The board recommends approving that seat on the committee. We're promoted to most quarterly earnings. Every day, shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard. Vanguard Investor Choice gives you a say in the companies you invest in. With just a few taps, you can set your proxy voting preference for your index funds. Visit Vanguard.com/investorchoice to learn more. Vanguard Investors own shares of our index funds, which own shares of the companies they invest in, available for Vanguard Index funds that participate in investor choice, Vanguard Market Incorporation Distributor. Good morning, Drew Daley Show. I'm Neil Fryman. And I'm Toby Howell. Today, Tesla revealed a flying car. Then McKenzie thinks the best way to screen candidates is to make them talk to AI. It's Friday, October 16th. Let's ride. My plan right after we finish recording the show is to buy a ticket to "You Can See Everything," Nathan Fielder's documentary about Elizabeth Holmes that's being released in theaters today. Wish me luck. This movie, despite being nearly three hours long, looks pretty booked up at every theater in the city. Now that it's surprising, Holmes, who founded the blood testing start of Theranos before a crashed and burned, has maintained her grip on American culture like few other fraudsters. And Fielder might be the only working comedian who can match her awkwardness and mystique. Toby, the movie has a 100% rating on Ron Tomatoes, which I think is good. Every review is rapturous. You have to assume it's going to be excellent and very bizarre. This is one of those movies that your cinephile coworkers, Neil included won't stop talking about. So I might have to go see it just so I can participate in the discourse. I have seen some rumors about what will go down, but apparently Amanda Seifried, who plays Holmes in a Hulu Docu series, also plays a big role in this movie. And Holmes might not even be the most interesting character in the documentary. Billy Evans, her partner has some jaw dropping scenes from what I've seen. All I know is there's going to be a lot of Elizabeth Holmes, costumes come Halloween time. She's back in the zeitgeist for sure. And now we're from our sponsor into it. Toby, let's play a little game of would you rather, okay? Would you rather deal with complexity or simplicity? Oh, man, that's such a toss up. Subplicity is so simple, but complexity, man, is that a lot to deal with? I'm craving simplicity. Same as the CFO's and finance teams stuck logging into four systems to close one month rebuilding every report in a spreadsheet and paying for add-ons they were told they wouldn't need. Well, thankfully there's the Intuit ERP for that. Your team runs one close, however many entities you have. They build their own reports, no consultant required. And getting started doesn't take over your year all without the legacy ERP baggage to learn more head to Intuit.com/ERP. That's Intuit.com/ERP. In order to add some freshness to a stale vehicle lineup, Tesla unveiled a flying car. Literally, at an event in Texas last night, CEO Elon Musk showcased the next generation Roadster, which performed aerial feats he wouldn't typically expect of an automobile, and to move reminiscent of a Simone Biles vault, it climbed up a steep ramp before flipping and twisting for a controlled landing on the ground, then it flew over multiple cars in Tesla's existing vehicle lineup. Another stunt showed how when it's on the ground the Roadster can go pretty dang fast. Tesla showed a video of the two-seater going from zero to 60 miles per hour in less than one second. The new Roadster was the prince that was promised way back in 2017, but numerous delays have pushed the release to nearly a decade later. In many ways, the sports car is a nod to the early days at Tesla. The OG Roadster launched in 2008 was the company's first ever product. And at a time when Tesla is full steam ahead on autonomy, the new Roadster emphasizes human driving, which seems so quaint, must say the Roadster would ultimately be the only manually driven car that Tesla makes. By must-own admission, the Roadster is more an attempt at what your marketing friends call brand-lift, rather than something that will materially contribute to the bottom line. The addressable market for the car, which is rumored to cost more than $250,000, is not big and Tesla won't make it in significant quantities. However, as Tesla pivots toward aerobotics and AI future, it wants to remind you it still makes cars with mind-blowing tech, cars that still account for the majority of its revenue and profits. Toby, take the Roadster out for a joy ride, or should I say, joy flight? Okay, two things can be true. This was one of the more surreal displays of technology that I have ever seen. It did a kickflip. The car did a kickflip. It hung upside down like a bat. This is stuff you do in your room with hot wheels, not with a real car. And yet, it was a stunt at the end of the day. There is not a mass market for this thing. Even if there weren't thrusters and rockets and flying capabilities, they're fighting an uphill battle just to sell an expensive EV in today's market. So it does beg the question, why do this? Why launch the Roadster again? Why finally bring it to market? And I think Elon and Tesla are incentivized to have this futuristic halo around their brand, especially as Chinese EVs are all the rage right now. Maybe it wanted to reassert itself as the company that still pushes the forefront of this technology. And there's nothing more futuristic than a flying car. So yes, I was blown away. A lot of people watching were blown away, which is exactly what Tesla was going for. It also might set the stage for a potential Tesla merger with SpaceX because this car was a collaboration between Tesla and SpaceX engineers. They use this advanced ultra high pressure and airtake to lift the car. And Elon has talked a lot about the synergies between Tesla and SpaceX. We know he loves bringing various areas of his businesses together. And so he's teased this merger. Investors have also been expecting the merger between Tesla and SpaceX. It's one reason why you've seen SpaceX stock do so well on the market is because they think there's this expectation that it will definitely eventually merge with Tesla. So this is also a showcase for how you put rocket engineering and cars together as both of them may eventually come together, which is looking likely to chart this future that is way more AI and robotic space. Yeah, a lot of people said that this is not a car. This is actually just a testing ground for maybe a low gravity landing vehicle on Mars or the moon because everything Elon does eventually ladders back up to space. And yeah, we did see the odds of the merger shoot up. I'm curious if you are a person who put down a deposit back in, you know, almost a decade ago at this point. Are you happy with what came out because the roaster used to be this very curvacious. It looked like a Lotus. It was a true sports car. Now it's almost been cyber truckified. It's the angles are a lot sharper. Obviously it flies now. So it was interesting to hear some news outlets talk to some of those people who put down the strategy so many decades ago. And it was kind of split. Some people are saying like, absolutely, I expected to be most impressive things ever. This is awesome. I can't wait to get one. And other people are like, absolutely don't want it anymore. They've burned all the trust here. Anything that they were allowed cannot make up for the fact that they kept me waiting so long. So if you had put a deposit down, are you pumped for this? Yeah, I want to talk about the deposits because that's part of the lore of this whole roadster journey. Back in 2017, Tesla asked for deposits of $50,000 to reserve the roadster. Or sometimes in some cases, $250,000 deposit for this limited edition Founder series model. They've been waiting nine years and they're going to be waiting even longer because this thing is will not go into production until 2028 at an undisclosed price. If you put that $50,000 deposit instead of toward the roadster into Tesla stock, you would have made between $850 and $900,000. So this was a pretty bad investment on your part for Tesla. It was great because they just got some a bunch of interest tree loans in the sum of tens of millions of dollars. So that's part of the infamous journey of this roadster that was first announced or versed teased in 2017. Now it can fly and it's not coming at least for another two years. Let's move on. There's this viral video floating around ex this week where a company sends an AI recruiter to interview a potential human candidate. So the human counters with an AI avatar of his own. And then he leaves, gets up and walks off to let the two human looking and sounding AI sit on a zoom call in chat. After getting off to a promising start where they manage to schedule a date for the next interview, things go haywire. They both glitch and get caught saying goodbye to each other in an infinite endless loop. It's on candy straight out of Black Mirror and hits all too close to home for candidates in the job market today. Despite some of the dystopia of an AI conducting your interview, companies are not shying away from the technology. McKinsey is the latest big name to bring AI avatars into their candidate screening process. Candidates are being put through simulations where they have to hold 10 minute conversations with a fake AI client designed to mimic a real consulting call. Human interviewers watch and evaluate their performance. McKinsey says the experiment tests whether a candidate is adaptable and can think on their feet. But humans aren't as gong ho. Charles Whitley, a 22 year old recent computer science grad has completed two AI interviews while looking for a job. And despite his interviewers attempting to sound more natural by inserting fillers like ohms and us, he described the experience as some horror movie type stuff and very dehumanizing. But companies aren't likely to slow down anytime soon since AI allows them to interview significantly more candidates sacrificing a touch of humanity for the sake of efficiency. You know, what's your reaction? If you hop on a Zoom call for a job and there's a fake person staring back at you. And absolutely nail it. I know how to charm the bots. Give me give me an AI interviewer. But I totally understand how there's so much backlash to this and it's become a very popular genre on social media. some of these videos.
of people, videoing themselves, messing or trolling AI interviewers go, bonkers viral. Some of the videos that the guy mentioned has put out, he talks gibberish to some interviewers. They respond with gibberish. These rack up about two million views. So it's a very popular thing to do. And that's because people just absolutely hate this. And it is a growing phenomenon, about two thirds of U.S. job seekers in a survey by the hiring platform, Greenhouse said they've had an AI interview, but they just got the IK, almost four and ten of those job seekers have with John from a hiring process once they got an AI interview, because first of all, it's just a weird experience. And second of all, it might speak to the company's values that they're throwing an AI interviewer at you instead of a human. What does that mean for your future job prospects when they find someone to or find a bot to automate your job ultimately? So why is McKinsey going down this path if there is such negative PR around it? They think that it can actually screen candidates better. That's the only reason why they would do it. They think that traditional interviews actually reward candidates who are very good at rehearsing answers. Someone who looks in the mirror and can charm a human interviewer versus if you have an AI that makes them think on their feet, that makes them get off their pre-recorded answers, that actually might illuminate the values that they want in a candidate better than a human can. There's also the argument that maybe human interviewers have more bias than an AI interviewer, because humans inherently have biases based off their lived experiences. If you put an AI into the same situation, maybe they won't exhibit the same thing. Although the pushback there is, these models also have inherent biases in them as well. So you don't necessarily want that machine-making adjustment call like that, so there is two sides of this argument. >> I think it's a time suck. I mean, how much are they paying these consultants at McKinsey? It's so much money. They don't want to spend their time interviewing people. We conduct interviews to it. It feels like a bit of a chore that you're not doing your actual job, so they want to try out these AI interviews to say they don't want McKinsey employees doing these interviews because it just costs them a lot of money and we're also seeing just job applications. The number of job applications surge because on the other side of the end, job seekers are also using AI to flood the market with applications. Two and three recruiters said it's gotten harder to find qualified talent over the last year in a LinkedIn survey. The number of U.S. applicants per opening, per job opening, has doubled since 2022. So they are finding any way they can sift their resumes to surface the best candidates and not do it manually because that just takes way too much time and you're paying people way too much to do this particular job. >> It's Stock of the Week. Dog of the Week time, the segment where we share one stock who's shunning pumpkin spices here and one stock who's leaning into holiday whimsy. I want the pre-show game of who can post more on their personal Instagram account. So I'm up first. My Stock of the Week is AI wearables because suddenly every company has one. Amazon is the latest to push into the category launching two new wearables from B this week, the startup it acquired last year. The B Frontier is a $75 wristband. The records and transcribes your conversations while the B eclipse is $100 and attaches to the back of your smartphone. Both devices are similar to the note takers that loom large in your Zoom meetings, except now they're listening throughout your day during real life too. Obviously, if someone rolls up to the function with a recording device on their wrist, there is bound to be some privacy push back and Amazon's approach is to include an indicator light and make B users toggle on the recording themselves. B also only holds the actual audio long enough to create summaries and insights before deleting. Amazon is not the only one exploring AI hardware. Apple's upcoming watch has a listening function that will also summarize your daily conversations. The company just logs home view to another AI powered device that can help you manage your home. Don't forget about Meta, which practically invented the category with its line of AI-enabled glasses. As we enter the holiday period, it looks like every single tech company is lining up their AI wearable strategy. Yeah, this is them trying to dip a toe into this market, lay the groundwork for what may be more ambitious device launches down the future. We don't really know demand for AI gadgets. Meta's glasses have sold pretty well, but there's this whole new category that's being invented, which is this always on device that just keeps your memories. It sounds straight out of black mirror, but that's what these companies are promising. We really don't know how people will respond to this. This is the first Christmas. This is the first time Santa will be asked to give you these AI gadgets to help you remember your memories, and we'll see if he gets asked in 2027, that's what companies want to find out. It's so exciting, though, because hardware is getting so expensive right now. Remember, the AI build-out is making every electronics more expensive as the chips and the memory that goes into these devices are being hot, hotly contested, so why do they go down this path? They're going after early adopters, because if you can get your feet in the door with people who are curious about this technology, you do get a sense on if there is a market for it, or not, the big question that I have is, do you really care about running a AI locally on a piece of hardware? That is something that not many people give to sense about if it-- that's not a difference. I know. We know what you were going for. Exactly. The way that ChatsyBT works is that when you prompt something, it's going into a cloud server, and then it's feeding answers back to you, but some other companies like Microsoft are rolling out AI-enabled laptops, or you can run the AI locally on your device. Who cares? That's what they're kind of figuring out. Is the normal consumer going to care if they are prompting the cloud or some chip locally on your device? That is what they are paying up right now to see if it actually does matter or not. I will say, I mean, there is a couple of use cases for something that takes notes for you. We were in a meeting yesterday, and we were-- somebody brought up all this stuff that we allegedly had talked about a few months ago, and we both were like, wait, can you remind me what that was again? And I honestly, the first thing that popped into my mind was, I would love to have not be or some sort of thing that just took notes in the background so I didn't have to, and which reminds us exactly what we talked about and what are ideas for. That's why you have really intelligent co-workers with great memories as well. Again, don't put burden on your co-workers, but you're absolutely right. That's sometimes it would be nice to have an extra brain on your side. All right, we're going to take a quick break and come back with Neil's dog a week right after this. Toby, where would you go with $1,500 to spend on airfare? First class, round fifth to my favorite place on Earth, Bloomington, Minnesota, baby. Well, with MasterCard Black Card, you can earn up to 75,000 bonus points after qualifying account activity with their limited time offer. That's worth up to $1,500 when redeemed toward airfare with no blackout dates or seat restrictions. They're going to have to drag me out of the model of America. Visit luxurycard.com/brew for more details. That's luxurycard.com/brew, offer, and soon terms and conditions apply. What's the best thing you've ever gotten out of a work trip, Neil? The friends I made along the way? Oh, that's not good at all. You should try getting better things like rewards. With hotels.com, business days can help fund the next getaway. Others save up to 20% earn rewards on workstays and can redeem them on future travel, making every work trip more valuable. Sign up for their free rewards program and start earning on every workstay at hotels.com/brew. That's hotels.com/brew loyaltymembers18plus. The business landscape in the U.S. feels like it's changing as often as the specials board at a fancy farm to table restaurant. The upcoming midterm elections are likely only going to bring more change. Thankfully, PWC can help. Using decades of experience and expertise, they work with leaders to help make sense of the volatility. PWC starts by identifying how changes in trade, AI, capital, and energy can affect your business. From there, they'll gather insights, model trade-offs, and share perspectives you can use to inform your decisions. Get support leading through change head to pwc.com/us/20206 midterms. My dog of the week is California's legendary wine industry, which is hurting worse than your hangover after slapping the bag in college. We're in the middle of the harvest season for California wine grapes, and it's abundantly clear that there are way too many of them given the demand. The crisis has forced grape growers to make difficult choices, each worse than the last. Do I harvest them for a loss? Do nothing and keep them on the vine. Terra might vineyard altogether and plant something people will actually buy. More and more are choosing the latter. According to the president of Allied grape growers, California once had 600,000 acres of vineyards, but farmers have removed or stopped actively growing wine grapes on about 25 percent of that land. It reflects the utter collapse of wine drinking in the United States. After peaking during the pandemic, sales have collapsed more than 20 percent over the past five years, and last year's drop was the biggest among all the alcoholic beverage categories. Wine was big with the baby boomer generation, but as they age out of frequent drinking, younger folks aren't pining for Pino. The decline of California's wine industry has major economic ramifications for the region. This is a massive sector, doing $84 billion per year in revenue and accounting for 80 percent of wine production in the U.S., but as it's clear from the grape glut, this is going to get worse before it gets better if it ever gets better. Too many grapes, not enough customers, not a good recipe for success. So growers, even as they pull out vineyards, are figuring out what to replace those [BLANK_AUDIO]
vineyards with. And you have some other products like almonds, walnuts, pistachios, olives that potentially make more money. But a lot of grows are also eyeing agave as well. That's what you use to make tequila and the mezcal. It is a lot cheaper to plant and to cultivate the agave plant. It also requires less water and maintenance. But it is risky Bloomberg said that there's very little local distilling capacity in California or knowledge about processing agave. So you're diving headfirst into this category that it's uncharted waters for a lot of these growers, even if it is a little cheaper. And you can also call it tequila or agave. You would have to call it like the California version of tequila, which you just have to invent a new name because those are protected side note. If you want to go drink some good mezcal, go to Oaxaca. I went to an agave farm there and it is just so cool and they will they will show you a good time. So yeah, definitely head out head down to Oaxaca. But if you are a wine drinker, actually times have never been better because you are getting some excellent wines on the cheap because these places that make wine can't really sell them at their own vineyards or their own bottling areas. So what they're doing is dumping them onto mass retailers like Costco, Kroger and Aldi. And you're seeing bottles that would go for maybe $150 as a winery brand being sold for less than $30 under a private label or exclusive label at these retailers. So if you check out the Costco wine section or the Kroger wine section, I mean, you are going to get some incredible deals. The guy who manages wide beer and spirits at Kroger said, like we have incredible wines now. He said we went from having no wines with 90 plus scores in our portfolio from respectable reviewers to 20 in just the last two months. So this is where the good wine is going. It's going to Costco and Kroger. If you think it ever comes back, I mean, obviously wine consumption peaked with a certain generation and during a certain time in COVID, but do you think it's just a slow decline from here on out? Or is it something that will just always be a part of humanity? I have no idea. I mean, it has been a part of humanity for thousands of years. Like, Odysseus was drinking wine. So if, you know, for me, something that has been around humanity for so long and people have shown that they like it and it's a part of the culture, I don't see how it goes away. I think it does. These are boom and bus cycles right now. We're in a huge bus cycle and even people in the industry say, like maybe this overall is a good thing. I mean, there's been so many bankruptcies in California vineyards, but perhaps it's just, you know, one of those periods where there was maybe overbuilding going on in 2021. Everyone was drinking wine just six, just five years ago. I mean, we would never be having this conversation five years ago when everyone was drinking wine. Now we're having it five years later, but who knows what we'll be saying five years down the road. I hope not. I love wine and another shout out. One of my favorite movies is Sideways where Paul Giamatti goes to California wine country and it's just an incredible movie. All right. Let's sprint to the finish with some final headlines. On yesterday's show, you heard that consumer prices were ticking uncomfortably higher. A new report showed that wholesale prices are soaring even more. Yesterday's producer price index revealed wholesale prices jumped 6.3 percent in September from a year ago up from a 5.6 percent gain in August. It's the biggest jump in the PPI since December 2022 and confirms that inflation is headed in the wrong direction whether it's when a product hits the warehouse or at the point of sale. Like in the consumer price report, wholesale inflation was pushed higher by surging fuel prices. The soaring cost of diesel, which is used by trains and trucks, is pushing up the cost of anything that needs to be moved. In a client note, Carl Weinberg of High Frequency Economics wrote, the jolt of transportation prices affects every good in the economy since it puts to manufacturing moved to factories and goods at all stages of production moved from producer to wholesaler to retailer by truck, train or rail. This is how increases energy prices bleed through to prices of core goods. It led to a weird day in the market too. Just candidly, we had this top story already to go about the global stock route. Thanks to these back-to-back hot inflation reports and while there was a bit of a sell-off and a chip index, the SV500 bounce back rose 0.33% and NASDAQ eaked out a 0.08% gain. It wasn't much, but investors came in. They bought the dip as they have been want to do and the market just seems to have these anti-gravity boots on. Every time a hot PPI or CPI report comes in, we think cracks are forming. The bounce inevitably comes as it did yesterday. Moving on, your portfolio might be crimson, but Harvard isn't. The university's endowment just posted a 27% annual return pushing its rainy day fund to a record $68 billion. The rise comes thanks to a booming stock market and also a particularly lucrative bet on Elon Musk's SpaceX with a stake worth over $2 billion. The $11 billion increase in its endowment was Harvard's best performance since 2021 and beat both the 19% median return for large college endowments and the S&P 500's 22% return over the same period. It was a good time to have a great year too since Harvard has been locked in a battle with President Trump over federal funding with government-sponsored research money falling 20% this past year. He'll Harvard kicked my butt in the market, but then again, the big brains over there probably should. Yeah, you went to a different IV. Did you see what Brown's endowment return was for last year? No. 19.6% which is solid, but that's less than the S&P 500. Here's the X factor. It's literally SpaceX because if you had SpaceX in your portfolio, then you did gangbusters. Harvard wasn't the only one. The University of North Carolina and Wash, you in St. Louis. They both post returns of more than 35% in the most recent fiscal year because they were early investors in SpaceX, which went public at a $2 trillion valuation. So yes, we're leaving to Harvard, which had some financial troubles recently over the past two years, but then it goes in post at 27% return on investments. I mean, yeah, it did a good job. It did a good job as a venture capitalist seeking out SpaceX at an early stage. And finally, soon you won't be able to order a Pepsi to wash down your chicken bucket at KFC. And that's because the chain is switching sides to Coke. In a Benedict Arnold move, KFC has signed a deal with Coca-Cola as its beverage provider in the United States. It ends a long-standing relationship with Pepsi, which used to be the owner of KFC before it spun it off alongside Taco Bell and Pizza Hut in 1997. This couldn't come at a worst time for Pepsi. Last week, it acknowledged its soda sales were struggling and activist investors are circling for a major overhaul. There's any silver lining. It's that Pepsi will still be working with KFC in many international markets, which represent the bulk of the restaurant's business. Pepsi keeps losing major customers to Coke. They just lost KFC. They lost Marriott in July of this year. They lost Costco in 2025 as well. So that is three big ones that have gone Coke's way. There is so much lower here because as you mentioned, KFC was once owned by PepsiCo, but then they spun off couple of restaurant fans to become Yamat brands, which owns KFC Pizza Hut in Taco Bell, although Pizza Hut is being cleaved off as well. Taco Bell is the crown jewel of this portfolio at this point because you are not going to wrestle Pepsi and Taco Bell away from each other because of the Baja Blast. I mean, Mountain Dew is a Pepsi product. It is a signature beverage that is so closely tied to the identity of Taco Bell. So if they lose Taco Bell, then you just might as well wrap it up at this point. All right, that is all the time we have. Thanks so much for starting your morning with us and have a wonderful Friday and an even better weekend to share your thoughts on the episode or anything else. Send an email to
[email protected] or DM us on Instagram @mbdailyshow. Let's roll the credits. Emily Miliron is our supervising producer. Raymond Lut is our senior producer. Our producer is Olivia Graham and our associate producer is Olivia Lake, technical direction by Yuchena Wahogu. Her makeup is not drinking more low and our show is a production of MorningBrew. Great show today, Neil. I wish you all well. Contentful in partnership with the Atlantic released their latest report that maps out the five questions marketing leaders need to answer to succeed in the agentic web era. The report helps marketing leaders figure out what they need to decide when it comes to defining AI's role within their team, the risk of deferral if no one makes a call, what success looks like, and the review cadence needed to stay on top. To see all the findings, go to contentful.com/mourningbrew.
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