McDonald’s Consumer Reality Check & Tariffs Head to the SCOTUS

Summary

Brew Markets Daily – Episode Summary Date: November 5, 2025
Host: Ann Berry (with producer/contributor John Crateau)

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Overview

This episode of Brew Markets Daily explores the current state of the U.S. consumer through McDonald's earnings, dives into key takeaways from Toast and Lemonade's results, recaps Rivian’s surprising quarter, and provides an accessible breakdown of a landmark Supreme Court case evaluating the President's emergency tariff powers. The conversation is lively, packed with data, informed commentary, and real-time reactions to market moves and regulatory developments.

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McDonald’s Earnings: A Consumer Barometer

[00:02–03:00]

• Central Theme: McDonald’s, as a symbol of American consumerism, released earnings with important insights about U.S. consumers’ financial health.
  • Host Ann Berry frames McDonald’s as a “bellwether emblematic of the state of the US consumer itself.” (00:15)
• CEO Commentary:
  • Christopher Kamchinski (CEO) notes a “bifurcated consumer base”:
    • "QSR traffic from lower income consumers declining nearly double digits... In contrast, traffic growth among higher income consumers remains strong, increasing nearly double digits in the quarter." (01:01)
    • Warns that “pressures will continue well into 2026.” (01:23)
• Investor Reaction:
  • While McDonald’s missed slightly on profit expectations, sales grew 3% for the quarter.
  • Positive investor response—the stock was up over 2%.
  • Ann Berry: “Total sales rose 3% overall ... helped by the chain bringing back its snack wraps for the first time in nine years.” (01:36)
• Value Meal Strategy:
  • McDonald’s reintroduced extra value meals in September, aiming to win back lower-income customers.
  • Next quarter’s results will be a test of this approach.
• Interesting Fact: Coca-Cola maintains a dedicated “McDonald’s division” due to the sheer scale of their relationship. (01:36)

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Earnings Spotlight: Toast

[03:37–08:14]

• Background: Toast provides end-to-end digital solutions (think payment, operations, marketing, loyalty) for restaurants.
  • John Crateau explains: “It’s not just the... point of sale. They’ve also got operations, digital ordering, marketing, loyalty programs, all for restaurants.” (04:26)
• Pivot & Growth: After laying off half its workforce during the pandemic, Toast rebounded as restaurants adopted contactless tech.
  • IPO’d in September 2021 at a $30B+ valuation.
  • Now at ~$22B market cap; “has pulled back as so many of those 2021 IPOs have done.” (05:29)
  • Locations: Up 23% YoY, ~156,000 venues now use Toast. (06:19)
  • Q3 Results: Revenue of $1.63B beat estimates; adjusted EBITDA at $176M suggests improving profitability.
• Notable Partnerships & Expansion:
  • Expanded partnership with Uber: enables Toast merchants to offer promotions and advertising via Uber Eats, with global intentions.
  • Surprising deal: Toast signed up Nordstrom, supplying POS systems for over 200 dining venues inside department stores.
• Stock Movement: Shares up 9% today, 25% YoY.

Memorable exchange:

• Ann Berry: “I’m going to hand it to this company... When you’ve got businesses that looked as though they really were at existential risk, when they pull off a pivot like that... is pretty extraordinary.” (05:29)

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Earnings Spotlight: Lemonade

[08:19–14:45]

• Company Focus: Lemonade uses AI and machine learning to underwrite insurance policies and automate claims, starting with renters/home, now expanding aggressively into car insurance.
  • Ann: “Insurance has actually been at the forefront of data analytics... Their bread and butter is making sure that they price risk, that they can ascertain risk accurately.” (08:19)
• How It Works: For car insurance, Lemonade uses data from drivers’ phones—measuring real behaviors, not crude proxies (like credit scores or marital status).
  • Kamchinski: “...let us track how you use your phone while you are driving... your own phone sensors can help inform Lemonade as to how careful of a driver you actually are.” (10:15)
• Market Reaction:
  • Stock up 35% today and 116% YTD, suggesting retail enthusiasm.
• Fundamentals:
  • “Enforced premium” (premiums on active policies) up 30% YoY.
  • Customer count up 25% to 2.9M people.
  • Still unprofitable but expects profitability by 2026.
  • Major driver: lowering “loss adjustment expense” (claims handling) via automation.
• Skepticism from Wall Street:
  • Despite the hype, 8 of 10 analysts on Yahoo Finance rate it hold/sell.
  • Berry’s analysis: “Lemonade’s been a bit of a darling if you look at its stock price... But Wall Street’s not actually saying lean into this name, at least not at this valuation.” (13:01)
  • 30% of shares owned by retail investors; Lemonade a “retail investor darling.”
• Privacy Debate:
  • John: “I don’t know that I like that product... the idea of constantly being evaluated is something that I might not appreciate.” (11:17)
• AI Impact:
  • Lemonade uses AI “for marketing, to try to figure out how to price a product... and to try to attack this particular expense line,” (14:16) meaning automation in the claims process.

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Rivian’s Earnings Surprise and the EV Market

[14:45–16:42]

• Headline: Rivian’s shares rocketed up to 25% on the day, beating both revenue and profit expectations.
  • "Gross profit was better than expected. Analysts had been thinking there could be a more than $60 million loss... It actually came in positive to the tune of $24 million." – Ann Berry (15:14)
• Sales Context: EV sales spiked due to tax credit expiry in September: Rivian sold 1300 vehicles in the quarter, up 32% YoY.
• Market Shifts:
  • The expiration of $7,500 tax credit caused a sales surge; drop-off expected in post-credit months.
  • Ford’s EV sales soared 85% YoY in September, but fell 25% in October after the credit expired.
• Product Roadmap:
  • Focus now on R2—the midsize, lower-priced SUV.
  • Completed R2 body shop; hope is R2 captures the “largest market opportunity” (16:10).
• Broader EV Competitive Struggle:
  • Traditional automakers like GM struggle to make affordable, mass-market EVs in scale.
  • Tesla’s “affordable” new model debuted with mixed reviews.
• Memorable moment:
  • Ann’s aside on the high-stakes Elon Musk compensation vote for Tesla ($1T package), with big funds publicly opposed. (16:42)

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Supreme Court Case: Presidential Tariff Powers

[18:34–22:43]

• Case Overview:
  • Supreme Court hears arguments on whether the President may unilaterally impose tariffs using the International Emergency Economic Powers Act (IEEPA)—a law not previously used for tariffs.
  • Trump administration cited “national security” (including the fentanyl crisis) as a basis for tariffs.
• Legal Stakes & Arguments:
  • Challenge: Critics (including states, trade groups, small businesses) argue this stretches “emergency” powers, since tariffs are taxes, which should be Congress’s prerogative.
  • Lower courts agreed—IEEPA doesn’t grant the President this economic authority.
  • Counterpoint: If embargoes are allowed, why not tariffs?
  • Ultimate issue: How far can executive power go in trade policy?
• Economic Stakes:
  • If tariffs are struck down, $190B in collected levies and related investments (e.g., South Korea’s $350B US shipyard commitment) become a logistical nightmare to unwind.
• Market/Policy Attention:
  • Treasury Secretary Scott Besant: If these tariffs are blocked, “others will be invoked instead,” citing Section 232.
  • Packed hearing: Treasury Secretary, Commerce Secretary, USTR, two Senators all attended, underscoring the stakes.
• Implications:
  • Supreme Court’s decision (expected in several weeks) could redefine the President’s trade powers.
  • Ongoing analysis and commentary expected as the legal process unfolds.

Ann Berry: “This moment... in the Supreme Court is a massive, massive legal moment... [with] huge implications.” (21:38)

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Quick Market Roundup

[22:43–23:53]

• Major indices: S&P 500, Dow, and NASDAQ all closed higher.
• Jobs Data:
  • Absent federal jobs data (shutdown), ADP reports private sector jobs up by 42,000 in October — a turnaround.
• AMD Shares:
  • Up 3% after a solid earnings release (data center revenues up 22% to $4.3B).

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Notable Quotes & Moments

• Ann Berry (on McDonald’s):
  • “Not just a symbol of global American consumerism, but a bellwether emblematic of the state of the US consumer itself.” (00:15)
• Christopher Kamchinski (McDonald’s CEO):
  • “QSR traffic from lower income consumers declining nearly double digits... In contrast, QSR traffic growth among higher income consumers remains strong...” (01:01)
• Ann Berry (on Lemonade):
  • “Lemonade’s been a bit of a darling if you look at its stock price... [but] Wall Street’s not actually saying lean into this name, at least not at this valuation.” (13:01)
• John Crateau (on Lemonade data tracking):
  • “I don’t know that I like that product... the idea of constantly being evaluated is something that I might not appreciate.” (11:17)
• Ann Berry (on Supreme Court case):
  • “This moment... in the Supreme Court is a massive, massive legal moment... which is why the courtroom was physically packed with observers.” (21:38)

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Timestamps for Key Segments

• 00:02–03:00 – McDonald’s earnings & consumer insights
• 03:37–08:14 – Toast: Resilience, recovery, Uber partnership, Nordstrom deal
• 08:19–14:45 – Lemonade: AI insurance, auto expansion, analyst skepticism, privacy debate
• 14:45–16:42 – Rivian: Quarterly beat, EV market disruption, R2 anticipation
• 18:34–22:43 – Supreme Court: Trump tariffs, constitutional limits of executive power, market reaction
• 22:43–23:53 – Market wrap: Indices, jobs data, AMD earnings

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In sum:
This Brew Markets episode is a concise, well-contextualized survey of market-shaping events: the evolving consumer landscape, disruptive companies in financial tech and insurance, up-and-down EV fortunes, and an under-the-radar but critically important legal battle at the Supreme Court with vast economic and political stakes. Ann Berry guides the conversation with sharp analysis, skepticism, and wry asides, making even arcane policy accessible and interesting.

Transcript

[Ann Berry]

Toast pops up, lemonade quenches and Rivian drives up interest in its new suv. Our take on their earnings. The Supreme Court hears arguments for and against Trump's use of emergency powers for tariffs. We break down this vital moment and its huge implications entails. From the golden arches, we see what McDonald's has to say about the state of the consumer. For Wednesday, November 5, it's Brew Markets Daily and I'm Ann Berry. More market details to come. But first, the golden arches, not just a symbol of global American consumerism, but a bellwether emblematic of the state of the US consumer itself. So all ears were on McDonald's this morning, the $219 billion market cap company reporting earnings and sharing its view on how consumers are holding up. Let's hear what CEO Christopher Kamchinski had to say.

[Christopher Kamchinski]

In the US we continue to see a bifurcated consumer base with QSR traffic from lower income consumers declining nearly double digits in the third quarter, a trend that's persisted for nearly two years. In contrast, QSR traffic growth among higher income consumers remains strong, increasing nearly double digits in the quarter. We continue to remain cautious about the health of the consumer in the US and our top international markets and believe the pressures will continue well into 2026.

[Ann Berry]

Well, that was a pretty definitive view coming from the guy who's perhaps uniquely positioned to see what global consumers and US Consumers are experiencing. Just to land that point, one post I spotted on X today reinforces the sheer scale of McDonald's and the credibility with which its executives are pine on sentiment. Coca Cola, with nearly $50 billion in global sales, has its very own McDonald's division. You literally go on the website, pull up the management team and there's a president of the McDonald's division dedicated to taking of Mackie D's. Coca Cola needs in 100 markets worldwide now. While missing expectations slightly when it came to profits, McDonald's top line resilience encouraged investors today despite the split in the fortunes of its customer base. Total sales rose 3% overall for the quarter, helped by the chain bringing back its snack wraps for the first time in nine years. And McDonald's is clearly focused on trying to shore up demand for from its lower income diners, reintroducing extra value meals in September. The next earnings report will tell if that strategy is working. Meanwhile, the stock moving up over 2% today. Coming up, toast and lemonade. No, not snack time, but two companies we're digging into as earnings unveil the latest and the Supreme Court's hearings on tariffs. Why this is a mega moment for for presidential powers. But first, Brew Markets Daily is sponsored by Public. Before the show today, our producer John mentioned a feature he found on Public.

[John Crateau]

That's right. Of course, you can build your own investment plan on Public, which consists of up to 20 assets, but you can also choose from themes in their marketplace. I saw healthcare, cybersecurity and energy transformation. Really helpful ways to discover new investment ideas. With either an investment plan you create yourself or one of their pre made ones, you can automatically contribute to those assets on a recurring basis.

[Ann Berry]

Public combines a wide range of asset classes with tools you need to build and manage your wealth, whether it's with stocks, options, bonds or crypto. So get started at public.com brewmarkets that's public.com BrewMarkets paid for by Public Investing.

[John Crateau]

Full disclosures in Podcast Description well, we.

[Ann Berry]

Remain in the thick of earnings season, so we thought to dig into a couple of the big ones that caught our eye today, including one company that one of our listeners asked us to unbreak. To unpack.

[John Crateau]

That's right. We heard from Andrew in New Zealand. He wrote into you and said, ann, can we please cover Toast?

[Ann Berry]

Isn't that amazing that we've got listeners in New Zealand and just so grateful that we've got folks all over the world clearly listening to us. So thank you to everyone listening from overseas to Brew Markets.

[John Crateau]

I love it. And so Toast, of course, is the company that probably many of us have seen when we've gone to make a credit card payment. It's that sort of cream colored nodule that you tap your credit card on. And just for myself, I saw for the first time three years ago when I was in a bagel deli and I'd never heard of Toast, the company. And so I thought, oh, is this branding? Because it's like Bread and Toast.

[Ann Berry]

Great name.

[John Crateau]

It's a great name. But obviously it's a digital platform. And it's, it's not just the, the part that the consumer inter gauges with the point of sale. They've also got operations, digital ordering, marketing, loyalty programs, all for restaurants. This is their, their business. And just a quick history. The company was founded in 2012 where they were coming up with payment systems. By 2020, they had grown. But then the pandemic hit. Restaurants. Restaurants were shutting down and the company, Toast, had to lay off 1300 people, which was about half of its staff.

[Ann Berry]

Yeah.

[John Crateau]

But once restaurants started opening back up in the pandemic, suddenly there was outdoor dining, there was takeout, contactless payments.

[Ann Berry]

Payments, absolutely yeah, yeah.

[John Crateau]

And so the company, which we thought was toast at that point, they had laid off half of its employees, came roaring back with all these new solutions for the new era of dining in the pandemic. The company IPO'd on September 2021 at $40 and ended the day closer to 62, putting its market cap at over $30 billion for an IPO. And then today the market cap is closer to 22 billion.

[Ann Berry]

So I'm going to hand it to this company when I listen to stories like that one, when you've got businesses that looked as though they really were at existential risk, when they pull off a pivot like that one and then have the IPO that they did in September of 2021. Granted it was a moment in time where the IPO markets were very hot and where tech enabled solutions were extremely in demand. You know, it was a good time to go out to market, but the fact they were able even to get there was pretty extraordinary. Well, let's take a look at what's happened to the business ever since then. As you said, the market cap today closer to $22 billion. It has pulled back as so many of those 2021 IPOs have done, by the way. But total locations in this latest quarter up 23% year over year. So scaling its customer base hitting around 156,000, which I've got to tell you, is a little smaller than I thought it might be.

[John Crateau]

Right.

[Ann Berry]

Just given the sort of ubiquity I feel and the way that Toast has actually done a very good job of getting its brand out there. Revenue of $1.63 billion beat estimates and adjusted EBITDA, which is a measure of profitability designed to closely proxy cash, was $176 million. So like many software companies, this one pretty attractive in terms of its margin profile and its cash flow generation. Now, the company made headlines last week for reasons its earnings which weren't out yet because it was expanding its partnership with Uber. So Toast merchants will be able to run promotions and have local advertising through Uber Eats. It's a very clever solution. It's designed to provide to its restaurant clients in partnership with Uber, and the two companies actually intend to take that global. So it's going beyond more than being a point of sale system.

[John Crateau]

Yes, exactly. That's how I might see it. But they're getting into ads going global. And then Ann, I thought this was one interesting nugget in the earnings. Toast recently signed up Nordstrom, the department department store. Clothing is what I Think about it. But I did not understand that Nordstrom has over 200 dining locations and they're going to start having toast in those 200 dining locations. I know there was a bar at the Nordstrom when I bought a suit up on Broadway last year. I didn't go to it, but I saw it and I. But I had no idea there were that many food locations within Nordstrom.

[Ann Berry]

Well, it's interesting actually, because if you think about, and as we're digressing now, but it's sort of fun since we're here already, when you actually take a look at department stores, that is an area of the retail sector that's really struggled to figure out why it exists for consumers. And so they are really leaning into experiential. And part of that is trying to become a food and drink beverage destination. The European department stores are ahead of us on this, by the way. And so it's completely consistent that Nordstrom's are going to give out over some of their square footage for something other than shopping to get people through their doors and to get them to stay longer too.

[John Crateau]

And partnering up with Toast.

[Ann Berry]

There we go, partnering with Toast.

[John Crateau]

Shares of Toast were up over 9% today and up 25% year over year.

[Ann Berry]

Well, from toast, which sounds like food, to lemonade, which sounds like a drink, let's talk about insurance technology and next gen applications of AI to the clunky dinosaur business that we think of as insurance. But one thing I will say, if you go back before AI became the expression du jour, and it used to be just called data analytics, insurance has actually been at the forefront of data analytics data very, very long time. Because the bread and butter of these insurance companies is making sure that they price risk, sure that they can ascertain risk accurately. And so they've been mining big data sets for longer than we've been talking about it with the advent of ChatGPT and the like. So I just want to sort of set the stage there. So Lemonade is the insurance company that uses AI and machine learning to build policies. So to do the underwriting, but also to automate claims. And I find this story really interesting. But why don't you tell us how this company went public?

[John Crateau]

Right. They're listed as LMND on the New York Stock Exchange. They were founded in 2015 and they IPO'd in 20 market cap of $5.7 billion.

[Ann Berry]

So back in the day I had, I was very lucky. I got to interview the CEO and co founder of Lemonade, Daniel Schreiber. On our sister podcast after earnings. And I hadn't paid much attention to Lemonade. I have to admit, up until that point, it was definitely something I'd seen with renters insurance.

[John Crateau]

Right.

[Ann Berry]

Those of you who are renting, they did a pretty good job with a marketing campaign that felt very sort of cool and millennial, you know, had good logos, good design. And so it did a good job in grabbing Mindshare. And I came out of my conversation with him for that podcast slightly enamored with what they were doing. I don't invest emotionally, but I really felt that the story landed. Now, while renters insurance and home insurance is where Lemonade got its start, it's been leaning in really heavily to the car insurance, to insurance, to the auto market. Massive market. And car insurance is typically priced using fairly crude boxes. That's the way the CEO described it. Your gender, your marital status, even your credit score. And what Lemonade said is, well, let us track how you use your phone while you are driving.

[John Crateau]

You've got it in the car anyway, right?

[Ann Berry]

The phone is gyro. It's got gps. It's very, very sensitive. And so your own phone sensors can help inform Lemonade as to how careful of a driver you actually are. And so Lemonade dug into using that data so that the proxy to measure risk, instead of being these sort of existential, you know, the esoteric factors, it's actually how you drive. It's actually inside your car's doors. And then Lemonade would offer you a rate for insurance commensurate with the data it was getting firsthand. That was the key point. Firsthand. So it was a very different way of approaching this.

[John Crateau]

It's very interesting, and it makes a lot of sense. Can we talk about if I don't know that I like that product? I like the concept. I can understand as a business, but as a driver, you know, sometimes we speed a little bit. I speed a little bit.

[Ann Berry]

Maybe say it out loud.

[John Crateau]

I know, but I guess the idea of constantly being evaluated is something that I might not appreciate. But Wall street seems to think that they're doing something right because Lemonade was up 35% today on its earnings, up 116% year to date. That's what Wall street says.

[Ann Berry]

Yeah. And there are a couple of things that folks were leaning into in the analyst community. One is something called the enforced premium. The premiums paid on active policies, just to hit the numbers for a moment, that grew 30% year over year. Think of that essentially as a measure of the user Base that's measured number of customers, Customer count indeed up 25% year over year to 2.9 million. The other thing that AI has been used for by Lemonade is to actually get expenses down. So we'll come back to that in a moment with the technicalities. But you just said something, John, which struck me, and I want to dig into it a bit and challenge you a bit. And you're going to challenge me on this. You said Wall street reacted very positively to Lemonade's earnings. I nerded out. I did this thing. I went to a place that's very easy for our audience to go to as well. I just went to yahoo finance, so finance.yahoo.com and I typed in Lemonade. And you can actually see on there two things. If you go to the analysis part of the website, you can see what Wall street analysts are saying about a company, and it's summarized in the rating they give the Stock. Of the 10 analysts covering the lemonade stock listed here, eight of them are a hold or a sell on Lemonade. Right. That may change after this earnings report. But Lemonade's been a bit of a darling if you look at its stock price. You just set it up 116 year to date. But Wall Street's not actually saying lean into this name, at least not at this valuation. Right.

[John Crateau]

Not those analysts.

[Ann Berry]

Right, not those analysts. The other thing I would just say is in the same place that I'm looking again, that's on Yahoo Finance, you can actually go to a spot on there called Holders, where you can figure out which kinds of investors are buying the stock. And it looks here as though about 30% of lemonade is being held by retail investors. So then I went to X and I went to go and ask, ask X, you know, what's trending. And. And Lemonade has become a retail investor darling. And so this one reminded me again, I came out enamored with the story, though not with the stock because of the valuation. And the fact is not making enough money yet. But this, to me is starting to feel like one of those names that investors are getting a belief vote. Right. That you don't quite see the evidence yet. But people are saying I kind of get behind the story.

[John Crateau]

And the company did say in its earnings that it hasn't yet recorded a profit.

[Ann Berry]

Yeah.

[John Crateau]

But it is expecting to in 2026.

[Ann Berry]

Right. So it's coming closer and closer to having to demonstrate it's hitting the mark. We're just going to come back to one more industry term and it's something that, John, you'd flagged as, as we were talking about this earlier is something called the loss adjustment expense. And that's the cost incurred by an insurance company to investigate, defend and settle an insurance claim. So this is basically the deciding factor for whether they're going to pay up or not.

[John Crateau]

Right.

[Ann Berry]

And it's interesting. Lemonade uses AI for its marketing. It uses AI to try to figure out how to price a product. It's also using AI to try to attack this particular expense line. Using automation in the claims process to really get to the heart of is it a valid claim or not. So another use of technology by this company to try and impact its profit margin.

[John Crateau]

It made a lot of sense to me. It would cut down on fraud if, if the phone is somehow recording the, the movement of the tracking.

[Ann Berry]

Again, I don't like that.

[John Crateau]

You can't make a false claim.

[Ann Berry]

You can't make a false claim. Well, speaking of cars, let's go and talk about an automaker. Let's talk about Rivian. We haven't talked about electric vehicles in a while, but an earnings recap just for this one. Shares in Rivian were up as much as 25 today. This is a volatile stock, by the way. It is up 46 year over year. Revenue came in to be estimates came in at $1.55 billion about versus 1.49 billion that had been expected. Gross profit was better than expected. Analysts had been thinking there could be a more than $60 million loss coming in. It actually came in positive to the tune of $24 million. So Rivian surprised to the upside today.

[John Crateau]

But we have to remember that the last quarter was an unusual one for electric vehicles because September was when the expiration of the 7,500 tax credit expired.

[Ann Berry]

Yeah, that's right.

[John Crateau]

Yes, exactly. And so Rivian sold 1300 vehicles in the past quarter and that was up 32% year over year. And Rivian doesn't break out each month. And so of course all the EV companies did well last month because people were racing to, to buy the cars before the expiration. Ford, for example, their sales were up 85% year over year in September. Then when the expiration of the credit, the sales dropped 25% year over year from October. And so a big race to get in there before it finished. But today on the earnings call, there was a lot of optimism for the R2. That's the midsize SUV, lower priced EV that the company expects to release in 2026. They said, we believe R2 is dressing the largest market opportunity with the right product and they've finished construction of their $1.1 million square foot R2 body shop in Normal, Illinois. And so that seems to be a lot of the anticipation of this lower priced EV coming out, wedbush analyst Dan Ives wrote. We remain positive in the long term Rivian vision and call the results solid.

[Ann Berry]

Everyone is trying to get after this affordable model in EV and the traditional car makers. General Motors for example, is fundamentally revisiting what it wants to do in EV because it doesn't seem to be able to get there in the scale for these much more mass market versions of the car. Just last month, Tesla revealed its long awaited, more affordable model. It didn't get rave reviews, so we'll have to keep watching this one. Speaking of Tesla, that big vote on that big pay package tomorrow, Elon Musk the board has proposed getting $1 trillion up to $1 trillion compensation package, largely composed of stocks, so that he can try and get to 20% plus ownership stake in Tesla. That vote being held tomorrow. Some big name investors have come out against it, including Norway's sovereign wealth fund, so we'll see how that one pans out. He has suggested that he will leave Tesla if he does not get what he wants. Let's take a quick break. When we come back, high stakes in the Supreme Court for Trump's tariffs and we break down today's critical hearing as a result. We are very much watching this one. And now a word from our sponsor, Surf Air Mobility. Surf Air Mobility is doing something really intriguing with their platform designed to combine three things, a nationwide flight network, AI enabled software and future electrified aircraft.

[John Crateau]

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[Ann Berry]

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[John Crateau]

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[Ann Berry]

The Supreme Court has stepped into a major fight over tariffs and it's fundamentally a fight over presidential power. Because today the highest court in the land heard arguments as to whether a president can use emergency powers to reshape U.S. trade policy without the blessing of Congress. So just to hold the thought for a moment, I've been watching this. I've been reading this all day. I listened in to some of the live audio streaming for some of the hearing that were heard today because this one is critically important. Maybe hasn't got as much coverage as we would have liked. Well, the case stems from two sets of tariffs imposed under president Donald Trump using a law called the International emergency Economic Powers act, or the ieepa. Now, the administration said that sustained trade deficits had brought America to, quote, the precipice of an economic and national security crisis crisis, and that deaths from implanted fentanyl also constituted a national emergency. As a result, the administration has said the president has the authority to regulate imports and levy tariffs to protect the country. Now, this was the first time since its enactment in 1977 that this particular act had been used by a president to impose tariffs. Challenges that have included small businesses, states and trade groups. Groups has said that this stretches the law beyond recognition. They argue that since tariffs are, in effect, taxes on imports, this is a policy decision that should rest along with other tax decisions with Congress, not with the White House. Well, lower courts agreed. They ruled that IEEPA does not give the president this kind of sweeping power and ruled that such a major economic decision should require explicit approval from Congress. Now, the counter argument to that is if the act gives the emergency power to place trade embargoes, for example, then why not the less extreme option of tariffs? So as a result of this complexity, this case has gone to the supreme Court, the highest court in the land. And the supreme Court justices will now have to decide whether that reading stands or whether presidents can keep using emergency powers to have unilateral, massive economic trade impact. Well, treasury secretary Scott Besant cautioned in press interviews that if the tariffs are not upheld under this particular act, then others will be invoked instead. National security concerns addressed under Section 232 of the Trade Expansion act of 1962 are being cited for tariffs intended to protect U. S. Auto, copper, semiconductor, pharmaceutical, robotic and aircraft sectors. This is super, super technical stuff, but that's just one example of how these technicalities are being used to try and uphold but also contest these tariffs. Now, a lot of time and money is being spent on lawyers and finding the legal justification for the Trump tariff program. And if tariffs are struck down in the courts, there's a practical mess of whether and how to refund levies already collected totaling about $190 billion. So far this year. And again, if these tariffs are struck down, there's more complexity, the question of what will happen to investments in America that have been explicitly tied to trade negotiations. One example of that is last week, South Korea committed $350 billion funding for US shipyards again as part of these negotiations. So this moment, this hearing today in the Supreme Court is a massive, massive legal moment, which is why the courtroom was physically packed with observers. Treasury Secretary Scott Besant turned up. So did Commerce Secretary Howard Lutnick, U.S. trade Representative Jamison Greer, and Democratic Senators Amy Klobuchar and Ed Markey. Now, it's likely to be at least several weeks before a Supreme Court decision, but already legal analysts and experts are coming up with their perspective based on combing through the comments made today. So there's going to be a lot more coming out on this even before that final decision is reached. I think we're going to keep on watching. Well, there is the closing bell because it's 4pm on the east coast and we don't have a ticker tape, but we'll throw it over to our human ticker, our producer said.

[John Crateau]

John that's right, all the major indices finished up today. The S&P 500 was up nearly 4.10of a percent. The Dow finished up nearly half a percent and the NASDAQ was up nearly 7.10of a percent. Some market headlines with the government shutdown, the BLS is not releasing jobs data. But today ADP published a report that private sector employment increased by 42,000 jobs in October, which topped expectations and was a turnaround from September's revised report of a loss of 29,000 jobs. And we almost made it the entire episode without mentioning chips. But after yesterday's broader sell off, shares in chip maker AMD were up over 3% today after the company reported better than expected earnings, noting that data center revenue rose 22% to $4.3 billion.

[Ann Berry]

Almost, but not quite making it through an episode talking about chips. Well, look, there are lots of fan favorites literally reporting right this moment. We've got Robinhood, DoorDash, Figma, Duolingo swear off to grab more coffee because we'll be plowing through it this evening. Again, if there are any names that are particularly exciting for you, reach out to us, email us, drop us a memo, and we'll unbreak. We'll break down and unbreak what's going on for those earnings. That's it for today's Brew Markets Daily.

[John Crateau]

Brew Markets Daily is hosted by Anne Barry and produced by John Crateau Tarka Bellatief and Emily Milian. Our technical director is Uchena Waugh. Audio assistance by Brittany Dottocco. And the president of Morning Brew, Inc. Is Devin Emery.

[Ann Berry]

Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew daily. We'll see you back here tomorrow, same time, same place.