The Fed Cuts Rates Again & Can Oracle Deliver for Investors on AI?

0:28The best B2B marketing gets wasted on the wrong people.

0:36Good morning for Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the Federal Reserve is at war with itself. And the government wants to put gyms inside of airports. It's Thursday, December 11th. Let's ride.

0:56Good morning and happy Thursday. Anyone who spends time around kids knows the 6-7 trend has gotten way out of hand. So much so that In-N-Out Burger has retired the number from its ticket ordering system. In response to throngs of kids camping out at the burger chain and waiting for order number 67 to be called, then going animal style when it is, In-N-Out confirmed that last month it got rid of 67 entirely. So if you order after ticket number 66, you'll be number 68. Then the person after you will be ticket 70 because apparently people can't handle the number 69 either. Toby, the youth, they broke in and out.

1:32At this point, just ditched the entire 60s. They are cursed. Now, this is interesting, though, because Wendy's is taking a different approach to dealing with 6-7. They are leaning in and selling 67-cent Frosties. So two different schools of thought here. If the ultimate goal is to kill the meme, I think Wendy's is doing a better job of that because you know what's not cool? Brands. Brands getting in on what the cool kids are saying. The fact that In-N-Out is not naming 6-7 going forward, I think it's like a Voldemort effect where you're giving it more power. So I do think if you want to never hear the word 6-7 again and have kids going crazy, you got to start doing brand promotions around it.

2:16That's the first time I've heard that. The Voldemort effect. It's basically the opposite of the Streisand effect. Get Streisand and Voldemort in the same room. That is a dinner party that I want to go to. And now a word from our sponsor, LinkedIn Ads. Toby, do you have any holiday traditions? Yeah. Every year, my family and I gather around, find a live board, and... I'm going to stop you right there. My holiday tradition is telling people about LinkedIn ads. This is true. They have the highest B2B return on ad spend of all online ad networks and a network of over 1 billion professionals and 130 million decision makers.

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3:22But under the surface, chaos reigns. A rare triple descent, the first since 2019, showed there's still an internal tug of war over the risks posed by higher inflation and lower employment. Not only were there three descents, but there were three descents on both sides, with one Trump-aligned official voting for a jumbo-sized half-point cut in order to spur on the labor market, while two others voted for no change in rates at all in order to stave off inflation. After the announcement, all eyes turned to Fed Chair Jerome Powell's press conference, his last before Trump announces his successor. After his customary good afternoon, Powell turned some heads by saying recent employment data may have overstated by about 60 ,000 jobs a month, Given that payroll growth has been averaging about 40 ,000 jobs per month since April, uh-oh, that means employment growth has been non-existent, which explains why the Fed felt comfortable cutting rates again despite persistent inflation.

4:19As for what's next, we got some grade A Fed speak to pour through. The central bank said that they were considering the, quote, extent in timing of additional adjustments to the target rates for the federal funds, which many took as a sign that the Fed is content to see how the economy evolves before committing to any additional cuts. Neil, from a triple descent to J-PAL's last hurrah, some excitement for a rate cut that was all but guaranteed. A lot of excitement, but I always start here when we talk about the Fed because it's really important to remember. The Fed basically only has two responsibilities.

4:51They're called mandates. It aims to get unemployment as low as possible, and it wants to keep inflation running at a 2 % pace, which is its target. The problem is that those are both problems. And when you try to tackle one, you risk making the others worse. unemployment was up to 4.4 % in September. That was up from 4.1 % back in June. And then prices, as measured by the Fed's preferred gauge of inflation, rose 2.8 % in the year through September. So you have these two different mandates in conflict with one another. And Jerome Powell gets up there and says, look, I can actually see both sides to this argument.

5:26I can see both sides to cutting rates. I can see the other side of sticking with what we have. He said everyone around the table at the Fed agrees that inflation is too high. We want it to come down and agrees that the labor market has softened and that there is further risk. Everyone agrees on that. Where is the difference? What the difference is, is how do you weight those risks and what does your forecast look like? Well, the central bankers in that room, they don't agree. And we got, you know, some historic levels of disagreement among the Fed officials. Powell's quote from yesterday I thought was very illuminating.

5:55He said a very large number of participants agree that risks the upside for unemployment and the upside for inflation. So what do you do? You've got one tool. You can't do two things at once. It's a very challenging situation. So it speaks to exactly what you're talking about. Like, hey, we can either raise rates, we can leave rates where they are, or we can cut rates. It's a very blunt tool when you have this dual mandate, as you described. the the general message that Powell was putting forth though was that the labor market is weaker than expected that is why we are getting a cut so despite all of those factors going into this decision the overarching theme is that hey the labor market is in a precarious place which is why we felt comfortable doing this despite some dissent within the Fed let's talk about what a rate cut means for your wallet well one thing that I noticed specifically when the Fed cuts rates is I have this high yield savings account.

6:48Well, when the rates were high, you were getting 5%, as everyone probably listening to this show knows. Well, as soon as the Fed cuts rates, I get an email from them being like, well, your rate has gone down. And it's been doing that over the past couple of months. So if you are in a high yield savings account or any savings account, it's likely that your interest rate is going down. You're probably wondering, well, the Fed is cutting rates. What does that mean for mortgages? Are mortgages going to finally be more affordable? The answer is not really. Mortgages are still above 6%. And that's because while the Fed's interest rate does influence broader borrowing costs across the economy, it's not a one-to-one comparison.

7:29So when the Fed cuts rates, it's not like the mortgage market follows lockstep because those are influenced by things like the 10-year Treasury yield and other things going on in the macro economy. So in general, you can say that when the Fed lowers rates, That means that borrowing costs will come down across the economy and at the same magnitude as the Fed's rate reduction. And remember, I kind of called this Powell's last hurrah. His term actually ends in May. But remember, there's been all this political backdrop of Trump has been demanding faster rate cuts. He's been kind of hinting at ousting Jerome Powell before his term ends.

8:05He's raised questions about Fed independence. this last hurrah basically powell went out saying i really want to turn this job over to whoever replaces me with the economy in really good shape i want inflation to be back down to two percent and i want the labor market to be strong that's all i want all of my efforts are to get to that place so that was kind of his parting words saying i'm doing my best here this i gave it everything i had despite all the turmoil that swirled around him he goes out saying the dual mandate was what I came in for. It's what I'm still trying to do, and it's what I'll continue to do till May.

8:40When Oracle last reported earnings three months ago, the tech giant gobsmacked investors by reporting a revenue pipeline of$450 billion, seemingly cementing its status as one of the runaway winners of the AI revolution. Its stock shot up more than 20 % that day, briefly making its co-founder, Larry Ellison, the richest person in the world. But ironically, Oracle couldn't predict what lay ahead. Yesterday, the company's stock fell more than 11 % after its latest earnings disappointed, continuing a slump that's raised alarm bells for the AI trade more broadly. Revenue increased 14 % from a year ago in Q3, missing projections, but it was rising spending on data centers and AI infrastructure that's got investors a little spooked.

9:21Capital expenditures, a proxy for data center spending, came in at$12 billion for the quarter, nearly$4 billion more than the street anticipated. And look, other companies are spending way more on AI infrastructure than Oracle. The difference is they don't have the debt problems that Oracle has. The company has been on a data center building binge financed by debt that has it burning cash at a rate that makes investors uncomfortable. $10 billion in negative free cashflow last quarter, to be exact. On top of that, the majority of Oracle's big backlog of revenue that I mentioned turned out to come from one company, OpenAI, which itself has invited many tough questions about the sustainability of that business model.

10:01As Jones trading strategist Michael O 'Rourke put it, I always thought it was dangerous for the company to take on significant leverage while tying its future to a startup. It looks like more investors are joining in his skepticism. Yeah, the core issue here is this massive CapEx. Oracle is spending more on AI data centers than any company not named Amazon or Microsoft. And unfortunately, they do not make as much money as an Amazon or Microsoft. Oracle execs did nothing to dispel those fears either. They said that CapEx for fiscal 2026 is expected to be 15 % higher than the already high$35 billion the company estimated back in September.

10:39The Wall Street is concerned that they won't be able to translate that into revenue quick enough, or the worst case scenario is it doesn't materialize as revenue at all, depending on what goes on in open AI. And so when you're taking on such a heavy debt load to fund this AI infrastructure build out. That is when alarm bells start to sing. It's so fascinating, though, that the very thing that propelled it to such a big stock run up is now the very thing that's weighing it down, which are these ties to OpenAI. And what's also been an interesting development is that when you're looking at companies to gauge the health of the AI sector, it's NVIDIA 1A, but Oracle 1B.

11:16That's why these earnings are so important. That's why we're talking about it, because Oracle for decades had been a pretty boring but very successful company in databases software. And then all of a sudden they get into this cloud computing market and they've been super successful with that. And their stock has a huge price run up. They have all these customers, specifically OpenAI, buying all of this compute from Oracle. But now at the same token, they rise with the tide, but they also fall with the tide. So it's very interesting how Oracle has put itself at the center of the AI trade because of its relationship with OpenAI, but also its centrality in many of the circular deals that have raised concerns of a bubble.

11:55I thought it was funny to see how Clay McGurk say, don't worry, guys, we have a plan. His quote was, we have some interesting models that we've been working on. One of them is that customers can actually bring their own chips. And in those models, Oracle obviously doesn't have to incur any capital expenditures up front for that model. So it's literally BYOC. They're saying, trust us, guys. It's fine. These people will just pack their bags full of their own chips. So we'll just set up all of this stuff around it, the server racks, et cetera. But the BYOC model is going to be totally fine. So it's BYOB is out.

12:28BYOC is in. Moving on, running to your gate to catch your connection isn't the only exercise you'll be doing at the airport, at least if the Department of Transportation has its way. Trump's Transportation Secretary, Sean Duffy, this week laid out his vision for how a pot of grant money should be allocated to upgrade airline terminals. Some use cases he floated at a press conference flanked by Health Secretary RFK Jr., included mini gyms in terminals so travelers can work out during layovers, expanded nursing pods for new mothers, family-exclusive security lanes, as well as more healthy food options.

13:03Duffy's press conference was punctuated by RFK and Duffy busting out some pull-ups in Terminal 2 at Reagan National Airport to demonstrate that getting the blood moving while traveling is possible with the right equipment. The money for these protein-fueled pipe dreams comes from the Biden-era Infrastructure Investment and Jobs Act, which allocates$1 billion annually through 2026 for terminal projects. And Duffy is advocating to use that billion to advance his Make Travel Family Friendly Again initiative. Neil, usually when people travel, they're looking to pull up a seat to the bar, not a pull-up bar.

13:38Rule number one of gyms and airports is if you do put a gym in an airport, then you also need a locker room as well. Many pointed out that there was this inherent conflict between what the Department of Transportation is messaging around air travel. Right before Thanksgiving, Duffy comes out and says, we want to make air travel the golden age again, which means that all of you who are going in PJs and sweatpants, I want you to dress up and look the part a little bit more when you're traveling. And that was to stem a wave of bad behavior. And at the same time, he's saying, well, let's put gyms in airports.

14:10And so what are you supposed to do, wear a gym or wear a suit on your airplane or to the airport or wear some Lululemon? Seems like those are an inherent conflict. One thing others also pointed out was this initiative, while, look, I think we all kind of want to get the blood pumping at the airport, especially before a long flight, kind of misses the mark when it comes to what people who are traveling by air really want. So there was this Ipsos poll in 2025, earlier this year. When it comes to what people are wanting in terms of changes from commercial air travel, Americans overwhelmingly want lower fares and fewer fees.

14:4968 % rank that as their top priority. And when you go to two and three, more comfortable airline seats and speedier security or customs lines. So those are really what Americans want when it comes to the air travel experience. It's get me in and out as fast as possible and make me pay a little less. Not necessarily let's put an Equinox in Terminal 2. I was surprised, though. So RFK did 20 pull-ups in this press conference, which is more than I can certainly do. I think it is a bizarre idea, though, to say, hey, here's a dedicated area to go work out in the gym. People are already stressed enough.

15:21People are already sweating. You're telling me that you want some people in your way ripping out pull-ups while you're just trying to make your connection. The overarching idea is just make airports a little bit of a healthier place, because right now you're going to get a lot of fast food. You're going to be very sedentary. It's not necessarily conducive to a healthful life. So that was the general thrust of this. But you're right. When you look at what customers are actually asking for, none of this is top of the list. All right, we're going to take a quick break and come back with Neil's numbers.

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17:21Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will give you a Lisa Simpson-level air of superiority. For my first number, the concept of treating yourself has gotten a little too literal in the self-checkout aisle. A new LendingTree survey found that more than one quarter of people who view self-checkout say they've intentionally taken an item without scanning it. That is a massive 12 percentage point increase from the 15 % who knowingly stole stuff in 2023. There are some clear demographic differences in who swipes more. Millennials and Gen Z were the most likely to admit they steal at self-checkout, while just 2 % of boomers copped to it.

17:57And men were more than twice as likely as women to shoplift. But here's where the numbers get a little contradictory. When asked why they stole from self-checkout, 47 % of people said it was the current financial environment that made it tough to afford essentials, while 46 % blamed higher prices. At the same time, people in households making more than$100 ,000 were the most likely to say they stole from self-checkout at 40 % compared to just 17 % of people making less than$30 ,000 who said they did the same. For whatever reason they stole, many said they don't regret it. 31 % of self-checkout thieves say they don't feel remorseful and 55 % think they'd do it again.

18:35The moral landscape is certainly shifting as those last two stats certainly show because 35 % also say that self-checkout is quote, unpaid work and taking small items feels like compensation, which is kind of a wild justification saying, I'm doing the bagging here. I deserve a little bit of payment. So I'm going to steal this pack of gum. The inherent contradiction though, is that it is on the average richer people doing this, then saying that it's because of the cost of living. It's mostly men that are doing it. It's mostly people that hypothetically should be able to afford this stuff that are paying.

19:11So maybe it's more of a sign of a moral shift than anything that's going on with the cost of living right now. And it's also wild to me that places like CVS and Target are locking deodorant toothbrushes up behind these glass cages when it's really self-checkout that's the source of their theft problems. So maybe let's open those cages back up. All right. For my next number, professional golfers perform significantly worse and earn less when they play alongside someone they disagree with politically. And it has implications for your workplace, too. A study by business researchers at UC Berkeley and Yale analyzed over 25 ,000 player tournament rounds for more than 700 PGA Tour tournaments between 1997 and 2022.

19:53Through social media posts, voter registration records, and interviews, they categorized the golfers into Republicans and Democrats, then looked at how those golfers performed when randomly assigned to play with political allies and opponents. It made a big difference. Stripping out all other variables, the researchers found that golfers who played in politically mixed groups scored 0.2 strokes worse per round and faced a more than 5 % reduced likelihood of making the tournament cut, a key threshold for potential earnings. The economic hit to golfers ranged from about$13 ,000 to over$23 ,000 in each of the tour's 47 tournaments.

20:29So why does disagreeing with someone politically make you a worse golfer? It's not like you're debating immigration policy while competing in a tournament. Well, just think about the stress you had at Thanksgiving dinner when politics wasn't necessarily discussed, but it was the elephant in the room. One of the study's authors said simply being aware of politically different others in shared spaces creates psychological tension that disrupts performance. The researchers say that these golfing findings can be extrapolated to other workplaces like sales teams or trading floors where political disagreements can reduce productivity by raising proximity based anxiety.

21:02Anxiety, not even related to politics, anxiety related to anything in golf makes golfing harder. So if I have a single other thought in my mind, of course, I'm not going to play as well. So when you are so close to someone that you know their political views, which the authors said that is often the case on the PGA Tour, you're traveling around with these people for most of the year. So you do know what they believe. So if you are very close to them and you're just aware of it, it just gets in the back of your head. The study's authors were also giddy with the fact that golf created a perfect landscape, perfect backdrop for this study because the pairings are randomly assigned, which is, you know, the gold standard whenever you're trying to do a randomized trial like this.

21:45They said, we didn't even have to design the study. The PGA Tour did it for us, which was why they were so happy to dig into this data. Fascinating, too, that the places of closest proximity was where the strokes gained showed up the most, putting and driving when you're standing right next to your playing partner. On the fairways, when you can distance yourself, you're in your own world. You don't see as much of that performance dip. So fascinating study from top to bottom. I'm just imagining Scotty Scheffler sitting over a pot and being like, I can't believe what this guy thinks about Obamacare.

22:15Exactly, exactly. And then misses it wide, right? All right, for my final number, in a shocking twist that explains much of my behavior in my 20s, you are technically a teenager until age 32. At least your brain is. A new study published in the journal Nature Communications looked at the brains of around 4 ,000 healthy people age 0 to 90 and found that adolescence, in terms of your brain development, doesn't end until your early 30s. The researchers actually found four distinct turning points in your brain structure, dividing the lifespan into five distinct phases. The first is childhood from zero to nine, then adolescence from nine until 32.

22:50Adulthood is the longest from 32 until about 66. Early aging until 83, then late aging from 83 until whenever you kick the bucket. The fact that adolescence lasts so long shows how human brains take a much longer time to develop than other animals, some of whom can stand upright not long after they're born. You might think of a 21-year-old as an adult, but these scans show that there's still another decade until the brain is fully stable. Toby, suddenly SantaCon makes a lot more sense. It is a great justification. Anytime you have a bonehead mistake, say, I'm still developing. You know, I'm still in my adolescent period.

23:25Let the brain catch up and take time diving into each one of these epochs, these eras, whatever you want to call it. It is fascinating what your brain is doing and what it is optimizing for. When you're zero to nine, you are consolidating a ton of neural connections. And actually over time, as you age from zero to nine, your brain becomes less efficient because it's sort of pruning some of these connections to find the ones that are most important for living, which explains the three-year-old chess player that we recently talked about. It's why when you are three, you can become a rated chess player because your brain is just firing so quickly.

24:00But then eventually your brain says, whoa, whoa, we don't actually need to be able to make connections at this rate. Let's start dialing things back a little bit. So that was just fascinating that the brain actually becomes less efficient during that key time because it starts out almost too efficient. Whatever you need to say to justify losing to a three-year-old in chess. Okay, let's bring to the finish with some final headlines. Congrats, you're being noticed on LinkedIn by U.S. immigration authorities. According to a notice published online, the Trump administration is planning to require tourists from dozens of countries, including Britain, Australia, France, and Japan, to provide a five-year social media history as a condition of entry to the U.S., citing public safety.