Wednesday, March 11, 2020

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  • Afghan government to release 1,500 Taliban prisoners, major step in peace negotiations
    Afghan government to release 1,500 Taliban prisoners, major step in peace negotiations
    WHOOP
    Good Wednesday morning. Sorry to be that person who always tells you their birthday is in a few days, but...our birthday is in a few days. 
    We think you’ll forgive us, and here’s why: Because we’re turning five, we’re giving readers who hit five new referrals this week a pair of beautiful Brew socks. 
    • The kicker: As we pack up those socks, we’ll stuff one pair with a golden ticket worth $5,000 cash. That means one lucky reader who gets five new referrals this week will win $5,000.
    You have until Sunday at midnight. Get started now.

    MARKETS


    NASDAQ
    8,344.25
    + 4.95%
    S&P
    2,882.23
    + 4.94%
    DJIA
    25,018.16
    + 4.89%
    GOLD
    1,648.60
    - 1.62%
    10-YR
    0.809%
    + 24.10 bps
    OIL
    34.63
    + 11.24%
    *As of market close
    • 2020: The "Joementum" keeps menting. Former VP Joe Biden won several primaries last night. 
    • Markets: Following the worst day on Wall Street in 12 years, stocks shot back up like a boomerang yesterday. Investors are desperately craving a strong, coordinated response from the U.S. government. 
    • Energy: Oil prices also rebounded from their Monday collapse, but Saudi Arabia appears to be making good on its pledge to flood the world with oil. The state-run oil company Aramco will bump up crude production to a record 12.3 million barrels a day in April.
    Bill Clark/Roll Call via Getty Images
    After paying a $3 billion fine last month, Wells Fargo was hoping to leave its 2016 fake accounts scandal tucked in the past between lip liner and dip-dyed tips. But Rep. Maxine Waters, chair of the House Financial Services Committee, isn't ready to let America's fourth-largest bank off easy. 
    Yesterday afternoon, Waters kicked off a pair of committee hearings digging into the bank's response to the scandal. Last week, her committee released a stinging report, alleging:
    • Execs looked away while the fraud was happening, and didn't exactly rush to get compliant after the fact. 
    • Regulators also failed to enforce the terms of Wells’s consumer settlement agreements. 

    Who was in the hot seat

    Charles Scharf, Wells's third CEO in four years. Scharf left BNY Mellon to take over last October, and that outsider status might be his only lifeline: The bank’s last two CEOs resigned shortly after their Capitol Hill grillings.
    • Yesterday, NY Rep. Gregory Meeks told Scharf, "For the life of me, I don't know why you took this job." 
    Waters wished Scharf luck, noting "the bank you inherited is essentially a lawless organization that has caused widespread harm to millions of consumers throughout the nation."

    Who's not in the hot seat anymore

    A pair of veteran Wells board members resigned this weekend, including chair Betsy Duke and director James Quigley. 
    • Waters had explicitly called for Duke's resignation ahead of the hearing. Former Bank of America CFO Charles Noski is taking over for her. 
    Big picture: Scharf acknowledged Wells has a culture problem, but advised not to expect that to get fixed until 2021. The Fed is capping the bank’s growth until those issues are resolved. 
    + While we're here: Also yesterday, the Consumer Financial Protection Bureau sued Fifth Third Bank, making awfully familiar allegations about employees opening fake accounts to meet sales goals. Third Fifth says it already investigated allegations and rooted out 1,100 fraudulently opened accounts (out of 10 million total) that amounted to less than $30,000 in damages. 
            
    Piqsels
    If you're willing to fly in the coming weeks, we can guarantee you won't be fighting an ex-Marine for overhead bin space. With demand plummeting from the coronavirus, the airline industry took drastic steps yesterday to mitigate its worst crisis since 9/11. 
    • Major U.S. carriers having taken measures including cutting flights, freezing hiring, delaying pilot training, and suspending share buybacks. 
    • Top United brass will forgo base salaries, and Southwest's CEO said he's taking a 10% pay cut. 
    • American, Delta, and United scrapped their 2020 forecasts. 

    Things are even more bizarre in Europe 

    Or should we say spooky. As travelers cancel their trips, airlines across Europe have been flying "ghost flights"—almost empty planes—to comply with an EU rule that they use allocated landing slots or lose them to competitors. 
    • That means planes were burning harmful greenhouse gases without actually taking anyone anywhere. 
    Realizing this policy makes very little sense at a time like this, the EU said yesterday it'll suspend the rule. It only expects air traffic to deteriorate going forward. 
            
    Tayfun Coskun/Anadolu Agency via Getty Images
    Companies, especially those in the service sector, are under pressure to provide paid sick leave to workers who may not be in a financial position to take time off. 
    • The CDC is not encouraging sick workers to hand lattes and fries to customers right now.
    • Around 40% of service workers don't get paid sick time, according to Labor Department data from spring 2019.

    The latest updates 

    Walmart, the country’s biggest private employer, instituted an emergency leave policy. Hourly workers will get up to two weeks’ pay if they have COVID-19 or if they're required to quarantine by either the government or Walmart. 
    McDonald’s workers demanded safeguards. Along with labor group Fight for $15, McD’s employees asked for paid sick leave and revamped safety protocols. Darden Restaurants, the owner of Olive Garden, started offering sick leave to hourly workers. 
    Looking ahead...Congress might step in. Two Democratic lawmakers introduced a new version of a stalled bill that would require companies of all sizes to provide paid sick leave, plus another 14 days off during public health emergencies.
            

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    And WHOOP is here to optimize your sleep habits, so you can be a winner.
    WHOOP is the high-tech fitness tracker that has our office sleeping smarter and more ready to deliver the wittiest business news of all time. It provides 24/7 insights on sleep, recovery, and performance. 
    Plus, WHOOP’s newest feature lets you see how your lifestyle choices impact your overall metrics. So we know if we need to lay off the cold brew after 3pm (we do), or if our attempts at meditating before bed are paying off (they are).
    WHOOP’s sophisticated insights have our office geeking out on our fancy fitness data—like our heart rate variability, sleep stage breakdown, and sleep debt.
    The night is when your day is won. Start catching those ZZZs with WHOOP. 
    Outdoor Voices
    ...by not doing it. The NYT reported yesterday on the turmoil around Outdoor Voices, the colorblock queen of digital-native startups.
    • In January, the workout apparel company raised money at a $40 million valuation, though it was worth $110 million in 2018. Then, last month, founder and CEO Ty Haney stepped down, followed by 15 other layoffs. 

    The (Instagram) backstory 

    In 2017, OV hired a renowned retail exec, Mickey Drexler, to add credibility and industry know-how. But Drexler and Haney paired like orange with green.
    • Tension grew until Haney's exit, when she posted an Instagram Story that reportedly referred to Drexler as "an individual trying to cause harm."
    Zoom out: OV is the latest poster child for money-losing ($2 million/month last year), VC-backed (Google Ventures and Forerunner) startups. Their favorite customer well—social media ads—is running dry, with the cost to acquire new users on platforms like Facebook, Instagram, and Google steadily trending upward. Plus, VCs' habit of pushing for supersonic growth is looking more like a liability than an asset. 
            
    MSCHF
    Here's one that defies explanation: MSCHF. 
    In its latest viral antic, the company created "All the Streams," a website that shows "pirated" TV shows from all the major streaming platforms: Hulu, Disney+, Netflix, Amazon Prime Video, etc.
    • You don't get to choose the show that's playing, but hey, we lived through that for 60 years of cable TV. 
    The backstory: Originally a marketing agency, MSCHF is home to 10 employees that "pretty much do whatever they want," per the NYT. But whatever they want has been highly entertaining…
    • A desktop app that swipes right on Tinder every time you click your mouse.
    • "Times Newer Roman," a font that's slightly bigger than Times New Roman. Works like a charm on term papers that need a little extra oomph to get across the finish line.
    • A mystery box that doubled as a game theory experiment. Until it sold out, you could buy a box for $100. If you opened it, you'd find an item worth anywhere from $0–$7,000. Or you could mail it back after 100 days and MSCHF would give you $1,000. 
    Bottom line: MSCHF has raised at least $11.5 million since fall 2019, but like the box, its business model is a bit of a mystery.
            

    WHAT ELSE IS BREWING

    • Occidental Petroleum slashed its dividend in response to plummeting oil prices. That $38 billion acquisition of Anadarko Petroleum is not aging well.
    • Dick's Sporting Goods said it will remove guns from another 440 stores this year.
    • Major universities across the U.S. are canceling in-person classes over the coronavirus epidemic.
    • Yesterday marked one year since the crash of the Ethiopian Airlines Boeing 737 Max that killed 157 people.

    SPONSORED BY WHOOP

    WHOOP
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    BREW'S BETS

    • Are we ready for an outbreak? Five years ago, Bill Gates explained why he didn’t think so.
    • Speaking of ridiculously wealthy people...can you guess who the richest person in each U.S. state is? A few are…
      • Washington: Jeff Bezos
      • New York: Michael Bloomberg
      • Texas: Alice Walton
      • Find out the rest here.

    FROM THE CREW

    Emerging Tech Brew
    Francis Scialabba
    We're not the only Brew newsletter that has a birthday this week. Emerging Tech Brew is turning one year old today. It’s a Pisces, so you know it's compassionate, intuitive, and chock full of news about the latest innovations in tech. 
    All it wants for its birthday is for you to sign up. So sign up here. 

    UNITED STATES OF WEALTH

    This challenge is for the readers who didn’t click on the “wealthiest person in every state” link above. See if you can identify the richest people in the following states:
    1. California
    2. Nebraska
    3. Massachusetts
    4. Oregon
    5. Kansas

    GIVEAWAY

    You know the deal. When you refer 5 friends to the Brew this week, you’ll earn:
    1. A brand new pair of Brew socks
    2. A chance that when you open that package of socks, there’s a golden ticket worth $5,000 in there.
    You have until Sunday at midnight.*
    Click here to get free swag.
    Hit the button below to start sharing.
    Share to Win
    Or copy & paste your referral link to others:
    morningbrew.com/daily/r/?kid=a17a7110
    *See the terms and conditions of the giveaway here.

    UNITED STATES OF WEALTH ANSWERS

    1. California = Mark Zuckerberg, CEO of Facebook
    2. Nebraska = Warren Buffett, CEO of Berkshire Hathaway
    3. Massachusetts = Abigail Johnson, CEO of Fidelity 
    4. Oregon = Phil Knight and family, co-founder of Nike
    5. Kansas = Charles Koch, CEO of Koch Industries
                  
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