Tesla Scores Big Win in China & The New Era of Grocery Shopping

0:00Tonight 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 I do win! On Brand with Jimmy Fallon. Series premiere tonight on NBC. Good Morning Brew Daily Show. I'm Neil Framman. And I'm Toby Howell. today why it's not weird for your boss to live in a different city than you.

0:39Then there is some serious drama going down at Paramount right now, including an un-appy heiress and a messy CEO firing. It's Tuesday, April 30th. I'm back and let's ride.

0:55Toby's back, but he left his voice on the West Coast of Florida. Toby, what happened down there? Yeah, it was my sister's wedding, and I'm definitely a little raspy because I ran a field day before the wedding, which entails dividing pretty much the entire 150 purse guest list into four teams, having them compete in games like egg toss, relay races, broom balance, all these events. It's really fun, though, because people of all ages, we're talking grandparents to kids, come and compete. It's a great icebreaker. You get to meet people from different friend groups, different parts of the family, and I definitely recommend doing it if you have a wedding coming up.

1:31But maybe have a megaphone if you're leading it. Definitely have a megaphone. Especially if you host a podcast. That is literally what I have written down. Bring a megaphone, especially if your job is podcaster. But let's get through this show. Let's hear a word from our friends over at Robinhood. Robinhood is introducing an uncapped account transfer bonus of 1%. That means when you transfer your account and assets from another brokerage to Robinhood, they'll give you 1 % sugar on top. Now, I know what you're thinking. 1 %? That isn't that much. But money is money, baby. Also, the bigger your account value, the bigger your bonus.

2:04You can transfer multiple accounts and get the bonus on all of them. And FYI, you don't need to sell your assets to transfer them. I mean, I take 1 % increase in other parts of my life. Running speed, vertical jump, IQ. Two out of the three, you're doing great on those, Tobey. Thank you. Wait, two out of three? Anyways, the 1 % bonus is only for a limited time. So if you want the extra dough, transfer your portfolios by June 30th. Learn more about the Robinhood app in the App Store or Google Play Store. Disclosures investing is risky. Terms apply to the 1 % transfer bonus. Visit Robinhood.com for more information.

2:40Robinhood Financial LLC member SIPC is a registered broker dealer. 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. We've all been to meetings that should have been in email, but sometimes, sometimes meeting in real life can lead to magic.

3:19And Elon Musk offered a perfect example of that yesterday. The Tesla CEO flew to Beijing and less than 24 hours later, left with one of the most important victories the automaker has had in months. Chinese officials gave tentative approval for Tesla to roll out its driver assistance software in the country, giving the struggling company a much needed boost. To understand just how big a deal this is, all you need to do is look at Tesla's stock price. shares shares surged 15 % yesterday good for their biggest one day jump since february 2020 and that's because autonomy self-driving cars is what elon has staked tesla's future on but without access to the massive chinese market tesla's second largest it would mostly be a dead end so investors were pumped about elon's hands-on approach to getting this done and after months and months of bad news for tesla the sun is finally peeking out from the clouds it would be a major boost for Tesla.

4:16Let's just go back through those months and months of clouds for a second. Remember, Tesla's coming off its first year-over-year decline in quarterly revenue since 2020. It slashed prices but still sold fewer cars in the first quarter. Layoffs are coming. Musk is cutting 10 % of the company. And it's desperately trying to get some momentum around these new models that it's trying to roll out. But you're right. A lot of the future does depend on FSD, full self-driving. And not only is it great that Tesla can now tap into this bigger market, from a monetary perspective, there also is the data portion of this where there's a lot of drivers in Tesla in China.

4:51And so if they can get the approval to export that data back to the US to help train their software, that's another big boost for them. Yeah. What's interesting about Tesla's relationship with China is China is not so friendly to foreign automakers. Tesla, it's actually the only wholly owned foreign automaker that's allowed to operate in China. And it's because, randomly, Elon just is buddy-buddy with this guy high up in the Communist Party there. And that's who he met with and who gave him approval. When Tesla first entered the Chinese market a few years ago to build its Shanghai plan, it got a very, very sweet deal.

5:28A lot of subsidies, a lot of incentives, a lot of low-cost loans. And during the COVID lockdowns, it also got special treatment. So China has a very tight relationship with Tesla. This is also big for China, not just Tesla, because China's foreign direct investment has plummeted over concerns of government crackdown. And just a lot of foreign investors are wary of investing in China these days. So it's good for China to say, hey, look, Tesla's here. Elon's coming. He's investing in our country. Hey, you should, too. Even though that Tesla and China do have a relatively strong relationship, that how Tesla is doing is kind of dropping off a little bit because its market share has been fading.

6:08It's facing increased competition from domestic automakers like BYD. Just to put it in perspective, Tesla had a 10.5 % market share in Q1 of last year. That has slid all the way to 6.7 % in the fourth quarter of 2023. And sales slid 4 % from a year ago. And there are still restrictions on where Tesla cars can go in China, even though you said that they kind of rolled out the red carpet for them. They are banned from entering sensitive locations that are sensitive to the Chinese military, even some airports, train stations over these data security concerns. So we'll see if those restrictions are actually rolled back where it looks like they will be.

6:47So even though this is a good win, you never know with the data security privacy laws that happen over in China. And then final point on this is that there's a little geopolitical fracas going on because last week Elon Musk was supposed to go to India. and then at the last second snubbed India saying he was too busy with Tesla. But apparently he found time to go to China, which shows that India is just not that mature market that Tesla needs. China is need to have. India is nice to have. And that ticked off some prominent Indians that Elon would not have time to go visit them. And he did have time to go visit China.

7:25Cue the succession music because a good old fashioned scuffle over the media empire at Paramount Global has broken out. Bob Backish was unceremoniously dumped from his position as CEO yesterday, where he'll be succeeded by a group of execs they are calling the office of the CEO. The move comes as the heir to the Paramount family fortune, Sherry Redstone, jockeys for a sale of the company, which includes CBS, MTV, Nickelodeon, and the Paramount Film Studio. The Redstones have been in control of Paramount for four decades, and Sherry still controls the holding company called National Amusements that holds a 77 % voting stake in Paramount.

8:01So what Sherry wants is usually what Sherry gets. And what Sherry wants is a merger with Skydance, the media company run by Larry Ellison's son, David Ellison, that would pay her out around$2 billion in cash for her stake. But what Sherry wants isn't necessarily what the shareholders want. They think the deal with Skydance is a sweetheart deal for Redstone that overvalues her stake and destroys value for common shareholders. Skydance's son since come back with a sweeter deal that would give Paramount stakeholders a larger stake in the combined company, but it's unclear if it's enough to entice a special committee of board members to make the final decision.

8:36Neil, either way, we'll find out the fate of the newly CEO-less company soon enough. This is an iconic American company, Paramount, CVS, Viacom, but it is a complete mess right now. And for that, all you have to do is look at the earnings call yesterday that happened after they fired Bob Backish. So each of the three new executives they're calling the office of the CEO, said maybe two to three minutes of remarks and then did not take any questions and then played the Mission Impossible music on repeat while analysts were like, can we find out what the heck is going on over there? Because y 'all don't really know what you're doing.

9:12Paramount has various divisions. It has the movie studio. It has the cable channels. The cable channels are obviously plummeting right now as people cut the cord. It rolled out Paramount Plus, which is its streaming service, as every other media company has done to kind of pivot towards the future. This is the way TV is going, but it just has not operated at a profit. It is growing fine. It has maybe 71 million subscribers, still a far cry from Netflix. So it's just going through the same motions that a lot of dying or struggling media companies are doing. And there's really no vision forward besides the sale.

9:48There have been exit opportunities that they've kind of ignored in the past. Netflix and Apple both showed interest in their Hollywood studio business. There were Showtime executives that wanted to spin off that and buy that channel. Comcast was intrigued at a potential partnership in streaming a few years ago. But one analyst painted the picture pretty well by saying the hope for any company in this space is that Apple will come out and buy them, but that's not a strategy. And part of the reason why Paramount is kind of this ugly duckling right now is that they did try to combine so many parts of their business.

10:19And they're like, if Redstone hadn't made the decision to combine the film studio with the cable business, with the streaming business, it would have been a more attractive acquisition target for a lot of these companies. But now it's just one big, ugly mess. And no one really wants to go too close to it except for Skydam. Yeah. The only reason that Paramount did okay last quarter and they did, they had revenue growth of three to 4 % was because they had the Superbowl. And that brings in a lion's share of advertising revenue. Just to take a step back about Paramount and what it is and how it got here in the relationship with the Redstones.

10:50So the Redstones have this holding company, National Amusement. They own CBS and Viacom. And in 2019, they said, okay, let's move these together. So then you got the company, CBS Viacom. Few years later, that CBS Viacom company became Paramount Global. So that's where we're at now. And now it seems that Paramount Global is going to be carved to bits. It probably should have earlier. And that led to a lot of the tensions between Sherry Redstone and Bob Backish. That was a good painting of the picture. And then also just to paint the picture of why Redstone maybe is looking to offload this. Company's market value has plummeted by about 80 % on Redstone's watch over the past eight years.

11:30And Redstone's stake has fallen alongside that. The current value of her Paramount holding is around$750 million. So remember that$2 billion number that this Skydance merger would reportedly pay her. That's why she wants to kind of railroad this sale through and why they're calling it a sweetheart deal for Sweetheart. If she sold like a few years ago, she would have netted at least$10 billion and now that stake is worth$2 billion. So she wants to get out while there's still billions to be made. For many of you, your one-on-ones with your manager involves Zoom and the question, how's the weather over there?

12:03And that's because in our increasingly remote work world, managers and their direct reports live in a different city. A fascinating new paper published by the ADP Research Institute found that people are now 36 % more likely to work for managers in another metro area than they were before the pandemic. The split of managers and their worker bees has implications for intercompany dynamics, of course. Throughout the history of capitalism, bosses and their reports have always been in pretty much the same room. But it also has dramatic impacts for the city hierarchy of the U.S., the paper argued, which is the emergence of a great divide.

12:43Some cities like San Francisco and Boston are becoming leadership hubs. That's where all the managers are clustered. And other cities, Las Vegas and Houston, are becoming workforce nodes, a fancy term for saying where regular employees live. Toby, thoughts on the rise of the managerial city? If you look at the graph that the ADP kind of published here, there is a distinct inflection point. It is the pandemic, even though technology has kind of been facilitating this break between the manager manager class and their worker bees, as you described them. Obviously, the pandemic really ramped it up.

13:18It's finally kind of severed the connection fully. And so now you're right, like 36 percent more, 36 percent more likely to work for managers in another city. That is a massive, massive jump and a massive difference in just the way America has laid out and how our workforces will lay down. And it largely tracks housing prices. It's very tied to housing prices. The cities that have the highest cost housing have seen their what's called leadership ratios. The people who are managing people in another city have increased since the pandemic. The lower cost cities in the Sunbelt have seen their leadership ratios decrease.

13:54The takeaway for me from this report is COVID was supposed to be the great leveler for cities. In the early days when New York and Boston and San Francisco were hollowed out, the thought was that people are going to move to lower cost locations and New York and these big cities, they're going to be laid low from this. But in fact, it has only led to greater polarization and the superstar cities are only becoming richer, costlier, higher value. And while the other cities are sort of falling behind. And so to me, it was just this great rejiggering of the workforce that didn't expect to happen. So let's name some names.

14:32What are these management hubs? Some places you definitely expect San Francisco and Boston have the highest leadership to normal worker ratio. Minneapolis and Philadelphia also do very well. Then you have the Las Vegas, the Houston, San Antonio of the world. They are falling behind because they've been adding more workers, less management, more worker bees, fewer queens. If you want to continue that ratio. So New York is kind of in the middle of the pack sandwich between Dallas and Kansas City just because there's just so many people who live in New York. So that's kind of some of the names that when we're talking about managerial cities versus worker cities that come to mind.

15:10Final lesson from this, though, is that you need to meet in person at a certain level to make huge decisions. Let's just go back to Elon Musk. He literally flew to China for 24 hours to get a deal done. And I think the fact that managers are clustering in certain cities shows that you need a face-to-face connection to make very high-level decisions. Up next, a little update on Saudi Arabia's futuristic city in the desert. Does it ever feel like you're a marketing professional just speaking into the void? But with LinkedIn ads, you can know you're reaching the right decision makers, a network of 130 million of them, in fact.

15:46You can even target buyers by job title, industry, company, seniority, skills, and did I say job title? See how you can avoid the void and reach the right buyers with LinkedIn ads. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started at linkedin.com slash campaign. Terms and conditions apply. Eczema isn't always obvious, but it's real. And so is the relief from EPCLIS. 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.

16:23EBCLIS, 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. EPCLIS 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.

16:51You 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 ePCLIS.lily.com or call 1-800-LILY-RX or 1-800-545-5979. Rome wasn't built in a day and neither it seems will Neom. Neom, if you might remember, is a proposed$1.5 trillion development on the Red Sea coast that would be the crown jewel of Saudi Arabia's big push to diversify its economy to tech, clean energy and tourism. The centerpiece is The Line, a city that's longer than the distance between New York and Philly and is all contained within mirrored structures that would be taller than the Empire state building.

17:35How's that going? Well, depends on who you ask. Earlier this month, Bloomberg reported that the project was being scaled back dramatically in the medium term. By 2030, only 1.5 of the line's 105-mile span would be completed, a reduction of 98.6%. The Saudi government also reportedly slashed its original plan to have 1.5 million people living there to just 300 ,000. Yesterday, though, the economy minister Faisal al-Ibrahim pushed back, saying everything was hunky-dory. All projects are moving full steam ahead, he told CNBC. He went on, we set out to do something unprecedented, and we're doing something unprecedented, and we will deliver something that's unprecedented.

18:17Toby, first of all, thought we retired the word unprecedented in 2022. Second of all, what is going on at Neon? I think when you get a report like Bloomberg, Switch, you have insiders revealing that everything is getting massively scaled back. But then you have the economic minister coming out and saying, no, no, no, full steam ahead. The reality is probably somewhere in the middle. And I think a lot of people thought that when the initial project idea was laid out, because 105 miles is just so, so long. One and a half trillion dollars is so, so much money. So it does seem like construction is happening.

18:50That much is definitely not up for debate because the project leaders recently had various international bankers out to show them the progress that's being made as they go and try to secure more funding. But even though we often think about Saudi Arabia's sovereign wealth fund that they call the public investment fund is this unending source of money. One and a half trillion dollars, one and a half trillion dollars. And you do need to kind of bring in some outside funding in order to support this very lofty vision they have. The finances of this project are definitely under scrutiny because the Saudi Sovereign Wealth Fund has now depleted its cash pile to just$15 billion, which is its lowest on record.

19:28So the Saudi officials have been going around the world on this roadshow. They were most recently in China, but they were also in Europe and the U.S. raising money for this project. They have to say, hey, look, you know, we actually have some stuff going on. Here's our plans. Here's our projections. So they've been on a whirlwind fundraising tour to get more money for this because as much as it seems that Saudi has unlimited money, they don't. It is interesting, too, because they certainly do not because the government has not provided a guarantee to these international bankers if they wanted to devote money to the project.

20:02So that's one thing that's been a hang up in raising money. And then as part of this broader Vision 2030 plan, Saudi Arabia does want to bring in some overseas money. It's hoping to bring in$100 billion of foreign direct investment annually by 2030. That is roughly three times bigger than any numbers it's achieved in the past. So they are definitely trying to modernize their economy, diversify their economy away from oil, and also bring in more of an international presence as well. Yeah, I mean, foreign investors were definitely eyeing Saudi Arabia for a long time in the past decade. And then Jamal Khashoggi was this journalist, this dissonant journalist, was killed.

20:39The CIA said it was approved by Mohammed bin Salman, who's the crown prince there, the de facto leader. And investors pulled out their money. They're saying, oh, we're not going to touch Saudi Arabia with a 10-foot pole. Now, though, it seems like they're all back. You can't ignore it. They're getting to all of the technologies that everyone wants to be a part of. They're stupid rich. And they're investing in a lot of AI stuff. And last week, they hosted a conference that literally every major tech CEO, TikTok CEO, IBM CEO was all there. So Saudi Arabia is just a huge player in many different industries right now.

21:13I'm back, which means it's Toby's Trends time, where I dive deep into consumer habits and emerge with a new trend you should keep your eye on. And for today's trend, I want you to think about your grocery shopping habits. Are you more of a gatherer where convenience is key? Or are you more of a hunter willing to travel to specific stores for certain items or deals? The latter type of shopper is becoming a lot more common these days as grocery shopping turns into a treasure hunt with multiple stores involved. In the last year, consumers bought groceries from an average of 20.7 retailers up from 16.8 in the same period in 2019.

21:50Part of the drive behind this treasure hunt as shopping is that grocery prices are up 21 % in the last three years, which has helped drive these trends towards multi-stop shopping habits. If Target has milk and eggs that are$2 cheaper than your local Publix, but Publix has the Gnocchi you like, why not make two stops? As prices rise, loyalty to specific stores falls, unless those stores can provide the best deals around. It's why most chains have been investing heavily in their own cheaper private label store brands to give consumers a deal while hopefully building back some loyalty. Neil, the fragmentation of grocery shopping, what do you make of it?

22:27It's pretty interesting. I was thinking if I buy groceries from 21 different spots and maybe over the course of a month. Yeah, because like you said, you go you know what in this era of high inflation where groceries are taking up the highest percentage of household budgets in 30 years. You have to be I'm going to bring a word back for that. We haven't used in a while choiceful about what you're buying. So if you know the produce is good over, you know, at one place, you're never going to buy produce at Trader Joe's because that's just a bad idea. But, you know, the frozen stuff is good at Trader Joe's.

22:59You go there. So you're being more aware about what places have deals. People are using way more coupons than they used to, which was a crazy stat. Two thirds of American shoppers used coupons for grocery stores last year. In 2021, it was just one third. So that amount has surged as inflation has stocked grocery stores. Yeah, I mean, if it's your main expense, I can definitely see you taking these drastic steps to cut costs. The Wall Street Journal did this big profile on these multi-stop shoppers. They actually spoke to someone who's an international flight attendant. He looks at his pantry before he goes abroad, takes note of what he needs to stock up on.

23:35He said he's found rosé from Paris for$7 that Trader Joe's selling for$17. He's found$2 European disdetergent. Please send that my way because that is insane. And yeah, just cheaper general essentials, pasta, olive oil, and bread. So it is crazy. I mean, obviously, that's a very extreme example, but it does show you what people are doing right now to capitalize on these deals. And the real winner of this and who's thriving in this new reality is the grocery store chain. All the foot traffic at all these stores was up 26 percent last month compared to the prior year. That's higher than six percent increase at Kroger Shards.