AppleTV+ is Losing $1B/Yr & Boeing Banks Big Defense Deal

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0:28Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, Apple may want to sever itself from its streaming service, which is losing$1 billion each year. Then, does the BPM of Lady Gaga's new album mean we're on the verge of a recession? We'll dig into the hashtag recession indicator memes sweeping the internet. It's Monday, March 24th. Let's ride.

0:54Hope you all had a great weekend, the first weekend of spring. Odds are you didn't make it to a movie theater. Disney's Snow White live-action remake pulled in just$43 million in its domestic box office debut. A really disappointing haul for a film the company spent nearly$300 million to make. In fact, the controversy plague Snow White posted the worst opening weekend of all Disney live-action remakes. Surely this will be the end of these remakes, Tobey. I mean, I think you're spot on despite the controversies. People might just be a little over these things. I mean, how many Uncanny Valley CGI resurrections of our childhood favorites can the market stand?

1:34Disney is hoping at least one more, though, because we have a live-action Lilo and Stitch coming down the pipeline in May. So we'll see if this tepid box office reaction was just a Snow White thing or if it speaks to a broader live-action slowdown. Now, a quick word from our sponsor, Sophos. Neil, how good are you at solving problems before they actually become problems? I'm more of a wait until things are on fire kind of guy. Probably not ideal. Unfortunately, I am the same. If I see my phone case start to break down, do I order a new one? No. I convince myself that I can go case free. In cybersecurity, though, waiting until there's a fire means you're already too late.

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3:21Terms and conditions apply. Getting the internet to agree on anything other than clowning that one dude's morning routine is a tough proposition. But right now, a lot of terminally online people are convinced of one thing. We are heading towards a recession. Why? It's not that any specific economic data points are flashing warning signs. Instead, the internet's prognosis is based on recession memes. Search for hashtag recession indicators on social media. and you might see people posting about Lady Gaga's new album giving recession pop vibes, or pointing to Jason Sudeikis re-dawning his mustache for a fourth season of Ted Lasso as signs that times are getting tough.

4:00While economists may look at yield curves and GDP growth, normal people, half jokingly and half seriously, take their cues from cultural trends, like how many people are spring-breaking in Houston versus more exotic locales. At the core of these memes is a divergence in so-called soft data like consumer surveys versus hard data like jobs numbers, which are painting contrasting images of the economy right now. Citigroup's chief U.S. economist told Bloomberg, if you just look at hard data, you're looking at what happened a month ago, sometimes even two months. Surveys are telling you what people are thinking about the future.

4:34So, Neil, while the Internet has surfaced these semi-serious data points that do speak to a wider anxiety people are feeling, hard economic data like employment numbers, manufacturing output, and inflation suggests the economy is in a relatively healthy spot. First of all, no shade on Houston. It seems like a perfectly fine place to go on spring break. They just had the world's largest rodeo there this past weekend and a couple weeks ago. There is a long tradition of economists not just using hard data, but also using behavioral measures to indicate whether the economy is growing or whether the economy is slowing.

5:07There's something called the Lipstick Index, which suggests that people buy more lipstick when things are in a downturn because it is just that little luxury that you can afford. Fed chair, the former Fed chair Alan Greenspan also coined the men's underwear index to find out whether how the economy is doing by gauging men's underwear sales. There's also the hemline index theory, which posits that skirt lengths get longer during a downturn. So this is as old as the economics profession and field itself is looking at certain societal and behavioral attitudes and consumption trends to see how the economy is going.

5:47Music has been often thrown out there, and I guess this Lady Gaga album, people are pointing to that as one reason why they're feeling a little more uncertain about the economy. Yeah, a big one is music because when times get a little tougher, we tend to prefer music that is slower, more introspective, more romantic, has more meaningful lyrics. When times are good, people prefer more upbeat songs, although it's not a perfect system whatsoever because the top song in 2008 was Low by Flo Rida, So maybe people just thought I was talking about the stock market. But you are right that there are some uncommon recession indicators that people do like to look at.

6:24A lot of these are actual memes like the lipstick index, the headline index. There is actual economic theories behind those things. But for instance, people saying Will Smith is getting back in the studio to drop a new album saying, ah, times must be tough if the Fresh Prince of Bel-Air is getting behind the mic again. And so I do think that there is truth in some of these because it does speak to just broader cultural feelings that people are expressing online. But, yeah, obviously, when you look at harder data, we can point to a lot of data points showing that the economy is doing just fine right about now.

6:56One area where you're actually seeing a significant slowdown in consumer spending is snacks. I don't know. Should we just coin the snacks recession indicator? But to a T, all of these big consumer food companies have come out in the past two weeks saying we're seeing a big snacking slump. U.S. convenience store sales are down 4.3 percent over the past year. General Mills has come out and said people are buying less Cheerios and our snacks. JM Smuckers, as well as sales of their sweet baked snacks, fell 7 percent in the most recent quarter. You go down the line. Campbell's is also forecasting a big snacking slowdown.

7:36So maybe you just maybe you just learn the new the new indicator right here, which is a snacking slump. Apple TV Plus is severance just wrapped up one of the buzziest seasons of television this year. But buzz isn't translating to profits. A new report from the information revealed that Apple streaming service is losing more than one billion dollars annually six years after it was created. The report also found that Apple TV Plus has just 45 million subscribers, far lower than streaming competitors like Netflix and Disney Plus. For comparison, Netflix has over 300 million paying subscribers and Disney Plus has 126 million.

8:14Now, some context is needed. Apple overall is one of the most profitable companies on Earth with net income of nearly$100 billion last year alone. A$1 billion loss will hardly make a financial dent. Plus, it's not out of the norm for streaming services to be unprofitable as they ramp up. Netflix, Disney +, Peacock, and others all lost billions of dollars for years until they started to make money. Still, given Apple TV Plus' shockingly bad performance, the entertainment industry is asking, why does this exist? Why is Apple lighting money on fire when there isn't a clear business case? Even competitors are throwing shade.

8:52In a recent interview, Netflix co-CEO Ted Sarandos said, I don't understand it beyond a marketing play, but they're really smart people. Maybe they see something we don't. Yeah, what they're seeing right now is just money going up in flames because 45 million subscribers isn't bad. Obviously, it's not Netflix numbers. Obviously, it's not Disney Plus numbers, but the issue is that Apple just spends so much dang money on their content, $5 billion production budget every year. They finally are pulling that back a little bit. They cut off 500 million from that budget, but they just can't do anything except for make the highest quality prestige TV.

9:27And I'm just going to go through some of the names that have been associated with Apple shows. Natalie Portman had an Apple show. Harrison Ford has an Apple show. Austin Butler, Barry Keoghan, Kate Blanchett, Jake Gyllenhaal, Colin Farrell, Brie Larson. These are the A-listers of A-listers. The problem is that if I stopped you and say, you know, you have to answer this question correctly or else, You probably wouldn't be able to tell me what any of those stars, what shows they actually starred in. So it's just indicative of the entire, it's condemning the entire project. If you are having these great shows coming out and you have 45 million subscribers, but none are really leaving a lasting impact that you would hope, given the monetary output that you are expending here.

10:08So there is a theory why Apple has rolled out a streaming service. It's no secret. It's basically the Costco hot dog and soda idea where you get people into your ecosystem so they buy other products. The goal for Apple is obviously to sell as many smartphones and computers as possible. The theory is that if you get people hooked on your streaming service, then they will buy your gadgets as well. The thing is that hasn't necessarily panned out or actually we don't know because according to this information report, Apple doesn't have the data to show whether its streaming subscribers are buying their products or staying within their ecosystem.

10:48So they are living in this foggy situation that no one has much clarity on. The fact that they don't have data on this is quite damning because that is the first thing you'd want to check, whether your streaming service loss leader, Costco, hot dog and soda combo is actually bringing people into your business. It could just be a velocity issue, too, because if you look at the Netflix top 10 page, that is a very fiercely fought over area of real estate that when you open the Netflix app, what's new and fun for this week? And that rotates through very frequently because just the sheer amount of output that Netflix is putting on their platform.

11:24If you look at Apple TV Plus's top 10 shows, you know what comes in at number one is Severance. Number two is Ted Lasso, though, which hasn't released an episode in almost two years now. So they went the like low volume, very high quality approach. And maybe that's just not the correct approach to resonate with consumers. Moving on, George Foreman, the heavyweight boxing champion turned grilling magnate, passed away on Friday at the age of 76, leaving behind a legacy as unlikely as it is impressive. Foreman's exploits in the ring included an Olympic gold medal and an improbable return to his championship winning ways at the age of 45.

12:01but for a generation of home cooks, he was known more for the George Foreman lean, mean, fat-reducing grilling machine than for his right hook. Introduced in the mid-90s, the portable grills, small enough to fit on your kitchen counter, became synonymous with the charismatic boxing star. A generation of infomercials seared the catchphrase, it's so good I put my name on it, into the minds of many an aspiring panini maker. Since its introduction, over 100 million units have been sold worldwide. Part of the reason for its success was that it was truly a revolutionary product. Indoor grilling was not a thing before the Foreman Grill, and its electric power design pioneered the smokeless grill kitchen category.

12:43Despite Foreman's passing, the grill's legacy is still alive and well today. It remains a bestseller on Amazon and still bears the boxer's name. Neil, without a doubt, one of the most successful celebrity indoors products of all time. I'm not sure how many grills you find when you walk into the Smithsonian National Museum of American History, but you will find the George Foreman Grill. That's how iconic and important it was to American culture, especially in the 1990s when it came out. One of its biggest innovations, perhaps its biggest innovation, was that the grooved grilling surface was pitched 20 degrees so that the fat would drain from the meat into this little plastic tray.

13:22We just showed a bunch of the infomercials here on the screen. And you can just see all of these fat droppings into this tray that you're not eating. And a low-fat diet was so big in the mid-1990s. And it just hit perfectly, resonated with consumers. And George Foreman was the perfect pitchman for this product. He put his heart and soul into it. My favorite part of the Foreman grill lore is the fact that the endorsement deal was originally offered to Hulk Hogan. And he technically had a choice between endorsing a blender and a grill. But he didn't pick up the phone altogether. So Salt and Brands went on, which is the parent company of Foreman Grills, went and called George Foreman.

14:00He did pick up and he chose to put his name on the grill. And my question is, have you ever heard of a Hulk Hogan blender? And the answer is no, because this is Hulk Hogan saying, George got the lean, mean grilling machine. I got a blender that when you put AA batteries in it, it would fart and then turn off. So it is just we were one phone call away for that being the Hulk Hogan lean, mean fat reducing grilling machine. Instead, it's the George Foreman grilling machine, and it's made it all the way to, you know, the Smithsonian Museum. Up next, let's hit you with our winners of the weekend. The Jack Welch Management Institute at Strayer University helps you go from I know the way to I've arrived with our top 10 ranked online MBA.

14:42Gain skills you can learn today and apply tomorrow. Get ready to go from make it happen to made it happen and keep striving. Visit Strayer.edu slash Jack Welch MBA to learn more. Strayer University is certified to operate in Virginia by Shev and as many campuses, including at 2121 15th Street North in Arlington, Virginia. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS. After an initial dosing phase, about 4 in 10 people taking EBCLIS achieved itch relief and clear or almost clear skin at 16 weeks. And most of those people maintain skin that's still more clear at one year with monthly dosing.

15:20EbGliss, Librikizumab, LBKZ, a 250 milligram per two milliliter injection is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema. Also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies. EbGliss can be used with or without topical corticosteroids. Don't use if you're allergic to EbGliss. Allergic reactions can occur that can be severe. Eye problems can occur. Tell your doctor if you have new or worsening eye problems.

15:47You should not receive a live vaccine when treated with EpGliss. Before starting EpGliss, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EpGliss and visit epgliss.lily.com or call 1-800-LILY-RX or 1-800-545-5979. Welcome to Winners of the Weekend, the segment where Toby and I pick two things whose brackets are actually looking not so bad. I won the pre-show George Foreman grill off, so I get to go first. And here's a sentence you haven't heard in a long time, Boeing just scored a huge win. On Friday, President Trump announced plans for a next generation fighter jet called the F-47, and Boeing was chosen to make it.

16:28We don't know the details of the deal, but estimates put the contract at an initial$20 billion, though experts say it could rise well above that. It is a much needed endorsement for the struggling Boeing, which lost nearly$12 billion last year amid a safety and confidence crisis around its commercial planes. Shares rose 3 % on the news, while shares of Lockheed Martin, the contractor that lost to Boeing for the deal, fell nearly 6%. So what is the point of this ultra-pricey F-47? It's all about countering China in the skies. The jet is the centerpiece of the Air Force's next-generation air dominance program, which seeks to replace the F-22 Raptor with a plane that can give the U.S.

17:09an aerial edge in a potential war in East Asia. It'll have greater range, enhanced stealth, and better tech than the F-22. All capabilities the Pentagon thinks are table stakes to confront China's increased military prowess. Toby, is Boeing back? I don't know. Technically, you know, the dogefication of the federal government is saying that we want to reduce the size of, reduce the spend of the government. And yet here you are handing out this pretty large contract to Boeing. But then also the Pentagon has been pushing to give some new entrants like Andruel and Palantir more contracts related to software and drones.

17:43And yet here you are giving a very traditional defense contract in Boeing a very large deal. So Boeing is obviously very happy about it because it's a huge boost for its defense business. That represents about a third of the company's revenues, but has been, like everything else in Boeing, a pretty money losing endeavor over the past several years. because in classic Boeing fraction, they've been locked into these money-losing contracts. They've run into cost overruns and delays and whatnot. So definitely a win, though, and you can see it. I encourage you to go look at the stock prices of Lockheed Martin and Boeing when this deal is announced because they diverged, like, while Waldo Emerson two paths diverged in the woods with Lockheed dropping and Boeing going up because, obviously, $20 billion in upwards of$20 billion is a big deal for Boeing.

18:31Robert Frost called. He wants his he wants his line back. Oh, my God. There is greater scrutiny around whether manned or crewed aircraft are even viable or necessary in 2025 in this new age of warfare. Elon Musk has publicly campaigned against crude aircraft. He called them obsolete in the age of drones. The Russia Ukraine war has really brought drones to the forefront. front. Some people in the military apparatus said we should be investing way more in drones, not in crude aircraft. The Air Force Trump administration is pushing back to Secretary of Defense Pete Hex has say, no, actually, when we fight China, if we fight China, then crude aircraft like the F-47 will be very critical, important, very critical for establishing air superiority, superiority to penetrate air defenses.

19:21So there is an internal debate about whether we should invest more in drones or whether we should invest more in these very high-tech crude aircraft like the F-47, like the F-35, like the F-22. And there is a lot of scar tissue from the F-35 contract because those things are extremely expensive. They cost taxpayers$1.7 trillion. They cost about$80 million per aircraft. There have been a ton of delays, ton of technical difficulties, tons of cost overruns. And these fighters, the F-47, are expected to be to cost way more than 80 million dollars per aircraft my winner of the weekend is the ipo market because like a lean cuisine meal pockets of it are starting to heat up even while the overall market remains a little chilly ai infrastructure provider core weave is set to debut soon buy now pay later giant clarna finally put in its ipo filing last week while everyone's favorite concert ticket op stub hub also submitted for its filing last friday the flurry of activity breaks a lull for tech IPOs that dates back to late 2021 when rising interest rates and high inflation scared investors away from riskier assets.

20:29Many were hopeful that the incoming administration would usher in a better environment for public debuts, but that hasn't quite been the case so far due to the market roiling trade agenda. Still, promising debuts from Service Titan and Reddit in recent months have inspired some cautious optimism amongst investors with the trio of Klarna, CoreWeave, and StubHub on deck to test the level of Wall Street's IPO appetite. Yeah, let's start with StubHub. I mean, interesting company that's been on an absolute roller coaster over the past few years since COVID. It was bought by Viagogo, which is a European ticketing company, for$4 billion in early 2020.

21:09I wonder what it would have fetched a few months later when no one was going out, no one was buying tickets. And then there was that huge roar back during the Eres Tour era when people were scooping up live tickets. Left and right, there are signs that the ticket and live industry, live events industry, is moderating a bit. So we'll see whether investors want to hop on the StubHub roller coaster because it could be a ride. Vivid Seats, which is a rival of StubHub, may give an indication of what the appetite is for this kind of company. The stock price has fallen more than 45 percent over the past year it's reportedly seeking a buyer so that's going to the StubHub S1 prospectus that I just gave you right there I mean I do think one StubHub needs to write a thank you note to Taylor Swift because 10 % of the group's annual ticket sales came from 2023's Ares Tour so it truly was one of those driving forces that turned around the prospects for this company another big name that I mentioned was CoreWeave CoreWeave is looked at as this almost bellwether for the AI IPO scene.

22:15Basically what they do is that they operate and manage these massive chip farms that instead of outlaying all the money and buying your chips yourself, CoreWeave will do it for you. So if you just want to train your data, you can say, hey, CoreWeave, help me train my data. I don't want to do all the uptake and all the buying of these chips myself. And there's been few and far attempts of AI IPOs in this AI age we've entered. Obviously, NVIDIA has been ripping, but that's been a public company for decades now. So it's really going to be one of the only data points we have to judge how the market feels about new AI companies.

22:49So people are going to be looking very closely at how CoreWeave does. And they expect it to be the biggest tech IPO of the year. They want to raise around$2.7 billion. So that will be a good proxy with how much, how hashtag back the IPO market really is. Yeah, I mean, CoreWeave is a massive company. They want a valuation of around$35 billion. They've pretty much grown in lockstep with NVIDIA because they've just hoovered up all these NVIDIA chips. NVIDIA owns a 5 % stake in CoreWeave. In 2024, sales jumped more than 700 % to nearly$2 billion. Those are basically NVIDIA numbers. So if you want another play similar to NVIDIA and you want to ride with this AI roller coaster as well, then CoreWeave is the company that can do that.

23:35One problem with Corvive is that it has only two main customers, and one of them accounts for 60 % of its revenue. That one customer is Microsoft. It's Monday, so here is your preview of the big events coming this week. With the Fed meeting in the rear view, this week's economic calendar is a little lighter, but we'll get the monthly reading of the Fed's preferred inflation gauge, an updated look at consumer confidence, and a final reading of Q4 GDP, plus earnings from the likes of Dollar Tree, Lululemon, and GameStop. You can look at the Fed's preferred inflation gauge and updated consumer confidence.

24:10I will be looking at men's underwear sales in Will Smith's next album to see how strong the economy is. More reliable data points right there. And good news. The S &P 500 did break its four-week losing streak last week, And futures are up bigly this morning over reports that President Trump's planned tariffs, reciprocal tariffs on April 2nd, which he called Liberation Day, will be more narrow than expected. In culture, speaking of Apple TV +, Seth Rogen's new show, The Studio, premieres on the service on Wednesday. And it has nearly a perfect Rotten Tomatoes score. So that's pretty exciting. Over on Max, Paul American, the new reality series following the lives of Jake and Logan Paul, drops on Thursday.

24:54And in music, new albums are out Friday from Lucy Dacus of Boy Genius and Mumford & Sons. Oh, man. Our boxers used to launch these very successful infomercials supporting grills, and now they're dropping reality TV shows over on Max. How far we've risen or fallen outside? I don't know. There's something there. In sports, baseball's opening day is on Thursday, with 28 of the 30 teams playing on the unofficial start of spring. The season soft launched last week with two games in Tokyo between the Dodgers and the Cubs, which highlighted the booming popularity of baseball in Japan. 25 million people watched the Tokyo series in Japan, bigger than any American baseball audience since Game 7 of the 2017 World Series.

25:36Some people were a little upset that MLB, America's pastime, had its opening day in Japan. But you look at these numbers and you see exactly why the league did it. And it looks like it was completely worth it because those numbers are eye-popping. And Shohei Otani, the hometown boy, put on a show. March Madness is rolling on the men kickoff Sweet 16 game starting on Thursday while the women's begin the Sweet 16 on Friday. Toby, how's your bracket looking? I got seven of my Elite Eight still alive. My final four is looking good as well, but I do just want to give a shout out to our executive producer, Emily, for cooking on the women's side of things.