Morning Brew Daily - Biden Wants to Bump Up Corporate Taxes & The US Could Actually Ban TikTok

Episode Date: March 8, 2024

Episode 275: Neal and Toby break down the biggest business takeaways from President Biden's State of the Union speech where he stated he wanted to bump up taxes on corporations and the wealthy. Plus, why Congress could actually ban TikTok and Netflix gets into boxing with a Jake Paul and Mike Tyson fight. The guys share their stock and dog of the week and Applebee's and IHOP are joining forces? And finally a full preview of the Oscars this upcoming weekend. Use code MORNINGBREW50 to get 50% OFF your first Factor box at https://bit.ly/3UUZGG0 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

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Good morning, Brew, Daily Show. I'm Neil Fryman. And I'm Toby Howell. Today, he's in love with the state of you. Biden touted his economic record in a fiery address to the nation last night. Then one bad review from a YouTuber could lead to an entire automaker going out of business. It's Friday, March 8th. Let's ride.

Happy International Women's Day, especially to all the women who listen to Morning Brew Daily. We promise we won't release a perfume for you like Binance did or do any other cringy brand activation. but yes, happy International Women's Day. And fellas, take this as a reminder to make sure you tell the women in your life that you appreciate them. Now let's hear a word from our friends over at Factor. I want to call out a very cool thing that's been happening with Factor. Ever since we've partnered with them, people keep seeing Factor trucks out there while listening to the podcast. It's true.

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With concern swirling about his age, 81-year-old President Biden delivered a defiant state of the union address that drew sharp-lined between himself and his likely opponent in the upcoming election, Donald Trump, who Biden referred to numerous times as my predecessor. The speech covered a lot of ground in 68 minutes, touching on January 6th, abortion, Ukraine, Israel, and Gaza, and the southern border. Biden also highlighted his economic record, saying he inherited an economy that was on the brink and turned it into an economy that is the envy of the world. And it's true, the U.S. is lapping other countries when it comes to economic growth. But what I want to start out talking with you, Toby, is perhaps one of the more under-discussed but hugely consequential issues in the upcoming election.

taxes. Whether Biden or Trump wins will have major impact on Americans' taxes, since many of Trump's 2017 tax cuts expire in 2025, leaving their fate up to the next administration. Biden, in the State of the Union, reminded everyone that he'd raised taxes for corporations and billionaires, if reelected. Yeah, I actually, as soon as the State of the Union was published on the White House website, I control F taxes just to see how many times it was mentioned in the speech. It was mentioned six times and his prepared remarks. Four were to see. how rich people and corporations need to pay their fair share, and then two were to say that normal people won't have their taxes raised under Joe Biden if he was reelected again.

But yeah, Biden says he wants to raise the minimum tax for corporations to 21% as well as well as lift corporate tax rate up to 28% from the current 21%. And you're right. That is the big showdown and the big bifurcation between these two candidates is that Trump would likely extend the tax cuts that he passed last time he was in the office. And then Biden wants to, yeah, roll those back. I mean, it is a huge policy difference between the two administrations. So whatever you think of the election other than policy and you can have a lot of opinions about that,

there's actually a big difference between Republicans and Democrats and what they would do with taxes. It is actually a $6 trillion question because if Trump extends the Trump, if the future Trump administration extends their tax cuts, it's going to cost the government $4 trillion over a decade. Meanwhile, if Biden is reelected and does his tax proposals, that will raise $2 trillion for the government. So it's really a $6 billion at stake in this next election. Yeah, $6 trillion. He also kind of touched on the housing market a little bit and how offered a few proposals on how to kind of unstick it right now. One proposal is on the housing front is to offer first-time home buyers a $5,000 per year credit for two years.

Again, you want to try to help people get that starter home. But then another proposal is that he wants to provide a one-year credit of up to $10,000 for families who sell their starter homes. Because, again, a lot of people locked in these really low mortgage rates. They don't want to sell the house because they would have to then buy a new house at a higher interest rate. So kind of figuring out how to grease the wheels a little bit, get the housing market flowing. That was another thing that he called out in the state of the union.

Yeah. And again, these are proposals. They're very fanciful. They're not likely to be enacted, but the point is to frame the debate ahead of the election and whatever his future administration does. It'll likely be maybe a split Congress, so they'll have to compromise in many areas. But this basically says, as we start negotiations, here is my pie in the sky ideas. Let's move on.

If you opened TikTok yesterday, you might not have seen your usual diet of cooking videos that you'll probably bookmarked but never come back to. Instead, some of you came across a pop-up warning that, quote, Congress is planning a total ban of TikTok, then prompting you to find and call your representative to fight a bill moving through Congress right now. The dire call to action from TikTok is in response to a vote from a key House committee that unanimously decided to approve legislation

that gives the app's Chinese owner, BightDance, six months to divest from TikTok or else face a ban in the U.S. I know we've been talking about TikTok getting banned for literal years now, but this is one of the more significant steps yet towards limiting access for normal people in the U.S. Now, as for that push notification, reps on Capitol Hill are none too happy that their phones are getting flooded with calls concerned about losing access to the app. But rather than change their mind, Axios reported that it's just made politicians even

angrier and more set on passing the bill. Neil, tension around TikTok, but also U.S.-China tension in general seem to be reaching a peak rate. It's crazy. First of all, this bill came out of nowhere. I didn't know it was happening. And all of a sudden, there's a huge push to start banning TikTok, or as lawmakers call it, forcing bite dance, a Chinese company to divest from TikTok within five months. And it passed this big House committee, and then next week it's going to be taken up by the House. So this is a huge momentum swing that a lot of lawmakers, and I should say bipartisan lawmakers, because it is supported by President Biden, as well as the Republican House Speaker Mike Johnson. Johnson to kind of get TikTok out of app stores. So I mentioned this House community. It's the House Energy and Commerce Committee. It voted 50 to 02. Again, bipartisanship is not something you see a lot these days,

but 50 to zero on a bipartisan community, or committee just goes to show how kind of unified Congress is right now against it. Also, I was reading a little bit into the PR war that TikTok is trying to wage right now, because sending a push notification to tell users to call the rep, That is a very, almost invasive step to take. You had to manually enter your zip code too, which didn't do anything to Alley fears that TikTok is tracking you. Now they have even more data on where you live.

So I think that this kind of push could work if TikTok was a U.S.-based company. But when you have a Chinese company telling you to influence your U.S. elected officials, it rubs people the wrong way. So I think this is a gamble that I don't think is going to pay on the TikTok. It absolutely backfired because it just confirmed the fears of what people have around TikTok, which is that the Chinese government is using it, whether that this is right or not, the fears are that the Chinese government could use it to influence American democracy and meddle with things we have going on here.

So basically just confirmed everything that we were worried about. Yeah, and then meanwhile, over on the Chinese side of things, they've been kind of intensifying its efforts to run this, quote, delete America from its technology campaign. Remember, as China kind of came into industrialized and came into the modern economic superpower that it's been, U.S. technology companies were right there alongside it. Both hardware and software companies rode China's ascendance, but now China's in a place where they feel like they can replace a lot of the American software and hardware companies

themselves with homegrown things. So there is a big push going on right now in Beijing to kind of remove America from its technology And that scene with Apple's iPhone sales, which have cratered 24% in the first six weeks of 2024. Man, the more you read about Chinese espionage and its ongoing economic war with the United States, especially in terms of AI, there was a Chinese national, former Google employee who was charged with stealing AI secrets just this week and handing them the Chinese AI companies gives you a little goosebumps.

Okay, moving on to something completely different. Jake Paul will box Mike Tyson on Netflix. It's a headline you would have thought The Onion wrote in 2019, but in 2024, it is all too real. The 27-year-old Paul, a YouTuber turned boxer, will step into the ring against Tyson, the 57-year-old former heavyweight champ. The action will stream live on Netflix on July 20th at AT&T Stadium,

home of the Dallas Cowboys. There's a lot we don't know, like, whether this is going to be an exhibition fight or how much the two are getting paid. But we do know it's another big step by Netflix into the sports entertainment space. Even as other streamers have paid big bucks for the broadcast rights to live sports like Amazon and Thursday Night Football, Netflix has opted for a more cautious approach with its biggest splash being a $5 billion deal to stream WWE. Toby, a lot to get into on the business side of things.

But the thing people really want to know your opinion on is who you got to win. I think we're all coming out of this losers. The fans are going to be the biggest losers. is going to win in this scenario. I mean, everyone's going to get their bag, do what you got to do. I can't fault Mike Tyson or Jake Paul for probably bringing in a lot of money from this exhibition. But I noticed you mentioned Netflix is pushing into the sports entertainment space because this is not true sporting, like contest. It is mostly entertainment. But I do think that Netflix may are, and Jake and Mike Tyson are jumping the shark here a little bit in the sense that fans are not stupid. Jake Paul tweeted out

this promo video of Mike Tyson, like, looking really good in the ring. Everyone immediately knew that it was from four years ago, and that's not the current shape he's in. Even the picture that they're using of Mike Tyson for the promo card is him from 19 years ago that they photoshopped the tattoo on him to make it look like it was recent. So I do think they are Netflix and Jake and Mike are flying dangerously close to alienating their users because are the people who might watch this fight because we know that this is not going to be pretty. Yeah, it's a little bit of a farce. Yeah, I mean, Netflix's strategy here is a little bewildering.

I mean, they clearly don't want to pay. What you have to do for live sports right now is pay billions and billions and billions of dollars because that is the only thing people watch live appointment viewing these days. But they've also been tiptoeing into the sports space with exhibition tennis matches and exhibition golf matches and their documentaries. It just feels like that old business adage. You have to spend money to make money. And Netflix is just tiptoeing in.

I'm not sure they're going to see any investment on their little spending in these sports entertainment pieces. Maybe WWE is, I mean, obviously, WBE is a big property. But I don't know. It just feels a little confused and they're not willing to just dive in like the other streamers. Yeah, they've definitely done what they have done well, which is the drive to survive, the point, the break points, the full swings of the world, which are these sports documentaries. And I do think that the eventual vision is to pair live sports with these behind the scenes, documentary. Right now, though, yeah, it is, they're not cannonballing in. They are tiptoeing in these kind of weird sports entertainment events. I say all that. I kind of was being mean in the beginning

of the show. I will definitely watch it, though, because like, come on, it is Mike Tyson. It's Iron Mike. Okay, before we take a quick break, stick around because we have a stock of the week, dog the week coming up right after this. Own it all. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Buckslot machine by Aristocrat Gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package. The biggest prize in Yamaba's history. Club Serrano members can earn daily instant prizes

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We're going to take you through one stock that is already studying up for their March Madness bracket and one stock that is just going to wing it based on vibes. Neil, I tip my hat to you because you won the pre-year. show horticulture contests. What is our stock of the week? What does that involve? I'm not telling the people. It's horticulture, though. You got a green thumb. All right. My stock of the week is Target, whose stock is up 12% after it revealed a plan to compete with the big boys of retail. Like Amazon and Walmart, it's going to have a new

paid membership program called Target Circle 360. The plan will offer unlimited free same-day delivery in under an hour for orders over $35 and free two day shipping. And in a special deal next month, people can get it for $49 per year, but after that, it'll cost $99. Target does have an existing loyalty program that gives you coupons, but this is a more robust service intended to compete with Amazon Prime and Walmart Plus. And given the stock pop, investors are clearly excited what Target's got in the pipeline, which includes not only this membership program, but also a plan to build 300 new stores and expand its private label brands. Yeah, this is kind of the retail, big box retail renaissance playbook.

You have to have an Amazon Prime-esque membership service that includes fast delivery. You also have to double down on your own private line of good, private label line of goods. They have this line called Dealworthy, as you mentioned. So I think they're trying to run the playbook and investors are finally happy to see them jumping on board on the things that others like Walmart and Amazon Brian, Amazon have been doing for years now, but they're finally getting up to speed. Yeah, Target's in this weird place compared to Walmart because it's scale, more of, more than half of its sales are discretionary items, which are items you don't really need, like the

electronics of the world. Meanwhile, Walmart has this big grocery business, so it tends to do better in times where people are hurting a little more. There's more recessionary vibes going on. So Walmart's really well positioned that space. Target is not so much, and it did suffer its first annual sales decline. since 2016 last year. But it's rolling out this membership program. It got rid of this big inventory glut. It had built up during the pandemic with all those supply chain problems. So it is

repositioning itself for a good few years. And yeah, those private label brands are huge for Target. I mean, they do $30 billion in sales from those private label brands. They just rolled out a new one called deal worthy. And most of these items are going to be priced under $10, some under $1. So it's all about those essentials that you don't want to pay up for. Target wants to own that space. And Target has actually outperformed Walmart, the stock since 2019, which I don't think I would have guess. They're both getting lapped by Costco, though, which I would have guessed. My dog of the week is the electric vehicle maker Fisker. So there's this YouTuber named Marquez Brownlee, who is one of the OG tech influencers. The guy is awesome, gives very pragmatic reviews of

stuff like the Vision Pro, new phones, et cetera. But he's recently got into reviewing cars and just published a video where he called Fisker's latest EV, the worst car he's ever reviewed. Again, Marquez is not prone to hyperbole. When he says something like that, he means it literally. The video blew up, racking up over 4 million views and has actually reached Fisker Senior Management. They began calling around trying to get someone out to update the software in the car, which was the main gripe Brownlee had with it. Well, it turns out Brian Lee borrowed the car from a local dealership. And another TikTok ended up going viral of this super weird conversation a dealer had with a Fisker senior engineer trying desperately to repair some of the bad PR Brownlee's

video generated. In total, the stock is down around 45% since the video was posted. And it just shows the power a single reviewer can have these days. It does. It also shows how cars and other hardware makers are shipping out these products maybe before they're ready. Fisker really wanted Brownlee to update the software. They said, we have this software update. What you're driving is not necessarily what everyone's driving. We want to give you this update. And Marquette said, no, I want to give, I want to review the car to as it's out in the public right now. And so that was the source of the tension. It also reflects how these companies are sending out products with the ability to update them, maybe when they're not ready for prime time. Yeah, absolutely. And just to be clear, though, Fiskers troubles are not stemming just from this one video,

although that did contribute to it. About a week ago, Fisker said that there is substantial doubt that it will have enough money to make it through the year. They said that in a filing with the SEC. So Fisker, kind of a younger, newer auto EV company, feeling a lot of pressure from a lot of different places. And throwing this review into the mix did not help anything. There are talks of sort of a bailout emergency, $400 million investment from Nissan who might come and be the white knight to rescue Fisker from going off a cliff. All right. Let's move on. in your journeys through the great capitalistic smorgasbord that is America, I have no doubt you have come across a combination Pizza Hut and Taco Bell or maybe an anti-Anse in Cinebun, but a new dual-branded combo restaurant is coming your way, ready to change the smells and sights of the U.S.

dining landscape. It's Applebee's and IHop. Yes, finally you can pair a two-for-20 appetizer featuring boneless nuggets and chicken wanton tacos with a short stack of double blueberry pancakes like you've always dreamed of. The idea behind the combo restaurant from parent company Dine Brands is to increase revenue by offering up menu items that hit at all hours of the day. IHOP will take the morning shift while Applebee's can pop off at night. But Neil, are combo restaurants the future of QSR? Are we even ready for the smells that are about to emanate from these crossbreeds?

I mean, it makes too much sense to combine your neighborhood bar and grill with your neighborhood pancake Emporium. But, you know, Dyn Brands does have a few of these locations overseas, and they're killing it. I mean, the CEO says they make twice as much revenue with the same amount of square footage. So I'm just to borrow some corporate lingo here. The synergies are truly incredible. You need to have one kitchen that serves two restaurants. So there are a lot of cost savings and a lot of maximizing efficiencies.

And I know that's very buzzwordy, but it's actually true. When you combine resources and think about the delivery costs, too. You don't have to pay a delivery vehicle to go to two separate locations. They can bring everything just to one place. So you can really save a lot of money from these kind of things. Yeah, so they are both under Dine Brands umbrella, but these are two brands that are heading in kind of opposite directions. Applebee's is shrinking. The company closed 46 locations, only open 10 new ones.

Meanwhile, IHOP added a net 33 new locations. So I do think that they're trying to bring Applebee's up, bring the dollarita up. Maybe the dollarita wasn't as profitable as they thought and kind of pair it with IHOP that has been doing well. But I do have to wonder, as soon as you start seeing these dual branded restaurants sharing the same space, what other restaurants would you want paired together? So, Neil, what are your thoughts? What would you want to see? Yeah, I'm thinking maybe we have a crusty crab during the day that transitions to Mo's Cantina Jazz Club at night.

I think that would kill it. You went immediately to the fictional space, but I do. That would be a heck of a vibe. The two restaurants that I want to see paired together, I want to go very different ends of the pricing spectrum. So you put a McDonald's in the same place as like a Nobu or some super, super premium brand. And then you start doing things like putting caviar on McNuggets, stuff like that. I don't know.

I think that would be cool. I don't think you understand the process of synergy. That would be a crazy kitchen back there. You got the McDonald's friar right next to like, I don't know, very nice people. people making a moose boost or something like that. A moose, boosh. Okay, moving on. Finally, before we let you go about your Friday,

let's preview the Academy Awards, which air on ABC Sunday night. The first thing you need to know about the Oscars is that the broadcast is moved up an hour from its typical time slot to 7 p.m. Eastern so that everyone can get to bed at a reasonable time, MLB and NBA. Please take notes.

The show hosted by Jimmy Kimmel for the fourth time has an extra buzz this year because for the first time in forever, It's highlighting movies everyone has seen. And of course, I'm talking about Barbie and Oppenheimer, which are both nominated for Best Picture. That could boost viewership because over the past decade, the Oscars have featured films that maybe are really good in an artsy way, but don't appeal to the masses. Every Best Picture winner over the past decade was made for under $25 million. And the top grossing of those winners, Green Book, brought in 320 million in ticket sales.

For comparison, Oppenheimer brought in nearly $1 billion, and Barbie grossed $1.4 billion, so I expect a lot of people to tune in. Yeah, it is kind of crazy to hear those box office numbers and that it's two of 2023's highest grossing movies pitted against each other as two of the favorites in the best picture category. I mean, even a few years ago, that would have been Avengers End Game versus Spider-Man far from home. So you just don't consider the Oscars as a place where these big box office movies do well, but hopefully it leads to, a rebound in viewership. I mean, viewership has fallen off a cliff. It's less than half of what it was back in 2013. Last year, only 18.7 million viewers in the U.S. tuned in. So I definitely think we're going to see a bump this year, though. Yeah, I mean, if Oppenheimer wins, it would be the highest grossing best picture since Return of the King way back in 2003. I know that probably

brings a lot of memories back. But also, for the Oscars preview, we got to talk about this gift bag that people get. The nominees get for Best Director and some of the top top acting awards. So there's this gift bag that is put together. They have nearly 60 items worth over $170,000 with the most expensive of those gifts being a $50,000 trip to a luxury chalet in the Swiss Alps. And I guess these brands think it's worth it because if Robert Downey Jr. takes one picture at your chalet in the Alps and it's worth it. I was thinking that gift bag is the wrong term for something worth $100. That's a treasure chest of stuff. right there. That is beyond gifts, but yes, that does go to show you what these brands are willing

to do to get in front of A-list celebrities. Also, let's get into a little bit of our previews and whatnot. We were looking at some of the betting odds. Neil, have you cooked up a parlay for us, or have you, what are you thinking I was going to dominate this year's award show? Okay, I put together. So betting on the Oscars is actually legal in New Jersey, Massachusetts, in five other states that's under the same loosening of the laws that allows you to the sports wager on sports. So that's fun if you're in those states. Look it up. You can do a little wagering on the Oscars. My parlay that I put together is called the Trinity. And it's Oppenheimer sweep. It's Oppenheimer Best Picture, Best Director and Best Actor. And Oppenheimer is heavily

favored in all those categories. So it might be around minus 200, but that's a parlay that you can do. Or at least in my sports book. You definitely went with the favorites. I cooked up a Barb Zillahimer parlay where you streamed together a best song pitch. of what I was made for from, that's the Barbie piece. A best visual effects pick of Godzilla minus one, which, by the way, was the most underrated movie of this year. You should definitely go see that. And then either a best picture or best actor award for Oppenheimer,

all favorites in the respective categories, but the parley will bring you better odds as well. Also, Barbzilla,heimer, come on. That just rolls off the tongue. It rolls off the tongue. And then finally, we have to, you know, mention the makeup and hair styling category, which Maestro is expected to win for what they do.

did with Bradley Cooper. I cannot believe we got snubbed in that category. Hair and makeup, come on. You guys got to do better. All right. That is a wrap on our shows for the week. Very fast week, in my opinion. And although the weekend is coming up, our inbox never stops working. So if you have any feedback on the show, send along your thoughts to Morning Brew Daily at Morningbrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lou is our producer. Eugenio Ogu is our technical director. Billy Minino is on audio. Hair and makeup is at the combination Applebee's and IHop. Devin Emery is our chief content officer

and our show is a production of Morning Brew. Great show today, Neil. I wish you all well. Hey, honey, it's mom. Did you know if we switched to Verizon, we can get four phones for $0,000 plus four lines for $25 a line? Call me back. Me again. That's just $100 a month for four lines on Unlimited Welcome. Plus four phones,

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