C (2:22)

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B (2:34)

the US economy went in for its quarterly checkup and came out with a clean, if not downright impressive, bill of health. Gross domestic product, the sum of all goods and services made in the country, grew at a 2% annualized pace in the first three months of the year. A solid showing considering in one of those months, March, the war in the Middle east began wreaking havoc on energy markets and global supply chains. If you had to hand out an MVP award, it'd go to business investment, specifically AI, which has emerged as the economy's primary growth engine. Business outlays for equipment and structures, aka data centers, jumped 10.4% last quarter. 3 Fastest pace in 3 years it's not a surprise when you consider the four tech giants that reported earnings on Wednesday. Metal, Alphabet, Amazon and Microsoft spent $131 billion on capital expenditures in Q1, which means they're collectively spending more money than the Manhattan Project every single month. It's a good thing that businesses are spending because consumers seem to be slowing down just a little, facing persistent inflation and geopolitical uncertainty. Consumer spending slowed to 1.6% in Q1 to down from 1.9% a quarter earlier. Bit of a worrying sign since Americans buying things account for 2/3 of all economic activity. Still, Toby, the bottom line is that the US Economy has received blow after blow, Covid soaring inflation, tariffs and now the war. But it continues to be remarkably resilient, mainly because of yeah, and I'm going

C (3:55)

to steal the words of Heather Long, the chief economist at Navy Federal Credit Union. She wrote that this is a split screen economy. Companies and investors that are involved in AI are on fire. They are in fuego. But then the rest of the economy, middle and moderate income households, are not doing as well. They are instead are facing an avalanche of things like rising gas prices. We've talked about the K shape economy. Now we have the split screen economy. It does seem like a lot of what you're seeing with these numbers are propped up by a very few amount of companies investing a whole lot of money Manhattan Project each month into AI.

B (4:31)

Yeah, and if you look at the savings rate, that a good indicator of maybe how the average person is doing well. This U.S. savings rate fell to 3.6% in March, which is the lowest reading since fall 2022, maybe one of the lower readings of all times, which shows that people are getting squeezed. That said, overall the economy does seem to be doing well. And if you want to be a ball knower around GDP Then you're going to look at this metric called real final sales to private domestic purchasers. And this strips away all the volatility of other metrics. And just as kind of how exactly is the economy doing? And that rose from 1.8percent a quarter in quarter four of 2025 to 2.5% last quarter in Q1 2026. So all things said and done, we do have a split screen economy. Overall things seem to be doing pretty good.

C (5:17)

I do have a relatively worrying statistic though to bring to your attention. And that is US national debt has crossed 100% of GDP. Put another way, as of March 31st, publicly held debt in the US was $31.265 trillion. GDP over the preceding year was $31.316 trillion. That means the debt to GDP ratio is 100.2%. What does that actually mean? It doesn't mean that much. It's not that much different than 99% versus 100%. But the reason why economists watch this debt to GDP ratio is that basically they're seeing how much the borrowing is weighing on the economy. Because as debt as it rises, debt eats up more consumer resources. Money that could have been used productively elsewhere in the economy and especially in an elevated interest rate environment, environment. A lot of that money is just going towards interest rates. One in seven dollars that the US brings in goes towards paying down the interest rate of the national debt. So yes, the economy is doing all right. But if you want to have a worrying statistic to cite 100% debt to GDP ratio is it's a milestone.

B (6:25)

I feel like we're just bringing contrasting, say it's good, it's bad, but all in this on maybe a positive note which is that if you are invested in the stock market then you made a lot, a lot of money the past month. We're just coming off in April right Now it's, it's May 1st. As you will does Justin Timberlake will we'll show you all over online today. But stocks has had their best month since 2020. The S&P gained 10% mainly thanks to all these AI companies doing well and all this business investments really showing up in the stock market.

C (6:55)

Speaking of big tech names, Apple was the lone big tech name to not report earnings Wednesday. But a day late did not mean a dollar short. It was straight days across the board with revenue up 17% year over year to $111 billion. Powered by strong iPhone sales that grew 22%. And even stronger China revenue which grew 28%. All things were firing on all cylinders, even things that have no cylinders, like its services business, which reached $31 billion. Everything Apple touched seemingly turned to gold with new products like the $599 MacBook Neo selling out left and right. The updated iPad Air and iPhone 17e were also big hits, but the actual earnings almost an afterthought considering the looming retirement of Mr. Tim Apple himself. Cook will step down in September, handing over the reins to former hardware boss John Ternus, who has a sturdy foundation to build on, albeit with some question marks. Costs for memory chips are skyrocketing, the Iran war remains a macro headwind, and Apple still doesn't have a solid defined AI strategy. Tertas did make some comments on this call, his first since the company announced he will take over the head job, saying, well, we have an incredible roadmap ahead and while you're not going to get me to talk about the details of that roadmap, suffice it to say that this is the most exciting time in my 25 year career at Apple. Neal an earnings call with one eye on the present and one eye on the future.

B (8:17)

And the present really is a golden age for Apple and especially the iPhone 17. Tim Cook said this was the most popular iPhone model ever. And I don't know what, I don't think it had anything particularly new or whiz bang gadgetry around it, but perhaps it came at an end of a cycle where people were looking to upgrade their phones. And so just the iPhone 17 is absolutely crushing it. IPhone sales were up 20% to $57 billion. Remember with all this other stuff that Apple is doing, iPhone sales still account for about half of their total revenue. So as the iPhone goes, so goes Apple. And iPhone is absolutely crushing the most popular one ever. And and Tim Cook really blew away Wall street with its sales forecast for the current quarter. That's kind of what had this tailwind for its stock Apple to grow 14 to 17% its revenue in the current quarter, which, which basically just blew away all the expectations that Wall street had. So Tim Cook, this was his 89th earnings call, maybe his second to last one, and it was an excellent one.

C (9:16)

A sneaky winner as well was Apple's Mac Mini, which if you are at all involved in the tech scene, you know that open claw has become a big thing and a lot of people are running open claw on these Mac Minis that, you know, sit next to your main computer. So Mac revenue hit $8.39 billion. When asked about tariff refunds Cook said that, yes, they actually will be applying for tariff refunds. But very diplomatic. He said, whatever refunds we get, we're going to invest it back in the United States. So that's kind of a landmine that Apple has to dodge because Trump has been urging companies not to apply for those refunds. And then also just zooming out, an analyst asked Cook what advice he'd give to Ternus because, you know, he's been at the helm for a long time. And Cook said, I think my advice is that one of the most important decisions you'll make is where to spend your time. And I would spend it where the greatest benefit to the company and the users are. And never forget the North Star of the company. We're about making the best products in the world that really enrich other people's lives. It's good life advice in general. Go where the most important problems are. Spend your time on the things that matter most. Don't get caught up in the weeds elsewhere, okay?

B (10:19)

But you do have to get caught up in the weeds, especially if you're Apple, because there are some very nitty gritty supply chain things that they have to work out. And this is, this is kind of the cloud over what was otherwise just a great earnings report. And that's because. Because Apple is dealing with some serious shortages. It undershot estimates of demand for Mac computers. So if you wanted a Mac computer, chances are you had to wait in line for one. And then it has these big problems with memory chips and other kinds of chips that are just in short supply right now because of AI. Memory prices are going through the roof. It's expected to hammer the smartphone industry this year. Their shipments are expected to crash by 13% in 2026. Not all of that will be Apple, of course. Apple might be able to rejigger its supply chain to figure out ways to, to soften the blow a little bit. But John Ternus, I mean, Tim Cook is known as the supply chain guy and he's kind of getting out of here and John Turner's is taking over. He really has to focus on the supply chain because there are much higher prices for all of the inputs that go into your iPhone.

C (11:16)

It's stock of the week, dog the week time. The segment where we pick one stock that is sounding fresh and sprightly and one stock that is fighting off a little congestion. I want the pre show game of who can go through a full tissue box faster. So I'm up first and my stock of the week is the ozempic economy. When JLP1's first rolled out, eulogies were written for sellers of unhealthy snack foods. But the desire for a sweet treat hasn't fully disappeared. It has just downsized. Magnum, the parent company of Ben and Jerry's, saw sales of many ice creams perk up this past quarter, showing that an itty bitty bite of ice cream is still preferable to no ice cream at all. Magnum feels confident that smaller portions and healthier options like frozen Greek yogurt will help offset falling sales of the richer Ben and Jerry's. Hershey's too has been an unexpected winner in the Ozempic era because people are eating less chocolate but chewing more mints and gum. I didn't know this, but one of the side effects of GLP1 drugs is bad breath. Since the drugs slow down digestion, users report getting cases of the burps and acidic tastes in their mouth. Those side effects paired with oral odor powered icebreaker mints and gums to 8% growth in the most recent quarter, turning it into the third largest confection brand for Hershey's. You know, maybe people are eating less half baked pints and chocolate bars, but tiny servings and breath mints are making up.

B (12:34)

The difference is is hood sea cups a publicly traded company like can I can I invest in them? Because I see if all the trends are going in small little bite sized ice cream direction then we could see sales grow for that. But I'm always like a kiddie size ice cream. I love ice cream but I always go kitty because too much ice cream is just too much. And I think people are realizing that especially if they're there on GLP1s. But all of this is in the milieu of Eli Lilly, right? Because they are the biggest player in this space and they also reported earnings. They make Manjaro and Zepbound. They have 60% market share in the GLP1 space. So they reported earnings yesterday morning and they're showing how the Ozempic economy is just continuing to grow. Profits doubled. Manjaro's Worldwide revenue rose 125% zip bound up 80%. So Eli Lilly is more people are getting on these GLP1 which is causing all of these different ripple effects like mints growing.

C (13:25)

I it's ironic because I've been calling it the zempic economy, but it really should be called the Manjaro economy at this point because it has been total domination for Eli Lilly, blowing past all analysts expectations. But it was fascinating to see these snack Food giants talk about earnings calls because they this is what literally the CEO of Hershey said. This is an emotional category. It's a treat, not a meal. The confection category is relatively insulated compared to other food categories, which again, that is something that maybe you can speculate but then to see it actually show up in the earnings, it is fascinating. Hershey's also said that their protein bar segment is doing really well. That's a well known side effect too of the rapid weight loss that comes with GLP1 drugs is you lose little muscle mass. So protein has bigger, big winner that we've talked about. But now we have mints and tiny little ice creams as well.

B (14:14)

More people are just going to get on GLP ones. I think already 1 in 10Americans are on them. And Eli Lilly introduced this pill called Foundao and it's absolutely ripping. They got 20,000 prescriptions in the first 20 days. 80% of those patients on found this pill are new to GLP1. So all the trends that we're seeing, whether it's protein bars or small ice creams or mints, could be just like a long term growth trend as more people get on this medication.

C (14:40)

All right, we're going to take a quick break and come back with our dog the week right after this. Neal, you can start calling me Mr. Worldwide because I know how to manage a global team.

B (14:53)

So that name is definitely taken.

C (14:55)

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B (15:02)

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C (15:08)

It can even make the hard parts of global work disappear. So scaling Worldwide feels easier than it should.

B (15:13)

Head to d l.com/morning brew to book a demo. That's deal.com/morning brew. Hey Toby, here's a bill for you. It's my fee.

C (15:24)

What? How am I supposed to pay this on short notice or at all?

B (15:28)

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C (15:37)

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B (15:46)

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C (15:51)

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D (15:59)

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B (16:30)

My dog of the week is Bill Ackman, whose quest to become the next Warren Buffett has gotten off to a bumpy start. The prolific tweeter and hedge fund billionaire listed a closed fund on the stock market this week, Pershing Square USA, raising $5 billion in the biggest IPO of its kind in history. But it wasn't met with a lot of enthusiasm on Wall street, and shares fell 18% on its first day of trading. The IPO was a milestone in Ackman's pursuit to build the next Berkshire Hathaway. For years he's talked about emulating Buffett by creating an investment fund, finding attractive companies at attractive prices, acquiring sometimes majority stakes in them and letting it ride. It's still the early innings on this journey, but Ackman's success may hinge on whether by sheer force of his personality, he can marshal an army of individual traders to give him their money to invest. Ackman's built a significant following on X, where he has 2.1 million followers and is infamous for writing long winded essays about everything from campus protest in New York City politics to modern dating. But many have tried to be the next Buffet, and by my last count, there's still only one. Ackman attempted to IPO this fund two years ago, but scrapped those plans after being met with low demand. And this time around, while $5 billion raised is a lot, a top 10 listing of all time. It was at the low end of the 5 to 10 billion he was expecting. Toby, it's way too early to call us a flop, but it wasn't maybe the start Ackman had hoped for.

C (17:47)

Yeah, the pitch here is that I am going to bring something that usually only institutional investors have access to to retail investors. He's omitting performance fees. So hypothetically you just invest right alongside Bill Ackman, which before you would have required you to be, you know, a very large player in the finance space. He went on CNBC and said hedge funds are sort of known for managing money for rich people and now we have the opportunity for someone with 50 bucks who could be a Long term shareholder. So that's his pitch. He's democratizing hedge funds for the masses. What are you actually buying if you buy Pershing Square? His portfolio is sort of not that crazy. He invests most of it in 10 large cap names by the end of 2025. Those are names like Amazon, Uber, and Brookfield. Like it's not rocket science. He's just trying to buy good companies and hold them for a long time. Hello, Warren Buffett's mentality right there. So that's basically worked for him over the past, though, because its net returns perishing. Square's cumulative net returns since its inception in 2004 is more than 2600%. Over the same period, the S&P 500 rose roughly 836%. So it's been working for him.

B (18:55)

Yeah. Akman has a very fascinating investing history. Used to be an activist investor, and he's turned some very small amounts of money into some very large amounts of money. During the global financial crisis, he put $60 million into general growth properties, and that turned into $1.6 billion a couple of years later. That was a mall operator. And then famous Covid trade in early 2020 spent about 27 million on credit default swaps. Right. As the pandemic hit, turn that into $2.6 billion. So he had some of the best hedge fund trades of all time. There are some lowlights as well. Probably he's most famous for his short of herbal, a Pyramid scheme in 2012 took on Carl Carl Icahn. And after years of bruising fights between those two, Ackman did lose. He lost about $1 billion. So he has a very fascinating investing history that has a lot of highlights, a lot of low lights.

C (19:48)

Yeah, but he just really wants to be a Warren Buffett. He really emphasizes the advantage of permanent capital vehicles. He says it reduces the amount of forced selling that happens during market downturns. It allows for compounding returns over time. That's the magic word in the investing world. And he also wants to steal some of Berkshire's culture as well. He wants to hold annual meetings where investors can engage directly with management. That's what Warren Buffett has been very famous for. So dude, dude is calling a shot. Like he. He has his idol. He knows who he wants to be. Let's see if he can actually pull off what many have tried, but not many have been able to do. Because as you mentioned, there is only one Warren Buffett. It let's run to the finish with some final headlines. OpenAI has a Goblin problem. Buried in the system prompt for GPT 5.5, which is the giant wall of instructions every AI model gets before it talks to you, is a very specific warning repeated twice. Never bring up Goblins, gremlins, raccoons, trolls, ogres, or pigeons unless the user actually asks about them. This rule is foundational, sitting right next to normal sounding instructions like don't use EM dashes and don't run destructive git commands. Just casually was in there is hey, cool it with the Goblins. The instruction is needed because GPT 5.5 apparently can't stop talking about them. Users have posted screenshots of asking the model to debug their code and getting unsolicited goblins in return. OpenAI put out a blog post explaining how Goblins have infiltrated its model. It's mainly tied to the fact that it wants its models to have a personality, so in training it rewarded metaphors that involve creatures. From there, the blog post reads, the Goblins spread. Neal, if your code contains one too many references to grip hook, now you know why.

B (21:31)

It's my favorite banker. Hope he's doing well. No, this seems to stem from two words which is unapologetically nerdy. In the original instructions, OpenAI wrote, you are unapologetically nerdy, playful and wise, AI mentor to human and GPT interpreted unapologetically nerdy as saying, okay, so I'm basically Brendan Sanderson. I'm basically a fantasy author. I'm going to put in Goblins into everything. And so it is kind of funny, but the big picture here opening I wrote a blog post said, you know, it's delightful or annoying quirk of the model, but it is a serious thing because it's a powerful example of how reward signals can shape model behavior in unexpected ways and how models can learn to generalize rewards in certain situations to unrelated ones.

C (22:12)

And of course once people figured out that Goblin modes is a thing, they've been building plug ins that circumvent these safeguards to bring the Goblin. It should be an option and OpenAI is talking about making it a toggle that you can turn on where Goblin mode return. So it's been a fascinating press cycle.

B (22:27)

It might be a good marketing move to maybe release different modes based on times of the year just to get people excited. Like we have May the fourth coming up. Maybe they should release a Yoda mode or something like that, Star wars mode. So maybe they might. Maybe they just stumbled onto something fun here.

C (22:41)

There you go. Neil Sam Altman, I hope you're listening Moving on. You've heard of cocaine bear and cocaine salmon on the show. Now it's time to talk about cocaine hippos. All right, it's not hippos on cocaine, thank God. But drug kingpin Pablo Escobar's hippos are back in the news. Back in the 80s, the drug lord built himself a private zoo in Colombia, importing all sorts of animals, including hippos. When he died, most animals got rehomed, but the hippos were released and started to be fruitful and multiply. What started as four hippos has grown to 160 and could be 500 in a few years, Colombian authorities warn, wreaking havoc on native species like manatees and river turtles. So the Colombian government announced a plan to call 80 of them, which hasn't gone over well with some animal activists. Enter Anat Ambani, son of Mukesh Ambani, one of the richest men in India and on Earth. Anat has a big wildlife sanctuary back in India, and he's volunteered to take the 80 doomed hippos off Colombia's hands. Neil, he's offering to airlift Pablo Escobar's hippo progeny across thousands of miles. I hope they let him just so I can see how this plays out logistically.

B (23:49)

Yeah, I'm not sure how this would work. So you basically have to hunt down 80 of these hippos, get them onto a plane or a ship, and remember, they cost. They. They weigh 2 tons each, and then put them into this wildlife sanctuary in India. And I should say there's a lot of critics who don't think it's a wildlife sanctuary. This place has been criticized by animal rights activists as well. They call it a vanity zoo. And they. There are allegations of illegal and unethical sourcing of its inhabitants. I don't know whether this would be considered one of them, but what a saga of these hippos. 4 to 200. This is the largest population of hippos outside of Africa because Pablo Escobar in the 80s said, Bring me some hippos. And now it's turned into a huge global problem that is players from India and Colombia figuring out what to do with these. And you just hope it has a happy ending. And finally, the most fashionable gang in Hollywood is back for the Devil Wears Prada, too, which hits theaters today. Twenty years since the original debuted, the movie has maintained its grip on culture. And with the sequel, Disney hopes to bottle some of that Miranda magic and turn it into major profits. Analysts project it could hit north of $80 million at the domestic box office this weekend, which would be a massive opening but necessary to cover an expensive production and an enormous marketing budget that's made the movie inescapable. Over the past few weeks, reviews have been pretty strong, with a 79% Rotten Tomatoes score. Summarizing the critics, the site says that the sequel is a well crafted bit of escapism, even if it isn't quite as biting as the original.

C (25:13)

With a new movie coming out, I was obviously catching up on some lore from the original D Where's P? And came across this fun Meryl Streep. In a recent interview, Streep said, I knew it was going to be a hit. They called me up and they made me an offer and I said, no, I'm not going to do it. I wanted to see if I doubled my ask. And they went right away and said, sure. And then she was like, wait, it was that easy? The whole time? She was 56 years old at the time. That was the first time she had played the card of hey, double my salary. And believe it or not, Streep was ready at that point in her career to hang it up. She was 56 years old and was like, if they said no, I would just retire. Which would have robbed us of subsequent movies like Mamma Mita and of course It's Complicated. I guess her third Oscar winning performance in the Iron lady as well. But pretty crazy that that was the first time Streep said, I think they really want me in this movie. What if I just doubled my asking price and they said yes, no questions asked.

B (26:06)

Maybe she read the script and was like, oh, my character Miranda Peaslee is kind of a hard ass. Maybe I should do the same thing when I'm negotiating my salary. Well, I'm actually seeing a movie tonight that's not Devil Wears Prada and I think I might be the only person in the country that doing that. It's going to a movie theater. But I'm excited to see Project Hail Mary. No, I did see that the drama, but I'm excited to see the hype because it's just remarkable the cultural impact that this kind of random movie in 2006. I don't think anyone expected that it would blow up like it has. And now we have a sequel 20 years later and everyone knows these characters.

C (26:36)

It taught me what Cerulean was. It taught a lot of people what Cerulean was, to be honest.

B (26:40)

Okay, that is all the time we have. Thanks for starting your morning with us. Have a wonderful Friday and an even better weekend. You know what would make my weekend amazing is if the Sixers beat the Celtics in game seven. Holy crap. They're playing so well. Please, please, please, please, please, please. If you'd like to reach us, send an email to Morning Brew daily at Morning Broadcom or DM us on Instagram @me Daily Show. Let's roll the credits. Emily Milian is our supervising producer. Raymond Liu is our senior producer. Our producer is Olivia Graham, and our associate producer is Olivia Lake. Ed Lewis returns as our celeb shot technical director. It's gonna be May Guppen Hair. Devin Emery is our president, and our show is a production of Morning Brew.

C (27:16)

Great show today, Neil. I wish you all well.

E (27:20)

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