Morning Brew Daily: DeepSeek Craze Tanks Tech Stocks & New Look Starbucks is Here
Release Date: January 28, 2025
Vanderbilt's Costly Court Storming Fines
Neal Freyman and Toby Howell kick off the episode by discussing Vanderbilt University's recent hefty fines imposed by the SEC due to repeated incidents of students storming the court after athletic victories. After Vanderbilt's men's basketball team upset Kentucky, the university was fined an unprecedented $500,000. This marks the third fine under the SEC's new court storming regulations, following previous penalties of $100,000 and $250,000 for similar infractions in football and basketball.
Neal highlights the financial strain on Vanderbilt, stating, “Vanderbilt has not got the memo and it's cost them nearly $1 million so far” (00:53).
Tech Stocks Plummet Amid DeepSeek's AI Breakthrough
The episode delves into the dramatic downturn in tech stocks triggered by DeepSeek's release of its R1 AI model. Neal explains how DeepSeek's open-source, cost-effective AI innovation led to a historic $1 trillion market loss, primarily impacting giants like Nvidia, which saw an 18% drop—the largest since the pandemic (03:05).
Toby adds, “Deep Seek has raised an uncomfortable question... what if companies don't need to spend nearly as much as they expected to develop AI models” (04:24). The discussion emphasizes the ripple effect on companies supporting AI infrastructure, such as Constellation Energy and Vertiv, which experienced significant stock declines.
Starbucks Revamps Under New CEO Brian Nichols
Neal transitions to Starbucks' strategic overhaul under new CEO Brian Nichols, who aims to recreate the company's nostalgic, community-focused atmosphere. Recent policy changes include the removal of free cups of water and the introduction of a "fixings bar" for customizing drinks (08:45).
Toby notes, “These changes are very vibe based. They're not efficiency based,” highlighting Nichols' shift from previous leadership focused on operational efficiency to enhancing customer experience (09:50). The hosts also discuss the significant compensation package awarded to Nichols, totaling approximately $96 million, reflecting Starbucks' commitment to reversing declining sales.
Tax Season Updates and IRS Changes
As tax season begins, Neal and Toby provide essential information for taxpayers. They discuss the IRS's expansion of the Direct File Service, now available in 25 states, allowing more Americans to file taxes for free (13:12).
Neal warns about the IRS lowering the threshold for receiving a 1099-K form from $20,000 to $5,000, aiming to clamp down on unreported income from side hustles (14:11). This change is set to further decrease to $600 in the coming years, potentially affecting millions of remote workers and freelancers.
Unionization Efforts at Whole Foods and Amazon
The conversation shifts to labor movements, focusing on Whole Foods employees in Philadelphia forming the first union within the Amazon-owned grocery chain (23:03). Neal draws parallels to Starbucks' unionization efforts, noting potential widespread implications for Amazon's workforce.
Toby cautions, “Winning a union vote doesn't necessarily mean that you will have a contract talk that will progress,” referencing the ongoing struggles faced by unionized workers at Amazon's Staten Island location (25:07).
New Zealand’s Visa Policy for Remote Workers
Neal and Toby explore New Zealand's recent relaxation of visa requirements to attract remote workers. The new policy allows foreigners to stay for up to 90 days while working for overseas employers, aiming to boost the local economy without displacing New Zealand jobs (25:07).
Toby enthuses about the opportunities, mentioning, “They really sell fruit-flavored ice cream... What if people just linger less with their cell phones?”
Social Trends: The Fast Walking Epidemic
The hosts analyze a National Bureau of Economic Research study revealing that pedestrian walking speeds in major cities increased by 15% from 1980 to 2010, accompanied by a 50% reduction in loitering and social interactions (17:00). This trend is attributed to the rise of cell phone usage and increased opportunity costs due to higher incomes.
Neal humorously reflects, “Cell phones are 80% of the story. Economic opportunity cost 5%” (21:19), underscoring the shift towards a more hurried urban lifestyle.
Final Headlines
White House Pauses Federal Grants and Loans
The White House has issued a vague two-page memo pausing various federal financial assistance programs, including those for disaster relief, foreign aid, and initiatives like the Green New Deal (23:03). This move has sparked confusion due to its broad scope and lack of detailed guidance.
Whole Foods Workers Unionize
Whole Foods employees in Philadelphia have made history by voting to form a union, seeking better wages, benefits, and working conditions. This movement mirrors earlier efforts by Starbucks and highlights growing labor pressure on Amazon subsidiaries (23:03).
Notable Quotes
- Neal Freyman: “Vanderbilt has not got the memo and it's cost them nearly $1 million so far” (00:53).
- Toby Howell: “These changes are very vibe based. They're not efficiency based” (09:50).
- Neal Freyman: “Cell phones are 80% of the story. Economic opportunity cost 5%” (21:19).
Conclusion
Neal Freyman and Toby Howell provide a comprehensive overview of significant developments in business, technology, and social trends. From the financial repercussions of Vanderbilt's court storming to the seismic shifts in the tech stock market due to DeepSeek's AI advancements, and Starbucks' strategic policy changes, the episode offers valuable insights for listeners. Additionally, updates on tax season, labor movements, and social behavior changes present a well-rounded snapshot of current events shaping the economy and society.
For more detailed discussions and updates, tune in to the next episode of Morning Brew Daily on your preferred podcast platform or YouTube.
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