Robinhood’s New Gold Credit Card & NCAA Wants Ban on Prop Bets

0:26Race the rudders! Good morning for your daily show. I'm Neil Freiman. And I'm Toby Howe. Today, the walls are closing in on Diddy, once one of hip-hop's biggest moguls. Then Robin Hood launched a credit card this week, and holy moly, it's got some perks that we need to tell you about. It's Thursday, March 28th. Let's ride.

0:55toby's macbook broke yesterday r.i.p but there was some good to come out of it because when you went to the apple store to get it fixed you decided to try a demo of the 3 500 vision pro headset for the first time what is your review my review is the controllerless operating system where you just look at what you want to select, then tap your fingers, a magical experience. It's so intuitive. I had a smile on my face, even just navigating through very simple menus here and there. So that was a huge, huge pro. All the negatives though, I kind of agree with. It was very heavy on the face, even after doing it for 20 minutes, I was like, ah, I got to get this off.

1:34And then also you can tell that it is definitely a version one of the device. The amount of apps that you can actually play around with are mostly entertainment based. That said, very, very cool entertainment device, but just a very expensive one. So we had Meta CEO Mark Zuckerberg on the pod last month, and he unequivocally said that his headset, which costs just$500 compared to the$3 ,500 Vision Pro headset, was the better device. Do you agree with Zuck? I'm not sure I agree because his point was that it is the better device, period, not just for the price point. I do think the operating system of Apple takes it to another level that using the controllers of the meta device doesn't give you.

2:17So I don't know if I fully agree with what Mark was saying, but I do understand where he's coming from. The general thrust of his argument that it's definitely not$3 ,000 better. So I still think you have to factor price in there for sure. Before you hear today's news, we have a quick word from our friends over at Factor. Neil, I woke up with a tear in my eye this morning because I realized we only have two days left of factor ads. It is sad, but you know what they say. Don't cry because it's over. Smile because you got to taste factors. Chef made, dietician approved, fresh, never frozen meals.

2:49Oh, classic platitude. But I've still got some factor meals stocked up in my fridge and I hope you listening at home do too. I also hope that every time you see a factor box on a stoop or a factor truck bringing deliciousness to people's doorstep, you think of us. But enough reminiscing. There is still time to get a tasty discount on your first factor box by heading to factormeals.com slash morningbrew50, then using code morningbrew50 to get 50 % off. That's factormeals.com slash morningbrew50 with code morningbrew50 to snag a 50 % discount. Change is always happening, but no matter what changes in five years, there's one thing that will stay the same, the price of your internet.

3:32With the Xfinity five-year price guarantee, you get five years of the most reliable Wi-Fi with our best equipment included for a price that stays exactly the same. Restrictions apply. New residential customers only. Taxes and fees extra and subject to change. Most reliable Wi-Fi based on OpenSignal Awards USA. Fixed broadband experience report, August 2024. Robinhood, the stock broker that's perhaps best known for its role in the GameStop meme stock debacle, is getting into the credit card game, and you should be impressed. The new card offers a juicy 3 % cash back on all purchases, 5 % cash back on travel purchases made through its online travel porter, and a 3 % match on all IRA deposits, and 5.25 % interest on cash.

4:19Plus, it's made out of stainless steel, so feel free to drop it in front of your friends to impress them at brunch. What's the but? Well, even though the card technically has no annual fee, you do have to be a Robinhood Gold subscriber which will set you back$50 annually. And it's there that you start to see Robinhood's game a little bit. With such generous incentives, this is a loss leader of sorts to try and loop people into its gold ecosystem where their lifetime value can offset some of the rewards users will rack up. Neil, this card was met with pretty much instant praise from people because of just how juicy those cashback rewards actually are.

4:56Yeah, there's not that many cards on the market out there. I don't think I can think of any where you have 3 % cash back on literally everything. It's not specifically geared toward any particular category, but it's 3 % across the board and for a$50 annual fee. I mean, you can say that's for Robinhood Gold or anywhere. You're paying$50 and you're getting some pretty generous perks. So I can see why it was met with sort of widespread enthusiasm. And same with investors as well. Robinhood's a publicly traded company and its shares shot up 7 % yesterday, which shows that people, investors, think that this is actually a boon to their bottom line.

5:33I think you've heard us talk about everything apps on this show before, and it looks like that's what Robinhood has its sights set on. They want to be the, quote, primary financial institution for its customers, so you can open a spending account with them, fill up your brokerage account with them, access your credit card rewards them. It's a pretty compelling vision. And CEO Vlad Tenev said all of their assets should be custodied at Robinhood and all their financial transactions should go through Robinhood. So that's the vision here. And that's part of the reason why they're launching this credit card.

6:06Right. Robinhood started back in the late 2010s as a way to democratize investing. They completely obliterated the brokerage fee structure. They offered commission free trades, which was extremely revolutionary. And the entire industry has followed. They've tried to become more of a holistic financial services app. They've opened features for retirement accounts. They have crypto trading now. They're trying to get into the UK and expand into international markets. So they do have a pretty steady growth plan here. Also, we can't mention companies opening up new credit cards without talking about Apple.

6:41Robinhood does appear to be taking a cue from Apple here. Apple launched its credit card a few years ago, and that's been doing really well. There's been a rocky relationship with Goldman Sachs, which is underwriting the card. Goldman Sachs and Apple's partnership may fall apart here. We're still seeing what's going on there. But the Apple card did top more than 12 million users as of January. So it feels like there is appetite for these more techie companies, these more fintech companies to launch credit cards and users be sort of amenable to that. I do think, though, that Robinhood's card makes Apple's card look pretty paltry in comparison because, I mean, if you go to the savings rate offered on both cards, you get a 4.5 % APY in savings on Apple compared to 5.25 for Robinhood, up to 3 % cash back on everyday purchases.

7:28Apple offers up to 3 % cash back on everyday purchases, but only at a limited amount of retailers, including Apple itself. So Robinhood is 3 % cash back on everything. So even though there's definitely shades of the Apple card here, I do think Robinhood's kind of eating Apple's lunch with just the sheer amount of rewards that they're offering. Moving on, at one point, Sean Diddy Combs was one of hip-hop's most successful businessmen. These days, his empire is crumbling, and Diddy's mounting legal problems only accelerated this week. Dramatic scenes unfolded when on Monday, two of his properties in Los Angeles and Miami Beach were raided by Homeland Security Investigations agents amid a widening criminal probe into sex trafficking.

8:09In helicopter footage blasted across cable news, Federal officers were seen removing computers and other electronics from the homes, and they also stopped Diddy at an airport and took some devices from him, though they didn't arrest him. This raid comes after Diddy was hit with several sexual assault lawsuits in recent months. While he's forcefully denied any wrongdoing, the allegations have still taken a wrecking ball to his business portfolio, which span music to fashion to liquor to cable TV. Toby, this has been quite the downfall for someone who is credited with taking hip hop into the commercial mainstream.

8:41Yeah, Diddy's businesses are definitely fading a little bit. Remember, one of his big wealth gainers was his deal with Diageo, the spirits giant. He used to be the face of Ciroc Vodka and rode that to a very profitable. Some reports say that he's been paid out over a billion dollars by Diageo over the course of that partnership. But that relationship was already on the outs even before these lawsuits started coming up. Remember, he sued the company back last May, accusing it of racism and failing to support the new tequila brand that they launched together. And so now the kind of spirits division of Combs' business empire is completely gutted, according to Insiders.

9:22So that's a major loss, not even withstanding some of the other troubles that other lines of his business have been going through. I think you have to look at the liquor business because before every single celebrity decided to launch their own tequila, their own vodka, which we take for granted now. We're just like, oh, you're a celebrity. You're going to launch a gin. You're going to launch a tequila. Diddy was the pioneer here with Ciroc in 2007. He didn't own the business, but he was the face. He did control all of the marketing, and he inked a deal with Diageo to get 50 % of the profits. And this really set the stage for what we just take for granted now as every celebrity launches their liquor line.

10:03Then Diageo bought Cosamigos from George Clooney for a billion dollars. And Diddy accused Diageo of sort of putting more resources behind George Clooney because he was white. And they did settle, but it did lead Diddy to leave all of his liquor brands in Diageo and he doesn't have any stake in it. Right. And the other big part of Diddy's empire is the music side of things. He's got Bad Boy Records, but that's even Bad Boy Records is a shell of what it once was. Bad Boy still has one artist affiliated with it, and it's Machine Gun Kelly of all people. And then Warner Music Group also distributes the label's back catalog, but the only active Bad Boy artist putting out new releases is Janelle Monae.

10:46So it really has shriveled up to a much smaller business than it once was as Diddy was coming up. And then Diddy himself released his first solo album in 17 years. Critics widely said they really did not like it. It didn't get past, I think, 17 on the Billboard Top 200 charts, even though it had a lot of heavy hitters on it. John Legend, The Weeknd, Justin Bieber, Mary J. Blige. But people, Diddy's always been known for, he hasn't always been the greatest actual musician, but he's got charisma in other areas of his life. But we see, you said the walls are closing in here and we're definitely seeing that everywhere you look on his business right now.

11:23Let's move on. The uneasy marriage between the NCAA and gambling companies has always been on thin ice, but now NCAA president Charlie Baker wants sportsbooks to go sleep on the couch. He is calling for a ban on college prop bets in states that have legalized sports betting. Prop bets are those wagers that aren't actually related to the final score of a game, but instead usually focus on an individual player and their performance. For instance, betting that they will have over or under a certain amount of three-pointers or rebounds in a game. The thought process is, while it's relatively hard for a single player to intentionally throw a game given all the variables at play, it's very easy to hit the under on their props if they so choose.

12:04I say that because a similar situation just arose in the NBA where a Toronto Raptors player, Jonte Porter, attracted outsized bets on his props during two games in which he exited early for somewhat dubious injuries. And that's an NBA player making millions. Now imagine the temptation an unpaid college athlete might feel. So Baker and the NCAA want to do away with a headache altogether. Yeah, I mean, this is Charlie Baker flexing his policy muscles. This is probably his biggest advocacy statement yet. Charlie Baker, as opposed to the former head of the NCAA, Mark Emmert, was a politician. He was the governor of Massachusetts.

12:41He has relationships in D.C. So he's really showing that he's really bringing these relationships to bear, pressuring state houses to enact laws and maybe even get Congress to come in as well and perhaps provide a blanket ban on profits across college basketball. Currently, 11 states do allow college profits in some form. The NCAA thinks that given its sheen of amateurism and the level of harassment that college basketball players and college football players and college athletes get around profits specifically makes it just not tenable right i think you hit the nail on the head there the two big points that baker nancy are looking at is the fact that it increases stress on college athletes because you have these growing men these grown adults badgering these college students to see who's playing how injuries are healing yelling at them on the court that they have money riding on them and it doesn't have to be this individualized.

13:38It doesn't have to be, again, prop bets make you hyper-focus on a certain player in conducting certain actions, and it just doesn't have to be that way. And then there's also the amateurism angle as well. Illinois coach Brad Underwood said that, I would hate to see the day where nobody jumps for the jump ball because of a prop bet. Because again, you can bet on literally everything in a game, and a jump ball is one of them. So he wants to see the competitive integrity remain in the game, even though as more money floods into the college scene. It felt like for the first couple of years of legalized sports gambling, there was this wave of momentum.

14:1338 states have now legalized it. And it feels like in 2024, at least in the first few months, there is some pushback. There is growing recognition of the scandals and risks to integrity and the problems of addictive gambling. And we're seeing maybe the momentum shifts back a little bit with Jonte Porter and the NBA. here. There's also the Shohei Otani scandal going on in MLB. So there are three concurrent scandals kind of going on right now in the sports gambling world. And DraftKings stock is showing a little hurt. It fell yesterday for its biggest loss in seven months. So this is something that the industry is grappling with here in the first part of 2024.

14:52Up next, hold on to your coffee mugs because Neil is about to take you through some of his favorite numbers he came across this week. Eczema isn't always obvious, but it's real. And so is the relief from Evglyss. After an initial dosing phase, about four in 10 people taking Evglyss achieved itch relief and clear or almost clear skin at 16 weeks. And most of those people maintain skin that's still more clear at one year with monthly dosing. Evglyss, LibriKizumab, LBKZ, a 250 milligram per two milliliter injection is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema.

15:31Also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies. Epglyss can be used with or without topical corticosteroids. Don't use if you're allergic to Epglyss. Allergic reactions can occur that can be severe. Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with Epglyss. Before starting Epglyss, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about Epglyss and visit epglyss.lily.com or call 1-800-LILLY-RX or 1-800-545-5979.

16:01I'm Christian McCaffrey, pro running back, and Abercrombie is an official fashion partner of the NFL. I'm not kidding when I say NFL by Abercrombie broke the internet last year, and I think this season's lineup is even cooler. And so does my wife, who keeps stealing all my hoodies. Stay fit for the season and Abercrombie's newest arrivals. Shop NFL by Abercrombie in the app, online, and in store.

16:31Welcome to another edition of Neil's Numbers, the segment where I share three stats from the week's news that will have you competing on Jeopardy's Tournament of Champions. First up, you're going to need more than two dimes to buy a banana at Trader Joe's. For the first time in more than 20 years, the grocery chain is raising the price of its bananas from 19 cents by the each to 23 cents. That's only a 4 cent hike, but amounts to a more than 20 % increase. Trader Joe's said the higher prices still represent a tremendous everyday value for bananas, and I don't necessarily disagree. Bananas on the whole have remained shockingly cheap, even as other food items have been rocked by inflation.

17:09The average price for a pound of bananas was 63 cents in February, just 3 cents higher than 10 years ago. Compare that to lemons at$2.08 a pound, grapefruit at$1.71, and oranges at$1.55, plus potassium. Plus potassium. I love that bananas are just the goat of cheap fruits because despite their popularity, the U.S. imports more bananas by volume than any other country, according to the FDA. The prices just really don't budge. I mean, you gave that 10-year stat. The average price for a pound of bananas has never been more than 80 cents since 2004. It's just remarkable how that bananas remain low.

17:48It's got low labor costs. There's good free trade agreements. There's favorable growing conditions, all those kind of combined to make bananas just this unstoppable force of consistent value over the years. They are the most popular fruit in America, which does surprise some people, but it's, it is funny comparing bananas to some of the other commodities that we talked about earlier this week, like cocoa, which can only grow in a certain part of the world. Bananas are just the goat of, yay, the goat of cheap produce. Okay. My number, uh, my second number is zero, which is how many diapers a Japanese company will make for babies and instead focus on making diapers exclusively for adults.

18:26This week, OG Holdings announced that it will stop making diapers for babies because there just isn't enough little ones in Japan for a viable business. Japan had 758 ,000 babies last year, down from over 2 million in the 70s and the lowest number of births since the 19th century. Meanwhile, the market for adult diapers is booming as the Japanese population gets older. Almost 30 % of residents in Japan are age 65 and older, and more than 10 % are 80 and above. This diaper pivot might come as a shock, but in fact, sales of adult diapers in Japan have outpaced diapers for infants for more than a decade.

19:01OG's announcement is just another sign, to quote the Japanese prime minister, of whether we can continue to function as a society amid a population crisis. I was genuinely shocked when I heard this stat, because even though that we know Japan's population is aging. The fact that diaper companies are just packing up shop and saying, it's just not a big market for us anymore. Let's go to the more profitable market, which is adult diapers. We've talked about the silver economy on this show a lot, but I don't think it's anywhere it's more apparent than in Japan right now with their diaper market. For my final number, holy profit margin.

19:36Novo Nordisk charges$968 for a weekly injection of its Ozempic diabetes treatment, But a new study found that the same drug could be produced and make money for less than$5 a month. The finding will only heat up the debate around whether the high prices for this new class of semaglutide drugs, which can lead to significant weight loss, are justified. Drug makers are famously tight-lipped about how much it costs to manufacture a drug. But researchers at Yale, King's College Hospital in London, and the nonprofit Doctors Without Borders investigated price estimates for raw ingredients and the cost of developing diabetes drugs.

20:13And in a paper published in JAMA this week, they concluded that Ozempic could be manufactured for$0.89 to$4.73 for a month's supply. As the study's author said, the profit margin is immense, and there should be a conversation in policy about what is a fair price. Definitely a conversation. The most surprising thing to me about this study was it found the biggest cost in producing Ozempic was not actually the active medicine itself, which is called semaglutide, but the disposable pens that you use to inject it. That's the physical hardware piece of drug making that you don't necessarily take into account.

20:48That said, the active drug in Ozempic is very expensive to produce as a whole. Semaglutide costs over$70 ,000 per kilogram. But the amount of dosage that each semiglutate or ozempic dose includes is very small. It comes out to around 29 cents for a month's supply. So that's where you see these insane profit margins coming into play. And that this study said, listen, you could be making this for so much cheaper. Let's move on. Daniel Kahneman, the famed author of the book Thinking Fast and Slow, died yesterday at 90 years old. Kahneman was a titan in the field of behavioral economics and won a Nobel Prize for his efforts back in 2002.

21:30He essentially invented the field, which led to a rethinking of issues as far ranging as massive infrastructure projects to the evaluation of baseball talent. The general thrust of behavioral economics is that it challenges the assumption that people act rationally and with their self-interest at heart. That's often not the case at all. and people more often than not act based on patterns they've observed, derived from small samples that don't necessarily factor in the presence of luck. Thinking fast and slow brought these ideas to the mainstream and became a mega bestseller. Neil, I believe I saw it on your bookcase the last time I was over.

22:05What are some of your favorite Kahneman heuristics? Yeah, so Kahneman and his longtime collaborator, Amos Tversky, created a bunch of these heuristics, which are basically rules of thumb that show how humans do not behave rationally. And the big takeaway here is don't trust your intuition, which is kind of sad, but it's true that the first thing you think of is probably wrong. Let's run through some of these experiments. One of these heuristics that I love is called conjunction fallacy. And here's the experiment. Students were told about a woman named Linda who was an activist in college and was deeply concerned with issues of discrimination in social justice and also participated in anti-nuclear demonstrations.

22:48They then asked the students, which was more likely, that Linda was a bank teller or that Linda was a bank teller and is active in the feminist movement. And the vast majority of the students said bank teller and active feminist, which mathematically is impossible because the probability of two conditions being met will always be less than the probability of either one. That is one where I talk to people about thinking fast and slow and they always remember Linda. Yeah, Linda is a very famous experience. He's also just famous for calling out universal brain kinks in humans. One of my favorite ones is the loss aversion fallacy, which explains actually why golfers haven't found a putt better when putting for par versus putting for birdie on a hole because they try harder on a par putt because they want to avoid the pain of a bogey more so than they want to feel the joy of a birdie.

23:39Loss aversion is a big part of Kahneman's kind of outlook on life. Another thing that I think is so interesting as well is the brain quirk of anchoring. That's one of my favorite things. We are definitely more influenced by arbitrary numbers than we'd like to give ourselves credit for. In the experiment that Kahneman ran, he asked one group if Gandhi was more than 114 years old when he died, while another group was asked if he was less than 35 years old. The first group, Gress, he was much older than the second group. Price anchoring is a huge deal in like SaaS companies these days. So if you ever see an outlandish price quote, part of the reason they're doing it is because psychologically it will make the other price quotes feel a lot less painful if one is very high.

24:22And a ban on salary negotiations. Huge deal. Finally, before we leave Kahneman, this is just a pro tip for people because in his later work, he talked about remembering memory and happiness. and the key takeaway from that is your remembered experience is much more powerful than your actual experience. So the way to take that into your daily life is when you plan a vacation, make sure you plan the coolest, best day last because you always remember the vacation as a whole by what happened at the end. So whatever you do for the first three quarters of your vacation may not matter because all you will remember about your vacation and it will shape your entire memory of that vacation is what happened on the last day.

25:06So just a pro tip, schedule the very coolest thing last. Let's finish our show very strong then, Neil, because this is all that people are going to remember. That's a good point. All right, so we're going to end on happy MLB opening day for those who celebrate. The vibes are not immaculate in the rainy Northeast, but still, baseball is back for another season with a full slate of games today, and that means spring is basically here. Lots of different storylines to tell you about ahead of the season. First is pace of play. This MLB season marks the second year that the league will have a pitch clock aimed to speed up the game.

25:38In its first year, the rules did their job. The average nine inning game was 24 minutes shorter than in 2022. And when you multiply that across the 2 ,430 games played during the season, it means that more than 40 fewer days of baseball were played in total. Takeaway from that stat is just there are too many games to begin with. Anyway, the beginning of the season also brings new food to ballparks, which are always looking to one-up each other in terms of creativity and clever names. Some new dishes I can't wait to try. Dungeness Crab Pizza from Moto Pizza in Seattle. The LBLT at Fenway Park in Boston.