Morning Brew Daily - Debt Ceiling Deal, Losing $1B in Blackjack & The Biz of TSwift

Episode Date: May 30, 2023

Episode 70: Toby and Neal break down the Debt Ceiling Deal that came together over the weekend. They also take a look at a lawyer who had to apologize for using ChatGPT in a lawsuit and why State Farm won't insure homes in California anymore. Plus, how blackjack players lost $1 billion in Vegas last year. And Neal and Toby are Swifties? They give a full recap of their experience at The Eras Tour. Learn more about our sponsor, Brex: brex.com/brewdaily Listen Here: https://link.chtbl.com/MBD Watch Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash US slash brew AI. That's pwc.com slash us slash brew a i. Good morning brew daily show. I am Neil Fryman. And I'm Toby Howell. On today's podcast, lawyers do not have to worry about Chad GPT taking their jobs just yet. And wedding season is off and running. We're going to talk about what's trending up and what is trending down for weddings and bachelor parties this year.

Then the house is winning more than ever in Vegas. So we dug into some of the shady things casinos are doing at the blackjack table. Plus, we have a very special winners of the weekend segment where Neil and I talk about entering our Swifty era. It's Tuesday, May 30th. Let's ride. Neil, it's the last show before we switch to the early morning 7 a.m. schedule. How are we feeling? A little tired. I think my body is just tired in preparation for it, but I'm excited to get up early, like I said before, more life. I know. We love to have more life. I was just thinking that I grew up watching the today's show. and listening to the radio in the morning.

And I always thought to myself, man, these guys get up so early and then have to present and talk. And then now I'm living it. Yeah, we are those guys now. But yeah, just to reiterate, episodes will drop at 7 a.m. each day going forward, which means you can finally listen to Morning Brew Daily in the mornings. So tell a friend, tell your mom, tell anyone who listens. 7 a.m. episodes are here starting tomorrow.

On your commute, we will be there with you. And we're super excited. Let's get into the news. Big win for all of us this week because we may not have to hear the words debt ceiling for maybe another two years. Thank goodness. On Saturday night, President Biden and House Speaker Kevin McCarthy finally reached an agreement that would suspend the debt ceiling and allow the government to borrow money again.

Remember, if they didn't secure a deal, then the U.S. would default on its debts by June 5th, one week from today. and the economic fallout would be pretty calamitous, as we talked about on a previous podcast. So thanks to the deal, the worst case scenario looks like it has been avoided. What is in this agreement besides raising the debt ceiling for another two years? There is a cap on non-defense government spending next year and then a 1% increase in 2024. This is basically a budget cut because the last time I checked inflation was running at 5%. So if you increase something by 1%, you are... not raising it at all. And then it also adds work requirements for many people aged 50 to 54.

On food stamps, the cutoff was 49, age 49 currently. This bill claws back some of that $80 billion that was handed to the IRS to hire more people and beef up enforcement. And then finally, it aims to speed up some environmental reviews of energy projects so they're energy projects so they don't get tied up in red tape. This may be a hot take. Neil, but this is exactly why no one really cares about the debt ceiling. And when I say no one, I mostly mean the market because, like, despite all the doomsday scenarios that we've been talking about over the last month, stocks have just been slowly inching up.

They knew this was going to happen. Right, because you always know a deal is going to get done. And this was a pretty, like, unsexy version of a debt ceiling deal, in my opinion, because, yeah, we didn't get, like, these huge cuts that Republicans were asking for. There was just, like, small little tweaks here and there. clawed back some of that money. That was a big term we kept hearing is how much money were they going to claw back from the IRS from unspent COVID-COVID era spending. And like overall, the New York Times analysis suggests that over a decade, only $650 billion will be kind of saved. And that is just

not a lot in the grand scheme of things, even though $650 billion sounds like a lot. When we're talking about a $31 trillion debt, that's a drop in the bucket, basically. Yeah. The problem is, I hate to say this, but we're not across the finish line yet. Both Biden and McCarthy need to sell this deal to their respective parties. And there are some Republicans, especially on the right wing, who are like, we want more cuts and we are opposed to this deal because Congress needs to approve it. The House will vote on it tomorrow.

And then the Senate will vote on it a couple of days after that. And it's, it's, they think they have enough votes to get this done, but it's not a hundred percent a slam dunk. I still think you do not want to be, I mean, there are, these lawmakers exist. But I can't imagine you will be a lawmaker that blocks this deal from going through and we end up hitting June 5th. Right. I think that how they're going to sell it to their constituents is basically this is kicking the can down the road because it comes due in 2025, which is after the next presidential election. So I think both parties can both leaders can come to their parties and say, hey, we're probably going to win the White House next year. Then we can do what we want to do with this.

So I think that's how they'll sell it if I were in their shoes. Because, yeah, it is, no one wants to hold it up, but I can see how that can be kind of the selling point. We need to abolish the debt ceiling. That is my position. I don't take a lot of positions. That is one I have. Let's move on. So there's this lawyer named Stephen Schwartz.

He is facing possible sanctions after he used Chad GPT to write a brief for a lawsuit, and it did not go particularly well. For some background, this guy, Roberto Mata sued the airline Avianca over an injury he suffered when an employee with a serving cart knocked into him while he was traveling. Normal lawsuit stuff. So after Avianca tried to toss the suit, Mata's lawyers sent a 10-page brief to the judge that cited more than six court decisions to back up the claim. We all remember Martinez v. Delta Airlines, Zickerman v. Korean Airlines, several others. Those are very well-known cases. Or not. When Avianca's lawyers and the judge looked at this brief and researched those historic cases that I just mentioned, they realized that none of those happened. The cases were totally made up out of thin air. Even the quotes that cited were fake. Sure enough,

Schwartz admitted he used Chatcheebt to write the brief and as has been known to happen, AI chatbot did what's being called hallucinated and made everything up. My favorite part of this story is that he said that he asked ChatGBT GBT if they were real. So he asked them multiple times, like is Vargasie a real case? And ChatGBTGPT said yes, it is a real case. And then he says, what is your source? And it provided sources for it too.

And then he also finished up by saying, are the other cases you provided fake? And it responded, no. The other cases I provided are real and can be found in reputable legal databases. So I guess he did kind of try to check his work, but he checked it using the very thing that is unreliable in the first place. Right. Well, apparently he had never used chat GPT before or had never listened to this podcast because he would know that these things get facts wrong. Right. They don't know the difference between fact and fiction.

There's some really funny examples of like chatbots getting stuff wrong. If you ask Bard, how many E's E's is Google's chatbot. If you ask Bard, how many E's are in ketchup, it says zero. But there are, like, more nefarious things where a law professor discovered that ChatGPT had placed him on a list of legal scholars who had sexually harassed someone. Remember, there was that Australian mayor who ChatGPT said was convicted of bribery and sentenced to prison. So these things can range from, like, very amusing to actually very disastrous if you take

chatbots at their word. Yeah. So I guess that's a lesson. Honestly, though, I do think that there is a future for AI bots in kind of the legal space because that was one of the professions that people really thought that these chatbots would disrupt. Obviously, in this case, didn't go very well. But there's a company called Do Not Pay, which kind of builds itself as the world's first robot lawyer.

And that's handling much lower stakes things, like getting out of certain parking tickets and just these little annoying, like, bureaucratic things that you don't really want to do. You can have the AI chatbot do. So I've seen it perform very well, like negotiating an Xfinity Internet bill. The only problem it did have at one point was it wrote insert email here instead of actually inserting the customer's email. So obviously they still can't quite. I thought you were going to say the chatbot wasn't around or from like 3 to 5 p.m.

when the Comcast guy was going to come. I know. It was, it was on a, it was talking to a representative online, though. So it was kind of like bot versus bot almost. But yeah, so I do think that there's a future for these AI chat bots, but not in this Avianca. Good on the Avianca lawyers, by the way, for doing their due diligence. I think if you are any well versed in aviation law history and you see these, uh, things that were cited and you know immediately, they were like, something's up. And then their first thought, according to the article was that, But maybe this guy used to get UVT because I don't know where he got these things. Yeah, very funny. All right, Neil, let's move on. State Farm is pulling out of California. That's right. Like a bad neighbor, State Farm is not there anymore.

You can boo if you want. No, I'm listening to the story. The insurance giant is stopping new home insurance sales in California, citing wildfire risk and skyrocketing construction costs. When you see the data, you kind of. to see where they're coming from. So over the past five years, there have been more than 7,000 wildfires each year with an average of 2 million acres getting burned, and over 25,000 houses have been affected. So that just makes insuring these homes extremely expensive for these companies,

and also the people who are paying the insurance payments as well. Like, we're entering an era of like insurance meltdown, basically. Yeah, insurance in certain states, it just, the juice is not worth to squeeze AIG last year notified thousands of California homeowners that their policies would not be renewed. They redirected them to new policies under one of their affiliate programs that cost three to five times as much. So yeah, it's brutal. Don't move to a wildfire area. It's easy to say, but that's where a lot of the growth opportunities are, like east of the Bay Area, where land is, you know, cheaper and there's a huge affordability crisis. So you're like, where will where can I move, but to these places that are closer to wildfire risk.

And so you just have this, you know, huge double problem. Right. And it's not just California. Insurance are pulling out of Louisiana and Florida, especially after the last year's hurricane season. Hurricane Ian was the second costliest insured loss ever globally. And this is, it took a 17 years to really recover from Hurricane Katrina. And now, like, this, the storm season is heating back up. But yeah, you talked about kind of the gross cycle that people are going through.

Another thing that is looming is that there's ratings downgrades looming over these property insurers. So I didn't actually know this, but insurers have get graded on like how just similar to how their risk portfolio. Yeah, a risk portfolio. And a lot of them need to have an A grading because in order for someone to secure a mortgage, you usually have to have one of these A graded insurers insure the. property. But if these insurers

are getting downgraded, that means it's harder for people who are trying to get mortgages to find an A-rater, which makes policies more expensive, which makes owning a home even worse. So it's this vicious cycle where no one's really winning. And yeah, it makes you want to kind of move into the heartland.

The heartlands. But then you have tornadoes there. So like, where are you? They say that the most climate-proof the most climate-proof city in the United States is Duluth, Minnesota. All right. Let's pack our bag. there who's like, I can't buy a house in Florida. I can't buy a house in California. I don't, I'm going to be in tornado alley. I'm going to get an earthquake over in San Francisco.

Duluth is just on the shores of Lake Superior. It might be cold, but you're, you know, you're maybe somewhat insulated from all of these risks. Yeah. All right, before we jump into 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 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 to homedipo.com slash price match for details.

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I'm not a casino guy. Like, I don't seek it out. But if one is in the area, I will go for an hour and lose a lot of money. There we go. Well, I hope you don't go and play Blackjack because Blackjack players lost nearly one billion at casinos in Vegas last year. That's the second highest loss on record after 2007. So digging into why people were losing so much kind of made my blood boil, Neil.

Basically, casinos are changing the rules on players. So Blackjack has historically paid out a ratio of three to two when a player hits 21, aka Blackjack, on the first two cards. That means a gambler would win $15 for every $10 they bet. But now many Blackjack Chabels on the strip are paying out six to five, which means that the same $10 yields only $12. So you combine those lower payouts with the fact that casinos are raising the minimum bet amount at certain peak hours, and you have a recipe for these record losses.

It's kind of crazy that casinos are getting away with this. I did not know that one could just change the payouts for Blackjack. I thought it was like written in stone like Hamarabi's code. Like this is what you get for Blackjack. That is the game. You know, it's like changing, you know, first in 10 to first in 15 and in football forever. Yeah. I did not know that like casinos could unilaterally change the payouts, but it kind of makes

sense. And you're also seeing the minimum tables go up. I mean, I haven't been to Vegas in a while, but I think the whole point of this is that they are, want to appeal to a more luxury crowd. because there was a Caesar CEO. He had a crazy quote. Let me find it. He was just like, look, we are packed.

We're packed to the brim. So you're kicking out the lowest end. I see no reason that that needs to stop or would stop. They're just like, we don't need you riffraff. You're not paying as much as the high rollers. We're already packed to the brim. Right. So get out of here.

It was actually interesting because fewer people went to Vegas in 2022 than pre-pandemic in 2019. But casino's profit was eight. $8.3 billion, which was 25% more than pre-pandemic. So even though less people are going, they're squeezing out 25% more dollars out of those people. And it speaks that quote that they're basically just like, we want richer. Yeah, we want richer people to come in. We want them to gamble more and we'll make more money that way. So they're just kind of squeezing out these lower end. It's not just blackjack that they're changing the odds, though. And roulette tables, 78 of the

278 roulette tables now have triple zero. I don't know if anyone has seen a roulette table who's listening to this, or a roulette wheel. Usually there's red squares, black squares, and then two, there's a zero and then a double zero.

And that already reduces your odds below 50% if you put it on red or black. And to introduce a triple zero is tough. And these, and lowers your odds even more. And people just don't know, honestly, Because you go, you just assume a roulette table is a roulette table. You go and you play.

And then you also sit down on a blackjack table and you assume the payouts are what they've always been, but they're changing those as well. So it is a bit crazy that they can get away with this. But yeah, we're in the era of record revenue and record losses. So don't go play blackjack, I guess, is the lesson of this story. I was never a subscriber to the greedflation theory, but this is pretty straight up greedflation. Absolutely. All right, moving on. I've got a feeling that you're going to hear the song a lot this summer.

Now that we're on the other side of Memorial Day, wedding and bachelorette parties are in full swing. In fact, I just went to one this weekend of Morning Bruce co-founder Alex. Congrats Alex and Carly. Super fun. So the Bruce newsletter crew just wrote an entire edition about weddings. So I thought we could chat about the trends that you should expect and maybe not expect to see at all the weddings you're going to this year. just as a note, most of this information comes from the wedding website, the not, from a survey they did of a bunch of couples getting married. So, let's start with trending up. Lab-grown diamonds. 30 per six of center stones for wedding rings were grown in a lab, which is double the share in 2020.

These apparently are indistinguishable from mine diamonds. They come with none of the ethical baggage, and they're much cheaper. So a one-carat lab-grown diamond went for $1,130 earlier this year, while a similarly, similarly, least sized mine diamond went for five over five thousand dollars it's diamonds are the greatest marketing campaign of all time but i don't know sometimes this is a tough sale to the significant other saying like technically it's cheaper and it looks the same and it's it's better ethically but people still like the the classicness of a mine diamond so that's good to see that it's it's on the rise because i think that's overall a great thing maybe the type maybe the taboo is wearing off

All right, so we also trending up as signature cocktails. The share of weddings with signature cocktails has increased 17 percentage points over the last five years. Yeah. I love this. What do you think of that? Because, so obviously, I had to do some additional research here and figure out what they're naming these cocktails. And there's some funny ones. There's bloody marry me.

There's my tie the knot. There's also my guy or my gal. And then the final one, mint to be. So, I mean, they're all, they're pretty cheesy. but I like the idea of the signature cocktails because, yeah, it's replacing, I don't want to steal your thunder. No, it's fine. Let's just go straight into that. Trending down is hashtag. Hit me, yeah. So in 2010, like, in the early 2010s, you couldn't go anywhere without seeing, like, the cringiest wedding hashtag you've ever seen on Facebook and Instagram, and that was meant to organize pictures. We're sort of in a different era now, and only 32% of couples created a wedding hashtag last year, which is down from 55% in 2017.

This is a great trend. I mean, hashtags, as someone who works in the social media space, too, like hashtags have definitely lost or luster, and no one wants to be caught dead posting, like, a 10-character hashtag about, like, someone's last name disappearing. So, yeah, that, I'm bullish on the hashtags going away. All right, let's, the final thing I want to talk about Bachelor and Bachelor at parties because I know we both got a couple this weekend, or not this summer,

and they are so pricey. Everyone's bawling out right now post-pandemic. In 2023, the average cost of a party is going to be $10,000, $10,800, according to the party planning app batch, up from $7,700 in 2021. So that's inflation and a lot of things going into that. So that means the cost per person for a typical nine-person party is $1,200. This surprised me. Bachelor parties are more expensive than bachelorette parties. Yeah, I can kind of see it because the thing that comes to mind, obviously, is golf.

I knew you're going to say. Golf is just such a staple of the bachelor party, and golf is just pricey as heck. So that's, I mean, good for the gals for slipping in or just having less expensive activities to do in general. I didn't think that was going to be the case. But people are really just like spending so much that they need to take out credit card debt in a survey, 52% of people who went to a bachelor or a bachelor at party. said they took on credit card debt. Oh, man. That means for my bachelor probably,

we're just going, we're going to Duluth, Minnesota, and we're going to Dave and Busters. Actually, I might rack up some credit card debt there. That's a good place. All right, Neil, thanks for the wedding facts. We're definitely going to a lot this summer, so I'll drop them there.

But let's get into our winners of the weekend. So usually this is our Monday segment, but it's Tuesday after a long weekend. So we had plenty of time to think about our winners. luckily, it was very easy to pick them this weekend. I speak for both Neil and I when I say our winners of the weekend were us. That's because you and I went to the Taylor Swift concert at MetLife Stadium on Sunday. Neil, give me some of your takeaways from that crazy experience.

I'm still grinning. Like, whenever you say it, it was a very, very amazing experience. Some of my takeaways were the production. because you're entertaining a football stadium of people for three and a half hours. More. I think it was four. I don't even know. For a long time.

You need to have like constant motion, constant stimulation. And then the choreography there, the storytelling, the costume changes, the highs and the lows of the music, were all so perfectly thought out and well executed, taking you from one music era to the next of Taylor Swift. And I think like the golden example of that was. I had no idea how long it was. I was like, that could have gone on for another three hours. So I thought from a production standpoint, obviously she has the world's best music producers, live event producers there, and it really showed.

Another one was the merch. So I've been at Newark Airport at 5.30 a.m. on a weekday, and I've never seen as long as the line of a line as the merch tents at Taylor Swift. I mean, it was honestly mind-blowing. We were just commenting it on the whole time. We initially talked about Taylor Swift's tour. earlier on this pod, we estimated that she brings in $2.4 million in merch sales each night. Honestly, that seemed low.

Seems so low, yeah. But the fact is that once we got in the stadium at like 4 p.m., there were no, like, smaller mediums left. And so everyone was just getting these excels. Yeah. And they were just buying them anyway. Luckily, it's kind of the style, like the oversized look right now. But yeah, I saw like 13-year-old girls holding like piles of clothes that stretched five feet

high. They were. $500 bill. Yeah. Once you got to the front of that line, you wanted to make the most of it. And people were just buying whatever they could get their hands on. But yeah, that was a sight to behold for sure. Yeah, I guess I don't really have that much other takeaway to say that she is a world-class performer, just like at her peak right now.

The economic activity, I was just thinking about the economic activity that she's generating from one of these shows, from the merch sales that we talked about, to the food vendors, to the people coming in to stay at the hotels, to going to the restaurants. there has to be a good chance that she adds 0.5% to second quarter GDP. She's powering the entire, yeah, the GDP of America right now, as she should. She's incredible. All right. What are your takeaways? All right. One of my takeaways is I've been to NFL games. I've been to Premier League soccer games, but I have never been to a stadium as loud as the Taylor Swift concert.

It's because there's 80,000 plus people screaming all at the same time. And everyone knows every single word to every song. So it was truly one of those things where you felt it in your chest. And obviously, like, the stadium is shaking. You just feel the entire environment. So I've just never been in a scenario as loud as that one in my entire life. They were shrieking hard. Yeah.

And then my- We were too. I know. We were part of the 80,000 strong. And then my final takeaway was they give you these wristbands when you walk in. So as soon as you walk in the gates, you scan your ticket, they put this wristband on your wrist. You don't put in any information. You don't click the on button.

but at some point in the show, they all start lighting up into the synchronized light show. And that was a big highlight for a lot of the people I talked to because it feels like magic. How are these things knowing where you sit? And it turns out it's not magic. It's actually just an RFID chip, which stands for radio frequency ID. And then they also use these infrared sensors to kind of locate where you are. And I read an article from Slate, actually from their 1989 tour because they used, she used the same technology. and they were basically saying it's like your television remote, that's RFID and infrared technology working together.

So it felt like magic and it did look magical, like seeing the stadium light up, but the wristbands were a big highlight for me. What a week. What a weekend. I would go to another show. I'm going to look. She's doing the Rust Belt next. I'll go to Pittsburgh or Kansas City. Yeah.

Let's do it. It's right. All right. Let's run through the week ahead quickly. Elizabeth Holmes is reporting to prison this morning to serve her 11th to begin. serving her 11-year sentence for defrauding investors through her startup Theranos to minimum security prison camp in Bryan, Texas. Apparently the first thing you do as an inmate there is work in the kitchen.

Oh, what's she she chefing up? Little blood sausage. Probably blood sausages. We also have Pride Month starting on Thursday with June 1st is also coming at a time when a bunch of brands like Target and Bud Light are catching heat from the right wing for aligning themselves with the LGBTQ community, as many corporations do this time year. We have the May jobs report on Friday. The economy is expected to continue adding jobs, though the

employment rate, unemployment rate is projected to tick up. The most wholesome thing ever is on Thursday, which is the scripts, National Spelling, B-finals. I love it. They're getting so good. I wonder if we're going to get a cheating scandal, though. Someone has chaty-T in the ear, feeding them the answers, but yeah, you're right. These little eighth graders are just so so smart, yeah. And then finally we got sports, NBA finals, between the heat and the jazz kicks off on Thursday, and then the Stanley Cup finals between the Florida Panthers, the Vegas Golden Knights right now.

Florida, so hot right now. South Florida is killing it in the sports realm. That is our show. Wish it was all, Taylor Swift. So we'll see you tomorrow at 7 a.m. Set your alarms. Wake up with us. It just hit me.

You can email us with whatever you thought about the show at Morningbrewdaily at MorningBrew.com. Major shout out to our entire. crew who puts the show together. Emily Milliron is back and she is our editor and producer. Samantha Vela's and Raymond Lou are the associate producers. Uchena Wa Ogu is our technical director. Billy Minino is on audio. Hair and makeup, quit after she learned, oh, I revealed the gender. After they learned that we were waking up at 5 a.m. Kevin Emery is our chief content officer and our show is a production of Morning Brew. Great, Saturday, Neil. Let's run it back at 7 a.m. tomorrow.

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