‘Shadow Fed Chair’ Lurking Over Powell? & Apple’s Huge Gamble on ‘F1’

0:00Tuesday on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, New York City landlords are losing their marbles over the rise of Zoran Mamdani.

0:40Then Brad Pitt is hitting the pits in a new F1 movie that Apple spent a whole lot of money on. It's Friday, June 27th. Let's ride.

0:54Happy Friday. Gosh, the weekend is so close. I'm sure you've got a lot of things on your to-do list over the next few days, but Toby and I want you to add one more thing. Share Morning Brew Daily. If you enjoy this news rundown every morning, odds are the people you're friends with or are related to will also find it useful. So spread the word with everyone you're hanging out with this weekend, and you'll be surprised with how much satisfaction you'll get two weeks down the road when they text you, Erica, thanks so much for turning me on to Morning Brew Daily. Toby, you're a marketer at heart, so let's hear some ideas and tactics people can use to share the pod because we get it.

1:28It's a little intimidating. Oh, man, am I ready for this? I think the best way to share the pod is to prime your friends and family first. And by that, I mean start dripping out facts slowly. You learn from the pod. A Neil's number here, a Toby's trend there. And only when someone inquires as to how you know so much, that is when you drop the link to the show. Gotta butter them up first. Either that or fly a plane banner over your nearest population center. Whatever's easiest. But yes, share the pod. We appreciate you. And now a word from our sponsor, Domain Money. Neil, are you confident managing your money?

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3:10This episode is brought to you by State Farm. Checking off the boxes on your to-do list is a great feeling. And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you. Whether you prefer talking in person, on the phone, or using the award-winning app, It's nice knowing you have help finding coverage that best fits your needs. Like a good neighbor, State Farm is there. If you walk by a movie theater this weekend and feel a rumble and hear a roar, that's not the new Jurassic Park installment out early. It's probably the F1 movie making its presence known.

3:47The movie starring Brad Pitt as an aging driver making one last pass at glory is fast, loud, and a massive bet by Apple. The iPhone maker won the rights to the movie by pledging to sink over$250 million into it, paying Brad Pitt well over$20 million in the process, all in an attempt to make a triumphant return to the big screen. F1 is one of Apple's most ambitious projects to date since diving into Hollywood back in 2019. Since then, it has found limited commercial success. Apple wants big hits, but only if the content matches the premium aspirational brand of products like iPhone and Mac. And F1 fits the bill.

4:25Led by a director who delivered the smash hit Top Gun Maverick, this movie is as much an entertainment product as it is an ad for iPhones. The racing scenes were filmed on custom-rigged iPhones, while a first-of-its-kind haptic trailer added vibrations to convey the feel of an F1 engine rumbling on a buy. but despite the gaudy marketing success is far from guaranteed while apple has cranked out a few popular tv shows like ted lasso and severance it hasn't found a ton of box office success so far on the big screen with his last two releases argyle and fly me to the moon flopping hard neil this is a big big swing in fact it's one of the most expensive movies ever made so apple needs people to turn out to watch pit in the pits this is a extremely curious side quest for apple dating back six years where they decided for some reason to get into the entertainment industry.

5:16You're right, it hasn't been super commercially successful in the box office or on the small screen. Apple TV, since launching, has about 27 million subscribers in the U.S. Disney Plus and HBO Max launched in the same year, and they have far leapfrogged that. I can't even give you Netflix's numbers because it would break the chart compared to Apple TV Plus. They're hoping that F1 can turn the ship around. And to do that, they've enlisted the same director as Top Gun Maverick. Top Gun Maverick made$1.5 billion at the box office in 2022. They're hoping this is just a land-based version of that. And Apple is, you know, a$3 trillion company.

5:54This is not going to make or break its bottom line. Obviously, selling iPhones is its core business. But while it might not matter too much to Apple's bottom line, it could make a big impact on F1, the racing league, not just F1, the movie. Because if you go back to the pandemic era and Netflix's drive to survive, that led to this massive boom in popularity six years ago. Between 2019 and 2022, US ratings for F1 races just absolutely went off the charts. It caused Disney to sell out$85 million a year for the rights to air them. So they're hoping maybe for another sort of boom, bringing all this attention to the league.

6:32That being said, it might not happen because Disney is apparently not so happy with their$85 million a year deal because they're saying that we don't necessarily need to review or go much higher than that. There's no commercial breaks during Sunday races. So it's going to be an interesting moment to see if it gets another bump, the F1 racing league from F1 the movie. All that's being said, the business stuff aside, this looks really cool. Like the stuff that they've done with the effects and making it seem super realistic. They embedded themselves in F1. There's going to be appearances from drivers.

7:07Lewis Hamilton, who is perhaps the best F1 driver ever, is a co-producer. So they've worked really hand in hand with the league to make this a really crazy theatrical experience. I will say it's not expected to gross anywhere near Top Gun Maverick,$1.5 billion. dollars. You know, it's estimated to come in maybe 40 to 60 million at the beginning of this weekend. So that'd be a solid but not amazing showing. But it will need to have an amazing showing because it is one of the most expensive movies of all time. That being said, I'm excited to watch it because, you know, feeling that rumble should be an amazing experience.

7:41We've got succession drama at the Federal Reserve with the role of the most important economic policymaker in the world on the line. According to The Wall Street Journal, President Trump is considering naming a replacement for Jerome Powell as early as September or October, an unusually long time before Powell's term expires in May 2026. That's because Trump has just about had it with Jerome, who has rebuffed his persistent calls to lower interest rates, saying that the risk of higher inflation was too great to cut rates just yet. If we make a mistake here, people will pay the cost for a long time, Powell said this week.

8:15By announcing a successor to Powell in the fall, Trump would essentially be installing a so-called shadow Fed chair that would be like a really annoying backseat driver to Powell and strip him of any market authority. Investors would look to his shadow chair as the primary economic decision maker in the country and ignore Powell, who would be the lamest lame duck around. While Trump may like the idea of finding a new Fed chair that would be more eager to cut rates, investors hate the idea. They and virtually all economists view the Fed's independence from political influence as a cornerstone of America's world-beating capital markets.

8:49And sure enough, following the report, the U.S. dollar sank to its lowest level in three years against a basket of major currencies, a sign of increasing concern about American institutions being eroded. As for the White House, it responded that an announcement on the next Fed chair wasn't imminent, but Trump is definitely thinking about it. On Wednesday, he said he had three or four candidates in mind and once again called Powell terrible. Yeah, the Powell-Trump bout has gone 12 rounds at this point. That being said, I was reading Brew Markets, our markets-focused newsletter, and they are saying that some analysts are kind of arguing that selecting a replacement sooner rather than later may help the markets a little bit.

9:27Because what it does is that, yes, it will cause maybe a little bit of turmoil in the short term. But in the long term, you will actually start to get a sense of what this new Fed chair might be approaching interest rates cuts and the timeline that they would be putting forth. So even though it's not necessarily on the surface a good thing, rolling out a Fed chair earlier and communicating their monetary policies, ASAP, could give investors a better chance to accept this new reality. So that is one potential take that you could see from this kind of unprecedented shadow Fed situation. Now, who is on the shortlist?

10:01Who could be the next Fed chair, which is a big deal because how often do we talk about the Fed chair? like pretty much every single day. This is the most important economic role in the entire world because the U.S. is the largest economy. They set the agenda for basically central banks all over the world. So there are a few people on the shortlist here. We got former Fed Governor Kevin Warsh, the U.S. Treasury Secretary, who you know very well, Scott Bessent, National Economic Council Director Kevin Hassett, and current Fed Governor Chris Waller. They are seen as probably though, three or four people that Trump is talking about.

10:36Kevin Warsh, that former Fed governor, seems like the top pick right now. He is getting a lot of discussion as a possible Trump pick for the next Fed chair. He was an advisor to President George W. Bush, except he is known as more of a hawk, which Trump may not like. He, by saying someone's a central bank hawk, that means that they are more concerned with inflation rather than full employment. Those of the two mandates that the Fed has, which leads itself to higher interest rates rather than lower interest rates if you're more hawkish. So Trump may run into some issues with Warsh there. And just to remember, Fed policy is set by a committee.

11:15It's not just set by a single person. So there are 12 policymakers, and Trump can't influence all 12 of those. A lot of those have been sitting in their seats for years now. So finding someone that will both prove loyal to him, but then also be able to wrangle those 12 policymakers. That is not an easy task. But just remember, it's not just a single person making all these monetary decisions. And just remember, Wall Street hates the fact that there will be any political influence on the central bank. They want it to be as independent and separate from short-term political interest as possible, because that will lead to bad decisions that could, that is exactly what Powell was talking about.

11:53If we cut interest rates now, it could lead to another bout of inflation. Trump won't be president then, but that's what the central bank is mandated to do. They want to think over the long term. So investors will be certainly concerned if there is a shadow Fed share. It's stock of the week, dog of the week time, where Neil and I pick one stock that remembered to reapply sunscreen during the heat wave and one stock that is rocking a gnarly farmer's tan right now. I won the pre-show game of patty cake, so I'm up first. And my stock of the week is NVIDIA because the king is back, retaking its throne as the most valuable company in the world this week.

12:27After all the turmoil in January when a new cheap AI model from DeepSeek upended the AI industry and raised questions about demand for its chips, and all the turmoil from President Trump's trade war restricting sales of its chips in China and costing it$2.5 billion in revenue, all NVIDIA has done is climb over 30 % and is currently trading at an all-time high once again. Deals with Saudi Arabia and the United Arab Emirates to supply hundreds of thousands of chips to the countries have made up for any revenue lost from China. And one analyst from Loop Capital is especially bullish on NVIDIA. This week, Loop raised its price target to$250 a share.

13:04That would mean a$6 trillion market cap for the GPU company, up from its current$3.6 trillion. Of course, a lot of questions remain before you can start tacking on trillions. Will AI demand continue to skyrocket? Is Trump's trade war going to rattle public markets further? Can China's own chip manufacturers close the gap? But for now, Neil, NVIDIA is back on top. NVIDIA has taken its licks this year, but has gotten up every single time to continue surging higher. I mean, you have this$3 trillion company that's almost$4 trillion. Sorry, it's at$3.8 trillion market cap right now. It reported a 69 % increase in revenue last quarter.

13:44It's still growing faster than most companies, much smaller than it. And a big endorsement has come from its biggest customers. Microsoft, Meta, Alphabet, and Amazon account for more than 40 % of its revenue. They went up to the earnings call earlier this spring and said, we are continuing to spend on AI. In fact, we are probably going to boost our spending even more this year. So much of that money is going to NVIDIA chips, to NVIDIA data centers, and it is reaping the rewards. It still has this remarkable moat that it's built that Jensen Huang has built over the past few years on these high-end chips.

14:18So it looks like NVIDIA is just keeping on cruising. And then zooming out, our stock could have been the entire stock market this week as well. Because despite this vibe of uncertainty and all this geopolitical craziness that's going on, the S &P 500 closed less than 0.1 % away from a record high yesterday, which it notched back in February. It's been on a 20 percent. It's been on this huge run since creating 20 percent in April. So it does look like you just never want to bet against the market right now because it has staged this massive comeback since those Liberation Day tariffs were unveiled.

14:55Up next, let's hear about our Dog of the Week. Race the runners. Race the sails. Race the sails. Captain, an unidentified ship is approaching. Over. Roger. Wait, is that an enterprise sales solution? Reach sales professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title, and more. Start converting your B2B audience today. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started today at linkedin.com slash campaign. Terms and conditions apply. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS.

15:35After an initial dosing phase, about 4 in 10 people taking EBCLIS 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. EBCLIS, 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. Also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies.

16:04EPCLIS can be used with or without topical corticosteroids. Don't use if you're allergic to EPCLIS. 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 EPCLIS. Before starting EPCLIS, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EPCLIS and visit ebclus.lily.com or call 1-800-LILY-RX or 1-800-545-5979. My dog of the week is companies tied to New York City's real estate market. Office landlords SL Green and Vornado, as well as real estate lender Flagstar, all dropped around 4 % or more on Wednesday in what analysts are calling the Zoran effect.

16:45Tuesday night, Democratic socialist Zoran Mamdani won the Democratic mayoral primary for New York City, and investors think his policy proposals could send a chill around the fragile commercial property sector. Mamdani's core plan is to freeze rents on stabilized apartments, launch government-owned grocery stores, and make city buses free, financed in part by higher taxes on the city's millionaires and corporations. The rent freeze would have the most direct impact on real estate because that would eat into landlords' profits and could make their debt more difficult to pay off, not good for lenders.

17:15The other policies might not seem directly related to real estate, but if they cause companies to hire less in the city or get out of Dodge altogether, it would reduce demand for office space. And the real estate industry appears to have entered full on panic mode. A Wall Street Journal headline blared NYC developers gripped by hysteria after Mamdani's sudden rise, writing that in the day since his election, phones across the sector are ringing almost nonstop as panicked executives scrape together their contingency plans. Toby, another sign that the business elite is freaking out over the prospect of a Democratic socialist presiding over the world's financial capital.

17:51Yeah, and SL Green and Vornado were initially had these big stocks at last, but then kind of pared back some of those gains, which showed maybe hysteria was the right world, where everyone started to panic, everyone started panicking, and then they realized, all right, take a deep breath, maybe this isn't as bad as everyone thinks. That being said, this rent freeze that you mentioned is the kind of controversial proposal here. There's one million rent-stabilized apartments in New York City, and yeah, landlords say that this is just, if you freeze those rents, it eats into their operating revenue.

18:21It makes people less inclined to invest in the city. And some people in the industry are saying that this focus on that particular policy is overshadowing some of the other policies from MomDani that some developers do like. Stuff like expediting land use reviews, opening up public land for development, and rezoning more residential products. These are boons to the housing and commercial real estate sector. So it is one of those things where you have this one policy gobbling up all these headlines, but maybe some of the other policies are just fine. Meanwhile, the focus has shifted to the general election in November.

18:57Remember, Mamdani is not the mayor yet. He just won the Democratic primary. So he's likely to go up against the current mayor, Eric Adams. And reports are out now that the business community, the business interests in New York City are all coalescing around Eric Adams and saying, how can we help you beat Mamdani? Because they are quite freaked out over Mamdani's rise. So we talked about how many billionaires backed Andrew Cuomo, who was Mamdani's opponent in the Democratic primary. It looks like they're all coalescing around Eric Adams now and hoping to get him elected. According to prediction markets, Mamdani is well in the lead.

19:34It's been a real struggle getting people to come to my upcoming rooftop party, and it's because they're all going to be in Japan. You're not being original, you know. This summer, Japan is a more popular destination for American tourists than Paris, and only second behind London, according to Kayak. More than 1.5 million seats are set to fly from the U.S. to Japan during June, July, and August, a 6.4 % bump from last year. And that's coming off a year so far through May, when the number of U.S. visitors to Japan has jumped nearly 30 % from 2024, reports the Japan National Tourism Organization.

20:09Japan does seem like an amazing place to visit, but why the crush of tourists now? The first thing you have to know is the currency gap. For the past four years, the yen has sank against the dollar and is nearing its weakest levels in almost four decades. As Bloomberg notes, in June 2019, 1 ,000 bucks got you about 108 ,000 yen. Now, the same amount gets you 146 ,000 yen. So as an American, your money goes a lot farther than it used to. Another reason could be fatigue with Europe. Remember, right after the pandemic, Americans flocked to Europe in droves and now might be thinking, you know, I would love for my meals not to take two and a half hours.

20:49Summer capacity from the U.S. to Great Britain is down 1.8 percent and down 0.4 percent to Germany. A third reason it's cheaper to fly to Japan. Average prices on long haul routes to Asia are running 11 percent below last summer. Toby, are you thinking what I'm thinking? Remote pod from an izakaya. I'm just happy I'm not crazy because every time I open Instagram, it feels like someone else is Japan. And it's not an exaggeration. There has been a massive spike. And airliners are kind of embracing this with open arms because United is flying to Japan 20 times a day. They are the biggest carrier that are sending flights over there.

21:27So they are happy that as domestic traffic has waned, this international business has picked up. not necessarily to Europe, which is falling, as you mentioned, but to Japan. So it's a fantastic place to go. It is getting cheaper. Of course, people are going to go there. But also, Japan is quite happy that Americans are picking up some of the slack because there's been a sudden drop-off in Asian tourists coming from places like South Korea, Hong Kong, Taiwan, etc. Those bookings have actually plunged by an average of 50 % from a year ago. And the reason why is kind of crazy. There's fear that another big disaster like an earthquake or a tsunami might hit the country because there was this manga cartoon that predicted the last one back in 2011.

22:11And they recently predicted one is going to happen in July of 2025. So that's caused a lot of maybe superstitious people to avoid traveling to Japan over in Asia. So it's been this odd sort of, you know, mirroring effect where a ton of people from America are coming over, but not as many tourists from Asia are dropping by. All right, let's sprint to the finish with some final headlines. It's hard to get a house these days, but Federal Housing Finance Agency Director Bill Pulte wants to make it a little easier by instructing the mortgage giants Fannie Mae and Freddie Mac to start counting cryptocurrencies as assets during mortgage loan risk assessment.

22:49Historically, your Fartcoin holdings have been considered too volatile to be considered in loan evaluations. You'd have to actually sell and convert them into dollars for them to count. But this new framework gives the crypto industry a better foothold in the housing market and keeps in line with President Trump's promise to make the U.S. the crypto capital of the world. Now, this announcement led to some celebrations from the crypto crowd, but also a lot of jokes about how the next big short is going to come from a bunch of mortgages collateralized with PepeCoin going belly up. There seems to be demand for this sort of thing.

23:22In a recent survey by Redfin, 14 % of homebuyers said they plan to sell crypto assets to get the cash to cover a down payment on a home, which is up from just 5 % in 2019. So under this framework that they're proposing, historically, you would have had to sell your crypto assets in order for that to be counted in your mortgage application. Now, you don't have to sell those, which a lot of people, I think a lot of crypto investors and many people are crypto and regular investors are crypto investors now. No, would that would be a positive development for them? And you're right, the crypto industry is celebrating this.