US Economy is Regaining Ground & China’s Controversial $170B Mega-Dam

0:28This episode is brought to you by Progressive Insurance.

0:34Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the U.S. economy says you like that to all its haters. Then China has started work on one of the biggest infrastructure projects in history. It's Tuesday, July 22nd. Let's ride.

0:53Time sure is strange. Some days feel like they go by super quickly. Maybe your wedding day was a complete blur. Other days feel like they take absolutely forever like the waiting game before the Super Bowl. If today happens to go by fast though, you won't be imagining it. The Earth is set to have its second shortest day on record, completing its full rotation 1.34 milliseconds less than the standard 24 hours. It's part of a recent trend of our planet spinning faster that could eventually lead to a second being subtracted from atomic clocks by 2029, or in other words, a negative leap second. Toby, there is so much I want to do today.

1:32So little time. I wish we could take this short day, bank it, and then bust it out whenever it's most needed. I'm talking the day before summer break, if you're a high schooler, the day before the Super Bowl, if you're an Eagles fan. Personally, I probably would have used it the day before I proposed because the nerves were nerving then. But since today is the second shortest day, make the most of it, all right? And now a word from our sponsor, Amazon Ads. We've all seen our fair share of brands whose advertising doesn't reach their target demos. Like that time a streaming platform was convinced I wanted all of those ceramic figurine horses.

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2:39Gain the edge with Amazon ads by visiting advertising.amazon.com slash start now. That's advertising.amazon.com slash start now. The U.S. economy has entered what economists like to call beast mode. Despite a world more uncertain than ever, policy positions that changed by the day, the highest tariff levels in a century, and technological disruption, the economy continues to stiff arm anyone in its path. Yesterday, the S &P 500 and NASDAQ hit another all-time high, mere months after stocks fell 19 % between February and April. Earnings season has been off to a roaring start, with more than 85 % of companies reporting so far topping expectation.

3:20Verizon was the MVP yesterday with a strong earnings beat, raising hopes that more companies will do the same in the next few weeks. The economic data that's been released recently has also been quality. People seem to be spending more with retail sales data handily beating projections in June. Meanwhile, morale has been improving. The consumer sentiment index is on an upward trajectory after falling to its lowest reading in almost three years in April. Toby, the current moment may be best summed up by JP Morgan's CFO last week. He said, after the initial shock of tariff policy changes, everyone kind of went on hold, but at a certain moment, you just have to move on with your life.

3:57And it does feel like some of that is happening because you just can't delay forever. Wasn't shocked. Can't keep delaying. Have to move on. Toby, sounds like the economy found a rebound. I mean, we started at the bottom post-Liberation Day tariffs. The vibes were atrocious. Consumer sentiment collapsed. SP fell off a cliff, as you mentioned. Everyone was kind of waiting for the economy to totally go off the rails. And then it just never really happened. It looks like consumers and businesses are getting their swagger back. Inflation has not materialized in the sense that a lot of people were expecting.

4:35It is a little bit above where the Federal Reserve wants it right now. But yeah, The strong earnings seasons has quelled a lot of fears from corporate America that they wouldn't be able to navigate kind of these elevated tariff environment. And, yeah, the bank earnings that kicked things off were unexpectedly strong, kind of set the tone. And every business that's come in afterwards has kind of reaffirmed that upbeat and buoyant attitude. Let's go to those earnings. Domino's yesterday said U.S. same-store sales rose 3.4%, which was more than the 2.2 % analysts estimated. Delta said we're in a very different place than we were 90 years ago.

5:13United said there's a much less geopolitical and macroeconomic uncertainty. And then to a T, all of those banks came out and said we're looking at how much you're swiping our cards and everything is up and to the right. JP Morgan said you're swiping your reserve or your preferred 7 % more over last year. So consumers are still spending. There was that very strong report that came out for June. Things are certainly looking up on the corporate earnings side of things. There are signs of weakness, though, as I'm sure a lot of people listening feel in just their everyday lives, because inflation, while down from those pandemic peaks, is still elevated.

5:48Manufacturing activity, which is an important measure of what Trump is trying to do in his second term, shrank for the fourth straight month in June. And then the tariff threat still looms. I mean, we're not out of the woods yet. The EU and the U.S. are still locked in a tariff debate negotiations right now with Trump threatening a 30 percent levy across the block of our biggest, you know, reciprocal trading partner there. 50 percent tariff was threatened on Brazil as well. So even with some delays on these tariff threats, the overall tariff rate is still higher than it's been at any point in recent history.

6:26So the effects of tariffs could still be coming down the pipeline. Yeah, we saw that yesterday also with Stellantis, which is the owner of Jeep. They said they're about to take a$350 million hit specifically due to tariffs. We are how many days are in July? 30 days, half September. 30 days, 31 days in July. So we are nine days out from potentially the next round of tariffs seeping in. Those take a long time to filter through the economy. The tariffs that Trump announced in 2018 didn't hit capital spending until 2019. So we could eat our words. But as of now, economists, corporate leaders, consumers are spending more.

7:08And not economists are spending more, but consumers and businesses are spending more. the economy is in a much better spot than people had predicted at the beginning of the year. China is building a dam that will have Yusang Dang. China's announcement over the weekend that construction had begun on the world's biggest hydropower mega dam called the Muto Hydropower Station. The country's premier said that it is the project of the century, and even that might be underselling it. It is slated to be three times the size of the Three Gorges Dam. It will cost $167 billion, more than four times what Three Gorges did.

7:44And once operational, it will have the potential to generate more power than the entirety of Poland. China is the world's biggest carbon emitter, so it's been making a massive renewable energy push over the past decade, bringing tens of thousands of hydropower projects online, more than any other country. The goal is to reach net zero emissions by 2060, and this dam, located on a river that flows through the Tibetan plateau will play a big role in achieving that target. But a mega dam also comes with mega controversies. The river the dam sits on is called the Yarlung Zhangbo, which flows through India and Bangladesh as well.

8:19The fear from those countries is that China will be empowered to control or divert the river, which some have noted could give China immense leverage on down river economies. But Neil, this thing is so, so dang big. This is a big dam. There's no question this is a big dam. It is going to be more expensive to build than the International Space Station. And the Three Gorges Dam, which was built, completed in 2009, cost$37 billion. That is the biggest power plant on Earth today. This one is going to dwarf that$167 billion in cost. It's also expected to juice the economy and is part of a bigger stimulus plan that China's government is rolling out.

9:00It's expected by Citigroup projected that this dam by itself will add 0.1 percentage points to China's GDP every year for a decade. That's nearly 17 billion dollars being juiced into the economy for the next decade every single year. It's also in a critical position with the sectors that it's hitting. What you need to build a dam, construction, cement, steel, things like that. the China property sector has been in a huge collapse over the past few decades. So the fact that there's going to be immense demand for steel, cement, other construction equipment, tunneling equipment, that has really been heartening to investors in the Chinese stock market because those are the particular industries that have been hit so hard recently.

9:45I think it's wild that we're talking about a single project juicing the second biggest economy in the world. This is one single dam on one river, and yet we are talking about it affecting GDP. That is wild, but it's also going to draw serious criticism from those countries, like I mentioned, India and Bangladesh, as well as environmentalists. Tibetan groups have said there's sacred sites along the river, and then there's population displacement that will happen. I mean, the Three Gorges Dam has estimated to have displaced about one and a half million people. This dam will likely do something similar.

10:20And then it is just a source of tension between India and China specifically. India registered its concerns with China last December. It's been featured in talks between the two countries for months now. They don't necessarily want China having all this influence on water that eventually flows into their country because water is a regional flashpoint. It is something that both generates power, but also powers agricultural and it has sacred implications for residents of India as well. So water is definitely the source of tension between the two nations right now. But if you're China, you're looking at this particular section of the revenue, you're saying this has the most hydropower potential that I've ever seen.

11:08This section that they're building the dam on, they're going to build five different dam structures. It falls 6 ,500 feet in elevation over 31 miles. So the amount of flow, if you're thinking, from this river is going to be immense. So the stand won't be completed anytime soon, but we will be keeping track of its progress. Huge news for people who say graphic design is my passion. The software company Figma kicked off its IPO roadshow with an aim to go public before the end of the month. If it pulls that off, it'll be the finance equivalent of a summer blockbuster at the box office. founded in 2012 figma allows designers and developers to seamlessly collab on projects crafting spiffy apps and websites in true group project fashion it is a mammoth startup buying a 16 billion dollar valuation in its ipo and the numbers back it up because you won't believe what you're about to hear figma is growing fast and it's profitable sales in q1 grew 46 to 228 million and Figma scored net income of$45 million up from$13.5 million a year before.

12:11It has 13 million monthly users and$1.5 billion in cash. If you're not one of those 13 million users but seem to have a recollection of the name Figma, that might be because it was embroiled in major merger drama just a few years ago. In 2022, it agreed to be bought by Adobe for$20 billion but regulatory scrutiny proved to be too harsh and the two called off their marriage in December 2023. In a blog post that day, CEO Dylan Field wrote, Figma's best, most innovative days are still ahead. And maybe he was right. He definitely seems to be right. Figma has been kind of a white whale for the IPO market for a long time.

12:50After this merger fell through, all eyes turned towards when is this thing going to go public? When is it finally going to provide the liquidity that these venture capital backers have been looking for? And it looks like we're right on the precipice of that. Let's go back to 2018. The company was just recently started by Dylan Fields, who actually went to Brown, Go Bruno. It was valued privately at$115 million. Fast forward four years later, it almost sold to Adobe for$20 billion. So the rise has just been exponential. And one of the reasons why it has just seen such explosive growth is it's a marketing engine.

13:25By its very nature as a product, it's collaborative. So if I'm working on something, I send a link over to Neil, who is an awesome designer, obviously. Neil plays around with Figma and goes, holy moly, this is so fun. I need to get in on this. So then suddenly your organization has Figma as well. And so you can see how it is just this beneficial loop that the more people who you bring in, and also the fact that it's browser-based is a big thing too. So you can literally just go onto your Chrome browser, open up Figma, and start editing immediately rather than downloading some app or, you know, what Adobe used to do, which is you have to download Photoshop and do this whole big rigmarole.

14:00So that it has this viral marketing growth built into the very product itself. So the IPO waters away. And if it does go public by the end of the month, which it aims to be a huge shot in the arm to an IPO market, that's having also a much better than expected 2025. Circle went public in June. That's the stablecoid issuer. It's already up sixfold from its IPO price. CoreWeave, which is that AI data center renter company that's massive, it's quadrupled since its IPO in June. So the IPO market is pretty hot right now. It hasn't been for software companies. There's only been a dozen enterprise software companies that have gone public since 2021.

14:46So this will be a big test for the IPO market. We're looking at you, Figma. Up next, we're looking at Toby's Trends. We've all been there. A summer day with some oysters and rosé goes awry when your stomach turns against you. Suddenly, you're in a race against time, a battle of brain versus bowels, desperately looking for a bathroom. But there's no Starbucks nearby. McDonald's is closed. you decide to brave a public restroom, which upon entering is somehow grosser than what's currently going down in your stomach. I don't wish this experience on my worst enemy, but it's an experience that some toilet startups are trying to fix.

15:23On today's edition of Toby's Trends, we're going to look into those companies who are peddling toilets as a service. Throne Labs is one company, the Wall Street Journal profiled, who is taking a tech forward approach to taking number twos. They can spin up a prefab bathroom stall overnight in the city center, then leverage technology to monitor, clean, and secure those bathrooms. To access a throne stall, you have to check in using an app that assigns you a unique ID. Throne monitors that unique ID, and if you smoke in a stall, bring in multiple people, take too long, or even just blow that thing up, you are given a warning.

15:59Repeat offenders, quote, lose their potty privileges, as the Wall Street Journal put it, though your actual identity is safe behind your throne identifier. The benefits of Throne are numerous, from its lower construction costs to a peer rating system that asks everyone upon entry to rate the cleanliness of the bathroom. It could be a way to alleviate some of America's public toilet problems and make those emergency visits a little more smooth. This is an area in which U.S. local governments have completely failed their citizens. On average, the United States has about eight public toilets per 100 ,000 people.

16:33That's a long line. That's according to the public toilet index. That is way behind Iceland, country that has the highest density of public bathrooms, 56 per 100 ,000 people. In New York City, there's four public restrooms per 100 ,000 people. Madison is the number one U.S. city with 35 per 100 ,000 people. But the U.S. just doesn't do well on this metric. Another analysis suggests that the U.S. is about 30th in the world tied with Botswana. You're starting to see the private market come in with these really interesting, innovative tech forward solutions. And local governments like D.C. and Los Angeles are absolutely champing at the bit to pay them and get these public toilets to make their people a little bit happier.

17:21Yeah. And one of the advantages Throne also has is that these bathrooms are entirely off grids. A lot of people look at them and say, oh, so they're kind of just high end porta potty. So it's the founders of Throne actually rejected that framing. But each prefabricated bathroom has a running supply from a built-in water supply, solar power on the roof, and then it flushes toilets into an empty storage tank. The downsides to that is that you have to go and empty the tank fairly frequently. But the upsides are that it is completely self-sufficient, which is good. It needs to be serviced less than a conventional bathroom, which is huge for these overstretched city officials.

17:56And then, yeah, the tech is a big aspect of this. The fact that you have some sort of friction to get in, the fact that you have to rate the cleanliness of it, it almost has this community effect where people keep it cleaner than a normal public bathroom because of just that little added layer of knowing if you're identifier. The founders kind of liken it to an Uber rating. If your throne rating gets too low, if you are doing some sort of shenanigans in the bathroom, then you just won't be able to access the stall anymore. So a fascinating concept here and one that I would love to see come to New York City because I have been in that oh no, oh no, oh no moment.

18:32Was that based on a personal? Oh, absolutely. It was actually a long run that just went totally awry. All right, let's spin to the finish with some final headlines. Polymarket is busting out its corsage as it looks to make a homecoming. The crypto betting platform previously forced offshore by U.S. regulators is re-entering the U.S. market after acquiring QCX, a little-known derivatives exchange. QCX is Polymarket's meal ticket home after the exchange recently gained approval from the Commodity Futures Trading Commission, which oversees prediction markets. The$112 million deal follows the closure of two federal investigations into Polymarket and marks a broader regulatory shift under the Trump administration toward embracing crypto and prediction markets.

19:16Now, Polymarket will look to cut into rivals Kalshi's lead, who has been operating in the U.S. since 2021. These prediction markets have never been more popular, and the fact that Polymarket will now have access to the American user base will likely only supercharge growth. I mean, just look at what happened with that astronomer CEO controversy, cold play situation. What went down on the prediction markets for that? It triggered$2.4 million in total trading volumes on Kaoshi and$5.3 million on Polymarket. People were betting on when he would resign. So that's$7 million total being wagered on this particular viral moment.

19:58Another popular contract that's been going around is whether Jerome Powell will see out 2025 or they'll be gone before then. That is over two million dollars in wagers. People, betters, wagers are going to these prediction markets and mass following their big glow up during the 2024 presidential election. So the fact that Polymarket is coming home will only boost its standing and hopefully close the gap for it with Kalshi. As Kristen Bell once sang, love is an open door share price that's gone absolutely bananas. Now firmly in meme stock territory, open door stock gained 42 % yesterday after skyrocketing 188 % last week on tremendous volume.

20:44It's quite a glow up for a company that was threatened to be delisted by the NASDAQ for holding a share price of under$1 for 30 days earlier this summer. But in classic meme stock fashion, this company doesn't have a whole lot going for it. Its main business is to use algorithms to buy houses from owners with cash, then flip them for a profit. But the real estate market is frozen over with existing home sales plummeting 50 percent since Opendoor went public in 2020. At least one investor sees a comeback story. Eric Jackson of EMJ Capital, who predicted Carvana's rise from the dead, posted a bull case for Opendoor on social media last week, sparking at least some of this frenzy.

21:21Yeah, it was absolutely to a T classic meme stop because you did get this hedge fund guy laying out the bull's case. It was then the most actively traded stock on stock to it on Monday morning. And then obviously you go to Reddit's Wall Street bets. It's all over that specific forum. So it's very reminiscent of the 2021 GameStop era. 312 % jump in six days is just classic meme stock. Nothing really changed about the underlying financials of the business, but somehow roughly 1.9 billion open-door shares exchanged hands on Monday's trading alone. That is over 1 ,700 % of the three-month average.

21:59So just that massive amount of volume is what you see when a meme stock just kind of hits the mainstream. It accounted for 15 % of Nasdaq's total volume yesterday. That's what people are zeroing in on, just how many shares of this stock were changed hands over the course of yesterday. And we'll see what happens today. Pepsi is going after your gut. Yesterday, the soda company announced it is launching a prebiotic cola under the Pepsi brand just months after acquiring one of the biggest players in the space, Poppy. Originally, Pepsi had plans to launch a functional soda under a sub-brand called Soul Boost, but scrapped those plans in favor of leveraging its namesake.

22:37The decision was no doubt driven by the fact that regular old Pepsi is one of the only bright spots for the company right now. Overall demand for its drinks continued to fall in Q2, with domestic beverage volumes shrinking by 2%. Only its namesake brand, fueled by the success of Pepsi Zero, was able to buck the trend line. Now Pepsi is doubling down on health-conscious consumers, rolling out Pepsi Prebiotic Cola starting in the fall. Neil, still think they should have called it Popsy. I don't quite understand. Maybe somebody smarter than me can understand this, but they acquired Poppy, this prebiotic soda brand, and then also released a prebiotic soda brand under Pepsi.

23:17So I'm not exactly sure what is going on there. And this drink is very similar to Poppy in terms of its composition, has no artificial sweeteners, the same exact amount of sugar, which is five grams of cane sugar, not corn syrup, and about the same number of calories, 30 and three grams of prebiotic fibers. So they spent over a billion dollars on Poppy and then released a very similar product under a different name. I guess they're betting on the Pepsi brand carrying over and that these two things can live side by side on grocery shelves. I know this is probably the last thing you want to hear today, a sparkling July Tuesday, but the PSL is coming back in just over a month.

23:58Yesterday, Starbucks announced that its famed pumpkin spice latte, along with the rest of its fall menu, will return on August 26th. That sounds way too early for pumpkin spice anything. It's actually not, relatively speaking. The PSL launch is four days later than last year's and Starbucks' latest release since 2022. Still, you've been warned, fall is coming. Fall is coming, and so is the pumpkin cream cold brew, the ice pumpkin cream chai, the pecan crunch oat milk latte. I would love to be a fly on the wall of like, what can we cram pumpkin in this time? So this is just the time of the year that Starbucks looks forward to every time because this is their best-selling holiday drink.

24:41I do love the backstory of it. It almost was called the Fall Harvest Latte. And you just have to imagine that 20 years later, we wouldn't still be talking about the Fall Harvest Latte. There is just something about PSL that speaks to the very core of what fall is. So I'm excited for it. I actually tried it for the first time last year. I'd never had it before. It is a little rich, but it is pretty dang delicious. It's day two of our week-long game of Password, where you try to guess a secret word from a series of clues. Yesterday's clue was the password is an anagram of a major city. That's it.

25:14And over 200 people had the guts to send in an answer. Toby, what is today's clue? Today's clue is the password ends with a number that's spelled out. The password ends with a number that's spelled out. If you think you have the answer, you can submit it at the link in the show description or head to our Instagram where we'll also post it there. Good luck, everyone. Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair and makeup says, will you look at the time? Devin Emery is our president.