Inflation Hits 3-Year High & Escorts Cash In on AI Boom

0:01Neal Freyman:AI is uncharted territory, and many leaders are trying to navigate through without a guide to help them. That's why Morning Brew created The Intelligence Shift, a new podcast with PwC. It's all about how AI is fundamentally changing different industries. Host Dan Priest is joined by a top-tier roster of industry leaders who share real stories and real lessons learned. Get guidance from industry experts. Listen to The Intelligence Shift wherever you get your podcasts. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, everything you need to know to get prepared for the World Cup.

0:36Neal Freyman:Then everything you need to know about the inflation data that just dropped. It's Thursday, June 11. Let's ride.

0:47So last night, I'm sound asleep like a responsible early morning podcaster when I'm jolted awake at about 11 45 p.m. There's tons of honking outside people hooting and hollering and then it hit me. The Knicks had won it at halftime of game four when I thought it was safe to go to bed. The Knicks were down 27 to the Spurs but miraculously pulled off the biggest comeback in NBA Finals history to win by one on an OG and an OB tip in with 1.2 seconds left. Absolute madness. If anyone's wondering what the small talk in your office is going to be this morning be prepared for about two hours of did you stay up for the Knicks game?

1:23Neal Freyman:Speaking of offices, you know who is liking this Knicks run the most? It's Wall Street and PE guys. Front office sports talk to some employees who are usually tethered to their phones, who are now getting a hall pass because in the evenings, the evenings now belong to the Knicks. We barely see this kind of leniency for federal holidays, one said. It's gotten to the point where coworkers and I are sending emails back and forth just to make sure our Wi-Fi isn't working. So the one thing that can give New York City deal makers and movers and shakers their evenings back, it's not friends, it's not family, it's not even federal holidays, it's the Knicks.

1:57And now a word from our sponsor, Sage. Toby, are you audit ready? No.

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2:38Neal Freyman:Inflation data dropped yesterday, and what do you know? It hit a three-year high. Prices rose 4.2 % year over year to the highest level since April 2023. However, monthly inflation inched up only slightly, rising 0.5 % in May compared to a 0.6 % rise in April. That had economists cautiously optimistic that this inflation wave may have peaked as long as oil prices don't spike again. If you're looking to play the blame game, look no further than energy. Energy accounted for more than 60 % of the monthly CPI increase. Gas prices are up more than 40 % year over year, hitting a peak of$4.56 a gallon in May before mellowing out a bit.

3:18Neal Freyman:Again, though, there's two sides to the coin. Without the energy shock caused by the closure of the Strait of Hormuz, inflation would have looked more manageable. Just look at core inflation, which strips out volatile food and energy costs. Core CPI came in at 2.9 % and just 0.2 % month over month, thanks to car insurance, prescription drugs, and new vehicle prices all falling. So glass half full, when you carve out energy costs, inflation is cooler than expected and in line with economists' expectations. Glass half empty, headline inflation is back above 4%, which is a difficult number for the Fed to ignore.

3:54Yeah, this was a better inflation report than that headline 4.2 % number made it seem. The big question was, will higher energy prices filter into the rest of the economy? Will higher diesel prices mean that trucking companies have to raise their rates and then food companies who are bringing in these supplies have to also raise prices on the grocery shelves in turn? So whether that trickle down effect was happening was the big question. And the answer is not really. I mean, we saw a huge spike in energy prices, but really very tame inflation across the board. Elsewhere, grocery prices, something that everyone was watching, rose just 0.1 percent.

4:30Food in general was up just 0.2 percent. So if you exclude energy, it was a very tame inflation report. The problem is we all pay for energy. So for the policymakers like new Fed chair Kevin Warsh, this was a pretty benign inflation report because perhaps that energy spike will go down. But for the rest of Americans, you can't just say, well, I'm excluding energy from my overall inflation basket because that's something I still pay for.

4:52Neal Freyman:Yeah, let's dig deeper into specific sectors. Airline fares did get hit pretty hard because obviously energy is a big part of their final costs. Airline fares were up 2.7 % in May, and they're now up 26.7 % from a year ago. So you are not imagining it. Every single flight is more expensive. Hotel rates rose 0.5%. Economists are trying to tie that to the World Cup effect. It's actually not as big as maybe hoteliers were hoping for, because remember, we've talked a lot about how the flood of international visitors hasn't necessarily materialized for the hospitality industry. The data center boom is also showing up inflation data for the first time.

5:31Neal Freyman:Years of falling tech prices actually reversed. Remember, we kind of got accustomed to things in the technology world got cheaper as more capacity came online. Things like TVs have fallen precipitously over the last decade. Now that trend is starting to reverse because everything is just so in demand to build out these data centers. And then the final thing that wasn't quite as bad as people were expecting were beef prices. Beef prices, though, you got to be aware of them because the screw worm, we haven't talked about the screw worm too much on the show, but that is this parasitic fly that can really impact beef herds.

6:07Neal Freyman:That's been seen in the U.S. recently. And if that becomes an issue, then you might see beef prices start to skyrocket again. Yeah. So the bottom line here, though, for the average American is this is the second straight month of negative real wages in which inflation is outpacing earnings over the past year. So the headline inflation was 4.2 % over the last 12 months ending in May, but average hourly earnings rose only 3%, 3.4 % over the past year. So that means your take-home pay is getting beaten by inflation. So your actual earnings that you take home are negative. So for all, there's a lot of doom and gloom around the American consumer right now.

6:44You look at every consumer sentiment report, consumer confidence, and they're in the dumps while we're seeing the stock market go to new highs. Well, if you're looking for a reason for that gap, it's because for two straight months now, there's been negative real wages because of higher inflation.

6:57Neal Freyman:It is ironic. The one thing that's keeping prices from rising faster is the fact that the consumer is so stretched. At C. Seth from Mooting's rating says, weaker pricing power shows businesses are thinking harder about what consumers can actually afford. The household's capacity to consume is eroding. So not necessarily the best reason for why inflation is not going out of control is that people just don't have any money to spend. Those tax refunds have mostly been spent. As you mentioned, wage growth has slowed. So a very stretched consumer is not the reason why you want to keep a lid on inflation.

7:29Now, President Trump had a very interesting response to the inflation report. They asked him at the White House and he says, I don't think I've ever heard a president say this before. He said, I love the inflation. So I think no one quite knows what he meant by that, but I think he meant, I love the inflation report. The inflation report. He said the numbers were great and that when the war against Iran is over, quote, inflation is going to come down like a rock. But with more missiles flying around the Middle East, doesn't look like the war is ending anytime soon. 104 games, 48 countries, 16 cities.

8:00After four years of anticipation, the World Cup has finally arrived in North America. Tonight, Mexico will take on South Africa in the tournament's first match, kicking off a five-week footy extravaganza that will conclude with one team hoisting the trophy in New Jersey on July 12th. This being the biggest event on the planet, there's a lot going on. So we put together a preview of the most interesting business storylines heading into the tournament. First up, the stadiums hosting the games have gotten a name change to become more generic. For the World Cup, no longer is it AT &T Stadium in Texas.

8:32It's Dallas Stadium. MetLife in New Jersey will be called New York, New Jersey Stadium. Lumen Field in Seattle is now just Seattle Stadium. Atlanta's Mercedes-Benz Stadium will be known as Tom Brady Arena. The list goes on. For the vast majority of the 16 stadiums hosting World Cup matches, they've been forced to hide their sponsors to play by FIFA's rules. FIFA's got its own sponsors for the World Cup, and they've been guaranteed exclusive rights to the tournament. So in the last few weeks, venues across North America have been covering up those huge logos adorning their stadiums in a process known as de-branding.

9:03The only exception, BP Place in Vancouver, which is owned by the government, so it can stay. Toby, it's giving Washington football team vibes.

9:11Neal Freyman:There's actually another stadium that is getting out a little scot-free, and that is Mercedes-Benz Stadium, which is actually being renamed Atlanta Stadium. FIFA allowed the giant Mercedes-Benz logo on the roof to remain because they're like, removing this is just a massive headache. It would cause structural damage to the stadium itself. So that's one thing, brands, if you're thinking forward to future World Cups, just make your logo so gall darn big that you can't even take it off. The other stadium that I think is handling this very well is Lumen Field in Seattle. Lumen's chief marketing officer leaned into the situation.

9:47Neal Freyman:He filmed a video of himself trying to cover up the Lumen logos with masking tape and whiteout, basically saying that like, hey, we understand that we have to do this, but we might as well make it a brand moment for our company. His quote was, you can't cover our name, but you can't cover our network. So it's a little like market ease, but I do like leaning in rather than just most brands have just been staying silent as their logos have been covered up. But just a fascinating part of the World Cup that you would never think about. Why do you need to cover up these logos? It's because you need to give top billing to the sponsors that FIFA is collecting their dollars and cents from.

10:24Neal Freyman:The beer industry is hoping the World Cup can act as a hand of God catalyst to reverse their declining sales. Because if 104 matches over six weeks can't reverse the trend of falling beer volumes, maybe nothing can. One analyst called it a Super Bowl that lasts a month. The question is not will alcohol consumption rise. It will, but by how much? Beer brands are careful to not let the moment slip away. Anheuser-Busch, who has been sponsoring the World Cup for 40 years, is back again this year. Heineken, though not sponsoring the tournament, is increasing its bar marketing spend by nearly 200%. And Molson Coors is boosting soccer-related ad spend by 60 % and just rolled out a taller boy beer canister that can fit up to three full Coors light scans at once.

11:09Neal Freyman:They have good reason to be optimistic. In some host markets, beer sales can spike up to tenfold. Neil, if the U.S. makes a run to the finals, it could be enough to turn around this structural decline. Yeah, Americans are drinking less alcohol than at any point on record. But the World Cup will absolutely give it a boost. Their expectations that about one billion more pints of beer will be consumed around the world during the next six weeks. And I don't know how many you and I are good for. But I know this this is, you know, a huge, a huge deal for alcohol companies and for sports bars. The American men are playing tomorrow night at 9 p.m.

11:47And I anticipate going to a sports bar very early to get a seat. And what am I going to do when I'm there? I'm probably going to drink some beer, which would reverse a very structural decline. I mean, beer volumes around the world are down 6%. And you also have not just beer companies, but liquor companies hoping to get a boost as well. Diageo, which owns Casamigos and other spirits. They've seen their revenue in North America, which is its biggest market, dropped 9 % in the most recent quarter. U.S. spirit sales were down 15%. So they hope people aren't just drinking beer, but hope they're taking shots as well.

12:19Neal Freyman:And one thing that beer countries are happy to see is that across North America, last call is being pushed later. A lot of states, Kansas, Missouri, Pennsylvania, Rhode Island, Massachusetts, New Jersey, the list goes on. They've all loosened alcohol-related regulations in some form. Usually that just means moving last call from 2 a.m. to 3 a.m. In some places in Kansas, last call is at 5 a.m., which I don't really understand because even 9 p.m games they're not they're not going to stretch too late into the evening so i think it what happened was it was a domino effect because rhode island was one of the first to loosen their bar regulations and then massachusetts quickly adopted uh similar regulations as well because seven games are being played at gillette stadium which is sort of equidistant between providence and boston so they're like boston stadium toby boston stadium sorry um tom the place that tom brady built um they do not want to be the ones missing out on the hordes of fans that would go to providence because their bars are open later so massachusetts are like hey we got to get these people as well so maybe that's why it was happening but i don't see the reason to stay open there's just going to be more people in town i think for these games and they'll just be so hyped or disappointed that their team lost and they'll just want to stay at the bar continuously after the game just having a good time especially people from out of town who are just like i didn't come to the United States just to go to bed at midnight.

13:41So that's why they're doing it. And I know people in Massachusetts are hopeful that these loosened regulations, at least for the World Cup, will lead to the reinstitution of happy hour. Famously, Massachusetts doesn't have happy hours since the 80s. And so they're hoping the governor just said, as there have been a broader loosening of restrictions around the World Cup, said, yeah, it would support bringing happy hour back. So maybe Boston's nightlife will tick up just a little bit from the depths it's in. Finally, one of the more quirky aspects of this World Cup has been learning where the national teams have established a home base.

14:13The logistics of this are so complex, with each of the 48 countries playing three group stage matches across a vast continent and requiring a top-tier training facility. Some, like Team France, are holing up in bougie digs. The tournament favorites are being pampered at the Four Seasons in Boston. Others have set up their HQ in places that most Americans haven't visited, like Spain in Chattanooga, Tennessee, or Algeria in the college town of Lawrence, Kansas. But Toby, I think Uruguay probably made the wisest choice. Their home base is on the beach in Playa del Carmen, Mexico.

14:44Neal Freyman:It was fascinating that Kansas City emerged as the hotspot because the way that these work is that top-ranked teams get first dibs on the facilities that they want to train in, and most of the top teams chose Kansas City, Argentina, England, Netherlands because of its central location. It's got good soccer training infrastructure as well. The one who got the short end of the stink is definitely Bosnia and Herzegovina. They were a very, very late qualifier. So they ended up in Sandy, Utah, and they faced the most spread out travel schedule of any team. They are going to fly over 7 ,500 miles just for the group stage alone so that's the short end of the stick the other team that i think is doing not so hot is because their home base is too hot says democratic republic of the congo they got the hottest uh place which is houston at texas that's hotter than even boca return floria or playa del carmen mexico so it really can make or break your entire tournament where you set up your home base and it is just very funny to read sentences like the spain national team is trading in Chattanooga.

15:49Neal Freyman:All right, we're going to take a quick break and come back with Neil's numbers right after this. Neil, I want to tell you about something I personally love very much. Is it me, your good friend and co-host? No, it's not my work friend and co-host. It's Spectrum Business, which keeps businesses of all sizes connected seamlessly with fast, reliable internet, advanced Wi-Fi, phone, TV, and mobile services, all backed by 100 % US-based support. Spectrum Business offers tailored connectivity solutions with packages built for your business budget. In fact, millions of business owners rely on Spectrum Business to keep them connected.

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17:03That's public.com slash morningbrew. Paid for by public investing, full disclosure, and podcast description.

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17:55Welcome to Neil's Numbers, the segment where I share three stats in the week's news that will give you something else to talk about besides the Knicks. My first number is the booming business of escorts in Silicon Valley. As detailed by Forbes, some escorts are charging as much as$6 ,000 an hour,$23 ,000 a day, and$30 ,000 for a weekend for their companionship and intimacy services. As recently as five years ago, it was rare for escorts to charge$1 ,000 an hour. So what changed? These girls can talk AI. Ayela, a social media personality and escort who charges$6 ,000 an hour, calls it a, quote, nerd-first approach where women like her are knowledgeable or even experts in topics like AI, longevity, and other technical areas.

18:38their Bay Area clients obsess over. Another escort who goes by the pseudonym Ada Hopper told Forbes, you'll have random Nvidia bros who are like, what, you know what a GPU is? Oh my God, wow. She said the girls who charge the highest rates are not the hottest girls, but the ones who are hot and smart. Escorts expect demand for their niche services to continue rising as AI places a higher value on authentic human connection. Charlie Levine, who works in the space, said in the future, being able to afford human contact and to afford settings where there is genuine human contact will be the ultimate luxury.

19:11Toby, welcome to a world in which talk dirty to me means, have you tried the new Anthropic model?

19:15Neal Freyman:Ayala highlighted an interesting data point. She analyzed escort advertisements and found that escorts using more intellectual language commanded significantly higher prices, more so than any physical feature. And this goes to show that AI wealth and the AI boom is inextricably linked to the boom in escort prices as well because think of the money that is flooding into the Bay Area and has flooded in the Bay Area over recent years. NVIDIA has created numerous millionaires and billionaires. OpenAI recently allowed a stock sale, so a lot of people were cashing in there as well. We have IPOs coming down the pipeline.

19:54Neal Freyman:We've talked jokingly about the San Francisco housing market, but it also influences other markets like this. So now you have very wealthy people who are very time constrained as well and are willing to spend very heavily on experiences and companionship, of course, you're going to see prices for escorts go up in the process. My next number is for all the fans of TV shows who feel like it's been forever since the last season aired. You are not wrong. It has. A new report from Ampere Analysis found that the weight between seasons of TV shows on streaming platforms has more than doubled over the last decade to reach a new record high.

20:28In 2016, the average gap between seasons was 10 months. In 2021, that had grown to 16 months, and by 2024 and 2025, the wait was 21 months. It's been very apparent recently. Season 3 of Euphoria, which just ended, arrived four years after Season 2. House of the Dragons Season 3, coming later this month, required fans to wait two years, and Severance Season 2 from 2025 marked a three-year gap away from Lumen Industries. The main issue seems to be that in their attempt to break containment, streamers are investing in bigger, more expensive shows that require longer production timelines. Series in sci-fi and fantasy especially that require tons of visual effects appear to have the longest waits between seasons, according to The Hollywood Reporter.

21:10Toby, a nearly two-year gap between television seasons, it's becoming a full-time job just to remember what happened the last season.