Morning Brew Daily - Markets Fear Recession is Near & Scientists Create Woolly Mammoth... Mice?

Episode Date: March 6, 2025

Episode 533: Neal and Toby dive into what economists are saying about the markets fearing that a recession is near. Then, the Trump administration teased the possibility of cutting hundreds of federal leases that shocked the commercial real estate market. Plus, scientists have brought back the woolly…mice? Meanwhile, Neal shares his favorite numbers on concert tickets, Chinese marriage rates, and Dallas Maverick ticket prices. Lastly, final headlines to know. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow There are risks involved with investing in ETFs, including possible loss of money. ETFs are subject to risks similar to those of stocks. Investments focus in a particular sector, such as technology, are subject to greater risks and are more greatly impacted by market volatility, than more diversified investments. Invesco Distributors, Inc. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good morning brew daily show. I'm Neil Fryman. And I'm Toby Howell. Today, the company trying to de-extinct the woolly mammoth is making progress. They just created woolly mice. Then one day after automakers' lives got flipped turned upside down by tariffs, Trump gave the industry a one-month reprieve. It's Thursday, March 6th.

Let's ride. If you were on social media at all last year, you probably saw this viral picture of a flaming hot Cheeto that uncannily resembles the rare Pokemon Charzard. Well, that single Cheeto, dubbed Cheetosard, has now been sold at auction for $88,000 to an anonymous buyer who beat out 60 other offers for the prize. And what is the prize? According to the auction house, Cheetosard comes affixed to a customized Charzard card and encapsulated in a clear card storage box, presumably to keep this piece of processed cornmeal from decaying. Toby, I decided not to bid on this one.

I'm waiting for the Pikachu-shaped Cheez-It. Oh, I thought you were going to say pickle chew there. I think this card is underpriced, Neil. Didn't think that was going to be my take, but two factors here led me to that conclusion. One, Charzard is one of the most valuable Pokemon characters. Holographic Charzard card sold for upwards of $500,000. Two, it's a flaming hot Cheeto.

What are the chances that it's a flaming hot dragon-shaped Cheeto. Plus, this is not the first time a uniquely shaped Cheeto has sold for a lot of money. In 2017, a Cheeto that looked like Harambe, the Gorilla RIP, pulled in nearly $100,000 on eBay. So whoever bought this, I think you got a great deal, and I will certainly be looking at the shape of my snack foods more closely. Now a word from our sponsor, Invesco QQQ.

Neil, I had a weird dream last night. How many times do I have to tell you, Toby? You don't have to tell me about your dreams while we're on air. So anyways, I was a world-famous investor that had one of those limitless pills that expanded my brain capacity, and I had a finger in every pie. Tech, healthcare, industrials, you name it, me, in my big brain, found a way to invest in every single one of them.

I hate to burst your big brain bubble, but it sounds like you were dreaming about the Investco QQQETF. You can get access to the most innovative companies across the country in every one of those industries you were dreaming about. Well, in my dream, I could also fly. I will say Dream Toby is a way better investor than Awake Toby. Probably a better podcaster too. With Investco QQQQ, you can rethink what's possible. Before investing, consider the funds investment objectives, risk, charges, and expenses, visit investgo.com for a prospectus with this information. Read it carefully before investing. Full disclosure in podcast description. Tomorrow morning is knocking. Stock your fridge now. How about a creamy mocha for a chino drink or a sweet vanilla,

smooth caramel maybe, or a white chocolate mocha. Whichever you choose, delicious coffee awaits. Find Starbucks Rappuccino drinks wherever you buy your groceries. U.S. automakers heard the sweetest nine-letter word in the dictionary yesterday. Hodgepodge. J.K., the word was exemption. One day before Trump's 25% tariffs on Canada and Mexico went into effect, Trump announced a one-month exemption for auto companies. The administration made the decision after speaking with officials from four GM in Stalantis

yesterday, where they warned that rising costs from the tariffs would cause auto prices to spike by thousands of dollars. The reprieve sent shares in all three companies sharply upwards, fighting against the overall gravity of a market that is flashing an increasing amount of warning lights showing that the U.S. may be heading down a path towards an economic slowdown. Despite the brief reprieve for automakers, tariff anxiety has sent recession fears spiking. A recent model from J.P. Morgan puts the chances of a recession at 31% up from 17% in November. Another model from Goldman Sachs is also seeing a recession risk creep up, now at 23% up from 14% at the start of the year. While a downturn isn't

the most likely outcome by any stretch. Some key indicators are flashing strong signs suggesting the economy is on the precipice of sliding in the wrong direction. Oil prices are at their lowest level since October. Stocks are reeling across the world. U.S. factory activity is stagnating and perhaps most important of all, consumer confidence is slumping. All of those factors are combining to raise fears of stagflation in the U.S. economy where prices continue to rise, but growth slows. Neil, let's start with this tariff-reprudence. first, but then transition to what these recession indicators might mean. Yeah, so for GM, Stalantis, these executives got on the phone with Trump on Tuesday and said

these tariffs are going to raise costs for us and we're going to have to pass it on to consumers. Trump said, okay, I will grant you an exemption for one month and, but you do have to qualify for a tariff free crossing across the border under Usmak, I guess it's called, which is the U.S.-Mexico-Canada free trade agreement, which is essentially NAFTA, 2.0 that Trump crafted with Canada in Mexico in 2020. You, any automaker covered under this agreement, you have a terror-free passage across the border. You need to qualify, you need to have a certain percentage of your parts sourced from North America.

And the goal there was to source more parts from North America. All these automakers said they comply, so they get a one-month reprieve. We still don't know what's going to happen at the end of this one-month exemption. and the vast majority of tariffs, 25% tariffs on Mexico and Canada, an additional 10% on China that were introduced on Tuesday are still in effect. So when you look at companies like Target that said they were going to have raised prices for produce coming across the Mexico border, Best Buy as well. Those are still in place, which will only extend the stock market jitters and perhaps some of those economic warning signs that you mentioned. Yeah, let's run down some of those warning signs, some of the data. The nominal personal spending fell 0.2% between December January.

That was the largest fall since all the way back in 2021. Adjusted for inflation, personal consumption was down. 0.5%. It doesn't sound like a lot, but again, personal consumption is one of the big drivers of GDP in this country. US retail sales fell by about a percent between December and January. The Consumer Confidence Survey that the conference board does, that slid the seven points in February. That was the steepest decline we saw since. summer of 2021. So a lot of warning signs, a lot of cracks everywhere you look. Now, we should take a

step back, though, and say, to be clear, sometimes financial markets aren't exactly nostradamus when it comes to pricing in recessions. Recession bets were way off back in 2023. Bloomberg forecasted a 100% chance of recession, but the U.S. consumer proved to be a lot more resilient than anyone expected in the face of those higher interest rates. So just take it with a grain of salt. Additionally, some of this bad economic news have come from reports based on surveys, which is not, you know, first-party data. It's really take them with a grain of salt. So we should say that despite all of these indicators can, you know, flashing kind of yellow lights and red lights in some instances, you can't just say, oh, yeah, we're definitely heading towards

a recession. Well, we'll find actually some hard data coming out tomorrow with the jobs report that will be very closely watched, given the widespread cuts across the government that Doge is doing, and it's the really, you know, you talked about the soft data that we've been getting these surveys. Well, this is hard data of how many jobs were added. Yesterday, there was a private survey of jobs that ADP does, which is essentially the preview of the government jobs report, and that also did not look very good. 77,000 jobs were added according to ADP, which is about half of expectations.

So this jobs report is going to be so key tomorrow morning. Like your company's CEO during peak COVID, the federal government is trying to shed its vacant or underutilized office space in a doge-led attempt to cut down on costs. On Tuesday, the real estate arm of the government, the General Services Administration, posted a list online of 443 properties it was considering selling, saying these properties were, quote, not core to government operations. The list was sweeping in scope covering buildings in 47 states and including prominent structures in Washington, D.C., such as, the headquarters of the DOJ, Social Security Administration, and Census Bureau. But then, a plot twist. Before anyone could place a bid, the list was paired back by 100 properties later on Tuesday, and then by Wednesday morning, it vanished altogether.

Instead, a message was posted on the GSA website reading, non-core property list coming soon. Whatever buildings, the final list contains the prospect of the government ditching its vast real estate portfolio has received both support and criticism, but it certainly sent shockwaves through a commercial real estate sector that is still trying to recover after its worst downturn since World War II. Washington, D.C., which is especially vulnerable to a government real estate fire sale, ended 2024 with an office vacancy rate at a near record 19.9%. Now, this isn't actually a new policy. It's just been happening faster than ever. The GSA has been

reducing the government's office footprint since 2013. It's shrunk by over 43 percent over the last decade. now it's just happening a lot quicker. And this has definitely been affecting the D.C. and the metro area. More than 98 leases covering 2 million square feet have already been canceled or restructured. In total, 63% of space cuts and 69% of cost savings have happened in the capital. So DC real estate market very much exposed to this initiative. And it could deepen this commercial real estate crisis that we've been seeing. The federal government just owns so much space in the capital.

174 million square feet of space. pays $5.78 billion annually in rent. So by canceling leases, by selling buildings, the government risk leaving landlords with these big vacancies, which would worsen an already pretty fragile office market. Now, some DC officials might be happy to see the government shed office space and have a private sector employer move in because the federal government is tax exempt for paying property taxes.

So they're taking up all this space in your downtown, which would really help your tax rolls if someone was actually paying taxes. So they are in support of generally moving the government out of these buildings if they are underutilized, if they are vacant and get a private sector employer to move in. The question is, say you're a private company and you see the Department of Agriculture give up their big office space. That is not a new building. And the data show that private sector employers don't really want to move into older buildings.

They want to move into, you know, the Hudson Yards of D.C. if those exist. Trophy and Class A plus buildings account for just 23% of D.C.'s inventory. But they've captured 59% of all private sector relocation volume since 2020. So if you're a private company that wants to move HQs, the chances are that you would want to move to a government building that is not new is quite low. One thing that is true, though, the government has been overpaying for office space. A report found that federal agencies pay 50% more per square foot than comparable private sector office building. So if you do cut this low-hanging fruit, like expensive leases, like expiring leases, you could save billions of dollars.

But critics say the speed of the cuts is this thing that could destable this pretty fragile real estate. And we had the list go up, 443 properties. We had the list go down. And then we had a message saying, we'll let you know what the properties are for sale in the future. so it is just a waiting game at this point. Let's move on to our next story. Scientists have been trying to bring back the woolly mammoth, but so far all they've got is a really hairy mouse.

Researchers at colossal biosciences announced this week that they have successfully genetically modified lab mice to have long woolly coats similar to mammoths, marking what they claim it is an important step towards reviving the extinct species and also an important step towards giving mice funny little hairdoes. The Dallas-based company has raised four, $435 million in the pursuit of de-extinction, with plans to introduce woolly mammoth-like elephants back into the world by 2028.

But a mouse is a far cry from a mammoth. Critics have pushed back saying that the team's changes mainly involved tweaking mouse genes to produce changes in their coats, rather than introducing any mammoth genes. There's also the critique that, hey, maybe these millions of dollars should go towards protecting ecosystems that exist right now, rather than making fuzzy lab animals in the pursuit of resurrecting the dead. But Colossal is confident in their vision. It does not accelerate anything, but it's a massive validating point, Ben Lamb, Colossal CEO, told the Guardian. I encourage everyone to go look up furry mammoth mice to Neil because they do have some luscious locks.

Is this marketing hype? Is this a technological breakthrough? The answer is yes. All the above, there might be a little, you know, this. PR team on Colossal Works overtime, and any time they, you know, make some genetic tweaks to an animal that, you know, people can already, scientists can already do nothing that's new before. They can put out a press release and we'll all cover it because these mice are so adorable. But there appears to be truly a technological breakthrough here because what Colossal is trying to do is edit genes of animals simultaneously, multiple genes simultaneously. And that is a technique that hasn't really been done before.

They're using these new techniques brought about by technologies like CRISPR. And some independent scientists are looking at what Colossal is doing and saying, hey, this is actually innovation here. So in their pursuit of the woolly mammoth, or we should really say this, it's not going to be a woolly mammoth. It's going to be a genetically engineered Asian elephant to resemble certain traits of a woolly mammoth, like being able to weather the cold weather. then that is pretty impressive,

and you are making some real progress along the way. And their long-term vision for this mammoth project is to not only resurrect a species and make these advancements in gene technology, but they also think that it could help the environment because to them there's real utility to bringing back mammoths. The idea is that these animals could help restore Arctic ecosystems by preventing permafrost thaw,

which releases carbon to the atmosphere. They walk over the ground which actually compresses the snow and grass that insulates the ground. So they're saying that long term, if we introduce this species back into the world, it could actually help the environment in a meaningful way. But who knows, actually, because they are saying that this really, the money could be spent doing things that save animals on Earth now rather than this future Hail Mary dream of a project.

But you are right that they do make these advancements. They do put out these marketing press releases. And you have to pay attention to them because, I mean, they made these really, crazy. Look at mice right here. So I do think that their approach could be criticized, but it does seem like they are making progress in some direction. And how are they going to make money is the question. And they already have spun out two healthcare companies from these progress. So maybe that's the way. They're going to create these new technological innovations as they're trying to create Woolly Mammis that will lead to commercialization opportunities because, you know,

they're worth $10 billion. They raise over $400 million. Those investors are going to be expecting some sort of return. And that return may not exactly be so satisfying if it's just 10,000, you know, quasi-wolly mammoths gromping around the tundra. Up next, he was gone last week, but he's back now. It's time for Neil's numbers. He's about to break it down. Own it all.

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the segment where I share three stats from the week's news that will send you to a higher plane of consciousness. My first number is a warning to everyone planning to see your favorite musical artists this summer. Start saving now, the Pink Pony Club flies first class. Tickets for concerts have exploded in recent years, far outpacing inflation and transforming concert going into a luxury good few can reasonably afford. Since this is Neil's numbers, here are some numbers per the New York Times. In 1996,

the average ticket price for the top 100 tours was around $26, or $52 adjusted for inflation. By last year, that had surged to almost $136. When Bruce Springsteen went on his board, to run tour about 50 years ago. You can see them for as little as $44, adjusted for inflation. Tickets for Taylor Swift's Erez Tour, which began in 2023, averaged $1,088. In all, concert ticket prices increased by nearly 400 percent from 1981 to 2012 compared to inflation's 150 percent rise. And that was way before the end of COVID, brought a spike in demand among people looking to get out of the house and experience life again. Toby, in a recent survey of 1,000 members of Gen Z.

86% said they overspent on live events. FOMO is a hell of a drug. That was my big takeaway from this, is that they know that they shouldn't be spending this much on concert tickets. But you see all your friends go. You see them all going to the ERISD tour, and you just can't help but shell out cash for...

Guilty. Guilty. I know. We both went as well. FOMO is a heck of a thing. But I do think, too, that we are also seeing just these unintended consequences where some fans are going into debt for these concerts,

taking on credit cards, debt. They see it as a luxury good that they're overspending on. And coincidentally, scams are also growing in tandem with concert prices. You've maybe seen like an Instagram ad for like cheap chapel rhone tickets. And then you click on that and you pay $400 to someone that isn't actually going to give you a ticket. So there is a lot of unintended consequences of this massive, massive upturn in ticket prices. Imagine $44 to go see, you know, Taylor Swift. It's just unfathomable these days. For my next number, the number of marriages in China plunged 20% last year to a record low of 6.1 million, which is less than half the number registered in 2013.

And some companies think they can help solve the depopulation crisis. Taking, we're a family here to the next level, one Chinese chemical manufacturer sent a message to unmarried employees recently, giving them an ultimatum to start popping out babies by September 30th or else get fired. quoted in the New York Times, the memo read, If you cannot get married and start a family within three quarters, the company will terminate your labor contract. The memo went viral on social media and not in a good way. People criticized the order as tone deaf and representative of the reasons

China's millennials are shying away from parenthood to begin with. They want people to stop telling them what to do with their lives and bodies. In response to the backlash, the company withdrew the memo and the local government ordered it to undergo, quote, rectification. Toby, this feels like, like something Lumen would try to pull off in severance. It is just a massive overstep, but officials have been trying these soft pressure tactics for a long time now. Those include visiting women at home to ask about their pregnancy plans, promoting this propaganda that pregnancy makes women

smarter. Their goal, they say, is to create this fertility-friendly social atmosphere, especially in workplaces. And this is not the only company that is pushing initiatives like this. There's this other big supermarket chain in China. The chain's founder posted on social media last year that he would forbid employees to exchange bride prices, which are these payments that can go upwards of tens of thousands of dollars that a man traditionally gives to a future wife's family. He also said that employees would not be allowed to invite more than five tables of guests to their wedding, which honestly, maybe not a bad strategy. Constraints, you know, breed creativity there. You really figure out who your good friends are in that case. But yeah,

this is just something that's been going on in China for a long time now. The government and private employers maybe overstepping their boundaries to try to increase the fertility rate. For my final number, the NBA's Dallas Mavericks are raising season ticket prices by more than 8%. And talk about not reading the room. The price height comes as Mavericks fans are suffering through one of the most miserable months in sports history. The MAV said that prices were going up due to, quote, ongoing investments in the team and fan engagement and explain that full season ticket holders will save up to 23% compared to projected

secondary market prices. But for fans, it was rich to mention ongoing investments in the team when general manager Nico Harrison traded away generational superstar Luca Donchage to the Lakers in February in one of the most flabbergasting, inexplicable trades seen in sports anywhere. Since that trade, Mavericks diehards have staged protest against management around their home arena and watched as more of their stars, such as Kyrie Irving, get injured and have to sit out the rest of what was once a promising season. So it'll be one fan's post on. social media pretty much sums up the state of despair, the audacity of this ownership group to come in and destroy the soul of the fan base, and then price gouge, it is disgusting.

However bad a day you think you are having, Mavericks fans are having a worse one. It's honestly just staggering at this point. This isn't pouring salt in the wound. This is making a spicy margarita in the wound left by the Luca Donchitz trade. And they are saying that, yeah, their season ticket increase actually represents savings of 15 to 23% when you compare it to the secondary market for next season. But that doesn't even make sense because if demand goes down, then it stands to reason that the price on the secondary market will go down as well.

So this is just pretty much unjustive. I mean, maybe this was always planned. This was obviously something in the works for a while. But the fact that you roll it out now in the wake of everything that's happened, disaster when it comes to PR for the team. Now let's sprint to the finish with some final headlines. Apple just refreshed the MacBook Air with its new AI-focused M4 processor, a slightly upgraded webcam, and most importantly, a lower price.

The 13-inch model now starts at just $999, making this the cheapest MacBook air since Apple's transition to making its own silicon. While the updates aren't ground-baking, other than the fact that it also comes in a beautiful sky-blue hue now, the price cut is strategic as Apple faces pressure from slowing Mac sales and increasing tariffs on imported electronics. Now, at this point, Apple is running up against the boundary of what you can do with a laptop. How much thinner and more powerful can they make this thing? Well, the Mac has actually been one of the few bright spots for Apple as iPhone sales have stagnated.

The Mac line in Q4 grew 16%, which was way more than expectations. And Tim Cook said that the MacBook Air was one of the reasons. And now he gives it a $100 price shave, even in the face of tariffs on China. And you can see that that might even spur more demand, which has already been pretty strong for these computers. Moving on, the world's largest iceberg has ran aground in the shallow waters near South Georgia in the South Atlantic, where it'll spend its final days gazing at macaroni penguins and elephant seals before melting and breaking up into a bunch of smaller bergs. This iceberg named A23A is almost unimaginably big. It weighs nearly 1 trillion tons, is larger than the state of Rhode Island, and has cliffs that tower over 1,300 feet.

Scientists have been watching its moves with great curiosity ever since it broke off the continental Antarctic shelf in 1986 and later got stuck literally treading water in the wetl sea for about three decades. Toby, is the Titanic finally getting a sequel? Well, the Titanic looks puny in comparison. The iceberg that sank the Titanic was maybe a quarter mile log which is just laughably tiny in the face of this 1,300 or 1,300 square mile behemoth. A lot of scientists were saying,

an iceberg like that look like, it just looks like a landmass. At this point, you can't see the edge of it. So it just literally looks like land in the middle of the ocean. Also, I was looking into what happens when something of this size melts. It can sometimes be a good thing for an ocean ecosystem because icebergs contain nutrients that it could stimulate ocean productivity. The area it's in right now has lots of seals, local predators as well. So it could actually be a boon to the particular spot in the ocean where it's kind of met

its final resting place. But also you mentioned that Titanic Berg was much smaller, and that really is the danger for commercial fishing and shipping operations. When it's so big like this, you can easily avoid it. When it breaks up into a million small pieces, that's where it gets a little more dangerous. So look out. For the first time ever, the World Cup is getting a halftime show. Yesterday, FIFA announced that the final match of the 2026 tournament held at MetLife Stadium.

In our backyard of New Jersey will feature a Super Bowl-style halftime show. And here's the catch. The lineup will include a list of artists curated by Coldplay. It's going to be electric when Ed Sheeran performs his disc track for Benson Boone. It's not quite Kendrick versus Drake. But I'm just nervous that soccer fans are crazy because they've started to roll out performances before games like the Champions League Final. Last year, Lenny Kravitz played at Wembley Stadium. But then two years ago or three years ago, Camilla Cabello was absolutely drowned out by Liverpool and Real Madrid fans ahead of the championship.

Champions League final. If this is a tense final, you're telling me that Ed Sheerun's going to come out between, you know, Argentina versus Brazil or something like that. The fans are just going ballistic. So who knows how I can't imagine that. You know, the imagined dragons would be received very well. Finally, a Florida man just took the phrase, eat the rich to a whole new level. Please say 32-year-old Jathan Gilder walked into a Tiffany & Co. Jewelry shop, claimed to represent a pro athlete and convinced employees to show him high value items. Before, snatching over $750,000 worth of earrings and making a run for it. When officers caught up with him later that day, they saw him, quote, swallowing several objects believed to be the stolen earrings, which turned the heist into the world's worst waiting game for authorities. I encourage you all to go look up this x-ray, which police released showing a foreign object inside of his abdomen. All I can say is only in Florida, Neil.

What is the resale value of this when it comes out the other end? Just buy. I don't even want to think about that. Just pop it in some cleaning solution. I'm sure Tiffany, you know, put it back on shelves soon after. Let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful Thursday.

This week is moving right along. For any questions, comments, or feedback, send an email to Morning Brew Daily at MorningBrew.com. And if you're enjoying the show, share it with a friend, family member, or coworker. Toby, who should everyone listening share it with today? I want you to share the podcast with someone who should probably go look through their old Pokemon cards again

or share it with someone who should go look through their snack foods a little more closely. You never know what you might find. Let's roll the credits. Emily Milliron is our executive producer. Raymond Loo is our producer. Olivia Graham is our associate producer. Eugenio Ogu is our technical director.

Scoop Stardaris is on audio. Hair and makeup is taking out alone to see the Gracie Abrams show. Devin Emery is our chief content officer and our shows of production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.