WSJ Reporter Free After Historic Prisoner Swap & Return of the (Apple) Mac

0:26Race the rudders! Good morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, inside the deal that brought detained Wall Street Journal reporter Evan Gershkovich back home. Then faster, higher, stronger, more marketable. Brands are ramping up the product placement at the Olympic Games this year. It's Friday, August 2nd. Let's ride.

0:54Toby, how is the weather in Michigan? That is quite delightful, Neil. Thank you for asking. But yes, Neil is making small talk with me because I am actually remote today podcasting from Northern Michigan. So if Neil doesn't laugh at any of my jokes, it's probably from a slight delay in the feed, not because they weren't funny. Well, I hope you're doing well over there with your remote pod. And I'm sorry you can't be here in person for me to announce the results of our t-shirt selling competition. As a reminder, we launched new retro MBD shirts and gave you two dueling discount code, Toby20 and Neil20.

1:31And after a week of the contest, the results are in. I have cruised to victory, so I appreciate all your support. And that means per the stakes of the competition, Toby will be dyeing his hair pink at a date to be determined shortly. Toby, silver medal ain't bad. Listen, I want to file protest here because I actually won on the initial discount codes, the Neil 20, Toby 20. It was only when Neil 21 was introduced and that extra 1 % discount came into play that things swung in his favor. So now we are introducing code Toby 22. No, I'm just kidding. But also, if you want to snag a t-shirt, they're still available at shop.morningbrew.com.

2:13So head to the store. They still look groovy. So snag yourself one. Now a word from our sponsor, Beehive. You've heard us talk a lot about the features Beehive has to offer. It's text editor, design studio, how much it costs. But let's think big picture for a moment. What can happen if you do everything right on this platform? One of the best examples is Milk Road. It is a crypto-focused newsletter that grew from zero to 250 ,000 subscribers on Beehive and then got acquired. Think about that for a second. One day, you're just walking around with an idea in your head. Then the next thing you know, you got a quarter of a million subscribers and a nice paycheck hitting your bank account.

2:54Obviously, it's not guaranteed that you're going to see a result like this. But the fact that Beehive makes an exit like this possible is a total game changer. It makes me want to start a newsletter. I'll tell you that much. I'll call it Evening Brew. And it will be just like Morning Brew, just a little edgier. Good luck with that. If you want to try your hand at building the next Milk Road or Evening Brew, head to beehive.com slash brew. That's B-E-E-H-I-I-V dot com slash brew and get a 30-day free trial plus 20 % off three months with code brew. Change is always happening. But no matter what changes in five years, there's one thing that will stay the same.

3:34The price of your internet. With the Xfinity five-year price guarantee, you get five years of the most reliable Wi-Fi with our best equipment included for a price that stays exactly the same. Restrictions apply. New residential customers only. Taxes and fees extra and subject to change. Most reliable Wi-Fi based on OpenSignal Awards USA. Fixed Broadband Experience Report, August 2024. Evan Gershkovich is back in the United States and reunited with his family. The Wall Street Journal reporter, who had been detained in Russia for 491 days on false charges of espionage, was freed, along with several other Americans, in a massive prisoner swap between the U.S., Europe, and Russia.

4:15This has been billed as the largest and most complex East-West prisoner exchange since the Cold War, involving 24 people and six countries. Sixteen people are headed back to the West, and eight prisoners are returning to Russia. In exchange for Evan, ex-Marine Paul Whelan and others, Russian President Vladimir Putin got the prize he wanted back, convicted murderer Kadim Krasikov, who was serving a life sentence in Germany for killing a separatist in a Berlin park. This is certainly a huge relief for the families of Evan Paul and the others who were held in Russian prisons on bogus charges. It also speaks to the persistence of The Wall Street Journal, which mounted a massive PR campaign for the last 491 days to raise awareness about its reporter who was just arrested for doing his job.

5:01Toby, the details of how this exchange got done are wild. Essentially, you had U.S. diplomats and CIA agents going to governments around the world and urging them one by one to free the Russian spies they had jailed so the Americans could go free. Yeah, exchange involved at least seven countries, 24 prisoners. It was just a massive operation. And it was a major diplomatic win for the U.S. I mean, President Joe Biden and Vice President Kamala Harris were on the tarmac to welcome these prisoners back to the United States. And I mean, Biden, literally an hour before he was dropping out of the presidential race, was on the phone with the prime minister of Slovenia trying to coordinate this thing.

5:42It was an all hands on deck approach to at the very high levels of government. So just in a massive operation that ended with Americans coming home, which you just love to see. Totally. And kudos to The Wall Street Journal. I said it in the intro, but all of the reporters there and the editors and the publishers at the highest level at that paper just wouldn't let Evan be ignored. They changed their profile pictures on social media. They mounted a massive campaign to keep him top of mind. And people responded. They unveiled banners at Premier League games. He's a big Arsenal fan and at MLB games.

6:18And there was just this large groundswell of support to bring Evan and Paul and others who had been detained in Russia home. So just kudos to that paper for just keeping Evan top of mind for everyone. Here is the difficult part, though. The U.S. has been very active in getting prisoners released from hostile countries, which sounds like a good thing. I mean, last year they got 10 Americans free from Venezuela or 10 fugitives free from Venezuela. And then they also had this major deal with Iran that included the US releasing billions of dollars in frozen revenue. But a lot of critics have popped up saying whether we should do these deals or not, because all it does is encourage these countries, embolden these countries to snatch everyday Americans off the street.

7:04And it's an asymmetric game here because obviously the United States isn't going to reciprocate with citizens of other countries. So it is an interesting balancing act that you have to play that you want to bring people home, but you don't want to embolden these countries that are using prisoners via hostile diplomacy. Yeah, we are in a new era here of essentially state-sponsored hostage-taking, which Putin has done with Brittany Griner in the past. And there was a prisoner exchange for an arms dealer, Victor Bout, to bring Brittany home, the WNBA star who came back in 2022. Final note on Evan, you can't take the reporter out of him.

7:41There's a wonderful anecdote about how before he was released, he had to write a request for presidential clemency from Putin. And there's a blank page at the end where you can just write wherever, whatever you want. And he completely filled it. And then at the end, he goes, would Putin be willing to sit for an interview? So this guy is just going to still be on the grind. I don't know if he's going to go back to Russia ever, but where he was doing his reporting. But yeah, he still wants to interview Putin. I wonder if we'll see that happen. Get in line, folks, because this week offered up an all-you-can-eat buffet of big tech earnings.

8:15Let's start at the beginning of the table with the bread and butter, Apple. And Apple did all right. It wasn't Texas Roadhouse-level bread quality, but it wasn't stale and cold bread either. Apple beat Wall Street expectations on revenue, raking in$85.8 billion, up 5 % from last year. Some surprise winner were the iPad sales, which grew 24 % year over year, as well as its services division, which grew 14 % in the quarter. But let's be real. Apple goes as the iPhone goes. The product accounted for nearly half of the company's total revenue in the quarter. And Apple did beat estimates, even though iPhone sales declined about 1 % on an annual basis.

8:55But despite its iPhone headwinds, particularly in China, investors mostly shrugged off this earnings report and the stock remained unchanged because they are looking ahead to its upcoming AI-enabled hardware. AI and sales in China, those are the big two in Apple land right now. Yeah, I mean, we are basically in a Super Bowl level pregame show for September when Apple is going to reveal its new iPhones with its new hyped artificial intelligence features, which it's calling Apple intelligence because it's too proud to say a eye. And it's really hoping that these new phones equipped with AI and it's a jacked up serious souped up Siri will drive a new round of iPhone buying because the problem Apple is dealing with right now is everyone's holding on to their iPhones for way too long and they're not upgrading them because there just really isn't a reason to.

9:46And they're hoping that this new Siri, which is also integrated with ChatGPT, are going to revive sales, especially in China where they continue to decline because there are a lot of domestic competitors there, including Huawei, who are just grabbing a ton of market share away from Apple because it has been stagnant on the AI front where a bunch of rivals have sort of lapped it in recent years. One interesting note about Apple's financials right now is that they don't have those gaudy capital expenditure numbers that other companies do, those CAPEC numbers that we've discussed on the show before, because Apple actually uses a hybrid approach to its data centers.

10:22It has some of its own, but it also partners with other companies. So we're not going to see that massive billion-dollar spend on AI. They are more focused on developing their own hardware that will revolutionize or infuse AI into like their typical Apple lineup. So we're not going to see this massive capex spending from Apple. But yeah, investors are just in this holding pattern. They're waiting for September. They're waiting for these new phones. I'm waiting for these new phones. You've promised a souped up Siri. I'll believe it when I see it. But yeah, all guns on or we're just in a wait and see approach to what these devices are actually going to look like.

11:00Moving on. Oh, God. What is happening at Intel? It is in total meltdown mode. Shares of the semiconductor giant are down 22 percent in pre-market trading this morning after Q2 sales came in way below expectations. And the company said it will cut more than 15 ,000 jobs, about 15 percent of its total workforce. It's also suspending its dividend that it's paid out to shareholders since 1992. Intel is in cash conservation mode after completely missing the boat on the AI revolution. It makes chips that serve as the brains for most computers, but it's losing business to rivals who make chips more geared for AI, you know, the things everyone is buying right now.

11:40NVIDIA, which Intel used to beat up on in the Varsity JV game, does double Intel's quarterly sales. Another rival, AMD, is worth over$100 billion more than Intel on the stock exchange. Execs were very direct about the challenges facing Intel. CEO Patrick Gelsinger said, this is an incredibly hard day for Intel as we are making some of the most consequential changes in our company's history. Toby, will it be enough to turn around this sinking ship? Intel has been in really deep trouble for a really long time now. I mean, the stock is down about 14 % over the last decade. And just think about where Intel started the decade versus where it is now.

12:20It dominated the semiconductor industry. Now it's being forced to parade these cost-cutting measures in front of investors and give reassurances that it can just continue to fund growth. It can't innovate fast enough to keep up with the NVIDIA or the leaders of the world. It's struggling to retain customers. It is a mess. The only thing it does have going for it is that it is a US company with US clients, so it's not as exposed to China. And just a few weeks ago, you're saying how Intel would be better protected from the geopolitical uncertainty since they've made recent moves to build more plants in the US.

12:53But clearly, if you can't innovate, it doesn't really matter where your factories are if no one wants to buy your stuff. Yeah, it has been the biggest beneficiary of the Chips Act from the Biden administration receiving like$8 billion to build new fabs here in the United States. But the problem is they're just not making the chips that the market is demanding right now. They make non-AI processors for data centers, but everyone wants AI processors for data centers. and you just have to look at data center revenue between Intel and NVIDIA to see how far off the cliff Intel has fallen. Intel last quarter did$3.3 billion in data center revenue, while NVIDIA is projected to do$24.7 billion.

13:36And that is by such a magnitude more than Intel that I can't even do it off the top of my head. So like nine times more. So NVIDIA is just in a much better place. It makes the chips that are more advanced for AI and Intel just completely miss the boat, and it's trying to save$10 billion. So we'll see if Patrick can turn this thing around. Yeah, we're on a first-name basis. Finally, Meta. Meta is in a similar position to Apple in the sense that it has a core product for Apple, the iPhone. For Meta, it's advertising, but it also has to show investors how it's preparing for its AI future. and it is navigating that fine line just about as well as anyone else in big tech.

14:19Advertising revenue ripped, jumping 22 % from a year earlier, leading to a 73 % rise in second quarter profits. Compare that to Google, who last week only reported an 11 % rise in ad revenue, and Meta's numbers look even better. As for its AI ambitions, it slowed down its capital expenditures to$8.5 billion for the quarter below the$9.5 billion that analysts estimated, as it pours money into data center infrastructure. But according to Zuck, it's paying off. He said that Meta AI is on track to be the most used AI assistant in the world by the end of the year, while also touting the good traction its Ray-Ban Meta AI glasses have continued to see.

14:58So Neil, Meta is in a pretty good spot right now. No one has a longer leash in corporate America than Mark Zuckerberg. I mean, he's lost$4.5 billion on its metaverse division just last quarter alone. He has these grand ambitions to build the next wave of the internet. He's talked a lot about AI as well. And for any other company, I think investors would be like, dude, we don't believe you. You're spending so much money. You just lost$4.5 billion making the metaverse happen. We haven't seen any traction. But the fact is he has this ace in his pocket, which is this ad business, which prints money 22 % year over year revenue growth because he's using AI in a very subtle and maybe not in your face way just to improve the ad targeting experience.

15:46So I see an ad that I'm more likely to buy, and that leads to more sales for these companies that are advertising on Meta's platform. So, wow. I mean, the dude is losing so much money for the long term, yet he's making so much money now that investors just don't care. Up next, Dwayne The Rock Johnson is in trouble with the army. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS. After an initial dosing phase, about 4 in 10 people taking EBCLIS achieved itch relief and clear or almost clear skin at 16 weeks. And most of those people maintained skin that's still more clear at one year with monthly dosing.

16:27EBCLIS, LibriKizumab, LBKZ, a 250 milligram per two milliliter injection, is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema. Also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies. EPCLIS can be used with or without topical corticosteroids. Don't use if you're allergic to EPCLIS. Allergic reactions can occur that can be severe. Eye problems can occur. Tell your doctor if you have new or worsening eye problems.

16:55You should not receive a live vaccine when treated with EPCLIS. Before starting EPCLIS, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EPCLIS and visit ePCLIS.lily.com or call 1-800-LILY-RX or 1-800-545-5979. Tuesday on NBC, Jimmy Fallon and Bozema St. John hosts the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars.

17:31I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon. Series premiere Tuesday on NBC. Bill Ackman had visions of being the next Warren Buffett. For the past few months, the famous hedge fund billionaire was planning a massive IPO of a new investment fund, Pershing Square USA, that would give regular traders the opportunity to invest like the pros. You buy in, he picks stocks, and you both reap the rewards. Ackman's initial target was to raise$25 billion, which would put it among the biggest IPOs of all time. But the demand wasn't there.

18:10So he cut the target to$4 billion, then to$2 billion, then to zero. This week, Ackman folded his hand and called off the IPO, concluding one of the most bizarre public listings in recent memory. Ackman has been well-known on Wall Street for over a decade. He used to be an activist investor that would take stakes in companies like Wendy's, push for changes, and watch the stock price go up. Recently, though, he's become somewhat Twitter famous after speaking out on political issues such as criticizing diversity initiatives and Ivy League presidents. Ackman thought he could leverage that social media fame by rallying his 1.3 million ex-followers to invest in his new fund and then shake up the investing world.

18:50It didn't work out as planned. Yeah, it did not work out as planned. To be fair to Akron, though, he had a reason to think that this might work because he actually has a fund listed on a European stock exchange in Amsterdam. And after he started posting on X, building this following, shares in that fund have been on a pretty furious rally. The difference is, is that that fund had been trading at a steep discount, about 35 percent compared to the actual assets that the fund was managing. So there was a lot of room for investors to jump in and feel like they were getting a good deal. but it's still trading at about a 22 % discount.

19:27But the big reason why this IPO ended up failing is that investors didn't really see a reason to buy at the IPO price because given the likelihood that the stock would, like the European sibling did when it was first listed, end up trading at a steep discount to the actual assets under management. So it was probably a little bit of a case of hubris. Ackman thought like he had this huge audience now, he wants to be the next Warren Buffett, but investors, the appetite from investors just clearly wasn't there. Yeah, I know this guy, this guy got a little full of himself, but that's what you have to do to be a successful trader.

20:00Anybody or anything on Wall Street, you have to have conviction. And he's had conviction in the past. I mean, his his he has a separate hedge fund that has for just 40 employees and they managed 19 billion dollars in assets, which is a ratio that is almost unheard of on Wall Street. And in recent covid times, I mean, the guy made a ton of money. He laid out$400 million on betting essentially that COVID would be worse than it was back in like February and March 2020. And then at the same time, he bet on the inflation trade coming out of COVID. People didn't think inflation would be that bad initially.

20:35You know, remember the Fed said it was transitory. He thought it would be entrenched. So he made that trade. So he turned that$400 million into$4 billion. So the dude made a lot of money recently. Lee, he has been in the news in the past for going to war against Carl Icahn with an Herbalife steak. So Ackman is just in a new era of Ackman with this new social media following. He thought he could translate it. He thought he could monetize it like Donald Trump did, like Elon Musk has. It just hasn't worked out because of some strategic missteps with this IPO process. And maybe the type of investment fund that he was trying to create in the first place just wasn't the right fit.

21:15Right. He was looking to become the next Warren Buffett, but maybe he should have taken a page out of Warren Buffett's playbook and just gone with a much simpler structure. That's how you become Berkshire Hathaway. He might have gotten a little high on his own supply. He loves himself a nice, complex financial instrument. Dwayne The Rock Johnson is a one-man marketing machine. He's a movie star, co-owner of a football league, and a steady presence in the WWE. But sometimes marketing machines break down and unfortunately for the pentagon they are the ones left footing the bill the army is having major buyer's remorse after handing an 11 million dollar marketing deal to the rock and the united football league a much smaller cousin of the nfl the goal was to leverage the rock star power and america's favorite sport to attract new army recruits on paper this match makes sense but in reality it went about as well as my short-lived football career in eighth grade.

22:10I got zero playing time and the Army got zero recruits. In fact, according to internal documents reviewed by military.com, the marketing effort may have somehow led to a loss of 38 recruits. Now, the Army reportedly wants$6 million of its$11 million back. But, Neil, make this make sense. How does a partnership with an albeit niche football league and the freaking Rock lead to a negative impact on recruiting? Well, it seems like the Rock just didn't do what he was supposed to in the contract. He was supposed to post on social media. And that really was the crux of this deal because The Rock has 396 million Instagram followers, which they valued at$1 million a post.

22:53And they signed him up to make five posts and he just did two because I guess he just didn't want to anymore and he's The Rock so he can do that. So when it comes to army recruiting, Uncle Sam is still the GOAT and The Rock has a lot of catching up to do. And you said this deal looks good on paper, but I'm not so sure because they spent money on both the UFL and the NCAA. And their deal with the UFL, the Army's deal with the UFL, was half that of the cost of the NCAA one. But the average NCAA football game draws roughly 10 times amount of viewers as the UFL. Not that many people watch the UFL.

23:32So this really relied on The Rock's Instagram post to make the deal work, and he just didn't come through. I can see potentially where the Pentagon's head is at because they want recruits and they want young recruits too. And where do most of young Americans spend their time on TikTok? Where is the Pentagon barred from advertising because ByteDance could get sensitive user data over to the Chinese government? Also TikTok. So part of the marketing's, the Army's marketing strategy may have been, all right, let's try to reach at least the parents of these younger kids. Maybe the parents are watching these UFL games, but no one was really watching.

24:06Have you met anyone who watched any of these games? I didn't even know this existed, honestly. The final averaged over a million viewers. So clearly some people are, I mean, America loves football. We're starved for football in the spring. We're like, okay, well, just if there's football and we'll watch it. Yeah, it was definitely not the worst deal that the Pentagon has ever put forth in order to try to gain recruits. There's this very famous one where the National Guard, it's this massive NASCAR sponsorship that reportedly didn't lead to a single new soldier joining the rakes. That was way worse though because they spent$88 million from 2011 to 2013, and yet an analysis showed it didn't move the needle at all.

24:46So clearly the Army needs some marketing minds in there right now because their efforts to gain new recruits aren't going so well. Earlier this week, after the culmination of the mixed doubles table tennis competitions, viewers were met with an unexpected sight. Athletes from South Korea and North Korea produced a cell phone for a group selfie together as they received their medals. And while it was a heartwarming display of the power of sports to unite, it was also a powerful moment for Samsung, one of the main sponsors of the games this year. If you've noticed an uptick in podium selfies so far, it's because the brand has been presenting winning athletes with a smartphone specifically to snap a pic after they received their medals.

25:28It's part of a broader push by the International Olympic Committee to loop in more Olympic sponsors without ruining the Olympic brand. And it's an interesting tightrope to walk. The Olympics wants to make money to reduce the financial burden on host nations, but you also don't want in-your-face product placement either. So what do you think of these brands nudging their way into the Olympic spotlight? In terms of product placement, brand integration, I feel like this makes a lot of sense. Like, athletes, when they're on the podium, first of all, they're barred from a lot of social media posting to protect broadcast rights.

26:02So they can't post anything on social media or use their phones up to hours after the competition. But obviously when they're on the podium after just winning an Olympic medal, they wanna capture that moment. And so if you want to help them capture that moment and also get paid from sponsors and make your sponsors happy so you can reduce the cost of the Olympics, then why not give them a phone? So yes, obviously we don't wanna see companies anywhere, but look, we're used to it all around sports. I mean, if you just watch any soccer game or any of the U.S. Open in tennis, I mean, you're looking at it and you see Mercedes and you see JP Morgan, you see Emirates like you're just used to it now.