Loading summary
Transcript54 lines
- [00:00]
A
Ready for AI. First things first, you should get your data foundation in order. That's where Quest Software comes in. Quest helps customers create trusted AI ready data, manage Microsoft Active Directory with less risk, and protect identities from ransomware. While everyone else talks about AI possibilities, Quest Software helps customers get their data ready for AI and build a foundation for future success. Learn more@quest.com brew that's quest.com brew Good morning, Brew Daily Show I'm Neal Freyman.
- [00:33]
B
And I'm Toby Howell.
- [00:34]
A
Today, Gen Z was feeling the love on Black Friday. Gen X, not so much.
- [00:39]
B
Then should the poverty line actually be four times higher than the official threshold? It's Monday, December 1st. Let's ride.
- [00:51]
A
Oof, this Monday hits hard. Hope you all had a relaxing Thanksgiving break and sad bending strength in your upcoming attempt to dig out of the mountain of emails you said you'd circle back to after the holiday. Today is the first day of December, which means it's time for the annual game of Whamageddon. What's that, you ask? It's an annual contest in which players try to avoid hearing Last Christmas by wham. From December 1st through Christmas Eve, you're going to want to stay away from department stores, holiday markets, cars playing on the radio, or really any outdoor event in general, because there are some devious people out there. Two years ago, the DJ at a soccer stadium in England played last Christmas to a crowd of more than 7,000 people with the explicit intention of causing them to lose Whammageddon.
- [01:36]
B
I legit almost already lost, you know, landed late last night in Newark and the plane started blasting music started off slow with Hallelujah, but not the one from Shrek, which kind of stung. Then Whammageddon struck right as I was leaving and my heart dropped. But I looked at my watch and I was still just before midnight. Even if I had been past midnight, though, I hadn't cleared customs yet. So I was going to invoke some sort of international waters rule right there. But I think one thing to keep in mind, all royalties from last Christmas go to charity, thanks to William's decision back in 1984. So even if you do lose, you didn't lose because you're supporting charity.
- [02:13]
A
And now a word from LinkedIn ads to Toby. What do you search for?
- [02:17]
B
Deeper meaning in my interpersonal relationships, a sense of belongingness I haven't experienced since childhood, and a really good pretzel bun.
- [02:24]
A
That is very deep, Toby. But what I was going to say was, what do you search for in professionals when doing B2B advertising because with LinkedIn ads you can target your buyers by job title, industry, company role, seniority, skills and company revenue so you can stop wasting budget on the wrong audience.
- [02:40]
B
I see. Well, in that case, it's worth mentioning LinkedIn Ads has a network of over 1 billion professionals and 130 million decision makers.
- [02:47]
A
Plus Plus LinkedIn Ads generates the highest B2B that's business to business return on ad spend of all online ad networks.
- [02:54]
B
Spend $250 on your first campaign on LinkedIn ads and get a free $250 credit for the next one. Just go to LinkedIn.com/MBD. That's LinkedIn.com/MBD. Terms and conditions may apply.
- [03:07]
A
I was going to be polite and ask you what you all did Thanksgiving weekend, but I already know. You woke up Friday morning, opened up your laptop and loaded up your cart with clothes and electronics. I Despite feeling down about the economy, Americans spent more than ever this Black Friday. Retail sales on the day after Thanksgiving, excluding cars, jumped 4.1%, outpacing last year's 3.4% growth, according to Mastercard Spending Pulse. A separate report from Adobe analytics found that online shopping drove most of that growth. Americans spent $11.8 billion online on Black Friday, a 9.1% increase from the year before. Meanwhile, malls were busy, but not so busy in store sales rose 1.7%, small bump, but still above last year's gain. This Black Friday was like the SEC's slogan, it just means more. Because of the record long government shutdown, economic data reports have been canceled or delayed, leading to tougher whiteout conditions than the Midwest. This weekend, economists, investors and the Fed are using alternative pieces of data like these Black Friday numbers to plug those gaps in our understanding of the health of the consumer. So what do we learn? Americans are still feeling flush enough to spend big on the holidays, despite plunging consumer confidence, sticky inflation, the shut and a weakening jobs environment. It's also a sign that Black Friday still remains a tentpole shopping holiday, even as retailers spread their deals out over many days, even weeks. Toby, did you do your patriotic duty and support the economy by buying stuff you didn't need?
- [04:35]
B
I don't know if it was super patriotic, but I did order a travel mahjong set, so I did spend something there. But it comes down to who was doing the spending this Black Friday holiday period. And it does look like it was a youth driven event. There's been a youth movement over the years with when it comes to this holiday. According to an AT&T business report. 40% of Gen Z and 32% of millennials plan to do most of their shopping on or around Black Friday. Older generations prefer pushing the can down the road, doing it closer to, you know, traditional Christmas time in mid December. And I think that comes from the fact that it's just become a very social first holiday in general. A lot of these deals are, you know, dispersed over Tik Tok, over Instagram, and that's where you're finding these deals. That's where you, you are seeing the marketing happen to you, which is why Gen Z is kind of resonating with this particular day. But then there's some contradictions with even within that report because Deloitte did a report that found that Gen Z shoppers recently said that they expected to cut holiday spending by an average of 34%. PwC said that Gen Z plans to spend 23% less this holiday season. So there's two things going on here at the same time. It's almost a high participation but low spend environment that we currently find ourselves in when it comes to young people.
- [05:51]
A
Well, it looks like retailers are trying to support Gen Z shoppers. They don't make a huge amount of, they don't account for a ton of retail spending today, just 8%, but that is expected to grow to about 20% within five years. That's about $2 trillion annually. So they're doing a lot of marketing to Gen Z. Maybe they're not going to be spending this Black Friday, but they are going to be growing into a core with a lot more disposable income and they want to hook them now and get that brand loyalty. One generation that's feeling left out in the cold with all of this Black Friday hoopla is Gen X. So Gen X is the only generation that said they would spend more this Black Friday than last year. But when you look at the stats, Gen X is not being targeted at all by retailers. Only 5% of brand influencer spending is targeted to Gen x. Even though 92% of Gen Xers use social media daily, 28% of TikTok's user base is Gen X. And by Gen X, I should say these are people from 45 to 60 they are willing to spend. They have a lot of people to spend it on too, because they sit in the middle. They have maybe aging parents that they need to take care of and buy stuff for. At the same time. They might also have kids that they also need to buy gifts for. So they're a very lucrative cohort and it seems like retailers for whatever reason are deciding not to court them and skip the line and go ahead to Gen Z for their look to the future.
- [07:13]
B
And then the other storyline to keep an eye on this year is AI driven traffic when it comes to spending. And Adobe found that AI driven traffic to retail sites did soar 805% year over year, which sounds like a big number. But it does seem like people are still a little wary of getting gift ideas from AI. 72% of people say they still get their ideas in a store just walking around and looking around. Only 9% of people say that they are going to AI to generate gift ideas. What they are going to AI for though is to double check deals that they are getting. So a lot of people are cross referencing. They'll just ask, hey, is this the best price I can get for this mahjong set? And I will kind of go and scrape the web for them and find other deals. So they're using it more as a fact checking tool rather than a inspiration tool. Which I guess makes sense. Like it doesn't take some of the fun out of gift giving. If you just go, what should I get my mom this year? I'll probably come back with the mahjong set, honestly.
- [08:10]
A
But I think that hits harder on December 20th than December 1st, when you're cramming for all these gift ideas and then that's when you go to chat CBT for help.
- [08:17]
B
That's a great point. Moving on. Are Americans actually a lot poorer than we think? That is the question Michael Green, a Wall street portfolio manager and writer, asked in a long substack post that recently blew up. In the post titled My Life Is a Lie, he argues that a family of four in America actually needs about $136,000 a year just to cover everyday necessities, way more than the $32,000 that represents the official federal poverty line. It means that if you took his number seriously as a threshold, most American families would suddenly count as in poverty. So why does Greene think that the real number should be more than four times higher? Well, first, he argues, the official number, calculated by taking the cost of feeding a household in a year and multiplying that by three doesn't reflect modern life because food is cheaper. He gets his numbers from adding up the average cost of a basket of necessities most families deal with, calculated using prices a suburban family in Caldwell, New Jersey might face, including food, housing, health care and childcare. When he ran the math, Greene concluded that a huge chunk of the middle class is caught in what he calls the valley of death. That's the group of people who make too much money to qualify for government benefits like food stamps or Medicaid, but too little to comfortably pay for everything that modern life more or less requires. Neal, needless to say, this set off a lot of debate, highlighted by the fact that Green used averages to calculate his numbers, ignoring the fact that cheaper options are available to most families. But the premise that a lot of Americans are struggling more than official statistics would suggest, clearly struck a nerve with a lot of people.
- [09:54]
A
Okay, this landed like a grenade. Let's walk this through one by one. Let's go over his argument, and then we can go to the broad refutations of those of his argument. Because economists don't agree on a lot of things. They generally agree that this was a really bad poverty analysis. But I think there's generally a lot of interest in this type of report because a lot of people want to understand why Americans are feeling so bad about the economy, want to understand this unaffordability crisis at a time when most people are doing okay. Real inflation, which is a real incomes, which is incomes just adjusted for inflation, are at a record high. Okay, so walking through his argument, he said that the poverty rate is, is calculated right now by tripling the cost of a minimum food diet. At the time, he said everything that was back in 1963, he said everything has changed between 1963 and 2024. Housing costs have exploded. Health care became the largest household expense for many families. Childcare became a market. That market became ruinously expensive. So in his math, he's saying food is not even a big part of the budget anymore. It comprises just 5 to 7% of household spending. And he put housing at 35 to 45%, childcare at 20 to 40%, and health care at 15% to 25%. He does this line item of how much it costs a family of four to just get by these days. He put things like health care at $10, transportation $15,000 per year, food $15,000, housing $23,000. So he just runs it down and says, well, if you want to afford life's basic necessities, you really need to be making $136,000.
- [11:32]
B
And then here comes the pushback to that. A lot of people said that you're actually measuring comfort, not necessarily poverty, because poverty should be a threshold which you exit from suffering, and if you dip below, then you are then suffering. It is not a threshold that you should be applying it towards things that are just comfortable participation in the economy. The other thing was he used his averages, not minimums. There are cheaper options available. And then another thing too is that he made child care a massive line item in this $32,000 a year go towards child care, which be that as it may, it is a very big cost for a family of four. But eventually child care costs fall towards zero as you know, you age out. So that shouldn't define the entirety poverty line when it is just a part of a family's life cycle. And he kind of ignored some of the items that have gotten cheaper over time. Clothing, consumer electronics, food have gotten all cheaper. Incomes are higher than ever when you use inflation adjusted dollar. So it was potentially cherry picking the worst of categories that are weighing on people's finances, not necessarily looking at the places where things have gotten better.
- [12:40]
A
Right. So bottom line, economists are saying that it was a faulty premise to begin with because this is the wrong definition of poverty and then use faulty data to back it up. That said, this certainly sparked a debate and a wider discussion around how we should define poverty, affordability, things like that in our economy. Because I think everyone generally agrees that certain things that he focused on, child care, health care, housing, those have all definitely gotten more expensive, they're putting more burden on American families. And they all agree too that the poverty measure that was established in 1963 is generally not a good way to measure poverty. There are some other measures, measures out there called the supplemental poverty measure and that brings in things like utilities, housing, health care, things like that. But yeah, certainly sparked a discussion. I think people do want to know why everyone's feeling so crappy. All right, welcome to Winners of the Weekend. The segment where Toby and I pick two things that have a great answer to. So how was your Thanksgiving? I won the pre show who came home with more leftovers contests. So I get to go first. And my winner is the stock market. Because even with all this chatter about 1999 or even 1929, it continues to get back up every time time it's knocked down. Stocks staged a quiet but furious rally over Thanksgiving week to close within 1% of record highs, at least for now, quieting all the bears who warned that an AI bubble would cause a meltdown. Over a five day rally, the S&P 500 rose 3.7% for its best week in six months, led by a resurgent Google who restored confidence in the AI trade. Just 11 days ago, the index was down more than 5%. In November it closed in the green for the month. But it wasn't just stocks having all the fun. After crashing 30%, Bitcoin rose above $90,000, commodities gained and silver hit a new all time high. Last week was, according to Bloomberg, one of the strongest cross asset rallies of the year. For your portfolio's recovery, you can thank the Fed. There are growing signs that the central bank is tilting toward a rate cut at its upcoming meeting next week, which is intended to juice the economy and benefit stocks. The bottom line, according to Barclays strategist Emmanuel Kao, the learning from this week is that don't fight the Fed and don't fight AI remains the market mantra. Toby, buy the MF dip its strategy that has never failed this year.
- [14:53]
B
We were coming off a very scary November though, because there were bearish signals galore last month. I mean, Michael Burry and Jim Chanos both took very public anti AI stances. The Nvidia leadership didn't necessarily inspire a lot of confidence with kind of their weird tweeting from their communications account. They said we are not Enron, which any time you invoke Enron immediately makes you people think you are Enron. And then retail earnings came in a little bit mixed as well. But then everything kind of came roaring back. The fact that another quarter point rate cut is probably coming is just the gravy that you put over everything. I just did it at Thanksgiving. As long as you douse everything in gravy, things start to taste a little bit better. So I think that is just what's powering this recovery right now. Even as the market is in an.
- [15:41]
A
Uncertain time, it's not the biggest names too, because if you look at Nvidia, Palantir, Oracle companies that have been driving the market, they had a really bad November. Oracle Stock is down 20% in November, Nvidia was down 12.5%. Palantir dropped 16%, had its worst month since August 2023. So the fact that those three names that were powering the rally over the course of the year were down double digits last month and still the S&P 500 was green is a probably a hopeful sign, a bullish sign that a lot of the other names that had been doing so well are picking up the slack, it's a broadening out of the rally from just being so concentrated in AI. So if you're a market forecaster and that's not a great position to be in because you get a lot of stuff wrong, but you're saying, oh, this is an exciting thing for the future and all of these banks right now are coming out with their 2026 projections for the S&P 500. They see it only going up from here. JP Morgan put its target for the end of 2026 at 7,500. For the S&P 500, it's right now at about 6,900 points. So that's a nearly 10% rally. HSBC came out, Deutsche bank came out with their forecast. They said the exact same thing as JP Morgan. So you have all of these banks coming out and saying, we see the S&P 500 gaining another 10% from here. If you're a regular investor, you're going to put in your money because you want it to grow.
- [17:02]
B
And of course, I looked at cryptocurrencies this morning. They are tanking again for some inexplicable reason. Bitcoin is now fell 6% as of this morning, down to $86,000 again. So even as S&P 500 is doing well, there is just some crazy stuff going on in the crypto market. All right, we're going to take a quick break and come back with my winner of the weekend.
- [17:24]
A
You know that saying, more money, more problems? Toby?
- [17:26]
B
Of course. Why do you think my life is so chaotic?
- [17:29]
A
Sure. Well, with startups it's more like more money, more security. Big enterprise deals usually come with even bigger security and compliance requirements.
- [17:38]
B
Yeah, the right kind of security posture doesn't just protect you, it can actually make or break a deal. Thankfully, Banta's AI and automation makes it easy for you to get big deal ready in days.
- [17:49]
A
They automate your compliance and continuously monitor your programs so future deals never get blocked. Plus, Vanta scales with your company so you'll always have the support you need, no matter what growth phase you're in.
- [18:00]
B
Morning Brew Daily listeners can get $1,000 off at vanta.com/morning brew. That's vanta.com/morning brew. Neil, have you ever had an issue get so out of hand you couldn't deal with it anymore?
- [18:16]
A
Yes, as it turns out, you cannot build an indoor pool in a one bedroom Brooklyn apartment.
- [18:20]
B
I love your optimism, but think of how bad something like cost can get as your business grows. That's why WooCommerce is designed to give you complete control over your costs, allowing your business to grow without platform fees eating into your margins.
- [18:33]
A
Choose every component of your tech stack, from hosting to payment gateways based on your budget and business needs.
- [18:38]
B
Avoid costly platform fees that cut into your margins as you grow. Only pay for what you use not for enterprise packages filled with tools you don't need.
- [18:47]
A
To learn more, visit woo.com/cost that's woo.com/cost.
- [18:53]
B
My winner of the weekend is Google's new AI powered hurricane model because it performed really well this hurricane season. As the 2025 Atlantic hurricane season came to a close yesterday, it lived up to its active moniker with 13 named storms in three Category 5 hurricanes is the first time in a decade that no hurricane made landfall in the U.S. but the Caribbean, headlined by Hurricane Melissa took a massive hit. But one model ahead of Melissa's rapid intensification had it dead to rights. One week before Melissa hit land, most traditional forecasting tech strongly disagreed about its path and intensity, save for one Google's DeepMind weather lab. It accurately predicted the storm's track in its eventual category 5 strength, a performance edge it maintained when averaged across all 13 storms this season. On the flip side, the US government's flagship global forecast system that uses an old school physics model running on uber expensive supercomputers performed abysmally. In fact, the difference in margin of error between the US's GFS and Google's DeepMind is massive. At five days out, GFS forecasts were on average twice as bad as Google's, a chasm inaccuracy that will cause forecasters to ditch a model entirely. Neil, as we close the book on this hurricane season and we shift shift into looking at what worked and what didn't, it looked like AI powered models might be the way forward.
- [20:14]
A
There are 11 models that these big hurricane forecasters use to model tracking and intensity. Google performed by far the best out of all of those 11 and they just released it in July. So this is brand new, this is the first of its kind on the market and absolutely just crushed the competition. So this is I think we're looking at a revolution in weather forecasting thanks to AI. And I just want to be clear, this isn't generative AI and in the likes of Chat cbt, they're not just putting a chat bot in of weather forecasting and just asking it where is this hurricane going to go? This uses machine learning to look at historical weather patterns and tease out patterns in this massive data that the average person or the average supercomputer wouldn't be able to find. And it performed admirably well. Not just on the not just on tracking the path of the hurricane, which AI models typically do pretty well, but also the intensity. You said it's coming out party really was Melissa when it forecasted that that tropical storm would grow into a Hurricane 5 and crush Jamaica just a few days later. It performed really well there. So it's doing well on both different skills and machine learning seems to be the future of this industry.
- [21:25]
B
I think you touched on it. Well, the major difference between an AI model and a more traditional model is that AI models know nothing about physics. Which is ironic because Sam, usually I know I'm right there with you. AI models usually you look at equations that describe the movement of wind, you feed in moisture, you feed in heat and you try to predict what a storm is going to do. It seems logical to do that. Like these are all the input factors. Let's see what they are saying and try to predict what is going to happen. But models actually ignore all of that and just look deep into these massive data sets to see what storms have done in the past. And it does look like the key is not looking into what is going on at a very micro level. It is just look using a macro lens and say, hey, historically this is what's happened and it's why you're getting these outlier results again. It is pretty early into its lifecycle. I mean it really did start predicting storms in this summer only. So we'll see if it bears out over time. But so far it is looking very promising with this novel approach to predicting where storms are going to go.
- [22:25]
A
It's Monday, so here are the events you need to know about in the week ahead. The countdown to Christmas is on and the string of made up holidays that encourage you to part with your money rolls on this week. Today is Cyber Monday, the E commerce complement to Black Friday and the biggest online shopping day of the year. Americans are projected to spend $14.2 billion today, up more than 6% from last year. Tomorrow is Giving Tuesday, which has become one of the biggest days for nonprofit fundraising of the year. But the travel industry is encroaching on their turf. Airlines, hotels, cruise companies and travel booking sites are trying to make Travel Tuesday happen, luring you to bite on one day deals for your next vacation. Toby, it won't be long till the rest of this week is spoken for.
- [23:06]
B
I mean, why stop there? WeGovy Wednesday, presented by Novo Nordic Theatrical Thursday, where we all support Broadway again. And Freaky Friday where everyone just watches their favorite Lindsay Lohan movies. But whatever, the more holidays the better in my opinion. Let's just serve them all up, up.
- [23:21]
A
All right. The case against Luigi Mangione will take a big step forward this week. Almost one year after the 27 year old, was accused of killing UnitedHealthcare CEO Brian Thompson in midtown Manhattan. Mangioni, who faces federal and state charges for the killing of Thompson, will appear in court for hearings today as his lawyers try to get evidence thrown out ahead of a potential trial. He is expected to receive a lot of support from legions of fans who still consider him a folk hero for taking action against what they consider an evil American health care system. Mangione's legal defense fund has raised $1.4 million from an online fundraising campaign with a median donation of $15.
- [23:58]
B
The support just really hasn't died down at all. This past spring, a group got a plane to pull a banner over Manhattan that read Free Health Care. Free luigi. He's gotten 6,000 letters sent to him in jail, according to a Wall Street Journal report. So expect this news cycle to pick back up again as this trial kicks into gear once more.
- [24:18]
A
In sports, the 12 team college football Playoff will come into view, with the penultimate rankings arriving Tuesday night, showing where the top teams stand after a chaotic rivalry weekend that was overshadowed by coaching drama. Yesterday, Ole Miss coach Lane Kiffin jumped ship to rival school lsu, an unprecedented and bizarre situation because Ole Miss is a national title contender and Kiffin won't be around to coach them in the upcoming playoffs. Meanwhile, in more coherent soccer, the draw for next summer's World cup will take place on Friday at the Kennedy center in Washington, D.C. in which the 48 qualifying countries will be split into 12 groups of four for the group stages. It's about to get real.
- [24:56]
B
Hear me out. Somehow we put LSU in the group of death in the World cup after that stuff stunt that Kiffin just pulled. But yes, you also forgot fantasy football playoffs are coming up soon. It's actually in the week after next week, but your boy is looking pretty good right now. Number one seed in three leagues. So I'll keep you guys updated on that.
- [25:15]
A
Please do on Thursday. Wow, this might be the biggest event of the year. Morning Brew Daily's live holiday extravaganza on December 4th in New York City, one of the top business podcasts in America will host a show that's being dubbed the Met Gala of Audio. And guess what? There are still tickets available. So if your calendar is a big fat empty space on it Thursday night, get your butt down to Brooklyn for our show because it's going to be an absolute blast. You can find the link to tickets in the show. Notes are on our Instagram page.
- [25:44]
B
By the way, this is not a live podcast recording. Well, you're just where you'll just hear us talk about the news. My whole family thought that. So no, you do not have to wake up at 4am to come watch Neil and I. There's going to be a bar. We'll be on stage. You guys will get to participate in some segments. So not a normal show, not the morning, but certainly a great time.
- [26:05]
A
That is all the time we have. Thanks so much for starting your morning with us. Have a wonderful start to the week. If you want to get in touch about this episode, send a note to Morning Brew Daily at Morning Broadcom or DM us on Instagram @MB. Daily show let's roll the credits. Emily Milian is our executive producer. Raymond Lu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair Makeup Lost Whamageddon after walking into CVS this morning. Devin Emery is our president and our show is a production of Morning Brew.
- [26:32]
B
Great show, Neil. Let's run it back tomorrow.
- [26:45]
A
And Doug, here we have the Limu.
- [26:47]
B
Emu in its natural habitat. Help people customize their car insurance and save hundreds with Liberty Mutual. Fascinating. It's accompanied by his natural ally, Doug.
- [27:00]
A
Limu is that guy with the binoculars watching us.
- [27:03]
B
Cut the camera. They see us. Only pay for what you need@liberty mutual.com.
- [27:07]
A
Liberty Liberty Liberty Liberty Savings Very unwritten by Liberty Mutual Insurance Company and affiliates.
- [27:12]
B
Excludes Massachusetts.