Morning Brew Daily - Elon Musk is Worth $400B & Saudi Arabia Set to Host 2034 World Cup

Episode Date: December 12, 2024

Episode 473: Neal recaps the latest inflation report, which ticked up just so slightly – but didn’t cause any panic. Then, FIFA announced the next countries to host the World Cup and in 2034, the choice of Saudi Arabia has raised a lot of eyebrows. Plus, Elon Musk becomes the first person to reach $400B net worth. Also, Neal shares his favorite numbers on Americans moving, Juan Soto’s contract, and a traveling humpback whale. Lastly, headline news you can use to end your day.  Visit https://www.sage.com for more! Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow 00:00 - Intro  03:25 - Inflation Ticks Up Slightly  08:50 - Saudi Arabia to Host the World Cup  13:30 - Elon Musk is Worth $400B 19:10 - Neal’s Numbers  Learn more about your ad choices. Visit megaphone.fm/adchoices

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Today, Saudi Arabia was awarded the 2034 World Cup, a controversial move that cements the kingdom as a sports juggernaut. And Elon Musk's net worth has exploded. The world's richest man is now worth nearly $450 billion. It's Thursday, December 12th. Let's ride. As you may have noticed, Toby is not here. He got a last-minute bug.

So I am going to go full Alex Honnold and free solo this podcast today. I promise to do my best to bring you all the most important business news of the day, as well as a few fun tidbits as well. Speaking of fun tidbits, if you're running for statewide office, don't manipulate your Spotify rap folks. New Jersey representative Josh Godheimer, who is running for governor of the state, is in some hot water after he was found photoshopping his Spotify rap

to give off the impression that all he listened to, was Bruce Springsteen, who is a god in New Jersey. Like everyone else, you know, Godheimer posted his Spotify wrapped on social media and his top songs were all the boss. Thunder Road was number one, and Badlands and The Rising rounded out his top five. The one problem, it wasn't real. Internet sleuths found that the font, numerals, and spacing were off, and when Godheimer was approached about it, he acknowledged that he fudged it, perhaps to impress voters with his Springsteen bonafides. He still said he was a huge springsteen. Springsteen fan, but shares a Spotify account with his two kids, so his rap data wouldn't necessarily

reveal that. Look, if you're going to run for the state of New Jersey, it's true. You have to be a Springsteen fan. That's just a baseline qualification, but this wasn't one of Godheimer's glory days. Now a word from our sponsor, Sage. Let me start off your day with some Neal's numbers, Sage edition. According to Sage, 88% of finance leaders have adopted cloud technologies, 86% are using automation, and 77% have implemented machine learning.

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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. That's sage.com. So the consumer price index report came in yesterday, which is this big monthly inflation report. And it came in matching expectations. It was pretty solid. The CPI index rose 0.3% from the prior month for the year. It rose 2.7%. So this was a bigger increase than in previous months. This was the strongest month-over-month increase in prices since April. The thing was, people, economists were expecting it, and so didn't ruffle any feathers in the market. And if you just look to the stock market as a response to the CPI index, the market did well.

After a few days of declines, the NASDAQ popped. Nearly 2%. It reached over 2,000 for the first time. S&P also added. So the market reaction to this was pretty strong, even though there does seem to be some underlying inflation pressures. I guess the bottom line is that inflation is a bumpy road to come down to 2%. Remember, two years ago, it was at 9.1%. Now it's down to 2.7 annual growth.

When you strip away those very volatile things like food and energy prices, which economists call core CPI, it also came in at 0.3%. That is what analysts and economists really look at, not that headline number, but the core number, which is 0.3%. One thing that was very heartening about this particular inflation report was shelter costs. So housing costs have brought, have been the main contributor to inflation over the past year. And private data have shown rents and housing prices are coming down. But in this government data, in this CPI, shelter costs have remained high. And that's been keeping up overall inflation.

It accounts for 40% of the entire CPI index. So one of the most heartening things of this report was that shelter costs were slowing. They advanced 0.3% in November after a 0.4% gain in the prior month. That was huge, and I think that's why you saw that really strong market reaction, because finally it seems that those housing and rent costs that have been showing, that have been declining in the private data are finally showing up in the government report. Let's dive into some of the more specific items in the inflation report. What's going up? What's going down? Well, a couple of things that were going up. Furnishings and apparel. So if you're buying clothes, if you're buying that new sofa, you probably saw a bigger price hike this month than last. That was one of the main drivers of inflation. Grocery prices after stagnating for about a year, jumped 0.5%. Use vehicle prices also rose. And then let's go back to that grocery. If you're buying a lot of, We've talked about this a bunch, but there's a really bad avian flu going around.

Egg prices rose 8.2 percent and are up 37.5 percent for the year. So while grocery prices have been stagnant or are ticking up broadly in the supermarket, those egg prices are going up. What does this mean for the Fed? So whenever the inflation report comes out, we always ask, what does this mean for the Fed and its path toward cutting interest rates? So the Fed is meeting next week for its final meeting of the year. And expectations going into this inflation report was had at about 90% chance that the Fed would cut interest rates.

This inflation report, because it matched expectations, basically cements that. We're going to get a third interest rate cut for the year come December. Remember, the Fed after hiking rates for the past two years, an historic amount started cutting rates in September. They did that meaty 50 basis point cut. Then they did a 25 point basis cut. Then they paused. And now it looks like we're going to get another rate cut in December, which, you know, hopefully the idea of that is to bring down borrowing costs, unleash a little more spending

into the economy, get the economy kick started again. The thing is, Jerome Powell just had this interview earlier this month. And he is expressing a lot of caution about rate cuts because the thing, he's trying to strike this balance. He wants to be on this tightrope where you don't want to cut rates too much because if you cut rates too much, then inflation is going to probably go back up. It's going to unleash more spending, and that leads to price growth. But if he cuts rates too much, then that could dent the economy and most importantly, dent job growth. The thing is, job growth seems to be doing perfectly fine.

After that anomaly we had in October with the hurricanes and the Boeing strike, job growth went back. to, you know, normal levels with over 200 job gained in, in November. So everything is going, I guess, bottom line, everything is going pretty much according to plan. The one question mark is what does the Trump administration have in store for inflation and the Fed's rate cuts? Well, you know, the economists have pointed out that a lot of the Trump, Trump administration's policies could be inflationary when you're talking about tariffs. Those could raise prices. When you're talking about tax cuts that could unleash more spending and also raise prices. Mass deportations could cause labor shortages and also raise prices.

So I think that's why you see Jerome Powell expressing caution about rate cuts going forward. So I would say the Fed's rate cuts are absolutely locked in for next week and people will be paying more attention to about how many rate cuts they expect in 2025. Saudi Arabia has been awarded host of the 2034 World Cup, marking. the zenith of its strategy to spend massive amounts of money on sports. It's a highly controversial selection by FIFA, given widespread accusations of human rights abuses in the kingdom, but it's determined to move ahead nonetheless because the center of gravity in sports is shifting and it's shifting east. With the selection, the Gulf has asserted itself

as a central node in the global sports network. We're about two years removed from Qatar hosting the World Cup in 2022, and the region is getting another one in Saudi Arabia in 10 years. years. Unlike the teams that play in the World Cup, Saudi Arabia did not have any competition for hosting duties. FIFA tweaked the process in its favor, expediting the bidding and changing its rule on infrastructure to allow countries with fewer stadiums to apply. In the end, Saudi Arabia was the only country that put its name forward for the 2034 World Cup. What comes next? Well, a whole lot of construction. The kingdom is going to begin building 11 new stadiums ahead of the World Cup, which combined with other real estate projects, will add $1.3 trillion to infrastructure

costs. It's been an understood fact for years, but by being tapped to host the World Cup, the granddaddy of all sporting events, Saudi Arabia has arrived as a global superpower. And this decision really was met with a lot of condemnation. 21 rights groups came forward and said Saudi Arabia, your human rights record is quite terrible. Whenever you have major construction projects like this mega city, megacity niam. There are widespread, widespread reports of thousands of migrant workers dying on the scene. You treat them horribly. There was also that 2018 murder of the dissident journalist Jamal Khashoggi that remains in the minds of some. So this election by FIFA was controversial, raised a lot of alarms from human rights groups,

but it seems like it doesn't matter. There's just too much money here. Saudi Arabia has been pouring nearly a trillion into all these sports investments in just the past three years. I mean, let's just run down the table here. You have golf, remember, Saudi Arabia financed a competitor to the PJ tour called LiveGolf and poached

a lot of the world's best players. They hosted a women's tennis tournament. They've been, in terms of soccer, I mean, they've really boosted their domestic league by buying up also all the world's best players, even if they're aging. They bought Ronaldo, Namar,

Zemma, Sadio Mani, Conte, all these players who are playing in the best leagues in Europe, Saudi Arabia showed out to bring them to their domestic league. In other sports, they've been spending a ton of money, horse racing. It's now basically replaced Las Vegas as the home of boxing. They have a Formula One race now. So Saudi Arabia, I would say, with this 2034 World Cup, this is just kind of the cherry on top for all of these sports investments because the World Cup just is the World Cup just is the the biggest sporting event in the world.

We'll be watching to see what these construction projects unfold because Saudi Arabia is building these futuristic cities, these futuristic skyscrapers. They're going to build 11 new stadiums ahead of 2034. And that wasn't the only World Cup news. FIFA also solidified the host of the 2030 tournament, which are going to be Spain, Portugal, and Morocco. They're going to co-host 2030.

But also, the wrinkle here is that the first few games are going to be played in Uruguay, Argentina, and Paraguay, over in South America. And that is an ode to the first World Cup, which took place in 1930. That was hosted in Uruguay. So they're going to play the first game in Uruguay to mark 100 years since the beginning of the World Cup. They're going to play a game in Argentina and Paraguay as well. And then they're going to move over to Spain, Portugal, and Morocco for the rest of the games. Elon Musk has just crossed into a level of wealth that would make even smog from Lord of the Rings jealous. His net worth surpassed $400 billion.

meaning Musk is now worth more than Jeff Bezos and Bill Gates combined. Tesla had another hot day in the market with the carmaker's 4% jump contributing to the milestone, but it really was Musk's stake in SpaceX, his rocket company, that pushed him over the $400 billion mark. The private space startup that Musk reportedly owns 42% of sold shares that valued the firm at $350 billion, making it by far the most valuable startup in the world. That share sale boosted his net worth by $50 billion in one fell swoop, leading Bloomberg to peg him at a staggering $447 billion. Altogether, Musk's fortune has increased by 66% since Donald Trump's victory,

propelled by a 65% recovery in Tesla's share price on expectations that Trump is going to eliminate those helpful EV tax credits for Tesla rivals and help with regulation for autonomous vehicles. I mean, this is insane. Musk spent $277 million helping to elect Trump. And since that election, he's made more than $4 billion per day on paper. Of course, you know, these are all, this isn't money he has in the bank. These are all tied up in stocks. But that is probably one of the best investments of all time. Let's run through some of Musk's companies that is contributing to his net worth.

Yeah, we should start with SpaceX. SpaceX is worth $350 billion. That is crazy. That is, yes, not only is that the most valuable private startup in the world. It's among the top 25 most valuable companies in the S&P 500. It's one of the most valuable companies in the world. It's worth more than any other defense contractor. Lockheed Martin Boeing, it blows those out of the water.

It's right around Johnson and Johnson and Bank of America's value. SpaceX is an absolute business juggernaut. It has this Starlink satellite internet business. It has a near monopoly on the U.S. satellite launch market. If you want to send something into space, then you're going to call up Elon Musk and SpaceX. It also has done a bunch of tests on its next generation Starship, which is contracting with NASA to bring people to the moon and then maybe Mars. So this company is truly a behemoth. I'm very curious to see whether Musk will have it go public.

If so, it'll clearly be the biggest IPO of all time. Then moving on to Tesla, Tesla was down 41% in April of this year. Its stock had a terrible first few months. And then all of a sudden, it's gone crazy. It's been up 65% since the election, which accounts for nearly all of its gains for the year. At one point yesterday, if you find this funny, it was up 69% for a share price of $420. I mean, I think that's kind of funny. Tesla still has a problem with its stagnant car lineup with selling EVs.

You know, it's doing okay with that, but really what investors are bullish on and pretty much all analysts raise their price targets this week, which contributed to the share price bump that we saw, is that it isn't making huge investments in robo taxis and AI. And when investors are looking at pictures of Donald Trump and every single one seems to have Elon Musk right by his side, They're saying, okay, obviously this administration is going to be great for Tesla. He's going to repeal these EV tax credits that are helping Tesla's rivals. He's going to lay federal regulation for robotaxies, which Tesla wants to introduce in 2026. So it looks, you know, things are looking up for Tesla after a year or so where, you know, there was a lot of criticism that Tesla hadn't introduced a new model in a while.

And then also, you know, there's Elon Musk has all these companies don't even think about. He has X-A-I, which is his AI company that's a competitor to Open AI. That just raised $6 billion at a $50 billion valuation earlier this year. It was valued at $24 billion. So he has all of these companies that are worth more money than we've ever seen in their life, which contributed to his net worth now of $447 billion. He is probably the richest person who has ever lived. There was this West African king named Mansa Musa, who lived a while ago.

worth around $400 billion, according to the BBC. So Musk is now worth more than any person who has ever lived on this planet. Up next, Neil's Numbers. 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 3-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

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Or you could book a stay with Hilton. Welcome to your oceanfront room. Just steps from the water. The Hilton sale is on now. Book on Hilton.com or The Hilton app and save up to 20% to get the stay you expected. When you want savings, not surprises. It matters where you stay. Hilton, for the stay. For my first number, Americans are moving less than they ever have before. Just about 7.5% of people in the United States packed up their things and moved into a new home

last year, the lowest share on record. Compare that 7.5% to the 1960s when one in five or 20% of Americans moved. We're simply not a geographically mobile people anymore. And this trend has been going on for a while now. I mean, if you look at the chart of the moving rate, it peaks in the late 1960s, and it's just gone slowly down setting new lows year after year. So what's going on? Are we just settling in the most literal sense of the term? Experts point to a few factors that could be contributing to the decline. Housing costs have skyrocketed, making moving financially impossible. the population is getting older and older people move less, and regions have become less specialized in certain industries. So if you work in a particular field, you don't necessarily need to move to find a job

in that sector. If you work in cars, you know, a few decades ago, you probably would have had to move to Detroit. Now you don't need to. If you worked in tech, you would have had moved to Silicon Valley, not necessarily now. I think remote work has a lot to do with just the plunging stats in people moving the aging population certainly has a lot to do with it. Just 4% of people in their late 60s moved over the past year. So if you're older, you're just going to what they call age in place, surrounded by your network of family and friends who will help take care of you. And then the biggest decline has been seen in young people.

Between 2005 and 2006, about 30% of 20 to 24-year-olds moved. And then that dropped to less than 20% in the most recent period. Maybe this drives with your experience. You're just not moving, whether it's housing costs. You don't need to move to find a job because there is a job in your field in the city you live in. But whatever reason, Americans just aren't moving anymore. We're hitting record low after record low. My second number is baseball superstar Juan Soto's $765 million contract with the New York Mets, the richest deal in sports history.

But my number isn't the $765 million. It's all the ways people are slicing and dicing it. to put it in context. In the day since the deal was reported Sunday night, internet users have made all sorts of fun calculations to help normal folks like us understand just how mind-boggling a number this is. For example, if Soto kept up his production last year on the Yankees, he'll be making $1.2 million for every home run,

half a million for every RBI, and $300,000 for every hit. He'll make nearly $50,000, which many people make in a single year, every time he swings the bat, no matter if he whiffs or makes contact. Moving across sports, Soto's contract dwarfs the earnings of other legends. The 15-year deal is more

than the combined career on-field earnings of Tom Brady and Peyton Manning, and it's also more than the combined career on-court earnings of LeBron, James, and Michael Jordan. This is a monster contract. The Associated Press also did something fun. They went across sports to other superstars and looked at how their contract

could be sliced in dice based on achievements that they made in in like over the course of their games. So Stefan Curry has a he's making nearly $56 million this season. If he was paid by the three-pointer, he'd be getting about $162,000 every time he makes one. Going to the Celtics, Jalen Brown and Jason Tatum, their two superstars. They make $27,000 for every point they score over in soccer, Lino Messi for Inter Miami. makes over $1 million for every goal he's scored this season. He made $230 every single second he's on the pitch. And then finally in golf, Scotty Schaeffler, he's made so much money. He's the world number one. He's incredible. He's made $29 million in 2024. That calculates out to

$11,000 per stroke. For my final number, one humpback whale was found to have taken one of the most epic road trips in history. And a new paper published yesterday, a male humpback was estimated to have traveled at least 13,000 kilometers or more than 8,000 miles in what researchers say is the longest migration of any whale known to science. This whale was seen in the Pacific Ocean off Columbia in 2017, then was spotted near Zanzibar in the Indian ocean several years later, about 13,000 kilometers away when expressed by great circled distance. So why did this fellow travel so far? Twice as long as the typical humpback migration. Seems like it's a case of dudes being dudes.

He was looking for a mate and crossed at least three oceans in search of sex. The researchers hypothesized. Another theory is that due to climate change food, the food they eat has also become more scarce in the region where he was, so he had to go 13,000 kilometers to find

more food. It's unclear how he was received though when he got to the new breeding ground, since humpbacks actually don't generally mix with other populations despite their epic migrations. Wondered, and this is a quote from one of the lead authors, when he showed up, was it like, ooh, sexy foreigner with a cool accent? Either way, this was an epic journey brought together by

a lot of citizen science and people taking pictures and uploading it to this platform. I just can't imagine how many times he had to stop to pee. Okay, that is all the time we have. Thanks so much for starting your morning with us, with me. Have a wonderful Thursday. For any questions, comments, or feedback, send an email to Morningbrewdaily at Morningbrew. Let's roll the credits. Emily Milliron is our executive producer. Raymond Loo is our producer. Olivia Graham is our associate producer. Eugenua Ogu is our technical director. Billy Minino is on audio. Hair and makeup. You should co-host with me next time. I think you do great.

Devin Emery is our chief content officer and our show is a production of Morning Brew.