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Nvidia Stock Falls in US Brawl with China & Harvard's $2.2B Fund Freeze
00:32:34
Now Nvidia is caught in the middle & Harvard stands up against Trump
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- [00:02]
Toby Howell
This episode is brought to you by Amazon Business. How can you free up your team from time consuming office tasks? Amazon Business empowers leaders to not only streamline purchasing, but better support their teams so they can focus on strategy and growth. Free up your teams and focus on your future. Learn more about the technology insights and Support available@AmazonBusiness.com.
- [00:26]
Neal Freyman
Good morning, Brew Daily Show. I'm Neal Freyman.
- [00:29]
Toby Howell
And I'm Toby Howell.
- [00:30]
Neal Freyman
Today, the gigantic economic summit stakes of the Harvard Vers White House feud.
- [00:35]
Toby Howell
Then Chinese tiktokers are slinging luxury goods directly from factory floors. But are $6 yoga pants legit? It's Thursday, April 17th. Let's ride.
- [00:50]
Neal Freyman
Tap, tap. Is this thing on? Can you hear me? Okay, just checking because yesterday was a different story. Spotify suffered a widespread outage from about 6 6:20am Eastern to nearly noon, frustrating all of us who wanted to listen to podcasts or our daylist in the morning. I'll say it, Toby. I was pretty much useless without my obsessed pink Pilates princess early morning jams.
- [01:13]
Toby Howell
It was very funny to see all the Spotify listeners come over to YouTube. It was like two different MBD tribes making contact for the first time. And it was mostly peaceful. Some said, hey, it's kind of nice over here. I think I'll stay talking. That was a nice byproduct of the outage. It's also two different commenting cultures. I've noticed. There's this core group of YouTube listeners who just want to be the first one to post a comment in the morning. So it's always just first, second, third eye. Nice try. And then over on Spotify, there's this core group of listeners who just comment on audio quality a lot, which makes sense because it's an audio platform. Apple Podcast. No idea what's going on over there because there's no comment section at all. But we love you all equally. Thank you for listening no matter what platform you do it on. And sorry again for the outage. And now a word from our sponsor, Planet Out. Neil. I was playing kickball over the weekend, classic rec league, tilt, and it hit me just how important it is to have that one player who can do it all.
- [02:10]
Neal Freyman
The mythical utility player. They can pitch, catch, sprint to first without pulling a hammy.
- [02:15]
Toby Howell
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Neal Freyman
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Toby Howell
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- [02:47]
Neal Freyman
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- [02:52]
Toby Howell
No frills, just performance. That's what you want in a teammate or in your fridge.
- [02:56]
Neal Freyman
Get your hands on the oat milk that has it all. Visit planet oat.com for more in the.
- [03:02]
Toby Howell
Extended poker game that is this global trade war, another chip has been played. And it literally involves chips. Earlier this week, Nvidia disclosed in a filing that the Trump administration's clampdown on sales of advanced chips to China will impact earnings to the tune of four, five and a half billion dollars. That number comes from the fact that its 820 chip inventory now falls under new restrictions. The H20 is a watered down version of Nvidia's higher powered H100 and H200 chips, one that was created specifically for markets like China where full power chips are restricted. Earlier this month, the US government paused its restrictions on the sale of H20. But when you don't like your hand in poker, you you have to exert pressure in other ways. I'm also realizing that this poker metaphor is getting mighty confusing with all the chips flying around. But we persevere. And so will Nvidia, who had a rotten day in the stock market, falling just over 7% and bringing the entire chip sector down with it. The new export controls are an especially tough pill to swallow because Nvidia is fresh off announcing a $500 billion investment that will go towards building two supercomputer factories in the US right in line with Trump's America first manufacturing policies. All in all, an annoying turn of events for the chip maker, who has suddenly found itself as the biggest US China bargaining chip.
- [04:21]
Neal Freyman
Every single day, there's a new company that's caught in the crossfire of this trade war. Yesterday we led the show with Boeing. Now it's in video. This is a much, you know, bigger player, much bigger bargaining chip. By all accounts, this was a big surprise for Nvidia. Jensen Huang, the CEO, went to Mar? A Lago earlier this month, dinner with Trump, and it talked about that $500 billion investment. He was under the impression that these H20s that they made specifically for the Chinese market were going to be exempt from the all of the trade war chaos. So they went to all their Chinese clients like Alibaba, ByteDance and Tencent said don't worry about it, we're still going to get you your age 20s. This has all been cleared up. And then earlier this week they were completely blindsided by this new ban. And that's why you know, the stock tanked. It surprised investors as well. And Nvidia stock, after Soaring More than 200% this year is down, you know, about 20% this year. It's just been been rough sledding so far in 2025.
- [05:23]
Toby Howell
Yeah, that's 200% last year that it soared. But it looks like half a trillion dollars only goes so far these days. Because an escalating trade war isn't just a great backdrop for any of a high tech good to going go towards China. Nvidia did design this chip specifically for this purpose. And it's not like this is a top of the line chip. I mean Morgan Stanley Anal say that H20s performance is about 75% below Nvidia's H100 family. And even since that note came out they've released a Blackwell chip that even exceeds the performance of the H100. So this is not a top of the line chip by any stretch of the imagination. So this inability to sell even low performing chips into the Chinese market is just a bit of a business scrambler if you are in video at this point. And Nvidia is definitely going to be peeved too. I mean they've done everything right there. They've a spokesperson said that hey, look at the taxes we pay. We have a US based workforce, we are a technology leader. Heck, our exports actually help the US fix its trade deficit with China which is the whole point of the tariffs is to bring that, that deficit downward. So they're just sitting here saying I thought we checked every single box crossed our T's dotted our eyes and yet here they still are.
- [06:39]
Neal Freyman
But the problem is the US government considers the sale of semiconductors to China in order to power their AI models a national security concern. This, this ban on chip exports did not start with the Trump administration. It started with Biden back in 2022 when they curbed the sale of the highest end chips to China. Because we had this thing like Deep Seek earlier this earlier this year where this AI model performed as good as ChatGPT or other American made models on a lot less firepower. They probably, it seems that they trained them on the age 20. So from the US government's perspective, whether it was Democratic or Republican administration, they're saying, sorry, Nvidia, I know you know you are going to have your business curd, but this is a national security priority for us because we need to win the air race against China. The country's wealthiest university and the White House are locked in a knock down, drag out fight and the economic stakes could not be higher. On Monday, Harvard University made the surprise decision to reject the Trump administration's demands that it change how it operates, saying that appeasement would compromise its educational mission and overall independence. Other schools like Columbia, who have been targeted by the government this year have given in to the demands. So that Harvard took the gloves off was somewhat of a landmark moment, signaling a more adversarial approach. Retribution came fast, with the Trump administration responding that it would freeze $2.2 billion in funds that had been awarded to the school for research. Now the two sides are digging in for a potentially long legal conflict over the $9 billion in total directs toward Harvard. Depending on how long it lasts, the showdown could have significant repercussions for the economy of greater Boston, where Harvard is based, and along with other research universities there is the primary economic engine of the region. Harvard is the fourth largest employer in the entire state of Massachusetts. And a funding freeze would deal a blow to sectors like life sciences and biotech that have flourished in Boston because of all the talent and research breakthroughs cultivated at the colleges. So Harvard is in no doubt feeling the financial squeeze with $2.2 billion and potentially more cut off. But Toby, it has been preparing for this moment for years.
- [08:52]
Toby Howell
True, it has a pretty massive rainy day fund. It's long hoarded cash and built up its budget to withstand quote, unquote shocks. Some of those shock absorbers are one, obviously the $53 billion endowment, the most of any school. Two, it's got a pristine triple A credit rating, and three, it's actually got an annual budget surplus of about $45 million. So all that affluence and prior planning makes it pretty well situated to weather this storm. But how long can it rely on its endowment? It's definitely a temporary thing. Even though that number sounds very big. There's pretty strict rules over what you can actually use an endowment for. About 80% of the funds are restricted to specific purposes like financial aid, like professorships and scholarships. And most of the federal funding that it was receiving was tied to this academic in scientific research. So you can't necessarily just like, for like plug that $2 billion hole that you now have because these funds are restricted and, you know, deemed towards certain purposes.
- [09:53]
Neal Freyman
Yeah. So this, when people were learning about this story and I, I was too, I was wondering, well, I thought this was a private school. Why, why is the government sending seven, nine billion dollars toward Harvard? And you know, it sends a lot of money toward other research institutions as well. And it goes back to World War II. The US government said, you know, I think maybe we should outsource this whole research and development and innovative thing. Maybe research, maybe colleges and universities do this better than we do. So it started funding schools for research purposes that grew over the course of the past few decades to the point where schools are now getting billions of dollars in, in funding. And it's kind of a sort of a. I scratch my back, you, I scratch your back, you scratch mine. I'm going to outsource all of this R and D to you by giving you billions of dollars in order to conduct research and create companies through your, through all of that research and innovation. At the same time, you are going to produce really high level talent and people with skills so that they, they can create companies and breakthroughs that will, you know, lead to the overall growing of the U.S. economy and local regions to flourish, like in the greater Boston area. So it's this partnership, this symbiosis that has worked for the past few decades. Now we're seeing some major fissures here in 2025.
- [11:10]
Toby Howell
Yeah. And Harvard has some options available to it too, to shore up. Even though it, it's, it's already sizable rainy day funds. Some of those are, you know, selling debt for short term funding. A lot of colleges have recently sold taxable bonds. Harvard did so last week. They sold $750 million worth. It's a pretty easy market for colleges to access. And so they have a lot of flexibility around how they can use those funds. And it goes back to stuff that Harvard did in the wake of 2008. They really kind of retrenched. They, they made their selves much more resistant to big shocks like this. The triple A credit rating is a big part of that too, because they have all these lines of credit that they can now tap into. So Harvard specifically will be probably all right. The long term ramifications of pausing research on things like, you know, AIDS research or cancer research or organ transplants. That's where people say we probably won't see the shocks now, but maybe down the line, when that research isn't taking place, that's going to affect a lot of things in a lot of part of the really entire U.S. economy.
- [12:13]
Neal Freyman
Right. The two things to watch are whether other universities follow in Harvard's footsteps leading, you know, showing defiance to the Trump administration, which might lead to more funding cutoffs and also the status of of Harvard as a tax exempt entity. Yesterday was reported that the administration is moving to revoke its tax exempt status, which is given to charities, churches, universities, so they don't have to pay federal income or property tax because they're in this umbrella of a nonprofit where you're conducting things that are, you know, for the greater good. So they give you tax exempt status. And now the Trump administration is looking to revoke that, which would be a huge escalation and lead to even longer legal battles.
- [12:52]
Toby Howell
A Chinese e commerce app is attracting a lot of American dollars, but it's not she an or temu. Driven by a string of viral videos posted on TikTok, the little known app Dhgate surged the top of Apple's free app charts and sitting in second place as of this morning. Dhgate's sudden popularity came from videos posted by Chinese influencers pulling back the curtain on global supply chains. In the videos, the influencers exposed luxury fashion brands from Hermes to Lululemon, purportedly showing how these name brands are actually being made in Chinese factories. Apps like dhgate allow global consumers to capitalize on this by buying direct from Chinese factories at much more affordable prices and without the branding. One video that has racked up 10 million views shows a woman boasting that the yoga pants she's offering are made out of the same material and with the same craftsmanship as Lulu, but can be bought for just five to six dollars. So even after tariffs are applied, they're still less than what Lulu would charge you. Another video shows a man in a factory showing off a Louis Vuitton style bag for only 50 bucks, again making the claim that that they're the same manufacturer as the real deal. Now, is a Louis bag for 50 bucks or leggings for $5 too good to be true? Probably. Louis Vuitton has repeatedly emphasized that they don't make any of their goods in China, while a Lulu spokesperson clarified that only 3% of its products are manufactured in China. Still, Neil, these videos are the latest in the surge of trade war TikTok content that's been blowing up ever since Trump rolled out the new tariffs. It's a new battleground when it comes to trade, but also when it comes to just public opinion.
- [14:29]
Neal Freyman
Yeah, the trade war has moved to TikTok I think you're right to pour a little cold water on this. A number of brands have come out like Lululemon saying that the videos are just not real. This guy said that, hey, I'm looking at the Lululemon factory in this town in China. And they're like, we don't make anything in those factories. Many of these brands have NDAs with their contract manufacturers in China. So if a manufacturer is saying that they work with Lululemon or Louis Vuitton or Hermes, they're probably lying because they're under contract to not disclose that. So I would say if you're using dhgate, go ahead, but you are probably just buying a dupe, not a real thing.
- [15:09]
Toby Howell
Well, there's actually a little bit of nuance between what a counterfeit is and what a dupe is because counterfeits are just like you're trying to pass it off as a real thing, but it's just made of much worse materials. Dupes are just D branded versions of, you know, high quality goods. And dupe culture has actually taken on a name of its own over in China. It's called Pink T and Gen Z uses use it to reflect the popularity of people moving from, you know, label loving to saying, I just want high quality stuff. So there's been this big market that is not the counterfeit market, but it is the dupe market of people saying, maybe I don't need that, that logo on my, on my Hermes bag or whatever or my Lululemon leggings. Maybe I just need high quality goods. And that's been a massive culture shift that's been percolating over the last year or so. So there is a slight difference between dupes and counterfeits. Make sure though, if you are buying anything you want to fall in the dupe category, you don't want to fall in the counterfeit category.
- [16:05]
Neal Freyman
Special edition of Toby's Trends on Thursday.
- [16:07]
Toby Howell
Seriously, you get them. I can't stop trending. That's just the name of the game. All right, let's take a quick break and hand it over to Neil for his numbers right after this. Taking your business international can feel like sailing through a sea of red tape. Regulations and unpredictability. Is attracting global business worth the global hassle?
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- [19:17]
Toby Howell
Yeah, it's definitely a reversal from just recent decades because you're right, there was this stigma around joining the family business. It just seemed like the easy path. And, you know, our generation of entrepreneurial or just wanted to set off on their own and they didn't want to join like the boring old business that mom or dad ran. But now they're staring down just an economic reality that makes that job seem a lot more appealing because, you know, Covid upended the beginning parts of most young people's careers. Then there's been this huge AI boom that's a massive disruptor. So, you know, maybe working in a steel fabrication plant seems a little more AI proof than working a cushy marketing job somewhere in New York City. So. And then you just toss in the trade war as well. And so all of a sudden, of course you're going to phone up mom and dad. And mom and dad are probably happy too, because, you know, they're looking to pass down these businesses too. They don't want to work forever. They want to ensure it's in good hands. And so if your kid comes calling, then of course it becomes this appealing avenue for them as well. So just kind of a fascinating shift that we have been seeing, maybe accelerated by recent economic conditions.
- [20:21]
Neal Freyman
Kind of an interesting game to play in the political office environment. You know, like, where do you put your kid when they come in? Do you put them in the, you know, in the trenches or are they management track so, you know, it gets a little tricky.
- [20:34]
Toby Howell
Yeah. A lot of career coaches say that a lot of parents make the mistake of turning their kids into executives right when they came out of the gate, which doesn't even make sense for the kid either. They're not prepared to be an executive. Obviously it leads to some weird office politics as well. If you see, you know, suddenly you're reporting to a 22 year old when you've been working there for many years. So there's a right way to do it and it is a little testy. There's no perfect way to do it. But yeah, definitely something that we're seeing increase, especially in the face of just the current reality.
- [21:02]
Neal Freyman
My next number piggybacks off my first. Not only are parents passing down businesses to their kids, they're also buying them super duper expensive real estate. Consider this. 28% of all Manhattan homes were purchased through a trust last year, a big jump from 17% three years ago. According to a new report from real estate analytics firm Adam. New York brokers told Bloomberg that wealthy parents Helping their kids flex on their trends was the primary driver of the jump. This highlights a couple of trends. Number one, at this point, you probably can't afford to buy a Manhattan property, especially in a desirable neighborhood, without generational wealth. In 2024, the median sales price in the borough was $1.1 million, with all cash sales accounting for 60% of purchases. And number two, that the great wealth transfer is picking up steam. As we learned in the previous story about family business succession plans, the great wealth transfer is what economists have called the exchange of $124 trillion from boomers to their kids over the next two decades. And it's playing out in real time in the West Village, which is being invaded by Nepo babies, right?
- [22:08]
Toby Howell
And a lot of the vehicles that these parents are using to transfer these houses to their kids are trusts. One luxury broker told Bloomberg that As much as 60% of sales last year involved parents buying for their kids, and 40% of those used a trust. Trusts are good for one, avoiding tax ramifications. They kind of skirt some of these wealth taxes or transfer estate transfer tax rules. But then two, they're also discreet. You don't have to disclose like who's behind the trust versus an llc, for instance, you have to attach your name to. So people are really digging trust as a vehicle. I mean, you've heard of like trust fund kids. This is kind of an invasion of trust fund kids into certain areas of New York because they're just really good vehicles for passing down that wealth when it comes to housing.
- [22:56]
Neal Freyman
My final number is $2 billion, which is the value of iPhones that were airlifted to the US from India in March. If that sounds like a lot, it is. The iPhone shipments marked an all time high for a single month, and roughly the same as the total number for January and February combined. At least six cargo jets were used in operation. Beat the tariffs, because that's what this rush was all about. President Trump had signaled on April 2nd he would be imposing reciprocal tariffs on the US trading partners. So Apple wanted to get ahead of whatever was announced to make sure enough iPhones were on US soil. Turns out it was a savvy play because Trump hit India with 26% tariffs and eventually 145% tariffs on China. The two countries where Apple makes iPhones later on smartphones were exempted from Chinese tariffs for now, and India tariffs were also rolled back. But the Apple iPhone Airlift shows how companies are scrambling to stockpile inventory in the US Given all the uncertainty around tariffs.
- [23:53]
Toby Howell
Yeah, we've talked about the fact that Apple consumers were also rushing into stores to try to buy iPhones before maybe prices rise. And we're seeing that kind of play out across the broader economy as well. We got consumer spending numbers for March yesterday, and they actually came in higher than expected, which shows maybe this rush to, you know, buy stuff before prices went up. So all this front loading, all this, you know, bringing in a ridiculous amount of product in terms of Apple seems to be the move that a lot of businesses are taking and consumers are reacting by kind of meeting that demand with spending of their own.
- [24:29]
Neal Freyman
Yeah. Another indication of this is the pharmaceutical industry. We've talked about it on the show that there might be pharma tariffs coming. Pharmaceutical products imported to the US in January and February was $37 billion compared to 31 billion during the same period last year. So if you're on a plane from China or India or Europe to the United States, there's probably a lot of freight alongside you. Let's sprint to the finish with some final headlines. What is this? A smuggling ring for ants? Why, yes. Yes, it is. On Tuesday, two Belgian teenagers pleaded guilty to the illegal possession and trade of wildlife in Kenya after they were accused by authorities of trying to smuggle thousands of ants out of the country to sell as pets. The 19 year olds were arrested earlier this month after being found with more than 5,000 ants packed in test tubes stuffed with cotton wool that would allow the ants to live for months. One of them asked for leniency, saying, we did not come here to break any laws by accident and stupidity. We did. The Kenya Wildlife Service has called it a landmark case that shows how the wildlife trafficking trade has shifted from larger trophy animals to smaller, more exotic species. Toby, these aren't your standard ant farm ants. They had a street value of $7700.
- [25:41]
Toby Howell
Yeah. The giant African harvester ant is a highly sought after species. They are prized by collectors because one, they're very big, like the queens can reach almost an inch long. So these are, I know that we're talking about smaller animals are becoming more popular, but in terms of the ant kingdom, these things are sizable. And a lot of it is because it's very hard to find this specific species if, if you're an ant collector on any websites. I mean, two of the biggest are ants HQ and ants are ants. Are you s. It sounds like, oh, ants are usually like Toys R Us, but ants are us. And they barely have any of these species listed on their sites. And if they did, they're sold out. Right now they sell them for $131 and $226. So you can see why this specific species was targeted by these Belgian teens. Because, yeah, they had some serious street value. If you thought Fyre Fest was bad, wait till you hear about this experience that Mr. Beast cooked up. Diehard Mr. Beast fans who paid $1,000 for a Vegas experience that was supposed to be unforgettable were left trying to forget and get a refund after the event, titled the Mr. Beast Experience was an abject disaster. Resorts World Las Vegas advertised the experience as something that included a three night stay at the hotel, a mystery bag full of exclusive merch, meet and greets, photo ops, minigames, and even a $10,000 voucher for a lucky fan. Unfortunately, we didn't get any of that, said one fan who flew from Arizona to attend. Instead, guests posted pictures of the exclusive package that they were supposed to be receiving that ended up containing some chocolate bars and about $9 worth of merchandise that you can get in the clearance section of Mr. Beast website. The YouTuber tries to make things right by personally inviting everyone affected by the experience to his actual studio. But still, Neil, a very tough look for him.
- [27:32]
Neal Freyman
The biggest problem was he wasn't even there. I mean, one fan who did go told a Las Vegas news outlet, when I go to the Tom Brady Experience in Boston, Tom Brady's there. And so they were wondering where Mr. Beast was. And when you're not there, you can't sort of direct the. You don't have control over the experience. So you get things like a miserable goodie bag. You have one. One. One traveler complained of a $63 cocktail, which sounds outrageous, but when you think about it, Las Vegas, like that does, that could happen there. So overall, a miserable experience for this, for these people, a very much a Mr. Beast Fyre Fest and a PR debacle that he's trying to clean up.
- [28:10]
Toby Howell
I love that this one fan clearly is an experienced person because who's going through the Tom Brady experience, the Mr. Beast experience. They just love the experiences hosted by anyone and everyone. Finally, for our last headline, scientists announced they discovered alien life yesterday. And that's all the time we have. Great show, Neil. Kidding. No, but seriously, a team of researchers announced they found the strongest indication of extraterrestrial life yet on a massive planet 120 light years away from Earth known as K2 18b. Thanks to these super strong observational abilities of the James Webb telescope, analysis of the exoplanet's atmosphere showed that there is a high concentration of of a particular molecule also found on Earth that has only one source living organisms. It's called dimethyl sulfide. It's made of sulfur, carbon and hydrogen and is a common byproduct of marine algae. Last year, after the first reading came in from the telescope, the team of astronomers conducting the study spent an enormous amount of time trying to get rid of the signal. But a second, even stronger reading led them to conclude that K2.18B may in fact harbor about a thousand times as much dimethyl sulfide as Earth, which suggests it sees could be teeming with life. I'm not screaming aliens, said Nicole Lewis, an exoplanetary scientist at Cornell University. But I always reserve my right to scream aliens. Neil, I am not an exoplanet scientist at Cornell University, so I'll just scream it aliens.
- [29:38]
Neal Freyman
Well, they said that they're either looking at a new chemical process that no one has ever seen before, or they're witnessing the first signs of biological activity outside of Earth. So kind of mind blowing to think about. It also makes me think that, you know, we've hyped up this first encounter between humans and aliens and it's probably not going to look like it does in the movies. Unfortunately, they probably won't descend from a ufo. It'll probably look a little more like this, like a peer reviewed report in the Astrophysical Journal Letters. So, you know, that is just something to look forward to whether, whenever we conform or deny this alien report.
- [30:16]
Toby Howell
Yeah, it's probably not going to be like, welcome to Earth, people. It's going to be like amoebas or something like that. But still, like, this is a lot of dimethyl sulfide, so I'm bullish.
- [30:25]
Neal Freyman
More dimethyl sulfide than I've ever seen for sure. Okay, let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful Thursday. For any questions, comments or feedback, send an email to Morning Brew daily at Morning Broadcom. We want to hear all your alien theories. Let's roll the credits. Emily Milian is our executive producer. Raymond Lu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Scoop star Daris is on audio hair and makeup welcomes our alien overlords. Devin Emery is our president and our show is a production of Morning Brew.
- [30:56]
Toby Howell
Great show that Neil. Let's run it back tomorrow.