House Passes Potential TikTok Ban & Tesla Recalls Almost 4,000 Cybertrucks

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0:27Good morning for your daily show. I'm Neil Freiman. And I'm Toby Howell. Today, you better get acquainted with Instagram Reels because TikTok is on very thin ice in the U.S. Then the U.S. dollar is stronger than ever. We'll tell you what that means for the global economy and your summer vacation plans. It's Monday, April 22nd. Let's ride.

0:51Happy Earth Day, everyone. Toby, what is your favorite Earth fact? My favorite Earth fact is more of a geometry fact. Say you have a piece of rope that fits snugly around the earth, all 24 ,900 miles of it. But then you want to raise that rope off the ground by one meter. So you go around, put one meter high sticks holding the rope up around the equator. How much longer would the rope need to be to make ends meet? And the answer is just two times pi meters, just 6.3 meters. That is it. It's an insane fact. I don't get it. It's just a matter of geometry. It doesn't actually matter how big the sphere or the circle is that you're putting the rope around as long it could be the size of an atom or the size of the earth as long as it is a circle and you raise it one meter it's always going to be two times pi meters that it's just stuck with me yeah what's your favorite my favorite fact is just how old the earth is and how new animals are so the earth is 4.5 billion years old dinosaurs didn't show up on earth until maybe about 240 million years ago so dinosaurs from dinosaurs to now is only five percent of the earth's entire time span.

1:58So there was so much time on earth that was just literally nothing. There were volcanoes going, nothing much was happening. Maybe there were a few microbes or whatever, but we are just so new. Even humans, I mean, have not been around for a long time at all. So just in the earth's time span, we are just so, we're just fresh people here learning about what this is all about. Happy earth day, everyone. Now let's hear a word from our friends over at Robin hood, not to get all introspective on a Monday, but Neil, have you put any thought towards retirement. Toby, I'm never retiring. We talked about this.

2:30We're riding Morning Brew daily till our bodies give out. And I'll be right here beside you. But in the meantime, you can at least start planning for the future. And what better way to do that than with an IRA? Robinhood is a great place to set up an IRA, whether you're traditionally employed or not. Robinhood has a whole host of ETFs that you can pick from based on your risk tolerance and sector preference. Or you can pick out all your own stocks for the long haul as well. And as a Robinhood Gold subscriber, my retirement contributions get 3 % match too. Learn more about the Robinhood app in the App Store or Google Play Store.

3:04Disclosures, investing is risky. Investors should consider the investment objectives, risks, and charges and expenses of any ETF carefully before investing. Be sure to review a prospectus before investing. Limitations apply to the retirement match. More information in the description of this podcast. Race the rudders! Raise the sails! Raise the sails! Captain, an unidentified ship is approaching. Over. Roger. Wait, is that an enterprise sails solution? Reach sails professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title, and more. Start converting your B2B audience today.

3:41Spend$250 on your first campaign and get a free$250 credit for the next one. Get started today at linkedin.com slash campaign. Terms and conditions apply. Well, the TikTok ban just got very real. Over the weekend, the House passed a bill that would require a forced sale or ban of TikTok in the U.S. within a year. The bill is expected to get through the Senate as soon as this week and will almost certainly be signed into law by President Biden. So TikTok's days could very well be numbered here in the States if its Chinese parent ByteDance doesn't sell the app. And that will have major ramifications for TikTok's 170 million users, its American social media competitors, and the tense relationship between U.S.

4:25and China. Here's why lawmakers on both sides of the aisle want to ensure TikTok has an American owner. They fear that U.S. user data could wind up in the hands of the Chinese government, which has a law that can compel private companies to fork over information. There's also concern that Beijing could put its thumb on TikTok's algorithm to promote its interests and influence American public opinion. TikTok says it has never sent US user data to the Chinese government and wouldn't do so if it was requested. Still, Toby, this TikTok ban has been floating around for years now, and it looks finally like it could happen.

4:59Yeah, let's dig into why we're finally saying this TikTok ban has the legs to actually make it through the Senate this time around. It's because it's not just a standalone bill. It's almost like a Russian nesting doll of other bills. It's part of a bill related to sanctions on foreign adversities like Russia, as well as bills to provide aid to Ukraine, Taiwan, Israel, Gaza. So it makes it more likely to pass the Senate. Also, they relaxed the timeline a little bit. Remember, the previous incarnation of this bill required by a chance to find a buyer within six months, which a lot of people said that's a little unrealistic.

5:32So this one relaxes that deadline to nine months, and it can extend all the way up to a year. So that is why this time we're putting our necks out on the line and saying we do think that this ban will make it through the Senate. It does. But whether TikTok will actually not appear on your phone is still a major question. For China, TikTok is its most successful international app. It's never had anything like this. It's not going to allow ByteDance to divest easily. In previous months, it's signaled that it's not going to allow this sale to go through. Meanwhile, on the TikTok side, it is preparing to challenge this bill legally.

6:08It might sue the U.S. over this ban, trampling free speech rights. And interestingly enough, Elon Musk, who owns a rival platform essentially in X, came out in support of TikTok and against this ban, saying that he would like TikTok to remain in the U.S. over free speech concerns. So it appears that there will be some legal wrangling that could extend the timeline that TikTok exists here. And then lawmakers who do support the pill are trying to frame it as, listen, this is not a ban. It's a divestment. We really don't want TikTok to go away. We just don't want ByteDance and Beijing to have so much control over it.

6:44But again, a divestment is not an easy thing to orchestrate whatsoever. One, TikTok is a very valuable business. So there's only a very short list of companies that could even afford it. And those companies are the names that you'd expect, the big tech names like the Googles of the world, like the metas of the world. but those companies would have no chance of buying it because u.s antitrust regulators would say listen meta there's no chance you're going to be able to own instagram as well as tiktok so then you have maybe oracle has been throwing around but they just went on a big buying spree they have a bunch of corporate debt so there's not really a good uh company that can step forward there's been some rumblings that former treasury secretary secretary steve mnuchin is putting together a bid or maybe ex-Activision Blizzard CEO Bobby Kodik.

7:29So there are rumblings, but that's where it gets really murky going forward. According to Axios, Dan Primack, the most logical buyers for TikTok would be the non-Bite Dance investors, those large institutional shareholders, General Atlantic, which is a PE firm, Sequoia Capital, or Susquehanna International Group. So these are these very wealthy, major institutional investors that could perhaps have the money to buy TikTok. But I'm going to put you on the spot. One year from now, April 22nd, 2025, what is the TikTok story? What is going on? I'm saying it's still on our phones. I just think that at least with the legal side of things, it's going to be wrapped up for a long time.

8:06So one year from now, I'm still going to be scrolling. Last week, you heard us mention that Tesla suspended customer deliveries of its Cybertruck. And just before the weekend, the news hit that it decided to issue a recall for the nearly 4 ,000 trucks it's sold so far. There's an issue with the accelerator pedals in the cars. Tesla put this metal cover on the pedals to match the exterior appearance of the car, but at some point in the process, some soap that they use in the manufacturing got in between the metal pad and the accelerator pedal, causing it to slide off if you press it too hard. Also due to some unlucky geometry, if the piece slides off, it results in the pedal becoming stuck in the fully down position, which is obviously incredibly dangerous.

8:48It's pedal to the metal, taken literally. This recall comes at a really bad time for Tesla in general. It's laying off more than 10 % of its workforce while slashing prices on three of its five models in the US due to tepid demand. On top of all that, the company is trying to figure out a compensation plan for Elon that would likely end up being the biggest in corporate history. So Neil, this recall could not have come at a more inconvenient time. Can we just recap Tesla's last week? So it started the week off by laying off 10 % of its workforce, 14 ,000 people. And there were reports over the weekend that that's going to grow to 20 ,000 people.

9:24So the biggest layoffs in its history. Then it had this compensation package proposal that it wants to give Elon back, the 56 billion that was denied him by the Delaware judge. And then we had the Cybertruck chaos, the recall here, which was all of its Cybertrucks. Every single one has to go under recall. And then the final thing was these sweeping price cuts, not just in the U.S., but across China and Germany as well, because there just isn't a lot of demand for Tesla right now. And it's fighting, especially in China. Very extreme competition where there's a price war going on. You need to constantly cut your prices to make it in the market.

10:03Its market share has gone down in China from 10.5 percent at the beginning of 2023 to just 6.7 percent now. So all you have to do is look at that number to see just how major these headwinds are for Tesla in China and in the US. Yeah, it's been rough all the way around. I do want to zoom in on the recall specifically a little bit. One of the big differences between this recall and other Tesla recalls we've seen in the past is in the past, they've been able to ship an over-the-air software fix that you can just download onto your Tesla to fix something small with the software. This is not that whatsoever.

10:36This is a physical issue with the brake pedals or the accelerator pedal sliding off. I've seen the fix in action, though. A lot of people are just going to a Tesla dealership or Tesla service center and just screwing in a screw. That's all it took. They just got a little too fancy with how they applied it. So it is interesting that it is both a simple fix that you do have to do it in person. So it's not like former Tesla recalls in the past. But yeah, it's just been rough in general sledding for Tesla. Another big piece of news that dropped was that Elon Musk is postponing a visit he had planned to go to India.

11:12India is a big presence and it's going to be a huge factor in Tesla going forward. They're going to spend a couple billion dollars, two to three billion dollars on a factory in India. So the fact that he's delaying that visit means that he's kind of entering wartime CEO mode. It's not about what's going on in the future. It's about what's happening right now. And there's a lot happening. A Morgan Stanley analyst who is a very big Tesla bull has said maybe it's time for Elon to start sleeping on the factory floor as he did when they were ramping up Model 3 production and there was manufacturing hell, according to Elon.

11:43This analyst also floated that maybe Tesla, this is crazy to think about, is going to exit the traditional EV business in general. Like it's not going to bank its future on making cars. It's going to work mostly on automation and robo taxis and self-driving software. And Elon Musk himself has said they're going balls to the wall with autonomy. So maybe that is the future that Elon is plotting. And maybe they're not going to focus on actually making cars anymore, which is crazy to think about. But it feels like everything we're seeing, that might be the ultimate endgame for Tesla. Wow. If you were debating whether to travel abroad this summer or stay in the U.S., here's one variable that may tip the scale.

12:26The U.S. dollar is absolutely surging right now, meaning American money will go farther in foreign countries and make for a cheaper vacation overall. Here are the numbers. The dollar index, which measures the dollar against six major advanced economy currencies, is up 5 % from its low in December. The euro is down 3.7 % against the dollar this year. And recently, the dollar hit a 34-year high against the Japanese yen. So why is the dollar doing so well? Not to be glib, but the main reason the dollar is getting stronger is because there's more demand for dollars. And that is a direct result of the U.S.

13:02lapping everyone else in terms of economic growth. Put another way, think of the U.S. economy as the Celtics and everyone else as the heat. Last week, the IMF predicted that the U.S. GDP would grow 2.7 percent this year, which is more than twice the rate of any other country. in the G7 group of advanced economies, throw in other factors like heightened geopolitical risk, the Fed holding off on interest rate cuts, and a strong U.S. stock market, and all the ingredients are there for a dollar surge, which could spell pain for the rest of the world. Yeah, a very popular narrative and a very popular trade at the beginning of the year was that the U.S.

13:38dollar was going to fall in relation to other currencies. So at the start of the year, remember the markets were pricing in at least or as many as six rate cuts from the Fed. That, in theory, should weaken the U.S. dollar since it would make it less attractive for foreigners to buy bonds in the U.S. But then what happened actually was that trade totally backfired due to the surprising strength of the U.S. economy. We've just weathered high interest rates really, really well. Retail sales are up. Employees are in the midst of a very strong hiring boom. Inflation has come in hotter than expected.

14:09So everything kind of went into opposite land for a little bit, which threw off a lot of these exchanges. And like the Bank of Japan was supposed to raise their interest rates and the U.S. was supposed to lower them. And that was going to be a really popular trade. Hasn't gone well overall. And it just has been a historically strong year for the dollar in a year where a lot of people didn't expect that. Yeah. So what is when the dollar is strong? What does that mean for you? What does it mean for the rest of the world? Who are the winners and losers? The winners are generally U.S. consumers because our imports get a lot cheaper due to the strong dollar.

14:42And then when we go abroad, everything is also cheaper. Your dollar goes further. You're paying at a British restaurant. You're like, damn, that's not so bad. If you go to Canada, too, like I did a few months ago, you're like, damn, this is pretty cheap, these beers. But it is bad for really emerging markets where they have a lot of debt in U.S.-denominated dollars. So their debt gets a lot more expensive to service. And the imports that they take in are also more expensive due to the strong dollar. So that is seen as inflationary. So there is a warning sign for emerging markets, specifically when the dollar gets stronger.

15:19It's also not great for American manufacturers because I just said imports in other countries get more pricey. That makes U.S. manufacturing a little less competitive on the global landscape. then it might be more cheaper to import products than to buy what Americans are producing and just by virtue of the strong dollar. Yeah, the issue or non-issue if you're an American is that the US GDP is a runaway freight train at this point. There is not a lot of signs that it's gonna slow down anytime soon, which means that there's not a lot of signs that the dollar is gonna get any less strong anytime soon as well.

15:50So get your passport. Get your passport. Up next, you've got our winners of the weekend segment coming your way. I'm Christian McCaffrey, Pro Running Back and Abercrombie is an official fashion partner of the NFL I'm not kidding when I say NFL by Abercrombie broke the internet last year and I think this season's lineup is even cooler and so does my wife who keeps stealing all my hoodies stay fit for the season and Abercrombie's newest arrivals shop NFL by Abercrombie in the app, online and in store

16:29When 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 Monday, which means it's time to take a look back on the weekend to see what news stories you may have missed. Since Morning Brew Daily looks on the bright side, we found two winners of the weekend to share with you.

17:07Neil, you won the pre-show cook-off. I should have known it was ramp season. So you're up first. Who's your winner of the weekend? Weekend is me because I made this gorgeous ramp butter. I should have brought it in for you. Anyway, but my actual winner is the United Auto Workers because they went to the land of Waffle House and smothered and covered their way to a historic victory. On Friday, workers at a Volkswagen plant in Chattanooga, Tennessee, overwhelmingly voted to join the union, marking the first time a non-union auto plant in the South has linked up with the UAW. While two previous union votes at the same factory failed in 2014 and 2019, the UAW was able to drum up more support this time, in large part because of the major pay gains it secured last year at Detroit's Big 3 automakers.

17:53The UAW is hoping to take this pitch that worked at VW and cause more dominoes to fall in the south, a region typically unfriendly to organized labor. It's going to be an uphill battle starting with its next test, a union vote at a Mercedes-Benz plant outside Tuscaloosa, Alabama, coming mid-May. Toby, the UAW is on a Damian Lillard-level hot streak right now. There's a lot of—you're on an NBA reference hot streak right now. I watch a lot of basketball, yes. Yeah, I think this does like Sean Fain is obviously framing this as look at we've done great work for the Detroit automakers. We got historic gains there.

18:29Like, let's bring this to the south. I also think, though, that the other narrative that this is showing is that the outsized effect that the Inflation Reduction Act is having on unions. Remember, this Inflation Reduction Act is this big sweeping legislation that adds a lot of different incentives to electric car manufacturers. And so when the energy department is doing stuff like offering$12 billion in subsidies to plants who are using union labor, factories are saying like, wait a second, we can offset some of the rising costs of becoming a unionized plant with these subsidies we're getting from the government.

19:05And so you kind of saw this. There was a lot less opposition from VW this time around. You mentioned those two previous failed votes. This time they were like, all right, there is enough subsidies out there that we can think we can make this work. So even though Sean Fain is definitely saying like, hey, it's because of the historic wins that we got with the Detroit automakers. I think there's other pressure here that led this union vote to happen. And Sean Fain is the leader of the UAW who's who's doing really he's backing up his words with actions right now. But I said it's going to be an uphill battle because the South is just very hostile to unions like the union membership rate nationally is 10 percent.

19:38But then when you go to these states and look at the stats, the union membership rate is 2.3 % in South Carolina, 4.6 % in Georgia, and 6 % in Tennessee. So this won't be easy. The Chattanooga-Tennessee is obviously a great momentum boost, and they say unionization is contagious, that it does create this domino effect. But I'm not sure that the UAW will have the success that it had in Tennessee all across the South, but we'll see. My winner of the weekend is the Nigerian chess master Tunde Onakoya. While you were sleeping, eating, and living life over the past handful of days, Tunde was playing chess in the middle of Times Square for a long time.

20:20He played for 60 hours straight, setting the Guinness World Record for the longest chess marathon in the process. He embarked on the challenge in order to support the millions of children across Africa without access to education, raising money throughout his attempt. As for the logistics, he played against Sean Martinez, an East Harlem American chess player, throughout the entire time period because the way Guinness World Records guidelines work is that you have to set the record by two players playing continuously. In total, Tunde played 197 matches. But I'm sad to report we don't know his official win-loss record.

20:55No. Well, I can't believe somebody played chess for 60 hours. It's the longest you've ever played chess. I mean, a 10-minute game feels a little bit long to me. Yeah, no, it's definitely a lot of people were misunderstanding it at first and thought that it was just one game that he played for a really long time in between moves. But no, he was playing multiple games. One of the funniest details is that he said the attempt got off to a rocky start on Thursday because he actually drank a coffee with milk in it despite his lactose intolerance. So he was kind of sick right from the beginning, but he fought through it.

21:25And I do have to give a shout out to Sean Martinez as well because it takes two to tango here. You do need the same person to play against you. I can't believe they didn't keep track of who won, though, because that would be probably delirious. I mean, just spending 60 hours in Times Square is a feat in and of itself. That should be a Guinness World Record. There's not even a lot of bathrooms there. So I don't know what they did about that. But interesting fact about Nigeria and games and sports. Nigerians are really good at at one particular game. Like the best in the world. Scrabble. Oh, they're really 33 out of the top 100 Scrabble players in the world are Nigerian.

22:00All right. And it's because they treat it as a sport and not a game. It's just so massive there. So maybe we should get a Nigerian Guinness world record going in Times Square, too. Yeah, it's just a crazy stat. They're they're so good at scrap. I'm trying to think of a really long word adjective to describe that surprising fact, but I got nothing right now. Yeah, exotic. All right. Let's move on. Wall Street isn't just a substitute word for the U.S. financial system. It's also a physical place in New York, a place that is slowly losing its actual relevance to the financial world. J.P. Morgan Chase officially closed its branch on 45 Wall Street, marking the end of its 150-year presence on the famous street and signaling the growing trend of financial institutions relocating away from Wall Street is only accelerating.

22:45J.P. Morgan has deep, deep ties to the area. Morgan and his family transformed Wall Street and with it New York and America into the center of the global financial system, so it's almost unthinkable that it would vacate the block completely. But today, a Wall Street bank is more of a moniker and less an actual locale. The move is a reflection of the broader trend of financial institutions moving away from Wall Street that started after the 9-11 attacks and was supercharged by the pandemic. Neil, you and I were just down there the past few days. You can kind of just tell from the vibe and the eye test that it's more of a tourist attraction than a financial hub at this point.

23:20It's not. I mean, the New York Stock Exchange is still there. And that first JP Morgan building was right across from it on Broad and Wall Street. And they did it on purpose because there's this term called cornering the market. And that was an allusion to that by occupying there. But no, it's not a financial hub anymore. The New York Stock Exchange is not really, it's mostly a TV studio on the floor there. It's not really a lot of trading going on. Computers and algorithms have taken over the financial system. A lot of these banks have moved away from Wall Street decades ago. I mean, UBS is on Sixth Avenue.

23:55Bank of America is on 42nd Street in Midtown. Goldman Sachs and Citigroup are now in Tribeca against the water. I think a lot of these banks really want to be next to either Penn Station or Grand Central because a lot of their execs live in New Jersey or Connecticut, and they want to be able to get in on the train and then walk maybe five minutes to the office. And the financial district is just not a great location for that, has a lot of old buildings. So right now, I think they've done a good job in revitalizing the financial district to become, yes, a tourist hub, but also a lot of people live there.