Morning Brew Daily - USPS Going Private? & SoftBank Makes $100B Bet on AI in America

Episode Date: December 17, 2024

Episode 476: Neal and Toby discuss another overhaul project that may be on the Trump agenda during his second term – the United States Postal Service. Then, Germany seems to be on the brink of economic collapse as it continues to trend downwards, concerning world economies. Also, SoftBank’s CEO Masoyoshi Son pledges a $100B investment in AI jobs in the US. Meanwhile, Toby looks at the rise and continued rise of puritan-names. Lastly, biggest headline news you need to know.  Build your Range Rover Sport at landroverusa.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://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow 00:00 - IMAX Re-Releases 03:40 - USPS Going Private? 08:10 - German Economic Turmoil 11:45 - SoftBank Investment  15:00 - Virtue Baby Names 18:30 - Headlines Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning brew daily show. I'm Neil Fryman. And I'm Toby Howell. Today, could the United States Postal Service be privatized? Newman would like a word. Then Germany is riding the struggle bus after its government collapsed under the weight of economic turmoil.

It's Tuesday, December 17th. Let's ride. Have you noticed that people are randomly talking about interstellar a lot, even though the movie came out in 2014. Well, it's probably because Christopher Nolan's space epic has returned to IMAX theaters for a few weekends now and just became the highest grossing IMAX re-release of all time, earning $17.4 million already in its run. It started a bunch of chatter online about which movie or movies should be the next on the

docket for an IMAX re-release. I know you've got some ideas, Toby. I've got some ideas. One of my favorite movies of all time is Mad Max Fury Road, which would undoubtedly slap in the iMacs format, but also thinking of good movies to re-release in iMax is kind of boring. So my mind went to what would be the worst movie of all time to release in iMacs. And I think the answer has to be cats. I mean, the movie adaptation of the Broadway musical that catified everyone from, you know, Ian McClellan to Taylor Swift. It was a nightmare

few, and I'd love to see them in, you know, 10 foot tall versions of themselves on an iMex theater. People would probably go ironically. Yeah, ironically. Do you have a movie that you would like to see re-released? Well, I was looking at one of this, the film critics from Variety, put together a list, and they were pretty good. So I'll just say five of them. Pulp Fiction would be amazing. Gravity, which is another space film that people say is even better than interstellar.

So that would be, you know, a sensory overload. Fight Club could be good. And then Casino Royale, one of the best bonficks of all time. And finally, Blade. See, it's boring to think of good movies. Of course those balls slap. Yeah, it's not that surprising. Now, a word from our sponsor, Range Rover Sport.

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Shop spring backyard days for seven days at the Home Depot. Now through May 6th. Exclusion supplies to homedipo.com slash price match for details. The incoming Trump administration has promised sweeping measures to cut costs in the government and one controversial aspect of the plan has picked up steam in recent days, taking USPS private. The U.S. Postal Service, whose origins in 1775 predate the country itself, is currently a self-funded independently operating public sector entity, but its business model is collapsing.

Its main revenue source, people sending Mother's Day cards and wedding thank you notes, has plunged into the past few decades, leading to a net loss of $9.5 billion in the last fiscal year. Advisors to Trump think the U.S.PS would be better off left to its own devices rather than being subsidized by the government. So they've recommended cutting it loose, the Washington Post reported over the weekend. At a press conference yesterday, Trump confirmed the rumors saying there is talk about the Postal Service being taken private. Not the worst idea I've ever heard. It really isn't. He added that we are looking at privatizing the service. Toby, turning the USPS into a for-profit entity would be a seismic event for the trillion-dollar e-commerce industry, likely leaving small businesses and rural communities in the lurch.

Do you think it would ever get the stamp of approval? It's tough because the point. Postal Service is one of America's most beloved federal agencies. It trails only the National Park Service in a 2024 Pew Research Study of most favorable outlooks on these services. But it has become this target, especially in this era of Do's government efficiency that we are about to enter. It has been a popular target to potentially become privatized so it could save the government a little bit of money. The Postal Service is a loss-making machine. It lost $9.5 billion. It has $9.5 billion in the last fiscal year. It has $80 billion in liabilities on its balance sheet right now.

So obviously it's going to come up as maybe a hot button issue when you are trying to cut costs from the government. But it is one of those things that a lot of people rely on. So it's more complicated than just, oh, it's losing money. We need to do something about it. It provides a very essential service for a lot of Americans. It provides an essential service because there is a requirement that is known as the universal service obligation, which requires it to deliver mail to all parts of the country, Alaska, rural communities, places that maybe a for-profit delivery service would not go or at least bunch them together and only deliver once a week. The USPS has to deliver to those because it is a government-funded organization and is required to go there as a loss-making

entity. Like, a for-profit business would never do that. So that's why the USPS is important to those communities. And if it were to be privatized, I mean, we live in New York City. If we want to go to Amazon, if we want to order something from Amazon, it could get here prime two days or even same day. If we lived in the boonies, then Amazon would probably take a lot longer to deliver. And if the USPS was privatized, that's probably what would happen. Let's talk a little bit about Amazon.

Amazon is the Postal Service's largest customer. It uses it. Remember, Amazon is constantly trying to figure out last mile delivery. The Postal Service is its biggest way it fulfills that last mile delivery going from fulfillment centers to your actual home. So you mentioned the e-commerce industry. This would really disrupt it if you disrupt the Postal Service because it relies so much upon it. And so, yeah, I don't think that it's going to be popular with Amazon. Trump has in the past, you know, called out Amazon and said the Postal Service to double prices when it comes to Amazon because he had a lot.

a feud with Jeff Bezos dating back to his last administration. We'll see if he kind of strikes a similar anti-Amazon tone here in this next iteration of potentially, you know, trying to bring the Postal Service private. If you look at it as a private company, you'd be like, this thing is uninvestable. Like, they are a company that was made for the 1950s. They are not made for the 2024. I mean, their biggest revenue sources is sending mail. So in 2020, 2001, That's when mail peaked in the United States. 104 billion pieces were sent, but it's just been absolutely plunging since then. In 2019, just 55 billion pieces of mail were sent.

So it's got to find other revenue sources. It's done this business with Amazon. Democrats wanted to make it into a quasi-bank. So, you know, it's a tough business to be in the mail business. Right. Your thank you notes, people. That's what I'm taking away from this. Okay.

Big European country tried to have a functional business. government challenge. With its neighbor France and its worst political turmoil in decades, Germany said, hold my hefebisen. Yesterday, Chancellor Olaf Schultz lost a vote of confidence in Parliament paving the way for elections in February seven months earlier than originally scheduled. The next German government basically only has one overarching New Year's resolution, and that's a kickstart an economy that's remained in neutral or worse for the past five years. The country, Europe's largest economy, is facing its biggest economic crisis since reunification. 35 years ago. And even worse, this once vaunted industrial juggernaut is plagued by

structural problems not easily fixed, problems like chronic underinvestment, losing cheap Russian energy following Putin's invasion of Ukraine, and getting its lunch eaten by companies in China. Bloomberg estimates that the decline in German competitiveness means every household is worse off by $2,600 a year since the pandemic. And even with the early election, it looks like more political deadlock is in store, which is not a recipe for the ambitious reforms Germany needs to regain its economic footing. Analysts compare Germany's economy, I'm analysts, to an old air mattress that slowly but surely loses its structural integrity until there's nothing left propping it up.

Toby, let's say you become chancellor of Germany in February. How are you tackling the country's economic malaise? Well, it's tough because you need the government to spend some money here. They're under a ton of pressure to spend on defense. on infrastructure, on social welfare, on getting your vaunted manufacturing industry back in its groove. But the problem with Germany is they're very austere. They have this actually debt break that is in their constitution,

which effectively handstrings them of what they can do with their budget. They are not allowed to, their debt cannot exceed 0.35% of GDP. So their hands are behind their back here. They can't do much to increase spending, increase spending from, the government to try to reverse this doldrum it's been in. So I don't know what I would do. I would probably get ousted as well because there's just not an easy path forward here. Yeah, they're maybe looking for ways to, you know, get around this debt break so they can spend more. It reminded me of our debt ceiling that the United States doesn't really seem to care about that much.

But the Germans do. The Germans do. The problem is, yeah, the problem here is very structural. Germany used to be an export powerhouse in 1986, 87, 88, and 90. They were the world's largest exporter. They were exporting more than the Americans, way more than the Japanese, and they sold a lot of those goods, especially cars, to China. Now China is a manufacturing powerhouse, especially their auto industry. They're selling not just in China, but also in the European market. And you just look at, you know, the German automakers.

They're absolutely collapsing in China, which was their largest market. the latest quarter, BMW, 30% revenue plunge, Mercedes, 13% decline in sales. Volkswagen, 15% decline. So they can't sell as much as they used to in China. Meanwhile, I talked about the gas situation, the energy prices that go into their factories are rising because they used to get 55% of their gas from Russia. That has been severed after the war. So, I mean, it is a tough situation there for Europe's largest economy.

SoftBank CEO Masayoshi's son never one to shy away from a big bet is doubling down on America. The Mercurial Japanese and tech investor announced a $100 billion investment in the U.S. over the next four years, making the pledge during a visit to president-elect Donald Trump's Mar-Largo estate yesterday. Son loves putting a lot of his chips on red and white and blue. During the last Trump presidency in 2016, he pledged to invest $50 billion in the U.S. economy, and create 50,000 jobs. While he technically fulfilled that lofty financial obligation by the end of Trump's turn, nearly half of the money went into funding the office space startup we work, according to Axios.

This time around, Sun and SoftBank have their sights set on the AI industry and promised to work with Trump to create 100,000 jobs at a minimum related to artificial intelligence, data centers, and chip manufacturing. Neil Masayoshi's son is back and ready for round two. He's back. It feels like we're 2016 all over again. This guy for people who maybe weren't paying attention for business news, kind of upended the venture capital industry and the startup community in the United States when he raised $100 billion for a vision fund and was plowing hundreds of millions of dollars, if not billions, into American startups like Uber, like WeWork. A lot of them were flops like WeWork. a lot, like there was a robot pizza making company. A lot of them did well. Uber, and he's investor in V-DivDia as well, and an arm, which is a chip designer that

just recently went public and is doing really well. So this guy, you're right, he's known for taking big bets, and he's also known for cozing up to President Trump. And so he just finds these big, like, round numbers and loves them, and he's going to make the announcement. But we'll see whether he can actually follow through on this, because SoftBank only has $30 billion cash on hand. He's pledging $100 billion, 100,000 jobs. We'll see what happened. Yeah, it's a little unclear where that money is going to come from. A lot of people

are looking at this more of a potential PR play than actual change in investment strategy because you know, even back in 2016, SoftBank was already going to deploy its vision fund into United States and in U.S. companies. So making that announcement, people are like, all right, you're already doing this anyway. And it's similar here because they already have been investing heavily in AI. They had plans to go even deeper. So just some idling up next to Trump and making that announcement, maybe is more of a PR play. That being said, though, Trump did say that he wants to fast-track investment in the United State. He said any company that invests a billion dollars or more in the U.S. would receive

fast-track permitting. So it does go along with his agenda as well. So you can see both the agendas were aligned here. They did want to make a headline in announcing this. Up next, it's Tuesday, which means it is time for Toby's trends. Open up that notes app on your phone. you keep track of baby names because today's Toby's trend is all about the sudden resurgence of so-called virtue names. What are virtue names? Well, they're not Toby or Neal. Instead, think patience or prudence or chastity, you know, names that stem from traditional, often Puritan virtues. They used to be all their age. In the 90s, there are more American newborns with virtue names than in the 1780s, but according to a Washington Post analysis, we're still writing a virtuous name with a virtuous name

wave to this day. U.S. Women's National Team goalie Hope Solo, former Trump press secretary, Hope Hicks, NBA journeyman, Justice Winslow, the more you look, the more they start popping up. Originally popular in Puritan times, the more modern appeal of virtue names isn't reflective of a sudden renewal of religious figure. Instead, the booms can be traced back to pop culture. The sitcom Will and Grace, which originally ran in 1998 to 2006, for instance, coincided with the rise in babies named grace. While names like Faith saw a boost after George Michael's album of the same

name sold 25 million copies. I know you like that. Neil, any harmonies or serenities in your life? No, but I will say there are a lot of graces and it was very interesting tracing back the origins of the word grace because again, it was kind of like the pop culture

of the 1840s. There was a girl in Britain who saved nine people from a shipwreck named Grace Darling. And that was, I guess, their sitcom, you know, TV show of the day. So everyone started naming their girls grace. And that, when they all came over to the United States, then they continued the grace phenomenon. In the 1850 census, one in four graces in the United States were British or Irish immigrants. So that one incident that probably was played over and over again in the British newspapers

led to, you know, a phenomenon here in the United States when it came to baby naming. And then you can also track it to some more modern names as well. I mean, the rise of the country singer Faith Hill led a lot of people to be named Faith. There was also a character named Faith in the TV series, Buffy, the Vampire Slayer. Chastity actually started popping off after Sunny and Cher picked it for their child. But honestly, a lot of these virtue names can also be tracked back to another explanation, and that is names ending in Y became a lot more trendy recently.

So Harmony, Serenity, the most common endings for virtue names is ending in Y, and that names ending in Y are experiencing one of their biggest booms in decades as well. So maybe it's less that they are virtue names and more that they just end in Y.

Toby, Neely, no, not quite. One interesting thing about virtue names is that they often go together in twins. So in 2011 in the U.S., faith and hope, were the fourth most common pairing of names for twins. So you can often pair these together, and you get a very virtuous household. And this came from this big Washington Post analysis from their Department of Data, and they offered one name that they think is different, old-fashioned, but not off-trend.

And that is sapience, which means wisdom. So, again, pull out that notes app in your phone. I know everyone has the running list of baby names, or all these people my age do. put sapiens on there because you could be kicking off a new trend of virtue names. Now, let's sprint to the finish with some headlines you may have missed. Up first, Donald Trump met with TikTok CEO show Z-chu at Mar-Largo yesterday as the company tries to dance out of the potential nationwide ban its facing. TikTok filed an emergency petition asking the Supreme Court to halt a law that would require

bite dance its parent company to sell the app by January 19th, arguing the ban infringes on its first Amendment rights. Trump, who was once all gung-ho about banning the app during his first term, has switched his tune and told reporters yesterday that he has a, quote, warm spot for the app. Neil, we don't know much about how the actual meeting went, but it's clear that Shoggi-chu is wasting little time trying to get the new administration on his side. Yeah, it's not quite clear what Trump could do to stop this ban from going into effect because Congress passed this, and they are ready to make it happen. They issued letters recently to Google and Apple saying, better be prepared to take TikTok off your app stores because if not, we're going to find you.

So there could, that TikTok's throwing up a hellmery to the Supreme Court. Trump could extend the deadline. That's one thing that was written into the law that the president can do. So he can't kill it, but he can't extend it. Or he could help TikTok find a buyer, right? It's not necessarily a ban on TikTok. It's the law forces bite dance to sell TikTok to an American buyer. So Trump, if he considers himself a dealmaker, could look into that.

So those are a few of the options. I know he has a warm spot for TikTok, but there's just, you know, even as the president, his hands are tied a little bit. I expect maybe the deadline to get kicked. Right. That's the problem. Trump's second term begins on January 20th. The deadline is set for January 19.

So how can he do much if he's not even inaugurated yet? We might have the shortest live TikTok ban in history. Yeah, one day. A massive congressional investigation led by Bernie Sanders into Amazon. found the company manipulated data on warehouse worker injuries and ignored internal research that offered ways to improve the situation. Sunday night, the majority staff of the Senate Committee on Health, Education, Labor, and Pensions, which Bernie oversees, issued a scathing report that found Amazon recorded 30% more employee

injuries last year than the warehouse industry average, and that in its own internal research, it linked its productivity quotas to higher injury rates. The company, which has been investigated by Bernie and other, for its warehouse work culture, said the report was, quote, wrong on the facts and that Bernie cherry-picked data and anecdotes to suit his narrative, which is that Amazon is putting profits above people. Yeah, this is a cherry-pickoff because Bernie and his committee thinks that the company had been cherry-picking stats to hide the fact that its warehouses are more dangerous than they might appear. And then Amazon pushback and say, no, you're cherry-picking stats

and especially people because Amazon's main gripe with this report was that it was a lot of lying on anecdotes from a relatively small portion of the workforce. Remember, Amazon employs 800,000 frontline workers. This committee interviewed 130 workers, so Amazon pointed out that that is 0.018% of its hourly workforce. So how can you draw broad conclusions about their warehouse staff when you're only talking to this few amount of people? Have they ever heard of sampling?

I know. How many people could you possibly interview? You can't interview 500,000 people. Hey, I'm just saying what the company said in their report. Yeah, you are right. And this is something that, you know, Amazon has been under intense scrutiny for years. There's another attorney from the Southern District of New York has been investigating allegations as well. So this isn't going away anytime soon.

Apple thinks it's figured out a way to reverse flagging sales. And it's origami. The biggest company in the world is reportedly developing two foldable devices. One, a giant foldable iPad that could unfold to the size of two iPad pros. And the other, an iPhone model that would unfold to a size, slightly larger than its current largest iPhone, a 16 max. Now, Apple has been pretty slow to enter this foldable market, but current foldable technology resulted in a phone too thick for Apple's standards. So it's hoping its slow and steady approach with a slated 2026 release date

means it's entering the market at just the right time to reverse its flagging sales that saw 2024 revenue grow less than 1%. Neil, do we think foldable phones are going to save Apple? Well, we knew about the foldable phones. The new news here was the foldable iPad. So you have two iPad pros back to back, and that might be coming in 2028. So I don't know whether people might want to have a Mac laptop and then a massive foldable iPad. But the problem is people do want bigger screens. But when you ship it, you can't build a screen or you can't ship a screen that big.

It just gets too expensive and unwieldy. So they're going to fold this iPad and hopefully have that crease removed. that's been the biggest technological blocker. I mean, I'm not an iPad user, but I could probably see someone liking this. Yeah, they've, for years, tried to say you can replace your computer with your iPad, which is awkward messaging for a company that also sells, you know, laptops. I don't know. I mean, I think a lot of people have just been tired with Apple for not innovating enough recently.

It's mostly been on the software side or when it comes to iPhones, just a camera update here and there. so they are trying to take bigger swings down and say, hey, you want something different, here's a foldable phone, here's a foldable iPad. It didn't really work with the headset. Oh, yeah, the Vision Pro, that was a big swing and a big miss. So, I mean, I guess it's better that they're taking swings. I don't know if foldable is the right direction for them, though. Apple released the top 10 most downloaded apps from the App Store this year, and coming in at number one for the second year running is Teammu, the Chinese shopping marketplace. Teammu claimed the top spot from TikTok last year and how much.

held on to it likely thanks to the popularity of its ultra-cheap products and its ubiquitous marketing. Coming in second, Meta's Threads. TikTok is number three. We'll see how long that lasts. And four and five are ChatGPT and Google search respectively. Toby, people just love to shop like a billionaire. They do love to shop like a billionaire. Also, you look down all around the list. Amazon is number 20. So Tamu is definitely, you know, leaving them in the dust as well. There was a few interesting things about this year's top 10 list. You mentioned ChatGBT has the fourth most downloaded app. It is ahead of Google search app. ChatTBT didn't make the top 10 last year.

It only released in May on iPhone, so it is interesting to see how much that has shot up. And then one final name I want to call out here is in the top 20 is Max. It's the only streaming service that made on the list. Warner Bros. has low-key been having a really good back half of the year. And I think it's on the back of the interest in Max, only streamer in the top 20. So that's a name that they'd definitely like to. see in that top 20. Remember when people

said that, you know, the change from HBO Max to Max would be the death knell of the streaming platform? I think I said those words. You did. I defended it, first of all. We have it on tape, so Ray and Emily, let's bring that up so we can, so I can have my vindication. Okay, let's wrap it up

there. Thanks so much for spending your morning with us and have a wonderful Tuesday. For any questions, comments, or feedback, send an email to Morningbrewdaily at morningbrew.com, or make like the postal service and deliver this podcast to someone you know who could be a little more informed about current events. As for who that someone is, Toby is here with a sharing idea.

Okay, so it's Secret Santa season right now. So I want you to share the podcast with someone you definitely didn't forget to buy a gift for it. Now, you might think, hmm, a podcast as a gift. Well, to that, I say, package it as giving the gift of staying up to date with the business world, something that arguably is priceless and can even make you money. So maybe MBD for Secret Santa. I'm telling you, it could be the move.

Let's roll the credits. Emily Milliron is our executive producer. Raymond Loo is our producer. Olivia Graham is our associate producer. Eugenwa Ogu is our technical director. Philly Minino is on audio. Neither snow nor rain nor heat nor gloom of nights stays hair and makeup from the swift completion of their appointed rounds. 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.