US Plans Hormuz Blockade & Wall Street Bigwigs Nervous About Mythos

0:01Neal Freyman:Marketers, tell us if this sounds familiar. You invest in something that seems incredible, like millions of views, but then don't see any revenue. Instead, invest in what looks good to your CFO. LinkedIn Ads generates the highest ROAS of all major ad networks. Spend$250 on your first campaign on LinkedIn Ads and get a$250 credit. Just go to linkedin.com slash mbd. That's linkedin.com slash mbd. Terms and conditions apply. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the U.S. is countering Iran's blockade of the Strait of Hormuz with its own blockade. Bananthropic's new model mythos has Wall Street in a tizzy.

0:42Neal Freyman:It's Monday, April 13th. Let's grind.

0:49Good morning and welcome back to the week. You know when you go down a YouTube rabbit hole and get caught in a nostalgic spiral looking at all your favorite old videos? That was basically Justin Bieber's set at Coachella. While headlining the music festival Saturday night, Bieber spent a half hour in the middle of his set sitting behind a laptop, scrolling through his past videos like Baby and Beauty and a Beat, then playing them over the festival's sound system and singing along in an octave lower. The first takeaway, he apparently has YouTube Premium, no ads. Second, people kind of dug it.

1:18Neal Freyman:Yeah, I didn't hate it either, Neil. Biebs and YouTube have a history. It was where he was discovered. At one point, Baby was the most viewed video on the entire platform. It's now the most disliked video ever on the entire platform. So you can't tell the story of Justin Bieber without YouTube. So it did feel very nostalgic because he did go very deep in the archive. On the other hand, though, you paid a lot of money to go watch a Coachella set. And instead, what you got was him scrolling YouTube. I think the final thing, though, is that guys, no matter how famous or how rich they are, will do anything in their power to sit you down and show you YouTube videos.

1:57This episode is brought to you by On Investing, an original podcast from Charles Schwab. Each week, host Lizanne Saunders, Schwab's chief investment strategist, and Colin Martin, head of fixed income research and strategy for the Schwab Center for Financial Research, analyze economic developments and bring context to conversations around equities, fixed income, the economy, and more.

2:15Neal Freyman:Join Colin, Lizanne, and their guests as they share insights into what might be moving the markets and why, as well as what indicators they are watching for signs of change. They'll also answer investor questions on everything from how sectors are evolving to what the bond markets are telling us to where to look for opportunities and considerations for your portfolio. You can download the latest episode and subscribe at schwab.com slash on investing or wherever you get your podcasts. President Trump announced the U.S. blockade of the Strait of Hormuz, escalating the conflict with Iran after marathon peace talks failed to produce a breakthrough over the weekend.

2:49You might be thinking, wait a second, isn't Iran already blockading the Strait of Hormuz? Yes, and what the U.S. intends to do is a blockade of a blockade, blockadeception. Think of it like a chess match where one player's piece is under attack, but instead of moving that piece in danger to safety, they decide to put pressure on a separate opponent's piece. It's a risky high-stakes move to undermine Iran's main source of... It's a risky high-stakes move to undermine Iran's main source of leverage in the war. Energy experts have been pushing the Trump administration to apply the blockade strategy for weeks, Bloomberg reported.

3:22Here is the rationale. In the current status quo, Iran has full control over the world's most important energy waterway, but it's not keeping a strait entirely closed. It is allowing its own ships to go through, as well as ships from several countries like China and India who have to cough up a toll. One estimate from Frontier Investments suggests Iran is making 150 million bucks a month from those tolls, a huge financial lifeline. With the U.S.'s planned blockade, which begins at 10 a.m. Eastern today, It's aiming to cut off that revenue source. As President Trump told Fox News, it's going to be all or none, meaning Iran will need to open the strait to all ships or the U.S.

3:58won't let any get by into the open seas. The economic bricksmanship comes after a J.D. Vance-led delegation to Pakistan couldn't agree to terms with Iran on a resolution to the war, which is currently in a tenuous two-week ceasefire. Vance said the biggest hang-up was Iran refusing to give up its nuclear ambitions, a non-starter for the United States. So now we're staring down a double blockade of the Strait of Hormuz. that won't make oil markets happy.

4:20Neal Freyman:A double blockade. Who could have seen this coming? Actually, it was telegraphed because the U.S. has used a similar approach against Venezuela earlier in the year. And this was, you know, definitely in the cards. A lot of energy experts were, as you said, pushing Trump in this direction because essentially you can set up a blockade out of range from Tehran's weaponry. And then you can also do it with less risk than going after something like Karg Island, which is where Iran kind of exports most of its oil from. So if the options on the table were, you know, strike Iran's critical energy infrastructure or set up another blockade, we've already done a blockade, we being the U.S.

4:59Neal Freyman:of Venezuela. This is just another attempt at that. So it sounds crazy on the surface to blockade a blockade. But again, this is how you return leverage to your side is by, you know, choking off their exports. David Ignatius at The Washington Post, who has kind of a line into what discussions are happening in the White House, said the strategy here is a quote credited to Eisenhower. If you cannot solve a problem, enlarge it. So this is the this is the way the U.S. is trying to just tighten the economic screws from Iran, because, as I mentioned, they're making about one hundred fifty million dollars a month from these tolls, as well as selling its own oil out into the open market.

5:38Oil prices are above$100 a barrel, but Iran can actually fetch around$140 per barrel for this actual physical crude. So it's making now annual run rate, we're talking like in software terms, but of billion dollars a year in selling its own oil. What this also will do, though, is test how much pain, economic pain America and the rest of the world will take. Because right now there's going to be no oil or no fertilizer or any other sort of these key raw materials flowing from the Persian Gulf out to the rest of the world. And that's why you're seeing oil markets actually react very significantly this morning.

6:14They're up 8 % to about$105 a barrel.

6:17Neal Freyman:Yeah, Trump conceded that energy prices may not fall soon and may be higher as we roll into midterm elections. He's trying to suggest that the economic pain right now is worth it in the long run. We are seeing just the economics of this blockade and now double blockade filter through the American economy. We've seen EV interest pick back up. This has been a side effect. Edmonds, which is a car shopping platform, said that we're seeing interest rise to nearly what it was before the tax incentives ended last year. used EV sales jumped 12 % in the first quarter, according to Cox Automotive. So basically, people are looking at their gas bills and looking at the pump and saying, actually, it does make sense to transition to electric vehicles because of just how elevated gas prices are.

7:06Energy prices are absolutely skyrocketing. I know we previewed the inflation report on Friday. It came in at 8.30 a.m. Eastern after we were done recording. It showed that consumer prices were up 3.3 % in March from a year earlier. That's up from February's gain of 2.4%. It's the highest reading in two years. It is because of gas prices. Energy prices were up 12.5 % from a year earlier, up from just a 0.5 % gain in February. So the rise in, whatever's happening in the Middle East is absolutely filtering. I mean, everyone can see it on a gas station, prices every single day through March and into April.

7:42But yeah, huge uptick in inflation, in the fastest pace in two years because of what's happening over in the Strait of Hormuz.

7:48Neal Freyman:The mythos around Anthropic's new model, Mythos, is only growing. According to a report, Treasury Secretary Scott Bessent and Fed Chair Jerome Powell summoned major bank CEOs to Washington last week to discuss the model that has been compared to a dangerous cyber weapon. Anthropic has held back on releasing Mythos to the public, which it says can kneecap much of the modern web by finding undiscovered vulnerabilities at a unprecedented rate. The cybersecurity chops of Mythos affects banks, so the government wanted to make sure Wall Street is aware of the possible risks. So they called the meeting to ensure everyone is adopting the proper precautions to defend their systems, according to Bloomberg.

8:25Neal Freyman:Remember, Anthropic distributed Mythos to only 40 or so organizations ahead of a public release, forming a sort of cybersecurity brain trust called Project Glasswing. The company also briefed government officials on its capabilities before release. The goal is to let big enterprises get ahead of bad actors who could use the new model to penetrate secure software. Neil, we keep hearing mythos framed in this all-powerful light. Some say its capabilities have been overstated and the fear-mongering only helps Anthropic. But the last-minute meeting shows that Wall Street is clearly talking about it.

8:59This is a meeting I would have loved to have been in. I mean, look at the people in this room. Goldman Sachs, you know, David Solomon, Bank of America's Brian Moynihan. Well, as far goes Charlie Scharf. Morgan Stanley's 10 picks. Citigroup's Jane Frazier. And then also you have Scott Bessent and Jerome Powell. The one person who couldn't make it apparently was J.B. Morgan, J.B. Diamond. I don't know what he was doing that was more important than this particular thing. But I want to focus on one person in this meeting, and that's Jerome Powell, because in the past few weeks, he has spoken a lot about cyber attacks against the financial system.

9:28And think about the banks that I was just talking about, who was represented there. Bank of America, Wells Fargo, Goldman Sachs, Citi, Morgan Stanley. These are systematically important financial institutions to the United States. Essentially, these are too big to fail. And the fact that the Federal Reserve is there, they deal with systemic risk. And that's why I think this is a very important meeting to talk about.

9:49Neal Freyman:It is important, but also after we kind of covered this story last week when Mythos came out and Project Glasswing was announced, a lot of people said, how real are these vulnerabilities that Mythos so apparently uncovered in an analysis from John Martindale for Tom's Hardware found that some of the bugs that they kind of highlighted are not as bad as they think. They flagged one vulnerability in a software called FFMPEG. That vulnerability had existed for 16 years already. No one knew why they included it in the report. There was another one around Linux that said that a lot of them had been recently passed, they were less severe in terms of how bad the vulnerabilities actually were.

10:32Neal Freyman:So another separate kind of analysis found that of the exploits found, they found 600 examples, but only 10 were severe vulnerabilities. So some of people from the tech circles are saying that, all right, Anthropic, you put out this messaging that mythos is this all-powerful thing, but maybe these devastating exploits that you're highlighting are not so devastating and not so pressing as you might have portrayed them to be. Welcome to Winners of the Weekend, the segment where we pick two things from the news that are getting fitted for their green jacket. I won the pre-show triathlon, so I get to go first.

11:09And my winner is Artemis II for successfully completing their mission to the moon and back, but maybe more importantly, for getting people excited about human space travel again. On Friday night, the crew of four astronauts splashed down in the Pacific Ocean and have since been reunited with their families. These folks now hold the record for the humans who've traveled furthest from Earth, more than a quarter of a million miles away around the backside of the moon. As NASA Administrator Jared Isaacman said, it was a mission well accomplished. The goal was to test out the Orion spacecraft ahead of a future lunar landing, and that spacecraft performed remarkably well.

11:43There were a few issues that NASA will have to fix ahead of upcoming missions, most notably the malfunctioning toilet. But other than that, things went according to plan, so according to plan, in fact, that the astronauts were scheduled to splash down on Earth at 8.07 p.m. Eastern Friday night, and they landed exactly at 8.07 p.m. Google Maps can't even get that right when I'm driving 15 minutes away, let alone hurtling back to Earth after 10 days in outer space, piercing the atmosphere at 25 ,000 miles per hour. Toby, it's all smiles in Houston after Artemis II, but now the attention turns to Artemis III and Artemis IV.

12:16Can NASA keep up the momentum?

12:18Neal Freyman:It was all smiles in Houston, but there was some tears actually being shed in the living room that I was watching with my fiance's family because there is just something about astronauts returning home that it hits you in the field. You're just so happy they're safe. They went through so much. And I just want to read some of the quotes from the crew. Victor Glover said, I have not processed what we just did, and I'm afraid to even start trying. Jeremy Hansen said, When you look up here, you're not looking at us. We're a mirror reflecting you. Christina Koch said, Earth is just this lifeboat hanging undisturbedly in the universe.

12:48Neal Freyman:And Reed Wiseman, the captain of the mission, said, I have two Microsoft Outlooks, and neither one is working right now. The memes from this trip were very funny, as was the heartfelt feeling that, man, humanity is just this very unique species sitting on a rock in space. They absolutely won the PR battle with this because, I mean, NASA is competing for our attention, just like Justin Bieber and YouTube, just like TikTok. They want to prove that space flight is cool because they're fighting for dollars from the federal government. They want to build up the political support for going back to the moon because it's a huge endeavor.

13:25And, you know, the support for space travel had been waning over the past few decades. But I think what they've done is very smart. They actually hired someone called an imagery czar, Zeblin Scoville, a couple years ago. And what he did is he put a bunch more communications apparatuses on these particular spacecraft so we can beam down high-quality video and they can FaceTime with people. And that sort of communication strategy worked admirably well. And I think it really helped that these poets were – I said poets. These astronauts were basically poets and they seemed like the best people that you could possibly have as emissaries from space.

14:00So I think they absolutely had a huge PR victory here as well, which was maybe even more important than the technical aspects of the mission.

14:08Neal Freyman:Not just poets, photographers too because the Artemis II team did photography training before they went up in the capsule because they said they wanted to tell a story. They wanted to capture the awe and grandeur. You can't just do that. Like if I just went up there with my iPhone, I'm not taking the pictures that they did. So that was one awesome thing. And then one final thing I want to leave people with is there is this space simulator game called Kerbal Space Program. It's pretty niche, honestly. It's about building and flying rockets for a species of green aliens called Kerbals. But after Artemis II landed, the player count hit an all-time high, which just shows that the next generation is excited about space travel.

14:49Neal Freyman:They want to go build rockets in this weird little space alien game. But that is kind of what a lot of astronauts think about when they land on their mission is, how are we inspiring the next generation? I think Artemis II absolutely did that. We did promise Artemis III and Artemis IV to preview what they're going to do. So Artemis III is set to launch next year. And that's going to test whether the Orion spacecraft can dock with the lunar lander. And this is where the private sector comes in. Because right now we got Jeff Bezos with his Blue Origin and SpaceX by Elon Musk competing for that lunar lander contract.

15:22So it'll be very interesting to see who ends up actually serving as the lunar lander for Artemis 4, which is expected to land astronauts back on the moon in 2028.

15:32Neal Freyman:Let's do it. All right, we're going to take a quick break and come back with my winner of the weekend right after this. Not working with a financial professional is one of the biggest mistakes you can make. Yeah, that and sneaking up on a miniature horse. Not going to ask. Anyway, Northwestern Mutual can match you with a financial professional who can build a plan that will be with you through life's milestones. They'll uncover blind spots and find new opportunities to help you grow your wealth and protect what you've worked so hard for. Find a better way to money at nm.com. That's nm.com. The Northwestern Mutual Life Insurance Company, Milwaukee, Wisconsin, and Northwestern Mutual Wealth Management Company.

16:11Neal Freyman:I hear we're talking about acting today. No, we're talking about TaxAct. Then why did I bring a skull? I have no idea. But the reason we're talking about TaxAct is they help small business owners get their taxes done. They make it easy by providing the only online DIY filing software for small businesses. With TaxAct, you can file your business taxes any way you'd like, whether that's by yourself or an expert can prepare and file for you. Just head to taxact.com slash business dash returns to get started. That's taxact.com slash business dash returns. Toby, you ever found a big problem with a teeny tiny solution?

16:51Yeah, locked doors. Okay, fair. But what if I told you I found the key to losing and keeping weight off? It's going micro with Noom. Micro habits, micro wins, and micro doses of GLP-1s.

17:03Neal Freyman:In fact, Noom found users lose on average 8 pounds in 30 days on their microdose protocol. The Noom GLP-1 microdose program starts at$79 and is delivered to your door in 7 days. Start your microdose GLP-1 journey today at Noom.com. That's N-O-O-M dot com. Noom microchanges big results. See podcast description for full disclaimers. My winner of the weekend is a guy named Adam Jacobs who has secretly recorded over 10 ,000 concerts spanning four decades, creating a heck of a music archive in the process. This story went viral over the weekend. Jacobs started this side project in Chicago back in 1984, and a few years later snuck a Sony cassette recorder in to go see a little band from Seattle play their debut show.

17:49Neal Freyman:His surreptitious recording of Nirvana predated their global breakthrough and set Jacobs on a path towards becoming an unexpected music folk hero. Over the ensuing years, Jacobs amassed an enviable archive of indie and punk rock, recording concerts from R.E.M., The Cure, The Pixies, The Replacements, Stereolabs, Sonic Youth, and more. Along the way, he became known in the scene. In the beginning, some venue owners gave him a hard time for sneaking in increasingly complex recording devices, but after a while, seeing that his intentions were that of a pure music lover, he became the taper guy, and venues started letting him in for free.

18:27Neal Freyman:Now his archive is being digitized and hosted for free on the Internet Archive, preserving the giant catalog of his live shows for future generations to enjoy. Neil, so far about 5 ,500 tapes have been digitized with thousands more to go. Volunteers across the world are still hard at work doing just that. There's something in the way that this is bringing the music community together. Yeah, it's further evidence that you can just do things. You can go to over 10 ,000 shows over 40 years and record them for your own edification and leave the world with one of the most important musical archives in history.

19:00Because this hobbyist project turned into an absolutely historical behemoth with over 10 ,000 recordings. And he is known, Jacobs is known, around Chicago. So he's taken on this mythic status. There was a documentary about him in 2023. WBEZ, the public radio station there, did a story about him in 2019. So he is known around Chicago as the as the taper guy. And I think more people will know him now that is is being helped on by other volunteers and being digitized because he has all these cassette tapes for everyone to listen. There needs to be a huge project around digitizing them. So the Internet Archive, which is this nonprofit that preserves sort of digital artifacts, has helped him with this huge push to digitize them.

19:43And so we're all going to be richer for it.