Morning Brew Daily - Meta’s Fact-Check Overhaul Scares Advertisers & Delta Teases Gambling Mid-Flight?

Episode Date: January 13, 2025

Episode 495: Neal and Toby discuss Meta’s recent overhaul of its policies that have sent shockwaves throughout, particularly with its main advertisers expressing concerns on its new free-speech direction. Then, JPMorgan wants staff to return to office 5 days a week and not everyone is happy about it. Plus, the December jobs report shows a hot labor market which has curtailed hopes of a near Fed rate cut. Meanwhile, Delta and robot vacuums are the weekend’s winners. Lastly, a preview of what’s coming in the week ahead.  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. Checkout public.com/morningbrew for more Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Alpha is an AI research tool powered by GPT-4.  Alpha is experimental and may generate inaccurate responses.  Output from Alpha should not be construed as investment research or recommendations, and should not serve as the basis for any investment decision. Public makes no warranties about its accuracy, completeness, quality, or timeliness of any Alpha out. Please independently evaluate and verify any such output for your own use case. *Terms and Conditions apply. 00:00 - LA Wildfire Update 03:15 - Meta Advertiser Concerns 08:10 - JPMorgan Return to Office  11:50 - December Jobs Report  17:45 - Winners of the Weekend  24:30 - Week Ahead  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, could Meta's fact-checking pivot cost it precious advertising dollars? Then Midtown's sweet green restaurants rejoice. J.P. Morgan has called every one of its 300,000 plus employees back to the office. It's Monday, January 13th. Let's ride. Kicking things off with an update on the wildfires in Los Angeles,

which California governor Gavin Newsom said would be the costliest disaster in U.S. history. Over the weekend, firefighters took advantage of calmer winds to make some progress battling the blazes, slowing the progress of the Eaton fire near Pasadena and corraling more of the Palisades fire near the coast, about 13% contained as of this morning. The death toll increased to 24 and is expected to rise, authorities said. The weather is not looking good for firefighting earlier this week, with at least two heavy blasts of Santa Ana winds expected, but later in the week, the winds are projected to calm down and remain loved. for the weekend. Also, if you've been on social media, you've no doubt seen some of the aerial

firefighting efforts going on, both from the smaller Nimbler helicopters and the bigger so-called super-scooper planes that are swooping into douse parts of the blaze. Those iconic water bomber planes are actually here on loan from Canada as part of a long-standing agreement between the Canadian and U.S. governments to kind of share aid when fighting wildfighters. Right now, there are two planes in L.A. being flown by rotation of eight Canadian pilots. Two more are getting folded into the rotation this week, which is good too because the FBI is currently investigating incident where one of the super scoopers hit a civilian drone damaging it. So hopefully that can get back up in the air soon because seeing these super scoopers in action, it is pretty remarkable to see just

how nimble the pilots can be and how accurate they can be when trying to fight these fires. Now a word from our sponsor, public.com. Neil, change is hard. Don't I know it? I've been using the same golf putter for so many years now. There is a dent where I hit the ball. Well, what if someone offered you up to $10,000 for switching? Well, that would make change a little easier.

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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, celebrating its 40th anniversary. You in? Must be 21 to enter. Mark Zuckerberg's makeover of meta for the Trump era took a surprise and dramatic turn last week when the CEO said his company would end its use of third-party.

fact checkers in favor of the crowdsource community note system employed by Elon Musk's X. Could that cost it business? Potentially, some marketers are now saying that the change could limit their ad spend on the platform if it were to lead to the unchecked spread of fake news, harmful content, and hate speech. Several advertising bosses told the financial times that brands are beginning to reassess their plans to advertise on meta's platforms over brand safety concerns. For meta, advertising is not just an important source of revenue. It's the only source of revenue.

In the third quarter, advertising accounted for 98% of meta's total sales of $40 billion. It's 21% share of the U.S. digital ad market is only second to Google. Meta's ability to keep advertising dollars flowing not only keeps the lights on now, but it's also crucial for subsidizing those futuristic money-sucking bets, such as the Metaverse and AI. So the stakes are enormous. Do you think Zucks Gamble on community notes will lead to an advertiser, Exodus? I mean, just look at X to see the answer to that question because when X has been kind of the opposite of meta when it comes to brand safety, if you want return on investment, if you want this close relationship with these brands, you don't necessarily look at X as the poster child of that. because with Elon Musk kind of more laissez-faire,

this third party without fact-checkers to keep the platform pretty buttoned up, you have seen advertisers kind of flee the platform. And meta has long been seen as more of a safe haven where you will find more brand-safe content to place your ads next to you. So even though a meta is kind of copying X's fact-checking approach, you do see how it can unsettle advertising.

if you do not have some of these safeguards in place. So yeah, there is definitely a little bit of fear out there that meta could start to turn more into a platform that resembles X. Now, the rebuttal to this is that meta's ad tools are second to none, maybe second to Google, but along with Google, it has built this duopoly in digital advertising. It has incredible targeting tools. Brands often see just incredible performance when you place an ad

in on meta's platforms like Instagram or Facebook. Facebook proper. So the pushback to that is if brands continue to see that performance on their money, that ROI, then they're not going to go anywhere. And that really is all they care about. Meta did a full core press to advertisers on LinkedIn and other places saying, look, like, we still have these brand safety tools in place. Those are not going anywhere. We want to make sure your ad dollars aren't going, your advertisements aren't appearing next to harmful content. But still, these quotes given to the Financial Times from ad leaders said, yeah, people are going to start reassessing their advertising spend. So we'll see whether META takes a hit.

On the other hand, you can say that this story goes in a million different directions, but you could also say that maybe it is a self-defeating move in the advertising space, but it is a plan to future-proof meta's business in the next administration because there's a huge antitrust trial looming in April. and a lot of these changes that Mark Zuckerberg has been making to meta are to get in the good graces of the Trump administration. So a lot of moving parts here. I don't think you will see advertisers care as long as the platform continues to perform. They don't really care what their ads are appearing next to if they are still getting the same ROI that they've been enjoying.

So that's probably maybe the cold hard truth that a lot of these advertising execs did say, like, hey, as long as it still makes sense to put our ad dollars there, we will do that regardless of the new fact-checking strategy. But I do think that last part that you mentioned is very important. Zuck has kind of looked at the playing field here, seen some of the antitrust action that is being levied against big tech and saying, wait a second, whoever's currently in office has a lot of say and usually does end up influencing

who or what the antitrust apparatus of the United States ends up operating like. And so saying, trying to cozy up a little bit to the Trump administration might just be a long-term bet on the future of meta. He's positioning himself. People are calling Zuckerberg a little bit of a chameleon in this sense that he is going where the winds are blowing. So part of it is potentially something that he has to consider when it comes to impacting his business's bottom line. But also he is looking ahead and saying, I need to possess myself well for these next four years. Workers at America's largest bank are donning their Patagonia vests and lacing up.

their dress shoes once again as they prepare for the end of the work from home era. Hybrid employees at JP Morgan got hit with a Membo last week saying they will be asked to return to in-person work five days a week starting in March. Most of the bank's workers were already back-clocking in, including senior managers in client-facing roles. This latest move affects mostly back-office roles like call center workers who had still been rocking two days a week from home. But so far, the bank's 300,000 plus employees aren't taking it very well. J.P. Morgan ended up shutting off comments on the internal memo after employees criticized a move with some even suggesting unionizing. Neil, on the one hand, about 70% of the bank's employees were already back in the office five

days a week, but also this is certainly the end of an era. It is the end of an era, as we like to say a lot. Some of these quotes of that people were putting on the message, which I think are quite revealing. One person said that someone who was driven around in a bio-s chauffeur must have made the return to office decision. Another said they were bullish on Rolex prices. As you mentioned, one comment I think that raised a lot of attention, was that maybe workers should unionize. Another finally said, this ain't it. So whenever we've seen this over the last few months, Amazon, Starbucks, Dell, AT&T, are all large corporations that have said, you know what, this hybrid working experiment that we've implemented since COVID is not working for us for whatever

reason. You can read between the lines. Maybe it's quote unquote a soft layoff or something like that and they're starting to bring workers back to the office. But the thing is, as we've seen from these companies bringing workers back to the office, you need to have your office ready. And that hasn't gone totally well. And I think that's why JP Morgan says we're going to give you a 30 day heads up so we can actually get our stuff in order at our New York offices or wherever they have offices to make sure that we're ready for when you come back in because that hasn't been always the case. Yeah, Jamie Diamond, the CEO of J.P. Morgan, has made it very clear in multiple interviews over the last few years that he is a workplace traditionalist. He does

think that face-to-face interpersonal communication and collaboration is the way to run a business. That is really what he's saying here. It's like, we think that the best way to run a company is like this is in person. That is the rationale behind this. But, I do think what you are seeing, too, is that we are seeing some of a bifurcation in terms of return to office. Is it about productivity or is it about saving some of the money that these businesses are wasting on these empty desk chairs? I do think that resume.org, they did this survey where they talked to business leaders, one and three business leaders, want workers back in the office due to existing lease agreement. So what is the motivation here? Is it just that Jamie Diamond is looking at all these empty?

the office chairs and going, wow, this is a lot of money I'm wasting. Let's get people back in the office. Or is it really about increasing productivity? Well, have you seen what they're building in Midtown? They're building a huge skyscraper, 60 stories. 14,000 workers are supposed to fill it. So, yeah, maybe there are some considerations there. It also comes at a time. We got this new report out on Friday. 20.4% of office space in the country's top 50 cities were empty. That is a new record for office vacancies. So whatever the return to office mood is, the offices are still more empty than they've ever been in the United States. The U.S. economy said goodbye to 2024 with the most spectacular fireworks display of them all,

no offense, Sydney Opera House. According to the monthly jobs report out Friday, employers added 256,000 jobs in December, smashing expectations of 155,000. And for the cherry on top, the unemployment rate fell to 4.1 percent, which was also better than estimates. All signs point to a healthy labor market. With December's numbers in the books, we now have the ability to do jobs wrapped and look at the hiring picture across the entire year. Bottom line, it was historically good. The U.S. economy created 2.2 million jobs in 2024. More than the 2 million added the year before the pandemic in 2019.

Hiring was positive for every month. month of 2024. In fact, December marked the 48th consecutive month of net job creation tied for the second longest streak on record. The last time the economy lost jobs was in December 2020. You'd all think this would be cause for a celebration on Wall Street. But no, stocks had their worst day in weeks Friday after the report came out. Toby, why the discrepancy between the great job numbers and the really bad stock market day? Unfortunately, this probably puts future Fed rate cuts a little bit more in doubt because of this absolutely amazing report. You called it the greatest fireworks show since Sydney Opera House. It looks like interest rate cuts are probably

a little bit more distant. Part of the reason is, is that if the labor market is so strong, if the economy is humming along so well, do we really need to cut rates going forward? So if you look at some analysts from the biggest banks in the country, Goldman Sachs now expects just two rate cuts from the Fed in June in December as opposed to a previously anticipated three. And then economists at Bank of America actually believe the Fed is done cutting rates. They see a possibility actually that the Central Bank may be looking at raising rates. I'm just saying what Bank of America economists are saying right now. So that is why you saw a little bit of this red day to close out the week because all of a sudden this possibility that, wait a second,

these rate cuts are not as guaranteed as we thought they were because of the, just how good these jobs numbers were. And, you know, we do have to talk about the bond market as well. I know that's something that we discussed last week. Bond yields are surging, which indicates that bonds are selling off. The 10-year yield right now is at 4.8%. It's really bumping up against 5%. That 5% yield on the 10-year is very rare.

It last happened in 2023 and the time before that was not until 2007. Now, rising brawn prices indicate that, traders think that there's going to be higher inflation going forward, which means the Fed is not going to cut rates at all. And that puts pressure on stocks because when bond yields are this high, it makes them more attractive relative to stocks, especially tech stocks, especially gross stocks, especially small caps. So if it hits 5%, some analysts are warning of a pretty steep correction in this stock market. So we will be paying attention to what happens with those bond prices. It's not just a U.S. issue either. It's all around the globe. Bond prices are rising.

That's the biggest story going on in financial markets right now. And then the final thing to keep an eye out for this week is Wednesday, the CPI report comes out. And if that comes in higher than expected, if inflation is a little bit more persistent, a little hotter than expected, that is when you might see the Fed put its already cooling plans for a rate cut completely on ice and just say, hey, we are done going forward because we need to tame inflation. Sorry about your stock portfolio. I'm putting you on the spot. We're going to get GTA 6 or a rate cut first.

Oh, gosh. What's GTA 6? October. October. Okay, I hope we get a rate cut before, though. I'm on record. Rate cut before GTA 6. Up next, do not go anywhere.

We have our winners of the weekend coming right up. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on ProPeteport. paying grills starting at $179 like the next grill three burner gas grill or get $50 off to select Weber Spirit grill and bring big flavor to your backyard.

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It matters where you stay. Hilton for the stay. Welcome to Winners of the Weekend, the segment where Neil and I picked two stories who had a better weekend than Philadelphia Eagles fans. Since Neil refused to pick anyone other than the Philadelphia Eagles as his winner of the weekend, I'm taking full control of this segment and doing two winners back to back for you all. Plus, I won the pre-show bridge competition,

so I was up first anyways. My first winner is cooking up a parlay in seat 14A. Delta recently announced a partnership with the sports book, Draftings, so you can get your heart rate elevated 10,000 feet in the air. The announcement, which came at CES, was a little light on details, but you can be assured that it won't be anything too crazy, seeing as gambling on commercial flights has been illegal in the U.S. since 1962. More than likely, the partnership will end up being some less flashy in-flight game or Sky Miles sports betting deal. Still, the prospect of actual gambling in the air is tantalizing for an airline the size of Delta. A Department of Transportation study from 1996 found airlines can make more than one million.

dollars per aircraft if they offered gambling, which for Delta would come out to $1.3 billion annually. Neil, given those figures, it's no surprise that there have been some attempts to get gambling into the skies over the years, this one being the latest. It started in 1981, Singapore Airlines installed actual thing about this, physical slot machines on Boeing 747s. You could actually walk up from your seat. There probably weren't seatbelts or seatbelt signs at the time and go play the slots. was discontinued, not surprisingly, after people started crowding the back area and the machines started breaking.

And over the years, there have been other attempts to put gambling in flights. Ryan Air also, like, right currently, that Irish Airline does allow scratch-off. They sell scratch-off tickets. So there has been lobbying in the past to the U.S. government to allow gambling on flights. And maybe the Delta drafting partnerships, yeah, you said there's not a lot of details, but it's possible that they'll start with this and then maybe cite the study that was done in 1996 and put a little pressure,

maybe get its other U.S. Airlines on board and say, Trump administration, maybe you want to reconsider putting gambling on board. You can gamble literally anywhere else in most states right now, so why not 30,000 feet up in the air? I do just want to paint the vision that Ryanair's CEO had. This was all the way back in 2005 that they were saying that potentially we should offer in-flight gambling.

The vision was that potentially, giving the money that you make off of these games, you could offer people the chance to fly for free because if you just change the business model to, we are now a gambling business. That is where most of our revenue come. We just want people to gamble on board our planes. We don't actually need them to pay for a ticket. So that was the vision floated back in 2005. It hasn't exactly come to fruition because of various laws, but it just paints a different picture of like, what if you're flying was subsidized by gambling in the air? Obviously, there's a lot of other ethical and maybe potentially moral issues you could have with gambling up in the air.

But yeah, this is definitely something that you see a headline like Delta Incs partnership with draftings and you start to think, oh my gosh, am I really going to be cooking up parlayes while I'm fastening in for a long haul flight. One other problem with this is what they call it's gambling is a mood modifier. And losers, if you are, you know, Toby, I mean, actually you're on a winning streak right now. But if you start losing and you are on a plane, you could, you know, not. you personally, but like some people could throw a temper tantrum,

and we know that, you know, in-flight incidents have picked up in the post-COVID era. So just, you know, it adds more pressure to flight attendants and people working on the plane to have someone, you know, have a big swing in moods that are associated with gambling. So if I was

pushing against this, I would certainly point to this to be like, we don't need any more sort of variables in the air. Let's just take off and land without any incidents. Preach, Neil. My second winner of the weekend is Robo vacuums, because the days of your Roomba rolling over a dirty stock and knocking itself out of commission appear to be over. Two companies Robo Rock and Dream unveiled commercial robot vacuums at CES this year that come with extendable arms that can pick up clutter in its path with grasping pinchers, then deposit them in a bin to clear the way for vacuuming.

But Robo Rock or Dream won't be winning any arm wrestling competitions, anything. time soon. Robo Rock's max capacity is 300 grams, which is a little bit more than half a pound. While Dream says its arm can lift up to 500 grams, which means it can pick up something as heavy as a shoe, as long as you're less than a men's size 9. Neal, it's not just Robo Arms, either. Dreams Machine has quote-unquote legs that can propel itself up two inches in the air, not exactly stair climbing height yet, but perfect for small elevation changes between rooms. But the main takeaway here, Neil, is that these things, These robot vacuum cleaners are evolving into almost full-on little butlers.

They are. And, you know, this was introduced at CES last week in Las Vegas. There was thousands, maybe tens of thousands of products unveiled. The robo vacuums were the talk of the town C-Nets editors, which looked at all of these products, ranked the Robo Rock one as unanimously the best of CES award. It's the first mass market robot vacuum with a mechanical arm that can pick up socks. And this had been, you know, a huge sticking point for robot vacuums that they would get caught in socks and other places around your room and just not, or avoid them and not clean

those parts. So the fact that they can pick up debris in the way and, you know, place it in a designated spot. It's one of the capabilities as well. Seems, you know, we laugh, but it's a pretty big innovation in the space and could lead to more adoption. And then another innovation that got people talking was Samsung released, this AI robot vacuum cleaner that can actually, to protect intruders, if it sees suspicious activity during the time that it's out puttering around cleaning your little McCulley Culkin. Yeah, your house. It will send you a push notification, but it also kind of conjured up these odd dreams of if

these robots can eventually start, you know, climbing stairs, can see the environment around it. What if you wake up in the middle of the night and the robot has climbed in your room and is looking at you? So it did open up a little bit of dystopian ideals here, but I do think that as the smarter you can make these robots, the more hurdles you can get them to overcome, the more effective that they actually are. The home is this very complex, it's very dynamic environment for a robot to operate in. So seeing these innovations, it did get a lot of people fired up. And I've always wanted a, I had a Roomba vacuum cleaner right when they first came out, but they would just always

end up under the couch or end up getting caught in the curtain like that. So the better that they can untangle themselves, the better that these products are going to be. As per Monday, tradition, let's close out the show with a preview of the events you should know about this upcoming week. It could be the final week that TikTok exists as a functioning app in the United States. On Friday, the government and TikTok battled it out in front of the Supreme Court, and the justices indicated they were more sympathetic to the government's case that TikTok presents a national security threat, which overrides free speech concerns. In other words, it appears they won't overturn a ban. Scotus is going to speed run a decision since the ban would go into effect

on Sunday, so expect a final ruling on TikTok's fate later this week. I'm getting my last scrolls in, you know, I think I might just delete it today to rip the Band-Aid off because it will just be a long, slow. Remember, they're not going to delete it off of your phone. What will happen is that they won't be able to ship updates anymore so the app will just continue to get more buggy, more laggy. So might as well just rip the Band-Aid off now and delete it while you still, you know, have the chance to. Yeah, this is an absolute huge story and will affect the social media. information landscape, so we'll definitely talk about it more later this week. Confirmation hearings

begin for Trump's cabinet picks, so get ready for some fireworks on Capitol Hill. On Tuesday, former Fox News host Pete Hegseth will go in front of a Senate committee to make his pitch to lead the Department of Defense. Pam Bondi, the former Attorney General of Florida, is up on Wednesday for AG of the United States. And on Thursday, billionaire hedge fund manager Scott Ascent will make his case for Treasury Secretary. C-SPAN is going to have its highest ratings in years. This was a little trip down memory lane for us, too, because we spoke about when all of these people were nominated. Now, we'll see if the confirmation process goes a little bit more smoothly than maybe the nomination process. And I should say, defeat of a nominee by a vote in the Senate is virtually unheard of.

The last time it happened was in 1989 during the incoming presidency of George H.W. So you basically do all this vetting beforehand and you hope to sail through the Senate, which is now controlled by Republicans after the election they were sworn in. earlier this year. Speaking of TV, the highly anticipated second season of Apple Severance is out on Friday, three years after its debut season.

Everyone must watch this now. It's an incredible show, and the second season has received glowing reviews. Over in movies, Oscar nominations were originally scheduled for Friday, but that's been pushed a Sunday

due to the wildfires in Los Angeles. Neil, you have been telling me to watch Severance nearly every single day over the past week, so I think I just got to rip the bandaid off and do it. It looks incredible.

Also disrupted by the fires is playoff football. The wildcard game between the Vikings and Rams has been moved from L.A. to Arizona tonight. Other winners from the weekend's playoff action were the Texans, Ravens, Eagles, and commanders. Congratulations to your Eagles once more. Thank you, Toby. Let's wrap it up there. Thanks for starting your morning with us and have a productive start to the week. Almost as productive is A.J. Brown on the sidelines reading a book.

For any questions, comments, or feedback, send an email to Morning Brew Daily. at morningbrew.com. And we'd be so grateful if you shared the podcast with your friends or family. Don't wait, just drop a link in the group chat as soon as this episode ends in 30 seconds. If they already listened, Toby's got another sharing idea for you.

I want you to share the podcast with someone who is already tired of winter. Just stay strong. A few more dark and cold days to go. And then we hit some slightly less dark in slightly less cold days. You got this. A few more as in two months.

Three months. Let's scroll the credits Emily Milliron is our executive producer. Raymond Lute is our producer. Olivia Graham is our associate producer. Yucenoa Ogu is our technical director. Billy Minino is on audio. Hair and makeup just lost their life savings from the middle seat. Devin Emery is our chief content officer and our show is a production of Morning Group. Great. Show Day, Neil. Let's run it back tomorrow.