The Summer of Spending Thanks to Taylor Swift, Beyonce & Barbenheimer

0:00Stocks? ETFs? Or what about mutual funds? Choosing your investments is easier with Fidelity. Our step-by-step experience can help you pick out the right investments for you. Plus, with recurring investments, you can decide how much and how often to invest. Lastly, there's 24-7 help if and when you need it. To find your next investment, head to fidelity.com slash trading. Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC, member NYSC SIPC. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. On today's special holiday podcast, Toby and I will recap summer 2023 by presenting the one story that we thought defined the past few months.

0:41We'll also go over some of our most embarrassing flubs because who would want to forget those? Then we'll look ahead to the next half of the year to see what's on the horizon before finishing up with some predictions that we will 100 % get correct and won't come back to bite us at all. It's Monday, September 4th. Let's ride.

1:06Happy Labor Day. Hope you're able to avoid doing any labor today besides making a massive pancake breakfast or shopping for sweaters online. Because of the holiday, today's Morning Brew daily episode will be different than usual. Labor Day is considered the unofficial end of summer, so Toby and I are going to discuss the news stories that define the summer and preview the rest of the year. Plus, we're going to quiz each other because we are hopelessly competitive about trivia. Hope you enjoy and let's you reminisce about all the good times we had together because winter is coming. Okay, to start things off, Toby and I are going to pick the one story that we think defines summer 2023 and present our case.

1:44And I will go first. The story that I think defines summer 2023, and I don't think anyone is going to be particularly surprised by it, is what I call Barbe Oppenielor. That's the term I coined for the phenomenon of watching Barbie and Oppenheimer in theaters, seeing Taylor Swift and Beyonce in concert, and catching a Lionel Messi game for Inter Miami. First of all, if anyone did all five of those, please let me know because that is extremely impressive and you probably have a private jet I could hitch a ride on. Anyways, the reason I think these five cultural events are so important is because they reveal a lot about the psyche of the American consumer in our first real summer after the pandemic.

2:23During COVID, people couldn't choose to buy experiences because we were all at home. So we loaded up on physical goods to renovate our houses, learn a new hobby like pickleball, and buy fancy toys for our new pets. All this buying of stuff drove inflation to levels we hadn't seen in decades. But this summer was maybe the first new normal summer, and it looks a lot like the old normal of 2019. People spent more at experiences like concerts, movies, and sporting events. They ate out more, and they traveled internationally. all things that were trending up before the pandemic. Meanwhile, Americans stopped buying so much stuff at Home Depot and Dix, as we learned in these companies' disappointing earnings reports recently.

3:02Of course, there are a lot more threads to pull out here, but no doubt these superstars commanded our attention and our dollars this summer. What do you think about things like Taylor Swift and Barbenheimer? What do they mean to you? Okay, two things stood out for me. By the way, thank you for pulling all those threads together, Neil. That was artfully done. But to me, first, we have to remember what the outlook, economic outlook going into the summer was. Remember, pretty much every major economist at a major bank said that we were going to enter a recession. Rates were going to be simply too high and was going to constrain economic activity far too much.

3:35And then all of a sudden, every single month, we're like, OK, we haven't gotten into a recession yet. But next month, for sure. Next month, for sure. And it was because we just kept spending our way through it all. And one of the big things I think that was underestimated was just the sheer power of women as an economic force. First of all, they're constantly underestimated as an economic force. And this was the summer that everyone finally woke up to the fact. I mean, even the Fed's Beige book, which is kind of their commentary on the economy that they publish eight times a year, called out Taylor Swift for boosting Philadelphia's hotel industry.

4:08Barbie is the biggest movie in Warner Bros. history. This was truly just the year of the summer of the woman, basically, and just them economic, they're exerting their economic power for everyone becoming aware of it for the first time. And the thing is, they went in groups, too. It wasn't kind of a solo endeavor. So more than 80 % of people who bought tickets to see Taylor Swift and Beyonce, they purchased more than two tickets to those tours. So you saw like these groups come together and really, you know, flex their economic muscle. And just overall, the sheer economic power of these cultural forces like Barbenheimer and Taylor Swift and stuff, you see them actually coming into GDP data.

4:51So over the summer, all this spending, I think it's going to amount to 8.5 billion in total on those two tours and the two movies are going to add 0.5 % to GDP. So maybe one of the reasons that we're able to avoid this recession that you talked about is because of these concerts and these movies and these cultural events. Yeah, you just can't forecast that as an economist. You can't forecast that we'll have two of the biggest tours of all time. I guess you could, but it truly did blow people out of the water. And then also just to put a bow tie on this whole experience over physical goods thing, we did see a huge increase in travel as well.

5:29Remember, especially travel to Europe was really hot at the beginning of the summer. Kayak reported that searches for European travel were 77 % higher than last year. Hopper said that of anyone who was browsing for international destinations, 30 % were searching for flights to Europe. And then passport demand, if you remember, in March was 30 to 40 % higher than last year's levels. So it was all these things where people were just finally ready to fly the coup, get away from the mainland, get over to Europe, and travel is just a huge part of this massive economic summer as well. Final point I want to make is what drives the experience economy is FOMO.

6:07And I think when you see Barbenheimer go viral on social media and Messi, every single goal Messi scores, you see it populate your feed. I think that's like, oh, I got to go and get in on this experience. So I think this virality on social media also drove a lot of the spending that we saw. Okay, Neil, my story of the summer is extreme weather and climate change. I feel like this summer, talking about the weather went from small talk to big talk really fast. I'm just going to run through all the extreme weather events that we've been tracking. First of all, this is an El Nino year, which researchers at Dartmouth estimated could cost the global economy as much as$3.4 trillion over the next five years.

6:52And we've already started to see its effects. We've seen historically hot ocean temperatures. A buoy in Manatee Bay, Florida reported an ocean temp of 101 degrees Fahrenheit, which is the highest ever recorded. And that has also led to historically hot air temperature as well. Starting on July 3rd, Earth reached its hottest day ever, a record four days in a row. In fact, things got so hot over in Europe that they actually named a heat wave for the first time, Cerberus, which is the three-headed dog from Greek mythology. There's also been droughts that have notably affected the Panama Canal, dropping its water to dangerously low levels and threatening to disrupt the global shipping industry.

7:32And droughts, combined with the heat I mentioned, have made this also the summer of wildfires. I'll never forget the few days when New York City had the worst air quality on Earth as wildfire smoke from Canada drifted our way and turned everything into a Blade Runner movie. Neil, I could keep going, but holy moly, it was a heck of a year. What stood out to me, though, was for the first time in a while, it seems like we are coming to terms with the real world effects of climate change. And I've seen more buzz around renewable energy, EVs, et cetera, than ever before. Yeah, especially because it was the one year anniversary of the Inflation Reduction Act, which offered$500 billion in incentives for clean energy projects.

8:10So you saw a lot of those get going, too. So on the one hand, you saw, yeah, we couldn't see each other because there was so much haze in New York and we were all coughing. And then on the other hand, you saw a lot of energy projects, clean energy projects, get going like offshore wind farms and chip plants. That's not exactly clean energy, but that's part of the equation. And EV plants and battery plants get going. So you saw kind of two sides of the same coin. And you're wondering if the, you know, the latter half, the clean energy part can catch up to what we all experienced this summer. But I think it's just going to be a structural change now.

8:44Like people may not be able to visit southern Europe as much because there's going to be constant heat waves there. And that's going to change tourism and tourism towards northern Europe. And supply chains are going to be affected all over because of climate. You mentioned Panama Canal getting so low. And that's been a storyline over the past few summers is rivers getting way too low for ships to traverse them. And gas prices was another thing that ticked up. And that was fueled by, no pun intended, refineries not being able to produce as much because they were idled by heat. So it's all of these sort of more permanent changes that I think we're gonna all have to deal with that kind of became visible this summer.

9:21I remember when we talked about El Nino right at the beginning of the summer and we saw that$3.4 trillion number and we kind of just like laughed to yourself because how can you really estimate the economic effects of a weather event? And then we just saw all these different ways it's impacting the economy directly right now. And this was for five years. I feel like it's an underestimate at this point. I mean, also another angle of this was the insurance angle where it's just becoming untenable in some places. Insurers are backing out of California and Florida due to just way too high disaster risks.

9:54Farmers, all states, state farm all have begun to withdraw because their exposure to extreme weather events is just too high to be profitable for them. So we're seeing real, real economic effects from things like the weather. And I mean, this was only one summer. It's just going to keep on going from there. Okay, Neil, let's move on to our next segment. This one I'm calling our first summer as podcasters because it was. Morning Brew Daily is still just six months old. And like any six month old, we've had our fair share of gaffes, misspeaks and mistakes. Whatever you want to call them, we've done them.

10:29And most of the time, it's you guys, our listeners, who catch them. So to have a little fun, Neil and I are going to revisit some of our more infamous MBD mess ups from the past few months. Neil, this is a safe space. What do you want to get off your chest? Here's what I want to get off my chest. NVIDIA. Apparently, sometimes they say NVIDIA instead of NVIDIA, which is this tech giant that also is a story of its own for being a leader in the AI space, and its stock is up 230 % this year. But a few YouTubeTube commenters pointed out that in one podcast, I said six NVIDIAs compared to four NVIDIAs.

11:08NVIDIAs. for NVIDIAs. You can't even pronounce it wrong now. And then, and then another person said, uh, when I say NVIDIA, it gives me an aneurysm. Okay. So that's my one mistake or that's one of the flubs that I have. Another is I got called out by so many of my friends for saying banal instead of banal. So I'll never get either of those wrong again, even though I just got NVIDIA wrong again. No, I'm not gonna lie. Those are pretty small compared to what I have coming. So here are my gaffes that I want to address. First came from a story where we were talking about the brands that work capital, the PE firm that bought Subway owns.

11:46And I brought up Culver's. Now I love Culver's, incredible cheese curds, incredible burgers, but I mistakenly said that they also have incredible ice cream. That was my fatal mistake. Culver's has custard and not ice cream. There's a difference. I looked it up. The main difference is the addition of egg yolks to custard. They give it a richer, creamier, thicker texture. so shout out Jeremy Miller and Angel Tello for calling me out on that one my next one is that I called the World Health Organization the WHO instead of the WHO so Neil thought that was a crazy move to call it the WHO and we had a debate about it on the show and I did get some listener support from the YouTube comment section as well as in our inbox so Lauren Matthews was on your side.

12:30She said, it's for sure the WHO, not the WHO. But then YouTube commenter Khalido Frio said, yes, you can call it the WHO. Toby was right. Wait, based on what authority? Okay, wait, I'm getting there. And then finally, Bamark Kusha said, those of us in the profession slash global health industry, call it WHO or WHO. So truly, we were both right in the end, even though we had a nice laugh about it on the show. Am I validated in that or no? No, I'm not giving that to you. Who is like a, first of all, it's abandoned. It's a very common word. You can't have an acronym that's also a common word. It gets confusing.

13:09Yes, you can. You can literally, as long as you put the in front of it, it's not calling, it's the who. I don't know. I don't want to get into it again. I'm just going to say that I'm validated on that one. Okay. And then the final thing that has emerged over the summer is something that I call the inverse Toby, where basically whenever I predict something, the opposite comes true. For instance, I said that the U.S. would win the Women's World Cup. They lost in the quarterfinals. I said Trinity Rodman would be the breakout player of the tournament. She didn't score a single goal. I said Nigeria was my new team of destiny after the U.S.

13:41lost. They lost immediately after I said that to England. Even outside of sports, I predicted who would have the biggest box office halls between Barbie, Oppenheimer, and Mission Impossible. I said Mission Impossible would win by far. It was the smallest by far. So, Neil, if I predict anything on this pod, immediately go bet on the opposite thing. All right. Well, we're going to do some predictions later in the show, so we'll be able to put that to the test. The inverse Toby is alive and well. All right. Before we jump into our next story, which is a little quiz off between Neil and I, we're going to take a quick break.

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14:49When 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. We're back with one of our favorite pastimes, trivia. Toby and I have each prepared a different quiz for each other about the summer, and we definitely encourage you all to play along and also make fun of us when we get something wrong.

15:29So, Toby, I think you're going first. You're quizzing me. All right. So for anyone who listens to the show, we have a segment called Stock of the Week, Dog of the Week every Friday. And even though we are just humble podcasters and not financial advisors, we do keep tab on what's going on in the market. So I want to give you a quick market quiz, Neil, to see just how well you know your equities, baby. So first question, can you name the top five best performing stocks of the year in the S &P 500? All right. Number one, NVIDIA. Number two, Meta. Crap. Number three. Just let me know whenever you want hints.

16:07Like maybe like Warner Brothers or something. I'm just trying to think about something that was really far down last year. So I'll go Warner Brothers. Probably another tech name. Amazon's too big. Palantir maybe and let's go with Morning Brew. Morning Brew is up the most. You are on the right track so you got NVIDIA that's up 228 % you got Meta too which was impressive up 142 % just crazy. Okay the third one is a car company Tesla? Tesla is up 117 % this year and then the last two are travel companies so you were correct and you're thinking of Expedia? Booking? Not air travel, not ground travel.

16:52What's another type of travel? Oh, Carnival. Carnival is the fifth best performing, 94%. And then Norwegian, number four. I'll give it to you. It's Royal Caribbean. So you're on the right way, 98%. We talked about those. Yes, you were totally directionally correct in thinking, all right, what was really down and what's up this year? So the cruise lines, I didn't know that they were top five best performing. Yeah, it's that experience economy we're talking about. Exactly, yeah. So well done on that, Neil. I actually thought meta would be a tricky one, but you nailed that one. Okay, so we did the best performing stocks.

17:25Now I want to go to the worst performing stocks. So the two worst performing stocks in the S &P 500 this year were Enphase Energy, which is down 52%, and SolarEdge Technologies, which is down 43%. But can you name the third worst performing stock of the year? And I would only ask this if it was a company that we have talked about on Stock of the Week, Pog of the Week. Dude, I black out during that time. I know. It's a vague question, but let's go on the same thought process. Energy, I know oil prices have been down. Last year, they were way up, and they've moderated. So Exxon or Chevron. I would think pandemic rather than energy.

18:02Oh, pandemic rather than energy. So I have three. Pandemic. I have three. Peloton is already so far down. I don't think it could go down even more. It's not Peloton. Zoom, I think, is coming back. What else? Maybe, oh, the cleaner company, Clorox. No, Clorox is already down. Here's a hint. It was the second best performing stock of 2020. Do you remember what the second best was? I don't. The top was Tesla. Okay, and the third hint is it starts with an E. E. And it's not ExxonMobil. What's the industry? Commerce. Etsy. Etsy. Etsy is down 38%. So that is the third worst performing stock in the S &P 500.

18:44It was one of our dog of the week. So we can certainly pick them, Neil. All right. Our third question is, of the top 10 biggest companies in the world, six are tech companies. Can you name the four that aren't? All right. Berkshire Hathaway. Nice. That's number eight. Definitely a pharma company now. Let's try Eli Lilly. Number 10. Okay. Let's try Johnson & Johnson. Not Johnson & Johnson. Visa. This is biggest companies in the world. Oh, in the world. Not just America. aramco aramco number three saudi aramco the uh the oil giant uh then we have lvma uh nova nordisk no it's no more you've already said this this company in our in our quiz nvidia not nvidia that's a tech company it's not a tech company although it does it is kind of a tech company it's an automobile company tesla tesla number seven so saudi aramco is third tesla seven eight is Berkshire Hathaway and number 10 was Eli Lilly.

19:39I thought Eli Lilly would be hard for you, but you immediately nailed that. Well done. Well done. Oh, you give me a lot of credit. I've got a lot of stuff wrong. You did better than I expected, honestly. All right. My turn for you. Here we go. So my quiz is called name that quote or really, or it's more like name the person who said the quote. I will read a quote from the summer's news and you'll have to tell me the name of the person who said it. Okay. Okay. First one. I recognize everything I've said in the past. I recognize people will call me a hypocrite. Anytime I've said anything, I've said it with the information I had.

20:11Oh, my gosh. I recognize this thing. Wait, wait, wait. Give me like a little hint. Give me a little hint. I totally know this. It's in the sports world. Oh, it's Jay Monaghan, the PGA commissioner. So he said this after the merger between Live Golf and the PGA Tour, and everyone kind of got on his case about it. There is a huge infusion from Saudi Arabia that they basically bought the sport of golf earlier this summer. OK, next quote. Send me location. Oh, it's Elon, right? Or send me. Look, is it for the fight between Elon and Zuck? Zuck. Yes. Mark Zuckerberg on Instagram challenged Elon Musk to a fight, to a cage match that was rumored back and forth for the past few months.

20:59Seems like that's not going to happen. And we kind of knew that all along. But for the first like week, it was fun. And then it just kind of dragged on. It was the lack of puncture or like proper grammar that got me. I'm like, that's got to be Elon, but send me location. That was send me location was Mark Zuckerberg. Okay. Here's the other one. I've made 33 dives. I've actually calculated that I've spent more time on the ship than the captain. James Cameron for the diving to the Titanic. So that was director James Cameron. And he was everywhere on doing so many interviews after the submersible, the Titan submersible imploded, killing all five people on board on its way down to the Titanic.

21:37So that was that. Remember, that was a huge story earlier this summer. OK, our fourth quote, there was a delicious mushroom dish. I was not aware that these mushrooms had hallucinogenic properties. That was Janet Yellen on her trip to China. Right. She had she had a magic mushroom without knowing it. She just like me for real. All right. Our final quote, I think you're four for four so far, maybe with a little three and a half for four and a half for four. Baby Gronk just stole Livvy from the drip king. Just whoever that guy on TikTok was who did that news story in millennial voice. Yeah. So this was a TikTok user, Henry Dettola, who unleashed a series of truly baffling videos about Livvy Dunn, the LSU gymnast and a kid named Baby Gronk that left a lot of people feeling like they no longer speak the language of the youth.

22:27That was crazy because even us, even me, who speaks for the youth, was like, all right, this is a step too far. This is too much internet for the day. But God, we've talked about a lot of stuff on this show, Neil. Let's move on to our next segment. While summer is basically over, we still have four months of the year left. So Toby and I are going to run down some major events and storylines to look out for until we go in for a smooch on New Year's Eve. Not Toby and I, just universally speaking. but people kiss on New Year's Eve. Anyway, Toby, go ahead with our first storyline. I think we're going to focus on the tech industry first, what to look out for.

23:02So what's on the docket is Apple's next event, Wanderlust, is coming up. And the big news is that the iPhone 15 is probably going to drop. And the big news on that iPhone drop is that it's going to have a USB-C charging port. Neil is fist pumping right now. So Apple chargers will no longer be the special butterfly that they are, and it's finally falling in line with the rest of the world. Honestly, I'm excited for it at this point, too. Let's just get on the USB-C bandwagon. People come over to my house, and they're like, can I have an iPhone charger? And I'm like, I don't have one. But now they will be.

23:35So thank you, the EU, for pushing that. What I'm looking out for in the tech world is there's an end of the era because Netflix is officially closing shop on its DVD service on September 29th. Crazy that they estimate that between 1.1 and 1.3 million people still subscribe to DVD rentals. Such good memories of it. I'm going to try to snag one because that's going to be a historic artifact one of these days. Let's move on to markets in the economy. The thing I'm looking out for is all these IPOs that could happen. Obviously, the IPO market has been absolutely silent over the past 18 months. It's starting to wake up with Kava.

24:12And then we had Instacart just recently filing its S1. So The SoftBank-owned chip designer is also planning to go public, which could be probably the biggest one of the year. And then I'm also looking forward to Birkenstock, which could go public at an$8 billion valuation. And we'll see it go. It's just always going to be compared to Crocs on the market. Yeah, Croc. That could be. It's like Crockenheimer. Birkencroc is going to be the winter story of choice. Okay, Neil, I am looking forward to how AI is going to affect the market going forward. So remember, if we're going to look in the rearview mirror, NVIDIA has just been absolutely riding the AI wave.

24:54So we'll see if NVIDIA can keep the momentum going after it reached a trillion dollar market cap. Also, the demise of Google's search business was greatly exaggerated. And in fact, it's rolling out more AI features than ever, just as quickly as anyone else. And then also can Bing, which is Microsoft's search engine, keep any of that momentum it captured going forward? So we'll see how kind of big tech and AI interact going forward. The S &P 500 is up about 17 % so far this year. So a nice rebound from last year. I'm wondering if we can make it 20 % by the end of the year, but we'll see. That has a lot to do with maybe Jerome Powell's interest rate hikes, which we can talk about a little bit later.