Morning Brew Daily
Fed Funding Freeze Causes Chaos & Indie Book Site Takes On Amazon
Wed, 29 Jan 2025
Episode 507: Neal and Toby dive into the chaos and confusion caused by Trump’s memo to freeze all federal funding. Then, Google will change ‘Gulf of Mexico’ to ‘Gulf of America’, and Denali to ‘Mount McKinley,’ saying that it’s only following what Uncle Sam says. Plus, the return of supersonic travel after nearly 50 years. Also, an indie online bookstore site launches a new e-book platform to support local bookstores. Finally, a roundup of the latest headlines to end your day. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Download the Yahoo! Finance App (on the Play and App store) for real-time alerts on news and insights tailored to your portfolio and stock watchlists. Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What is the chaos caused by the federal funding freeze?
Then the Trump administration's vague directive to halt $3 trillion in federal funding has hit a bit of a roadblock. It's Wednesday, January 29th. Let's ride.
Happy Lunar New Year, if you're one of the more than 1 billion people celebrating the arrival of the year of the snake, the wood snake this year, to be precise. Sounds a little spooky, but it isn't. Unlike in Western culture, snakes aren't considered the manifestation of evil and temptation in China. Instead, the slithery animals are associated with
spirituality, charisma, intelligence, and art, but also cunning and mystery. Some people you may have heard of who were born in the year of the snake, Mahatma Gandhi, Bob Dylan, and Taylor Swift. Toby, obviously this had me checking my Chinese zodiac sign, and turns out I was born in the year of the goat, which is no surprise because, well, I'm the goat. What's your sign?
I am the year of the ox, Neil, which is unfortunately really bad news for the podcast because apparently, according to the Chinese Zodiac, ox and goat are not compatible at all and should in fact avoid each other wherever possible. So it might be time for me to pack it up and you need to go out and find a pig or a rabbit because apparently that is what you are compatible with. Okay.
Oh, so it was really a concentrated sell-off. Neil, you know what? You're always on it. Where do you even come up with all these facts?
Well, I usually just give Yahoo Finance a peruse.
Oh, so I was giving you too much credit. You derive your power from perusing Yahoo Finance. Hey, it's right there for you to access too.
I'm just a better peruser than you.
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Chapter 2: How does the Trump administration's directive affect federal funding?
If you want to up your perusing game to Neil levels, head to yahoofinance.com. On Monday, the Trump administration directed all federal agencies to pause hundreds of billions of dollars in grants and loans, creating deep uncertainty among those who rely on federal funding. But yesterday evening, a federal judge played an Uno reverse card and temporarily froze Trump's freeze until February 3rd.
The administration spent most of yesterday clarifying their memo, saying it wasn't a blanket pause and it wouldn't affect programs offering direct payments to individuals like Social Security or Medicare.
The goal of the pause was to take stock and make sure programs align with the president's priorities and also rein in government spending on grant programs and federal assistance, which hit $3 trillion last fiscal year. That is nearly half of the $7 trillion the government is expected to spend in fiscal year 2025. The pause also likely sets up a constitutional fight over spending powers.
The executive branch is only allowed to spend money allocated by Congress and signed by the president. And many see Trump's order as an unconstitutional attack on Congress's power of the purse. Already states are pushing back. A coalition of attorneys generals filed a suit yesterday to block the order.
So Neil, not only does this order affect a lot of cash and a lot of people, but it will no doubt also find its way to the courts.
This was absolute chaos yesterday. It was very similar to a self-imposed federal government shutdown where Congress is stymied by the fact that they can't spend any money because the government has shut down. There's no budget. It was very similar to that where there's just no money flowing from the government. As you mentioned, there's tens of hundreds of billions of dollars going from D.C.
out to California. Programs all around the country, nonprofits, school lunches, states and local jurisdictions, anything that you could think of was touched by federal spending. And they spent the day yesterday fielding hundreds of calls from their constituents being like, what is going on? Am I going to be able to pay my rent because this is this is financed by federal government?
Am I going to be able to pay my paychecks? What am I going to do? So it was absolute chaos. It seemed like the the government or the Trump administration wanted to pause spending in order for those to make sure those spending things complied with these executive orders, which aim to root out diversity inclusion initiatives. But instead, it was very half. hazard.
They didn't even know what was going on. One of the biggest focuses of yesterday was Medicaid, which is the largest grant program for the federal government. It provides health care for 72 million lower income individuals. The portals for all 50 states for Medicaid reimbursements went down. So people were like, what's going on here?
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Chapter 3: What are the legal implications of the funding freeze?
will recognize it as such.
This isn't the first time that Google's had to wade into thorny geopolitical debates about what to name which bodies of water. So if you think about the body of water between Saudi Arabia and Iran, you might think, okay, that's the Persian Gulf. But in fact, in Arab countries, they refer to that body of water as the Arabian Gulf.
So if you're in one of those countries and you open Google Maps, you will see Arabian Gulf. If you open it in Any other country now you will see. I did this yesterday. I actually checked. You will see Persian Gulf and then a parentheses Arabian Gulf, which is very similar to what is happening with Gulf of Mexico, Gulf of America.
Similar thing to that body of water between the Korean Peninsula and Japan in Korea. They refer to it. as the EC. In Japan, they refer to it as the Sea of Japan. So you have that double moniker as well. And all of these decisions, yes, are made within Google.
So it's a very interesting exercise whenever these examples come up to see how a few engineers in Silicon Valley are really shaping our worldview of how we conceive of the globe.
I think this is good for the map making business, at least within America's borders, because you got to order new maps for a classroom. So maybe if you're a map maker, you're looking at this as a good thing for business. If you happen to find yourself strolling through the Mojave Desert in California yesterday, you may have heard a big boom above your head.
No, it wasn't the Costco guys rating a double chocolate chunk cookie. It was the XB-1 prototype plane built by Boom Supersonic. The XB-1 is a smaller scale demonstration version of what will eventually be a larger airliner that Boom wants to turn into a commercially viable supersonic plane.
Yesterday was its 12th test flight, but the first time it was slated to go full Concorde and break the sound barrier, which it did successfully three times. After takeoff, it climbed to an altitude of 34,000 feet before the pilot Tristan Geppetto-Brandenburg let her loose and hit a top speed of Mach 1.1, about 760 mph.
The XP-1 now holds the distinction of becoming the first civil aircraft built by a private company to have gone supersonic. Neil, this was but a taste of Boom's long-term vision of transporting up to 80 passengers on supersonic international flights, but what a compelling taste it was.
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Chapter 4: What changes are being made to Google Maps?
limited you can't really go from LA or the west coast to over the Pacific to Asia you can only go kind of transatlantic flights so we'll see whether this commercially viable but for people who are excited about airplanes like I am it's a very it's a very cool thing one of the issues also with supersonic flight is that the
there's engineering problems. You have to have a very long nose and you have to have a very high angle of attack when taking off and landing, which if you are a pilot, that interrupts your view of the runway if you have a big old nose in front of you and you're coming in really steeply.
So the Concorde had dealt with this by having this movable droop nose as it was described, but Boom has had the luxury of having technology advance over the decades since Concorde flew. So now it has this augmented reality system that allows you to see the runway, see in quotation marks, because without all that extra weight that a droop nose brought in.
So this digital engineering, this rise of digital engineering has allowed some advancements to be made, which is why people are a little bullish on Boom Supersonic.
Three and a half hours between London and New York City. It sounds like I'm going to have to pay a lot for that. That's what that sounds like.
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Chapter 5: What is the significance of the renaming of the Gulf of Mexico?
It sounds like you're going to pay a lot, but also the grand vision here is if we have faster planes, you technically need less of them because they can do more trips. So maybe in the grand scheme of things, it does end up lowering prices because you just don't need to make as many airplanes because they're going faster. Up next, a feel-good story about indie booksellers.
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Chapter 6: What advancements are happening in supersonic travel?
And Hunter says that that left the e-book industry to kind of wallow away at around 20% of the overall book market. But now... He's saying that, wait a second, e-books are one of the most level playing fields we can actually compete with Amazon on because remember publishers do require consistent prices across stores. So Amazon can't go and undercut on price.
Also, there's no logistics to delivering an e-book. There is no, you know, Amazon can't have faster shipping times. You're just downloading a file. So he does think that of all the playing fields you could possibly compete with Amazon on, e-books is the most level.
And one feature that seems most intriguing is something called quote share. We know that TikTok and virality has been huge for book sales over the past few years. And bookshop.org also wants to implement a feature of sharing into its ebook. So it has this quote share feature where you can select a quote.
Say you're reading something and you see a quote, you're like, I need to share this with the world. This is the most profound thing I've ever read. You can post that on social media. And then people who see that, they like the quote as well. They can click through and it'll go to that e-books page.
And that maybe increases the level of shareability, virality that is not inherent to e-books now, but maybe with Bookshop's feature, it will be able to allow the spread of books and hopefully generate more sales overall.
This reminds me too of the story of the rise of Barnes & Noble recently. Remember, Barnes & Noble has been having a great last few years because they started kind of copying indie bookstores. They started letting store managers recommend books and make it feel more like a neighborhood bookstore. This is the same thing. Bookshop.org wants to elevate these indie bookshops.
If you go to an indie bookshop's page, you will see, even though you're buying an e-book, their recommendations, their staff picks, and just make the whole online buying experience more reminiscent of going to one of those indie bookshops.
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Chapter 7: What challenges does Boom Supersonic face for commercial flights?
So I do think we're seeing a rising tide of support for these places that used to be kind of centers of communities, got a little eaten up by Amazon, but are now making a comeback.
The problem is Amazon has Kindle. And so I think distribution is going to be a problem. I don't think Amazon will take kindly to bookshop.org asking to get their app on the Kindle. Amazon does have this very powerful e-book system where it can sell you the book and then you can read it on its hardware as well. So either way, something to know about in the e-reader space.
I'm not an e-reader myself. I know Toby loves his Kindle. So something to know about. All right, let's sprint to the finish with some final headlines. The Mona Lisa is ditching her roommates. The Louvre in Paris announced it would move Da Vinci's masterpiece to its own room in a newly created exhibition space as part of a major renovation to the world's most visited and biggest museum.
Anyone who's been to the Louvre knows it's become a zoo to get into, and the crowds don't get any better once you enter the gallery home to the Mona Lisa. So the museum is embarking on an overhaul to better accommodate the art-loving masses, which will include a dedicated space for the Mona Lisa and a new entrance on its eastern facade near the Seine River.
Toby, 9 million people visit the Louvre each year, and an estimated 80% of them come specifically just to see the Mona Lisa. That's wild.
I was in Paris a few years ago and just never did the Louvre because it is a zoo. I mean, it is just insane how long the lines are. And we're like, do we really want to see the Mona Lisa over the backs of a clamoring crowd? They say that the current design is this very large room that is very loud.
It's cacophonous. I was there last year. Like you just go to the back and you peer over and you see this very small painting.
It's not a good experience, right? Yeah. Yeah. And they're saying, well, yeah, I guess maybe if you really like art, it's a good experience. But they're also saying the museum's curators say it causes all the other paintings from these famous Venetian painters to go unnoticed as well. So just giving the Mona Lisa her own room, it seems like a logical conclusion.
What is tough, though, is that they need to accommodate more visitors because when the museum underwent its last renovation in the 1980s, it was designed to receive 4 million annual visitors. Now that's up to 8 million. So overcrowding is just an issue that is tough to deal with, but they think that maybe this new kind of renovation will help alleviate some of those pains.
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