Americans are Ditching Summer Travel Plans & Iran Sets Up Tollbooth for Strait of Hormuz

0:00Neal Freyman:There's more to investing than stocks and bonds. With iBit, you can broaden your investment mix and get Bitcoin exposure. Learn more about iBit with iShares by BlackRock. The market is yours.

0:16Good morning for Daily Show. I'm Yul Freyman. And I'm Toby Howell. Today, Iran set up a toll booth at the Strait of Hormuz.

0:23Neal Freyman:Then the U.S. summer travel season is getting ruined by high jet fuel prices. It's Friday, April 3rd. Let's ride.

0:35Good Friday morning. Literally, it's Good Friday. The markets are closed and Easter awaits in just a couple of days. Did anyone have a crazier week than Jonathan the tortoise? Probably not. If you're unfamiliar, Jonathan is the world's oldest known land animal at 193 years old. On Wednesday, famously April Fool's, an account on X purporting to be his veterinarian, Joe Hollins, wrote that Jonathan had died, an announcement that was taken at face value by outlets like the BBC and USA Today, which published stories eulogizing Jonathan. But it all turned out to be fake news. The real Joe Hollins called up newspapers and said he believes someone was impersonating him on X in order to solicit crypto donations.

1:16Jonathan is very much alive, as alive as he has been since 1832. Shout out, Jonathan.

1:22Neal Freyman:Persevering one more year. But I do want to, you know, I have a bone to pick with BBC because they got caught in the crossfire of Jonathan's death. They were one of the first real news outlets to report his death erroneously, of course. But then the next day they posted an article titled, What Jonathan the Tortoise Can Teach Us About Fake News. The fake news was you, BBC. You were the issue. But I'm not going to lie, Neil wrote a whole obituary for Jonathan before the hoax was revealed. I hope you have to sit on it for another 100 years as Jonathan remains in the pinnacle of health. And now a word from our sponsor, Company Retreat.

1:58Neal Freyman:Neil, can we do a trust fall? Sure, Toby. You fall and I'll trust that our insurance covers your injuries. Very funny. Anyway, the creators of Jury Duty are back with a new season featuring an all-new cast. This installment of the groundbreaking documentary-style comedy takes place on an annual Company Retreat where all the employees are actors except one Anthony, the new temp. Featuring bigger laughs, higher stakes, and the same heart that made this series a cultural phenomenon. You'll be rooting for Anthony and his hilarious fake co-workers as you laugh cry through the finale. Jury Duty Presents Company Retreat is streaming now on Prime Video.

2:33Neal Freyman:Clock in and grab your popcorn. It's time to root for the underdog. One big impact of the war in the Middle East is on summer travel. Americans are increasingly saying adios to international travel as rising fuel costs make trips more unaffordable. Under 17 % of respondents to a conference board survey said they intend to travel internationally over the next six months, the lowest share since the tail end of the pandemic in 2022. Airfares are a big reason why. On Monday, JetBlue said it was raising baggage fees to offset operating costs. United Airlines warned last week that they might have to hike prices by 20 % or more if jet fuel remains this expensive.

3:11Neal Freyman:And just yesterday, they bumped up baggage fees as well. Jet fuel is very expensive right now. Prices have surged 85 % in the U.S. since the day before the war began in February. Even if you're willing to eat the cost, flights are getting harder to find, with United announcing they are dropping 5 % of their planned flights in the second and third quarters. On an economy-wide level, that means U.S. GDP might come in lower because of the decrease in consumer spending. On a you-and-me level, it means trading down when it comes to your vacation, maybe for going a week in St. Barts for a road trip to St.

3:45Neal Freyman:Louis. That's been the historical norm, Neil. When fuel prices tick up, consumers don't necessarily cancel trips altogether, but they do trade down. You ever seen the arch in person? I have not. I would love to. But did you know it's the tallest monument in the United States at 630 feet tall? It also required almost 900 tons of stainless steel. That's more than any other project in history. But maybe I'm not going to go this summer at all because road trips are not that fun right now either. U.S. gas prices have jumped to over$4 a gallon on average for the first time since 2022. That's up from under$3 before the war started on February 28th.

4:23This is the largest monthly jump that AAA has seen on record. So whether it's flying or driving, Americans are facing higher expenses as they look to the summer travel season.

4:33Neal Freyman:Yeah, the economic ripple effect that I like to call it, it just ticks all the way down when gas prices go up. Because even if you don't cancel your trip, you do see maybe your hotel and meal spending change. You'll see traveling to distances that are closer. You'll see the drops in the number of days you actually spend away. And all of those decisions on a familial level that maybe we're not going to opt for the trip across the seas to Europe, that makes a big difference for economic activity in 2026. So Wall Street has downgraded GDP forecasts this year to account for both the higher inflation and the hit to consumer spending that the gas price hikes are going to have on just the broader economy.

5:13And let's talk about aviation for so many years since coming out of the pandemic. Americans have been flocking to Europe and, you know, people, places like Barcelona haven't been so happy about that. But it looks like that could be stymied a bit by higher jet fuel prices, which have nearly doubled since before the war. What we're seeing right now is basically a toilet paper panic on aviation, on people booking flights. Transatlantic airfares for flights 21 days in advance are up about$200 on average compared to a month ago. So there's increased demand to buy ahead of time. And airlines are hiking prices as a result.

5:47And prices are going up. The average airfare in the past week reached$465. That's the highest price point around this period since at least 2019. So maybe Barcelona and the Trevi Fountain over in Rome are saying, oh, wow, maybe we'll have one summer where we don't have a lot of over-tourism by Americans.

6:03Neal Freyman:Yeah, bookings from U.S. hubs to major European cities this summer are down 11 % year over year. Europeans coming to the U.S., so the other way, that's down even more sharply. So the pullback is happening in both directions. I will say, though, 2026 is a good year to stay domestic, or as best a year in recent memory, because we have the World Cup. The world is coming to the United States. So if you wanted to stay home, make a road trip, you know, save the money on airfare and spend it on World Cup tickets, you have a pretty good year to, you know, stay within the good old U.S. of A. That's contingent on, you know, these airports having jet fuel because Heathrow, if you're trying to come from England to watch the boys bring it home, Heathrow, if things continue the way they are with the war in Iran, they're going to run out of kerosene at Heathrow.

6:51They import about 50 % of their jet fuel from the Gulf. And you hear about airports across Europe saying, we're actually well-supplied right now. But as we get into the summer months, May, June, and July, our stocks of kerosene could be depleted because we're just not getting any from the Middle East. And we can't really buy any on the open market because prices are sky high. So we'll see what happens. I think the actual physical jet fuel at airports will be something to watch should this continue.

7:15Neal Freyman:If that is the case and the England fans can't make it over to the U.S. for the World Cup, they're going to go in and open the Strait of Hormuz themselves. Football is coming home. Moving on, it's been about a month since Iran has effectively sealed off the Strait of Hormuz, one of the world's most critical energy checkpoints. Now it wants to make money off of it. Iran's IRGC, the Islamic Revolutionary Guard, has imposed a de facto tollbooth regime in the Strait of Hormuz, said maritime research firm Lloyd's List Intelligence, noting that at least in one case, a ship made a reported$2 million payment to secure safe passage.

7:47If you look at a chart of ships transiting the Strait of Hormuz, you're gonna see a massive drop-off when the war began to basically zero. But in the past week, the number has been ticking up ever so slightly, and that's because Iran has been allowing ships from countries it considers friendly-ish to cross the waterway through a safe shipping corridor as long as they pay a fee. So who is getting an easy pass? Not the U.S. or its Western allies, of course. Mostly, according to CNBC, the transits have involved Iranian, Greek, or Chinese-linked ships. But Pakistan and India have also secured safe passage.

8:19And more are getting on the phone with Tehran to bring desperately needed fuel to their shores, including Iraq, Malaysia, and Thailand. And don't think you're paying in USD. For this bribe, Iran is reportedly taking Chinese yuan or stablecoins, cryptocurrencies pegged to a hard currency. Toby, we've seen it in the business world. We're seeing it in geopolitics. Once you secure strategic dominance, the next step is to monetize.

8:40Neal Freyman:Yeah, this toll system is quite complex. It's not just, you know, pay a toll, raise the arm, go through the Strait of Hormuz. Step one is you have to contact an intermediary. That is usually a company that is linked to the IRGC. You submit detailed documentation, your ship's ownership, the flag you fly under, the nationalities of the crew. Then the IRGC runs a background check. Make sure you have no links to Israel, the U.S., or any other states that Iran is considering an enemy right now. Then comes a total negotiation process. Right now, you mentioned that$2 million number. That is usually the starting point because they charge$1 per barrel of oil that is contained on these very large crude tankers.

9:20Neal Freyman:They also have a ranking system, 1 to 5, for nations in terms of how friendly they rate them. So you better hope you come in at the right end of that scale. Then once everything checks out, they provide you clearance. They provide you an escort. They issue you a permit code. So you literally have a secret code that you have to broadcast over the radio to say like, hey, we've done our negotiations here. We are a safe – we deserve safe passage. And then the route itself, you go through this very narrow corridor that all 57 transits of the Strait of Hormuz have gone through. So there clearly is like a safe passage way that you have to navigate.

9:56Neal Freyman:So that's generally how the negotiation process starts. You've called it a bribe. It is a bribe. There's a lot of legal issues around, you know, doing this that we will get into. Yeah, let's talk about that. So I'm sure you're listening to this thinking, is this legal? And according to the United Nations Law of the Sea Treaty, not likely. States can charge reasonable, non-discriminatory fees for specific services that they render in the waterways around them. Things like pollution mitigation and just maintenance. they can service your ship and then charge it for, but they actually have to provide a service without that particular service.

10:29And this service in this case is just letting you go through a waterway. It seems to be not legal. And if you're thinking, okay, what about the Suez Canal or the Panama Canal? Panama charges ships to go through. Well, actually, those are constructed and operated by sovereign states. So they are allowed to because they have constructed, maintained, and operated these waterways rather than the Strait of Hormuz, which to my knowledge has been formed naturally.

10:53Neal Freyman:It is natural. So the one thing that a lot of people were pointing out, too, is that this toll system only works if there is still an imminent threat of attack. So Iran still has an incentive to keep things very dangerous because they want to keep continuing to charge these tolls. So it is a thing that is pointing to maybe the war continuing because Iran has everything in their interest to not open up the Strait of Hormuz. They kind of like this new normal of charging ships$2 million or more to go through the Strait of Hormuz. That means we might see attacks on ships continue for the foreseeable future.

11:27Neal Freyman:Moving on, Starbucks is one year into new CEO Brian Nichols' turnaround effort, and it's reached the what-if-we-just-gave-all-our-baristas-a-bunch-of-cash stage of the process. Under a new bonus program, Starbucks will award baristas and supervisors a quarterly bonus of$300 if their stores meet certain targets the company announced yesterday. A good year means$1 ,200 in extra pay. The company is also adding the option for customers to tip while using their mobile apps to order and bumping up the frequency of barista paychecks to every week instead of every other. The idea is by putting more cold hard cash into barista's green apron pockets, it will lead to more inviting cafes with faster orders and warmer exchanges with customers.

12:09Neal Freyman:In general, it seems like cash has regained its spot as king of the hill when it comes to compensating employees. In the completely opposite domain of AI startups, companies are offering much higher cash compensation than before, with median base salaries, not including equity, rising 25 % to$200 ,000 since 2022. Neil, whether you're a barista or a deep learning expert, things like culture or perks are paling in comparison to the allure of cash right now. Companies aren't overthinking it and are giving more money to their employees to try and drive results. OK, let's talk about Starbucks, because I think I understand coffee a little more than AI.

12:45This is part of Brian Nichols' plan to turn around Starbucks, is investing in employees, investing in the service of these locations. They've already spent about$500 million since launching his big return back to Starbucks plan on employees and adding more of them, essentially, during the busiest time. There's a coach position that has been included to Starbucks that will help out the store manager to keep locations moving smoothly. And Starbucks says that this new tipping system and this new quarterly bonus system will increase compensation by 5 % to 8 % on top of current pay. Nickel has been around for a year and a half now, and things have been okay.

13:26Starbucks stock really hasn't moved much. It's actually down since he came in, and he's considered retails messy. He joined Chipotle when it was in a downtime and improved things a lot there. I think going into Starbucks has been a lot more difficult, but he thinks that just investing in people is the way forward.

13:41Neal Freyman:Yeah, the idea is even though you are seeing that pay raise of 5 % to 8%, Starbucks expects better earnings results to offset the cost of those bonuses. It sounds like business 101, and it is business 101 on a certain point, that if you compensate your employees more efficiently and more effectively, they will be more effective in the workplace. So raising pay, putting more money in the people who interact with customers on a daily basis seems like the right move. But I do see the rise of cash payments in general filtering through multiple different industries. Business Insider said it's giving out new quarterly AI awards to the best use of AI at the company.

14:18Neal Freyman:Winner gets$400. So again, everyone probably rolling their eyes saying, wow, it's revolutionary that if you give cash to people, they will do things that you want them to do. But at a certain level, companies got away from that for a while now, especially during these economically more difficult times. Having that extra$400 in your pocket, having extra$300 per quarter, that goes a long way and probably does boost performance in the workplace. All right, we're going to take a quick break and come back with our Stock of the Week, Dog of the Week, right after this. If you're not using AI correctly, you're almost certainly falling behind your competitors.

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15:01Neal Freyman:Now with NetSuite AI Connector, you can use the AI of your choice to connect your actual business data and ask just about every question you ever had. If your revenues are at least in the seven figures, get our free business guide, Demystifying AI at netsuite.com slash brew. That's netsuite.com slash brew. This episode is brought to you by Apple. There is nothing like your first, Mac. When I got mine, I was heading into freshman year at the University of Maryland. A lot was uncertain that fall, but I knew I had a dependable sidekick for homework, connecting with other students, and devouring blogs about our basketball recruiting class.

15:37What about you, Toby?

15:39Neal Freyman:For me, it was right as my sister started to get recruited to play soccer in college, I was given the very important task of making her a highlight tape, and iMovie was my best friend. She ended up playing at Georgetown, so I'd say it was all worth it. That's how we felt with our first Macs. How will you? Check out the all-new MacBook Neo, an amazing Mac and a surprising price. Find out more at apple.com slash Mac. That's apple.com slash Mac. Toby, what do you think of these new tax laws? Why are they making new ones? I don't even know the old ones. And that's why there's TurboTax, because being tax compliant is among small business owners' top concerns, but it's often time-consuming and research-intensive to figure out taxes on your own.

16:20Neal Freyman:Turbo Tax Experts for Business can match you with a tax expert with expertise and knowledge for your specific industry. To ensure you have confidence, you're maximizing deductions and your taxes are filed correctly. Learn more at TurboTax.com slash business. That's TurboTax.com slash business. Welcome to Stock of the Week, Dog of the Week, the segment where Toby and I pick one stock that kept its head and another that got April fooled. I won the pre-show game of Dominion, so I get to go first. And my stock of the week is Eli Lilly because it just entered the fray in what looks to be the next arena in the weight loss battles, a pill.

16:56On Wednesday, the pharma giant said that the FDA approved its weight loss pill that will be sold under the brand name Foundayo. Shares popped 6 % as investors smelled another drug coming onto the market with blockbuster sales potential. Fundeo isn't as powerful as its injectable cousin, ZepBound, which has been shown to consistently help people lose more than 20 % of their body weight. In clinical trials, Fundeo caused an average weight loss of about 12 % for people with obesity after 72 weeks on the highest dose. But what it lacks for in potency, it makes up for inconvenience. You can take Fundeo at any time of day, with food or without food.

17:30It's that ease of use factor that has analysts projecting the pill could bring in$14.8 billion per year by 2030. But FoundAO isn't the only GLP-1 pill in town. Novo Nordisk, Eli Lilly's Danish rival, already has a weight loss pill on the market, the Wagovi pill, and it's selling like hotcakes. Toby, welcome to the pill battles.

17:49Neal Freyman:Yeah, we've already had the injectable battles. Now we're having the pill battles. A lot of people say that the convenience factor is probably the tipping point for a lot of people, but also price is a big deal. At this point, most of the pills work. You know, you're going to lose weight on any of these GLP-1 class of drugs, whether it's 12 % of your weight, whether it's 16 % of your weight, the efficacy is not probably going to be the thing that tilts you one way or the other. It is going to be like, hey, can I just eat this, take this pill with my normal food? Do I have to not drink for the first 30 minutes of the day?

18:22Neal Freyman:Also, is it cheaper than the other thing? So we are seeing a knock-on drag-out war now that every pill kind of does the job that you want it to. And people are saying Foundeo has an edge in that ease of use. They have an edge maybe on the pricing front as well. So it could be an absolute monster. Well, the prices are the exact same. The lowest doses of both drugs are going to cost 149 for cash paying customers. And that's thanks to an agreement that both companies, Eli Lilly and Novo Nordis struck with the Trump administration last fall. What is Novo? How's Novo going to counter this? Because if the price parity is the same, Eli Lilly's an American company and they have a little more they have a little more mojo in this weight loss race right now.

19:02Well, Novo's going to say their pill is more effective. According to a study, the Wagovi pill showed about 16.6 % weight loss on average in a late stage trial compared to about 12 % on average for Eli Lilly's pill. And then Lilly's going to push back and say, hey, we're more convenient because this pill can, as I mentioned, can be taken at any time of day without any restrictions on food and water. Meanwhile, the Wagovi pill has to be taken first thing in the morning on an empty stomach with only a few ounces of water.