Stock Market Hits Record High & Gen Z Loves Saving For Retirement

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0:27Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, why Elon Musk called the Senate's tax bill utterly insane. Then stocks made it back to all-time highs quicker than you can say Liberation Day. It's Monday, June 30th. Let's ride.

0:47Good morning, Toby. I can't believe it. But today, June 30th, is the final day of the first half of the year. And the good news is that a much-needed halftime break is coming very soon. July 4th arrives at the end of this week, which means the window for let's circle back after the holiday emails opens this afternoon. Can't wait to fire a couple of those off. Toby, six months in the books for 2025. Fast half year or slow half year? It's always a fast first half of the year. But I also just want to reminisce about all the random stuff we never could have foreseen coming into this year. We got an American Pope, which has led to multiple pictures of His Holiness wearing a white Sox hat.

1:29Never saw that coming. I learned what a La Boo Boo doll was and wish I had never laid eyes on those freaky little things. I'm also just thinking about all the previous meaningless words that everyone now knows. Deep Seek, Liberation Day, Chicken Jockey. Wish I never had Chicken Jockey in my brain. But yeah, it is time to head back to the locker room, have a little reset, eat some orange slices, re-tape the ankles, and get back out there. Can't wait for the second half of the year. And now a word from our sponsor, Iterable. Neil, you're a group chat guy. I see you discussing show topics with your college friends, but everyone's on a different time zone, right?

2:04Oh, yeah. I'll drop a banger of a trivia question at 7 a.m. after we wrap up the show, and eight hours later, someone chimes in with the answer. But they always get it right because your friends are smart. But that's also what marketing feels like when you're locked into fixed campaigns. You might send a message when you're ready because your campaign calendar says so, but it might not be when your customer is ready. Iterable flips that. It listens to the customer, not the calendar. So the message hits when they open the app, browse a product, really whenever the opportune moment is. It's getting the whole group chat on the same time zone.

2:37Real-time personalized engagement powered by AI and fueled by customer data across every channel. So stop marketing like it's 4 a.m. in the wrong time zone. Go to endthecampaign.com. The U.S. stock market has faced no shortage of curveballs lately, trade wars, Middle East tensions, and tariff threats, but investors are seeing the ball well and on Friday cleared the bases, sending the market to a record high close. It is a stunning rebound from the multi-trillion dollar sell-off that followed April's announcement of sweeping Liberation Day tariffs. Market surged early Friday after Commerce Secretary Howard Lutnick announced a finalized U.S.-China trade framework and hinted at imminent deals with 10 major partners.

3:19But the rally hit a speed bump after Trump posted on True Social that trade talks with Canada had been terminated. The volatility is nothing new. Wall Street has been ragdolled around for months by conflicting signals. Business-friendly headlines. One day, aggressive tariff moves the next, and yet zoom out and the trend line is unmistakable up. The S &P 500 is now up more than 20 % since bottoming out on April 8th and nearly 5 % on the year. There were just 89 trading days between bottoming out and reaching an all-time high, the fastest ever recovery after a decline of at least 15%. Along the way, investors have weathered rising oil prices, surging yields due to debt concerns, and fresh anxiety over China's AI advances.

4:03But through it all, the U.S. economy has held strong with low unemployment, only modest signs of labor softening and inflation data suggesting tariffs have had little effect on prices so far. Neil, despite the chaos, markets just keep on climbing. What is behind the rebound? Well, the last few days are a microcosm of what we've seen in the first half of the year. You mentioned that Trump called off trade talks with Canada over this digital services tax on U.S. technology firms. Well, last night, Canadian Prime Minister Mark Carney said that that tax is gone and that trade talks are about to happen again.

4:39Meanwhile, futures are surging this morning. So this trade whiplash that we've seen over the past few days has been going on for the past six months. And every single time that it appears that this worst case scenario is going to happen, there's going to be massive tariffs. There's going to be no discussions between countries that has just never come to pass. So if you've bought the dip, you've been rewarded. So people are just going to keep buying the dip until it doesn't work anymore. There were some analysts who believe that the dip never should have happened to begin with, though. Art Hogan, who is a strategist at B.

5:13Riley Wealth Management, he said the sell-off never should have happened. There was no need for that. It was a completely manufactured crisis because the market wasn't yet attuned to Trump's, you know, kind of threaten and then roll back sort of cycle right there. And another clue that investors are pretty bullish overall in the market as a whole is that what is the S &P's top performing sector this year? It is industrial stock. That is a sector of the economy that is very attuned to the strength of the economy. Industrials have risen 11%. That's more than double the gains of the broader S &P 500.

5:49So there are clues here that investors do think the fundamentals are still in a very strong place despite all the trade war shenanigans going on. And it is not just technology firms that are driving the S &P 500 this year. You mentioned industrials is the biggest gaining sector. Well, what's the best performing stock in the S &P 500 since that last high on February 19th? It's not NVIDIA. It's not Microsoft. It's not any industrial company. It's Dollar General, which is up around 15%, which isn't an outlier because its rival Dollar Tree is the 13th best performer in the S &P 500, which is up around 30%.

6:25So those discount chains have exploded recently. And maybe that's not a great sign because that's a sign that people are trading down in what they're buying and not going to bigger retailers. And they're going to these dollar stores, which are absolutely surging. Still, challenges do lay ahead. I mean, July 9th is the date that everyone has circled because that is when the 90-day pause on most of these tariff deals is lifted. So if no deals are forthcoming, then we could see some shakiness happen. Still, there is all this uncertainty in the Middle East that hasn't gone away. And then also valuations are pretty high right now compared to historic norms.

7:08S &P 500's price-to-earnings ratio is over 23 right now. Historically, that's been around 19. So stocks are, quote, quite expensive when you look at price-to-earnings ratio. So looking ahead to we got a jobs report coming later this week. We'll see if the underlying data still supports these frothy valuations that we're seeing in the market as a whole. Every employee across the United States is sprinting to wrap up projects ahead of July 4th this Friday. And that includes the Senate, which narrowly voted Saturday night to advance the GOP's gigantic tax cut bill that President Trump demanded be passed before the holiday break.

7:46The Senate's 940-page One Big Beautiful Bill Act largely mirrors the House version stuffed with a Costco-sized pub mix of Republican priorities. The centerpiece is$4.5 trillion worth of tax cuts that extend Trump's cuts from 2017 and tack on new ones, including deductions for taxes on tips and overtime. Among other things, the bill will also ramp up spending for defense and immigration enforcement, scale back Medicaid and food stamps and wind down tax credits for EVs and other renewable energy projects more quickly than the House version. And Elon Musk had a few things to say about that last part.

8:22In a series of expos on Saturday, the Tesla CEO and top Trump campaign donor ripped into the bill for its phase out of green energy tax credits while labeling the bill, quote, utterly insane and destructive. He said the measure would give handouts to industries of the past while severely damaging the industries of the future. He and renewable energy advocates say that cutting off tax credits for solar and wind development would raise electricity prices for Americans, cede energy dominance to China and hamstring the U.S.'s electrical grid at a time when AI data centers are supercharging demand for power.

8:55On the other side, President Trump has called green energy tax credits a giant scam and said the money should be redirected to other uses, while Energy Secretary Chris Wright recently labeled technologies like wind and solar a parasite on the power grid. Toby, I think both sides would agree on one point at least. This bill is intended to gut the clean energy industry in the United States. Yeah, Elon is not happy with this because it does represent a total 180 of the U.S.'s energy policy over the last few years. Remember, Biden's Inflation Reduction Act laid out all these EV tax credits for consumers, but also businesses as well.

9:30And so that is what you're seeing is that a lot of these companies, solar wind companies, had been investing in America and building these factories. But now when these subsidies are kind of ripped out from underneath them, they have a very uncertain future ahead. And then on the consumer side of things as well, maybe you were going to use that$7 ,500 EV tax credit to buy an electric vehicle. But now prices are going back up. And of course, a lot of Republican lawmakers say, hey, if your industry requires these subsidies to survive, then maybe it wasn't an industry at all to begin with. So which is some of the reason why you were seeing this pushback to these subsidies.

10:08But yeah, total reversing course on U.S. energy policy. Let's talk about the details of what's actually in this bill. It requires that new wind and solar projects must be placed in service by the end of 2027 for companies to claim a tax credit, which previously amounted to up to 30 percent of the project's cost. So it's not that you just don't have to start construction on these projects. They actually have to be in service. It also eliminates the seventy five hundred dollar tax credit for EVs by September 30th, which is an earlier deadline than the house version. That's just in a few months. And this this next part was a total surprise to the clean energy industry.

10:45It got put in the bill on Friday night without any warning. It actually imposes an additional tax on renewable energy projects that receive material assistance from China or other adversaries. This industry runs on Chinese components. The fact that they are going to tax these new projects that contain a significant or any amount of Chinese components is going to absolutely stop so many of these projects or new plants in their tracks. So it's not just the fact that they're rolling back these tax credits. It's that they're adding an additional tax credit or an additional tax on top of it. Also, the Congressional Budget Office took a crack on seeing what the Senate package would look like when it comes to adding to the deficit over the next 10 years.

11:33$3.3 trillion in added budget deficits. That is something that Republicans have pushed back on. But they pointed mainly at these increase in tax cuts, which leads to a wider deficit. They also said that this version would lead to 10.8 million people without insurance per the CBO as well. So outside of just the energy thing, it does look like it will increase the U.S. debt and then also lead to more uninsured people. When rumors started swirling about Meta offering$100 million compensation packages to poach top AI researchers, the industry's reaction ranged from disbelief to outright denial. But after four OpenAI employees jumped ship to join Mark Zuckerberg's personal superintelligence team last week, it became clear that Zuck wasn't messing around and that he'd do just about anything to avoid falling further behind in the AI race.

12:26His all-out recruiting push follows the underperformance of Meta's open-source LLAMA model, which failed to keep pace with Frontier Systems despite being hyped in April as outperforming rivals. That moment lit the fuse on one of the most aggressive AI recruiting pushes Silicon Valley has ever seen, centered around The List, a hand-picked roster of elite researchers Zuckerberg has spent months assembling. In addition to doling out massive offers, Meta shouted out over$14 billion to acquire Scale AI and retain the talents of Alexander Wang, a well-connected AI wonder kid. Meta also reportedly convinced three other OpenAI researchers to jump ship last week and brought on two other power brokers in the industry, Daniel Gross and Nat Friedman.

13:09In doing so, Meta has completely reset the AI compensation and recruitment market with packages now resembling those of NBA stars rather than reinforcement learning experts. So, Neil, would you rather have Giannis on a super mask or Hong Yoo Ren, OpenAI's post-training lead for the 03 and 04 mini models? We're reaching movie montage levels here of Zuck going to these various AI researchers at different companies and saying, hey, put out his hand and saying, hey, want to join my team? And obviously there's a very lucrative offer attached with that. It's an extremely aggressive arms race going on for talent.

13:45It's also led to a bit of an interesting war of words between executives at Meta and OpenAI. meta at an all hands meeting last week said that Sam is exaggerate. Sam Altman is exaggerating about that$100 million offer claims. And I know exactly why he's doing it, which is because we are succeeding at getting talent from open AI. He's not very happy about that. That came from Andrew Bosworth, the meta COO. And then Altman replied at a New York Times podcast. He said, it's like, okay, Zuckerberg is doing some new insane thing. What's next? So they're each dismissing each other here, but it's true that the future of AI and perhaps the tech industry overall is at stake.

14:28The fact that these guys are, these AI researchers are getting paid so much is because Zuckerberg and Altman and all these other tech execs think that a single engineer, maybe two engineers could change the fate of their entire company. Yeah. And the funny part is, is that it's a very small world. Like all these people know each other. So when they figure out that they're on the list, they text their other friends and some of them are negotiating kind of these package deals like, hey, if I'm coming, Neil's coming with me type of deal. So it's this very weird negotiation strategy. Also, a lot of these people were totally content just a few years ago to be professors with tenure.

15:05But since they're very niche talents have become so valuable, now they are looking down$100 million contract. So it is just a total reset of this market. What is funny, too, is that a lot of these companies are becoming super, super secretive with how they are conducting their work at Anthropik and OpenAI. Researchers work on separate floors. They're very cut off from each other. And then also at Safe Superintelligence, another AI firm, candidates who do interview in person have to put their phones in a Faraday cage to block outside signals. So we are seeing like, you know, a cold war happening right now.

15:46And in the middle of it are these researchers that are just so widely valuable. The other thing you said that one single researcher could change the trajectory of a company. When you think about the fact that these companies are selling out billions and billions of dollars, I mean, Meta plans to spend$60 billion this year just on, you know, AI infrastructure. when you toss in$100 million for one researcher, it doesn't seem that much compared to the$60 billion you're spending on hardware. So that's another reason why we're seeing just these massive compensation packages. Up next, let's talk about our winners of the weekend.

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17:01Gain skills you can learn today and apply tomorrow. Get ready to go from make it happen to made it happen. And keep striving. Visit Strayer.edu slash Jack Welch MBA to learn more. Strayer University is certified to operate in Virginia by Shev and as many campuses, including at 2121 15th Street North in Arlington, Virginia. Welcome to Winners of the Weekend, the segment where Toby and I picked two things that delighted everyone with their stories around the campfire. On that note, I won the pre-show s'more-making competition, so I get to go first. And my winner is Gen Z, because there's no other way of saying this.

17:38They are slaying the savings game. According to a 2024 report from TIAA, an impressive 20 % of Gen Zers are saving for retirement while they're contributing to 401k plans at higher rates than millennials did when they first began working. They're also more invested in the stock market than the generation that came before it. In 2022, nearly 40 % of 23-year-olds own stock, and that's compared to 31 % of 23-year-olds in 2007, per the Federal Reserve Bank of St. Louis. That tendency to stash money away has turned Gen Z into a surprisingly major force in the home ownership market. Yes, even in this economy.

18:16The cohort of Americans aged 13 to 28 accounted for one in four loans issued to first time homebuyers in May, according to Intercontinental Exchange. Plus, going back to January 2024, their home ownership rate is outpacing that of millennials and Gen X when they were the same age. Toby, the generation that grew up on Instagram and TikTok are proving to be personal finance whiz kids. They're putting money away into retirement accounts, saving enough to buy a house, and plowing money into the stock market at rates far exceeding millennials. As a cusper, does this make you want to identify with Gen Z more?

18:48Yes, absolutely. I am totally Gen Z. I don't know what you're talking about, Neil, 1997. 97. Anyway, the reason why Gen Z is better at saving is part policy related and also part just, you know, technological advancement related. The policy change that I'm talking about was this act that took effect in 2022 that mandated eligible employees be automatically enrolled in their company's 401k plans. That automatic enrollment does wonders for people because it just gets you started earlier without having to, you know, opt in yourself. It's just like a human behavior you're hacked. A lot of people are just going to allow themselves to be auto enrolled and not opt out versus opting in.

19:28So that's one part of it. But then the other part is you're right. A lot of us grew up on us, as I'm saying, Gen Z grew up on these budgeting apps, on these, you know, personal finance podcasts. Money with Katie is a big personal finance podcast. Go give that a listen. And the reason that people resonate with it, because it's just so digitally native to them, Robinhood is something that a lot of people had downloaded early, which is why we're seeing this greater participation in financial markets and in saving. And there's an interesting gender reversal that's happening with Gen Z, which is encouraging to analysts.

20:02So typically, women have about 30 % less money in retirement than men. According to that TIA report, for Gen Z, women, 54 % were saving more for retirement in their 401ks than Gen Z, men at 44%. So we've seen a bit of a gender reversal here. But yeah, maybe it's just these new tools and these new ways of empowering yourself via various resources and apps to save. And you can't overlook that policy response. It was laid out in this book called Nudge, which is a microeconomics, freakonomics type book where it says, yeah, you have to have people opt out of something instead of opt in. And that will lead to much greater participation.

20:44My winner of the weekend is lab-grown salmon because it could be coming to a restaurant menu near you. While multiple lab-grown meat products have gotten approved by the FDA, the startup Wild Type is the first to bring a synthetic salmon to the alternative protein market. So in addition to debating between wild or farmed at a grocery store visit, you might have to soon add another option, growing, to contend with. Once it nabbed FDA approval in May, a Haitian restaurant in Portland called Cannes recently became the first to add synthetic salmon to its menu, serving it raw with pickled strawberries and spiced tomatoes.

21:21Unlike plant-based alternatives, cultivated seafood like wild type is made from animal cells, Pacific salmon cells to be specific. They are put in steel tanks housed in an old microbrewery in San Francisco, fed a nutrient-rich slurry, rinsed, mixed with plant-based ingredients for structure and turned into a 220 gram filet in just two weeks. That's compared to the two years it takes a real salmon to mature. Proponents of the lab-grown approach note that global seafood demand is set to rise nearly 80 percent by 2050, putting immense pressure on fisheries. But not everyone is convinced, namely consumers who still get a little weirded out by the taste and texture.

22:01Neil, would you bat an eye if a Samlet appeared on your plate who was made from slurry rather than swimming? I think I would. I think I would. People are pretty particular about their fish. Anthony Bourdain even said there are particular days of the week where you're supposed to eat fish in particular days of the week where you're not supposed to eat fish when it comes in a restaurant. So for all of the hurdles that are facing lab grown meat and plant based meat, and there have been many challenges, this industry has not grown like what, like it was expected back in 2019. I think there will be even more hurdles for lab grown fish.

22:33So we'll see what happens with this particular pilot in the restaurant in Portland. It's Monday. You're probably planning out your week. So here are the major events to know about. On Friday, Americans will declare their independence from work by celebrating July 4th with firework displays, parades, road trips, and hot dogs. So many hot dogs. AAA expects a record 72.2 million people to travel within the country for the holiday. The majority of them, 61.6 million by car. If you're concerned about getting stuck in traffic that is justified but try to avoid hitting the road on july 2nd and july 6th which will be the busiest driving days according to transportation data provider in ricks the good news gas prices are at their lowest level in four years just remember to play the cow road trip game if you are traveling when a player sees a cow you yell my cows you point you get all the cows you see when you see a church you say marry my cows and your cow count doubles When you see a cemetery, you say bury your cows.

23:30All the other cows that the player have die. When you see a hospital yell mad cow disease, all other players lose half their cows. And when you see a McDonald's, you say cash in my cows. And now your cows are all burgers. The player with the most burgers win. If you never see a McDonald's, the person with the most cows win. That is the cow road trip game. Pretty fun. I am absolutely playing that game. That sounds amazing. OK, on the economic calendar, this week's highlight is the jobs report for June. Typically, jobs reports are released on the first Friday of each month. But this Friday is July 4th and markets are closed.

24:03So it's being pushed up one day to Thursday. Whatever day the report comes out, it's going to be crucial for shaping the Fed's calculus around the timing of interest rate cuts. In terms of estimates, U.S. companies are expected to have added 116 ,000 jobs last month, which would continue that gradual slowdown in the labor market. In May, 139 ,000 jobs were added. The unemployment rate is also projected to take up to 4.3 % from 4.2%. A Thursday jobs report just doesn't feel right, but it is an all-important one because it will help illuminate the Fed's path on rates. Right now, the thing that the Fed is expected to do is deliver a quarter-point rate cut in September, but it needs to see strong-ish labor market numbers still for that to happen.

24:45So Thursday is step one. In sports, most of the action is happening overseas with the NBA and NHL wrapped up. No offense to baseball. The poshest major on the tennis calendar, Wimbledon, begins today in London. All eyes are on whether number two ranked American Coco Gauff can make it two grand slams in a row, following her French Open title earlier this month. On the men's side, Novak Djokovic will try to muster enough energy in those 38-year-old legs to overcome the young guns Carlos Alcaraz and Yannick Sinner. And then speaking of legs, the Tour de France begins on Saturday across the channel.