Super El Niño Threatens World Economy & Trump Wants Early Access to AI

0:00Neal Freyman:Many employees can't afford a hefty medical bill that pops up out of the blue, but it happens. And employees who are financially stressed are, understandably, more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, Aflac plans help with out-of-pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more at aflac.com slash morningbrewdaily. That's aflac.com slash morningbrewdaily. Good morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today why Steph Curry signed with a Chinese apparel company.

0:36Neal Freyman:Then El Nino is likely coming this year and it's likely going to be a super one. It's Wednesday June 3rd. Let's ride. Good morning. Well this is a bit strange because today is the last you'll be hearing from me and Toby for the remainder of the week because we are headed out of town to Toby's bachelor party tomorrow. That's right. Your second favorite MBD host is getting married soon, but you'll be in great hands for Thursdays and Fridays shows while me, Toby, the rest of his friends, wait, I'm realizing I don't even know what we're doing. What should I pass? All right. I'll give you the lay of the land here.

1:15Neal Freyman:My brother, who is my best man, is calling it the Tobin Turney government name right there, by the way. Essentially, it's a decathlon of the mind, body, and soul with way more than 10 events. We'll partner up and play a series of games that include, but it's not limited to, a team beer mile, wiffle ball, home run derby, punt, pass, and kick, pickleball, three-point contest, hot dog eating contest, egg toss, paper airplane replay, a bake-off, and of course, taking part of the SAT. So the idea is to give people of varying athletic and academic abilities the chance to compete. So in terms of what to pack, just bring athletic clothes, Neil.

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2:26Neal Freyman:That way, your payroll data flows into your financials, your HR system knows who got paid, and you're not reconciling everything manually at month's end. To learn more, head to sage.com slash morningbrew. That's sage.com slash morningbrew. Time to dust off your middle school science textbooks because El Nino is almost certainly coming back this year. The United Nations Weather Agency announced yesterday that there's an 80 % chance El Nino forms before September, mirroring other forecasts. It's likely going to be an intense one too. According to the U.S. Climate Prediction Center, there's a two-thirds chance it evolves into an extra strong version of the naturally occurring event, known colloquially as Super El Nino.

3:06Neal Freyman:You've no doubt heard of El Nino before, but what exactly is it and why should you care? Think of it as a really loud, auto-tuned karaoke microphone for the climate. It amplifies and warps weather patterns across the globe. The defining characteristic is a warming of the Pacific Ocean, which disrupts fishing off the coast of South America and leads to wetter, stormier weather across the southern U.S. and South America and drier, warmer weather in the PNW, Australia, and Southeast Asia. And when you get a super El Nino, everything is amplified further. UN Secretary General Antonio Gutierrez described it as pouring fuel on the fire of a warming world.

3:44Neal Freyman:And that's exactly where the danger lies. The last El Nino in 2024 led to record global temperatures. If this version matches or exceeds that, it would lead to another year of record heat stretching into 2027. Neil, El Nino is naturally occurring, but the human side of the story is how it impacts agriculture, food supplies, and the global economy. Floods, droughts, wildfires, and storms could stretch already strained supply chains. There's a pretty robust literature on the economic impacts of El Nino. And the impacts are just huge. Go back to 1982, 1983. That El Nino led to a$4.1 trillion loss in global income.

4:22Fast forward to 1997, 1998. That El Nino led to $5.7 trillion in lost GDP around the world. And the thing to know is that's just not one year after that particular El Nino. That's a five-year span showing how this intense weather patterns wreaks havoc on a lot of infrastructure that takes time to rebuild. So the economic impacts add up over time. There's a five-year span that we just had just about 30 years ago, just led to almost$6 trillion in global losses.

4:52Neal Freyman:I mean, I said that the Pacific Ocean warming is the key characteristic of El Nino. The Pacific Ocean covers a third of the Earth's surface. So that is why it's just such a massive event, because that affects things from crop yields to hurricanes to shipping lanes and which downstream leads to effects on commodity prices, food security issues. So it's a massive disruptor right there. And I mentioned 2023, 2024. That was our last El Nino. That was ranked among the five strongest ever. And it made 2024 the hottest year on record. Now we're a few years later, a lot of forecasts, especially since it's a super El Nino, says that 2027 is going to surpass 2024.

5:33Neal Freyman:We're already seeing record heat waves in Europe right now. Throw an El Nino into the mix and you might have an even more intense year going forward. Yeah, we should say El Nino typically peaks around Christmas time. So we're in the lead up right now. And when we'll see the impacts might be around December. One reason for hope and that this may not be as bad as the ones in the 90s, the 80s, and even all the way going back to the 19th century is we're better prepared. We have more monitoring. We know this is going to come. We're talking about it now. It's not going to peak until Christmas. But weather forecasters have known about this for a while.

6:06In mid-1990s, there were about 70 more buoys in the ocean monitoring temperatures. Right now, we have over 4 ,000. So in the decades since, we've upped our monitoring game. We know this is going to come. We can plan. We can put, you know, food security banks in the places in the tropics that might get hit with severe drought or, on the other hand, severe rain. So we are a little bit better prepared. So hopefully the impacts in 2026 won't be as bad as in years past.

6:34Neal Freyman:But just to have a little dour perspective as well, there is a growing agreement that a warmer world amplifies El Nino's impact. So that means the droughts become harsher. The rainfall becomes more intense. The heat waves become delirier. It just amplifies everything. So that is one reason why scientists are saying that 2027 could be an especially impactful weather event. Moving on. Yesterday, President Trump signed a long-awaited executive order that asks AI companies to hand over their most powerful models for White House review 30 days before their release to the public. It presents a speed bump, but not exactly a tall one for AI development, as Trump seeks to balance adding some national security guardrails without slowing down the industry's progress.

7:15The executive order itself wasn't surprising, but the timing was. Rewind a couple weeks to May 21st, and Trump had invited all the major AI execs to the White House to attend the signing of this order, a version that gave a 90-day timeline for model review. Some were on their way to Washington when they got the news. Trump had canceled the event just hours before it was set to take place, saying he didn't like the draft. What changed his mind? According to the Washington Post, a couple of the business leaders, including Elon Musk and Mark Zuckerberg, called up Trump at the last hour and warned that a 90-day model review, even if it was billed as voluntary would hinder the growth of the AI industry, which is kind of propping up the American economy right now, or at the very least, the stock market.

7:58So it came as a surprise yesterday when we all learned Trump had signed the order without any fanfire behind closed doors, a watered down version of the original that narrowed the review timeline from 90 days to 30 days before public release. Toby, the general consensus seems to be this is kicking the can down the road when it comes to actually reining in AI.

8:16Neal Freyman:Yeah, let's dive into the different factions that are sort of building up within the Trump administration right now. Faction one is the safety and national security camp. And they have, you know, very logical arguments that AI models can do things like discover software vulnerabilities. We've seen that already. Automate hacking. They can help attack critical infrastructure. And that vocal portion, vocal faction is usually people in the NSA, in the Pentagon, the people charged with, you know, national security interests of the United States. But also there are some economic advisors that say, hey, we need to pump the brakes on AI.

8:50Neal Freyman:Jamie Dimon warned Treasury Secretary Scott Bissett that the government is moving too slowly on AI cyber risk, especially when it comes to our financial system. But then there's the very loud don't regulate AI camp as well. That you mentioned includes people like Elon Musk, includes people like David Sachs, Mark Zuckerberg. Their fear is that even if you have these voluntary reviews, even if it's just 30 days, that slows down AI progress in the United States that allows China to catch back up. And you're actually going to end up in a worse spot by regulating AI rather than just letting the free market run its course.

9:27And there was a pivotal event that really escalated the debate on AI safety and whether we should regulate AI in the name of cybersecurity and national security. And that was the launch of Mythos. Anthropic, which also just filed to go public, launched Mythos a few months ago. Remember, this was a model that they said was too powerful to even be released to the public in the first place. They gave it access to just 50 organizations around the world and a handful of countries saying we can't unleash this. This is Pandora's box. And then the administration started to take notice and they said, OK, well, actually, we should probably do something around cybersecurity and AI.

10:03yesterday we also learned that Anthropic is opening up access a little bit more. They're giving Mythos access to about 150 companies and organizations around the world, expanding the purview of Mythos. At first, they just released it to tech companies like Amazon, Microsoft, Google, and Apple. Now they're allowing healthcare providers, power and water utilities to have access to Mythos. So that was also something that happened yesterday that ties in very

10:27Neal Freyman:inextricably to this order moving on steph curry has taken his most ambitious shot to date and it could be worthy of a mike breen double bang after parting from under armor last year curry took his standalone curry brand independent and tested the waters of sartorial free agency who landed the immensely marketable global superstar was it nike adidas nope it was lee ning you're not going to find lee ning at your local outlet store unless you're listening to this pod in beijing because the brand is Chinese. While unfamiliar to most Western shoppers, Li Ning is a powerhouse in its home country with revenue of over$4 billion last year.

11:06Neal Freyman:It has been eyeing the U.S. market for a while too, signing Dwayne Wade to a lifetime shoe deal a few years ago. The tie-up with Curry is for 10 years, which stretches well beyond how long the 38-year-old can expect to play in the league. The idea is to capitalize on Curry's star power now to introduce the brand to the rest of the world while also raising the profile of leaning domestically in basketball crazed china for curry he gets a deal that will outlive his nba career and a chance to enhance his already global appeal in basketball crazed china plus reports are that the deal is worth 400 million dollars which helps too neil nike famously missed out on signing curry out of college when an exec mispronounced his name now they've missed out on him again to a chinese brand that is coming for its market share.

11:51Neal Freyman:How do they mispronounce his name? Stephen, Stephen, could it be me? I've never mispronounced anything on this podcast. Apparently the worst part is they occasionally called him Seth as well, which is his brother. And imagine if people started calling you your brother's name, you wouldn't sign with them either. Absolutely not. But big picture, this is a huge coup for leaning. I mean, Steph Curry, however you want to pronounce his name, is one of the most marketable athletes, athletes anywhere around the globe. He's just one of four athletes in the history of the world to make more than$100 million in endorsements in a single year.

12:25He last year, he was number seven among the world's highest paid athletes. So for leaning to win out over Nike, Adidas, any other athletic brand is just huge, big for their global visibility. And I think one thing that's important to remind everyone is that they have already signed a few NBA players and also other Chinese companies have as well. They have signed Jimmy Butler and who played with Steph Curry and Dwayne Wade, one of the better basketball players in recent memory. And then there's also another company, Chinese sports company that's probably even bigger than Li Ning that we can talk about a little bit.

12:56Anta, they've already signed Klay Thompson, who played with Steph Curry famously and Kyrie Irving. And Steph Curry said, I tried on their shoes. And he's like, I was very impressed. And that was one of the reasons that he said, I'm going with Li Ning.

13:09Neal Freyman:This is not just some startup either. Li Ning was started in 1990 by a Chinese gymnast. He was an Olympic gold medal. His name was Li Ning. But the issue with their business right now is 98 % of the company's$4.3 billion in revenue last year came from the domestic market. So they have global ambitions. They want to take on Nike, which by the way, they are making up the ground on Nike in China alone. If you go back to greater China revenue in 2020, Nike had$6.7 billion. Li Ning was way behind at$2.2 billion. Fast forward to 2025 leaning jumped to 4.3 billion nike went down to 6.6 billion so they are losing kind of their undisputed part as the king of the sportswear market globally and in china so leaning is sensing vulnerability right now like let's go and get one of the most marketable superstars of our time and bring them into the roster and anta is the other company to know so they bought arcteryx which is makes that outerwear, outdoors gear that you should be wearing for hiking, but you actually see on the streets of New York City as well.

14:15And they bought a huge stake in Puma. They opened their first flagship store in Beverly Hills in the United States. So they are coming to the United States, much like, you know, Chinese cars are. They've upped their quality over the past few decades. We're seeing Luckin Coffee, which is the big coffee Starbucks rival from China, open up so many stores in the United States, especially in New York City. So the Chinese brands seeing that the domestic market is muted. They're not seeing so much domestic demand in China. They've kind of tapped out. So they're coming to the United States and we're seeing that in coffee.

14:44We're seeing that in cars, except there's a huge tariffs. But we're also seeing that in sportswear with this big signing. All right, we're going to take a quick break and come back with a story about math right after this. If you're not using AI correctly, you're almost certainly falling behind your competitors. That's why there's NetSuite. It's a unified suite that brings your financials, inventory, commerce, HR, and CRM into a single source of truth.

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15:44Neal Freyman:You can now also create AI agents that can monitor the market, manage your cash, and execute your trades. Just enter a prompt, approve the workflow, and put your agent to work. Head to Public.com slash Morning Brew. That's Public.com slash Morning Brew. Paid for by Public Investing. Full disclosure in podcast description. Goodwill hunting might have finally met his match, artificial intelligence. Last month, OpenAI stunned the math world by announcing its model disproved a famously hard 80-year-old conjecture, and now human mathematicians are grappling with a future in which computers are better at math than they are.

16:19Some are excited, others are very worried. First, the math problem. In 1946, a prolific and eccentric Hungarian mathematician named Paul Erdos proposed something called the unit distance problem, which at its most basic level asks, if you put N number of dots on a sheet of paper, how many pairs of dots can be exactly one unit apart? Erdos first set a$300 award for anyone who solved it, then raised that to$500 when he realized it was a little bit more complicated than Y equals MX plus B. Fast forward to a few weeks ago, and OpenAI cracked the code, leaving mathematicians' jaws on the floor. Timothy Gowers, the winner of the Fields Medal, basically the Nobel Prize for math, said the proof is, quote, a milestone in AI mathematics.

17:01If a human had written the paper and submitted it to the Annals of Mathematics, and I had been asked for a quick opinion, I would have recommended acceptance without any hesitation. But not all of his peers are as hyped. Yesterday, a group of 16 leading mathematicians published what they called the Leiden Declaration, which hopes to spark a conversation around the threats AI presents to the cherished human pursuit of math. In other words, who's got the beautiful mind now?

17:24Neal Freyman:Okay, so I spent this morning trying to wrap my head around this Erdos problem, and I couldn't even begin to understand the problem. I thought it was just like a geometrical thing, so it was humbling to see where my mathematical abilities stopped and where they started. But the biggest takeaway from this is not that necessarily that AI solved the Erdos proof. It just disproved what Erdos' original hypothesis was, which made some mathematicians feel a little bit better because, again, it's not something where it did something that was never done before. It just said whatever Erdos was thinking was not quite right.

18:02Neal Freyman:So that was one thing that made mathematicians feel a little bit better. But the big strength here and the big takeaway is that what AI is so good at is holding encyclopedic recall across multiple fields because the human brain is really good at being hyper specialized, especially mathematicians. They usually dive very deep on one subject or another. It's very difficult to be amazing at multiple subjects in math. AI doesn't have the limitations of our brain, so it can pull from different fields and combine that into new insights, which is what happened to this air dose problem, which is what actually got some people fired up because they're like, that is something that humans are not good at.

18:40Neal Freyman:Maybe we can stand on the shoulders of AI and have this kind of centaur relationship where humans are good at one thing, AI is good at another thing, but together they can do amazing things. Right, and another reason why AI might've solved the problem where humans couldn't have is just that humans wouldn't have devoted the time to do it. AI, they're like the best worker you've ever seen because they don't take bathroom breaks. They don't get tired. So AI is just grinding on this problem. And a human, after working on it, a human could possibly have solved it. But after hours and days and weeks and months spent working on it, they're probably like, well, this is not even worth my time.

19:11Like, why am I even doing this? And AI doesn't have the same issue. So that's another reason why AI might have the advantage in solving something like the Erdos problem.

19:20Neal Freyman:One mathematician did say, like, I actually thought about the method that AI used, but it looked so boring and time-consuming that I just didn't do it. So you are absolutely correct in the fact that AI can do the nitty-gritty grunt work that mathematicians don't want to do. But a lot of people liken this to the moment when Garry Kasparov lost to the IBM Deep Blue supercomputer in chess. That fundamentally altered how humans and computers related to each other in the game of chess. It's a different division of labor now. Now, a lot of the top chess players run like these very deep simulations. It's this massive tool in their arsenal.

19:58Neal Freyman:Humans will never be better than chess players, but chess is still a very thriving game. It's still something that humans doggedly pursue. So maybe that's the optimistic view of this is like, yes, this is a pivotal moment in the field of mathematics, but it's not gonna do something like wipe out mathematicians altogether. There is, so that's the optimistic view. The pessimistic view is that what OpenAI is doing, what other AI companies is doing in terms of math is serving their own interests. They're solving problems that humans would not want to solve because it's just not that interesting for a human mathematician.

20:32And they're saying, the mathematicians are saying, OpenAI, Anthropic, all of the AI companies are just doing things that serve their own commercial interests where human math is just about the pursuit of knowledge and sharing information with each other. Michael Harris, who's a mathematician at Columbia University, told the New York Times, he's the author of this Leiden Declaration, that the tech industry proceeds in accordance with commercial logic, which is antithetical to the values of mathematics. So you see, on one hand, people are super hyped about working with computers, working with AI to solve problems, not just in math, but using the ability of AI to solve difficult problems to advance things in the medicine field or any other field.

21:10And then you have this other faction, which says that we can't let AI companies lead this charge because they're doing it for commercial interests, not the interest of the pursuit of human knowledge.

21:18Neal Freyman:I think I'm an optimist at heart because I think what this shows is that humans just need to choose the right questions in order to, you know, lead to the right results because there's probably hundreds of thousands of proofs waiting to be solved if we just ask the correct questions that are just latently in AI models right now. So that's a very optimistic view of this. Yeah, I guess the pessimistic view is that it's commercial interest and it is going to wipe out the field of mathematics. So it was fun to think about math for the first time in a long time because I'm not going to lie. English majoring in college hadn't taken a math class in a couple of years.

21:51Neal Freyman:So going down the air dose rabbit hole was a good time. All right, let's sprint to the finish with some final headlines. 60 Minutes is looking less like a pocket watch and more like a ticking time bomb. Last night, CBS News fired veteran correspondent Scott Pelley following his biting criticism of the show's new management escalating the chaos at the network as new editor-in-chief Barry Weiss tries to take it in a new direction. Weiss recently replaced the entire leadership team of 60 Minutes, the U.S.'s most-watched news magazine, and Pelley wasn't here for it. In a staff meeting on Monday where new executive producer Nick Bilton introduced himself to the team, Pelley lit into Weiss and Bilton in front of everyone, telling Bilton had slender qualifications to lead the show and would, quote, never be welcome at 60 Minutes.