Investors Lose Patience with Iran War & TSA Workers Finally Get Paid

0:00Neal Freyman:Score more with the college-branded Venmo Debit Card and earn up to 5 % cash back with Venmo Stash. Got paid back? With the Venmo Debit Card, you can instantly access your balance and spend on what you want, like game day snacks, gear, tickets, and more. The more you do, the more cash back you can earn. Plus, there's no monthly fee or minimum balance. Sign up now at Venmo.com slash college card. The Venmo MasterCard is issued by the Bancorp Bank N.A. Select schools available. Venmo Stash terms and exclusions apply at Venmo.me slash stashterms. Max$100 cash back per month. Good morning Brew Daily Show.

0:33I'm Neal Fryman. And I'm Toby Howell. Today, the stock market is on pace for its worst month in years.

0:39Neal Freyman:Then TSA airport chaos might soon be coming to an end. It's Monday, March 30th. Let's ride.

0:50It's being dubbed the crime of the century. Over the weekend, Kit Kat said that 12 tons of its special Formula One chocolate bars were stolen while traveling to the world. on a highway from the factory in Italy to Poland. That's 413 ,793 individual units. The heist sparked worries of a global chocolate shortage right ahead of Easter, but miraculously, KitKat assured the public that supply would not be affected. Toby, it's an impressive heist, but how do you go about laundering 12 tons of KitKats?

1:21Neal Freyman:All right, I was looking into this too because according to the New York Times, the stolen product is able to be traced via a unique batch code tied to individual KitKat bars. So it's very difficult to resell them, which leaves one of two options. Melt it down like stolen gold and resell, you know, the chocolatey ore. Or you eat them all. Either way, Kit Kat is coming out of this looking good. They put out a statement in response to this theft saying, we always encourage people to have a break with Kit Kat, but it seemed like thieves have taken that message too literally and made a break with 12 tons of our chocolate.

1:55Neal Freyman:Whilst we appreciate the criminal's exceptional taste, The fact remains that cargo theft is an escalating issue for businesses of all sides. So well done, KitKat. I hope you get your bars back. And now a word from our sponsor, Company Retreat. Toby, what do you know about jury duty? That it's super easy to get out of if you tell them you're a hologram. Not actual jury duty. I mean, the documentary-style comedy series. It's back for a second season. Jury Duty presents Company Retreat. It all takes place during an annual company retreat. At the center of it all is Anthony, a hardworking, kind, and very patient temp employee who has no idea that the company is fake and that the entire retreat is staged around him.

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2:40Neal Freyman:Oh, and Amazon is actually selling four flavors of a rockin' grandma's hot sauce. Jury Duty Presents Company Retreat is now streaming on Prime Video. For about a month, the stock market had mostly brushed off the war in Iran in the hopes that, like most other geopolitical conflicts, it would be short-lived and have a negligible impact on the economy. But in the last few trading days, that confidence has been badly shaken, and stocks are getting routed like a 16 seed. The Dow fell nearly 800 points on Friday to close in correction territory, joining the Nasdaq at a level more than 10 % below their recent highs.

3:12The S &P 500 isn't quite there yet, but it just suffered its biggest two-day decline since the tariff chaos last year, and its five consecutive weekly losses equal its longest losing streak since 2022. It seems Wall Street is waking up to the fact that the war will inflict considerable economic damage for months, even if it were to end today, which is not likely. The closure of the Strait of Hormuz, alongside attacks on key energy infrastructure in the region, has resulted in the largest energy supply disruption in history. Almost 20 % of oil and natural gas has been taken off the market, which means the world will have to dramatically lower its fuel consumption.

3:46Meanwhile, shortages of key inputs for global industry, helium, sulfur, plastics, aluminum, fertilizers, threaten to upend everything from chip production to farming. And the most concerning part for Wall Street is Trump can't taco his way out of this one. When markets have gotten spooked in the past from Trump's policies, the president would roll them back and stocks would surge, the infamous taco trade. But when it comes to the Strait of Hormuz, Trump can't flip a switch and open it. Iran also holds a hand of cards. And even as Trump extended a negotiation deadline and signaled de-escalation last week, stocks barely reacted as we've been accustomed to.

4:20Toby, we're a long way from Dow 50 ,000.

4:22Neal Freyman:And nothing is working. There is no safe haven assets. At least three of the four asset classes included in the traditional core diversified portfolio have fallen in unison for the past four weeks. So stocks have fallen. Bonds have fallen. Cash or cash equivalents have, like gold, have fallen. Alternative investments have fallen as well. That's the longest stretch dating back to Liberation Day back in May of 2022. The issue is that oil affects everything in the economy. That's why there is no safe havens. Brent crude is above$112 a barrel. And what happens is that affects how the market moves.

5:03Neal Freyman:Benchmark Global Oil Futures and the S &P 500 have moved in the opposite directions in 12 of the past 13 trading sessions. And so if oil goes higher, the market goes lower, and it's very difficult to uncouple that price movement. Let's call it a few names here. I don't want to, but there are some stocks that are doing particularly bad. Many of them are in tech. The NASDAQ, which is focused on tech companies, dropped 3.2 % last week. That's its worst week since last April. Meta is down bad. Meta lost 11 % last week. It's down 34 % from its all-time highs last year. Maybe that has to do with the war.

5:39maybe impacting ad spending, but also it had those two horrible court defeats last week, which put a target on its back. And another company that's not doing really well at all is Microsoft, which used to be the AI leader. It's now down 35 % per month's October high. So within tech, within the Magnificent Seven, Meta and Microsoft have been absolutely plunging. And then another company that's on a long losing streak is Berkshire Hathaway. Luckily, Warren Buffett's not really involved anymore. I don't know if that's related, but it's lost ground for eight consecutive days. That's his longest losing streak since 2018.

6:12And if you're looking for more correlation with what's going on in the Middle East, Berkshire Hathaway is very invested in the insurance business, in the energy business, in the freight business. And so that might be a direct correlation there.

6:22Neal Freyman:And what is going to be the economic fallout from this? Now traders are piling into bets that the Fed's next move is going to be to raise interest rates because inflation is just starting to get out of control if oil prices remain this high. That That is a big switcheroonie from cuts having been telegraphed over the past few months. So now there's a 40 % chance that the Fed's policy rate will be higher at year end than it is right now, which going into this year felt absolutely unthinkable. But given everything that is unfolded from here on, of course, a rate hike could be in the cards. Meanwhile, mortgage rates, speaking of rates, are not getting any prettier.

7:04Neal Freyman:year. The average 30-year fixed mortgages rate was 5.99 % at the end of February. As of last week on Thursday, it was up to 6.62%. Remember, that kind of follows closely the 10-year yield. With yields going up, you see mortgage rates going up as well. So it is just absolutely affecting everything from your home prices to your stock market portfolio, and no one is happy. No one is happy because this is hitting actually both a wide swath of Americans from lower-end consumers to maybe the upper echelon on the lower end, they're getting hit by higher gas prices. Gas prices right now are an average$3.99.

7:37It's up about a dollar since before the war. That's going to hurt disproportionately low income people and the businesses that they flock to, whether it's fast food restaurants or dollar stores. It will be very interesting to hear their earnings because when gas prices spike like this, it just lowers demand across the board. And then on the other hand, we saw the top 1 % really drive a lot of the economy over the the past few years in what everyone's calling a K-shaped economy. But almost 40 % of household wealth in the United States is tied up in stocks. Compare that to just 10 % during the 1990 oil price shock.

8:10So as oil prices rise and stocks fall, as you demonstrated with that very tight correlation, then maybe the upper echelon, the more upper income people in the United States will also pull back on their spending. So maybe this is more of the economic worries are coming into view, and that's why the stock market is responding like this.

8:28Neal Freyman:The only entity that seems to be doing all right right now is Iran. Iran's exports are estimated to have remained very close to pre-war levels, 1.6 million barrels of oil a day. But Brent crude price is now$112 a barrel. So based on a Bloomberg estimate, Iran is earning about$139 million a day from oil sales in March, up from$115 million into February. So that's around 30 % more revenue. It seems like the only person benefiting, at least economically, in terms of selling their oil on the global markets is Iran, which the U.S. is targeting. Moving on, the long national nightmare of long national lines might soon be over.

9:08Neal Freyman:Trump directed Homeland Security to start paying TSA workers just before the weekend, even though Congress failed to agree on a path to end the partial government shutdown. That means agents could start seeing paychecks as soon as today, but don't expect the lines at TSA to snap back to normal immediately. Almost 500 TSA agents have fully quit since the funding lapse in mid-February. That is in addition to the 1 ,000 agents that quit during the 43-day government shutdown last year. Those roles won't be easy to replace. It takes four to six months to complete training. Plus, it's not like people are applying in droves for a job that increasingly gets caught up in political skirmishes leading to lost paychecks.

9:46Neal Freyman:Adam Stahl, TSA's chief of staff, said last week that the situation will get worse before it gets better, despite Trump's executive order. Folks that are possibly in the pipeline or considering going and joining the workforce will be dissuaded because of the lack of job security, he warned. Certain airports are and will be worse off than others, too. George Bush Airport in Houston has been dealing with a call-out rate of around 40%, far above the national average of 11%. Atlanta, the busiest airport hub in the world, is facing a similar level of absenteeism. Meanwhile, in Baltimore, travelers waited more than five hours in security lines to stress outside the concourse after as many as 94 TSA agents called out over the weekend.

10:27Neal Freyman:Neil, a lot of these workers are just digging themselves out of the financial hole created by the previous government shutdown. It's no surprise that fewer are showing up for work and recruiting is getting tougher. It's pretty fascinating to look at the gap in the worst affected airports and the airports that are doing just fine. Because as many of these horror videos have come out of people getting to the airport five hours early and still missing their flight, there have been an equal number of videos of people saying, I got to the airport, it was literally 10 minutes. Because if you flew out of Minneapolis, St.

10:57Paul, or Denver, or Seattle, Tacoma, like it's been fine. Those wait times have been under 30 minutes consistently. But then over the weekend, you had Atlanta saying the RTSA wait times are four hours. Houston also saying RTSA wait times are four hours. Forty percent of RTSA agents are calling out from both those airports, and they've been consistently some of the worst for this entire month. So it's very interesting to see the discrepancy between these two. And there might we might have an answer here for Atlanta and Houston. First of all, these are very sprawling metropolises. A lot of the workers who go there and also at JFK, which has been bad.

11:31people who are TSA agents live about an hour away or even more. So there's a long commute time. And so they're more likely to call out when they live in these big, sprawling metropolitan areas rather than maybe a Minneapolis, St. Paul, especially as gas prices have gone up. So maybe that's one reason why. Another is we have spring break right now. Atlanta is the busiest international airport in the entire world. So people, there's an increased demand, fewer TSA agents. So that's why maybe we're seeing longer wait time at those hotspots specifically.

12:00Neal Freyman:Just in general, can we commiserate how miserable flying has gotten recently? Because it is getting more expensive, too, because as fuel costs go up, airlines are charging more to passengers. They're passing on a lot of those costs to consumers. So if you looked at flights now for your summer vacation, you're in a lot worse spot than if you had booked them a few months ago. Also, consumer confidence in just the airline industry in general is taking almost half of respondents to an Ipso survey conducted in February. said they're losing confidence in the safety of air travel. Less than 30 % said that they felt confident in the safety of air travel.

12:38Neal Freyman:So it's basically you enter an airport. It takes a long time to get to your gate. You're nervous about getting on the plane. Your ticket that you booked is more expensive than ever. You're probably crammed back in economy class. All the first class seats are taking up more and more space in the planes. It's just not fun flying at all. And miraculously, this has been the longest stretch that I haven't flown from the beginning of the year until now. So maybe I'm, you know, I maybe I looked at my crystal ball and said air traffic was going to get absolutely insane. And, you know, I've been here in New York for a long time, which is getting a little claustrophobic, but maybe it's not a good time to fly.

13:11Neal Freyman:One bright spot is that some airlines are, you know, saying, I will throw you a bone, passengers. Delta says that they're waiving fees for certain flights out of Atlanta if you wanted to change or if you missed your flight. United said they're offering waivers for flights in and out of Houston. Southwest says we will rebook customers who missed your flight at no additional charge. So basically airlines are saying, hey, we hear you. We know that it's absolutely chaotic right now. Again, hopefully with TSA workers getting their paychecks again, things start to mellow out a little bit. But that has to happen ahead of the busy summer travel period where even Neil might leave his roost in New York City.

13:46Neal Freyman:All right, we're going to take a quick break and come back with our winners of the weekend right after this. This episode is brought to you by Apple. Neil, there's nothing like your first Mac. I remember my first Mac like it was yesterday. I got mine right as my sister started to get recruited to play soccer in college. I was given the very important task of making her a highlight tape, and iMovie was my best friend. She ended up playing at Georgetown, so I'd say it was all worth it. When I got my first Mac, I was heading into freshman year at the University of Maryland. A lot was uncertain that fall, but I knew I had a dependable sidekick for homework, connecting with other students, and devouring blogs about our basketball recruiting class.

14:23Neal Freyman:That's how we felt with our first Macs. How will you? Check out the all-new MacBook Neo, an amazing Mac at a surprising price. Learn more at apple.com slash Mac. That's apple.com slash Mac. Toby, how do you wake up in the morning? Well, I asked our producer to slap me across the face as hard as they can or drink coffee. Have you considered ultra pouches? They're completely nicotine-free and caffeine-free, but help you feel human in the morning with clinically proven nootropics and adaptogens to deliver immediate focus and smooth energy that lasts one to two hours. In fact, 90 % of users saw significant improvements in their overall focus levels with zero cheek pain.

15:03Neal Freyman:Way better than my slap method. Get some for yourself at TakeUltra.com. That's TakeUltra.com. Toby, what do you think of these new tax laws? Why are they making new ones? I don't even know the old ones. And that's why there's TurboTax, because being tax compliant is among small business owners' top concerns, but it's often time-consuming and research-intensive to figure out taxes on your own. TurboTax Experts for Business can match you with a tax expert with expertise and knowledge for your specific industry. To ensure you have confidence, you're maximizing deductions and your taxes are filed correctly.

15:37Learn more at TurboTax.com slash business. That's TurboTax.com slash business. Welcome to Winners of the Weekend, the segment where Toby and I picked two things that won all of their ABS challenges. I won the pre-show poll vault, so I get to go first. And my winner is the hope that politics could get a lot less polarized. And it's all thanks to AI. In the Financial Times, John Byrne Murdoch published a viral essay over the weekend that argues artificial intelligence will become a moderating force on political discourse, reversing the vitriol and sensationalism that defined the social media era.

16:11He backed it up with his own data analysis, showing that the major AI platforms, even Elon Musk's grok, pushed people away from the most extreme stances and toward more normie, centrist positions in line with expert consensus. It's a provocative claim that others have made, too, drawing on hundreds of years of human history. Every time the dominant form of media changes, it profoundly transforms public opinion. 600 years ago, the printing press democratized the consumption and distribution of written text, resulting in the elites losing their hold on shaping the information space. After World War II, the experts were back in control.

16:43TV news networks came along and, given the high barrier to entry, once again concentrated the flow of information with a handful of gatekeepers like, say, CBS or ABC. In the early 2000s, social media toppled that dynasty, allowing anyone with an internet connection to share their opinion and in turn elevated anti-establishment, anti-elite voices. Now, with the era of AI upon us, some argue that the moderate gatekeepers are back in power. Toby, is AI actually going to bring back the age of Walter Cronkite?

17:11Neal Freyman:maybe, and it comes down to their business models and how it differs from social media. How do social media companies make money? They make money from attention. What gets in tension? It's sensationalism. It's inflammatory content that doesn't necessarily have to reflect the truth. They just want to get eyeballs and they want time spent on platforms. So you look at more ads and advertisers buy more ad spots. AI companies' business model is they want to serve up objective. They want to serve up accurate and intelligent tools that deliver factual information. So they do not want to dive deep into the sensationalist aspect of social media.

17:51Neal Freyman:They want to be a neutral platform, which is why maybe they will be converging in the viewpoints that they share rather than diverging and democratizing like social media. Yeah, the British philosopher Dan Williams, who has wrote a lot on this subject and argues again, for this moderating force of AI. Said a good thought experiment is pretend that you went to Twitter, Instagram and search for the term climate change, vaccines, Epstein files, immigration, crime, tariffs, inequality. What will you see is a whole host of diverging opinions, perhaps a lot of conspiracy theories, mostly people dunking on each other and getting extremely mad.

18:27Now, what if you put immigration, crime, Epstein files, climate change, vaccines into an LLM like Claude or ChatGPT or Grok, you're more likely to get an answer that is aligned with expert opinion. And you can argue whether one is better than the other or not, but that is essentially what the thought experiment will lead to is that, yeah, I'm putting this question to an LLM. I'm getting a pretty normie answer that experts who have written this field, you know, who are an academics in this field have written on.

18:57Neal Freyman:And what was fascinating to me is that this held true despite the chatbot knowing your political tendencies because in conducting this experiment, they had one where they did not let the bots know that, hey, this person is right-leaning or left-leaning, and it nudged them towards the center. But then even when they did tell the chatbot, like, hey, this is the political affiliations of the person that you're talking to, I thought that the sycophantic tendencies of a chatbot would take over and start just confirming the worldview of whatever you say. That has been a real problem for a lot of these AI chatbots is the fact that they just kind of agree with anything that you're saying if you nudge it in that direction.

19:31Neal Freyman:But when it came to politics or some of these more extreme issues, it did seem like they were more center leaning. Now, there are some caveats of this study. I was reading a little bit on social media, the reaction to this, which is ironic in and of itself. And people were mad that the users that these chatbots were talking to were simulated users. So they weren't necessarily real people. That could probably confound the data a little bit because it was almost AI chatbots talking to other AI chatbots, that's not necessarily reflective of how humans interact with them. So that was one caveat, but just a fascinating study that, you know, of course got people talking on the very thing that it's talking about, which was social media.

20:09Neal Freyman:My winner of the weekend is knowing where the edge pieces are because U.S. Jigsaw Nationals just wrapped up its biggest event ever in Atlanta on Sunday. Hundreds of puzzlers and spectators from around the world descended upon the Peach State to test their mettle in speed puzzling, racing to compete 500 and 1 ,000-piece puzzles. The competition has blown up recently. The first Nationals was held in 2022 in San Diego and featured 33 teams of four, 93 pairs, and 99 individuals. This past weekend in Atlanta, 200 teams of four, 400 pairs, and 800 individuals competed with registration quadrupling across every category.