A (2:12)

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B (2:46)

off it's not every day you can say that a Federal Reserve meeting should have been moderated by Andy Cohen, but yesterday's was in his final press conference as Fed Chair Jerome Powell said he will remain a central bank governor for a time to be determined because of President Trump's interference. Powell was not his usual tight lipped self. When discussing what he considers grave threats to the Fed's independence, he said, my concern is really about the series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors. I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors. He's referring to Trump trying to fire Fed official Lisa Cook and the DOJ launching a criminal investigation into his handling of the Fed's building renovations, which was widely seen as a scheme scheme to pressure Powell to lower interest rates. The DOJ ended that probe earlier this month, but Powell said, I've said that I will not leave the board until this investigation is well and truly over with transparency and finality. So what does it mean that Powell is staying on as Fed governor even as he leaves the chair? Well, remember when we talk about the Fed, we're really referring to the Federal Open Markets Committee, a group of 12 Fed leaders that includes the chair, governors and Reserve bank presidents from around the country. Powell's term AS chair ends May 15 this year, but his term as a Governor runs through 2028 and he's not going anywhere.

A (4:10)

It is very funny that we just talked about the Fed story and never actually got to the actual announcement of what they did with interest rates, which is held them steady. But it is overshadowed by all the other stuff, all the other drama going on at the Fed right now. Powell is sticking around. What does that mean for new Fed chair nominee Kevin Warsh, who is coming in to take up the reins? Powell kind of tried to allay some of those concerns, saying I am not going to be able to a shadow Fed chair. He plans to keep a low profile as a governor. He wants to kind of be there to be the steady hand on the committee, but he doesn't want to exert undue influence over the chair, which is what some people may fear. Maybe Trump fears himself because he doesn't like Powell's influence on the Fed right now. But Jerome Powell did try to take a step back and go, listen, I'm the adult in the room, but I'm not by any means going to be the leader of this committee going forward.

B (5:01)

It's a very unusual decision. This does not happen. When the Fed chair leaves, he pieces out usually. And this hasn't happened in the modern era. The last time that a Fed chair stepped down from their position but stayed on the board of Governors was back in 1948 for this one guy, Mariner Eccles, who is sounds like the most Fed chair. Oh, Mariner, the most Fed chair name possible. So he stepped down in 1948, but he remained a governor until 1951. So the two people have done in the last century are Jerome Powell and Mariner Eccles.

A (5:30)

The other reason Jerome Powell might be sticking around is that we are in a very divided Fed right now. Four dissents for this rate cut decision. Only one actually voted to cut rates. That Stephen Mirren, who more aligns with Trump's view of the economy. But three Fed presidents disagreed with the wording of the Federal Open Market Committee's statement. They took issue with the phrases additional adjustments or easing bias, basically saying that we do not foresee any rate cuts coming anytime soon. So we don't agree with even hinting at the fact that more rate cuts to could be coming down the pipeline. So maybe that's another reason that Jerome Powell sticking around is that he knows that right now the Fed is the most divided it's been in a long time. Usually the Fed votes in the lockstep with each other, but given all the supply shocks that are coming into the economy, the Iranian war coming out of COVID it has become a difficult policy environment to say the least.

B (6:21)

Yeah, inflation last month surged at its biggest pace in nearly four years. And then this morning, don't look at the oil chart because oil is going crazy. It surged past 125 bucks this morning, the highest level in four years. Years. And you know, we're worried about that. But also if you are on the Federal Open Market, Federal Reserve, Open Market Committee, or you're Kevin Walsh looking at this and you're seeing oil go past 125, you're saying, how could I possibly think about a rate cut? Because energy prices kind of trickle through the entire economy. So inflation's bad, unemployment is going trickling up. So the Fed is just staying put for now.

A (6:53)

It was kind of sad though. Jerome Powell left the podium for the last time. He got a big applause and he goes, I won't see you next time. We're not going to see any Jerome Powell press conference anymore. It's going to be a new era for Morning Brew Daily as well. Moving on. The Kentucky Derby is known as the fastest two minutes in sports, but yesterday was the fastest two minutes in tech. Four of the Magnificent seven companies reported earnings after the bell, bringing an avalanche of info for traders to digest about the health of companies that collectively make up more than 15% of the S&P 500 total market cap. Alphabet, Amazon, Mehta and Microsoft actually had a solid last month, pushing indexes to all time highs. But the market was on high alert yesterday to see just how much money the quartet is blowing on capital expenditures tied to AI and if a payoff is arriving soon. Especially after a report earlier this week that OpenAI has been struggling to meet revenue and user targets. That was the scene yesterday. Now to the major players kicking things off with Alphabet. Alphabet is the guy at the craft stable who seemingly cannot roll a 7. It reported a 22% jump in revenue and an 81% rise in profits. Google is spending a lot on AI, around 185 billion this year, but it makes it back on providing access to computing in storage. Its Cloud division made 63% more money this quarter than the year prior and more is coming down the pipeline. Its cloud backlog rose to $460 billion, up from 240 billion last quarter. Neal, this stock is looking very nice and rose 6% after hours.

B (8:28)

Unfortunately it feels like I'm never at the craps table with this kind of person and I'm certainly not that one. Well, CEO Sundar Pichai said that AI is quote lighting up every part of this business. And you remember when everyone declared Google search dead because OpenAI and ChatGPT we're going to eat its lunch. Well, search revenue was up 19% from the same quarter last year to $60.4 billion in quarterly sales. And then Google also makes chips. Does anyone know that they have these things called Tensor processing units which are Tensor tpu's which compete with Nvidia's gpu's and it has these deals with Anthropic and a bunch of other tech companies to sell these TPU's and they're widely catching on across the industry. So Google has spread its wings across the AI industry and it's doing really, really well.

A (9:11)

Yeah, just introduced a chip customized for inference which is basically just serving you up the answers, not training the models that need all this information. So absolutely right on the Google Search front as well, I saw one tweet saying that how is Google search still growing 19% year over year with nearly monopoly like market share in the category? It does boggle the mind, but apparently people like the Google AI overviews and you still need to know stuff. So Google Search is doing all right.

B (9:39)

Meanwhile, Google owns 14% of Anthropic, and Anthropic is now seeking a valuation of $900 billion. So as that valuation grows, which seems like it's going to astronomically day by day, Google will also benefit.

A (9:51)

All things coming up Google. Microsoft, on the other hand, is a guy at the craps table who can't stop rolling sevens. Going into yesterday, its stock was coming off its worst quarter since 2008, making it the laggard of the Magnificent Seven. So far, the focus was on its Azure cloud division, and while that unit did post a solid 39% gain, that wasn't enough to wow investors who expected about that level. The results also paled in comparison to that of both Google and Amazon, which we'll talk about in a bit, who both had accelerating cloud growth. Neal it seems like Microsoft has just been caught in the doldrums recently as people wonder if software like Word and Excel can survive the AI era.

B (10:29)

Yeah, according to a Jefferies analyst, there's Microsoft is facing two problems, which is why its stock has been caught in the mud. One is the weak adoption of Copilot. Last last quarter, Microsoft said that only about 3% of the company's corporate users were paying for Copilot. And I saw someone online say Copilot is the PT Cruiser of AI. Nobody asked for it yet somehow it's everywhere. And then the other issue is Microsoft Office software business. It has been caught up in the SaaS apocalypse fears that have that have sent a lot of other software shares down. By the fact that OpenAI and especially anthropic are releasing software tools that will allow companies to basically create their own Excel and PowerPoint. That's damaging for Microsoft's business.

A (11:10)

First of all, I love the PT Cruiser because good luck, you could punch your little brother and say PT Cruiser bruiser. But the other thing that had investors kind of yawning was their cloud growth, which is all important to in a lot of these companies. But I said that it grew 39% feels like a lot, but when you see the growth trajectories of both Google's and Amazon Web services. Azure is actually growing at a flat rate. Again, it's still growing 39%, but it is not accelerating like Google Cloud or second derivative Amazon. You're right, exactly. So that is the reason why they're saying, hey, you did well, but this is exactly what we expected out of you, which is why its stock isn't doing so hot. Moving on. Metta is sort of the mirror opposite of Google, I would say. It also sees its capital expenditures for this year increasing to around 145 billion, a 7% jump from what it had previously projected. But it can't point to a clear payoff from that spending. Whereas Google has its cloud division to fall back on, Metta does not, while its standalone Meta Air app is stuck in neutral. The good news is that revenue climbed 33% from a year earlier, which was its faster quarter, which was its fastest quarter for growth since 2021, but its stock still fell about 9%.

B (12:22)

Yeah, Zuck did not offer any assurance to investors whatsoever. He said that Metta doesn't have a, quote, very precise plan for what each AI product will look like. And then he said, I think we have a sense of the shape of where things need to be. And he acknowledged that his answers might be unfulfilling, which, yes, because when you're spending as much as Metta is on AI, maybe want to have or show a concrete plan for what you're building. A bunch of the other companies are showing more of a concrete plan. Meta doesn't really have one.

A (12:49)

He has concepts of a plan deal. But it does look like some of its investment is paying off because it debuted its artificial intelligence model, Muse Spark. That was the first release under its new superintelligence unit when they brought in Alexander Wang for a lot of money. And it does look like they're having another model rollout later this year. It's slowly catching up, and that's what investors do want to see. Even though they are spending a lot of money, their business is also doing very well. We should note that all of these businesses underlying outside of the air race are doing very solid, which can justify some of the spend. But for sure, better is the big question mark. Figure out your strategy. Let's show some results, because you don't have that cloud division that can make up a lot of those losses. And finally, Amazon. Amazon was sort of an amalgamation of everyone else's earnings. It too had accelerating cloud growth, beating analysts expectations and growing at its fastest rate since 2022. And it too made Wall street nervous by exceeding its planned capital expenditures in the first quarter and it too reported strong underlying numbers for its main business of selling you stuff, which has become more profitable thanks to filling orders more efficiently. Feels like all of these earnings could have been an email. Neil. Business is doing well. Cloud up, capex also up, rinse and repeat.

B (14:03)

Going through Amazon's earnings is, is a trip because, you know, 10, 20 years ago, this company just stuff online. Well, actually just books in the 90s and now it does pretty much everything in the world. So you mentioned it has these large AI ambitions. And so as a huge division, but also yes, online stores grew 12%. And then you look at the fact that it has a space arm, acquired a satellite operator, Global Star, for $11 billion. So it has this Internet satellite business. This is the company that previously used to sell books, mind you. And then finally you're still going down the earnings report and you're like, oh, Project Hail Mary. Yeah, they made Project Hail Mary, which also earned $615 million in global ticket sales at the box office. So it's like, what does this company not do? At the end of the day, investors don't care about the online sales. They don't care about Project Hail Mary. They don't really care about the space race either. It all comes down to us and AI.

A (14:55)

Amazon is also moving up its prime day sale, if that's something that you care about. If you were looking for some toilet paper, they are. It's going to take place in June. This year is used to take place in July. So in case that is something that you know you care about, which honestly a lot of people use Amazon, that is probably what they care about. That's something to mark on your calendars. All right, we're going to take a quick break and come back with Neil's numbers right after this. Neal, I've got something pretty big on the Verizon.

B (15:27)

You mean Horizon?

A (15:28)

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B (15:59)

That's great. Have you thought about taking a fresh look at your finances as well?

A (16:03)

Will that make me more dapper?

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A (16:59)

Learn more and get started at poly.com/brew that's poly.com/brew welcome to Neil's Numbers, the

B (17:07)

segment where I share three stats in the week's news that will feel as refreshing as the first sip of a Miller Light. For my first number, Movie ticket prices have hit a previously unthinkable milestone. $50 for one ticket. According to the Wall Street Journal, Regal Cinemas was charging 50 bucks for an opening night seat to Dune Part 3 in December in 70 millimeter IMAX, and it scared off absolutely nobody. They were gone in minutes. It shows how cinemas have learned a thing or two from airlines segmenting customers into first class and economy and squeezing as much profit as they can out of first class. Overall, prices for movie tickets have been increasing in line with inflation these days. According to the Journal, adults seeing a movie on a regular screen pay an average of 1275. But for other people, the kind who memorize which font Wes Anderson uses in all his films, it's Futura who are willing to pay much more for bigger screens with better sound. 17% of movie tickets sold last year were for premium format theaters like IMAX, up from 13% in 2021. And those tickets cost $18 on average, but can reach 30 and now even 50 in major cities like L A and New York. Toby, would you pay $50 to see Dune Part 3 on opening night in 70 millimeter IMAX?

A (18:15)

Quite simply, yes. So I think that this strategy is paying off for these movie theaters because that sounds like an experience. I mean that is what they are selling you, that you go to the movies now. It's not just something you can do at home in your couch. It is a big ordeal. You are willing to pay upwards of $50 for it. It does sound crazy to say the movie industry is moving in this direction because they are actually selling less tickets than before the pandemic. About a third less than before the pandemic. But revenues have come back to be on a par with pre pandemic and that is because they're making more money per patron. Part of that also comes to concessions per visit. The average AMC Customer now spends $9 on concession per visit compared to $5 pre pandemic. And even 9. You can't even get a hot dog for $9. Which why did I say hot dog? Who eats a hot dog at the movie theaters? But it shows how they're squeezing more money out of each individual person coming to the movies.

B (19:10)

For my next number. You're never going to believe this, but most traders on the prediction site Polymarket are losing money and the only ones who made money appear to be automated. A Bloomberg analysis of Polymarket Wallet since the beginning of 2025 found that over 100,000 accounts lost over $1,000. Nearly twice the number that made at least that much. In a separate study by University of Toronto business school professor found that 69% of traders on Polymarket lost money. There's no house on prediction markets, so every dollar lost is a dollar gained by other traders. And those traders seem to be bots, high frequency automated traders that have long been deployed in other financial markets. Bloomberg found that these bots have made a profit of $1 on Polymarket, mostly driven by a group of 823 users that have each made over $100,000. Toby one of the main promises of prediction markets was that they'd be fairer to the everyday trader because there is no house stacking the odds against you. It's just mono a mano. May the best predictor win, but in reality, just like on Wall street, just like in the casino, the average Joe and Jane is getting toasted by the sophisticated pros. Tldr don't leave your day job to trade on Polymarket.

A (20:17)

It is fascinating that the reason that the bots outperformed humans was not because they were better at actually predicting the out outcomes of events. They really just got into markets earlier in that better prices. Humans and retail traders actually do pick the right outcome more frequently. They're just coming in at really bad prices. The issue too with prediction markets is that they're a zero sum game. You either win the bet or you lose the bet. Compared to the stock market, which you reference, companies very rarely go to absolute zero. So the money that you can possibly lose in the stock market is less than what you can lose in prediction.

B (20:50)

So why have I invested in all the ones that have gone to zero?

A (20:53)

I know that's I said most companies don't go to zero, but some companies do.

B (20:57)

For my final number, people are having trouble falling asleep and counting sheep just ain't cutting it anymore. Enter sleep aids A new federal study released yesterday found that almost 13% of US adults rely on medication, supplements or marijuana to help them sleep. Nearly 6% used over the counter medication, almost 5% took prescription drugs, and about 4% took marijuana or CBD products and demographics matter to Women are more likely than men to use sleep aids, which supports other research that shows women feel like they need more sleep than men. In a small study of 32 college students sleep even when women get more sleep than men at a similar quality, they reported higher levels of sleepiness, fatigue, anxiety and stress. And speaking of college students, this is another group that disproportionately relies on sleep aids. A recent survey of Williams College students by the school's newspaper found that 31% of students enrolled there use medication, supplements or substances to fall asleep. The reason for all this is that people know sleep is important to their health, but they're not getting enough of it. About one third of Americans get less than the recommended seven hours of sleep a night, Bloomberg reported, spurring a huge boom in a sleep aid industry that clearly has more room to grow. What I'll say is, have you tried taking off your socks? Usually does a trick.

A (22:07)

I mean, I get it. I am doing all sorts of things to try to get good sleep. Mouth tape, deep breathing, not eating close to bedtime. So totally understand. But it is tough, especially with something like cannabis, which helps you fall asleep quicker. In the short term, maybe, but over time they actually, it actually appears to disrupt sleep patterns, according to researchers. You also mentioned a difference between men and women. There's also a difference between old and young. Prescriptions are more popular with people as they get older, but cannabis is more popular with younger adults, or CBD products are more popular with younger adults. So there is a male female split, but also a demographic age split as well.

B (22:45)

Okay, let's sprint to the finish with some final headlines. Uber wants you to call a ride to your hotel, and while you're on the app, book a room at the hotel itself. At its big product launch event yesterday, Uber said it was adding hotel bookings to its flagship app through a partnership with Expedia, adding yet another service and its quest to become America's first all in one super app. This could make a lot of sense given Uber's strong position among travelers. The company says that about 15% of its ride hailing gross bookings happen to or from the airport, while over 1.5 billion trips took place outside a riders hometown last year. It could also juice its paid uber one program since those members get 10% back from their hotel bookings to apply to future rides or Uber Eats orders. Toby, the one thing I am concerned about is how this will impact my Uber rating. Not necessarily the neatest hotel guests.

A (23:33)

Yeah, well we know you take your socks off when you sleep and just leave them everywhere. A fascinating wrinkle to this negotiation with Expedia is that Dara Khosrowshahi, the current CEO of Uber, had the same role at Expedia for a decade. So this partnership with Expedia, how do you go about negotiating against your former company? Apparently he recused himself from negotiations related to the partnership. I do think it makes sense though because a lot of people are booking their hotels through an app. About half of all travelers do that. I mean, I can't remember the last time I went to a hotel's website to book a hotel. You do it on hotels tonight or hotels.com Expedia, all of these travel apps. So I think Uber is saying we're an app to we're a travel app. Why not? Why don't you just do it while you're within the confines of our, you know, ecosystem? It makes sense. I don't know if I want to have like my Uber eats and my drive and my hotel all in the same super app, but Uber certainly wants me to do that. Moving on Live is dying. Saudi Arabia's public investment fund, the pif, is pulling the plug on funding the upstart golf league. After plowing three years in billions of dollars into trying to take on the PGA Tour, the PIF is telling players and staff that it won't fund the league past this season, sending LIVE to hunt for outside investors to keep the lights on. It also leaves a roster of high profile athletes in alerts, including major winners Jon rahm and Bryson DeChambeau. Neil the writing was definitely on the wall when the Wall Street Journal reported that its Saudi backers were rethinking its spending strategy to focus on more domestic projects. Now it's official and this league is on life support.

B (25:08)

One person on next summed this up. Well, look, was live golf successful? No. Did it bolster the reputations of everybody involved? Also? No. But was it fun? Once again, no. So I think as golf fans, both you and me are are happy that live is ending, looks like, and that some of these best golfers will come back to the PGA Tour to play against each other majors. But across the entire season, the big question is what is the PGA Tour going to do to these defectors and these people who sometimes trash the PGA Tour on their way out to live? They're going to want to come back, but it's just how you manage them coming back and what sort of penalties they need to pay is a big question mark going forward. Finally, huge news, my fellow American theater kids. The Evita revival, starring Rachel Ziegler, perhaps the buzziest production anywhere the past few years, is coming to New York. The Andrew Lloyd Weber and Tim Rice show about Eva Perron, directed by Jamie Lloyd, will hit Broadway the spring of 2027. But what's going to happen to that balcony scene that had everyone talking in London? Ziegler steps outside on the balcony to sing the show's most famous song, don't Cry for Me, Argentina, to the unsuspecting London public. Unfortunately, it doesn't look like that's going to happen in Times Square because of gun violence. Andrew Lloyd Weber said, the one thing that absolutely cannot happen is what we did in London on the balcony. We can't do that in New York. I mean, something awful could happen. We have gun laws in Britain.

A (26:28)

I mean, my group chats have been lighting up about the balcony. SC on Evita. Rachel Ziegler's Evita, obviously. But it is interesting when I thought about if I went to a production of Evita and she walks outside during the key song to sing to passerbys. Yeah, I'd be kind of mad, actually. And some reviewers agreed with me. Guardians Mark Lawson referred to it as a gimmick which portrayed those who purchase expensive tickets to see the show. I'm fully on board with that. Do not leave to go sing to people outside.

B (26:56)

Show it in the theater on a screen.

A (26:58)

Still, that is literally the point of going to a live theater, is that you don't have to watch watch it on a screen. So coming to New York City, I'm glad that Rachel Ziegler is staying indoors this time, not going outside and serenading people on a balcony.

B (27:11)

I mean, Jamie Lloyd is who's directing this, is known for shaking things up and sometimes people say he's gimmicky. But I saw the show Last year Sunset Boulevard where the one of the main characters leave every single night. He leave for one of the songs. He leaves the theater, goes outside into Times Square and they've created this like choreography where he's walking around, they have police around him and he's walking around singing in literal Times Square people are just. Tourists are just milling around and he's singing among them and they projected back into the theater and it's pretty cool.

A (27:40)

Call me old fashioned. I want my theater folks staying in the theater when I paid a ticket to watch them do just that.

B (27:45)

Toby, I'll not a Jamie Lloyd fan. Okay. That is all the time we have. Thanks for starting your morning with us and have a wonderful Thursday. Toby, I think you have a shout out you want to give.

A (27:53)

I do. It is my grandmother's birthday. We call her Grandmommy. She is one of the biggest fans of the show in the world. So happy birthday to grandmammy. I love you so much.

B (28:02)

Much. If you'd like to reach us, send an email to Morning Brew daily at Morning Broadcom or DM us on Instagram at Ambie Daily Show. Let's roll the credits. Emily Milian is our supervising producer. Raymond Lu is our senior producer. Our producer is Olivia Graham and our associate producer is Olivia Lake. Ed Lewis is our celeb shot technical director. Hair and makeup would love some of that big tech money going their way. Devin Emery is our president and our show is a production of Morning Brew.

A (28:24)

Great show, Daniel. Let's run it back tomorrow. You can't reason with the sun. Trust us, we've tried this summer. It's time to put that angry ball of fire on mute. Columbia's Omnishade technology is engineered to protect you from the sun's harsh rays that can burn and damage your skin. The sun is relentless, but so is our gear. Level up your summer@columbia.com to spend more time outside and less time slathering on aloe lotion. You're welcome. Columbia engineered for whatever.