Morning Brew Daily - Is OpenAI Too Big to Fail? & Shutdown Takes Step Towards End

Episode Date: November 10, 2025

Episode 710: Toby and Kyle discuss whether OpenAI is becoming too big to fail as there’s been rumblings about a government backstop for its AI-fueled debt. Then, President Trump proposes a 50-year mortgage to help with affordability for aspiring home owners. And, Netflix drops a first-look of “Sesame Street” on its debut on the platform. Meanwhile, Starbucks drops a viral “bear cup” that sparked a fan frenzy but also backlash. Finally, what you need to know in the week ahead.  Learn more at usbank.com/splitcard  Get your MBD live show tickets here! https://www.tinyurl.com/MBD-HOLIDAY  Listen to Kyle on Per My Last Email here: swap.fm/l/pmle-show 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

Consider this comparison. PWC data found the percentage of CEOs who report revenue gains or cost reductions from AI is almost equal to the percentage who say they're still stuck. What separates these two groups? PWC points to a clarity issue. Even for CEOs, it's hard to tell what's AI hype, what's reality, and where this tech can make a tangible difference. Learn where AI can actually make an impact and what successful adoption looks like at

pwc.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning brew daily show. I'm Toby Howell. And I'm Kyle Hagey. Today it's the beginning of the end of the government shutdown. And why there's a hot new collectible item, but you'll need to find a Starbucks that still has them in stock. It's Monday, November 10th.

Let's ride. Happy Monday, everyone. We got Kyle in the house today because Neil's away on vacay. Now on Friday show before the weekend, Neil gave a hint, to where he went because he cannot resist the game. That hit was he is traveling to what was once the wealthiest country on earth. With that hint in mind, we asked people for guests on our Instagram story, and we got a lot of bad ones.

Iceland was by far the most popular option. So shout out to you guys for your optimism about Iceland's past fortunes. Yeah, did Iceland, like, come in the comments on here or what? I have no idea why people were gravitating towards that place. Great spot. But it sounds like you all need a new hint. And Kyle, I need you to listen and play too because you don't know where Neil is either. Here's your next hint, everyone.

Neil texted me saying he's enjoying his seafood and custard tarts. Kyle, any ideas. I feel like this is a distraction. I don't think Neil actually left. I think he's in Studio 3. This man's addicted to the grind. I think he's right next door, Toby. He's under the desk right now.

Actually, he's going to pop up any minute. So everyone ruminate on that and maybe submit some guesses of where you think Neil is. Now a word from our sponsor, US Bank. If you're anything like Kyle and me, you're probably budgeting carefully so you can stay ahead of the holiday shopping season. The last thing you want is to have to pay for an unexpected bill out of pocket, introducing the U.S. Bank Split World Master Card, a new type of card that lets you pay later on every purchase. With the split card, all purchases are automatically divided into three payments and placed into a payment plan to be paid back over three months. And if you're looking for additional flexibility, any purchase over $100 can be extended to six or 12 months.

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Well, after 40 days of stalemate, the longest government shutdown in U.S. history is finally showing signs of ending. Last night, as the Steelers and Chargers tossed up a dud on Monday night football, the Senate voted 60 to 40 to advance a measure that would reopen most federal agencies

through January. The breakthrough came after eight Democrats crossed party lines, giving the GOP the votes it needed to move forward. The bill reverses all permanent federal layoffs from the shutdown, guarantees back pay for furloughed workers,

funds snap through September, and establishes new bipartisan budget rules to prevent future shutdowns. Notably, the Comparise does not include the extension of health care subsidies that Democrats had been fighting for, sparking backlash from the progressives who say that the party caved under pressure.

But the shutdown's economic toll from delayed food assistance to grounded flights, intensified pressure on both parties to finally find an off-ramp. Now, this isn't quite a done deal yet. The legislation still needs to clear final passage in the Senate, win house approval, and be signed by President Trump.

But for the first time in over a month, Washington appears to have a real path to reopening the government. Kyle, the beginning, of the end, I would say. Yeah, it feels like some serious progress is being made. Remember, flight capacity was recently reduced by 4% in 40 major hubs with plans to ramp that up to about 10%. And I think we started to see the effects of that across airports this weekend. US Airlines canceled more than 2,700 flights on Sunday. In addition, nearly 10,000 flights were

delayed. The FAA said staffing shortages at airports were causing average departure delays of about 75 minutes in LaGuardia, obviously a very busy airport and in Newark. And then earlier Sunday, Sean Duffy warned that U.S. air traffic could continue to decline if the shutdown persisted and that they might have to cut to 20 percent of flights. More controllers weren't coming in day to day, up to 15 to 20, he said, we're retiring every single day. And so airline infrastructure, and I think a lot of infrastructure across the country, really was starting to feel the effects of the government shutdown, kind of death by a thousand

cuts literally. And once it starts affecting, I think, everyday Americans' lives in these very tangible ways with the holidays coming up, pressure increased to get a deal done. Yeah, and it wasn't just airline passengers that were feeling their pressure. It was also airline cargo networks as well because those flight reductions also affect, you know, carriers like FedEx or UPS. So the major hubs are logistics hubs as well. I mean, Memphis, Indianapolis, Louisville, these are places where UPS and FedEx do have their major transportation hubs. So that was also a fear going into the holiday season if those flights were continuing to be delayed. Right now, though, this deal looks like progress is the first time that we've seen maybe a thawing of the tensions

between Democrats and Republicans. And the market is loving what it's right now. Check this morning. Futures are up bigly right now because investors seem to be betting that any deal, even a partial one, reduces some of this near-term economic uncertainty that we've just been living in for so long right now. Now, there is some latent risk here because if this, you know, hints of a deal fall through, then we're kind of right back to square one again right ahead of, you know, the Thanksgiving travel and retail period right now. But I do think that, you know, economic pressure was just getting ratcheted up too high for things to continue as the status quo.

I mean, White House advisor Kevin Hassett warned GDP could turn negative in the fourth quarter if the shutdown persists. Consumer sentiment had fell on to a three and a half. half year low as households were kind of dealing with the fallout from the shutdown. And the Fed is continuing to fly blind without the data it needs to make informed decisions. So that combined with all the airline industry stuff that you mentioned at the beginning just made it so that it was kind of coming to the 12th hour. That's right. To get done. Moving on, the words too big to fail carry a lot of weight in American capitalism. So it's causing some trepidation that they are

being applied to the biggest name in artificial intelligence, Open AI. Alton has been in damage control mode over the last few days, rejecting the idea that Open AI should ever be too big to fail or seek a government bailout after comments from his own CFO, Sarah Fryer, introduced the idea that the company could possibly ask for a, quote, federal backstop on its enormous spending plan. It's not just the size of the spending plan, $1.4 trillion over the next eight years that has industry watchers nervous. It's the interconnectedness of everything. Open AI has inked billions of dollars worth of circular. deals with the likes of Nvidia, Microsoft, AMD, Oracle, and CoreWeave designed to help foster

its build-out. Those promises have ignited fears that the AI sector is evolving into the same sort of systemically intertwined entity that made the banking sector so fragile in 2008. Should one domino fall, it could bring down the whole industry and an economy teetering on the edge with it. Now, people within the government have pushed back on the idea that they would ever step in to help with White House AISR. David Sachs declaring that the taxpayers, will never have to fund a bailout for AI. Sam Altman, too, said, if we screw up and can't fix it, we should fail.

Kyle, there's definitely some absurdity in the idea that a company that is yet to turn a profit could already be too big to fail, but perhaps even more absurd is the idea that given AI's broad impact on the economy and stock market, it actually could be. Yeah, and I want to think talk about the scale of open AI and chaty BT just to like set the scene here

because I think it's important to understand. Chatsybt, the fastest consumer apps to reach 100 million active users. it took only two months to reach that feat. Currently, it has approximately 800 million weekly users across the globe, routinely handling billions of queries a day. It's valued at $500 billion in October after a secondary shares sell-off. Expected revenue is $20 billion annualized, though.

Despite all of that, Walmart, for example, they make over $600 billion a year. Google, for example, $300 billion a year. So when you're looking at this company only making, quote-unquote, $20 billion a year, and they lost about $12 billion in the past quarter, that's where people get suspicious of where this $1 trillion plus and spent commitments is going to come from. Now, they can say, we don't want to be too big to fail. David Sachs can say that there'll be no federal bailout,

but I think you hit on the key point here, which is the interconnectedness. If AWS, Nvidia, Microsoft, Oracle, AMD, and OpenAI are all tied together, and there is some issue, like the government might have to step in. And that's what people are afraid of here. It's the interconnectedness. It's not necessarily the scale. Yeah, it was kind of a foot in the mouth moment for Sharefired during this interview

because I don't think she necessarily wanted to say that. But then what happened was basically once funding deals reach such a size, there really is only an insurer of last resort, which is the government. There is no one else who can step in. I mean, A16Z or any venture fund or even private equity fund can't step in and help backstop a trillion dollars in AI spend, which is, why potentially you heard that government idea tossed out. Not everyone is necessarily against it.

InVIDIA CEO, Jensen Huang, said on Wednesday that state subsidies for AI infrastructure might be necessary if the U.S. wants to keep its nose ahead of China. He actually caused a massive sell-off earlier in the week when he said, China's going to win the AI race here. He kind of walked back some of those comments. But that was Jensen kind of saying we might need a government backstop here if we want to win. But David Sachs was basically like, hey, we have five front.

tier models who are pushing the boundaries of AI in America right now. We don't need to specifically backstop Open AI. If Open AI fails, another one will be there to take its place, which is a very, you know, free market reading of the situation. But you were seeing some people saying there is a national security angle here. That's right. And you're dealing with an administration that has shown the ability or interest in backstopping or even taking vested interest in some companies. We had the government taking a 10% share of Intel earlier this year. And so there is absolutely whether it's for a specific company or just in general to ensure that, to your point, we're staying ahead of China from a national security perspective when it comes to AI and advanced

data centers and infrastructure. So there's probably some interest here, although, to your point, Trump's AIs are, David Sachs, said there's not going to be a federal bailout. It looks like 50, maybe the new 30. And before Generation X gets too excited, I'm not talking about age. I'm talking about mortgages. That's right. Over the weekend, President Trump made a post on Truth Social that suggested he wants to introduce a 50-year mortgage, and then federal housing finance agency director Bill Pulte confirmed shortly thereafter that this was in the plans. This offering would be in addition to the standard 15 and 30-year mortgages, homeowners and prospective homeowners are used to.

Now, the idea is simple in theory. By allowing more time to pay four-year home, a 50-year mortgage should drop the monthly mortgage payments a family would have to make. However, it would also likely increase the total amount of money. over time, slow the rate of equity build-up homeowners game in their homes, and could increase home prices as more families now are able to chase after the same amount of supply of homes. Now, don't go running to your bank and start asking for a 50-year mortgage because right now this is merely an idea. The Dodd-Frank Wall Street Consumer Protection Act does not currently allow

for 50-year mortgages. So that legislation would have to change for the Big 50-0 to get out into the world. Toby, if this were to pass, it looks like I might be able to pay off a home by the time I'm 82 years old. Pretty exciting stuff. You're looking great right now for your age, Kyle. I will say that this is still definitely speculative, as you mentioned, but the idea of a 50-year mortgage definitely set up a lot of debate amongst economists, amongst housing market watchers, because you can see right now there's clearly an affordability crisis. I mean, mortgage rates have been above 6% for over three years now. Fortability has been out of reach for many buyers. The median U.S. household now spends 39% of monthly income on mortgage payments. So,

obviously, if you are, you know, the government necessarily, you were trying to say, how can we make things more affordable? What if we just increase the lifespan of a mortgage? So, as you said, that would likely reduce the monthly payment, puts a little bit more cash back in people's pockets, which means they're not spending quite as much as their paychecks on their housing every single month. But it also comes with it a bevy of issues as well, When you're expanding the lifetime of mortgage, you are slowing your equity buildup. Most of that money is actually going towards interest payments. You are paying more in interest over time, over the length of the mortgage.

Also, you probably have a little less flexibility now. You're going to be locked in to some debt probably well into retirement, as you said. 80-year-old Kyle had you right there. And it actually could inflate housing prices because if you lower monthly payments, You allow buyers to borrow more, which actually ends up bidding up home prices. So it could be a catch-22 where even though you're lowering the monthly payment, it just might cause housing prices to shoot up. Yeah, there's like some limited stuff that the federal government could do quickly on the

supply side, which is to like increase housing. So they're focusing on the demand side here, which is how do we let more people afford homes? But to your point, that could also push up home prices. I think affordability was a key point in some of the elections. we just saw, it's been a key point for a while now. And that's what the Trump administration is trying to address with this move. The other thing that's tough to get out of is this quote unquote lock in effect where people got very attractive rates pre-2020 or, you know, in 2020 or before.

And they don't want to get out of those rates by selling their home and having to get a new mortgage. So it's a force people to stay in their homes. And that's where you have this liquidity that's not ramping up here in the housing market. Yeah, I think if we had to, just put a bow on it, what would a 50-year government-backed mortgage actually do? It would lower monthly payments, but rise housing prices. It would slow equity build-up, make things a little bit less flexible. And so in general, for an affordable policy in the U.S., that's kind of a poor trade-off right there. So look to maybe that 50-year idea to be tossed around a few more times, but who knows if it will actually come to fruition. All right, we're going to take a quick break

and come back with our winners of the weekend. 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 three-burner gas grill. Or get $50 off the 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.

Let's head to our winners of the weekend, the segment where Kyle and I pick a story that had a better weekend than the kid who made their Halloween candy supply last until mid-November. I won the pre-show game of knowing where Neil went on vacation, so I am up first, and my winner of the weekend is Sesame Street because it's back in better than ever. Remember, Sesame Street had been without a home after Warner Bros. didn't renew its deal to show episodes on its HBO Max streaming service. But Netflix swooped in to save Elmo Cookie Monster and the rest of the... the gang to air new seasons with the first episode dropping today. Season 56 represents a big evolution for the show too with a new structure and modern feel to appeal to a new era of kids. There will be a smaller main cast of just four characters following research which

shows fewer characters help kids build familiarity. Music will also be highlighted to a greater extent. Every episode includes a new song and several repeat across episodes so kids can learn and sing along. Kyle Sesame Street has been losing some cultural relevance for years now as Cocoa Mell and Bluey and other shows compete for kids' attention. Maybe it's Netflix debut can help it get its swagger back. I think it's going to get its swagger back. Also, we got a shout out. This is the 56th anniversary of Sesame Street, so they just paid off their 50-year mortgage six years ago. Pretty exciting. The show premiered on November 10th, 1969. And I want to say,

you did say maybe they're losing some cultural relevance. I think they've done a great job of trying to adapt with the times. And I think getting on to Netflix is just one of the signs that they're still trying to do that. It's still on PBS, but now they have more distribution. You mentioned that a lot of it is research driven, which parents love, and they're adapting the show to fit what the research is showing. So I think they have tried to stay culturally relevant for five plus decades. That's a really hard thing to do. I'm bullish on Sesame Street. Also, some of the best memes online are Sesame Street characters. I'm thinking the Big Bird meme. So they've done a good job of staying hip. It's got staying power for sure. I do think you touched on the right

point there that Netflix is probably the more natural home for Sesame Street these days. The HBO Max was never quite the right place for it because HBO was trying to get more into kids entertainment content, but that platform is not known for kids entertainment content. It just didn't feel right to, you know, have Cartoon Network shows and Sesame Street on the same platform that you have, you know, House of Dragons on, for example. So Netflix actually says that kids and family programming now make up 15% of its overall viewing. This is the biggest streamer in the game here. So landing Sesame Street just made sense for Netflix right there. But as a recently new father, I do want to get your thoughts on it. Like, is Sesame Street still

in the rotation for kids? What are you seeing out there? Is it all bluey these days? You're still probably a little young for Sesame Street. but we're reporting live from the fields. We tried to avoid putting my daughter in front of the TV too much. But this story has, again, made me bullish on Sesame Street. So when she's ready, I think I'm going Netflix Sesame Street. We'll test it out and I'll report back. Okay, that's what I like to hear.

First, you had the Stanley Tumblers, then you had the Lubbuboos. And now my winner of the weekend is the next hot collectible item, the barrista. Donning a green Starbucks beanie and a straw coming out of its head. The barista is a bear-shaped glass cup that the Seattle-based coffee chain is offering for 2995. Now, the barista was seemingly living in peace until virality hit. The glass cup quickly gained notoriety

across social and demand skyrocketed, with people waking up at the crack of dawn to line up outside their local Starbucks in hopes of obtaining one. Because of this demand, Starbucks inventory of the barista was strained with some stores running out before a majority of customers

could purchase one, leading to angry comments online, and in some cases, physical fights inside of stores. Now, if you weren't able to welcome the barista into your family, you can find some reselling for as high as $500 on eBay in other secondary markets. But whatever you do, whatever you do, be nice to the barista. He is so dang cute. He didn't want the fame, Toby. I know. These things, okay, anytime one of these cuts or whatever goes viral, you kind of just roll your eyes a little bit because it's just kind of the consumer merch culture that we're in right now.

but I will say the barista, I think it deserves all the vital same. Because it is very adorable. You know, it's see through, you can see your coffee into it. Starbucks is no one for these, you know,

cup drops. But I think this one has reached escape velocity. I mean, people are literally bloodying themselves going into stores or lining up before Starbucks even opens. There's been some controversy where people are peering in

through the windows and saw employees allegedly stashing some baristas of their own because we are seeing, you know, retail prices skyrocket. I mean, $500 for these things on eBay is a remarkable number right now. And I've also saw some people making DIY baristas, which is you empty out a honey bottle, which is shaped like a sea through bear and sticking a straw through its head. So I do think, I mean, every time that these trends go viral, you wonder what's the staying power of it is. We've seen it with, you know, Trader Joe's tote bags. We've seen it with other Starbucks holiday merchant

in general, but I don't know. I think the barista's got a little bit staying power. I hope so. In zooming out, I mean, I think the business model of these limited drops is really hard to get right. If done correctly, it's amazing. You're driving so many people to your stores. They're getting the barista and they're getting a latte. But when it gets this big, making sure people feel like it's fair, making sure there's enough inventory, making sure that people aren't mad on the comments and saying, I'm never coming to Starbucks again, can be difficult. So it is a kind of pretty risky strategy. And, you know, Starbucks is going through it right now. Finally, here's what you need to know to stay ahead in the week ahead.

Warren Buffett is preparing to release his final letter to Berkshire Hathaway shareholders today, marking the end of his extraordinary 60-year run as CEO. Now 95, Buffett says the note will touch on philanthropy, Berkshire, and other matters, much like his past letters have. Ahead of this release, Berkshire already penned a message warning investors about AI-generated deepfakes of Buffett circulating online, which was likely not an issue when he first started investing. Kyle, with Greg Abel set to take the reins at year's end.

This letter is likely the last word for one of the business world's most enduring voices. Right. Truly a goat. And I remember growing up, my dad would actually have me read the Buffett letters. It was like a really special bonding moment. We went to the Berkshire Hathaway Conference in Omaha when I was pretty young. And the letters are fantastic. Like, I encourage everyone to read them.

So, you know, thanks Warren for all the writing. And I'm really excited for this last one. It's a little bittersweet. Gosh, I was. trying to think about what I was due growing up. I definitely wasn't for it. I was probably watching Sesame Street for being honest, not reading letters with my dad. Very cool, though. Yeah, definitely in the end of an era. The world's biggest climate gathering, COP 30, has kicked off into Brazil. The first time the summit has returned to the Amazon since the 1992 Rio meeting

birth, the modern UN climate treaty. This year's conference is being cast as a full circle moment, focusing less on a new promises and more on accountability. Promises are nice, but now it's time to dig into whether countries are actually meeting prior pledges like phasing out fossil fuels and keeping warming below one and a half degrees Celsius, expect debates over financing for developing nations, the protection of rainforest, and growing tensions between rich and emerging economies over who bears the cost of climate action. Yeah, this one will definitely be something to watch and there's maybe some tension from the U.S. side of things for COP 30 and that we won't be attending this year, which I guess the bright side is will save some carbon emissions

not flying down there, but it feels like this is fraying at the edges, and hopefully this can revitalize the global community to stay focused on this challenge. Though the government shutdown finally has an end in sight, economic data scheduled to arrive from the government won't be released if the votes can't be wrangled in at time. Impact reports include the October Consumer Price Index, Producer Price Index, and the monthly U.S. Retail Cs report, leaving the Fed without visibility into key inflation in spending trends. That missing information has major implications for monetary policy as the central bank prepares for its December 10th meeting amid what Chair Jerome Powell has called driving in the fog

conditions, Kyle. Yeah, I think it's just another example of as the government shutdown goes on and on, we start feeling the effects more and more. And so, you know, hopefully we get a deal across the line and we can get back to some data nerds diving deep into it. Seriously, it makes our job a little easier too. Finally, tomorrow is Veterans Day, which means bond markets, banks and government offices will close, though the stock market will remain open. It also means we won't be in the office recording for you, but we're not depriving you of your MBD. We have a special interview episode dropping that you're going to want to listen to. We got the opportunity to chat with Michael Lewis, the author of Moneyball, The Big Short, and all the other books that somehow made even better

movies. Kyle, it is a great listen. Are you tuning in? Of course, of course I'm tuning in. You can't miss Michael. And also, obviously, happy Veterans Day tomorrow. And thanks. to all the veterans for their service, but I will be at the Michael Lewis interview, no doubt. It is a good one. Believe me, you're going to want to catch this one. All right, that is all the time we have today. If you have thoughts on the show

or have a guess as to where Neil is, shoot us a message on Instagram at MB Daily Show. Let's roll these credits. Emily Milliron is our executive producer. Raymond Lou is our producer. Olivia Graham and Olivia Lake are our associate producers. Hair and makeup just emerged, bruised and bloody, but with a barista

from our local Starbucks. Devin Emery is our president in our show's production of Morning Brew. See you all tomorrow. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars. Catch the Jonas Brothers return to the Yamava Theater stage on April 30th, the powerful vocals of Demi Lovato on May 17th, and the signature Southern Country Rock of Eric Church on July 19th. Tickets on sale now at Yamavatheater.com, only at Yamava Resort and Casino,

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