'Catastrophic Implosion' Destroys Titanic Sub & Why Global Inflation Keeps Rising

0:00I love you. superhuman.com slash podcast. That's superhuman.com slash podcast. Good morning, Brew Daily Show. I'm Neil Freiman. And I am Toby Howell. On today's Friday show, you thought we were done with interest rate hikes? Inflation would like a word. And we'll hop in a time machine to meme stock mania of 2021 to hang with Seth Rogen, Pete Davidson, and Nick Offerman. Then the search and rescue operation for the Titan sub has unfortunately ended in tragedy. Plus, Bed Bath & Beyond might have a new lease on life, even if it doesn't actually have any leases anymore. Neil, it's Friday, June 23rd.

1:07Let's ride.

1:12Neil, you plugged this podcast at the top of the newsletter this morning, so I just want to give a quick shout out to any new listeners or watchers who are joining us for the first time. I also want to give them a little behind the scenes anecdote to start off the show this morning. So every time that we hit a new daily downloads record, the CEO of Morning Brew, Austin Reif, sends Neil and I a gif of Stone Cold Steve Austin, the WWE star. I love this because we don't even have to look at the numbers anymore. I just wait around till 6 or 7 p.m. to see if we get that little gif from Austin. And luckily this week we got that gif right on schedule.

1:52I got a little slack notification so i guess the story moral of the story is share this pod with your friends so austin can keep sending us his little stone cold steve austin gifts yeah it's been a nice growth trajectory we're very grateful uh for everyone listening and watching uh this has been so fun and i don't even know how many episodes we've been doing i know almost 100 now coming in on 100 so freaking crazy thanks everyone for 88 i'm being told uh and we started in the winter now it's the summer, which is kind of nice because, you know, the sun comes up a little early. And when we go back to the winter, it'll be kind of interesting to see what it'll be like this early in the morning.

2:30We have a Friday tradition where we do this classic, you know, small talk situation. So, Toby, I got to ask you, was it a fast week or a slow week? This is like when you put an asterisk next to someone's sports title because some controversy happened. For me, it is obviously a fast week because I missed Tuesday. It was already a short week because of Juneteenth federal holiday. So obviously it's a fast week for me. It was a fast week for me too, but even normalized for the short week. So like per capita, it was still a short week. It was very busy. We are speeding towards July 4th. So excited for another holiday.

3:09There you go. All right, Neil, let's jump into our top story of the day where unfortunately the saga of the missing Titan submersible that lost contact while exploring the Titanic has come to a tragic end. We now know that all five passengers on board, including a Pakistani businessman and his son, a British billionaire, a legendary Titanic explorer, and the CEO of Ocean Gate, Stockton Rush, have died. The news broke yesterday after pieces of the sub were found on the ocean floor near the Titanic and later confirmed by a statement from Oceangate, which was the company that managed the craft. There are so many different parts of this story that we've already touched on, but I just want to briefly sum up one additional piece of information we learned in the past 24 hours.

3:55I think the biggest bombshell is that the U.S. Navy actually detected audio that sounded a lot like an implosion all the way back on Sunday, right around the time that the craft lost communication with its mothership, but the sound wasn't definitive and thus they allowed the search and rescue mission to continue over the past week. Only when the debris was found yesterday were officials ready to declare that the search was over. So Neil, what are some of the biggest storylines that stand out to you now that we know the fate of the division? Well, you know, when you talk about not suffering when you die, this is the most instantaneous way you can go in possibly history.

4:34I was looking on Quora and they were mentioning this about a nuclear sub. When a submarine hull collapses, which is what happens here, happened here in the Titan disaster, it moves inward at about 1500 miles per hour or 2200 feet per second. A modern nuclear submarine's hull radius is about 20 feet. So the time required for complete collapse is about one millisecond. And the human brain's rational response time is at best 150 milliseconds. So we were all wondering whether they were, you know, down there alive, gasping for breath with the oxygen tank dwindling. And this is not what happened here.

5:13Yeah. You saw a lot of people saying that of the worst case scenarios, this is like the best of the worst case scenarios because it happened so quickly. We also got an appearance, a television interview appearance from James Cameron, who is the director of the Titanic movie. and he his big quote was i'm struck by the similarity of the titanic disaster saying it was kind of the same thing where maybe the hubris of a a pilot plowing forward into the unknown without giving the proper safety precautions very similar parallels there but he has a ton of credibility he's not just uh the titanic director he is a underwater explorer too he's built his own submersibles he's made 33 dives to the titanic wreckage and he kind of did a mic drop yesterday on all these interviews when he was like, I've been on the Titanic for more time than the actual captain of the Titanic.

6:04So he comes out of this looking really good. He also criticized, yes, Ocean Gate, the company who seemed to ignore a lot of warnings from experts over the past few years for not getting their craft certified by this third-party body of experts. Yeah, and then also just to quickly touch on kind of the internet's reaction in this story. Wild. This was one of the more collective internet stories we've seen since we've been doing this podcast for sure. And there's so many angles. Like you had the billionaire's stepson, Hamish Harding, who went to a Blink-182 concert. The internet was kind of up in arms about that and his reaction to it.

6:43And then he also started just being kind of generally creepy and inappropriate on the internet. And then there was also like there was the orca angle too where we had just heard about these orca attacks. and people are saying this is the ocean kind of uprising. So there was a lot of different jokes being made and then people saying, should we be joking about this? So just one of the true internet stories of the year so far. And then you had the media kind of navel-gazing, being like, we're covering this so much. We're covering this wall-to-wall. Meanwhile, last week there was a huge migrant ship disaster where hundreds of people were killed in the Mediterranean, one of the worst disasters ever.

7:19And that got a fraction of the coverage of this. Which, look, people are going to be more interested in this. That's just a fact of life. But the media was kind of being like, look, look at what we're doing. And you saw a lot of pushback. I want to talk a little bit about what's next for the adventure tourism industry, which is this growing industry of taking really wealthy people to underexplored parts of the world like Titanic, Mount Everest, the South Pole, and obviously space. And this is a huge industry. It was going to grow to$1 trillion this year. I mean, the tickets for this particular voyage were$250 ,000.

7:56So there's a lot of questions about will there be more oversight of these extremely dangerous missions? I mean, my take is that nothing is going to stop explorers from exploring. It's human nature. Absolutely. And one final point on this topic, we did get some questions. What the heck were the banging noises? because remember there was a Canadian aircraft that detected banging noises that they thought sounded human because the regularity of them. And honestly, there's not a great answer for this. A lot of the theories are maybe it was just the wreckage itself hitting together. Maybe it was just wildlife.

8:30Like there are noises in the ocean. So that was the big question I had. It was like, I thought we heard the ocean is loud. Have you ever been to the beach? The ocean is like a hundred decibels. The ocean is very loud. Absolutely. All right. Let's move on. Inflation. I have this comparison. Inflation is just like glitter. No matter how hard you try, you just can't get rid of it. And I'm not necessarily a glitter guy, but when you get it on you, you cannot get rid of it. That is for sure. So central banks around the world have raised the alarm yet again that inflation is sticking around much longer than they expected.

9:04So they are jacking up interest rates even higher to stamp it out once and for all. The most significant move came yesterday when the Bank of England made the surprise move to jack up interest rates by half a percentage point, which shocked markets. England's inflation rate is still stuck at a much too high 8.7%. And the central bank is like, look, I know you're all sick and tired of these high interest rates and what it's doing to your mortgages and loans. But we still have a huge inflation problem on our hands. So we got to do something about it. But it's not just the Bank of England. The European Central Bank and the central banks of Australia, Canada, Switzerland and Norway have all announced rate hikes in the last few weeks.

9:45Even Turkey, which had gone against the grain and lowered interest rates to combat inflation, which is not typically what you should do. they turkey yanked them up another 6.5 percent yesterday so this is clearly a pattern yeah the central banks are in such a rock in a hard place right now because they need to decide if inflation really is stalled and they still have to keep uh hiking rates or if it's coming down and hiking rates would be disastrous if they are coming down so it's a call that would either like have send the world like the the richer countries in the world into a deep recession or force it to like endure these high years, these years of high inflation.

10:25So it might, I don't ride, I don't envy anybody in the central banking systems. It might sound very theoretical that, you know, the bank of England or the European central bank or the fed is meeting in their little offices to decide interest rate hikes, but it really will determine the course of the economy and a lot, a lot of, you know, your personal finances and what you're going to pay for homes. So this is a big decision and it's going to happen here too. It seems like we know that the fed paused interest rate hikes last meeting for the first time in 15 months. But Powell was like, I just want to warn you, this is a pause.

10:58I'm not stopping. And so he was on Capitol Hill this week saying, look, we're probably going to have to raise rates one or two more times this year. Inflation is still rising at 4%, which is double the Fed's 2 % goal. Yeah. And if they raise it two more times, just big picture here to cap it all off, you would see U.S. rates at a 22-year high. So it just goes to show you just how big these rate hikes have been. And the economy is still ripping. We added 300 ,000 jobs last month. It's a paradox. So economists are like, what is going on? Have they already filtered through the economy and we've just fundamentally changed our spending behavior?

11:33Or do we still have to wait? It's very confusing. Yeah, wait for it to filter through. It is very confusing. Thank God we're in these chairs and not their chairs. All right, Neil. our next story takes us to the corporate graveyard where an iconic company is coming back from the dead. Well, kind of. According to court documents released yesterday, Bed Bath & Beyond's name, IP, and digital assets have been bought by overstock.com for$21.5 million. So just to be clear, this deal won't keep any of the Bed Bath & Beyond stores open, which are in the process of clothing after Bed Bath & Beyond filed for bankruptcy back in April.

12:12But Neil, this feels like a pretty savvy move from Overstock, which is this big budget online retailer. Their stock jumped 17 % on the news that they did this. Their big thing was after they had this huge boom during the pandemic of these big ticket items, they're kind of going after these smaller home decor and home appliance offerings. And so adding that Bed Bath & Beyond brand helps them target that audience. So they now have the rights to Bed Bath & Beyond's brand, but they also have their eyes on some other parts of its portfolio. They are targeting Bed Bath & Beyond's vendors, some of its real estate, and then obviously some of its customers.

12:48So what do you make of this move from Overstock? I guess I just don't know how you value the name of Bed Bath & Beyond. How do you know how much its IP is worth? Well, there are some digital assets included too. So I'm sure there are some, but it feels like they, I first it's an iconic brand. And so twenty one and a half million dollars to me felt like I just don't know. I guess the price is what someone is willing to pay for it. Yeah. But we've seen this happen before where these zombie retailers, they go bankrupt. And then you see these like vulture companies swoop in and pick off their carcasses and buy up their IP and their brand names and not necessarily the real estate.

13:28It happened with Circuit City, Linen and Things, Dress Barn, Radio Shack. Barnes & Noble bought the IP to Borders, and now Borders.com redirects to Barnes & Noble. I love that. That's just dancing on their grave. Absolutely. But honestly, I don't love this move because we were looking into one of these companies, one of these vulture companies called Retail E-Commerce Ventures, REV. or Rev. It's owned by, it's run by Ty Lopez of all people and a partner. And they've got Pier One Imports and Radio Shack and Modell Sporting Goods, which they paid$4 million for, but it does not seem like it's going well.

14:06I know. They are just saddled with all this debt. They bought up all these brands. I think it was more like they're social media influencers. And so having the credibility of saying we own these five brands sounded good at the time because they bought them at really distress rates during the pandemic. But now they have all these brands that no one really wants. Apparently their online store is selling merchandise from TJ Maxx from 2021. And if you go to the Models site in March, it said football season is right around the corner. And people were like, did you know the Super Bowl was just played?

14:40So it looks like they're not investing in these online marketplaces at all and just kind of letting them die. They're truly zombies. Meanwhile, Rev is kind of taking money from unsavvy investors and just lighting their money on fire. So it really does not seem like a great operation. And there are reports recently from the New York Post and the Wall Street Journal that Rev is going bankrupt itself. Sometimes zombie brands are better left dead, Neil. All right. Before we jump into the next story, we're going to take a quick break.

15:17Here we have the Lemu Emu in its natural habitat, helping people customize their car insurance and save hundreds with Liberty Mutual. Fascinating. It's accompanied by his natural ally, Doug. Uh, Lemu, is that guy with the binoculars watching us? Cut the camera. They see us. Only pay for what you need at LibertyMutual.com. Liberty, Liberty, Liberty, Liberty. Savings vary underwritten by Liberty Mutual Insurance Company and affiliates. Excludes Massachusetts. This episode is brought to you by State Farm. Listening to this podcast? Smart move. Being financially savvy? Smart move. Another smart move?

15:55Having State Farm help you create a competitive price when you choose to bundle home and auto. Bundling. Just another way to save with a personal price plan. Like a good neighbor, State Farm is there. Prices are based on rating plans that vary by state. Coverage options are selected by the customer. Availability, amount of discounts and savings, and eligibility vary by state. All right, we are back with our Friday segment, Stock of the Week, Dog of the Week, where we look at one stock who is the market's teacher's pet and one stock who got kicked out of class. As always, Neil and I are just humble podcasters, so please note that none of this is financial advice.

16:32I've been on the dog train recently the last few weeks, so today I am kicking us off with the Stock of the Week, which isn't actually a stock at all. It's a crypto meme token called PepeCoin. It jumped over 40 % in the 24 hours ending yesterday, and it's up over 70 % in the last week. Now, meme tokens or meme coins are kind of this unofficial subset of the crypto ecosystem that first became big when Dogecoin went absolutely berserk during the pandemic. Pepecoin is similar in the sense that there's no real inherent value to this token at all. It serves no real purpose other than to be a vehicle of speculation and to be memed.

17:11All that considered, it still racked up$800 million in trading volume over the 24 hours yesterday. And part of the reason is because there's almost like this short squeeze going on, kind of what happened with GameStop back in the day. And the market is overall bearish long-term on Pepecoin, which is forcing people... Surprise, surprise. Yeah, surprise, surprise. But those bears have been getting wrecked recently. There was over$13 million in liquidations that occurred in the last week. and a liquidation happens when basically an exchange forcefully closes someone's position because they over leverage themselves and they can no longer afford to keep that position open.

17:49So I guess keep an eye on PepeCoin. Like it sounds ridiculous to say, but PepeCoin. PepeCoin. I don't know if I have anything to say. I know. It's honestly... Is there anything that sparked it besides the short squeeze? It was more like PepeCoin describes itself as the most memeable coin in existence. And like they also said that dogs have had their day because Dogecoin had their day. So I don't know. It's more it's kind of one of those things that when someone someone opened a huge position and they saw that they started making money and the rest of the ecosystem kind of turns their eyes to it.

18:23So it's pure speculation. But we'll keep our eye on Pepecoin. Yeah. I always keep my eye on Pepecoin. All right. Let's go to the dog of the week. So last week at this time, I was sitting in the same chair talking to not Toby about how Disney's Pixar animation studio had maybe lost its magic. And sure enough, that turned out to be very true. Disney stock has fallen about 4 % this week for a couple of reasons, including that Pixar's latest movie, Elemental, was a complete flop. It had the second worst opening of a Pixar movie ever. And the worst was actually, I'm quizzing you. I know what it is.

18:59Toy Story. Toy Story. Toy Story in 1995, but you can't really compare them because movie tickets were half the price of what they are now. So essentially, there's no dispute that Elemental was easily the worst Pixar debut of all time, bringing in just$29.5 million at the domestic box office. Meanwhile, there's an executive exodus going on at Disney. The company's CFO resigned last Friday. And this Wednesday, Disney's chief diversity officer left the company. So would not want to be Bob Iger, the CEO right now. You've got Pixar that's in a slump, a superhero franchise in Marvel that's not pulling in the money it used to, softening growth in your parks business, a feud with a governor of the state you make a chunk of your money in, Florida, and you're facing a lot of competition in streaming and an existential crisis with your longtime cash cow ESPN.

19:49Oh, man. PepeCoin was so much more simple when you compared to that. But yeah, I'm kind of bummed because Elemental, it has 92 % Rotten Tomatoes audience score, which it seemed like people generally kind of liked it. But I guess, yeah, it just didn't have that interest that some of the other Pixar movies had. So investors are turning a little bearish on Disney because of all those things I just mentioned. And some are speculating that Apple could swoop in. It's not the first time, but maybe Apple could swoop in and buy it. All right, let's go to the NBA where the Victor Wenbanyama era has begun.

20:22The 19-year-old French phenom, who is 7 '4 and has an 8-foot wingspan, was selected number one overall in the NBA draft last night by the San Antonio Spurs. This guy is an otherworldly talent. He's been called the greatest basketball prospect since LeBron, who was drafted 20 years ago. And he's also an unmistakable sign that the NBA is becoming dominated by foreign players, especially Europeans. The last five MVP awards were given to three international players, Joel Embiid. What's up? Recent NBA champ Nikolaj Jokic and Giannis Antetokounmpo, which I nailed. Well done. So what accounts for the Euro takeover is an interesting question.

21:02When Banyama has a few ideas, he started playing professional basketball in France when he was 15. And when most American basketball players are getting driven to their high school practice by their parents. And he thinks this exposure to high level talent at an early age gives Europeans a leg up. earlier this week kind of made waves by saying that europeans play at a higher level than american prospects yeah i mean i love first of all i just love that the nba is one of the more stronger international leagues domestically because they also just have smarter rights rules than like the mlb for instance which if you post a video of someone hitting home run they'll immediately strike it down so they've been very lenient and have yeah invested deeply in their international scene.

21:43But then I also kind of want to talk about how the college scene is being cannibalized a little bit by the international scene, plus these kind of high school straight to the league pipelines. And so four out of the top five picks in this NBA draft did not actually play college basketball. And yeah, Overtime Elite is there's there's two of them, which is G League Ignite and Overtime Elite. Overtime Elite is this trade school where they're offering players a minimum of$100 ,000 to come and you learn social media skills, you learn financial literacy, you take some, you know, quasi academic classes, and you just play basketball and they train you to go to the NBA.

22:23And it's kind of disrupting the landscape. Meanwhile, college basketball is fighting back with NIL. And they're like, look, you can go to their, you know, overtime elite or G League Ignite, which is one of the other sort of prep prep things for basketball. Or you can come to us where you can be a god at like Ole Miss or Kentucky or Duke and also make a lot of money from your image and likeness. So I think this is just the continuation of the professionalization of basketball because you can't enter the league until you're 19. So this age from 16 to 19, I think you're going to see a lot more kids making a lot more money from during that time span.

23:01I say good on it. Like, absolutely. They bring in a ton of eyeballs, a ton of views. So I think they deserve to be compensated. All right. Let's move on to our final story. Remember back in 2021 when we called stocks stonks and they only went up even if they were worthless? Well, we got to relive those glory days once again because there is a movie coming out this fall about the meme stock craze called Dumb Money. And the first trailer was released yesterday. It tells the story of how Keith Gill, also known as Roaring Kitty, a YouTuber, and a group of individual traders on Reddit took down the hedge fund Melvin Capital by driving the share price of GameStop to the moon.

23:37It's got quite the cast. Paul Dano as Roaring Kitty. Pete Davidson as his brother, which I don't know if it was actually a major character. They were just like, let's get Pete Davidson in there. Seth Rogen as Melvin Capital founder Gabe Plotkin. And Nick Offerman as hedge fund kingpin Ken Griffin. And then you also this. I'm just so excited for this. I mean, we talked about like unique internet moments in history, and this was definitely one during the pandemic. It was just this cultural phenomenon. You don't often see like these kind of insider finance stories just explode into the mainstream.

24:09So, of course, we're getting a Hollywood movie from it. Of course, I'm going to go see it because like we lived it. We lived it. I'm very excited for it. Yeah, it's very big shorty. Yeah. It feels like. I'm going to, it's going to be interesting how like they explain some of like, how do you explain a short squeeze? Like, are you, remember Big Short literally had like Margot Robbie in a bathtub, like cutaway scene. So I always wonder how like you approach these financial stories. And I think it's going to be great. We should host an MBD watch party for it. Absolutely. Let us know if you'd be down for that.

24:38That is our show for Friday. A lot of info. Wow. You can always reach us at Morning Brew Daily at MorningBrew.com with any questions, comments, concerns, praise, more praise. That would be great. And a huge thanks to our control room who puts the show together. Emily Milliron is our editor and producer. Samantha Veles and Raymond Liu are the associate producers. Yuchenna Waogu is our technical director. Billy Menino is on audio and big Kelly Clarkson fan apparently. Hair and makeup is on strike because we both wore hats today. Devin Emery is our chief content officer, and our show is a production of Morning Brew.