Stock Market Surges After 'Aggressive' Fed Rate Cut & Costco Launches New Product…Housing?

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, a first-of-its-kind housing development just broke ground in LA, and it involves a Costco and a rooftop pool.

0:41Then, Jerome Powell signaled a new era for the U.S. economy, announcing the meatiest of interest rate cuts. It's Thursday, September 19th. Let's ride.

0:55The battle for toy supremacy has reached levels Pixar could never dream of. Yesterday, the National Toy Hall of Fame released the 12 finalists under consideration for entry into the Hall of Fame, which includes first-time contenders The Trampoline, Apples to Apples, and Balloons. Other toys hoping to get enshrined are Hestrux, Sequence, Phase 10, the Pokemon trading card game, and Transformers action figures. Toby, I am making you an honorary committee member for the Toy Hall of Fame. Your criteria are the toys have to have longevity, be recognizable, and have great play value, meaning they encourage things like creativity and socialization.

1:35Who has your vote this year? So I was initially skeptical of including the simple red balloon. But if you've ever played The Floor is Lava where you have to just keep the balloon from the floor, endless hours of fun. Apples to apples. I know you're not a fan of that, but I played it at a bar late night the other day. It is still hits. It's still extremely fun. but I do just want to call some attention to a name you didn't mention, which was My Little Pony. This is its seventh year as a finalist. Can we put some respect on Twilight Sparkle and Rainbow Dash's names, please? They deserve better, although I am hearing that they may have been PED users, steroid users in their prime, so maybe that's the only thing that makes sense and why they're on the outside looking in.

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2:56If you want a payment platform you can trust, head to wise.com slash business. That's wise.com slash business. This 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. After months of hand-wringing, prediction market watching, and analysts prognosticating, it turns out that the only person we needed to go to for guidance for how much the Fed would cut rates was Rod Stewart.

3:41Because the first cut is the deepest. Yesterday, Jerome Powell served us up an interest rate announcement that would make Morgan Spurlock proud, a supersized 50 basis point cut that surprised swaths of economists who predicted a more standard 25 point cut. It was the first interest rate cut in over 1 ,600 days, dating back to the early days of the pandemic, and sets the federal funds rate between 4.75 % and 5%. Predictably, stocks jumped for joy after the announcement, with all three indexes spiking before settling slightly in the red for the day as the exuberance wore off. In his press conference after the announcement, Powell said the economy is in good shape, but also cautioned against thinking that 50 points is the new pace for cutting in the future.

4:29Neil, you called it on yesterday's show, so I know you're not that surprised. But what do you make of how the Fed kicked off its rate-cutting campaign? Yeah, I think it's very important to listen to what Powell said in his press conference. You said he did say the economy is in a good place, and our decision today is designed to keep it there. So the way I've been thinking about this is when you're driving a car, your gas level is getting a little low and you're looking at the tank. You're like, should I fill up? Should I wait for the light to come on? This is Powell taking that car off the road, going to the gas station and filling up before we get to that light, because the economy is in a good place.

5:05But the point right now is he wants maintenance. He wants the labor market not to fall any further. He said that would be worrying. We're at an unemployment rate of four point two percent, which is still low. It's much higher than it was at the beginning of the year. Jobs are still being added, but at a lower level. So this is all about preservation of the economy. It is not an emergency rate cut where things have already become into recession, but he just wants to get out ahead of it with this meaty rate cut. And then let's look at those gas levels a little deeper, too. You already mentioned the unemployment rate, which is not extremely high, but it is a little bit higher than the Fed likes to see.

5:39Also, the Fed's preferred inflation gauge is running around two and a half percent. They'd like to get that down to that 2 % number that they always cite. And then if you just look at the economy as a whole, the GDP expanded at a 3 % annual rate in the last quarter. So there aren't check engine lights flashing, but you are right. It depends on what kind of driver you are, reasonably. Are you the person who puts it all the way down to the end of the tank, or do you want to fill up when you still have some gas left? Jerome Powell did say, too, that we are not going back to that world of ultra-low interest rates.

6:10There's never going to be, or under his term, he does not see that era of cheap money returning. So that was kind of goes in line with what I said is that he said, don't expect a 50 basis point cut on our next meeting. And this is not the pace in the future. We are going to just continue to monitor the data. This was just a reaction to what we saw in this particular moment, but it doesn't necessarily inform what we are going to do in the future. Now, I know you're probably thinking, because this is exactly what I was thinking. What does this mean for my money? What is this Fed rate cut going to do?

6:42I know broadly, conceptually speaking, a Fed rate cut is intended to boost the economy by lowering borrowing rates, spurring more spending. But over the past couple of years, I've parked many people have parked their money in high yield savings accounts and CDs and money market funds that have accrued five percent yield because of the Fed's high interest rates. I know many people are wondering, OK, does the Fed rate cut going to lower those yields? And what do I do with my money now? Well, the answer is yes. If you do have your money in a high yield savings account, it's going to be a lot less lucrative to stash your money there.

7:18So you you might want to reallocate your portfolio to find different places to put your cash to work. Don't expect an email from Wealthfront or your savings account to the fact that they're lowering rates. They're not obligated to. I know probably on the way up, they were sending you emails every single day being like, now you can get 4%. Now you can get 4.5%. But they are not obligated to tell you. So definitely check your savings accounts. See what's going on there. They won't lower immediately, but a 50 basis point cut is big. So expect in the days, weeks, months to come that saving is not going to be as useful as it was, which is the entire point of a rate cut, right?

7:57It's to get your money off the sidelines and into spending to boost the economy. And then let's look ahead for a second here. The Fed's dot plot, which is this amalgamation of various committee members projection for future interest rates. They are seeing around a 50 point cut going forward. That's also indicating what traders are betting on as well. So it looks like we're going to get another 50 point cut by the end of the year. But again, there are two more Fed meetings left on the calendar. So that would put a more standard 25 basis point cut at each one of those. Again, echoing what Jerome Powell said is like, this is not the pace that we expect going forward.

8:34We're just going to keep it standard. But either way, it is a new era for the U.S. economy that Jerome Powell has signaled. And it is exciting. It's fun to have lower interest rates and higher interest rates. I think I can say that for everyone. Now, a deep dive into the global supply chain for an ancient technology, the pager. after thousands of pagers carried by Hezbollah militants in Lebanon simultaneously exploded on Tuesday in what appears to be an unprecedented, wildly sophisticated attack by Israel's spy service, the Mossad. The attack on the pagers, which was followed by more explosions of walkie-talkies in Lebanon yesterday, killed 32 people total and injured more than 3 ,000, according to Lebanon's government, which blamed Israel.

9:17Israel has neither confirmed nor denied responsibility, but it is widely believed they were the masterminds behind the attack, which threatens to escalate tensions into a wider regional war that diplomats have been desperately trying to avoid. But let's talk about the pagers, because the mystery of how an explosive compound was secretly planted into these ancient devices somewhere along their supply chain has sparked a frenzied global investigation that spans three continents. The first stop, a nondescript building in a suburb of Taipei, Taiwan, the home of a 40-person business called Gold Apollo.

9:52You are right that it is this mystery that is spanning across the globe because, yes, they were, the pagers just seem like they were manufactured by this company, Gold Apollo. But then a bunch of reporters showed up on the founder's doorstep and the company's doorstep. And the guy was just bewildered because he assured them that he had nothing to do with it. Instead, Gold Apollo pointed their finger at a company in Budapest, Hungary called BAC Consulting that had licensed Gold Apollo's company brand and trademark about two years ago. But according to the New York Times, BAC Consulting was established as this shell company that would pose as an international pager producer, even though the ultimate goal was to establish this relationship with Hezbollah in Lebanon.

10:34BAC did have these ordinary clients. It did make ordinary pagers, but it also made pagers that were not ordinary. They contained batteries laced with an explosive, according to New York Times reporting, which is how kind of this entire supply chain meandered across the globe and eventually found their way into Lebanon. Right. And so this guy just woke up this morning in Taipei, was just going to work, and he was sworn by reporters and investigators being like, we saw Apollo gold brand on these pagers that exploded. How can you explain this? And he's like, I can't like I have no idea what's going on.

11:09The product isn't ours. And then he said that they got into this relate this business relationship with BAC a few years ago. He did point out that there was some sketchiness involved. He talked about particular payments that were flagged by the Taiwanese bank. And in fact, in one instance, they were blocked by the Taiwanese bank, their local Taiwanese bank. And he was like, I don't use like they flagged it to me. We worked for an entire week to unfreeze this payment. So it appears that he had suspicions and that this arrangement to begin with, they didn't manufacture. The Taiwanese company did not manufacture these particular pagers used in Lebanon.

11:46And so he said the original request that he license his brand out to this company, this BAC consulting company, in general, seemed a little suspicious. this Apollo Gold Company is very interesting in general because they are single-handedly perhaps responsible for resuscitating the entire pager business at one point they said they own 99 % of the pager market in the Netherlands they also said they supply the FBI which speaks to the weirdly weird persistence of pagers in our life even though it seems like it is an ancient technology that had been replaced by the phone yeah pagers have obviously declined in popularity They still persist in certain industries.

12:24What comes to mind first is, of course, health care and hospitals. They persist because they can reach workers in cellular dead zones. They have long-lasting batteries. It is just a more simple technology. So some military organizations follow a similar logic. Also, Hezbollah said that they had a compromise with cell phones, which is why they made this big push over to pagers, which seems like it was also kind of orchestrated by Mossad and Israel intelligence. but it also just opens up this can of worms too into how smart appliances and how internet of things internet connected devices can be weaponized in this new era so a lot of people are looking at this particular attack and saying that we could see this happening with other things it could be your refrigerator it could be your phone it could be your television anything that is connected to the internet could theoretically be weaponized so it does open a new can of worms when it comes to like global cyber warfare.

13:20The battle to put computers on our faces continued this week after Snap unveiled its fifth generation AR spectacles. Now, if you're a fan of looking normal, these are not for you. I'd describe them as a cross between the glasses you wear after an eye exam and the ones you wear to a 3D movie. But if you're a fan of wearable AR hardware becoming as normalized as phones are today, then maybe give them a shot. It's worth noting that these big old honking facehuggers are designed specifically for developers so function was prioritized over form in this case some highlights that reviewers called out from this update was a field of view increase over generation 4 a more polished operating system and a surprisingly light package despite their hulking size but still it's hard to see these reaching mainstream adoption anytime soon neil what is snap's vision for these spectacles uh you're right they are not expected to hit consumers anytime soon.

14:17The idea right now is to put them in the sandbox of developers, let developers work on particularly use cases for these AR glasses. And then once there are compelling things to do with them, then start to sell them for consumers. But this device is now eight years old. It is very, it's very clear that Snap is bullish on AR glasses that you will wear, essentially a computer on your face, perhaps instead of your phone, because Snap is a small company, right? Like it doesn't have that much money to throw around, especially it is going head to head in this space with the Apples and the Metas of the world.

14:54Meta brought in$132 billion in sales last year. Snap had just 4.6 billion. Meta can afford to lose a ton of money building their MetaQuest AR headset. And Apple also prints cash more than you could ever imagine in their life. so they can build something like the Vision Pro and release it. Snap just has fewer resources to play with. So the fact that they've been so bullish and pouring a lot of money into AR glasses for eight years now, the first one came out in 2016, shows that Evan Spiegel, the CEO, really believes in this technology. He thinks it will lead to new business opportunities. Obviously, they wouldn't devote resources to it.

15:37The vision that he potentially has is that a lot of Snapchat's business today is driven by advertising, which is sold on videos and chats within its app on your phone. But investing in AR, potentially owning its own operating system, can help diversify its business model a little bit, expand its ad business. So maybe imagine you're wearing these gigantic snap glasses in the future and you're getting AR ads kind of fed to you on your periphery, AR billboards suspended in space and time. A little dystopian, but maybe good for Snapchat's bottom line here. But I looked at some of the demos and it's just I'm not super bullish on it because even though that the field of view that I talked about did increase over version four, it's still not great.

16:20Like I was watching this person playing this golf simulator and it was literally like they were playing through a doorway in front of them because it doesn't have that huge field of view that you're hoping for in these AR glasses. So still early innings for sure. But I don't know. I mean, they started with just cameras on the sides of it. Now they're moving into AR. We'll see if it can go toe-to-toe with the big boys here, but I hope I get proven wrong because it would be cool to wear a computer. You sound like Steve Ballmer criticizing iPhone. I know. I know. I can't believe I just called Snap Spectacles the iPhone.

16:51But I hope they prove you wrong, Toby. Yeah, me too, honestly. I like cool technology. Up next, sorry, Jerome Powell. Your interest rate cut isn't even the most important numeric announcement of the week because we got Neil's numbers coming in hot. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS. After 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.

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18:06I'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.

18:36Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will make you feel as smart as someone who uses their middle initial. For my first number, a country has made history by having more electric vehicles on the road than gas-powered cars, and that country is the birthplace of Magnus Carlsen and Erling Haaland, Norway. The Road Federation there reported Tuesday that of the 2.8 million passenger cars registered in the country, 26.3 % are fully electric, topping gas-powered cars for the first time anywhere in the world. Before you point out that doesn't add up to 100%, you're right, it doesn't.

19:13The rest of the cars are diesel. Norway's government achieved the EV milestone in a couple of ways, most importantly by making it much cheaper for its residents to buy an electric vehicle. It hands out heavy subsidies and perks to get people buying EVs, like exempting them from sales taxes, lowering tolls and parking fees, and allowing EVs to drive in bus lanes. And fresh off this global milestone, Norway wants to make even more transportation history. By next year, it aims to become the first country to end the sale of new gas and diesel cars altogether. Paradoxically, though, you got to point out that Norway is a major oil and gas producer and the profits that they reap from selling oil and gas to other countries is what allows them to subsidize their kind of push for electrification.

19:58But it is quite the push. I mean, electric vehicles made up 94 percent of new car registrations in Norway. Compare that to 22 % of new car sales in China, just 7 % in the United States. And if you want to look at how many cars are on the U.S. that are all electric, 1.2 % of U.S. cars and trucks are electric, according to the Department of Energy. So it really shows how much further ahead Norway is. But you've got to remember, it is a much smaller country. It's a very wealthy country. And it also just has made this a key priority for their government. It has. They have that$1.7 trillion wealth fund from oil and gas that they're putting to use on EVs.

20:37And maybe next year they will ban the sale of gas and diesel cars once and for all, which would be another historic milestone. My second number is also a first of its kind development in the most literal sense. Yesterday, construction crews in Los Angeles broke ground on the first mixed use development in the country to have Costco as its anchor retail tenant. I'll try to paint the picture for you. A Costco with 800 apartments stacked on top. Housing analysts say this innovative real estate mashup, if successful, could spark more like it around the country and help alleviate a severe affordable housing shortage.

21:12Here are some more details about the housing development. 23 percent of those 800 apartments will be reserved for low income residents, with the rest offered as non subsidized affordable and workforce housing units. This thing is going to be tricked out with amenities as well, including a gym, workspaces, courtyards, a rooftop pool. And did I mention the Costco downstairs? Thrive Living, the developer behind the project, said it was only possible because of a brand new law passed in California, which helps streamline approvals for apartments and mixed-use projects that include low-income housing.

21:44Toby, this might be a more compelling of a combo than$1.50 for a hot dog and a soda. I don't know if we want to go that far. But yes, in terms of mixed-use developments, having an anchored tenant, I can't think of a much better one than Costco. Maybe Dave & Buster's, although that's not even a retail tenant. I did see some pushback, though, from housing advocates in L.A. saying that this was more an attempt by Costco to just get the building itself done. Because it's very hard to build a big box store in L.A. It is much easier to do it if you slap some housing on top. But the reason that they did it was the California law that you mentioned, in order to get that expedited timeline for development, it has to be at least two-thirds residential.

22:27Costco itself is 185 ,000 square feet, so they needed at least 370 ,000 square feet of residential. And a lot of those apartments ended up being these prefab models that are small one-bedroom units, so there were no family units. Again, any housing is good housing, but this was some of the pushback is that some housing advocates are like, this is Costco just trying to get their Costco built rather than them trying to introduce more housing because if they were truly trying to make a great neighborhood place, you would include some family units, not just these single dorm-like things. But again.

23:01I think overall, the sentiment was that this is a very cool project. 800 apartments, 23 % of them reserved for low-income residents. I mean, California, Los Angeles specifically, has a shortage of 270 ,000 units of affordable housing. They just passed this law to streamline more mixed-use projects, get more apartments. We know that there is a housing crisis. So the fact that, yes, there may be a Costco at the bottom, but that's great for this area, which doesn't have a lot of fresh produce or supermarkets going on. So I think overall, I mean, you saw the L.A. mayor there breaking ground, cutting the ribbon.

23:35I mean, this was a huge deal that happened on Wednesday. And so I think this is overall a huge win for everyone involved. My final number is a$1.9 billion flop brought to you by the soccer club Real Madrid. Ahead of this summer, Real Madrid completed a$1.9 billion renovation of its legendary stadium, the Bernabeu, to turn it into a multi-purpose, state-of-the-art venue that could host not just soccer games, but also the biggest musical acts from around the globe. The idea was that there were only so many soccer games, and adding concerts to the menu could present new revenue new sources for what would be an empty stadium.

24:12All was going according to plan early this summer. Taylor Swift played two nights in May. Carol G performed four concerts. But then the complaints started pouring in. People who lived around the stadium said these concerts were so loud and went on so late that it amounted to a, quote, torture drone. And I didn't even mention the drunk fans laying waste of the neighborhood after the shows. The local residents group was so fed up, they took legal action against City Hall and the team for violating municipal codes and applied so much pressure that last Friday, Madrid said it had canceled or postponed all concerts at the Bernabeu, which remember, it had paid$1.9 billion to upgrade until next year so it could work on a fix.

24:55Toby, Real Madrid usually pummels their opponents to a pulp. They finally met their match with angry neighbors. I mean, before the show today, we were just cruising around on Google Maps aerial view and looking at where this stadium is situated, and it is surrounded not by an ocean of parking lots like maybe MetLife is here in New Jersey. It is smack dab in the middle of a city with a lot of residents around it, so of course they're going to be mad when you're blasting music into the late nights. You can see, though, where this is coming from from Real Madrid. This massive investment that they took to renovate the stadium costs a lot of money.