Biden's Plan for $0 Student Loan Payments & How A.I. is Shaping the Future of Warfare

0:00Stocks? ETFs? Or what about mutual funds? Choosing your investments is easier with Fidelity. Our step-by-step experience can help you pick out the right investments for you. Plus, with recurring investments, you can decide how much and how often to invest. Lastly, there's 24-7 help if and when you need it. To find your next investment, head to fidelity.com slash trading. Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC, member NYSC SIPC. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. On today's pod, student loan borrowers have a reason to be hopeful ahead of the resumption of payments in a few months.

0:39And we'll talk about the under-the-radar company that's been dubbed the messy of AI. Then, it's been a minute, but the U.S. is back in the nuclear energy game for the first time in three decades. Plus, I'll tell Neil all about the latest trend in getting better sleep, playing with Pokemon. It's Tuesday, August 1st. Let's ride.

1:04Toby, you're back. Yesterday, I said to Kyle on the show that you'd complain about the elevation in Utah. And sure enough, the first thing you said on our Zoom call yesterday was that the elevation was getting to me. I'm getting way too predictable, but it's true. I was walking upstairs and I'm just like, dang, I'm not as fit as I used to be. But yeah, Utah was great. Salt Lake City is incredible. And I realized I'm a huge wedding crier. It was one of my best friends. I know. I I didn't expect it, but I was a groomsman and I was standing up there. And honestly, when I looked at my friend's mom who's getting married, I just broke down in tears because she was crying.

1:41So I guess I'm a wedding crier. That's so cute. I know. You need to become a podcast crier. Once we hit our thousands episode, you know the waterworks are flowing. I've never cried at a wedding. Or a podcast. I wonder if I'll cry at my own wedding. We'll see about that. But in other news, just a few hours ago, the U.S. women's national team drew Portugal, which means that they still will advance to the knockout round. But it was a squeaker. I know. One of the best parts about doing this podcast is we're up early. So we got to kind of bathe in that tension of the last few minutes. So there's perks to the podcast game, Neil.

2:15Yeah. So they're moving on and they just got to play a little bit better. All right. Let's get to our first story. Starting off with some good news for all you student loan borrowers who thought you were left with no options after the Supreme Court kicked President Biden's forgiveness plan to the curb. The administration yesterday launched the beta website for an income driven repayment plan that can lower your monthly bills and decrease the amount you have to pay back over the lifetime of your loans. For millions of Americans, it will reduce monthly payments to zero. Surprised? This thing called the save plan has been lurking in the shadows while the Biden administration pursued its doomed program to to wipe out up to twenty thousand dollars in student loans.

2:57While the Supreme Court rejected that earlier this summer, the save plan has moved forward and will be in full swing by next year. This concept of income-driven repayment plans is not new. There are several programs in existence that base loan payments on a borrower's income and family size, regardless of how much student debt they owe. But this save plan offers some of the most lenient terms of all, saving the typical borrower$1 ,000 per year. And it shows how Biden is still trying to notch a student loan victory after the big promises that he's made. Yeah, I mean, this sounds really good on paper, obviously, especially if you have student loan debts.

3:33The big asterisk is definitely the cost of it. So the save plan is estimated to cost the federal government between$138 billion and$361 billion over the next 10 years. But in comparison, Biden's last student loan forgiveness plan was expected to cost around$400 billion. So maybe it's a bargain if you consider anything that has a$361 billion price tag a bargain. But yeah, it does seem weird, though, that we did this whole song and dance with his previous program when this one has much stabler legal footing and has a much better chance of actually coming to fruition? It's just the way they went about it.

4:09I think they went through the proper channels of going through the education department in conjunction with Congress and the existing, and it's based on existing precedent. Right. Like there's what Biden did with the 20 ,000 student loan forgiveness was go around Congress and do this executive action. And when you start doing that, that opens you up to a lot of legal troubles. This might face legal troubles. And there are opponents. A lot of the Republicans say, look, this is this. This is the same thing. You're making college free. The people who don't have student loans are being unfairly harmed.

4:41And they're probably looking for any plaintiff right now to go sue the administration. So we could see that coming. But it does appear like this has much stronger legal footing than Biden kind of going out on his own and invoking, you know, the HEROES Act. Right. He did for the other payment plan. Yeah, there is a thing already called the repay plan, which is revised pay as you earn, which is also an income driven repayment plan. So again, this is just building upon that and it's increasing the threshold for what you qualify as. And again, the argument of paying for free college, which is a lot of what Republicans are pushing back against this for, it's still like the income threshold is$32 ,000.

5:24So it's not exactly like the elite or anything. That's to have your payments like literally reduced to zero. Right. And again, like$32 ,000 a year is not, you're not raking in the dough. So that narrative always seems like a little bit, I don't know, to me, it always seemed a little bit overblown that you're paying for free college for the elite. But yeah, this, it's great for millions of Americans. It's great for any company too that relies on discretionary spending because like we We saw the Chipotle CEO talking about how would this impact burrito sales? Because, again, this puts money back in people's pockets, money that could be going to burritos if you're Chipotle.

6:04Yeah. Well, he was like, I don't think it's going to take a hit. So a lot of retailers are bracing for this resumption of student loan payments after more than three years where nobody's had to pay anything. And everyone's a little curious about how it's going to play out and how much spending is going to take a hit. There are forecasts that, let's say, let's just talk about the restaurant industry, that it's going to wipe out$11 billion in annual sales, which amounts to 2 % of all sales. But I thought, this is the funniest part about that interview where he was talking about the student loan impact.

6:38He's like, I don't think millennials who have to pay student loans are going to skimp on a$9 burrito. I was thinking to myself, what? In what Chipotle is there a$9 burrito? I'm 14 plus, easy. Maybe it's because we put too much guac in. I think we're guac guys. All right, Neil, let's move on to our next story where we have some big news out of Georgia where the first new nuclear reactor to be built from scratch in decades has officially opened. It's been over 30 years since the last time someone managed to get a new nuclear plant built. And at full output, Georgia Power Company estimates that Unit 3 at Plant Vogtel can power more than 500 ,000 homes and businesses.

7:21Sounds like a big win, right? Well, I haven't mentioned the price tag, which makes a New York oat milk latte or a Chipotle burrito seem reasonably priced. Construction of Unit 3 finished seven years late and$17 billion over budget. In total, the two plants that Georgia Power is building, one of which will open next year, were supposed to cost$14 billion, but are now on track to cost$35 billion. So yes, it's a good win for nuclear power in the U.S., which has been stagnant for decades. But holy moly, Neil, that price tag is tough to swallow. Yes, this is going to be the single largest power source in the U.S.

8:00It's kind of just an economics question of the tradeoffs here because you're spending in total$35 billion on building this. Is the tradeoff situation worth it? Plus, the other controversy to this is it's going to raise power prices for Georgia residents. If you pay for electricity in Georgia, they're estimating that you're going to pay$926 to basically finance this and$4 more on your monthly bills. So you have opponents kind of pointing to the fact that the Georgia rate payer is going to be footing the bill for this kind of cash money sucking pit that is these huge hulking nuclear reactors. Right.

8:42Experts have said that there's basically no cost savings when you factor it out over the lifetime because, yes, nuclear power is more cost effective than other forms of power. But when it costs so much money to bring these things online, over the life cycle, the cost basis just goes to zero. I also think it's funny. I didn't know this. There's a thing called a prudence filing where a company has to submit a report on basically how they used money to try to argue for what's essential and what was wasteful. And so Georgia Southern has to release a prudence report and they will have to, some of which they can pass the cost on to the customer, but the other half or whatever's not covered in the prudence report, they have to foot the bill for.

9:23So that must be like a really interesting report of, no, we really needed like the espresso bar that our people were using or not. So I love the idea of a prudence filing. The big picture here is the future of nuclear in the United States. The question of whether this Voxto plant will be the last large-scale nuclear plant to ever come online. In the U.S., obviously, we're transitioning away from fossil fuels to renewable energy sources. And nuclear proponents say nuclear is needed. Like, just this thing is huge. It can power a million businesses and homes. Like, it is massive. Whether nuclear is needed to bridge the gap.

10:02They say absolutely because it's carbon emission free. It doesn't warm the planet And then you have opponents saying look at what happened in Three Mile Island Look what happened in Chernobyl and Fukushima was the big one in 2011 That says the risk is not worth it. We this produces all kinds of hazardous Chemicals and materials that are that last in the earth forever. We all know the concept of a half-life Yeah, and these things just stick around you're seeing what's happening in Japan right now where they're releasing all the hazardous waste from the plant over there. And there's a huge outcry over whether it's going to contaminate the ocean.

10:39So it's kind of a battle between nuclear proponents who say this is very much needed. Like, why would we not build a clean power source? That's super powerful. And the opponents that just say, let's focus more on having storage for wind and solar, which are really great, but they operate intermittently, like when the sun isn't shining and the wind isn't blowing. Right. It's always going to be controversial. But right now, 55 % of Americans favor nuclear energy, which is the highest in a decade. So, yeah, the price tag was tough to swallow, but the support is there, I think. All right. We're moving on.

11:16Shares of Palantir, the data analytics company, are on a tear after it was crowned the messy of AI by famous tech analyst Dan Ives last week. The stock soared 11 % yesterday and is up an astonishing 211 % this year. So why is Palantir the Messi of AI, according to Ives? Because like the Ronaldo of AI, Microsoft, and the Pele of AI, NVIDIA, Palantir is in an enviable position to capitalize on the gold rush, where every CIO of a major company wants to integrate generative AI into their systems to make them work smarter. During Palantir's first quarter earnings call, CEO Alex Karp said that demand for its new AI platform is without precedent.

12:00Zooming out, Palantir is a fascinating company that zagged where Silicon Valley has zigged. First of all, it was co-founded by controversial tech investor Peter Thiel, who, let's just say, has different political views than most of his peers. Plus, not all that much is known about Palantir's work because it's part of that good old military-industrial complex. The company is best known for working with military and intelligence agencies for integrating AI into our defense apparatus. So you've got generative AI, robot soldiers, outspoken execs, and a storing stock price all wrapped up into this one company named after Crystal Ball and Lord of the Rings.

12:37I know. It has definitely been one of those companies that is controversial, and a lot of people either are all in on Palantir or all out. But yeah, the intersection of war and AI is just something that basically a lot of people are very afraid of and want to shy away from. But Palantir is like, listen, if we're not doing this, then someone else will. So this is like the cost of peace is basically we need to invest in these systems. And the whole concept around Palantir is the pace of war has sped up. So basically, Palantir can use its AI to adjust satellite positions in space to get up to the minute imagery of a certain spot on Earth, which usually that used to take six hours.

13:18So all of a sudden, you have this war being condensed into minutes instead of hours, which is really, really game changing and changes the whole fabric of war in the future. Alex Karp, the CEO, is a fascinating guy. uh apparently he has seven percent body fat yeah which is akin to michael phelps at the 2008 olympics because he cross-country skis so five plus hours a day yeah um really interesting guy uh he wrote this op-ed recently last week in the new york times taught like kind of defending ai development at a time when a lot of experts are saying we need to put pause and it's it's and he invoked oppenheimer right actually like a lot of people have been comparing the development of you know, the atomic bomb right now to the development of AI and mentioning how Oppenheimer regretted the development of the atomic bomb and said he had blood on his hands.

14:09And Karp was just talking about that and how that related to AI. And he's like, look, if we don't do this, then our adversaries will. We don't have a choice. We need to invest in the West. Like, if you believe in the West and Western democratic ideals, then I'm sorry. Like, this is the war. This is where the war is being fought. And if we didn't develop the atomic bomb, then maybe wouldn't have defeated Japan and the Nazis in World War II. And this is very similar to that. So, like, we got to do our own Manhattan Project here. Right. And then I actually think there's this utopian outcome that, again, I'm saying utopian because it might be a fantasy.

14:45But there is a world in which the risk assessment that comes from these AI-generated reports basically renders war moot because you can just run a simulation and see how much casualty or how much it would cost in terms of human life. And the other side is doing the same thing. And so the war is just fought in the algorithms, not actually on Earth. It reminds me, do you know that scene from League of Shadows, the second Sherlock Holmes movie? No. Where Sherlock and Moriarty fight an entire battle in their heads and then they end up just not fighting it. Or the scene in Breaking Dawn, the last Twilight movie, where Alice sees the future and they end up not fighting the war.

15:25altogether. So there is a world in which AI develops to the point where, yeah, you can just run risk assessments and see if action's actually necessary or not. Again, it might be far-fetched, but that is potentially the direction we are heading, fighting in the algorithm. It does seem like we are going to fight in the algorithm and whether our algorithm's better than Chinese algorithms. I'm just saying the word algorithms is losing all meaning, but I don't know if it'll end up where we don't fight at all. It's an interesting thought experience. It's an interesting thought experiment. All right, before we jump into our next story, we're going to take a quick break.

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17:03All right, Neil, we have another IPO potentially coming down the pipeline, but it's not some groundbreaking utopian AI company or an orb that scans your eyeballs. No, the new hot commodity that is seeking to go public is a 250-year-old shoe company, Birkenstocks. For such an old company, Birkenstocks still has a chokehold on the modern fashion industry. Revenue rose 29 % to$1.3 billion last year, and more recently, sales have seen a jump after Margot Robbie or a pink pair briefly in the Barbie movie. Everything comes back to work. And Oppenheimer. We can't freaking escape them. We can't escape them.

17:41This IPO comes just two years after El Cateron, the family investment office of LVMH patriarch Bernard Arnault, acquired a majority stake in the company at a$4.9 billion valuation. El Cateron is hoping to take Birkenstock public at an$8 billion valuation. So not a bad little return for the on again, off again, richest man in the world. Neil, have you ever been a Birkenstock guy? And will you be buying stock in Birkenstock? I have, I think I did own a pair of maybe knockoff Birkenstocks because there are so many. Um, and so I think I did own a pair. I did not like how the, you know, the middle, the, the sole is soft.

18:23It's that famous cork sole, but the outside edges are very hard and rigid. So I would put my foot in and I would just know the whole time. I was like, if you get it in the sweet spot and it's, Oh, then it's a great feeling. But then if you put your foot down, your heel down on like any of the edges. I was like, oh, damn. But the first thing I saw when I saw this$8 billion potential valuation was I Googled the stock, the valuation of Crocs, which is another famous, maybe quote unquote, ugly footwear company that's come back in vogue over recent years. And it's worth 6.6 billion. So do you think that you think Birkenstocks is worth a little bit more than Crocs?

19:00Well, I think so. And I also think that Arnaud is licking his chop licking or licking is his chops looking at Crocs because yeah it is the the ugly footwear that has just caught on in recent years and people love like the comfort aspect of it and like the whole point of it is almost to be ugly it's like anti-fashion in a way but yeah Crocs had a billion dollars in revenue for the second quarter so Birkenstock is right in that they're at the 1.3 billion dollars so they're right in the same range I do just want to talk about Birkenstocks because This shoe is kind of like a chameleon. It's been very hard to kill.

19:33So it started in Germany 250 years ago. It's always prioritized comfort and function over looks. But it caught on in various counterculture groups from skaters to surfers to deadheads, which are Grateful Dead fans. But then Kate Moss wore them in the 90s and they kind of exploded in popularity. Then in the 2000s, you saw Jude Law and Gwyneth Paltrow wearing them. And then High Fashion totally embraced them with Rick Owens, Dior, Manolo, Blahnik, which my girlfriend Tommy had to pronounce that yesterday and they did they did collabs with them raising their profile and then plus they're also very gender neutral and very unisex which has kind of been in style recently as well so Birkenstocks are just they've been embraced by so many subgroups that they're really hard to kill because like they keep having this enduring they are high fashion yeah it's a clog girl summer I love that really is I need Tevas to come back Like they are big out West.

20:27Like I'm sure you saw them in Park City, like Chocos. I saw people. Those are ball in them. Yeah. Those are so popular out West, but they have not been embraced by the Dior's or the Manolos of the world. Just you wait. All right, Neil, let's move on. We are back with another edition of Toby's Trends where I, a young, dumb and blonde Gen Z-er teach you an older, wiser and less blonde millennial about a trend that has been going around the interwebs. Today's trend focuses on something that you and I hold very near and dear to our hearts, and that is sleep. There's a new video game from developer Niantic called Pokemon Sleep, which, as you can likely deduce, combines classic Pokemon characters with a sleep tracking app.

21:07The app recently hit number six on the Apple App Store, so I want to tell you and the listeners a little bit about it. The game uses your phone's accelerometer and microphone to track your sleep habits. the actual gameplay starts when you get a snorlax which is a type of pokemon to observe its sleeping patterns then that snorlax attracts other pokemon as you sleep and the more and the better you sleep sleep the more and better pokemon you can attract when you wake up in the morning you see which pokemon cam comes by and then you have to feed your snorlax and do a bunch of other stuff to upgrade its drowsy power so you can attract better pokemon so people have started to play it and say it's actually working for them.

21:46It doesn't really improve the quality of your sleep, but what it does do is make you excited to wake up and see which Pokemon dropped by. The app also immediately makes you do something upon waking up, so people are saying instead of doom scrolling or something like that, it jolts them awake and gives them something to do. So, Neil, this might be a must-download for us if it helps us get out of bed in the morning. I was going to say, do you want to try this? I really do want to. I was actually one of the first Pokemon Go players, too. I was fully in on that craze, And so I am interested to see what Pokemon sleep does for me.

22:18Apparently it's a really bad sleep tracker though. I was reading a few reviews and they were like, this thing is useless. I know I used to have a Fitbit and it did a much better job of tracking my sleep and waking me up. So if you're trying to look for a health app, then maybe this isn't the one. But if you are, you know, a future Ash Ketchum or someone who was really, really loved Snorlax, then maybe, maybe this is an app you might want to use. Yeah, people were calling it a little predatory too because it's kind of like gamifying your sleep. So people were trying to take more melatonin so they got better sleep.

22:49And then also the actual gameplay is not that fun because the majority of the time you're sleeping and then the time where you're awake, you're literally just feeding Snorlax. So who knows? But I think Niantic just stays undefeated with targeting these different health outcomes basically. Like Pokemon Go is meant to make you walk. This is meant to make you sleep. And they're selling that$55 Pokemon gadget that you can press instead of hitting your phone to go to sleep. So Pokemon is just so good at monetizing its IP. And yeah, I'm definitely going to give this a try. All right. Our final story.

23:27There's a famous tweet that goes like this. European out of office messages are like, I will not be working until September 18th. All emails will be automatically deleted. Americans, I'm in the hospital. Email responses may be delayed by up to 30 minutes. Sorry for the inconvenience. If urgent, please reach me in the ER at dot dot dot. Obviously, the joke is that Europeans are known for taking vacation in the summer, while Americans are cold-hearted workaholics. But that might be changing, at least this year. According to a new Wall Street Journal article, Americans have learned to stop worrying and are actually taking vacations this summer.

24:04More working adults took vacation days in the first half of 2023 than they did in pre-pandemic years, according to data from the Labor Department. The number of employees who took vacation days jumped 11 % in June compared to last year, while the amount of time they took off rose by 5%. Chalk it up to pent-up travel demand after COVID or what have you. But it does seem like more Americans are saying, screw this, I'm just going to be unreachable and you're going to have to deal with it. Yeah. I mean, this is a trend that makes a ton of sense to me because, yeah, no one had anywhere to go during the pandemic.

24:35And so I do think not only is there some pent up demand and there might be some pent up savings, too, from the student loan cost being deferred for a minute. But also there's like a psychological release that over the last couple of years, like we've been so pent up. So I feel like people are just more prone to just saying, yeah, I'm checking out. I'm going to Europe for 10 days. Yeah, but the world was open last year and these figures were, you know, 11 % more time using your PTO over last year. So I don't know if it's just like a pent up COVID thing because, you know, you could travel last year.