Morning Brew Daily - Credit Suisse Rebounds, Ryan Reynolds is super rich & TikTok Sale?

Episode Date: March 16, 2023

Episode 18: Neal and Toby break down why Credit Suisse is on the rebound. They also discuss why the U.S. is advocating for the sale of TikTok and why Ryan Reynolds is one of the most successful celebrity entrepreneurs. Plus, the economics of March Madness, and NASA's nifty new spacesuits. Oh also they reveal the Greatest Logo of All Time bracket - head to our social channels to sound off! Learn more about our sponsor, Fidelity: https://fidelity.com/stocksbytheslice Listen Here: https://www.mbdailyshow.com/ Watch 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 am Neil Freyman. And I'm Toby Howell and Neil. It is March, which means it is March Madness Time, which also means it's bracket time. So obviously at Morning Brew Daily Show, we wanted to put our own little spin on March Madness. So we put together a bracket pitting the greatest logos of all time against each other. We're super excited for this. We want you guys to participate as well.

So go follow us on Twitter at MB Daily Show and on Instagram at MB Daily Show. you can vote on these logos. And Neil, we're looking at the bracket right now. Take us through what stands out to you. All right. Well, we have Nike as the number one seat in the retail luxury division. And I just can't see anything dethroning Nike. It's iconic.

It's iconic. Starbucks is the number two in that region, but I still think Nike will go to the final four from there. Down in sports and entertainment, we have some really heavy hitters at the top, Yankees and Cowboys, some America's franchises. I hate it. But, yes. But my pick is that the sort of opposition vote is going to come out in force. And I think the six-seed, Mighty Ducks, is going to roll through that region.

I iconic as well. I love the Mighty Ducks logo. Tech is going to be Apple. Apple is the most iconic logo. Probably we have. So I think Apple's going to steamroll into the final four over there. Miscellaneous, this one's really open. McDonald's is the number one seed.

Coke is the number two seed. Playboy is number three. We got FedEx and UPS in there. there as well. My pick here is, I think, Coca-Cola is going to go in from name recognition alone. Yeah. It's a great bracket. Again, you guys can participate in this. We'll be hosting voting after the show today. You just log on Twitter, log on Instagram. We'll put the matchups up, and you guys just click the vote on who you think is going to win. So we'll be kind of updating it throughout March Madness as well. It's going to be good. I saw some social media user

already commented on our post saying that there are no great logos. There are. only great brands. Oh, interesting. So basically, people are going to vote for their brands, but we'll see what happens. We do have actually some news to talk about besides this. We're going to talk about the heat is turning up even more on TikTok from the U.S. government. Ryan Reynolds is just a total business god, and we'll talk about why that is, and we'll do an actual March Madness preview and talk about some of the storylines to pay attention to from the actual basketball. But first, so Toby, I thought we were going to be able to enjoy watching college basketball today, not have to look at the news that much. But we're going to have to keep at least

one eye on the global banking system because it is just in a bad place right now, so fragile. And here's the latest is that shares of Credit Suisse are jumping this morning after a total day of chaos yesterday. So what happened yesterday? Shares plunged to a record low when Credit Suisse's top shareholder, the Saudi National Bank, said it wouldn't provide any more financial support. And that sparked this global banking sell-off. And then, And then last night, there was all this nail-biting from investors throughout the day. What's going to happen to Credit Suisse? It tapped in Swiss National Bank for $53.7 billion as of this emergency lifeline to strengthen

its liquidity. So basically, that move has calmed fears a little bit, but we don't want to draw any big conclusions. Banking is, no one has really any confidence in the banking sector right now. So Toby, I was wondering if you could just maybe walk us through. What happened at Credit Suisse? Is this at any all related to what happened over the failure of Silicon Valley Bank? Yeah. It's definitely not as related as people are making out to be. Obviously, when you have two banking crisis on the heels of each other, people want to know, like, did one cause

the other? Honestly, Credit Suisse has been a long and slow train rack over the past two multiple years. So if we want to go back all the way to early 2021, Credit Suisse has had a bunch of money in this lending company called Green Sill. That failed. It costed Credit Suisse $10 billion. Then Archegos, which was this huge family office run by Bill Huang, and they had a margin call on that. They lost almost $6 billion for that. There was a cocaine and cash laundering case in the summer.

And then more recently, it's seen five straight quarters of losses, over $100 billion in customer outflows and a ton of executive turnover. So clearly this was not just something that, in reaction to SVB, this has been a long, slow kind of demise for this once great bank. So I would say that it's pretty unconnected. The only thing that is similar between the two is that they also had these long-term bonds on their balance sheet that kind of got undercutted by these rates hikes. So that two things are similar between the SVB and Credit Suisse. But yeah, overall, Credit Suisse has many, many more problems than SVB.

ever had. So if you were picking a bracket, who would you choose to help you pick a Jim Kramer or Credit Suisse? I mean, Inverse Kramer never fails. Whatever Jim Kramer says, do the opposite. I don't know, Credit Suisse's track record has it up there with Jim Kramer. Right. So then what happens when Jim Kramer recommends Credit Suisse has a buy?

The world just closed. Has he? Yeah. Yeah, this is definitely just sort of a symptom of a larger crisis for banks. Larry Think, who is this major finance leader, this CEO of Black Rock, wrote his annual letter yesterday and everyone reads this thing and he warned of a slow rolling crisis for banks and it's exactly what you talked about they're getting hammered by higher interest rates right now they bought all these low yielding bonds when rates were near to

zero and Europe actually in Europe they bought negative yielding bonds because regulators forced them to do that so in Europe there was even negative interest rates and now that they're jacking the Fed and other central banks have jacked up interest rates these banks are facing major unrealizing losses. So I think that's what's spooking the global banking sector. Silicon Valley Bank was kind of its own niche thing. You know, it catered to startups and it had its own problems and it was completely mismanaged. But I think why you're seeing a lot of the fragility in banks all around the globe is because they're getting hammered by higher interest rates. So Larry Fink said these higher interest rates have exposed cracks in the financial system. And you predicted more seizures and shutdowns coming. It's scary. I mean, if Larry says it, though, people are going to listen. So, yeah, definitely a scary time in banking, a ton of instability. But yeah, we'll obviously be monitoring this story for weeks and months to come. Speaking of stories that kind of felt like they've been on our radar for a long time, the fate of TikTok is once again in the news. So yesterday, the Biden administration made an official threat to ban TikTok, unless.

unless its Chinese owner's bite dance sells the app. This is a major, major escalation from the White House who has previously kind of hedged its bets on TikTok, but it's clear that they think that it's a threat to Americans' data. It's too big to ignore at this point. So, Neil, I remember writing about this story throughout the entire Trump era as well, when people were kind of rolling in their eyes

at like banning TikTok, but now here we are two or three years later still talking about it. What do you make of it? My first initial take was this. was deja vu all over again. Because the Trump administration, a few years ago in 2020, sought to force bite dance to divest its stake in TikTok. And this is kind of similar to what the US is doing now.

So it just feels like the environment and the sort of public opinion around TikTok has shifted a little bit. You have bipartisan senators introducing a bill that would empower the US government to ban TikTok. So it feels like there's a little more of a groundswell of support. And it felt a little bit like when Trump was doing it, it was kind of, it was,

super politicized. Right. And so what a big aspect that we haven't talked about is TikTok actually did commit to spend one and a half billion dollars to kind of, it was actually called Project Texas, which is hilarious, basically to enact a stronger firewall between TikTok employees and its Beijing parent company. And that got rejected by Cephas, which... Scythus, yeah. Yeah, I remember talking about that, which is the committee on foreign investment in the U.S.

So... Right. They're behind all of this. and they basically review mergers and acquisitions from international companies that want to take over American companies. And they were very active during the Trump administration, blocking a lot of deals of Chinese companies wanting to buy American companies. It's crazy that I cannot believe we're still talking about it. Just to kind of bookend the news, this morning, actually, the United Kingdom announced plans to ban the use of TikTok on government devices. If that sounds like deja vu, it's because the EU.

you already did it, and the U.S. is in the process of doing it. But since Brexit, U.K. has to do its own way. So they are also banning TikTok on government devices. Final thing. We just had this crazy crisis around a balloon. We had to shoot out of the sky. And then now we have TikTok on 100 million Americans' little phones every single day. I know.

So, yeah, it seems like they're treating this with about the same level of concern as the balloon. Yeah. There's literally 100 million balloon, Chinese spy balloons on all our devices. Shoot them down. Shoot them down. All right. So I mentioned we talked about Ryan Reynolds earlier on the show, and this is the part

where we're going to talk about Ryan Reynolds. It's T-Mobile is buying the budget cell service provider Mint Mobile for $1.35 billion. And we would never talk about this deal probably on this show. If not for the fact that Ryan Reynolds, the Deadpool Star, owns 25% of Mint. and is basically the face of the company in marketing materials. So Reynolds is basically here bagging more than $300 million in cash in stock and continues to be the marketing goat. We have a little clip of him and the T-Mobile CEO announcing this deal.

We are so happy to have you and the whole Mint team join the T-Mobile family. Well, I wouldn't call it a family, Mike. Family is a place for misdirected hopes and dreams. I'm hoping this will be much better than that. I giggle at it. You roll your eyes at it. I just don't like the way he talks. I don't like his cadence or his tone, but I appreciate him.

Yeah, no, he is kind of a beast right now. If we go through his portfolio, he had Aviation Jin which sold for $610 million two years ago. He's got Mitt Mobile now. He has his production company maximum effort, his advertising agency. He owns Rexum, which is a Welsh football club that we absolutely love. and he's now submitting another bid to own the Ottawa Senators. He's taking over the world right now. I didn't know that about the Ottawa Senators.

Yeah, he's part... A noted Canadian Ryan Reynolds. Noted Canadian Ryan Reynolds for all our Canadian listeners. But yeah, he is kind of the modern-day how you parlay celebrity into business dominance, and he's doing well with it. Right. We should talk about Rexum just because that's a really interesting story. So, Rexum is this Welsh football club, very not prominent, not good at all.

But he and it's always sunny in Philadelphia star Rob McElwaney. Did I pronounce that right? McElheny. McAuleney bought this club, and then they basically just turned it into content. Yeah. So there's this Disney, I think there's this Hulu documentary that follows them as they bought the club and are trying to drum up support. And now Rexum, they brought Rexum is coming to the United States next summer to play against Chelsea and Manchester United. And so it's this crazy boon to this little small Welsh town.

He has some magic dust. That's why I think Ryan Reynolds is one of the better celebrity endorsers. We've seen a rise of, you have, obviously, the Kardashians with their makeup brands, their shapewear brands. You have, like, Kendall Jenner with her tequila, the rock with tequila. Obviously, Doris Clooney with tequila. But I think Ryan Reynolds adds a special sauce because he clearly loves advertising and loves making these videos.

So he seems like a value ad celebrity in terms of, well, all the other ones. are obviously value at as well. I think I would want Ryan Reynolds coming on my brand because he'll put in the work. Well, absolutely, but you have to pay him. Yeah. Yeah, this sent me down a big rabbit hole for celebrity, side hustle, entrepreneurship, kind of things. Yeah, you mentioned George Clooney sold Casamigos Tequila for a billion dollars. There was Kylie Jenner sold 51% of her cosmetics brand to Cody for $600 million. That was a huge exit. We know Rihanna has Fenty, and she's a billionaire from Fenty. Some other fun ones was Acon owned a diamond mine in South Africa that was quite controversial, but basically he sourced all of his blink from this diamond mine that he owned. And then finally, one of my favorite ones is that Robert De Niro is the co-owner of Nobu, and he brought it from L.A. to New York and turned it into this massive hospitality company.

I did not know that before the show. You're missing the goat, though. Neil, do you know who the goat celebrity endorser is? Obviously not. George Foreman. George Foreman, 100 million units. sell to the George Foreman Greer. So George Foreman is the goat. All right, that's some fun celebrity. But before we jump in the next story, we're going to take a quick break.

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We talked about our bracket at the beginning of the show, but I want to talk about the real bracket. March Madness is here. It's time to laugh and cheer and maybe even drink some beer. That was my also other intro that I had, not good, not great. I see you're, you're cringing at me right now. But basically, March Madness is this huge event every March. There's a couple of business angles we can choose from, but I actually want to start out by providing some context on how big March Madness is for the NCAA. Basically, the men's basketball tournament funds the entire NCAA's existence. One thing that I didn't know is that NCA, does not control the college football playoff

nor the FBS bowl games, which would be a boon for them. So it really does all come down to how does March Madness do? 85% of the 1.1 billion that the NCAA made in 2021 came from March Madness. So this is literally their Super Bowl,

which is ironic because it's basketball. But yeah, huge for the NCAA and basically powers the entire collegiate athletic scene that we see today. I don't know what is the more cringy thing you just said. I have a bunch of children. There's a lot.

Yeah, it is interesting to see how important it is to the NCAA. It's also really big for sportsbooks, obviously. I was looking out some gambling stats, and whenever you have a major sporting event, you know a lot of people are going to gamble. I didn't know that more adults, American adults, are expected to gamble on March Madness than the Super Bowl, about 18 million more.

Yeah. Well, I just figure the Super Bowl is only one day versus March Madden's spread out over multiple weeks, so it just provides more games. But yeah, it's obviously a huge betting thing. It's also huge for the athletic programs of the school. So 60% of revenue from March Madness gets allotted back to the schools. But it's also a kind of a dog-eat-dog world where the teams that go further in the tournament earn credits.

And they also earn credits for their entire, like the Big East, the conferences they play in. So it is so high stakes where one game can mean the difference between building a new arena or building a new athletic facility. It's really lots on the line during March. Yep. And finally, I want to talk about the TV angle. Basically, all these ads have sold out for both the men's and women's tournament. So this is clearly going to be a big draw for them. One of our favorite things about TV and March Madness comes from our friend Kendall Baker,

who writes the Axios Sports newsletter, and he calls it True TV Awareness Month. So basically, some of these games, they're spread out across CBS and Warner Bros. Discovery sports networks, and one of them is True TV. And apparently people don't watch True TV over the course of the year, and they do now. So if you go to Google Trends searches, you'll see these insane spikes every March for searching for like, what is True TV, where is True TV? Okay, I think that is Impractical Joker erasure right there, because Impractical Joker airs on True TV.

I watch that. But yeah, I love that chart. It's kind of like the Mariah Carey, like, all I want for Christmas, Google Search Trend, when Christmas rolls around. Right. Before we move on, I just want to get your take on what people should look out for this tournament, maybe from a basketball perspective. The big story last year was St. Peters, which was a 15 seed that became the first to reach

the elite eight, and they're from Jersey City. So our hometown team, but what should people look out for in 30 seconds? If I could pick who the St. Pierce would be, it would either be Colgate or College of Charleston, two extremely good teams that, unfortunately, just play in smaller conferences. So those are your underdogs to look out for. And then I have to plug. I actually went to Marquette for two years. This is the highest seed they've been in ages.

And so I have them going to the finals, but ultimately losing to UCLA in the finals. Sounds good. My Terps play, I think, this afternoon, I think they're the first game of the tournament. They're playing against West Virginia. So I'm hoping. But they're not that good this year. If you're in a bad mood tomorrow, we know why. All right.

Moving on to one of my favorite segments because it's named after me. It's called Neal's Not. numbers. Seals numbers, let's go. Toby gets hyped for it. You're more hype for that than college basketball. I know, because I don't know them. I get surprised when you tell them to me.

Right. So the gist of this is I just read a lot of news over the course of the week and find three interesting stats to share with Toby and you all. So let's start with the first one is the U.S. has a new favorite dog breed. It's the French bulldog, known as Frenchies, obviously. They became the nation's most prevalent purebred dog last year, according to the American Kennel Club. And why that's interesting is the Labrador Retriever has been number one for 31 years. Wow.

And for the first time in 31 years, French Bulldog has beat them. Okay. That makes sense because, I mean, we live in New York. Frenchies are everywhere. Yeah. They're pretty expensive too, right? Super expensive. They were, they're the target of thefts a lot.

Remember Lady Gaga's dog walker got shot? That was over to French Bulldogs. Holy moly. Wow, the caviar of the dog world. Are you a dog? I'm not a dog guy. Like, I have to admit this. but I'm kind of dog asexual.

Because I don't know what a cute dog is versus an ugly dog. People are like, oh, he's so cute, oh, he's so ugly. It's personal preference, Neil. I literally can't tell. It's like I'm colorblind. I have no clue whether a dog is cute or not. I didn't grow up with them. I love dogs, and I think they do love me.

But I just can't. That is quite the sound bite we just produced right there. I just can't tell attractiveness. All right. Okay. Moving on from my interesting relationship with dogs. The next numbers, there's three numbers here. the numbers are three, two, and one.

Okay. The three is tons of cocaine. Two is bodies, and one is submarine. So last Sunday, Columbia seized a submarine with two dead bodies and nearly three tons of cocaine aboard that was seized over the Pacific Ocean off the coast of Columbia. The cocaine was worth more than $87 million and was apparently bound for countries in Central America. Dang, 87 million. I could see why you're taking it underwater in a sub. You do not want that intercepted.

That sounds like the plot of an epic movie, maybe like a little Michael Bay film or something. It could. Yeah, I mean, I didn't watch Narcos, but I don't know if they had narco subs in there, but narco subs are a thing. Yeah. And they've increased in prevalence over the past few years because it's a really, you know, relatively affordable way to get cocaine to Central America and North America from South America. They only cost $2 million to make, and you can send a shipment that's worth a

over $100 million. So your profit can be $100 million. And they're obviously better evasive for, as opposed to other kinds of methods of transportation to getting your drugs on the market. Anything to get those shipping and handling fees down, I guess. So there's your narco sub fact of the day. I encourage everyone to read the Wikipedia entry. It's pretty interesting.

And then our final, our final Neal's numbers is about pay transparency. So if you remember recently, California and New York recently enacted pay transparency law, to make employers put up salary ranges for open positions. We have some new data on how many employees are actually doing that. Across the country, so this is just not even in those states, but across the U.S., salary ranges appear on 44% of all posts on Indeed, and that's up from 18% three years ago. So this push for salary transparency and posting salary ranges has made a significant difference. Yeah. Well, I know there's some memes out there, though.

Sometimes these salary ranges are like zero to a million dollars. So some of them are little, like they're not truly in the spirit of salary ranges. I was also thinking like, what would, what's the salary range for a podcast? I might, a podcast host, I might jump on Indeed and check out what the typical range is here. I know, exactly. So, all right, Neil, those were delightful as always. I always get my mind blown by them. So thank you for bringing those to the show today.

to kind of finish our show, we're heading to space. New spacesuit just dropped. It's really exciting, actually. Axiom Space is teaming up with NASA to provide the new threads for this new era of moon exploration. We're kind of looking at these pictures now. These things are pretty slick. Like the Nike dry fit of spacesuits.

Right. They're not your mother's spacesuit from the 20th century. Some of the things that stand out is, one, it's a lot less bulky than kind of the marshal. mellow moon suits we've all come to see over the last kind of decade of or a few decades of lunar research. And it's also, these are going to be worn for NASA's Artemis program, which is kind of seeking to return astronauts at the moon on the Artemis missions kind of later in the decade. So we're going to see these in action relatively soon. Yeah, I think we're aiming to get there

at 2025. A couple of things are interesting about this story to me. The first one is the colors. So we're looking at these spacesuits now, and they're black and orange, but they're actually going to be white in actual space. And I was like, why are they white? So apparently it's because when you're out in space, it reflects the sunlight instead of absorbs it. And that's important. And obviously, if you wear a black spacesuit in space, then no one's going to see you. You probably need some visual recognition. But then there's also these orange spacesuits that people wear, the astronauts wear when they launch, and when they reenter the atmosphere.

here. And that's because orange is very visible against a wide range of backgrounds, particularly the sea. Oh, so it's when they rescue them. Okay. Yeah. Or hopefully, recognize them. No, yeah, exactly why. No, the color is interesting. Yeah, because space, you're really exposed. Like, there's a lot of solar rays that can get you. So they don't want black, which would, like, absorb them so they want white that reflects them. It makes sense. Once you hear these things, you're like, ah, they're really thinking about everything up there. You just got to Google a little bit, and they make sense. I knew there was a reason. But, yeah, it looks like we're going to the moon in 2025. One of the weirdest facts about this is that this mission was supposed to happen in 24, but it was delayed specifically because of these spacesuits.

Oh, I mean. There were major cost overruns and delays, and then eventually NASA went through. You kind of got to get them right, so, yeah, makes sense. So it was like the one reason that we didn't go to the moon in 2024 weren't planning on it was because they just couldn't make the spacesuits. And it is the first spacesuit that's done. designed for a woman as well. And there's going to be a woman who walks on the lunar surface for the first time in 2025. So that's exciting. Fun space suit. All right, Toby. That's our show.

You're leaving me? Yeah. Tomorrow I will be out. Someone will be feeling in my place. A capable Kelsey from Morning Brew. She's awesome. You guys are going to be in great hands. But yeah, I'll be back bright and early on Monday. All right. Well, have fun without us. Remember to write us. We definitely reply a Morningbrood daily at Morningbrew.com. We read all your feedback. We read all your hate mail, whatever you want to send us. We'll read it. And we have to give a shout out to our amazing cast and crew. Not our cast. I saw a Broadway show last night, so I'm in that freaking mindset. The producer is editor. Our producer and editor is Emily Milliron. Our technical director is Justin Orlando. Supervising producer is Bryce Beloff. Our audio guru is Kelsey Jones.

Hair and makeup took off to watch March Madness, and we can't blame them at all. is our chief content officer. Our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow. 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,

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