Morning Brew Daily - Biden Wants to Cap Rent Nationwide & Why Kids Aren’t Watching Disney

Episode Date: July 17, 2024

Episode 367: Neal and Toby examine Biden’s proposed law to curb the housing crisis by placing a nationwide rent control on landlords. Then, crypto power players are beginning to align themselves with Trump and the GOP. Next, Zyn can’t keep up with high demand so it plans to build brand new factories to pump out more products. Meanwhile, Disney is losing its ground against YouTube in the battle of young viewership. Also, a small diaper company is blaming Amazon for tanking its business after it resold a used diaper. Lastly, high schoolers share which jobs they want most. Hint: it’s not Tech. Expand your world with Meta AI. Now on Instagram, WhatsApp, Facebook and Messenger. Get your Morning Brew Daily T-Shirt HERE: https://shop.morningbrew.com/products/morning-brew-radio-t-shirt?_pos=1&_sid=6b0bc409d&_ss=r&variant=45353879044316  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 Howe. Today, Donald Trump once called Bitcoin a disaster waiting to happen. So why is the crypto industry rallying behind it? Then the White House just proposed a divisive new policy to bring down housing costs, a 5% cap on rent prices.

It's Wednesday, July 17th. Let's ride. I know many of you can't see me, but I'm crying tears of joy right now because today is World Emoji Day. Why is July 17th World Emoji Day? Well, pull up the calendar emoji and look at the date. Yep, July 17th.

And the backstory of how we got here is very interesting. Apple picked that date for its calendar emoji because that was the day when the company debuted ICAL for Mac at the Mac World Expo in 2002. Amogopedia, which introduced World Emoji Day in 2014, decided that July 17th made the most sense for a global celebration of emoji. And in the year since, many platforms have decided to use July 17th as the date on their calendar emoji. Many platforms, but not all platforms, because Facebook has their own emoji keyboard, and they also have a different day on their calendar emoji. On their calendar, it's May 14th,

which is Mark Zuckerberg's birthday. If I was CEO of a company, I totally make it my birthday as well, so I understand it. I do have one more emoji fact for you. There are emojis for lots of flags from various countries, but what country has their actual geographical shape depicted as a stand-alone moji. There's only one. I have no idea. North Korea? It is Japan to show the special connection between emojis and their country of origin. There's so many good emoji facts. So happy world emoji day to everyone. Now a word from our sponsor, Meta AI. So I'm in this college group chat with my old soccer

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Hasbro is not a sponsor of this promotion. Housing is too expensive in America and President Joe Biden is working to do something about it. No, he's not getting his hands dirty building affordable housing units. He's capping rent costs. Yesterday, he proposed a plan to temporary cap rent increases at 5% per year for the next two years. Raining in housing costs that have soared since the pandemic is a major issue for voters. The administration estimates it would affect 20 million rental units across the

country, and half of all renters in the U.S. are cost burdened by housing, meaning they spend more than 30% of their income on rent and utilities. The cap would be enforced by stripping a key tax benefit from landlords who own more than 50 units and jack up rents more than 5% per year. crucially, it wouldn't cover units that have not yet been built, so it's not to discourage construction of new housing. Neil, this measure still needs to pass Congress, and it certainly has its detractors, but talk about an issue near and dear to people's hearts. A rent cap will get people's ears perked up.

It absolutely will, but if you say rent cap or rent regulation and an economist hears it, I mean, they will die inside. According to the top economist at the Obama administration, Jason Furman, says rent control has been about as disgraced as any economic policy in the toolkit. And the reason is that economists say that it has a very chilling effect on housing supply. If landlords know that they can't raise rents to cover costs, then they're just not going to build new housing. And they say that the lack of supply of housing is the main issue that we need to address.

And the problem is at the federal level, there's not so much you can do to spur new housing. A lot of it happens at the local and state level. So you can say, hey, build new housing. We'll throw some money at you. But if it's not zoned for housing in just a municipality, then there's not much you can do. So there's only so many levers that you can pull. And this is what the Biden administration is trying to do. The White House hears those concerns, though.

And they're kind of proposing this as more of a bridge because it's only capping it for the next two years. They do think that these millions of units are about to come on the market. They think about an estimated 1.6 million units are about to flood the market, which will help prices come down, alleviate some of that supply crunch. And they're just saying that this 5% cap is over the next two years, just get people to a point where those new housing, new supply becomes available. So it's not the end all fixed because you're right. It is something that economists have time and time again said this is not the way,

a rent cap is not the way to go about fixing a housing crisis. You have to build more housing. And so when Biden announced this, he did it in Las Vegas. And I think that is not a coincidence because Las Vegas has really been the epicenter for the housing unaffordability crisis we've experienced since COVID started median rental prices there, soared 36% during the pandemic. And when you take a poll of voters all over the country, they say that housing is the second top financial concern after inflation.

The reason why inflation hasn't come down to 2% is shelter costs, which account for more than 30% of the CPI. So this is very top of mind for people. And, you know, I don't think Congress is going to pass this in an election year, especially since Republicans control the House and they are against this. But it's a way for Biden to say, I hear you that housing prices are way too high. And I'm trying something. Yeah, it's definitely an appeal to voters because the Gallup poll back in May found that 41% of Americans cited inflation in the high cost of living as the most important financial

problem facing their families. 14% of voters said the cost of owning a renting a home is the most important financial issue for their families as well. So it's clearly top of mind. And the Biden administration is also simultaneously pushing a lot of other policies as well, not just this rent cap, stuff like incentives for local governments to change. Their zoning laws, also new federal incentives for builders. So they're trying to take a top-to-bottom approach to this.

It's not an easy problem to solve them. No, but one facet of this plan that I found interesting was they want to convert federally owned land to housing in Nevada, and one of the aspects of that plan includes converting old post offices that aren't doing anything anymore into affordable housing. That seems like a pretty good policy to me. A group of people has emerged to play an unexpectedly influential role in the upcoming election. Crypto Bros. In recent weeks, leaders in the cryptocurrency industry have begun to line up one by one in support of former President Trump, showering him with donations after he's portrayed himself as the pro-crypto candidate.

Yesterday, it was reported that two of the biggest names in Silicon Valley, investors Mark Andreessen and Ben Horowitz, are planning to throw their cash behind a political action committee that supports Trump's run to the White House. It is a big move considering they have not backed Trump previously. If you go back five years, Trump and crypto embracing each other would seem preposterous. When he was in office, Trump called crypto a scam and a disaster waiting to happen. He said its valuations are based on thin air and they can facilitate drug trafficking and other crimes. But Trump has ever the opportunist, and he's seen that the crypto world is not happy with the Biden administration.

So he's recently come out in full support of crypto and is successfully rallying the industry to his side. Yeah, and May became the first candidate ever to accept donations in cryptocurrency. The About face is just certainly tied to the fact that a lot of really rich people are willing to support him if he changed his tune on crypto. So you go top to bottom in Silicon Valley right now. I mean, the Winklevoss twins, Elon Musk, David Sacks, they've all endorsed Trump. They've all started to donate a lot of money to his campaign or pro-Trump PAC. So it's been one of those things where insiders close to Trump had said it's not that his understanding evolved on crypto. It's just that he saw this opportunity and saw that a lot of these single-issue voters have very deep pockets.

So why not change your tune to grab some of that money? And there are a surprising amount of single-issue voters that vote just based on crypto. In a recent poll, 13% of Republicans who were not planning to vote for Trump say that as new pro-cryptostance may change their views. That's 13%, which is pretty astounding. I mean, Andresen Horowitz, those two investors, said that they were changing their tune specifically because of crypto. And there is an opportunity here because the crypto industry has not liked what the Biden administration has done specifically. SEC Chair Gary Gensler. They said he is conducting a war on crypto. He's brought more than 80 cases against figures in the cryptocurrency industry during Biden's presidency. And Gensler would argue

that's because crypto is used for money laundering. It's used for all these crimes. Look what happened with SBF. A lot of this happened in the wake of FtX's meltdown in Sam Beekman-Feed exposing a lot of crimes in the crypto industry. But the crypto industry leaders are sort of of just don't like Gary Gensler at all, and they want him out, and they think that a new administration would do that. It's rather ironic, though, because I just zoomed out over the past four years. I looked at the price of Bitcoin when Biden first took office. It was hovering around $36,000 when he took office in January 2021. It's now at $65,000. So despite all of their negative feelings towards the current administration's crypto has done quite well. All it's done is gone up under Biden.

So it is fascinating, too, to see the about face because Sam Bankman-Fried, was shaping politics. He was the crypto person in Washington, huge Democratic donor, and now it's just done an entire 180 degrees, and now Republicans are the party of cryptocurrency. Semiconductor companies have been frantically making plans to build factories to keep up with rising demand for their products, but another company is also scrambling to scale up to meet ravenous demand from consumers, and that is Zinn. Philip Morris, the parent company who makes the addictive nicotine-infused lip pillows, is expanding production to the U.S.

with plans to invest $600 million over the next two years to build a manufacturing facility in Aurora, Colorado. The factory will begin operation by the end of next year, but it may not be fast enough. Philip Morris said it shipped 385 million cans in the U.S. in 2020, up 62% year-over-year, with more growth ahead. It's forecasting U.S. shipments of 520, million cans this year. Neil, this is how a company like Nvidia or Tesla talks scrambling to build

half billion dollar facilities to meet demand. But we're talking about Zinn. I know. I mean, also Novo Nordisk with OZempic. They're scrambling to build factories. I just would be, you know, I would just giggle if I lived in the town where there's a Zen factory and I'm giving someone directions. They're like, oh yeah, you just need to go, take a left at the Zinn factory. No big deal. You'll get where you need to go. But it just shows that there is a scramble to add capacity because there is booming demand. This is, if the 2010s were the year of the vape, or the decade of the vape for the tobacco industry as they tried to diversify away from cigarettes, then this decade has been the one of the Zinn and nicotine pouches, and they've just been so

booming based on social media influencers who have emerged over the past few years, and I've just talked about the buzz that this gets you, and it's led to absolutely skyrocketing demand, 80% growth in the first quarter. They just can't. make enough to keep up. Yeah, Zin is the lifeblood of the industry right now. Cigarette smoking is declining. It's been declining for decades now. Vap industry is also declining, but it's also been kind of dominated by these unauthorized,

very cheap products flooding in from China, so it's very hard to make a buck there. So Zin is just where in these lip pillows are. I keep calling them lip pillows. That's what the Zin influencers said. They are popping off right now. I have friends that legit cannot even work without a Zinn these days. It is an interesting, there is no tobacco product in it, so technically it's healthier, but a lot of health experts say that a nicotine addiction is something that is not good for a variety of reasons, cardiovascular, respiratory,

nervous systems, even though there's no tobacco in it, a nicotine addiction is still not good for you. But in the meantime, a lot of other companies have tried to copy Zin's success. But anecdotally, and just from articles we've read, people say they just haven't nailed it yet. They overpower it in terms of flavoring. It just doesn't hit the same way that Zinn's hit. So Zinn is investing a lot of money and hoping that this consumer trend that we've seen over the last five years will continue to power it because there is the possibility that something else comes along and it replaces it, much like vapes have been replaced.

But $600 million, they clearly think it's going to continue to grow. And that something else could be something not of its own doing, which is a regulatory crackdown. they had to stop selling online because of a subpoena in D.C., which that jurisdiction does not allow flavored nicotine to be sold. So you're already seeing rumblings of a crackdown, similar to what happened to Jules. Chuck Schumer, the Senate Majority Leader, has been on a war with Zinn earlier this year. He called on federal health agencies to crack down because they're marketing, or accusing them of marketing to teens. So we could see backlash from lawmakers and regulators in the same way we saw backlash to

Jewel. Start rationing out your tins, everyone. Up next, Disney is facing a kids crisis. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179, like the next grill three-burner gas grill, or get $50 off a select Weber Spirit grill and bring big flavor to your backyard, then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the Home Depot.

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Disney is finding itself in an unfamiliar conundrum. It has plenty of Disney adults, but where are the Disney kids? For over a century, the company has had a near monopoly on kids' attentions with beloved characters like Mickey, Jeannie, Dory, Wasowski and most of all, Kronk. But these days, Insider argues, it's losing the battle for the kindergarten. The key entry point to the Disney universe, the Disney channel, is a non-factor. Last year, it was the 80th most viewed TV network down from the top 10 as recently as 2014. The most popular kid show for the last two years was not a Disney franchise. It was Cocoa Mellon, which is made by Moonbug Entertainment and airs on Netflix. And there we've identified the main

villain in this story, more vengeful than Scar, more flashy than Cruella DeVille, more scheming than Captain Hook. Streaming platforms like YouTube and Netflix, but especially YouTube, are eating Disney's lunch when it comes to grabbing kids' attentions. Kids 2 to 11 watch three times as much YouTube as Disney Plus content last year. Toby, if Disney loses its grip on kids, it's an existential crisis that threatens its entire business model because kids ask their parents to go to Disney World. They ask them to buy Baby Yoda pajamas. They want to see Inside Out, too, for $17. Do you think this is Code Red level?

It is Code Red because Disney is facing the same challenges that other longstanding legacy media platforms are. And that is the challenges of competing with big tech and the streaming world at large. But for Disney, it is existential because it has this flywheel. It has this amazing flywheel where all of its characters that are introduced in its movies are then fed into its parks. And that's where you spend money on merch and everything.

So it looks very grim at the. current moment. I do think Disney is dodging and weaving and finding where kids spend their attention these days. They just recently put their largest investment ever into Epic Games, which is the maker of Fortnite. They're trying to get their IP in front of kids in a different way. But right now, YouTube is just eating their lunch. There's parents, there's stories of parents anecdotally saying, like, I'm trying to show my kids, Lion King, I'm trying to show them these movies that were part of my childhood. And they are just saying, I'd rather toss on YouTube. in zone out for a little bit. So it is existential and they are finding an uphill battle for

kids' attention. But when you look at the actual data, I'm not so convinced. I mean, inside out two from Pixar just became the highest grossing movie of the year. It's over a billion dollars now at the box office. Six of the top 10 streaming movies of 2023 were Disney, including Moana and Canto Elemental, which are all Disney movies from the past years that show they have a long shelf life. So I will push back a little bit on that. This is a code red. But it does seem to be the case that Disney is doing much better with its Hulu, its adult fans rather than the young kids who do seem to be gravitating to YouTube. I mean, 60% of Disney plus subscribers were adults without kids at home, which is a mind-boggling stat, which shows how many Disney adults there are,

or they're moving to more adult programming. So I don't know. if Disney's looking at this as a huge existential crisis, but it does seem like they need kids because that is their, this is the company's lifeblood. Yeah, maybe the answer is to just diversify away from kids, though, because it has invested heavily in content, not geared towards kids,

sports, news content, and then more just general entertainment. That is the Hulus of the world. They're also trying to become a little bit more sophisticated grow up as a streaming company. I mean, the way that Disney used to curate its homepages for people on Disney Plus was that

employees were manually dragging and dropping titles based on themes or the time of year, which is not very sophisticated when you think about just how much data goes into Netflix's algorithms and like putting the perfect show in front of you at the perfect time. Disney was way behind on that, so they're trying to catch up in terms of sophistication on these algorithms that drive this streaming retention. And another tactic that they're trying to do to keep you on Disney Plus is that if you stop watching a series in the middle, they're going to send you an email reminding you to finish.

So get ready for the Disney Plus emails being like, hey, you haven't finished the bear. And you're like, I know you brought, I don't think I need an email from you, Disney. That would annoy me. One dirty swim diaper paired with a scathing Amazon review was almost enough to take down an entire company. And now it's throwing Amazon's entire review and return process into question. The husband and wife owners of a mom and pop shop, Bo and Bell Littles, told Bloomberg a harrowing tale where Amazon accepted a returned item, then resold it to a customer without actually doing a quality check. That led to a feces encrusted swim diaper, making it into a customer's hands without the couple knowing. A one-star review predictably followed that 100 buyers ended up flagging as helpful on Amazon, which ultimately doomed their business, leading to falling sales in $600,000 in debt. things are now being called into question. One, Amazon's inspection process for returned items, and two, the power and stickiness of one bad review. Neil, one headline about this story

from the outlet, Ars Technico read, Dirty Diper resold on Amazon, ruined a family business. It's hard not to come to that conclusion either. This feels like it was totally Amazon's fault. Yeah, let's do the bottom line at the top, which is from the father who started this business. He says, Amazon talks a big game about helping small businesses, but they really don't. and I think what he's talking about there is this couple tried to get Amazon to remove the review, which is so prominently placed on their product page for more than four years because it actually violated Amazon's guidelines for reviews because you're not supposed to be able to leave a review about the shipping or the seller specifically. It just has to be about the quality of the product itself, and this was not.

This had to do with a shipping issue. And so it really violated Amazon's guidelines. they were on the phone for hours, they were emailing. They're like, Amazon, please take this down. It's literally killing our business. And Amazon, for whatever reason, just did not take it down. It does seem to be like Amazon is so big. It sells hundreds of millions of products.

It is just such a sprawling vast e-commerce marketplace that it can't possibly pay attention to everything. And that's a huge problem for small businesses. That was problem number one. And then problem number two is that Amazon promises on its site that each item that Amazon return center that makes it to an Amazon return center is carefully inspected and evaluated to determine if it meet Amazon's high bar to be relisted for sale. But obviously that doesn't and almost can't match up to the reality of how returns our process.

You're right. It is just such a sprawling company. Bloomberg talked to some warehouse employees that said, absolutely, we don't take care and look at every single one. Most of times what they do is just see if the seal of the packaging has been disturbed of not. And if it appears visually that it hasn't been disturbed, they'll just move the package on. but in a situation like this where you needed to actually take the product out, in this case it was a diaper that had poop stains on it, and see if this was ready to be resold or not. That is on Amazon. It's not on Bo and Bell.

It's not on the company that is actually selling the product. It is on Amazon to facilitate those returns. So that is another spotlight put on this, that this story put on Amazon saying that it's not doing what it's saying it's doing to these small businesses. So now, because of this Bloomberg report, the review has been taken off the site, luckily, and Amazon has also made some changes. They can allow a merchant on their marketplace to say, we don't want you to be able to sell

something that has been returned from us. So there has been a little movement here, but it is a absolute black eye for Amazon, and they want to show how they help small businesses. This shows how they can absolutely hurt them and send them into a massive downward spiral. Finally, say you walk into a high school 10 years ago and ask all the overachievers in AP classes where they wanted to work when they grew up, you'd probably hear companies in big tech, Amazon, Facebook, Google with its famous nap pods. But these days, it's a very different story. According to a new survey of high achieving students from the National Society of High School Scholars, tech firms have fallen far down the list of most inspired to employers. Google, which was number one in 2017, has fallen to seven, Amazon is down to eight, Tesla is down to 33, and Facebook barely made the top 100, coming in at 94 after Dow Chemical in 3M. Instead, all the smart kids seem to want to work in health care.

St. Jude Children's Research Hospital took the top spot, followed by the Mayo Clinic at number two. The CDC came in at 14, and it wasn't even in the top 10 in 2018. Toby, I'm going to ask you to put your sociologist hat on. What made kids sour on tech and why are they so interested in working in hospitals? Oh, I'm not even going to put my sociology hat on. I'm just going to go to another survey conducted by Handshake, which is a job site. And they said that the class of 2024 listed job stability as their top priority when deciding where to apply. And big tech has fallen out of favor because you've seen it's a simple calculation of who's hiring and then also who is laying off people.

We've seen those layoff videos get hundreds and thousands and millions of views of big tech. just being laid off in a really callous manner. So if you're seeing that, you're entering the job market, you're thinking, I want to go to a more stable place. I don't want to lose my job. And the lofty ambitions of tech that used to be the sirens call that lured people, them, that they were going to change the world, is not offsetting the fact that it is a more unstable place to work right now.

So I think the combination of stability and maybe the wool being removed from people's eyes about what big tech companies are doing, those are the two factors that are contributing to this reversal on big tech. And speaking of stability, one of the major categories, sectors where people wanted to work, which is very surprising, is the government. I mean, I already mentioned the CDC was in the top 20. Joining the top 20 is the CIA, NASA, and the FBI applications

just from college seniors. Four government rolls was 7.4%, which is up from 5.5% last year. So all the kids want to work in the government. That is crazy. The kids are not all right. But I guess we've seen these ebbs and flows in where people want to work. I mean, two decades ago, all the smartest kids wanted to go work in finance. They wanted to be a man in finance. But if you think about what happened two decades ago, Lehman Brothers collapsed, everything went to heck. And so that's when big tech came in and said, hey, come work with us. We're the new thing. We're going to change the world. So now clearly healthcare is actually taking that role, which was very surprising to me. But I guess coming out of the pandemic, you saw what these frontline workers were doing, this does seem like the place where you can make the most impact on the world. So it's fascinating to see where kids want to work and the trends evolving

if you look at these surveys throughout the years. Let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful day. If you found yourself laughing at a part of today's show or conversely a segment that sent your blood boiling, we want to know about it. So feel free to send a note to Morning Brew Daily at Morningbrew.com. I also will remind you that our new t-shirts are available for all your summer needs at shop.mortmorrowbrue.com.

Let's roll the credits. Emily Miliron is our executive producer. Raymond Lue is our associate producer. Olivia Graham is our associate producer. Yuchinawa Ogu is our technical director. Bill Minino is on audio. Hair and makeup misses the Disney Channel glory days. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.