← Morning Brew Daily
Morning Brew Daily
Inflation Unexpectedly Cools & What is Going on with Oracle Stock?
00:28:49
Why Inflation cooled and Oracle stock is dropping
Loading summary
Transcript49 lines
- [00:01]
A
The best B2B marketing gets wasted on the wrong people. In what possible world do I need the seven pound bag of wasabi peas that social media is obsessed with showing me? To reach the right professionals, use LinkedIn ads. LinkedIn has grown to a network of over 130 million decision makers. You can target your buyers by job title, industry and more. Spend $250 on your first campaign and LinkedIn will even give you a $250 credit on your next one. Just go to LinkedIn.com MBD that's LinkedIn.com Terms and conditions apply only on LinkedIn ads.
- [00:36]
B
Good morning Brew Daily Show. I'm Neal Freyman.
- [00:40]
C
And I'm Toby Howell.
- [00:41]
B
Today why Trump's social media company is getting into nuclear fusion then that inflation report was amazing.
- [00:48]
C
Or was it? It's Friday, December 19th. Let's ride.
- [00:56]
B
Happy Friday. I don't know. If you look at the date recently, it's already December 19th. Less than a week to go until Christma miss. It's also that time of the year when you don't feel bad just vegging on the couch for the entire weekend. And lucky for you, there's going to be plenty of new content to keep you busy. There's a big boxing match tonight on Netflix. Jake Paul versus the much bigger Anthony Joshua. The College Football Playoff begins. The NFL is games on Saturday and Sunday. And if you want to leave your house for just a bit, movie theaters are showing the new SpongeBob movie and the third Avatar, Toby. All that plus some chili on the slow cooker. Who would say no, I'm not watching any of that?
- [01:33]
C
Actually Neil, I recently started watching Stranger Things again having only consumed the first season, picked it up midway through season three. Have literally no idea what's going on. Who is Vecna? But if that got that slate that Neil mentioned, sounds like the worst thing you've ever heard of. The winter solstice is on Sunday, which is the shortest day of the year. So you have an excuse to be in bed way before subjecting your eyes to anything that involves Jake, Paul or SpongeBob. And now a word from our sponsor, public Neil at 5:00am My brain is basically an old school windows startup screen same.
- [02:06]
B
I'm operating with one functioning neuron.
- [02:09]
C
That is why I like Public. They have AI woven into their entire product experience. It can actually explain earnings calls and portfolio changes in the way my half awake self can't understand.
- [02:20]
B
And you can build a really balanced portfolio. Stocks, bonds, options, crypto all in one place. It feels good to have everything centralized when your life is chaos.
- [02:28]
C
Plus you can set up recurring contributions so you don't have to think about it at all.
- [02:33]
B
It's the ideal pre sunrise investing setup. Get started at public.com/morning brew and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com/morning brew paid for by Public Investing Full Disclosures and Podcast Description November.
- [02:49]
C
Inflation data dropped yesterday and what the heck was that? Annual CPI fell to 2.7% year over year, down from the 3% it's been running at, and way lower than the 3.1% economists expected on the surface.
- [03:03]
D
Woo hoo.
- [03:05]
C
Some relief for consumers in the lowest inflation print in months. But hold those horses, cowboys and cowgirls. Broad skepticism emerged across Wall street and amongst economists who think that this isn't the slam dunk report. It initially appears the nitpicking is inspired by the fact that the data comes after a 43 day federal government shutdown in which BLS workers were furloughed, meaning November data collection started quite late. Since the CPI relies heavily on in person price collections, the shutdown severely limited that process. The shutdown clearly had a big impact on data collection, heather Long, chief economist at Navy Federal Credit Union, said, I don't take it at face value, stephanie Roth, chief economist at Wolff Research, told cnn. Such a sudden stop is very unusual, at least outside of a recession, paul Ashworth, chief economist for Oxford Economics, said in a note. Still, the White House and Wall street celebrated with stocks opening well in the green before leveling off a bit throughout the day. But that was the general vibe. Neal, take this whole report with a pretty big grain of salt.
- [04:08]
B
Yeah, just look at what analysts titled their reports after this report dropped. Lost in translation said TD securities delayed and patchy Swiss cheese CPI report and then another one said borrowed your salt metaphor and said take it with the entire salt shake. There's just a lot of gaps and a lot of skepticism toward this report. A number of other analysts came out and said, you know what? I don't. I don't take this at face value, but I also don't dismiss it entirely because if you take it on a whole, there's probably a good sense that inflation is slowing down in certain categories. But this dramatic drop that we saw, we saw core cpi, which strips out gas and food, fall to its lowest level since 2021 at a 2.6% annual rate. Something some that just didn't feel totally believable. That said, there, you know, a growing sense that inflation is Receding, we just don't know by how much.
- [05:00]
C
Let's dive into why people think there were red flags with this particular report. So the government shutdown delayed the release of the November report and it also just canceled the October CPA report altogether. So that means November's data didn't have a previous month to be compared to. Remember, we are looking for what inflation is doing relative to other months in other years. So if you take away, you know, that base comparison, things get a little bit wonky. Also, as I said, November prices weren't collected until towards the end of the month, meaning that some of that information was likely heavily influenced by holiday discounts. What starts to happen, Black Friday, sales come on, longs come online. So if you're just looking at prices in that particular moment in time, yes, they might appear to be lower. And then a lot of people are just raising their eyebrows at shelter categories as well because makes up a big portion of CPI and the fact that it was logged at nearly flat over the last two months. What people are basically saying is let's wait until December comes out and then we'll probably average the two because then it gives a better snapshot of what actually happened.
- [06:04]
B
Yeah, the shelter data was what economists did pinpoint as the biggest red flag here because they basically zeroed out shelter for October because they couldn't collect it. So they basically said there was no inflation in rents at all in October and therefore there was just no growth in shelter costs at all. From September through November, shelter makes up 3/4 of the entire CPI. And that was one of the main reasons that it was brought down to these low historical levels compared to previous months and years. So that that shelter costs, if you talk to an economist, they're like, that is the one thing that really showed me that the CPI report was something that we should probably take with a huge grain of salt and we need to wait for December to have a better understanding of what inflation is doing in this economy.
- [06:46]
C
But as you are hinting at, it's not a total watch wash, the general downtrend is probably accurate. So if you are the Fed now, which is who, you know, looks at this data very closely, you're probably economists say the Fed may still want to cut interest rates again until they can see more data that is untainted by the shutdown. So again, all eyes are turning towards December.
- [07:07]
B
This shutdown had huge effect. I mean, 43 days. And basically you learn how this data is collected. These people at BLS go out to stores in actual main streets across the United States and just look at what the prices are on the shelves. And they didn't do that until the second week of November, until the government was reopened again. And they weren't able to do that. And therefore we don't really have a great picture of what inflation is doing. Interesting. Okay. History is full of examples of pivots. Netflix went from DVDs to streaming. Adam Sandler is now a respected dramatic actor. But none may top the news yesterday that Trump Media and Technology Group, the parent company of Truth Social, agreed to merge with a nuclear fusion company. Yesterday, everyone led a collective, huh? When Trump Media announced a $6 billion deal to combine with Tae, a Google backed company that wants to smash atoms together to generate infinite amounts of clean energy. The company said their tie up combines Trump Media's access to significant capital and TAE's leading fusion technology to supply badly needed power for artificial intelligence infrastructure. And that's where this starts to make a little more sense, or at least where you can see the reasoning behind it. Trump Media isn't going to leverage its social media know how to help TAE build reactors. It will use its uncanny ability to sell stock to help TAE fund its ambitious fusion plans. Because if Trump Media is good at one thing, it's attracting capital. Despite doing just $4 million in revenue a year, its market value is over $4 billion. And it paid its CEO almost $47 million in 2024 because of the Trump name. Apparently people are happy to throw money at this company, so it's taking advantage of that to make a bet on an experimental technology. Will it work? Who knows? But that's at least the logic.
- [08:51]
C
The logic here is that, yeah, we are really good at getting money. And what do you need to make fusion a thing? Money. Let's dive into what this company actually does, though. What is nuclear fusion? How does it differ from nuclear fission? You know, great thing to explain.
- [09:07]
B
Yeah, I'm taking up my notepad here.
- [09:09]
C
Or this early in the morning, but yeah, fusion is what it sounds like. You're smashing atoms together, usually hydrogen atoms together. And this process produces far more energy than fission, which involves splitting atoms apart. It also, when you're doing fission, it ends up producing radioactive waste, which is a headache to deal with, obviously. It also can lead to reactor meltdowns. Fusion, on the other hand, can't run out of control because if it runs out of energy, the reaction just stops, it just peters out. So it's thought to be a lot more safe. This is what's happening in the sun right now. So it's thought to be, you know, the holy grail of clean energy. So obviously if you frame it in that sense, like, yeah, go after fusion, you know, give it all the capital you need. But no one's ever actually produced a commercial grade fusion reaction or reactor on earth as we know it.
- [09:57]
B
No, there was a breakthrough in 2022 when this fusion process was created in lab condition. So there was a little movement a couple years ago. But there does seem to be a lot of attention and money flowing into this sector. Global funding top $7.1 billion across 50 startups as of July. And VC funds are pouring in $3.3 billion into nuclear fusion. That was an almost 600% increase over the same period last year. This particular company, tae, has a lot of substantial backers. In addition to Trump, it is considered the oldest and one of the more respected companies in this particular field. It has Alphabet as a backer, Chevron, Goldman Sachs. It's been around the. It's been around the bend. So this is an interesting deal, but I think big picture, it shows that AI is so power hungry and the winners of the revolution will be the ones that are able to supply the power, create infinite power in the holy grail sense of nuclear fusion to fund all this infrastructure being built out. Because there's a big race between the US and China about who can deliver the most power for AI. And right now we are not winning that race.
- [11:04]
C
At least we have a social media company on the case though. All right, let's move on to our stock of the week. Dog of the week, this segment where we pick one stock that did its Christmas shopping in a timely manner and one stock that is panic re gifting a candle. I won the pre show game of Flip cup, so I'm up first and my stock of the week is Medline. Medline, you say? What the heck is Medline? It's a US medical supplies giant that went public this week in the biggest IPO of the year. Priced at $29 a share, it opened at 35 before finishing today at $41, up more than 41%. The market cap at close was $54 billion, which makes it the largest US IPO since Rivian went public back in 2021. Founded back in 1966, Medline is the definition of a massive but under the radar business. It has 43,000 employees worldwide and offers a catalog of over 335,000 medical and surgical supplies. Think everything from gloves, masks and scalpels to wheelchairs and hospital infrastructure products. It had net sales of 24 and a half billion dollars last year, which would already place it Amongst the top 500 public companies in the US so why go public? Historically, we've done very little advertising, very little marketing, CEO Jim Boyle told cnbc. So the IPO is seen as a way to increase brand awareness and get on more people's radar. Neil, going to go out on a limb and say that unless you've directly been involved in this industry, not many people have heard of Medline.
- [12:34]
B
I have not heard of it. And I want everyone right now to take out the smallest violin that they have because this is a huge win for the private equity industry. Now, people probably don't know this, but the private equity equity industry has been going through it for the past couple of years. They've been struggling to sell the companies that they've bought and they've been struggling to return cash. And there is this big existential crisis going on for P e now in 2021, there was a leveraged buyout of Medline by three massive companies, including Blackstone and Carlyle. $34 billion. It was one of the biggest leveraged buyouts of all time. The question was, could they get a return on this particular buyout? Could they take this company public successfully and return cash to their shareholders? Because this was seen as a huge symbol of private equity and whether it was going through, whether it could come out of this huge trough that it was in. And the fact that they did go public and it did pop on the first day is seen as a comeback of sorts of for the private equity industry that I know everyone was so sad to see is in the dumps right now.
- [13:41]
C
And then now that it's a public company, you know, you or me or anyone can buy stock in it. So how is this company doing right now? There's a few risks that are involved with Medline right now because tariffs. A majority of Medline's products are sourced or manufactured in Asia. So there's some big question marks around that in their supply chain. But investors still like the stock. We saw it pop on the first day of trading because you know, this is a market leading company. They have a massive equipment portfolio and also a lot of people believe that Medline's demand is actually insulated from the broader economy. You're always going to need gloves, you're always going to need scalpels, you're always going to need these surgical implements. Regardless of what's going on with rates, whatever. Regardless of what's going on in the broader economy or consumer sentiment. So in that case, it seems relatively insulated as a business. All right, we're going to take a quick break and come back with Neil's Dog of the Week.
- [14:35]
B
You know that saying more money, more problems? Toby of course.
- [14:38]
E
Why do you think my life is so chaotic?
- [14:40]
B
Sure. Well, with startups it's more like more money, more security. Big enterprise deals usually come with even bigger security and compliance requirements.
- [14:49]
E
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.
- [15:00]
B
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.
- [15:12]
E
Morning Brew Daily listeners can get $1,000 off at vanta.com morning brew that's vanta.com/morning brew this message is a paid partnership with Apple Card I'm a person who really appreciates simplicity, and when it comes to credit card rewards, the simpler the better. That's one of the many reasons I have an Apple Card. The rewards are super straightforward. I earn up to 3% daily cash back on my everyday purchases. There are no points to calculate, no limits or deadlines. Plus it's super easy to access my card and make payments from the wallet app of my iPhone. If that sounds like the kind of simplicity you want in a credit card, apply for Apple Card in the Wallet app on your iPhone. Subject to credit approval. Apple Card issued by Goldman Sachs Bank USA Salt Lake City Brands terms and.
- [15:58]
B
More at applecard.com, my dog of the week is Oracle, which is setting off more red flags than a guy who follows a bunch of Instagram models. Shares of the tech giant fell 8% this week, extending a months long slump that has investors seriously worried about the company's balance sheet and the health of the AI sector more broadly. Oracle's recent troubles began last week when it revealed it would be spending a lot more than analysts expected on building out data centers. Not a good look for a company that has over $100 billion and growing in debt. Then another whopper came when the Financial Times reported that Blue Owl Capital, which is the primary backer of Oracle's AI binge, was backing out of a planned $10 billion data center in Michigan. Oracle denied the report, but the damage was done since reaching a peak in September, minting its co founder Larry Ellison, the richest person in the world, Oracle stock has lost half of its value. Now this is spooky stuff. A growing number of Wall street experts see Oracle's shakiness as a canary in the coal mine for the AI trade overall. It's taking on high amounts of debt to build AI infrastructure, but has little to show for return on those investments. The worry is that Oracle's problems will become everyone's problem given that AI has been the primary engine of economic growth. And the stock market this year, Toby, it ain't looking great.
- [17:14]
C
It ain't looking great. A lot of people are looking to, you know, boom times of your, specifically the railroad boom or we started laying railroad tracks before there were trains actually run on them. Maybe this is what's going on with Oracle right now where they have all these, you know, commitments and are putting all this money into building out this infrastructure that we don't even know if we need yet. 13 letter word that I want you to keep in mind is rpo, which is stands for remaining performance obligations. This is what happened when Oracle's stock run up happened a few weeks ago, where suddenly they reported this massive backlog of deals. But RPOs are contracted sales that are not yet recognized as revenue in accounting. Basically you need to have a high probability of these things be actually materializing into sales. Usually it's around 70% probability, but that's still a probability. You don't know if they will actually materialize as you expect. Especially when a lot of those RPOs are coming by way of OpenAI, which is a private company that doesn't have enough revenue yet to satisfy all of the infrastructure spend that they've pledged. So that is both a blessing and a curse when you have this massive backlog like, hey, this could be all great revenue and it's all going to come in and everything's going to be happy go lucky. Or maybe we're not going to fulfill some of that. And then it's just you're taking on all this debt for not enough revenue.
- [18:35]
B
Yeah, Oracle is $248 billion worth of commitments to data center leases and it's using a high amount of debt to actually finance that entire infrastructure. All those data centers, you wonder whether those will get actually built or if they, if they do get built, whether there will be any customers for them. And you know, an increasing number of people are saying like, this is a little spooky for Wall street because when you are a company taking on this amount of debt to make huge bets on the future in the past, maybe in 2024. In the early part of 2025, investors were rewarding these bets. We had this couple months stretch where OpenAI would do a particular deal with Oracle or would do a particular deal with Core Weave or Nvidia, and that particular stock would go up 10 to 20% on that day. Now if you show any bit of shakiness, your stock is going to get crushed like Oracle's is doing right now. And also another adjacent company, really not adjacent, at the center of the trade is Core. We've core, we've spiked more than 4% after it IPO'd. Now it's down more than 60% since then. So investors are getting a lot more skeptical, they're getting a lot more strict about the finances of these companies that have not shown any return for all of their AI investment.
- [19:44]
C
There are still some bright sides. I know this is the dog of the week segment, but Micron, which is a AI memory company, had an incredible earnings call this week where they said that hey, we cannot actually keep up with demand. They came in ahead of every analyst forecast saying, and analysts were surprised saying like this is actually real demand because this is not necessarily something where they have to bring on data centers online. They're actually just providing services to companies that do need AI. So there is real demand out there. It just depends on where you're falling within, you know, the picks and shovels matrix here. Are you the ones actually having to build the data centers? Are you someone who is providing a service to companies that are actually generating revenue like someone like Micron is? Let's sprint to the finish with our final headlines. Rip to your screen time. TikTok is not going anywhere. TikTok finally signed a deal to spin off its US operations into a new joint venture, according to a memo from TikTok CEO Sho Chu, he sent to employees yesterday. This comes after a years long saga that culminated in a law passed in 2024 that required TikTok to divest its U.S. operations or face a ban in the U.S. the law technically went into effect back in January, but enforcement has been repeatedly delayed under the new joint venture. 50% of TikTok USA is owned by a consortium of mostly American investors, including Oracle and the PE firm Silver Lake, valuing the entity at around $14 billion. 19.9% is retained by ByteDance, which keeps them below a key 20% legal threshold under US law. And 100% of you might be confused as to whether this was all necessary. The idea behind the joint venture is that now delicate things like American user data will be handled by an American company like Oracle. TikTok's algorithm will be retrained on US user data and content. Moderation will also be handled by the US venture. Neil, we've got some all Americans scrolling ahead of us.
- [21:42]
B
I can't wait. This is bizarre because TikTok, according to this deal is valued at $14 billion. In 2023 it did $16 billion in revenue. Right now, according to this deal, it's valued at about the same time level as Snapchat and it is one of the leading social media companies in the world and the United States. So analysts are trying to wrap their head around what's going on here. And the answer may be that this is just not really a business deal, it is a political deal. The Trump administration forced TikTok ByteDance, TikTok's owner ByteDance to make this deal happen and therefore had to sell it at a much lower value than it would it should be valued at which according to put into TikTok should be should be valued at around $100 billion. And this new entity, I think it's worth stressing this new American owned entity will not actually own the underlying algorithm that that powers TikTok. And this may be so much of the value that is TikTok, it's still going to be owned by Beijing based ByteDance, but what's going to happen is that American auditors this will be retraining the algorithm on US user data. So still more news to come. This happened late last night and we'll see what happens with TikTok under this new ownership, which Oracle stock is popping 5% yesterday.
- [22:55]
C
So I know that was the one thing we didn't mention, TikTok. We were saving it for, you know, the TikTok.
- [23:00]
B
We spend a lot on data centers, but now they own TikTok. All right. In a menu update that feels ripped out of an SNL commercial, Chipotle announced it will start selling meat in a cup beginning later this month. The four ounce portion of Adobo chicken or steak with nothing else in a cup is part of a wider high protein menu that includes two high protein bowls, a salad, a burrito and an Adobo chicken. Taco Bell. After a bruising year, Chipotle is hoping to reignite demand by leaning into a protein craze that every other food company is chasing. It says that high protein diets have ranked as the top diet pattern in the US for three years running, that 70% of Americans now say they prioritize protein and more than 1/3 have increased their protein intake over the past year. Toby, can meat in a cup save Chipotle?
- [23:43]
C
Yes. Mo Sloff is out. Cup slop is so in at this point. In addition to the protein trend that they are jumping on, I think the smartest play here is the fact that they want to capture off peak traffic. When do you, when does traffic peak At Chipotle, it's peaks around lunchtime when everyone's getting, you know, their full burritos in full bowls. But maybe you want to pop in for a snack at 2pm, 3pm, 4pm you can get meat in the cup and just have a little bit of snack, but you don't want to order an entire burrito. So I think directly they're saying how can we get people in the door during non peak hours? And also they did call out the fact that GLP1 weight loss drugs are transforming how people are engaging with food. Portion sizes are getting smaller. A Chipotle burrito is massive. You don't want that if you are taking Ozempic or something similar. So I think they're trying to kill three birds with one meat cup right now and I'm kind of bullish on it. It might work.
- [24:36]
B
I think there was a branding missed opportunity here though because they're calling it like high protein cups and maybe if they just called it meat it would actually go super viral because that's what anybody is going to say anyway. I do wonder about the social stigma or what it would be like if you just go there, get me in a cup and you're doing. You're not even using a fork.
- [24:54]
C
I'm not using a fork. I'm just tossing it straight back like this. It's going down the gullet. Meat down the gullet in a cup. Actually, I don't think you're right about the marketing aspect. I do not think people want to actually meet in a cup. That's why you're a podcaster, not a marketing expert.
- [25:09]
B
All right, finally, not every social media platform platform needs to do an end of year wrapped and I'm looking at you. LinkedIn, the professional networking app, released its first ever year in review. That reminds you just how much time you spent looking for a job in 2025. Of course that's not the intention, but that's basically how it functions. Located on the app, it tells you how many days you visited LinkedIn, how many new connections you made and how many impressions your profile racked up. LinkedIn editor in chief Dan Roth told CNN. We know this has been A challenging year for many job seekers. Year in Review is meant to reflect the full picture of how people showed up professionally this year. Not just in searching for jobs, but learning new skills, building networks, sharing ideas, and supporting each other through change. Toby a top 1% poster of cringe parody.
- [25:53]
C
Man, rap culture has gone too far. Someone had to say it. I'll be the one to say it. I mean, I got so many raps this year. I got a gin wrapped which measures my golf handicap. I got a sleep wrap from my mattress, and now I have a LinkedIn wrapped. A lot of people on social media said, read the room LinkedIn. Like, this has been a historically tough job market for a lot of people. And now here you are saying, hey, you were, you know, dramatically searching for a job in the wee hours of the morning, 360 out of the 365 days of the year. A lot of people said, that is not what I want to know right now. I know that it was a tough job search for me. So it just is inherently at odds with what rap culture should be. It didn't make people feel good about themselves or about their job prospects.
- [26:37]
B
And neither did your gin. All right, and finally, we want to give a shout out to Serena for winning the ladder game. As a reminder, we gave you five things in a particular order based on one metric. This was on Monday, and we asked you to pick the metric we used to order them. Those things were Mario, Garfield, SpongeBob, the Hulk, and Cookie Monster. As hundreds of you responded, the answer is colors of the rainbow, red, orange, yellow, etc.
- [27:06]
C
A lot of people answered the correct answer. But I do want to highlight one of our favorite incorrect answers, which was how much they love Italian food. And this was the justification given. Mario is Italian, so he loves their food. Garfield loves lasagna. I can see spongebob liking Italian more than the Hulk. And Cookie Monster just eats cookies. It kind of works. I feel like you should give out a consolation prize.
- [27:29]
B
That is all the time we have. Thanks so much for starting your morning with us and have a wonderful Friday. If you want to get in touch or ask a question for that upcoming Q and A episode, you can send a note to Morning Brew daily at morning broadcom or DM us on Instagram @me. 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 is pretty checked out at work. Devin Emery is our president and our shows are production of Morning Brewing.
- [27:56]
C
Great show today Neil. I wish you all well.