Morning Brew Daily - Stock Market Loses $6 Trillion in Two Days & Minecraft Movie Scores Big

Episode Date: April 7, 2025

Episode 555: Neal and Toby continue to breakdown the fallout from Trump’s major tariff announcement last week and how businesses all over are managing. Then, oil prices take a plunge and what it means for consumers. Also, Billionaires suffer massive losses from the market rout. Meanwhile, the Minecraft movie provides a much-needed sigh of relief for Hollywood. Plus, Mega Millions is increasing its ticket prices even more in hopes to balloon its jackpot. Finally, what to expect in the week ahead. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Checkout TaxAct for more! Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow 00:00 - What is a circuit breaker? 2:30 - Markets Have Historic Two Days 7:00 - Businesses Feel Tariff Impacts 10:45 - Oil Prices Plunge 12:30 - Billionaires Lose Their Bag 15:30 - Minecraft Movie Wows 18:40 - Mega Million change-up 20:00 - Week Ahead 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, stock futures are way down again as the U.S.'s global tariffs spark a market meltdown. Then a Minecraft movie put the industry on its back this weekend with a remarkable box office debut. It's Monday, April 7th. Let's ride. Well, we hope you had a relaxing weekend because it's looking like today will be worse than a Monday after the Super Bowl.

And we didn't even get the Super Bowl yesterday. Asian and European stock markets plunged overnight over fears the trade war. will crush the global economy. Toby, what's the latest? Well, Neil, have you ever heard of a circuit breaker? But seriously, circuit breakers have levels that end up getting triggered when markets go down by a certain amount. For the S&P 500, trading would be halted after a 7% drop or a 13% drop. And if the worldwide market's performance while you're sleeping is any indication, a lot of those levels are going to be tested today. Hong Kong's Hangseng market is down 13%. Japan's Niki index is down 8%.

Singapore down 7%, China is down 7%, India is down 4%. And over in Europe, things are not much better. The pan-European stocks, 600 index was down 5.2% in morning trading. And then a little sneak peek at the US. SP 500 futures down 4%. NASDAQ 100 features down 4.3%. Futures on the Dow are up. Just kidding.

They're also down of 4%. So yeah, go ahead and put an extra shot in your espresso. So now a word from our sponsor, Tax Act. Neil, do you think Batman ever did his own taxes? Definitely not. That's what Alfred is for. Actually, maybe Robin was a CPA? The point is, every hero needs a sidekick.

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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.m.m.m. Beacons are awesome because you don't have to work. You can eat cold pizza for breakfast, and the stock market isn't open, and we're all grateful it wasn't because Thursday and Friday's wipeout will go down in the history books. The S&P 500's 10% plunge on Thursday and Friday after President Trump announced massive tariffs ranks among the steepest two-day declines in the last 70 years on par with Black Monday in 1987, the post-Lean Brothers route in 2008 and the COVID plunge in March 2020. More than $6 trillion was erased from stocks over two days. The Dow shed more than 3,000 points and the

NASDAQ entered a bare market, down 20% from a previous high. It was carnage on Wall Street and reflects the investor panic over President Trump's Liberation Day tariff announcement when he raised tariff levels to their highest point in more than a century. Trump and his team believe these tariffs are necessary in order to restore America's manufacturing base and use them as a point for leverage with other countries. While virtually all economists say they're a recipe for slower growth and higher inflation, especially at these astronomical levels, on Thursday, J.P. Morgan raised their recession forecast from 40% to 60%. Toby, trading starts at 9.30 a.m. this morning and what may be

the least exciting opening bell ever, what is the word on the street? The word on the street is not great, Neil. Bill Ackman, the billionaire hedge fund manager, who is also a very vocal backer of Trump, has been on a posting spree on X over the last few hours saying, quote, that a massive and disproportionate terrorist risk destroying confidence in our country as a trading partner, he urged Trump to call a time out on Monday today, or else he wrote, we are heading for a self-induced economic nuclear winter and we should start hunkering down. He also posted last night that he strongly believes launching tariffs on April 9th against the entire world is a mistake. So you are seeing a lot of anxiety coming from even the people who are some of the more vocal backers

of this administration. And suddenly, a lot of the calculus has changed when it comes. to what the Fed is doing as well, even though Jerome Powell kind of said we are still in wait in C mode, even though that two-headed beast of stagflation is potentially creeping up on us. Suddenly, the market is now pricing in the Fed cutting rates five times by year end. Now, previously it was only looking like three times. So you are seeing a lot of things changing very rapidly from the people, the billionaire class, who was supporting Trump all the way down to Jerome Powell and the Fed saying, suddenly the calculus is changing.

Yeah, on Friday, into this maelstrom walks Jerome Powell, who just so happened to have an event scheduled on Friday as the markets were melting down. So everyone was very curious to see what he was going to say about the impact of tariffs. And he kind of sounded a worrying note. He said the tariffs are much larger than expected. They would lead to higher inflation than he was calculating

and they would lead to lower growth than the Fed was calculating. He still said that the Fed was going. to be in that wait and C mode, see how it all plays out. But as you said, over the weekend, the calculus may have changed a little bit. Some investors are betting there might be an even emergency rate cut in order to save the market because this three-day collapse should, you know, whatever happens today in the futures market bear out through 4 p.m. It would be, you know, another addition to the historic collapse that we've been seeing. So we'll see what the Fed does. But Powell on Friday kind of said, we're still seeing the, you're still seeing the

still seeing it playing out. And one fascinating thing to observe over the last two days of last week was the divergence between retail investors and hedge funds, actually. Through the first three hours of trading on Thursday, retail investors were net buyers of almost $3 billion in stock. That is the second highest level on record since JPMorgan began tracking data 10 years ago. Meanwhile, global hedge funds and ETFs dumped more than $40 billion of stocks on Friday, which is the largest selling on a net basis in almost 15 years.

So you are seeing retail investors, people like you and me, buying the dip, as like you like to say. But then you have the professional side of things, just dumping things left and right. So Jim Kramer was kind of on CNBC saying that there's a possible Black Monday level event coming two days. So there's a lot of different factors where you're seeing professional investors behaving one way and then not professional investors behaving the other way. So that's going to be a fascinating tension to see play out over these next coming days as well. In the face of the uncertainty, tariffs have injected into the global economy, companies around the globe are looking around like John Travolta in Pulp Fiction,

trying to figure out what to do. And it looks like the answer is, press the pause button. Case in point, Nintendo, the tariffs landed at the worst possible time for the Japanese video game maker ahead of its much type release of the Switch 2 console, just hours. after announcing pre-order availability, the company reverse course announced it would be delaying at the April 9th pre-launch date, though it's still planning to ship the console this summer.

Nintendo had already shifted about half of its switch to manufacturing to Cambodia and Vietnam in anticipation of a U.S.-China trade war, but now those countries are also caught in the tariff crossfire too, hence the pause. Another unwelcome casualty of tariffs is the U.S. IPO market. Klarna and Stubhubb both put their public debuts on ICE, in a blow to what was supposed to be a promising period for companies going public.

The Buy Now Pay Later, Giant Klarna was scheduled to list today with a projected $15 billion valuation, while Stubhub planned to launch its Roadshow pitch to investors this week. Both of those timelines are now on hold due to market turmoil. Finally, Ford and Salantis are trying to capitalize on the Buy America push, extending employee-level discounts to all customers for the rest of April in an attempt to stave off panic rising about rising vehicle prices. But across the pond,

Jaguar Land Rover decided to temporarily halt shipments to the U.S. following Trump's 25% foreign auto tariffs to give themselves some time to figure out their longer term plans. So, Neil, a lot of companies are entering wait and sea mode. You're right. I mean, they are hitting pause. And one interesting development

that you might see more of in the coming days is companies declaring force majeure, which is a legal. maneuver that says you can void certain contracts because of crazy situations that are unavoidable and unpredictable. You saw this happen during COVID a lot where they're like, we can't do this contract because there's literally a global pandemic. That's what they're saying about the tariffs. The first company that we know that did this is how it Aerospace, which is based out of Pittsburgh. They supply airplane parts for Airbus and Boeing across the $150 billion industry.

They reportedly, according to Reuters, declared force majeure to void certain contracts, with these companies. So that could add another level of supply chain chaos on top of what we're already seeing. Yeah. And a lot of these companies are looking around saying, I thought we did what we were supposed to do here. We were supposed to diversify our supply chains outside of China. And Nintendo is just the perfect example of that.

It's like we thought we laid the groundwork for we knew the switch two is coming. We wanted to get out of China specifically. But now their cost looks like they're going to go up. They still say they're going to release it in the summer. but they're just taking that little minute to figure out what to do. The IPO market is also just very frustrated, specifically venture capital firms who were kind of counting on the IPO market, coming back to life under the Trump administration after a really bad couple of years for big exit.

They just had Corweave, which was the big AI data center infrastructure company that debuted last week. It did all right, but nothing crazy. But now you are seeing these two shining hopes in StubHub, in Klarna, pressing pause as well. And then Land Rover, too, is also just saying, we have to enter away in C mode because the U.S. is the second largest expert market for the UK's car industry. Those cars are getting a lot more expensive. Land Rover Jaguar doesn't make any of their vehicles inside the United States. So they have to take a step back and recalibrate because of these increased cost of tariffs are introducing. One corner of the market we haven't touched on yet is

oil prices and just like everything else, they are an absolute free fall. The price of U.S. crude oil plunged 14% over two days to below the key mark of $60 a barrel. They're at the lowest level since before the vaccines rolled out in COVID. The reason prices are cratering is a double whammy of lower demand and higher supply. Tariffs, if they do send the global economy into a downturn as expected, will sap demand for fuel, people will travel less. Businesses will ramp down spending. the economy will just need less energy overall. And in some really unfortunate timing, just as tariff spook markets last week, OPEC plus, a group of oil-producing nations said they would raise output in a surprise move.

So lower demand and higher supply has tanked the oil market. And while that means lower gasoline prices, it's a bad sign overall. It would crush U.S. energy companies. And it's an omen. The economy is headed toward the dumps. So filling up for cheap will not be something to celebrate because it means there are a lot. bigger problems going on. Right. This has these two events back to back, Trump's tariff and then the boost in production, have totally shifted the global energy market. Crude is right around

that $60 per barrel, and that is just basically completely cast a doubt on Trump's drill baby drill approach saying that we want to achieve energy dominance, but it's very hard to even create new drills profitably if oil is lingering around $60 a barrel. $65 is actually the threshold that many companies need to profitably drill new wells in places like Texas in surrounding states. So you are right that even though gas will likely end up being cheaper, it does lead to a lot of kick-on effects down the road that make energy investment much harder. It just means everyone's poor if gas is super cheap because of a recession. Let's move on. When the biggest companies in the world are shedding trillions in market cap, it stands the reason that the billionaire class is also taking a beating

too, and that was certainly the case. The world's 10 richest people lost a collective $74 billion after last week's market route, the worst single-day loss in five years, while the world's 500 most affluent people lost $536 billion for the biggest two-day drop in the history of the Bloomberg billionaires index. Elon Musk took the biggest hit, losing $31 billion. Mark Zuckerberg shaved off $27 billion. Jeff Bezos lost $23 billion.

Even Warren Buffett wasn't immune losing over $2.5 billion on paper. Still, the Oracle of Omaha is living up to his name if you zoom out a little. Berkshire stock price is up about 9% this year, far outperforming the S&P 500's nearly 14% decline. And a big reason for that is Wall Street is looking kindly on Buffett's gargantuan cash pile, which has swelled from $110 billion in September of 2022 to $321 billion at the end of last year, bigger than Coca-Cola's market cap. It's a lot easier to be greedy when others are fearful when you have the dry powder to deploy when things go south. And as the most famous value investor, many expect Buffett might be on the hunt for deal soon now that the market has taken a haircut.

Neil Buffett is actually the only billionaire in the top 10 richest people list to see his net worth expand this year as his patient approach and hefty cash pile look especially oppression in these uncertain times. We are learning why he is the goat. and you said that he is greedy when others are fearful. He was also fearful when others were greedy. Last year, as the stock market soared to record highs, he cut his Apple steak by two thirds. He dumped Bank of America and Citigroup. Both of those stocks are down 22%.

Apple is down 28% this year and continuing today. So he was cutting last year and everyone was like, why are you dumping stocks, aren't they doing well? And then, you know, I don't think he foresaw this necessarily, but it just goes to show why he's. such an incredible investor. I think a lot of people are looking to him and saying that if he starts buying relatively soon, that might mean that he believes that Trump's tariffs are under more of an economic blip or an annoyance created and actually create these big buying opportunities. Or if he

holds off, it might suggest that he's looking at these tariffs more in line with, you know, the Smoot-Hawley tariffs of 1930, where it's just a persistent economic force that ends up kind of breaking the market a little bit. Unfortunately, we have to wait to see because we'll probably see an answer become clear when they Berkshire's next shareholder meeting we won't know necessarily what his moves are until a few more months down the line up next let's talk about some winners of the weekend 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

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Unbelievable Pepsi Now it's time for our winners of the weekend The segment where Neil and I picked two stories that had a better weekend than Duke haters Neil I won the pre-show game of Pin the Tail on the Donkey so I'm up first And my winner of the weekend is Minecraft All those kids tugging on their parents' shirt sleeve

combined to create some serious spending mic This weekend as a Minecraft movie Shattered box office expectations and brought in $157 million domestically in the biggest opening weekend of the year. The movie that is an adaptation of the ultra-popular video game title was initially expected to only bring in $60 million, but that severely underestimated the fact that it had Jack Black going very hard in the paint. Part of the reason for the movie's overperformance is kids freaking love it.

Reactive videos posted this weekend on social media, saw theaters erupting to particular fan service moments. One person posted on social media that, quote, when Jack Black said Chicken Jockey, I believe you not, the entire row in front of me gave a standing ovation. Chicken Jockey is, of course, referring to a rare instance in which a character rides a Cuboy chicken in the game. You may roll your eyes or even ask for a translation from your 12-year-old nephew, but the movie industry is happy to be rolling in the dough again. After a brutal march, absent of any big releases, industry earnings are down just 5% in 2020. after previously staring down a 13% gap pre-release of a Minecraft movie. Neil, seeing the jokes that were getting thunderst applause in this movie, it was the first time I truly felt a little old.

Welcome to the club, Toby. This wasn't just the best debut of the year at the box office. It was the best in the history of a video game adaptation. So this is becoming maybe the Marvel of the 2020s adapting video games. It's been a recipe for success. We had the Super Mario Brothers movie, which was the biggest movie of the year last year, brought him $1.3 billion. Five Night at Freddy's Sonic the Hedgehog has had three movies now. Tom Holland in Uncharted.

They all did really well at the box office, and I think the Minecraft success, incredible overperformance, will only add fuel to adapting every video game that there is out there. And Warner Bros, which was the main studio that financed this movie, they did 75% of the financing, and they did really well. They arranged this marketing partnership with McDonald's that, viral on TikTok, but also a lot of people are crediting Legendary for adding this magic producing touch. And Legendary jumped in to finance the extra 25% of the movie. But if you go down legendary entertainments kind of hitless over the last few years, they are kind of the Kingmaker when it comes

to resuscitating old IP. They brought back King Kong in 2017. Now that trilogy has gone on to gross $1.6 billion worldwide. They were also the force behind Dune, Part 1 and Part 2, which took in 1.1 billion. So if you want to adapt a beloved and sometimes complicated source material, hit up legendary because they clearly have it figured out. What video game do you want to see adapted into a movie? Oh man, I didn't play a lot of video games growing up. Maybe like an iPhone game, like doodle jump or something like that, Fruit Ninja. I could see us going back into those era of IP and getting into the mobile genre a little bit. Cool. All right. My winner is mega millions because it's about to get a little easier for you to be a winner.

The lottery game is rolling out its biggest makeover in years with the goal of jacking up jackpots and improving players' odds of winning at least a little something, something. Of course, there is a catch. The price of a ticket is going up for only the second time in the lottery game's 23-year history. Tickets that were $2 will now be $5. But Mega Millions said the payoffs will be worth the steep price hike

because its redesigned game will lead to higher starting jackpots and faster growing prizes. For instance, it says the average jackpot in the new game will be more than $800 million compared to around $450 million in the past. And the odds of winning the jackpot are getting better from a 1 in 302 million chance to just one in $290 million. I mean, you're practically guaranteed to win at that point. Toby, the first drawing of the new game is 11 p.m. Eastern this Tuesday.

Are you feeling lucky? So you're saying there's a chance to, Despite this pretty hefty price increase, I mean, it's over 100% increase. The lottery spokesperson basically said that a lot of the customers were already spending more than $5 when buying a ticket. So hopefully with the added bang for your buck you're supposedly getting here, it will not be too big of a shock to the system. They kind of compared it to a subway fair hike where you don't really get anything more. You're paying more money for the same ride. In this case, they're saying the price increase is leading to improved odds, a better chance of winning.

money, faster-growing jackpot. So technically you're getting something to return for this rather sizable price hike. Okay, let's move on to the week ahead, the major events you need to know about. It sure's going to be another tumultuous week on Wall Street. On Wednesday, President Trump's reciprocal tariffs go into effect on virtually every region of the world, even those without any human inhabitants. On Thursday, the Consumer Price Index will show inflation rates for March, setting a baseline before whatever happens to prices with the trade war. And on Friday, big banks like J.P. Morgan kick off earning season, which will be closely watched for what CEOs say about the tariff impacts on their businesses. I mean, technically, this thing hasn't even really started yet because April 9th is the big day when these reciprocal tariffs kick in.

It also is a big day where we start to see some inflation data that may be influenced by some of these tariffs as well, although likely we're going to have to wait for next month on that as well. So still in the first inning of this very long stretch to come here. Yeah, and the key question is whether the Trump administration will take Bill Ackman's advice and say something in order, a pause in order to stem the bloodbath in the market. So we'll see whether that happens in the next few days before those go into effect on Wednesday. For golf fans, this is without a doubt the best week of the year, practically a religious experience because the Masters tees off in Georgia on Thursday, the sports first major of the year. known as a tradition unlike any other. The Masters is certainly unlike any other sporting event in the cheapness of its concession menu.

For the 23rd consecutive year, the pimento cheese sandwich will cost you just $1.50. Compare that to like $23 for whatever drink you're going to get at the U.S. Open and tennis. It is a steel. It is a steal, although I was seeing some chatter this weekend that it tastes about as good as what you pay for it, which I would like to push back on as someone

who's been in the master. one single day. It's pretty good, I think. A dollar 50, you know what you're getting. So the $150 cheese sandwich is good enough. Do you want my master's picks now or should we wait a little bit? Let's wait. Let's wait. Let's wait. I'll sit on them. I'll hold over a little bit. Also in sports, the men's college basketball championship is tonight between Houston and Florida. In the women's championship yesterday, Yukon destroyed South Carolina for its 12th title and their first since 2016. On television, White Lotus may have wrapped up yesterday, but Sunday nights on HBO will remain great with the new season of The Last of Us. The zombie apocalypse thriller was a major hit with its first season in 2023,

racking up more than 30 million viewers. White Lotus, on the other hand, has about 18 million. Elsewhere, The Handmaid's Tale returns for its sixth and final season on Hulu, and the new season of Black Mirror hits Netflix on Thursday. My only commentary on the White Lotus is I'm finally that we all finally got to use the Duke meme when Duke law. Mike light conspired to make it happen. I am sure of it. Okay, let's wrap it up there. Thanks so much for starting your morning with us and have a great Monday, or at least as great as it could possibly be given the circumstances. For any questions, comments, or feedback, send an email to Morningbrewdaily at Morningbrew.com.

And before we get into the credits, got to wish a happy birthday to my mom, a big MBD listener. Happy birthday mom. Okay, now here is our wonderful team behind the scenes. Emily Miliron is our executive producer Raymond Lue is our producer Olivia Graham and Olivia Lake are our associate producers. Yuchinawa Ogu is our technical director. Garrett Peck is on audio.

Hair and makeup is in a bear market. Devin Emery is our chief content officer and our show is a production of Born and Brew. Great show today, Neil. Let's run it back tomorrow. All. Pay off your home. Travel for life. Drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Buckslot machine by Aristocrat Gaming, Yamava Resort and Casino

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