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Boomers Keep the Economy Afloat

💰 Call your grandparents—you actually have a reason to today. Baby Boomers powered spending growth in January, so let’s thank them for their donations to the economy.

Author

Ankit Sinha
February 12, 2025

Silver banana goes to


In this issue of the peel:

  • 💰 Call your grandparents—you actually have a reason to today. Baby Boomers powered spending growth in January, so let’s thank them for their donations to the economy.

  • đŸ„€ Intel shares rose the only way possible for that firm—thanks to someone else—while Coca-Cola ripped on strong volume and price growth. A better question for Tesla is what’s not going wrong, and Marriott is struggling in China. 

  • ⁉ What the hell is going on? OpenAI and Elon Musk have a lot of history, but the latter is now working to rekindle the romance. See our breakdown of Musk’s offer to buyout OpenAI.

Market Snapshot

Banana Bits

The Daily Poll

What do you think about Elon Musk’s $97.4bn buyout offer for OpenAI?

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If the U.S. creates a sovereign wealth fund, where should it invest first?

Tech & innovation: 28.8% // Infrastructure & energy: 40.8% // Healthcare & biotech: 15.7% // Global markets & diversification: 14.7%

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Macro Monkey Says

Baby Boomers Bring The Boom

Apologies in advance—I’m sure today’s header just got that hellish incantation stuck in your head for the rest of the day, but I promise it was absolutely necessary.

Macroeconomic forecaster and probably future Fed Chair Big Justice was absolutely right in alleging that “We bring the boom!” but it turns out the “we” in question is actually someone all too familiar.

Baby Boomers are bringing the boom—the spending boom—across the country.

Let’s get into it.

The Numbers

Household consumer spending rose 1.9% in January, according to Bank of America’s aggregated credit and debit card spending.

As a reminder: U.S. GDP is ~70% consumer spending over any given period. So, when we talk about GDP growth, really the primary factor in question is consumer spending.

January’s 1.9% rise slowed slightly from December’s 2.2%, but that’s largely to be expected even after adjusting for seasonality. Over the three-month period from November to January, seasonally adjusted spending grew at an annualized rate of 2.8%.

You love to see it. However, consumers, unfortunately, don’t like to see the change in our spending mix month-over-month as, in January, groceries and fun-sounding “general merchandise” took the lead.

That was an unfortunate switch-up from the spending categories that grew the most in December and November, including clothing and “services including restaurants.”

Alas, so goes the Holiday season. 

Along with the good food, gift-giving, and spending time with family, the other great aspect of the Holiday season is that it just so happens to coincide with the bonus season.

That’s one of the primary drivers Bank of America believes supported the continually solid spending growth in January, underpinned by strong wage growth leading into and after the New Year.

As your grandparents know, Social Security checks came with a 2.5% cost of living increase in January, too, likely adding to the growth in spending.

But the rest of us are doing okay, too. Bank of America cites a “still robust labor market” for powering wage growth that has been “solid” across age groups.

Baby Boomers and Traditionalists (a.k.a the Silent Generation, born ~1925–1948) led the way in spending growth, up nearly 3% YoY. Your cheap parents (Gen X) grew their spending by just 0.3% in January while the cool kids hovered in between.

Meanwhile, wage growth was essentially the opposite. Gen Z continued to lead the way in earnings growth, probably because of our reputation for being super thick-skinned and hard-working. 

I don’t know whose poor 95-year-old grandparents are still working, but the Traditionalists saw quite a boost to start the year as well.

With that, almost all generations are doing better with their savings. Bank of America’s data shows growth in Q4’24’s 401(k) contribution rate along with median checking & savings balances that remain elevated against 2019 levels.

The Takeaway?

Consumer spending has continued its strength into 2025 so far, and wage growth continues to improve.

Hard to be mad about that. With evidence of a healthy labor market and likely solid GDP growth, spending data likely won’t push the needle in either direction for interest rate moves.

We’ll get January’s CPI report today, PPI tomorrow, and Retail Sales on Friday, hopefully creating a more instructive view of the direction of the economy. JPow and the FOMC gang have until March 19th to figure out what they want to do.

Until then, let’s hope every generation keeps bringing the boom.

Career Corner

Question

Is it worth it to try to network and have calls with IB professionals based in Hong Kong if I'm recruiting in the U.S.?

Answer

If you’re still learning about the industry, sure, but beyond that, probably not unless you’re open to locations or struggling to find something new to connect with in the U.S.

For example, if the only person at Bank XX who went to your college is based in another country, by all means, reach out, but if you have plenty of options in the U.S., then I would focus time there.

Head Mentor, WSO Academy

What's Ripe

Intel (INTC) 6.1%

  • With a job description that’s mostly ‘wait around until needed,’ the U.S. Vice President is essentially America’s most overqualified hype man.

  • And our current VP, J.D. Vance, is living up to that title in spades. During a speech in Paris, Vance vowed to ensure a robust chip manufacturing ecosystem in the U.S.

  • Vance said, “... the Trump administration will ensure that the most powerful AI systems are built in the U.S. with American-designed and manufactured chips.” Intel is the poster child of U.S. chips, sending shares soaring.

Coca-Cola (KO) 4.7%

  • RFK is in shambles. Another company not particularly known for the health benefits of its products joined McDonald’s in ripping on Q4 earnings. Soda demand is surging.

  • History shows that big political shifts tend to trigger buying sprees. With RFK’s confirmation coming up, maybe it’s time to grab the good stuff.

  • The food and beverage producer reported EPS of $0.55/sh on $11.54bn in revenue vs estimates for $0.52/sh on $10.68bn. Net revenue grew 6% annually.

  • Volume declines seen in late 2024 turned in 2% growth last quarter, while prices rose 9% on average. Markets were happy with 5-6% revenue growth guidance, given expected FX headwinds.

What's Rotten

Tesla (TSLA) 6.3%

  • It’s hard not to worry about Elon Musk these days. After deciding to devote his life to public service in 2024, his net worth has already dipped below $400bn. We’ll send a GoFundMe link ASAP.

  • In the meantime, shareholders appeared to sell off Tesla for a plethora of reasons on Tuesday. Chiefly, these included competition from BYD and Musk’s bid for OpenAI.

  • BYD announced plans to launch “God’s Eye,” their version of FSD, across all car models for free on Tuesday. If that wasn’t enough, investors’ concern around Musk’s focus on Tesla is growing, but what else is new?

Marriott International (MAR) 5.4%

  • Anyone have plans to vacation in Beijing anytime soon? Maybe a girl's trip to Shanghai or a guy's trip to Wuhan? If you are, Marriott is begging you to stay with them.

  • The world’s largest hotel operator reported revenue of $6.39bn and EPS of $2.45/sh, well above estimates as revenue per available room (RevPAR) grew 4.3% YoY.

  • That was especially strong considering the firm added 123k rooms in 2024, a 6.8% increase. However, shares sank on a poor outlook, driven by expected weakness in China.

Thought Banana

How Does This Guy Walk?

Remember that scene from The Office where Stanley freaks out on Michael after getting fake fired and says:

“Everyday you do something stupider than you did the day before, and I think, ‘There’s no possible way he can top that’, but what do you do? You find a way—damnit—to top it!”

That’s exactly how I feel about Elon Musk. Except, replace “stupider” with “ballsier.”

Let’s dive in.

What Happened?

Late yesterday afternoon (or early evening, depending on how you define 4:37pm), the WSJ reported that a group of investors led by Elon Musk submitted a buyout offer to OpenAI for $97.4bn.

Immediately after receiving the offer, OpenAI CEO Sam Altman posted the following on X—calling it “Twitter”—leading to this great exchange (don’t look at my profile picture).

Quick History Lesson: Musk and Altman co-founded OpenAI in 2015, among others, and co-chaired the non-profit until 2019, when Musk left. 

Since then, OpenAI has taken over $14bn in funding from Microsoft alone, in addition to other investments. Under their unusual corporate structure, OpenAI Global—the entity in which Microsoft invests directly and runs ChatGPT—is a subsidiary of OpenAI Inc, a non-profit 501(c)(3) organization. 

Like OpenAI Inc., other 501(c)(3)s include universities, hospitals, food banks, churches, etc. Is it just me, or is one of those things not like the others? Can’t quite put my finger on it


Anyway, Altman’s ongoing attempt at converting OpenAI from a non-profit to a for-profit public benefit corporation (PBC) is quite the legal gray area (apparently, somehow). 

There are few verifiable details on the restructuring effort, but with Altman set to receive “substantial” equity in the for-profit entity, many have labeled this maneuver as an attempt to sell OpenAI to himself and other investors.

Common rumors of an alleged $40bn valuation for the “sale” have bounced around online. However, Musk’s offer changes that price tag substantially.

Under the Revlon Rule, established in 1986, company boards of directors in the U.S. are not required to consider all buyout offers. However, when a board decides they are going to sell, the fiduciary responsibility of the board is to get the maximum value possible for shareholders.

Specifically, once a sale becomes “imminent,” boards must:

  • Explore all available alternatives to ensure they are securing the best value for shareholders,

  • Carefully evaluate any serious offers that could potentially provide higher value to shareholders.

“Best” and “highest” “value” do not necessarily mean the highest price. Other factors could come into play, like the quality of new management or the risk of closing.

So, while Altman and OpenAI do not have to accept Musk’s offer (as Altman’s tweet makes clear), it does legally require OpenAI Global’s board of directors to factor in Musk’s offer’s $97.4bn price tag.

Effectively, Musk made OpenAI a market. Now that the prevailing market price of buyout offers for OpenAI is $97.4bn, it greatly complicates Altman’s plans to “sell” OpenAI to himself at a $40bn price tag.

The Takeaway?

I’m not a lawyer (in case that wasn’t obvious), and things could absolutely change, especially considering how gray the legality of this restructuring process is.

However, this was a f*cking crazy move by Elon Musk. Not crazy as in stupid, but crazy bold, lowkey smart, and downright ballsy.

There’s a chance OpenAI Global actually accepts the offer. That means Musk would be the lead owner of yet another company—one that he founded—which I’m sure Tesla shareholders would greatly appreciate.

By the way, bettors on Polymarket are giving Musk 10% odds of actually buying OpenAI in 2025. 

The Big Question: What the hell happens next? Is Sam Altman really trying to sell OpenAI to himself? Was/Is $40bn really the target valuation? What if this is actually real? 

Banana Brain Teaser

Previous

A certain high school has 5,000 students. Of these students, x are taking music, y are taking art, and z are taking both music and art. How many students are neither taking music nor art?

Answer: 5000 − (x + y − z)

Today

Each person who attended a company meeting was either a stockholder in the company, an employee of the company, or both. If 62% of those who attended the meeting were stockholders and 47% were employees, what percent were stockholders who were not employees?

Send your guesses to [email protected]

❝

When something is important enough, you do it even if the odds are not in your favor.

Elon Musk

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David, Vyom, Ankit & Patrick