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US TikTok Off to Rocky Start & Americans Think the Economy Stinks
00:29:08
American TikTok's rough start and consumer confidence hits new low
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Good morning, Brew Daily Show. I'm Neal Freyman.
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C
And I'm Toby Howell.
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Today, Americans think the economy is worse now than during the pandemic.
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C
Then TikTok U.S. is off to a shocking start. It's Wednesday, January 28th. Let's ride.
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B
Let's kick off the show by talking about one of my favorite subjects, civilizational collapse. It could be closer than ever. Yesterday, the advocacy group Bulletin of the Atomic Scientist moved its doomsday clock to 85 seconds until midnight, signaling that Earth is as close as it's ever been to total destruction. According to them, the group cited increasingly belligerent nuclear powers, climate change, the misuse of biotechnology, and the rise of artificial intelligence without adequate controls as the main potential sources of annihilation. That said, the Doomsday Clock could be shifted back should leaders work together to prepare for existential threats. Toby, I'm just going to say it. I don't think I do well in an apocalypse. Don't have that dog in me.
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Well, don't start going Mad Max on me yet, because a lot of people are sort of roasting the Doomsday Clock because how is it closer to midnight now than in 1962 at the peak of the Cuban Missile Crisis, which merely brought us seven minutes till midnight? And part of that just has to do actually with a methodology change. In the past few years, the group has changed from counting down the minutes until midnight to counting down the seconds because it gives you a little bit more flexibility and nuance when addressing global rapid change that's hitting our world right now.
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Inflation's hitting everything from groceries to Doomsday clock counts.
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And now a word from our sponsor, Sandals. Neil. Got any fun travel plans?
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Yeah, I'm visiting home for a very quiet dinner with my parents, followed by the annual fight.
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I see. That is the problem. That is not something to look forward to to get you through these gloomy winter months. If only you could go to Sandals Resorts instead.
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Yes, if only I were at Sandals Adult only resorts exploring the Caribbean's most beautiful islands from Jamaica to St Vincent and enjoying globally inspired dining across more than 10 restaurants per resort.
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I mean, where would you rather be? With your parents or the Caribbean's best beaches? Powder white sand in turquoise waters?
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Mom earmuffs, but definitely the Caribbean. There's no better place to experience the Caribbean than at resorts founded by a family from the Caribbean. The Winter Blue Sale is now on, so visit sandals.com for the best all inclusive value in the Caribbean. That's sandals.com okay, this is incredible. Americans views of the economy is officially worse now than it was during the pandemic, when you could barely leave your house and unemployment neared 15%. The consumer confidence index for January released yesterday morning tumbled almost 10 points to its lowest reading since 2014, far lower than projections. The the Conference Board survey asked respondents to assess the economy as it stands currently and their outlook for the future. Those questions revealed a nation more pessimistic than er, perhaps the biggest area of concern is a job market that stagnated over the last year. More than 55% of respondents said it was difficult to land a job, the highest number since the pandemic. And the share who said that jobs are plentiful tumbled to 23.9% from 27.5% in December. But people are worried about the economy for other reasons too, specifically inflation. The Conference Board said references to prices and inflation, inflation, oil and gas prices and food and grocery prices remain elevated. Plus mentions of tariffs, trade, politics, health insurance and war all rose in January. Toby, I can't help but think of the vibe session of a few years ago when people were super down on the economy but continued to spend like everything was hunky dory. The key question is, will this time be different?
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I mean that list that the chief economist of the Conference Board pointed out gives plenty of reason why people are not feeling good.
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B
Games day clock 85 seconds makes a lot of sense.
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C
What a dour start to the morning. But it is true that consumer sentiment is in the gutter right now, and I think you have to look into the reasons why. Obviously you pointed to the labor market. One good kind of metaphor for how the entire economy is right now is I'm stealing from Diane Swonk, which is a KPMG economist. She said what? It's a one legged stool everywhere you look. And basically what she's saying is that only certain parts of the economy are propping up the larger hole in the and in the labor market. Right now, one industry is the only one doing the hiring. It is health care has driven most of the gains in the labor market over the past year or so. In the consumer spending front that you mentioned, it's rich people. Rich people have. We've talked about this ad nauseam on the show. It's a K shaped economy where just look at the planes that you are going on. Everyone in first class is driving most of the revenue for airlines. Same goes for all the way across the economy. So one legged stools everywhere you look. Which is probably why people are feeling very uncertain right now.
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I think the biggest red flag is the job market. According to this survey, just 14% of respondents expected more jobs to be available in six months. The job market is essentially just frozen over. We got more bad news yesterday on that front. Pinterest, social media giant announced that it was going to lay off less than 15% of its workforce. And the reason why this is notable, well, it's a lot of people. But also they tied it directly to artificial intelligence. They said the company is taking these actions to support transformation initiatives like reallocating resources to AI focused roles in teams. I think people certainly have AI and how that's going to impact their job. In the back of their minds when they're perhaps responding to a survey asking hey, how do you think the economy is? Do you think they'll have a job in the next six months?
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C
And then the weird part about AI too is that if you look at GDP projections coming up over the next year, they're pretty rosy. I mean there are some very optimistic projections, you know, saying that GDP will grow 4 or 5% over the next year. But a lot of that is driven by AI investment. And so if artificial intelligence spending is the only thing kind of drawing the carriage of the economy forward, then again that's another one legged stool that we're looking at that most of the business investment have been in data centers. It's not a very broad business investment. So very few things are propping up the economy right now, which is again leading to all that uncertainty moving on. TikTok is looking like a broken clock these days. After the US version launched last week, a wave of glitches have hit the app, which the company blamed on a power outage at one of its data centers, creating quote cascading Systems failure. However, TikTok's explanation is not sitting well with its user base who claims the company is censoring political content, especially anti Trump and anti Ice content. One viral example that was verified by CNBC showed the word Epstein triggering an error message in DMs, prompting an investigation from the company. Other more general issues users reported were their videos getting flagged as ineligible for recommendation posts showing zero views, which make better videos, am I right? And DMs failing to send While the censorship narrative gained a lot of attention on social media, Gavin Newsom went as far as to launch a review into whether TikTok is violating state law by censoring content. More mundane issues like a massive winter storm could help explain some of the outages. In general, though, it's been a very rocky start to life for the joint venture, highlighted by the number of US users deleting the app, surging nearly 150% over the past five days, according to Sensor Tower. Neal Tough to think of a worse start.
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Well, the 2025 Colorado Rockies would like a word. All you have to do is go to the App Store to see this change take place. I looked at the top 25 free apps. TikTok is not there, which is crazy to think about. It's one of the most popular social media apps in the country. What is there at number two is a social media app called upscrolled. It was just started last year. It's sort of a blend of Instagram and X, and a lot of users from TikTok have been defecting from there to upscrolled and a number of other competitors. We saw this happen after Elon Musk took over Twitter Slash X a few years ago. Who knows whether this will have any staying power. But at least right now people are voting with their feet because no matter the cause of the issue, whether it's actual censorship where there's no evidence of, or these data center power outages, you know, people just don't trust the current leadership of TikTok or many users don't seem to trust the current the new current owners. And they're voting with their feet.
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One thing that I mentioned when we talked about TikTok kind of getting into this US joint venture was the fact that the data security risk now lies with Oracle. Like the buck stops with Oracle. And we immediately saw how that is going to manifest. Because if they have a data center issue now, they cannot blame bytedance. They can't really blame Beijing at all. It all comes down to whether Oracle can withstand the load of this of taking on TikTok USA onto their servers. And early signs are not good that they have not done well with it. Because if the reason why you're saying all of these errors were occurring for users is the fact that your systems couldn't handle it, that's still not a good thing. Even if you're not censoring data like that is not a good start to life as a US joint venture.
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B
Meanwhile, there's other another headline yesterday that just shows how powerful TikTok was at least a few years ago and hopefully it'll continue in the future if the new owners sort of handle this. Okay, Khabi Lame, who is the world's biggest TikToker? He has 160 million Tik Tok followers. He's that guy that does those mime he makes fun of just people doing stupid things on the Internet. Well, he just signed a $975 million deal with a financial services firm called Rich Sparkle holdings to monetize that massive fan base. And they think this is this business led by Kabi is the, you know, a creator led business is going to eventually do $4 billion in revenue. So that was, I mean he cashed out. That's, that's an incredible deal for him. Shows the power of TikTok over the past few years to generate huge fan bases. I think there is a huge question about whether this social media app that came out of absolutely nowhere in 2019 will have this power moving forward. Moving on. After two decades of negotiations, the European Union and India finalized a trade agreement yesterday that leaders are calling the mother of all trade deals. It's the latest sign that President Trump's tariffs have motivated other countries to cozy up to each other and reduce their dependence on the American market. The mother of all trade deals is indeed massive. It covers nearly 2 billion people, encompasses about one quarter of the global economy and one third of global trade trade. Crucially, it'll give European companies better access to a fast growing Indian market that has been among the most protectionists in the world. Here are the details. India is going to eliminate or reduce tariffs for nearly 97% of traded goods by value. That's projected to double EU exports to India by 2032 and lead to 4 billion euros in savings for European firms. On the other side, the EU is going to cut tariffs on virtually all goods imported from India over the next seven years. Both India and the EU have been bruised by tariffs from the Trump administration. India got hit with a 50% tariff on certain goods, while Europe was slapped with a 15% tariff even after it struck a deal with the White House. That proved the impetus to get together and say, look We've been talking about this deal for ages. With the US Becoming unpredictable, it's probably time we finalize this thing. Toby, they're clinking French champagne in Delhi.
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I mean, you said that they've been talking about this forever. 20 years is a long time to talk about a trade deal. But I do think it's all downstream of just wanting a stable trading partner. Just think about what you want in a life partner, Neal. Do you want somebody? Think about it a lot, constantly oscillating back and forth, jumping down your throat when, you know, you buy Russian oil once or twice, or do you want someone who says, yes, we welcome you with open arms? That being said, it does feel like maybe you're kind of trying to get back at a jolted X a little bit here because, yes, this is a big deal. Yes, they're calling it the mother of all trade deals. But India EU trade pales in comparison to US EU trade. Right now, only less than $200 billion of goods are exchanged between the two countries. Between the US and the EU, it's one and a half trillion dollars. So that just gives you a sense of the scale. But still, it is a big win for these two blocks.
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B
It really ties back to the Prime Minister of Canada's Mark Carney's speech back in Davos where he talked about the middle powers getting together. They basically every, almost every country on the planet, their biggest trading partner is the United States. Or in second place or first place, China CAR called on the middle powers to act together because, quote, if we're not at the table, we're on the menu. And you're seeing this happen all over the world. The EU is just coming off signing a trade agreement with four South American countries. Keir Starmer, the UK Prime Minister, he's going to China today to perhaps sign some more deals. Canada and China agreed to a deal earlier this month that reduced tariffs on Chinese EVs in Canada. So you're seeing these middle powers come together because, yes, the United States is their number one trading partner, but as the United States becomes more unreliable, reliable on the trading front, they're all getting together. Who knows whether this is, you know, the start of something big and a more major global realignment of. Of trade permanently or just sort of a gut reaction to what's happening with the United States right now. But either way, it opens up an Indian market for the EU that is just extremely productionist. We talk about the US Having high tariffs right now. India is essentially a fortress right now. European cars are hit with a 110% tariff that is going to come down to 10% over the next few years under this. And then let's talk about wine and alcohol that is a huge export from the European Union. It's currently tariffs in India are currently at 150% right now. Eventually those will be reduced to 20%. I don't know how they afford to buy European liquor in India.
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C
Clinking glasses for sure will be in the future. All right, we're going to take a quick break and come back with more stories right after this. Man, Neil Bonds sure are tricky, huh?
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B
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C
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B
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C
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Barry Weiss apparently has never heard of a feedback sandwich and a brutally honest direct address at a CBS News all hands. The new editor in chief announced an overhaul of the network to bring it to the social media age or else become extinct. Weiss, the Free Press founder who was given the reins to CBS News three months ago, told colleagues that the era of television news was dead. Put a fork in it, she said. Our strategy until now has been to cling to the audience that remains on broadcast television. I'm here to tell you that if we stick to that strategy, we are toast. She urged reporters to forget about which Shows would pick up their stories and instead focus on reaching audiences on the Internet who expect news immediately and on demand. Weiss argued that CBS News is not meeting people where they consume news in 2026. She said that Americans actually spend twice as much time consuming news today as they did 50 years ago. So it's not like they're tuning out the world, but they are tuning out traditional TV in favor of things like podcasts, YouTube newsletters, and Twitch. Walter Cronkite had competitors. She told staffers, we have 2 billion, give or take. Toby Weiss has had a rocky few months since being hired as editor in chief. Do you think this pivot to more of a startup culture can turn the ship around?
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C
Yeah. And a lot of people within CBS News maybe not are Bari Weiss fans, but are fans of kind of her take on the industry as a whole. Because a lot of people do agree with it that the diagnosis of the. Of the fact that CBS may be overindex on broadcast news is 100% true. People do consume news on social media. Now, how you go about giving that message to your employees, how you go about, you know, managing layoffs and whatnot, has been left something to be desired. But her overall take on the industry, I think a lot of people are aligned with.
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Yeah. Here are two data points where I think she's kind of relying on to message this shift. She said that Americans confidence in mass media has fallen to a record low. This is in a new Gallup poll last year, 28% expressed trust in newspapers, television and radio to report, report the news fully, accurately and fairly. So that 28% is down from 31% the year before and 40% five years ago. So this has been a precipitous downfall. And then another poll from Pew found that for the first time ever, social media has displaced television as the top way Americans get news. And so she announced 18 new contributors to CBS News. It's an interesting list of podcasters, newsletter writers, existing columnists at the Free Press that express that kind of span the gamut when it comes to political ideology. But I think the number one thing that they all perhaps share in common is they bring an existing audience, their creator first. And this is the way news is going here at Morning Brew. We're doing that exactly.
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That little endorsement of Morning Brew along the way. But yeah, and one of the big things that she is trying to preach here is that we need to install trust in news organizations once more. But a lot of people say you're kind of undermining that very goal when you do something like pull a 60 minute segment just days before it's going on air because the government hasn't had a chance to respond to it yet. So people are saying, let's execute this strategy if you actually believe in this, because right now people don't trust you and don't trust CBS as a whole because of the moves that you have made yourself. So yes, you can bring Andrew Huberman on, you can bring Peter Attie on, which are some of the commentators that she is doing. But if you want to establish trust, you just got to make moves that establish trust. Moving on, Yale wants to make sure that your grades are the only thing you can blame for not getting into Yale. Yesterday, the school announced a major expansion of its financial aid program. Starting this fall, kids who come from families earning up to $200,000 a year will be able to attend the school tuition free, while those coming from families who earn up to $100,000 a year paying nothing at all. The decision will save students and their families a hefty chunk of change. Tuition alone will run you $72,000 a year, while full cost of attendance, including room and board, can reach nearly 100 grand. Yale has already made strides to increase the number of lower income students on its campus. With over 1,000 of their 6,800 undergraduates attending for free, how can they afford all the free rides? Its endowment ticked up 11% last year to reach $44 billion. The decision also moves Yale into lockstep with many of its ultra wealthy peer schools with similar policies. Harvard, MIT and UPenn all offer deals like the one Yale announced. Neil, obviously this is great for expanding access to one of the premier institutions in America, but it's also coming at a time where the value of a college degree is being called into question. So Yale is killing two birds with one stone by killing tuition.
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This is all about hitting the middle class. So at Yale and other elite institutions are doing really well with with low income students. They're doing really well with high income students. Unsurprisingly, those legacy people. So this is all about targeting the middle and that's why they are increasing this tuition exemption to $200,000 instead of up from $100,000 earlier. Yale has nearly doubled the number of low income students that go to New Haven in recent years. But that missed that middle is the gap that they're trying to solve now.
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Now I think they're trying to solve a ROI issue as well because they are trying to defend their relevance or trying to defend their legitimacy. Right now, even as you have students kind of second guessing if this is worth it. Like, should I go into debt to attend this institution? Is it worth spending $100,000 a year even though it is Yale? It is just an insane amount of money. So they have adopted sort of this high price but high aid model because you are splitting the difference there because you can say we still have that prestige sticker price, but we are allowing a lot more people in as well. So that is one of the big questions here is obviously expanding access, but how do you defend the legitimacy of your institution? And this seems like a pretty good way of going about it.
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I think it's worth going just for the pizza alone.
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I've never had any New Haven pizza. Like, we make jokes about it all the time. But I visited Yale on my, on my college tours. Didn't actually have any pizza. So we got to go back sometime soon. All right, let's sprint to the finish with some final headlines. Health care stocks need an ambulance. After a surprise report that the government is likely to keep the Medicare Advantage rate flat for next year, insurer stocks collapse like a cheap lawn chair. UnitedHealth Group. Bam. Down at 20%. Humana. Ouch. Down 21%. CVS Health. My leg down 14%. I could keep going. In total, nearly $100 billion in market cap up was wiped away in a deeply red day for the sector. Medicare Advantage rates, AKA the pure patient payments the government makes to insurers powers a major part of the health care industry, driving more than $500 billion in revenue last year. But that golden goose has already been under pressure. Some Biden era policies trimmed the most lucrative billing practices. And then came the rate shock. The Centers for Medicare and Medicaid services propose a 2027 rate increase increase of just 0.09%. Wall street expected closer to 5%. Suddenly the engine looks broken, Neal. And there's no mechanics with anything higher than a two star Google review nearby to fix it.
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I've never heard someone relish stock prices tumbling as felt fitting as much as that. Yeah. What you're about to see is the mother we talked about the mother of all trade deals. We're out to see the mother of all lobbying to protect this very lucrative $500 billion business in Medicare Advantage by these health insurance companies. In previous times, they've rolled out seniors talking about how they're going to lose coverage. They've taken out commercials in the Super Bowl. So one consultant said, this is going to be the typical industry, Medicare lobbying on crank. This next 90 days. Because right now this capping rates is just a proposal. They haven't finalized it yet. So prepare for, prepare for an onslaught from the health insurance companies. So, so in the future maybe we'll talk about their, their stock prices rising and they'll have the same amount of curve.
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All right, our next headline. Amazon is giving its grocery ambitions, or at least the stores that bear its name. Amazon Go and Amazon Fresh were the ugly stepchildren of the e commerce giant's foray into food. Fresh was intended to be a mass market alternative to Whole Foods. Go was intended to be a checkout free convenience concept. But Fresh felt stale and Go never went. Now both are being subsumed into the one concept that is working for Amazon, Whole Foods. The thought process is Whole Foods has a clear brand identity a and a loyal customer base. So why fight it? Plus all the same day delivery experiments that Amazon wanted to try out of those previous locations can actually be rolled out from those stores as well. Neal, this feels like a no brainer. Why force a round peg into a square? Whole Foods just ride with what people know.
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It is pretty funny that the only grocery concept physically that is working for Amazon is Whole Foods, which is the one they bought back for 13,7 back in 2017 for $13.7 billion. It's another L for Jeff Bezos pet projects, the Lord of the Rings TV series which was his, his brainchild. He said go find me. Game of Thrones hasn't worked out so well. And then this other brain, this other pet project was the Just walk out technology that was featured at Amazon Goes convenience stores which was where you just pull something off the shelf, walk out and we'll have this technology to essentially check you out without you waiting in line. They sunsetted that technology in 2024 at Amazon go stores. Now there's going to be no Amazon Go stores. They have licensed the technology to things like sports arenas and it is being used at around 360 third party locations. But Bezos is pet projects little over two.
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I'll say.
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Another one of his pet projects was Amazon to begin with. Yeah, maybe is, maybe he's doing well and that kind of, you know, subsumes the rest.
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C
He's hitting for power, not for average. Neil.
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B
All right. Finally, Southwest Air Airlines entered a new era Yesterday, scrapping its 50 plus year open boarding system for more traditional assigned seats. Now if you get on a Southwest plane, you'll be assigned a seat and placed into an eight group boarding structure similar to how other airlines do it. It's part of Southwest sweeping overhaul to make more money. A transformation that also includes charging for bags when bags used to famously fly free. The transition from mad Max level anarchy to buttoned up airline will take about two months to complete. So don't be surprised to see those tall metal columns still standing by a Southwest gateway. But those will have their numbers removed or covered till they're whisked away from the airport. Toby, I think they should auction off these metal columns. Would love to have one at my house.
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C
I've never been in the A section of one of those columns, so get me the A1 through 30 because I never checked in in time. This just stinks. I'm saying it now because our Southwest used to be like the quirky airline that it used to have a little idiosyncrasies that that defined it against the rest of the industry. Now it just feels the same as the rest of the industry. So. Yes, well, they probably make more money. Is that the goal of the business? Probably. That is a good idea. But in terms of just like user love for the brand, I'm not sure this is going to be the wise.
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B
People love the brand because of that boarding system.
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C
Yeah, it's different. It's different. That is very much better. And bags fly free, obviously.
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B
Yeah, I think that has more of an impact. I mean, maybe people did enjoy that boarding system, but I did not. It was like a free for all to get in line and.
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C
And that might say more about you than about the customer base as a whole. That is basically what the brand is saying, though, that assigned seating actually reduces anxiety among travelers because they know what to expect. But a lot of people like the egalitarian ness of it all that I can. There is no first class. It's just like how prompt you were with checking in. So now it's just like any other airline.
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B
Yeah. Southwest will never be the same. That is all the time we have. Thanks for starting your morning with us and have a wonderful morning Wednesday. If you want to get in touch, send an email to Morning Brew daily at Morning Broadcom or DM us on Instagram at me Daily Show. Let's roll the credits. Emily Milian is our executive producer. Raymond Lute is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair makeup is more out than TikTok. Devin Emery is our president and our show is a production of Morning Brew.
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C
Great show today, Neil. Let's run it back tomorrow.