Postal Services Stop US Shipping & Keurig Dr Pepper Spends $18B on Coffee

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.

0:36Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, President Trump said he'll remove Fed Governor Lisa Cook. But can he do that? Then why are dining rooms disappearing from homes? It's Tuesday, August 26th. Let's ride.

0:55If you fired up Netflix this week, you might have seen their new method for helping you find a new show to watch, your astrological sign. Last Thursday, the streamer launched an astrology hub called Your Zodiac Watchlist, which matches the different Zodiac signs to content those people may like because of their particular character traits. For example, I'm a Leo with quote main character energy, so Netflix suggests I would enjoy Emily in Paris or The Crown, which, yeah, sure, Toby would love to have been in the room where they came up with this idea. Someone definitely floated it as a joke and then everyone else was like, wait, that's secretly incredible.

1:32It's a incredible idea, but I do want to go through who got the best recommendations and who got the worst. Let's start with the worst. Definitely Aquarius, who Netflix considers oddballs, quirky, and outsiders, and then pitch them content about aliens in sci-fi, including Venom, The Last Dance. So not only are Aquarians assumed to be weird, but Netflix also thinks they have awful taste in movies. I think the best is either Sagittarians who get adventure content like Lost, The Witcher, and Jurassic Park, or the total other side of the spectrum. Cancers get more emotional recommendations like Gilmore Girls, Ginny in Georgia, and Grey's Anatomy.

2:07I'm a Pisces, which apparently means I'm a dreamer and hopeless romantic, so I got A Star is Born, XO Kitty, and Groundhog Day. But yes, these hyper-personalized and specific collections are clearly part of Netflix's strategy. They've made a hope they don't end up on the Kiss Cam collection, which are filmed with, you know, steamy dramas based on the Coldplay Kiss Cam incident. And then also, can I pull you for a chat collection inspired by Love Island? So maybe let's have a little movie marathon, Neil. All right. And now a word from our sponsor, LinkedIn Ads. Toby, speaking of you being a hopeless romantic, heard you were looking at wedding venues yesterday.

2:44I was. Both exciting and overwhelming. So many options to choose from. Just know that whatever you pick, the most important thing is the person standing across from you. Oh, that's so sweet. My fiance will love that. I was talking about myself as one of your groomsmen. But also, this reminds me of the best B2B ads platform out there, LinkedIn Ads. How does my wedding venue search remind you of B2B ads? Well, hear me out. With over 10 million C-suite execs and over 130 million decision makers, aka the people you need for your business, on their platform, you can find the right venue for your message.

3:16Honestly, I wish I could slice and dice venues like LinkedIn does. You can target by job title, industry, company, and more. They can link you with the right audience for your brand. So make the right choice and check out LinkedIn ads. LinkedIn will even give you a$100 credit on your next campaign so you can try it for yourself. Just go to linkedin.com slash mbd. That's linkedin.com slash mbd. Terms and conditions apply only on LinkedIn ads. President Trump reached into the toolkit from his apprentice days saying he was firing Fed Governor Lisa Cook in his biggest attack yet on the central bank's independence.

3:50In a letter to Cook last night, who was appointed by Biden in 2021, Trump said he had sufficient cause to remove you from your position, citing allegations that Cook submitted fraudulent info on two mortgage applications. The letter added that, quote, the American people must be able to have full confidence and the honesty of the members entrusted with setting policy and overseeing the Federal Reserve. In light of your deceitful and possibly criminal conduct in a financial matter, they cannot, and I do not, have such confidence in your integrity. Cook, who insists she did nothing wrong, responded, you can't fire me, I'm not quitting.

4:23In a statement late Monday, she wrote, President Trump purported to fire me, quote, for cause when no cause exists under the law and he has no authority to do so, I will not resign. And Toby, this sets up a massive legal showdown that could change the course of the economy and impact the wallet of everyone listening. If Trump successfully removes Cook and fills her role with someone who's more sympathetic to cutting rates, economists warn of another spike in inflation. Yeah, the big question here, can he fire her? And the answer is definitely legally murky. Congress severely curbed the president's authority to unilaterally fire a Fed official back in 1913.

5:02that they the law states that you can only do so for cause but what cause is is kind of up for debate it has historically been you understood to mean malfeasance or dereliction of duty for trump that cause is the potential mortgage fraud but then you actually have to go out and say why does trump want to fire cook here he definitely wants to shape the fed in kind of his own image because a new opening on the Fed board would give Trump a lot of leverage to shape its makeup. Remember, Powell's term ends in May, and then he also almost has a majority at this point. He appointed two current Fed governors, Michelle Bowman and Christopher Waller, in his first term.

5:43This past month, Trump nominated Stephen Moran to fill a open seat that was created by a resignation of a Biden appointee. And then if Cook's seat is open, then he has a majority on that board. So he's definitely trying to push for monetary policy that he can shape. Talking about the Fed composition as having a majority Republican, conservative, or having a majority-leaning Democrat or left is unprecedented. Because since it was created in 1913, central bank has had this independence that economists and bank CEOs like Jamie Dimon have said form the bedrock of stable American financial markets.

6:23And if that doesn't happen, you could lead to a spike in inflation because when you're a president, you want low interest rates because during your term, which only lasts four or eight years, you want lower interest rates because that stimulates the economy. More people have jobs. More people have money to spend. It's all good. But that could be very harmful in the long run if inflation goes too high and then the Fed has to hike rates in the down the line in order to bring it down. This has happened in other countries. It hasn't happened in the United States. You know, we should stress that this is unprecedented for a president to remove or to try to remove a Federal Reserve official.

6:57Right now, I'm looking at the inflation rate over time in Turkey, where President Erdogan has installed a loyalist as the central bank governor. He did that in 2021. It was pretty the inflation rate was pretty low, but below 20 percent until 2021. And then you see a vertical line the next year going to 86 percent inflation. No one's saying that the United States will ever have 86 percent inflation. But when you install someone who is a loyalist to you, there's political considerations that will keep rates artificially low. And that leads to a spike in inflation. And looking at the markets, they are not reacting super well to this.

7:34All three major stock indexes are down this morning. And the biggest move is actually in the U.S. dollar, which lost 0.3 percent rapidly overnight as this news was breaking. So we'll pay attention to how the markets continue to react to this today. If you were planning to order chocolate from Belgium, wine from New Zealand or a suit from Italy, you might need to think more local. In the past few days, more than a dozen international postal services have suspended business shipping to the United States over a new tariff rule going into effect on Friday. Postal services from Germany to Singapore say they were caught by surprise and need more time and clarity from U.S.

8:11authorities so they can adjust their systems accordingly. What's happening on Friday is that the de minimis exemption is ending. This exemption had allowed packages worth less than$800 to come into the U.S. duty-free, paving the way for ultra-bargain Chinese retailers like Xi 'an and Taimou to flood America with cheap goods. In May, the Trump administration ended the de minimis exemption for China and Hong Kong, a major blow to Xi 'an and Taimou, which were forced to raise prices. And on Friday, the exemption will go away for the rest of the world, which is what all these postal services are responding to.

8:42Going forward, shipments from businesses under$800 will be subject to country-specific tariffs. For instance, that's 15 % for the EU and 20 % for Vietnam. How long these suspensions last, we don't know. But it shows how tariffs aren't just affecting huge companies importing cargo on container ships, but mom-and-pop businesses all over the world sending smaller parcels. And those smaller parcels make up the bulk of stuff arriving in the U.S. De minimis shipments account for over 90 % of all cargo that enters the country. Yeah, there is a massive amount of these smaller packages entering the U.S.

9:161.36 billion shipments annually. That adds up to 4 million packages a day. So this is not just affecting Shein and Temu Hauls. It's affecting everyone because it's literally 90 % of packages that are arriving on your doorstep. Small retailers are kind of just throwing their hands up in the air and saying, hey, we cannot figure out how to add duties directly at checkout. We're just going to suspend U.S. shipments. And so that's going to affect a lot of sellers on these smaller sites like Etsy who say that they'll basically just be shut out from U.S. buyers because they just don't have the infrastructure to navigate or can't eat the cost like a larger retailer would.

9:54So maybe one of the longer term effects of this is that the big boys can figure out how to consolidate and figure out how to navigate the situation. But the longer tail of niche sellers might get kind of hollowed out. And so these tchotchkes that you might pick up from Etsy, you're not going to get them anymore. Now, there are a few exemptions to this exemption being ended. And if you're listening to this thinking, well, I have a few cousins. My grandma lives in Amsterdam and I have all these relatives abroad and my birthday is coming up. And, you know, am I going to get their letters? Well, the answer is yes, because these do not apply to letters or gifts that are worth less than$100 and sent from a person to a person rather than from a business to a customer.

10:37So these postal services will still deliver small gifts and letters to you to the United States. But it's just those bigger items between$100 and$800 that are being suspended for now because companies like DHL, which is one of the biggest logistics delivery companies in the world, are saying we can't do this paperwork. Essentially, it's not that the costs are too high. It's just that there's too much paperwork and they can't figure out how to work it out in their back-end Excel systems. And I do think that you will see some loopholes start to emerge, maybe mislabeling some shipments as gifts. That's one thing that industry watches.

11:11Mislabeling. Right, exactly. or you just start smuggling or there's just a gray area of imports or maybe you do start to see Xi 'an and Temu start to set up fulfillment centers in the U.S. Temu has already said they are doing that, that if you order in the U.S. you will get goods from U.S. sellers, which again they can do, but maybe a smaller business absolutely cannot do. And then the final thing that is going to shake out here is that it does put a lot of inflationary pressure on the bottom of the market. Wealthy consumers probably won't feel this because they're not shopping as much at Xi 'an and Temu, But low and middle income Americans who did rely on Shannon Taimou will definitely feel this.

11:47So in that case, it's almost a regressive tax because these tariffs are going to fall the hardest on the people less likely to be able to absorb higher costs. So that's just from the consumer perspective, another reason why this is going to be very impactful. OK, I'm going to need everyone to pour themselves a big cup of joe before hearing this next piece of news, because it's about a massive coffee deal. Yesterday, American drinks giant Keurig Dr. Pepper said it would buy Amsterdam-based coffee company J.D.E. Peet's for a latte of money, more than$18 billion, the latest shakeup in a rapidly consolidating food industry.

12:22Let's talk about the main characters here. Keurig Dr. Pepper, no surprise here, is the company that slings Keurig K-Cups and cold drinks like Dr. Pepper, 7-Up Snapple, and Hawaiian Punch. It's a conglomerate formed by a mega merger in 2018 between Keurig Green Mountain and Dr. Pepper Snapple. The company it's acquiring, JDE Peet's, is a globe-spanning hot drinks behemoth, owning nearly 50 coffee and tea brands around the world, including Peet's Coffee. The acquisition is just the start of a bigger transformation. Once the deal is completed, Curing Dr. Pepper is going to split its business in two.

12:55One is going to be focused on refreshment beverages like sodas, juices, energy drinks, and the other on coffee. The coffee business will be the world's second largest behind Nestle and will actually become the number one pure play coffee company anywhere on the globe. And that brings opportunities and challenges. Coffee is a huge industry, especially in the United States, where we drink 516 million cups of coffee a day. At the same time, prices for coffee beans are rising dramatically due to U.S. tariffs on Brazil, making it a super tricky market to navigate. Toby, you've poured over this deal.

13:27What are the takeaways? I think the takeaway is that coffee is certainly an attractive long-term investment because it does have pretty resilient demand. Everyone wants to start the day with a cup of coffee, but in the near term, a ton of volatility because of these tariffs, because of climate change, and because of just rising costs in general. So this just gives a little bit of clarity to investors. Either you want to bet on coffee or you want to bet on soda. It got a little murky when you tried to bet on both. So I do think that maybe coffee has that long tail effect. Soda has a very steady demand in the United States.

14:03So I think the biggest thing here is that you just figured out, separate the bubbles from the caffeine, although I guess there's caffeine in soda as well. Just give some clarity around this. Well, if you look in the past few years, I know you said coffee is maybe the better long-term investment, but over since this mega merger was completed in 2018, the Dr. Pepper part of this company was doing a lot better than the Keurig part of this company. Just look at these earnings last quarter. This company said its U.S. beverage sales were up nearly 11 percent from a year earlier. And that's because Dr.

14:34Pepper has rolled out all these new types of flavors like Dr. Pepper Blackberry and Cherry. And people are loving it. And then in terms of coffee sales, well, they were completely flat in Q2. There was higher prices for K-Cups and that and there was less demand for that. So this company is going now going once they acquire Peets is going to separate out its coffee business from its beverage business. and typically you might think that coffee is a growing, it would grow faster than soda, which people are shying away from. But Dr. Pepper is just a behemoth. It's the number two most popular soda in the United States after Coke.

15:08It's ahead of Pepsi. It's confusing because like the company's name is Keurig Dr. Pepper, but Dr. Pepper itself is absolutely killing it. But we should zoom out to the entire food industry where more breakups are happening than on Love Island. Not the only major food company going through a breakoff. Kellogg spinned off its snack company, Kelanova, from its cereal branch, WK Kellogg, in 2023. Then last year, Mars bought Kelanova, and then in July, Ferrero bought, says, and intends to buy WK Kellogg's. Kraft Heinz is also reportedly planning a similar separation. So everywhere you look are, you know, mergers and then demergers and then remergers.

15:46People are just trying to slice and dice up the food industry because so many different factors are changing. You have Ozempic being brought into play and how GLP-1 drugs are affecting things. So certainly not the only company that is breaking up and merging. All right, let's take a quick break and come back with another feud between Sam Altman and Elon Musk. Just like you have regular visits at the doctor, your company's supply chain needs checkups too. Thankfully, it takes less than a minute to do it with Supply Chain Health Vitals Checkup from SPS Commerce. It's a free, non-intimidating way to understand your current position and access practical steps for improvement.

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17:33EBCLIS 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. Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when 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. Death, taxes, and Elon Musk suing Sam Altman. The feud that's been running longer than Grey's Anatomy added another twist to its saga, with Elon Musk filing a lawsuit against Apple and OpenAI yesterday.

18:09This time, Musk is accusing the two companies of illegally colluding against his company, XAI. a crusade he first vented about in a social media rant last week, calling out Apple's alleged refusal to feature Grok or X in its app store. According to Musk's attorney, the suit is intended to, quote, stop defendants from perpetrating their anti-competitive scheme and to recover billions in damages related to their alleged collusion. Remember, Apple reached a deal with OpenAI last year to integrate ChatGPT into its iPhones. Musk thinks that deal is preventing customers from being able to access other competitors' chatbots like his own.

18:45OpenAI pushed back in a statement to the New York Post saying, this latest filing is consistent with Mr. Musk's ongoing pattern of harassment. The pattern they are referring to is that Elon really likes taking legal action against OpenAI, the company he co-founded alongside Altman in 2016. Last year, he sued both Altman and OpenAI, accusing them of putting profits ahead of the company's original mission, not to mention the variety of barbs the two CEOs have traded on social media. As for Musk's case, Apple thinks he doesn't have one. A spokesperson responded to Elon's initial accusatory post by saying its app store is designed to be fair and free of bias and that the company features thousands of apps using a variety of different metrics.

19:28Neil, I hope we all find something we love as much as Elon loves suing his rivals. And Elon's lawyers have been doing their homework because this lawsuit against opened the eye and Apple is very similar to the DOJ's successful antitrust case against Google. And during that case, which we're going to find out what Google's penalty is in just a few days, a federal judge found that Google was illegally monopolizing the market for search by locking up distribution through iPhones. Remember, Google is paying Apple more than$20 billion a year to be the default search provider on Safari. And Elon's lawyers and Elon himself say that this is very similar to what OpenAI is doing with Apple.

20:08It really homes in on the fact that Apple is such a powerful distribution mechanism, specifically through its iPhones. Billions of them are in people's pockets. And if you can be the default on Apple or have a first-party integration, like ChatGPT does with any iPhone, then you're going to be locked into so many people and you're going to get so many eyeballs to your products at the expense of competitors. That's their allegation. Yeah, at the one hand, that decision to integrate it could inhibit rivalry, could inhibit innovation in the AI industry. But then if you look at how people reacted to this, a lot of people pointed out the fact that, Elon, you're wrong in the sense that no app can reach the top of the app store.

20:47That was his main gripe. That was the initial thrust of the lawsuit because a lot of them said that, hey, DeepSeek, remember your rival AI company? That made it to number one on the app store. Perplexity, another AI company, made it to number one on the app store. Apple, after Apple announced their OpenAI partnership. So in that case, a lot of people in community notes, even under the posts that Elon was putting out on his own social media platform X, were saying, buddy, you're wrong here. That being said, though, this does mirror a Justice Department case that they did bring against Apple. They sued the iPhone.

21:19They sued Apple in the New Jersey federal court in March. Apple lost a bid to dismiss that case. So there's almost two things going on here where you're saying, definitely wrong, Elon. Someone else has made it to the top of the app. store, but you actually may have an anti-competitive case here, according to the Justice Department. Moving on, welcome back to another edition of Toby's Trends, the segment where I spelunked into the business world to find a trend you can impress your aloof teenage children with. And today's trend is all about disappearing dining rooms. No, that's not a horrible escape room spinoff concept.

21:51Nearly 80 % of designers for new home communities say formal dining rooms are less important than they were last year, according to a report analyzed by Axios. And according to Realtor.com, only 25 % of listings even mention a dining room these days. It's not that Ozempic has made everyone stop eating. Buyers are instead looking for more versatile ways to use their precious square footage. Formal dining rooms have almost been eliminated from our design vocabulary, said the report by John Burns Research and Consulting and ProBuilder Magazine. What's taking their place are flex rooms that can serve multiple purposes, like being converted to an office or an extra bedroom.

22:30Dining rooms aren't going away everywhere. Homes in the Southeast might still have them because buyers still value formal dining where it fits, according to the report. But for the most part, every square foot space is being optimized for multifunctionality rather than for grubbing. Neil, all I'm hearing is I could have avoided a lot of dining room table grillings from my parents if we never had a dining room. I say good riddance to the dining room because in my home, when we got a nicer dining room, the playroom was the thing that went. And I had very fond memories of playing in that particular room.

23:04And now it's just this place where we eat on very few occasions. And I think in this time of unaffordable housing, you want to maximize every single square foot in your home. And the dining room is seen as maybe one of the more expendable parts of the home where you're not going in there every single day. you're going in there for special occasions. And when you can't afford a huge house and you can afford a smaller house, every square inch counts. And that's why I think we're seeing the decline of the dining room. Now, you did mention the Southeast. I was looking at Southern Living Magazine, and they also were mentioning that they were talking about the dining room, but they had a different spin.