The people’s chip manufacturer

0:05Pushkin. What do microchips and roadside restaurants have in common? Well, companies in both of those sectors have found themselves in the line of sight of Donald J. Trump. The US president has been doing some pretty weird stuff recently. He struck a deal where the government bought a 10 % stake in Intel, the chips maker. That's a weird sort of free market capitalism you've got going on there. And this was on the back of deals with NVIDIA and AMD to take a slice of their revenues from chip sales to China. Then along comes Cracker Barrel. Now, I'm a Brit. I'm not familiar with Cracker Barrel, but it's a big restaurant chain in the US, and Trump did not like its rebranding, so this grabbed it.

0:49Today on the show, we're asking, what on earth is going on here? Is this some sort of shakedown economy? This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist here at FT Towers in London. And no, I really don't get what Cracker Barrel is, but joining me down the line to tell me is this week's Token American. Listeners, I've got a treat for you here. It's our US managing editor, Brooke Masters, who's one of the people who makes the FT really tick and is a really fast-talking New Yorker under strict instructions to slow down.

1:26Brooke, I can't guarantee you'll have fun, but I will try. I'm looking forward to it, Katie. It should be great. She's talking so slow. So there's been a real blizzard of presidential involvement, I'm going to say euphemistically, in American corporate life recently. Really quickly, let's start with NVIDIA and AMD. What happened there? Trump had been saying he was going to prevent them from exporting their H20 chips to China for national security reasons. But he said, if you give the U.S. government 15 percent of sales, so basically an export tax, then you can do it. And it's a straight up company specific tax.

2:14It hasn't actually been entirely finished yet. They're still writing the rules. But it's absolutely you want to do something. Give me a kickback. It's definitely a shakedown economy. It's amazing. And then, so Intel comes along. And first of all, the president took some sort of exception to Intel's chief executive and said that he has to go. It's the only answer. This seemed to kind of come out of pretty much nowhere. But then struck a deal with Intel, which is even more meaningful, actually, than the cut of revenues thing, right? Like what happened with Intel? Intel's basically giving the government, but Trump sees the government as himself, as a 10 % stake.

2:51Like they're doing some weird swapperoo where the big grants that are getting given to Intel to build chip factories in the U.S. are going to be converted into equity. And so instead of getting money from the federal government and then doing something corporate and acting like a normal company, which is how it has been done in the past, the government is taking a direct stake. In the past, the U.S. government has only taken direct stakes in companies it was rescuing, you know, like AIG, which remember that insurer that almost took down the world economy. The idea that you would take a stake in a company that's basically functional is very strange.

3:28So let's just look at sort of tech in the round here to start with. I guess you can argue tech is a strategic priority for the U.S. Maybe it should get some sort of special treatment. But I mean, from over here, this looks super weird. What do you think it is? What does it mean? I think you have to remember that Donald Trump sees himself as a dealmaker. And he also sees himself as someone who is extracting money and benefits for himself, for the people he represents, for his voters. And so this is his idea that this is how we're going to get the money that's been accruing to the tech billionaires and get it for America.

4:10And we're going to make America great by extracting this money. So it's like a Robin Hood thing. Sort of. Yeah. Yeah. It's also, I mean, it's completely inimical to the way we normally run the American economy, where, you know, free market, free market, free market. The American government doesn't meddle in corporate leadership, you know, even of banks. You're allowed to appoint who you want to appoint most of the time. But this time, you know, Trump is saying, let's throw that out the window. We're going to have an industrial policy, but it's not a planned sector by sector industrial policy. It's like I've picked this company.

4:43I'm going to do something to it policy. And with Intel, I've heard some people argue, look, all we're doing is converting these loans into equity. It doesn't mean the government's going to be involved in our affairs, to which I say, sure. Or the other one, like surely it means they're involved in what actually happens with the company. We have no examples. So honestly, maybe they won't be. You know, you cannot assume anything because there is no precedent in recent decades for this. I think it's really hard to know what they're going to do. But it's hard not to imagine that if the government owns a stake in the company, it then has a stake in its sales.

5:23And so given that Trump has been, you know, putting tariffs on all kinds of things and requiring export licenses, he would certainly be tempted to favor the companies that the U.S. government owns a bit of. Whether they will, we don't know. So tech, again, strategic imperative, maybe. National security imperative, just about if you stretch the definitions, maybe. But then along comes Cracker Barrel. Now, I understand the UK equivalent of Cracker Barrel is like a harvester. And do you remember Harvester from when you lived in the UK, these sorts of restaurants, like family restaurants? Is that like a reasonable analogy?

6:01What sort of company is Cracker Barrel? It is family restaurants, but it's family restaurants with a real heavy load of old tiny nostalgia. You know, they've got rocking chairs out front. You know, they have Southern style comfort food. Like, have you ever had chicken fried steak? That's one of their specialties. What? What? Chicken fried steak, where you take your nice chunk of beef and you fry it like fried chicken. It's interesting. Okay. I'm not a fan, I have to confess. This is Tennessee based, and it's heavily, you know, Southern old style Americana. So I gather from our reporting on this that their logo has been since forever a kind of orangey, yellowy, brown type affair.

6:47And it says Cracker Barrel and it's got a picture of some old guy leaning on a barrel. And they decided, let's get a new logo that's like a barrel shape and just says Cracker Barrel across the middle and is the same color. And people like lost their minds about it. Why do people lose their minds about it? I think Americans have too much time on their hands, to be honest. But there was some assumption that Cracker Barrel had, you know, taken the guy off and made this much cleaner logo because they were trying to appeal to a more diverse, woke crowd. It's a little bit like what happened to Bud Light when it collaborated with a transgender influencer, where everyone thought, you know, Budweiser and Bud Light are American, big Americana brands, that they were going to the left.

7:37They were trying to win over Rainbow customers and that this was what Cracker Barrel was doing. I mean, it's quite possible also that what they were trying to do is have a logo that was clean and simpler and worked better when it was small and large. they did as part of this lose their little old country store statement underneath it as well. That was also part of the old logo. Oh, right. Okay. So, I mean, it was more modern. And honestly, I think Cracker Barrel was trying to be a bit more modern. They've been rebranding inside their stores also with a sort of cleaner decor, less old timey and more probably easier to clean plastic-y kind of stuff.

8:11The meltdown wasn't entirely wrong. But this is not some truly woke company and never has been. Yeah. And so when did the president get involved and why is this like anything to do with him? You know, he gets involved in all kinds of things. You know, he's been doing that since his first time. Do you remember when he got involved, he got pissed off at Boeing over the price of Air Force One and he was tweeting? He's been doing that. He does this off and on. It's all very personal to him. Yeah. Yeah. And and, you know, and and he also has a number of right wing influencers have sort of lines directly into his administration and he talks to them.

8:51And he then, you know, after he talks to someone, he gets out and posts something on Truth Social. And so here's the thing, like this sort of bullying apparently works because Cracker Barrel were like, whoops, you know, our bad. We're not going to change the logo after all. you know, we're listening. And so they've gone back to plan A and gone back to the original logo. This is like super interesting for a number of reasons. I guess it just means like, if you are in charge of corporate branding, any sort of company, like, how are you supposed to do your job now? How it feels like companies are sort of losing control of their own branding here.

9:31I think they're losing control of lots of things. And it's trickling down very far into the companies. You know, a bunch of the cereal companies and Coca-Cola have also faced, you know, Trump pressure to do something he wanted. Remember a couple months ago when Trump posted that Coca-Cola should and had agreed to start offering a cane sugar version of his soda. And the company was completely not ready. They basically were dead silent for six days before they actually said, oh, yes, we actually are doing what the president told us to do. it's unusual. Let's put it that way. So there you are over in New York for the FT.

10:12You talk to a lot of corporate executives, whether they are like, you know, the huge AI tech, you know, masters of the universe, or whether they are running branding for relatively small restaurant chains. What is the atmosphere like in corporate America now? How are they responding to all this? They're all hiding under their desks. It does make it very hard for anyone to criticize anything Trump does, because they're all living in fear that they are the next post on Truth Social. So, you know, even with completely legitimate policy disagreements like tax rates or tariff rates, nobody wants to say anything, because what if Trump then goes after the company as a company, not just on policy.

10:56And so it is silencing corporate America. I mean, you can't get anyone to talk publicly about anything. They are deeply concerned about what's happening. I think the invidious export tax and the intel stake taking have really raised hackles privately because this is not how America normally runs its economy. But no one wants to say it. it's not how America normally runs its economy. And normally, this is the sort of thing that Americans would typically point at other countries and say, you know, lol, look at these idiots with the government seems to think it knows better. I mean, you used to be company's editor for the FTO over in London.

11:38So you must be like super familiar with this kind of, you know, mockery that's normally gone in the direction of companies that have done this. Yes, certainly Americans have always looked over to Europe where there are often efforts to create state champions and government backing of individual companies and said, come on, guys, the market is much better at allocating capital than the government. You know, free market above all. I mean, it was always a bit of a lie in that, you know, Americans, the American government is a huge grant giver and funds a lot of the basic research and the science on which much of American entrepreneurship is based.

12:13But once it gets beyond the basic research level, the U.S. government doesn't pick winners, at least historically, because the whole point is that capitalism and the free flow of the market is better at this than some bureaucrats sitting in some, you know, industrial policy office. What are people saying to you about the potential long-term implications? Where does this lead us? And will it cause damage that you can't undo when you get the next administration come in? It will definitely cause long-term damage because if nothing else, if you believe the argument, and I do, that the market is better at allocating capital most of the time.

12:49I mean, it makes mistakes and there are bubbles, but basically the market's better than people. We are misallocating tons of money to the wrong companies and picking the wrong horses and spending a lot of time and energy on logos for restaurants when, in fact, you know, China is leaping ahead in certain crucial technologies. If the government owns Intel, what does that mean, or at least a big chunk of Intel, what does that mean for anybody who wants to do something different and do a different kind of chip? Are they going to get any money? I'm like, if there's a brilliant idea, and there probably is one somewhere, how is that person and that little company going to get funding when there's a government-backed one that it's competing with?

13:29That's nuts. Yeah. Yeah. You make a really good point. But also, like, if you're an investor, you know, lots of people just track the big indices for their investment in US stock markets, But some of them pick individual stocks and they have like no idea. Am I going to get wiped out by some social media posts from the president on one of the companies that I've got a lot of money invested in tomorrow? Or is it going to double in value tomorrow based on a different sort of post on Truth Social? Now, what investors are saying to me is, look, as long as you're diversified, that should kind of even out.

14:04But there's a lot of people that have got their life savings in certain individual stocks that, you know, whether they're retail investors or kind of big institutions that really might want to think quite carefully about how they tiptoe around this, right? I think this is another blow against active investing. And once again, you should just put your money in some sort of, you know, S &P 500 ETF and hope. Although, as we were talking about, if this is inefficient, the whole index will at some point be dragged down by this wasted money. And so you aren't protected. I mean, you're probably more protected if you're in an index fund because, you know, you should own the winners as well as the losers.

14:42But what if everyone's a loser in the long run? So for you, what's next with this whole saga? Are you just expecting it to keep rolling on? As you say, we've been through cereal manufacturers. We've been through Coca-Cola. We've been through a few tech companies. We've been through, you know, southern fried chicken retailers on the sides of motorways. Does this trickle further and further down into smaller and smaller companies and just become, you know, just massive? Just you cannot stop this thing. It's hard to see what's going to stop it. Nobody has tried to sue to say you can't do this because it takes too long to fix that.

15:20I mean, I think it already is trickling down in some ways into smaller companies. If you think about crypto, which, you know, Bitcoin as a currency is huge, but the companies that do crypto are relatively small. And the administration is definitely picking winners. I mean, Donald Trump's children are invested in particular companies that do very well because they're connected to Donald Trump. So, yes, it is trickling into different parts of the economy. And, yeah, I don't see an end to this. And, I mean, I guess the one limit is Donald Trump, after all, does live in the real world. And there are only 24 hours in a day.

15:54So he can only attack so many companies. But I don't see anybody's going to stop him from continuing to do this. Yeah, we need to keep the days shorter. That is the answer to all of this. Donald Trump needs to go to bed earlier. And speaking of shorter, we're going to be back in one sec with Long Shorts.

16:25okie doke it's time for long short that part of the show where we go long a thing we love or short a thing we hate brooke is there something you've become irrationally angry about recently I am seriously short pumpkin spiced latte and other theme drinks which make the lines really long at Starbucks and explain why they are having to hire lots of baristas. Nobody needs those things. There is too much nutmeg in the world already. I completely agree, actually. And I got upset at some point recently over the summer. There was some sort of lavender coffee. I mean, what the hell? This is just a total outrage.

17:03I agree. Ban it all. We can be limit short that. I am short ANZ, the Australian bank. Did you see the story we had today? Oh, I love that story. Oh, my goodness. Story from Nick Files in Sydney for the FT. ANZ has issued an apology and offered psychological counselling to more than 100 senior bankers after they received an email sent in error instructing them to return their computers ahead of the news that they were going to be fired. I went, oh, this is so bad. This is so bad. This reminds me of the fact that at UBS in the financial crisis, a ton of people learned they were getting laid off because their entry pass didn't work.

17:48They clicked in and they were stuck and they got sent to some room. I remember like you got to security, you put your little pass on the BP thing and it was like, you know, no entry and they would sort of turn on to the security person and be like, what the hell? and they were like, oh, yes, it says here on this list that we've got hit, it says you're fired. I think exactly it says here you need to go to that room, and then it was clear you were getting fired. Just absolutely brutal, huge screw-up from AMZ. What a story. What a story. Brutal times. Brooke, thank you again for doing this. I understand I'm going to see you soon in real life.

18:25Yes, I'm flying over for the FT Weekend Festival. I'm going to be on a couple of panels and having fun outside, and I hope everyone else is too. Yep, September the 6th at Kenwood House. I think, I believe I'm right in saying, in fact, I'm certain I'm right in saying there are still tickets available to buy. You can get them on that internet. And if you use the promo code FTpodcasts, that's podcast plural, then you get 10 % off. It's good. There's like loads of speakers. There's loads of FT journalists. There's like all sorts of interesting stuff going on. Food, drink, that kind of thing. So come along.

18:58Listeners, in the meantime, we'll be back in your feed next Tuesday. so listen up then and pray for American branding executives.

19:34I'm Katie Martin. Thanks for listening.