marketers tell us if this sounds familiar you invest in something that seems incredible like millions of views but then don't see any revenue instead invest in what looks good to your cfo linkedin ads generates the highest row ads of all major ad networks spend 250 on your first campaign on linkedin ads and get a 250 credit just go to linkedin.com slash mbd that's linkedin.com slash mbd. Terms and conditions apply. Good morning, Bird Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, Harvard is cracking down on great inflation. Meanwhile, real inflation hit a three-year high. It's Wednesday, May 13th. Let's ride. Good morning and happy Wednesday. Toby, my birthday isn't for another few months, but I already know what I want, so please write this down. LEGO just revealed one of its biggest sets ever, Minas Tirith, the capital of Gondor from Lord of the Rings. Coming in at 8,278 pieces and 10 minifigures, it's the biggest Lord of the Rings set ever and fourth biggest all time behind the Eiffel Tower, Titanic, and Death Star. The price matches its scale. The set goes on sale June 4th at a price of $650. I'm literally going to build this instead of going to therapy. Am I wrong in saying that Lego prices have gotten out of hand? Is that a crazy take? Because it is clear that Lego has started catering to offals, which are AFOLs, adult fans of Lego, more so than the kids. Whatever happened to good old Bionicles that were $15 and you could just go build and collect those? I think this set is very cool, obviously, but I'm not a massive Lord of the Rings guy. So when it comes to the pantheon of greatest big Lego sets of all time, I'm putting Death Star and Millennium Falcon as a one in two on my big board. It's hard to beat, you know, just I remember my friend who built the Millennium Falcon for the first time. That was the coolest guy ever for like months after that. I don't know if Minas Tirith is going to hit as hard as those. It will for some people like me. And remember, August 21st. Okay, and now a word from our sponsor, AT&T Business. Toby, how much would you say your business relies on good internet connection? Not at all. I'm the only business owner from the modern age who doesn't use the internet. Are you being sarcastic? No, I was cursed by a witch and now I sound like this forever. Well, for everyone else out there relying on good internet, there's AT&T Business. Strong connectivity helps teams stay productive wherever and however work happens. Your business keeps moving even when you're not at work. I have to find that witch. Explore connectivity solutions that transform along with your growing business at att.com slash small business. Like you, after eating a gummy and having to interact with strangers, inflation has gotten uncomfortably high. The inflation report for April yesterday showed U.S. consumer prices rising at their fastest pace in three years, primarily driven by higher energy prices from the war in Iran. The Consumer Price Index jumped 3.8% last month, up from 3.3% in March and 2.4% in February. So that's about as clear a picture as you'll get of inflation running hotter after the war in Iran began on the last day of February. But this isn't your first inflation report, Rodeo. You know that economists care less about that headline number, 3.8%, and more about core inflation, which strips out volatile energy and food prices to provide a better picture of underlying inflation. Well, that too is a bit worrying. Core inflation came in at 2.8%, which is the biggest jump since September. That indicates that those higher gas prices from the war are starting to filter into other sectors, lifting inflation across the board. And the best example of this is airfares, which are 21% more expensive than last year. That's a result of spiking jet fuel prices, forcing airlines to raise ticket prices for passengers. It all amounts to a U.S. economy where inflation is erasing your wage gains for the first time in three years. Wages were up 3.6% in the past year. Inflation's up 3.8%. You can do the math. That's negative earnings. I also want to talk about tomatoes because I feel like tomatoes are very emblematic of how inflation filters through an economy. First of all, Americans eat a lot of tomatoes, more tomatoes than any other vegetable outside of potatoes. And they have rised 15% for the second month in a row, almost 30% more than a year ago. And the reason why tomatoes are so expensive is nearly 90% of them come in from Mexico, and there's a 17% tariff on Mexican tomatoes. So that is one instance of why the price would increase. Then there's fertilizer costs. Just go down the supply chain. You have to grow tomatoes, and fertilizer costs can account for as much as 40% of a farmer's input costs. Diesel is needed to power the tractors. That's also a major cost. Packaging also uses oil. That is also a major cost. And then there's transport to actually get you the tomatoes to your doorstep. All of those inputs have gotten more pricey, either one because of tariffs or either two because of the war in Iran. And I do feel like that is just the perfect symbol of why inflation is just a runaway thing, not because of one particular thing. It's an amalgamation of a lot of things driving up the price. Yeah, and tomatoes are just one set of food category that's also going much higher. Coffee prices rose 19% in the past year. Fresh veggies, which includes tomatoes, were up 12%. Overall food prices were up 3.2%. And I didn't even mention beef prices, which is not necessarily a result of the war in Iran or anything else. It's just that cattle herds are at their lowest level in 75 years. So you're starting to see the war in Iran and other factors at play contributing to a rise in not just food prices, but energy prices. When you're talking about what people spend on their daily basis, it's food and energy. So it's hitting household budgets really hard. And gas prices are also a powerful driver of inflation expectations, just how much people think prices are going to rise in the future. And that dynamic actually fuels inflation even more, because if you think prices are rising, if you think everything's getting more expensive, That leads to more aggressive wage demands, which could lead to price increases across the broader economy. So it's almost a self-fulfilling cycle at that point. Let's zoom out to the broader economy, too. The White House is under a lot of pressure right now because it staked a lot of its economic credibility on bringing costs down. The Federal Reserve is also now in a tough spot right now. Kevin Morse is coming in, taking over for Jerome Powell as chair of the Fed. Right now, investors see very little chance of another interest rate cut in 2026. But Wors is under pressure from Trump, who's under pressure from his voter base when it comes to inflation. So that is something to keep an eye on if those expectations for a rate cut or a rate hike changes going forward because inflation is still just running stubbornly high Yeah And maybe the big takeaway is that for the past couple of years inflation has been running hot But at the same time wages have been even better Wages are growing faster than inflation for the past three years. But then just because of this inflation report, we found out that wages were up 3.6 percent. Inflation is up more 3.8 percent. So for the first time in a couple of years, we're now seeing people have negative earnings because inflation is completely eating away at their paycheck and then some. Moving on, we've seen how the war in Iran is spiking inflation in the United States, but it's also having other unintended side effects, like causing a Japanese potato chip giant to go grayscale. In one of the strangest examples yet of the war's global economic impact, Japanese food company Calbee announced that the color packaging for some of its most popular products would be swapped to black and white. The reason is that the closure of the Strait of Hormuz has caused a shortage of naphtha, a crude oil derivative used to make commercial printing inks. So less naphtha means less color ink, and Calbi wants to make sure it doesn't run out. Calbi isn't some small beans either. They're like the Lays of Japan, controlling 50% of the overall snack market and 70% for potato chips. Calbi said that the new black and white packages will hit stores on May 25th and not affect the quality of the product inside the bags. Toby, I think if you looked up globalization in the dictionary, you'd find a war in Iran has resulted in a Japanese potato chip company going black and white with its packaging. I encourage you to look up the black and white packaging because it feels so wrong. That is how conditioned we've become when walking down the snack aisle to expect these bright colors. The black and white truly seems like a glitch in the matrix. The government is a little confused though because they expressed puzzlement at Calbee's move. Prime Minister Sinead Takahachi said that Japan has secured enough naphtha and oil derivative products to last into next year. So they're basically saying you're being a little dramatic, Calbi, and we don't really know what this shortage that you're speaking of. That being said, it's not just Calbi. A Japan-based printing ink manufacturer said in April that it plans to raise prices for its ink by 20%, citing the naphtha shortage. A toilet maker, Toto, said that it temporarily suspended orders for its plastic baths because of higher input costs as well. So maybe Calbee's being dramatic, maybe not. It is very funny to see black and white chip bags. And do you think this is gonna affect sales? I mean, there's nothing like walking down a snack aisle and seeing Doritos, you know, red right in your face and the Lay's yellow and so iconic. And really a lot of consumer research has been done on their psychology. And it's very important, the color of the packaging, on whether you pick something off the shelf and put it in your cart. Here's my big brain marketing take is that it's gonna stand out even more in the aisle because if everything is colorful, then nothing is. The black and white is going to be very, very apparent on the shelf. So maybe it's just like a weird mad, mad scientist experiment where they want to see if it actually does increase sales. Everything about human psychology says no, it won't because we like pretty bright colors. But Toby says yes. I say yes. I'm just curious to see the data on this. It's like it's a very fun, interesting experiment. Moving on in the trial pitting Elon Musk versus Sam Altman with the fate of OpenAI hanging in the balance. It was Altman's turn in the hot seat as he took the stand to testify yesterday. Elon Musk is suing OpenAI and Sam Altman, arguing that OpenAI abandoned its founding mission by attaching a for-profit company to the original non-profit, stealing a charity as Musk frames it. Musk's lawyer, Stephen Molo, looked to make Altman squirm with his line of questioning heavily geared towards trying to betray him as untrustworthy. One of the first questions out of his mouth during cross-examination was, are you completely trustworthy? To which Altman responded, I'd like to think so. Mello also brought up various news hits, including a recent New Yorker article titled, Sam Altman may control our future, can he be trusted? To once again cast doubt on Altman's relationship with the truth. Altman's team, on the other hand, has tried to paint Elon as the one who originally wanted to abandon OpenAI's nonprofit roots by pushing for it to become part of Tesla before he left. A key moment, according to Sam Altman's testimony, is when OpenAI founders asked Musk, what happens to control of the company if you die? Altman says Musk responded that control would pass to his children, and that became a turning point with Altman saying, I was not comfortable with that, and also cuts directly against Musk's central argument that OpenAI betrayed its original mission. Neil, the general vibe was that Altman came off as a little less combative than when Elon testified last week, but that may have almost worked against him because of his reputation as a smooth social operator. There are still lots up in the air as both sides fight for control over what they consider to be civilization-altering technology. In terms of who has the most to lose in this trial, it's Sam Altman, not even close. Elon Musk wants over $100 billion in damages. is he wants OpenAI to have to unwind its for-profit initiative and become a non-profit again. Remember, OpenAI is in a race with Anthropic and Elon Musk's SpaceX, which owns XAI, a rival to go public. And if OpenAI were forced to revert back to a non-profit, that would completely derail its IPO plans. And then Elon Musk also wants Sam Allman and Greg Brockman, OpenAI's president, just booted from their leadership positions. So if there's anyone is going to be nervous about testimony. And we've seen a flock of tech executives take the stand so far this trial. It's going to be Sam Altman. So he apparently did come off as a little nervous at the beginning. And who wouldn't when the lawyers literally trotted out all of his former coworkers and said, look, he called you a liar. She called you deceptive. He called you a liar. She called you deceptive. So apparently got a little smoother as the day went on. The other thing that Elon Musk's lawyer did is point out Altman's personal financial conflicts. Sam Altman does not have equity in OpenAI. He always says that. He's like, I'm not in this for financial gain. But then Molo went down Altman's investments in companies that could benefit from OpenAI ties. Those are things like Helion Energy, which has deals with Microsoft and OpenAI. Cerebris, which is a chip manufacturer that's in business with OpenAI. It's about to go public. So even though Sam is not directly benefiting from OpenAI and the equity there, the fact that OpenAI is boosting these other companies that Sam Altman does have equity in, that is what Elon Musk's lawyer tried to say, dude, you are going to profit for this just indirectly. Again, trying to paint this picture of him as an untrustworthy operator. And Sam Altman also tried to paint that picture of Elon Musk. Remember, these two guys do not like each other. They worked together back in 2015 through about 2020, but now there's a lot of animosity. And Altman had some funny stories about Elon Musk. He said that Musk was a huge damage to the culture of OpenAI in its early years because he just put so much pressure on employees And then he talked about one meeting where there was talk of folding OpenAI into Tesla and said that there was, quote, a long, long period of time with Elon showing us memes on his phone. The court reporter asked him to repeat that last part. And so he had to say memes on his phone very loudly in the courtroom. That's all kind of funny, but I want to take the bottom line from Ina Fried, who's a reporter, tech reporter at Axios, who's there and just said, to sum it up, so far, we have one more day of the trial. The testimony showed how hard it is for any AI leader to claim the moral high ground while also fighting for money, influence, and control. Neither side has offered a clean, reassuring story about AI governance. All right, we're going to take a quick break and come back with a story about great inflation right after this. Neil, let me tell you something about bond markets. I'm all ears. They are confusing. Insightful as ever. But yes, capturing value in fixed income is not easy. Thankfully, Vanguard bonds are institutional quality. That means top grade products across the board. Vanguard is able to invest across all kinds of sectors, maturities, and geographies, which means they can spot and act on opportunities that others might miss. So check out Vanguard.com slash audio. That's Vanguard.com slash audio. All investing is subject to risk. Vanguard Marketing Corporation Distributor. Hey, Toby, here's a bill for you. It's my fee. What? How am I supposed to pay this on short notice or at all? That's a question countless employees ask themselves when they're saddled with an unexpected medical bill not covered by health insurance. And understandably, financial stress can cause lost productivity. This missed work can really cost employers annually. That's why Aflac works to pay claims quickly and accurately to help foster employee peace of mind. And offering Aflac plans comes at no direct cost to businesses. Toby, I take cash or card. Learn more at aflac.com slash morningbrewdaily. That's aflac.com slash morningbrewdaily. Toby, would you say you're authentic? You know I'm the real deal, Neil. Well, you and iHerb have that in common. iHerb is a trusted wellness specialty store that sources 100% authentic vitamins, supplements, sports nutrition, and so much more directly from brands with zero third-party sellers on the site or app. And iHerb stands behind every purchase. If something doesn't meet your expectations, they make it right with easy returns and simple refunds. Head to IHERB.com slash MBDaily and use code MBDaily for 20% off your purchase. That's IHERB.com slash MBDaily. Getting into Harvard is hard. Getting straight A's at Harvard? Much easier. A proposal to fix the scourge of great inflation at the world's most prestigious university went to a vote yesterday after years of runaway A's. Back in 2006, about 30% of Harvard grades were A's. Fast forward to 2025, and that number jumped to 60%. The new proposal, which faculty will vote on over the course of the next week, wants to bring things back into natural order, capping A's to no more than 20% of a class plus four additional students. Battle lines have been drawn on classroom blackboards, with many pointing to grade inflation problem as emblematic of a lack of merit in higher ed. But students have pushed back, saying that capping A's just adds stress to their lives by pitting them against each other. What is clear, though, is the problem has gotten difficult to ignore. Median college GPA in the U.S. has risen more than half a point over the past three decades. At Harvard, last year an award for the top GPA in a class traditionally given to one senior resulted in a 54-way tie instead, Bloomberg writes. Neil, we don't know if the proposal will pass, but if it does, other schools could follow Harvard's lead. We spent the previous half of the show talking about stubbornly high inflation, but grade inflation is just as prevalent. Some of these numbers are pretty hilarious. I'm not going to lie. To earn summa cum laude at Harvard last year, graduating seniors needed a 3.989 GPA. Meanwhile, I graduated summa cum barely. But I was curious, why is this happening? Well, why is there grade inflation at Harvard and a bunch of other schools as well? It seems like it's sort of the anti-Adam Smith. I don't think Adam Smith got this one wrong because everyone is acting in their self-interest and it's simply not working. So universities themselves are incentivized to keep grades high because if you have higher grades as a student, then maybe you look better to a potential employer. And then Harvard can say, look, at all these amazing jobs that our students are getting after graduation. And then on the professor's side, where this is most acute, professors are also incentivized to give out good grades because they are judged by, in many cases, student reviews. And if you give someone a C or a D, they're going to probably give you a worse review than if you gave them an A or a B or at Harvard just simply an A. And they're thinking about their own job prospects and whether they want to get tenure and all that stuff down the line. So it seems like the forces of self-interest are working to create a paradigm at Harvard where 60% of people get A's. And Princeton already tried this. So we do have a pretty good A-B test. Back in 2004, they cracked down on grade inflation as well. They wanted to limit A-level grades to 35%. And the result was students absolutely hated it. The university eventually abandoned it because even though Harvard and Yale were getting mocked for handing out easy A's, they were still getting the same outcomes. Their students were still going to elite jobs. They were still getting those top grad school placements. So you are right. All the self-interest is aligned to handing out A's. Why would it change? Students do have plenty of material and ammunition to push back on this because they may avoid the easier or they may avoid the more difficult majors if getting an A becomes more difficult. So you just start to go down different paths. It starts to warp what people actually want to study if you know an easier A lies around, you know, maybe – I'm not going to call out a major, actually. I was going to say English. I was ready to go to war with you, Toby. I was going to say English because, you know, that's what I was. And I went to Brown, actually, which got rid of grades for a lot of classes altogether, which is a different conversation altogether. But I do think that right now is a current moment with a lot of societal factors that are piling in that will make probably this grade inflation crackdown happen. And because Yale is doing the same thing, they want a campus-wide mean GPA target of 3.0, which is a far cry from that sumer cum laude number that you mentioned earlier. So I don't know if it's going to pass. It seems like students are just really against this. Most professors are against it. But right now, it seems to be the most momentum there has been since that original Princeton crackdown back in 2004. OK, let's sprint to the finish with some final headlines. Remember how GameStop launched a bid to buy the much bigger eBay for $56 billion? eBay has replied and it shows how the worst she can say isn no In a scathing letter eBay wrote to GameStop CEO Ryan Cohen The board with the support of its independent advisors has thoroughly reviewed your proposal and is determined to reject it We have concluded that your proposal is neither credible nor attractive. They cited uncertainty around the financing of the deal, operational risks, and GameStop's governance for brushing off Cohen's overtures. There sure is a lot of uncertainty around how Cohen would even pay for eBay, a company nearly five times its size. And in TV interviews, Cohen has struggled to explain where this $56 billion would come from. But even though eBay rejected the deal, this might not be the end of the story. Cohen's pledged to do whatever it takes to acquire eBay, including going hostile and taking his offer directly to shareholders. Someone has to use this at the bar if you get hit on by someone that you don't like. Don't say I have a boyfriend. Don't say I have a girlfriend. Say your proposal is neither credible nor attractive. Just such a good line right there. But we did see this coming. Part of the issue is GameStop's bid relied very heavily on TD Bank pledging $20 billion towards making this takeover happen. But that was contingent on the merged company being considered investment-grade by at least two major ratings agencies. That matters because investment-grade companies, you can borrow money much more cheaply, etc., etc. But the TD letter was non-binding and moodings, which is a rating agency called the deal credit negative. So it really just shows how different of views both of these people have about their businesses. Cohen's view is eBay is this very bloated, inefficient dinosaur that can be radically streamlined. eBay's view is like, hey, we are doing pretty dang well. These costs are just associated with running a marketplace of this size. We don't really want your overtures. We do not find you credible nor attractive. This is not the last we're going to hear of this saga, but it is a very interesting twist. Spotify dropped an unexpected surprise yesterday, releasing an all-time version of your Spotify wrapped. Instead of a year in review, this is your whole music history in review, dating back 20 years to when the platform launched. In addition to your top 120 all-time most played songs, it also tells you your most streamed artists, what day you joined the platform, and what the very first song you ever listened to was. In order to access the deep dive, just open the app and find the section that reads Spotify 20, your party of the years. If you don't want to access it, I do not blame you. I had a Kevin Hart Lil Yachty song in my top five most played songs ever, and now I wish I never checked. Neil, please tell me you had a more refined all-time Spotify rap. I did. I had maybe a little, it was maybe a little more refined than yours. My most played artist was Wolfgang Abadeus Mozart, the 18th century goaded composer, which is maybe why my Spotify age last year in Spotify Rapped was 92. I actually found this way more useful than Spotify Rapped because it gives you a playlist of the 120 most played songs that you've ever done on Spotify. And it was really interesting looking back through the eras of my life, like the eras of Taylor Swift, who did not really show up that much, unfortunately, and saying, oh yeah, I remember when I listened to that song all the time when I was in high school and I listened to that all the song all the time when I was in college and then post-college, I loved this album. So I thought it was a pretty cool scroll. And now I have a good playlist for my runs over the next few weeks. Well, give me your top song. Give me top, your first song you ever listened to. Give me the deets. This is weird. So my very first song was a song from Armin Van Buren's State of Trance. I like it. You know Armin Van Buren? Yes. Okay. So I was in a big. A little trance phase. Yeah, I was big in a trance phase. And that was in 2011 when I was in a sophomore in college. My most embarrassing song on the top 10 was How Far I'll Go by Moana. That was literally on mine as well. That's my 13th top song. I think it was like number six. I can't explain it. And then my most played song was eventually by Tame Impala. All right. You really do have range there. Those are three pretty different musical genres as well. My most listened to song was Sixes to Nine by Big Wild. That's pretty good. My sister put me on to Big Wild, and I thought it was what all the cool older kids were listening to. So went down that rabbit hole. My second was Cruel Summer, but a remix by LPGOV, which I play all the time in the office. This is not surprising. Yeah, not surprising. But yeah, it was, I realized I do not have a good taste in music. Like, let's just be completely honest because it was, I did not like going through the eras. There was no fun era for me. So this was sobering and I got to get my music taste a little bit better. Either way, cool feature from Spotify. You should definitely check it out. And finally, we close out every Wednesday show with Suggestion Box, the segment where Toby and I each share something we've been obsessed with. Hopefully you'll enjoy it too. Unlike in past weeks, my recommendation today is not going to help you live a more productive life. In fact, it's the complete opposite. I want you to turn off your brain and enjoy mindless fun. There's this guy named Neil Argyle, no relation, who makes a website with the most entertaining time-wasting games on the internet. I can't do it justice describing it for you, so you'll just have to visit for yourself. The site is simply neal.fun, N-E-A-L.fun. Poke around all the different pages and you'll be surprised and delighted for hours, if not days. Every once in a while, a Neil.fun game goes viral in the Morning Brew office and nothing gets done over that past, you know, the ensuing hours. It is fun. It is mind-blowing. I don't know how he comes up with this kind of stuff, but I heavily endorse that recommendation. And now it's time for my recommendation. And that is to loop in more bits to your life. So Neil and I's algorithms recently converged on this guy. I am Paul Conway, and he shares bits to use in your daily life. I'll give you some examples. When you're in the elevator and someone presses their floor, say, good choice. Tried this one the other day with only one other dude in there. It fell so flat, but I will try again with a more crowded elevator. Another one Paul recommends is when your joke doesn't land, point to someone in the group, preferably a stranger, and say, this guy gets it. Definitely going to be looping that one in. Someone in his comment section suggested saying, we heard you the first time when someone sneezes more than one times. That's a brutal one. But that is really, really good. I'm going to use that one. I know. There's some sneezers in the office. So just loop in more bits, a little bit more whimsy in your life. If you have some good bits that you use, please submit them as well in our comment section. That is all the time we have. Thanks so much for starting your morning with us and have a wonderful Wednesday. If you'd like to reach us, send an email to morningbrewdaily at morningbrew.com or DM us on Instagram at mbdailyshow. Let's roll the credits. Emily Milliron is our supervising producer. Raymond Liu is our senior producer. Our producer is Olivia Graham. And our associate producer is Olivia Lake. Technical direction by Nina Miller. Hair and makeup somehow got a B at Harvard. Devin Emery is our president. And our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.
