Apple Bets $500B on the US & Rich People Are Powering the Economy?

0:26Race the rudders! Good morning, Brew Daily Show. I'm Toby Howell. And I'm Anne Berry. Today, the U.S. economy is increasingly reliant on the spending of the richest 10 % of Americans. And Apple, a half a trillion dollar bet investing big in America. It's Tuesday, February 25th. Let's ride.

0:54Good morning, everyone, and happy Tuesday. three men who were accused of stealing a golden throne worth three and a half million dollars back in 2019. A standing trial in England this week but it's not your typical golden throne because the throne in this instance refers to a toilet or in my country's parlance the loo. The loo. Yes six years ago thieves broke into an English country mansion where Winston Churchill was born and swiped the 215 pound 18 karat gold conceptual art piece in just under five minutes. At the time The gold was valued at$3.5 million, but was insured for$6 million. Not your typical smash and grab, Toby.

1:31It is not often that your booty is a place for booties in this case. Sorry, I had to. Ironically, this toilet was a conceptual art piece by the name of America from the artist Maurizio Catalan, meant to represent excess. If that name sounds familiar, Catalan is the same artist behind the banana peel duct tape or the banana duct tape to a wall that sold for$6.2 million last year. Probably a little easier to steal a banana than a 215 pound golden toilet, but also harder to sell on the secondary market. So they stole America and they're selling it off for parts. There's some metaphor in there somewhere, but it is very funny that the loo in this case was the valuable thing that you wanted stolen.

2:17Now let's hear a word from our sponsor, LinkedIn Ads. Anne, I use an espresso machine for the first time over the weekend. Fancy. Was it a real one with all the bells and whistles or this is more of an espresso vibe? Oh, it was real. All right. I was getting my barista on. Unfortunately, I baristaed too hard and accidentally pulled multiple shots through the same coffee grounds. did not taste all that good. Okay, Toby, that's actually amateur hour. All the soluble compounds are already extracted, so you're using a waste product at that point. See, I'm a rookie. Luckily, you never have to deal with a situation like that, though, if you use LinkedIn ads.

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3:29John 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. 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. So for our first story, we have got Apple betting big on the future of American innovation as it announced plans to spend$500 billion in the US over the next four years.

4:08Included in that investment is also hiring an additional 20 ,000 people to help bolster its AI projects. The tech giant also announced plans to open a 250 ,000 square foot factory in Houston that they will develop with partners to make servers and power Apple intelligence. The announcement comes as tech companies try to make good with the Trump administration with tariffs from China looming. Now, if you remember, the Trump administration did put out there a 10 % tariff on all Chinese goods earlier this month. Now, the 20 ,000 employees Apple plans to hire in the US will be focused on research, engineering and software and AI development, the company says.

4:45Meanwhile, in other Apple news, it is set to defend its DEI programs against critical investors during its shareholder meeting amid other major corporations axing its diversity pledges. Toby, there's an awful lot to unpack here, but it looks like CEO Tim Cook is deciding to spend dollars on building infrastructure on American soil to play ball with Uncle Sam. What are you thinking about this one? I think that this is something that Tim Cook has done in the past. This is a playbook that Apple has run in the past. If you go back to Trump's first term back in 2018, they pledged to make$350 billion in direct contributions to the US economy.

5:24That was to play ball with Trump because what you are seeing under this administration is that they're threatening these tariffs. Tariffs have already been levied against China. And so Apple is saying our supply chain is very sensitive to these tariffs. And so we should try to kind of reshore some of those operations, bring some operations back to the United States, and in doing so, hopefully skirt by and maybe avoid some of those tariffs that are being levied against countries where it develops most of its products. So I think that for Trump, to him, this is another win for his tariff approach.

6:00He said in a speech to governors recently, Apple is going to build here instead because they don't want to pay the tariffs. And for Apple, it's just another instance of them moving and grooving around this administration saying, yes, we will play ball with you. We will invest in America in order to try to avoid some of these punitive tariffs. Yeah, so I think I feel like President Trump's definitely taking a victory lap on this one. But there are some parts of the street, Wall Street, Toby, that's asking, is this really a response to that? Or is this kind of a logical business step? So when we take a huge step back, there's been a huge movement with tech companies to try and, for example, get their chip manufacturing back to the US.

6:36We've seen a ton of the big players talk about it. We've seen folks like Microsoft talking about investing more in the US, partly national security concerns, but partly also because, you know, in a world where there's so much uncertainty, it feels as though people want to build in their own backyard. But I don't know. I feel like Apple's all over the headlines at the moment. I was really stunned. But to the positive, I was really excited by part of this announcement is to create an academy in Detroit to train small and medium sized businesses in implementing AI. And I just thought that to me feels like a really solid investment in Michigan.

7:13Oh, absolutely. I mean, a lot of this is something that aligns with AI. I mean, obviously, every investment you're going to hear about is going to have those two letters in it. This manufacturing plant, this 250 ,000 square foot facility in Houston, those are going to house servers that they hope can accelerate the company's efforts to build out AI. In this case, it's Apple Intelligence for them, which has been a little bit of a nothing burger so far. So I think they are trying to say, hey, we're making these investments here. We're trying to beef up our AI capabilities because we've been lagging behind a little bit.

7:50So who knows how much will actually come of this, though? Because, I mean, I mentioned that$350 billion it pledged in 2018. That really hasn't come to fruition that much. So part of this is maybe PR posturing like we've seen with people announcing these big investments. Because if you go down the list, not all of these investments actually come through. You have things like the Foxconn factory. That was a really big deal. This$10 billion high-tech campus in Wisconsin under Trump's first administration that never really materialized to the degree at which Foxconn kind of promised. But then you also have companies like Toyota and this U.S.

8:28steel producer, Nucor, who did actually follow through and did invest billion dollars, built manufacturing plants in Kentucky that now do employ thousands of people. So is this going to be more of that PR bucket or is this going to be actually an investment that you do see, you know, bring jobs, bring investment to America? For the last few years, the American economy has been chugging along at a rate far exceeding its peers. But that engine is increasingly being powered by a single fuel source, rich Americans. According to new data from Moody's Analytics, the highest earning 10 % of Americans, those households making$250 ,000 or more, are fueling the economy at unprecedented levels.

9:12Consumers in the top decile now account for nearly half of all consumer spending, the highest it's been since 1989. If you go back three decades ago, that number stood at just 36%, showing how much more dependent on rich people the economy is today than ever before. Two things are true at the same time. The finances of well-to-do have never been better. Their spending never stronger, Mark Zandi, the chief economist at Moody's, told the Wall Street Journal. And the economy has never been more dependent on that group. And the U.S. economy has been very strong emerging out of the pandemic, maintaining higher GDP growth and lower unemployment than pure nations.

9:51But it's also in a precarious position given how reliant it is on wealthy people. It's created this odd sort of paradox, strong, but delicate. You know, I looked at this and I asked myself, well, why is how do we get here? And I went back, I went down the rabbit hole, Toby, you know, I'm a complete data nerd. And I'm also a markets person because BrewMarkets is the franchise I look after here. I asked myself why. Back in January 2024, a year ago, there was a Fed survey that came out and said that the top 10 percent of Americans hold 93 percent of all stocks, right? 93 percent. That was a year ago.

10:27And since then, the S &P 500, the Nasdaq markets were up over 20 percent in 2024. So I look at today and say, how is it that spending is so dependent on the wealthy in America? I'm like, because the wealthy just got even wealthier because they're investing. And I think that separation between spending, investing, saving, wealth creation. I mean, the divide is just getting bigger and bigger. Fascinating. Why? Right. It is 100 percent related to the stock market. And it's also related to the housing market as well because richer people can afford houses. Housing values have just exploded over the past few decades or so.

11:02So I want to dig deeper, though. Is this inherently a bad thing? Why is it a bad thing that so much of our economy is powered by such a small portion of the country? It's not inherently bad, but it is risky because, say, there is a stock market sell-off. say home values do start to fall a little bit and the confidence of that top 10 % begins to rattle, if that causes them to cut back on all this heavy spending that they're doing, that influences the economy. Because again, consumer spending contributes 70 % to GDP. So that would have a massive trickle or massive effect on the economy altogether.

11:40So if you start to see consumer sentiments start to slide in the top 10%, then it's going to affect the economy as a whole. Well, I'll get to your question of is this a bad thing. I think we could agree that socially it's not a good thing to have this degree of inequality. So I just want to sort of go on the record and sort of say that. I do think there's risk to having this kind of concentration. And, you know, there are a couple of data points I found really interesting. Walmart, did you see that recently, Toby, came out and said, we've got like 87 % of folks earning over $100 ,000 are now shopping at Walmart.

12:09And I guess that would be a good thing if it means that you could see lower prices in places like that, which inures to the benefit of lower income folks. But I don't think we're necessarily seeing that because inflation's kept on going up, right? You are right, too, to call out just how this affects companies and businesses. You are seeing this bifurcation in how businesses have been doing. If you look at companies that cater to people on lower on the income spectrum, big lots filed for bankruptcy last fall, Kohl's, Family Dollar, those two businesses are closing stores left and right because there's just all this competition for fewer dollars down at the lower end of the income spectrum.

12:47But then if you look at the higher end of the income spectrum, Delta is killing it mainly on the backs of very high spend from business travelers. LVMH is the biggest company in Europe. It kind of tosses that title back and forth between them and Novo Nordisk on the backs of this really intense luxury spending. So you see this bifurcation not just across, you know, where the spending is coming from, but the businesses that are attracting that spending, the top end are doing much better than the ones catering to the bottom end. And just to build on that with one last thought, like back in, you know, several years ago when I was investing, the conventional wisdom was, to your point, luxury will always do well because the rich will always figure it out.

13:25They'll be fine. The other place that people would invest was at places like Dollar General, like the dollar stores. And so, you know, two years ago, I went and invested a bunch of money in the dollar stores thinking this bifurcation is going to play out. They've done terribly. To your point, we've seen the bankruptcies, but also dollar general, folks like that, the share prices have not performed well. That old model of the poor are going to, you know, the less wealth you're going to get certain places just hasn't panned out. It's been that hard for people. So I think really worth keeping an eye on to see how this inequality sort of pans out from an economic perspective.

13:55Let's move on. Let's change gears a little bit, Toby. Let's talk about Greenpeace, which is our next story. We've got a pivotal trial taking place in North Dakota that could jeopardize the existence of the environmental group Greenpeace USA. There's some real context here which is worth going over. The company behind the controversial Dakota Access Pipeline, Energy Transfer, tried to sue Greenpeace in federal courts back in 2017, alleging that the group's protesters who camped near construction sites for months cost the company$300 million. dollars. Now, the federal court ended up dismissing the case, but Energy Transfer filed a similar suit in state court, and that's where we are today with the trial.

14:35The issue that's underlying all of this sits with a small section of the pipeline that crosses near the Standing Rock Sioux Tribe's reservation, where tribe members argue they were not consulted in the planning process and that the construction poses a pollution risk to sacred sites and to its water supply. Now, it should be noted that Energy Transfer disputes all of these claims, But Toby, this battle's had real messiness around it. Police and protesters have clashed. Protesters say they were pepper sprayed and police officers say protesters threw rocks at them. The outcome of the trial, which again is focusing on energy transfer, saying all of this cost us in terms of this project, could have serious implications not only on the fossil fuel industry in sharing what they're capable of doing, but also the environmental industry.

15:20I think the punchline here when I really looked at the Say What if the story is, if energy transfer wins, Greenpeace could be out of existence. Right. That is the underlying fear here. If you are an environmental organization, that this lawsuit is designed to silence free speech because Greenpeace is obviously a much smaller organization than a company like Energy Transfer. Energy Transfer is alleging that, you know, these protests cause physical harm to its employees, to its physical infrastructure. but Greenpeace is saying that this is existential for us. Like we cannot bear to fight this lawsuit in a court.

15:54And so it sets a precedent against, that could allow other major corporations to target organizations that they disagree with and kind of essentially put them out of business through this threat of litigation. So that is the broader picture here. North Dakota specifically is important in this because this case is what's known as a SLAP case. SLAP stands for Strategic Lawsuit Against Public Participation, S-L-A-P-P. SLAP cases are usually designed to, you know, cost your opponents money, force them to spend all this time, all this money defending against the case. And you can tell this is a SLAP case because the actual financial damages energy transfer seeking is not that significant.

16:37$300 million is a lot of money for Greenpeace, but for energy transfer, which generated$82 billion in revenue last year, It's not a massive financial portion. So their concern isn't really financial loss. They are trying to, you know, basically turn public opinion and also try to squash similar protests against them. North Dakota is among 15 states that do not have anti-slap laws, which makes it easier for if you have an anti-slap law, it makes it easier for these cases to get dismissed and then potentially like recover some of the costs that these plaintiffs have that file them. So I do think that the fact that this is happening in North Dakota is important because of, you know, the fact that there is no anti-slap law there.

17:19Critical taking. We'll keep watching this one. Up next, it is time for Toby's Trends. 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. Like a good neighbor, State Farm is there.

17:52The spirit of innovation is deeply ingrained in America, and Google is helping Americans innovate in ways both big and small. From improving emergency response times to protecting against cyber attacks, local, state, and federal governments are innovating with Google AI. This is a new era of American innovation. Find out more at g.co slash American Innovation. It is Tuesday, which you guys know means it's time for a Toby's trend. But for some, today is also the day after when an episode of White Lotus airs, where you might be digging into what weird thing that North Carolina family did this time around.

18:31I mentioned White Lotus, the smash hit from HBO now in its third season, because it's become a reliable driver of travel booms. Each season has taken place in a beautiful four seasons resort around the world, the first in Hawaii, the second in Sicily, and now the third in Thailand. While it was difficult to quantify if season one drove an increase in travel to the already very popular Maui, the second season had a much clearer cause and effect. One luxury operator told Bloomberg its Sicily bookings tripled after the finale of season two. Another saw a 424 % spike in sales. And now Thailand is hoping for a similar boom.

19:11Bookings at the$2 ,000 a night Koh Sumai Four Seasons Resort have already jumped 40 % according to the New York Times. And we're only three episodes into this season, Anne. I know. I haven't watched it yet. Is that a terrible thing to admit? It's not. It's not. There's a lot of good TV out there. But yes, continue. There's so much good TV and I'm completely the target for TV driven destinations. I watched Shogun. Did you watch Shogun? I did watch Shogun. Devour Shogun. I could not book a flight to Japan fast enough after watching Shogun. So look, I get it. I get it. I'm a TV tourist too. No, this is a real industry that has, you know, popped up.

19:48It goes all the way back to, you know, Lord of the Rings where, you know, people saw the Shire and immediately started booking their flights to, you know, New Zealand. And jet setting in this case literally means jetting off to a set of a movie or a TV show. I think it's fascinating too that Four Seasons have really capitalized it. They have a formal marketing partnership with HBO. So it's not a coincidence that these shows keep taking place at Four Seasons resorts. So they kind of have this deal to market themselves as the real-life version of the fictional White Lotus brand. So there is this promotional machine at play here for sure.

20:28I mean, if the Four Seasons is listening and they happen to want to do a promotional partnership with Morning Brew, I think Toby and I would be very open to having that conversation. I do think, too, this is just a growing industry. We're seeing American Express, the card brand, is offering White Lotus Thailand experience packages to certain card members. It includes a stay at the Four Seasons Resort. You can also do a seven-night White Lotus Thailand trip for just under$8 ,000 a person from another travel company. That includes private tours of Bangkok. That is what people are saying about this particular season.

20:59It's not just contained at the resort. It is broadening the world. You're going to other places in Thailand as well. So Thailand is kind of saying, yes, we're welcoming you guys with open arms tourists because right now, tourism is a little bit down from pre-pandemic. Like pre-pandemic, they were getting 40 million visitors a year. That number fell all the way down to 28.2 million in 2023. It's back up to 35 million in 2024. And so they're hoping they can get, you know, close that gap to 40 million that was flowing in pre-pandemic. Now let's sprint to the finish with some headlines you may have missed.

21:35Up first, the Starbucks-assance is fully upon us. The struggling coffee company is laying off over 1 ,100 corporate employees and leaving several hundred positions unfilled as it aims to streamline its operations. Part of that effort also includes streamlining its coffee menu. 13 drinks are on the chopping block, including the ice matcha lemonade, the white hot chocolate, and whatever a chocolate cookie crumble creme frappuccino is. The strategic shift under new CEO Brian Nichols is all part of the effort to reduce wait times, focus on customer favorites, and revitalize the brand's core coffeehouse experience.

22:11And sometimes you've got to cut the fluff in order to grow again. I think that's right. And when are they going to fix their food offering? Do you know what I mean? You're not a fan? I'm not a fan. Every time I walk in there, it looks good. It tastes terrible. I think Starbucks, fix your food, and then you're on to your new chapter. Let's go on to our next headline, Toby. Lester Holt, the legendary newscaster and anchor of NBC's nightly news, is stepping down. Holt has been a mainstay for the evening programme since 2015, but announced he plans to step away from the desk this coming summer. NBC executive Janelle Rodriguez called Holt, quote, the beating heart of his news organisation, highlighting his steadying voice during the early days of the pandemic in 2020.

22:51At the time, the show was averaging 12 million viewers a night. Even Even though broadcast TV audiences have declined in recent years, nightly newscasts can still draw 20 million viewers on a good evening. Toby, look, trust can be the most valuable asset a news program can have. Lester Holt's been a trusted face for NBC for years. Is it going to be hard to replace Holt or is this just the end of an era now for news? It's a slow end of an era for sure because you have seen a spate of high profile news anchors stepping away from their posts recently. just in the last few months. Joy Reid, she's leaving her position as a host of MSNBC.

23:28Her show was actually canceled by the network. Nora O'Donnell recently left her spot as anchor for CBS Evening News. And then Chris Wallace left CNN. Chuck Todd left NBC News. Hoda Kotb left NBC's Today. So we are seeing kind of these networks pull back on spending. They don't want to, you know, hand out these hefty contracts to these faces of the network. And I do think we are just seeing a gradual, but suddenly, sudden shift away from these faces that we used to see all the time on network TV towards more media news influencers, like podcasts like us. We are seeing just a shift happening over time.

24:06It is spring training time in Major League Baseball, and for the first time, MLB is allowing pitchers and batters to challenge balls in strike calls, but rather than adding another human into the mix, they found a neutral arbitrator, a computer. That's right, the league is testing out robot umpires with the hopes of adding them to the regular season eventually. Dubbed the automatic ball strike system, it allows players to challenge umpire decisions, adding a strategic twist to the game. The challenges can only come from the pitcher, catcher, or batter, and they must happen immediately, which so far has led to some pretty funny mix-up.

24:40Pitchers are horrible at it, said Dodgers pitcher Landon Nack. We probably had a 90 % miss rate with all the pitchers last year. Dodgers catcher Hunter Faducia chimed in. It is funny, Anne. As a player, you always think umpires are getting it wrong, but this is exposing it might be the opposite. Hasn't this been happening in sports for years? Like tennis with the line calls? Hasn't this been happening in basketball? Why is this new news? It's new news because baseball has been, it's a slow-moving game. They didn't want to replace umpires. They think that it's moving to a fully automated strike zone.