Morning Brew Daily - Why Apple's Stock Just Tanked & Workers Are Unhappier Than Ever

Episode Date: September 8, 2023

Episode 143: Neal and Toby discuss the reported iPhone ban in China and how it it has plummeted Apple's stock over the last week. Plus, why workers are unhappier than ever and Elon Musk reportedly ordered Starlink to be turned off during the Ukrainian War. The guys also share their stock and dog of the week and how Drake's AI ghost writer is chasing a grammy. Finally, what are the most photographed restaurants on yelp. Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.c.com slash U.S. slash brew AI. That's pwc.com slash us slash brewAI. Good morning brew daily show. I'm Neil Freyman. And I'm Toby Howe. On today's pod, new reports show that American workers are feeling extra unhappy these days. So we'll get to the bottom of the great gloom of 2020. We'll also discuss how Elon Musk is changing the course of the Ukraine war with the flick of a switch.

Then Chinese smartphone maker Huawei shocked the world by dropping a 5G chip way more advanced than anyone expected. Plus, we've got the stats from Yelp's most photographed restaurants of the year, and it ain't your local Golden Corral. It's Friday, September 8th. Let's ride. Toby, I have to ask you, why did you glue your feet to the ground of the U.S. Open last night? Oh, Neil, I have my reasons. But for anyone who doesn't follow our Instagram account, which you should at MB Daily Show,

I did a Toby takeover last night at the U.S. Open. My main goal was to try and secure the Honey Deuce Cup, and I succeeded where Neil failed. It's on my desk right now. But then, yes, the match was interrupted by these climate protesters, one of which glued his feet, his bare feet to the ground. It was amazing, Neil. The crowd instantly united around not liking this person,

as you might imagine. You pay a lot for a ticket. You don't want your experience disrupted like that. But also a fun detail was my section was pretty far away from where things were going down. And so everyone had their iPhones out and we're using kind of the 14X zoom feature kind of as a telescope to look at what was going on. So it truly felt like an Apple ad for me

with everyone using like this great feature. So yeah, it was amazing. Barish on the binocular industry. Yeah, and bullish on the iPhone industry. Okay, now let's jump into our first start of the day where Apple is taking a bit of a bruising over in China. Yesterday, China announced plans to expand a ban on the use of iPhones in government departments in state companies. Now, foreign devices like iPhones have long been discouraged in some sensitive departments, but to see the ban expand in scope is not great for Apple. Despite the rising tensions between the U.S. and China, China is still a massive market for Apple. Last year, it pulled in $74 billion in sales in the region. And even as Apple tries to diversify away from

China, it's still a major manufacturing hub for the company. But the real nasty surprise for Apple this week was that Chinese smartphone maker Huawei shocked the world by releasing a smartphone equipped with a 5G chip. Most people in the industry didn't think it was possible for a Chinese company to produce technology like that, given sweeping efforts from the U.S. government, to restrict access to chip technology in the region. So, Neil, all of a sudden, Apple's future in China, where it has enjoyed three decades of sales growth, looks to be a little bit on shaking footing. It's kind of like a double whammy here. I don't know if they're related. Some are speculating that they are.

This Huawei new phone coming out, I think it's called the Mate 60 Pro, which is. is quite good and much, you know, much better than anyone suspected. And at the same time, this ban. So I just want to back up if anyone recognizes the name Huawei, it's because there was a lot of news about this company in like 2018, 2019 during the trade war years. They want to build, they're a 5G telecom equipment company in addition to being a smartphone maker. And they wanted to build all this 5G telecom equipment across the Western world, to which a bunch

of Western companies like the UK, the Netherlands. the U.S. said no out of fears that it would be used by the Chinese government to snoop on our citizens. So the U.S. hit Huawei with a ton of sanctions, like restricted a lot of access to U.S. technology, and crippled this company. This company was like in the dumps. And then slowly, but surely over the past few years, they've been progressing, progressing, progressing, leading up to this moment where they absolutely just shocked the world. It's kind of like a Sputnik moment for China here. Yeah, I've seen the take basically is that our chip ban on their on Huawei kind of backfired on us. And what it did instead was spur this huge innovation moment and they

got them to this point that we didn't think that they could get to. And then also a lot of people are saying to have they violated these sanctions or has someone in the U.S. violated these sanctions? Because not only did they produce the chip in order to create a 5G enabled phone, they also produce all the other components that you need to run a 5G phone like power amps, switches, filters, all these other parts of what makes up a smartphone. So a lot of people are scratching their heads saying, like, how did they actually get to this point, like 10 years before we expected them? Yeah, and the U.S. is officially investigating what's going on here.

You know what I think we need is these guys who took apart the McFlurray machines to grab this phone and see what's inside because no one actually knows. But these guys are so good at it, they can fix a McDonald's ice cream machine. I think they can figure out what's going on here. But this has been not good for Apple. It's lost $200 billion in market cap over the past two days. Shares are down about 7%, which is a lot for Apple because it's worth more than $2 trillion. Yeah, and then zooming out, I mean, we have the next iPhones are going to be unveiled this week, setting the stage for the holiday period.

So this is like a really, all of a sudden, there's a lot of focus on Apple where, I mean, in the past couple of years, it's literally just been Apple. kept getting bigger and bigger, just has been cruising through little rough patches here and there. But now we have a lot of focus on this next Apple event. Obviously, the USBC is going to be released, or we're hoping it's going to be released. So that's probably going to be the major news on that front. All right, let's move on. Maybe all those cringy trends of quiet quitting, bare minimum Mondays, focus on anything other than work Fridays.

I just made that up. Have a kernel of truth. Because a few recent reports show that employees in the U.S. are really disgruntled with their situation. American employees are now more unhappy now than they were during peak COVID, says a new report from HR Platform Bamboo HR. This survey of workers across 1,600 different companies found that employee sentiment has dropped significantly since 2020 and has declined at a rate 10 times faster than

the past three years. So don't trust this survey. Okay, let's head to the ADP Research Institute, an arm of the major payrolls company, which just took the pulse of American workers, and found, pretty much the same thing. Employee engagement, resilience, and connection with their employers dropped from June last year. Why is this happening? And this could be any number of reasons from pay not keeping up with inflation, the prospect of layoffs, return to office mandates, but they're all conspiring to create what Bamboo H.R. calls the great gloom of 2023.

Yeah, I mean, there's a lot to unpack in these industry reports, but definitely like the big thing was a returned a push back against the return to the office policies that you're seeing pop up everywhere. I mean, we just saw Grindr, which is the dating app company. They kind of mandated that employees come back to the office two days a week. And 45% of the company resigned. They had 178 employees, 45 people, 45% just said, all right, if you're going to make us come in the office, we're just not coming back at all. And you're kind of seeing that across lots of companies. There was Deloitte, there was this Deloitte report that said if we had to go back to the office five days a week, 66% of remote workers said they'd quit their jobs, which honestly, I feel like that's low.

Because if we just had 45% of Grindr quit for two days a week, you'd expect the five day a week crew to numbers to be even higher. It does seem like there were other issues going on at Grindr. They were attempting to unionize and the company was pushing back. So that may have led to maybe a greater resignation than usual. but there's no surprise here that tech is the tech workers are declining in happiness, the fastest out of any industry. And I think that's because the CEOs in that industry have done a complete U-turn on remote work in 2020 and 2021.

It was like, yeah, you can work wherever you want. We're super remote friendly. We can all be super productive. And then they are completely changing their tune in 2022 and 2022. It's been this slow burn of being like, yeah, come back. Okay, we want you to come back. right, now you need to come back. Yeah.

And you see CEOs like Andy Jassy being, you know, stating flat out that if you don't want to come back to the office, then we don't want you to work here. And that may be a mechanism to also, you know, soft lay off some employees that they don't want coming back. So also from this HR study from Bamboo HR, there were some other nuggets. And we got to see what are technically the happiest and unhappiest industries. The happiest industry was actually construction. And a lot of people were just pointing to the fact that on,

going work in high wages have just helped make that industry happier relative. And just working with your hands outside. Yeah, I don't know about that part. It's probably the pay and the, yeah, because I don't know. I mean, it's still a tough job. And then the unhappiest industries are education and health care. Both of those, you can kind of posit why it would be the case. I mean, education, very low salaries, very, a lot of work. Same thing with health care, to be honest, and especially coming off the pandemic, just burnout is a big issue too. So that's the happiest and unhappiest industries. All right, moving on. I know we are both pretty hype for Walter Isaacson's biography of Elon Musk that hits bookstores next week, but excerpts from the book have already been

leaking and they are juicier than a Georgia peach. According to an excerpt of the book obtained by CNN, last year Elon Musk secretly told engineers to shut off Starlink satellite communications near the Crimean coast to foil a Ukraine-Sept. sneak attack on a Russian naval fleet, Musk was spooked by the prospect of Russia retaliating with nuclear weapons, telling Isaacson Starling was not meant to be involved in wars. But Starlink has been very involved in the Ukraine war from almost the beginning. Its internet-beaming satellites have provided vital communications infrastructure to Ukraine after Russia invaded and wiped out a lot of the country's connectivity.

So when Musk ordered Starlink to be shut down, like he did in the case of the sneak attack last year, Ukraine's military gets completely discombobulated. It almost can't function without Elon's goodwill. So at a high level, this episode shows just how much power Musk has accumulated through SpaceX and Starlink to the point where U.S. military leaders consider him an unelected official. It's crazy to think about, but it's true, that wars and the current geopolitical order might hinge on the whims of one meme-loving billionaire.

I know. And I mean, this story kind of or this excerptens back to the Ronan Faro piece that was released earlier, this big investigative deep dive into Elon Musk and his relationship with the powers that be, the U.S. government. I mean, you have NASA giving major contracts to SpaceX to figure out how to better launch satellites. Then you have him kind of putting America's EV future on his back, especially with the charging stations. And then obviously you have the startling situation in Ukraine.

And just to be clear, though, like the reason he was nervous about this Ukrainian attack was he thought, in his personal opinion, based off his conversation with other Russian officials, that it would escalate into maybe nuclear war in Crimea. But again, like, that's the alarming part is that it hinged on his opinion of the situation. And he's literally holding sway over what does and doesn't happen in this Ukrainian war. And a lot of people think he's kind of in Putin's pocket a little bit because he put out that peace plan that ceded a lot of territory to Russia. So this guy is just a huge power broker.

not only does he own SpaceX, Starlink, you know, Tesla and energy, the future of energy here, but he also owns Twitter or X now. And that's where a lot of governments used to communicate. And in the previous regime of Twitter, a lot of state-back propaganda outlets from Russia, China, and Iran were flagged as such. And they were demoted on people's feeds. And he removed those. So now, you know, a Chinese propaganda arm, a Russian propaganda arm can can, can, post a lot on Twitter and they'll get into your feed.

So that was, and the reason this is alarming is because Elon Musk is not elected by anybody. He is, he has shares in Tesla and all of these other companies. So he's beholden to his business interests. And where does Tesla sell a lot of its vehicles? Where does it get subsidies to build plants is China? So this is why this is alarming, uh, the national security apparatus. Yeah, but honestly, though, some of what he's doing is at odds against some of his best interest in business because one of the other excerpts from this book was that part of the reason

why Starlink is active in Ukraine was SpaceX was just doing it on their own goodwill. They were footing the bill. And so SpaceX officials were trying to get the U.S. government to pay for Starlink being up. And the president of SpaceX was really mad because he said he literally had a $145 million check ready to hand it to me from the Pentagon. And Elon Musk tweeted, the hell with it. We'll just keep funding the Ukraine government for free. And so he'd like undermine this deal.

So it is this weird thing where the power he gets from being able to pull these strings is even superseding money making from the companies that he owns. So it is an interesting thing to see for sure. All right, Neil, 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. Or get $50 off the select Weber Spirit grill and bring big flavor to your backyard. Then set the scene with Hampton Bay string lights that bring it all together.

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Learn more at Windows.com slash student offer. While supplies last, ends June 30th, terms at AKA.m.m.S. College PC. Okay, Neil, it's time for our Friday segment, Stock of the Week, Dog of the Week, where we bring you one stock that just landed the first ever quad axle and one stock that forgot to take its skate guards off. As always, we are just humble podcasters, so please do not take any of this as financial advice. Neil, you won the pre-show Mario Cartray, so you're up first. What's our stock in the week? Wow, we went from Winter Olympics to video games there. Either way, I love the opening. Okay, my stock of the week is Soho House.

shares of the London-based membership club are up 12% this week after its CEO revealed to Bloomberg that is plotting a big expansion across the United States. What is Soho House? Well, I've only been allowed in twice, but it's an exclusive membership club that's geared towards creatives instead of buttoned-up finance types. Very attractive people go there to eat, drink, socialize, and the one in Dumbo in Brooklyn has a pool that overlooks Manhattan. It's quite bougie and costs $4,900 a year.

Soho House does have locations in maybe. U.S. cities like New York City and Los Angeles. But as executives think there's lots of opportunity and wealthy people in other metros as well, like Portland, Oregon and Charleston, South Carolina. So it's planning on opening up spots there as well as for other cities. But to me, the most interesting part of Soho House's expansion is that it's part of this wave of companies that cut their teeth on the coasts, and now they're attempting to conquer Middle America. So Sweet Green and Chippole, two chains that originally catered to downtown office workers, are both planning expansions in smaller towns across the country. Sweet Green is even adding salami and

barbecue sauce to some of its folds. If you aren't convinced, it wants to expand its user base beyond yuppies in Flatiron. It's so interesting to me because Soho House, when it went public, didn't do very well. Like, their shares halved in their first year post-IPO, but now they're up 50% since the beginning of this year. So clearly investors are kind of on board with this expansion plan. But to me, it's such an interesting and fine balance between you want to keep the mystique and the exclusiveness, but at the same time, you need to grow. You're a public company. And so, so I think the way Soho House navigates this is they keep this really chunky waitlist. And so they have 95,000 people so they can always point to that number and say, look,

we've got 100,000 people who want to get in that we're denying right now. So I think that's how you balance. If I'm the CEO of Sohouse, I go, let's keep the waitlist chunky, but still keep opening these other locations. That's my playbook. That's pretty good. Do you think we would get it in if we applied? I hope so. I don't know. That's, it's always like, if we were the 95,000th and won, your person. It's like, it preys on like your popularity. Like, wouldn't I be popular enough? I mean, they're so, it's pretty nice in there, I got to say.

Yeah, let's, you've been twice. I've never been. So you're already ahead of the game. Got to have some friends. Okay, Neil, our dog of the week is Manchester United. Yes, Manchester United, the Premier League football club is a publicly traded company. And that company is not doing well. Shares of Manu are down nearly 15% this week after reports that the club.

owners, the U.S.-based Glazer family, won't go through with a sale of the team after all. So Ineos founder Jim Ratcliffe, who is Britain's richest man, as well as a Qatari billionaire, had both been engaged in serious talks to buy the club from the Glazers, but apparently neither has met the family's asking price of around $7.5 billion. Neil, the Glazers are one of the most hated families in English sports right now, as they've repeatedly classed with supporters over the years, pretty much since buying the club back in 2005. fans never really got over the fact that they borrowed 500 million euros against the club

in order to finance the deal, which plunged it into debt. And now 18 years later, there's still obviously a lot of tension in the relationship. I just love how angry English soccer fans get at their owners, and they stage these very intense protests, way more intense than what you saw last night at the U.S. Open. Toby, as a man you fan, do you want the glazers gone? Well, it's two sides of the coin, because they've actually invested a ton of money in buying players,

whether those were the right players to buy is definitely up in the air. So they still are investing in the club, although the stadium's kind of getting a little rickety. So I want them out at this point because there's just too much tension, and they often hold on to players who have bad attitudes because they don't want to spend more money on new players. So yeah, and we're not doing that well on the pitch. We've lost two of our first four games. You know what's doing well is Liverpool. Oh, my God.

And here's my stat for Liverpool. I saw us on Twitter yesterday. Since signing for Liverpool, Muhammad Sala has received more yellow cards from celebrating goals versus Manchester United at Anfield, Liverpool's home base, then Manchester United have scored goals there. Okay, that's a disgusting.

Why did you have to do that to me on this Friday? Oh my gosh, that's an incredible sign. He is quite good. All right, our second to last story, remember that AI generated Drake song that went viral a few months ago? Well, it could win Song of the Year at the Grammys. The anonymous creator of the song Ghost Writer submitted it for a Grammy in both best rap song and song of the year.

And in response, the CEO of the Recording Academy, Harvey Mason Jr., said it would be absolutely eligible because it was written by a human. As Morning Brew Writer, Molly put it in this morning's newsletter, it might be the biggest sign yet that mainstream music is entering its AI era. And Ghostwriter wants to take us there. Not satisfied with Grammy eligibility, the team behind the anonymous music creator, just released a new AI-generated song, mimicking the voices of Travis Scott and 21 Savage. And in a post below, the release declared, the future of music is here. Artists now have the ability to let their voice work for them without lifting a finger. They told the rappers, if you're down to put it out, I will clearly label it as AI,

and I'll direct royalties to you. Respect either way. Yeah, I think it's really smart from Ghost Rider or the team behind Ghost Rider to align himself with the artists themselves, because, again, this could feel like an ex-execis. essential threat to an artist by saying, hey, we're literally cloning your voice in replacing you. But he's kind of framing it as we're actually giving you more leverage. You can make money now without lifting a finger. You can get more output from less input, which is kind of the whole promise of AI. So I thought that was a really savvy move from Ghost Rider. And then it's also just, I would,

I've said this before and I'll say it again, but I would hate to be the people making the rules for the Grammy nominations because it's such a gray area, like how much AI is too much AI. Obviously, like, you've had some Beatles songs come out with touched up voices of John Lennon. So you need, like, why would you deny, like, a new Beatles song just because it has a little AI in it? So there's so many little different nuances to everyone, but I think it's smart that the Grammys are embracing AI. Yeah, the thing they have to. And the guy, Harvey, Mason, Jr., he gets it. And he's, he called up Ghost Rider. Ghost Rider has an incredible reputation right now. But this guy is, or this team, it's a team behind it, is super savage. And,

They are doing things very thoughtfully, it seems. The song itself, I mean, I was listening to this morning. It's really not bad. I think that's the thing. It's a good song. The technology has come to the point where you can produce viable songs. So the CEO of the Recording Academy called up Ghostwriter and said, we need to talk. Like, I really want to hear what your thoughts are about AI and music.

And Ghostwriters showed up in costume in disguise with a voice enhancer, a voice distortor. So completely played the part. And I think the whole mystique. around this creator is definitely playing it up. But yeah, this is something that not only the Grammys are contending with, but record labels too and they want to protect artists IP. So we'll see how this shakes out, but it definitely seems like the AI era of music is here. The AI era of everything is here and you're seeing that play out across the creative disciplines. I mean, it's a big sticking point in the actor and writer's strike about what happens to their likenit,

the actor's likeness and the written works and all of the intellectuals, copyright intellectual property copyright protections around these creative works so we'll see how it plays out but it would be crazy if this song won an award yeah i don't know if it will the problem is also it needs to have commercial viability that's one of the other planks of getting nominated or awarded a grammy is you have to be able to sell it and when this song originally came out it was on spotify you do music all of those but they took it down uh so now the new song that um what's his name Travis got and 21 Saturday just released is just on like the social media services. Still bangers probably won't win though. All right, Neil, for our final story, I want to talk about the most photographed restaurants in the U.S. Yelp released its annual report on where

people were snapping away the most yesterday, and we have a repeat winner. For the six year in a row, Gordon Ramsey's Hell's Kitchen located on the Las Vegas strip was the most photograph place to eat on Yelp. In total, four restaurants from Las Vegas clocked in in the top 25. New York came in with three, including the famous cats delicatessen and Harry Potter, New York. But it was California who topped the list with five restaurants in total. Some other takeaways from this list, Neil, Adela's country eatery in Hawaii was the highest reviewed and the only one on the list to get five stars from Yelp eaters, while Gianni's, an Italian place in Miami, was the lowest rated at three and a half stars. Neil, any surprises? Have I been there?

Not so, no, to Adela's, anyway, no surprises, it's Vegas. It's Vegas. You're supposed to take pictures. It's the whole point. It's not about substance. It's about the appearance of substance, but this beef Wellington. Right. It's all about the beef Wellington.

I went through their menu and thought about which would be the most photographed, and I saw the sticky toffee pudding. That would probably get it. The Beef Wellington, obviously, and then maybe the lobster risotto as well. We should make the Beef Wellington. I would do it on film because it's very famous and you get that cross-section. It's all about the cross section. Did you see the video of this chef?

Did I show you the chef on one of Gordon Ramsey's reality shows? He made the beef Wellington, and he presents it to Gordon Ramsey. Gordon Ramsey takes a bite, so dramatic and was like, said something like, this was as good as I've made it, and the guy just starts weeping. Just weeping. I totally relate to that because the amount of pressure you're under on those cooking shows, I'm under pressure just cooking alone in my house. I want to cry, so doing it in front of Gordon, I give him a pass. So talking about, you know, are you a phone eats first guy? Oh, phone eats first.

Yeah. No, are you kidding me? I'm hungry. Well, maybe you should because there are scientific studies that show that when you take a picture of your food first, you enjoy it more. Oh, interesting. Because of things like delayed gratification and it leads to increased saving. Savoring. I'll give the actual scientific quotes.

Momentary active delay in consumption, which increases the savoring associated with consumption of pleasurable foods, and in effect increases attitude and taste evaluations of the experience when consumption actually takes place. So that is all to say, if you take the time to take a picture of your food, you're actually going to enjoy it more after. You can give me all the scientific literature you want. There is no way I am letting the phone eat first. Hobie eats first.

All right. That is our show for today. Have a wonderful weekend. Enjoy watching tennis. Go Coco. Football or whatever else you're up to. And as always, go birds. Email MorningBrewdaily at MorningBrew.com is open 24-7 and we'd love to hear your thoughts on the show.

Let's roll the credits. Emily Milliron is our editor and producer. Samantha Velas and Raymond Loo are associate producers. Isabel Wynn is our technical director. Billy Menino is on audio. Hair and makeup is not happy at work. Okay, join the club. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. I wish you all well. Own it all. Pay off your home. Travel for life. drive a Ferrari. In celebration of the world premiere of the Monopoly big board buck slot machine by Aristocrat Gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package. The biggest prize in Yamava's history. Club Serrano members can earn daily

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