DOJ Sues Live Nation & Car Insurance Hits 50-Year High

0:00Tonight on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best I do win! On Brand with Jimmy Fallon. Series premiere tonight on NBC. Good morning Brew Daily Show. I'm Neil Fryman. And I'm Toby Howell. Today, the surprising reason your car insurance bill has gotten so high.

0:39Then you won't believe which city just declared itself the pizza capital of the USA. It's Friday, May 24th. Let's ride.

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1:24If you haven't seen what these babies look like, they're beautiful. And they're sitting on the desk in front of me and Neil right now. So tune into the YouTube channel if you want to snag a look. or just go to shop.morningbrew.com. Now let's hear a word from our sponsor, Sage. Not the herb, but a tool that saves finance professionals a lot of time and money. Neil, we both like cooking, right? I love cooking. Can you imagine cooking with dull, uninspired knives that don't cut anything? That's what running a business without Sage can be like. Sage lets you combine all your entries in seconds, then slice and dice your data however you see fit, mid-meeting if necessary.

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3:41The ultimate goal of the lawsuit is to force a breakup of Ticketmaster, the ticketing giant, from Live Nation, the concert promoter that bought Ticketmaster back in 2010. Many recent antitrust lawsuits have raised eyebrows for maybe being overzealous, but this one, well, the people seem fully behind it. That's, of course, because Live Nation's industry dominance was on full display two years ago when it botched the rollout of Taylor Swift's Eros Tour tickets. An investigation into Live Nation was already underway by then, but the scrutiny certainly ramped up following the massive outcry from the Swifties.

4:16But Live Nation is not going to give up Ticketmaster without a fight. The company fired back that the DOJ caved to, quote, intense political pressure and said that the high ticket prices fans are experiencing right now are set by artists and are a result of surging demand for concerts. It called the suit baseless. Toby, how do you see this case playing out? I see Live Nation as this four-headed monster. You have the ticket sales that comes from Ticketmaster, but then you also have the promotional piece. You have the artist management piece, and you have the venue ownership piece. And the DOJ is saying that they're using this four-headed monster to set up this very lucrative and anti-competitive flywheel where you capture revenue from concert fans and sponsorship.

4:55You use that revenue to lock up artists and these venues into long-term exclusive promotion deals. Then you use that kind of powerful library of live content you have to sign venues. And then you start the cycle all over again. So I do think that the DOJ really looked at this whole flywheel and said, this is not fair to everybody else involved in it. Right. Let's see how this concert promotion arm, which is what Live Nation does really well, and then the ticketing arm, which is when it bought Ticketmaster, work and practice, pick an artist. I was immediately going to say Taylor Swift, but Usher.

5:33We'll go with Usher. Okay. So I'm Live Nation. I'm promoting Usher's concert. I'm running his tour all over the world. I go to a venue like Red Rocks or something and I say, hey, we'd love to bring Usher to your venue. I think he would absolutely kill at Red Rocks, except you know what? You have to use Ticketmaster as your ticketing platform. And if you don't, we're not going to bring Usher to the masses here at Red Rocks. So that is how those. And then, you know, what is what does Red Rocks say? They're like, all right, well, we want Usher. So we have to use Ticketmaster. That is sort of how the DOJ sees Live Nation Ticketmaster playing out by using those two arms of its business to work together to squash competition.

6:13Usher at Red Rocks would be electric. Those are two kind of disparate types of artists, but that would be fun. Yeah, a major focus to the lawsuit, too, is Live Nation's, they called it a competitive detente with a rival venue operator, which is called Oakview Group. There were some emails that leaked out that was essentially saying, let's not both compete for the same artists at the same venue. Let's just go our separate ways here. It's more lucrative. It would drive up artist fees if we were both competing for Usher at Red Rocks, for instance. So there's a lot of juicy bits to this. And, yeah, it really puts Ticketmaster and Live Nation finally in a spotlight that so many fans have had that experience with Ticketmaster, like the long queues, the fees, just the super high prices.

6:56So I think this is a part of the reason, too, why they want this to be the Department of Justice wants this to be a jury trial. They want to get people in the building because I think that they know that there's some sort of emotional connection when it comes to an antitrust lawsuit in this arena. Yeah. And let's talk about Live Nation's response, because they are definitely not going to go down without a fight. They say we have nothing to do with setting ticket prices. That is all on the artists. And there's so much demand for concerts right now. So what are we supposed to do? Prices are going to be sky high.

7:27That is not our problem. And then in terms of who gets the money at the end of a concert, they say that the venues receive most of the money and that their profit margins are actually on the lower end of all S &P 500 companies. So they're going to come with their argument. We'll see how it holds up in court. Right. They're saying it's only 1.4 percent last year, which is far too low, they argue, to indicate an actual monopoly. If the past month has been one big old Sunday for crypto supporters, yesterday was a cherry on top. The SEC approved applications from nine different exchanges to list spot Ether exchange traded funds.

8:03According to CNBC, the SEC's decision does not technically approve the individual funds themselves, so will likely have to wait till later in the summer before they actually start trading. but it does give the regulatory pathway forward for the spot Ether ETFs to be listed on their respective exchanges. So far, nine exchanges have applied, including BlackRock, Fidelity, and Grayscale. So the big boys of traditional finance world are getting involved. Ethereum, which is the second largest coin by market cap in the world, actually fell a little bit after the announcement, but has been on a nearly 30 % run in the past week as SEC's decision loomed.

8:38It's a little confusing with the delay between approval and actual trading, but still another watershed decision for the crypto industry that is still riding high from the spot Bitcoin ETF approvals earlier this year. Yeah, let's talk about the significance of this. First of all, it was a huge surprise. I think as recently as a week ago, there was a lot of concern and doubt that the SEC would approve spot Ether ETFs. This is a big wave of potentially retail investors and institutional investors being able to buy Ethereum. because right now you have to go to a crypto exchange platform, maybe Coinbase or also Robinhood offers it.

9:14But you have to buy Ethereum directly. And that might provide a lot of hurdles for people who are just on their regular exchanges, brokerage accounts, and don't want to, you know, may get a little spooked about buying crypto. And this just puts it in an ETF. And ETFs are these tracking indexes that track everything from stocks to commodities to anything, any kind of asset class. And it's very easy to buy them. And so they think that this, like what happened with Bitcoin, will open up a new wave of funding for people to be able to get into this asset class. People are expecting the Ethereum ETFs to be a lot smaller, at least initially, than their Bitcoin counterparts.

9:53One, it's just got a smaller overall market cap. But also, if you just compare the amount that Grayscale, which is a finance company that has been kind of pushing forward the crypto agenda, And their Grayscale Ethereum Trust currently has around$11 billion in assets under management, which is much smaller than the Bitcoin fund was when that conversation was going on. For comparison, the Grayscale Bitcoin Trust had$26 billion in assets under management before it was approved to convert to a spot Bitcoin ETF. One of the reasons why also I think these might not see as big of an uptake as Bitcoin is these funds won't allow staking.

10:28Staking is where you can basically loan your Ethereum out to the network for a period of time and you actually earn interest on that. I actually do that right now with my Coinbase. And Ethereum ETFs don't allow this. Staking is a big part of the Ethereum ecosystem. So there's a few hurdles here that I think will prevent it from becoming quite as big as these Bitcoin ETFs. When we talk about AI as a gold rush, it does seem like these crypto ETFs are something similar for at least retail investors. Larry Fink is the CEO of BlackRock, which is the largest asset manager in the world, and they've gone all in on this Bitcoin ETF.

11:06He said that his Bitcoin ETF, IBIT, is the fastest growing ETF in the history of ETFs. There's so much demand. So it took 57 days for Bitcoin ETFs broadly to cross$50 billion in assets under management. It took gold ETFs more than five years to hit that same threshold. So all of these institutional finance companies, these traditional Wall Street firms are looking at Bitcoin ETFs, Ethereum ETFs as a potential huge moneymaker. And they're seeing a ton of demand for it. And it feels like in general, along with a major crypto bill that was passed in the House this week, that the vibes on D.C. are definitely thawing towards crypto.

11:44We're getting some regulatory clarity, which is what the crypto industry has just wanted for. They're like, you can regulate us, but just tell us what you want from us. And it seems like we are making steps in that direction. Not too long ago, getting your car repaired was relatively straightforward. Your bumper got messed up from an overconfident parallel parker. You took it into the shop and voila, good as new. But in these high tech times, getting your car fixed is more like taking it to the Apple store. As more vehicles come equipped with fancy driver assist software, cameras and sensors, car repair has gotten way more expensive, with major consequences for insurance and the auto market as a whole.

12:21Fixing sensors and cameras now accounts for more than a third of post-crash repair costs in a new vehicle, according to a new study by AAA. One exec at a major auto body repair company said the change they've seen in the last five years is greater than the change in the last five decades. And that's because new cars, sometimes called computers on wheels, now come with sensors and cameras plastered across the vehicle to enable those safety features like automatic emergency braking and blind spot monitoring. When your car gets crunched by a bad driver, those cameras get damaged and are far more difficult and expensive to repair than bent metal.

12:56They just can't be welded back on. Toby, this is another fascinating downstream side effect of all the tech we've been putting in our cars. Right, and the craziest stat from this kind of rise of tech being inserted into cars is that more than one-fifth of vehicles are now declared a write-off by insurers after examining the claim. So basically, they'd rather total these cars than actually go through the process of repairing them because the math just doesn't math. The repairs cost so much money and after factoring in insurance that you literally make more money just by totaling the cars. So it is very interesting what these downstream effects are.

13:32The rock and the hard place here though is you should probably still get these features. You shouldn't be put off by the repair cost because it does make driving a lot safer, like these rear view cameras, the automatic lane detection, these pieces of software that cost so much to fix also make driving a lot safer. So consumers are kind of left between a rock and a hard place, but you should still probably opt for the safer vehicle overall. I don't think you have a choice at this point. If you buy a new car, I mean, it's going to come with all of these gadgets. And I know when I go home and drive my parents' cars, like you back out of the garage and there's like 17 ,000 things beeping you all at once.

14:07And I'm like, shut it up. I really don't need all this beeping, but it truly is insane cost to repair. I'm sure a lot of people have been shocked when they've looked at the bill and they've taken it into the shop. I mean, if you just want to replace a side mirror with a camera on a new F-150 pickup truck, that'll cost you$1 ,600, which is kind of insane for a mirror. But the thing is that it also comes with a camera and replacing a camera is not just like slapping another camera off. You have on you have to calibrate it as well. You have to log some road miles so it can get used to where it's looking.

14:39And so all this tech comes at a huge price tag. Another thing to consider here is that auto body repair technicians are extremely in demand right now because you're right. They're not just bending metal back into place anymore. They are very, very highly trained individuals who have to be able to calibrate these sensors. So that is another downstream cost that's passed on to insurers that are eventually passed on to consumers as well. And it's why we've been having this conversation around car insurance and how it's been leading to sky high inflation. We talked about the inflation numbers that came out earlier this month.

15:11And car insurance was one of the biggest drivers of inflation overall. So that is probably why you're seeing your insurance premiums go up. Yeah, they're up 23 percent from a year ago, which was the largest annual increase since 1979. Up next, whip out your portfolios, ladies and gentlemen. It's stock of the week, dog of the week time.

15:33This episode is brought to you by State Farm. Checking off the boxes on your to-do list is a great feeling. And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you. Whether you prefer talking in person, on the phone, or using the award-winning app, it's nice knowing you have help finding coverage that best fits your needs. Like a good neighbor, State Farm is there.

15:59Race the runners! Raise the sails! Raise the sails! Captain, an unidentified ship is approaching. Over. Roger. Wait, is that an enterprise sales solution? Reach sales professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title, and more. Start converting your B2B audience today. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started today at linkedin.com slash campaign. Terms and conditions apply. bird flu is getting a little scary yoga pants are getting commoditized and i couldn't be more excited to bring you another edition of stock of the week dog of the week this is the segment where we pick one stock that rated morning brew daily five stars on both apple and spotify and one stock that pronounces sriracha incorrectly neil it's been a bit of a shaky week in the markets but i tell you what you dominated the pre-show windsurfing competition with these So you're up first.

16:56What's our stock of the week? My stock of the week is the biotech Moderna. And when shares of a vaccine maker shoot up 24 % in a single week, it's usually not good news for the rest of us. And so it is this time. Moderna's shares got a boost after the U.S. government said it was in discussions with the company, as well as Pfizer, over a potential avian flu vaccine program. Yup, bird flu or H5N1. The news of readying a possible bird flu vaccine came as a second human case of bird flu infection was found in the U.S., a worker at a dairy farm in Michigan. Remember, bird flu has been spreading in cattle across the country, with a count of dairy farms infected up to 51.

17:37Officials are concerned about this mammal-to-mammal spread, but still say the public health risk to humans is very low. Still, the fact that the government is talking to Moderna and Pfizer about prepping a vaccine shows they're taking the threat seriously. The U.S. does have an existing stockpile of bird flu vaccines, but it's not nearly enough to cover the population should something like a pandemic happen. Toby, Moderna, Pfizer and other vaccine makers were all on the rise this week. Their investors love to see it. The rest of us, not so much. Yeah, it's such an interesting thing here because analysts covering the stock is the bold case for Moderna as if another widespread pandemic happens.

18:14So a lot of them are saying like, we probably expect them to retrace their gains unless something like a wide scale pandemic happens. So it's a very interesting stock to kind of cover. This is actively happening, though, that Moderna is going ahead and starting the process of converting some of those raw materials that the U.S. has stockpiled into doses of Avian influenza vaccine, even if it doesn't become pandemic level, like if it becomes more widespread, then they will have these ready. So just a very interesting stock to cover in general. Yeah, there's a there's a very fascinating debate also happening within the public health community because it's like, all right, well, we know that avian flu is spreading.

18:55It could come to humans. It could not. Most likely not. But shouldn't we be prepared and shouldn't we ready hundreds of millions of doses of vaccines right now just to get ahead of it. But it's not that simple of an equation because these vaccine makers have only so many a finite number of assembly lines and they have to produce things like the seasonal flu vaccine. And you kind of have to produce either the seasonal flu vaccine or other vaccines that can save people's lives or this other one for the avian flu that you don't even know if you need. So there is a there's a very much of a question and it's uncertainty whether these companies like Moderna and Pfizer should switch out all of their production and start making the avian flu vaccine.

19:33It's not as simple as saying, yes, you should just to be prepared. Let's shift over to the dog of the week. And my dog of the week is Lulu Lemon. I'm wearing their pants right now, but apparently it wasn't enough to keep them out of the dog column. The stock is down 12 % in the past week after some reshuffling at the executive level. Chief product officer Sun Cho is out, but the company doesn't plan on backfilling the role. Instead, they plan to pull a money ball and try to recreate Cho in aggregate with a new team made up of execs from the merchandising and brand branches. It's the kind of shakeup that you don't really want to see from a company that does rely on innovative product design to maintain its foothold in the ultra-competitive athleisure space.

20:14There is just a general malaise around Lulu after it offered weak guidance last quarter amidst shifting consumer trends and increased competition. How about this stat, Neil? Lulu is the worst performing stock in the entire S &P 500 so far this year. Worse than Boeing, worse than Walgreens, worse than everyone. Pretty crazy. Pretty crazy. I mean, it came out of the pandemic riding high. And I thought that along with all these other COVID stocks, it would fall back to earth because people were dressing up again and weren't wearing athleisure just to bum around the house because they're going back to the office.

20:49but it does appear like there is true competition here from people like from companies like Aloe and Vori. And analysts have walked around Lululemon stores and they're really not impressed with what they've seen from the selection. And they're like, oh, my God, there's all these colors available and all these different you have way too much inventory here. It's a sign that people that your products are not resonating with customers as much as they used to. And I'm not, you know, an apparel expert or anything, so I don't have any prescriptions for what they should be doing but it does appear like lululemon is in a bit of a slump right now yeah and apparently cho was a baller too lululemon's revenue grew by 20 compounded annually during her tenure obviously can't be attributed just to one person but a lot of analysts were like listen she played an integral part in making lulu the the juggernaut it's been over the past seven plus years but you're right the business has just matured at this point it's an established brand the hyper growth days are over The growth opportunities now lay abroad, and that's always a little bit of an unknown.

21:49So, yeah, it's just a lot of things combined to make Lulu just not as exciting to investors. But hopefully you can bounce back because I do like their pants. I will say I see a lot more aloe stuff going around these days than Lulu. Moving on, trillions of cicadas are now emerging across the United States. And you know what? I'll go ahead and say it. Those cicadas are looking like a snack. I mean that literally. Adventurous eaters and even some restaurants are using the opportunity to widen their culinary horizons and eat the bugs, which are high in protein and apparently taste kind of good. A brewery in suburban Chicago made headlines this week by announcing a cicada-infused malort.

22:28And anyone who's been forced to drink that stuff knows that adding insect flavor couldn't possibly make it any worse. Elsewhere, people are hosting potlucks where you must bring a dish with a cicada component. And a restaurant in New Orleans called Bug Appetit is serving dishes like cicada salad and roasted cicadas. Toby, are you joining this cicada feast? After all, we eat wet bugs like lobster and shrimp. Why not eat dry bugs? I am so conflicted on this because I love the idea of a crispy, maybe fried, tempered. That crispy exo-celeton sounds very good. But once I start thinking about kind of the juicier innards, it really is off-putting to me.

23:07I do love this from the creative director of the brewery that's making this Malort shot. He said basically, everyone already hates Malort. So it's like, let's just try to make it even worse. So clearly this is more of a stunt in that regard. But yeah, I have seen other things that cicadas have a flavor reminiscent of succulent lobster. I don't know. They are relative. Yeah. I mean, they are both arthropods. So it makes sense. I'm very conflicted on this. You have eaten crickets, though. Grasshopper, yeah. Oh, grasshopper. I ate grasshopper in Mexico City. I am very adventurous. I'll eat anything.

23:39That did not taste good. That definitely warded me off to the insect thing because it just tasted like grass and soil, so earthy. And I really couldn't stomach more than 10 of them. So it was the taste, not the texture? It was toasted. It was toasted with a chili sauce and a little lime. But it's the taste that got you, not the texture? It was the texture. It was both. Okay. It was bad. I think cicadas probably might be a little bit better. And there's a lot of people out there that say that they taste quite good and a little more seafood-y probably than grasshoppers do. So I'd definitely be down to try it.