Tariff Warnings Dominate Earnings & The Spring Housing Market Slumps

Summary

Morning Brew Daily: Tariff Warnings Dominate Earnings & The Spring Housing Market Slumps

Released on April 25, 2025

Hosts: Neal Freyman and Kyle Hagee

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1. Introduction

In this episode of Morning Brew Daily, hosts Neal Freyman and Kyle Hagee delve into the pressing economic concerns impacting businesses and consumers alike. With an insightful discussion on how tariff uncertainties are casting shadows over corporate earnings and an unexpected downturn in the spring housing market, the duo provides listeners with a comprehensive analysis of the current financial landscape.

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2. Tariff Warnings Dominate Corporate Earnings

Overview: The episode kicks off with a significant revelation from the Financial Times: tariffs have become a predominant concern among CEOs, affecting over 90% of earnings calls on a particularly impactful Tuesday. Neal Freyman highlights that the influence of tariffs spans across various sectors, from beverage companies like Pepsi to technology giants such as Verizon and AT&T.

Key Points:

• Widespread Impact: Tariff uncertainties are not confined to a single industry. Companies across diverse sectors, including manufacturing, energy, and telecommunications, are feeling the pinch.

• Reduced Profit Guidance: Notable companies have adjusted their financial forecasts downward. For instance, Pepsi lowered its profit guidance, and American Airlines suspended its 2025 forecast due to unpredictable passenger numbers.

• Operational Challenges: Boeing is forced to seek new buyers for its planes as Chinese demand wanes, and NextEra Energy anticipates increased costs for gas-fired power generators amidst surging electricity demand.

Notable Quotes:

• Neal Freyman at [03:02]: "CEOs say they're desperate for clarity from Washington about trade policy because they need to plan for the future and they just can't right now."

• Kyle Hagee at [04:30]: "United Airlines took this very unusual step where they offered dual earning forecasts. They said, if it continues down this recession path, here's what our earnings might be, and if things can stabilize, here's what our earnings might be."

Analysis: The hosts emphasize the pervasive anxiety among corporate leaders regarding the unpredictability of trade policies. This uncertainty hampers strategic planning and dampens investor confidence, leading to conservative financial projections and cautious business strategies.

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3. Spring Housing Market Slump

Overview: Transitioning from corporate earnings, Freyman and Hagee examine the unexpected slump in the spring housing market. Contrary to seasonal trends where spring typically marks a surge in home buying, March saw a 5.9% decline in U.S. existing home sales—the largest drop since November 2022 and the weakest March since 2009.

Key Points:

• Affordability Issues: With mortgage rates hovering near 7% and rising home prices, affordability remains a significant barrier for potential buyers.

• Economic Uncertainty: Tariff-induced economic fears and recession concerns are deterring consumers from making substantial investments like home purchases. A Fannie Mae survey from March revealed that one-third of consumers fear job loss in the next year, further stifling buying intent.

• Increased Inventory and Seller Concessions: Although housing inventory has slightly improved, rising availability hasn't translated into higher sales. Sellers are increasingly offering concessions—44% of purchases in the first quarter included seller concessions, with markets like Seattle seeing up to 71%.

Notable Quotes:

• Neal Freyman at [07:07]: "Home sales for March came in yesterday and they were downright ugly, recording their biggest monthly decline in more than two years."

• Kyle Hagee at [08:28]: "A real estate brokerage, Redfin, did this survey that I thought was really interesting. They found that about 25% of respondents overall were canceling plans outright to make a major purchase due to the tariffs."

Analysis: The hosts discuss how the combination of high mortgage rates, persistent economic uncertainty, and increased housing inventory is contributing to the slowdown in the housing market. Despite more homes being available, buyers remain hesitant, leading to a shift in the market dynamics favoring buyers over sellers.

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4. Stocks of the Week: Alphabet and Philip Morris International

Alphabet Inc. (Google):

Overview: Neal and Kyle spotlight Alphabet Inc., the parent company of Google, as a standout performer in the stock market despite looming challenges. Recently, Alphabet reported robust earnings that exceeded expectations, leading to a 5% surge in share prices.

Key Points:

• Strong Financial Performance: Alphabet's search revenue increased by nearly 10% to $51 billion. The cloud computing division also saw a significant 28% growth, driven by the rising demand for AI integration.

• Shareholder-Friendly Initiatives: The company announced a 5% boost in its quarterly dividend and authorized an additional $70 billion in share buybacks.

• Diverse Business Portfolio: Kyle underscores Alphabet's diversified revenue streams, including YouTube advertising, Google Cloud, and various "other bets" like Waymo (self-driving cars) and life sciences units.

Notable Quotes:

• Kyle Hagee at [12:32]: "YouTube advertising revenue $8.93 billion in the quarter. Google Cloud revenue $12.26 billion in the quarter."

• Neal Freyman at [13:33]: "Alphabet showed that advertising is staying strong. We don't know what's going to come in the future. So, yeah, Alphabet kicked off big tech earnings in a very positive fashion."

Philip Morris International:

Overview: The second spotlight is on Philip Morris International, whose flagship product, the Zyn nicotine pouch, is driving significant shareholder value. The company's strategic shift towards smokeless products appears to be paying off handsomely.

Key Points:

• Profit Growth: Philip Morris reported a 16% increase in quarterly operating profit to $3.5 billion and a 5.8% rise in revenue to $9.3 billion.

• Zyn Pouch Success: Shipments of Zyn have surged by 53% year-over-year, surpassing 200 million cans. The company projects sales of 800 to 840 million cans in 2025.

• FDA Approval and Domestic Focus: Zyn is the only nicotine pouch brand authorized by the FDA, and its predominantly domestic manufacturing shields Philip Morris from many global trade uncertainties impacting other sectors.

Notable Quotes:

• Kyle Hagee at [17:31]: "Zyn is the only nicotine pouch brand authorized by the FDA. What is also interesting is tobacco manufacturing is predominantly domestic. And so they're relatively, compared to the competition, insulated from these tariff and trade uncertainties."

• Neal Freyman at [18:36]: "They're spending $800 million on those plants combined just to make enough to keep up with demand. So I can't say enough about whoever made that deal back in 2022 to buy Zyn should be employee of the month or maybe employee of the decade."

Analysis: Philip Morris's pivot towards innovative, smokeless products like Zyn is evident in its strong financial performance. By focusing on domestic production and securing FDA approval, the company effectively mitigates some of the external economic pressures, ensuring sustained growth and profitability.

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5. Final Headlines

a. Ice Bucket Challenge Makes a Comeback for Mental Health

Overview: The iconic Ice Bucket Challenge resurfaces, this time aimed at raising awareness and funds for mental health issues. Originating from the University of South Carolina, the challenge has quickly gained traction on social media platforms like Instagram Reels and TikTok, attracting participation from celebrities such as Peyton Manning and Carson Daly.

Key Points:

• Purpose and Reception: Unlike its predecessor, which focused on ALS, the new challenge targets mental health. However, it has faced criticism for potentially turning a serious cause into a popularity contest, questioning its effectiveness in truly promoting mental health awareness.

• Fundraising Impact: To date, the sequel has raised approximately $300,000, a fraction of the original campaign's $115 million but still significant for raising awareness.

Notable Quotes:

• Neal Freyman at [24:12]: "The Ice Bucket Challenge raised a ton of money for ALS. That was maybe the biggest thing that happened that year. It raised over $115 million."

Analysis: While the revival of the Ice Bucket Challenge for mental health demonstrates the enduring appeal of viral fundraising campaigns, the hosts ponder its potential to generate meaningful impact beyond social media buzz. The balance between awareness and genuine support remains a delicate one.

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b. Andre Agassi Returns to Sports with Pickleball Debut

Overview: Tennis legend Andre Agassi is making headlines with his surprising return to the sports arena through pickleball. Partnering with top-ranked pickleballer Annalee Waters, Agassi is set to compete in the US Open Pickleball Championships, signaling a potential boost for the rapidly growing sport.

Key Points:

• Strategic Partnership: Annalee Waters brings immense experience with 148 Professional Pickleball Association titles and an impressive young age of 18, making her a formidable partner alongside Agassi.

• Market Impact: Agassi's participation is expected to draw significant attention to pickleball, potentially attracting new audiences and elevating the sport's status in the professional realm.

Notable Quotes:

• Kyle Hagee at [26:37]: "Andre Agassi is going to help turn the country's fastest growing sport into one people will actually pay attention to at the pro level."

Analysis: Agassi's foray into pickleball could be a game-changer, leveraging his star power to propel the sport's popularity. The collaboration with a young and successful athlete like Waters highlights a strategic move to blend experience with emerging talent.

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Conclusion

Neal Freyman and Kyle Hagee expertly navigate through the complexities of tariff-induced economic uncertainties and unforeseen shifts in the housing market, providing listeners with a nuanced understanding of these critical issues. Their analysis of standout stocks like Alphabet and Philip Morris International offers valuable insights into market resilience and strategic pivots amidst challenging times. The episode concludes with entertaining yet thought-provoking headlines, leaving listeners informed and engaged as they head into the weekend.

Notable Closing Remarks:

• Neal Freyman at [27:37]: "Grabbing a quick meal is easy. It's getting a quick meal that's also good for you. That's tricky."

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Credits:

• Executive Producer: Emily Milliron
• Producer: Raymond Liu
• Associate Producers: Olivia Graham, Olivia Lake Uchenova
• Technical Director: OGU
• President: Devin Emery
• Production Company: Morning Brew

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For more updates and insights, subscribe to Morning Brew Daily on your preferred podcast platform or watch on YouTube.

Transcript

[Discover]

It's smart to always have a few financial goals and a really smart one. You can set earning cash back on what you buy every day. And with Discover, you can get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show see [e-mail] credit card.

[Neal Freyman]

Good morning, Brew Daily Show. I'm Neal Freyman.

[Kyle Hagee]

And I'm Kyle Hagee.

[Neal Freyman]

Today, why every CEO is mentioning the T wig word on earnings calls and.

[Kyle Hagee]

How the infamous Zyn nicotine pouches are driving shareholder value. Today is Friday, April 25th. Let's ride.

[Neal Freyman]

Big thanks to Kyle for stepping in while Toby runs the London Marathon.

[Kyle Hagee]

Yes. Great to be here, Neil. And I run no marathon, so I'm always available when Toby's doing his athletic pursuits.

[Neal Freyman]

All right, a big shake up in the global economy rankings. There is a new fourth largest economy in the world, according to new data from the imf. After Japan slipped from the current four spot to fifth, which country took its place? It's not a country at all, but a state. California is now the world's fourth biggest economy with a GDP of $4.1 trillion, topping Japan's 4.02 trillion. California is now just behind Germany for the bronze medal, while the United States and China come in at 1 and 2. California is indeed an economic juggernaut, serving as a global hub for the tech industry, entertainment, manufacturing, and agricult culture. Kyle, this is definitely cause for a new Red Hot Chili Peppers album.

[Kyle Hagee]

I mean, California, massive economy. Also beautiful state. Like you have money and you look good. Like, come on, California. That's too much. Neil, I'm going to quiz you though, because if people come to you for news.

[Neal Freyman]

Yeah.

[Kyle Hagee]

Can you name the other top four in the five largest state economies?

[Neal Freyman]

Number one is California. Let's just go. The next biggest state, Texas.

[Kyle Hagee]

Boom.

[Neal Freyman]

I think New York is going to be next.

[Kyle Hagee]

Boom.

[Neal Freyman]

And then. Okay. Oh, God. Pressure's on. I'm deciding between Florida and Illinois for this next one. I think you know, Illinois doesn't have a whole lot out of Chicago, so I will go with Florida as the final one.

[Kyle Hagee]

Neal is five for five and you can now trust him on this podcast. Let's go, Minnesota. Though I do have to call them out. My home state only has half a trillion in gdp, so we're going to have to pump those numbers up. And now a word from our sponsor, Planet Oat. Neal, you know that one hoodie that just softer than all the others?

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[Neal Freyman]

Parade of more than 120 public company CEOs hopped on earnings calls and one by one toss their financial outlooks in the shredder because of tariff uncertainty. Let's just pick one day this week. Tuesday. In earnings calls that day, tariffs were cited on more than 90% of them, while the word recession was mentioned in 44% of calls, compared to 3% for the fourth quarter of 2024, the Financial Times found. And it's not just one sector, one kind of company sounding the alarm. The trade war is touching virtually every part of the economy. It doesn't matter if you sell soda or wireless plants, make airplanes, drill oil, oil or power electric grids. Yesterday, Pepsi lowered its profit guidance due to tariff uncertainty. American airlines suspended its 2025 forecast because it has no idea how many people will fly this year. Norfolk Southern, a railroad, said tariffs could reduce shipments of containers. Boeing said it would need to find new buyers of its planes because China can't buy them anymore. Nextera Energy, which owns the largest power utility in the country, said tariffs would raise the cost of gas fired power generators even as electricity demand surges. Verizon and AT&T said higher prices are coming for phones and wireless routers, and that was only from the past 72 hours. Overall, CEOs say they're desperate for clarity from Washington about trade policy because they need to plan for the future and they just can't right now. As American Airlines boss said yesterday, we don't know what's going to happen.

[Kyle Hagee]

Yeah, and you mentioned a lot of the companies. The one that you didn't mention was 3M, who also said that Minnesota, Minnesota to bring them up, that tariffs are going to be a headwind this year, which may raise the price of Post IT notes. So they're coming for our Post IT notes as well. And there's also this demand challenge on the other side because there's volatility in the stock market. We have maybe tariffs increasing the cost of goods, fluctuation, interest rates. So there's a consumer spending challenge also that's affecting some of these companies. I thought the travel sector was really interesting. And United Airlines took this very unusual step where they offered dual earning forecasts. They said, if it kind of continues down this recession path, here's what our earnings might be, and if things can stabilize, here's what our earnings might be, which is very rare for a company to do. The Southwest CEO, Bob Jordan said that the drop in domestic leisure bookings are the worst he's ever seen outside of COVID which basically brought travel to a halt. So this is affecting every industry. I thought the travel industry was an interesting one.

[Neal Freyman]

Yeah, it was interesting that United offered two earnings projections because that just doesn't happen. They were like, recession scenario, we're doing this regular scenario. We're doing this. Of course, companies are cutting their profit guidance there. They are scrapping their outlook. And they're also warning of higher prices. That's another theme to this earnings week. So far, they're saying, look, we are being hit with hundreds of millions of dollars in added costs, and simply, we don't want to pay that. Let's go back to American Airlines CEO. He said, aircraft costs too much already. I don't want to pay any more for aircraft. Certainly this is not something we would intend to absorb. And I'll tell you, it's not something that I would expect customers to welcome. So we've got to work on this. Verizon CEO, if the tariff is going to be as high as they say on the handsets, we are not planning to cover that in our work. That is not just going to be possible. So here you have CEOs warning of higher prices because they're just putting their foot in the sand and saying, we're not going to, you know, absorb all of these hundreds of millions of dollars of extra costs because of higher tariffs.

[Kyle Hagee]

Yeah. One, I don't know who still uses handsets, so we got to find those.

[Neal Freyman]

I think that's just a fancy word for phone.

[Kyle Hagee]

And then you and analysts are also saying, just like the uncertainty around where these policies are going in the future is causing a lot of concern. You know, TCW's Purdy said the chief executives were stuck in a kind of suspended animation, basically like, we don't know if we're going to wake up in six months into an entirely new world order or if this is going to feel like a bad fever dream and things get to normal. Until there's a lot of certainty around policy, it's going to be continued tariff talk for these companies.

[Neal Freyman]

Okay, let's move on. Spring has sprung, bringing more sunshine in the evenings, dudes showing more thighs, and more Americans buying a new home. Well, scratch that last one. Home sales for March came in yesterday and they were downright ugly, recording their biggest monthly decline in more than two years. U.S. existing home sales dropped 5.9% last month to a seasonally adjusted rate of 4.02 million, far below expectations. That's the biggest month over month decline since November of 2022 and the weakest March since 2009, which was an infamously bad period for the Hous housing market. It's an ominous sign for housing activity in 2025 because the spring is typically the busiest season of the year for buying a home. Families want to settle in over the summer before kids restart school in the fall. And even more disappointing, this year was supposed to be a rebound year for the housing market after 2023 and 2024 were complete duds. But it just can't catch a break. Affordability remains a key hurdle. Mortgage rates remain super high near 7%, while home prices keep on inching up. Meanwhile, the economic uncertainty unleashed by the tariffs has Americans thinking twice about whether now is the best time to drop a wad of cash for a down payment. Kyle, for the past three years, the housing market has been frozen over. And now when it was finally supposed to begin to thaw, another frost comes along.

[Kyle Hagee]

Yeah, I mean, uncertainty for on the consumer side is never good. Obviously for the housing market, there's this general fear that a recession might be coming. I've stopped buying my Starbucks personally, so Lord knows I would pause on a house. A real estate brokerage, Redfin, did this survey that I thought was really interesting. They found that about 25% of respondents overall were canceling plans outright to make a major purchase due to the tariffs. And nearly four in 10 respondents said the tariff policy was making them less likely. So you have people canceling plans outright and people saying I'm less likely to do it. Even before the tariff announcement, consumer confidence was fading because of this recession fears. Survey by Fannie Mae in March said that their people concerned about losing their jobs in the next 12 months hit a record high. It was about one third of consumers and then with stock market volatility, a lot of people. How do you pay for a home? You might sell some of your stock or sell some of your Bitcoin. About 16% of homebuyers use financial assets to do a down payment. When your stocks are down, you don't want to sell. So that is also putting pressure on this housing market. And again, there's a lot of uncertainty of when this will clear up.

[Neal Freyman]

Yeah. So one headwind that is not facing the housing market anymore is inventory. Right. Maybe over the past few years we've heard there's just no homes available for sale and that's driving up prices and leading to this frozen over housing market that we're seeing. Inventory is just so low, no one's leaving their houses. I can't even find a single house to buy because they just don't exist. That is improving that situation. Nationally, there were 1.3 million homes for sale or under contract at the end of March, which was up 8% from February and up 20% from March 2024. So there certainly are more choices for buyers and yet they're still balking at the high prices.

[Kyle Hagee]

And it's interesting too, because I think sellers are now in some markets having to make more concessions because buyers are so scared. They said that about 44% of purchases in the first quarter included a seller concession, according to Redfin. And in some markets, such as Seattle, it was 71% of sellers were offering concessions. So stay strong and maybe sellers will just, you know, do pay some of your closing costs, fix the roof for you, throw in a hot tub, I don't know. But they're going to have to bring more to the table if they want a buyer to jump in.

[Neal Freyman]

Yeah. In some senses, this power dynamic between buyer and seller has shifted more to the buyer and you're starting to see home prices come down, actually negative in certain markets in Florida, in Texas, where a lot more inventory is coming. So, yeah, not a good sign for the full year housing market because this is really the busy season. This is their holiday shopping season, the spring, March, April, May. And it just got off to a very slow start. Okay, now let's go to stock of the week, Dog of the week, the segment where Kyle and I pick one stock that was selected one overall and another that slipped to the second round surprise. Today we're going to hand out two stocks of the week because, well, we definitely covered just a lot of dogs just now in the first half of the show and it's Friday, so who needs more gloomy Our first stock of the week is Alphabet. Surprise, right? After all, Google's parent company was found to be a monopoly twice. It's facing an existential threat to its search business with the rise of chat, CBT and you know about all the economic uncertainty in the world. But yesterday afternoon it reported strong earnings that showed all was well in the Googleplex and shares shot up 5%. After Hours CEO Sundar Pichai said that Search, the company's cash cow, was humming along and that integrations like AI overviews drove stronger engagement. Search revenue increased nearly 10% to $51 billion, topping expectations. Its fast growing cloud computing division continued to grow fast with sales up 28% thanks to all these other companies tapping Google's data centers for their own AI ambitions. It also helped that Google launched some shareholder friendly plans like boosting its quarterly dividend by 5% and authorizing an additional $70 billion in share buybacks. Kyle Google was the first big tech company to report earnings and investors were bracing for some bad news. They got a pleasant surprise.

[Kyle Hagee]

Yeah, it was really good news for Alphabet and I think it's nice to step back and realize just how diverse this business is, you know, which makes it, they got that whole Alphabet from A to Z. So YouTube advertising revenue 8.93 billion in the quarter. Google Cloud revenue 12.26 billion in the quarter. You mentioned search did almost 51 billion and then they're so big they have this quote unquote other bets segment which includes Waymo, the self driving car and some life science units did $450 million. So they have a lot going right in terms of all the different business lines they have and I feel like they're kind of locking in because of some of this other news. They've turned dark mode on on their, on the Chrome browser. They've made their largest acquisition recently in Wiz for $32 billion. And they're now telling some REM it's time to get back to the office, lock in, collaborate, like let's keep this momentum going. So I think finally some good news for Alphabet which is really nice to hear for them.

[Neal Freyman]

Let's talk about some warning signs though because you're too cheery right now.

[Kyle Hagee]

It's too told us it was Friday.

[Neal Freyman]

So happy but you said they're a diversified business. But a lot of that does depend on advertising and big tech companies are are bracing for an advertising downturn because so much of those advertising dollars are spent by Chinese e commerce companies like T she and Facebook. Metta gets $10 billion in advertising alone from those two companies, who knows what tariffs are going to do to the advertising market. You have all these advertising analysts come out and say, we expected growth this year. Now we're expecting a decline. Which is why a lot of investors and analysts were looking at Alphabet's report saying, well, we don't know what's going to, what they're going to report with its search ads because it could go down. We're expecting, you know, a downturn in the overall ad market. But now I'm, you know, playing the angel on my shoulder. Alphabet showed that, you know, advertising is staying strong. We don't know what's going to come in the future. So, yeah, Alphabet kicked off big tech earnings in a very positive fashion. We'll see what happens with Metta, Amazon, Apple in the next few weeks. Up next, an app that can help you cheat on everything. If you're planning to do business abroad, you've got to make sure your finances are in order. That's where Wise Business comes in. Wise Business is the account for doing business in other currencies.

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[Kyle Hagee]

Back with our next stock of the week. And Neil, it's officially a Zinfandel spring because my stock of the week is Philip Morris International, the maker of the infamous Zinn nicotine pouch. Now, the company announced Wednesday that it expects a bigger adjusted profit profit this year. Its stock is up nearly 5% over the past five days. And let's talk numbers. For the first three months of the year, the company recorded a quarterly operating profit of $3.5 billion, up 16% from a year year. And revenue revenue rose 5.8% to 9.3 billion. Now, on Zinn specifically, shipments of Zinn topped 200 million cans, which is 53% higher year over year. And the company now expects to sell 800 to 840 million cans in 2025. They also have the FDA stamp of approval. Zinn is the only nicotine pouch brand authorized by the fda. What is also interesting is tobacco manufacturing is predominantly domestic. And so they're relatively, compared to the competition, insulated from these tariff and trade uncertainties. So, Neil, I guess they found out that selling addictive things makes you money.

[Neal Freyman]

It's crazy that Philip Morris, ostensibly a tobacco company, hit its stock at a record high this week in the year 2025. But this acquisition of Sweetest Match in 2022, which originally made Zinn, is looking at one of the, is looking like one of the best, you know, M and A deals in recent memory. This company was making tobacco and needed to move to a more smoke free base in order to, you know, get with the times. It bought this, this company in 2022 that made Zinn and now they, their biggest challenge is making enough Zins to keep up with demand. They're saying we don't even market it. This thing, though, what we're spending money on is increasing production and building huge Zinn factories all over the United States. They're pouring hundreds of millions of dollars into a new plant in Kentucky, another plant in Denver. These are, they're spending $800 million on those plants combined just to make enough to keep up with demand. So I can't say enough about whoever made that deal back in 2022 to buy Zinn, you know, should be employee of the month or maybe employee of the decade.

[Kyle Hagee]

Give them a raise, Morris. Yeah, I mean, you mentioned they don't spend anything on like, the Zins have kind of gone viral and that's the marketing for them. Like this whole, like take us in and lock in trend has been everywhere. And so they're putting all their money towards production. Neil, if they ever make the Social network too, I think I have a story for you that they need to base it on. So let me break this down. A high school kid named Roy Lee gets accepted to Harvard, which is his dream. He sneaks away on a high school field trip, tries to outrun a cop, gets into some legal trouble, which causes Harvard to rescind his offer. And then other colleges don't want to touch him either. He goes to community college. He locks himself away. He learns to code. He finally transfers to Columbia University where he builds Interview Coder, which is an undetectable application that lets you cheat on leetcode exams, which are basically coding exams big tech offer often uses. He gets an internship with Amazon because of this. Then he gets discovered that he was cheating. It goes viral. He gets suspended from Columbia, the offer pulled from Amazon. Then he says, I'm just going to take the idea for Interview Coder and said, what if the application allowed you to cheat on anything virtual like sales calls or live meetings. He calls this new company Clulee. He goes viral again on X with an over the top ad where he basically uses his app to like get real time information to hit on an older woman he's on a date with. And it is blowing up all over the Internet. So. So, Neil, does this have movie potential? What are we thinking?

[Neal Freyman]

It it does. Let's get Aaron Sorkin on it right now. He is Roy Lee and he has certainly a knack for going viral. Their pit, their pitch here is they're giving you a quote cheating tool for literally everything. And it's very much George Costanza coded because George Costanza says it's not lying if you believe it. Now these guys say it's not cheating if everyone cheats. And so they've built this app to be your assistant wherever you go to answer questions. Many of the use cases are in job interviews where the Cluley is just humming in the background of your computer. It's completely undetectable. And an interviewer asks you questions, it listens in and then tells you exactly what to say and how to respond. Obviously quite a controversial app because they are pitching themselves as helping you cheat. And it gained notoriety because of it helped this guy cheat on his interview. So you can understand why people are like, like maybe we shouldn't do this. But it has gained 80,000 users. It does did just raise around a $5 million. So it is a thing in the real world. Who knows whether what's going to come of it. But it does spark an interesting conversation about what cheating is and what cheating is in 2025 with AI.

[Kyle Hagee]

Yeah, I think, I mean, he's being, I think the company's being intentionally, like cheat on everything is very like incendiary. Like you're like, oh, what, what's going on here? They said, quote, we're being ludicrous and controversial almost intentionally. They said we've just been blowing up the story as much as possible in order to get as much attention and eyes on me. Because I really think that's the only differentiator between winner and losers. And in a post AI world. So they're playing up this cheat on everything angle. But to your point, it is interesting. Like the ad that they showed where he's talking to this woman, it's basically lying. And so this, this idea of like, okay, if you're doing something that's unintentionally or not known to the other person, is that really good? And so it has generated a lot of controversy for that fact.

[Neal Freyman]

And the problem is a lot of these AI startups that have tried to bring AI from ChatGPT, you just typing chat in chatbots to answer your questions into the real world have totally flopped. Humane, which made a pin to be your AI assistant in the real world is not a thing anymore. Rabbit R1 was another little device that was supposed to bring AI into your everyday conversations or your lived life. And that also did not work. So there's a uphill challenge to bring ChatGPT or other AI models from the computer to the, to the actual lived experience of people. So we'll see. I mean, it's kind of interesting the way they talk about cheating in that, you know, they he references calculators, how everyone thought, thought math teachers thought calculators were cheating when they first came around and things like spellcheck. But you know, I don't think, I think this is of a different order. And the biggest problem that they have here as a business is that this thing just takes a long time to spit out answers. That's like the user experience is just not great because say I'm have. Say you're interviewing me and I want to use cluely to answer a question. It takes 10 seconds to hear you and then tell me what to say. So I will literally be staring at.

[Kyle Hagee]

You like, Neil, what's the pause here?

[Neal Freyman]

Yeah, exactly. I'll just be telling, taking my time. So if they can fix those latency issues, maybe it'll be a thing. But either way, Sparks a conversation. And that's all this guy wants to.

[Kyle Hagee]

Do and can confirm we're not using Clulee for this podcast?

[Neal Freyman]

No. Okay, let's sprint to the finish with some final headlines to take you into the weekend. Is that Black Widow by Iggy Azalea coming over the speaker? It's 2014 again, folks, because the Ice Bucket Challenge is back. The viral challenge has emerged from hibernation with a second life dedicated to a new cause. Whereas the first Ice Bucket Challenge was dedicated to raising money for als, this one aims to raise money for mental health issues. It was started back in March by a student at the University of South Carolina who wanted to come up with an event for his mental health awareness club. And it's taken off on Instagram Reels and TikTok, with celebs like Peyton Manning and Carson Daly on the Today show taking part. Ice Bucket Challenge, the sequel has sparked a lot of discussion online, but it hasn't always been supportive.

[Kyle Hagee]

Yeah, I mean, I think the critique of this one is we've already done this challenge, and the point of the original challenge was to simulate what ALS may feel like. This is about mental health. And there's been a critique online, which is basically saying, okay, so you're supposed to tag people to do this. It becomes a popularity contest on the Internet. Well, we've seen how bad this is for mental health. How is this tied to, like, promoting mental health? That being said, it is raising some money. It is funny to me, like, this is kind of like the Avengers 2, where we're like, we're not going to make a new film. Let's just take a trend from the past and remix it and call it, like, ice bucket challenge 2. I was looking up what was going on in 2014, though, which is super interesting. You mentioned Iggy Azalea. The most retweeted image of 2014 was that Ellen DeGeneres picture at the Oscars. Alex from Target was trending, which apparently was just a cute guy that worked at Target and apparently blew up on the Internet. The crop top was in, Gilmore Girls were added to Netflix, and former President Barack Obama went on Zach Gifinakis between Two Ferns.

[Neal Freyman]

I remember that interview. It was good. There's no. And the Ice Bucket Challenge raised a ton of money for als. That was maybe the biggest thing that happened that year. It raised over $115 million. A 2020 for 2024 report by the group RTI, commissioned by the ALS association said that there was clear evidence that the Ice Bucket Challenge had substantially accelerated ALS research. I don't know if they're going to raise that much this time around. So far they've raised like $300,000. It's hard to get, you know, so angry about something that's raising.

[Kyle Hagee]

Exactly.

[Neal Freyman]

Awareness about an important issue and also raising money. Okay. Finally, tennis legend Andre Agassi is coming out of retirement to play pickleball. The eight time Grand Slam winner will link up with top ranked pickleballer Annalee Waters for his professional debut at the US Open Pickleball Championships next week. I put their odds of winning at high, but not because of Agassi. Anna Lee is considered the best woman to have ever picked up a pickleball paddle, having won 148 Professional Pickleball association titles already. And did I mention she was 18 years old? But Agassi certainly brings the star power and we'll see if he can help turn the country's fastest growing sport into one people will actually pay attention to at the pro level.

[Kyle Hagee]

Yeah, this is actually going to be very exciting as it sounds electric and I want to get Roger Federer involved somehow. Pickleball is definitely having its moment in a long moment for sure.

[Neal Freyman]

Okay, let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful Friday. Kyle, appreciate you filling in today and I need you studying all weekend because you'll be back with us on Monday. I'll be here for any questions, comments or feedback. Send a message to Morning Brew daily at Morning Broadcom. Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer. Our associate producers are Olivia Graham and Olivia Lake Uchenova. OGU is our technical director. ScoopStar ARIS is on audio Hair and Makeup is pulling its full year guidance. Devin Emery is our president and our show is a production of Morning Brew.

[Kyle Hagee]

Have a great weekend, y'all.

[Neal Freyman]

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