Nvidia Stock Falls in US Brawl with China & Harvard's $2.2B Fund Freeze

0:00Tuesday on NBC, Jimmy Fallon and Bozma St John host the 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. This 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. Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the gigantic economic stakes of the Harvard vs.

0:39White House feud. Then Chinese TikTokers are slinging luxury goods directly from factory floors, but are$6 yoga pants legit? It's Thursday, April 17th. Let's ride.

0:55Tap, tap. Is this thing on? Can you hear me? Okay, just checking because yesterday was a different story. Spotify suffered a widespread outage from about 6.20 a.m. Eastern to nearly noon, frustrating all of us who wanted to listen to podcasts or our day list in the morning. I'll say it, Toby. I was pretty much useless without my obsessed pink Pilates princess early morning jams. It was very funny to see all the Spotify listeners come over to YouTube. It was like two different MBD tribes making contact for the first time, and it was mostly peaceful. Some said, hey, it's kind of nice over here. I think I'll stay.

1:32So that was a nice byproduct of the outage. It's also two different commenting cultures I've noticed. There's this core group of YouTube listeners who just want to be the first one to post a comment in the morning. So it's always just first, second, third. Ah, nice try. And then over on Spotify, there's this core group of listeners who just comment on audio quality a lot, which makes sense because it's an audio platform. Apple Podcasts, no idea what's going on over there because there's no comment section at all. But we love you all equally. Thank you for listening, no matter what platform you do it on.

2:02And sorry again for the outage. And now a word from our sponsor, Planet Oat. Neil, I was playing kickball over the weekend, classic rec league tilt, and it hit me just how important it is to have that one player who can do it all. The mythical utility player. They can pitch, catch, sprint to first without pulling a hammy. It used to be me, but now the hamstrings are getting a little dicey. Anyway, when it comes to breakfast, you want Planet Oat on your team. And it's not just showing up for one thing. It's making your coffee better, your cereal smoother, your smoothie creamier. Whatever you throw at it, it'll toss it right back just that much better.

2:37The Barista Lovers version 2 is especially versatile, incredibly velvety, frost like a dream, blends like it's made for cafe level lattes because it was. And Barista Lovers backs it up with the numbers. Just three grams of sugar, an excellent source of calcium plus vitamins A and D. And it's dairy free, soy free, gluten free, peanut free, clean and dependable. No frills, just performance. That's what you want in a teammate or in your fridge. Get your hands on the oat milk that has it all. Visit planetoat.com for more. This episode is brought to you by State Farm. Checking off the boxes on your to-do list is a great feeling.

3:14And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you. Whether you prefer talking in person, on the phone, or using the award-winning app, It's nice knowing you have help finding coverage that best fits your needs. Like a good neighbor, State Farm is there. In the extended poker game that is this global trade war, another chip has been played. And it literally involves chips. Earlier this week, NVIDIA disclosed in a filing that the Trump administration's clampdown on sales of advanced chips to China will impact earnings to the tune of$5.5 billion.

3:50That number comes from the fact that its H20 chip inventory now falls under new restrictions. The H20 is a watered-down version of NVIDIA's higher-powered H100 and H200 chips, one that was created specifically for markets like China, where full-powered chips are restricted. Earlier this month, the U.S. government paused its restrictions on the sale of H20, but when you don't like your hand in poker, you have to exert pressure in other ways. I'm also realizing, Neil, that this poker metaphor is getting mighty confusing with all the chips flying around. But we persevere, and so will NVIDIA, who had a rotten day in the stock market, falling just over 7 % and bringing the entire chip sector down with it.

4:30The new export controls are an especially tough pill to swallow because NVIDIA is fresh off announcing a$500 billion investment that will go towards building two supercomputer factories in the U.S., right in line with Trump's America First manufacturing policies. All in all, an annoying turn of events for the chipmaker, who has suddenly found itself as the biggest U.S.-China bargaining chip. Every single day, there's a new company that's caught in the crossfire of this trade war. Yesterday, we led the show with Boeing. Now it's NVIDIA. This is a much bigger player, much bigger bargaining chip.

5:05By all accounts, this was a big surprise for NVIDIA. Jensen Huang, the CEO, went to Mar-a-Lago earlier this month, had dinner with Trump and talked about that$500 billion investment. He was under the impression that these H20s that they made specifically for the Chinese market were going to be exempt from all of the trade war chaos. So they went to all their Chinese clients like Alibaba, ByteDance and Tencent said, don't worry about it. We're still going to get you your H20s. This has all been cleared up. And then earlier this week, they were completely blindsided by this new ban. And that's why, you know, the stock tanked.

5:43It surprised investors as well. And Nvidia stock after soaring more than 200 percent this year is down, you know, about 20 percent this year. It's just been been rough sledding so far in 2025. Yeah, that's 200 percent last year that it soared. But it looks like half a trillion dollars only goes so far these days because an escalating trade war isn't just a great backdrop for any of a high tech good to going go towards China. NVIDIA did design this chip specifically for this purpose, and it's not like this is a top-of-the-line chip. I mean, Morgan Stanley analysts say that H20's performance is about 75 % below NVIDIA's H100 family, and even since that note came out, they've released a black-well chip that even exceeds the performance of the H100.

6:28So this is not a top-of-the-line chip by any stretch of the imagination. So this inability to sell even low-performing chips into the Chinese market is just a bit of a business scrambler if you are NVIDIA at this point. And NVIDIA is definitely going to be peeved too. I mean, they've done everything right there. A spokesperson said that, hey, look at the taxes we pay. We have a US-based workforce. We are a technology leader. Heck, our exports actually helped the US fix its trade deficit with China, which is the whole point of the tariffs is to bring that deficit downward. So they're just sitting here saying, I thought we checked every single box, crossed our T's, dyed our I's, and yet here they still are.

7:10But the problem is the U.S. government considers the sale of semiconductors to China in order to power their AI models, a national security concern. This ban on chip exports did not start with the Trump administration. It started with Biden back in 2022 when they curbed the sale of the highest end chips to China because we had this thing like DeepSeek earlier this year where this AI model performed as good as ChatGPT or other American-made models on a lot less firepower. It seems that they trained them on the H20. So from the U.S. government's perspective, whether it was a Democratic or Republican administration, they're saying, sorry, Nvidi, I know you are going to have your business heard, but this is a national security priority for us because we need to win the AI race against China.

7:58The country's wealthiest university and the White House are locked in a knockdown drag out fight and the economic stakes could not be higher. On Monday, Harvard University made the surprise decision to reject the Trump administration's demands that it change how it operates, saying that appeasement would compromise its educational mission and overall independence. Other schools like Columbia, who have been targeted by the government this year, have given into the demands so that Harvard took the gloves off was somewhat of a landmark moment, signaling a more adversarial approach. Retribution came fast, with the Trump administration responding that it would freeze$2.2 billion in funds that had been awarded to the school for research.

8:39Now the two sides are digging in for a potentially long legal conflict over the$9 billion in total the government directs toward Harvard. Depending on how long it lasts, the showdown could have significant repercussions for the economy of greater Boston, where Harvard is based and along with other research universities, there is the primary economic engine of the region. Harvard is the fourth largest employer in the entire state of Massachusetts, and a funding freeze would deal a blow to sectors like life sciences and biotech that have flourished in Boston because of all the talent and research breakthroughs cultivated at the colleges.

9:13So Harvard is in no doubt feeling the financial squeeze with$2.2 billion and potentially more cut off. But Toby, it has been preparing for this moment for years. True. It has a pretty massive rainy day fund. It's long hoarded cash and built up its budget to withstand quote unquote shocks. Some of those shock absorbers are one, obviously the$53 billion endowment, the most of any school. Two, it's got a pristine AAA credit rating. And three, it's actually got an annual budget surplus of about$45 million. So all that affluence and prior planning makes it pretty well-situated to weather this storm.

9:51But how long can it rely on its endowment? It's definitely a temporary thing, even though that number sounds very big. There's pretty strict rules over what you can actually use an endowment for. About 80 % of the funds are restricted to specific purposes like financial aid, like professorships and scholarships. And most of the federal funding that it was receiving was tied to this academic and scientific research. So you can't necessarily just like for like plug that$2 billion hole that you now have because these funds are restricted and, you know, deemed towards certain purposes. Yeah. So this, when people were learning about this story and I was too, I was wondering, well, I thought this was a private school.

10:31Why is the government sending$9 billion toward Harvard? And, you know, it sends a lot of money toward other research institutions as well. And it goes back to World War II. The U.S. government said, you know, I think maybe we should outsource this whole research and development and innovative thing. Maybe colleges and universities do this better than we do. So it started funding schools for research purposes. That grew over the course of the past few decades to the point where schools are now getting billions of dollars in funding. And it's sort of a I scratch my back, I scratch your back, you scratch mine.

11:09And I'm going to outsource all this R &D to you by giving you billions of dollars in order to conduct research and create companies through all that research and innovation. At the same time, you are going to produce really high-level talent and people with skills so that they can create companies and breakthroughs that will lead to the overall growing of the U.S. economy and local regions to flourish in the greater Boston area. So it's this partnership, this symbiosis that has worked for the past few decades. Now we're seeing some major fissures here in 2025. Yeah, and Harvard has some options available to it too to shore up, even though it's already sizable, rainy day funds.

11:48Some of those are selling debt for short-term funding. A lot of colleges have recently sold taxable bonds. Harvard did so last week. They sold$750 million worth. It's a pretty easy market for colleges to access. And so they have a lot of flexibility around how they can use those funds. And it goes back to stuff that Harvard did in the wake of 2008. They really kind of retrenched. They made themselves much more resistant to big shocks like this. The AAA credit rating is a big part of that, too, because they have all these lines of credit that they can now tap into. So Harvard specifically will be probably all right.

12:26The long-term ramifications of pausing research on things like AIDS research or cancer research or organ transplants, that's where people say we probably won't see the shocks now. but maybe down the line when that research isn't taking place, that's going to affect a lot of things and a lot of part of the really entire U.S. economy. Right. The two things to watch are whether other universities follow in Harvard's footsteps leading, you know, showing defiance to the Trump administration, which might lead to more funding cutoffs and also the status of of Harvard as a tax exempt entity. Yesterday was reported that the administration is moving to revoke its tax-exempt status, which is given to charities, churches, universities, so they don't have to pay federal income or property tax because they're in this umbrella of a nonprofit where you're conducting things that are for the greater good, so they give you tax-exempt status.

13:16And now the Trump administration is looking to revoke that, which would be a huge escalation and lead to even longer legal battles. A Chinese e-commerce app is attracting a lot of American dollars, but it's not Xi 'an or Timu. Driven by a string of viral videos posted on TikTok, the little-known app DHgate surged the top of Apple's free app charts and is now sitting in second place as of this morning. DHgate's sudden popularity came from videos posted by Chinese influencers pulling back the curtain on global supply chains. In the videos, the influencers exposed luxury fashion brands from Hermes to Lululemon, purportedly showing how these name brands are actually being made in Chinese factories.

13:56Apps like DHgate allow global consumers to capitalize on this by buying direct from Chinese factories at much more affordable prices and without the branding. One video that has racked up 10 million views shows a woman boasting that the yoga pants she's offering are made out of the same material and with the same craftsmanship as Lulu, but can be bought for just$5 to$6. So even after tariffs are applied, they're still less than what Lulu would charge you. Another video shows a man in a factory showing off a Louis Vuitton style bag for only$50, again making the claim that they're the same manufacturer as the real deal.

14:32Now, is a Louis bag for$50 or leggings for$5 too good to be true? Probably. Louis Vuitton has repeatedly emphasized that they don't make any of their goods in China, while a Lulu spokesperson clarified that only 3 % of its products are manufactured in China. Still, Neil, these videos are the latest in the surge of trade war TikTok content that's been blowing up ever since Trump rolled out the new tariffs. It's a new battleground when it comes to trade, but also when it comes to just public opinion. Yeah, the trade war has moved to TikTok. I think you're right to pour a little cold water on this.

15:05A number of brands have come out, like Lululemon, saying that the videos are just not real. This guy said that, hey, I'm looking at the Lululemon factory in this town in China. and they're like, we don't make anything in those factories. Many of these brands have NDAs with their contract manufacturers in China. So if a manufacturer is saying that they work with Lululemon or Louis Vuitton or Hermes, they're probably lying because they're under contract to not disclose that. So I would say if you're using DHgate, go ahead, but you are probably just buying a dupe, not a real thing. Well, there's actually a little bit of nuance between what a counterfeit is and what a dupe is because counterfeits are just like you're trying to pass it off as a real thing, but it's just made of much worse materials.

15:51Dupes are just de-branded versions of high-quality goods. And dupe culture has actually taken on a name of its own over in China. It's called Ping T. And Gen Z use it to reflect the popularity of people moving from label-loving to saying, I just want high-quality stuff. So there's been this big market that is not the counterfeit market, but it is the dupe market of people saying, Maybe I don't need that logo on my Hermes bag or whatever, or my Lululemon leggings. Maybe I just need high-quality goods. And that's been a massive culture shift that's been percolating over the last year or so. So there is a slight difference between dupes and counterfeits.

16:30Make sure, though, if you are buying anything, you want to fall in the dupe category. You don't want to fall in the counterfeit category. Special edition of Toby's Trends on Thursday. Seriously, you get them. I can't stop trending. That's just the name of the game. All right, let's take a quick break and hand it over to Neil for his numbers right after this.

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18:19Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will give you a lot to talk to your parents about. Just a little preview. For my first number, a growing share of youngsters are pulling a Saxon from White Lotus and joining up with the family business. The share of small businesses that employ a young adult child of an owner is up 13 % year-over-year in January and has doubled since 2018, according to HR firm Gusto. They analyzed 400 ,000 payrolls to find companies where the last name of an owner over 50 years old matched the name of an employee under 30, purposefully excluding the 100 most common names in the U.S.

18:58It's a sign that the cooling demand for entry-level jobs and the threat of AI automation has young professionals embracing the familiar environment of the family biz, despite the historical stigma that may come with it. It's also an indication that Baby Boomer and Gen X business owners are thinking seriously about succession as they plan their retirement parties. While the share of small business owners who employ their own children is still a small slice of the overall pie, the movement is significant, Augusto Economist told The Wall Street Journal. Yeah, it's definitely a reversal from just recent decades because you're right.

19:31There was this stigma around joining the family biz because it just seemed like the easy path and, you know, our generation of entrepreneurial or just wanted to set off on their own. They didn't want to join like the boring old business that mom or dad ran. But now they're staring down just an economic reality that makes that job seem a lot more appealing because, you know, COVID upended the beginning parts of most young people's careers. Then there's been this huge AI boom. That's a massive disruptor. So maybe working in a steel fabrication plant seems a little more AI-proof than working a cushy marketing job somewhere in New York City.

20:06And then you just toss in the trade war as well. And so all of a sudden, of course, you're going to phone up mom and dad. And mom and dad are probably happy too because they're looking to pass down these businesses too. They don't want to work forever. They want to ensure it's in good hands. And so if your kid comes calling, then of course it becomes this appealing avenue for them as well. So just kind of a fascinating shift that we have been seeing maybe accelerated by recent economic conditions. It's kind of an interesting game to play in the political office environment. You know, like where do you put your kid when they come in?

20:39Do you put them in the, you know, in the trenches or are they management tracks? So, you know, it gets a little tricky. Yeah, a lot of career coaches say that a lot of parents make the mistake of turning their kids into executives right when they came out of the gate, which doesn't even make sense for the kid either. They're not prepared to be an executive. Obviously, it leads to some weird office politics as well. If you see, you know, suddenly you're reporting to a 22-year-old when you've been working there for many years. So there's a right way to do it, and it is a little testy. There's no perfect way to do it, but, yeah, definitely something that we're seeing increase, especially in the face of just the current reality.

21:12My next number piggybacks off my first. Not only are parents passing down businesses to their kids, they're also buying them super-duper expensive real estate. Consider this, 28 % of all Manhattan homes were purchased through a trust last year, a big jump from 17 % three years ago, according to a new report from real estate analytics firm Adam. New York brokers told Bloomberg that wealthy parents helping their kids flex on their friends was the primary driver of the jump. This highlights a couple of trends. Number one, at this point, you probably can't afford to buy a Manhattan property, especially in a desirable neighborhood without generational wealth.

21:49In 2024, the median sales price in the borough was$1.1 million, with all cash sales accounting for 60 % of purchases. And number two, that the great wealth transfer is picking up steam. As we learned in the previous story about family business succession plans, the great wealth transfer is what economists have called the exchange of$124 trillion from boomers to their kids over the next two decades. And it's playing out in real time in the West Village, which is being invaded by Nepo babies. Right. And a lot of the vehicles that these parents are using to transfer these houses to their kids are trusts.

22:25One luxury broker told Bloomberg that as much as 60 percent of sales last year involved parents buying for their kids and 40 percent of those used a trust. Trusts are good for, one, avoiding tax ramifications. They kind of skirt some of these wealth taxes or estate transfer tax rules. But then, two, they're also discreet. You don't have to disclose who's behind the trust versus an LLC, for instance, you have to attach your name to. So people are really digging trust as a vehicle. I mean, you've heard of trust fund kids. This is kind of an invasion of trust fund kids into certain areas of New York because they're just really good vehicles for passing down that wealth when it comes to housing.

23:06My final number is$2 billion, which is the value of iPhones that were airlifted to the U.S. from India in March. If that sounds like a lot, it is. The iPhone shipments marked an all-time high for a single month and roughly the same as the total number for January and February combined. At least six cargo jets were used in Operation Beat the Tariffs. Because that's what this rush was all about. President Trump had signaled on April 2nd he would be imposing reciprocal tariffs on the U.S.'s trading partners, so Apple wanted to get ahead of whatever was announced to make sure enough iPhones were on U.S.

23:40soil. Turns out it was a savvy play because Trump hit India with 26 % tariffs and eventually 145 % tariffs on China, the two countries where Apple makes iPhones. Later on, smartphones were exempted from Chinese tariffs for now, and India tariffs were also rolled back. But the Apple iPhone airlift shows how companies are scrambling to stockpile inventory in the U.S., given all the uncertainty around tariffs. Yeah, we've talked about the fact that Apple consumers were also rushing into stores to try to buy iPhones before maybe prices rised. And we're seeing that kind of play out across the broader economy as well.

24:15We got consumer spending numbers for March yesterday, and they actually came in higher than expected, which shows maybe this rush to buy stuff before prices went up. So all this front-loading, all this bringing in a ridiculous amount of product in terms of Apple seems to be the move that a lot of businesses are taking and consumers are reacting by kind of meeting that demand with spending of their own. Yeah, another indication of this is the pharmaceutical industry. We've talked about it on the show that there might be pharma tariffs coming. Pharmaceutical products imported to the U.S. in January and February was$37 billion compared to$31 billion during the same period last year.