Chapter 1: What are the implications of the Fed's latest rate cut?
Good morning for Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the Federal Reserve is at war with itself.
And the government wants to put gyms inside of airports. It's Thursday, December 11th. Let's ride.
Good morning and happy Thursday. Anyone who spends time around kids knows the 6-7 trend has gotten way out of hand, so much so that In-N-Out Burger has retired the number from its ticket ordering system.
In response to throngs of kids camping out at the burger chain and waiting for order number 67 to be called, then going animal style when it is, In-N-Out confirmed that last month it got rid of 67 entirely, so if you order after ticket number 66, you'll be number 68. Then the person after you will be ticket 70 because apparently people can't handle the number 69 either.
Toby, the youth, they broke in and out.
At this point, just ditch the entire 60s. They are cursed.
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Chapter 2: What dissent is present within the Federal Reserve's decision-making?
Now, this is interesting, though, because Wendy's is taking a different approach to dealing with 6'7". they are leaning in and selling 67-cent Frosties. So two different schools of thought here. If the ultimate goal is to kill the meme, I think Wendy's is doing a better job of that because you know what's not cool? Brands. Brands getting in on what the cool kids are saying.
The fact that In-N-Out is not naming 6-7 going forward, I think it's like a Voldemort effect where you're giving it more power. So I do think if you want to... Never hear the word six, seven again and have kids going crazy. You got to start doing brand promotions around it.
That's the first time I've heard that. The Voldemort effect. It's basically the opposite of the Streisand effect.
Get Streisand and Voldemort in the same room. That is a dinner party that I want to go to.
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Chapter 3: How is Oracle performing in the AI market?
Not only were there three dissents, but there were three dissents on both sides, with one Trump aligned official voting for a jumbo size half point cut in order to spur on the labor market, while two others voted for no change in rates at all in order to stave off inflation.
After the announcement, all eyes turned to Fed Chair Jerome Powell's press conference, his last before Trump announces his successor. After his customary good afternoon, Powell turned some heads by saying recent employment data may have overstated by about 60,000 jobs a month, given that payroll growth has been averaging about 40,000 jobs per month since April.
Uh-oh, that means employment growth has been non-existent, which explains why the Fed felt comfortable cutting rates again despite persistent inflation. As for what's next, we got some grade A Fed speak to pour through.
The central bank said that they were considering the, quote, extent in timing of additional adjustments to the target rates for the federal funds, which many took as a sign that the Fed is content to see how the economy evolves before committing to any additional cuts. Neil, from a triple descent to J-PAL's last hurrah, some excitement for a rate cut that was all but guaranteed.
A lot of excitement, but I always start here when we talk about the Fed, because it's really important to remember the Fed basically only has two responsibilities. They're called mandates. It aims to get unemployment as low as possible, and it wants to keep inflation running at a 2% pace, which is its target. The problem is that those are both problems.
And when you try to tackle one, you risk making the others worse. Unemployment was up to 4.4% in September. That was up from 4.1% back in June. And then prices, as measured by the Fed's preferred Gauge of inflation rose 2.8 percent in the year through September. So these two different mandates in conflict with one another.
And Jerome Powell gets up there and says, look, I can actually see both sides to this argument. I see both sides to cutting rates. I can see the other side of sticking with what we have. He said everyone around the table at the Fed agrees that inflation is too high. We want it to come down. and agrees that the labor market has softened and that there is further risk. Everyone agrees on that.
Where is the difference? What the difference is, is how do you weight those risks and what does your forecast look like? Well, the central bankers in that room, they don't agree. And we got some historic levels of disagreement among the Fed officials.
Powell's quote from yesterday I thought was very illuminating. He said, a very large number of participants agree that risks the upside for unemployment and the upside for inflation. So what do you do? You've got one tool. You can't do two things at once. It's a very challenging situation. So it speaks to exactly what you're talking about. Like, hey, we can either...
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Chapter 4: What concerns do investors have about Oracle's revenue?
raise rates, we can leave rates where they are, or we can cut rates. It's a very blunt tool when you have this dual mandate, as you described. The general message that Powell was putting forth, though, was that the labor market is weaker than expected. That is why we are getting a cut.
So despite all of those factors going into this decision, the overarching theme is that, hey, the labor market is in a precarious place, which is why we felt comfortable doing this despite some dissent within the Fed.
Let's talk about what a rate cut means for your wallet. Well, one thing that I noticed specifically when the Fed cuts rates is I have this high yield savings account. Well, well, when the rates were high, you were getting five percent, as everyone probably listening to the show knows.
Well, as soon as the Fed cuts rates, I get an email from them being like, well, your rate has gone down and it's been doing that over the past couple of months. So If you are in a high yield savings account or any savings account, it's likely that your interest rate is going down. You're probably wondering, well, the Fed is cutting rates. What does that mean for mortgages?
Is our mortgages going to finally be more affordable? The answer is not really. Mortgages are still above six percent. And that's because while the Fed, the Fed's interest rate does influence broader borrowing costs across the economy. It's not a one-to-one comparison.
So when the Fed cuts rates, it's not like the mortgage market follows lockstep because those are influenced by things like the 10-year treasury yield and other things going on in the macro economy. So in general, you can say that when the Fed lowers rates, that means that borrowing costs will come down across the economy and at the same magnitude as the Fed's rate reduction.
And remember, I kind of called this Powell's last hurrah. His term actually ends in May. But remember, there's been all this political backdrop of Trump has been demanding faster rate cuts. He's been kind of hinting at ousting Jerome Powell before his term ends. He's raised questions about Fed independence.
This last hurrah, basically Powell went out saying, I really want to turn this job over to whoever replaces me with the economy in really good shape. I want inflation to be back down to 2% and I want the labor market to be strong. That's all I want. All of my efforts are to get to that place. So that was kind of his parting words saying, I'm doing my best here.
I gave it everything I had, despite all the turmoil that swirled around him. He goes out saying the dual mandate was what I came in for. It's what I'm still trying to do and it's what I will continue to do.
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Chapter 5: What innovative ideas are being proposed for airport improvements?
Capital expenditures, a proxy for data center spending, came in at $12 billion for the quarter, nearly $4 billion more than the street anticipated. And look, other companies are spending way more on AI infrastructure than Oracle. The difference is they don't have the debt problems that Oracle has.
The company has been on a data center building binge financed by debt that has it burning cash at a rate that makes investors uncomfortable. $10 billion in negative free cash flow last quarter, to be exact.
On top of that, the majority of Oracle's big backlog of revenue that I mentioned turned out to come from one company, OpenAI, which itself has invited many tough questions about the sustainability of that business model. As Jones trading strategist Michael O'Rourke put it, I always thought it was dangerous for the company to take on significant leverage while tying its future to a startup.
Looks like more investors are joining in his skepticism.
Yeah, the core issue here is this massive CapEx. Oracle is spending more on AI data centers than any company not named Amazon or Microsoft. And unfortunately, they do not make as much money as an Amazon or Microsoft company. Oracle execs did nothing to dispel those fears either.
They said that CapEx for fiscal 2026 is expected to be 15% higher than the already high $35 billion the company estimated back in September. The Wall Street is concerned that they won't be able to translate that into revenue quick enough, or the worst case scenario is it doesn't materialize as revenue at all, depending on what goes on. on an open AI.
And so when you're taking on such a heavy debt load to fund this AI infrastructure build out, that is when alarm bells start to sing. It's so fascinating, though, that the very thing that propelled it to such a big stock run up is now the very thing that's weighing it down, which are these ties to open AI.
And what's also been interesting development is that when you're looking at companies to gauge the health of the AI sector, it's NVIDIA 1A, but Oracle 1B. That's why these earnings are so important. That's why we're talking about it, because Oracle for decades had been a pretty boring but very successful company in database software.
And then all of a sudden they get into this cloud computing market and they've been super successful with that. And their stock has a huge price run up. They have all these customers, specifically OpenAI, buying all of this compute from Oracle. But now, at the same token, they rise with the tide, but they also fall with the tide.
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Chapter 6: How do political disagreements affect golfers' performance?
BYOC is in. Moving on, running it to your gate to catch your connection isn't the only exercise you'll be doing at the airport, at least if the Department of Transportation has its way. Trump's transportation secretary, Sean Duffy, this week laid out his vision for how a pot of grant money should be allocated to upgrade airline terminals.
Some use cases he floated at a press conference flanked by health secretary RFK Jr. included mini gyms in terminals so travelers can work out during layovers. expanded nursing pods for new mothers, family-exclusive security lanes, as well as more healthy food options.
Duffy's press conference was punctuated by RFK and Duffy busting out some pull-ups in Terminal 2 at Reagan National Airport to demonstrate that getting the blood moving while traveling is possible with the right equipment.
The money for these protein-fueled pipe dreams comes from the Biden-era Infrastructure Investment and Jobs Act, which allocates $1 billion annually through 2026 for terminal projects. And Duffy is advocating to use that billion to advance his Make Travel Family Friendly Again initiative. Neil, usually when people travel, they're looking to pull up a seat to the bar, not a pull-up bar.
Rule number one of gyms and airports is if you do put a gym in an airport, then you also need a locker room as well. Many pointed out that there was this inherent conflict between what the Department of Transportation is messaging around air travel.
Right before Thanksgiving, Duffy comes out and says, we want to make air travel the golden age again, which means that all of you who are going in PJs and sweatpants, I want you to dress up and look the part a little bit more when you're traveling. And that was to stem a wave of bad behavior. And at the same time, he's saying, well, let's put gyms in airports. And so what are you supposed to do?
Wear a gym or wear a suit on your airplane or to the airport? Or wear some Lululemon? Seems like those are
an inherent conflict one thing others also pointed out was this initiative while look like i think we all kind of want to get the blood pumping at the airport especially before a long flight kind of misses the mark when it comes to what people who are traveling by air really want so there was this ipsos poll in 2025 this year earlier this year when it comes to what people were wanting for
In terms of changes from commercial air travel, Americans overwhelmingly want lower fares and fewer fees. 68 percent rank that as their top priority. And when you go to two and three more comfortable airline seats and speedier security or customs lines. So those are really what Americans want when it comes to the air travel experience.
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Chapter 7: What recent study reveals about brain development and adolescence?
The fact that adolescence lasts so long shows how human brains take a much longer time to develop than other animals, some of whom can stand upright not long after they're born. You might think of a 21-year-old as an adult, but these scans show that there's still another decade until the brain is fully stable. Toby, suddenly SantaCon makes a lot more sense.
It is a great justification. Anytime you have a bonehead mistake, say, I'm still developing. I'm still in my adolescent period. Let the brain catch up and take time diving into each one of these epochs, these eras, whatever you want to call it. It is fascinating what your brain is doing and what it is optimizing for. When you're zero to nine, you are consolidating everything.
a ton of neural connections. And actually over time, as you age from zero to nine, your brain becomes less efficient because it's sort of pruning some of these connections to find the ones that are most important for living, which explains the three-year-old chess player that we recently talked about. It's why when you are three, you can become
a rated chess player because your brain is just firing so quickly. But then eventually your brain says, whoa, whoa, we don't actually need to be able to make connections at this rate. Let's start dialing things back a little bit. So that was just fascinating that the brain actually becomes less efficient during that key time because it starts out almost too efficient.
Whatever you need to say to justify losing to a three-year-old in chess. Okay, let's sprint to the finish with some final headlines. Congrats, you're being noticed on LinkedIn by U.S. immigration authorities.
According to a notice published online, the Trump administration is planning to require tourists from dozens of countries, including Britain, Australia, France, and Japan, to provide a five-year social media history as a condition of entry to the U.S., citing public safety.
Officials are calling it a mandatory data element of the electronic system for travel authorization form, which people from about 40 countries can use to visit the U.S. for a short stay without a visa. The proposal, which is not yet final, would create more barriers for international tourists at a time when they're already avoiding American shores.
According to the World Travel and Tourism Council, the U.S. is the only one of 184 economies that's expected to see a decline in international visitor spending in 2025.
And of course, what's coming up is the World Cup. Anytime we're talking about any of these changes, a massive influx of people from waiver visa waiver nations are going to be coming to America for the 2026 World Cup. So what is going to happen if they have to put their social media.
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Chapter 8: What are the final thoughts on the episode's main topics?
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