Morning Brew Daily
Federal Staffers Must Justify Jobs or Be Fired? & Ozempic Shortage is Over
Mon, 24 Feb 2025
Episode 525: Toby and Ann discuss Elon Musk’s email to all federal employees asking them to report their accomplishments otherwise face resignation and why some agencies are choosing to ignore the email. Then, Warren Buffett’s Berkshire Hathaway reports another record strong quarter and publishes his famed annual letter that takes aim at the White House. Also, Ozempic and Wegovy are back on the shelves as the FDA reports they are no longer in a shortage in the US. Meanwhile, Conservative CDU/CSU Party leader Friedrich Merz and New York Yankee facial hair are the weekend’s winners. Finally, a look toward the Week Ahead! LinkedIn will even give you a $100 credit on your next campaign so you can try it yourself. Go to LinkedIn.com/MBD Terms and conditions apply. Only on LinkedIn ads. 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. Check out https://linkedin.com/MBD for more! Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Hear more from Ann on After Earnings: https://open.spotify.com/show/5I5q3LIg1ueDWoTM8AZsHQ?si=38da6cb59c874a5e Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: Who are the hosts of Morning Brew Daily?
And I'm Anne Barry.
Today, federal employees are scrambling after an email over the weekend asked them to show their work.
And the Oracle of Omaha, Warren Buffett, with Berkshire Hathaway's annual newsletter out, letting us answer the question, what would Warren do?
Chapter 2: What is Elon Musk's email to federal employees about?
It's Monday, February 24th. Let's ride. Happy Monday, everyone, and welcome to the show. Neil is still enjoying his much-deserved break, so Anne will be helping steer the ship for the upcoming week. And since we're going to be hanging out for the next few days, do you mind giving our listeners a quick bio? Who is Anne Barry, and how did you end up in this chair across from me?
Well, I'm breaking down the market news for Morning Brew at a franchise called Brew Markets. You'll find us on Instagram, on X, on YouTube right now. And also we have a fabulous daily newsletter coming out at the end of day. Also hosting After Earnings, which is our conversations with CEOs and CFOs at your favorite public companies. So keeping really busy.
Anne hosts a lot of shows. She's very talented. I highly recommend checking out both of the franchises that you're a part of, but thank you so much. You're a natural fill-in from Neil. You look great over there, so I'm excited for our week ahead. Now, a word from our sponsor, LinkedIn Ads. Anne, have you ever been traveling abroad and seen a distinctly American restaurant?
Of course, I was actually just in London, back in my hometown, and I did see a KFC, which is a delicious place, but a long way from Kentucky, Toby.
There's always this dissonance when you see things pop up in places that they shouldn't be. Same goes for ads.
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Chapter 3: How are federal agencies responding to Musk's email?
No more spraying and praying and no more Americanized three-piece tender combos near Piccadilly. If you're interested in testing out LinkedIn ads, LinkedIn will give you $100 credit on your next campaign. Just go to LinkedIn.com slash MBD. That's LinkedIn.com slash MBD. Terms and conditions apply only on LinkedIn ads.
If you thought you had a case of the Sunday scaries this weekend, federal workers almost certainly had it worse. 2.3 million government employees checking their email today will be staring down a message from the U.S. Office of Personnel Management asking them to share five bullet points detailing what they accomplished in the last week.
The effort was spearheaded by Elon Musk and came with a warning on X that any employee who fails to respond would be treated as having resigned, only adding to the uncertainty. For Elon and Doge, the email is meant to spot, quote, outright fraud from people on the government payroll who aren't actually working.
But multiple agencies and unions have pushed back, instructing their workers to hold off on hitting that reply button. New FBI Director Kash Patel told employees not to answer, saying the Bureau would use its own procedures to review employee performance. NOAA and NSA employees were told the same. The State Department is also on the no-reply train. The email told employees to respond by 11.59 p.m.
ET tonight. So as that deadline draws near, it set up a high stakes standoff, putting Musk and Trump's attempts to aggressively downsize the federal government against agency heads who aren't sure how to proceed. And a lot of weight contained in one tiny email.
So much going on. This is straight out of the Elon playbook. He did this over at X. It was then called Twitter. He drop shipped in and said, this is now happening. He's done this at Tesla. He's done that at the rest of his companies. I don't think he knows any different. And it's really difficult because it's been a successful strategy elsewhere.
The issue people have had is that the federal government is not necessarily a tech company. You can't treat it in the same way. Also, just logistically, some federal workers are on leave right now, whether it's sick leave, parental leave, so they can't access their emails.
Some of them work in far-flung places that don't even have email access, so do they get automatically fired just because they can't actually load their email online? Others like the CFPB, the Consumer Financial Protection Bureau, their workforce has recently been placed on leave and have been instructed not to work. So do they have any accomplishments to report? No.
So there's just been all these edge cases where everyone's a little confused as to how you're supposed to approach this if, one, you can't look at your email, or two, you're already on leave right now. So definitely some logistical issues, not to mention maybe some of the legal issues along with this email as well.
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Chapter 4: What insights did Warren Buffett share in his annual letter?
Yeah, I mean, everybody loves reading the annual shareholder letter from Warren Buffett. It is a tradition in finance circles, unlike any other. The cash pile is always something that grabs headlines because it just continues to grow bigger. Remember, his cash and treasury bills, it's sitting at $330 billion plus right now. But I do like that he was like, chill out with all this cash pile talk.
I know you guys love writing headlines about this. But again, the vast majority of our company is tied up in equities. He still very much believes in equities as the path to growing Berkshire Hathaway. The fact remains that the stock market is trading at near-record highs. Valuations are elevated compared to historical averages.
it's very hard to find a deal for a value investor like Warren Buffett. Everyone tends to get in a tizzy about this cash pile, but Warren's like, hey, just chill out. We're looking for deals. You know how we operate here. We look for good deals. We're not just going to splash out this cash on something willy-nilly. Write your headlines, but you know what?
We're still fine with the cash position that we're sitting in right now.
And he actually said, look, we've got less cash than we've got public equities. And don't forget the other thing about Berkshire Hathaway is they own 100% of businesses too. Those are basically privately held businesses. You can't go buy in the stock market.
A couple of things that really struck me here, Toby, did you see that line in the shareholder letter saying 53% of our investments, our companies had earnings down? And actually, I went back and looked at exactly how they broke it out. But for their insurance investments and frankly, their energy, they would have been down.
Mm-hmm. It is remarkable. It speaks to the fact that they have a piece of 189 businesses. So that diversification, I mean, it kind of is emblematic of the U.S. economy at this point. It's like a proxy for the U.S. economy. That diversification allows them to have the majority of their business or the over half their businesses diversified.
actually report negative earnings that fell, and still on the year report a pretty solid year overall. We do need to talk about this tax bill, too. In 2024, Berkshire paid $26.8 billion. That's the most of any U.S. company in history. It actually amounts to 5% of the total American corporate income taxes paid in 2024.
Warren Buffett said the company now has paid in aggregate more than $101 billion. billion of income tax directly to the U.S. Treasury. And he's not mad about it. That was the kind of sentiment you got reflected in this letter is that he's like, spend it wisely, you know, spend it on maybe the less fortunate.
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Chapter 5: Why is Berkshire Hathaway's cash position significant?
That's music to their ears. And they have been down a little bit in recent months, these Japanese trading houses, which just... Backing up a minute, these are these massive conglomerates that handle everything from global trade, resource procurement, logistics, investments across multiple industries. They're very diversified.
And he says that these Japanese positions are ones that they'll hold for decades. So again, all of the positions that Berkshire usually takes are held over a long time frame. So these Japanese trading house positions are no different. After two years of insane demand for the active ingredient in injectable weight loss drugs, semaglutide, the FDA has declared the shortage over.
Ozempic, Wegovy, and other drugs in the blockbuster category have been in short supply around the world as their popularity has skyrocketed. When certain medicines face shortages, the FDA can make it possible for other companies to make their own off-brand copycat versions of brand-name drugs.
That proved to be a boon for digital health companies like Hims and Herds, who have been prescribing compounded semaglutide in the midst of the shortage. Patients flocked to the non-FDA-approved medications because of the cost difference.
Hims and Herds sells their medicine for a few hundred dollars compared to brand drugs from Novo Nordisk, which clock in at around $1,000 per month without insurance. But now that gravy train looks to be ending. The FDA said compounding drug makers have 60 to 90 days to close up shop, which sent hims and hers stock plunging 26% just before the weekend.
A big shakeup in the GLP-1 drug industry here, Anne.
Huge shakeup. And I've got to tell you, everyone I speak to at the moment, Toby, seems to be using a GLP-1 from every age group, from every demographic. And I just, I think I've almost not really realised the ubiquity of this. So the fact that the affordable version, the accessible version is likely, is actually going to go away.
I think it's got enormous repercussions, not just for the people using it, but also let's take a little bit of a look at what's been going on with other businesses impacted, like the snack industry. Everyone was talking about how the snack industry is going to be changed by GLP-1. I don't know how that's going to change.
Yeah. No, it has been an absolute phenomenon. We've talked about it a lot on this show over the year, but I also just want to dig into this practice of compounding drugs. Typically, compounding drugs is a very normalized and very commonplace practice to make these custom versions of brand name drugs.
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Chapter 6: Is the Ozempic and Wegovy shortage over?
If you're itching to shout out the answer, just do the next best thing and go to morningbrew.com slash morning-market-trivia to test your stuff with a morning market trivia quiz. Like I said, top scorers will receive prizes and a feature in the Morning Brew newsletter. I scored 12 out of 15. I got you by one, 13 out of 15.
Head on over to morningbrew.com slash morning-market-trivia to see if you can beat us. Neil, you've had the chance to work with plenty of leaders in your career. What traits do you think are most important?
In my experience, a few things stand out, like leading by example, taking risks and being passionate.
And for all those influential leaders out there, there's the Range Rover Sport. That's definitely a match made in heaven. Absolutely. Each model strikes an ideal balance between on-road performance and world-renowned off-road capability, sophisticated refinement and visceral power.
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Welcome to Winners of the Weekend, the segment where Toby and I share two stories highlighting people or companies that had almost as good of a weekend as Neil hopefully is while on vacation. But before we do that, there's a winner of the day, and that is Toby. Hey, Toby, it's your birthday. Happy, happy birthday.
I knew something like this was coming. The control room put you up to this, but thank you. And, you know, 28 years young, it feels like right now. But thank you for the birthday wishes.
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Chapter 7: How will the end of the GLP-1 drug shortage affect the market?
What are you going to do to celebrate?
Oh, you know, probably play a little golf, go out to dinner with my girlfriend. The usual. Keep it low key.
All right, we're going to bring in cake for you every week because it's going to be the week of Toby's birthday. For our first winner, though, let's talk now about the winner of Germany's election. That's Friedrich Merz, the centre-right conservative candidate. His alliance won. That was expected. And they did clock in with about 29% of the vote.
In second place was the far-right alternative for Germany with about 20%. Now, this election is going to have a large impact potentially on Germany's economy, which has been struggling for the last five few years. Soaring energy prices have impacted manufacturing since Russia invaded the Ukraine back in 2022.
And that coupled with the rising cost of living, increasing migration and green energy regulations have caused public and businesses to pause, leading to the call for reforms in the policies that Friedrich Merz and his party have run on.
Now, one of the first items the new government will address is the country's debt break, which is a rule enacted in 2009 that actually limits government borrowing by controlling the budget deficit to cap it at 0.35% of the country's gross GDP, massively below other places like the US, for example.
Now, the winner, Friedrich Merz, prefers to retain the debt break and wants to instead reduce social benefits and downsize government employment, also supporting tax cuts and social spending. So, Toby, Germany's economy is certainly in a precarious situation right now. As reading over the weekend, it's technically been in recession for the last two years.
So we're going to have to see how these new policies will impact their standing as a country and on the global stage. But when you saw this news here, what was your first reaction?
I mean, the big winners here were the political fringes in Germany. I mean, the far right AFD party doubled its vote share from the last election in 2021, received about 20 percent of the vote. But also, you know, Merz is the big winner as well. Let's talk about who he is. He's actually a corporate lawyer that is a multimillionaire businessman.
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