Morning Brew Daily
CA Home Insurance in Full Crisis & TikTok’s Last Pitch to Supreme Court
Fri, 10 Jan 2025
Episode 494: Neal and Toby dive into the insurance dilemma in California that’s been brought to light due to the destructive wildfires in LA. Then, TikTok makes a desperate attempt at preventing a ban by making its case in front of the Supreme Court. Plus, there’s two Dogs of the Week: bonds and quantum computing. Also, Japanese hi-tech toilets are making their way through the US. Lastly, a final roundup of the day’s headlines to head into the weekend. 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. Checkout public.com/morningbrew for more Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Alpha is an AI research tool powered by GPT-4. Alpha is experimental and may generate inaccurate responses. Output from Alpha should not be construed as investment research or recommendations, and should not serve as the basis for any investment decision. Public makes no warranties about its accuracy, completeness, quality, or timeliness of any Alpha out. Please independently evaluate and verify any such output for your own use case. 00:00 - Welcome back Toby 03:00 - Insurance Crisis from LA Wildfires 08:15 - TikTok Heads to the Supreme Court 11:55 - Dog of the Week: Bonds 17:10 - Dog of the Week: Quantum Computing Stock 21:00 - Japanese Smart Toilets 23:45 - Headlines Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What is the insurance crisis in California?
Tobi is so back. We are very glad you are feeling better and in mostly full voice. This return is conspicuously well timed for a Friday too. Tobi, what did you even do? You said you didn't leave your apartment for 54 straight hours.
Well, first of all, you and Kyle held it down as always, so shout out to you guys. But yes, I did what anyone who was just sitting around and wallowing, saving their vocal cords would do, and that is, I took up the game of Bridge, you know, the age-old card game, way harder than I ever imagined.
I always thought it was similar to Spade, similar to these other trick-taking games, but I went down the rabbit hole, and I have a lot to learn.
You know that Es ist eine Reputation, die das komplizierteste Karten-Spiel auf der Erde ist. Ich weiß nicht, was du denkst. Was machst du, um in dieses Spiel zu kommen?
Es gibt eine App, die Tricky Bridge, die ich gelesen habe. Ich weiß, dass du sie auch gelesen hast. Ich denke, was ich sagen möchte, ist, dass Neil und ich uns für ein paar Bridge-Partner suchen, um mit unseren Kräften zu arbeiten. Aber ja, das war meistens, was mir Zeit genommen hat. Und natürlich auch, um die Vocal Chords zu retten. Now a word from our sponsor, Public.com.
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Chapter 2: How is TikTok fighting for its survival?
An underrated part of Public's platform is its AI-powered research assistant.
It's like that helpful know-it-all who always seems to know the latest news or alpha on a stock.
You hit the nail on the head, Neil.
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Chapter 3: What are the implications of the recent wildfires?
Chapter 4: What are the Dogs of the Week this episode?
It's literally called Alpha and can answer questions about any stock. Want some insight as to who might benefit from increased interest in modular nuclear power plants? Ask Alpha.
Want some investment ideas related to increased demand for rare earth minerals? Ask Alpha.
It can help you tease out your hunches and navigate all the stocks, crypto, options and bonds available to trade on Public's platform.
To get some Alpha from Alpha, head to public.com slash morningbrew. Paid for by Public Investing. Full disclosures in podcast description.
Wildfires continued to rage across Los Angeles for a third day yesterday in what the fire department chief called one of the most destructive natural disasters in the history of the city. Neighborhoods obliterated, at least 10 people have died, more than 35,000 acres burned, an area twice the size of Manhattan.
Die beiden größten Blasen, der Eton-Fahrzeug nahe Altadena und der Palisades-Fahrzeug, der die Palisaden des Pazifikus verletzt hat, sind bis heute noch nie vorhanden. Mehr als 360.000 Menschen sind unter mandatorischen Evakuierungsordnungen.
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Chapter 5: How do Japanese smart toilets compare in the US?
Selbst mit dem Feuer noch anzuerkennen, hat die Aufmerksamkeit gestern zu den Kosten des Schadens gewechselt, was erwartet zu sein, dass es astronomisch und fast unvorhergesehen ist, je nach dem Wert der Häuser und Strukturen, die in Flammen geflogen sind. J.P. Morgan hat die totalen ökonomischen Löhne auf 50 Billionen Dollar gesteigert. Tobi, this insurance mess.
Just went from already really bad to worse.
Right. If you look at the specific areas affected, like Pacific Palisades, State Farm didn't renew policies for over 72,000 homes or apartments in that region. 70% of the insured homes that have been flattened by the fires were part of those homes that were not renewed by State Farm. So, you mentioned the state plan that has kind of stepped in here in place of these private insurers.
That is called the FAIR plan. It's a limited fire insurance plan offered by the state of California. Coverage under that FAIR plan for Palisades residents spiked 85% from September of 2023 to September of 2024. So it's It is putting a ton of pressure on what was supposed to be this last resort plan paid for by the state.
They could be on the hook for almost $6 billion in payouts just based off this fire alone right now. So if it doesn't have enough money to, if the fair plan doesn't have enough money to cover the claims that it faces, guess where it gets the money from?
It collects funds from insurance companies operating in California, which puts even more pressure on these already stretched private insurers as well.
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Chapter 6: What are the latest headlines before the weekend?
So why did State Farm, Allstate, etc. pull out of California? Well, they just said that the prices that they could offer did not reflect the risk that they were taking on. They were saying, we're not a charity, we can't offer below market prices, especially when these things happen. And we have to pay out because our business just won't support that.
California premiums for fire insurance are actually quite low. And that is because they've had regulations on the books for decades that cap premium price hikes to 7%. So they saw this wave of defections from insurers after the 2017-2018 campfire and other series of fires that began in Northern California.
Und dann gesehen, dass all diese Verletzungen, Kalifornien hat tatsächlich zwei Wochen vorher entschieden, neue Regulierungen zu implementieren, die diese Insureds mit höheren Prämien ermöglichen. Alle Staaten sagten, dass es ihre massiven Verletzungen stoppen würde, ihre massiven Verlängerungen, weil dieser neuen Regulierung.
Nun, alle Staaten sagten, dass es in diesem Staat bleiben würde, es würde Prämien von 34% erhöhen. Also Kalifornien versucht, New laws, new regulations to stem the exodus of insurers. But it seems like this new fire just reversed all of that progress.
Yeah, and this fire poses a threat to the entire housing market as well, because the bigger these fires are, it makes risk more unpredictable. The risk makes insurance more. Ja, genau. Das wird auch die breitere Wirtschaft steigern, weil wenn die Wertschätzung des Hauses steigt, wird die Betrachtungsbasis auch kleiner, um andere kritische Funktionen in der Stadt, in der Region zu unterstützen.
Also, du kannst sehen, dass, obwohl wir gerade über Feuerinsurance sprechen, ein Kind,
und haben viel größere Auswirkungen auf die breitere Wirtschaft. herr easily known to catch on fire especially in these times of climate change between 1990 and 2010 25 million people moved into that wildland urban interface the wui 12.7 million homes were built so this is Proving to be a big predicament. Meanwhile, what's going on with the weather and with the fires today?
National Weather Service said it's going to be another bad day today. Critical red flag fire weather conditions. The Palisades fire is 6% contained. The Eden fire is 0% contained. So I guess when we come back on this pod on Monday, we're hoping for better news.
In a high stakes Supreme Court case that your teenage cousin is following quite closely, TikTok will fight for its life today in front of the US' highest court, trying to wiggle its way out of a de facto ban that is set to go into effect later this month.
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