SpaceX's Civilian Spacewalk & Peloton Back From the Dead?
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Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, how economic history could be made at a hunting lodge in Wyoming. Then another billionaire is blasting off to visit space, but this time they're planning to spacewalk. It's Friday, August 23rd. Let's ride. ♪

That is a wrap on the Democratic National Convention. Last night, Kamala Harris officially accepted her party's nomination for president and gave a 45 minute speech, making her pitch to American voters. But ahead of the speech, the Internet was buzzing over potential appearances by a special musical guest, Taylor Swift, Beyonce. But in the end, neither showed up.

up. Toby, how did this happen? How did this rumor even start? This turned into a very fascinating case study in how the internet does spread rumors. I mean, it started from a single anonymous blue checkmark account on X with 600,000 followers. They tweeted out how they were sworn to secrecy, but a

big guess was potentially on the cards. But then things really got out of control when the White House political director tweeted out a bee emoji, seemingly confirming rumors that it was Beyonce that would be the surprise guess. But then she walked it back saying the bee meant nothing and used the classic excuse of my kid accidentally tweeted it out. That's always a classic. By that point, though, it was too late. The rumor mill was fully turning. TMZ actually reported as well. So it was just

Interesting to see how once a snowball reaches critical velocity, it's very hard to put back. But yeah, no special guest. So if anyone stayed up late, apologies for that. Now a word from our sponsor, MassMutual. Neil, you're a sports fanatic.

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Equity starts with knowing the facts. Visit massmutual.com for more information. Okay, let's begin in Jackson Hole, Wyoming, where everyone in the business world is locked in with the focus of a 10-year-old playing Mario Kart. That's because the resort town is currently hosting the most important economic event on the calendar. And later this morning, Fed Chair Jerome Powell will deliver what may go down as a history-making speech today.

To learn why, rewind to 2022. The economy was hotter than gas station coffee. Job growth was surging, but so was inflation. At a speech at Jackson Hole that year, Powell warned that he had no choice but to jack up interest rates to tame inflation and warned Americans that they'd feel economic pressure

pain as a result. The S&P 500 plunged 3.4% that day. Fast forward two years and the pain that Powell predicted hasn't really materialized. In the span, the Fed raised interest rates to 23-year highs to slow the economy, but consumers powered through, the job market was resilient, and inflation has dropped to almost normal levels.

So today, Powell will sing a totally different tune than two years ago. We'll likely talk about the plan for lowering interest rates. While inflation has been put on a leash, the jobs picture is showing signs of weakness. So the Fed's priority has shifted from inflation to preventing unemployment numbers from growing. Toby, what do you expect to hear from Powell today? Well, one key stat that I will be looking at is in Jerome's

Powell's Jackson Hole speech last year, he used the phrase labor market just 13 times. Compare that to his use of the word inflation, which he said more than 40 times. I would imagine that the pattern will be reversed this time around. The labor market and the revision that happened earlier this week is definitely the most important things right now for Powell. But I think you're right. It's helpful to go over what has happened since the last Jackson Hole speech. The employment state

rate sat below 4%. Now, it's ticked up to 4.3%. Before that meeting a year ago, more than 200,000 jobs had been added in August. This latest jobs report, just 114,000 jobs have been created. It's very interesting to see the parallels from 365 days ago. Definitely, inflation is not

probably the top priority on Jerome Powell's to-do list right now. Right. So investors will be looking to hear what he has to say about lowering interest rates and more specifically, how fast and how much he will lower interest rates. Expect him to be, he's not going to be very specific about this. Most Jackson Hole speeches are actually more high level, long-term intellectual economic policy stuff. And he doesn't really talk so specifically about

Thank you.

if he gets more aggressive, and this would be because they are actually really concerned about the labor market deteriorating very quickly. They could bump that up to potentially a 50 basis point increase or decrease, and that would signal something way more aggressively. And if he says that they will need to be more aggressive, I don't see the stock market reacting pretty well to that. I am also interested in the tone Powell is going to strike, because are we lowering rates

to get ahead of weakness or are we reacting to weakness? So in other words, are we taking, is the Fed taking preemptive action rather than reactive? Typically their moves have always been the latter and it's just over history. It's mostly like we have seen this data and now we are reacting. This is like we're seeing cracks forming. Do we want to get out ahead of it? So it's a slight nuance there, but I think the size will also tip us off to what he's actually feeling. Just to zoom out to the stock market too. Remember, we're sitting close to all-time highs today.

despite the bloody money that we had a few weeks ago. And that has been, we've been kept afloat by the belief that rate cuts will be confirmed today and that it's also been a pretty solid earnings season. If anything is hinted at to the contrary, that's when we might see some faltering. We might see the stocks that have been kept afloat by this hope kind of be deflated a little bit. So that's just another thing to keep an eye on. Yeah, a truly pivotal speech today. But it is also worth wondering, like,

Why are they in Jackson Hole? I mean, this is a hundred of the top economic officials, not just in the country, but around the world. They all fly out to Jackson Hole, which is this resort town in the Tetons in Wyoming. Like, how did the center of the economic world get there every single August? And it's because

The Kansas City Fed was putting on this more agricultural conference every year, but they wanted to sort of beef up their speaker list. So they wanted to get Fed chaired Paul Volcker at the time. This was in the 80s. And they're like, how do we get Volcker to come speak at our little conference here? So

He is a very avid, he was a very avid fly fisherman. So they thought, okay, let's put in Jackson Hole. Like this is the fly fishing capital of America. Maybe that'll convince him. And sure enough, he just shows up with his fly fishing gear on that first day, ready to speak. I love that story.

Some people are good at walking on water. Some people want to walk on sunshine. But tech billionaire Jared Isaacman, he wants to walk in space. And as is usually the case when you're a billionaire, Isaacman is getting his wish. On a SpaceX mission dubbed Polaris Dawn that is expected to launch this upcoming Monday, Isaacman and three others will push the boundaries of what civilians have done in space by attempting a spacewalk for the first time in civilian and SpaceX history.

Isaacman is funding part of the mission alongside SpaceX and will spend a total of 15 to 20 minutes outside conducting experiments and testing out new spacesuits in the process. This is a big deal for everyone involved, but especially SpaceX.

It has plenty of experience with human spaceflight at this point, launching nine crewed NASA missions and four private crew ones since 2020. But a civilian walking in space, it's a whole different ballgame, Neil. This is the total opposite of the Joyride.

joyrides we've seen billionaires take to space. So I looked up how high a blue origin flight goes. This is what like William Shatner, Michael Strahan, Jeff Bezos have done before. That goes to 62 miles above the Earth where this spaceflight is going. They're not doing the spacewalk, but they're going as high as nearly 800 miles above Earth. And they're doing this spacewalk around 430, 450, 435 miles above Earth. This is

just complete leaps and bounds, way more significant, way more risky. It's actually pushing the envelope forward with what we can do in space. So this has, like, think of the space tourism stuff that Blue Origin and Virgin Galactic are doing as completely different than what's happening here, which is,

a very ambitious thing for any astronaut to do, let alone from a government agency or a billionaire. There was a lot of hurdles to this mission too because it's very complex. One big hurdle is the suit itself. SpaceX wanted to develop a suit that could obviously withstand walking outside in space, but also they wanted a much more freeing suit where you can move around more easily than maybe the bulky ones we've seen in the past.

Also, you have to reinforce much of the interior of the actual spacecraft, which is the crew Dragon. Because to spacewalk, they're literally just going to open the doors and everyone inside will be exposed to the vacuum of space, not just the person spacewalking. So that's a big thing. Another thing you have to worry about is solar radiation. They're traveling so high that if a

particularly big solar flare hit, it could bombard everyone with these dangerous charged particles. So that's just another thing that you don't have to worry about if you're only 62 miles above space. But as you get further and further out, it becomes more and more dangerous. So just a lot of logistical things to think about. But obviously, it...

we call space the new frontier, but this is pushing the frontier even further, especially for civilians. Yeah, I mean, as soon as they get to space, before they're doing this spacewalk, they have to start this pre-breathe process, which will take 45 hours, and it's basically what, or it's a very exaggerated version of what scuba divers do because of decompression sickness to get ahead of that. So they need to

purge all of the nitrogen from their body through, I don't know what this process looks like. I haven't watched YouTube videos, but over 45 hours, they need to do these breathing exercises to purge all of the nitrogen from their body so that when they go into space, it won't cause sickness. So that is a big part of this that they've been practicing for over a year now. Right. Because SpaceX's longtime goal, like this is Elon Musk's big thrust for the entire project, is that he wants to get

thousands, hundreds of people living and working in space. But right now, a huge amount of people are affected by space motion sickness. 60 to 80% of all space travelers experience this. And they've just candidly said, like, if we don't solve the space sickness problem,

You have 60 to 80 people throwing up. That means everyone else is throwing up too. We're never going to become like a multi-planetary species. So you're right. That is a big priority for this particular mission. Yeah, they are going farther than any astronaut has gone since the 1970s when the Apollo missions went to the moon. So meanwhile, those two astronauts are still on the ISS. They're going to wave. They're going to wave when they go by. Maybe we should bring them home sometime soon.

Sports drafts are as American as apple pie. All the teams get together and one by one, they pick out the plucky youngsters to join their squad and hopefully lead them to a future championship. But one American league is doing the unthinkable. It is getting rid of the draft. In its new collective bargaining agreement with players, the National Women's Soccer League is eliminating its draft, becoming the first U.S. Pro League to take this monumental step.

So why not? Why no longer draft players? Well, the NWSL says that drafts are designed to limit young players negotiating power and force them to play for teams they may not want to. Instead, it wants to maximize player freedom. But there's also a business strategy to this. Also, the NWSL is in a fierce competition for overseas soccer player talent and the Europeans are

They don't have a draft. Players there can sign with teams they want to play for. In fact, players who have been drafted by NWSL teams have left the country to play abroad because they thought it would be a bad fit where they were drafted. So by eliminating the draft, the league wants to put itself on the same competitive playing field as top women's European leagues. Maybe an even bigger question, Toby, is...

Will this move spur other U.S. leagues to rethink their drafts as well? It is a wild concept because you're right. Drafts are just such an inherently American thing. It feels weird to think about leagues without them, but a draft is a little bit of a bizarre concept. As a player, you have

no say over where you're going, where you're about to apply your trade, where your career is going to take off. And oftentimes, players get put in these bad situations. Like the Jets. If you get drafted by the Jets, you have to play there. That's turning around there. It's not the worst place to land these days. But yeah, essentially, the NWSL looked at it and said, this is a very antiquated model. The initial idea behind drafts was to make it so all the best players didn't flock to all the best teams and help maintain competitive parity. But at the end

what they're doing instead is just empowering players. They're saying, this is the new era that we want to enter into. This is what the world is doing. Let's do it here in the NWSL. It's definitely a little bit of a risk because potentially all the best players say, I want to go play for Angel City FC. I want to go get the biggest contracts, but that is how the rest of the world operates when it comes to soccer. They'll still have salary caps. They'll still have things that do maintain a bit of competitive parity, but I think player empowerment is never a bad idea. So it

This is great from the NWSL. Yeah, I mean, this is just an acknowledgement that they operate in a very different landscape than maybe other sports leagues in the United States that are more monopolies. I mean, the NFL is a monopoly over its sport. Like, no other player is going to play for a football squad outside of the NFL. So they can have this draft...

I don't think the NFL draft is going anywhere. It's like a multi-billion dollar event now where 400,000 people are coming and millions more are watching on TV. But the NWSL is competing with a global labor market. There are

top European leagues and top European teams, and they're in a fight for talent. So they really have to boost their game and hand over more concessions to players to end this big rivalry for talent because a top Brazilian player can either play in England or France or they can play in the NWSL in the United States. So that is a big reason why they're ditching the draft. And I do just want to say, we talked about

Jerome Powell either taking proactive or reactive action right now. I think the NWSL is taking proactive action because it is still one of the top leagues in the world. We have to be clear about that. I mean, if you just go back to the Olympic final in Paris, 26 NWSL players featured in that match. Obviously, the U.S. was playing there, so it's skewed. But it is still very much a top league. They want to remain so, and they think that this is the path towards doing that. Up next, we've got Stock of the Week, Dog of the Week coming your way.

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Welcome to Stock of the Week, Dog of the Week, the Friday segment where Toby and I pick one stock that's as crisp as the cold beer in your fridge and another that's as stale as the one sitting in your trunk for four months. I don't think this company has ever been Stock of the Week before, so put your hands together and please give a warm Morning Brew Daily welcome to Peloton. Peloton.

We've got a pulse, folks. The fitness company that has utterly collapsed since peak COVID had its best day ever on the stock market yesterday with shares skyrocketing 35%. That's because investors saw signs of that long-awaited turnaround in its latest earnings report. Losses came in less than expected, while sales grew for the first time in more than two years.

Peloton's revival strategy hinges around this thesis. Not many people are buying our new bikes fresh off the lot. So how do we make money from the ones already in the wild? Facebook marketplace is flooded with old Peloton bikes going for at least $1,000 cheaper than the retail price.

One idea, focus on the Peloton app that costs $44 a month. Get people hooked on classes that don't require actual hardware. This seems to be going pretty well. Though hardware sales fell 4% last quarter, subscription revenue grew 2.3%. Okay, here's another idea. Find a way to get a cut when someone sells their used Peloton bike.

Aha, Peloton is now requiring a $95 used equipment activation fee that applies to people who buy a Peloton machine directly from a previous owner. Toby, this company's CEO resigned in the spring and it just had its best day ever. Maybe anarchy is the way to go? The funniest part about this whole stock jump to me is that the sales growth that we experienced for the first time, it was 0.2%. Hey.

you'll take what we can get, hop on those stationary bikes, folks. We are going to the moon, but I get it. I mean, first year over year revenue growth since 2021. Also when they did it was significant too, because sales are typically lower in the summer. I mean, everyone is, this is what kind of crushed Peloton the first time around that everyone said, wait a second, I can go work out outside. Like I can go experience the sunshine. So they did it in the summer when most people are out and about focused on traveling. It's not even the holiday period. So I'm,

I'm back, baby. Peloton has had a rough go of it recently, but I think that these cost-cutting measures are finally taking place, and we're seeing a much more enthusiastic investor reaction. Enthusiastic, but you're right. It is a 0.2% sales increase. This company is still definitely in the dumps, and they're working through how to move forward

I really think the main question here is what to do with all these bikes that are just sitting in people's apartments that they don't want anymore. I mean, Facebook Marketplace and other secondhand sites are just flooded with all of these very cheap bikes. One estimate says that around one million Peloton bikes are collecting dust in homes around the world.

So, okay, you're not going to sell these because you've already sold them already. But like, if you're Peloton, how do you find a way to make money? So they put this like a $95 activation fee on it, which they say is, will lead to a better onboarding experience. People say that's just essentially a Peloton tax. And another way is, yeah, leaning into this

app, the subscription revenue, which for hardware purchased on the secondary market grew 16% year over year. So really dialing on that app and they're really opening up their ecosystem to a broader array of players. Previously, you know, the app and the hardware went so tightly together. It was very Apple-y, closed ecosystem. You could only access Peloton media on Peloton, but now they opened up to streaming services. You can watch

you know, anything, any show while you're on your Peloton. Then they just announced a partnership with Kindle so you can read your e-book while you're on the Peloton. So sort of separating the app from the hardware itself, I think, has been a smart decision. And then the final thing I want to call out is that they sell a treadmill. Sales of that grew 42% year over year. So maybe it's part of the running boom. I don't know. Maybe running will be the thing that saves Peloton.

Our dog of the week is Sonos, the maker of high-end audio speakers, but very low-end, oftentimes disastrous software. It recently rolled out its new app that has angered its loyal user base, destroyed the company's reputation, and cost it a lot of money. The release of the new app to control its speakers back in May was supposed to be the crown jewel of CEO Patrick Spence's plan to turn around the company and snag a bigger share of the $100 billion audio market.

But the new app was way worse. We could fill an entire pod with its shortcomings, but to name a few, the sound drops in and out randomly, volume turns up to the highest level then couldn't be adjusted, devices would just disappear on the app randomly, and even basic features like setting an alarm or a timer were missing. Neil, in the specialist audio business, customers are loyal,

but a vicious bunch. If they turn on you, you are done. And Sonos' stock is down 35% since the new app came out. This company can't really move forward with anything else until they fix this app. They've also delayed two new product releases recently.

which would have been perfectly timed for the holiday. People love buying high-end speakers for gifts for the holidays, and this is a complete disaster. They've lost almost $30 billion on this debacle so far. So all of their resources need to be going to fixing this app instead of pushing the company forward in other directions. So this is a big egg on the face of

of the CEO. He's apologized multiple times. He said, my push for speed backfired. They released this app before it was ready. There's been...

So much pushback in this high-end audio community, which is very fickle, and they can turn on you if you don't deliver a product. And Sonos has had a great reputation for a long time. I mean, it's considered one of the best speakers. If you want to outfit your home with just, like, the best audio quality, that is—you turn to Sonos. There's a very active subreddit. And the CEO went on that subreddit earlier this week, really into the lion's den to try to answer questions about

and the people pounced on him, and he just had to keep saying, we're sorry, we're working on it. We think we fixed a few bugs. We're going to keep releasing updates every two weeks. But it really is make or break for this company because their stock is down. There are plenty of other companies developing products like this, and they just need to get going with their product cycle again and not stop focusing on this stupid app that they released in 2020.

and butchered. Some analysts say that if they can figure out the app, Sonos still is the best in class for especially multi-room setups. No other smart speakers on the market does it quite like Sonos does. Remember, it's a very loyal community. They've been burned right now, but if Sonos can get its act together, I think potentially people still like this company. It's still a very loyal audience. You just have to win their trust back.

Now let's move from high fidelity audio streaming to chicken streaming. Chick-fil-A purveyor of nugs and waffle fries is dipping into the streaming game. Yes, Chick-fil-A is launching a streaming service. Deadline reported that it's working on

with a few production companies and studios to create multiple original shows for a streaming platform that would come out later this year. Initially, Chick-fil-A plans to lean into family-friendly content, including a rumored game show, but eventually they want to broaden out to original series animation and add some licensed content down the line. Neil, as I am saying this, I keep forgetting we are talking about a restaurant chain here. If I was Netflix, I'd be watching my back because...

For all its programming, it doesn't have Chick-fil-A sauce. What is going on here? Okay. Okay. So let's just start with the basics. Chick-fil-A is not the first non-media, non-streaming company to get into media. This is a playbook that's been developed by Airbnb and Lyft and recently Walmart bought Vizio, which is a smart TV maker, to get into this streaming space. That's a great thing.

That said, I don't get it. You're going to have to explain it to me. Is it to sell ads on the streaming service? But this it also comes at a time like when streaming is contracting, companies are spending far less on on shows because there's so much competition. Everyone's already subscribed to every platform that they're already going to be subscribed to. So for I just can't imagine anyone is going to be watching a Chick-fil-A game show when there's

so much other content to watch. So please, what's the argument? Well, I won't start with the argument. I'll actually start with why this is not so far-fetched for Chick-fil-A to actually do. Because remember, Chick-fil-A is owned by the Cathy family, whose family trust was actually big in the foundation of this company called Trillis Studios, which is this Atlanta-based studio that has worked very extensively with Marvel. So they do have some entertainment industry pedigree. They have the infrastructure to potentially set this up. But

I think you just have to, we're saying streaming platform, which is what is tripping a lot of people up. But if you think about it, like you mentioned Airbnb, these companies have produced one-off shows in the past to just showcase their product. And I think Chick-fil-A is saying we want to be known as like this family friendly, this Southern, this welcoming place. Like let's create some family friendly content to just

brought in the brand. So I would think about it more as a brand play. That being said, though, they did say that they wanted to buy licensed content. So maybe they are leaning into the streaming platform at all. It is a bit bizarre, but they have the ability to pull it off. They want to increase their brand in terms of reputation, how many people can come in contact with it. So

Yeah, it is weird, though. You have to remember, it's Chick-fil-A. It is a restaurant chain at the end of the day. Yes. Let's wrap it up there. Thanks so much for starting your morning with us. Have a wonderful Friday and an even better weekend.

For any feedback or questions, open up your email and fire off a message to morningbrewdailyatmorningbrew.com. And you are all our best promoters, so please spread the podcast with your network. Toby, who should our listeners share it with today? I want you to share it with a cousin you haven't spoken to in a bit. Preferably the crew.

cool one, but we'll take any cousin. Use it as a chance to reconnect. We're all about bringing people together here at MBD. Cool. Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer. Olivia Graham is our associate producer. Uchenua Ogu is our technical director. Billy Menino is on audio. Hair and makeup is on the market for a used Peloton if anyone has one lying around. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. I wish you all well.