Morning Brew Daily - Covid Lab Leak?, Buffett Defends Buybacks, More Twitter Layoffs

Episode Date: February 27, 2023

Episode 5: Neal and Toby explain the report that the Covid-19 outbreak may have been caused by lab leak in China. Warren Buffett released his annual shareholder letter over the weekend and defended stock buybacks. While over in the tech world Elon Musk lays off at least 200 Twitter employees and Nokia announces a logo redesign. And it's Monday! We take look ahead as to what's on the docket for this week as we turn the calendar to March. Listen Here: https://www.mbdailyshow.com/ Watch Here: https://www.youtube.com/@MorningBrewDailyShow Sources: US Department of Energy believes lab leak is most likely theory for Covid’s origin: https://www.morningbrew.com/daily/stories/2023/02/26/undefined Warren Buffett Calls out Stock Buybacks: https://www.cnbc.com/2023/02/25/warren-buffett-annual-letter-berkshire-hathaway-stock-buybacks.html Warner Bros. Discovery continues to lose money: https://techcrunch.com/2023/02/24/warner-bros-discovery-q4-2022-earnings/ Twitter Lays Off at Least 200: https://www.nytimes.com/2023/02/26/technology/twitter-layoffs.html   Nokia Logo Rebrand: https://www.reuters.com/technology/nokia-changes-iconic-logo-signal-strategy-shift-2023-02-26/   Learn more about your ad choices. Visit megaphone.fm/adchoices

Marketers, tell us if this sounds familiar. You invest in something that seems incredible like millions of views, but then don't see any revenue. Instead, invest in what looks good to your CFO. LinkedIn Ads generates the highest row ads of all major ad networks. Spend $250 on your first campaign on LinkedIn ads and get a $250 credit. Just go to LinkedIn.com slash MBD. That's LinkedIn.com slash MBD.

Terms and conditions apply. Good morning, Brude Daily show. I am Neil Fryman. And I'm Toby Howell? It's Monday. Just had a weekend. How was yours? I had a crazy weekend.

So as many of our listeners know, it was my birthday on Friday. I thought I was just going out to a low-key dinner with my girlfriend. Turns out she had flown in my brother, one of my best friends from growing up, and through this huge, huge surprise birthday party for me. So I went from zero to 100 really, really quick. So I had a really fun weekend. But yeah. Nice. Well, I celebrated your birthday, too, but away.

And with your dad, we played golf together. He treated me to an amazing day. He is the best trash talker. I know. I've ever heard. Now imagine what he's saying about all of our episodes, though, after he listens to him. He was telling everyone to sign up for our podcast. He was an amazing promoter.

He deserves everything. Yeah. He's a great guy, and I'm excited. Are you going to be just like him? Honestly, he rubs off of me, but I hope I'm not just just like him. I don't think he'll be just like him. But yeah. It was interesting.

to see the similarities. Yeah, and how, where Toby came from. Yeah. Meanwhile, Tampa, I was down in Tampa, that place is blowing up. Yeah. I don't know why you're up here. It's, the lifestyle is incredible, and there's construction everywhere. Well, I like doing this show with you, Neil. There you go. Speaking of, we got a great show ahead of us today. We're talking a little bit about Warren Buffett's shareholder letter, a little bit about HBO Max and how they're still not really doing that well, despite their great shows. And then, yeah, we'll finish off the little week ahead action as well. Yeah, it should be a good week. Okay. So to start it off, there is more investigations into where COVID came from. And it's just, first of all, really crazy

that we're almost three years into this global pandemic. And we still don't know where COVID came from. I know. It is crazy. But so what was the news? Yeah, so there's news. The Wall Street Journal reported that the Department of Energy reached a conclusion that COVID emerged from a mistake in a Chinese lab in that escape to the human population. And this is known as the lab leak theory. And it's really important to note that this was established with low confidence. So basically, they don't know. They previously didn't have any idea.

The Department of Energy didn't reach a conclusion. But in an updated report, they said that they had reached with some level of low confidence that it emerged from COVID lab in Wuhan, China. No, the two things that stood out to me from this story is, one, I can't believe that the energy department is making a conclusion on the origin of COVID-19, and we'll get into exactly why they are doing that. But that was, like, number one thing, super surprising. And number two, I didn't realize that the intelligence community was so split still.

Yeah. Yeah, so actually the lab leak theory is in the minority of all U.S. agencies. What's really been interesting is that the U.S. agencies, they're not really seem to be working together on this issue. They're sort of pursuing their own lines of investigation, which I think is great, honestly. Right. They're all pursuing their different methods, and they're reaching their own conclusions. Four U.S. agencies think it was natural transmission, which means an animal gave it to humans, probably at that wet market in Wuhan. Two are still undecided.

And then now two think it was the lab leak, the Department of Energy, and the FBI. which has moderate confidence that it came from a lab in China. Right. And why is the energy department actually telling people where COVID came from? In the newsletter this morning, I actually wrote the sentence because I knew people would have questions. Why is the energy department making a determination in this case? They apparently oversee 17 labs in the United States doing really advanced research, and a lot of

them are working on bio stuff. So they gleaned this information not from sending a spy balloon to try or anything, but from their labs in the U.S. Yeah. Now, that was definitely the number one takeaway. I was like, wow, good for the energy department. But also that this lab leak theory is not that China purposely released a bio agent into the world. The U.S. has determined that it was not, you know, it was purely accidental that this happened.

That's the one thing that every investigation has agreed upon, that it wasn't, yeah, it wasn't like intentional. Intentional. But, yeah, it is interesting, too, that the lab leak theory, used to be a little bit of a pariah. Like, you weren't supposed to say that it came from a lab. And now we have two more agencies kind of saying, again, with low confidence. But it is interesting to see once more facts and research has been done, what has come out. This whole thing has been politicized from the very beginning.

For sure. Because Trump said it was the China virus. And then that led to a lot surge in hate crimes against Asian Americans that is still happening. And progressives pushed back, and they were like, we shouldn't really talk about blame China for this because we're looking at what's going on to Asian Americans. This is terrible. We shouldn't associate China with the emergence of COVID. And then there were critics of that approach saying, like, well, you're suppressing the examination of truth. And it could be a lab leak.

So this whole thing, there's a lot of I told you so now from the Nate Silvers of the world who are sort of chiding progressives for being a little too sensitive around the issue. and that we, like, the most important thing here is to get to the bottom of how this thing started so we can prevent future pandemics. Yeah. No, absolutely that is the most important thing. But, yeah, it was a pretty crazy news headline to read over the weekend. Something else that happened over the weekend was Warren Buffett published his annual shareholder letter, which is kind of like, I don't know, Christmas or a holiday for business news professionals. because he writes bangers, honestly.

Warren writes bangers of shareholders. For more than 60 years. I know. He's so consistent, yeah. But so we're going to get into a little bit of what he wrote about. The headline issue that he kind of touched on was stock buybacks. That was like the main theme of it. And saying that Buffett believes that buybacks are super beneficial to shareholders

and that critics who say they're bad are either economic, economic illiterates or silver-tongued demagogues. So he's basically like really, really laying into people who say, because it's been very popular from politicians especially to say like stock buybacks are bad. This is an example of corporate greed. But Warren's like, nah, they're really good. And I'll get into a little bit of why. Yeah, maybe we should talk about stock buybacks a little background.

It's basically when a company repurchases, it shares from the open market or existing investors. And it's sort of a fancy difference. evident in a way. But the critics say that share repurchases, stock buybacks, are sort of like a bad use of capital and that these companies, if they have extra money left over to buy their shares, should be investing in jobs in United States and pursuing like capital expenditures and building factories and paying their workers more. And they accuse these companies that are doing share repurchases or stock buybacks as just like enriching themselves. Right. But Buffett is saying that by reducing the number of shares outstanding, you're actually increasing the intrinsic value of

every single share that a shareholder owns. And so he's, and he's also saying, because a lot of people say you should take your cash and return it to shareholders through dividends. But he's saying, this is similar to doing that. But because a lot of people actually reinvest their dividends just right back into the company. So technically he's doing the same thing, just skipping that extra like dividend step. So yeah, Buffett, big fan of stock buybacks. Sorry, I just want to interrupt you and say that there's actually movement on the like anti-stock buyback front because Biden, through the Inflation Reduction Act, there's now a tax on stock buybacks. That's 1%. And it's intended to raise $74 billion for the U.S.

government. And in the state of the union, he pushed Congress to push that to 4% on stock buybacks. Right. So, again, it is a heavily politicized issue at this point. I just want to take you through a couple of other nuggets from some Buffett's shareholder letter. My favorite one was that Buffett attributes most of the success over his last 60 years to a dozen or so good decisions. So he said, in 58 years of Berkshire management, most of my capital allocation decisions have been no better than so-so. Our results have been the product of about a dozen truly good decisions. Okay, one of those, two of those good decisions was investing in Coca-Cola and American Express. Yes.

Because here's some crazy stats that he invested in the 90s, he invested $1.3 billion in Coke, and now that stake is worth $25 billion. And then he invested $1.3 billion into American Express back in the 90s, and that is now worth $22 billion. So I think that's exactly what he was talking about. Outside. Just run up. Right, from a very few good decisions.

And we should know that Buffett is 92 years old, so we'll see how many more of these shareholder letters. Also, he could be a writer for Morning Brew, by the way. He's good. I love the way he writes. Very plain, very informative, so yeah. Warren, if you're listening to this, we'd happily have you on as a writer. Moving on to the media world, the entertainment world, we're talking Warner Brothers Discovery, which is a company that many people probably didn't know exist because it was the result of, like, a million different mergers and acquisitions.

Yeah. The big news is that it is still losing money. It lost $2.1 billion in Q4, and that's despite some really big releases like the White Lotus Season 2 on HBO Max and The Last of Us, which is that video game adaptation, it still lost $217 million from its streaming division. So this is taking a lot of time to make money. We're not surprised at this point that streaming is hard business. Right.

I think why this is noteworthy to a lot of people is that in their minds, streaming is like a very big part of culture. Right. Right. Like Last of Us dominates culture. White Lotus dominates discussion on the internet. The Hogwarts game has been dominating news recently. So you're hearing about these things constantly, and yet you see their earnings come out, and

this company is still losing money. It goes to show that maybe cultural buzz doesn't always translate to good earnings. No. But there are a few interesting releases coming up for Warner Bros. Discovery. They also own insane amount of IP. Right. Like DC Studios, they own, Discovery owns all those channels, like Animal Planet and HGTV, which is honestly what people are watching these days on TV.

But there are a few interesting releases coming out. DC Studios is going to come out with 10 movie and TV projects to finally take on Marvel. We've heard this for so long. There's the Barbie movie coming out. Let's go. With what's his name? Oh, Margo Robbie and Ryan Gosling. We got Dune Part 2.

I never saw Dune Part 1. And then I'm excited for Timothy Shalameh and Wanka. Okay. Timothy C. Shalameh, because he's Dune Part 2 as well. You have to, they have such good IP. They have to figure something out here. They'll get there eventually.

And yeah, the one other thing that I thought was interesting, this doesn't contribute to the earnings that we just mentioned. But Harry Potter Legacy made $850 million in retail sales in the first two weeks. video games are so much bigger than movies, it's crazy. Like, the best performing Harry Potter movies only do around $217 million over that same period. So even though you just don't understand how big video games are. Are you a gamer? I'm not.

I'm not, yeah. That's why it shocks me to see how well it's done. If we were, we would have started off, like, every, all the shows with gaming. Right, absolutely. Okay, let's shift now to the world of Twitter. more layoffs happened over the weekend. Now, at least 200 of its employees were laid off on Saturday night of 2000. So it's 10% in the company. Musk is at it again. I think the headline news will get into Hugh who he actually laid off, but he is so bad at layoffs. It's crazy.

What happened this time? He locked the company Slack channel before the layoffs happened so people couldn't like gossip about it. So now not only can you not communicate with anyone, you don't know who got laid off. So people are like frantically telegramming each other and saying like, hey, are you locked out of your email? And it was the classic thing where you just try to log into your work computer, no more access anymore. I'm just shocked that it's still happening where just so callous. He doesn't care about people or his perception in the media. Yeah. He is full media as the enemy at this point. For sure. And so some of the cuts kind of targeted, honestly, some Elon Musk supporters, like really, really, from the beginning had supported him.

The big one is Esther Crawford, who she led Twitter's product org, was kind of headlining the Twitter blue push, which is Elon's, like, baby. He wants to monetize that way. And she also tweeted out a picture of her sleeping on the floor in the early days of the must takeover. We just tossed it on the monitor for people watching on YouTube. She literally slept on the floor during the early days of must tenure. Now she's out the door.

Right. She also had a pretty fiery tweet, if we can go back to that in our YouTube channel. But, yeah, after she was laid off, she kind of took, you know, she went after her haters for supporting Elon Musk. And she wrote, or for her support of Elon Musk, she wrote, the worst take you can have from watching me go all in on Twitter 2.0 is that my optimism or hard work was a mistake. Those who jeer and mock are necessarily on the sidelines and not in the arena. I'm deeply proud of the team for building through so much noise and chaos. heart emoji. I know. Honestly, I like that attitude.

It's a good attitude, but then people clap back at her on their replies and are like, okay, but you didn't actually build anything good because Twitter Blue, which is a subscription service that now kind of all social media companies are pursuing, had just 180,000 subscribers two months into the launch as of mid-January, and that was less than 0.2% of all of its monthly active users. So this is not a big revenue driver. This is not saving the company. And Musk is now, he's not paying his bills.

Yeah. Oh, yeah. He's on the hook for more than $14 million worth of bills to vendors to real estate companies. They didn't pay their slack bill. Oh, my gosh. That's why I shut it off. There was a $7,000 swag givepox for Elon that a vendor sued Musk over. Oh, my gosh.

We've said this for so long, but it truly, truly feels like Twitter's cheating on the edge. Even this morning, I was trying to refresh the web version of Twitter. Very, very slow. What is the end game here, just selling it for pennies on the dollar? I don't know. In my heart of hearts, I hope he figures it out, but we'll see going forward. This gets worse every day. I know. Okay, this is news that I'm actually really excited to talk about with you, Neil. Nokia, which is the iconic phone company that we all kind of know and love from our childhood days, they just redid their logo, and logo redesigns are always fun. Nokia is saying that their logo redesign is

representing a strategy shift in their business. They no longer make phones. They actually haven't really made phones for the last 10 years. They are a big 5G equipment provider, telecom equipment provider. Nokia is a huge, huge company still. 26 billion in sales, none of which are their smartphone division. There's a lot to talk about here. I know we have a ton of Nokia facts. First of all, what do you think of the logo? Yeah. Okay. So the logo, to me is not good in the sense that the same exact thing happened with Kia back in the day, but it is an N and the C don't really look like ends or C's. They could be A's.

And so people are commenting on Twitter, is that no Sia or is it? There's no C. AOSIA? I know, exactly. Right, yeah. The problem, I don't know why brands can't just write it out legibly. That should be number one. Yeah, that's the problem with it.

And the logo redesign thing. Right. We're looking at it, and I literally just mistaken the K for a C, even though it is a K. But you were mentioning that another recent brand redesign had a similar problem, which was Kia, which they didn't show people what they're actually the letters are. Right. Kia didn't put the bar across the A, and so it kind of looks like KN. And close to, after they did the redesign, close to 30,000 people were Googling KN cars each month last year.

That is not a good logo redesign. No, I think brands should update their logo every few years because regardless of how it looks like, I don't think a brand's logo actually matters to sales or anything. But it gets people talking about your brand. When was the last time we talked about Nokia? Right. 2007. Well, it did go a little crazy during the mean stock boomed.

Did it? No. Yeah. It was nostalgic. But it is important to do it when you, to signal a strategy shift. I mean, the biggest thing I can think of recently is Facebook switching to meta. Right. And that wasn't just a rebrand for the sake of rebrand.

I mean, they had, like, they had tinkered with that F in Facebook for years. Right. But this was a huge rebrand because it signaled a strategy shift from away from social media and towards the metaverse. Yeah. I actually, I am now back on the side of this was a good move from Nokia because you're totally right. If there is a meaningful shift and you want to make that shift known in the, mind of a consumer, it does make a lot of sense to rebrand and launch a new logo, because it gives you an excuse to explain your new strategy to everyone.

And before we came on air, we were taught, we were just kind of reading Nokia's Wikipedia, and we were like, this is insane. In 2000, it accounted for, it's a Finnish company, which is pretty interesting. It accounted for 4% of Finland's entire GDP and 70% of Helsinki's market cap. And then in 2007, when it was peak smartphone, it held 51% of global market share in smartphones. To put that in perspective, Apple is the leader right now, and it owns 25% market share. So this was a giant. Yeah, there was a world in which we all have Nokia phones instead of iPhones. Because Nokia did know that smartphone boom was coming.

It just didn't quite nail the product design. But they knew it was coming. It didn't do the smartphone. I guess they didn't, because it wasn't 2007. the first iPhone. So as soon as Apple did the iPhone, it was sort of game over. Right. But it seems like they're doing a pretty good business in telecom equipment manufacturing. You know, maybe we don't have all Nokia's in our pockets. But who's to say, you know, you make, just like we talked about with Warren Buffett, you know, the boring stuff. The boring

stuff is what makes money. Gets it done, yeah. All right. Our final segment for today, as we do every Monday is looking at the week ahead, sort of giving you guys a preview of what to expect this week. The big, I would say the biggest news that I'm looking for and probably the biggest news in the country is that the Supreme Court is hearing oral arguments over President Biden's student loan forgiveness program that starts tomorrow. And if you don't remember that program, Biden wants to wipe away $10,000 for most borrowers from their balances. That's been challenged by this particular challenge is six Republican-led states are trying to get Supreme Court to throw it out. So that'll be a huge thing that I'm sure. I mean, I think there are 40 million federal borrowers.

So I'm sure, you know, a decent amount of the country will be looking into that. For sure. No, excited to talk about that. We have some earnings coming up as well. Target, dollar tree, Macy's Kroger, kind of, I don't know, the pulse of the consumer health of America. so not exactly the sexiest tech businesses, but I'm excited to check those out. My fun fact about that is with Dollar Tree reporting, this is actually a Dollar General fact that I came across on Twitter, but Dollar General has 18,000 stores in the U.S. that have generated $34 billion in revenue last year. Starbucks has 17,000 stores that generated $23 billion in revenue last year.

So it kind of seems like on a per-store basis, Dollar General generates more revenue? Yeah. And also the fact that. that Dollar General has more locations than Starves. It's so many. Right. Those were very surprising to me, both of those. As I drive, I've done a lot of cross-country road trips recently, and you see them all over. Often it's the only, you know, store in town in many rural places. It's just the Dollar General is where you get everything. Yeah. No, Dollar General, it rips, actually. So excited to see. Toby, Dollar General, Toby, it says it rips. Yeah. We probably are not done talking about Elon Musk for the week because there's this big,

Tesla Investor Day on Wednesday, and there's going to be another SpaceX rocket launch to the ISS with astronauts. That was supposed to happen this morning at 1.45, and I got up at 4.30 to see if it happened or not. I wrote this whole blurb about it for the newsletter, and it got called up with two minutes left. So, I mean, the life of a newsletter. The life of a newsletter writer. And then I didn't mention this in the newsletter, which I feel bad about, but there's a jobs report on Friday. We'll see if the labor market continues ripping like it has been, which, which is great for American workers. It's less great for the Fed, which is trying to tamp down inflation.

And the final thing I want to talk about is that March is here. Yeah. I love new months, new beginnings. I think it's coming Wednesday because February is super short and it's not a leap year. So what is your favorite thing about March? What are you looking forward to? The easy thing to say is March Madness. I mean, that's what I was going to say so you can't say it.

I know. So I'm just excited for the Iides, you know. I'm a big I'd March guy. Okay, that's when Julius Caesar was killed. Oh, yeah. At two Brutei. Yeah. Yeah, I mean, Ted Lassos coming back this year.

I actually stopped watching after season two because I watched that Christmas episode and I was like, this is so cringy. There's no consequences to anything happening. So I'm sort of out on Ted Lesso, but I might come back. I'll still watch. And, yeah, I'm super hype for March Madness. I'm sure we'll figure out something fun to do on this show. But the Terps are projected to be a seven seed, so it's always fun when your team is in. That is exciting.

Well, March is going to be a heck of a month. This was a heck of a show, Neil. This was a heck of a show. Man, it went by so fast. Thanks for listening. We're on our full second week. Feel free to tell your friends all about this. We're going to do this every day for as long as people listen.

Eternity. Eternity. Yeah. I want to get into who is helping out with our show because it's a lot more than just me and Toby. Our show's producer and editor is the big process truster, Emily Milliron. and show's technical director is Elias Alba. Supervising producer is Bryce Spelloff. VP of technical and production operations is Dan Bousa.

Thanks for the new mics. Our wardrobe and hair is no one, clearly. And Devin Emery is our chief content officer. Our show is a production of Morning Brew. We'll 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 Bucks slot 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 29.

Don't pass go and own it all. Only at Yamava, celebrating its 40th anniversary. You win? 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.