Morning Brew Daily - Biden/Trump Debate Moves Prediction Markets & Amazon’s Plan to Take Down Temu and Shein

Episode Date: June 28, 2024

Episode 354: Neal and Toby recap the 1st presidential debate between President Biden and Republican nominee Donald Trump. Then, the Supreme Court rejects the Purdue Pharma settlement that would’ve sent billions to treatment programs affected by the opioid crisis but shielded the Sackler family from any future lawsuits. The right move? Also, Amazon plans to launch its own fast-fashion service similar to Shein to maintain its hold as the top retailer. Next, Al Michaels is the stock of the week and Walgreens is the dog of the week. Meanwhile, a new study suggests that daily multivitamins don’t actually help with longer life. Lastly, the International Space Station has an expiration date and NASA has tasked SpaceX to take out the trash. Download the Yahoo Finance App (on the Play and App store) for real-time alerts on news and insights tailored to your portfolio and stock watchlists. 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 Options are not suitable for all investors and carry significant risk. Option investors can rapidly lose the value of their investment in a short period of time and incur permanent loss by expiration date. Certain complex options strategies carry additional risk.  Investors must review the Options Disclosure Document (ODD): public.com/ODD. See Fee Schedule and Options Rebate & Referral T&Cs: public.com/disclosures. Brokerage services for US-listed securities and options offered through Public Investing, member FINRA & SIPC.  See terms of the Options Rebate Program. Rebate rates vary from $0.06-$0.18 and may depend on time of enrollment and number of referrals. Rates are subject to change at any time. All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing., member FINRA & SIPC. See public.com/#disclosures-main for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash US 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, do you believe in miracles like the voice of Al Michaels returning to the Olympics in AI form? Yes. Then the Supreme Court rejected a major settlement between the makers of OxyContin and the victims of the opioid epidemic.

It's Friday, June 28th. Let's ride. The presidential debate has. happened last night, and it left Republicans feeling way more upbeat than Democrats. President Biden tried to attack former President Trump on raising taxes for the wealthy, abortion, and his recent criminal conviction telling him, you have the morals of an alleycat. But that was overshadowed by Biden's subdued and meandering performance that elevated concerns he is too old to serve another term. Democrats in panic mode are already huddling up and considering ways to

replace him on the ticket, according to reports. But he is unlikely to step aside. And then on the other podium, a more composed Trump repeated falsehoods and wild exaggerations and refused to commit to accepting the results of November's elections. And by the end, these two guys were sparring over golf handicaps. Every conversation between two old guys inevitably spirals towards talking about golf and yesterday last night was no different. But yeah, one way to measure the impact of this debate is how the prediction markets are pricing each candidate's chances at winning the election. And there were some major swings last night. The market.

is now giving Trump a 61% chance to win with Biden down to just 27%. And then interestingly enough, too, California Governor Gavin Newsom's chances jumped up to 5% while Michelle Obama's chances rose to 4%. So that is just another data point about how the public reacted to last night, other than the memes you inevitably saw on social media. Now a word from our sponsor, Yahoo Finance. Roaring Kitty, everyone's favorite game stop investor, made an appearance on social media again yesterday, but the man who named himself after a cat tweeted out a picture of a dog.

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I'll send you text. America's Best Network based on Root Metrics, Best Overall Mobile Network Performance, U.S. second half, 2025. Four new lines on a limited welcome and auto pay. See Verizon.com for details. The Supreme Court this summer has been busier than a centipede at a toe-counting contest. The latest decision the High Court handed down

was striking down a decade in the making settlement between Purdue Pharma and victims of the opioid epidemic. The settlement was crafted as part of Purdue's bankruptcy plan, but the issue up for debate was how it extended generous protections for the billionaire Sackler family. The Sackler family is one of the more infamous names in the pharmaceutical industry. As the owners of Purdue Pharma, they produce OxyContin, a highly addictive painkiller linked to the opioid crisis in the U.S. And for years, the Sacklers have been putting together this deal that would shield them from current and future lawsuits in exchange for putting $6 billion towards addressing the crisis.

But yesterday, the Supreme Court said, nope. In a 5-4 decision, the justices found that the settlement broke bankruptcy law because it didn't get the consent of other parties who might want to sue in the future. Neil, this plan was always a little unusual because of just how broad those protections were for the Sackler family. Now it looks like they're going to have to go back to the drawing. for it again. Yeah, it is known as this Sackler shield and it has just been shattered, but this was such a painful and agonizing decision for the claimants here, the victims of the opioid epidemic,

because on one hand, you're getting $6 billion. That's a ton of money funneled back to you, back to states for drug prevention, and it could theoretically save lives. It's so much money, $6 billion. On the other hand, you're giving the supposed architects of the opioid epidemic immunity, they get a walk scot-free. So it's really this agonizing decision, but it did result in most of the claimants supporting the settlement. There were a few holdouts, and they rallied around with the Justice Department who intervened in this bankruptcy case, and that led to the Supreme Court decision that struck

down the ultimate settlement. You can see why this was such an agonizing decision for the court, because the thing that the majority eventually honed in on was the method that the Sacklers were using to kind of insulate them from all these lawsuits from opioid victims. They did not like that the Sackler family was using the bankruptcy system to shield themselves from litigation. The bankruptcy system is very complex, but Gorsuch said it rests on a simple bargain that bankruptcy court allows the victims to release itself from its financial obligations as long as they put all their assets up onto the table. And they felt like in this settlement, the Sacklers weren't doing that. And they were using

it kind of twisting the purpose of bankruptcy in order to protect their own selves and assets. And the and the sacklers are not the first, uh, the first party to use this provision, which is called a non-consensual third party release. Uh, it has been used in the past to resolve mass litigation related to asbestos lawsuits. The Boy Scouts of America used it. USA gymnastics, Catholic diocese. So this has been a tried and true practice to resolve mass litigation and what the Supreme Court ruled is now sort of questioning that into doubt for corporations going forward using bankruptcy court to shield themselves from lawsuits in the future. Right. It definitely leaves both the Sackler family in limbo now because they have to go back to the

drawing board, as I said, and come up with a new settlement. And then you're right, it does, what does it mean for these other claims involving mass injury like the cases that you mentioned? Made in China shipped directly to your door for next to nothing. That's the business model perfected by e-commerce upstarts like Tameu and Sheen. And now the industry leader wants in. Amazon is planning to an online storefront that's essentially a clone of Tamu and Xin. Cheap fashionware, household goods, and other products sent directly from warehouses in China to customers bypassing warehouses in the United States. According to news reports, it unveiled the plan at an invite-only meeting with Chinese merchants

on Wednesday, but did not announce it publicly. Like meta, copying TikTok with Reels, making a clone of your competitor is a defensive move aimed at preserving market share, and Amazon is really feeling the heat. TAMU was the most downloaded free app on the U.S. App Store this week was Sheehan coming in at number seven. Their bargain basement prices seem to be trumping Amazon's promise of speedy shipping. Toby, Amazon was once seen as the retail disruptor. This direct from China move shows it's genuinely concerned about getting disrupted itself. And they should be because they have been eating Tammu and Shian have been eating Amazon's lunch in this very specific category,

which is just ultra cheap goods. they're not fast goods, and Amazon is saying it's going to take nine to 11 days for these orders to arrive. So Amazon's kind of going back on what they've been focusing on for the last decade or so, which is getting you your product as quickly as possible. Now they're saying we need something to compete at the absolute bottom level of prices. And so they are instituting this new program. On the terms of the seller side, they are copying Cheyenne in the sense that they're allowing sellers to produce these very small batches of goods, put them out to the market, see how the market reacts, and then scale up from there. That is something that Cheyenne has become very good on, especially in the fast fashion industry where trends move at the speed of social media. So Sheehan usually makes just a few amount of goods.

If it does well, then they scale up. Amazon is setting up a similar program for its sellers. Right. They're probably making crew socks right now. And eventually it'll go back to ankle socks, and luckily they'll only have made small batches. But there is a very interesting loophole here in the U.S. tax code, which is how Sheehan and Temu have been able to grow. it's just, you're thinking, oh, I'm buying stuff from China. There's a ton of tariffs on that I'm going to pay more.

How are these things so cheap? But there is a loophole, a rule here that if you ship a parcel, that's under $800, you don't have to pay tariffs at all. And they have absolutely hammered this loophole. And Amazon is going to take advantage of it as well. It's spurred calls from Congress to sort of eliminate this. And then Amazon is getting it from another angle, too, including TikTok, because Amazon announced that their prime day would be July 16th.

And then BightDance announced that they're going to run this sale beginning on July 9th in their TikTok shop. So here you have TikTok going toe to toe with Amazon as well with their shop. So it's getting it from all angles right now. And it's reacting to it. You see that in these new programs that's rolling out. Meanwhile, Amazon's market cap has never been higher. This week, it crossed $2 trillion, joining a very exclusive club of Nvidia, Apple, Alphabet, and Microsoft as the only company's worth $2 trillion. or more. Its stock is up nearly 30% this year, 52% in the past 12 months. So investors are really

liking what CEO Andy Jassy is doing in terms of cost cutting and investing in AI. I know when we talk, we've talked about AI all the time, but we never bring up Amazon. That's because it is investing in generative AI, but mostly on the B-to-B side, it's infusing AI into AWS, Amazon Web Services, it's cloud computing provider. So things are happening in the background that maybe the average consumer isn't seeing with Amazon, but they are going hard in the paint with generative AI, and investors are absolutely rewarding it because they are having a banner year. Speaking of the stock market, would you look at that? Time has continued. It's relentless March ever onward, stripping away another week in its path, which can mean

only one thing. It's stock of the week, dog of the week time, where you'll hear about one stock that knows Jimmy Johns is a top tier subchain and one stock that thinks the turkey tom is overrated. Neil, you won the pre-show game of reciting Peter Dinklitch's IMBD profile. I first forgot he was in Avengers Affinity War. So you're up first. What's our stock of the week? You know what, Toby? I'm actually going to start with Dog of the Week. It's just been that kind of week. And my Dog of the Week is Walgreens. Yeah, things have gotten pretty dire for the place you buy candy from before going to the movies. Shares plunged more than 22% yesterday to at their lowest level in nearly three decades as leadership attempts a painful turnaround. And by painful,

I mean that Walgreens is going to close a substantial number of stores that aren't pulling their weight and pull back from a primary care business that's been a total flop. Walgreens is facing pressure in all parts of its business. In the back of the store, the pharmacy section, revenue growth has slowed from prescription drugs, a major driver of sales. In the front of the store, where you buy the candy, Walgreens is seeing pullback from customers who have had it with inflation. So what's the turnaround plan?

It involves closing underperforming stores, focusing more on its core retail pharmacy business and getting out of the health care side projects and, like many other retail, offering discounts on Staples to get people back in the door. Toby, Walgreens has been around for 123 years. This may be one of the most challenging times it's ever had. Yeah, the stock chart looks insane because shares sunk as much as, yeah, 22% actually. That's the biggest single-day decline since at least 1980. The stock is down over 50% this year. It is just crazy to see this institution that's just been around for over a century just getting absolutely wrecked right now. it's hard to remember now, but there was good vibes around the CEO Tim Wentworth's hiring back in October last year. But like most things, it's not as simple as just putting a new CEO in charge. And actually, a lot of investors were hoping for more divisive action from him. They're going through this big strategic review right now, which has led to closing down on these underperforming stores. But some investors have been calling for them to just sell off or spin off its boots chain, which is its UK arm. Others are saying offload this primary care provider, village,

MD, you tried it. It's just complicating businesses, your business even further. So there's just a lot of bad vibes around Walgreens right now. You can see it in the stock chart. Yeah, I mean, if you have Walgreens close by, I would say maybe go say goodbye to it. I mean, the CEO said that's only 75% of their stores drive 100% of their profitability today. So I wouldn't put a number on how many stores they're closing, but I'm looking at 25% are unprofitable here. So, yeah, there's so many Walgreens. Maybe there's just too many. But, really this is an industry-wide downturn. I mean, Walgreens is in a lot of pain, but CVS has closed more than 900 locations. RightAid went into bankruptcy and closed 100 locations as well.

CVS stock is down 28% year-to-date. So this is an, the pharmacy business is just in getting hit on all sides right now. Before we head to our stock of the week, we're going to take a quick break. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179 like the next grill 3-burner gas grill or get $50 off a select Weber Spirit grill and bring big flavor to your backyard. Then set the scene

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NBC announced this week that it will use artificial intelligence to recreate Michael's silky smooth baritone to give peacock subscribers a chance to catch up on major storylines with a 10-minute curated highlights package each day narrated by AI Al. Neil, this was instantly polarizing, But Michaels has said once he saw a demonstration, he was on board. So now you have the chance to hear his Dulcet tones recapping, Katie Ladecki winning the 1500 by 25 seconds. Are you on board?

Well, I'm going to let listeners hear it for themselves. We're about to play a clip, and I think they will be on board because this is so strikingly similar to Al Michaels. Let's head right to the pool. Team USA secured a stunning victory in the men's 4 by 100 meter medley relay smashing the world record. Over at the diving venue, Chris the Palmer showcased resurgence. Jillianson skill, overcoming past knee surgeries to qualify for the women's springboard final. Meanwhile, a tough break for canonist Pamela Ware as a failed final dive scored zero, ending her bid for the final. Check out these highlights from yesterday's action.

But even more confusing than whether we're listening to the real Al Michaels or not, is when you see this on a paper, is it AI Michaels or Al Michaels? They look the exact same and it's been confusing me whenever I try to read up on this story. It is very funny. Al Michaels is an absolute legend. I mean, you did the call at the very top of the show. He's known for his miracle on Ice Call at the 1980 Winter Olympics. And then obviously, when Al was presented with his plan, he had a few reservations because this voice is his livelihood.

It's his legacy. You don't want it to say anything that you wouldn't say yourself. But he actually, once he heard it, he told Vanity Fair that this is a quote from Al. Frankly, it was astonishing. It was amazing. and it was a little bit frightening. Astonishing, amazing, a little bit frightening. Sounds a little bit like your Acapella group in college, Neil.

But it's also almost an unofficial, a catchphrase for AI because astonishing, amazing, and a little bit frightening, is everything encapsulated in one sentence about AI. And I know every media company is thinking about, oh, how can we infuse AI into what we're doing to make things more efficient? I think this seems like a really cool use case because the Summer Olympics has so many different things going on. There's 32 sports.

There's more than 300 metal events. You can't catch them all at the same time. There's fencing going on. There's ping pong. Sorry, table tennis. There's rowing. Like, there's so many things that are going on that you try to catch up on. And using AI to sift through all of these highlights and deliver something at the end of the day in a 10-minute package with Al Michael's AI voiceover.

Sounds like something I would definitely watch. And there's so many different permutations of this. We're going to get a personalized version. of this for whoever is watching. There are 7 million different ways they could package these highlights from 5,000 hours of live coverage. So using AI to parse through huge data sets

is certainly something that makes a lot of sense. Yeah, usually the alternative was you just scroll through Twitter or you scroll through Instagram just hope to catch certain highlights. But yeah, I am totally with you because it is hard to take in all the action. I think it's pretty cool, too,

that the model is doing two things at once. It is analyzing the clips itself and using that metadata to put the package together. And then it's also going to use the LLM. It's trained on Al Michaels' huge data set of his calls to then put together a package or a narrative that sounds like Al Michaels as well, not just from an actual voice perspective,

but actually how he talks in Al-Michaelism as well. So there's two separate models running at the same time, and I think it's creating a very useful product for consumers. And at the same time, you can see if I'm an announcer or a comment, I'm like, well, if this thing is so good already, then maybe, you know, I should find a different position in five to ten years from now. Anyone listening take daily multivitamins? A lot of you are probably nodding. After all, one in three American adults take multivitamins to supplement their diet. But while you think vitamins might turn you into a real-life Superman, a landmark new study cast doubt on their health benefits, at least for people without chronic conditions,

In a paper published in the Journal of the American Medical Association, researchers analyzed data from nearly 400,000 healthy U.S. adults for more than 20 years and found no association between regular multivitamin use and lower risk of death. Whether it's death from cancer, heart disease, stroke, they saw no benefit from taking multivitamins. In fact, vitamins could have an adverse effect. The study found that people who took the supplements had a slightly increased mortality risk of about 4%. Important note, this is what's known as an observational study instead of a controlled trial, so it cannot prove causality, just correlation. But researchers say the conclusions are clear. If you are a healthy person, you're exercising, eating a balanced diet, you do not need to take vitamins.

They simply do not do anything to help you live longer. You know what liked this study the most? It's just good old-fashioned food because researchers at the National Cancer Institute wrote in reaction to the study that refocusing nutrition interventions on food rather than supplements, provide the mortality benefits that multivitamins cannot deliver. You just need real food. There's nothing that a single pill or single supplement can replace when it comes to just getting the nutrients, your body needs. It is interesting too, because this study looks specifically at mortality risk. There are other things in other studies out there that show that multivitans can improve

memory in older adults. They might also offer benefits for mood disorders. So there are other studies that look at more specific factors about living a healthy life other than just your mortality to say that multivitamins do do something. So it's not, as you mentioned, there are qualifications. And there are certain populations for whom multivitamins do help. Just one of them is people have had bariatric surgery because their bodies are no longer able to extract as many nutrients from food. And this is what the industry, the multivitamin industry lobbying group pushed back with

when they responded. to this study, but really this is a massive industry. One in three Americans do take these. They spend $8 billion a year as the largest subset of the supplement sector. So, I mean, a lot of people take multivitamins. There has been some studies looking at what is going on with their health impacts. This is by far the biggest one. I mean, 400,000 participants and over 20 years. So this is the one that researchers are hanging their hat on there saying, right now, this is the definitive study we have to show the health impacts, at least on young, on healthy people. I'm sure some people will forward this podcast to their parents or anyone who's told them in the past, like, oh, you're feeling run down, take your multivitamin.

So it is interesting. It's going to throw a rent a little bit in some of those, you know, parent kid relationships, I think. In a headline that feels like it was written by the onion, Elon Musk's SpaceX has been selected by NASA to bring down the international space station. The old ISS has been circling the Earth every 90 minutes since the first elements were launched back in 1998, but at last, the home to thousands of scientific discoveries and the setting for at least one Sandra Bullock-led Hollywood drama is reaching the end of its life. Scientists insist that the station is still structurally sound, but it's putting plans in place now for its eventual disposal early next decade. If we just left it as is, its orbit would eventually decay over time and would make an uncontrolled and potentially daintingly. reentry into Earth, which is where Space X comes in.

It will build a ship capable of nudging the 430-ton station along, so it crashes harmlessly into the Pacific Ocean, successfully, quote, de-orbiting it. In other words, Elon Musk has been hired to crash the space station. It's a retirement party for the ages for the International Space Station. Really, this has been one of the most successful scientific endeavors that humankind has ever done. It's been a partnership between countries between, it's not just the United States, it's Russia, Canada, Europe, Japan, all working together to learn more about our universe. Over 3,000 experiments conducted on this thing. It's been in there for decades.

It's massive. It's the size of a football field. So I'm just getting nostalgic, thinking about the ending of the space station. This does sound like a very high-risk endeavor that is about to happen with SpaceX going, sending a essentially a tugboat slash destroyer to guide. out of orbit, and this thing is so big that it's not going to burn up in the atmosphere. I mean, we already saw that a battery pack landed on a house in Florida, so they better get this thing in the middle of the Pacific Ocean, or it will kill people. And that's really the entire point of this is to do it in a more controlled manner than the

other one. It's interesting, too, because the so-called redundant spacecraft and space talks are aimed at a specific point in the Pacific Ocean, and that's known as Point Nemo, which many people might have heard of. It comes from the piece of ocean that is furthest away from any other piece on land. It's known as the most remote place on Earth. So they're hoping to hit that point. So just to take away any risk of the space station hitting anybody. But it is very interesting, too, because NASA did study a lot of options for end-of-life disposal. One of them was dissembling the station. One of them was keeping some of the younger elements up there and just building a next-generation

next generation station there. But then another idea was to hand it off to a private company to say, you take over, use it for whatever you want to use it, turn into a space hotel, turn it into a research laboratory. But all those ended up just being too costly, very hard to pull off. So now they are instead handed out this $843 million contract to SpaceX to say, you guys nudge it down. Let's crash it in Point Nemo and let's say goodbye. This won't be the end of space stations general, though,

because there are private companies that are starting to build space stations that will send up to replace what's going on at the International Space Station. One of them is Jeff Bezos's Blue Origin. There is a space station in the building called Orbital Reef, which is expected to go up, and a bunch of other private companies are also sending space stations up. So this is part of the broader privatization of space, and NASA's leaning on private companies to kind of do everything.

I just hope the ISS is an organ donor. I'm sad. You said you're nostalgic, but I'm getting a little sad as well. You served us well, ISS. Thanks for your service. Let's wrap it up there Friday. You made it. Thanks so much for listening and have a wonderful weekend. For any comments, questions, love notes for Toby.

Send an email to Morning Brew Daily at MorningBrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lue is our producer. Olivia Graham is our associate producer. Yucenoa Ogu is our technical director. Billy Minino is on audio. Hair and makeup can't believe it's almost July.

Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. I wish you all well. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars. Catch the Jonas Brothers return to the Yamava Theater stage

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