Baltimore Bridge Collapse Fractures Supply Chain & Cocoa Prices Soar 250%

0:28This episode is brought to you by Jack Daniels. There's lots of drama at 30 Rock, and surprisingly, it has nothing to do with Jenna Maroney. Then everything you need to know about the collapse of the Francis Scott Key Bridge yesterday in Baltimore. It's Wednesday, March 27th. Let's ride.

0:49So I know it's the Summer Olympics coming up, but I'm on the winter sports beat this morning. If you don't know the name Ilya Malinin, learn it. He's a 19-year-old figure skating prodigy who just won the men's singles competition at the World Figure Skating Championships. And part of the reason we're talking about it is because his winning routine was set to the Succession theme song. Plus, in terms of the actual skating, Ilya busted out six quadruple jumps, including the much-funted quadruple axle. This guy's insane, Neil. He's so good. Obviously, the Succession part is amazing. It's the first time the Succession theme song has been used in a figure skating routine.

1:26that's part of the reason that Ilya decided to use it because a lot of figure skating music is repeated over and over again. But he does not have an HBO subscription and he's never watched Succession. So I don't know if that puts an asterisk to this routine. He just liked the vibes of it. I would definitely bust out a routine to Hans Zimmer or something like that. Maybe the Dune soundtrack. Yeah, that would go extremely hard. Now let's hear a quick word from our friends over at Factor. So I came home from the office yesterday afternoon and lo and behold, my eyes were greeted by the most amazing sight, a factor box sitting right outside my door.

2:02It's truly the best feeling. It almost just floods you with a sense of relief because you know you can go on autopilot for eating during the next few days. Yes, sometimes I feel like a modern day Sisyphus in the kitchen, but my boulder is thinking about what to cook and doing the dishes. Dang, already getting into Greek mythology this morning? Hey, my turkey chili with zucchini I ate last night. It's got me firing on all cylinders. But yes, I'm with you. I want all our listeners to feel the joy that comes along with the arrival of a factor box. If you want to do away with your kitchen boulder or just feel the happiness Neil is talking about, head to factormeals.com slash morningbrew50.

2:37Then use code morningbrew50 to get 50 % off. That's factormeals.com slash morningbrew50 with code morningbrew50 to snag that 50 % discount. The 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. Yesterday around 1.30 a.m. in the morning, the Francis Scott Key Bridge that spans across the mouth of the Baltimore Harbor was struck by a container ship and collapsed.

3:19The whole event was captured on film and it was surreal to see this massive Sri Lanka bound container ship appear to lose power before drifting off course and hitting a support causing the entire bridge to plummet into the water below in just seconds. A mayday call was made by the ship before impact, so officials were able to stop some of the traffic crossing the bridge before the collision. But a crew of construction workers that had been fixing potholes on the bridge couldn't get off in time, and six remained missing as of late last night and are presumed dead. The bridge's collapse also means a major transit artery on both land and sea is now impassable.

3:57Over 30 ,000 cars use the bridge daily and will have to be rerouted. And no cargo ships can enter or exit the Port of Baltimore, which is the ninth largest port by trade volume in the country. Neil, watching that bridge go down yesterday was a shocking experience for sure. It was. And there are two main questions that people are trying to answer right now. What do we know about the ship and what do we know about the bridge and the safety of each? The ship was inspected in June and was found to have a propulsion and auxiliary machinery problem. But then it was inspected later in New York in September 2023, and there were no deficiencies found.

4:34So we're still looking into what exactly went wrong with the ship that caused it to lose power and lost complete all rudder authority so they couldn't steer it. And then for the bridge is concerned, it was built in 1977. The last inspection of it was in May 2021, and it was given a fair rating by the Federal Highway Administration, which means it was deemed sound. Those are two outstanding questions. But then also, if we look into the broader global economy, the Port of Baltimore is not one of the biggest, most important ports in the country, but it still is very important in certain industry.

5:10It's definitely going to throw a wrench into the auto industry. The port plays a huge role in the shipment of vehicles and handled 850 ,000 trucks and cars in 2023. And it ranks first in the entire country for the volume of automobiles and light trucks that it handles. Part of the reason is because it's really good at handling row-row ships, which are short for roll-on, roll-off cargoes, stuff like autos, trucks, tractors, wheeled cranes. So it's the largest U.S. port for those specialized cargo like that. So the auto industry is definitely going to have to figure out what to do, and it's going to reroute most of its ships to maybe Virginia or like the New York, New Jersey area.

5:48Yeah, once again, we're going to see a reshuffling of trade, as we've seen multiple times over the past few years. I don't think any incident regarding a supply chain reshuffling or crisis is as visible or visceral as we saw on video here. One thing that could probably happen is that a lot of these ships that were going to Baltimore are now going to go around to the West Coast, especially coming from Asia, and then take trains to go to their final destination on the East Coast. But once again, we're seeing rerouting of ships as this happened so many times over the past few years, whether it's Houthi attacks or they ever given the Suez Canal or other COVID supply chain problems.

6:25And then the other outstanding question, too, is who is going to pay for the bridge and how long is it going to take to get it back up and running again? And President Biden hosted a press conference yesterday where he said the federal government will pay for the entire cost of rebuilding the bridge. Whether that actually pans out to be true or not will kind of be up in the air and remain to be seen. And then in terms of the timeline, it's very hard to say with an infrastructure project this large. But I mean, last summer when the portion of I-95 in Philadelphia collapsed, work crews on the highway, they got it open less than two weeks later.

6:58This is obviously a much different scenario, a much larger undertaking, but that was expected to take months and it did happen much quicker. So I guess maybe the takeaway here is that there is a chance that we repair it ahead of schedule. Totally different infrastructure projects. This is the third longest trust bridge in the world. It's 1.6 miles long. I think this is a years long undertaking. Absolutely. But the question everyone was asking yesterday is like, was there anything wrong with the bridge? Could anything have prevented this bridge from going down? There's this 100 ,000-ton ship going into it.

7:34Some engineers have—well, everyone was a bridge engineer yesterday. I didn't realize there were so many bridge engineers on the Internet. They were questioning whether any bridge should have been able to handle a massive ship crashing into it. I think the general consensus from what we were reading is that no amount of protection around the bridge or no amount of construction could have prevented a collapse when a 100 ,000 ton ship comes crashing into you at nine miles per hour. OK, moving on. One of the biggest names in finance is warning of a retirement crisis in America, urging companies in the government to launch an organized high level effort to rebuild the entire system.

8:13The Paul Revere in this case is Larry Fink, the CEO of the largest asset manager in the world, BlackRock. Fink sounded the retirement alarm in his annual letter to shareholders yesterday, which is one of the most closely read documents on Wall Street each year. Fink has a ton of sway in corporate America through its massive index funds. BlackRock is one of the top three shareholders in most large U.S. companies. In his letter, Fink warned that the way we do retirement here in America is rotten. Nearly half of Americans aged 55 to 65 don't have any funds invested in a personal retirement account.

8:48And the problem is only to get worse as the population ages and people live longer. Fink wrote, as a society, we focus a tremendous amount of energy on helping people live longer lives, but not even a fraction of that effort is spent helping people afford those years. Toby, what do you think? I can't. I'm going to say Fink at one point when I mean to say Fink in this segment for sure. But BlackRock and Larry Fink are uniquely situated to talk about this issue. BlackRock is the largest asset manager in the world, and more than half of the assets it manages are for retirement. So getting people investing more of their asset in capital markets is something that BlackRock is uniquely also motivated to get people to do.

9:29So you have to take it with a grain of salt saying, Larry Fink was saying, like, capitalism is a great equalizer for a lot of people and a great wealth builder for a lot of people. So I do think that BlackRock is incentivized to get people to invest in the public markets. But it is true. We have been making a ton of strides. He's mentioned Ozempic and the GLP-1 class of drugs extending people's lives. Now we need to band together and figure out what to do with this aging population now that people are living longer. Right. We need to help. When they're not working, they need money. I went down a deep rabbit hole of what Fink identified as one of the major problems, which is that the U.S.

10:10has moved from a mostly defined benefit retirement plan to a defined contribution retirement plan. So in the 80s, American workers mostly had defined benefit pensions, which is that a company promises to pay you a certain amount each year from the time you retire till the time you die. That is called a defined benefit plan because you know how much you're going to get. you know, it is a very predictable income stream. But that has shifted dramatically to defined contribution plans, the most popular of which is the 401k. And the risk shifts from the employer to the employee to invest in a retirement account.

10:47The employer can match funds, but they don't necessarily have to. It also leads to a much less predictable income stream. So as the U.S. has moved from a defined benefit plan to more defined contribution plans, retirement has become a lot more uncertain. That's one of the main problems Fink wants to fix. Yeah, it puts a lot of stress on retirees because you don't know if that income is going to be steady or not. I also think Fink clearly listens to Morning Brew daily because he wrote, in my 50 years of finance, I've never seen more demand for energy infrastructure. That was another big theme of his annual letter, which you heard us talk about on Monday this week.

11:24So in his mind, the two biggest challenges facing 21st century America and the world economy is one providing more secure and better retirements. And then two, building the massive amount of infrastructure that the world is going to need for increasing that energy production. So those are issue number one and issue number one, uh, a or one B on, uh, on his mind. Let's move on. The sunshine state wants its youths to go outside and get a little bit more sunshine in Florida. Governor Ron DeSantis thinks the best way to do that is to kick them off social media. Earlier this week, Florida became the first state to effectively ban kids under the age of 14 from having social media accounts.

12:05DeSantis signed a law that prohibits children from using certain social networks, requiring companies to delete accounts that they believe belong to underage users, while also requiring platforms to obtain a parent's permission before giving accounts to 14 and 15 year olds. Now, this bill is almost certainly going to meet staunch resistance from the social media companies it's targeting. From a constitutional perspective, there are a bunch of First Amendment questions, like if it's infringing on a young person's right to freely seek information or a company's right to distribute that information.

12:38But supporters of the bill think it could pass muster because it's targeting these companies based on their addictive features, like notifications, like auto pay, rather than the actual content itself, Neil. Yeah, I mean, this is probably the most ambitious yet by any state to crack down on social media, which has been blamed on this teen youth mental health crisis we're experiencing here in the United States and around the world. Lawmakers have called social media digital fentanyl, and it's especially impressionable on kids whose brains are still developing these addictive features that get them hooked on social media.

13:13And yeah, I guess they don't go outside. But also, yes, it leads to not only mental health issues, but also bullying and other types of harassment leads them to see really harmful content. So Florida is really sort of staking out its own. I mean, a bunch of other states have tried to roll back kids use of social media, but none to the extent that Florida has. Right. And I do think the main question, the first thing that comes to people's minds is how the heck are you going to enforce this? because apps like Facebook, Snapchat, Instagram, they already have policies in place that prohibit children under the age of 13 from using theirs, but it doesn't have a ton of heft behind it.

13:49It's very easy to just change your birthday when you're signing up. I specifically remember I'm 29 years old on Facebook right now because all the way back in the day, I changed my birthday to allow myself to have a Facebook account. So one way you can improve that ID process is there is technology out there that allows you to scan a government-issued idea But again, if you are 14 or 15 years old, you may not have a driver's license at that time. So there's this other option, which is the rise of these facial scanning apps, where it literally requires you to take a picture, take a selfie video of yourself, and then AI will analyze your face to see if you are under the age that you say you are.

14:27And one company who offers it says that they're 96.99 % accurate at estimating 6 to 11-year-olds as under 13 years old. So there are new technologies developed that maybe these states could use to ensure that these age verification laws are enforced. But again, verification is always the big question mark here. And you're talking about scanning kids' faces. That's exactly what privacy experts are warning of in terms of this bill and overall age verification efforts across social media. Yeah, it's certainly a tough needle to sense this trying to thread, trying to get around these First Amendment issues and also those privacy issues that you just mentioned.

15:04Up next, the political pundit that prompted an on-air rebellion from NBC, plus a breakdown of the crazy high cocoa prices we're feeling right now.

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15:44This 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.

16:11Turns out public shaming doesn't just work in Westeros. It also works at 30 Rock. After a chorus of NBC's most prominent anchors berated their bosses on live television, the network dropped Rona McDaniel as a paid contributor yesterday, saying the hire undermined a cohesive and aligned newsroom. Here's what sparked the revolt. NBC hired McDaniel, who is the former chair of the Republican National Committee, to add a more conservative voice to the generally left-leaning coverage at its cable network, MSNBC. Now, it's not unusual for TV companies to hire former political operatives. In fact, happens all the time.

16:47But McDaniel's hiring specifically outraged NBC journalists because she supported Trump's false claims of a rigged election in 2020 and had smeared reporters before. So in an unprecedented protest, one by one, they use their shows to publicly spank their bosses about bringing on McDaniel. Rachel Maddow called it inexplicable. Nicole Wallace said it empowers election deniers. And even Chuck Todd, considered an establishment NBC company man, said execs owe hosts an apology. Something tells me this would never have happened if Jack Donaghy were still in charge. Got 230 Rock reference in there. Good job, Neil.

17:22The politics to punditry pipeline is definitely just a part of media, both on the conservative and liberal leaning media publications these days. And if you go back to 2000, more than half of White House press secretaries and communications directors have actually gone on to become paid contributors or commentators on news programs of some sort. That's according to an Axios analysis. So you said that this is very common. It is extremely common when you have literally more than half people taking their careers from the White House and going straight into kind of this punditry land. And there's always a kerfuffle.

17:55I mean, back in 2022, Jen Psaki, who was the press secretary for President Biden, went to MSNBC and there was a lot of controversy about how she was negotiating the deal. And she's obviously on the Democratic side about how she was negotiating a deal while she was still at the White House. I think what makes this one different and why it caused such an uproar is that McDaniel has backed false claims about rigged elections and had been, you know, gone on the war path against journalists at NBC specifically before. So you can see why they say, yes, obviously there's a very problematic muddling of politics and media in general, but this one was beyond the pale because of her sort of denial of facts.

18:39Yeah. I think you hit the nail on the head there. There are the thorny ethical issues about negotiating contracts while you're maybe still in the White House. And then also there's the question of credibility, because do you really want people who have maybe peddled half-truths or outright lying be trusted as commentators on network air? And it's also, I do think it's a risk that networks have decided are a risk worth taking, because trust in media is at historic lows. Viewership is also at lows. So they're trying to make this very calculated decision to bring on these controversial X kind of political figures to try and remain relevant.

19:13And sometimes they fly a little too close to the sun, as was the case in this particular example, especially during an election year. Now, what is really interesting is this contract, because McDaniel signed a deal that is worth about three hundred thousand dollars a year. She made one appearance on Meet the Press, and she is reportedly hiring a legal team to maybe go at NBC if NBC doesn't pay her. But if they do end up paying her, it might be one of the most lucrative contracts in TV history because she will have made tens of thousands of dollars per minute on her Meet the Press interview. I can't think of anybody who's made more money on TV than that.

19:50That's an efficient usage of her time for sure. Neil, I'm looking at a chart right now. it kind of bounces along merrily for a few years before going absolutely parabolic in the last few weeks. It's not NVIDIA. In fact, it's got nothing to do with AI. It is Cocoa prices. Cocoa futures surged to an unheard of$10 ,000 a metric ton yesterday and show no signs of slowing down. Longtime listeners of the show may have heard us talk about this before, but things contributing to the massive price spike include a poor harvest in the key West African region that put the industry on course for a third straight year of a supply deficit.

20:27This was a ticking time bomb that has gone boom in spectacular fashion. And while I'm on the topic of confectionery supply shortages, I got to clue you in on the maple syrup situation in Canada. The strategic maple syrup reserve in Quebec, which is a real thing, is designed to hold 133 million pounds of maple syrup at any given time, but last year the supply fell to just 6.9 million pounds. It's a similar story as cocoa, with weather-related issues wrecking havoc on production, leading to shortages. Neil, which way are we going first, cocoa or syrup? Let's talk cocoa. I mean, we could talk about sweet treats all day, and we actually will later in the show as well.

21:07I mean, the problem with cocoa is that it is so hard to grow. You can only grow it in a very narrow band around the equator. Just four West African countries, Ivory Coast, Ghana, Cameroon, and Nigeria, account for 75 % of the globe's total cocoa supply. Ivory Coast alone produces half. So if the weather is bad and the crop harvest is bad in just that narrow band, then you get a huge shortfall. As we're seeing now, the question everyone's thinking about as they hear us talk about this is, man, Easter's coming up. Halloween, I mean, not totally coming up, but you can see it. It's coming in October.

21:42what does it mean for chocolate prices? And I think inevitably when cocoa prices go from 2 ,000 to 10 ,000 in the span of a few years, then you're going to see higher chocolate prices. Chocolate prices at retail US stores were up 12 % last year. And Hershey's, Mondelez, which makes Cadbury, is already warning that they don't have enough cocoa supply and they're going to have to pass on cost to consumers. There's no other way around it. As for the maple syrup situation, If you thought the cocoa market was top heavy in terms of production, wait until you hear these stats. Canada accounts for 75 % of the world's entire maple syrup production, and around 90 % of that is produced in the province of Quebec.

22:23So it's even more concentrated than the cocoa situation is. And we've been on a little bit of a downward hill trend for a few years now. In 2020, that strategic syrup reserve had more than 103 million pounds in it. Now the amount of the reserve is only 7 % of that. And the problem is that just like cocoa, maple syrup harvesting requires a very delicate balance of temperatures, typically done between the early March and late April periods, and relies on below freezing temperatures overnight, but then warmer daytime temperatures above zero degrees Celsius. So it is this very, very delicate balance that you need to nail in order to kind of harvest this maple syrup.

23:02Yeah, the sugar maple is very temperamental. Temperamental. Toby, it just pains me that you'll never know the joy of going to a sugar shack in March in New England and getting some beautiful, fresh maple syrup on your pancakes. I definitely want to take you to that. But what's interesting is why cocoa prices have skyrocketed. Maple syrup prices have stayed stable because of the strategic reserve. The fact that they created this allows for stability in a very unpredictable, temperamental market. So it's kind of paying dividends that to create the strategic reserve where the amount of sap that you can produce every single year really fluctuates so much based on the particular weather.

23:40They're hoping that there's a good harvest this year, though. I was in Quebec a few years ago and it was a little too warm for harvesting. So I'm a little unsure about that. Finally, as someone with the last name of Fryman, I feel uniquely qualified to share the news that Krispy Kreme inked a partnership with McDonald's to add its donuts to the menu at locations across the country. For Krispy Kreme, there are no holes in this deal. Its shares shot up 40 % yesterday following the news for the company's best day ever on the stock market. By getting its donuts in McDonald's, which famously has a lot of locations, Krispy Kreme will double the distribution points where customers can find its donuts.