Morning Brew Daily - Fed rate hikes ending?, TikTok on the Hill, SCOTUS Poop Case

Episode Date: March 23, 2023

Episode 23: Neal and Toby discuss the Fed raising interest rates but signaling it could be stopping soon. Plus TikTok’s CEO heads to Capitol Hill and why SCOTUS is hearing a Jack Daniel’s poop case. And the latest celebrity crypto settlement and why Taylor Swift is…. even richer. Learn more about our sponsor, Fidelity: https://fidelity.com/stocksbytheslice Learn more about our sponsor, TaxAct: https://www.taxact.com 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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pwc.com slash U.S. slash brew AI. That's pwc.com slash us slash brewaI. Good morning brew daily show. I am Neil Freyman. I'm Toby Howell and Neil today March Madness is back. The Sweet 16 is kicking off. What is also back is voting in our logo bracket. So for those of you who haven't been following along on social media,

we have pitted 64 of the greatest logos of all time against each other in order to crown the gloat, which is the greatest logo of all. time. We were very proud of that. And so, Neil, we're in the round of 32 in our bracket. Do you want to preview some of the matchups? Sure. There are three that I'm particularly watching today to see how the voting will go. First one is Mighty Ducks versus 90s MTV.

Juicy second round matchup dripping with nostalgia. So I'm given to give Mighty Ducks an edge on this one because I think it has just a little stronger brand than 90s MTV, but that should be close. I'm also looking to see if Morning Brew can continue its Cinderella run versus the 8C, Disney, two entertainment behemoths going at it with long legacies. I cannot believe we upset the Yankees, by the way. Good job, morning, brew. The little mug that could. The little mug that could. Finally, I love New York versus FedEx. So I think this one's going to overtime. I think this is a nail biter. It's a total pickum. I love New York got a sentimentality boost recently because they just

redesigned I Love New York to We Love New York and it looks like trash. Horrible. So everyone's kind of hearkening back to the old one. Meanwhile, FedEx, you always remember. You always remember. remember that first time you learned about the arrow. It was such a fun fact to initiate your uninitiated friends. Do you see the arrow? I remember it. Yeah. So that I expect to be a super, super close matchup. Who do you have? So after all this, after the first round, who were you liking to go all the way? Okay. You didn't mention them, but I think Playboy. I think Playboy, it's a three seed, but holy moly, it's got that brand recognition. It is truly a logo, too. Some of these other logos are a little more like word base. This is truly a logo.

that I think is going to win it all. We'll see. Who's the number one in their region? I think it's McDonald's. Yeah, that's the miscellaneous category. It's wide open. Yeah, Mickey Dees. We'll see.

Let's talk about what we're going to talk about on today's show. We got TikTok CEO testifying on Capitol Hill. Super dramatic. A poop joke had its day in the Supreme Court yesterday, so we'll talk about what that is about. And then finally, top golf like venues are absolutely taking over the world right now. They're popping off. The first, we have to talk about the Fed. They kept on hiking interest rates yesterday with another 25 basis point increase, the ninth straight time that the Fed has hiked interest rates,

and now the interest rates are now at their highest level since 2007. So this has been a pretty significant climb from pandemic lows. This one came at a particularly dicey moment for the economy. Inflation is still ripping at 6%, way above the 2% target. But we also had this bank meltdown recently in the past couple weeks. Many people were concerned that by continuing to raise interest rates, Powell would be only adding to the pressure on banks. So as you love to say, Toby, he's trying to thread the needle. Did you think he was successful? Yeah. I actually, I mean, I wrote a thread yesterday calling this one of the most important Fed meetings of our lifetime. And it was almost a little I know, hey, drama sells on social media, right? And I think it didn't go as dramatic as people thought.

People predicted it would be a 25 basis point hike. That's what we got. And I think the big takeaway, though, is that Jerome Powell kind of had his job done for him by this banking crisis. So, yeah, you're right. The main goal that he's been trying to do for the last year or so is get inflation under control. Finally, the banking sector kind of implodes, which when the banking sector implodes, it definitely

slows down an economy. So he doesn't have to hike rates as aggressively as was planned. So, yeah, he almost got bailed out by the banks, getting bailed out in a sense. Yeah, it's not a good thing for the economy. It actually increases the chances of a recession. But even Powell in his press conference said that what happened to the banking system can be thought of as being the equivalent of a rate hiker or perhaps more than that. So it tightens what the tightens credit conditions.

That's the Fed-Speed way of saying there's just going to be less lending and there'll be less hiring and inflation and employment. because there's just less borrowing in the economy, and borrowing runs the economy and fuels our ability to finance projects. Right. His words were, it will likely weigh on economic activity hiring in inflation, which you're totally right. It's not a good thing for the economy, but that's a good thing for getting inflation under control. And yeah, I also think a big takeaway is that Powell is still in the hot seat.

He's getting it from both sides of the aisle. You got people from Rick Scott to Elizabeth Warren kind of calling for his head saying that he, like, laying the blame for the banking failure at his feet and then laying the blame for the inflation at his feet as well. So, yeah, and you got the Bitcoiners on his butt, too. We still have that, we mentioned on a previous show that Bali is betting that the U.S. will enter hyperinflation, and so he thinks Bitcoin will be at a million in 90 days. Okay, how's that going? Yeah, we're doing a little checking. It's right around 27,000 right now, so only 973,000 to go before it hits a million. It can happen. You never know, yeah.

Yeah, so the final piece of news from this Fed press conference and statement was that it looks like rate hikes because of the banking turmoil and all the stuff we just talked about, that the economy is kind of getting hit from this, that rate hikes, there might be one more until the end of the year, and then they're going to hike, and then they're going to cut, actually. So, you know, markets used to celebrate. You used to see the NASDAQ going up 3%, or at SMP up 2%, when there was a chance that the the Fed would slow down its rate hikes.

And now that it's happened, stocks didn't do all that much. And I think it's because there's this growing realization that the economy is really going to hit the brakes as a result of this. Yeah. What are we going to talk about if he's not hiking rates every Fed meeting? I guess we'll find it. There'll be other stuff. There's always other stuff.

Okay, Neil, let's kind of stay in the congressional arena. TikTok CEO Shoe Z-Chu is testifying before Congress today. This has been a long time coming. TikTok has been on the verge of being banned since the Trump era, it feels like. We've been talking about it since then. But over the last few months, the movement to ban TikTok in the U.S. has really gained steam in Washington. So today's hearing will kind of focus on how TikTok is protecting consumer data, how the platform affects kids, and also its relationship with the Communist Party in China.

So, Neil, I think an interesting part of the story is actually how TikTok is fighting back. against this hearing in the court of public approval, if you will. So we actually have a clip from a TikTok posted by the TikTok CEO that will play right now. Some politicians have started talking about banning TikTok. Now, this could take TikTok away from all 150 million of you. I'll be testifying before Congress later this week to share all that we're doing to protect Americans using the app and deliver on our mission to inspire creativity and to bring joy. So a key part of this, not just from his, you know, I'm chill tone, is that he looks like Mark Zuckerberg,

circa 2007, wearing a zip-up hoodie in jeans, just trying to be, you know, one of the boys. Yeah, the chill tech CEO vibe. But another, yeah, so another part that's super interesting about this hearing is that they're really making the CEO, the public face of TikTok when he's kind of been hiding in the shadow. So everyone's been scrambling to learn more about who the heck. this guy is. So we looked up as LinkedIn, and we'll just run it down. Honestly, it's very interesting. He's 40 years old from Singapore, Singapore. He was an officer in the Singapore Army, and actually a prestigious role. He got his MBA from, guess where, Harvard Business School. And while he was there,

he interned at Facebook. So I guess the Mark Zuckerberg comparisons are spot on. That was before its IPO, and it was just a startup. He was an investment banker at Goldman Sachs. And he led a team that invested in BiteDance, which is TikTok's parent company. He became CFO of BiteDance. And then in 2021, when Kevin Mayer stepped down, he became CEO of TikTok. So the last two CEOs of TikTok have been Harvard Business School grads. Yeah. I mean, it's a resume that, like, Patrick Bateman would be proud of.

It is, he hits all the major points that you want in a resume. But I also think a big thing to call out is he's been a screenshot. as perfectly bicultural. So he splits kind of, he went to school in London undergrad, he went to Harvard Business School, so he can appeal to the West in a way that not all Asian CEOs possibly can. And so I think that putting him as the face of this is definitely a risk, but we saw this TikTok video. If you actually go to the comments under that video, you see all these creators. He actually called for creators to say, leave a comment about what you want lawmakers to know about your relationship with TikTok, and you have people just begging to keep TikTok because some

people are saying their livelihoods have been made off of it. Others are saying, like, this is just my favorite app in the world. So even though you have all this animosity in Washington, there still is this groundswell of support from the people who use TikTok. Okay, but I looked at the comments, and the number one for me was, you know something went wrong when the boss has showed up. Yeah. Again, because he came out of nowhere. No one knew the CEO before this. So, yeah, you're, you're right, that it is a little jarring to see kind of the face of the company when you haven't seen it before. So we'll definitely have more about what happened at the hearing tomorrow.

But finally, China actually offered its first official response to the U.S. threatening to ban TikTok, and they're saying they're going to firmly oppose it. So I'm just wondering, are we going to have a World War III over TikTok? Oh, my gosh. It would make sense in today's environment that TikTok would be the thing that puts it over the edge. All right, yeah. So stay tuned tomorrow and we'll, we're just going to watch the. hearing today and see what show says and what lawmakers say. This is super high stakes.

We're going to get some sound bites. We're going to get some sound bites. Maybe they won't be wearing hoodies this time. Okay, let's stay in D.C. Yesterday, the Supreme Court took a break from ruling on heavy topics like affirmative action, elections, and LGBTQ rights to hear a case about a poop joke. Which I didn't have any poop jokes in that intro. I couldn't think of one. Jack Daniels. It's all about Jack Daniels. Has sued a toy company for copyright infringement because that company created a dog toy that looks like a Jack Daniels bottle filled with dog poop. It's called Bad Spaniels, the old number two on your Tennessee carpet. Jack Daniels is like, you can't just use our branding for this product. It hurts our brand

to be compared to Dog Doodoo. While the toy company, VIP, products, says it's our First Amendment, right, to do this. So there's two powerful legal precedents that are clashing here, and it boils down to this, basically. Is this a parody, or is this piracy? So the first piracy is covered under copyright law, which prohibits the use of symbols that are likely to confuse consumers about a product or dilute its value. And that's clashing up against parity law that's covered under the First Amendment. You can use copyrighted works without authorization as long as you don't harm the copyright holder, and you're using humor or commenting on it or offering some sort of social commentary in some way. Interesting. I'm glad you broke that down for us. I think this comes down to

if the Supreme Court has a freaking sense of humor in my opinion, because it is pretty funny. I also love the founder of the toy company. He said that the reason that he made this toy is he was sitting at a bar. He saw the logo. And on the spot, he took out his phone, called his graphic designer and said, I got two words for you, bad Spaniel. And it's now their best selling toy. I also think, just from a independent observer, I think Jack Daniels is being so dramatic in this case. In their brief, they wax poetic on how iconic of a brand Jack Daniels is. They noted that Frank Sinatra called it the nectar of the gods and was famously buried with a bottle. And then it also mentions a Miranda Lambert song where she calls it the best kind of lover there is.

So they're really trying to play up that Jack Daniels is this iconic, iconic brand and that this is really damaging it. I was looking up other parody law uses because I think it's fascinating that you can just kind of rip somebody's logo or brand and use it as your own to make fun of it. That seems, I guess, you know, it's covered under the First Amendment. We live in a free country. First thing I always think of with parody law is dumb Starbucks. Oh, yeah. Remember that? Nathan Fielder of Nathan for you in 2014 opened a chain, opened a coffee store that was called dumb Starbucks. And it had Starbucks everything, and it was literally a carbon copy of Starbucks. He just put dumb before it and cited parody law as the reason why he could do this. And eventually it was shut down over

health code. It was, and Starbucks didn't even know what to do. They were weighing, you know, whether they should file legal action or they just didn't know how to play it because parody law is so powerful. Yeah, it's very interesting. I guess the last thing I want to say on that is if someone started calling this show Morning Pooh daily, would we press legal? action or would we allow it? I mean, we'd have to dive into the action. I know. You know, it would it harm our brain? It depends on what it is. If it was just a crappier version of our newsletter, then I think that would fall, wouldn't fall under fair use. But if they used Morning Pooh to make some sort of, if it was really funny and they used it to offer some sort

of comment on the state we're in as society, then I don't know if we would have recourse and maybe it would even, you know, lead to greater awareness about Morning Brew. I hope we see a parody Why don't we just launch morning as something and get ahead of it? Yeah, absolutely. All right, Neil, that was a fun one. But before we jump into the next story, we're going to take a quick break. 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.

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the best of both worlds. Get the Unreal College deal, everything you need, to study and play with select Windows 11 PCs. eligible students get a year of Microsoft 365 premium and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller. Learn more at Windows.com slash student offer. While supplies last ends June 30th, terms at AKA.m.m.S. College PC. Okay, Neil, let's talk about crypto and celebrities. There was nothing as annoying during the last bowl cycle as celebrities kind of shilling these random cryptocurrencies.

But it turns out it wasn't just annoying. It was also a little illegal. So yesterday, a group of celebs including Lindsay Lohan, Acon, Neo, Little Yadi, and Jake Paul have all agreed to pay more than $400,000 in a combined SEC settlement for promoting two coins, their Tronics and BitTorrent, without disclosing that they were paid to do so. One small detail just to cover our legal basis is that none of the celebs actually admitted or denied the SEC's findings. They're just paying the fine anyways. So this is a story that is definitely going to really annoy some people. We remember the Matt Damon era of like shilling companies.

But yeah, what do you make of it finally coming back to bite them in the butt, if you will? I mean, this has been going on for a while. You're starting to see that these celebrities are having to pay up for that crazy run. And this is a string of, I mean, you can go back a year and find so many other examples of this. The biggest one that I remember is Ethereum Max, which was this scam token, essentially, that was pumped. And Kim Kardashian had to pay a million dollars. Paul Pierce had to pay $1.4 million. Floyd Mayweather.

And then there's Steven Segal who had this. So I just feel like you could go down IMDB and kind of, you know, say, maybe half of these people paid crypto scams. What was interesting to me about this was that it was part of a wider investigation to this guy, Justin's son, who is this like Cryptomogel who founded Tron. This guy is a pretty interesting character. He uses the title, His Excellency, because he's the Granada's trade representative to the World Trade Organization. He's also the same guy who paid $4.6 million to eat to have lunch with Warren Buffett. Warren Buffett holds these celebrity lunches. But this is part of a wider investigation into Sun over wash trading, which I was hoping you could explain to people and me.

Yeah. I mean, wash training is a scourge of the crypto industry. Basically, it's when a couple of larger people, whales, if you want to call them that, kind of trade a token or an asset back and forth to each other. Each time they drive up the price, and they also make it look like there's volume happening, so there's real people trading. So this happens, this has been happening in the NFT market, especially, where you can fake it and make it look like a lot of people are trading something when it's really just a group of two or three people sending it back and forth. So, yeah, this is the headline news is the celebrity thing, but there was a broader investigation into these, if there was actual legitimate investor interest in any of these tokens. The taxes celebrities, I know yesterday I said that alcohol, the alcohol industry was just vibes. and it's clear that the crypto industry is just vibes times a million because they leverage

celebrities like crazy. I mean, look at FTX, right? They had to get Tom Brady, Steph Curry, Shaq, Larry David to promote their thing because I don't know if it had any use to people. There was this lawyer who said the crypto industry needed celebrity endorsers to get any credibility, and I think that is 100% true because they weren't offering any value to people. And so now all of those people that I just mentioned, Larry David, Tom Brady are all caught up in this class action lawsuit against FDX. Now, I do wonder, yeah, there is a Venn diagram of crypto and alcohol in the sense that, yeah, it's more just a brand and a vibes of a thing than anything fundamental.

The final thing we'll note on that before we move on is that Coinbase was also served a Wells notice today, which usually precedes SEC enforcement in some regard. We won't get into exactly. It's about how they classify securities. But it also, people are using it as a further example of the war on crypto that's happening right now. So we saw some kind of drama and hysteria on Twitter about the war on crypto is going on right now. Yeah, that applies to signature bank that they took down and everyone kind of thinks, or the Bitcoin and crypto community kind of sees U.S. government right now is unfairly going after the crypto industry. Yeah. Well, when you have stuff like this going on, I know, like you've got to clean your stuff up.

Yeah. Let's go to our favorite segment of the week, Neal's numbers, where I share with you all, all the crazy, three crazy stats that I read during the week. So the first one is when you invest in the S&P 500, you're basically just investing in two companies at this point. And those are Apple and Microsoft, okay? Apple and Microsoft have now account for 13.3 of the weighting of the index, their highest level on record. So I'm not upset by this stat, by the way. If I want to invest in the S&P 500 and I'm getting mostly Apple and Microsoft, I'm okay with that, truly.

Like, that's not a bad thing for me, although it is probably annoying to the fact that it's supposed to be a free market. These two companies are dominating the free market. They've sort of distanced themselves from Fang, right? There was this whole Fang index, which was supposed to be big tech under the umbrella big tech. Fang was Facebook, Apple, Amazon, Netflix, and Google. First of all, weird that Netflix was ever there because they're a content company. and it seems like Apple and Microsoft I've just pulled away.

Now, the last time, here's a little trivia question for you, the last time two stocks had a combined higher weighting in the S&P than Apple and Microsoft do now was 1978. And so I'm wondering if you know or can guess the two companies. Is it an energy company or? No, you've heard of them. They're still around. They're still around today?

Are they tech companies or no? IBM? Yeah, IBM. I don't have the other one. The other one's telecom. Oh, I don't even, that's crazy. No, no, Telecom, the industry. Oh, I was like, I'm pretty sure that was an industry.

I've never heard of Telecom. AT&T, AT&T, yeah. So, AT&T. Still around. All right, if anyone has a, knows a company named Telecom, let us know. That was an egg on my face moment there. All right, the second, we'll move on to save you from the embarrassment. This next one is, I mean, the next Neal's number is that between 1961 and

1964, there were almost 40 movies made about gladiators. A lot of them were small budget Italian films, but that's still a crazy surge, and that came after the success of Ben Hur and Spartacus in the previous years. Now, Gladiators had a little bit of a lull, even including Gladiator, but they will have their vengeance. Sorry. There are three Gladiator movies in production right now, including a sequel to Gladiator, Ridley Scott's Gladiator, that Ridley Scott is directing, and then a reboot of Spartacus on stars. Oh, I'm excited for this. I was thinking about this.

I don't love. Gladiator movies are obviously super cool, but there's only so many stories you can tell with it. It's kind of like a sports movie where the underdog like rises up, defeats the emperor, defeats the big guy. So they've got to find a different way to tell the gladiator story. Maybe from like the perspective of the concession stand guy who's at the Coliseum is just shipping cotton candy. I don't think they had cotton candy back that.

Yeah, maybe a lot of. modern-day gladiated. I don't know what that would look like. It is kind of funny how randomly some years, there's just a bunch of movies about a really specific topic. I'm thinking ants in a bug's life in 1998. Then there was first daughter in Chasing Liberty, which

were about presidential daughters. They happened to come out the same year. And then this is a classic, the prestige and the illusionist in 2006. Both great movies. Both great movies. Okay. That's the second deal's number. The final one is about Taylor Swift's Erez Tour, which kicked

off on Friday in Arizona. Just some really interesting stats have come out about it already. This thing is supposed to last 52 stadium dates. So it's going to be over the course of the year. It will become the highest grossing tour of all time. The projections are that it will be 5 or earn $591 million. So that's not a bad payday for a year. She just rips.

I think it's amazing too because these concerts are so long. People have been preparing for them. Like they prepare for a marathon. Like they wear comfortable shoes. They bring hydration. they get their bathroom breaks in before because, yeah, she's going 44 songs. She's a beast. This is a distant, it's basically a distance endurance contest or an endurance sport.

Katie Ledecki, who's this incredible swimmer, goes three hours, she tweeted three hours shows Taylor Swift is definitely a distance swimmer. Yeah. And I think someone would track Taylor Swift's movements, like they track soccer players on a pitch and then she travels or she walks up to two miles every concert. In heels, too. In heels. Pretty impressive.

Thank you. Neil. I love your Neil's numbers. I always learn a lot, so feel free to drop those at the bar this weekend. Just to finish off our show really quickly, we have a really fun story. Basically, the top golf of baseball is getting launched in Katie, Texas. It's called Home Run Dugout, and I'm going to give you a quick stats just to kind of paint the picture for you. It's 46,000 square feet. It's got a full two bars and a full service restaurant, and it has 12 virtual batting base. So basically, it shoots a ball at you. You're looking at a screen and you hit, and the computer measures the velocity and the, like, spin rate and shows where the ball is going.

It seems fun, Neil. I'm so bullish on this adult entertainment trend that top golf pioneered. I know you probably know more than me, but it seems like every sport is kind of rolling out this upscale bar hybrid kind of thing. And I think it's just people want something to do while they go out. I think everyone's kind of tired of just sitting at a bar and, you know, being a square. I love it. And so when I heard this, I immediately texted my friends. I was like, we got to go, my bachelor party. And they were all like, when's that happening? I was like, I don't know. Get the order of that's right, Neil. You know, Top Golf really pioneered this. And crazy

stat I heard is that, you know, Calloway, the golf equipment maker, invested in Top Golf a few years ago. Now Top Golf accounts for 39% of the combined company's revenue and Callaway sales, equipment sales, account for 35%. So Top Golf is making more money. than Callaway golf equipment right now. It's a behemoth. It's a juggernaut. Yeah. All right, that's all we have.

Hope you visit a Top Golf soon. It's also made for the TikTok generation too, because so many TikTok videos from there. Please write in with maybe some of your best experiences at Topgolf at Morning Brew Daily at Morningbrew.com. And we have to shout out our awesome crew in the back. The show's producer and editor is Emily Milliron. The show's technical director is Justin Orlando.

Our supervising producer is Bryce Belloff, Our VP of technical and production operations is Dan Bousa. Hair and makeup is in D.C. lobbying for TikTok. Didn't know that. 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. All. Pay off your home, travel for life, drive a Ferrari.

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