PayPal Enters Crypto Game with New Stablecoin & Warren Buffett is Crushing It Right Now

0:01Stop waiting for customers to fall into your funnel. It's 2025, and the same old strategies are, well, just kind of old. That's where Amazon ads can make a difference. Brands using four Amazon ad solutions saw dramatically higher growth compared to limited approaches. Our latest Marketing Brew article breaks down how they can help you reach customers everywhere they are, from prime video to Alexa to shopping with consistent messaging. Read the whole thing at marketingbrew.com slash amazon dash ads. Good Morning Brew Daily Show. I am Neil Freiman. And I'm Toby Howell. On today's pod, at 92 years old, Warren Buffett still has his fastball.

0:39And we'll tell you about one college major that is desperate for students. Then PayPal is dipping its toe into the stablecoin game, so we'll cannonball in to explain it to you. Plus, car bloat has infected our roadways, but bigger is not always better when it comes to our automobiles. It's Tuesday, August 8th. Let's ride.

1:04Neil, I have some sad news to report this morning. It looks like the room temperature, ambient pressure, superconductor dream is dead. More research has come in in recent days, and the general consensus is that LK99, the supposedly magic material, is more likely just a ferromagnetic material, which explains its levitating properties. So, Neil, we made a really cool magnet, but probably not a Nobel Prize winning conductor that will change humanity forever. The fight goes on. The fight goes on. We'll get there one day. But you know, the real superconductor was the lab partners we made along the way.

1:39Oh, man. I did want to jump in there and start mixing it up a little bit. But yeah, kind of the dream is dead. But it was just a fun time to see humanity. You can still try just like a different formula or different substance, different formulation. And hey, make it a cool magnet. That's not nothing. I've never made a cool magnet. Right, exactly. All right, let's jump into our top story. Yesterday was one small step for PayPal and one giant leap for your cousin who talks nonstop about crypto. The global payments giant yesterday launched a stablecoin called PayPal USD, becoming the first major financial technology firm to dip its toes into those waters.

2:17So stablecoins are cryptocurrencies tied to a more stable asset like the US dollar, which is supposed to make the tokens less volatile, more stable. since there is a real concrete thing behind it. They are less of a speculative investment like Bitcoin that you hope will grow over time and more a tool for interacting with the crypto ecosystem. I can move money between wallets or exchanges very easily using a stablecoin rather than having to deal with the traditional banking sector. They've been around forever actually, but regulatory headaches have prevented any traditional payment providers from using them.

2:52But PayPal decided now is the time to get into the stablecoin game because it hasn't exactly had a bannered year right now, down 33 % in the past 12 months, which is sixth worst performer on the NASDAQ 100. So Neil, do we like this move from PayPal? I think the question is whether this is anything new from PayPal, or it's just kind of what it's doing with Venmo in crypto dressing. Because when you're crypto wrapping, because when you're exchanging payments via Venmo, you're kind of doing something similar to a stable coin where you're just like sending money that's a representation of a digital dollar that paypal has on its reserves so a lot of the critics of this move are saying paypal this is just a money grab by them and not necessarily advancing the crypto cause yeah i mean it's not breaking any new grounds like it's not a new innovation but i do think there's kind of like three things that paypal was looking at that made it them say okay, let's jump into the stablecoin game.

3:51One is that I feel like they see regulatory clarity on the horizon because they wouldn't have made this move if there was some big regulatory crackdown coming down. So there's currently two bills sitting in Congress, one directly dealing with stablecoins. So I think they heard good things about what the result of that will be. And then two, the stablecoin market is kind of dominated by just a few names. The biggest name is Tether, which has a 67 % market share. And there's really only three or four other names that even have a foothold in it. So they're probably thinking, well, there's kind of some ripe for the taking.

4:24We're gonna jump in here. And then three, they definitely see it as a way to make a lot of money because I mentioned Tether, which is the largest stable coin. They could be on track to bring in$6 billion in revenue this year. So it's a crazy business. Yes. That stood out to me out of this whole entire thing, how much money Tether is making off this because basically they take customer deposits and then dump it into treasury bills. And treasury bills are yielding 5 % right now, and they don't have to pay yield on their stablecoin. So they're just reaping in billions, putting it in T-bills, getting 5%, and printing money.

5:00So what are they going to make, a billion dollars last quarter? And yeah,$6 billion for the year, which is more than BlackRock's profit. It's a great business. This is a crazy business. Yeah, it really is. And I mean, Tether has been plagued by some issues with, a lot of people are always wondering, is their reserves actually one-to-one to their stablecoin? And because, yeah, that's what they advertise, is that we have$80 billion in Tether. That means we have$80 billion in T-bills backing it. And so that's always been the controversy with Tether. But yeah, what a business. They're literally just minting money.

5:34There are a lot of critics of stablecoins. You talked about the regulatory crackdown that's coming. It's definitely operating in this murky financial space, and the Fed hates it because they don't have any oversight over it. And you talked about how you can exchange money and that it's kind of separate from the traditional financial system. The Fed has no regulation of it. So they're like, no, we kind of want to do our digital dollar thing, which is very similar. But it's ours and we can control it and we can see it. And the dollar will reign supreme. Meanwhile, all these stable coins are operating completely separately.

6:07And, you know, Jerome Powell has come out in the past few years and said, like, we don't like stable coins. They need a lot more oversight than they are because there have been some crazy blowups in the past. Terra was last year. Terra was a stable coin that went that did not was was not stable. It came off its peg. This is it's different than the PayPal one because this was an algorithmic stable coin, which is even SPF was like, yo, this is this is bad news. Like this could blow up at any moment. And it did. And it wiped out 40 billion dollars worth of investors cash, which is more than the FTX wipeout.

6:39This was a total disaster. It was huge. Yeah, big black cloud kind of over the crypto ecosystem. And then remember Meta tried to launch a Facebook, tried to launch one called Libra. And basically regulators said absolutely not just like absolutely killed it before it could even get a foothold. So I mean, PayPal is late to the game, which could be a good thing, too, because they've seen these failures in the past. And like they are just a giant payment provider. So we'll see how it how it pans out for them. Yeah, you might be able to use it in Venmo in the coming months and years, but it seems like it's first going to be adopted by sort of Web3 metaverse applications like micropayments and games and remittances between countries.

7:23Yeah, that's a big cross borders is a big use case for it, for sure. Right. All right. We have to move on to more traditional finance. Yesterday, Berkshire Hathaway stock reached a price of nearly five hundred and fifty two thousand dollars per share. And if that sounds like a lot, it is. It is a record high. The stock jump came as a result of Berkshire's earnings on Saturday that showed the company posted a record operating profit of more than$10 billion. Berkshire Hathaway, of course, is led by Warren Buffett, who at 92 years old is still running a steady ship over there. Berkshire owns and has stakes in dozens of companies across unsexy industries.

8:03The standout last quarter was the insured GEICO, which is performing a lot better thanks to lower advertising spend and fewer people getting in car crashes. With its latest stock boost, Berkshire's market cap has climbed to nearly$800 billion, making it one of the biggest companies in the U.S. It's larger than Tesla, larger than Visa, JP Morgan and Walmart. Got to say Buffett's slow and steady strategy is kind of a breath of fresh air in his social media hype filled days. He's still killing it. It is pretty crazy. And one of my big takeaways was actually Buffett and Tether have more in common than you might believe because Berkshire is sitting on almost$150 billion in cash, which is near its record high.

8:46And it's up from$130 billion in the first quarter. And it's loving these high interest rates right now because Berkshire is just plowing money into T-bills as well. And so they hold more than$97 billion in short-term treasury bills. and Buffett previously said he's been buying$10 billion worth of three months or six month T-bills every Monday. So they are just reaping in these cash rewards just like Tether is. They're sitting on a big pile of cash and these T-bills are doing really well for them. So is Berkshire. You know, it's also doing good for Berkshire? Tell me, Neil. Apple. Apple is crushing it for Berkshire.

9:23They reported$26 billion unrealized gain. Apple had a huge second quarter, jumped 18%. And yeah, Berkshire's Apple stake,$177 billion. Crazy. Yeah, no one, you know, Buffett never invests in tech companies. And he randomly took a flyer on Apple because he likes Tim Cook. And all of a sudden, it's now 45 % of its entire portfolio. Crazy. I mean, it's hardly a flyer, though, when you talk about Apple. I know, but he had never invested in tech stocks because he's like, I don't understand the tech world. I'm going to stay in oil and gas and insurance and Coke and American Express and Visa. and all these businesses that he understands.

10:01And then he just randomly invested, not randomly, but he invested in Apple. And now it basically is half of Berkshire Hathaway's stock holdings. And so that's kind of driving the gains for Buffett. And then I just want to quickly call out one of my favorite Berkshire investments, which he has a stake in five Japanese trading houses. And Japanese trading houses do pretty much everything from gas to salmon farming. They're involved in a bunch of commodities over in Japan and across the world. And a lot of people shy away from Japanese trading houses because they're like, these businesses are so complex.

10:36We don't really get what's going on. And that's exactly why I think Warren Buffett loves them because he's like, I'll do the research. I'll figure out why these complex businesses work. And they've done really well for him. He has a 10 % stake in almost in every major Japanese trading house in trading on the Japanese exchange, which is just such a Berkshire Warren Buffett move. He's playing chess. Yeah, 3D chess. And if you're wondering why Berkshire Hathaway stock price is$550 ,000 per share, which is kind of unheard of, it doesn't exist in any other place, it's because Buffett doesn't like to split the stock because he wants people who are only in it for the long term.

11:12Such a flex. Except now you can buy fractional shares of Berkshire. I just tried it yesterday to see whether it was possible on Robinhood and you can buy like$50 worth. So the thesis is kind of gone now with technology. But anyway, he's not splitting that stock. I love that for him. All right. Let's move on. Los Angeles has earned itself a new nickname. Strike City. More than 11000 city employees, including sanitation workers, LAX employees and traffic officers are walking off the job for a one day strike today to protest what they call bad faith negotiations by LA officials. The goal, according to the union's president, is to shut down the city of Los Angeles.

11:49So if you live there or are flying out of LAX like Ray, you might notice some disruptions today. But back to Strike City. Los Angeles is under the grips of many different strikes right now. The 160 ,000 person actors strike is the biggest single work stoppage in the country in over 25 years. More than 12 ,000 Hollywood writers are also on strike. Plus, thousands of hotel workers have also gone on strike periodically this summer to protest working conditions and pay. So I just crunched the numbers here. You've got four separate strikes happening in the same city on the same day today. Something's up over there.

12:24It is interesting because we have been talking a lot about the summer of strikes. But then if you actually look historically, this strike isn't the biggest strike year we've had even in the last decade. 2018 and 2019 both had more in terms of gross number of workers striking but a lot of those had to do with like more public sectors like right schooling and teachers so it is still a big summer and then if you really want to zoom out though into like the 50s 60s and 70s we were striking a whole lot more back then so yes this is still a very big year for strikes but in terms of historical context unions don't wield quite as much power as they once did and so it isn't quite as big a striking summer, as we might believe.

13:08That's because, I mean, I think a big part of it is the UPS workers didn't strike. That would have been 340 ,000 employees. Yeah, I do think it's more of the private sector angle. You know, maybe it doesn't raise the consciousness of America when you see like public sector unions strike because they are known to do that. There's this, you know, traditional contract cycle. But when you see private sector workers strike like Hollywood, uh hollywood employees starbucks uh employees at individual locations right it kind of just it's it it hits a little bit different and it creates this momentum this cascading effect where you know i think the fact that four different sectors are striking in hollywood right or in la right now at the same time is is not like a coincidence yeah yeah absolutely i do think it is crazy though too that yellow which is the big trucking company uh was going to go on strike.

14:01That had 22 ,000 workers. That actually went bankrupt, so we didn't see that materialize. And then, as we mentioned, UPS was going to go on strike. They didn't, which should be considered a big win for labor unions, but it won't be reflected in the data because they didn't actually go on strike. So I guess, are we comfortable with still calling it a hot strike summer? Absolutely. Well, the big thing next will be whether the United Auto Workers Union strike, because that's over 100 ,000 people. They're currently negotiating with the big three automakers up in Detroit and everyone's watching that to see that could be major disruptions.

14:35And then you could definitely call it a hot strike. Yes. Summer slash September. But I do want to talk about one Taylor. There's always a Taylor Swift. Oh, yeah, of course. Taylor Swift is playing in Los Angeles right now at SoFi Stadium, a six show set and a bunch of dozens of elected leaders in California and Los Angeles told her not to come because the hotel workers are striking and they wanted her to stand in solidarity with the hotel workers. And because if she came, then people would stay at a bunch of the hotels and pad the profits of the hotel, you know, the hotel owners that they say are stiffing their workers.

15:09So there's always a Taylor Swift angle. She's influencing GDP. She's influencing inflation. And now she's influencing labor relations. She truly can do it all. All right, Neil, before we jump into our next story, we're going to take a quick break. In America, half of every dollar spent on brand medicines goes to entities who don't make them. While middlemen like PBMs and 340B hospitals drive up costs, Biopharma is investing$500 billion in new infrastructure and manufacturing here at home and helping patients buy medicines directly at lower prices. Tell Washington to end middlemen markups and put American patients first.

15:50Visit phrma.org slash middleman.

16:26All right, Neil, you know how we love our segments and our alliterations. So I'm calling this next story Merger Monday because you guessed it. We're talking about two big old mergers that went down yesterday. The first merger that closed yesterday was between Campbell's and Sovos Brands, which is the parent company of Rouse, Pasta Sauce, and Noosa Yogurt. The deal was for$2.7 billion and promises to add another big name pasta sauce brand to Campbell's existing Prego line, which brings in$1 billion in sales each year. Neil, one interesting part of this merger to me was Campbell's CEO said that the brands are pretty much completely siloed.

17:04He said the two businesses really do not interact or compete. It's a different consumer, a different occasion. And that is, of course, because Prego is more affordable while Rouse is more upscale. pretty solid looking acquisition on paper if you ask it's a little expensive but so is rouse so yeah i think it's eight dollars for rouse versus three dollars for prego yeah you know what i really want to know any of these because i kind of make my own tomato sauce what a flex out of you but yeah no no campbell's this is interesting because this you know it's getting into this meals and beverages uh segment which is its biggest revenue generating line so you know it's it's chugging along with soup, but it bought a Snyder's Lance, which is this big potato or pretzel brand that also comes with kettle and Cape Cod chips.

17:51They, yeah. So they've definitely done this before where they kind of have the, uh, more common or just less expensive entry point. And then they buy a more premium brand. So they did that with their, their pretzels and potato chip brand. And now they're doing it with pasta sauces. Rouse is, it's pretty big though already. So that's the nervy part about this acquisition is that they already are available in 80 % of retail sites nationwide. And so a lot of people are looking at this merger and saying how much room to grow because Campbell's big thing that they can offer is distribution. And if you already have 80 % market penetration, like, all right, where's the run right here?

18:28You got to make Rouse pizza and pasta and kind of dominate the whole Italian dinner night home market. Exactly. All right, we have to talk about the other deal on Merger Monday. Simon & Schuster, one of the most prestigious and oldest publishing houses in the U.S., is being sold by its owner Paramount for$1.6 billion. So Rouse is worth more than Simon & Schuster. Okay. The buyer is not anyone else in the publishing industry, but KKR, the private equity giant. So book publishing meets high finance. Business world is never boring. Got to give it that. This deal has quite an interesting backstory, too.

19:05A couple of years ago, Penguin Random House, another big publisher, agreed to buy Simon & Schuster. But that deal was blocked by regulators because they were worried about too much concentration in the industry. There are only about five big publishers. So that deal would shrink the number to four, reduce competition, and harm authors, the government said. So Paramount was like, all right, we'll just find another buyer for Simon & Schuster. And KKR stepped up. Yeah, this one is personal to me because Simon & Schuster is the publisher behind Stephen King, which Stephen King is one of my, if not my favorite authors.

19:38So I hope they treat the property well. And it does look like they will treat it relatively well because the fear is always a big private equity firm comes in. It kind of optimizes for profit over anything else. But in the past, KKR has owned and sold RB Media, which was an audiobook company. And they did really well for RB Media. They doubled the size of its audiobook catalog. they sold it for a profit and then all the uh employees of rb media actually came out with a little payment on top so people from the industry are like this is it could be worse like kkr knows how to deal with like these kind of sensitive media properties also they are invested in axel springer axel springer which is the uh the parent company of morning brew so have good taste i would say so they know media they yeah they know media so well they're they're just buying up amazing assets in media.

20:32Exactly. All right, Neil, let's move on. We're back with another edition of Toby's Trends where I, a spry and sprightly Gen Zer, educate you a purposeful and poignant millennial. What's the difference between spry and... They both start with S and they are both synonyms. I'm really using the thesaurus when I come up with these intros, Neil. But let's talk about our trend. There's been a trend over the last decade in America that has seen the size of our cars balloon, something that experts have coined as car bloat, or as the French have named it, auto-obesity, which I love. So what are the signs that we have an auto-obesity epidemic in the U.S.?

21:10Well, as David Zipper, a Harvard fellow specializing in mobility, put it in a thread recently, 80 % of U.S. cars are now trucks and SUVs, and those trucks slash SUVs are only getting bigger. The Ford F-150 is now 800 pounds heavier and seven inches taller than in 1991. And EVs are only going to make the problem worse due to bigger batteries being more efficient. And Neil, I know this is my trend, but you're a big mobility guy. What are some of the second order effects of car bloat that we should be concerned about? Well, safety is, for one, it's terrible for pedestrians if you get hit by a freaking truck rather than a sedan.

21:49You can't see either. Like cars are so high now that if you're below a certain height, like a children or something like that, like you're below the eyeline. So yeah, definitely dangerous safety wise. I also want to talk about how much they cost. Oh, they're huge. Trucks and SUVs are a lot more expensive than sedans, which explains why you see so many of them, because they're far more profitable for automakers to build. And there was this recent stat that came from Edmonds, which kind of blew my mind. And in Texas and Wyoming, known for their love of big trucks and SUVs, More than one in four car shoppers last quarter committed to a payment of more than$1 ,000 a month.

22:30That's a hefty. And overall, the number of people who committed to a thousand or the share of Americans who committed to a car payment of more than$1 ,000 a month last quarter was 17%. And just to give you some context, in 2019, it was 4%. Yeah. Yeah, it's cars are getting so expensive and a large share. A large reason for that is because these bigger cars cost so much. There's so many parts that go into them. Yeah. And they're also, you know, great for automakers. But they are even even automakers are calling out. This isn't like some guerrilla warfare by, you know, mobility activists to say cars are getting so expensive.

23:09The CTO of Stellantis, he was asked by a reporter, like, what's the biggest thing that keeps you up at night? And he was like the weight of cars. Yeah, I also so heavy. They are really heavy, which is bad for roadways too, because it kind of pulverizes the payment. It's bad for tires because it puts a ton of stress on them. I do love what Paris's approach to this is because Parisian officials are saying the same thing, like cars are getting too big over there, which probably relative to the US, they're probably not as big. But they're trying to change the pricing of paid parking to make it progressive according to the weight and size of a vehicle, which makes a lot of sense.

23:43And then also, I just love that they call it auto-visity. I'm sure whoever came up with that were like, oh, this is perfect. Where was the country that was giving you parking tickets based on income? Oh, yeah. Remember that? That's different. Sweden. No, Sweden was doing speeding tickets based on income. Yes, and then this is parking tickets based on weight. But you can imagine I'm a family and I need a big car and I want to keep my kids safe in case of an accident. The other guy has a huge car also. So there's this kind of race to the top here, which I think is getting a little out of control and even auto execs realize it.

24:19All right. Finally, there's been a lot of fingernail biting over the demise of humanities majors like history and philosophy. And I would know as a history major, we are a dying breed. But there's another degree that's also seeing dramatically fewer students, petroleum engineering. According to an article in The Wall Street Journal, young people just don't want to work in the oil and gas industry anymore. Maybe this should have been your trend. Gen Z doesn't want to work in oil and gas. Here's some of the stats across U.S. colleges. The pool of new entrants for petroleum engineering programs has declined to its smallest sizes before the fracking boom began more than a decade ago.

24:55At Texas Tech specifically, the number of undergrads pursuing petroleum engineering has plunged 75 percent since 2014. There are a lot of empty classrooms, but this does not fit historical patterns. Typically, when oil prices rise, you see more workers in this industry because the Gittin's good. But take the period from 2016 to 2021. Oil prices doubled, but petroleum engineering graduates more than halved. Toby, the lack of qualified workers in this pipeline is a serious crisis for the industry. What's crazy, though, is the Gittin is still very good because post-graduation, petroleum engineers can earn 40 % more than computer science grads.