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Hear that? That's me in Tokyo learning to make sushi from a master. How did I get here? I invested wisely. Now the only thing I worry about is using too much wasabi. Get where you're going with spy, the world's most traded etf. Getting there starts here with State Street Investment Management.
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Before investing, consider the fund's investment objectives, risks, charges and expenses. Visit state street.comim for prospectus containing this and other information. Read it carefully. SPY Subject to risks similar to those of stocks, all ETFs are subject to
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risk, including possible loss of principal. Alps Distributors Inc.
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Distributor inflation strikes again and the European Central bank just delivers its first rate hike in years. We have the latest global response to higher energy prices, ETFs, mutual funds, what is the difference and what does it mean for your tax exposure? Yes, we get technical, but this is a good one. We answer one listener's question and Mercedes Benz From Roads to Drones why the automaker is looking skyward for its next frontier of growth for Thursday, June 11, it's Brew Markets Daily and I'm Ann Berry. More market details to come. But first, car companies have spent the last century conquering transportation on the ground, and now many are looking to the skies. From flying taxis to military drone systems, automakers are increasingly investing in drone technology, the latest being Mercedes Benz. The auto OG just announced a partnership with German startup Titan Technologies to develop mobile anti drone vehicles. Well, under this agreement, Mercedes will provide modified sprinter vans and military G Class SUVs to serve as platforms for Titan's drone Defender system. The vehicles would carry sensors and interceptor drones designed to detect and neutralize or hostile unmanned aircraft. Well, the announcement comes as European governments increase defense spending and look for new ways to protect airports and critical infrastructure from growing drone threats. Titan says its systems are designed to offer a more scalable, affordable alternative to traditional air defense platforms. And this is all in keeping with concerns in both the United States and in Europe about the use of attack drones by Russia and Iran that are cheap, at least compared to the systems required to intercept them. Well, as competition for vehicle sales intensifies, automakers are taking their expertise in large scale manufacturing and supply chain management to advanced aviation and defense technologies. Toyota, Hyundai, Stellantis, Honda and others have poured billions into electric vertical takeoff and landing aircraft, often called EVTOLs or flying cars. Toyota, for example, has become one of the largest backers of Joby Aviation, one company we talk a lot about on this show, while Stellantis has partnered with another, Archer Aviation to help manufacture electric air taxis well outside of transportation. In recent weeks, both Ford and GM have also started to diversify. They've launched energy storage businesses, pivoting their EV operations in a move that mimics Tesla. Well, the market is liking what it's seeing here. Mercedes stock nudging up on today's news. We'll keep watching. We're coming up in a moment to spin through the headlines that are moving the markets today, including earnings results from Navon, the Amazon of travel as it sees its shares take off off. But first, this episode is brought to you by Liquid. John, how many times have you wanted to move your money around the market but had to wait for markets to reopen?
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O and you're setting alarm clocks in advance.
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Well, in a moment we play a new game. It's technical but stick with us. And that is mutual funds versus ETFs. But before we get there, a few headlines from today's trading session, starting with earnings results coming in from Oracle Ticker ORCL shares down nearly 10% despite the software and cloud computing company beating quarterly expectations and raising its full year profit forecast.
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So what's worrying investors? Likely it's Oracle's plan to raise $40 billion through a mix of debt and equity financing to fuel its AI expansion. And this is a story we keep hearing. Yesterday shares of super microcomputer sank 18% when that company announced plans to raise $7 billion to fulfill AI server orders. And Alphabet stock dipped just last week when it revealed plans to raise $80 billion to fund its massive AI infrastructure buildout. This massive spending is giving some investors pause. How much is too much to compete in the AI arms race?
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That's right, that Capex is getting real when the money's now getting raised and possibly diluting shareholders. Well, with today's drop, shares in Oracle are down roughly 7% year to date overall and sticking with earnings. But moving to the self proclaimed quote Amazon of travel, that's Nouvon shares ticker Navn there jumping 7% after the company topped quarterly expectations and raised its full year outlook revenue in particular rising 40%. And that's buoyed by subscription revenue which grew 26% from a year ago.
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And Ann, this is not a company I was previously familiar with, maybe because I don't do much corporate travel. So a little background. Navon has a market cap of five and a half billion dollars and the company says it's the all in one travel, corporate card and expense management solution. Last November the company IPO during the government shut down. Not a time for travel then shares were hit hard and the software sell off earlier this year. The company's had a tough run but the stock has turned around, shares up 175% since late March. Definitely want to keep an eye on
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be digging into that as a big jump since March. And finally since we're talking about travel, we're going to go international and take a look what is happening with the European central bank. The ECB raising interest rates today, marking its first hike since 2023. Don't forget it's been going in the opposite direction to flat ever since then. It's also the first increase by a major central bank after the conflict in the middle EAs caused energy prices to surge. So lots to watch there.
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The move comes just a week before the Federal Reserve's first interest rate decision under new chief Kevin Warsh. And it arrives as inflation pressures continue to build in the United States. Yesterday we saw that CPI report showing consumer inflation running at its hottest pace in three years and today wholesale inflation data came in at its highest level since 2022. All of which sets the stage for the Fed meeting next week. One will be watching closely.
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Let's take a quick break and when we come back we are going to unpack the differences between ETFs and mutual funds and how which one you go into may affect you.
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You know what Ann, following the markets is my job and even I find it challenging to keep up sometimes.
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Well, Public's investing platform helps you create agents that can monitor the market, manage your cash and execute your trades. Just enter a prompt, approve the workflow and put your agent to work.
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And with Public you can build a multi asset portfolio of stocks, bonds, options, crypto and more while accessing industry leading yields.
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To learn more, Simply head to public.com brewmarkets that's public.com brewmarkets paid for by
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Public Investing Full Disclosure in Podcast Description so good, so good. So good.
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New markdowns up to 70% off are at Nordstrom Rack stores. Now Stock up and save big on shoes, tops, dresses, accessories and more must haves for summer. Join the Nordy Club to unlock exclusive discounts. Shop new arrivals first and more. Plus buy online and pick up at your favorite rack store for free. Great brands, great prices. That's why you rack so. John Rather like a modern day homing pigeon with a note attached to it. We got an email, right? This wasn't a comment.
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What a throwback.
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A throwback. We got a real live email. I love those from one listener.
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That's right, we heard from Chad. Chad wrote, I understand the basic differences between mutual funds and ETFs but can't seem to understand the underlying structural differences between say AN S&P 500 ETF and an S&P 500 mutual fund when it comes to intraday trading and tax efficiency. He continues, what am I actually purchasing when I buy one of these versus a mutual fund?
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Right. So what is one versus the other? So this is a little technical, but do stick with us. And the reason why this is timely is there's so much conversation at the moment around what on earth is going to happen? Because to these tracker funds, whether it's an ETF or a mutual fund, they're a little different. When we have these massive IPOs coming, we've got SpaceX, Anthropic OpenAI and as a result there's a concern that more and more these tracker funds are just going to be so heavily weighted towards technology that people aren't getting the diversification that they were really buying into these kinds of assets for in the first place. So that's the overall picture, it's the overall context. And then within that if you do decide to buy them, well, how do you distinguish one from the other? So it's a really good question. And Chad, on the surface the these two products do look as though they should be identical. They are also named in a way that is extremely similar, which makes it harder to decipher what the differences are. So they both have the same underlying basket of 500 stocks. They both serve the same general purpose of helping retail investors like you and me get a diverse basket across the broad market in one place. So let's go through the differences between the two and address Chad's questions John and let's do it in our favorite fashion. We are going to role play, role play. I'm going to be an etf.
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Okay.
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And you are going to be a mutual fund.
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Okay. So I guess As a mutual fund, that makes me old school.
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It does.
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Mutual funds initially rolled out in the
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1920s, as you did.
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Yes. Thank you.
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You're welcome. Well, that makes me a bit more modern. I first came on the scene in the 1990s. Alas, not actually true in my personal case. But ETFs did come out on the scene in the 1990s. And in many ways ETFs were a product of computing and electronic markets. They came about with that development in the technology. Right.
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Well, with me back with the mutual funds, people were doing trades through brokers or emails or homing pigeons, perhaps.
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Right. Slower and more difficult at the time that mutual funds were created. Electronic and faster by the time the ETFs came about. Well, let's think about trading. An ETF can be bought or sold just like a stock at any time in the trading day, all day long, ETFs can be bought and sold and an investor is shown a real time price for that etf. Again, an etf, a basket of equities, and you can lock in an order and you know pretty instantaneously what the price that you just paid is.
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Right. And that's different for me as a mutual fund. My shares are priced once a day. So after the market closes at 4pm, the fund calculates the net asset value, the navigation of its holdings, and that's the price everyone who bought in that day pays. You don't know your price when you pay the order. And think of me, the mutual fund, as a piece of market price. Fish at a restaurant, you want the grouper, you order it. When the bill comes, you see what it costs.
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Yes, John, the mutual fund, piece of market price, fish at the restaurant. So that's the billing aspect. Right. So that's when the payment gets done, it's when the price gets set. They're actually very different between the two. And so I suppose one thing you've got to bear in mind is if you're looking to buy an ETF or a mutual fund in the morning, what risk do you run that the price is different by the time this trade actually closes at the end of the day? So that's just one very small nuanced thing to think about. So let's talk about what Chad is actually buying. What is the what here?
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Right. So if Chad is buying me a mutual fund, he's buying a share in the fund company. So the fund creates a new share just for Chad. They take your cash, your money goes into the fund pool, they go out and buy a Tiny slice of all 500 stocks and in proportion, right?
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So this is an important note about buying any of these packaged, packaged assets, whether they're ETFs or mutual funds. Here's what you're not getting, right, Right through these tiny slices all packaged up into these big baskets. What you're not getting when you buy an ETF or a mutual fund typically is the vote that you would get if you bought a share of a company directly. Now this is changing. So just to add a note in here, There are some ETFs where or mutual funds were actually the managers of those, the fund sponsor, like BlackRock or Vanguard or State street, typically they've held the stocks and they've cast votes on behalf of the whole pool of capital. They're starting to be a shift to let the underlying investors express preferences over those votes. But it's only just evolving, so it's a bit of a side note. But again, the fund sponsors BlackRock, Vanguard, State street and the like. Can you imagine the power that they've accumulated because they're holding so many stocks through these structures that aggregate voting power is actually very meaningful.
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All right, so what are you buying with an etf?
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Well, instead of buying into a fund, right, or a fund company, what's happening is you've got an ETFs have shares that trade all day on an exchange. They are exchange traded fund. So investors are buying and selling the ETFs amongst themselves. And big institutions keep the supply of ETF shares in balance with demand by creating new shares or redeeming existing ones directly.
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So that goes that distinction is important for Chad's other big question, what happens with taxes? So as a mutual fund, I expose investors to a higher tax risk, those capital gains that we see at the end of the year. Because when a shareholder in your mutual fund wants to redeem or cash out, the fund has to sell stocks on the market to give the seller their money back. And when the fund sells stocks at a gain, every shareholder who's still in the fund gets hit with a portion of that capital gain, even if you yourself didn't sell anything, right?
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Exactly. So when you're selling the mutual fund share, literally the fund is having to sell stocks to give you your cash back, Right? That is not what's happening with an etf. What's happening if you sell your ETF share is some other investor is buying it from me in the market. The underlying stocks themselves aren't being shed. So that is the key difference. And that's why there is a difference. So you don't get a recognized capital gain when you. With an etf. It sounds very jargony, it sounds really dense, but it's actually very, very meaningful because I want to talk about what's happened over the last several years, and a lot of it has been driven by this difference in the tax structure. The difference in the tax structure is appealing to investors, both institutional and retail investors. So there's been a lot of demand for ETFs for that reason. The other thing is too, that mutual funds historically have been quite expensive to manage because there's a whole bunch of infrastructure around them. ETFs are tended to be cheaper to manage. And as result, we, the investors, whether institutional or retail, pay lower fees, typically in order to buy ETFs. And so between the two of those, just to give you some context, at the end of 2025, because of the course of history, mutual funds, as John, you've said, have been around since the 1920s. There were 3. $31 trillion in mutual funds. At the end of 2025, there was only 13 and a half, only quote in exchange traded funds or ETFs at the end of the year. But the growth is in ETFs, there was a 30% increase in mutual funds. There was a 10% increase. And the number of mutual funds has actually been declining. So at the end of last year, there were 6,800 mutual funds, down from a peak of 8,000. There were 5,000 ETFs, up by over a thousand ETFs newly created in 2025. So you can see there's a real shift here.
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Yeah, there's a real shift, and it makes sense. And, you know, there's that, that understanding that when you get your first paycheck when you're young and you think, all right, I'm getting paid so much an hour, I'm getting $10 an hour. And then you open up your paycheck and why don't, why don't I have $400? Oh, my gosh. Taxes. It's the first time that, you know, when you're young. Well, I remember this as an, as an older person with one of my first jobs where I'm investing, I have a 401k. It's going into a mutual fund. And then at the end of the year, a tax advisor or tax preparer says, you're getting killed on these capital gains. And that was something that was new to me. It was to say, like, where'd my money go?
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Yeah, that's great insight. Best is now you can control your destination.
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Yes, exactly.
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Decide when to when to trade out. So great question, Chad. Those of you who stuck with us, we're back. Hi, we made it to the under end of that. But do send in your questions. We love them. We love the technical ones. We'll do our best to make it a little bit more accessible, digestible, and we just love to hear what's on your mind. So whether it's a company you want us to look at, whether it's an asset like the ETFs or the mutual funds, whether it's a CEO or a person in the markets you find interesting, send us comments. You can do that on Spotify, you can do it on YouTube, you can do an Apple, wherever you get your podcast. You can also drop us a line with good old fashioned email and that's at BrewMarkets show@morning brew.com. well, it's 4:00pm on the east Coast. There it is, the closing bell and the markets are wrapping up for the day. We don't have a ticker tape, so we'll throw it over as always to our human ticker, our producer John.
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And stocks came roaring back today after yesterday's sell off the S&P 500 and the Dow both up nearly 2% and the NASDAQ finishing the day up over 2 1/2 percent.
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It is just a yo yo. Well, tomorrow is a biggie. It's finally coming. SpaceX, the IPO happening and the team over at SpaceX ringing the bell at Nasdaq. So tomorrow we actually have an interview. We're going to be talking to the chief marketing officer of Kraft Heinz North America. And so our SpaceX coverage is going to be back on Monday, by which time we will have seen how the day's trading has gone. We will see how it closed, what kind of evaluation that that implies, what the market is saying. We'll also have a couple of nuggets from that Monday morning trading by the time we get back together to talk about what people think over the weekend, by the time we get there.
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And if anyone made it through that dense conversation we had, the reward is that tomorrow with Heinz Kraft, there will be conversations about the Weenie Mobile and it's Kraft Heinz.
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But yes, that's right. That's it for today's Brew Markets Daily.
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Brew Markets Daily is hosted by Ann Berry and produced by John Crow, Tarka Villatic Avenue leroya and Evelyn Miller. Brittany Dotacco is our audio engineer and the president of Morning Brew. Inc. Is Devin Emery.
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Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew daily. See you back here tomorrow, same time, same place. Your next chapter in healthcare starts at Carrington College's School of Nursing in Portland. Join us for our open house on Tuesday, January 13th from 4 to 7pm you'll tour our campus, see live demos, meet instructors, and learn about our Associate Degree in Nursing program that prepares you to become a registered nurse. Take the first step toward your nursing career. Save your spot now@carrington.edu events. For information on program outcomes, visit carrington.edu sci.