Morning Brew Daily - Fictional Story Tanks Stock Market & The iPod Making a Comeback?

Episode Date: February 24, 2026

Episode 786: Neal and Toby chat about the software stock wipeout after a report from Citrini Research said AI could be detrimental to the economy. Then, Anthropic CEO Dario Amodei will meet with Defense Secretary Pete Hegseth to discuss the use of Claude for the US military. Also, what is Blue Owl? And why is it rattling the private credit industry? Meanwhile, Toby dives into the trend of the iPod making a comeback thanks to Gen Z.  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://www.swap.fm/l/mbd-note⁠⁠⁠  Watch Morning Brew Daily 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 brewAI. Good morning, Brew Daily show. I'm Neil Fryman. And I'm Toby Howell. Today, how a work of science fiction took down the stock market. Then Gen Z hates their phones, but are obsessed with iPods. It's Tuesday, February 24th.

Let's ride. Good morning and happy Tuesday. I am back in the studio this morning, but Toby is still remote because of the storm. and that is a real shame because today is, drum roll, please, Toby's birthday. Please send him some love in the comments right on his Facebook wall, sent him bountiful gifts. Just tell him how much he cheers up your mornings. Toby, how's it feel to finally turn 21? Okay, my friend Zach Pograb actually has a system for how old you feel at each age.

25 is old. 26 goes back to young. 27, you're young again. 28 is the last young year, which is what I am right now. 29, you become old again. And then when you turn 30, you become an unc. So that is a foolproof system. And I'm right in that old stage.

Well, what is 34 then? Do I feel young or old? Your unk senior. You're actually, you're the wisest unc among us, Neil. All right, well, happy birthday, Toby. I'm very glad you're not here to have to deal with all this snow. Okay, let's hit our first story. The year is 2028 June.

The economy is in a state of deep depression. the S&P has tanked almost 40% from its highs, and unemployment has spiked to 10.2%. The social fabric is fraying. This was a dystopian scenario laid out by investment analyst Cetrina Research in an article on Sunday. The 7,000 word piece is purely speculative fiction. I repeat, fiction.

But after going mega-viral on social media, it caused a sell-off on the stock market yesterday, the real one. Many companies name-checked in the novella, such as Uber, DoorDash, American Express, Mastercard, and Visa all fell at least 3%. In their essay, Citrini asked the question, what will happen when AI agents become ubiquitous? And their answer is, the economy will collapse. When companies can write software themselves using agents, white-collar workers will be laid off in mass. And that's just the tip of the iceberg.

As these high-earning knowledge workers hit the job market, they'll take lower-paying positions, reducing their purchasing power and crushing the consumer-based economy. It gets worse from there, if you can believe it, because this process is a self-reinforcing feedback loop with no natural break. Facing lower demand, companies will invest more in AI rather than humans to prop up profits, sparking additional layoffs, shrinking consumer demand even more, causing more adoption of AI and so on and so forth as we circle the drain. Citrini's stress that people should not interpret this as a prediction. They write, the sole intent of this piece is modeling a scenario that's been relatively under-explored.

Still, Toby, this is a... This is the crazy world we live in now. A piece of horror fiction just wrecked the stock market. Yeah, and we can dive into that piece of horror fiction and just a minute, but I do think it underscores how shaky and trigger-happy the market is right now because I think back to a few weeks ago, transportation stocks had one of their worst days ever. And that was triggered by AI trucking efficiency announcement from a company that on its surface sells karaoke machines.

But that pattern is something that we've seen emerged time and time. again, a real disruption happens or a hypothetical disruption is presented in a substack piece. Markets instantly kind of react to it. There's oftentimes a partial reversal after that. And then it repeats oftentimes in a new industry as well. It just shows how sensitive people are to the speed that AI represents usually changes in the economy happen over time. Now they can happen in hours and minutes even based off how people are feeling. and then you throw some terror policy and uncertainty into there as well.

And you get what we got yesterday, which was downstream of a single substack piece. Let's talk about one of the paragraphs or sections of the piece itself, DoorDash. So DoorDash tumbled nearly 7% yesterday. There was a good amount of time in this work of fiction spent on what will happen to DoorDash and other delivery apps when AI agents are everywhere and will do your shopping for you. So why DoorDash tanked was the position of Citrini was that your AI agent, we're all going to have AI agents in a few years, of course, will basically comparison shop across all delivery apps, pick the one with the lowest fee, the fastest delivery. This agent of yours

doesn't have any brand loyalty. It doesn't have any psychological things going on where it just needs to open up DoorDash because it's on a home screen. And so DoorDash will basically not have the moat that it has now because of this particular brand. So this is the theory that was put out. DoorDash lost hundreds of millions of dollars in value because of this particular theory. And then Andy Fang, who is a co-founder of DoorDash, seemed to confirm what these risks were. He responded to this piece saying, we definitely believe agentic commerce will be transformative to the industry.

No question we're going to need to adapt to it. The onus will be on us to create a compelling ecosystem for agents to participate in. The ground is shifting underneath our feet. and the industry is going to need to adapt to it. He didn't exactly put out the fire there. I know, but a lot of people did look at the DoorDash example and go, the moat that DoorDash has is not their technology. It's not the app itself.

It's the physical resources they're able to marshal in the real world, the drivers that they're able to match with the restaurants that are able to match with the people doing the food. Like that is a very intense physical world logistical puzzle that DoorDash has solved. That's its moat, not the fact. that it has a decently good at tech, and that cannot be easily replicated by someone vibe coding a DoorDash alternative in a weekend. I also want to talk about this idea of Ghost GDP. That was something that came up in Citrini's piece a lot, which is in the short term or in

like the near term, productivity is going to search. Things are going to look really good at the top line because AI agents are going to supercharge everything. Corporate margins are going to go up. GDP is going to look very strong. But then wages are. going to a road, maybe retail and restaurants start to quietly wither away as well. Housing starts the weekend. So the economy is growing without paying people. That's the doomsday scenario that Satrini is putting forth. It's also a scenario that some people are getting uncomfortably close to right now where maybe wages aren't keeping up with the productivity gains that we're seeing in a strong, top line economy. I think it's worth mentioning as we wrap this up that many, many

economists push back on the fundamental thesis of this Satrini piece. They said, this would not fly in an econ 101 or a macroeconomics course because you're just getting fundamental things wrong with how you view the economy. So one by one, a lot of economists have come out and said, this is extremely flawed. This is not going to happen. This is not even worth our time talking about. And yet, at the same time, it does have real world impacts. And I think it highlights, as you said at the top, how jittery the markets are. Because yesterday, IBM had its worst day since 2000 because Anthropic released a tool that can modernize a programming language, Cobol, that mainly run on IBM computers. So just down the line, whenever any sort of headline comes out about AI,

these stocks are tanking. Everything is on, feels like it's on absolutely thin ice right now. But if you haven't read this piece, go read it. I mean, it is, it's pretty interesting to think about, even if you think it's, you know, extremely wrong or extremely right. Moving on, the simmering bad blood between the Pentagon and Anthropic will reach its boiling point this morning when Defense Secretary Pete Heggseth will meet with Anthropic CEO Dario Amadeh in a clash over so-called woke AI. This is not going to be a friendly chat over bagels. More of Hegsteth demanding, come see me in my office rather than a, so how have the kids been

lately? Hexst's main problem with Anthropic concerns the terms of use for Anthropics Claude Chatbot at the Pentagon. Hexeth, an AI maximalist, wants carte blanche to leverage Claude for pretty much any kind of work that's legal. However, Anthropic wants other guardrails. Specifically, according to Axios, Anthropic does not want Claude to be used by the military for the mass surveillance of Americans or to operate lethal autonomous weapons with no humans involved. So they are at an impasse. And it's an impasse that's not easily resolved because the relationship between the two is like your middle school friend who you don't have much in common with anymore, but you still keep them around.

Right now, Claude is the only chatbot that's authorized to be used in the military's classified systems. Not Google, not Open AI, not GROC, it's just Claude. And for Anthropic, it has a $200 million contract with the Pentagon. It definitely does not want to lose. Toby, this is a meeting that could definitely not have been an email. Yeah, there's clearly an ideological standoff here. Anthropic is a very ideological company, but they're also trying to say that there is a technical explanation for the reticence of giving carte blanche to the Pentagon.

on AI's make a mistake. They still hallucinate. And Anthropics trying to say you don't want them being used to plan or deploy an attack without some serious guardrails here. So outside of the idealism, there is also just technical challenges to this. And then on the mass surveillance front, obviously, you know, America has the Fourth Amendment, but it wasn't built to address AI technology today in 2026. So Anthropic does not really want to be part of something where they feel like the laws have

not caught up to a modern tech. So obviously you can go through, you know, Anthropics history as a company and realize that they usually take these stands. But you can also point to this as saying like, hey, the technology is not ready yet. We don't want to go into a war scenario where we have to have this technology be top of the line because it makes mistakes. Let's go through Anthropics history as a company. It was actually founded by defectors from Open AI in 2020, Anthropic. These guys wanted to build a more safe AI. That was the founding mission of Anthropic. They write constitutions to govern their use of AI. They've just promoted safety from the get-go. Also, their leadership has criticized the Trump administration, which is rankled people in the Trump

administration. So they just don't really like each other, the U.S. government and Anthropic from the get-go. But things really came to a head in January when the U.S. military conducted that raid to kidnap Nicholas Maduro in Venezuela. It was found out that Claude was used in that raid. And then one executive reportedly at Anthropic raised questions about what Claude was used for. They said, hey, did Claude? What was Claude using this raid? What did it do? That raised alarm bells in the Pentagon that said that it seemed to suggest that Anthropic was uncomfortable with Claude being used with this type of use case. So things really escalated after this Venezuela, already. There's just a lot of mistrust here. Hegstad thinks that we need to use AI for literally everything

because if we don't, China will take the lead. Anthropic wants guardrail. So we'll see what happens with these two, but they clearly don't like each other. Yeah. And the Pentagon is considering a very intense option. They have threatened to detonate Anthropic as a quote, supply chain risk. That immediately voids existing contracts and potentially requires contractors to certify that they are not using Claude in any of their workflow. So supply chain risk is usually used for, you know, foreign adversaries. Applying it to a U.S. firm is not something that happens. It is a very big rebuke of what is going on here. So that is intense, to say the least, that you can go from using the product daily to now never use the product again within the entire Pentagon.

It's a threat. It's a big threat. But we'll see what happens at this. Meaning, the problem is they need each other, right? Anthropic has this huge contract with the Pentagon. It needs all the money it can get because AI is very expensive. And the Pentagon, the only chatbot that it can use in its classified systems right now is Claude. The onboarding process to get all those other ones on board is probably very complicated and takes a lot of time. So this is right now a marriage of convenience. We'll see if these threats can materialize into some sort of a working relationship. Let's move on. There's something lurking in the shadows of Wall Street that is keeping finance pros up at night. It's not a Zen shortage. It's trouble in the world of private credit.

Private credit firms act as middlemen, getting capital to companies that need it, but may not be able to meet traditional banking standards. While it sounds shady, oftentimes these are just non-public companies that have financing needs that banks don't really want to deal with. Enter private credit. They take money from big institutional investors like pension funds and insurance companies and make those relatively risky loans that offer higher returns. But alarm bells have been going off in this industry that mostly operates out of sight of retail investors. Blue Owl is a major player in this space with over $300 billion in assets under management.

They are unique in the private credit space because they've opened up one of their funds to retail investors instead of the normal institutional players. And here's where the bells come in. Blue Owl also recently halted investors from making quarterly withdrawals and instead began selling assets to return capital. Management is framing the switch up as a good thing because it accelerates the return of capital, but others think it smells fishy. The red flags we are seeing in private credit today are strikingly familiar to those of 2007,

said Orlando Gimey's Chief Investment Officer of Fourier Investment Management. Neil, nothing bad happened after 2007, right? This is one of those stories that your friend in finance tells you about over drinks or dinner. They go, I know this hasn't broken into the mainstream. yet, but it's all anyone in our industry is talking about. Investors are not buying this blue owl story. They seem to be very concerned. Their shares are down 60% over the last 13 months, and they just are having an 11-day losing streak. Even Treasury Secretary Scott Bassett came out on Friday and said, after this redemption, these redemptions were halted and said, we are concerned.

And I even go back to last fall. That's when all these jitters sort of started in private credit. There was the bankruptcy of those two auto companies. which was First Brands, which is an auto parts supplier and TriColor, which is a subprime auto lender. Private credit was exposed to them. There's sort of a lot of shady stuff going on there. There was even fraud. And Jamie Diamond came out. He lost his bank.

He's the J.B. Morgan C.O. His bank lost $170 million on its loans to TriColor. He said when you see one cockroach, there are probably more. TBD, whether Blue Owl is one of those cockroaches yet. But if so, it would be one of the biggest ones because it's become the first. face of private credit because it's just grown so much over the past few months. Yeah, this fund is notable or this company is notable for two reasons. One is the fact that they did open up one of their private credit funds to retail investors.

These are high net worth retail investors. They're not just you know, you and me. But they also aren't pension and insurance companies who generally have a better appetite for risk over the long term. They understand that, you know, these funds are going to go, up and down. They can afford to, you know, have a few cockroaches in their portfolio because these are such massive, it pulls of money and they invest over such long-term retail investors are not built like that. They're a lot more emotional, which is why you have people,

you know, withdrawing their money if they see cockroaches on the horizon. So that is one reason why Blue Owl is different, that they did get into the retail game. And then the other reason why Blue Owl is a poster child for maybe some private credit jitters is the fact that they've gone very heavily into software. They're one of the largest lenders to software companies. They bought into these firms at 40x earnings. What is happening of recent times, AI tools like Claude and ChatsbyT are causing a ruckus in the software market. Suddenly those bets are not looking as good as maybe they would a few years ago. So that is why you're going to hear your finance, bro, you know, go check out what's happening with Blue Owl. Those are two of the biggest reasons.

All right, we're going to take a quick break and come back with Toby's Trends right after this. It's Tuesday and my birthday, which means it's time for a Toby's trend. And this one will have you feeling nostalgic for better days. The iPod is seeing a revival. Google Trends is showing spikes in searches for the original iPod and the iPod Nano, while eBay searches for both were up over 20% compared to the year prior. It ties into the broader trend of returning to simpler tech times, Older devices enforce boundaries by design.

Tau Newport, the author of Digital Minimalism, points out that all you can do with an iPod is listen to music. A smartphone opens up a buffet of possibilities. You may want to listen to Olivia Dean, but actually end up neck deep in Morning Brew Daily's Instagram listening to Neal if you aren't careful. It makes single-purpose tech with built-in boundaries a lot more appealing to the younger generation. It also ties back to a concept known as friction maxing, having to manually load songs, onto an iPod with finite storage and no algorithm controlling what you listen to next. It makes it harder to listen to music, but harder in a good way. Plus, nostalgia remains undefeated. A lot of you close to Neil and I in age remember their first iPod. And even though Apple discontinued

the line in 2022, it evokes memories of better times. Neil, what's the first song you're queuing up? The first song that comes first in the alphabet, because one of my core memories of an iPod is when you put it on, oftentimes the first song will just be whatever comes first in alphabetical order. So I don't remember exactly what song that was on my particular iPod. If it's not the song that starts with AA something, I think I listen to a lot of Green Day or red-out chili peppers back in the day. We'll give you a few more reasons why we might be seeing an iPod resurgence. One is that kids are using them to get around phone bands in school. So at many school districts around the country right now, you can't bring your smartphone into school. But maybe

you can bring an MP3 player, so that has kids rediscovering the beauty of an iPod. And then the other thing is if you're more of an audiophile, it sounds good. It sounds better than a smartphone because an iPod is made specifically for listening to music. So all of the guts in there are made for the audio experience. So you combine that with a pretty good wired headphone, which apparently are also making comeback because I'm seeing them everywhere, at least here in New York City. Then you have a recipe, and then you combine it with friction maxing, and all these other nebulous terms and nostalgia,

you have a recipe for an iPod comeback, even though they haven't made him in the last couple of years. I think it's very funny that when Steve Jobs unveiled the iPod back in October, 2001, the tagline was a thousand songs in your pocket. And that was unfathomable levels of abundance during that moment in time. In 2026, the appeal is the limitation, the fact that there's only a thousand songs in your pocket now. So it just really has showed how overwhelmed people have gotten in the digital age. They have attention fatigue.

They have decision fatigue. Your smartphone is constantly vying for your attention with different notifications, with different apps that beg your attention. The iPod is just music, man. I never even had one. It's sad. It's sad. You didn't have one?

No, I never had one. I found one iPod Nano on the sidewalk one time and I used it, but it was only preloaded with music. I never had one. I'm saying I'm nostalgic for it. Maybe I am nostalgic. I think you should get one now because it was a, it's an amazing piece of technology. And it ties into a broader trend of people rediscovering old, old tech.

Like DVDs and Blu-rays are coming back. I don't know if I believe this, but Consumer Reports is legit. A survey from them found that nearly half of us are still watching DVDs and Blu-rays. Okay. But also at the same time, vinyl is coming back. So in this age of abundance where maybe we're overwhelmed. And I totally agree. with this. When you go on to Spotify, you have all of the history of recorded music at your

fingertips. But I just like putting on the radio when I'm on the car because they'll choose something for me. And maybe that's a similar reason to why the iPod is coming back. But I do have a question for you. Like, what is the next, what is the next legacy tech to have a revival? I'm thinking of wearable tech at this point because, you know, like whoop and or a ring are in right now. I wonder if one of those, you know, step counters that only, they have no digital components at all. literally just jiggles. I can see those coming back in as well because you have data overload. I mean, I wear multiple wearables on my wrist at all times. And yeah, you do get a little data fatigue. So maybe a simpler way of step tracking could be the next thing to come into Vogue.

All right, let's sprint to the finish with some final headlines. Snowly moly. The blizzard that was supposed to blanket the Northeast in buckets of snow. Yeah, it did exactly that. Nearly 20 inches of snow fell in Central Park, the ninth highest on record. Airlines canceled more than 5,600 flights nationwide. There were 290,000 power outages across Massachusetts, but no one got it quite as bad as Providence, Rhode Island. The official snowfall there was 37.9 inches. That is more than three feet.

That is half a toby. Unfortunately, it looks like this is just the beginning, too. The New York Times reports that the snow is wet. and heavy, meaning it will weigh on power lines, causing more outages and taking longer to to clean up. Neil, I am going to strangle that rat from Punksitani. He did this to us. I'm not sure why you need the New York Times to report that the snow is heavy and wet. You could have just asked me or Ray or Emily who are here. It is very wet. It was actually incredible for snowman making and snowball. So as I was out around the park yesterday afternoon,

I don't think, I've never seen anything like this. There was at least 60 snowmen coming up out of the, out of the snow at the park. So it was very cool. There was, I mean, a lot of people didn't think it was cool to have this snow day. And obviously, that is true. But there was, the snow lent itself to a lot of playmaking, but it also was very disruptive. The Boston Globe had printed a paper, a physical paper, for every single day since it was founded in 1872. but not this morning.

Couldn't get its workers into the office or the printing press safely. So the Boston Globe, for the first time it's history, in 153 years, is not printing a paper and goes to show that while it was bad here in New York, this storm was really, really bad up on the coast near Providence, Boston, and Cape Cod. So we hope everyone for still having issues over there. You dig out. You dig out well. Okay, up next, things are going from bad to worse for Novo Nordisk.

The Danish company known for making OZempic just got stuffed in a locker again by U.S. rival Eli Lilly. In a new trial out yesterday, Novo's experimental obesity drug, Kagresema, offered less weight loss than Eli Lilly, setting Novo's shares plummeting more than 14%. This drug was seen as one of the few big opportunities left for Novo to make up ground on Lilly, so it coming up short is the worst-case scenario. Even before yesterday's stock plunged, Novo's value has cratered for more than $600 billion in 2024 to less than $180,000. billion now, a more than 60% wipeout, a big rise and even bigger fall. Oh, Novo, the only thing you're helping people lose at this point is money. It is crazy, though, because I feel like people are always going to call weight loss drugs OZMPIC, but no one will actually be using Ozempic at this right. It's like getting a tissue, calling it a Kleenex, but Kleenex is out of

business. It does just seem like not a fair fight anymore. Earlier this month, Nova predicted that it's sales and profit growth would decline between 5 and 13% in 2026. Meanwhile, Eli Lilly guided for sales to grow about 25% in 2026. Also, Novo's GLP1 patents are set to expire sooner than Eli Lilly's, which is another reason that it was really counting on this trial to succeed. So just not good looks anywhere you look at Novo Nordus right now. Finally, even Axe thinks that teenage boys spray too much axe on themselves. The body spray known for emitting a suffocating cloud of fragrance around its users is rolling out a new bottle and an associated ad campaign that encourages boys to take it down a notch. The new bottles come

with new lighter spray technology that allows for a more controlled application, but don't worry, it'll still last 72 hours like the old product. We keep hearing about the Axe Cloud, how it goes everywhere, Dolores Asolini, the head of Axe US, told the Wall Street Journal. So we really wanted to address that, both from a technology standpoint and from a user standpoint. To hype its new Spray Tech, Axe is rolling out an ad campaign called The History of Overdoing It to Highlight Instances Where Less is More. Okay, I love stories about certain tweaks to products that have wide-ranging applications. There's one that's sort of legendary at this point.

A consultant was hired to sell more toothpaste, and all he did was widen the diameter of the hole from 5 millimeters to 6 millimeters, which, you know, caused more volume of the pace to be squeezed out for any given length, almost by 40%. So I love that story because it really does show how small tweaks can lead to these bigger changes. Here it looks like Axis is doing the reverse of the toothpaste and making less come out. Bad for business, but good perhaps for the olfactory senses of everyone around middle schoolers. And I have, I need you to be honest today, deal. Were you an axe guy?

Were you taking those axe showers? Yeah, I think so because you just could not. Everyone, just the peer pressure was so insurmountable. and if you were with a bunch of your friends, and if they're doing it, then you kind of have to, or people would look at you weird. At least they would. People would look at you weird after you put it on. But yes, I was sick.

I so came to peer pressure just like anyone else. It is fascinating. Like, there's not a lot of instances where a company would ever tell you to use less of their product, but I do think that the goodwill that Axe is going to build up here is enough to offset whatever, you know, profits they might lose by people going. through bottles less quickly than normal. I think they felt like they had a brand crisis. Their reputation was bad because people just associated them with a negative smelling

experience. So they wanted to reverse that with this bottle change. I don't know if it's actually a big deal or not. But yeah, I think it's good for everyone if everyone just sprays a little less axe. Okay, that is all the time we have. Thanks so much for starting your morning with us. Have a wonderful Tuesday and happy birthday again, Toby. If you want to get in touch, send an email to Morning Brew Daily at Morningbrew.com or DM us on Instagram at MB Daily Show.

Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair and makeup is still digging out. Devin Emery is our president and our show is a production of Morning Brew. Great. So Daniel, let's run it back tomorrow.