Morning Brew Daily - Can Only the Rich Buy A House? Whiskey Fungus, Glassdoor for NFL Teams

Episode Date: March 3, 2023

Episode 9: Neal and Toby break down why you have to make more money than ever to own a home. Good luck millennials! Also what The Last of Us and Jack Daniel's have in common. Plus the NFLPA released report cards for every single team. And yes, F- is a real grade. And why Salesforce and Rivian stocks are going in opposite directions. Learn more about our sponsor, TaxAct: https://www.taxact.com Listen Here: https://www.mbdailyshow.com/ Watch Here: https://www.youtube.com/@MorningBrewDailyShow Sources: Only the Rich Can Afford a House: https://www.bloomberg.com/news/articles/2023-03-02/will-home-prices-fall-first-time-buyers-face-a-costly-housing-market?srnd=premium Whiskey Fungus: https://www.nytimes.com/2023/03/01/us/whiskey-fungus-jack-daniels-tennessee.html Stock of the Week: https://finance.yahoo.com/news/salesforce-shocks-wall-street-earnings-quarter-analyst-reaction-125149467.html Dog of the Week: https://www.wsj.com/articles/rivians-6-4-billion-cash-burn-might-be-a-tech-record-86ee59f1 Novavax Struggles: https://www.washingtonpost.com/business/2023/03/01/novavax-vaccine-covid-trump/ NFLPA Releases Team Report Cards: https://nflpa.com/nfl-player-team-report-cards Congress Pushes Daylight Savings Bill: https://www.nbcnews.com/politics/congress/sen-rubio-renews-push-make-daylight-saving-time-permanent-rcna73183 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 brewAI Good morning brew daily show. I am Neil Fryman. And I'm Toby Howell. And Neil, today I have an interesting internet effect that I actually came across recently that I want to explain to you real quick.

It's called the Streisand Effect. I'm sure you've heard of it in some respect. No. Okay, never by that. Well, maybe I heard of it. Yeah. You've heard of the Mandela Effect, maybe, which is different.

This is the Streisen Effect. It basically says that the more you try to cover something up, the more you end up accidentally bringing attention to it. And so I knew that was the Streisand effect, but I didn't know why it was named the Streisand effect. It is named after Barbara Streisand, the singer. That's because there was this coastal California records project where they photographed thousands of mile of the California coast.

And one of the pictures they took was of Barbara Streisand's house. And Barbara Streisand found this, got mad that they were invading their privacy and sued them to get them to take the photo down. Before they had sued them, the image had seven views. Two of them were from Streisand's legal team. Throughout the lawsuit, it attracted more than 420,000 people looking at the image. So in her effort to cover up and restrict the flow of information, she accidentally brought a ton of attention to it, and that is why it's called the Streisand effect.

Fascinating. Was there any particular example, something that happened recently, that brought your attention to the stric-stand effect? Honestly, I did see a TikTok, but there are a lot of examples throughout business history. Usually when someone's trying to cover up corporate malfeasance, it ends up bringing more attention to it in the first place. All right, well, maybe our listeners have more examples. Feel free to send them in to us.

Let's talk about what we're going to get into the show. I just have two words for this story, whiskey fungus. I know. I'm excited for this. There's just going to be some. last of us jokes made, but... All right, so we're going to talk about Whiskey Fungus. Then we'll get into some NFL players grading their own teams,

and which teams came out on top and which teams came out on the bottom. Very excited for that one. And then finally, before we head into the weekend, we'll talk about the fight over daylight savings time, which is getting renewed attention in Congress. Also excited for this one. Also fun. Great show. Let's start with something that's, I mean, fun, but also not fun.

The housing market, and we're going to do a little check-in, and it looks like, yeah, you still can't afford to home. That's the headlines I've been seeing, but break it down for me, Neal. So, mortgage rates are back on the March way up, climbing for their fourth straight week to 6.65%. For context, a year ago, the 30-year fixed-rate mortgage was 3.76%. So that translates to real money. On a $600,000 mortgage, you're paying about $1,000 more now, a month now than you were last year. It's ridiculous, and it's kind of showing in the amount of people applying for mortgages. So volume is 44% lower the same week one year ago, and it's now sitting at a 28-year low.

So people really, really, one, cannot afford a house, and two, aren't even trying to afford a house. They're not even applying for mortgages right now. No, because they're scared away by higher mortgage rates and higher prices, which higher prices are still here. but luckily they've tamped down just a little bit. There was the first year-over-year decline in February for the first time in 10 years. So the average, the typical U.S. homes sold for still $350,000. Dear God. So that was just a slight downtick.

But getting a home these days is literally like the biggest accomplishment you can probably ever have. I remember James, our colleague, walked in this week with literal tears in his eyes after he closed on a home. He was shocked. That was the most... He was actually, like, comatose in a way, because I don't think he'd believe that was happening. Well, he's in the minority because first-time buyers accounted for the lowest share of all home buyers on record last year was just 26 percent. Right.

We're first-time buyers. And to show you how hard it is just to get in a, you know, your starter house in the United States right now, the median age of first-time buyers was 29 in 1981. That has jumped to 36 in 2022. It is the classic joke of, like, our parents, our parents when they were 26, like, married, family, multiple homes, us when we were 26, like, still, like, on Twitter, buying rocks on the Internet. Living in a shoebox in New York City. Just in general, it feels like an extremely confusing time in the economy. It feels like everyone has a job.

No one has a home. No one can afford any eggs. Inflation's at all-time highs. The economy is both doing well and not doing well. at the same time. It's very, very confusing economy. It is an extremely confusing economy, and economists have no idea where this is going. Basically, mortgage rates are surging higher because they're tracking treasury yields, which are tracking the future forecast of Fed interest rate hikes, and the Fed is about to hike rates even more because inflation has not

come down like we've expected. But at the same time, the economy is doing really well. There's really strong economic growth. Unemployment is down to some of its lowest levels in decades. So, yes, a very confusing economy. I would guess the big picture is that inflation is not coming down as fast as we'd hope, and the Fed is hiking interest rates a little bit more, and mortgages are tracking that. And the stock market kind of hit the skids last month because of the prospect of higher interest rates. Neil, that was one of the more eloquent breakdowns of the economy that I've seen. Actually, no, truly, very, very good.

Makes sense. You read a lot of economic data. Okay, that is the housing market. I think we did a pretty good job of kind of touching on the major points. I just have one question for you now, Neil, as we transition into our other story, have you been watching the Last of Us? I have. Okay. Actually, it's like the one TV show that I watch. I appreciate that because it seems like it's almost playing out in real life in a small corner of Tennessee.

So residents of Lincoln County are complaining because a dark, soot-like fungus has kind of taken over their small town. And this dark fungus grows on the alcohol vapors that comes from the aging of Jack Daniels whiskey. So Jack Daniels has made their whiskey in this area for a long time. The ethanol vapors produced by its aging process causes fungus to spread. And it's really, really causing a lot of tension between residents and Jack Daniels in the city. Someone's actually suing it, suing Jack Daniels. I think they're suing the county.

Sewing the county, and then also one of Jack Daniels' warehouse projects has been halted. So, Neil, I know you have some thoughts on how, like, community and businesses interact. What do you make of this fungus situation? Yeah, I mean, it's, we honestly, when we first heard this story, we kind of laughed. We like, ha-ha, whiskey fungus, blah, blah, blah. But when you read into it, it actually reveals, like, bigger tensions around when businesses and local communities kind of butt heads, reminds me of when they were building all these Amazon warehouses during this e-commerce boom. And there were trucks going into these warehouses late at night, and the local residents were upset.

And this just reminds me of all of the sort of negative externalities that happen when businesses expand and they give off pollution. And there's just a lot of things they bring into the local area that residents might not want. Obviously, they made investments and create jobs and all of that. But there are a lot of negative externalities as well. And, I mean, this woman said she had to pay thousands. Her power washing bill was $10,000 per year. That's ridiculous, because you got to get this fungus off. And you said that businesses oftentimes point that they're bringing economic prosperity to do an area.

Jack Daniels has already built six warehouses. They actually call them barrel houses in the whiskey industry. Fun fact. They're trying to build six more. And the argument they're making is that if we have 14 barrel houses, that would generate $1 million in annual. property tax for the area. So, again, it is that classic, like, yes, there's tradeoffs because it's annoying to have these barrel houses, annoying to have fungus coat, everything, but, like, we're bringing economic prosperity to the area.

Fun fact about this fungus is that in the prohibition area, this is a thing. This happens all over the world in bakeries and distilleries whenever there's, you know. The fungus appears. The fungus appears in the local area. But where there's fungus, there's whiskey, is like what I like to say. And federal officials knew that back in prohibition area. So when they were looking for little moonshine, so the fungus was a giveaway. The fungus was a giveaway.

And listen, we're giving bourbon a lot of bad press, so I want to give a shout out to the Kentucky Bourbon Trail, which actually is booming right now. I don't know if you know people have had Bachelor parties over there. I think I've known a few people. But basically, this Kentucky Bourbon Trail where bourbon is produced, has seen more than 2 million visitors last year for the first time ever. So that place is exploding.

I kind of want to go. It's beautiful over there. But not if this fungus. This fungus is disgusting. We were looking at images of it. It is, it looks like a black ash. Yeah. Like a volcano erupted.

Yeah. It's really, really gross. All right. So get your fungus cleaned up and then we'll come drink. You heard us. You heard this podcast, Tennessee. Get your act together. Okay.

Let's go to our Friday segment, which we, We highlight some particular stocks that are doing well and stocks that are not doing well. It's called Stock of the Week and Dog of the Week. Toby, I'm just going to kick it to you for your favorite phrase that you've always wanted to say. This is not financial advice. Nothing that we say in this podcast can be construed as financial advice. We were just a news podcast. All right, Neil, take it away.

That was pretty good. Thank you. Okay. So I got stuck with Dog of the Week last week. So I am doing Stock of the Week because that's- You wanted it. You wanted it. I'm going to highlight Salesforce.

Salesforce is this big software company. It's used for customer relationship management. It's all over the world. Businesses use it to track sales. They've been facing a swarm of activist investors, putting a lot of heat on CEO, Mark Benioff. He kind of shut them up this week with their massive earnings report. Crushed, crushed, and their stock surged, I think 16% this week so far. And yesterday they had their best trading day since 2020.

Yeah. It was actually really funny reading the analyst reports. They were like weeping almost. This is the most incredible thing we've ever seen. No one expected it. And it is interesting because, yeah, Mark Benioff was in the hot seat. Multiple, multiple activist investors, including Elliott Management, were on him. We're like, you've got to clean up. You've made these huge, huge acquisitions of Slack. You probably overpaid for both of them. Like, let's tighten the ship. And it looks like he kind of rose the occasion and the company did really well. Right, and he kind of got a little flack for having this preachy family vibe where I think he called, you know, his company and workforce, Ohana, which is the Hawaiian word meaning family, and does this whole like dad thing, which is a little weird. And so, but then that kind of bite him when he laid off 8,000 workers, which is 10% of the workforce. At the same time, they're paying Matthew McConaughey $10 million as their spokesperson marketing advisor. So it's just not a good look, and people were kind of crappy on him.

But maybe everything McConaughey touches turns to gold, so maybe he's worth the $10 million. Possibly. So they're focusing on profitability. Investors love that, and Salesforce is back. Stock of the week, baby. Okay, let's go to Dog of the Week now. Dog of the Week is Rivian. So Rivian has had a long journey to get to this point of Doggla Week.

When it went public in 2021, it immediately shot up to be the third most valuable car company in the world. Now the stock is down over 90% since that high. It was down 10% over the last five days as well. And the big reason why it kind of missed on earnings was earnings came in worse than expected. They made $663 million, below $740 expected. But the big thing was it missed its delivery. goal. So it only delivered, it missed its delivery goal by 10,000 cars, which is when you're a budding electric vehicle maker, all you want to see is, like, can they ramp up production to deliver

enough vehicles? And Rivian did not do that. Yeah, investors seem like they're kind of okay on Rivian over the long term. So I think, you know, they're just like, it's really hard to make cars, especially when you're not doing it in huge volume. Right. No, people, here's the bullish and bearish case, if I can quickly sum it up. The bullish case is people love Rivian cars themselves. They actually J.D. Power named it the top. One, J.D. Power Satisfaction Survey. It actually beat out Tesla for it. So they're making really, really top quality cars. But yeah, they cannot scale production fast enough. And the 1,000-pound elephant in the room is Tesla, who is kind of undercutting prices right now, too. So there's a lot of headwinds, but also some tail wins.

but they say full speed ahead on a $5 billion factory outside of Atlanta. So there's some ramp there's some production capacity right there. Yeah. Okay. So that was your stock of the week and dog the week. Before we jump in the next story, 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 three burner gas grill.

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Take me back. All right, taking you back. So we know about Peloton. Yes. We know about Carvana. I remember. We know about Zoom and NFT apes. Those were all huge COVID.

I wish I did remember any of those. I want to talk about maybe the biggest COVID bubble of all, which is COVID vaccines. Interesting. So, Novavax, which is a small biotech company that made COVID vaccines, issued a going concern warning, which sounds not good. And it is not good, which means they could cease operations this week. So they make, yeah, they make COVID vaccines. No one really, there's very little demand for COVID vaccines anymore, and they're not sure they can stay in business. day in business. I remember Novavax going nuts during the pandemic because everyone was looking for

a vaccine manufacturer to kind of invest in. Obviously, the big names Pfizer, Johnson & Johnson, Moderna. They were doing all right, but everyone wanted to find the experimental one, and Novavax kind of captured that hype. So this stock went way, way up. Yeah, I think. Piqued at $290 a share two years ago. Now it's below seven. Oh, my gosh. Just ridiculous. And I think the reason why people were so bullish on Novax is because they took a different approach to vaccine manufacturing. So they were a protein-based vaccine, whereas Moderna and Pfizer did the MRNA. Turns out this is kind of going to be their downfall, though, because now that were years in the pandemic, one of the big thing that the U.S. Food and Drug Administration is looking for

is for the vaccine to be able to be updated so you can get boosted every year. And it's easier to update an MRNA vaccine than it is to update a protein-based vaccine. So NOVAX is kind of sitting here. They have no good future prospects. Less people are getting the vaccine. It's not looking good for them. No, I mean, I was just looking at up. 33% of Americans have gotten a booster, and the U.S. government said that we may need

yearly COVID shots, but maybe not. Like, it's all a little hazy right now. I mean, I haven't thought about a COVID shot in six months. I think, right, it is definitely like the demand is going down. This is the craziest stat I've ever seen, though, from kind of the vaccine craze, is that the Biden administration bought 3.2 million doses of Novavax. Only 80,000 of those have been administered. So, again, we overbought to have enough supply to do it. But the fact that only 80,000 of Novavax, I, Novax technically.

doesn't care. They secured the purchase order, but that's still kind of a crazy discrepancy between we went from a crazy lack of supply of vaccines to a huge abundance. And it's really going to hit these drug makers. Pfizer, this is truly astonishing. Pfizer made $100 billion in revenue last year. 57 billion of that, so I guess 57% was COVID stuff. So it's Paxlovid and its vaccine. It's warning that its revenue is going to decline this year. 33%. because those products aren't in demand, and its vaccine sales are projected to plummet 64%. So, can you think of another product that was, like, the most popular product in the world for 12 to 18 months and then fell off a cliff a year later? I mean, maybe the McRib at one point for McDonald's.

But that kind of comes back. I don't know. Maybe our listeners can help. Yeah. That is very interesting. Bryce in the control room was saying something maybe related to World War II production. Yeah. Which is very similar to this, but I'd love to hear from you all listening if there's this, if you know anything in history that was similar to the boom and bust of a COVID vaccine.

It's very interesting, yeah. All right. From COVID, let's go to the playing field, the NFL. The NFL Players Association, basically Glassdoored itself this week. I'm very curious to hear this data. So it pulled 1,300 players anonymously and asked them to grade teams based on eight categories, including. getting meals, nutrition, training, and travel. And we know, know who the best team to play for and the worst team to play for in the NFL.

The worst team to play for was the least surprising thing, I think, we've all ever heard in sports, which is that the Washington commanders were the worst team to play for. They had three F-minus grades out of eight. I didn't even know you could get an F-minus. That is the funniest part of all this is that they gave an F-minus. And F is already failing, so somehow this is below F-minus, yeah. So the best team was the Minnesota Vikings. They just built these gleaming new facilities.

They did not get any lower grade than an A-minus across all the A categories. I want to do a quick quiz to you, Toby. Okay. You watch a lot of football. What do you think are the top five teams and the bottom five teams from this? I'm going to go bottom because I think that's easier. I want to say like the Jets comes to mind. Not the Jets.

Okay. The Jags. Okay. Jaguars had a rat infestation. Yeah. In Florida. Wow. That's ridiculous.

I do feel like I'm trying to think of small market teams that are also kind of bad at football. What other small market teams are there? I wanted to say the Seahawks because their stadium's a little outdated, but they're a pretty well-run organization. All right. Just to move things along. You did pretty good. You got one. Well, the Cardinals, Chargers.

Chargers was kind of a giveaway. And then the Chiefs is, you're right. Chiefs is kind of like a small market. team. And then the top five are the Vikings, dolphins, raiders, Texans, and Cowboys. Texans, interesting. But it was super interesting because the NFLPA in doing this said they

didn't want to shame teams. But obviously, this led to a lot of shame. It was to sort of surface best practices so that teams could learn from each other. And then they did it ahead of free agency, so players could get a sense of where teams stand before they decide on teams, which is really interesting. Oh, gotcha.

But yeah, there's some really funny stats from this. from this survey. Three teams don't serve players' dinner at facilities. Players' wives were having to nurse babies on the floors of public bathrooms because they didn't have family rooms. Oh, my God. And then the Bengals go full-spirred at airlines because they don't have charging plugs in lockers. Oh, my gosh.

And then seven teams don't fly players first class. So it was really interesting to me that there was all this discrepancy between teams. It's kind of like different companies you're shopping for. I thought there would be sort of a pretty standard practice. But I guess the survey, the point of it was showing how teams run their operations really differently. Yeah. Before we jump in the last story, it is crazy that the commanders are the worst run team, and they're still fetching a price tag of almost $6 billion.

We'll see. It hasn't happened yet. Hasn't happened. Do you think this will dent their sale price? Probably. It's leverage now. Like, you can say, listen, you need – it's probably Jeff Bezos who's bidding on it, so he can say, hey, you need me more than I need you.

So, interesting, interesting data for sure. All right, Neil, there's something very exciting coming up next Sunday, and it's not the Oscars. Sunday is when the clock spring forward for daylight savings times. That means it's going to be lighter or a little longer in the evening. But the reason why daylight savings is in the news is lawmakers are once again considering making daylight savings times permanent. And just for some brief context, the Sunshine Protection Act actually passed Congress last year, but Marco Rubio just reintroduced the bill. just because... Well, it's stalled.

It passed the Senate, didn't make it through the House, so he's reintroducing it to potentially go through a vote again. And, Neil, I know you have a lot of strong opinions on daylight savings. Do you think it's a good or a bad idea? I think it's a bad idea. I think it's a really bad idea. We tried this. You know that.

We tried this in the 70s, where they made daylight savings time permanent. And the idea was there was this big energy crunch in the 1970s, and we wanted to save energy. and by making it light later, we would save energy as Americans. They scrapped this bill after 10 months. People hated it. Well, it was not only people hated it, it was legitimately dangerous. Because when you have kids waking up and going to school in the morning and it's pitch black outside, it's dangerous.

It leads to obviously some safety issues. Just to cover our bases, I will give some arguments for the Sunshine Protection Act, making daylight savings time permanent. and having lighter evenings all through the year. And that is, it's very economic-based. It's retailers and leisure activities. Like the National Retail Federation really, really supports the Sunshine Protection Act because they think people will go out and spend more when it's lighter.

Right, gas stations too. Yeah. But the problem is, and why this is such a bad idea, is because people don't realize how bad it is when it is dark out in the morning. It is really bad. It's bad for your health. Scientific community, almost as consensus, says that we should not only have not daylight savings time.

We should be on standard time all year round because it just, we are, our bodies sink with the sun way more better, way more better, much better when it's light out. And there's this whole consideration about kids. Kids go to school in the morning, and if we had permanent daylight savings time, they would, you know, be in much more danger of getting hit by cars. if it is pitch blackout. Yeah. See, I knew you had a lot of thoughts on this. It is weirdly a hot-button issue for a lot of people. The main argument for making it permanent is people hate changing their clocks,

which is kind of a dumb argument if you think about it. But truly, most of America is aligned on this because they're like, it's so annoying. But it's also really funny to me that that's the main issue because all of our clocks automatically do it at this point. It used to be a thing where you had to go around your house and do it all, but now it happens automatically. I really don't mind changing the clock. I know for parents of kids, it actually wreaks havoc.

So I'm definitely sympathetic to that. That's why I advocate Neil Freyman for president going for permanent standard time. We're going to wake up early. Yeah, we're going to wake up early with the sun. That's what I'm going to leave us with today. Early risers. I like it. Okay.

That's the show we have for you today. Pretty awesome show. If I do say so myself, want to give a huge shout out to our crew. there. Show's producer is editor. Show's producer and editor is Emily Milliron. Show's technical director is Joe Hampton. Thanks Joe. Supervising producer is Bryce Belloff. The show's overlord of audio is Dan Bousa. Hair and makeup is often Turks and Kako, snorkeling. Devin Emery is our chief content officer. Our show is a production of Morning Brew. And remember, we want to hear from you. Make sure you email us at Morningbrewdaily at

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