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Warren Buffett Plans His Retirement & Welcome to SpaceX City?
00:27:05
The legend hangs it up & SpaceX town is here
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- [00:01]
Public Sponsor
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Neal Freyman
Brew Daily Show I'm Neal Freyman.
- [00:38]
Toby Howell
And I'm Toby Howell.
- [00:39]
Neal Freyman
Today Warren Buffett is stepping down as CEO of Berkshire Hathaway after making a lot of people a lot of money.
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Toby Howell
Then Elon Musk's Rocket, based in South Texas, has gotten so big it's officially become its own city. It's Monday, May 5th. Let's ride.
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Neal Freyman
Good morning and happy Cinco de Mayo. When you're out sipping a Spicy Mart margarita later, do not tell anyone it's Mexico's Independence Day. That's in September. Cinco de Mayo commemorates the defeat of French forces by the Mexican army at the Battle of Puebla in 1862 and is mostly celebrated now in the United States by people of Mexican descent, honoring their heritage. Of course, beer companies have a lot to do with its popularity. In the 1980s, they began to leverage Cinco de Mayo in marketing campaigns, turning it into an unofficial national drinking holiday.
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Toby Howell
Yeah, now Mexico accounts for about 30% of all global beer exports and ships more than double the amount of beer as any other country. And of course, a lot of that beer ends up across the border. 97% end up in the United States. And Modelo is the top selling beer in America, not the top Mexican imported beer. The top beer in America where it's been since it surpassed Bud light back in 2023. So never underestimate the impact of a good drinking holiday. And now a word from our sponsor. Plan it out, Neil, you ever watch one of those cooking shows where they take a plain old dish and somehow turn it into something magnificent?
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Neal Freyman
Don't I ever. I've seen them drizzle a balsamic reduction over a grilled cheese and boom. I could see myself at a fine dining establishment.
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Toby Howell
Well, that's what Planet Oat does for your morning coffee or your cereal or whatever you're sipping, slurping or blending. It's not just oat milk, it's an upgrade to your life.
- [02:25]
Neal Freyman
Rich, creamy, smooth, it brings Michelin star vibes to your entire morning.
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Toby Howell
And if you're looking for something without the sugar, the unsweetened version has 0 grams but still tastes like it's a cheat day.
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Neal Freyman
Plus vitamins A and D calcium. It almost is the balsamic drizzle of the oat milk world.
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Toby Howell
Would not recommend putting it on your grilled cheese though. Got to draw the line somewhere.
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Neal Freyman
Get your hands on the oat milk that has it all. Visit planet oat.com for more. Inside Omaha's Chi Health center on Saturday, tens of thousands of Warren Buffett fans hung on his every word for hours of a Q and A until they heard the ones they had dreaded the most. He's stepping down. The 94 year old Buffett stunned the business world when he closed out Berkshire Hathaway's annual shareholders meeting by revealing he would leave his CEO role by the end of the year. It even came as a surprise to his handbook successor Greg Abel, who wasn't told of the announcement beforehand. After Buffett's mic drop, the silent crowd erupted into a delirious minutes long standing ovation. To say it was well deserved is the understatement of the century. Buffett is the most famous investor in the world, having inspired millions across the globe with his philosophy of patience and seeking out value. It was how he transformed a struggling textile company in 1965 into a $1.1 trillion conglomerate that spans 189 operating businesses such as Geico, Duracell and Fruit of the Loom and dozens of stock holdings including Coca Cola and Apple. What happens next? Buffett said he'd, quote, still hang around and could conceivably be useful in a few cases. But the keys to the kingdom will be handed off to Abel, a cand native and big hockey guy who grew Berkshire Hathaway's energy division into one of the leading power producers in the United States. Whatever his achievements until now, he'll have some size 21 shoes to fill. Toby we all knew this was coming at some point, but still, Buffett retiring doesn't feel real.
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Toby Howell
It doesn't feel real. I mean, I can't imagine a world without Buffett isms without tuning in to his annual shareholder meeting. It really is just he defines such an era of capitalism in America. He's been CEO for 55 years. It's he's the longest serving CEO of any S&P 500 company. And he deserved his 10 minute standing ovation because let's run through the scorecard A little bit. Berkshire Hathaway has returned 5.5 million percent since 1964. That's a 20% annual compound growth rate versus 39,000% return from the S&P 500 over the same period. So the stat that I have to quote is Berkshire could fall 99% and he will still have outperformed over the length of his career. And then talk about the power of compound investing, which is just such a tenet of Warren Buffett's philosophy. 96% of his net worth was accumulated after his 65th birthday. So that's just how compounding works. So there are so many insane stats you could just keep going down. But I think that just shows how much of an outperformer he really was over his storied career.
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Neal Freyman
Let's talk about one of those investments that Buffett said made more money than any other one, and that is Apple. At the Berkshire Hathaway annual shareholders meeting on Saturday, before he announced his retirement, Buffett said, I'm somewhat embarrassed to say Tim Cook, the CEO of Apple, has made Berkshire a lot more money than I've ever made. Berkshire started investing in Apple in 2016. He bought about $31 billion worth of shares. The value of that investment, a couple of years later grew to more than 174 billion before Buffett started selling Apple shares. That's a neat 6X, and kind of was a watershed moment for Berkshire Hathaway and Buffett because for so long he stayed away from tech companies and he never really did a huge investment in tech companies besides Apple. And you wonder how much that 5.5 million percent return could have been more if he had invested in, say, you know, a Facebook or a Microsoft or an Amazon? But yes, he had a lot of good things to say, as he always does, about Tim Cook and Apple.
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Toby Howell
And then looking ahead, Greg Abel has a lot of questions that he has to answer as he steps into the CEO role. Namely, what are you going to do with this 350 billion pile of cash that Warren Buffett had been reluctant to deploy over these last few years of volatility? So who knows how he's going to actually use that? He's obviously in a good position. A lot of CEOs would love to have that cash pile to work with. But questions about, is he going to bring a different risk tolerance? Is he going to have more preference for industries that Buffett typically avoided? Is he going to dive deeper into tech or something like that? And then also, is he going to continue this Woodstock for capitalists Is the shareholder meeting going to have the same sort of magic it did under Buffett and Munger? These are all questions that Abel has in front of him. But by all accounts, he's a very good operator of businesses. Who knows how he is as a capital allocator. So that's maybe one of the biggest question marks as well. So an enviable position to some, but also a lot of weight on your shoulders. Starbase, the sprawling command center Elon Musk uses for Space X launches of its towering starship rocket, is now officially a town. After a near unanimous vote, 97% in favor, from a pool of mostly Space X connected residents, Elon Musk's outpost near Brownsville, Texas, has incorporated as its own municipality. That means Starbase USA now has the power to levy taxes, right zoning laws, and, if a pending bill passes, even shut down local public beach access during launch activities. For Elon, the move offers a way to streamline operations and possibly reduce the logistical friction that comes with being a very big private company that has huge ambitions. For example, Space X has not been able to provide enough housing for workers who want to live near its headquarters, especially after a recent attempt to build more was rejected by the county. So its new identity should help fix that. Since state law gives wide latitude to municipalities in Texas, critics do worry about blurring lines between private ambition and public responsibility, especially if Starbase uses its new authority to sidestep environmental concerns or cut residents off from a previously public destination for waves and sunshine. But for many in the area, the tradeoff looks to be worth it. 3400 jobs in a budding tourism economy of people who want to stop by and watch Starship in action were enough to win over most of the dissenters.
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Neal Freyman
Neal, I mean, we are so back in terms of company towns. I thought this was going to be, you know, a relic of something you just read in your history textbooks of the United States. I mean, I think we all learned in high school about George Pullman, who is the railcar magnate who started this company town called Pullman, Illinois, after himself, which was just south of Chicago. Gary, Indiana, was created by U.S. steel in 1906. You have Corning, New York, Benville, Arkansas, with Walmart. And Elon Musk has sort of reinvented the concept of the company town for the space age. And it's a very interesting development with a lot of possibilities and a loss, also a lot of pitfalls that local residents are certainly, you know, excited about the opportunities in terms of economic development, but also wary of, you know, Space X gaining control of this particular area that had been very rural, very remote, not a lot of people there, and now it's turned into, you know, the frontier of Mars colonization, essentially.
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Toby Howell
And this incorporation isn't just this get out of jail free, free pass to do anything you want, any regulations that you want. But it does give you a lot of unique authority to kind of set the rules in your developmental area. So zoning, building projects, even just more normal aspects of life, all fund fall under the purview of a now a mayor who is a vice president at Space X. So that's where people say, is this really, like, there has to be a conflict of interest here when the literal mayor of a town is also a VP at this private company. But one of the big sticking issues was I mentioned this beach because beach access is something that should be available to a wider population. And so if you grant control over that, ostensibly to a private company, then you are depriving a public population of going and tanning and going and having a beach day, which has been a big issue because, you know, Space X has these big launches. They test the rockets, and they need to shut down the local highway every time they do something like that. So a local judge has said, hey, we've been working with you, SpaceX. There is no need to go to this step. So expect that to be kind of a hallmark issue in this, you know, push to make a public place into a private enclave for a company like Space X. Let's move on. What is the last time you went to see a Marvel movie? Or better yet, when was the last time you went to see a Marvel movie and actually enjoyed it? Unfortunately for Disney, your answer probably dates back to avengers endgame in 2019, if you had an answer at all. But Kevin Feige, the brainchild behind the whole interconnected web that makes up the Marvel Cinematic Universe, thinks he's figured out a plan to make Marvel good again. Stop making TV shows and start making good movies. According to the Wall Street Journal, Feige had recently told colleagues that keeping up with all the company's new movies and TV shows was starting to feel less like entertainment and more like homework. As the latest Marvel film, Thunderbolt, debuted to a tidy $165 million worldwide, you can see the inklings of that strategy starting to pay off. Thunderbolts doesn't feel like most of the rest of the heavily CGI fair that MCU typically serves up. It's a smaller affair, both in terms of feel and in name recognition. Gone are Captain America and Iron Man. And in their place steps Florence Pugh as Yelena Belova and a JV squad of anti heroes that even the most ardent of comic book fans would be hard pressed to recognize. But critics and fans actually like this new Marvel movie precisely because it feels distinct. Thunderbolts. Director Jake Schreier said. When I first started on the movie, Kevin Feige said, make it different. It all adds up to a movie that feels like a breath of fresh air for a cinematic universe that was becoming woefully stale and represents a glimmer of a new Marvel, one that makes fewer TV shows and more standalone stories that don't require an encyclopedic knowledge of previous MCU fodder released on Disney plus to actually understand.
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Neal Freyman
You're probably wondering how I got here. Well, in 2008, Marvel releases Iron man, and that sets off one of the greatest cinematic runs in history. From 2010 to 2019, they turned out 21 movies. Every single one of them was a smash hit. They averaged in the box office about $1 billion. And the apex of this was the crowning achievement of Avengers Endgame. That was also the year around that time when Bob Iger, the CEO of Disney, started rolling out plans for Disney plus, their streaming service. And he looked at Marvel and said, wow, people really like that. We should put a ton of Marvel content on Disney plus. I went to Kevin Feige at Marvel and said, give me a lot of content. So Kevin Feige and his team worked really hard to produce a ton of content, and they just got stretched too thin and the quality deteriorated, not only on tv, but also in the movies. So they need to hit the reset button. It looks like we're starting to see the fruits of that labor start to come with. With this particular movie. Thunderbolts.
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Toby Howell
And part of the greatness of the MCU is also its biggest vulnerability in that Feige had immense creative control over everything that went through the Marvel Cinematic Universe. And so he would have, you know, the final creative say, he would have the final editorial say. He would be in the edit bay with people and saying, hey, we need to reshoot this. We need to cut this. And so as you expand, you start to see these demands on his attention where quality starts to fall. And, you know, the. The quote that came out of this big Wall Street Journal piece was the strategy just became expansion, expansion, expansion. And when there's only one Kevin Feige, that becomes an issue because he's a major bottleneck as well. And he has told friends that he felt that the need to be an excellent corporate citizen and, you know, step up to the plate when they want to execute this expansion strategy. And it was just very obvious to anyone who went to see a Marvel movie that the quality just went off a cliff. I mean, I was talking about my experience seeing Ant Man Quantumania, and it was like the worst movie I've ever seen. And that was supposed to be this next big setup for its next big, you know, expansion set up the big bad villain. So it's just one of those things where it was too much of a good thing. And so Thunderbolts is trying to re, be a much different feel, a much different strategy. You know, stop relying on the, on the big names characters of yore and try something different. That being said, they do still have, you know, the heavy hitters waiting in the pipeline. Robert Downey Jr. Is coming back as Dr. Doom somehow in their, in their next movie. So they are trying to recapture some of that old magic. But who? It's been a rough couple of years for Marvel, to say the least. Up next, we have our Winners of the Weekend coming your way.
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Neal Freyman
Welcome to Winners of the Weekend, the segment where Toby and I picked two things that nearly had as epic a weekend as sovereignty. Who won the Kentucky Derby? I won the pre show podcast derby, so I get to go first. And my winner is the stock market. Because investors are laughing in the face of danger. In spite of tariffs, recession warnings and swirling uncertainty. The S&P 500 closed Friday, having gained for nine straight trading sessions, its longest winning streak since 2004. The index is now a hair above its level from Trump's Liberation Day tariff announcement on April 2, which sent stocks plummeting. And it's down just 3.3% year to date, a big comeback from its bear market. Wall street pros are puzzled by the stock surge, given that A no trade deals with other countries have been announced yet, and B, earnings season hasn't really offered much in the way of optimism. Dozens of companies have scrapped future guidance, and around 25% of them have mentioned the word recession, up from 2% last quarter. On the flip side, recent economic data has come in pretty good. The April jobs report on Friday showed a healthy labor market, with the US economy adding 177,000 jobs beating expectations. And both Trump and China have signaled that some sort of de escalation in the trade war could arrive soon. It all makes for an extremely confusing economic picture, but investors appear to be keeping calm and carrying on.
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Toby Howell
Yeah, just a little context. Index is still down more than 7% from its all time high. But what a run we have been on and a lot of it has been led by retail investors. According to Vanguard, net buyers of stocks outnumbered net sellers by a ratio of 4 to 1amongst self directed investors over this last little run we've been on. So that is, you know, the retail traders, the Reddit people saying, hey, buy the dip, which has become a very popular refrain. And The S&P 500 Vanguard ETF actually saw $21 billion in inflows last month, which is the most in its 15 year history. So so clearly it was institutional investors kind of rotating out whether it was by algorithmic trades, just automatically, you know, making adjustments here and there. But retail investors said, hey, we haven't seen obviously that nine and a half percent dip we saw on Liberation Day may have been overstated a little bit and have been piling into stocks again, it's just a one a month sample size. I feel like Warren Buffett's on my shoulder right now saying zoom out. Which he actually did. Talk a little bit about it, that these recent market volatility haven't been anything in the grand scheme of things. But it has been interesting to see retail investors step up to the plate here. My winner of the weekend is Tim Friedy, because he might have the most valuable blood known to mankind. Freddie is a man who quite simply loves letting snakes bite him. Over 18 years, Friedy has injected himself with venom more than 650 times and endured roughly 200 bites from the deadliest snakes in the world. As such, his blood now contains powerful antibodies that, according to a landmark study published on Friday, provided various levels of protection from 19 different deadly snake species. He started on this crazy journey in 2001 and nearly gave up until he met Dr. Jacob Glanville, the CEO of biotech startup Centivax, who knew how to turn his hardcore science experiments into a viable protection from snake bites, which, to be clear, is a major worldwide issue. According to the New York times, snakebites kill 140,000 people a year and injured nearly half a million. Figures that are both thought to be vast underestimates. So afraid his blood does yield a mythical sort of universal antivenom that is a lot of lives saved. I'm really proud that I can do something in life for humanity, Friedi said, for people 8,000 miles away that I'm never going to meet Neil. Have you heard of a more hardcore story?
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Neal Freyman
Very hardcore. Not all heroes wear capes. Some just get bitten by extremely venomous, venomous stakes hundreds of times and save a Lot of lives in the process wild that this was happening and we didn't really know about it, but it is a landmark study because these particular antibodies and the antivenom that they have created applied to such a wide variety of snake species. And we know how to create antivenom now, but it just targets one particular snake species or toxin. For example, cobras and mambas produce toxins that paralyze neurons, but then the venoms from the venom from the viper family rips up tissues, causes you to bleed to death. So there's a wide variety of the ways that really venomous snakes can kill you. And to create this widely applicable antibody antivenom is a huge breakthrough in science, which is a very big public health problem.
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Toby Howell
And what's crazy is that the way antivenom is made hasn't been changed in over 130 years. We still do it the same way, which is you inject a small amount of venom into a larger mammal, like a horse, a camel or a sheep, and then you harvest the antibodies that were produced in response to that injection of venom. And you're right, the issue is that most venoms are just so. Most antivenoms are so particular to the snake that they treat and that they do not. There's no universal application of them. And so if you can find this, you know, super blood that Freddie has created over time through just sheer force of will, by the way, he's like, I am not a real scientist. I was just doing the best I could with no real end in sight either, because he. A few scientists had sampled his blood before, but they never made any strides. So if it wasn't for this magical pairing of, you know, Dr. Glanville with Friedi, we wouldn't have this antivenom at all. So just truly a crazy story. A lot of people over the weekend going, this is the most hardcore I've ever seen. But it looks like Freed is going to save a lot of lives.
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Neal Freyman
It's Monday, so per MBD tradition, here's your preview of the major events coming up this week. The Fed is holding its meeting and Chair Jerome Powell is pretty much a lock to maintain his wait and see outlook and keep interest rates steady. Despite President Trump's urging to lower rates, the Fed, much like everyone else in the business world, is trying to navigate a deep fog of uncertainty. And Powell has repeatedly said he needs more clarity on the direction of the economy before making a move. Traders are betting the first rate cut won't come until July.
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Toby Howell
Yeah, they think there's a 98% chance of rates being left unchanged. And a big reason of that, we kind of gloss over it in that earlier story was that very strong April jobs data, 177,000 jobs added, which was ahead of an expected 133,000 jobs. So despite everything that's going on with the economy, again, that underlying data seems pretty solid, which is enough for Jerome to say, let's keep things where they are.
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Neal Freyman
Right here in a federal courthouse in Manhattan, the sex trafficking trial for Sean Diddy Combs will begin today with jury selection. The one time king of the rap world was arrested last September and charged with racketeering, sex trafficking and transportation to engage in prostitution. Prosecutors claim that for over two decades, Diddy orchestrated a scheme to abuse and rape alleged victims to, quote, fulfill his sexual desires. Diddy has pleaded not guilty to all counts against him, but if convicted, he could face life in prison. Toby this trial is going to be everywhere for the next couple of weeks.
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Toby Howell
Which is why jury selection is going to be difficult, because most of the potential jurors are going to know who did he is and know something about the case. And so the judge will determine who gets excused for cause for, you know, knowing too much or having preconceived notions about things. While attorneys for both sides will also have a certain number of strikes when it comes to jurors, which can be used strategically as well. So all this to say before we actually get into the case. Jury selection is going to be a.
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Neal Freyman
Major Storyline the Met Gala is tonight, and if you've managed to snag a $75,000 ticket to the A List Museum fundraiser, you'll be expected to go viral in an outfit inspired by the theme Tailored for you, which honors black dandyism throughout American history. The co chairs of Anna Winters Fashion extravaganza are Pharrell Williams, Colman Domingo, Lewis Hamilton and A$AP Rocky, while LeBron James gets participated patient trophy as the honorary co chair title.
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Toby Howell
Personally, I hope hair and makeup tune in to learn a thing or two. But yes, pretty excited to see the fits this year as always, especially co chair Colman Domingo, who absolutely just rips fits every single time he walks out on the red carpet.
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Neal Freyman
It's another busy earnings week on Wall street, headlined by Disney, Uber and Palantir. Wednesday is the deadline, a long time coming for needing a real ID to fly domestically. Don't have one yet. It's not the end of the world. You can still use your passport to get through security. Also on Wednesday, the conclave begins in Vatican city to select the next Pope. So if you need to contact a powerful cardinal, do it now.
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Toby Howell
I My vote is for Ralph Fiennes. I hope he becomes Pope this year. He deserves it. He could do it. Good luck, Ralph.
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Neal Freyman
And finally in sports, the second round of the NBA and NHL playoffs are kicking off, headlined by a Knicks Celtics matchup that begins tonight. Toby favorite storyline so far?
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Toby Howell
Well, honestly, just all the game sevens that we've gotten recently across hockey and NBA as well. It's just been a lot of entertaining stuff. Though I'm not a fan of in the NBA playoffs there was a game 7 that started after the next round had started. The NBA playoffs are just too dang long.
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Neal Freyman
All right, let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful start to the week. Want to get in touch with us? You can send an email with any question, questions, comments or feedback on the show to Morning Brew daily at Morning Broadcom. Let's roll the credits. Emily McLaren is our executive producer. Raymond Liu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Scoop star Daris is on audio, hair and makeup is Snake Bitten. Devin Emery is our president and our show is a production of Morning Brew.
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Toby Howell
Great show, Neil. Let's run it back tomorrow.