Fed Hikes Rates Despite Banking Woes, AirBnB Room Rentals & NY Out On Gas Stoves

0:01This message is brought to you by AppleCard. Apple Card members can earn unlimited daily cash back on everyday purchases, wherever they shop. This means you could be earning daily cash on just about anything, like a slice of pizza from your local pizza place or a latte from the corner coffee shop. Apply for Apple Card in the Wallet app to see your credit limit offer in minutes. Subject to credit approval. Apple Card issued by Goldman Sachs Bank USA Salt Lake City Branch. Terms and more at AppleCard.com. Good Morning Brew Daily show. I am Neil Freiman. And I'm Toby Howell. Today we have a special May the 4th Be With You Star Wars Day episode, and we're going to talk about the Fed hikes interest rates again, but for the last time, could it be?

0:44Yes. No longer cooking with gas, New York is. Oh my gosh. I didn't know we were doing Yoda speak. Also, I need a little grumble in your tone there. But wow, that's going to be tough to follow. we'll also be talking about some of the changes Airbnb is making because it heard some of the youths were actually booking hotels and then before finishing up with a super nerdy story about a star consuming a planet. Neil, it's Thursday, May 4th. May the 4th be with you.

1:18Okay, real quick off the top of the show, I have some news to share. I will be out of town starting tomorrow and also the entirety of next week. I know, it's very sad. I'm going to Spain with my girlfriend and her family, but there will be plenty of awesome guest hosts to fill in in my place. I don't know if any of them have blonde hair, though, Neil. So you're going to be all right without looking over and seeing this? We're going to be great without you. We're just worried about you. I want you to share your itinerary with all of us and hope you have a good time. We're going to Marbella. We're going to Madrid.

1:51We're going to go to a Real Madrid game. So I'll come back with some stories and hopefully a little tan. I will be here in New York where I always am. Holding down the fort. I need to go somewhere really, really desperately. Let's move on to the news. So yesterday we might have just seen our last interest rate hike for a while. Yesterday, Jerome Powell, the Fed chair, raised interest rates for the 10th straight meeting to try to bring down inflation for good. To give you some context on how gigantic these rate hikes have been, we went from near zero interest rates just last year to above 5 % now.

2:26So now the benchmark interest rate that the Fed controls is the highest it's been in 16 years. But yesterday, Powell suggested that with inflation maybe coming down and the banking crisis doing the Fed's job for it and dragging down the economy, it might be time to say my work here is done and hit pause. Yeah. As always, everyone was hanging on every word from Jerome Powell. And one of the big deals of yesterday's kind of announcement was that he kind of acknowledged that this could be the end. They took out language previously released in other reports saying that, oh yeah, we're definitely going to keep hiking rates.

3:04That language was kind of removed. And that was a big deal to a lot of people because light at the end of the tunnel, we feel like this might be the last rate hike for a little bit. Yeah. And let's talk about the role of the regional banking crisis in that. So four U.S. banks have collapsed since early March, and that's tightened credit conditions that's led to a slowing of the economy that the Fed was trying to do. So, I mean, Powell mentioned it basically in his press conference yesterday saying like, I don't know, he uses crazy phrases that you can read to us. But no, this is word for word what he said.

3:35He said, in principle, we won't have to raise rates quite as high as we would have if it hadn't happened with it, meaning the banking crisis. So that reminds me of Senora Alvarez in ninth grade teaching me the subjective tense. I know. Literally, I feel like I have to diagram that sentence. It's bringing me back to English class as well. But essentially, if I had to decode it a little bit, he said, if the banking crisis hadn't happened, then we probably would have had to raise rates more. So again, it's this really weird thing where somehow the banking crisis has these positive aspects and has kind of done the job of the Fed for it a little bit.

4:14It feels weird to say that, though. But people still criticize Powell. He can not have, you know, people just like hate on him every single time that he does something. Some folks were saying the Fed should have not hiked interest rates this time around because all of the economic data they're looking to is a lagging indicator. And, you know, they're saying inflation is coming down. The labor market is cooling down. The regional banking crisis still hasn't seeped into the broader economy. So you're just behind the curve and you're going to induce a recession here. And then others say that he shouldn't have been so direct in saying that they were going to pause because what if inflation still keeps ripping the next time the job market is still super hot.

4:51All of these economic indicators don't go down, as they're saying. And then the Fed does a surprise interest rate hike and people and investors. That's the last thing they want from the Fed. The Fed is supposed to give a very clear signal and vision about what it's going to do in the future. And any surprise gets investors really antsy. Riled up. Yeah. To be fair, he did say that the case for avoiding a recession is, in his view, more likely than having a recession. But of course, a lot of people disagree with that. Yeah. But of course, he kind of has to say that. Honestly, he can't say like, yeah, we're definitely plunging the economy into the recession.

5:26Right. But I mean, that's what rate hikes are designed to do. They're designed to slow the economy down, slow growth. So it's not exactly going to be out of left field if we do enter a little bit of a recessionary period. So that was a lot. But the big picture here is that the Fed, by sort of pausing interest rate hikes, is showing that maybe the past four years, the biggest concern here was inflation. And now the biggest risk or the biggest concern for the economy is a recession and more banks failing. Yeah, it's definitely, that's the macro environment we live in. Very confusing. Inflation is still around.

6:00I don't get that people are saying, Like it's, it's coming down. Like it is still above 5%. Hey, believe me. I just had a sweet green salad. Almost 20 bucks. Oh my God. I know. Okay. All right, Neil, let's talk Airbnb. Uh, anyone who has booked an Airbnb in the last few years has probably had a similar complaint and experience. Prices were way too high and it all comes back to those hidden like cleaning fees and whatever fees that they make up. So It got so bad that a lot of people gasped, just anecdotally speaking here, started looking at hotels when they were traveling, like a wild concept to a lot of young people.

6:38So Brian Chesky heard all of us and yesterday dropped kind of the mother of all product updates. He listed 50 of the most commonly complained about aspects of Airbnb, then described in detail how the company was addressing each one. So I won't go through all 50 because there was a lot. But the one that stood out to a lot of people was this update called Airbnb Rooms. So Rooms basically facilitates the renting of these cheaper single rooms in shared homes. So this has always been an option on Airbnb, honestly. But now they're giving it its own real estate in the app, and they're just kind of prioritizing it a little bit more.

7:15And obviously, the price point is the biggest seller here. So the average room that you're sharing in a larger house runs you about$67 a night. The average daily rate over the last year has been$153 a night. So that's the big selling point here is they're trying to bring down those costs that a lot of people are really mad about. Yeah, it feels like$100 is that threshold where you're like, I really don't wanna pay over$100 a night for a room. But this goes back to their, I think they called it their soul, like the original Airbnb mission, which was Brian Chesky, who's the CEO, Joe Gebbia, who founded Airbnb, started renting out a room in their San Francisco apartment in 2007 to pay to help pay their rent.

8:00And that's how Airbnb started. And so they're kind of going back to their roots here with rooms in this very inflationary environment. But they acknowledge that people were choosing hotels over Airbnb. And yeah, again, anecdotally, I was going to Philadelphia and I was like, I'll book it guys. Don't worry about it. I'll book the Airbnb. And they were like, actually, I kind of prefer hotels and i was kind of shell-shocked but but and it goes to this other product update that was the other big one which was the checkout list yeah it people were i mean morning brew literally made a video about this how absurd the checkout list became at airbnb's where you were like do the laundry like all the towel mow the lawn take out my dog reconnect with my estranged child it became a meme yeah truly and and chesky acknowledged he's like we need to stop this from becoming a meme.

8:47I've seen, he's like, I'm on the internet too. I've seen you all making fun of these ridiculous checkout lists. So they're making changes to make it more transparent around, you know, you can look at the checkout list before you book a listing. Right. One other angle of this that I think is very interesting is that VRBO, which is owned by Expedia, it's a big competitor to Airbnb. They're taking a totally different tact and they're basically, their main selling point is that we're only renting out entire houses. So their whole thing is like privacy. You get your own space while Airbnb is doing a 180 and saying, listen, it's not that bad to stay with other people because it's cheaper.

9:28So we're gonna see kind of like these two differing philosophies play out and we'll kind of see who emerges as a winner down the line. Uber is also leaning into the reemergence of the sharing economy that kind of disappeared during COVID when everyone wanted to be by themselves. So they're incentivizing Uber pools now. They're offering discounts that happened the same day that Airbnb just rolled out their product update. So they kind of want to smush people back together again post-COVID. Right. You wanted to avoid people, and now everyone wants to be with people again. That is interesting, the contrast with VRBO, and we'll see what people sort of gravitate to, and there might be different customer segments.

10:10For sure. All right. Next story. There is one New York celeb that won't be shown on the Madison Square Garden Jumbotron anytime soon. And that is gas stoves. New York became the first state to ban hookups of natural gas and other fossil fuels in most new buildings in an effort to curb greenhouse greenhouse gas emissions. So by doing this, New York is inserting itself into this bitter nationwide debate that turned the kitchen into a battlefield this year. If you remember, there was this uproar in January after a consumer product safety commissioner suggested that the agency could eventually ban gas stoves in new homes.

10:46And this started this massive culture war with many Republicans saying, you know, get your hands off my gas stoves. And the commissioner eventually walked it back. But New York just kept going. It said, look, buildings account for 32 percent of our planet warming emissions in the state. And they also have potentially other dangerous effects for kids and leading to asthma. so we need to get these things out of our buildings and so it's doing that um over the next few years in new buildings yeah i mean first of all the governor of new york wanted to be very clear because obviously this is a culture war and they're saying that i'm not taking away existing gas stoves i'm just banning future hookups in residential buildings specifically so again it will be like blown out of proportion again because for some reason this has become like a central piece of a culture war, but your existing gas stove will stay.

11:38I also do think it's funny. Like we got this report. It is bad for children. Like 12 % of asthma cases in childhood asthma cases come from indoor pollution, these gas stoves. So I always thought it was so weird that people were so against it because like it's truly breathing in bad fumes for you. And especially if you're a kid. People have very personal attachments to their stoves. I do. I know it is. There's something very visceral about a flame pop up. You're not a fan of electric stoves because I mean, I haven't used one in a while, but I'm just I'm just remembering it. And there were many problems.

12:13It took a while to heat up and a while to cool down. So the surface was hot. Right. And it's just yeah, people were saying like the UX of a gas stove is just absolutely gorgeous. And now that we're watching all these cooking people, these chefs on TikTok and on TV, like just over the flame, you know, sizzling up something with you get these blue lights going. It's just aesthetically beautiful. And you feel like you're a god in the kitchen. So I can see why people are like, get your hands off my gas stove. Like, I love this thing. I'm not really seeing the total impacts of this because, you know, maybe I don't have kids or, you know, I feel like it's not a major contributor to global warming.

12:53Methane dissipates quickly. So, I mean, it was just kind of funny. And then we looked up how there's actually been a crazy PR campaign by the gas industry, very similar to the got milk thing of the past couple of decades. So did you know that a person, a PR person for the American Gas Association coined the slogan, now we're cooking with gas? Unbelievable. It's kind of blew your mind. It absolutely blew my mind because I've definitely said that before. We've all said that before. I said it like 10 minutes ago. I know. And it turns out that we, I've just been influenced by PR campaigns. Like it, it, it truly was the got milk campaign of the gas association because they were trying to make cooking with gas seem hip and cool because people were cooking with wood at the time.

13:39So like they wanted to transition the country to this like hip, new technological advanced way of cooking. And now, now we're all just like sheep who repeat the terms that we were in, incepted into our brains. I'm a very happy sheeple. When I look at a Viking range, I'm just like, oh yeah. Oh my God. That's incredible. I want that. But apparently it's only an American phenomenon because in Germany, less than 3 % of people cook with gas stoves. So it's possible. It's just, we love our fire. We love our fire. Yeah. All right, Neil, before we jump into our next story, we're going to take a quick break.

14:16This episode is brought to you by State Farm. listening to this podcast smart move being financially savvy smart move another smart move having 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 This episode is brought to you by Indeed. You're ready to move your business forward, but first you need to find the right team.

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15:18Neil, on Wednesday, the FDA approved a vaccine targeting the RSV virus. It's made by drug maker GlaxoSmithKline and is designed to be given as a single shots to adults over 60 years old. So what is RSV and why is this a big deal? RSV is a respiratory virus that most people, it affects them as a little cough and some light flu-like systems. But to seniors and babies, it actually can be quite deadly. In the U.S., around 159 ,000 adults 65 and older are hospitalized each year. 10 to 13 of those die each year as a result of their infections. But I also want to take you through the scientific advancement that kind of powered this new vaccine because it was awesome.

16:00So the way that the RSV virus works is it has this little protrusion on it on the surface that it's called the protrusion. Sorry. It's called the F protein, which helps it stick to and infect cells. So normally the F protein, and I quote the scientific literature here, is wiggly. So that means it's flipping back and forth and it's generally pretty hard to pin down before it fuses to a cell. So researchers figured out how to freeze that wiggly F protein in place in the shape that it normally takes right before it fuses onto its cell. The body recognizes that shape as something naughty, doesn't like, and basically starts cranking out antibodies, which is what you want a vaccine to do.

16:41so i thought that was you're gonna be a science teacher in your future life i know well i just love that the fact that wiggly is like the technical term for describing this protein can't be wiggly um but i feel like we didn't hear we didn't know about rsv before last year i hadn't heard of it and then all of a sudden it blew up in the news stories because there it was a part of this triple demic where you had covid flu and rsv sending people to the hospitals last winter in huge rates. And you had all these kids going to the hospital and people were like, what the hell is going on? And then everyone's like, oh, this is RSV.

17:17It's a thing. And then they just approved the first ever vaccine, which is remarkable. And what is more remarkable is the backstory of this vaccine because they've been trying to do this for 60 years. But the first time in the 60s that they tried it, they actually killed two infants when they gave them a vaccine for RSV. Yeah, it was not a good look for RSV because they had done animal trials. They said they thought it was safe, and then they started human trials. And then it turns out that once RSV season hit, the vaccine did not work as planned. It actually amplified RSV in some patients, which resulted in the death.

17:55It wasn't like they were stuck and they died. It was just it ended up not preventing and actually amplifying RSV. So, yeah, big black mark on the entire RSV vaccine industry. But weirdly, looking back now, you can say that some of the advancements in some of the regulations put in place around that kind of tragedy has led us to this today. So it has been like this very long journey that has a happy ending as of as of yesterday. Yeah. And now there's a flood. The floodgates have opened. So every pharmaceutical pharmaceutical company you can think of is is launching an RSV vaccine for older people or infants.

18:32You have Pfizer's vaccine could be approved this month. Moderna should be in the first half of the year. Those are for older people. And then for infants under two years old, you have AstraZeneca and Sanify are making a treatment for this. So the floodgates have opened. And I was just thinking about this. Are vaccines the most important invention ever? Yeah. I mean, well, what was interesting to me is I thought it was going to be some advancement in COVID research unlocked RSV, but it was actually the other way around. So the RSV, this idea of locking this protein in place actually helped researchers develop the COVID-19 vaccine.

19:10So RSV has been this long, slow burn. Obviously, the COVID vaccine was like it was Operation Warp Seed. It was this giant sprint. So all those decades of knowledge built up around the RSV research helped propel. So it's crazy how things work out like that. And we're just here hosting a podcast. I know. That did make me like we started about Fed rate hikes and now we're talking about like these things. Yeah, I'm just saying they're they're saving lives and we're talking to a microphone, but it's OK. Let's move on to something even more important than that, which is Neil's numbers. It is three interesting facts from the week's news.

19:45But I'm not going to do that this week or today because it is Star Wars Day. It's May the 4th. So I am going to do three really weird numbers or bizarre numbers from the Star Wars universe. OK, let's start with six hundred and ninety quintillion dollars. And nobody has any idea what I'm referring to, but you'll you'll hear in a sec. That is how much money you would take to bail out the banks and save the economy at the end of Return of the Jedi. So how do we know this? There's this guy, Zach Feinstein, an absolute legend and associate professor at Wash U, wrote a paper in 2015 where he analyzed the state of the galactic economy during a period of economic crisis.

20:22Let me just paint the picture for you. The Empire had just collapsed. The Death Star, which was a massive government project that cost it$419 quintillion, was destroyed. So Feinstein concluded that the Rebel Alliance needed to spend at least 15 % of gross galactic product to bail out the 1 ,7500 banks that were systemically important in this galaxy and stave off economic catastrophe. We know how important it is to bail out the banks, right? So with gross galactic products at$4.6 sextillion, this amounts to a$690 quintillion bailout. So this just puts our own banking problems in perspective, right?

20:59Yeah, drop in the bucket. Drop in the bucket. FDIC spent just$20 billion to make SVB depositors whole. And meanwhile, the Rebel Alliance central government, the Jerome Powell of the Rebel Alliance is going to have to shell out$690 quintillion. Is Palpatine the Jerome Powell of Star Wars universe? He died. That's what sparked this. Oh, true, true. Sorry. I need to brush up on my Star Wars lore. Wow. Those are some big numbers. Big numbers. Let's go to another one. The amount of Star Wars content made for TV dwarfs the amount of Star Wars movies. So there are almost 11 ,000 minutes of Star Wars TV shows and just 1 ,700 minutes of Star Wars movies.

21:36That means for every one minute of Star Wars movies, there are six minutes of Star Wars TV. So this is kind of showing that so much Star Wars content has been made in the last couple of years just for TV. I don't know if it's any good. Have you watched any of them? I watched the first season of Mandalorian and I did not like it. I thought it was just super boring. And I've heard good things about Andor. Andor is fantastic. And then Clone Wars, the animated series, also pretty good. That makes up the bulk actually of the TV. Surprisingly compelling. No, I heard it was good. All right. Our final number is James Earl Jones, the amazing actor, was paid just$7 ,000 to voice Darth Vader in the first movie, A New Hope.

22:15but it took him just 2.5 hours in one day to record all of the lines so his rate comes out to about three thousand dollars an hour for that movie which is not bad that's interesting but the reason i'm bringing this up mostly is that jones retired last year from voicing darth vader and he's allowing an ai company to to use previous recordings of him for future movies and shows where vader appears interesting so he is getting out ahead of it basically and saying like yeah Yeah. Use me. Yeah. It's one of the most iconic voices of all time. So it definitely makes it. It's pretty interesting. There's been like a very growing, you know, use of AI generated voices for voiceovers.

22:55I remember this. This was a big thing in the Anthony Bourdain documentary. Right. Right. But it's all about consent. Right. So this is he's very vocally giving his voice up to AI for future permutations and literally create dialogue. where I think the case with Anthony Bourdain using his voice from the grave was they didn't kind of work out the kinks with his estate. Yeah, that's crazy. But I'm excited for future editions of Darth Vader. Okay, let's move on to our last story. It's about stars as well. We didn't actually plan this. But you know when you have one of those bad dreams where you swear you're like watching your own demise play out?

23:35Is that just me? Have you ever had one of those? Maybe a couple times. Yeah. Well, astronomers had that same feeling yesterday or this past month when they watched a star engulf a planet, which some think is the way that Earth might eventually go five billion years down the line. So this was very exciting for scientists. They had long kind of posited that this is potentially how some planets eventually died, but they'd never seen it happen live or whatever live means when you're on a 15 ,000 light year delay. but this was a huge huge planet that got eaten the planet was anywhere between three to ten times the mass of Jupiter so so big so basically how this goes down is when a star gets old it kind of puffs up and bloats a little bit and that expands its atmosphere and nearby orbiting planets kind of start bumping into that atmosphere which actually causes dust to like stellar dust to happen and so all this stellar dust actually creates drag believe it or not in space and so once that orbiting planet starts experiencing drag the orbit starts to tighten the gravitational pull gets harder and harder and then it's a runaway train and it eventually orbits so fast that it slams into the planet and it causes this big like solar eruption and then the plant the the sun just eats it basically scientist toby strikes i know it's so exciting though this stuff exciting is one way to talk about a star eating a planet but it's just crazy to me that we know now like we know definitively that earth is going to be destroyed one day but yeah we know definitively but there's actually two ways we could go so one is this way where the sun eventually blows up and like we get eaten by it after venus and mercury those will be the first to go or the other way is it blows up and it loses some of its gravitational pull and we just slowly drift away from the sun.

25:24So one way is a lot more fiery and exciting. One is just kind of a sad drift out into the world. But either way, we won't be around. We won't. Chat GPT will have killed us by then, maybe just in the next 50 years. That is our show. Toby, we're going to miss you. Thanks for dropping all that silence knowledge on us before you go and have a great time in Spain. Remember, listeners and watchers, you can always reach us at Morning Brew Daily at morningbrew.com. big thanks to everyone who made this show possible the show's producer and editor is Emily Milliron, our technical director is Justin Orlando, welcome back Samantha Veles and Raymond Lua are our associate producers Billy Menino is on audio, hair and makeup turned to the dark side, Devin Emery is our chief content officer and our show is a production of Morning Brew Great show today Neil, let's run it back in a week when I'm back.

26:14Adios!