Shein IPO, inflation plays, housing supply: Wealth!

On today's episode of Wealth!, host Brad Smith delves into various topics, including company updates, strategies for navigating inflation, and insights into the housing market.

In the corporate arena, semiconductor giant Nvidia (NVDA) takes center stage as it prepares for its highly anticipated 10-for-1 stock split on Friday. Brad Smith breaks down the implications of this move for investors.

Meanwhile, the retail sector is reacting to news from fashion giant Shein, which is considering an IPO listing on the London Stock Exchange. Yahoo Finance's Rachelle Akuffo breaks down this development and its significance for investors.

Amid the persistent challenge of high inflation, GLOBALT Investments Senior Portfolio Manager Thomas Martin joins the show to offer valuable strategies for navigating the stock market in this environment. Furthermore, Yahoo Finance's Madison Mills weighs in on the insights revealed by retail earnings, painting a picture of the state of the consumer in the current economic landscape.

Rounding out the episode, Fannie Mae Chief Economist Doug Duncan offers practical tips for navigating the supply constrain dynamics within the housing market.

This post was written by Angel Smith

Video Transcript

Welcome to wealth everyone.

I'm Brad Smith and this is Yahoo Finance's guide to building your financial footprint.

Our community of experts will give you the resources, tools, tips and tricks that you need to grow your money.

Hey, on today's show, fighting inflation in your investment portfolio, we'll hear from an expert about the top inflation, hedge ideas, sectors and stocks and bust out that pen and bad in a week filled with labor market data.

We're bringing you the advice to land a job in a very competitive market plus mortgage rates back above 7% and some say that they might stay that way.

We'll break down everything that you need to know if you're committed to purchasing in this market.

All that and much more.

Coming up throughout today's show, we gotta start with NVIDIA.

NVIDIA reached a record milestone here crossing a $3 trillion market cap for the first time ever.

On June 5th, the stocks advanced pushed NVIDIA past Apple, moving it into position as the second most valuable publicly traded us company here and it comes ahead of Nvidia's 10 for one stock split.

That's right, folks, shares of NVIDIA, they're about to get a little bit more affordable for the average investor out there.

If you own a share of NVIDIA ahead of tomorrow's market close on Monday, you will see that one share turn into 10 shares in your portfolio and the share price will be divided by 10.

This will not change the company's $3 trillion valuation but it will change two basic things.

One the number of shares current shareholders own.

So each shareholder of NVIDIA as of market close today, Thursday, June 6th will receive nine additional shares distributed after the market closed on Friday.

So if you own one share, then you'll have 10, if you own 10 shares.

Yes, you guessed it.

You'll have 100.

So the second thing here though, to remember the stock split changes the dollar amount that you pay for every new share on Monday, NVIDIA closed at $1224.40 on Wednesday.

If the stock split had been effective, then each share would then be worth 1/10 of that or 100 $22.44 stock splits don't always generate positive results for every company, but in aggregate stocks that split, they tend to outpace the S and P 500 over the 12 months following the effective split based on data from Bank of America.

So sticking with NVIDIA here, Nvidia's 10 for one stock split may seem exciting to investors who missed the boat and didn't wanna buy $1000 stock but does it merit a spot in your portfolio post split here with more?

We've got Thomas Martin who's the global investments, senior portfolio manager?

Great to have you here.

Let's break this down a little bit further.

Does it make it a little bit more attractive?

Great.

Well, thanks for having me on the show.

Um uh as far as making the company more attractive.

Uh No, I mean, like you just uh did a very good job of explaining nothing has changed economically for the company.

Um However, uh when you're trying to make a precise position in a portfolio and make sure your exposure is where you want it.

Um And I would say that for a company like NVIDIA that has um had such huge increase in value, um and really can kind of um get to be an outsized position in your portfolio.

Uh It's important to make sure you size that correctly so that you're taking the amount of risk that you want, you have the exposure to uh a good company with great prospects.

Um But maybe you trim it back from time to time um to make sure that it doesn't get too big in your portfolio, you and you have too much when the share price is 1/10 of what it is, you can be more precise with that.

And so I'm looking forward to the split to be able to just better manage my position and exposure.

You know, we've been kind of having this mental joust of what's more important to the markets.

Is it in video or is it the fed and, and, and Thomas investors are increasingly pricing in a rate cut in September.

The probability that's risen to about 58% from 45% just a week ago.

The FED continues to track the data to see whether or not inflation is moderating.

And we've got that big jobs report tomorrow, what should investors be doing with their portfolios?

Given where the probability of cuts continues to move?

Right.

Well, um I like that.

The name of the show is wealth and that when we're building wealth, um we're really talking about um, exposures in a portfolio for the times that should move fairly slowly.

Um We shouldn't be doing trading, you know, every day or every week or changing where we are with regard to stocks or bonds or cash.

Um Unless there's a big move and, and really lately, other than the market moves upward for stocks and some fluctuations in interest rates, there haven't really been um, a lot of fundamental things that are different.

We're in this neutral zone with regard to inflation which is coming down, but sort of stalled out, we hope it's going to continue its downward path, but there's a fair amount of uncertainty about that.

Um uh employment and unemployment have been, you know, more or less state, um, uh, in this area and we'll, we'll get an yet another data point on Friday.

Um, but again, uh, if there's nothing showing significant signs of weakening, um, although, uh, there have been some signs that things aren't quite as strong as they used to be.

Um, so that's in the neutral zone too.

The consumer, um, again, mixed, uh, with the, the, maybe the lower end of the income spectrum having to make a little bit more decisions and be discretionary, discretionary about what they're buying.

Um Whereas at the higher end of the income and wealth spectrum, um they're uh you know, speeding along and, and uh and creating a fair amount of demand.

So there's not a lot of reason to make changes in the portfolio uh until something does change and the moves from the fed have been fairly well telegraphed.

Um You know, they've, they've said that they want to wait until inflation.

Uh numbers are better than they are and they just, they haven't been better.

So that's why those expectations have gotten pushed back.

Um when those rate cuts do come, they uh right now at least are, are, are fairly well anticipated in the market.

So, um uh whatever your positioning is for the risk that you have, if you liked it yesterday, you should like it today and, and probably will like it going into uh the latter half of this year.

And so with inflation keeping above the Fed's 2% target.

How can investors hedge that risk in their portfolios?

Right.

So uh people are rightly worried about inflation over the long term.

And uh there's really two ways that are fairly easy, I guess, um to hedge that inflation.

And the first is one people don't think about uh very often uh because it's, it's just sort of standard investing and that is to invest in good profitable companies that are growing their earnings and their cash flow.

And the reason that that works is that they are creating value um and the value of what they're creating um makes it um you know, more valuable and therefore uh outpaces just a general level of, of prices going up.

Um So you really can hedge inflation um by being invested in, in businesses that um that are tapping new markets and growing in existing markets and growing their earnings.

So that's one way to do it.

Um And, and most people are already there in, in a part of their portfolios.

Um The second way it is fairly well known is through inflation hedges um in commodities and specifically um in gold um which has been for thousands of years, um a store of value in an inflation hedge.

Um And it's not an exact 1 to 1.

Um but it is a way to put aside some money in your portfolio for something that has acted as a hedge for a long time, just lastly while we have you, we got about 30 seconds, let's get to some individual stock names.

What are you liking right now?

What are you fading?

Well, I think what's important to recognize in today's market that, you know, we had the S and P and the NASDAQ at New all time high and then the markets are fairly strong this year.

A lot of the major themes, you know, which are obviously A I and the energy to support it in data centers, et cetera are very well recognized.

And uh in the market that doesn't mean that you shouldn't have exposure there.

But as far as adding to new positions now, um it's, it's trying to find those companies where the fundamentals are still good, but where for some reason, there's been a correction.

So one of the companies that is in that boat is Uber Technologies.

So here's a company that had been doing very well year to date but has underperformed recently.

Um And really the earnings estimates are higher today than they were when uh when the stock cracked.

So you've got a good valuation and nothing's wrong with the story in terms of growth and in terms of their levers for continuing to grow their uh revenues and increase their margins.

So that's one where you have a high quality stock that um is basically on sale.

Thomas Martin Global Global Investment Senior portfolio manager, Thomas, thanks so much for taking the time here with us today.

Great.

Thanks for being, thanks for me being here.

Well, Sheehan is the next household known company expected to go public this year, but it may not list on the New York Stock Exchange and is instead reportedly opting for the exchange across the pond in London here.

With the latest, we've got Yahoo Finance's Rochelle Auo Rochelle.

So us investors here tracking she and trying to figure out where it's gonna list.

Indeed.

So we have to take a step back here because Chinese founded fast fashion retailer Xian is expected to list its $63 billion IP O on the, on the London Stock Exchange this week.

That's according to reports that started with Sky News.

Now, this would actually be the biggest in the history of the LSE after us, regulators pushed back, citing their concerns about forced labor and the environmental footprint.

These are allegations which Sheen has denied, but UK lawmakers still have their concerns.

So we'll see how this plays out despite sheen making its reselling platform available to Europe and the UK to alleviate at least some of the ESG concerns.

But now to the bread and butter, depending on how she enlists.

Here are the top five ways that us investors can buy in.

You have international brokerage accounts, American depository receipts or AD Rs mutual funds and exchange traded funds or ETF S direct purchase plans and foreign account services.

International Brokerage accounts as well.

You can open these with firms that offer access to foreign stock exchanges.

Some of the most popular include interactive brokers.

If we're starting with the brokers here you have Charles Schwab fidelity investments, E trade.

Another option is AD R. So if X issues these, that us investors can buy these securities, now they represent shares in foreign companies and trade on us stock exchanges, they're convenient and it also avoids the headache of worrying about foreign currency or exchange issues.

Now, according to the US China Economic and Security Review Commission as of January 8th, 2024 there were 265 Chinese companies listed on us exchanges with a total market cap of 848 billion.

So this is obviously a very popular way that a lot of Chinese companies tend to list here.

Now you can also invest more broadly with mutual funds and ETF S that focus on international or specific regional markets to get that indirect exposure to Xian as well.

You also have direct purchase plans.

Now some foreign companies offer direct purchase plans to buy shares directly from a company without using a brokerage.

Now we won't know if Shean is providing such a plan until after its IP O and you need to check the kind of protections that that comes with.

There's also foreign account services like foreign stock purchase programs.

Now these are provided by some us banks or financial institutions and they can facilitate buying and holding shares of foreign companies as well.

Now be mindful of that conversion rate though from dollars to pound sterling.

So you don't get some sticker shock there if you try and buy shares.

So what should investors consider if they go the brokerage route then?

Well, there are some things that you can compare first and most important check market access to make sure that that brokerage actually includes your desired international market.

Another thing to do is compare those fees, commissions and cost structures, especially given the currency convergence to keep in mind.

Also make sure the trading platform is straightforward to use and provides analysis, data back, research and reachable customer support so that you have an understanding of what you're buying.

And if you have questions, you can reach out to someone and of course check the regulatory protections and insurance coverage provided by the brokerage as well.

That's in case of any trading glitches or unforeseen circumstances.

So at least you know what your recourse is, Brad.

All right, Rochelle, thanks so much for that breakdown.

Certainly appreciate it.

Uh But don't go too far.

We'll need you back here at 11:35 a.m. Eastern Time.

Why?

You're gonna be discussing that interview with Dan Amos, who's the Aflac CEO as part of our lead this way series?

So we'll see Michelle back here very soon.

We've got all your markets action straight ahead.

Plus continued coverage of how you can build your wealth.

You're watching Yahoo Finance.

It's been a very busy week for Wall Street.

New data out on jolts and AD P revealed the hot job market starting to cool a bit here.

Just today.

We also saw the number of people filing for unemployment benefits or initial jobless claims tick up to 229,000 for the week ending June 1st.

That's an increase of 8000 from the week prior.

And with the labor market showing some signs of stagnation, we want to help viewers land the role that they want.

And here to weigh in, we've got Julia Pollo who is the Zip recruiter, chief economist.

Great to have you here in studio with us.

Thank you very much, Brad.

Absolutely.

So, one of the huge things that we're tracking here is of course, some of the moderation in the labor market and there's naturally the thought of what this means for the fed, how they might evaluate this.

What does that look like from the economists perspective?

So this is a labor market that is actually consistent with non inflationary growth.

The quits rate is perfectly consistent with 2% inflation.

Labor market tightness is returned to what it was before.

The pandemic is measured by the number of openings per job seekers.

So the labor market is no longer really a a source of major concern and it, it suggests that perhaps a rate cut may be on the cards.

This year after all, it's interesting and especially coming into the set up for Friday where we'll get the monthly jobs report and, and non farm payrolls from the data that we've seen come through so far this week.

What is that signal we could be due for in that report?

Sure.

So, you know, the data is actually mixed, there are lots of signs that hiring is slowing, but this has been a very gradual, orderly cool down.

And I'm actually expecting that Friday's report could be well above consensus in our marketplace on zip recruiter.

We've seen job posting stabilize this year and actually start ticking up again.

We're seeing quite a lot of demand.

Ok?

So with all of this in mind, you've got a lot of potential job seekers, job fillers out there.

People who are looking to get back into the labor force trying to figure out how they can beat the bots, how they can make sure that their resume that cover letter that they spend so much time working on with chat G BT that it actually gets through to the hiring manager and they can get an interview.

What are some of the tips that you would have?

That the most important thing is to use a really, really simple template.

So your resume should read from top to bottom from left to right, no tables, no columns, nothing fancy, no fancy formatting, simple, keep it straight and simple, stupid.

Uh That's tip number one, uh two.

It is a good idea to uh tailor your resume to the job, you know, don't copy and paste the entire job posting and stick it in there in white, which some people were trying to do to game the system.

But uh definitely, uh you know, put your best foot forward and show that you've studied the company, you figured out what they're all about.

Uh, and, and, you know, list the most relevant skills and experience.

What about for fresh college grads?

You got a lot of people that just cross the stage, they, they turn the tassel and now they're trying to figure out, ok, where, where does the money reside?

Where can I get a job at this juncture?

So how can they go into the workforce even if they don't have, you know, some of the applicable experience and they're going up against a lot of other people that are just graduating too.

They are.

So, one thing to know is that it has become more competitive over the past year.

There are slightly fewer openings and there are actually more applicants per posting.

So that means you, you know, you don't, don't just get discouraged if you get rejected a couple of times, stay with it.

Understand, there's a numbers game here apply to enough jobs, apply consistently to several jobs every day, uh because there are new jobs being posted all the time.

Oh, you know, where to look Well, you know, one issue is your major really matters.

Uh, the return on investment on different college majors can range from less than $50,000 to over $500,000.

And so it is important that you study what people need, the skills that employers are actually looking for if you graduate and realize suddenly.

Oh, boy.

Um, you know, II, I studied biology.

I want something in health care but all the jobs require something more further study in that field.

Uh It may not be a good idea to settle for a low paying job now that doesn't use your skills and experience and to put your job search on hold and actually find uh more studying opportunities to get the credentials, credentials.

You need to land a good job.

We're, we're talking about something really large there in terms of how cost of living, how some of the expenses, especially when you come straight out of college and are trying to best position yourself f to, to build wealth over time, how that might also have a role in changing people's majors that they choose even when they go into our midway through college.

Are we seeing a dramatic shift there?

So, I mean, ideally, students should start their job search before they choose their course of study, right?

They should be looking at job postings often they should figure out which skills and credentials, employers want and then they should tailor their studies so that they get the skills that they need and they graduate ready for the job market.

The other thing that makes a huge difference is getting internships and getting some kind of practical experience ahead of time.

Employers are a bit suspicious of the value of a college degree these days because sat scores have been doing this and high school graduation rates and college graduation rates have been doing that.

And so, uh what they really want to know about is your real life work experience, get internships, get apprenticeships, freelance, do whatever you can to be in the real world, dealing with real world challenges so that you can talk about how you solve them.

These great tips, Julia Pollo, who is the zip recruiter, chief economist joining us here on set all the way from the West coast.

Thanks so much.

Thank you very much, Brad.

Well, as earnings season rolls along the retail sector is in the spotlight with reports from five below dollar tree.

Even Campbell Soup giving us a possible insight into the minds of consumers.

For more on this, we've got our very own Madison Mills here with the breakdown.

Ok.

So Mattie, what is the, the through line that we can draw from some of these earnings?

So what's really interesting is that a company like got Starbucks, for example, right, when they come out with their earnings and they blame it on the macro, you can look at their peers and say, well, their peers aren't necessarily blaming their bad sales on things like weather or the macro environment with some of the names that you just ran through the Brad five below dollar tree.

Uh Campbell's, all of them coming together to paint a broader picture about the struggling lower income consumer.

And that is something you can start to see an accumulation of data that could point to a problem.

Right.

So five below several analysts telling me that they were surprised by the degree of the headwinds this quarter, they hadn't anticipated that this is a discount retailer that stock is down over 12%.

Right.

Now.

This retailer warning that low income shoppers are facing an outsized impact from quote years of inflationary pressures here and then you have a dollar tree, right?

They're looking to sell off family dollar.

What does that tell us?

Well, family dollar is utilized by those even lower income consumers.

It's got things like your paper goods, those staples that you really rely on that consumer base, even struggling to keep up with some of those basic purchases.

They're looking to sell off a name that they've only had for under a decade.

That's indicative that they're not seeing a lot of growth opportunity in that particular income group.

Yeah.

You know, it's interesting, especially as we think about what you were starting off this conversation with Starbucks being very different.

I mean, anybody that's selling a $9 latte or drink, at least that's the drink order for one of our producers.

Um, anybody that's selling something that tier, it becomes a luxury after a while in an environment where people are just trying to make sure that they can afford the staples right now too.

It's such a great point, Brad and points to kind of what we're talking about.

I mean, even if you take a look at a Campbell's right, you're seeing that their snack sales were down 1% their meal category was up by 1%.

That idea reminds me of, I mean, think back to childhood, right?

The parents suddenly giving you canned soup for dinner, you know that something is wrong.

That's exactly what we're seeing play out in the Campbell's earnings here.

And it really, when you look at the totality of the earnings, you can see this higher income consumer that to your point can put up with a $9 latte and then a consumer that can't even afford the Campbells snacks.

When my question, of course, when I look at it from a macro perspective, when does that become a problem?

The Federal Reserve for the broader economy?

Just because the lower income consumer may not be seen in the macro data.

We're seeing it in the earnings and that could be an issue moving forward.

So you're telling me to ship some spaghettios to Jay Pow's house and have him give it a shot, just say, hey, these cuts.

A lot of people are having to subsist off spaghettios.

Consider that in your next fed rate decision.

That's all they were pretty darn good grown up though.

I will say that right.

It's not necessarily a bad night at the house.

I shouldn't be so dramatic.

Thanks so much.

Appreciate it.

Everyone coming up on the other side of this short break in the home market here, we're gonna take a deep dive, especially if you're out there on the feet in the car trying to take a look at some of these for sale signs.

We're talking to an economist for what you need to know about the housing market.

That's up next.

The number of homes for sale grew by over 35% in May compared to last year.

That's according to realtor.com.

Now, that sounds pretty good if you're in the market, but it's still low compared to pre pandemic levels.

And that supply constraint is impacting costs.

Prices for single family homes rose over 7% year over year according to Fannie Mae and to break down how you can hack the housing market.

We've got Doug Duncan Fannie Mae, chief economist here with us.

First, let's just start broad strokes here.

How would you define the housing market that we are navigating through right now?

Supply constraint.

Uh That's been a theme for several years.

I know it, it, it's gotten to be kind of repeating the story, but it is it's the story.

Uh your point on the the growth in the listed supply that puts us up to about 3.5 months normal is probably somewhere 5.5 to 6 months of existing homes.

One of the interesting things that I think reveals the stress of affordability for the next phase of uh entry level buyers is that the number of completed new homes available for sale is the highest it's been in almost three decades.

So you have to ask the question.

If the market is supply constrained, then why is the completed new homes number as high as it is?

Why is that?

Well, part of it I think is because typically the entry level buyer, the first time buyer buys an existing home, they fix it up, build a sweat equity, then they use the, the cash from the sale of that home to leverage themselves up to a house that maybe has more attributes that they like their family got bigger.

So they need a little bigger home and some of them turn to the new homes market.

But what's unusual today is that very low supply of existing homes?

And what you see is the share of first time buyers who are buying new homes, but builders have a price point to which they can build.

And it may be diverging from what that first time home buyer can buy today.

As we've seen, uh interest rates go up and house prices go up both constraining affordability at today's mortgage rate.

What does it make more sense to do for first time home buyers?

Does it make more sense to go after an existing home or does it make more sense to, to wait and, and ultimately kind of bank on a build out here.

Well, first of all, it depends on, uh on what's available.

Uh If there is a very low supply of existing homes, you may want to buy there but not find what you look for.

Second thing is what's your financial capability and what I always give people uh as advice when they ask is now a good time to buy a house is if you have a family budget or a household budget.

So that's, that's the most important clause because any lender you talk to is gonna ask you things that will come out of that budget.

So if you can budget it all out, you will know how immediately to answer those questions and you get a better deal at the end of the day.

So if at today's price and the amount money that you'd have to borrow, the payment fits in your budget that you have, then you buy today, you're a homeowner.

If you're speculating on whether interest rates are gonna fall, whether prices are gonna fall on refinancing.

Yeah, but then you've moved into the realm of being a speculator, some people can afford that.

A lot of entry level buyers can't really afford that.

So you wanna take a well educated financial management approach to, to that decision because you would like to be able to sustain it.

A lot of people wanna know what are, what are the Fannie Mae top tips for buying in this market right now?

Well, that the first one would be, get your credit in shape because you're no matter who you talk to, there's different kinds of lenders.

Uh All of them are gonna look first of all at, what's your, what's your credit?

Do you have a good credit score?

Uh Do you have a good record of repaying uh debts which will be uh showing up in that?

They wanna know what, what's your risk profile?

The second thing would be shop around.

We have evidence that shows if you talk to more than one lender, you always get a better deal than if you only talk to one lender, make them compete.

They, they don't make money if they don't make a loan to you.

So they have an interest in satisfying you just like you have an interest in getting a good deal.

So shop around for sure.

Doug Duncan, who is the Fannie Mae, chief economist.

Doug, thanks so much for taking the time here.

A pleasure.

Good to be with you coming up everyone.

Rochelle A coo is back to share her interview with Aflac Ceo Dan Amos.

That's next when it comes to brand mascots.

One of the loudest and most recognizable is the Aflac duck.

Well, our very own Rochelle Ao got to sit down with the man at the helm of the insurance company, Dan Amos, the CEO of Aflac as part of our lead this way series.

Hey, Rochelle, that's right.

So Dan Amos is one of the longest serving CEO S in the Fortune 500 that's a group topped by Warren Buffett.

Now, investors know Amos for continuing the 41 year streak of dividends.

Consumers of course, recognize his company by one unforgettable sound Aflac.

So on this edition of lead, this way, I got to know the man behind the duck, the dividends and the decisions.

Let's take a look.

It's a globally recognized name synonymous with health insurance and a dividend darling for investors returning over 15,000% including reinvested cash dividends to shareholders for 41 consecutive years.

CEO Dan Amos has navigated risk to become one of the longest serving CEO S in the Fortune 500 leading one of the largest insurance companies in the US by market cap.

This is my 34th year as CEO and I've said, I believe we'll see more changes in the next three years than in my last 30.

While the company's total annual revenue has been on the decline since 2019, Aflac kicked off 2024 with Q one earnings and revenue beating Wall Street expectations.

Yahoo Finance visited Amos in Columbus, Georgia to hear how he navigates risk in today's challenging sales environment.

The potential for A I to disrupt the industry and changing demographics in their largest market.

Japan Amos says three principles have guided him through the risky health insurance business.

Don't risk a lot for a little, don't risk more than you can afford to lose and consider the odds.

And he's leaned on those principles as the insurance industry evolved from endless paperwork to apps to now.

Generative A I A I models have sped up data analysis allowed claims to be processed faster which have led to increased savings for companies like Aflac.

But for Amos, it's not just about the bottom line when you have a technology like generative A I in a business like yours.

I know the three risk principles.

How does that apply with something that we still really don't know really the limits of it at this point?

What I generally say about running an organization is there's a herd mentality and you can be at the head of the herd or the back of the herd.

But if you get way outside the herd, you can get shot.

We want to be the head of the herd, but we can't overspend to the point that we can't validate.

So technology plays an important role in our company and what we do going forward, but not one that will replace what Amos sees as one of Aflac's core assets.

It's people, I think there'll be hybrid.

We have what we call wellness benefits.

So we encourage you to go to the doctor and get check ups.

You can do that through A I that you don't need to talk to anybody.

You just went to see the doctor, the doctor said you're fine and we need to pay the bill.

I think the human touch is something that is very important for the growth of the company because all we sell is a promise on a piece of paper.

That's all it is.

The COVID-19 pandemic was a wake up call for Aflac to re invent a customer service model that relied on agents on site for that human touch.

This accelerated the one digital Aflac strategy to create the hybrid digitized model AFLAC uses today.

Another unintended consequence of the pandemic.

Advancements from COVID MRN A vaccines that Amos believes could soon lead to other potential treatments including cancer therapies.

I don't know of anybody that's more excited about our future than I am.

And what I see ahead because people through healthcare are finding cures and these cures cost money.

And so you need the additional coverage to help cover those costs and something like supplemental insurance where it's where it's an addition.

How do you manage sales like that when people are already like I I can barely afford to cover my bills.

Well, my question is, can you afford if the bills come in that are the health care bills.

You know, somebody asked me one time you paid the claim so fast, why does it matter?

And I said, it really doesn't.

And there was a shock and then he said, unless you need the money, when you think of supplemental insurance, you think an acronym of American Family Life Insurance Company of Columbus, an arguably risky advertising campaign that cost more than Aflac had ever spent, had catapulted the company's brand recognition from 11% to 94% over 14 years.

According to Aflac Aflac, a household name redefining the insurance ad landscape.

It started with two advertising creatives on a park bench later immortalized in the first commercial which aired January 1st 2000 and they heard the duck quacking and they heard Quack quack Aflac.

They said that sounds like they're saying the name.

Not only was it humorous, but you were making fun of your name.

And I said, we'll absolutely do it.

We'll try it.

But if it fails, going back to my three principles of risk management insurance, we'll pull it immediately.

The likability went through the roof afterward.

And so in a matter of three years, we doubled our sales in the United States.

Aflac now spends roughly $150 million on advertising.

While S and P global market intelligence finds other insurance spend an average of a billion annually.

The Aflac duck is the golden goose.

This is the top floor but the main board room is straight ahead.

The Amos brothers with principal founder John co-founders, William and Paul Dan's father founded the company in 1955 with the passing of his uncle John Dan stepped up in 1990 as CEO I think it's clear that this is part of the American dream.

Three brothers with no money got together and were able to form an insurance company.

Selling stock door to door is nothing more than an American dream.

The importance of family is evident across the company telling people that we don't expect our company to come first, we expect your family to come first.

So about how many people are in this building, despite other us companies outsourcing call centers, Amos has doubled down on keeping Aflac customers connected close to home, allowing for regular one on one interactions with his employees who Amos says are the heart and soul of Aflac from an administrative perspective, our most talented important people of the call center because they're the line between the company and the customer or the agent and the company.

And so it's very important that we, that we have positive attitudes, help them do whatever we need to do to make sure it works.

So what we're trying to do is verify whether he was transported via ambulance.

And so a lot of people don't know about Aflac's history with, with cancer insurance.

Why did you decide to go that path?

Well, my grandfather was diagnosed with cancer and we saw the high hospital bills and what took place and they decided to develop a policy that was to help cover the cost of cancer.

That's what they did in the fifties and it just grew and grew and grew.

And in Japan they thought they had an epidemic of cancer taking place after the war.

People only lived to about 58 and today they live in their eighties.

So they saw a skyrocketing number of claims, but they were just living long enough.

So cancer is a disease of age.

The Amos family's experience with cancer has made them hyper aware of rooting cancer claimants to a friendly voice at the other end of the line.

Well, our, our cancer or claims department is much more sensitive to that, especially the newly diagnosed.

They're overwhelmed as a general rule with what to do.

And so they help walk them through a process that takes care of them through the filing of the claim and whatever they need to do and our people have numbers and you can call them back if you need to on certain issues.

So cla so goes claims.

So goes your company while Aflac is a made in America story.

Its biggest market is Japan where the company says it insures one out of four households.

It all started with our CEO who was my uncle who went to Osaka to the world's fair and saw a thriving economy and he noticed people wearing surgical masks.

People said, well, that's because they don't want to spread a cold and he went, anybody will do that will buy insurance.

I'm gonna get license there.

In 1974 Aflac began selling insurance in Japan.

So we came out with a life insurance policy that paid X amount for death any reason, but it paid 10 times that amount if you had cancer, plus it made so much a day for every day in the hospital.

And so that's what kinda took off and built our company over a period of time.

But now Aflac is facing a country with a demographic squeeze at both ends.

By the year 2050 the United Nations predicts the share of China and Korea's 65 and older population will overtake Japan's where its aging population is dying off.

This coupled with a declining birth rate presents a dilemma for Aflac.

Aflac solution says Amos is its hybrid policy, a combination of cancer insurance and life insurance to attract younger consumers earlier.

So they avoid financial hardships later part of a series of sales campaigns to coincide with Aflac's 50th anniversary of doing business in Japan reliance on Japan.

As Aflac's biggest market also comes with geographical risk.

Something Amos says he still worries about after the Tohoku earthquake and tsunami of 2011.

It claimed more than 18,000 lives and caused major damage to the Fukushima Daiichi nuclear power station.

Comparisons were being drawn with the 1986 Chernobyl nuclear Power Plant disaster.

Both incidents were rated the highest on the international nuclear and Radiological event scale considering the odds Amos assessed the risk fallout for the region and shareholders.

When they had the incidents in Chernobyl, we had paid outside consultants to review what the death rate was and what happened over those 20 years.

And so I knew that if I did not respond one way or another, the stock was going to tank.

And 15 years later, we haven't seen a problem like his principles on risk.

Amos shares a strong commitment to corporate social responsibility, which includes de I seen by Amos as just the right thing to do with qualified candidates.

I'd start by saying women have played an important role since the inception of the company in the US.

So I didn't understand why Japan had not promoted any women.

And I said, I want a woman promoted, you choose them, tell me who it is.

After two years, they came back and said they didn't want to and didn't think it was a good idea.

I knew I was about to get the list of officer promotions and I went and got a red magic marker and I wrote as big as I could reject it and I sent it back to him and I said, I don't know how culture works over here, but I know one thing we're not gonna promote a single male till I get a female.

And so God touched them that night and they came back and they said here's the person.

And after 16 years working at Aflac as a sales representative and later managing the training department, Mike Yamoto became Aflac Japan's first female executive as vice president of Human Resources.

In 1997 20 minutes from Aflac headquarters is a place near and dear to Amos.

Soma farms.

Amos spelled backwards built to host his Japanese guests and where Amos gets to do what he loves most.

Got first bite.

Got one as the company approaches its 70th anniversary, 72 year old Amos considers what the next 70 years will look like for his successor.

How do you view succession and what would you like the next future CEO to take on?

Well, remember 34 years ago, that same question was asked until John passed away, he was the company and so the transition will continue and it's my responsibility to train someone which I'm working on now.

That'll, that'll have the heart and soul for what we need to do.

And I've, I've got a couple that are in contention and I think I've got someone that can do that but you have to watch them and see, believe it or not.

One of the things I do is is if somebody gets promoted and they stop talking to people on the elevator, they need to go that success will also need to carry on Aflac's philanthropic efforts with pediatric cancer patients.

A cause extremely important to Amos.

In 1995 Amos was asked for a $25,000 donation from what was formerly Children's healthcare of Atlanta.

Amos said no, he had a bigger vision, a $3 million building naming for Aflac.

This relationship blossomed into the Aflac Cancer Center at Children's Healthcare, the largest pediatric cancer center in America, keeping the momentum going for Aflac's philanthropy customers and investors is a balancing act.

Amos and his future successor will have to contend with after 50 years with Aflac Amos says risk is just part of the business.

I worry about all kind of things but not to the degree that I think it's pass fail.

We are global.

We are no longer can say, well, we're here in Columbus, Georgia and we don't have to worry about the rest of the world.

I've got to worry about tsunamis in Japan.

I worry about interest rates and what's gonna happen in that regard.

But am I frightened about him?

No, we manage risk.

That's what we do for a living is we're in the risk business.

So I'm not nervous about it, but I worry about it all.

And if I didn't, I wouldn't be a very good risk manager.

Big.

Thank you there to Dan Amos Aflac CEO and the team in Georgia there for that interview.

You can watch the full video on our youtube channel, but much more on wealth is coming up after the break.

You're watching Yahoo Finance.

The IRS recently announced that the direct file program and online free tax filing tool operated by the agency is here to stay following a successful filing season.

Pilot.

The agency made direct file a permanent option for filing federal tax returns starting in the 2025 tax season.

So what exactly does this mean for you and your finances?

And how can this program set you up for success next tax season?

Yeah, finance reporter Rebecca Chen joins me now with the details.

Hey, Rebecca.

Hey, Brad.

So the direct file is a program that allows taxpayers to file their taxes directly with the IRS for free.

And this is phenomenal because it's the first time us has a filing system like this.

In the past, we've always been expected to find our own method of filing taxes and often times that means paying for commercial software.

So this could be a game changer because it could change how and how much we pay for tax preparation.

Now, the biggest question from this program is who is eligible while the IRS has said they are expanding the program, they haven't specified to what market they are expanding to.

What we do know is that they have invited all 50 states in Washington DC to join them in the program for next year.

And we chatted with expert and one expert told us that he believes the program will be for families making $400,000 or less.

And the reason is because this has been the income cut off that the IRS has been using in other campaigns recently.

Um And based on the pilot program, we are expecting that taxpayers earning a W-2 receiving social security and unemployment benefits could also qualify for this direct file in the coming year.

And now after we, after this biggest question of who is eligible, we also want to chat about what is the biggest draw of switching to direct file.

Experts are saying the biggest draw is really simple, it is free.

Um A lot of Americans like we mentioned are going to commercial software for tax preparation and on average, the software fees are about $270.

So that will be a big change or a big chunk of change that they save if they were to switch to the direct file.

There definitely has been some concerns about the reliability and trustworthy of the IRS system.

But what we are hearing from experts is that the IRS just want to help taxpayers to file a good and accurate, get the benefit that they deserve.

And direct file will be a system that reflects that.

All right, Rebecca Chen, thanks so much for breaking this down and what this program could do for millions of tax return filers out there.

Thanks so much.

Well, let's do a final check of the markets.

We are mixed right now.

The Dow Jones industrial average the loan gainer right now it's up by about 1/10 of a percent.

The S and P 500 though flat just barely to the downside.

And the NASDAQ, you're seeing that lower by about 2/10 of a percent.

That's it for wealth today, everyone.

I'm Brad Smith.

Thanks so much for watching.

You can stay tuned for market domination with Juliet Hyman and Josh Lipton coming up 3 p.m. eastern time.

You don't want to miss it.