Morning Brew Daily - Cities Charging for Traffic & Wall Street Loves Weight Loss

Episode Date: June 27, 2023

Episode 90: Neal and Toby break down New York City's adoption of a congestion toll that would charge vehicles for driving in Manhattan, and why it could be setting a precedent for other cities around the country. They also explain why a possible weight-loss pill from Eli Lily has investors on Wall Street salivating. Plus, SCOTUS hears a case that could block plans to tax the rich. Toby gets trendy and explains why Gen-Z loves cottage cheese and why insurance companies are not pickleball fans. And finally why Jell-O Shots are taking over the.... College World Series? Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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 US slash brew AI. That's pwc.com slash us slash brewa i. Good morning brew daily show. I am Neil Fryman. And I am Toby Howell. On today's pod, what is income? Seriously, what is it? We might have a better answer this year as the Supreme Court takes up a highly charged case over taxes

and what plummeting health insurance stocks and pickleball have to do with each other. Then brace yourself, Neil, we're entering the weight loss whores where a new pound shaving pill might be approved as soon as this year. Plus, a single college fan base ordered over 60,000 jello shots at one bar in Omaha. We'll tell you which college it was and why in just a bit. Neil, it's Tuesday, June 27. Let's ride. All right, Toby.

As you know, we have a very active YouTube commenter community, which everyone should join. And I want to share some of the responses to yesterday's show that kind of stood out. Hit me. So first, the good news, I said Wagner correctly. when talking about Russia's mercenary armies. So that's pretty awesome. If you are talking about that story with any of your friends,

you can pronounce it the right way. We also had one viewer who works at the stage company, Tate Towers, that Elton John used for his tour, which is the reason he began it in Allentown, which was kind of a mystery. Apparently, it's this small Amish town called Littitz in Pennsylvania. It's crazy how widespread and far-reaching this YouTube comment, our little YouTube that could.

So, yeah, I appreciate it. seeing everyone's comments every day. Wait, I'm not done. Finally, and this one has to do with you, there were a bunch of people who commented on your changing hairstyles. One said, I swear to God, Toby looks different every week.

And another who said, your new trim is a bit strange, but you're still rocking the F-boy vibes. I know. Oh, my gosh. The funny part is that our thumbnail team, who makes our thumbnails for our YouTube videos, say, Toby, are you going to change your hair

anytime soon? because we're going to have to update the thumbnails again. So sorry to Emily and everyone, Seth, who makes our thumbnails. All right, let's go to our first story. New York City got final approval from the federal government yesterday to implement an additional toll known as congestion pricing in the busiest parts of Manhattan. The first time any U.S. city has done anything like this.

And before you say, I don't live in New York, why should I care? Let me remind you what a wise man once said. If you can make congestion pricing in New York, you can make it anywhere. So it could be coming to a city near you. What's the deal with this toll? In order to disincentivize driving on Manhattan streets, the city will implement a toll of between $9 and $23 on cars entering Manhattan below 60th Street, which is the densest part of the borough.

There will be exceptions for drivers just staying on the highways and lower-income people who live in that zone will get an offsetting tax rebate. but everyone else, you are paying up for clogging our streets. After getting the final green light yesterday, the city is aiming to start this plan next spring, but it is controversial. It's super controversial, and on the surface, it does kind of make sense, though.

What the government is pushing forward is that it would be a more equitable transportation environment, because technically, if you can afford a car in New York, then you're probably on the higher end of the income spectrum. so you're taxing someone who can afford it and then giving it to a mass transport system that is used by people who likely can't afford a car. So I see like the high level this makes transportation in New York City more equitable. But there's a ton of pushback against it. Yeah.

So let's talk about that. The main pushback is coming from our good friends. New Jersey, baby. New Jersey. They are so pissed. First of all, it already cost $17 for New Jersey commuters to go into Manhattan on the, tunnels and the bridges. So they're like, you are, you know, you're taxing us additionally on top of $17 that we're coming in. And like, they're just saying that New York is not being a great neighbor.

There are a lot of people who come in to New York from New Jersey at the last count in the fall of 2021. There were 117,000 people who drove in on the average fall weekday. And I've never seen, I mean, I have seen New Jerseyans this upset, but they are upset. The lawmakers, they are the senators and the governor are literally doing anything they can. Yeah, they're threatening legal actually. Yeah, totally. Because I can see why, yeah, being double, triple charged, like, of course it's going to be annoying. And then I'm also a little mad too, because you know this is going to drive up Uber prices and taxi prices within the city. There is a pro vision that they say that they'll probably only charge people who do operate or like a ride sharing vehicle, a one-time

fee rather than the actual congestion fee. But that was my first thought is like, this is going to make Uber's more expensive. But we talked about the opponents. Let's talk about why this is a good idea. And I have to say, I am a former urban planner. And the urban planning community is completely on board with this. They think congestion pricing has to happen to reduce pollution and sort of unclog the streets. Right now, cars travel at just seven miles per hour on average in the congestion pricing zone. And that's been on a downward trends. Public bus speeds have also fallen 28% since 2010. And New Yorkers lose 117 hours on average each year sitting in traffic, which sounds kind of

low, to be honest. I know. Yeah. So, yeah, they're like, this is a policy that needs to happen to sort of unclog our streets. Yeah. And just final point on this, if you look kind of around the world, like London has one of the longest standing congestion taxes.

And it did. The year after it was enacted, congestion fell 30% and pollution dropped as well. But then it's kind of reverted back to the mean a little bit over the line London's had it since 2004. So it has grown over time. But people said so has like the environment of cars. Right. Uber exists now.

And so they kind of attributed that plus it rise in delivery cars. Yeah. Delivery vehicles. So yes, we did see a we have an example of it working, reducing congestion. But then we also have an example of it returning to to the mean. I think LA specifically. is looking at this very close to LA Times, LA Times editorial board wrote, like, L.A. Mayor, you need to look at what's happening in New York because we need to do this next because we got a traffic problem.

Yep. All right, Neil, our next story, it's time to check in with an old friend, which is weight loss drugs. The big news is that the drug maker Novo Nordisk is seeking FDA approval for a pill version of its weight loss specific drug called Wagovi. Remember, there's been this ozempic craze this past year where people found out that even though OZempic is a diabetes drug, you can also lose a lot of weight while you're on it. That discovery has kind of kicked off what the weight loss, this weight loss drug race, where all the major drug makers are trying to snag a slice of what many expect to be a $100 billion industry.

But right now, the problem with drugs like OZMPIC is that they're injectables, which means they're pretty expensive. OZEPA currently costs between $750 to $1,000 a month, whereas an oral pill could be up to 70% cheaper. Plus, oral medications are a lot more approachable for people who get a little squeamish around needles. So combined a cheaper and more approachable pill with the fact that Novo Nortis found that patients lost up to 15% of their body weight in a clinical trial, and you could see how this pill could be a massive moneymaker. these oral pills, Neil, they're definitely a big development. Yeah, because apparently they'll reduce the cost by 70%,

but you can save, you can have the same margins as you would. For the drug maker, yeah. But the trials that have come out recently are kind of astounding. Health professionals are like, what is going on? We've never seen anything like this. I mean, the Eli Lilly pill led to a 24% weight loss in less than a year, and the average loss was 58 pounds. nothing like this has ever been seen before.

One endocrinologist at NYU wrote, it was the most effective anti-obesity med to date. And then you had a Novo Nordisk one that showed similar things. So the fact that they're being able to produce the similar results in pills that injections is kind of blowing everyone's mind. And it's sending these stocks to the moon. Right. Speaking of the stocks, Eli Lilly and Novo Nordisk are both up almost 100% this year.

And then also I was looking into Eli Lillian. Lilly, how much it's trading above its earnings. It's trading at 44 times forward earnings. If you look at the New York Stock Exchange's pharmaceutical index, which is kind of an index of all pharmaceutical companies, that's trading at 15 times forward earnings. So you can see how much people are betting on Eli Lilly, on these drug makers to create a pill that is just going to blow away profits, basically, because, yeah, the weight loss industry is massive. Monjaro, which is Eli Lilly's drug is expected to top 50 billion in annual sales.

These are going to be the best-selling drugs of all time. We just had the COVID drugs. This reminds me of the AI boom, but in pharma. And investors are just piling in. Eli Lilly is worth more than $400 billion right now. Crazy. It is a huge company. The timeline on this is that Novo expects to file for regulatory approval in the U.S. and Europe for its pill.

it could extend a few years before this pill reaches the market, so we will see. But doctors do think it's a game changer when you can have a pill instead of an injection. So we'll see what happens there. Moving on, while we wait for the Supreme Court to rule on major issues later this week, we'll definitely talk about that. The court made big news yesterday when it said it could take up a big case that could determine the future of taxes in the U.S., specifically whether the government is allowed to, tax your unrealized income, which Democrats have made plans to do. So the case that SCOTUS will hear in October concerns a couple that owns a stake of an Indian company. And under a new rule from 2017, they had to pay about $15,000 in taxes on it.

But the couple said, wait a second, none of that money is in our bank account. It's just an investment. So why are we paying taxes on it? They sued the government, arguing that this tax is unconstitutional because their stake in the Indian company doesn't count as income under the 16th amendment, which grants Congress the ability to collect income tax. What the judge's rule on this case could have major consequences for tax policy in the U.S. Because Democrats want to slap a wealth tax on the unrealized gains of the richest Americans. Here's a quick primer on the difference between unrealized and realized gains gains, since it's kind of the crux of this story.

A realized gain is when I sell an asset that I'm holding. holding. So say I bought a GameStop stock in January 2021 and sold it the next year for a nice little profit. I would pay capital gains tax on that since I can pocket the money now. But say I kept the stock and I haven't sold yet still sitting in my Robin Hood account, that is an unrealized gain. It's hypothetical. It's paper money. It could go down to zero at any moment. So to raise more money for the government, Biden and some other Democrats have proposed taxing the unrealized gains of people like Zuck, Elon, Bezos, who have all their wealth tied up in stocks. Yeah.

I mean, I guess from a very headline level, you're saying that this tax is something that targets would target the rich and that if this Supreme Court case goes in favor of the Moors, the family, then that tax- It would cut it at its knees. Yeah. And so Democrats are looking at this very closely because, yeah, they're eyeing that unrealized gains tax. And yeah, so if the Moors, the family wins.

it could actually end up that corporations could get reimbursed for some taxes that I've been limited against them. So yeah, just from it's kind of, you can see why this is making headlines of, oh, great, like another tax that could benefit the rich and benefit corporations. So that's why this is kind of one of those court cases that has a lot of people paying close attention. Yeah, because it's a very philosophical thing to think about is whether your paper money should be taxed, even if you haven't sold it.

So why do some people think this is a good? idea to tax unrealized gains? Well, how are we supposed to tax billionaires and make them pay income tax like the rest of Americans? They stash their money in stocks and real estate and other assets that the government can't tax until it's sold, until it's realized. Many CEOs take a salary of $1, as we know, and take the rest of their compensation in company stock and often hold their assets until they die when it's tax at a more favorable rate. So there's no way of bringing their income tax up to the rest of Americans without doing something maybe to their unrealized gains. That is the thinking. Yeah. I mean, they're playing a little bit of a different game

than you and I know for sure. But just to kind of put a bow tie on all this, the case that the Supreme Court is arguing is should you have to receive or realize your income for it to be taxed under the 16th Amendment? Those are the arguments that we're going to hear. And I'm sure we'll check in once those arguments come out. All right, Neil, before we jump into, to our 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. Or get $50 off a 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. See homedieboh.com slash price match for details. We're the Hartford, with decades of experience insuring millions of unique small businesses. When it comes to your small business insurance. Thank you. One size, absolutely does not fit all. Get a quote or find an agent today at thehart.com slash small business.

All right, Neil, we are back with another edition of Toby's Trends, where I, a young and lion-hearted, Gen Zier, teach you a wise and great. grizzled millennial what the youths are up to these days. And Neil, I am pleased to inform you that the youths actually have a new hyperfixation with cottage cheese. Yes, lumpy, bland and kind of off-putting cottage cheese. I don't know if you've seen these cottage cheese recipes on TikTok recently, but they are everywhere.

You have creators making ice cream with cottage cheese as the base. I've seen cookie dough recipes, pasta sauces, and even bread. In total, the hashtag cottage cheese has more than 323 million views on TikTok, which is also converting to a real-life boom in sales. Cottage cheese sales in the U.S. are up 16% to $1.2 billion over the last year that ended in May. And I want your take on this, Neil. What are your thoughts on cottage cheese? It makes sense that it's a trend, right? Like, it's healthy.

You can do, it's very versatile. It's very versatile. I think that's the thing. Right. The thing is that if you blend cottage cheese, it kind of takes away some of those lumpiness about it and turns it into a versatile ingredient that you can use as a base in a lot of different ingredients. I haven't had cottage cheese in maybe 30 years because it was forced down my throat. And a lot of people have been nasty. Yeah, a lot of people have bad memories associated with it because probably maybe their grandparents or parents used it. And so this is like a rebranding exercise for cottage cheese. where they're showing that it can be.

The thing I actually liken it to is that cottage cheese was once a bigger market than yogurt. And yogurt has undergone this huge transformation, especially like Greek yogurt. Yeah. In terms of it used to be kind of like this sour off-putting, maybe a little heavy ingredient. Now it's like one of the biggest selling ingredients out there. So I can see how cottage cheese might undergo. It's like yogurt arc.

It's in its yogurt. Right. Are there new companies, new brands that are putting like a hip spin on cottage cheese these cottage cheese startups absolutely there are yeah there's cottage cheese startups i actually don't have the name of the one written down but they're gonna do they've raised a hundred million dollars in funding and um yeah it's basically they said the same thing that the yogurt companies thought is this can be a ingredient that young people love and so they're putting a little more hip branding on it you're

seeing it in the grocery aisles different uh different level of curds and the textures what they're kind of like playing around with. So maybe you're just a big curd cottage cheese guys. You just don't know it yet. I will try it out. I think I will. I'm a person who tries everything at least one. I love that.

I love that about you, Neil. I will go back and maybe buy one small thing of cottage cheese. Give it a spin and check out some recipes on TikTok. All right. A healthcare mystery may have just been solved. And the suspect is Mr. Clyde in the kitchen with a pickleball racket. Our story starts a few weeks ago when the insurance company United Health Group warned that more people were using the health care system sending health insurance stocks plunging because they're very sensitive to higher costs. It was a total bloodbath for health insurers, but no one knew exactly why more people were getting surgeries right now.

Yesterday, the sleuth at UBS said they crack the mystery. It is pickleball injuries. UBS calculated that the game's surging popularity among seniors particularly, will contribute $377 million in medical costs this year for procedures like hip replacements and knee surgeries. This might be a big sci-out by big tennis, but it also might be true. This makes, again, it's one of those things that you see the headline stat, and it seems really big at first, but then you dig into it. It makes a lot of sense because, by the way, $22 million players of pickleball,

about a third are core players who play at least eight times a year. and those players tend to be older, and those older players tend to have incomes that are over $100,000 a year. So you have the biggest group of pickleball players having the most money who are also the most at risk for injuries. You can see how you get these massive headline stats.

UBS said that pickleball players go to emergency departments at a rate of about 0.27% with the majority of injuries occurring for people, 60 years are over. And I don't know whether 0.27 is a lot to be honest. Just to put a real number on that, they're expecting 60,000 ER visits in the next year. So that's like kind of the biggest total, 4.7,000 hospitalizations. So they kind of really broke down exactly where they're expecting these seniors to end up. But I wonder, it's also people who haven't exercised or played a sport in a while.

Right. Because pickleball is quite easy to play. There's a very low barrier to entry. I mean, at the amateur. level, so, you know, we're not all pros like you. But so it's people who've been not so active. And I think that is contributing to the injuries where they're like, okay, I can go play pickleball. It's, I haven't maybe played a sport in five years, but I can go play pickleball. And you maybe are a little more brittle, not having warmed up with someone else. I mean, just anecdotally speaking to my parents and hearing some of their friends,

I can name probably five people who have suffered some sort of big injury from playing pickleball, because you're right. They're like, oh, it's this nice exercise thing. It's actually the exact mentality that you're exhibiting saying like, oh, pickleball's very easy. But then you start playing and it's a quick movement here. It's a lunge there. And suddenly, like, the knee or hip is gone. So we'll keep an eye on this one for sure.

All right, Neil. Our final story of the day brings us to Omaha, Nebraska, where the men's college World Series National Championship just finished up between LSU and Florida. It's also where jello shots are flowing free, fast, and gelatinously. There is this awesome tradition that a bar called Rockos started where they host a competition every college world series to see which fan base can buy the most jello shots. They make custom colors for each team and update a whiteboard four times a day to show who's in the lead. And Neil, wait till you hear the numbers that one school is putting up.

As of yesterday, LSU had ordered 64,808 jello shots, which shattered Ole Miss's record of 18,000 shots last year and is also more than all seven other fan bases combined. But that isn't even the only record that was set this World Series. The founder of Raising Cains, which is this elite chicken fast food shot out of Baton Rouge. Out of Baton Rouge. Cain gang stand up. I love Raising Cains. He lives in Baton Rouge. So he ordered 6,000 jello shots for LSU, which comes out to $30,000. And this is a funny part too. He was initially only going to order 5,000. But then he caught word that the previous world record for the largest round of drinks ever ordered, belonged to a country singer.

Merle Haggard. Merle Haggard, who ordered 5,000 in 95, so he upped it to 6,000. Plus, he found out that $1 of each shot goes to charity. So he's like, this is for a good cause. But this is just an epic tradition that LSU took to a totally different level this year. Yeah, well, he didn't even, that wasn't even the total record. Later, I think two days ago, some attorney from Louisiana came along and ordered 8,880, shots to break the record that was set earlier.

So they are ordering a lot of jello shots. This company or this bar, which is this great family establishment. I mean, three generations of bar owners are making a lot of money and they're giving it to food banks from each of the schools. So this is just a really cool sports tradition. It's a field great. Internet story. And yeah, Rocko's the bar absolutely makes bank this weekend.

They say 42% of their yearly revenue comes from these two weeks each summer. So this is a big time, and I think they're going to exceed their figures this year. They made, we just calculated before the show, they made $275,000 in sales on jello shots alone. Crazy. Not a very high margin product for a bar, though, actually, they said. And we just have to call out the lamest schools. Virginia, not surprised, not surprised. They only ordered 86 jello shots.

Come on. And then Stanford was next with 918. Get your jell shot game. We also didn't mention that. LSU won. Yeah, congrats to LSU. It clobbered. So they won the Jellowshot contest, and less importantly, they won the actual baseball series. That is our show. Thanks for listening and watching. If you want to get in contact with us,

our email is Morning Brew Daily at Morningbrew.com. Huge shout out to our crew who put the show together. Emily Milliron is our editor and producer. Samantha Bellas and Raymond Lou are the associate producers. Euchenna Waogu is our technical director. Billy Minino is on audio. Hair and makeup quit after I failed to mention Toby's new haircut But on yesterday's show, Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow. All pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Buckslot Machine by Aristocrat Gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package.

The biggest prize in Yamava's history. Club Serrano members can earn daily instant prizes and secure a spot in the finale May 29th. Don't pass go and own it all. only at Yamava, celebrating its 40th anniversary. UN. Details at yamava.com must be 21-20. Please gamble responsibly. Monopoly is a trademark of Hasbro. Hasbro is not a sponsor of this promotion.