Amazon Dabbles in the Luxury Biz & How Euro Elections Impact Global Markets

0:00Tuesday on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC. Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, France just held its big elections.

0:37Who's popping the champagne and who's drinking sparkling wine? Then it was Caesar's salad 100th anniversary on July 4th. What's the secret to its longevity? It's not walking 10 ,000 steps a day. It's Monday, July 8th. Let's ride.

0:56A lot of you are no doubt easing back in the swing of things after the July 4th holiday. Neil, we haven't seen each other in four days now, which might be the longest we've spent apart in like two years at this point. Anything you care to report? No, it was just pretty much the perfect long summer weekend. Sat by the pool, played games, ate ice cream, broke 90 in golf for the first time. I just, I can't really script it any better than that. It was pretty awesome. Did not get sunburned also. Well, you do look very sun-kissed. I have nothing to report here other than a bit of a sunburn. And a reminder that we did release two interview episodes, One with the WNBA commissioner, Kathy Engelbert, and then one with the founder of Major League Eating, host of the Coney Island Hot Dog Eating Contest, George Shea, on Thursday and Friday.

1:39So if you haven't had a chance, go listen to those episodes. Got a lot of awesome feedback on those interviews. Also just want to report some breaking news overnight. Boeing is now a felon. The struggling company agreed to plead guilty to a criminal fraud charge tied to the fatal 737 MAX crashes and will pay an additional$244 million fine for violating a 2021 settlement that shielded it from prosecution. And as part of the handshake with the DOJ, Boeing will be placed on probation and an independent monitor will be installed to oversee compliance. A judge needs to approve this deal before it goes into effect.

2:14Yeah, Boeing was presented with two roads here. One, either enter this guilty plea, pay a fine. or to face a trial on felony criminal charges of conspiracy to defraud the United States. So it shows the former, which families of the victims of those Boeing crashes are not happy with because they wanted to see Boeing go to trial. And then just to be clear, this plea deal only covers wrongdoing by Boeing before the crashes, so it doesn't cover anything like the Alaska door popping off and these other instances that we've talked about with Boeing in the news. Now, a word from our sponsor, Meta AI.

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3:56Over the holiday weekend, while Americans were downing glizzies by the dozen and getting sunburned beyond all recognition, Toby, people in the UK and France were voting in pivotal elections that will chart the future of Europe. The real shock came in France yesterday, and it was a stunner when a leftist alliance won the most votes in parliament. No one, no one had this on their bingo card. Everyone was expecting a victory from the far right National Rally Party, who got the most votes in the first round of elections last Sunday. But the week in between round one and round two was the wild card.

4:30President Emmanuel Macron's centrist and the left wing got together and said, hey, we need to do anything possible to prevent the right wing from winning. So what they did was ask more than 200 candidates to step down in order to consolidate votes against national rally. And this strategy worked like a charm, blunting the rise of the far right party they feared would erode democratic institutions. So what happens now? Well, in a word, chaos. None of the three main parties, the left, the centrist or the far right, established an absolute majority in parliament. So you're going to see a lot of political maneuvering to form a government that shares power and actually gets things done.

5:06And talk about a country that needs to get things done because France is a nation that could do with some stability. They have the mother of all events coming up with the Olympics right around the corner. Then you also have France kind of emerging as this maybe top five AI power in the world behind the U.S., behind China. But they have this – they're trying to turn themselves into this innovative tech hub. And now you have a new, much shakier government that's trying to usher in this kind of technocratic era that France has been dipping their toe into. Right. So what does the leftist party want?

5:40Because they're going to have a lot of heft here in negotiations with Macron. Macron is seen as pro-business and he's enacted a lot of policies in order to spur investment. The new popular front, which is the leftist, they basically want to roll back everything that Macron has done. Remember, Paris burned when Macron tried to raise the retirement age from 62 to 64. This new leftist coalition wants to bring that back to 60. They want to reinstate a wealth tax. They want to shake up the tax code and bring the top marginal income tax rate to 90 percent. They want to raise the minimum wage. So they want to do this tax the wealthy, spend big government, which does fly in the face of what Macron wants.

6:24The thing is, he doesn't have a lot of options here because he has to work with the way this parliamentary system works. You have to work with your opponents in order to form a government. So he might have to concede on some of their demands, which some economists say is wildly too expensive with France being very cash-strapped as it is. Yeah, Macron made this massive bet calling this snap election early. He was gambling that voters would rally around his party. Technically, the gamble worked, but voters didn't rally around his party. Instead, they rallied around this loose coalition of parties in order to keep kind of the far right out of control.

6:58But the problem is that Macron has built himself as pro-business, as this technocratic competence, this regime that does favor investment from foreign countries as well. It was neither left nor right. But then you see how that starts to fracture when you're neither left nor right when you're centrist. Usually when the fracturing happens, they tend to go to one side or the other. So the new popular front was not projected to finish first. They did finish first. So now we have this interesting conglomeration of parties, and they're going to have to do some politicking to figure this out. Moving on to another country who is still alive in the Euros.

7:36The UK also had a landscape-altering general election before the weekend. The center-left Labor Party defeated the Conservative Party in a landside victory on Friday, which means there's a new party in charge for the first time in 14 years. The Labor Party's reward, a sluggish economy, stagnating incomes, deteriorating living standards, chronic housing shortage, among other macroeconomic headaches. It's a tough spot Britain finds itself in right now. Much like the U.S., it is dealing with a massive debt burden that is bigger than the GDP of the country, so spending cuts or tax hikes are likely on the way.

8:09But those won't be enough on their own if they can't kick economic growth into gear. So new prime minister, Keir Starmer, has quite a job in front of him to turn this economy around. I think what people are looking for from Starmer is some sort of stability. I mean, the conservatives have gone through five prime ministers in eight years. Remember, there was that one year with Boris Johnson, Liz Truss and Rishi Sunak, where they had three prime ministers in just one year. Political instability has really hampered economic growth in Britain. And so they're looking for Starmer to come in and just kind of provide this stability, this ability to just be consistent.

8:47And what Labour did was not really promise anything big. If you look through their policy proposals, it's kind of very vague. So he doesn't have a lot of promises to keep, which may be a good thing for him. So that's what UK is looking for, just some sort of consistency from their leadership. It's also easy to see why there's been little to no economic growth. I mean, first there was a decision to leave the EU back in 2016. Then there were all these years of reduced government spending. Then there were five prime ministers in eight years. So also just looking at the data, it is pretty ugly to look at.

9:19When I say income is stagnant, wages roughly have been staying the same since 2010. The British pound 14 % weaker than it was in 2010. And then productivity or GDP per hour grew 0.5 % annually since 2010 compared to 2 % for the decade prior. So it's really been a rough slog in the past decade or so. So hopefully just some stability can turn things around. And if you're looking for a man in finance, don't look to the UK because for the first time in 800 years, the chancellor of the Skechor, which is their finance minister, will be a woman, Rachel Reeves, who likes to model herself after Janet Yellen.

9:58She considers Yellen a role model. So she is going to try to take a page out of Yellen's playbook, which is put a little more government intervention than the UK has done in the past. I mean, Yellen definitely pushed through the Inflation Reduction Act, which gives a lot of subsidies and tax credits to build green energy infrastructure. And so she, Reeves, is going to look after Yellen to try to do the same things in Britain, but they just have a lot less money to play with in the United States. So it might be a little more incremental than what we did here. Moving on, while you were busy merging your mouth with a perfectly grilled hot dog, Corporate America was conducting a few mergers of its own.

10:35Up first, Saks Fifth Avenue announced a deal to buy Neiman Marcus for$2.65 billion with a little help from its friend Amazon. After being linked for years, the two finally decided to make things official, hoping their combined might will help them negotiate better deals with luxury brands. Saks has 39 stores, while Neiman Marcus, who filed for bankruptcy back in 2020, has 36. Amazon is playing e-com sugar daddy in the deal, lending its tech and logistical expertise while taking a minority stake in the new entity. Neil, these are some iconic names in the luxury industry, but do we think that putting two struggling retail brands together will result in a sum greater than its parts or just a bigger struggling retail company?

11:18First of all, is that the last hot dog reference you have for the July? Nope, still more coming. Okay, I just want to make sure how many we have lined up here. No, this is, yeah, this is all about negotiating power with the brands that fill their stores, like the Carings of the world, the LVMHs of the world, because right now those luxury conglomerates, the people, the companies that actually make the goods are eating the department store's lunch. So they're hoping by gaining scale, they'll have greater negotiating power against the LVMHs, which are getting into retail themselves. And they're also selling direct to consumer.

11:50So they present a little bit of a threat to department stores like Neiman Marcus, like Sachs, and they're hoping that actually they they're really banking on real estate. I mean, together, they're going to have seven billion dollars in their real estate portfolio. They have these flagship stores on Fifth Avenue and that that big Bergdorf Goodman in New York, which is owned by Neiman Marcus. So they're banking on these flagship properties to bring in people, to bring in tourists when they come to New York and all other places around the world to drive sales. Yeah, we talk about the shift in negotiating power.

12:24That's because the power balance has totally changed between luxury department stores and the luxury brands. Because if you think about when these companies were founded a century ago, they were introducing European luxury to American shoppers. So they wielded all the power there because they were the gateway to America. These days, the luxury brands, everyone knows them. You can buy directly from them, as you mentioned. So they now wield a tremendous power. So hopefully this is a case of department stores banding together, fighting back and saying, OK, we can be a powerful entity still. I'm not hopeful.

12:57OK. It looks like Paramount will finally be bought in a deal that was more drawn out than the last hour of Oppenheimer. The board approved a deal for the upstart production from Skydance Media to merge with Paramount Global, the company that owns MTV, CBS, and the film studio that brought you The Godfather. The deal marks the end of an era and a lucrative cash-out opportunity for Sherry Redstone, the mogul who controls Paramount parent company National Amusements, and it also means a new media mogul, the head of Skydance, David Ellison. If that last name sounds familiar, it's because he is the 41-year-old son of Oracle founder Larry Ellison.

13:35David dropped out of USC to try his luck in the film business, and everyone suspected he was just another Nepo baby who didn't have the actual chops to make it. But David built a really impressive business with Skydance, producing blockbusters like the latest Mission Impossible and the Top Gun sequel. Soon he'll be the head of the combined Skydance Paramount company, and it's really a sign of the times that this struggling entertainment dinosaur like Paramount is being taken over by a guy who comes from tech money. Yeah, the big winner in this deal is Ellison because he's gone from a little bit of a Hollywood outsider to now one of the most influential executives in the entire business.

14:14So that is a big deal for Ellison. The interesting part about this deal is that there were so many stops and starts saying, will this deal or won't this deal happen? Part of the issue was that a lot of shareholders thought that it was basically just enriching Sherry Redstone, like it was a sweetheart deal for her. Details around this one are still kind of emerging, But apparently this new offer appealed more to shareholders, which is why it's looking like it's going to happen. So it still requires regulatory approval. We have to put that little asterisk on every single merger and acquisition that happens given the FTC's kind of rampage they've been on.

14:50But it is finally this deal looks like it's across the finish line. Meanwhile, we talked about long to-do lists in UK and France. And, you know, David Ellison probably has one up there because Paramount is, as I said, a dinosaur. It's lost 70 percent of its market value since 2019. It tried to get into streaming with Paramount Plus, but that is losing hundreds of millions of dollars per year. It's cable business. The MTV, the Nickelodeon, is in secular decline. Everyone's cord cutting. So it really has to do a lot to rejuvenate this Paramount business that he just bought for a couple billion dollars.

15:26And so I don't know which I would prefer. UK, France, Paramount tried to revive all of them, but it doesn't none of them seem like a shoe in for revival. Up next, it was a long weekend for some. So let's dive into the winners from it. The spirit of innovation is deeply ingrained in America. and Google is helping Americans innovate in ways both big and small. From improving emergency response times to protecting against cyber attacks, local, state, and federal governments are innovating with Google AI. This is a new era of American innovation. Find out more at g.co slash American Innovation. Lowe's knows how to help make your home holiday ready for less.

16:11Get Select Style Selections Vinyl Flooring for just$1.99 per square foot and have it installed before the festivities begin. Our team can help you every step of the way. See a Lowe's Red Vest Associate or visit lowes.com slash holiday install to get started. Lowe's. We help you save. Basic install only. Date restrictions apply. Subject to availability. Install by independent contractors. See associate for details. Contiguous U.S. only. Now it's time for our Winners of the Weekend segment where we wade through your fireworks-filled weekend to find two stories that were bangers in their own right.

16:47Neil won the pre-show Farmer's Tan competition, meaning his tan lines were even worse than mine. So he's up first. Neil, who's your winner of the weekend? My winner of the weekend is the crew of a NASA mission who completed their voyage to Mars without leaving Houston, Texas. On Saturday, four volunteers walked out of a simulated Mars environment at Johnson Space Center after spending 378 days enclosed in the 3D printed habitat. Besides playing thousands of rounds of Never Have I Ever, the crew tried to mimic as closely as possible what living on Mars would be like. They simulated spacewalks. They grew and harvested their own vegetables.

17:26They communicated only with ground control with a 22-minute delay, all with the goal of helping NASA learn what living on Mars would be like. They were willing human guinea pigs in the grand experiment of space exploration. And you're probably wondering, what did they say when they came out? Were they on the verge of killing each other like you and your roommates during COVID? Not at all, it seems. They said they were grateful for the opportunity to push science forward and grateful for each other confined for over a year in that 17 ,000 square foot fake Mars. The group consisted of a research scientist, a structural engineer, an emergency medicine physician, and a US Navy microbiologist, which sounds like a great group to simulate a Mars experience or the intro to the greatest bar joke of all time right there.

18:09So, yeah, they did really well. I mean, when they came out, they just said hello to the people gathered there. And they're like, you have no idea how good it just feels to talk to someone that isn't us. I love this experiment, though. Nutrition seemed to be the big focus of all. How does the body react when you have to cultivate your own food in this unforgiving environment? I would love to see actually the nutritional data that comes out of it. and what they were using as the most bare bones way of feeding yourself, just from a curiosity standpoint. They were probably just all wearing Apple Watches.

18:39And everyone was just tracking them. Tracking themselves. But yeah, so this one was focused on nutrition, and there's going to be two other missions, missions in quotes, 2025 and 2027 in this simulated habitat to learn more about the science of going to Mars before NASA actually plans on sending people there, which doesn't look like it's going to happen until late 2030s, which actually means late 2050s in the NASA timeline of things. But I think Elon Musk wants to go there a little earlier on Starship, provided that doesn't explode upon reentry. Think about all the news that they missed. Think about all the Morning Brew Daily episodes that they have to catch up with if you've been in a pod for the last year, year plus.

19:20My winner of the weekend is Steve Ballmer. There's a popular refrain in investing, which is do nothing. If you own a good asset, don't sell it. And Steve Ballmer is the poster boy for that approach. His Microsoft stake, a mastering the time he worked there and eventually led the company, is now worth$161 billion, meaning for the first time ever, he is richer than Microsoft's founder, Bill Gates. Ballmer joined Microsoft back in 1980 as a business manager and eventually became CEO in 2000, taking over from Gates. But unlike Gates, he never really divested his shares or diversified his holdings, and he's assumed to still own about 4 % of the company.

19:58Neil, Steve Ballmer was once Bill Gates' glorified assistant. He was an employee of Microsoft. Now he is richer than the company's founder. What's the lesson here? The lesson is you don't need to start a company, but you need to be an early employee if you want to be in one, if you want to be super rich. And better yet, if that company that you're joining at a young stage just so happens to be Microsoft, that helps. But yeah, There are not that many mega billionaires on Forbes' top list that aren't founders or entrepreneurs that didn't create their company because they didn't own a large stake.

20:35There's only 26 people on the list of 760 U.S. billionaires that aren't heirs that didn't inherit their wealth or entrepreneurs. That also includes Tim Cook. That also includes Jamie Dimon of J.P. Morgan and now Steve Vollmer. So I guess the lesson is find your Microsoft. I do have to go through the deal that set him up for this, though, because when he joined as the 30th employee in 1980, he had a salary of$50 ,000, but Microsoft was trying to grow. So Gates and Paul Allen, the co-founder, agreed to give Ballmer 10 % of whatever profit he could drive. But soon, Microsoft started growing really fast, and that 10 % deal just was untenable.

21:15So as soon as Microsoft kind of reorganized as a corporation, Balmer said, OK, I'll give up that 10 percent rev sharing deal in exchange for 8 percent stake in the company. Turned out to be a very savvy negotiation as well, because, again, Microsoft is now worth three and a half trillion dollars. So that little 4 percent stake, 8 percent stake has become worth a lot of money. The 4th of July was not only America's birthday, but also the birth of an even more important hallmark of human ingenuity, freedom and global influence. the Caesar salad. So today, let's honor the dish that has persisted through menu changes and food trends for an entire century.

21:52First things first, the Caesar salad was not named after Julius Caesar. In fact, it's not from Rome at all. Like most 100-year-old origin stories, there's some debate as to the exact founding tale, but the most agreed-upon version is that the famous salad was conducted by Italian chef Cesar Cardini at his restaurant in Tijuana, Mexico on July 4, 4th 1924 according to his daughter he ran out of ingredients for a meal so he pulled a dad special and just threw together what was left in his kitchen that just happened to be lettuce olive oil raw egg croutons parmesan cheese and worcestershire sauce and thus soup and salad deals were changed forever neil other versions of the story are floating around out there but what a great trivia fact to bust out next 4th of july that caesar salad was invented in mexico and it's really a remarkable snapshot of this point in U.S.

22:44history because Prohibition was going on during the 20s and a lot of elites in Hollywood, those A-listers, they couldn't party, they couldn't drink, well, you know, on the surface, but they decided, hey, let's just drive two hours down to Tijuana, which became a hub for Hollywood moguls in the 20s and other hard-partying Americans who still wanted to have a good time during Prohibition area. So Tijuana was absolutely booming during the 20s. And that led to ultimately the creation of the Caesar salad because it created this ecosystem where there were a lot of Americans present. But I did not know it was started there in Tijuana.

23:21And that restaurant still exists. It went out of business, but it's there under new ownership. And for the 100th anniversary, a bunch of top chefs went on a four-day pilgrimage there to pay homage to the Caesar salad, including Jose Andres, and just speak to its rich culinary history. It's umami culinary history of just persisting throughout a hundred years. So many dishes from the 20th century we don't even know about because they've gone bust, but the Caesar salad is here today and it's maybe never been stronger. Do you have any Caesar salad hot takes? It has to have anchovies. Okay. That's very interesting because the original Caesar salad had no anchovies.

23:59The whole point of the salad was it was supposed to be very subtly flavored. The only flavor you're supposed to get was from the Worcestershire sauce, but now I am totally with you. Anchovies just takes it to another level. I totally agree with that. Another aspect of Caesar salad culture that we need to talk about that it was the original intention was that it was a finger food and that you don't cut the romaine lettuce. You don't grate the Parmesan. You eat the romaine as a big leaf. You eat the Parmesan as a bite, as a hunk of Parmesan. And then you just have the blocks of lettuce in the dressing with the side of like a side of Parmesan.