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A
AI is incredible. It can teach you how to fry an egg and even write a poem, pirate style, but it knows nothing about your work. Slackbot is different. It doesn't just know the facts, it knows your schedule. It can turn a brainstorm into a brief. And it doesn't need to be taught. Because Slackbot isn't just another AI, it's AI that knows your work as well as you do. Visit slack.com meetslackbot to learn more.
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Just a year after acquiring Neiman Marcus, Saks Fifth Avenue files for bankruptcy. We look at what went wrong and which rivals may stand to benefit. Changes are coming to how Tesla owners can access full self driving we review the news from Elon's post on none other of course than X and Once again, members of Congress seek to police their own investing activity. But will the new proposed act be enough to limit insider trading? For Wednesday, January 14th is Blue Markets Daily and I'm Anne Barry. More market details to come. But first, the House Administration Committee just took a step forward in addressing a controversial question that regards Congress and that is should its members be allowed to trade stocks while in office? Under federal law, members of Congress are currently permitted to do so and the reason it raises ethics questions is that they're able to trade even while the they regulate industries and may have exposure to non public information. Now the stock act of 2012 tried to put guardrails around this explicitly prohibiting lawmakers from using material non public information received from official positions for their own gain. Members of Congress must publicly disclose any stock or security transaction exceeding $1,000 within 30 to 45 days of the trade and these disclosures are made available to the public. And in fact those disclosures are used to inform investing by two ETFs run by the data provider unusual Wales great name. One tracks trading by Democratic Congress members and that ETF has the ticker NANC. Yes, that's Nancy. And the other with the ticker GOP tracks Republican trading disclosures and as it turns out, there's a lot to track. In 2025 alone, members of Congress executed more than 13,000 stock trades totaling over $635 million in value. Now, critics of the Stock act argue that the current rules are weak, that enforcement is limited, and that penalties are too small to deter misconduct. Just to put that in context, the fine for a first time offense is $200 and even that can be waived. And this part's amazing to me, a violation of insider trading laws does not automatically bar a candidate from appearing on the ballot. Again. Well the headlines on this topic have frankly not been encouraging. In January 2022, the New York Times ran a piece titled quote, personal Profit in Congress that listed examples of lawmakers trading around market moving events. One example that article cites includes several then senators including Dianne Feinstein, a Democrat, and Kelly Loeffler and Richard Burr, both Republicans selling stocks in mid February 2020 after they received a private briefing on COVID 19. That was just weeks, by the way, after the discovery of the first case in China and before you may remember the shut that then swept over the United states. Well, a 2023 survey by the University of Maryland concluded that the vast majority of voters support a ban on trading by lawmakers. And the support was bipartisan with over 80% in favor of a ban amongst each of Republican, Democrat and independent voters. Well, the House Administration Committee and House GOP leaders have moved to amend the status quo with the Stop Insider Trading Act. The committee chair said, and I quote, this legislation is critical to restoring the public's trust in their elected officials. If you want to trade stocks, go to Wall street, not Capitol Hill. Well, under the new act, the proposals are that it would let members of Congress keep the stocks they own at the time they're elected. They can then still sell stocks so long as they give public notice seven days beforehand. They can reinvest dividends and would still be able to trade commodities, futures and diversified funds. But what this new legislation would do is ban members of Congress, their spouses and their dependent children from buying publicly traded stocks. And the fine for violations would rise to $2,000 or more, 10% of the value of the covered investment, whichever is greater. And the net gain realized from a trade. Well, some Democrats have argued that this proposal simply does not go far enough. They want a total ban on on owning stocks as well as further limitations on trading. Will this be passed by the full House? We're going to keep on watching. Coming up, Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman. No, not a luxury shopping spree, but a list of brands taken down by Saks Global's bankruptcy filing. We're going to break down what happened and which upscale suppliers are left holding the quote Chanel bag. But first, a word from our sponsor public. John, when was the last time you used something truly intuitive?
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I mean, does a bicycle count? Because if that counts, probably a bicycle.
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That's not a bad answer, by the way. I can't ride a bike. But a bike can't help you invest smarter. Public.com can. Since it was designed this century, it's actually clean and intuitive. You can build a multi asset portfolio of stocks, bonds, options, crypto and more while accessing industry leading yields with a suite of fixed areas income products.
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Right now you can earn a 1% match when you transfer your existing portfolio over to public.
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Head to public.com brewmarkets to see it in action. That's public.com brewmarkets paid for by Public Investing. Full disclosure in Podcast Description Saks Global let's go there. That's the company that owns the luxury department stores Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman, and it filed for bankruptcy yesterday, buckling under billions of dollars in debt and a crumbling relationship with vendors. It's only been 18 months since Saks first announced its plans to buy Neiman Marcus and it's been a very public fall ever since then. Well, Saks itself, the parent company, is not publicly traded, but this caught our market's eye for a couple of reasons. So just going to go through them very quickly. I moderated for two years in a row at panels and I helped with the keynote at the World Department Store Summit that brings together the CEOs of the biggest department stores in in the world. And although a lot of those conversations were off the record, here was the theme. The dialogue was always around how department stores will survive the onslaught of specialty retail, the move to E commerce. And for many that are still publicly traded, like Macy's or Bloomingdale's and Dillard's, these folks kept asking themselves what are the lessons that we can learn to make sure we survive? So there's a lot more to this story than the Saks bankruptcy itself, but we're going to go through it in detail. And John, give us some background first though on the deal.
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All right, the year was 2024 and cast yourself back at the time there was contraction in high end spending, residual hits from COVID and department stores like Barney's New York and Lord and Taylor had gone out of business. Privately owned Saks Fifth Avenue made a deal to acquire rival Neiman Marcus Group, which also owned, like you said, bergdorf Goodman, for $2.7 billion, thus creating Saks Global. And also interesting as I was looking into this, Amazon and Salesforce were both part of that deal. They took a stake in the new company.
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That's right, they took minority states. Let's actually talk about that for a moment because I think again, painting the picture 2024 is very helpful here. One of the key things that brands have struggled with over time is how they could increase their presence of Amazon and particularly for luxury brands. And I've seen this a lot in beauty where I've been on a lot of boards and I've invested a lot. The stress was always, if we are building a luxury brand, how on earth do we translate that to an Amazon, which is the digital equivalent of pile it up and just sell it. Right? And so there was a lot of concern that losing control of the brand was a risk of moving to Amazon. So this particular partnership where Amazon was taking a minority st was very, very interesting. And as it turns out, there was a bit of a quid pro quo here. Right.
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There was some idea that whatever sort of e commerce that the luxury brand would explore, maybe Amazon could help it on the back end.
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Just to sacks back end.
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Yes, exactly. And there was hope at the time that the company would succeed. I read an article printed at the time. The combined company would have about $10 billion in annual sales. It would have 150 locations. And Richard Baker, who served as SAC's global executive chairman and orchestrated the deal, he said at the time, quote, we're thrilled to take this step in bringing together these iconic loc luxury names. For years, many in the industry have anticipated this transaction and the benefits it would drive for customers, partners and employees.
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And again, just so interesting there, the idea of the combined company able to get some more scale increasing, therefore the back end that Amazon could support. And then the front end of this was Saks opened a storefront on the Amazon platform. Again, something a lot of luxury brands at that time were sort of reluctant to do. And some called that move, quote, desperate. A desperate move by Saks at first hurts the brand. Hurt, hurting, perceived to hurt the brand. That, by the way, since change, you've seen a lot of luxury names actually move on to Amazon. But again, in 2024, that wasn't the lay of the land. Well, even then, there were already issues with the debt. Saks Fifth Avenue was already falling behind on payments as a standalone company. So that's before the acquisition. And the acquisition was financed by about $2 billion in bonds that sacks global struggle to pay. And I do remember for some in the market, they were saying this is a doubling down, right. On a weak cash flow profile. Sachs, you know, is struggling with its debt before it makes a big move like this. We're not sure that Neiman Marcus is going to make it any easier because the whole space is challenged. Moody's, which is one of the credit rating agencies, rated the billions in loans as very risky because again, it added more Debt to two companies that independently were seeing lackluster sales. So there was noise around this even from the get go, Right.
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Mickey Shada of Moody's said it was a recipe for disaster and quote, it was the fastest failure of an acquisition of this magnitude seen. And that was the quote out of this week. All right, there's several theories as to why sales were down. One was simply an increase in E commerce and looks like they were trying to address that with their partnership with Amazon. And then I thought this was interesting at the time and this continued to be the case. Luxury brands began opening their own stores. So instead of going to a department store that might have a Burberry section or Burberry goods, you can go to Burberry in New York City, this flagship. And even as I was reading today, there was some customers saying, why would I go to a department store? I can go directly to this high end location, they're going to give me a glass of champagne, they're going to treat me right. People liked the experience, one analyst said at the time. Now many of Saks and Neiman's biggest suppliers are also their biggest competitors.
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That word you just used is, I think, the absolute key to this. It's the experience and it's how are the department stores able to capture an experiential dynamic that was different than one that you and I could find everywhere else? And if you think about a department store now, right. Why did they exist? And historically it's been this idea that department stores act as the ultimate curator, right? Right. And if you walk into a department store, you're really navigating a sort of labyrinth of shops and shops, right? So if you want to go, for example, to Burberry, why go to the little teeny tiny version in a Sax? If you want to go to a Burberry, then just go to a Burberry if there's one that's located near you.
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Right.
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And go and see the three story version of it. And to your point, as always, get a glass of champagne in the process if you possibly can. Well, just to put some numbers around the Sachs booked an adjusted loss of more than $100 million in 2024, indicative of a snowballing problem with reduced foot traffic. And fast forward then to when the drama really starts to escalate. On Valentine's Day last year. That's inauspicious as the date Sachs's CEO sent a letter to suppliers, a love letter, advising them that it was going to take longer for past bills to be repaid. We're going to get back to that in a minute. At that point, some vendors stop their shipments so there is less inventory on the shelves. And as a blow to the customer experience, in addition to the fact that you just had less choice as you walked into these department stores. It was reported that Saks executives told staff to limit the number of refunds processed each week so that the company could keep more cash on hand. If ever there was smoke, that was it.
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And that went to social media. There were people that had spent thousands of dollars at Saks and wanted to make a return and it was taking weeks or months to get that money back to their credit card. Saks Global missed an interest payment over $100 million just a few weeks ago on December 30th. And then just a week ago, Saks CEO Mark Metric stepped down and he was replaced briefly by Executive Chairman Richard Baker, who I mentioned earlier as orchestrating the deal. But now Baker is also exiting the role.
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All right, so to fill the seat now and gosh, under these circumstances, who wants it really? The former Neiman Marcus chief executive returning as Sachs's global CEO, name of that CEO is Jeffrey von Ramdong. Now, Sachs has secured one and three quarter billion dollars to help finance the company through bankruptcy. It's essentially controlled by its lenders at this point. And the company does intend to emerge from bankruptcy later this year and at that point does expect to honor then, but also in the meantime, all customer programs and will continue to make payments to vendors and continue importantly to pay its employees. All of that being said, intentions are wonderful. What's the expression? The path to hell is paved with intentions.
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Intentions.
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Right this moment, right before the intentions come into fruition, some people are struggling around this, right?
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There is a list of vendors who are looking to get paid back. And at the top of that list is Chanel, which is due $136 million. And then I'm going to let you read some of these other brands.
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Kering sa, the owner of brands including Gucci and Balenciaga, they rode about a $60 million. Other creditors with claims of about 30 million include Capri holdings, which owns Michael Kors and Jimmy Choo. And these are just the ones that have sort of made their way out into the public. The list is going to go on. So there are folks lining up wanting to get their cash right now.
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And as you said at the top of the story, let's look at the companies that are public. How does this affect the market? And one of the companies that might benefit the first One that came to mind was Macy's which owns Saks rival Bloomingdale's. And we've been covering Macy's turnaround on the show under two year CEO Tony Spring. He's been able to attract a wider range of appealing high end brands to Bloomingdale's, I've read, including Victoria Beckham, Totemy, Christian Louboutin and more.
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Oh, very good French. So our producer John speaks French, just so you all know. So we got. Yeah, so I'm going to push on. Anytime there's something French to talk about, I'm going to lob it over to you. Well, Bloomingdale's revenue steadily rose in 2025. The third quarter delivered a 9% increase in same store sales which was a great result for this business given its turnaround dynamic. It was the best result in, in 13 quarters. And I've got to sort of raise my hand on this. I was super skeptical about Macy's ability to get its share price performance turned around. I went out there on various TV networks and said this is going to be very, very difficult. They've been approached to Macy's by a real estate private equity investor with a take private off, you know, proposal which the board turned down and said no, we're going to figure this out. And to the board's credit, shares in Macy's are up 80% in the last six months. Touched 24 bucks a share in December, its highest level in three years. The balance sheet solid. The net debt excluding store leases, although that's an important component, the store lease is about $2 billion. They can still figure out something to do with its real estate value. And it's, it's sort of figuring things out. And there's one player here where if the CEO of Macy's and that team, the Bloomingdale's team are going to get aggressive and I hope they're going to get aggressive for the sake of their shareholders. They should be going out to all these fashion brands and encouraging them to, you know, ship in their most in demand products to get ahead of the curve and say, look, you don't know where our competitors are going to be six months from now. We're going to be strong and standing. Send us your best for the money, we're good for the money. So there is an opportunity here. And it's, you know, these are the moments when you see what is the metal of your management team. Macy's management team's got an opportunity to show what it's made of. That being said, Macy's shares were down today. It's been announcing closures recently, which is consistent with its cost cutting moves and consistent with its attempts to try to modernize its supply chain. Layoffs are unfortunately going to come from the closure of two, quote, underproductive Macy stores in New Jersey. Macy's also will be closing a fulfillment center in Tulsa, Oklahoma this spring. A little unclear whether Macy's shares are down because of sentiment now around department stores and their right to exist. Pertinent to this conversation or whether it was just part of a bit of a market sell off that we saw over the course of today.
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It's possible because they were up 3% around noon today and then dropped down with the rest of the market vote.
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Let's talk about Nordstrom as well and just a couple of the other comps out there. Rival Nordstrom, which had a very strong Nordstrom family presence even today, actually was taken private last year. It was publicly traded. It was taken private by the private equity firm Sycamore. This could be again, depending on how aggressive they're going to be. Usually private equity back management teams are pretty aggressive. They're probably going to go to these brands and say send us the good stuff. Dillard's is one that we've talked about a slightly different geographic footprint, much more heavily weighted. In the south, for example, stock down over 5% today. That stock's had a great run. It's had really strong performance. So again, hard to unpack. Is this a little bit of a decline in department store sentiment or again, part of the broader market sell off? There's one area in all this that is a real nugget when you see these sort of bankruptcy stories come about. There is often somebody standing on the sidelines who you don't think of who's probably going to benefit and do the big unveil. John, there is one here.
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Potentially it could be T.J. maxx.
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Yeah, exactly. Walk us through that. And it's true. I can see this.
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Yeah, well, the company has $1.8 billion of net cash on hand. That excludes store leases and so they could leverage their off price model to buy up inventory from Saks. So you can imagine going into a TJ Maxx and seeing some of those high end items at a great discount. Shares in TJ Maxx are up 26% over the last six months. We know that there are budget conscious shoppers out there. They're down today over about 2%. With the broader market sell off.
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Well, we're going to keep an eye on Saks Global this year. Again, it is privately owned now, possibly by its lenders. But watching what it does from to be a really interesting litmus test, a bit of a canary in the coal mine for how department store retail is going to shape up. And we're going to keep tracking if it's publicly traded competition stands to gain from all of this. Well, let's take a quick break and when we come back, we have an update on the battle over Warner Brothers Discovery, this time with Netflix making a counter move. It's 4pm on the east Coast. There it is, the closing bell. The markets are wrapping up for the day. We don't have a ticker tape, so we're going to throw it over to our human ticket. Our producer John.
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The S&P 500 finished down half a percent. The Dow was down 1/10 of a percent and the NASDAQ finished down 1% for the day. Some market headlines. Airbnb announced it bought in Ahmed Al Delay to be its new Chief Technology officer. He previously ran Meta's older gen AI unit. We know that Meta is once again shaking up its AI strategy and execution, having just named Dina Powell McCormick as president and Vice chairman.
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So this one's interesting because Airbnb has been, I think, trying to figure out what its AI strategy is going to be. It has not been sort of out there sort of harping on a strategy around it particularly aggressively, but this is a sign that perhaps it's going to shift gears and actually start moving into AI. Specifically, we do know that generally Airbnb is trying to move beyond its reputation as a short term rental platform and now out there saying with this new hire, with the technology finally at a place it can get its head around, I could one day be a travel concierge for your entire trip. Interestingly though, despite that big name higher, and just to put it in context, the new CTO was really instrumental to building some large language models.
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Yes.
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That have sort of really been foundational in the industry. Airbnb ticker A BNB shares were down 6% today. Just to put that in context too, Airbnb just hasn't been able to find its way back up to its IPO share price. It just hasn't been able to get its growth to a point where the market feels it fulfills that original valuation. Well, let's move on to another story. Again, we've been keeping an eye on the Warner Brothers Discovery sale and the drama. This isn't going away yet. It's now headed to the courts. We've seen that Paramount Skydance did decide to go to the courts to try to force the disclosure of how the Warner Brothers board was assessing the Netflix valuation of its business. Well, shares in Netflix down over 2% today off the back by the way of recent declines after a report that the company intends to come back to the negotiating table and produce an offer for the studio side of the business of Warner Brothers in an all cash deal. And just as a reminder, the deal that Netflix currently has on the table isn't for all of Warner Brothers Discovery. It's for one particular part of it, the studios and the intellectual property, the library. And at the moment, the Netflix offer consists of both cash and Netflix stock. So the purpose of this is for Netflix to say forget giving you some of our stock, which creates complexity for us in terms of needing shareholder approvals and accounting updates. Cash is queen coming back to you with an all cash deal.
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Right? It's trying to get rid of that complexity like you said, trying to expedite the sale. And also if they're offering Netflix stock, it's worth pointing out since October the streamer's stock has lost a quarter of its value.
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Huge part of it. So basically is this the way it's of? It's throwing up its hands and saying we know that the currency we're offering you not as valuable Warner Brothers Discovery shareholders as it was. We're going to de risk this. You don't need to take the risk of our share price moving further. We're going to pony up the cash. So very interesting strategic move here. Going to keep on watching that one very, very closely. And finally, let's just wrap the day talking a little bit about Tesla. We haven't talked about Elon Musk for a while. I sort of missed it. Like we need to get back in there.
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It's been a few weeks. Well, he doesn't want us to forget about obviously he's always. He's busy on X. And today shares were down in Tesla 2% after Elon Musk announced on X that the EV maker will stop selling its full self driving or FSD software for a flat rate. Instead it will be available only as a monthly subscription.
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Just the pricing of that. To put it in context, the FSD will start at $99 per month. The one time price used to be $8,000. Just interestingly, Tesla does not disclose how many people subscribe to or actively use the FSD software. But thing I will say, the markets typically do like subscription models as long as the math works out. That you get more stickiness and more revenue over time than that one time upfront payment. So we'll see. We're gonna have to wait and see probably a quarter or two to figure out how the adoption has gone and, and basically to see what that has done to the financials. Well, as we exit the show, before we leave, I wanted to tease this one more time, sort of being a bit cheeky here because this is the second day in a row I've made this point. But on Friday's show of this week, I'm going to be joined by Al Alix Steel. If you were to say who is the most high energy, engaging, articulate, expert voice out there, I would unequivocally say it's Alix Steel. She was a TV anchor for Bloomberg for a long time. I had the great privilege of joining her on her show a couple of times. A highly sourced, highly networked energy reporter, now full time working inside the energy industry. She left Bloomberg to go spend all of her time with energy clients. She joins us on Friday for a bit of inside scoop and what's going on in the oil and gas industry and in the alternative energy industry too. And we're specifically focused on jargon busting so that we can provide for everyone a really accessible but deep and substantive update on the current state of oil and gas around the globe. What are the key drivers? What does it mean to the United States and what does it mean to investors here in the US Equity market? So do come back on Friday. So much fun. It's going to be energy in a way you've never seen it addressed. It's going to be a really good one. That's it. In the meantime for today's Brew Markets Daily.
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Brew Markets Daily is hosted by Anne Barry and produced by John Coteau, Tarkat Belletief and Emily Milian. Our technical director is Uchenawa Ogu. Brittany Dotako is our audio engineer. And the president of Morning Brew Inc. Is Devin Emery.
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Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. We'll see you back here tomorrow, same time, same place. Sam.