Morning Brew Daily Podcast Summary Episode: Why Companies Are Buying Bitcoin & Consulting Crashing Out?
Release Date: May 29, 2025
Hosts: Neal Freyman & Toby Howell
Duration: Approximately 31 minutes

Introduction

In this episode of Morning Brew Daily, hosts Neal Freyman and Toby Howell delve into two major business trends: the surge of companies investing in Bitcoin as a strategic financial maneuver and the alarming downturn in the consulting industry, highlighted by significant layoffs at major firms like McKinsey and Booz Allen Hamilton. Additionally, the episode touches on various other business and economic topics, including Nvidia's navigation of the U.S.-China trade war, the impact of celebrity distractions on the New York Knicks, and intriguing statistical phenomena like the birthday effect.

Why Companies Are Buying Bitcoin

GameStop's Bold Move

The episode opens with a discussion on GameStop's unprecedented decision to purchase 4,710 bitcoins, amounting to over half a billion dollars. This marks the company's first foray into cryptocurrency investment, aligning with a growing trend among public companies to diversify their assets through Bitcoin holdings.

Neal Freyman notes, "[...] buying bitcoin has become a popular strategy for an increasing number of public companies" and highlights that the number of listed companies holding Bitcoin has surged from 89 to 114 since April, amassing around 800,000 bitcoins worth $88 billion.

Strategic Advantages and Risks

The hosts examine the rationale behind such investments. Neal explains, "For every one bitcoin that they buy, they're rewarded with a 1.6x increase in valuation on the stock market," suggesting a synergistic boost between Bitcoin investments and stock market performance. However, Toby Howell brings a critical perspective, emphasizing that this strategy isn't a natural fit for most businesses, as illustrated by the example of crypto investment funds acquiring public companies to create asset pools.

Neal Freyman further elaborates, "They own $64 billion worth of bitcoin, but their stock market capitalization is $101 billion," highlighting the potential for valuation growth through strategic Bitcoin investments.

Consulting Industry Crashes

McKinsey's Workforce Reductions

The conversation shifts to the consulting sector, specifically focusing on McKinsey & Company, which has reduced its workforce by over 10% in the past 18 months. This marks one of the most significant layoffs in McKinsey's nearly century-long history, a stark contrast to its previous expansion during the COVID-19 pandemic.

Neal Freyman explains, "McKinsey has shed more than 10% of its workforce over the past 18 months as the consulting giant hunkers down for lean times in the industry."

Booz Allen Hamilton's Struggles

Similarly, Booz Allen Hamilton, a major player in government consulting, is cutting approximately 2,500 jobs. The firm has seen a decline in demand due to the Trump administration's crackdown on federal contracting.

Toby Howell adds, "Booz Allen's stock price fell nearly 17% after the announcement because they are so exposed to their 98% of their $12 billion in revenue comes from government-related work."

Underlying Causes and Future Outlook

The hosts discuss the underlying causes of these layoffs, including decreased demand for consulting services post-pandemic and internal challenges such as significant legal settlements. They also touch on the potential long-term impact of AI and ChatGPT on the consulting role, with Neal pondering, "there is one firm that's doing pretty good and that's McKinsey's smaller rival, BCG."

Nvidia and the U.S.-China Trade War

Earnings Report and AI Demand

Nvidia's recent earnings report is a focal point, showcasing robust growth in AI infrastructure demand with a 73% year-over-year increase in its data center business. Despite this growth, Nvidia faces challenges due to U.S. export controls restricting the shipment of advanced chips to China.

Neal Freyman summarizes, "Nvidia forecasted $45 billion in sales for Q2, saying its guidance would have been $8 billion higher if not for the export restrictions on China bound 820 chips."

Expert Insights from Phil at Macanomics

Guest Phil from the Macanomics YouTube channel provides deeper analysis, detailing the financial impact of Nvidia's compliance with export controls. He states, "Nvidia is saying that global demand for their products is alive and well," despite the losses incurred from unsold inventory and reduced margins.

Phil also discusses the broader implications, noting, "necessity is the mother of all invention," suggesting that U.S. restrictions may inadvertently accelerate China's domestic chip development.

Neal's Numbers Segment

1. New York City's Congestion Pricing

Neal presents $216 million raised in the first four months of NYC's congestion pricing initiative. This program aims to reduce traffic and fund transit improvements, charging drivers $9 to enter south of 60th Street during peak hours.

Neal Freyman highlights, "The daily average decline for cars entering the zone is 11%, and the average traffic speeds inside the zone have increased by 15% in the first two months of congestion pricing."

2. New York Knicks' Home Performance

The Knicks are underperforming at home with a 3-5 record this playoff season, despite strong support from celebrity fans. Speculation points to distractions caused by A-list celebrities sitting courtside, as voiced by former player Julius Randle and commentator Boomer Esizen.

Toby Howell muses, "I would do my job a lot worse if Timothy Schlamma Goo was dressed up as Guy Fieri yelling in my face."

3. The Birthday Effect on Mortality

Studies indicate a 7% excess death rate on individuals' birthdays. Various theories are discussed, including clerical errors in death records and the psychological notion of "death postponement," though evidence largely supports the existence of this statistical anomaly.

Neal Freyman remarks, "The statistical analysis has proven to be pretty robust across multiple experiences, experiments in multiple countries and states."

Final Headlines

Trump's Tariff Agenda Hits Legal Roadblock

A federal court ruled that former President Trump did not have the authority to impose certain tariffs under the International Emergency Economic Powers Act, creating uncertainty in trade negotiations.

Neal Freyman explains, "Without the looming threat of tariffs, countries have no incentive to come to the table with the U.S."

Hailey Bieber's Rhode Acquisition by ELF Beauty

ELF Beauty acquires Hailey Bieber's skincare brand, Rhode, in a deal worth up to $1 billion. This acquisition highlights the lucrative potential of celebrity-backed ventures in the beauty industry.

Toby Howell adds, "Rhode has grown to $212 million in revenue over the last 12 months, making it one of the fastest-growing companies in its sector."

Texas' Attempt to Become the New Hollywood

Texas is pushing a state bill offering $1.5 billion in incentives to attract TV, film, and video game production. However, the bill includes a provision that restricts negative portrayals of Texas, aiming to control the state's image in media productions.

Neal Freyman humorously comments, "The next Texas Chainsaw Massacre would probably have to be filmed elsewhere."

Conclusion

In this episode, Morning Brew Daily provides an insightful look into the strategic financial moves of companies investing in Bitcoin, the challenges plaguing the consulting industry, and the broader economic implications of trade policies and technological advancements. The hosts, along with expert guest Phil, offer a comprehensive analysis of these topics, enriched with engaging statistics and thoughtful commentary.

For more detailed discussions and updates, listeners are encouraged to visit Morning Brew's website and follow their social media channels.

Note: This summary excludes advertisement segments and non-content discussions to focus solely on the key topics and insights presented in the episode.