Morning Brew Daily - Big Retail is FINALLY Slashing Prices & US Workers are Lonelier Than Ever

Episode Date: May 30, 2024

Episode 333: Neal and Toby dive into the latest drama from the oil industry with its biggest players trying to fend off activist investors. Plus, Walgreens, Amazon, and Walmart have announced major cuts to prices to get consumers spending again. Next, stats from the Negro Leagues are officially part of the MLB record books and it’s led to some new leaders. Then, Neal shares his favorite numbers on the American worker, Spelling Bee champs, and India’s heatwave. Toby has his own number on orange juice prices. Lastly, North Korea sends trash balloons into South Korea. Visit https://www.sage.com/morningbrew for more! 00:00 - “Home Alone” house for sale 2:45 - Big Oil battles activist investors 7:15 - Summer of savings 10:15 - Negro Leagues added to MLB record books 13:40 - Neal’s Numbers 19:20 - Toby’s Tally 21:50 - Korean balloon fight 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 Disclosure: 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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Good morning, Brew Daily Show. I'm Neil Fryman. And I'm Toby Howe. Today, why Babe Ruth is no longer the top slugger in baseball history. Then your orange juice might be tasting a little differently soon. It's Thursday, May 30th. Let's ride. All right, you filthy animals, do I have a real estate listing for you?

Kevin McAllister's Child at Home from Home Alone hit the market this week with an asking price of $5.25 million. For that price, you get a 9,000 square foot Georgian-style house in the Chicago Burbs, five beds, and six baths, and according to the team selling the property, a chance to own one of the most iconic movie residences in American pop culture. Toby, would you like to pay all cash, or should I put you down for a 20% down payment? I am out on buying this home, but I did dive into the internet lore that comes around the question of what did the McAllister's do for work? because you see them taking these vacations to perish.

You see their beautiful home. So what did they do and what was their income? No one really knows what their actual jobs were they never stay in the show. Some theories think that his mom was a fashion designer because there's mannequins in the house. But working on the assumption that McAllisters did not spend more than 30% of their income on housing. Economists have been able to determine that they probably could have afforded that home back in 1990 on an income of $305,000. So maybe not stratosphericly wealthy, but these days, given home prices, it does seem like they would have to make a little bit more cash. Yeah, the value of this actual home has jumped over the past decade when it was last sold.

So in 2012 was the last time it changed hands, and it went for $1.5 million, according to Zillow. And now it's, you know, around 5x that. So, wow, good for the people who actually own this home. Now let's hear a word from our sponsor, Sage, not the herb, but a tool. that saves finance professionals a lot of time and money. If you're a finance pro, you're always walking a tightrope of sorts. Data from Sage's recent CFO report found that 81% of finance leaders believe manual processes inhibit strategic work.

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Kayak, got that right. We all know that if you mix water and oil, oil always rises to the top. Turns out if you mix activist investors and big oil companies, oil will also rise to the top. There was a key shareholder vote this week that proved the oil industry still very much has the wind. of corporate America filling its sales. To set the stage, two small activist investors urged Exxon Mobile to speed up their carbon emission goals back in January. But Exxon turned right around and sued them.

The investors dropped the proposal, but Exxon continued with the suit. And some big institutional investors, including Norway's central bank and the U.S.'s largest pension fund, didn't like Exxon beating up on the little guy, so they prepared to move against the company's board of directors at their annual meeting yesterday. but the status quo was maintained. 95% of voters backed the existing 12 Exxon directors, while other proposals for reports on gender and raise, plastics, and social impact were also rejected.

Semaphore's Liz Hoffman recently wrote that Exxon is on an epic corporate winning streak, and that was before yesterday's meeting. Neil, this vote, as well as the impending lawsuit, could represent a real turning point in shareholders' ability to hold corporations accountable. Yeah, this is a sign of the rising. fall of the ESG movement, which it stands for environmental, social, and governance, and it picked up in pace around the 2020 when shareholders were pushing companies to do more around

social goals and environmental goals. And back then, Exxon lost a proxy battle to this tiny hedge fund called Engine Number One, which shock the world. They got three board seats on Exxon's board, and now, three years later, the political wins have completely shifted. And, Exxon railroaded over these other small activist investors and one with 95% of the vote. Yeah, that's looking like the peak of the ESD movement rather than just the start of something bigger. It also kind of signifies, it very neatly signifies how big oil companies are only getting bigger these days. If we just go through the list of acquisitions that have happened recently, it's pretty remarkable. Chevron acquired Hess for $53 billion, which allowed them to get access to the extremely productive Guyana oil.

fields. Shareholders actually voted earlier this week to approve that deal. ExxonMobil bought Pioneer Natural Resources for $59.5 billion that doubled their production in the Permian Basin. Occidental Petroleum, which Warren Buffett has a big stake in. They acquired Crown Rock minerals for $12 billion. And then yesterday even, Canoco Filts announced it was buying Marathon oil for $17.1 billion. So when we talk about big oil and we talk about epic wind streaks, It is amazing how many of these oil mergers and deals have happened just in the last kind of 18 months. Yeah, an Exxon stock is up 250% since the depths of COVID. That has largely been helped by oil prices rising over the course of the war in Ukraine.

Energy prices got higher, which only helps energy companies. And now their stock is booming. So it's good times to be an oil company. And you see that they are all doing this land grab for very lucrative spots around world, including Guyana and also in the Permian Basin, Texas. It's also just surprising in the current regulatory climate that these deals are happening, because this is probably the least, the most merger hostile regulation in a generation at the FTC right now, and yet these deals are sliding through.

So that's just another win in another notch in Big Oil's Feather Cap. After jacking up prices for the better part of three years, retailers are finally giving customers a break. Welcome one and all to Hot Discount Summer. Yesterday, Walgreens said it would slash prices immediately on about 1,300 items, ranging from gummy vitamins to facial cleanser to even squishmelows. It joins Walmart, Target, Amazon, and other chains that have recently announced sweeping price cuts ahead of the summer.

The discounts are happening not because retailers feel bad for us. It's because consumers, who had been so resilient during the spike in inflation, are finally starting to crack. People aren't spending as much in stores anymore. So in response, companies are slashing prices to keep them from dropping off completely. Toby, some of these discounts are staying just for the summer. Others are going to be permanent, but either way, this is a major shift in strategy. Right. And you want the consumers to come in and buy the actual products that you're cutting prices on, but then you also want them to, once they're in the store, hopefully start spending on more discretionary items, stuff like arts and crafts or new clothes, not.

those essentials, but this is part of the strategy of why these price cuts are rolling out on all the retailers that you mentioned. It's also been a game of chicken between stores and shoppers over the last few years where prices, consumers are only so resilient. Like at a certain point, they do stop shopping and the volume that these stores are doing goes down. It appears that in that game of chicken, stores have finally blinked first. So maybe it's just a nice little relief, a hot discount summer, as you so neatly put it. Yeah, so we're basically at the end of the earnings season. And one of the major themes that came out from retailers was that the lower income consumer

is pulling back. You heard that from McDonald's, from Starbucks, from Home Depot, from Walmart, to a T. They all said this. And you can just look at where people are buying various, what kinds of items people are buying. So in the cheapest groceries, the market share of the cheapest grocery, the market share of the cheapest groceries went from 38% in April 2019 to 48% last month. And then the share for the most expensive groceries went down from 22% to 9% over the same period. So that's why you're seeing

all these brands or these stores like Walmart rollout store brands that are much cheaper around $5 price point to get people shopping who are going for those cheaper items. And then outside of retail just specifically, McDonald's has also been doing some damage control recently on the price fund. Their USA president wrote an open letter that was published yesterday, basically saying that reports of McDonald's price rises faster than the national inflation average are greatly exaggerated. He called out viral social media posts, which we've talked about. We talked about the viral $18 Big Mac meal at a Connecticut rest station. So he was just trying to set the record straight. And you see McDonald's is playing offense too. They plan to roll out a $5 value menu

following kind of this heightened attention around their price increases. If you don't know the name Josh Gibson, that is about to change because he's about to be plastered all over major leagues, baseball's record books. In a move that quite literally rewrites baseball history, the MLB announced plans to finally incorporate Negro League statistics into its record books. That means a player like Josh Gibson, who batted 372 in the Negro leagues, is now sitting above Ty Cobb on the all-time batting. average list. The man called the Black Babe Ruth now holds the all-time slugging percentage

record to metric that factors in a hitter's power, leapfrogging, none other than Babe Ruth himself. This was a project four years in the making that required diligent research from a team of historians and statisticians in order to incorporate the stats of more than 2,300 Negro League players from 1920 to 1948 into a new online database. But it has been more than worth it because anyone who knows history of baseball knows it has been incomplete if you don't acknowledge the contributions of these athletes to the game. Yeah, this did seem to stem from the follow-up from the George Floyd Black Lives Matter movement in in 2020 when MLB Commissioner Rob Manfred designated seven Negro leagues that operated from 1920 to 1948 as major leagues,

setting in motion this remarkable historical archival project to sift through newspapers and microfilms from the early 20th century, go through box scores, find out these people's stats, which weren't kept as well as MLB stats because they just did not have enough resources, and then finally add them to MLB's record books, which it's unlike any other sport where the actual record books are so significant. It's really a historical record more than anything else. And so this has been a long time coming, and I think it is a really important move for MLB to recognize this part of baseball's history. Right. Part of the issue, has been that one, the records were incomplete, but also a lot of the seasons were different lengths.

A lot of Negro League seasons tended to come in in a 60 game season while baseball is 162 games. So how do you reconcile the difference between those two? But one of the things you mentioned at 2020, another thing about 2020 that set this process in the motion was the fact that it was a 60 game season, a pandemic shortened season. So it did kind of kick off that conversation again of saying we've had different length seasons before. So that shouldn't be a limiting factor in including these statistics. So that was just another reason why the project got underway when it did. And I think you're going to start to see more Negro leagues.

Memorabilia caps, jerseys going around and more recognition of this part of baseball history. You can already play as them in MLB, the show of the video game. They're selling jerseys and caps. Last night at the Mets game, someone snapped a picture of somebody wearing a Josh Richards jersey, Josh Gibson's jersey. I'm sorry. So I think you're going to start to see this part of the game be more recognized. And also the reason they're doing this now, this record book thing, is that because in a few weeks, they're going to be playing an MLB game at Rick Wood Field in Alabama, which was home to the Birmingham team in the Negro Leagues.

Up next, it is my favorite segment in the week. Toby's Trent. Just kidding. It's Neil's numbers. It's time to refresh your yard during spring backyard days at the Home Depot. price is guaranteed on propane grills starting at $179, like the next grill three-burner gas grill, or get $50 off the select Weber Spirit grill and bring big flavor to your backyard. Then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the Home Depot. Now through May 6th, Exclusion supplies to homedipo.com slash price match for details.

Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the unreal college deal, everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 premium and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller. Learn more at Windows.com slash student offer. While supplies last, ends June 30th, terms at AKA.m.m.S. College PC. Welcome to Neal's numbers, the segment where I share three stats from the week's news that will have you feeling like you're entering the Renaissance from medieval times.

First up, are any of you feeling isolated at work? You're not alone. Well, you are. But what I mean is many other people are feeling the same way. In an article called The Loneliness of the American Worker, the Wall Street Journal listed a bunch of recent studies that show how workplace shifts in the past four years are contributing to America's loneliness epidemic. Get a load of these. More than 40% of fully remote workers who are working parents said they go days without leaving the house, according to a 2023 survey.

People who work in office spend nearly one quarter of their time in virtual meetings, while face-to-face meetings account for just 8% of their time. Speaking of meetings, Americans have tripled the time spent in meetings since 2020, according to Microsoft, which leaves less time for those casual coffee chats or other serendipitous interactions that lead to overall well-being. Finally, 68% of workers surveyed by BetterUp said they knew their colleagues on a personal level, which is down from 79% in 2019.

Toby, people just don't have work friends anymore, let alone a work husband. Yeah, the entire default of how we interact has just shifted. It used to be you could catch five minutes with someone at the proverbial water cooler, just catching up. But now if you want to catch five minutes,

you have to schedule that, which you just see from those meeting stats going through the roof. Every moment of our day has to be scheduled now. There's very little serendipity when you factor in remote work. And honestly, the staff that really sit out to me was the fact that people are not leaving their homes. That is not a good thing. That is not good for the loneliness epidemic. That's not just affecting workers, but just people in general. So a lot of eye-opening statistics in this report from Wall Street Journal. For my second number, tonight is the finals of the Scripps National Spelling Bee. And chances are an Indian American kid is going

to win it. That's because they've won 28 of the last 34 national spelling bees going back to 1999. In 2019, when eight champions were declared, seven were Indian American. It's an incredible achievement for a group that accounts for just 1.3% of the U.S. population. This utter domination has been a source of pride for South Asian immigrants, and even those who remain in India. In his 2016 address to Congress, Indian Prime Minister Narendra Modi cited spelling bee champions as one of the country's contributions to the U.S. So how can we explain this? And there are a couple factors, experts say.

One is that Indian immigrant parents put a heavy emphasis on the value of education because that was their pathway to success in the United States. Another is a role model in Balu Natarajan, who in 1985 became the first child of immigrants to win the spelling bee and became a household name in that community. And finally, a well-funded spelling bee infrastructure is sprouted up that produces Indian American spelling champions, most notably the North South Foundation that holds educational contests across the country. Toby, can you spell dynasty? I knew you're going to tell me to spell a word. I can't spell dynasty, but I'll leave that to the spellers themselves.

There is just a lot of well-educated and tending to be wealthier Indian Americans in the country as well. They're 3.1 million Indian-born people living in the U.S. right now. Their average median income household median income is 147,000. That's more than twice the median income of other U.S. households. But it's not just the fact that it is a wealthy population living in the U.S. It is the fact that there's this very robust community around spelling as well. There's these organizations. And then also a lot of the same families from the southern part of India. It's not just Indians in general. It is a specific part of India as well. So you're seeing a lot of factors that contribute to this absolutely dominant run over the last 30 years.

Dominant run. And if you want to learn more, there's a great documentary from 2020 called Spelling the Dream, which follows four Indian American children that go through the spelling bee. It's a great movie. And I just want to also talk about how the spelling bee has upped its game over the past few decades. So in 1940, the winning word was therapy. Whoa. I think you can spell therapy, right?

And last year, the winning word was sammified. which is a prefix, just to help you out here, here's a hint. The prefix is derived from the Greek samos, meaning sand. Does that help you? It does not help me, but samophile, I feel like that's getable, right? I'm not going to try. Don't try. It's not going to end.

Don't want to embarrass yourself on the podcast. Okay, for my final number, let's head to India proper, where scorching temps are shattering records. Yesterday, New Delhi recorded a temperature of 52.3 degrees Celsius, or more than 126 degrees Fahrenheit, if confirmed, that'd be the hottest temperature ever recorded in India. And parts of India have been sweltering

under a heat wave that shot temps above 110 degrees for weeks. But yesterday's spike was on a whole other level of danger and brought major changes to daily life. Hundreds of teams were sent out to crack down on people washing cars to conserve water. And construction workers have mostly paused working between noon and 4 p.m. Toby, a 50 spot on Celsius.

that's unfathomably hot, but it might be part of the new normal. Scientists say climate change has made extreme heat waves in India far more likely. Right. It really disrupts daily life. I mean, you had a judge at a court just stop hearing cases on Tuesday this week after he said it was just too hot to work without air conditioning. There's been calls to leave water pans at bus stops and bus stations. Power demands are at an all-time high in the city as well. So it really does throw a wrench in life.

And you're right, like a 50 spot when it comes to Celsius. It's just never a number that you expect to see or want to see. Neil, I am honored once again to be invited into the exclusive club that is Neil's numbers and add my humble Toby tally to the fray. And my tally has to do with that cup of OJ you have at your Sunday brunch. Orange's futures is to let traders hedge against big swings and prices hit $4.92 pounds this week. That is almost double the price from a year ago.

And it's just been a really bad couple of years for Orange. There was a hurricane, then a cold snap in Florida that wiped out thousands of acres at the end of 2022. And now a really bad harvest out of Brazil has once again sent prices skyrocketing. It's gotten so bad that some companies are toying with the idea of making orange juice from mandarin's, which are a little bit more resilient to swings in temperature. Other fruits like apples and pears are also getting the carton call up. Neil, it's hard to fathom life, especially as a Florida boy without oranges and orange juice. but three consecutive bad years of harvest is pushing us towards that path.

Yeah, the problem here is that the orange production is concentrated in just two places, basically Florida and Sao Paulo, Brazil. They account for 85% of world production. We saw that with cocoa prices where it's just concentrated in a very specific place. And when there's disease or bad weather there, sends prices skyrocketing. And that's what's happening in oranges. But at the same time, people just aren't drinking as much oranges, orange juice as they used too. So this is not just a minor blip. This is a long decline in people drinking orange juice.

Consumption has halved in a decade. People have looked at the label and seen how much sugar that is in there. So it could be the case that orange juice, your beloved, has just been going to become a niche luxury product. Yeah, one of the things that really has been happening over the past you get decades was 20 years ago, citrus greening was first detected. That's this disease that makes the fruit bitter and kind of stunts it, killing it all together. That was first detect in the U.S. and farmers have been fighting against it for literally 20 years now. And the problem is that it only affects some fruits on the trees.

So the only way to really root it out is by uprooting the trees and getting rid of them. But farmers are always low to do that because they can save some of the fruits there. So it's just a rock and a hard place. And yeah, I am affordable. What's your pulp level? I'm a no pulp guy. But I just grew up with that smell of burnt oil. oranges, because the traffic counter factory was literally right across the river from where I live.

So this is a sad day for me. When you hear the words balloon fight, your first thought is probably a summer afternoon with some lighthearted water balloon tossing. But not when North Korea is involved. The country deployed about 260 balloons full of trash and potentially extrament into South Korea yesterday. The move triggered emergency protocols, brought out chemical and explosive teams and prompted authorities to warn people to stay indoors.

Aerial messages are actually quite a quite common source of tension between the two nations. During the Korean War, the U.S. military estimates that the country has distributed more than two billion propaganda leaflets, and the drops have continued into present day. These trash balloons are a more symbolic display of North Korea's displeasure with their neighbor, but still, balloon-aided psychological warfare, Neil, it's a real part of life on the Korean Peninsula. It really is. And this specific balloon launch appears to be a responsible. to another launch of leaflets and other materials by South Korean activists who wanted to penetrate that wall of North Korea and say, hey, look, life is a little bit better down here.

So recently they sent a bunch of USB drives containing K-pop music and other, you know, anti-regime leaflets to try to permeate what's going on North Korea, which is a complete foreign media blackout. They don't let people consume any other sort of culture from anywhere else. And the North Korean people said this was a direct response to that launch by activists south of the border. And then another kind of notch in the balloon saga is that in 2022, North Korea blamed balloons for starting its first COVID-19 outbreak. So these things go very, very deep. But you're right.

The biggest threat to the current regime is just exposure to the outside world right now. So that's why you're not seeing propaganda leafless. You're literally just seeing K-pop music. And you're seeing other parts of the culture, which is South Koreans. attempt to show North Koreans that there are stuff going on outside their borders, and it's not just what this regime tells you it is. That's all the time we have for today. Thanks so much for listening, and I hope you managed to avoid all metaphorical poop balloons headed your way today. If you have any feedback on the show, please send an email to Morning Brew Daily at Morningbrew.com.

It truly helps us get better, and we'd love to know who's listening to Morning Brew Daily. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lou is our producer. is our associate producer. Euchenawa Ogu is our technical director. Billy Minino is on audio, hair and makeup, H-A-R-A-N-D-M-A-K-E-U-P. Devin-E-Mrey is our chief content officer

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