Morning Brew Daily - Inflation Cooling, Buffett weighs in on Banking Crisis, Twitter & X Corp.

Episode Date: April 12, 2023

Episode 37: Neal and Toby break down the latest CPI Data released on Wednesday Morning. Also, Elon has revealed his latest plan for Twitter - which might be an entire new company? And Warren Buffett explains why bank depositors should relax. Oh, and pack your bags because travel to Europe is the new wave. Plus, million dollar vanity plate business and why this billionaire is donating $300 million to Harvard. Learn more about our sponsor, Grasshopper: https://www.grasshopper.bank/thedailyshow Learn more about our sponsor, TaxAct: https://www.taxact.com 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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at pwc.com slash US slash brew AI. That's pwc.com slash us slash brewa i. Good morning brew daily show. I am Neil Fryman. And I'm Toby Howell. Let's run through what we're going to talk about today. We have a big inflation report, so we'll discuss that and what it means for stocks and the economy in general. We'll also reveal the latest must-have collectible for any billionaire.

So if there are any billionaires listening, take notes. Then, Neil, we have a heck of a headline to unpack. Does Twitter no longer exist? We'll find out. Finally, we'll finish up with a feel-good story about a little-known Massachusetts college landing a $300 million donation. What a tasty lineup, Neil. Let's ride. All right.

So Toby and I did some networking last night. We shook a lot of hands, put on name tags, talked to people we didn't know. I signed a baby, too, I think, which was an interesting part of the night. I never knew that was a part of networking. Absolutely. It was a great time, fun to meet people, and our friends put it on. But I just went through the same question. I had the same conversation with 15 people.

It was, oh, where do you work? Oh, nice, nice. You in the city? Oh, love that neighborhood. Yeah, I'm over in Union Square. So how do you know the host? It was that like, like, 20 million times. I'm getting the chills just thinking back to how many times I did have that exact conversation.

I just made up everything differently every time. Yeah, yeah. I also, we lost her voice a little bit because we talked to so many people. and they're like, we got to go. And the music was loud. I know I never had to use my voice before for work. And I was like, well, I can't talk. Protect the moneymaker, Neil.

Ooh. Okay. Let's get into the news. You know, people ask how we get out of bed every morning early. Well, this is it right here. The March inflation report, which is technically called the Consumer Price Index. It measures the change in prices across the economy, essentially, measures how much we pay for stuff. It dropped this morning.

And it's like one of those movies that ends. mostly happy, but still leaves you with a little bitter taste. And you said maybe a beautiful mind would fit. So that's what this morning's inflation report was. TLDR is that inflation came down more than expected less munch, which is obviously good news. Consumer prices edged up 0.1% from the previous month and 5% from a year ago, which was less than projections. Many economists, though, don't really look at the numbers I just mentioned, so kind of forget those. Those contain energy and food prices, those fluctuate very dramatically all the time and make the data messy. So economists mostly look at what's known as core CPI, which takes out food and energy.

And so here are the core CPI numbers. They were up 0.4% for the month and 5.6% from the previous year. Still, the main takeaway from this is that inflation is coming down, but there's still a lot of inflation. But it is good news because, as seen by stock futures, which are absolutely spiking this morning. Yeah. Thanks for the rundown, Neil.

I always look forward to it because once inflation data drops, everyone's kind of parsing through it figuring out. So thanks for breaking it down. I do want to hit on the volatile food and energy component. So one of the reasons why they take out something like energy is because if we think back to March of 2022, which is what we're comparing this month's data to, energy figures spiked because Russia invaded Ukraine. And so that's the data that we're comparing this month to.

So you can see why economists kind of remove energy sometimes because stuff happens. Right. A war broke out that really affects energy prices. So that's why we're kind of tossing that out sometimes. It's an interesting point about comparing things to a year before. You should literally anything that happens. And it says like, oh, up 5%, down 5%, up 40%, down 40%. You should always think about what the benchmark was previously.

Right. Because I remember we were talking yesterday about Apple's shipments were down 40% in that first quarter. Well, the year before, it spiked, you know, way more than usual. So you have to really think about what you're comparing things to in these year-over-year comparisons. Yeah. There's also, let's just dive into a couple of the more nitty-gritty data. Food inflation actually stayed flat month over month. So that's been something that has been a big talking point.

We didn't find the specific number for eggs, but... I still can't find eggs for below $6 at the grocery store. That's been a huge benchmark for a lot of people's, like how expensive eggs are. And then another thing that is still kind of red hot, as we like to say, is that food away from home, which is food in restaurants, inflation is still pretty high on that. So restaurants are still bearing those inflated food costs because they have to buy food just like we do. So those are two little food nuggets that we picked up from on the report. All right. Finally, we should just talk about what this means for the Fed.

The Fed has raised interest rates nine straight times now. and this inflation report does not put it off track to raise interest rates for one more time at its meeting in May. So it's April now. So next month, it seems like the Fed is going to raise rates one more time, but then it's also signal that maybe it's going to cut interest rates over the remainder of 2023 because inflation is coming down, which is what it's trying to do. And maybe this banking crisis has done a little bit of the work that interest rate hikes

would have done. Happy CPI Wednesdays, I guess. Happy CPI Wednesday. Does it always come out on a Wednesday? I don't know. We should start throwing a little bit more of a party when it comes to that. We should. Next time.

All right, that was CPI. Now, Neil, I kind of tease this at the beginning show, but how's this for a beginning of a story? Twitter no longer exists. You heard that right. Twitter has officially merged with a newly formed shell firm called X-Corp. It sounds like the X-Men. It's not.

Who knows, though? So we actually found this out under very kind of funny musky and circumstances. So a right-wing Twitter personality sued Twitter last year for banning her account. And through various court filings, it came out that she got a response that said Twitter Inc. has been merged into Xcorp and no longer exists. So what is Xcorp? In the past, Elon has kind of hinted at this nebulous idea called X, which he calls an everything app. And Everything app is very clearly modeled off of an existing app out of China that Tencent

Minks called WeChat, which started as a messaging app, but now you can do everything from HALA taxi, order food, buy movie tickets, check in for your flight, you can send money to each other so it truly is an Everything app. So Elon's had this fixation on like turning Twitter into X the Everything app. But I see your face right now. I'm a little in my eyes. Are you, do you think that this is actually, Elon is actually going to pull off making this everything. Well, he can barely pull off Twitter. I think we're going to all agree. So I don't know. You know, my parents always said walk before you run. Twitter is barely crawling right now. So I think it's a little presumptuous to say, oh, he's going to build an everything app because he can barely keep Twitter running.

Yeah. He's making a zillion different mistakes, backtracks on every policy issues, you know, very half-hazard standards across various accounts. This is like the last thing I'm thinking about. Right. He did, he tweeted out once this news broke, he tweeted out X and everyone's like, oh my gosh. Cool. He's just the letter X. Yeah. My odds, Vegas, his my bookmaker odds, is that he sells Twitter at a huge loss for 90%. And then that he builds anything interesting on top of Twitter at, you know, maybe 5%. And then just keeps Twitter running right now at another 5%. I might book some of those odds.

Okay, but Neil, we also want to talk about a competitor, a Twitter competitor that just kind of emerged. substack has released this platform called Substack Notes, which is, it looks a lot like Twitter, honestly, it's a feed that the writers can post on. You can post tweets. There's some, a little different differences between the two. Some of them are, one, there's no character limit, so you can actually really be loquacious on there.

And then there's a few just, like, you can't post videos, you can only post gifts in photos. But like the idea is to, a lot of substack writers use Twitter to drive newsletter subscriptions, and now you have this self-contained ecosystem where it's a lot easier to just one-click, sign up for someone's newsletter. And you were pretty impressed with it.

Yeah, I mean, admittedly, I scrolled for three minutes, but it didn't have a lot of the garbage that Twitter has, and it was people just, like, nerding out over stuff, which is kind of what Substack is in the first place. Yeah. Should we talk about the drama of Substack and Twitter, though? Right. Because when they first announced this launch,

Twitter throttled Substack links, Meanwhile, everyone was like, what do you mean? You're a free speech absolutist, and you're doing this little petty activity against your arrival. That's not even a rival. Right. So, yeah, when you would post the sub-sac leak, no one could comment on it, no one could retweet it. Like, you couldn't even like it. So he really just undercut this entire ecosystem of sub-sac riders on the platform.

And people are just like, all right, I'm out. I'm out. Including Matt Tybee, the journalist who was in cahoots with Elon Musk over the release of the Twitter files. Right. So people got a lot of satisfaction seeing them fight because they didn't like either of them. Right. Truly. Should we finally talk about he gave this BBC interview while all of us were sleeping. Uh-huh. Uh-huh. Uh, must talk to a BBC journalist on camera and they also played it on Twitter spaces. Just some tidbits from that. He said the pain level has been extremely high. This hasn't been some kind of party, which we is quite evident. It hasn't been

boring. It's been quite a roller coaster. He said it was a really quite a stressful situation. situation. And he also said he's going to stop tweeting after 3 a.m. because he says, have I shot myself in the foot with tweets multiple times? Yes, I think I should not tweet after 3 a.m. I guess he's a self-aware king. Would we go that far? I wouldn't say so. No. Yeah. Still not yet. A lot of Twitter news. Obviously, we get news like that every day, so I'm sure we'll continue talking about it. Okay, Neil, let's jump to America's favorite grandpa, Warren Buffett, because the civil-haired Fox was back on air this morning to kind of comfort the American public when it comes to banks. So his main message was, one, we're probably not through with bank failures, which on the

surface sounds a little incendiary. But two, he followed that up by saying depositors should never, ever be worried. His exact quote was, banks go bust, but depositors aren't going to be hurt. So this is a Buffett, again, kind of saying, being the bank whisperer, he's done this in the past. He stepped in during previous financial crisis. So people listen when he's, he talks about banks. What do you think about the message that he's sending? I mean, he knows more than me. That's for bank show. I've been following business news for six years now. And I, you know, when we were, you know,

looking at this interview, I was just thinking, this guy has, what is he, 92, he's been in business for 60 years. He's seen this before. These things come in cycles. He's, you know, experienced 60 years of watching things go boom and bust and bank failures and non-bank failures and people getting hurt and people getting help. and he's rescued Bank of America and Goldman Sachs before we were even born. I mean, not to say that I think everything he says is right, obviously, but when someone looks at something from that perspective, that historical perspective, it's a little bit of assuring.

And his specifics were that the FDIC, which is the kind of the backstop for banks, he said people don't understand that the FDIC costs are borne by the banks that are not born by the American public. Yeah, I don't understand. Right, exactly. And again, Buffett's quote was, the public literally doesn't understand that. Nobody is going to lose money on a deposit in a U.S. bank. It's not going to happen. That's pretty... Is he just saying the government's going to backstop everything above insurance? So he's saying there's basically unlimited insurance for your bank to... Well, he's saying that the FDIC will step in, but then, too, that the banks are the ones responsible for funding the FDIC, which is, again, something that he thinks that the American public isn't aware of. So this was just... Maybe we should educate that. on a future episode. Right. How it works.

Exactly. No, but this is, this is Grandpa Warren, just kind of being, being the grandpa, being the person who can, whose dulcet tones soothe our fears. So,

do you want to talk about his Japan stuff? Yeah, we'll just touch on it really briefly. The part of the reason why we're going to talk about Warren Buffett today is that he has increased his stake in Japan's five largest trading companies to 7.4%, which is a hefty margin. when he a few years ago he had just 5% that stake was worth $6 billion so it's only gone up from them

and these trading houses they're super interesting i went pretty deep on them this morning basically japan was closed the outside world for much of its history for 200 years so when they opened up they quickly had to develop these trade relationships with other countries so these trading houses formed that have this deep domain expertise in negotiations and also just like the flow of information so they became these really really strong institutions. In Japan, they're some of the highest paying employers. So, like, they're kind of

like the McKinsey's. What consulting is in the U.S., these trading houses are in Japan. And I know why Buffett loves them is because they deal in the real economy. They're deeply involved in areas like commodity trading, shipping, steel, basically like the

anti-Bitcoin, they actually do stuff that you sell in the real world. The one I'd heard of is Mitsubishi. Is that the same entity that makes the cars? Or, I don't think so because these are more focused on, I could be wrong on that. I actually didn't double-check that, but it is, basically what they do is deal in all sorts of commodity training. And yeah, there's like five or six major ones. And Buffett wants a piece of all of them. All right, we didn't have time to get in as deep as you wanted it on the podcast, but you should make a TikTok about it later.

I'll do a deep dive. Check out our TikTok, MV Daily Show. Okay, Neil, 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 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 days for seven days at the Home Depot. Now through May 6th.

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Eligible students get a year of Microsoft 365 premium and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller. Learn more at Windows.com slash student offer. While supplies last, ends June 30th, terms at AKA.m.m.S. College PC. So President Biden is in Northern Ireland and the Republic of Ireland this week doing some diplomacy around the 25th anniversary of the Good Friday Agreement, but also visiting the villages where his family is from. We're not going to talk about that, but I did want to talk about Biden may have a unique job, but he is not unique in this trip at all because Americans are traveling to Europe in huge numbers, okay?

I promise that you will not go three scrolls on your Instagram over the next six months without seeing your friend doing that. your hand up against a leaning tower of visa shot. So searches for European travel on kayak, which is a travel site, are 77% higher than last year. Hopper said that of its U.S.-based customers browsing international destinations, 37% are searching for flights to Europe, which is up 9% from 2019 levels. So I don't know if this is a strong dollar, if this is the White Lotus effect, and everyone's going to Europe to live their best lives. They're going to protest at credits fees, caddicorders. They're going to watch maybe

with the Wales team, Rexum play. First of all, 10 out of 10 transition from Biden's international travel plans to talking about European travel in this rodeo before. One thing I do want to call out too is if you're going to travel abroad,

you better get your passport in line too because there's some crazy stats around the demand for passports, which are 30 to 40% above last year's levels, which also broke a record with 22 million passports issued. So basically the Secretary of State is telling you if you want to travel, get your stuff in line because so many other people want to travel to you that your passport demand is just like 500,000 applications a week. Luckily, I got my passport

maybe two years ago and that's the best feeling in the world because you know you don't have to do it for the next 10 years. Right. It is a good feeling. Although once you see your passport photo and if you look at yourself and you go like, damn, that's young. That's probably in your mind saying you probably need to go renew it. So if you're seeing a younger version of yourself too frequently, go renew it. We should talk about what this means for airlines, because this is a literal gold mine. First of all, transatlantic flights are their biggest international routes in general. Most, the biggest moneymakers, the top three U.S. airlines get up to 20% of their total passenger revenue from people flying from U.S. to Europe, which is pretty crazy. This is another stat. I don't,

I can't really fathom this, but United is flying almost. two dozen flights every day from the U.S. to London. So if you need to get to London, you should be able to do it relatively cheaply. And that's why I think a lot of people are traveling to Europe, because they're realizing at least from the East Coast, it's faster to go to London than it is for me to get to L.A. Right. And you just take a red eye, you're there at 6 a.m. It's super easy. And we love this stat about Croatia. First of all, Croatia's 25% of Croatia's GDP is tourism. So they need to build out their transportation infrastructure, and this one airport is considering extending its runway so that it can get more transatlantic flights. And this stat blew my mind that the Croatia only has two transatlantic flights per day.

Yeah. Hey, invest in yourself. That's what they always say, right? Yes, make yourself better. Yeah. All right. Let's move on to a new status symbol just dropped. A new collectible.

Vanity license plates. So a license plate with the number seven sold for $15 million in Dubai, which became the most expensive license plate ever sold. The previous expensive plate was $14.2 million, which also is a lot. So the auction in Dubai benefits this charity founded by the ruler of Dubai to bring food to communities struggling with food insecurity in the world. But $15 million for a license plate, that's way more than the cost of the actual car. I guess it's just another way to show off your wealth. Yeah. I was digging deep into why the United Arab Emirates,

it's this hotbed for these luxury or these license plates with really low numbers on them. That's like the status symbol. And so I was reading a story, there's this local businessman who was actually refused entry into a luxury hotel in 2006 because his car license plate had too many numbers. So it's that big of a symbol. So he was refused entry. So that same businessman in 2016.

purchased the D5 license plate for almost $9 million and went back to the hotel and said, like, look at me now, baby. So it truly is like a very integral part of the culture there, which you just never would have known. Also, so the previous record for this license plate was $14.2 million for the number one license plate in Abu Dhabi, which I feel like is so much better than, what was this one, P7? Well, seven may have some extra significance that we don't know about.

These are quite boring, you know. I think in the United States, you want to have, like, a little more fun, but this is just literally, like, the equivalent of a Rolex, I guess. So do you know what the most expensive? Did you find what the most expensive U.S. one? Well, there's actually... You go first. There's a vanity license plate.

It's a New York license plate that says New York on it. And this is the funniest part. So it's on sale for $20 million. And they threw in the car that it's on. And it's this old beat-up Volvo. So they're like, you can... get the, look it. You get the card, too. Like, what great value for yourself. I did look up some of the U.S. ones, and there's one in California, which is M.M. Yeah. It's valued at $24.3 million.

I don't think there was a sale yet, but the reason this is so valued so high is there's, it's two character plate, MM, which is very rare. And then the fact that it's the same letter of M is even rare. There are only 35 of these in existence. And then obviously, I should have seen this coming, but it's paired up with an NFT. Oh, my gosh. Oh, God. But that just shows you that this is a collectible. This is the status symbol.

I like this one. Most expensive one in Texas is called 12th man for the Aggies. That's what they call it. There's one in England that has an F1 vanity plate. That's very expensive. That looks sick. See, these are... I want to buy one of these.

I feel like it's a great collector's item. Not that I can afford it. Let's start a little marketplace, Neil, a little side hustle. Okay, let's jump into our last story. So hedge fund billionaire Ken Griffin has donated another $300 million to his alma mater, Harvard. And notice I said another because with that gift, he's now given over $500 million to the school. So this particular gift comes with the benefit of getting his name on a building, which what the billionaires always want. So the graduate school of arts and sciences will now be named after him.

Neil, if you're a billionaire, are you dropping $300 million to get your name on a building? Probably. Well, I was thinking about what building I would want. It definitely wouldn't be an academic institution. I would give money to academia, but it would probably be a little more, I don't know, I'm just a little weirder and different. I was thinking like the Fryman Memorial Monster Seats at Fenway Park or something. Well, you really had it prepared.

Neil Fryman Memorial. Why am I saying Memorial? I'm like, whatever, this will happen when I'm done. Like Neil Fryman Terminal at JFK. Okay. I could do that. That might be a little more expensive than $300 million, I would say. But we also went down a deep hole into like the biggest billionaire donations to, to colleges.

Bloomberg, this is going to be tough, tough to beat. Michael Bloomberg, $1.8 billion for student financial aid to NYU in 2018. Billy. That's a lot of number. That's a billion. And it still costs $80,000 to go to NYU. It's ridiculous. Yeah.

I would donate, I think. I think it's good. Who's going to argue against donating to higher education? All right. I have a little trivia for you. What is the second, so we know the colleges that are produced the most billionaires. Number one is Harvard. What is number two?

Oh, man. I'm going to say, is it going to be like an SEC school or something like that? No. I don't know. I was thinking like Tim Cook, went to Auburn. Fine. Johns Hopkins. No.

Son of a gun. University of Pennsylvania. Irene Powell Jobs, Elon Musk, and it's tie with Stanford. Boring. Bled Tenev. I don't know he's still a billionaire from Robin Hood. Rich Barton, who's the co-founder of Zillow and Jerry Yang, the co-founder of Yahoo. The more you know.

Before we go, yeah, all I want is my name on a sandwich, honestly. I will pay Jimmy Johns, whatever, just to get a sandwich. I don't need a college. I'll take a number seven, Fryman, please. All right, that is our show for today. It's going to be 81 degrees, so I'm hoping to get out of here and enjoy the sunshine. You can always reach us at Morningbrewdaily at Morningbrew.com. Keep those messages coming.

Let's roll the credits. Show's producer and editor is Emily Milliron, our technical. director is Euchenna Wa Ogoo. Our supervising producer is Bryce Belloff. Uber Batista got up so early to be our associate producer, thanks. And Raymond Lou is also an associate producer. Dan Bousa is our sound mixture extraordinaire.

Hair and makeup has merged with X and no longer exists. That is telling. RIPA. Devin Emery is our chief content officer. Our show is a production of Morning, Brew. Great show today, Neil. Let's run it back tomorrow. Pay off your home.

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