The Dr. Doug Ramsey Show - 20250329

Episode Transcript

Speaker 1 (00:00):
The opinions and information expressed and discussed on The Doctor
Doug Ramsey Show or for informational and educational purposes only.
It is not intended to provide and should not be
relied upon for accounting, legal, tax or investment advice. Please
consult with a professional specializing in these areas regarding the
applicability of this information to your situation.

Speaker 2 (00:23):
All things financing business leading you to success at work,
at home, and in live. It's the Doctor Doug Ramsey Show.
And now here's your host, Doctor Doug Ramsey.

Speaker 3 (00:38):
The Doctor Doug Ramsey Show. I'm your host, Doctor Doug
Ramsey Broadcasting Live. I'm the merger Favo Radio Network. Well,
it's been a while since I've been on. Had to
get focused on this project, completing a merger with a
company called Whitey Biopharma. Really interesting target company. I'll talk

(01:02):
more about it after the deal gets done and go
into the kind of structure and everything behind it, because
it's really fascinating, But for now, since we're right in
the tail end of it, I'm not gonna talk any
more about it because we're in with the sec on

(01:25):
the review and got to make sure we do everything
by the books. So anyway, a lot of news ever
since Trump took office and seeing great stories from week
to week. I just couldn't get to them, but got
to line up of stories here are gonna go a
little shorter today, so I just want to make sure

(01:45):
that we can get good start out of the gates
and then we'll get back to the normal show length
going forward. But this first story, I talked about this
before and she finally made it to trial, and we're
talked about Charlie Javis. She's the one that sold her

(02:07):
company to JP Morgan for one hundred and seventy five
million bucks, and it turns out it was a lot
of made up data. Pretty crazy. So it's from CNBC
the Finance section just yesterday in fact, and it says
that Charlie Javis, founder of a startup purchased by JP

(02:30):
Morgan Chase in twenty twenty one, was convicted in federal
court Friday to frauding the bank by vastly overstating the
company's customer list. The jury decision comes after weeks of
testimony in New York over who was to blame for
the flame out of a once promising startup, Frank, founded

(02:50):
by Javis in twenty sixteen. That's the name of the
company aimed to help users apply for college financial aid.
JP Morgan has accused Javis, who is thirty two years old,
of duping the bank into paying one hundred and seventy
five million bucks for a company that had more than
four million customers, when in reality it had fewer than

(03:13):
three hundred thousand. And just think about these numbers. Four
million customers and you can do the math. Divide that
into one hundred and seventy five million, and you can
see what they were paying per customer. And then it
turns out three point seven million of those customers were
made up, just data, created out of thin air. You

(03:38):
can see why JP Morgan wasn't going to let this
one go away. Largest US bank by assets sued Javis
in late twenty twenty two after attempting to send marketing
emails to some of the thousands of customers that thought
Frank had In its suit, JP Morgan released emails in
which Javis hired a data scientist to generate a fake

(03:58):
roster of customers. Then, in April twenty twenty three, the
Justice Department charged Javis with four crimes, including wire and
bank fraud counts, which carry multi decade maximum sentences. Javis
was arrested at Newark Airport on April third of that
year and had been out on bail. Javis had pleaded

(04:21):
not guilty and said she was innocent throughout the trial.
Her lawyers blamed JP Morgan for rushing to close the
Frank acquisition because it feared that other suitors would emerge.
That sounds like a horrible defense, all right, So JP
Morgan wants to get the deal closed, But it doesn't

(04:42):
mean you can present frauds with information that JP Morgan
just because the deal's moving quickly that that wouldn't have
been a defense I would have presented. That's pretty silly.
Sentencing will happen in August. A spokesman for New York

(05:03):
based JP Morgan declined to comment. No surprise, and that's
the end of that story. That's a quick hit there.
But yeah, pretty young, and she's probably going up the
river for a long time, probably till she's eligible for
Social Security. So way to screw up your life, all right, Starbucks.

(05:30):
In the news, I've did some stories about that new
CEO they've got and how he was commuting in a
private jet and he got a big allowance for that
from the board of directors. He's in there making changes now,
and you know, whether you agree with the changes or not,

(05:50):
he's definitely trying to streamline some things and make it
a little more efficient for the baristas, bring back the
kind of community feel where you can stay there for
a while and you're not just going in, grabbing your
coffee and go and jumping right back in your car.
So this particular article talks about the free refill perk.

(06:18):
Starbucks took a shot in the dark with their new
policy and it's bean working, oh clever. They use the
word bean in there instead of being for a little
play on the coffee theme. The coffee giant has been
making moves to rebrand their stores as classic coffee houses
for communities to sit and stay, and it's paying off,

(06:40):
according to numbers shared with Axios. At the end of January,
Starbucks implemented a new refill policy where customers are ordering
in store have to say if they would like to
drink for here or to go. Those who order for

(07:01):
here get their drinks served in a ceramic mug glass
or a personal cup. These people are able to get
free refills during their visit on hot brood or iced
coffee or hotter iced tea. That's interesting. So I haven't
been in the Starbucks in a bit of sit down,

(07:26):
drink it in the store style a long time, so
fact they're switching to these ceramic mugs or glasses is
definitely a change. Starbucks reveal to Axious that over the
past three weeks, the number of customers who choose ceramic

(07:47):
mugs and glasses to sit and stay in cafes has
on average increased by more than three times in the US.
That's a lot, so some rural positive results there. Customers
must have their first drink served in one of these
reusable cups in order to receive free refills, and no
disposable or plastic vessels can get free refills, which is

(08:11):
encouraging some patrons to stay a while. Yeah, they don't
want to go in into a to go container because
you get these free refills and then you're out the door.
They figure if you're going to stay in there, you
might spend a little more money on other stuff too.
New CEO Brian Nicol, who took the helm back in September,

(08:31):
said at the company's annual shareholders meeting last week that
he was pleased at the early reaction to changes we
made from both customers and partners. These changes come as
Starbucks is hoping to increase foot traffic and sales as
part of its Back to Starbucks initiative plan to simplify
offerings and return to its roots companies leaning into our

(08:55):
coffee culture, Tressie Lieberman, Starbucks and Global Chief brand Officer,
till that we're re establishing Starbucks as the community coffee
house and reintroducing Starbucks to the world. Leberman added, the
coffee jiners aiming to expand their reach, investing in ads
on TV and streaming that will evoke the feeling that

(09:18):
I want to go to Starbucks. Starbucks has already started
to test new designs and s like locations too, bringing
back more comfortable seating in spaces, further giving stores an
old school vibe where customers can sit for hours, relaxing
or doing remote work. New designs include expanded seating options,

(09:40):
power outlets, and abundant food displays, as well as some
locations with more separation between the cafe and mobile order experience.
The company revealed to Axios you know it reminds me
of when I was working on my PhD at Claremont.
I would hang out in a place called Walters in

(10:00):
the village and it was great. Sometimes I was in
there for upwards of three hours and they would let
me do my thing, and it was that kind of
atmosphere where they just check you on on you once
in a while, make sure you're doing okay, check for

(10:21):
any you know, refresh on the drinks, and if you
need any more food. And they had Afghan fries that
were just the bomb, super good, And that was the
kind of place you feel comfortable and relax and sit
there and just focus on doing your homework and reading

(10:45):
and whatever else you wanted to do. And it was
right there in the heart of the whole Claremont College
campus system. You know, that's the Claremont Colleges includes Pomelona, Pitzers, Grips,

(11:06):
Claremont mckinna College, and then the graduate university in the
business schools. So it made for a great atmosphere. So Starbucks,
you know, it's a global model. They can't be quite
as community esque as a Walters might be, but he's

(11:31):
definitely trying to drive it back towards that. So pretty
interesting what he's doing. Nicholas been making quite a few
changes of popular coffee chains since he came aboard from Chipotle.
When he started, he doned that one of his priorities
to accelerate growth of the company is to simplify the
overly complex menus. So Berice has been speed up service

(11:55):
with the goal to cut roughly thirty percent of food
and drink options from its menu by late twenty twenty five.
At the beginning of the month, Starbucks removed thirteen drinks
from his menu. And I went over an article one
time about how many total combinations of drinks that Starbucks

(12:16):
was making, and it was some humongous number because you
can do you know, zero, one, two, three, four shots
or something, and then you got different serrups that you
can get shots of, and it went through every iteration
and every single drink and it was just crazy. So

(12:37):
he's onto something there too. All right, that's enough on Starbucks.
Sambangrent Freed talked a lot about him before he went
up the river. Well, he's floating down the river now.
It looks like former crypto mogul sambangment Free transferred out

(12:57):
of the New York and that he was in. ABC
News had an update here. The Bureau of Prisons his
transferred former cryptomogul Sanbankmin Freed or SBF, out of a
detention center in Brooklyn, New York. Sources familiar with the
manner told the ABC News bankment Free was moved from

(13:20):
MDC Brooklyn to Oklahoma, a transfer point on his way
to another federal lock up to continue serving in his
twenty five year sentence for orchestrating one of the biggest
financial frauds in US history. He had requested, however, to
remain at MDC while he appeals his conviction. Bankment Freed

(13:42):
and maybe he made some friends there at MDC Bankment Free.
His transfer comes after he conducted an unauthorized video conference
interview with Tucker Carlson, which temporarily landed him in solitary
confinement Gosh waiting goes sam. An additional source told ABC

(14:04):
News the reason for the chansfer has more to do
with him filing his appeal, rather than punishment from the
Carlson interview. The source said, once Bankman Freed's appeal was filed,
there was no longer reason for him to remain at MDC,
where he had asked to be so he could remain
close to his attorneys. The Bureau of Prisons wants him

(14:27):
to service sentence at a federal prison rather than a MDC,
which is traditionally more of a way station for defendants
awaiting trial. In November twenty twenty two, Bankment Freed's and
global cryptocurrency exchange called FTX, which he co founded and
served as CEO, imploded, resulting in an eight million dollar
loss for its customers. Bankment Freed resigned amid the company's fall,

(14:51):
and the new ownership filed for bankruptcy. Prosecutors said he
stole from FTX customers and used the money for political contributions, investments,
and personal gain. In twenty twenty three, Bankment Freed was
convicted of seven cancel fraud, conspiracy, and money laundry. Papa's Restaurants.

(15:15):
If you're from Texas or living Texas, so you're familiar
with the Papas restaurant group. They've got a number of
different style restaurants that they run, Papa Steakhouse, Papa Cegos,
and so forth, So they kind of cover some big

(15:40):
segments in the restaurant industry. Well, they're looking at buying
on the border. Apparently, and this is from WFAA right
here in Dallas for worth, Texas based Papa's Restaurants could
buy Irving based text mex chain on the border. Bloomberg
report warts Papa's Restaurants, the parent company behind nine restaurant brands,

(16:06):
including Papa's Brothers Steakhouse. I should have waited and just
read this thing. Papasito's canteena Papados Seafood Kitchen, Papa's Barbecue
and more made a bid Dubai on the Border Mexican
Grill and Canteen in bankruptcy court, according to Bloomberg, on
the Border file for bankruptcy earlier this month, citing inflation

(16:29):
and changing customer behavior. As the Associated Press reported, prior
to filing for bankruptcy, on the border close forty restaurants,
leaving it with sixty restaurants across eighteen states, which the
Associated Press says will stay open during the bankruptcy proceedings.
There are reportedly another twenty restaurants across the US and

(16:51):
South Korea owned by franchisees. That is that is interesting.
So they've got their you know, Mexican restaurants on the
border in South Korea. I wouldn't have thought that, but

(17:12):
there you go. And remember the bankruptcy process. When you
do a Chapter eleven filing, it allows you to stay
open while you basically reorganize the right hand side of
your balance sheet. So your right hand side of your
balance sheet is how you finance everything. So it's got
all your debt components, it's got your preferred stock if

(17:37):
you have any of that, and then it's got your
common equity. So they apparently obviously have too much debt
versus the amount of cash flow that they're bringing in.
Because that cash flow that's available after paying for operations

(17:58):
and capex and everything else, you got to have enough
left to service the debt, which would include principal payments
and interest if you need to be paying any interest
on the debt, which they obviously would be. So they're
coming up short, and so you can go through this
chapter eleven process and basically eliminate some of that debt

(18:23):
or change the terms on the debt so that the
amount that you owe towards the debt, you know, in
terms of principal and interest each month, goes down. And
you can do that by maybe extending the term and
the debt. If it's a term note, you take it

(18:45):
from five years to ten or whatever and just lower
the monthly obligation and then try to fit it inside
of your cash flow that way. So in a lot
of restaurants have been filing Chapter eleven here over the
last twelve months. We got a ton of them. Other

(19:05):
casual restaurant chains that have filed include Red Lobster and
TGI Fridays on the Border's North Texas Route run Deep.
The chain reportedly opened its first location in Dallas is
nineteen eighty two and was also previously owned by Chile's
parent company, Brinker International, and they're based here in Dallas.

(19:27):
Brinker acquired on the Border in nineteen ninety four and
sold the chain to Golden Gate Capital in twenty ten,
who then sold it to Argone Capitol Group in twenty fourteen.
The family behind Papas, which is based in Houston, has
operated restaurants across Tennessee, Arkansas, and Texas since the late
eighteen hundreds. But I didn't know they'd go back the

(19:51):
far all right back to Starbucks. I thought this was interesting,
you know, I knew some of the weights were a long,
but and this is what this Brian Nichols is trying
to attack but Starbucks, and they've got a picture one

(20:11):
in New York City. Starbucks is a It's on a
mission to speed up its act, setting new goals to
cut weight times for both drive through mobile orders in
an effort to win back customers and boost sales following
reports of thirty to forty minute weights last year. Man,
I've been in a couple of long waits, but not

(20:34):
thirty to forty minutes. The coffee giant is now aiming
at complete drive through orders in four minutes, while mo
orders should be ready within twelve minutes. Starbucks, which is
traded publicly. If you want to buy some Starbucks, the
ticker symbols sbux. The company did not say if this

(20:56):
goal would increase the workload for Buris, as the company
has said it plans to hire more workers to address
staffing issues, which have left many locations operating with skeleton crews.
I have noticed that it went from more than adequately staffed. Yeah,
skeleton carew is probably the best way to describe it.

(21:22):
And you know they're just trying to keep up and
they're getting run ragged. These new targets are part of
Starbucks attempt at a big fix, which looks to restore
the brand's position as a premium coffeehouse after four consecutive
quarters of declining sales and growing frustration over long wait times.
The company is focusing on speed. CEO Brian Nickel said

(21:47):
these goals marked the first time the company has formally
implemented such specific targets, per Bloomberg. Starbucks also recently announced
it with limit mobile orders to a maximum twelve items
per customer. That good. I got behind some lady one
time and she had orders for the entire office. I
mean she's going and going and going. I just wanted

(22:10):
one thing, and yeah, that was That was not a
good day. So there's a competitor that's entered into the US.
And I actually talked to one of the co founders
outfit called Black Sheet Coffee over the UK, and they're

(22:30):
in Scotland and around and they are kind of the
rebel brand and they don't mind going head to head
against Starbucks, and I tried them. They just opened up
finally here in North Texas and they opened up one right
by my house. Stopped in there, got the iced Machia

(22:56):
and it was really good. Place was packed. It was buzzing,
and they went into an old Wendy's and they hired
a design firm to come in and just retrofit the
Wendy's and converted into the black sheet style looking style
and everything really efficient, cruise, super friendly, fast, and they

(23:23):
use the computer kiosks or boards where you just punch
in your own order on the board and pay for
it and then they call you up when they got
your drink ready. But yeah, a great job. And I
like what they're doing. I like kind of that style

(23:44):
to go head to head against you know, a giant
like Starbucks, and they're doing it one store at a time.
So really impressive job there. All right, let's jump into
let's see where we're gonna go here. In and out.

(24:07):
This is interesting and it's a little pricing arbitrage trick.
I didn't know about it until I found this article
this morning. There's a secret strategy to pay much less
for an in and out Burger, and it is no
more the ordering hack used by some customers to pay
just a fraction of the price for one of the

(24:29):
popular restaurant chains. Secret Burgers has been deleted after corporate
officers appear to have caught onto the workaround. A popular
burger known as the Flying Dutchman consists of two beef batties,
two slices of cheese with no bond. Yet you won't

(24:49):
find it on the burger chain's menu because it is
one of In and Out's secret menu items in California restaurants.
The burger sales for five dollars and fifty cents, which
is a few cents less than the popular double double.
Some customers, however, would simply order two patties and two
slices of cheese, giving them a nearly half off discount

(25:13):
on what is essentially a Flying Dutchman without ordering by
the name. According to a memo poster on read It
this week, it appears in and Out caught onto the
hack and has moved to change the prices on individual
patties and cheese slices. In response, the new price of
a meat and cheese patty will be aligned with flying

(25:35):
Dutchman pricing. The meat and cheese patty will be half
the price of a Flying Dutchman. That makes sense, that's
according to the March twenty memo from In and Out
Chief operating officer Denny Warnick, who is on the case
Way to go, Denny. That means that two patties and
two slices of cheese, the equivalent of a flying Dutchman,

(25:56):
will be charged at the price of a flying Dutchman man.
They figured it out. Got a bunch of restaurant articles.
Let's get into this IPO though, so core Weave. You know,

(26:20):
the Trump took office, everybody's waiting to see whether IPO's
initial public offerings were really gonna take off. This articles
from CNBC. Core Weave CEO Michael Introteur unpacked the cloud
computing company's first day on the market in a Friday

(26:43):
interview with CNBC's Jim Kramer, defending its decision to raise
a hefty debt load. The debt is the engine, it's
the fuel for the company, he said. We go out,
we find great contracts with great counterparties that need massive scale,
massive skill computing to drive their business. And then we

(27:03):
go ahead and we go back to our syndicated lenders
and they give us the debt to stand up the clusters.
It will deliver revenue to the company. The IPO debuted
on a tough day for the indexes. They're talking about
the SMP and NASDAK and so forth, especially for tech stocks,

(27:24):
whose losses helped the Nasdaq composite plunge two point seven percent.
Core Weave, which sells artificial intelligence technology in the cloud,
opened at thirty nine bucks and closed flat at forty
dollars a share, raising one and a half billion dollars
in its share sale. It's the biggest tech IPO in

(27:44):
the US since twenty twenty one. Even as the company
set its sheer price at forty dollars, lower than the
previously expected range of forty seven to fifty five bucks,
in Trader told CNBC the lower pricing was where buying
interest was. They claimed, there are a lot of headwinds
in the macro. He's talking about the macro economy. So

(28:10):
the IPOs have gone over this before. But just as
a refresher with an IPO, you come off your roach.
Oh you finish in New York, and on that last
day of the road show in the late afternoon early evening,
you meet up with your investment lead investment banking firm,
and you look at the demand, which is the indications

(28:34):
of interest, and you see if that order book is
you know how many times oversubscribed it is to have
decent training. After the IPO debuts, they like to see
at least the investment banks like to see at least
two to three times oversubscription. And you know, if they

(29:00):
get that, then they're gonna then move that next step,
which is the pricing. When you send the red hairing
out or the preliminary perspectives, you put a price ranging there,
you think it's going to be priced. In their case,
they thought it'd be priced between forty seven and fifty
five bucks. But reading the between the lines here, it

(29:23):
looks like that demand was a little softer than they expected,
and so their lead investment banks at hey, you know,
if we want to have good action in the stock
over the coming months, let's price it a little bit lower.
You're still going to be pulling in to the company
when you sell these new shares out to shareholder's still

(29:47):
going to be pulling in at one and a half
billion dollars at forty bucks. So let's use that as
the clearing price and pull the trigger. And so that's
what they did they did at debuts. So they had
their pricings meeting on Thursday, and then overnight they fill
in the blanks. The remaining blanks in the prospectus, they

(30:11):
print it, they deliver it out of the brokerage houses,
and then when the market opens Friday morning, then this
company is now being publicly traded, and it closed it

(30:32):
at forty bucks. So we opened at thirty nine, so
they priced it forty when it opened. The traders then
priced it down a dollar. Underwriters are already paying. It's
going to be a firm commitment. So the underwriters are
the ones the investment banks that actually write the check

(30:55):
to the company gorwy and then the underwriters on the
stock and then they resell it out. Well, when they
started selling the shares, it opened up at thirty nine,
which is right there, I mean where they priced it,
so they were they were pretty in line. So Corwave

(31:19):
has raised almost thirteen billion dollars in debt, much of
which is for GPUs in the company's leased data centers
in the US and abroad. It had debt on the
bouncing is offset by a larger revenue contract, so we'll

(31:40):
see how they do. That's a lot of debt though.
All right, let's see what else we get in here.
So if you've got student loans in your late pan,

(32:05):
here's some data points for you. It is to keep
in mind and this is from CNBC as well. The
more than nine million student loan borrowers who are estimated
to be laid on their payments could experience significant drops
in their credit scores during the first half of twenty
twenty five. The Federal Reserve Bank of New York horns

(32:27):
some people with the student loan delinquency. You could see
their scores fall by as much as one hundred and
seventy one points. The FED rights in March, and it's
actually the March twenty six report. Credit scores, which impact
people's ability can cost to borrow, typically range from three

(32:49):
hundred eight hundred and fifty, with around six seventy and
high are considered good. The expected drop was highest for
borrowers to start with the best scores. Among those with
scores under six twenty. The reported new delinquency could lead
to an average eighty seven point decline. Although some of

(33:11):
these borrowers may be able to cure their delinquencies, the
FED rights that damage their credit standing will have already
been done and will remain on their credit reports for
seven years. It's been a long time since federal student
loan borrowers have needed to worry about the consequences of mispayments,
which can also include the garnishment of wages and retirement benefits.

(33:33):
That's because collection activity was suspended during the pandemic and
for a while after. That relief period officially expired on
September thirtieth, twenty twenty four. As as student loan delinquencies
appear on credit reports again this year, borrowers are likely
to face a cascade of financial consequences, said Doug bone Parth,

(33:58):
a certified financial planner the founder and president of bone
Bonefide Wealth in New York. This credit score penalty restricts
their access to affordable financing, locking them into a cycle
of elevated barring costs and fewer opportunities to rebuild their
financial stability. Student loan bars struggling to make their payments

(34:25):
of options stay on track and protect their credit. Consumer
advocates say, for one, finding an affordable repayment plan coll
ower your chance of falling behind on your bills. Borrowers
can apply for an income driven repayment plan, which will
cap their monthly bill at a share of their discretionary income.
Many bars end up with a monthly payment of zero.

(34:47):
The Education Department recently reopened several IDR plan applications following
a period during which the plans are unavailable. Borers can
also apply for a number of deferments or forbearances, which
can pause your payments for a year or more. It
may show up on your credit report that you're not
currently making payments on your loan, but you shouldn't be

(35:08):
flagged as late. So there you go. Keep those student
loan payments going. In keeping talking, all right, that's the
first show back after the hiatus. You've been listening to
doctor Doug Ramsey show. I remember that you can't make