Morning Brew Daily – December 12, 2024

Episode Title: Elon Musk is Worth $400B & Saudi Arabia Set to Host 2034 World Cup

Hosts: Neal Freyman and Toby Howell (with Toby absent due to illness)

Introduction

In this episode of Morning Brew Daily, host Neal Freyman delves into two monumental news stories: Saudi Arabia’s controversial bid to host the 2034 FIFA World Cup and Elon Musk’s unprecedented surge in net worth to nearly $450 billion. Freyman navigates these topics with his characteristic wit and insight, ensuring listeners are well-informed about these significant developments shaping the global landscape.

Josh Gottheimer's Spotify Wrapped Controversy

Timestamp: 00:00 – 05:00

Neal opens the discussion with a light-hearted yet critical examination of New Jersey Representative Josh Gottheimer’s recent mishap involving his Spotify Wrapped. Gottheimer, running for governor, was caught photoshopping his Spotify statistics to appear as a die-hard Bruce Springsteen fan—a move aimed at aligning with New Jersey’s cultural icon.

Neal Freyman (00:09): “Look, if you're going to run for the state of New Jersey, it's true, you have to be a Springsteen fan. That's just a baseline qualification, but this wasn't one of Gottheimer's glory days.”

The deception was uncovered by internet sleuths who noticed discrepancies in the font numerals and spacing of his Spotify report. When confronted, Gottheimer admitted to manipulating the data, attributing it to sharing a Spotify account with his children. This incident underscores the lengths politicians might go to connect with voters, even at the expense of authenticity.

Consumer Price Index and Federal Reserve's Interest Rates

Timestamp: 05:00 – 17:00

Freyman transitions into a deep dive on the latest Consumer Price Index (CPI) report released on December 11, 2024. The report showed a 0.3% month-over-month increase and a 2.7% annual rise, the strongest monthly uptick since April. Importantly, the data met economists' expectations, resulting in a positive reaction from the stock market. The Nasdaq surged nearly 2%, surpassing the 2,000 mark for the first time, while the S&P 500 climbed 0.8%.

Neal Freyman (06:45): “When you strip away those very volatile things like food and energy prices, which economists call core CPI, it also came in at 0.3%.”

A focal point of the report was the shelter costs, which constitute 40% of the CPI. While private data indicated a decline in rents and housing prices, government data revealed a slight slowdown in shelter cost increases—from 0.4% to 0.3%—signaling a potential easing of inflationary pressures.

Freyman discusses implications for the Federal Reserve, highlighting the likelihood of a third interest rate cut in December, following previous reductions in September and October. Despite these cuts aiming to stimulate the economy by reducing borrowing costs, Fed Chair Jerome Powell has expressed caution to avoid reigniting inflation or harming job growth.

Neal Freyman (15:20): “Jerome Powell just had this interview earlier this month and he is expressing a lot of caution about rate cuts because the thing that he's trying to strike this balance, he wants to be on this tightrope where you don't want to cut rates too much because if you cut rates too much, then inflation is going to probably go back up.”

Freyman also touches upon the potential impact of the Trump administration’s policies on inflation, including tariffs and tax cuts that could exert upward pressure on prices, thereby influencing the Fed’s future monetary strategies.

Saudi Arabia Awarded 2034 World Cup

Timestamp: 17:00 – 36:00

One of the episode’s standout topics is Saudi Arabia’s successful bid to host the 2034 FIFA World Cup, a decision fraught with controversy due to the kingdom’s human rights record. Freyman outlines how FIFA modified the bidding process to favor Saudi Arabia, allowing countries with fewer existing stadiums to compete and ultimately leading to Saudi Arabia being the sole bidder.

Neal Freyman (20:30): “Saudi Arabia has been pouring nearly $1 trillion into all these sports investments in just the past three years.”

Saudi Arabia’s commitment includes constructing 11 new stadiums and investing an additional $1.3 trillion in infrastructure, reinforcing its status as a global sports powerhouse. Freyman highlights the region’s broader sports strategy, including investments in golf, tennis, soccer leagues, boxing, and Formula One racing.

The episode also covers FIFA’s decision regarding the 2030 World Cup, set to be co-hosted by Spain, Portugal, and Morocco, with the opening matches honoring the 100th anniversary of the tournament by being held in Uruguay, Argentina, and Paraguay.

Despite significant backlash from human rights organizations condemning Saudi Arabia’s labor practices and past actions, the financial allure appears to have outweighed ethical considerations for FIFA’s selection committee.

Elon Musk's Wealth Surge to $400 Billion

Timestamp: 36:00 – 17:18

Elon Musk’s meteoric rise in wealth is another central focus of the episode. Musk recently surpassed the $400 billion milestone, making him the world’s richest individual, exceeding Jeff Bezos and Bill Gates combined. This increase is primarily driven by a 4% surge in Tesla’s stock and a monumental 50 billion dollar boost from the sale of shares in SpaceX.

Neal Freyman (40:15): “Space X is worth $350 billion. It is crazy. That is, yes. Not only is that the most valuable private startup in the world, it's among the top 25 most valuable companies in the S&P 500.”

Freyman breaks down the contributions of Musk’s various enterprises:

• SpaceX: Valued at $350 billion, SpaceX dominates the US satellite launch market with its Starlink internet service and its ambitious Starship program aimed at moon and Mars missions. The potential IPO of SpaceX is anticipated to be the largest in history.

• Tesla: Following a turbulent period, Tesla’s stock has rebounded by 65% since the presidential election, fueled by advancements in robo-taxi technology and artificial intelligence investments.

• X AI: Musk’s foray into artificial intelligence with X AI, a competitor to OpenAI, has attracted substantial investment, valuing the company at $50 billion.

Freyman also touches on Musk’s political engagements, noting his significant financial support for Donald Trump’s election campaign and the subsequent surge in his net worth aligned with policy expectations favorable to Tesla and SpaceX.

Neal Freyman (16:45): “Musk spent $277 million helping to elect Trump, and since that election, he's made more than $4 billion per day. On paper, of course.”

This segment underscores the intertwined nature of Musk’s business ventures and political maneuvering, positioning him as a pivotal figure in both technological innovation and economic influence.

Neil’s Numbers

Timestamp: 36:00 – 19:03

In the closing segment, Freyman presents intriguing statistics across various domains:

1. Declining Mobility Among Americans: Only 7.5% of Americans moved to a new home in the past year, the lowest rate since the 1960s. Factors include skyrocketing housing costs, an aging population preferring to age in place, and the rise of remote work reducing the necessity to relocate for jobs.

2. Juan Soto’s Historic Contract: Baseball superstar Juan Soto signed a $765 million contract with the New York Mets, the richest deal in sports history. Freyman humorously breaks down the contract's enormity by comparing it to earnings per home run, RBI, and hit, illustrating its unprecedented scale.

3. Epic Humpback Whale Migration: A male humpback whale embarked on a migration spanning over 13,000 kilometers, the longest recorded for the species. Researchers speculate the journey was driven by the search for a mate or scarcity of food due to climate change, highlighting the impacts of environmental shifts on marine life.

Neal Freyman (19:00): “I just can't imagine how many times he had to stop to pee.”

Conclusion

Neal Freyman wraps up the episode by summarizing the key takeaways and encouraging listeners to engage with Morning Brew Daily for their daily dose of business news and insightful commentary. Despite Toby Howell’s absence, Freyman effectively steers the conversation through a diverse array of topics, ensuring a comprehensive and engaging listen.

Notable Quotes:

• Neal Freyman (00:09): “Look, if you're going to run for the state of New Jersey, it's true, you have to be a Springsteen fan. That's just a baseline qualification…”

• Neal Freyman (06:45): “When you strip away those very volatile things like food and energy prices, which economists call core CPI, it also came in at 0.3%.”

• Neal Freyman (15:20): “Jerome Powell just had this interview earlier this month and he is expressing a lot of caution about rate cuts…”

• Neal Freyman (20:30): “Saudi Arabia has been pouring nearly $1 trillion into all these sports investments in just the past three years.”

• Neal Freyman (40:15): “Space X is worth $350 billion. It is crazy. Not only is that the most valuable private startup in the world, it's among the top 25 most valuable companies in the S&P 500.”

Note: The transcript includes additional sections such as sponsor messages (Sage, Miro, Virgin Voyages) and production credits, which have been omitted in accordance with the summary guidelines to focus solely on the content-rich segments of the podcast.