Meme Stock Surge Fizzles Out & Netflix Scores Massive NFL Deal

0:00Tonight on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best I do win! On Brand with Jimmy Fallon. Series premiere tonight on NBC. Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. today, bird flu is spreading through cattle, but sales of raw milk are soaring.

0:40What's up with that? Ben, inflation numbers came in yesterday. Are your trips to the grocery store and gas station getting more expensive? We'll let you know. It's Thursday, May 16th. Let's ride.

0:55We had a special visitor in the studio yesterday, Toby. Yes, we did. Uber CEO Dara Khashrashahi was in town for Uber's big product event, and he stopped by Morning Brew Daily for an interview that will be released later this morning. I know it's cliche to say an interview was wide-ranging, but this one really covered all the bases. We talked robo-taxis and competition from Tesla, what it was like to clean up after Travis Kalanick, his biggest regret while running Uber, and how they can get away with surge pricing while no one else can. Dara was a super insightful guy. I learned a lot from this episode, and I think you will too.

1:31The episode drops at 10 a.m. today, Eastern time. So after you're done with this one, have yourself a little coffee, respond to some emails, then toss on the bonus Dara episode wherever you listen or watch Morning Brew daily. Okay, new sponsor alert. Today's show is presented by Sage. Sage is not an herb, but a cloud accounting provider for small and medium-sized businesses. They take all the annoying, time-consuming manual processes that require time and money and automate them. And they recently added AI into the mix to supercharge everything. Here's an example. You're a finance professional.

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3:16Before starting EBCLIS, Tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about Epglis and visit epglis.lily.com or call 1-800-LILY-RX or 1-800-545-5979. You know that sound your dad makes when they sink down into your favorite chair? Kind of like a, ugh. Well, that's the sound I imagine the economy is making right now after April's inflation numbers came in. I'm projecting that sound onto the economy because inflation actually eased up a little last month, providing us all with a slimmer of relief and hope that a cut in interest rates is coming sooner rather than later the consumer price index which is a closely watched basket of goods and services rose on a monthly basis by 0.3 percent from march below estimates which we like to see on a yearly basis the cpi came in at 3.4 percent which was in line with expectations so yeah we're not doing victory laps but i think my dad chair sound is a little justified really most people were just happy that this was the first reading in months that wasn't hotter than expected.

4:17You might have noticed a little relief rally yesterday in stocks as all three major indexes finished in the green. Neil, you're looking more relieved. Are you feeling more relieved? Oh yeah. So I have a different metaphor than your dad chair metaphor. It's like when your flight is delayed at the airport, one hour goes by, two hours go by, and you're like, I'm never getting on this plane, am I? And right when you lose all hope, they finally announced they're ready for boarding and that wave of relief washes over you. And you did see that in the stock market yesterday. They didn't just have a little relief rally.

4:47All three stock indexes closed at a record high. The S &P rose over 1%. So this was investors breathing the sigh of relief because all three inflation reports, January, February, March, came in hotter than expected. And the question was, oh my God, really? Are we not going to even get any interest rate cuts this year at all? And is inflation going to be with us forever? And then finally, this was the first bit of good news of 2024. First of all, you did steal my metaphor because you said breathing a sigh of relief. So I'm saying there's only so many ways you can say relief. I know. But yes, there is still inflation around.

5:23So where is it coming from? A lot of the gains for the month were driven heavily by rises in the usual suspects, both shelter and energy, rising rents, rising gas prices were partially offset actually by falling prices for groceries. So mostly in those household staples like eggs and milk. So that's generally where we're seeing still some of that price pressure, but then also some of that price relief. Yeah. So what is going to happen next? It looks like Fed Chair Jerome Powell is not ready to cut rates at their next meeting this summer. It's going to take another few reports to make this trend into something that's more permanent because it could just be a blip on the radar.

6:00Everything seems to be a blip on the radar. And the most important consumer price index inflation report is the next one. So that's what we're looking forward to is what's going to happen next month. It does appear like investors are piling in their bets that there will be a rate cut sometime in the fall, September or November. If you're Joe Biden, you're like, please let it be September because that's two months before the election. And if they don't cut, then it'll be a little dicey. So that's what we're looking forward to this summer and the fall. Yeah, I guess the takeaway is that inflation still higher than normal.

6:32The Federal Reserve are very far away from declaring victory. Just to put it in perspective, this marks the 37th consecutive month with inflation above 3%. Remember, the Fed's goal is 2%. So we're clearly not there yet. Call it the last mile. That last percentage point is still something that the Fed is very concerned about. So no victory laps. No victory laps. But it does appear that that soft landing is coming more into view. That soft landing means that bringing down inflation from its peak of 9.1 % in 2022 back to normal levels without causing a major recession or major job losses does appear like we are perhaps on track.

7:10I know we've gone back and forth. I have so much whiplash from saying, yes, we're going to have the soft landing. No, we're not going to have the soft landing. This report indicates that a soft landing is perhaps possible. So the major stock indexes all hit record highs yesterday. Could meme stocks extend their upward march after folk hero Roaring Kitty indicated he was back in action? No. The meme stock rally fizzled out yesterday with GameStop falling nearly 20 % and AMC tumbling 16%. To be sure, these companies are still worth way more than they were before Roaring Kitty posted his first tweet in three years on Sunday.

7:45AMC has risen 73 % so far this week, and GameStop more than doubled its market cap from $5.3 billion on Friday to$12.1 billion currently. So a few Roaring Kitty social media posts are worth roughly$6.8 billion to GameStop, in case you were wondering. The question now is, what comes next for these companies? At least for AMC, it's trying to capitalize on the stock surge by steadying its struggling business, which it's done before during moments of meme stock mania. It reached a deal to swap about$164 million of its debt for newly issued stock, a move that will reduce its overall debt levels. Toby, has the dust settled on this?

8:25Is the Roaring Kitty pop over? Both companies are down big once again in pre-market trading this morning. It's so interesting because AMC actually pulled this same strategy back in 2021 with the original meme stock rally. It is kind of a rescue that most companies in America can only dream of. Essentially, what you're doing is injecting fresh cash into your company without really hurting your stock price too, too much. I mean, AMC's price did fall yesterday. And also the biggest thing is not adding more debt onto your balance sheet. So this is something that they sold. They did a debt for equity swap back in 2021.

8:59They're doing it again. And Bloomberg's Matt Levine wrote, I don't think this is a strategy you can really count on waiting for a meme stock rally to hit every time and then offloading some of that debt. But I will say that AMC is like their CEO has kind of maintained this relationship with retail investors. So it's not so much of an accident necessarily that it's always GameStop and AMC as the two meme stocks. So even though like hope is not a strategy, as we like to say, they are capitalizing on the current moment, which I think is wise from them. Yeah. Do you think the CEO is just refreshing Twitter to see if Roaring Kitty tweets?

9:34Because that's basically their financial strategy at this point instead of getting people actually back in theaters. So how big was this meme stock mania of 2024? It may have been fleeting, but it does appear to have been somewhat sizable. Robinhood saw$5 billion in equities trading on volume on Tuesday, which was among the highest levels in the past 12 months. Still, this was nothing compared to January and February 2021. GameStop reached a peak daily inflow of$88 million back then. And on Monday, which was maybe the peak of everything this week after Roaring Kitty tweeted, just$16 million float into GameStop.

10:13So much lower, but there was a considerable amount of FOMO and there was a lot of chatter on Wall Street bets and other social media platforms about, you know, getting into this, getting into this rally before it fizzles because inevitably it does always fizzle. I think the biggest difference between this rally and 2021 was one. Yeah, you're right. The size like GameStop was up over a thousand percent in that rally in 2021. This time it's only only up 100 percent. There felt to be more of a cultural movement behind the 2021 one. This was truly like a coming out party for retail investors. Now there's not same.

10:46There's not that same cultural oomph behind it. So it just felt different as well as as you said, like the volumes were much smaller as well. football is coming to yet another streaming platform because you know what they say you can't spell netflix without the nfl yep the biggest league and the biggest streamer in america are teaming up to air the nfl's two christmas day games this year netflix is paying a pretty penny about 75 million dollars per game in a three-year deal that will also include at least one holiday game in 2025 and 2026 you just have to laugh here a little though neil netflix was the company that just a few years ago was staunchly against getting into live sports saying it was too expensive and they'd be focusing more on sports adjacent content instead but since then they've sold out five billion dollars to air the wwe and now have gone to the ratings altar that is the nfl do we like this move 75 million dollars per game is it a good deal i think they saw what happened with the tom brady roast and were like we just had football players talking on a random sunday night and people love that and create this cultural moment.

11:50Maybe we should start showing NFL games themselves. But I do like the move. I think you have to do it. NFL is the biggest media property by far. It creates all of those live moments that you can really sell advertisers on. And Netflix is obviously very bullish on their ad supported tier and getting into the ad business, as you'll hear us talk later about today with Uber. Every company eventually becomes an advertising company. Netflix is realizing this. It's going after the NFL, which accounted for 93 of the top 100 TV broadcasts last year. There is no bigger fish in the entertainment pond than the NFL.

12:24And there's no bigger fish in the streaming pond than Netflix. So teaming up makes all too much sense. And it also feels like a good deal because when you compare it to Peacock last year, remember Peacock paid reportedly$110 million to air a single game, the exclusive rights to the AFC wildcard game on its service. That ended up being a pretty smashing success for them. Apparently, it was the largest ever event for internet usage in the US. It was responsible for 30 % of all web traffic. So I do think they saw that and were like, all right, it worked pretty well for them. Let's try it on our own services.

12:55Again, I said I have to laugh in the intro because it's so funny. Remember, Netflix's co-CEO, Ted Sarandos, was literally last year saying, we aren't anti-sports, we're pro-profit. They were saying the bidding war for these sporting properties are just insane. like we could just make these sports adjacent content, which is like their drive to survive series and stuff like that. But now I think maybe they've seen the light. They've seen that other platforms can pull it off and they want to get in on the action too. One deal this may not be good for is consumers because we're used to just flipping on the TV and watching the NFL on ABC, CBS, NBC, all these broadcast, Fox, all these broadcast networks.

13:35And now the NFL is becoming a very splintered landscape. One person calculated that to watch every single NFL game next season, you are going to have to pay over$800. There's a game on Peacock. There's games on ESPN+. Now there's games on Netflix. Thursday night games are on Amazon Prime Video. This is becoming a very bifurcated market for the NFL. And it's very in opposition to what it used to be, which was throw it up on broadcast, get our product out to the masses. And now it's going to be splintered among all these streaming services. And I think fans are quite upset about having to buy all these different streaming services to watch these games.

14:11And on the flip side, too, you add Netflix into the mix means you have to take away something from someone else. So the media partners are also not happy. So there's definitely friction on both the fan side and on the media partner side. But$150 million. No, it's good for it. Listen, the NFL wins. The NFL always wins. Now hold on to whatever horse you're listening to this podcast with because Neil's Numbers is coming up next. I'm Christian McCaffrey, Pro Running Back, and Abercrombie is an official fashion partner of the NFL. I'm not kidding when I say NFL by Abercrombie broke the internet last year, and I think this season's lineup is even cooler.

14:49And so does my wife, who keeps stealing all my hoodies. Stay fit for the season and Abercrombie's newest arrivals. Shop NFL by Abercrombie in the app, online, and in store.

15:08When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. welcome back to neil's numbers the segment where i share three stats from the week's news that will hopefully expand your perspective on the world my first number is a sign of hope in what has been a national nightmare overdose deaths in the u.s declined in 2023 for the first time in five years according to preliminary data released yesterday which is a step in the right direction toward combating the opioid crisis.

16:00Still, it's just a step. And the 107 ,500 overdose deaths last year marked the third year in a row that they've been over 100 ,000. It's just a stunning number, considering that as recently as 2015, the tally was just half that. And in 1990, 8 ,400 people died of a drug overdose. The main cause of overdoses now is fentanyl, which is made by Mexican cartels and then trafficked over the border. seven of every 10 U.S. overdose deaths in 2023 involve synthetic opioids like fentanyl and their 2 % decline last year brought down the overall numbers. Toby, feels like progress, but a long way to go because this crisis is still raging.

16:40Yeah, I mean, it is progress because the last two declines came in 2018 and then the last one before that was 1990 when you gave that number. It is just staggering how much it's growing from 8 ,500 to over 100 ,000 opioid deaths. state by state it's a little all over the place still um generally speaking though cdc data is showing that a lot more western states are dealing with rising deaths from overdoses and while eastern states cool off so it's almost like we're seeing this this drug epidemic migrate across the country so but yeah we're seeing declines in some places alaska saw the highest increase so there's no there's no perfect through line but that's generally like some of the trends that we're seeing.

17:21So what is anyone doing about this? Like, this is not good. We need to fix this. So the Biden administration has pledged$167 billion to help this crisis. And they're buying all these opioid addiction medications and giving them to states to hand out to people. And then one of the biggest problems, obviously, is fentanyl coming across the border. The Senate passed this border, this bipartisan border bill to help stem the flow of fentanyl from Mexico to the United States. That was blocked in the House. So that is one of the biggest one of the biggest potential solutions that didn't get through Congress.

17:57So, you know, going to the border because it does appear like this drugs being trafficked from across the border is really fueling this crisis. So figuring that out will definitely help. Before revealing my second number, I'll pose the question. Overall, do you think that going on the Internet is linked to positive well-being or people feeling worse about their lives? The answer, which might surprise you, is that surfing the web might boost measures of well-being. A huge global study carried out over 16 years found that internet access and use is consistently associated with positive well-being, which complicates the existing narrative that going online is bad for you.

18:33The study from the Oxford Internet Institute said that, on average, people who had access to the internet scored 8 % higher on measures of life satisfaction, positive experiences, and contentment with their social life compared to people who lacked internet access. Why might this research be telling a different story than pretty much everything else you've heard about going on on the Internet? There are three key differences. This study didn't focus on social media in particular, just the Internet more broadly. It had participants from 168 countries, so very international in scope. Currently, more than 90 percent of data sets on the topic come from a handful of English-speaking countries.

19:11And finally, this study looked at people age 15 and up, while most other internet is the devil research only cares about the impacts on young people. Toby, these scientists say the internet could be good for you. Are you convinced? I think the main takeaway here is that it's more nuanced than you think because you're right. Like a lot of people who are quoting a higher level of well-being doesn't also mean that there are negative things that happen to them online. Like they're not mutually exclusive. It's not just your experience is entirely positive or entirely negative. It's somewhere in the middle of those.

19:39And then on the flip side, just because there's this documented rise in teen mental health crisis doesn't mean it's automatically like the Internet's fault. We've talked about this a lot on the show. You're right. It's been more tied to social media. This is more the Internet broadly. So I do think this was a unique perspective, going more global, going more Internet-based rather than social media-based. And it was interesting to see like a new data point kind of entered into this conversation. Yeah, I mean, going on the Internet, I mean, you learn things. you can meet people in communities that you never would have met before.

20:10I mean, I just feel like their conversation on the internet always focuses on the harms. And of course, we should talk about that. But I'm glad that the study injected into the conversation, the fact that the internet has made our lives so much better in certain ways as well. My final number has not been pasteurized. And that's because ever since bird flu was confirmed in US cattle on March 25th, Weekly sales of raw cow's milk has spiked up to 65 % compared with the same period a year ago. That jump comes despite advice from the FDA and CDC that raw milk is one of the riskiest foods people can consume because of the harmful germs it can contain.

20:47And that's not even factoring in bird flu, which has been found in 42 cattle herds in nine states as of Monday. Viral remnants of the flu have been detected in samples of milk sold in grocery stores. But the FDA said this milk is safe to drink because it's been zapped by the hot pasteurization process. The same cannot be said for raw milk. And it's not yet clear whether the virus can be transmitted to people who consume milk that hasn't been treated with heat. So why are people drinking more raw milk? Scroll on social media where there's been a ton of content circulating touting its benefits. Health experts say these raw milk promoters have no evidence to back up their claims.

21:24But that only feeds the flames. many people are gravitating to raw milk because it's a giant FU to the experts. Yeah, this is definitely fueled by wellness or conservative influencers. It's definitely not something where people don't understand the science. It's that they do understand the science and are intentionally rejecting it because they've been told that they shouldn't do it. So it's definitely almost a center of a certain culture war at this point. I do just want to put it into perspective, though, even though sales are on the rise, about 4 ,100 units of raw cow's milk were sold the week of May 5th, according to Nielsen IQ.

21:59Let's compare that to pasteurized milk. 66.5 million units of pasteurized cow's milk were sold. So this is still very much a niche product, although that niche product is growing. It is crazy what pasteurization and milk regulation has done to overall public health, though. So in 1924, before milk standards were adopted, about 25 % of all foodborne illnesses in the U.S. were related to dairy consumption. And now it It accounts for just 1 % of such illnesses. So this milk regulation, pasteurization, treating milk, and then having people drink it has been one of the biggest public health successes over the last century.

22:36Remember, we ran a greatest invention of all time bracket earlier this year in conjunction with March Madness. I don't remember. And we put pasteurization in it, and it made it to the Elite Eight, which was very surprising to me. But yes, it seems like in general, people are very much on board with pasteurization. There is a wave of fake studies flooding top scientific journals right now that is throwing the entire scientific community into a tizzy. This wide-scale fraud is carried out by so-called paper mills, which, for the right price, will list someone as an author of a fabricated paper. They submit the papers en masse, usually to a less prestigious journal, so they have a better chance of sneaking through their fake work.

23:15Why do these operations exist? Citations are the currency in the world of academia because you got to get your work into peer-reviewed journals to win grants or promotions. So bad actors are incentivized to cheat the system, with paper mills happy to facilitate their deceit for a fee. The flood of fraud has already caused one 217-year-old publisher from Hoboken to close 19 of its journals, and a Wall Street Journal investigation found countless other instances in the nearly$30 billion academic publishing industry. Neil, this is a bad look for the science community as a whole. It's an absolute crisis.

23:50Last year, the annual number of papers that were retracted by research journals, top 10 ,000 for the first time. So this is a very widespread practice, these paper mills, putting out these fraudulent papers, messing with scientific research. You don't know what to trust. You don't know what to trust. You don't. I don't know. I think we can trust the global Internet study that we just talked about. But it's really funny the way these guys do it because they, I mean, it's not funny, but it's clever. What they do is they put these papers, these paper templates through synonym generators online. So you end up with these really goofy phrases like breast cancer becomes bosom peril.