Morning Brew Daily - American 'Vibescession' Lingers & Nvidia Sales Triple in AI Boom

Episode Date: May 23, 2024

Episode 329: Neal and Toby discuss the latest poll that shows a majority of Americans believing the economy is worsening despite data showing the contrary. Then, Nvidia shows a strong earnings report that says AI is still riding high. Next, a scary turbulent Singapore Air flight reveals the most bumpy flights in the world and why it could get worse. Plus, Neal shares his favorite numbers of Graceland, California homes, and a feather. Lastly, Vivek Ramaswamy buys stake in Buzzfeed hoping to give it a revamp.  Visit https://www.sage.com/morningbrew for more! 00:00 - Prepare of Memorial Day travels 3:00 - Americans think economy is bad 7:20 - Nvidia crushes earnings 10:50 - Turbulent skies 14:00 - Neal’s Numbers 21:00 - Politicians buy stock Get your Morning Brew Daily Mug HERE: https://shop.morningbrew.com/products/morning-brew-daily-mug?utm_medium=youtube&utm_source=mbd&utm_campaign=mug Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good morning, Brew Daily Show. I'm Neil Fryman. And I'm Toby Howell. Today, Graceland is up for auction, but its sellers may not be who we thought they were. Then why is there such a big gap between how well the public thinks the economy is doing and how well the economy is actually doing? It's Thursday, May 23rd. Let's ride.

Today kicks off the annual Memorial Day weekend pilgrimage, and it seems a lot of you are hitting the lakehouse this year. An estimated 43.8 million people are going to travel at least 50 miles from today through Monday, up 4% from last year and nearly hitting the 44 million record from 2005, according to AAA. We haven't seen Memorial Day weekend travel numbers like this. In almost 20 years, the organization said, Toby, you're one of the most competitive people, I know. You must have a road trip game that our readers can play while they're driving this weekend. Oh, do I have a road trip game for you? So the goal of the game is to accrue the most cows.

If you see a cow, shout cow, and you earn the amount of cows that are in that particular pasture. If you see a church, you shout church, and it doubles your cows. If you see a bank, shout out bank, and you can bank your cows store them for later. And if you see a graveyard, shout it out, pick an opponent and it kills their cows, sending them back to zero. So whoever has the most total cows at the end of the road trip wins. There's some variations that get McDonald's involved, turning them into patties, but that's a little advanced. Just to start, look for cows, look for banks, churches and graveyards. It's very fun, actually.

So when you see a cow pastor and you say cow, do you get one cow or do you get the entirety of the flock? It depends. The herd. It depends on how advanced you want the math to become. Some people play, you just get one point. But I like playing where you get the entirety of the amount of cows in the pastor. So then by the end of the trip, sometimes you're in the thousands of cows. So it's very fun.

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Exclusion supplies. See homebentbo.com slash price match for details. A new Harris poll published in The Guardian has revealed some interesting things about the current psyche of the American people when it comes to the economy. Headlighting the poll is this number. Nearly three and five Americans believe the U.S. economy is in a recession, even though we aren't. Digging into the specifics, 55% of respondents think the economy is shrinking, despite the fact that GDP has been growing for six quarters in a row. people are even confused about the stock market. Right around half believe the S&P 500 is down for the year, even though it rose 24% last year and is up 12% so far this year.

And 49% think that unemployment is at a 50 year high, even though it's near a 50 year low. So what is going on here? Maybe the easiest thing you can point at is rising inflation. Everything from food to gas is more expensive now, which makes it hard to be happy about high-level economic figures. It could be a failure of the media. Negative news often drives clicks, creating an incentive structure to frame certain things as worse than they actually are.

Or maybe people are just really bad at taking polls. Neil, a lot to dig into here. Yeah, let's focus on the media thing because I saw the most discussion around. It's blame the media because they're focusing on negative news and they don't report on positive news. Let's go back to last October. There was a jobs report that showed the U.S. economy added 336,000 jobs, one of the largest job gains of the year, nearly double-expective. So here are the headlines from major newspapers about that blockbuster incredible jobs report that showed that employees were hiring so many people. Jobs from the New York Times, jobs gain surge, troubling news for the Federal Reserve.

And then here's the Wall Street Journal. Don't get too comfortable with a good job market. And then finally, Bloomberg, September jobs report may be the last good one before a sharp slowdown. So when you look at the headlines around a blockbuster jobs report, they were unanimously negative. and it could possibly be that some part of this is that the media is driving bad economic vibes even though they're not. Yeah, it's absolutely. There's plenty of studies out there, too, that show media coverage of gas prices in particular only ramps up when they hit $350 a gallon or more, and then it only increases as the price increases as well. No one writes about gas prices when they're beneath that Mendoza line of $3.50. sense because it doesn't get clicks. And again, you can shake your hand at it or shake your fist at it, but this is just the current reality that we live in. More negative headlines do get

more clicks. But also, some of these are a failure of the audience, especially I want to look at that S&P 500 one. 60% of American U.S. households own stocks, but 49% say stocks are down year-to-date. That is literally cold hard fact. All you have to do is look at your portfolio, look at that S&P 500 ETF you own. So some things are just, it's a failure of the audience. Yeah. And then when you, another thing, another angle here is that people's personal experience with the economy may not be what they project for the national economy. People generally feel like their personal finances are in a better place than how they view the national economy, which has a little more political salience and may be a projection of their political views as well. I mean, if you just look at

consumer spending numbers, they're universally up, even when people say we're in a recession. The same month where people said that 50% of people said they were in a session, personal consumption for households grew 3.8%. So people's actions are not backing up their words at all. Yeah. And I mean, let's be honest here, though, there is a gap in the reality represented by the data and then this emotional reality of how people feel about the economy. And that's not something that we want to just brush over lightly because, yeah, people do have individual financial circumstances. is inflation does eat into your paycheck. It does feel worse going to the grocery store now than it did maybe a few years ago. Also, we're still coming off entering this higher interest rate environment where at one point Bloomberg economists forecasted a 100% chance of recession. So that is lingering in people's minds as well.

So we never want to discount how you in particular are feeling about the economy. But it is interesting to see these figures juxtaposed to the actual economic data. Yeah, and people are, I mean, the bottom. line is that people are just flatly wrong about what the national economy is doing and how the stock market is performing. But if you listen to Morning Brewd Daily, you will be informed. Over the past year, Nvidia went from an obscure maker of graphics chips to a $2 trillion household name for building the picks that are used in the AI gold rush. And when it reports quarterly earnings like it did yesterday, it offers a rare window into the progress of that gold rush.

Well, we are still going strong like it's 1849. Nvidia beat analysts' expectations like the Harlem Globe Trotters beat the Washington Generals, tripling revenue in Q1 and forecasting another strong quarter ahead. In its all-important data center category, sales jumped 427% from last year to $22.6 billion. For an already massive company to grow its core business that fast, it simply defies the laws of economics. A tech CEO remarked that those two days, numbers, 427% growth, and $22.6 billion have never been next to each other in the history of

capitalism. But Nvidia is rewriting the rules again and again. In a move that juiced its already skyrocketing share price, Nvidia announced a 10 to one stock split, which doesn't change its market value at all, but it does make the individual price of its shares much cheaper. Ho-hum, just another blockbuster earnings from Nvidia. It really was. The jokes yesterday on social media were very funny about Nvidia just supporting the entire global economy at this point. It's kind of a joke, but it's also kind of not. The stock market almost goes as in Vivida goes at this point. One thing that has been of some concern to some of the analysts covering the stock is the over-reliance on so-called hyper-scalers in the AI space. Those are

the big tech companies like Microsoft, Google, Amazon, other big tech names, who accounted for around 45% of Nvidia's data center revenue. That's more than $10 billion. It's these big companies that are just in this all-out war. And the other thing, the asterix that analysts do want to bring up is that those companies are developing in-house AI chips as well. And so how is Nvidia going to compete if, like, Apple, or if Amazon rolls out their own AI chip? So it is something where you have to take a broader step back and say, are they too

over-reliant on a very small customer base here? It feels like any criticism. Invidia is like, we need to find some criticism. And we need to find some lint to pick because overall this company is just going gangbusters. You mentioned meta and Amazon, these big companies, buying so many chips from Nvidia. And it's true that they have a very concentrated customer base. Just looking at how much they buy from Nvidia is absolutely insane. Meta is expected to have about 350,000 H-100s, which are Nvidia's flagship chip by the end of this year.

Considering that H-100s go for tens of thousands of dollars, you can do the math, 350,000 of them. from a single customer that accounts for certainly billions of dollars in revenue this year. NVIDIA rolled out a new chip platform called Blackwell, which is going to go for $30,000 a pop. So they are progressing ahead. They know that there's increasing competition from startups, from the big players as well. But they are continuing to innovate and push the envelope. You know what's so funny to me is looking at Nvidia's gaming segment revenue because it came in that $2.6 billion, but it almost looks like you're peering into an alternate universe because

Because Nvidia's biggest segment used to be its gaming sector. It used to be, that's what it was. It made high-quality graphics processing units for gaming people, but now it's just totally eclipsed by its data center revenue. And it just feels like this could have been what Nvidia was, which was a solid gaming chip manufacturer. Now it's one of the most important companies in the world. Fasten your seatbelts, ladies and gentlemen, we expect to have some rough air ahead.

It's a phrase you've all heard at one time or another, but it recently turned deadly for an air Singapore flight that experienced such intense turbulence on a route from London to Singapore that a 73-year-old man ended up losing his life while seven other people were critically injured. It was a result of a freak clear air turbulence that doesn't show up on radar and happens in clear blue skies. It also put a spotlight on some of the world's more unstable air routes and if turbulence is getting worse recently due to climate change, turbulence comes from different airstreams coming together so it often pops up at a lot of at the end of jet streams near mountains or in clouds.

With that in mind, the most turbulent route in the world is Santiago Chile to Santa Cruz due to strong Pacific winds blowing over the Andes. Neil, we've talked a lot about airlines and Boeing on the show, but rarely turbulence. Rarely turbulence, because it is rare that people get injured from 2009 to 2023. There were 185 serious injuries across 162 global flights involving turbulence. So it doesn't happen all that often, given how many millions of flights. happen between 2009 and 2023. But when it does happen, it can be very dangerous and deadly in some cases.

Basically, they compare this. When you have severe turbulence, they say it's as dangerous as falling headfirst off of a ladder or diving into a shallow concrete swimming pool. That's the amount of force that happens. If you're not wearing your seatbelt and this plane drops, gravity does not work and you shoot straight up and you can hit your head. And reading the first-hand accounts of what happened on this plane is absolutely horrible. They kind of blacked out.

Everybody kind of jumped up who didn't have a seatbelt on. And then the next thing you know, after the plane stabilized, you see blood everywhere. That was the issue is because it was clear air turbulence, there was no warning. So people were milling about the cabin. There wasn't any warning from the captain because they didn't see it on their radar either. And what actually happened is they felt like they were going up a roller coaster and then they suddenly dropped 6,000 feet very quickly because just this pocket of air came out of nowhere. And yeah, it is interesting, too, to look at some of the other most turbulent flights. Their Bloomberg published this piece where they looked at by region, what are the most turbulent flights.

And in North America, it's Nashville to Raleigh, Durham. That was number one. Charlotte to Pittsburgh's number two. And then Denver to Puerto Vallarta was number three. Have you ever been on any of those routes? I mean, no. It seems like the top two are flying over the Appalachian Mountains, which does seem like mountains and the way that jet streams and air currents do interact. with mountains, it does seem like that leads to turbulence.

The final aspect of this kind of tragic story was it was on a Boeing flight. It was a Boeing 777-300 ER. And people were saying actually the plane held up very well all things considered. I mean, it literally shook so hard that oxygen masks were falling from the ceiling. But like the actual plane itself did very well handling turbulence. So people are saying actually Boeing comes out of this looking pretty okay. Up next, I feel like a kid in the candy store. But instead of candy, it's just aisle upon aisle of need.

Neil's numbers coming up next. You said this place was steps from the water. We just haven't found the steps yet. How much did we save? Enough. Enough to get lost. Or you could book a stay with Hilton. Welcome to your oceanfront room.

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or at Sephora.com today. Welcome back to another edition of Neal's numbers, the segment where I share three stats from the week's news that will grow your head like a chia pet. My first number is three, which is where Elvis Presley's Graceland sits on the list of the most visited homes in the U.S. Behind only the Biltmore and the White House. So why are we talking about Graceland? Because fraudsters are allegedly trying to sell it. Yeah, this is a wild story. So a mysterious company named Nossany Investments was planning to.

sell Graceland in an auction planned for today. Nassany said Lisa Marie Presley, Elvis's daughter who died last year, received a $3.8 million loan from them and offered up Graceland as collateral. Marie Presley defaulted on that loan, so they were now Graceland's owners and were going to auction it off for a pretty penny. But hold up. Elvis's granddaughter, the actor Riley Keough, alleged that Nassany was just a devil in disguise. Riley accused the company of being a fake, said it forged the loan documents in order to fraudulently sell Graceland.

She asked a judge in Tennessee where the house is located to stop the auction, and yesterday, the judge did put a pin on it. So Graceland remains in the hands of the Presley family, at least for now. Toby, I'm all shook up. What a bizarre sequence of events. It really was bizarre because Nassini basically just straight up lied here. The person who's supposedly notarized the loan document that also Elvis's granddaughter allegedly signed said she'd never ever even met Lisa Marie Plessley, let alone notarized her signature. So it does look like Nostini was just playing foul here. I wish there was some Elvis joke I could make.

I made enough. I know. You slid enough in there as well. I also was just surprised that Graceland was this high up on the, I mean, the number was three. I can't believe that it's the third most visited place in the country or house. in the country, more than 20 million visitors total, 500,000 visitors a year. People just really like Elvis. Yeah, I mean, have you been? I mean, clearly I've been there. Because if you've been there, it is a zoo. You need a book. We take it way in advance. Oh, you have been there. Yeah,

I've stopped by. We didn't actually go into the house because it is quite busy and honest and care a whole lot because just going there. But it is a huge tourist attraction, one of the biggest in the South. And it does drive a lot of revenue for Elvis Presley Enterprises, which is sort of the company that manages Elvis's finances, not the family trust. Lisa Marie Presley went into a lot of debt and she had to sell off 85% of Elvis's Elvis Presley Enterprises, which they used to own. But yeah, this thing is huge. It brings in $80 million in revenue for the family. And so we'll see what the fate of this house is, but it's a huge asset from a historical, cultural, and revenue point of view. For my second number, if you're California dreaming of buying a home in the Golden State, you'll need to be

pretty dang rich. The statewide median sales price for an existing single family home topped $900,000 for the first time in April, highlighting the affordability crisis in the most populous state in the union. The median price of 904,21010 is up 11.4% from a year earlier, and if price growth continues at this rate, we'll hit a millie in the next one to two years, which would be shocking. And it's not just in California. Across the country, home prices are still climbing, the median existing home price nationwide rose 5.7% to $407,000 last month, according to new data from the National Association of Realtors. Meanwhile, the number of homes sold, fell in April for the second straight month. That should not be happening because the

springtime is typically the busiest season for home buying. Altogether, these numbers show how mortgage rates of more than 7% are creating this lock in effect, discouraging homeowners from selling and leading to a severe inventory shortage that's driving up prices. Yeah, we are in a generationally unaffordable housing market in California specifically is, I mean, it's just insane to think about. A median home is $900,000 and we are fully on the pathway to $1 million. I mean, technically, yes, home prices could go back down, but you're right. People have just locked in these 3% mortgage rates.

They are not moving. They do not want to give up the sweet deal that they got. and I just don't see a world where we're not having this conversation in one year or two years time when it is over a million dollars. For sure. And Zillow came out with this new study that showed that kind of put a point on this affordability crisis. They said that since 2020, you'd probably need to earn 80% more to comfortably afford buying a home in today's market. And that's because home prices are up 42% compounded with mortgage rates of over 7%.

So you need to be making almost double what you were to afford the same house that you would want to in We need some podcast downloads, Neil. I'll tell you what. Let's go. All right, my final number is 28,365, which is how much a bird feather sold for at auction, making it the most expensive feather in history. At that sale price, the feather is worth vastly more by weight than gold. Of course, this is no ordinary feather. It comes from the extinct New Zealand Huya bird that has been extinct since the 1920s. These birds, known for their beautiful song were sacred to Maori and only chiefs and others with high rank were allowed to wear its feathers. When the Europeans came to New Zealand, the hooya population was already in decline, but the

foreigner's frenzy over the bird eventually led to its ultimate demise. Researchers say the hooya had lethal popularity. And because of the bird's significance to New Zealand's culture and its history, only registered collectors could bid on it. And the feather cannot leave the country without permission from the government. Toby, how much would you pay for a feather? It's a good-looking feather. Neil. I tell you what. So this plumage is very distinct. It has this beautiful white tip across it, which made it really highly coveted for, you would put it in your hat and was just a nice little fashion statement, which you're right. It ended up leading to its demise. But yeah, I'd say this feather is totally worth it. I like, it's in great condition. And yeah,

Huia just has this very unique place among collectors. And it's something, when the auction finished, people clapped. Like, it just felt like they were happy it went into good hands and happy that it retain the value that it did. And it does come at a time when auctions for memorabilia, whether it's sports or celebrity stuff, is just surging and they're breaking records all around the world. That Hand of God jersey worn by Maradonna sold for $5 million in 2022. And then most recently, there was this napkin that Messi signed his preliminary contract with for Barcelona. This napkin went for $965,000 a few weeks ago. So that means that has to be the most expensive napkin ever sold. And I don't want to, you know, spread false information,

but it does seem like $965,000 for a napkin would be the most expensive napkin ever. I would rather have the hoo-you-a-feather. I'll just say that. Finally, we're going to play a little game of headline to Madlibs to end the show today. Think of a politician's name. Now, think of a struggling media company. Got them? Let's see if you got the headline right. Yesterday, former presidential candidate Vivek Rameshwamy took a 7.7 stake in BuzzFeed as an activist investor. Yeah, let's get a little weird. The stock jumped as much as 82% before closing the day up 20%. And the company's newly minted fourth largest shareholder is not just sitting idly by doing personality quizzes on the side. He said in an SEC filing that he's sitting down with BuzzFeed's

management to look at every aspect of the company's operations. Neil BuzzFeed went public via SPAC in 2021 and shares are down to 94% since then. What do you make of this unholy marriage? This company is not doing well. So, I mean, I guess they'll take any investor, but the pairing of Vivek and BuzzFeed does not seem to, it seems to be like oil and water because Vivek has been very anti-ESG, anti-Woke, and BuzzFeed is, you know, probably comprised of a lot of liberal writers, liberal people working in the New York City media landscape. So I have no idea how this is going to shake out. I can't imagine it's going to end particularly well for at least

one of the sides. But BuzzFeed is just in a rock and a hard place right now. They have cut a lot of staff. They shuddered BuzzFeed News, which won a bunch of Pulitzer prizes, but it didn't make any money for them. Really, their only media property right now that is doing anything of note

is Hot Ones, which they got from buying complex. So basically BuzzFeed, I would say right now, is Hot Ones, a bunch of quizzes. Jonah Paredi, the CEO, said they're going to lean into AI stuff and getting generative AI to make more content and leaning on freelance contributors. So I have no idea how this is going to shake out. This is very bizarre. But yeah, just to put a point in it, BuzzFeed is just doing quite terribly. Yeah, what does Vivek want? Maybe it's just attention.

He spent $30 million of his own money to kind of get his name out on a national stage when he was running for president. So why not try to commandeer your own media company? Maybe he sees BuzzFeed's share price being down 94% from highs and saying, like, maybe it's just a good deal. The stock already popped, so he made his money back. Or maybe he does just want to land an interview on hot ones. Like, people have done weirder things before. But the way politicians in general, engaging with stocks is changing a little bit. I mean, we just saw Robert F. Kennedy on Tuesday say he had invested $24,000 in the mean stock that is GameStop and an effort to show solidarity with retail investors over kind of like the larger institutional fund.

So he's investing in order to send a campaign message about what he stands for. I mean, we just saw Trump's campaign announced that it would accept cryptocurrency donation. So there is all this posturing around how you interact with the financial sector. And maybe, I mean, it doesn't really make sense for Vivek, though, because you're right. It is BuzzFeed's a little bit at odds with what he stands for. But we're just seeing more of this in general in the political space. All right. That's all the time we have.

Thanks so much for listening. and have a wonderful Thursday. It's a Thursday that feels like a Friday. For any feedback on the show, send a note to our email, Morning Brew Daily at Morningbrew.com. Let's roll the credits. Emily Milliron is in our executive producer.

Raymond Liu is our producer. Olivia Graham is our associate producer. Yuchenoa Ogoo is our technical director. Billy Minino is on audio. Hair and makeup is going to Graceland. Devin Emery is our chief content officer and our show is the production of Morning Brew. Great show, Daniel.

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