US-Japan Team Up to Save the Yen & The Hugo Spritz, the New Drink of the Summer?

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0:27Toby:Good morning, Brute Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, why the U.S. made the shocking decision to defend the yen. Then move over, Aperol Spritzes. A new drink of the summer has emerged. It's Tuesday, August 4th. Let's ride.

0:52Toby:Anyone solve the password yet? Yesterday, we rolled out a puzzle that asks you to guess a word from a series of clues. Each day this week, we'll share one new clue to get you closer to the password, and you can submit an answer once you have that aha moment. The earlier you submit in the week, the more raffle tickets you get to win the prize of MBD swag, and you can only submit an answer once. The first clue yesterday was this password has to do with one of the five senses. Probably not enough to go off of, though that didn't stop some of you from YOLOing some guesses. Maybe today's clue will help you get on the right track.

1:28Toby:The password begins with a chemical symbol. So, so far the password has to do with one of the five senses, and it begins with a chemical symbol. Toby, I see the gears turning in your brain. Okay, so we got taste, touch, smell, hearing, and seeing. Those are the five senses. And how many chemical symbols do I know? Helium, hydrogen. Hearing starts with H-E, which is the chemical symbol for helium, but that seems too on the nose. Feeling starts with Effie, which is a chemical symbol for iron. Again, hard to know. And as I'm saying this, I just remembered oxygen and carbon exist. So that narrows it down to anything that starts with O or C.

2:10Olfactory seems like a good guess. All right, the gears are turning too fast right now. Maybe I did just nail it there, but I think I'm going to wait until I get more clues before I lock in my answer. So final answer, Neil, I'm holding out for more hints. All right.

2:23Toby:So how can people submit their answer? Go to the link in the show description. Remember, you only get one guess, but I do admire brave souls who guess early. So go for it. If you're feeling confident, I think we got a couple of answers yesterday that were smells like team spirit, team spirit, multiple ones like that, which I appreciate, but just to emphasize, this is just one word, not a phrase. Okay. The U S and Japan just made it more expensive for you to travel to Tokyo. The two countries linked up to buy Japanese yen and stabilize the flagging currency in what Bloomberg called one of the most dramatic interventions in global currency markets in decades.

3:01Toby:President Trump framed the surprise move as supporting a key ally that's going through some market turbulence, telling reporters, Japan's been very good to us, with the exception, of course, of Pearl Harbor. The yen has been in a deep slump over the past year, falling at 1.2, 164 against the dollar, its lowest level in four decades. A number of forces have contributed to the decline, including Japan's super low interest rates, heavy government spending, and high debt levels. It's alarmed Japanese policymakers because a falling currency makes imports more expensive and boosts inflation, lowering people's living standards, especially now that energy has gotten so expensive from the war in Iran.

3:40Toby:Still, seems like a Japan problem, right? Why is America stepping in because just to put a point on it this type of thing is extremely rare typically the u.s only gets involved in other countries currencies if things get to like impending crisis levels which they aren't here and the answer is we don't actually know the motivations wall street is full of gossip as to why the u.s deemed it necessary to scoop up yen toby what's the tea one of the biggest reasons is that the u.s is always looking out for the u.s and they want to protect the bond market here. So Japan is one of the largest foreign holders of U.S.

4:16treasuries. If Japan tried to boost up the yen by selling treasuries, treasury prices would fall and the U.S. bond yields would go up because the prices are inversely correlated. Trump does not want that. So he actually, the Fed has this thing called the Foreign and International Monetary Authorities, FEMA repo, and that allows Japanese authorities to borrow dollars against treasury securities that they own without actually selling the treasuries themselves. So this helps the yen get strengthened when it comes to global currency markets without the Japanese government being forced to sell U.S.

4:50treasuries. So that's one idea. The other thing, too, is that the carry trade, you can't talk about the yen without talking about the carry trade. This is a very popular trade amongst hedge funds globally. The yen is one of the best funding currencies. And what that means is that you can borrow yen very cheaply because interest rates have been low for so long and invest it in higher yielding assets elsewhere. And if all of a sudden you mess with the carry trade, that is part of the plumbing of the global financial system. If you mess with that, then you run the risk of contagion spreading and global financial markets panicking.

5:24So maybe the idea was we don't wanna screw with something that is just so important, like the carry trade. And so preventing a carry trade unwind is another reason. There are more reasons, but I'll pause there because those are two of the kind of the gossip that you've been hearing on Wall Street.

5:39Toby:And I can't wait to whip out the carry trade at happy hour tonight and teach everyone. You can't look beyond who is spearheading this too, because I think that is a key part of this story. The leader for the United States in making this deal happen is Treasury Secretary Scott And if you don't know Besson's background, it's literally as a currency trader. He made his name betting on currencies, specifically against currencies, working for George Soros' investment firm. He made a fortune betting against the pound in 1982 and then made basically almost over$1 billion in 2013 in a matter of months by betting against the yen.

6:21Toby:So maybe he's married to the game and he just wanted to get that kick again. So Basant has been the spearheading figure in the United States on making this deal happen. And he kind of telegraphed it in a very funny move. Back on Friday, he was at this cabinet meeting and he had this sheet of paper and it was photographed that it said to-do list. And then there was only one item, and that item was said, buy Japanese yen for about$5 to$10 billion. So we knew this was coming because he just had it written out on a piece of paper. The other thing, too, is that, again, America is always looking out for America.

6:58And Japan has pledged roughly$550 billion of investment into the U.S. under a trade agreement signed last year. That was one of Trump's biggest trade deals that he was printing around, saying, like, look at this foreign country. is investing so much on U.S. soil. But if the yen collapses, as it has been doing, it makes overseas investment for Japanese firms a lot more expensive. And so, again, it's killing two birds with one stone. If you can prop up the yen, then all of a sudden those investments remain attractive to Japanese firms. So if the dollar is too strong compared to the yen, two, it goes vice versa.

7:37It makes American exports more expensive overseas as well. So basically, there's a lot of birds and a lot of stones at play here, and hopefully it works out well for both the parties involved.

7:47Toby:The problem is people don't think it will. And that's, I think, what was most perplexing to Wall Street, to investors. They're saying, Scott, you know better. You know that FX interventions like this don't necessarily work over the long term. So we did see a pretty dramatic move in the yen yesterday after this intervention. It went from 164 against the dollar, which was the lowest level since 1986, to about 157. But unless Japan fixes those underlying economic dynamics with huge debt levels, with government spending, with all those forces that cause the yen to depreciate against the dollar in the first place, then this is going to be temporary and not solve the longstanding issues.

8:26Toby:But what it will do, and I mentioned this at first, is at least temporarily make it a little more expensive for you, Toby, maybe to go on your honeymoon to Tokyo. Because right now it is, you know, for the past couple of years, it has been very cheap for Americans to travel to Japan and spend money there because of this currency difference. With a stronger yen, it'll get a little more expensive. Let's move on. One of the biggest pharma mergers of all time has been proposed. And one set of shareholders loves it and the other hates it. AstraZeneca, with a market cap of around$260 billion, is in merger talks with Bristol-Myers Squibb worth$135 billion.

9:02The report that the two were chatting sent each stock in totally different directions, with AstraZeneca falling 7%, while BMS jumped nearly 5 % on the news. Should it go through, not only would it be one of the biggest mergers of all time, but it would also create the largest pharmaceutical company by revenue in the world. But AstraZeneca's shareholders are looking at the deal like it's a moldy piece of cheese and diary of a wimpy kid. They see Bristol-Myers Squibb as sort of a deadbeat boyfriend. Sure, it's got some redeeming characteristics like strong footprints in neuroscience, cell therapy, and cancer drugs, as well as a larger U.S.

9:39footprint than AZ. But it also has major red flags, namely key patents it owns are expiring soon. Analysts are confused as to why AstraZeneca, who has been one of Pharma's strongest performers over the last decade and a half sees in BMS. Given the strength of AZ's growth and innovation profile, we are a bit perplexed, Jeffrey Analyst said of the potential merger. Investors worried that the merger would slow innovation, lead to layoffs, and bring unwanted antitrust scrutiny, arguing that AstraZeneca would be better off just staying in its single era. Neil, it's not often you get a merger of this size that is this hated by industry watchers.

10:16Toby:Bristlemeyer's script is like the two-headed monster from Sesame Street. It has two drugs that bring in 50 % of its revenue. One is the blood thinner Eliquis, and the other is the cancer drug Updivo. And so together, they account for half of BMS's sales. The problem is that in the coming years, just like most drugs across the pharmaceutical spectrum, this is the big problem that you have to look out for, is you lose your patent protection. Then other folks can make generics, and then you lose so many profits from having that protection that you have had for many years for developing the drug. Investors don't think that BMS has a pipeline that is worthy of AstraZeneca spending all this money to buy, to scoop up BMS, because they just said, you don't need it.

10:59Toby:You have a very strong pipeline. You have one of the best pipelines in all of pharma. BMS is losing the patent protection for two of its blockbuster drugs. So we don't quite understand this. And then you look at the forward projections. AZ is expected to grow earnings per share at 10 % over the next five years. BMS earning per share is expected to grow, not even expected to grow, is expected to shrink throughout the next decade. So that's one of the reasons why investors Wall Street are a little confused about this. So why did AstraZeneca even want this in the first place? The big thing here is a bigger U.S.

11:32present. Right now, 42 % of AstraZeneca's sales in the first half of 2026 came from the U.S. 69 % of Bristol Myers Squibb's revenue came from the U.S. So ostensibly, there's a little bit of a gap there in that they can close the gap there. The U.S. is the largest pharma market in the world. But again, a lot of people are saying, that is not enough of a gap. You already are making almost half of your revenue from the U.S. I don't understand this geographical expansion argument. It's worked potentially in mergers in the pharma industry in the past, but that was when there was a Japanese firm that wanted to make inroads into the U.S.

12:07that had no sales there. So that is confusing a lot of people because you also just invite so much antitrust risk because when you combine these two very large oncology businesses, that is a warning sign for regulators as well. And also the innovation piece is where a lot of people are scratching their heads because when you combine these giant research organizations, that takes a lot of time. And during that time, your development timelines are going too slow because you just can't be as nimble because you're doing a lot of administrative work of putting these two giant pharma organizations together.

12:44So yeah, lots of head scratching decisions here in the market did not like it.

12:48Toby:Still, it would be unwise to doubt Pascal Soria, who is the CEO of AstraZeneca. And he has been probably he's been a stud over the past decade and a half. He has taken AstraZeneca from a struggling pharmaceutical company that Pfizer wanted to take over in 2014 to new heights, where it's in the position to buy this American rival. And it's become just an absolute cancer powerhouse. Everyone looked at him a little weird back in 2014 when Pfizer wanted to take it over for 70 billion euros. And he was like, nah, we got this. And he's been just an absolute rock star in the pharmaceutical space. So maybe he's cooking up something that analysts don't realize.

13:28Toby:And BMS is a prize that Wall Street is just sort of overlooking at this point. But yes, it is a perplexing deal. That's why you saw some of those pretty dramatic moves in the stock market yesterday about AstraZeneca shareholders essentially rejecting this concept. Moving on, firefighters are battling blazes in eastern Washington state that have forced the evacuation of 65 ,000 people in the Spokane area and destroyed 700 structures. They're among the 99 active large fires burning across the U.S. in what is a busy wildfire season above the 10-year average in terms of acres burned and number of fires.

14:04Toby:On top of that, major cities across the United States have been periodically blanketed in smoke this summer from fires raging in Canada. So your first thought is probably, how can I bet on that? Prediction markets are coming under pressure for wildfire trading, with at least one new app dedicated specifically to trading on fires. Wildfire, spelled like Wildfire, but with Y's instead of Y's, recently launched as a play money only platform that encourages you to wager fake cash on the scope of California fires. Their tagline, you can't predict fire, but you can trade on it. While it's play money only for now, the site says that betting with real money is coming soon.

14:41Toby:Some lawmakers want to extinguish this flame before there's a spark. A group of Democratic senators sent a letter to the CFTC, which oversees prediction markets to crack down on wildfire trading, claiming it creates perverse incentives where someone could place a bet on a wildfire to take place, go and set that fire, then reap the profits. Toby, it's clear that this wildfire season in more than one way is highly unusual. So the difference between a hurricane or an earthquake on which there are actually prediction markets when it comes to those weather events and wildfires is that humans can directly influence wildfires.

15:16Most California wildfires are actually human caused. A lot of them are accidental, but you are right. And the lawmakers are right in that there, there is a meaningful financial incentive now to go set a wildfire, which is why they want to crack down on it. There's also just an ethical argument against this because it is part of the growing, you know, part of the financial system where you are turning disasters into entertainment. And a lot of ethicists say that devalues human lives and you are creating psychological distance between the actual victims because people are dying when it comes to these wildfires.

15:51Homes are being destroyed, and yet maybe the only thing you're thinking about is, oh, I can make a quick profit off of this. One psychologist says that it makes people begin viewing disasters like video games rather than real tragedies. So not only is there an argument against the fact that these markets can be manipulated, but there's also just a very big ethical component to this as well.

16:12Toby:Put some respect on Storm's name. With a little mutation, you can create hurricanes and tornadoes. This really came to the fore in 2025, last January, when Polymarket, one of the biggest prediction markets, did have about 20 questions, 20 markets related to the wildfires in Los Angeles. Like, how many acres will the Palisades Fire burn by Friday? You know, will the Palisades Fire reach Santa Monica by Sunday? day and people spent$1.2 million betting on those markets. And I think what these lawmakers want to do is get out ahead of this and say, well, we're not, we don't want that to happen anymore.

16:49Toby:And then they're looking at this new platform called wildfire and saying, we need to stop this in its tracks right now. It's only play money, but they clearly have desires to add real money to the equation. And they're talking about things that you, that you mentioned and saying, we can't really have this prediction markets defend themselves by saying that actually by aggregating all this information and tapping into the wisdom of the crowds, you improve forecasting. And while they love putting that argument forth, if you look at what organizations that are in charge of tracking these fires actually do, they do not use prediction markets.

17:23Cal Fire does not use prediction markets. U.S. Forest Service also does not rely on them. Maybe it's just early innings and they haven't figured out how to integrate them into their systems. But if the very people in charge of who want to prevent these from spreading don't see it as a useful tool, then maybe that argument falls a little flat.

17:40Toby:But maybe they should, because recent studies out of academia and Wall Street show that these prediction markets, even for fires, are actually useful and change people's minds. So one analysis from Patrick Brown, who's the head of climate analytics at Interactive Brokers, said that prediction markets may already be outperforming traditional weather forecasts because they, quote, better incentivize human judgment, that wisdom of the crowds. And then there was this very fascinating research out of Columbia University that found that taking part in climate prediction markets like hurricanes or wildfires actually increases concern about global warming.

18:18Toby:The head researcher there said that climate change is the perfect problem for the brain because the brain is very bad at thinking about its own future. Prediction markets are a mechanism that allows us to bring the future into the now by holding a stock in the future people became more uh aware of and worried about climate change regardless this debate is happening during one of the country's worst fire seasons so i hope everyone stays safe out there all right we're gonna take a quick break and come back with toby's trends right after this breaking news a new drink of the summer has emerged the hugo spritz is passing its vibrant aperol sibling like jackson storm passes lightning mcqueen and cars three, a trend I want to talk about on today's edition of Toby's Trends.

19:02A Hugo Spritz shares the same Prosecco and soda water components that make up an Aperol Spritz, but substitutes in elderflower liquor like St. Germain in place of the iconic Aperol. It creates a paler, more translucent green gold look, and when garnished with mint and lime, gives off a more garden fresh vibe. And people are loving it. Bacardi, St. Germain's owner, said that Americans discovered it after traveling to Europe post-COVID, but sales have really taken off this summer. In the past three months, St. Germain sales in the U.S. jumped 40%, while Aperol sales have fallen 4%. Google searches for how to make a Hugo Spritz at home spiked 2 ,200 % this summer, according to data shared with Axios, and it has now been searched more than Aperol Spritz in 15 states across the country.

19:48One bar owner in New York City compared the Hugo to a sizzling plate of fajitas. When it's carried through the dining room everyone sees it and they're like oh i want that still it's going to be a minute before it becomes the true king of the summer spritzes campari sold 8.8 million cases of aperol globally in 2025 while bacardi sold just 435 000 cases of saint germain neil what is it about this drink that has caught people's imagination why do they love it so

20:15Toby:much bitter is out floral is in so if you go back a bunch of years bitter was all the rage negronis Everyone was getting Negronis. Remember those hoppy IPAs that my friends used to drink in college and that I pretended to like? Those were the big trends in flavor profiles and what people wanted to drink and consume. Now we're seeing more floral favors come to the fore, vanilla, things like that. And I can't think of a more floral flavor. Good job, me. That was a tongue twister. Then elderflower, it gets rid of some of that syrupy texture of the Aperol that people may, and the bitterness of the apra that people may balk at, even though it's a little crisp and refreshing, and more toward these floral flowery flavors like elderflower, which really gives you that.

21:01Toby:It transports you to a meadow in the Alps is exactly what it's trying to do. Yeah, one bartender said it's a cognitive thing. The association of mint with better weather. People underestimate the power of a garnish. So again, an apra, you might get an orange. A Hugo, you're going to get mint and a lime. So it is just a different vibe and people are digging that vibe right now. The other thing too, it's just not that strong. You can drink a Hugo Spritz and not be put on your butt for the rest of the day. You can still go enjoy your day. And it does seem like not only is it maybe stealing some market share from Aperol Spritz, but it's also taking market share from beer.

21:40About two thirds of new Spritz drinkers are switching from beer. So again, beer might be out as we have actually spoken about on this podcast before and spritzes are just in, in general. So maybe it's a rising tide floats all spritz boats right now.