Amazon Dethroning Walmart? & DOGE Hits Snag in Treasury Overhaul

0:26Race the rudders! Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, from conspiracy theories to the color of the Gatorade shower, everything you need to know ahead of Super Bowl 59. Then a move over Walmart. A new company has laid claim to the title of highest revenue generating business in the world. It's Friday, February 7th. Let's ride.

0:55Good morning and happy Friday. Look, if you're spending an entire paycheck on a carton of eggs these days, you might as well prepare them to perfection. And scientists now say they've discovered the recipe to cook the best possible boiled egg. It'll just take you 32 minutes. In a study published Thursday in the journal Communications Engineering, the scientists recommend putting eggs in a steamer basket, then transferring them between two bowls of water every two minutes, one boiling and the other set to 86 degrees Fahrenheit. height, lukewarm until 32 minutes are up. That process known as periodic cooking yields a velvety yolk and a meaty but soft white.

1:36Toby, my deviled eggs for the Super Bowl party are about to blow people's minds. When I first heard about this study, I was like 32 minutes, way too long. But then I thought a chalky yolk is one of the most tragic substances on earth. I would rather starve than eat a chalky yolk. So I am all in on this method. And I also happen to be a big fan of Gordon Ramsay's scrambled eggs cooking style, which also involves taking it on the heat, off the heat, back on the heat. So I've kind of already done this. If I'm willing to devote that much time to making scrambled eggs, why wouldn't I spend half an hour doing this method?

2:10We have to try it. I will absolutely try it this weekend. It's been lofty, but that perfect texture, that velvet yolk, I think it's worth the extra time. Now a word from our sponsor, Wise Business. Neil, fun fact, I grew six inches my junior year of high school. Good God, how many pairs of pants did you go through? So many, but that is part of growth. You gotta make changes. And if you're a business owner going through change, instead of just wearing longer pants, you have to upgrade your software and build out new systems. And if you grow internationally, that can be a real pain. That's why you need a business account that can grow alongside you.

2:44Wise helps you save money, time, and stress on making payments and getting paid internationally. It's trusted by over 600 ,000 businesses, big, small, and everything in between. Six inches, Toby, really? My poor knees, man. Needed Wise for growing pains. For international payments that grow alongside you, visit wise.com slash business. That's wise.com slash business. This episode is brought to you by State Farm. Checking off the boxes on your to-do list is a great feeling. And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you. Whether you prefer talking in person, on the phone, or using the award-winning app, It's nice knowing you have help finding coverage that best fits your needs.

3:27Like a good neighbor, State Farm is there.

3:32Like a river overtaking the dam that once controlled its flow, Amazon is almost certainly set to bring in more revenue than its rival Walmart this past quarter for the first time ever. For a decade, Walmart has reigned as the world's biggest company by revenue. But analysts project Wally World will announce sales of$180 billion when it reports earnings later this month, while Amazon announced yesterday that it had brought in$187 billion in revenue in the fourth quarter. This was a long time coming. Amazon had been growing at a 12 % clip year over year, while Walmart's revenue growth was just 6%.

4:08As the two have duked it out for the title of biggest retailer in the world, they have also grown more similar. Amazon has invested heavily in groceries, while Walmart has dipped its toe in a Prime-like membership service, built out a robust e-commerce operation, and experimented with advertisement revenue. But Amazon still has an ace in the hole in the form of its cloud business, Amazon Web Services. AWS revenue has more than doubled since 2020 and now accounts for 17 % of its total sales. Neil, despite reaching that$187 billion in quarterly sales to take it above its rival, Amazon did issue disappointing revenue forecasts, which caused its stock to slip, but isn't too much cause for alarm.

4:52No, Amazon and Walmart, this is certainly one of the most interesting rivalries in business. If you look at Amazon's ace in the hole, as you said, it is Amazon Web Services. Walmart has nothing like it. This is a$100 billion business for Amazon, and it's growing double digits every single quarter. Last quarter, it grew 19%. Amazon also has an advertising business that's growing 18%. So if you look at where the growth is for Amazon, it is in advertising, and it is AWS, and it is also in AI, something Walmart doesn't have. Amazon said it was going to spend$100 billion on AI, mostly on data centers and things like that, over the next fiscal year.

5:36So very interesting rivalry. Amazon has a few more cards to play, especially in the tech area. And that's why its market cap is so much bigger than Walmart's. Walmart is mostly a pure play retailer still. And its market cap, despite a very good year last year on the stock market, is still around$800 billion. Amazon has zoomed past$2 trillion. it's interesting because you know walmart gets the bulk of its sales from selling stuff and it's building up these side businesses like advertising digital sales etc whereas amazon is competing in the retail sector just to you know competing on speed of delivery and competing on price and then all their profit comes from these web-based businesses things like aws so it is interesting to see how they are both in the same arena but like one just has this extra web-based thing that really takes it to the next level.

6:27Let's talk about Amazon's AI investment because they kind of shocked investors yesterday when they reported earnings saying that they do plan on spending$100 billion on AI, which is bigger than any other of its big tech peers. And it makes you a little cautious if you're an investor because we just went through that whole deep seek debacle where this Chinese AI company proved that you could train these models for a lot less. So then when you hear we're going to spend$100 billion on AI, we're like, wait a second. I thought you would spend a little bit less because it's more efficient. So we don't have to spend as much money.

7:01But that being said, Andy Jassy was like, listen, we see this big outlay as a good sign for AWS. We wouldn't do it if we didn't think that it would lead to more revenue generation. You got to spend money to make money even at the highest echelons of corporate America. So he still feels pretty confident that this is the right investment to make. Yeah, and that was the common theme across big tech earnings. Amazon was the last big tech company of the Magnificent Seven outside of NVIDIA to report earnings over the past two weeks. And they sounded a very similar tone. Microsoft, Alphabet, Amazon, and Meta, they all said we are going to spend not only the same on CapEx for AI, we're going to spend even more.

7:43Their combined capital expenditure forecasts are totaling$320 billion. billion. That's up from$246 billion in 2024, and that's up from$150 billion in 2023. They all said the same thing. We're going to continue to spend, never mind DeepSeek. So that DeepSeek revelation has not changed plans whatsoever, and we have NVIDIA coming up in the next few weeks, and we'll see what they say. The blizzard of news keeps raging from Washington, D.C., and we're here to shovel it all up for you. First, that deadline for federal workers to take deferred resignations has been extended past yesterday's midnight cutoff by a federal judge who ordered a hearing on Monday to determine whether he'll block it indefinitely while litigation proceeds.

8:27That litigation came from the American Federation of Government Employees and other unions, who in lawsuits alleged that what the government was doing, offering employees the opportunity to resign while still being paid for eight months, was illegal. Bloomberg reported that about 50 ,000 people have so far taken the deal, which is about 2.5 % of the federal workforce. The Trump administration was targeting 5 to 10 % of workers to opt in. Toby, the fate of federal workers now shifts to the courts, but they remain in a state of limbo. Yeah, definitely a state of limbo. The administration is looking at this pause in a different light.

9:01They don't see it as a pause. They're saying, actually, what a great way to increase the number of resignations. So it is increasing that time people can reply to that fork in the road email and say, I do want to take this deferred payment. That being said, we still don't know if it will be legal. There's a lot of challenges that we've covered on the show already about the fact that Congress has not passed a budget for funding beyond mid-March. So how can you guarantee that you will pay these employees beyond that date? So again, we have reached sort of a Trumpian limbo space where he issues an order, some court pushes back against it and it leaves you in the lurch for, you know, a period of time where you're in that period of time right now.

9:43Right. But the thing is they might not wait for these people to take resignations before issuing sweeping layoffs. Reports out yesterday indicated that the Trump administration was preparing an order that would cut thousands of health workers. USAID also is reportedly going to be essentially gutted from more than 10 ,000 employees worldwide to about 290. And we already have reports of small businesses and contractors laying off workers across the economy. And, of course, that is in focus because we have the jobs report coming out in two and a half hours at 830 a.m. Eastern. That won't show all of the chaos that's been enveloping Washington and federal workers and everyone, all the 7.5 million employees across the country connected to the federal government.

10:32But it'll be, you know, it'll be a very important jobs report. And then the next one for February will be even more important. OK, let's move across town to the Treasury Department, where another court has curbed Elon Musk's access to the government payment system that distributes trillions of dollars each year. Following a legal challenge over Musk and Doge's reported entry into that system, a federal judge barred the U.S. Treasury from handing over data from its payments portal to outsiders and limited access to two Doge staffers who can see Treasury Department data, quote, as needed and on a read-only basis.

11:05Then, mere hours after that court ruling, one of those two Doge staffers who was granted access to Treasury data, 25-year-old Marco Elez, resigned after the Wall Street Journal found links to a deleted social media account that supported racism and eugenics. In one post, the account wrote, just for the record, I was racist before it was cool. What does Scott Bessent, the newly confirmed Treasury Secretary, think about all this? In an interview with Bloomberg, he defended Musk's work in his department and said he and Elon are, quote, completely aligned in terms of cutting waste and increasing accountability and transparency for the American people.

11:39He described Doge employees as highly trained professionals and not some roving band running around doing things. Remember, this was very sensitive data that these Doge employees did get access to. stuff like social security numbers, your birthday at home addresses, telephone numbers, bank account information, which was why there was kind of this uproar, even if it was read only access, which I'll actually touch on in a second. You don't want two people that weren't elected, you know, combing through this data. But then Wired actually did report later that they probably didn't have only read only access.

12:13They had direct access to the treasury payment systems, this 25 year old engineer. So it is a little scary to have these unelected people coming in and digging through this system that covers nearly all payments made by the U.S. government and that has a lot of sensitive data on U.S. citizens. Yeah. And that's why I think U.S. Treasury Secretary Scott Bessent was saying everything's kosher here. I'm overseeing everything. I'm in control in that interview with Bloomberg. But again, another push by the Trump administration and Doge that has been sued and blocked at least temporarily by the courts.

12:48There will be a more formal hearing in a few days to figure out what's going on over there. Finally, a spat is escalating over the Panama Canal, one of the world's key shipping routes, after Panama's president accused the U.S. of lying about a deal over American military ships. Here's what's going down. On Wednesday, the U.S. State Department posted on X that Panama agreed to allow U.S. government ships to access the waterway without paying a toll. Remember, Secretary of State Marco Rubio traveled to Panama over the weekend as part of the Trump administration's push to assert more control over the canal and get China to back off.

13:21But yesterday, Panamanian President José Raúl Molino said, huh? We never said your ships could pass through for free. Or in his words, I am incredibly surprised by yesterday's statement. They're making an important institutional statement from the entity that governs U.S. foreign policy based on a falsity, and that's intolerable. After the blowback, Rubio said, OK, maybe you're right. At a press conference. He said that the U.S. expects Panama to remove the fees, but acknowledged that Panama has a process of laws and procedures that they need to follow. Yeah. And actually that process is tied to a 1977 treaty, the treaty that actually originally handed over control of the canal to Panama.

13:58There's a clause in that treaty that requires equal treatment of all canal users. So you can't do these carve outs for specific nations like Rubio and Trump are pushing for. What's ironic, too, is that over the past 26 years, the U.S. has paid$25 million for warships and submarines to pass through. That comes out to less than a million dollars a year. It is not a big chunk of change that we're talking about. It does seem to be more of like a symbolic victory that Trump and Rubio are pushing for because it just really isn't. I mean, look at the percent of the total ships that pass through each year.

14:330.5 percent are U.S. Navy vessels. So it just doesn't affect that many things, which is why it's interesting that kind of this administration is making such a big deal out of, you know, trying to get free passage for these ships. Up next, Stock of the Week, Dog of the Week time. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS. After an initial dosing phase, about 4 in 10 people taking EBCLIS achieved itch relief and clear or almost clear skin at 16 weeks. And most of those people maintain skin that's still more clear at one year with monthly dosing.

15:34Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with EpGliss. Before starting EpGliss, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EpGliss and visit epgliss.lily.com or call 1-800-LILY-RX or 1-800-545-5979. Tuesday on NBC, Jimmy Fallon and Bozema St. John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea.

16:09This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon. Series premiere Tuesday on NBC. It is Stock of the Week, Dog of the Week time, where Neil and I pick one stock that had a perfect sleep score and one stock that stayed up all night scrolling Instagram Reels. Neil, I won the pre-show game of ruin a movie by changing one letter in the title. So I am up first. And my stock of the week is Workday, which saw its share price jump after it announced it was laying off 8.5 % of its 20 ,000 plus employee workforce.

16:47Workday is a workforce management software that you'd ironically probably use to figure out if you wanted to lay off employees at your own business. But the reason investors view its restructuring so positively is because its purpose is to increase its focus on AI investments. Workday is far from the only company rearranging their organizations to make room for AI. Most of big tech from Meta to Google to Salesforce have laid off employees to make room for the only two letters investors care about these days. So Neil, when you see an announcement of layoffs under the premise that a company will redirect those resources towards AI, it's pretty clear that the market will like it.

17:24It's certainly a pattern. Earlier this week, Salesforce also announced it was going to lay off 1 ,000 workers and hire a few in other positions. And that position is salespeople for its AI. Dropbox did this last year as well. The CEO, Drew Houston, said it was a really tough decision to let go of a lot of people and then make room for investments in AI. So it's all about making space for investments in AI. We just talked about Amazon spending$100 billion. A lot of these companies don't have infinite resources like Amazon does to, you know, spend$100 billion. So they need to make cuts elsewhere.

18:02And those cuts are human workers. The fears that many had about AI replacing human work and leading to a lower reduction in the amount of humans that need to work at these tech companies appears to be coming true in 2025. Yeah. Klarna is another big name that has cut a lot of employees to make space and replace them with AI. They say they've saved$10 million annually for using AI for its marketing needs. And then very ironically, Klarna also drastically reduced their usage of software platforms like Salesforce and Workday and replaced them with AI. So it's not just humans. It also is the other software stack that usually are used to run these big organizations.

18:46So it is cuts all the way down. And it is interesting to see how these layoffs are just met so positively by the market. Whenever you say those magic words, it's like, we are cutting costs in this area, putting it towards this area, being AI instead. The market usually tends to like that. Figures I get dog of the week because this one strikes at the heart of my identity. A millennial who grew up in the suburbs and wanted to dress like a skateboarder. Quicksilver, Billabong, and Volcom, popular outdoor clothing brands for skaters, surfers, and the wannabes, are closing virtually all of their stores across the country after their parent company, Liberated Brands, filed for bankruptcy.

19:22The silver lining, or I should say quick silver lining, you can still buy those clothes. The brands will continue to make them just under a license from a different company, but it won't be from their namestake stores. More than 120 of the locations will close in the coming weeks. What went wrong at Billabong? Liberated CEO blamed macro forces like a rise in interest rates, inflation, and supply chain delays, while also criticizing the fast fashion industry for allowing shoppers to, quote, cheaply, quickly, and easily order low-quality clothing garments. Toby, a sad day. Quicksilver was always a must-stop on the high school mall date.

19:57It absolutely was. It is kind of the end of an era, too. So you can blame a lot of things. Obviously, you can blame interest rates, inflation, supply chain lanes. Those are all very valid. But the last thing that its CEO said was shifting consumer preferences, which I think you cannot ignore either. I really think that these brands kind of rode the wave of, you know, the board short era, the, you know, skateboard era. But now if you go to the beach, for instance, you're seeing a lot of thigh out there. You know, five inches. I haven't seen an inseam longer than five inches in a long time. So I really think the thighs killed Billabong, killed Quicksilver, killed Volcom.

20:32These brands that kind of rose a very specific aesthetic to prominence. But, yeah, they aren't going. They're not dying per se. You just won't see them in the malls anymore where you were taking all your dates, Neil. OK, Super Bowl 59 between the Chiefs and the Eagles is two days away. Here is a preview of the biggest business storylines around the game as you apply layers one and two of the dip. Besides Patrick Mahomes and Saquon Barkley, the start of this year's Super Bowl will be the Caesars Superdome in New Orleans, which is celebrating its 50th year in existence as the home of the Saints.

21:04This is a remarkable building that pound for pound may have hosted more legendary sports moments than any other venue in the United States. eight Super Bowls, counting this one, the most of any stadium. Final four is college football championships, heavyweight boxing bouts. It's where college freshman Michael Jordan lifted North Carolina to a title over Georgetown, and Tom Brady became a household name with his first improbable Super Bowl win over the Rams. But time has run its course, and New Orleans may be seating its crown as the top host for championships to Las Vegas, which hosted last year's Super Bowl and has emerged as the new epicenter for live sports events.

21:40So in a way, the Super Bowl feels like both a celebration of the Superdome, an absolute space age icon, but also a retirement party from heavy hosting duties. It's the fifth oldest home field in the NFL and the last remaining of its kind. It is iconic, though, and it is sad because it is aging. It recently underwent a big renovation to try to modernize it. But, you know, New Orleans is one of the smallest cities that has an NFL team in the country. It's always punched above its weight when it comes to hosting events because the city is a very fun backdrop for, you know, things like a Super Bowl.

22:13That being said, it just might be over, you know, it's just over its head at this point because these events are so big now. Vegas looks like it's a better place, you know, take that mantle because it's got more hotel rooms. It's more of a walkable city. It's got multiple things within a certain radius as well. So New Orleans was, you know, kind of the de facto party hosting destination. Now it looks like maybe that time is coming to an end. Yeah. After the last year's Super Bowl, Roger Goodell was like, you can bet we're coming back to Las Vegas. But the Superdome is a very important part of New Orleans and New Orleans history.

22:50It's called, quote, the city's living room because it doesn't just host Saints games, but it hosts conventions, weddings, proms, hundreds of other events. It had the RNC when Pope John Paul II came. He was at the Superdome. And then, of course, you can't talk about the Superdome without its role in Hurricane Katrina. After that hurricane wiped out parts of the city, it served as a refuge for thousands of people. And perhaps the most iconic moment in the Superdome history was the first Saints game after Katrina when there was a blocked punt and the Saints romped at home. and just this feeling of celebration and coming together for that city just still gives me goosebumps.

23:33Another storyline heading into the big game is a switch up happening in the end zone. As Saquon pounds in his fifth touchdown of the game, you might notice that the NFL has switched out its on-field slogan and racism for choose love instead. An NFL spokesperson said that the reason behind the change is tied to the New Year's terrorist attack in New Orleans, as well as other recent tragedies like the LA wildfires and the plane crash in DC. However, NFL commissioner Roger Goodell did recently reaffirm the league's commitment to DEI in his annual Super Bowl address, including policies like the Rooney Rule, which require teams to interview minority candidates for coaching and executive positions.

24:13You know, this is the first time since 2021 that people watching will not see end racism stenciled on the field. Yeah, the NFL certainly made a lot of headlines this week with the end zone change and also Roger Goodell's statements around DEI at a time when many Fortune 500 companies are backing away from DEI. It's very interesting that the NFL has put its foot in the ground and said, no, this is very important to us. Goodell said, quote, we got into diversity efforts because we felt it was the right thing for the National Football League and we're going to continue to do those efforts. That hasn't stopped criticism from being late on the NFL for its coaching decisions.

24:56This year, seven of the 32 NFL teams have a head coach that are people of color, which critics say is not close to enough considering the amount of black and other people of color athletes who are participating in the NFL. And then in terms of the pipeline to head coaching positions, there were zero offensive coordinators, people of color in the NFL this year. The offensive coordinator is, you know, the stepping stone to becoming a head coach. So you can say NFL is talking the talk. They've had this Rooney role for since 2003, but it's not necessarily walking the walk. Moving on, this year's Super Bowl is also a feast for people who dabble in conspiracies.