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Trade War Spills Over Champagne & Meta Tries to Slow Tell-All Book
00:29:03
Trump extends the trade war to EU booze & Meta tries to stop tell-all book
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- [00:01]
Neal Freyman
Good morning, Brew Daily Show. I'm Neal Freyman.
- [00:04]
Toby Howell
And I'm Toby Howell.
- [00:05]
Neal Freyman
Today, France has got champagne problems after Trump floated a 200% tariff on European alcohol.
- [00:11]
Toby Howell
Then Meta secured a key legal victory against a whistleblower, leaving the future of her memoir in doubt. It's Friday, March 14th. Let's ride.
- [00:25]
Neal Freyman
Good morning, happy Friday. And happy PI Day 31 4. The day we celebrate the most elegant of of all irrational numbers. PI, defined as the ratio of a circle's circumference to its diameter, has been key to the development of math because it's used to understand anything that involves a circle, sphere, or curve. And at 22 trillion known digits and counting, it's also been excellent material for memorization contests. The person who holds the unofficial world record for reciting the most digits of PI from memory is a Japanese guy named Akira Hariguchi, Who. Who in 2006 counted more than 1 00,000 digits over 16 hours. That's a lot.
- [01:05]
Toby Howell
That is a lot. And I was thinking about my own training with PI in the past because I think a lot of people have, you know, gone through a pie phase. Maybe that's just me, but this one technique that I recommend using is called the memory palace. You've probably seen it in Sherlock Holmes show from a few years back, but it involves creating an imaginary place in your mind where you sort of store these mnemonic images that represent strings of numbers. So, for instance, you might take a stroll through that location. For me, it's like my childhood bedroom is what I use in order to, you know, do a pie recitation contest. And it worked pretty well for me. I got up to like 50 to 100 digits. I still got, you know, 50 in the memory palace locked in today. I will spare you all from hearing that, though, because that's not good podcasting. Just hear. You hear me rattle off some digits here and there. But yeah, try the memory palace technique out. You might not get to 100,000 digits, but it's a good kicking off point. Now, a word from our sponsor, Invesco qqq. Neil, how are you feeling about your sleep schedule these days?
- [02:02]
Neal Freyman
Well, it is not great. Too much thinking, not enough sleeping.
- [02:05]
Toby Howell
What's keeping you up at night?
- [02:07]
Neal Freyman
I think information overload. I'm always reading about business news in the market, and it leaves me wondering if I'm investing in the right stuff.
- [02:14]
Toby Howell
Have you heard of Invesco QQ? It contains 100 of the most innovative companies in the NASDAQ. So you can sleep easy knowing that the future is yours to access an.
- [02:23]
Neal Freyman
ETF as a sleep sleeping aid. Who would have thought it's been tracked.
- [02:26]
Toby Howell
The NASDAQ 100 for over 25 years and helping people access better information with.
- [02:31]
Neal Freyman
Invesco Cuckoo Q Q. You can rethink what's possible before investing. Consider the fund's investment objectives, risk charges and expenses. Visit Invesco.com for a prospectus with this information. Read it carefully before investing. Full disclosure and Podcast Description Toasts, not Tariffs that was the plea of the alcohol industry as they found themselves once again as the fall guy in the escalating trade war between the US Europe President Trump took aim at the bubbly yesterday morning when he said he'd put a 200% tariff on wine, champagnes and other alcoholic products coming out of France and the EU. The threat was a response to Europe announcing a 50% tariff on Kentucky bourbon and other American goods, which itself was a response to Trump putting a 25% tariff on aluminum and steel from all countries. It's a jab left hook, then uppercut in the heavyweight economic boxing match of our age. No one on both sides of the Atlantic had particularly nice things to say about each Trump called the EU one of the most hostile and abusive taxing and tariffing authorities in the world, while France's foreign minister replied, we will not give in to threats and will always protect our industries. Caught in the crossfire are alcohol companies who have consistently been targeted in trade spats because they're so core to national identity. Toby A 200% tariff means European wines would become two to three times more expensive. Looks like it's California Cab instead of Beaujolais on the menu for the foreseeable future?
- [03:56]
Toby Howell
Seriously, even a bottle of Prosecco that you might pop for 15 buc bucks? That's now getting up to $45. So that's what a 200% tariff does. It adds 200% to the costs. French wine producers have typically been in this very chummy relationship with the United States. It's their biggest export market. But right now, the vibes that, you know, grand chateaus and vineyards in Europe are not good right now because when you talk to American wine importers, you either have to if you are if you are an American wine importer, you have to decide whether one to pass on those costs to consumers or to just stop importing altogether. So it's not it used to be this love love relationship, but now it's a lose lose relationship.
- [04:36]
Neal Freyman
Yeah, I mean these tariffs are would be quite high and we should say they are not, they have not gone, gone into effect yet. There might be a negotiating period and we all just drop them, but we'll see. In 2020, China imposed tariffs as high as 218% on Australian wine that caused exports to plunge by 90%. So that's what you're hearing from the wine importing industry, saying we import a lot of wine from France and Italy, the two biggest markets for import. And if you know, 200, 200% tariffs go into effect, we're just not going to import them. And we'll turn to the US Wine industry, but they just don't make enough to fill our shelves. So they are expecting a lot of pain.
- [05:15]
Toby Howell
And then the economic chaos unleashed by these tariffs, even though it is affecting a very niche industry. We did see stocks fall again yesterday. Broadly, they fell 1.4% on Thursday. That's now we have reached a correction, which means that we are down 10% from February's all time high. We've now fully erased all the post November election gains. So we're back at levels not seen since September of last year. I mean, it sounds ridiculous to say, but we're not. We're at levels only seen that last year in September. In response to all this, though, Treasury Secretary Scott Bessant basically shrugged his shoulders yesterday, said that the White House is focused on, quote, the real economy and not concerned about a little market volatility. In response to These specific proposed 200% tariffs on EU alcohol products. He said, I'm not sure why that's a big deal for markets. So the overall vibe and messaging we're getting from percent and the White House is that the current trade war and tariffs are meant to create long term economic health and that small market corrections might be necessary to, you know, shore up the broader economy for success.
- [06:18]
Neal Freyman
Meanwhile, after a long period of silence, CEOs of major companies and banks in the United States are speaking up a little bit about what they think about tariffs. It's been a mixed bag. Jamie Dimon of JP Morgan, perhaps the most influential private sector CEO around, had previously said, get over it when it came to tariffs. This was after Trump was elected. Now on Wednesday, he said at a conference, uncertainty is not a good thing. Meanwhile, his rival David Solomon at Goldman Sachs, said that companies understood what Trump was trying to accomplish, but made a public appeal for more certainty. Certainty, uncertainty, that is the big word you're hearing out of the C suite of corporate America about what they are. You know, they, they think that uncertainty will lead to lower investment. They're trying, you know, in public and in private to lower the temperature with this trade war.
- [07:10]
Toby Howell
Metta really doesn't want you to read this book. The social media company is taking legal action to prevent a former employee from promoting her new memoir. The book, titled Careless People, is written by Sarah Wynne Williams, a former Meta executive who uses its pages to provide a detailed account of her six years at the company. It touches on global controversy since as the platform's role in Myanmar, its influence during the 2016 US presidential election and lob sexual misconduct allegations at former CEO Sheryl Sandberg. And Joel Kaplan is chief Global affairs officer. Obviously these are things Metta doesn't want out in the public discourse. A Meta spokesperson responded, stating that the book contains, quote, a mix of out of date and previously reported claims and false accusations about our executives. But Mehta went a step further, filing an arbitration demand against Wynne Williams, saying that the claims in her book violate a non disparagement agreement she signed when she left the company. And they succeeded. An emergency arbitrator ruled this week that Wynne Williams can no longer promote or distribute the memoir or make any disparaging, critical or otherwise detrimental comments. The two parties are now set to enter private arbitration. Neil the filing doesn't stop the publisher, Flatiron Books, from continuing its publication and promotion of the book. So it's not like it will just disappear off shelves. But still, this was a legal win for Metta.
- [08:34]
Neal Freyman
But Streisand effect much? I mean this book came out on Tuesday and contains certainly explosive allegations but we were not going to talk about it at all. Now here we are on Friday talking about this book because of Metta's big, large scale pushback and its arbitration win here against the author. So you could, you could question Meta's PR strategy, but there's no question they've been on a full court press. They got former and current employees to speak highly of Sandberg, Zuckerberg and Kaplan. They published a blog post as well pushing back against these allegations. Meta's PR team has been through this so many times before. There have been a number of crises that have engulfed this company over the past decade, from Cambridge Analytica to the election to whistleblower complaints about how they, you know, hid harmful effects of Instagram. So Metta has been doing this a long time. You can question their strategy, but they certainly have a strategy.
- [09:32]
Toby Howell
This does feel like a more forceful, you know, public repudiation of a former employees tell all because you are right. Like Francis Hagan, last year or two years ago was another whistleblower that kind of, they went through this past thing, but they usually don't, you know, pursue legal action to try to reduce the promotion or publication of a book. Especially because in 2023, the National Labor Relations Board ruled that it's generally illegal for companies to offer severance agreements that actually prohibit workers from making disparaging statements about their former employers. So that includes stuff like sexual harassment or sexual assault accusations. So it's, it's interesting that they found that there was any legal standing here given that NLRB kind of ruling from a few years ago. So just fascinating that this was one particular book that they did take this pretty severe action against.
- [10:26]
Neal Freyman
And if you're curious about the book, I mean, it's been well reviewed by a number of publications. Not Metta, but you know, outside reviewers, careless people. The title refers to actually the Great Gatsby and the two main characters from that book, Tom and Daisy, who smashed up things and creatures and let other people clean up the mess they had made. And that refers to Mark Zuckerberg and Sheryl Sandberg. So there's a little taste of what you can expect if you pick up the book. Welcome to Stock of the Week, Dog of the Week, the segment where Toby and I pick one stock that hit the gym every single day and another that bailed because they were too tired. I won the pre show pie baking contest, so I get to go first. And my winner is intel because the struggling chip maker hired a new CEO and investors loved the pick. Shares popped 15% yesterday after intel selected Lipboard Tan to lead it out of the darkness and into the light. Tan is a well known figure inside the semiconductor industry, having previously been the CEO of Cadence Design Systems, a maker of software used by all the big chip designers. He's also a known figure inside intel because he was on the board of the company until recently. But being the boss of intel is like being the head coach of the giants. There is just so much work to do before you can be taken seriously again. Intel whiffed on the AI boom, has spent tons of money building a questionable foundry business and went through three CEOs in seven years. Once the king of the American chip makers, intel is now valued at less than 1/3/30 the size of Nvidia. In a note to employees after his hiring, Tan wrote, there's nothing I dislike more than losing Toby. Can he turn intel into a winner?
- [12:04]
Toby Howell
I don't know. The giants metaphor is apt because intel is in a struggling place right now. I will say though, that so Lip was on or Tan was on intel's board until August 2024, where he left after having differences with how to position the business with the now ousted CEO Pat Gelsinger. Which might be exactly why he appeals to Wall Street. Because Tan frequently pushed for a better AI strategy. He wanted faster decision making. He wanted to break up the notoriously bureaucratic organization. So one source told the editor of Yahoo Finance that if anyone can save intel, it's Lip. But it will take years and a partner. So it does look like he is the man for the job. But I also find it ironic too, because over the last month, Intel's actually been rising a little bit on the hopes that they will separate their foundry business, which was this big push into taking on TSMC and fabricating their own chips. And Wall street was never really sold on. And that was a big Gelsinger thing to do. But then Lip Bhutan has come in and said that he's signaled he's probably going to stick with that plan. And yet the stock still rallied. So I don't really know what the stock is rallying on at this point because those are two kind of conflicting pieces of data right there. Maybe it's just that they think this really is the man to turn intel around.
- [13:18]
Neal Freyman
And if not, I mean, he'll be could be the last CEO that Intel ever has. Because if this turnaround plan fails, then it is likely that intel will be sold for parts to vultures. So it could be the turnaround of a once fallen American giant, similar to we saw with General Electric, but it also could be the breakup of a once iconic American giant.
- [13:41]
Toby Howell
Up next, it is our dog of the week.
- [13:45]
C
Eczema isn't always obvious, but it's real. And so is the relief from Ebglis. After an initial dosing phase of 16 weeks, about 4 in 10 people taking EBGLIS achieved itch relief and clear or almost clear skin. And most of those people maintain skin that's still more clear at one year with monthly dosing.
- [14:03]
D
EBGLIS Lebricizumab LBKZ, a 250 milligram per 2 milliliter injection, is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema, also called atopic dermatitis, that is not well controlled. With prescription therapies used on the skin or topicals, or who cannot use topical therapies, Ebglis can be used with or without topical corticosteroids. Don't use if you're allergic to Ebglis. Allergic reactions can occur that can be severe. Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with Ebglis. Before starting Epglis, tell your doctor if you have a parasitic infection searching for real relief?
- [14:38]
C
Ask your doctor about epglis and visit epgliss.lilly.com or call 1-800-dilly Rx or 1-800-545-5979.
- [14:45]
Toby Howell
This message it's a paid partnership with Apple Card did you know you can earn up to 3% daily cash back on every purchase when you have an Apple Card? I said what I said. Up to 3% on every purchase. You can even take that daily cash back and save it automatically when you open a High Yield Savings account through Apple Card. Whether you're embarking on an overseas trip or just grabbing a bite around the corner, Apple Card is built to be your smart spending sidekick wherever you are. It also helps that there are absolutely zero fees. To get started, head to the Wallet app on your iPhone where you can apply in minutes and start using your Apple Card right away to watch that daily cash roll in. Let's ride. Subject to credit approval, Savings is available to Apple Card owners subject to eligibility. Apple Card and Savings by Goldman Sachs Bank USA Salt Lake City Branch Variable APRs for Apple Card range from 18.24% to 28.49% based on creditworthiness rates as of January 1, 2025. Member FDIC terms and more@apple card.com My Dog of the week is Kohl's. For a long time, Kohl's has been a store that you run into for socks but somehow leave also with a blender. But lately, fewer people are making that blender impulse buy or buying socks. The department store reported a rough end to 2024, with sales plunging 6 and a half percent and profits cut nearly in half. Kohl's also warned investors that next year looks even gloomier, with a much weaker sales forecast for the year ahead, causing the stock to plummet by more than 27% this week. CEO Ashley Buchanan, still fresh on the job amidst a lot of the company's wounds, were largely self inflicted. Kohl's went all in on chasing younger customers by adding Sephora beauty counters, expanding its trendy homes goods sections and nixing popular coupons. But instead of attracting new shoppers, these moves just ended up confusing and frustrating its loyal customer base. But Also, Kohl's issues are far from unique. Across retail, companies like Macy's, Target, American Eagle and Dollar General are sounding the alarm about cautious shoppers squeezed by inflation and hesitant to spend. Lower income customers especially are cutting back, prioritizing groceries and rent over discretionary purchases. Neal Kohl's had a rough one this week, but it's far from the only one running into these issues. Consumer angst is is here.
- [16:59]
Neal Freyman
The last two weeks have been pretty wild on the retail front. Every single company that reported earnings said that they saw a pullback in consumer spending because consumers are worried about tariffs. They have, they're still not over inflation. And what was been interesting to hear, what you heard from Kohl's as well is it's not just that really low income consumer pulling back. It's also the more affluent consumers. The CEO of Kohl's said that those earning 50,000 less than $50,000 a year, but even those earning under $100,000 a year are cutting back with the potential for more pullback in the coming months. So these are some serious warning signs for consumer spending, which drives 2/3 of the American economy.
- [17:41]
Toby Howell
Right. You mentioned the higher end of the market. American consumers in the luxury market are spending a lot less as well. That spending fell 9.3% in February from a year earlier. That's according to Citi's analysis of its credit card transactions. Costco, who usually has a customer base that skews towards higher income, have said last week that they've seen a big shift towards lower cost proteins, stuff like ground beef and poultry. So you are seeing it just across the board because we also saw the CEO of Dollar General come out say, hey, consumers are feeling very squeezed right now. So did Coles. They say lower end is also very squeezed. So you're hearing that word tossed around that we were hearing a few years ago, which is choiceful. Consumers are becoming choiceful with how they're spending their money once more. So you are right. Coles was our dog week just because it had a really rough week. But it is emblematic of the whole retail sector at this point.
- [18:32]
Neal Freyman
Let's end on a high note, shall we? It is Friday after all. One thing that is working for Kohl's is this partnership with Sephora. Kohl's now has 1,000 Sephora shops inside its stores. Those tick in $1.8 billion in revenue. Last year, comparable beauty sales increased 13%. So this partnership is clicking and they want to invest in it further to drive revenue.
- [18:54]
Toby Howell
Let's move on. Formula One is back in Melbourne this weekend, kicking off the season down under for the first time since the pandemic. At the center of this upcoming season is seven time world champion Lewis Hamilton, who swapped Mercedes silver for Ferrari red, marrying the sport's most recognizable star with its biggest brand. Will he contend for a record breaking 8th championship or will it be more photo shoots than photo finishes? It's a storyline you can only cook up in a Netflix studio, which is pretty much exactly what execs in a Netflix studio were hoping for. Netflix's drive to survive transformed Formula one into must see tv, birthing an entire genre of sportscenter docu series from golf's full swing to tennis's breakpoint. And as this new season begins, every Max Verstappen pole, personal feud and pit stop maneuver will be documented for millions of fans who may never even watch the actual races. Which, Neal, is sort of an issue because races average just 1.1 million weekly viewers in the US and peaked at just under 2 million in 2023. Both those peaks and those averages are well below IndyCar and way below the numbers NASCAR pulls in. So Neil, lots of storylines to look out for as drivers enter the grid on Sunday. From Sir Lewis to Netflix's supposed influence to the fact that maybe F1 isn't as big as you might think. It's lights out and away they go.
- [20:14]
Neal Freyman
Well, the this is a merger between the two biggest brands in the sport and it's kind of exactly what F1 needed after that pandemic bump led to a couple of years of stagnation. Ferrari has participated in every single Formula One season since the series began in 1950. Lewis Hamilton is a figure who is much larger than the sport. A global fashion icon, he's co chairing the Met Gala this year. He has just transcended the sport and so Ferrari is paying him $100 million per year to come over. That includes overall earnings, including sponsors, image rights, bonuses and salary. That is a ton of money. It's a huge gamble on this British guy to revitalize Italian racing.
- [20:58]
Toby Howell
I do think that they need it too because there is some media analysis done when you know, Caitlin Clark was still tearing up college basketball and they were like the three games that Caitlin Clark played to end her collegiate career. They brought in more viewers than the entire Formula One season did over all 24 races in the U.S. so when you're talking about a influence on something like Caitlin Clark is an order of magnitude above what the entire sport of Formula one is. So I do think there was this time where everyone was watching Drive to Survive, probably during the pandemic, and it became this thing where, like, oh, this series just has catapulted this sport into the American mainstream. That's not quite the case. That being said, the Miami Grand Prix, the Las Vegas Grand Prix, the Austin Grand Prix, these are all events that are very well attended. They are these big business moneymakers in the cities that they descend upon. So it's not like this is some really tiny thing, but it's also probably not as big as you might think.
- [21:54]
Neal Freyman
I think gauging the influence of something like Drive to Survive is worth talking about the all the copycats that have emerged from it. Tennis has break point. Golf has full swing. American football has quarterback and receiver. There's been so many of these, you know, Drive to Survive style docu series that have come out in the aftermath of the success of that show. I don't think any of them have achieved nearly the heights of Drive to Survive, and maybe that's because of the particular egos involved in F1 and the characters that this sport has, and they're involved in money and politics and business. So it's quite larger than life, just like Lewis Hamilton. But I think in terms of the influence of Drive to Survive, I don't know about the viewership, the impact it has, but on the particular industry of. Of docu series, it's been. It's been a massive influence.
- [22:44]
Toby Howell
Now, let's sprint to the finish with some final headlines. A federal judge has ordered President Trump to reinstate thousands of federal workers who were dismissed during his administration, flipping the efforts of DOGE on its head. In Maryland, a judge ruled that the layoffs violated federal protocols, ordering thousands of dismissed probationary employees to be reinstated temporarily, while a California judge called the terminations a, quote, sham and demanded immediate rehiring across six major agencies, including the Departments of Agriculture, Energy and Defense. Both judges emphasized that while workforce reductions are legal, they must follow established legal processes. This might make for some awkward return to office moments, Neil.
- [23:24]
Neal Freyman
It would. I mean, they. The administration characterized these terminations as based on poor individual performance. But the problem is that these people who had been fired, these probationary workers, who are very young into their career, that's why they were fired, because it's easier to fire them, actually received stellar performance reviews. So they did not square the circle with their firing. So the judge says, you can't, you know, put it under the guise of bad performance when we have documentation here that says they had good performance. So a blow to Doge's efforts to trim the federal workforce. There have been lawsuits filed all over the country for any number of of sort of cost cutting issue, cost cutting measures that Doge is undertaken. We're seeing these play out in the courts. Markets may have 99 problems, but a government shutdown ain't one the head of the Senate Democrats, Chuck Schumer, said he'd vote to advance a Republican measure to keep the government open later today, relieving concerns that Congress would pass a spending bill to prevent the government from shutting down, which it would do absent of a bill at 12:01am Saturday morning in less than 24 hours. A shutdown would be disruptive to the economy. With hundreds of thousands of workers furloughed and many government services closed, Schumer, after a bitter debate among Democrats about how to confront Trump, decided this issue wasn't worth the fight.
- [24:43]
Toby Howell
Right. And you did see stock futures creep up a little bit this morning. They are green as of the time that we're recording this because yeah, a government shutdown is just disruptive whichever way you cut it. There is also rumblings too though, that not passing the bill is exactly something that Elon and Doge might want because a government shutdown could expedite this goal of downsizing the federal government. So counterintuitively, it looks like it's very likely that this spending bill will pass with support from across the aisle, precisely because, you know, Democrats do not want a government shutdown to aid in Doge's efforts.
- [25:17]
Neal Freyman
Finally, in space, the rich keep getting richer, at least when it comes to moons. Saturn, which already has the most moons of any planet in the solar system, was recently discovered to have over 100 more moons orbiting it than previously known. That brings its total up to 274 moons, way ahead of second place Jupiter with 95 known moons. And Earth has just a measly one. These new moons around Saturn aren't big and they certainly don't have cheese. Most are just small space rocks a few miles across. But if they have trackable orbits around their parent body, then yes, they are considered to be moons. Congrats Saturn on another five star recruiting class.
- [25:56]
Toby Howell
I'm just going to come out and say it. Astronomers are are being way too lenient in their definition of what constitutes a moon. I need more than just rocks that are a few miles across. I do need some more substantial moons. Maybe it's because our moon is 2159 miles across. So I don't like that Saturn's picking up all these extra moons in the process when they're not big enough in my, in my mind. But also one thing that I think astronomers are going to run into is that right now the current whoever discovers the moons get the chance to name them. They get the rights to name them. But the current naming scheme for Saturn's moons is based on characters from the Norse mythology. So we are now probably so deep in the Asgardian pantheon that they might have to expand to, I don't know, Greek or something at this point because there's only so many Thors and Odins out there. You're going to have to find a different pantheon at this point.
- [26:43]
Neal Freyman
It made me realize that we don't name our moon, we just call it Moon.
- [26:47]
Toby Howell
Yeah, see, because it's big enough. It's not some of these one mile across rocks. I don't know. I'm hating on Saturn right now. You're doing great, Saturn.
- [26:54]
Neal Freyman
Maybe that's because I asked this question on my trivia night on Wednesday and you said Jupiter instead of Saturn. You won't make that mistake again. All right, let's wrap it up there. Thanks so much for starting your morning with us. Have a wonderful Friday and an even better weekend. For any questions, comments or feedback, send an email to Morning Brew daily at Morning Broadcom. We'd love to hear from you. And if you're enjoying the show, share it with a friend, family member or co worker, Toby, who should everyone listening share it with today.
- [27:21]
Toby Howell
I want you to share the podcast with someone who was really into F1 when drive to Survive first came out, but as fallen off in recent years because I know there is a lot of you. So I'm going for a big total addressable market here.
- [27:32]
Neal Freyman
Neal, let's roll the credits. Emily Milian is our executive producer. Raymond Lu is our producer. Olivia Graham and Olivia Lake our associate producers each. And Aogoo is our technical director. Scoop Star Darius is on audio, hair and makeup says beware the Ides of March, which is coming tomorrow. Devin Emery is our chief content officer and our shows are production of Morning Brew.
- [27:53]
Toby Howell
Great show today, Neil. I wish you all well.