Wall St. Shook By ‘Sell America’ & BlackRock’s CEO Says Capitalism is Not Working

0:00Neal Freyman:Score more with the college-branded Venmo Debit Card and earn up to 5 % cash back with Venmo Stash. Got paid back? With the Venmo Debit Card, you can instantly access your balance and spend on what you want, like game day snacks, gear, tickets, and more. The more you do, the more cash back you can earn. Plus, there's no monthly fee or minimum balance. Sign up now at Venmo.com slash college card. The Venmo MasterCard is issued by the Bancorp Bank N.A. Select schools available. Venmo Stash terms and exclusions apply at Venmo.me slash stashterms. Max$100 cash back per month. Good morning Brew Daily Show.

0:34I'm Neil Freiman. And I'm Toby Howell. Today is the Sell America trade back on.

0:38Neal Freyman:Then BlackRock CEO Larry Fink roasted capitalism during his speech at Davos. It's Wednesday, January 21st. Let's ride.

0:53Neal Freyman:Toby, what's the date today? I literally just said it. It is January 21st. Oh, my B. I don't have my Morning Brew daily desk calendar with me here in Switzerland. It's basically the only way I know what day it is. Desk calendar? Say more. Yeah, so Morning Brew has this games-focused desk calendar for 2026. Each day of the year, you'll get a new game, trivia, crosswords, puzzles, and they're all really great because guess what? I helped put it together. Self-promo Neil. No, this calendar really is great. Put it on your desk, put it on your nightstand. If you have a kitchen island, I'm jealous, but you can also put it there.

1:27Neal Freyman:If you want to give yourself or someone else the gift of a productive way to procrastinate, head to shop.morningbrew.com to see Neil's handiwork. Check it out. It's really fun. And now a word from our sponsor, Indeed. Neil, has AI changed the way you work? Well, now instead of asking you questions directly, I ask my AI-powered Tobybot questions like, why are you like this? Why do you ask? Well, we're here at the World Economic Forum in Davos this week, along with Indeed, who are diving into things like how AI impacts jobs, transforms skills, and employer adoption. Indeed will be sharing real-time insights like that into the global labor market and how leaders can navigate the workforce challenges and opportunities ahead.

2:08Neal Freyman:They're also helping business leaders and hiring professionals dive into these perspectives through Indeed's Global Labor Market and Workforce Trends Report. This report includes also where job opportunities are growing, where skills shortages and mismatches could impact business performance, and how immigration patterns are shaping workforce capacity. Together, these insights help leaders prepare for what's next and make better workforce decisions grounded in real-time data. Learn more at Indeed.com slash Davos. That's Indeed.com slash Davos. Yesterday really put the red in the red, white, and blue.

2:41American assets had their worst day since last April as President Trump's insistence on acquiring Greenland unnerves investors over the safety of USA, Inc. The S &P 500 had its worst day in four months, dropping more than 2 % and erasing its entire gain for 2026. Tech dragged the index lower, with each member of the Magnificent Seven falling at least 1%. The dollar fell against a basket of other currencies. Gold, sorry for being a broken record, surged to a new record, and Treasury bonds tumbled, sending yields higher. The sell-off broke a long spell of calm in the stock market, which had largely brushed off major geopolitical upheaval in recent weeks.

3:19It shrugged when the U.S. captured Venezuela's President Nicolas Maduro in a surprise raid, and also ignored when Fed Chair Jerome Powell said he was under criminal investigation. But the events of the past few days seem to have caught the attention of investors. President Trump threatened eight European allies with tariffs come February 1st, unless Denmark sells Greenland to the U.S., and the EU has vowed to respond with an economic barrage of its own. Toby, it's important to emphasize just how big of a shift is occurring right now. Historically, when things get hairy, investors flock to the safety of American assets, a lighthouse in the tempest.

3:52In these uncertain days, they're yanking their American investments. Some say it marks a profound shift in the world economic order.

3:59Neal Freyman:Yeah, maybe the best emblematic emblem of that shift is the fact that a large Danish pension fund is literally selling US treasuries right now. They sold$100 million because of finance concerns. The investing chief says the decision was driven by what it sees as poor U.S. government finances in America's debt crisis. And this is something that could spread beyond just this one Danish pension fund because$100 million in the grand scheme of things isn't a lot of money, which feels weird to say, but it's true in terms of U.S. treasuries. Bridgewater's Ray Dalio told CNBC yesterday that sovereign wealth funds could start to also sell U.S.

4:37Neal Freyman:investments if they stop seeing U.S. as a stable trading partner. That is absolutely how a lot of the world sees the U.S. right now, not a stable trading partner. Yeah, we just have to wonder whether this is a blip or a more long-term shift. A new Bank of America surveys out front that surveys investors. They remain the most bullish they have since July 2021. Nearly half of participants said they don't have any protection against a sharp fall in equity prices. We've talked about Sell America. This isn't the first time we're talking about Sell America. We talked about it last April during Liberation Day and a few times last year.

5:09And yet what did happen in 2025. Stocks surged to record highs. Corporate earnings were strong. Everyone's very excited about AI. It seems like that sort of outweighed any uncertainty that global investors have about the safety and certainty of American assets. You just have to think about when will the dam break?

5:26Neal Freyman:I think the real question here is, does Trump back down again? Because historically, he's been pretty sensitive to how the bond market responds to his policies. He also clearly looks at the stock market and loves citing it as evidence that his agenda is working. Back in April, literally, he backed down from his Liberation Day tariffs because, quote, the bond market started getting a little bit yippy. The bond market is certainly a bit yippy right now. And I do want to just hammer down the point that this has been an extremely calm period of months. As you mentioned, all those things that could have roiled the ship didn't.

6:02Neal Freyman:Volatility across US bonds, equities, in the dollar over the past month had sunk to the lowest level since 1990. So literally we were in a historic period of calm despite all the turbulence. Now maybe it looks like investors have woken up to the reality of what's going on. Yeah, it may not be the most exciting thing, but probably the one asset to watch is the 10-year yield. That reached 4.3 % for the first time since September 2nd. The higher that keeps climbing, the higher borrowing costs are for Americans and the US government. And if that keeps climbing to levels that get into the yippee zone, then we'll see maybe Trump back off.

6:39But it seems right now that global investors think that generally the United States and Europe will come to some sort of agreement over Greenland. There won't be an invasion because right now we saw in the morning just the stock market futures are up and a little bit into the green. So we may be in for a few bumpy days and weeks.

6:57Neal Freyman:And Trump's speech later today at Davos is definitely going to make headlines as well. Moving on, one of the main features of the World Economic Forum here in Davos is that CEOs and business leaders get a lot of microphones shoved in their faces. And what do you know? They say the darndest things. The soundbites started early yesterday when BlackRock CEO Larry Fink tore into the conference itself, saying, For many people, this meeting feels out of step with the moment. Elites in an age of populism, an established institution in an era of deep institutional distrust, and there's truth in that critique.

7:29Neal Freyman:Fink's words carry weight. Not only is he the leader of the largest asset manager in the world, but he also took over running the WEF last year after its longtime leader, Klaus Schwab, stepped down. But Fink didn't stop there. He also tore into the concept of capitalism itself, saying that despite more wealth being created since the fall of the Berlin Wall than at any other time in human history, quote, in advanced economies, that wealth has accrued to a far narrower share of people than in any healthy society can ultimately sustain. Neil, one-two punch of going in on the conference he now runs for its billionaire navel-gazing, while also warning of the perils of unequal wealth distribution.

8:07Neal Freyman:He's certainly rocking the boat. Certainly really striking for the CEO of an investment firm that manages$14 trillion in assets to say, look, this capitalism thing, it's not really working. But as Liz Hoffman of Summer4 points out, he's kind of right because Davos has been wrong consistently about the world is heading for much of the last two decades. She goes back to 2008 when an economist got up at a panel here in Davos and said, it is inconceivable, repeat, inconceivable to get a world recession. I'll just repeat, that was in 2008. And then in the mid-2010s, no one could foreseen Brexit or MAGA or the populist wave that soon followed in 2020.

8:48People were here in January sipping, you know, sipping champagne. Meanwhile, COVID was going to become a big thing. So yeah, consistently Davos has always been sort of backwards looking and has not been on the front edge. And I think Larry Fink, as he's coming into this role, is doing a lot of navel gazing himself and reflecting and saying, look, this thing is not really working. Davos and capitalism.

9:08Neal Freyman:And he also mentioned AI because he thinks it could be an inequality accelerator. He's saying that, hey, these AI risks could actually repeat the same existing inequality patterns. His direct quote, if AI does to white collar workers, what globalization did to blue collar workers, we need to confront that today directly. Obviously AI is dominating Davos right now. So he was calling attention to the fact that we need a call to action here and we need to figure out what prosperity means going forward in this age of AI. And one reason why people pay attention to Larry Fink, like what he says is yes, he's the CEO of BlackRock, is the biggest money manager in the world.

9:44They have a big stake in pretty much any public company you can think of when he calls, the CEOs are going to pick up the phone. He may be the most influential puppet master behind the scenes in the world in terms of the economy. So what he says carries a ton of weight in boardrooms across the world.

10:01Neal Freyman:Our next quote comes from Anthropic CEO Dario Amadei, who had some strong thoughts on who should get their hands on the picks and shovels fueling the AI revolution. Speaking at Davos, Amadei said selling the most advanced NVIDIA chips to China is a massive blunder with even bigger national security implications. It would be a big mistake to ship these chips, Amadei said to Bloomberg. I think this is crazy. It's a bit like selling nuclear weapons to North Korea. His comments come as Trump has moved to ease restrictions on sending chips to China, allowing NVIDIA to sell its H200 processors to Beijing.

10:37Neal Freyman:This is a drum that Amadei has been beating for a while. last year at Davos, he said he was worried about, quote, 1984 scenarios or worse, talking about the dystopian totalitarian world from George Orwell. Dude knows how to generate some quotes, Neil. Yeah, I mean, he absolutely shocked the crowd. And one reason why is he went in on NVIDIA. Well, what happened a few months ago is NVIDIA said it was going to invest up to $10 billion in Anthropic. The financial ties between these companies are very close, just like all AI companies have a lot of connections financially and otherwise with each other.

11:10So to go after NVIDIA and say, I think you're extremely wrong here. This is a huge national security issue that you're going to sell these H200 chips to China is like basically giving them a leg up in the AI race that we are currently winning. And the issues are so paramount are so big that this is a huge strategic mistake.

11:29Neal Freyman:One way he framed it is that AI chips are essentially cognition or essentially intelligence. He said that doing this is essentially like shipping a country of geniuses in a data center to China. You would never give your smartest people over to your direct geopolitical enemy in China. And so that is the equivalence that he made is that these are the brains of the new era. Why are we giving them to China when we absolutely do not need to be doing that? Finally, there's also a funny Davos update that I want to mention. There's been a hot market for off-label or fake badges, with street prices fetching nearly$1 ,200.

12:08Neal Freyman:Most of them are selling access to a USA house, which is the base for the U.S. delegation here in Davos. And USA has had to come out and issue a warning about selling fake VIP passes that are pledging access to Trump and Scott Bissett. Totally fake, but apparently some billionaires were falling for this scam. So that is why you and me, Neil, have no badges or access to anything here, just to avoid getting scammed, of course. Yeah, there is a little bit of schadenfreude in billionaires getting scammed just like the rest of us. Moving on, Netflix may be the most valuable media company the world has ever seen, but it wants you to know it's not the only television game in town.

12:45After reporting earnings yesterday, executives emphasized that the competition for eyeballs is fiercer than ever. Co-CEO Ted Sarandos said, the TV landscape has, quote, never been more competitive than it is today. TV is not what we grew up on. TV is now just about everything. He added the Oscars and the NFL are on YouTube. Networks are simulcasting the Super Bowl on linear TV and streaming. Amazon owns MGM. Apple is competing for Emmys and Oscars and Instagram is coming next. Why go to such great lengths to highlight the competition? It's all because Netflix is trying to close its$83 billion acquisition of Warner Brothers Discovery, the owner of HBO Max.

13:23And Sarandos appears to be workshopping the argument he's going to be making in front of skeptical regulators who might scuttle the deal on Monopoly grounds. Still, whoever Netflix is battling for your attention, it's winning. The company reported another outstanding quarter with its subscriber base growing to over 325 million and revenue rising 18 % year over year. December was one to remember. According to Bloomberg's LucasShot, Netflix posted its best month of viewership ever in December thanks to its NFL Christmas Day games and the final season of Stranger Things. During that month, Netflix accounted for almost double the viewership of Disney's streaming services.

14:00So the only thing stopping Netflix from even more global domination might be regulators.

14:04Neal Freyman:It's so funny. They're going, oh, little old me, Netflix, like we're so small. Everyone is so competitive against us. And yet you do look at the quarter they just reported. They did really freaking well, but it does look like everyone kind of is ignoring their actual financial performance because all eyes are looking at this Warner Brothers Discovery deal. Shares were down 5 % after hours. This has been a rough go of it for Netflix ever since announcing this acquisition of Warner Brothers Discovery. Their stock has fallen over 15%, which is very decidedly un-Netflix-y when you look at actually what's been happening at the company and the financial performance itself.

14:41Neal Freyman:So it does look like this was just an afterthought to what is actually going to happen with this big merger that is just hanging over them like a black cloud. So Netflix is trying to stake out the argument that they are just one of many, many streaming companies or television companies seeking attention for your eyeballs. It competes in this very competitive market. Perhaps regulators or the government is going to say, no, you actually are a streaming TV service. You're competing against HBO Max, Disney Plus, Paramount Plus. You are actually operating in that market. And when you look at that specific market, if Netflix were to combine with HBO Max, the streaming service, that would put the combined company over 30 % US market share, which would maybe raise monopoly concerns.

15:25But then if you put it in the bigger market with YouTube and now Instagram Reels, Ted Sarandos mentioned Instagram Reels, it's because they just released an app to put Instagram Reels on TV. He's saying we're actually operating in this much wider market than the one that you guys think we are actually operating in?

15:41Neal Freyman:Still, I do want to dig into why investors are not so hot on this acquisition, even though Warner Brothers is a very valuable catalog of IP. A lot of them think that it's going to not mesh well with Netflix's culture. Warner Brothers might bring a bloated, slower way of life to a very fast-moving company. Also, Netflix has done very well licensing standout content from other content studios. Why do they need to change up that model now? Why do you suddenly need to own this IP. So these are some of the reasons why I call this a dark cloud hanging over their pretty good financial performance is because it just doesn't vibe with what Netflix has been over the course of its career.

16:21Neal Freyman:Frandos and co have basically said, we can adapt, we can change. This is a great studio. We can move into the movie business. Like we're not this inflexible monolith of a company. We can adapt, but still, that is part of the reason why you're just seeing such bad vibes around the stock right now, even as it's doing pretty well as a company. All right, we're going to take a quick break and come back and talk about why no one's drinking alcohol anymore. Time for our Morning Brew Daily Davos update with Lightspeed. We are joined by Lightspeed co-founder and partner Ravi Matra. Ravi, AI talk is everywhere at WEF.

16:54Most are even calling it a revolution. Be honest, hype, real deal, or both? Two things can be true at once. If you look at the underlying substance, it is a larger investment in a technology shift since electrification. We had just in the last year four companies investing almost$400 billion in the compute infrastructure AI build-out. Moody's is predicting there will be over$3 trillion invested by 2030, and that's across compute, data centers, chips, power. So that being said, there's probably some amount of funding that's going in to companies where there's a circularness to what they purchase and what they sell in the AI domain.

17:36AI is not really a market. It is a paradigm shift that is very horizontal and intelligence touches so many industries. We think the transformation and the value is very real.

17:45Neal Freyman:Thanks, Ravi. There really does seem to be a shift going on. Morning Brew Daily is live from Davos all week in partnership with Lightspeed. 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 Proxima Fusion, Francesco Shortino, who is trying to power the world with Fusion Energy. Keep an eye out as we will be posting more throughout the World Economic Forum. Pour one out for the alcohol industry and then pour a few more out because spirits are low in spirit right now. Five of the biggest publicly traded spirits groups from Diageo to Campari are sitting on record levels of inventory right now as no one is buying what they're selling.

18:26Neal Freyman:Collectively, the group is holding$22 billion worth of product, the highest inventory levels in more than a decade, according to reporting from the Financial Times. That inventory is dominated by all the stuff that was on your parents' top shelf as a kid, things like scotch, whiskey, cognac, tequila, and more. But while you may have been clamoring for a taste in high school, that is not the case anymore. The inventory buildup dates back to some poor decisions made to dramatically ramp up production during the COVID-era drinking boom. assuming that demand for a stiff drink would remain stiff indefinitely.

18:59Neal Freyman:But right as production facilities came online, inflation started to squeeze people's wallets, a broader focus on health and wellness emerged, and consumption started to wane. By December 2024, Mexico was sitting on over 500 million liters of tequila in inventory, basically an entire year's worth of production. And the producer, Remy Contreau, is sitting on over$2 billion worth of maturing inventory, nearly double its annual revenue and close to its entire market cap. Neil, there's a lot of talk in the industry as to whether this is cyclical and demand will come back around or structural and people will never drink as much as they used to.

19:36Neal Freyman:Fitting to have this conversation during dry January. I know this industry is really on the rocks right now. No, you can't laugh. I guess the good news for people who still drink, which is a dwindling number is that appears that a price war is coming because if you're sitting on so much inventory, you're sitting on inventory that's worth your entire company. You're gonna have to cut prices to get people to buy this thing. So let's just look at Hennessy. Um, Hennessy was priced at about$45 a bottle in the United States, but since they've cut it to about$35. So you're, if you are a Scotch collector or you like fancy tequila, expect prices to come down because, you know, things are turning in your favor with all this inventory sitting around.