Uh-oh

MARKETS

• U.S. markets: They keep ping-ponging back and forth. Yesterday was a good day—all 11 S&P sectors finished higher.
• Economic data: Do you want the good news or the not-as-good news? The good...consumer confidence rose to an 18-year high. The not-as-good...the housing market continues to slow down.

SOCIAL MEDIA

Facebook Meets a Low Bar

Facebook (+3.20% after hours) reported Q3 earnings yesterday that showed Zuck's platform still has some work to do as it gets comfortable with slowing user growth rates. But, hey, at least Wall Street knew this was coming.

And before we hit Q3, let's travel back to FB's rough Q2 earnings. Its user base in key markets shrank, and it warned it may not be as profitable in coming years. Pair that with user privacy and misinformation campaign scandals, and its stock tanked ~20%.

Q3 was a little...less rough

In the quarter, Facebook reported...

• $1.76 in EPS (earnings per share), up from $1.59 last year and ahead of projections.
• Revenue came in at $13.73 billion, up 33% annually but just short of forecasts.

But the key metric Wall Street's watching? User growth. Monthly active users on FB totaled 2.27 billion, up 10% annually. Across its family of apps (Facebook plus WhatsApp, Messenger, and Instagram) more than 2.6 billion people are active monthly.

"Facebook...managed to eke out a small usage gain in the U.S. and Canada. After the flatness we saw last quarter, that's a good sign," eMarketer's Debra Aho Williamson told Bloomberg.

But (there's always a but), Facebook's largest sources of growth are in developing markets like Asia, where users only generate about $2.67 each in revenue. Compare that to the $27.61 Facebook clocks in for every user in Canada and the U.S...and it's easy to see why there are concerns about future profits.

But still, Zuck got some relief

He told investors Facebook's set to invest in the business big time, focusing on building out new products like Facebook Watch, Marketplace, and IGTV. It'll also give some much-needed love to cybersecurity issues.

Take us home, SunTrust analyst Youssef Squali: "A year ago, when everything was going great, we assumed everything was going to be great for an extended period of time. Now we've adjusted a little—we have the fear of God in us."

ELECTION

Brands Join the Midterm Conversation

You might have heard: There's an election coming up. And companies are busy playing both defense and offense in these polarized times.

Land O'Lakes, the large agriculture co-op, said it will stop financial contributions to GOP Rep. Steve King of Iowa, a congressman who has openly expressed support for white nationalist and racist ideas. The company had come under scrutiny for giving $2,500 to King, especially after Saturday's massacre at a Pittsburgh synagogue. Here's its statement:

• "We take our civic responsibility seriously...and also seek to ensure that recipients of our contributions uphold our company's values. On that basis, we have determined that our PAC will no longer support Rep. Steve King moving forward."

Zoom out: Ag companies have a lot at stake in Iowa—it's the country's #1 corn and egg producer, per Bloomberg.

As far as brands playing offense? That'd be the activist-minded Ben & Jerry's, which introduced a new flavor called "Pecan Resist" to promote a "future that values inclusivity, equality, and justice for people of color, women, the LGBTQ community, refugees, and immigrants."

TECH

Apple Refreshes Its Lineup

If you're reading this from a 2013 MacBook Air with a cracked screen and a missing "return" key...Apple's (+0.50%) here to help with a bunch of new updates for some of its most popular devices. Here's what it unveiled at an event in Brooklyn yesterday:

1. iPad Pro

Goodbye home button, hello Face ID. The new iPad Pros (which come in two sizes) will get the upgrade the iPhone X earned over a year ago, plus an edge-to-edge LCD display. Starting price: $799.

2. MacBook Air

Apple revamped the keyboard and trackpad, and gave the 13.3-inch computer Touch ID for unlocking the device and using Apple Pay.

The new Air is made entirely of recycled aluminum, securing its designation as the "greenest ever" MacBook Air. Starting price: $1,199 (about $100 cheaper than your basic MacBook).

3. Mac Mini

Finally, the first update to the smaller Mac model in four years. It packs up to 64GB of memory and 5x the speed of older Macs. Starting price: $799.

Zoom out, courtesy of the WSJ: "While PCs and tablets have become smaller parts of Apple’s business," say analysts, "they are important for keeping people attached to Apple’s broader ecosystem..."

EARNINGS

Two Up, Two Down: Earnings Edition

Two up

Under Armour (+27.71%): The sports apparel company was looking for a boost during a rough patch (restructuring, cutting hundreds of jobs, etc.). It found one by way of a 15% surge in international sales last quarter. Investors were also impressed it made the cut for our trivia section on Monday.

Coca-Cola (+2.52%): Well look who showed up to the party. Welcome back, Diet Coke. Coca-Cola CEO James Quincey was thrilled to see sales volume grow in the U.S. after years of losses. Plus, there's another hero: "Coke Zero Sugar is on a roll," Quincey said.

Two down

General Electric (-8.29%): New CEO, same old problems. Recently hired chief Larry Culp cut GE's famous dividend down to what surely will be an infamous penny per share. He's also splitting its power unit in two, and Culp said the DOJ and SEC are investigating GE's accounting practices. Its stock is now at its lowest price since 2009.

Pfizer (-0.79%): The pharma giant narrowed its revenue forecast for the rest of the year, blaming (in part) competition from generic drugmakers and the relative strength of the dollar compared to other currencies.

ELECTION

Will More Rent Control Find a Home in California?

Each day this week, the Brew will take on one state-level ballot measure that will impact the business world following midterm elections. After all, they don't say "all politics is local" for nothing.

Remember when Miley Cyrus sang about hopping off the plane at LAX with a dream and her cardigan? Course you do. But she should have brought her checkbook, too, because California rent is...really expensive.

That's why some in the state support a ballot measure called Proposition 10. If Prop 10 passes Nov. 6, it will give some cities the ability to expand rent control to more properties by repealing a 1995 law.

The motive: California has a severe housing shortage...which has driven up rent prices and spurred a homelessness crisis. Rent in the LA metro area has jumped at least 3% every year from 2012 to 2016, per HUD.

But on the other hand...some economists dismiss Prop 10 as a cure-all, saying it could limit housing supply, discourage property owners from maintaining rental units, and devalue single-family homes Californians already own.

+ At last count, the polling isn't looking great for Prop 10 supporters. Tack on a significant funding disparity (landlords have contributed ~$62.4 million vs. Prop 10 supporters with $24 million), and it looks unlikely to pass.

MEDIA

Uh-oh

Per Variety, the Red Sox and Dodgers drew an average of 14.3 million viewers per game to Fox, down 23% from last year's 18.7 million average.

• But it's not quite apples to apples: Viewership tends to increase as the series gets longer. So, if the Dodgers actually listened to us and took this thing to six games, ratings would likely have been higher. That 2017 WS matchup between the Dodgers and Astros went seven games.

WHAT ELSE IS BREWING

• President Trump told Axios he is planning to sign an executive order that would end birthright citizenship in the U.S. Many legal scholars say that would be unconstitutional.
• Whitey Bulger, the notorious Boston gangster, was found dead in a WV prison at age 89. It is being investigated as a homocide.
• The Athletic, a digital sports media startup, raised $40 million, per Axios.
• Uber is taking on the UK's second-highest court to appeal a workers' rights ruling and defend its business model.
• Coinbase, a major crypto exchange, announced a $300 million funding round. It's now valued at $8 billion.
• BP (+2.88%) said Q3 profits more than doubled this year compared to last. H/t higher oil prices.

BREAKROOM

FROM THE CREW
Do you have a Halloween costume you are super proud of this year? Let us know here and we'll share the best/most creative ones with the Brew community tomorrow. You won't dress up as the Morning Brew mug...you won't.

Guess the Logo: Chocolate Edition

Bonus: Can you name this brand's parent company?

(Answer located at bottom of newsletter)

Breakroom Answers

Guess the Logo
Toblerone. And for bonus points, its parent company is Mondelez.