Valuetainment - Episode 494： 10 Industries Crushed By Coronavirus

00:00:00.000 30 seconds.

00:00:01.880 Did you ever think you would make it?

00:00:04.220 I feel I'm so close I could take sweet victory.

00:00:07.620 I know this life meant for me.

00:00:10.740 Yeah, why would you bet on Goliath when we got Bet David?

00:00:14.580 Valuetainment, giving value is contagious.

00:00:16.420 This world of entrepreneurs, we get no value to haters.

00:00:19.160 How they run, homie, look what I become.

00:00:21.400 I'm the one.

00:00:22.420 I'm Patrick Bedevi, host of Item, and today we're going to talk about 10 industries crushed

00:00:26.400 by coronavirus.

00:00:27.260 But before I go into that, I want to give you some good news.

00:00:30.400 Check this out.

00:00:31.600 According to CNBC, U.S. savings rate hits record 33% as coronavirus causes Americans to stockpile

00:00:39.680 cash and curb spending.

00:00:40.740 Look what Bank of America says here at the bottom.

00:00:43.180 Bank of America says somewhere here.

00:00:45.000 Here we go.

00:00:45.920 Bank of America, which touches half Americans' households, said checking accounts have 30

00:00:49.500 to 40% more money than compared to 12 weeks ago.

00:00:52.940 CEO, et cetera, et cetera, et cetera.

00:00:54.140 Okay, so now, let me give you another data here to look at.

00:00:56.760 When it comes down to savings, watch this.

00:00:58.680 You'll be blown away by this.

00:01:00.460 This is the savings rate since 1960.

00:01:03.620 America, on average, we were saving 10%.

00:01:06.160 Then we went up to somewhere around 17.5% in 1978.

00:01:11.220 Then it went down and down and down, and our habits didn't get too good.

00:01:14.820 In about 30, 40 years, we were saving somewhere around 5%.

00:01:18.340 It hit a low of 2.5% in 2006, 2007.

00:01:21.440 And then look, boom, 33%.

00:01:24.640 So now, what does this tell you?

00:01:26.560 It tells you we used to be savers.

00:01:29.120 Then we became spenders because of a lot of TV, marketing, and hey, let's buy luxury, luxury,

00:01:35.360 luxury, luxury, luxury, luxury.

00:01:37.600 And then boom.

00:01:38.140 Oh my gosh.

00:01:39.360 It's not really all about luxury.

00:01:41.140 Maybe, just maybe, cash is king.

00:01:44.720 Maybe we need more cash, you know, in the bank.

00:01:47.760 Maybe we need more cash in case a crisis takes place.

00:01:51.740 And people are right now sitting there saying, you know what?

00:01:54.160 I hope they're thinking about this saying, if I can save 33% during these times,

00:01:58.660 let's just say I go back to regular life.

00:02:01.300 What was I spending money on that I don't need to spend money on?

00:02:04.700 What was I buying that I don't need to be buying?

00:02:07.720 What was I purchasing that I can set aside for now?

00:02:10.820 And what if maybe I can't be at 33% when I get back to normal life,

00:02:15.380 but maybe I can figure out a way to hit that 15% marker.

00:02:18.880 Because if you hit the 15% marker of saving your salary,

00:02:23.160 you're on your way to creating wealth.

00:02:25.100 Now, that's not even one of the 10 issues I wanted to talk to you about.

00:02:28.020 It's just something that came up that's good news that we're saving money.

00:02:31.220 So let's get into some of these industries.

00:02:33.160 First things first is the airline industry.

00:02:34.980 The airline industry employs 10.6 million people,

00:02:39.060 but you're also seeing the fact that airlines and TSA report 96% drop in air travel as pandemic continues.

00:02:46.040 We've looked at the TSA numbers to show that we used to get, you know, 2.2 million flights a day,

00:02:52.640 you know, 2.5 million, 2.6 million flights a day.

00:02:55.680 This is last year, same time a year ago, meaning 2019.

00:02:58.560 And we went all the way down, I think, April 17th or so.

00:03:02.120 What is the date?

00:03:02.820 April, right, April 14th.

00:03:04.780 We were averaging only 87,000 flights a day, travelers a day.

00:03:10.780 And today, the travelers went up Memorial Day,

00:03:14.200 and it kind of picked up to 348, 318, 340, 321,

00:03:18.640 which means we're traveling a little bit more.

00:03:20.620 That's good news.

00:03:21.320 Now, let's look at the airline industry, why these guys got hit hard by the pandemic.

00:03:27.160 Most people don't realize the airline industry's margins are only 3.26%.

00:03:31.680 I know it's small.

00:03:32.480 You may not be able to see it.

00:03:34.160 Their cost and expense is 96.74%.

00:03:38.980 They barely make any money.

00:03:40.940 Let me explain to you what this means.

00:03:42.000 Here's what this means.

00:03:42.660 You know how companies who sell software and you, for instance, do 20 million a year,

00:03:49.620 but the 20 million a year you do, 70% is profits.

00:03:52.320 You're really doing what?

00:03:53.280 14 million a year versus another company that does 200 million a year,

00:03:58.480 but their profits is only 5%.

00:04:00.960 They're making only 10 million a year.

00:04:03.300 So the company that's doing 20 million profits more than a company doing 200 million

00:04:08.200 because of what they're profiting, not what their revenues are, right?

00:04:11.740 20 million revenue, 60, 70% profits, 12 million.

00:04:16.540 200 million revenue, 5% profits is 10 million.

00:04:20.520 It's not about revenue.

00:04:21.720 It's about profits.

00:04:22.940 And the airline industry's profit net margin is 3.26%.

00:04:26.980 This is why the airline industry has historically been the sexy industry.

00:04:32.040 Let me go create my own airline.

00:04:34.500 And most people don't realize there's 27,000 commercial jet aircraft valued at $696 billion.

00:04:41.740 Of which, of which, these airlines, 13,300 commercial jets valued at $331 billion are owned by operating lessers.

00:04:53.540 Meaning, they're being leased.

00:04:55.840 They're not owned.

00:04:57.360 So these airlines like Virgin Airlines, you're thinking, oh, it must be like a $20 billion company.

00:05:01.720 It only sold for $2.6 billion.

00:05:04.560 $2.6 billion.

00:05:05.900 Alaska Air Group bought it for $2 billion.

00:05:07.320 That's Virgin. 0.89

00:05:08.060 You know Virgin, the nice, sexy airline that Richard Branson starts.

00:05:13.680 And you know, you've been on it before.

00:05:14.940 The pink lights and the music that they play.

00:05:17.140 It's not that big of an industry.

00:05:19.020 And they got exposed.

00:05:19.960 The airline industry's taking a very big hit because people are starting to realize you cannot go into an industry just to be able to say, hey, I'm going to start my own airline.

00:05:27.580 But David Airlines, why?

00:05:29.200 Because it's such bragging rights.

00:05:31.080 You can go do it.

00:05:32.060 It's a leasing business.

00:05:33.200 It's not a big deal.

00:05:34.240 But it's not as sexy as profitable as people think it is.

00:05:37.100 People are starting to pay attention to numbers they didn't pay attention to before.

00:05:40.180 Next number I want to look at, here's the following.

00:05:42.360 Watch this.

00:05:43.600 Amazon, again, is capitalizing.

00:05:47.080 And the word I don't want to use, but similar to it, they're exploiting this opportunity.

00:05:51.240 They are looking at buying AMC theater.

00:05:55.020 AMC stock just jumped up just last week, May 27th.

00:05:59.280 Why is an Amazon merger now off the table?

00:06:03.120 Is Amazon wanting to buy it?

00:06:04.860 Why Amazon gobbling up AMC theaters doesn't make any sense? 0.98

00:06:09.220 This is an article by Observer.

00:06:11.080 What do you mean it doesn't make any sense?

00:06:12.820 Let me explain to you guys.

00:06:13.880 Let's just say you're Jeff Bezos and you're Amazon.

00:06:16.080 Who are you competing against?

00:06:17.600 Everybody, Facebook, Netflix, Amazon, Google, you're competing with all of these guys.

00:06:24.640 Why is there so much power for him to pick up AMC?

00:06:27.600 Who cares if he picks up AMC?

00:06:29.800 It's only like, what is it?

00:06:31.600 It's a company that got started January 1st, I believe, 1920.

00:06:35.980 Let's look at the Wikipedia.

00:06:37.520 Watch this.

00:06:38.120 January 1st, 1920.

00:06:41.820 Let me go back to this.

00:06:43.080 Come on, AMC Wikipedia.

00:06:44.540 Where are you at?

00:06:45.260 AMC Wikipedia.

00:06:46.300 Check this out.

00:06:47.280 Okay, AMC.

00:06:48.620 They got started when?

00:06:50.180 Come closer, come closer.

00:06:51.480 Yeah, January 1st, 1920.

00:06:52.780 I was right.

00:06:53.220 100 years ago.

00:06:54.440 And have how many theaters?

00:06:55.620 1,006 theaters.

00:06:57.440 11,000 screenings.

00:06:58.940 Okay?

00:06:59.280 Now watch this.

00:07:00.380 Why would Amazon be interested in buying 1,000 theaters?

00:07:03.120 Here's why they would be interested in buying 1,000 theaters.

00:07:05.780 You know what they get to do?

00:07:07.360 They get to dictate and control a part of Hollywood.

00:07:10.940 Why?

00:07:11.880 We're not going to play your movie unless if you do this.

00:07:15.160 This is a form of control.

00:07:17.320 I know AMC's in debt $4.9 billion, but if Amazon owns them and they own Prime, they are starting

00:07:23.820 to kind of figure out a way to control a part of Hollywood and in a way compete with Netflix

00:07:29.580 because Netflix doesn't have that.

00:07:31.260 So it's a very interesting move these guys are making.

00:07:34.440 Nothing Amazon does is accidental. 0.83

00:07:36.980 The whole book I'm writing, Your Next Five Moves, that it's about being methodical.

00:07:40.340 These guys don't do stuff that's winging it.

00:07:42.300 They're being methodical.

00:07:43.120 So it's going to be interesting to see what the entertainment industry is going to do,

00:07:46.280 especially with this purchase by Amazon.

00:07:48.280 Now let's look at the fitness industry.

00:07:52.040 CNN Business, $94 billion fitness industry is reinventing itself as COVID-19 spreads.

00:07:59.060 What does this mean?

00:08:00.260 24-hour fitness prepares for bankruptcy while gyms start to open.

00:08:05.100 By the way, this is just from yesterday.

00:08:06.940 24-hour fitness filing bankruptcy, Planet Fitness competitor Gold's Gym files bankruptcy.

00:08:13.700 So now Gold's Gym is now filing bankruptcy.

00:08:17.260 LA Fitness is kind of looking at it, but look what business is blowing up.

00:08:21.380 Peloton could emerge much stronger after coronavirus shutdown and analysts say,

00:08:27.620 Peloton?

00:08:29.660 Who is Peloton?

00:08:30.900 Which one of you guys has Peloton yourself in your house?

00:08:33.440 I know I do.

00:08:34.280 Now watch the stock here, Peloton.

00:08:35.760 Peloton, last six months, Peloton was doing okay.

00:08:39.320 Matter of fact, they were even going down a little bit.

00:08:41.260 All of a sudden, boom, coronavirus comes.

00:08:44.180 They go up.

00:08:45.240 Why?

00:08:45.940 People are not buying Pelotons.

00:08:47.580 This is something you can do from home.

00:08:49.160 You can still do classes.

00:08:50.220 You can still do spinning.

00:08:51.640 You don't need to have a gym membership.

00:08:53.020 Why not just go buy one for $3,000?

00:08:54.900 So the fitness industry is about to go in a complete different direction because,

00:08:59.720 especially for those that innovate and pivot, if they don't, they're going to take a massive hit.

00:09:03.060 The old model of gyms, I just don't see that thing.

00:09:07.560 I think they have to definitely realize that they go the way it is and say, well, you know,

00:09:11.380 things are going to go back to normal.

00:09:12.920 I wouldn't invest.

00:09:14.000 I used to work at Valley Total Fitness and Valley Total Fitness eventually followed bankruptcy.

00:09:17.620 You don't want to be part of an industry that's going to do well for eight, nine, 12, 15 years.

00:09:21.820 And then one event every 15, 20 years can take these guys out.

00:09:24.700 But if I'm going into the gym business, I'm changing it up and it's going to be interesting

00:09:28.680 to see how they do it.

00:09:29.500 Now, here's the next one.

00:09:30.340 Watch this.

00:09:31.320 Hotel, hotel industry.

00:09:33.240 Here's some scary stats.

00:09:35.160 The impact to travel industry is nine times worse than 9-11.

00:09:39.600 Look at hotel occupancy rates.

00:09:41.800 2011, 58%, 60%, 61%, 62%, 64%.

00:09:44.940 This means 64% of all the hotel rooms were being occupied in 2014.

00:09:50.360 Then 65, 65, 65, boom, 38%.

00:09:53.900 Nearly 50% revenue declined in 2020.

00:09:57.860 That's $124 billion lost off the $270 billion total Oxford economics.

00:10:04.680 Eight in 10 hotel rooms are empty right now.

00:10:07.140 2020 is projected to be the worst year in the record of hotel occupancy.

00:10:11.500 Worst year ever.

00:10:12.960 Think about that.

00:10:13.920 Ever.

00:10:14.940 Forecasted occupancy rate for 2020, worse than 1933, Great Depression.

00:10:19.820 Let me read that to you one more time.

00:10:21.720 Forecasted occupancy rate for 2020, worse than 1933, Great Depression.

00:10:27.960 And this is leading to 70% hotel employees have been laid off.

00:10:32.020 It's a scary thought.

00:10:33.280 Nearly 1.6 million hotel employees out of work and $2.4 billion a week be lost.

00:10:38.060 Wages.

00:10:38.880 This is hotel.

00:10:39.880 What are they going to be doing?

00:10:41.240 How are they going to be pivoting?

00:10:42.700 How are they going to be making adjustments?

00:10:44.100 What's going to happen to some of these big hotels that you and I are accustomed to going,

00:10:48.560 whether it's the Marriott's of the world or Hilton's of the world or some of these other

00:10:52.200 names, the Ritz's, the Four Seasons, what are they going to be doing?

00:10:54.860 How are they going to be adjusting?

00:10:55.880 I'm in the event.

00:10:56.720 I was about to do a big event with MGM for $7 million, contracts, everything signed.

00:11:01.720 And we're going through this process and we're going to have to adjust.

00:11:05.380 We're looking at things in a different way.

00:11:06.860 Why?

00:11:07.480 Because that's the direction they're going.

00:11:08.780 So hotels have to sit there and figure right away.

00:11:12.060 I think Vegas is getting ready to open up this week.

00:11:14.240 I was talking to some of the executives at MGM telling me where they're at and what it's

00:11:18.020 like.

00:11:18.240 It's ghost town right now.

00:11:19.660 But Vegas has been shut down because of this business, the entertainment business.

00:11:22.880 So it's going to be very, very critical to see how they adjust.

00:11:26.220 Next, Airbnb.

00:11:27.600 You got Airbnb, a reference to vacation rental, vacation real estate markets are toast because

00:11:34.780 of the pandemic as Airbnb owners rush to offload their homes.

00:11:40.260 Airbnb owners rush to offload their homes.

00:11:44.320 So Airbnb hosts are planning to sell off their properties because the pandemic, that's CNN,

00:11:48.520 completely different article.

00:11:49.360 So Airbnb has reportedly dropped its internal valuation to $26 billion as the coronavirus

00:11:55.120 halts worldwide.

00:11:56.980 So the Airbnb model, what are they going to be doing?

00:11:59.780 You know, when you buy rental properties, I got a rental property, I got a vacation while

00:12:03.420 I'm doing this.

00:12:04.460 Are people going to go back to buying those properties for the same reasons?

00:12:07.960 I don't know how they're going to be pivoting.

00:12:09.640 Now, I'm not telling you this is permanently going away.

00:12:11.580 I just don't know how people are going to be pivoting.

00:12:13.380 Here's another topic that came up because of coronavirus.

00:12:16.040 President Trump, executive order on preventing online censorship.

00:12:22.260 This just happened, by the way.

00:12:24.400 YouTube.

00:12:25.080 Here's Elon Musk just a few weeks ago.

00:12:28.040 Elon Musk blasts YouTube for banning Californian doctors' video that claim physicians are being

00:12:33.060 pressurized into putting coronavirus on death certificates and urged an end to it.

00:12:38.820 Censorship.

00:12:39.500 We talked about censorship before, but not this much.

00:12:42.880 Watch this one here.

00:12:43.800 With a debate, who's right, Dorsey or Zuck, when it comes down to issues of politics.

00:12:50.540 You know, Trump says right-wing voices are being censored.

00:12:54.020 The data says something else.

00:12:55.100 If you haven't seen this article, you got to look at it.

00:12:57.400 Conservative voices dominate Facebook.

00:12:59.560 Ben Shapiro, number one.

00:13:00.700 Then it's Breitbart.

00:13:01.860 Then it's Liberal.

00:13:02.700 Now this.

00:13:03.480 The Hill.

00:13:04.340 Western Journal.

00:13:05.740 Then it's the Young Turks. 0.83

00:13:06.880 Then Blaze.

00:13:07.600 IJR.

00:13:08.160 Washington Examiner.

00:13:09.100 CNN Politics.

00:13:10.240 It's interesting to see some of these things being talked about now.

00:13:13.060 And look at the angle some media companies are taking.

00:13:16.000 This is NBC saying Twitter places warning on Trump posts saying tweets glorify violence.

00:13:22.680 And then another one is Trump is at war with the truth, not Twitter, coming from CNN.

00:13:27.140 Again, they're taking shots.

00:13:28.160 I mean, if there's ever a title that's going to piss off Trump, this is it right here.

00:13:32.360 Trump is at war with the truth, not Twitter, which led to Twitter saying Twitter's not censoring Trump.

00:13:38.880 Trump is censoring Twitter.

00:13:40.700 And then again, it keeps going on.

00:13:41.940 Trump's executive order cracking down on online censorship has nothing to do with free speech.

00:13:46.000 Business Insider, not defending Trump.

00:13:48.300 And this is what Trump said about Twitter when he was asked about it just yesterday or two days ago.

00:13:52.940 There's nothing I'd rather do than get rid of my whole Twitter account.

00:13:57.900 But I'm able to get to, I guess, 186 million people when you end up all the different accounts and add Facebook and Instagram.

00:14:06.460 It's a lot of people.

00:14:08.020 And that's more than the media companies have, frankly, by a lot.

00:14:11.520 And so if I get a story that's wrong, I can put a social media, I don't usually use the word Twitter, I say social media.

00:14:20.940 But I put something out and the next day or the next hour or the next minute, everybody's reading about it.

00:14:26.500 So I'm able to refute fake news and that's very important.

00:14:29.660 So that's his battle right there.

00:14:31.200 Now watch what Zuck says on Fox just a day ago, two days ago, about the role they're playing censorship,

00:14:37.120 which is slightly different than the role Twitter is playing.

00:14:38.900 Because Twitter is saying, no, we can censor you if you say the following things.

00:14:42.680 Facebook is saying the following.

00:14:43.740 Look at Zuck.

00:14:44.700 Well, let me just be clear about what our roles are.

00:14:48.100 You know, I don't think it's appropriate for Facebook to do fact-checking.

00:14:53.160 But we do have clear policies.

00:14:54.980 And if anyone violates them, you know, whether you're a high-

00:14:58.840 Let me read that to you one more time.

00:14:59.860 Listen.

00:15:00.160 What our roles are.

00:15:02.140 You know, I don't think it's appropriate for Facebook to do fact-checking.

00:15:06.480 I don't think it's appropriate for Facebook to do fact-checking.

00:15:09.500 I'm going to leave the link below if you want to see it.

00:15:11.460 You know, whether you're, you know, a high-ranking government official like the president.

00:15:15.580 Yeah, he's talking about if you lead to violence and you want there to be violence,

00:15:19.240 obviously that's something that we will take down.

00:15:20.800 But he's saying we're not doing fact-checking.

00:15:22.180 So he's taking a position to say we're just a platform.

00:15:26.060 You got things that you need to say.

00:15:27.080 We're not a media company.

00:15:28.040 We're just a platform.

00:15:28.820 We're not going to do fact-checking.

00:15:29.980 And not everybody's happy about this.

00:15:32.100 So this censorship has created a very interesting topic on both sides where if we're leading to this

00:15:38.460 and Trump is suing these companies or maybe even going after them, executive order,

00:15:44.220 it's going to be very interesting to see how these companies respond during times like this,

00:15:48.260 especially if he gets re-elected.

00:15:50.940 That's another issue.

00:15:51.700 Now, here's another one.

00:15:53.440 Politico.

00:15:54.200 How coronavirus could make people move.

00:15:56.300 Not move as in let's move.

00:15:57.440 Let's go move our bodies and work out. 0.86

00:15:59.020 No, no.

00:15:59.800 Physically move to a different place.

00:16:01.980 Leave New York.

00:16:03.000 Leave Chicago.

00:16:04.280 Leave California.

00:16:05.320 All this data about people leaving.

00:16:07.300 Look at this.

00:16:08.240 I want you to watch what some of these folks are saying here from New York

00:16:10.820 and what some people are saying from California.

00:16:13.780 Frustrated Californians move out, say coronavirus pandemic was last straw.

00:16:18.060 Listen to this here.

00:16:18.800 But behind some of the glass in this picture-perfect scene,

00:16:22.720 the coronavirus has brought pain and doubt to the American dream.

00:16:26.420 It's hard to keep up with the bills right now.

00:16:29.620 Tian Lam, an immigrant from Vietnam.

00:16:32.020 His family arrived with next to nothing 30 years ago.

00:16:34.920 And now this restaurant called Bacon is what they have to show for all of their work.

00:16:39.540 But with his doors still closed, profits have dropped 90%.

00:16:43.340 The family is ready to move to Texas, which is opening up.

00:16:46.960 Texas.

00:16:47.280 And already more affordable than California.

00:16:49.640 I blame the states.

00:16:51.280 Yes, I do.

00:16:52.560 He is not alone.

00:16:53.660 Watch this one.

00:16:54.340 Different states.

00:16:55.260 They prepped this morning for a move to Florida.

00:16:57.900 You don't like California.

00:16:58.740 Why?

00:16:59.600 I don't like all the litter, the trash, the homeless.

00:17:03.200 Well, that was before the pandemic.

00:17:05.420 But the pandemic was the last straw because they shuttered businesses,

00:17:08.660 which I believe could be safely open.

00:17:11.060 One business in particular hits close to home.

00:17:13.760 It's their husband's film-to-digital transfer service.

00:17:16.640 When we asked Mike Pritchfield about what role COVID-19 plays in their decision.

00:17:21.100 It's challenging, shall we say.

00:17:23.800 And that from a man who wants to leave California despite living 40 years in this state.

00:17:28.740 Can you live better somewhere else?

00:17:30.920 Quite possibly.

00:17:32.300 These are reasonable people, by the way.

00:17:34.100 You don't hear them bashing or anything.

00:17:35.940 They're just people that are small business owners.

00:17:37.500 These are not millionaires, billionaires.

00:17:38.860 They're just guys saying, look, I just can't do this anymore.

00:17:41.640 So the other issue here that's going to be taking place, people are right now talking about the topic of moving more than ever before

00:17:48.940 because they're realizing how much influence the local politicians have over the effects of their businesses.

00:17:55.680 Meaning, I'm running a small business.

00:17:57.740 A politician can put your business out of business depending on what state you're living in.

00:18:02.080 You better believe people are thinking about that.

00:18:03.520 By the way, this article in Politico, it's not just talking about the states.

00:18:07.820 It's talking about Italy.

00:18:09.380 It's talking about Europe.

00:18:11.060 It's talking about countries that are sitting there saying, I don't know what I'm going to be doing.

00:18:14.700 Milan, Madrid, Tokyo.

00:18:16.360 All of these places.

00:18:17.440 This is not an America thing.

00:18:19.080 People all over the world are sitting there saying, do I want to build my family, my business in the city, the state, the country I'm living in?

00:18:25.540 And it's something a lot of people are talking about.

00:18:27.400 That's part of the pandemic.

00:18:28.920 It's exposing.

00:18:29.640 Here's another one.

00:18:30.800 Big Pharma.

00:18:32.780 The coronavirus outbreak exposed the U.S. pharma supply chain.

00:18:35.780 Which, what does this really mean?

00:18:37.200 COVID-19 has exposed the limits of pharmaceutical market model.

00:18:40.180 Okay, can we go a little bit deeper than that?

00:18:42.280 Look at some data right here as you go down.

00:18:45.660 Antibiotics, okay.

00:18:46.640 In the U.S. U.S. asked during a Fox and U.S.

00:18:49.020 as long gone for pharmaceutical manufacturers are 94% of antibiotics in this country.

00:18:53.180 That's not the data I want to show you.

00:18:54.540 There's one right all the way in the bottom.

00:18:56.920 Here you go.

00:18:57.520 Okay.

00:18:58.040 The Japanese government has taken action.

00:18:59.560 The government of Prime Minister Shinsu announced April 7th that it would provide $2 billion in subsidies to help Japanese companies move their supply chains back to Japan from where, obviously, China.

00:19:10.660 On May 12th, the government announced that it has begun to work with more than 400 domestic firms to bolster production at home.

00:19:16.140 Generic drugs are among the most vulnerable fields.

00:19:18.420 Nearly half of Japan's API.

00:19:19.920 API stands for Active Pharmaceutical Ingredient.

00:19:23.640 That's what API means.

00:19:24.760 Not API, the other API.

00:19:26.300 Active Pharmaceutical Ingredients.

00:19:28.320 So again, nearly half of Japan's APIs come from China and South Korea.

00:19:32.280 In addition, 70% to 80% of masks come from where?

00:19:35.880 China.

00:19:36.480 And most countries don't trust China anymore.

00:19:39.420 In Europe, French President Emmanuel Macron promised full dependence by the end of the year in the production of protective face masks for France.

00:19:48.380 I don't want to do business with China. 1.00

00:19:50.700 In the U.S., the number at the bottom, if I can find it, I remember it saying 13%.

00:19:54.080 Kai, do you see the 13% number?

00:19:57.740 70%, 13%.

00:19:58.800 Oh, let me go here.

00:19:59.860 Let me go here.

00:20:02.820 72%.

00:20:03.340 FDA currently has no clear data to track the amount of medicine imported by the U.S.

00:20:07.600 Instead, it has only data on the location of the factors that produce those drugs.

00:20:11.160 According to its data, 72% of the API, which is the drugs, manufacturers supply the U.S. market are located overseas.

00:20:17.980 Read the sentence again.

00:20:19.660 72% of the API, API stands for Active Pharmaceutical Ingredients, API manufacturers supplying the U.S. market are overseas.

00:20:33.660 13% of those manufacturers operate inside China.

00:20:37.720 So, this is quite scary because, let me get this straight, all these pharma companies in the U.S. are sitting around saying,

00:20:45.160 we're building in China, and U.S., you, myself, family, my dad gets medicine that he needs.

00:20:52.240 He's 78 years old.

00:20:53.500 He had a heart attack when he was 50-something, and he's still around.

00:20:56.740 What's going on?

00:20:57.260 It's because the right medicine he's taking.

00:20:58.720 If China decides to have a trade war issue with U.S. and they leverage their pharma, this could get pretty ugly very quickly for baby boomers and elderly folks.

00:21:08.220 So, the pandemic exposed the fact that we cannot have 73% of our APIs coming from markets outside of U.S.

00:21:17.860 That's a scary thought to be 72%.

00:21:19.940 Well, that's going to be a big opportunity today for pharmaceutical companies to say, we are made in U.S.A.

00:21:25.960 If the word made in U.S.A. has ever had more weight than today, I can't even tell you when.

00:21:31.140 We buy stuff, nobody looks at it and says, oh, made in China, oh, made in China.

00:21:34.680 Today, it's more important to say made in U.S.A.

00:21:37.200 Matter of fact, if you're a business owner, entrepreneur, running your own company,

00:21:40.560 it'd be such a big selling point for you to say 100% of our products are made in the U.S.A.

00:21:48.260 That's a very important factor to consumers today, again, exposed due to the pandemic.

00:21:53.780 Let's keep going with another industry here.

00:21:55.640 Here's the next one.

00:21:56.400 Sports, entertainment.

00:21:58.300 Sudden vanishing of sports due to coronavirus will cost at least $12 billion.

00:22:01.600 This is at least $12 billion.

00:22:03.360 This is coming May 1st.

00:22:04.620 Now, watch this.

00:22:06.040 So, you know, Rob Manfred, who is the commissioner of Major League Baseball,

00:22:09.760 as if he wasn't already the most hated commissioner in sports with what he did with Houston Astros.

00:22:14.740 And, yeah, I don't think it's a big deal.

00:22:16.380 What's the big deal about the trophy and all this stuff?

00:22:18.960 You know, many will call him one of the worst commissioners of all time in the history of sports,

00:22:23.520 let alone baseball.

00:22:24.940 Here's what they propose.

00:22:26.580 MLB offers players sliding pay scale to return to play proposal.

00:22:31.360 And here's what the numbers are.

00:22:32.540 Now, if you were making a full-year contract of 563, they're proposing you go to 262.

00:22:38.460 If you were making 5 million-year contract, they want you to go to 1.64 million.

00:22:43.220 If you were making 20 million, they want it to be 5.15 million.

00:22:46.540 If you were making 35 million, they want you to only take 7.84 million.

00:22:50.160 Now, this is the proposal that baseball made.

00:22:52.780 Now, logically, it makes sense because baseball is probably not going to get the money,

00:22:57.680 but if they're getting the money, they have to pay for it.

00:22:59.780 Even Tom Glavin, who's a pretty respected guy, he and another former baseball player.

00:23:07.000 Where is it here?

00:23:07.640 So, you know, you have to understand.

00:23:08.960 Okay, here we go.

00:23:09.660 Here's what they say on Twitch.

00:23:10.860 No, I want to read the one with Glavin.

00:23:13.500 This is the one with Glavin.

00:23:14.300 Okay, Glavin and Chipper Jones, two of the best players that they had on Atlanta Braves years ago.

00:23:18.560 You know, the 30 million people in America that are out of work right now,

00:23:21.580 they don't want to hear about millionaire baseball players bitching 1.00

00:23:24.420 because they're only getting paid 25% or 30% of their salary this year.

00:23:28.700 They don't want to hear that.

00:23:29.760 So, I thought Snell's comments could have been worded a little differently.

00:23:32.940 I haven't heard anything else outside of Snell.

00:23:35.360 I can only imagine it's probably a phone call away from Tony Clark and Rob Manfred.

00:23:38.720 So, what's the point?

00:23:39.440 There are people right now in baseball that are saying, you know, come back and play for less.

00:23:43.500 And there are people saying, well, wait a minute.

00:23:44.580 Why would I come back and play for less?

00:23:45.800 You're making money.

00:23:46.480 Why should I take it?

00:23:47.160 So, that's baseball.

00:23:48.500 The hit they're taking.

00:23:49.680 Now, this is many other sports.

00:23:51.040 The kind of hit they're taking because of a pandemic, games.

00:23:54.100 We've seen these before.

00:23:55.600 This is the marathon.

00:23:56.700 Typically in Tokyo, 300,000 runners would show up in 2019.

00:24:00.420 If you look at what that looked like the year before, this is 2019, by the way,

00:24:05.600 versus this year, 2020, they only had 200 runners versus 300,000 runners.

00:24:10.380 So, industries are taking a hit, but not all of them.

00:24:13.240 Some of them, it has to do with the leadership.

00:24:15.600 Watch what Dana White just did. 1.00

00:24:16.860 Dana White had 249, right?

00:24:18.320 Where Joe Rogan's sitting on one side, where all these guys are sitting on,

00:24:22.140 Cormier's sitting on a different side, and they're kind of commentating the fight.

00:24:24.980 Very weird.

00:24:26.380 But 249 UFC generates 700,000 pay-per-views at a price point of $64.99.

00:24:34.140 I'll do the math for you.

00:24:35.580 Watch the numbers here.

00:24:36.700 UFC got a little bit of criticism for it, but watch this.

00:24:39.900 700, okay, buys, pay-per-view, times $64.99 is what?

00:24:44.920 $45.493 million.

00:24:48.200 He paid his fighters a high of $500,000, a low of $12,000.

00:24:53.640 These are the fighters, what they got paid, their salaries.

00:24:56.100 It's roughly $3.5 million.

00:24:57.920 All these fighters got paid $3.5 million.

00:25:00.580 So, $3.5 million to pay fighters to make $45 million.

00:25:05.280 Now, you got to rent the space.

00:25:07.520 That's what you call a massive profit margin, and I like how he's doing it.

00:25:12.520 Look at this.

00:25:13.500 Here's Dana White just yesterday.

00:25:18.500 Test number five.

00:25:21.560 Accountability.

00:25:22.520 Here's what I'm doing.

00:25:23.740 I'm taking it serious.

00:25:25.320 I'm not saying it's a hoax, but I'm still running a business.

00:25:28.900 And running a business, boom.

00:25:31.080 See, you got to respect the way Dana's leading the UFC organization, and that's one of the

00:25:36.520 reasons why UFC's got that kind of a loyal followers right now.

00:25:39.520 Without anybody being in the audience, still got 700,000 pay-per-views.

00:25:43.520 So, MLB, you know, NBA, NFL, some of you guys got to think about what your game plan is

00:25:49.440 going to be.

00:25:49.760 Now, I know NFL's got a massive, you know, 20-some billion-dollar contract with media

00:25:55.000 and all these other things that they sign, but there are different ways to improvise.

00:25:58.820 You're going to have to figure out a way to make it work at a time like this.

00:26:02.160 So, that's the entertainment and the sports industry.

00:26:04.240 Let's look at the next one here.

00:26:05.440 I don't know how many more I got left here, but let's look at commercial real estate.

00:26:08.100 These guys are going to take a hit.

00:26:09.480 U.S. commercial real estate braces for defaults as pandemic cuts cash flows.

00:26:13.860 Now, look, it's not just the small companies, by the way.

00:26:16.740 Starbucks asks for a break on rent for the next year.

00:26:21.420 Starbucks.

00:26:22.020 Starbucks pays roughly, what is it, on rent.

00:26:25.340 There was a number up here on what they paid.

00:26:27.040 The company estimated it lost $950 million in sales first quarter, a fiscal second quarter

00:26:32.560 due to stores closures, et cetera, et cetera.

00:26:35.700 And they're not going out there saying, hey, we want you to kind of negotiate with us

00:26:39.120 and we don't feel, oh, here it is.

00:26:40.340 The restaurant company, one of the largest in the country by number of stores, total landlords

00:26:44.880 that starting June 1st, for at least the next 12 months, it will need to change lease terms

00:26:52.800 and base rent.

00:26:54.020 Listen, Starbucks is not asking for 60-day or 30-day.

00:26:59.740 They're asking for 12 months.

00:27:03.160 Now, you've got to realize these commercial real estates, if they don't pay their own mortgages,

00:27:07.380 they're going to go out of business and they're going to go into default.

00:27:10.180 And Starbucks is a very big customer.

00:27:11.760 By the way, that's not the only people, landlords, commercial tenants, negotiate rent, breaks

00:27:15.980 amid coronavirus disruption, how struggling businesses can renegotiate rent, this is Harvard

00:27:21.900 business review.

00:27:23.200 So there's going to be commercial real estate that's going to take a hit.

00:27:25.500 And the other part that a lot of people have right now is companies are worried about,

00:27:28.920 commercial real estate agents specifically, because they're salespeople, commercial real

00:27:33.560 estate agents are very good at saying things like, you know, it's funny, coronavirus

00:27:36.880 has actually shown the value of office, and this is why it's booming right now, commercial

00:27:42.020 real estate.

00:27:42.920 That's a salesperson talking.

00:27:44.320 I relate, because I know what it is to sell.

00:27:46.540 But the reality behind closed doors, philosophies are changing.

00:27:50.380 People are deciding to work from home.

00:27:52.220 You're seeing Google, Facebook, a lot of these guys saying 50% of our employees can work from

00:27:56.880 home.

00:27:57.340 We don't need that much commercial space.

00:27:59.360 Google was about to buy a bigger project.

00:28:01.140 They put a halt on it.

00:28:02.100 Why?

00:28:02.660 They don't need it.

00:28:03.240 Those big campuses that they were building, they're not looking at it right now, so who

00:28:06.760 takes a hit with that?

00:28:08.240 Possibly commercial real estate.

00:28:10.060 It'll be interesting to see how they pivot.

00:28:11.460 So look, these are 10 issues I have with you that I'm talking to you about, and I just think

00:28:16.680 it's very important for you to look at for yourself, because I run a small business.

00:28:20.980 We have fewer than 500 employees.

00:28:22.820 We have 15,000 agents nationwide.

00:28:24.520 We have 130 offices nationwide, nearly half a million square feet of space.

00:28:28.400 And as a business owner, we immediately were affected by coronavirus to see what we had

00:28:34.100 to do.

00:28:34.760 What are some of the leaks that we had?

00:28:36.540 What are some of the leaks that we had with issues of hiring, firing, training, technology?

00:28:41.500 We had to adjust from a go-to webinar on Webex to another platform.

00:28:45.920 We had to figure out a way to tailor all our presentations to be effective on Zoom.

00:28:50.780 We had to get compliance in place to understand what it is to sell products on Zoom.

00:28:54.740 But we, ourselves, were exposed and tested, and we looked at it and said, oh my gosh,

00:28:59.340 look what's going on over here.

00:29:00.420 But at the same time, we had our biggest profit of month last month, in the month of April,

00:29:04.020 and we have our biggest month revenue, EBITDA, top line policies.

00:29:08.340 Every measurable category possible in the history of the company has been shattered in the month

00:29:13.040 of May.

00:29:14.020 Because if these industries, if these companies, if these businesses, they don't pivot quickly

00:29:20.180 and figure out a way to reposition themselves to assume that something like this is going

00:29:25.720 to happen again in the next 5, 10, 15, 20 years.

00:29:27.920 Because the next time a coronavirus comes out, say the president is a Democrat.

00:29:33.980 You know what they're going to say?

00:29:35.040 If he doesn't shut down, they're going to say, hey, well, Trump shut down, and he did

00:29:38.100 the responsible thing.

00:29:38.960 And he shut down two weeks before.

00:29:40.820 There was no death.

00:29:41.840 There was only one death when Trump shut down.

00:29:43.560 And he closed China.

00:29:44.860 He did this, and he did that.

00:29:45.900 And this president's being very risky.

00:29:48.540 That president is going to be forced to shut down, and the pressure is going to come to

00:29:52.840 them.

00:29:53.220 If it's a Republican president, they're going to say, Trump did it.

00:29:55.640 Why aren't you doing it?

00:29:56.760 There's going to be so much pressure, which means this shutting down game is not something

00:30:02.040 that's only going to happen one time.

00:30:03.680 I expect it to happen a lot of times.

00:30:05.480 You know why?

00:30:06.420 Because even until today, they say what?

00:30:08.120 We don't know when we're going to get a vaccine.

00:30:10.060 We don't know when we're going to get a vaccine.

00:30:11.580 We don't know when we're going to get a vaccine.

00:30:14.000 Uncertainty, uncertainty, uncertainty.

00:30:16.160 So if business models, don't assume that this is going to happen again in the next

00:30:21.360 10, 20, 30, 40 years, they are going to be affected in the next 10, 20, 30, 40 years.

00:30:26.300 So whatever business you're looking at, you got to look at your business and say, what

00:30:29.860 can I do to make it pandemic-proof?

00:30:31.880 Thanks, everybody, for listening.

00:30:33.200 And by the way, if you haven't already subscribed to Valuetainment on iTunes, please do so.

00:30:37.740 Give us a five-star.

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00:30:40.580 And if you have any questions for me that you may have, you can always find me on Snapchat,

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00:30:46.680 Just search my name, PatrickBitDavid.

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00:30:53.420 With that being said, have a great day today.

00:30:55.240 Take care, everybody.

00:30:55.980 Bye-bye.

00:30:56.240 Bye-bye.

00:30:56.880 Bye-bye.

00:30:57.200 Bye-bye.

00:30:57.960 Bye-bye.

00:30:58.720 Bye-bye.

00:31:00.760 Bye-bye.

00:31:01.160 Bye-bye.

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00:31:02.400 Bye-bye.

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Valuetainment - July 17, 2020

Episode 494： 10 Industries Crushed By Coronavirus

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