Wall St. Shook By ‘Sell America’ & BlackRock’s CEO Says Capitalism is Not Working

Summary

Morning Brew Daily – Episode Summary

Date: January 21, 2026
Hosts: Neal Freyman & Toby Howell
Theme: Wall St. Shook By ‘Sell America’ & BlackRock’s CEO Says Capitalism is Not Working

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Overview

In this episode, Neal and Toby broadcast live from Davos during the World Economic Forum (WEF), diving into a seismic shake-up in the global economic order, financial market turmoil, and headline-making remarks by prominent CEOs. Topics range from the sudden exodus out of American assets ("Sell America"), Larry Fink’s critique of capitalism and the WEF, concern over AI and global inequality, to consumer trends from Netflix’s record quarter to declining alcohol consumption. They also touch on quirky news like counterfeit Davos badges, Lululemon’s ongoing see-through leggings woes, and a tool-using cow named Veronica.

The tone is sharp, witty, and engaging, as the hosts deliver complex topics with humor and clarity.

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Key Discussion Points & Insights

1. Wall Street Tumult & the "Sell America" Phenomenon

[02:07–06:27]

• Sharp Sell-Off: US stocks, bonds, and the dollar dropped sharply, marking the worst day for American assets since April last year. The S&P 500 lost over 2%, erasing 2026's gains. Even "Magnificent Seven" tech stocks declined.
• Geopolitical Jitters: Markets finally reacted after weeks of shrugging off big geopolitical shocks (e.g., U.S. raid capturing Venezuela’s president, Powell under investigation). What moved them this time? President Trump’s threats of tariffs on allies unless Denmark sells Greenland to the U.S., with the EU promising retaliation—spooking investors globally.
• Flight From Safety: Traditionally, global turmoil drives investors into American assets as safe havens. Now the opposite is happening: major funds (like a Danish pension fund) are selling US treasuries, citing long-term U.S. debt concerns.
  • Quote: “It’s important to emphasize just how big of a shift is occurring right now…these uncertain days, they’re yanking their American investments.” – Neal [03:00]
• Potential Domino Effect: Ray Dalio warns sovereign wealth funds may follow suit unless the US is seen as a stable trading partner.
  • Quote: “Not a stable trading partner... that is absolutely how a lot of the world sees the US right now.” – Toby [03:29]
• Is This a Blip? Despite the headlines, investors are still largely bullish and under-hedged. Reflecting on 2025’s runaway bull market, hosts caution against reading too much into day-to-day reactions.
• Trump’s Response: Questions if President Trump might back down from hardline trade threats if markets continue to tumble, recalling his previous about-face after “Liberation Day” tariffs rattled bonds.
  • Quote: “The bond market is certainly a bit yippee right now.” – Toby [04:56]

Notable Segment:

• The 10-Year Treasury Yield at 4.3% is flagged as the “one asset to watch,” as rising yields increase borrowing costs and could spook policy makers [05:46].

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2. Davos Dispatch: Larry Fink Blasts Capitalism – and WEF

[06:27–09:31]

• Larry Fink’s Disruptive Speech: BlackRock’s CEO, now also head of the WEF, shakes things up by lambasting both Davos “navel gazing” and capitalism’s failure to deliver broad prosperity.
  • Quote: “For many people, this meeting feels out of step with the moment: elites in an age of populism, an established institution in an era of deep institutional distrust.” – Larry Fink [Reported by Toby, 06:36]
  • Quote: “Despite more wealth being created since the fall of the Berlin Wall than at any other time in human history... that wealth has accrued to a far narrower share of people than any healthy society can ultimately sustain.” – Larry Fink [06:55]
• Track Record of Ignoring Reality: Davos’ history of missing or misreading transformational global shifts—from the 2008 recession and Brexit to COVID—is called out.
  • Quote: “Davos has been wrong consistently about where the world is heading for much of the last two decades.” – Neal [07:39]
• AI as the Next Wedge: Fink cautions that unchecked, AI could aggravate inequality for white-collar workers just as globalization changed blue-collar work.
  • Quote: “If AI does to white collar workers what globalization did to blue collar workers, we need to confront that today directly.” – Larry Fink, as quoted by Toby [08:37]

Context:

• Fink’s remarks are seen as especially striking coming from the world’s largest asset manager—someone with direct influence over the biggest boardrooms globally.

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3. The AI Race & Geopolitics: Anthropic’s CEO Calls Chip Sales to China a Blunder

[09:31–10:59]

• National Security and AI: Dario Amodei, CEO of Anthropic, issues a stern warning against selling Nvidia’s advanced AI chips to China.
  • Quote: “I think this is crazy. It’s a bit like selling nuclear weapons to North Korea.” – Dario Amodei [09:45]
• Nvidia-Anthropic Tension: Despite heavy financial ties (Nvidia set to invest $10B in Anthropic), Amodei draws a red line at national security. He frames these chips as the “brains” of the new era—“like shipping a country of geniuses in a data center to China.” [10:59 – Toby]

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4. Corporate Curiosities: Fake VIP Badges at Davos

[11:00–12:02]

• Black Market for Davos Access: Scammers are selling counterfeit “USA House” access badges for $1,200. Even billionaires are being duped.
  • Quote: “There is a little bit of schadenfreude in billionaires getting scammed just like the rest of us.” – Neal [12:02]

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5. Netflix Results & Big Acquisition Ambitions

[12:05–15:11]

• Not the Only Game in Town: Netflix’s Co-CEO Ted Sarandos insists competition is fiercer than ever (citing YouTube, Amazon, Apple, Instagram), as Netflix eyes a mammoth $83B acquisition of Warner Brothers Discovery.
  • Quote: “TV’s not what we grew up on. TV is now just about everything.” – Ted Sarandos (paraphrased by Neal) [12:22]
• Closing a Blockbuster Deal: Netflix boasts 325 million subs and 18% YoY revenue growth; shares fell on news of the merger, as investors fear “bad vibes” from blending with Warner Bros. Discovery’s slower culture.
  • Quote: “It does look like this was just an afterthought to what is actually going to happen with this big merger that is just hanging over them like a black cloud.” – Toby [13:34]
• Regulatory Watch: Whether Netflix can argue it's not a monopoly depends on how regulators define the “television” market.
• Skepticism Over the Deal: Investors question the necessity of owning Warner’s IP versus Netflix’s successful licensing model.

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6. AI Investment Is Real, but So Is the Hype

[16:21–17:15]

• Lightspeed's Ravi Matra discusses whether the AI boom is real or hype:
  • Investment is truly massive—$400 billion in a year, possibly $3 trillion by 2030—but some “circular” investment is driving hype. AI is not a vertical market, but a horizontal paradigm shift.
  • Quote: “AI is not really a market, it is a paradigm shift that is very horizontal and intelligence touches so many industries.” – Ravi Matra [16:39]

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7. Alcohol Industry Hangover: Inventory Overflow & Shifting Habits

[17:39–21:42]

• Spirits Industry in Crisis: Major companies like Diageo and Campari have record inventory ($22B worth) due to overproduction following a COVID-powered boom and subsequent sharp drop-off.
• The Wellness Shift: Declining alcohol consumption is now structural, not cyclical, matching broader wellness and moderation trends (esp. around "Dry January").
  • Quote: “The industry is really on the rocks right now.” – Neal [19:09]
• Price Cuts Expected: Brands like Hennessy have dropped prices from $45 to $35 a bottle to offload excess product.
• Danger of Overcorrection: Some warn that major cutbacks, like Jim Beam halting whiskey production for a year, might lead to future shortages if demand rebounds.
• Exceptions – Guinness & Stouts: Stouts, especially Guinness, are bucking the trend thanks to pop-culture moments and Instagrammable appeal (helped by the “House of Guinness” Netflix show).

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8. Weather Woes & Other Quick Headlines

[21:42–25:38]

• Southern US Braces for Catastrophic Ice Storm: Power outages, paralyzed travel expected as a cold Arctic air mass collides with southern moisture.
• Lululemon’s Ongoing Leggings Fiasco: More see-through yoga pants lead to a recall; company faces leadership turnover and activist investor pressures.
  • Quote: “It’s kind of indefensible. Like you have one job, Lululemon: make pants that when people use them to work out, you can't see through.” – Neal [24:01]

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9. Uplifting Oddity: Veronica the Tool-Using Cow

[25:38–26:29]

• First Tool-Using Cow: A 13-year-old Austrian cow, Veronica, is observed using a broom to scratch herself—a first for cattle, challenging assumptions about animal intelligence.
  • Quote: “It is so clear, it’s not an accident. She is very itchy and she is doing her scratches with this broom.” – Toby [25:38–26:25]
• Observational Blind Spots: Researchers suggest cows’ mental abilities may have been overlooked simply due to living conditions.

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Notable Quotes & Memorable Moments

• “It’s important to emphasize just how big of a shift is occurring right now…these uncertain days, they’re yanking their American investments.”
  — Neal [03:00]

• “Not a stable trading partner... that is absolutely how a lot of the world sees the US right now.”
  — Toby [03:29]

• “For many people, this meeting feels out of step with the moment: elites in an age of populism, an established institution in an era of deep institutional distrust.”
  — Larry Fink, via Toby [06:36]

• “If AI does to white collar workers what globalization did to blue collar workers, we need to confront that today directly.”
  — Larry Fink [08:37]

• “I think this is crazy. It’s a bit like selling nuclear weapons to North Korea.”
  — Dario Amodei [09:45]

• “It’s kind of indefensible. Like you have one job, Lululemon: make pants that when people use them to work out, you can't see through.”
  — Neal [24:01]

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Timestamps for Major Segments

• Wall St. Sell-Off: [02:07–06:27]
• Larry Fink at Davos/Capitalism Critique: [06:27–09:31]
• Anthropic CEO on Nvidia Chips & China: [09:31–10:59]
• Fake Davos Badges: [11:00–12:02]
• Netflix Results & Warner Discovery Deal: [12:05–15:11]
• AI Industry Investment (with Ravi Matra): [16:21–17:15]
• Alcohol Industry’s Hangover: [17:39–21:42]
• Southern US Ice Storm: [21:42–22:41]
• Lululemon Leggings Woes: [22:41–24:01]
• Veronica the Intelligent Cow: [25:38–26:29]

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Morning Brew Daily’s signature blend of sharp insight and humor brings clarity to a turbulent economic moment, offering both a pulse check from Davos and colorful dispatches from business and culture.

Transcript

[A]

Good morning brew daily show. I'm neal freyman.

[B]

And I'm toby howell.

[A]

Today is the sell america trade back on.

[B]

Then blackrock CEO larry fink roasted capitalism during his speech at davos. It's Wednesday, january 21st. Let's ride.

[A]

Toby, what's the date today?

[B]

I literally just said it. It is January 21st.

[A]

Oh my B. I don't have my Morning Brew Daily desk calendar with me here in Switzer, Switzerland. It's basically the only way I know what day it is.

[B]

Desk calendar. Say more.

[A]

Yeah. So Morning Brew has this games focused desk calendar for 2026. Each day of the year you'll get a new game, Trivia, crosswords, puzzles. And they're all really great because guess what? I helped put it together.

[B]

Self promo. Neil no, this calendar really is great. Put it on your desk. Put it on your nightstand. If you have a kitchen island, I'm jealous. But you can also put it there if you want to give yourself or someone else the gift of a productive way to procrastinate. Head to Shop Dot Morning Broadcom to see Neil's handiwork. Check it out. It's really fun. And now a word from our sponsor. Indeed. Neil, has AI changed the way you work?

[A]

Well, now instead of asking you questions directly, I ask my AI powered Toby Bot questions like why are you like this? Why do you ask?

[B]

Well, we're here at the World Economic Forum in Davos this week along with indeed, who are diving into things like how AI impacts jobs, transform skills and employer adoption.

[A]

Indeed. We'll be sharing real time insights like that into the global labor market and how leaders can navigate the workforce challenges and opportunities ahead.

[B]

They're also helping business leaders and hiring professionals dive into these perspectives through Indeed's Global Labor Market and Workforce Trends report.

[A]

This report includes also where job opportunities are growing, where skill shortages and mismatches could impact business performance, and how immigration patterns are shaping workforce capacity.

[B]

Together, these insights help leaders prepare for what's next and make better workforce decisions grounded in real time data. Learn more@ Indeed.com Davos that's Indeed.com Davos.

[A]

Yesterday really put the red in the red, white and blue. American assets had their worst day since last April as President Trump's insistence on acquiring Greenland unnerves investors over the safety of USA incident. The S&P 500 had its worst day in four months, dropping more than 2% and erasing its entire gain. For 2026. Tech dragged the index lower, with each member of the Magnificent Seven falling at least 1%. The dollar fell against a basket of other currencies. Gold, sorry for being a broken record, surged to a new record. And treasury bonds tumbled, sending yields higher. The sell off broke a long spell of calm in the stock market, which had largely brushed off major geopolitical upheaval in recent weeks. And it shrugged when the US Captured Venezuela's president Nicolas Maduro in a surprise raid. And also ignored when Fed Chair Jerome Powell said he was under criminal investigation. But the events of the past few days seem to have caught the attention of investors. President Trump threatened eight European allies with tariffs come February 1st unless Denmark sells Greenland to the US and the EU has vowed to respond with an economic barrage of its own. Toby, it's important to emphasize just how big of a shift is occurring right now. Historically, when things get hairy, investors flock to the safety of American assets, a lighthouse in the tempest. And these uncertain days, they're yanking their American investments. Some say it marks a profound shift in the world economic order.

[B]

Yeah, maybe the best emblematic emblem of that shift is the fact that a large Danish pension fund is literally selling U.S. treasuries right now. They sold $100 million because of finance concerns. The investing chief says the decision was driven by what it sees as poor US Government finances in America's debt crisis. And this is something that could spread beyond just this one Danish pension fund, because $100 million in the grand scheme of things isn't a lot of money, which feels weird to say, but it's true in terms of US Treasuries. Bridgewater's Ray Dalio told CNBC yesterday that sovereign wealth funds could start to also sell US Investments if they stop seeing us as a stable trading partner. That is absolutely how a lot of the world sees the US Right now. Not a stable trading partner.

[A]

Yeah, we just have to wonder whether this is a blip or a more long term shift. A new bank of America surveys out front that surveys investors. They remain the most bullish they have since July 2021. Nearly half of participants said they don't have any protection against a sharp fall in equity prices. We've talked about Sell America. This is the first time we're talking about Sell America. We talked about about it last April during Liberation Day and a few times last year. And yet what, what did happen in 2025? Stocks surged to record highs. Corporate earnings were strong. Everyone's very excited about AI it seems like that sort of outweighed any uncertainty that global investors have about the safety and certainty of American assets. You just have to think about, like, when will the dam break.

[B]

I think the real question here is, does Trump back down again? Because historically, he's been pretty sensitive to how the bond market responds to his policies. He also clearly looks at the stock market and loves citing it as evidence that his agenda is working. Back in April, literally, he backed down from his Liberation Day tariffs because, quote, the bond market started getting a little bit yippee. The bond market is certainly a bit yippee right now. And I do want to just hammer down the point that this has been a extremely calm period of months. As you mentioned, all those things that could have roiled the sheep ship didn't volatility across US Bonds equities in the dollar over the past month had sunk to the lowest level since 1990. So literally, we were in a historic period of calm despite all the turbulence. Now, maybe it looks like investors have woken up to the reality of what's going on.

[A]

Yeah, it may not be the most exciting thing, but probably the one asset to watch is the 10 year yield that reached 4.3% for the first time since September 2nd. The higher that keeps climbing, the, the higher borrowing costs are for Americans and the US Government. And if that keeps climbing to levels that get into the yippee zone, then we'll see, maybe Trump back off. It seems right now that global investors think that generally the United States and Europe will come to some sort of agreement over Greenland. There won't be an invasion because right now we saw in the morning just the stock market futures are up and a little bit into the green. So we may be in for a few bumpy days and weeks.

[B]

And Trump's speech later today at Davos is definitely going to make heads headlines as well. Moving on. One of the main features of the World Economic Forum here in Davos is that CEOs and business leaders get a lot of microphones shoved in their faces. And what do you know, they say the darndest things. The sound bites started early yesterday when BlackRock CEO Larry Fink tore into the conference itself, saying for many people, this meeting feels out of step with the moment elites in an age of populism, an established institution in an era of deep institutional distrust. And. And there's truth in that critique. Fink's words carry weight. Not only is he the leader of the largest asset manager in the world, but he also took over running the WEF last year after its longtime leader, Klaus Schwab, stepped down. But Fink didn't stop there. He also tore into the concept of capitalism itself, saying that despite more wealth being created since the fall of the Berlin Wall than at any other time in human history. Quote, in advanced economies, that wealth has accrued to to a far narrower share of people than in any healthy society can ultimately sustain. Neil one two punch of going in on the conference he now runs for its billionaire navel gazing while also warning of the perils of unequal wealth distribution. He's certainly rocking the boat, certainly really.

[A]

Striking for the CEO of an investment firm that manages $14 trillion in assets to say, look, this capitalism thing, it's not really working. But as Liz Hoffman of Semaphore points out, he's kind of right. Because Davos has been wrong consistently about the world is heading for much of the last two decades. She goes back to 20 2008, when an economist got up at a panel here in Davos and said, it is inconceivable, repeat, inconceivable to get a world recession. I'll just repeat, that was in 2008. And then in the mid 2010s, no one could foreseen Brexit or Maga or the populist wave that soon followed. In 2020, people were here in January sipping, you know, sipping champagne. Meanwhile, Covid was going to become a big thing. So, yeah, consistently Davos has always been sort of backwards looking and has not been on the front edge. And I think Larry Fink, as he's coming into this role, is doing a lot of navel gazing himself and reflecting and saying, look, this thing is not really working. Davos and capitalism.

[B]

And he also mentioned AI because he thinks it could be an inequality accelerator. He's saying that, hey, these AI risks could actually repeat the same existing inequality patterns. His direct quote, if AI does to white collar workers what globalization did to blue collar workers, we need to confront that today directly. Obviously, AI is dominating Davos right now. So he was calling attention to the fact that we need a call to action here and we need to figure out what prosperity means going forward in this age of AI.

[A]

And one reason why people pay attention to Larry Fink, like what he says is, yes, he, he's the CEO of BlackRock. He is the biggest money manager in the world. They have a big stake in pretty much any public company you can think of. When he calls, the CEOs are going to pick up the phone. He may be the most influential puppet master behind the scenes in the, in the world in terms of the economy. So what he says carries a ton of weight in boardrooms across the world.

[B]

Our next quote comes from Anthropic CEO Dario Amadei, who had some strong thoughts on who should get their hands on the picks and shovels fueling the AI revolution. Speaking at Davos, Amadei said selling the most advanced Nvidia chips to China is a massive blunder with even bigger national security implications. It would be a big mistake to ship these chips. Amadi said to Bloomberg. I think this is crazy. It's a bit like selling nuclear weapons to North Korea. His comments come as Trump has moved to ease restrictions on sending chips to China, allowing Nvidia to sell its H200 processors to Beijing. This is a drum that Amadei has been beating for a while. Last year at Davos, he said he was worried about, quote, 1984 scenarios or worse, talking about the dystopian totalitarian world from George Orwell. Dude knows how to generate some quotes now.

[A]

Yeah, I mean, he absolutely shocked the crowd. And one reason why is he went in on Nvidia. Well, what happened a few months ago is Nvidia said it was going to invest up to $10 billion in anthropic. The financial ties between these companies are, are very close. Just like all AI companies have a lot of connections, financially and otherwise, with each other. Just so to go after Nvidia and say, I think you're extremely wrong here. This is a huge national security issue. That you're going to sell these H200 chips to China is like basically giving them a leg up in the AI race that we are currently winning. And the issues are so paramount, are so big, that this is a huge strategic mistake.

[B]

One way he framed it is that AI chips are essentially cognition or essentially intelligence. And he said that doing this is essentially like shipping a country of geniuses in a data center to China. You would never give your smartest people over to your direct geopolitical enemy in China. And so that is the equivalence that he makes, is that these are the brains of the new era. Why are we giving them to China when we absolutely do not need to be doing that? Finally, there's also a funny Davos update that I want to mention. There's been a hot market for off label or fake badges. For with street prices fetching nearly twelve hundred dollars, most of them are selling access to a USA house, which is the base for the US delegation here in Davos. And USA has had to come out and issue a warning about selling fake VIP passes that are pledging access to Trump and Scott Bessant. Totally fake, but apparently some billionaires were falling for this scam. So that is why you and me, Neil, have no badges or access to anything here. Just to avoid getting scammed, of course.

[A]

Yeah, there is a little bit of schadenfreude in in billionaires getting scammed just like the rest of us. Moving on. Netflix may be the most valuable media company the world has ever seen, but it wants you to know it's not the only television game in town. After reporting earnings yesterday, executives emphasized that the competition for eyeballs is fiercer than ever. Co CEO Ted Sarando said the TV landscape has, quote, never been more competitive than it is today. TV is not what we grew up on. TV is now just about everything, he added. The Oscars and the NFL are on YouTube. Networks are simulcasting the Super bowl on linear TV and streaming. Amazon owns MGM. Apple is competing for Emmys and Oscars, and Instagram is coming next. Why go to such great lengths to highlight the competition? It's all because Netflix is trying to close its $83 billion acquisition of Warner Brothers Discovery. The owner of HBO, Max and and Sarandos appears to be workshopping the argument he's going to be making in front of skeptical regulators who might scuttle the deal on monopoly grounds. Still, whoever Netflix is battling for your attention, it's winning. The company reported another outstanding quarter, with its subscriber base growing to over 325 million and revenue rising 18% year over year. December was one to remember, according to Bloomberg's Lucas Shot. Netflix posted its best month of viewership and ever in December, thanks to its NFL Christmas Day games and the final season of Stranger Things. During that month, Netflix accounted for almost double the viewership of Disney's streaming services. Probably the only thing stopping Netflix from even more global domination might be regulators.

[B]

It's so funny. They're going, oh, me, Netflix. Like, we're so small, everyone is so competitive against us. And yet you do. Look at the quarter they just reported. They did really freaking well. But it does look like everyone kind of is ignoring their actual financial performance because all eyes are looking at this Warner Brothers Discovery deal. Shares were down 5% after hours. This has been a rough go of it for Netflix. Ever since announcing this acquisition of Warner Brothers Discovery, their stock has fallen over 15%, which is very decidedly on Netflix when you. When you look at actually what's been happening at the company and the financial performance itself. So it does look like this was just an afterthought to what is actually going to happen with this big merger that is just hanging over them like a black cloud.

[A]

So Netflix is trying to Stake out the argument that they are just one of, one of many, many streaming companies or television companies seeking attention for your eyeballs. It competes in this very competitive market. Perhaps regulators or the government is going to say, no, you actually are a streaming TV service. You're competing against HBO Max, Disney plus Paramount plus. You are actually operating in that market. When you look at that specific market, if Netflix were to combine with HBO Max, just HBO Max, the streaming service, that would put the combined company over 30% US market share, which would maybe raise monopoly concerns. But then if you put it in the bigger market with YouTube and now Instagram reels, said Ted Sarandos mentioned Instagram reels, it's because they just released an app to put Instagram reels on tv. He's saying we're actually operating in this much wider market than the one that you guys think we are actually operating in.

[B]

Still, I do want to dig into why investors are not so hot on this acquisition. Even though Warner Brothers is a very valuable, you know, catalog of ip, a lot of them thinks that it's going to not mesh well with Netflix's culture. Warner Brothers might bring a bloated, slower way of life to a very fast moving company. Also, Netflix has done very well licensing standout content from other content studios. Why do they need to change up that model now? Why do you suddenly need to own this ip? So these are some of the reasons why I called this a dark cloud hanging over their pretty good financial performance is because it just doesn't vibe with what Netflix has been over the course of its career. Sandos and co have basically said, we can adapt, we can change. This is a great studio. We can move into the movie business like we're not this inflexible monolith of a company. We can adapt. But still, that is part of the reason why you're just seeing such bad vibes around the stock right now, even as it's doing pretty well as a company. All right, we're going to take a quick break and come back and talk about why no one's drinking alcohol anymore. Time for our morning brew daily Davos update with Lightspeed. We are joined by Lightspeed Co founder and partner Ravi Matra.

[A]

Ravi AI talk is everywhere at wef. Most are even calling it a revolution. Be honest. Hype, real deal, or both.

[C]

Two things can be true at once. If you look at the underlying substance. It is a larger investment in a technology shift since electrification. We had just in the last year, four companies investing almost $400 billion in the compute infrastructure AI build out. Moody's is predicting there will be over 3 trillion invested by 2030 and that's across compute data centers, chips, powers so that being said, there's probably some amount of funding that's going into companies where there's a circularness to what they purchase and what they sell in the AI domain. AI is not really a market, it is a paradigm shift that is very horizontal and intelligence touches so many industries. We think the transformation and the value is very real.

[B]

Thanks Ravi. There really does seem to be a shift going on. Morning Brew Daily is live from Davos all week in partnership with Lightspeed and.

[A]

Be sure to head to our YouTube channel for special interviews with Lightspeed founders all week. We just posted one with the co founder and CEO of Proxima Fusion, Francesco Shortino, who is trying to power the world with fusion energy. Keep an eye out as we will be posting more throughout the World Economic Forum.

[B]

Pour one out for the alcohol industry and then pour a few more out because spirits are low in spirit right now. Five of the biggest publicly traded spirits groups from Diageo to Campari, are sitting on record levels of inventory right now, as no one is buying what they're selling. Collectively, the group is holding $22 billion worth of product, the highest inventory levels in more than a decade, according to reporting from the Financial Times. That inventory is dominated by all the stuff that was on your parents top shelf as a kid, things like Scotch whiskey, cognac, tequila and more. But while you may have been clamoring for a taste in high school, that is not the case anymore. The inventory buildup dates back to some poor decisions made to dramatically ramp up production during the COVID era drinking boom, assuming that demand for a stiff drink would remain stiff indefinitely. But right as production facilities came online, inflation started to squeeze people's wallets, a broader focus on health and wellness emerged, and consumption started to wane. By December 2024, Mexico was sitting on over 500 million liters of tequila in inventory, basically an entire year's worth of production. And the producer, Remy Cotreau is sitting on over $2 billion worth of of maturing inventory, nearly double its annual revenue and close to its entire market cap. Neal There's a lot of talk in the industry as to whether this is cyclical and demand will come back around or structural and people will never drink as much as they used to. Fitting to have this conversation during dry January.

[A]

I know this industry is really on the rocks right now. No, you can't laugh. I guess the good the good News for people who still drink, which is a dwindling number, is that appears that a price war is coming. Because if you're sitting on so much inventory, you're sitting on inventory that's worth your entire company. You're going to have to cut prices to get people to buy this thing. So let's just look at Hennessy. Hennessy was priced at about $45 a bottle in the United States, but since they've cut it to about $35. So if you are a scotch collector or you like fancy tequila, expect prices to come down because you know things are turning in your favor with all this inventory sitting around.

[B]

And aging spirits in general are a unique type of inventory to manage because you have to decide years in advance how much spirit you want to create. Because cognac makers, for example, they have to allocate spirits into casks that are intended for 2, 4, 10, or 12 years of aging. Imagine having to make a decision now about what demand will be like in 12 years. It's very difficult. And they clearly miscalculated, you know, six years ago at the beginning of COVID and now they are facing the consequences of that. So that is why this industry is so difficult to manage from an inventory.

[A]

Perspective, which is why some analysts are saying, I think it's a mistake for you to cut back production now. And they are cutting back production. Jim Beam's main distillery is stopping to make whiskey for an entire year at least. And some people look at that and say you are actually responding too much to the short term trends and not looking to the long term. Of course, we don't know whether, you know, drinking whiskey or Scotch or things like that will actually come back, but it could. And if so, you're going to have a huge. You're going to have the opposite problem of what you have now with a huge inventory shortfall.

[B]

One type of drink that is bucking the trend, though, that I want to shout out is stouts. Guinness mainly is having a moment. It's had a little bit of a pop culture moment from the Netflix series House of Guinness. And also just TikTok trends of people trying to split the ghost Stouts were so dead in the water, they dropped 50 million liters per year in consumption from 2008 to 2014. But now stout consumption in the UK rose 43% from 2019 to 2024. They are just so back in right now, which every other drink is not. I think partly because of the Instagram ability of, you know, that nice creamy head, you. It just looks good to take a picture of. Also, it feels like you're getting bang for your buck because again, this can feel like a complete meal in itself. So even though the spirits industry is not doing well, the stout industry is quite stout right now.

[A]

I feel like for four Guinnesses is like a complete meal for me, but I am part of that. I never drank Guinness before the last couple of years and then maybe, maybe I was influenced by by Instagram, but I started drinking and I was like this is actually pretty good. And I've noticed a bunch of my friends also doing the same. Okay, let's bring to the finish with some final headlines. If you live in a swath of the American south, from Texas to the Carolinas, and this weekend is going to be a doozy. Beginning Friday, what forecasters are calling a potentially catastrophic winter storm will sweep through the area and the major concern is ice. Ice weighing down trees and power lines. It's a recipe for outages if you get half an inch of ice or heaven forbid, an inch of ice, one South Carolina Utilities CEO told the ap. That would be catastrophic. Travel could come to a standstill not just on the roads, but in the air, since many major hubs including Dallas, Atlanta, Charlotte and Memphis stand in the storm's way. Once the horrible weather is done with the south, it's expected to tilt toward the east coast through Sunday.

[B]

I'm going to put my weatherman hat on for a second and say what is actually driving this massive potential ice storm? And it really is a very large and very cold arctic mass of air is coming southward for Canada at the same time that rain, rain and moisture from the southeastern United States is moving upward. So those two are meeting in the middle and you have an extreme almost like peak winter event right there. Which is why you are seeing just these warnings of very catastrophic damage. Because obviously southern states in the southern part of the country are not very well equipped to dealing with ice as maybe the northern states are. So be careful if you're driving, be careful if you're traveling. We hope for the best for you out there. Moving on. Lululemon does not learn from its mistakes. The company is pulling a new style of leggings from its shelves and after customers complained that the fabric was see through. Now this carries with it a double case of irony. One, because the yoga pants were branded as get low leggings designed for training. Yet multiple reviews on Reddit complained that the leggings were decidedly not squat proof. Secondly, this is not the first or even the second time Lulu has dealt with a See through legging problem just 18 months ago. It had to pull its breeze through line for similar problems. And infamously in 2013, Lulu recalled the many of its black yoga pants for being see through as well. Neil how in the world does this keep happening?

[A]

It's kind of indefensible. Like you have one job. Lululemon make pants that when people use them to work out, they you can't see through. And it seems like it has not learned from its mistakes once or twice before. Lululemon's dealing with a lot of challenges right now. Besides, See Through Pants has a proxy fight on its hand with the founder Chip Wilson, who's going on LinkedIn and bashing current the current executives. It doesn't even have a CEO right now. It's looking for a CEO. Elliott Management and Activist Hedge Fund acquired a $1 billion stake and is pushing for changes. So there's a lot going on at this company. I think this is the last thing that its PR team wants. Finally, I want to introduce you to Veronica, a 13 year old pet cow who lives an idyllic life on an Austrian farm. But after yesterday, she's become the most famous animal since mu Dang. A paper published in the journal Current Biology revealed a startling observation. Veronica used a tool. Specifically, Veronica used a broom to scratch parts of her body that were hard to reach. According to the researchers, it's the first experimentally verified instance of cattle using a tool, adding to the growing list of animals other than humans who've used tools, a list that now includes orcas, elephants, octopuses, crows, wolves, fish and ants. This wasn't bovine intervention. One scientists saw video footage of Veronica scratching herself with the broom. They went to the farm to check out this smart cow firsthand. She did not disappoint. They recorded 76 instances on tape of Veronica picking up the broom, securing it in her teeth, then relieving that itchy feeling using the tool. Toby this suggests that the scientific community has underrated the cognitive capabilities of cows.

[B]

I encourage you to go watch a video of Veronica in action because it is so clear it's not an accident. She is very itchy and she is doing her scratches with this broom. One researcher of the paper said there are around 1.5 billion heads of cattle in the world and humans have lived with them for at least 10,000 years. It's shocking that we're only discovering this now. It maybe has been a case of just oversight from humanity because cows have on average been painted as a dumber species in the Animal kingdom. But we've kind of done this with a lot of animal species. No one thought that chimps could use tools back in the day, but in 1960, Jane Goodall said, absolutely, they can do that. It happened in the avian world as well. Now it's happened with many other species. So maybe it really just has been this crazy oversight and cows have been scratching themselves with various things over time. Or maybe Veronica is just a genius cow and she's the only one in her entire.

[A]

Seems like Veronica is. Is like the Neil Degrasse Tyson of cow.

[B]

Neil Freyman.

[A]

Neil Freyman of cow. She is quite smart. But they. They're saying that Veronica is not necessarily special in the fact that she's a cow. But her life circumstances may have led her to be able to pick up that broom and scratch that itch. Because she lives on this Austrian farm, she interacts with humans. She has tons of pasture land to go out on. So many cattle live in, you know, much worse circumstances, so they just would never acquire the ability to use a tool. But look, we all got to scratch that itch. That is all the time we have. Thanks for starting your morning with us and have a wonderful Wednesday. If you want to get in touch, send an email to Morning Brew Daily at Morning Broadcom or DM us on Instagram @me Daily Show. Let's roll the credits. Emily Milian is our executive producer. Raymond Lu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Big shout out to our AV team here in Switzerland. Mood Studios out of Zurich. Hair and makeup tried to get into Davos with a fake badge. That didn't work. Devin Emery is our president, and our show is a production of Morning Brew.

[B]

Great show today, Neil. Let's run it back tomorrow.