Morning Brew Daily - The Cuban Power Crisis & Nuclear Stocks Are Boomin’

Episode Date: October 21, 2024

Episode 435: Neal and Toby discuss the economic fallout from Cuba’s power crisis as it has gone 3 days without any electricity. Then, Sam’s Club introduces its “store of the future” with no checkout lanes in hopes of providing a complete frictionless shopping experience. Also, a startup thinks it has the technology to help wealthy couples increase the IQ of their babies, opening up another debate on the ethics of human genetic engineering. Meanwhile, nuclear stocks and robotaxis are the weekend winners. Lastly, the biggest news in the coming week ahead.  00:00 - Philly gets its own portal 2:30 - Cuba’s power problem 6:50 - Sam’s Club goes in on tech 10:30 - Controversial smarter babies 15:30 - Nuclear stocks surging 18:30 - Waymo is winning people over 21:50 - 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. Find your fit at bonobos.com and use code BREW20 for 20% off.  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

Consider this comparison. PWC data found the percentage of CEOs who report revenue gains or cost reductions from AI is almost equal to the percentage who say they're still stuck. What separates these two groups? PWC points to a clarity issue. Even for CEOs, it's hard to tell what's AI hype, what's reality, and where this tech can make a tangible difference. Learn where AI can actually make an impact and what successful adoption looks like at

pwc.com slash U.S. slash brew AI. That's pwc.com slash us slash brew AI. Good morning brew daily show. I'm Neil Fryman. And I'm Toby Howell. Today a startup says it can boost your baby's IQ through advanced

embryo screening. I think I saw a movie about this once. Then if you hate small talk, Sam's Club just opened the perfect cashierless store for you. It's Monday, October 21st. Let's ride. Good morning. Welcome back to the week. got some fun news for people in Philadelphia, you're getting the portal. After wrapping up a

viral stint in New York City in September, the art installation that gives you a peek into other cities got driven down the turnpike and will be turned on in Philadelphia's Love Park, sometimes this week, allowing Eagles fans to draw with strangers in cities across the world. Toby, what is your over-under on how long this portal lasts in Philly? If we know anything about Philadelphia, is that this will end so, so poorly. The story that I immediately comes to mind for me is the poor tale of hitchbot, the hitchhiking robot that was supposed to be this experiment in human kindness. It made several cross-country trips across countries like Canada, the Netherlands, Germany. No issues. As soon as it traveled in the U.S.

just 300 miles into its journey, it got beheaded in the city of Brotherly Love. So yes, Philadelphians and techno-optimistics art projects don't really seem to get along. But, hey, at least we'll get some great content before it inevitably gets shut off. optimistic about this because the last thing New York gave Philadelphia was Seekwon Barkley and that is going really well so I think the porter is going to follow in its footsteps. Now a word from our new sponsor, Bonobos. Neil, may I just say that you're looking positively dashing at this morning? You know what they say. Look good, feel good, podcast good, and I'm podcasting good today

thanks to Bonobos. It's not just that you look good is that everything just fits incredibly well too. Bonobos takes fit seriously. They have a wide range of size and fit offerings that you really can't find anywhere else. For instance, they have this curved waistband, which can help eliminate that annoying bunching of fabric in the tush area. Oh, the dreaded diaper butt. You cannot be podcasting with diaper butt.

Bonobos knows that you can't feel your best if you don't look your best, especially when it comes to diaper butt. You can find your fit at your nearest Bonobo store or head to bonobos.com and use the code brew 20 for 20% off your order. 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 slot 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 Yamava'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. is struggling to turn the lights back on. Four days after power shut down across the island, a crisis stemming from the country's Jurassic era energy infrastructure and dire economic situation. And then to make matters worse, Hurricane Oscar made landfall on Cuba yesterday evening, compounding the misery with heavy rains. As of this morning, millions of people remain without power. Here's what happened.

Midday on Friday, Cuba's largest power plant shut down, crashing the national power grid in causing schools and all non-essential public services to close. Even streetlights in the capital of Havana stopped working. Rolling blackouts are not rare in Cuba, but they typically lasted a few hours. This island-wide grid failure is unprecedented in modern times outside of hurricane-inflicted disasters. Yeah, the problem, or one of the many problems, is that to supply its electricity grid, Cuba depends on eight rickety power plants that are nearly a half a century old, and have received no maintenance

in as much as 15 years, an energy expert told the New York Times. And not only are they prehistoric, these plants are kept running by crude oil, and Cuba has a major deficit of 80,000 barrels a day. Now, this blackout sits at the confluence of multiple crises underinvestment in energy infrastructure, a decline in fuel imports, U.S. sanctions, and the pandemic that sent Cuba to its worst economic downturn in decades. Yeah, let's talk about that crude oil deficit. So Cuba produces 40,000 barrels of fuel a day, but it consumes 120,000. That shortfall used to be made up by its allies, Venezuela, most of all, and then also Russia and Mexico. But Venezuela has dramatically reduced its fuel shipments to Cuba. At its peak,

a few years ago, it was sending 130,000 barrels a day. Data shows that's decreased to just 25,000 to 30,000 barrels a day. Venezuela is dealing with. its own economic crisis. And so it needs to sell its oil to make a lot of money and it's not doing this to help Cuba anymore. So the fact that these plants are 50 years old, they are out of a prehistoric era energy experts say that is leading to any sort of break in this, in this grid is going to crash the entire thing. Yeah. So it used to get a ton of barrels from Venezuela and a lot of people thought that, okay, Venezuela is going through its own economic crisis. Maybe Russia will step in to help. But

Cuba is just not as big of a priority as it once was for Russia, especially because Russia is very resource-contrained right now, given that they're fighting a war. Cuba has just had a rough one economically recently, though. They had this potential thawing of tension with the U.S. during the Obama administration. Obama tried to normalize some of those relations after a lot of decades of hostility. But then the Trump administration kind of re-uped all those sanctions once more. And then as soon as Cuba's burgeoning tourism industry started taking off, it got hit with the pandemic. So it's just been hit with economic roadblock after economic roadblock, which is why it's in such dire straits. Because even though they are importing barrels from Venezuela and getting them

at a slight discount, it still costs about $600 to $700 million a year to make up that deficit in crude oil that they need to power their electricity system. So those are just, we call it a confluence of a lot of crises, and those are the main ones that it's facing. Meanwhile, Cuba's also suffering a massive depopulation and brain drain. I remember a few months ago, a startling stat came out from the National Statistics Office. Between 2022 and 2023, more than one million people, which is 10% of its entire population left the country. So people are just fed up with what's happening there economically, and they're just trying to get out a decent amount to the United States. So we'll see what's happening in Cuba. They've tried four times to get this power back on

just in the past weekend. And each time they encounter difficulties, we'll see what happens whether there's any social unrest too, because the last time there was a big power outage back in 2021. It led to street protests and a little unrest among the population. There have been signs of some small protests. But that is something foreign policy watchers will be looking at to see whether the people start protesting because the government can't do its function of giving people electricity. Sam's Club has long been the Little Brother to the giant that is Costco, but it just opened its first new location in seven years. And like most overshadowed Little Brothers do, it is trying extra hard to make a name for itself. The new Sam's Club doesn't have any checkout lanes.

It will officially be its first ever all-digital store. The new store is in Grapevine, Texas, and is actually a reopening. after a tornado tore through the Dallas location nearly two years ago. The fresh start led to a fresh store concept. To ring your items up via the store's mobile app, then walk out through AI-powered blue arches that confirm what you have in your shopping cart. No checkout lines, no cashiers, just high-tech vibes. Neil, Sam's Club sees this as a guinea pig for future tech forward locations.

Is this how it can chase down Top Dog Costco? We'll see. I mean, technology coming into stores has not always been embraced by consumer. Self-checkouts had a rocky rollout. We know what's going on with CVS and Walgreens locking things behind barriers. So whenever new tech comes into a store, I think people are a little wary. Sam's Club says that it's been testing a lot of these technologies and its clubs around the country. So it's pretty confident that people are already enjoying and using this technology.

but it is interesting to go full out, full, you know, no checkout in such a large-scale format. We've seen Amazon and other retailers do use this kind of technology in sort of smaller urban retail locations, but to do it in a store that has over 100,000 square feet in a suburban location for something as big as a warehouse club where people are going and shopping in bulk is a very interesting experiment. Sam's Club has been pushing down the tech rabbit hole for a while now, though. It has this feature in its app called Scan and Go. which is you literally scan items, barcodes as you shop, they add it to your virtual cart,

much like you're shopping online. Then when it comes time to checkout, you can just bypass the checkout line, show a sales associate that you've paid and be on your merry way. This new location doesn't even have the cashiers anymore, so there's no line to bypass you just immediately walk out. People have specifically loved that. It's been very convenient. I read some of these articles of people going there and saying, this is the way to shop. You feel so much better just being able to skip that long line. You can see the prices. You can see the discounts reflected in the app as you're shopping.

One thing it has done is led to a lot of Gen Z members kind of shifting over to Sam's Club. CEO of Sam's Club, Chris Nichols, attributed a 68% bump in Gen Z membership over the past years to their more tech forward approach. So this could be the way to appeal to the use is get them my more digitally native shopping experience. And it does need to do some catch up with Costco, as you mentioned. So both of these warehouse clubs have about the same number of U.S. locations. But when you drill down even further, it's clear that Sam's Club is behind. Its revenue came in at $86 billion in the most recent fiscal year. And that's compared to about half of what Costco has at $177 billion.

Sam's Club is on a big expansion drive now. after closing more than 60 stores in 2017, they want to grow their location numbers by 30 by 2030. So we'll see whether they contain this level of technology or if there's more of a piecemeal approach when they open up these new locations. Gender reveal parties may be out. IQ reveal parties might be the new pre-birth celebration of choice for expecting parents. A new U.S. startup called Heliospect Genomics is offering wealthy couples the chance, to screen their embryos for an above-average IQ. For the low, low price of $50,000,

clients undergoing IVF get the option to test 100 different embryos to see which future children might have a better chance at a higher IQ based on certain genetic predictors of intelligence. According to undercover video footage obtained by a UK-based advocacy group called Hope Not Hate, some managers at the company brag that their methods could lead to a gain of more than six IQ points.

Now, in case you haven't guessed by now, this is highly controversial. Experts say experimental genetics selection techniques represent an ethical minefield. Katie Hassan, an associate director at the Center for Genetics in Society in California, told the Guardian that one of the biggest problems is that it normalizes the idea of, quote, superior and inferior genetics. Neil, this is an ethical minefield, but it looks like Pandora's Box has been opened when it comes to these gene selection companies. It is also a sci-fi movie because this is similar to the plot of Gataco, which is a 1997 film, and you have this genetically enhanced upper class and a naturally conceived lower class,

and there's much stratification in society. So your mind, when you think about who could possibly pay $50,000 to boost their kids' IQ, it could lead to that sort of result and many other sort of ethically dubious things that could happen in the future. but this is happening. I mean, previously, you can screen for embryos before IVF. That does happen, but it's for chromosomal abnormalities like Down syndrome or a mutation of a single gene leak like cystic fibrosis. But now these companies are pitching more advanced embryo screening where they give you a score based on the interaction of multiple genes, which can lead to behavioral things like IQ. But again, I just want to stress this is experimental.

because there's a lot of technical problems that experts have raised with it. Right. Whether Helios Spex technology works is a claim that still remains to be seen because IQ is determined in part by genetics, but there's not simply a gene for, quote, smart that you can turn on and off. Researchers in Japan recently published a paper that concluded screening for a desirable trait in Ebrios is unreliable. The reason being is that they are not determined by a single gene. A person's IQ is often determined by a lot of overlapping things. How much they listen to MBD. How much they listen to Morning Review daily.

But you're right. It is a notoriously hard thing to measure. Your things like education, your family, your friends, these all have just as large an impact as your inherited traits do. So that is why a lot of experts say that potentially this is not as cut and dry as science as they're saying. You can't just screen 100 embryos and automatically get guaranteed six IQ points. But that is the story that Heliospect is telling its customers. And according to the CEO, there are babies on the way.

they say they have analyzed and helped select embryos for five couples as of late 2023. And you're thinking, is this even legal? And in the United States, this sort of screening is legal. You can do it. It's a very unregulated industry. So you can possibly do it. And we'll see whether it happens or there is more regulation around. I think experts are just like, we need to have this conversation because it's actually happening now.

Up next, we have a futuristic winners of the weekend segment coming your way. As the Krispy Chicken Sandwich from 7-Eleven, people always call me loud. And I'm like, yeah, I know. I'm crispy. Did you expect me to whisper? If you want quiet, go eat some soup and reflect. Like, I know I'm a handful. I'm bold, I'm juicy.

Throw some pickles and barbecue sauce on me, and baby, I'm a whole meal. And with seven rewards, I'm just $4. Quiet. No. Krispy, saucy, and $4? Very. Only at 711. Valley through 62326, participating stores only while supplies lastly out for full terms.

Spring is the season everyone refreshes everything except their blinds. People put it off because they think it's complicated. But at blinds.com, we've spent 30 years proving it's not. Right now, you can save big during the Spring Cyber Monday sale. Whether you want to DIY it or have a pro to handle everything from measure to install, we've got you. Free samples, real design experts, and zero pressure. Just help when you need it.

Shop up to 50% off site wide. Huge savings on special buys, plus a free professional measure now during the Spring Cyber Monday sale. Rules and restrictions apply. Welcome to winners of the weekend, the segment where Toby and I pick two things that are telling their coworkers happy Monday and actually mean it. I won the pre-show Jackalenton Carving Competition, so I get to go first. And my winners are nuclear energy stocks, which are looking like Wallace and Gromit in a grand day out because they are moonbound. Last week, companies that make small modular reactors soared to record highs, Oaklo, which is backed by Sam Altman, jumped 99% in five days. while new scale rose 37%.

The reason is that big tech is buying what these guys are selling. In the span of three days, both Google and Amazon announced plans to use next generation smaller reactors to power their AI data centers with zero emissions energy. Their announcements have helped revive a nuclear industry that was thought to be uninvestable after the meltdown at Fukushima in 2011. Now, in a twist of fate, there's talk of a nuclear renaissance thanks to AI's need to guzzle more energy than our grid has capacity for. Toby, there's still a long way to go before these smaller reactors even get built

and the technology remains unproven. But clearly investors think that big tech projects are a game changer. For a long time, investors were just super against and wary about financing these smaller reactors, even though they were promising. It was just such a risk. And so a lot of people just rather would go up for the safe or more efficient, large-scale nuclear reactors. but the concern about the industry's record of delivering these projects kind of rested on the fact that it was a high interest rate environment.

There was a shortage of customers willing to actually pay for these. But look what's happening now. Interest rates are coming down. Now all of big tech wants their own personal nuclear reactors to play with. So there's plenty of willing customers. So the big question, as you said now, is if they can actually deliver these smaller scale nuclear reactors because right now a lot of contracts are signed,

but not a lot of reactors are actually been built and actually zero reactor. Zero. And they're not even in the pipeline. No small reactor projects have even begun construction in the U.S. and you look at all the capacity waiting to connect to the grid in terms of energy breakdown. Solar, wind, and battery storage account for 95% of that,

while nuclear makes up less than 1%. A private company that did a deal with Amazon, X Energy, was actually supposed to go public a few years ago via SPAC, a special purpose acquisition company, and they had to pull it because, because the excited market conditions weren't good. So there's been fits and starts here. But these companies were all looking for that first customer.

That would be willing to pay the high cost to build the first reactor. And it looks like Amazon and Google are saying, I'll be that. And then the final tailwind, too, is that the U.S. government is putting a lot of momentum, a lot of dollars behind funding these things, because their main concern is if Rush and China build this big lead on this small reactor front, then it could make them the leaders in the nuclear sector, which by proxy could make them the leaders in the artificial intelligence sector. So you are seeing a lot of federal funding too that are going in to supporting these projects.

My winner over the weekend is second chances because after a rocky start to life on the roads, self-driving cars are beginning to win people over. Despite Tesla's flashy Robotaxie unveiling last week, it's Waymo that is currently the leader in the clubhouse. It's now providing it more than 140,000 paid rides a week across L.A., Phoenix, and its largest market, San Francisco, and people are actually really starting to like the experience. Some SF residents that the Wall Street Journal spoke to highlighted not having to talk to anyone when you get in the car and the ability to have personal conversations without fear of a driver

overhearing as reasons why they enjoyed a Waymo ride. And one analysis showed that Waymo is retaining riders at a higher rate than competitors, Uber or Lyft, though on a much smaller scale. Neil, people used to hate self-driving cars, even going so far as to set them on fire or block their sensors with cones, but now they seem to like them. Yeah, it just seemed like people need more time to get comfortable in these self-driving cars. It can be a little intimidating getting into a car without a driver for the first time. And there have been high-profile mishaps where a bunch of Waymos get together at an intersection for whatever reason and stall out and block emergency vehicles from getting where they need to go. So those incidents have gone viral and had turned the public against self-driving cars. But now people in San Francisco are getting in them and they're saying, wow, this is so great that there's no driver.

I can have a personal conversation. What happens in a waymo, stays in a waymo. And I think the novelty is delighting people instead of scaring them off. Right. They actually talked to some of the riders. And another feedback that they had was they liked it better than a human driver because human drivers can be erratic and can be stressful to be in a car. everyone's had maybe an Uber driver or two who has really taken the rules of the road pretty liberally. Also, a lot of the Waymo's on the street right now are Jaguars, so they are these

very luxurious rides. So you get in there, you feel like you're riding in style. A lot of these driverless car companies have said that the biggest hurdle that they have faced is just getting people to take their first ride, because if you can get people to take their first ride, they do begin to start to like the experience citing all the reasons that we have today. Waymo is on this big marketing push right now to say like, hey, just give us a shot here, give us a chance. I think you'll like what you see. Right. So you can actually order a Waymo.

If you're in San Francisco, you can. And I can see that helping maybe the tourist industry a little bit there because, you know, maybe I'm deciding about places where to go for a vacation for a few days a week and getaway. I might do San Francisco because I'm like, wow, I really want to get in a waymo. But increasingly, you don't have to go there to get in the self-driving car because they have service in Phoenix. they have service in Los Angeles. They're expanding to Austin. They're expanding to Atlanta.

So they have national and international ambitions. We'll see how this business plays out, though, because they aren't profitable. And right now, they have a lot of cars just driving around without passengers making money. 40% of miles driven for Waymos are without a passenger. And if you don't have a passenger, you're not making any money. So we'll see whether this business pans out. But, you know, the CEO gave an interview and he was like, we've been doing this for 15 years and maybe reflect that, yeah, oh my God, they've been doing this for 15 years,

and they finally seem to be reaching that inflection point. So we'll see if their competitors can catch up with them because Waymo is definitely the clear leader in the clubhouse. It is Monday, and as per tradition, we close out the show with a preview of the big events in the coming week. Maybe a rare bit of good news for Boeing. The five-week strike that has cost the company more than $1 billion could end this week. and that's because Boeing and its machinist union agreed to a new contract proposal that includes

a 35% pay increase over four years, as well as bigger 401K contributions and a higher signing bonus. The key date to know is Wednesday when 30,000 members of the union will vote on the proposal after overwhelmingly rejecting the previous one last month. This new deal does not reinstate the pension benefits that Boeing workers used to have. That was taken away over a decade ago, and that was their big, home run swing like, hey, let's reinstall, reinstate the pension benefits. It does seem like they have gotten what they wanted. The 35% pay increase, that's a bump from the 25% offer that was overwhelmingly rejected a month ago. The big thing here, though, is if the deal gets done,

contract gets ratified on Wednesday, that is just a huge win for new CEO, Kelly Orkberg. He wants to start off on the right foot, and the best way to do that is to end this crippling strike. And then just 14 days remain until the election. Both candidates, are going to be storming through the swing states this week. Elon Musk has taken on a major role in Donald Trump's campaign and on Saturday announced a highly unusual scheme. His pro-Trump political action committee, America PAC, is handing out a $1 million daily prize through election day to a registered swing state voter who signs a petition supporting the first and second amendments. It is a strategy that has election experts questioning whether it violates a law that bans linking a

cash handout to signing a petition that requires a person to be registered to vote. Yeah, this is a very highly unusual strategy. It has election law experts pretty split on whether it is unlawful or not. But with Elon, he often aims second, shoots first with these sort of things. Historically has not been afraid of running a foul of certain laws. But this close to the election, it feels like it's hard to make the case that he's doing anything other than incentivizing people to go out to vote. So I do think this is not the last we've heard of the legal murkiness around this particular tactic. And according to one campaign finance lawyer,

you can't give something of value to people in exchange for them voting or registering to vote. And you're saying these people are already, will be registered to vote, but you may be incentivizing to get them to register to vote through this $1 million prize. But, yeah, Elon Musk has taken on a very visible role through his being a surrogate for former President Trump,

and he's given at least $75 million to this, America pack. In the corporate world, there's a full slate of earning reports, including Tesla, speaking of Musk, Boeing, speaking of Boeing, General Motors, Verizon, AT&T, IBM, Coca-Cola, American Airlines, and Southwest Airlines. It's going to be a feast. A variable buffet. I'm excited for pretty much all of them. I do want to see Coca-Cola, too, because we talked about PepsiCo and some of their tactics to win back consumers via their morphlation approach to snack. So I do think Coca-Cola is in that same bucket. I want to see how they're kind of reacting to this new post

inflationary environment. And finally, in sports, the World Series that MLB dreamed about has come true. Shohei Otani and the Dodgers are going to face Juan Soto and the Yankees in a star-powered major market showdown starting Friday. Major market is right. You have the two

major markets in the U.S., Los Angeles, and New York City, but then you also have the third major market when it comes to baseball, which is Japan, who will be tuning in to watch Shoahe O'Hani. So I think this could be the most watch World Series ever, regardless of it's the most watch or not, there will be a lot of eyeballs on it. Yes.

And then while we must say goodbye to baseball starting on Friday, we'll say hello to a new NBA season on Tuesday tomorrow. The defending champion Boston Celtics are hosting the Knicks while the Timberwolves visit the Lakers in what will be the first father-son debut of LeBron and Bronny James. I just hope we get the soundbite of Bronny going, Dad, pass me the ball. Truly a first on an NBA court. Okay, let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful start to the week. For any questions, comments, or feedback on the show, send an email to Morning Brew Daily at MorningBrew.com.

And if you're enjoying Morning Brew Daily, don't be shy. Share the pod with your friends, family, co-workers. And who else, Toby? I want you to share the pod with someone that you wouldn't mind taking a driverless car ride with. They did say that it's perfect for potentially date night because, as you said, what happens in a Waymo, stays in a Waymo. Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer. Olivia Graham is our associate producer. Eugenwa Ogu is our technical director. Billy Minino is on audio. Hair and makeup is crying in the Sam's Club. 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. When Mother's Day means celebrating your mom, your wife, maybe even your daughter as a new mom. Trust 1-800 flowers to help you celebrate every important woman in your life. With double blooms from 1,800 flowers, order one dozen roses and get another dozen for free.

It's a simple way to give beautifully, with colorful blooms that make Mother's Day feel meaningful. For every mom you're celebrating, order with confidence and get double blooms at 1,800flowers.com slash Spotify. That's 1,800flowers.com slash Spotify.