High Speed Market Summary, Apple Lambo, $200 Pool Chair Rental

July 28, 2022
There is so much to talk about regarding the markets, we couldn’t possibly focus on just one story so we’re giving you a high speed summary. We’re also talking about Apple's recent poach from Lamborghini, as well as a growing trend of resorts charging big bucks for pool chair rentals.
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SPEAKERS

Kyle Mountsier, Paul Daly


Paul Daly  00:23

Yo, what is going on? It is Thursday. We have so much stuff to talk about from yesterday. So we're gonna give you a lightning round summary for the first time ever talking about an apple, Lamborghini. Does that make sense? It will have a second go. The people really want to know who else is rebound Smith wants to know me repeat went up on me what's it called? It's been a while for a second.


Kyle Mountsier  00:48

I'm telling you for those, listen to the audio podcast. If you're if you're a guy, and you roll up when a black flat bill with white lettering, and it's a one on one, there's only one option, you have to lean into the bounce. And that's what


Paul Daly  01:05

this is. This was the test hat that they sent. The art was supposed to be in black and it came back in white and it couldn't fit Kyle's head so I ended up with it in my office. This is great. Thanks, Lise Lee's comments, love the music. I love that sometimes you just get a little bounce in your step, and it helps your day go a little bit better. We have a lot to talk about today. So much happened in the markets yesterday. I have a couple of fun stories like we always try to cover. But I want to mention the fact that we completed the very first front to back full episode of auto collabs yesterday with our keynote speaker featured speaker at asotu con Jim McKelvey, co founder of square the payments company, but get this. He's also the chairman of the St. Louis Federal Reserve, sitting


Kyle Mountsier  01:52

like, and like a professional glassblower Karela company whose company imports the most sand and glass in the US


Paul Daly  02:06

into the US from everywhere else. And he just did not stat and he's working on a solution to make compostable diapers like vigs, the world's most interesting man, and we finish the full episode. And the format of that show is we, Michael Cirilo, and Kyle and myself, we record a little intro, we're talking about the guests, and then we've had the interview. And then after that, we give our thoughts on the interview. And so we got all three of those pieces in place for auto collabs episode number one with Jim McKelvey is going to be released soon. Subscribe on your favorite platform at auto collabs.com. And we can't wait to share it because this I feel like this podcast is like a level up. Like I know it's a level up for me personally, but I think I think the conversations are gonna be a level up for the industry. So we're, we couldn't be more excited about that. We can't and you know, that he is going to be featured at a soda con, if you don't have your tickets yet. The the fire is ramping up, we are like 44 days out. I don't know how many days it's in the 40s.


Kyle Mountsier  03:05

No. And yesterday, we we put every speaker that we currently have confirmed I think we're confirming like four or five more tomorrow. So I think the speaker list is over 55 At this point, we're just we're making sure and like we said where you want to get perspectives from across automotive, retail and outside of auto retail, we weren't kidding, meaning we're backing into 36 hours 50 Plus speakers, and they're on the website you can check out who's coming can kind of see your peers or people you don't know yet get get a little bit of info about them click through to their, their social profiles, learn a little bit about those. So if you're coming or if you're wondering whether or not you should come that speaker place is a really good place to, to check out. Just kind of the thoughts that are gonna be ruminating around us Otakon


Paul Daly  03:55

legit, legit legit, we spent like half of the day yesterday on other people's podcasts, which was insanely fun. It was insanely fun. spent so much time with our friend Glenn past Jason Harris. And it's neat for other people to ask you questions based on what their perspective is and what they're hearing about you and about your organization because we realized, like, we should talk about some of this stuff more people are like, what exactly are you doing? If, if you're listening to the show, then you already know. But there's a lot of confusion about what we're doing. And we're trying to clear that up every day. One of the things we're doing at a soda con is having something called dealers pitching vendors, right? It's the reverse game, or dealers are going to have a moment to pitch the things that they wish were solved, to a whole a whole audience of industry partners. And we're hoping that through doing doing that it starts conversation and collaboration to solve those problems. And we think it's going to be the synthesis of some problems. The solutions to the problems that exist in automotive that dealers just haven't had an opportunity to communicate large part. I don't know that that's ever been done before. And we don't know what problems are even going to be presented. But if you're a dealer Are you and you have a problem that you wish was solved. Shoot it to us email through CR e w at a sotu.com. I really wish someone would fix x, y or z or x, y and z. And we'll throw it in the mix for dealers pitching vendors at asoto con.com. Thank you Chris Reeves. What a genius idea. Was it his idea? It wasn't his


Kyle Mountsier  05:24

idea. So yeah.


Paul Daly  05:27

Okay, so


Kyle Mountsier  05:30

are we putting like a timer on you a tick tick boom like so you can roll through all of these things like if we remember we would throw it but let's just let's just act like there's a timer and Paul can't take a note. You can take a breath you're allowed to you can take a breath. Okay, there's a lot of things happening and so we're just gonna hit the bullets and then just pull them all together and time down with as pretty much as we possibly can for you. So okay. Oh,


Paul Daly  05:55

yes. All right. I'll shoot the bullets and then you have to shoot the commentary. Okay, starting yesterday, during the Fed increased rates by point seven 5%. As expected, although they said future rates may still need to go up. They said it would be appropriate to ease at a at some point, which made investors really happy like you do have to use them at some point. I don't understand it, but it happened. Fed Chair Jerome Powell said again, he does not believe we are in a recession. So I think he has been listening to Jonathan smoke their next bullet point thing for revenue jumped 50% 55 Zero and net income is up 19% year over a year. CEO Jim Farley said the company's moving forward with purpose into the largest growth period that company has ever seen. The number of vehicles awaiting chips is 18,000 18,000 vehicles are sitting waiting for chips. Remember, you gotta look to them to be put in them, as opposed to last quarter when they had 53,000 Waiting for chips. That's a good sign. Next one thing. Penske auto group records. The most profitable quarter ever in the history of the Penske Auto Group is their net income jumped 10%. Next one during group one reported the highest revenue and gross profit ever last year or last quarter due to largely acquisitions because their same source sales was down 4.1 were their same store revenue was down 4.1%. And the last one, a report a deal between Senators Chuck Schumer and the ever controversial Joe Manchin revived a four and a half $1,000 Evie credit, if you remember that credit was on the chopping block and only available to those dealers or OEMs. Who sold they had a 200,000 vehicle cap on that credit afforded reportedly that cap is going to be lifted, the credit is going to be revised, giving everyone a fair playing field as we try to move into an Eevee. Future.


Kyle Mountsier  07:41

All right, you ready for the commentary?


Paul Daly  07:44

Let me have it.


Kyle Mountsier  07:48

Five words. Jonathan, smoke is the goat. Ah, look, here's the thing we heard this last Friday. And we everybody was anticipating yesterday. And from all of the q2 reports all of the talks about inflation. We saw markets rebound at an epic scale. The s&p and NASDAQ both up over 3%. I think the Dow was up over one and a half percent. So we saw like a sharp incline in just futures trading as well as real stock trading and people going, Hey, look, interest rates going up. And the consumer demand and gross domestic which we learned yesterday, gross domestic income staying high, which is the balance of the balance to gross domestic product is all like headed full steam ahead. So my perspective here is that one Jonathan smoke is the goat and two is keep pressing the gas pedal because there's a chance that we never actually touch a recession. Man, one


Paul Daly  08:55

of the one of the things you said is yesterday, he goes we've never intentionally ruined a good economy by putting an under because of a lockdown. And that's what we did. And so we don't know what it's like when you come out of a self induced recession, which was what the pandemic kind of was so fun stuff. So we couldn't just pick one of those and talk about it. We had to pick them all and talk about them. Just fancy stuff was speaking of fancy stuff.


Kyle Mountsier  09:22

Segway we don't even plan that that was epic.


Paul Daly  09:28

I'm going to say a name. Ready. Luigi chatterbot. Any


Kyle Mountsier  09:36

fancy pasta maker?


Paul Daly  09:38

No, no, actually, he is a Lamborghini executive with 21 years of experience who has worked on the Juris, the Hurrican coupe the performance at the event the door and other stuff. And guess who just hired him? Apple


Kyle Mountsier  09:58

man, it Come on, that's amazing because appaled this is what you know, like, Apple's not going to be like, we're gonna put out the vehicle, like, let's just say that we're gonna put out a vehicle even though they've kind of been wavering back and forth on that. But you know, they're not going to come out and be like, hey, we'll do the vehicle that's like $25,000 accessible to everyone, because that's not what they do with their phones, or any product


Paul Daly  10:24

or their adapters or their polishing cloths,


Kyle Mountsier  10:26

nothing they're like, only the best, literally only the best for people that purchase Apple products. And so where to go to find the best supercars Lamborghini,


Paul Daly  10:40

Lamborghini, so they hired him away to work on their Project Titan that has been around since 2014. Seeing a lot of ups and downs, and we're pulling the plug, we're reviving it, it seems like it is getting actually a full head of steam over the last 12 to 24 months as a further indicator that the kind of convergence of car culture and pop culture is fully alive, I would almost say that 2014, you know that the launch of the product was was really a situation of being early looks like being wrong? I think it really is. I think you're right, yep. They just didn't have what it took to like, push the ball forward, as far as it needs to be pushed to get to the adoption curve, they needed to actually keep steam behind the product.


Kyle Mountsier  11:24

Interesting, because if you look at like, you know, all of the companies that came out with like mp3 players earlier than Apple did, and recognizing that, that they didn't have the steam because like Dell as an mp3 company didn't make sense. And so early on Apple as an mp3 company didn't make sense because, or as a vehicle company car company didn't quite make sense. But we're seeing companies like them start to make it acceptable to touch different ecosystems and different silos. And so now I think that it's kind of commonly accepted that companies like Apple or Amazon or even met Sami factures. Yeah, exactly. Can can touch other silos. And like, people can transfer the brand recognition over to that silo. And so that's, I think it's just that now the opportunity is ripe for them to jump in. And I don't have any doubt that in the next two, three years, we're going to see a ceiling with a full vehicle with


Paul Daly  12:25

I would agree with that. And second that opinion. I like the, the comparison to the mp3 situation. Because the other mp3 players the reason they didn't make it, thinking about it now, is there was just no ecosystem to get music onto that thing easily. Yes, right, it did the same thing. You plug the headphones in, and it plays the mp3, but Apple actually built the ecosystem. And then for it to support the hardware, I see where you're headed. And it shows like the ecosystem exists now. So it's not only that it's almost not even silos, it's like now like technology and culture and automotive are on the same highway. So now it's actually they're just getting on the highway where there's a lot of and


Kyle Mountsier  13:06

they don't have to build engine technology, which is much more difficult for them.


Paul Daly  13:11

And ice engine is complicated. moving parts, lot of suppliers. Now it's like I don't know I need a motor, I need a battery and need some microchips. And


Kyle Mountsier  13:20

they're already use batteries faster, less heated and smaller.


Paul Daly  13:25

And they make their own microchips and they make their own stuff fun make their own to come on, man. Come on.


Kyle Mountsier  13:33

Just go for it.


Paul Daly  13:34

Oh, speaking of going time. So major resorts around the country are now charging as much as $200 to reserve a standard lounge chair by the pool. And in a lot of cases, actually, the chair is as expensive as the room. Think about that for a second. So due to high travel demand and willingness of guests to reserve preferred experiences and spend the money on that many resorts across the country. You're giving guests the option do you want to reserve a pool chair by the pool the Bellagio in Vegas 200 bucks. But you know MGM is other hotel Excalibur 125 bucks, the JW Marriott in Arizona $150. And basically what you get is like several levels of chairs, some have a little cushion on them. We're not talking about luxury cabanas here. And you get at some places a little bit of a mix of different amenities. Like you get a towel, but you get a towel anyway. You get maybe some preferred water selections, right? So maybe you get some sparkling water and maybe you get some snacks that people 150 200 bucks. You're doing that unbelievable.


Kyle Mountsier  14:47

I'm a Not a chance. Not a chance on guys. This is this is my expectation of what's happening right now. Right? Somewhere. A dealer's like, come on, people were working Getting hard in the showroom every day you're buying chairs and cabanas. You're arguing over three bucks a month. Yeah, someone's over here just like swiping their desk off. What is it? What is wrong with this world? And then you've got you know, then you've got some cars.com executives, and they're like logging into Slack. Like, is everyone green today? Call a meeting right now see where they're at? See?


Paul Daly  15:24

Your luxury chair? It lets, you know, so that they are, I think it expresses a few things. So number one, that hospitality and like the concierge economy in general, there's there's some headroom and there's some room to grow, like kudos on them and figuring out what was valuable. And building a system or deploying a system, much like you would make an Open Table reservation reserving a chair, right for some level of convenience and priority on your trip. So that's cool. Like, I'm excited to do that. Right. And the market decides,


Kyle Mountsier  15:51

yes, this to me is the smarter execution of what BMW tried to do with heated seats.


Paul Daly  15:58

Right. Is that true? Did you debunk that?


Kyle Mountsier  16:00

You said it might be fake? Well, so it's not fake. But but the way that people perceive the BMWs communication was wrong. And so gotcha, actually, if you go to my LinkedIn, you can see BMWs Twitter thread on it. So you can go back and listen to that, but it's just the communication pathway kind of got skewed through the media, although it's still not all sunshine. I don't believe that, that. I don't believe that. Yeah, no, right. But, um, so it's, it's like that, because it's like, if I go to a hotel, and I'm gonna go to the pool, I would expect that at the pool, I can go sit on a chair, and that I wouldn't need to pay money for that chair unless them well, I will say, like, at a beach, you go pay for the chairs on the beach, right? Because you got to tip to people and the people that set them up, but so you wouldn't expect that. But what they did is they elevated that experience and gave an access that wasn't that wasn't previously allowed, like, just there naturally. And so I think it's the it's, you know, it's a, it's a hard, you know, it's an A hard cost, instead of like a software thing, similar to how he did seat where you expect it to be there. But they raised the level of opportunity or access, by get by, by charging for this. So I just think it's a better level of execution of what a BMW tried to do a couple of weeks ago with the heated seats. Interesting. Interesting. I mean, I guess, I mean,


Paul Daly  17:21

when you have kids, if you have multiple people, it gets expensive, quick. Yeah, they're trying to make the experience great. People are paying for it, guess what, if they don't want it, and they don't want to pay for it, they will stop doing it. That's called free market right there. You know, I think it is an indicator for sure. of people being willing to allocate their money, right, we talk a lot about spending power and inflation and you know, is consumer spending or consumer confidence high low, this definitely is an indicator that people are prioritizing their dollars on some convenience, some luxury, some prioritization to kind of like bring down the anxiety all over, right? Coming out the pandemic, people traveling people doing their thing, and they're willing to spend on that. So forgot it. And that's what we'll prioritize go for it, it's just a little bit new and a little bit shocking. But that's okay. If you don't want to pay for the chair, you can still get one, you just have to get there before everybody else. So you can put your toe


Kyle Mountsier  18:13

on it. Before we wrap I just want to say like we kind of went all over the place from a news perspective today. And sometimes tying things down to the way that you do business and why you're doing business with your people. Whether you're in dealership, or an industry partner, or an OEM listener, or outside of the automotive industry is a little bit tough. But you can contextualize some of these things and how to communicate to your people what's going on in in larger perspectives, like what's the outlook and what do they need to be prepared for. So recognizing that Apple might come out with something, that that's a whole nother thing that everybody in culture is paying attention to, and that people are going to be one want to be aware of. So leaning into the education with your team, recognizing that people are paying for access and experience. And so if there is some level of access or experience that you can give your people your customers access to and monetize that, then then work to do that, find those inroads to revenue. So there's always ways to tie it down. And those are just a couple of quick ways. But make sure you're not just kind of accepting the news and moving on, take what we're saying and tie it down to something that you can practically work on in your business because that's what that's why we want to deliver this to you every single day.


Paul Daly  19:23

I love that you wrap it up like that. We want you to keep your head up. But we also want you to keep your hands to the ground, keep your feet nimble, keeping ready to move and understanding your consumer and we all do that. We're all going to be just fine.

With so much reporting going on, here are the bullet points

  • The Fed increased rates by .75 percent as expected yesterday. Although they said future rates may still need to go up, they did say it would be appropriate to ease at some point, making investors happy
  • Note: Fed Chair Jerome Powell stated again he does not believe we are in a recession.
  • Ford revenue jumped 50% and net income was up 19% from YOY
  • CEO Farley said the company is moving forward with purpose into the largest growth period the company has ever seen
  • Number of vehicles awaiting chips is 18k down from 53k last quarter
  • Penske Auto Group records most profitable quarter ever as net income jumps 10%
  • Group 1 reported highest revenue and gross profit largely due to acquisitions. Same store revenue was down 4.1%
  • Reported deal between Senators Chuck Schumer and Joe Manchin revives 4.5k EV credit to be available to all EV sales and not limited to cap, giving Toyota and Tesla a more level playing field
  • Take Away: Keep your head up and feet nimble

Apple hires exec from Lamborghini to join the AppleCar team

  • 21 year Lambo veteran, Luigi Taraborrelli left the company in May according to LinkedIn from a position leading the development of chassis and vehicle dynamics
  • Taraborrelli worked on Lamborghini’s Urus SUV,  Huracan Coupé, Performante and Aventador Coupé, and others
  • AppleCar project Titan has been around since 2014 and has seen ups and downs only to be gaining steam in current years
  • Take Away: This is a further indicator of car culture and pop culture being synonymous

Major resorts now charging up to $200 for that WFH poolside lounge chair

  • Due to high travel demand and willingness of guests to reserve preferred experiences, many resorts are presenting guests with the option to reserved not-so-luxurious chairs by the pool
  • Bellagio $200, Excalibur $125, JW Marriott Desert Ridge Resort & Spa in Phoenix $150, for combinations of standard chairs to plush. Additional amenities include premium water selections and snacks
  • Using ‘open-table like’ software to manage reservations
  • Take Away: This is another indicator of how consumers are prioritizing their spending post pandemic