Big news

MARKETS

• Trade: In a literal sense, President Trump physically held up a folded piece of paper he identified as a “very simple” Mexico trade deal in front of reporters. In a figurative sense, he said he’s “holding up” a trade deal with China unless Beijing agrees to earlier terms.
• U.S. markets: The Dow snapped a six-day winning streak.

TECH

Trends Come and Go, but the Internet Is Forever

No one is as extremely online as Mary Meeker, famed Silicon Valley VC and verified internet seer.

That’s why we spent yesterday poring over her 2019 Internet Trends report. Actual transcript of the Brew’s Slack:

• Ryan [12:38 PM] I am hundo p going through all 333 slides
• Neal [12:38 PM] Haha def
• Kinsey [12:38 PM] Required reading

Before we get to what we learned from those 333 slides, a note on why yesterday was Christmas for internet lovers:

• Meeker began the tradition in 1995 while working as an analyst for Morgan Stanley.
• Her inaugural report included info on “how to use the internet” and notes on “lots of upside” to recorded music and television online (...)

Fast forward to this millennium, and Meeker’s still a tech world sage. Her teams have invested in Facebook, Spotify, Square, Twitter, Snap, Slack, and Uber, to name a few.

To (some of) Meeker’s trends

More than half the human population is online. 51% of the world, or 3.8 billion people, used the internet last year. And Americans are spending more time online than ever—6.3 hours/day last year, per Meeker. Over 25% of U.S. adults consider themselves “almost constantly online.”

• Growing usage and strong returns are part of why tech investment is at a 20-year high.

Google and Facebook still own the ad spending game, though Amazon and Twitter are on the up. Overall U.S. internet ad spend jumped 22%, but the costs to acquire new customers are growing quickly.

• For that reason, Meeker is bullish on free trials and “freemium” subscription models.

Now that people care about privacy, companies are turning it into a selling point. In Q1, 87% of global web traffic was encrypted. Three years earlier, just 53% was.

Bottom line: As the internet continues to evolve, trends that made tech valuable even a year ago are changing. Today, succeeding online is all about being nimble.

ANTITRUST

State AGs Object to T-Mobile/Sprint Merger

Yesterday, a group of at least 10 state attorneys general filed a lawsuit in Federal District Court against T-Mobile (-1.58%) and Sprint’s (-6.80%) planned $26 billion-plus merger. New York and California’s AGs are leading the charge.

The backstory: Ever since it was announced last year, the deal has inspired both fears of increased prices and dreams of a 12 Angry Men-style courtroom showdown.

• Then, FCC Chairman Ajit Pai said last month he supported the union as long as it meant expanded broadband connectivity for rural Americans and 5G for all of us.

But this latest move is...weird. The FCC handed over the case to its partner-in-antitrust-crime, the DOJ, which hasn’t made a decision yet. Experts say it’s very unusual for state attorneys general to bring a case on a topic that the Justice Department is reviewing. We don’t know which judge will get the case yet, but we bet they’re practicing in the mirror as you read this.

ENERGY

BP Energy Report: Thought We Talked About This

BP’s (+0.62) yearly energy market review suggested a vicious cycle similar to our keto diet/entire pizza seesaw. Extreme weather causes people to use more energy on heating and cooling, which increases carbon emissions, which scientists say can cause...extreme weather.

The numbers: The report said global primary energy use increased 2.9% last year, likely in response to unusually hot and cold temperatures. Carbon emissions from energy use in turn grew 2%.

• That’s the biggest jump since 2011 and the equivalent of adding 400 million passenger vehicles globally. In the U.S., energy consumption rose by even more—3.5%, the strongest growth rate in 30 years after 10 years of decline.
• And that’s even as global economic growth slowed.

On one side: Global renewable energy consumption increased 15% in 2018, and China’s renewables consumption has grown 20x in the last 10 years. Overall, renewables accounted for about a third of the necessary increase in power generation.

On the other side: Coal accounted for about the same proportion.

Bottom line, borrowed from BP Chief Economist Spencer Dale: “Renewables can’t grow quickly enough.”

TECH

We All Need a Foxconn to Lean On

Going through a rough patch? Need to move your production outside of China if the trade war goes nuclear? There’s a Foxconn here to help.

Apple’s biggest manufacturing partner said it has enough capacity to shift U.S.-bound iPhone production to other locations if President Trump follows through with threats to put tariffs on about $300 billion more in Chinese goods. Most iPhones are made in China and would be affected by the tariffs.

• Semiconductor division head Young-Way Liu said 25% of Foxconn’s manufacturing capacity lies outside of China.
• It’s not clear where your iPhone could end up being assembled if things go downhill with China, but Foxconn has plants in countries including Brazil, Japan, Mexico, and the Czech Republic. Or as they’re better known, Group C of the World Cup.

Zoom out: Foxconn had plenty more questions to answer at its first-ever investor conference yesterday. The most pressing: Who will succeed chairman Terry Gou when he steps down to run for president of Taiwan?

BANKING

Wells Fargo Can't Find a CEO

Word on the street (and in the Journal) is that the bank is struggling to find someone to become CEO. These days, no one wants to take over the haunted office of ex-CEO Tim Sloan, who resigned in late March.

The Wells Fargo (-0.02%) board has reportedly approached some very strong-résuméd people, including JPMorgan consumer banking chief Gordon Smith, PNC Financial Services CEO William Demchak, and former U.S. Bancorp head Richard Davis. No dice.

It’s a tough sell. Wells Fargo may be the fourth-largest bank in the U.S., but it takes the cake when it comes to scandal. Whoever becomes CEO will have to juggle rebuilding the bank’s muddied reputation, answering to lawmakers on the warpath, and improving struggling business units.

Hiring is getting so hard, we found this at our local coffee shop.

WHAT ELSE IS BREWING

• Amazon (+0.16%) showed it is human after all, shuttering its U.S. restaurant delivery service after four years.
• Brex, a fintech startup known for its credit cards for...startups, raised $100 million at a $2.6 billion valuation.
• Uber’s (-0.38%) Elevate conference kicked off yesterday. The company has ambitions to become a major player in air transportation.
• Dropbox (-0.26%) unveiled a redesign.
• Juul told investors sales are climbing again after a brief pullback stemming from its move to axe some teen-loved flavors.
• Bill Ackman, activist investor and sizable United Technologies (-3.96%) shareholder, sent a letter to the company saying a merger with Raytheon (-5.11%) makes no sense, per the WSJ.

BREAKROOM

Currency Manipulation
Rank the following USD notes by total circulation:

$1, $2, $5, $10, $20, $50, $100

Breakroom Answers

$100: 13.4 billion notes
$1: 12.4
$20: 9.4
$5: 3.1
$10: 2.0
$50: 1.8
$2: 1.3