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JP Morgan has teams to support you at every stage of your growth. As former founders who have worked in local markets themselves, the bankers at JP Morgan bring deep sector knowledge and lived experience to their clients. JP Morgan can help you navigate complexity with confidence backed by real world insights and an entrepreneurial perspective. Get what your startup needs now@jpmorgan.com growwithoutlimits. JP Morgan is the bank of the innovation economy. Lowe's. No, not that one. We answer a question from the audience about the holding company that is Low S and the billionaire family that controls it. Apple investing another $30 billion into U.S. chip production. We look at the company's latest move to shore up its domestic supply chain and the ceasefire collapse. We have the latest from the conflict in the Middle east and its effects seen today across the markets. For Wednesday, July 8, it's Brew Markets Daily. And I'm Ann Barry.
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Foreign.
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Details to come. But first, a volatile trading session unfolded today as the United States launched a new wave of strikes against Iran. It also revoked a temporary license that had allowed Iran to openly sell crude oil in the world market. Well, Iran immediately warned that it would, quote, take whatever measures it deems necessary altogether putting the Middle east at risk of a wider conflict. Again, President Trump also saying that the memorandum of understanding to reach peace in which was brokered just weeks ago, is now, quote, over. While the administration says that U.S. forces carried out powerful strikes on Iranian military targets after commercial shipping came under attack. And while in conversation with Ukraine's President Jelensky at today's NATO summit in Turkey, President Trump said that US Action could extend to strikes on Iran's desalination plants, a threat to the nation's water supply and a material escalation if, if in fact enacted. He also mused that the US could take over Khark island, which is located in the Persian Gulf and serves as Iran's primary oil terminal, handling roughly 90% of the country's crude exports. While the renewed fighting is making waves through global markets, we saw oil prices jump up around 4 to 5%. That's as concerns grew over security in the Strait of Hormuz, one of the world's most important shipping lanes for energy supplies. And investors are now watching closely for signs as to whether the conflict could spread further across the region. Well, to take a quick trip through some of the stocks and their reactions, we did see travel stocks dropping, notably the airlines, with American and United down around one and a half percent. Delta also in that range. And that's ahead of its earnings due out this Friday. Refiners and energy names moved higher. Somewhat predictably, we saw Marathon Petroleum and Valero gaining more than 4% and PBF Energy jumping over 9%. And then there's defense stocks, which is sort of telling actually in the context of the market overall because this sector initially caught a bid, with Northrop Grumman and Lockheed Martin rising around 1% as investors priced in higher geopolitical risk and possibly military action. But as the trading day progressed, shares in both companies ticked down into the red, reflecting, frankly, the overall market response, which was just not as dire as this kind of geopolitical incident would typically induce, suggesting that investors think a resolution is altered ultimately still likely, but with the uncertainty being when we're going to keep on watching. Later into the show, we dive into a question from the audience about Lowe's, which is the holding company behind Lowe's Hotels, but it also holds energy, insurance and industrial assets. First, though, a few headlines from the day's trading session. Kicking things off with Apple and another commitment to domestic manufacturing. Well, the iPhone maker is ramping up its continued investment in the United States, making chips with plans to spend more than $30 billion with Broadcom over the next five years. Broadcom does already supply Apple with connectivity chips, including WI Fi and Bluetooth components.
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But Apple's move today will lead to the production of over 15 billion additional chips on U.S. soil, including an investment of $1.5 billion to, quote, expand and modernize Broadcom's manufacturing facility in Colorado. The move is the latest step in Apple's pledge to invest billion in the US over four years. The company is already committed to buy chips from the new manufacturing facility that TSMC is building in Arizona. And Apple recently struck a deal with intel to make some of its chips in the United States. Shares in Broadcom, the $1.9 trillion market cap company, rose nearly 6% today on the announcement. And shares in Apple also up around 1.5%.
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And we get a ride out of the headlines with Waymo, the Robotaxi division of Alphabet. Well, if you live in San Diego, Las Vegas, Tampa or Denver, you're soon going to see the driverless cars zooming around town. Well, for now, only Waymo employees will get to hitch a ride. But the company is planning to launch public trips in those cities soon. And it's all part of Alphabet's goal for the division to hit 1 million weekly trips by the end of this year.
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Waymo currently dominates the US Robo taxi market, but competitors like Tesla and Zoox are also expanding into new markets with Amazon Owned Zoox, almost doubling its share of monthly active users during the first half of this year. But the US isn't having all the fun. Waymo is also going international, with plans to launch commercially in London later this year. And you were just in London. What's your firsthand report on the turbo taxi situation?
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I saw them. I spotted Waymos. I spotted them with human drivers, actually, clearly doing their reconnaissance trips with all of the whirring that goes on in those sort of. What are they called? Not detectors, but the radar. The radar and the. The lidar systems that are sitting on the roofs of the cars. So they were going bananas. They were everywhere, doing all of their detecting and taking in lots of information. So they're definitely going to arrive in London.
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Yes, and I've seen them here in New York, the same drive driven by someone, piloted by a human. And so we'll have to see how these do in big cities. I think London and New York, that's a tough task.
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You know, it's a tough task. I actually saw them in Miami a ton when I was there in April, and I have just this one searing memory. I was outside at the front of a hotel where this big conference was being held. It was the possible conference and it was the Fontainebleau, and there was a ton of traffic coming through, people getting dropped off and people like me waiting to be picked up. And I thought, this is the moment I might try Waymo. But I changed my mind because I saw Waymo come in, it dropped someone off, and then it got stuck. You know, it could not unstick itself and figure out how to get out of this sort of semicircular driveway. And you could just see traffic getting backed up all the way down this major road in Miami and just all the Hong Kong and just other drivers going bananas. But there's nothing you can do. It's not like you can come up, tap on the window and sort of get annoyed at the driver of the. Wait, you're stuck.
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And even worse, there was a video that went viral over the weekend for July 4th that a Waymo drove just right into the fireworks.
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Oh, no way I was getting past that. I missed that on the other side of the pond. Well, you know, caveat emptor. London beware. This is what's coming. And goodness knows already, the city does not need more. More reasons for the traffic to back up. But let's take a break, and when we come back, we answer one listener's email about Lowe's, which is the company behind the Lowe's hotel chain. There's almost no analyst coverage, so we're going to try and step in and break it.
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made pre tax get started@aflac.com BrewMarkets that's aflac.com BrewMarkets this episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block. Or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it, ready to make anything online make sense. There's no place like Chrome. Check responses Setup required compatibility and availability various 18
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well John, we received a note from the audience.
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That's right, Gabriel wrote in hey Anne and John, I'm a listener of the show since the beginning. I'd like for you to nerd out on Lowe's. I'm an investor already, but no one ever talks about them. I'm curious about your thoughts.
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Investor already trying to talk their own book I sense over here. But Gabriel, we're going to humor you. We're going to lean in and give give a little bit of perspective on what's going on here. Well, the name Lowe's because the pronunciation can mean many things in the business world. There's the former chain of movie theaters that was folded into AMC in 2006. There's of course the home improvement store. So when you hear the word Lowe's, that's what people tend to think of. But that's spelled differently. That's L O W E S, no apostrophe. Entirely different company. The lows to which Gabriel is referring because to provide the ticker is a publicly traded family controlled holding company spelled L O E W s. Now this Lowe's controls the Lowe's chain of hotels, which I've stayed at and if you've stayed at John, but maybe familiar to folks. But the conglomerate also owns businesses in lots of other industries, including energy and really the Sort of the crown jewel here as an insurance company. Well, we'll get into the diverse holdings in just a moment. And the family behind it all, and whether this kind of setup is. Is at all common, and it turns out there isn't. I'll come back to that later, but this one's a bit of a nugget, actually. But, John, give us the lowdown on Lowe's.
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Right. It's great that Gabriel sent this one in. Lowe's Corporation trades under the ticker L on the New York Stock Exchange, has a market cap of $24 billion. So a big company that is talked about not very often, and as you mentioned, it owns four operating businesses. CNA Financial, that's that insurance company that you mentioned. And Lowe's owns approximately about 92% of that insurance company. Now, CNA is publicly traded on its own as well. Market cap of $15 billion. So that represents the biggest part of Lowe's portfolio. Then the second part, boardwalk pipelines, that's 100% owned by Lowe's. That's an energy company that operates 14,000 miles of pipelines and storage for gas across the United States. Then, of course, Lowe's hotels, which I've stayed in, there's one in Times Square, and they own 100% of that. And then Altium Packaging, this is a smaller ownership, 53% is owned by Lowe's, and that's a plastic packaging company for consumer goods. So into manufacturing and industrial, but still
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a control position if you've got 53 ownership over there. So again, we're having a bit of. I'm having a bit of deja vu, right, Because Berkshire Hathaway is the one that springs to mind huge holdings and insurance. The reason they have those whole huge holdings and insurance, these are cash flow machines. And then the Berkshire Hathaway thesis has been take the cash from these insurance companies and then diversify it into other big, stable positions, often control positions, or at least very significant shareholder positions when it comes to other public companies. So I'm having a little bit of deja vu. We have seen something like this before.
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Yeah, a bit of a mini Berkshire. And this is also a family affair, and this cannot be overstated. Lowe's essentially started in 1946 when the Tisch brothers bought a single hotel in New Jersey. And then over time, the brothers acquired more companies. And now. So is this conglomerate a structure throwback to the 20th century? Because we've been talking about spinoffs and corporations breaking up.
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It's really interesting you bring that up, because there's an article, I think it was in the Economist over the weekend. I just been catching up. It came up. My mailbox is like stuffed full of like Nature magazine and the Economist, which shows what a complete nerd I am, all the things I subscribe to. And there was actually an article, or maybe it's Bloomberg, but there was an article there which asked the question, is the age of the conglomerate over? And what prompted that particular question for this article was actually the food conglomerates.
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Sure. Kraft, Heinz.
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Kraft Heinz. In that case, it's a bit of a different take on the word conglomerate because that's a single industry, even if it's lots of different brands. But nevertheless, we have seen big, more diversified conglomerates like GE break itself up. Right. It broke out its financial services which were in there at one point. It's then broken, broken up further into the energy component, into the aerospace component. We've seen a Honeywell break itself up with Johnson and Johnson. So this is this sort of a different play, as is Berkshire Hathaway.
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Sure.
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Different players, basically. How do you have the aggregation and the consolidation of these kinds of businesses as opposed to sort of breaking them up?
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And this company is controlled by the Tisch family. And that's a familiar name here in New York City, at least the New York City Police Commissioner. Jessica Tisch is a granddaughter of one of the co founders of the company. Her father, James Tisch was CEO of Lowe's. The company also owns a stake in the New York giants. And I know so many people that went to NYU and tried to get into the Tisch school there. So you see these names all around New York and the family still controls. They're just in the third generation now of family control.
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That's hugely philanthropic too when it comes to hospitals and whatnot. So this is, this is a real name here in New York. And members of the family have remained in the business. Bentish, president and chief executive officer of Lowe's Corporation. So that's the parent company. Alex Tish is the president and CEO of Lowe's Hotels. Again, that's 100 owned by the business. He succeeded his cousin Jonathan Tish in 2023. So it is, as you say, very much still a family affair. Big voting influence when you take a look at the capital structure. And of course significant economic ownership too, although not control economic ownership, just to be super clear.
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Right. So let's look at some of the results. And so this is out of the Q1 earnings. It's the most recent earnings for which we have results for the q1/4 revenue was up slightly from the previous year to four and a half billion dollars. Earnings per share had fallen. And now not all the properties are having the same success. On the Q1 earnings call, CEO Ben Tisch called it a tale of two cities. Now, of course, there's more than just two properties, but two cities. Let's go with the loser, CNA Financial. At the time, in that quarterly report, they had taken on $106 million in reserve charge, basically old insurance claims that came in worse than what they had budgeted for. But I do want to point out that they have turned that around. Shares in CNA have rebounded 20% just in the last month.
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But to your point, CNA is itself a publicly traded company. As you said before, it's a market cap of $15 billion. So you don't have to own low stock to get exposure to the story at cna. I think that's a really big point when we talk about the coverage of this a bit later.
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Yes, exactly. So meanwhile, the winners, the other city, the Tal, two Cities, Boardwalk Pipelines. And that was a standout in the Q1 earnings. EBITDA, a measure of profit, was up 4% to $360 million. And Ben Tisch, the CEO, called the results tremendous and pointed out that the company was benefiting from strong demand for natural gas.
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Another hugely free cash flowing business model. By the way, you do get a lot of capital expenditure to actually build the pipelines, but once they're up and running, it's really just taking a toll. Right. That is a hugely free cash flowing business. There are the likes of epp, others out there as well that do that. So then there's the. I'm a travel nerd. I'm a travel junkie. I'm very excited to talk about this. And Lowe's Hotels, also a winner. That brand basically swinging from break even in the prior year to $26 million in net income, largely because they have a joint venture with Universal Orlando, which is doing pretty well. And it's these big sort of resort hotels that again, if you can hit that scale, if you can execute, and if you can get occupancy, you're in for a good time. Well, Lowe's Hotels in total now has about 11 hotels guest rooms as part of its Universal collaboration, having opened three of those since January 2025. So that's been a pretty speedy rollout. Just going to show that my people, Harry Potter still remains popular.
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So popular. And this was emphasized throughout all the press releases I read Today, going back the last couple years, this was from the Lowe's press releases. They were telling the story of the business. And then they love to say, and that's when things got hairy. And I was, oh, that's typically a negative thing.
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Right.
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But of course it's spelled H A R Y. And they were talking about the broad success that Harry Potter brought to Universal Studios and that Lowe's was in on that, on the ground.
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But if I said it, you would not have been confused, because he wouldn't. That's when things get hairy.
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Sure.
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Right. No confusion.
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Very clever. If you're reading it.
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If you're reading it, they need to figure out who to put on their earnings calls. As my take on this, well, over the years, let's just talk a bit about what the Tisch family has been doing and how their actions have sort of signified how they're feeling about the business performance. They have tended to buy back stock when they think it's cheap. That's not unique to a family. Lots of businesses, corporations make that decision if they decide that a share buyback is the best use of capital. Lowe's did repurchase 300,000 shares in Q1 this year for $31 million, nevertheless ending the quarter with four and a half billion dollars in cash and equivalents at the parent level. Again, just showing just how cash flow generative these business can be, primarily, again, insurance and these pipeline businesses, $1.8 billion in holding company debt. But when you've got four and a half billion dollars in cash, you're not worried about it.
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Sure, they've got a checkbook.
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They've got a check.
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But. And I just wanted to highlight one more thing from the Q1 earnings call. And there's this lawsuit, it's an ongoing lawsuit that came up out of the 2018 Lowe's acquisition of the Boardwalk Minority Partnership units for that pipeline company. And at the end of the last year, CEO Ben Tisch called it, quote, a deeply frustrating and potentially highly consequential legal process. So I looked at the court documents today in New Jersey court.
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Did you really?
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Well, I was trying to see if you're still ongoing. Exactly. I mean, it's no nature magazine scene, but apparently it's still ongoing. And there are frequent letters sent into the court. And it's still on hold.
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Well, it's, it's interesting. That's on hold. And it's interesting that 2018 date, because when I tuned it out, which is when to go and look at how the analysts have been Rating this business. I did notice that there was sort of an end point where a number of the analysts who were putting price targets on the low stock actually had stopped in 2018. Not that that was a huge population to look at because there aren't many analysts who cover this name.
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No. Every time we talk about one of these companies, I go to a familiar site and I look at what the analyst reports are saying or what the analysts. And on Lowe's. Yeah, Home improvement company, the other lows, the other Lowe's, for example, they have 35 analysts that give price targets and reflection and those, those ratings buy, sell, hold and underperform over. If you go to this Lowe's, there's none of those numbers. There are two analysts and neither of them give estimates.
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No, exactly. And. But they're real names, they're real banks. Just to put that in context. So this is a Fortune 500 company, which sort of begs the question, why aren't they getting more love and more attention? And I think just to go back to Gabriel sending in this question to start with. So Gabriel's made the decision to hold the stock. Has it? But I think one of the reasons we don't hear much about this is precisely this problem. It doesn't have a lot of analyst coverage. And it's very hard for individual investors and institutional investors for both actually to try to figure out how to deploy their capital if there's not a ton of research being done, particularly given these are very different businesses that are owned under the same umbrella. So it's difficult to create a single model. That's true for me, just trying to do my own desktop work. It's true for analysts who are doing this professionally too, covering these kinds of names. It doesn't fit it into a single sector, which sort of begs the question, are there others like there? So I went down the rabbit hole and it turns out that there are a couple. So there's one called Markle Group, M A R K E L. It's also publicly traded. It's also got about a 24 billion dollar market cap. This business has insurance as its anchor. So a similar story. It was founded by a family and now it's got insurance, car, hauler equipment, leather handbags, some health care assets. So this, this case, the founding family, I think has about 3% ownership. It doesn't have voting control, but it does exist. It is out there. And it's very curious to see how these kinds of things evolve.
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That's interesting. And that handbag reminds me that the tisch family over the years had invested in watches.
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Yes.
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They also invested in cbs. They had some control over there. So it's been changing over the years.
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Well, shares in CNA Financial, we sort of alluded to it, up 14% year over year. Shares in Lowe's, the L up 26% year over year.
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And I just want to say we love getting notes either on Spotify or Apple, wherever you listen. And emails. We got the email from Gabriel. So if like Gabriel, you want to get in touch with us, please send an email to brewmarketshoworning.
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Brew.com Can I also just put in a pitch for snail mail too? I do love a good handwritten note. So, you know, feel free to send those in too.
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Yes, send it to the Burlington coat factory on 6, 7. Even that I walk by every day. I'll go pick up my.
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Yeah, that's great. Thank you for doing that. Well, it's 4:00pm on the East Coast. The market's wrapping up for today. There's the closing bell. We don't have a ticket tape, but as always, we'll throw it over to our human ticker, our producer, John. That's right.
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The S&P 500 finished down 3.10 of a point. The Dow was down over 1% and the NASDAQ pulled back from earlier losses to finish up the day up 2. 10 of a percent.
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There we go. There is the volatility. It's from the chip trades. They've been all over the place, lots going on, particularly as we look ahead to the SK Hynix ADR offering coming out, we think on Friday on the Nasdaq. Well, just as a final thought, let's talk about the Fed because we haven't done that in a minute. And just a short while ago, the minutes from the Federal Reserve's latest policy meeting were released. Now, this was the first meeting and therefore the first set of minutes, minutes coming out under new chair Kevin Walsh. He had described the meeting as, quote, a good family fight with policymakers debating the case for both rate hikes and for cuts. But beyond those competing views, the bigger story was really how the Fed may be communicating going forward. The minutes very interestingly did show a majority of participants support shortening the post meeting statement. So we get that every time there is a Fed decision. And this is in line with Walsh's push for a, a simpler, more streamlined approach to Fed communications. And frankly, he's very focused on making sure that Fed communications and decisions are much less open to broad interpretation. He wants to get rid of that ambiguity. So we're going to keep on watching. I cannot wait to nerd out on the next set of Fed minutes. That's it for today's Blue Markets Daily.
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Brew Markets Daily is hosted by Anne Barry and produced by John Cartel Talk, Abdelatif Avenue, La Roya and Emily Millarn. Our technical director is Uchenawa Ogu. Brittany De Taco is our audio engineer. And the president of Morning Brew Inc. Is Devin Emery.
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Up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. See you back here tomorrow, same time, same place.