Got Ozempic Breath? & Goblins Infiltrate ChatGPT

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0:30Good morning, Bridge Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the U.S. economy simply cannot be stopped.

0:37Neal Freyman:Then, a surprise winner of the Ozempic era, Breathments. It's Friday, May 1st. Let's ride.

0:49Good morning and welcome to May. People have tried everything to try to get kids to read more books, but maybe we're all just overthinking it. Bribe them with free pizza. Pizza Hut has announced the return of its Book It program for the summer, which will reward young students who hit reading milestones with a free one-topping personal pan pizza each month. And it really works. This announcement sparked a wave of millennials and Gen X sharing memories of how the lure of Free Pizza Hut made reading exciting when they were young.

1:17Neal Freyman:I missed this era growing up, but I feel like you and I would have been much heftier children if this was a thing, because the amount of Magic Treehouse books that I was powering through meant we'd be eating pizza every dang night. But I love a good incentive system. Remember box tops? I mean, box tops was a big thing growing up. If there was pizza involved, though, you bet your butt that I would have been going through those pages left and right, which I was anyway. Now there's pizza on the line. All right. Now a word from our sponsor, Windermill. Neil, what's the coolest view from your apartment?

1:52Well, all of my apartments windows face brick walls.

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2:30Neal Freyman:That's windmillair.com.mbd for 10 % off. The U.S. economy went in for its quarterly checkup and came out with a clean, if not downright impressive, bill of health. Gross domestic product, the sum of all goods and services made in the country, grew at a 2 % annualized pace in the first three months of the year, a solid showing considering in one of those months, March, the war in the Middle East began wreaking havoc on energy markets and global supply chains. If you had to hand out an MVP award, it'd go to business investment, specifically AI, which has emerged as the economy's primary growth engine.

3:03Business outlays for equipment and structures, aka data centers, jumped 10.4 % last quarter, the fastest pace in three years. It's not a surprise when you consider the four tech giants that reported earnings on Wednesday, Meta, Alphabet, Amazon, and Microsoft spent$131 billion on capital expenditures in Q1, which means they're collectively spending more money than the Manhattan Project every single month. It's a good thing that businesses are spending because consumers seem to be slowing down just a little. Facing persistent inflation and geopolitical uncertainty, consumer spending slowed to 1.6 % in Q1, down from 1.9 % a quarter earlier.

3:38Bit of a worrying sign since Americans buying things account for two-thirds of all economic activity. Still, Toby, the bottom line is that the U.S. economy has received blow after blow, COVID, soaring inflation, tariffs, and now the war, but it continues to be remarkably resilient, mainly because of AI.

3:54Neal Freyman:Yeah, and I'm going to steal the words of Heather Long, the chief economist at Navy Federal Credit Union. She wrote that this is a split-screen economy. Companies and investors that are involved in AI are on fire. They are en fuego, but then the rest of the economy, middle and moderate income households are not doing as well. They instead are facing an avalanche of things like rising gas prices. We've talked about the K-shape economy. Now we have the split screen economy. It does seem like a lot of what you're seeing with these numbers are propped up by a very few amount of companies investing a whole lot of money, Manhattan Project each month, into AI.

4:32Yeah. And if you look at the savings rate, that's a good indicator of maybe how the average person is doing well. This U.S. savings rate fell to 3.6 % in March, which is the lowest reading since fall 2022, maybe one of the lower readings of all times, which shows that people are getting squeezed. That said, overall, the economy does seem to be doing well. And if you want to be a ball knower around GDP, then you're going to look at this metric called real final sales to private domestic purchasers. And this strips away all the volatility of other metrics and just as it kind of how exactly is the economy doing.

5:04And that rose from 1.8 % a quarter in quarter four of 2025 to 2.5 % last quarter in Q1, 2026. So all things said and done, we do have a split screen economy. Overall, things seem to be doing pretty good.

5:18Neal Freyman:I do have a relatively worrying statistic, though, to bring to your attention, and that is U.S. national debt has crossed 100 % of GDP. Put another way, as of March 31st, publicly held debt in the U.S. was 31%. $1.265 trillion. GDP over the preceding year was$31.216 trillion. That means the debt-to-GDP ratio is 100.2%. What does that actually mean? It doesn't mean that much. It's not that much different than 99 % versus 100%. But the reason why economists watch this debt-to-GDP ratio is that basically they're seeing how much the borrowing is weighing on the economy because as it rises, Debt eats up more consumer resources, money that could have been used productively elsewhere in the economy and especially in an elevated interest rate environment.

6:07Neal Freyman:A lot of that money is just going towards interest rates. One in seven dollars that the U.S. brings in goes towards paying down the interest rate of the national debt. So, yes, the economy is doing all right. But if you want to have a worrying statistic to cite, 100 percent debt to GDP ratio is it's a milestone. I feel like we're just bringing contrasting statistics just to say it's good, it's bad. But all in this on maybe a positive note, which is that if you are invested in the stock market, then you made a lot of money the past month. We're just coming off in April right now. It's May 1st, as Justin Timberlake will show you all over online today.

6:43But stocks just had their best month since 2020. The S &P gained 10%, mainly thanks to all these AI companies doing well and all this business investments really showing up in the stock market.

6:54Neal Freyman:Speaking of big tech names, Apple was the lone big tech name to not report earnings Wednesday, but a day late did not mean a dollar short. It was straight A's across the board with revenue up 17 % year over year to$111 billion, powered by strong iPhone sales that grew 22 % and even stronger China revenue, which grew 28%. All things were firing on all cylinders, even things that have no cylinders like its services business, which reached$31 billion. Everything Apple Touch seemingly turned to gold with new products like the$599 MacBook Neo selling out left and right. The updated iPad Air and iPhone 17e were also big hits.

7:32Neal Freyman:But the actual earnings almost seemed like an afterthought considering the looming retirement of Mr. Tim Apple himself. Cook will step down in September, handing over the reins to former hardware boss John Ternus, who has a sturdy foundation to build on, albeit with some question marks. Costs for memory chips are skyrocketing. The Iran war remains a macro headwind, and Apple still doesn't have a solid defined AI strategy. Ternus did make some comments on this call, his first since the company announced he will take over the head job, saying, we have an incredible roadmap ahead. And while you're not going to get me to talk about the details of that roadmap, suffice it to say that this is the most exciting time in my 25-year career at Apple.

8:14Neal Freyman:Neil, an earnings call with one eye on the present and one eye on the future. And the present really is a golden age for Apple, and especially the iPhone 17. Tim Cook said this was the most popular iPhone model ever. And I don't know what, I don't think it had anything particularly new or whiz-bang gadgetry around it. But perhaps it came at the end of a cycle where people were looking to upgrade their phones. And so just the iPhone 17 is absolutely crushing it. iPhone sales were up 20 % to$57 billion. Remember, with all this other stuff that Apple is doing, iPhone sales still account for about half of their total revenue.

8:46So as the iPhone goes, so goes Apple. And iPhone is absolutely crushing the most popular one ever. And Tim Cook really blew away Wall Street with its sales forecast for the current quarter. That's kind of what had this tailwind for its stock. Apple expects to grow 14 % to 17 % its revenue in the current quarter, which basically just blew away all the expectations that Wall Street had. So Tim Cook, this was his 89th earnings call, maybe his second to last one, and it was an excellent one.

9:16Neal Freyman:A sneaky winner as well was Apple's Mac Mini, which if you are at all involved in the tech scene, you know that OpenClaw has become a big thing. And a lot of people are running OpenClaw on these Mac Minis that sit next to your main computer. So Mac revenue hit$8.39 billion. When asked about tariff refunds, Cook said that, yes, they actually will be applying for tariff refunds. But very diplomatic, he said, whatever refunds we get, we're going to invest it back in the United States. So that's kind of a landmine that Apple has to dodge because Trump has been urging companies not to apply for those refunds.

9:51Neal Freyman:And then also just zooming out, an analyst asked Cook what advice he'd give to Ternus because, you know, he's been at the helm for a long time. And Cook said, I think my advice is that one of the most important decisions you'll make is where to spend your time. And I would spend it where the greatest benefits to the company and the users are and never forget the North Star of the company. We're about making the best products in the world that really enrich other people's lives. It's good life advice in general. Go where the most important problems are. Spend your time on the things that matter most.

10:17Neal Freyman:Don't get caught up in the weeds elsewhere. Okay, but you do have to get caught up in the weeds, especially if you're Apple, because there are some very nitty-gritty supply chain things that they have to work out. And this is kind of the cloud over what was otherwise just a great earnings report. And that's because Apple is dealing with some serious shortages. It undershot estimates of demand for Mac computers. So if you wanted a Mac computer, chances are you had to wait in line for one. And then it has these big problems with memory chips and other kinds of chips that are just in short supply right now because of AI.

10:47Memory prices are going through the roof. It's expected to hammer the smartphone industry this year. Their shipments are expected to crash by 13 percent in 2026. Not all of that will be Apple, of course. Apple might be able to rejigger its supply chain to figure out ways to soften the blow a little bit. But John Ternus, I mean, Tim Cook is known as the supply chain guy, and he's kind of getting out of here, and John Ternus is taking over. He really has to focus on the supply chain because there are much higher prices for all of the inputs that go into your iPhone.

11:16Neal Freyman:It's Stock of the Week, Dog of the Week time, the segment where we pick one stock that is sounding fresh and sprightly and one stock that is fighting off a little congestion. I'm on the pre-show game of who can go through a full tissue box faster, so I'm up first. And my stock of the week is the Ozempic economy. When GLP-1s first rolled out, eulogies were written for sellers of unhealthy snack foods, but the desire for a sweet treat hasn't fully disappeared. It has just downsized. Magnum, the parent company of Ben & Jerry's, saw sales of mini ice creams perk up this past quarter, showing that an itty-bitty bite of ice cream is still preferable to no ice cream at all.

11:52Neal Freyman:Magnum feels confident that smaller portions and healthier options like frozen Greek yogurt will help offset falling sales of the richer Ben & Jerry's. Hershey's, too, has been an unexpected winner in the Ozempic era because people are eating less chocolate but chewing more mints and gum. I didn't know this, but one of the side effects of GLP-1 drugs is bad breath. Since the drugs slow down digestion, users report getting cases of the burps and acidic tastes in their mouth. Those side effects paired with oral odor powered icebreaker mints and gums to 8 % growth in the most recent quarter, turning it into the third largest confection brand for Hershey's.

12:28Neal Freyman:You know, maybe people are eating less half-baked pints and chocolate bars, but tiny servings and breath mints are making up the difference. Is Hoodsy Cups a publicly traded company? Like, can I invest in them? Because I see if all the trends are going in small little bite-size ice cream direction, then we could see sales grow for that. Yeah, but I'm always like a kiddie-sized ice cream. I love ice cream, but I always go kiddie because too much ice cream is just too much, and I think people are realizing that, especially if they're on GLP-1s. But all of this is in the milieu of Eli Lilly, right, because they are the biggest player in this space, and they also reported earnings.

13:02They make Manjaro and ZepBound. They have 60 % market share in the GLP-1 space. So they reported earnings yesterday morning, and they're showing how the Ozempic economy is just continuing to grow. So profits doubled. Manjaro's worldwide revenue rose 125%, zip bound up 80%. So Eli Lilly, more people are getting on these GLP1, which is causing all of these different ripple effects like mints growing.

13:25Neal Freyman:It's ironic because I've been calling it the ZenPIC economy, but it really should be called the Manjaro economy at this point because it has been total domination for Eli Lilly, blowing past all analysts' expectations. But it was fascinating to see these snack food giants talk about earnings calls because they this is what literally the CEO of Hershey said. This is an emotional category. It's a treat, not a meal. The confection category is relatively insulated compared to other food categories, which, again, that is something that maybe you can speculate. But then to see it actually show up in the earnings, it is fascinating.

13:59Neal Freyman:Hershey's also said that their protein bar segment is doing really well. That's a well-known side effect, too, of the rapid weight loss that comes with GLP-1 drugs is you lose a little muscle mass. So protein has a big winner that we've talked about, but now we have mints and tiny little ice creams as well. More people are just going to get on GLP-1s. I think already 1 in 10 Americans are on them, and Eli Lilly introduced this pill called Fondeo, and it's absolutely ripping. They got 20 ,000 prescriptions in the first 20 days. 80 % of those patients on Foundeo, this pill, are new to GLP-1. So all the trends that we're seeing, whether it's protein bars or small ice creams or mints, could be just like a long-term growth trend as more people get on this medication.

14:40Neal Freyman:All right, we're going to take a quick break and come back with our Dog of the Week right after this.

14:47Neal Freyman:Neil, you can start calling me Mr. Worldwide because I know how to manage a global team. So that name is definitely taken, but also how? Because I know about Deal. They help you hire, manage, pay, and equip anyone, anywhere. They keep HR, payroll, and IT aligned in one platform so growth doesn't turn into tool sprawl. It can even make the hard parts of global work disappear, so scaling worldwide feels easier than it should. Head to D-E-E-L dot com slash morningbrew to book a demo. That's D-E-E-L dot com slash morningbrew. Hey Toby, here's a bill for you. It's my fee. What? How am I supposed to pay this on short notice or at all?

15:28That's a question countless employees ask themselves when they're saddled with an unexpected medical bill not covered by health insurance. And understandably, financial stress can cause lost productivity.

15:37Neal Freyman:This missed work can really cost employers annually. That's why Aflac works to pay claims quickly and accurately to help foster employee peace of mind. And offering Aflac plans comes at no direct cost to businesses. Toby, I take cash or card. Learn more at affleck.com slash morningbrewdaily. That's affleck.com slash morningbrewdaily. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at$179, like the Nexgrill 3-Burner Gas Grill. Or get$50 off a select Weber Spirit Grill and bring big flavor to your backyard. Then set the scene with Hampton Bay String Lights that bring it all together.

16:20Shop Spring Backyard Days for seven days at The Home Depot, now through May 6th. Exclusion Supplies, see homedepot.com slash price match for details. My dog of the week is Bill Ackman, whose quest to become the next Warren Buffett has gone off to a bumpy start. The prolific tweeter and hedge fund billionaire listed a closed-ed fund on the stock market this week, Pershing Square USA, raising$5 billion in the biggest IPO of its kind in history. But it wasn't met with a lot of enthusiasm on Wall Street, and shares fell 18 % on its first day of trading. The IPO was a milestone in Ackman's pursuit to build the next Berkshire Hathaway.

16:56For years, he's talked about emulating Buffett by creating an investment fund, finding attractive companies at attractive prices, acquiring sometimes majority stakes in them, and letting it ride. It's still the early innings on this journey, but Ackman's success may hinge on whether by sheer force of his personality, he can marshal an army of individual traders to give him their money to invest. Ackman's built a significant following on X, where he has 2.1 million followers and is infamous for writing long-winded essays about everything from campus protests to New York City politics to modern dating.

17:25But many have tried to be the next Buffett, and by my last count, there's still only one. Ackman attempted to IPO this fund two years ago, but scrapped those plans after being met with low demand. And this time around, while$5 billion raised is a lot, a top 10 listing of all time, it was at the low end of the$5 to$10 billion he was expecting. Toby, it's way too early to call us a flop. but it wasn't maybe the start Ackman I had hoped for.

17:47Neal Freyman:Yeah, the pitch here is that I am going to bring something that usually only institutional investors have access to, to retail investors. He's omitting performance fees. So hypothetically, you just invest right alongside Bill Ackman, which before you would have required you to be, you know, a very large player in the finance space. He went on CNBC and said, hedge funds are sort of known for managing money for rich people. And now we have the opportunity for someone with 50 bucks who could be a long-term shareholder. So that's his pitch. He's democratizing hedge funds for the masses. What are you actually buying if you buy Perishing Square?

18:22Neal Freyman:His portfolio is sort of not that crazy. He invests most of it in 10 large cap names by the end of 2025. Those are names like Amazon, Uber, and Brookfield. Like it's not rocket science. He's just trying to buy good companies and hold them for a long time. Hello, Warren Buffett's mentality right there. So that's basically worked for him over the past though, because its net returns, Perishing Square's cumulative net returns since its inception in 2004 is more than 2 ,600 % over the same period the S &P 500 rose roughly 836%. So it's been working for him. Yeah, Akvin has a very fascinating investing history.

18:58He used to be an activist investor and he's turned some very small amounts of money into some very large amounts of money during the global financial crisis. He put$60 million into general growth properties And that turned into$1.6 billion a couple of years later. That was a mall operator. And then famous COVID trade in early 2020, spent about$27 million on credit default swaps right as the pandemic hit, turned that into$2.6 billion. So he had some of the best hedge fund trades of all time. There are some lowlights as well. Probably he's most famous for his short of herbal life. He called that a pyramid scheme in 2012, took on Carl Icahn.