North Korea’s Economy is Booming & Apple unveils IOS27

0:01Neal Freyman:AI is uncharted territory, and many leaders are trying to navigate through without a guide to help them. That's why Morning Brew created The Intelligence Shift, a new podcast with PwC. It's all about how AI is fundamentally changing different industries. Host Dan Priest is joined by a top-tier roster of industry leaders who share real stories and real lessons learned. Get guidance from industry experts. Listen to The Intelligence Shift wherever you get your podcasts. Good morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, you won't believe which country has a booming economy.

0:35Neal Freyman:Then Apple has unveiled its more sophisticated Siri. It's Tuesday, June 9th. Let's ride.

0:47Well, it won't be Knicks in four. Last night, the Spurs cut the Knicks NBA Finals lead to 2-1 with a victory in game four at Madison Square Garden. Still, it was a night that seemed to transcend sports in a way only the Super Bowl can. President Trump became the first sitting U.S. president to attend an NBA finals game, causing security nightmare around the arena and eliciting boos when he was shown on the Jumbotron. There were more A-list celebrities sitting courtside than the Oscars red carpet. And New York City, I have never seen it like this. Walking around last night, you'd think we were landing on the moon in 1969 with crowds of people clustered in front of makeshift projectors in park sidewalks, driveways, watching the game.

1:26everyone's been coveting that third space, a place to gather with others in real life outside of work or home. And at least for this next playoff run, they've delivered that.

1:34Neal Freyman:And if you wanted to actually catch the heartbreaking loss from courtside, it's going to cost you a lot of money. Two seats on celebrity role were sold for$1 million, making them the most expensive seats in NBA history. And the money actually went to a good cause. The seats were part of a charity auction for the Knicks garden of dreams foundation that supports kids. The winning bid was split between a law firm and a PE firm. It ended up being the largest single donation in the history of the foundation. Those seats typically are not sold. They're doled out to celebrities like Timothee Chalamet, like Ben Stiller.

2:07Neal Freyman:So it's impossible to know what they actually cost. But apparently the answer is the same price as a good size home in most of the country. And now a word from our sponsor, Sage. Toby, imagine having 5 ,000 co-workers all in different countries, and it was up to you to manage all of them. Do I get to visit all of them? No. Well, that sounds very stressful. Exactly why Sage built AI-powered software that can handle HR and payroll across large distributed multi-country employee populations. Scaling internationally means dealing with different benefits package, labor laws, tax treaties, and reporting requirements.

2:41Neal Freyman:Sage People is built to manage that complexity without drowning HR teams in spreadsheets. It's no wonder then that over 6 million businesses use Sage globally across 150 plus countries. To learn more, head to sage.com slash morningbrew. That's sage.com slash morningbrew. Apple hosted its worldwide developer conference yesterday, and all eyes were on if it could finally roll out a version of Siri that didn't stink. This event was tabbed as the AI comeback for Apple after a very underwhelming rollout of the technology over the last two years that included paying out a$250 million settlement because it overhyped its AI capabilities.

3:18Neal Freyman:Did yesterday cleanse the palate? But yes and no, Siri did in fact get an upgrade and it can now do some baseline stuff that it feels like it probably always should have been able to do, like pull information from your personal data. For instance, if your mom texted you a coffee mug that she wanted for her birthday, you can ask Siri, hey, what was the name of that brand again? And it'll search your messages for you. It can also search the web and look at what's currently on your screen. The demos Apple highlighted included looking up concert info, chatting with Siri about the World Cup and setting reminders.

3:50Neal Freyman:Siri also gets its own dedicated app and will be better at holding conversations thanks to an assist from Google, who co-developed the model Siri runs on. All pretty standard stuff. And that is why its stock fell about 2 % yesterday as the announcements rolled out. Apple essentially shipped a lot of the AI features it unveiled two years ago, only this time with a pinky promise that they're actually going to make it to your phone. Neil, Siri got better, but is it enough to put Apple back in the AI race? This was disappointing. And it was also Tim Cook's last WWDC as CEO before he hands the reins over to John Ternus later this year.

4:26It was basically just a redux of 2024. Benedict Evans, who's a tech analyst, said the best thing about all these new Apple AI features is that this time they'll ship. Remember, in 2024, they unveiled a new Siri that just never hit phones because of delays. And analysts were really not happy with Apple here. KeyBank wrote, We found Apple's WWDC AI updates to be lacking in the context of what we thought was generally a high bar for advancements of Apple intelligence. We saw no clear signs of monetization of AI, Apple's reliance on Google Gemini, very few use cases where Apple's app integration was materially beneficial, and a slightly better standalone Siri, which is still worse than other LLMs.

5:06I think that 2 % stock drop really undersells it because before in the day, Apple's stock was up 3%, So it really fell 5 % over the course of this announcement, which really disappointed analysts and everyone else watching.

5:18Neal Freyman:I'm going to go to bat for Siri a little bit here and say that one of the biggest things that I was kind of tucked away in the announcement is the fact that it can see what's on your screen. The way most people use AI is they screenshot something on their phones, bring that over to OpenAI or bring that over to Anthropic and say, hey, can you analyze this screenshot or whatever you wanted to do initially. The fact that Siri can now see what's on your phone means that it does have a meaningful chance of taking market share from OpenAI because now I don't have to go through the rigmarole of screenshotting.

5:49Neal Freyman:It's just right there on my phone. And that convenience, that network effect, the fact that we all have Apple devices in our pockets could mean that you don't need to copy and paste anymore. It already has all your information right there. So that's one potential bullish argument for why Siri can capture market share. The other thing is that grounding it in personal context is a big deal because, I mean, I mentioned that mom coffee mug example, but now you can do things like add photos to albums via Siri with your voice. You can send iMessages. You can add events to your calendar. You can put places from your maps into a save folder.

6:25Neal Freyman:These are all things that you do every single day on your phone, and if Siri can make that a little bit better, then that is a meaningful leap for a lot of people in how they actually use their iPhone. So maybe not so sexy, but a lot of stuff that makes it better to use your phone, which is what Apple is probably going for. The bottom line for Apple is whether this new Siri, these new Apple intelligence features can cause people to upgrade their phones. Because right now, there are about 1 billion people with iPhone models that are 14 or earlier, and they don't have Apple intelligence. So if Apple can get those 1 billion people with those older iPhone models to upgrade to a 15 or later that can run iOS 27 that has all of these new features that you talked about, you don't have to screenshot and put it into Anthropic or OpenAI, which is something that I've actually never used AI for, so this is new to me.

7:16then it's a win for Apple. So they need people to upgrade. But from my perspective, the features that were released that got people talking actually had nothing to do with Siri or AI at all. Two of them were iOS 27 now allows you to hide your location in Find My without sending a notification to the other person, which I think is huge for a lot of people.

7:41Neal Freyman:Who are you hiding from, Neil? A lot of people. And then the other thing is Liquid Glass. Remember, Liquid Glass rolled out last year, and people did not love this new design language from Apple. So they've redesigned it a little bit. They are giving you a little more control. You can adjust the intensity of the visual effect with a slider. So if it's too globular for you, which a lot of people feel like with Liquid Glass, then you can make it a little more rigid so the icons appear a little more forward in your screen. And you mentioned what are people screenshotting and feeding into AI. What do you think the last thing I screenshot and fed into AI was?

8:14Neal Freyman:obviously it was the top of my golf swing and i said what's going on here something's a little bit off so that's how people are using ai i'm sure everyone millions of people around the world are doing the same i thought it was going to be your uh scorecard from your last round that was a pretty good round shot of 70 okay yesterday chinese president xi jinping arrived in north korea for his first visit in seven years and he might not recognize the place the economy in this highly isolated brutally autocratic country is low-key crushing it as the wall street journal reports North Korea is the world's most unlikely growth story with the economy the strongest it's been in decades.

8:49Smartphones are everywhere. So are electric vehicles. Mobile payments are beginning to replace cash on a large scale. So it's not unusual to see people paying for pizza and chicken wings through a QR code system. Cranes are also everywhere. According to the journal, North Korea built 10 ,000 new homes in the capital Pyongyang last year, which is more construction than either Chicago or Los Angeles. Stephen Ager, North Korea expert at UCSD, told the Journal that the country's economic standing is the healthiest since Kim Jong-un rose to power almost 15 years ago and is likely in a better spot than at any point during the reign of his father, Kim Jong-il, from 1994 until 2011.

9:25It's a remarkable transformation from just a few years ago when, at the height of the COVID pandemic, Kim Jong-un cried during a speech on national TV. I am really sorry, he said to suffering North Koreans. My efforts and sincerity have not been sufficient enough to rid our people of the difficulties in their life. But now, Toby, things seem to be on the up. How can we explain this turnaround?

9:45Neal Freyman:I mean, the biggest change is probably Russia's war in Ukraine, because that's been a huge catalyst for North Korea's economy. Armed sales, according to estimates, made more than$10 billion from 2023 to 2024. North Korea's entire GDP is only around$27 billion. So that is a meaningful injection of cash into their economy. Trade with China is helping, too. It hit an eight-year high, according to the Wall Street Journal. Chinese consumer brands are now everywhere in North Korea, including their electric vehicles. So those two big trade partners have definitely helped. And the first thing I thought of, too, is how much of this data can you trust?

10:25Neal Freyman:Like, how much of it? I mean, propaganda is a real issue here. But what doesn't lie is satellite imagery. and South Korean researchers say that the economic improvements are literally visible from space. North Korea is roughly three times brighter at night than five years ago, which shows that a lot of these power facilities are coming online. More electricity is coming online. That is something that you cannot propagandize is the fact that more light means more economic activity. Yeah, it's very much a black box to see how North Korea is doing from a GDP economic growth perspective. We just don't know.

11:00So you really have South Korean spy agencies going in with satellite data to look at, yeah, parking lots at stores and other things like that to get a gauge of how North Korea's economy is doing. And I just want to be clear, this has not been a benign transformation. It's been a brutal crackdown that Kim Jong-un has done since the height of COVID until now, really rooting out underground smuggling markets, which had largely powered an informal economy. People are distributing K-pop or K-dramas from the South to the North. And Kim Jong-un basically cracked down on that and said, we need to be self-reliant.

11:35But to do that, it's been extremely brutal and draconian. You can be executed for carrying a thumb drive of K-pop and selling it to your friends. In fact, there was one 22-year-old who distributed three South Korean dramas and 70 K-pop songs. He was executed in a public schoolyard by Firing Squad. So it's been a brutal crackdown to dismantle the informal economy and bring it more to self-reliance. But at least from a GDP perspective, it's been working.

12:03Neal Freyman:It also shows that sanctions are just not working as intended. Because remember, the U.S. and the U.N. have imposed sanctions since 2017 on North Korea in an attempt to kind of throttle their economy. But if that is not working, that has geopolitical ripple effects because historically the U.S. has always leaned on sanction relief as a key leverage point whenever they've been negotiating with North Korea specifically about their nuclear ambitions. So if that economic pressure becomes a lot less effective, then it means the U.S. is in a much worse negotiating spot. So if indeed the regime is wealthier than ever, then geopolitically, what do you say to North Korea to try to get them to stop with their nuclear ambitions?

12:45Neal Freyman:It really pulls an ace in the whole of the U.S. out of the hole and makes it in favor of North Korea. And now with this Xi Jinping visit, it seems like we know that North Korea has buddied up to Vladimir Putin and Russia with these arms sales since the war in Ukraine. Now it's getting even closer to China, which is its most important trading partner. They've restarted passenger rail service earlier this year. They're putting more flights between the two countries, and they want to grow their relationship even more, which is a new threat to the West. Italy may not have made the World Cup, but they might have just revolutionized coffee.

13:20Yesterday, the 131-year-old brand Lavazza announced a K-cup without a cup arriving in the U.S. market in August. It's a bet that American consumers care enough about sustainability with their morning brew, get it, to grab market share from the giants Keurig and Nespresso. Here's how this works. First, calling it a cup is misleading. Tabli is in a espresso tablet that's 100 % coffee, no wrapping or coating. It's the result of five years of R &D, more than 15 patents, and an entirely new production facility in Italy because making a shelf-stable quality coffee pod without plastic is a lot more difficult than it seems.

13:57You won't be able to pop these tabs into your office, Keurig. In true Apple form, Lavazza has built its own ecosystem. To make your coffee, you need to buy its Tabli machine, which for$99.99 comes with a milk frother and a 60-count variety collection of the tablets. Clearly, the company thinks there's tremendous growth opportunity in single-serve coffee in the American market, where it's currently a minnow. Four out of 10 American adults own a single-cup brewer in their homes, according to the National Coffee Association. And almost 9.4 billion coffee pods are sold in the U.S. every single year.

14:29Toby, will people say ciao to their Keurig K-Cups and benvenuto to Lavazza's coffee pucks?

14:34Neal Freyman:I don't think so because Lavazza knows who the big kahuna in the U.S. coffee industry is, which is Keurig. Lavazza CEO Antonio Bravelli told CNBC that we are talking about two giants and one of them we have an important contract with that we are very happy with. He is referencing the fact that Lavazza currently sells K-Cup pods through a partnership with Keurig. So I don't think it wants to bite the hand that feeds them currently in the U.S. market. That being said, I think that Lavaz is going to lean pretty heavily into the sustainability angle because, remember, that used to be a very, very big deal about single-serve coffee pods is that they were encased in plastic and they just were very wasteful.

15:13Neal Freyman:Now a lot of companies have moved into recycled materials, but if you just ditch the plastic entirely, that could restart the conversation around sustainability. So this is basically a bet from Lavazza that consumers still care about pod waste, which maybe they do, maybe they don't. And this is where they think can be their unique wedge into a market that is currently dominated by Keurig. Yeah, let's get into the numbers a bit because maybe if you go to Europe or some specialty stores, you'll see Lavazza coffee beans and you can get an espresso there. But it really is small in the United States.

15:45It generates about$100 million in sales through retailers like Target and Walmart. But compared to Keurig, which is a giant in this space, that generated$4 billion from its U.S. coffee segment alone in 2025. Most of that comes from those pods. Nespresso also has a 7 % market share compared to Keurig, which has about a 50 % market share. So it is an uphill climb. But Lavazza is there bringing that Italian premium aura and brand to the U.S. market. And we'll see. There's been many waves of coffee in the United States. There's a first wave, second wave, third wave, fourth wave. if Lavazza's hoping to be a part of the fifth wave?

16:19Neal Freyman:I think that, I mentioned sustainability, but the fact that it has this special concave shape that allows the coffee to expand while brewing and create a thicker espresso foam, that would work. You are a sucker for marketing. I am, because that would work on me. Because the thing I love the most about espresso is that foam. I basically love all foams, I'm realizing. Like Starbucks is cold foam. That also works on me. But maybe that is truly what gets people to switch over because I don't like what comes out of Keurig. I think it tastes like a little bit stale. Nespresso does pretty well because it does get that foam.

16:53Neal Freyman:If Lavazza comes with a foamier foam, then that will work on me. Yes, I'm a victim of marketing. I'll say it right now. All right, we're going to take a quick break and come back with Toby's Trends right after this.

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18:04Head to public.com slash morningbrew. That's public.com slash morningbrew. Paid for by public investing, full disclosure, and podcast description. It's freezing in here.

18:14Neal Freyman:What gives? I'm trying to preserve my freshness, Neil. Like how iHerb stores and handles their supplements and sports products in GMP, ISO, and NSF certified climate-controlled fulfillment centers designed to protect potency and product integrity. That way, you don't get melted gummy vitamins. Toby, that only works on supplements and sports products, not... And iHerb stands behind every purchase. If something doesn't meet your expectations, they make it right with easy returns and simple refunds. Head to I-H-E-R-B.com slash MBDaily and use code MBDaily for 20 % off your purchase. That's iherb.com slash MBDaily.

18:54Neal Freyman:Feeling stressed recently? Is life overwhelming you? To stop the hurt, change your hurts. Music in the 432 hertz range is blowing up on Spotify and YouTube for a reason I want to talk about on today's edition of Toby's Trends. Most songs you hear on the radio today are tuned in the 440 hertz range. Your ear doesn't really notice this because it's the baseline for most modern music. But 432 hertz music lowers the pitch slightly, meaning songs subtly sound softer and a tad less bright. Proponents of these slightly different vibes say that the specific hertz range makes sound feel more natural and calming, even going so far as to say the frequency has healing properties.

19:36Neal Freyman:Is there any truth to it? Some small studies have found that it can lower heart rates, calm breathing, and reduce anxiety, but as of right now, comprehensive scientific evidence remains limited. But that hasn't stopped listeners and artists alike from flocking to the pitch. Radiohead guitarist Ed O 'Brien recorded his solo album in 432 hertz. James Blake used the tuning while working on one of his recent albums, and the AP talked to people with ADHD, noise sensitivity, and chronic pain who say 432 hertz music helps them stay focused productive and pain-free if you type in 432 hertz to youtube you'll find videos with over 50 million views neil this is part woo-woo science but part real because at a certain point if listeners genuinely feel calmer listening to 432 hertz music doesn't matter whether the effect comes from science or the expectation and belief that you'll feel calmer such a fascinating topic at the intersection of art and science i want to get into the background just a little bit about how this all works without getting too much in the weeds.

20:37Typically, every orchestra or group of musicians to sound good and in harmony together tunes their instruments to a reference point. And that reference point is the A note above a middle C. So in our orchestra in high school, we would get into the orchestra room. And before we started, I was not very good, but playing cello. But before we would start playing, we would have the oboist play the A. And that's what you would use as a reference point to tune the rest of our strings, and everybody else in the orchestra would use that particular note. But what is that A is the question. And it's just a frequency.