Nation’s Busiest Commuter Train Shuts Down & Where Do Spirit Planes Go to Die?

0:28Consider this comparison. That's pwc.com slash us slash brew AI. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, what can get you booed as a graduation speaker talking about AI? Then Long Island railroad workers are officially on strike. It's Monday, May 18th. Let's ride.

0:55Good morning and welcome back to the week. The casting call for James Bond is officially open. Late last week, Amazon MGM Studios said the search for the next James Bond has gotten underway, and they'll share more news with 007 fans when the time is right. In 2021, Daniel Craig wrapped up his five-film run as the British spy with No Time to Die, and now the search is on to find a new Bond ahead of the upcoming film, The 26th in the franchise, directed by Dunes Denis Villeneuve. Toby, you're seeing the board well right now. Who do you think gets this part? Well, I mainly just went to prediction markets, Right now, Callum Turner is in the lead at 38%.

1:31He has to win because maybe we get Dua Lipa, his fiancé, as a love interest. Jacob Elordi is 18%. I watched Wuthering Heights this weekend. He's too tall. He's too tall to be James Bond. I just can't see him running and jumping across buildings and trains. Tom Holland at 5%. He's too short to be James Bond, so we need someone right there in the middle. But you can see him jumping and running across buildings. Yes, he could. He could. I say we give it to Aaron Rye, who is English and just won the PGA Championship over the weekend. That's my pick for the next James Bond. And now a word from our sponsor, LinkedIn Ads.

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2:40Just go to linkedin.com slash mbd. That's linkedin.com slash mbd. Terms and conditions apply. The nation's busiest commuter rail system shut down over the weekend for the first time since 1994, disrupting commutes for hundreds of thousands of daily riders, leaving once busy transit hubs looking like a ghost town. The Long Island Railroad shuttles 275 ,000 daily riders every weekday from hubs in Manhattan to JFK Airport, the Hamptons, and everywhere in between. But the unions who represent the LIR workforce walked off the job starting Saturday at midnight after months of negotiations broke down with the MTA.

3:17The union is looking for pay raises and increased health care contributions after going roughly three years without a contract, saying raises are needed to keep up with soaring costs of living. The MTA says the union's demands would blow up the agency's budget, force fare hikes, and potentially lead to job cuts. With the train shut down, the agency is planning on using shuttle buses to ferry people around, which is set to cost the MTA roughly$550 ,000 per day. Riders are caught in the middle of the spat with many staring down expensive Uber rides or trying to piece together subway and bus routes to make their daily commutes.

3:51Governor Kathy Hochul and the MTA are encouraging commuters to work from home if possible. You know, this is actually the second passenger rail strike to hit New York City area in the last year as NJ Transit workers also walked out last spring. That one lasted three days. Even if this strike wraps up in a similar time frame, it comes during peak tourist season ahead of Memorial Day, disrupting travel during one of the busiest periods and also really hurts our chances of getting out to Shinnecock before the U.S. Open. First of all, this is a disaster this morning. You know, they walked off the job on Saturday at midnight, so there was no LAR service over the weekend, which was tough for Mets and Yankees fans.

4:29They were playing each other. There's all types of graduations happening here in New York City. There's also a Bruce Springsteen concert. But anyway, this is going to be so much worse this morning when 275 ,000 people tried to get to their workplaces. A bunch of companies said work from home. Kathy Hochul, the governor, says we encourage you to work from home. But what about the essential workers? What about people who have to go to retail jobs that start at 7 a.m. and 8 a.m.? They have this bus system, but it's only going to account for just a fraction of the total ridership. They're busing people to subway stations in Queens and Brooklyn, but they can only take 13 ,000 riders in the morning and another 13 ,000 in the evening.

5:07So imagine if you just have to get to a place of work at 8 a.m. You know, you're going to probably have to leave sometime around 4 or 5 right now to take a bus to the subway. That'll inch you along to work. So this gets really bad on Monday morning when there's commuting going on to work. So the workers, the LIR workforce is saying that, hey, inflation has eaten into our paychecks over the last few years. We need a raise to keep up with just the soaring cost of living. But a lot of people on the MTA side is like, hey, guys, you are extremely well paid already. The MTA says the average LIR salary is about$136 ,000.

5:45$168 of LIR's hourly workers got paid more than Governor Kathy Hochul's$250 ,000 a year salary. 25 made over$300 ,000. So that is why, along with frustrated commuters, a lot of people are saying like, hey, LIR workers, you are the highest paid transportation workforce in the world. Why do you need another raise? Whereas they turn around and say, hey, everything's gotten more expensive. That's why we need this little bump. Yeah, hear the specific numbers. They're seeking a retroactive 9 percent percent, 9 percent wage increase for the past three years when they didn't get a raise. And they're also looking for a 5 percent raise in the current year.

6:20The MTA has countered with a raise of nearly four point five percent this year. But they apparently that point five percent is is a big enough gap where they're going on strike. And my question was, why? Why doesn't Congress step in? Right. This is a huge issue. We have 300000 people not being able to get to work. Shouldn't Congress or lawmakers say, you know, we can't we have to go to mediation. We have to figure this out because we can't just have rail workers going on strike when people need to get to work. Well, Congress could intervene, but it probably won't. Remember, you talked about the NJ Transit strike last last year.

6:53Congress said, no, you guys figure it out. We're not dealing with this. It seems like the only time that Congress does step in or the president steps in and says, look, this is this is too critical for the economy is when a freight rail strike happens, because that's you know, that may have national economic implications. While this is mostly regional, while the New York City is the, you know, the richest, the most economically robust region in the country, doesn't rise to the level where lawmakers step in. So when there were when there was a rail strike impending in 2022, Congress did step in and say this can't happen.

7:25But when it comes to commuter rail, apparently they're just like, you guys figure it out. How are talks going? There was a marathon day of negotiations that fell from Sunday into Monday night that failed to actually end the strike. But the two sides said that talks were going well enough that negotiators agreed to come back into their work early Monday morning. So maybe we'll see some progress on this as we come into Monday and Tuesday. Now, there are a few winners from the from the rail strike. One is Blade, which is that helicopter commuting service. They're offering$95 one-way helicopter rides between Long Island and Manhattan.

7:59Usually that's for the bougiest people. But if I'm looking at taking an Uber from, you know, mid-Island to Manhattan, I'm seeing Blade offering$95 one-way helicopter rides. That is not particularly bad. It's probably cheaper than an Uber is this morning. And the other winner is probably New York City's congestion pricing program. Because remember, they're charging$9 during peak hours for drivers to come into the city. Well, think about how many more drivers are going to come into the city as long as this strike goes on. So New York City's coffers may get a little more full. You know when you're enjoying a sunny summer beach day and you take a peek at the horizon, see dark clouds gathering in the distance and think, ah, crap, it's going to storm.

8:37That's what's happening in global markets right now. And those dark clouds are government bonds. On Friday, bonds across the world sold off in historic fashion, signaling an arriving thunderclap coming from markets. When investors dump bonds, yields soar, and they're absolutely mooning right now. In the U.S., the 30-year Treasury yield spiked to 5.1%, its highest level since 2007, and the 10-year note jumped to its highest point since February 2025. This phenomenon is rippling through all high-income economies like Japan, where the 30-year yield reached 4 % for the first time since it was introduced in 1999.

9:12Meanwhile, in the U.K., 30-year bond yields have notched a 28-year high. So what's causing the sell-off? In a word, inflation. Investors are concerned that with little progress to open the Strait of Hormuz, higher oil prices will remain a problem for some time, forcing central banks to jack up interest rates to keep inflation from spiraling out of control. It's no coincidence that the bond tantrum escalated on Friday when President Trump ended his trip to China without forward momentum on ending the war in Iran. Bond prices may feel like a niche corner of finance, but they're incredibly powerful.

9:42When yields shoot higher, they raise borrowing costs for businesses and consumers. It's a huge drag on the economy, like trying to drive a car with the e-brake on, not to mention a bad sign for stocks. Toby, it feels like whenever the bond market makes headlines, it's not good news. You know, I'm not going to lie. I thought we were going to talk about the market for who's the next James Bond. So I did not prepare to talk. I had even more to say about Callum Turner, though. So you said that inflation expectations are the reason why, you know, the bond market is blowing up. But why does that happen?

10:11A bond pays you fixed interest over time. You know, it's 4%, 5%. But if inflation eats away at the purchasing power of those future payments, then the bond becomes less value. Also, if you expect governments to raise, you know, the baseline interest rates, you expect bonds to pay more over time as well to compensate. Buyers want more yield, which means they'll only buy the bonds at a lower price because, as you said, bond yields and prices move inversely. So existing bondholders are kind of watching this unfold. If they see Neil is getting a bond that pays, you know, 5 percent, I have one that pays four and a half percent.

10:44They rush to sell before the price starts to drop even further, which accelerates the cycle, so on and so forth. So whenever you see that inflation expectations are making the bond market royal, that's basically the base case for why it's happening. And I want to stress how powerful the bond market is because we don't really pay attention to it until it vomits like it is now. But many of policy moves are influenced by the bond market because that's just the force that governs everything. So remember what caused President Trump to roll back Liberation Day tariffs? It was because of the bond market, the similar thing that happened now.

11:19And then remember when Liz Truss, the U.K. prime minister, unveiled this budget that would increase government spending? Well, we had these bond vigilantes, which are these investors that essentially protest government fiscal or policy decisions by saying we're going to sell off a ton of bonds, raise your borrowing costs, increase the cost of what it takes for you to borrow money. So you basically can't get your policy across the finish line. So this is their huge protest that causes huge policy changes. And Liz Truss did not make it past a lettuce in terms of her tenure as prime minister. So the longer this this bond tantrum happens and yields climb higher, they're saying that the 30 year yield, if that stays above five percent, that really causes Congress to take some sort of action, really drives outcomes in the highest level of government.

12:02Because this is just a disaster. It raises borrowing costs for consumers and especially businesses. I mean, how much are these companies borrowing to build data centers? And this AI data center build out is underpinning the entire economy right now. If you're Microsoft or Meta and you have to borrow at 5%, 6%, 7 % to build your data center, then maybe it doesn't become financially feasible. What does make it past a lettuce mean? Remember what Liz Truss was the UK prime minister a few years ago? And they said, who is going to survive longer, this head of iceberg lettuce or Liz Truss? And they just had this iceberg lettuce on YouTube decaying over time and rotting.

12:37and she did not make it past the lettuce. She got booted from office before then. There you go, everyone. There's a new thing to add into your lexicon. Didn't even make it past the lettuce. All right, welcome to Winners of the Weekend, the segment where Toby and I picked two things that executed a flawless park day. I won the pre-show Game of Horse, so I get to go first. And my winner is the Repo Men of Aviation, because when an airline abruptly shuts down, it's their time to shine. Steve Giordano and Bob Allen are the two guys who run Nomadic Aviation Group, a company that ferries planes all over the world, or as the Wall Street Journal put it, they're the door to ash for jets.

13:10It's an obscure corner of aviation whose business only booms when things go haywire, and that they did earlier this month when Spirit Airlines suddenly liquidated, stranding not only passengers, but those bright yellow planes at airports across the country. In the hours after the liquidation announcement, Steve and Bob's phones lit up with aircraft leasing companies wanting their Spirit planes returned, and these dudes are among the few who can actually make that happen. They sprung into action to execute one of the most logistically complex repo operations you can imagine. Steve and Bob created a WhatsApp group of 40 pilots, many of them who had been working for Spirit, who could step in to fly these empty planes.

13:44One unprepared fellow replied, can I fly in shorts? No issue there, considering Steve told the journal, we're guys that fly around in jeans and t-shirts, which in itself looks bizarre. Rallying pilots to repatriate the planes is just one aspect of the process, which also includes finding mechanics to inspect the planes and filling out mountains of paperwork to comply with airport regulations. The repo operation has been a success so far with about two dozen empty spirit jets flown to the Arizona desert where they await their next assignment. This is a part of the airline industry that you never think about, but underpins a lot of, you know, the planes that you see in the air and on the ground today.

14:20They literally function as smaller airlines with none of the resources. You know, they don't have all the accompanying, like, you know, routing information. So it is just going through WhatsApp group chats a lot of the time saying, hey, can you come here and fly? This business model also works very well in good times and in bad times because when things are bad, they're extremely busy. When companies are going out of business, there's a lot of planes that need to be moved around. When things are going very well right now, they are also extremely busy because planes need to be in different airports.

14:51They need people to shuttle them back and forth. There's also just a weird kind of Twilight Zone aspect to doing this job because a lot of the planes that they picked up from Spirit still had fully loaded galley carts. They still had Biscoff cookies sitting in the back of the plane. The Wi-Fi still worked, but you had to pay for the Wi-Fi on some of these planes. And it's just completely eerie that there's no passengers back there. It's just you in jeans and a T-shirt sometimes flying a plane. It's like commuting in your car by yourself, but it's a massive jet. Now, these guys are kind of celebrities in the aviation world because they run a very popular channel on YouTube called Cockpit Casual, where they document a lot of things about their business, which is extremely niche, figuring airplanes across the world.

15:34Like they got a call saying, hey, I need you to bring this plane from China to Wales. And so 24 hours later, Steve is on a plane to China to pick up this plane to bring it to Wales with all these stops in Egypt along the way. So if you are curious about how this operation works and it is fascinating, head to their YouTube channel, Cockpit Casual, because there is a 47 minute video just on this spirit repatriation, which is really fascinating. Another question I had is why are they moving it to the Arizona desert? Why do all these planes get moved there to these boneyards? And we saw this in covid as well.

16:04Remember, there are pictures of planes outside Tucson, outside Phoenix of all these planes that just weren't being used. And the thing is, they store them in the desert because there's no moisture. Moisture is bad for planes. So when you're just having them park there, it's best to have them in the desert where, you know, they can stay relatively safe. It's the same reason that people, humans move to Arizona. You know, good weather. It's a dry heat. Yeah, it's a dry heat. All right, we're going to take a quick break and come back with my winner of the weekend right after this. Neil, let me tell you something about bond markets.

16:37I'm all ears. They are confusing. Insightful as ever. But, yes, capturing value in fixed income is not easy. Thankfully, Vanguard bonds are institutional quality. That means top grade products across the board. Vanguard is able to invest across all kinds of sectors, maturities, and geographies, which means they can spot and act on opportunities that others might miss. So check out Vanguard.com slash audio. That's Vanguard.com slash audio. All investing is subject to risk. Vanguard Marketing Corporation Distributor. Toby, what if I told you you had to pay me$1 ,000 right now? I'd be in deep trouble.

17:10Well, you would be in the same boat as a lot of employees in the US, and that can lead to decreased productivity and distractions. Thankfully, Aflac can help. Aflac pays claims fast, accurately, and fairly at no direct cost to businesses. Plus, Aflac plans can save businesses and employees tax dollars when payroll deductions are withheld pre-tax. To learn more, just head to aflac.com slash morningbrewdaily. That's A-F-L-A-C dot com slash morningbrewdaily. Neil, I'm ready to make an announcement. Toby, we all know it's okay that you're afraid of horses. No, and I am not afraid. I just don't trust them.

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18:21My winner of the weekend is grad speakers who opted for authenticity over AI. It's graduation season for a lot of schools. So if you're donning the cap and gown, first of all, congrats. Second of all, how have your commencement speakers been? So far, it seems like speeches have fallen into two camps. One has praised AI and received boos in response, while others have emphasized humanity and basked in cheers. One person who threaded the needle to perfection was Eric Church, whose UNC commencement speech is being heralded as the best of the season. Instead of hyping up technology, he talked about craftsmanship and human connection through the metaphor of guitar strings and clips that have since gone viral.

19:00One person who did not take the right tact was Gloria Caulfield, a real estate exec who called AI the next industrial revolution. That, understandably, did not go over well with the students of University of Central Florida's College of Arts and Humanities. Google co-founder Eric Schmidt made the same mistake getting booed for speaking about AI in a way University of Arizona students didn't like. Zooming out, these speeches and the reactions encapsulate a lot of young grads' views on a technology that mostly inspires anxiety instead of hope when it comes to their jobs and futures. Neil, who knew that the dude who wrote Drink in My Hand was going to be the voice this moment of rapid technological chain needed most?

19:39Let's dive into some of these speeches and why they might not have landed before maybe talking about Eric Church and why his was so good. I've been an Eric Church fan for a while, to be clear. So Eric Schmidt, who is the former CEO of Google, went in front of University of Arizona graduates and acknowledged that, quote, there is a fear in your generation that the future has already been written, that the machines are coming, that the jobs are evaporating, the climate is breaking, the politics are fractured, and that you're inheriting a mess that you did not create. So he's acknowledging these fears, he called them rational, but said, look, you got to adapt to this technology.

20:12You got to be involved in shaping how this technology will be rippling through society. He said, quote, the question is not whether AI will shape the world. It will. The question is whether you will have shaped artificial intelligence. And perhaps his didn't land because people he talked about all of these things about the machines are coming. The jobs are evaporating. Well, he was the former CEO of Google. You know, he was perhaps the person that set in motion these chain of events that are causing them so much anxiety. So I'm not exactly sure what he could have said because him himself as a messenger was already taught.

20:44He was already an uphill climb. It is funny, too, that kids are kind of sort of in on this meta theme that is spreading across these speeches, because I was just scrolling on Instagram and Carnegie Mellon students whose commencement speaker was Jensen Huang, who's CEO of NVIDIA. they were placing bets on how many times he would mention AI. So they're literally go like, how many times do you think he's going to say AI? And everyone's like 40, 47 times. So they know going in that this is going to be a talking point. And then I want to go back to University of Central Florida in Gloria Caulfield.

21:16She was getting booed and cheered in like equal measure based off of whatever she was saying in that moment about AI. And at one point she stopped and says, what happened to the crowd? because she didn't understand why she was getting booed and cheered. But literally, depending on how you are framing AI, that is how the crowd is reacting to you right now. So speakers, if you are listening to this, you've got to figure out how to get the crowd on your side. It's not by saying AI is going to take all of your jobs. Here's one tack. Delta Airlines CEO Ed Bastian was addressing Emory University. And this is what he said.

21:49He said, in composing these remarks out of curiosity, I asked AI to prepare the address. I was amazed at how quick and easy it was generated. But then he also said he noticed the lack of soul nor warmth that it conveyed. It was not my personal voice. It was not a genuine appreciation of the opportunity to impart my insights to thousands of you. You want to hear from me, not some algorithm of me. So perhaps this was a little performative because he didn't necessarily need to say this. But he took a sideswipe at AI by saying it wrote a speech for me, but actually it sucked. And now I'm addressing you as a human.

22:21I think that was really smart, honestly, of Ed Bastard. Because you addressed the elephant in the room. You know, he got his cheer. So again, that is what I'm saying. You know, play to the crowd in front of you. Right now, the crowd is reacting very negatively to AI. And back to Eric Church. I think people should watch this. I mean, he did a really beautiful metaphor of how the six strings of the guitar reflected different aspects of your life. And I'll just mention one of them was the B string. He said stands for community. And he said, your generation faces the temptation no generation before has faced temptation to perform for anyone, belong to no one, to be globally visible and locally invisible.

22:54So he urged people to plant yourself somewhere, put down roots with the full intention of growing there, learn the actual names, not usernames of the people around you, volunteer, coach a team, build the thing your community needs, even if the Internet will never see it. So that's really the antithesis to AI, and that's why he's your winner of the weekend. Thank you, Eric Church. It's Monday, so here's what you need to know to stay ahead in the week ahead. Happy NVIDIA Earnings Week. The world's most valuable company will report on Wednesday coming off a cheeky little run with shares climbing 14 % in the past two weeks.