Middle East Conflicts Upend Gas Prices & Meta AI Chats are Public?

0:00Tuesday 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 idea win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC.

0:32Good morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, war in the Middle East has put a spotlight on oil prices, but just how high will they go? Then people are accidentally posting very intimate details from their lives on Meta's AI app. It's Monday, June 16th. Let's ride.

0:55Good morning and welcome back to the week. Here is a question. How important is it for a brand to have a catchphrase? Shake Shack thinks it's pretty crucial. The burger chain, which does not currently have a slogan, has hired the team behind Arby's We Have the Meat to develop a catchphrase of its own, the CFO said last week. They're looking for a slogan that succinctly communicates Shake Shack's brand and captures why people love it, believing that adding a tagline could actually supercharge growth. Toby, you've been known to frequent Shake Shack. Got any ideas to help them out? Well, first of all, I love that they went to the best in the business here, straight to the We Have the Meats people from Arby's.

1:34What if those people came back three months later and goes, we have it, guys. We definitely have the slogan for you, Shake Shack. And they go, we also have the meats. If that doesn't work, then maybe another option is thin patties, full arteries, can't lose. Maybe that wouldn't sell so well. But honestly, it's got me thinking, too, what would be a good catchphrase for Morning Brew Daily? I mean, we have Let's Ride. But beyond that, maybe weigh in in the YouTube comments or on Spotify and tell us what Morning Brew Daily's slogan should be. And now a word from our sponsor, Amazon Ads. Neil, you ever try to win an argument using just vibes?

2:10No, I'm actually pretty logical and data-driven. Now, arguing with you, on the other hand, I hear a lot of, I don't have the actual numbers, but I feel like I'm right. Well, usually because I am right, but you're correct. It's a bad habit of mine. But that's also how most small and medium businesses approach their marketing. You put an ad out there and just hope it lands in front of the right viewers. In reality, though, you want less vibes, more results. You want Amazon ads. One of the great parts about Amazon ads is that it's not just for businesses that sell on Amazon. Local shops, car dealerships, even service providers can use Amazon streaming TV ads to help get in front of relevant audiences during shows they're already watching.

2:50Plus, you can actually measure what's working, adjust, optimize, repeat. That's how you make every dollar count. So gain the edge with Amazon ads by going to advertising.amazon.com slash start now. That's advertising.amazon.com slash start. This episode is brought to you by State Farm. Checking off the boxes on your to-do list is a great feeling. And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you. Whether you prefer talking in person, on the phone, or using the award-winning app, It's nice knowing you have help finding coverage that best fits your needs.

3:27Like a good neighbor, State Farm is there. Now, let's begin the show in the Middle East, where Israel and Iran continued to bombard each other with missile strikes over the weekend, raising fears of spiking oil prices and energy market upheaval should the conflict escalate from here. The long-simmering feud between the regional rivals entered a new register on Friday, when Israel pummeled Iranian nuclear and military sites in what it said was a preemptive blow to prevent Iran from making a nuclear weapon. Iran has retaliated by sending volleys of ballistic missiles at Israel, and the two have traded deadly missile attacks for the past four days.

4:05Now, any conflict involving Iran has consequences for the entire global economy, given its key role in oil production and shipping lanes. Fearing supplies could be cut off, investors sent oil prices more than 7 % higher on Friday, their biggest one-day gain in years. Markets broadly went into the classic flight-to-safety mode. Stocks fell to their biggest loss in nearly a month, while gold and the dollar gained. But many analysts noted that the market moves were relatively muted compared to the mayhem that ensued during potential oil shocks 30, 40 years ago. Some speculated that Wall Street has become sanguine to flare-ups between Israel and Iran over the past couple of years, with plenty of investors swooping in to buy the dip and being proven right when tensions die back down.

4:48Still, who knows whether this time could be different. And at least one energy expert, Javier Blas of Bloomberg, says the threat of major oil Middle East shock is alarmingly high. It's not just Iran's role as a major oil producer. It's also its proximity to the entire region as a whole, especially transit routes. It gives it a ton of leverage over global energy markets. One of that points of leverage is the Strait of Hormuz, which we've talked about on the show before. A third of all the world's oil flows through that. And they've often made threats to potentially close that during times of tension, though they don't often follow through and actually carrying those out.

5:26But even if they don't close it, vessels going through the strait face this elevated risk of potential collateral damage, misidentification, a lot of safety issues. So even if they don't shut it down, it will restrict the flow just because of how uncertain things are right now. Right. I mean, on Friday, the world's largest publicly listed oil tanker company, it's called Frontline, said, we're not taking any new orders going through the Strait of Hormuz. It may be open, and that is the key artery through which oil and natural gas flows from the Gulf to the rest of the world. So we're not taking any more orders because it's just too dangerous.

6:00He said trade is going to become more efficient, and of course, security has a price. And that's why everyone is really focused on oil prices, because it's not just oil. It's the entire global economy at stake because oil flows through everything. It powers not just power, but it powers airlines and cars and everything that sort of moves does still require oil. We haven't transitioned to renewables. And we're at a point in the global economy where things are just a bit more precarious and uncertain. We just had the World Bank come out, cutting its outlook for global growth by almost half a percentage point from 2.8 % growth, which they had thought, to 2.3 % growth.

6:39If oil prices rise, that creates more inflation everywhere. And that causes central bankers to maybe think twice about cutting interest rates, which just slows economic growth overall. And that's why just oil markets are so important for the global economy beyond just the fact that it's a barrel of oil. The good news here, if there is good news, is that oil and fuel prices had been relatively cheap leading up to these strikes. A gallon of regular gasoline costs on average$3.14 this past month, down from$3.45 at the same time last year, according to AAA. So maybe this will have a big effect on oil prices, but you still have a little bit of wiggle room, at least compared to last year, on if that will directly start affecting your wallet at the gas pump.

7:24And meanwhile, we just have to talk about dip buying, because this has been the feature of the market this year. Every time there's tariff announcement or a spark up in the Middle East, all these retail traders come in and buy the dip. And that's exactly what we're seeing this morning. Oil prices have stopped spiking. That was on Friday. Now they seem flat as we go into the morning trading. And S &P 500 futures are up. Stocks are up across the board here in futures trading. The S &P 500 just fell 0.4 % last week. Right now, it's less than 3 % from an all-time high. So this market is extremely, extremely resilient.

7:56While the real economy might be shakier than Adam Scott's iron play down the stretch, the influencer economy is doing just fine. As much of the ad industry descended upon Cannes this weekend for its annual advertising festival, execs grappled with a turning point in their industry. Ad revenue from user-generated content is starting to surpass that of professionally produced media, according to WPP's president of business intelligence. In other words, brands are shelling out more money to get Ashton Hall to dunk his face in water rather than run an ad on TV. With ad budgets shrinking, content creators are seen as better value given their more personal relationships with their audiences.

8:37The influencer marketing industry is projected to hit$33 billion in 2025, according to Statista, a 36 % jump from last year. It's not just your typical fashion and beauty brands that are hiring influencers either. More and more boring consumer goods giants are tapping influencers like Unilever, whose CEO recently said he plans to hire 20 times more influencers as consumers grow suspicious of corporate branding. Neil, it's not like influencer marketing is new at this point, but you're finally seeing agencies and buyers loop in creators to their media plans from the beginning rather than just slap them on haphazardly as they go.

9:13So there's certainly a shift underway in the industry. Kai Sanat, Amelia DeMoldenburg, Keith Lee, Alex Earle, these are the new power brokers of the advertising industry. and maybe a few years ago, you're right. I mean, influencer marketing has been around for a while, but it was more like you had to convince bigger brands like Unilever about why they should spend money on influencers. And now that is not even a question anymore. That is clear. It's a clear strategy that most companies are using. So it's not necessarily why we should use you for our marketing campaign. It's how and what are the best ways to deploy influencer marketing in this new paradigm?

9:50Just one of the many disruptions that the advertising industry is facing. They have a lot of advantages too. One, they are still cheaper than quote unquote celebrities. They also drive a much more direct impact. I'm looking at the rise of TikTok shop and the rise of direct social commerce, which is really big over in China, but it's still kind of gaining its footing here in the US where you can have someone talk about your product on TikTok and immediately lead to sales. That is a very appealing thing for a lot of brands because Because if you run a big TV ad or you run a flashy billboard, it's hard to see the direct line of sales from that advertising moment to a buyer actually purchasing your product.

10:30When someone's talking on TikTok, you know that they just drove those sales because someone bought it live. So it is interesting to see how it is remaking the ad industry structurally where people are saying, like, we want to create content that can lead to purchases very easily and creators are the best way to do that. And one wrinkle to add to that is, I mean, we're talking about human influencers here, but you have to also think about the prospect of AI influencers because those are already quite popular on certain platforms. AI influencers don't come with any particular reputational baggage or risk because that is one of the main risks of working with an influencer.

11:05What if they do something super weird and they get canceled? But AI influencers can't really get canceled. I'm sure there will be talk about how AI influencers can. And it's crazy to even think about, but they're becoming a major force in the marketing industry as well alongside human content creators. Yeah, absolutely. Meta just said that they aim to fully automate ad creation with AI down the line. And I'm sure the next iteration of that is creating fake influencers who don't have that reputational risk that you're describing. What happens between you and your favorite AI chatbot stays between you and your favorite AI chatbot.

11:39That is unless you downloaded Meta's new AI-focused standalone app. Users of the app have in some cases been unwittingly posting their private conversations for everyone to see. When you ask Meta's AI a question, there's an option to tap a share button that brings up a preview screen before publishing your post. But many users seem unaware that by doing so, they're sharing their conversations, audio clips, and images with the entire world. That has led to a rash of embarrassing, heart-wrenching, and ultimately illuminating conversations revealing how people are interacting with AI. Some exchanges that became public showed people asking about medical issues, marital problems, legal advice, or even coaching a friend about coming out of the closet.

12:22The public chats reveal that people are sharing deeply personal information with the AI, highlighting both the immense amount of trust users place in the technology and the risk associated with Meta's decision to combine social media features with an AI chatbot that people are confiding in. You know, some of these posts were innocuous, like, hey, Meta, why do some farts stink more than other farts? Seriously, that was a real run. It was not you. But many more revealed way more intimate details. And in the process, some of the perils of combining social with AI. Totally. And we just have to say that Meta has come out with a statement saying that, look, this is not your interactions with our chatbot.

13:04Do not get automatically posted to this feed. You have to go through a four-step process that includes a pre-post preview where it's like, are you sure you want to share this to the feed? Still, it seems like people do not think it will be shared publicly, at least based on some of the type of content that you're seeing on this feed, because it is extremely personal. And some of it kind of opens up people to legal liabilities, saying that they're in close contact with people who have committed white-collar crimes, and they're talking about pending court cases. But yes, so Meta is saying, look, this is not automatically public.

13:36But still, it shows – yeah, you're right. It just shows what people are using these chatbots for. And it's to really give them emotional support in many cases. Yeah. I mean, Meta is a social media company. Obviously, they were going to add a social layer to AI. But a lot of people said there was a reason why Google, for instance, has never tried to turn its search engine data into a social media feed. because, again, your relationship with something like Google or a chatbot is personal. You're asking it and prompting it about things very unique to your own life. So, I mean, AOL tried to do this anonymously back in 2006, published Internet users' search history.

14:17Went so badly back then. This is basically the modern version of that where you're seeing people's just intimate details of their lives. So a little bit of a privacy nightmare, but also extremely illuminating to see how people are developing these close relationships with AI. They are their closest confidant in many cases. I am curious about whether people listening to this, if you do prompt a chatbot about a personal topic, whether you would say, I am going through this situation, or whether you would say something like, I have a friend who is going through this particular situation. Just kind of like push it off to another person just in case because we're seeing what's happening here.

14:51I mean, most likely people are developing one-to-one relationships with them. So I would imagine in most cases they are just saying it's me because you feel like this is your friend. It's in a very enclosed relationship. You don't expect it to get out. So, yeah, just be careful that you're not accidentally sharing. A lot of them are like almost butt dials where people are just having random conversations and your phone just goes through a couple of steps. But, yeah, definitely an interesting feed to look through if you want to go check that out. So up next, we're going to give you our winners of the weekend.

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16:36Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with Epglis. Before starting Epglis, 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. Let's hit our winners of the weekend, the segment where Toby and I picked two things that treated themselves to the biggest lox bagels you've ever seen Sunday morning. I won the pre-show planking competition. Toby started shaking 30 seconds in. So I get to go first.

17:08And my winner is stable coins, because at some point down the road, you might be using them to buy toilet paper on Amazon. On Friday, The Wall Street Journal reported that Amazon, Walmart and other major companies, including airlines, are evaluating whether to issue stable coins that bypass the traditional payment system that costs them billions of dollars each year. Stable coins are digital assets intended to have a one to one exchange ratio with fiat currencies like the dollar and are backed by cash or treasuries. They promise quicker and cheaper financial transactions. And for retailers in particular, they offer the holy grail, the opportunity to sidestep the payment rails run by Visa and MasterCard.

17:47Every time you use a credit card at a merchant, they're on the hook for a fee known as an interchange fee. For the biggest players like Amazon and Walmart, those fees add up to billions of dollars per year and are a major drag on profits. So you can imagine why the prospect of stable coins is so compelling. Retailers wouldn't have to pay an interchange fee, and money would be dropped in their bank account quicker than it is now. Walmart launching Walmart coin is probably still a long ways off, but Visa and MasterCard shareholders did get a little spooked over what could amount to substantial lost revenue.

18:18Both those companies' stocks dropped more than 5 % on Friday after this news came out. Yeah, in 2021, the Fed found that about$32 billion were paid in total interchange fees on prepaid and debit card transactions alone. So that just gives you a snippet on how big this interchange fee market is for Visa and MasterCard, but also how much it's costing retailers. So it would save a lot of money if it can sidestep those interchange fees. But it would also make a lot of money because if those transactions are settled in seconds, that is money that they can hold in the bank and earn interest on. So they're also losing out on billions of dollars in interest payments because of the way the system is currently set up as well.

18:57Well, for a consumer now, that's where things might take a little bit of convincing because, one, a lot of people are very used to just swiping their credit card. And also, you pay off your balance at the end of the month so you don't have to know before the month starts how much you're going to pay. It's like a very nice system where you're like, all right, I've spent this much. This is how much I have to pay. Stablecoins are basically like holding cash, which you would have to preload your credit card or your stablecoin wallet with how much money you think you're going to spend for the month.

19:26And that is just not as good of a system as paying at the end of the month. So obviously it's great for retailers, but the consumer side of things might take a little bit of convincing. Right. And convincing might be incentives or like kind of what Starbucks does with its loyalty program. It says, okay, if you load up your stable coin wallet for Walmart, you know, you'll get et cetera, like all of these deals. And that will certainly cost these companies some money. So you're right. They have to think about incentives to lure consumers to come over from credit cards, the traditional finance system.

19:56And they're also so that's one reason why the stable Walmart coin is going to be a long way off. And another is that these companies are waiting for the passage of stable coin regulation. It's called the Genius Act. It's got through a few procedural hurdles in Congress. It's one of the biggest, you know, crypto regulations that has come through Congress thus far. And they're waiting on that to get passed by the House and Senate. Still a big question mark. And only once that gets passed, the Genius Act, that's when they'll sort of pursue these stable coin plans more aggressively. But yeah, warning shots for Visa and MasterCard for sure.

20:30My winner of the weekend is live action remakes because despite appearing to be money-grabbing retreads of beloved movies, boy, do audiences love them. The most recent remake to convert animated IP into box office gold was How to Train Your Dragon, which opened to over$80 million domestically, the fourth largest debut of the year. The Dragon franchise, as we'll call it, has turned into a smashing success over the past decade and a half. Despite the original Dragon finishing as the fifth most popular animated movie of 2010, in total the trilogy has now pulled in over$1.6 billion globally. The latest live action installment now has the highest grossing opening of all of the films in the franchise, despite costing less than the original to make.

21:14It's also brought in enough to knock off another remake from the top spot in the box office, as the$800 million juggernaut that is Lilo and Stitch finally dropped to second place. Neil, live action remakes have borne a lot of criticism for feeling like soulless, high-tech cash grabs, but the latest Dragon movie has a 98 % audience score on Rotten Tomatoes, brings in Gerard Butler to play the chief he voices in the original, and leans on Northern Ireland's rugged landscape to give this one a little bit more soul than other previous attempts. And you know who was one of the main critics of live action remakes was the director of this particular movie, Dean DeBla.

21:51In 2020, he called them lazy studio endeavors and a missed opportunity to put something original into the world. So he bashed them just five years ago. And then when he was contacted by Universal to do this movie, he thought about it and said, OK, well, you're going to do it anyway. So maybe I'll just do it and try to make it actually good. Seems like he did that. He did do that. And one of the big issues with doing a live action remake of How to Train Your Dragon is how to recreate Toothless, which is this very unique looking creature. For those of you who haven't seen the movie, it's a black dragon that is a cross between a salamander and almost a black panther that has these unnaturally large eyes.

22:30And so animators were like, we want to make it feel real. We want to have scale texture. But they kept trying to make the eyes smaller because like no animal in the animal kingdom has eyes this big. But every time they try to do it, they say, we just totally lost the character. And people would look at it and go, that thing is hideous what we just made. So they tried to be faithful and make sure the dragons seem grounded in reality. But there's only so much you can do when we're talking about animated characters with giant eyes. Now, I mean, studios are seeing a lot of success with these live action remakes.

23:01There's going to be Moana 2 next year. And the question is, what's coming next? What's interesting is that Universal chose How to Train Your Dragon over something like Shrek or Despicable Me. So maybe down the pipe we might get a live action Shrek. Please don't make a live action Shrek. I'm just saying it might happen because they're making a lot of money on it. And that's what drives the movie industry. And then on the Disney side, they scrapped a Tangled live action remake after Snow White flopped. but they also have seen more success recently after that. So we could see Frozen live action remake.

23:30Let's do it. All right. It's Monday. So here are the big events you need to know about in the week ahead. Ever heard of Kananaskis? It's a beautiful resort in the Canadian Rockies of Alberta and home to this year's annual meeting of the Group of Seven Nations. The G7, the seven major economies, plus the EU, they gather each year to discuss the world's problems and maybe take some action on it, like putting joint sanctions on Russia as they did for the last two summits. This year, with President Trump in attendance, the global economy and trade will be a focus, as well as Canadian wildfires and wars in Ukraine and the Middle East.