Microsoft Will Pick Up its Data Center Tab? & Your Groceries Got More Expensive

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0:30Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, as data center blowback grows, Microsoft promises to be a better neighbor. Then what's this new anthropic tool that all your tech friends are going wild over? It's Wednesday, January 14th. Let's ride.

0:52Toby, we've been talking about some trends that could pop off in 2026, and I've got another one for you. Analog rooms. This is a space in your house with zero digital distractions, zero screens, just you and your family, maybe a musical instrument, some books, a jigsaw puzzle, and sure, why not, a vintage record player. People are desperate for a break from their phones. According to The Wall Street Journal, searches for how to reduce screen time reached an all-time high last year. And on TikTok, videos tagged Analog Life have gotten more than 76 million views. Toby, maybe the antidote to the smart home is the analog room.

1:30I'll go a step further as everything from your TV to your toaster has become a smart. I think dumb design is coming back. So I'm not going to call my screenless room an analog room. That is the dumb house. Game night in the dumb house, everyone. However, this whole movement falls apart when it comes to analog clocks. No one knows how to tell time anymore. So game night is starting a little bit behind schedule in the dumb house. All right, now a word from our sponsor, Indeed. Toby, have you ever been to the Swiss Alps? No, but I once ate a bunch of Swiss cheese with a guy named Alp. Does that count?

2:05It does not, but we're going together for the World Economic Forum's annual meeting in Davos next week. Indeed will be there, also giving business leaders the inside scoop on all things hiring. With real-time insight into the global labor market and more than 20 years of hiring expertise, Indeed is bringing a data-driven perspective to the conversations shaping the future of work. Those insights come together in reports from Indeed's Hiring Lab, like the newly released 2026 Jobs and Hiring Trends Report, which offers a forward-looking view of the U.S. labor market, what's shifting, what's stabilizing, and what business leaders need to prepare for in the year ahead.

2:38Explore Indeed's full report at Indeed.com slash 2026 Hiring Trends. That's Indeed.com slash 2026 Hiring Trends. The inflation report for December dropped yesterday morning, and it came in more mild than Austrian cuisine. U.S. consumer prices rose 2.7 % for the year and 0.3 % from the month before, about in line with expectations. It shows an economy that's pulled back from the inflation brink, but still has steady, higher-than-typical price increases that's frustrating many Americans. A major contributor to inflation last month was groceries, which posted their biggest monthly gain since 2022.

3:15Beef prices have jumped 16 % from a year ago to a record high, and fruits, veggies, dairy, and coffee all got a bit more expensive. On the flip side, gas got cheaper, as did used cars and trucks. Prices for household furnishings fell 0.5 % after President Trump held off on his plan to hike tariffs on furniture imports. So now that the December numbers are in, we can close the chapter on inflation in 2025. The TLDR is inflation did slow down slightly from the beginning of the year. A major concern was that tariffs would send prices in certain categories soaring once they took effect. But even in those industries like apparel, inflation wasn't as bad as feared throughout the summer and fall.

3:55The bottom line, inflation is still above target level, still hitting people's wallets. But at the same time, it's not code red. Yeah, it's a good time to have a little inflation wrapped, a little retrospective on the year. And it was kind of a year of fits in starts. Inflation is not re-accelerating, but it's also kind of moderating a little bit more gradually than maybe economists are hoping for. Tariffs were the lingering risk throughout this entire year, and it never quite impacted inflation the way a lot of people were expecting. A lot of people thought that tariffs were going to cause this big one-time price increase, but there wasn't any sort of circa 2022 price inflation surge that we were expecting.

4:35Really what happened is businesses found ways to mitigate a lot of the effects of tariffs. Some of the price impacts were delayed and uneven. That being said, we did, if you go back, we did see it in the household items like coffee, like furnishing, toys, window coverings, tableware. There were pockets of the economy that definitely were affected by tariffs. Yeah, even if you look at this December inflation report, you can find the impacts of tariffs. Jewelry and watches rose 4.7 percent. Tools, hardware and supplies increased 5.2 percent compared to December 2024. And those are some categories that have been hit with tariffs.

5:12Now, going into 2026, I think a big conversation is going to be had around groceries and food because that was the big number here. It was the biggest monthly increase since July 2022. Other food at home soared 1.6 percent. Now, that is a category that encompasses things like spices, seasonings, sauces, and condiments. So your hot sauce is, you know, you might have to just stick with sriracha. You can't go anything. That fancier. And then also coffee prices up 1.9 % from the previous month. And then if you go back to the previous year, December 2024, coffee prices are up nearly 20%. So grocery, your supermarket bill is still getting more expensive, except for one category, which we have to mention, egg prices.

5:54Egg prices are in free fall. They fell 8.2 % over the month. So at least the egg scare inflation is over, but the rest of the supermarket aisle is getting more expensive. I feel bad for eggs. We used to talk about eggs all the time. Now it's just an afterthought in the inflation report, which is probably good if you like an omelet in the morning. Finally, I do want to talk about shelter data because shelter data is one that's still a little bit wonky coming out of the government shutdown. Remember, because the government shut down, the November inflation report didn't have, They assumed shelter inflation was zero because they just carried the same prices forward from the previous month to the next month, which is obviously not necessarily true.

6:34Some rent prices probably did go up. So if you're coming off of a month where there was 0 % increase in shelter costs, then we might see bigger bumps in shelter costs going forward in these next few months as it kind of normalizes and stabilizes. So that is something to keep an eye on some of these unresolved data distortions coming out of the government shutdown that are probably going to manifest in shelter costs. And shelter costs are just housing costs, rent costs, and they make up the bulk of the CPI, the Consumer Price Index Report. So it's a big one that economists watch. All right, let's move on.

7:09You know when you go out to dinner with friends and everyone hems and haws about who's paying? Well, Microsoft is making it clear that it's picking up its own tab. Yesterday, the company released a five-point plan promising to pay more when it builds a new data center to ensure jacked-up electricity costs aren't passed on to consumers. The primary concerns it and the rest of the tech world are facing is that data centers create very few permanent jobs outside construction, lead to higher electricity bills for residents, and put strain on the environment given their heavy water usage. So, according to Microsoft Plan, it will foot the bill and not rely on any taxpayer subsidies.

7:47It also plans to replenish more water than its data centers use, focus on the local job creation and fund AI training programs. Trump is tapping into the data center trepidation swirling around communities. He posted on Truth Social on Monday that while build outs are essential to USAI dominance, Americans should not pay higher electricity bills because of them. Neil, it seems like the initial move fast and break electricity brills approach to data center construction is coming under more scrutiny, especially ahead of midterm elections where affordability will feature prominently. Yeah, Microsoft isn't doing this out of the goodness of its heart.

8:23It has a plan to double its data center footprint in the next two years, and it can't do that based on what communities are telling it right now. Now, between April and June of last year, 20 projects valued at around$98 billion of planned data center projects were rejected by communities across the country. And it even happened to Microsoft in Caledonia, Wisconsin, and wanted to have this big data center project. The local community came together and said, we don't want Microsoft coming here with their data centers because it's going to drive electricity rates higher. We don't see any of the positive economic benefits from these data centers.

8:55And so they had to scrap the plan. So Microsoft and a bunch of other tech companies need these data centers to be built to fuel their AI ambitions. It's almost as important as whipping out a flashy brand new model, just building these brick and mortar data centers. But they can't do it right now unless they change tack. And Microsoft is trying to pave way with a new strategy that engages the community a little bit more. Yeah, it's turned into a public affairs issue, not necessarily a tech issue at this point, because some public affairs consultants said that tech companies failed to do the dirty work and the groundwork early and engage community members.

9:29Now, as they're opening their bills and seeing their electricity prices, it's almost too late to play nice with them. So that is why you're seeing kind of this five-point plan come out. It is scrambling from Microsoft's point. They are saying that, like, hey, this is not charity. We feel like we are doing our civic duty here. We should be having to pay for our own electricity bills. But absolutely, it is a hot point issue at the state level, especially ahead of all these elections coming up. Yeah, we got Bernie Sanders calling for a new data center moratorium. Elizabeth Warren, another Democrat, they've launched an investigation to the link between data centers and rising electricity prices.

10:06And then even on the right, a bunch of Republicans are also, including Marjorie Taylor Greene, are also opposed to data center expansion. And a big reason why is these things just don't create a lot of jobs. If you're going to have this big economic development project in a community, you can really sell the locals on it. If you're saying, I'm going to create 2 ,000, 3 ,000 jobs and we're going to be a part of your community and we're going to employ people. The problem is these things just don't have a lot of people working there. in Abilene, Texas, OpenAI is building one of its first Stargate data centers, and they got 1 ,500 people working to build it on construction.

10:38But once it's completed, the facility is going to have fewer than 100 full-time employees. So you just see this big negative externality in the community and saying, I'm not sure how you're going to make my place better. I thought that was funny. Microsoft was like, they emphasize in their plan that construction phase can last 10 to 15 years. That's the part that only employs a lot of people. Right, exactly. But it is ironic to say, No, we're going to drag this things out, guys. You will have jobs for those 10 to 15 years for sure. All right, moving on. Greenhouse gas emissions are going back up.

11:09After two years of declines, the amount of greenhouse gases the U.S. plowed into the atmosphere climbed 2.4 percent, according to an analysis from the Rhodium Group, an independent economic research firm. It was the first time U.S. emissions climbed since 2022 when the world was coming out of the pandemic and people and industry were back on the move. The study's co-author, Ben King, said it plainly. seeing upward emissions levels in the United States on the whole is not great. It is problematic for the prospects of meeting long-term decarbonization. So why, after two decades of broad declines, did emissions perk back up in 2025?

11:42Well, one factor we have no control over. It was cold last year. Colder temperatures boosted demand for heating, requiring more buildings and homes to burn natural gas and fuel oil. Another driver was the topic we just talked about good old data centers. Power-hungry operations like AI data centers, crypto mining, and other large load customers also generated more demand for electricity. And when utilities needed to meet that demand, they turned to a fuel source that's the opposite of clean energy, coal. Electric utilities burned 13 % more coal in 2025 than they did the previous year, which is only the second time in the last decade that coal generation has increased annually.

12:18Toby, a setback for keeping climate warming gases in check. I think I know you're thinking, why is coal stepping in to fill this gap? Isn't renewable energy supposed to do that? And renewables did put the team on their back. They only have a small back, though. Solar generation grew 34 % in 2025. Wind generation power also grew modestly. but with just the sheer amount of extra demand that came online in the form of EVs becoming more popular, in the form of data centers coming online, there's only so much that solar and wind can actually do to help close the gap, which is why we saw coal rise in popularity again.

12:56This isn't all bad news, though, because emissions barely increased despite a lot of the factors that you just mentioned, especially there was record travel last year as well. So I'm just going to put a little bit of optimism here and say that certain parts of the climate industry have gotten more efficient, too. Methane leak, when you are storing barrels of oil, actually got a lot better. Methane is a massive polluting greenhouse gas, and leakage per barrel of oil fell 62 % over the last decade or so. So we are making these incremental improvements, which is why maybe we saw a duller spike than you would expect given all the excess demand.

13:34All right, let's take inventory of where we stand in terms of greenhouse gas emissions. Greenhouse gas emissions in the United States are down 18 percent from 20 from 2005. President Joe Biden, former President Joe Biden, had a plan to cut emissions 66 percent by 2035 from 2005 level. So we are far away from that. And rhodium and others now project that we are going to reduce emissions by about 35 percent, potentially less by 2035. So as our sales team would say here, off track to goal. Off track to goal for sure. And you just look around at what governments are doing around the world. It's a much different tune that they were beating than even just a few years ago.

14:15Mark Carney, new Canadian PM, used to be a very big climate advocate, has Canada rolling back some of their climate policies. Ford has pulled back on their EV ambitions as well. And then you even go to Hollywood. If you look at a few years ago, it was the biggest movie in 2020. It was don't look up now. Oil centric shows are dominating TV screens. Landman is the biggest show that people are talking about. So there's just small things that show how the attitude has shifted towards climate policy over the last even half decade or so. All right, we're going to take a quick break and come back with a story about Claude.

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16:13Get started at public.com slash morningbrew and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash morningbrew paid for by public investing full disclosures in podcast description. Imagine you wake up one day and a huge solar flare adds an extra hour to each day, or maybe your team will double in size overnight, or there'll be a global paperclip shortage. The truth is no one knows what's around the corner. Anything can change the world of work, and those changes can be due to factors that are internal, external, or global. From HR to payroll and benefits, ADP designs forward-thinking solutions to take on the next anything.

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17:32Some multi-step examples in Cowork's wheelhouse that Anthropic highlighted, turning a folder of receipts into a completed expense report, and reorganizing your messy desktop with a single prompt, aka it will do all the annoying busy work you chose to put off. CodeWork is especially designed for non-technical people like you and me, even though it's powered by the same bones as Claude Code, the equally powerful agent from Anthropic geared more towards developers. Claude Code is able to complete a lot of the same tasks, but scared off normies because it requires some technical know-how. CodeWork, on the other hand, looks a lot like the normal LLM interfaces you've become accustomed to, with more capacity to rummage around your computer to get stuff done.

18:15Neil, the reactions in my little tech bubble on X range from someone calling it devastatingly good, saying it will 100x people's productivity, to others saying, GG, it's over for knowledge workers since this renders them obsolete. But a lot of people were talking about it. Totally. And what happened here was very interesting. So Anthropic released Claude Code, I think back in 2024, for coders, software engineers, people were using it. But people were using it not just for coding, but just to make apps and do a bunch of different things that kind of escaped from the software engineer bubble that maybe you were in.

18:49And so what they did was they created Claude Co-Work after they saw how successful Claude Code was because they wanted to make Co-Work available to the masses, normies like us who aren't so technical. And what was interesting is they actually built Co-Work in about a week and a half, largely using Claude Code itself, which sent more jaws dropping. Toby, you played around with Claude Code. What is it like and how powerful is it? Yeah, so by the way, this is part of the paid tiers of Anthropic. So I was not a subscriber for this, but in my due diligence for the show, I was like, all right, I'm going to buy the$20 a month tier to get access to Cloud Code.

19:27And you're right. I felt like I was kind of a Luddite looking at this interface because I don't really feel comfortable operating in a terminal. I don't feel comfortable operating in that environment. So even though apparently it's this very popular tool and very powerful and can execute all these tasks across my desktop, I just don't speak the language, the technical language to make it do what I want it to do. So that's why Cowork was invented basically for people like me. That is part of right now their$200 a month tier. So I actually did not spring for that. So I did half of my due diligence in order to do this.

20:02But I can totally see the thought process of how do we get Toby more comfortable using a tool like this? It's get him out of this terminal environment, get him into an environment where he can just use natural language to prompt it to do what I want it to do. And if I'm Microsoft, I have co-pilot trying to be this big enterprise software, AI software for businesses across the country. I'm a little worried because I think this co-work is going directly there. And Anthropic already has had a lot of success. It has more enterprise adoption among software engineers and businesses than OpenAI's chat GPT.

20:35So it's already embedded in boardrooms and offices across America. It just raised money at$183 billion valuation. It wants to raise even more at a$350 billion valuation. And you know what? It has people paying$200 a month and companies on the corporate card for this tool. So if I'm Microsoft, I'm a little nervous at how fast Anthropic is growing and how powerful the tools it's whipping out for enterprise customers is. I'm nervous if I'm Microsoft, but I'm also nervous if I'm a smaller startup because whenever an AI lab releases a tool like this, the inevitable reactions you see from people is that this just killed a bunch of startups because there are specific startups geared towards receipt processing, geared towards file cleanup, towards note synthesis, desktop automation, document drafting.

21:21These are all kind of one-off startups that focus specifically on this one thing because it is a very helpful thing. Anthropic just says, hey, baby, we'll do it all for you in this one tool, which is why you have the big boys scared in Microsoft, but also the little guys are scared as well, because it looks like Anthropic just ate their lunch once more. What's on your Claude Cowork to-do list? Because I want to go into my Google Maps. My Google Maps, I've saved a ton of places. I have a lot of want to go, but that is not organized at all. And I want to be a better trip planner. So I think I'm going to have Claude Cowork go if I pay$200 a month.

21:56That is, I want to go in and kind of clean up my Google Maps and have a better sense of where I've been, where I want to go, what I liked, what I didn't like. So that's my number one to-do list. It's a perfect example because you could do that. It would just take a while to do it and you don't want to spend the time doing it. Claude is expertly tuned to do something like that. Mine is a lot simpler. It really is clean up the desktop because believe it or not, my file management system is not so good. So if I could literally just say, please put all screenshots in one folder. Please put all memes in another folder.

22:27That would go a long way towards decluttering my brain and my desktop. OK, let's sprint to the finish with some final headlines. Tensions over Iran have escalated after President Trump canceled meetings with Iran's government and told protesters help is on the way without adding any details. More than 12000 people have reportedly been killed as the regime cracks down violently on what have become the most widespread anti-government protests in years. And as we've seen in other geopolitical hotspots, Elon Musk's Starlink is once again at the center of it all. Iran's government has shut down the Internet and throttled phone lines, leaving Starlink satellite Internet service as the only way the Iranian people can connect to the outside world.

23:05The government has spent the last few days jamming the service and hunting down users. And what one digital rights leader told The Wall Street Journal is electronic warfare. Also, for the first time, oil markets began to react to developments out of Iran, a major producer, with crude prices jumping at more than 2 % on the day. Moving on, everything's on the table, according to JPMorgan Chase CFO Jeremy Barnum. That was his response when asked by reporters what the bank's plan was for dealing with Trump's proposed 10 % cap on credit card interest rates. As the industry begins to report earnings, the elephant you should look for in the bank lobby is Trump's demands, which only escalated yesterday when he called on lawmakers to support the Credit Card Competition Act, which would target the$200 billion in swipe fees banks make each year.

23:50Game plans are being drawn up on how to deal with the potential cap. Bloomberg reports that some execs are toying with the idea of offering a card that caps interest rates charged at 10 percent. But other insiders say aggressive lobbying, ad campaigns and lawsuits are potential roads as well. In other words, this fight is just kicking off, Neil. We were also keen to hear what Jamie Dimon and other execs had to say about this Fed investigation, Jerome Powell Fed investigation debacle happening. And he did respond at the during his earnings report. Jamie Dimon, JP Morgan CEO said, I just want to say that I don't agree with everything that the Fed has done.