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MARKETS

• Trade: The U.S. will lift steel and aluminum tariffs on Canada and Mexico this weekend. USMCA (aka NAFTA 2.0), you’re looking clear for takeoff. In other scaling-back-tariff-aggression news, the White House opted to postpone a final decision on auto tariffs for six months.
• Economy: Consumer sentiment in the U.S. surged to its highest level in 15 years. Funny, the spike in good vibes came suspiciously soon after Lizzo’s latest album release.

AGRICULTURE

If It Runs Like a Deere...It's Going to Have a Tough Year

Much like your friend who bailed on your birthday party, the U.S. agricultural sector has a lot going on right now.

Yesterday, farm supply company Deere & Co. (-7.65%) announced a cautious forecast and earnings that showed the ripple effects of a downbeat industry.

Farmers dealing with uncertainty are less likely to spring for a shiny new thresher...and it showed in Deere’s numbers. It cut net income guidance from $3.6 billion to $3.3 billion and equipment sales growth from 7% to 5% for fiscal 2019. Its Q2 earnings ($3.52 per share) came in under estimates for the fifth quarter in a row.

So why is agriculture all agitated?

1. Technological improvements in fertilizers and seed technology have improved efficiency, leading to a global crop oversupply that’s driven prices down.
2. Bad winter weather in the Midwest, followed by historic flooding after a sudden thaw, led to a later-than-usual planting season in North America. Iowa's farm-driven economy took a $2 billion hit from March floods, according to Farm Bureau estimates.
3. Rhymes with frayed boar: the ongoing U.S.-China trade conflict. China is the #1 global buyer of soybeans, and last year it capped U.S. imports in response to...one maneuver or other from Washington, we’re losing track. And on Monday, China said it’s planning to increase tariffs on $60 billion of U.S. goods in response to a U.S. tariff hike, causing even more uncertainty.

As JPMorgan analyst Ann Duignan put it, “Overall, this is a perfect storm for U.S. farmers,” which means less demand for Deere’s wares. It was forced to cut production by 20% at two of its largest North American factories.

It’s hard to find a silver lining, but here’s a shot: The company’s stuck around for 182 years, because while other industrial companies come and go, writes the WSJ’s Lauren Silva Laughlin, Deere services an industry—food—whose sales remain resilient no matter the challenges.

DELIVERY

Amazon Is En Route With Your Delivery

roo) has raised $575 million in a Series G led by Amazon (-2.02%).

Take a step back: The investment shows Amazon’s willing to stick its neck out for a food delivery company—and squashes concerns that Uber’s disappointing IPO (which in part hinged on the success of its Uber Eats service) would stifle food delivery hype.

• The icing on the cookie? Deliveroo’s other U.S. rival, DoorDash, is reportedly raising at least $500 million at a valuation of about $13 billion—nearly double the price tag DoorDash got just three months ago.

While we don’t know Deliveroo’s exact valuation, Varys’s little birds said it topped the startup’s late-2017 valuation of $2 billion, per Axios.

Operating in 500 locales across 14 countries, Deliveroo has earned quite the fan base. Per the FT, Uber tried to buy Deliveroo outright last year but couldn’t agree to a valuation. And Amazon also tried (twice!) to buy Deliveroo.

Bottom line: Amazon’s vote of confidence draws battle lines with Uber, who, if you remember, considers Amazon its north star.

IPO

Luckin Clearly Asked for a Double Shot

On its first day as a public company yesterday, Luckin Coffee nailed the café's wi-fi password on its first try. Shares rocketed nearly 20%.

Rewind: Luckin priced its IPO at $17 per share on Thursday, which was already on the high end of its expected range. Friday morning, the opening trade came in at $25, and shares traded as high as $25.96.

We’ve told you before that China’s coffee competition is hotter than a bone dry cappuccino. And though Luckin has momentum in its favor (it’s opened 2,370 stores since launching under two years ago), Starbucks is still China’s biggest coffee chain.

So what has Luckin done to differentiate itself?

• About 90% of Luckin’s stores are smaller format shops that prioritize easy pickup and close proximity to customers. It also loves a good discount.
• Starbucks has the same large-but-homey format in China you know from stores stateside. And its CEO Kevin Johnson doesn’t think discounts work long-term.

Bottom line: Luckin isn’t afraid of a little caffeinated rivalry—it’ll put this week’s roughly $571 million injection toward expanding its network even further.

C-SUITE

Breaking: CEOs Still Get Paid a Ton of Money

Both Bloomberg and the WSJ recently delved into executive pay for 2018. Yacht and private jet salespeople who read the Brew...you’re welcome for the lead gen.

Two takeaways

1. This year’s onslaught of IPOs means more than just Brew tailgates. CEOs often do very well when their companies go public.

• Case in point: Brendan Kennedy, CEO of marijuana company Tilray, which IPO’d in July and ended 2018 with a 315% gain.
• Per Bloomberg, Kennedy was the second highest paid exec among companies traded on U.S. exchanges in 2018 with $256 million in compensation—behind only Elon Musk’s $513.3 million.

2. A stint at the Lee Strasberg Institute could still pay off more than one at Wharton. Median pay for CEOs of the biggest U.S. companies reached $12.4 million last year (the fourth-straight post-recession high), per the WSJ. But for a little context, last year…

• Katy Perry made $25 million.
• Jennifer Aniston made $22 million.
• And Howard Stern made $90 million.

HEALTH

So That's How You Get in Shape

WHAT ELSE IS BREWING

• Facebook (-0.90%) COO Sheryl Sandberg said the growing chorus calling to break up FB isn’t totally wrong, but doing so wouldn’t solve all of its problems.
• JPMorgan (-0.49%) is buying medical payments tech platform InstaMed for more than $500 million, JPM’s biggest deal since the financial crisis.
• Boeing (+0.32%) has completed a software update for the 737 Max jet. Next step: completing a certification flight with the FAA.
• Google will refund advertisers whose spots ran on sites with fraudulent traffic.
• Lions Gate stock jumped 14.71% following a report CBS offered to take Starz off its hands for around $5 billion two months ago but was rejected.

BREAKROOM

Saturday Headlines
Three of these headlines = real. One = made up. Are we depraved enough to invent the roadkill one? Maybe, maybe not.

• “McDonald's in Austria will double as mini U.S. embassies for tourists in need of help”
• “Meet the newest sensation in prison libraries: Cookbooks”
• “Eating roadkill is illegal in California. But that may change”
• “Deepest ever dive finds plastic bag at bottom of Mariana Trench”

Breakroom Answers