Government Shutdown = Mass Layoffs? & Quantum Trading is Here

Summary

Morning Brew Daily – Episode Summary

Episode Title: Government Shutdown = Mass Layoffs? & Quantum Trading is Here
Date: September 26, 2025
Hosts: Neal Freyman & Toby Howell

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Overview

This episode of Morning Brew Daily dives into the looming threat of a U.S. government shutdown and the unprecedented warning of mass federal layoffs, analyzes Starbucks’s ongoing turnaround struggles and store closures, assesses the health of the auto industry in their “Stock of the Week, Dog of the Week” segment, and explores the real-world debut of quantum computing in high finance. The hosts round out the episode with trending news—tariffs on furniture and pharmaceuticals, Amazon’s FTC settlement, and the regional nuances of plastic surgery demands in the U.S.

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Key Topics & Insights

1. Potential Government Shutdown & Threat of Mass Layoffs

[02:56 – 07:06]

• Current Situation:
  The Office of Management and Budget (OMB) has warned federal leaders to prepare for “reduction in force plans,” hinting at permanent layoffs if a budget deal isn’t reached by October 1.

  • Unlike past shutdowns, this goes beyond usual furloughs to suggest potential permanent job cuts.

• Legislative Deadlock:
  Republicans control both chambers and need some Democratic support to pass a short-term funding bill.

  • Democrats are focused on continuing ACA subsidies and reversing Medicaid cuts, stalling negotiations.
  • High uncertainty prevails as the White House ups the ante with layoff threats, which Democrats (notably Chuck Schumer) called “an attempt at intimidation.”

• Economic Ripple Effects:
  Traditionally, shutdowns result in temporary pay delays but little long-term economic impact, as back pay restores normal spending once workers return.

  • Permanent layoffs “change the entire fiscal math,” leading to a “sustained drag” on the economy due to reduced consumer spending.
  • Markets dislike political brinkmanship, with increased volatility as uncertainty grows.
  • Neal: “For every week that federal operations are shuttered, about 1/10th of a percentage point from the nation's total economic output that quarter goes down.” [06:03]

Notable Quotes:

• Toby Howell [05:09]: “If we move from temporary furloughs to full-on permanent layoffs, you change the entire fiscal math around a government shutdown.”
• Neal Freyman [06:03]: “Generally … economic output or economic spending just completely bounces back [after a shutdown], so there’s really no negligible impact … This changes the math entirely.”

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2. Starbucks Turnaround: Store Closures & Strategic Shifts

[07:06 – 10:07]

• Announcement:
  Starbucks will close 1% of its North American stores (~400 cafes) and cut 900 additional corporate jobs, on top of 1,000 layoffs earlier this year.

  • New CEO Brian Nichols aims for “structural cuts,” focusing on traditional café experiences—not just “cosmetic changes.”
  • Key criteria for closures: locations that can't “create the physical environment our customers ... expect” or lack financial viability.

• Investor Concerns:
  Despite the shake-up, investors are impatient: share price is down 8% this year, and the company’s six straight quarters of negative same-store sales growth worry analysts.

  • Analyst Jacob Aiken Phillips: “The turnaround still has a long way to go ... still don’t address that their prices have just gotten way too high.”

• Strategic Shift:
  Moving away from mobile-only pickup stores, Nichols envisions Starbucks as a ‘third place’—a spot to linger, equipped with comfortable seating and outlets.

  • Toby points to baristas' growing workload and pushback against new uniform policies.

Notable Quotes:

• Toby Howell [09:28]: "It's also a lot of pressure on baristas ... some of the drinks have gotten more complex ... also been this pushback on uniform policies.”
• Neal Freyman [10:07]: "Starbucks stock is down 8% this year. Let's just say it right now, this turnaround is not going according to plan.”

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3. Dog of the Week: CarMax & Auto Industry Struggles

[10:07 – 13:55]

• CarMax’s Collapse:
  CarMax’s stock fell 20% in a day after poor quarterly results—profits and sales plunging what the CEO called a “challenging period.”

  • Demand was “pulled forward” earlier in the year as consumers rushed to beat tariffs, inflating previous sales and resulting in a sharp drop now.
  • Subprime auto loan delinquencies hit 9.3%—near post-2008 crisis highs—indicating lower-income consumers are struggling.

• Broader Industry Woes:

  • A subprime auto lender collapsed (Tricolor).
  • Auto suppliers like First Brands and major automakers (e.g., Ford) are struggling, especially selling to consumers with weaker credit.

Notable Quotes:

• Neal Freyman [12:42]: "Analysts view subprime auto loans as a leading economic indicator ... but delinquencies rose in August to 9.3%, … only hit only three times since the 2008 financial crisis.”
• Toby Howell [11:49]: “I think this is the clearest example of [demand] getting pulled forward … suffering from its own prior success.”

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4. Stock of the Week: IBM & Quantum Computing’s Financial Breakthrough

[15:49 – 19:10]

• Quantum Milestone:
  HSBC used IBM’s Heron Quantum processor in a large-scale bond trading test, improving price prediction accuracy by 34%—a potentially industry-defining leap.

  • HSBC called it a “potential Sputnik moment for Quantum.”
  • IBM shares jumped 5% on the news and are up 27% for the year.

• Quantum’s Real-World Relevance:
  Other breakthroughs: Alphabet’s “Willow” Quantum processor (solving otherwise-impossible problems in minutes) and JP Morgan’s certified quantum random number generation.

  • Quantum computing, long seen as a “Loch Ness monster,” may finally have a real-world use case.
  • Despite start-ups in the space not yet profitable, market enthusiasm is high, with the sector adding $23B market cap last month.
  • The Trump administration has made quantum commercialization an R&D priority.

Notable Quotes:

• Toby Howell [16:38]: “HSBC’s head of quantum technologies called it a potential Sputnik moment for Quantum.”
• Neal Freyman [17:20]: "If you can solve complex problems faster … you get a little bit of an edge over your competitors. In finance, that ... makes all the difference from hundreds of millions into hundreds of billions of dollars.”

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5. Quick Headlines & Trends

a. Trump’s New Tariffs on Furniture & Pharmaceuticals
[19:10 – 22:12]

• New tariffs:
  • 50% on kitchen cabinets & bathroom vanities
  • 30% on upholstered furniture
  • 25% on heavy trucks
  • 100% on branded pharmaceuticals (unless produced in U.S.)
• Purpose: Protect domestic manufacturing and address “national security” concerns.
• Effects: Furniture prices already trending up; European drugmakers like Novo Nordisk hit hard in morning trading.

Notable Quotes:

• Neal Freyman [21:13]: "Furniture ... cost 4.7% more than in August 2024 … Living room and dining room furniture specifically has gotten a lot more expensive … up 9.5% over the past 12 months.”

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b. Amazon’s $2.5B FTC Settlement Over Prime “Dark Patterns”
[22:16 – 24:14]

• Amazon to pay $1B in fines, $1.5B to customers (up to $51 each) for making Prime difficult to cancel and using misleading sign-up tactics.
• Notable: To be eligible, users must have signed up or tried to cancel Prime between June 23, 2019, and June 23, 2025.
• FTC Chair Lina Khan: Settlement is “just a drop in the bucket” for Amazon.

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c. Regional Plastic Surgery Preferences in the U.S.
[24:14 – 26:53]

• Highlights:
  • Southeast (esp. Florida): Highest rate of buttock enhancements (“Brazilian butt lift”).
  • Northeast: Focus on natural results/younger appearance.
  • West: Most breast augmentations, with SoCal patients preferring larger implants.
  • Liposuction is the most common procedure nationwide.
  • Potential “Ozempic effect”: Weight loss drugs are driving demand for skin tightening and trimmer looks.

Notable Quotes:

• Toby Howell [25:44]: “Beauty trends ... reflect culture, lifestyle, the different beauty ideals in each region of the country.”

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6. Lightning Round / Memorable Moments

• Bill Nye gets a Hollywood star [00:53 – 02:11]

  • Fun recap of his impact and quirky quote:
    • "Almost all of my work is a celebration of the PB and J … the passion, beauty and joy of science.” – Bill Nye

• Neal’s stock market humor:

  • On CarMax: “Even the smoothest used car salesman couldn’t have talked someone into buying CarMax stock yesterday.” [11:30]

• Plastic Surgery & Politics:

  • Neal: “After Trump’s election in 2024, the number of patients coming into his [Palm Beach plastic surgeon] clinic absolutely exploded.” [26:38]

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Timestamps for Major Segments

| Segment | Timestamp Range | |-------------------------------------------------|-------------------| | Bill Nye Walk of Fame Highlight | 00:53 – 02:11 | | Government Shutdown & Layoff Threat Analysis | 02:56 – 07:06 | | Starbucks Turnaround & Store Closures | 07:06 – 10:07 | | Dog of the Week: CarMax & Auto Sector | 10:07 – 13:55 | | Stock of the Week: IBM & Quantum Momentum | 15:49 – 19:10 | | Headlines: Tariffs, Amazon FTC Settlement | 19:10 – 24:14 | | Regional Plastic Surgery Trends | 24:14 – 26:53 | | Closing notes and podcast award announcement | 27:06 – End |

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Tone & Enjoyment

True to Morning Brew Daily’s signature style, the hosts blend sharp, factual business reporting with breezy banter and pop-culture nods—making even weighty topics like government shutdowns and quantum computing feel lively and accessible.

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Notable Quotes

• Neal Freyman [06:03]:
  “Generally, because these things are temporary and honestly last only a few days at a time, you see economic output or economic spending just completely bounced back ... This changes the math entirely.”

• Toby Howell [09:28]:
  “It’s also a lot of pressure on baristas ... the menu has gotten smaller, some of the drinks have gotten more complex ... this tension because you want to make these consumer facing changes, but the very people who need to carry those out are kind of pushing back.”

• Toby Howell [16:38]:
  “HSBC’s head of quantum technologies called it a potential Sputnik moment for quantum ... first time someone has proven that quantum gives an advantage using real trades at scale.”

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For Further Listening

• Next episode will likely revisit the government shutdown as the deadline approaches.
• Watch for ongoing coverage of Starbucks’s evolving turnaround and the practical rollout of quantum computing.

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For feedback or to vote for Morning Brew Daily at the Signal Awards, visit vote.signalaward.com.

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Summary by Morning Brew Daily Podcast Summarizer

Transcript

[A]

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[B]

Good morning, Brew Daily Show. I'm Neal Freyman.

[C]

And I'm Toby Howell.

[B]

Today, Starbucks is closing stores and cutting staff as its turnaround fails to impress.

[C]

Then the White House is threatening mass layoffs if the government shuts down next week. It's Friday, September 26th. Let's ride.

[B]

Good morning and Happy Friday. If you go to Hollywood and look at the stars on the Walk of Fame, you'll see a new one that was added just this week. William Nye, AKA Bill Nye the Science Guy. The beloved educator was honored with a star on the Walk of Fame on Monday for helping kids realize that learning science could be fun. A former Boeing engineer and comedian, Nye says that quote, almost all of my work is a celebration of the PB and J. The passion, beauty and joy of science. Now mostly retired from TV work, Nye heads up the Planetary Society where he advocates for space science and exploration. Toby, I don't think anyone's ever rocked a bow tie harder.

[C]

Bill Nye has just a permanent place in all of our childhoods. But one of my favorite Bill Nye stories is how he actually got the name Bill Nye the Science Guy. As you mentioned, he did perform stand up in the Seattle area. He was part of this sketch comedy group called Almost Live. And it was there that he earned the nickname because he corrected the host mispronunciation of gigawatt. And the host said, who do you think you are, Bill Nye the Science Guy? And thus the name stuck. But yes, hard to think of a figure more beloved or had a bigger impact on all of our childhoods and. And our love of science. And now a word from our sponsor. Remarkable. Neil, do you ever feel like your meetings are missing something?

[B]

Snacks and hard stops, sure.

[C]

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[B]

But how else will you take notes.

[C]

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[B]

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[C]

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[B]

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[C]

A potential shutdown on October 1st due to a lack of funding, the Office of Management and Budget, AKA the ones behind Doge, had an interesting message for the federal leaders. If there is a shutdown, start thinking about your reduction in force plans. In other words, mass firings could be ahead. The memo specifically called out programs not directly addressed by legislation passed by the current administration or not aligned with the Trump's priorities as targets for permanent cuts. Now there is an off ramp to this further doja vacation of the federal workforce and if a bipartisan funding agreement can be reached before next Wednesday, it's unlikely mass layoffs would occur. Historically, shutdowns have led to temporary downsizing, but often in the form of short term furloughs, not direct firings. But now the pressure is turned up to 11 to get a deal done, which was likely part of the motivation behind the memo in the first place. Democrats have pushed back on the threat, with Senate Minority Leader Chuck Schumer telling reporters the plan was an attempt at intimidation and questioned whether any firings would hold up in court. But still, the threat will hang over negotiations in the lead up to Wednesday. So Neal, there's two parts to this story. One, how likely is it that we reach a government shutdown and these layoffs occur? And to what ripple effects would those layoffs have on the economy?

[B]

Let's start with the negotiations for the shutdown and get to the ripple effects in a bit. So yeah, the Republicans have the majority in the Senate and the House and they do need a little bit of Democrat support in order to pass a short term funding bill bill in order to fund the federal government past the end of the fiscal year which ends September 31st. Democrats are digging in. They really want to extend subsidies for people on Obamacare and reverse those heavy cuts to Medicaid. Hundreds, hundreds of billions of dollars worth under the one big beautiful bill, the GOP's tax and immigration bill. And they're dug in and they don't have any meetings on the calendar with Republicans in order to perhaps advance a funding bill passed October 1st. So you know the chances of a government shutdown? I haven't really looked at polit market, but they look pretty high. And now the White House has really escalated things beyond what normal shutdown politics looks like with this threat to, to mass fire workers in the federal government.

[C]

And what do normal shutdowns look like? Usually 60% of essential workers keep working without pay with a promise that they'll get payback at a later date. And then 40% are furloughed and then return with back pay. So if we move from temporary furloughs to full on permanent layoffs, you change the entire fiscal math around a government shutdown. Because instead of getting maybe a hiccup in gdp, for instance, you will get this sustained drag on it because there's less consumer spending, because layoff workers have no money. So it just starts to ripple down through the economy as well. And I'll tell you one thing too. Markets do not like political brinksmanship or whatever you want to call this. They don't want to inject uncertainty into this, into consumer spending, into regulations, all these things. And so by kind of pushing it to the edge and threatening to basically affect a large portion of the federal workforce, a lot of markets get a little uncomfortable with that.

[B]

If you're looking for how a government shutdown affects the economy, there is a general rule for every week that federal operations are shuttered, about 110 of a percentage point from the nation's total economic output, that quarter goes down. We had this back in the first term of President Trump in 2018 with the longest shutdown in history. That was 35 days, about five weeks. According to Wells Fargo, that shaved off 0.1 percentage points from the US's GDP in the final quarter of 2018, and then another point 3 percentage points in the first quarter of the following year. Generally, because these things are temporary and honestly last only a few days at a time, you see economic output or economic spending just completely bounced back. So there's really no negligible impact on the economy over the long term because people who are furloughed get their paychecks and then they spend what they would have spent had they got their paychecks at a normal time. This changes the math entirely. As you're seeing, it's, it's very intense bricksmanship we're seeing from the Republican side. We'll see what the Democrats have to respond with.

[C]

And I don't think this will be the last time we talk about it because as we draw closer to that Wednesday, October 1st deadline, this is going to just get even more pressure filled. Moving on, Starbucks is taking its store footprint from a venti to a grande, announcing yesterday that it's closing 1% of its North American stores around 400 cafes. On top of that, it is cutting 900 corporate jobs, following up on the 1,000 or so people laid off earlier this year. New CEO Brian Nichols says the closers are focused on underperforming stores as he shifts from more cosmetic changes like tweaks to employee uniforms and adding ceramic mugs to more structural cuts. In total, the company expects the restructuring to cost about $1 billion. But Starbucks is huge, which means that many investors not only welcome the changes, but think that they need to be even bigger to given Starbucks is sprawling 41,000 global locations, everyone agrees change is definitely needed. Starbucks has posted six straight quarters of negative same store sales growth. In the meantime, the vision for its new leader, Nicole, on the job for a year now, is crystallizing. In a message to employees Thursday, Nicole said that stores that got the axe were either unable to create the physical environment our customers and partners expect or where we don't see a path to financial performance. That Nickel has been hiring baristas left and right while cutting corporate staff shows where his priorities lie, recreating that coffee house experience of old. Still Neil, while investors like seeing changes being made, some are getting a little antsy. Other costs and the timeline at this point, yeah.

[B]

Bellious research analyst Jacob Aiken Phillips said the turnaround still has a long way to go after this announcement and the changes being made still don't address that. Their prices have just gotten way too high. Many of the shops that Starbucks is closing are mobile only stores where you pick up and grab your coffee. And this jives with Nichols grander strategy of turning Starbucks back into the third place where you go and hang out. He's added more comfortable seating and electrical outlets which we know are key to places where you want to study. They already have free wi fi, so the fact that they're closing these small pickup only stores, you know, further advances this really bold strategy that flies in the face of what we're seeing with trends in beverage and food more generally, which is that people care more about value and speed than kind of hanging out. So it's kind of an ambitious zig where others are zagging.

[C]

It's also a lot of pressure on baristas because he has been staffing up as he gets rid of corporate staff, he's hiring more and more baristas to try to make it a better experience for customers. But that in turn is putting a lot of pressure on these baristas because some of even though the menu has gotten smaller, some of the drinks have gotten more complex and they're trying to get drinks out to people more quickly. Also, there's been this pushback on uniform policies. You have to wear a black T shirt to work now, which has sparked some lawsuits actually from barista saying I wish I could wear whatever I wanted to wear. So it is this tension because you want to make these consumer facing changes, but the very people who need to carry those out are kind of pushing back against a lot of your changes.

[B]

Yeah, Starbucks stock is down 8% this year. Let's just say it right now is turnaround is not going according to plan. Investors are getting antsy and they think that these particular cuts and changes that were announced yesterday just don't go far enough. Okay, let's head to Stock of the Week, Dog of the Week, the Friday segment where Toby and I pick one stock that knows all the words to a Millie and another that can't even get through the first verse. Toby, you won the pre show game of Catan but elected to receive. So I'm going first with Dog of the week, which is CarMax, whose stock tumbled 20% yesterday to become the worst performer in the S&P 500. It adds to a growing number of problems in the auto sector that suggest a slowing economy and a strapped consumer. Last quarter, CarMax was more like Carmen. The biggest seller of used cars in the country said its sales and profit plunged from a year before in what its CEO called a challenging period. Analysts were stunned. One at the investment firm Stevens called it a bit shocking and said he was still trying to make sense of the results. CarMax tried to help with a few explanations of its own. One, it said that customers had pulled forward their demand for cars to the beginning of the year in order to lock in one before tariffs hit. That artificially boosted sales in the spring while deflating them in the summer and fall. It also cited depreciation of its fleet and angsty consumers who seem to be sitting on the sidelines. And if it was just CarMax, maybe analysts would brush this off. But the auto industry's entire dashboard is lit up with warning alerts. A subprime auto lender collapsed a few weeks ago, profits are getting thinner from tariffs and the push to electrify has been far more challenging than expected. Toby, I don't think the smoothest Used car salesman could have talked someone into buying CarMax stock yesterday.

[C]

We've talked a lot about this idea of demand getting pulled forward, that when these tariffs were starting to filter through the economy, a lot of people started panic buying and loading up on stuff. But I think this is the clearest example of this happening that we've spoke about so far because actually CarMax enjoyed a 42% increase in earnings in the prior quarter that ended in May. That came from all the people going, I see these tariffs coming like let's just go car shopping right now. So it is suffering from its own prior success. That being said, Cox Automotive, who is kind of this industry analyst, said that they upped their full year projection for new vehicle sales in the US So it is an interesting thing where some people are still bullish that people are going to keep spending. We have seen relatively strong consumer spending data come out recently. So really rough quarter, but we'll see if maybe it was just a blip because all that demand was pulled forward or it's going to be a more continuous thing.

[B]

Yeah, new vehicles are selling like hotcakes. Actually, they're up 4% so far this year. But what analysts are reading into this CarMax result and other news from around the auto industry is that, you know, consumers at the lower end of the income spectrum are strapped and are pulling back. And you see that in a few examples here. So I mentioned this subprime auto lender and car dealer owner, which is called Tricolor. It absolutely collapsed spectacularly a few weeks ago. And analysts view subprime auto loans as a leading economic indicator because people on the lower end of the income spectrum will do anything to repay their auto loans. But delinquencies rose in August to 9.3%, which is near the 10% mark that has only been hit only three times since the 2008 financial crisis. There's also this auto supplier named First Brands, which sells oil filters and windshield wipers that is careening towards bankruptcy protection. Ford now is offering lower interest rates to buyers with the weakest acceptable credit histories. It's trying to sell these F150s that aren't going anywhere off the lot. So there a bunch of signs that the auto industry is struggling. And a lot of that points to consumers at the lower end of the income spectrum just pulling back.

[C]

Thank God we live in New York City and don't have to buy a car any time soon. All right, let's take a quick break and come back with our stock of the week.

[B]

Toby, have you ever gotten ads for products that are totally unrelated to you.

[C]

Absolutely. There was a solid week where I got ads for 55 + senior living communities in the Midwest.

[B]

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[C]

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[B]

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[C]

Start targeting the right professionals with LinkedIn ads. Spend $250 on your first campaign and get a free 250 doll for the next one.

[B]

Just go to LinkedIn.com/mbd. That's LinkedIn.com/me. The terms and conditions apply only on LinkedIn ads Toby, I want to talk to you about exposure.

[C]

Oh, you mean like that reoccurring nightmare where I show up for the podcast in my underwear?

[B]

It's actually nothing like that at all because I'm talking about exposure to the NASDAQ 100 index using micro index options.

[C]

Oh well, that's totally different. NASDAQ 100 micro index options XND offer precise and manageable exposure to the NASDAQ 100 index at a smaller notional value.

[B]

The smaller notional value can make it an attractive option by allowing retail investors to participate in options trading with lower capital requirements.

[C]

Plus, this can provide flexibility for those managing smaller accounts or looking to diversify investment strategies without committing significant resources sources.

[B]

Potential tax benefits can help sweeten the deal too. Index derivatives like XND index options may benefit from a potentially lower blended tax liability.

[C]

There are many more ways you can benefit from X and D index options, so to learn more, head to nasdaq.com nasdaq-100-options-xnd-ndx that's nasdaq.com nasdaq 100optionsxnd-ndsx My stock of the week is IBM because Big Blue is making big breakthroughs in quantum computing, the bank HSBC announced this week that they used IBM's Heron Quantum processor to massively increase efficiency in a large scale bond trading test. The test use historical European bond data and found that the computer was able to make a 34% improvement in predicting whether a bond would trade at a quoted price. While that doesn't sound all that impressive, oftentimes high volume bond markets are searching for just a 1% improvement in efficiency, which means a 34% edge could reshape the whole industry. HSBC's head of quantum technologies called it a potential Sputnik moment for Quantum because it's the first time someone has been able to prove that Quantum gives an advantage using real trades at scale. The demonstration led to a 5% boost in IBM stock, which is quietly up more than 27% so far this year. Now, oftentimes, Quantum is talked about like the Loch Ness monster, a supposedly fantastical thing. But most people will only believe it when they see it. This quantum power trade might be the first sighting of a practical use case for a technology that many still think is a long way off from real world applications.

[B]

There's been a lot of Quantum momentum this year. Remember earlier this year, Alphabet's Google revealed that its Quantum processor, named Willow, solved a problem in five minutes that the world's most powerful supercomputers wouldn't have have been able to solve if they started working when the universe began 13 billion years ago. And then JP Morgan also announced in March that it generated and certified truly random numbers using a Quantum computer. And J.P. morgan is one of many finance firms, including HSBC, that are really locked in on Quantum because in, if you can solve complex problems faster, which, which is the process, which is the promise of Quantum, then you get a little bit of an edge over your competitors. And in finance, that little bit, that 100th of a percentage point makes all the difference from hundreds of millions of dollars into hundreds of billions of dollars.

[C]

That is the funny part is like on the one hand, you have all this R and D coming from big tech, IBM, Microsoft, Alphabet, they're all betting billions dollars on Quantum. And then on the other side of the spectrum, you have the finance institutions that really want Quantum to work as well. So there is a lot of energy and money behind Quantum right now. And if you look at some of the more pure play Quantum stocks as well, ionq, d, wave rigidity, qubit, they all added $23 billion in market cap last month. That nearly doubled the entire industry as a whole. Which is ironic because none of these are making money. And a lot of them actually say in their guidance that we don't even expect to have a usable product for a few years. Now some are saying 2030. And yet there is all this momentum behind it. Also, the Trump administration is putting some thrust behind it. They made Quantum an R and D priority. They're calling out for more people to work on the commercialization of it. So a lot of tailwinds, but the headwind is just that. Is this thing going to work? Is it actually going to have some application in the real world? HSBC says we think we just found one.

[B]

And shout out to IBM too. I mean, let's go back to that because that was your actual stock of the week. They built their first quantum computer in the year 2000 and are only seeing maybe real world dividends here in 2025. They played the long game with this and as they've been playing the log game over there, you know, over a century in existence. But it's really had an amazing comeback for Big Blue, which was thought to be this old legacy tech company, kind of like Oracle, that are seeing new life thanks to new technologies. Okay, let's sprint to the finish with some final headlines. Hope you're not planning to redo your kitchen anytime soon because tariffs are coming to cabinets and other furniture. Last night, President Trump announced major new tariffs on household goods, including 50% on kitchen cabinets, bathroom vanities and associated products products, plus a 30% tariff on upholstered furniture, accusing countries like China and Vietnam of flooding the market with cheap products and harming American manufacturers. And that's not all. Trump also slapped a 25% tariff on heavy trucks coming into the US and a 100% tariff on branded or patented pharmaceutical products unless the company is currently building a plant in the United States. These new tariffs are set to begin next Wednesday.

[C]

Yeah, this is part of the push to roll out some of these Section 232 tariffs, which are a little bit more legally durable. They allow action on national security grounds without Congress's approval. And so that is why something like pharmaceuticals is getting 100% tariff because Trump thinks that this is a national security concern, that we need to make more of our drugs in the country. And you have seen European drug makers already start to fall in morning trading. Novo Nordisk is down because they are, you know, still manufacture a big part of their blockbuster Ozempic drug outside of the US which is ironic though, because all of these pharmaceutical companies were scrambling in the early parts of the administration to say, hey, we are building in the United States. We are breaking ground on these million foot facilities inside the US but still they're being hit with these tariffs. As you know, Trump says we need to be doing more to bring.

[B]

No, we don't know if they're going to be hit. I mean, if they're building a plant in the United States or they already have, which all of these drug makers have. Eli, I mean, Eli Lilly is an American company AstraZeneca, Roche, GSK. They have announced collectively $350 billion by the end of this decade on manufacturing in the United States. And then let's talk about furniture too, because this thing's going to get more extensive and it's already getting more expensive. Furniture last month, this is, according to the CPI report, cost 4.7% more than in August 2024. Living room and dining room furniture specifically has gotten a lot more expensive. It's up 9.5% over the past last 12 months. And we're now seeing sector specific tariffs hit these particular sectors that go into your household and making your house look good. So if in the past few months we've been looking at furniture specifically to see how tariffs had impacted inflation and now we're getting specifically tariffs on, on furniture. So we should see, I mean, economists would say we would should see prices rise if there is a tariff.

[C]

So we're not having that dinner party at your house. You didn't buy an extra chair. Come on.

[B]

Moving on. If you're on the jury for the Amazon F FDC trial, tough luck. You have to go back to work tomorrow. Yesterday, just days after the trial began, Amazon agreed to a $2.5 billion settlement with a regulatory agency that accused the company of duping millions of people into signing up for a Prime membership account and making it difficult for them to cancel when they tried to get out. The settlement is historic, one of the largest in FTC history. And we'll see Amazon pay $1 billion in penalties and 1.5 billion to customers, capped at $51 each to anyone who qualifies. To be eligible. You had to have signed up for a US prime subscription between June 23, 2019 and June 23 of this year. Or you could have tried and failed to cancel a Prime subscription or mistakenly signed up for one over that time period. Amazon has 30 days to notify eligible customers who can apply for a refund.

[C]

A big part of this trial was the so called the dark patterns that Amazon was using to trap users or make them do a certain action. One thing that was called out as an example is that if you want to enroll a user in prime, they had this big button that said get free same day delivery. And then if you wanted to avoid prime, the only option was a tiny text link that said, no thanks, I do not want free delivery. So it's just these things that Amazon called industry standard practices. But the FTC says this is actively harming consumers. And the response to this settlement has been kind of twofold one people said that, but finally they're actually paying out this money to consumers and they're celebrating it as a win for consumers. But then Lina Khan, who actually started this big tech brigade against big tech, said that this is just a drop in the bucket for a company called Amazon. Amazon is makes the most money of any company on planet earth. So two and a half billion dollars is not necessarily something that is going to impact Amazon more akin to a slap on the wrist. So yes, a settlement is occurring. Some people think it should have been bigger or it should have forced more legal action.

[B]

Finally, for something completely different to close out the week, let's talk about the geography of plastic surgery. If you want to hear Toby and I say the word Brazilian butt lift, you've come to the right place. The Wall Street Journal analyzed data from the American Society of Plastic Surgeons to show how preferences for cosmetic surgery vary widely across regions, painting a mosaic of bionic bodies. Here are the takeaways. This may not be so surprising, but people in Florida prize curviness. 50% of all butt augmentations performed by ASPS surgeons were done in the Southeast region in 2024. As one surgeon explained, in Florida they want high end results and they don't care if someone goes, oh my God, you got a facelift. Meanwhile, in the more Puritan Northeast, they're looking for less curvy body shapes and the Brazilian butt lift is far less popular there. For one surgeon in New Jersey, he sees a lot of patients who want him to make them look younger, but not in an unnatural way when it comes to breast augmentation. Go West. 37% were recorded in the Pacific and mountain states like California and Utah, with those in Southern California opting for bigger implants. And even within the L A area, there is wide variation. Down in Orange county, south of la, plastic surgeons told the Journal that patients want implants that are 400 or 500 cubic centimeters compared to Los Angeles patients who generally want 200 to 300 cc's model that one for me. But none of these procedures compared to liposuction, which was the top request last year. Ozempic be darned. Toby, what made you perk up from this report?

[C]

I think the fact that not all beauty trends are uniform across region of the United States. It sounds very simple on the surface, but they reflect culture, they reflect lifestyle, they reflect the different beauty ideals in each region of the country. Overall though, maybe the thing that the plastic surgeons were pointing to was that that fitness and wellness is in right now and so that means that they're looking for sleeker and trimmer looks in general. That's probably like the broad trend as a whole outside of Florida. Florida is just completely in its own world and a lot of surgeons said that the trickle down effects of Ozempic and these weight loss drugs becoming more popular are, are meaning that a lot of it is, is post weight loss maintenance where you want to like skin tightening or trying to get a more trimmer look if you've lost a lot of weight. So fascinating how these things evolve over time, evolve when new medicines are introduced and certainly evolve in different regions of the country.

[B]

And then one thing that stood out to me was also this one plastic surgeon who has a clinic in Palm beach said that after Trump's election in 2024, the number of patients coming into his clinic absolutely exploded.

[C]

So politics effect.

[B]

Yeah, I guess more people are coming to Mar a Lago and they want to look good. I guess when people are coming in. All right, that is all the time we have. Thanks so much for starting your morning with us. Have a wonderful Friday and an even better weekend. Toby, it says here you have a big announcement.

[C]

Yeah, we got some pretty sweet news to share. Morning Brew Daily has been nominated for three Signal Awards, which are kind of like the Oscars of podcasting. We're nominated for best Business Podcast, Best Commute Podcast, and best Daily Podcasts. But unlike the Oscars, fans can actually vote. So to help us bring home some hardware, we need you guys to head to vote.signalaward.com and toss some sugar our way. We'll also have a link in the show notes one more time, head to vote.signalaward.com and the link in the show description to vote for Morning Brew Daily.

[B]

I'm doing it right now. If you have any feedback on today's show, send a note to Morning Brew Daily at Morning Broadcom. Let's roll the credits. Emily Miller is our executive producer. Raymond Lu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair and makeup is working the Ryder Cup. Let's take care of business usa. Devin Emery is our president and our show is a production of Morning Brew.

[C]

Great show today, Neil. I wish you all well.

[B]

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[C]

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