Morning Brew Daily - Labor Market is on Fire, Americans Nervous About Banks, UK Economy-Saving Coronation

Episode Date: May 5, 2023

Episode 53: Kelsey Sutton is here! Kelsey and Neal break down the latest jobs report which was stellar, and they explain why Americans are nervous about keeping their money in banks. The economy has never been more confusing. Plus, this week's earnings roundup and if King Charle's coronation will be good or bad for the British economy. And Snoop Dogg may be all in on the NHL while Ed Sheeran made music lawsuit history. Learn more about our sponsor, Fidelity: https://fidelity.com/stocksbytheslice Listen Here: https://link.chtbl.com/MBD Watch Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning brew daily show. I am Neil Fryman. And I am Kelsey Sutton. Welcome, Kelsey. Good to have you back. On today's show, we're going to talk about the jobs report that is hot and fresh out of the oven.

And Snoop Dog and Ryan Reynolds are in an epic battle to buy a sports team. Yes, very excited to talk to you about that. Neil, we're also going to talk about Bud Light sales. We're going to check in on that. And we're going to talk about a big event happening over the weekend. on the other side of the pond, which is the coronation and what it might mean for the economy across the pond. All right, let's get into the show. All right, Kelsey, before we get into the news, I do this every week with Toby and you're filling him in for him this week.

So you have to answer this question. It's our Friday tradition. Fast week or slow week? Fast week. Yeah? I don't know what that means, but I feel like the answer is fast. I mean, it's basically the small talk every Friday when you come into the office is like, man, that was just that was sure. just a super fast week or that was a real slow week. Oh yeah. It was super busy, super fast for it flew by.

Mine was, I usually do fast, mine are usually fast, but it was slow a little this week because I became a nap guy. Oh, yeah. Congratulations. Thank you. That's huge news. My brain just has started shutting off at 1130 a.m. or noon, so I kind of leave work and I enter my house as a zombie and collapse until, you know, 1245 and pick things up again. Yeah, well, you're here super early every day for the morning show. So that makes sense. You become a little like, I like that. Yeah, I've become like a two day. Yeah, two a day person. All right, let's get into it. The jobs report came out 30 minutes ago before we were taping this. So it's all a little bit fresh. But the main news is that it is super hot. So the labor market is still ripping. Basically, everyone who wants a job can get one. The U.S. economy added 253,000 jobs.

The expectations were 185,000. So you could safely say this crushed expectations. Yeah, do the math. Do the math. Tag us. We didn't study math. The unemployment rate also ticked down to 3.4%, which is a historic low. Basically, no one knows what the hell is going on in the economy right now.

Yeah. It's interesting because it's like really good for the workers. And then the Federal Reserve has been kind of. of saying, well, we need this to slow down to help with inflation and, you know, all of that. So it's kind of one of those things like whenever one of these comes out, it's like, wait. The good news. It's a total good news. It's bad news kind of thing. But the economy is just giving such big signals because on the one hand, you have this crisis with the banks and regional bank. There seems to be another regional bank crisis or failure every single week.

And that is, you know, leading to tighter credit conditions and slowing down to the economy. There's all these mass layoffs that we've heard about, and we'll even talk about another mass layoff later in the show. The Fed is hiking rates. Their economic growth is slowing. But every time all of these warnings about a recession is on the doorstep, something like this jobs report comes out, and everyone's like, wait, I have no idea what's going on. Because there is no evidence of a slowdown in this jobs report.

I mean, you cannot, we're not even remotely close to recession if you have an unemployment rate of 3.4%. Yeah, I know. And especially, I think it's four out of, more than four out of every five people in their kind of prime working age. So I think that's 25 to 54, I think, are in the labor force. So like that's, you know, that's a huge thumbs up. What they're doing in France, I think I enjoy. But you want to talk about this banking poll that just came out and shows kind of how spook people are about.

Yeah, I was going to say, Neil, I think the thing that's so interesting is it's kind of like the different, the different economic are not necessarily like lining up perfectly with people's perception of what's going on. And you always see this in like these big public polls. And, you know, we mentioned the kind of regional banking crisis, mini crisis, however you want to define it. But I think it's about 29% of people in the U.S. are moderately worried about the safety of their money in banks. That's according to the Gallup poll. 19% are very worried. And so like that is indicating, you know, that this kind of banking crisis that we've seen kind of through the year is like it is having an effect.

But meanwhile, then you, and I think that's about similar to the 2008 financial crisis too. I think it's even more. Mm-hmm. Because when you combine those two figures total, you have 48% of adults who are worried about their money in banks. And then after Lehman Brothers in 2008, it was just 45%. So right now, at 3.4% unemployment and, you know, the economy adding almost 300,000 jobs every single month, more people are worried about their safety and banks than they were in 2008.

Yeah, and despite all of these efforts to try to kind of tamp down on some of these local bank mini crises, as you would say, do you want to kind of walk us through kind of what we're seeing with Pac-West or Western Alliance? Sure. I mean, the bank, the week started off with another bank failure, the second bank failure in U.S. history, which was First Republic. And then PAC West said, which is another regional lender based in California, said it was exploring strategic options, which usually means it's looking for a sale. Shares plummeted like 50%, over 50% yesterday.

Now they're rebounding this morning by 28%. And then First Horizon was another bank that called off a merger with TD Bank, and it fell 33% yesterday. Now it's rebounding again today. So I guess it remains to be seen whether these banks will, you know, end up, like First Republic or SVB or is this kind of just like jitters working their way through the system and maybe at the end of this will be okay. But it's just been a really crazy week for the economy. Like I said, like we started with First Republic. Then Janet Yellen, remember this, warned about the debt ceiling happening on as soon as June 1st, which got everyone a little freaked

out because that would be a market calamity that makes this banking crisis seem very small. Then we had the Fed raising rates maybe for the last time. Other regional banks like plummeted yesterday and then we had this jobs report. So I'm ready to turn my brain off this weekend. Let's just say that. But not before we go into our next story, which is about there was a Maddie wrote this morning in the Brews newsletter. She called it the Met Gala of earnings days yesterday.

And I don't disagree. There were a lot of really interesting earnings reports. And in classic Morning Brew daily fashion, we're not going to talk about all of them in super in depth, but we're going to go back and forth. and just use our, just take away, have one big takeaway from each of them. So I'll start with, you have to start with the biggest publicly traded company in the world, which is Apple. And Apple's quarter reminded us that iPhone is like oxygen.

Everyone needs it. So analysts were expecting iPhone sales to drop last quarter because of all the economic gloom we just talked about, but sales actually grew 4%. That was from huge demand in emerging markets like India, Indonesia, and the Middle East. East. So basically, the takeaway here is Apple can just crank out iPhone sales, even in a slowing economy all around the world. People need their iPhones. Except me. I have an Android. I just need a That makes literally one of you. Disclosure. Let's move on. I want to talk about Bud Light real quick. I'll keep it super fast. Anheuser-Busch reported its earnings this week. Their earnings rose 8.3%,

which is kind of above analyst expectations a lot. So that's really good news. But the thing that I think is kind of important to talk about is that Anheuser-Busch, as you may know, is kind of in the midst of this big kind of public relations crisis, I would say, like the culture wars, like it's smack in the middle. It did not want to be, I don't think. But one of the things that's interesting is like these are really good results. But, you know, April is not part of these results.

and that kind of entire thing happened in April. Again, for those of you who are somehow missed this, Bud Light had a partnership of a brief social media partnership with Dylan Mulvaney, who is a trans influencer, and that has created a lot of backlash. And, you know, they have put some executives on leave. It's kind of a mess. But so the CEO said, you know, during the earnings call that it's too early to really have a full view of the situation.

And the situation, meaning people boycotting, but light, whatever. They said, They hit rock shooting it. Yeah, with the gun. We're not going to cut to that video. It's not necessary. But it said that the volume decline of Bud Light sales would represent around 1% of overall global volumes for that period.

With that said, we've also seen some data that says, like, there are some temporary retail store sales. So I think that Bump Williams, consulting did an analysis of Nielsen sales data and saw that retail source sales of Bud Light in the week ending April 22nd fell around 21 percent and competitors raised around the same percentage. So you know, you'll see, well, kind of remains to be seen kind of what the full effects are going to be. We'll have to wait till next quarter to see kind of what that, what that looks like. One thing you should know is that you will see a lot more Bud Light commercials coming your way because

they said they would spend triple the amount of marketing that they were planning to in the summer. Yes. Yes. So just steal yourself for that. Okay, let's move on to Shopify, which is this e-commerce platform that a lot of, you know, online merchants run on. It said it was cutting 20% of the workforce and shares spike 23%. And that's just been the total trend this year where investors are really rewarding you for mass layoffs. We saw it with, you know, all of the big tech companies where they all entered year of efficiency mode and investors, you know, sent their stock price up because they're finally getting costs under control and maybe their, uh, maybe their workforces had ballooned a little much. I thought this was also interesting. Shopify sold its, it's, uh, logistics unit to

Flexport, which is a freight company. And it seems as though Shopify was really wanted to be a fulfillment provider to like Amazon and Walmart and it was buying up these warehouses and it was trying to do this fulfillment thing. That is so expensive and really hard. Um, and so Shopify was like, yeah, we're, we're not, we tried to play in the big leagues. I don't think we, we're, we're not, we try to play in the big leagues. I don't think we can do that. So we're just going to kind of offload it to Flexport, which has a much bigger, you know, capabilities in that area. And we're not going to compete with Amazon and Walmart. We'll just stay in our lane a little bit. Yeah, yeah. And other companies that are being rewarded for, I was going to say, slimming down, cutting costs. Warner Brothers Discovery just reported their

first quarter earnings this morning. And I mentioned that because they have gone through layoffs. They did not announce new cuts today. But they reported quarterly revenue pretty in line with estimates. a big net loss, $1.1 billion. Their streaming business turned to profit for the quarter, which is kind of a big deal, $50 million, but of course not enough to offset those losses. Something that David Zaslov, the CEO of Warner Brothers Discovery, said, is that the streaming business, so that's HBO Max, soon to be rebranded to Max, and Discovery Plus, excuse me, they hope will be profitable this year.

They expected to be profitable this year, which is a year early. earlier than they anticipated. And I think that's going to be interesting to see how investors respond to that because investors have really been in the streaming sector focusing on profitability and not growth. So for a long time, we were just looking at subscriber numbers, subscriber numbers, subscriber numbers. And now it's like, no, no, no, we need to see that this is actually turning a profit. So something that's going to be really interesting to watch is, you know, HBO Max is going

to be rebranded to Max in just a couple of weeks. I'm sure you have heard the news. Yeah, everyone was so upset about it. And we listened to an interview with David Zazloff this morning. And I thought he made a pretty interesting case for it being like, HBO has a really dedicated, loyal subscriber base, but it wasn't growing. And a lot of part of the country doesn't really care about HBO shows. They care about the reality shows on Discovery, Friends, Big Bang Theory, all the stuff

that is in this package. So branding the streaming service as HBO Max is kind of a misnomer. and might put off some people because there are some, you know, HBO homers, but a lot of people don't really care about the brand. So he was making that case. And I, you know, I don't think it is a biggest deal in the world to drop HBO from the name of the service. Yeah. Or, well, we're going to have to see how everyone responds later this week. And then the elephant in the room is the writer's strike, which, of course, Warner Brothers Discovery is not the only

entertainment company dealing with, but that we're going to have to keep watching and seeing how that may affect these, you know, of these streamers bottom lines going forward. Of course, if you have content already made, you're great for now. But that quickly catches up to you. So we'll see how that plays out. We've stockpiled a lot of podcast episodes. All right. Our final one is Royal Caribbean.

So remember during peak COVID when cruises were seen as like petri dishes of viruses and there was no way anyone was getting on a cruise again? Well, as Maddie wrote in the brew this morning, nothing will stop Midwesterners from getting plastered and a floating, hotel. There's just nothing that will. Royal Caribbean said that bookings were higher now than in 2019 before COVID by a wide margin. So everyone's got the travel bug and they don't care whether they're going to get a bug while traveling apparently. I was about to say you just teed that up for yourself really well. I know. Sometimes sometimes I can do a good one. That is our earnings roundup.

We'll see what happens next week in the world of corporate financial disclosures. Severe sexy. But beforehand, let's talk about something that's happening on Saturday. If you are aware that there is a royal family, the coronation is happening this weekend, Neil, and it's coming at a really interesting time because the UK economy is, I would not say, is in the best shape. And so this is really coming in a moment. And it's, of course, the coronation brings with it huge, huge sales, right? retailers have come up with all of this merchandise. All of these chotchkes people are traveling into the UK to be part of coronation celebrations. So, you know, if you're there, you can buy biscuit tins, teddy bears, tote bags, flags, cushions, teacups, you know.

So Westminster Abbey, May 6th, we're going to see this. The thing that's so interesting to me, Neil, is that we really don't know the cost of the coronation. So we know sort of like there are kind of all these estimates about. about kind of what this, what the coordination can do to the economy in terms of sales, in terms of boosting the hospitality sector, for instance, or, you know, retailers in the area, extra tourism. At the same time, we really don't know kind of the cost of this. I think that there's some of the estimates are around like up to about $125 million for, for the expense of the proceedings. And it's coming really at a cost of living crisis for, you know, for Brits, you know, people are. are relying on food banks to make ends meet. So I want to know what are your thoughts about kind of what you're going to be keeping an

eye on in terms of like how this how this plays out and how that might affect the economy. I mean, it, I don't think these things have much bearing on the economy. Like these one-day events, it's kind of a sim. It's kind of like the Super Bowl or a big sporting event, the World Cup. They always say they're going to bring in all this money. And then at the end you do, you kind of look at the numbers. And it's like, okay, actually, we lost like a bazillion dollars on this. So I think this is kind of the case.

He's doing a much like slim down version, a smaller version than the last one, Queen Elizabeth, in 1953. So I think this is, I don't think that many. I think people care about this, but I don't think it won't be the event of the century that it was last time. Charles, I guess, is, you know, I don't think anyone cares about them. They just care about like whether, you know, Harry and, I mean, Harry's going and Megan's not going. But honestly, the biggest thing I want to zone in on is the kish. Oh. The coronation kish.

This is the official dish selected by the king and queen. And it's got spinach, tarragon, fava beans and cheddar, and a lard crust. And the judge on the great British bakeoff declared a really good kish. Well, I'm going to make this tomorrow. I think I'm going to, I think I'm going to join you. It sounds great. All right. So if you want to tune in to the coronation, it starts at 5 a.m.

on a Saturday. So I guess you don't want to tune in because it's 5 a.m. Eastern on a Saturday, but you can, has CNN, CBS they have it. And I'm sure the memes will be flowing on social media when you wake up with how everyone is all dressed. All right, we are going to head into our next story after this quick break.

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First, this is so weird that I'm saying it because Toby usually says this, but this is not financial advice. We are just humble podcasters. And don't take any of what we're talking about. This is not advice. We're just talking about what happened. So I'm doing stock of the week this week, and I'm choosing perhaps the newest stock that exists because it just IPOed yesterday. Kenview, which is Johnson and Johnson's Consumer Health Unit, went public yesterday in the biggest U.S. IPO since November 2021. So it's kind of a big deal for the IPO market, too.

And it had this nice first day pop that you dream about spiking 22%. I didn't heard of Kenvue, so I looked it up. And apparently I should have because it made everything in my medicine cabinet. There's Tylenol, Listerine, Nutrigena, Band-Aid, Vino, and a lot more. It brought in about $15 billion in sales last year, went public at a value. of 41 billion. So yeah, this is a pretty good IPO. It was huge. It's valued at $42 billion or $41 billion, like I said. And the last time a company this big went public was Rivian, which in November 2021, which seems like eons ago. And the IPO market has just had this crazy deep freeze. We were different people in 2020. Oh, my God. We were talking about slurp juice and NFTs and bored apes. I want to go to the dog of the week. sort of the bummer segment of the week, which is, unfortunately, I mean, I write about streaming.

So I'm, I, this is my pick, which is Paramount Global. Shares fell over 28%. They reported their earnings. And they missed analyst estimates. They logged their worst day since Viacom and CBS merged in December 2019. Never great. This is really due to the fact that operating a streaming service is really expensive. And they, They are just not quite there. So Paramount Plus has 60 million subscribers, which is great. But they just, they, their revenues are just not, not able to catch up. Combined that with a challenging ad market, especially at the beginning of the year.

And that just doesn't add up. The company is cutting its quarterly dividend, almost 80% from 24 cents a share to five cents a share. That is something that executives has said is necessary to kind of help, basically, help them invest in the kind of long-term value proposition here, which is, again, paying for streaming, which is really expensive. So it's kind of a familiar story. We're seeing a lot of these companies, a lot of these entertainment companies are just reporting wider and wider losses in their streaming segments, just, again, due to the kind of exorbitant cost of content. And then, of course, as I mentioned with Warner Brothers Discovery 2, there's this writer strike, which has a huge

question mark as to what that's going to mean. I think in the short term, we might see some actually cost savings because you can't make any shows, so you're not spending them any on shows, but that causes a problem down the line. So we're going to have to see how Paramount deals with that and how a lot of those entertainment companies, you know, manage, manage through. For some reason, I have Paramount Plus. Like, I don't know through what person or account I'm signed into. I think they have South Park, which I watched on. And I also watched The Godfather on Paramount Plus recently. That's been a my experience with Paramount Plus. I don't know if they have anything else worth watching. They have a lot of sports. Well, so that's interesting. They have their Paramount Plus Showtime

Showtime. So Yellow Jackets is like, I feel like super buzzy. It's a Showtime show or Your Honor, I think is another one. I'm flattered. So, yeah. No, maybe they do like Champions League 2 with CBS. Yeah. Or some soccer. Okay. All right. Speaking of sports, let's talk about Snoop Dogg. He wants to buy a hockey team. And that hockey team, and that hockey team is the Ottawa Senators. The Sends are up for sale and Snoop is teaming up with LA-based entrepreneur Nico Sparks to prepare a bid that could eventually top $1 billion, which would be a record for any NHL team. Snoop, I did not know this, but is a huge hockey fan and I also did not know this, randomly loves Ottawa, which is not anyone's idea of

the most exciting city in the world. This week he posted on Instagram about his interest saying that he wants to bring hockey to our community in all caps. And if they're bid is successful, they'd be the first black ownership group in the very white NHL. And yes, like I said, the sale would break an NHL record for a dollar amount for any team. I feel like celebs are really interested in sports teams right now. We saw Ryan Reynolds and Rob McElhaney with Rexum. So it's going to be interesting. Sports is big business. Speaking of Ryan, he's bidding for the senators too. So he and Snoop are going at it with billion dollar bids. So this is going to be a very interesting.

war to play out. Who would you rather have owned the senators? You obviously don't care about the senators. What do you mean, obviously? No, I have no horse in this race. Let's be honest. Well, here's the thing. I don't think anyone outside of Ottawa cares about the senators.

But that could change. And I know you're not from Ottawa. I'm not, believe it or not. I want to move to our final segment of the day, Neil, but I'm going to toss it to our guest host. It's just a clip of Ed Sheeran. We're going to talk about insurance legal case. But let's roll the, do you want to roll the clip now or should we roll it at the end?

Let's do it now. I'm just a guy with a guitar who loves writing music for people to enjoy. I am not and will never allow myself to be a piggy bank for anyone to shake. I'm obviously very happy with the outcome of the case and it looks like I'm not having to retire for my day job after all. But at the same time, I'm unbelievably frustrated that bassist claims like this are allowed to go to court at all. So thank you, Ed, Sheeran, for joining us on the pod. So Ed Shearin had a good week at the end of it. The jury, so Ed Shearin was facing a lawsuit filed by the heirs of Ed Townsend, who co-wrote the song, Let's Get It On, famously sung by Marvin Gay.

And I believe that, I believe it was in 2017, the lawsuit was filed basically saying that Ed Schuier song thinking out loud was was copyright in was a copyright infringement of let's get it on a jury decided unanimously on Thursday that that he was not liable and this is really interesting because this is his second this is edjuring's second copyright infringement case so I believe it was last year he was he had also was facing a lawsuit for the song shape of you he had been accused of copyright infringement and he won that case as well so I think that that kind of helps context actualize like his frustration by he's saying this because this is not the first time that that this has happened. Um, but it's, you know, it's, it's just one of those things that's like,

sometimes if you hear the songs, you can hear it. And, and I think that one of the lawyers actually played a mashup that Ed Shearant had done with, uh, with Let's Get It on and was like, this is the smoking gun of the case. And Ed Shearant's basic argument was basically, no, this is not copyright infringement. Like, we're writing songs and there are, you know, there are lots of ways that notes can be kind of combined in songs who can be written and only so many chord structures and all of that sort of thing. So ultimately, a good day for Ed Shearren at the end of it. Yeah, I think our listeners know where I stand on this. It was complete BS. Like Ed Shearin is a, you know, he writes very basic pop songs and usually they follow it a very similar four-core

progression. And there's, you could overlay a million songs onto Ed Shearan songs and a million songs onto other songs that people write that are pop songs. So, listen, yeah, I'm glad this is getting thrown out and I hope and yet like you said he's like I'm not a piggy bank so I hope I hope people stop with these kind of frivolous lawsuits just kind of the second celebrity to look pretty good recently after a trial along with Gwyneth Paltrow that's a really good good good month for celebs on trial um that is our show thanks for stopping in Kelsey it was great to have you um you can always reach us at morning brew daily at morning brew. Daily at morning brew. Com. Big thanks to everyone who made this show possible. The show's producer and editors

Emily Milliron. Have fun in Philly tonight. Our technical director is Dan Bousa. Samantha Vela's and Raymond Lue are our associate producers. Billy Minino is on audio. Hair and makeup went to Spain with Toby, which is weird because I did not know they were friends. Devin Emery is our chief content officer. Our show is a production of Morning Brew. Thanks for having me, Neil. Have a great weekend. Have a great weekend. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars.

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