Morning Brew Daily - What The Supreme Court Might Do to Social Media & Pillow Talk Insider Trading

Episode Date: February 26, 2024

Episode 266: Neal and Toby discuss the landmark US Supreme Court case that will debate the first amendment vs controlling what you see on social media. Next up, a breakdown of Warren Buffett's annual letter to investors and how one man overheard his wife's conversations while working from home and is now on trial for insider trading. The guys share their winners of the weekend and what are the requirements for a region to get a Trader Joe's? And finally what we are looking forward to in the week ahead. 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, the Supreme Court hears a case that could transform your social media feed. Then be careful what you tell your significant other because pillow talk insider trading cases are on the rise. It's Monday, February 26th. Let's ride. Who is this old man sitting next to me? He's unrecognizable.

Got some gray hair showing already giving me long-winded directions to places I can just look up on Google Maps. Toby, you are 27 after celebrating your birthday over the weekend. weekend, get anything fun? I got a lot of fun things. I'm actually wearing a sweatshirt that I got from my wonderful girlfriend. We also went upstate to this cool nature resort for the weekend. It was a very funny story. We did this yoga, early morning yoga class.

And after the class was over, the yoga teacher goes, no way, are you, Mory Brew Daily? Oh, my God. So yogis love Mory Brue Daily. Shout out to that yogi. But also, the one thing I truly am missing from my wonderful birthday weekend is some reviews from you guys. I was taking a scroll through our Apple podcast app, and it's looking a little dry in there. So the one final thing that I want for my birthday week, yes, I'm expanding it to a week, is some Apple review.

So please oblige. All right, before we jump into the show today, we want to tell you about our sponsor, VIM. One of my favorite parts about VEM is that they have this section on their website that reads, Don't become a ransomware headline. That hits home because of just how many ransomware headlines we've talked about this year. Sony got hit with a ransomware attack last fall, the government of Maine, two, and a bunch of healthcare systems in California. Those are just the ones I can remember from the past year.

Well, to be fair, Neil, you do read more news than anyone on Earth. Okay, but still, this just goes to show how much VIM is needed out there. Beam is needed indeed. Don't become another ransomware headline. Head to VIM.com today. That's VEAM.com today. Study and play. Come together on

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and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller. Learn more at Windows.com slash student offer. While supplies last, ends June 30th, terms at AKA.m.m.S. College PC. There is a major Supreme Court case unfolding this week, about who gets to decide what can and cannot go on social media platforms. The origins of this case date back to 2021 when Facebook, Twitter, and YouTube banned President Trump

from their platforms in the wake of the January 6 riots at the Capitol. Florida retaliated by passing a law that restricts companies from banning candidates from office from their sites, while Texas also passed a similar law prohibiting them from taking down political content. But two tech groups push back saying that the companies have the right to make decisions, around free speech on their platforms under the First Amendment. So now we have this Supreme Court showdown that could shake up the modern internet as we know it. The central question at play here is essentially who controls speech on the internet? Is it platforms like X, YouTube and Facebook, or the states and lawmakers?

Neil, when you think about platform moderation, things like hate speech or inciting violence are always top of mind. So if you strip these companies of their ability to moderate content, who knows what might start leaking onto our feeds. It's a little scary to think about, but if you look at the decisions from the appellate courts, big word there, appellate, you can kind of see the contours of the argument because the Texas law was upheld by the Fifth U.S. Circuit Court of Appeals, who said we reject the idea that corporations have a freewheeling First Amendment right to censor what people say. Then you go to another appellate court, which ruled against Florida's law, and they said a private entity's decisions about whether to what. extent and in what manner to disseminate third-party created content to the public are editorial judgments protected by the First Amendment? There you go. Those are both the arguments that are in play right here. Yeah, the original kind of impetus behind or push behind these laws is that these states think that this is protecting potentially conservative viewpoints on the more liberal biased

California-based social media platforms, if you will. And so right now it is the social media platforms wield an immense amount of power of what can and cannot go on their platform. These platforms have long policed themselves. They set their own rules while the government is kind of pretty hands off. And that's just the way it's always been. But potentially that this Supreme Court decision could shake all that up. Yeah, there's a more existential question here of how you define social media. The companies themselves say, we are publishers. We're like magazines. We can make editorial decisions about what goes in our feet or not. We are granted that right under the First Amendment, you have some conservative lawmakers saying, actually, social media companies,

you're not publishers, you are telecom companies, you are akin to the telephone conglomerates of years past where you just are freely disseminating information. The government has to take a bigger hand in regulating what information flows through your pipes because we don't want you censoring it. Yeah, so what are the next steps here? The court will hear arguments from both sides today, but a decision is not expected until June. So start thinking about this once again when the weather starts warming up a little bit. Yeah, but we could see, I mean, if these laws are upheld, then the companies will either just create feeds, particularly for Florida and Texas, which you can see anything. I mean, that's the concern.

Anything can be here like, you know, ISIS propaganda, terrorist propaganda, child, bad stuff. Or they could just pull out of Florida in Texas entirely. So that's what to watch. Warren Buffett released his annual letter to shareholders on Saturday, which has become a most. Street on Wall Street for the Oracle of Omaha's folks he musings on investing, the U.S. economy, and just life in general. In this year's letter, Buffett spent time honoring his longtime pal Charlie Munger, who died last year at 99. Buffett called Munger the real architect of their company, Berkshire Hathaway, and said he was just the general contractor who carried out the day-to-day construction of Munger's

vision. In addition to the letter, Berkshire Hathaway dropped its annual results for the year, which are also closely watched by investors. And that's because Berkshire is, this unique company in that it owns companies across a wide array of industries, railroads, utilities, consumer goods, some tech. So Berkshire's performance always gives clues into the state of the economy. How to do? Well, pretty great with a 21% increase in operating earnings, thanks in part to a stellar year from its insurance holdings, including Geico. This was such a heartwarming Berkshire letter. It was just, this is always just a nice event to kind of bookend the end of the year. And I do love the tribute to Charlie Munger.

The part that really stood out to me is that Warren Buffett said that even though he knew he was right, he gave me the reins. And when I blundered, he never, never reminded me of my mistakes, which is just such a healthy form of friendship. Like, yes, you let your, even if you love someone and you think that they're making a mistake, you let them make the mistake, but you don't make them feel bad after it. So I thought that part really lived up to expectations. We knew we were going to get a monger tribute. And I absolutely loved every word of it.

It was super nice. Let's talk money. Let's talk money. So the thing you want to look with Berkshire Hathaway is this cash pile. So Warren Buffett is known for making tons of big deals. He owns a ton of companies across Berkshire. But over the past decade, Berkshire has built up this massive cash pile. I think it's now up to $168 billion.

And Buffett says there just aren't any great investment opportunities. And he warned investors that if they're looking for eye-popping returns, they're not going to get it from Berkshire. Yeah. What a problem to have that you just are swimming in too much cash. He's looking around and looking at foreign markets, at U.S. markets, and saying there's no tasty deals out there. The most recent deal that they just pulled off was they bought the nation's largest truck stop operator, which is pilot last month for only $2.6 billion. Even that deal had some hurdles and some hiccups that there was some legal dispute, but eventually they got that deal done. And it just really is a sign of the times that Warren Buffett is being very patient right now.

He's saying, listen, I'm not going to act rashly or kind of throw off. pursuit of good deals out the window because there just certainly there just aren't any out there now. Meanwhile, with yields the way they are and you have this much money, you can make money, you can make money on cash. I mean, he has $125 billion in short-term investments in U.S. Treasury bills, and the yield on six-month treasury bills right now is about 5.3%. So if you just do some back in the napkin math, that's just pulling in billions of dollars without doing anything. So if I'm Buffett and I'm thinking about how I'm allocating capital, you know, that's still making money for me in this high interest rate environment.

Not too shabby, indeed. Let's move on. If you got a very successful, significant other with a high power job and a lot of poll, first of all, congrats. But secondly, please do not eavesdrop on their phone calls. You could end up like the Texas man who just pleaded guilty to insider trading last week for making $1.7 million in illegal profits. Acting off of info he overheard from his wife's work conversations.

conversations. Tyler Loudon bought 46,000 shares in a truck stop and travel company called Travel Centers of America after he heard his wife who works for BP talking about a proposed acquisition. When BP did end up announcing that drill, the stock shot up 71%. Loudon had hit it big and immediately offloaded all his shares he had bought without telling his wife. Unfortunately, though, BP and SEC came sniffing around and Loudon was busted. Neal, these so-called Pillow Talk Insider Trading cases where significant others glean knowledge about potential deals are not uncommon and actually kind of exploded during COVID. Totally.

I mean, if you go back into the archives, there are a ton of pillow talk insider trading cases in the early 2000s. Now it's a little bit different because of COVID because these kind of chichats aren't happening in the bedroom anymore. They're happening at the kitchen table where me and my significant other are working on our deals right next to each other while working from home. So it's kind of morphed a little bit into a new area. of remote work insider trading because I can just hear your Zoom calls even though I don't want to

and I might hear some tasty deals. Yeah, it's a lot less sexy these days because you don't even have to get your significant other in a compromising position or somewhere where they feel like they're going to bear their deepest target secrets to you. It is just the mundanity of sharing the same space as someone. I was looking back at some of these insider trading cases during COVID though. There was this one guy who was dating an executive assistant at Morgan Stanley. She asked him to keep an eye on her computer while she ducked out to an exercise class. He started looking at calendar invites, which include meetings about potential planned mergers, started selling those stock tips to his friends, trading them for Rolexes.

And it was also another interesting thing that one of the big takeaways from these Pillowch, insider training cases, is that it's usually the men who end up acting on the material they gleaned from their significant other. That's not to say that they're all men doing it, but making the jump to actually take pulling off those traits is usually something that males do. So girls out there listening, I would keep your corporate secrets held tight. You don't want your relationship in jeopardy. We should know that none of the relationships in these cases survived. They all, like the title outed, his wife immediately divorced him, did not speak to him after. So yes, if you want your relationship to survive, do not do this. All right, before we end any relationships, let's hear a quick word from our

wonderful sponsors. It's time to reveal our winners of the weekend. The where Toby and I share two things whose birthday wishes came true the past few days. I won the pre-show Drag Race, so I will go first. And my winner is Sora, OpenAI's new text-to-video program. Less than two weeks after it debuted, it's already having a real-world impact on the movie industry because entertainment mogul Tyler Perry said he's pausing an $800 million expansion of his studio in Atlanta after seeing Sora's capabilities. In an interview with the Hollywood reporter, Perry said seeing SORA create cinema-grade video out of a single sentence of text was mind-blowing and warned that without regulation protecting workers, he doesn't see how the industry survives.

For an example of how SORA will impact the film industry, Perry said he would never have to travel to shoot on location anymore. If he wanted to set a scene in the mountains, he wouldn't have to move an entire crew to Colorado. He could just type it into Sora and create a mountainous landscape. Toby, $800 million investment on hold because of a two-week AI program. I have a lot of questions here, though, because my big question is SORA came out legit two weeks ago at this point. How are you already reconfiguring all your processes? It's still in a closed beta, and I'm sure Tyler Perry has had access to it,

but how can you actually know that it's going to be cinema-grade quality stuff? Because, of course, there's still drawbacks to this new technology. So I don't know. Whenever I see a headline like, oh, my gosh, I'm pausing everything, changing everything. I feel like there's something else here. Yeah, I get a little skeptical. He wanted an excuse to pull the plug on this. That's what I was thinking because, I mean, he's coming out and saying,

I feel so bad about all these jobs are going to be lost. The contractors are working on my studios. But, like, you are the one responsible for this. You could continue on this $800 million studio expansion. But if it doesn't feel the need for it, if he thinks that, I mean, I totally hear what you're saying. But I think this is a guy, and in this interview with the Hollywood reporter, he talks about how he's been following AI for a really long. long time. This was a big sticking point in negotiations last year during the writers and

actors strike. So this is not something that's completely new. He knew he knew this was happening. He said he's already used AI in two films for aging makeup. And he said, I would have had to spend hours in the makeup room. And now AI can just make me look older. So yeah, maybe this is the case, but it's still an interesting discussion around SORA and its potential threat to the film industry. Absolutely. And if anyone is plugged into this, it is going to be Tyler Perry. So again, He is sitting from a chair where he actually is using AI and can see what this thing does. So we will see, though. I wonder if we're going to see a much different look to movies in the future if they're not going to Colorado and shooting the mountains anymore.

And it is just sort of generating these landscapes. My winner of the weekend is something very near and dear to my heart. And that is the Florida Man Games. This is an event hosted this past weekend with all sorts of insane games that really embody my home state. We're talking competitions like a mullet contest. a mud duel with pool noodles, and even an evading arrest obstacle course, complete with a real sheriff's deputies chasing contestants. The idea behind the contest is to embrace the Florida man joke

that has become a staple of internet culture over the last decade. Due to a combination of Florida's very strong public records law to make it easy to obtain police reports and the general weirdness of our populace, seeing headlines of Florida men doing insane things, it's just a normal part of existing online these days. And now there's a multi-event competition to celebrate. Neil, I have to do this next year, right? You have to go.

What competition do you think you would be best at? Well, one of the funniest one is the theft simulation relay, which people were carrying pairs of bicycles, copper pipes, catalytic converters. They really were leaning into kind of like the Florida man of it all. It just doesn't seem like Florida is unique in this case. I mean, it's the third most populous state is so many people. It's so diverse. There's a lot of different things going on.

Florida. North is different than Southwest is different. and east. But if you just go back in history, even before Florida became a state in 1845, it was just known as a rogue's paradise where a bunch of hoodlums came down and we're just doing their thing. I guess they're drawn to the weather. But for whatever reason, Florida is just the embodiment of weird when, I guess when you take a broad look at it, it's probably not any weirder than anywhere else. The first flag to fly over the capital in 1845 had the motto, let us alone. So for a long time, Florida has just, as you said, been kind of a place that

it attracts weird people. And I do like that this is kind of taking and owning a Florida Man thing where there's been some pushback recently of like, hey, should we really be publicizing these people at their worst? Like they just committed a crime. They're probably not feeling the best and here we are making fun of them. But I think this is a recapturing of the essence of what makes Florida Florida. So I'm all in on the Florida games, Florida Man Games. Let's move on. I do not know if we have any residents of Springfield, Missouri listening to this podcast. But if we do, I am very sorry for your loss.

For 48 minutes last week, Springfield thought that they were the next lucky city. Trader Joe's was going to open a location in. The local newspaper ran a story. People posted on X. And the 4,000 strong members of a Facebook group dedicated to the cause celebrated in pure elation. But less than an hour later, all that enthusiasm was crushed. Trader Joe's apologize and said it was actually opening a store in Springfield, Virginia. The Pure Joy followed by Pure Despair underscores the crazy cult-like following Trader Joe's inspires.

They only have 500 or so locations across the country, so cities lobby hard to be the next lucky geographical landing point. The Springfield, Missouri Facebook group I mentioned earlier, it's been active for over 16 years. This was their Super Bowl. Trader Joe's, it's a serious business, Neil. Yes. One local pastor said it was a. moment of euphoria followed by a dark night of the soul, showing how crushing this is.

But it does kind of peel back the curtains into Trader Joe's secretive location decisions. I mean, this is a privately held company. They don't explain how they make decisions where they locate. They don't expand that quickly. And this company is one that is maybe the most requested by a particular community because it is a symbol that your community is. wealthy, well-off as education. So it is kind of like a stamp of approval on your local city if you get a Trader Joe's. And a lot of people in local communities do you want that?

Yeah, there's no real formula or demographic requirements, if you will. But free economics actually dove into this a little bit. And they found that they usually target areas where household median income is about $10,000 higher than the average median income. So they are looking for wealthy areas. That being said, though, Trader Joe's is very inexpensive. So they do try to locate in cheaper parts of those more expensive areas. That's kind of the only behind-the-scenes look that we've gotten into the location selection process. I also think it's hilarious that Springfield,

this was going to happen, of course, to a place called Springfield, because definitely not descriptive enough. There's a Springfield Mass. It's actually a Springfield, Florida. I could go down the list. Obviously, that's the name also of the Simpsons hometown, which was apparently based off Springfield, Oregon.

But the Simpsons creator, Matt Groening, said, yes, I intentionally wanted people to think it was their Springfield. I wanted people to kind of put their own interpretation on it. So, of course, this happened to Springfield. Trader Joe's, make my family happy and come to Springfield, Massachusetts, because we all want one there. My mom will never stop talking about bringing a Trader Joe's to Springfield, Mass. So please do that. Final note on this, very interesting Zillow study that found that when a Trader Joe's or a Whole Foods goes into a location, the surrounding homes appreciate and price twice as fast as they would have otherwise if those grocery stores hadn't come in. So it's this self-fulfilling prophecy where the stores go into a neighborhood

that's quote-unquote made it and then only create even more value for the home prices in the surrounding area. Okay, let's do our preview of the week ahead, the final week of February before March comes in like a lion. On Tuesday, a big presidential primary in the swing state of Michigan. On the Republican side, Donald Trump is expected to continue his role after a rompton, South Carolina on Saturday, making his nomination all but inevitable. On the Democratic side, President Biden is running unopposed, but the Michigan primary could expose major cracks in his support from the large Arab American population there. Muslim community leaders are urging Democratic voters to vote uncommitted on their ballots to protest Biden's handling of the Israel-Hamas war,

and that dissent could have major ramifications in November because Michigan, is a crucial swing state. Yeah, Michigan and Florida, it always seems. It always comes down to those two. Still doesn't really hit me. We're in an election year. We're barreling down towards one. But it's happening all right.

And these are kind of the first, I don't know, not the first states where we're going to see kind of the relative support of each major. Yeah, Michigan is a big one. Next up, if you hear your American tech friends start saying, Barcelona, it's probably because they're in town for Mobile World Congress, a huge tech trade show that kicks off this week. The convention has been known for the launches. of smartphones and wearables, but these days, everyone is talking about hardware that's tailored specifically to AI. Will we get introduced the device that eventually dethrones the smartphone? I don't know, but I've been looking out the current ones that have been coming out of there. We've seen a bendable smartphone. You can wrap around your wrist, a fully transparent

laptop, and a phone where the back changes colors when you charge it. I don't know if any of these are dethroned in the iPhone, but it is always fun to see kind of the wacky initial looks of the inventions coming out of this Congress. Yep. Tell me if you've heard this one before, but parts of the government will shut down on Saturday if lawmakers don't agree to a spending extension. I've heard that one before, Neil. It's the golden corral of earnings weeks because an endless variety of companies are reporting their Q4 results, including Macy's, Dominoes, Zoom, Birkenstock, Salesforce, AMC, and Kava. So you know how we have Fang? I was trying to group these companies into some sort of nice moniker. And all I got is scam Dragon Ball Z. So it's scam DBZ.

I don't think it's going to catch on, but I'm just putting it out there for people to look at. The one I'm most excited to see is Kava, because it's the product that I use the most. And they just went public last year. Leap Day, February 29th, is on Thursday. You know, I realize that an easy way to remember leap years is that they fall during the same years as the Summer Olympics. Oh, that is very interesting. Do we ever, oh, I guess the 2021 Olympics, because we shifted that. That was the one exception.

The sandworms are coming back because Dune Part 2 hits U.S. theaters on Friday. Do you think I can read all the Dune books before this comes out? I absolutely do not think that. I love Dune, though. Have you read Dune? No. I highly recommend it. Get on it, Neil.

Okay, in the sports world, Formula One season begins on Saturday with the Bahrain at Grand Prix. Of course, the big news this off season was Louis Hamilton leaving Mercedes and going to Ferrari. He will not be in the Ferrari Red this season, though. It'll be 2025. So this is last year at Mercedes. He's a lame duck Mercedes driver. Wow, Formula One correspondent over there. And then finally, happy birthday to Jay Bebes, who's turning.

30 on Friday. Oh my goodness. I'm 27. Jay Beaks is 30. We're all getting all over there up there, Neil. All right. We have to wrap it up there. Happy Monday. Have a great start to the week. A reminder to give Toby the birthday present he really wants by leaving a review on Apple podcast. Or you can leave a personal review by writing to the email Morningbrewdaily at Morningbrew.com. Let's roll the credits. Emily Milliron is our editor and producer. Raven Lou is our associate producer. Yuchinawa Ogu is the technical director. Billy Menino is on audio. makeup keeps pillow talk in the bedroom. Devin Emery is our chief content officer and our show is a production of Morning Brew.

Great show, Daniel. Let's run it back tomorrow.