Motley Fool Money - Episode: "Lions, and Tigers, and Tariffs. Oh My!"
Release Date: April 4, 2025

Hosts: Ron Gross (hosting for Dylan Lewis), Jason Moser, and Asit Sharma

1. Introduction: Navigating the Tariff Terrain

The episode opens with a spirited discussion on the recent tariff announcements by the Trump administration. Ron Gross sets the stage by highlighting the global scale of these tariffs, affecting approximately 180 out of 195 countries. The hosts emphasize the complexity and potential long-term impacts on the economy and stock market.

2. Understanding the Reciprocal Tariffs

Timestamp: [00:54] - [04:24]

Jason Moser delves into the specifics of the reciprocal tariffs, explaining their origins and broader implications:

"Tariffs were brought to the table as a way to help control border issues, concerns of fentanyl crossing the border and whatnot. But now it's obviously gone virtually global." – Jason Moser ([01:27])

He discusses the underlying issue of trade deficits, noting:

"Trade deficits are one piece of the puzzle. If we import more than we export, it can lead to shrinking domestic production, job losses, higher deficit spending." – Jason Moser ([02:10])

Asit Sharma adds that the tariffs, while labeled "reciprocal," often vary based on the trading country's status, resulting in inconsistent rates:

"Many of these tariffs are adhering to a calculation based on these very trade deficits." – Jason Moser ([03:00])

3. Short and Midterm Consequences for U.S. Companies

Timestamp: [04:37] - [05:51]

Asit Sharma analyzes the immediate impact on U.S. companies:

"The short term consequences are going to be a hit to earnings for many companies because the tariffs are effective." – Asit Sharma ([04:37])

He warns of potential stock value declines and advises investors to remain calm:

"My caution here to investors is not to just jump out of the market out of fear unless you really need that money." – Asit Sharma ([05:20])

Ron Gross offers a historical perspective, reassuring listeners:

"100% of the time stocks have come back, rebounded and moved higher through wars, depressions, pandemics." – Ron Gross ([05:51])

4. Earnings Insights: RH's Struggle Amid Tariffs

Timestamp: [06:38] - [08:39]

Ron Gross discusses RH's disappointing Q4 earnings, exacerbated by tariff news:

"RH reported fourth quarter earnings that were worse than expected." – Ron Gross ([06:38])

Asit Sharma breaks down the financials:

"Revenue up by about 10%, but earnings per share were 25% below consensus estimates." – Asit Sharma ([07:24])

He cautions investors about RH's leveraged position:

"They've taken on about $2.6 billion in debt... the company is a little stretched right now." – Asit Sharma ([08:39])

5. Rocket Companies' Strategic Acquisition

Timestamp: [08:39] - [10:07]

Rocket Companies' acquisition of Mr. Cooper Group for $9.4 billion is analyzed:

"Rocket shares were actually up on the news... moving towards a one-stop shop for homeowners." – Ron Gross ([09:08])

Jason Moser praises the strategic fit:

"The combined company would service about one in every six mortgages here in the US, equating to about $2.1 trillion in loan volume." – Jason Moser ([09:30])

He notes the potential catalyst from improving housing starts:

"There’s a catalyst on the horizon here when housing starts to improve." – Jason Moser ([10:07])

6. Roblox Ventures into Video Advertising

Timestamp: [11:03] - [12:42]

Ron Gross shifts focus to Roblox's new advertising strategy:

"Gamers can choose to watch video advertisements up to 30 seconds long in exchange for in-game rewards." – Ron Gross ([11:03])

Asit Sharma explains the business rationale:

"This is a really great way to tap into that programmatic style advertising space." – Asit Sharma ([12:42])

He highlights impressive completion rates:

"A completion rate of over 80%, with some experiences seeing a 90% completion rate." – Asit Sharma ([12:42])

7. Encino’s Market Reaction to Q4 Results

Timestamp: [13:08] - [15:11]

Encino's Q4 results led to a sharp stock decline:

"Shares were down more than 30%." – Jason Moser ([13:40])

Jason defends Encino's performance, focusing on growth metrics:

"Revenue up 14% from a year ago. Subscription revenue up 16% from a year ago." – Jason Moser ([14:10])

He attributes the stock drop to overly optimistic future guidance:

"The market wanted more than the guidance leadership provided for the coming year." – Jason Moser ([14:59])

8. OpenAI’s Transformation and Funding

Timestamp: [15:11] - [17:47]

Ron Gross reports on OpenAI's significant funding round:

"OpenAI raised up to $40 billion in new funding, valuing the company at $300 billion." – Ron Gross ([15:11])

Asit Sharma discusses the conditional nature of the funding:

"They're going to receive $10 billion upfront from SoftBank, but to get the rest, they must convert to for-profit status." – Asit Sharma ([16:03])

The hosts exchange opinions on AI platforms:

"I like Gemini on my phone... If I'm on my computer and I'm typing, then I'm a chatgpt guy." – Ron Gross ([17:30])
"Claude's my friend." – Asit Sharma ([17:40])

9. Tesla’s Q1 Challenges and Future Outlook

Timestamp: [17:47] - [19:40]

Tesla's Q1 sales slump is dissected:

"First quarter sales fell 13% to the weakest in nearly three years." – Ron Gross ([17:47])

Jason Moser explores the factors:

"Investors were expecting deliveries around 365,000, but came in at 336,681." – Jason Moser ([18:22])

He discusses Elon Musk's influence and competitive pressures:

"His big political presence has made his bed, so to speak, and he's laid his cards on the table there." – Jason Moser ([19:08])

10. Interview with Liz Ann Saunders: Lessons from Market Corrections

Timestamp: [20:04] - [34:38]

Guest: Liz Ann Saunders, Chief Investment Strategist at Charles Schwab

Liz Ann addresses the unexpected nature of the tariff announcements:

"I think maximum a 10 out of 100. Yeah, I think it was a huge surprise." – Liz Ann Saunders ([23:14])

She analyzes the potential for a bear market:

"Every cycle is different, but recession probabilities have gone up, elevating concern for a bear market." – Liz Ann Saunders ([24:00])

Guidance for investors includes:

• Avoid Panic: "Panic is not an investing strategy." – Liz Ann Saunders ([25:31])
• Diversification: Emphasizes the importance of not having all eggs in one basket, particularly advocating for international exposure.
• Rebalancing: Encourages trimming high-performing assets and reinforcing diversification.

Liz Ann also reflects on historical corrections and the heightened exposure of households to equities:

"This tentacle from market performance to economic performance is a bit tighter than we've seen in the past." – Liz Ann Saunders ([34:20])

11. Lighthearted Segment: Subway’s New Nacho Creation

Timestamp: [35:05] - [37:03]

Ron introduces a fun segment about Subway's partnership with Doritos:

"Subway is partnering with Doritos to sell foot-long nachos for $5." – Ron Gross ([36:08])

Jason humorously critiques the menu addition:

"How in the world are you using cheddar cheese on these things? It just doesn't melt good." – Jason Moser ([36:38])

Asit offers a playful alternative:

"Buy yourself a party bag of Doritos and get some Cheez whiz at home." – Asit Sharma ([36:58])

Dan humorously refuses to try the new offering:

"Never underestimate the laziness of the American consumer... I will not go." – Dan Boyd ([37:00])

12. Stocks on Radar: DoorDash and Pure Storage

Timestamp: [37:15] - [39:35]

DoorDash (DASH): Asit Sharma highlights DoorDash's strong free cash flow and strategic partnerships:

"This company may seem like not a great stock to have on your radar, but it's a free cash flow monster." – Asit Sharma ([37:15])
"DoorDash is looking good with expansion into retail deliveries and a deal with Domino's." – Asit Sharma ([37:56])

Dan expresses his humorous disinterest:

"All I want to say is never underestimate the laziness of the American consumer." – Dan Boyd ([38:08])

Pure Storage (PSTG): Jason Moser recommends Pure Storage, emphasizing its data storage solutions:

"Data centers consume a lot of power, and Pure Storage offers an all-flash alternative to traditional methods." – Jason Moser ([38:11])

He underscores the company's sustainability and financial health:

"It's profitable, cash flow positive, and has a healthy balance sheet." – Jason Moser ([38:11])

Dan humorously questions the nature of the storage business:

"I thought it was going to be a physical storage company... and it's data centers." – Dan Boyd ([39:08])

13. Closing Remarks

Ron Gross wraps up the episode with final thoughts on the discussed topics and thanks listeners for tuning in. He reiterates the importance of thoughtful investing amidst market volatility and global economic shifts.

Notable Quotes:

• Ron Gross:
  “Stocks have come back, rebounded and moved higher through wars, depressions, pandemics.” ([05:51])

• Jason Moser:
  “Trade deficits are part of the puzzle. If we import more than we export, it can lead to shrinking domestic production, job losses, higher deficit spending.” ([02:10])

• Asit Sharma:
  “The short term consequences are going to be a hit to earnings for many companies because the tariffs are effective.” ([04:37])

• Liz Ann Saunders:
  “Panic is not an investing strategy.” ([25:31])

Conclusion: This episode of Motley Fool Money provides a comprehensive analysis of the recent tariff announcements and their multifaceted impact on the global economy and U.S. stock market. The hosts, alongside expert guest Liz Ann Saunders, offer insights into navigating market volatility, strategic investments, and the importance of diversification. Lighthearted segments and stock recommendations add a balanced mix of information and engagement, making it a valuable listen for investors seeking to understand and adapt to current economic challenges.