Canada Pulls US Liquor From Shelves & Can Fries Save Sweetgreen?

0:00Does it ever feel like you're a marketing professional just speaking into the void? But with LinkedIn ads, you can know you're reaching the right decision makers, a network of 130 million of them, in fact. You can even target buyers by job title, industry, company, seniority, skills, and did I say job title? See how you can avoid the void and reach the right buyers with LinkedIn ads. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started at linkedin.com slash campaign. Terms and conditions apply. Good morning for your daily show. I'm Neil Freiman. And I'm Toby Howell.

0:35Today, the first jobs report is being released since Doge began its drive to slash the federal workforce. Then a Jack and Coke in Canada is now just a Coke after Jack Daniels got caught in trade war crossfire. It's Friday, March 7th. Let's ride.

0:54It's going to be the last Friday you try to beat the darkness when leaving work because daylight saving time starts this weekend at 2 a.m. on Sunday. clocks will spring forward, which means you will lose an hour of sleep, but also gain an extra hour of daylight in the evenings. For instance, here in New York City, the sun will set tonight at 5.55 p.m., but on Sunday, it'll set at 6.57 p.m. This is absolutely huge for lazy people like me who held out strong on changing their microwave clock since daylight saving time ended in November. I've been living an hour ahead of you all for months, but soon will be synced up again.

1:30Living in the future. I was making a little pros and cons list to figure out how I felt about Daylight Savings Time because I always get confused. For the pros, it's good for golf. Great for evening picnics. Great for people who never change their clocks. For cons, it's very bad for parents taking their kids to school in the morning. Also tough for morning people in general. So if your job is hosting a morning business news podcast, maybe not so great. So after weighing all of that, I realized I have no strong feelings. And thank goodness for auto-updating clocks. Now, a word from our sponsor, Invesco QQQ.

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3:42It's finally here at long last, the next Game of Thrones book. No, just kidding. It's the monthly jobs report due out this morning at 8.30 a.m. Eastern, giving us a key snapshot of America's employment situation in February. And while all jobs reports are big deals, this one feels like a big freaking deal for a few reasons. First, it is the first jobs report since President Trump and Doge have taken a chainsaw to the federal workforce in a bid to slash the size of the federal government. Second, a slew of recent surveys have raised alarms over slowing economic growth, prompting investors and analysts to up their bets on an upcoming recession and sell off stocks.

4:22The jobs report is one of the first pieces of hard data that could calm those fears or jack them up even more. The hints we've been getting have not been pretty. In February, U.S. job cuts hit their highest level in almost five years, according to an analysis released yesterday from Challenger, Gray and Christmas. Layoffs were up 245 % from January and marked the highest total for the month of February since 2009. The firm said that more than one third of the total layoffs were attributed to the headcount reduction efforts of Doge, totaling 62 ,000 job cuts across 17 agencies. But Dobie, the government jobs report due out in a couple of hours is the gold standard for providing the most detailed picture of the labor market in America.

5:05What should we be expecting? Well, unfortunately, will these cuts show up in this jobs report? The answer is probably not. February's official jobs report will not fully reflect these doge cuts that are coming through just due to timing. March and April are probably going to be the real test as these layoffs continue to filter in and these federal cutbacks do ripple throughout the economy. They really haven't shown up in any official government data yet. The Labor Department said yesterday that the number of Americans filing for jobless benefits actually fell 21 ,000 to 221 ,000 for the week ending March 1st.

5:40So these are just lagging a little bit. You'll probably see that unemployment rate stay pretty low, pretty solid at 4%. But that could change very fast because we just need to dive into this Challenger Great Christmas report a little bit. Some of the percent increases in layoffs when it comes to government jobs are astounding. that 62 ,000 government job cut number represents a 41 ,311 % increase from last year. So obviously we're in unprecedented territory when it comes to shedding jobs. Also, the nonprofits and the companies that rely on those federal contracts are shedding jobs now, too. So you do start to see just how big the ripple effects could be from these Doge cost-cutting efforts.

6:20How big those ripple effects will be is still an open question. federal employment, while it employs a lot of people, millions of people, it still accounts for less than 2 percent of U.S. employment. So even when the job cuts from the federal government are factored in in future jobs reports in March and April and all those months after that, we'll be unclear just how big the size of the impact will be. If it's just limited to the federal workforce, then it probably won't be a huge impact on the jobs market. If it ripples beyond that into the private sector say people aren't going into their jobs in D.C.

6:56anymore. So the people who all the people who work in servicing them from the from the lunch counters or transportation, things like that, we'll see how big those ripple effects will be going forward. Some forecasts are suggesting over 500 ,000 job losses by the end of the year, which would actually erase a quarter of all job growth from 2024. So that obviously is a pretty solidly large number right there. I mean, a quarter of all job gains from the previous year. Also, one interesting effect of this is as federal workers are kind of getting laid off, states are stepping in and trying to recruit them because they actually have open positions they want to fill.

7:33New York launched a Doge said you're fired. We say you're hired campaign trying to lure some of those federal workers to 7000 open state jobs they have. Maryland is offering job assistance programs, But their officials are admitting there's not enough, you know, one to one replacements in the state roles to replace all these federal workers. But it is interesting to see them just like any other, you know, like tech companies sometimes sneaking in and saying, hey, you're not working for the federal government anymore. Come work for the state government. We have a lot of open positions here. So jobs report due out 830 a.m.

8:06Eastern. We're expecting strong job gains, 160 ,000 low unemployment. So perhaps this will be sort of the baseline or snapshot of what the jobs picture looks like before sort of the shakeup that's been happening in Washington. And like I said, there's been other indicators indicating a economic slowdown. So the jobs report will be very closely watched at a time when the stock market is teetering. Canada is weaning itself off America's booze. It's not an intervention, but a counter move in the trade war between North American frenemies. Canadian provinces are yanking Jack Daniel's Kentucky bourbon and California wine off store shelves in retaliation to Trump's 25 % tariffs on Canadian imports.

8:49It's prohibition, but just for made in America drinks. Naturally, U.S. liquor execs are losing their minds. The CEO of Jack Daniel's maker Brown Foreman called it, quote, worse than a tariff. Because while tariffs make things more expensive, this just straight up deletes their sales. Ontario alone carries 3 ,600 American alcohol products before Premier Doug Ford declared them, quote, done, gone. This is not great news for Kentucky, where bourbon is a$9 billion industry supporting over 23 ,000 jobs. And while Brown Foreman insists it can shrug off the Canadian losses since they only make up about 1 % of its total sales, things get dicey when you factor in the post-pandemic sales slump the industry was already going through.

9:31Turns out that international beef, Neil, does not mix very well with the spirits industry. No, spirits and alcohol has long been a political football in trade wars, even if it doesn't account for a huge amount of sales. And, you know, Jack Daniels only does one percent of its total revenue in Canada. It's not going to make a huge impact, but it is more symbolic and is one of the levers that governments can pull to show their displeasure with what's going on in terms of tariffs and trade wars. because Canada government can't tell a random retailer to say, take that product off your shelf, but it does control the liquor stores.

10:10And so it's using that particular tool, that particular control that it does have. It has leverage there. And that's what it's using to kind of send a message saying you should buy Canadian and don't buy anything from America because we have the power to take it off the shelves. Yeah. And even though Brown Form is trying to shrug it off a little bit, Canada is the U.S.'s largest export market for alcohol. Over$763 million worth of American wine, beer, spirits end up there, get sold there. And this is a very interconnected industry. So something that happens in Canada, too, will result in potentially job losses in the U.S.

10:44The Distilled Spirits Council of the United States, which has the acronym DISCUS, which is very cool, estimates these tariffs could result in the loss of over 31 ,000 U.S. jobs. Obviously, that's coming from a perspective of someone advocating for the industry. But yeah, I mean, Kentucky governor has also spoken out against these tariffs, calling them incredibly difficult and challenging for his state. So it is interesting how decisions made by the premier of Ontario filter all the way down to, you know, Kentucky's bourbon industry. Meanwhile, we got some more updates on the trade war yesterday.

11:16President Trump delayed tariffs on Canada and Mexico for goods covered by USMCA, which is the free trade agreement he brokered in 2020 with those countries. So many goods are now being pushed back till April, along with the automakers delay, which we got earlier this week. Still, a White House official said about 50 percent of U.S. imports from Mexico and 62 percent from Canada may still face tariffs under the new regime. And Justin Trudeau, prime minister of Canada, had a call with Trump and said that he can confirm after that what he called a colorful call. There will continue to be a trade war for the foreseeable future.

11:57So you saw stocks sell off in a big way yesterday after these tariff moves. The Nasdaq closed at a correction, which is 10 percent down from its recent peak. Let's move on. Yesterday, intuitive machines made one small step for man and one giant leap for private companies landing spacecrafts on the moon. Maybe. Intuitive Machines Athena lander was supposed to touch down near the moon's south pole, making it the second private company this week to pull off a lunar landing. But as the clock hit landing time, Mission Control was met with a confusing situation. The craft didn't crash. Mission Control was receiving data from the spacecraft as it touched down, but it was clear that the spacecraft was not working quite as expected.

12:40NASA and Intuitive Machines cut their live train without confirming whether the lander was fully operational, and a later press conference did nothing to clear things up. If this all sounds familiar, it's because Athena's twin craft, Odysseus, did the same thing last year, landing successfully but then tipping over like a lunar Jenga tower. Engineers are now scrambling to figure out if Athena stayed upright or if history just repeated itself. NASA is footing the bill for this mission as part of its Commercial Lunar Payload Services Program, which hires private companies to deliver science experiments to the moon.

13:13Athena is carrying a drill to search for frozen water, a tiny rover to test a Nokia cell phone network, and a rocket-powered hopper designed to explore tricky terrain. But it's also carrying the hopes and dreams of the Texas-based private company whose stock cratered as a result of the craft's struggles to land near a lunar crater. It's really hard to land on the moon. When you're trying to land back on Earth from going to space, space. Earth has an atmosphere which serves as a natural braking system. Apollo 11 reentered Earth's atmosphere at almost 24 ,000 miles per hour and splashed down at about 15 miles per hour.

13:49It was helped by parachutes and that drag of the atmosphere. That does not exist on the moon, so intuitive machines had to slow down this lunar lander from 25 ,000 miles per hour to six miles per hour using no humans and just jet engines. That is hard. Firefly pulled it off. It has not exactly pulled it off. It hasn't really stuck the landing like Simone Biles in two different attempts, but it just shows how hard it is to land on the moon with a robotic lunar lander in the absence of atmosphere. It's not like it's rocket science, Neil. Actually, wait, in this case, it actually is. But you did mention the Firefly spacecraft.

14:29They have this little rivalry going. They're both Texas-based companies. They're both private companies pursuing moon landing missions. And it just so happened that they did them within the same calendar week. Firefly's landing on Sunday was deemed successful. Intuitive Machines Athena lander, that fate is unclear. Part of it is due to the design of each spacecraft. The design of Athena is very tall and narrow, while the blue ghost lander from Firefly is short and squat. So it's literally because intuitive is taller that it's more likely to tip over and these the the craft that it sent up this time is pretty much an identical copy of the one it sent last time so what's the sign of insanity doing the same thing over and over again expecting different results maybe they just need to go you know the saquon barkley route make this thing shorter make it squatter make the center of gravity lower because it keeps tipping over although we'll see what actually happened in this case because we still don't really quite know up next it is stock of the week dog of the week

15:35time.

15:57Series premiere Tuesday on NBC.

16:02When did making plans get this complicated? It's time to streamline with WhatsApp. The secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. It's Friday, and you know what that means. Pushing off emails and Stock of the Week, Dog of the Week. The segment where Toby and I pick one stock that landed on the moon and another that can't stay on its legs.

16:39Toby, you won the pre-show burping the ABC's competition, so you get to go first. Very gassy over here. For my Stock of the Week, it built its brand on kale and quinoa, but now it's making a play in the French fry game. Sweet Green, the fast casual salad chain, just introduced Ripple Fry. an air-fried, avocado-oil-coated take-on French fries that are supposed to taste great and not weigh you down with a metric ton of grease. And Wall Street is digging it so far. Shares popped 5 % this week after the company unveiled the fries, making a rare win for a stock that's been on a 34 % slide since early February.

17:15On paper, this move makes sense. Sweetgreen has been trying to break out of the$18 salad box for years now, rolling out dinner-friendly protein plates in 2023 and adding steak permanently to the menu in 2024. To them, fries were the next logical step as they search for a craveable item that are designed to keep customers coming back. Now, the company is still losing money, $90 million last year, so it's not like Ripple fries can save everything, but it's a bet that the Salty Snack can boost margins and drive foot traffic to continue its evolution beyond those pricey green bowls. I mean, it's International Women's Day tomorrow, and I think this launch was timed for that because this is Sweetgreen's attempt to complete the girl dinner, which has gone viral on social media.

18:00It includes Caesar salad, fries, and a Diet Coke. It has a Caesar salad, it has the Coke, and it needed fries. It's just another instance of a company noticing a trend on social media and hopping on it with a product introduction. I think you're definitely right on that, but also this term craveable is a term that industry execs use in the fast food industry, which is something like McDonald's fries, that you just go in, you probably add them to your order because they're good, they're salty, like you know what you're gonna get. And so they've been, Sweetgreen's been looking for a craveable menu item like that.

18:30They want to drive these repeat purchases. They also wanna differentiate themselves a little bit too that say, hey, we're not just salads. Like we can offer that comfort that fast food provides, but with a much healthier take on it. They're trying to trademark this name, Ripple Fries. Apparently they're pretty good too. I was reading some reviews of it And they said the biggest thing that you take away is like, one, it tastes pretty much like a French fry. But two, you can use your phone afterwards because there's not this layer of grease on it. And that comes from the air frying of it. So I do think that it will be relatively popular because of the fact that you don't feel like, I said you're weighed down with a metric ton of grease.

19:07That is kind of the feeling they're trying to avoid with these fries. My dog of the week is management consulting firms, which are currently getting a taste of their own medicine by the federal government. Firms like Booz Allen Hamilton and EY that are hired to streamline operations are themselves at risk of being streamlined away as Doge reviews government contracts with consultants and aims to rip up the ones that aren't providing value. It sent a chill through the sector on Wall Street. Shares of Booz Allen Hamilton, which relies on the public sector for 98 percent of its 11 billion dollars in revenue.

19:38Virtually all of its business have plunged more than 40 percent since the election of Donald Trump in November. Accenture, which gets about 8 % of its total sales from the U.S. government, is down about 14 % over the past month. Whether they can stop the bleeding may depend on high-stakes reports due today. The General Services Administration, the group that oversees procurement for the U.S. government, asked all federal agencies to justify contracts from the 10 highest-paid consulting firms with a deadline of Friday, March 7th. Dubbed Defend the Spend, they're being asked to identify which projects are mission critical and others that could be canceled with minimal collateral damage.

20:15Toby, it is a bit ironic for consultants to be asked, what would you say you do here? I mean, they are biting their nails and the nerves are definitely filtering through this industry right now because, you know, the scale and the speed of these cuts have been pretty unprecedented so far. More than 30 contracts have already been canceled in just six weeks. That is more than in any full year in recent history. So what's being targeted to, while some of these modernization contracts will definitely survive, like projects where you're updating IT infrastructure, things like DI initiatives are on the chopping block.

20:50You have seen already explicitly linked diversity initiatives have been axed as well. So what does it mean for the consulting industry? It is just a scary time for it. The industry analysts are expecting zero growth in 2025 with potential revenue declines in 2026. Because as these contracts phase out, the next logical step, too, is that you might have to reduce your bids for them in the future. Because if there's just there not as much demand from it from the government, then how are you going to, you know, bid? If you're Deloitte, how do you win out over Accenture? You might have to lower your bids for some of these contracts.

21:26And we're already seeing that happen. So just a major shakeup of an industry that has been kind of steady and stable. You know, you can say like piggybacking off the government for years and decades. There is perhaps a bull case to be made, though, because the federal government is trying to streamline systems, trying to update its technology. And as they cut workers, they might look for contractors to fill the void. So some some of these consulting firms say, hey, this is literally our bread and butter. So they're weathering the damage right now. And hopefully not hopefully for them, they will come back stronger.

21:59Let's sprint to the finish with some final headlines. Walgreens nearly 100 year run as a public company is winding down. The pharmacy chain agreed to be taken private by Sycamore Partners in one of the biggest leverage buyouts in recent memory, according to The Wall Street Journal. The last decade has not been kind for the place you buy everything from cold medicine to candy valued at more than 100 billion dollars in 2015. This deal gives Walgreens an equity value of around$10 billion, which highlights the challenges the company has faced as it's been squeezed by Amazon on the retail side and pharmacy benefit managers on the pharmacy side.

22:34The hope is that by staying out of the limelight of the public markets, Walgreens can better execute a much-needed turnaround. Yeah, drug search chains have just been getting hammered left and right. You are right. They've been struggling for years with lower reimbursement rates for prescription drugs. But then you also have this new competition from Amazon. They're also the front ends of drugstores just compete with everyone. When I say everyone, I mean Amazon. But you also you've seen pressure from larger competitors like Target, even dollar general stores when they're opened near these pharmacies, hurt chains in rural areas.

23:06So that's just even, you know, the front of front ends of drugstores. We're not even talking about the back ends here who, you know, dole out prescriptions. So it's just been very, very tough. And it has been this long and winding road from a hundred billion dollar company to, you know, getting bought out for around$10 billion today. Hope you're not planning on taking a train today from Paris to London because all Eurostar services between the two cities and others across Europe have been canceled for the remainder of Friday. Why? Because overnight workers discovered an unexploded bomb from World War II near a major station in Paris.