Morning Brew Daily - Best Earnings Season Ever? & CLEAR Tests Biometric Scanning at Airports

Episode Date: August 20, 2025

Episode 652: Neal and Toby dive into what’s behind a string of strong earnings that is shrugging off tariff fears. Then, the SPAC king returns and is seeking to raise $250M for his new SPAC. Also, CLEAR and TSA is piloting biometric tech to help airport screening go much faster. Meanwhile, AI-powered sleep tech startup Eight Sleep is planning to open up retail stores by 2026.  00:00 - Guess what ‘TMZ’ stands for 3:00 - Companies are crushin’ 7:30 - SPAC King is back 11:30 - CLEAR clearing up airport screening 17:00 - Eight Sleep’s big dreams 21:20 - Sprint Finish! LinkedIn will even give you a $100 credit on your next campaign so you can try it yourself. Check out LinkedIn.com/mbd for more. Submit your MBD Password Answer here: https://docs.google.com/forms/d/1Yzrl1BJY2FAFwXBYtb0CEp8XQB2Y6mLdHkbq9Kb2Sz8/viewform?edit_requested=true  Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Listen to Morning Brew Daily Here:⁠ ⁠⁠https://www.swap.fm/l/mbd-note⁠⁠⁠  Watch Morning Brew Daily Here:⁠ ⁠⁠https://www.youtube.com/@MorningBrewDailyShow⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Consider this comparison. PWC data found the percentage of CEOs who report revenue gains or cost reductions from AI is almost equal to the percentage who say they're still stuck. What separates these two groups? PWC points to a clarity issue. Even for CEOs, it's hard to tell what's AI hype, what's reality, and where this tech can make a tangible difference. Learn where AI can actually make an impact and what successful adoption looks like at

pwc.com slash U.S. slash brew AI. That's pwc.com slash us slash brew AI. Good morning brew daily show. I'm Neil Fryman. And I'm Toby Howell. Today, plot twist. This earning season has been won for the record books as

corporate profits soar. Then clear things the secret to getting through airport security faster lies in your face. It's Wednesday, August 20th. Let's ride. Good morning and happy Wednesday. MSNBC's rebrand to MSN now sent me down a

TV acronym Rabbit Hole. I'm only climbing out of now. But I come with loads of interesting facts, like that QVC stands for quality value convenience. CNN is cable news network and HBO is Home Box Office. But there was one news acronym that to me was the most surprising and most clever, TMZ. Do you have any clue what TMZ stands for? It's 30-mile zone. Toby, what the heck does that mean? Yeah, the 30-mile zone is a term at the film. TV industry uses to describe the studio zone, which is literally the 30 mile radius around Beverly and Los Angeles, where most of the studios are clustered. Back in the day, entertainment industry labor unions used the studio zone to actually determine worker compensation and work rules.

And now it's the name of a gossip outlet. Okay, and final nugget of wisdom I want to pass down is that TMZ is an initialism, not an acronym. The difference being acronyms are pronounced as a single word, while initialisms are pronounced by spelling out each letter individually, TMZ, initialism, NASA, acronym, which also means MS now is part initialism, part acronym, and 100% a bad name. And now word from our sponsor, LinkedIn Ads. Toby, when was the last time you got a good ad served your way?

Well, sometimes I listen back to our show and hear lots of good ads. Whoa, meta. Actually, more like, whoa, LinkedIn Ads is the place to be if you're in B2B. It's got over 10 million C-suite execs and over 130 million decision makers, aka the people you need for your business on their platform. And you can target by job title, industry, company, and more. Most importantly, LinkedIn ads can help you stop wasting money, time, and resources on mistargeting, something that 71% of B2B ads suffer from.

It can link you with the right audience for your brand. So check out LinkedIn ads. LinkedIn will even give you a $100 credit on your next campaign so you can try it yourself. just go to LinkedIn.com slash MBD. That's LinkedIn.com slash MBD. Terms and conditions apply only on LinkedIn ads. Second quarter earning season is entering its seventh inning stretch. And as we stand up and take stock of all the action so far, one theme has emerged.

Companies are kind of crushing it right now. Aggregate earnings per share of S&P 500 companies are up 11% over the previous year, nearly tripling expectations of 4% growth. And with over 90% of corporations having reports, reported, six in 10 have topped earnings forecasts by more than a standard deviation of estimates. Analysts are gushing like my mom after I brought home a report card that didn't have a C. David Koston, chief U.S. equity strategist at Goldman Sachs, said the quarter has been marked by one of the greatest frequency of earnings beats on record.

But perhaps even more important than beating earnings estimates for the previous quarter is what companies are saying about the fall and the winter. They're much more optimistic than earlier this year when many pulled their annual forecast, they had no clue how tariffs would impact their businesses. Now, in music to investors' ears, many are boosting their guidance. This quarter, more than 40% of S&P 500 companies raise their earnings estimates for the rest of the year compared to just 17% at the end of the first quarter. Toby, despite tariffs and other economic headwins, it's been a stellar earnings season. In fact, one of the best in history. One of the best in history, but I'm going

to immediately reign on your parade here because companies certainly benefited from a low bar. They had the lower expectations heading into this earnings season because a lot of analysts slashed estimates during the first part of Trump's administration. It sounds a little bit like my academic or athletic career. Set the bar low and then limp over it and then everyone will be happy. And then there also is some caveats looking forward like maybe terrorists are going to take a while to filter through the economy. And if you actually go back and look at full your outlooks, they still haven't fully recovered to, um, to, what they were before the year.

So again, talking about that lower bar, we are operating under the pretense that things aren't going to be as good as we thought they were because all these tariffs were introduced. All that being said, I'm sorry I immediately rained on your parade. It was a really standout earnings season. Yeah, I mean, just look at what happened yesterday. We had Home Depot report earnings,

and it stuck with its annual forecast, saying that full year total sales will grow by 2.8% shares rose about 3%. And then you had Palo Alto networks, which is a cybersecurity giant report better than expected quarterly results. It boosted its guidance for the year. Stock rose 5% in extended trading. And for that reason, you are seeing the S&P 500 and other stock market indexes hit record highs in recent days and weeks due to the fact that all these companies are not only beating,

they are raising their guidance. So yes, low bar, but companies are leaping right over it. And then final, again, parade rain. I'm bringing a lot of negative vibes to the show this month. morning, but only 25% of S&P 500s actually provide quarterly guidance. That is a lot lower than you might have expected. And that group is typically dominated by the companies that have been doing very well, like technology companies, like consumer discretionary companies. So maybe if you zoom out to the rest of the S&P 500 index, they might not be painting as rosy of a picture,

but the ones that are painting a picture are painting a Bob Ross masterpiece. We have another litmus test coming up as well. Walmart and Target are reporting. earnings this week. Invita doesn't report earnings until August 27th. But speaking of Nvidia, a lot of chip in AI stocks actually got hit pretty hard yesterday. There are two narratives kind of holding up the market right now. One is the strong earnings that we've been talking about, but then the other is AI and some cracks are beginning to emerge in the AI narrative. Some traders pointed to this paper that was released on Monday by MIT researchers that said 95% of organizations are getting zero return from their investment.

in generative AI. That spooked a lot of people. And then also, this comes on the heels of Sam Altman, the CEO of opening eyes, saying, hey, we might be in a little bit of an AI bubble right now. So you combine those two things. Suddenly people took a step back and go, maybe we got a little over-exuberant here.

So that's something to keep an eye on as we progress forward through another great earnings season, but maybe looking ahead that AI narrative is getting a little shakier. Moving on, he's back. Chimath Palahapitia, the investor who popularized SPACs, is reentering the ring three years after suffering a series of embarrassing knockouts. Monday night, Chimath filed for an IPO of American Exceptionalsam Partnership Corp, which intends to raise $250 million and bring a company public. To jog your memory, a SPAC is a shell company whose sole purpose is to acquire

a target firm, and in doing so, make it publicly traded. Spacks offer a cheaper, faster alternative to an initial public offering or IPO, which critics say ties up aspiring public companies with too much red tape, among other concerns. Spacks were all the rage in 2020 and 2021, when markets were frothy from Stimmy's and rock bottom interest rates, and Chamath was the ringleader, dubbed the Spack King, the former Facebook executive, raised 10 blank check vehicles to take companies public, making deals for firms like Open Door, Virgin Galactic, SoFi, and Clover Health. But Spacks flew too close to the sun. They came under regulatory scrutiny

after individual investors suffered hefty losses while their sponsors, like Chamath, got filthy rich and the trend collapsed just as quickly as it emerged. Spacks did not stay in witness protection forever,

though. In 2025, Spacks have been making a sustained comeback, and Chimas returned to the arena shows their staying power might be stronger than you first thought.

Toby, do you think he learned any lessons? I mean, fool me once, shame on you. Fool me 11 times. Shame on everyone involved. but SPACs are definitely back. Look at the numbers. More than $16 billion have already been raised by special purpose acquisition companies this year. That is more than the combined totals of 2023 and

2024. In just August alone, 17 blank check companies have already filed for IPOs. That's surpassing July's total of 12. So definitely some momentum swelling around this. But he's, so Shamath used to be kind of early to the game. He's always loves SPACs. I think it's a better way for normal. retail investors to participate in these public debuts of companies. But now he's almost late to the party this time because a lot of momentum has been building around SPACs in riskier corners of the market. Think crypto. That's been a main one. And then also there's been this pro-America bent to a lot of them. Eric and Donald Trump Jr., they have a U.S. manufacturing SPAC called New America SPAC. Brandon Lutnik, who is the son of Commerce Secretary Howard Lutnik. He lost a crypto SPAC earlier this year.

So there's definitely this ground swell of support, not just around smacks, but specifically, this pro-America bent. Well, maybe because maybe he's biting his time. We're talking about Chamath is there is a lot of scar tissue from what happened in 2021. So Chamath, I mentioned, has raised 10 SPACs. Let's go down how those have performed. Well, four didn't complete any deals. You have to find a target company to take public within two years. And if you don't find a good deal, then you just return all that money to investors and that particular blank. check company just kind of goes away. And then so there were six spacks that did complete deals. Only one of them is trading above its IPO price. That is SOFI. And all of the others have suffered a median loss of 75%. So Chabatha's taken a lot of heat from the investing community

for raising these spacks. And he gets a lot of money out of this. Meanwhile, retail investors were left holding the bag for nearly all of them. And it seems like he's almost becoming self-aware because he wrote in kind of this letter to investors saying there is no crying in the casino if you lose all your money. He said that we believe retail investors should only participate if A, this investment is a small part of an otherwise diversified portfolio. B, this investment is a quantum of capital. They can afford to completely lose. And C, if they do lose their entire capital, they embody the adage from President Trump that there will be no crying in the casino. So he is coming out and saying, like, listen, I haven't done so great in the past.

you could lose all your money here. Please be aware of this. This is the first time he's included kind of a disclosure like this in his SPAC perspective. He didn't do it for the other, you know, 10 that he did. Maybe the 11th time is actually the charm. If you're tired of missing your flights or waiting too long in security, the answer to a smoother airport experience might lie in your face. Clear is partnering with the TSA to deploy EGates that rely on biometric data

to move you more quickly through airport lanes. available to members of Clear Plus, the company's $209 per year membership. If you're traveling through Seattle, Atlanta, or Reagan in D.C., you'll be able to scan your boarding pass at an eGate and get your identity verified through a biometric scan to make sure your face matches your boarding documents. Once that is complete, the gate opens right into a TSA security line where you can go through the normal bag and body scanner check. The big time saver from previous clear operations is that a staff member no longer has to walk you up to a TSA, officer, who then lets you into the screening area, EGate now handles that instead. The new tech is being rolled out ahead of a busy travel season with major events like the

World Cup in America's 250th birthday coming next year. Neil, Clears CEO told Axios that EGates are just the start of frictionless travel that is integrated into one step and should just take three to six seconds. Sounds like a dream, honestly. Well, there is a scary part, and that Clear said these EGates will free up clear employees to, quote, bring other services to travelers. So if you enjoy getting harassed by clear employees to sign up while you're waiting in precheck or another line, then you can expect them to have a little bit more time in order

to do that. But no, this sort of automated border control systems where you go into a little area, they take your picture, maybe they scan a document, and then an automatic gate opens up and there's no interaction with humans. Those that can be found in Europe and Asia, if you traveled over there. It looks like they're finally coming to the United States, but for a $200 a year fee. It is pretty wild to see how much confidence has grown with biometrics. I mean, back in the day, this was a very controversial thing that has become entirely mainstream at this point.

I mean, the TSA is working on biometric technology. You've probably gone to an airport recently where you go up to the agent, you scan your boarding pass, and then you just look awkwardly at the camera. That is them using biometrics as well. Touchless ID is another thing that's rolled out on a few. airports where you just have to take a photo and then it pairs you with your your boarding documents and you're on your way. So this is clearly a theme here where for a long time people were skeptical of biometrics, but now it is becoming the de facto way to travel because it's just so much

quicker and so much more seamless. It's been a big year for airport security and modernization and innovation. Remember a month ago, TSA said you no longer have to take off your shoes. And then Christy Noem, the Homeland Security Secretary, after that announcement, said, you know what, liquids might be coming next right now. You can't bring a container of liquid of over 3.4 ounces on a flight. And she said, the liquids, I'm questioning. So that may be the next big announcement is what size your liquids need to be. It does seem like there is a push to streamline and modernize security, especially as we have so many visitors coming in next year for the World Cup. There's be tens of millions of people entering this country, as well as, you know, our birthday celebration

for 250 years. It looks like there's, you know, airport security, which had been a certain way since 9-11 and then 2006 were some also big changes. Looks like 2025 will be a landmark year for airport security. And the growing cost of showing up to the airport so early to wait in line is becoming a fuller into view. Gary Leff, who writes this very influential aviation blog, calculated that the current recommendation of showing up to the airport two hours early costs the economy $83 billion per year, and that's assuming $100,000 average income for passengers. He's saying this is something that we just tolerate, but we shouldn't, shouldn't have to show up to an airport two hours before to wait in line.

Now let's take a quick break before we talk about really expensive ways to go to sleep. Would you pay $3,000 for a better night's sleep? The Sleep Fitness startup, 8Sleep thinks so and just raised $100 million to expand their operation. Praised by billionaires, Elon Musk and Mark Zuckerberg, Gate Sleep's main product is a mattress cover called the pod that connects to a hub filled with water that automatically adjust your temperature throughout the night. It also tracks your sleep and vibrates to wake you up. If you splurge on a king-size cover and add extra features like speakers for white noise and height adjusters,

it can run you up to $5,099. And oh yeah, it comes with an annual app subscription that can top out at $399 a year. For most of its 11-year history, that egregiously expensive sleep stack appealed mostly to power users from the tech world, but eight sleep plans to use this latest funding round to target more normal people by opening up branded retail stores next year. Now, if you're rolling your eyes and wondering, who would ever sell out that much for a mattress cover? The answer is a lot of people. So far, sales of its most popular pod have generally. generated more than $500 million since it was introduced in 2019.

Eight Sleep might be meeting the right moment, too. Robert F. Kennedy Jr. just told Congress that he wants every American wearing a health tracker within four years. And Eight Sleep CEO told Axios that the company wants to dive deeper into the health side of things with plans to submit two FDA applications this month, one seeking approval for a sleep apnea device, and the other for a menopause-related device. Neil, 35% of adults report they get insufficient sleep. and I'm looking at two gentlemen in this studio who certainly don't get a lot of sleep,

maybe it's worth shelling out the big bucks. I don't think so. But it's interesting the way this company uses AI in its marketing. It's done this since 2018. They are now rolling out an AI, what they're calling an AI sleep agent, which we know agent is certainly a buzzword in the AI space. That is supposed to leverage large language models. It will create thousands of digital twins for each user to predict outcomes with the goal of

optimizing nightly recovery. The goal is to be a proactive helper for your sleep instead of, you know, being reactive. They want to move deeply into the medical space and get some FDA pants and treat this as a medical device. You know, they are clearly using AI as a marketing buzzword. It's unclear with how AI is going to help your sleep or whether this is just actual, just regular software. I do think that the medically prescribable treatment angle is big here because they want to make the pod something that can be reimbursable by health insurance saying that sleep is a health issue, which, I mean, it is a health issue. It is kind of the bedrock that your health is built on. And then, yeah, they're trying to roll out these products that they want to specifically

tailor to certain use cases like sleep apnea, like menopause. They introduce this rapid cool-down feature that helps with hot flashes during a menopause. Remember, this works by sending water through the mattress cover, and it can adjust your temperature based off of the feedback is receiving because the bed has a ton of sensors in it as well. So it is really hammering this health angle, which is something that, again, has a lot of support from RFK Jr. from Congress right now. So maybe this is the moment where these mattresses become reimbursable and they're just an everyday fact of a lot of people's lives. Let's talk about some challenges and headwinds. Well, first of all, is the price. I mean, they have to get this price down if they want to be more adopted

than the tech executives that have formed the core of their customer base. There also is increasing competition, not by other mattress companies, which there are, and they're undercutting them on price, but by other health monitors. I'm talking about ORA ring, which is worth $5 billion, Apple Watch. There are all of these wearables and health trackers that you can wear that are much less expensive than a $3,000 to $5,000 mattress. Maybe they track the same sort of health markers, but it'll be interesting to see this battle play out between this mattress company and ORA and other ring or wearable companies. They each are pitching their own value prop. I think Eight Sleep is saying, well, ours is plugged into a socket and you don't have to

recharge it. And ORARing saying, well, ours is much lighter, you know, lightweight. And it's just easier to take on the go and is more comprehensive. So it's interesting to see these two, these two types of companies battle in this health space. That was sprint to the finish with some final headlines. The U.S. Open is underway in New York this week, but it's completely revamped mixed doubles tournament has some players furious. Typically, mixed doubles, which pairs a men's and a women's player together, is not a big draw for fans. Doubles in general often see lower attendance, coverage, and

prize pool than singles. But this year, the U.S. Open decided to try and change that, luring top stars like Carlos Alcaraz, Igaz, Iguessiatic, and Yonik Center, with a record $1 million prize pool to participate in the mixed doubles draw. Double specialists are angry, saying they've been sidelined from their own discipline in calling. the event sad and dishonest. Some rules have been changed too to make matches less demanding, like playing sets to four rather than six, and reducing the number of teams from 32 to 16. But the draw was also stacked with blockbuster pairings. Carlos Alcaraz and Emma Radicano, Naomi Asaka, and Gail Monfis, Madison Keys, and Francis Tiafo. These are names that rarely

deviate from singles, especially not in a Grand Slam. Organizers insist it's a true Grand Slam title meant to boost doubles profiles, but some pros see it more as a made-for-TV exhibition. Neil, the first rounds were last night. What was the initial verdict on how the upgraded tournament went down? Well, it's clear that all of these top players were learned by one thing, and that is the $1 million paycheck, because it is by orders of magnitude bigger than what a mixed doubles check is, has been handed out in the past last year. these mixed doubles teams, they won split $200,000.

This year, it's a million dollars. So that's an 800,000 increase from 2024. Look around at the other Grand Slam's mixed doubles. Champions at Wimbledon made about $180,000 to share. The French Open, it's down to $142,000. And at Australian Open, it's at $114,000. So this is a bold gambit by the U.S. Open to get people watching mixed doubles in a way that they hadn't before and also generate more.

revenue for this first week before the singles kicks off next week. And we'll see how what the reaction is. I know a lot of the top players said, this is great. Francis Tiafo said, quote, seeing the prize money, everyone was like, yeah, we're going no matter what. Meanwhile, the double specialist says this is a bastardization of what we do. It really was, though, because you look at the final scores and you see 4-1, 4-2, it just doesn't feel right. They were clearly trying to usher this tournament rather quickly because a lot of the top players have singles coming up. And most of the big names ended up losing yesterday. A lot of the actual double specialist team that said, hey, this is what we do for a living.

They ended up faring better. So the initial, I don't know, response was one that of, hey, great, there's a lot of money involved. Maybe elevate the players that have been toiling away on the circuit instead of the bigger names. And maybe don't change the entire format of a tournament. So you're seeing 4-1, 4-1 instead of, you know, 6-1, 6-1. Well, the final, the semifinals and finals are today. So if you want to root for any team, I'm going to be rooting for the mixed doubles specialists

that have been toiling away for years in this particular domain. There's Sarah Irani and Andrea Vavasori. They are facing Danielle Collins and Christian Harrison. Go team. La Popote, a French-style restaurant in the north of England, has one Michelin Star and a carefully curated winery of nearly 140 varieties. But soon, it'll also be the first restaurant in Britain to offer a bottled water menu.

Yep, on Friday, when he sit down to this restaurant, you'll be presented with an entire menu of H2O to choose from, three bottles of steel and four sparkling, coming from exotic locales around Europe, like Spain, Portugal, and France. Chef Joseph Rollins said he was pitched the idea by Doran Binder, a water sommelier, which is in fact a real thing, allegedly. To prove water was worth its own menu, Binder invited Rollins and his partner for a water tasting,

and that knocked their socks off. Water isn't just water. It was mind-blowing, Rollins said of the tasting. Prices for the bottled water range from $6.80 to $26 for a Portuguese sparkling water. Tap water remains free. I was initially skeptical. Obviously, you're going to be skeptical. Water, Somelier, like, what are you talking about?

It's just water. But then I kind of went on the Joseph Rollins journey as well, because as they started describing what makes a water taste better than another, it is fascinating because the measurement that you. use to kind of determine a water's taste is called total dissolved solids or TDS. Distilled water, it has zero, which again, the chef says it's great for cleaning windows, for, you know, running electrical appliances, but it's not that good to actually drink. It doesn't taste very exciting. And then you go to the other end of the spectrum. Sea water has 30,000 to 40,000 TDS. Their most expensive water from France has 3,300 TDS, and they say it tastes

rather salty, but then when you pair it with something like a cured ham or something like that, it elevates the flavor much like a wine would. So it is fascinating how these TDS changes the flavor of water. It pairs with food just like you would with alcohol and kind of capitalizes on this growing movement for non-alcoholic drinking. Like you want to sit down and have a great meal, but you want to have, you don't want to drink wine. Here is water for you. I think you've been inducted into a cult. Oh, absolutely. That's the way. The way you're talking. It's like the reverse Jesus, too. I'm turning wine back into water. It makes a lot of sense. But this alcohol thing is a big deal. I mean, there was that Gallup poll that just came out

showing that only 58% of adult Americans drink alcohol, which is the lowest on record. They're seeing the same trends in Europe. And alcohol is a big source of sales for restaurants. So this water if they can get somebody to pay $26 for a water that it's you, that would have previously ordered a bottle of glass of wine and they're not doing it anymore, then that is a huge boost to their business. And then the final note on this is how do you think the water should be served? I'm sure you have opinions on this as a water connoisseur, but they recommend that it's served at room temperature with ice and a slice of lemon, just like wine. If it's too cold, it kills all the flavor. That is all the time we have. Thanks so much for starting your morning with us and have a wonderful

Wednesday. Toby, you are headed out of town for the rest of the week. Have an awesome trip. And I know Anne will be a worthy sub. If you have any thoughts. our feedback on today's show, send a note to Morningbrewdaily at Morningbrew.com. Toby, what is today's password clue? Today's clue is the password rhymes with a sport. The password rhymes with a sport. In case you forgot to write down Monday and Tuesday's clues, pull out your notes app now. They were the password is a two-word movie title, and the password begins with a title

that a person could have. And now add the password rhymes to with a sport to the list. You can submit by heading to the link in the show description or going to our Instagram. at MB Daily Show. As always, good luck. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lue is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair and makeup will stick with tap. Thank you. Devin Emery is our president and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.