Govt. Shutdown Threatens Food Stamps & AI Giving Performance Reviews?

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0:31Good morning for your daily show. I'm Neil Freiman. And I'm Toby Howell. Today, would you let AI write your performance review? Then Qualcomm is getting into the AI chip game, much to the delight of its investors. It's Tuesday, October 28th. Let's ride.

0:52Good morning. Happy Tuesday. Today, October 28th, is really quite special. And not just because it's julie roberts's birthday october 28th is the best day of the year for the s &p 500 on average according to market strategist ryan dietrich going back to 1950 the index has gained an average of 0.5 on this day making it the most bullish day on the calendar which is why toby i am absolutely shocked to see stock futures flat right now do they not know they're supposed to go up they do not know they do not behave first of all this is replacing horoscopes in my mind going forward. I don't care if you're a Leo or a Pisces.

1:31Give me the S &P average return on your birthday and I will know your personality. Neil, August 21st, I looked this up. A slight 0.4 % loss. That means you're stable, reliable, nothing too flashy and maybe a tad pessimistic. Myself, February 24th, 0.11 % gain, optimist, great hair, impeccable sense of humor. And if your birthday is today like Julia Roberts, happy birthday. You're the life of the party because you make everyone richer. And now a word from our sponsor, Disney Campaign Manager. Fandoms are everywhere. You name a show, movie, or public figure, and it probably has its own niche fan club.

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2:51That's because Friday, November 1st, is the deadline for a number of expiring programs that will cause significant pain to tens of millions of Americans should the government remain closed. On that day,$9 billion of SNAP benefits or food stamps will not be sent to more than 40 million Americans, something that's never happened before in modern US history. American troops will also miss their next paychecks on Friday, and people looking for healthcare under the Affordable Care Act will see major price increases in premiums. And it seems like things are hanging by a thread right now. More than 8000 flights were delayed across the country on Sunday, joined by thousands more yesterday because absences by air traffic controllers who aren't being paid.

3:33Furloughed federal employees who haven't been paid in weeks are turning to the gig economy to work for Uber and DoorDash. And daredevils have taken over national parks that are open but understaffed. With a deal to reopen the government nowhere in sight and President Trump over in Asia with other priorities, some lawmakers are scrambling to find emergency funding sources for certain programs like SNAP that could cause major harm to Americans if suspended. But the clock is ticking. Yeah, let's start with the transportation crisis that's happening right now. I was looking at FlightAware yesterday afternoon.

4:06On Monday, Southwest had 15 percent of flights delayed, American 12 percent, Delta 9 percent. but the reasons behind those delays are becoming extremely apparent right now. U.S. Department of Transportation officials said 44 % of the weekend's delays stemmed from controller absences. That is up from the usual 5%. So you are seeing a lot of people start to call in sick here. A lot of people say, I'm not getting paid. Why am I working while no one else in the government is working right now? And the FAA is already dealing with a shortage crisis. They think there are 3 ,500 air traffic controllers short of targeted staffing levels right now.

4:40So again, if you are a normal everyday person, you're wondering how the government shutdown affects you. Flight delays are going to be one of the one things that are increasing in volume right now. Yeah, right now there are 730 ,000 federal employees working without pay because of the government shutdown. Air traffic controllers and TSA agents included. Another 670 ,000 federal workers are furloughed without pay. So they are not working. They are also not getting their paychecks. Let's move to SNAP. So about one in eight U.S. residents get an average of one hundred and eighty seven dollars a month through the Supplemental Nutrition Assistance Program.

5:17That's called SNAP. It's the country's largest anti-hunger program. It funding is going to lapse on November 1st on Friday if the government doesn't get their act together and reopen. This is uncharted territory. This has never happened before where there's a funding lapse of SNAP. There's a lot of bickering going on between hunger nonprofits and the USDA, which runs the program. Hunger nonprofits say you can find there are emergency contingency funds that you can dip into in order to get this nine billion dollars out the door on November 1st onto these debit cards to replenish funds so people can go buy food.

5:53The USDA has shot back saying, no, that is illegal. We are completely tapped out. So there's a lot of fight. Meanwhile, a hunger crisis is potentially brewing should these payments not go out. Food banks across the country are staffing up. They're seeing a lot longer lines from a lot of those furloughed workers who are not seeing a paycheck. And that could only grow into a much more damaging situation should these these checks not go out on Friday. Right. You mentioned that these contingency funds right now, they're saying they're not legally available because they said that they're earmarked for emergency situations.

6:25And a government shutdown doesn't classify as an emergency situation. That leaves a about a four billion dollar shortfall right now. The SNAP program needs about$9 billion monthly to stay solvent. So obviously the program is a little short to stay solvent as of right now. There are some bills that are being floated right now. Senator Josh Hawley introduced a bill to temporarily fund SNAP through the shutdown, but it hasn't necessarily advanced. We are seeing some stopgap bills starting to come both to address the air traffic controller situation. Ted Cruz is trying to get one pass that would pay air traffic controllers specifically during the shutdown.

7:03while this one is trying to fund a snap through the shutdown. But those bills haven't garnered a lot of attention as still the broader shutdown is the main focus here. And meanwhile, the shutdown is having some bizarre secondary impacts in ways you might not expect, such as base jumpers taking over Yosemite National Park. Typically, it's been rare to see people hurling themselves off El Capitan with nothing but a parachute because that risks a$5 ,000 fine and up to six months in jail. But half of all workers at Yosemite have been furloughed and enforcement of illegal base jumping is down. So since the shutdown started on October 1st, visitors to the park have noted with amazement that they're seeing base jumpers fly over them in broad daylight with little fear of getting caught and little fear of much else, apparently.

7:47As one climber said, when the cat's away, the mice will play. I learned two things when I saw this story. One, base jumping is an acronym. I always just thought it meant jumping off something big. It means buildings, antennas, spans, and earth, which is a great trivia fact. And two, I didn't realize that so many people just love this sport and that the only thing holding them back was, one, the fear of fines, the fear of jail time. I guess that all kind of goes into making the entire experience something thrill-seeking. But, yeah, fascinating to see how people react in times of shutdowns. This is not something that you necessarily think about at the top of your list of what happens during government shutdown, But, you know, all the power to the people jumping off El Cap.

8:31I've seen Free Solo. I do not want to mess with that wall. At least they have something attached to their back versus Alex Honnold with nothing at all. All right, moving on. It's almost performance review season. Everyone's favorite annual tradition when you have to make up a bunch of things you accomplished at work this year to present to your uninterested boss. Or here's another idea. AI could do that for you, which is more along the lines of what J.P. Morgan is thinking. According to the Financial Times, JPMorgan is giving workers the option to use its in-house AI system to help them write end-of-year performance reviews.

9:05The goal is to make the process more efficient. JPMorgan Chase has more than 300 ,000 employees around the world. That's a lot of shareholder value going down the drain when each one of them has to set aside time to explain whether they hit their 2025 goals. It could work. Boston Consulting Group has already instructed employees to use AI for performance reviews, which cut down writing time by 40%. Toby, we're seeing AI creep more into the workplace, and it's no surprise it's disrupting the lowest hanging fruit. Performance reviews, something no one likes doing. Yeah. When I first read this headline, I thought it's just the worst idea ever because performance reviews hypothetically should be something that you are spending time thinking about because this does have to do with both reviewers and revuees.

9:49It should be something that you do spend time thinking about. But if you are a bank and you're thinking about time equals money, then cutting down the time people are putting into these performance reviews, maybe they weren't putting their entire effort into it in the first place, that does lead to freeing up more time to work. Also, some standardized feedback could be good in this scenario right now instead of playing favorites. If you just have an LLM that kind of level sets everything that it won't lead to a manager saying like, oh, I like this employee better than this employee. It will just kind of standardize everything.

10:23So those are some potential benefits, even though on the service it does feel a little inauthentic and a little icky to have AI creeping into this more personalized aspect of the work experience. Right. Like what's the point of doing a performance review if you have a bot do it for you? That said, if it is a part of the workplace and I still need to do it, then sure, I'd have a bot do it because honestly, I hate doing them. And I'm sure a lot of people listening feel the same way. And then speaking of AI infiltrating the workplace, here's another consequence of that. Your accounting department is probably dealing with right now fake expense receipts.

10:55Expense software platforms are warning of a surge in fraudulent expense receipts created by employees using new AI image generation tools from companies like OpenAI and Google. According to the Financial Times, the fintech company Ramp said that it flagged more than$1 million in false invoices in 90 days, while AppZen said that about 30 % of the fraudulent receipts it catches are generated by AI. And it makes sense. If you're trying to cheat your company out of money, why burn your retinas trying to Photoshop a fake receipt when you can just type in AI prompt, write me a receipt for a dinner I had with clients at the Capitol Grill.

11:29We ordered six Wagyu tomahawks and nine bottles of wine. Thank you. Of course, I joke, but this is actually happening. Abzen said it flagged a bunch of AI-generated receipts for hotels and airfares to Bangkok by an employee who did not go to Bangkok. Yeah, obviously, I tried this. First thing I did when I read this story is type in, generate me a receipt, I said, of a Starbucks receipt at Boston Logan Airport. And the first thing it gave me wasn't actually that good. You have to prompt it a little bit. It gave me a European total, too, with a comma instead of a decimal. So then I asked it one more time, like, hey, make this a little more crinkly, a little more lifelike.

12:07And what it did do is say, stop, what will this receipt be used for? And actually said it's not okay if it's for reimbursement or trying to deceive anyone financially. But then I just said it's for an art project. And then it allowed me to continue down this path of making receipts. So clearly the safeguards in place around generic LLMs, this was using ChatGPT, isn't necessarily up to snuff right now. So if you are someone who works at your company and you are trying to get ahead of this corporate fraud, a new frontier or something like that, I do feel for you because of the barrier to entry. Like back in my day, you had to Photoshop it manually.

12:45Now it's a lot easier to just type in a sentence and have it generated for you. And of course, the only way to fight AI is with AI. So these companies, these expense software platforms are going to be beefing up their AI flagging systems because that's the only way that you can possibly tell that something is fake. The naked eye just won't do it. There is metadata included in these images by OpenAI and Google. They say like, if you dig into the data that says this was created by an AI image generator, but all you have to do is take a picture of that and then the metadata goes away. So there's going to be an arm race here between the companies and these scammers over fake receipts.

13:23Moving on, if anyone grew up playing Super Smash Brothers bra there's this moment when you unlock a new character where the screen flashes red and a text appears a new challenger approaches flashes on the screen well the real life version of that just happened in the ai chip race with qualcomm entering the arena qualcomm announced two new ai accelerator chips yesterday the ai200 and the ai250 designed to speed up ai processing encroaching on the territory currently dominated by nvidia you may not have heard of qualcomm but you've almost certainly benefited from its products before. It's the dominant chip maker for mobile phones, including supplying cellular modems to Apple for decades.

14:03But with Apple building their own modems in-house going forward, Qualcomm needed to find a new business in the AI world back-end. The niche it's targeting with this foray into AI is high-memory chips that are good at running AI models, a process called inference, rather than training models which other companies specialize in. Qualcomm will sell whole racks of chips or individual components, letting big hyperscalers from the big tech world mix and match should they choose. A win for companies like OpenAI who want to diversify away from relying solely on NVIDIA. Clearly, the market liked its positioning too, with the stock jumping as much as 20 % yesterday on the news before settling up 11%.

14:42Neil, Qualcomm has been sort of the forgotten chipmaker amidst the AI rush, but better late than never, I guess. Qualcomm is like Billy Joel playing a set and not including Piano Man. You got to give the people what they want. You got to play the hits. And if you're not in the data center game as a chip maker, then you're missing out on a whole lot of revenue. $6.7 trillion is estimated to be spent on data centers through 2030. $6.7 trillion. So any little slice of that is a ton of money and a lot of incremental revenue. NVIDIA is the dominant company in this space right now. It's going to generate$180 billion from its data center unit this year alone.

15:21That is more than any other chip maker, including Qualcomm, will rake in in revenue in total across their entire business. So Qualcomm is looking at this saying, yeah, we've been in smartphones for a long time. Let's adapt what we know we do well in smartphones, which is low power use and high memory, and move that into the data center market where this entire industry is going. Yeah, I think that is the big selling point of Qualcomm right now is their memory capacity. They actually have more memory, more RAM per card than NVIDIA or AMD equivalent. So if you are looking to run these models, which again, there are two main things that you do with these AI chips.

15:56Either you train models or you run them called inference. Inference, very costly, not very efficient. So any efficiency gains that you can be made is something that these big hyperscalers are obviously interested in. And Qualcomm is like, hey, listen, we've been making chips that fit in your smartphone for years right now. If there's one thing we do know is efficiency and energy efficiency specifically. So maybe that is its niche, maybe edge case here that some of the other companies haven't necessarily been able to crack so far. And then finally, the other thing that it's really good at too is this plug and play mentality where, again, if you are open AI and you're relying so heavily on NVIDIA, but you want to scale up another data center somewhere else and some of the chips aren't right or some of the racks aren't right, You want someone that you can just slide right into your existing system.

16:45And Qualcomm says, hey, we're down for that as well. So we are flexible. We are efficient. Give us a try is basically the pitch here for Qualcomm. All right, we're going to take a quick break and come back with Toby's Trends. You know that saying, more money, more problems, Toby? Of course. Why do you think my life is so chaotic? Sure. Well, with startups, it's more like more money, more security. Big enterprise deals usually come with even bigger security and compliance requirements. Yeah, the right kind of security posture doesn't just protect you, it can actually make or break a deal. Thankfully, Vanta's AI and automation makes it easy for you to get big deal ready in days.

17:24They automate your compliance and continuously monitor your programs so future deals never get blocked. Plus, Vanta scales with your company so you'll always have the support you need no matter what growth phase you're in. Morning Brew Daily listeners can get$1 ,000 off at vanta.com slash morningbrew. That's vanta.com slash morningbrew. This message is a paid partnership with Apple Card. I'm a person who really appreciates simplicity. And when it comes to credit card rewards, the simpler, the better. That's one of the many reasons I have an Apple Card. The rewards are super straightforward. I earn up to 3 % daily cash back on my everyday purchases.

18:02There are no points to calculate, no limits or deadlines. Plus, it's super easy to access my card and make payments from the wallet app of my iPhone. If that sounds like the kind of simplicity you want in a credit card, apply for Apple Card in the wallet app on your iPhone. Subject to credit approval, Apple Card issued by Goldman Sachs Bank USA Salt Lake City Brands. Terms and more at applecard.com. Welcome back to another edition of Toby's Trends, the segment where I take a deep dive from the business world to emerge with a trend that will give your brain a sugar high. And speaking of sugar, today's trend is a deep dive into the recesses of your jack-o'-lanterns because it's all about what's hot in the Halloween candy market this year.

18:41The New York Times did a write-up and found that the overarching theme for 2025 is that kids just want to feel something. Flavor maximalism and extreme sensory stimulation are in. That means when you steal some of your kids' candy, you'll be confronted with extreme sour flavors, freeze-dried takes on classic candies, and enough goo-filled nerds clusters to last you a lifetime. If you are doing some grazing, beware of Skittles Gummy Fuegos, which are Skittles gummies coated in chili powder. You'll notice that I haven't mentioned any candy bars yet, and that's because these are dark times and deeds for chocolate.

19:16Cacao prices have more than doubled since 2023, sending chocolate candy prices up nearly 30 % year over year, stretching inflation-weary shoppers thin. A surprising comeback story this year is none other than candy corn, which has thrived in the social media era as creators make ASMR candy salads that rack up millions of views of what I can only assume to be hate watches. Neil, what do you think? Would you rather be a kid now with their current candy lineup or are you sticking to your era? What has Halloween come to? I mean, back in my era, we were going after the big guys, Snickers, Reese's, Twix, and Hershey's.

19:52It was physical. It was defense-oriented. It was hand-to-hand combat. It was a pure time. Now that we've moved on to these gummies and sour things, I just don't recognize Halloween anymore. Yeah, it definitely is. Gummies is probably the name of the game at this point. The New York Times kind of tried to frame it as in this age of social media where kids are just mindlessly scrolling all the time. They just want something new and different, which is why you're seeing these hot candies, these extreme flavors. And it probably is true. The candy market is shifting away from just normal Hershey's bars from your era into something more exciting.

20:25Another thing that they mentioned as a trend is that there's this unpredictability element that candy companies are putting in, which is Jolly Rancher trick gummies where the colors don't match the flavors or Sour Punch Ghost Pepper Roulette, which has hidden ultra spicy pieces. again one of the themes that we keep seeing pop up here is spiciness which again we were saying back in my era we just stick to the classics where's the spiciness coming from i don't want spicy i want sweet on halloween but yeah that's another thing is like trying to inject a little bit of fun a little bit of unpredictability into your candy purchases the one thing we can't have on halloween though is healthy and that seems to be coming to overall sales of gummies were up less than 2 % this year, but sales of better for you versions that have less sugar and don't have artificial colors surged 54%.

21:16And that just doesn't sit well. I got to get your take though on the candy corn salad ASMR trend here. First of all, are you a candy corn guy? I feel like you might. I do not like candy corn. Okay, good. But it is crazy. They still, the branch, the company that makes candy corn sells 22 million pounds of candy corn per year. Is it ironic or please leave us a DM on Instagram if you love candy corn because I know you're out there. I don't know if you enjoy it ironically or if it's something that you're like, mmm, delicious candy corn, but that trend is never something I can get behind. All right, let's sprint to the finish with some final headlines.

21:49Hurricane Melissa is expected to make landfall on Jamaica later today, setting all kinds of records. The Category 5 is the world's strongest storm this year, and it'll likely be the strongest to ever hit the island in recorded history with maximum sustained winds of 175 miles per hour. Officials are warning of life-threatening conditions from a storm surge of up to 13 feet and torrential rain that could reach 40 inches in some places. Jamaica's Prime Minister, Andrew Holness, said they've done all they could to prepare, but there's no infrastructure in the region to withstand a Cat 5. Now, the only question is speed of recovery.

22:24Right. Jamaica hasn't had a direct hit from a hurricane in over a decade, let alone from a Category 5. So it is expected to be the strongest storm to have hit the island since record-keeping began all the way back in 1851. I was looking this morning, meteorologists said that minimum central pressure of the storm decreased from 909 to 901 millibars early on Tuesday. Again, lower the pressure equals stronger the storm. To put that into comparison, Hurricane Katrina's lowest pressure ever was 902 millibars, so this is already a stronger storm than Katrina ever was. Moving on, Amazon is looking to get leaner and meaner with the e-com giant expected to cut as many as 30 ,000 corporate jobs across departments.

23:11The announcement is slated for today and follows CEO Andy Jassy's push to streamline operations and reduce costs after Amazon's pandemic-era hiring spree. It also reflects Jassy's growing emphasis on using AI to automate tasks once handled by humans, something we've talked about at the factory level, but also a shift he's warned will shrink the corporate workforce over time. Even though the figure represents a small percentage of Amazon's 1.5 million total employees, it does come out to nearly 10 % of its roughly 350 ,000 corporate employees. employees. Now, we often talk about Amazon's warehouse workers as a limit test for the broader job market.

23:48But now this is a shot across the brow of the white collar market. Even for Amazon, 30 ,000 jobs is a lot of jobs. It's going to be the biggest layoffs in Amazon's history. And this was signaled in June by Andy Jassy, who sent this memo that sent shockwaves around the corporate world. He said he told employees in the next few years, we expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company to send off a panic within Amazon and across anybody who works at a desk job. Because if Amazon, which employs 1.5 million people, the second largest employer in the United States, is thinking about reducing their workforce instead of increasing their workforce going forward, then what does that mean for the rest of us?

24:33So we'll be paying attention to the details of these layoffs today and bring you more tomorrow. It's not easy to make Donald Trump and Joe Biden seem young, but Cameroon is doing its best. Yesterday, President Paul Bia was announced as the winner of the recent election, extending his reign as the world's oldest serving head of state. He's 92 years old, and if he sought out his new term, his eighth, he'd be running the country at nearly 100 years old by the time it was over. Most Cameroonians have never known anyone else as president. It's a very young country with more than 70 percent of the population below age 35.