Southwest Scraps Free Checked Bags & Tariffs Hit Steel and Aluminum

Summary

Morning Brew Daily: Southwest Scraps Free Checked Bags & Tariffs Hit Steel and Aluminum

Release Date: March 12, 2025

In this episode of Morning Brew Daily, hosts Neal Freyman and Toby Howell delve into critical developments impacting the aviation and manufacturing industries, explore geopolitical maneuvers surrounding Greenland's rich mineral resources, and touch upon unexpected shifts in the global ski industry. Here’s a comprehensive breakdown of the key discussions, insights, and conclusions from the episode.

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1. US Imposes Heavy Tariffs on Steel and Aluminum

The episode begins with a significant focus on the United States' latest move to impose substantial tariffs on steel and aluminum imports.

Neal Freyman: "President Trump ramped up his fight against Canada yesterday, saying he would double plan tariffs on Canadian steel and aluminum from 25% to 50% effective today." (08:02)

This escalation comes in response to Ontario's Premier Doug Ford imposing a 25% surcharge on electricity exported to U.S. states like New York, Michigan, and Minnesota, affecting approximately 1.5 million households and businesses. Although initial negotiations hinted at a potential easing of these tariffs, the episode highlights the ultimate imposition of a staggering 2075% tariff on aluminum and steel against all U.S. trading partners, including Canada.

Toby Howell: "It shows that investors, part of the pun here, don't have nerves of steel." (09:31)

The repercussions of these tariffs are multifaceted:

• Domestic Impact: While U.S. steel producers may benefit from reduced competition, manufacturers reliant on steel and aluminum face increased costs, potentially leading to higher prices for consumers and reduced profitability.

• Market Reaction: The S&P 500 experienced a sharp decline, tumbling another 1.75%, reflecting investor anxiety over the unpredictable trade policies and their broader economic implications.

• Historical Context: The hosts reference the 2018 tariffs, noting a 2% rise in metal prices and a 25% drop in imports, illustrating both the intended protection of domestic industries and the unintended consequences on other sectors.

Neal Freyman: "Prices for both metal, steel and aluminum rose 2% and imports fell by a quarter. That is the intended effect of tariffs." (10:18)

The discussion underscores the delicate balance policymakers must maintain between protecting domestic industries and fostering a competitive, cost-effective manufacturing sector.

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2. Southwest Airlines Ends Free Baggage Policy

Transitioning to the aviation sector, Neal and Toby examine Southwest Airlines' bold decision to abandon its longstanding free checked baggage policy.

Neal Freyman: "Last year, Southwest was the last airline standing against the rise of extra fees and nickel and diming, missing out on five and a half billion dollars in baggage fees US Airlines raked in last year." (04:43)

This policy shift is not merely a pricing strategy but a strategic response to intense financial pressures faced by the airline industry. Factors driving Southwest's change include:

• Financial Strain: The airline industry is grappling with reduced consumer demand, economic uncertainties, and a series of aviation incidents that have shaken passenger confidence.

• Investor Pressure: Activist investor Elliott Investment Management has pressured Southwest to enhance revenue streams, leading to the reconsideration of previously held policies.

• Market Differentiation Challenge: By aligning with industry norms on baggage fees, Southwest now faces the challenge of differentiating itself from rivals like Delta and American Airlines, which rely on premium services and diversified fleets to drive profitability.

Toby Howell: "Southwest believes it had little choice but to press the flight attendant call button to try and beef up its bottom line." (05:29)

The hosts discuss the strategic implications of this move, questioning how Southwest will maintain its unique market position without its free baggage hallmark. They also explore the broader industry downturn, noting reduced revenue forecasts across major airlines and the compounded effects of external economic and safety concerns.

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3. Greenland's Pivotal Parliamentary Election and Mineral Riches

A significant portion of the episode is dedicated to Greenland's recent parliamentary elections and their implications for global geopolitics, particularly concerning rare earth minerals.

Toby Howell: "Greenland isn't just strategically located between North America, Europe and Asia. It's also sitting on a mother lode of rare earth minerals, lithium, graphite, nickel, and rare earth elements that can help power the global tech industry for the next century." (12:20)

Key points include:

• Election Outcomes: The center-right Democratic Party surged from 9% to 30%, while the pro-independence REC party emerged as the second-largest group, signaling a strong movement towards Greenlandic independence from Denmark.

• Geopolitical Significance: Greenland's estimated 43 of the 50 critical minerals vital to U.S. national security make it a focal point in the strategic maneuverings of global powers. The U.S. aims to secure access to these resources to counter China's dominance in the rare earth supply chain.

• Economic and Environmental Challenges: Despite the abundance of minerals, Greenland faces significant logistical hurdles. Approximately 80% of the island is ice-covered, and the lack of infrastructure necessitates substantial investment to make mining viable.

Neal Freyman: "The stage is set for an absolute gold rush onto Greenland right now. It contains an estimated 43 of the 50 critical minerals that the US considers vital to national security." (13:50)

The discussion touches on historical contexts, referencing President Trump's previous tariffs and the ongoing strategic interest in controlling Greenland's mineral wealth. The hosts also highlight the environmental and infrastructural challenges that impede exploitation efforts, despite the high-stakes geopolitical interest.

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4. Japan's Ski Industry Surges Amid Record Snowfall

Shifting gears, Neal and Toby explore the unexpected boom in Japan's ski industry, driven by record-breaking snowfall and its growing appeal to international tourists.

Toby Howell: "Light, fluffy and abundant Japan snow has attracted a record number of skiers and snowboarders this winter who marvel at the fresh powder and unique cultural experience offered by Japan's 500 ski resorts." (19:00)

Highlights include:

• Record Snowfall and Its Effects: Despite unprecedented snowfall heights—122 inches on one mountain—leading to temporary resort closures and operational challenges, the overall impact remains positive, attracting more tourists seeking reliable and high-quality skiing experiences.

• Comparison with Western Resorts: Unlike North American and European resorts struggling with inconsistent snowfall and rising costs, Japan offers abundant natural snow, more affordable lift tickets (with the highest being around $75), and a cultural allure that enhances the skiing experience.

• Long-Term Growth and Challenges: While the current surge presents significant opportunities for tourism and economic growth, concerns loom regarding potential over-crowding, increased real estate costs, and labor shortages due to Japan's aging population.

Neal Freyman: "The snow is so abundant. It's just this swirling swirl of climate factors where you have the winds blowing across Siberia mixing with the warmer temperatures above the Sea of Japan, and then it slams into these mountains and creates a really, really abundant snowfall." (19:58)

The hosts conclude that Japan's ski industry is poised to become a global leader, provided it navigates the imminent challenges of infrastructure strain and demographic shifts.

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5. Final Headlines: Education Department Downsizing, Manchester United's New Stadium, MLB Merchandise Fiasco, and More

The episode wraps up with a series of brief yet impactful headlines covering diverse topics:

• Education Department Downsizing:

  Neal Freyman: "The Education Department said it plans to shed more than 1,300 of its employees, about half of its staff." (21:41)

  In alignment with President Trump's agenda to dismantle the agency, the downsizing aims to reduce bureaucratic bloat while maintaining essential functions like delivering federal aid and managing student loans. However, concerns persist about the department's capacity to effectively fulfill its duties with a significantly reduced workforce.

• Manchester United's Stadium Transformation:

  Toby Howell: "By ditching Old Trafford, the club announced plans to replace its historic 115-year-old stadium with a brand new 100,000-seat behemoth." (22:20)

  The proposed new stadium, projected to be the largest in the UK at a cost of $2.5 billion, promises to generate jobs and boost local economies. Yet, fans express anxiety over the financial feasibility and the club's on-field performance, as Manchester United currently languishes in 14th place in the Premier League.

• MLB Merchandise Mishaps:

  Neal Freyman: "This year, fans are mocking special edition New Era hats for showing nonsensical and sometimes inappropriate words on the cap." (24:12)

  New Era's attempt to modernize their merchandise design backfired, leading to public ridicule and product discontinuation. This follows last year's issues with jersey designs, highlighting a troubling pattern of failed merchandise launches within Major League Baseball.

• Impact of "Severance" on Pets:

  Toby Howell: "Fans of the hit Apple TV plus show have noticed their pets freaking out, whining, pacing, even hiding whenever the series is playing." (24:57)

  The unsettling sound design and color palette of "Severance" are believed to distress pets, mirroring the anxiety experienced by viewers. Experts suggest that pet owners consider lighter programming alternatives to maintain household harmony.

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Conclusion

In this episode, Morning Brew Daily effectively navigates through a spectrum of pressing topics, from hefty tariffs reshaping the steel and aluminum industries to significant strategic shifts in the aviation sector with Southwest Airlines. The geopolitical spotlight on Greenland underscores the intricate interplay between natural resources and global power dynamics, while Japan's burgeoning ski industry exemplifies resilience and strategic opportunity in the face of environmental extremes. Concluding with a rapid-fire roundup of diverse headlines, Neal and Toby provide listeners with an insightful and comprehensive overview of the day's most impactful stories.

Notable Quotes:

• Neal Freyman: "Prices for both metal, steel and aluminum rose 2% and imports fell by a quarter. That is the intended effect of tariffs." (10:18)

• Toby Howell: "Southwest believes it had little choice but to press the flight attendant call button to try and beef up its bottom line." (05:29)

• Neal Freyman: "The stage is set for an absolute gold rush onto Greenland right now." (13:50)

• Neal Freyman: "The snow is so abundant. It's just this swirling swirl of climate factors..." (19:58)

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This detailed summary encapsulates the multifaceted discussions from the Morning Brew Daily episode, offering listeners a thorough understanding of the critical issues shaping today's economic and geopolitical landscape.

Transcript

[Toby Howell]

Hey, Fidelity. How can I remember to invest every month? With the Fidelity app, you can choose a schedule and set up recurring investments in stocks and ETFs. Huh. That sounds easier than I thought. You got this?

[Neal Freyman]

Yeah, I do.

[Toby Howell]

Now, where did I put my keys? You will find them where you left them. Investing involves risk, including risk of loss. Fidelity Brokerage Services, llc. Member nyse, SIPC.

[Neal Freyman]

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

[Toby Howell]

And I'm Toby Howell.

[Neal Freyman]

Today, tariffs go heavy metal as the US hits trading partners with a 25% steel in aluminum tax.

[Toby Howell]

Then, remember when bags flew free on Southwest? Well, now it's bags fly for a fee. Yep, free baggage is gonzo. It's Wednesday, March 12th. Let's ride.

[Neal Freyman]

A hot new play is setting fire to Broadway. Well, it's actually a very old play. Shakespeare's Othello, starring Denzel Washington and Jake Gyllenhaal brought in $2.8 million last week over eight performances, making it the highest weekly gross for a Broadway play in history. The average ticket price was $338, but hearing Denzel recite, excellent Wretch, perdition catch my soul, but I do love the and when I love the not Chaos is come again. Seems worth it.

[Toby Howell]

Watch out. Dead. That was well done. Very expensive ticket prices. I mean, you mentioned the average ticket price, but you can get tickets upwards of $800 to see these two on stage. There's a lot of movie star action on Broadway right now. And also coming down the pipeline this spring, you can come see a picture of Dorian Gray starring Sarah Snook, AKA Shiv from Succession, Maybe Glengarry Glen Ross starring Kieran Culkin, Bob Odenkirk, and Bill.

[Neal Freyman]

Burr as I have tickets to that.

[Toby Howell]

All right, that is your thing.

[Neal Freyman]

That looks amazing.

[Toby Howell]

And if you want suave, Good night and Good Luck starring George Clooney starts previews this week. So a lot of good Broadway out there right now, even if it may cost you an arm and a leg. Now a word from our sponsor, Invesco Cucu. Neal, were you a jock or a nerd in high school?

[Neal Freyman]

Geez, Toby, getting a little personal here. I'd like to think I straddled both worlds. I was on the tennis squad, but also on our Quiz bowl team, and we were elite.

[Toby Howell]

I'm sure you dominated and this is why you're successful, Neil. You contain multitudes. You're kind of like the Invesco QQQ etf.

[Neal Freyman]

Does it have a nasty one handed backhan and know every capital city in the United States?

[Toby Howell]

Well, no. But it's not just a tech fund or an industrials fund. It's a mix of 100 of the most innovative companies in the NASDAQ.

[Neal Freyman]

It contains multitudes. Want to know our Quiz bowl team name?

[Toby Howell]

If it ain't Invesco Cuckoo, then I don't want to know. With Invesco Cuckoo, you can rethink what's possible. Before investing, consider the fund's investment objectives, risk charges and expenses. Visit Invesco.com for prospectus with this information. Read it carefully before investing. Full disclosure in Podcast Description for more than 50 years, Southwest Airlines built its brand around one simple promise bags fly free. But that era is officially over. Starting May 28, Southwest will begin charging for checked luggage, a stunning reversal for an airline that once prided itself on being different. It's not just a policy change, it's a survival strategy. The decision comes amid a brutal financial squeeze for Southwest and the broader airline industry at large. Delta, American and Southwest have all slashed their revenue forecasts, blaming a sudden drop in consumer demand, rising economic uncertainty and Trump's unpredictable trade policies. It's a sharp U turn for airlines that have been riding high post pandemic, only to now face a perfect storm of weak consumer spending, corporate travel cutbacks and shaken passenger confidence following a string of aviation incidents. And Southwest is far from the only airline forecasting a rough air ahead. Delta CEO called the start of 2025 a quote, parade of horribles. As revenue expectations crater, American Airlines slash its guidance and nearly doubled its projected first quarter losses across the entire travel sector. Hotels, cruise lines and retailers are all seeing some signs of consumers pulling back. For years, Southwest was the last airline standing against the rise of extra fees and nickel and diming, missing out on five and a half billion dollars in baggage fees US Airlines raked in last year. But it did stay true to its identity. But after activist investor Elliott Investment Management began snapping up board seats and pushing the airline on missed revenue opportunities, Southwest believes it had little choice but to press the flight attendant call button to try and beef up its bottom line. Neal Bags. They're no longer flying free.

[Neal Freyman]

Let's go back to September 2024. Just a few months ago, Southwest praised its two free bags policy as far and away the top feature distinguishing the airline. This guy, Ryan Greene, who was the chief transformation officer at the time, did a study. He found that bag charges would bring in about $1.5 billion in revenue a year, but also cost Southwest $1.8 billion in lost market share as customers would go to Other airlines, if they made this change. So he said, guys, it is not worth it. Let's just say that Southwest is not employing this man anymore. They got rid of him and they made this change in a bid to survive in the cutthroat. In the cutthroat market for airlines right now.

[Toby Howell]

Right. It has underperformed financially. That is undeniable. But with this backslide free policy, it had a unique selling proposition. It was differentiated in the market and the market had been valuing differentiation at this point. However, when a business underperforms like Southwest was doing, management does lose a little bit of wiggle room when it comes to acting differently from the rest of the industry. So with that being said, it looks like Elliott management came in and said, hey, this is where we think that you guys are leaving a lot of revenue on the table. Obviously the back checked baggage industry is a huge part of what makes airline profitable. Sorry, you've been different for a long time. But now let's fall in line and try to, you know, shore up this business that has been struggling.

[Neal Freyman]

But now that Southwest has fallen in line with the rest of the industry, the question is how does it differentiate itself from Delta, American and United? And the answer is very unclear. Southwest doesn't have those premium cabin spots that have really been the profit driver of all of those major airlines in recent years. It only flies Boeing 737. It doesn't have a differentiated aircraft base where it can fly to different routes at more profitable areas. And then in terms of distribution and where people find Southwest. Only recently it showed up in places like Expedia or Google flights. For many years it wanted you to go to Southwest.com to book a flight. Now it's changing course because it realized that that's just another lever it could pull to move in line with the rest of the industry. But there are major concerns that Southwest cannot differentiate itself right now.

[Toby Howell]

And then just to zoom out in the, to look at the airline industry as a whole, Delta, American and Southwest have all lowered the revenue forecast. Delta slash its Q1 earnings forecast by more than 50%. American Airlines doubled its projected Q1 losses. Southwest cited softness in bookings. And it looks like part of it is because a lot of these airline CEOs are acknowledging changing spending habits. Where, you know, Trump's trade policies maybe have caused people to pull back a little bit. Goldman Sachs revised its 2025 U.S. growth forecast downward. We've talked about that on the show. Also, just a spate of recent aviation incidents and safety concerns are making travelers hesitate a little bit. We think back to the deadly crash into Washington in January. Delta had that non fatal crash in Toronto last month. And Delta has acknowledged that passenger concerns about airline safety have contributed to weaker demand. So just across the board you are seeing some softness in this industry.

[Neal Freyman]

Delta CEO Ed Bastian called Q1 a parade of horribles. Who knew that the brawls at the U.S. canada Hockey Game earlier this year would be a preview of their much larger economic war to come. President Trump ramped up his fight against Canada yesterday, saying he would double plan tariffs on Canadian steel and aluminum from 25% to 50% effective today. TRUMP said the tariffs would be raised after Ontario's premier Doug ford imposed a 25% surcharge on electricity from the province to people living in New York, Michigan and Minnesota, affecting 1.5 million households and businesses. But by mid afternoon, the 50% tariff on Canadian metals had been called off. That came after Ford and U.S. commerce Secretary Howard Lutnick said Ontario would suspend its plans for a surcharge on electricity going into the US and that the pair would meet in Washington on Thursday to discuss trade. With any negotiation that we have, Ford said, there's a point that both parties are heated and the temperature needs to come down. The temperature may be coming down, but the tariffs aren't starting. At midnight, 2075% tariffs on aluminum and steel went into effect against all the US Trading partners, including Canada, which could boost American metals producers but raise prices for manufacturers who use steel and aluminum as inputs to make other goods. The on again, off again tariff threats continued to give traders a headache. A day after posing its posting its worst session of the year, The S&P 500 tumbled another point, 75%.

[Toby Howell]

Yeah, it shows that investors, part of the pun here, don't have nerves of steel. The big issue is that Canada is the top foreign source of steel and aluminum that is used in just everything that you mentioned, cars, planes, soda cans. So these import taxes, yes, they could boost US Steel makers, could boost their bottom lines, but it also could make US manufacturing a lot more expensive. Auto industry execs in particular are very nervous about this because of how much aluminum and steel go into their vehicles. So yes, it has been just this one. It was kind of everyone was really scared a little bit yesterday when those tariffs were at 50%. We have backed down a little bit from that down to 25%. But still it is alarming that for auto manufacturers in particular and US Manufacturers that their input costs are going to be raised so much.

[Neal Freyman]

Yeah, and this is not the first time that Trump has input imposed tariffs on steel and aluminum. He did it back in 2018 during his first term. And that might be instructed to see what the impacts might be this time around. Prices for both metal, steel and aluminum rose 2% and imports fell by a quarter. That is prob intended effect of tariffs. It's supposed to raise prices to help out domestic manufacturers who are competing with foreign metals. At the same time it raised prices, companies like Caterpillar raised prices for customers, citing $100 million loss, loss in profit from from those tariffs. So you see the give and the take from tariffs. Last time those President Biden actually kept those tariffs on on for many of the US Trade partners rolled them back a little bit. So steel and aluminum tariffs have been with us for a while and they're just coming back to the entire world right now.

[Toby Howell]

And Canadian Canada, not Canadian Canada, plays an outsized role in the global aluminum market. Actually, most of their aluminum does end up across the border in America. 90% of its aluminum exports go to the US but 30% of 1. One thing that is interesting about Canada is that they don't actually have a lot of the raw materials you need to make aluminum. Bauxite is actually raw aluminum or they don't have any of that. Most of that comes in from Brazil. What they do have is an abundance of cheap hydroelectric power, which again, we've talked about it. This is something that it gets imported over the border. This was part of the entire spat to begin with. But their hydroelectric power infrastructure makes it one of the top producers of aluminum. So it's not just that they have a bunch of aluminum ore laying around the country, it's just that they're very good at fashioning it into aluminum itself. Moving on. Yesterday, Greenlanders bundled up and headed to the polls in a hugely consequential parliamentary election, one that will likely shape the future of the Arctic island and determine just how much leverage Trump has in his latest territorial obsession. The center right Democratic Party won most of the votes, jumping up from 9% in the last election to 30% this time around, while the pro Independence now the REC party surged to second place. Their victory signals that Greenlanders are thinking seriously about independent future away from Denmark. Taping. Taking a step back for a second, let's talk about why Trump and a whole bunch of other world powers suddenly care so much about a mostly frozen rock with a population smaller than a Taylor Swift concert. Greenland isn't just strategically located between North America, Europe and Asia. It's also sitting on a mother lode of rare earth minerals, lithium, graphite, nickel, and rare earth elements that can help power the global tech industry for the next century. For the US it is a tasty proposition. China currently dominates the rare earth supply chain, and Trump has made it clear he wants to change that. First, he pressured Ukraine to hand over mineral rights in exchange for military aid. Now he's trying to make sure Greenland's massive mineral deposits don't fall into Chinese or European hands. Meanwhile, Greenlanders are caught in the middle of this geopolitical tug of war. The island has been inching towards independence from Denmark for years, and opinion polls show that most Greenlanders do want to be their own country, just not as America's 51st state. So it was actually at stake. In yesterday's election, voters elected 31 lawmakers who will decide the direction of Greenland's independence movement, its mining policies, and by extension, whether the US Gets its hands on those minerals. So a lot was at stake.

[Neal Freyman]

The stage is set for an absolute gold rush onto Greenland right now. It contains an estimated 43 of the 50 critical minerals that the US considers vital to national security. It's hosted some of the largest rare earth resources known to exist anywhere around the world. People like Bill Gates and Jeff Bezos and even Howard Lutnick, the Commerce Secretary, have invested in companies that are prospecting in Greenland. It is a very strategic for Western powers as a way to box China out of its encroachment into their territory. However, only two mines currently exist in Greenland. There are a litany of challenges that prevent companies from investing there. So there is a ton of treasure to be had in Greenland. The accessing part is quite difficult.

[Toby Howell]

Yeah, it is very extreme in Greenland. It's incredibly difficult to access these things. As you said, 80% of Greenland is covered in ice. And there's also not a ton of roads between these settlements. So most, most of these mining projects must build these huge infrastructure from scratch, which adds to the costs. Right. So you're right, the island only has two active mines right there. The last a third one closed due to bankruptcy. Because this is just like the surface of the moon, it's just as difficult to set things up there as well. The US Already does have a foothold in Greenland. It is a military foothold. They have an air base there. It's been a military outpost since 1951. So it is one of those things where we've kind of been, always had an eye on it because of its strategic importance, but now, obviously, it's very much in the crosshairs. As it kind of enters this pathway towards independence. You can see from these elections that both those parties are in favor of independence. So with that being the case, you see some other multinationals come in and say, what else is there to glean from Greenland? And it is these, these rare earth minerals. So of course you're going to see a lot of, you know, fighting over it from the geopolitical powers like China, like the United states, like Russia, etc. Up next, you ever want to go skiing in Japan? Have you taken our Morning Market Trivia quiz yet?

[Neal Freyman]

Top scorers will receive a custom prize, a $200Amex gift card and a newsletter feature.

[Toby Howell]

If you want a sneak peek, here's one of the questions right from the quiz. Which of the following is not a major index? A nifty 50B S&P 500C DK Xi40 or D Nikkei 225.

[Neal Freyman]

If you have the answer, go to www.morning bukom/morning-market-trivia to test your stuff with the Morning Market Trivia quiz. Who knows, you could end up on the leaderboard. Like I said, top scorers will receive prizes and a feature in the Morning Brew newsletter. I scored a 12 out of 15.

[Toby Howell]

I got 11 out of 15.

[Neal Freyman]

Head on over to www.morning broadcom/morning-market-trivia and see if you can beat our scores and win some goodies. You know how some wireless plans promote a great deal and then you never see it again past your first bill?

[Toby Howell]

All too well, unfortunately.

[Neal Freyman]

Well, in comes Mint Mobile to the rescue with premium wireless plans starting at 15 bucks a month.

[Toby Howell]

Flexible plan options let you choose the data amount that's right for you and all plans come with high speed data and unlimited talk and text on the nation's largest 5G network. Mint Mobile's plans are by OE. Bring your own everything so you can bring your phone number with you and keep existing contacts.

[Neal Freyman]

Ditch overpriced plans and get three months of premium wireless service from Mint Mobile for $15 a month. Check coverage in your area and shop plans@mint mobile.com morning brew that's mint mobile.com morning brew upfront payment of $45 for three month five gigabyte plan required equivalent to $15 a month new customer offer for first three months only, then full price plan options available, taxes and FE C Mint Mobile for details Talk to any well traveled skier and they'll tell you that the country with possibly the world's best snow is Japan. Light, fluffy and abundant Japan snow has attracted a record number of skiers and snowboarders this winter who marvel at the fresh powder and unique cultural experience offered by Japan's 500 ski resorts. But this year, there was too much of a good thing. Last month, record breaking snowfall, 122 inches on one mountain has caused chaos on the slopes, leading to closed resorts, dozens of stranded skiers, and burnout for staff as they've had to shovel out to make their mountains operable. A spokesman, a spokesperson for Gala Yuzawa Snow Resort, which had to close for a day for the first time in more than 30 years, called this season's snowfall honestly disaster level, or to put a number on it, two and a half time. Last year's snowpack, the tumble is unlikely to dissuade more foreigners from skiing in Japan. In fact, it may only galvanize it once. Under the radar, Japan's ski mountains, centered on the northern island of Hokkaido, have officially hit the mainstream as European, Aussie and North American tourists head there in droves to escape the long lines, steep prices and lack of snow that characterize their home mountains and the gossamer waggoo strips. Opera Ski doesn't hurt.

[Toby Howell]

It does not hurt at all. I'm sure a lot of west coast skiers in the United States are rolling their eyes listening to this right now, saying too much now. Oh, poor Japan. Because Japan really is kind of the next iteration of this ski boom that we see go across the road. North America has been struggling with warmer winters. They've been struggling with melting glaciers. Skiing has become unreliable in the Alps and in the Rocky Mountains. So you are seeing these things where ski ticket prices are just absolutely exploding. 200 plus per day at resorts like Vail, Aspen and Whistler. So you look over at Japan, they have lower costs due to the weak yen compared to the US Dollar. They have a more reliable snowfall. Snowfall. So it makes for a lot of long term tourism growth there. Just Japan's ski industry is less dependent on artificial snowmaking. So you are just seeing this absolutely explode on the world scene. And a lot of travelers are flocking over there because of things like reliable snowfall.

[Neal Freyman]

A lot of people who ski this summer in North America, Europe, are about to win. But the most expensive lift ticket in Japan is around $75. Many cost much less. So essentially, if you pave the international airfare and you get there, you can have a really good time on the cheap. The snow is so abundant. It's just this swirling swirl of climate factors where you have the winds blowing across Siberia mixing with the, you know, warmer temperatures above the Sea of Japan, and then it slams into these mountains and creates a really, really abundant snowfall. Another factor that makes Japan attractive is that if you're afraid of altitude or get sick from the altitude, many of these mountains are below 1,000ft in elevation. So there's no altitude sickness going on. Yes, there may be smaller slopes, smaller, smaller runs, but, you know, it makes up for it in terms of the experience.

[Toby Howell]

And I do think that Japan is a little bit at of having what happened to the North American and European ski industry happen in Japan, because these resorts are starting to get more crowded, which means that, you know, real estate costs around them are going to go up, make it harder for locals to afford housing. Also, labor shortages are a big issue in Japan as well, because we've talked about this as a larger problem. Japan, it's an aging population. And so to have, you know, young ski bums working those seasonal work jobs are not as easy to find in Japan as maybe you find in the United States as well. So the final takeaway is Japan. Maybe it's the future of global skiing. There are a lot of factors that are pushing it towards that. The weekend, climate change, global ski industry shifts in general. But it does have to avoid the same pitfalls that these other mountains have gone through.

[Neal Freyman]

Let's sprint to the finish with some final headlines. The mass layoffs at the federal government roll on with the Education Department saying it plans to shed more than 1300 of its employees, about half of its staff. Previewing President Trump's stated goal of dismantling the agency entirely. Officials insisted the Education Department would continue to fulfill key functions such as delivering federal aid to schools, managing student loans and overseeing Pell grants. Secretary of Education Linda McMahon said the downsizing was intended to reduce bloat and send more money to state school authorities. She has acknowledged that only Congress has the power to completely abolish the agency.

[Toby Howell]

Right. This is an advancement of one of Trump's stated goals, get rid of the Department of Education. There is a lot of concern, though, if you can, a 50% reduction in stat allows you to continue to serve the people that the Education Department does. There was that reiteration that, you know, student aid will not be impacted, but there is some concern on whether, you know, you can do the job of the Education Department. With half of the staff gone, Manchester United is taking the ultimate out with the old in with the new approach. By ditching Old Trafford, the club announced plans to replace its historic 115 year old stadium with a brand new 100,000 seat behemoth that co owner Jim Ratcliffe claims will be the world's greatest football stadium. The project is part of a massive plan that aims to create 92,000 jobs, 17,000 homes and attract 1.8 million visitors a year. While United fans might welcome the upgrade, their real concern remains the club's on field struggles. As a fan myself, it is tough to see them languishing in 14th place in the Premier League. The theater of dreams, as Old Trafford is known as, has become more of a nightmare.

[Neal Freyman]

Yeah, this stadium is going. This new stadium is going to be huge. 100-000-person capacity that would be the biggest stadium in the UK. It's going to cost $2.5 billion. So the big question is where they're going to find the money. Are they going to sell the naming rights? But just to put this in context, this stadium has been around for 115 years. It's like Fenway park getting demolished to get a new Boston Red Sox stadium is kind of similar to what happened with Yankee Stadium where they took down the old one, built a new one. I mean, as a Man U fan, what do you feel about this?

[Toby Howell]

I mean, I saw the renderings, they kind of look like a circus tent. Which led to a lot of jokes of, hey, look, there's a circus tent above it and there's a circus going on beneath it. I truly just care what's going on on the field, stadium or not. Just play better. That's all I want.

[Neal Freyman]

For the second straight spring, Major League Baseball is dealing with a merch fiasco weeks before the season starts. Last year, players complained about newly designed jerseys from Nike and fanatics. This year, fans are mocking special edition New Era hats for showing nonsensical and sometimes inappropriate words on the cap. New Era recently released overlap hats that superimposes each franchise's logo over its wordmark. But it worked better in the brainstorm session than in practice because the Houston Astros hat reads ash hose and the Texas Rangers hat looks like it says tetas, which you can Google what that means in Spanish. After getting roasted on social media, the Rangers hat is no longer being sold. But seems baseball cannot get out of its own way when rolling out new merchandise.

[Toby Howell]

They're so bad, I don't understand why you need to get so cute with it that you just completely obscured the brand's name altogether. The issue with New Era doing this is that unlike fanatics, which had the jersey fiasco last year, where the jerseys were way to see through, they were Sweating Through New Era has had a relationship with MLB dating back nearly a century. They've been supplying its game used MLB hats since 1934. So this was not just some new upstart company trying to save costs. It really looks like they just whiffed the I mean, I should say struck out on these designs. I encourage you to go look them up because you would never put it on your head. It just doesn't make sense. Next time you toss on severance, check to see if your pet is nearby. Because while your Audi might love dogs, you your dog might not love them back. Fans of the hit Apple TV plus show have noticed their pets freaking out, whining, pacing, even hiding whenever the series is playing. Experts say dogs might be reacting to the show's unsettling sound design, which includes high pitch beeps and unnerving static, or even its signature blue color palette, which dogs perceive more vividly than other colors. But maybe the real culprit is you. If severance is stressing you out, your dog is likely just mirroring your anxiety. So maybe switch to something lighter, like bluey.

[Neal Freyman]

I mean, panting, pacing, pacing back and forth, wanting to curl up with someone. That sounds like me when I watch this. So. So it's very understandable that a dog would be exhibiting these behaviors as well. It's just a very unsettling experience for both human and animals. Let's wrap it up there. Thanks so much 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, share it with a friend, family member, or coworker. Toby who should everyone share it with today?

[Toby Howell]

I want you to share the podcast with someone who has strong thoughts on Severance Season two the debate has been tearing up the Morning Brew office. A lot of it's boring and there's no payoff takes being thrown around. So stir things up in your own group chat by setting this episode as a catalyst.

[Neal Freyman]

Let's roll the credits. Emily Milian is our executive producer, Raymond Lu is our producer. Olivia Graham and Olivia La are our associate producers. Uchenawa Ogu is our technical director. Scoop Stardaris is on audio, hair and makeup is scarfing down nigiri after a long day on the Japanese slopes. Devin Emery is our chief content officer and our show is a production of Morning Brew.

[Toby Howell]

Great show that Neil. Let's run it back tomorrow.