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- [00:00]
Anne Barry
Many employees can't afford a hefty medical bill that pops up out of the blue. But it happens. And employees who are financially stressed are understandably more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, Aflac plans help with out of pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more@aflac.com Frumarkets that's aflac.com Frumarkets
- [00:27]
John Croteau
Wendy's a viral Reddit post Soaring shares and a trading halt. Does it have investors asking where's the meme? Beer, gambling, TV ads? We shine a light on the stocks getting a World cup boost and those getting the boot and the AI boom has a power problem. A new corporate partnership has proposed a solution. Your home thermostat for Wednesday, June 24th. It's Brew Markets Daily and is on assignment. I'm John Croteau. More market details to come. But first, the build out of hyperscalers has placed hyper attention on the need for power to run all that compute. Is nuclear the solution? Offshore wind farms? Or maybe it's you, the home energy consumer. So says a new announcement today from Tesla, sunrun Solar and Renew Home, a Google spinoff that manages smart thermostats. The three companies plan to knit together the rooftop solar panels, home batteries and smart thermostats already installed in millions of American homes and use them as a single massive virtual power plant. Here's how it works. After homeowners opt in, the companies use software to direct thousands of those home batteries to charge during the day when solar energy is abundant, and release that power into the grid in the evening when demand spikes. And here's a fun detail. Smart thermostats can even be nudged remotely, just a degree or two, up or down, to ease the load. Earlier this year, the White House told major AI and tech companies that they need to quote billions of build, bring or buy their own power for new data centers, rather than shifting those costs onto the public grid. But I suppose there wasn't a mandate not to utilize the grid. Utilities generally have enough spare capacity to serve new data centers most of the time, but not when demand for electricity is very high, like in a heat wave or a cold snap. And the companies behind today's announcement contend that bouncing out of power needs would reduce or even eliminate the need to add power plants alongside new data centers. Some states, like California, have programs that already operate along the lines of what these three companies are proposing. In fact, I remember when I lived in la, the utility company was always offering free smart thermostats to homeowners, laying the baseline to build out that network. But sunrun, Tesla and Renew Home would need to persuade electric utilities, grid managers and state regulators across the country to work with them if they hope to hit the goal of harnessing 16 gigawatts of power, the number touted in today's announcement. So back to the homeowner. I read the press release. There's no talk about cash back for participating. Instead, quote, the companies will unlock new ways to help households manage their energy costs and earn rewards for participating in grid supporting programs. We'll see if that's enough incentive to encourage adoption and having the temperature in your home remotely controlled. Investors seem hopeful. Shares in Sunrun ticker run. We're on a run today up as much as 30% this morning before settling down to a 16% increase. And even with today's bump, Sunrun shares still down 20% this year. Meanwhile, shares in Tesla dipped throughout the day along with the broader market down about 2%. The story of AI investment has passed through many phases, including compute, storage picks and shovels. And we'll be keeping an eye on energy. Well, coming up in a moment is spin through the headlines that are moving the markets today, including earnings out of FedEx and KB Home. But first, this episode is brought to you by Aflac.
- [03:55]
Anne Barry
John, how much money is in your wallet right now?
- [03:57]
John Croteau
Well, I've got $38 cash and a coupon for dry cleaning. Why?
- [04:01]
Anne Barry
Because I need you to hand me $1,000 right away.
- [04:04]
John Croteau
What? I can't afford that. What am I supposed to do?
- [04:06]
Anne Barry
See, that's what unexpected financial stress from medical expenses can do to a person. It throws them off. It doesn't just cost a lot of money to pay unexpected medical bills. It can be distracting and negatively impact your work.
- [04:17]
John Croteau
Well, that's where Aflac comes in. They aim to pay claims fast and accurately and fairly at no direct cost to businesses. Plus, some AFLAC plans may be eligible for pre tax deductions and that could provide potential tax savings. To learn more, head to aflac.com brewmarkets that's aflac.com brewmarkets oh, and Emily, that dry cleaning coupon I mentioned, it's expired.
- [04:39]
Anne Barry
Oh, man.
- [04:40]
John Croteau
In a moment, I welcome Morning Brew Daily's own Toby Howell onto the studio to talk soccer, stocks and the World Cup. But first, a few headlines from today's market with help from Emily Miliron, our supervising producer. Emily, kick us off with some earnings from FedEx.
- [04:56]
Anne Barry
Thanks, John. Happy to be here. Shares in FedEx ticker FDX trading around 1% lower despite the company beating top and bottom line estimates. Revenue came in higher than expected, driven by its business shipping services, which FedEx has put renewed emphasis on during its turnaround efforts.
- [05:12]
John Croteau
Still, the cost story overshadowed those positive revenue numbers. Operating margins slipped year over year, due in part to the grounding of the company's MD11 car jet fleet following a fatal crash last year. Also, 350 million of the stranded costs are to account for spinning off its freight business earlier this month. That spinoff, FedEx Freight, is expected to report earnings tomorrow. We'll be looking out for that and sticking with earnings but pivoting over to homes Shares in KB home ticker KBH surged nearly 18% today after the home builder beat revenue expectations and showed growing momentum to its build to order business.
- [05:51]
Anne Barry
That BTO Segment accounted for 73% of orders during the second quarter, up from over just a half at the end of last year. The earnings arrive as housing affordability remains front and center in Washington, with Congress just passing a major housing bill today, President Trump canceled his plans to sign that bill, saying he will not do so until Congress passes the Save America Act, a bill centered on election reform. Moving outside of earnings. Shares in Rheinmetall down 15% today, marking 1 of the company's worst days in almost four decades. That's after Germany scrapped a multi billion euro project to build warships in what would have been its largest commission since the Second World War.
- [06:30]
John Croteau
Rheinmantal was expected to become the leading contract of that project, and instead of building the fleet, Berlin will buy eight smaller warships from German company TKMS. That stock rallied 16% on that news. Definitely a global trend. Less spending on billion dollar warships, more spending on relatively inexpensive drones.
- [06:50]
Anne Barry
And finally, I hope you're not hungry, John. Wendy's ticker Wen Shares in the fast food chain surged 30% today after the company gained popularity online. A widely followed Reddit page called on its followers to quote Save Wendy's before it's too late, while its followers jumped in and the stock surge literally triggered a trading halt. Even after today's move, shares remain down roughly 35% over the last year, but I would still like some spicy chicken nuggets.
- [07:15]
John Croteau
Oh, nuggets. Okay, I'm going to dip my fries into a frosty that.
- [07:19]
Anne Barry
That's a great call too. Let's just get both.
- [07:21]
John Croteau
We've got plans after the show. With the World cup in full swing, we've been seeing lots of companies taking their shot at global Attention. To review some of the winners and corporate losers of the tournament so far, I invited Toby Howell onto the show. He co hosts the Morning Brew daily podcast and is by all accounts, an athlete. Having played soccer at Brown, Toby has a unique perspective on sports and business. Isn't that right?
- [07:44]
Anne Barry
He does. He runs a pickleball apparel company, and he also loves to organize field days for his friends and family. Even thinking about doing one before his own wedding, which.
- [07:53]
John Croteau
Like, field days, like growing up, like PE or gym.
- [07:56]
Anne Barry
Yeah, like, you know, balance the egg on the spoon, 40 yard dash, that kind of thing.
- [08:00]
John Croteau
That's a real athlete. All right, enjoy our conversation. It's a very fun guest. Toby, thank you so much for being on Broom Markets.
- [08:06]
Toby Howell
Pumped to be here.
- [08:07]
John Croteau
When I think about business and I think about sports, I think about you. And so we're excited to have you here to play a little bit of a game we're gonna go through called Toby's Goal or Red Card. Toby's Goal or Red Card. So we're gonna start. We're gonna go through a couple categories, and you can weigh in. Is this goal? Is it good? Is it red card? You know, what are you seeing here? We're gonna start with ticket resellers, including StubHub. For example, the US winning their first two games sent interest in the World cup soaring domestically here, and prices on the aftermarket sales went double the price to get into half of the remaining games is a thousand dollars on resale markets.
- [08:49]
Toby Howell
It's definitely a red card. I mean, let's be honest. No one. Red card, red card, Red card. Oh, that brings back ptsd. Receiving a red card of my own. Yeah, no one likes ticket resellers because football is the world's game. You know, you want it to be accessible to lots of people. And the fact that it is just so darn expensive and that resellers take their cut in the middle of it means everyone hates them. Also, there's been horror stories about people stranded outside of stadiums after their ticket miraculously doesn't download or something like that. Like grandmothers who traveled many miles to get there, who can't get in to watch their countries play. So that's another red card.
- [09:28]
John Croteau
StubHub chimed in and they blamed FIFA for, quote, poor technology infrastructure which was stranding those grandmothers out there.
- [09:35]
Toby Howell
It's just the worst PR imaginable. I mean, no one wants to be on the other side of stranding a grandmother outside of a World cup stadium.
- [09:42]
John Croteau
All right, let's go to topic number two, another controversial one. Hydration breaks. FIFA has introduced mandatory three minute hydration breaks at the 22nd and 67th minute of every match. Toby, is that a goal or a red card?
- [09:56]
Toby Howell
I think you already have your finger over the red card because that's absolutely a red card. Play the sound card. So it's a red card on so many levels because one, Football purists. I keep saying football. Soccer purists sure hate it because the whole point of the game is that it doesn't stop.
- [10:12]
John Croteau
Well, let's put some dollar signs around those numbers because hydration breaks alone could bring in Fox Sports $250 million in ad revenue.
- [10:22]
Toby Howell
It's all about the money. There's also been a funny story that I just remembered that broke today. FIFA has been trying to get DJs to play songs that are easy to sing along to during those water break periods because booze have been raining down. And what's the way to drown out the booze? Get them singing along to Sweet Caroline or something like that.
- [10:41]
John Croteau
Okay, well, similarly, okay, we talked about Fox during these hydration breaks. I was watching a game here in the office yesterday with you, and I saw an ad come up for Coke's Powerade hydration break. Is that at least a clever way? Like, okay, Powerade in the hydration break?
- [10:55]
Toby Howell
I'm sure FIFA was happy to sell it to Coca Cola. They've been partners for a long time. Like, hey, you want to sponsor the hydration break? It's probably a goal for Coca Cola. Like, it's. It makes sense. I really just wanted to get the first goal out there. But yeah, I mean, it's on brand. I guess if anyone was going to sponsor a water break, yes, it makes sense for a hydration brand to do it. So it's a small goal, it's a tap in, but we'll give it to them.
- [11:20]
John Croteau
Maybe a yellow card. Because then I saw Home Depot sponsored the next ad and I was thinking that is doesn't make much sense. All right, let's move on to apparel. Adidas is outfitting 14 World cup teams. Nike is outfitting 12. The apparel. Or do you call it the kit? The soccer kit. Okay, is that a goal or a red card?
- [11:37]
Toby Howell
I mean, there's a lot of eyeballs on this. Like, obviously you want your logo in front of, you know, billions of people watching. So, yeah, whoever you get as a kit sponsor, that is a goal for them. Adidas is probably, it pains me to say, because I was a Nike guy growing up, but I think they have surpassed Nike in recent years. In a very not important metric, but also important metric which is who makes the best World cup commercial. This was a big thing again for a kid who grew up playing soccer. Nike would drop like a five to six minute ad that was very cool about like embodying the spirit of the World cup. And it was something that you would always wait for. This year, Adidas dropped like a 15 minute ad narrated by like Timothee Chalamet. It was way better than anything Nike put out. So it's an unofficial metric. But I think the tides have tilted in the favor of Adidas when it comes to encapsulating like the spirit of the game right now. Again, you can't put necessarily a dollar figure on it. I mean, I guess you could. Nike stock has Nike stock down 33%
- [12:38]
John Croteau
this year in the middle of a turnaround.
- [12:40]
Toby Howell
And I really do just think that Adidas has kind of snuck up behind Nike and taken a little bit more of the, the hearts of a lot of, of World cup fans.
- [12:49]
John Croteau
All right, moving on the gambling sites. Global wagers on the World cup are projected to top 50 billion DOL sportsbook expected to take in over 4 billion. If we're talking about the gambling sites, is it a goal or a red card?
- [13:02]
Toby Howell
Okay, I actually think this is a red card surprisingly because it gets me every time. Every time. Like this is obviously a mega event like going to be one of the biggest gambling events in the history of sports. But soccer is just historically not very good for sportsbook margins. They return just 5 to 7% of each dollar wager. That's much below money making sports for them like football. That's because there is just less scoring so there's finer margins. Like there's never that big of a swing in the amount of goals. And so like you can not set the lines as precisely. But then also lots of big name players have been scoring. I mean Messi, Ronaldo, Holland, Mbappe, they have all scored multiple goals which you know is good for people betting on them. Also the US Men's national team has done really well. So that's been a hurt for them. So I think gambling sites, once we emerge on the other side of this will show that yes, there was a lot of activity, but maybe not so good for our actual bottom line.
- [14:00]
Anne Barry
Right.
- [14:00]
John Croteau
Apparently I've been reading that the Knicks run the US Men's team have actually been costing these sites.
- [14:06]
Toby Howell
When the teams people want to win, win, it's actually not good for, for Vegas.
- [14:10]
John Croteau
But the goal side I guess is that DraftKings said there's been an uptick in people getting into their prediction market.
- [14:16]
Toby Howell
Yeah. And that's actually, I think, another red card for them because their. Their prediction market business is much smaller than, like, the big boys of Kalshi and Polymarket. So even though they're going to say, like, yeah, it's up 170%, it's coming from such a small portion, and it's still small when you compare it to the bigger players in this space, that they'll spin it as a goal. But I wonder if it's still more
- [14:37]
John Croteau
of a yellow card and DraftKings figuring it out shares down 27% this year. All right, last one. We're going to go to Budweiser. Bud. Budweiser is celebrating 40 years as the official beer of the World Cup. I did not realize that They've launched a Let it Pour campaign. They've done all sorts of other promotions and campaigns. So if we're talking about Budweiser, which is Michelob Ultra as well, under the Anheuser Busch in Bev, is it a goal or a red card?
- [15:02]
Toby Howell
I think this is a major goal because. Goal. Because coming off the Qatar World cup alcohol, obviously sales were severely, you know, diminished. You weren't allowed to drink it. You could only drink it in certain parts of stadiums and designated drinking zones. The US does not have that problem. Canada, Mexico, they are wholeheartedly embracing, actually taking it back to the water breaks. That has also led to beer rushes to like, yes, the players on the field are going to stop. Like, obviously, the fans are going to try to sprint and get some alcohol as well. Michelob Ultra 2 has positioned itself very well to capitalize on this moment. They are now the number one beer in America, which is. Would sound crazy to say to someone, you know, 10 years ago, because they've actually invested a lot into marketing to athletes and marketing it as a lighter beer that doesn't bog you down after doing an athletic competition. They've specifically nailed it with soccer fans, too, because a lot of Premier League games and a lot of European games in general tend to go on in the mornings in the States. And so when you go to a bar on a weekend to watch, you know, Bournemouth play at 9am do you want a triple IPA or do you want something lighter that you can just kind of sip? And Michelob fills that gap really nicely. So they have become associated as kind of the beer of soccer.
- [16:21]
John Croteau
Your breakfast beer.
- [16:22]
Toby Howell
Yeah, your breakfast beer. It sounds funny, but, like, they have nailed their niche. They've focused their marketing on this specific group of consumers and obviously it's paying off when the biggest tournament in the world comes to the US. That's right.
- [16:34]
John Croteau
Budweiser said that in 2018 that it had uptick of 10% globally after the World Cup.
- [16:39]
Toby Howell
Yeah, and again, that was a World cup where that was in Russia and drinking still wasn't as big as it is in the us. I mean, we've seen stories of Scottish fans drinking Boston Dry. Right. So it's definitely. That is a big goal. It's a hat trick for the beer brands this year.
- [16:57]
John Croteau
All right, Toby, where are you going to be watching the game tomorrow?
- [16:59]
Toby Howell
Oh, tomorrow I've actually getting pulled in a different direction because I have my English friend inviting me to go share a pint at a pub. I might just watch it at home so I can concentrate. The game is not quite as important as previous ones, just given the way the group's shaken out. But I'm going to be tuning in us. We're going all the way.
- [17:17]
John Croteau
Awesome. Thank you so much for being here and for playing Toby's Go or red card one last time.
- [17:24]
Toby Howell
You got me excited to go Hit the hit the pitch again.
- [17:28]
John Croteau
This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block. Or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it, ready to make anything online make sense. There's no place like Chrome. Check responses. Setup required. Compatibility and availability. Various 18
- [17:53]
Toby Howell
and we're live on Matchday as Doug reaches for a buffalo wing. He's got it. Oh, and he's gone for a can of Pepsi too. What a finish. There's no doubt about it. It just tastes better. Match days deserve pepsi.
- [18:10]
John Croteau
Well, it's 4pm on the east Coast. The markets are wrapping up for the day. The S&P 500 finished down a tenth of a percent, the NASDAQ was down 4.10of a percent, and the Dow finished up a third of a percent. And about the Dow, there's some reshuffling coming to the Dow Jones Industrial Average. Alphabet will join the index next Monday, replacing Verizon Communications, the index operator S and P. Dow Jones said that Alphabet's inclusion will broaden and strengthen the DJIA's exposure to areas like artificial intelligence, cloud computing, healthcare technology and digital advertising. For Alphabet's part, it's unlikely that inclusion will have any immediate effect on its share price. The Dow is a price weighted index, meaning individual stock prices determine the weighting of each company, not the market cap. As a result, few funds choose to replicate its composition, so there's little or no boost from those funds being forced to buy in to a new entrant, as opposed to what we typically see when a company is added to the S&P 500. For its part, shares in Alphabet ticker goog go. We're up 1.5% today in early training. And that's it for today's Brew Markets Daily. Brew Markets Daily is hosted by Anne Barry and produced by John Croteau, Tarkav delatif, Aveni Laroy and Emily Millard. Our Technical director is Lonnie Fiskus. Brittany Dotako is our audio engineer. Catering by Dinks Drive in the President of Morning Brew Inc. Is Devin Emery. Wake up tomorrow with the Morning Brew newsletter and tune in to that Neil and that Toby on Morning Brew Daily. We'll be back here tomorrow, same time, same place.
- [19:44]
Anne Barry
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