Papa Shaq

MARKETS

• Sanctions watch: President Trump unexpectedly said he’d reverse sanctions linked to North Korea that his own Treasury Department imposed Thursday. White House Press Secretary Sarah Sanders explained the decision: "President Trump likes Chairman Kim, and he doesn’t think these sanctions will be necessary."
• Budget watch: The U.S. budget deficit widened to $234 billion in February, the biggest monthly gap on record.
• Mueller watch: He's turned in his report to Attorney General William Barr.

ECONOMY

The Bond Saga Returns

Yesterday was a rough one for the global economy, if the red wedding in today’s Markets section didn’t give it away. Some not-so-hot manufacturing data paired with slowing global growth prospects sent investors scrambling for the protection of government bonds.

Part of the U.S. Treasury yield curve inverted

After that fresh wave of bond-buying sent longer-term returns lower (remember, yields and prices have an inverse relationship), the gap between the 3-month and 10-year Treasury yields disappeared for the first time since the financial crisis.

The so-called yield curve inversion is generally viewed as the black cat of the U.S. economy: The last nine times the yield curve inverted, a recession followed.

Nothing happens in a vacuum

In an economy this globally interconnected, news spreads fast. And bad news spreads faster. As Bloomberg points out, the U.S. was still in Thursday mode when Friday’s bad news began across the globe.

• Yields on New Zealand bonds fell to new lows.
• Then came Japanese markets, where the 10-year yield fell to a two-year low.

Another big hit: German bond yields dipped below zero for the first time since 2016. The 10-year yield in Germany is considered critical for fixed income markets in Europe—after all, the German Bund is one of the region’s safest assets.

Did we ruin your weekend yet?

Here’s some comforting context: Yes, this is the first time this part of the U.S. yield curve has been inverted since ‘07. But during the last cycle, the spread fell below zero for the first time in January 2006—nearly two full years before the beginning of the recession.

So while you’re watching March Madness, the economic world will be watching Fed Chair Jerome Powell and central bankers everywhere. Their influence over monetary policy will be key as a few storm clouds gather on the horizon.

AVIATION

Anyone Know Boeing’s Cancellation Policy?

Indonesia’s national airline, Garuda Indonesia, told Boeing (-2.83%) it’s looking to cancel its order of 49 Boeing 737 Max jets worth about $6 billion. That’s the now-grounded aircraft coming under fire for its involvement in two fatal (and awfully similar) crashes in five months: the most recent in Ethiopia, and the other...in Indonesia.

• “Our passengers, psychologically, they don’t trust flying with Max anymore,” a Garuda spokesman told the NYT.
• FYI, analysts said the deal was on shaky ground before the crash for non-safety reasons.

Why it matters: It’s the first time an airline has publicly tried to cancel a 737 Max order in the aftermath of the Ethiopian Airlines crash. Keep in mind, the 737 Max is Boeing’s best-selling plane, and the company still has more than 4,600 orders on its books.

Of course, canceling a plane order is more difficult than canceling a haircut. Production backlogs for Boeing and Airbus make switching manufacturers a nightmare. Garuda and Boeing officials will have to talk it out.

FOOD/h3>

Papa John’s Signs a Big Man

NBA Hall of Famer Shaquille O’Neal is joining the board of struggling pizza chain Papa John’s (+6.21%).

As part of the agreement, Shaq will 1) invest in nine restaurants in metro Atlanta 2) serve as a brand ambassador and 3) allow chairman Jeff Smith to move to his more natural position as a power forward.

Why Papa John’s is becoming Papa O’John’s: It needs a makeover following its embarassing dispute with founder John Schnatter. The company thinks Shaq’s a good fit in part due to his experience owning restaurants (27 Five Guys locations at one point).

He’ll also be the first African American on the Papa John’s board. Remember, Schnatter’s road to unemployment began after reports he used a racial slur on a conference call last summer.

Btw, if you’re looking for the deepest bench in pizza, Papa John’s could be it. The chain has added several new members to its board in 2019, bringing the total roster to 12.

IPO

NYSE vs. the Nasdaq

Uber has reportedly found a new home—it’ll list shares in its upcoming IPO on the New York Stock Exchange. But its ride-hailing archnemesis Lyft has picked the Nasdaq for its own IPO. Dare to be different.

Zoom out: Lyft’s March 28 IPO pricing kicks off a highly anticipated string of tech listings this year—which could include Slack, Pinterest, Zoom, Palantir, and more. That it picked the Nasdaq while Uber opted for the NYSE shows that the score is far from being settled for the exchanges.

Times are changing. Tech had been synonymous with the Nasdaq, but in the last few years, the exchange has struggled to win the West Coast’s top talent after famously fumbling Facebook’s 2012 IPO.

That’s made the NYSE the exchange of choice for many tech firms taking things public—including Alibaba, Twitter, and Snap.
With massive tech listings come massive listing fees, meaning the competition between the NYSE and the Nasdaq has gotten fierce...even if they’re just a short Lyft away. Or Uber.

MANUFACTURING

So That's How They Make Fortune Cookies

You cannot love life until you live the life you love.

WHAT ELSE IS BREWING

• President Trump said he plans to nominate former campaign adviser Stephen Moore to the Federal Reserve Board.
• Pinterest filed to go public, bringing in $756 million in 2018 revenue and posting a net loss of $63 million. Dive into its S-1 here.
• Disney (-0.40%) just completed its acquisition of 21st Century Fox’s entertainment assets. Now come the layoffs—3,000 are slated at Fox properties, per the LA Times.
• General Motors (-2.44%) is investing $300 million and adding 400 jobs to build an electric vehicle at its Orion plant in Michigan.
• A new study suggests nearly 95% of all reported trading in bitcoin is artificially created by unregulated exchanges.

BREAKROOM

Saturday Headlines
One of these stories is hilarious, another is heartwarming, a third is creepy, and the fourth we made up. See if you can tell which is which.

• “Oregon man arrested for walking pet drone on a leash”
• “Hundreds of South Korean motel guests were secretly filmed and live-streamed online”
• “Texas House passes bill legalizing lemonade stands run by children”
• “Artist carves out plan for big wooden bong for the town of Woodenbong”

Breakroom Answers