Americans Have Bad Vibes on Economy & UK Demands Apple’s Encrypted Data

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0:27Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, consumer sentiment is way down, inflation expectations are way up, Are Americans souring on the economy? Then the Super Bowl was kind of a blowout, but the ads, they were also honestly kind of boring too. It's Monday, February 10th. Let's ride.

0:52Well, that was a spanking. The Eagles, coasted by the Chiefs 40-22 to win the Super Bowl, avenge their loss to Kansas City two years ago, and prevent the Chiefs from winning a historic third straight championship. just utter domination by the birds. But many of you won't be around to discuss the game and the commercials at the office today. 22.6 million people across the country plan to miss work the day after the Super Bowl, according to the Harris poll, which is up 40 % from a year ago. Now, whether these numbers are accurate or not, who knows? But here's my question to the NFL. Instead of making everyone have a brutal Monday, why not just move the Super Bowl to a Saturday?

1:32Well, Neil, Roger Goodell, the commissioner of the NFL, has answered that very question. It comes down to ratings. According to Goodell, the reason we haven't done it in the past is just from an audience standpoint. The audiences on Sunday night are so much larger, so you got to feed the ratings machine, even if it means giving 22 million Americans a case of a Super Bowl flu, which, by the way, Neil, shouldn't you be partying in Philadelphia right now or something? My heart is on Broad Street. My body is on 6th Avenue. I like that. married to the game. We will discuss the big game in more depth later in the show.

2:09So stick around for that. Now a word from our sponsor, wise business deal during the pandemic. I went through a baking phase, but one time I accidentally substituted salt for sugar. That's not a baking phase, Toby. That's a, Oh shoot called poison control phase. Hey, I never did it again, but it did show me how one wrong move can lead to disastrous results. Same goes for managing international payments for your business. If you mess up cookies, they might taste bad. But if you mess up payments, suddenly your suppliers are blowing up your phone, asking why they got paid half of what they expected.

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3:18This is a huge opportunity. This is the battle for the next big idea. This 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. Trade war 2.0 between the U.S. and China has officially kicked off. Starting today, Chinese tariffs on$14 billion worth of American exports go into effect. One of Beijing's responses to President Trump's announcement of 10 % tariffs on Chinese goods last week. And then last night, in a surprise move, Trump also said he plans to impose 25 % tariffs on imports of steel and aluminum across the board to every country.

4:00The flurry of tariff announcements in the past month, whether they've been delayed or not, like in the case of Canada and Mexico, is starting to have a significant impact on Americans' views on the economy. On Friday, reports showed that Americans across the political spectrum have become increasingly pessimistic over the economy and think higher inflation will rear its ugly head yet again. Here's the data. In a closely watched University of Michigan survey, consumer sentiment fell about 5 percent to its lowest reading since last July. So levels are lower now than they were before the election.

4:33At the same time, inflation expectations are surging, with Americans predicting 4.3 % inflation in the year ahead, up from 3.3 % the month before. That full percentage point jump in inflation expectations is almost unheard of. It's only the fifth time in 14 years we've seen such a big one-month rise. Now, it's not all bad. The jobs report released on Friday showed strong employment gains in January and an unemployment rate that ticked down to a very low level of 4%. But with all the uncertainty and confusion related to tariffs, Americans are turning increasingly negative on the economy. Yeah, it seems the Trump bump was short lived.

5:11I mean, we have these tariff threats. We have these tariffs that are actually being carried out. These pretty crazy stock market swings as well as well as a ton of executive orders that, you know, get issued and then immediately rescinded. It's all caused Americans to feel a lot more pessimistic, a lot more uncertain about the economy than before Trump took office. Remember, immediately after Trump's victory, consumer confidence went through the roof because he was going to be this very market first. He wanted sentiment stayed elevated the entire run up to the election in anticipation of Trump taking office because he won the awful office by pledging to improve the economy, to bring down inflation.

5:51Those two things, obviously, it's only been a month into his administration, but those two things haven't happened necessarily, which is causing consumer confidence to start to appear to be a little more shaky. And uncertainty is manifesting in other ways as well. I don't know if you've visited the Bank of England's gold vaults recently, tried to withdraw some gold there. Well, you can't because there is an eight-week-long line to move gold from the Bank of England to the United States. And that is because of this uncertainty around potential tariffs coming on to the EU, the UK, and it possibly could hit gold.

6:27So right now there's a very interesting arbitrage situation in the gold market where prices in the United States are higher than they are in London. So there is very long, as they would say in England, queues to ship these very heavy gold bars from England to the United States. And that is all tied into this general uncertainty that traders have over what's going to happen in the economy moving forward. And finally, you mentioned Friday's jobs report. This jobs report was also the one where you do some data adjustments that happens at the start of every year. And what we saw in 2024 was that there were just a side of 2 million jobs added over 2024.

7:05That's around 166 ,000 jobs per month, which is a pretty solid rate, actually. That is pretty much dead on with what we saw before the pandemic in 2019. As for January's jobs report, though, there has been a little bit of a concerning trend. It was solid overall, but you have started to see that some of the churn that the job market needs to, you know, operate in a healthy manner has been slowing down. We've talked about this on the show before. People are not, you know, quitting their jobs. The quit rate is down a lot. So there isn't a lot of movement in the job market, even though you are seeing pretty solid growth still.

7:39And there were some external factors as well. You know, a lot of sometimes weather and illness can affect January jobs report as well as some of the natural disasters we saw, like the wildfires in California. So it has been a good start to the year. We're still seeing solid jobs numbers. But when you factor in the fact that rates are still elevated, the jobs market isn't, you know, popping off anymore, that two factors could also contribute to some of these feelings of uncertainty that we've mentioned so far in this story. Security officials from the UK are knocking at Apple's backdoor, asking the privacy focus company to allow them to snoop around encrypted content that users upload to their iCloud.

8:20According to the Washington Post, the British government issued an order, which is called a technical capability notice, last month. It's a criminal offense to even reveal that the government has made a demand, which has put Apple in a rotten spot. Does it acquiesce and break its privacy promises to its users? Or does it cease to offer the encryption technology so as not to run afoul of the order? The UK justified serving the notice to Apple by saying that end-to-end encryption makes it easier for terrorists and child abusers to hide illegal activities from law enforcement. But tech companies have long resisted being used as tools for governments to spy on their users.

8:58It's also a slippery slope. If Apple is forced to give in to the UK's demands, then other nations like the US and China will likely make similar asks. So, Neil, big privacy showdown brewing here with much larger implications for how tech companies and governments interact. Totally. There is no known precedent in major democracies for a government to go knocking on a tech company's back door like this and saying, hey, we know you have encrypted data on users. Let us see them. And the big implication here is it's not just for English people or British people. It's for the entire world. So any Apple user who uses this feature, and we should say it's an opt-in feature, you're not on this by default.

9:40If you want to encrypt your iCloud, you can, but you do have to go through some steps that Apple can take you through. But the fact that it implies globally is absolutely sending a chill down tech companies' spines and privacy-focused groups as well who say that the government should not be doing this, not be asking tech companies to allow governments to snoop on their users. Right. And I said it puts Apple in a rotten spot. That's not just a pun. That is so true because Apple touts privacy as one of its core values. They literally describe it as a fundamental human right. They've made it such a big selling point for users.

10:17So if they have to give into this technical notice, one, it will just shred their reputation because you can't be this privacy-focused company, but then also let governments have a backdoor into their users' data. So they'll probably just cease to offer this protection. It's called Advanced Data Protection. They've had it around since 2022 to encrypt user data. They'll probably just stop offering that in the UK rather than give in and shred their reputation when it comes to privacy. Now, what's interesting is law enforcement has had a very interesting relationship with encryption. So for the past few years or until recently, they were very anti-encryption because they want to see certain communications to prevent crimes.

11:01And so they were going to war with tech companies and saying, let us see this encrypted data. Users, we do not want you to encrypt things. So we can we can see in an Apple had this big showdown with the FBI in 2016 over the San Bernardino shooters phone where Apple actually won in a court case against the FBI. The FBI wanted them to unlock the shooter's phone and they said no. And then they then Apple won. So law enforcement was very anti encryption until a few years ago when the threat of Chinese hacking operations became a little more prescient than than this other consideration. So they said, so now the FBI, a bunch of other Western countries except the U.K.

11:41said, OK, we actually think you should be using encryption because the threat of hacking from Chinese operations is more risky to us than what we need from you to prevent crime. So that is what the way the world apparently has been shifting is toward encryption. The UK has zagged where others have zigged. And that's why privacy groups, tech companies say, UK, you're becoming a tech pariah rather than a tech leader. A financial earthquake is about to hit the world of medical research. Today, the National Institutes of Health will begin implementing sweeping cuts to overhead funding for research grants.

12:17The NIH says this will save taxpayers more than$4 billion when it announced the move on Friday. But scientists have pushed back fiercely, saying that slashing the budget will halt progress on life-saving medical innovations and threaten jobs, medical research institutions, and regional economies that depend on NIH funding. To understand the controversy, you first need to grasp how NIH funding works. When the agency awards a grant to a scientist, an additional percentage of that award is provided to the scientist's institution to pay for infrastructure that supports the research. Think things like lab equipment, utilities, hazardous waste disposal, and more.

12:54It's a pretty sizable chunk that goes to overhead. Of the$35 billion awarded to grants in fiscal year 2023, 9 billion, or 26%, went to those so-called indirect costs. Sometimes the rate can be much higher, like in the 60s. So the NIH under Trump says that's wasteful and that rich universities should shoulder more of the burden. They're now capping indirect reimbursements at 15%. Scientists say, okay, Maybe Harvard can afford to make up the shortfall, but many, many other institutions can't. And critical research, jobs, economic growth will dry up if this funding is cut off. And this is because the NIH is truly an economic force.

13:34It is the leading funder of biomedical research in the world and supports 412 ,000 jobs across the country. Yeah, there are cascading effects to this. A lot of people will lose their jobs. Clinical trials will start to slow down as well. A lot of research goals will go unmet because researchers have pushed back and say, like, yes, of course you want to support direct science. Those are the direct costs. But you also need to fund the indirect costs to, you know, subsidize the infrastructure necessary to carry out those research things. I mean, say you need a really expensive new electron microscope.

14:07You can't afford to buy it yourself, so you go to the NIH for a grant for that. But then it's also just really mundane stuff like heating the buildings, you know, paying personnel. So it's not just the fancy stuff. It's just everything you need to support this infrastructure. Also, there was pushback, too, against this idea that these very rich institutions like Harvard, Yale, these research facilities can make up the difference with their endowments. School endowments are not just this slush fund that you can go in and out of and pull money from willy nilly. They have pretty intense limitations that make it hard for schools to draw them down too quickly.

14:44So you can't just post a graphic saying, look at how big Harvard's endowment is. They can definitely afford this. There are limitations when it comes to how you can use an endowment. And indirect costs have been criticized before. The Government Accountability Office in 2016 said that there were risks that they present waste and that this was an aspect of government spending that could be brought more into control. in the government, the NIH, Trump administration, in announcing this move, said, well, private foundations don't do anywhere near these indirect cost reimbursements as the NIH. Many private foundations say the Robert Wood Johnson Foundation, 12 percent goes to indirect costs.

15:22Gates Foundation, 10 percent for indirect costs. So they're pointing to private donors here and saying, well, we're way out of whack with the private sector here, the private philanthropic sector. So that's why other reasons why we need to bring this down. So that's their argument. But yes, cascading effects and a disproportionate effect on certain cities and regions that have become what they call meds and eds economic base. So I'm thinking Pittsburgh, Nashville, Chapel Hill area, Research Triangle. These are the areas that will likely see a bigger impact. The University of Pittsburgh, for instance, is getting 25 % of its NIH funding cut, which is$130 million.

16:06And I was also in Birmingham, Alabama a few years ago. That city runs on UAB. That is the largest employer in Alabama. The medical research center there is massive. You can't walk a single street without seeing another UAB building. So these are the areas that will be hurt. And we'll see what happens going forward like many other Trump administration executive orders and actions in the first few weeks. There have been legal challenges pushing back. They've been tied up in the courts and you can bet university lawyers everywhere are pushing back on this because they don't want to see all this critical research dry up.

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18:24Up first, old celebrities. Meg Ryan and Billy Crystal recreated their deli scene from When Harry Met Sally, except this time Sally's enthusiasm was for Hellman's mayonnaise. Harrison Ford narrated an ad for Jeep. Martha Stewart danced around for Skechers. Morgan Freeman's dulcet tones graced a homes.com ad. everywhere you looked there were celebrities pushing products and most of those celebs were on the older side neil it felt like this year's commercials were characterized by pretty safe nostalgic choices totally and the one i want to focus on is the michelo commercial that included katherine o 'hara and willem defoe playing pickleball that was i would say probably the most successful example of a brand utilizing older celebrities because i think they also tapped into you know a bigger cultural moment that everyone's having with pickleball.

19:14But I don't know if it's good for pickleball to be associated with beer because if they want to take themselves seriously as a sport, you maybe want to be associated with hydration drinks, water, Gatorade, instead of beer. So I don't know how the pickleball community is feeling about this. Yeah, you know, that small sport, the NFL, never associates itself with beer. So I totally see where you're coming from there, Neil. I do think that most of these ads were also in development during the last presidential election. So no one really knew what was going to come later down the pipeline. So they kind of chose safer, less controversial things, which is always what they do for the Super Bowl.

19:49But this year especially, I think they're like, let's reference a time in the past. Let's reference nostalgia. Let's reference these older celebrities because that's about as safe and middle-of-the-road as you can play it. One ad that didn't play it safe, though, was Doritos. It was this short ad featuring aliens trying to abduct a Doritos bag. And it was funny. We both chuckled at it when we saw it at our watch party. And it turns out that part of the reason for its edgier vibe was that it was fan-made. Doritos ran a contest where normal people could create a spot for the big game. After a round of fan voting abduction, which was the ad's name, won the prize, sending its two directors to the Super Bowl and$1 million richer.

20:28Neil, it did feel like in a year where a lot of brands were playing it safe, Doritos ad stood out because of that. It did. It had a very strong narrative arc, which I appreciated. It felt like it was telling a story. And I'm not sure if I'm sitting and working in an ad agency now. I'm not sure that I can do anything that much better than what these content creators, the people who won this contest, can do. So this user-generated ad, they got paid like a million bucks. A million dollars, yeah. Yeah, okay. Well, that's probably what you're going to pay an ad agency. So maybe crowdsourcing is going to be more prevalent going forward because that was a great ad.

21:04And it was smart, too, because they had three finalists and they kind of put them all out on their social media. So they kind of got triple bang for their buck. They got three ads made. They only had to pay a million dollars to the eventual creator. And it was just trusting creators always leads to a better product, I think. By the way, these aren't just some no-name filmmakers. One of the creators, Nate Norell, he's got 6.2 million followers on TikTok. He is a filmmaker, so it's not like he just picked up a camera for the first time, you know, won a million bucks. Another ad that turned heads this year came from Nike.

21:34Nike's been on a rough run recently. Its stock is down about 35 % over the last year. It's losing ground to brands like On and Hoka. Desperate times call for desperate measures. So last night was the first time in 27 years that Nike ran a Super Bowl ad. It leaned on stars from women's sports to spark a brand revival. Its 62nd spot featured people like Caitlin Clark, Asia Wilson, Sha 'Carri Richardson. In an earnings call back in December, Neil, Nike said it would be investing more in marketing to try to get some of its swag back, some of its aura back. That ad last night was a step in the right direction.

22:07Yeah, in 2021, Nike spent$3.1 billion on marketing. In 2024, they spent$4.3 billion on marketing. That also included a lot around the Olympics. And now they have the Super Bowl ad. They're first since 1998. They're tapping into larger cultural conversations about the rise in women's sports. So I think that was a very well-received ad. And maybe Nike is getting its marketing mojo back a little bit. And I watched it this morning and I did get chills. It was Led Zeppelin music in the background too. It just did hit really well. It wasn't just women's sports too, specifically women's basketball. Four women's basketball players featured in it.

22:41They think that the meteoric rise of women's basketball, they just want to ride the coattails of it essentially by elevating, you know, these players and these women. the final ad trend that we have to mention flying facial hair two different brands Pringles and Little Caesars came up with essentially the exact same concept facial hair of some famous people uproots itself from men's faces and flies around freaking people out and Little Caesars ad actor Eugene Levy bites into some pizza and he likes it so much his famous eyebrows lift off from his face and fly around like a big hairy insect then Pringles followed that up by showing the equally famous mustaches of Nick Offerman James Harden and Andy Reid lifting off to fly around as well the similarities were uncanny I think it speaks to my earlier point about ads playing it rather safe this year that two ad agencies came up with the same concept for two different brands do you think this was a coincidence I think it is a coincidence because you can go back to Super Bowl's past and similar things have happened in 2021 two advertisers indeed and guaranteed rate actually used the same exact clip of stock footage showing this man carrying a kid on his back so it just happens like these ad agencies you know some of the similar people work at both so I can see how it happens which I think again just props to Doritos because let the fans uh make an ad let's do something different you will never end up doing the same ad as another ad agency if you let fans do it so I thought it was very funny people were scratching their heads saying are they related I think it truly was It's just a coincidence.

24:10All right. So overall, the commercials, you at the top of the show, you said they were a down year. But to be honest, I feel like every year we say this is a little disappointing. So every year we say that the commercials did not live up to the hype. And I think we just have to acknowledge that they're never going to and that 90 percent of them are going to be commercials. And there's going to be so many celebrities doing things that aren't particularly interesting. There will be a few standouts. There'll be a few duds that everyone is talking about. So I think I think that's just we have to arrange our priors to be this is what the this is what the commercials are.

24:44They're commercials. It's Monday once again. And as per tradition, here are the big events you should know about this week. A massive A.I. conference begins today in Paris, where world leaders and top tech bosses will meet to hammer out the thorny geopolitics of this rapidly advancing technology. The artificial intelligence action summit is basically the Met Gala for tech. And the invite list proves it. OpenAI's Sam Altman, Google's Sundar Pichai, Microsoft President Brad Smith, and world leaders, including Justin Trudeau of Canada, Narendra Modi of India, Jermallan Chancellor, Olaf Scholz, and U.S.