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Good morning, Bridele Show. I'm Neil Freiman. And I'm Toby Howell. Today, how the Iran War could impact the global economy. Then, in Thropic was blacklisted by the US government in Open AI said, "Hey, remember
us? One day, March 2nd, let's ride." Good morning.
Welcome to the first full week of March, everyone, and welcome back, Toby.
It feels like things are a little more out of control lately, well, it's not a mystery why. A rare blood moon, total lunar eclipse is coming early tomorrow morning, which will render the moon a deep and coppery red as the full moon falls behind the earth's shadow. And by rare, I mean, this is the last time the phenomenon will happen for another three
years. Toby, are you feeling the disturbance? I'm going to get scientific with it before I get superstitious with it. The moon turns red because when the earth blocks the moon from the sun's light, the light that does make it around the edges is filtered by our atmosphere and our atmosphere scatters
a blue light more readily than a red light, so that's the spectrum that you end up seeing more.
“If you want to see this phenomenon then and sort of ruin the moment by giving the explanation”
that I just gave above the eclipse begins at 34 a.m. Eastern and ends around 6.30 a.m. So you kind of got to be on the podcast schedule to see it. And now we're from our new sponsor, bland AI, we're to podcasters with one brain. I cannot do this for an entire episode. But think about how much easier it would be to podcast with one brain.
That's the idea behind a bland AI. They created a unified interactive voice response across SMS calls and chat. That means no more fragmented tools. They help you move from clunky, many based IVR to natural human-like AI voice that can actually resolve issues and to end.
They're able to drive serious ROI across industries and there are 127% net revenue retention rate means people keep buying more of bland for their business. To learn more, head to bland.ai/mbd, that's bland.ai/mbd. The global economy is in a precarious moment after the United States and Israel launched a war against Iran this weekend, which aspired into a major regional conflict.
On Saturday, the two countries attacked Iran with sweeping air strikes and killed the supreme leader of 37 years in the hopes that the Iranian people will rise up and overthrow the autocratic government. Iran's military responded with strikes around the Middle East against the US and allies and three US service members were killed the Pentagon said yesterday.
With a war spilling into its third day this morning, the consequences for the global economy
are huge, spanning energy markets, global capital flows and travel. The first thing everyone is watching is oil prices, which shot up 8% last night, the most in four years over concerns of disrupted supplies.
“Iran is not only an oil producer, but it sits next to the most important maritime”
choke point in the world, the state of Hormuz. One out of every five barrels of oil in the world flows through the state and a prolonged closure of tankers accessing the waterway could keep oil prices elevated and in turn caused a spike in inflation around the world, something we saw after Russia invaded Ukraine. Another potential economic casualty from the war is the Gulf.
Nations like the United Arab Emirates, home to Abu Dhabi and Dubai, Qatar and Bahrain have emerged as global economic hubs in the past decade, pitching themselves as a business-friendly peaceful oasis and a region otherwise prone to conflict. What image was shattered this weekend when Iranian drones pierced glitzy Gulf hotels and tourist hotspots as well as airports, Etihad airways, Qatar airways and Emirates, the world's
largest international airline, also spent in flights in an unprecedented move that stranded tens of thousands of passengers. Last night President Trump said that combat operations will continue until all our objectives are achieved. Toby, one thing for certain, there are no certainties.
Yeah, let's start with the straight of Hormuz, because that's the name that you're going to be hearing a lot when it comes to this regional conflict. How can the straight of Hormuz be closed? That is a question that I saw floating around online yesterday in the Khabisi letter, which is a stock account.
Kind of explained how this actually happens because no country owns the straight of Hormuz, so no one can effectively close it. But what happens is that when the ships travel through this region, they purchase war, risk insurance, which protects their companies from the cost of being attacked. But insurers are looking at the risk of the region right now and saying, we are either not
Going to offer that anymore or we're going to charge you astronomical rates.
And if that happens, then basically no ship is going to sail through that region because
“they know that they're going to be on the hook if they end up getting attacked.”
So insurers actually are playing a much larger role here than you would expect when it comes to so-called closing the straight of Hormuz. And the straight of Hormuz is effectively closed. I was just tracking this morning on my maritime shipping app, and there's just no ship. They're all kind of parked either on either end of this waterway because Mayor's MSC
Hapag Lloyd, these are these big shipping container companies that if you drive by a port that those are the companies that run all of these tankers and container ships, they're they're not traversing it.
And it's so critical because on one side of the straight you have Dubai, UAE, these are
the big oil producing nations, and then on the other side of the straight, you have the rest of the world. If no ships can traverse this straight, then there's going to be no supply coming on to the market. And we are already seeing a major reaction to oil prices.
They're up 8% this morning. That's going to have an immediate effect on your gas bill when you're filling up your tank because James DeHan who runs gas buddies is very a noted gas predictor said we're going to see gas prices climb above $3 per gallon for the first time in more than three months. He's predicting another 15% increase in gas prices.
Meanwhile, just overall, we might see a spike in inflation.
“Remember, when Russia invaded Ukraine, there was oil prices went skyward and everywhere”
around the world, including the United States saw a huge spike in inflation. The question is, how high will oil go right now? Brent crude is at $78 a barrel if it hits $100. That is when you'll see a lot of spookiness. What I do just want to put into context this move, because heavier blasts, it was a Bloomberg
reporter posted yesterday that if Brent market closed at current levels, which was up around 7.5%, that one day percent increase would rank as the 53rd largest. So it's not even a top trend move, even though all this craziness happened in the region and part of the reason why is that it might have been a little bit priced in because this attack was telegraphed a little bit, but also the U.S. makes a lot more oil now than it
has in the past, only 17% of U.S. energy is imported. That is the lowest level in 40 years. So yes, it's still exposed to global oil benchmarks, but a lot less exposed than it has been in the past. All right, let's talk about Dubai, UAE, I mean, this is the nightmare scenario.
They had pitched themselves to the past decade as this safe haven for global capital. They've emerged as this huge player in investing AI, entertainment, just tried to fashion themselves into the center of the world and brought in a lot of foreigners nearly 90% of everyone living there are foreigners. Now the image is coming out over the weekend where we're unbelievable, you saw the Burst
Khalifa, which is the biggest skyscraper in the entire world, getting seen drone strikes around it, there were five star hotels in Bahrain that we're getting hit, and then people were leaving reviews on the Fairmont Palm Hotel and Dubai saying, one star no air defense systems. One person on the next kind of summed up the vibe in the UAE and Dubai right now saying,
move to Dubai for tax shelter, and now I'm in a bomb shelter, and one of the biggest consequences here is air travel. These are the busiest international hubs in the world.
“They connect east and west, they connect north and south and the fact is right now,”
Qatar, Airways, Etihad, and Emirates are not flying.
No, Dubai is literally the busiest international hub in the world, 92 million international
travelers flew through it last year. That is 13 more than Heathrow Airport in London, and it's not only the fact that commercial traffic has been disrupted, it's also the fact that logistics are disrupted because airports don't just fly people, they fly food, they fly other things, and according to Ryan Peterson, CEO of Flexport, which is the shipping logistics company, he said 18% of
global air freight capacity has been taken out of the market by the conflict in the Middle East right now. So, if we were talking about the region of the straight of hormones disrupting maritime travel, same thing is happening on air travel as well. Yeah, this is a huge deal for the Middle East, for those Gulf countries trying to project
safety at a time when it's not really safe there at all.
Finally, the sea plot here is Pauli Market, as it always is for any major world event.
These prediction markets where you can bet on literally anything while people were betting on a strike in Iran, a lot of people were betting on this particular market. These markets for when the U.S. States would strike had a mass to $530 million dollars making it one of Pauli markets largest ever, and once again, there were accusations and skepticism around possible insider trading here.
Yeah, absolutely, because you just looked at accounts posted online, one account turned $87,000 and $2,500 in at 15,000, six of wallets made $1.2 million betting on a February
28 strike.
Whenever you see these very outlier calls, yes, hypothetically, someone could have a lot
“of conviction and make that bet in place those bets, but also they probably had access”
to someone with access information around this, which is why you're seeing, again, a lot of people pointing out prediction markets and saying, "This is just a hallmark of what they do now." The big event happens, it looks like insider's new before or ahead of time. All right, let's move on, andthropic in the Pentagon broke up over the weekend and open
AI, slid into the government's DM's faster than your ex's ex did when you broke up. The Pentagon and Anthropic had been on thin ice all week. Cloud had been the chatbot of choice for the military, including aiding the U.S. and its Maduro operation, but the defense department wanted full access to use the tech in any way they pleased.
Andthropic wanted some guardrails in place, namely that Cloud could not be used for mass domestic surveillance or fully autonomous weapons. Defense Secretary Pete Heggseth issued an ultimatum to the company, promising to cancel
its $200 million contract by 501 PM on Friday, unless it met its demands.
After that deadline passed, the government took the very intense step of blocking Anthropic on Instagram and also designating it a supply chain risk, which bars any company with U.S. government contracts from doing business with them, enters Sam Altman, who had been leaving fire emojis on the government's stories for month, waiting for the perfect moment to shoot his shot.
By 10 PM on Friday, he announced that open AI had, quote, "reaching agreement with the Department of Wards to deploy our models in their classified network," though all they maintained that their agreement had similar red lines to Anthropics. What brings us to today, Anthropic is a supply chain risk, but is promising to take the issue to court open AI is an opportunist who landed a deal, but may have damaged its reputation
in the process. And no one even really considered using growth, you know. No, they didn't.
You can get really deep with this and many folks to say that this story, basically disregard
anything else that's going on in the world.
“This story is the most important thing that's going to be happening now for decades in”
the future, because it really is a sign of how the government and the Pentagon and military companies are adopting AI and using it at scale for the first time. But going back to the narrow impact, I mean, the first thing you saw is a big brand boost for Claude. Claude overtook Chatchee BT as number one app on the app store.
There seemed to be this upswaling of support for Anthropic and Claude for sticking to their guns and staying true to their principles and going at it with the Pentagon, even Katy Perry, posted that she upgraded to a higher tier of Claude, he saw many folks posting that they canceled their Chatchee BT subscription. So they did get a lot of good well, especially from just the rank and file tech employees,
many folks at Google and OpenAI, Pendle letter saying we stand with Anthropic and even Sam Almond of OpenAI said that Anthropic took a principal stand even though he disagreed with them. Very similar to what we saw back in 2016 when Apple took on the FBI, they refused to unlock an iPhone blogging to a terrorist suspect and they also earned a lot of good wills.
So a lot of big picture questions you can ask here and talk about, but the most immediate effect is that a lot of people are supporting Claude over OpenAI. I was seeing some people say that technically everyone did come out of this deal a winner in a weird way because the government now hypothetically gets more control even if it now has to use what's probably the second best product on the market.
OpenAI and Altman pulled off the powerplay that they love to pull off. It's a very cut throat in a very bottom line, focused powerplay and we'll see how that actually translates into brand equity down the line. And then Anthropic stood up for itself, gets to and treads itself as like the very ethical AI lab in the AI playing field right now and Nate Silver noted that this adds a political
characterization of two to top AI labs. He wrote, among the general population Anthropic now gets more lib code and open AI gets more conservative coded, but then he went on to point out that, hey Tesla went down this rabbit hole as well. Look at what it did to its brand equity.
A lot of consumers of these tech products probably are more left leaning and then right leaning. So again, when we're talking about big picture, yes, open AI now has a big contract with the government.
“What is that going to do down the line to its reputation?”
Yeah, certainly you could take that view. Some would argue that this has a bad precedent for the Pentagon to be bullying its own AI champion that way. I mean, there are very few companies that have been blacklisted like this by the Pentagon and they all come from either China or Russia, which are two huge geopolitical adversaries. Dean Ball, who is a former Trump administration AI advisor called it a dark day in the
history of American AI, the message sent to the business community, and to countries around
the world could not be worse for the Pentagon to essentially go to war with an amazing
piece of American innovation and a company that is, you know, now worth hundreds of
Billions of dollars.
It is another chapter in the battle between open AI and Anthropic.
It cannot get any juice here.
“We were in India a couple of weeks ago with Dario and Sam.”
Everyone was holding hands, except those two guys and they're all barreling toward the IPO later this year, both raising tons of money, it's just quite a heavy, heavy weight fight. All right. We're going to take a quick break and come back with our winners of the weekend.
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are so happy it's March. My winner is Pokemon, which much like your boy Neil, turn 30 and really hit its stride. The Japanese media juggernaut celebrated its 30th birthday on Friday at the peak of its powers announcing a slew of projects that aim to extend the franchise's domination well into Middle-Age.
The Pokemon company said it would launch two new games for Nintendo Switch 2 next year, which will add new storylines, regions and characters to its already immersive world. There is no way to Jerry Satoshi could have anticipated what was about to be unleashed when he created Pokemon back in February, 1996. A designer living in the suburbs of Tokyo, Satoshi was an insect collector and lamented
the urban sprawl that tarnished their habitats. And so he was inspired to invent a digital world where people could collect cute pocket monsters. Yep, that's where the word Pokemon comes from and have them spar against each other. Three decades later, Pokemon is the highest-grossing media franchise in the world, topping even Star Wars and Marvel with total revenues of $150 billion.
It's an empire that transcends age or gender-spanning trading cards TV shows video games, theme parks, and merchandise.
And it has never been stronger.
Pokemon cards have been at the forefront of the collectibles boom of recent years, while Pokemon Go led the critters into the mobile age. Toby, when it comes to brand-building, Pokemon is the very best the best they ever was. The scale of Pokemon is insane. They've sold nearly 500 million video games.
They've sold over 75 billion trading cards. That is so many trading cards. And I do just want to shout out Pokemon Go here because for a while, it was like the biggest thing in the world, 2015, 2016, 500 million downloads immediately upon release. 30 million people are still playing it every single month.
It has obviously fallen from its peak a little bit, but that is a very successful video game. You do just associate Pokemon with the trading card game more. And that has been a fantastic investment if you were a nerd in high school or middle school, because the card ladder index was tracks of value of the collection. The most popular trading cards was up about 6,200 and 8% since May of 2004.
“The S&P 500 was up a measly 521% during that time frame, so you should go dig through your”
ad, you can see if you have only old boxes left over and also Pokemon was important, not just for Pokemon, but for unleashing Japanese culture on the rest of the world. Pop culture expert in Tokyo, Roland Kelts, put it this way and I think it's so apt. You call it the Rosetta Stone that unlocked Japanese storytelling and the economist writes that Pokemon channels to Japanese sensibilities.
One is Kawai or cuteness, which the Pokemon show through their wide-eyed innocence. And the other is Otaku, which is Greek culture. That's when fans love collecting things and cataloging things.
So those are two essential elements of Japanese culture that most folks didn't really know
about around the world and then Pokemon sort of unleashed it that we had Digimon and all the anime is one of the biggest booming media properties globally now. And it appeals across many different generations. It appeals against many different demographics, not just for kids, although kids obviously find great join it, adults are doing most of the collecting at this point.
And then also there is, if you want to be cute, there's Gigglypuff. If you want to be like hardcore and fierce, there's Charmander and Charmillion.
There's something for everyone, which is why it just explains it's enduring a...
appeal.
I never collected a nail.
Never got into it. Well, maybe we were a little late. Maybe we were late. Yeah, 90s, baby.
“Yeah, because I was early '90s and Pokemon was the biggest thing around and I was just”
thinking about, I was born in 1991. We had it best. Pokemon 1996. Harry Potter first comes out in '97, '98, Mark McGuire, Sammy Souser Ace. I mean, those three things were just the peak I was six, seven, eight during when those
were happening. It was an amazing childhood. '67. Sorry about that. My winner of the weekend is Australia because it's stealing Kiwis, not from the grocery store,
but from similarly accented New Zealand. '63,000 New Zealand citizens left the country last year with 61% heading to Australia, but perhaps none as high profile as Jacinda Ardern. The former Prime Minister of New Zealand became a poster child for the issue when she made the decision to relocate her family to Sydney last week.
The move across the ditch, as it is known in the region, has always been a popular migration
route. Citizens of both countries can live and work indefinitely under a reciprocal visa arrangement, which has attracted 600 and 70,000 New Zealanders to Australia. But it's becoming an existential issue for the smaller nation. Brain drain is a real concern, especially since most Kiwis leave for economic opportunity.
Skilled blue collar workers fetched much higher wages in Australia, while the white collar pay gap is estimated at 5-10% in favor of Australia. Plus, New Zealand's economy is already in a precarious position having contracted the last four consecutive quarters, so it can't afford to lose much more talent to the Aussies. Neil, there's sort of this friendly, big brother, little brother relationship between
the two countries, but sibling rivalry is tipping a little bit too much in one direction at the moment. Yeah, this is like if Justin Trudeau moved from Canada to the United States, it's just a real blow to your pride, but you can understand why the New Zealand economy is just not doing well at all right now.
They had the largest contraction in gross domestic product of any developed country in 2024. The unemployment rate, 5.3% the highest, and nearly a decade. And when you read and listen to interviews of people who move from New Zealand to Australia, they describe a general vibe of optimism, and that things can get better for them in Australia, whereas in New Zealand, things just seem to be on this downward spiral.
There's not a lot of career opportunities out of advancement opportunities. The unemployment rate is high, people just can't find the jobs that they want, and they're getting paid less. There's one social worker moved from Christchurch on the South Island to Perth, which is on Australia's West Coast.
He's earning about $20,000 more as a social worker than he did in New Zealand.
“That's why more than 1% of the New Zealand population has left the country in the 12-month”
sending last October. Right, Australia just offers a lot more in terms of economic opportunity. They have more generous pension contributions as well. They think there's better and stronger family allowances as well. So there's just this perception of a much stronger labor market over there.
There's this joke in New Zealand for a long time that it used to be a good recession to clear out the cowboys on New Zealand. Now it's nurses, police, and soldiers. So that does speak to a broader issue here is that you don't want young people leaving to another nation, because if mid-20s and mid-30s professionals are leaving, that is a permanent
migration pattern, because that is the backbone of your economy, that's the backbone of your labor market. So, yes, there is kind of this friendly relationship between the two countries, but now it's becoming existential in a way for New Zealand. It's so far, I really do, I don't think I fully understand the relationship between New
Zealand and Australia. It's far away. I don't think it's a U.S. candidate thing. I kept wanting to call them neighbors and then I'm like, they're not even close to neighbors, but you're right.
They're closer to each other than anything else in the world. So very interesting that particular trend people leaving New Zealand to Australia, meanwhile New Zealand's trying to core a lot of Americans with these visa programs, and the number of Americans living in New Zealand has search, I don't think it's enough to make up for the Exodus, but it's been interesting to see New Zealand try to core wealthy.
Wolf Americans, ever since Peter Teele, started coming over 2018, there was a big surge in American and wealthy Americans buying property in New Zealand, thanks to friendly tax situations. I don't think they can make up for the Exodus. Okay, it's Monday.
“So here's what you need to know to stay ahead in the week ahead.”
Apple is holding its first product launch of the year, and it's not just one day, but
three, starting today and running through Wednesday. If Apple wants us to pay attention all that time, they'd better deliver the goods and reportedly at least five gadgets will be introduced, including a new low-cost MacBook, the iPhone 17E and an updated iPad Air and entry-level iPad. Toby in the early days of the show, you got a reputation as an Apple fanboy.
He's still getting hyped for these product launches. I'm a fanboy of Apple's Honey Crisp and Granny Smith. I am an objective analyst of tech companies, Neil, and objectively, no, I'm not that excited
For this.
I actually have my eye set on a future fall event, which is expected to be Apple's
full right into touchscreen laptops.
“This one is a little bit more, you know, similar devices coming out at different price”
points, so it doesn't really get me going. I will also be eating a cosmic crisp when I go home. On Wall Street, besides word developments, all eyes are on the February jobs report that comes out on Friday. January showed surprisingly strong employment gains, but fears of an AI-induced white collar
white belt are still palpable, especially after Jack Dorsey cut nearly half of the workforce from his fintech company block, citing artificial intelligence. Elsewhere, it's another busy week for earnings, including the chip-making giant Broadcom and retailers Costco Target and Best Buy. The block layoffs are absolutely going to be top of mind when this report comes out
in a week. Wall Street economists expect the U.S. economy to add 60,000 new jobs, which would be a slow down from the 130,000 jobs that were created in January as for the earnings front, not sure what the market wants to see right now, because in video blew it out of the water last week, but that didn't settle any fears about AI disruption, so good luck to Broadcom.
Target has a new CO as well, so it's interesting to see the tone he strikes as they look to kick off if they are turned around.
And finally, if you're having Olympics withdrawal, international sporting events are back
with the World Baseball Classic beginning on Thursday. The stacked U.S. team is looking for revenge after losing a thrilling championship game to Japan in 2023, but plenty of MLB's stars will be wrapping other countries too, with contender such as Mexico, Puerto Rico, and the Dominican Republic. And I know we're all ready for baseball season, but don't sleep on more winter sports,
the Paralympics begin on Friday from Italy. More, lose, baby. Also, you being so excited for the World Baseball Classic reminds you of a challenge we recently did, where we each tried to name as many athletes as we could in a one hour across any sport.
“And I think you ripped off 170 baseball players.”
I did 12, including Shulis Jo Jackson and Horace Wagner, so you're definitely a little bit more excited than for this than I am, and I love that for. There are a lot of people who are excited about this. I saw videos of Shoyu Otani taking batting practice in Japan, and it was Bedloom. And, you know, he won it for Japan a few years ago.
He's the biggest baseball star in the world, so me and everyone in Japan is a super excited for the World Baseball Classic. Oh, no, Tony.
As soon as this thing gets going, and there's some amazing games, they're going to be totally
locked in. I just want, I got to learn more baseball players names.
“It's sobering to see that list, I'm like, how do I only know 12 baseball players?”
I was under pressure. Shulis Jo Jackson didn't make their Oscar this year. Okay, that is all the time we have. Thanks for starting your morning with us and have a wonderful start to the week. If you'd like to reach us send an email to [email protected] or DM us on
Instagram @MBDailyShow. Let's roll the credits. Emily Milliron is our executive producer. Raymond Loo is our producer, our associate producers, our Olivia Graham, and Olivia Lake. Here I make up.
It's moving to Australia. Devon Emory is our president, and our show is a production of "Borning Brou. Great show Danielle. Let's run it back tomorrow."
