The Stock Market is on Fire & Marvel is in Crisis

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. On today's pod, will a pin replace your iPhone? One AI startup is trying to make it happen. Then a new study confirms you're not alone if you have no idea when you're actually supposed to tip these days.

0:46It's Monday, November 13th. Let's ride.

0:54Toby, I know you're a big donut guy. So I wanted to inform you and our listeners that you can get free donuts at Krispy Kreme this morning to celebrate something called World Kindness Day. The chain is giving away a dozen donuts to the first 500 people who come to each of its locations. So you could be the office hero today if you take a little initiative. My question is, if you're willing to give away 6 ,000 donuts, why not one donut for each of the first 6 ,000 customers? Then you get people coming in all day and people who only get one donut are more likely to buy things from you while at the store.

1:28Whereas if you give people a dozen donuts, they're probably like, OK, like this is plenty. I'm all set here. I'm just going to walk out. I think you're looking at it too much from a business perspective, Neil. That's why you're doing it. You're not looking at it from a maximizing kindness perspective. And I think if you give just one donut to people, then they're like, this wasn't kind enough. I didn't feel like I received enough kindness on World Kindness Day. So you need 12 donuts. That's what I'm thinking went down in the Krispy Kreme boardroom. Wow. Okay, before we dive into the news, let's do a quick shout out to our lovely, lovely sponsor, Brex.

2:01Toby, I don't know if a lot of people are aware of this, but you're actually in the middle of founding a pickleball shoe company. That's right, Neil. And the hardest part so far, other than convincing people that pickleball is awesome, is staying on budget. From paying designers to buying inventory, it can be a lot. Sounds like you could use Brex. It has AI-powered alerts that ping you when it recognizes budget anomalies or overages, so you can keep yourself accountable. All right, Neil. See you on the courts then? Definitely not. But if you're interested in trying out Brex, head to brex.com today.

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3:08In what's been one of the sneakier rallies I can remember, the S &P 500 is up nine out of the past 10 trading sessions, good for a 7.2 % rally over the past two weeks. And daily call options, which are a sign of bullish future bets on the S &P 500 going up, hit one of the highest levels on record this month. As usual, it comes back to what's going on with the interest rates and bond market. First, the Treasury announced that it would be increasing the amount of long-term debt it auctions off by a smaller amount than had been expected, which was a welcome surprise that helped drive demand for the bills up, sending yields down.

3:43Plus, Jerome Powell hinted that the Fed might not raise interest rates again before the year ends. Now, all eyes turn towards the future where the market has two more crossroads to navigate. First is the October inflation report, which drops tomorrow. If that comes in cooler than expected, traders might start to fully believe in the end-of-year rally. And finally, the last thing investors are waiting on to see if the Fed will hike interest rates one more time before the year ends. But the main takeaway here, Neil, is that the market has done remarkably well this year, despite tons of uncertainty.

4:15The S &P 500 is up 15 % year to date, and the NASDAQ is up over 32%. Yeah, we had this big rally at the beginning of the year. And then in the summer, there was this slump. And now we're back kind of sneakily, as you said, with the S &P rising 9 out of the 10 last sessions. This is totally a bet on the fact that the Fed has done hiking interest rates. We saw that bond yields, which follow interest rates, spike to over 5%, which was the most, the highest level in many decades. Those have fallen and stocks have risen because of that. So, you know, investors think that Jerome Powell has said his work is done.

4:52I've raised interest rates to 22-year highs, and our work is done here. Inflation is coming back down and stocks are primed for a rally. One thing that really stood out to me is that people got way more bullish on the market in just a span of one week. So this stat comes from a survey from the American Association of Individual Investors. The share of investors who said they expected share prices to rise over the next six months jumped to 43 % last week, up from 24 % a week prior. So that's crazy. Almost double the amount of people are bullish over the span of a week. And it just goes to show you how much the markets kind of hang on every last word.

5:25There was another bullish report from Goldman Sachs who wrote the title of their report was, the hard part is over. They are betting that there's going to be no U.S. recession, that inflation is going to continue to fall back to 2%. The global economy is going to continue to grow next year, and all major financial markets will do better than cash, which is not that easy these days when you can get 4 % to 5 % on cash. Remember, if we zoom out and we go back to the beginning of this year, More than two-thirds of economists at 23 major financial institutions expected the U.S. to have a downturn. That never really came to fruition.

5:59And then also economists surveyed at the beginning of the year said that they expected the unemployment level to reach above 5%. It's currently at 3.9%. So this is just a kind of come back around and check in on all those predictions and forecasts and see where we're currently at. And again, the market especially is doing a lot better than anyone expected. There was a little bad news last week, which we didn't talk about because it came out on Thursday or Friday, which was Moody's, the credit rating agency, downgraded its outlook on the U.S. government debt to negative from stable. And if you remember, Moody's is the only one that still maintains a AAA rating, which is the highest rating for U.S.

6:35government debt. The other two credit rating agencies, Fitch and Standard & Poor's, have knocked the U.S. down to AA +, which is the second highest from the top. So they're worried a little bit about U.S. government debt and our ability to repay that in this era of high interest rates. So the U.S. Treasury Secretary Janet Yellen and the Biden administration knocked that decision. But there is a little concern going around around the U.S.'s debt levels. OK, moving on. Last Thursday, we got a look at what a post-smartphone future might look like. And it looks like a pin. A startup founded by ex-Apple employees, Humane AI, released a pin that it thinks will be a smartphone killer.

7:16For$700 and a$24 monthly fee, you attach this pin to your shirt and use voice prompts to tell an AI chatbot what to do. No screen, no scrolling, no apps, just the pin. Humane's goal is to end the smartphone era by looking forward and backward. The backward part is the idea that we're all addicted to our phones, and by eliminating scrolling and screen time, we can be more connected to each other. The forward part is AI. If you think AI is this once-in-a-century tech innovation, then it probably isn't best used with hardware we've designed for a bygone era. If you have a free-flowing conversation with a really smart chatbot to look something up, reply to emails, take a photo, then maybe you don't need a bunch of apps cluttering a screen anyway.

7:58So time will tell if this pin will be a smartphone killer. I have my doubts for sure, but it still is a fascinating concept as companies race to develop an AI-first consumer gadget? Yeah, there's a lot to say about this. I'm going to start with some of the positives, maybe. And I think they're going about the creep. Feedback sandwich. Yeah, feedback sandwich. The positives, negative positives. I think they're going about the creep factor in the right way, because a lot of this new era of computing where there's all these devices that some people are wearing AI devices around their necks. You have the meta smart sunglasses, and you never really know if someone is recording you or not.

8:35humane is doing this thing where it makes you tap the device in order to activate it so it's not always on it's not waiting for a wake word like hey siri or something like that and then once you tap it a light flashes so i do think that's a big thing that they head on addressed is that no one wants to be feel like they're being recorded in public and so having it tap rather than waiting for a wake word i think was a good decision on that creep factor front you know what the use case that could really, that would get me to buy this is if I could ask it what my flight number is when I'm checking in, because apparently you can retrieve anything from your emails from this device.

9:09So I could, if I'm at the kiosk at United or something, and I'm like, what is my flight number? Because I can never find it. I have to go through a million emails. So that's just one example to say that this thing could drive a lot of efficiencies and make a lot of people's lives better. If they don't have to sort through their email, you're gone for a vacation for a month. You come back, you put on the pin, you say, catch me up on anything that I need to know about, about X or Y client or something like that. That was also a very nice feedback sandwich. Also, one thing that is interesting to me is that holding up food to the camera, you can get nutritional information.

9:40And it's a little dicey on how well this actually works because even in the demo video, they identified how much protein was in almonds and they kind of got that number wrong. But that's an interesting new case as well, that you're shopping in a store, you hold up a watermelon, you hold up a dragon fruit as they put in their example video. And they say, is this good for me? You can just ask it a very conversational question like that. And it'll kind of take you through the sugar content or something like that and say, yes, it is good for you or something like that. Let's get to the but part. Yeah, the big butts are, I feel like no one wants to talk to a pin in public because that is a very unnatural and antisocial thing to do is, again, a phone you can call is antisocial because we're all buried in it.

10:21But at least you're not speaking out loud in the middle of a grocery store to your pin. And I just can't see that becoming a social norm that becomes acceptable. But hey, prove me wrong, I guess. I think a few problems are the screen. You still have to look at stuff. Like we're humans. We have to look at stuff. We can't always digest information auditorily. And for the screen, instead of having a screen, what this does is this has lasers that projects a basically a smartwatch interface onto your hand as you hold it up. So you said you can't you can't imagine people talking to a pin in public. I can't imagine everyone holding up their hand just to look at something in public.

10:57Well, that's not really doing, right? No, I don't do it at all. It's a phone right now when you're you have your phone out. So I do think the auditory versus more, and although I will give you credit, it is awkward to hold your hand at this unnatural angle to get it projected upon. Plus there's no apps, and they touted the fact that there's no apps. But in a pretty scathing review for Ars Technica, the reviewer was like, the fact that this doesn't have any apps is going to be its killer. Because if I want to listen to music, I have to do it through basically any of the services that Humane has partnerships with.

11:30So I have to listen to Tidal. I can't just download Apple Music or Spotify and you run the gamut through all of the basic services. So, I mean, I think I can say we're both pretty bearish on this particular pin. But I do think something will come along that ends the smartphone because it was not designed for AI. My pick is it's going to be glasses. Yeah, I want to try it personally. So$699, I'll break the bank for it. For our next story, I want to talk about just how bad the new Marvel movie did at the box office. The movie from Marvel is titled The Marvels and stars Brie Larson as Captain Marvel.

12:04But no matter how many times they slapped their name on it, it couldn't capture the attention of moviegoers. It brought in just$47 million in ticket sales in the U.S. and Canada this past weekend, which is the lowest ever for a Marvel release. But it's even worse when you consider it costs$300 million to make and market. Neil, this is the mighty Marvel we're talking about. From 2008 when Iron Man came out, it has pretty much been nonstop, banger after banger. 32 films across more than 15 years brought in$30 billion in total, accumulating in a$2.8 billion haul for Avengers Endgame. But how far the mighty have fallen.

12:40To be fair, the Marvels were dealt a tough hand with the actor strike hamstringing its ability to promote the film. But there's also a general vibe around Marvel right now that you have to have watched previous films or TV shows to know what the heck is happening anymore. There is light at the end of the tunnel. The actor strike is officially over, which means actors can go back to promoting their movies while eating hot wings or hosting SNL. Plus, Disney only has one Marvel release planned for next year, which means they might be able to prioritize quality over quantity again. But, Neil, the L's keep mounting for the once-untouchable studio.

13:14I gotta say, I was watching the Patriots game yesterday. This feels a lot like what the Patriots are going through right now. The total end of a dynasty. I mean, the New York Times review for this was the Marvel's review. You've seen this movie 32 times before. And we totally have. I mean, just to talk about the fact that this was a sequel, this was the worst performing sequel ever. It made$100 million less than the previous version in 2019, not even adjusted for inflation. No sequel has ever made$100 million less in its opening debut than this. So this is truly a horrific performance. Yeah. Just like Billy Zappi.

13:51I think part of the problem is Disney Plus has just been so thirsty for new content to attract subscribers that they started cranking out just way too much content, way too much of these TV shows, which also resulted in this varying quality of visual effects as well. The VFX team at Marvel has spread so thin that they literally unionized after Quantumania, Ant-Man Quantumania came out. um so it is just you're seeing a kind of it breaking at all edges from the vfx to the audience demand for movies like this and i think it all came down to they launched a streaming service they're like we need new content people like superhero content let's just inundate them with that and you're seeing the the repercussions they'll pull back uh let's just talk about quick the movies that are coming out for the rest of the year because it's kind of fun the hunger games prequel comes out on friday which i have no interest in seeing but maybe you do i i'd certainly want to even though i knew i didn't know it was coming out because it wasn't promoted until you're right yeah i'm telling you i'm doing their promotion okay and then we have napoleon which i'm definitely into ridley scott and joaquin phoenix wonka it december 15th timothy chalamet a young wonka and the story shows how he met the oompa loompas originally he or not not he last year uh who's the oompa loompa in it it's the uh hew grand and then uh ferrari comes out christmas day with adam driver so that seems pretty dope good movie slate all right neil before we jump in the next half of our show, we're going to take a quick break.

15:19Does 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, you 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. Tonight on NBC, Jimmy Fallon and Bozema St. John host the highly anticipated new competition show.

15:56I 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 idea win! On brand with Jimmy Fallon. Series premiere tonight on NBC. Let's head to our winners of the weekend where Toby and I choose two people or things that are bringing everyone donuts this morning. I won the pre-show air guitar riff off so I get to go first and my winner is Jimbo Fisher, the former head football coach at Texas A &M.

16:36Now, I realize that picking Jimbo is a weird choice because he actually got fired this weekend for failing to lift his team out of mediocrity. But he's still clearly a winner because Texas A &M must now pay him the$77 million that's left on his contract through 2031. And if getting$77 million for doing poorly at your job sounds like a lot, it is. It's more than triple the largest known bio ever given to a college football coach. And it's far more than the$45 million Jimbo made while he actually coached there for six years. So just another staggering piece of evidence to show how college football is swimming in money, but not for the players.

17:13And sought-after coaches are able to tilt contracts in their favor even when they don't perform well. The funniest part about this to me is you were telling me before the show that oil prices actually influence how willing the Texas A &M boosters are to fund or do a buyout like this. And with oil approaching like$100 a barrel, they probably felt a little better about maybe getting rid of Jimbo Fisher and eating this just massive, massive golden parachute of buyout. Because Texas A &M is in West Texas, and a lot of Texas A &M alum are in the oil industry out there. So, yeah, when oil prices are rising, they're feeling flush with cash and can take a little more aggressive tack.

17:55In some ways, Saudi Arabia overpaying for soccer players is very similar to Texas A &M overpaying for football head coaches. It is an interesting ripple effect, certainly, of the global oil market. My winner of the weekend is buy-now-pay-later companies. Both Klarna and Affirm reported their quarterly results this week, and it went swimmingly. Affirm saw 37 % revenue growth, while Klarna was not far behind with 30 % revenue growth. And this is notable because buy-now-pay-later companies were not supposed to do well in this current rate environment. Higher interest rates were supposed to hurt because, unlike banks who fund their loans by receiving deposits, BNPL companies need to get their funds from the capital markets, like stocks or bonds, or the securitization markets, where they bundle together a portfolio of their loans and sell them to investors.

18:45So when the federal funds rate is hovering over 5%, banks hypothetically should have an advantage because their cost of acquiring capital, aka getting deposits, is way cheaper and easier than BNPL companies. But that hasn't quite come to fruition. Banks have found it harder to attract depositors than they expected. Meanwhile, pension funds and other asset managers are digging the returns on credit that a firm can offer. So while it's been a dark past few months for a firm in Klarna, between falling stock prices and layoffs for both companies, it looks like they are back. They're back. I mean, they're much smaller than they were, but they're somewhat back.

19:20Klarna was the most valuable European startup in history, and now its valuation is about 85 % lower than it was. So, yes, it's much smaller, but it did just post its first profitable quarter. So sometimes, you know, in tougher times, you get leaner and meaner and come out in a more positive way. And then both companies also reported less delinquencies, which means that they lost a lot less money on people who did not make their payments. And that's good for the overall health of the economy as well, because you don't want people falling behind on these kind of micro loans that Klarna and Affirm provide people.

19:56And they got the full holiday spending season around the corner. So the glow up is real. For our next story, let's talk tipping. I know a lot of our listeners out there have had the dreaded experience where you order an already too expensive latte, then are confronted with a screen suggesting an ungodly high amount of tip. It's anxiety inducing, makes you feel like a bad person if you don't tip. And it's becoming increasingly common according to a new Pew Research report. 72 % of Americans say that tipping is expected in more places than five years ago. And even though we are being asked to tip everywhere from the coffee shop to the barbershop, over a quarter of Americans are still confused about what services they're actually supposed to tip for.

20:38The only thing people are sure about is tipping at a sit-down restaurant, with 92 % saying they tip in that circumstance. Other notable tipping scenarios are 78 % will tip when getting a haircut, 76 % will tip when having food delivered, and 61 % will tip when using a taxi or a rideshare service. Neil, tipping has become a whole lot easier these days, given our quick access to the calculator apps on our phone and the rise of those iPad checkout systems. But tipping norms are more metal than ever, as the Pew report shows. Do you think we're entering an age or are living in an age of tipflation?

21:14I think probably the case is for, I think it's a specific scenario, which is the fast casual restaurant, I think, and the coffee shop. I think that's where those kiosks have proliferated because everyone uses toast or square, all these POS point of service, point of sale systems. And I think, you know, we've always tipped for delivery or we've always tipped for when you go out to a restaurant or at a haircut. I don't think those have changed in any significant way. But I think the use of this tech at, you know, at coffee shops and at fast casual restaurants is where people are feeling a little more uneasy because they're just kind of ordering a bowl of food or just someone pouring a drip coffee or making them a coffee.

21:57And they're just a little confused about how to tip at those specific locations. And I think that has kind of created an aura of confusion overall. I think tipping has gone from a way to reward service to a more of a social norm. So the difference is now there's this pressure to conform to this new tipping culture. So now societal pressure has become the main driver of tipping rather than just rewarding someone for good service. So I do think that's where the breakdown happens, where is it good service if, yes, someone just poured me a coffee? You want to reward people for doing if they're in the service industry.

22:32But now it's not necessarily something where you think they poured their coffee better than someone else. You just feel obligated to because of the pressure that you feel from society at large. So I think it's a fine line, but that's where a lot of this anxiety is coming from. See, I don't think there's that much more anxiety than there has been. I think we've always talked about tipping as American society. I remember there's a Seinfeld episode from the 90s where George gives a tip into a jar, but the guy who works there isn't looking. So he's like, oh, what was the point of that? So he reaches into the jar to take it back out.

23:05And then, of course, the employee turns around and they have a whole discussion around tipping and what the point is. So I don't I think this is just put put that on Neil's tombstone, by the way. I was there's a Seinfeld episode that I just wanted to show that I don't think this all this anxiety around tipping is anything particularly new. I think these kiosks are the big thing. And when you get when you get prompted for a tip for a self-checkout thing, then that is, I think, what bugs people. But for for service industry workers, it's a it's a big deal to obviously get a significant tip. All right.

23:36Let's hit a preview of our week ahead. Probably the biggest event happening this week is a face-to-face meeting between President Biden and Chinese President Xi Jinping at a summit of leaders in San Francisco. Both Xi and Biden have said they want to repair the deteriorating relationship between the world's two largest economies. But expectations for a breakthrough are low for this particular meeting. Also worth noting, while he's in SF, Xi will be the guest of honor at a dinner with the CEOs of top American companies and hundreds of other business leaders. So it just shows how China is still a huge market for U.S.

24:08companies. Yeah. I always just wonder how awkward these meetings are because you're sanctioning the heck out of each other. You're restricting chip technology. And now you're supposed to sit down and just shake hands and smile at each other. So I would love to be a fly on the wall on what they're talking about. But just the awkwardness level to me, too much. Have you met a politician? They live for this. They bash people somewhere and then they go shake hands with them and eat dinner. Like that's the whole game. Not for me. Okay. Up next. Tell me if you've heard this one before. The government is set to shut down at midnight on Friday and lawmakers are scrambling to pass a spending bill to keep the government open.