Visa Is Being Sued By The DOJ
Summary
TLDRThe Joseph Carlson show discusses Visa being sued by the Department of Justice for alleged monopolistic practices in debit card transactions. The show analyzes the DOJ's case, Visa's market position, and the impact on consumers and investors. Other topics include Nike's CEO change, the potential benefits of the new leadership, and the concept of 'Doom spending' among Gen Z and Millennials, where they spend on luxuries despite economic pessimism.
Takeaways
- πΌ The Department of Justice is suing Visa for allegedly being an illegal monopoly in the debit card transaction market.
- π Visa's stock has been struggling, dropping 1.36% on the day of the news and 5% over the past week, with only a 4% increase year-to-date.
- π₯ Visa operates the largest debit network in the U.S., facilitating over $4 trillion in transactions annually.
- π« The lawsuit claims Visa uses exclusivity agreements and volume discounts to maintain its dominance and penalize competitors.
- π Despite being a large player, Visa faces competition from companies like MasterCard, which is growing faster and gaining market share.
- π³ Visa's debit card business is significantly larger than its credit card business, with 3.2 billion debit cards issued compared to 1.3 billion credit cards.
- π MasterCard's revenue growth has outpaced Visa's, suggesting that Visa's market dominance is being challenged.
- π The lawsuit alleges that consumers are harmed as retailers pass on higher Visa fees to them, but this is disputed by some who argue that savings are often not passed on.
- π’ The change in CEO at Nike, with the former CEO being fired and replaced by a long-term insider, is seen as a positive move for the company.
- π The term 'Doom spending' is a new phenomenon where younger generations are spending on luxuries despite economic pessimism, which some argue is actually preventing a recession.
Q & A
Why is Visa being sued by the Department of Justice?
-Visa is being sued by the Department of Justice for allegedly being an illegal Monopoly, specifically in their debit card use, where they are accused of violating Federal antitrust law.
What is the Department of Justice's argument against Visa?
-The Department of Justice argues that Visa operates as a monopolist in the debit transaction markets, inflicting significant harm on consumers and businesses, and uses unlawful anti-competitive agreements to penalize merchants and banks for using competing payment networks.
How does the lawsuit against Visa affect its stock price?
-Following the lawsuit announcement, Visa's stock price dropped 1.36% on the day and had previously dropped 5% over the past week, with a year-to-date increase of only 4%.
What is the significance of debit cards in Visa's business?
-Debit cards are a significant part of Visa's business, with over 60% to 70% of all debit card transactions in the United States being processed through Visa's network, and approximately 3.2 billion Visa debit cards in circulation.
How does MasterCard's market position compare to Visa's?
-While MasterCard is currently smaller than Visa in market cap and number of cards issued, it is not by a large margin, with 3.05 billion cards issued and growing at a faster rate than Visa, gaining market share over the past decade.
What is the impact of exclusivity agreements on merchants according to the lawsuit?
-The lawsuit claims that Visa uses exclusivity agreements to maintain its monopoly power, penalizing merchants with higher fees if they route transactions through competing networks, which is alleged to be an illegal practice.
How does the Department of Justice argue that consumers are affected by Visa's practices?
-The Department of Justice argues that consumers are affected because merchants and banks pass along the higher costs imposed by Visa through higher prices or reduced quality of service.
What is the potential outcome for Visa if the lawsuit is successful?
-If the lawsuit is successful, Visa may be forced to allow merchants to have multiple options for transaction processing and potentially lose its exclusivity agreements, which could lead to reduced fees and more competition in the market.
Why was Nike's former CEO John Donaho fired?
-John Donaho was fired due to strategic decisions that led to increased competition for Nike, such as consolidating products and reducing investment in new designs, which allowed competitors like Adidas and New Balance to gain market share.
Who is Elliot Hill, the new CEO of Nike?
-Elliot Hill is a longtime insider of Nike, having started at the company in 1988 as an intern and worked his way up to become one of the top executives. His deep experience and understanding of Nike's culture and business are seen as assets for the company's future.
What is 'Doom spending' and how is it related to the current economic climate?
-Doom spending refers to the trend of young people spending on luxuries like travel and designer clothing instead of saving, driven by pessimism about the economy and their future. Ironically, this behavior may be preventing a recession by continuing to stimulate consumer spending.
Outlines
πΌ Visa Faces Antitrust Lawsuit
The Department of Justice, led by Merrick Garland, is suing Visa for alleged monopolistic practices in the debit card transaction market. The lawsuit claims that Visa's dominance leads to significant harm for consumers and businesses. Visa operates the largest debit network in the U.S., facilitating over 60% of all debit transactions. The company's size is used to argue its monopolistic position, despite competition from MasterCard and other credit card companies. The script discusses Visa's debit card business, which is larger than its credit card business, and compares it to MasterCard's market position.
π Debunking Visa's Monopoly Claims
The script challenges the Department of Justice's claims against Visa, arguing that Visa faces strong competition, particularly from MasterCard. It points out that MasterCard is growing faster than Visa and has been gaining market share over the past decade. The discussion also addresses the DOJ's allegations that Visa uses exclusivity agreements and volume discounts to maintain a monopoly, practices that are common in business. The script suggests that these practices do not necessarily harm consumers, as retailers may not pass on savings to customers even if Visa's fees were reduced.
π The Impact of 'Doom Spending'
The script discusses a trend called 'Doom spending', where young people are spending on luxuries like travel and designer clothing instead of saving, due to pessimism about the economy and their future. Despite being labeled as unhealthy and fatalistic, this spending behavior is ironically preventing a recession by keeping money flowing through the economy. The term is believed to have originated on social media, particularly TikTok, and is described as a mechanism for stress relief amidst a constant barrage of negative news.
π Nike's Leadership Change
Nike has replaced its former CEO, John Donahoe, with Elliot Hill, a longtime insider who started at the company as an intern in 1988. The script reviews the previous CEO's strategy of consolidating products and focusing on the Nike app, which led to increased competition from brands like Adidas and New Balance. It suggests that Elliot Hill's deep experience with Nike and its culture makes him a better choice for CEO than someone with a background in cloud architecture, like the previous CEO. Despite the challenges Nike faces in a more competitive market, the script expresses optimism about Hill's leadership.
π Global Economy and Consumer Behavior
The final paragraph discusses the global economy and consumer behavior, particularly focusing on the concept of 'Doom spending'. It suggests that despite the negative connotations of the term, the act of spending money on luxuries and travel by younger generations may actually be beneficial for the economy, as it stimulates economic activity and could potentially prevent a recession. The script also touches on the role of social media in shaping consumer attitudes and behaviors.
Mindmap
Keywords
π‘Debit Card
π‘Monopoly
π‘Department of Justice
π‘Merrick Garland
π‘Anti-Competitive Agreements
π‘Market Share
π‘Visa Stock
π‘Investors
π‘MasterCard
π‘Durbin Amendment
Highlights
Visa is being sued by the Department of Justice for being an illegal Monopoly.
The lawsuit focuses on Visa's dominance in the debit card transaction market.
Visa operates the largest debit network in the U.S., facilitating over $4 trillion in transactions annually.
Visa's debit card business is larger than its credit card business, with 3.2 billion debit cards issued.
MasterCard, though smaller, is a significant competitor to Visa with 3.05 billion cards issued.
Visa's year-over-year revenue growth is 9.7%, compared to MasterCard's 11.87%.
MasterCard has been gaining market share in debit cards, increasing from 21% in 2005 to 27% last year.
The Department of Justice claims Visa uses a 'carrot and stick' strategy to maintain monopoly power.
Visa allegedly penalizes merchants with higher fees for using competing payment networks.
The DOJ alleges that consumers bear the cost of Visa's anti-competitive practices through higher prices or reduced service quality.
Visa's exclusivity agreements and volume discounts are cited as evidence of anti-competitive behavior.
Visa's response to the lawsuit is that it is 'meritless' and they will defend themselves vigorously.
Investors may view the lawsuit as a buying opportunity, considering Visa's past performance post-litigation.
Nike has replaced its CEO, John Donahoe, with Elliot Hill, a long-term insider of the company.
Elliot Hill's appointment is seen as a positive move, given his long history and understanding of Nike's culture and business.
Gen Z and Millennials are increasingly engaging in 'Doom spending', a term describing spending on luxuries due to pessimism about the economy.
Doom spending is characterized as a mechanism for relieving stress and is considered unhealthy and fatalistic.
Transcripts
today on the Joseph Carlson show Visa is
being sued by the Department of Justice
Meritt Garland is added again targeting
the big bad monopolies and Visa is the
next one in sight they're being sued
over being an illegal Monopoly
specifically with their debit card use
the Department of Justice laid out their
argument of why they believe Visa is an
illegal Monopoly we're going to take a
look at their statement see if it has
any Merit and see if Visa investors
should be concerned after all Visa stock
is down 1.36% on the day that's after
dropping 5% over the past week and
year-to date Visa is only up 4% this
company is struggling to keep up with
the market and will'll be taking a look
going over everything with visa and
MasterCard and seeing if investors
should be concerned about this news now
of course we have some other news to get
to John donaho the former CEO of Nike
was fired he was canned and replaced
with the new CEO Elliot Hill he's a
longtime Insider of the company we'll be
going over why this is good news for
Nike and then finally we have here from
cnbc's Mak
that genz and Millennials are
increasingly Doom spending that's a
direct quote they're Doom spending we'll
be looking at what Doom spending is and
apparently why genz and Millennials are
doing it so as always we have a lot to
get into let's go ahead and start off
with the headline news visas under suit
by the Department of Justice for being
an illegal Monopoly the Department of
Justice is headed by the Attorney
General Merrick Garland and I think it'd
be beneficial to first before even
jumping into this listening to their
case Merrick Garland is the one over
this and he basically laid out the
reasons that he's suing Visa I'll go
through and I'll highlight some of what
I think are the most important points
that he brings up he starts off with a
brief summary here we alleg Visa is a
monopolist in the debit transaction
markets that is violating Federal
antitrust law and inflicting often
hidden but significant harm on American
consumers and businesses Visa operates
the largest debit Network in the United
States a debit Network facilitates the
electronic transfer of funds directly
from a consumer's bank account to the
Merchant's Bank account in a retail
transaction millions of Americans prefer
to use debit transactions which are
often the primary option for lower
income consumers without a credit card
in the United States over $4 trillion of
debit card transactions take place every
year over 60% of those transactions and
over 70% of all online online debit
transactions are routed through Visa's
electronic payment Network he's laying
the groundwork that Visa is a very large
company and that's part of being a
monopoly it's harder to be a monopoly
when you're a very small company than a
big one so making the point that Visa is
really big is accurate and in fact I
think most people realize that Visa is a
big company but most may not fully
understand how big their debit card
businesses a lot of people look at Visa
as a credit card business but they are
massive in debit cards if we look at
visa and bring up the fundamentals here
on qual trim I'll point out just one key
performance indicator these are things
that I track on different companies that
I hold even though I'm not directly
invested in Visa I do keep track of this
metric and it shows the breakdown of
total Visa cards between the debit cards
and the credit card what you'll notice
is that the dark orange hair is Visa
debit the lighter orange hair is Visa
credit Visa credit is a much smaller
portion of the cards issued the majority
of their business is through debits
that's around 60 to 70% of their
business is through debit cards and the
amount of debit cards they have is just
astounding as of the most recent quarter
it's 3.2 billion debit cards with a B if
we compare that to their credit cards
the credit cards are only 1.3 billion
still a lot of them 1.3 billion is not a
little amount but it's not anywhere
close to the Visa debit card so Visa
overall right now is more of a debit
card business than a credit crit card
business so he starts off by laying out
how big Visa is trying to paint them as
monopolist the one thing I'd point out
that he misses hair that he does not lay
out is how big Visa's competitors are we
have MasterCard here it is true that
MasterCard is currently smaller than
Visa in both market cap and cards issued
but not by a lot MasterCard still has
billions of cards issued now we just
have the total card number here but it's
3.05 billion and I would estimate that
MasterCard has a majority of theirs as
debit as well so MasterCard is a massive
competitor they're not something that
just be ignored but that's what Merrick
garland does because he's trying to make
the case that Vis is a monopoly it's
difficult to make the case that
something's a monopoly when you have a
massive competitor competing against you
we of course also have many other credit
card companies Visa Mastercard aren't
the only ones but that goes against the
point that merri arland's trying to make
he's trying to make the point that Visa
is dominant that it's the leader that
it's a monopoly that it has Limitless
pricing power and that it controls
consumers if you highlight how big the
competitors are how Fierce the
competition is in this space it
discredits his point the truth is when
you look at this from an impartial
standpoint it looks like Visa is
actually facing tough competition in
fact if we look at Visa's Revenue growth
appr proxy for their market dominance
and their pricing power it was 9.7%
year-over-year over the last trailing 12
months so we have just under 10% %
growth from Visa if we compare that
level of growth to MasterCard again
their primary competitor MasterCard is
growing faster at
11.87% so MasterCard is growing around
3% faster than Visa but Visa is being
sued for being a monopoly MasterCard
isn't if we look at different reports of
market share over time Visa is also
losing market share to MasterCard over
time MasterCard has gained market share
and debits over the past decade with 27%
share last year up from 21% in 2005 so
in the past 10 years MasterCard has
gained 6% market share of Visa's debit
card business so we see the numbers here
that MasterCard their primary competitor
is growing faster than Visa by a good
margin MasterCard is gaining market
share in debit cards which is what they
have a problem with we also have other
data we can look at MasterCard is
growing faster internationally they're
issuing cards at a faster Pace there's a
lot of reasons to believe that Visa does
have competition to face MasterCard
being the primary competitor but even as
we see that data Merck Garland Paints
the opposite picture he Paints the
picture that Visa's Moote is
impenetrable according to Visa's own
calculations it is insulated from
competition for 75 to
80% of debit transactions initiated with
a Visa branded debit
card we allege that to maintain this
Monopoly Power Visa deploys a web of
unlawful anti-competitive agreements to
penalize merchants and banks for using
competing payment networks at the same
time it coerces wouldbe Market entrance
into unlawful agreements not to compete
by threatening High fees if they do not
cooperate and promising big payoffs if
they do the result is a debit Market
where Visa has unlawfully amassed the
power to extract fees that far exceed
what it could charge in a competitive
Market merchants and Banks pass a law
those costs to Consumers either by
raising prices or reducing quality or
service and there we get to the Crux of
the complaint they're alleging that Visa
used a carrot and stick strategy to
coorse different Merchants into unlawful
agreements they would punish Merchants
by leving higher fees if they routed
some transactions to other card networks
the justice department said consumers
are losers from that Arrangement now it
is true that Visa does this they say hey
if you use just our service then we'll
give you a better rate than if you use a
lot of people's service this is called
an exclusivity agreement it's a normal
thing in the terms of business lots of
businesses have exclusivity agreements
you might have the same thing if you're
providing ingredients to a restaurant if
you're the only one providing and
supplying this product you might have an
exclusivity agreement that you get
better rates than if you have many
people supplying it this type of thing
happens all throughout businesses
worldwide so in and of itself giving a
business a better rate when they
exclusively do business with you is not
something inherently illegal many
businesses are doing this right now and
it's the reason that Visa has been able
to do this for decades now the other
part of this where they say consumers
are the losers from this Arrangement is
entirely subjective the argument from
the Department of Justice is that
retailers like Walmart and Target pass
along the cost of the Visa transaction
onto the consumer so when Visa charges
more the consumers pay more and
therefore the consumers are the loser in
the situation but that isn't necessarily
accurate in fact a lot of people that
study this stuff and do third party
research on it people that study debit
card and credit card transactions
they've looked over a lot of data and
found that even when you remove the
credit card fee the retailer does not
pass along the savings to the consumer
they pocket them for themselves so if
Walmart suddenly could get rid of Visa's
transaction fees it's not necessarily
true that they would just pass along
those savings right to the consumer a
lot of if not all of those savings would
fall to Walmart's bottom line retailers
are upset at Visa not because they have
to charge customers more but because
they have to pay visa to do business the
other thing they leave out when alleging
that consumers are the loser from this
Arrangement is that not all networks are
the same Visa has built a trustworthy
reliable insured Network to process
transactions the third-party networks
the cheaper ones that Walmart and Target
would happily send customers to may not
be as trustworthy they may not be as
reliable we had the same type of
discussion a year ago when there was a
new Durban Amendment proposed this would
allow retailers like Walmart to choose
what network your transactions are
processed on and the results would be
the same exactly cuz I'm the one paying
for that purchase I should choose where
my purchase gets run why should the
retailer decide nah let's run it on a
cheap Network that doesn't have fraud
protection that's what this bill will
allow this will absolutely harm
consumers so it may not necessarily be
in the best interest of the consumer to
make Walmart more money by transacting
through lower quality pay payment
processors but that's what could happen
if this type of thing is successful now
we've addressed this stick part where
Visa apparently punishes companies by
using exclusive agreements there's also
the carrot part the justice department
said that Visa has a practice of
offering volume discount to Merchants
that is illegal under antitrust law now
again this is something that every
business is doing all the time offering
bulk discounts for high volume customers
is standard practice in virtually every
industry especially in software and
payment proc processing they Loop this
back again to the penalizing factor
Federal Law requires that Merchants have
the ability to choose from at least two
unaffiliated debit card networks to
process transactions but Visa would
penalize Merchants who pick another
payment Network by charging higher fees
on all transactions processed so even
when they're talking about bulk
discounting they're really talking about
once again penalizing Merchants for
using other payment networks Visa likes
to have the exclusivity agreement where
companies like Costco use only visa and
they give them a much lower rate for
being exclusive with them and that is
the primary concern that the doj has now
the doj hasn't laid out specifically
what they want in terms of relief so we
don't know really what they're asking of
Visa they're just alleging they're a
monopoly at this point but if I was to
guess it would be that visa and other
credit card issuers are forced to have
multiple options for transaction
processing at Merchants and most likely
the merchant would be able to pick where
your transaction is processed if it's
processed through Visa Network or a
third party alternative that would be a
lack of choice from the customer and
would benefit the merchants now in terms
of the argument and the strength of
these arguments I think it's rather weak
from the doj I've looked at different
arguments from the Department of Justice
on many lawsuits they've had with other
companies and this one is one of the
weaker ones they're basically just
alleging that Visa gives group discounts
with exclusive agreements that has some
validity to it but that is normal stand
business practice offering discounts for
bulk and volume customers is also
something that's standard practice
outside of that Visa hasn't been boxing
out competition they haven't been buying
up companies Visa's transaction with
plaid was blocked by the doj they've
mostly been growing organically over
time so I think this is going to be an
uphill battle from the Department of
Justice and Visa thinks so as well they
said quote we are proud of the payment
networks we have built the Innovation we
advance and The Economic Opportunity we
enable
this lawsuit is meritless and we will
defend ourselves vigorously so Visa is
ready to fight this and take on the doj
now looking at this from an investment
standpoint when I look at my portfolio I
announce frequently that I invest in
Monopoly monopolistic companies that
have large dominant concentration in
very important usually Global markets so
we look at S&P Global it is a duopoly
with Moody MasterCard is somewhat
duopoly or oligopoly with Visa in this
case I actually think that MasterCard is
growing going faster taking market share
that's why I have a preference of
MasterCard over Visa into it has a very
dominant position in so many different
markets and that leads to lots of
advantages these companies are more
stable they grow organically they have
huge Network effects of people naturally
gravitating to their products there's
lots of things that go well with these
type of dominant companies but one thing
you're always going to face when you
have a portfolio like this when you're
investing in lots of dominant
monopolistic companies
is government interference government is
constantly going to be targeting these
type of companies and I've seen this
pattern over the past 5 years we see an
example of it time and time again just
recently the justice department sues
Google for monopolizing digital
advertising Technologies they're suing
Google twice for being a monopoly in two
different categories the justice
department sues Apple for monopolizing
smartphone markets that happened in
March of 2021 the justice department
already blocked Visa's proposed
acquisition of plaid this is going to be
a great acquisition for Visa this is a a
phenomenal digital property for visa to
buy but Visa ended up buying a smaller
alternative to Plaid because they
couldn't get this deal to go through and
there's many more examples in this
there's lots of governments even outside
of the us that are also targeting big
tech companies namely the EU so if you
have a portfolio full of companies that
are top te dominant world-class
companies they're going to run into
regulatory issues over time that is the
natural consequence of being a dominant
winner
whether Justified or not and I can say
the same thing about the story fund the
companies in this portfolio are every
bit as dominant as in the passive income
portfolio so far some of them have
avoided a lot of legal action but some
haven't Amazon has been under threat of
lawsuit and sued so many times for being
a monopoly and it's never going to end
for this company as long as they're
dominant as they are but the company
will continue winning anyways Netflix is
one that I think has avoided most
lawsuits it hasn't been one that's been
targeted but I think with the continued
dominance of Netflix and when investors
the market and government officials from
large economies realize that Netflix is
in fact a dominant company that has huge
concentrated market share they're going
to be targeted as a monopoly as well I
think it's only a matter of time I can't
perfectly predict the future with any of
these companies but if we use history as
a guide in most cases having these
companies targeted as a monopoly ends up
with these companies becoming stronger
over time Visa itself is an example of
this the first Durban amendment was
passed in 2011 if we look back close to
that time period Visa was trading for
below $50 per share the stock price is
up 400% while it's paid dividends the
entire time up to
$270 and this was after a groundbreaking
Anti-Trust lawsuit was successfully
launched against Visa the stock has
still crushed the market over that time
period so I consider events like this
with scary things happening to an
otherwise great company compan as
typically buying opportunities and I
think most Visa investors will do really
well over time given its current
valuation and price point I'm not going
to be buying into Visa because I already
own a lot of MasterCard but I'm going to
continue holding my Mastercard now
moving on we have some good news for
Nike Nike fired their old CEO John donow
and they replaced him with someone named
Elliot hill now Elliot Hill is not a
known entity he's someone that has
worked at Nike for a long period of time
we'll learn about him in just a minute
but I want to highlight just a in which
I covered this in a previous episode but
I think it would be good to summarize
really quick the problems that John
donel caused with Nike basically what he
did was he Consolidated a lot of Nike's
Products off of different retail shelf
space and off of different online
Outlets like Amazon and
and of course the consequence of that
was having other top competitors like
new balance and Adidas quickly fill in
that shelf space Adidas and New Balance
found that they had a lot more
distribution which caused them to gain
market share then Nike also decided to
make their business more efficient
higher margins by lowering the amount of
investment into new shoes and new
designs instead of just creating new
designs for runners they created a lot
of new colors for existing product lines
and this allowed a host of all new
different shoe companies to start spons
in ones like Hoka on brand ones like
Brooks all these different brands
started popping up out of nowhere and
they got popular people found out about
these shoes they fallen in love with
these shoes and now Nike has a host of
competitors that didn't exist just four
years ago so in many ways we can
directly attribute the increasing
competition to Nike as a consequence for
them concentrating everything on the app
and that's why it was overall looking
back in hindsight not a great decision
to put everything on the app and here we
have Nike now investors realize the
mistake they've made the executive team
has as well and they need a change of
leadership so they can John donow and
they get a brand new Nike CEO now I
didn't know anything about this guy
Elliot Hill and most people didn't as
well because he's not a known name he's
not some hot shot CEO moving from
company to company he's not someone that
came from a firm like McKenzie that was
plugged into the company Elliot Hill
started working at this Aker Giant in
1988 as an intern right when I read this
first sentence I already like him better
he's already a better CEO in my opinion
than the existing or previous Nik CEO
the fact that he started working at the
company in
1988 as an intern I was born in
1989 just to give you an idea of how
long ago that was he has been working at
this company for longer than I've been
alive so when you talk about CEOs and
their ability to to see the company
overall the culture the direction they
should go I think it's always a better
idea to have people that have been there
a long time period that really know the
company that they've lived the company
they've experienced it it's basically
all they know is that company from what
I see that is most often the best people
to have running the company and I see
the same thing with Costco the Costco
CEO someone that worked as a forklift
operator he worked as a starting point
in the company and Rose through the
ranks and this guy Elliot Hill did the
same thing he took on calls from
customers he moved boxes in warehouses
over more than three decades he claimed
to be one of the top Executives so in
2020 Nike had to decide who to make
their CEO they had option one who was
Elliot Hill who had worked with the
company for 35 years risen through the
ranks over time then they had option two
John donow who was someone that had
experience with Cloud architecture but
he was more of a Consulting type of
person coming from ban and Company which
is similar to a McKenzie type of
Personality they wanted to make the app
big and so they chose someone that had
experience in app architecture but of
course this was the wrong decision they
needed someone that had experience
running Nikey not someone that had
experience running Cloud architecture
Nike has a lot of Engineers that they
can refer to to figure out the
technicalities having someone that has
the experience of the culture and the
business was far more important so once
they realized the error in this decision
they fired John and they brought back
Elliot Hill so he is now back to try to
revive Nike and get it back on track now
they know hair accurately that he faces
steep challenges the industry is
increasingly fragmented Rivals like Hoka
and an are taking market share from
Nike's core running category and its
lifestyle offering another hurdle will
be managing key franchises like Air
Jordans and dunk which Nike oversold in
recent years Nike is cutting back on new
releases under those models in an effort
to Engine air scarcity Executives warned
in June that the move would likely hurt
the company's sales growth so this is a
great thing to have him as a CEO I think
he's going to do a better job and make
decisions that will help Nike in the
long term of the company but he now does
face a far more uphill battle these
other brands like an and Hoka already
exist people have already fallen in love
with them and it's true that Nike is
facing a far more competitive space so
even though I think this is a great job
from the Nike executive team to bring
back Elliot Hill to the company I think
he'll do a better job I still think that
Nike is going to face a lot of
challenges for that reason I'm not
buying the stock right now but I wish it
well now moving on we get to this
headline here gen Z and Millennials are
increasingly Doom spending here's what
it is and how to stop it when I read
headlines like this I just wonder where
the term comes from who's pioneering
terms like Doom spending I've never
heard of this in my life and I have just
a hunch a hunch that this is from Tik
Tok I feel like whenever there's a new
term that's it's out there it's a little
crazy it comes from Tik Tok but
apparently some young people are
splashing out on luxuries like travel
and designer clothing instead of saving
and a trend that's being carried
characteriz as doom spanding on social
media social media I I think it's I
think it's Tik Tock in this definition
Doom spanding is when a person
mindlessly shops to self soothe because
they feel pessimistic about the economy
and their future according to psychology
today so apparently this is when you
feel so pessimistic about the economy
and about the future you're just you're
just going out and spending money to
sooe yourself a mechanism for relieving
the stress making so you a little bit uh
happier in the moment according to a
senior lecturer in finance at King's
business school the practice is both
quote unhealthy and
fatalistic now it may be unhealthy but
the ironic thing here is that that
people Doom spending and going on
vacation and spending their money is
ironically what's causing us not to go
in a recession so so people are are
mindlessly spending money feeling
pessimistic about the economy because
they might fear an upcoming recession
but them mindlessly spending money is
what's causing us to not go in a
recession they say that this is also
happening because people are chronically
online and feel like they're constantly
receiving bad news it makes them feel
like Armageddon to me after reading this
it seems like Doom spending is just
another way for people to complain they
have a lot of money they're spending it
going on vacations and shopping and
we're still unhappy about it but there
you have it apparently the global
economy right now is being held up by
Doom spending that's all for this
episode see you in the next one
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