New Technology / Big Tech
Monitor Big Tech strategy, platform competition, corporate decisions and structural shifts across the global technology sector.
Fed Fight And Apple Ousts OpenAI | The Brainstorm EP 116
Topic
Economic Policies and Market Dynamics
Key insights
- Jerome Powell was subpoenaed from the DOJ, threatening criminal indictment
- There has been a long line of macroeconomic initiatives from Trump
- Issues of affordability in housing and grocery prices are concerning consumers
- Consumer sentiment measures are soft around affordability topics
- Kathy expresses concern over the volatility caused by Fed officials market-moving statements
- There is a historical precedent of Fed interaction with the president during the late 70s
Perspectives
Discussion on economic policies, market dynamics, and the implications of tech partnerships.
Kathy Wood
- Highlights the threat of criminal indictment against Jerome Powell causing market volatility
- Warns that increased transparency from the Fed has led to excessive volatility
- Proposes a return to a commodity or Bitcoin standard to stabilize the economy
- Argues that the Feds current structure is flawed and needs reform
- Indicates that rising productivity is contributing to lower inflation rates
- Poses that the Feds actions are politically motivated ahead of midterms
Other Panelists
- Questions the implications of a 10% cap on credit card interest rates
- Discusses the impact of loyalty programs on airline profitability
- Analyzes the potential effects of the Feds mortgage-backed security buy order
- Critiques Apples reliance on Googles Gemini technology for Siri
- Speculates on the future of AI and its integration into consumer products
- Examines the political dynamics surrounding credit card legislation
Neutral / Shared
- Notes the significant lobbying power of the banking sector
- Observes the changing economic dynamics in the tech industry
- Mentions the potential for innovation in consumer finance
Metrics
interest_rate
over 20%
historical interest rates during Fed Chairman Volcker's tenure
High interest rates were necessary to control inflation, impacting mortgage affordability.
he had to take interest rates up to, you know, with surcharge is over 20% in some cases.
inflation
under 2%
current underlying inflation rate
underlying inflation is probably under 2%.
productivity
more than 2%
increase in productivity
Higher productivity can lead to economic growth and lower inflation.
if you look at productivity, it was more than 2%
unit_labor_costs
1.2 or 1.4%
decrease in unit labor costs
Lower labor costs can reduce inflationary pressures.
taking unit labor costs down to 1.2 or 1.4%
true_flation
1.8%
current true inflation rate
Accurate inflation measurement is crucial for economic policy.
true Flation, which is down to 1.8%
dollar_value_loss
99%
loss of dollar value since 1913
Significant loss of currency value impacts purchasing power and economic stability.
the dollar has lost 99% of its values since 1913
cereal_price
$5 USD
price of cereal considered outrageous at the time
High cereal prices indicate inflationary pressures affecting consumer goods.
I remember it was the first time cereal hit $5. A box. And that was outrageous at the time.
unemployment_rate
12%
current unemployment rate for 16 to 24-year-olds
High youth unemployment reflects economic challenges and impacts future workforce productivity.
the unemployment rate for 16 to 24-year-olds now, it is at 12%.
Key entities
Timeline highlights
00:00–05:00
The threat of criminal indictment against Jerome Powell is creating market volatility, impacting consumer sentiment on affordability issues.
- Jerome Powell was subpoenaed from the DOJ, threatening criminal indictment
- There has been a long line of macroeconomic initiatives from Trump
- Issues of affordability in housing and grocery prices are concerning consumers
- Consumer sentiment measures are soft around affordability topics
- Kathy expresses concern over the volatility caused by Fed officials market-moving statements
- There is a historical precedent of Fed interaction with the president during the late 70s
05:00–10:00
Increased productivity led to a decrease in unit labor costs, contributing to a lower inflation rate. This dynamic reflects a shift from wage-driven inflation seen in the 70s.
- Productivity was more than 2%, taking unit labor costs down to 1.2 or 1.4%
- In the 70s, cost push inflation came primarily from wages
- Donald Trump wants Jerome Powell to leave before the end of his term in May 2026
- Donald Trump aims to put his own person on the Federal Reserve board
- The dollar has lost 99% of its value since 1913
- Prior to 1913, the price level on average was flat with private money
10:00–15:00
Vulcar's focus on stabilizing the money growth rate at 3% aims to reduce inflation, potentially leading to a stronger dollar and a bull market.
- Gold was used as a guide during his tenure, leading to stable prices
- Vulcar aimed to reduce inflation by stabilizing the money growth rate at 3%
- Cereal prices hitting $5 was considered outrageous at the time
- Reaganomics policies contributed to a significant increase in the dollars value
- Trumps policies are seen as a continuation of Reagans, potentially driving the dollar up
- Unemployment rate for 16 to 24-year-olds is currently at 12%
15:00–20:00
High APRs are linked to loyalty programs, which significantly boost airline profitability, but their removal could lead to negative margins and credit card cancellations.
- High APRs are tied to loyalty and reward programs
- Delta Air Lines reported an operating margin of 10.5% with their loyalty program
- Without the loyalty program, Deltas operating margin would drop to negative 2.5%
- Other airlines like United, American, Alaska, and Southwest would face similar drops in margins
- A 50% drop in margin or interest rate would require issuers to adjust their underwriting models
- Issuers may need to cancel millions of credit cards or devalue rewards to maintain profitability
20:00–25:00
Legislation to cap credit card rates at 10% reflects a growing political push against banking lobby influence, potentially impacting consumer finance costs.
- Senators Warren and Sanders are often proposing issues related to credit card rates
- Legislation introduced by Bernie Sanders and Josh Hawley would cap credit card rates at 10%
- The banking lobby is strong and influential in Washington
- The health sector spent around $650 million on lobbying through Q3 2025
- The finance, insurance, and real estate sector spent just north of $500 million on lobbying
- Apple announced that Siri will be powered by Gemini this year
25:00–30:00
Apple's shift to paying Google $1 billion annually for search services results in a net loss of $21 billion, indicating significant economic challenges.
- Apple is reportedly paying Google around a billion dollars a year for search engine services
- Apple is losing $21 billion a year due to changing economic dynamics with Google
- Apples Apple Vision Pro is criticized for a subpar courtside experience for live sports
- There is a perception that Apple has lost its ability to curate quality experiences
- Apples current features, including Apple intelligence, are reportedly not used by many people
- Switching from one model provider to another is unlikely to improve usage