Morning Brew Daily - S&P 500 Hits New Highs & Gig Workers Get a Raise

Episode Date: June 13, 2023

Episode 80: Neal and Toby explain why the S&P 500 is absolutely ripping, as it jumps to it's highest level in over a year. Plus, how the youths in Montana are taking charge in the climate change crisis and food delivery workers in New York City just got a raise. Is London the new crypto hub? And finally the pasta protests that have Italy sauced up. Listen Here: https://link.chtbl.com/MBD Watch Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

Marketers, tell us if this sounds familiar. You invest in something that seems incredible like millions of views, but then don't see any revenue. Instead, invest in what looks good to your CFO. LinkedIn Ads generates the highest row ads of all major ad networks. Spend $250 on your first campaign on LinkedIn ads and get a $250 credit. Just go to LinkedIn.com slash MBD. That's LinkedIn.com slash MBD. Terms and conditions apply.

Good morning, Brew Daily show. I am Neil Fryman. And I'm Toby. On today's episode, the stock market, it's doing really well. What's behind the rally and how long will it last? We'll try to answer those questions. And Italians are preparing to do the unthinkable boycott pasta. Then we'll talk about a landmark case that pits the youth of America against the state of Montana in a little climate change showdown

before taking you all across the pond to see why venture capital firm A16Z is being. betting big on crypto in the UK. Neil, it's Tuesday, June 13th. Let's ride. All right, Toby, did you see this? Last night, Pat Sejack, who is the host of Wheel of Fortune for more than 40 years, said he would be stepping down from the gig after giving us so many amazing viral moments. One of the goats, one of the goats of the game show business, for sure. All right, so speaking of the goat, I want to ask you your top three game show host power rankings. All right. Number one, Howie Mandel from Deal or No Deal. It's kind of a modern day game show for the kids. I love it. Drew Carey from Whose Line Is It Anyways? And I know you're going to say that's not a game show. It's not a game show. But there are points involved. The points don't matter, but there are points involved. And then finally, remember the two dudes from the original wipeout series? I googled them. Their names are John Henson and John Anderson. Very good at just giving the appropriate phrase every time someone has an epic wipeout. Johns. The Johns. Give me yours real quick. I'm doing Trebek, um, obviously. Um,

though Ken Jennings is doing an amazing job as his replacement and could potentially pole vault him. Um, and then in going Ann Robinson for the weakest link. The everyone knows, not everyone, but the people who know what I'm talking about, know what I'm talking about. Okay. Very angry, uh, British lady. And then finally, um, servicing this one from the early 2000s, Regis Philbin, who wants to be a billionaire? Is that your final answer, Neil? Oh, yeah. That was my best Philbin impression.

Not bad. But yes, Will Fortune. So many good viral moments. Jeopardy has also gone into the viral moments game. But Pat, you will be missed. Let's move on. The stock market is absolutely ripping right now. Yesterday, both the S&P 500 and the NASDAQ scored their highest close since April

2022 14 months ago. And heading into Monday, the S&P jumped for four straight weeks, and the NASDAQ, which is home to a bunch of the tech stocks, has had a seven-week winning streak. These are serious gains. The NASDAQ is up almost 30% this year. So what's driving all these positive vibes on Wall Street? There are a couple factors. The government reached a deal on the debt ceiling, so they avoided a catastrophic default. The regional banking crisis never seemed to spread to the broader finance sector.

and the hype around AI is just juicing tech stocks to record highs. Honestly, this still feels a little weird, and it feels like we shouldn't be hitting these record highs that we are, despite everything that you mentioned, because, and I've seen just reading around a little bit, people are calling this rally pretty narrow, which means that a lot of the gains are concentrated in a relatively few amount of companies. And so when that happens, people get a little nervous

because if the entire market is being propped up by, like, the invidias, the metas, the alphabets, the big techs of the world, then that means that we can come back down relatively quickly as well. So yeah, there's something to drop to your friends that when they talk about the stock market, say, hey, me, the rally's a little narrow, don't you think? Okay, but here's another thing to drop to your friends after that, which is that it was narrow, but it's getting wider, which is why they think that this rally, it kind of has some legs to it. So yes, so in May 8 stocks were responsible for the S&P being positive. That is insane concentration.

But since that now this month, it's grown to 20 stocks responsible for the S&P's positive gains this year. And when you look at small cap stocks, which are those smaller companies that encompass the Russell 2000, that's up 7.1% in June. So we're getting wider. This is good. We're getting wider, which is a little more fundamental. Toby, I want to hand out some game balls if you will allow me, putting on my high school football coach. There are a few stocks that are doing really well.

First goes to Apple, closed at a record high yesterday. Old reliable, cash flow, just closing it on $3 trillion. Closing it on $3 trillion. I think it's within $100 billion of becoming the first company to reach a $3 trillion valuation. $100 billion sounds like a lot, but it's close to $3 trillion. My other game ball is going to Tesla, which is gained now for 12 straight sessions, its longest streak ever. and the recent bullishness is around this charging network that we talked about last Friday, where analysts say it's going to give them an additional $3 billion in revenue,

now that Ford and GM have hopped on board and it becomes the industry standard. My final game ball is going to Oracle. So yesterday, Oracle hit a record high after its earnings report showed strong demand for cloud computing that powers what else, AI, and founder Larry Ellison just passed Bill Gates as the fourth richest person in the world. Good for Larry, you know. We haven't talked about Larry Ellison in a minute, so good for Oracle as well. But there's your little stock market primer. Give you a couple of talking points to drop out the office this morning. Let's move on to Montana. Neal, a lawsuit against the state of Montana went to trial yesterday, but it's not just any old lawsuit. This was brought against the state by plaintiffs who are aged 5 to 22. So it's the youths.

The U's argue that they have a constitutional right to a livable climate and that by investing in fossil fuels, the state is violating that right. So a lot of people are closely monitoring this case because it could set a precedent for other states to follow, even if it doesn't lead to any immediate change in Montana state laws. So this is obviously a headline case because the plaintiffs are so young, but it's actually very interesting from a legal perspective because this is really the first time a trial gets to the question of if government, governments have a duty to protect its citizens from the effects of climate change. Yeah. What do you make of this? If you look at the, it's really interesting, Montana is one of the few states that has sort of an environmental code written into its constitution.

It says this was, I think it was written in 1972. And this clause is the state and each person shall maintain and improve a clean and helpful environment in Montana for present and future generations. So kids are saying, well, by your support of fossil fuels, and we can get to the, that later, but Montana is a big, you know, fossil fuel, coal, natural gas state, you are sort of infringing upon our rights to have a healthy environment in the future. I was really struck by some of the stories that these kids were telling. One of them, one of the plaintiffs said that there were wildfire smoke blew into her summer soccer practice in the Missoula Valley, and the

smoke was so dense that the kids on the team with asthma could not play at all. So that was one example of they're saying how climate change was just affecting their daily life. Another, whose name is Ricky held, who is 22, said she has a 3,000 acre ranch in eastern Montana, and it's been threatened by droughts, wildfires, and extreme weather. She said, I know that climate change is a global issue, but Montana needs to take responsibility for our part of that. Yeah, and if we just want to take the other side of the case and what Montana might, lawyers might choose to argue. It's the fact that Montana's emissions are, this is, I'm quoting from the attorney in charge, Montana's emissions are simply too minuscule to make any difference. Climate

change is a global issue that effectively relegates Montana's roles to that of a spectator. So they're basically saying, like, listen, we really aren't the problem in the grand scheme of things. But yeah, it's going to be a very interesting case. And this is really the first one of, the plaintiffs in charge of this case have been kind of, machine. gun firing out these lawsuits in all 50 states. Montana's the first one to make it to trial, so that's why we're all talking about it. And yeah, we'll be kind of closely monitoring these arguments over the next two weeks. Let's move on to New York City.

Some big news here. They were there during the pandemic. They were there during the blizzards. They were there during the recent apocalyptic wildfire smoke. And now they're getting a big raise. And I'm talking about New York City's food delivery workers. Yesterday, the city implemented its first ever minimum wage for app-based delivery workers at companies like Uber, Grubhub, and DoorDash. That minimum wage is 1796 per hour, and that will increase to $20 by 2025 to keep up with inflation.

That is without a tip. The wage is about triple what they currently make, which amounts to really a life-changing pay bump. Advocates are calling it a historic policy that finally recognizes the dangerous and low-paying, work that these delivery workers do while everyone else in the city can kind of stay home away from the elements. Plus, as independent contractors, these workers must also cover their health insurance, business expenses, extra taxes. So making sure that that top line income is higher is crucial to their overall financial situation and is a really just a life changer. So it's a big victory for big economy workers. Yeah. And again, I'm immediately going to go to the other side. I feel like I'm playing the

the other side in today's conversation. There's nuance. But so, yeah, Uber and DoorDash, some of the biggest delivery companies in your city are pretty against this. Uber says that the city's not being honest with these delivery workers. They're parading out this headline number of, oh, your pay will triple. But what they're not saying is that it might force you to go faster and accept more trips. And then also it might discourage tipping because some of the costs are passed on to consumers.

So it's not just as cut and dry as all these delivery workers will just instantly make triple what they're currently making. And then there's also some like political double speak here because there's these rules against having multi-apps open. And if you have multi-apps, then the minimum wage is not as high as, again, that $19 number. And so again, it's not perfectly cut and dry, but yeah, it's definitely a big win for just boosting up the baseline pay of these workers. But just to push back on Uber, so they made the same argument when New York City implemented a minimum wage for Uber and Lyft drivers in the city in 2019. There was the study that was done because the companies complained that it would lead to worse service and higher fares,

obviously. But the study looked at what happened in New York City, which had a minimum wage, and Chicago, which didn't. And it found that prices for ride sharing companies increased at the same pace as New York City and Chicago, which didn't have a minimum wage, plus passenger wait times decreased. So the companies are going to company. Of course, right. Yeah, companies are going to company. And just to zoom out broadly to kind of the delivery food market

in general, Grubhub also just laid off about 400 employees or about 50% of its corporate workforce. So these aren't the delivery drivers. And it's basically just, again, there's too many companies. There's only such, there's only so many foods that can be

delivered. And so if we're just going back to Grubhub, it was acquired by Just Eat Takeaway in 2021 for $7.3 billion. And then less than a year after that deal closed, Just Eat Takeaway said that it was exploring a full or partial sale of Grubhub. So it hasn't quite worked out exactly how they wanted it to. But yeah, it just kind of goes to show that there's some headwinds that these food delivery companies are facing.

All right, Neil, before we jump into the next story, we're going to take a quick break. It's time to refresh your yard during spring backyard days at the Home Depot. low prices guaranteed on propane 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. Then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the Home Depot. Now through May 6th, Exclusion supplies to homedipo.com slash price match for details. Own it all.

Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Buckslot Machine by Aristocrat Gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package. The biggest prize in Yamaba's history. Club Serrano members can earn daily instant prizes and secure a spot in the finale May 29th.

Don't pass go and own it all. Only at Yamava, celebrating its 40th anniversary. You win? Details at yamava.com must be 21-20. Please gamble responsibly. Monopoly is a trademark of Hasbro. Hasbro is not a sponsor of this promotion. Neil, one of the big boys of the Venture Capital World

A16Z is heading across the pond to set up shop in England, but their business won't involve skin fades or razor blades in their hats. The firm is setting up a crypto hub in London as the regulatory environment in the U.S. gets more stifled than a subway car in July. So remember just some backstory. The SEC just sued Binance and coin baits back to back for kind of breaking their laws. So pair that regulatory pressure with London's history as a major player in the finance world, And it makes sense that A16Z decided it was time to stake its claim and advance its crypto ambitions in England. Neil, what do you think about A16Z jumping across the pond? They, wherever they go, it seems like crypto follows because they are the major crypto booster.

They are propping up the entire industry. If you just go to their portfolio page and look at all of the companies that they've invested, it's basically every single crypto company that you've heard of besides FTX. And I don't know what happened why they didn't invest in FDX, but they've got Coinbase. They own a 1% stake in Coinbase. They have this, they've invested in OpenC, which is the leading NFT platform. They've invested in Dapper Labs, which is MBA Top Shot. They invested in Yuga Labs, which makes the Bordate Yacht Club.

They invested in WorldCoin, which is Sam Altman's eyeball scanning crypto company. So they've amassed $4.5 billion for the world's largest crypto fund. And I think going to the UK is a major endorsement of the UK's friendlier policies than the U.S. and is a big indictment. And you can argue whether, you know, the U.S. should be pursuing this sort of hostile attitude towards crypto companies or not. But it does seem like the center of gravity is moving away from the United States because regulators are just saying after FDX happened, they were just like, this is not worth it for us. This is such a headache. You lost billions, you lost tens of billions of dollars.

Go do your scam somewhere else. It feels like that is the vibe. And the UK thinks that there might be some potential value to this as their economy kind of doesn't really grow at all. And they're like, okay, maybe we can be on the forefront of tech here. Yeah. I mean, England is getting lapped when it comes to kind of tech and VC funding. So according to the VC firm Atomico, the UK has suffered a 57% drop in tech investment this

year. That's the biggest decline across any of the big European markets. So you can kind of see why this is a match made in heaven or whatever you want to call it because UK is like, yes, we want industry. We want innovation here. So they welcome them with open arms. And no, you actually talked to the current prime minister back in January of 2022, I think, Rishi Csac. And he's kind of been bullish on crypto for now. Do you remember what your takeaways from that conversation was? Yeah. So he is a head, former hedge fund who went to Stanford MBA. And he is, he called, like, the reason that we interviewed him is because his people reached out and he wanted to promote, like, the UK as a Web3 destination.

Right. So I asked him about whether he was following crypto and he said something like, you know, I'm really following the dumb monkeys closely. That was a quote from him. Yeah, he said dumb monkeys. I'm like, I think you mean bored apes, sir. So I don't know how closely he was following it. But he, you know, he went on to say that he's,

He's really bullish on maybe not the coin aspect of crypto, but like the Web 3 and blockchain technology. And he put out a tweet welcoming A16Z to London. And everyone was saying, I think this has to be first in history that a world leader has welcomed a venture capital firm to their country. Yeah, it's a weird timeline. But honestly, again, London has that history as a financial center. So I could see where it makes sense a little bit.

But yeah, that's our crypto worldwide update for you right there. All right, let's move on, Neil. We're back with another edition of Toby's trends where I plug into the Matrix, sift through the millions of stories flowing through the undercurrent of the internet, and emerged triumphantly with a trend that I think our audience and you, Neil, should know about. Today's trend actually takes us to the world of athletics, specifically the endlessly fascinating oval of track and field. Just three days ago, Jacob, or Yaakov, excuse me, Inglebritson,

a Norwegian distance runner broke a 25-year-old record in the two-mile. Not only did he break it, he absolutely demolished it by four seconds. His time was 754, Neal, which is two sub-four minutes miles in a row, just unfathomable to think about running that fast. And the reason why I'm bringing this up as a trend is because world records in running have been falling at an alarming rate. So Faith Kipjagan, a 29-year-old Kenyan runner, just broke the women's record in the 1500 and the 5,000 meters,

just one week apart. Here's the craziest part. She hadn't even run the 5,000 meters in eight years, and so she just kind of went out there and broke the world record. So a lot of people are saying what is going on? And, of course, you have to talk about athletics, the athlete's shoes. So the rise of carbon fiber plated shoes combined with super energy, efficient foam has led to an undeniable rise in record-breaking performances.

And one last stat just to illustrate how widespread this trend is. At the collegiate level, breaking four minutes in the mile used to mean something. Now it's painfully common. So already 115 athletes have done it in 2023. That's up from just 35 in 2020. So over the span of three years, the numbers over more than tripled or almost tripled in the amount of athletes that are breaking the four minutes in the mile. So yeah, Neil, a lot of people are talking about the integrity of the sport at this point.

Is this related to the Nike shoes that have been banned and like what's going on in the regulation space? Yeah, it's very tough to regulate it. So Nike has, or the world athletic body has instituted a stack, a maximum stack height, which is just how much foam you can have underneath the sole. That actually mostly applies to the marathon. Track and field is kind of a different governing. body. But yeah, a lot of some runners, like Carson Warholme, who's your favorite, he's a 400

meter hurdler, and he's kind of very anti these super shoes. He says that it's destroying the integrity of the sport, and he doesn't run with some with like the packed with this high performance foam. But honestly, it's great for a spectator because I was hyped watching Engel Ritson just demolish this world record, but you do wonder if technology has taken it too far. What if I put those shoes on. Like what and I ran a mile. How much time would I be able to cut? I mean, I think you would be surprised at how energy efficient they really are because I have worn some of the super marathoning shoes. And I was very curious to that as well. It just protects the legs. It makes you more efficient. Once you get up to speed, you feel much better. So I do think there is something

valid. It's not just marketing hype here. Interesting. So I might have to look into that if I ever get back into running. Four minute miles. Morning Brew Daily sub four minute miles. minute, one mile, I think. All right, for our final story, the fight between Italians and pasta sellers is getting spicier than carbons rigatoni. With the price of pasta skyrocketing, one consumer advocate group in Italy is calling for a week-long national pasta boycott starting later this month to protest the overpriciorecti. It seems impossible that Italians could part with their beloved pasta, right? After all, the average citizen consumes 50 pounds of pasta every year. Right? And like, I think a pound is one of those boxes. So they're eating about a, they're eating one of those boxes per day. But, or per week. Prices, though, have gotten out of hand. They're increasing at double the rate of inflation. The cost of pasta boxes has risen 16.5% in April compared to the same period last year.

So a lot, I was looking in this story and a lot of these countries, including ALE, are looking into price controls, which are basically capping. the price of goods to make them more affordable. And a lot of people are saying, no, don't do that, because what it does is basically artificially increased demand from shoppers, whereas supply doesn't get that same boost. Well, you discourage supply because you're like, well, I can only make so much money. Right. Exactly. If you're a supermarket, why would you sell pasta that's price capped when you could be selling other things? And so, yeah, they're saying don't do that because Hungary actually introduced caps in early 2022, but food price inflation has since accelerated almost 50%. So yeah, again, it's kind of like a joke like, ah, pasta is getting more expensive,

but this is a real, Europe is expacing a huge food inflation crisis right now. Yeah, there was a pasta strike in the past, but it did not go well. I think they tried in 2007 because rising wheat prices were leading to, you know, skyrocketing pasta prices as well. It lasted one day. I mean, there is. So I don't know if this thing is going to be widespread. The goal is obviously to completely shrink demand to zero so that retailers and sellers have to, you know, lower their prices ultimately. But it may be just kind of like a PR thing to get people recognizing this issue.

Yes, Italy, there was an emergency meeting in Rome last month around the, you know, around pasta prices because this is like a big deal over there. And they decided against price controls. And economists are saying, just wait, because the pasta that was made now, is super expensive because it was made with ingredients from that was that were really expensive because of the war in Ukraine and broader inflationary pressures and that the pasta being made now is had the supplier the supplier stuff is much less expensive because overall inflation is coming down so just wait just wait cheaper pasta yeah that's what they're saying but I don't know um 16.5% in a month is

extreme. Gargantuan. We started our show by ranking game show host today. Tomorrow, let's power rank our best pasta shapes. And let's start it off that way. I'm going to think about it. Bucatini is pretty good. Bucatini.

Bucatini. Oh, God. All right. That is our show today. Great stuff, Toby. Please write in with any of your spaghetti, any of your favorite pasta recipes, or your favorite game show host. You can reach us at Morning Brewed Daily

at MorningBrew.com. Huge shout out to our crew in the back. Emily Milliron is our editor and producer. Samantha Veles and Raymond Lue are the associate producers. Euchenawa Ogu is our technical director. Billy Manino is on audio. Hair and makeup quit after hearing all of the cringy pasta funds. Devin Emery is our chief content officer

and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow. Not loving your AT&T or T Mobile Bill? Yeah, we've been hearing that a lot. Good news. Bring your AT&T or T mobile bill to Verizon, and we'll give you a better deal. So get away from that unfortunate phone bill and get to Verizon. Run, ride, canoe.

Whatever it takes, we'll be here. Bring your AT&T or T mobile bill to a Verizon store today, and we'll give you a better deal on the best network. A better deal. No surprises. That's Verizon. Best Network based on Route Metrics, Best Overall Mobile Network Performing with U.S. Second Half 2025.

All rights reserved. It must provide a recent consumer mobile bill in the name of the person who gave me the deal. Additional terms, conditions, and restrictions apply.