US-China Reach Deal for TikTok & No More Quarterly Earnings?

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0:30Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, bad news for your screen time, good news for amateur restaurant critics, TikTok is being saved. Then why is Trump pushing corporate America away from issuing quarterly earnings reports? It's Tuesday, September 16th. Let's ride.

0:55Good morning. Hope everyone is having a great start to their Tuesday. We're counting down the hours until our next monthly trivia night this evening in Manhattan. A ton of you have signed up to come and we can't wait to stump you all and meet you, of course. For those of you who can't make it, here's a little taste of what your fellow MBD listeners will be up against. There's a before and after round that asks you to find a single phrase that connects two clues by a single word. For example, if I said Walt Whitman poem about a Marvel character known as the first Avenger, the answer would be, oh, Captain, my Captain, America.

1:31Neil Fry, man, that was good right there. But some details if you signed up. Check your email for details on location. New location this time. We kind of ran out of space at our last one. So we have a bigger and better spot for you today so we can fit more of you in. So get those brains warmed up, guys. Try and develop that prefrontal cortex before age 25 by tonight if possible. Girls, you're already there. And we'll see all of you there at 6 p.m. tonight. And now a word from our sponsor, Indeed. Neil, you've been at Morning Brew so long, you've practically hired half the company. Oh yeah, I found myself neck deep in resumes a time or 16.

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2:41President Trump proposed something that most middle schoolers with poor grades would agree with. He wants companies to reduce the frequency of their performance reports. Yesterday, Trump suggested that quarterly earnings reports should be a thing of the past on Wall Street and that companies should report on a once-every-six-month schedule instead. His logic, this will save money and allow managers to focus on properly running their companies, he posted on Troop Social. China has a 50-to-100-year view on management of a company, he continued, whereas we run our companies on a quarterly basis, question mark, question mark, question mark, not good.

3:16The quarterly schedule has been around ever since the SEC required it back in 1970, which is about how long the debate around that cadence has simmered in the background. Trump floated the idea of breaking away from the quarterly system in his first term, while both Jamie Dimon and Warren Buffett have called for an end to quarterly guidance, which they think fosters market short-termism. The main thrust of any argument to move away from a quarterly system is that it makes companies focus too much on maximizing short-term performance, sometimes at the expense of long-term plans. Plus, it's just a headache to go through the process of preparing quarterly reports every three months, which can often be an expensive burden, especially for smaller companies.

3:56So, Neil, an interesting can of worms that has once again been reopened, but still a long way to go to see if the SEC heeds Trump's call. Yeah, it sounds like a small mechanical thing going from three months to six months, but it could have a massive effect on the economy. Although publicly owned companies account for just about 3 ,700 of the United States' 28 million businesses, they are responsible for a third of all private sector employment, half of all business capital spending. So if this move to a biannual reporting structure, the results and changes in business strategy could have huge impacts on how companies hire and deploy resources.

4:33Plus, it would lead to changes in your portfolio via your 401k, which is invested in all these companies. Yeah, and a lot of advocates for this change have said that going to that quarterly system has actually led to fewer IPOs and fewer public companies in general. The number of U.S.-listed public companies plummeted from 7 ,500 in 1997 to just around 3 ,700 today. So, again, it is just this onerous system that they are under. It takes a lot of effort to prepare these quarterly reports. And again, the long term thinkers out there are saying, why do we have a system that will make people potentially skimp back on hiring because they don't want their profits to take a hit in the short term when they really should be thinking on a much longer term horizon?

5:19It's a pretty common practice in other places in the world. Ironically, even though Trump mentioned China, they still do have quarterly reports and they do issue quarterly reports. But in the UK and in some places in Europe, they don't have to do it. And so it is not necessarily a brand new idea. There's definitely countries out there that already encourage this sort of system. But there is a powerful case against as well. These reports are important for a lot of people, including shareholders, economists, retail traders, because without these quarterly reports, if it goes to a longer time horizon, then we just don't know what's going on with particular companies that we want to invest in.

5:58We don't know necessarily what's going on in the economy. Imagine if Delta sees a huge uptick in demand for travel in the summer, but they don't report until the fall. How would we know what's going on in terms of the travel industry? Just apply that across the board. Retail traders particularly don't like it. One of the most popular posts in Reddit's stock market subforum yesterday was, so less transparency and accountability. Sounds like a great idea, wrote one user. And obviously that was very sarcastic, got nearly 2 ,000 upvotes. So the individual investors who don't have access to much information at all, besides what these companies are saying every three months on these conference calls, is critically important.

6:42So the case against would be this just reduces transparency and accountability across the board. Yeah, the CFA Institute actually did an impact. They studied if the UK ending its quarterly reporting systems in 2014 did anything to affect companies. and it didn't really affect how much companies invested, which was, again, kind of the thrust of this. Like, they should be thinking more long-term with their investments. But what it did do is reduce the accuracy of analyst forecasts, which, you know, becomes this information delta between retail traders and, you know, Wall Street itself. So I do think that technically you can see both sides, but it's a double-edged sword.

7:17Whatever you sacrifice in, you know, transparency, maybe you make up in long-term investment, but it also works vice versa as well. Yeah, it's a really interesting debate, and there's good arguments on both sides. It looks like it's essentially a coin flip as to whether the SEC takes Trump up on this particular proposal. It looks like TikTok isn't going anywhere after all. Yesterday, a years-long drama appeared to reach its final chapter after U.S. officials said they had reached a framework deal for TikTok's Chinese owner ByteDance to hand over ownership to an American entity. The framework will be finalized on Friday when President Trump and Chinese President Xi Jinping speak over the phone to give it their official blessing.

7:57Until then, we are left with few details. Treasury Secretary Scott Besson said, we're not going to talk about the commercial terms of the deal. It's between two private parties, but the commercial terms have been agreed upon. So I would suggest heading to Polymarket if you want to find out which American company is most likely to be involved. The deal for TikTok, which was hammered out over negotiations in Madrid, may wrap up a saga that began all the way back in President Trump's first term in 2020. Five years ago, Trump aimed to ban TikTok over national security concerns that China would use the hugely popular app to snoop on American citizens and influence opinion.

8:32That effort didn't go anywhere, but in 2024, Congress took up the mantle and passed a law that requires ByteDance to sell TikTok to an American owner or else be banned in the U.S. Once Trump got into office, he softened on TikTok and delayed the law's enforcement several times. And now here we are with a deal on the table. So it seems like the only way TikTok will be removed from your phone is if you delete it yourself because you were too addicted, which we've all been there. We have all been there. One of the interesting sentiments from this negotiation is that Scott Bissend has said that China was very interested in keeping Chinese characteristics of the app, which they think are soft power.

9:11He literally said the words soft power out there. And I do think that is one aspect of this saga that China does want to hang on to. There's a national security angle. Obviously, Congress saw TikTok as a national security threat. But then Beijing clearly cares about TikTok as cultural leverage of some point. I don't really know what Chinese characteristics necessarily mean, but Sen was kind of brushing it off as this superfluous thing that they were trying to get added to the deal. But it's clearly not just a financial thing for TikTok and for ByteDance and for China. They do think that there is some sort of credibility to having, you know, one of the largest social media apps in the world.

9:49And then obviously there's the political angle as well. Trump has flip flopped on it multiple times, kind of going wherever the political winds were blowing. He wants to curry favor with the youth, use it as leverage, saying, hey, I'm fighting for this app that you all love. So a lot of different angles here, but it is fascinating that China is kind of doubling down on this soft power aspect. Yeah, what's interesting is that China for many months showed very little appetite to make a deal for TikTok. They had dug in their heels. So what changed? It seems like they are very keen on President Trump visiting China for a summit with Xi Jinping.

10:23and the United States perhaps conceded to that agreement. They're going to send Trump over to Beijing to meet with Xi in exchange for China allowing TikTok to be sold. We'll probably find out more details after this call on Friday. They could announce a summit of Trump heading over there. The question now for people interested in American companies is who is going to buy it? Well, I did look at Polymarket. I told you all to look, but I did a little bit of the legwork. And the front runner in this race is not a surprise. Larry Ellison and Oracle, they have a 53 percent chance of acquiring TikTok.

11:02They have very close ties to the Trump administration. They've already had this server deal with TikTok dating back to 2022 to host U.S. user data on Oracle servers. So they are by far the leader to be the acquirer of TikTok. And that would be, you know, another huge win behind the sales of Oracle, which, you know, recently made Larry Ellison briefly the richest person in the world and has had a huge stock jump recently. In second place, which is 9%, is Meta. And then you have Amazon and Elon Musk, X and Twitter or Applove and Microsoft, Walmart. These are all names that are thrown around. But it looks like Larry Ellison and Oracle are the leaders in the clubhouse.

11:40What isn't he the leader in the clubhouse right now? Feels like every single story has Larry Ellison smack dab in the middle. Of course, he's buying TikTok. Some big companies hit some big milestones yesterday. So everyone raise your glass as we make a toast to the creation of shareholder value. First up, Alphabet became the fourth company to reach$3 trillion in market cap, joining NVIDIA, Microsoft, and Apple in a club harder to get into than Berghain. The milestone comes about 20 years after Google IPO'd, in just over 10 years since Google reorganized into a holding company, Alphabet. And Google is making it look as easy as the ABCs.

12:16Shares are up more than 30 % this year, doubling the Nasdaq's 15 % gain. As investors feel confident it'll successfully fend off upstarts like OpenAI coming for its search crown. More recently, the stock got a big boost a few weeks ago after a judge gave it a slap on the wrist as punishment for being a monopoly. Clearly, Google's feeling lucky. Everything is coming up for Google right now. I just looked at the Apple App Store and Gemini's chatbot overtook ChatGPT as the most popular free app on the Apple App Store as of today. Then also, we were cruising around Coliseum, cruising around the Polymarket the other day.

12:51And one of the questions we saw was which company will have the best AI model at the end of the year? And Google is in the lead at nearly 70%, opening AI a second at just 12%. It feels like they've come a long way from having a derpy little chatbot that actually screwed up during a live demo and tanked their stock. Now it's the de facto leader in the AI clubhouse. And oh, yeah, did we forget to mention that search is still one of the most profitable businesses in the world? So all of a sudden, it seems like once that antitrust scrutiny kind of went to the wayside, investors woke up and said, wait, Google is way undervalued compared to the rest of the Magnificent Seven.

13:26And the race to$5 trillion in market cap is on NVIDIA. right now is$4.3 trillion. It's the most valuable company in the world. Microsoft, 3.8. Apple, 3.5. Alphabet just hit three. And when you add in Amazon, the five largest U.S. companies have a combined market cap of over$17 trillion, which would be the second largest stock market all on their own. Another company that achieved a breakthrough yesterday is Tesla, whose stock has now turned positive for the year. It was for good reason. CEO Elon Musk bought about $1 billion worth of Tesla stock, the first time he purchased shares on the open market since 2020, and a sign he's committed to leading the automaker for the long haul.

14:07Tesla stock popped 3.6 % on the news and is now in the green for 2025, rebounding all the way from a 45 % decline as of early April. The stock purchase could also be seen as a really expensive gesture by Musk after the Tesla board proposed a compensation plan that would make him the world's first trillionaire if he hits certain business targets in the next decade. Toby, this is the corporate equivalent of Taylor proposing to Travis, two lovebirds, Elon and Tesla, are now attached at the hip. You say that it's a very expensive commitment, but a billion is quite affordable for the planet's richest person.

14:43In fact, actually, if you factor in the stock rise that they got on the news from Musk plowing a billion dollars into Tesla, he actually He added almost$6 billion to his net worth. So he'll take that math any day of the week. It's crazy. This stock is up now 70 % since Musk officially left DC, left the Doge world behind. It's up 25 % the last three months. So it is just pretty crazy how this has rebounded. And it looks like Elon has committed himself to this future of AI and robots. Again, you look at the vehicle business and you're like, there's absolutely no way you can justify this sort of valuation level.

15:19But he says that Tesla will eventually drive 80 percent of its value from its robots. He's called Optimus, which is their humanoid robot, the greatest product in the history of humanity. So clearly he thinks that his future is at Tesla's future is in robotics and AI. And the market's pretty happy to see him, you know, back with his full focus on Tesla. There's still a long way to go for Tesla to hit the targets for Elon Musk to become to achieve that trillion dollar compensation package. So even after that big stock run up, Tesla stock is worth$1.3 trillion as of Monday's close. To get that full trillion dollars, Elon Musk needs to have Tesla hit an$8.5 trillion market value.

16:00So there's a long way to go. He's got 10 years to do it. We'll all be watching. Let's take a quick break and come back with some Toby's trends. Toby, didn't we find you through Indeed? Nope. but that would have been a lot easier than agreeing to do your laundry for a month just to get an interview. Well, all the more reason to talk about how much the world of job seeking and hiring continues to change. You're right. Morning Brew was actually on the ground at Indeed Future Works in New Orleans. Yep. Indeed just dropped something huge. Career Scout and Talent Scout, a career coach and hiring partner for both job seekers and employers.

16:34They leverage Indeed's massive pool of data to match employers and job seekers through a simple conversation. It's a smarter way to search for jobs and hire. Impressive. Does this talent scout also do laundry? Maybe next year, buddy. Learn more about innovation from Indeed and why leaders trust them to make hiring simpler, faster, and more efficient. Head to Indeed.com slash brew. That's Indeed.com slash brew. 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.

17:09It's a free, non-intimidating way to understand your current position and access practical steps for improvement. SPS Commerce created this checkup to give you a way to benchmark your supply chain against industry standards and identify your biggest opportunities for growth. You don't even have to carve out a full minute to get a fast, efficient assessment of your supply chain's current health and receive a personalized guide with practical recommendations for improvement. From there, SPS Commerce can work alongside you and your suppliers to ensure everyone is equipped to meet shared goals. Head to sbscommerce.com slash morningbrew to get your supply chain checkup.

17:45That's sbscommerce.com slash morningbrew. Welcome back to another edition of Toby's Trends, a segment where I take a deep dive into the business world to emerge with the trend that you can use to impress your hot date tonight. And today's trend goes out to all my gas station cuisine lovers because you're not alone in your lust for sad donuts and soggy breakfast sandwiches. Convenience stores like Wawa's and Casey's General are increasingly stealing market share from fast food giants like McDonald's. Visits to fast food chains during the morning meal period rose just 1 % in the last three months ending July, while traffic to so-called food-forward convenience stores jumped 9 % over the same stretch, according to Surkana data seen by CNBC.

18:29What is a food-focused convenience store? I'm just going to toss some names out there so you get the vibe. In addition to Wawa's and Casey's, Serkana also classifies Bucky's and Sheet's under the umbrella, an umbrella that might be growing soon, though. 7-Eleven, the biggest convenience chain in the U.S., is planning to bring some of the food-focused vibes from its Japanese stores to the U.S. soil, while Racetrack announced last week that it's buying the sandwich chain Potbellies, signaling its interest in joining the food game as well. Convenience stores' gains appear to be fast food losses. Year-over-year, morning traffic to fast food chains has fallen every quarter for the past three years.

19:06And in the second quarter, breakfast visits fell by nearly 9%, according to data from Revenue Management Solutions. So, Neil, it's looking like more gas station burritos and less McMuffins. What does your refined palate have to say about this trend? Well, why is this happening? There's a few reasons. One is convenience stores are actually very convenient. You are there in the morning rush hour to fill up your tank of gas. And while you're there, you can pop in and get some food. And while you're in the store, you know, unlike a fast food restaurant, you can you have a much wider variety of options.

19:40You can get a sandwich like a prepared sandwich. You can maybe get a food. Maybe you can get a sandwich that's prepared to you freshly. But at the same time, you can walk around the store and maybe pick up an energy drink, a granola bar or a banana and something that you can't do, say, at a comparable McDonald's location. And then the final thing is value. We know that consumers are really looking for value. There's a perception that these convenience store options are good bang for your buck. They might not be, you know, incredible food. You know, some of us who've been on a road trip and you walk in to a gas station and pick up a little breakfast sandwich on a biscuit.

20:13I mean, it's, you know, sometimes it's not very good, but it is cheap. And that's what we're looking for in 2025. But I do think that fresh food, that good fresh food is what is creating winners in this space. I mean, just look at Wawa's, which makes these delicious sandwiches. which is it's seen its customer growth or customer base grow by 11.5 % since 2022. In the meantime, chains like McDonald's Burger King and Wendy's have seen their combined customer base shrink 3.5 % over the same time. Casey's general store makes this breakfast pizza that has this just cult falling. They make pizza in general.

20:47That's very good. So I think that more people are seeing those types of places as viable alternatives to popping into McDonald's or popping into Burger King, because you're going to actually get similar quality there and maybe, better quality, all my Wawa stans out there. CNBC actually asked 1 ,100 respondents if they have purchased a made-to-order breakfast from a convenience store in the morning over the past three months. And 48 respondents said that they have done that, which means that's 48 % of respondents that are probably not opting for something like a McMuffin. So again, it's not necessarily something that they're still indulging in breakfast at a fast food place.

21:22They are replacing that breakfast sandwich with maybe a better one at a convenience store. And these convenience stores just have such great regional flair. Every region has their convenience store that they love going to. I just wish New England's was a little bit better. We have Cumberland Farms. It's okay. It's nothing like Waba or Sheets or Casey. So New England, Cumberland Farms, let's go. Up your game. Now let's spin to the finish with some final headlines. The FTC is in the late stages of the probe into Ticketmaster's handling of bots, investigating whether the company has done enough to comply with the 2016 law which bans automated ticket resales.

21:56The investigation has gained momentum under the Trump administration after an executive order in March directed the FTC to look deeper into Ticketmaster's practices following public outrage from a lot of angry Swifties after some of those Eras tour ticketing fiascos. Ticketmaster denies any wrongdoing, saying it has invested more than anyone in fighting scalpers while also criticizing what it calls the FTC's overly expansionist interpretation of the law. But, Neil, this probe into bots, I'm going to guess it's going to be a popular one because bots, frankly, stink. They're annoying, and we're all, you know, learning about this as we try to get World Cup tickets.

22:32So Ticketmaster is not involved in this. But, yeah, it just feels like hand-to-hand combat every single time you buy a ticket. And the government is certainly looking into this. Besides this particular probe, Ticketmaster is facing a FTC loss or a DOJ lawsuit that combined with tons of state attorneys general seeking to break it up from Live Nation into Ticketmaster, which was that merger that created an alleged monopoly. There's also a criminal antitrust probe also by the DOJ into Ticketmaster. It's been under scrutiny all the way back since the 1990s when Pearl Jam tried to bypass it for a U.S.

23:08tour. This company has just been under the microtope for so long because buying a ticket is such an arduous process. It's just the worst. Apple has officially released iOS 26, marking its biggest software jump in a minute, as it aligns version numbers across all Apple operating system and aligns them to reflect the year of use. So as we head into 2026, we'll all be rocking iOS 26. The standout feature is the new Liquid Glass design, a translucent glassy interface inspired by Vision Pro. It has already seen multiple tweaks in betas, as many users took some time to adjust to what were some readability issues.

23:42Beyond that, other updates include a call screening assistant for when Neil is blowing up my phone, a redesigned messaging app with WhatsApp-like features for when Neil is blowing up my phone, and improvements to Maps, camera, and wallet. Overall, iOS 26 represents Apple's most ambitious visual overhaul. And aren't you glad you have an iPhone now, Neil, so you know what the heck I'm talking about? Well, I am glad I have an iPhone, but I was very upset about the amount of spam calls that I got compared to my Android days. So I'm very excited about this call screening feature. Apple is way worse than Android when it comes to screening phones.