Morning Brew Daily
Elon Musk is Worth $400B & Saudi Arabia Set to Host 2034 World Cup
Thu, 12 Dec 2024
Episode 473: Neal recaps the latest inflation report, which ticked up just so slightly – but didn’t cause any panic. Then, FIFA announced the next countries to host the World Cup and in 2034, the choice of Saudi Arabia has raised a lot of eyebrows. Plus, Elon Musk becomes the first person to reach $400B net worth. Also, Neal shares his favorite numbers on Americans moving, Juan Soto’s contract, and a traveling humpback whale. Lastly, headline news you can use to end your day. Visit https://www.sage.com for more! 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. Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow 00:00 - Intro 03:25 - Inflation Ticks Up Slightly 08:50 - Saudi Arabia to Host the World Cup 13:30 - Elon Musk is Worth $400B 19:10 - Neal’s Numbers Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What recent inflation trends should I be aware of?
Good morning, Brew Daily Show. I'm Neil Freiman. Today, Saudi Arabia was awarded the 2034 World Cup, a controversial move that cements the kingdom as a sports juggernaut. And Elon Musk's net worth has exploded. The world's richest man is now worth nearly $450 billion. It's Thursday, December 12th. Let's ride. As you may have noticed, Toby is not here. He got a last minute bug.
So I am going to go full Alex Honnold and free solo this podcast today. I promise to do my best to bring you all the most important business news of the day, as well as a few fun tidbits as well. Speaking of fun tidbits, if you're running for statewide office, don't manipulate your Spotify rap, folks. New Jersey Representative Josh Godheimer said,
who is running for governor of the state, is in some hot water after he was found photoshopping his Spotify rap to give off the impression that all he listened to was Bruce Springsteen, who is a god in New Jersey. Like everyone else you know, Gottheimer posted his Spotify rap on social media, and his top songs were all the boss.
Thunder Road was number one, and Badlands and The Rising rounded out his top five. The one problem? It wasn't real. Internet sleuths found that the font, numerals, and spacing were off, and when Gottheimer was approached about it, he acknowledged that he fudged it, perhaps to impress voters with his Springsteen bonafides.
He still said he was a huge Springsteen fan, but shares a Spotify account with his two kids, so his rap data wouldn't necessarily reveal that. Look, if you're going to run for the state of New Jersey, it's true. You have to be a Springsteen fan. That's just a baseline qualification. But this wasn't one of Gottheimer's glory days. Now a word from our sponsor, Sage.
Let me start off your day with some Neal's Numbers Sage edition. According to Sage, 88% of finance leaders have adopted cloud technologies, 86% are using automation, and 77% have implemented machine learning. They've ditched the abacus, folks. And then on top of that, 88% of very successful finance leaders use AI and automation tools.
So there's a trend toward advanced AI tool usage like ChatGPT among those leaders. And then looking ahead, 86% of CFOs predict that technology, especially AI, machine learning, and automation, will significantly change their roles. 61% expect an increased use of AI-powered tools. So if you want to get in on those figures, you got to visit sage.com for more info. That's sage.com.
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Chapter 2: Why was Saudi Arabia chosen to host the 2034 World Cup?
So the Consumer Price Index report came in yesterday, which is this big monthly inflation report. And it came in matching expectations. It was pretty solid. The CPI index rose 0.3% from the prior month. For the year, it rose 2.7%. So this was a bigger increase than in previous months. This was the strongest month over month increase in prices since April. The thing was,
people economists were expecting it and so didn't ruffle any feathers in the market and if you just look to the stock market as a response to the cpi index the market did well after a few days of declines the nasdaq popped nearly two percent it reached over two thousand for the first time. S&P also added 0.8%.
So the market reaction to this was pretty strong, even though there does seem to be some underlying inflation pressures. I guess the bottom line is that inflation is a bumpy road to come down to 2%. Remember, two years ago, it was at 9.1%. Now it's down to 2.7 annual growth.
When you strip away those very volatile things like food and energy prices, which economists call core CPI, it also came in at 0.3%. That is what analysts and economists really look at. Not that headline number, but the core number, which is One thing that was very heartening about this particular inflation report was shelter costs.
So housing costs have been the main contributor to inflation over the past year. And private data have shown rents and housing prices are coming down. In this government data, in this CPI, shelter costs have remained high, and that's been keeping up overall inflation. It accounts for 40% of the entire CPI index.
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Chapter 3: What are the implications of Elon Musk's $400B net worth?
So one of the most heartening things of this report was that shelter costs were slowing. They advanced 0.3% in November after a 0.4% gain in the prior month. That was huge, and I think that's why you saw that really strong market reaction, because finally it seems that those housing and rent costs that have been showing—
that have been declining in the private data are finally showing up in the government report. Let's dive into some of the more specific items in the inflation report. What's going up? What's going down? Well, a couple of things that were going up furnishings and apparel. So if you're buying clothes, if you're buying that new sofa, you probably saw a, a, a, Bigger price hike this month than last.
That was one of the main drivers of inflation. Grocery prices, after stagnating for about a year, jumped 0.5%. Used vehicle prices also rose. And then let's go back to that grocery. If you're buying eggs, we've talked about this a bunch, but there's a really bad avian flu going around. Egg prices rose 8.2% and are up 37%. 37.5% for the year.
So while grocery prices have been stagnant or ticking up broadly in the supermarket, those egg prices are going up. What does this mean for the Fed? So whenever the inflation report comes out, we always ask, what does this mean for the Fed and its path toward cutting interest rates? So The Fed is meeting next week for its final meeting of the year.
And expectations going into this inflation report was headed about 90 percent chance that the that the Fed would cut interest rates. This inflation report, because it matched expectations, basically cements that we're going to get a third interest rate cut for the year 2022. come December.
Remember, the Fed, after hiking rates for the past two years, an historic amount started cutting rates in September. They did that meaty 50 basis point cut. Then they did a 25 point basis cut. Then they paused.
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Chapter 4: What interesting statistics about American migration did Neal share?
Chapter 5: What are the latest updates on consumer price inflation?
Remember, the Fed, after hiking rates for the past two years, an historic amount started cutting rates in September. They did that meaty 50 basis point cut. Then they did a 25 point basis cut. Then they paused.
And now it looks like we're going to get another rate cut in December, which, you know, hopefully the idea of that is to bring down borrowing costs, unleash a little more spending into the economy, get the get the economy kickstarted.
Again, the thing is, Jerome Powell just had this interview earlier this month, and he is expressing a lot of caution about rate cuts because the thing, he's trying to strike this balance. He wants to be on this tightrope where you don't want to cut rates too much because if you cut rates too much, then inflation is going to drop. probably go back up.
Chapter 6: How is Saudi Arabia transforming its image through sports?
It's going to unleash more spending, and that leads to price growth. But if he cuts rates too much, then that could dent the economy and, most importantly, dent job growth. The thing is, job growth seems to be doing perfectly fine after that anomaly we had in October with the hurricanes and the Boeing strike. job growth went back to normal levels with over 200 jobs gained in November.
So everything is going, I guess, bottom line, everything is going pretty much according to plan. The one question mark is what does the Trump administration have in store for inflation and the Fed's rate cuts? Well, you know, the economists have pointed out that a lot of the Trump administration's policies could be inflationary. When you're talking about tariffs, those could raise prices.
When you're talking about tax cuts, that could unleash more spending and also raise prices. Mass deportations could cause labor shortages and also raise prices. So I think that's why you see Jerome Powell expressing caution about rate cuts going forward. So I would say the Fed's rate cuts are absolutely locked in for next week.
And people will be paying more attention to about how many rate cuts they expect in 2025. Saudi Arabia has been awarded host of the 2034 World Cup, marking the zenith of its strategy to spend massive amounts of money on sports.
It's a highly controversial selection by FIFA, given widespread accusations of human rights abuses in the kingdom, but it's determined to move ahead nonetheless because the center of gravity in sports is shifting and it's shifting east. With the selection, the Gulf has asserted itself as a central node in the global sports network.
We're about two years removed from Qatar hosting the World Cup in 2022, and the region is getting another one in Saudi Arabia in 10 years. Unlike the teams that play in the World Cup, Saudi Arabia did not have any competition for hosting duties. FIFA tweaked the process in its favor, expediting the bidding and changing its rule on infrastructure to allow countries with fewer stadiums to apply.
In the end, Saudi Arabia was the only country that put its name forward for the 2034 World Cup. What comes next? Well, a whole lot of construction. The kingdom is going to begin building 11 new stadiums ahead of the World Cup, which combined with other real estate projects will add $1.3 trillion to infrastructure costs.
It's been an understood fact for years, but by being tapped to host the World Cup, the granddaddy of all sporting events, Saudi Arabia has arrived as a global superpower. And this decision really was met with a lot of condemnation Twenty-one rights groups came forward and said, Saudi Arabia, your human rights record is quite terrible.
Whenever you have major construction projects like this megacity Niamh, there are widespread widespread reports of thousands of migrant workers dying on the scene. You treat them horribly. There was also that 2018 murder of the dissident journalist Jamal Khashoggi that remains in the minds of some.
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