Trump Battles Court’s Tariff Block & Home Sellers Outnumber Buyers?

0:00Does it ever feel like you're a marketing professional just speaking into the void? But with LinkedIn ads, you can know you're reaching the right decision makers, a network of 130 million of them, in fact. You can even target buyers by job title, industry, company, seniority, skills, and did I say job title? See how you can avoid the void and reach the right buyers with LinkedIn ads. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started at linkedin.com slash campaign. Terms and conditions apply. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell.

0:35Today, we'll take you to the hottest club in America, Costco. Then, Trump's tariff agenda is pinballing through more courts than a Djokovic French Open run. It's Friday, May 30th. Let's ride.

0:51If you want to know what people mean when they say aura, watch the highlights of last night's spelling bee. Faison Zaki, a 13-year-old from Plano, Texas, won the 100th Scripps National Spelling Bee, and he did it with swagger, rattling off impossible-sounding words one after another with his hands in a black hoodie. Zaki, who was the runner-up last year, won this year's bee by spelling the word eclaircissement, and he did it without asking a single question before nailing it. Dude is a legend. So how does one spell eclair chisman correctly before you even have your learner's permit? Well, you got to train like a professional athlete.

1:30For the past year, after finishing runner-up, Zaki absolutely grinded. He worked with three different coaches. The New York Times said his typical weekday schedule included five to six hours a day of practice and seven to eight hours on the weekend. That is so many words. But also, Neil, I have to read you some of these quotes from his friends and family after Zaki won. His dad said, he's the goat. I absolutely believe that. And his friend roasted him for missing an easy word late in the competition saying, I think he cared too much about his aura. But the goat had enough aura left over and took home the dub.

2:05Man, I love the spelling bee. And now a word from our sponsor, LinkedIn. Neil, you ever try to go somewhere using no directions? Well, I kind of pride myself on it. One look at the suggested Google Maps route, then it's all memory from there. I've been in the car when you do that. And while it's impressive, I don't think it's the optimal way. I've seen you make a wrong turn or two. That's a little what B2B marketing can feel like when you're not using LinkedIn. You've got a destination in mind, decision makers, but sometimes your ad ends up in the wrong place entirely. Using LinkedIn ads is like plugging your campaign into Waze.

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3:40maybe one day we'll go 24 hours without tariff news but yesterday was not that day if you went to bed at 8 16 p.m eastern on wednesday and woke up at 2 13 p.m eastern on thursday here's what you would have missed first the u.s court of international trade ruled that trump's usage of a 1997 law to carry out his trade war was not legal that means the 30 duties on chinese good 25 % on Mexico and Canada, and all the other reciprocal tariffs sprinkled around the world on Liberation Day were set to be paused. The White House immediately clapped back, calling it judicial overreach, and appealed, suggesting it may take the case directly to the Supreme Court if lower courts didn't move fast enough.

4:22The message was heard, and yesterday a federal appeals court temporarily paused the pause that would have wiped out most of Trump's tariff agenda. That ruling gives the group challenging the original tariff, which includes states and some U.S. businesses, one week to respond to the government's appeal, and then gives the government until June 9th to fire back. So in one sentence, Neil, tariffs were paused, appeals court intervened to pause that pause, and now it looks like we're on a collision course towards a higher court. But even if the White House loses its appeal, these tariffs are far from over.

4:54Trump has a few other levers he can pull. This is like a seven-layer dip where every layer is uncertainty stacked up on another. Let's talk about the original statute that Trump used to implement these reciprocal tariffs. That's the International Emergency Economic Powers Act of 1977. And in striking it down and in calling it illegal for Trump to use that, the judges said that in the five decades since IEEPA was enacted, No president until now has ever invoked the statute to impose tariffs. The Trump administration said that it was a national emergency. What was going on with the United States trade deficits with the rest of the world.

5:34So they invoked IEPA, which judges said, actually, you can't use tariffs in this context. There are a number of other ways that you can, a number of other measures within the existing U.S. trade law that you can enact tariffs. Trump did that during his first term, and he did that to enact other tariffs that we've seen in his second term on things like autos, auto parts, aluminum, and steel. Yeah, let's go through some of those other ways you can enact tariffs. One that you'll hear a lot of is Section 232. These tariffs are actually left in place because they weren't affected by that initial ruling, and those are the ones that are in place on things like foreign steel, aluminums, and autos.

6:14Section 232 of the Trade Expansion Act of 1962. There won't be a test on this after. It's open book, so you can check this out. It requires a big Commerce Department investigation. Cannot simply be imposed on the president's whim at its own discretion like the other tariffs Trump has been using. So he still has the authority to raise those Section 232 tariffs. It just takes a lot longer because you do have to go through the paperwork. You do have to do this big Commerce Department investigation. So those are actually a lot more legally sound. They're just not as quick and as nimble as Trump wants them to be.

6:48And then the other one is section 122. This allows you to apply 15 % tariffs kind of across the board. However, those would require congressional action after 150 days. So they expire. So again, a little bit more legally sound, but a much shorter term in terms of breadth. And so Trump kind of wants to avoid section 122. So those are some of the ones that you're going to hear a lot of over the coming days. And because of those potential alternatives, even if the existing tariffs are ultimately struck down at this appeals hearing on June 9th, most banks and analysts came out yesterday saying they're going to figure a way to put these tariffs on, whether it's all these trade sections going through your head right now.

7:34Morgan Stanley and Goldman Sachs came out saying really fundamentally things on the ground may not change all that much over the next few weeks because of these alternative mechanisms that the Trump administration can use. It just adds even more fog to any business that's trying to drive through their future right now. And it's no wonder why every single company that we heard report earnings this season say we're pulling our guidance for the year. We have no idea what's going on. Yeah, and it's kind of why we saw a little bit of a muted response from the market yesterday. Futures were up in the morning when we heard that this pause was coming down.

8:07Obviously, it was rolled back later in the day. But overall, the market finished just barely up because it was just a pretty muted response because their investors are not getting too carried away. They know that they have these workarounds available to them that allow them to continue to pursue this trade agenda. So it wasn't this big green day that you might have expected on news of a tariff potentially being paused. One thing that we can pretty much bank on is that the Trump administration will do everything that it can to put these tariffs and make sure that they are happening because they are banking on the tariffs to bring in a lot of money,$200 billion each year, in order to fund this massive tax bill that the GOP is pushing through that's expected to cost$3.8 trillion over the next decade.

8:51If there are no tariffs, then you might see that bill get tweaked a lot in the Senate because a lot of GOP senators and lawmakers more broadly are not, you know, it's not acceptable to them to spend this much money without any of the tariff revenue coming in. So, yes, another trade fight we've got going in the courts. And the only people who seem to be happy right now are the lawyers. OK, let's turn to the real estate market where a major power shift is underway. Buyers are gaining the upper hand while sellers are twiddling their thumbs at empty open houses. According to a new Redfin report out yesterday, there were nearly 500 ,000 more home sellers than buyers on the market in April, a 34 % gap that is the biggest in at least 12 years.

9:35It's enough to give your neck whiplash from just two years ago when buyers outnumbered sellers. Redfin didn't mince words with what's going on, saying it's a buyer's market. What turned the tables? why are so many people wanting to offload homes, but so few people wanting to scoop them up? A few things. The buyer ranks have dwindled because homes and mortgages are so dang expensive. The median home sale price was$432 ,000 in April, up 1.6 % year over year, while mortgage rates are hovering just below 7%. Another dynamic is economic uncertainty unleashed by the tariffs, which has scared off buyers.

10:10Nearly one in four Americans scrap plans to make a big purchase because of the tariffs. And finally, on the other side of the marketplace, that lock-in effect keeping homeowners put is slowly wearing off. In the past few years, the number of sellers has been limited by the fact that so many locked in super low rates during the pandemic and leaving that cushy situation for a more expensive one was simply unbearable. But time passes, life happens, you get a new job and need to move or you outgrow your house, and eventually you do need to switch spots. So all of these trends have contributed to sellers losing the upper hand.

10:42Yeah, I was talking with my sister yesterday who bought a house kind of coming out of the pandemic when those buyers were vastly outnumbering the sellers. And you had to do insane things at that time. Write letters, say you'll pay way over asking, pay in all cash, like pledge your firstborn child, it felt like. And now that narrative has totally flipped, not because, you know, a flood of supplies is hitting the market. It's just like a lot of people are having this apprehensive time. They're grappling with a lot of economic uncertainty. So you see some very, very cautious home shoppers out there.

11:15According to a survey released by Bank of America, 75 % of prospective home buyers are waiting for home prices and interest rates to fall. So the housing market is frozen, but it's frozen in kind of like a different way just from people saying, I can't really afford a house right now, nor do I necessarily even want to take that expense on with these higher mortgage rates. And one consequence of this, which may be good in your book, is that prices are probably going to fall. Redfin says whenever it's a buyer's market, it might lead to or it does typically lead to sellers cutting their prices. So we've had 22 consecutive months of home price growth.

11:50That's expected to stop later this year when prices are expected to fall 1%. And it's already happening about one in five home listings had their prices reduced in April. So sellers are finally saying, I've had this house on the market for so long. Maybe it's time for me to start cutting my price, even though that doesn't leave the greatest taste in the mouth. But they're going to have to to get buyers coming again because that pool has dried up. That issue, though, is that even though you would expect home prices to fall more than 1%, like 1 % is not a rise. So I guess technically it's good. But the reason why it's not bigger is sellers can always just say, hey, I don't really like the home prices right now.

12:26I'll just live in my house for another year. There's nothing really pushing people to move right now, especially with elevated mortgage rates. So that is part of the reason why you're not seeing greater price falls where you might expect them. And the regional breakdown is interesting. Where is where our buyers have the biggest upper hand? That would be in Florida and Texas. Six of the top 10 buyers markets are in Florida. Another one is in Texas. The top buyers market is Miami, and it's followed by West Palm Beach, Fort Lauderdale, Austin, Texas, and then Jacksonville. In the wide world of retail, there's Costco and there's everyone else.

12:59As Walmart raises prices and targets sit empty, Costco is keeping calm and sampling on. The company reported an 8 % increase in sales last quarter to$63 billion, topping estimates and profits also climbed from a year earlier. Costco was essentially concocted in a lab for uncertain economic times like these. Its high-quality, low-cost items sold in bulk are exactly what inflation-scarred shoppers are looking for. And as for tariffs, just about one-third of its goods are imported from other countries, with less than half of that coming from China, Mexico, and Canada. Plus, it also sells cheap groceries and discounted gas, which are need-to-haves when Americans are avoiding want-to-have items.

13:39But it's not just Costco. Other warehouse clubs that use a membership model are also having a moment, and together with BJ's and Sam's Club, they are taking over a greater share of the retail sector. Foot traffic data from Q1 shows that U.S. shoppers spent 13 % more time inside Costco, Sam's Club, and BJ's than they did in conventional supermarkets. Maybe the CEO of Sam's Club US said it best, through good times, we do well, and through times that are tough, we do even better. Yeah, Costco is sort of a canary in the coal mine company, just like Walmart is, where investors look at its earnings very closely to see clues on how shoppers are spending, what they're buying, et cetera, because a lot of other maybe canary in the coal mine companies like Target, Procter & Gamble, Kraft Heinz have been slashing their annual outlooks.

14:23Walmart have been a little bit of an outlier, and it looks like Costco is too, because Costco just has so many levers it can pull to make it more immune to economic volatility. One is customers are paying a fee to shop there. So they kind of have this sunk cost fallacy where they're like, all right, well, I'm already, I got this card, I'm paying for it. I might as well go buy stuff there. And then also just in general, they skew more affluent. So they are a little bit more immune to these economic comings and goings. And then also they just have the juggernaut Kirkland brand, which we just have to talk about because it has put a lot of effort into growing these things.

14:58It has this carrot that it can dangle, say, come in, buy our Kirkland brand. You can find 4 ,000 of them in our store, and that is just something that they know comes with quality. It's less pricey, and then they can maybe buy other more expensive stuff once they're in the door. So it's got a lot of carrots it can dangle, a lot of leverage it can pull that makes it just so successful in these times of economic uncertainty. Kirkland Signature is celebrating its 30th birthday this year. It started in 1995. Costco at that point had 30 different store brands like many other retailers. They have different in-store brands for various types of products, but they had the insight to just combine them into one single overarching brand called Kirkland Signature named after the area where they were founded.

15:43And now this brand, Kirkland Signature, across so many different product lines, does about$86 billion in annual sales, counting for one-third of Costco's total revenue. It puts it on par in terms of revenue with Lowe's and Procter & Gamble, and it does more revenue each year than Nike and Netflix. They are now on the move. They're stepping on the gas pedal, being on offense. They're unleashing these new, very adventurous products like Kirkland Sinature French Fries and vodka and soda and the lager. So they're just moving into these new areas where Kirkland hasn't already dominated. And you might expect it to dominate as it has so many others.

16:20Let's take a quick break and come back with our Stock of the Week in Dog of the Week. The Jack Welch Management Institute at Strayer University helps you go from I know the way to I've arrived with our top 10 ranked online MBA. Gain skills you can learn today and apply tomorrow. Get ready to go from make it happen to made it happen. And keep striving. Visit Strayer.edu slash Jack Welch MBA to learn more. Strayer University is certified to operate in Virginia by Shev and as many campuses, including at 2121 15th Street North in Arlington, Virginia. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS.

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17:31EPCLIS can be used with or without topical corticosteroids. Don't use if you're allergic to EPCLIS. 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 EPCLIS. Before starting EPCLIS, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EPCLIS and visit ePCLIS.lily.com or call 1-800-LILY-RX or 1-800-545-5979. It's Stock of the Week, Dog of the Week time, where Neil and I pick one stock from the week's news that has been upping their creatine intake recently and one stock that is missing out on some gains at the gym.

18:06I won the pre-show game of Name That Cloud Formation because Neil didn't recognize high-altitude, thin, icy cirrus clouds, so I am up first. And my stock of the week is the taco trade, which has nothing to do with living moths at Taco Bell and everything to do with investors' reaction to President Trump's on-again, off-again tariff strategy. TACO stands for Trump always chickens out, a phrase coined by the Financial Times journalist Robert Armstrong back in early May. It was recently thrust into the public eye during a White House press conference when a reporter asked Trump's thoughts on the term, to which he responded it was a nasty question.

18:42It's called negotiation, Trump continued. Regardless of how Trump views his tactics, traders have figured out a way to make money off of them. Investors are becoming more comfortable with the idea that most of the White House's levies get paused or walked back a short time later. That has allowed traders to buy the dip on the initial tariff news, then reap the rewards if the market bounces back later on the rollbacks. For example, on Friday, May 23rd, Trump threatened tariffs of 50 % on the EU, setting the S &P 500 down about 1%. But after he walked back those threats on Sunday, stocks surged with the S &P 500 jumping over 2%, a classic case of the taco trade in action.

19:23So, Neil, even if Trump doesn't like tacos, investors are reaping the rewards. They really are. Buying the dip is at its highest levels on record. Retail investors have poured more than$50 billion into U.S. stocks since the low on April 8th, which was more than the$46 billion that they put into the market between March and June 2020. And the returns are excellent. They're the best in 30 years. The S &P has increased an average of 0.36 % in the next trading session following a down day. And that is the highest on records dating back to 1993. So I don't know about institutional investors, but we've talked about retail investors really driving this 19 % surge in the S &P 500 since its spring lows.

20:09And they are totally on to the taco trade, and they are buying the dip to great success. You'll notice, too, though, that the bounce back needs to be bigger than the initial drawdown, or else the taco trade kind of falls apart, which is kind of what we've seen so far. I mean, remember some of the taco relief rallies early after the initial pauses of Liberation Day tariffs, S &P 500 gained 9.5%. It's third biggest one-day percentage gain since World War II. So clearly these bounce backs need to be pretty monstrous if the initial drawdowns are big as well. There is some people who haven't fully got their arms around the taco trade, though, because the markets, technically, if this was an efficient market, that it wouldn't do anything on the announcements of the tariffs, but there's a shutter still runs through the market every time a new tariff is announced because there is some concerns that these tariffs might actually stick this time.

21:02There always is that concern. And so that is why we are still seeing kind of this roller coaster motion, even though it is flattening out a little bit. My dog of the week is all the future stocks that may never exist because America's startup pipeline is at risk. Economists say the Trump administration's crackdown on international students at U.S. colleges threatens to wipe out the motor that generates billion-dollar startups and maintain America's competitive edge in the world. The United States draws more international students than any other country, but the numbers show they're starting to look elsewhere.

21:35Clicks on American courses have fallen to their lowest level since the pandemic on study portals and online directory for global degree programs, with weekly page views dropping by half from January 5th through the end of April. First quarter traffic to American undergrad and master's degrees fell by 20 % annually, while PhD courses tumbled by one third. If international students choose to pursue their grad degrees in other countries like England, France, or China, the United States could lose the innovation advantage that helped to become the richest country in the world. Because more than half of Americans' billion-dollar startups, those unicorn companies, were founded by at least one immigrant, and one quarter have a founder who came here as a student.

22:16Yeah, let's run down through those famous immigrants who have founded famous companies. Elon Musk, born in South Africa, studied at the University of Pennsylvania before founding a million companies, it feels like. John and Patrick Collison, they moved from Ireland, went to MIT and Harvard before founding Stripe, one of the most valuable private companies in the world. And then even if you go beyond founders and you go to executives, Satya Nadella got a master's in computer science at the University of Wisconsin, Milwaukee. We have the leader of the most valuable company, well, I guess second most valuable company now, just ripping cheese curds in Milwaukee.

22:50But that's been the beauty of American higher ed for so long. Immigrants come here, get an education, and then often go on to build or lead gigantic companies that have given us this edge in innovation that we've historically held. And other countries are saying, well, hey, you don't want to go to America for college? Well, come here. French business schools yesterday announced that they're fast tracking or extended application deadlines for foreign students who don't want to be caught in this visa fog that the Trump administration has imposed on American universities while those go through the more legal procedures.

23:25So they're saying, hey, we'll fast track your application. Come to France and study here. We've been lapped by the United States in terms of unicorns for the past few decades. Why don't you come here and start company here. So there is a global tug of war now around these international students who the data shows are just shunning American universities at rates they haven't in many years. Now let's sprint to the finish with some final headlines. Fire up the DeLorean because Apple's operating systems are about to jump forward in time. Starting in September, iOS 18, Mac OS 15, and others will instead be called iOS 26, Mac OS 26, etc., aligning version names with the calendar year.

24:03For all you green text truthers out there, yes, rival Samsung has been naming its flagship smartphone releases by their launch year since 2020. So congrats for leading the way, even if you ruin group chats. The rebrand is set to be unveiled at WWDC on June 9th and aims to unify design across devices and hopefully reignite some hardware sales after a post-pandemic slump. Tell me what you think, but I think this is unnecessary. It feels like they are trying to solve for a problem that doesn't really exist. I don't find this particularly confusing in terms of what iOS were on. I just downloaded it on my phone.