Morning Brew Daily - OpenAI Gets Into Filmmaking & Should We Be Worried About Nukes in Space?

Episode Date: February 16, 2024

Episode 259: Neal and Toby look at the latest app from OpenAI, Sora, which can create realistic, movie-like videos from a text prompt. Then, Russia is looking to build nukes in space. How much money will it take for security in the stars? Plus, immigration is actually giving the economy a $7 trillion boost, but there’s a catch. Also, stock and dog of the week, a real-life scam that sounds like a true-crime documentary, and a historic night for Caitlin Clark and the NCAA women's basketball.  Get your Morning Brew Daily Merch HERE: https://shop.morningbrew.com/products/morning-brew-daily-sweatshirt?utm_medium=multimedia&utm_source=podcast&utm_campaign=mbd&utm_content=shownotes Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow 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 is Russia building a space nuke? What you need to know about the Cold War era frenzy gripping Washington this week? Then we just had another, oh geez, moment in AI that will change video forever. It's Friday, February 16th. Let's ride.

We have a massive surprise announcement this morning. We interviewed someone yesterday that I think you all would be interested to hear from. Mark Zuckerberg. Yes, the massive surprise announcement. Meta CEO and Smoker of Meets himself. He sat down with us to talk about the Apple Vision Pro, his vision for AI, and even tipped us off on what he sees himself doing after Meta. That episode is dropping today at 9 a.m. Eastern.

So after you finish this one, make sure you leave some time to listen to that one, please. How do you think the interview went? I think it went pretty well. I mean, he thinks about this stuff pretty deeply. he's literally a software engineer who built something in his dorm room and it happened to be super popular and he learned enough along the way. He was smart enough guy to see where the industry was going and turned it into a trillion dollar company. So, you know, a lot of people think he may come off as robotic, but he really warmed himself up to us, you know, over the course of the interview and got really animated, especially when talking about the early days of Facebook.

Yeah, early days of Facebook. We talked about his leadership style, how that's involved. That was something I'd never heard him share before. Also, I just love that he's a man who's very passionate about his hobbies. I mean, it's kind of an inside joke for everyone that he loves smoking meats. He loves doing UFC or MMA. And we talked to him about that. So we got to see kind of that more personal, passionate side.

All in all, it was super fun. And I really hope that you guys take the time to check it out. Before we jump into our show, let's hear a quick word from our sponsor, Vime. Not going to lie, Vime, you are one lucky son of a gun because you are getting the Zuck boost today. Wait, how are they getting the Zuck boost? Well, I think that people who listen to that episode will stop by and listen to this episode too and also even the past months of episode as well. I see. Even better, lots of people getting the chance to hear how Veem can protect your data and help you recover it too if something goes wrong. I wonder if Mark has his data security all figured

out. I'm going to have to say yes on that one. He's probably got a cover. All right, all right. Whether you're new to the pot or have been here for a while, head to VIM.com today to learn more. That's VEEE. EAM.com. 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 Yamavah Theater.com, only at Yamava Resort and Casino, celebrating its 40th anniversary. You win? Must be 21 to enter. Yesterday was another wild day online that pushed us further into the AI Twilight Zone. OpenAI dropped a text video platform that, frankly, is scary good. To show off the capabilities of its new program called Sora, Sam Altman took to X and asked people to reply with captions for videos they'd like to see,

then started tweeting them out. Neil, it was surreal. These videos are hyper-realistic, like all the weird distortion and warping we come to expect from AI, generated videos, mostly just gone. And these are not simple videos either. One prompt read, a bicycle race on ocean with different animals as athletes, riding the bicycles with drone camera view, and it absolutely nailed it. All I could think about while watching these videos flow through was if Pandora's box wasn't

open already when it comes to online misinformation. Sora turned it over and shook it until all the contents came out. SOR is still in a closed beta so academics and researchers can red team it and look for ways it can be misuse. But it's here, Neil. It's here and it's once again the best in class. I mean, text of video has been around for only 18 months. There are other companies doing it. MetaGoogle, some startups called one is called Runway.

But once again, OpenAI, they release chat GPT. They have Dahl E3. Those are text and image generation ones. This is their first text of video. And they just outclass the competition. This is miles away better than anything else that's on the market. And it's only 18 months after the first one dropped. Again, the thing with AI is we're all commenting on how scary good it is.

And this is just the first iteration. So, yes, there's a long way to go here. But the first, you know, V1 is very, very good. Very, very impressive. Like all this technology, it's a double ed sword. There are some people who pointed out that it could help speed up the work of movie makers. It could replace less experience digital artists almost entirely, but it also is pretty much right out of the box a quick and inexpensive way to make disinformation, misinformation,

misinformation online. It's already like the line between what is real and what is fake is getting bluer and bluer every day. And I mean, I encourage you guys to go check out these videos because truly they are photorealistic in every sense of the word. Yeah, I mean, Pixar and Monsters Inc worked for months to get. the hair on Sully's fur looking realistic, and Sora does that in an instant. So you can see how it's definitely spooking people in the cinema movie industry. But I think the first use case for this,

because they can only be a minute long, will be social media. So I think as soon as they release this to the public, and we don't know when they will, because you can tell they know that this is very dangerous, and they're just releasing it to a very small amount of people right now. It'll probably flood your social media feeds. But the line between what is real and what is AI generated, I think, is becoming even blurrier. We put out a teaser for the Zuck interview on social media last night. And a non-insignificant amount of people replied to me and replied to that tweet saying, is this AI generated?

And they were completely serious. Yeah. Because they couldn't believe we interviewed Zuck. I hope they were a little tug and trick. But yeah, some people were genuinely, because I mean, the entire feed was flooded with AI generated videos. So we kind of twircled back after and said, maybe that wasn't the best time to drop this trailer. But yeah, very interesting.

The final thing is I thought it was cool how this program has knowledge of film techniques. Like if you tell it, I want a steady cam shot or I want a drone follow. It also understands film language like that. So I do think that there will be a credible use case for filmmakers in the future as well. Look out, Christopher Nolan. Yeah. Moving on, it felt like we were living in the 1950s this week because there was a total freak out in D.C. over Russia's apparent pursuit of a nuclear weapon, but this one was in space.

It all started on Tuesday when House Intelligence Chair Mike Turner urged President Biden to declassify information about a serious national security threat. But he didn't elaborate, and everyone was thinking, like, what the heck is he referring to? Toby was convinced it was aliens, but White House officials confirmed yesterday that this threat was a Russian anti-satellite capability that it's developing but doesn't present an active risk to American safety. Reading between the lines, experts said this is a nuclear space-based weapon that is intended to target America's vast network of satellites. Satellites orbiting the Earth are crucial to our military and our commerce, so taking them out would have enormous consequences, crippling telecommunications,

GPS, Howard Stern, and our economy more generally. And that's about all we know for now, though speculation is rampant about what kind of anti-satellite weapon Russia is building. What we do know is that space is the next frontier in the struggle for global, or it should say, universal domination. I still think it could be aliens, by the way. But yeah, we aren't sure what kind of weapon this is. When you hear nuke in space, the first thing your mind thinks of is the mushroom clouds and the big explosions, although I guess if it's in space, there is no real fire.

But a lot of people are suspecting that it's actually carrying some sort of, it's like, a nuclear-powered satellite carrying electronic weapons that would help disable the satellite network. And it's really thrown a wrinkle into how the U.S. thinks about space, especially when it comes through their space satellites. The old way was we would launch a big satellite every two years or so. We'd send it into deep orbit, geosynchronous orbit, which is much further away from space and low-earth orbit. But now it's kind of falling in the footsteps of the space X blueprint, which is, let's do, let's blanket the Earth with cheaper, lower orbit satellites, and that is much harder to take down our target versus these big behemoth ones that we've relied on the past.

Yeah, and the military and NASA is contracting with a bunch of startups and rocket companies to kind of blanket the Earth with satellites. And one wrinkle that I thought was super interesting is we are trying to build up our capabilities of rapid deployment of satellites. So say Russia knocks out a bunch of our satellites. systems, the global economy goes in free fall, stock market plunges, we can't communicate with each other. They want to be able to get satellites back up in space as fast as possible. So they've contracted with a bunch of startups that are working in this rapid deployment space. There's one called

Firefly that received an order from the military and then put a satellite up in space 27 hours after receiving that order. The earlier record was 21 days. So this rapid deployment, being able to get satellites to replenish in the event of Russia jamming them is a burgeoning industry. Yeah. And I mean, you can't overstate SpaceX's role in all this, too. The new kind of test satellites that the military launched this week was launched by a Falcon 9. They also are kind of copying Starlinked strategy of blinking low Earth with satellites. So, again, SpaceX is, the industry kind of goes as SpaceX goes.

Even though that now the military and the government's getting involved, they still rely heavily on Elon and Spaceback. Elon has so much power. It's crazy. All right, besides Russia's space nuclear weapons, immigration and how to secure the southern border has been at the forefront of debates in Washington. And at the peak of the commotion last week, a report dropped showing just how much immigration contributes to the U.S. economy. According to the nonpartisan Congressional Budget Office, the surge in immigration will add $7 trillion to the U.S. economy over the next decade by increasing the labor force and demand. There's going to be 5.2 million more people than expected in the American labor force in

233, mostly from the influx of foreign nationals. And all of the taxes that come with this economic growth will be helpful to America's deficit, lifting government revenues by about $1 trillion more than otherwise. This report echoes what Fed Chair Jerome Powell said on 60 minutes earlier this month, which is that the U.S. economy has benefited from immigration, and that one of the main reasons the labor market was successful, so strong last year, was immigration returning to pre-COVID levels. So even as the border fight drags on, there are plenty of ideas about how to fix a broken

system. One thing that any solution should acknowledge is that immigration is massively beneficial to the U.S. economy. Yeah, this report put into perspective that the main benefit of the influx of immigrants is a much bigger, faster-growing economy. Extra workers pay more taxes, generates more economic activity that also yields tax. revenue, but it is more nuanced than just more workers equals better economy, because this report paints a picture of a much larger economy, but if you overflow the labor market with lower skilled

workers, then it could drive wages down, which, again, maybe not good for the economy as a whole. So it is more nuanced than just like bigger is automatically better, but the big takeaway is that it does lead to a bigger economy. The CBO in the short term did say that the new influx of migrants, which are coming from poor Latin American economies, are going to put modest downward pressure on wages over the short term. In the long term, it shouldn't be a big deal. But certainly that is a lot of anxiety that people have about immigration, that they're going to drive down wages in certain sectors. And the CBO kind of nodded to that and said, yeah, that might happen a modest amount, at least for the next few years. But I just want to emphasize how important it is to have immigration for labor. shortages because during COVID, remember, there were all these labor shortages. Restaurants couldn't find workers. Hospitality companies couldn't find workers. The reason was that because we locked up the border for COVID and prices went up. That was a big reason why inflation skyrocketed. There just weren't enough workers. So to be able to replenish your labor force, especially as,

you know, your population gets older and people retire, you need to have new workers. We're not having that many babies anymore. So America, for its entire history, has relied on immigration for this. And I think this report spells out just how important it is to keep up that influx and that welcoming arm to people because the economy depends on it. Yeah, I mean, all you have to do is look at other high-earning nations like China and Japan who are not doing well. They do not have a sizable immigrant population. Their population is aging, and it's putting a ton of pressure on their economy. So you literally just have to look east and you see what it happens if you don't have kind of this young workforce entering the country.

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slash student offer. While supplies last, ends June 30th, turns at AKA.m.m. Before we get to that scam, though, it's time for a little stock of the week, dog of the week action, where we bring you one stock

that you'd be proud to take home to your parents and one stock that forgot flowers on Valentine's Day. As always, we are just humble podcasters, not financial advisors, so please do not take any of this as financial advice. Neil, I can't believe it, but you beat me in the fitted sheet folding contest this morning. So you're up first.

What is our stock of the week? That is right. And before I reveal my stock of the week, I just have to ask everyone, how's your burger? Shakeshack is our pick after the company's stock popped 26% yesterday for its best day ever. While other restaurants are experiencing slowdowns in foot traffic, Shakeshack is seeing lines out the door. Traffic at the burger chain jumped 15% in October and 24% in December compared to a 1.1% in December compared to a 1. point six percent decline in the overall fast food industry. What is working? Well, new launches like spicy burgers and crinkle cut fries went over very well with customers, and so did limited time

promotions like trolls-themed shakes. Next year, ShakeShack is hoping to continue the momentum by opening 80 new stores, testing out combo meals, and even getting into dessert. I mean, they got shakes already a little bit, but I am a huge Shake Shack fan. I actually have tried their, they called it their new swicy menu, which is sweet and spicy. I've had their Korean-style fried chicken sandwich. I've had their Korean barbecue burger. And they do, it is more on the sweet side than the spicy side. How much of the foot traffic did you contribute yourself? I have contributed a fair amount, I am load to say. It is interesting, though, because this stock has absolutely been ripping 30% year-to-day and more than 130% dating back to the beginning of

last year. It's also not just Shake Shack, that investors are kind of pound. into. They've also shown love to Kava and Wingstop. They're both up 20% year-to-date. So I do think we're seeing this resurgence of consumers going out, doing what I'm doing, walking into these fast casual places, in order and food. Yeah, but overall, Shake Shack stock is only up 3% from its peak in 2015. Meanwhile, the S&P is up 135%. So, yes, it's been ripping recently, but this stock has not been exactly a huge winner over the past decade. All I'm saying is that the jump in stock corresponds to me moving to New York. So you're welcome, Shake Shack. Let's move on to my dog of the week, which is the whole doggone country of Japan. Its GDP shrink at an annualized pace of 0.4% in the last quarter of

2023. And just like that, it's in a recession and it lost its position as the world's third largest economy to Germany. It was an unexpected drop in domestic consumption that ended up causing the weak economic numbers. And they were weak. Economists, expected 1.4% growth and instead got another quarter of contraction, which combined with the previous quarter was enough to satisfy the typically agreed upon definition of a recession. Neil, it's kind of the same old story we've been talking about here in the U.S. Consumers are battling higher prices for food, fuel, and other goods, but the difference is that people just aren't spending enough for the economy to grow.

Yeah, Japan's been stagnating for the past 30 years. It came out of the World War II, huge economic miracle, power through the 70s and 80s, had these vaunted corporations. But over the past few decades, you're seeing a population get older, just like we talked about. They don't have an influx of immigrants to supply the labor, to replenish the labor force. So Japan is just kind of in this stagnating position where it's getting leapfrog by other growing economies, and not that Germany is growing so fast, but in the next few years, it's expected to be passed by India, which is growing at 7%. So you're, you have this period of malaise and stagnation over there. One of the big issues is that Japan's

economy imports 94% of its energy requirements, 63% of its food. So whenever the yen kind of falls and becomes weaker compared to the dollar, everything just becomes more expensive and just weighs on prices as well. So when you're relying on 94% of your energy consumption requirements from outside of the mainland, then it is very hard when energy prices start to go up. But in further evidence that the economy is not the stock market, the Niki, Japan's The index is at a 34-year high. So, investors are bullish, at least on the corporations there. So, we'll see what happens.

But do you know number five is on the economy standings? I mean, I would have thought. Germany and Japan. I would have thought India, but that makes me feel like it's not. Well, California. Oh, my gosh. That's a fake one. Okay.

Yesterday, a woman named Charlotte Cowles wrote a detailed piece in the cut about how she was scammed out of $50,000. But there's a catch. She is a personal finance columnist. Kals explained how she gave a shoebox full of her cash to someone posing as an undercover CIA agent in an SUV parked outside of her house and all of the steps it took to get there to show how anyone, even someone whose job it is to write about taking care of your finances, could get bamboozled out of their money. This article went so viral to the point where FTC chair, Lena Kahn chimed in, emphasizing that fraudsters posing as the government are highly. common and that Americans lost 2.7 billion to impersonator scams last year. The reactions to this piece were varied from, she's a moron, I would never fall for this,

too. I can totally see how someone can be psychologically manipulated by inducing panic, fear, and isolation. Kowles's point ultimately was that if she, a normal, smart person who writes about scams, ended up giving away $50,000 in a shoebox to someone she doesn't know, then you could, too. I cannot stress to you guys how detailed and elaborate this scam was. I'll try to quickly run through the details. It started with a call from about unauthorized purchases on her Amazon account. That quickly became an identity theft case where she got connected to the FDC. Remember,

all these are going to be in quotation marks, which then escalated to having a warrant out for arrest in connection to drug smuggling and money laundering in two states. And she ended up talking with what she thought was a CIA agent. It all led her to having to having a warrant. to trust nobody, not even tell her husband what is going on. Again, we spoke to that isolation. And then also that they needed to freeze her assets, which involved her going to the bank, withdrawing $50,000 in cash and handing that cash over to someone in SUV. It was crazy. They had her social security number. They knew where she lived. They knew that she had a son. I see both sides of it. Once that fear grips you, it's very hard to think nationally.

Yeah, I mean, they break you down. And the whole time she had this inner monologue of like, Something's up, something sketchy. Why is this happening to me? But just the way they manipulate you and instill fear. And I think a big thing of this is the escalation. It started with Amazon. Then it gets handed off to the FTC. It gets handed off to the CIA. It gets from innocuous, check your account because there might have been unauthorized purchases to there was a body found in a car with your name on it in New Mexico. then it only escalates from there. And I think you just get super scared, super isolated, to the point where you don't think rationally. And her point was saying, like, this can happen to anyone. And she pointed out stories from a bunch of her friends

and other people who seemed smart, seem with it, and we're also scammed out of their money. Yeah, it's absolutely easy to point the finger at this person and say, well, I would not have fallen for that. I'm not a boomer. I'm not dumb. But that's just statistically untrue. Younger adults, Gen Z millennials,

are 34% more likely to report losing money to fraud compared to those over 60, and that's coming from the FDC. So, again, this is very much a thing that even though you are part of the online generation, you spend a lot of your time online, you are still vulnerable to these scams. Or maybe even more vulnerable. Yeah, absolutely. The FDC data shows that. And then we haven't even mentioned AI.

There was no AI involved in this case. So this next generation of scams, just be on the lookout, people. All right, Neil, last night, we stayed up late by our standard. all the way to 8 p.m. to see if Caitlin Clark would break the all-time NCAA basketball scoring record and our sleep schedules,

thank you, Caitlin, because she made us wait all of 10 minutes before doing it. She needed eight points to pass Kelsey Plum for number one and scored the first eight points of the game for Iowa, capping it off with a three

from the logo, which was probably the coolest thing I've ever seen. Neil, what else is there to say about Clark? She's the face of college basketball right now, or women and is actually generating

a sizable amount of economic activity wherever she goes. Ticket prices for her game were around the most expensive ever for a women's basketball game pro or college according to Tick Pick. Iowa sold out every single home game before the season even started and her mere presence in the sport

helped drive average resale ticket prices to see regular season women's college basketball up 75% from a year ago. It's Clark's world. We're just living in it. Yeah, I mean this is exactly what we saw with Taylor Swift in the Ares store over the summer. I'd be surprised if Jerome Powell doesn't mention Caitlin Clark in the next economic report.

Because wherever she goes, she generates a huge buzz. People drive in from all over to see her games. It generates so much revenue as well. Look at just Macia Arena, Purdue, West Lafayette, Indiana. When Iowa came to town, they earned $106,000 in ticket sales. Normally, that's $22,000. They generated $36,000 in concessions. normally that's 11,000.

So just like Taylor Swift, whenever she would go to another city, hotels would book up, restaurants would book up, people would spend a ton of money. That's exactly what's going on with Caitlin Clark. She is the face of basketball. And she's lived up to the expectations. I mean, remember at the beginning of the year, they sold out their football stadium. 55,000 people showed up to a game to watch Iowa play DePaul in a charity match. It wasn't even a regular season game.

They ended up raising $250,000. But it just goes to show that we are literally living kind of. of through a Steph Curry moment in women's college basketball. I think that's what, beyond the economic impact, the impact of her game is legitimately something that we haven't seen since, Steph, just in terms of we're going to see girls in the next generation entering college, Jackie has three from the logo. She is changing the way the game is played.

And I highly encourage you all to go watch her breaking the record because it is one of the most. It's electric. It's electric. It was incredible. Yeah. But also, I think this is part of a sea change. of women's college basketball eclipsing men's in interest because what is different is that

women have to stay for four years. There needs to be a four-year pause between leaving high school and entering the WMBA in men's. You only have to wait one year. Sometimes you can even just go to the G League or play somewhere else before entering basketball. So this name recognition persists in women's college basketball where we've seen Caitlin Clark do these things over multiple years. And I think that builds name recognition. She's making a lot of money from NIL. So of the 12 players who have shoe deals as part of this name image likeness, nine of them are women. So I think the name recognition of women's college basketball is going to supersede that if it already not has. That was in English. And that's why we're going to end the show

right there and head into this weekend. Definitely cue up the Mark Zuckerberg interview for your long weekend listening. And if you do have that. the day off for President's Day. Don't forget to shut off your Monday through Friday alarm. That is a killer. As always, you can send any thoughts or feedback on the show to Morning Brew Daily at Morningbrew.com. Let's roll the credits. Bryce Belloff is our editor and producer. Thanks for stepping in this week, Bryce. Raymond Lou is our associate producer. Yuchinawa Ogu is our technical director. Billy Minino is on audio. Hair and makeup would not have fallen for that scam, but I don't know. Devin Emery is our chief content officer and our show is a production of Morning Brew.

Saturday, Neil, I wish you all well. Spring just slid into your DMs. Grab that boho look for that rooftop dinner, those sandals that can keep up with you, and hang some string lights to give your patio a glow up. Spring's calling. Ross, work your magic.