Morning Brew Daily
Trade War Spills Over Champagne & Meta Tries to Slow Tell-All Book
Fri, 14 Mar 2025
Episode 539: Neal and Toby chat about Trump’s latest tariff threat that has escalated trade wars on alcohol. Who needs a drink? Then, a former Meta employee publishes a book detailing the toxic environment at the top level and Meta is doing everything in its power to stop it. Also, Wall Street is applauding the arrival of Intel's new CEO, making it our Stock of the Week. And Kohl’s weak forecast makes it the Dog of the Week. Meanwhile, Formula 1 makes its grand return to the starting line and everyone is anticipating Lewis Hamilton’s newest digs. 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. Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow There are risks involved with investing in ETFs, including possible loss of money. ETFs are subject to risks similar to those of stocks. Investments focus in a particular sector, such as technology, are subject to greater risks and are more greatly impacted by market volatility, than more diversified investments. The Nasdaq-100 Index® includes the 100 largest non-financial companies listed on the Nasdaq. An investment cannot be made directly into an index. Invesco Distributors, Inc. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What are the implications of a 200% tariff on European alcohol?
Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, France has got champagne problems after Trump floated a 200% tariff on European alcohol.
Ben Amedda secured a key legal victory against a whistleblower, leaving the future of her memoir in doubt. It's Friday, March 14th. Let's ride.
Good morning, happy Friday, and happy Pi Day 314, the day we celebrate the most elegant 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 Haraguchi who in 2006 counted more than 100,000 digits over 16 hours. That's a lot.
That is a lot. And I was thinking about my own training with pie in the past because I think a lot of people have 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 a hundred 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 a hundred thousand 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?
Well, it is not great. Too much thinking, not enough sleeping. What's keeping you up at night? I think information overload. I'm always reading about business news and the market, and it leaves me wondering if I'm investing in the right stuff.
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Chapter 2: How does the trade war between the U.S. and EU affect the alcohol industry?
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 U.S. and Europe. President Trump took aim at the bubbly yesterday morning when he said he'd put a 200 percent 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 other.
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.
Seriously, even a bottle of Prosecco that you might pop for $15, that's now getting up to $45. So that's what a 200% tariff does. It adds 200% to the cost. 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 vibe's at...
Grand Chateaus and vineyards in Europe are not good right now because when you talk to American wine importers, if you are an American wine importer, you have to decide whether, one, to pass on those costs to consumers or, two, just stop importing altogether. It used to be this love-love relationship, but now it's a lose-lose relationship.
Yeah, I mean, these tariffs would be quite high, and we should say they have not gone into effect. Yeah, 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 200% tariffs go into effect. We're just not going to import that. And we'll turn to the U.S. wine industry, but they just don't make enough to fill our shelves. So they are expecting a lot of pain.
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.
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Chapter 3: Why is Meta trying to stop a former employee's tell-all book?
And if you're curious about the book, I mean, it's been well reviewed by a number of publications, not meta, but, you know, outside reviewers, careless people, the title refers specifically 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 chipmaker hired a new CEO and investors loved the pick. Shares popped 15% yesterday after Intel selected LipBoot10 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 30th 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?
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 has actually been rising a little bit,
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Chapter 4: What are the allegations in the book 'Careless People' about Meta?
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 them. That was a big Gelsinger thing to do. But then Lip Bhutan has come in and said that he's signaling 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.
And if not, I mean, he 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 what we saw with General Electric, but it also could be the breakup of a once-iconic American giant. Up next, it is our Dog of the Week.
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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 6.5% and profits cut nearly in half.
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Chapter 5: Who is Intel's new CEO and why did the stock rise?
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.
Well... 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 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.
I do think that they need it too, because there was 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.
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 docuseries. 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...
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Chapter 6: What are the challenges facing Intel's new leadership?
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 docuseries, it's been a massive influence.
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 emphasize that while workforce reductions are legal, they must follow established legal processes. This might make for some awkward return to office moments.
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 sort of cost-cutting measures that Doge has 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 12.01 a.m. 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.
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 now. whichever way you cut it.
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