Episode 556: Neal and Toby dive into how a single post on X about a tariff pause set the markets ablaze while the White House denies the credibility of the post. Then, Jamie Dimon, Bill Ackman, and other Wall St. big heads are publicly expressing their concerns about the tariff-induced market wipeout. Plus, a pivotal NCAA settlement case out in California could fundamentally change how athletes are paid by their schools for NIL. Meanwhile, Toby looks at the trend of metal braces making a comeback. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Checkout TaxAct for more! Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow 00:00 - Nintendo President named… Bowser? 2:15 - One post = market madness 7:00 - CEOs have a warning 10:30 - NCAA game changing case 17:30 - Toby Trends: Braces 20:00 - Sprint Finish! Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: Who is Doug Bowser and why is his name significant?
So the Nintendo of America president was making the media rounds yesterday discussing the impact of the trade war on the Switch 2, the company's much anticipated new console whose pre-sales have been delayed due to tariffs. And that's interesting, but what you really need to know is this guy's name is Doug Bowser. Yes, Bowser, like Mario's arch nemesis.
The Nintendo executive and the video game villain have no connection, but it could be a sign of normative determinism, the theory that people tend to gravitate toward work that fits their names.
Well, if you thought that was a crazy bit of Nintendo naming lore, try this one on for size. There was this civil rights attorney, John Joseph Kirby, who famously defended Nintendo in a major IP case that allowed Nintendo to keep using the name Donkey Kong.
That win helped solidify the company's rise and also earned them the honor of being the namesake for their little pink character, also named Kirby. And get this, I'm named Toby because my mom stubbed her toe on a bee and Neil is named Neil because, okay. I'll stop. Let's get to the ad. A word from our sponsor, TaxAct.
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Chapter 2: How did a single tweet cause massive stock market volatility?
who wrote that the director of the National Economic Council, Kevin Hassett, said Trump was considering a respite. That rumor spread like wildfire. It was eventually picked up by CNBC, leading to the massive stock run-up. Then came the reality check. People started to realize that the rumor was exactly that, a rumor.
And an hour later, the White House issued a statement outright denying the report, and the market quickly made a U-turn. Just to put the volatility into perspective, the entire stock market gained, then lost more money in a matter of minutes based on a single unverified tweet than it was worth 40 years ago. Two and a half trillion dollars of movement, one tweet.
Finally, just to throw one more variable into the cauldron of volatility, Trump went on to threaten an extra 50% tariff on China. if they didn't rescind their 34% tariff on U.S. goods. It all combined to add up to a whole lot of nothing. The S&P 500 closed down just 0.2%, while the Nasdaq eked out a 0.1% gain.
Neil, there were dumps, then pumps, then dumps again, enough to give your portfolio whiplash.
It was pretty wild. I mean, the S&P 500 was down 3.4. Sorry, it was down 4.7 percent for the day, officially entering bear market territory. Then this tweet comes along and everyone's like, well, where is this information from? So there's a wild goose chase on Twitter to find that. But it had. really severe market implications.
And then the S&P 500 went from down 4.7% to up 3.4% for the day before finding a sense of calm and futures look good this morning. They're all in the green. All three indexes are up over 1%. Japan's Nikkei index was up 6% for the day. So it seems like markets are finding some measure of calm after two and a half days of truly insane volatility and a big sell off.
The Wall Street Journal kind of tracked down this tweet origins to an account named Hammer Capital on X. It is an anonymous account that with 692 followers and a bio that reads memes and vibes, that was the first time this rumor started. And then it got picked up by this much larger Walter Bloomberg account. And then just absolute chaos broke out. And I think a lot of people...
The takeaway from this story is just how fast information moves in today's trading environment because it really just underscores how, one, many investors are just feverish for any information that might calm this market, but then also, how quickly Wall Street's high-frequency trading algorithms react to news like that, which is why we saw this just incredible run-up.
It's one of the biggest intraday moves ever in the stock market. You have to go back to March of 2020 to find a move of similar magnitude, and it all comes from these... really these algorithms reacting to this one little shred of information.
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Chapter 3: What are Wall Street CEOs saying about tariffs?
Diamond's not the only one, not the only banking baron sounding the alarm. Bill Ackman, a Trump supporter, warned of economic nuclear winter over tariffs. And the influential but typically private investor, Stanley Drunkenmiller, issued a rare statement on X saying that he doesn't support tariffs over 10%. Toby, the billionaire dam has broken.
It absolutely has. And it's not just Wall Street specific billionaires as well. Elon Musk has also been sounding off against this tariff situation. He's kind of publicly sniped at the key tariff architect you mentioned, Peter Navarro, saying that his PhD from Harvard is a bad thing and not a good thing. And then Navarro kind of struck back and said, he's just protecting his own interests.
He's a businessman. Of course, he doesn't like this. So you are seeing some of these cracks form in kind of this coalition around Trump with Elon Musk, with Bill Ackman, sending a lot of tweets about how he wants a little 90-day timeout on this tariff situation. So you are seeing the who's who of Wall Street, basically influencers. I know that's a ridiculous thing to call
Jamie Dimon, but that's what they are, kind of sounding off and letting their feelings be known about these tariffs.
And another one of those influencers was someone we talked about last week, BlackRock CEO Larry Fink. He got up at the Economic Club of New York and said, he didn't talk about the tariffs specifically, but he said, most CEOs I've talked to would say, we are probably in a recession right now.
This comes after his annual letter last week where he said we are in one of the more uncertain economic environments that he's ever seen. So he's joining the chorus along with Bill Ackman. And another name to know that spoke out was Ken Langone. He's the co-founder of Home Depot, longtime Republican donor. He said, I don't understand the gosh darn formula. He didn't say gosh darn.
He said something else similar. I believe he's been poorly advised by his advisors about this trade situation. and the formula they're applying. So Ken Langone, Larry Fink, Bill Ackman, Jamie Dimon have all kind of said recently in the past few days that we need to get this thing wrapped up because it's causing a ton of uncertainty and could lead to a recession.
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Chapter 4: What conflicting messages are being sent about U.S. trade negotiations?
And then even on Washington as well, Ted Cruz has raised fears about the next election cycle. And then some Republicans have started pushing towards signing legislation that would allow Congress to remove tariffs with a majority vote. So you are seeing some pushback. on the hill as well.
And then finally, we are going to hear from Wall Street once more again this week because JP Morgan, BlackRock, and Wells Fargo are all due to announce earnings on Friday.
What if I told you that Florida beating Houston last night in the men's national championship game was not the most important thing to happen in college sports yesterday?
Perhaps the more significant development happened in a courtroom in California where a judge heard the final hearing and a settlement that will rip up the NCAA's amateurism model as we know it and allow schools to directly pay players for the first time. Experts say it's the biggest structural change in the entire history of collegiate athletics ever.
and arguably one of the most significant legal milestones in sports history, not just college. The settlement stems from several massive multibillion-dollar lawsuits filed against the NCAA over player compensation, which the organization has worked for over a year to resolve.
The judge still needs to approve it, and she declined to yesterday, telling lawyers to make some small tweaks and get back to her in a week. But when she does, as expected, the landscape of college sports will never be the same again.
Among the sweeping changes, schools would be able to start sharing revenue with student athletes, team sizes would be governed by roster limits instead of scholarships, and name, image, and likeness deals, NIL, would be overseen by a third-party clearinghouse that ensures they are fair value. Toby, there's two major parts to this settlement, one looking back and one looking forward.
Yeah, let's look at the backward-looking one first. It offers a remedy for college athletes who played before 2021, which is when the NCAA allowed players to cash in on their name, image, and likeness. And so there's about a $3 billion, $2.75 billion pot that is set to be distributed to those players. And that is really based on which sports you played in at which schools.
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Chapter 5: Which billionaires are publicly opposing tariffs and why?
The majority of that money is going to go towards sports. the Power Five conferences, and money-making sports like football and basketball. So if you are a swimmer or maybe if you are a soccer player, you're not going to get a large sum, but you will have a little bit of money waiting there for you.
But it really is the future where the big transformation is kind of aligned here because going forward, allowing schools to share revenue with student-athletes is just a complete – and a complete upending of the old amateurism laws that governed NCAA sports. So this is definitely one of those things that completely rewrites the rulebook around how college sports are going to be approached.
Yeah, so schools will have, for now, a $20.5 million salary cap to spend on players, and it applies to those big four power conferences, plus the Pac-12, and other schools can opt in. And the question is, will this increase or decrease schools And as always, with NCAA changes, it appears like this is a rich get richer situation.
Alabama, Ohio State, all these companies make a ton or all these schools. They are basically companies. They make so much money in their athletic departments because of these powerhouse programs.
football programs and secondarily basketball so they will have more money to marshal to pay players and also while nil is not going away it's moving to a third party clearinghouse situation managed by deloitte they will probably have more resources at their disposal to broker nil deals so players will be able to get some of that revenue sharing and nil deals so it does seem like the power conferences will put even more distance with the rest of the pack
One knock-on effect of this, too, is that it's a totally new way of running an athletics program, and it's a lot more pro-based. And so what you will be seeing is more of these GM figures come in to say, hey, how do we manage a roster? How much is a player worth? What salary should we devote towards them? So you're going to see colleges and universities hiring sometimes former athletes.
Like Steph has been named the GM of Davidson's basketball program. you are going to see people coming in to run these like professional sports franchises because that's basically what they are. And then finally, one thing that we have to mention is that with these new roster sizes incoming, a lot of players who maybe were under scholarship will now no longer be
receiving the aid that they thought they would. So that's been a big pushback from a lot of current and former athletes is saying, hey, you are upending these kids' lives here. They're probably going to have to transfer, but transferring is a very traumatic situation. You don't bring your friends with you, even though you might play a sport there.
So you are seeing some pushback specifically around this roster limitation from athletes, which is maybe one of the big sticking points that will hang this settlement up. Up next, let's talk about Toby's Trends. Have you heard what's happening in Ohio lately? The list is long, folks.
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Chapter 6: What is the NCAA settlement case and how will it change college sports?
Yep, brace yourself for another Toby's Trends, because today we're talking about braces making a comeback. Suddenly, jaw hardware is the hottest new status symbol amongst the youths and adults alike. Orthodontists have reported a rise in interest in the once uncool OG metal braces as wearers are embracing their imperfections and flashing metallic smiles with pride.
Part of it is tied to popular culture, old and new. There was Marsha Brady in the Brady Bunch, and of course, America Ferreira in Ugly Betty. But contemporary stars like rapper Lil Uzi Vert are also proudly flaunting their orthodontic infrastructure, leading to an uptick of young people wanting to do the same. Part of the appeal, though, is undeniably tied to price tag. Braces can range from
$3,000 to 10 grand and are often not covered by insurance. So rocking 10 racks on your face is just the latest way to flex. Plus, accessories like colorful rubber bands and jewels turn braces into tooth bling and offer wearers another outlet to express their individuality. Neil, as a former brace face myself, I'm happy to see this narrative shifting, but it is a bit baffling at the same time.
Well, I was going to say, I wish they were cool when I had them in eighth grade. And when I think about a braces comeback, that usually refers to something you respond to someone when they make fun of you for having braces, which I think happened to a lot of us back in the day. It's a little baffling, but as you mentioned, you can see it as a way to personally express yourself.
Recently, I did do Invisalign, and in this article about braces, they quoted a bunch of people saying Invisalign was boring, and I'm like, yeah, that's kind of the point. You want to keep this thing a little discreet because it's very visible, but the tides have turned, the youth have spoken, and I guess braces are cool again.
Braces are cool, but you are right that part of it is that Invisalign is not only boring, but people don't like having to remember to wear their trays, and you have to wear them for 22 hours a day. You have to take them out when you eat. So part of it is just the logistics of it all. They'd rather just have these braces.
But part of it is that a lot of people are just saying that they're embracing this – they are literally working on self-improvement. So like, why would I hide this thing? Like I'm trying to invest in my appearance here. So now you're seeing kids who used to, you know, beg to take them off, begging to leave them on because it's become a part of their personality and something like that.
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Chapter 7: How will the NCAA settlement impact past and current college athletes?
And these orthodontists are posting in Facebook groups, national Facebook groups and going, Is anyone else seeing this? And they're all like, yes, for some reason, these kids do not want to take them off. So I think it's a good thing overall, though, because braces were traumatic for a lot of kids. Like you didn't want to even smile. It made us all do those smizes where you don't open your teeth.
But now if people are embracing them, I think that's overall probably a good thing. Now let's sprint to the finish with some final headlines. Shopify has drawn a line in the sand when it comes to AI usage at the company, stating that not only is it encouraged, but AI use is now a fundamental expectation for all employees.
Shopify CEO Toby Lutke emphasized the critical role AI will play in a memo he posted on X yesterday. He told staff to treat AI as a tool for innovation and efficiency, and pushed to integrate it into tasks like product development, performance reviews, and even hiring decisions.
Lutke highlighted that teams must demonstrate why AI cannot fulfill the needs before requesting additional resources or headcount. He also warned against stagnation, arguing that embracing AI is and will be essential for staying competitive as a business. Outside of Klarna's AI-obsessed CEO, this might be the most explicit endorsement of AI we've seen from a major company.
And Shopify, Toby, has always been the Toby with an I, not you, has always been kind of pushing the technological bounds of workplace productivity. In early 2023, he kind of rocked the HR world. He sent this memo directing employees to stop holding an absurd amount of meetings. The company literally went into people's calendars, deleted 12,000 events, freeing up 95,000 hours.
And now he goes with this very, you know, buzzy or interesting... boundary pushing AI memo as well, saying you can't get more people on your team if AI can do that. And you have to prove that AI can't do that. And you just wonder how big the overall head counts of tech companies is going to be now. We saw huge hiring during the pandemic. It
Then there were major layoffs, and now it's kind of stagnated. Shopify had a total headcount of 8,100 at the end of December from 8,300 a year earlier. And you wonder with this new directive whether that will ever grow again. Klarna, as you mentioned, is another AI-forward fintech company that wants to decrease its headcount from 4,000 to 2,000.
You just wonder what this means for the overall picture for tech jobs. Another company thought, hey, what if we did Game of Thrones, but make it real? Colossal Biosciences announced yesterday that they had created three direwolves, which haven't existed on Earth in more than 12,000 years.
If Colossal sounds familiar, that's because it's the $10 billion company trying to resurrect the woolly mammoth and de-extinct a bunch of other lost species like the dodo and the Tasmanian tiger. But it surprised the world yesterday with the introduction of the direwolves, two brothers named Romulus and Remus, and their sister named, of course, Khaleesi. How did they do it?
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