Trump Threatens EU Tariffs Over Greenland & ChatGPT Adds Ads

0:02Good morning Brew Daily show. I'm Neil Freiman. And I'm Toby Howell. Today markets are reeling after Trump starts a trade war over Greenland. Then, after saying they wouldn't, ChachiBT is adding ads. It's Tuesday, January 20th. Let's ride.

0:21Greetings from the World Economic Forum in Davos, Switzerland, where the Morning Brew Daily team is recording podcasts and interviews and social media content all week. It's only been 48 hours on the ground, and as we're about to get into, There are a lot of world economic issues swirling that are going to be hashed out here. What are my impressions as a first-time Swiss Alps visitor? Thanks for asking. The mountains are indeed stunning. I need to get on cross-country skis ASAP, and the Swiss hot dog game is on point. Toby, what are your observations from Davos so far? Yeah, I had a totally incorrect impression of what Davos is.

0:57When I heard conference, I thought one big building, convention space, everyone meets kind of at a central location. Not the case whatsoever. The whole conference is sort of distributed throughout downtown where brands and even countries take over retail locations as their homes for a week. And some of these houses are wild. USA House is in this big old church on the corner. It's rather ominous looking. Palantir's House looks like a Malibu sushi restaurant. Lightspeed House, where we're recording from, is kind of this retro futuristic space that's sandwiched between the South African delegation and an Italian restaurant.

1:33So it's all got this sort of chaos energy running beneath the surface that you get when you cram so many businesses and nations together into a tiny Swiss mountain town. And we're recording right in the middle of it, which is pretty cool. But first, a word from our sponsor, Indeed. Neil, I'm in the mood for fondue. Well, what's the occasion? Not that I need a reason to drink melted cheese, but it's because we're here at the World Economic Forum in Davos this week. And you know what else is mouthwatering? Indeed is here too, sharing real-time insight into the global labor market and how leaders can navigate the workforce challenges and opportunities ahead.

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2:40You go away for a three-day weekend, and what do you come back to? A potential fully-blown trade war, not to mention diplomatic crisis, between the U.S. and Europe over who controls Greenland. On Saturday, President Trump dropped an economic and geopolitical bomb, threatening to hit eight European allies with a 10 % tariff by February 1st, rising to 25 % in June, should there not be a deal for, quote, the purchase of Greenland from Denmark. With the tariff threat, Trump singled out eight countries, Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland, who were rallying in defense of the territory.

3:15But there's more. Yesterday, Norway's prime minister revealed that Trump said his pursuit of Greenland was tied in part to not receiving the Nobel Peace Prize, which is awarded by a committee in Norway. Whereas Europe played nice with Trump last year around Liberation Day tariffs, they are drawing the red line now, warning that tariff threats, quote, undermine transatlantic relations and risk a dangerous downward spiral. The EU is redding tariffs on over$100 billion worth of US goods if Trump follows through, and some outraged leaders have even floated the so-called bazooka option, known as the anti-coercion instrument, which could limit European market access for tech giants like Google.

3:52At the very least, Europe is now set to block a US trade deal that had been reached last year, one that reduces tariffs on American goods to zero. Markets are violently throwing up right now. Yeah, they are not happy this morning because this is really the first time investors are able to fully react to these tariffs because they were closed for Martin Luther King Day holiday on Monday. We are also seeing that flight to safety that we've talked about really over the past few months where gold and silver are once again ripping because they are past previous records because investors are fleeing towards these assets that feel a little bit safer right now.

4:28The reason why the markets are getting the heebie-jeebies again is because the economies of the US and Europe are very intertwined to say the least. The European Union is the US's biggest trading partner. Europe is the largest source of foreign direct investment in the US as well. $3.6 trillion invented into the US. So these are two economies that do give global traders a little bit of the fits when we hear that they might be beefing. Yeah, like look at the companies that were declining yesterday and today, Volkswagen, BMW, Mercedes-Benz, Ferrari, Porsche, big European automakers that sell a lot in the United States.

5:04And then you also have luxury companies from France. LVMH and Kering are down. And then a lot of pharma companies as well, Novo Nordisk. And here in Switzerland, their Roche company. I mean, they sell a lot to the United States. So all of those stocks are down today. And they were yesterday in European trading. Let's talk about Europe's options for retaliating, because that's what's happening this week. All of Europe's leaders are getting together and saying, how do we respond? Some want more measured response to the United States should these tariffs come to pass. Some want to go full the nuclear option.

5:34So I'll just talk about the first one. The first immediate reaction that Europe has is they want to halt the trade deal that was agreed to with the United States last July. What that trade deal was, was that the EU agreed to remove basically all tariffs on American products. And in exchange, the EU basically accepted a 15 % tariff on most of its exports to the US and 50 % on steel and aluminum. them, they're pretty happy to scrap this deal because this was seen as one that the U.S. kind of got one over on them. So it doesn't take a lot for them to say this trade deal is going to be off, but they have other options on the table as well.

6:09Yeah, there is a very spicy, if unlikely, option that Europe has up their sleeve. As I mentioned, because European countries hold literally trillions of dollars of U.S. bonds and stocks, Europe countries hold 40 % of foreign U.S. treasuries. what they could do is say, hey, we're gonna start selling some of these assets in response to what you're doing to us in response to this tariff war, which could drive borrowing costs up and equities down because some of these balances are held by European government. So they could hypothetically pull that lever. Will this happen? Probably not, because that is, as you mentioned, probably a nuclear option because it is a weaponization of capital and we won't necessarily see that because it hurts European businesses as well.

6:53but that is another option they have up their sleeve. And as more tariffs are being threatened on other countries in the world, there's new research showing, you know, who does pay for these tariffs? And this analysis found that overwhelmingly, American importers and consumers are paying for the tariffs. German-based Kiel Institute, they just released this report. They analyzed$4 trillion worth of shipments between January, 2024 and November, 2025. They found that foreign exporters absorbed about 4 % of the burden of last year's tariffing. increases compared to American consumers and importers who absorbed 96%.

7:28We're going to see if these tariffs actually come to pass right here in Davos. Trump said that he is organizing a meeting between NATO and other European leaders to see if they can work out something. But it seems he's very adamant on Greenland and we'll see what happens, but there's going to be a very, very high stakes meeting here in a couple of days. And we're right in the middle of it. Moving on, there's a saying in business that on a long enough timeline, every company sells ads. OpenAI has finally reached their ad era, announcing that it will begin testing ads in the previously pristine waters of ChatGPT.

8:00The ads will appear above or below answers, not embedded within any responses, and only for users on the free or lowest cost plans. OpenAI also pinky promises they will be clearly labeled in tinted boxes so you'll know what is what. Still, it's undeniable that Sam Altman and co. are seeing a very different tune than they have in the past. I kind of hate ads just as an aesthetic choice, Altman said last year. Ads plus AI is sort of uniquely unsettling to me, he said back in 2024. And yet, here we are. OpenAI's official position is that ads do not influence responses and that the model's output will remain objectively useful.

8:39But it begs the question, if Altman hated ads, why is he embracing them now? And of course, it comes down to money, money, money. According to recent reports, annualized revenue at OpenAI exceeded$20 billion a year. But in case you forgot, OpenAI has raised roughly a bajillion dollars. So bringing in that ad revenue will help OpenAI put its big boy monetization pants on. Neil now begins the delicate tight wire walk. Nearly every internet company has had to walk at one point or another between making money and not pissing off their users. Well, imagine if I told you there was a switch and if you flicked it on, you'd make a billion dollars instantly and maybe keep your business afloat are you going to turn it on i'm pressing the switch absolutely like it would be business malpractice not to open ai needs to get to 200 billion dollars in annual revenue in order to turn a profit in 2030 right now it's making 20 so it needs to increase its revenue tenfold so it can stay as a business in case it because because it's just keep raising more and more money to stay alive.

9:44So Sam Altman, he called previously, he called ads a last resort. Well, looks like we're at the last resort. And these are going to be ads that hopefully feel native to the experience. Ads are going to be matched through the current conversation topic. So for instance, Neil and I are saying, what should I wear to Davos? An ad will not just come up for McDonald's. It will come up for, hey, here's some nice slacks or here's something that a sweater that brings out the color in your eyes. It's basically going to be contextual and they promise not to sell user data or anything like that. And there is some interesting things you can do with a chatbot environment when it comes to ads.

10:19You can ask follow-up questions to the ads, like say, hey, I actually don't like this color. It doesn't bring out the blue in my eyes. I'd rather a different color sweater. And you can kind of go through the same conversational output that you normally would with the normal chatbot. So in terms of the ad landscape currently on the internet, it does represent an interesting step in a different direction. It's worth going back to the first thing you said that over a long enough timeline, every company starts to sell ads. And it's so true. I mean, Netflix just a few years ago said, we're never going to do ads.

10:48We're never going to put commercials in Netflix. And now there's a tier that costs$6 a month that has ads. Uber has an ads business now that's now worth over $1 billion. Walmart sells ads. It does$4.4 billion a year in revenue. They look at Google and Meta, which bring in nearly$100 billion in ads a year and use that to subsidize so much of their other business that they say, we truly cannot, you know, this is too much of a lucrative opportunity not to get into ads. Still, the word that comes to mind is one that we've talked about on this podcast, which is instantification, which is when social media platforms essentially become worse over time, they stop valuing their users' trust and their experience.

11:28This could be that slippery slope towards people losing trust in their chatbots, which is a huge proponent of people using chatGBT is they feel like it's a safe space that they can, you know, talk about their health problems, talk about relationship issues. Now, once ads start to intrude, it's a slippery slope there. I know, but then you go to, then you go to Gemini and there's going to be ads there too. So every, I think every chatbot at some point is going, well, most of them will get ads in the future, but yeah, it's, if you use free version of chatGBT and you love free chatGBT, then you're probably going to start seeing ads sometime soon.

12:02Washington, D.C. has a Pentagon, an obelisk, and soon it could be getting a Sphere. Sphere Entertainment, the company behind the futuristic domed event center in Las Vegas, announced plans to build another one in National Harbor, Maryland, just outside the nation's capital. Except this won't be a normal Sphere. It's going to be a mini-me Sphere containing about 6 ,000 seats, roughly one third of the original in Vegas. That doesn't mean it'll come cheap. Building the Maryland sphere is still expected to cost more than$1 billion, but to defray the cost, the project includes$200 million in financing help from Maryland governments and private sources.

12:38For sphere, National Harbor marks progress in its bumpy quest for world spherical domination, plopping immersive entertainment orbs in cities all over the globe. A second sphere is already being planned for Abu Dhabi, but projects in London and South Korea have faced setbacks. For National Harbor and DC, The local politicians are hailing it as a big tourism win for an area whose economy has been hit hard by federal workforce layoffs. Apparently, their minds were made up after Governor Wes Morissart, Kenny Chesney, rehearsed at the sphere in Vegas, and a county executive took in a Zac Brown show.

13:08Tell me, I might just have a reason to go back to my old stomping grounds. I think it's so funny to characterize this as a mini sphere because it is smaller than the one in Vegas, but it's still costing a billion dollars to build. So don't get it twisted. So this thing is still a very big economic project. My big question is, can this work not in Vegas? Because Vegas is a tourism destination. It makes sense for residencies to take up place in Vegas because you get a new crowd every single night because there are constantly tourists flowing in and out of Las Vegas. That's kind of its main appeal.

13:41That is not true for Washington, D.C. Are you going to be able to have, convince an artist to come down and stay there for a few months or something? like is U2 going to do a residency in DC? Does it have the tourism to support that sort of residency? That's the big question mark I have. Your anti-terp bias is showing. You clearly haven't been to National Harbor. Well, yeah. Okay. National Harbor for people who don't know is basically this. Yeah. It's like a mini Vegas, a little South of DC on the Potomac. There's an MGM casino that they kind of just built a city. There's an MGM casino there. There are restaurants.

14:15There's a huge Ferris wheel. And they do think that they can bring huge acts like you two or zach brown or kenny chesney there and dc is a big tourism city and but the thing is it's going to be a little outside dc and pg county prince george's county where the if if you haven't noticed i've made a lot of maryland references i went to the university of maryland which is in prince george's county that's suffered a lot of setbacks recently there was going to be a huge fbi uh headquarters going to be that was going to be located there now it's not they lost the commanders which are going back to washington dc so they really have national harbor to hang their hat on.

14:49So to a T, every local politician there is saying this is so great. And it's so interesting to contrast that with other places around the country like New York City or even the world like London that have pushed back against the sphere. It's really bright. You know, if you are located, if you live next to the sphere, it's probably a huge negative externality, like you probably can't sleep. But National Harbor is away from most residential areas that they think that this is going to be a big local economic development win, that they're willing to put forth$185 million in tax incentives to get it there.

15:19Meanwhile, the Sphere is doing very well. Sphere stock, Sphere Entertainment Co., it's up 134 % over the last year. It's profitable now in Las Vegas, which looked a little dicey for a while, but it made$150 million in net income in the quarter that ended June 30th. So this is a money-making machine. Now they have a mini money-making machine in Maryland. Yeah, the Wizard of Oz has been doing really well. remember they did this zhuzhed up Wizard of Oz. That's apparently generating$2 million a day. And they're hoping that it can drive the number, the share of people that go to Las Vegas to the sphere over 10 % currently.

15:567 % of everybody who visits Las Vegas goes to the sphere and they're hoping to just raise that percentage. All right, we're gonna take a quick break and come back with Toby's Trends right after this. Time for our Morning Brew Daily Davos update with Lightspeed. We are joined by Lightspeed co-founder and partner Ravi Matra. Ravi, we are recording this pod this week in the Lighthouse by Lightspeed. What is it like to create a space like this for your founders? We're really excited to build something that thematically plays on the name of our firm, Lightspeed, but it's really inviting and we have some iconic representations of all of the companies or many of the companies we've backed recently where the founders had pretty transformational ideas and we've tried to create a space where we had something representative of what was transformational about their idea along with the name of the company.

16:45So we've bedecked the space with those examples. And it's a little bit of a retro feel just to make it feel a little, you know, uncorporate and a little undivosed and a little, you know, a little bit irreverent. But we like it. We think it's a space that engenders excitement and enthusiasm about how we can be irreverent and creative about the future. Well, we love it and are so thankful to be here. And I think we look and sound pretty good too. That we do. And be sure to head to our YouTube channel for special interviews with Lightspeed founders all week. We just posted one with the co-founder and CEO of Skilled AI, Deepak Partak, where we chatted about robot brains and AI.

17:23Keep an eye out as we will be posting more throughout this World Economic Forum. Neil, when's a good time to start working with a financial professional? Now. What about? No, Toby, now. Northwestern Mutual can match you with a financial professional who will meet you where you are and work with you to build a financial plan based on what's important to you. They'll uncover blind spots and find new opportunities to help grow and protect your wealth. Will they tailor it to my life and near and long-term goals? Yes. Give yourself the right financial start to 2026 with the right financial partner.

17:56Find a better way to money at nm.com. That's nm.com. The Northwestern Mutual Life Insurance Company, Milwaukee, Wisconsin, and Northwestern Mutual Wealth Management Company. All right, Neil, one time I was preparing to give a speech back in high school. My English teacher gave me this advice. Tell them what you're gonna say, say it, and then tell them what you said. Unfortunately, it seems like Netflix also got that same advice and is bringing that repetitive energy to its own content. And it's something I want to talk about on today's edition of Toby's Trends. Matt Damon has a new movie out on Netflix right now called The Rip.

18:33And as part of his promo tour, he went on Joe Rogan's podcast to talk about the state of entertainment today. In one soundbite that is going viral, he acknowledges the fact that more people are watching movies at home these days. And those home viewings usually involve a lot more distractions than a movie theater. Kids running around, lights on, pots boiling. and downstream of that distraction-filled environment are shifts in the movie-making business. Big action sequences that used to hit in the third act have been dragged to the first five minutes to try and wrangle people's attention. But the biggest change is that Netflix is encouraging verbal repetition of plot details.

19:09According to Damon, filmmakers now get explicit guidance that it wouldn't be terrible if you reiterated the plot three or four times in the dialogue. Once you realize Netflix is doing this, you can't unhear it. So Neil, at this set in Davos where we are recording a podcast episode, do you want to open your mouth and respond to me about this narrative phenomenon? I would love to. Okay, quick defense of Netflix. Stating the plot of the movie is not necessarily new. We were watching A Mission Impossible last night and we were absolutely cracking up at the amount of exposition that they were talking about.

19:43But I think Damon is hitting on something here that people who were watching the last season of Stranger Things noticed a ton, which is that these characters were reiterating the plot and saying what happened and what they were about to do literally every five minutes, every single episode. They took out props and just essentially explained, you know, the plot of Stranger Things. And this is apparently, according to Damon, coming from on high at Netflix and shows how, yeah, movie watching, TV consumption is changing. We're not in the theater anymore where we're essentially captives to a big screen.

20:14We're in our houses with a million different distractions and Netflix is armed with more data than we know of. So they know exactly how people are consuming their content when they're turning it on, when they're turning it off. So maybe they know something that we don't. Not maybe, they definitely know something that we don't. Yeah, you can roll your eyes and blame Netflix for putting out what you might describe as slop, but actually look inwards and blame yourself because they do know that you are watching with your phone in front of your face. And I feel like everyone has experienced this where you wanna show a movie to one of your friends and you look over and they have their, it's the worst thing in the world.

20:47But so Netflix has said, it is a lot of second screen viewing is kind of like the technical term for it. You have your first screen in front of you, but in the background, you need to know what's actually going on. Like, how are they going to kill this Demogorgon? So you're kind of hearing that subconsciously. And that is why they're doing this kind of annoying Netflix speak as some people have been branding it. And it's also a little ironic too, because Matt Damon is biting the hand that feeds him in this case, but he's also sort of setting the groundwork for another movie that he has coming out, which is The Odyssey, which is probably the furthest thing away from a Netflix movie you can have.

21:20It's from Christopher Nolan. It's shot entirely on IMAX cameras. It's meant to be viewed in theaters. It's probably gonna gross a billion dollars. And some people were making jokes that, wouldn't it be funny if they did Netflix speak in The Odyssey to explain why do all these characters' names sound the same? Like, what is actually going on in the plot right now? So it's very funny to juxtapose Damon's Netflix tilt with his upcoming Christopher Nolan Odyssey movie. Okay, let's sprint to the finish with some final headlines. China continues to shrink and there's no let up in sight. New government figures show that the country had more deaths than births in 2025 for the fourth year in a row while its birth rate fell to a record low.

21:58The government, which for decades instituted a one-child policy to curb population growth, is pulling out all the stops to reverse what it considers an existential crisis. They're paying cash to couples and subsidizing housing. They've tried to introduce a, quote, childbearing culture, and they even placed a 13 % tax on condoms. None of it seems to be enticing people to have kids, and this population crisis is happening all over the world. Yeah, a pen economist added some perspective to these numbers. One of the headline kind of positions that he said is that, to put this into perspective differently, there were fewer births in China in 2025 than in 1776.

22:37So it just shows how different the demographics are right now. Also, if China could somehow sustain the 7.9 million births per year from now on, which is a big if because, again, this birth rate is declining, their population would level out at around 625 million people. Again, that is the upper bound under the most rosy assumptions possible. Right now, there's over 1.4 billion people there. So this is something that it accelerates negatively very quickly. It's not something you can easily turn around. So even though right now it doesn't seem that big of a deal because you're only losing a few million every year, eventually over generations, that does settle at literally less than half of their current population.

23:19Moving on, if you thought you had a good year in the stock market, you probably didn't do as well as Chris Hone. That's because Hone and his hedge fund TCI just had the best trading year literally ever. No other hedge fund has surpassed the$18.9 billion it brought in in 2025, eclipsing the previous record set by Ken Griffin Citadel back in 2022. What was the magic strategy that led to such insane overperformance? The firm just picked really good stocks. TCI operates a very concentrated fund with$52 billion in assets spread across just nine holdings. Its top position that generated such outsized returns.