The iPhone Feature Saving Lives in Maui Wildfires & Coach Owner buys Versace Parent Company for $8.5B

0:01Stop waiting for customers to fall into your funnel. It's 2025, and the same old strategies are, well, just kind of old. That's where Amazon ads can make a difference. Brands using four Amazon ad solutions saw dramatically higher growth compared to limited approaches. Our latest Marketing Brew article breaks down how they can help you reach customers everywhere they are, from prime video to Alexa to shopping with consistent messaging. Read the whole thing at marketingbrew.com slash amazon dash ads. Good Morning Brew Daily Show. I'm Toby Howell. And I am not, not Toby. That is right. There comes a time in every young man's life you have to reclaim your identity.

0:40So I'm just introducing myself now as Kyle. Welcome, Kyle. On today's Toby and Kyle show, we're talking about just how expensive it is getting to live in the Big Apple these days. Plus, our stock of the week is an energy drink that has got the market's pulse racing. Yes, we have an excellent show. We're also gonna be talking about a new merger in the luxury fashion space and why colleges are addicted to spending. It's Friday, August 11th. Let's ride.

1:12Kyle, we're back in the studio. Toby and not not Toby anymore. It's just Kyle. We're also fresh off the Morning Brew Company party last night. How are we feeling? I'm feeling great. I didn't sleep. I went straight for the party here. We're buzzing. Legally, I have to say that as a joke. I did sleep. But it was a really fun week, and I do have a big shout-out here quick. I also had a surprise engagement party for a colleague and a great friend of ours, Kayla, who got engaged Wednesday. So if you're on YouTube, drop some comments for Kayla in there. So many engagements in the summer months. How are you doing?

1:49I had a great time as well. The party was Y2K-themed. So there was actually a friendship bracelet making station. So, of course, I had to make a friendship bracelet with Neil's name on it. Even though he's not with us, he's always with us. I included the Morning Brew Daily color scheme into the bracelet as well. So we'll post a picture of it on our Instagram if you want to go check out my crafting skills. That's amazing. You also had a great costume, I will say, for the Y2K party. Thank you. Thank you. I went thrifting for it. But okay, Kyle, let's jump into our top story of the day where we head to Hawaii to check in on the devastating wildfires that have been tearing through the Maui city of Lahaina.

2:28The human toll has been devastating with at least 53 people losing their lives, making it one of the deadliest U.S. wildfires in decades. Essentially, the entire city of Lahaina, a major tourist destination and nationally recognized historical landmark, has been burned to the ground. An investigation into the cause of the fire has not yet begun, but people think that unmanaged grasslands likely played a role in its spread combined with a period of drought and high winds from a passing hurricane. This is still an ongoing tragedy. President Biden declared it a national emergency yesterday afternoon.

3:03And residents have had to deal with the fires and the smoke itself, of course, but also the secondary effects like a loss in cellular service and widespread power outages. So, Kyle, I just want to touch in on some of the storylines that are emerging from this tragedy. We have the role Apple is playing in saving lives. Also, the impact these fires are having on Maui's still delicate economy. What kind of stood out to you? Yeah, I mean, one, it is obviously a very sad story. But what stood out to me, yeah, I think the Apple thing is really interesting. Kind of satellite phones have now come into the conversation.

3:34They have this special feature, I think it's called SOS, where if you don't have cell service, you can still call first responders via their satellite. And you know Starlink is also big in this space as well. Apple has invested$450 million in their satellite network, and they have them now on most new iPhones. Yeah, we saw all these stories kind of emerging on Twitter of, I mean, I touched on this yesterday at the top of the show, but like people were literally saying once cell service goes down, the only option you have is A, if you have a satellite phone, which no one has a satellite phone, but then people were coming to realize that all their new iPhones are equipped with like this really, really life-saving technology.

4:15So it is one of those things where Apple, you're putting$450 million into it. You probably can look at that and say, like, are we really going to plow this much money into a feature that will maybe be used? But in situations like this, it's literally the difference between life or death. Yeah, it has been saving lives, which is obviously really great to see. And also, like, Google has their project Loon, which is cell phone balloons. And so we're seeing ways in which you can still get critical service when needed. Yeah, you can't actually access a cell network or just talk to emergency services.

4:48I also do want to talk about how the fires have impacted Maui's economy because it's been in a really delicate spot, still recovering from the pandemic. Tourism is like the economic engine of this island. 80 % of Maui's economic activity is generated by visitors spending their money on the island. So that means four out of every$5 that the island generates comes either directly or indirectly from tourism. And of course, these wildfires have thrown a huge wrench in the tourism business because, yeah, the city is just pretty much no longer there. So it is just this brutal one-two punch where the loss of property damage, loss of life, but then also a very bleak economic output looking forward for the island of Maui.

5:32Yeah, and you don't often hear about wildfires in Hawaii causing obviously this much damage. And so they're not super prepared for this. And so hopefully they can recover fast. obviously prayers to everyone in Hawaii. Yeah. And if we just want to zoom out a little bit, this year has been one of the worst years already for natural disasters. Extreme weather events in 2023 have already cost insurers$50 billion. That's the biggest natural disaster year since at least 1980 when these statistics were first tracked. So, I mean, it's only August too, which is just kind of nuts. Let's move on to our next story of the day.

6:09And as someone whose style could best be described as fruit of the loom. There's no one better than myself to cover this story, and that is two fashion conglomerates are merging. They're Tapestry and Capri Holdings, which generate about$12 billion in combined revenue. And while Tapestry and Capri Holdings might sound unfamiliar, unless you're deep in the luxury space, the brands they own won't. So this deal is actually going to bring together brands like Coach, Kate Spade, and Stuart Weitzman, together with Versace, Jimmy Choo, and Michael Coors, which sounds like the inside of a Kardashian's closet.

6:42But zooming out, this potential deal is at a time when luxury markets slowing a little bit in North America, and they want to move internationally. And there's some more security when you team up with another large company that has a lot of great brands. And they also said that this merger is going to allow them to focus on direct-to-consumer businesses and kind of managing through a lot of supply chain issues. And it's also not a rare deal. There's been a lot of movement in this luxury space. fashion house Zimmerman was bought by a private equity firm and then LVMH Bernard Arnault's company one of the richest men in the world is swirling around a possible sale of Bergdorf Goodman so Toby as someone who's constantly dripped out in Gucci what's your take here I do think it's funny because I don't think we have put any of these brands on our body before but I actually do think that this is we mentioned LVMH and I do think this is kind of the American version of LVMH trying to put together a similar luxury conglomerate.

7:42I mean, Louis Vuitton, Caring, Gucci, Saint Laurent, they're all under the LVMH umbrella. But you also now are seeing this other merging of the giant luxury fashion brands. And one of the big goals of this merger was most of Tapestry's brands have been near luxe, but not true luxury. So brands like Kate Spade and Coach, again, they're very luxurious brands, but they're not like the Dior or the Louis Vuittons of the world. And so Capri gives Tapestry a toehold in that super luxe industry where honestly Versace might be the gem of this entire deal because Versace is one of those brands that kind of can go toe-to-toe with the Dior, the Gucci's of the world.

8:27So I am interested to see how this American approach to LVMH-ing goes for Tapestry. And Versace, if you've made it into Amigo's song, you know you're doing something right. And so this could exactly, like you said, that could be the crown jewel. I know you said we haven't worn any of these brands, but I just want the world to know. I'm very open to wearing the brand. So if Gucci's looking to sponsor the show. Well, I will say that's actually untrue because Birkenstock is actually owned by Bernard Arno's family office. And we spoke about on the show. They are preparing for an IPO. But so technically.

9:02We are dripped out. Do you own Birkenstock? I've owned Birkenstock. Okay, so then I don't know why we're selling ourselves short, Kyle. Yeah, we are fashion moguls. Yeah, we are dripped to the nines. But yeah, you mentioned it's kind of been like the summer of luxury fashion mergers. As the luxury market has slowed down a little bit, it looks like people are looking to acquire different companies in order to continue to grow. And yeah, you mentioned the fashion house Zimmerman is an Australian fashion house. Australian fashion houses, like, rip. They do really well. The Australian fashion scene is one of the most robust in the world, so maybe we just got to get down under it.

9:37Yeah, I think we got to do an investigative piece and get flown to Australia. Let's get boots on the ground. All right, Kyle, let's move away from Australia and back to the Big Apple, where the Big Apple is big, but the rents are bigger. Everyone knows it's absurdly expensive to live in New York, but new data shows just how much we're talking. the average monthly rent in New York City in July was$5 ,588. That's up 9 % over last year and over 30 % compared to 2019. My bank account literally just gagged like hearing that. But here's the craziest part about these absurd rent prices. New York is losing residents.

10:19The city's population dropped by 400 ,000 people between June 2020 and June 2022, according to census data. And while experts think that the population probably has increased since last year, they say it is still likely below those 2019 levels. So Kyle, this is a very confusing and pricey time to be a New York renter for sure. Yes. And I will say there's nothing more that people like that live in New York to talk about New York. So this is a great story for us. It was very interesting too, to see that rents are even going up in some of the outer boroughs, Brooklyn, Queens. So we might actually start seeing some JP Morgan vests in Bushwick, which is really sad.

10:57But you're spot on. It seems like it shouldn't be going up. More people are leaving the city, but rents continue to increase. And so listing inventory in Manhattan on a year-over-year basis is up more than 10 percent. So rental inventory in Manhattan is almost 25 percent higher than it was pre-pandemic. And there's a great quote in an article I read that said, quote, it isn't the lack of supply that is pushing leasing activity down. We're seeing evidence of the decline in leasing is due to a challenge of affordability. And so it's kind of a contradictory story in some ways. Right. Like you said, inventory is up.

11:30It actually rose in July and yet people still can't afford the places. There are open apartments, but they're just too pricey. So I do think we're about to reach like a breaking point where rents just like can't go any higher because if inventory is being freed up and not filled, like it's just simple supply and demand, like something has to break. Also, So one explanation, though, for part of the reason why rents are staying so high and like there is this affordability crisis is that Airbnbs have kind of invaded the city a little bit. So a bunch of brokers are blaming Airbnbs for taking snapping up apartments that could have gone to to someone to rent.

12:06So Airbnbs, man. Yeah. Brian Chesky, please call us. Another reason is that part of the reasons rent remains so high is that mortgages are also very, very high because of inflation. And so people are feeling like they can't buy a house. So people that wouldn't be renting normally are forced to rent. And again, supply and demand as a philosophy major, clearly, I understand it well. That seems to be the case. Yeah. And another interesting wrinkle to this story is that even though New York rents are skyrocketing, offices have not really bounced back. So according to Castle Systems, New York offices were only 48 percent occupied at the end of July.

12:43so it is just like there's so many contradictory data points here we're like a ton of people are leaving new york city but rents are still rising but no one's really gone back to the office yet so just a confusing time all around so i guess you know what we should do is just move to minneapolis yes we talked about it yesterday they have the lowest the rate of housing inflation in the country you're our minneapolis expert should we head out there we should definitely head out there i could bore everyone with a ton of minneapolis facts but it is a great city and And Toby, I want to throw a theory at you.

13:13Hit me. I think in New York City, because rent prices are so high, couples move in together way faster than anywhere else in the country. So I want to see a study on that. Because$5K a month sounds a lot high, but you're like, we can move in, and it's$2 ,500 a month. Honey, I know we've only been dating for two weeks, but should we get a place together in Bushwick? I like that theory. There you go. All right, Kyle, before we jump into our next story, we're going to take a quick break. In America, half of every dollar spent on brand medicines goes to entities who don't make them. While middlemen like PBMs and 340B hospitals drive up costs, Biopharma is investing$500 billion in new infrastructure and manufacturing here at home and helping patients buy medicines directly at lower prices.

14:01Tell Washington to end middlemen markups and put American patients first. Visit phrma.org slash middlemen.

14:36Why shop anywhere else?

14:43So, Toby, I feel like there hasn't been really a true song of the summer. But if I had to pick one, it might be Inflation by Jerome Powell, because it's all we've been talking about for the past couple of years. The new inflation numbers just came in. And I would say overall, they're a bit of a mixed bag. So inflation ticked up to 3.2 % year over year in July and 0.2 % from June alone. But they had been falling for 13 months prior. So this is the first uptick in a while. And to take you back in time, inflation was at 9.1 % about two years ago. And we've made kind of steady progress in bringing that down towards the 2 % target.

15:24and there is going to be a decision to raise rates again, possibly in September. So people are really tuned into this number. What's your take on it? My take is that it has been the song this summer, but it's actually kind of slowly fading away. I think there's like a new Ariana Grande song just dropped because like, look it, we're talking about it. It's our fourth story today. It used to be like our first story always because it was just so high for so long. So you're right, like 13 months in a row. this was a slight uptick but honestly if you look at core cpi which excludes volatile food and energy prices that actually dropped slightly from 4.8 to 4.7 so it really depends on like which number you you really want to focus in on like top line cpi or the the core cpi some of the big drops came from airline fares which again like i always i hate when i see like airline fares are have dropped 8.1%.

16:18That has not been the case with any of the flights I've booked. Yeah, where is this drop? I was saying, I guess it's just nothing to the weapon. Spirit Airlines. Yeah, Spirit Airlines. And then car prices actually finally eased down. So in July, new car prices rose less than 1 % compared to the year before. That's the smallest increase in the past decade, according to Kelly Blue Book. And part of the reason is inventories have finally recovered a little bit. People have a little more cars on the lots. But then also, remember Tesla kind of kicked off this EV price were. They just kept dropping up prices, and a lot of other companies had to react to the market leader in EVs dropping their prices.

16:55It's kind of nice. Tesla almost single-handedly erased new car inflation. Keep dropping it, Elon. Keep it going low. One of the knock-on effects is high interest rates have been driving up the cost of mortgages, obviously, and balance carrying credit cards. An interesting stat, I thought, was that consumer debt has ballooned to$17.9 billion from May to June, and American credit card balances have now surpassed$1 trillion. I might be like half of that, to be honest. I know. That was our second story a couple of days ago. Coming full circle. Yeah, we're always on top of it. Just to put a bow on this story, it does feel like this is— the Biden campaign has been kind of framing this as a win because they're like, look, we've dropped inflation from that 9 % number all the way to here.

17:41although you can easily, the Republican National Committee set out a fundraising email saying like it ticked up again this month. So it really is, as you said, it was kind of a mixed bag. You can interpret it as, hey, this is Bidenomics working, like how much inflation has fallen, but then you can also interpret it as the other way. So I think inflation is going to be increasingly like an important issue as we enter like election season. And it really depends on like if you're taking the macro view or like the month-to-month view going forward. All right, Kyle, let's move on to our Friday segment, Stock of the Week, Dog of the Week, where we look at one stock who would win best in show at the Westminster Dog Show and one that would pee on the judges.

18:22I'm up first because I won the pre-show arm wrestle, and our Stock of the Week is the energy drink company Celsius. It had another absurdly good quarter. Revenue jumped 112 % to a record$326 million in the second quarter. That demolished expectations of$277 million, and it has now seen more than 100 % revenue growth in each of the past two quarters. The stock was up 20 % over the past week and 72 % year-to-date. Kyle, I think I know the answer to this, but are you a Celsius guy? I'm a big Celsius. As someone named Kyle, you have to be a bit of a resident energy drink expert. And so big Celsius guy.

19:02And I will say, one, this is not financial advice, obviously, but the MB Daily team started drinking Celsius and now the stock is shooting up. So we might be moving markets. Thank you. I forgot our disclaimer. We are just humble podcasters. None of this should be construed as financial advice. But yeah, Celsius is killing it all fronts. We do drink it like we're up early every morning. So we do need that little kick. But yeah, one of the biggest fronts that I think Celsius has really succeeded on is it has reached that critical distribution threshold. It was the second largest energy drink sold on Amazon in the 14 weeks to the end of June, trailing only Monster.

19:41And then they also struck a deal with PepsiCo. It joined PepsiCo's distribution network at the end of 2022, which is why you're probably suddenly seeing this drink literally everywhere. so once you kind of get to that critical distribution threshold and you're in the airport you're in the convenience stores you're in the bodegas uh that that is one of the reasons why we're just seeing like it's sales go parabolic basically yeah and i think they've done a great job of like reframing it almost as like a health drink as well it's right it doesn't have the same uh like connotation connotation as monster but it's like oh no you drink this it's really healthy really it just has enough caffeine to kill a small child that's it it literally yeah it has 200 milligrams of caffeine.

20:22And if Morning Brew Daily listeners know that we talked about Prime Energy and how regulators are looking at that because that had 200 milligrams of caffeine in it. So Celsius and Prime have the exact same thing, but Prime is banned in Canada because a lot more kids drink it. So Celsius is like, yeah, the adult version of Prime, I'd say. So if you see me and Toby shaking on camera, it's because we had some Celsius. Let's move on now to the dog of the week, and that is Proterra, which is a company that develops battery systems for buses and other heavy-duty EVs, and it actually, RIP, filed for bankruptcy earlier this week.

20:59This company launched in 2004, so it's been around for a while. So it was an electric transit bus company. In 2021, it went public through SPAC, which just red flag now. If you've SPAC'd, trouble is coming. This was a very capital-intensive business. They have multiple different sources of revenue. And there's a few reasons why this business got very hard to operate. One, capital markets have tightened. When you're in a capital-intensive business, money is not there. They also work with city and state governments. They have long purchasing cycles. They're relying on federal and state funding. So it's a tough procurement process.

21:34And then finally, every transit agency has different requirements for what they want in a bus. So you can't scale one simple solution. So it's a tough time for Patera. Yeah, it was interesting because a lot of people, this was like a darling of the early EV ways, 2004. Like this was not some like pre-revenue startup or anything. Like it's been around for a long time. So everyone was a little shocked when they saw like this bankruptcy announcement. But then when you piece together like the puzzle you just said, they are working in the most capital intensive business with like the worst partners of state governments who all want like their own special batteries.

22:06So once you zoom out, you're like, all right, this was a really difficult business to operate. Yeah, the stock is down 92 % over the last five days. This bankruptcy announcement did not go meme stock. It just went in reverse. So yeah, RIP Proterra. It does still intend to operate as a business, and when it said when it voluntarily filed for protection under Chapter 11 that this move will strengthen its financial position. So it is the dog of the week now, but I'm hoping one day it can be your stock of the week in the future. Bounce back. Best in show, yeah. Yes. All right, let's move on to the last story of the day, And this one has everything.

22:41Dazzling skyscrapers, snazzy new buildings, rooftop pools. No, this isn't Abu Dhabi. It's your local college campus. That's right. Colleges are spending like there is no tomorrow. Wall Street Journal had a fantastic investigative piece on this. And they said, quote, these places are just devouring money. And it's an absolute banger of an article. So go check it out. Let me give you some some facts, Toby. So at the median flagship university, spending has rose 38 % between 2002 and 2022. And sometimes stats don't tell the whole story. So here's some stories. The University of Kentucky upgraded its campus to the tune of$805 ,000 a day.

23:22The University of Oklahoma acquired and renovated a 32 ,000 square foot Italian monastery for its study abroad program. And Penn State spent so much money that it now has a budget crisis. So this story really has it all. Like, what was your big takeaways from this article? My takeaway was just like, this is such a ridiculous process because no one ever says no to budget increases. Literally, an economist found that trustees approved 98 % of cost increasing proposals at large public universities. Because who wants to be the person who says like, no, we don't want to improve our school. Like, it's very hard to actually audit like the budgets of these public universities.

24:05So that was my big takeaway. And also just like the absurdity of some of these numbers of just like, oh, the University of Oklahoma is spending on a monastery. Like it's ridiculous. Fourteen million dollars, like absolutely absurd money. Yeah. And there is a reason if you look at the economics of a school, like the most valuable customer to a university is someone with high test scores that doesn't need financial aid because they're going to pay full tuition and colleges are able to see that money right away. And so they're all competing for this smaller and smaller batch of students. And what do they want?

24:39They want gaming studios. They want new gyms. They want nice apartments. And so that is kind of pushing it alongside, as you said, the ability for trustees. They just don't say no. And also what is interesting, we kind of have to talk about student loans and student debt. Like this story, this story is inextricably tied to that. There's a$1.6 trillion federal student debt crisis. and basically these schools have been using, you know, federal and state loans given to students to finance a lot of these capital expenses and students are really facing the run of this. Yeah, you're totally right. Like it gets passed on to like the debt holders.