Morning Brew Daily - Bitcoin Soars Past $120K & Delta’s Clever Way to Dodge Tariffs

Episode Date: July 15, 2025

Episode 626: Neal and Toby dive into Bitcoin hitting another record high just in time for ‘crypto week’ in Washington. Then, Delta has a clever way to avoid import tariffs on new airplane parts, and they’re not the only ones doing it. Plus, Kraft Heinz is on its way for a break up after its doomed merger in 2015. Meanwhile, Toby talks about the trend of ‘superfake’ luxury items that are nearly indistinguishable from authentic luxury.  Meet your local home loan expert at ⁠⁠https://mortgagematchup.com/?utm_source=morning_brew&utm_medium=podcast  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. Listen to Morning Brew Daily Here:⁠ ⁠⁠https://www.swap.fm/l/mbd-note⁠⁠⁠  Watch Morning Brew Daily Here:⁠ ⁠⁠https://www.youtube.com/@MorningBrewDailyShow⁠ 00:00 - Trivia Tonight! 02:50 - Bitcoin Boomin’ 08:20 - Delta Ducks Tariffs  12:15 - Kraft Heinz Breakup  17:00 - Luxury Knockoffs  21:00 - Headlines  Learn more about your ad choices. Visit megaphone.fm/adchoices

Many employees can't afford a hefty medical bill that pops up out of the blue, but it happens. And employees who are financially stressed are, understandably, more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, AFLAC plans help with out-of-pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more at aflac.com slash morningbreedaly. That's aflac.com slash morning bradale. Good morning, BrewD Daily show. I'm Neil Fryman. And I'm Toby Howell.

Today, companies are dipping into their bag of tricks to avoid paying tariffs. Then it's crypto week in the nation's capital and Bitcoin is Soren. It's Tuesday, July 15th. Let's ride. We are so excited to see you all tonight for the second Morning Brew Daily bar trivia. Toby and I have been hard at work, cooking up questions that will test and possibly break your mind-bond. and spirit, but also we're just pumped to meet listeners and have you tell us we don't look at all like you expected.

And if you're not in New York, congrats on your cheaper rent, but we want to include you to tomorrow. We will be posting the trivia questions online so you can play with your friends, family, coworkers, and you can also get mad at how hard Neil made some of the questions last time he got booed. But yes, super excited to see everyone in person tonight, our second trivia night of many more going forward. check that email for the exact time and location and bring those thinking caps.

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licensed in all 50 states and the District of Columbia. Congress kicked off its Crypto Week yesterday, aiming to push forward legislation that will bring the once maligned industry fully into the mainstream. Bitcoin has been ripping in the lead-up to Crypto Week, vaulting higher than one. $120,000 per token this weekend. It's up nearly 30% this year after doubling in 2024. Let's just take a step back for a sec. If you told somebody less than three years ago that lawmakers would be holding what is essentially a week-long celebration of the crypto industry, they'd have looked at you the way Larry David looks at anyone. Back in November 2020, the crypto exchange FDX collapsed as a result of massive fraud. Bitcoin fell to $16,000. And the industry lay in

ruins its reputation in tatters. The next year, Jamie Diamond said of crypto, if I was the government, I'd close it down. Warren Buffett had previously called Bitcoin rat poison squared. Well worn, you may have missed the boat on this one. The crypto industry soldiered on post-FDX, hoping that its most toxic baggage had left it for good. Companies poured hundreds of millions of dollars into the Trump campaign and other pro-crypto candidates, hoping to find allies in government after being nearly sued into oblivion by a skeptical Biden administration. The Gambit worked, and it's all led up to this Crypto Week in which Congress will debate three separate bills that would provide the clarity the industry has desperately craved. The idea is that a clear rules of the road would supercharge adoption and investment and legitimize crypto as a pillar of mainstream finance.

Toby, how are you celebrating Crypto Week? I'm celebrating by digging deep into these three pieces of legislation. Super fun. Yeah, I got to get to the nuts and bolts here. First, there is the Genius Act. Again, I'm not going to go through and tell you what they all stand for. We're just going to call this one the Genius Act. This one has to do with stable coins.

A lot of companies like Walmart, these businesses, have considered issuing stable coins to their customers as a means to you speed up payments. This has already passed the Senate, and basically companies are just looking for more legal certainty around and clear regulatory rules around what is allowed, what are considered securities, what are considered commodities. that's what the Genius Act focuses on. Then there's the Clarity Act. That would block federal agencies from using court rulings to extend regulatory power, ensuring that Congress, not the courts are the ones that are defining how crypto assets are going to be classified and are going to be governed. And then finally, there's the anti-CBDC surveillance state act. That one's a bit of a mouseful. That would prohibit the Fed from issuing a digital central bank currency, which is something that's been floated around over the years.

The reason behind this is that they don't want government surveillance of these digital assets. So those are the big three right there. Those are what is making Crypto Week, Crypto Week. We'll see most of them do have pretty good support. Again, the Genius Act has already passed through the Senate. But those are kind of what people are focusing on right now. Right. And the Republicans who are bringing this legislation have been hugely supported by the crypto industry,

which is getting exactly what they paid for. in terms of supporting these candidates. There is some opposition from the Democrats who say that these bills don't provide enough consumer protections around crypto. They point to what happened, as I mentioned, in 2022 with FDX and a number of the other frauds and scams associated with the industry. So far, it seems to have shed that reputation in the past few years as it's moved more into the mainstream.

And one of the tactics of how it's done that is these companies pioneered by, the company Micro Strategy are essentially turning into Bitcoin Treasury companies where their sole purpose as a company is to raise money to buy Bitcoin and Ethereum and other cryptos and hold them on their balance sheet. Investors are paying a premium to buy the stocks in these companies. Micro Strategy right now holds over $70 billion worth of Bitcoin, but it's worth over $120 billion on the stock market. So you see that delta there and how much of a premium micro strategy and other companies are getting when they do this particular maneuver. So more corporate holding of Bitcoin is also sending it much higher.

Yeah, let's talk a little bit about the institutional demand for Bitcoin. Let's go back to the price at the beginning of Donald Trump's re-election. It was $69,000 at its close on election day. Right now, it's over $120,000. So it's gone up by about 75%. And a lot of that is coming from institutional demand and inflows into these Bitcoin ETFs. On Thursday, Bitcoin ETFs logged their biggest day of inflows in 2025. 1.18 billion dollars in one single day flowed into these ETFs. They've become just a massive moneymaker

for these ETF issuers as well. And then this final angle, too, that we should talk about, that crypto people do love talking about, is that the dollar has been weakening over, you know, the beginning to Trump's second term. Bitcoin is up 28% year to date, but the dollar are down about 10%. So as Bitcoin, you know, grows more valuable in terms of USD. Part of it is because USD is weakening itself. So it's a bit of a one to two punch that creates the illusion that your Bitcoin is worth more USD. Now, of course, CryptoPurists say that one Bitcoin is worth one Bitcoin. They don't even measure it in terms of dollars. But it just goes to show you how much, you know, Bitcoin has increased since Trump has started his second term and how

much of that is powered by these institutional buyers. They say that necessity is the mother of invention, and boy, ain't that the truth for companies trying to avoid tariffs and preserve their slim profits. Take Delta, for example. Bloomberg reported that the airline is ripping engines off its new Airbus planes in Europe, then sending them to the U.S. to put them on other planes so they can enter service. It's a bit of trickery to avoid paying 10% tariffs that Trump put on aircraft made in Europe. So how does this work exactly? Well, the new Airbus planes in Europe aren't allowed to fly yet because their seats haven't been certified by regulators. Since these planes are twiddling their thumbs in the parking lot, Delta is borrowing their American-made engines to use on its airbus planes that are in the U.S.

planes that are also not able to fly because of an engine issue. So Delta is managing to grow its fleet and avoid paying tariffs a win-win. This all may seem like a heck of a lot of work to not pay 10% more. But for a company like Delta, the tariffs add up. Aircraft costs billions of dollars. So 10% on that is a significant tax. Plus, airlines have slim profit margins. They're trying to protect at all costs. During Delta's earnings call last week, CEO Ed Bastion was adamant. We are not planning to pay tariffs on aircraft deliveries, he said. The hope is that the EU and the U.S. were got a trade deal that eliminates aircraft tariffs and allows both sets of planes to eventually get airborne.

I mean, back in January, Delta predicted 2025 would be the best financial year in the company's 100 year history. And now they are stripping engines from new jets in Europe and shipping them over to grounded planes in the U.S. It just shows how much the macro environment has changed in a few months. Delta is far from the only company doing this or have done this in the past. Tariff engineering, whatever you want to call it, has been around it for decades right now. I mean, go back to Snuggies. they got classified as blankets instead of garments, which dropped their tariff rate, basically cut it in half.

Converse has one of my favorite instances of this. They added that felt to the souls of their Chuck Taylor's, and they can actually classify them as slippers instead of normal athletic shoes. That drops their tariff rate by almost two thirds. And then Marvel tried to argue that his X-Men action figures were non-human toys instead of dolls, which again cut the tax, right? Again, they are trying to find the smallest of margins, the smallest of definitions to reclassify one thing as another in order to save tariffs.

So Delta is figuring out one way to do this, but they're not the only company to do this in the past. No, and a big tariff trickery or sort of tariff engineering that you're seeing also happen right now is all these factories moving from China to Vietnam. Chinese goods right now face a tariff anywhere from 40 to 50 percent. Meanwhile, as a result of a trade deal announced with Vietnam, there is a tariff rate of 20% there. So, China, Chinese and Hong Kong companies have set up more than 800 new investment projects in Vietnam in order to basically make their goods just in another country so they can get them into the United States at a lower tariff rate. Meanwhile, while all this is happening, the GOJ is beefing up its trade-related criminal enforcement and hiring a ton of lawyers to go after tariff cheats because they're going. This is a big source of revenue for the government as has emerged in recent months.

And they want to crack down on all this trickery as much as possible. We should say there is a legal tariff trickery like lying about your products value or lying about where it came from? And then they're this sort of exploiting loopholes like the Chinese manufacturers are doing in Vietnam or what Delta is doing or what Congress and X-Men have done in the past. So you're seeing companies find every way they can to save as much money as possible. possible as a result of the tariffs. Kraft Hines is giving investors the same spiel your high school girlfriend gave you, explaining why breaking up is really the only way to move forward. The snack conglomerate is preparing to separate its grocery businesses from its sauce and spreads business. That means, as Bloomberg astutely put it, it is working to split its ketchup from its hot dogs.

The logic behind the breakup is that not all Kraft Hines products are created equal. The company divided its products into three tiers with brands like Heinz ketchup. in Kraft Mac and Cheese at the top, Jello and Capri Sun in the middle, and Oscar Meyer meets and Velvita cheese bringing up the rear. It wants to shed some of those meats and cheeses at the bottom of the pile,

which are falling out of favor with consumers to focus on faster-growing units like hot sauces and condiments, though according to reports, is still working out which brands would be spun out. The breakup would mark the end of a rocky relationship dating back to a 2015 merger

engineered by Warren Buffett's Berkshire Hathaway that was supposed to create a packaged food giant. Instead, things curdled like cheese left in a hot lunchbox, with the stock falling more than 60% since the companies combined are racing $57 billion in value. Neil Kraft-Hein's power ranking meats, cheese, sauces, and desserts to satisfy shareholders. Sounds a lot like my middle school lunch table trading economy. The cheese that Kraft Heinz makes probably won't curdle in your hot lunchbox. It won't do anything because it is so processed. And that is the main.

problem here. Per capita consumption of natural cheese is up 3.6x over the past five decades, while processed cheese consumption hasn't budged at all, cheese and dairy made up 14% of Kraft Heines's revenue in 2023. That's down from 21% just seven years earlier. Now, you know, I may not want to admit this, but I'm a huge craft singles guy. Like, I think that is elite cheese, but it's clear that consumer tastes are moving away from processed meats like Oscar Meyer and processed cheese like singles and Valvita and moving towards more natural, healthier, cheaper alternatives. And those are just kind of products that Kraft Heinz doesn't make.

And it's six straight quarters of sales declines kind of shows that. And then a lot of people use this as a chance to kind of say, hey, Warren Buffett, you got this one wrong because he was behind this engineering of this merger right here. but if you actually go into the numbers, Buffett came out a little bit better than expected. They paid $4.3 billion for their stake in Heinz. They added a couple more cash when Kraft, when they actually merged, took their total stake to nearly $9.8 billion. Today, their 27% stake in the joint company is worth $8.8 billion.

So it looks like they lost a billion dollars on paper. But over the time that they owned this business, they received $6.3 billion of dividends. so he's technically up 60% on his original shares that he acquired. So even when Buffett loses, even when he gets catch up on his shirt, he still comes up on top because he just buys and holds these businesses for a long time. Up next, we're going to talk about handbags. Next time you see your friend with a dubious income stream rocking a Birken bag, it might not be because of their access to the bank of mom and dad.

They might just be rocking a new super fake, a growing segment of ultra-high-end knockoffs that I want to talk about on today's edition of Toby's trends. Superfakes, as you might presume, are really, really good counterfeits. Not like the ones you see hawked on street corners, but bags so exact that they are nigh indistinguishable from the real things. The super fake economy runs through encrypted messaging services where buyers can place orders, receive customer service, and take their deliveries in branded boxes just like the real deal. The best superfakes can cost up to $5,000, according to the Wall Street Journal, and aren't even called fakes anymore, with language like replicas, superclones, or one-to-ones used by fans instead. Whatever you call them, they are a growing thorn in the side of real luxury manufacturers, as evidenced by Gen Z spending $5 billion less on luxury brands in 2024 than the year prior, according to Bain & Co.

It's also led to growth in the super fake forensics industry, with the secondhand site The Real Reel, investing in X-ray machines to examine the insides of bags sold on their site to ensure their veracity. These bags are so good that counterfeit professionals are saying that industrial espionage is likely at play, stealing things like tech packs that give instructions on how to make certain products, down to the number of stitches involved, or even poaching workers from real factories to make use of their hands-on experience. Neil, I think Superfakes is an app name for these things because it is wild how close they are to the real things. Yeah, the luxury resale website Fashion File. They put a counterfeit Louis Vuitton handbag on display right next to their real one at their flagship store here in New York City and give people a quote authenticity challenge to see if you can spot the real from the fake.

They say that people who work as sales assistants for the top luxury bands, brands cannot tell the difference. So there is a level of sophistication and artistic mastery here that we've never seen before in the counterfeit industry where typically you get a fake and you know you're getting a fake and that's okay because it's super cheap. But the playing field has become completely level. And as you mentioned, those stats on Gen Z, spending so much less on luxury brands, there seems to be a growing animosity towards luxury brands because there's growing awareness around how much they are marking up those products. just because they're slapping that label on it, and it actually doesn't cost that much to make these things, but you're making us pay 1520x what you actually cost to manufacture it. Meanwhile, these other, I don't know, you wouldn't call them brands, but people in China are making items of the same quality and charging much less.

That's much more palatable to the younger consumer. They almost are brands at this point, too, because certain companies, certain factories are getting customers just like real companies where they pay social media influencers to review their fake handbags just like a real company would. And then also, this new distribution model is really causing authorities and companies to kind of scratch their heads because it is a nightmare to try to attract, you know, direct to consumer fakes. Usually in the past, ports could keep an eye out for big shipments that they could intercept

of, you know, a hundred fake Louis Vuitton bags. But now if you're selling directly consumers over these, you know, telegram channels, these WhatsApp channels. How are you supposed to, as a custom authority, Nab one bag going through to Neil who really wanted a new Birken bag. I know you've been eyeing one. So it's almost like become this very exclusive club

where if you want access to the best counterfeiters, you have to join these telegram groups. You have to join these exclusive group chats. Usually pay for access to them. So it's a whole new ballgame out there. Super fakes are super good. And they're like pretty expensive too. So there is almost another status game being played.

underneath the bigger status game of like, I want my $5,000 fake Birken bag rather than the $500 one. So truly an insane world. So if you're in the market for a new handbag, maybe look the super fake route. Now let's sprint to the finish with some final headlines. NVIDIA is out of timeout in China after securing the White House's blessing to resume selling its 820 AI chips in the region, following a meeting between CEO Jensen Huang and President Trump. While not NVIDIA's top-of-the-line technology, the commerce, department still restricted sales of the chip back in April, causing the company to lose out on

$8 billion in revenue. Designed specifically for the region with downgraded features, the About Face resurrects that revenue stream for Nvidia. Neil, this is a company that has had the goalposts continually moved on them when it comes to designing and selling chips in China. But whatever Huang told Trump at their last meeting appears to have worked, Nvidia's shares are up about 4% this morning as investors digested this good news. Jensen has emerged as a key broker. in the trade war, he didn't set out to be CEO of NVIDIA and be this, you know, diplomat between the U.S. and China, but because NVIDIA does so much business in China,

and they make an item, a product, like these high-end AI chips that are at the center of the simmering Cold War around tech between these two countries. He is shuttling back and forth between Beijing and D.C. trying to work out a deal that allows his company to sell, not top-of-the-line chips, but middle-of-the-line chips, to China. Yeah, shares are up this morning. It's lifting the entire market as NVIDIA does because it's worth over $4 trillion as we head into this big corporate day because there are bank earnings

on tap and we have a big inflation number dropping also this morning. So the fact that NVIDIA's giving this overnight markets a lift is a good sign heading into this pretty crucial day. The Trump administration appears to be openly establishing a possible legal pretext to fire Jerome Powell for cause. Trump has repeatedly hammered Powell for not lowering interest rates, but in recent days, those attacks have taken a different flavor. Trump officials have been publicly criticizing Powell for a $2.5 billion building renovation, they say, got wildly out of hand and speaks to Powell's mismanagement as head of the central bank. Yesterday, Powell ordered the inspector general to review the Fed's building renovation for cost overruns and any other issues. The Fed also added details about

the project to the frequently asked questions page on its website. website. So it appears that Powell, in the Fed's understated way, is also getting his legal ducks in order ahead of a potential firing by Trump over this renovation. Suffice it to say, sacking Powell over a building project was set a whole new precedent by which a president exerts control over the central bank. Yeah, let's look at what the powers granted to the Fed's Board of Governors to make over its real estate decisions. And it is pretty wide authority. the Federal Reserve Act says that it may maintain enlarge or remodel any buildings or buildings it is acquired or built, and it shall have sole control over such building or buildings in space

therein. So it does look like they have pretty wide leeway to do what they want with their real estate. That's one part of this equation of like, is this going to be a vector that Trump can use to remove Powell from his position? But then the other angle, too, is that this would be very, very bad if somehow Trump did end up removing Jerome Powell because we've talked a lot of how the feds independence is something that markets like, global markets rely on. And if that goes away, it could lead to the collapse of the currency in bond markets. That is not my words. That's a Deutsche Bank analyst saying that we consider the removal of Chair Powell as the largest underprice event risks in the market right now. So there's two sides of this. Let's dig into the legal

details of if this is something that can actually happen. But if it does happen, it would not be good for global markets. I want to see what this renovation is. It must be big and cool. Part of the issue is that there's somehow this rumor got started that they added a rooftop garden with beehives on it. And that's been a major attack vector is like you can't be at rooftop gardens with be hives if you want to, you know, be fiscally responsible. All right. Hope you already bought tomatoes for the capraise salad you're whipping up for dinner because the fruit, yes, it's a fruit, will probably get more expensive in the United States. That's because yesterday, a nearly 30-year-old trade agreement between the U.S. and Mexico ended, resulting in a 17% tariff. on most tomato imports entering north of the border.

Many Mexican tomato buyers in the U.S. say they won't eat the tariffs, and analysts expect prices to rise about 10% as a result. This goes back to April when the Commerce Department said it would withdraw from a long-standing trade agreement with Mexico on July 14th, blaming Mexico exporters of low, unfair pricing that undercuts American tomato producers. And many American farmers are celebrating the tariff, calling it long overdue. but buyers that have relied on cheaper tomatoes like restaurants are afraid that higher prices will cause them to go out of business. Yeah, U.S. growers are saying that it's about time for these tariffs to come in because they've been trying to fight what's called dumping, which is essentially just Mexican importers, putting a lot of cheap exports into the foreign market of the United States and undercutting those home growing product prices.

So this is a big win for those home growers. But growers in Mexico are saying that the actions of some growers who have been dumping, are not enough to blow up this entire agreement that's been in place for decades right now. And then caught in the middle are just like these pizza makers that are going, hey, it's going to make our pies more expensive. Like anyone who makes stuff with tomatoes, even it's such as fine margin business. Food is always a very fine margin business. So any hits to your input costs do end up reflected in your bottom line.

So you probably will see more companies end up turning to domestic growers. Heinz already actually only uses homegrown tomatoes in its ketchup. products sold in the U.S. We might see others follow in their footsteps. Finally, long a not-so-secret secret secret, Starbucks is officially making its secret menu full of specially modified drinks official. Real Starbucks lovers have known that if you add a syrup here and a cold foam there, you could create your own Frankenstein's monster of a beverage.

For instance, adding two pumps of vanilla syrup, sweet cream, cold foam, and cookie-crumble topping to a cold brew would create a sugary hybrid called cookies on top. Again, secret here is a bit of a misnomer. Starbucks has a whole broadcast channel on Instagram called the Starbucks Not So Secret Menu. But in addition to finally officially recognizing some orders, Starbucks is hosting a contest over the next seven days where customers and employees can submit their own drinks for a chance to win $25,000.

Pretty smart here, Neil. Make your customers come up with new viral drinks while using your existing ingredients so you don't have to spin up a full new supply chain. The social media to menu pipeline is strong. This seems to be the work of new CEO, Brian Nicol, who did this exact same thing at Chipotle when he was CEO there. They introduced three new menu items based on TikTok users' personalized orders. I would enter this contest, but I am just a little bit overwhelmed by the amount of

options that Starbucks offers. This is what Brian Nichols also trying to streamline with all of the various customizable things. you can add to a Starbucks latte, squirt shots, cold thumbs, all that. It adds up to more than 383 billion different possibilities just for a latte. So that makes my brain go a little crazy. And I think I'm just going to stick with a cold brew. That makes me optimistic, though, because that means that there's something here-to-for, yet uninvented that I could come up with that could be the new hot drink of the summer.

The duality of man. The duity of man. All right. That is all the time we have. Thanks so much for starting your warning with us. A wonderful Tuesday. 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. Hair and makeup is the real thing. Devin Emery is our president and our shows of production of Morning Brew.

Great show today, Neil. Let's run it back tomorrow.