Your Wages Are Catching Up to Inflation & Why Tesla Could Sue Cyber Truck Owners

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0:29Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, Netflix finally spills the tea on what shows we're all watching. Then, whatever you do, do not try to resell your Tesla Cybertruck. It's Wednesday, December 13th. Let's ride.

0:48Toby, we had some breaking news overnight and an optimistic sign for group projects everywhere, and climate change, of course. Nearly 200 countries reached a historic agreement at COP28 in Dubai that calls for a transition away from fossil fuels, which account for more than 75 % of global greenhouse gas emissions. Not everyone is satisfied with the deal. It is a compromise after all. But it does mark the first time that a global climate agreement specifically calls to limit the use of fossil fuels. And I assume all the admission cuts are being deferred until 2034. Am I right? Oh, God. Everyone is falling into Shohei Otani footprints these days.

1:25He sets the standard. Okay, before we jump into the news, quick shout out to our friends over at Yahoo Finance. Spoiler alert, we're going to be talking about how inflation affects your wallet on today's show, but you would have already known that if you're a fan of Yahoo Finance. Yep, Yahoo Finance gives you a stream of high quality real-time market data so you can dig into the inflation stats, most importantly, how it affects your favorite stocks all in one place. So head to finance.yahoo.com today or download the Yahoo Finance mobile app to get it directly on your phone. Does it ever feel like you're a marketing professional just speaking into the void?

2:02But with LinkedIn ads, you can know you're reaching the right decision makers, a network of 130 million of them. In fact, you can even target buyers by job title, industry, company, seniority, skills. And did I say job title? See how you can avoid the void and reach the right buyers with LinkedIn ads. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started at LinkedIn.com slash campaign. Terms and conditions apply. Now, without further ado, let's dig into that pesky inflation data to see how it might affect your dollar-dollar bills, y 'all. The Consumer Price Index, which measures inflation, increased just 0.1 % in November and was up just 3.1 % from a year ago.

2:41The big number that will likely affect your wallet the most is a decrease in energy prices. Gas prices fell 6%, while energy prices in general decreased 2.3 % month over month. Also, wage growth has been an unexpected MVP in helping tamp down inflation. Wages rose at a 4 % annual rate last month, extending a long, slow decline, but staying above that 3 % inflation number. Finally, shelter prices have been a huge thorn in everyone's side, accounting for nearly 70 % of the total increase in core CPI over the past year. But last month, housing inflation declined slightly to 6.5 % relative to a year earlier and has fallen from a peak of over 8 % in March 2023.

3:23Neil, energy going down, wages slowly declining but outpacing prices, and housing remaining elevated. That's this inflation reading in a nutshell. Yeah, you're right. Those are the main takeaways. Those are my main takeaways. Let's dial in on gas prices, right? Because that was the inflation boogeyman for at least last summer. But they've been down 19 % since September. And AAA said that now the average gallon of gas in the United States was$3.14, which is compared to over$5 a gallon in June 2022. So people are feeling a lot of relief at the gas pump. And, you know, inflation stats, a lot of times we try to parse them and say, let's exclude gas prices and food prices because they're so volatile.

4:07and look at core CPI, the core inflation index. But it is important for people to, when they fill up gas once a week or so, so looking at those gas prices, they're so visible. They are very politically salient issue as well. So Biden has to think this is pretty good news, that gas prices have truly plummeted and they could go below$3 a gallon headed into January. Yeah, even though from a macro perspective, a lot of time economists do like excluding those things. If you're just talking about a very micro perspective, If you're talking about what affects your wallet on a day-to-day basis, of course gas prices affect it.

4:43So it is good to see them falling so much. Housing, on the other hand, another thing that affects a lot of people on a daily basis. It's just super sticky right now. On a monthly basis, the index increased just 0.4%. But on an annual basis, it's still up 6.5%. There's just still a very large shortage of affordable homes or even affordable rentals right now, which is why we are seeing that housing number just consistently remaining high. There's some really stark numbers here about housing unaffordability in the United States. About half of the nation's renter households pay more than 30 percent of their household income on rent.

5:19And that is considered the threshold of what is affordable and not. You don't want to pay more than 30 percent, but half of all the nation's renters are. And more tenants than ever are spending 50 percent of their income on shelter. So this is a problem that the United States still has not yet addressed, and it's still pushing inflation higher. So we talked about core inflation, but I now actually want to talk about super core inflation, which is another metric that economists have been looking at, which excludes not only the volatile food and energy prices, but also excludes shelter costs, which, again, you spoke to why maybe that won't be something that an everyday person wants to do.

5:58But economists are looking at it. super core inflation increased 0.4%, which is double the pace of October. So that's the number that gets economists a little, gets a knot in their stomach that maybe inflation isn't doing the thing that the big headline number is saying it's doing. So that's when you go beneath the surface and look into kind of the nitty gritty data that you see some warning signs, but nothing to get too overly. I think that's the main takeaway from this report is that inflation is still coming down. It's going to be a bumpy ride back to 2%, but there was nothing too alarming about this report at all.

6:34All right, Netflix is finally revealing how many people watch its shows. After years of keeping its viewership stats close to the chest, much criticism was handed to it. The streamer spilled the beans in a massive engagement report that discloses the viewership of its shows through the first six months of the year. It is the most detailed info that any streamer has ever made public. The biggest takeaway, the top of the lineup is dominated by originals. Nine of the top 10 TV series and six of the most watched programs were Netflix originals. The most viewed program through June was The Night Agent, followed by Ginny in Georgia, season one of the South Korean drama The Glory and Wednesday.

7:13I have not heard of 90 % of those shows, but overall, this is a win for writers, actors, and producers that have been pushing Netflix to be more transparent and having built a wide lead atop the streaming leaderboard, Netflix feels like it's in a strong enough position to release stats it once said would only help competitors. Yeah, remember, Netflix is not doing this out of the goodness of their heart necessarily. Initially, when the streaming industry was first born, Hollywood was kind of pumped to not live and die by the old Nielsen audience ratings. But now writers and creatives have started to criticize Netflix because hiding audience data allows it to maybe underpay for the more successful shows that they've produced.

7:52but I think this is a total power move by Netflix because by releasing their numbers first, other streaming services are going to be put in this awkward position because first of all, their numbers aren't going to be as high as Netflix's numbers because Netflix is just bigger than they are. But also they're going to kind of have to be transparent after this because once Netflix moves, then you have to fall in line. So it's sort of a damned if you do, damned if you don't scenario for other streamers. That's a really good point. One thing I want to point out for Netflix is that it has a really big bottom of the order, kind of like the Red Sox last year.

8:26But they said that over, they said that 100 billion hours were viewed on Netflix, but 20 % of the titles only accumulated 100 ,000 hours. So I did a little back of the napkin math, and that means a fifth of all titles account for 0.0001 % of all viewing hours. So there's this huge stack of its library just languishing and no one's watching any of these shows. Yeah, it's definitely a hits business. One thing that was interesting to me too is that whereas you look at Apple TV, which invests a ton of money into getting really big names to headline their shows, Netflix does the absolute opposite. And it seems like their shows meant movie stars, not the other way around.

9:10I mean, Ginny in Georgia, The Night Agent, can you tell me any of the actors or actresses in that movie and then those shows? You definitely cannot. So I think it's interesting how they don't choose to splurge on talent. They just make hopefully what is high quality product. And then that turns into some famous talent. Okay, Neil, put yourself in this situation. You just shelled out nearly six figures on a new Tesla Cybertruck. But on the way home, you realize that bulletproof stainless steel isn't quite your cup of tea. Unfortunately for you, though, there's not a whole lot you can do about it.

9:43A clause has reappeared in Tesla's terms and conditions that says owners are restricted from reselling their Cybertrucks with a threat of a lawsuit looming for those who failed to comply. This is a clause that has appeared and disappeared a few times now, but it looks like it's back to stay. One theory for its inclusion is that previous Tesla vehicles ended up being bought by other automakers, presumably to then be taken apart to see how they work. With a Cybertruck so new to the market, it makes sense that Tesla is being overprotective of its newest creation. You know, this feels like a defensive move, too, to make sure resellers don't send the price of a Cybertruck exorbitantly high.

10:20I mean, this is as textbook of a scalping opportunity as you could possibly find. It reminds me of limited edition sneakers or Aero's Tour tickets. The supply-demand balance is so out of whack. There's only 1 ,000 of these Cybertrucks coming online in this first foundation series. Meanwhile, millions of people have reservations. So when you have this supply-demand imbalance, it's not crazy to think that there's going to be a ton of opportunists out there hoping to scoop up the first 1 ,000 and then flip them for a much higher price. And remember, this is the worst the Cybertruck will ever be because it just got released.

10:55So this is still version 1. It's the Foundation Series. So if resellers come in, drive the prices up super high, then someone is inevitably going to be pretty unhappy with the actual product that they get. So that's another reason why you want to kind of put this clause in place. Some people were balked at the idea of getting a lawsuit pressed against them for reselling their vehicles. But in general, this is not a completely out of the ordinary thing for especially luxury car makers to do. There's a really funny case involving John Cena, actually, who he bought a Ford vehicle, a Ford GT that costs$450 ,000 and then quickly flipped that Ford GT to another party.

11:39And Ford came saying like, wait a second, we have a lockup period on this. You can't sell it for at least 24 months. You broke that John Cena. And so they ended up settling and he ended up donating the difference to charity. So there's a happy story in the end of the day, but this just goes to show that this is a very common practice in kind of the luxury car market. And there is, Ferrari does that too. And we should add that there is, Tesla kind of has a right of first refusal. You can offer to sell it back to Tesla and you can ask Tesla to permission, essentially, to sell the car. So it's not this, you know, it's not super black and white.

12:13Tesla is offering some wiggle room. But it is interesting to see this happen with a car that you might see happen in other markets. Yeah, for sure. OK, before John Cena comes in from the top rope, we're going to take a quick break. 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 maintain skin that's still more clear at one year with monthly dosing. EBCLIS, 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.

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13:28Tonight 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. I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon. Series premiere tonight on NBC. Things haven't been this tense in the hotel industry since Toby suplexed a guy for the last waffle at the Continental Breakfast.

14:06Choice Hotels, the owner of Comfort Inn and other budget brands, ramped up its hostile takeover attempt of rival Wyndham Hotels by taking its$8 billion offer straight to shareholders. Choice has been trying to buy Wyndham for a while now, hoping that by joining Comfort Inn with Wyndham's Days Inn and La Quinta brands, They could better compete with the big guns, Marriott and Hilton. And that way, it reminds me of the mergers happening in the budget airline space with the smaller guys linking up to take on the Deltas of the world. But Wyndham's leadership has repeatedly rejected the offer, leaving choice with no choice.

14:41But to go full succession and try to make this merger happen in spite of Wyndham's resistance, this hostile takeover attempt would require sidestepping Wyndham's board and trying to win support directly from the shareholders, convincing them that this offer is actually quite generous and that Wyndham's management is making a big mistake. Toby, nothing gets the blood flowing at 6 a.m. like a hostile takeover attempt. We love a hostile takeover attempt. Good use of suplex, by the way. Let's set the stage here, though, for why we're even seeing this merger in the first place. Domestic travel in general has come under a lot of inflationary pressure.

15:14It totally relates to the first story of the day. It doesn't seem as fun to pile into the family minivan for a cross-country road trip if everything from gas to hotels are more expensive. So domestic travel in general has seen a little bit of pressure, which is why budget hotel chains like the ones owned by Choice, like the ones owned by Wyndham, are kind of seeing are in favor right now. So maybe this is why Choice is looking at Wyndham and looking at shops and saying, hey, this is our moment to combine and really dominate this budget hotel space. So that's generally why we're seeing this. It is interesting.

15:47There's a lot of tension, though, because Wyndham is probably saying, well, we see the same opportunity as well. So you're going to have to make your offer better, which is forced choice to kind of circumvent the board and go straight to the shareholders. A big problem Wyndham has cited is regulatory approval. This could take a year or two years to win regulatory backing from the FTC. So what Choice has done to kind of expedite the process, It started a dialogue with the FTC already saying, look, we're already engaging regulators. We know this might catch their eye, and we know this is going to take a while, and we know this is one of your concerns.

16:20But look, we already started this process, so we're getting going, and the ball's in your court right now. Let's talk a little bit about hostile takeovers in general. There's a few different ways that you can achieve this. One is a tender offer, which requires a majority of shareholders to accept. That's similar to what Choice is doing. A proxy fight aims to replace a bunch of the board members at Wyndham or at whatever the target company is. But also, an acquirer may simply choose to buy enough stock in the open market to take control. There's a defense mechanism to that called the poison pill, which we saw happen in the Twitter and Elon saga from a few years ago.

17:00So the most prominent hostile takeover recently was probably when Elon Musk tried to take over Twitter. because remember, Twitter did not want this to happen. Musk acquired a 9 % stake in Twitter and said, hey, I'm coming for you. And Twitter was like, we don't exactly want that. So what happened there is as soon as you buy a certain stake in a company, it has to be disclosed, in which case the target company can kind of play this defense. It's kind of like chess a little bit. But they can adopt a poison pill, which is a little complicated. But basically, the gist is that you can set a target threshold for a stake that a particular shareholder owns.

17:36And then once they hit that particular threshold, in Twitter's case, it was 15%, then you can basically flood the market with cheap stock to have your other shareholders buy it at a free or at a major discount, which essentially blocks the acquirer, so say Elon Musk in this case, from taking over the company. So it's called a poison pill. And that's one defense mechanism that companies can use to avoid getting a hostile takeover. Yeah, so Wyndham does, they're not sitting ducks here. They're not helpless. They do have certain defenses that they can employ. Choice does look to be doing an exchange offer, which they are offering Wyndham stockholders both a little cash and Choice stock in compensation for a majority stake of the company.

18:15So we'll see what they choose. It is very funny that their name is Choice Hotels because there's some choices that need to be made by Wyndham stockholders. Okay, Adam Newman, the WeWork founder, infamous for his over-the-top vision to elevate the world's consciousness via short-term office rentals is back with another project and you need to hear about it. A reporter from Business Insider got a first look at his new company called Flow. And honestly, I'm kind of digging it. Flow made waves last year when the venture capital firm A16Z wrote a$350 million check to help fund it. It's the single biggest investment it's ever made.

18:52And what the Insider reporter saw was essentially just a well-managed apartment building. Flow's thesis is that demand Sanford Apartments has grown so much that landlords have gotten lazy and essentially subject their tenants to anything they want to because there's always another one to take their place. Flo wants to treat tenants well, focus on building community among them and charge a premium for it along the way. Neil, one of the first things a reporter said when they stepped into the building was, it felt a lot like a WeWork. Are we being duped again into another Adam Newman snake oil pitch or were you impressed reading about Flo?

19:26It's possible that this is classic Newman because when he launched the company, he said, this company has four pillars. It's a management company. It's a brokerage agency. It's a financial services company. And it's a mechanism for sharing value with tenants. So there are these lofty principles behind what is essentially revealed to be a landlord. And this company was worth a billion dollars before it launched a single product, which definitely raised a lot of eyebrows. But no one can raise money like Adam Neumann, even after the collapse of WeWork. So should a landlord be valued at a tech startup valuation, which is what's happening here.

20:06It's what happened to WeWork, and that is one reason why WeWork collapsed. Yeah, it certainly feels a little bit like history doesn't repeat itself, but it often rhymes. It does feel like they're trying to inject this tech layer on top of a non-technical business. The Flow app was a big thing that this reporter saw. You can do everything from unlock your doors, view security footage, book fitness classes. There's also this kind of Facebook-styled news feed that you can check in on announcements and messages from residents. It's this all-in-one everything app that, honestly, a bunch of communities have tried before, but it looks like in the past maybe it hasn't worked or it's a little janky.

20:43Flow has devoted a ton of time into it. And talking to residents, the reporter was like, they love it. They do feel like the app works very well. It is kind of your hub for everything that happens in Flow. Also, the idea of sharing your data is a big part of this Flow community as well. So maybe your leasing agent notices that you have a dog, and they might do a nice white-glove service of sending dog treats to your apartment, which is just nice from a resident perspective. But also then they enter, oh, Neil is a dog owner. I'm going to put that in the database. And then if a dog food brand wants to come host an event at a flow apartment, then they can make money off that.

21:23So there is kind of like monetizing your data, much like the Internet has, but in an analog format. So, again, however deep or however much Kool-Aid of it you want to drink, you can definitely do that. But on the surface, a well-managed apartment that treats its residents well will probably be successful. Maybe it's not a billion dollar company, though. Finally, it's holiday party season at work. and you're probably wondering, is my office party the only one that seems a little more lame than last year? Nope. A report by the Wall Street Journal explains that employers are taking a more chill approach to corporate America's most sordid ritual this year, ditching the roast beef carving stations for office potlucks and swapping out the ice luge with ginger ale.

22:01That probably has to do with all the layoffs and budget cuts this year, but it's also because workers just aren't excited about these parties. A survey by LinkedIn showed that 55 % of workers weren't planning to attend their company's holiday party this year. To deal with this apathy, more employers are holding their parties during work hours, with almost 60 % of companies hosting holiday gatherings during the traditional workday, up from less than half last year. Toby, did COVID kill the work holiday party? And is that even a bad thing? I don't think that COVID did it. I think it's just one of those things right now where you pick your head up and look at what else is maybe going on in the world.

22:36Also, just again, the rise of prices and inflationary pressure. And it's just difficult to kind of get into that holiday spirit. It doesn't feel right to be celebrating a holiday party. But I also choose a more optimistic view in that in tougher times, maybe holiday parties are exactly what you need to bring people together. You want to bring people together more, not isolate them. So which is why I kind of like seeing this data point where a November poll found of more than 200 companies found 64 % were planning holiday gatherings up this year, up from 57 % in 2022. However, the parties are definitely going to be more low key, as you mentioned.

23:12Right. It seems like there's been a shift away from the traditional Christmas party that you might see in the office. And it's more geared towards less alcohol, more activities. A lot of companies have said they're planning pickleball tournaments and things during the workday that just aren't the traditional party at night where a lot of shenanigans can go down. You see your boss do some things that they probably shouldn't be doing. So it seems like there's just a general, and maybe that's just a general shift in society where there are all these bars popping up where people go and they like to play activities.

23:42They like to play ping pong and pool and shuffleboard and all of those things. And it just seems like the holiday party is mirroring that broader trend shift. The veteran move I think that some companies are pulling off is pushing the holiday party from the December time to January. I hate that. Oh, you hate that? I think it's so smart from a cost-saving perspective. It is. Everything is a lot, like probably 25, 50 % cheaper because it's not peak holiday party. But wait, you hate it because. Well, I just don't. I like to. I'm just a very organized, orderly person in my mind. And a holiday party should be in December leading up to Christmas because after New Year's, I just don't.