Comcast Dumps Struggling Cable Biz & Is Target in Trouble?

Summary

Morning Brew Daily: Comcast Dumps Struggling Cable Biz & Is Target in Trouble?

Release Date: November 21, 2024
Hosts: Neal Freyman & Toby Howell
Description: Morning Brew Daily brings you the latest news on business, the economy, and everything else you need to start your day with wit and insight.

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McRib's Comeback and the "McRib Effect"

Timestamp: [00:53] – [02:11]

The episode kicks off with an exciting update from McDonald's: the return of the iconic McRib sandwich on December 3rd. Neal Freyman highlights the sandwich's sporadic availability, noting, “The McRib wasn't around in 2023 at all and was supposed to be on its Farewell tour in 2022” (00:53).

Toby Howell introduces an intriguing concept called the "McRib Effect", referencing an analysis from Dollars in Data. He explains, “when the McRib is available, the S&P 500 has a higher average daily return than days when it's not available” (01:26). This correlation suggests that the sandwich's return might have a surprising impact on the stock market, although Toby wisely cautions, “correlation does not equal causation” (01:50).

Comcast's Strategic Spin-Off of Cable Networks

Timestamp: [03:36] – [07:02]

The hosts delve into significant changes within Comcast, which is spinning off most of its cable television networks into a new publicly traded entity named SpinCo. Channels such as MSNBC, CNBC, and USA Network are among those being shed, along with digital properties like Fandango and Rotten Tomatoes. Interestingly, Bravo remains with Comcast, signaling confidence in its enduring popularity.

Neal Freyman points out, “Cable TV is a dying business, but even in a shrinking industry, scale matters” (04:15). The move to shed cable networks is driven by a decline in cable subscriptions, which dropped by 4 million in the first half of the year. Toby Howell adds that Comcast might be offloading "problem assets" and suggests, “This is just the start of some M&A activity in the future” (06:03).

The discussion highlights potential repercussions for the broader media industry, questioning how giants like Disney, Warner Brothers Discovery, and Paramount will respond to Comcast's aggressive strategy.

DOJ's Antitrust Case Against Google: The Future of Chrome

Timestamp: [07:02] – [10:48]

A major segment of the episode focuses on the Department of Justice's (DOJ) antitrust case against Google. The DOJ has proposed a groundbreaking measure: forcing Google to sell its Chrome browser to dismantle what it considers an illegal monopoly in internet search.

Neal Freyman outlines the potential ramifications: “If forced to hive up Chrome, Google would have far less visibility into the activity from users who sign into the browser” (08:40). This move could significantly impact Google’s advertising revenue, which relies heavily on user data from Chrome.

Toby Howell discusses Google's defense, emphasizing that Chrome serves as a "loss leader" that feeds into their profitable search and advertising services. He notes, “Google's lawyers say that spinning off Chrome would actually harm consumers because there are very few other companies out there that have the scale to maintain a secure browser” (09:39).

The hosts also speculate on potential buyers for Chrome, including OpenAI, and ponder the influence of the incoming Trump administration on the case, suggesting a possible shift in regulatory approach.

Target's Struggling Q3 Earnings Amid Retail Competition

Timestamp: [10:48] – [14:00]

Neal Freyman and Toby Howell turn their attention to Target's disappointing Q3 earnings. Target's stock plummeted by 21%, hitting a 52-week low after sales missed Wall Street expectations by 20%. The company also downgraded its full-year profit guidance, reversing previous optimistic forecasts.

Neal explains, “Target's bread and butter is discretionary items... but the number of people paying for Cable drops every year” (12:28). Unlike its competitor Walmart, which saw positive results in its discretionary division thanks to a strong grocery business, Target has struggled to maintain its market position. Toby Howell adds, “Target has been trying everything. They've been throwing the kitchen sink at this” (13:25), referencing Target's extensive price cuts on thousands of items to drive foot traffic, which unfortunately hasn't translated into sufficient revenue growth.

The discussion underscores the broader retail industry's challenges, contrasting Target's struggles with TJ Maxx's success, which reported strong holiday sales, showcasing the varied landscape of consumer behavior and retail strategies.

Neil's Numbers: Art, Real Estate, and Canine Favorites

Timestamp: [15:11] – [23:26]

In the much-anticipated "Neil's Numbers" segment, Neal shares three fascinating statistics:

1. $6.2 Million for a Duct-Taped Banana

   • A conceptual art piece featuring a banana duct-taped to a wall sold for $6.24 million at Sotheby's, purchased by crypto entrepreneur Justin Sun. The original banana was a simple fruit bought for 35 cents, highlighting the art world's quirky valuations (15:11).
   • Toby Howell humorously suggests, “If you have to keep the original banana taped to your wall, that is performance art” (18:55).

2. Via Monte Napoleon: Europe’s Priciest Shopping Street

   • Via Monte Napoleon in Milan has been named the most expensive shopping street in the world, surpassing New York's Fifth Avenue with prices at $2,047 per square foot, up 11% from the previous year (20:54).
   • Toby Howell remarks on the staggering costs, “If they are priced at Via Monte Napoleoni prices, I'd be looking at paying a nice one and a half million dollars a year in rent” (21:30), emphasizing the exclusivity and high demand driving these prices.

3. Lamb Chop Mania Among Dogs

   • Stuffed versions of the classic puppet Lamb Chop have become the most popular plush dog toys at Chewy's, second only to balls.
   • Toby Howell explores why these toys are beloved, noting their versatility for different dog personalities: “You can cuddle it... or rip it apart” (22:32).
   • Neal Freyman adds, “The fruit does have a pretty tangled history... or you can just say this is a banana stuck to a wall” (19:49), highlighting the debate over the toy's appeal.

Final Headlines: Federal Workers, Nvidia, Adani Fraud, and Movie Musicals

Timestamp: [24:11] – [29:44]

Federal Workers Back to the Office

Neal Freyman and Toby Howell discuss an ambitious plan by Elon Musk and Vivek Ramaswamy to mandate federal workers return to the office full-time. Their proposal includes banning remote work for the nation's 2.3 million federal employees, potentially igniting fierce battles with unions (24:11).

Nvidia's Earnings and Blackwell Chip

The episode covers Nvidia's recent earnings report, which showed nearly 100% revenue growth compared to last year. However, the stock remained largely unchanged due to a lower-than-expected Q4 sales forecast. The spotlight is on Nvidia's next-generation Blackwell chips, touted as “incredible” and essential for training and running large language models (25:15).

Gautam Adani's Fraud Accusations

A significant development involves Gautam Adani, chairman of the Adani Group, facing U.S. charges for allegedly orchestrating a massive bribery scheme. Prosecutors accuse Adani of sending over $250 million to Indian officials to secure solar energy contracts, adding to previous allegations of stock manipulation and accounting fraud (26:07).

Wicked Movie Sing-Alongs

The hosts touch on audience reactions to the movie musical Wicked, where some viewers sing along loudly, disrupting the experience. Neal Freyman muses, “It would just be hard to have that self-restraint” (28:18), contemplating whether interactive versions of the film might cater to different viewing preferences.

Conclusion

Neal Freyman and Toby Howell wrap up the episode by reflecting on the day's highlights and inviting listeners to engage with the show. They emphasize the importance of staying informed amidst a dynamic and often unpredictable business landscape.

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Notable Quotes:

• Neal Freyman: “The McRib wasn't around in 2023 at all and was supposed to be on its Farewell tour in 2022” (00:53)
• Toby Howell: “Correlation does not equal causation” (01:50)
• Toby Howell: “This is just the start of some M&A activity in the future” (06:03)
• Neal Freyman: “If forced to hive up Chrome, Google would have far less visibility into the activity from users who sign into the browser” (08:40)
• Toby Howell: “Target has been trying everything. They've been throwing the kitchen sink at this” (13:25)
• Neal Freyman: “The fruit does have a pretty tangled history... or you can just say this is a banana stuck to a wall” (19:49)

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For more insights and daily updates, tune in to Morning Brew Daily available on all podcast platforms and YouTube.

Transcript

[Toby Howell]

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[Neal Freyman]

Good morning, Brew Daily Show. I'm Neal Freyman.

[Toby Howell]

And I'm Toby Howell.

[Neal Freyman]

Today, you'll never believe how much a banana duct taped to a wall just sold for.

[Toby Howell]

Then Bullseye the Bull Terrier might be out of a job. Soon after Target reported some shaky Q3 earnings. It's Thursday, November 21st. Let's ride.

[Neal Freyman]

The McRib is coming back. McDonald's semi mythical sandwich containing boneless pork bar sauce, onions and pickles is returning to participating stores nationwide on December 3rd for a limited time. The McRib wasn't around in 2023 at all and was supposed to be on its Farewell tour in 2022, so let's hope its comeback goes better than Mike Tyson's. But Toby, apparently there's something called the McRib effect that says during periods when the McRib is available, the stock market posts higher returns. Is this true at all?

[Toby Howell]

Yeah. This is big news, not just for your taste buds, but potentially your brokera. According to analysis from the Finance blog of dollars in data, when the McRib is available, the S&P 500 has a higher average daily return than days when it's not available. When you annualize this, when you add it all up, the difference amounts to 19% a year. So it is significant. Now, I do have to say that the blog post goes on to use the McRib effect to remind us that correlation does not equal causation and that causality in financial markets is pretty hard to determine if you just isolate one single factor. But to all that, I say pass me the barbecue sauce and let's make some money, baby. And now a word from our sponsor, Yahoo. Finance. Neal Yesterday, and really the last month has been a wild time for news.

[Neal Freyman]

Corporate breakups, cabinet appointments, crypto, going to the moon. It has been a lot, and it's.

[Toby Howell]

Easy to get lost in endless push notifications or your social media feeds where you're just inundated with headline after headline.

[Neal Freyman]

That's where Yahoo. Finance can step in to help cut through the noise. Instead of bopping all around the Internet to stay up to date with financial news, it brings it to you all in one place. Market data analyst insights, news sources you can trust. It's all there.

[Toby Howell]

It's one of our regular stops as we prep for this show every morning. We don't call it our Purple Prince for nothing. If you want to check out the best hub for financial news on the Internet, head to yahoo.finance.com that's yahoo finance.com the times they are a Change in the Media Business the media conglomerate Comcast is cutting loose most of its cable television networks and reconglomerating them into a new publicly traded entity it is for now calling spin company. On the chopping block are channels including msnbc, CNBC and usa, as well as some of Comcast's digital properties like Fandango and the review aggregator Rotten Tomatoes. Other parts of its media business are staying put though, including the golden child streaming service Peacock, still basking in some post Olympics glow, as well as its NBC Broadcast network and Universal properties. Oddly enough, Bravo was one of the only channels to avoid the spinoff. Don't sleep on Real Housewives, I guess.

[Neal Freyman]

And even though Comcast is separating these channels from the mothership, it probably thinks the castaways can still be successful in their own right. Look, cable TV is a dying business, but even in a shrinking industry, scale matters and analysts have predicted that Comcast could be eyeing other companies cable networks to fold into the new entity, especially under a more M and A friendly and administration. But at the end of the day, Comcast is shedding its cable networks for exactly the reason you'd expect. The number of people paying for Cable drops every year, 4 million in the first six months of this year. So it is looking ahead to what can be by unburdening itself by what has been right.

[Toby Howell]

If Comcast really wanted these channels, it probably wouldn't be spitting them off. I do think you can look at this in two ways though. Comcast is dumping some problem assets, some of these non growth assets because cable is dying. Or this is an opportunity for some pretty strong media names and media franchises to finally get their time in the sun after so much time and so much money was focused into streaming. Msnbc, cnbc, these are pretty big name media properties. Well established brands that maybe haven't gotten a ton of investment wrinkly recently. But I do think it's probably a little hard to avoid the first interpretation. Cleaving off a whole business unit usually says indicates about that business that you don't really want it around anymore. Yes, these channels and cable are going to still be around for a long time, but it's probably just not a.

[Neal Freyman]

Growth business, like a zombie business a little bit. And they're still very profitable. Cable TV is very profitable for these companies, but they just see no growth trajectory. And it is also a win for shareholders. Remember a couple of weeks ago we were talking about an activist investor wanting to break up Honeywell because it was. It's a big conglomerate that contains all these constituent parts that don't trade at a value of the sum of its parts. They think it trades at what's, what's called this conglomerate discount. And Comcast thinks it's getting this conglomerate discount. And by shedding what has been known as a financial albatross which are these cable TV channels, it thinks that shareholders will pump the stock. And the big question now is what does this mean for the broader media business? What are these other companies going to do now that Comcast has essentially rang the start bell on potentially a big cable TV purge? What is Disney going to do? What is Warner Brothers Discovery going to do? What is Paramount going to do? Those questions are going to be asked a lot over the next few months and years.

[Toby Howell]

Paramount and Warner Brothers Discovery you just mentioned took a combined $15 billion in write offs earlier this year. Related to its cable business. Disney also took one as well, although it's a little bit smaller. They were basically telling investors that they are, we are less valuable than we used to be. So Comcast peers have definitely thought about offloading some of its media businesses. But part of the issue with offloading these properties is who is going to buy them. It was like we said, it is not a growth business. Yes, they are cash flowing. So these companies are said yes, these businesses are getting less valuable but we do don't mind the cash flow. They still bring in money. But now Comcast has, I mean you said rung the starting bell. Someone had to do it first. Maybe this is going to be the Spinco is going to be kind of buying those properties, are saying hey, we'll take your, your dead weight, we want to scale this thing up. Or maybe they'll sell off some of these properties in Spinco to these other companies. We're not knowing for sure but there does seem to be, this is just the start of some M and A activity in the future.

[Neal Freyman]

It does seem like there's going to be a ton of consolidation already. Spinco seems to be eyeing documentaries and food TV channels to bundle together into a more compelling product there. So this is very big changes in the cable TV business and the media business overall. So very exciting, honestly. Remember how earlier this year Judge Amit Mehta ruled that Google had an illegal monopoly in Internet search. Well, now he's got to figure out how to make it not a monopoly. And last night, the doj, which brought the monopoly case, proposed some ideas, one of which is a total whopper. It asked the judge to force Google to sell Chrome, the most popular browser in the world. If the judge accepts, it would present massive changes for Google's business and possibly rejigger the Internet as we know it. As far as the DOJ sees it, Google Chrome is a key access point for people to use Google Search. As all of us who use Chrome know, you type in something in the URL bar that's not a URL you are querying Google Search. If forced to hive up Chrome off, Google would have far less visibility into the activity from users who sign into the browser, making it harder to target them with advertising, which is Google's main line of business. Google, of course, is not feeling lucky about this. The company's VP of Regulatory affairs said the DOJ is pushing, quote, a radical agenda that goes far beyond the legal issues in this case. And in a likely plea to incoming President Trump, she added that a forced sale of Chrome would harm American technological leadership at precisely the moment it is most needed. Toby, the DOJ is swinging for the fences here in a way it hasn't done since it tried to break up Microsoft over 20 years ago.

[Toby Howell]

Yeah, it would really break up Google as we know, and almost the modern Internet as we know it. Let's dive into Google's argument against all of this. Yes, it handles more than 90% of online search queries, but it says that all that success is not due to a monopoly. It is due to the fact that its products are very quality. People choose it over other products out there. And it says that it does face tougher competition in the sector, especially like the advertising market as well, with rising powers like Amazon. And it does have some grounds to stand on here. Google's lawyers say that spinning off Chrome would actually harm consumers because there are very few other companies out there that have the scale, that have the resources to maintain a secure browser and offer it to the market for free. So if you. There's not that many out there really like Apple, Safari maybe would do it, but providing browsers at cost for free to consumers, they say is actually something that consumers really benefit from, and getting rid of that would end up harming them.

[Neal Freyman]

Okay, well, let's game this out. Let's say the judge doesn't buy that argument. And this is not going to happen until 2025 when this is just a proposal. The judge still has to approve it. What could happen to Chrome? Well, analysts are now valuing it and it's certainly an estimate because we don't know anywhere between 15 to billion. So someone's got to have that amount of cash to come and buy Chrome, which is the world's most popular browser. Who could it be? Spin co Spink definitely. Spinco could be eyeing this, but potentially a lot of other big tech names, but who knows if they would be allowed to buy it. Certainly not in the current regulatory environment. One name that's been floated is OpenAI because OpenAI has developed a bunch of search tools and you can see how a browser would absolutely complement Chat CBT and Chat search with adjust, which ad just released. So that is one potential name that has been floated out and again this is a long way from happening. But you have to think of the potential suitors. Should Google sell Chrome? I mean it's an unbelievable asset, but it doesn't generate any money on its own. It has to be paired with other services that make money for it to be worth anything.

[Toby Howell]

Right though it is what is called a loss leader that feeds into Google's search business in its advertising business that does actually generate the vast majority of its revenue. But you are right though. One final question mark on this case though is the incoming administration. Because the Biden administration has been very favorable to these antitrust crusades against big tech. Who knows what will happen under Donald Trump's administration? Will they take a more lenient approach to Google? Will they keep up the drumbeat against big tech antitrust, these powerful tech companies? So that is the final question mark in this case that is still very much full of question marks. Target's logo is a bullseye, but it missed the mark with its latest earnings report sending its stock plummeting a whopping 21% yesterday to a new 52 week low. Disappointing third quarter sales miss Wall street expectations by 20%. And Target also cut its full year profit guidance, an abrupt change from three months ago when it actually raised its forecasts. So why is it getting eaten alive? Target's bread and butter is discretionary items. Its business thrives when you're making those sometimes impulsive purchases of toys or appliances or home goods. But Target said those categories showed a weakness this quarter even as its rival Walmart reported positive results in its discretionary division. Digital and in person traffic actually did increase 2.4% in part thanks to thousands of price cuts that Target rolled out but it wasn't enough to keep up with high flying rivals Costco, Amazon and Walmart. So Neal, it all led to Target's largest single day stock wipeout in more than two years. Seems like consumers in Target aren't really vibrant right now.

[Neal Freyman]

No, I mean, Wal Mart earnings on Tuesday, then Target earnings on Wednesday. I mean, it was like watching the Celtics play one night and then watching the Sixers play the next night. Just a total different story. Walmart is absolutely crushing it thanks to its grocery business, which accounts for 60% of its revenue. As you mentioned, Target has just not invested in grocery. And that was fine for it in the past, you know, before the pandemic, because grocery has terrible margins. They're very thin and you get much higher margins on things like really expensive candles and sofas and other things that, that Target sells. So that was doing fine for it until inflation happened and people started not buying those discretionary goods that are Target's bread and butter and they started gravitating to those need to have items that Walmart sells as well. So right now Walmart is just kind of eating Target's lunch, breakfast and dinner.

[Toby Howell]

It really felt like Target was that order in that order. It really felt like Target was actually turning a corner. It posted a string of very weak results and then finally showed some success last quarter. It was very a bully and everyone was very happy because it raised its profit outlook for the rest of the year. But then it comes right around and just completely reverses that direction. Target has been trying everything. They've been throwing the kitchen sink at this. They've cut prices on 5,000 items. By the end of the year, they expect to cut prices on 10,000 items. And they are getting people through the door. But the problem with cutting prices is that it just doesn't lead to as much revenue. So it is, it's one of those things where they're trying to drive up foot traffic, they're trying to get people back through the door, but it's just not translating to those, you know, top line revenue gains that you want to see. And they're just competing with Walmart on reputation. Walmart has reputation for those everyday low prices. It gets people in the door with its grocery business and in an inflationary environment you just tend to gravitate towards the place where you think you can get the best deal. So a lot of headwinds that are kind of conspiring against Target. Oddly enough though, you zoom out to the, to the broader retail industry and TJ Max, another one of those kind of discretionary spending lower, you know, price places, beat full year, beat Wall street estimates, and raised its full year profitability guidance. So they said they're seeing a strong start to the holiday shopping season. So you Anywhere you look, you can find different interpretations of what's going on in retail, but it does seem like people do want good prices, especially when they're kind of recovering from such an inflationary past couple of years. Up next, I really thought I'd never come, but it's finally time for Neil's Numbers.

[Neal Freyman]

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[Toby Howell]

Not sure if I've used those exact words, but I've definitely had to send some time consuming follow up emails in my day.

[Neal Freyman]

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[Toby Howell]

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[Neal Freyman]

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[Toby Howell]

On besides great snacks in the break room? It's got to be innovation.

[Neal Freyman]

Exactly. And innovation relies on business processes that are clear and quick.

[Toby Howell]

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[Neal Freyman]

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[Toby Howell]

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[Neal Freyman]

Whether you work in innovation, product design, engineering, ux, agile, or it, bring your teams to Miro's revolutionary Innovation workspace to be faster from idea to outcome. Go to miro.com to find out how. That's M I R O.com welcome to Neil's Numbers. The segment where I share three stats from the week's news that will feel like updating your brain to the latest operating system. For my first number, I'll begin with a question originally posed by Lucille Bluth. It's a banana, Toby. How much could it cost? Well, we have the answer. $6.2 million. The banana in question is a conceptual art piece, A banana stuck to a wall with silver duct tape. It sold at a Sotheby's auction yesterday for $6.24 million to crypto entrepreneur Justin sun, who beat out six other bidders for the potassium prize. It's the work of Italian artist Maurizio Catalan, who called it a sincere commentary and a reflection on what we value. The auction house seems to agree, calling the duct tape banana a masterpiece that single handedly prompted the world to reconsider how we define art and the value we seek in it. We've seen this banana before. Catalan debuted at Art Basel Miami in 2019, causing chaos in the art world. Crowds grew so heavy that the gallery had to rip it off the wall, which is not that hard, and hide it from public view. Now, I should mention sun won't take possession of the original banana. That thing is a gone, obviously. Instead, he'll get the banana, a roll of duct tape, a certificate of authenticity, and instructions on how to install it. Toby, this piece of art, nobody knows what it means, but it's provocative.

[Toby Howell]

I mean, I'm just looking at it right now, and it is provocative.

[Neal Freyman]

It's beautiful.

[Toby Howell]

It is a banana tape to a wall. Like, just imagine that in your mind. You got it. I do want to dig into where this banana came from, though. It's a dull banana, and it was bought earlier that day from a fruit stand on the Upper east side of Manhattan for 35 cents. I feel like the fruit stand, whoever was operating that maybe got a little shafted here because, you know, 6.2 million.

[Neal Freyman]

35 could have just taped it to his little umbrella and said, yeah, this is worth 10 million.

[Toby Howell]

That's a pretty good margins right there. You know what I think would be funnier, though? Because as you said, you're not buying the actual banana. You're just getting the right to reproduce that work of art. But I think that you should have to keep the original banana taped to your wall for as long as possible. Then that is performance art, because that thing starts shriveling up, starts leaking down your wall. That, to me, is worth 1 million, 5 million, $6 million right there. But yeah, sure, this banana is whatever you want it to be you can get deep and analyze it. I mean, the fruit does have a pretty tangled history when you put it in the context of imperialism or like labor expectations. So you can go down that route or you can just say this is a banana stuck to a wall that I think makes people really mad. And either way, apparently Justin sun thought that was worth $6.2 million for my.

[Neal Freyman]

Second number the most expensive shopping street in the world has been crowned. Via Monte Napoleon in Milan beat out New York's Fifth Avenue to become the first street ever in Europe to be named the priciest. According to a report by Cushman and Wakefield. On Via Monte Napoleon, a square foot sells for $2,047, up 11% from last year. Meanwhile, Fifth Ave's prime square foot price stayed flat at $2,000, knocking it from the number one spot it held last year. So why is this street so expensive? Well, first, Milan is experiencing a luxury tourism boom and the uber wealthy are descending on the city in droves to take advantage of generous tax incentives. Second, it's a matter of supply and demand. I don't know if anybody has been on the street, but it is really short, which makes retail space more competitive and drives up prices. Gucci's parent company, Caring, bought a $1.4 billion building on via Monte Napoleon this year, joining other luxury brands on the street, including Hermes, Versace, Cartier and Bottega Veneta, all places I have definitely shopped at.

[Toby Howell]

Very well done pronouncing the street name. So I've been looking to maybe buy an apartment in New York City recently, and the spaces I'm looking at are modest, maybe 750 square feet. If they are priced at Via Monte Napoleoni prices I'd be looking at paying a nice one and a half million dollars a year in rent. So these are just astronomically expensive prices. You're right, though, it is a short street. Milan is becoming this destination for the fashion world, so it makes sense that prices are going skyrocketing. But still, $2,047 per square foot is just astronomical. How could this possibly be profitable for them?

[Neal Freyman]

For my final number, we have to talk about the cult of lamb chop among dogs. If you are a pup owner, you know what I'm talking about. According to the Atlantic, stuffed animal versions of the puppet from the 1960s TV show Lamb Chop are somehow the pet store Chewy's most popular plush dog toy and its second most popular dog toy period. More than 20 iterations of Lamb chop toys exist, including nautical Lamb Chop Tie dye, Lamb Chop and mini sized Lamb Chop. And all dogs seem to be obsessed with them. One reason for Lamb Chop's popularity, they're so versatile, depending on what kind of dog you have. If you have a gentle pooch, they love cuddling with the plush lambie. Lamb Chop is also easily rippable and devourable for your more active hunting dogs. Still, this is very hard to explain. As the Atlantic put it, is it really possible that dogs which can be bigger, small, playful or shy, hunters or herders could nevertheless share a preference for the same exact plush toy? I guess so.

[Toby Howell]

I guess so. One reason that they did give for why Lamb Chop Mania sweeping through the dog world is that dogs are very attuned to what you, their owner, are feeling. So if you are excited about a toy and you hand them the toy and like, they clearly see that there's some joy on your face, maybe in some of these micro expressions, then of course they're going to want to play with that toy as well. But also, you're right, the versatility of it is pretty good. I mean, you can absolutely destroy it if you want, if you have like a high hunting instinct or you can cuddle with it. I'm speaking as if you, the listener, are dogs, but this is what dogs are going through. You can cuddle it, you could rip it apart, you can play tug of war with it. So it is pretty versatile. Although I talked to 10,000 other dog owners and they said ball was their favorite dog's toy.

[Neal Freyman]

So you could say a little cheaper.

[Toby Howell]

Ball Mania is sweeping or Rope Mania is sweeping. But yeah, Lamb Chop. I mean, I don't want to be too cynical right here. It looks like a fun toy and if I were a dog, maybe I'd play with it as well.

[Neal Freyman]

Okay, let's sprint to the finish this Thursday with some final headlines. Elon Musk and Vivek Ramaswamy want federal workers back in the office. In a Wall Street Journal op ed outlining their plan to curb government waste, the co heads of the newly created Department of Government Efficiency, or doge, wrote that they want to ban federal employees from working from home and compel them to return to the office five days a week. Musk and Ramaswamy wrote American taxpayers shouldn't pay them for the ERA privilege of staying home. And if workers don't comply, it would result in a wave of voluntary terminations that we welcome. Should this be adopted by the Trump administration, mandating fully in person work for the country's largest workforce, 2.3 million people could set off fierce battles with federal worker unions.

[Toby Howell]

Yeah, let's dive into more things that this op ed said because it was pretty long.

[Neal Freyman]

Right? They went through their whole plan, their whole plan.

[Toby Howell]

One big thing that people pointed out was that they actually pointed to a lot of Supreme Court rulings as kind of guidings. Remember the Chevron document doctrine that was recently actually overturned by the Supreme Court? It stripped federal agencies of some of this significant power that they used to have to kind of make these sweeping regulatory decisions. So they're saying like that is one thing that they want to use as a blueprint for their, you know, department of government efficiency, trying to strip the government down to a little bit less than its current, you know, gargantuan size and budget. Another thing that they said is that they're going to rely heavily on executive action to pursue this agenda. Remember this is not technically a government agency, it's like government adjacent agency. So they will be trying to skirt Congress, not rely on Congress, go through executive action. But yeah, if you are curious as to what the heck Doge is actually going to do, this Wall Street Journal op ed really dove into the nitty gritty of it.

[Neal Freyman]

But I linked to it in the Morning Brew newsletter this morning.

[Toby Howell]

You linked to it as well. But probably the headline news is going to be the fact that they are requiring.

[Neal Freyman]

Maybe they want to. They want to and they want people to leave their jobs as a result. That seems to be the main, right.

[Toby Howell]

That kind of quiet quitting type of approach. While the fun times kept on rolling for the world's biggest company in video reported earnings yesterday and what do you know it it saw revenue growth of nearly 100% compared to last year. But like the kid who always hid in the same place during hide and go seek, the market has come to expect Nvidia's excellence and its stock remained pretty much unchanged in after hours trading. One thing that might explain the market's tepid reaction is Nvidia's forecast for fourth quarter sales. It was a good deal lower than the higher end of analysts expectations. Though Jensen Huang did emphasize that demand for their next gen Blackwell chip is quote incredible and quote coming from a lot of different places.

[Neal Freyman]

Yeah, everything. All of the attention around Nvidia right now is focusing on Blackwell which is their newest processors that are 2.5 times faster when training large language models models and 5 times faster when running those models in real applications. So everything going forward for Nvidia when you're thinking about their earnings or how their stock price is doing is Going to hinge on Blackwell. That's just the one name to know. A bombshell fraud accusation hit the wires yesterday afternoon. Gautam Adani, one of the world's richest people and chair of Adani Group, was charged by US Prosecutors with participating in a massive bribery scheme in which more than $250 million was sent to Indian government officials to obtain lucrative solar energy contracts. Adani and other defendants were charged in New York federal court for fraud, accused by prosecutors of lying about their plan when raising money from U.S. investors. This is sending shockwaves through India this morning where Adani is the most powerful businessman and a close ally of Prime Minister Narendra Modi.

[Toby Howell]

And if you've heard the Adani name before, it probably was because in early 2023, the short selling firm Hindenburg Research, who goes after companies that they think are accused in, you know, some shady practices, they accuse Adani Group of engaging in, quote, brazen stock manipulation and accounting fraud scheme over the course of decades. So this is kind of lending some validity to their interest into Adani. Adani did push back. They released this 400 page report saying, no, we didn't do anything you accused us of. But now the US Is getting involved for this bribery scheme. So we'll see how it kind of plays out on a, on a global scale at this point. Finally, if you are heading to the theaters to see Wicked this weekend, be prepared to have some awkward conversations about your fellow moviegoers. Lack of pitch. Early viewers of the movie musical have complained that theaters were filled with people who wouldn't stop singing. Drowning out Ariana Grande and Cynthia Erivo with their passionate and often off tune crooning. Neil, I feel like you and our listeners definitely have an opinion on this. Should you be able to sing along to Defying Gravity or are the death glares that you're likely to get justified?

[Neal Freyman]

Right. Like I get the argument here and people say you would never sing in a Broadway theater, so why would you sing in a movie theater? These are world class singers. You should let them do it. If you want to sing, go along. Just listen to the soundtrack at home or just watch it at home. That said, I was just thinking about myself going there and like how could I stop myself from singing or humming along? And I'd be it take a lot of discipline because songs are amazing, you know, every single word. So I totally get it but I'm just putting myself in the position. Like it would just be hard to have that self restraint. That said, a lot of movie theaters are going to be hold holding sing along versions where you are encouraged to sing. Kind of like the Taylor Swift Eras tour where you're supposed to go have a party. Those are starting December 25th. Other movie theaters like Alamo Drafthouse are holding more interactive sessions where you're supposed to just kind of be a part of it. And who cares if you can't hear the lead singing because you can always watch it again or listen to the soundtrack. But personally, maybe, maybe this will lend itself to multiple viewings. One you go, it's more of the Broadway performance where you hear them. The other is more of that communal experience. And I can see both ways. I think it's smart for people not to fight each other in the theater, to just separate them.

[Toby Howell]

Neil, if you start singing and we go see Wicked together, I am leaving. You're. I mean, you're a great singer, but unfortunately Ariana Grande is a little better than you. So I am all out on this.

[Neal Freyman]

Trend of singing just a little bit better than me. Can't wait for that movie. Okay, let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful Thursday. It's finally raining here in New York, which is great news because on Monday the city declared its first drought warning in 22 years. Plus, I got nowhere to go outside. For any questions, comments or feedback, send an email to Morning Brew daily at Morning Broadcom. And I'm just a podcaster standing in front of a loyal audience asking them to love MBD by sharing it with your family, friends, or coworkers. Toby, who should our listeners said the pod link to today.

[Toby Howell]

Okay, so we've talked a lot about conglomerates and reconglomeration. Indeed, conglomeration. I want you to conglomerate a group of listeners, probably in a group chat. Call it the Morning Brew Daily. Conglomerate. Reconglomerate. Everyone, let's get some listeners in a group chat together. Because you know everything is better when you share it with your friends.

[Neal Freyman]

Let's roll the credits. Emily Milian is our executive producer. Raymond Lu is our producer. Olivia Graham is our associate producer. Uchenowa Ogu is our technical director. Billy Menino is on audio hair and makeup has stolen the company credit card and is on a plane to Milan. Devin Emery is our chief content officer, and our show is a production of Morning Brew.

[Toby Howell]

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