C (3:50)

Yeah, it is US East 1. That is a name that you should know if you are, you know, someone who is affected by this outage. What happened here? So a simple update was shipped to this domain name system, DNS. A lot of people describe a DNS system as the Internet's phone book. It connects, you know, human friendly domain names, so think something like google.com to numeric IP addresses that computers use to identify each other on a network. So when someone, something in that process breaks, essentially any computer trying to access, you know, another computer are getting the equivalent of a wrong number. They're unable to find the right destinations, which is why you saw all these data requests bouncing and all these sites go down. It actually started affecting Amazon's internal logistics system and then quickly rippled out from there. And what it did too is put a lot of companies that are so called in decentralized industries right in the spotlight. The one that comes to mind initially is Coinbase. Coinbase, you know, is a crypto exchange. Crypto's entire value prop is the fact that is a decentralized organism. And yet here is one of the biggest exchanges in the world going down because of a very centralized entity in US.

B (4:58)

Let's just look at the scope of the damage. I mean, yes, it did start on Amazon's internal services, but spread far and wide. People couldn't charge their electric vehicles Monday morning because the charging network uses AWB. More than 4,000 flights were delayed. A bunch of news websites, as we were trying to do research for this specific story, were knocked out, especially the Wall Street Journal. Alexa devices could not hear. A lot of people couldn't post on Slack. Students couldn't turn in assignments or materials from their courses. And then a number of British government websites were also down. So it extended beyond the Atlantic. And again, a lot of people were reflecting on the fact that, yes, Coinbase is a decentralized service and all these other companies, you know, we're relying specifically on Amazon Web Services to keep them afloat. And here we are with this maybe single point of failure. You heard that phrase a lot. Single point of failure for the entire Net. Entire Internet is being propped up by just honestly Google, Microsoft and Amazon Web Services with their cloud providers.

C (5:56)

I do think one of the funniest, you know, jokes being made was the fact that Venmo was down. And so you made it yesterday on the show that, hey, I'm going to be a little late in the payments because, you know, what can I do? It's down right now. But the other segment of the world that melted down, which is a little bit funny, was a wordle because New York Times website went down for a little bit as well. And so a lot of people's wordle streaks disappeared. And so people are looking at it like one person that Business Insider talked to had a 292 day streak snap that was actually in Manchester over across the pond. And they're like, what am I going to do? They legitimately reported all out body chills. Obviously not the most important part of the, you know, entire Internet. But it was funny how certain pockets of the web were totally melting down over, you know, this big old outage.

B (6:43)

Yeah, so this has happened before for Amazon. Happened once in 2023, once in 2021 and once in 2017. But you start, if you look at the numbers, you're starting to see how much Amazon web service has grown to be a key player in holding up the Internet. So Amazon Web Services had a brief stumble back in 2017. Well, back then it was a business that was doing just $20 billion in annual revenue. That's pretty big. But today, Amazon Web Services accounts for about $130 billion in revenue. It's growing 20% per year. It accounts for nearly 20% of Amazon's entire revenue and it really is its profit center, with 60% of its operating profit coming from this very high margin cloud business.

C (7:24)

I think you're going to start hearing the term multi cloud, multi cloud resilience going forward because all of these businesses are looking at this saying we're, we're going to need to diversify where, you know, our data is living because if it all comes down to us, even though it has been a reliable service up until this point, it just cloud centralization causes more and more risks. So I did look though Amazon stock is up in the early trading right now. So maybe it just shows how important it is to so many businesses. But maybe you'll start to hear some inklings about people trying to diversify their, you know, suppliers to the cloud because you don't necessarily want to have just all the strain on one specific point of failure that can get wiped out in just one early morning outage. Moving on After a couple of down years, it looks like the emperor has its new groove back. Apple for a long time has been the laggard of the Magnificent Seven, falling as much as 31% by April of this year as investors fretted over tariffs and its lack of a progress. But yesterday its stock set a new all time high on the back of old faithful the iPhone. After two years of declining or flat iPhone sales, the iPhone 17 is suddenly hot again. According to Counterpoint Research, the latest iPhone outsold its predecessor by 14% in its first 10 days. Across the US and China, shipping times are also 13% longer than last year, which is a proxy for strong demand. For as much as people like to poke fun at the lack of a major hardware change, the the iPhone 17, meaningful increase in battery life, camera upgrades and a fresh orange paint job were enough to convince plenty to upgrade. An analyst from Loop Capital, which aggressively upgraded their long term price target on Apple yesterday said part of the reason for the upgrade is that we're at the front end of Apple's long anticipated adoption cycle, meaning a lot of people sitting on pandemic era phones are finally in the market for a new one. Neil all of a sudden Apple has gone for from worst to first among its peers, trading at 32 times forward to earnings. The most expensive member of the Magnificent Seven after Tesla. Who needs AI when you have an iPhone?

B (9:27)

The question analysts are trying to parse now is whether this is an iPhone 17 specific story or this is just part of A broader cycle of people upgrading their iPhones. 315 million iPhone users out of 1.5 billion users worldwide have not upgraded their phones in over four years. That's according to Wedbush's Dan Ives. A lot of people got their previous iPhones back in the pandemic when all we were doing was scrolling on our phones and we looked at and we're like, should probably get a new phone. So a lot of people have not had a new phone in four years. So they were due for an upgrade. But does look like Apple did make meaningful changes to the iPhone 17 specifically. That makes it a very compelling proposition compared to at least the iPhone 16, which it's absolutely lapping in sales in both US and China, which is. Which are its two biggest markets.

C (10:15)

Perhaps the further to further the bull case here is that if this iPhone upgrade cycle is in the midst of happening, but Apple intelligence hasn't even hit its stride yet, then it could have almost second wave of growth because, you know, Apple intelligence has even rolled out in China, you know, one of the most important markets for the iPhone. So if you have people upgrading to this new phone and then you can roll out an AI system, that's a big if, obviously, because so far Apple has shown absolutely no ability to capture anyone's attention with their AI efforts. But if you do that and people just have these new phones and maybe you could see how the ball can start rolling again for Apple, which, I mean, we go back to the beginning of the year. Things were looking very dire for, for Apple because, you know, iPhone sales were not looking good. They are flat or falling. Its AI efforts stunk, and also, you know, tariffs hit it, and we thought it was going to be very much affected by that. It's made a massive comeback since then, is now doing just fine amidst its magnificent seven peers. So quite a turnaround story for a company that was very beleaguered at the start of the year.

B (11:18)

Yesterday, the head of NASA told Elon Musk something he's heard a few times before. You're missing deadlines, pal. Sean Duffy, the NASA administrator, said that he was going to reopen a contract for a lunar lander previously awarded to SpaceX because SpaceX was taking too long getting its starship ready for for a moon mission in the next couple of years. And now is not the time to dilly dally because the US is scrambling to send humans back to the moon before China does to secure the best lunar real estate. In a Fox News interview, Duffy said, we're going to have a Space race in regard to American companies competing to see who can actually get us back to the moon first. I love Space X, it's an amazing company, he told cnbc. The problem is they're behind. They push their timelines out and we're in a race against China. Back in 2021, SpaceX was awarded contracts worth $4 billion to use its mega starship rocket to ferry American astronauts to the lunar surface for the first time since the 70s. Beating out other companies like Bezos is Blue Origin. To accomplish this, it would need to pull off a series of unprecedented engineering feats like refueling Starship multiple times while in space. But so far, through 11 test launches, Starship has exploded more often than not, leading Duffy to solicit bids from rival rocket companies. Toby Elon Musk isn't exactly known for his two minute drill. And now the space race has a quarterback controversy on its hands.

C (12:38)

It does, because yes, obviously the rockets keep blowing up, but that is not even the hardest logistical challenge they're trying to pull off. It is this, you know, mid orbit refueling that has a lot of people scratching their heads because you'd like to see them a little bit further along in the process by now if you are going to pull this off. Because that engineering feat is something that hasn't been done before. They are literally trying to invent the technology to do this on the fly. And so you see a lot of, you know, NASA administrators saying, why did we even go down this path to begin with? Jim Berdenstein and NASA administrator during Trump's term, it said in a Senate hearing that it's an architecture that no NASA administrator I'm aware of would have selected. So just the premise of the launch in general is something that has a lot of people scratching their heads and being a little bit nervous. Obviously it's Elon, he tends to pull things off that you don't think are possible. But right now it is not looking super good. If we want to get to the moon on the timeline that we're expecting.

B (13:35)

Who are the alternatives? So there's not that many because the while they did give a contract to Blue Origin, Jeff Bezos, his company for a lunar lander, Blue Origin is also utilizing a similar process for getting these people to the moon, which is doing rocket refueling in the middle of space, which is very experimental and it has not been done before and the timeline is encroaching. So China is planning to go to the moon by 2030 and you have to assume they're going to be on the moon in 2030. Here's the timeline for NASA's there's three Artemis missions. Artemis 2 is supposed to happen in April 2026. They're going to send astronauts around the moon. It's kind of like a scoping mission to see what's going on up there at the moon. So they're going to do a 10 day trip around the moon in April 2026 and then by 2027, that's the goal is they're going to land maybe two astronauts in the south polar region of the moon in 2027. So that's three years ahead of China. So they do have a bit of wiggle room here. But Space X seems to be dragging its feet a little bit. Are not getting starship in the in the fitness that it needs to be where they're confident in.

C (14:42)

We saw a little bit of an anti space X trade popping off Y when this news came out. We saw shares of smaller space company names like Rocket Lab, Ast Planet Labs look a little bit more attractive to investors because maybe there's just a hint that one of them could land some of this contract if things are up for negotiation once again. So maybe the space trade is back on after a couple of years of not that much excitement around this space. Pun intended. All right, we're going to take a quick break and come back with Toby's Trends. To all the financial advisors listening, let's talk bonds for a minute. Capturing value in fixed income is not easy. Bond markets are massive, murky and let's be real, lots of firms throw a couple of flashy funds your way and call it a day. But not Vanguard.

B (15:30)

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C (15:39)

The Lineup includes over 80 bond funds actively managed by a 200 person global squad of sector specialists, analysts and traders.

B (15:47)

So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com/audio. That's vanguard.com/audio. All investing is subject to risk. Vanguard Marketing Corporation Distributor Neal Would you.

C (16:04)

Rather have surgery performed by a junior resident or a department head?

B (16:08)

Is that even a question? Give me the doctor with the most practiced hands, please.

C (16:12)

Customers of Quest software have the same outlook. Quest has been a global leader in data management, cybersecurity and platform modernization for decades. So now that the AI transformation is here, companies are turning to their established expertise for support.

B (16:26)

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C (16:36)

And they have thousands of customers around the world, including more than 90% of the Fortune 500. So on top of Quest's expansive product suite, they use insights from those relationships to inform how companies build AI readiness and success.

B (16:49)

With something as complex and significant as AI, you're probably going to want to have a seasoned pro in the room with you. Head to quest.com/brew to get started. That's quest.com/brew welcome to Toby's Trends, the.

C (17:03)

Segment where I take a deep dive into the Internet to emerge with the trend you can impress your group chat with. And today's trend, I would argue, is the most important one I've done yet. If you have a child in middle school right now. Because today I am daring to explain the 67 trend that has swept classrooms around the country. What is 6 7? If you ask your kids, they will likely tell you it means nothing, which is actually pretty spot on. The phrase is sort of an in joke among the youth, whose power lies almost entirely in confusing adults. You can trace its origins back to a viral song from the rapper skrilla. The song Do Do it has a lyric that reads 6 7. I just bip right on the highway. Probably in reference to 67th street in Philly or the police code 1067 used to report a death. From there, it made its way to the sports world with edits featuring Hornets point guard Lamella Ball, who, you guessed it, stands 6 foot 7 inches tall. The memes human embodiment came in March of this year when a hyperactive suburban middle schooler was caught on camera shouting 67 at a basketball game, attaching a sort of ironic, overzealous middle school energy to the joke. From there, any mention of six or seven in succession, either on the calendar or in problem sets in school, sends a certain gen alpha demographic absolutely buck wild. Teachers everywhere have no doubt been greeted with a chorus of 67 when going about their everyday duties. Now this trend is of the skibidi toilet in the Ohio variety. The a meaningless phrase whose purpose is to divide the insiders from the outsiders. But on a scale of 1 to 10 right now, how confused are you.

B (18:39)

About a 6 or a 7? You did a good job explaining it, Toby. Now this is the it seems to be the trend of all trends this year, and it has remarkable longevity. It's amazing what's going on in classrooms, especially math classrooms, because teachers and adults are realizing how much you actually use the word 6 and 7 in your daily life or especially teaching math. And whenever they say either one of those words, especially in succession, there is a chorus of kids who are saying 6, 7, disrupting the entire classroom experience. So these teachers are taking interesting tasks to figure this out. Some are avoiding breaking kids up into groups of six or seven. They'll never ask them to turn to page 67 in a textbook. And they'll never say you can take six or seven minutes on a particular task. That's one way they're they're doing. They're trying to, you know, avoid this. But on the other hand, they're also embracing it by perhaps saying, oh, if I do it, it makes it cringe and then you guys will stop doing it. We can actually learn something here.

C (19:36)

I think we are actually helping teachers out right now by talking about it. Admittedly, pretty late to the trend. I mean, this thing probably peaked a few months ago, but at a certain point, the news outlets finally started to get to it. I'm like, all right, I guess we'll talk about it. We are also inherently making it uncool right now. So, teachers, you are welcome. But it did penetrate pop culture for sure. I mean, south park had a whole episode about it where there is, you know, of colt of 6, 7 at the middle school. And then obviously you've seen it in the sports world a lot too. I mean, even last night, Almira St. Brown, a receiver for the Lions, celebrated. There's a hand movement that goes along with it as well. People just celebrate with it. Now it is penetrated the sports world. Paige Becker's dropped 6, 7 in a press conference. She was kind of giggling while all the reporters had no idea what was going on. That's kind of just an encapsulation of the trend is one group of people, usually kids, giggling while another group of people have no idea what's going on. So in that sense, it's a tale as all the time kids have always created just dumb words that mean nothing in order to signify that, hey, I'm a kid, I'm cool. You're an adult, you're not cool. So this is not a new thing by any stretch, even though it probably is the most absurd one to date.

B (20:43)

One thing I thought was really funny is a bunch of kids went to an in and out and they just waited until the order 67 was called and then they celebrate. And that was a particular video that I saw that went viral on social media. Toby, thank you for trying to explain 6, 7. I know that's one that's been percolating around. We're like, are we going to do it for Toby's trends, like, for a couple of months now? And I think it did a great job. Okay, let's sprint to the finish with some final headlines. History was made in Japan this morning where Sanae Takaichi was elected by lawmakers to become the first woman prime minister in the country ever. She's also the first Japanese prime minister to have been a drummer in a heavy metal band and ride motorcycles. Probably. Takechi, a Conservative whose hero is Britain's Margaret Thatcher, has advocated for more government spending to rejuvenate Japan's military and industries. But she must also deal with a rising cost of living that has angered the public in the world's fourth largest economy. Her eyes to prime minister is a milestone in Japan in particular, a patriarchal country where men dominate the ranks of business leaders and politicians. Japan ranked 118th out of 148 countries in the World Economic Forum's most recent global gender gap report.

C (21:50)

Yeah, let's just dive into her policies a little bit as well. She is expected to push Japan further to the right. She's pretty hawkish on China, but she also doesn't want to reduce the reliance on the US Military. She wants to tighten immigration and tourism rules and has a little bit of a nationalist messaging as well. But at the same time, she is, you know, the first woman to ever become prime minister in a very patriarchal country. Her husband actually took her last name, which is not something you see in this culture. So bit of a contrast between her actual policies and her rise through the ranks as a female lawmaker in a country that, you know, doesn't necessarily make it easy for someone like her to rise to the top.

B (22:29)

And I think a lot of people will zero in on the fact that she was a drummer in a heavy metal band. Her favorite bands are Iron Maiden and Deep Purple. And also she loves riding motorcycles in her youth. So those are sort of the counterculture, you know, aspects of, of Takaichi that people are going to focus on moving on.

C (22:47)

Disney is still picking up the pieces after temporarily pulling Jimmy Kimmel off air last month, according to Independent data release. The decision triggered a wave of cancellations across Disney plus and Hulu. About 3 million Americans pulled the plug on their Disney plus subscriptions in September, more than double its usual churn, while hulu saw over 4,4 million cancellations. Turn the dreaded industry term for the percentage of people who nix their subscriptions every month jumped to 8% for Disney plus and 10% for Hulu. For context, Netflix has been rooted at 2% churn for the last 13 months, but the report from the data provider Antenna was not totally negative. There is also a healthy amount of new subscriptions totaling 4.3 million across both platforms. Regardless, Neal, here we are weeks later still talking about that 4 faithful choice to ditch Kimmel after his comments on Charlie Kirk's murder.

B (23:39)

Yeah, what surprised a lot of people during that time was that was that Disney announced that it was raising prices on Disney plus Hulu and across its bundles. So that actually is going to effect today. So you might see your Disney plus or Hulu bill go up. The ad supported Disney plus plan is going up $2 from 999 to 1199. The ad free premium version is going to whoo, $3 from 1599 to 1899 per month. And so are those bundles with Disney Plus Hulu and ESPN, which is their new streaming service they just released. And maybe some of the increase in subscriptions that you were talking about is related to that new ESPN subscription service that was, you know, that is broadcasting NFL. And obviously the NFL came back in September. But another instance of a social media boycott that made its way to the real world like Bud Light and Target. These are things that went viral online and actually impacted a business's bottom line as we saw with Disney. And finally, how about this? Kids are much less likely to develop peanut allergies than they used to. A new study out yesterday found that food allergy rates in young children has plummeted within the last decades, which it attributes to a public health campaign that encourages parents to feed peanut products to their babies. The study found that food allergy rates in children under three fell to 0.93% between 2017 and 2020, compared to 1.46% between 2012 and 2015. That amounts to 60,000 children having avoided peanut allergies. The progress goes back to 2015, when a trial upended decades of guidance around potentially life threatening peanut allergies. Previously, it was thought that parents should avoid giving their infants common allergens like peanuts. But that experiment found that by feeding peanuts to babies, you could actually slash their chances of developing an allergy by more than 80%. Shortly after, US health authorities formally recommended that parents introduce peanuts to babies starting as early as four months, which contributed to the declines we're seeing today.

C (25:40)

I mean, I can't imagine living life with a peanut allergy. I'm a big peanut butter fan. So anything that reduces this, it is, you know, a life threatening condition for a lot of children. So this is being treated as a massive public health win. When you introduce these allergens through the gut, it just makes you more, you know, have a robust defense against them in adulthood. But it is kind of fits into this larger pattern of modern immunology that we live in a more over sanitized world. We have limited microbial exposure that sometimes under trains our immune system. So by introducing some of these allergens into your environment in a controlled way early on in the right way through the gut, that it does make you a lot more resilient to them going forward.

B (26:23)

We started with Amazon outage Internet hours and we end with limited microbial exposure.

C (26:29)

You get the full range here, folks.

B (26:31)

Okay, and that is a good way to end it. That's all the time we have. Thanks so much for starting your morning with us. Have a wonderful Tuesday. If you have any feedback on today's episode, send a note to Morning Brew daily at Morning Bukom. Let's roll the credits. Emily Miller. Byron is our executive producer. Raymond Liu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair and makeup still doesn't understand six' seven, but you tried, Toby. Devin Emery is our president and our show is a production of Morning Brew.

C (26:57)

Great show today, Neil. Let's run it back tomorrow.