'Maxinomics' Explains Tariffs, the Space Race, Can the US Buy Greenland? And More

0:26Race the rudders! Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, if you want to learn a lot in a short amount of time, this is the podcast episode for you. It's a special holiday show featuring the smooth-talking, fact-dropping Phil Andrews of Maxonomics. It's Monday, January 20th. Let's ride.

0:55Today is Martin Luther King Jr. Day, a federal holiday that has many of you home from work. It's also Inauguration Day where Donald Trump will be sworn in as the next president of the United States. And to cap it all off, the college football championship game is tonight between Ohio State and Notre Dame. A ton going on. A ton going on. That's a great way to describe this episode that we taped ahead of the holiday. We talked to Phil Andrews, who is the man behind the Maxonomics brand for Morning Brew. This guy is a human encyclopedia. He can talk with expertise on topics ranging from autonomous cars to Costco's store design to whether the U.S.

1:33should buy Greenland. A true man of the world. We learned a lot from Phil and know you'll also get a lot out of the conversation. But first, a word from our sponsor, Yahoo Finance. Neil, one of the beautiful things about investing is the earlier you get started, the more things compound. The best time to plant a tree was yesterday. The second best time is today. But a lot of people don't even know where to find a seed to plant. That's where Yahoo Finance can help. Tree planting and investing is way easier when you know what the heck you're doing. And if you want to know what you're doing, check out Yahoo Finance.

2:06Toby and I have been reading Yahoo Finance literally for years now. It helps us stay up to date so we can prepare for this show every day. But it's also a great resource for normal non-news people who just want to learn more about the market and keep a finger on the pulse of what's going on. If you're interested in trying out Yahoo Finance for yourself, and you should be, head to yahoofinance.com. And now here's Phil from Eczema. Isn't always obvious, but it's real. And so is the relief from EBCLIS. After an initial dosing phase, about four in 10 people taking EBCLIS achieved itch relief and clear or almost clear skin at 16 weeks.

2:42And most of those people maintain skin that's still more clear at one year with monthly dosing.

3:15when treated with EpGliss. Before starting EpGliss, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EpGliss and visit epgliss.lily.com or call 1-800-LILY-RX or 1-800-545-5979. Maxonomics. Phil, welcome to the show. Thank you so much for having me. It is a pleasure and an honor to be here. So first question, your YouTube channel and social media accounts are called Maxonomics, but your name is Phil. What is going on there? Who are you and how did you end up at Morning Brew? That's a great question. I'm glad I get to say this because so many people call me Max.

3:54They see me on social media and they assume my name is Max. Rightfully so. The name Maxonomics was just the name that was chosen for the third web. I came about via a variety of websites that served investing data to the retail investor and just the general public. Maxonomics was the third one. It was just kind of the name that stuck when it was time to have a name. And so here we are. I came from that background of the internet. And in writing for a bunch of different websites, I ended up making video. People were like, you were really good. You should get on video. I was like, no, no, no, no, no.

4:27I don't do video. And yet here we are. So after a little bit of time, Morning Brew reached out and we formed a partnership. And here we are. Now I'm on the Morning Brew Daily podcast. It is a pretty interesting ride. And where are you located? Like what city have you spent the most time in your life? I have lived in a variety of different places around the United States. But right now I am just outside of San Francisco. I'm about an hour south of San Francisco, enjoying a little bit of the sun. That's where I call home. But I am originally from Philly. So I'm Phil from Philly. And you will hear it occasionally come out of my mouth.

5:08I'll say water. I say water and a few other things like I'm from Philly because I'm from Philly. Great. Now it's time to pick your brain a bit. Should the U.S. buy Greenland? I can't see a reason why the U.S. wouldn't want to buy Greenland. Of course, if the people of Greenland agreed to join the United States, there's a variety of resources, the land area, it's becoming more and more strategically valuable given that the planet is warming up and a lot of the ice on top of Greenland is melting. So I don't see a big downside to the United States owning Greenland. I think it's probably been said, the Alaska purchase was a huge deal.

5:48What a benefit, what a boon. The Louisiana purchase was probably the best move that Thomas Jefferson made out of all of the good moves that he did make. So why wouldn't Greenland be a benefit to the United States? Again, I don't think that it should be taken by force or threatened to be taken over. If the people of Greenland want to join the United States, we would gladly take them. They do want to be independent from Denmark. And I would remind our listeners that the U.S. did buy a territory from Denmark in the early 20th century. And that would be what is now the U.S. Virgin Islands. So no Virgin Islands without a land sale.

6:23The more you know. Today is also inauguration day and the soon to be president Donald Trump's signature economic proposal is tariffs. Your most recent YouTube episode is titled, Tariffs Are Even More Powerful Than You Think. Why are tariffs more powerful than I think? And also, how did you get inside my head? I am curious to know how that is inside your head. But the tariffs are far more powerful than you think. For a variety of reasons, you could probably go on for about 30 minutes on the history of tariffs, how they've shaped the world, how they have changed, particularly since 1995, when the World Trade Organization came about.

7:04But tariffs are just this very powerful tool that govern access to a country's consumers, a market. The US market is the largest consuming market in the world, you and I. We buy stuff every year that accounts for about 70 % of GDP, or about$20 trillion worth of spending from us. And$7 trillion of that is spent on goods, things like cars, dishwashers, mugs, pencils, whatever it happens to be. And the United States with the lowest or the 14th lowest tariff rate in the entire world has kind of opened up its market to every manufacturer that wants to sell to the United States. And this has been great for consumers in a lot of way in way for prices.

7:48But low tariffs incentivize manufacturers to move manufacturing outside of the United States. And this is what's been happening for about the past 20 years and in huge droves in the early 2000s. So tariffs are this incredible tool that has kind of been put on ice over the past 25 years and is just now coming back. And I think we'll start to see the impact that tariffs had, because what the World Trade Organization did to go on is it removed the ability for a country to unilaterally change its tariffs for different countries. And the U.S. pulled out of the WTO in about 2018. And so tariffs are coming back into vogue.

8:29Well, what do you think we can learn about the tariff regime from last time when Trump implemented them in 2018 that might help us understand what's coming for consumers and businesses in the United States and around the world, should they be implemented this time? Obviously, there are so many question marks. We don't know how high they're going to be or where they're going to go or on what goods they're going to be placed on. But is there anything that we learned last time that can maybe be applied to, you know, our new era going forward? Of course. And the blanket implication this time of it's just going to be 25 percent across the board for all goods.

9:03That's a huge number and, you know, pretty scary in a variety of different ways. But the one thing that I would say is for the president, for president elect Trump, I would believe what is coming out of his mouth. While some of this is certainly a negotiating tactic. This is a man that typically does follow through on a lot of the stuff that he says, or at least attempts to. So I wouldn't think that this is just some grand gesture to try and get a better negotiating position. I would expect to see tariffs come in at a pretty decent clip across a variety of different categories. As much as it affects the U.S.

9:39consumer, we did see the price of goods that Trump put tariffs on in 2018 rise. But the broad inflation level, it had almost zero effect on broad inflation. So it's going to depend a lot on how these are instituted in different categories. But for the most part, it's hard to predict the effect until we see exactly how they're going to come in. So I would take a bit more of a reactionary standpoint here and say they're coming. They're going to come in a variety of ways on a variety of goods. exactly what that's going to be is to be seen. Did we actually see a boost in domestic manufacturing on the industries that were affected by tariffs?

10:25That is kind of the protectionist mindset when it comes to tariffs, is that by applying these tariffs, it will hopefully incentivize people to move their manufacturing to the United States and hopefully strengthen those specific industries. Did we see any of that last time around? I don't have great numbers on whether or not the categories that we put tariffs on brought manufacturing back. And I honestly think it would probably be too early to tell. Six years is a short amount of time to install an entire new manufacturing base. But what I can tell you is a little bit of the inverse of that. In 2000 to 2010, 5 million manufacturing jobs left the United States.

11:06And one of the big problems with that or why that occurred was because when China joined the WTO and the WTO became an institution in 1995, and companies around the country looked at this and said, OK, well, if the United States can't raise tariffs in the next 20 years, like they can't unilaterally go in and just next year change tariffs on, say, mugs, then I can confidently move my manufacturing outside of the United States and not have to worry that that's going to be a big deal. going to change and all my profit margins are going to be destroyed. So that incentivized so many companies to leave in between 2000, 2010, 5 million manufacturing jobs left.

11:46And there just hasn't been this threat of tariffs that have incentivized companies to set up shop here. And I think we're still in this period of, all right, are tariffs really back? Like, are we really doing this again? And if they are, as a new manufacturing company, am I willing to take the risk of setting up shop outside of the country, or do I definitely want to set it up here and not take that tariff risk? So to your question, I don't have specific numbers on whether or not that has occurred, but I think it's too early to tell. This is a much longer process, I think, than that. Let's shift gears here a little bit.

12:22If you take a scroll through your Instagram page, you'll see a lot of videos about the airline industry, specifically Southwest. That airline recently announced it is changing its famous boarding system to include assigned seats and premium perks. What do you think about Southwest kind of ditching its roots and falling more in line with the broader airline industry? One of the reasons that Southwest is doing this, in my opinion, is because they don't have anything to offer loyalty customers, right? So if you're an American Airlines, I don't know if either of you have an allegiance, Delta, United, whatever it happens to be.

12:59I happen to be on American Airlines just because I got on it 10 years ago, and it's very hard to get off. It has been beneficial. But American Airlines gives me free stuff for a variety of different categories of flying. Southwest just gave all of that stuff away for free, right? There's no first class. There's very little in terms of early boarding. There's no lounge. There's nothing that Southwest had to offer as a loyalty perk. And that has been good and bad. A lot of customers would say they love that about Southwest. But a big part of the traveling public now, especially our generations, the millennials and lower, love perks.

13:42They have travel credit cards. They have loyalty points. And they want those perks. You know, the ability to be upgraded to first class is like a nice thing. So Southwest doesn't have any of that. And a lot of people are kind of tired of just the random boarding process. So I'm a little worried about Southwest as a company. However, they have great brand loyalty. So we'll see. Seems like a business decision, too, because Delta has shown that when you offer these premium seats, that's the way forward for the industry. That's basically how you make the bulk of your revenue. Delta CEO said a few weeks ago that 2025 was going to be their best financial year ever.

14:22So Southwest maybe is just not in a position where it can continue what it has done for decades and needs to adopt this more segmented model because this is how you make money as an airline now. It's just not profitable otherwise. Yep. Industries change. Southwest seems to have gotten the message that premium is in vogue right now. And speaking of perks on flights, Delta and Giraffe Kings just announced a partnership. It's very vague, but do you think we'll ever see gambling reach the skies? I'm wondering from a regulatory perspective how this would happen, because it's state by state. Gambling laws happen state by state.

15:00And frankly, I'm not sure how that would play if you're taking a flight from California to Texas. How do you get over all those regulatory hurdles? Because there's been very light on details, I think that Delta and DraftKings are like, yeah, this would make a ton of sense. We've got people sitting in our seats for a couple of hours. Let's let them gamble. But I think executing this is going to be much harder than it seems. And actually, at the federal level, gambling on flights is barred on all U.S. commercial flights. So there is the potential that they go to the Trump administration and lobby.

15:34But it might it might render itself as a much more limited partnership than we want. I was about to say we want, but like maybe then some people want. I think as you fly over each state where it is legal, it drops in and out when you're over that state specific airspace. So as you're flying over Vegas, get your bets in. And then once you hit, you know, Iowa, it's it's it's done. Let's go up in altitude a little bit. You posted a video recently about the new space race. What is the new space race? If you look at a chart of orbital launches, this is taking a rocket and putting it outside of the atmosphere and into space.

16:12In 1967, 141 orbital launches happened. We didn't hit that number again, 141 launches, until 2021. In 2021, we did 145 orbital launches. And if you look at the chart, it's just like a stock chart that you really want to be in. It just has gone vertical. 263 orbital launches this year, and the number is only going to continue higher. What's happened here is that the cost to put something into space has gone so low that we've hit this moment that's basically the shipping container. If you look at the shipping container back in the 1950s, it changed everything about the world, how you can move goods around.

16:56It costs about$6 a ton to load something onto a ship back in the 1950s. Today, because of shipping containers, it's about 16 cents. And this is what SpaceX has done for rockets. And of course, companies like Rocket Lab and a variety of others that are starting to spin up. So as the cost has dropped, people are looking and saying, OK, well, what part of space is valuable? And do I want to occupy or want to be a part of? So the new space race has been a function of dropping costs. And then everybody's saying, well, I don't want to miss out. So this has been an entrepreneurial thing. but also militaries at this point in time.

17:32So this is the first time in space history that we have not just nation states and militaries, but we now have entrepreneurs saying, all right, let's go to space and do some stuff. Let's stick with this future-looking perspective. We've been promised self-driving cars for a decade now, but there finally seems to be actual momentum with Ramo racking up rides in San Francisco and expanding to other cities. How close is our autonomous future? Are babies born in 2025 ever going to need to learn how to drive a car? I think that the answer to that is probably no. I mean, an infant today, 16 years from now, we're looking at 2040.

18:15These are the betas. Yeah, generation beta. Yeah, the betas. We'll call them something else. Yeah, whatever the term is for AV riders that don't have driver's license. I mean, a lot of people in New York don't have driver's license, and a lot of kids get around by Uber now. it's way safer. I'm not a parent. I don't know if you guys are parents, but one of the things that whenever I've talked to parents is like, we would prefer for our kid to not have to drive. There's 35 ,000 car accidents that cause fatalities around the world, around in just the US every single year. So if that number can be lowered, and I think it's hard to argue that autonomous vehicles aren't safer.

18:52I mean, we can get into little details, but over time it will become safer because autonomous vehicle doesn't want to look at its phone ever or have a chat or drink coffee or whatever it happens to be. So I think the answer to that is yes. You live near San Francisco. Have you been in a self-driving car? And what's the experience like? I've spent a bunch of time in Waymos. I've probably taken 20, 25 trips in Waymos at this point in time. The first thing that you notice when you get in a Waymo is that it's private. There's no driver. I mean, I'm sure there's cameras and speakers in there. And I'm sure if somebody really wanted to listen to you, they could.

19:26But you get in there with somebody and you can talk about whatever you want at whatever volume you want. You can choose the music like you can have a party. It's like your own little world for a little period of time. So it is very nice in a variety of ways. You know, the windows don't go down. You set your preferences once. And when you get in the next way, preferences are there. The experience is quite elevated compared to what we have experienced with Uber and Lyft in the past. We'll be right back with more Phil after this. Tuesday on NBC, Jimmy Fallon and Bozema St. John host the highly anticipated new competition show.

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20:31When 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. You are a big fan of Costco's business model. And frankly, who isn't$1.50 hot dog, Soto Combo? You cannot beat that. What can the retail industry learn from the way Costco does things while maintaining their own identity?

21:13One of the things Costco does is maintain its own identity so well with the Kirkland brand. I think it's probably underrated. I mean, everyone talks about it. Everyone loves Kirkland. But like Costco wine, the Kirkland brand is good. I mean, and so are a lot of their white label Kirkland products. So they give you this ability to just go in, wander around, and spend money on things that you really do need at a really nice price point without being pushy. There's really no sales. Things are just kind of placed where people can go find them, and they don't change anything. The$1.50 hot dog is such a good example.

21:56The CEO or CFO years ago, or just a couple of years ago, I think you guys probably remember this. He's like, definitely used a curse word. He's like, we are not going to change the price of the hot dog. I think that that's what people want, is they want that stability of a product and a brand saying, we are what we are. We're not changing it. Just keep coming and we'll keep giving you what you want. We've been talking about food a little bit and you have posted some videos about fast food. Chipotle's market cap right now is around$76 billion. McDonald's is$200 billion. What does calories per dollar have to do with the gap between those two market caps potentially narrowing over the coming years?

22:36Sure. When you go and anytime we get food, right, it's calories. We are eating calories. That's kind of the point. So how many calories can you get for a dollar was the premise of that whole video and series that I did because it's what we do. I don't think that we instinctively think about it. You know, how many calories am I getting? But if you look through all the menus of fast food and sweet green and kava and Chipotle, you can see what kind of price point each of these sits at. And when you look at McDonald's menu and you look at Chipotle's menu, they each give about 100 calories for every dollar that you spend.

23:14And of course, if you go to McDonald's, while it is delicious, I am a sucker for chicken nuggets. I think they are a gift to humanity. They're so good. But it's not good for you. It's obviously not good for you. And if you go to Chipotle's menu, it's fairly solid food, right? You can see all of the ingredients. The lettuce is fresh. There's corn. There's produce. You can see all of the ingredients that are there. So for$10, you can get 1 ,000 calories at Chipotle that are of higher quality than you can get at McDonald's. And this has opened up a lot of markets for Chipotle. Fast food can go into smaller rural areas that don't have a fluent customer base because they have a lower price point.

23:59Chipotle is the first really kind of healthy fast food quick service restaurant that is able to do this, which has unlocked just this magnificently big market. So the runway for Chipotle at about 7 ,000 stores now, they could expand by 500 % across the United States over the next 10 to 15 years. A wise man once said that three out of every 100 people added to the U.S. population in the last decade have ended up in Phoenix. That wise man was you, Mr. Phil. What What is the number one reason behind the growth of the Sunbelt? And what is the biggest risk factor that could slow its roll? It was cheap.

24:39I mean, it was so cheap. And of course, the weather. I think that there's a there's a the reason for the growth is one, the weather. A lot of people wanted to get out of the Northeast where a property prices are extremely high. It's hard to build. It's cold most of the time. And if you move down into the Sunbelt, where now electricity is much cheaper, it's prevalent. You can run AC throughout the year without a window unit. The advances in air conditioning have made the Sunbelt in the really hot areas like Phoenix and Arizona and Southern Florida attractive. Without air conditioning, this really wouldn't have happened.

25:18And there are a few advances that have happened over the past 30 years that have just made it better and better. Not that people didn't live there beforehand, but this has helped for things like industry. You can now set up a big office building in Phoenix, and it will remain cool, and people can work there so you can have more jobs in these types of areas. So this is a big part of the growth. But I think the housing prices are not cheap anymore. And if you talk to anybody in the Sunbelt, in places like Phoenix, in places like Nashville, they complain about the influx of people. So before, it was this niche little thing like, oh, you're moving to Nashville, and people are like, oh, yeah, it's great here.