S&P 500 Hits New Highs & Gig Workers Get a Raise

0:00Stocks? ETFs? Or what about mutual funds? Choosing your investments is easier with Fidelity. Our step-by-step experience can help you pick out the right investments for you. Plus, with recurring investments, you can decide how much and how often to invest. Lastly, there's 24-7 help if and when you need it. To find your next investment, head to fidelity.com slash trading. Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC. Member NYSC SIPC. Good morning, Brew Daily Show. I am Neil Freiman. And I'm Toby Howell. On today's episode, the stock market, it's doing really well.

0:38What's behind the rally and how long will it last? We'll try to answer those questions. And Italians are preparing to do the unthinkable, boycott pasta. Then we'll talk about a landmark case that pits the youths of America against the state of Montana in a little climate change showdown before taking you all across the pond to see why venture capital firm A16Z is betting big on crypto in the UK. Neil, it's Tuesday, June 13th. Let's ride.

1:13All right, Toby, did you see this? Last night, Pat Sajak, who is the host of Wheel of Fortune for more than 40 years, said he would be stepping down from the gig after giving us so many amazing viral moments. One of the goats. One of the goats of the game show business for sure. All right. So speaking of the goat, I want to ask you your top three game show host power rankings. All right. Number one, Howie Mandel from Deal or No Deal. It's kind of a modern day game show for the kids. I love it. Drew Carey from Whose Line Is It Anyways? And I know you're going to say that's not a game show. It's not a game show.

1:49But there are points involved. The points don't matter, but there are points involved. And then finally, remember the two dudes from the original Wipeout series? I Googled them. Their names are John Henson and John Anderson. Very good at just giving the appropriate phrase every time someone has an epic Wipeout. Johns. The Johns. Okay, give me yours real quick. I'm doing Trebek, obviously. Though Ken Jennings is doing an amazing job as his replacement and could potentially pole vault him. and then I'm going Anne Robinson for the weakest link the everyone knows not everyone but the people who know what I'm talking about know what I'm talking about very angry British lady and then finally servicing this one from the early 2000s Regis Philbin who wants to be a billionaire is that your final answer Neil?

2:38oh yeah that was my best Philbin impression not bad but yes Will Fortune so many good viral moments Jeopardy has also gone into the viral moments game. But, Pat, you will be missed. Let's move on. The stock market is absolutely ripping right now. Yesterday, both the S &P 500 and the Nasdaq scored their highest close since April 2022, 14 months ago. And heading into Monday, the S &P jumped for four straight weeks. And the Nasdaq, which is home to a bunch of the tech stocks, has had a seven-week winning streak. These are serious gains. The Nasdaq is up almost 30 % this year. So what's driving all these positive vibes on Wall Street?

3:21There are a couple factors. The government reached a deal on the debt ceiling, so they avoided a catastrophic default. The regional banking crisis never seemed to spread to the broader finance sector. And the hype around AI is just juicing tech stocks to record highs. Honestly, this still feels a little weird. And it feels like we shouldn't be hitting these record highs that we are, despite everything that you mentioned, because, and I've seen just reading around a little bit, people are calling this rally pretty narrow, which means that a lot of the gains are concentrated in a relatively few amount of companies.

3:56And so when that happens, people get a little nervous because if the entire market is being propped up by like the NVIDIAs, the Metas, the Alphabets, the big techs of the world, then that means that we can come back down relatively quickly as well. So, yeah, there's something to drop to your friends that when they talk about the stock market, say, hey, the rally is a little narrow, don't you think? OK, but here's another thing to drop to your friends after that, which is that it was narrow, but it's getting wider, which is why they think that this rally, it kind of has some legs to it. So, yes.

4:26So in May, eight stocks were responsible for the S &P being positive. That is insane concentration. But since that now this month, it's grown to 20 stocks responsible for the S &P's positive gains this year. And when you look at small cap stocks, which are those smaller companies that encompass the Russell 2000, that's up 7.1 percent in June. So we're getting wider. This is good. We're getting wider, which is which is a little more fundamental. I, Toby, I want to hand out some game balls, if you will allow me, putting on my high school football coach. There are a few stocks that are doing really well.

5:01First goes to Apple, closed at a record high yesterday. Old reliable cash flow, just closing in on$3 trillion. Closing in on$3 trillion. I think it's within$100 billion of becoming the first company to reach a$3 trillion valuation. $100 billion sounds like a lot, but it's close to$3 trillion. My other game ball is going to Tesla, which is gained now for 12 straight sessions, its longest streak ever. And the recent bullishness is around this charging network that we talked about last Friday, where analysts say it's going to give them an additional$3 billion in revenue. Now that Ford and GM have hopped on board and it becomes the industry standard.

5:41My final game ball is going to Oracle. So yesterday, Oracle hit a record high after its earnings report showed strong demand for cloud computing that powers what else? AI. And founder Larry Ellison just passed Bill Gates as the fourth richest person in the world. Good for Larry. You know, we haven't talked about Larry Ellison in a minute, so good for Oracle as well. But there's your little stock market primer. Give you a couple of talking points to drop out the office this morning. Let's move on to Montana. Neil, a lawsuit against the state of Montana went to trial yesterday, but it's not just any old lawsuit.

6:17This was brought against the state by plaintiffs who are aged 5 to 22. So it's the youths. The youths argue that they have a constitutional right to a livable climate and that by investing in fossil fuels, the state is violating that right. So a lot of people are closely monitoring this case because it could set a precedent for other states to follow, even if it doesn't lead to any immediate change in Montana state laws. So this is obviously a headline case because the plaintiffs are so young. But it's actually very interesting from a legal perspective because this is really the first time a trial gets to the question of if governments have a duty to protect its citizens from the effects of climate change.

6:58Yeah. What do you make of this? If you look at the – it's really interesting. Montana is one of the few states that has sort of an environmental code written into its constitution. It says this was I think it was written in 1972. And this clause is the state and each person shall maintain and improve a clean and healthful environment in Montana for present and future generations. So kids are saying, well, by your support of fossil fuels and we can get to that later. But Montana is a big, you know, fossil fuel, coal, natural gas state. hey, you are sort of like infringing upon our rights to have a healthy environment in the future.

7:33I was really struck by some of the stories that these kids were telling. One of them, one of the plaintiffs said that there were wildfire smoke blew into her summer soccer practice in the Missoula Valley. And the smoke was so dense that the kids on the team with asthma could not play at all. So that was one example of they're saying how climate change was just affecting their daily life. Another, whose name is Ricky Held, who is 22, said she has a 3 ,000 acre ranch in eastern Montana, and it's been threatened by droughts, wildfires and extreme weather. She said, I know that climate change is a global issue, but Montana needs to take responsibility for our part of that.

8:12Yeah. And if we just want to take the other side of the of the case and what Montana might lawyers might choose to argue, it's the fact that Montana's emissions are this is I'm quoting from the attorney in charge. Montana's emissions are simply too minuscule to make any difference. Climate change is a global issue that effectively relegates Montana's roles to that of a spectator. So they're basically saying, like, listen, we really aren't the problem in the grand scheme of things. But, yeah, it's going to be a very interesting case. And this is really the first one of the plaintiffs in charge of this case have been kind of machine gun firing out these lawsuits in all 50 states.

8:52Montana is the first one to make it to trial. So that's why we're all talking about it. And, yeah, we'll be kind of closely monitoring these arguments over the next two weeks. Let's move on to New York City. Some big news here. They were there during the pandemic. They were there during the blizzards. They were there during the recent apocalyptic wildfire smoke. And now they're getting a big raise. And I'm talking about New York City's food delivery workers. Yesterday, the city implemented its first ever minimum wage for app-based delivery workers at companies like Uber, Grubhub, and DoorDash.

9:25That minimum wage is$17.96 per hour, and that will increase to$20 by 2025 to keep up with inflation. That is without a tip. The wage is about triple what they currently make, which amounts to really a life changing pay bump. Advocates are calling it a historic policy that finally recognizes the dangerous and low paying work that these delivery workers do, while everyone else in the city can kind of stay home away from the elements. Plus, as independent contractors, these workers must also cover their health insurance, business expenses, extra taxes. So making sure that that top line income is higher is crucial to their overall financial situation and is a really just a life changer.

10:08So it's a big victory for gig economy workers. Yeah. And again, I'm immediately going to go to the other side. I feel like I'm playing the other side in today's conversation. But so, yeah, Uber and DoorDash, some of the biggest delivery companies in your city, are pretty against this. Uber says that the city's not being honest with these delivery workers. they're parading out this headline number of, oh, your pay will triple. But what they're not saying is that it might force you to go faster and accept more trips. And then also it might discourage tipping because some of the costs are passed on to consumers.

10:40So it's not just as cut and dry as all these delivery workers will just instantly make triple what they're currently making. And then there's also some like political doublespeak here because there's these rules against having multi-apps open. And if you have multi-apps, then the minimum wage is not as high as, again, that$19 number. And so, again, it's not perfectly cut and dry, but yeah, it's definitely a big win for just boosting up the baseline pay of these workers. But just to push back on Uber, so they made the same argument when New York City implemented a minimum wage for Uber and Lyft drivers in the city in 2019.

11:19There was a study that was done because the companies complained that it would lead to worse service and higher fares, obviously. But the study looked at what happened in New York City, which had a minimum wage, and Chicago, which didn't. And it found that prices for ride-sharing companies increased at the same pace as New York City and Chicago, which didn't have a minimum wage, plus passenger wait times decreased. So the companies are going to company. Yeah, companies are going to company. And just to zoom out broadly to kind of the delivery food market in general, Grubhub also just laid off about 400 employees or about 50 percent of its corporate workforce.

11:59So these aren't the delivery drivers. And it's basically just, again, there's too many companies. There's only such there's only so many foods that can be delivered. And so if we're just going back to Grubhub, it was acquired by Just Eat Takeaway in 2021 for$7.3 billion. And then less than a year after that deal closed, Jesse Takeaway said that it was exploring a full or partial sale of Grubhub. So it hasn't quite worked out exactly how they wanted it to. But yeah, it just kind of goes to show that there's some headwinds that these food delivery companies are facing. All right, Neil, before we jump into the next story, we're going to take a quick break.

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13:17Smart move. Another smart move? Having State Farm help you create a competitive price when you choose to bundle home and auto. Bundling. Just another way to save with a personal price plan. Like a good neighbor, State Farm is there. Prices are based on rating plans that vary by state. Coverage options are selected by the customer. Availability, amount of discounts and savings, and eligibility vary by state. neil one of the big boys of the venture capital world a16z is heading across the pond to set up shop in england but their business won't involve skin fades or razor blades in their hats the firm is setting up a crypto hub in london as the regulatory environment in the u.s gets more stifled than a subway car in july so remember just some backstory the sec just sued binance and Coinbase back to back for kind of breaking their laws.

14:07So pair that regulatory pressure with London's history as a major player in the finance world. And it makes sense that A16Z decided it was time to stake its claim and advance its crypto ambitions in England. Neil, what do you think about A16Z jumping across the pond? They, wherever they go, it seems like crypto follows because they are the major crypto booster. They are propping up the entire industry. If you just go to their portfolio page and look at all of the companies that they've invested, it's basically every single crypto company that you've heard of besides FTX. And I don't know what happened, why they didn't invest in FTX, but they've got Coinbase.

14:46They own a 1 % stake in Coinbase. They've invested in OpenSea, which is the leading NFT platform. They've invested in Dapper Labs, which is NBA Top Shot. They invested in Yuga Labs, which makes the Bordet Yacht Club. They invested in WorldCoin, which is Sam Altman's eyeball scanning crypto company. So they've amassed$4.5 billion for the world's largest crypto fund. And I think going to the U.K. is a major endorsement of the U.K.'s friendlier policies than the U.S. and is a big indictment. And you can argue whether the U.S. should be pursuing this sort of hostile attitude towards crypto companies or not.

15:27But it does seem like the center of gravity is moving away from the United States because regulators are just saying after FDX happened, they were just like, this is not worth it for us. This is such a headache. You lost billions. You lost tens of billions of dollars. Go do your scam somewhere else. It feels like that is the vibe. And the U.K. thinks that there might be some potential value to this as their economy kind of doesn't really grow at all. And they're like, OK, maybe we can be on the forefront of tech here. Yeah, I mean, England is getting lapped when it comes to kind of tech and VC funding.

16:00So according to the VC firm Atomico, the UK has suffered a 57 % drop in tech investment this year. That's the biggest decline across any of the big European markets. So you can kind of see why this is a match made in heaven or whatever, wherever you want to call it, because UK is like, yes, we want industry, we want innovation here. So they welcome them with open arms. And Neil, you actually talked to the current prime minister back in January of 2022, I think, Rishi Sunak. And he's kind of been bullish on crypto for now. Do you remember what your takeaway from that conversation was? Yeah, so he is a former hedge fund guy who went to Stanford MBA.

16:39And he called, like, the reason that we interviewed him is because his people reached out and he wanted to promote, like, the UK as a Web3 destination. Right. So I asked him about whether he was following crypto and he said something like, you know, I'm really following the dumb monkeys closely. That was a quote from him. Yeah, he said dumb monkeys. I'm like, I think you mean bored apester. So I don't know how closely he was following it. But he, you know, he went on to say that he's really bullish on maybe not the coin aspect of crypto, but like the Web3 and blockchain technology. and he put out a tweet welcoming A16Z to London and everyone was saying, I think this has to be a first in history that a world leader has welcomed a venture capital firm to their country.

17:29Yeah, it's a weird timeline, but honestly, again, yeah, London has that history as a financial center. So I could see where it makes sense a little bit. But yeah, that's our crypto worldwide update for you right there. All right, let's move on, Neil. We're back with another edition of Toby's Trends, where I plug into the matrix, sift through the millions of stories flowing through the undercurrent of the internet, and emerge triumphantly with a trend that I think our audience and you, Neil, should know about. Let's do it. Today's trend actually takes us to the world of athletics, specifically the endlessly fascinating oval of track and field.

18:06Just three days ago, Jakob Inglebritsen, a Norwegian distance runner, broke a 25-year-old record in the two mile. Not only did he break it, he absolutely demolished it by four seconds. His time was 7.54 nil, which is two sub four-minute miles in a row. Just unfathomable to think about running that fast. And the reason why I'm bringing this up as a trend is because world records in running have been falling at an alarming rate. So Faith Kipyagun, a 29-year-old Kenyan runner, just broke the women's record in the 1500 and the 5 ,000 meters just one week apart. Here's the craziest part. She hadn't even run the 5 ,000 meters in eight years.

18:49And so she just kind of went out there and broke the world record. So a lot of people are saying, what is going on? And of course, you have to talk about athletics, the athlete's shoes. So the rise of carbon fiber plated shoes combined with super energy efficient foam has led to an undeniable rise in record-breaking performances. And one last stat just to illustrate how widespread this trend is. At the collegiate level, breaking four minutes in the mile used to mean something. Now it's painfully common. So already 115 athletes have done it in 2023. That's up from just 35 in 2020. So over the span of three years, the numbers over more than tripled or almost tripled in the amount of athletes that are breaking four minutes of the mile.

19:35So yeah, Neil, a lot of people are talking about the integrity of the sport at this point. Is this related to the Nike shoes that have been banned and like what's going on in the regulation space? Yeah, it's very tough to regulate it. So Nike has, or the World Athletic Body has instituted a stack, a maximum stack height, which is just how much foam you can have underneath the sole. That actually mostly applies to the marathon. Track and field is kind of a different governing body. but yeah a lot of some runners like carson warholm who's your favorite he's a 400 meter hurdler and he's kind of very anti these these super shoes he says that it's destroying the integrity of the sport and he doesn't run with some with like the packed with the with the this high performance foam but honestly it's great for a spectator because i was hyped watching ingle britson just demolish this world record but you do wonder if technology has taken it too far what if i put those shoes on like what and i ran a mile how much time would i be able to cut i mean i think you would be surprised at how energy efficient they really are because i have worn some of the super marathoning shoes and i i was very curious to that as well it just protects the legs it makes you more efficient once you get up to speed you feel much better so i do think there is something valid it's not just marketing hype here interesting so i might have to look into that if i ever get back into running four minute miles uh morning brew daily sub four minute miles eight minute one mile i think all right for our final story the fight between italians and pasta sellers is getting spicier than carbone's rigatoni uh with the pot with the price of pasta skyrocketing one consumer advocate group in italy is calling for a week-long national pasta boycott starting later this month to protest the overpriced oriccetti it seems impossible that italians could part with their beloved pasta, right?

21:22After all, the average citizen consumes 50 pounds of pasta every year, right? And like, I think a pound is one of those boxes. So they're eating about, they're eating one of those boxes per day, but, or per week. Prices though have gotten out of hand. They're increasing at double the rate of inflation. The cost of pasta boxes has risen 16.5 % in April compared to the same period last year. So a lot, I was looking in this story and a lot of these countries, including Italy, are looking into price controls, which are basically capping the price of goods to make them more affordable. And a lot of people are saying, no, don't do that.

22:02Because what it does is basically artificially increase demand from shoppers, whereas supply doesn't get that same boost. Well, you discourage supply because you're like, well, I can only make so much money. Right, exactly. If you're a supermarket, why would you sell pasta that's price capped when you could be selling other things? And so, yeah, they're saying don't do that because Hungary actually introduced caps in early 2022. But food price inflation has since accelerated almost 50 percent. So, yeah, again, it's kind of like a joke, like pasta is getting more expensive. But this is a real Europe is experiencing a huge food inflation crisis right now.

22:37Yeah, there was a pasta strike in the past, but it did not go well. I think they tried in 2007 because rising wheat prices were leading to skyrocketing pasta prices as well. It lasted one day. I mean, there are either boxes. So I don't know if this thing is going to be widespread. The goal is obviously to completely shrink demand to zero so that retailers and sellers have to lower their prices ultimately. But it may be just kind of like a PR thing to get people recognizing this issue. Yes, Italy, there was an emergency meeting in Rome last month around the, you know, around pasta prices because this is like a big deal over there.

23:19And they decided against price controls. And economists are saying, just wait, because the pasta that was made now is super expensive because it was made with ingredients from that was that were really expensive because of the war in Ukraine and broader inflationary pressures. and that the pasta being made now is the supplier stuff is much less expensive because overall inflation is coming down. So just wait. Just wait. Cheaper pasta. Yeah, that's what they're saying, but I don't know. 16.5 % in a month is gargantuan. We started our show by ranking game show hosts today. Tomorrow, let's power rank our best pasta shapes, and let's start it off that way.

24:04I'm going to think about it. Bucatini is pretty good Bucatini Bucatini Oh god Alright that is our show today Great stuff Toby Please write in with any of your Spaghetti Any of your favorite pasta recipes Or your favorite game show hosts You can reach us at Morning Brew Daily At morningbrew.com Huge shout out to our crew in the back Emily Milliron is our editor and producer Samantha Velez And Raymond Liu are the associate producers Yuchenawa Ogu is our technical director Billy Menino is on audio. Hair and makeup quit after hearing all the cringy pasta buns. Devin Emery is our chief content officer, and our show is a production of Morning Brew.

24:45Great show today, Neil. Let's run it back tomorrow.

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