Federal Funding Bill's Market Impact & Goodbye to the Penny?
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Good morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the House passed a sweeping tax bill. We'll tell you what it means for the economy and for your wallet. Then RIP to the penny. The U.S. Treasury will stop minting one set coins in a matter of weeks. It's Friday, May 23rd. Let's ride.

If you're listening to today's episode on the Friday before Memorial Day weekend, well, you're committed to being informed. So why don't you prove it by coming to Morning Brew Daily's In Real Life Trivia Night on June 3rd, where you can create a team and compete against other listeners in what will be a really amazing night. Toby and I are hosting, of course, and we are hard at work writing questions that will entertain and delight. Plus, we can't wait to meet you all in person.

Here are the details. It's going to be in New York City, June 3rd. That's a Tuesday at 6 p.m. at a very trendy bar in the East Village. We can't tell you the exact location on air. That comes when you sign up for the event, which you can do by following the link in the show description. I am so excited for this, Neil, because it means we get to hang out with you all in person and be wildly impressed with how smart and plugged into the news cycle you guys are. So once more, June 3rd, 6 p.m. in the East Village, June 3rd.

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You may not have been productive at work counting down the hours till MDW, but the House of Representatives was. Republicans in the chamber passed a sweeping tax and spending package they've dubbed the one big beautiful bill that will have major implications for the U.S. economy and your personal finances. The bill is indeed big.

containing a smorgasbord of GOP priorities. It extends President Trump's tax cuts for all income groups from 2017, which were set to expire at the end of this year, and heaps on even more tax relief on top of that, including a bigger child tax credit, a higher standard deduction, and the elimination of taxes on tips, overtime pay, and Social Security benefits. It also ramps up spending on certain things like border security, national defense, and support for farmers.

It decreases spending on certain things, too, like Medicare, food aid, and tax credits for clean energy projects. But that's not enough in savings to account for the lost revenue from the tax cuts. Independent analysts estimate that the bill will increase budget deficits by about $2.7 trillion over a decade, which has spooked the bond market in recent days by worsening the U.S.'s already concerning fiscal situation.

Democrats don't find this bill beautiful at all, calling it a reverse Robin Hood situation in which the government is taking from the social safety net to fund tax cuts for the wealthy. But they're not in the majority. So even though no Dems voted for it, it may become the law. And I say may because as you know from Schoolhouse Rock, the bill will now head to the Senate, which must also pass it before President Trump makes it official through his signature. So Toby, a long way to go, but this sweeping tax bill is one step closer to reality. So

So let's start with how this might affect your tax bill, though. More than 8 in 10 households would get a tax cut in 2026 under this bill's current form. The average household is looking at a 2026 tax cut of around $2,900 compared to what it would pay if those 2017 cuts actually went in expired. So pretty solid there. But also 60% of those tax cuts would go to the top 20% of households who

with more than one-third going to those making over $460,000 or more. If you're a family, you're also going to stand to benefit from this. There's a temporary $500 increase in the child tax credit, plus all newborns are going to be given $1,000 in this kind of unique concept called a Trump account. It's fueled by a one-time deposit by the federal government. So if that bill passes, parents can contribute it.

to that account and would just go towards a broad base market tracking the US stock index. So that is kind of the play by play of who specifically is going to affect, which is a wide and broad swath of people. It will also disproportionately help higher income earners in New York, New Jersey, California, these high income states, because there's this SALT

tax deduction, which was probably the biggest sticking point of the bill, the state and local tax deduction, which was capped at $10,000 in 2017. That is now expanding to $40,000 up until incomes of $500

thousand dollars. That's a big win if you're a property owner in the northern New Jersey suburbs listening to this or New York or any other higher tax jurisdiction, because you are going to be able to deduct a lot more of your taxes now under the new cap for the next few years. And then I also want to talk about what this bill did to clean energy in order to get it across the finish line. Congress basically completely cut

clean energy credits, which is a big blowback to renewable energy companies, specifically rooftop solar companies who stood to benefit from a lot of these clean energy kind of rebates under the Inflation Reduction Act. Those credits are now set to go away in 2028, and you saw that reflected in the market. Sunrun, the biggest rooftop solar company in the country, fell 3%.

37% yesterday. So this was kind of like Armageddon for a lot of those clean energy solar companies, as well as wind companies, anyone really who is standing to benefit from those IRA tax credits. So looking ahead, the Senate still has to pass this bill before it heads to president Trump's signature desk for his signature. There could be a lot of wrangling and it might be in response to what's happening in the bond market. Yesterday, we saw 20 year bonds and 30 year bonds, uh,

go above 5%. Remember, they've been tracking up for the past few months. They hit 5% yesterday, which is a very spooky level. It means that borrowing costs are going up across the economy. If you're going to finance a car, if you're going to mortgage your house, we have mortgage rates at over 7% now. So that is raising borrowing costs across the economy. And the reason for that is bond investors are very concerned about the United States'

fiscal situation. We just had this Moody's credit rating cut on Friday. And the general feeling right now with this bill adding two point seven trillion dollars to deficits is that the United States is getting into is digging itself into a deeper and deeper hole. And when bond yields go up, that means that's basically a proxy for how much it costs the government to borrow. So we are already paying one point one trillion dollars in interest payments.

per year last year. And now we're going to have even, you know, when you borrow money, it's going to the interest payments are going to continue go up. So the bond market is throwing a bit of a tantrum. We'll see whether lawmakers respond by paring back some of the deepest cuts of this bill. Moving on, the penny has entered a heads I win tails you lose scenario with the U.S. Treasury. One cent coins are being officially phased out. According to The Wall Street Journal, the Treasury Department will stop

putting new pennies into circulation by early next year, instructing businesses to get ready to round prices up or down. You don't need to pay a penny for the government's thoughts to figure out why they pulled the plug. There has been a long bipartisan effort to ditch the lowest unit of American currency, spanning from Obama to Trump, primarily due to costs.

The mint expects to save about $56 million a year through reduced material costs after putting an end to the most confounding of currency calculus. Each penny is worth only one cent, but costs nearly four cents to make. Add it all up and the US lost more than $85 million last year on the coin.

As for what is going to happen to prices, non-cash transactions will still be priced in exact increments, but businesses will have to round prices to the nearest 5 cents for cash transactions. Neil, it was probably time. 60% of actively circulating coins sit in coin jars, according to the Federal Reserve. But still, the penny is so much a part of American culture. Penny stocks, a penny saved is a penny earned, offering your 2 cents cashless.

it's hard to imagine life without it. And it will still stick around. And that's because we're not eliminating the concept of the penny. We're just eliminating the actual coin itself. That's exactly what our friends to the north did Canada in 2013. They eliminated the penny, but prices online specifically will probably stay in the

range. You'll probably buy something for $2.11 or $2.16 because when you pay with a credit card, you don't need to pay with an actual penny itself. So it'll be very interesting to see how retailers play this to say whether you go into a store and you see a cash version, a cash price for a particular good that's rounded up to $0.05 or you see a credit card price that is the exact change that you would pay typically in cash, but you're

with a penny, but you wouldn't any more. So we'll see how retailers play. It's going to be very interesting. It hasn't really shaken up things in Canada. They've been in this new regime for 12 years. They have the concept of the penny, but they don't have a one cent coin itself. It's worked out just fine. Yeah. And no need to go and throw your pennies away right now if you even have any, because they will remain legal tender. You can pay with them

And then also fewer than one in five payments are actually made in cash, according to the Federal Reserve Bank of Boston. So it's not going to rock a lot of boats. A lot of people are already tapping their Apple Pay. They're paying with credit cards. And yeah, Americans throw away up to $68 million in coins a year. So it's not like people are really using these things a lot. One thing that is interesting

A second-order effect of this is that if pennies go out of circulation, what's going to become more in demand? And that are nickels. And the nickel is a disaster when it comes to its production costs. Obviously, a nickel is worth $0.05. It costs about $0.14 to produce in the last fiscal year. So that's

up 20% from the year before. So you're saying like, hey, we're trying to save money here by phasing out the penny. The nickel might be even more costly. Barbenheimer, it ain't. But this weekend's box office matchup of Mission Impossible versus the live-action Lilo and Stitch is certainly popcorn-worthy. Just to set the stage, Mission Impossible The Final Reckoning is set to hit theaters as the last installment in what's become Hollywood's greatest act

And then...

there's Lilo and Stitch, Disney's live-action remake of the 2002 cult classic featuring a little blue alien who causes chaos on Earth after crash-landing into Hawaii. While flying under the radar for more than a decade, Stitch has turned into IP gold for Disney, attracting legions of fans who were born in

years after the original came out. On Disney+, for example, Lilo & Stitch content is viewed about as much as The Little Mermaid. So listeners, which movie do you think is projected to earn more at theaters this weekend? The answer is Lilo & Stitch, which is expected to gross more than $165 million domestically, which would be as monstrous as its title character. Mission Impossible is also...

supposed to perform well, but not as well with projections of around $80 million. Toby, in the double feature, which are you seeing first? Well, first of all, I'm trying to come up with the Barbenheimer version of this. And all I got is Miss Stitch and Pasa Lilo or Mission Stitch Pasa. They're all bad. So don't even try to stitch them together, I guess, pun intended there. But yeah, Lilo and Stitch is just this movie that has gained so much groundswell. It was originally supposed to just be

a direct-to-streaming sort of thing. But then over the last five years, Stitch has just exploded in terms of its popularity. You just look at the merch sales. Just five years ago, they were pulling in $200 million from this franchise, which isn't bad. But then that has swelled to $2.6 billion in Disney's last 2024 fiscal year. So there has just been this groundswell of support, a lot of it from young women who grew up watching the original film and have kind of aged out

into their lives and still just have very good nostalgic memories of it. But it's also brought in a lot of new fans as well. And Disney is on it with the merch. They're putting it on everything from dog collars to pineapple-shaped goblets. They are going hard in the paint on this because they remember when they released 2013's Frozen, no one could get Elsa dresses anywhere. And it was just this huge crunch from parents. They know the merch aspect of this calculus is very important. So they are just...

printing like you wouldn't believe the amount of merch. So will this be a record setting weekend? It could possibly because the record for Memorial Day box office grosses was in 2013 when we had Fast and Furious 6, which is maybe the only analog that you have for the longevity of Mission Impossible, was paired with The Hangover Part 3. So that's what Lilo and Stitch and the final Mission Impossible are going after. The

expectations for Lilo and Stitch has just gradually got higher and higher and higher over the past few weeks. Just four days ago, it was 120, just three weeks ago, it was 120 million. Now it's 165 million. So there's been amazing groundswell of support for Lilo and Stitch. This thing is going to be a behemoth at the box office. Up next, let's talk about our stock of the week and dog of the week.

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It's time for Stock of the Week, Dog of the Week, the segment where Toby and I pick one stock that's already at their lake house and another that's sitting in bumper to bumper traffic. I won the pre-show javelin toss, so I get to go first. And my Stock of the Week is Bitcoin, which celebrated Bitcoin Pizza Day this week by reaching an

all-time high at over $111,000 per token. That is a 45% increase from its 2025 low on April 8th and can be chalked up to a variety of factors. One, investors everywhere have piled into riskier assets as Trump walked

back his many tariffs. Two, Trump's pro-crypto agenda is advancing with a bill regulating stablecoins passing a key Senate hurdle. And three, Bitcoin is seeing a lot more institutional money. The number of Bitcoin held by public companies has jumped 31% to about $350 billion since the beginning of

the year, accounting for 15% of the total Bitcoin supply. Even Bitcoin hater Jamie Dimon, who leads JP Morgan, said, I defend your right to buy Bitcoin and said the bank would let clients invest in it. It's another I told you so moment for crypto's biggest advocates, including Michael Saylor of MicroStrategy, a company that pioneered the concept of stashing its cash in Bitcoin. On Wednesday, he wrote on X,

If you're not buying Bitcoin at the all-time high, you're leaving money on the table. So Toby, here's Bitcoin once again flexing up 18% for the year compared to the flat year-to-date performance of the S&P 500. Who would have thought Michael Saylor would say such a thing as that? But yeah, it was a big day for Bitcoin, not just because it reached an all-time high, but also there was this big gala that Trump hosted last night where he brought in hundreds of the top investors in his meme coin,

aka Trump coin, for this intimate private dinner where he just spoke about his vision for crypto in the economy ahead. The price of admission ranged anywhere from $55,000 all the way up to $37.7 million. They hosted this big competition. Whoever was holding the most coins over a certain period got to have dinner with Trump. And there was a lot of protesters outside saying like, hey, this is exactly what we don't want. You do not necessarily want

a means of exchanging access to the president by buying his coin, especially if it comes to foreign investors as well. So two kind of things were happening in parallel here that Bitcoin hitting an all-time high in this big dinner with access to the president, which just shows the place crypto occupies in our country right now. My dog of the week is Nike because it just did the business equivalent of crawling back to your ex five years later saying, you were right, I needed to work on myself, but please take me back.

Yep, Nike is back selling on Amazon after a self-imposed breakup in 2019 to focus on their own DTC sales and crack down on counterfeits and low-quality items. The deal is a win for Amazon, who has been trying to attract more high-end brands back to its platform. But for Nike, it represents the unwinding of a strategy that led to a 35% drawdown in its share price over the last five years, where it shunned wholesale partners to focus on its own website sales.

However, that strategy pivot was kind of overshadowed by a bigger announcement too yesterday. Price hikes are coming. Starting June 1st, some Nike gear will cost up to $10 more. You can expect to pay $5 more for sneakers under $150 and $10 more for any above that range.

New CEO Elliot Hill is trying to reverse a revenue slump that's lasted longer than a pair of beat up Air Force Ones. But when that turnaround plan involves higher prices and a return to Amazon, you get the muted response from the market we saw this week, Neil. The company's sales dropped 9% last quarter, 17% drop in China, and its digital sales are also going down the toilet in Europe, the Middle East, and Africa.

E-commerce sales were down 25%, Greater China 20%. Their current strategy, especially online, is not working, which is probably why you see them going back to Amazon. They thought they could just be the storefront themselves and really tighten the distribution path.

for people buying Nikes. And now the fact that they're going, crawling back to their ex, going back to Amazon shows that whatever strategy they were pursuing, which was really tight in that window, it was not working at all. Elliott Hill came in last year with a mission to turn around the company. It has proven very difficult to do. He's been there for many months and you don't see any movement in improvements. Yeah, one of the big strategy mistakes that they're trying to recover from is they leaned way too heavily on Amazon

their workhorses, their classic sneakers like Air Force Ones, the Jordan line, their Pegasuses to kind of juice demand online. But they kind of overproduced a lot of those SKUs. And now they're trying to push people back to more of their full price sneakers, stuff like Air Max shoes with

a focus on running as well. So it's just fascinating to see like the Renaissance of Nike is passing through Amazon, which is not necessarily something that you would equate with returning the luster to the brand. So I don't know, Elliot Hill still has only been there for a little bit, but yeah, this turnaround is looking harder than initially expected.

Let's sprint to the finish ahead of the long weekend with some final headlines. President Trump turned his war against Harvard up to volume 11. His administration blocked the university from enrolling international students and forcing the existing ones to transfer or else lose their legal status by revoking Harvard's student and exchange visitor program certification. In a statement, the Department of Homeland Security cited Harvard's

unsafe campus environment that permits, quote, anti-American pro-terrorist agitators to harass and physically assault individuals, including many Jewish students, and otherwise obstruct its once venerable learning environment. Harvard responded that the move was unlawful and will support its international students who currently make up 27% of its student body, up

from 20% in 2011. Critics said the move amounted to America shooting itself in the foot by turning away the best and brightest from coming to study here, and it would certainly leave Harvard in a gaping financial hole. Yeah, Harvard says it's got nearly 10,000 people in its international academic population, and also those people are...

paying more to attend the institution when room and board are included, the total cost usually adds up to around $87,000. So that is going to be a massive financial hit. And it just adds to the financial pressure that Harvard's already facing. Remember, the Trump administration has already frozen more than $2.6

billion of Harvard's funding. They've cut off future grants. They've also called for it to lose its tax-exempt status. So this is just the latest in a series of financial blows. Which means you'll probably see a legal challenge that blocks us from going into effect, which it would in the next few days. They could seek an emergency injunction.

Something's happening later today that hasn't occurred in over 10 years. All six of Oscar Meyer's Wienermobiles will be in the same place, but this meetup won't be friendly. The Wienermobiles will race against each other at Indianapolis Motor Speedway in the inaugural Wienie 500, a promotional event ahead of the Indianapolis 500 on Sunday. And the stakes are

couldn't be higher with regional hot dog supremacy on the line. Each Wienermobile will represent a different regional hot dog, the New York dog, the Southeast Slaw dog, Chili dog in the South, Chi dog in the Midwest, Seattle dog from the Northwest, and Sonoran dog from the Southwest in the ultimate test of toppings. Who you got? I

I'm going New York, baby. Hometown favorite here. But the Weenie 500 might be the greatest idea in human history. The issue is that these things are not great cars, however. Their long wheelbase makes their turning radius about the same as a battleship. So don't expect the Wieners to pick up any lap time through the corners. But on the straights,

Also don't expect them to pick up much time either because these winter road deals ride on an Isuzu NPR truck chassis powered by a gas fed 330 horsepower, six liter General Motors V8 engine, which means they can go zero to 60 in, wait for it, 24 seconds. So yes, Neil, these things are not built for speed, but they are built for spectacle. Yeah.

Finally, Dr. Beach is back doing the thing he does best, ranking beaches on the internet. Stefan Leatherman, a coastal scientist at Florida International University who goes by Dr. Beach, has updated his annual beach rankings and we have a new number one. Cooper's Beach in Southampton on the eastern end of Long Island is, according to the doctor, the best beach in the U.S., just beating out Wai'lai Beach in Maui.

What are the doctor's qualifications, you might ask? He's been ranking beaches since 1991 and uses a 50-factor checklist to evaluate everything from the presence of algae to the cleanliness of the air and water. In total, beaches from Hawaii, New York, and Florida dominated the list, but Cooper's came out on top. It's a

big, beautiful beach, Leatherman told CNN in an interview. Dr. Beach is a legend. I mean, he just commits to this so hard and he takes it very seriously, which means we should take it seriously too. And one thing I want to point out from this list, know California. California, very famous for its beaches, got...

snubbed from the list in favor of a lot of Hawaii, a lot of Western Florida, and then some Northeast with Cape Cod and Long Island. I was actually passing by Cooper's Beach last year, and then I saw the hordes of crowds. And I was like, I think I'm just going to keep driving. But it does seem pretty awesome. I know. I'm confused at how he's got a 50-factor checklist, but crowds and crowding isn't necessarily one of them because he did mention the fact that you're going to have to deal with

traffic on the way to this Long Island Beach. And then also there's very high cost of parking as well. He recommends taking a free shuttle from downtown South Hampton, but I would, I'm kind of on the Dr. Beach is not necessarily correct train because I like the sugary white sand of like Florida from Clearwater Beach and whatnot. He's more of like the overall sandbag

setting and if it's more natural. So I remember dating back a few years ago on this podcast, I've had a little bit of beef with Dr. Beach, but I do like seeing Florida well-represented here with two beaches making the top 10 list. Cape Cod in Massachusetts also made it as well. So Dr. Beach, he's got a good bit going. Go check out Cooper's Beach in Southampton.

That is all the time we have. Thanks so much for starting your morning with us and have a wonderful Memorial Day weekend. Just so you're aware, on Monday, Memorial Day itself, we are putting out a special interview episode. So be sure to tune in as you're driving back home. Then on Tuesday, we'll be back to regularly scheduled programming. To repeat, Monday's special episode, Tuesday, back to the classic format.

And also don't forget to head to the show description to sign up for trivia night that is going down on June 3rd. If you have any thoughts on today's episode, send an email with questions, comments or feedback to Morning Brew Daily at morningbrew.com. 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. Scoop Stardaris is on audio. Hera Makeup wants to hear from Dr. Lake.

Devin Emery is our president and our show is a production of Morning Brew. Great show today, Neil. I wish you all well.