Elon is $20B Richer After the Election & TGI Fridays Owes $50M in Gifts

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0:27Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, just how friendly to business will a second Trump presidency be? Then how Elon Musk stands to cash in from his seat at the government table. It's Thursday, November 7th. Let's ride.

0:46Well, we are officially in a transition period between administrations. Kamala Harris conceded her election loss yesterday, addressing supporters at Howard University, her alma mater, and where she hoped would be the site of her victory speech. She spoke about the importance of a peaceful transition of power and also said she talked on the phone to the president-elect Trump to congratulate him on the win and formally concede the race. Yeah, now there is a 75-day transition period where Trump and his group of allies is going to need to create essentially an entirely new government and hire 4 ,000 government positions to fill his cabinets and things all the way down.

1:25Last time in 2016, that transition was led by the former New Jersey governor, Chris Christie, before Trump and Christie had a falling out. Then he gave it to his future vice president, Mike Pence. This year's transition co-chairs are the CEO of Cantor Fitzgerald, Howard Lutnick, who's been a big Trump supporter, and the WWE mogul, Linda McMahon. It's truly becoming the wrestling White House at this point. Now a word from our sponsor, Yahoo Finance. so we know that there was probably a lot of scrolling out of you all in the last few days, lots of screen time. And we get it. This is a time where social media can be a bottomless pit, devouring minutes and hours without even realizing it.

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2:59Elon Musk is known to be a gambler rolling over his successes in Zip2, PayPal, Tesla, SpaceX and more into newer and riskier ventures but perhaps none of his bets were as big or as risky as going all in on trying to get Donald Trump re-elected this year. Musk spent 130 million dollars through his political action committee to help elect Donald Trump, but he is already seeing that bet pay off tenfold. Shares of Tesla rose 15 % yesterday to reach a new high this year. He added$20 billion to his net worth since Wednesday. And perhaps most coveted of all, he's more than likely landed himself a seat at the table as a head of Doge, the Department of Government Efficiency.

3:41And more gains lie ahead. Musk's empire of businesses are heavily entangled with the U.S. government. SpaceX is a critical partner to NASA and the Defense Department. Tesla needs a favorable regulatory environment to help its autonomous robo-taxi dream become a reality. Plus, he owns NetX and Neuralink, which have received scrutiny from the FTC and the FDA. So now Musk sits at this uniquely powerful confluence of business and government, where he'll likely get a chance to advocate for his interest in Washington. Neil, he went all in, and it seems like he has won again. Yeah, there are two perspectives here.

4:14Supporters of Trump and Musk are looking at this as an incredible opportunity. I mean, this is a guy who caught a falling rocket with mechanical chopsticks, and now he's going to play a role in Washington, D.C., in the federal government, which many view as ancient and full of cobwebs and full of bloat. So having a person who has this business track record, who's built companies that are worth$800 billion in Tesla,$200 billion in SpaceX, is an incredible opportunity. They're super excited to see what Elon Musk can do as a part of the federal government or playing a role in there. Then you have the detractors, the critics of Musk, who are very concerned, first of all, with his politics and his rightward turn and his misleading information that he's promoted on X.

4:57But also the numerous conflicts of interest that arise when a businessman who owns so many of these companies that are entangled, as you mentioned, with the federal government, that are involved in investigations, that compete for contracts. what might happen there in terms of how musk could use this 130 million dollar bet to enrich himself even more in a trump administration yeah i mean musk has promised to cut two trillion dollars from the federal debt and he hasn't been very specific at where that might come from but i need to cut two trillion should it come from the contracts handed out to spacex or should it come from something else remember spacex has signed more than 15 billion dollars in government contracts over the past decade so again conflict of interest maybe we'll do cuts somewhere else Also, another place that we think that there could be some conflict of interest is that Starlink is trying to get in on this$42 billion internet expansion campaign that was rolled out under the Biden administration.

5:50It was supposed to put fixed fiber optic lines to reach rural America, but Elon Musk has long said maybe Starlink's a better option to reach those rural areas, which very well might be true. But again, the conflict of interest there is hard to overstate. If Elon is having a seat at the table that does give out contracts to SpaceX, to Starlink, of course that is a conflict of interest. And then one other area where I think this is going to be most important, Elon's role here, is in autonomous vehicle regulations. Tesla has changed its course recently from producing electric vehicles to compete with the legacy car makers to go all in on autonomy.

6:27And Elon has said in the past that he wants to use his role in the White House to create more streamlined regulations for autonomous vehicles. And his entire company is staked on that future. So I think that will be a very key regulation, just area of focus to watch autonomous vehicles, how to get them out on the road, because there are very hardcore regulations right now about what you can do in terms of rolling out, you know, self-driving cars. So if that is what the future of Tesla is staked on, and it is, then that is something Elon will have a big role in. But speaking of electric vehicles, it's not like it is a little bit counterintuitive because one thing that the Trump administration has spoke about is potentially rolling back the Inflation Reduction Act, the IRA, which did grant all these subsidies to the EV industry.

7:13And so you might think that is negative for Tesla. But on the contrary, Tesla is much more established than some of the other nascent electric vehicle programs at legacy automakers like GM, like Ford. And so they have the scale. They have the kind of margins in order to continue to operate profitably even without those tax credits. So what it would do is actually make it an even, they would be more competitive in the market than they are with these tax credit there. So it probably helps Tesla overall. One thing that could hurt Tesla though, is that Trump has promised to put heavy tariffs on China.

7:45Tesla has a Shanghai factory over there that does a significant portion of its EV deliveries. But again, on the flip side, the tariffs could end up just hurting its competitors BYD a lot more than Tesla. So even when you are looking at the things that could hurt Tesla's business, they still kind to loop around and end up helping it. Meanwhile, people in fields not even closely related to electric vehicles or space or anything that Musk is involved in is excited about the prospect of Musk getting in government and doing some deal making. Roy McIlroy, the golfer, said yesterday that he was excited about Elon Musk coming into government because he thinks he could finally close the deal on a Live Golf PGA Tour merger that has been brokered by the Saudi Sovereign investment fund.

8:30And so he said, you know, I think Elon Musk is the smartest man in the world. I'm glad he's in the government because now I, you know, now I'm hoping that he can finally close this deal. I know he knows nothing about golf, but he is a, he, you know, Rory McIlroy thinks he's a smart guy. So he's hoping he can finally get this deal done that has been languishing since 2023. And then let's just run down some names from the tech world that also congratulated President Trump on his win. Jeff Bezos weighed in. He tweeted, big congratulations to our 45th and now 47th president, which if you go through Jeff Bezos' Twitter feed, he's only tweeted two times in the last year.

9:03The first time was wishing Trump well after the assassination temp. So Jeff Bezos is kind of cozying up to this new administration because we talk about those government contracts. Jeff Bezos has a space company. He probably wants to get in on that as well. And then also some other tech leaders, I'll just run through them really quickly. Zuck, who has had a rocky history with the Trump administration, congratulated him on threads. Tim Cook tweeted out a congratulations. Sundar Pichai tweeted out a Google election map and said congrats to Trump. Satya Nadella also weighed in. Dharikas Rishahi. So you're seeing kind of this mobilization from the tech industry, trying to position themselves and see what this new Trump administration brings, but trying to start it off on the right foot.

9:40Meanwhile, the stock market went bananas yesterday. The S &P 500 climbed 2.5%, which is the best post-election day in its history. It closed at a record. Speaking of the other two market major stock indexes as well, the Dow shot up 1 ,500 points, which was its best day since November 22. It closed out a record. And then NASDAQ climbed almost 3 % to have a record of its own. So all three stock indexes, which typically go up the day after a presidential election, did so this year. And then diving into some of the more granular industries that were affected by a Trump win, Bitcoin hit an all-time high as Trump looks to be a more crypto-friendly president.

10:21Coinbase also jumped 31%. It's the biggest crypto exchange in the United States. And then big banks as well, looking forward to maybe a more lenient regulatory environment. Also had a great day. JPMorgan, Wells Fargo, they were all up double digits. So you can see kind of the industries that were jumping for joy the most after this Trump presidency win. And then the ones that were flopping were more of the renewable energy ones that might not benefit. The Invesco Solar ETF, which is a group of solar companies, fell almost 11 percent. And then cannabis stocks also got crushed after Florida rejected that proposal that would legalize recreational marijuana in the state.

11:00Let's move on to talk monopolies and mergers in a second. Trump administration. For the past three years, the Biden administration, spearheaded by the antitrust crusader FTC chair Lena Kahn, have unleashed a historic crackdown on companies they accuse of being monopolies. They viewed market concentration as a central force, driving up prices and boxing out little guys from competing. So what changes will a new Trump administration bring? Probably a more relaxed approach to antitrust. Trump has already signaled that he'd be less harsh on big tech companies. For instance, he's been skeptical of a government proposal to break up Google, which was found to maintain a monopoly with its search engine.

11:37Back in October, Trump said, if you do that, are you going to destroy the company? What you can do without breaking it up is make sure it's more fair. So more hesitant to get tough on tech. And as far as mergers go, it looks like the floodgates could be opened. Trump is expected to oust Lena Kahn as chair of the FTC, who has blocked many deals from being completed, leading to a wave of M &A. And that was clear as day from the surging stocks of Capital One and Discover yesterday. Remember, these credit card companies are planning to merge in a$35 billion mega deal, but the Biden administration was expected to challenge it.

12:10Now they've gotten the green flag. Discover popped 20 % and Capital One rose 15%. Yeah, I mean, you look at some of these investors, these big name investors, Carl Icahn, for instance, said that he thinks mergers and acquisitions will skyrocket under Donald Trump. He said a lot of these mergers have been thwarted by the current administration. If he wins, that's not going to happen anymore. Lena Kahn has been this rising star under the Biden administration. We spoke about what even Kamala Harris was being a little, you know, flip floppy on if she would bring her back just because of how kind of much of a force she has been in pushing back against these big mergers, against these big antitrust suits.

12:47Now it looks like she's on the outs. And so big businesses and big tech kind of up and down the antitrust landscape are cheering now because their biggest foe is now looks to be heading out. All that being said, though, you have to remember that under the first Trump presidency, antitrust wasn't some toothless thing. I mean, in his first term, a Trump DOJ actually fought to block AT &T from buying Time Warner. They applied these big divestiture requirements for T-Mobile's deal for buying Sprint. And then in tech, Broadcom was back from buying Qualcomm. And the FTC under the last Trump administration actually was the one who sued Google for acting as a search monopoly.

13:23So it wasn't like some completely, you know, utopian place for for these M &A deals. There definitely were still some teeth under the first Trump administration. Absolutely. I think people are having short memory. In fact, deals activity was higher during the Biden administration than the Trump administration. There was a lot of unpredictability you get with Trump. He could not like you like he didn't like CNN. And that's why they tried to block AT &T from buying Time Warner. He's against Nippon Steel buying U.S. steel. There are a lot of times where he's been against companies for certain reasons that we can't explain.

13:59But maybe they've slighted him. Maybe he feels that it's not good for the United States. But it certainly was not this M &A utopia. And you're seeing investors react like it will. Maybe that is in reaction to, you know, Lena Kahn and her counterpart at the DOJ leaving in a new Trump administration. But absolutely, I think there's a lot of unpredictability you get with Trump. And in the past, there wasn't a lot of M &A. So it might not be this paradise for corporations and they'll learn the hard way. One tech company that probably is pretty happy with the Trump victory, though, is ByteDance, who owns TikTok.

14:33Remember, this TikTok ban bill was passed by Congress and signed into law this year. By January, TikTok is supposed to divest or sell off its U.S. operations or face a nationwide ban. That might not happen under Trump, though, because even though he spent most of his first term in office trying to ban TikTok, he kind of did a 180 and flip-flopped on that, changed his mind, and he has pledged to save TikTok in the United States. So that is one company that definitely could benefit from a Trump administration if he does follow through on his word and fight to protect TikTok in the U.S. Up next, yes, the election is important, but you know what else is important?

15:09Neil's numbers!

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15:55Lowe's. We help you save. Basic install only. Date restrictions apply. Subject to availability. Install by independent contractors. See associate for details. contiguous U.S. only. Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will help you feel those five minutes of awkward silence at the start of a Zoom call. My first number helps explain that decisive Trump victory on Tuesday. As political strategist James Carville famously said, it's the economy, stupid. According to a network of exit polls, two-thirds of voters rated the economy as not so good or poor compared to one-third who rated it as excellent or good.

16:33And of those voters who rated the economy negatively, nearly 70 % opted for Trump, a margin that fueled his reelection. But as we've talked about on the show many times, the U.S. economy is doing better than it has in decades. With low unemployment, strong job growth month after month, and rising output, it's the envy of the world. So what gives? The pain of inflation, feeling your wallet get stretched thin, appeared to be more salient than those other macroeconomic indicators. Just two years ago, Americans faced 9 % inflation, the fastest rise in 40 years. While inflation has come down to more normal levels, voters are still paying more for those daily necessities like food and housing than they used to.

17:12And they rejected, fired really, the people who were in power during those price hikes. And this is not just an American story. It's important to have some global context. Leaders all over the world who were in charge during high inflation, such as the UK's Rishi Sunak, Macron in France, Kishida in Japan, All faced electoral defeats this year. As The Wall Street Journal's Greg It put it, inflation has been an incumbent killer everywhere. Yeah, economy is doing well overall. You can look at GDP growth. You can look at unemployment being low. You can look at the job market. But really what people are looking at is their grocery bill.

17:43Prices are about 20 percent higher now than they were when Biden first took office. And then you mentioned home prices as well. Home prices have reached new record highs for 15 straight months. So, again, you can look at you can point to any data point and say, oh, no, wait, we're doing great. People can also counter back with another data point that's saying, never mind. It's the economy is stinging in ways that you kind of aren't looking at. But perception often is reality. You said Republicans are three times more likely to think the economy is good when a Republican is office Democrats than when a Democrat is in office.

18:14The same is true for vice versa. So a lot of it just comes down to who your political affiliations are and who is in office, who is in office. that usually kind of belies how you're going to think about how the economy is, regardless of maybe what the actual macroeconomic data shows. For my second number, investors who correctly placed bets on Trump to be reelected are set for a major windfall. The thousands of people who gambled on the election and won can look forward to a potential payout of about$450 million from online gambling sites after the election. $287 million of that payout is arriving from the crypto platform Polymarket, which doesn't allow U.S.

18:52users, and a pot of 159 million will hit bank accounts from the U.S. platform Kalshi. One gambler in particular probably won't clock into work for a while. A French trader known as the Polymarket Whale made a total profit of$48 million wagering on Trump to win the election. Toby, prediction markets have gone from a niche tool used by academics and degenerates to mainstream adoption. Kalshi and Polymarket were the most downloaded free apps on the Apple App Store yesterday. Yeah, I mean, we mentioned that Polly Market, Prediction Markets, and Kalshi were winners because of how accurate they turned out to be.

19:26But also, there were real winners who bet on the election as well that are getting these big payouts. I do just want to dig into that French Whale story a little bit because this guy wagered almost$30 million on Polly Market. So what was his big insight here? He knows that there is a difference in polls asking, who are your neighbors voting for versus who are you voting for? That had Trump overperforming. So it was maybe one of those things where even amongst when people were getting pulled, they didn't want to say that they were voting for Trump. But the neighbor poll, he commissioned his own neighbor poll.

19:57So he did do like a little bit of digging, thought that he found like this arbitrage opportunity and went very, very big, which is only allowed recently because of the rise of these prediction markets. And he's walking away with, yeah, nearly$50 million because of it. And I just want to put just the numbers in context here. So So Americans wagered$123 million on Kalshi in the days leading up to the election. Compared to sports betting, that's a not a lot. $2.7 billion were wagered on March Madness this year. $23 billion was wagered on the Super Bowl. So this is a tiny market now. I know I said it's mainstream, but I still think it's pretty niche.

20:35But after this election, I think its role will only grow going forward. For my final number, TGI Fridays has a$50 million gift card problem. The restaurant chain, which went bankrupt over the weekend, is staring down the inconvenient fact that people are in possession of$49.7 million worth of unredeemed gift cards that never expire. And if you just went, wait, what? So did the judge overseeing this case. Bankruptcy judge Stacey Jernigan acknowledged, quote, I did a double take on that, noting that some of the gift cards date back to 2003. For a financially strapped company like TGI Fridays, the prospect of having to pay$50 million to gift card holders is as daunting as ordering a refill of a Long Island iced tea.

21:19It's especially alarming for its franchisees on the front lines. Most TGI Fridays are franchises, and they rely on the parent company to reimburse them for redeem gift cards. It's doubtful that TGI Fridays corporate, even with a loan of$5.9 million, has enough money to cover them. Toby, this company is praying that most of these gift cards are buried so far inside someone's purse that they're gone forever. I imagine across the country right now there's a rush to find TGI gift cards, checking under beds, checking in wallets. But I was doing some digging on if this happens to other bankrupt companies, and it absolutely does.

21:55Borders, when it went bankrupt in 2011, it gave gift cards only a short window to redeem their gift cards. In 2015, Radio Shack actually stopped accepting gift cards, but then under pressure from state attorneys general, they actually had to honor them going forward for a limited time. Same thing happened with Sharper Image. These are names from my childhood, by the way. Sharper Image went bankrupt in 2008. Same thing. State attorneys general jumped in and made them allow limited gift cards. So there are a long history of companies trying to wriggle out of allowing people to redeem their gift cards.

22:26I don't know if TGI Fridays is going to try something similar, but it is not easy to say like, hey, you cannot use these because we are going through bankruptcy, usually you have to allow like a certain limited period where customers can't do that. Yeah. TGI Friday says it does plan to continue to honor the gift cards and the judge allowed it to proceed. So it looks like if you do find this gift card, you know, just go to TGI Fridays, but know that the franchisees might be on the hook because the corporate parent might not be able to pay it. Just a wild story. All right, let's sprint to the finish with some final headlines.

22:59On Sunday, Mariah Carey declared it's time to start celebrating the holidays. Today, Starbucks is declaring its time by rolling out its annual seasonal cups and holiday menu. Beginning today, customers at U.S. Starbucks locations will get their hot drinks served in one of those four festive cups as part of an annual tradition dating back to 1997. Of course, any promotion Starbucks does these days takes on heightened significance and needs to get more people in the door. Sales have dropped for three straight quarters and new CEO Brian Nichol dubbed the messy of the restaurant industry is promising dramatic changes to turn things around.