Morning Brew Daily - US to Ban Farmland Sales to China & Middle Managers Crashing Out?

Episode Date: July 9, 2025

Episode 622: Neal and Toby talk about the Trump Administration banning Chinese buyers from acquiring US farmlands. Then, Robinhood is offering faux equities as tokens and OpenAI is not happy about it. Also, middle managers are being axed which means top managers are adopting more workers. Plus, a polymarket controversy over whether President Zelenskyy wore a suit or not. Finally, a wrap up of more headlines.  Meet your local home loan expert at ⁠⁠https://mortgagematchup.com/?utm_source=morning_brew&utm_medium=podcast  Join us for trivia night! https://mbd-trivianight-july15.splashthat.com/ 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. Listen to Morning Brew Daily Here:⁠ ⁠⁠https://www.swap.fm/l/mbd-note⁠⁠⁠  Watch Morning Brew Daily Here:⁠ ⁠⁠https://www.youtube.com/@MorningBrewDailyShow⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

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Terms and conditions apply. Good morning, Brew Daily show. Neil Fryman. And I'm Toby Howell. Today, the $237 million debate over Vladimir Zelensky's suit. Then the Agricultural Department has had it with foreign investors buying up U.S. farmland. It's Wednesday, July 9th. Let's ride. The number one rule of Hollywood is if you have a hit on your hands, you must run it back. It's how we ended up with seven Jurassic Parks and Freakier Friday in a few weeks. And the same goes with podcasters doing live.

trivia. After having an incredible time a few months ago, we are unveiling Morning Brew Daily Bar Trivia Night, the sequel. It's going to take place next Tuesday, July 15th in the East Village of Manhattan, and we want to see you there. Yes, we do. You get the exact details of where it is when you head to the sign up link in the show's description. For any of you non-New York city-based people, we do plan to publish the trivia online the day after so you don't get FOMO. But if you are based in the city, the best way to avoid FOMO is to show up and bring some friends. Neil, want to give a little preview to wet people's trivia app types. Well, all they'll say is you're going to want to brush up on your song lyrics.

Oh, Neil. And now a word from our sponsor, Mortgage Matchup. Neal, what do you know about borrowers? That it's not for me. I want to spend absolutely zero time under the ground. I get very scared. Borrowers. I'm not talking about burrowers. But those prairie dogs are so cute. Cute as they may be. They cannot help you find an independent mortgage broker in your area. Mortgage Matchup powered by United wholesale mortgage can.

These licensed professionals can shop on your behalf and give you access to more home loan options like conventional 1% down purchase, VA loans, jumbo, and more. They help borrowers save thousands of dollars all while staying above ground. So check out MortgageMatchup.com to speak to a home loan expert. That's MortgageMatchup.com. Disclam, United Wholesale Mortgage LLC, Equal Housing Lender NMLS, number 3038, license in all 50 states and the District of Columbia. There is a game of risk currently going on with U.S. farmland, one that the Department of Agriculture doesn't want China playing. Yesterday, Secretary of Agriculture, Brooke Rawlins, announced that the U.S. was moving to ban the sale of farmland to buyers with ties to foreign adversaries by strengthening public disclosure requirements in imposing tougher penalties for. false reporting. That means it's harder for amber waves of grain to fall under Russian, Iranian,

and especially Chinese control. In total, foreigners hold nearly 45 million acres of farmland in the U.S. as of 2023, which sounds like a lot, but that's only 4% of all the privately held farmland in the U.S. And of that 45 million acres, the most of it is held by Canadian investors. In fact, only 265,000 acres are held by Chinese investors, less than 1% of foreign-held acres, and just 0.003% of total U.S. farmland. So why is Rollins in the USDA tightening its grip on foreign ownership? Lawmakers from both sides of the aisle have pointed to food and national security concerns. You don't necessarily want your geopolitical enemy setting up shop in your backyard. Already half of U.S. states have restrictions on ownership, and now the national farm apparatus

has taken up the call. Neil, this has long been a hot button issue, and now it's a central component of the Agricultural Department's National Security Strategy. Yeah, that's really raised into the national consciousness back in 2023 when we all remember this Chinese spy balloon episode. It came floating over the western part of the United States, and it led to lawmakers sort of acknowledging that this geopolitical fracas with China did not only play out in the high-tech realm.

When we've talked so much about this geopolitical rivalry, we've mentioned things like semiconductor chips and drones and EVs and other high-tech products. Well, it also is playing out in more pastoral environments like the farmland of North Dakota. so it's very interesting to see this rivalry play out across high tech and low tech. Yeah, because critics of these Chinese tied ownership parcels say that if you let a foreign adversary have this large-scale investment in U.S. farmland, that could give them significant leverage over American food supply, which they could use in times of crisis to say like, hey, we are reducing the amount of food coming out of this segment of the country.

And then also you mentioned a land deal in North Dakota. That was controversial because a Chinese-owned group purchased 370 acres, which, again, isn't a ton of acres. But that was roughly 12 miles away from an Air Force base, which, again, made it extra sensitive. So not only the food security issue, but also the actual national security issue of if you're setting up shops so close to these military installations, that is also a concern for the U.S. government. Now, a lot of the criticism has focused on just two companies, Smithfield, which is a pork producer owned by a Chinese conglomerate, and then Cingenta, which is an American company, also seed producer, also owned by a Chinese parent company. Smithfield accounts for half of all Chinese-owned private land in the United States.

They sold more than 40,000 acres of U.S. farmland last year under pressure from lawmakers, leaving it with just about 85,000 acres. And when you look at these numbers, as you mentioned, they aren't that big. And there has been some pushback from academics showing that the amount of farmland held is so small. Half of that is by this particular pork producer that there's been perhaps a panic on the part of lawmakers.

This isn't really a problem. And instead of the agriculture department at this press conference yesterday, frame this as a rising issue. However, the amount of U.S. farmland owned by Chinese investors has declined by 31% since 2021. They say a bigger issue that lawmakers aren't really focusing on is long-term leasing of at least 10 years. And that is what is really driving foreign interest in American agricultural space. So we have the frame of this debate. It looks like the agriculture department is tightening the screws here.

and if you're a Chinese investor in American farmland, probably get ready to face some penalties and sell your farmland. Over the years, you might have watched OpenAI's valuation rise from $20 billion to $60 billion to $100 billion to the current $300 billion and thought to yourself, look, the S&P 500 is perfectly good, but why can I be an investor in that rocket chip? Well, the moment may finally have arrived. Yesterday, the finance platform, SoFi, said it's adding new, private markets funds to its app to allow individual investors to put money into companies that

aren't yet public like SpaceX, OpenAI, and Epic Games. And it's lowering the barrier to entry by a lot. SoFi already has private markets funds that allow you to invest in things like SpaceX and Anthropic shares, but you needed at least $25,000 to invest. With the new funds, the minimum contribution is just $10. SoFi is far from alone hopping on a trend that aims to bring historically gate-kept private company shares to the masses. Just last week, Robin Hood said it would offer equity tokens to European users for privately held companies like OpenAI and SpaceX. This all sounds like an exciting development, doesn't it? Less regular folks can start investing in unicorns before their IPO, just like a billionaire venture capitalist. Well, with great reward

comes greater risk, I think Uncle Ben said that, and these platforms have come under scrutiny by regulators from the U.S. to Lithuania for their cannonball into private markets. Plus, some of the private companies whose shares are being offered are pushing it back. Toby, private markets. It may just be the next great frontier for investors, but the journey has been anything but smooth. Yeah, it sounds really great because, of course, you want a piece of the pie when these private companies are just exploding in evaluation. But the private companies themselves don't necessarily want to give out pieces of the pie

when it comes to places like Robin Hood or even SoFi going forward. Open AI after Robin Hood announced this big tokenization effort said that it wasn't involved at all in facilitating this token sale. It said on X, those open AI tokens are not really open AI equity. We did not partner with Robin Hood. We were not involved in this and do not endorse it. So then how are you going to circle the square here? What was Robin Hood actually selling? Robin Hood has access to this special purpose vehicle.

that has access to Open AI equity. So it was kind of like your cousin twice removed equity in Open AI, not necessarily direct shares in the company. So it's a little bit of a murky regulatory situation right now, but clearly, so-fi saw Robin Hood do it. Now they said they wanted to get it in on the pie as well. So this is not going away anytime soon, even though the regulatory issues are a little more cratankerous than you might expect.

And Robin Hood's CEO Vlad Tenev had a reply that was, mocked by the greater online population to OpenAI. He acknowledged that while the tokens aren't technically equity, actual ownership stakes in a company, that is, the tokens effectively give retail investors exposure to these private assets. So you're seeing a certain amount of legalese and corporate language saying that, well, you can get exposure to these things, but don't actually think they are actually equity. The reason that there's so much demand for private markets companies is that the IPO pipeline has been clogged ever since 2021. There are companies that are absolute rocket ships like OpenAI, like SpaceX, that perhaps in another life would be public by

now. And you and me and everyone listening to this could have access to them. But there's just so many more unicorns companies worth $1 billion staying private. Just a decade ago, there were 90. Now there are over 1,200. They are staying private longer. They're not going to going to the public markets, and by the time they reach the public markets, an IPO, maybe all the juice has been squeezed from them. So there's a huge business opportunity for any company that kind of unlock this market. Moving on, Frodo might have had an easier time navigating Middle Earth than employees navigating the perils of middle management right now. Because while Frodo had Samwise to lean on, middle managers have more underlings and less

support than ever these days, according to a new analysis from payroll provider, Gusto. Gusto found that middle managers, those bosses who have bosses themselves, are getting phased out of more organizations these days. Microsoft recently laid off 9,000 workers citing reducing management layers as a key reason. That mirrors similar moves by Amazon, Google, and meta, who have all been cutting middle managers out in flattening their org charts. But this flattening is also happening at much smaller businesses. There are now six individual contributors for every one manager at the over 8,500. small businesses analyzed by Gusto. That's about twice as many underlings to watch over compared to five years ago.

And while it's easy to point a finger at AI, you can't just blame the technology for disappearing managers. A lot of small companies fired managers to save on costs and just never hired more, leaving more work for the ones that remained. Neil, whether it's AI or just normal restructuring, one thing is clear. I pity how many performance review cycles the ones that are left have to conduct. Yeah, Amazon calls this a builder ratio, and it's the ratio of individual contributors to managers. The general thought process by big tech companies now is you want to increase that ratio of individual contributors to managers.

They believe this removes bureaucracy. It is a much more efficient structure for a company. So back in September, C.O. Andy Jassy said that he wanted Amazon to have a 15% increase in the ratio of individual contributors to managers. by this March, and you're seeing that happen across all major tech companies. Zuckerberg back in 2023 when introduced the year of efficiency, that was about eliminating layers of middle management in order to increase that builder ratio. You want these companies want more people actually doing things instead of managing others. Of course, that leaves the people who are managing with a lot of direct reports.

So you're probably getting a little less face time with your manager. if you're part of a company that has eliminated that particular middle layer. And we talked a lot about AI on the show and the potential to replace white-collar workers. And most of the time your brain goes to these entry-level workers who are new to the job force and have skills that are easily replaceable by this new technology. But that might not necessarily be the case. There was this Harvard Business Review study that said that the use of AI has actually freed up more managerial minutes because direct reports are turning to AI instead of their managers.

So maybe you need fewer managers going forward because you don't need them to, you know, handhold these employees because they have someone else to hold their hand, and that is AI. And then meanwhile, a lot of supervisors are saying that they are actually using AI to automate the managing process, go through, you know, hiring review cycles, go through salary review cycles. These are things that we did not think was going to affect the middle management class of corporate America. we thought it was mainly going to affect less experienced workers, but it turns out the opposite has been true.

Now, how many direct reports is too many, though? Perhaps the most famous example of this is Nvidia CEO Jensen Huang. He has 60 direct reports, which I guess are direct reports in name only, because he's certainly not having one-on-ones with all of those folks. Managers at Dells have been told that they should have 15 to 20 direct reports. I'm not exactly sure as someone who's a manager myself. I can't handle more than four people and help them as a manager while also doing all of this other work. So we are seeing managers having a ton more direct reports.

It's going to shake up the structure and organization of these companies in ways that we haven't really thought about yet. Overall, the bet from these companies is that they think that middle managers are expensive and just adding layers of bureaucracy, kind of like Michael Scott. Don't you talk negative about that. He is the quintessential. He's the quintessential middle manager. He's the arena. But he's the morale guy. You need him in your organization.

Maybe they are important. There you go. Up next, we're going to talk about President Zelensky's suit. Did Ukrainian President Vladimir Zelenskyy wear a suit during his recent trip to the NATO summit? Only asking because more than $200 million hung in the balance. In the most 2025 story you can think of,

the crypto-based prediction market, Polymarket is being accused of manipulation from outraged users over the seemingly prosae question of whether Zelensky wore a suit in Europe in late June, a firestorm that's raised doubts over its ability to verify the truth at scale. The controversy all started on May 22nd when Polymarket introduced the contract, will Zelensky wear a suit before July? The idea behind this being that Zelensky has famously stuck to military-style clothing while his country is at war with Russia. According to Polymarket, the bet would resolve to yes, if Zelensky was photographed or videotaped wearing a suit based on the, quote, consensus of credible reporting, and gamblers have

wagered more than $237 million betting on the outcome. Well, at the NATO conference in June, Zelensky was seen in formal attire. But the question of whether it was technically a suit sparked heated debate online, including from popular menswear poster Derek Guy, who didn't clear things up that much by calling Zelensky's outfit, both a suit and not a suit. After several rulings and disputes, a final resolution was handed down last night. No, he did not wear a suit. But the problems for Polly Market may just be beginning. Yeah, this is a big problem for Pollymarket, because if you want to be the arbiter of truth, you want to decide the truth, you have to be able to have a robust system in place to establish that when it comes to these controversies. And the way it works

is that there are these protocol token holders who are called oracles who are supposedly these unbiased people who can weigh in on disputes. In order to weigh in, you have to own this token called a UMA token. And these disputes play out in public. They play out on social media. They play out in Discord. So you can watch it happening. But a lot of people have pointed to the fact that the trading volumes that go down on polymarket absolutely dwarf the market cap of UMA. So if you wanted to weigh in on something for a relatively low price, you can buy a UMA token and then you can influence a contract that has a lot of money involved, like a $200 million contract with Zelensky. So maybe you wanted it to go the no direction. You could buy that UMA weigh in and change the outcome.

So that is what has people up in arms here is this sort of arbitrage opportunity between UMA token holders and people who are betting on contract. And it really exposes maybe some of the issues of decentralized truth verification, which we didn't really think about maybe a few years ago, but is certainly increasingly important as these bets rack up things like $237 million. Polymarket and Kalshi and prediction markets of those ilk have become massive players in the gambling system.

They're doing one, and Polymarket itself is doing $1 billion in volume a month. Now let's move to the other pressing question. Was it a suit? Was it a suit? So the bet itself said the rule was, you know, based on consensus of credible reporting. Well, more than 40 global media headlines referred to the outfit as a suit. Those were compiled by those who voted yes in order to present their case. Reuters said the outfit was a suit style.

The New York Post said that he ditched a t-shirt for a suit. And you have to look at what Derek Guy said because Derek Guy is this menswear expert on X and he has become the go-to for everyone looking to figure out what is going on with fashion and clothing. That's why I was kind of frustrated with him because he really just hedged his bets a lot. He said that it is writing this line

where it's not fully meeting the social expectation, but it is meeting the technical definition of a suit. He said that the suit, there's a lot of things missing and that it takes a lot of inspiration from work jackets and military jackets. He also pointed to the pocket design because there were four pockets on the rest of this suit. This is how deep people were going because you have to, really going back to the central issue, the question was just worded poorly. Like they needed a better definition of suit to begin with.

But then you go to the expert like Derek Guy and he kind of hedges his bets here. So Derek Guy did tell 404 media that it's a weird suit, but it's a suit. but he didn't really want to stake his flag either way, which I think he should have just been the arbiter of truth here because he clearly is one of the most informed people on this subject. So just you mentioned the most 2025 headline possible, and it certainly does have a lot of elements from the year that we find ourselves in. Okay, let's sprint to the finish with some final headlines.

All eyes were on the stock market yesterday after President Trump reigniting the trade war with threats to implement much higher tariffs on major trading partners come August 1st. And it was very much a Taco Tuesday. Stocks barely wavered indicating that investors are calling Trump's bluff that this deadline won't be pushed back further or some deals might be struck before then. Trump did rock one asset in particular, though, copper. Copper prices shot up as much as 17% to a new record, their biggest intradate gain in history after the president floated slapping a 50% tariff on all copper product imports. He also said that 200% tariffs on pharmaceuticals will be on their way soon.

Yeah, markets in Asia and Europe were actually in the green yesterday, even though there were these tariffs handed out to 14 countries. And I guess the bullish case here is one that maybe they won't come through at all. But two, they're not necessarily as bad as they initially looked, even though Japan, South Korea, Thailand, that they account for this big share of U.S. imports. The tariffs aren't as big as they seem because electronics and pharmaceuticals have been exempted. But then you go down and Trump did say that 200% import duties on pharmaceuticals.

are coming. So again, it really comes down to this question of will they be implemented or won't they be implemented. And clearly the market thinks they're in the won't be column right now. Elon Musk has a lot on his plate between falling Tesla sales, a new political party. And now you can add a deeply offensive and unhinged chatbot to his list of to-dos. GROC, the LLM developed by Musk's XAI, came under fire this week after it posted a series of anti-Semitic replies, including praise for Hitler over the last few days. When users asked Grock to figure out where the hate speech was coming from, it admitted that, quote, Elon's tweaks dialed back on the PC filters and that it was doing away with conventional

politeness filters. By yesterday afternoon, it appeared that XAI was rolling back some of the prompts that told the model to not shy away from making claims which are politically incorrect. That comes on the heels of GROC randomly bringing up white genocide in South Africa out of contacts a few weeks back. Neil, through it all, Elon has been hyping up the release of Grok for the next version of the bot that comes out today. But since these models are trained on content coming from X, maybe these issues

aren't going away anytime soon. Every time he says that Grok has been improved, it does something even more insane. I mean, on Friday, must have said that Grok had been improved significantly following concerns that right-wing influencers were said it had become too woke. And then it goes and does this. an interesting thought experiment is if this happened to a public company, what would its market value look like? How would investors respond to these really offensive posts by our particular chat bot that all of these companies like Microsoft and Google have stake their entire futures on?

Like, what if Google Gemini started responding in this way to AI overviews in your Google search? I have to think that Google's stock would plunge by, you know, at least 10%. And luckily for Elon Musk, X is a private company. It doesn't have to deal with those major fluctuations. But Grok is proving to be a major liability for XAI and X, which are now one company. Your pastor will no longer put your church in financial danger for telling you who to vote for. In a landmark court filing, the IRS said that clergy and houses of worship should be allowed to make political endorsements without losing their tax-exempt status, which would effectively scrap a ban on the practice that began 71 years ago.

In its filing, which was a response to a lawsuit by two religious groups, IRS said the ban violated the First Amendment and argued that clergy members endorsing candidates to their congregations was a private matter like, quote, a family discussion concerning candidates. The National Council of Nonprofits representing 30,000 groups, forcefully pushed back, saying that churches could become the next political battleground and that the move could, quote, open the floodgates for political operatives to funnel money to their preferred candidates, while receiving generous tax breaks at the expense of taxpayers,

who may not share those views. It just becomes such a slippery slope, too, because the IRS is kind of viewing this as a conversation around a dinner table. It's a conversation that's happening in private, which, of course, you can endorse a political candidate in your own home and now in a place of worship. But when you start to think through the implications here, what if they post it on their website?

I mean, it doesn't just stay within the walls of the church itself. One professor at Loyal Law School said, What happens in Vegas doesn't necessarily stay in Vegas these days. Everyone has a web page. So that's the fear here is when these big influential churches start to post about their public affiliations, political affiliations. It's going to escape containment. And it's going to escape those four walls, which is something that has been tried to avoid

from the IRS for years now. Now it looks like they're walking back their stance on that. So communications meant for congregations might reach other people who aren't in the congregation. themselves. I should add that this 1954 ban on endorsing political candidates without losing your tax exempts, it was not enforced. This was kind of hush-hush, so maybe the IRS

is just kind of formalizing this particular rule that they had been not actually following through on. If you ever had to rely on your parents for rides growing up, which can kind of ruin a movie date night, Waymo is here to save the day. The self-driving company

announced yesterday that it will begin offering accounts for teens age 14 to 17 in Phoenix, allowing parents to invite their teens to the program and pair accounts so their kids can hail fully autonomous rides. After years of testing, the company found that a lot of teens are either anxious about driving or dependent on their parents for transportation, and so represent a perfect market for the autonomy Waymo provides. Parents, on the other hand, use Waymo as a safer, less stressful alternative to ride hailing with a stranger in their car or having friends drive each other around. Neil, these teen accounts actually make a lot of sense for Waymo.

And we could see the demise of teen driving in general. Like back in 2007, nearly 5% of all U.S. drivers were 19 or younger. By 2023, it dropped to 3.7%. With all this self-driving systems being rolled out, you wouldn't be surprised to that go to zero. There is something that is going to be missed, though, about going to the mall with on a first date to the theater and having your mom drive you extremely awkwardly there and back. And instead,

it'll just be no driver. So maybe something that we experience that the future teens won't experience that, you know, something we can look back romantically on. Yeah, absolutely. A core part of the teen experience is like texting your mom. Okay,

can you come pick me up? I'm actually done it now at the movies or at the mall now. So I agree that it's, it is missing a part of growing up. So teens, these days maybe you have it great because you can hail a ride at your beck and call. But back in the day, you know, yeah, you had to rely on old mom and dad. And no question. The type of people that are most excited about this are the parents. Yeah, they don't have to ferry around anymore. All right,

that is all the time we have. Thanks so much for starting your morning with us. Have a wonderful Wednesday. But before we go, and speaking of parents, Toby, I think a few shoutouts are in order. Yes, very special shout out to my mom because it's her birthday today. She was a big conspirator and helper of my engagement. So extra happy birthday to her, but also a happy birthday to executive producer Emily's mom. Yes, our moms share a birthday to mom birthdays on the same day. Best day ever. Happy birthday to those two. If you have any thoughts on today's episode, send an email with questions, comments, or feedback to morning brew daily at morningbrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lou is our producer.

our associate producers are Olivia Graham and Olivia Lake. Hair and makeup is our arbiter of truth. Devin Emery is our president and our show is a production of Morning Brew. Great show today, deal. Let's run it back tomorrow.