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April 26, 2023 View Online | Sign Up | Shop 10% Off

Morning Brew

Apple Card

Good morning. As of today, the bankrupt Bed Bath & Beyond will stop accepting your 20%-off coupons, which means they’re now just worthless pieces of paper. Well…not completely worthless: They can be redeemed for Fyre Festival tickets, Blockbuster late fees, and McDonald’s chicken snack wraps.

Matty Merritt, Sam Klebanov, Cassandra Cassidy, Neal Freyman

PS: The Brew’s Leadership Accelerator kicks off in May. If you’re a newly minted boss looking to learn the management ropes in just eight weeks, check out the program.

MARKETS

Nasdaq

11,799.16

S&P

4,071.63

Dow

33,530.83

10-Year

3.402%

Bitcoin

$28,176.60

First Republic

$8.10

*Stock data as of market close, cryptocurrency data as of 2:00am ET. Here's what these numbers mean.

  • Markets: Even though many companies turned in bright earnings reports, stocks couldn’t escape the shadow cast by First Republic Bank. The regional lender, which suffered over $100 billion in deposit outflows last quarter, crashed to a record low yesterday and is exploring selling up to $100 billion in assets to support its balance sheet. But First Republic’s condition is so dire that it sure seems like the US government will have to intervene.
 

TECH

Generative AI joins the 2024 presidential race

Snowy mountains fill the landscape behind the Hollywood sign. Patrick T. Fallon / Getty Images

After President Biden announced his reelection bid yesterday morning, the Republican National Committee swiftly responded with an attack ad. The video asked “What if the weakest president we’ve ever had were re-elected?” and then…imagined the answer.

It got help from artificial intelligence. The 30-second video used generative AI tools to create images and video of The Last of Us-looking scenes, including one where the army is occupying San Francisco because the city had supposedly been overtaken by crime and fentanyl. The RNC told Axios that it’s the first video the organization has created using AI.

Get used to it

The video is likely just the start of a 2024 presidential race heavily influenced by AI. While political campaigns have used AI tools to help canvass voters for years, recent breakthroughs in generative AI (like ChatGPT, Midjourney, and other programs) have taken the tech to a whole new level of realism.

And, if the past few months are any indication, powerful figures are among the most popular targets of AI-generated shenanigans.

  • Fake photos (fauxtos, if you will) of the pope swagged out in a giant white puffer coat and former President Trump being carried away by cops went viral due to their shocking realism.
  • It’s not just images: Fake audio of Biden and Trump slinging insults at each other while they play a video game made the rounds on TikTok and Instagram. Those two men could very well square off in a rematch of the 2020 election.

Not only has generative AI technology dramatically improved since the last election, but so has access to these programs. ChatGPT, for instance, became the fastest-growing consumer app in history after racking up 100 million users in just two months.

Experts say that since anyone with a computer and a wild imagination can use AI programs, misinformation could be churned out rapidly during this election cycle—especially since social media companies have loose policies to keep AI-generated political content in check.

Counterpoint: Misinformation is already doing just fine without AI. Chris Meserole, a Brookings Institution fellow, told Fortune that “recent presidential elections have already witnessed...high levels of human-written misinformation” and expects the next election to look similar to those of 2020 and 2016.

Plus, concerned citizens raised alarms during the 2020 presidential election that deepfakes would sow chaos and confuse voters. But that…didn’t end up happening.—MM

     

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WORLD

Tour de headlines

Spotlight on Microsoft and Google Francis Scialabba

Alphabet and Microsoft kept calm and carried on. The two tech giants posted earnings that showed they’re both on solid footing, despite investors’ concerns that growth would slow to a trickle. For Alphabet, Google search advertising revenue grew again after a quarter in the red. And Microsoft’s all-important cloud division posted better-than-expected sales. Both companies discussed how AI could impact their businesses, but they differed in their predictions: Microsoft characterized AI as a much more disruptive force than Google did.

Nate Silver will leave ABC News. The statistician and founder of FiveThirtyEight said that Disney’s recent layoffs had “substantially impacted” his website to the point where he expects to leave the company when his contract expires this summer. Silver became the data nerd du jour with his prescient forecasts for the 2008 and 2012 elections, and his statistics-focused site was acquired by ABC News in 2018. Silver becomes the latest media bigwig to seek new pastures this week.

RIP, Harry Belafonte. The groundbreaking performer-turned-activist died at his Manhattan home yesterday at 96. You probably know Belafonte best for his catchy-as-all-heck take on the Jamaican folk song “Day-O (The Banana Boat Song)” released in 1956. But after achieving unprecedented commercial success for any musician at the time, especially a Black artist, Belafonte turned his attention to political activism and the fight for civil rights. Belafonte even put up bail for MLK and other civil rights activists to get them out of jail.

CONSUMER

Shoppers pay up for pricey Big Macs and burritos

shut up and take my money! Futurama meme Disney/Futurama

Charge more, and see what happens. That’s exactly what many consumer-facing corporations, including Chipotle and McDonald’s, did in response to historic inflation…and it’s worked out pretty great for them, according to their earnings reports this week.

  • Chipotle increased prices and store traffic also increased, the company said.
  • PepsiCo products were 16% pricier last quarter, but it sold only 2% less of them, resulting in a 10.2% sales bump.
  • Consumer giants Kimberly-Clark, Nestlé, and P&G raked in more revenue last quarter after they jacked up prices by about 10%.
  • Higher sticker prices helped GM add almost $1,800 to its per-car profit in North America and grow its revenue.

But the good times won’t last. After more than a year of getting hammered by inflation, consumers are starting to resist paying farmers market prices at the grocery store. Pepsi’s CFO said its customers have already been opting for cheaper products, and the CEO of McDonald’s told the Financial Times that customers were starting to push back on the company’s beefier price tags.

Looking ahead…execs at companies like Coca-Cola say it’s only a matter of time before they’ll have to stop increasing prices or risk losing customers. Chipotle has already made that decision, revealing it had paused price hikes.—SK

     

TOGETHER WITH THESIS

Thesis

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HEALTH

Sleep gummies give you more Zzzs than you asked for

Sleep gummies give you more Zzzs than you asked for Hannah Minn

Apparently, counting melatonin isn’t as easy as counting sheep. A study released yesterday showed that the labels on sleepy-time gummies frequently misrepresent the amount of melatonin they contain.

The study, published in the Journal of the American Medical Association, found that 22 of the 25 melatonin products tested by researchers had inaccurate labels that most often lowballed the amount of melatonin they contained. One product even had 347% of the stated amount of melatonin.

For an adult, extra melatonin usually makes you feel like you had too many Vodka Red Bulls the night before. But for kids, higher levels of melatonin can cause health problems.

  • Between 2012 and 2021, the number of pediatric melatonin ingestions reported to poison control surged 530%, according to a CDC report last year. Of the 260,000+ incidents reported, over 4,000 kids were hospitalized, five required mechanical ventilation, and two died.
  • Pediatricians warn that since melatonin is a hormone, even normal consumption on a regular basis can affect a child’s development in puberty.

Big picture: Industry reps and the FDA agree that the dietary supplement marketplace needs a regulatory overhaul. Current US regulations do not require supplement-makers to conduct clinical trials or obtain FDA approval before putting their products on the shelf. Meanwhile, in the EU, the UK, Canada, and elsewhere, melatonin requires a prescription.—CC

     

GRAB BAG

Key performance indicators

The first Barbie with Down syndrome Mattel

Stat: Barbie introduced its first doll with Down syndrome as part of its recent push to represent more types of women than just the skinny, blonde ones. Barbie-maker Mattel partnered with the National Down Syndrome Society on the design of the doll, which bears a pink pendant necklace with three upward-pointing chevrons to symbolize the 21st chromosome—which people with Down syndrome have an extra copy of.

Quote: “As a squad, we understand your frustration, your anger. It wasn’t good enough.”

Frank Ocean may want to take note: The Tottenham Hotspur players have offered to reimburse fans who attended their 1–6 thrashing by Newcastle United on Sunday. After the game, the team sacked their interim coach and replaced him with another interim coach…who had previously been Tottenham’s interim coach.

Read: The surprising surge of faith among young people. (Wall Street Journal)

NEWS

What else is brewing

  • Netflix said it will spend $2.5 billion in the next four years to produce South Korean content. The company noted that 60% of Netflix subscribers watched Korean shows or films last year.
  • Tesla’s Model Y now costs less than the average vehicle sold in the US.
  • A Japanese company’s spacecraft likely crashed as it attempted to land on the moon. If it managed the feat, the firm would have been the first private company to pull off a lunar landing.
  • GM is killing off its Chevy Bolt EV, the first electric vehicle it produced for the masses.
  • Why people are reading obituaries on YouTube.

RECS

Wednesday to-do list

The highest-paying internships right now: Check out the list.

This new sport is ass: Introducing…donkey basketball.

“Channel drift”: It’s the trend of TV channels abandoning their original identities and eventually standing for nothing. (YouTube)

A music savant at work: Watch Fred again… take the Tiny Desk stage.

Retail pros: Learn strategies that will keep your target shoppers coming back time and again. Here’s how to revamp your approach.

Liquid gold: Fine wine delights palates and portfolios alike—and its historic lack of volatility helped it outperform the S&P 500 over the last 4 recessions. Diversify with Vinovest.*

*This is sponsored advertising content.

GAMES

The puzzle section

Word Search: Play today’s Word Search to glimpse the animals you’ll likely encounter during a hike in the woods.

National park trivia

Here’s some trivia about the US’ national parks in honor of National Park Week. We’ll give you the name of a national park, and you have to name the state(s) it’s located in.

  1. Badlands
  2. Haleakala
  3. Yellowstone (three states)
  4. Great Smoky Mountains (two states)
  5. Carlsbad Caverns
  6. Olympic

AROUND THE BREW

How AI could affect your job

How AI could affect your job

As you’re reading this, companies all over the world are integrating AI. See how your job could be impacted with Tech Brew’s rundown.

Join us today at 3pm ET for a free virtual event with Claire Hughes Johnson, the former Stripe COO and author of Scaling People. Register here.

Want to enhance your marketing strategy? Hear from Ajay Kapoor, the global director of performance-driven marketing at General Motors, at The Brief on May 11 in NYC. Learn more here.

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ANSWER

  1. South Dakota
  2. Hawaii
  3. Wyoming, Montana, and Idaho
  4. North Carolina and Tennessee
  5. New Mexico
  6. Washington

✢ A Note From Apple Card

Savings provided by Goldman Sachs Bank USA. Member FDIC.

         

Written by Neal Freyman, Cassandra Cassidy, Matty Merritt, and Sam Klebanov

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