Morning Brew Daily - Your Wages Are Catching Up to Inflation & Why Tesla Could Sue Cyber Truck Owners

Episode Date: December 13, 2023

Episode 212: Neal and Toby discuss how gas prices and wage rates have impacted the latest inflation report. Plus, Netflix posts viewer data from every show for the first time ever and Tesla says they have the right to sue anyone who attempts to re-sell a Cyber Truck. Next the guys get into Choice Hotels' hostile takeover of Wyndham, and what is the latest with Adam Neumann's latest 'utopian' apartment project. And finally, who is going to their company Holiday party? 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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Terms and conditions apply. Good morning, Brew Daily Show. I'm Neil Fryman. And I'm Toby Howell. Today, Netflix finally spills the tea on what shows we're all watching. Then whatever you do, do not try to resell your Tesla cyber truck. It's Wednesday, December 13th. Let's ride.

Toby, we had some breaking news overnight and an optimistic sign for group projects everywhere, and climate change, of course. Nearly 200 countries reached a historic agreement at COP28 in Dubai that calls for a transition away from fossil fuels, which account for more than 70. of global greenhouse gas emissions. Not everyone is satisfied with a deal. It is a compromise after all. But it does mark the first time that a global climate agreement specifically calls to

limit the use of fossil fuels. And I assume all the admission cuts are being deferred until 2034. Am I right? Everyone is falling into Shohei Otani footprints these days. He sets the standard. Okay, before we jump into the news, quick shout out to our friends over at Yahoo Finance. Spoiler alert. We're going to be talking about how inflation affects you.

your wallet on today's show, but you would have already knowing that if you're a fan of Yahoo Finance. Yep, Yahoo Finance gives you a stream of high quality, real-time market data so you can dig into the inflation stats, most importantly, how it affects your favorite stocks all in one place. So head to finance.yahu.com today or download the Yahoo Finance mobile app to get it directly on your phone. When the job gets tough, you need equipment that's built to handle it, the Cabota Construction lineup, featuring the versatility to do more.

durability to keep going and increased comfort for long days on the job. With skid steers, track loaders, wheel loaders, utility vehicles, and the world's number one selling compact excavator for 20 years, our expanding lineup is built to deliver. Visit cabotaUSA.com or your local cabota dealer today to learn more. Go to cabotaUSA.com flash disclaimers for full disclaimers. Now, without further ado, let's dig into that pesky inflation data to see how it might affect your dollar dollar bills, y'all. The Consumer Price Index, which measures inflation, increased just 0.1% in November and was up just 3.1% from a year ago.

The big number that will likely affect your wallet the most is a decrease in energy prices. Gas prices fell 6% while energy prices in general decreased 2.3% month over month. Also, wage growth has been an unexpected MVP in helping tamp down inflation. Wages rose at a 4% annual rate last month, extending a long, slow decline. but staying above that 3% inflation number. Finally, shelter prices have been a huge thorn in everyone's side, accounting for nearly 70% of the total increase in core CPI over the past year. But last month, housing inflation declined slightly to 6.5% relative to a year earlier

and has fallen from a peak of over 8% in March 20203. Neil, energy going down, wages slowly declining but outpacing prices, and housing remaining elevated. That's this inflation reading in a nutshell. Yeah, you're right. Those are the main takeaways. Those are my main takeaways. Let's dial in on gas prices, right?

Because that was the inflation boogeyman for at least last summer. But they've been down 19% September. And AAA said that now the average gallon of gas in the United States was $3.14, which is compared to over $5 a gallon in June 2020. So people are feeling a lot of relief at the gas pump. And, you know, inflation stats, a lot of times we try to. parse them and say, let's exclude gas prices and food prices because they're so volatile and look at core CPI, the core inflation index. But it is important for people to, when they fill up,

they fill up gas, you know, once a week or so. So looking at those gas prices, they're so visible. They are a very politically salient issue as well. So Biden has to think this is pretty good news, that gas prices have truly plummeted and they could go below $3 a gallon headed into January. Yeah, even though from a macro perspective, a lot of time, economists do like excluding those things. If you're just talking about a very micro-perspective, if you're talking about what affects your wallet on a day-to-day basis, of course gas prices affect it. So it is good to see them falling so much. Housing, on the other hand, another thing that affects a lot of people on a daily basis. It's just super sticky right now on a monthly

basis, the index increase just 0.4%. But on your annual basis, it's still up 6.5%. There's just still a very large shortage of affordable homes or even affordable rentals right now, which is why we are seeing that housing number just consistently remaining high. There's some really stark numbers here about housing unaffordability in the United States. About half of the nation's renter households pay more than 30% of their household income on rent, and that is considered the threshold of what is affordable and not. You don't want to pay more than 30%, but half of all the nation's renters are. And more than tenants are more than more tenants than ever are. spending 50% of their income on shelter. So this is a problem that the United States still has not

yet addressed, and it's still pushing inflation higher. So we talked about core inflation, but I now actually want to talk about super core inflation, which is another metric that economists have been looking at, which excludes not only the volatile food in energy prices, but also excludes shelter costs, which, again, you spoke to why maybe that won't be something that everyday person wants to do, but economists are looking at it. Supercore inflation increased 0.4%, which is double the pace of October. So that's the number that gets economists a little, gets a knot in their stomach that maybe inflation isn't doing the thing that the big headline number is saying it's doing. So that's when you go beneath the surface and look into kind of

the nitty-gritty data that you see some warning signs, but nothing to get too overly. I think that's the main takeaway from this report is that, inflation is still coming down. It's going to be a bumpy ride back to 2%, but there was nothing too alarming about this report at all. All right, Netflix is finally revealing how many people watch its shows. After years of keeping its viewership stats close to the chest,

much criticism was handed to it. The streamer spilled the beans in a massive engagement report that discloses the viewership of its shows through the first six months of the year. It is the most detailed info that any streamer has ever made public. The biggest takeaway, the top of the lineup is dominated by originals. Nine of the top 10 TV series and six of the most watch programs were Netflix originals.

The most viewed program through June was The Night Agent, followed by Ginny and Georgia, season one of the South Korean drama The Glory and Wednesday. I have not heard of 90% of those shows, but overall, this is a win for writers, actors, and producers that had been pushing Netflix to be more transparent. And having built a wide lead atop the streaming leaderboard, Netflix feels like it's in a strong enough position to release stats it once said would only help competitors. Yeah, remember, Netflix is not doing this out of the goodness of their heart necessarily. Initially, when the streaming industry was first born, Hollywood was kind of pumped to not live

and die by the old Nielsen audience ratings. But now, writers and creatives have started to criticize Netflix because hiding audience data allows it to maybe underpay for the more successful shows that they've produced. But I think this is a total power move by Netflix. because by releasing their numbers first, other streaming services are going to be put in this awkward position because, first of all, their numbers aren't going to be as high as Netflix's numbers because Netflix is just bigger than they are. But also, they're going to kind of have to be transparent after this because once Netflix moves, then you have to fall in line. So it's sort of a damned if you do, damned if you don't scenario for other streamers.

That's a really good point. One thing I want to point out for Netflix is that it has a really big bottom of the order. Kind of like the Red Sox last year. But they said that over, they said that 100 billion hours were viewed on Netflix, but 20% of the titles only accumulated 100,000 hours. So I did a little back of the napkin math. And that means a fifth of all titles account for 0.001% of all viewing hours. So there's this huge stack of its library just languishing and no one's watching any of these shows.

Yeah, it's definitely a hits business. One thing that was interesting to me, too, is that whereas you look at Apple TV, which invests a ton of money into getting really big names to headline their shows, Netflix does the absolute opposite. And it seems like their shows meant movie stars, not the other way around. I mean, Ginny and Georgia, the night agent, can you tell me any of the actors or actresses in that movie in those shows? You definitely cannot. So I think it's interesting how they don't choose to splurge on talent. They just make hopefully what is high-quality product, and then that turns into some famous talent. Okay, Neil, put yourself in this situation.

You just shelled out nearly six figures on a new Tesla cyber truck, but on the way home, you realize that bulletproof stainless steel isn't quite your cup of tea. Unfortunately, for you, though, there's not a whole lot you can do about it. A clause has reappeared in Tesla's terms and condition that says owners are restricted from reselling their cyber trucks with a threat of a lawsuit looming for those who failed to comply. This is a clause that has appeared and disappeared a few times now, but it looks like it's back to stay. One theory for its inclusion is that previous Tesla vehicles

ended up being bought by other automakers, presumably to them be taken apart to see how they work. With a cyber truck so new to the market, it makes sense that Tesla is being overprotective of its newest creation. This feels like a defensive move, too, to make sure resellers don't send the price of a cyber truck exorbitantly high. this is as textbook of a scalping opportunity as you could possibly find. It reminds me of limited edition sneakers or ERIST tour tickets. The supply demand balance is so out of whack.

There's only a thousand of these cyber trucks coming online in this first foundation series. Meanwhile, millions of people have reservations. So when you have this supply demand imbalance, it's not crazy to think that there's going to be a ton of opportunities out there, hoping to scoop up the first thousand and then flip them for a much high. higher price. And remember, this is the worst the cyber truck will ever be because it just got released. So this is still version one. It's the foundation series. So if resellers come in, drive the prices up super high, then someone is inevitably going to be pretty unhappy with the actual product that they get. So that's another reason why you want to kind of put this clause in place. A little, some people were balked at the

idea of getting a lawsuit pressed against them for reselling their vehicles. But in general, this is not a completely out of the ordinary thing for especially luxury car makers to do. There's a really funny case involving John Sina actually who he bought a Ford vehicle, a Ford GT that costs $450,000 and then quickly flipped that Ford GT to another party. And Ford came saying like, wait a second, we have a lockup period on this. You can't sell it for at least 24 months. You broke that John Sina. And so they ended up settling and he ended up donating the difference to charity. So there's a happy story in the end of the day, but this just goes to show that this is a very common practice in kind of the luxury car market.

Right. And there is, Ferrari does that too, and we should add that there is, Tesla kind of has a right of first refusal. You can offer to sell it back to Tesla, and you can ask Tesla to, permission essentially, to sell the car. So it's not this, you know, it's not super black and white. Tesla is offering some wiggle room, but it is interesting to see this happen with a car that you might see happen in other markets. Yeah, for sure. Okay, before John Cena comes in from the top rope, we're going to take a quick break. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179, like the next grill 3-burner gas grill,

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Heat makes it last. So when the rest of the world settles because of a setback, Icy Hot accelerates your comeback with fast-acting powerful pain relief. Icy Hot, you're so back. Things haven't been this tense in the hotel industry since Toby's suplexed a guy for the last waffle at the Continental Breakfast. Choice Hotels, the owner of Comfort Inn and other budget brands, ramped up its hostile takeover attempt of rival Wyndham Hotels by taking its $8 billion offer straight to shareholders. Choice has been trying to buy Wyndham for a while now, hoping that by joining Comfort in with Wyndham's Days Inn and La Quinta brands, they could better compete with the big guns, Marriott, and Hilton. And that way it reminds me of the mergers happening in the budget airline space with the smaller guys linking up to take on the deltas of the world.

But Wyndham's leadership has repeatedly rejected the offer, leaving choice with no choice, but to go full succession and try to make this merger happen in spite of Wyndham's resistance. This hostile takeover attempt would require sidestepping Wyndham's board and trying to win support directly from the shareholders, convincing them that this offer is actually quite generous and that Wyndham's management is making a big, mistake. Toby, nothing gets the blood flowing at 6 a.m. like a hostile takeover attempt. We love a hostile takeover attempt. Good use of suplex, by the way. Let's set the stage here, though, for why we're even seeing this merger in the first place. Domestic travel in general has come under a lot of inflationary pressure. It totally relates to the first story of the day. It doesn't seem as fun to pile into the family minivan for a cross-country road trip if everything

from gas at hotels are more expensive. So domestic travel in general has seen a little bit of pressure, which is why budget hotel chains, like the ones owned by choice, like the ones owned by Wyndham, are kind of seeing, are in favor right now. So maybe this is why Choice is looking at Wyndham and looking at shops and saying, hey, this is our moment to combine and really dominate this budget hotel space. So that's generally why we're seeing this. It is interesting. There's a lot of tension, though, because Wyndham is probably saying, well, we see the same opportunity as well. So you're going to have to make your offer better, which is forced choice to kind of circumvent the board and go straight to the shareholders. A big problem, Wyndham has cited, is regulatory approval.

This could take a year or two years to win regulatory backing from the FTC. So what Choice has done to kind of expedite the process, it started a dialogue with the FTC already, saying, look, we're already engaging regulators. We know this might catch their eye, and we know this is going to take a while, and we know this is one of your concerns. But look, we already started this process. So we're getting going, and the ball's in your court right now. Let's talk a little bit about hostile takeovers in general. There's a few different ways that you can achieve this. One is a tender offer, which requires a majority of shareholders to accept.

That's similar to what choice is doing. A proxy fight aims to replace a bunch of the board members at Wyndham or at whatever the target company is. But also, an acquirer may simply choose to buy enough stock in the open market to take control. That has a, there's a defense mechanism to that called the poison pill, which we saw happen in the Twitter in Elon saga from a few years ago. So the most prominent hostile takeover recently was probably when Elon Musk tried to take over Twitter. Because remember, Twitter did not want this to happen. Musk acquired a 9% stake in Twitter and said, hey, I'm coming for you. And Twitter was like, uh, we don't exactly want that. So what happened

there is as soon as you buy a certain stake in a company, it has to be. disclose, in which case the target company can kind of play this defense. It's kind of like chess a little bit. But they can adopt a poison pill, which is a little complicated, but basically the gist is that you can set a target threshold for a stake that a particular shareholder owns. And then once they hit that particular threshold, in Twitter's case, it was 15%. Then you can basically flood the market with cheap stock to have your other shareholders buy it at a free or at a major discount, which essentially blocks the, you know, acquire, so say Elon Musk in this case, from taking over the company. So it's called a poison pill.

And that's one defense mechanism that companies can use to avoid getting a hostile takeover. Yeah. So Windham does, they're not sitting ducks here. They're not helpless. They do have certain defenses that they can employ. Choice does look to be doing an exchange offer, which they're offering Wyndham stockholders, both a little cash and Choice stock in compensation for a majority stake of the company. So we'll see what they choose. It is very funny that their name is Choice hotels because there's some choices that need to be made by Wyndham stockholders. Okay, Adam Newman, the WeWork founder infamous for his over-the-top vision to elevate the world's consciousness via short-term office rentals, is back with another project

and you need to hear about it. A reporter from Business Insider got a first look at his new company called Flow, and honestly, I'm kind of digging it. Flow made waves last year when the venture capital firm A16Z wrote a $350 million check to help fund it. It's the single biggest investment it's ever made. And what the insider reporter saw was essentially just a well-managed apartment building. Flo's thesis is that demand for apartments has grown so much that landlords have gotten lazy and essentially subject their tenants to anything they want to because there's always another one to take their place. Flo wants to treat

tenants well, focus on building community among them, and charge a premium for it along the way. Neil, one of the first things the reporter said when he stepped into the building was it felt a lot like a we work. Are we being duped again into another Adam Newman snake oil pitch or were you impressed reading about flow? It's possible that this is classic Newman because when he launched the company, he said this company has four pillars. It's a management company. It's a brokerage agency. It's a financial services company. And it's a mechanism for sharing value with tenants. So there are these lofty principles behind what is essentially revoke.

revealed to be a landlord. And this company was worth a billion dollars before it launched a single product with definitely raised a lot of eyebrows, but no one can raise money like Adam Newman, even after the collapse of WeWork. So does a landlord, should a landlord be worth, should be valued at a tech startup valuation, which is what's happening here. It's what happened to WeWork, and that is one reason why WeWorks collapsed. Yeah, it certainly feels a little bit like history doesn't repeat itself, but it often

in rhymes. It does feel like they're trying to inject this tech layer on top of a non-technical business. The Flow app was a big thing that this reporter saw. You can do everything from unlock your doors, view security footage, book fitness classes. There's also this kind of Facebook style news feed that you can check in on announcements and messages from residents. It's this all-in-one everything app that honestly a bunch of communities have tried before, but it looks like in the past maybe it hasn't worked or it's little janky. Flow has devoted a ton of time. into it and talking to residents, the reporter was like, they love it. They do feel like the app works very well. It is kind of your hub for everything that happens in flow. Also, the idea of sharing your

data is a big part of this flow community as well. So maybe your leasing agent notices that you have a dog, and they might do a nice white glove service of sending dog treats to your apartment, which is just nice from a resident perspective. But also then they enter, oh, Neil is a dog, owner, I'm going to put that in the database, and then if a dog food brand wants to come host an event at a flow apartment, then they can make money off that. So there is kind of like monetizing your data, much like the internet has, but in an analog format. So, again, however deep or however much Kool-Aid of it you want to drink, you can definitely

do that. But on the surface, a well-managed apartment that treats its residents well will probably be successful. Maybe it's not a billion-dollar company, though. Finally, it's holiday party season at work, and you're probably wondering, Is my office party the only one that seems a little more lame than last year? Nope. A report by the Wall Street Journal explains that employers are taking a more chill approach

to corporate America's most sordid ritual this year, ditching the roast beef carving stations for office potlucks, and swapping out the ice luge with ginger ale. That probably has to do with all the layoffs and budget cuts this year, but it's also because workers just aren't excited about these parties. A survey by LinkedIn showed that 55% of workers weren't planning to attend their company's holiday party this year. To deal with this apathy, more employers are holding their parties during work hours with almost 60% of companies hosting holiday gatherings during the traditional workday up from less than

half last year. Toby, did COVID kill the work holiday party? And is that even a bad thing? I don't think that COVID did it. I think it's just one of those things right now that you pick your head up and look at what else is maybe going on in the world. Also, just, again, the rise of prices and inflationary pressure. And it's just difficult to kind of get into that holiday spirit.

doesn't feel right to be celebrating a holiday party. But I also choose a more optimistic view in that in tougher times, maybe holiday parties are exactly what you need to bring people together. You want to bring people together more, not isolate them. Which is why I kind of like seeing this data point where a November poll found, of more than 200 companies found 64% were planning holiday gatherings up this year, up from 57% in 2022. However, the parties are definitely going to be more low-key, as you mentioned.

Right. It seems like there's been a shift away from the traditional. traditional Christmas party that you might see in the office and it's more geared towards less alcohol more activities a lot of companies have said they're planning Pickleball tournaments and things during the workday that just aren't the traditional party at night where a lot of shenanigans can go down and you see your boss do some things that they probably shouldn't be doing So it seems like there's just a general and maybe that's just a general shift shift in society where there are all these bars popping up where people go and they like to play activities. They like to play ping pong and pool and and shuffleboard and all of those things and it just seems like the holiday party is mirroring that broader trend shift.

The veteran move, I think that some companies are pulling off, is pushing the holiday party from the December time to January. I hate that. Oh, you hate that? I think it's so smart from a cost-saving perspective, though. Everything is a lot, like probably 25, 50% cheaper because it's not peak holiday party.

But wait, you hate it because... Well, I just don't. I'm just a very organized, orderly person in my mind, and a holiday party should be in December. leading up to Christmas because after New Year's, I just don't, I can't look back. We're going forward. It's not a holiday party season at all, and I just can't get in the mindset. But then again, if it's not a holiday party and it's more of a winter party, I can see it

happening in January. But I just, I just personally, it feels good for me. Maybe it's OCD to have a holiday party in December ahead of Christmas. And January just seems so deflating. Maybe it's just a branding exercise for you. Call it a winter bun's party, and then Neil will be happy. That is our show for today. have a fantastic Wednesday and keep it classy at your holiday party.

As always, feel free to send your thoughts on the show or just say, what's up, at our email address, Morning Brew Daily at Morningbrew.com. Let's roll the credits. Emily Miliron is our editor and producer. Samantha Velas and Raymond Liu are associate producers. Yucenoa Ogu is our technical director. Billy Minino is on audio. Hair and makeup is headed to an open house for a flow apartment.

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. 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 and San Manuel is giving one person a $1.6 million dream package. The biggest prize in Yamava's history. Club Sorano 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.