Is Diet Coke Dangerous? & US Supreme Court Bans Affirmative Action

0:28The best B2B marketing gets wasted on the wrong people.

0:34good morning brew daily show i am neil freiman and i am toby howell on today's pod extreme tourism shows no signs of slowing down even after the titan disaster and the olympics gets a rival but you'll never guess how it's differentiating itself then we had a huge supreme court decision yesterday that put an end to decades of affirmative action we'll break down exactly what that means for education and corporate America. Then we'll check in on one of the best performing stocks of the first half of the year. Spoiler alert, it's not an AI company. Neil, it's Friday, June 30th. Let's ride.

1:14All right, so today is June 30th, which is the last day of the first half of the year. On Fridays, we typically do fast week, slow week, but since it is June 30th, we have to do fast first half or slow first half toby i'm tossing it to you it might be the fastest first half of my life because of this show and waking up early and just like the repetitive nature but i wouldn't i wouldn't have it any other way what about you it was a fast first half um but so much happened actually i was looking back to all the things uh all the news stories uh that happened in the first half of the year that you may have forgotten about are you ready for a little trip down memory lane Let's go.

1:53We had the Chinese spy balloon in February. The Discord leak of Pentagon documents that sparked a frantic manhunt. SVB collapse and the banking crisis that never totally materialized. TikTok CEO testimony on Congress. Morning Brew Daily launched, which was big. Trump was indicted twice. Tucker Carlson was fired. Barbie and Grimace went viral. When we look back five years from now, what do you think we'll remember about the first half of the year? Well, I feel like you didn't mention the story that left the biggest impact for me, which was the Titan submersible. Okay, but I didn't want to have recency bias.

2:30I know. I definitely have recency bias, but that seemed to permeate through social media in a way that maybe the spy balloons a little bit. Yeah, you're just looking back at what happened last week. I have an animal brain. Recency bias totally influences me, but for some reason, I think the Titan sub is going to stick. I think AI, the AI hype and all of the pushback to it could be, we could look back at this and consider it, you know, the dot-com bubble of 2000, very similar to that. Or just the beginning of a new wave of technology that will forever change the way we live. No big deal. Or the Taylor Swift era's tour concert that, you know, boosted GDP by 0.5 % and took over everywhere.

3:13And it was our Taylor Swift era tour as well. What a first half of the year. Who knows what the second half is going to bring, but we'll be here to tell you about it. All right, let's jump into our top story of the day where yesterday we had a massive Supreme Court decision handed down. SCOTUS ruled that colleges cannot consider race in the admissions process, effectively eliminating one of the biggest tools higher ed has leaned on to increase diversity on their campuses. Now, the actual case itself involved the student group that filed twin lawsuits against Harvard and the University of North Carolina, claiming that the two schools discriminate against white and Asian American students by giving minority applicants a boost in the admissions process.

3:58So the conservative leaning court voted six to three along their ideological lines in favor of the student group. And suddenly 40 years of precedent has been upended. So I'll just quickly summarize both the court's majority and minority positions. So Chief Justice Roberts wrote that a student must be treated based on his or her experiences as an individual, not on the basis of race going forward. While the minority position written by Justice Sotomayor states that society is not and has never been colorblind and the court ignores the dangerous consequence of an America where its leadership does not reflect the diversity of the people.

4:38Neil, this was a big decision with far-reaching implications that will trickle down through the business world, but the most immediate impact will be felt at these top schools and universities. Right, definitely. There's only a small percentage of schools where students are fighting over spots. We, the media, loves to focus on the Harvards and Stanfords of the world, but actually there are only about 200 of the 4 ,000 college and universities in the U.S. that have highly selective admissions where fewer than 50 % of applicants get in. 3 ,800, the rest, have acceptance rates of more than 50%. We've used Harvard as this symbol of higher education in the U.S., but in the reality, it is very much an outlier in terms of how selective its admissions are.

5:20And while this will definitely impact Harvard and other elite schools, the vast majority of schools are not necessarily, like, divvying up spots so selectively like, you know, the few that we talk about. Right. Yeah. I read a statement from Arizona State who said, we let anyone in who reaches our admissions requirement. So like we will continue to have a very diverse student body. So you're right. We do hyper fixate on 200 schools of 4 ,000. Right. That's not where the majority of Americans get educated. Right. But it is where the majority of kind of some of the business leaders or like even the Supreme Court.

5:55So it does have an outsized impact on the rest of the country, even though it is a small factor of the of the overall university population. And so, yeah, we're definitely going to see this trickle down into the workforce, namely because if you make the top universities less diverse, then you'll make the leadership across corporate America less diverse. And, yeah, last year, 80 U.S. firms, including all the big tech firms, Meta, Apple, Google, filed a brief in support of affirmative action because they're like, listen, we recruit a lot from these schools. So we definitely still want a diverse student body to recruit from.

6:31Right. And they also are pursuing these diversity initiatives very loudly after, you know, especially after the George Floyd murder of 2020. And HR experts say it's the most consequential decision in the past 15 to 20 years for them because they might have to rename those those efforts away from diversity to, you know, you can't have a chief diversity officer anymore. you might have to have a chief transformation officer because this Supreme Court decision might, while it doesn't affect workplaces directly, might open them up to more legal challenges on a similar grounds that this was just struck down in the education sphere.

7:10For sure. And then also there's some are looking at this decision and seeing a couple of loopholes potentially. One, there's actually a loophole for the nation's military academies where they literally said that these schools have potentially distinct interests. We want a diverse fighting force and so that they can still have some level of affirmative action. But then there's also, John Roberts said in his decision that you colleges can still consider an applicant's discussion of how race affected his or her life, be it through discrimination, inspiration, or otherwise. So a lot of colleges, Harvard also released the statement saying like, okay, we are going to 100 % do that, or can still 100 % consider how race impacted their life.

7:55Obviously, the decision goes on to say that that's not what you can base the decision off of. Right. You can have these proxy measures that gauge socioeconomic status and try to use that to reverse engineer for race. And a bunch of colleges and states that have already banned affirmative action, which has happened in nine states, have used that. Looking ahead to today, Today, there's Supreme Court is going to be very much in the news again because there's a big ruling on President Biden's student loan forgiveness plan that is expected around 10 a.m. We're not going to be here at the podcast to talk about it, but just pay attention because that is going to happen in just a few hours.

8:35OK, we have to move on. I've got to admit, Toby, that I have been a Diet Coke hater my whole life. But now I've got some actual ammo to back up the hostility. Besides, it leaves a bad aftertaste. And in fact, this has to do with that aftertaste. Yesterday, Reuters reported that the International Agency for Research on Cancer, the Cancer Research Department of the World Health Organization, is set to declare aspartame a possible carcinogen next month. Aspartame is that artificial sweetener that is found in diet beverages and many other products. And it's been under scrutiny lately over increased cancer risk.

9:11Now, I just want to be clear from the get-go. This agency is not about to say that drinking Diet Coke will give you cancer. far from it. This is just a very broad classification that suggests that aspartame is possibly a hazard, which is the third level of hazard below. Definitely a hazard and probably a hazard. Another WHO committee that specializes in food additives will give guidance also next month on how much individuals can safely consume. Still, this will have implications for the about 6 ,000 food products that use aspartame and potentially open them up to legal challenges or spur them to rejigger their formulas.

9:48Yeah, I mean, you said thousands. Aspartame is in everything. It's in diet sodas, obviously, but it's also in some teas, some chewing gums, yogurts. Ms. Butterworth's sugar-free syrup has it too. So this is one of the most widespread artificial sweeteners. And this debate has kind of been going on since the 80s, truly, when it kind of first became widely used. And the common data point cited in these old studies was that someone would have to drink between 12 and 36 cans of diet sodas every day to be at risk. But now they're revisiting it again because, yeah, they labeled it possibly carcinogenic, which, again, it feels a little inflammatory, but that's just how they do their rating system.

10:30They do it based on hazard. And what is it? Possibly carcinogenic means there's limited evidence that it is associated. So there's been a lot of controversy around this classification in the past because they've included products that they've said are possibly carcinogenic, are aloe vera and pickled Asian vegetables and mobile phones. And there was this whole red meat scare. I don't think we remember, but we were reading about it, where they were like, red meat, deli meat, and red meat will give processed meat in general is possibly carcinogenic. And it led to all of these crazy headlines where it's like, red meat will give you cancer.

11:08If you look at the actual evidence, They said giving 100 people an extra 50 grams of bacon and they would have to eat it for every single day for the rest of their lives would just lead to one case of bowel cancer. Jeez. So it's just them like covering their butts here. But it could have broad implications for soda manufacturers. And they are coming out and they're not happy. Yeah, they're very mad. There's actually an international sweetener association that came out against this and said, yeah, it's ridiculous that this is based on heavily and discredited research. So they're mad. And then Pepsi, Pepsi's actually okay with it because they removed aspartame from SOTUS in 2015, brought it back in 2020, or brought it back a year later, and then removed it again in 2020.

11:50So they're saying, listen, we don't have any aspartame in ours. So I guess it's Diet Coke that's under stress. I want to talk about Diet Coke a little bit because have you heard about this theory that the highest performers in the world chug Diet Coke? I know Warren Buffett loves it. Yeah, Warren Buffett, Elon Musk, Bill Gates, Bill Clinton, Trump, they all crush Diet Coke. They're very notable Diet Coke drinkers. So I think it was last year or two years ago, there were a lot of articles written trying to figure out if there was anything in Diet Coke that led to— Sounds like it was written by Big Aspartame, though, right?

12:24It could be. People decided that it was just like a natural caffeine buzz all day long that makes you more productive. Yeah. All right, Neil, let's jump into our next story where it's time to check in on a name that we haven't heard for a while on the pod, Virgin Galactic. The space tourism company founded by the eccentric British billionaire Richard Branson successfully completed a commercial flight to the edge of space yesterday. On board were three Italian customers who paid$450 ,000 each for their seat, as well as a pilot, and all four made it back to Earth successfully. I mention that because something we have been talking a lot about on the pod recently is the rise of adventure tourism, especially in the context of the Titanic sub-disaster.

13:08So a lot of eyes were on this conspicuous example of yet another foray into the unknown by a couple of wealthy patrons. But it went okay, and now it looks like Virgin Galactic might be on the edge of turning into the full-fledged space tourism company that Branson always imagined. Neil, is adventure tourism back? It never left. Yeah. It never left. That was a one-off thing with the Titan submersible where the CEO stocked in rush seemed extremely reckless. And I think these space companies, while there obviously will always be potential for disaster, have their stuff a little more buttoned up. So I am like people die on Everest every single year.

13:49And yet more people and more people and more people apply for permits and more people climb. They're literally stepping over dead bodies on their way to the top. So they know the risk. I don't think extreme tourism is going anywhere. It's only going to grow. Yeah. And to me, though, this signals that Virgin Galactic might be maturing into kind of a real company because after this trip, it has another commercial flight planned in August. And after that, they plan to fly on a monthly cadence. And like this, this is a company that lost five hundred million dollars last year. It's a company that has really struggled.

14:21Its stock has seesawed. It used to be 11 billion worth, 11 billion dollars. Now it's worth one point three billion dollars. But if there's a path forward for flying people up to space regularly at$450 ,000 ahead, that's a company that has a viable chance of surviving. But how many people can pay$450 ,000 a ticket until you run out of rich people? I mean, if someone presented you this business plan. They said they've sold 800 tickets, though. Okay. And some of them are$250 ,000 ahead. I'm just saying, then one of those 800 people, are there another 800 people that could pay half a million dollars?

14:54There's a lot of rich people out there, too. I'm just saying if someone presented you with this business plan and we're a space tourism company, we're charging$450 ,000 and our costs are X, you know, would you invest in this company? Like, does it scale? Is it sustainable, this kind of tourism? I think there's plenty of rich people out there that want to do this. We will see, though, going forward. But before we jump into the next story, we're going to take a quick break. This 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.

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16:14Hey, that's a beat! You want to do it your way Want to drive? CarMax. All right, Neil, you know what time it is. It's Stock of the Week, Dog of the Week time, baby. This is our segment. What? Did you just have a lot of Diet Coke? Oh, yeah, I did. Aspartame. This is our segment on Friday where we tell you all about a stock that is in its thriving era and one that is giving disappointment. As always, we are just humble podcasters, so please remember that none of this should be construed as financial advice. Today is the last day of the first half of the year, like we mentioned. So we actually stretched out the x-axis a little bit to choose between two companies that had notable performances over Q1 and Q2 versus just the past week.

17:02Neil, congratulations. You are up first. Let's go. Take us away. All right. My stock of H1 is cruise operators. So after getting bruised up during COVID, cruise companies like Carnival, Royal Caribbean, and Norwegian have been the best performing stocks in the S &P 500 this year. each up more than 55%. Yes, for all the AI hype, it's cheap daiquiris and crusty snorkeling face masks that rose to the top of the stock market in the first half of 2023. And if those weren't the right metaphors, I've never been on a cruise, so I just assume that's what happens. So NVIDIA, which is emblematic of the AI craze, came in fourth behind these three cruise companies.

17:40So cruise lines have bounced back really well. Carnival Cruise's$5 billion in quarterly revenue was its highest since 2019. but everything is relative. These companies are still losing money and both Carnival and Norwegian stock prices are 60 % lower than at the end of 2019. But this is striking their comeback because everyone left them for dead in 2020. They were like, no one is going to go on a cruise anymore now that we know that it spreads germs. And I think the biggest cruise ship ever is about to set up. I cannot wait for that. Yeah, that's going to be big. Wait, what is it? Something of the seas probably?

18:15It's always something of the seas. Yeah, because I was in St. Thomas once and I saw Oasis of the Seas, which was the biggest at the time. These things are crazy. Cruise pod? Should we do a cruise pod? I would do a cruise pod, but on a small boutique one, not necessarily on the Petri dish ones. All right, Neil, let's move on to our dog of the half, which is Dollar General. Good old DG has had a rougher first half of the year than hair and makeup, slotting in at number eight on the list of the 20 worst performing stocks in the S &P 500 this year. And honestly, its meager performance comes down to a lot of little things.

18:51Just an overall poor economic environment with increased levels of inflation the first half of the year hurt Dollar General shoppers. But the CEO also called out things like bad weather and lower than expected tax refunds as a couple of things that impacted sales. Finally, Dollar General is also experiencing that rise in theft that other retailers have been grappling with. Put that together and what have you got? a stock that is down 34 % year to date, and a Dollar General that is performing more like a Dollar Lieutenant. I was very happy with that one. Really? Come on, give me a little something there.

19:27Yes, Dollar General does seem to be more emblematic of the retail malaise that's going on with increased theft and consumers pulling back just a little bit. No more stimmies from the pandemic. Times are a little tougher for them. It felt emblematic of the first half of the year. Right. And that's why you picked it. And that's why you picked it. All right. Let's move on. Indiana Jones and the Dial of Destiny hits theaters today. I know Barbie has overshadowed a lot of the new releases, but that hits. It's especially notable because it's Harrison Ford's last turn as the archaeology professor he introduced to the world in 1981.

20:02But Ford is not retiring from all acting just yet. And at 80 years old, he's representative of a growing number of octogenarians who are putting off retirement and putting in the hours. In fact, about 650 ,000 Americans over 80 were working last year, which is 18 percent higher than a decade ago. Even more surprising, half of them log full time hours. And when you take people 75 and over, this trend becomes even more dramatic. workforce participation among those 75 and older will rise to nearly 12 % in 2030 from 9 % in 2020. It's the only age group that's expected to increase its ranks of workers.

20:40When you're talking raw numbers, this means that there will be nearly twice as many people 75 plus working in 2030 as in 2020. Can't slow these people down, Neil, these Okta-Najarians. I think the funniest part is we read this Wall Street Journal article and it did a deep profile on 80-year-old workers. and they said they had real trouble getting into contact with some of these people in order to interview because if you're an 80 year old that's still working you're probably at the top of your field and so they said that one said an interview would have to wait because he was traveling to france for the 24 hour le mans another said he'd be free after organizing his harvard business school's classes 65th reunion so these are again it's a bigger than you'd expect group but these are still like an elite sector of like top performers.

21:25I don't know. What do you mean? That's all the, I think they are at some of the top echelon, but like the stats I just rattled off was just broad based workforce, workforce people being like, either I need to go back because I'm living longer and therefore I need to keep working later. Or I get bored, which I think is what I would do. I would get bored with retirement. And so I'm just, you know, putting in some hours here or there to keep working because I don't know what else to do with my life. No, that point that you made prior to the what else to do with my life, people are living longer. Right.

21:58We are getting older as a country. And if you're staying alive, you need more money. And so that is definitely what's contributing to more people working. And the boomers are all becoming of this age right now. So that's why we're seeing a huge increase in the workforce of over 70, over 80. I just want to highlight, you know, some people who are still chugging along in their 80s. Jane Goodall is 89, still protecting the chimps. Warren Buffett's 92. And Charlie Munger is 99. Paul McCartney is 81. He's still rocking. Martha Stewart just became the oldest ever SI swimsuit cover model at 81. And President Biden's running for president at age 80.

22:39So it's the year of the Okinajerians. Yes. OK, let's move on to our final story. Toby, I want you to imagine a parallel universe Olympics where doping is not only allowed, but encouraged. Let me introduce you to the Enhanced Games, a real-life athletic event that aims to showcase a different vision of sports, one that's rippling with steroid-infused muscles. The Enhanced Games are the brainchild of Australian businessman Aaron D'Souza, who's planning on hosting the inaugural event next year. It's intended to have five categories, track and field, swimming, weightlifting, gymnastics, and combat sports.

23:15DeSouza is dead serious about the Enhanced Games, saying he has several athletes on board and Silicon Valley investors interested. And he's not just going after the Olympics for the thrill of it. He claims to be fighting a battle for the soul of sports. Armed with scientists and doctors, the Enhanced Games accused traditional athletic competitions like the Olympics of being anti-science and shaming enhanced athletes. Of course, Olympics officials are calling this a joke and that it's unfair and irresponsible. Toby, I want to know two things. A, are you watching the Enhanced Games? And B, are you competing in the Enhanced Games?

23:48I have always wondered if I just doped up, like what could I potentially achieve? Like if I started blood doping and just started training cycling or something, how good could I get? Which was actually, remember Icarus, the documentary that came out on Netflix? Yeah, about the Russian doping scandal. Right, but that originally started, he sought out to answer that question. It's like, if me, an average cyclist, if I started doping, like how good could I become? and he didn't really sniff the top people still. So I don't think I could truly like broid up. But that's what this guy, D'Souza, is getting at.

24:21It's like, we have all these scientific things going on. Like, why don't we see what the human body can actually achieve? Obviously, I frankly don't know. Steroids obviously seem not good for you and have many adverse health effects. So that could be a stumbling block. Yeah, I could see it though. If someone is aware of the risks and like this competition fosters it, than all the power to them, right? Like I want to see someone jump 11 feet on the high jump or run. Like Usain Bolt's 100 meter records, 9.19. If someone broke nine on steroids, that I think would generally be entertaining and would like open up a new chapter in human history.

24:59Because yeah, we think we're like almost maxed out on the 100. And so I would love to see someone push it to its limits. I also feel like the line between performance enhancing drugs and just drugs that you normally take that are okay to be in sports is blurring. As science advances and medicine advances, how are we going to distinguish between what gives you an advantage and that's okay and what gives you an advantage and that's not okay? It's like technological advancements too. Shoes are changing technology. A hundred years ago, they didn't have the shoes. It is almost a natural evolution of humans.