Neal Freyman (1:57)

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Toby Howell (2:08)

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To learn more, head to bland AI/MBD. That's bland AI/MBD stocks are tumbling this morning and oil is spiking as the full scale war in the Middle east rages for a fourth day. Since the US And Israel attacked Iran on Saturday, the conflict has expanded to consume at least 11 countries in the region, with Iran retaliating against US assets in places like the UAE, Bahrain, Qatar and Saudi Arabia. Wall street might finally be taking this war seriously as a threat to global energy production and transit. S and P futures are off 1.8% as of 6am EAS while the Nasdaq has tumbled over 2.3%. If the sell off holds, it would mark a departure from yesterday when traders bought the dip on the hope that the war would be short lived and not spill over to the global economy. At least according to US Officials, it won't be particularly short lived. Speaking yesterday, President Trump said that early projections had Operation Epic Fury lasting four to five weeks, though that timeline could change. Also, facing criticism that this war has no rationale or endgame, Trump tried to clarify his messaging by laying out four objectives to destroy Iran's missile capabilities, take out their navy, ensure they can never make a nuclear weapon, and prevent Iran from funding terrorism outside its borders. Those goals will take time to achieve, if they're doable at all. And despite the chill atmosphere on Wall street yesterday, threats to global energy supplies are increasing. Yesterday, Qatar said it was shutting down the world's largest export facility of liquefied natural gas, taking out 20% of total supply and sending European gas prices nearly 40% higher. And, and as for the all important Strait of Hormuz, through which one in five oil barrels passes through, an Iranian commander said the country would set fire to any ship that tries to transverse it. Toby Wall street was eager to buy the dip yesterday. It's unclear whether they're going to be so sanguine today as the war ramps up.

Toby Howell (4:33)

Yeah, you're right, because geopolitical flare ups historically have been seen as short term buying opportunities and that's what it looked like we had yesterday. Everybody was kind of the market opened red, but then people piled into equities and turned it back into the green. And then we kind of reconvened this morning and looked at future. And we go, okay, that is not the story anymore. Like they are now pricing in a much longer conflict. A much more ill defined end period to this conflict especially I want to talk about the liquefied natural gas industry because yeah, a 50% jump in prices for Europe is a big deal. That's the biggest jump since 2022. The Strait of Hormuz is especially damaging for European energy prices because Goldman Sachs estimates that they could more than double US LNG exporters, which stands for liquefied natural gas, actually stand to benefit. They go a different route that's actually unaffected by the Strait of Hormuz. So financially this is very good for US LNG producers, very bad for Europe in general. Which is why I think we saw a bit of a repricing of this conflict in the broader market.

Neal Freyman (5:38)

Yeah, I mean, we are actively heading toward the worst case scenario, which the worst case scenario for global energy markets and the global economy in a conflict. Conflict in the Middle east is two pronged. One is the Strait of Hormuz gets closed, which it seems to be effectively closed right now. Number two is Iran launching attacks against production facilities in the Gulf. And we saw Qatar's largest. Qatar is the second largest liquid liquefied natural gas exporter, its biggest facility out of commission. There is another oil production facility in Saudi Arabia that was taken out of commission as well. So you're starting to see Iranian attacks against those production facilities, starting to take those offline and constrain global supply. Now, as we talked about yesterday, the United States has plenty of plenty of supply in oil and also in natural gas. So it seems to be somewhat shielded. But for other places that buy a lot of Gulf energy, like China, like Asia and like Europe, then this is sending off some, some warning bells.

Toby Howell (6:36)

And you mentioned that a lot of infrastructure is being targeted. Now another type of battleground for infrastructure targeting is data centers. And Amazon Web Services reported that multiple of their data centers were knocked offline by drone attacks. Maybe not direct drone attacks, maybe they were damaged by debris. But that being said, they are being treated like critical infrastructure in the way that a oil refinery would be or a water desalination plant would be. The joke is that, you know, Amazon itself is almost a nation state given the size and importance to so many businesses and countries. So that is something to keep an eye on is do these attacks start targeting tech companies as well because of the infrastructure capabilities that they provide?

Neal Freyman (7:19)

The question everyone's watching is what happens with oil? Brent crude is up to $80 a barrel, up 13% in the past five days. The benchmark that traders are looking at, where it might spill over to the US and broader economy is $100 a barrel. That's when you might start to see people feeling the pinch from rising gas prices and starting to cut back on consumer spending and create this deflationary spiral in the United States. So we're not close to 100 DOL dollars yet, but we are creeping up $80, up 13% in the past five days.

Toby Howell (7:50)

And finally, one thing to keep an eye on when it comes to how this war is going to progress is the asymmetry of cost between air defense and air attacking. And right now at current burn rates, it heavily is favoring the Iranian regime. It's not heavily favoring the defense systems because just the dollar cost difference is so large.

Neal Freyman (8:10)

Yeah, they say it's like shooting down an E bike with a Ferrari. For every $1 Iran spent on drones to head drones, the UAE spent roughly 20 to $28 shooting them down. That's according to Kelly Greco is a senior fellow at the Stimson Center. Bloomberg reported yesterday that Qatar and the UAE are urging the US to ramp this down because they are rapidly running out of interceptors to shoot down these drones and missiles coming from Iran. Now UAE and Qatar both denied that report and said we have plenty of interceptors. This is not a supply issue. We are not running out. But there have been multiple reports that yes, indeed, these interceptors are dwindling in supply and could run out at current rates at by the end of the week. So you're seeing this race against time between the US and Israel trying to destroy the missile launchers within Iran before the interceptors run out in the uae, Qatar and around the Gulf. Okay, moving on. Call it the Swifties revenge. Yesterday a landmark antitrust trial began pitting Live Nation against the government, which calls the concert giant an illegal monopoly and wants to break it up. The Department of Justice, along with dozens of states states sued Live Nation in 2024 on the heels of the Taylor Swift eras tour debacle in which fans who tried to buy tickets were met with website meltdowns and absurdly high prices of more than $1,000. For critics of Live Nation, it was a crystal clear example of how its dominance over the live entertainment industry has stifled competition and harms consumers. The US Government, if it gets its way, wants to split up Live Nation and Ticketmaster, which merged in 2010 and brought together the largest concert promoter with the largest ticketing service. The DOJ argues that Live Nation leverages its market power to bul venues into signing exclusive agreements with Ticketmaster. And if they don't agree, they steer major artists from holding shows at those venues. In response, Live Nation says that the government does not have any evidence it pressures venues into signing Ticketmaster deals. And furthermore, it faces far more competition than the DOJ describes. So, Toby, I don't think it's a stretch to say that Live Nation has already lost in the court of public opinion, but whether it loses in an antitrust court is another matter entirely.

Toby Howell (10:15)

Right, let's dive into the DOJ's claim here a little bit deeper and get into the numbers. The DOJ says that live nation controls 65% of the concert promotion market, 87% of the concert ticketing market. That goes along with operating 265 venues. They manage 400 artists. So they are. The DOJ is calling that mutually reinforcing monopolies. Live Nation's defense is, hey, you're actually excluding sporting event ticketing, which encompasses a lot of venues as well. So our true market share is closer to 40% if we go back in the history of this merger. The DOJ did allow it back in 2010 by saying, hey, you can't tie your services together. You can't retaliate against venues switching ticketing providers. You've now done both those things, which is why we're coming after you.

Neal Freyman (11:04)

And one specific example that's going to come up, at least in the first days of this trial, the government is going to present this example as a way of Ticketmaster and Live Nation colluding concerns, the Barclays center contracts. The Barclays center is down in Brooklyn. That's where the Brooklyn Nets Play. And in 2021, Barclays switched from Ticketmaster Geek as their exclusive ticketing service. And then according to the government, what? And SeatGeek, what happened was that Live Nation, which owns Ticketmaster, it steered concerts away from the Barclays center because they switched away from Ticketmaster and said, oh, you want Addison Rae, who? No, you can't have it because you switched from Ticketmaster to sea. I just made that up. But that is an artist that I enjoy top of mind. So. So, yeah, I will steer these major artists away from the Barclays center because you don't have Ticketmaster anymore. And so that is one example, one instance of how this antitrust, how this illegal monopoly came to the fore. And so this Barclays center example will be top of mind, at least in the first few days.

Toby Howell (12:07)

And you mentioned the fact that they've already lost in the court of public opinion. Ticketmaster and Live Nation are not popular amongst fans because of the Taylor Swift meltdown, because of all these reasons that they feel like they're driving up the price of tickets, but also the venue. The independent venue business world is very much against this big conglomerate. Steven Parker, who represents the National Independent venue association, said 64% of independent venues reported being unprofitable in 2024. The idea is that they're not competing at all with Ticketmaster. They're actually barely surviving. So when it comes to looking at the competitive landscape, one player is clearly eating a lot of the pie here while the rest are just surviving off crumbs.

Neal Freyman (12:50)

Will be a very interesting witness list too, because basically everybody in the live event industry is going to testify. NBA executives, Dallas Cowboys executive arena operators, and one Kid Rock who's been in the news a lot more than I would expect Kid Rock to be in in 2026. He is very anti Ticketmaster Live Nation tie up and he's going to be testifying alongside all those other executives.

Toby Howell (13:14)

Moving on After Paramount beat out Netflix for Warner Brothers Discovery, it's trying to figure out what to do with its new $110 billion prize. While the deal is expected to close in the third quarter and still needs to be approved by regulators, David Ellison is sketching out his vision for the combined entity. Yesterday, he introduced its new streaming service, Paramount B O plus Max. No, just kidding. That's not what it's called. But Paramount plus and HBO Max will merge into a single platform, with Ellison assuring shareholders that the HBO brand will remain intact. The combined platform will have over 200 million subscribers. It will power a company that expects revenue of $69 billion. Crucially, Ellison says there are no plans to reduce theatrical output, which has been a key fear from the industry. And in fact, he publicly committed to releasing 15 films per studio per year, though there's no word on how many of them will be Minecraft movie sequels. Ellison was also already trying to straddle the line between assuring investors that Paramount made the correct move without appearing overconfident in raising the hackles of regulators. For instance, he is selling the Paramount B plus Max service as a pro competition because it challenges Netflix in the streaming world. Neil Paramount is trying to say all the right things, but there's still a ways to go before this thing gets the sign off from regulators.

Neal Freyman (14:35)

What an odyssey this has been for HBO in the streaming world dates back to 2010, when Time Warner, its parent company, launched HBO Go. Four years later, HBO now came along AT&T, then bought Time Warner in 2018, launched HBO Max in 2020. Three years later, WarnerMedia merged with Discovery after being divested from AT&T. And the new CEO David Zaslav said, okay, I don't like HBO Max anymore. Let's just make it Max. That drew a huge backlash as well. And then last year they reversed it back to HBO Max. So this has been absolute journey for hbo. I think a lot of fans of HBO and those who want it to stay independent and perhaps keep its name will be maybe heartened by David Ellison saying, we want, we know how important the HBO brand is. We are going to protect it. And whatever this larger streaming service is called, it'll be a very prominent sub brand within it and won't be diluted by whatever else Paramount is bringing to the table.

Toby Howell (15:31)

I think it's very funny how David Ellison is on this call with investors yesterday and saying, hey, this is going to compete with Netflix, is going to be this big 200 million plus subscriber base that we can go toe to toe with Netflix. But also you have regulators listening to that and going, oh, if you're so big, then why should we allow you to combine at all? So I think he is trying to play both sides of the fiddle here. I don't even know if that's a saying at all, but straddle the line between appearing confident and not saying that this is actually going to reach a scale that would attract the interest of regulators. I do also just want to talk about how expensive this deal is. Just in the history of leverage buyouts. Netflix, when they were trying to, you know, kind of sully this deal, said that this is the largest proposed leverage buyout in history. 7x is the amount of debt to the ratio between the debt to the revenue that the the proposed merger would create, which is a lot of debt. And some people have been drawing comparisons to the fact that last time that private equity or any of these leveraged buyouts happened. Thinking back to something like KKR buying out Toys R Us in 2005 that had a similar leverage debt ratio that ended up in bankruptcy losing 33,000 workers. If you look at the combined entity, Warner Brothers Discovery has 35,000 employees. Paramount has about 18,000. Usually when you take on this much debt, it does lead to layoffs, which is something that David Ellison is trying to stay away from. But others in the industry are saying, like, this is the most likely scenario here, is that people are going to lose their jobs.

Neal Freyman (17:04)

Yeah, but did Toys R Us have Minecraft probably. They actually had something, they had something along those lines. Yeah, regulators, this is not across the finish line yet. Looks like it'll get a pretty easy pass in Washington. But state attorneys general, especially in California, can challenge the deal on antitrust grounds. They can sue to stop the merger and that could potentially happen. I know we've been focusing on streaming, but I think regulators are going to pay more attention in the monopoly space to the combination of the two movie studios, Paramount and Warner Brothers, because right now there are only five major movie studios that would be combining two of them to just make four. And there are grounds for antitrust action on this front because back in 2022, the Justice Department successfully blocked Penguin Random House from buying Simon and Schuster on the same grounds that you would argue this this combination would would lead to, which is that there's fewer buyers now for creat that back then in 2022, the DOJ said that, well, if Penguin House, Penguin Random House combines with Simon and Schuster, then if I'm an author, I have fewer potential buyers and that leads to my lower compensation. You could say the same thing for directors and writers here if two of the five movie studios do combine. So it looks like this is not across the finish line. I know they want to sign the deal by Q3 and we'll see whatever happens with this new streaming service, whatever it's going to be called.

Toby Howell (18:25)

All right, we're going to take a quick break and come back with Toby's Trends right after this.

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Toby Howell (19:02)

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Try Whoop on for size@join.whoop.com Brew Daily that's join.whoop.com Brew Daily Sweetgreen has turned sour. The salad chain has seen its stock tumbled 75% over the past year. It tried and failed to launch french fries. And it's gone from being the future of lunch to to a poster child of the fall of a very millennial point of time, a long spiral I want to get introspective about on today's edition of Toby's Trends. Last week, sweetgreen reported earnings that set the stock into the bitter red, reporting a same store sales drop of 7.9% last year. Financially, Sweetgreen operates on a knife's edge with a complex supply chain full of organic ingredients. But beyond the bottom line, sweetgreen's demise also reflects a decline of a very specific breed of millennial optimism. The Atlantic wrote an article titled How Sweet Cream Became Millennial Cringe, where author Ellen Cushing notes that the chain was achilly of its era, an era where aspiration in health and productivity became symbolized by a fifteen dollar bowl of salad. Cushing calls it the perfect fuel for grinning drivers of the 2010s were eating your desk lunch at a we work, accompanied by the soundtrack of Hamilton was the norm. Yet culture changes. Hamilton is cringe, we work is bankrupt. And sweetgreen's moment seems to have passed. Neil Younger generations are rarely look kindly upon their immediate predecessors. But the relentless march of time has been especially unkind to millennials that love Sweetgreen. Maybe even more so than the stock market has. The edible embodiment of the 2010s has gone stale.

Neal Freyman (22:10)

I feel personally attacked as a grinning striver who ate many harvest bowls and a WeWork in 2018. But it does seem like that era is ancient history. The bigger question is, did sweetgreen change or did we change? The answer is probably both. Yes. Millennial cringe is on its way up. At the same time, Sweetgreen has, by all accounts, dipped in quality, and its CEO even predicted this. Back in a podcast in 2023, Jonathan Neiman said, Most food companies, as they get bigger, they typically get worse. Scale kills the product. And at the same time, people are complaining that sweetgreen has dipped in quality. Its prices have surged. Back in 2014, a Kale Caesar with chicken was. This is crazy. I can't even believe this. $8.85 this week. In certain locations, it is nearly $15. 1475. That's $2 higher than broader inflation. So at the same time, Sweetgreen has a dip in quality. It's at a huge price spike. People don't feel like they're getting value. And at the same time, maybe there's something to this whole grinning striver millennial cringe being on the way and people just aren't necessarily drawn to this product anymore.

Toby Howell (23:17)

Yeah, they are throwing everything at the wall too. To try to recapture some of that magic, they dropped seed oils, which was kind of part of the Maha movement wellness trend that's been coming to the restaurant space right now. They added protein plates because it, when in doubt, just put protein in everything. That seems to be the strategy right now. They've also talked a big game about robot kitchens in automating the process of building your $15 sad desk lunch. None of that necessarily worked. They just launched wraps the other week. So they. They really are trying everything right now. But the fact that it's no longer 2010, the fact that some people just don't really like salads, no one ever really likes salads that much was probably reduced. The size of their total addressable.

Neal Freyman (24:00)

People are going to come after you.

Toby Howell (24:02)

I know that. Well, I'm just saying that if you want to be a broad appeal, chain salads are harder to sell than maybe cheeseburgers are. They're really big. In pioneering online ordering, they were early to that. That's why you saw so many people munching down on Salads at their weworks. And they really were just a millennial aspiration brand. So, yes, have we changed? Has sweetgreen change? Everything has changed, and sweetgreen is worse off for it. Now let's sprint to the finish with some final headlines. Apple unveiled its cheapest iPhone in years yesterday to kick off the wave of product releases it has coming this week. Now, a cheap iPhone is sort of an oxymoron. The 17e will still run you at least $599, but Apple thinks it will be popular, especially in emerging markets like India, where price point matters more than camera quality or screen size if a cheaper iPhone doesn't tickle your fancy. Apple also unveiled a faster version of its iPad Air. IPads have been hot lately, selling a well through the holidays. And now you have a faster, skinnier version that you'll still probably end up leaving in the seat back pocket of an airplane. Neil this was day one of Apple's push, and it's off to a decent start.

Neal Freyman (25:10)

Yeah, the most exciting thing for me is this new soft pink color for the iPhone. It comes in black, white, and then something called soft pink. And I think it looks nice. I think a lot. The reaction to this was generally positive because there's a lot of cool stuff packed into this iPhone 17 that doesn't cost a whole lot, at least relative to other iPhones. You can get Apple intelligence and, you know, pretty, pretty high quality tech that's stuffed in there. The other thing is the iPad. Yeah, I did not know this, but the iPad lineup was a very strong seller in the holidays. It generated $8.6 billion in the December quarter, up 6.3% from a year earlier. And half of iPad buyers were new to the product. So they're getting new people into the iPad ecosystem now. I have to say, iPad people freak me out. Like, it's so crazy when I walk into somebody's house, they're on their. They're on their couch and they're just like going to town on their iPad. Because that is a complex thing for me. I can't wrap my mind around it. I can barely get through my phone. But there are some people who are absolutely devoted iPad people.

Toby Howell (26:10)

I am getting the iPad it lately. I don't know why. I think it was because I was flying home this weekend and this guy was reading a magazine on his iPad and it was beautiful and it was tactile. He was turning the pages and, I don't need an iPad, but I kind of want one now. So maybe I am becoming, you Know the Apple fanboy that many have accused me of again, but the iPad is calling me right now.

Neal Freyman (26:32)

All right. The year is 2026 and Michael Jordan can't stop three peating. The basketball legend who won back to back to back titles on two different occasions with the Bulls has done it again, this time in an entirely different sport, nascar. After a victory on Sunday, Tyler Redick, who drives for Jordan's Team 23 XI Racing, won the first three races of the season, Daytona, Atlanta and Austin, becoming the first driver in NASCAR history to accomplish the feat of the bar Jordan set. Reddick said, yeah, he reminded me earlier this week that he does things in threes. Meanwhile, Jordan heaped praise on the team and his co owner Danny Hemlin, saying, look, I just put up the money money.

Toby Howell (27:10)

He knows his place. Which is why I was kind of digging through NASCAR's subreddit and people are saying that Jordan is succeeding in NASCAR while maybe failing at his other executive positions that he's had in the NBA with the Charlotte Bobcats, which became the Charlotte Hornets. And people were positing that in most cases goats in their own sports don't turn into good execs in their own sport because in their mind the only way that they can be perfect or to hold people to the standards if they are on on the court themselves. It's why people are pointing to Tom Brady or Peyton Manning coming into broadcasting instead of going into coaching, because they just have this insane sense of perfection that doesn't necessarily translate well into managing a team. Which is why when you come to nascar, Michael Jordan knows his place like he was never a NASCAR driver. So he does put up the money, he brings in the sponsorship dollars, he does the things that you need an owner to do without maybe meddling in the day to day operations of the team. That is kind of why people are saying he's off to a very hot start part. Also, he's just got dang good drivers.

Neal Freyman (28:11)

It's been a great few days for people named Michael Jordan in general because the actor Michael B. Jordan was a surprise winner at the actor awards on Sunday night. He brought home best actor for his role in Sinners, which is a huge surprise and certainly shakes up the Oscar race coming up in a few weeks because Timothee Chalamet was kind of the odds on favorite by far to win best actor for Marty Supreme. But now after this one, Michael B. Jordan is making a strong case of his own. Okay, that is all the time we have. Thanks for starting your morning with us and have a Wonderful Tuesday. It's that time of the month again. Trivia we are hosting our next trivia night in New York one week from today, next Tuesday, March 10th, and we'd love to see you there. Head to the link in the show description to sign up and come meet us in the flesh. If you'd like to reach us, send an email to Morning Brew daily at Morning Broadcom or DM us on Instagram at the Daily Show. Let's roll the credits. And Ayo, some people got some promotions. Emily Milian is our supervising producer. Raymond Lu is our senior producer. Our producer is Olivia Graham, and our associate producer is Olivia Lake. Hair and makeup has the same title. Devin Emery is our president and our shows are production of Morning Brew.

Toby Howell (29:22)

Great show, Danielle. Let's run it back tomorrow. Close your eyes. Exhale. Feel your body relax. And let go of whatever you're carrying today.

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Neal Freyman (29:49)

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