Episode 582: Neal and Toby talk about the latest inflation report that shows the CPI rate slowing down despite tariff worries. Then, ESPN revealed some details about its standalone streaming service. Also, tech companies may have a spy problem as they think they’re hiring remote workers but actually North Korean operatives. Plus, Airbnb is luring back customers from hotels by offering bougie services such as personal chefs and personal trainers. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Visit endthecampaign.com for more Listen to Morning Brew Daily Here: https://www.swap.fm/l/mbd-note Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: Who are the hosts of this episode?
Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, watching sports will never be the same after ESPN unveiled ESPN, the streaming service.
Then Airbnb is going through a midlife crisis, unveiling a new offering that goes beyond short-term rentals. It's Wednesday, May 14th. Let's ride. Let's ride.
Bilbo Baggins went there and back again in the Hobbit, and the S&P 500 just did the same. After being down more than 17% for the year at one point, the index has climbed all the way back to close yesterday in positive territory for 2025. Toby, along with the 2004 Red Sox in the ALCS and Jennifer Coolidge in the White Lotus, this has to be one of the greatest comebacks of all time.
Well, first of all, Jennifer Coolidge never lost her fastball. But how about this stat from Bloomberg's Lisa Abramowitz? The S&P 500 is now positive on the year after being down more than 15%. That is just the ninth time since World War II that the index has climbed out of a 10% plus hole before the year end, which I should remind you all that hole was created on April 8th.
It's only May 14th right now, so it was quick. And if you want to get even crazier, it's just the fifth time we've erased a decline of over 15% by year's end. Again, it's May, which either means it's going to be a very long and crazy year, or the market's going to be up 1 million percent by December. Not financial advice. I don't know which one of those outcomes is going to come to fruition.
And now a word from our sponsor, Iterable. Neil, you know when you're watching what you thought was a live sporting event and someone next to you casually drops a spoiler from a minute ahead because they're checking social media?
Nothing like celebrating a big Tatum three-pointer just to hear, wait for it, from the guy next to you.
Oh, too soon. But that's what a lot of traditional marketing feels like. Brands are stuck on a delay, still operating on campaign calendars, while customers are living in the moment.
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Chapter 2: What does the latest inflation report reveal about the economy?
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There is nothing more beautiful in this world than a cooler than expected inflation report. Okay, maybe Michelangelo's David or Glacier National Park at sunset, but still a good inflation print is in the conversation and we got one yesterday. with the headline inflation rate for April falling to 2.3% on an annual basis, the lowest since the spring of 2021 before prices started spiking.
The Consumer Price Index reading showed that tariffs announced on April 2nd had a minimal impact on how much Americans paid for things, which is a sign that businesses decided not to pass on those extra costs, or more ominously, they haven't infiltrated the supply chain quite yet. But let's stick to the good news for now and hit the numbers.
In April, headline inflation ticked up 0.2% from the previous month, the same amount as core inflation, which is considered a more accurate indicator because it strips out the volatile energy and food categories. Both headline and core inflation came in below estimates of 0.3%. What led to this cooling off?
Well, you probably experienced less sticker shock at the grocery store because supermarket prices fell 0.4% for the month, the most since 2020, and perhaps even did a little jig at the egg display because prices tumbled 12.7%, the biggest drop in over 40 years. Services also contributed to the decline with prices in the category increasing 2.7% year-over-year, the slowest pace since 2021,
Toby, taken together with the U.S. and China tariff reduction over the weekend, the inflation report is an encouraging sign that America is maybe stepping back from the economic brink.
Yeah, it looks like this report highlighted two differing dynamics that are going on in the economy at the same time. Goods categories, which are things probably more exposed to tariffs like cars, apparel. They did see some of the price increases that some economists were expecting to come through the pipeline as of now.
That also means that on the flip side, though, those goods didn't increase at the rate that a lot of people were expecting, which means that a lot of those retailers are absorbing the extra costs or they imported a bunch of products ahead of time. So it's probably a little combination of both.
And then the other thing that this report revealed is that there's definitely some weakness in services categories. As you mentioned, those prices rose at a slower than expected rate. So categories like travel, recreation suggest that consumers are actually pulling back on some of those discretionary spending things like going on vacation, like leisure activities.
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Chapter 3: How is Airbnb expanding beyond short-term rentals?
It is a landmark moment that shows the passage of time in the media industry, not to get all professor here, but at one point ESPN was the shining star of the cable package, uh, It brought in more than $1 billion per month through cable fees and advertising. I mean, this was the profit center of Disney's entire portfolio. But times have changed. They had 100 million subscribers at one point.
Now they have about 65 million streaming subscribers. does appear to be the future for TV broadly, but also sports. We've seen Peacock and Fox just rolled out a, you know, a dedicated sports and news app as well. So this is the direction the industry is going and ESPN execs are calling it their biggest move in more than four decades.
But it is interesting, though, because Disney seems like it's trying to keep one foot in both the new world and the old world because you're right, old time TV networks are fading away, but they're also still profit centers for a company like Disney.
So they are trying to assuage fears that they are ditching this cable subscription that is lucrative while also saying, hey, we're investing in the future with streaming like that as well. And it's definitely something that you can look at two ways. On the one hand, $30 per month for just ESPN may seem pretty hefty if you already have a cable subscription and these other subscriptions.
Or if you're paying $100 a month for your cable subscription and you really only watch sports on it, maybe you can save $70 by moving to this $30 a month fee. So it depends on where you're coming from, if that price seems too high or if it actually seems like you're saving a lot of money.
And you also might be wondering if you're listening to this, doesn't ESPN already have a streaming app? And that is ESPN plus. And the difference between this new ESPN and the ESPN plus that exists is like ESPN plus is very pared down. You're not getting a very robust opportunity to watch a bunch of different sports.
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Chapter 4: What are the challenges and opportunities for Airbnb's new services?
Maybe it's like Northern Montana state versus Western Arkansas tech, you know, in football. ESPN will have everything that ESPN offers, like U.S. Open tennis, Monday night football, college football that you actually want to watch. No offense to Northern Montana State, but it'll be much more comprehensive than ESPN+. They're going to keep ESPN+, but it's a much cheaper option.
Up next, we're going to talk about a crazy North Korean hacking scheme. This message is a paid partnership with Apple Card. I'm a person who really appreciates simplicity. And when it comes to credit card rewards, the simpler, the better. That's one of the many reasons I have an Apple Card. The rewards are super straightforward. I earn up to 3% daily cash back on my everyday purchases.
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If you work at a large tech company, your coworker who never contributes to a group project might have a good reason for laying low. They're actually a North Korean cyber operative funneling their cushy salary back to Pyongyang to fuel its weapons program. North Korean operatives catfishing the biggest American companies is a scam that's been going on for years.
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Chapter 5: What is ESPN's new streaming service and how much does it cost?
Yeah, Saudi Arabia really rolled out the red carpet, or I really should say they rolled out the golden arches because the Saudi royal court brought in a custom McDonald's trailer just to honor Donald Trump's visit. Ronald McDonald is literally being used as a foreign policy tool at this point. But yes, this whole trip showcases Trump's willingness to embrace foreign dealmaking as president.
and also how U.S. industry is hopping on board as well. The Trump administration said that they want to give the UAE an option to pursue their AI ambitions, and U.S. tech companies like Nvidia, like AMD, are planning to spend billion dollars to help fund those efforts as well.
United Health Group, the largest healthcare company in the U.S., lost its CEO yesterday after Andrew Witte stepped down immediately from his role, citing personal reasons. He'd been at the helm since 2021 and been in the driver's seat as the company worked to navigate following the murder of United Healthcare CEO Brian Thompson last year.
While not much else has been shared regarding Witte's decision, it has been a rough period for the company. Yesterday, United Health Group also suspended their financial outlook for the year,
causing shares to drop 18 percent tumultuous to say the least so far neil yeah they're bringing back uh stefan hemsley who was the ceo of united health group built it up to this massive healthcare colossus uh he was there for more than a decade ending in 2017. uh this echoes maybe the playbook of some other companies some more consumer-facing companies like starbucks bringing back howard schultz three times as ceo bob eiger returned to disney when they were having troubles
back in 2022 but this company's stock plunged another 17 yesterday it is the largest component in the dow jones industrial average it is a absolute colossus it's going through some absolutely crisis moments right here as its stock has shed maybe 50 in the last couple of months at just multiple things coming at it uh maybe this new ceo can turn things around or this new old ceo can turn things around
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Chapter 6: How might ESPN's streaming service affect traditional cable subscriptions?
Chapter 7: What are the implications of tariff changes on inflation and prices?
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There is nothing more beautiful in this world than a cooler than expected inflation report. Okay, maybe Michelangelo's David or Glacier National Park at sunset, but still a good inflation print is in the conversation and we got one yesterday. with the headline inflation rate for April falling to 2.3% on an annual basis, the lowest since the spring of 2021 before prices started spiking.
The Consumer Price Index reading showed that tariffs announced on April 2nd had a minimal impact on how much Americans paid for things, which is a sign that businesses decided not to pass on those extra costs, or more ominously, they haven't infiltrated the supply chain quite yet. But let's stick to the good news for now and hit the numbers.
In April, headline inflation ticked up 0.2% from the previous month, the same amount as core inflation, which is considered a more accurate indicator because it strips out the volatile energy and food categories. Both headline and core inflation came in below estimates of 0.3%. What led to this cooling off?
Well, you probably experienced less sticker shock at the grocery store because supermarket prices fell 0.4% for the month, the most since 2020, and perhaps even did a little jig at the egg display because prices tumbled 12.7%, the biggest drop in over 40 years. Services also contributed to the decline with prices in the category increasing 2.7% year-over-year, the slowest pace since 2021,
Toby, taken together with the U.S. and China tariff reduction over the weekend, the inflation report is an encouraging sign that America is maybe stepping back from the economic brink.
Yeah, it looks like this report highlighted two differing dynamics that are going on in the economy at the same time. Goods categories, which are things probably more exposed to tariffs like cars, apparel. They did see some of the price increases that some economists were expecting to come through the pipeline as of now.
That also means that on the flip side, though, those goods didn't increase at the rate that a lot of people were expecting, which means that a lot of those retailers are absorbing the extra costs or they imported a bunch of products ahead of time. So it's probably a little combination of both.
And then the other thing that this report revealed is that there's definitely some weakness in services categories. As you mentioned, those prices rose at a slower than expected rate. So categories like travel, recreation suggest that consumers are actually pulling back on some of those discretionary spending things like going on vacation, like leisure activities.
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