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Yahoo Finance’s Alexis Christoforous and Kevin O'Leary, Chairman of O’Shares ETFs, discuss stimulus and the economic recovery.
ALEXIS CHRISTOFOROUS: Early this morning, the Senate approved a budget resolution for President Biden's $1.9 trillion stimulus package by a vote of 51 to 50. Vice President Kamala Harris had to cast the tie-breaking vote there. Earlier today, President Biden spoke from the White House about that package.
JOE BIDEN: I've met with Republicans, and some really fine people want to get something done. But they're just not willing to go as far as I think we have to go. I'm not cutting the size of the checks. They're going to be $1,400, period. That's what the American people were promised.
ALEXIS CHRISTOFOROUS: All right, joining us again is Kevin O'Leary, chairman of O'Shares ETFs, Mr. Wonderful himself. So you've been, I'm sure, tracking all the news coming out of the Senate today, Kevin. As part of that package as it stands right now, those stimulus checks would not be extended to illegal immigrants. It's been a sticking point, especially for some Democrats. What are your thoughts on that?
KEVIN O'LEARY: I actually think we're at a point now where we have to be careful. We're almost putting too much stimulus into the market and into the economy. You've got to remember there's still a trillion dollars in the first package still unspent. So we're really talking about $3.9 trillion that are going into this market and at a time when the economy is actually quite strong. So the risk here is that you cause inflation when you didn't need to.
In terms of the structure and the metrics of the deal, I don't know why we're sending checks to people that are already employed. That makes no sense to me. The deal should be this. If you are displaced by the pandemic, we will send you a check, because you're unemployed.
I don't want to see any more PPP. I personally feel, having lived through that and watched what happened to it, that 50% of it was wasted. And I had a lot of companies that took it that will go out of business, no matter how many PPPs they get because consumer preferences have changed. And they're never going to come back. That's the nature of the digitized economy. America 2.0 is emerging. So I wouldn't put money into that either.
No more bailouts for airlines. We have too many airlines in terms of capacity because business spending will be down somewhere between 20% and 25% for years to come. Why would you fly somewhere when you can do a Zoom meeting instead? And so that's going to be a very long time before people waste their time and money flying around and business entertainment.
I know I've slashed my budgets for 2021 in my private company portfolio from 20% to 50%. And it's going straight to the bottom line. I have zero interest in increasing those costs when I don't need to. So why bail them out? Let a couple of them go bankrupt. Just give unemployment checks to the employees. They're highly trained. They'll find new jobs in the digital economy. And airlines are very good at going bankrupt. They do it every 10 years. So it's just fine. Stop spending money there.
ALEXIS CHRISTOFOROUS: What about the restaurant industry? Leisure and hospitality really, really struggling here.
KEVIN O'LEARY: No, the restaurant industry will survive on its own. Restaurants grow like mushrooms as soon as we've got this pandemic under control. So a better way to spend on restaurants would be to spend more money on the logistics of getting the vaccine out. Because I can guarantee you, when people feel safe again, they will go to restaurants. And believe me, they'll pop right out, just like they've always done for 200 years. It's an industry that bounces back very, very quickly.
The only two areas I would invest in, if I had my druthers, would be-- even if you kept it at 1.9 billion, just spend it on vaccine litigate-- logistics, getting it into people's arms, and let's take care of unemployed people. Nothing else. Otherwise, you risk horrific, horrific inflation. We just don't need this much stimulus. It's just-- it's going really overboard.
ALEXIS CHRISTOFOROUS: Well, what about some of these restaurant owners hearing your words are thinking, you know, I don't have-- time is of the essence. And I don't have the time to wait for the vaccine to get here and for people to feel comfortable to come to my restaurant. What do you say to them?
KEVIN O'LEARY: Let's take care of the employees of the restaurants, the waiters, the people that do the work. Let's give them the unemployment checks. I don't want to bail out every owner of every business. Why? That's not how the markets work. I have lots of food services businesses that are going bankrupt right now. And the ones that are going to survive will be the ones that should come back because they're still relevant.
Now if I had a restaurant near or close to a B grade mall that's being shut down, that's probably not going to work, or if I'm providing food services to movie theaters-- probably not going to work. Because consumers' preferences have changed. I think we're going to end up with probably only 500 malls left in America. Look at Amazon's numbers. They grew by over $100 billion in just 90 days in sales. They were actually $125 billion. You think people want to go back to a B grade mall? I don't think so. They want to order their stuff and have it delivered to their homes.
That's-- my whole concept of investing now is to figure out where this digital pivot's occurring. I'd like to take care of everybody that works in a restaurant that's unemployed. I do not want to bail out every restaurant owner. I'm sorry.
ALEXIS CHRISTOFOROUS: All right, to your point, if some people get checks here, even though they do have jobs-- because the way that this is structured right now, they would be getting those checks. If they're amongst the lucky ones--
KEVIN O'LEARY: Does that even make sense to you? Does that make sense to you? Why? Why are we doing that?
ALEXIS CHRISTOFOROUS: Right. I mean, that's what they're debating right now in Congress. But if that were to happen--
KEVIN O'LEARY: Well, I hope so. I hope so. Because somebody should put up their hand and say, wait a minute. What do we need to give money to in an emerging economy that's coming out of this mess, when people are employed? Let's take care of the unemployed people. Let's give the unemployed people more money. They're the ones that are really hurting, not people sitting at home with jobs. That seems ridiculous to me.
ALEXIS CHRISTOFOROUS: And you have to wonder even if that money is going to come back into the economy, right? Because maybe people will sit on that money. Maybe people are going to save that money and not inject it and spark the economic recovery. So what would your advice be to somebody who gets that check and maybe doesn't need to pay the rent or the utility bill with it? What should they do with that check?
KEVIN O'LEARY: They should send it back to the government. But they're not going to do that. I mean, that's what's so crazy about this. You know, when you have a blunt instrument like a $1.9 trillion stimulus package, you know probably 30% of it is completely wasted. I mean, there's no test in terms of whether somebody should get that check or not. We're just sending everybody free money from a helicopter. That's not a great idea. That's not the best way to do this.
When you've got tens of millions of people that have no jobs, they're the ones who we should be taking care of. And certainly, ask anybody that wants a vaccine right now if they would like to see more money spent on logistics to provide that vaccine. The whole country is waiting to get vaccinated, at least the ones that want the vaccine. And we can't do it. And we're sending checks to people that already have jobs in the meantime. It just seems crazy. It's nonsensical.
ALEXIS CHRISTOFOROUS: All right, listen, Kevin O'Leary, always a pleasure. Great to get your insights, as always. Enjoy the Super Bowl. Who do you have for the Super Bowl this weekend? The Buccaneers or the Chiefs?
KEVIN O'LEARY: I used to be a New England fan. And I've just watched that team go to triple C negative grade. I mean, it is-- I can't watch them anymore. What a disaster. You think they should have signed Brady for another two seasons along with the Gronk? Maybe that would have been a good idea.
Meanwhile, I have to go with Brady. So I mean, I think he's probably one of the-- maybe is the greatest. I'm betting that Tampa is going to pull it off because he's already seen every defense ever. He's seen every play. I mean, the guy is a knowledge book in terms of what they're going to throw at him literally. And I think he'll pull it off. I'm very hopeful.
But New England, I can't say enough negative stuff about. I'm a heartbroken fan. That was-- I couldn't watch that this year. I've never seen such a fall from grace. It was just-- it was like radioactive waste.
ALEXIS CHRISTOFOROUS: Oh, wow. That is not good. Never good when you're likened to radioactive waste. It should be a good game. It should be a high scoring game, hopefully a tight one. Kevin O'Leary, thanks, as always.
KEVIN O'LEARY: Take care. Bye bye.