Morning Brew Daily - Dueling Presidential Corporate Tax Plans & Teens Aren’t Vaping Anymore

Episode Date: September 6, 2024

Episode 404: Neal and Toby preview the upcoming jobs report that could shed some light on the direction of employment in the US, and the size of the Fed’s rate cut. Then, the Trump and Harris campaigns are focusing on corporate America with plans that have different strategies. Next, the Boeing Starliner is returning to Earth, finally! Except with no crew. Meanwhile, the organization behind National Novel Writing Month is being roasted online for not opposing AI. Meanwhile, a new survey shows teens are cutting back on vaping. Lastly, Fyre Fest 2 is coming…but no one knows when, where, and how. Seems to be going well so far.  Visit https://www.massmutual.com/ for all your financial planning needs 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 00:00 - Intro 02:40 - Jobs Report Preview  07:40 - Presidential Economic Plans  12:30 - Starliner returns sans Astronauts  17:45 - NaNoWriMo in Disarray 21:15 - Teens aren’t vaping  24:45 - Fyre Fest II  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, Starliner is about to leave the International Space Station, but without its crew. Cue up the audiobook for a solo road trip home. Then nobody panic, but the most consequential jobs report in years is coming out this morning. I said, nobody panic, okay? It's Friday, September 6th.

Let's ride. The NFL season started up last night with Taylor Swift, and the Super Bowl champion Kansas City Chiefs defeating the Baltimore Ravens in a nail biter. But let's be honest, the only teams anyone seems to care about these days is their fantasy football teams. Toby, how is yours looking? Well, Neil, my team stinks.

Yahoo gives you a little grade after the draft that it generates via AI. And I got a D-minus. So now I have a bone to pick with the entire artificial intelligence community because of how mean it was. how dare you criticize Toby's tip-top team like that? Toby's tip-top team. That is your name? It's not my finest, which is why I actually went and asked our production crew

what some of their team name was for inspiration. And our producer Ray's team name is Sit in Purdy. Very clever, Brock Purdy. And then our executive producer, Emily Millarons, team's name is Genis Sequin, which is a play off the Eagles' new running back, go birds. But Olivia Graham, our social producer's team name was my favorite. I don't know what you guys are talking about. I've never played this game.

I don't understand the obsession with it. Go away. I have work to do, which is a little long, but I like where her heart is at. Now, let's hear a word from our sponsor, Mass Mutual. Saving for retirement is just one piece of the pie when it comes to planning your financial future. Your 401k might be the filling of your pie, but there's more to it than just stashing money away. Saving for retirement is crucial, but securing your financial future involves more than just putting money aside.

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Apologies to Sabrina Carpenter, but the Bureau of Labor Statistics, latest jobs report is likely going to be the hottest drop of the summer. That's because the employment numbers published this morning at 8.30 a.m. Eastern will go a long way towards determining the Fed's policy decisions, a.k.a. when and how big rate cuts should be. The reason why this particular report has everyone so jittery is that there has been some signs of a shaky labor market in recent months. Previous reports leading up to the August numbers have given us, one, a massive downward revision of previous counts, and two, a jump in the unemployment rate pushing joblessness to levels higher than it was pre-pandemic,

which brings us back to today. Wall Street is expecting 161,000 jobs to be added in August. and the unemployment rate to tick slightly downwards to 4.2%. Neil, if you were a betting man, are we beating expectations? Well, the caveat here is that not even Jerome Powell, the Fed share, knows what these numbers are going to be. My hunch is that they will come in at the target or a little better than the target. And the reason is there are indications that last month's whopper of a job report,

I mean, it led to a huge market celloph and sparked recession fears was a bit of a fluke. The unemployment rate rose to 4.3 percent, but economists poured through the data and it showed that a lot of those who were unemployed or who were laid off were temporarily laid off due to bad weather. There was a hurricane barrel, and there were tornadoes in extreme heat across the southeast and the west. And previously when we saw a surge in temporary layoffs, the next month bounced back even bigger. So there is some signs that we could see a bounce back from those temporary layoffs.

Another factor adding to that higher unemployment rate could be that the denominator of unemployed people got bigger because of a surge in immigration, people looking for work and the unemployment rate takes into account. People who are new to the labor force and looking for work. So for those two reasons, there are some signs that last month's terrible jobs report was a bit of a fluke. But if it comes in lower than expected, then you can see a major sell-off in markets. The Fed could cut rates more than expected in September. And we could be thrown around that R-word again. Right. When that surge in temporary layoffs does happen, it typically reverses in the next report,

which, again, is why we are paying so much attention to it, even more so. and Sabrina Carpenter's latest album, because if that isn't the case here, then that's when the alarm bells start to ring. It's interesting, too, because a lot of people are looking to this jobs report to get a hint of to what the Fed's next policy decision will be. Is it going to be a normal rate cut of just 25 basis points?

Is it going to be a jumbo rate cut of 50 basis points? So that's what's confusing. If the numbers come in really soft, then it makes a jumbo cut more likely. So maybe that could cause the market to raise. react bullishly. I don't know. This is all just speculation at this point. But that said, the Fed really hasn't reduced its benchmark rate by a half point that what I called the jumbo rate cut since the early days of COVID. So this jobs report will go a long way towards determining

if we are going to return to some of those more drastic rate cutting measures. And let's be clear here. A lot of data in recent months has shown the labor market cooling. The question is, is this a reversion to normal after a very tight labor market over the past couple of years? where employers just couldn't find enough workers. There's a big worker shortage. Or is it just going back, or is it going off a cliff? And we're going to see skyrocketing unemployment. Just yesterday, there was a report that accompanied the jobs report,

or that previewed the jobs report. It was job openings in July fell for the second consecutive month to an estimated $7.7 million, which is the lowest number of openings since January 2021. one. The ratio of unemployed workers to job openings is now about 1.1% down from a peak of over two. So more signs that the labor market is cooling. We just don't know whether this is going back to pre-pendemic normal or something a little more alarming. And then final note, we did get a mini preview as well from the payrolls processing firm ADP, which does August private job growth numbers. And that came in at just 99,000, which is the smallest gain dating all the way back to January of

2021. So that was a little bit nervy because it's kind of a preview to the main event and that came in a little softer than expected. Yeah, 8.30 a.m. Eastern. To tune in. Start pre-gaming. Yeah. It's going to be a huge deal and the market could react violently one way or another. This week, presidential candidates Donald Trump and Kamala Harris went full challengers mode on the campaign trail hard court, making dueling speeches about their economic policies to charm a key voting block, the business community. Let's Let's start with Trump, who outlined his economic proposals yesterday in a speech at the Economic Club of New York.

Trump's ideas for the economy focus on cutting regulations, slashing the corporate tax rate for some companies, and a whole lot of Elon Musk. Trump said he'd create a government efficiency commission headed by the Tesla CEO that would conduct, quote, a complete financial and performance audit of the entire federal government and make recommendations for drastic reform. Musk was a natural choice for this position because it was Musk who first raised the idea of a government efficiency commission to Trump when they had that public conversation on X last month. As for Harris, she announced her biggest break yet from President Biden's economic agenda when she told a crowd in New Hampshire that she'd scale back Biden's proposed increase of the capital gains tax on wealthy people, which is the tax you pay when you sell an investment asset or a property. Biden has proposed raising that tax to 39.6% on Americans who make more than $1 million per year.

But Harris's target is 28%. Still up from the current top rate of 23.8%. Toby, this was the week. Both candidates wanted to show the business community, they have their back, but with very different plans. I feel like we have to start by drilling down deeper into this government efficiency commission that was suggested and wants to be led by Elon Musk as if he doesn't have. more to do here. Remember, this was the idea that kept coming up in that spaces that they hosted. A lot of people have been quick to point out that Musk's businesses, Tesla, SpaceX, are regulated

by a lot of federal agencies. So there's probably a potential for a conflict of interest here should he become more actively involved in a commission that is meant to pare back government spending. Right. SpaceX's biggest customers are one, NASA, to the Pentagon. Another one of Trump's big plans is to claw back a lot of Inflation Reduction Act funds. Remember, the Inflation Reduction Act spent, or allocated hundreds of billions of dollars to clean energy programs, health care, the IRS, and a lot of that still has not yet been dispersed. Trump wants to claw that back. Janet Yellen gave a speech, the Treasury Secretary, saying that doing so would put the U.S. at a disadvantage to places like China, which are heavily subsidizing green energy technologies.

That's been a big geopolitical and economic fight over the past. few years. The IRS still has $50 billion that it needs to spend. Remember, the IRS got $80 billion to go after tax cheats and modernize its system. Republicans want to pull a lot of that funding back. But let's talk about Harris as well. Harris really broke from Biden in a big way. He proposed raising that capital tax, capital gains tax, to almost 40%, which would be a huge increase from around 24% currently. And she paired that back to 28%. And she wants to show the business community. She is pro-investment, pro-private sector growth, and helping the, you know, allowing the government to, you know, put the thumb on the scale a little bit to, to generate more investment in the United States.

She's also going big on small businesses. She wants to offer small businesses and startups, this $50,000 tax break, which right now is 10 times the current deduction. You contrast that to Trump, who's looking to slash the corporate tax rate for some of these bigger companies across the board. So it's just a little bit of a insight into who they're trying to appeal to and what their strategies are. She also wants to give those first-time homebuyers that $25,000 down payment support, which we've discussed on this show before. There were some pushback on that too because experts worried that that could just supercharged demand for the housing market, and it would just heat it up too much. So it has been interesting, though, to see the corporate world to come out after Harris's proposals came out this week.

Mark Cuban has tweeted out in support. Aaron Levy, the CEO of the software company Box that said it's good to see Harris moving towards the center. So you've been seeing this upwelling of support from the corporate world as well. So just fascinating, though, to see how each candidate is targeting the exact same group of people with different policy proposals in hoping that their approach pays off come November. You know the feeling of dropping someone off at the airport, then settling into a silent passenger-less trip back home alone with your own thoughts? Well, Boeing's Starliner spacecraft is set to make its own long and lonesome return today,

also without its passengers in tow. The troubled capsule will attempt to undock from the space station around 6 p.m. Eastern today, leaving astronauts Butch, Wilmore and Sunni Williams behind to wait until 2025 for a space X mission to ferry them home. If it all goes to plan, Starliner should land in New Mexico six hours after departing, bringing to close yet another chapter in Boeing's recent history it will likely want to forget. Helium leaks and issues with the propulsion system ultimately forced NASA into making the decision

to Nix using Starliner in a return mission, forcing Space X to play space Uber instead. Neil, this mission was meant to prove that Boeing could be counted on to ferry astronauts to and from the space station, and instead it did the exact opposite. Right. This was huge for NASA and Boeing. NASA only has SpaceX right now to ferry astronauts to and from the space station. They were relying on Boeing to help out with that, be their second driver. And I guess they have finished one part of the mission.

I don't think you can declare this a complete failure. It is a little bittersweet, and I would say more bad than good, that this is coming home, that the Starliner is coming home. without people, but it did accomplish one part of the mission. Still, I would say this mission probably got a worse draft aid than your fantasy football team. The question now is, what do you do with Starliner? What is Boeing can do with its space program? Because it's taken over a decade to get this thing going, and it still can't fulfill its

mission why it got its contract with NASA. NASA gave it $4.2 billion back in 2014, and it will only pay out that amount when it actually accomplishes these particular benchmarks, which still hasn't. Meanwhile, it is going as on the hook for all the cost overruns. And already those cost overruns have totaled $1.6 billion. Now it's got to get under the hood of Starliner and figure out what's going on with these thrusters, which would only balloon the costs even more. So new CEO Kelly Orpurg has a decision to make, whether to pull the plug on the space program or continue investing in it, even if it hasn't paid dividends yet. Speaking of those thrusters, they are modifying how Starliner plans to actually

leave and decoupled from the ISS, they're going to conduct what it's called a breakout burn that actually just moves it up in a way pretty quickly. It's actually 12 small burns within orbital velocity of just 0.1 meter per second for each one. So that means it will be pulsing for a shorter period of time than they did during their approach to the station. The idea is that less can go wrong with shorter burns because there's still, there's an issue with the propulsion system. So they want to make sure there's the astronauts aboard the space station are as safe as possible. There actually is a SpaceX Dragon vehicle that's currently attached to the station that the astronauts have been working to outfit with emergency seats. So if something goes go

wrong, they could hop on that in case of a big emergency. So it's just a lot of people I've seen on social media say, why is no one talking about the fact that two astronauts are still up on the space station right now? I know. We've been doing our part here. But yes, this is the plan to finally decouple Starliner, send it home. It will be bittersweet because if it makes it home, then probably it exemplifies that it could have taken the astronauts home. But the end of just another chapter that Boeing wants to erase from the history books, it has not been a solid space mission for them so far. Up next, a novel writing organization really boofed it when it comes to taking a stance on AI. The term nano-riamo means absolutely nothing to you now.

but in the next three minutes, you'll learn what Nanorimo is and why it's at the center of a massive artificial intelligence controversy. Nanorimo is shorthand for National Novel Writing Month, an organization that challenges wannabe writers to write 550,000 words of a novel about the length of the Great Gatsby in the month of November. The idea is that putting some structure and gamification around fiction writing, you'll leave the month with a first draft of a novel, no matter the genre, seems like a cool idea. But Nanorimo is facing heated backlash from the writing community because of its position on AI. In a post-published online last weekend, the organization said it wouldn't condemn the use of

AI for writing submissions because categorically rejecting the technology would be classist and ablest. Their argument is that generative AI technology could help people who are disabled or without financial means to access writing more easily, leveling the playing field with their more privileged peers. This did not go over well with authors who've watched AI companies rip their copyrighted works without permission or payment to train language models. Four people left the nonprofits board. A sponsor dropped out, and writers all over the globe shared their disgust with Nano Rimo.

Toby, taking the position of AI can produce novels for a writing challenge is not a popular one in these circles. If you had a short list of creative communities, you do not want to upset. Novelists are at the top because, boy, can they craft some lethal insults? So this science fiction writer Daniel Jose Older, who stepped down from the board wrote, your heinous reconfiguring of language used to fight actual injustices into a shield to cover transparently business-based posturing is unforgivable, and then called its position on AI, vile, craven, and unconsciousable. Again, that is some good non-AI generated insults right there saying that, I mean, come on, we are seeing through what you're doing right now. You're trying to come across

as maybe overly politically correct here, trying to take these stances against injustices that don't probably exist in the writer community. A lot of disabled writers came out and said, you are treating us like we cannot create work on par with an enabled person. So a lot of people just saw through it and said, this is not the approach to take here. But they doubled down. I mean, after all of this backlash came, they updated their post and didn't really change a language that avoided condemning AI, but they did add a phrase that said, they acknowledged that there were bad actors in the AI space who are doing harm to writers and who are acting unethically. It doesn't seem like that has quelled the outrage over what they originally said. But I think

this just speaks to the general unease and disgust that a that writers and creatives have around AI and the use of AI and these companies just ripping off their works there are there's a current lawsuit being float going through the courts right now with george r martin jonathan franz and jodi p. Cole other authors who have who have sued chat chb temaker open ai for uh copyright infringement for you just basically taking their novels online and just training chat GPT with it. And we've seen this go across a bunch of other creative media from music to movies to writing as well. So there is just a widespread backlash to anybody who would appear to endorse what the AI companies are doing. They did not read the room. Like skinny jeans,

silly bands, and wearing your backpack with one strap, vaping is the latest high school trend that is appearing to fall out of favor with the youths. The number of teenagers who reported using an e-cigarette in the last year has fallen from its peak five years ago to its lowest level in a decade. In an annual government survey of schools across the nation, less than 8% of high school students said they vaped in the past month. Compare that to the peak years of 2019, when more than a quarter of students say they were ripping a jewel in the bathroom between classes. Brian King, the director of the FDA's Topaco Division, called this year's numbers a monumental public health win. And Neil, this does feel pretty monumental. The year,

use seemingly have turned on their vapes. Yeah, so why is this happening? Why are we seeing such a huge decrease? There could be a couple of factors. There have been a big crackdown on Chinese exports of disposable flavored vapes. Teens say that 90% of the vapes they use are these flavored fruity ones. And so if you can get those out of the market, then that will probably lead to a decrease in use. and Elf Bar, which is the brand that is the most popular among teens,

use of it fell 36% after the FDA sent warning letters to retailers and other distributors of these vapes saying, this is illegal. Like, we have banned these types of Chinese imports, so you can't sell them. And it appears like they stopped putting them out for people to buy. They also ran a bunch of public health campaigns online. One of their campaigns actually won an award for how effective it was.

So it seems like the public health messaging, the crackdown by the FDA on getting rid of these Chinese disposable vapes seems to be working. Meanwhile, the rise of Zin is something that maybe is contributing as well. Jules out, Zin is in, a little bit more discreet than Jules, no plumes of vapor coming out of your face, no tobacco either. That being said, though, this U.S. survey showed that only 1.8% of teens are using these lip pouches, which is largely unchanged from last year. but you just have to look.

Money talks. Philip Morris, the owner of Zinn, is full steam ahead in increasing production in the United States. They have plans to invest over $230 million to expand production at a plan in Kentucky. So it could just be a shifting consumer habit at this point, but clearly something has shifted in the way that teens are approaching vaping. And, you know, it is a good thing. Like, you don't necessarily want teens vaping in school. So to see that number fall from over 25% to under 8. percent is, it is a big public health win. Like Big Mama's House, too, a sequel is coming that nobody

asked for. Billy McFarland, the fraudster behind FireFest, told the Wall Street Journal that FireFest 2 was definitely happening. 100% absolutely for sure happening. He claims he's already secured backing from a production company, a talent management agency, and a U.S. Festival operator. And he's also even sold some tickets to some truly adventurous souls. McFarland is hoping that by putting on a successful Fire Fest too, he can make everyone forget what happened during his first attempt. That event turned out to be a scam of epic proportions, with attendees showing up on a Caribbean island expecting a festival jam-pack with beautiful influencers and luxurious accommodations, only to be essentially stranded there, Lord of the Fly style, eating sad cheese sandwiches. Firefest has since become a common phrase used to describe any type of scam or disaster, while McFarlane was sentenced to six years in prison,

in order to repay $26 million to the investors he defrauded. After being released from jail in 2022, McFarland has tried to redeem his reputation and more importantly for his newfound freedom, raise money to pay the investors he owes. Toby, do you think Fire Fest 2 is actually going to happen? Or should we have learned our lesson and not believe anything this guy says? I mean, fool me once, shame on you, fool me twice, shame on me. I think I'm ready to get fooled again here. I don't hate his logic because saying,

if I screw this up, I'm done forever, so you might as well trust me this time. He did sell tickets too, so he can't really go back and save face at this point. So it truly is do or die. He's not giving any real specific details about the festival. That's where I start getting a little wishy-washy. He doesn't know where it will be held. He doesn't know when it will be held. He doesn't know who is going to be there or who is performing.

But, yep, it is totally happening. So it's tough here because he is Billy McFarland. I want to think that he has changed in a time in his prison and he wants to do it right this time, but it's tough to trust. Well, apparently he drew up Fire Fest to the idea in solitary confinement because he served two stints in solitary confinement. He does say a production company that is unnamed, has purchased a 51% stake in the festival's parent company, which is Fire Media.

He's reportedly, you just have to put allegedly reportedly before anything here in this story, sent scouts out to various Caribbean. islands and places like Honduras and Belize and Jamaica to scout out locations. And Wall Street Journal did interview the owner of the Coralview Beach Resort in Honduras on a Honduran island of Utila. And he said that he's been talking to this production company and they're legit. This guy's been in business for 20 years. And he's like, yeah, I wouldn't be talking to Firefest to Billy McFarland if he didn't sign on

this production company that is legit in this space. So, but my, the reason that I think this has to happen is he owes $26 million. And he is, he needs to like make some money and get a job. He has an advertising agency. He goes on podcast. He does celebrity, you know, amateur celebrity boxing matches for a couple thousand here and there. But it's $26 million. He needs to put on a pretty big event to claw that back.

What's tough, though, is that it's not a great time for festivals in general. I mean, remember Burning Man tickets weren't selling this year. Bonaroo, Intendees didn't really have a great time at Bonarue. Coachella had all these technical issues and also saw their slowest ticket sales in almost a decade. So not exactly the great time to be jumping into the festival business. But I don't think Billy cares about any of that because he is motivated by that $26 million looming over him. If he can actually figure this out, I expect people to buy tickets. Yeah, people already have.

People will do it just for the novelty. They'll probably be a bunch of content creators to go and say, I went to Firefest too, just to make content. So I'm not worried about him selling out. I'm just worried that this thing actually exists and it's not just a figment of his imagination. Let's wrap it up there. Thanks so much for starting your morning with us. Have a wonderful Friday and an even better weekend.

Go Birds. For any feedback, questions, or comments on the show, send an email to Morning Brew Daily at morningbrew.com. We would also love if you shared Morning Brew Daily with your friends and family that way, you wouldn't have to explain what nanorimo means to them. And if you're not sure of who to share it with, Toby will help you out. I want you to share it with someone who you'd fittingly go to FireFest 2 with. You need a ride or die person there by your side.

So send this podcast to that person. Toby, would you go to Fire Fest 2? I think we already agreed to it even before the show. So yes, I'm in. Okay, let's roll the credits for the one final time this week. Emily Milliron is our executive producer. Raymond Liu is our producer. Olivia Graham is our associate producer.

Yuchinawa Ogu is our technical director. Billy Minino is on audio, hair and makeup is in New Mexico to welcome home starliner. Devin Emery is our chief content officer and our show is a production of Morning Brits. Great show today, Neil. I wish you all well. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars. Catch the Jonas Brothers return to the Yamava theater stage on April 30th, the powerful vocals of Demi Lovato on May 17th, and the signature Southern Country Rock of Eric Church on July 19th.

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