Fed Holds Rates Steady & 'X' Worth $44B Again?
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Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, Ben & Jerry's is escalating its fight against its parent company, accusing Unilever of removing its CEO. Ben, the Fed didn't rock the boat at its meeting yesterday, keeping interest rates steady as they go. It's Thursday, March 20th. Let's ride. Let's ride.

It is a great morning because we have made it to the best day of the year, the start of the first round of Men's March Madness. Now, I'm sure many of you Venmo'd five of your friends $20 for a bracket challenge without having watched a second of college basketball this year, and that's

Perfectly normal. But there are still a few hours remaining before the first game tips off. If you want to create a more informed bracket, well, I've got a bracket science major sitting right next to me. You're probably not surprised, but our dear Toby is a two-time March Madness bracket champion, and he's literally spent hours this week poring over strategies and stats to get an edge in

and he wants to help you. So, Toby, let's hear it. What are some things to keep in mind when filling out a bracket? Ooh, I hope I live up to that lofty billing. Okay, a few tips for you guys. Avoid high-altitude teams in the tournament. Usually those schools enter with a bit of an inflated record since their home court advantage during the regular season is so outside. So that means fading teams like BYU, Utah State, Colorado State, and New Mexico. The other metric I'm looking at this year is the so-called kill shot metric created by Evan Miyakawa. A kill shot was...

is when a team goes on a 10 to zero or better point run. Teams that have this ability to get really hot tend to perform better in March. Finally, be mindful of your pool size. The more people in your pool, the riskier you should be. Same goes, the smaller your pool is, the less risky you should be. You don't need to send McNeese to the Final Four if there's only 20 people in your office pool. So those are my three tips.

Take them or leave them, do with what you will, but good luck on March Madness. Now a word from our sponsor, Sophos. Neil, what's the worst trade you've ever made? One time at the middle school lunch table, I was convinced to give up half of my fruit by the foot in exchange for some goldfish,

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The Federal Reserve has gone all noble gas on us because it refuses to react to anything. Jerome Powell and the Fed decided to keep interest rates steady at a range of 4.25% to 4.5% during its latest meeting, taking a cautious approach to an economy in a delicate spot.

Powell said, we're paying close attention to risks on both sides, keeping inflation under control while supporting jobs. In other words, he's trying to strike a balance between fighting inflation and not slowing down the economy's role too much. As for the year ahead, the Fed hinted that they might cut rates twice more, though Powell admitted the outlook is more uncertain now. Just 11 out of 19 Fed officials anticipate those two rate cuts,

which is a slimmer margin compared to the 15 policymakers who had projected the same back in December. Still, the market loved the sound of two more rate cuts on the horizon and turned green during Powell's press conference. In less good news, officials said they're expecting inflation to rise this year to 2.7%, up from the 2.5% they projected in January, with, quote, a good part of that coming from tariffs, according to Powell.

Fed officials also said they expect GDP growth of just 1.7 percent down from their December projections of 2.1 percent. With all that uncertainty looming on the horizon, Neil, it makes sense that the Fed kept the ship steady in this latest meeting. Yeah, coming into this Fed meeting, it was expected that they wouldn't cut rates, but it was still a very closely watched meeting because of what was going on in the economy and markets overall.

leading up to these Fed officials getting together. The market has been flashing some warning signs about a slowing economy. The S&P 500 entered a correction last week. Gold, which is a safe haven, surged to more than $3,000 for the first time. The dollar is down 4% in March.

earnings calls, many companies have been warning of a consumer spending slowdown. So all of that factored into making Jerome Powell's press conference a very closely watched event on Wall Street to see what his predictions were for the future, for rate cuts, for economic growth and for inflation. We saw from the Fed was that they do expect

higher inflation. They do expect lower growth, but still they expect to do two rate cuts this year, which is why you saw the markets gain yesterday and they're also gaining this morning. Yeah, just some more economic data to paint a fuller picture of just the uncertainty gripping the economy right now. Spending has slowed, but hiring has held relatively steady. The unemployment rate stood at 4.1% in February. That's still historically low. Consumer sentiment, on the other hand, that has taken a bit of a beating.

In February, it fell the most in four or five years or so. But the economy is still pretty good. Employment is holding up. There's been an injection of uncertainty. But Powell said that he was asked in his press conference yesterday, like, do you think a recession is coming? And he says, well, first of all, we don't make proclamations on if we think a recession is coming. But looking at what forecasters have said, those forecasters haven't moved up their forecast

projection of a recession to a much higher level. So he says that the chance of a severe economic downturn is not likely. So again, he was kind of cooling tempers of a massive drop off in the economy because he still thinks the fundamentals are there for a pretty strong economy. And one reason why the Fed is not...

going to cut rates anytime soon is that we have two economic factors kind of balancing themselves out. Lower economic growth would generally support the case for lower rates. Higher inflation would generally support the case for higher rates. So those two are kind of canceling them out. It's kind of like adding plus one and negative one. So you get to zero. And that's what Powell said. He's like, these are two factors that we're considering and they're canceling each other out. So that's why we're just literally doing nothing, sitting on our hands and

and waiting to see what happens. And I would circle May 7th, though, on your calendar. That is the next time the Fed meets. All the April data, all the tariffs that are set to kick in will be illuminated in May. So that is going to be a tone center and an important one for how these policies are actually affecting the economy because we're still kind of in the early days of some of these more disruptive economic policies.

In further proof that time is a flat circle, the social media site X is worth $44 billion, exactly the same price Elon Musk bought Twitter for in 2022. Investors gave the company that valuation earlier this month when they exchanged existing stakes in what's known as a secondary deal, according to the Financial Times.

But it's not about the destination. It's about the journey. X's value plunged as much as 79% below its sale price as recently as last September after advertisers fled the platform over Musk's loosening of content moderation and brand safety issues. Now, marketing spend is slowly but surely coming back and combined with a much lower headcount up

But is this a healthy platform?

It's getting healthier. It is about the journey. It's not about the destination. Because the Financial Times talked to some people familiar with X's finances, and they said that, yeah, this is Elon Musk's cost-cutting plan and action. The company is a lot healthier with a lot smaller workforce. It's a lot more efficient. But then another person they talked to said that the EBITDA figure was, quote, wildly adjusted. So there's probably two sides of this coin. Maybe the $1.2 billion figure that you mentioned isn't as

legit as you might say it is, according to some people familiar with the situation. But the move has definitely improved. Part of the reason is that Elon Musk gave a 25% stake in XAI to investors of the social media company last year. So that has kind of

attracted this higher valuation when you have this AI portion attached to it. But then advertisers are coming back as well. I mean, Amazon has started boosting marketing spend recently. You have seen a lot of these advertisers come back as...

Elon has deepened his relationship with the current administration as well. So I do think there's a lot of signs of positivity, even if maybe that $44 billion figure is more symbolic because, you know, it is dead on exactly what Elon paid. And yeah, you're right. X is also progressing in Elon's vision to create a everything X.

Elon Musk for decades has wanted to create an everything app similar to a WeChat in China where you can do everything from post on social media to send payments. And that payments part is a part of what X is going to roll out. It is teaming up with Visa for a feature called X Money where you can have an in-app wallet and you can send peer-to-peer payments. Linda Yaccarina announced that last week and said that was going to be rolling out later this year. So the everything app feature

vision is slowly progressing as well. Yeah, and I do think one ace in the hole is that they have XAI, which is, you know, obviously has a chatbot in Grok, but also they think that they can use that technology to boost its ads offering. So I think even though there is this vision for this everything app, they want to spend a lot of time pushing their subscription product. I do think maybe ads on X will become a thing again if you can kind of use your AI to build a better platform than it existed in the past.

Ben & Jerry's and Unilever are looking like they're on a rocky road after the ice cream brand accused its parent company of firing its CEO for refusing to, quote, oversee the dismantling of its progressive values. Unilever told Ben & Jerry's board earlier in March that it was planning to remove David Stever, who led the company for nearly two years.

And it's Ben & Jerry's contention that it was because Stever allowed the ice cream maker to speak out on certain political issues. To Ben & Jerry's, that seemed like a half-baked plan since it went against an agreement signed when the companies merged all the way back in 2000 to set up an independent board meant to protect the ice cream brand's mission. The whole thing stinks like fish food too because according to the chair of its independent board, Ben & Jerry's has quote, delivered strong financial results far outpacing the rest of Unilever's ice cream business.

Zoom out, and this has been a far from happy pairing since their 2000 merger. In 2021, tensions rose after Ben & Jerry's announced it would stop selling its product in the West Bank, and in November, Ben & Jerry's sued Unilever, accusing it of silencing its statements in support of Palestinians.

So this latest escalation of the suit is the Cherry Garcia on top of a tumultuous relationship between the two companies. These two have mixed like oil and water or maybe bacon and strawberry ice cream. You have Unilever, which is a UK consumer goods giant. It owns things like Dove, Axe, Hellman's.

and Vaseline. And then you have Ben & Jerry's, which is this, you know, upstart, very progressive-minded ice cream brand out of Vermont that was bought by Unilever in 2000 to improve its stable of ice cream brands. And these two just

Can't stop fighting. I'm sure there's a lot of buyers remorse and it looks like Unilever could get Ben and Jerry's off of its hands if it wants to because it is aiming to spin off its ice cream business, which is huge. It includes five of the top selling 10 ice cream brands in the entire world.

in an Amsterdam stock listing sometime this year. So it probably is accelerating those efforts after this latest legal complaint by Ben & Jerry's. I mean, you said buyer's remorse, but it's not necessarily on Unilever's side because Ben & Jerry's has performed incredibly well within their portfolio because in 2024, according to Unilever's own presentation on its financial performance, Ben & Jerry's grew faster than most of its ice cream brands, including its Magnum brand, which is another one of its high-end ice cream products. So

financially, this deal has gone very well, but socially and politically, they're clashing a little bit. A lot of bit. A lot of bit, yeah. And I will say, too, it's not like Unilever is in a great spot either. They just fired its own CEO last month and replaced him to speed up this turnaround process that they've been doing. I do think this move to spin off its ice cream business

I don't know. I don't know if it's going to save the company, but at least it's going to, you know, provide some clarity on the direction of what this giant CPG is actually doing. So potentially this unhappy marriage could be, you know, annulled by the end of the year if Ben & Jerry's is spun off in that Amsterdam listing, as you mentioned. Up next, oh boy, we made it. It is time for Neil's Numbers.

Have you taken our morning market trivia quiz yet? Top scorers will receive a custom prize, a $200 Amex gift card, and a newsletter feature. If you want a sneak peek, here's one of the questions right from the quiz. Which of the following is not a major index? A, Nifty 50, B, S&P 500, C,

If you have the answer, go to www.morningbrew.com slash morning-market-trivia to test your stuff with the Morning Market Trivia Quiz. Who knows, you could end up on the leaderboard. Like I said, top scorers will receive prizes and a feature in the Morning Brew newsletter. I scored a 12 out of 15.

I got 11 out of 15. Head on over to www.morningbrew.com slash morning-market-trivia and see if you can beat our scores and win some goodies.

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Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will feel like the first day of spring after a long winter. And I mean that literally. Today is the first day of spring. For my first number, Volkswagen has a booming business on its hands, but it's not cars. It's sausage.

Last year, according to a Works Council report, Volkswagen sold nearly as many sausages as cars. 8.5 million sausages to 9 million vehicles across all its brands. Volkswagen makes sausage? Heck yeah, they do. Curry worse, to be specific.

a staple of the German diet when combined with fries. VW began serving currywurst to employees and locals around its Wolfsburg headquarters in 1973, and it's blossomed into a huge business. Now the company sells sausage to tens of thousands of workers at its German factories, fans at the Wolfsburg football stadium, and in supermarkets around the country.

But while the hot dog business is soaring, Volkswagen's car business is floundering. Last week, it reported a 3% decline in vehicle sales and a 30% drop in net profits in 2024. The largest employer in Germany, VW, has proposed up to 35,000 job cuts and closing some German factories in an unprecedented move to cut costs. Toby, pretty mind-blowing that Volkswagen sells

More currywurst than cars bearing the VW logo. Let's just hope they're not using the same grills. It's so emblematic of, or the same oil for that matter. It's so emblematic of everything that's going on in VW right now that their sausages are outperforming their cars. First, I have two things to say about this. One,

I encourage you to go look it up because they look very delicious, especially a nice little sear on the outside. So that is delicious. But then, too, they're promising more innovation down the pipeline. They also have been rolling out their VW-branded Spice Ketchup. They sold a few in the U.S. last year, but I think they're going to expand the reach of that. So pairing some VW Currywurst with some VW Spice Ketchup, I think that's going to hit hard at a summer barbecue.

For my next number, the French Bulldog has done what Patrick Mahomes couldn't by going back to back to back. For the third year in a row, the Frenchie is the U.S.'s most popular purebred dog, according to an annual ranking from the American Kennel Club. After the French Bulldog, the most popular breeds are Labrador Retrievers, Golden Retrievers, German Shepherds, and Poodles, rounding out the top five.

But there's one dog that's come out of nowhere to make a claim as an alpha, the Cane Corso. This strong and athletic breed, which served as a Roman war dog and later a boar hunter, has surged in popularity, rising from nearly 50th on the list last year to 14th this year. The AP notes that the American Kennel Club rankings

have been accused by animal welfare activists of pumping up the visibility of certain breeds and supercharging puppy mills. The AKC responds that it just documents and doesn't promote dog ownership trends. Toby, can anyone take down the Frenchie? This is crazy. I had no idea Frenchies were so popular. That being said, their popularity is actually waning. There's been less sold year over year over year for the past three years. I do think

The Kennel Club said, like, hey, this is a voluntary registration process, so the amount of Frenchies out there still might be doing just fine. But I can't believe how far ahead of the lab it was. If you had asked me before seeing this list, like, what is the most popular dog, I definitely would have gone with a Golden Retriever or a lab like that. But they logged just 58,000 new registrations last year. There were nearly 74,000 Frenchies logged. So it's just...

leaps and bounds ahead of its next closest competitor. The Lab was the most popular breed for a very long time until the Frenchie has overtaken it in the past few years due to popularity in social media. They just look good on Instagram. They look so good on Instagram. They're very funny. They're very low maintenance too. Well, some of them are. It depends on which dog you have, but they don't require a ton of exercise. They don't shed that much, and obviously they're very Instagrammable. All of those three things combined to

to make this one of the most popular dogs in the U.S. the past year. For my last number, a student manager signed a name, image, and likeness deal for the first time in history. Amir Khan, who was the student manager for the McNeese State men's college basketball team, signed not one, but three NIL deals this week with major brands Buffalo Wild Wings, Tick Pick, and Insomnia Cookies.

Khan is no ordinary manager. Along with his regular duties of wiping sweat off the court and rebounding during warm-ups, he is a rap legend. Last month, a video went viral showing Khan rapping a song alongside the team's players while leading them out of the tunnel, boombox strapped over his shoulder. His star rose quickly from there, amassing a large following on social media and selling t-shirts,

with his photo on them. Toby, we are in a new era of college sports where previously anonymous people can instantly monetize overnight fame through NIL deals. We saw this happen last March with Oakland sharpshooter Jack Golke. And as the tournament gets going today, expect more to come. This guy is a legend, Neil. His nickname is Aura, and I think it fits him perfectly. His mini state bio says, if they kept manager stats for rebounding and wiping up wet spots, I...

I'd put up Wilt Chamberlain numbers. How about this, too? His deals are actually performance-based. So for every NCAA tournament game that made nice wins, his paycheck goes up. So the man literally has win bonuses like a player does. So he's just an absolute legend, and I do think it is the future right now. I mean, Jack Golke's the perfect emblematic of it that a lot of people probably don't even remember what he looks like at the time. But during March Madness,

He was signing deal after deal after deal. He signed with Buffalo Wild Wings as well. So you're seeing these unspoken agreement that the brands know that this is five minutes of fame. The person knows it's five minutes of fame, but might as well cash in on it while the attention is there.

As the men's tournament for March Madness tips off today, you may still be looking at an empty bracket with no real concept on how to fill it out. Is it Duke's year? Is the SEC that good? The questions overwhelm your underdeveloped college basketball mind, so you turn to a familiar companion for some guidance.

But it may not be as adept at winning your office bracket pool as it is at revising emails for you. An Axios reporter put some of the major AI chatbots out there to test to see if they could fill out a winning bracket, but most couldn't even fill out a legal one. Google's Gemini 2.0 Flash picked the first round games well enough, but created impossible second round matchups.

Anthropix Claude did great into the final four where it hallucinated the semifinal games. ChatGBT actually got a bracket fully filled out on its first try, but picked every single favorite along the way. Still, some people within the AI industry are bullish that AI is ready to cut down the nets. One CEO is running a $1 million March Madness bracket challenge this year.

that claims his AI can outperform one of the nation's top sports gamblers. We're not a crystal ball, says Alan Levy, the head of 4C Predictions, who is running this challenge, but it's going to start to get very, very creepy. Who is the AI backing? Houston to win it all, says Levy, while Sean Perry, the gambler, is going with Duke. Neil, how long until our March Madness pools are just AIs picking against other AIs? I think it's...

happening this year. I think a lot of people are probably turning to AI to help fill out their brackets because it's a crapshoot as it is, you know, maybe you think differently with your whole kill shot metric. But I'm sure a lot of people listening to this are like, yeah, I have used AI to help fill out my bracket or hey, that's a good idea. I have six hours left. The game tips off at 1215. Maybe I'll turn to AI. And if you're going to do that, I have some tips.

Because I asked ChatGPT like a doofus. I said, who's going to win March Madness this year? And ChatGPT replied, I can't predict the future, but I can tell you that NCAA March Madness is always full of surprises. So if you give a vague prompt like that, you will get a vague response because it is going to hedge $3.

You need to be a little more specific with your query. So the Axios reporter said something along the lines of, I'm looking for help filling out a 2025 NCAA men's basketball bracket and wondering who you would pick for each game. I'm attaching a blank bracket to help. So attaching a PDF, please tell me who you predict to win each game. Then ChatGPT might say all of the favorites, but that you have to go a little further and push it and say, can you do some deep research around the web and incorporate some upsets into your predictions?

Maybe you could say incorporate this strategy. I really like this team. So if you push it a little bit, you may get a bracket that looks pretty good or something that would rival anything that you could come up with. Or just do individual matchups. Just say like look at all the data and tell me like who is going to win. Some people have worked this morning. I know. But this is work. I mean that's –

let's be honest, we're all taking a little bit of a half day today. But I do think also March Madness has always been kind of this proving ground and coming out party for a lot of tech. I mean, probably the biggest one that comes to mind is streaming. March Madness with its crazy amount of games was great for kind of ushering in and being a testing ground for the streaming era. And this year, AI companies are kind of capitalizing in as well. OpenAI has actually said like, hey, use us to try to fill out your bracket. And then Perplexity is incorporating odds from the prediction market.

Kalshi and its platform. So they're definitely leaning in this year because you're right. A lot of people are probably staring out of bracket and going, I don't know how to, how to even who's, who's make me state. Um, I do think though that the true AI that we should all rely on is just that Corgi on social media that hits the ball with his nose into one back or the other. I trust that Corgi more than I trust, you know, chat to BT or anything else out there. All right. Well, whatever strategy you choose, we hope you have a wonderful, uh,

bracket filling out experience. I haven't filled out any brackets, so I need to get on that this morning as well. Okay, let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful Thursday. For any questions, comments, or feedback for us, send an email to morningbrewdaily at morningbrew.com. And if you love the show, don't keep it to yourself. Share it with a friend, family member, or coworker. Toby, who should everyone share it with today?

I want you to share the podcast with someone who didn't pick Duke to win this year. There's not a lot of you out there, but I could see maybe a Florida or an Auburn fan sneaking in there. Heck, maybe even Gonzaga for all the true ball knowers. There is no way I can pick Duke. There's just no way. Fair enough. Sorry, even if they win, I will not pick them. It is my principle. Okay, let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer. Olivia Graham and Olivia Lake are our associate producers.

Uchenua Ogu is our technical director. Scoop Stardaris is on audio. Hera Makeup is on Yale Upset Watch today. Devin Emery is our chief content officer. And our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.