Morning Brew Daily - Tesla Unveils Its $30K Robotaxi…Finally & FTC’s Lina Khan Spars With Billionaires
Episode Date: October 11, 2024Episode 429: Neal and Toby recap the big unveiling of Tesla’s long awaited Cybercab that could cost $30,000 to ride in and can bought. Then, a look into the latest inflation report which rose slight...ly, reminding economists and officials that inflation is not going away just yet. Next, Mark Cuban joins in on the billionaire’s war on Lina Khan. Except, Khan has a staunch defender named AOC. Meanwhile, our Stock of the Week is Palantir and Dog of the Week is Redbox. Lastly, United Airlines announces new routes into destinations that are off the beaten path to reaffirm its dominance as the US largest international airline. 00:00 - Former FTX CEO trolls LinkedIn 3:00 - Tesla finally reveals its robotaxis 9:40 - Inflation cools just a bit 13:30 - Lina Khan vs. billionaires 19:40 - Stock of the Week: Palantir 23:30 - Dog of the Week: Redbox retailers 26:15 - United expands international flights 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. To learn more about how Wise could work for your business, visit https://wise.com/business/ Join us at our trivia night! Visit morningbrew.com/events to register Get your Morning Brew Daily T-Shirt HERE: https://shop.morningbrew.com/products/morning-brew-radio-t-shirt?_pos=1&_sid=6b0bc409d&_ss=r&variant=45353879044316 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, Tesla finally unveiled its robotaxie.
Will Elon Musk's grand bet on autonomous driving pay off?
Then the United Airlines announced new far-flung routes
that will have you busting out a world atlas to plan your next vacation.
It's Friday, October 11th.
Let's ride.
It's always a good idea to keep your LinkedIn profile up to date
to show you are actively engaged in your professional life
and are serious about your career.
But Ryan Salem, the former co-CEO,
of FDX might be a little too actively engaged and serious.
Salem reported to federal prison yesterday to serve a seven and a half year sentence on campaign finance fraud charges.
But before he checked in, he updated his LinkedIn saying, I'm happy to share that I'm starting a new position as inmate at FCI Cumberland.
Neil, I guess he didn't want to risk the dreaded resume game.
Yeah, no, this is smart.
Every recruiter will say no gaps in the resume.
and Ryan did absolutely that.
The comments section, though, so funny.
People were posting very tongue-in-cheek.
Well-deserved Ryan.
Bro went from LinkedIn to Lockton.
Can you refer me?
And finally, they're lucky to have you.
So I thought this was pretty dang funny
and just the next evolution of LinkedIn
into maybe a more Reddit-style platform.
I honestly think some people didn't really look at what the update said to
and just use one of the canned LinkedIn.
Like, congrats.
happy for you. So there is definitely some people who are in on the joke and some people who
definitely weren't, which made it all the funny. And the prison looks like a company name, kind of.
Right. FCI Cumberland. You wouldn't know unless you know, but it is still live on LinkedIn.
So go give Ryan some kudos there. Now, a quick word from our sponsor, Wise Business, the app for doing
things in other currencies. Neil, today is our last Wise ad. Time flies when you are saving money
on international payments. Time flies indeed. Honestly, doing all these ads has
me inspired to start my own international business just so I can start using WISE.
Well, I think you're supposed to have the business idea figured out first before you start
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In 2016, Elon Musk said Tesla's self-driving cars were two years away.
In 2017, he said six months definitely.
In 2019, feature completes full self-driving this year.
None of that happened, but on a fall night in October 2024, he finally came through.
Yesterday in Tesla's most hyped event in a decade,
Musk unveiled a prototype for a Tesla Robotaxi, the autonomous vehicle that could mark a paradigm shift for transportation,
or it could be a generational setback.
Elon Musk has laid everything on the line for self-driving cars.
Facing heated competition in Tesla's primary business of electric vehicles,
he decided to make a big pivot earlier this year,
out a new cheaper model that could freshen up Tesla's aging lineup
in, all-in, robotaxies and artificial intelligence.
In April, must have said that anyone who doubted Tesla could solve autonomy
shouldn't invest in the company.
So is this robo taxi going to be the game?
game changer, Musk has promised. It certainly looks like it could. The two-seater prototype that he
showed off last night has no steering wheel, no pedals, and has butterfly doors that open upwards.
Musk said it should arrive by 2026 and cost less than $30,000. Toby is a robo taxi firing you up.
It does not have a steering wheel. It does not have pedals. What it does have is the entire hopes
and dreams in Tesla's market cap resting on its shoulders. Remember Tesla's status as the world's
most valuable company used to be driven by this narrative that the company would sell a lot more
cars than it does. Elon painting this vision that it would sell 20 million cars by the end of the
decade. This was kind of in the mid-2000s or 2020s as he was saying this. But now it is completely
changed. That narrative has been poked. There's been holes poked in that narrative because of
kind of flatlining traditional auto sales. And so now everything is resting on the cyber cab on this
autonomous Robotaxi. And who knows, it was a buzzy event. It was a classic Tesla event with a very
cool demonstration of it kind of wandering through the Warner Bros set of actually where they filmed
Westworld. So there was definitely some robot parallels there as well. It was a little light on specifics.
There's a lot of questions around the regulatory environment that will allow these robo taxis to actually
take the road. A lot of questions on just if it is ready for prime time in general. It looks cool.
That's about all you can say right now. It is a prototype that looks very futuristic. It does not have wheels. It does not have pedals. It does not have pedals. It does not have a steering wheel, just like Elon Musk promised. So clearly they're going on all in here. Where that all in is is still up for kind of questions. Yeah, let's talk the advantages and disadvantages that Tesla might have in this marketplace. I guess the disadvantage early on is that it's kind of behind its rivals. There are companies.
that are out there providing autonomous robotaxi service.
One of them that comes to mind is obviously Waymo, the Google subsidiary.
It's now providing more than 100,000 rides a week.
In San Francisco, Phoenix, in Los Angeles.
You have crews, which is a unit of General Motors,
that had a little hiccups when it hit a person and then dragged her.
But now they're back on the road.
You have Zooks owned by Amazon.
So there are very well-capitalized companies already providing fully autonomous service.
Tesla is not doing that currently. It does have self-driving features in its Tesla, Model 3s, model
wise, but a person needs to be constantly alert. There needs to be constant human supervision for that.
So they are behind on this particular technology. Other companies are racing heads, so there's
catch-up to mean. So why could Tesla win in this marketplace?
Well, I do think that the business model is interesting that they have for Robotaxis.
They want you to buy your own personal robotaxie, but then they also say that you can lease it out and earn extra money to ferry passengers around the analogy that I saw in the New York Times was it's the automotive equivalent to listing a home on Airbnb.
So it is kind of like this car sharing program that they do think will just redefine how transportation is currently just carried out.
Another cool thing about the car, it's got wireless induction charging, so it doesn't actually have a charge in port like you are used to on electric vehicles.
Elon says that running a cyber cab will cost about 20 cents a mile, so that is a big unlock as well.
They also unveiled this robo van too, which is this very futuristic, very art deco-looking bus shuttle service, essentially, that they say they can be even cheaper at 5 cents a mile because it can carry 20 people.
So it is painting this vision for a world where everyone's zipping around in these cars that are self-driven, very cheap, very efficient.
You don't have to spend a lot of time charging it because it is charging potentially on the road as it drives through induction charging.
So there is a compelling vision for the future there.
Yeah, but we'll just see the timeline.
I think that's the biggest thing because remember I said the first time he promised self-driving cars was 2016, which was eight years ago.
and now he expects the robotaxie to actually start being made in 2026. I think, you know,
obviously we can question that, but investors in Tesla want to know when this thing is coming
because it has this aging lineup of vehicles that has just not been refreshed. And Elon Musk
prioritize a robotaxy over a cheaper electric vehicle priced at about $25,000 that would better
compete with all these Chinese, Chinese EV makers that are unleashing all these.
cheap vehicles that are taking market share in China.
And then in the United States, there's been a ton of competition from EV makers or traditional
legacy automakers that have rolled out cheaper EVs.
So if Tesla's bet on autonomy doesn't work out, then I could only see its business declining.
The final thing we have to mention, too, was there was a lot of optimist talk,
which is Tesla's autonomous robot.
There was this film that showed it serving drinks, playing with children, unloading groceries
from a car.
and Elon painted this vision that he thinks that everyone will have one for personal use.
And the words that he used was, this will be the biggest product ever of any kind.
So even buried within this Robotaxi event, he says,
autonomous robots that will be priced in the $20,000 to $30,000 range might be the biggest product that has ever been sold ever.
So it's a little classic Elon, but you got to slide that in there as well.
There was some interesting optimist demonstrations as well.
That was quite the Tesla event right there.
All right, is it my birthday today, Neil? Because inflation hasn't been this low since February of 2021.
Yesterday's September's CPI data showed inflation continuing to cool, with the consumer price index falling slightly to 2.4% in the month compared to a year earlier.
However, that 2.4% reading actually came in slightly hotter than economist's expectations, as food and housing prices remain stubbornly high.
But again, zooming out, we haven't seen inflation this.
low in nearly three years. The chiller vibe around inflation reports these days is reflected in the
market too. It was a muted day across the three major indexes as it looks like the inflation crisis
is mostly behind us without any glaring warning signs that prices might reignite soon.
But there's still some trepination out there as we enter a period filled with more angst
in uncertainty than Neal's high school prom corporate earnings season. The SMP 500 is off to a
horrid start to the year up 20% so far. But now it has to digest earnings report starting with
JP Morgan, Delta, BlackRock, and others today. In addition to September's inflation numbers,
I hope it took some peptobismal, Neil. Yeah, seriously. I mean, this inflation report showed that
inflation coming down from its 9% peak is not going to be a constant downhill. It's like, you know,
when you're coming down from a hike from the top of a mountain, and you're going down, and then
you start going uphill a little bit, and you're like, what is going on?
here. I thought I'm going downhill. And then you realize, okay, the overall trajectory when you
zoom out along a long enough timeline that this trajectory is going down, but along the way,
there should be some bumps. As you said, the market digested is perfectly fine because it does
not appear to derail the Fed's rate hikes, which is driving the majority of market moves.
It looks like there's still come November going to be cutting interest rates by a quarter of a
percentage point and then maybe one more before the year is out. But this is also important because
This is the last inflation report before the election.
And as we know, voters say the economy is number one on their list of most important topics.
So this is just a big deal for a lot of Americans.
How much things cost, obviously, has been headlines after headlines over the past three years.
This shows that inflation is cooling.
There are some bumpy roads on bumps on the way back down.
But overall, it doesn't concern anyone.
Right.
Core prices, which exclude the more volatile food and energy components, rose 3.3%.
annually, which is, again, a little bit faster than August and a little bit faster than
economists expected. But most of that, what core figure was driven by housing prices, they're
still remaining stubbornly high. They rose 4.9%. Though, technically, it did ease on a monthly
basis. So we are still seeing the usual suspects, housing, a little bit of food costs are
still remaining elevated, driving inflation. You are totally right, though, that this is
the number one issue for a lot of voters. A U.S. voters ranked the
economy as the most important issue in their choice for president. So that is why a lot of people
were still looking at this inflation report, despite maybe its muted effects on the market.
Interestingly enough, though, a market watch analysis of wage and inflation data found that
for the average U.S. worker, it actually takes fewer hours of work now to afford a week's worth
of groceries. So it does reflect that wages have been outpacing inflation. That's probably
not something that a lot of people necessarily have been feeling because they are still seeing those
higher egg prices, are still seeing those higher prices in the grocery store, but technically,
due to wage gains, it does take fewer hours of work to afford like your normal grocery
bill. Potentially, that's not what is reflected in the general sentiment, but it is the reality
that the wage data and inflation data is showing. That's an interesting fact. Someone called
Riff and Tony, because there's a rumble going down. Democratic billionaires and lawmakers are
escalating a feud about the future of FTC chair, Lena Kahn. It all started with,
Mark Cuban. This is seriously a madlib story. At an event on Tuesday, the cube said that Harris,
if elected, should replace Khan as the head of the FTC. If it were me, I wouldn't keep Khan on,
he said. Key context, Cuban has been a major donor and vocal backer of Harris's campaign.
And then the next day, the knives came out. Representative Alexandria Ocasio-Cortez
vowed there would be an out-and-out-briol if more billionaires like Cuban push for Khan to get the boot.
AOC said it would be terrible leadership to remove her, and she was supported by Senator Bernie Sanders, who called Khan the best FDC chair in modern history.
If you told someone even five years ago that leadership changes at the Sleepy Federal Trade Commission would spark this much drama, this much passion, they wouldn't have believed you.
But this isn't your grandma's FTC.
Since Lena Khan took the reins three years ago, she has remade the agency into an antitrust megaforce that has delighted progressives like San Francisco.
and AOC and irk tech leaders like Cuban. Toby, you bind the pay-per-view.
Yeah, I mean, it is. The FTC is not your mother's FTC because in the past, the FTC has kind of,
they've had this mandate to protect Americans from unfair or deceptive corporate behavior,
but they've so often been so outmatched by the corporations of America that they haven't
really done anything. I mean, it often, it used to face off in court against companies.
That would use as many law firms as the FTC had lawyers. So they were just hopelessly outguned
outmatched, but now it is a new FTC.
You start digging into who's actually pushing it back against Lena Con, and you start to
realize that it's the majority of these billionaires are operating companies that are
under investigation or under scrutiny by the FTC.
So you can kind of see where their motivations lie.
This is the stat that's been thrown around that just shows the new FTC that we're currently
under.
Nearly half, around 43% of companies in the S&P 500 are currently under antitrust scrutiny.
So, Nvidia, meta, Amazon, Microsoft, you can go down the list.
So much of the entire market cap of the S&P 500 is currently being investigated because
the FTC under Lina Khan has just, they've dropped any pretense of being buddy-buddy
with corporate America and they're going after them.
Yeah, she's really expanded the scope to go beyond just rooting out scammers to really
suing and tackling huge antitrust cases.
I mean, the one that's going through the courts now is Kroger wants to buy Albertsons,
which is a $26 billion supermarket mega merger.
And then outside of antitrust, there have been other things that Lena Khan has done.
She's gone after non-competes, which restrict as many as 30 million Americans from going to a rival competitor.
That is blocked in courts.
She's also suing Amazon and meta.
And so she's 35 years old.
And she was this like wonderkind coming out of Yale Law School.
She in 2017 wrote this viral paper.
that basically said the way we've been doing antitrust law is so outdated, and we need to update it
for the digital world we're in. She used Amazon as an example of that, and that sort of catapulted
her profile to become a place where she at 30, she was less than 35 then, she was younger than 35
then, to become the chair of the FTC, and she just raised his profile so much so that they're
making it a huge deal over who the chair of the FTC was. And I can't stress this enough, that
very few people would care the chair of the FTC was just a few years ago,
but now it's taken on such heightened importance.
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It is time for stock of the week, dog of the week,
where Neil and I pick one stock that dances like nobody's watching
and one stock that is too scared of how society perceives it
to really let loose and have some fun.
Neil, believe it or not, you won the pre-show game of Dance Dance Revolution.
I have never seen anyone break it down to Cotton Eye Joe like that before.
So you are up first.
is our stock of the week? My stock of the week is Palantir, the data analytics firm that has quietly
become one of the biggest software companies in the world. Palantir, which is named after an
indestructible crystal ball in the Lord of the Rings, has been pretty indestructible this year.
After another 10% gain this week, its stock has jumped more than 160% for 2024, good for the
third best performance of any company in the S&P 500. Palantir has a very interesting bag.
backstory. Co-founded by billionaire investor Peter Thiel more than 20 years ago, its early focus
was on helping secretive government agencies like the CIA pluck insights from enormous amounts of
data. Now, though, it shed its mysterious aura and broadened its client base to commercial customers
while still maintaining its tight relationship with Washington, D.C. About half of its total revenue
comes from government contracts. Another quirk, CEO Alex Carp, who has a doctorate in neoclassical
social theory has tied the company's fortunes to a broader mission helping Western countries
defeat their enemies. He told Forbes, we stand unapologetically with America and its allies,
and its sole commitment is to our partner's success in business and on the battlefield.
I mean, Palantir started off 2024 with a $37 billion valuation. It is now closing in on a
$100 billion valuation. It's one of those stocks that always splits analysts because you can
definitely say Palantir's valuation is a bit excessive. Of the 23 analysts who cover Palantir shares,
six have buy ratings, nine have hold ratings, and eight have sell ratings. So that is about as
split down the middle as you can be when it comes to analysts covering a stock. Palantir did
grow revenue at a 27% clip last quarter. It's posted eight quarters in a row of gap profits. It just got
included into the S&P 500. It's up 42% since joining the index just as recently as September. So it
You can point to whatever data point you want.
You can point to whatever kind of earnings signal that you want to say it's either
undervalued or overvalued.
It is one of those very polarizing stock.
Well, it is the most expensive stock of any in the S&P 500 based on a revenue multiple.
It's trading at 36 times its annual revenue, which is insane.
And it speaks to kind of the Elon Musk effect that CEO Alex Karp has, who is just this
larger-than-life character who's driving a lot of investor in
specifically retail investor enthusiasm.
But I can't believe I haven't mentioned this yet, but two letters, AI, Palantir has a very
in-demand AI platform that's been working on for decades.
And then now all of a sudden, all of these enterprise, huge customers are saying,
well, we have so much data.
We want help analyzing it.
And so they're turning to Palantir, which has the groundwork in place with this AI platform.
So that is driving it.
And I'm sorry, I just left that to the end.
But a lot of this hype around Palantir certainly has come from its investments in AI and helping
companies sift through tons of data.
This is separate than the military stuff that it works on, even though that is a big part of
its business.
But just helping them sift through tons of data.
And that's kind of what those guys won the Nobel Prize for earlier this year, earlier this
week.
I do think that you're right.
Like, it used to be known solely for this government contracts, but the customer count of
the company has jumped 41% from a year ago.
so it is definitely opening up to a broader commercial and private or audience getting away from its kind of reputation as just this government contract worker, although it does still have a big U.S. government business as well, but its commercial business is taking off as well.
My dog of the week is any retailer that has a red box DVD vending machine in front of it.
The company behind the anachronistic DVD delivery mechanism filed for bankruptcy this past,
due to some cash flow issues, leading the kiosk operator to go out of business.
Now, if you loved a good movie night brought to you by a physical DVD, this probably upset
you.
But it definitely upset some of the nation's biggest retailers because Redbox just left 24,000
of its now useless vending machines just sitting out in the field.
And that has caused a logistical nightmare.
These things weigh as much as 890 pounds and often require an electrician to disconnect.
So chains like CVS, Walgreens, Walmart,
Albertsons, and Dollar General,
all popular Red Box spots are sitting looking at these things,
wondering what the heck to do with them.
Most will be hauled away and sold for scrap parts.
Some will find their way into collectors' hands
who want to own a piece of movie history,
but all will represent costly headaches for the chains left to deal with them.
Talk about costly. Walgreens said that it spent $184,000 each month
at its 3,800 stores to power.
these 5,400 machines for a failed business. That's not even doing anything. They just have to
keep them up. They have to keep the upkeep there so they don't, you know, wreck their stores. So this
is a huge headache. And not only are these red box boxes around, but they have stuff inside them.
These each contain about 600 DVDs. So not only are they're huge, I don't even know what to call them,
containers, but there's also the content inside them that you need to dispose of. So if you are a
DVD recycler or know what to do with scrap metal. I mean, go up to your nearest Walgreens or
CVS location, talk to them and see if you can make a quick buck taking care of their red box.
I did like the Wall Street Journal talked to this 19-year-old kid who said he negotiated a deal with
a contractor who's just hauling one away and he wanted to bring it home. And this is cool.
He's retrofitting it. So the kiosk exterior is the same, but he's putting his own video games
and DVDs in there. That is a cool like man cave thing. Imagine bring your friends down and
going through your own personal red box. So I do think they will become a collector's item.
The other business idea that I've seen put forward is that you could just retrofit them to
dispense other goods, like potentially cannabis or something like that. I'm not sure if any of the
like Walgreens or CVS's of the world want a like marijuana, a cannabis dispensary out in front
of them. But people are going to get creative with these things. They are a piece of history.
So I do think the collector market might be the most popular destination for these red boxes
to end up.
And there's a lot of 24,000.
That is a lot.
Yeah.
And they're just so heavy, too.
United Airlines must have gotten a taste for playing risk this week because it is launching
flights to eight brand new cities next year, kicking off what it is calling its largest
international expansion ever.
Fans of Senegal and Taiwan, you're in luck.
United is flying there.
Maybe you're more of a Greenland or Bilbao person.
There's a flight for you.
Heck, you can even go to Ulan-Batar Mongolia if you're feeling like you haven't seen enough
yaks recently.
these destinations were not chosen at random.
The savvy traveler has been to Paris, Rome, and Madrid
so many times that they're looking for something different.
Patrick Qualey, a senior vice president at United, told reporters,
so the thinking is that with these new destinations,
which also include some new routes to lesser-traveled cities
in Portugal, Spain, and Italy,
United will stand out compared to other carriers
who have stuck to the more bread and butter roots.
Do we like this expansion from United?
It's super interesting.
It's definitely a bet that,
travel behavior is changing in that people are tired of going to the classic Western European
capitals, Madrid, Rome, and Paris, and that they're looking for new frontiers, new experiences
in places like Mongolia or Newk Greenland, which is the northernmost capital of the world.
And if you do look at certain trends, it does seem like travel is going in that direction.
I mean, Mongolia has absolutely exploded in 2022. It had nearly 2.2.
250,000 visitors, which is more than six times as many as the year before.
And of course, maybe the year before was hampered by COVID restrictions a little bit.
But it is interesting that United is taking a different type because this is not normal.
Usually United or American Delta, the other American airlines do not fly to these places.
So it's certainly a risk.
And many of these, many of these routes may not work out.
And they'll say, okay, after 2025, no one.
Our planes, the New Greenland, were empty, or, you know, they could succeed and then they'll continue them.
I do think another motivator here is that they are using this diverse network almost as a marketing tactic.
I mean, we are talking about it right now because they are trying to differentiate itself from the other carriers out there.
And specifically to drive sign-ups for their more lucrative credit card rewards and their United Credit Card.
So this is something that they are seeing these roots as more unique content, is that's the words that.
the vice president of United said to reporters, they think that this is how you can stand out
in the crowded landscape right now. Also, I think you are right about traveler preferences too.
Going to, I think about all the stories we covered over the last year of tourists and over tourism
being a huge problem for these popular destinations. I mean, tourists were being sprayed with water
guns in Barcelona. They're putting up fences in front of Mount Fuji in Japan. These places are just
so oversaturated that I do think travelers do want to go somewhere else just so they don't have to
be, you know, sprayed with water guns by local.
So I think we're seeing a pendulum swinging.
We won't know until we know if people actually take these flights.
But I don't know, Mongolia seems pretty nice this time of year.
Yeah, they're flying from Tokyo.
So you can take a flight from Newark to Tokyo to Mongolia and get there within maybe 24 hours.
I don't know.
It seems like a long trip.
But it does seem cool over there.
Okay, let's wrap it up there.
Another week in the books.
Thanks so much for starting your day with us.
Have a wonderful Friday and an even better weekend.
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Emily Milliron is our executive producer. Raymond Lou is our producer. Olivia Graham is our
associate producer. Yuchinawa Ogu is our technical director. Billy Minino is on audio.
Haired bankup will gladly take all of your Red Box DVDs. Devin Emery is our chief content.
officer and our shows of production of Morning Brew.
Great show today, Neil. I wish you all well.
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