Chapter 1: Why did inflation unexpectedly cool in November?
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Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, why Trump's social media company is getting into nuclear fusion.
Then that inflation report was amazing. Or was it? It's Friday, December 19th. Let's ride.
Happy Friday. I don't know if you've looked at the date recently. It's already December 19th, less than a week to go until Christmas. It's also that time of the year when you don't feel bad just vegging on the couch for the entire weekend. And lucky for you, there's going to be plenty of new content to keep you busy.
There's a big boxing match tonight on Netflix, Jake Paul versus the much bigger Anthony Joshua. The college football playoff begins. The NFL is games on Saturday and Sunday. And if you want to leave your house for just a bit, Movie theaters are showing the new SpongeBob movie and the third Avatar. Toby, all that plus some chili on the slow cooker, who would say no?
I'm not watching any of that, actually, Neil. I recently started watching Stranger Things again, having only consumed the first season, picked it up midway through season three, have literally no idea what's going on. Who is Vecna?
But if that content slate that Neil mentioned sounds like the worst thing you've ever heard of, the winter solstice is on Sunday, which is the shortest day of the year, so you have an excuse to be in bed way before subjecting your eyes to anything that involves Jake Paul or SpongeBob. And now a word from our sponsor, Public.
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Chapter 2: What is the significance of Trump's media business merging with a nuclear fusion company?
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November inflation data dropped yesterday and what the heck was that? Annual CPI fell to 2.7% year over year, down from the 3% it's been running at and way lower than the 3.1% economists expected. On the surface, Woo-hoo! Some relief for consumers in the lowest inflation print in months. But hold those horses, cowboys and cowgirls.
Broad skepticism emerged across Wall Street and amongst economists who think that this isn't the slam-dunk report it initially appears. The nitpicking is inspired by the fact that the data comes after a 43-day federal government shutdown in which BLS workers were furloughed, meaning November data collection started quite late.
Since the CPI relies heavily on in-person price collections, the shutdown severely limited that process. The shutdown clearly had a big impact on data collection, Heather Long, chief economist at Navy Federal Credit Union, said. I don't take it at face value, Stephanie Roth, chief economist at Wolf Research, told CNN.
Such a sudden stop is very unusual, at least outside of a recession, Paul Ashworth, chief economist for Oxford Economics, said in a note. Still, the White House and Wall Street celebrated with stocks opening well in the green before leveling off a bit throughout the day. But that was the general vibe, Neil. Take this whole report with a pretty big grain of salt.
Yeah, just look at what analysts titled their reports after this report dropped. Lost in translation, said TD Securities. Delayed and patchy Swiss cheese CPI report. And then another one said, borrowed your salt metaphor and said, take it with the entire salt shaker. There's just a lot of gaps and a lot of skepticism toward this report. A number of other analysts came out and said, you know what?
I don't take this at face value, but I also don't dismiss it entirely because if you take it on a whole, there's probably a good sense that inflation is slowing down in certain categories. But this dramatic drop that we saw, we saw core CPI, which strips out gas and food, fall to its lowest level since 2021 at a 2.6% annual rate. That just didn't feel totally believable.
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Chapter 3: Why is Medline considered the stock of the week?
So they basically said there was no inflation in rents at all in October, and therefore there was just no growth in shelter costs at all from September through November. Shelter makes up three quarters of the entire CPI, and that was one of the main reasons that it was brought down to these low historical levels compared to previous months and years.
So that shelter cost, if you talk to an economist, they're like, that is the one thing that really... showed me that this CPI report was something that we should probably take with a huge grain of salt. And we need to wait for December to have a better understanding of what inflation is doing in this economy.
But as you are hinting at, it's not a total watch. The general downtrend is probably accurate. So if you are the Fed now, which is who looks at this data very closely, you're probably... economists say the Fed may still want to cut interest rates again until they can see more data that is untainted by the shutdown. So, again, all eyes are turning towards December.
This shutdown had huge effects. I know. I mean, 43 days and basically you learn how this data is collected. These people at BLS go out to stores in actual main streets across the United States and just look at what the prices are on the shelves. And they didn't do that until the second week of November until the government announced.
was reopened again, and they weren't able to do that, and therefore we don't really have a great picture of what inflation is doing. Interesting. Okay, history is full of examples of pivots. Netflix went from DVDs to streaming. Adam Sandler is now a respected dramatic actor.
But none may top the news yesterday that Trump Media and Technology Group, the parent company of Truth Social, agreed to merge with a nuclear fusion company. Yesterday, everyone led a collective, huh? when Trump Media announced a $6 billion deal to combine with TAE, a Google-backed company that wants to smash atoms together to generate infinite amounts of clean energy.
The company said their tie-up combines Trump Media's access to significant capital and TAE's leading fusion technology to supply badly needed power for artificial intelligence infrastructure. And that's where this starts to make a little more sense, or at least where you can see the reasoning behind it. Trump Media isn't going to leverage its social media know-how to help TAE build reactors.
It will use its uncanny ability to sell stock to help TAE fund its ambitious fusion plans. Because if Trump Media is good at one thing, it's attracting capital, despite doing just $4 million in revenue a year. Its market value is over $4 billion, and it paid its CEO almost $47 million in 2024.
Because of the Trump name, apparently, people are happy to throw money at this company, so it's taking advantage of that to make a bet on an experimental technology. Will it work? Who knows, but that's at least the logic.
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Chapter 4: What are the concerns surrounding Oracle's stock performance?
This is what's happening in the sun right now. So it's thought to be, you know, the holy grail of clean energy. So obviously, if you frame it in that sense, like, yeah, go after fusion, you know, give it all the capital you need. But no one's ever actually produce a commercial-grade fusion reaction or reactor on Earth, as we know it.
No, there was a breakthrough in 2022 when this fusion process was created in lab conditions. So there was a little movement a couple years ago. But there does seem to be a lot of attention and money flowing into this sector. Global funding tops $7.1 billion across 50 startups as of July. And VC funds are pouring in at $3.3 billion into nuclear fusion.
That was an almost 600% increase over the same period last year. This particular company, TAE, has a lot of substantial backers in addition to Trump. It is considered the oldest and one of the more respected companies in this particular field. It has Alphabet as a backer, Chevron, Goldman Sachs. It's been around the bend. So this is an interesting deal. But I think
Big picture, it shows that AI is so power hungry and the winners of the AI revolution will be the ones that are able to supply the power, create infinite power in the holy grail sense of nuclear fusion to fund all this AI infrastructure being built out because there's a big race between the US and China about who can deliver the most power for AI. And right now we are not winning that race.
At least we have a social media company on the case though. All right, let's move on to our Stock of the Week, Dog of the Week, the segment where we pick one stock that did its Christmas shopping in a timely manner and one stock that is panic re-gifting a candle. I won the pre-show game of Flip Cup, so I'm up first. And my Stock of the Week is Medline. Medline, you say, what the heck is Medline?
It's a U.S. medical supplies giant that went public this week in the biggest IPO of the year. Priced at $29 a share, it opened at $35 before finishing the day at $41, up more than 41%. The market cap at close was $54 billion, which makes it the largest US IPO since Rivian went public back in 2021. Founded back in 1966, Medline is the definition of a massive but under-the-radar business.
It has 43,000 employees worldwide and offers a catalog of over 335,000 medical and surgical supplies. Think everything from gloves, masks, and scalpels to wheelchairs and hospital infrastructure products. It had net sales of $24.5 billion last year, which would already place it amongst the top 500 public companies in the U.S. So why go public?
Historically, we've done very little advertising, very little marketing, CEO Jim Boyle told CNBC. So the IPO is seen as a way to increase brand awareness and get on more people's radar. Neil, going to go out on a limb and say that unless you've directly been involved in this industry, not many people have heard of Medline.
I have not heard of it. And I want everyone right now to take out the smallest violin that they have, because this was a huge win for the private equity industry. Now, people probably don't know this, but the private equity industry has been going through it for the past couple of years. They've been struggling to sell the companies that they've bought And they've been struggling to return cash.
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Chapter 5: How does the recent inflation data impact the economy?
And also, a lot of people believe that Medline's demand is actually insulated from the broader economy. You're always going to need gloves. You're always going to need scalpels. You're always going to need these surgical implements, regardless of what's going on with rates, regardless of what's going on in the broader economy or consumer sentiment.
So in that case, it seems relatively insulated as a business. All right, we're going to take a quick break and come back with Neil's Dog of the Week.
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My dog of the week is Oracle, which is setting off more red flags than a guy who follows a bunch of Instagram models. Shares of the tech giant fell 8% this week, extending a months-long slump that has investors seriously worried about the company's balance sheet and the health of the AI sector more broadly.
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Chapter 6: What are the implications of the government shutdown on inflation data?
And that particular stock was would go up 10% to 20% on that day. Now, if you show any bit of shakiness, your stock is going to get crushed like Oracle's is doing right now. And also another AI adjacent company, really not adjacent, it's at the center of the AI trade, is CoreWeave. CoreWeave spiked more than 400% after it IPO'd. Now it's down more than 60% since then.
So investors are getting a lot more skeptical. They're getting a lot more strict about the finances of these companies that have not shown any return for all of their AI investment.
There are still some bright sides. I know this is the dog of the week segment, but Micron, which is a AI memory company, had an incredible earnings call this week where they said that, hey, we cannot actually keep up with demand.
They came in ahead of every analyst forecast saying, and analysts were surprised saying, this is actually real demand because this is not necessarily something where they have to bring on data centers online. They're actually just providing services to companies that do need AI. So there is real demand out there. It just depends on where you're falling within the picks and shovels matrix here.
Are you the ones actually having to build the data centers? Are you someone who's providing a service to companies that are actually generating revenue like someone like Micron is? Let's bring to the finish with our final headlines. RIP to your screen time, TikTok is not going anywhere. TikTok finally signed a deal to spin off its U.S.
operations into a new joint venture, according to a memo from TikTok CEO Cho Chu he sent to employees yesterday. This comes after a years-long saga that culminated in a law passed in 2024 that required TikTok to divest its U.S. operations or face a ban in the US. The law technically went into effect back in January, but enforcement has been repeatedly delayed.
Under the new joint venture, 50% of TikTok USA is owned by a consortium of mostly American investors, including Oracle and the PE firm Silverlake, valuing the entity at around $14 billion. 19.9% is retained by ByteDance, which keeps them below a key 20% legal threshold under U.S. law. And 100% of you might be confused as to whether this was all necessary.
The idea behind the joint venture is that now delicate things like American user data will be handled by an American company like Oracle. TikTok's algorithm will be retrained on U.S. user data, and content moderation will also be handled by the U.S. venture. Neil, we've got some All-Americans scrolling ahead of
I can't wait. This is bizarre because TikTok, according to this deal, is valued at $14 billion. In 2023, it did $16 billion in revenue. Right now, according to this deal, it's valued at about the same level as Snapchat. And it is one of the leading social media companies in the world and the United States. So analysts are trying to wrap their head around what's going on here.
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Chapter 7: What challenges does Oracle face in the AI sector?
The four-ounce portion of adobo chicken or steak with nothing else in a cup is part of a wider high-protein menu that includes two high-protein bowls, a salad, a burrito, and an adobo chicken taco. After a bruising year, Chipotle is hoping to reignite demand by leaning into a protein craze that every other food company is chasing.
It says that high protein diets have ranked as the top diet pattern in the U.S. for three years running, that 70% of Americans now say they prioritize protein, and more than one third have increased their protein intake over the past year. Toby, can meat in a cup save Chipotle?
Yes. Bowl slop is out. Cup slop is so in at this point. In addition to the protein trend that they are jumping on, I think the smartest play here is the fact that they want to capture off-peak traffic. When does traffic peak at Chipotle? It peaks around lunchtime when everyone's getting their full burritos and full bowls. But maybe you want to pop in for a snack at Chipotle.
2 p.m., 3 p.m., 4 p.m., you can get meat in a cup and just have a little bit of snack, but you don't want to order an entire burrito. So I think directionally, they're saying, how can we get people in the door during non-peak hours? And also, they did call out the fact that GLP-1 weight loss drugs are transforming how people are engaging with food. Portion sizes are getting smaller.
A Chipotle burrito is massive. You don't want that if you are taking Ozempic or something similar. So I think they're trying to kill three birds with one meat cup right now. And I'm kind of bullish on it.
It might work. I think there was a branding misopportunity here, though, because they're calling it like high-protein cups. And maybe if they just called it meat in a cup, it would actually go super viral because that's what anybody is going to say anyway. I do wonder about the social stigma or what it would be like if you just go there and get meat in a cup. You're not even using a fork.
I'm not using a fork. I'm just tossing it straight back like this. It's going down the gullet. Meat down the gullet in a cup. I'm actually I don't think you're right about the marketing aspect. I do not think people want to actually meet the cup. That's why you're a podcaster, not a marketing expert.
All right. Finally, not every social media platform needs to do an end of year wrapped. And I'm looking at you, LinkedIn. The professional networking app released its first ever year in review. That reminds you just how much time you spent looking for a job in twenty twenty five. Of course, that's not the intention, but that's basically how it functions.
Located on the app, it tells you how many days you visited LinkedIn, how many new connections you made, and how many impressions your profile racked up. LinkedIn editor-in-chief Dan Roth told CNN, We know this has been a challenging year for many job seekers.
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Chapter 8: What are the latest headlines to know heading into the weekend?
Neither did my gin. All right. And finally, we want to give a shout out to Serena for winning the ladder game. As a reminder, we gave you five things in a particular order based on one metric. This was on Monday. And we asked you to pick the metric we used to order them. Those things were Mario, Garfield, SpongeBob, the Hulk, and Cookie Monster.
As hundreds of you responded, the answer is Colors of the Rainbow. Red, orange, yellow, etc.
A lot of people answered the correct answer, but I do want to highlight one of our favorite incorrect answers, which was how much they love Italian food. And this was the justification given. Mario is Italian, so he loves their food. Garfield loves lasagna. I can see SpongeBob liking Italian more than the Hulk. And Cookie Monster just eats cookies. It kind of works.
I feel like we should give out a consolation prize. That is all the time we have. Thanks so much for starting your morning with us and have a wonderful Friday. If you want to get in touch or ask a question for that upcoming Q&A episode, you can send a note to morningbrewdaily at morningbrew.com or DM us on Instagram at mbdailyshow. Let's roll the credits. Emily Milliron is our executive producer.
Raymond Liu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair and makeup is pretty checked out at work. Devin Emery is our president, and our show is a production of Morning Brew.
Great show today, Neil. I wish you all well.
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