US Dollar Falls to 3-Year Low & Prediction Markets Take on the Next Pope

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0:28Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, Chipotle will open its first locations in Mexico. it go, what could go wrong? Then in the wake of the Pope's death, people are taking to prediction markets to bet on the outcome of the upcoming conclave. It's Tuesday, April 22nd. Let's ride.

0:51Good morning and happy Earth Day, which takes place every April 22nd to raise awareness around environmental protection. To me, it's an opportunity to reflect on just how many things had to go right for us to be living here. The Earth happens to be located in a remote section of the Milky Way galaxy, which means fewer threats, like a huge star devouring us. As for the star nearby, the sun, we have a key magnetic field that deflects its deadly flares. We have a moon that stabilizes the climate, a bodyguard in Jupiter that redirects asteroids and comets from smashing into us, and an active plate tectonic system that produces volcanoes whose eruptions may have led to the first instances of life.

1:32And if all that doesn't make us the best planet around, we also have unlimited breadsticks. Also, just for some more perspective on this Tuesday morning, if Earth's four and a half billion year history was squeezed into a 24 hour clock, humans, you, me, Neil, your neighbor, Paul, everyone you ever know or have known showed up at 1159, 59 p.m. So remember, we're guests who just got here. So take your shoes off, compliment the decor, and let's try not to leave a mess. And now a word from our sponsor, Planet Oat. Neil, have you ever noticed how the right lighting can make a room feel totally different?

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3:21Terms and conditions apply. Investors came back to work after the three-day Easter weekend and clearly didn't find it relaxing. The sell America trade that has been stalking Wall Street since President Trump announced sweeping tariffs on April 2nd was back in full force. The S &P 500 and Nasdaq dropped more than 2 percent and the Dow lost nearly 1000 points. That index is on pace for its worst April since the Great Depression. More significantly, the dollar continued its free fall down to a three year low against the euro. even while virtually every other major currency was higher. Bonds also sold off, continuing this unusual scenario that has spooked investors for the past couple of weeks.

4:03Remember, when times get hairy, investors have flocked to treasuries and the dollar because America has been the most dependable partner. The opposite is happening now. Meanwhile, gold rocketed higher to another record, topping$3 ,500 an ounce for the first time ever. Analysts say that what we're seeing here, equities, bonds, and the dollar all falling in tandem, is investors fleeing American assets due to uncertainty around the trade war and President Trump's suggestions at firing Fed Chair Jerome Powell, which would abolish the Fed's independence that investors considered a bedrock of the global financial system.

4:39Trump did nothing to alleviate those concerns yesterday, ramping up his criticism of Powell in a post on True Social. He called the Fed chair a major loser and demanded Powell lower interest rates immediately, which contributed to the market sell off. Toby, sinking dollar, sinking bonds, sinking stocks. It's been a disturbing trend to investors and a sign they are increasingly losing faith in America as a safe haven. Yeah, not a fun combo whatsoever. So what does a weaker dollar actually mean? There are some pros if you're sitting as someone who thinks that U.S. exports should get cheaper. American-made goods cost less overseas, which can technically boost sales for U.S.

5:19companies, help domestic factories, farmers, manufacturers, you name it. So it could support U.S. manufacturing, which is a stated goal of this administration. Companies may start making more things domestically if foreign goods aren't as cheap comparatively. That is a big argument for driving the U.S. dollar down. Some other less prominent arguments are technically tourism to the U.S. might go up, although we've seen the opposite happen just because of the general attitude that we've adopted towards other countries. And then finally can help pay down foreign debt if the U.S. has debt in dollars, which it does.

5:51Paying it off is cheaper relative to other currencies. But there are also a lot of cons to a weaker dollar. One, imports get more expensive. Stuff made abroad, electronics, clothes, cars, food gets pricier. Remember, we import a lot more than we export. That's the whole basis of this trade war we're conducting. So that can fuel inflation. Then also traveling abroad gets more expensive now. The opposite is true. Remember how everyone was going to Japan earlier in the year because there was a weaker yen. No more Japan trips for you as the dollar gets cheaper. And then also it just shakes investor confidence.

6:24As you said, as this sell America trade keeps percolating through the markets, you're just less confident in the U.S. economy. So that manifests as more volatility and less foreign investment. So when you hear the dollar is weaker, the dollar just hit a three-year low. Hopefully this provides a little more context around what that actually means. And I also want to turn to the treasury yields as well, not just the dollar, because those yields are going off. People are selling bonds. This month has been a historic moment in the bond market. Like, I wouldn't be surprised if Michael Lewis would write a book about it one day.

6:58We've seen the biggest weekly surge in the yield on 10-year treasuries in more than two decades. 30-year yields had their largest weekly increase since 1987. For decades, foreigners, foreign investors have plowed money into the U.S. Treasury market because it is the bedrock of global finance and it has led to this premium that Americans get on interest rates. Our 30-year, I know it doesn't feel like it now, but our interest rates for buying mortgages is, or for getting mortgages, is lower. Interest rates across the economy are suppressed than they would have had foreign investors not plowed money, plowed trillions of dollars into our treasury market.

7:41It allows the government to borrow more cheaply. And now that yields are rising, all these borrowing costs across the economy are going up. And it's downright spooking investors that perhaps foreign investors are lowering their demand or interest in U.S. treasuries. What ties the bow on what we've been talking about together is gold this year because, I mean, gold is ripping. It is behaving like the Magnificent Seven. So far, gold has outperformed the stock market by 42.5 % so far this year. Gold has always been that safe haven asset, but like Bitcoin has come along and tried to say, hey, we can be a safe haven asset.

8:21But that usually kind of correlates more closely with the actual stock market, specifically NASDAQ. NASDAQ. So gold, you know, the oldest metal, it is a store of value right now. And it's massively outperforming all these other asset classes that we've been talking about. Here's a crazy stat. Gold could not move from where it is now in 2025, and it would have its best year since 1980. So just truly a crazy run for gold. Moving on, tributes poured in from across the globe yesterday after the Vatican announced that Pope Francis, the leader of more than 1 billion Catholics died at age 88. In his 12 years as Pope, Francis left behind a historic legacy of reform, such as clamping down on the church's financial misdeeds, embracing the global poor and marginalized, and addressing modern threats like climate change and artificial intelligence.

9:09But even before Francis' funeral plans were made, a big question came up, who will be the next Pope? No one will know until a conclave of cardinals chooses the next Catholic leader in one of the most unique and secretive traditions on planet Earth, but that's not stopping people from betting on it. Prediction markets, which surged in popularity during the last presidential election, have once again been thrust into the spotlight over the outcome of a new election. On polymarket, the prompt, who will be the next pope, has drawn more than$3.5 million in wagers, but that's not all. People are betting on which continent the new pope will be from, or what name he will choose, or whether he'll be selected by May.

9:48Overall, the papal market has become one of the biggest active pools on the platform. Many have criticized this sort of papal wagering as distasteful and perverse, especially when Pope Francis was still alive. But Toby, if you go back in history, there is a long tradition of people wagering on popes. Yeah, this is certainly not a new thing. The technology is new, but the fact that there was a gambling culture that existed around this is not new. There was a big gambling culture in Renaissance Rome. There were these things called sensalis, which are essentially your bookie who you sent memos to on the weekend.

10:19They took bets on everything from the identities of new cardinals to who actually would become a pope. There's also newspapers and newsletters that would spring up around conclaves. People kind of liken it to the comment section on Polymarket right now. So it shouldn't shock us that there has been this kind of long tradition of gambling around it. And obviously the spread of information at that time did impact the process of the new pope. I wonder if we'll see a similar thing today. There was this very egregious example back in 1555 when some rumor mongers spread this idea that one of the top candidates had died, that lowered that candidate's chances in wagering, which probably led to a nice little profit on the side.

11:02So you can draw parallels to modern day markets where, you know, some rumors are going to fly. Polymarket odds might change very quickly based on those rumors and someone might stand to make a profit. So nothing is new under the sun. We've been seeing this all the way back in the 1500s. Now we just have polymarket. We saw it back in the 1500s, but in 1591, the hammer came down actually from Pope Gregory XIV. Yes, I'm reading these Roman numerals correctly. So he issued this bull called Kogit Nas that said, you can't bet on anything that has to do with popes or else we'll excommunicate you, which was the worst punishment at the time.

11:40So for centuries, Gambling on this did go down in the early 20th century. The church lifted its ban on betting. And then over the 70s, 80s, 90s, we saw gambling, you know, start to pick up again on Pope's Paddy Power. The last time this happened in 2013, Paddy Power, which is a UK betting platform, you know, gained a lot of headlines for allowing people to bet on this outcome. It's just very interesting because, you know, unlike the NFL draft or these other things that people bet on, it is so secretive. You know, and I think a lot of people are probably going to watch the movie Conclave that came out last year to learn more about this process.

12:17But basically, no information escapes those walls. So we'll see how the odds change and what information they're trading on. Yeah, and by the way, if you think you're going to predict the next pope, you're probably not because Pope Francis started at 55 to 1 odds and never had better than 32 to 1 odds. So if you think you're going to nail the next papacy, you probably are not. Chipotle is opening a store where no one will mispronounce their name. in the very country that inspired its cuisine, Mexico. The burrito chain is partnering with a restaurant operator who has experience running brands like Domino's and Starbucks to begin opening outposts in Mexico by 2026.

12:50The hope is that the familiar ingredients will make it a success south of the border as the company eyes growth outside of the U.S. But just because Chipotle's carnitas, guac, and other offerings take their cues for Mexican dishes, it doesn't mean that Mexicans will actually turn out. No one knows that better than another Mexican-inspired chain, Taco Bell. It tried to enter the market back in 1992, but was essentially laughed at for its inauthentic naming conventions like Tacostadas, especially when it was juxtaposed next to mom-and-pop taquerias. It packed up its cheesy gordita crunches and shut down every location just two years later.

13:28It's like bringing ice to the Arctic, historian Carlos Montesivas told the AP at the time. But sometimes the US-ified versions of traditional food and beverage do find success. Starbucks entered the Italian market in 2017 by leaning into Humility in a proprietary coffee blend tailor-made for Italian tastes. And now it has 30 stores in operation. So, Neil, on a scale of Taco Bell to Starbucks, where do we think Chipotle is going to land? It could go either way. It totally depends on how they do that. And you can see that by what Taco Bell did because it tried to go into the Mexican market twice, adopting two very different approaches.

14:05In the early 90s, when it tried to go into Mexico the first time, it tried to present itself as this authentic taqueria. They opened in a taco stand and they tried to cater their menu and ingredients to fit into the local mosaic. That didn't work. So then they came back in the 2000s and said, you know what? You're right. We're an American chain that is inspired by Mexican cuisine, but we're not really trying to be a part of your milieu. So they took out an ad in a newspaper saying one look alone is enough to tell that Taco Bell is not a taqueria. It is a new fast food alternative that does not pretend to be Mexican food.

14:44Well, guess what? That didn't work as well. So I'm sure Chipotle is studying this a lot more closely than we are to see what is the right tactic to get people to embrace Chipotle. Are they trying to present themselves as this authentic Mexican-inspired restaurant that could fit into the local cuisine? Or are they just going to say, you know what, we're Chipotle, we're from Boulder, Colorado, and you like other American goods, so maybe you'll like this one as well. And then maybe it won't be something as sexy as their brand positioning that will make or break its fortunes in Mexico. Maybe it's just the cost of importing food to Mexico because it makes sense that to open a chain in Mexico because a lot of their avocados come from south of the border.

15:25Now they won't have to pay those import fees. So technically, they should be able to keep their menu prices a little bit lower than you see. I mean, they're not going to be$16,$17,$18 burrito bowls like I'm loading up in New York City because I'm getting extra guac. So potentially they will be able to fit in more with their supply chain and their prices to say that we're not like this Americanized chain with Americanized prices. Or maybe they won't be able to pull that off. So it could just be pricing power that ends up, you know, dictating the fortunes of Chipotle in Mexico. If you were Chipotle execs, would you go in and try to say like we're one of you or would you adopt the second Taco Bell approach and just be like, yeah, we have burrito bowls.

16:04You probably have never heard of that before because we invented it in Colorado. but you know that is what we do and you know I think you're gonna like it I think just lean into the quality aspect don't try to be anything you're not just say hey we make quality ingredients right there in front of you come try it if you want it up next we got Toby's Trends

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18:19It initially debuted to modest success back in 2021, but that modest success gradually turned into smashing success due to a single TikTok. A video posted in December of 2023 features a girl just eating Dubai chocolate in her car. The ASMR vibes combined with the clearly delicious looking treat has since racked up over 120 million views, and it has put some serious strain on its key ingredient. One nut trader told the Financial Times, the pistachio world is basically tapped out at the moment, with the craze pushing prices to over$10 a pound, a 34 % rise in just a year. And one chocolate shop in the UK sells Dubai chocolate at more than double the price of its other bars.

19:03It does look like the only thing that can slow Dubai chocolate's roll now is shortages. The U.S. pistachio industry is coming off a poor harvest, and now it's got to contend with half of TikTok clamoring for this delicious new treat, Neil. This is a very cool example of guerrilla marketing, too, because the bars were first invented in 2021 by this British Egyptian woman living in Dubai, Sarah Hamouda. And she made these bars while she was pregnant because she wanted to, you know, kind of indulge herself. And she sent all these bars to a bunch of local influencers and said, hey, do you want to try my chocolate?

19:36This is, you know, a tactic that a lot of people do when they're creating a product. They're going to send it to influencers and see whether they make a video about it that happens to go viral. And, you know, one caught on. He racked up so many millions of views and led to a global craze that's, you know, I've never had this, but, you know, you can't get it anywhere because it sells out in multiple hours when these stores have it in stock. It's leading to a global shortage of pistachios. So an absolute sensation. One interesting aspect of this is the U.S. is actually the world leader in exporting pistachios.

20:10That's one thing we do export. And when I say that the U.S. crop, the U.S., the most recent U.S. crop had a shortage. It was actually because they had a higher quality than usual crop, leaving fewer of the cheaper, you know, shell free kernels that usually are used as ingredients and stuff like baking or chocolate. So it was almost too good of a harvest season for the United States. And also it's coming off of a year where there was a supply glut in 2023. So suddenly there was like this global supply exceeding demand back in 2023. So maybe that coincided with the fact that a lot of chocolatiers were experimenting around with this ingredient.

20:52And so it's been like the worst of both worlds where they're like, all right, there's going to be a lot of pistachios because we're in the supply glut environment. Now there's a supply shortage and prices are kind of skyrocketing and leading to Dubai chocolate being very expensive as well. Well, I need to get my hands on this because it looks so good. Delicious. Okay, let's sprint to the finish with some final headlines. In its monumental battle against the Trump administration, Harvard has turned the volume up to 11, filing a federal lawsuit yesterday against the government for illegally freezing$2.2 billion in funding and threatening its academic independence as part of an anti-Semitism crackdown at colleges.

21:29The country's wealthiest college accused the government of violating the First Amendment by attempting to use financial leverage to, quote, gain control of academic decision making at Harvard. Alan Garber, the university's president, said the consequences of the government's overreach will be severe and long lasting, saying that funding cuts imperil research into things like child cancer and infectious disease outbreaks. The White House replied to the suit by saying taxpayer funds are a privilege and Harvard fails to meet the basic conditions required to access that privilege. The gloves are officially off.

22:01Yeah, after Harvard took this stand and filed this lawsuit, over 150 university leaders from other U.S. universities signed this joint statement where they were pushing back against what they see as government overreach on college campuses. They specifically called out the use of federal funding as this sort of pressure lever to get these universities to do what the administration wants. So it's big names, MIT, Princeton, Yale, Brown, Tufts, Duke, you name it, they were among the signers. So you're seeing higher ed kind of rally behind Harvard here as they fight what they see as overreach from this administration.

22:34For our next headline, Airbnb users rejoice. The short-term rental company is finally being transparent about the fees it charges. You know the feeling. You're cruising around on Airbnb's search function. Find the perfect little cottage upstate for a weekend getaway for the right price. And then you click it and boom, hit in the face by taxes and fees galore, pushing it right out of your price range. It was always a huge pain point for users, but that changed as of Monday with the platform now displaying the total price, fees and all, right from the outset and by default. This change aligns with the new US FTC rule, which requires rental platforms and hotels to disclose all fees transparently before purchase to prevent hidden junk fees.

23:18Neil, it feels like a big win for consumers. It is, and they can thank the FTC for that, for instituting this rule. What I'm going to be looking for is whether this leads to any pricing changes or any pricing decrease among hosts because, you know, the pricing will be far more transparent as you're scanning. And there may be some indications that hosts will lower their prices because in 2023, Airbnb introduced an optional toggle button that you could go. You could show it, show the prices with fees or without fees. And Airbnb, in a blog post last year, said that after they introduced this toggle button, hosts behind nearly 300 ,000 listings removed or lowered their cleaning fees in the months following its introduction.

24:01So I wonder how this will affect pricing on Airbnb. And you're not the only one using ChatGPT to do your work for you. The United Arab Emirates announced that it will begin using artificial intelligence to write new laws and review existing ones in the world's most ambitious plan yet to fuse generative AI and government. The goal, according to UAE leaders, is to make the legislative process more responsive, agile and efficient. Sheikh Mohammed bin Rashid al-Maktoum said the new system will allow us to track the daily impact of laws on our people and economy using large scale data, and it will regularly suggest updates to our legislation.