Episode 504: Neal and Toby recap Trump’s address in Davos at the World Economic Forum where he made strong comments about bringing oil costs and interest rates down. Then, Federal DEI programs are on their way out under the Trump administration. Also, Oscar nominations are out and this year’s Best Picture prize is up for grabs. Meanwhile, Walmart managers are the Stock of the Week and EA is the Dog of the Week. Finally, a roundup of the biggest headlines to close out your week. Get your MBD hoody for the Winter! https://shop.morningbrew.com/products/morning-brew-daily-sweatshirt?variant=44491852316892 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 00:00 - Dental Debate 02:40 - DEI Policies in Corporate World 07:30 - Trump in Davos 12:15 - Oscar Nominations Released 17:40 - Stock of the Week 21:30 - Dog of the Week 24:00 - Headlines Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What controversial changes are happening with DEI programs?
Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the Oscar nominations are out, but could an AI controversy derail a Best Picture contender?
Then Trump's move to abolish DEI initiatives at the federal level is causing chaos in the corporate world. It's Friday, January 24th. Let's ride.
There's been something bothering me for a few days now. I went to the dentist earlier this week and you always brace for some gentle scolding by the hygienist. Like you should really floss more. And I was prepared mentally for that. This wasn't my first rodeo, of course. But in this instance, I went in, she cleaned my teeth. And when she was done, she was like, OK, you're good to go.
See you in six months. Absolutely no feedback, positive or negative. Kind of rattled me, I have to say. I mean, my teeth are solid, but are they at a zero feedback level? I thought the dream was to get no feedback, but when it was actually realized, I'm not so sure anymore. Would you rather get a lot of dental feedback or none at all?
What you just described to me is the ideal dental visit. This isn't a weekly one-on-one with your manager. You're not looking for actual constructive criticism. The fewer words exchanged, the better, in my opinion. If you were looking for words of affirmation, which I think you were, go to your significant other. Go to a therapist.
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Chapter 2: What did Trump say in his Davos address?
They can fill the cavities in your soul and your heart that you were looking for your dentist to fill there. But I am very curious to hear people's thoughts on this because that isn't probably the only dental experience that people have had where they haven't gotten any feedback whatsoever. So... Clearly, you're still thinking about it. I am still thinking about it.
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After years of embracing the idea that a more diverse, equitable and inclusive workforce was beneficial, the business world is now grappling with the government's change of course on those issues. Donald Trump has issued multiple executive orders this past week relating to terminating illegal DEI mandates in the federal government.
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Chapter 3: What are the key highlights from the Oscar nominations?
On Monday, he put those who worked in federal DEI offices on administrative leave, and a memo issued this Wednesday warned employees that they could face adverse consequences if they fail to report on anyone continuing to work in DEI for the government.
Some companies like Meta and Walmart got ahead of the curve and already began to roll back their DEI programs leading up to the election, but others are fighting back against the shift. Speaking at Davos, JP Morgan CEO Jamie Dimon told CNBC to, quote, bring them on when asked about activists pushing the bank to change their existing policies.
Costco, Apple, Microsoft and others have also held fast to their initiatives as well. So, Neil, there's clearly a lot of moves and counter moves going on right now as businesses try to position themselves amongst a shifting cultural and legal landscape when it comes to DEI.
It absolutely is shifting, and I want to go back to even before Trump was inaugurated. So in 2020, we saw a boom in DEI. Glassdoor saw a 50% increase in job postings for DEI roles. That came right after the murder of George Floyd, and a lot of corporate America decided that it was incumbent on them to establish more diversity inclusion initiatives.
Fast forward to the first two weeks of this year, ZipRecruiter had 561 postings for DEI job programs. That was a 93% decline from the same period just a year before. So you can really see the boom and bust of this particular department in corporate America. As you mentioned, a lot of companies have been rolling back their DEI policies in recent years.
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Chapter 4: What is the Stock of the Week?
A lot of that you can draw a through line to the Supreme Court decision that banned affirmative action in higher ed. Now it's on its last legs and all these sweeping, comprehensive, really ambitious executive orders by Donald Trump hopes to deliver the knockout blow.
It does seem like Trump is testing to see whether that Supreme Court decision can actually be extended to private employers. It looks like we're setting up a court battle about if these DEI initiatives can be struck down through executive orders.
One of the big tools that these anti-DEI activists are using are trying to bring shareholder proposals to companies to try to ensure that these DEI policies are struck down. Their argument... is a financial one saying that, look at what the federal government is doing. They are changing these DI policies.
That leaves us as shareholders vulnerable to lawsuits against us being the company that they are shareholders in if we continue to have these DI practices in place. The problem is that those shareholder votes are pretty routinely rejected. A lot have been filed against Apple, Walmart, Starbucks. They have all been handily defeated. They rarely get more than 2% of shareholder support.
Chapter 5: What is the Dog of the Week?
So even though you hear some noise, when it actually comes down to what shareholders want, they are not supporting these anti-DEI efforts.
And one just happened yesterday. You mentioned the name before, Costco. Costco's shareholders defeated a proposal against their DEI policies. And Costco has sort of taken the mantle as one of these corporations that says, I know what Everybody else is doing not everybody else, but a lot of these other companies are doing tractor supply. Harley Davidson, Walmart, McDonald's.
We've talked about it on this show. A bunch of companies have rolled back. But Costco said, no, this is really important to us. It enhances our capacity to attract and retain employees who will help our business succeed. So they rejected that proposal. And a number of other companies have come out and said no. No, DI is really important to us.
Chapter 6: What are the biggest headlines this week?
You can, as Jamie Dimon said, like, come on with the lawsuits. Apple defended its DI policies. Microsoft did as well. Pinterest did as well. And the common thread with all of these companies, Costco, Apple, who are trying to preserve their DEI policies is they didn't just start hiring for them in 2020. These policies go back to the 90s and the 2000s.
This has been ingrained in their culture for a long time. They've tried to promote DEI for decades now. So it wasn't these fly-by-night DEI departments that were sprung up post-George Floyd in 2020. The common thread through all of these companies that are the holdouts right now are that they've had these DEI initiatives in place since the 90s.
Hope you're wearing Canada goose and cashmere because now we're headed on a trip to Davos, Switzerland, the ski town where the World Economic Forum has been taking place. Top corporate brass, world leaders and other PJ types have been yakking it up since Monday. But the main subject on everyone's minds, the newly inaugurated President Trump, has been absent.
Until yesterday, that is, Trump delivered a virtual address to executives, his first major speech since taking office. That was 45 minutes long and particularly newsy, so we'll break down the bits you need to know. One major development, Trump called on OPEC, a cartel of oil-producing countries, to bring down the price of crude oil, which he linked to ending Russia's war in Ukraine.
The thought being Russia funds its military campaign through oil revenues. And if the price dips, their resources dry up. Oil actually did fall one percent on that news. Trump also tried to assert his influence on the Federal Reserve, saying he would, quote, demand that interest rates drop immediately. And likewise, they should be dropping all over the world.
During his first term, Trump frustrated. frequently attempted to bully Fed Chair Jerome Powell to lower rates to little success, but it looks like he's running it back. This pressure campaign worries the vast majority of economists, even conservative ones, because they see the Fed's independence from politics as a key factor in healthy markets. Toby, what stood out to you?
Yeah, this was a long and meandering speech, 45 minutes packed with a lot of stuff to break down. I think if you take it as a whole, though, it was kind of Trump laying out his proposal for almost a carrot and stick approach to how he's going to approach world economics in this next term. So he clearly wants to lower taxes in America to incentivize companies to set up businesses there.
And he also wants to raise taxes, raise tariffs on companies outside of America to hopefully offset some of that revenue lost from lowering taxes in America. He definitely wants to produce more oil. Oil was obviously one of the big headline announcements that he has. He thinks it will lower energy costs, bring down inflation. And then he also wants to lower interest rates, which...
again, is something that is more of a want right now than anything else because, again, the Fed does have its independence. So he was trying to lay out this vision that he has to solve everything that is ailing the U.S. economy, bring down those higher prices, bring down those higher taxes, kind of restart manufacturing in the country and jumpstart a world where the U.S.
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