Sound the alarm

MARKETS

• International markets: European and Asian stocks fell across the board as the world's economies gear up for a potential trade war (more on the trade war below).

ECONOMY

Trade War (Finally) Sounds Alarm for Markets

Seems like markets finally woke up to the news of a U.S.-China trade war. Guess they haven't been reading the Brew lately.

Let's survey the damage:

• The Dow slipped into negative territory for the year.
• Industrials got hit hard. Caterpillar and Boeing both dropped more than 3%.

And this next stat is so crazy it deserves its own bullet point section:

• 1,023 Chinese stocks fell 10% to their daily limit.

So what finally got to the markets? Probably President Trump's Monday night bombshell announcement that the U.S. is considering a 10% tariff on $200 billion worth of Chinese goods.

Zoom out: It's easy to read a piece about tariffs, think "hmmmm that's interesting," and go on with the rest of your day. But here's some food for thought: an escalating trade war between the world's two biggest economies might have some very real effects.

Actually, it already has

And to show you how, we're going where no newsletter has gone before...

Soybean futures: They dropped to their lowest point in 9 years.

Why they're important: Soybeans are the U.S.' #1 agricultural export, and China is a repeat customer (for animal feed, tofu, cooking oil, and more). In fact, 62% of total soybean exports go to China. So as you can imagine, China putting a large tariff on the grain (like it promised) would be a huge blow to American farmers.

But don't take our word for it...Purdue University economists crunched the numbers:

• If China imposed a 30% tariff..."Chinese imports of U.S. soybeans could drop by 71 percent...and total U.S. soybean production could decrease by 17 percent."

Bottom line: The biggest problem right now is uncertainty over whether these tariffs will actually go into effect. As one grain broker told the WSJ, "Nobody has a clue what to do."

PHARMA

CVS Schools Amazon With Delivery

Step into CVS's classroom. Today's lesson? How to build a moat in the pharmaceutical industry before Amazon comes in swinging.

Remember, Amazon secured pharmacy licenses in at least 12 states back in October.

And now, CVS is teaching by example. It introduced a prescription drug delivery service for customers near almost all of its 10,000 locations.

• It already rolled out same-day delivery in New York City last year (with plans to move into Boston, Miami, Washington D.C., Philadelphia, and San Francisco).
• And last December, CVS announced a $69 billion acquisition of health insurer Aetna.

So is the moat big enough? That remains to be seen. CVS is utilizing the U.S. Postal Service for delivery, but all it would take for Amazon to truly compete with CVS would be an acquisition of its own.

We all know what happened when it bought Whole Foods...

MANAGEMENT

How CEOs Spend Their Time

In a brand new study, Michael Porter and Nitin Nohria (who work at a tiny place called the Harvard Business School) studied the calendars of 27 CEOs over a three month period.

And here's what they found:

[Redacted]

You didn't think we'd just tell you, did you? Nope—in true Brew fashion, here's a quiz to see how well you know how a CEO spends her time (answers at the bottom of the story).

1) How many hours a week do CEOs work, on average?

1. 62.5
2. 75
3. 80.5
4. 90

2) How many hours a night do CEOs sleep, on average?

1. 4.6
2. 5.9
3. 6.9
4. 8.1

3) CEOs spend nearly three quarters of their time at company HQ: True or False?

4) Fill in the blank: On average, CEOs spend 72% of their total work time ________.

1. writing/replying to emails
2. in meetings
3. playing Fortnite

Bottom line, courtesy of Morning Brew CEO Alex Lieberman: I always knew playing Fortnite during work hours was a good use of my time.

Answers: 1) 62.5 hours, 2) 6.9 hours 3) False (47%) 4) in meetings

AI

The Newest Member of the IBM Debate Team Is Here

Debate night in the Valley got out of hand this week, when IBM let its "Project Debater" AI square off against professional debater Noa Ovadia.

Think of Project Debater as an older, wiser, and funnier brother to the IBM Watson that won Jeopardy! in 2011. So when it challenged Ovadia (without any prior knowledge of the debate topic)—it had no trouble making points, counterpoints, and even cracking a joke here and there.

The debate topic btw? Government subsidies for space exploration.

Here's how Project Debater works:

• The AI has access to "several hundred million articles" across 100 different topics.
• When hit with a question or argument, it rates how well it thinks it understands the prompt, sifts through its database, and spits out an answer.

And although it's still a "research-level project," the developers see plenty of real-world applications—like giving big banks data points on portfolios, or helping lawyers form a case.

REAL ESTATE

Show Me a Big Mall

Alas, another wave pool is being built in Miami for your kids to pee in. This time, it'll be indoors in the new American Dream Miami: the biggest mall ever built in the U.S.

Wow me with the development cost: $4 billion

Stun me with the size: 6.2 million sq ft

What else can I find there? Aside from an Auntie Anne's, you'll find an indoor ski slope, 2,000 hotel rooms, and...an ice-climbing wall?

Bottom line: American Dream Miami is a project by Triple Five—a real estate developer building another American Dream mall in New Jersey and a company clearly not afraid of the impending mall apocalypse.

WHAT ELSE IS BREWING

• Tech CEOs like Mark Zuckerberg and Tim Cook blasted the policy of separating children from their parents at the southern border.
• AT&T and Verizon said they'll stop selling location data to third-party brokers.
• Starbucks (-1.97% after hours) said it'll close more stores than usual in 2019.
• PayPal (+1.57% after hours) will acquire fintech company Hyperwallet for $400 million.

BREAKROOM

LIFE HACK
From Brew Insider Andy F.: Change your password on your computer to a long-term goal or to-do list item that you haven't accomplished yet. Let's just say, you'll have a hard time forgetting about it...

GUESS THE LOGO

(Answer located at bottom of newsletter)

Breakroom Answers