Episode 550: Neal and Toby recap a wild first quarter of markets all around the world. Then, Elon Musk sells X to xAI to create one single entity. Also, Trump pardons some prominent business leaders found guilty of fraud. Plus, the New York Yankees unveil a new hefty bat that looks like a bowling pin, but apparently doesn’t break the rules. Meanwhile, HBO’s ‘The White Lotus’ may be a favorite among many, except for one – as in the #1 seed Duke University. Finally, what’s coming in the week ahead. 00:00 - East Coast weather gap 2:15 - Q1 markets recap 8:20 - X gon’ give it to ya 12:00 - Fraudsters freed 15:30 - Big bat energy 19:00 - Duke v. White Lotus 22:30 - Week Ahead 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 TaxAct for more! Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What is the weather like on the East Coast?
Then we'll recap the wobbly first quarter Wall Street has had to kick off the year. It's Monday, March 31st. Let's ride.
What a difference 200 miles makes. On Saturday, New York City was in full-on summer mode as temperatures reached 80 degrees. But just above I-95, the weather could not have been any different. On the same day, people living in Boston were hit with freezing rain and temps in the mid-30s. That 45-degree temperature gap between Boston and New York City isn't just good material for small talk.
It's history. Meteorologists said it was the widest temperature difference between the two cities on record. Meanwhile, in Connecticut, they couldn't decide which side to take per usual.
I mean, it was snowing briefly in Boston. Meanwhile, you and me, Neil, we were golfing in short sleeves. The farmer's stands were coming out in droves. Really drives home what they say about Boston, though. New York prices, Chicago weather, Scranton culture.
Oh, you're doing Boston dirty. Now a word from our new sponsor, Tax Act. Toby, you look a little pale today. What is going on?
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Chapter 2: How did the Q1 markets perform?
Today is the final trading day of Q1 and Wall Street's 2025 is off to a start you'd expect from the Chicago White Sox. Nothing has quite gone according to plan with the S&P 500 fresh off recording its fifth weekly loss in the past six weeks as it digested some less than stellar economic news.
The tech-focused Nasdaq is also officially in correction territory as the Magnificent Seven has labored in Q1. But here are some other storylines as we look to close the chapter on the first three months of the year. First up, European stocks are suddenly hotter than Portuguese, period, period. After years of the US lapping the global pack, the playbook flipped in Q1.
Tariff uncertainty weighed on American markets, while Europe's promise to boost defense spending sent local stocks flying. The S&P 500 now trails Europe's stocks index by nearly 17 percentage points, the biggest gap ever recorded, according to Bloomberg. One reason why the U.S.
is now the global laggard, our MVPs, the magnificent seven mega cap stocks, are tossing up more bricks than Tennessee in the first half. Nvidia's down over 20% and Tesla's dropped more than 30%. In all, they have lost nearly $2 trillion in market cap so far in 2025. after driving half the gains for the S&P 500 last year. Still, there have been hints of good news.
Other companies outside the Magnificent Seven are quietly thriving. One ETF excluding the big boys is actually up in 2025, albeit just over 1%. So Neil, I think the best way to sum up Q1 was that it was better spent doing anything other than looking at your brokerage account.
The sports metaphors were strong in that one, Toby, so kudos on that. Yeah, let's start by looking internationally, because we do focus a lot on the United States, but there were a lot of fireworks afield. I want to start with China, actually. So they have their own Magnificent Seven, and that includes big tech companies like Alibaba, Tencent,
BYD, which is this EV maker, Baidu, JD.com, they are soaring. The MSCI China index has jumped more than 30% since the end of August. DeepSeek was sort of their open AI breakthrough moment for artificial intelligence, and investors have been plowing money into the Chinese stock market, whereas for years it had been kind of stagnant. So There's been a real changing of the guard over there.
You mentioned Magnificent 7 stocks have shed $2 trillion in value. Terrific 10 is maybe another name to know over in China where they're absolutely soaring. So we've seen the script flipped a little bit.
And a little bit more on China. China typically in the past has moved in tandem with emerging markets because it was classified as an emerging market for most of the early 2000s. If you look back in history- Chinese shares rose 63% from 2009 to 2010. The broad gates of emerging markets climbed 103% over that same time. Go back to 2016, 2017. China stocks up 50%. Emerging market shares rallied 46%.
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Chapter 3: Why did Elon Musk sell 'X' to 'xAI'?
So these are two just insane fraud business stories that now both of them are kind of walking free, but just taking a trip down memory lane to reacquaint myself with these two stories. It was truly a wild time in business media.
And while those two guys were walking free on Friday, another fraudster is awaiting her prison sentence because Charlie Javis, remember her, she's that Forbes 30 under 30 who founded this fintech Frank, which sold to JP Morgan for one hundred and seventy five million dollars, was convicted of fraud for, quote, falsely and dramatically inflating the number of the company's customers average.
After JP Morgan bought Frank, they had a ton of buyer's remorse because they sent out this email to the supposed list of more than 4 million Frank customers only to return just a few small percentage percentages of those emails. Turns out that Javis and and one of the other executives at Frank had been artificially inflating their email list.
So now Javis was convicted by a jury on Friday and she awaits a prison sentence later this summer.
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