Mamdani Wins NYC Mayoral Race & Tariffs Head to the Supreme Court

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0:37Let's ride.

0:42Good morning. Lots of big news to get to from Election Day results to tariffs at the Supreme Court. But first, yesterday was pretty epic for dapper English lads. David bent the knee like Beckham and was knighted by King Charles III for his contributions to sports and charity. That also means his wife, Victoria, will be known as Lady Beckham, her second most impressive nickname after Posh Spice. Then, the actor Jonathan Bailey, who's seemingly been in everything over the past two years, was named People Magazine's Sexiest Man Alive, becoming the first openly gay man to win the title. You'll get him next year, Toby.

1:17My fiancé and I had very different reference points for Bailey. She said, oh, Jonathan Bailey from Bridgerton and Wicked. And I said, oh, Jonathan Bailey from Jurassic World Rebirth, because that's the only thing I saw of him. But I also recently learned that People Magazine has categories for sexiest people, including a podcasting category. Last year, Jason and Travis Kelsey won it, obviously. And this year, I went to the host of The Basement Yard, which, I'll admit, Joe and Frank, they're funny, good-looking guys. All this to say, I think our ship will come in one day, Neil. And now a word from our sponsor, U.S.

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2:23So whether you're splurging on concert tickets who are covering an unexpected bill, you can pay later on every purchase with the U.S. Bank Split Card. Learn more at usbank.com slash split card. That's usbank.com slash split card. The city home to the Charging Bull statue, Macy's Thanksgiving Day Parade, and Times Square Olive Garden is getting a Democratic Socialist for its next mayor. Last night, Queen's Assemblyman Zoran Mamdani was elected the next leader of the largest city in the United States, becoming New York's second youngest mayor in over a century at age 34 and the first Muslim mayor.

2:57The self-described democratic socialist rose from total obscurity just six months ago to defeat rivals Andrew Cuomo and Curtis Sliwa by hammering one simple message, relentlessly affordability. By flooding the zone with slickly produced social media videos and a grassroots campaign to match, Mabdani spoke to regular New Yorkers' struggles in keeping up with the soaring cost of living in the Big Apple, where median rents are more than twice the average of America's 50 largest cities. And good luck trying to raise your kids here. Daycare for babies and toddlers is roughly$26 ,000 per year, a rise of 40 % since 2020.

3:32How Zoran plans to reduce costs has drawn heavy criticism from the city's business community, who say his ideas like rent freezes and eliminating bus fares will bankrupt New York and end up having the opposite effect of what they intend to do. The real estate industry has warned that New York will face an exodus of wealthy folks to places like Westchester or Palm Beach, depriving the city of much-needed tax revenue and causing a doom loop spiral, such as New York experienced in the 1970s. Tobia reported 26 billionaires and rich families spent at least$100 ,000 opposing Zoran. Now they've got to work with him.

4:05Right, and that has kind of been the vibe. Wall Street definitely has mixed feelings, we'll say, about Zoran and Mom Donnie, but they moved from trying to actively campaign against him to quietly starting to prepare to work with him because if you're going to have the mayor of New York City, you're going to want to build a rapport with them. So Bill Ackman has kind of come out and congratulated Zoran for winning, even though he contributed a million dollars to a fix-the-city pack anti-Momdani groups. But then you also have Momdani spoke with the CEO of JPMorgan Chase, Jamie Dimon over the summer.

4:42Dimon reportedly said he offered to help Momdani if he wins. So it does look like that relationship will go forward. So I think you're seeing the general attitude right now is you can call it resignation, but or you could call it, hey, we're going to have to work with this guy. So we might as well start laying the groundwork right now. Yeah, let's talk about what Mom Donnie has pledged to do during his campaign and maybe why the business community was so opposed to him. Well, he has advocated for free child care, free buses, a$30 an hour minimum wage by 2030, a four year rent freeze for two million residents.

5:15And the way he's going to pay for that, he says, is he's going to raise about$10 billion largely by taxing corporations. And when wealthy New Yorkers hear this and others hear this, they think, well, first of all, a lot of these policies will be counterproductive because they're especially in the real estate community. When you're talking about a rent freeze for over a million apartment units, they say that that disincentivizes landlords from building more, which is a key way to bring down housing costs. So you hear talk from Bill Ackman and from other business leaders saying, well, we don't want New York City to go the way of Chicago, where you see a huge corporate exodus.

5:52And, you know, if a wealthy people do leave New York City, that could leave a huge hole in New York City tax coffers because the top 1 percent account for a huge portion of the city's personal income tax revenue. The top 1 percent, which are people with incomes of at least$900 ,000, they contribute 40 percent of the$18 billion the city collects in annual income tax. Yeah, the question is always, when you raise taxes, will the city's top earners go somewhere else? And we actually do have a mini case study here because in 2022, Massachusetts voters approved a 4 % surtax on incomes of over$1 million.

6:27Since then, actually, the state has seen an increase in its millionaire population. It's jumped 38%, which is a little counterintuitive. So it does go to show, though, at least in certain circumstances, a wealth tax doesn't automatically mean exodus. You know, New York City is still obviously the finance capital of the world. It's not suddenly a marginal increase in tax is going to mean everyone's going to move down to Miami. It could hypothetically if people, you know, follow through. But in another case study that we've seen in Massachusetts, that did not happen. So maybe if you have misgivings about, you know, the rich fleeing the city and, you know, the tax base collapsing, it's probably not as founded given other times that it's happened before.

7:07And now the challenge facing Mamdani, I mean, his campaign was impressive by all accounts, but now he has to run this city, and he does not have a lot of experience at all. That was one of the main criticisms by the business community and opponents, saying this guy has not ran an organization of more than five people ever. He has been a backbench assemblyman for less than five years. He's just 34 years old, and now he's about to oversee a city with a$112 billion budget, 300 ,000-person workforce. the metro area's economy is more than$2.3 trillion, bigger than that of Canada, and about 9 % of the total GDP of the United States.

7:48So while Zoran ran a great campaign and made these really big swing promises, you know, he's going to have to actually run this city, and the business community is going to have to work with him to see that through. Let's talk about Election Day broadly, because there were other races besides the New York City mayor. It was a big night for Democrats. Abigail Spanberger will become the governor of Virginia. Mikey Sherrill won the governor's race in New Jersey. Those are both Democrats. And here's a fun fact. Spanberger, who's going to lead Virginia, is a native of New Jersey. And Sherrill, who will lead New Jersey, is from Virginia.

8:21It's got my brain in a pretzel right there, Neil. That is a fun fact. All right, moving on. Today, the most important case ever is in the United States Supreme court. But don't take my word for it. That language comes from a social media post from the president himself. Oral arguments in the case Trump is referring to kick off today when justices will weigh whether the president's lawfully rolled out global tariffs without Congress's approval. A lot is at stake here. A ruling against Trump would undercut his ability to use tariffs as an all-purpose tool to bolster American industry and pressure trading partners into concessions.

8:55A win would set a precedent for how much unilateral authority a president can wield in times of so-called emergency. Hanging in the balance is the around$90 billion the government has already collected in tariffs, as well as the$1 trillion in revenue the administration expects to have collected by next June. Everything may hinge on how the court defines one word, regulate. The International Emergency Economic Powers Act, the law that Trump has used to justify most of his tariff agenda, lets a president, quote, regulate importation during emergencies. Trump argues that tariffs are indeed a form of importation regulation, so using them is well within his powers.

9:34The challenger's argument, which includes a group of small businesses and states, say he exceeded his legal powers, something the lower courts have agreed with so far. The stakes are sky high. Administration officials have used words like dangerous, catastrophic, and ruinous to describe what would happen should they lose this case. Trump went a step further and called the case literally life or death for our country in a post on True Social. Arguments kick off at 10 a.m. today. Supreme Court seems to agree with the gravity of this case because they kind of streamlined the schedule for this saying, get your briefings into us now.

10:07We're going to hear this case in November, and we're probably going to rule on this before next summer, which is when you usually see the rulings on the current docket come through. So they do certainly agree with Trump and the Trump administration that this is a huge deal. Experts say it's a toss-up, though. They're not really sure how the justices may decide. There's all these confounding variables, too, hanging over it, not just the tariffs itself, but all the political considerations that are going on of what it would mean to rule against Trump. And, you know, the Supreme Court does have a 6-3 conservative majority.

10:39They're not going to want to see bowing down to the executive branch. But at the same time, there's just a lot of stuff going on. Let's talk about the backstory, how we got here. So back in April, Trump gets up with the big easel on Liberation Day and says, we are going to put tariffs on more than 100 trading partners because he said, we need to address this huge trade deficit we have with the rest of the world. So tariffs went up. And then through August, the government collected around$90 billion from these specific tariffs. That's more than half of the tariff revenue that the country collected in the last fiscal year.

11:12I just want to stress, this is not all of the tariffs that the Trump administration has rolled out. There are sector-specific tariffs on things like autos, aluminum, steel, lumber. Those were invoked under a different law than this 1977 Emergency Powers Act. Then there were lawsuits from state officials, six companies, including a wine importer and a toy manufacturer. And that's the case that has wound up at the Supreme Court, where they're going to dissect this law with every word, including regulate. Yeah, let's dive into what the International Emergency Economic Powers Act actually means. The law grants the president the ability to, quote, investigate, regulate or prohibit international economic transactions by declaring a national emergency.

11:54Remember, Trump administration has been declaring national emergencies left and right to justify these tariffs against Canada, Mexico, China. In total, he's declared nine national emergencies, including the fentanyl crisis, unbalanced trade duties. These are things that he says constitute national emergencies. I do think that's what will be debated here is since when is a trade deficit a national emergency? We've been running trade deficits for, you know, the last modern years of economic history right now. So why suddenly after 50, 70 years of running these deficits, is it now constitute a national emergency?

12:30So that is going to be something that you will see debated today. So the critics of this law say that the administration is just abusing the phrase national emergency doesn't mean what it was initially intended to mean. And the Trump administration's lawyers are going to come back and say, essentially, these tariffs are too big to fail. Treasury Secretary Scott Bacent said back in August, I think the more deals we've done, the more money coming in. It gets harder and harder for SCOTUS to rule against us. So he's like, we're the big banks. We're the big car companies. You can't let us fail because it would lead to what Trump says, you know, economic ruin.

13:03And that's going to be a big argument that they're going to push. Like this train has already left the station. You can't do this because if so, and you know, a lot of analysts agree, there'd be a lot of chaos in the market. Should the government have to refund$90 billion worth back to back to companies? And of course, they're planning a bunch of contingency plans, like using different statutes and laws to bring more tariffs. Should these things be rescinded? But there's a long way to go until then. We'll absolutely be watching these arguments today. Michael Burry became world famous for identifying a bubble, and he's seeing one now.

13:37The investor who famously shorted the housing market ahead of the financial crisis, a.k.a. Christian Bale in the big short, revealed that his hedge fund had taken out put options on two huge AI names, NVIDIA and Palantir, at the end of last quarter, which is a bet on those companies' shares to decline. They did, at least yesterday, with Palantir tumbling 8 % and NVIDIA dropping 4%. Burry's disclosure comes days after his first ex-post in years where he wrote, Sometimes we see bubbles. Sometimes there is something to do about it. Sometimes the only winning move is not to play, a reference to the 1983 sci-fi movie War Games.

14:12Burry's moves are closely watched by individual investors who consider him a modern-day Nostradamus, and him calling out Palantir and NVIDIA is notable given those are considered among the biggest winners of the AI revolution NVIDIA shares are up 1 ,200 % since the start of 2023. Palantir has gained more than 170 % year-to-date after being the S &P's best performing stock in 2024. But unlike 2008, Burry isn't the only one warning of frothiness in the market this time around. On Tuesday morning, the CEOs of Morgan Stanley and Goldman Sachs got on stage at a panel in Hong Kong and predicted that stocks could fall at least 10 % in the next one to two years, noting that often these pullbacks are healthy and part of the business cycle.

14:51Still, all this bubble talk gave investors heartburn yesterday, with the Nasdaq dropping more than 2 % and the S &P closing 1.2 % lower. Yeah, yesterday morning when we were doing this show, you just looked at stock futures and you go, oh, it's a red day going. So it was just kind of a confluence of a lot of different factors. Obviously, like the entire market didn't fall because Michael Burry revealed these positions. But it's all kind of contributing to the narrative that maybe the AI trade has gotten a little ahead of its skis right now. Now, one person who had a lot to say about Michael Burry's decisions was Palantir CEO Alex Karp.

15:25This dude can't stop making headlines with the quotes that he's putting out. He called Michael Burry and called the short bat blank crazy. The idea that chips and ontology, which is the platform that Palantir is rolling out, are the ones you want to short is crazy, he told CNBC. He says, why would you go after the money-making companies? Why would you go after the two things that are clearly doing well in the AI trade right now? So he also called it market manipulation. So kind of just let Michael Burry have it right now. Now, the question is, are these shorts part of a broader hedge? Are they standalone bearish bets?

16:03We're not sure because these filings happen on a delay. These positions might already be closed by now. But it was telling to see how fast and how intensely Alex Carter pushed back against Michael Burry because, of course, he did. Yeah, right. He's coming off that earnings call back on Monday afternoon where he also spoke to all the haters of Palantir because they reported a great quarter, but their shares declined after. And then they continued declining yesterday after Burry revealed that short because Palantir is the most expensive stock of its size in the history of the United States. Then you had the CEOs of Morgan Stanley and Goldman Sachs come out and say, we see a little frothiness as well.

16:45One sign you can point to to identify perhaps a bubble forming is the intense market concentration we have in a few stocks at the top that are really invested in AI. So six stocks contributed about half of the gains in the S &P 500 since the start of 2025. Go back to Monday. The Nasdaq was up like 0.5%. But then you look at the entire S &P 500, 300 stocks out of the 500 closed in the red, but it was still up. So a lot of analysts are pointing to this intense concentration at the top, as perhaps Michael Burry might be onto something. Yeah, it's S &P 500 in name only. It's probably closer to S &P Magnificent 7.

17:24All right, we're going to take a quick break and come back and talk about the restaurant industry. The crypto landscape changes daily. Keep up with some of the best launches and new tech all in one place on your commute. Join Ripple for a series of crypto and blockchain conversations with some of the best in the business. Learn how traditional banking benefits from the blockchain. Or how your digital assets can be kept safe and secure thanks to their all-in-one custody platform. Or how you can convert fiat to stablecoin faster than you can get home. Or how you can send a transaction halfway across the world before you make it to work.

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19:08The number two pizza chain in the U.S. with$5.6 billion in sales across 6 ,500 stores is being shopped around by parent company Yum Brands as it lags behind the rest of its portfolio. Founded back in 1958 in Kansas, Pizza Hut's iconic red-roofed eateries were a staple of mid-century Americana. But now, 70 years later, Pizza Hut's dine-in pizza model has been eroded by delivery-first rivals like Domino's, turning the brand into Yum's weakest performer, overshadowed by higher-growth names like Taco Bell and KFC. It's far from the only chain you'd catch on an interstate sign that's struggling, though.

19:42On Monday, Denny's announced it had reached out to buyers and received multiple offers as it navigates a tough post-pandemic period where it closed 180 locations in two years. Papa John's also plunged on news that Apollo Global Management withdrew its offer to take the company private. And Bojangles is reportedly mulling a$1.5 billion sale of its fried chicken empire. Add it all up, Neil, and it's clear that these restaurant chains are struggling under both the weight of outdated business models, in the case of Denny's and Pizza Hut, and reduced spending from consumers who are feeling a little uncertain in the current economic environment.

20:16All I know is I am hungry right now. Yeah, Pizza Hut within the greater realm of young brands is the laggard. So young brands spun out of Pepsi in the 90s. It owns Taco Bell, KFC, and Pizza Hut. And Taco Bell and KFC are doing actually really well. Taco Bell, same store sales, gained 7 % last quarter. KFC was up 3%. And then Pizza Hut was down 6%. So clearly Pizza Hut is getting lapped by Domino's and other pizza chains. Just compare the revenue per location from Pizza Hut and Taco Bell, and you kind of see why they're shopping Pizza Hut around. It has more than double the footprint of Taco Bell.

20:54But last quarter, Pizza Hut had$240 million in revenue to Taco Bell's$730 million. So Taco Bell is seeing a lot more people come through those doors. It's showing a lot more burritos and tacos than Pizza Hut. Those things are empty. Its market share is absolutely crumbling right now. Back in 2019, it had a 22.6 % market share in the pizza market in the United States. Now that's down to 18.7 % in 2024. And you have to imagine that Domino's with rolling out a bunch of promotions is only gaining from there. My question is, who is wanting to buy these companies right now? Because everything you just said is true.

21:30I mean, declining foot traffic, its business model is outdated. So why are people interested in Denny's? Why are they interested in a Pizza Hut? and it is these private equity firms that are circling here because they do see value in legacy chains. Obviously, they're trading at very low multiples right now because this is not a growth industry, but they have super strong brand IP. They have really strong real estate footprints, and you have seen some turnarounds happen in the past. PF Changs is on the comeback trail. Hooters is trying to re-Hooterize itself and stage a comeback as well. So even though that you're facing falling foot traffic, You're seeing a shift to fast, casual and value driven diners.

22:10You still have a name like Denny's and you still have a name like Pizza Hut. These are names that are ingrained in, you know, American diner culture. So I do think that they see a buy low opportunity here, even though that these are struggling businesses. You answered your own question. All right. Let's sprint to the finish with some final headlines. If you've ever wanted to live through history, congrats. You're doing it right now. The U.S. government shutdown has become the longest ever. At 36 days, it surpassed the previous record of 35 set during the first Trump administration in 2018 and 2019.

22:39But for the first time in weeks, there's hope it could end soon. Senators from both parties were optimistic that now that Election Day has come and gone, there's greater willingness to come together and work out a compromise that would extend funding for the government and get millions of workers the paychecks they haven't been receiving for over a month. I think we've got a real shot, said Republican Senator John Hoeven of North Dakota, while Democrat Gary Peters of Michigan said, we're in a sensitive time right now. Sensitive time is right because SNAP food stamp payments to 42 million Americans are in limbo.