Brew Markets – Episode Summary

Podcast: Brew Markets (Morning Brew)
Episode: Can A New CEO Save Target? Plus: Amazon Will Sell Hertz's Used Cars
Date: August 20, 2025
Host: Ann Berry
Producer & Contributor: John Croteau

Episode Overview

This episode explores two major stock market headlines:

• Target’s selection of a new CEO, raising questions about whether internal promotions and leadership continuity truly address the company's recent struggles.
• Amazon’s partnership with Hertz, signaling a new chapter in online car sales and potential disruption for used car retailers like Carvana.

Host Ann Berry breaks down what these moves mean for investors, the broader retail sector, and lessons for corporate governance and innovation. The episode also discusses the day’s tech sell-off, the surge in TJ Maxx’s parent company TJX, and the ongoing AI investment boom, with analysis of potential industry bubbles.

Key Discussion Points and Insights

1. Target’s CEO Transition – “Not a Fresh Start”

(00:27–04:24)

• Leadership Change:

  • Michael Fidelke, a 22-year Target veteran, named CEO after serving as COO, CFO, and in other senior roles.
  • Outgoing CEO Brian Cornell becomes Executive Chair of the Board.
  • Target’s stock is down over 30% since 2020, with languishing performance and an identity crisis.
  • Berry criticizes Target's choice for lacking innovation and independence, comparing it to Disney’s troubled CEO succession in 2020.

• Governance Flaws Highlighted:

  • Berry argues that retaining the old CEO as executive chair limits the new CEO’s autonomy.
  • Draws parallels to Disney’s Bob Iger/Chapek dynamic, noting history of internal friction and lack of fresh strategy.

• Key Quote:

  • “He [Fidelke] will have to trust that the last CEO will have his back rather than defend past mistakes. And here's the magic word in that announcement: Target's old CEO will be executive chair. Not just chair, but executive chair, meaning the last guy will still have operational clout. He's still very much around. So much for a fresh start at Target.” – Ann Berry [02:17]

• Lesson for Public Companies:

  • Succession planning should prioritize fresh ideas and true leadership change, not just continuity.

2. Amazon & Hertz: Used Cars Go Digital

(05:12–08:19)

• Deal Breakdown:

  • Amazon expands its car sales business (“Amazon Autos”) to used and certified pre-owned vehicles via a new partnership with Hertz.
  • Amazon acts as a marketplace—does not hold inventory, unlike Carvana.

• Stock Market Impact:

  • Hertz shares spiked 7% on news, rebounding after seven consecutive quarters of losses.
  • Carvana shares fell over 6%—highlighting market anxiety about Amazon’s disruptive potential, despite different business models.

• Market Insights:

  • Carvana’s “retail” model (buy, inspect, recondition, deliver) versus Amazon’s “marketplace” (matching buyers and sellers without owning inventory).
  • Carvana’s recent financial run: 100x stock price rise over 30 months, strong earnings, $70B+ market cap.
  • Used car market in U.S.: 40M+ cars sold annually, still highly fragmented; Carvana only holds 1.5% market share.

• Key Quotes:

  • “Carvana owns and manages its vehicle inventory. It actually buys used cars, inspects them, reconditions them, then delivers... It’s the classic retail model, not Amazon's marketplace model.” – John Croteau [06:50]
  • “I have no doubt that Amazon… sees the opportunity, sees that Carvana has proved it can work, and now is ready to move in.” – Ann Berry [07:39]

• Consumer Perspective:

  • Croteau raises skepticism about buying ex-rental cars: “When I rent a car, I put it through its paces.” [08:08]

3. Retail Winners: TJX Shines Amid Discounter Boom

(08:29–10:45)

• Listener Q&A: Gina from Portland asks about TJ Maxx’s popularity and stock movement.

  • TJX Companies (TJ Maxx, Marshalls, HomeGoods) beat earnings forecasts: $14B quarterly revenue and 4% same store sales growth.
  • TJX is expanding—even as many retailers shrink; stock up 15% for the year; market cap $155B (forty times Macy’s, triple Target).
  • Value proposition, “treasure hunt” shopping experience, and off-price model drive loyalty.

• Key Quote:

  • “You never really know what new products are going to be delivered week in or week out. So there’s a draw to return regularly to discover something new.” – Ann Berry [10:20]

• Industry Comparison:

  • Macy’s down nearly 24% YTD; department stores struggle without clear differentiation.

4. The Tech Sell-Off and the AI “Bubble” Question

(12:46–17:25)

• Market Context:

  • Nasdaq drops to two-week low; S&P 500 down 0.25%; tech stocks especially pressured.
  • Discussion framed around long-term trends versus day-to-day moves.

• AI Investment: Bubble or Revolution?

  • Torsten Slok (Apollo Global): Data center spend contributed as much to GDP growth as consumer spending in 1H25; “extraordinary” indicator of scale.
  • Slok claims “we are now in a bigger tech bubble than we were during the IT one of the 1990s.”
  • Short interest in Meta up 75% YTD; concern about overvaluation.
  • Palantir called “the most overvalued firm of all time” by The Economist; parallels drawn with Cisco’s 1990s revaluation.
  • Citron Research questions Palantir’s valuation relative to OpenAI and Databricks.

• Bullish Contrarian Voice:

  • Dan Ives (Wedbush) sees “room to run” for a basket of innovative tech names.
  • Berry hints at upcoming episodes featuring these key industry voices.

• Key Quote:

  • “That data center spend for this year's first half alone contributed as much to GDP growth as consumer spending... absolutely extraordinary.” – Ann Berry [13:23]

5. Retail Earnings Recap & Look-Ahead

(17:25–18:45)

• Market Close Wrap:
  • S&P 500 down 0.25%, Nasdaq down 0.7%, Dow flat.
  • Winners: Lowe’s (+0.5% after beat and raised forecast).
  • Losers: Estee Lauder (-4.5% on tariff headwinds), La-Z-Boy (-11% on reduced foot traffic).
  • Anticipation for next day’s Walmart earnings—with focus on competition with Amazon, supply chain impact from tariffs, and the performance of Walmart’s growing digital ad business.

Notable Quotes & Memorable Moments

• On Target’s governance:
  • “So even if Fidelke can come up with fresh, new, exciting ideas to turn Target around, a real question when he has no outside experience and arguably has been part of the problem.” – Ann Berry [01:57]
• On Carvana vs. Amazon:
  • “Carvana’s success points to the fact that there’s a lot of money to be made in the used car market if you can figure it out.” – Ann Berry [07:16]
• User Experience Anecdote:
  • “When I rent a car, I put it through its paces.” – John Croteau [08:08]
• TJ Maxx shopping trip:
  • “I did pop into the store right by the studio... things were piled up everywhere... you never really know what new products are going to be delivered week in or week out.” – Ann Berry [10:12]
• On AI/Tech Bubble:
  • “If you look at valuations today, [Slok] believes that we are now in a bigger tech bubble than we were during the IT one of the 1990s. That’s a really big statement from a really influential voice.” – Ann Berry [13:52]

Timestamps for Key Segments

| Segment | Timestamp | |-------------------------------------------------|--------------| | Introduction & Target CEO Analysis | 00:27–04:24 | | Amazon-Hertz Deal & Car Market Impact | 05:12–08:19 | | Listener Q&A: TJX/TJ Maxx Stock & Retail Trends | 08:29–10:45 | | Tech Sell-Off & AI Bubble Discussion | 12:46–17:25 | | Market Close & Retail Earnings Recap | 17:25–18:45 |

Summary Takeaways

• Target’s CEO pick signals more of the same, failing to deliver the “fresh start” investors and the company may need.
• Amazon’s push into used cars—especially via Hertz—threatens legacy online retailers, though the segments don’t entirely overlap yet.
• TJX and other value off-price retailers are winning with clear identity and expanding store presence, in stark contrast to struggling department stores like Macy’s and identity-challenged Target.
• AI investment has reached historic highs, sparking concerns from financial heavyweights over inflated tech valuations and possible bubbles.
• Upcoming Walmart earnings are poised to reveal much about retail sector dynamics, digital expansion, and the ongoing contest with Amazon.

For more insights or to contribute questions for upcoming guest interviews, listeners are encouraged to reach out to the Brew Markets team.