Trump Targets DEI Programs & Walmart Managers Make $600K?

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0:28Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the Oscar nominations are out, but could an AI controversy derail a Best Picture contender? Then Trump's move to abolish DEI initiatives at the federal level is causing chaos in the corporate world. It's Friday, January 24th. Let's ride.

0:52Toby, there's been something bothering me for a few days now. I went to the dentist earlier this week, and you always brace for some gentle scolding by the hygienist. Like, you should really floss more. And I was prepared mentally for that. This wasn't my first rodeo, of course. But in this instance, I went in, she cleaned my teeth, and when she was done, she was like, okay, you're good to go. See you in six months. Absolutely no feedback, positive or negative. Kind of rattled me, I have to say. I mean, my teeth are solid, but are they at a zero feedback level? I thought the dream was to get no feedback, but when it was actually realized, I'm not so sure anymore.

1:33Would you rather get a lot of dental feedback or none at all? What you just described to me is the ideal dental visit. This isn't a weekly one-on-one with your manager. You're not looking for actual constructive criticism. The fewer words exchanged, the better, in my opinion. If you were looking for words of affirmation, which I think you were, go to your significant other, go to a therapist. They can fill the cavities in your soul, in your heart that you were looking for your dentist to fill there. But I am very curious to hear people's thoughts on this because that isn't probably the only dental experience that people have had where they haven't gotten any feedback whatsoever.

2:12So clearly you're still thinking about it. I am still thinking about it. Now, a quick word from our sponsor, Yahoo Finance. We are fans of Yahoo Finance over here at MBD because it sets us up to succeed on this show every morning. I can get into the weeds on a certain stock and see if it's a contender for Stock of the Week or Dog of the Week. And I can dig into the headlines to find arguments to support my contention that Challengers was absolutely snubbed at the Oscars this year. It's the perfect place for going deeper than the headlines, too. You can get live quotes, advanced charts, and expert research reports all in one place.

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3:19Spend$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. The idea that a more diverse, equitable, and inclusive workforce was beneficial, the business world is now grappling with the government's change of course on those issues. Donald Trump has issued multiple executive orders this past week relating to terminating illegal DEI mandates in the federal government. On Monday, he put those who worked in federal DEI offices on administrative leave, and a memo issued this Wednesday warned employees that they could face adverse consequences if they failed to report on anyone continuing to work in DEI for the government.

3:59Some companies like Meta and Walmart got ahead of the curve and already began to roll back their DEI programs leading up to the election, but others are fighting back against the shift. Speaking at Davos, JPMorgan CEO Jamie Dimon told CNBC to, quote, bring them on when asked about activists pushing the bank to change their existing policies. Costco, Apple, Microsoft and others have also held fast to their initiatives as well. So, Neil, there's clearly a lot of moves and counter moves going on right now as businesses try to position themselves amongst a shifting cultural and legal landscape when it comes to DEI.

4:35It absolutely is shifting. And I want to go back to even before Trump was inaugurated. So in 2020, we saw a boom in DEI. Glassdoor saw a 50 percent increase in job postings for DEI roles. That came right after the murder of George Floyd. and a lot of corporate America decided that it was incumbent on them to establish more diversity inclusion initiatives. Fast forward to the first two weeks of this year, ZipRecruiter had 561 postings for DEI job programs. That was a 93 % decline from the same period just a year before. So you can really see the boom and bust of this particular department in corporate America.

5:23As you mentioned, a lot of companies have been rolling back their DEI policies in recent years. A lot of that you can draw a through line to the Supreme Court decision that banned affirmative action in higher ed. Now it's on his last legs and all these these sweeping, comprehensive, really ambitious executive orders by Donald Trump hopes to deliver the knockout blow. It does seem like Trump is testing to see whether that Supreme Court decision can actually be extended to private employers. It looks like we're setting up a court battle about if these DNI, DEI initiatives can be struck down through executive orders.

6:02One of the big tools that these anti-DEI activists are using are trying to bring shareholder proposals to companies to try to ensure that these DEI policies are struck down. Their argument is a financial one saying that look at what the federal government is doing. They are changing these DEI policies. That leaves us as shareholders vulnerable to lawsuits against us being like the company that they are shareholders in. if we continue to have these DI practices in place. The problem is that those shareholder votes are pretty routinely rejected. A lot have been filed against Apple, Walmart, Starbucks.

6:42They have all been handily defeated. They rarely get more than 2 % of shareholder support. So even though you hear some noise, when it actually comes down to what shareholders want, they are not supporting these anti-DI efforts. And one just happened yesterday. You mentioned the name before, Costco. Costco's shareholders defeated a proposal against their DEI policies. And Costco has sort of taken the mantle as one of these corporations that says, I know what everybody else is doing. Not everybody else, but a lot of these other companies are doing tractor supply. Harley Davidson, Walmart, McDonald's.

7:18We've talked about it on this show. A bunch of companies have rolled back DEI. But Costco said, no, this is really important to us. It enhances our capacity to attract and retain employees who will help our business succeed. So they rejected that proposal. And a number of other companies have come out and said, no, DI is really important to us. You can, as Jamie Dimon said, like, come on with the lawsuits. Apple defended its DI policies. Microsoft did as well. Pinterest did as well. And the common thread with all of these companies, Costco, Apple, who are trying to preserve their DI policies, is they didn't just start hiring for them in 2020.

7:55These policies go back to the 90s and the 2000s. This has been ingrained in their culture for a long time. They've tried to promote DEI for decades now. So it wasn't these fly-by-night DEI departments that were sprung up post-George Floyd in 2020. The common thread through all of these companies that are the holdouts right now are that they've had these DEI initiatives in place since the 90s. Hope you're wearing Canada Goose and Cashmere because now we're headed on a trip to Davos, Switzerland, the ski town where the World Economic Forum has been taking place. Top corporate brass, world leaders and other PJ types have been yakking it up since Monday.

8:31But the main subject on everyone's minds, the newly inaugurated President Trump, has been absent. Until yesterday, that is, Trump delivered a virtual address to executives, his first major speech since taking office. That was 45 minutes long and particularly newsy. So we'll break down the bits you need to know. One major development, Trump called on OPEC, a cartel of oil producing countries, to bring down the price of crude oil, which he linked to ending Russia's war in Ukraine. The thought being Russia funds its military campaign through oil revenues. And if the price dips, their resources dry up.

9:05Oil actually did fall 1 % on that news. Trump also tried to assert his influence on the Federal Reserve, saying he would, quote, demand that interest rates drop immediately. And likewise, they should be dropping all over the world. During his first term, Trump frequently attempted to bully Fed chair Jerome Powell to lower rates to little success, but it looks like he's running it back. This pressure campaign worries the vast majority of economists, even conservative ones, because they see the Fed's independence from politics as a key factor in healthy markets. Toby, what stood out to you? Yeah, this was a long and meandering speech, 45 minutes, packed with a lot of stuff to break down.

9:45I think if you take it as a whole, though, it was kind of Trump laying out his proposal for almost a carrot and stick approach to how he's going to approach world economics in this next term. So he clearly wants to lower taxes in America to incentivize companies to set up businesses there. And he also wants to raise taxes, raise tariffs on companies outside of America to hopefully offset some of that revenue lost from lowering taxes in America. He definitely wants to produce more oil. Oil was obviously one of the big headline announcements that he has. He thinks it will lower energy costs, bring down inflation.

10:20And then he also wants to lower interest rates, which, again, is something that is more of a want right now than anything else because, again, the Fed does have its independence. So he was trying to lay out this vision that he has to solve everything that is ailing the U.S. economy, bring down those higher prices, bring down those higher taxes, kind of restart manufacturing in the country and jumpstart a world where the U.S. is the largest energy producer as well and also get those interest rates down. So part of it was, you know, actual vision. Part of it was just kind of hopeful. I'm going to tell Jerome Powell to lower interest rates, but it was quite newsy.

10:56It does set up a clash between Trump and Powell because he did frequently bash Powell in his first term to bring down interest rates. Powell said, I don't know if he even acknowledged Trump. He just said, I'm going to do what the Fed should do. And most people think that that's the way this should operate. You don't want the Federal Reserve to have political interests in mind when it's raising and lowering interest rates. Because if the Fed lowers interest rates too much now, that could lead to another bout of inflation. It has to have that long-term view. But it still feels like Trump is going to keep up the pressure on Powell because even after he gave this speech, he goes back to the Oval Office to sign some more executive orders.

11:37And he said, I think I know interest rates much better than they do. They being the Federal Reserve. And then he took a very specific shot at Powell. I think I know them certainly much better than the one who's primarily in charge of making that decision, which is Powell. If I disagree, I will let it be known. And I just have to emphasize how rare this is and unusual for a president to be involved in interest rate decisions like this. And then finally, just to hammer home the point about Trump wanting to produce more energy to produce more oil, the problem with this drill baby drill approach is that demand around the world isn't very strong for oil right now.

12:14Big economies, big world economies, mainly China, are kind of struggling with some of the similar issues that the U.S. is, which is higher inflation, lower job growth. So the United States is producing more oil than any country at any time in history right now. So it's not exactly, oil companies aren't exactly clamoring to get new leases to build new drills. So that is why you saw the oil market kind of react negatively to Trump speaking on it because there just isn't quite demand to match the supply that Trump wants to bring to the market. And Saudi Arabia is quite reluctant to have lower oil prices because as we've talked about many times on the show, they've got some big ambitions to build out futuristic cities and diversify into all these different industries and tech and AI and sports and entertainment.

13:01And the way they fund that is through oil revenue. And so they want a higher price so they can fill their coffers and fund those huge plans that they have. The Oscar nominations were released yesterday morning. And unlike the blockbusters that dominated last year's slate, Barbenheimer. This year's nominees are led by more under the radar cinema with progressive themes. Amelia Perez, Netflix's musical about trans identity, scored the most nods of any movie with 13. It's the most nominated non-English language film in Oscars history and the most nominated film in Netflix's history. Another sleeper hit is The Brutalist, a low budget indie epic about a Jewish immigrant in America, which scored 10 nods.

13:45The two I just mentioned were nominated for Best Picture, joined by Conclave, The Substance, Nickel Boys, and Nora, I'm Still Here, A Complete Unknown, and Box Office, Juggernaut's Dune Part 2, and Wicked. Of those movies, Wicked is up for the most awards, with 10 tying The Brutalist. Unlike last year, when Oppenheimer mostly had Best Picture on lock, it's a pretty wide-open race for the title this time around. We'll find out who wins on March 2nd, when the awards ceremony is held in Los Angeles. Conan O 'Brien is going to host. Very pumped about that. But it's expected to be a more subdued event than in past years to reflect the wildfires that devastated parts of L.A.

14:21earlier this month. Yeah, it is a different Oscars ceremony this year, not only because of the wildfires, but also because it is a much more wide-open race. Brutalist and Nora Conclave, they all have the joint highest odds for taking home the best picture. It is also interesting because I was looking at the box office hall of the brutalists so far in the United States. And it's, I can't really even call it a haul because it's just about$8 million. It hasn't been widely released yet. So more people will see it, but it's a pretty low attended so far, best picture nominee. It also has some controversy tied to it as well.

14:59The editors of the movie admitted to using AI to touch up and change part of the actor's voices in the movie. Adrian Brody has this Hungarian accent. that Hungarian is a very difficult language to speak. It has a lot of nuances to it. And they said, listen, if we didn't use these tools, we would still be in post-production right now. It was a very tight budget, only$10 million. But again, there is this kind of perception that AI is this replacement for workers. It's taking away workers from creatives, which is why you saw a little bit of controversy with its usage of AI. So certainly a little bit of a different feel from the Barbenheimer epic of last year's Oscars, but a lot of good movies up for grabs.

15:38Many were quick to point out after the backlash to The Brutalist using AI to touch up actors' voices that this is nothing new. AI was used in so many movies in years past. We just weren't all kind of freaking out or knew about it. Get Back by Peter Jackson, that documentary about the Beatles. Without AI, that wouldn't have existed. The Irishman used AI to de-age Al Pacino and Robert De Niro. Bohemian Rhapsody, that biopic about Freddie Mercury. Rami Malek, when he sang those songs, that was actually an amalgamation of multiple different voices. So if you just go back a little bit in cinema history, you find that using AI is nothing new.

16:17Using tech in post-production is nothing new. So this brutalist brouhaha might have been a little bit of a nothing burger. And I do just want to talk about a few snubs real quick before we go to break. My biggest snub was Denzel Washington and Gladiator 2. When Gladiator 2 came out, there was all this talk that he was going to win Best Supporting Actor. He absolutely dominated that movie, and I saw it, and it was not a good movie, but Denzel was fantastic in it. Didn't even get nominated, which was sad. And then, of course, we talked about it at the top of the show, but Challengers not getting nominated for Best Original Score is a travesty.

16:55Anyone who has seen that movie with Zendaya and the tennis. They know that one of the main characters was the soundtrack of that movie. So the fact that it didn't get a nod is heartbreaking to me. Zendaya and the tennis is the most hilarious description of challenges I've ever heard. I'm not going to go into the details. Up next, it is Stock of the Week, Dog of the Week time. Eczema isn't always obvious, but it's real. And so is the relief from Evglyss. After an initial dosing phase, about 4 in 10 people taking EBCLIS achieved itch relief and clear or almost clear skin at 16 weeks. And most of those people maintain skin that's still more clear at one year with monthly dosing.

17:36EBCLIS, LibriKizumab, LBKZ, a 250 milligram per two milliliter injection, is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema. Also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies. EPCLIS 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.

18:04You 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. Tuesday on NBC. Jimmy Fallon and Bozema 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.

18:39I'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. It's Friday, and you know what that means. Stock of the Week, Dog of the Week. The segment where Toby and I pick one stock that was inducted into the Hall of Fame like Ichiro and another that is still waiting its turn. I won the pre-show Name All the Prime Numbers in Order contest. 59 will get you every time, Toby. So I get to go first. And my Stock of the Week is Walmart, but more specifically, the employees who oversee a bunch of Walmart stores. Under a new payment scheme, those regional managers could pull in more dough than your friend in investment banking.

19:21According to The Wall Street Journal, Walmart's top regional managers stand to make up to$620 ,000 per year as a result of higher bonus and stock awards, a 50K bump from their previous ceiling. Sorry, Dwight, assistants to the regional manager are not eligible. The pay bump, which is laden with performance incentives, shows how critical smooth store operations have become for the country's biggest retailer and how hard it is to find people who can do this well because it is a really demanding job. These managers, known internally as market managers, oversee about a dozen stores apiece, and each store can have 300 employees.

19:58The market manager is a road warrior spending long hours driving to each location to ensure the Walmart machine is humming. And boy, it has been humming. Shares were up more than 80 % last year, pushing its market cap to nearly$800 billion. It is fascinating to see someone with the title manager getting this big pay bump because if you look across corporate America, managers are not exactly popular words and popular positions because a lot of companies are trying to flatten themselves. There's too many layers of bureaucracy. Amazon CEO Andy Jassy has said he wants to increase the ratio of workers to managers.

20:33Google CEO Sundar Pichai also said that they had culled about 10 % of its managerial roles. So in big tech, there is this move to get rid of managers. Walmart, though, is prioritizing them because these are basically like companies in themselves that they're managing. They're not just managing one store. They're managing a portfolio of stores or going and checking in on each store manager. It is this job that requires management. Like it is a pure management role. And you see that in just these massive salaries. Every time Walmart kind of publicizes these salaries, this story goes a little bit mini-viral because the number is big,$620 ,000 if you get full bonuses.

21:10That is a hefty chunk of change. The number is big, but when you go and read about the job description, the responsibilities that these people have, it all checks out because I'm looking at this and I'd be like, I am being terrible at this job. This looks so hard. These stores are massive. There's so many moving parts, so many people. and to drive to each one of them, check in, make sure everything's going okay, sounds like something I would be absolutely terrible at. And from at least my perspective, the$600K is even a low ball because each of those Walmart stores is probably pulling in tens of millions of dollars each year.

21:43My dog of the week is EA Sports because no one is playing its soccer video games anymore. Its stock fell 16 % yesterday after the video game maker reported slumping demand for its FC25 video game. Now if you're thinking to yourself, FC25, what even is that? Well, I'm right there with you. FC25 is a franchise that used to be known as FIFA before the two parties couldn't come to a licensing agreement prompting a name change. But the game sold well last year, so you can't pin it all on a name. Mostly players complained about a lack of innovation as well as some weird in-game physics bugs, which gave the franchise less staying power than its predecessor.

22:23That is bad news for EA, who relies on its soccer games to be a consistent revenue driver for the company. It is forecasting that its live service net bookings, which is all the money it makes from microtransactions within the game, is set to decline by mid-single digits this year. EA shaved about half a billion dollars off its 2025 revenue forecast as well, so these problems are certainly affecting the bottom line. Yikes. I mean, and even the titles that it's trying to roll out to make up for that slump in, I'm just going to call it FIFA, sorry, has not been working out. It released this new game called Dragon Age that garnered 1.5 million players during the quarter.

23:03That underperformed the company's expectations by nearly 50 percent. So half of all people it expected to play this game didn't show up. So that is a huge problem. It's there's a lot of weakness in in its soccer game and then everything else is trying to do is also not working out. So EA, that's 16 percent. That's that's its worst day in many years. Meanwhile, the video game industry is not really thinking about EA. There's a bunch of other exciting things happening separately from this. You got the Switch 2 coming out. You got Grand Theft Auto 6 coming out in November. So it's kind of a backwater over there in EA.

23:38Yeah, just something to illustrate that point. EA stock trades at about 17 times its forward earnings estimates. Take-Two, which makes GTA, they're trading at about 27 times their forward earnings estimates. So there's clearly a lot more excited for that upcoming GTA franchise. But yeah, when you talk about basically people in the industry call FIFA or FC25 the Swiss clock of media because it is just so consistent every year. Everyone loves playing FIFA. Everyone loves playing FC 24. But this year, for some reason, growth stagnated. People aren't buying as many packs in games when they're making their ultimate team.

24:17So that is a huge warning light for EA. If they can't have their day in, day out performer, if that starts to fall off the cliff, then it gets a little ugly for them because they need their, you know, kind of consistent Steph Curry to come out and give them 30 points a game. Right now, he's not playing very well. Now let's sprint to the finish with some headlines from the week's news you may have missed. Up first, a long and winding chapter in the opioid crisis in America is finally coming to a close. The Sackler family and the company they control, Purdue Pharma, reached a$7.4 billion settlement with a coalition of 15 states over its role in fueling the opioid crisis.