The Cuban Power Crisis & Nuclear Stocks Are Boomin’

0:03When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, a startup says it can boost your baby's IQ through advanced embryo screening. I think I saw a movie about this once.

0:41Ben, if you hate small talk, Sam's Club just opened the perfect cashierless store for you. It's Monday, October 21st. Let's ride.

0:54Good morning. Welcome back to the week. I've got some fun news for people in Philadelphia. You're getting The Portal. After wrapping up a viral stint in New York City in September, the art installation that gives you a peek into other cities got driven down the turnpike and will be turned on in Philadelphia's Love Park sometime this week, allowing Eagles fans to jaw with strangers in cities across the world. Toby, what is your over-under on how long this portal lasts in Philly? If we know anything about Philadelphia is that this will end so, so poorly. The story that immediately comes to mind for me is the poor tale of Hitchbot, the hitchhiking robot that was supposed to be this experiment in human kindness.

1:35It made several cross-country trips across countries like Canada, the Netherlands, Germany, no issues. As soon as it traveled in the U.S. just 300 miles into its journey, it got beheaded in the city of brotherly love. So yes, Philadelphians and techno-optimistics art projects don't really seem to get along, but hey, at least we'll get some great content before it inevitably gets shut up. I'm actually optimistic about this because the last thing New York gave Philadelphia was Saquon Barkley, and that is going really well. So I think the porter is going to follow in his footsteps. Now a word from our new sponsor, Bonobos.

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3:53Cuba is struggling to turn the lights back on. Four days after power shut down across the island, a crisis stemming from the country's Jurassic-era energy infrastructure and dire economic situation. And then to make matters worse, Hurricane Oscar made landfall on Cuba yesterday evening, compounding the misery with heavy rains. As of this morning, millions of people remain without power. Here's what happened. Midday on Friday, Cuba's largest power plant shut down, crashing the national power grid and causing schools and all non-essential public services to close. Even streetlights in the capital of Havana stopped working.

4:30Rolling blackouts are not rare in Cuba, but they typically lasted a few hours. This island-wide grid failure is unprecedented in modern times outside of hurricane-inflicted disasters. Yeah, the problem or one of the many problems is that to supply its electricity grid, Cuba depends on eight rickety power plants that are nearly a half a century old that have received no maintenance in as much as 15 years, an energy expert told the New York Times. And not only are they prehistoric, these plants are kept running by crude oil and Cuba has a major deficit of 80 ,000 barrels a day. Now, this blackout sits at the confluence of multiple crises, underinvestment in energy infrastructure, a decline in fuel imports, U.S.

5:11sanctions, and the pandemic that sent Cuba to its worst economic downturn in decades. Yeah, let's talk about that crude oil deficit. So Cuba produces 40 ,000 barrels of fuel a day, but it consumes 120 ,000. That shortfall used to be made up by its allies, Venezuela, most of all, and then also Russia and Mexico. But Venezuela has dramatically reduced its fuel shipments to Cuba. At its peak a few years ago, it was sending 130 ,000 barrels a day. Data shows that's decreased to just 25 ,000 to 30 ,000 barrels a day. Venezuela is dealing with its own economic crisis. And so it needs to sell its oil to make a lot of money.

5:52And it's not doing this to help Cuba anymore. So the fact that these plants are 50 years old, they are out of a prehistoric era, energy experts say that is leading to any sort of break in this in this grid is going to crash the entire thing. Yeah. So it used to get a ton of barrels from Venezuela. And a lot of people thought that, OK, Venezuela is going through its own economic crisis. Maybe Russia will step in to help. But Cuba is just not as big of a priority as it once was for Russia, especially because Russia is very resource constrained right now, given that they're fighting a war. Cuba has just had a rough one economically recently, though.

6:30They had this potential thawing of tension with the U.S. during the Obama administration. Obama tried to normalize some of those relations after a lot of decades of hostility. But then the Trump administration kind of re-upped all those sanctions once more. And then as soon as Cuba's burgeoning tourism industry started taking off, it got hit with the pandemic. So it's just been hit with economic roadblock after economic roadblock, which is why it's in such dire straits, because even though they are importing barrels from Venezuela and getting them at a slight discount, it still costs about$600 to$700 million a year to make up that deficit in crude oil that they need to power their electricity system.

7:14So those are just, we call it a confluence of a lot of crises, and those are the main ones that it's facing. Meanwhile, Cuba is also suffering a massive depopulation and brain drain. I remember a few months ago, a startling stat came out from the National Statistics Office. Between 2022 and 2023, more than 1 million people, which is 10 percent of its entire population, left the country. So people are just fed up with what's happening there economically, and they're just trying to get out a decent amount to the United States. So we'll see what's happening in Cuba. They've tried four times to get this power back on just in the past weekend.

7:52And each time they encounter difficulties, we'll see what happens, whether there's any social unrest, too, because the last time there was a big power outage back in 2021, it led to street protests and a little unrest among the population. There have been signs of some small protests, but that is something foreign policy watchers will be looking at to see whether the people start protesting because the government can't do its function of giving people electricity. Sam's Club has long been the little brother to the giant that is Costco. but it just opened its first new location in seven years. And like most overshadowed little brothers do, it is trying extra hard to make a name for itself.

8:31The new Sam's Club doesn't have any checkout lanes and will officially be its first ever all-digital store. The new store is in Grapevine, Texas and is actually a reopening after a tornado tore through the Dallas location nearly two years ago. The fresh start led to a fresh store concept. You ring your items up via the store's mobile app, then walk out through AI-powered blue arches that confirm what you have in your shopping cart. No checkout lines, no cashiers, just high-tech vibes. Neil, Sam's Club sees this as a guinea pig for future tech-forward locations. Is this how it can chase down Top Dog Costco?

9:09We'll see. I mean, technology coming into stores has not always been embraced by consumers. Self-checkouts had a rocky rollout. We know what's going on with CVS and Walgreens locking things behind barriers. So whenever new tech comes into a store, I think people are a little wary. Sam's Club says that it's been testing a lot of these technologies in its clubs around the country. So it's pretty confident that people are already enjoying and using this technology. But it is interesting to go full out, full, you know, no checkout in such a large scale format. that. We've seen Amazon and other retailers do use this kind of technology and sort of smaller urban retail locations, but to do it in a store that has over a hundred thousand square feet in a suburban location for something as big as a warehouse club where people are going and shopping in bulk is a very interesting experiment.

10:02Sam's club has been pushing down the tech rabbit hole for a while now, though it has this feature in its app called scanning go, which is you literally scan items, barcodes, as you shop, they add it to your virtual cart, much like you're shopping online. Then when it comes time to check out, you can just bypass the checkout line, show a sales associate that you've paid and be on your merry way. This new location doesn't even have the cashiers anymore. So there's no line to bypass. You just immediately walk out. People have specifically loved that. It's been very convenient. I read some of these articles of people going there and saying, this is the way to shop.

10:36You feel so much better just being able to skip that long line it you can see the prices you can see the discounts is reflected in the app as you're shopping one thing it has done is led to a lot of gen z members kind of shifting over to sam's club ceo of sam's club chris nichols attributed a 68 bump in gen z membership over the past years to their more tech forward approach so this could be the way to appeal to the uses get them a more digitally native shopping experience and it's it does need to do some catch up with costco as you mentioned. So both of these warehouse clubs have about the same number of U.S.

11:13locations. But when you drill down even further, it's clear that Sam's Club is behind. Its revenue came in at$86 billion in the most recent fiscal year. And that's compared to about half of what Costco has at$177 billion. Sam's Club is on a big expansion drive now. After closing more than 60 stores in 2017, They want to grow their location numbers by 30 by 2030. So we'll see whether they contain this level of technology or if there's more of a piecemeal approach when they open up these new locations. Gender reveal parties may be out. IQ reveal parties might be the new pre-birth celebration of choice for expecting parents.

11:56A new U.S. startup called Heliospect Genomics is offering wealthy couples the chance to screen their embryos for an above-average IQ. For the low, low price of$50 ,000, clients undergoing IVF get the option to test 100 different embryos to see which future children might have a better chance at a higher IQ based on certain genetic predictors of intelligence. According to undercover video footage obtained by a UK-based advocacy group called Hope Not Hate, some managers at the company bragged that their methods could lead to a gain of more than six IQ points. Now, in case you haven't guessed by now, this is highly controversial.

12:35Experts say experimental genetic selection techniques represent an ethical minefield. Katie Hassan, an associate director at the Center for Genetics and Society in California, told The Guardian that one of the biggest problems is that it normalizes the idea of, quote, superior and inferior genetics. Neil, this is an ethical minefield, but it looks like Pandora's Box has been opened when it comes to these gene selection companies. It is also a sci-fi movie because this is similar to the plot of Gattico, which is a 1997 film, and you have this genetically enhanced upper class and a naturally conceived lower class, and there's much stratification in society.

13:14So your mind, when you think about who could possibly pay$50 ,000 to boost their kids' IQ, it could lead to that sort of result and many other sort of ethically dubious things that could happen in the future. But this is happening. I mean, previously, you can screen for embryos before IVF. That does happen. But it's for chromosomal abnormalities like Down syndrome or a mutation of a single gene leak like cystic fibrosis. But now these companies are pitching more advanced embryo screening where they give you a score based on the interaction of multiple genes, which can lead to behavioral things like IQ.

13:56But again, I just want to stress this is experimental because there's a lot of technical problems that experts have raised with it. Right. Whether Heliospecs technology works is a claim that still remains to be seen because IQ is determined in part by genetics, but there's not simply a gene for, quote, smart that you can turn on and off. Researchers in Japan recently published a paper that concluded screening for a desirable trait in embryos is unreliable. The reason being is that they are not determined by a single gene. A person's IQ is often determined by a lot of overlapping things. How much they listen to MBD.

14:29How much they listen to Morning Brew daily. But you're right. It is a notoriously hard thing to measure. Your things like education, your family, your friends, These all have just as large an impact as your inherited traits do. So that is why a lot of experts say that potentially this is not as cut and dry a science as they're saying. You can't just screen 100 embryos and automatically get guaranteed six IQ points. But that is the story that Heliospect is telling its customers. And according to the CEO, there are babies on the way. They say they have analyzed and helped select embryos for five couples as of late 2023.

15:03And you're thinking, is this even legal? And in the United States, this sort of screening is legal. You can do it. It's a very unregulated industry. So you can possibly do it. And we'll see whether it happens or there is more regulation around. I think experts are just like, we need to have this conversation because it's actually happening now. Up next, we have a futuristic winners of the weekend segment coming your way. Tuesday on NBC, Jimmy Fallon and Bozema 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.

15:43This 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. I'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.

16:17Shop NFL by Abercrombie in the app, online, and in store.

16:29Welcome to Winners of the Weekend, the segment where Toby and I pick two things that are telling their co-workers happy Monday and actually mean it. I won the pre-show jack-o'-lantern carving competition, so I get to go first. And my winners are nuclear energy stocks, which are looking like Wallace and Gromit in a grand day out because they are moonbound. Last week, companies that make small modular reactors soared to record highs. Oaklow, which is backed by Sam Altman, jumped 99 % in five days, while NewScale rose 37%. The reason is that big tech is buying what these guys are selling. In a span of three days, both Google and Amazon announced plans to use next generation smaller reactors to power their AI data centers with zero emissions energy.

17:16Their announcements have helped revive a nuclear industry that was thought to be uninvestable after the meltdown at Fukushima in 2011. Now, in a twist of fate, there's talk of a nuclear renaissance thanks to AI's need to guzzle more energy than our grid has capacity for. Toby, there's still a long way to go before these smaller reactors even get built and the technology remains unproven, but clearly investors think that big tech projects are a game changer. For a long time, investors were just super against and wary about financing these smaller reactors, even though they were promising. It was just such a risk.

17:51And so a lot of people just rather would go up for the safer, more efficient, large-scale nuclear reactors. But the concern about the industry's record of delivering these projects kind of rested on the fact that there was a high interest rate environment. There was a shortage of customers willing to actually pay for these. But look what's happening now. Interest rates are coming down. Now all of big tech wants their own personal nuclear reactors to play with. So there's plenty of willing customers. So the big question, as you said now, is if they can actually deliver these smaller scale nuclear reactors.

18:22Because right now a lot of contracts are signed, but not a lot of reactors are actually been built. And actually zero reactors. Zero. And they're not even in the pipeline. No small reactor projects have even begun construction in the U.S. And you look at all the capacity waiting to connect to the grid in terms of energy breakdown. Solar, wind, and battery storage account for 95 % of that, while nuclear makes up less than 1%. A private company that did a deal with Amazon, X Energy, was actually supposed to go public a few years ago via SPAC, a special purpose acquisition company. And they had to pull it because the cited market conditions weren't good.

18:59So there's been fits and starts here. But these companies were all looking for that first customer that would be willing to pay the high cost to build the first reactor. And it looks like Amazon and Google are saying, I'll be that. And then the final tailwind, too, is that the U.S. government is putting a lot of momentum, a lot of dollars behind funding these things because their main concern is if Russia and China build this big lead on this small reactor front, then it could make them the leaders in the nuclear sector, which by proxy could make them the leaders in the artificial intelligence sector.

19:29So you are seeing a lot of federal funding, too, that are going in to supporting these projects. My winner of the weekend is Second Chances, because after a rocky start to life on the roads, self-driving cars are beginning to win people over. Despite Tesla's flashy robo-taxi unveiling last week, it's Waymo that is currently the leader in the clubhouse. It's now providing more than 140 ,000 paid rides a week across LA, Phoenix, and its largest market, San Francisco. And people are actually really starting to like the experience. Some SF residents that the Wall Street Journal spoke to highlighted not having to talk to anyone when you get in the car and the ability to have personal conversations without fear of a driver overhearing as reasons why they enjoyed a Waymo ride.

20:14And one analysis showed that Waymo is retaining riders at a higher rate than competitors Uber or Lyft, though on a much smaller scale. People used to hate self-driving cars, even going so far as to set them on fire or block their sensors with cones, but now they seem to like them. Yeah, Yeah, it just seemed like people need more time to get comfortable in these self-driving cars. It can be a little intimidating getting into a car without a driver for the first time. And there have been high-profile mishaps where a bunch of Waymos get together at an intersection for whatever reason and stall out and block emergency vehicles from getting where they need to go.

20:50So those incidents have gone viral and had turned the public against self-driving cars. But now people in San Francisco are getting in them and they're saying, wow, this is so great that there's no driver. I can have a personal conversation. What happens in a Waymo stays in a Waymo. And I think the novelty is delighting people instead of scaring them off. Right. They actually talked to some of the riders and another feedback that they had was they liked it better than a human driver because human drivers can be erratic and can be stressful to be in a car. everyone's had maybe an uber driver or two who has really taken the rules of the road pretty liberally also a lot of the waymos on the street right now are jaguars so they are these very luxurious rides so you you get in there you feel like you're you're riding in style a lot of these driverless car companies have said that the biggest hurdle that they have faced is just getting people to take their first ride because if you can get people to take their first ride they do begin to start to like the experience, citing all the reasons that we have today.

21:50So Waymo is on this big marketing push right now to say like, hey, just give us a shot here. Give us a chance. I think you'll like what you see. Right. So you can actually order a Waymo. If you're in San Francisco, you can. And I can see that helping maybe the tourist industry a little bit there because, you know, maybe I'm deciding about places where to go for vacation for a few days a week and get away. I might do San Francisco because I'm like, wow, I really want to get in a Waymo. But increasingly you don't have to go there to get in the self-driving car because they have service in Phoenix.

22:19They have service in Los Angeles. They're expanding to Austin. They're expanding to Atlanta. So they have national and international ambitions. We'll see how this business plays out though because they aren't profitable. And right now they have a lot of cars just driving around without passengers making money. 40 % of miles driven for Waymos are without a passenger. And if you don't have a passenger, you're not making any money. So we'll see whether this business pans out. But you know, the CEO gave an interview and he's like, we've been doing this for 15 years and maybe reflect that. Yeah. Oh my God.

22:49They've been doing this for 15 years and they finally seem to be reaching that inflection point. So we'll see if their competitors can catch up with them because Waymo is definitely the clear leader in the clubhouse. It is Monday. And as per tradition, we close out the show with a preview of the big events in the coming week. Maybe a rare bit of good news for Boeing. The five-week strike that has cost the company more than$1 billion could end this week. And that's because Boeing and its machinist union agreed to a new contract proposal that includes a 35 % pay increase over four years, as well as bigger 401k contributions and a higher signing bonus.

23:27The key date to know is Wednesday, when 30 ,000 members of the union will vote on the proposal after overwhelmingly rejecting the previous one last month. This new deal does not reinstate the pension benefits that Boeing workers used to have. That was taken away over a decade ago, and that was their big home run swing, like, hey, let's reinstall, reinstate the pension benefits. It does seem like they have gotten what they wanted, a 35 % pay increase. That's a bump for the 25 % offer that was overwhelmingly rejected a month ago. The big thing here, though, is if the deal gets done. Contract gets ratified on Wednesday.

24:03That is just a huge win for new CEO Kelly Orberg. He wants to start off on the right foot. And the best way to do that is to end this crippling strike. And then just 14 days remain until the election. Both candidates are going to be storming through the swing states this week. Elon Musk has taken on a major role in Donald Trump's campaign and on Saturday announced a highly unusual scheme. His pro-Trump political action committee, America PAC is handing out a$1 million daily prize through election day to a registered swing state voter who signs a petition supporting the first and second amendments.