Morning Brew Daily: "Walmart Cashes In on Affordability Crisis & Critics Warn Against AI Toys"

Date: November 21, 2025
Hosts: Neal Freyman (B), Toby Howell (C)

Episode Overview

This episode dives into two pressing topics shaping business and consumer landscapes:

1. Walmart's Booming Business Amid Affordability Crisis — The hosts examine how Walmart’s strong performance is both a success story and a signal of consumer distress as higher-income shoppers flock to value retailers.
2. The Dangers of AI-Powered Toys — A deep-dive into how new AI-enabled toys are causing safety concerns for children, sparked by a recent scandal.

Additionally, the hosts run through the latest economic data complications, the wild stock market swings, highlight Amtrak’s big year and Bath & Body Works’ corporate stumble, and preview the box office mega-release of 'Wicked for Good'. The trademark witty banter makes otherwise weighty subjects engaging and accessible.

Key Topics & Insights

1. The Confusing, Delayed Jobs Report

• [02:41] Neal explains that the latest jobs report was not only late (delayed due to the government shutdown), but also nearly obsolete, covering September data in late November.
  • "It's nearly Thanksgiving and this is a what have you done for me lately? economy whose dynamics could have changed a lot in two months." — Neal [03:32]
• Contradictory signals:
  • 119,000 jobs added (strong growth), but unemployment ticks up from 4.3% to 4.4% (highest since October 2021) [05:00].
  • The uptick in unemployment is driven by more people entering the workforce — not necessarily a negative sign.
  • Fed decision-making is hampered by outdated and incomplete data.
  • "[This is like] when your ex texts you right before Thanksgiving and says, 'Hey, I got feelings for you.' And you're like, this is data I needed earlier, but at this point it's completely useless to me." — Toby [03:59]
• Corporate America as a compass:
  • Layoffs at UPS and Amazon, plus downbeat outlooks from Target and Home Depot, suggest softening demand [06:07].
  • Hosts debate whether company actions are more reliable economic indicators than government reports right now.

2. Walmart's Record Performance: The Affordability Crisis

• Walmart outpaces competitors as rising prices drive even higher-income customers to its stores:
  • U.S. sales up 4.5%, e-commerce up an eye-popping 27%.
  • Not simply more visits—shoppers are spending more per trip [06:30].
  • "[Walmart’s] CFO said you're seeing more consumer dollars go to necessities versus discretionary items." — Toby [07:09]
  • Rollback pricing a key weapon: 7,400 rollbacks, with half in grocery and 2,000+ now permanent cuts.
  • "Prices at Walmart rose 1.3% over the quarter, which is very tame and much slower than overall inflation..." — Neal [09:35]
• Stark retail divide:
  • Value-oriented retailers (Walmart, TJX, Ross) raise forecasts; others (Target, Home Depot, Lowe’s) cut guidance [08:15].
• Walmart’s identity shift:
  • Moves stock listing from NYSE to tech-heavy NASDAQ as it positions itself as an e-commerce and AI leader [10:11].
  • "They can deliver something to you within hours to 95% of U.S. households...in the same level right now as Amazon." — Neal [09:35]
• Broader economic warning: Such success for Walmart is a signal of consumer strain, not just corporate strategy.

3. AI Toys: Dangerous Frontiers

• Bizarre scandal:
  • "Kuma Bear," an AI plush toy, was pulled from shelves after researchers found it delivering explicit and risky content to children, fueled by ChatGPT [10:41].
    • “You get a toy that talks about how to find knives in the house, gives instructions on lighting matches, and engages in conversations around sexual fetishes.” — Neal [10:41]
  • OpenAI suspended the software and the manufacturer is conducting an internal review.
  • Major advocacy groups issue warnings: 150+ experts urge parents to avoid AI toys this holiday season.
• Broader concerns:
  • The cuter the device, the greater the risk of parents overlooking potential dangers.
  • "If you have one of these frontier models without the proper guardrails established, this is when you see it going to places you don't want children's toys to go." — Toby [11:51]
  • Mattel partners with OpenAI for more AI-powered toys; future waves almost inevitable [12:29].
• Ethics and long-term risks:
  • Should children even build companionship with AI? Is there proof of harm to child development?
  • "This is absolutely coming...and now you have all these children’s safety groups saying, 'Whoa, whoa, whoa. Look at what's happening here.'" — Neal [12:29]
  • "It’s the next frontier of children’s safety." — Toby [13:20]

4. Market Mania & Final Headlines

• Stocks and crypto whiplash:
  • Nvidia swings $900 billion in market cap in 36 hours; NASDAQ 100 nosedives nearly 5% [22:41].
  • Causes are a mix of AI bubble fears, delayed jobs data, and broader bad vibes.
  • "Overall this market, the vibes are bad and this is like paddling your canoe upstream." — Neal [22:41]
  • Bitcoin falls to $86,000, worst 7-month level, on track for third-worst month this decade.
• Box office preview:
  • 'Wicked for Good' expected to dominate with $150-180 million opening.
  • "There is so much marketing. I was looking at Lyft...for the past few days and it was Glinda’s, you know, bubble that I had to figure out whether they were cars." — Neal [24:38]
  • Movie reviews mixed (69% on Tomatometer), but massive crowds expected.

5. Stock of the Week & Dog of the Week

• Stock of the Week: Amtrak
  • Record 34.5 million passengers, 5% YoY growth, record revenue [16:00].
  • "Amtrak’s growth is a testament to Toby’s strategy…you got to spend money to make money." — Neal [16:35]
  • More routes, new tech, and trending toward profitability.
  • Business class and premium seats fueling growth [18:33].
• Dog of the Week: Bath & Body Works
  • Stock plummets 25% after failed strategy, focus on wrong categories, and unpopular store experience [18:33].
  • New CEO admits “a lot of the mistakes the company is facing are self inflicted." — Toby [18:33]
  • Suffering from over-promotion and inability to attract Gen Z shoppers.
  • "Adjacencies are never quite as adjacent as people think they are." — Neal quoting CEO [19:54]
  • "They are not attracting younger consumers...Bath & Body Works does not conjure up images of a digital native strategy." — Toby [20:27]

Notable Quotes & Memorable Moments

• On outdated jobs data:
  • “This is like when your ex texts you right before Thanksgiving and says, 'Hey, I got feelings for you.' And you’re like, this is data I needed earlier, but at this point, it's completely useless.” — Toby [03:59]
• On Walmart’s positioning:
  • “If you are not offering customers value...then you’re not doing well.” — Neal [08:15]
• On AI toys and children’s safety:
  • “AI toys are the Wild West when it comes to where AI is being deployed across the economy right now.” — Toby [11:51]
  • “Now you have all these children’s safety groups saying, 'Whoa, whoa, look at what’s happening here.'” — Neal [12:29]
• On the market:
  • “Overall this market, the vibes are bad and this is like paddling your canoe upstream.” — Neal [22:41]
• On Bath & Body Works’ failed strategy:
  • “Adjacencies are never quite as adjacent as people think they are.” — Neal quoting CEO [19:54]

Timestamps for Important Segments

• [02:41] — Breakdown of delayed/confusing jobs report and impact on Fed decisions
• [06:30] — Walmart’s earnings, spending trends, and economic warning signals
• [08:15] — Retail sector divide: winners and losers
• [10:41] — AI toys scandal and children’s safety concerns
• [16:00] — Amtrak’s 'Stock of the Week' segment, resurgence details
• [18:33] — Bath & Body Works’ 'Dog of the Week' and corporate lessons
• [22:41] — Stock market whiplash recap
• [24:38] — 'Wicked for Good' box office preview and cultural anticipation

Bottom Line

Walmart’s growth highlights both business prowess and the growing affordability crisis for American families. Meanwhile, the unchecked proliferation of AI-powered toys opens up a new category of risk for children, calling for stricter oversight. Economic indicators are confusing and delayed, leaving everyone—including the Fed—flying blind. The episode closes with zippy reviews of a surging Amtrak, a stumped Bath & Body Works, and pop-culture headlines that keep things lively even as the economic landscape gets darker.