Trump Strikes Controversial Oil Deal With Russia & Low Payroll MLB Teams Dominate Postseason

Good morning, Bridgetly Show. I'm Neil Fryman and I'm Toby Howell. Today Pepsi is getting crushed from everyone on OZEMPIC. Then what to make of Trump's controversial diesel deal with Russia. It's Tuesday, October 13th. Let's ride. So I was scrolling through Strava and saw Toby put in a pretty long run on Sunday. Naturally gave him kudos, but what was that all about? Right. The Chicago Marathon, Neil. And it was awesome. I am very sourcing in this chair right now, but I just want to shout out, first of all, the MBD listeners. They showed out like you wouldn't believe on the Chicago Marathon course. Saw a couple of signs dedicated to MBD. So if you cheered me on, thank you so much. I heard you even though my face looked like I didn't. One thing I noticed about the Chicago Marathon versus other marathons I've done, so many people handing out alcohol, like mallort shots, pickle beer, tequila shots. There were so many opportunities for drinking alcohol. More so than gatorade or water station. So shout out Chicago for that. It was a hot one too. So sometimes the pickle beer was calling my name. But Neil, it looks like you're having a bit of a marathon travel weekend yourself. You're in a hotel room right now. What's the deal with that? Yeah, I'm feeling a little lazier than you. I was in North Carolina. I had an amazing weekend. But then yesterday I could not get back to New York. The RDU was basically a circus. And apparently it had to do with a fiber optic cable. At least one of the ground stops there were two was because in the local area there was a fiber optic cable that was cut by in a plumbing repair. And that brought me back to a few weeks ago where we talked about the same thing happening at New work. And it just happened to me. So yeah, I'm at a local hotel and hopefully we'll get back to New York sometimes soon or just start running Neil. I'll do that in two weeks in New York. Yep. All right. And now we're from our sponsor into it. Toby, know what I'm craving? Oh, I know. Like a really big sandwich, one with salami, prosciutto, capacola, mozzarella, tomatoes, balsamic, spinach, banana peppers, pickles. No, no, no. And please eat breakfast before we record from now on. You get too descriptive when you're hungry. I'm craving simplicity, same as the CFOs and finance teams stuck logging into four systems to close out 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 Gating 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. Trump said shock waves through with energy markets when he announced a deal Friday to purchase Russian diesel fuel and attempt to bring global prices down. He then sent a political shock when he doubled down on the deal yesterday. Just before the weekend, the White House announced a broader energy ceasefire, demanding that Ukraine stop striking Russian refineries in exchange for a halt on Russian attacks on Ukraine's energy infrastructure. Trump defended his decision posting on True Social Monday. I made the right choice for the American people, always America first, while also mentioning that the European Union has imported fuel from Russia in the past. It's a bold move, but the question is, is it going to make any difference? Energy experts are skeptical for one, the amounts mentioned in Trump's announcement won't be enough to move the needle in the US market. The immediate supply boost of just over 2 million barrels sounds like a lot, but is less than a day supply for America's transportation sector alone. It is also deeply unpopular from a political perspective. Over the weekend, a bipartisan group of senators released a statement calling for Trump to immediately reverse course, saying Putin shouldn't get a financial lifeline when Russia continues to kill Ukrainian civilians. Neil Diesel prices have jumped nearly 70 percent since the Iran War began in February, so Trump is trying to show voters that his administration is working to bring prices down ahead of midterm elections, but co-zing up to Russia is not the most popular way of going about it. Energy experts said this could send about $4 billion of American money into the Russian economy. It's not exactly what you want to do for your geopolitical rival. This is exactly what Congress set out to do, set out not to do in 2022, right after Russia's invasion of Ukraine. They issued a ban of Russian energy products while it was invading Ukraine, and it wouldn't, it said it wouldn't lift that until they stopped and also threatening NATO allies. So this also raises questions about its legality, not only that it's politically unpopular, and that'll send $4 billion into the Russian economy, but whether he can do it in the first place because there is this ban from four years ago in place. And a lot of people just don't think that the gamble is worth it because US Diesel prices were down 0.5 percent on Monday following Trump's announcement. So it just didn't move the needle that much. You're basically taking this big political gambit and you're risking a lot of popularity for a very small payoff on it comes to the amount of diesel that will flow into the system. Also by pausing or trying to force Ukraine to pause their attacks on Russian energy infrastructure, you are taking out basically Ukraine's entire strategy when it comes to this war because it's increasingly turned into an economic one, not necessarily one that has fought on the front lines. Putin has acknowledged that Ukrainian strikes on its refineries have cost it approximately 1 percent of its GDP. If you look at total gas production is down 20 percent compared to last year, diesel production is estimated to be down nearly 30 percent. So the attacks are working. So the fact that Trump is pushing for a pause on those really undermines Ukraine's entire strategy here. Yeah, diesel prices near record highs. Trump has thrown everything at the wall to figure out ways to bring it down, especially as we head toward midterm elections in literally a few weeks. There was a couple options being floated on the table, like the fact that the US could ban diesel exports. That was a proposal, but that was not actually followed through after political pushback. What Trump did manage to do was get allies, G7 allies, to release emergency stockpiles. That amounts to 1.5 million barrels a day, but overall the thing that will get diesel prices down, get fuel prices down is one reopening the straight-up form moves fully. So Middle East oil and crude can get to the rest of the global markets. And for Russia and Ukraine to stop fighting each other and hitting each other's refineries and energy infrastructure, because that is also setting prices higher. Meanwhile, on the geopolitical stage, Saudi Arabia is reeling after a spate of attacks on Riyadh's international airport over the weekend that killed 13 and injured hundreds of others. The strikes were carried out by Iran backed Houthi rebels and represent the single-deadliest attack on the US or its allies so far in the war according to the Wall Street Journal. The escalation against Riyadh comes after Saudi Arabia spent years trying to present itself as a stable modern economy in the region, working to become a destination for tourists and for an investment. But the attacks have put that transformation under threat. In the immediate aftermath, Delta delayed its plans to launch a direct route from the US to Riyadh until March. Saudi Arabia also has a major oil conference on the books this week and another one courting Wall Street bigwigs say slated for next month. Despite the attacks organizers insist both events will happen, showing how the country is trying to paper over these threats. The other attacks are undermining the reputation of stability Saudi Arabia has worked so hard to build. The events of recent weeks are serious, our response must be equally serious while remaining focused on the decades ahead investment must continue. And then in a few weeks before the end of the month, they're expected to host what's called Davos in the desert which you get the biggest business people in the world like Jamie Dimon of JP Morgan, Black Rock CEO. They all go into Saudi Arabia to talk about investment in Saudi Arabia. These things have thrown these recent attacks have thrown that all into questions. So hard questions are now being asked of MBS, the de facto leader of Saudi Arabia. Economic data is showing the damage to from these attacks. 2026 GDP forecast for Saudi Arabia is negative 3.6%. So its economy is expected to couldn't attract going forward, especially its non-oil economy. Obviously its oil production and export is taking a hit, but the non-oil economy was actually smaller in the second quarter than the first quarter. That's exactly what Saudi Arabia doesn't want because they put all this time and energy and money into trying to broaden its economy from just being reliant on oil. And then when it comes to just the less quantifiable aspect of attacking airports, it's very hard to portray yourself as a safe haven when the very entry in exit of your country is under attack. That is why the Houthis are targeting things like civilian airports because it just leads to some doubt in the global community about the reputation that Saudi Arabia has been trying to kind of see. stake for itself. - Moving on, somebody called Kendall Jenner, 'cause Pepsi is down bad. The food and beverage giant posted concerning quarterly results last week revealing a number of existential threats to its business. The problem, first and foremost, is Americans are drinking less Pepsi. CEO Ramon LaGuarda said he doesn't feel good about the company's beverage business in North America, pointing to softening sales in soft drinks, like its name-sake brand and Mountain Dew. North American beverage volumes fell 2% during the quarter. Prompting LaGuarda to acknowledge we're not competing well in soft drinks. Another issue is snacks. Pepsi owns the mammoth Frito-lay snack business, but GLP-1 users are skipping the mid-afternoon munchies. The company has tried everything from Doritos protein to sun chips with fiber, but execs admit they're on the back foot trying to navigate all these societal changes. Speaking of changes, Pepsi is being pressured to make big ones to turn around its stock, which has slumped 12% this year and is trading at six-year lows. Some angry investors are pushing for a sweeping overall that could include splitting up the international and American business or breaking up food and beverage into two separate companies. So it seems like a company behind the times might be in need of a Baja Blast. - There's all this talk around splitting Pepsi up, like either it's by geography or it's by beverages and snacks, but if Pepsi won't do that, which it looks like they're pushing back on that, they actually have to go the opposite way and just lean in harder to the combined synergies of its snack and bottling soda divisions. They have been saying that one way to actually reap these cost savings that active investors are looking for is to reimagine how it's distributing its goods across its supply chain. The thing that you've been hearing from Pepsi execs is a snack and drinks truck. Basically, what happens right now is the Fritos come on one truck, the Pepsi comes on another truck. That's pretty redundant and is not the most effective way of doing supply chain management. So they actually want to make a single combined delivery to grocery stores to the places that sell their products. So ironically, either split everything up or just integrate it even more deeply to create a more efficient supply chain network. - I'm also thinking about the screaming truck that is GLP ones because this is taking a big hit to Pepsi's business. I mean, overall, the food and beverage industry is staring down lost revenues of $55 billion by 2030 from people cutting back on drinks and on food because they're on GLP ones that's according to JP Morgan. So they're trying everything. I said I mentioned they're doing sun chips with fiber and they're doing Doritos protein. They're also, they just bought Poppy. Poppy is this prebiotic soda brand and they are trying all these new different products with Poppy. One is Poppy Lyft, 70 milligrams of caffeine and electrolytes and then they're also trying to reimagine the namesake soda. Pepsi, it's just fallen behind Coke so far. It's introducing, tell me what you think of this. It's introducing Pepsi strawberry shortcake. So you combine the classic flavors of Pepsi with strawberry cake and vanilla cream, trying to lean into that maybe that dirty soda trend that's taken over from Utah and that's taken over the country because people are drinking soda. They're just adding so much stuff to it and they're not just drinking soda. So that's one, those are a couple of the new product launches that Pepsi is trying to revitalize its business. - I ironically think you came up with a great name. You accidentally said pro-redos instead of protein Doritos. That sounds like a new product category right there. And as for the sweet Pepsi, sounds delicious after running a marathon. Does not sound delicious any other time. Sounds extremely rich in sugary. So it does look like they're trying to play two sides lean into more of the decadent sweet treat economy but also lean into something like their naked line of Doritos with stripsway artificial colors. Trying to play both sides, I think you put it well. They're just throwing anything at the wall and seeing what sticks. All right, we're gonna take a quick break and come back with our winners of the weekend right after this. - Every day, shareholders meet to discuss important matters about the companies you invest in. Now, you can easily make your voice heard too. Vanguard investor choice makes it easy to set your proxy voting preference for your eligible Vanguard index funds. In just a few clicks, you can have a say on important shareholder topics like executive pay and director elections. Visit vanguard.com/investorchoice to learn more. It's your shares, it's your voice, it's easy. Vanguard investors own shares of their index funds and those funds own shares of the companies they invest in. Vanguard Marketing Corporation distributor. - The business landscape in the US 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. - Mental health is no laughing matter. Unlike ferrets, those little guys are hilarious. - Yes, but we're not talking about ferrets, we're talking about RULA health. Rather than dealing with things later, they help you access quality, affordable mental healthcare with sessions costing an average of $15 with insurance. - They vet their provider's monitor outcomes and over 90% of patients report feeling better and making real progress. They help you find a therapist for your specific needs with provider specializing in over 90 conditions. - To get started head to RULA.com, that's RULA.com and take the first step. - It's time for our winners of the weekend, the segment where we pick two things that had a better weekend than someone who wore their marathon medal to the airport. - I won the pre-show game of who can actually make it to the studio, so I'm up first and my winner of the weekend are the two Americans who won the Nobel Prize in Economics for developing a model that helps smooth out the booms and busts of the economy. Stanford's Robert Hall and Columbia's Michael Woodford were awarded the prize for determining the microeconomic foundations for macroeconomic stabilization. Put it another way, the feelings of the individual units of the economy, the people and the businesses, influence the economy as a whole. Their big insight is what people expect to happen to the economy can be just as important as what is actually happening. For instance, households make spending decisions today based on what they think their income will be going forwards. In other words, you book that future trip to Disney not because of the paycheck you got this month, but because you're pretty sure you'll be paid consistently in the future. Businesses too set prices based on what they think their future costs and demand might look like. It's hard for Disney to price a ticket if they don't know if anyone will show up next year. Sounds a little common sense, but it's what governments in central banks do with that info that makes it price worthy. The tools of economic stability are not limited to changing interest rates or juicing government spending, but also by changing what people believe will happen next. Neil, this feels especially relevant in today's day and age where the shocks keep coming and they don't stop coming. - We were robbed again, Toby. When we're gonna get this prize in economics, one day, maybe when we coin a new term or develop a new policy, yes, very appropriate to today's problems, stabilization policy, but for the roots of this Nobel prize, you really have to go back to the 1930s when there was all kinds of economic mayhem and there was this one economist, which many people know named John Maynard Keynes and he pioneered this concept called stabilization policy where if things go haywire in the economy, not you can't leave it to the free market to fix things, which was the orthodoxy of the time, no government has to step in, lower interest rates, juice the economy with a bunch of money so that people can back get back on their feet and the economy gets back to its regular standing. And that was the standard going forward for a bunch of decades until the 1970s when there was a major oil crisis out of the Middle East and Keynes' ideas didn't really hold a lot of weight and it was kind of laughed off. So stabilization policy got put in the dumpster for a few decades, but these two guys brought it back, you really don't want your economy running too hot when things are going good and you don't want to getting too low when times are going bad, they put together this new theory focusing on individuals and businesses and forward guidance by central banks and they were rewarded for it. - Look no further than 2008 to see how that forward guidance actually worked in the broader economy because remember central banks began basically forecasting their expectations for interest rates, broadcasting their expectations for interest rates going forward. And so instead of just cutting rates to near zero, you can't really go beyond zero, they could signal that the rates would remain low for an extended period of time and that actually did a lot to reboosting businesses investment, reboosing consumers' confidence just the fact that they were saying and projecting stability going forward was enough to kind of bring the economy out of the dumps. It also makes me think about new Fed Chair Kevin Worsh's approach. This seems incredibly timely given his perspective on this issue. Remember, he thinks central banks talk too much. He doesn't want central banks broadcasting their movement because he thinks that the market should wait and see and determine rates rather than having the central bank be the end all be all when it comes to this. So, I don't know if it knows. well committee was thinking specifically about this when awarding this prize, but it feels especially timely given his kind of very not conversational approach to being a fed chair. Final fun fact about this is it's not actually a Nobel Prize. I know you're going to bring this up. It's the most Neil fact in the world, continue, continue. It's very interesting. It's a prize that's handed out by the Sweden Central Bank in economic sciences and memory of Alfred Nobel. It wasn't among the original categories that Alfred Nobel, the inventor of diamondite, set out in his will in 1895. He wanted to hand out prizes in five fields, physics, chemistry, physiology, or medicine, literature, and peace, because those were the ones that would confer the greatest benefit to humankind. I guess economics just didn't make the cut. It doesn't really benefit humankind up to Nobel standards. They still get $1.2 million in prize money though, so there is a little bit. Even though you didn't get Alfred Nobel's stamp of approval 100 years ago, you do get over a million bucks. All right, my winner of the weekend are 50 baseball teams. Three of the four squads in the championship series, the semi-finals playing right now, boast rosters in the bottom half of the payroll rankings, and the American League match up the race versus the Guardians features teams that know how to use a Costco card to their advantage. Their payrolls rank 28th and 30th respectively. The contrast cannot be more stark, because I haven't mentioned the fourth team yet, the Los Angeles Dodgers, they've amassed a roster worth $523 million. The biggest spenders in the league, a sum that is greater than the payrolls of the other three remaining teams combined. And for another jaw-dropping stat, according to the athletic, there are 18 players on these four teams that make more than $10 million or more from their current clubs. 14 of them play for the Dodgers. So, can money buy you championships? It's a very important question that will impact whether MLB even has a season next year. In December, the current collective bargaining agreement will expire, and owners and players are not seeing eye to eye about a new one. The league and the owners want to introduce the salary cap system to prevent the wealth disparities I just mentioned. While the players say that's a non-starter, to be clear, the answer to that question is seemingly, yes, the free spending Dodgers are looking for their third world series trophy in a row. There's basically a argument supporting a salary cap or against the salary cap, depending on what perspective you're taking at this precise postseason moment. Because, again, the Dodgers have been so dominant. That is a massive argument for a salary cap. How can these tiny little teams compete? But then you look at what's happening in the postseason. The three teams, Brewers, Brewers, Rays, and the Guardian. Somebody's not the paying attention. I promise. They are in the bottom half of the MLB play role. So, how can you say that you need a salary cap when these small market teams are going toe-to-toe and beating the rest of the league here? So, it really just depends on where you are sitting. If you are a player, obviously, you don't want a salary cap because it captures your earning potential. It gives you less player empowerment. But if you are the league, you are very concerned with the fact that small market teams just don't seem to win very much. You have to go back to the Kansas City Royals doing it, and their championship window closed almost immediately after that. Meanwhile, the Dodgers have just amassed this dynasty, although they are down zero to two right now to the Brewers. See, I haven't paid attention, Neil. Yeah, I was going to mention the Brewers are up to zero. Really interesting looking at parity stats from baseball, compared to the other leagues, because baseball is the only of the four major sports leagues that doesn't have a salary cap. And when you look at the numbers, actually, the parity is pretty much the same everywhere. The biggest teams aren't winning the World Series. MLB has had seven different World Series champions over the past decade, compared to six Super Bowl winners in the NFL. So many of those were the chiefs, and eight NBA champions, 28 of baseball's 30 teams have made the playoffs at least once in the past 10 years, compared to 31 of 32 in the NFL and 29 of 30 in the NBA. And I hate to throw my team under the bus here, but you just have to look at some of the biggest spenders in the league. They haven't been doing well at all. The Phillies, Yankees, and Metz are in the top five of MLB's payroll rankings. And while the Yankees made the World Series, or made the playoffs, they got blown out by the raise. And the Metz and Phillies are also not playing well at all. So maybe that's another argument to say that, you know, maybe spending money doesn't necessarily equal championships. I just love the final stat here is that the Dodgers spend more on their starting pitchers than the other three teams combined by more than 52 million dollars. They're pitching lineup is almost as expensive as all the other teams total. And yet they're losing. So there you go. Beautiful baseball. They're losing. The big question here after the season ends is will there be another one because this salary cap question is going to come to a head when this CBA expires in December. And many people think they're just won't be one. So enjoy now. All right, it's Tuesday, but definitely giving Monday vibes. So here's what you need to know to stay ahead in the week ahead. If you missed watching tech executives gesture awkwardly with their hands while introducing new products, well, you're in luck today. Apple is hosting an event called Welcome Home. It's attempt to take over your house. Well, Apple's got billions of phones and pockets for people on the go. It's largely seated the home to rivals Google and Amazon. But armed with a revamped Siri new CEO John Ternis thinks now is the time to pounce will find out more specifics later today. But the centerpiece hardware of Apple's smart home plans is expected to be the home view. What Bloomberg describes is a Siri command center for the Apple powered households. Yeah, Apple insider Mark German describes this as plugging a hole in Apple's ecosystem. He says that Apple has all the ingredients for success in the smart home. You have an iPhone, you have a smart speaker, you have TV devices, but forever reason they haven't been able to cook the full meal yet, connect all of those devices. But I get nervy when I hear Siri command center because we're all still just so scarred as to how dumb Siri has been in the last decade. So now I have to let it run my home. Yes, I know it's revamped. But you got to show me you got to address these trusted issues. Neil before I turn over my home to Siri. Have you downloaded the new software? I haven't yet. I haven't got around to it. I don't know. But yes, I do really check that out before, you know, bad mouth in it. All right. Next up, everyone's favorite time of the quarter earning season kicks off today with big banks, including JP Morgan and Goldman Sachs reporting their quarterly results hopes are high despite bond volatility, energy shocks and fears of AI disruption. The S&P 500 hit a record last week on the expectation that corporations are still raking in major profits. The bar is atmospheric and they will need to leap over it for the stock market to continue its rally. Yeah, futures are a little mixed as of this morning ahead of bank earnings. They are going to set the tone, but they might need to set an absolutely amazing one because the semi conductor and memory trade is looking a little wobbly right now. This morning, the very chip heavy South Korean Cosby index just hit its lowest level since July. So maybe need other parts of the economy start chipping in. Hey, good one. And finally, the movie everyone's talking about, but no one new existed two months ago will hit theaters on Friday. You can see everything Nathan Fielder's surprise documentary about disgrace there knows founder Elizabeth Holmes now is a nearly 50% chance to be nominated for a best picture Oscar according to CalShi didn't know this, but there have been just under a hundred Academy Awards ceremonies and no documentary has ever been nominated for best picture. I think the issue is I was reading some, you know, people more plugged in than me in the industry talking about this. The issue is when you're nominated for best picture, you're also racking up norms and other categories like editing cinematography, visual effects and most crucially acting documentaries inherently by definition don't have actors. So they've just never quite had the juice to make that case for best picture. Maybe this one though Nathan Fielder is so present in it and it almost seems like he is acting in it that maybe it will get over that hump that no other documentary could before it. All right, that is all the time we have. Thanks so much for starting your morning with us and have a wonderful Tuesday to share your thoughts on the episode or anything else send an email to Morning Brew Daily at Morning Brew.com or DM us on Instagram at and Be Daily Show. Let's roll the credits Emily Mill iron is our supervising producer. Ray Melu is our senior producer. Our producer is Olivia Graham and our associate producer is Olivia Lake Technical Direction by Nina Miller. Her makeup is not going to use this fiber optic cable excuse every time for skipping work I know it and our show is a production of Morning Brew. Great Saturday nail. Let's run it back tomorrow. 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/BorningBrew.