’re, we’re, we are always evaluating, what I’d say is, um, what we’ve done over the last four or five years is we’ve added sports, we added women’s volleyball.
Uh, we just announced we’ve added, uh, girls, uh, women’s, uh, softball as well.
So we’ve added sports onto our Bradenton campus.
Uh, and really importantly for us, we are trying to make our programming available to any family that believes in sports as a platform for life.
So we have over 100,000 online customers.
Now, uh, working with us in our online recruiting product called N CS A.
We have uh, online Mets, performance coaches, online nutrition coaches, and hopefully, uh here pretty soon online, uh, finan uh financial education, uh coaches as well.
So we are trying to make it easier and easier if you’re a family anywhere in the world to access IMG academy education.
But, I mean, I’d love to see the, the student athletes really performing at such a level that really sets them up for success in the future and a partnership like this, that helps them get a little bit more financially minded ahead of time as well and add on to the skill sets that they already have.
Greg mcgauley, who is the Bank of America, head of Merrill Private Wealth Management and Brent Richard Img Academy CEO.
We’ve got much more wealth on the other side of this short break.
You’re watching Yahoo Finance athletes are convening from around the world and they begin to take the world stage this weekend for the 2024 summer Olympic Games in Paris, France.
But while they seek glory and hopefully some riches, the city is left to foot the bill.
The latest estimates put the Paris Games.
Wow, at 8.9 billion or about $9.7 billion is the budget there.
Now, this broke the original budget from when the bid about seven years ago but is one of the least expensive recent summer games.
London 2022 clocked in at $16.8 billion.
Rio was $23.6 billion in Tokyo in 2020 slash 2021 with $13.7 billion according to the Oxford Olympics study.
So is it worth it to the city and the people who live there to host the Olympic Games?
Joining me now is Andrew Zimbalist who is the Smith College professor of economics here.
Great to have you.
So is it worth it when you consider all of the costs that cities have to take into account to host the Olympics?
Simple answer is no.
And let me also point out how Oxford has done some wonderful work on the Olympics but their budget numbers are including athletic infrastructure.
They’re not including transportation infrastructure, telecommunications or hospitality infrastructure.
So it doesn’t represent the actual cost.
So Tokyo is probably somewhere the actual cost in part because of the delay from the COVID uh pandemic.
Yes, $9.7 billion is now the number they’re using but does it include the cost to clean up the send?
Does it include the cost of the metro that goes to the Saint Denis area?
Does it include the social and business tions that are disruptions that are happening during the weeks of the Olympic?
Does it include uh maintaining and operating the facilities that have been built or modernized for the Olympic Games?
There are a lot of things that are not being included.
Those numbers are fungible numbers and you just have to take them with a large grain of salt.
But look at the end of the day, what do you get from hosting the Olympics?
You get maybe $5 billion for Paris.
Um And that, that’s some of the international, about 20% in international television revenue and some of the international sponsorship revenue, some domestic sponsorship revenue, the ticket money add it all up.
It’s about $5 billion.
So if you spend $5 billion oh, excuse me, if you receive $5 billion on one end and you’re putting out minimally 9.7 billion, but probably a lot more than that, then of course, the, the economic calculus is, is not very good at all.
Uh And you know, there, there have been other disruptions we heard about the, the, the, the train sabotage uh that, that has probably cost hundreds of millions of dollars.
Ok. And so what do you think the IO the, the IOC needs to take into consideration to better evaluate the economic cost that cities are taking on essentially when they decide and put their bid in to host the Olympics.
Well, the IOC as I just said, they give about 20% of the international television money.
That’s the biggest chunk of money that comes in 20% of the whole city.
So they could look at giving the whole city, they used to give the whole city 50% and even higher than that, we going way back to the 19 sixties.
Uh they give a higher percent of that money.
Now, the IOC is not a, it’s not a for profit organization.
They take the money that they earn.
Of course, they take care of their executives very nicely.
But the vast bulk of their money is going to International Sports Federations and National Olympic Committees.
So I think, you know, at the end of the day, what we have to do is look at a rationalization of the Olympics and altogether rationalization.
What would be rational, it’d be rational not to look to a new city every four years to rebuild the Olympic, Shangri La.
Uh and, and uh in my view, the best thing to do would be to have one permanent host for the Winter Games and one permanent host for the summer games.
Ok. And just lastly while we have you here is the cost for the Olympics.
Is it going to be continuing to just kind of go on this upward trajectory?
What what does it need to, what needs to be changed ultimately to make it more affordable for the cities that are hosting it?
Well, I think I just told you that, but look to it to its credit.
The IOC has made changes.
The problem the IOC has faced over the last 15 years is that nobody wants to bid anymore.
So they put the whole bidding process behind closed doors, we can’t even see it, but they have made some changes.
They have simplified and made more flexible, the demands that they put on the whole city and that saves the whole city a couple of billion dollars, which is nice.
But if you’re spending 20 $30 billion you save a couple of billion, you’re still in a large deficit.
All right, Andrew Zimbalist who is the Smith College Professor of economics.
Well, the travel industry is in the midst of another busy summer.
The price for airfare, hotels and rental cars, certainly adding up travelers looking to save money on their next vacation might find that budget friendly destinations are a great option and for more on how to save money and make the most out of your next kid.
We’ve got Kristen Taylor who is the Vasa Vice President.
It’s great to have you here with us.
And so let’s talk about some of these more affordable travel destinations and, and where consumers are opting into those experiences versus perhaps some of the more pricey ones out there.
What are you seeing based on some of the booking data?
Yeah, I mean, we’re definitely seeing over half of Americans want to travel this summer, they want to take a vacation.
The majority of them do want to travel domestically stay within the U SS mostly for that savings.
Um, short term rentals, vacation homes hit all the marks for that.
You can get a group of individuals together, family, friends chip in and save quite a bit of money.
Um You’ve got amazing destinations.
Uh specifically there’s a lot of beachfront locations, lakefront, waterfront um locations where people are able to rent homes for around $250 a night, which is a, a really great deal.
And so with that considered, how is this changing the average cost that we’re seeing people be comfortable with spending on vacations right now?
Yeah, I mean, we’re definitely seeing people wanting to save as much money as possible.
So with the short term rental, your savings really comes with the the chipping in individually on a share at home.
Uh you save a lot of money with being able to eat in grocery shop, have a vacation without necessarily needing to go out and spend a lot of additional money on a me uh you know, uh transportation, food and beverage, things like that.
You can really enjoy a great vacation with your loved ones and save as much money as possible by not needing to spend a lot of money on those additional things.
Um You can have, you know, a pretty low budget vacation right at a beautiful beach or a lakefront and not have to worry about um you know, breaking the budget.
And so does that change the calculus for people who are looking at certain international travel destinations, let’s say Paris is a last minute trip and they wanna just go to take in the Olympics.
I mean, is this dampening demand for the amount of people that would go and be able to take in the Olympics?
No, not necessarily.
I mean, I think there is a time and a place for all kinds of different travelers, Labor Day weekend.
Typically we’re gearing up for kids to go back to school.
We’re looking at people that are trying to get out and enjoy the last minute um Joys of summer time.
So I think that demand is definitely um shifted a little bit more towards those drive to markets where people can last minute book something, they can get in the car, they can drive two hours away and experience some really great locations.
Um You know, we’re seeing a huge demand for coastal Maryland uh about $236 a night.
That’s one of our biggest search destinations for um Ba casa.com for Labor Day weekend, uh West Florida Panhandle around $219.
Um Dustin Florida, which you get the beautiful white beaches for about 100 and 83.
So we’re not necessarily, you know, feeling like we’re coming heating with international travel, but we’re certainly opening up the availability for people that maybe just want to get out of town.
They don’t have a ton of, you know, exorbitant money to spend to go internationally to the Olympic Games.
But they can certainly still enjoy a great, uh, last minute summer vacation with their families.
All right, a destination with a good TV.
So you can still watch the Olympics, uh, is at least the bucket that I’m in Kristen Taylor, who is the Picasso Vice President.
We’re taking a look at the major averages right now.
The S and P 500 you’re seeing that hold on to gains up by about a quarter of a percent.
The NASDAQ composite that’s up, holding on to gains of 3/10 of a percent here.
Big week for economic data.
You’ve got a lot of focus on the employment situation and the jobs fronts with the A P private payrolls coming out later this week.
And of course, that all important monthly jobs figure.
Plus you’ve got the fed and you’ve also got some big earnings coming your way in the tech space.
Market domination with Julie Hyman and Josh Lift and I know that coming up 3 p.m. eastern time, you do not want to miss it.