Markets Rally On US-China Deal & Big Pharma Grapples with Price Cuts?

0:26Race the rudders! Good morning for Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the U.S. and China decide they don't want to break up. After all, Esther Perel, you did it again. And Trump signed an executive order asking for lower drug prices, but asking and getting might be two different things. It's Tuesday, May 13th. Let's ride.

0:57How do you feel about going to the movies on a weeknight kind of weird right feels like a weekend thing well the theater chain amc hopes to remove that mental hurdle by offering tickets at 50 off on wednesdays the promotion which is available to members of its loyalty program amc stubs kicks off on july 9th and means wednesday will join tuesday as the two weeknights where you can score discounted tickets at amc's toby half off enough to get you out on a weeknight? I think so, actually. I love the idea of a Wednesday movie because I also love the idea of a solo movie night. I've done one of those recently, and it just, I don't know.

1:36It's just a time for yourself, but I think AMC needs this. Their first quarter admissions revenue fell 11 % from a year earlier. Outside the pandemic, it was their worst first three months of the year since 1996, so they're pulling all the levers that they can to try to get people to come out. That being said, AMCCO Adam Aran said that their first quarter was an anomaly and they're already seeing people start to come back to the movies. So maybe you just need a lot of teenagers who love screaming chicken jockey rather than any big promotion to bring people back to the theaters. And now a word from our sponsor, Iterable.

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3:03When 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 was Christmas in May on Wall Street yesterday after the U.S. and China announced a major de-escalation in a trade war that threatened to topple global commerce. Following a weekend meeting that could not have been an email, the U.S.

3:42said it would lower tariffs on China from 145 % to 30%, while China will lower tariffs on the U.S. from 125 % to 10%. Those new rates will be in effect for a 90-day period so that talks can continue. And with that, the Sell America trade that had been running since Liberation Day turned into Buy America once again. The S &P 500 popped over 3%. The Nasdaq officially entered a bull market and the Dow gained 1 ,100 points while traders piled into the dollar and oil and out of gold, a safe haven. The ramping down of tariffs signaled to investors that for now, the worst case economic scenario was likely averted and the scale of the tariff reduction was even more than they had expected.

4:26The general feeling among economists was, we're not sure why this trade war was launched in the first place or what it has accomplished besides sowing chaos, but we are glad to be waking up from April's nightmare. Over in China, they were almost as ecstatic as on Wall Street, touting the deal as a major victory for President Xi Jinping, who went 12 rounds with the world's top economy in the trade ring and held it to a split decision. What happens next is the big question mark hanging over all of this. The U.S. still has 30 % tariffs on Chinese goods, eight times higher than when Trump took office.

4:58And it's unclear what it would take to lower those even further. For now, though, a big sigh of relief for businesses across the Pacific. Yeah, still the sigh of relief is coming as the U.S. tariff rate is now just 17.8%, the highest since 1934. So people are celebrating returning to literal Smoot-Hawley level tariffs right now. And the big question was, was this even really hurting China beforehand? A little bit. Chinese shipments of goods to the U.S. dropped 21 % from a year earlier as a result of the increased tariffs. But then you look at where Beijing was sending other goods, and you see that their exports to the block of Southeast Asian nations surged 21%.

5:40So 21 % lower to the United States, 21 % higher. Maybe they were finding demand elsewhere. Obviously, the U.S. is their biggest trade partner, so it's not a like-for-like sort of thing. All that being said, though, this does seem like a dream scenario because just a few days ago, Trump was suggesting that 80 % tariffs was where things were going to normalize. 30 % is obviously a lot lower than that. So all things being considered, you could see why it was a very green day on Wall Street yesterday. Yeah, let's talk about that. I mean, stocks that were exposed most to China and that had been hurt since April 2nd shot up yesterday.

6:15Apple, which was the face of the trade war because they make a lot of their iPhones and other products in China, shot up more than 6%, which drags all of the indexes bigger because Apple is the most valuable company in the world. Williams-Sonoma, Estee Lauder, Best Buy, Lululemon, Nike were all up at least 7 % as traders sort of breathe that sigh of relief and said, wow, all these companies that we had knocked because they were so exposed to China are now getting, you know, we're sending them back up because things seem to be calming down. Yeah, the dollar and bond yields also rose as well. Now there's this expectation that the U.S.

6:50will grow faster once again now that these trade tensions have died. And if you look at the odds of a recession, too, on Polymarket on Kalshi, Those dipped below 40 % for the first time since back in April. So it really is just, I mean, sigh of relief is the word that you keep hearing here because it did come out a little bit softer than people expected. Like this level of thawing was not necessarily something that people thought was going to happen when Scott Bissett entered Geneva to do those talks over the weekend. So a lot of just people going, whew, it's not the worst case scenario. We're in a manageable position now.

7:27Let's talk about inflation and prices because they were about to skyrocket with 145 percent tariffs. What does it mean with 30 percent tariffs? Well, because of the quirks of ocean shipping and how we get goods from China to the United States to our retail shelves, there is probability that there still will be inflation and price hikes because there's going to be a surge in shipping from China to the U.S. We saw a huge amount of front-loading in March and April to get ahead of Liberation Day tariffs. Now tariffs are still high. There's this 90-day pause, but they could go back up. We don't know.

8:06So you're going to see all of these containers. There are thousands and thousands of containers in Shanghai, in Shenzhen, waiting to come over to the United States that they had just not come over because of these massive tariffs. Now there's going to be a huge spree, and all of that demand could drive up freight rates, which could lead to higher prices on shelves this summer and back to school for back to school shopping and holidays. So you see retailers being like, OK, this is great. 30 percent is still, you know, a big chunk of change that we need to pay. And also we're going to have to pay so much more in freight rates, at least as this huge shipping surge comes across the Pacific over the next days and weeks.

8:43Drug pricing has long been a controversial aspect of the American health care system, one that President Trump is targeting with an equally controversial policy. Yesterday, he signed an executive order that, amongst other things, brings back the most favored nation policy when it comes to drug pricing. Basically what we're doing, Trump said to the press on Monday, we will get whoever is paying the lowest price, and that's the price we're going to get. The proposed policy gives pharmaceutical companies price targets to reach over the next 30 days, with the goal of ending what Trump describes as systemic overcharging of Americans.

9:16The data does back up what he's saying. The U.S. paid nearly three times as much for all drugs in 2022 compared to other wealthy developed nations and over three times more for brand name medications, according to the Rand Corporation. The pharma industry pushed back on the law, saying that any threats to their profits could impact the money they put into R &D to create new drugs down the line. Initially, shares of U.S. drug makers like Pfizer and Eli Lilly fell yesterday in pre-market trading, but then came roaring back throughout the day, mainly because the order cites no obvious legal authority to mandate lower prices, according to the New York Times.

9:54Plus, hours before Trump's announcement, Congress proposed$700 billion in health care cuts, but didn't touch drug prices. So, Neil, not quite as toothy as some pharma execs were expecting, But it's clear Trump wants to try and bring the U.S. in line with other countries when it comes to drug pricing. The pharma industry was preparing for a bloodbath yesterday. I mean, stocks were down pre-market. They were waiting to see what Trump would do with this executive order. They feel like bringing prices down 59%, which Trump wants, would threaten their businesses completely because they use these profits to invest in R &D.

10:34and they say this would lead to new medications that they could monetize. So they were preparing for the worst. This executive order comes through the pipeline at 11 a.m. and executives and traders looked at it and said, wow, that's really not that bad at all. I mean, it's basically a kickstarting negotiation phase for 30 days. There's not a lot of legal precedent that they can stand on. So the pharma industry, you know, we said in the first story, they're breathing a sigh of relief after this executive order came down because it doesn't feel like it would impact them much at all. Let's talk about the motivation behind it, though.

11:06So Trump said that even though the United States is home to only 4 % of the world's population, pharma companies make more than two thirds of their profits in America. That is not a good thing. And drug makers do make a substantial amount of their profits worldwide from sales in the United States. They typically design their entire business strategy around the U.S. market. And so what are some of the outcomes if suddenly most favorite nation policy does come into play? One outcome is drug makers just leave, facing a choice between making cuts to their pricing in the U.S. or the loss of super profitable or not super profitable overseas market.

11:42They might just leave some of those overseas market and just abandon them altogether, which obviously isn't a great outcome for the people living in those countries. and it probably would leave the United States paying the same amount that they were going to pay because if they abandoned some of those most favored nations, then you're still going to end up paying higher prices to the United States as well. So people are starting to poke some holes in this, even though the general thrust of the order is something that a lot of people are actually aligned behind. Right. Economists are against sort of the price setting action of this, where the government comes in and says, this is the price that you pay for that.

12:17You know, free market, free market experts are totally against that. But one idea that seems to be gaining momentum across the board from Donald Trump to Mark Cuban is this idea of going direct to consumer and cutting out those middlemen, those pharmacy benefit managers that have sort of drawn a lot of scrutiny from regulators for driving up prices, those people that sit in the middle between the manufacturer and the customer and the insurer. And Trump went after them yesterday, this executive order that no one really expected a portion of that was, you know, allowing and enabling more direct to consumer sales, which is what Mark Cuban has done with his new company with Generic.

12:55So we'll see if there's a further squeeze on those middlemen in the drug process in order to bring down prices. President Trump landed in Saudi Arabia today to kick off his first major international trip of his second term. And while any number of geopolitical crises are swirling around the region, This visit is focused on one thing, securing business deals. Over the next three days, Trump will roll through Saudi Arabia, Qatar, and the United Arab Emirates to secure up to$1 trillion in investments from these oil-rich nations who become increasingly influential in sectors spanning AI to sports and entertainment.

13:32That the Saudis are getting Trump first is no coincidence. Crown Prince Mohammed bin Salman was the first world leader to call him after the election, pledging to invest$600 billion in the U.S. over the next four years. You know who wants a piece of that money? American CEOs. A gaggle of them, including Sam Altman, Jensen Huang, Mark Zuckerberg, and Elon Musk, will all be in the kingdom today, aiming to forge closer ties with these autocratic free-spending leaders who are going all in on AI. So, Toby, we've got a very unusual first international trip by a president here. Less diplomacy, a lot more term sheets.

14:06Yeah, this makes sense given Trump's transactional approach to foreign policy in general, because in Trump's eyes, these states have a lot to offer him. One, they're pledging to invest literally trillions of dollars in the U.S. economy. That's been a theme throughout Trump's early presidency so far. They also pledged to spend a lot of money on U.S. weapons systems as well. So this is a very carefully crafted strategy from those Gulf states to try to, you know, woo Trump to maybe get some extractions and benefit for themselves as well. So they are seeing this as almost like a once in a lifetime opportunity to have a U.S.

14:43president come in to try to, you know, land things like security packs that Saudi Arabia wants with the United States. So it's definitely a a mutually beneficial relationship where they think they can solve a lot of win win issues. Here's the question, though. I mean, this is a lot of money, trillions of dollars like that. You know, we know that these countries are rich, but can they actually afford it? And I think that is a question that people are asking and are a little doubtful on because Saudi Arabia has launched these huge mega projects. We know they have this futuristic city of Niyam that was supposed to be, you know, online by 2030.

15:17But they're dramatically reducing the scope of that project. You know, they use oil money to fund all these expansions into AI and other sectors. But oil has been in the dumps recently. I mean, the price of oil was$62 today compared with$77 when Trump took office. So at oil prices at that level, their bank account is shriveling up. So the question about whether these three countries can actually spend a trillion dollars and buy all these AI chips from NVIDIA and whatnot, you know, is a open question that I think most people say they actually can't afford it. And it's in direct opposition to one of Trump's stated goals, which is to bring down the price of oil as well.

16:00So that is a point of tension between the two nations. But as we saw him land this morning, it looks to be a very chummy relationship. I mean, they literally had horses escorting his limo as he entered, you know, the kingdom of Saudi Arabia. So definitely not a relationship that is too strained or too tense right now because clearly the two leaders get along. Up next, we have Toby's friends. Eczema isn't always obvious, but it's real. And so is the relief from EPCLIS. After an initial dosing phase, about 4 in 10 people taking EPCLIS achieved itch relief and clear or almost clear skin at 16 weeks.

16:37And most of those people maintain skin that's still more clear at one year with monthly dosing. EBCLIS, Librikizumab, LBKZ, a 250 milligram per two milliliter injection is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema. Also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies. EBCLIS can be used with or without topical corticosteroids. Don't use if you're allergic to EBCLIS. Allergic reactions can occur that can be severe.

17:06Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with Epglis. Before starting Epglis, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about Epglis and visit epglis.lily.com or call 1-800-LILY-RX or 1-800-545-5979. Tuesday on NBC, Jimmy Fallon and Bozema St. John host a highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea.

17:42This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon. Series premiere Tuesday on NBC. So I know a lot of you guys listen to the podcast while on your commutes, which thank you. Hope you're not too stressed coming into work. But this edition of Toby's Trends goes out to all you remote employees out there who, even without a commute, are more stressed than you might expect. New data from Gallup shows that remote workers represent a bit of a paradox. Fully remote employees are actually more engaged at work than their in-person or hybrid counterparts, with 31 % reporting higher levels of enthusiasm for their work and connection to the organization compared to their hybrid and fully in-office counterparts.

18:28Part of the reason for this higher engagement is that they have more autonomy over their workday, which allows them to use their time more efficiently. But his downside to that autonomy is that they are more stressed out too. Remote workers are more likely to feel negative emotions like anger, sadness, and loneliness compared to people who go into an office. Nearly half said they felt a lot of stress recently, more than the 38 % of on-site workers. And that's true controlling for how much money they make as well. So combine all that data and it shows how working fully remote can lead to higher highs and lower lows compared to going into an office or having a mix of both.

19:04So, Neil, thank goodness we're doing this podcast in person. Well, I'm still stressed, that's for sure. But, you know, CEOs are certainly paying attention to this report and they're saying, wow, a lot of my remote workers are probably super stressed and they're angry and they're lonely. I, you know, there's I probably need to address this to prevent them from leaving, because also in this survey, they showed that 57 percent of fully remote workers were actively looking or passively watching for new job opportunities, which is a very high share. So you see that this stress and these lower levels of happiness with their job is actually taking a toll that might lead them to look for more work.

19:41I don't know if that is also in a remote role or not, but they're, you know, nearly two over half, almost two thirds of remote workers are actively or passively looking for a new job as a result of these stressors that they're under. And Gallup kind of called out some of those stressors. A lot of them have to do with the fact that distance makes things more difficult. cold. For some employees, remote work feels like just work because you don't get any of the friendship. You don't get any of the shared meals. You don't get any of the banter that you have with your co-workers as well. So that isolation can increase that feeling of loneliness as well.

20:14And then also I mentioned the autonomy piece, which is why there's this paradox. Because if you do feel autonomy over your work and you can dictate how you spend your workday, you probably do get more done. You can enter a flow state more easily. But also that is stressful for a lot of people. There's a reason why, you know, not everyone is an entrepreneur. Some people just want to know what they have to do today. They don't want too much ownership because then it feels like the whole world is on your shoulders, especially when you're alone. So that autonomy can be a two-sided sword as well. And then obviously, too, technology is just frustrating as well because everyone's tried to been on a Zoom call before.

20:49It's not working and you just feel like, oh, why can't I just do these things in person? So those are a few of kind of the triggers that Gallup called out as reasons that remote workers are feeling these increased levels of stress. Now let's sprint to the finish with some final headlines. Pack the Twizzlers and fill up the with Mountain Dew. It is a road trip time, baby. A record 39.4 million Americans are expected to hit the road this Memorial Day weekend to travel by car, up 3.1 % from last year and the most in 20 years according to triple a just 3.6 million people on the other hand plan to fly which is up a mere 1.7 percent from last year the reasons people are channeling their inner rascal flats in treating life like a highway are plentiful rising economic uncertainty higher living costs gas prices near a four-year low combined with flight prices and flight anxiety rising means a lot more americans are hitting the roads neil gonna be a busy one out there it is i mean i'm going to be flying this Memorial Day, but I wish I was driving because there's really nothing better than a road trip handout the window.

21:55And one of my favorite games to play on any road trip is beat Google Maps ETA. I feel like that's gotten harder to do. I don't know if anyone resonates with this, but maybe five years ago, you could reliably beat Google Maps ETA by just going the speed limit. And they changed their algorithm to account for you beating them. And now it's pretty spot on, which is, which I get, but is also quite frustrating. You're advocating for finding more efficient routes, not speeding though, Neil. Okay, good. I just wanted to clarify that. More efficient routes, side skirting traffic. But yeah, they're, they're onto me.

22:30Okay. If you own an Apple device with Siri, you could be in line for a small payment. Last January, Apple settled a class action lawsuit for$95 million that accused Siri, its voice assistant of inadvertently listening in on private conversations. Now the window is open for anyone with a Siri-enabled gadget to file a claim to secure their slice of the$95 million pie. Eligible devices include the iPhone, iPad, MacBook, Apple Watch, iMac, HomePod, Apple TV, and iPod Touch, but you had to have bought and used them between September 17, 2014 and the end of 2024, and you must live in the U.S. You also have to declare that you experienced at least one incident where Siri was activated unintentionally and you were having a private conversation at that moment.

23:17Toby, this might be the most helpful thing Siri has ever done. Yeah, news you can use right here. You can go and file a claim online. You're probably not gonna get a hefty chunk of change because it's about 20 bucks per connected device. So you can gather up to$100 from this claim, but that only happens if you own five Siri connected Apple devices, which actually maybe a lot of us have. I mean, I got an Apple Watch and a computer in front of me, so I'm almost half the way there already. But yeah, you can submit this claim. This kind of came through the pipeline with Apple denying everything but wanting to settle it and just kind of get it out of the way because this is not a massive number, but still something to, if you want a little nice dinner later in the year, maybe submit a claim and try to get your$100.

24:03The Apple Stimmies are coming. And the website is Lopez voice assisted settlement.com. So there you go. You can file a claim there. The Dallas Mavericks may no longer be the punching bag of the NBA. The franchise everyone has been making fun of for their inexplicable trade of superstar Luka Doncic and probably won the draft lottery last night, meaning they'll have the opportunity to pick Duke star Cooper flag with a number one pick. The Mavericks had just a 1.8 % chance to grab the top spot in the draft heading into last night, sparking all sorts of conspiracy theories. Toby, you buying any of them?

24:40I mean, let's just go through some of the recent draft outcomes over the years. LeBron leaves Cleveland. The Cavs get the first pick and get Kyrie. Anthony Davis leaves New Orleans. Pelicans get the first pick and get Zion. Mavs trade Luka, get the first pick and land flags. I'm not saying anything. It just seems like any time a blockbuster trade sends one major superstar to another market, they seem to get the number one pick directly after. So, again, I'm not saying anything, but I'm just asking questions here. Speaking of basketball, time to reopen the GOAT debate because Michael Jordan is coming back to the NBA.