No thanks

MARKETS

• Asia: After a bruising 2018, Asian emerging market assets are looking pretty, pretty good to start off the year. Glass half full? The Fed appears to be taking a less aggressive approach to rate hikes. Glass half empty? An escalation of the U.S.-China trade war could be a buzzkill.
• U.S. markets: They'll face a major test this week with Big Tech earnings, a Fed meeting, and a jobs report. This could be fun. Or not.

TECH

The Smartphone Maker Everyone’s Talking About

Apple reports its quarterly earnings tomorrow. But to be perfectly honest...there's another huge tech company that's captivated us.

That would be Huawei. Sound familiar? It's a Chinese telecom equipment producer and a favorite punching bag of the U.S. national security community. Huawei's been accused of spying on behalf of the Chinese government (not to mention its CFO is set to appear in a Vancouver court next week on a different charge).

So here's why we're keeping on top of this story...

It's got major smartphone

Huawei's consumer division chief made a bold prediction last week: Rams win by 10 The company will become the world's largest smartphone maker.

• "Even without the U.S. market we will be number one in the world," he said. "I believe at the earliest this year, and next year at the latest."
• "Our customers have trust and confidence in us...it's only politics guys which are trying to put pressure on us."

Zoom out: Huawei's consumer business raked in more than $52 billion in revenue last year, the first time it's accounted for more of the company's total sales than Huawei's telecom network business.

Speaking of telecom networks...

The NYT published a remarkable story over the weekend explaining how the Trump administration is pressuring other countries to block Huawei equipment.

What's at stake? The building out of 5G networks...or as the reporters describe it, "the most dramatic remaking of the plumbing that controls the internet since it sputtered into being, in pieces, 35 years ago" (now that's writing). The U.S. believes it's locked in a Cold War-style arms race with China—and by proxy Huawei—to be the world's plumber.

Looking ahead: The next six months will be make-or-break, as countries auction radio spectrum and sign contracts to build new systems. "This will be almost more important than electricity," one analyst told the NYT.

SHUTDOWN

Shutdown Chronicles: No Thanks for the Memories

Dearest uncle,

It took 35 days, but the federal government is at least temporarily open. I must admit—I never truly appreciated just how much it affected the economy. Joni Mitchell got it right: "You don't know what you've got 'til it's gone..."

Let's recap.
Economic impact: Small, but you can still see it. S&P Global Ratings estimated that the partial shutdown sliced at least $6 billion off the U.S. economy. Federal workers who went without paychecks likely curbed their spending on things like travel and entertainment.

And you thought your inbox was a wreck? The IRS will reportedly require 12 to 18 months to get back on track following the shutdown, per the WaPo. That means digging out from "millions" of unanswered taxpayer letters and hiring new employees for the upcoming filing season.

This isn't over: Like your hay bathing phase, this spending bill only lasts three weeks. President Trump tweeted Saturday that "21 days goes very quickly" and it "will not be easy to make a deal, both parties very dug in."

MINING

In Brazil, an All-Too-Familiar Tragedy

MINING
In Brazil, an All-Too-Familiar Tragedy
Authorities are still looking for survivors after a mining dam collapsed on Friday, releasing nearly 12 million cubic meters of mud and waste. At least 58 people were killed and hundreds remain missing.

The mine is owned by Vale, a Brazilian company that's the largest producer of iron ore in the world. The scrutiny will be fierce, especially because this isn't the first time the company's been involved in a disaster:

• Another dam (half-owned by Vale) in the same state broke in November 2015, killing 19 people.
• That was the country's worst environmental disaster in history at the time.

Zoom out, per the FT: The second tragedy in just a few years is a "blow to the mining industry, which has been trying to change perceptions that its operations damage the environment and hurt local communities."

Now, all eyes are on Brazil's new president, Jair Bolsonaro. His pro-business pledges have invited high marks from investors...and criticism from opponents who worry that environmental deregulation could lead to more catastrophe.

INTERNATIONAL

It’s Been a Weekend for Big Thinking

And not just when you subbed Taylor ham for bacon on your bagel.

In Germany...

A government-appointed panel offered a maverick-style recommendation for the country: stop burning coal to generate electricity by 2038 at the latest.

• Driving the news? The climate change discussion. Germany gets more than one-third of its electricity from burning coal—which generates harmful greenhouse gases.

But change doesn't come easily. Germany's coal-free vision for 2038 will require heavy lifting from the government to mitigate the economic impact of higher electricity prices. The country expects to invest at least 40 billion euros ($45.6 billion) in coal-dependent regions over the next two decades.

And in Saudi Arabia...

Economic overhauler-in-training/crown prince Mohammed bin Salman is getting ready to launch a massive plan to build up the kingdom's infrastructure and industry.

How massive is massive? $425 billion. That's how much MBS is seeking in investment, which will go toward improving railways, airports, and industrial projects by 2030.

Remember, Saudi Arabia is the world's largest oil exporter, but it's spent recent years working to earn a different reputation—and fill its government coffers with something other than oil money.

CALENDAR

The Week Ahead

Say goodbye to January with a Fed meeting, Tesla earnings, trade talks, a jobs rep—actually...we'll just let you read the darn thing.

Monday: Earnings (Caterpillar, Whirlpool)

Tuesday: Fed meeting begins; consumer confidence; earnings (Verizon, Apple, Lockheed Martin, 3M, Pfizer, Allergan, eBay, AMD, Harley-Davidson)

Wednesday: Fed announcement; U.S.-China trade talks; GDP; earnings (Alibaba, Boeing, AT&T, Facebook, Tesla, Microsoft, PayPal, McDonald's, Qualcomm, ADP)

Thursday: Motor vehicle sales; earnings (Amazon, GE, UPS, Altria, Raytheon, The Blackstone Group, Mastercard)

Friday: Jobs report; earnings (Chevron, Cigna, Merck, Honeywell, ExxonMobil, Sony)

WHAT ELSE IS BREWING

• Howard Schultz, the ex-CEO of Starbucks, is exploring an independent 2020 presidential bid.
• Google employees again put on their activist hats after an internal memo penned in 2016 leaked. Some proposals in the note? Paring back promotions and bonuses to cut costs.
• PG&E, the California utility that was just cleared of blame for the deadly 2017 Tubbs Fire, is still planning on filing for Chapter 11 bankruptcy protection, per Axios.
• The Pentagon is looking into whether Amazon improperly hired a former Defense Department employee...who was involved in a $10 billion contract Bezos is gunning for.

BREAKROOM

Et tu, Brewte?
Note: All puzzles/trivia this week will be at least somewhat related to the Super Bowl. No knowledge of football is required.

The NFL has made it a tradition to mark the number of Super Bowls by Roman numerals. While that's odd, it gives us a chance to quiz you on your knowledge of these ancient markings. Can you convert the following Roman numerals to Arabic numerals?

1. LIII
2. DCCCXII
3. CDLXXXVIII
4. MCMXL
5. Let's go the other way to round it off...write 3,888 in Roman numerals

(Answer located at bottom of newsletter)

Breakroom Answers