Morning Brew Daily - The Reason Groceries are So Expensive & Women Win Big at the Grammys

Episode Date: February 5, 2024

Episode 250: Happy Monday! Neal and Toby are back and are discussing President Biden's comments on inflation at the grocery store and the stats behind the historic prices in the egg and milk aisle. Plus, it's been one year since the East Palestine train derailment and which women dominated the stage at the Grammys. The guys share their winners of the weekend, including the World Cup coming to New Jersey and Joe Rogan inks a new deal with Spotify. And finally what we are watching for this week. 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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pwc.c.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning brew daily show. I'm Neil Fryman. And I'm Toby Howe. Today, women dominated the Grammys last night and one in particular made music history. Then you're not imagining it. Grocery store shopping still is really expensive, which is bad news for President Biden.

It's Monday, February 5th. Let's ride. Yesterday, February 4th was the 20th anniversary of the day March Zonald. Zuckerberg brought the Facebook.com online from his Harvard dorm room. Now, two decades later, Facebook is still here, albeit under a new company name. Mark Zuckerberg is also still around, and the Facebook universe is more powerful than ever. Neil, 20 years is an extremely long time. It's been a crazy run for Zuck. I do think it's interesting how the mythology of Facebook's founding is now inextricably tied to the movie The Social Network. We don't really know how Facebook

started unless we go back to that movie. So I think it's pretty interesting. Like Justin Timberlake, drop the the, like everyone thinks about that movie when they think about the starting of Facebook at this point. Yeah, and just looking ahead, what is meta going to look like in 20 years? Is it going to be a VR, AR company?

Is it still going to be the dominant app suite that we all interact with every day? Are there even going to be apps in 20 years? And also, is Zuck going to be around in 20 years? These are all the questions. 20 years is so long and 20, thinking about two decades in the future as well, is just crazy and maybe maybe we still have zuck maybe we're still wearing headsets who knows my question is when

will the when will meta eclipse facebook as sort of the popular imagination of this company i mean facebook platform itself appears to be dying i don't know that many people using it at all anymore so it'll be interesting to see when the the transformation to from facebook to meta is complete in the popular imagination they need a sorkan movie that's that's when it'll be complete before we jump into the show today we are back with another word from our sponsor VIM. Okay, so I was up late last night thinking about some VIME wordplay. Just tell me what you think about these, Neil. Okay. VIM on, like dream on. Two out of ten. What? Okay. Vime me up, Scotty. You stole that one for me. Okay. What is yours is mine? Just give me a score.

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slash student offer. While supplies last, ends June 30th, terms at aka.m.m.S. College PC. We are finally getting a break from inflation. Gas, use cars, health insurance, you name it, it has been falling in price. And yet anyone who's gone to the grocery store to snack some ingredients for a nice home-cooked meal recently knows that I'll leave you saying parmesan costs how much? The price of food at grocery stores has jumped 25% over the past four years

compared to 9% for overall inflation during that same time. And one person, this is giving a major headache to, is, President Biden. Research shows that the cost of eggs, milk, and other staples play an outsized role in how people think about inflation, which is why Biden's been having a tough time convincing Americans that inflation actually is under control. Here's the issue, though, there's no immediate fix. Grocery prices have remained stubbornly high due to a mix of everything from labor shortages dating back to the pandemic to stuff like avian flu and other factors outside anyone's control. Neil, trouble on aisle, all of them for the current administration.

if these prices don't calm down a little bit. Right. It is a tough problem to fix grocery prices. One thing you can do is look at the grocery stores themselves and retailers and say, you have increased your profit margins over the course of the pandemic. You're not paying as much for your supplies, and now you're passing on a lot more cost to the consumer. So President Biden last week, kind of singled out in bash grocery stores for so-called greedflation, which is saying, like, they're increasing their profit margins while, making consumers pay more when they don't actually need to, and they should be bringing prices down.

Yeah, you are right. Food margins have increased. Grocery stores margins are up about 2% since the beginning of the pandemic, which is their highest level in two decades. So it's not like there isn't any cost savings that they could pass the consumers. But also, if you look at all the factors that have combined to push the prices of grocery higher, it is a lot. I mean, I already mentioned labor shortages. There's these ongoing supply chain disruption. We got droughts. The aviates. The aviation and flu hit the egg industry, especially hard. And then also, consumers still have a robust amount of demand. I mean, we still want to eat, and we still want to eat more expensive stuff, like the organics, like the cage-free stuff. So also, consolidation in the industry has given these larger

chains, like the ability to keep prices high. So, yeah, there's still a bunch of factors going into making your grocery bill a little higher than you want it to be. Speaking of consolidation, one other lever the administration can pull to try to increase competition to bring down prices is to scrutinize mergers. And there is this huge grocery store merger that we haven't talked about in the show, but it's kind of been simmering. And that's Kroger merging with Albertsons. This is a $25 billion merger that is currently under FTC review.

So the Biden administration, which has been very, very hard cracking down on mergers and acquisitions is obviously going to take a quick look or going to take a very deep look at this one. And the FTC is expected to block it. What is the one grocery ingredient that you remember being like higher than it normal? Because I mentioned Parmesan cheese. That's the one that always gets me. If I got a trader Joe's and I see a block of that, I'm like, that is way more expensive than I expect. I guess for me it's the staples like everyone else, the milks and the eggs.

But good news is the agriculture department expects prices to actually decline this year. Okay, moving on. Saturday marked one year since a Norfolk Southern freight train derailed in East Palestine, Ohio, spilling about 1 million gallons of toxic chemicals into local waterways, forcing residents to temporarily evacuate, and causing millions of dollars in economic losses. Though it didn't cause any deaths, this accident was supposed to serve as a wake-up call around rail safety

and the movement of hazardous materials through populated areas. But a year later, not much has changed in regulating the industry. Congress has not passed a rail safety bill, and derailments by the biggest U.S. railroads increased 13%. in the first 10 months of 2023. About that rail safety bill, a month after the derailment, a bipartisan Senate duo proposed the Railway Safety Act that would increase oversight of major railways and increase the cap on penalties they would have to pay for messups.

But despite supporting the legislation publicly, rail companies have used their massive lobbying presence behind the scenes to try and gut the core provisions of the bill, the Washington Post reported. And it has still not yet received a full vote in the Senate. Yeah, I mean, you said not much this. change, and that's definitely kind of the theme here one year later. The fact that U.S. Railroad crashes increase is just another sign that, again, we saw this major event happen, and then you didn't see the requisite reaction to it. The people of this community East Pound Sign are still

not feeling good or safe either. A lot of them are still only drink bottled water, even though the EPA is coming and say, hey, everything's safe now to drink. It's still just hard to recover from seeing the sights of like these massive plume of spokes. I remember when those pictures came out. It was insane just how environmentally destructive this one incident really was. They, right, because this, what happened was this wheelbaring caught on fire and derailed the train. And what they did was a few days later, those plumes of smoke was they essentially burned the hazardous chemicals because they thought that was the best solution. So you can understand why the residents, despite getting these assurances. And they do say Norfolk Southern has been very active in the community.

they've settled up with businesses. They've paid a lot of fees to help recover, to help this town recover. And the mayor said we're about 90 to 95% cleaned up here. But I wish it didn't happen in the first place. Right. Obviously, some steps have been made. So previously there is this requirement in the industry that if a wheel bearing, like you said, heats up to a temperature over 200 degrees Fahrenheit. You have to take action and replace it. They recently lowered that to 170 degrees. So they're trying to take steps to direct this. specific issue of these rail wheels catching on fire. So again, there is, you hate to see a bill in Congress get stalled after an event like this happens, but it does seem like some of these railways are taking it on to themselves to improve their safety standards. Let's move on. The Grammys were last night and Taylor Swift dominated as expected.

She won her record setting fourth album of the year award for her album, Midnight's, passing greats like Stevie Wonder and Frank Sinatra. and that felt almost like a side note due to the surprise announcement of her new album called Tortured Poets Department. Women in general also dominated. Siza led the charge with nine nominations. She ended up taking home three. Miley Cyrus won her first two Grammys ever. And Billy Eilis rounded things out, winning song of the year for her ballad that featured in the Barbie movie called What Was I Made for?

It all added up to reflect a year in which pop culture was dominated by women. Barbie was the highest grossing movie a year, and Taylor Swift helped local economies economic activity rip wherever her air is a tour rived. One of the jokes of the night was when host Trevor Noah commented when Taylor Swift walked by Lionel Richie saying he had turned into Lionel wealthy due to the economic activity she stimulated. Neil, pretty entertaining show overall. It was.

I mean, the Grammys have the benefit of, you know, 75% of the show is not speeches. It's music performances from the. biggest pop stars in the world. I want to focus on two performances that I thought were especially compelling. One is Joni Mitchell, who suffered a brain aneurysm in 2015. She is on the comeback train. I love her stuff. And this is the first time she performed at the Grammys and was extremely moving. The other definitely Tracy Chapman performing with Luke Combs, her classic hit, fast car with Luke Combs covered, and was one of the biggest songs in 2023, seeing her back on the stage with him. and he's, you know, said so much of his success around that song is owed to Tracy, obviously.

So seeing her up there, I think, was a little goosebumps-inducing. Those were fun for sure. And then Billy Joel also performed his first new song in 17 years. I was in bed at that point. Me too, but apparently it was great. It was right at the end of the show. And then you two also had this virtual performance from the sphere in Las Vegas. Someone's got to let you two out of the sphere.

I think James Dillon hasn't walked in there and just keep performing. But it was great. I mean, overall, though, there's kind of this weird feeling around the music industry right now. Remember, Universal Music Group, which is one of the biggest labels in the country, is in this big feud with TikTok right now. They pulled all their music off of TikTok, which has led some artists to say, all right, how am I going to have my music be discovered these days? And then also, I mean, Taylor Swift kind of propped up the music industry last year, but it's not necessarily that you can count on one of the artists of our generation having one of the biggest music tours ever every single year. So there is a bit of a malaise around the industry, but overall still a celebratory night. Crazy stat about Taylor Swift.

She made up 2% of all U.S. music sales last year. And that herself. She's bigger than the entire genre of jazz or classical music. That's brutal. So what I'm hearing is Taylor Swift needs to release a classical album. A classical album. That thing would do very well. All right, before we jump into the next part of our show, we're going to take a quick break.

Okay. let's hit our winners of the weekend, the segment where Toby and I select two things that had an even bigger weekend than Miley Cyrus's hair at the Grammys. I won the pre-show NHL skills competition, so I will go first. And my winner is New Jersey. And that's because MetLife Stadium in East Rutherford, home to the Jets and the Giants, was selected by FIFA to host the World Cup final when it comes to North America in 2026. A secondary winner is everyone who lives in suburban Jersey that are now sitting on an Airbnb gold. mind when the finals come to town. This decision is a big deal because of all the economic benefits and publicity that comes with hosting the final of the world's most popular sports tournament. New

Jersey beat out Los Angeles and Dallas for the coveted final spot, but FIFA threw Jerry Jones a bone by staging nine games at AT&T Stadium in Dallas, the most for one location in the tournament. And let's talk about the U.S. national team schedule for a second. The lads will play all three of their group stage matches on the West Coast, starting in L.A., heading up to Seattle, and back to LA. And if they play a game that's not on the West Coast, well, that would be very good news because it means they made the knockout stage. And finally, FIFA tapped Mexico City's famous Azteca to host the game's first tournament. It begins on June 11th, 2026, but I need this to start tomorrow. I know. I cannot believe that we have to wait an entire year, more than a year to

yeah, two years. Gosh, it's just teasing me at this point. All the jokes after this was announced was about the lack of public transportation and how Europeans are just going to be shocked when they have to merge eight lanes over in traffic, try to make it to the MetLife Stadium parking lot. I mean, we've been to a major event at MetLife. We went to the Ares Tour there. And again, it's just kind of a mess trying to get in and out of the stadium. I mean, you're a little more bullish on the public transport than that. No, I just think every football stadium in the United States is surrounded by a huge parking lot.

So there's no really good public transportation options. The one date that I have circled for the World Cup, I know it's over two years away, but there's a July 4th knockout round game that will be played in Philadelphia on July, on the 4th of July. And if the World Cup script riders could come together and get England versus United States on July 4th in Philadelphia, that would be the single greatest sporting event in history. So that's my two cents. My winner of the weekend is the Applevision Pro.

So I know we all live in our own social media bubbles, but I think I speak for a lot of us when saying that I could not escape Vision Pro videos this weekend. They were everywhere. I saw people working with it on the subway, watching a movie on an IMAX-sized screen while sitting in coach on an airplane, using the self-driving feature of a Tesla cyber truck while wearing the headset. The videos just kept going on and on. And the Vision Pro Reddit was popping off.

You had gamers gaming on it, coders, coding. and, of course, people trying to watch X-rated videos. The discussion was lively and varied with some people calling it the greatest piece of technology they'd ever tried, with others saying everything is darker than expected, and the pass-through vision makes everything kind of blurry. Neil, what were your impressions of seeing the first weekend of the Vision Pro out in the wild? Well, these were definitely the early adopters,

and I just want to remind everyone that this thing went on sale on Friday. So these are the people that have $3,500 to spend, the very tech-forward people, who are also okay with being seen in public with a headset or maybe not even okay with it. They want to and they're kind of peacocking to the world. So I still can't understand whether this is super dorky or cool, you know, or they're mainstreaming this technology. But, you know, my mind just went, is this what everyone's going to look like in five to ten years? Yeah, it's a little dystopian for sure.

I mean, Casey Neistadt, who is one of the biggest YouTubers, great filmmaker, took it on a joyride and said it is one of his favorite piece of technology he's ever used, which is a little scary because he is someone who interacts with the world and is just like a joyful way and is so present in the moment. It seems like, and here he was with like this big headset on. Another big takeaway was that I saw this post that Apple had patented something that looked a lot like the Vision Pro all the way back in 2007, which just goes to show you, who knows what Apple is cooking up in the lab right now?

because if it went from 2007 to 2024 to bring this Vision Pro to life, they've got something in the background. So that was definitely another cool Easter egg that I saw pop up over the weekend. Yeah, the car, maybe. Let's move on. It appears the Joe Rogan experiment

has been going pretty well at Spotify. Well enough for the two to announce a new $250 million multi-year deal with one big catch. The podcast will no longer be exclusive to Spotify. Under the new agreement, Spotify will sell ads, but they'll also help distribute the pod across lots of podcast platforms like Apple and YouTube. Now, wait a minute, why sell out all

that cash for non-exclusive distribution rights? I thought the whole point of the signing him to a deal was to use his appeal to drive new subscribers to Spotify. Yes, but it turns out that approach hasn't been working too, too well. Spotify's podcasting business has been hemorrhaging money for years, so the new deal that brings in ad revenue can help pay back their investment while still getting that halo effect of new subscribers. Neil, this deal was announced last Friday, so we've had some time to sit with it. What do you think about this new approach from Spotify?

It kind of reminds me of what's happening in the video streaming world, right? Where at the beginning of the streaming wars, each of the platforms took their content and put it behind their own platforms paywall. So if I wanted to watch the office, I had to go to Peacock. If I wanted to watch Sex in the City, I had to go to Max. And now that the streaming wars have kind of played out a little bit, you're seeing a lot more content sharing. And I think that Spotify also realizes that maybe putting Joe Rogan behind the, you know, its walled garden is not extracting as much value as they could from him.

Yeah, it's definitely a question of, it is mirroring kind of the same exact path that video streaming where it was this all-out rush to attract these users. But now we're going to Spotify is sitting here figuring out how the heck can we. actually monetize this most effectively. Ads. Yeah, and ads is still a great business, but also they've lived on other monetization efforts, too. They tried to do this concerts and tickets business that didn't really work. And then also, they rolled out high fidelity audio a little later than a lot of people.

That was supposed to be another big money driver that maybe hasn't popped as much. But yeah, if you have someone like Joe Rogan who brings in still a massive audience, he was actually the number two podcast for any women over the age of 13 as well, So behind Morning Brue Daly? Behind Morning Brue Daly, of course. But yeah, so he still is just this absolute juggernaut of a podcaster. And so why would you diminish the reach of like your main star when you could just be putting the Joe Rogan brand and the Spotify brand across a much bigger audience? Right.

And Spotify has spent over a billion dollars on this podcasting push. It has vaulted them over Apple to become the top podcast platform in the world. But the problem is. And so it's doing fine in podcasts, but the problem is podcasts are just not a huge business. I know it's kind of funny as we sit here, you know, talking on a podcast. But advertising revenue grew 25% last year to just $2.3 billion. So it spent a billion and the total market size is 2.3 at this point. So, you know, I think it is the leader in this space, which it had set out to do, but it may be overpaid to get there.

And the market size may not have justified all the costs and bring. all Barack Obama and Harry and Megan and Joe Rogan. Toby and Neil and everybody. The heavy hitters there, yeah. But yeah, you're absolutely right that. Podcasting, hey, we're bullish on it, though, obviously. We're sitting here at the mics, but, yeah, Spotify is adjusting the strategy. Someone's making $250 million from it.

Okay, let's preview the week ahead to make sure you know what to expect in the news over the next few days. Lots going on in D.C. First up on Thursday, the Supreme Court, will hear arguments over whether former President Trump can be excluded from ballots due to his role in the January 6th attack on the Capitol. Trump is appealing a Colorado ruling from last year that found he violated a clause in the 14th Amendment that says an elected official cannot return to office after engaging in an insurrection. This is certainly a big deal because the Supreme Court's decision will effectively decide if the clear frontrunner for the GOP nomination can continue his campaign.

Yeah, with three justices appointed by him on this court, this is a unique case to say the least. Probably the biggest and most direct involvement in elections since Bush first score. So obviously people are going to be paying attention. Really big deal. Also in D.C., the Senate is expected to vote on a long awaited bill, which was released yesterday, intended to dramatically reduce illegal crossings at the U.S.-Mexico border by establishing a new asylum process. The bill would also send $118 billion to Ukraine, Israel, Taiwan, humanitarian efforts, and the southern border, with Ukraine receiving more than half of the funds.

but the bill does face a lot of opposition from members of both parties. Yeah, House Speaker Mike Johnson has said that this deal is reportedly dead on arrival to the House. So even though, yes, people have been waiting for this to kind of months. Yeah, months, it looks like it's not going to go far. All right, let's head to Wall Street where investors are bracing for another big earnings week. While last week's earnings were dominated by tech, this week, there's something for everyone. The headliners include McDonald's, Disney, Ford, Chipotle, and Eli Lilly. so we should get an update across a wide swath of industries.

Meadows report from last week, though, remains the gold standard for this earning season. It's going to be top to top. Yeah, absolutely. But you know what I'm going to say. All I want to see is what Chipotle projects for this year's burrito season. Breedo season best time of year. It's going to be a big one. Lunar New Year begins Saturday, ushering in the year of the dragon.

And Chinese officials are hoping it leads to that typical dragon baby bump to stem worrying declines in its population. In the last Dragon Year in 2012, the Chinese birth rate jumped significantly before following the next year, which is because people born in Dragon Years are believed to have desirable traits like intelligence, leadership, and good fortune. Oh, interesting. Wait, do you know which kind of Chinese year you were born into? No. I am the year of the ox, which I don't really know what that signifies about me, but I've always liked oxes because of that. I don't. Oh, interesting. Yeah.

Okay, Friday is National Pizza Day, or as your boss calls it, please don't unionize day. Okay, here's the thing. There's all these jokes about pizza days in the office replacing actual benefits, but I would appreciate some pizza days these days. So if you're listening to this, Austin Reeves CEO, let's throw more pizza days. And finally, as if you need a reminder about that big game coming up on Sunday, puppy bowl 20 will take place. Yes, and we actually had a listener recently right in saying that their puppy got accepted

to take part in the puppy bowl. So shout out Matt Soudal and his daughter. Indiana Jones. There is some controversy, though. There's another dog who goes by the name of Indigo at the puppy bowl. And so Matt's pup has to change their name to Jonesy. So instead of indie, you have to go by Jonesy because apparently Indigo stole the indie nickname. All right, that is our show for this Monday. Hope you all have a great start to the week and you stay as dry as you can if you're listening in California. If you have any thoughts on the podcast, please drop us a line at our email Morning Brew Daily at morning brew.com. Let's roll the credits.

Meal Iron is our editor and producer. Raymond Lou is here in the flesh as our associate producer. Euchennewa Ogu is our technical director. Billy Menino is on audio. Hair and makeup can buy themselves flowers. Thank you for the offer. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show, Danielle.

Let's run it back tomorrow.