RTO Wave Hits Federal Workers & $500B Investment Powers AI Industry

Summary

Morning Brew Daily Podcast Summary Episode Title: RTO Wave Hits Federal Workers & $500B Investment Powers AI Industry
Release Date: January 22, 2025
Hosts: Neal Freyman and Toby Howell

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Introduction

In this episode of Morning Brew Daily, hosts Neal Freyman and Toby Howell delve into a variety of impactful topics shaping the current business and economic landscape. From significant policy changes affecting federal workers to colossal investments driving advancements in the AI industry, the discussion provides listeners with insightful analysis and engaging commentary.

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1. Federal Workers Face Return-to-Office (RTO) Mandates

Overview: The episode kicks off with a major policy shift as President Trump signs an executive order mandating federal department heads to terminate remote work arrangements, compelling over 2.3 million federal employees to return to in-person work full-time.

Key Points:

• Scope of the Mandate: The federal workforce, larger than corporations like Walmart, is now subject to one of the most extensive RTO requirements to date.

• Union Pushback: Tens of thousands of federal workers belong to unions with collective bargaining agreements that support remote work. Consequently, legal challenges and negotiations are anticipated as unions vie to protect these arrangements.

• Political Divide: Estimates on current remote work prevalence vary significantly. For instance, Senator Joni Ernst reported only 6% of federal workers were fully in-person, while the US Office of Personnel Management (OPM) stated that 54% operate entirely on-site, highlighting the political and data-driven debates surrounding the issue.

• Elon Musk’s Influence: Elon Musk supports the RTO mandates as a strategy to reduce the federal workforce by encouraging voluntary departures, a tactic he openly endorses.

Notable Quotes:

• Neal Freyman [04:30]: "A new survey from Pew found that nearly half of remote workers would consider leaving their jobs if their employers no longer allowed them some remote flexibility."

• Toby Howell [05:40]: "The American Federation of government employees represents 800,000 federal and D.C. government employees. They have collective bargaining agreements that have locked them into remote work policies."

Insights: The RTO mandates represent a significant shift in federal employment practices, with potential long-term implications for workforce retention and recruitment. The interplay between political agendas and labor rights underscores the complexity of implementing such widespread policy changes.

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2. Project Stargate: A $500 Billion Boost for the AI Industry

Overview: President Trump, alongside industry leaders Sam Altman (OpenAI), Masayoshi Son (SoftBank), and Larry Ellison (Oracle), announced Project Stargate, a joint venture aimed at accelerating AI infrastructure development in the United States with an initial investment of $100 billion, eventually scaling to $500 billion.

Key Points:

• Objective: The project focuses on building AI infrastructure, including data centers, to ensure the U.S. remains competitive in the global AI arms race, particularly against China.

• Energy Consumption Concerns: The rapid expansion of data centers necessitates significant energy resources. Unlike the previous administration's emphasis on clean energy, Project Stargate places the onus on tech giants like Microsoft, Amazon, and Google to source their energy, whether fossil-based or renewable.

• Regulatory Shifts: The initiative signals a departure from President Biden's regulations, which included an executive order on AI safety and technological safeguards. Project Stargate indicates a more laissez-faire approach, potentially reducing regulatory barriers for AI advancements.

Notable Quotes:

• Neal Freyman [09:40]: "We're expected to supercharge our dependency on the grid, perhaps break its current form. We need more energy."

• Toby Howell [10:31]: "Sam Altman called out, saying that we need this infrastructure buildout in order to keep ourselves ahead and make the US remain ahead of China in the AI arms race."

Insights: Project Stargate represents a monumental investment in AI, positioning the United States to potentially lead global advancements in the field. However, the focus on rapid infrastructure expansion raises environmental and regulatory questions that may shape the project's sustainability and ethical considerations.

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3. Netflix’s Record-Breaking Year and Strategic Shifts

Overview: Netflix recently reported its best financial year ever, significantly surpassing Wall Street expectations with substantial subscriber growth and strategic pivots in its business model.

Key Points:

• Subscriber Growth: In Q4 alone, Netflix added 18.9 million new subscribers—a 44% increase from the previous year—culminating in a total of 41 million new customers in 2024. This growth pushes the total subscriber count to over 301 million globally.

• Revenue and Profit: The surge in subscribers led to notable increases in both revenue and profit, further solidifying Netflix's dominance in the streaming industry.

• Pricing Adjustments: In response to its strong market position, Netflix raised prices on its ad-supported and premium tiers by $1 and $2 respectively, signaling confidence in its pricing power.

• Shift to Advertising: Netflix is transitioning its focus from purely subscription-based revenue to incorporating a robust advertising model. Live events and exclusive content, such as partnerships with WWE and high-profile live sports rights, are becoming significant revenue drivers.

• Future Outlook: Netflix anticipates that advertising revenue will double by 2025, although it is not yet a primary revenue source.

Notable Quotes:

• Neal Freyman [13:15]: "It was absolutely insane. Netflix is just on an abso roll right now. Shares shot up 14% after hours Tuesday."

• Toby Howell [14:43]: "Everything Netflix turns, touches, turns to Gold."

Insights: Netflix's aggressive subscriber acquisition and strategic shift towards advertising and live events have positioned it as an unparalleled leader in the streaming market. The company's ability to adapt its business model in response to market demands underscores its resilience and innovative prowess.

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4. Olympic Medals Manufacturing Glitches Undermine LVMH’s Prestige

Overview: Post-Olympics, LVMH faces reputational challenges as athletes report that the gold, silver, and bronze medals designed by its subsidiary, Shamay, are deteriorating prematurely.

Key Points:

• Manufacturing Issues: Over 100 athletes have reported that their medals are discolored and falling apart. LVMH attributes the problem to the French mint's alteration of the varnish formula, which failed to prevent oxidation effectively.

• Public Relations Impact: The malfunction contrasts sharply with LVMH’s prominent presence during the Paris Games, where its brands were heavily featured. The ensuing negative publicity threatens to tarnish the luxury conglomerate's image.

• Regulatory Factors: European Union regulations mandated changes to the varnish formula by banning certain chemicals like chromium trioxide, intended to reduce toxicity but inadvertently compromising the medals' durability.

• Historical Precedent: This is not LVMH’s first encounter with faulty Olympic medals, as similar issues occurred during the 2016 Rio Games, leading to numerous athlete complaints.

Notable Quotes:

• Neal Freyman [19:03]: "This is not necessarily a news story either because I know you said you were watching social media during the Olympics themselves."

• Toby Howell [20:12]: "Our chemical process was wrong. So they're kind of taking the buck from LVMH."

Insights: The medal manufacturing debacle highlights the challenges luxury brands face when integrating stringent regulatory changes. LVMH's attempt to associate with the Olympics backfired, emphasizing the importance of quality control and proactive communication in maintaining brand integrity.

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5. A Historic Winter Storm Blankets the Southern United States

Overview: An unprecedented winter storm hit the Southern U.S., bringing rare snowfall to areas typically unaccustomed to such weather, leading to significant disruptions and casualties.

Key Points:

• Extent of the Storm: Cities like Houston, New Orleans, Pensacola, and Mobile experienced snowfall levels that shattered historical records, including over 10.5 inches near Lafayette, Louisiana.

• Impact on Daily Life: The storm resulted in closed schools for more than a million children, halted air travel with massive flight cancellations, and tragically led to at least nine fatalities.

• Cultural Reactions: The unexpected snow transformed familiar landscapes, with residents engaging in activities like sledding in Houston and snowball fights in Gulf Shores, creating memorable and surreal scenes.

• Travel Chaos: Major transportation hubs, especially Atlanta's airport, suffered extreme congestion, exacerbated by concurrent events like the national championship game.

Notable Quotes:

• Toby Howell [21:03]: "It was really funny. I saw so many different videos and pictures coming out of places that it just doesn't look right to have snow."

• Neal Freyman [21:59]: "It was more than they experienced in a generation or ever. An area of Louisiana near Lafayette got more than 10.5 inches of snow."

Insights: The historic winter storm serves as a stark reminder of the increasing unpredictability of weather patterns, likely influenced by climate change. The capacity of southern cities to handle such extreme conditions is now a critical area for future infrastructure and emergency preparedness improvements.

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6. Costco Employees Threaten Strike Over Wages and Benefits

Overview: A union representing nearly 20,000 Costco employees has authorized a strike, demanding improved wages and benefits in light of the company’s substantial profits.

Key Points:

• Union Demands: The Teamsters union is pushing for increased wages, enhanced pensions, and greater job security, leveraging Costco’s impressive $7.4 billion profits in fiscal 2024.

• Potential Impact: Although the union represents only 8% of Costco's workforce, a strike could affect 56 store locations across five states, disrupting operations and customer service.

• Company Reputation: This move challenges Costco’s longstanding reputation for favorable worker benefits and high pay, highlighting tensions between labor and management despite the company's profitable performance.

Notable Quotes:

• Neal Freyman [22:54]: "A union representing nearly 20,000 Costco employees voted to authorize a strike."

• Toby Howell [23:29]: "They have this reputation for treating their workers very well right now, but the union is pointing to Costco's record profits and saying, like, hey, you guys clearly can afford it."

Insights: The potential strike at Costco underscores a broader trend of labor movements seeking better compensation and benefits, even within companies that are financially successful and previously known for treating employees well. It highlights the evolving dynamics of employer-employee relationships in a competitive market.

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7. JetBlue Embraces Venmo for Flight Payments

Overview: JetBlue Airlines has become the first in the aviation industry to accept Venmo as a payment method for flights, aiming to attract a younger, tech-savvy demographic.

Key Points:

• Innovation in Payments: By integrating Venmo, JetBlue simplifies the payment process, catering to customers who prefer digital and mobile payment solutions.

• Competitive Advantage: As the first airline to adopt Venmo, JetBlue differentiates itself in a crowded market, potentially increasing customer convenience and loyalty.

• Additional Services: Alongside accepting Venmo, JetBlue is introducing its first airport lounges at major hubs like JFK, Logan, and Boston, enhancing the overall travel experience.

Notable Quotes:

• Toby Howell [24:28]: "JetBlue will now accept Venmo payments for flights. And a first for the aviation industry."

• Neal Freyman [24:31]: "They also are introducing their first ever airport lounges and JFK and Logan in Boston."

Insights: JetBlue’s adoption of Venmo represents a strategic move to align with consumer preferences for seamless digital transactions. This initiative, combined with the introduction of airport lounges, positions JetBlue as an innovator in customer service within the airline industry.

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8. Celebrating Ichiro Suzuki's Induction into the MLB Hall of Fame

Overview: Ichiro Suzuki has been elected into the MLB Hall of Fame, marking a historic moment as the first Japanese player to receive this honor.

Key Points:

• Career Achievements: Ichiro’s illustrious career includes being a 10-time All-Star, Rookie of the Year, and MVP. He holds the record for the most professional baseball hits, accumulating over 3,000 in Major League Baseball (MLB) and nearly 1,300 in Japan.

• Cultural Impact: Ichiro paved the way for future Japanese players like Shohei Ohtani, contributing significantly to the globalization of baseball talent.

• Legacy: Beyond statistics, Ichiro is celebrated for his work ethic, focus, and dedication to excellence, serving as an inspiration to athletes worldwide.

Notable Quotes:

• Neal Freyman [25:18]: "I encourage everyone to go read different articles on his process and his work ethic and his maniacal focus on being the best he could be because that really is Ichiro's story."

• Toby Howell [27:28]: "I aspire to be that level of locked in that I don't even know who Tom Brady."

Insights: Ichiro Suzuki’s induction into the Hall of Fame not only honors his personal achievements but also symbolizes the bridging of Japanese and American baseball cultures. His legacy continues to influence and inspire the next generation of international athletes.

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Conclusion

This episode of Morning Brew Daily offers a comprehensive analysis of significant developments across various sectors, from governmental policies and corporate strategies to cultural milestones and unforeseen natural events. Hosts Neal Freyman and Toby Howell adeptly navigate these topics, providing listeners with valuable insights and thought-provoking discussions to start their day informed and engaged.

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For more detailed discussions and updates, tune in to the Morning Brew Daily podcast available on all major platforms and YouTube.

Transcript

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[Neal Freyman]

Good morning, Brew Daily Show. I'm Neal Freyman.

[Toby Howell]

And I'm Toby Howell.

[Neal Freyman]

Today, Netflix just had its best year ever, which means, yup, prices are going up again.

[Toby Howell]

Then it's been just about 100 days since the Olympics ended, but athletes medals are already falling apart. It's Wednesday, January 22nd. Let's ride.

[Neal Freyman]

Good morning. Morning. Kind of rocks that it's already Wednesday, right? I got to start thinking of some Neil's numbers for tomorrow. Anywho, the author John Green, who wrote the Fault in Our Stars and Other Books, posted this pretty interesting video on YouTube yesterday where he posed the question, do audiobooks count as reading? Greene said a decade ago he probably would have answered no, but now he says that audiobooks are not only definitely reading for many people, they're the best kind of reading. Toby, do you agree with John?

[Toby Howell]

I have some thoughts about this and I'm going to tell a quick story to illustrate them. My mom recently added me to her Audible Premium account. Shout out Mom. But then she was snooping on some of the books I downloaded and she was roasting my choice to listen to the Odyssey. First, I had to explain to her that I wanted to brush up on it ahead of Christopher Nolan adapting it into a movie. But also technically, I am participating in the long oral tradition of the retelling of the Odyssey. The story was originally passed down through generations through listening, so it kind of is the OG audiobooks if you think about it. So all that to say I think that stories are stories no matter which medium you are consuming them in. So yes, I am Team audiobooks count as reading. What about you?

[Neal Freyman]

And you're listening in the. In the original ancient Greek, right?

[Toby Howell]

Oh, of course I am. No, I picked. I was going through some of the translation. I can't actually remember the one I'm currently listening to. But it does matter. Whoever does the translating kind of affects how you interact with the story. So no, not ancient Greek. But yes, I am Team Audiobook. Now, a word from our sponsor, Yahoo Finance. Neil saw you checking your brokerage account this morning.

[Neal Freyman]

Was just having some FOMO post Netflix Earnings fomo.

[Toby Howell]

You used to get FOMO from seeing your friends go to a party that you skipped out on, but now you get it from looking at a stock chart.

[Neal Freyman]

Luckily, there is an antidote to financial fomo and that is Yahoo Finance.

[Toby Howell]

FOMO is downstream of a lack of information, so Yahoo Finance helps you stay up to date on the latest financial news so you don't miss out on any 20 baggers.

[Neal Freyman]

Just head to their homepage for a wide overview of what is happening in the market or dive deeper by going to their research tab for more advanced screeners.

[Toby Howell]

Don't let FOMO hurt your investing returns. Visit Yahoo Finance.com today.

[Neal Freyman]

What do JP Morgan, Amazon and the sprawling federal bureaucracy have in common? Not much, but they've all recently announced that their employees must come into the office five days a week. Late Monday, as part of his whirlwind of Day one actions, President Trump signed an executive order mandating that federal department heads, quote, terminate remote work arrangements and get their people back to in person work Monday through Friday. Considering the Federal government has 2.3 million workers, more than Walmart, it could be considered the biggest return to office requirement we've seen yet. And as has been the case in the private sector, there's going to be loads of pushback. First, tens of thousands of workers belong to unions that have signed collective bargaining agreements allowing them to work remotely, so it's doubtful whether they could be legally forced to abandon their home desks. Second, some government labor leaders are going to fight tooth and nail against this because it could make retention and recruiting that much harder. And remember, an agency like the EPA is competing against any number of private companies for top talent. Still, Trump has launched the opening volley, one of several orders he signed on Day one that intends to remake the gigantic federal workforce.

[Toby Howell]

The question here is how much of that gigantic federal workforce is actually currently working from home? And depending on who you talk to, you might get different answers. Senator Joni Ernst from Iowa. She released a report last year that claimed that only 6% of federal workers were actually in person full time. But then you look at the US Office of Personnel Management and they pushed back on that. The OPM noted that 54% of the 2.3 million civilians employed by the federal government work entirely in person. So to them that number is closer to 50%. So it really is about where you kind of lie politically and how you are approaching this problem. Because the one name that we do need to mention here as well is Doge and Elon Musk, who has been very vocally open about wanting to push for RTO mandates in order to shrink the federal workforce. They're hoping that when people have to go into the office full time, they'll just quit, which is, we've called it sneaky layoffs. It's not so sneaky. Elon has come out and said that is what he wants to happen. So it really is about where you fall politically when you are considering how to react to this RTO mandate.

[Neal Freyman]

And, you know, there is a good argument to be made that if you force people to come to the office, then they will just quit. A new survey from Pew found that nearly half of remote workers would consider leaving their jobs if their employers no longer allowed them some remote flexibility. Trump administration is saying, you know, it's taking its cue from Elon Musk and being like, okay, well, maybe that's good. We want a smaller federal workforce. On the other side, you say you have people saying, look, President Trump, you have all these things you want to do across the government. You have an ambitious agenda. You need a fully staffed workforce to get this done. If you send people away, you go, they go to the private sector, they work for, for other companies. Then the fact is you're going to have less talent on hand and fewer people to carry out what you're trying to do. So this is going to be an absolute fight. The American Federation of government employees represents 800,000 federal and D.C. government employees. That's a big chunk of that 2.3 million number. They have collective bargaining agreements, environmental protection agencies, Social Security Administration that have locked them into remote work policies. So as we've seen with other Trump executive orders, this is absolutely going to run into some legal more where there's going to be a fight possibly in the courts to see whether these government workers are going to come to the office or not.

[Toby Howell]

Just in general though, zooming out, it definitely looks like the winds are shifting towards rto. You mentioned all the big corporate organizations that are asking their workers to return to office. But even if you look around a popular culture right now, the office is kind of a central figure in the biggest TV show, which is Severance. Right now, I don't know if it's the biggest, but the biggest in our world at least, that is all about, you know, corporate psychological drama. And then also it does look like the labor market has just shifted so that the power is more in employers hands rather than employees. During the great resignation following Covid, their employees had a ton of leverage. They could ask for remote work arrangements, but now the labor market, labor market is definitely a little tighter, leading to that power bounce shifting back to employers who say, no, we do want you in the office right now. So if you just look at a macro perspective, the fact that the federal government is now on the RTO bandwagon means that the winds are certainly shifting that way.

[Neal Freyman]

It'll be interesting to see because over the last few years, we've seen young workers who are just graduating from college really gravitate towards government jobs. That was one of the fastest growing sectors for recent grads that were going away from big tech companies and big banks that just weren't hiring as much the government was hiring. So we'll see whether these changes that Trump is implementing, and I should mention RTO is not the only one. There's a lot of other, a lot of other changes he's making to the federal workforce that could maybe dissuade people from working for Uncle Sam. There's going to be more data centers than Dunkin Donuts if Donald Trump gets his way. Yesterday afternoon, the president, flanked by OpenAI's Sam Altman, Softbank's Masayoshi Son, and Oracle's Larry Ellison, announced Project Stargate, a joint venture that aims to supercharge the construction of AI infrastructure like data centers in the United States. That's going to take a lot of money, but with these guys involved, funding doesn't seem to be an issue. The venture will deploy $100 billion immediately and eventually ramp that up to $500 billion. The first projects, data centers in Texas are already underway. Ellison said the announcement offers the first glimpse of Trump's AI policy agenda. Whereas his predecessor, Biden promoted AI expansion, he also put up guardrails on the new technology to avoid the robot apocalypse and other harms. To that end, Biden signed a comprehensive executive order on AI safety. Things will probably be much less regulated going forward. Trump already tossed Biden's AI executive order in the trash on his first day. And with Project Stargate, he's signaling to tech companies, Prepare your ships for ludicrous speed.

[Toby Howell]

Leaders for a long time have been sounding this alarm that, hey, we need more, more of everything. We need more of the chips that you use to train the model. We need more of the electricity used to power those chips. We need more water to run these data centers. And the. The flip side of that is that in doing so, we need to keep our nose in front of China. That was something that Sam Altman called out, saying that we need this infrastructure buildout in order to keep ourselves ahead and make The US Remain ahead of China in the AI arms race. And you can see why Trump is on board with this as well. Because if you can ground this AI race in things like the economy and the military, which I will certainly affect, you can see why you have this massive $500 billion joint venture to try to get the US to the forefront of AI research right now.

[Neal Freyman]

One thing to look at with the build out of data centers you kind of mention is how much energy they consume. We're expected to supercharge our dependency on the grid, perhaps break its current form. We need more energy. And under the Biden administration, there was a big focus on using clean energy to power data centers. And under this new administration, it looks like we don't care what kind of energy you use. It's up to you. Just figure out a way you can use fossil fuels, you can use clean energy. Now, the responsibility is on Microsoft, Amazon, Google to source clean energy. If they want to fill their commitments, they're already going way past their clean energy thresholds that they expected. So energy ties into data centers, ties into AI. So that will be certainly be part of the conversation. It looks like the, you know, everything has been unleashed and we're not really focusing on clean energy, at least under this new administration.

[Toby Howell]

One final thing to note here is that new presidents often come in pledging these giant investments, these big rebirth of American industry. And one person who has done that is Trump himself. Remember in 2017, he announced this big $10 billion electronics factory with Foxconn in Wisconsin. It was supposed to create 13,000 jobs. It ended up being much smaller, created about 1500 jobs. Just $672 million was invested. So sometimes these big infrastructure or these big, you know, investment announcements don't necessarily end up being as big as they are.

[Neal Freyman]

It's a great photo op.

[Toby Howell]

It is a good photo op. Netflix reported earnings yesterday, and the king of the streamers still has its crown firmly in place. The streaming giant brought in 18.9 million new subscribers in the fourth quarter, up 44% from a year earlier, leading to revenue and profit. Beats in the process, a combination of squid games to rekindling the intrigue of season one, as well as its live events catalog. Bringing in loads of eyeballs powered Netflix to another strong quarter. It caps off a year where Netflix just dominated. It added a total of 41 million customers in 2024, more than double what Wall street had expected. It is now sitting pretty with over 301 million subs. But remember that number because it's the last Time we're going to hear it. The company has said that this earnings report will be the final time it discloses quarterly subscriber numbers as it aims to shift investor focus from subscriber growth to more traditional financial metrics. Speaking of financials, Netflix is trying to milk us all for more cash. It raised the price of its ad supported tier $1 to 799amonth and bumped up its premium tier $2 to reach 2499. Guess you can do that.

[Neal Freyman]

Neal, when you are king, you are the king, then. I'm talking about Netflix. I mean, you are also. Toby, I think you're almost underselling this quarter. It was absolutely insane. Netflix is just on an abso roll right now. Shares shot up 14% after hours Tuesday. So they are basically at a record high right now if things hold towards the close today. Stock is up more than 80% over the past 12 months. Its market cap is now over $400 billion. That's more than Disney, Comcast, Warner Bros. Discovery and Paramount combined. They are firing on all cylinders and they've made this extremely graceful pivot from subscriber subscribe, a subscription business model to one that has a lot of ads. And they're making a ton of money on ads. They're buying these live sports rights like Jake Paul, Mike Tyson, the two NFL Christmas games. They have two World Cups coming up. And those products are way more valuable for advertisers than say you're just putting on a random show and there's an ad in the distance and you're also cooking or, you know, listening to an audiobook at the same time. You can't charge as much for that as you can for when you say I'm having, I just bought Jake Paul and Mike Tyson. I'm going to have 60 million people watch that. They're going to watch it live. They're going to be engaged and you better pay up for that. And so they're going to make a ton of money on these live sports and they already are. And it's taking them from the past era to the new era and they just haven't missed a beat.

[Toby Howell]

And what's crazy, the company has said that advertising isn't yet a meaningful driver of revenue. They expect revenue from ads to double in 2025. So even though they have attracted all these eyeballs, they haven't quite got their ad selling apparatus up to kind of, you know, price them accordingly with the amount of eyeballs they are getting. But it does just look like everything Netflix turns, touches, turns to Gold. Remember it signed a deal with the WWE to air its Raw event. It attracted 5 million viewers. That is double what those events typically receive on linear TV even. They're bad movies. And I'm saying bad because I watch this movie.

[Neal Freyman]

They're bad.

[Toby Howell]

Carry on, which was this Christmas, you know, TSA thriller. It vaulted in the top 10 all time films on the service, which I watched with my girlfriend. I go, really? That's top 10 all time. But there is just something about Netflix's formula that gets people to watch and gets people to subscribe.

[Neal Freyman]

It's just incredible. Like the, the business that they build, they can still, they still have some Runway to get more subscribers. We thought they plateaued with number of subscribers. Then they go in to have at 41 this year, which is the most they've ever added in a year. They have pricing power so they can raise prices on us and we'll still pay. Now it's going to be like $18 a month for the most, for the most popular plan. That's fine, people. Seems like they'll pay or they'll just go to the, the cheaper ad plan which they instituted. They have, they can get more money from advertising. They get good content constantly. So just on every, on every metric, Netflix is, is just a behemoth right now and it's only growing.

[Toby Howell]

All right, we're going to take a quick break, but this next story goes out to all our oly olympian listeners.

[Neal Freyman]

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[Toby Howell]

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[Neal Freyman]

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[Toby Howell]

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[Neal Freyman]

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[Toby Howell]

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[Neal Freyman]

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[Toby Howell]

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[Neal Freyman]

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[Toby Howell]

Last year's summer Olympics weren't just a display of ray guns immense breakdancing abilities. They were also one big advertisement for the luxury fashion house LVMH. Yet just about 100 days later, that successful partnership is being tarnished by, well, tarnished. The gold, silver and bronze medals designed by LVMH is jewelry subsidiary Shamay are falling apart and discoloring. Two French swimmers posted a video last month showing how the outside of their metals had begun to resemble crocodile skin and not the expensive kind. And nearly 100 athletes have asked for replacement metals after theirs started to crumble as well. But LVMH has tried to distance itself from the faulty metals, claiming that Chami merely designed them. It was the French mint that actually manufactured them, which attributed their deterioration to a change in its varnish formula. Still, LVMH was everywhere at the Paris Games. Its champagne brands were in the hands of VIPs, French athletes rocked its luxury outfits and Louis Vuitton luggage was front and center at the opening ceremony, watched by a billion people worldwide. But now it's facing the embarrassment of having its hand designed medals very publicly lose their luster.

[Neal Freyman]

And this is not necessarily a news story either because I know you said you were watching social media during the Olympics themselves. An American skateboarder said, my metal is already crumbling. What's going on here? And then it seems in the months since more than 100 have come forward and said play. I worked pretty hard for this metal. Can you maybe send a new one that's not super rusty? This is not the first time that a metals have had to have been replaced. I guess they're hard to make, but in 2016 the Rio Games number of athletes asked for for new metals because, because they started to break down. But you're right, this is a bit of an embarrassment for lvmh. They've gone radio silent because they don't want to take the blame. And it seems like the French mint that actually made them is falling on the sword for lvmh. That said, the varnish we use, you know, was, was tarnished in a way that it doesn't prevent oxidation like it should. So we're going to make the new ones. Don't worry about it. We used, you know, our chemical process was wrong. So they're kind of taking the, taking the buck from, from lvmh. Certainly still not a good look for this French luxury giant.

[Toby Howell]

And the French mint has another person to blame. And that is actually European regulations because they say they changed their varnish formula to conform to this EU regulation around banning certain chemicals. Chromium trioxide, which is this toxic chemical.

[Neal Freyman]

I know what it is.

[Toby Howell]

Oh yeah? Yeah. Explain it to just explain to the people at home. That's a chemical used to prevent metal from rusting. So they tried to, you know, fall in line with these regulations and it ended up creating a product that started to break down before you wanted to. To make matters even worse, rub salt into the wound. It's mostly the bronze medals that are rusting. So not only did you not get first or second, but also your metal is falling apart. Although there are studies that show bronze medal are happier than silver medal winners, it is better to be, you know, third place rather than the first loser.

[Neal Freyman]

Okay, let's sprint to the finish with some final headlines. Sledding in Houston. Snowball fights in Gulf Shore. Skiing down Bourbon Street. These all actually happened yesterday after a winter storm dumped ultra rare snowfall on a large area of the south, making for what forecasters called a once in a lifetime event. Air travel was basically non existent. Airports in Houston and New Orleans canceled virtually all their flights. More than 2300 and more than 1 million kids in the region had off from school. At least nine people have died as a result of the dangerous conditions and cold. Toby. Wild scenes in cities that are just way more accustomed to hurricane warnings than winter storms. And it wasn't just a dusting. It was more than they experienced in a generation or ever. An area of Louisiana near Lafayette got more than 10.5 inches of snow or as they spell it down in the bayou. S and E, A, U, X.

[Toby Howell]

It was really funny. I saw so many different of videos and pictures coming out of places that it just doesn't look right to have snow. I mean a beach in Destin was completely covered in snow. That is Florida we're talking about here. A lot of crazy weather headlines. I mean, New Orleans received its biggest snowfall in on modern record. Pensacola, Florida, Mobile, Alabama. They broke 130-year-old records. I think it is just crazy to see scenes of people sledding in Houston. It also led to huge travel disruptions. One of the main place that was disrupted was Atlanta because not only did they receive a lot of snow, but they also are dealing with the end of the national championship game that was hosted there. So shout out to anyone who had to fly through Atlanta airport because those security lines were literally stretching outdoors three hours long. Just brutal scenes. For anyone traveling during this period, all.

[Neal Freyman]

Is not well in the land of Kirk. A union representing nearly 20,000 Costco employees voted to authorize a strike, threatening to walk off the job if they don't reach a new contract agreement with the company before the end of the month. Teamsters boss Sean O'Brien said Costco's greedy executives have less than two weeks to do the right thing, which in his view would be to increase wages and benefits, such as pensions and job security. If the strike were to happen, it could be disruptive. The union represents 8% of Costco's employees and 56 of its locations across five states would be affected.

[Toby Howell]

This was a little bit of a narrative violation in my mind because a lot of people associate Costco with great worker benefits. Benefits, good at worker pay. They have this reputation for treating their workers very well right now. But the union is pointing to Costco's record profits and saying, like, hey, you guys clearly can afford it. We, we want a bump in pay. We want a bump in benefits. And Costco did make $7.4 billion in profits for fiscal 2024, which is why this union is trying to use it as leverage to get a better deal. You might see a new account popping up in your Venmo feeds requesting money from you. JetBlue. The airline will now accept Venmo payments for flights. And a first for the aviation industry. Guess when you are a struggling airline who had a merger with Spirit, denied by the doj, you look for any way to attract new customers. And Neil, I think this might be a good idea. Venmo is very easy to use and ubiquitous amongst our generation. So it feels like a solid plan to be the first mover when it comes to Venmo.

[Neal Freyman]

Do you think you have to send an extra payment for baggage and everything else?

[Toby Howell]

You're a little drink like, you just do the emoji.

[Neal Freyman]

See, that would not be as fun. But yes, you know, I think this is an interesting idea. Obviously, the more ways you give people to pay, then the likelier they are to send you money. I mean, a bunch of other airlines already accept PayPal, so it's not. This is not necessarily a first. PayPal owns, owns Venmo. So yeah, you can see this is a good idea for JetBlue. They're doing a bunch of different initiatives to try to revive, to revive their financial fortunes. They also are introducing their first ever airport lounges and JFK and Logan in Boston.

[Toby Howell]

I know you're a big lounge guy.

[Neal Freyman]

So I'm just saying. Okay, moving on.

[Toby Howell]

Ichiro Suzuki is a name that even non baseball fans know. The electric leadoff man for the Seattle Mariners made history yesterday as the first Japanese player to be elected into the MLB hall of Fame. If that wasn't enough, he was nearly the second unanimous selection falling just one vote shy of joining Yankees legend Mariano Rivera. Need a word with a one voter who didn't think Ichiro was Hall of Fame material. Ichiro was just that guy, Neil. He was a 10 time All Star, rookie of the year, an MVP that transcended the game and helped pave the way for other juggernauts like Shohei Ohtani to come to the MLB via Japan. I didn't really even play baseball growing up, but, but I remember trying to be Ichiro while playing my little backyard wiffle ball games.

[Neal Freyman]

He was electric. I mean he was so fun to watch. One of the greatest hitters ever. He has the most hits of any player in professional baseball all time. Because he played in Japan and the United States. He had nearly 1300 hits in Japan, more than 3000 in major league Baseball. So just truly one of the better, best hitters that we've ever seen. And I encourage everyone to go read different articles on his process and his work ethic and his maniacal focus on being the best he could be because that really is the Ichiro's story. There's a great anecdote by Peter Gammons that, that explained that, you know, in 2017, Ichiro once got a text from someone who was asking to meet him and study his stretching system and he scrolled to the bottom of the text message and he, and he just reads the name out loud. Who it's from. He goes, tom. Tom Brady. And then he looks up and goes, who the F is Tom Brady? So this guy, talk about laser focused on your job. And Ichiro was that guy. He was a very big, it was a very big moment for Japan's cultural export to the world because he did, as you mentioned, lay the foundation for a ton of Japanese players to come play in the United States. Obviously highlighted by Shohei Ohtani, who, who at one point had the world's richest athletic contract ever. And, and there are a bunch more as well that have followed in his footsteps. So truly a trailblazer.

[Toby Howell]

I aspire to be that level of locked in that I don't even know who Tom Brad okay, let's wrap it up there.

[Neal Freyman]

Thanks for starting your morning with us and have a wonderful Wednesday. For any questions, comments or feedback, send an email to Morning Brew daily at Morning Broadcom. And if you're enjoying the show, consider this a little tush. Push to share it with a friend, family member, or a coworker who would also find it helpful, and we'll make it as easy as possible. Don't think, just take Toby's recommendation.

[Toby Howell]

I want you to share this episode of the podcast with someone who owes you some money on Venmo. Consider this a more polite way of following up than just reminding them in the app. And if you are the debtor, then consider this a reminder to pay your debts.

[Neal Freyman]

Let's roll the credits. Emily Milian is our executive producer. Raymond Lu is our producer. Olivia Graham is our associate producer. Uchenawa Ogu is our technical director. Garrett Peck is on audio, hair and makeup. Sent a Venmo reminder just when you get a chance. Devin Emery is our Chief Content Officer and our show is a production of Morning Brewing.

[Toby Howell]

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