Toby Howell (2:05)

Okay.

Neal Freyman (2:05)

My waffle at 3am it's not a breakfast thing though.

Toby Howell (2:08)

Well, yeah, anything could be breakfast if, you know, you flip the script enough. I like putting the chocolate chips on the thin waffles and then adding a little bit of peanut butter as well. So that's my Waffle House hack. No eggs necessary. Let's take a moment to talk about our sponsor, Wise Business, the app for handling payments in multiple currencies. Neil, yesterday I woke up and did the show with two completely different shoes on.

Neal Freyman (2:30)

How is that even possible? Did you not feel the difference?

Toby Howell (2:33)

They were both Nikes, both running shoes. And anyways you didn't even notice. Which is why I bring it up. Imagine us as international business owners. I often do managing payments in different currencies. Euros, yen, pesos. It'd be a disaster to say the least.

Neal Freyman (2:47)

It's why you need wise business. You can pay your vendors or suppliers in multiple currencies. No stress, no hidden fees, and no way to wear two different shoes.

Toby Howell (2:55)

If you are a business owner and you have a lot on your plate, take one thing off with wise business. Make international payments simple. Head to wise.com/business. That's wise.com/business.

Neal Freyman (3:07)

That trade war last night was awfully crazy. I wished we taped it about 36 hours after President Trump announced 25% tariffs on Canada and Mexico, sending global markets tumbling, he flipped Benson Boone style and delayed those tariffs by 30 days, allowing everyone to take a deep breath. The pause came after phone calls with the leaders of both Mexico and Canada yesterday in which they took steps to soothe his concerns about border security and drug trafficking. Mexico President Claudia Sheinbaum said she would reinforce the border with 10,000 members of the Mexican National Guard. And Canada's Prime Minister Justin Trudeau said he'd continue implementing a plan that had already been announced, a $900 million initiative to deploy drones and helicopters at the border. Investors were pumped to hear the North American trade war was called off, at least for now, because it would have likely pushed inflation higher, lowered economic growth and caused all sorts of costly headaches for companies. After suffering heavy losses in morning trading, stocks made up ground by the close and ended up moderately lower, with the S&P 500 finishing down 2.75%. Still, this trade war is not completely over 10%. Tariffs on China went into effect this morning, and China retaliated with tariffs of its own. Uncertain goods. An antitrust investigation into Google and Chinese exports of critical materials will be limited, a pretty moderate response designed to avoid escalating tensions further. Toby, my head is spinning here. What do we make of all this?

Toby Howell (4:36)

By kicking the can down the road once again, Trump is kind of showing the US to be to, you know, have this reputation for maybe stopping short on actually falling through on some of these promises. So far, I mean, I've seen headlines that it's been more art of the deal than actual tariffs being slapped on these countries. Proponents and supporters of Trump will say, hey, look it, we got the concessions that we are after. But then you can look at the concessions and say, wait a minute, they're not as Big as potentially that the tariffs that were threatened you would expect the concessions to be. And I mean, some of the things that Mexico did, they've done in the past before. They've done this multiple times, pledging 10,000 troops to secure the border. They did it in Trump's first turn, they did it during Biden's term, and now they're doing it again under the threat of tariffs. The US Is developing this reputation for not actually following through. And President Trump is developing a reputation for not fully falling through on his threats of tariffs.

Neal Freyman (5:28)

It's also gaining a reputation for being a very uncertain trade partner, which could chill investment anyway. Even if there's no tariffs involved. If we keep threatening our trade partners and pulling back at the last minute, it just creates this level of uncertainty. And uncertainty is terrible for the stock markets, terrible for, for business investment. Mexico has been a huge winner of the past few decades as the US has decoupled a bit from China. A lot of multinational companies have set up factories just south of the border, right next to Texas or Arizona, so they can easily ship goods into the United States. Even without the tariffs, Mexico could still suffer from all of this uncertain certainty whether the US Is a reliable trading partner going forward. And the same can be said for Canada.

Toby Howell (6:14)

A lot of American allies are saying, all right, we're just going to trade amongst ourselves more. Obviously, you can't ignore the US The US Is the biggest consuming nation in the world, so you can't just completely cut them out of trades. But you are seeing more US Allies make trade deals that kind of skirt the US The European Union has done three trade deals in the last two months that have not involved the US at all. They've did a big one with some South American countries. So obviously you can't fully ignore the US because of just how big we are. It's not anyone's preference to not trade with the U.S. but if the U.S. does prove to be, such as you put it, an unreliable trade partner, then you are going to see more of these deals.

Neal Freyman (6:52)

And we're not done with the trade wars just yet. As I mentioned, 10% tariffs have went into effect on China. China retaliated. It was a very measured response as a way to kick start negotiations. So we'll see what happens over there. It is not a full blown trade war. As it happens. Trump has also threatened to levy tariffs on the eu. And I expect, I do expect that to happen in the next few months. And there's also these, this looming cloud of Canada and Mexico. You know, that we've kicked the can down 30 days down the road, but we'll see how it plays out. We're just in a new era of uncertainty. You saw stocks go down yesterday. Not a whole lot, but they were still down a pretty significant amount, 0.75% from the S&P 500. And I'm sure so many people spent all day yesterday if they were working in a multinational business that does trade with Canada and Mexico or anywhere else, just on the phones figuring out what the hell to do and then to see this called off again. It just leads to a little more chaos and a little more uncertainty into the U.S. economy.

Toby Howell (7:53)

For our next story, $40 billion in U.S. foreign aid has been put on hold after President Trump and Elon Musk agreed that the US Agency for International Development should be shut down. Two US Aid directors replace on administrative leave over the weekend after refusing to turn over sensitive info to Musk and Doge. And in their place steps in new Secretary of State Marco Rubio, who as of yesterday is the acting administrator of the agency that appears to be doomed. Foreclosure despite strong pushback from Democrats against gutting the agency responsible for everything from humanitarian efforts in Ukraine to health initiatives in sub Saharan Africa. Employees were seen cleaning out their deaths yesterday after being told not to report to work anymore. Neil Critics say that Trump lacks constitutional authority to fully shut down USAID without help from Congress. But Trump pushed back on that idea, saying when it comes to fraud, he doesn't need approval. This has left a lot of international aid efforts in the lurch in the meantime.

Neal Freyman (8:53)

Yeah, I mean, this, this agency hands out $40 billion worth of money every single year. That doesn't sound like a lot. And it's not. Compared to the federal budget, it's less than 1% of everything the US spends. But in certain areas, it accounts for a large part of their economy. US aid accounts for 7% of the entire GDP of South Sudan. In Somalia, it's 9% of GDP. In Kenya, US aid supports 30,000 health workers. After all this chaos went down over the weekend, this Bangladesh health health clinic that supports cholera and malnutrition laid off a thousand workers. So $40 billion going all around the world. It's a way for the US to project its soft power. USAID has been around since JFK was the first person to to institute it. And it was a way to check Soviet aggression. And now it's a very similar way to check China's influence, economic influence all around the world. So critics of dissolving it, or at least making it a shell of its former self, say that this leaves a wide opening for China to continue exerting its economic power all around the world. It's already Africa's top investor, top trade partner. And in the absence of a US Aid influence or a vacuum of US Aid, that could lead to, you know, China sending its tentacles all around the world.

Toby Howell (10:13)

And then meanwhile, too, it does leave a lot of these contract workers just, I call it, in the lurch because they don't know what their future entails right now because USAID had 10,000 employees, but also numerous contractors working with it, health contractors spread across the globe. So they're saying, all right, what do we do now? So you are correct, too, that even though USAID as a portion of the federal budget is a lot smaller, I mean, $40 billion is nothing to sneeze at, but when in context of the entire federal budget, it is rather small. But that soft power that the fact that the US Is, you know, stepping into these places to also fend off China from doing the exact same, it does shake up the geopolitical world in the ways that it probably goes above the actual dollar amount.

Neal Freyman (10:57)

Right. And just to, just to say what happened, you know, at the end of last night, it looks like USAID will still continue to exist as a part of the the State Department. Marco Rubio, the Secretary of State, said that there are a lot of functions of US Aid that are going to continue to be part of American foreign policy, but it has to be aligned with American foreign policy. That may be an acknowledgment by the Trump administration that they can't just shut this aid down that was approved by Congress without getting similar approval from Congress. Under a new executive order, the United States could look a little bit more like Norway. Yesterday, President Trump greenlit the creation of a sovereign wealth fund, a federally owned investment vehicle that takes stakes in different types of assets, such as stocks, bonds, or in Saudi Arabia's case, entire soccer teams. But getting one set up in the United States will be a tall task. First of all, it's unclear where the funding would come from. In many countries with sovereign wealth funds, they're financed by a budget surplus that typically comes from commodity riches. Norway's sovereign wealth fund, the world's largest, is plugged by the country's vast oil revenues. Second, it would require congressional approval, but it's unclear whether lawmakers will go for it, since it would be a way to sidestep their spending authority. If a sovereign wealth fund comes to fruition Which Trump said he hopes will happen in the next 12 months. It could be a way to save TikTok in the United States, he said. Remember, Trump delayed a ban on TikTok and is pushing for a joint venture with ByteDance in which the US owns a 50% stake. Toby, we heard this floated on the campaign trail a sovereign wealth fund to, quote, advance national endeavors. It looks like the gears are in motion.

Toby Howell (12:33)

It is easy to understand the allure of a sovereign wealth fund because in theory, you can let it allows the government to, you know, put cash towards strategic aims without having to actually raise taxes on its citizens. In practice, that balance is actually a lot harder to achieve because in America, it is tough. We do not run a budget surplus.

Neal Freyman (12:54)

$1.3 trillion deficit deficit.

Toby Howell (12:56)

So where is that money coming from? And then also, when you choose to allocate money to a sovereign wealth fund, that means you are also choosing to not allocate it towards something else. So maybe should that money instead go towards, you know, improving highways or funding public education or something else than just putting it in a fund to invest in strategic things like, you know, TikTok or something like that. But then, you know, Howard Lutnick also is on board with this as well. He said that it could be used to facilitate the sale of TikTok. He also called out, you know, during COVID when they are buying a 2 billion vaccines from these companies. So, so they also take a stake in those companies as well.

Neal Freyman (13:35)

So he's the Commerce Secretary nominee, the.

Toby Howell (13:37)

Commerce Secretary now nominee Howard Lutnick. So you can see where this would fit into some of these deals. But also it's just not something that you immediately think of, of that would be helpful for a country like America. Finally, the Panama Canal has found itself on the wrong end of a Trump administration ultimatum after Marco Rubio traveled to the Critical Waterway to, try and, quote, change the status quo. The status quo Trump is upset with is the level of Chinese influence over the critical trade route. Rubio was able to win significant concessions on that front, with Panama's president declaring after the meeting that his country won't renew a 2017 infrastructure funding agreement with Beijing. Trump has threatened to seize control of the canal, but Panama's president, Jose Molino downplayed the tensions between his country and the US While also reiterating the fact that the canal is not up for negotiation. Neil Most new secretaries of state take a trip over to London or another cushy ally for their first official overseas visit, but not Rubio. The focus on Panama shows the new diplomatic priorities of this administration.

Neal Freyman (14:43)

All right, let's do a little history lesson here. So the United States built the Panama Canal in the early 20th century. In the 1970s, Jimmy Carter signed a law that allowed Panama to take back control, and that eventually happened in 1999. But the Panama Canal continues to be a huge unlock for trade, especially for the United States, because it just presents such a shortcut from east coast ports to Asia. And the United States right now is the Canal's biggest user. 40% of all US container traffic traverses it annually. It's also a big It's a key for Panama's economy as well. It accounts for 4% of its entire GDP. There have been major price hikes recently. They've increased tolls and service fees because the Panama Canal has suffered a bunch of droughts that has limited the ships that have been able to go through. It has these big investments that it wants to make on the Panama Canal. So that's what Trump is bristling at a little bit is these huge price increases that happened over the past few years.

Toby Howell (15:43)

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Toby Howell (17:13)

Ago OpenAI debuted an AI helper that with little oversight, could go buy you some Valentine's Day chocolates online if you ask it to. And then it dropped another tool that can scour the Internet to conduct deep research about any topic of your choosing, maybe how to find a valentine. And today those so called agents have made it into Toby's Trends, where I want to talk about the rise of AIs roaming the Internet. The first tool I mentioned is called Operator and it can shop for groceries or book a reservation online with minimal human input. A New York Times journalist took it out for a test drive and described how their cursor zoomed around the screen controlled by the AI to go buy some dog food, only stopping to ask for passwords and payment confirmation. OpenAI's latest tool, Deep Research, accomplishes in 10 minutes what would take a human many hours, according to the company. The company does see the tool as particularly useful for people who work in finance, science, law, or really anywhere else that spends time going deep on certain topics. But the reason I toss this into a Toby's Trends is that computers, browsing computers is only going to grow more common. Google has quite literally already dropped a tool two months ago called Deep Research that can do the same thing as OpenAI's new release. And I expect we'll see more announcements coming down the pipeline as related to AI agents. So the so called self driving Internet, Neil, as you actually framed it to me earlier, is fast arriving.

Neal Freyman (18:39)

It's fast arriving. It is extremely expensive too because this tool will cost you $200 a month for OpenAI. But I think what we're seeing is these companies respond to Deep Seek's cheaper model by releasing for very frequently new product updates to create a more sticky product. We all saw that Deep Seek went to the top of the app store right away which showed that it was very easy to move between chat bots. They're very similar in their capabilities and their scope. It doesn't matter whether using Cloud or ChatGPT or Deep Seek, whatever you ask, it's going to give something broadly similar which show that their products are not sticky. So in response, OpenAI said, hey, we're going to, you know, put our foot on the gas pedal. We're going to release a lot of new products that hopefully gets people in our ecosystem paying for this and it'll create a more sticky experience with OpenAI specifically. But as for the self driving Internet, I mean parts of this are very exciting. You can see ways that it would save a lot of time. There are things That I feel like I'm just copy, pasting, clicking through. It's very much a headache like booking a reservation or booking a flight or things like that that I would love to have an air agent do. If the stakes are low enough.

Toby Howell (19:51)

I guess you could see how these tools could supercharge productivity. Remember, that's always been the promise of AI, is that it will, you know, take productivity to another level. Because instead of taking hours to research an obscure scientific topic, you can do that in minutes now. So that is literally saving time. But then also some cold water on these, you know, lofty claims is that a lot of researchers have pushed back and say you probably need to spend as much time verifying the AI's research as you would just researching yourself, because again, it is prone to hallucinations and it's not great at parsing through, like what information is actually true online versus what is not true. And then the other thing too. Remember I talked about the New York Times journalist who took it out for a spin and said that it was almost like having the world's least confident assistant, because it is constantly asking you, hey, can I do this? Can I do that? Because it doesn't want to, you know, overstep its bounds. So it ended up, you have to focus on it just as much as if it's not running in the background because you have to put in your credit card info. You have to say, yes, this is okay to do this. So it's not quite fully autonomous yet. So definitely some, you know, it's not quite there, if you want to call it that, because you still need to, you know, monitor it. But you see the promise in the idea that these tools could eventually save you a lot of time.

Neal Freyman (21:12)

Right. I think it'll be important for people to learn to trust them without checking their work. And I think that would be my biggest hold up right now. If it were to generate a research report, I just wouldn't totally trust it because I know that these eyes are prone to hallucinate and make stuff up. So I need to check it. And then it would be the same amount of work anyway. So this is V1. We'll see what happens in V2 and V3. Okay, let's sprint to the finish with some final headlines you should know about. While the Eaton and Palisades fires in Southern California have been 100% contained, the financial fallout is continuing. State Farm, which provides insurance for more than one in five homeowners in the state, has asked California regulators to approve an emergency rate hike in Order to avoid quote, dire situation for our customers and the insurance market in the state. That hike would include a temporary 22% increase in homeowners insurance and a 38% increase in renters insurance. The desperate tone of the letter raises questions about the financial condition of the insurer, which is being hit with thousands of claims from victims of the fires and has already paid out more than $1 billion. It said an interim increase was necessary to preserve its claims paying capacity.

Toby Howell (22:20)

Remember, State Farm actually chose not to renew fire insurance in for about 1600 customers in the Palisade Palisades in 2024. And it did raise questions about, yeah, how is the financial health of this company. One group that does think that State Farm is doing just fine is Consumer Watchdog, which is this l. A based advocacy group. They actually are disputing that State Farm is any in any sort of financial trouble. They pointed to the fact that insurers made it made underwriting profits of $1.4 billion between 2020 and 2023. They say it has 134, $134 billion in the bank right now. So they're saying you could absolutely, you know, cover these costs. But then State Farm is saying this is actually how insurance works. As, you know, the risk goes up in a certain area. Prices have to go up as well. That is just a foundational way that insurance works. So higher risk should actually lead to, you know, more higher costs as well. So it is just tough though to see that headline of 22% increase for a community that is already, you know, reeling from the fallout of these fires. For our next headline, Neal, it looks like you may be able to go watch your Eagles play in the super bowl after all because ticket prices for the big game are plummeting. The cheapest ticket has fallen 30% over the past week, bringing it down to prices that are 50% cheaper than the last year's record breaking Super Bowl. Now, I should say the cheapest ticket is still insanely expensive. And picking one up on the secondary market will set you back about $4,000. Still a little cheese fatigue combined with the fact that the game is being held in New Orleans instead of Vegas like last year. And you can see why prices are coming down from the stratosphere.

Neal Freyman (24:01)

Yes. So the Caesar Superdome in New New Orleans holds 74,000 seats. Allegiance Stadium in Vegas last year holds 65,000 seats. So it could be a little bit of a supply and demand or supply issue. And then on the demand side, yes, I do think there is a decent amount of cheese fatigue. We had the same matchup two years ago. But I will tell you, when you see the Superdome on Sunday, it is going to be a sea of Kelly Green. The Eagles have 34% more ticket buyers on StubHub than the Chiefs. So we are going to be out in full force and we are going to be flush with cash because we're only paying $4,000 for a ticket instead of 8,000.

Toby Howell (24:40)

Is that we just like the royal we?

Neal Freyman (24:43)

I'm not going. I am not going. We got to prep for the show. Okay. When it comes to drive thru efficiency, Chick Fil A is in a league of its own, boasting the highest revenue per restaurant of its peers. Yes. Even with being closed on Sunday. And turns out the secret to putting the fast in fast food is by studying game film like an NFL quarterback. According to a new Wall Street Journal report, Chick Fil A deploys traffic analysis teams to its locations that use drones to capture aerial footage of drive Thrus and make tweaks based on the footage they capture to improve traffic. The executive tap to improve service at Drive Thrus said his light bulb moment came from watching a football game where New Orleans Saints quarterback Drew Brees looked at replays on his tablet from the sidelines. He thought to himself, we can break down drive thru game film just like they break down football game film. So never tell me I'm not being productive when watching football.

Toby Howell (25:35)

I will never say that. What are some of these insights that they're finding though? And first of all, Chick Fil A is just the absolute apex of, you know, the fast food service industry. One franchisee was looking at his franchise serving one car every 13 seconds, which is just insane. But they found that there were a few, you know, bottlenecks and a few issues. One worker was just doing way too much at the drive thru is a veteran worker. They were shouldering too much of the load. And then another issue that they found is that the wi fi used in the parking lot didn't extend far away enough for people to, you know, put their orders in. So it is really small tweaks that we're talking about here because, you know, Chick Fil A is great right now and the US Is just becoming a more drive thru centric country. In general, 43% of fast food orders in the US happen in drive thru windows. So if you could, you know, increase efficiency by just that 5%, that 10% margin, it does lead to, you know, greater profit. So I'm just.

Neal Freyman (26:33)

You think you would be bored Watching game film of a drive thru of cars go through drive thru.

Toby Howell (26:37)

Well, it would be like watching a football game for me. I wouldn't even know what I'm looking at because I don't see the very small nuance of the details. But I do think the drones are a big unlock as well because in this article in the Wall Street Journal they said Chick Fil A managers used to stand on their roofs to get an aerial view. Now they have that drone footage. So to answer your question, though, I would have no idea.

Neal Freyman (26:58)

I would love it that we need the Chick Fil a version of Jon Gruden there just walking us through with the telestrator. I would love it and see where we think we could improve the drive through times.

Toby Howell (27:07)

Finally, when you go to the movies, there is an expectation that a bevy of previews will precede your fe film. It's part of the experience that when you show up for say an 8pm start time, the actual movie won't start until 8:20 or so. But a Connecticut lawmaker is trying to challenge that assumption. A state senator from New Haven, Martin Looney, recently proposed a bill that would require theaters to list the actual start time of movies, not when the trailers for fast and furious 27 start. So going to book a movie, you might see something like the brutalist 8pm Then in parentheses, film starts at 8:14. Neil Looney told a local news outlet, it seems to be an abuse of people's time. If they want to get there early and watch the promos, they can. But if they want to just see the feature, they ought to be able to get there just in time for that.

Neal Freyman (27:57)

This, this man is fighting the good fight. But I've never seen a more dead bill than this one. Movie theaters are going to fight a tooth and nail because this is their livelihood. You watching previews, you watching commercials, right? The previews before the movie is the third most likely place for people to see promotions. A lot of independent theaters say this is what we need to survive. We'd die if people came in at 8:20 for an 8:00 movie. So I think of all the list of inconveniences and annoyances people have on in life. This one sits somewhere in the middle or near to the bottom. It is not, you know, it's not great if you have to sit through 8, 8 previews before seeing the movie, but it's not a big deal either.

Toby Howell (28:38)

I like it. You know, it keeps the movie machine turning as well because you see a preview, you're like, wait a second, I want to go see that in the theaters. And then you go see that movie, you see another preview. So you need the previews to keep, you know, theaters running and they need the revenue because they're struggling from COVID So I like the movie theater preview.

Neal Freyman (28:54)

Plus, you know, it allows for banter where you can't talk for the entire movie. But during the previews, everyone just turns to the person they're sitting next to and be like, that one looks good. Or like, I'll never see that one. That's the key part of the movie. Moviegoing experience.

Toby Howell (29:06)

I also think it's great for the friend that always shows up late too, because if you actually told them the correct start time and they usually show up 15 minutes late, now they have that buffer of the preview. So it's great for your know, not so time efficient friends.

Neal Freyman (29:19)

All right, so we hate this bill. All right, let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful Tuesday. For any questions, comments, or feedback, send an email to Morning Brew daily at Morning Broadcom. And if you're enjoying the show, share it with a friend, family member, or coworker. There is a ton going on right now, so make sure everyone you know and care about has a way to stay informed. Toby, who should people share the pod with today?

Toby Howell (29:43)

I want you to share it with your biggest group chat because like we said, super bowl tickets are all time low prices right now. So ask for a little Venmo donation and maybe you can join Neil and the Kelly green hordes and go and watch the Super Bowl.

Neal Freyman (29:59)

Okay, let's roll the credits. Emily Milian is our executive producer. Raymond Lu is our producer. Olivia Graham is our associate producer. You know is our technical director. Scoop Star Darius is on audio, hair and makeup has been approved for all audiences by the Motion picture Association of America. Devin Emery is our chief content officer and our show is a production of Morning Brew.

Toby Howell (30:20)

Great show, Daniel. Let's run it back.