Without EU

MARKETS

• U.S. retail sales: Following some alarming December numbers, they rebounded in January to increase 0.2%. The only problem? Those December numbers were revised even lower, from a 1.2% drop to a 1.6% drop.
• Markets: The major indexes snapped a five-day losing streak thanks to big gains in tech stocks.

AVIATION

Ethiopian Airlines Crash Reverberates Around the World

We’re tracking all the moving parts following the tragic Ethiopian Airlines plane crash that killed 157 people Sunday.

First, jets get grounded

China, Indonesia, and a few other countries joined Ethiopia in ordering carriers to suspend flights of Boeing’s 737 Max 8 jet, the brand-new model that went down shortly after takeoff in Ethiopia Sunday and the same one involved in the Lion Air crash that killed 189 people in October 2018.

While some were quick to link those disasters, safety experts have cautioned against drawing early conclusions.

The FAA said as much. The U.S. regulator gave the 737 Max an important vote of confidence by offering a global notice of "continued airworthiness" for the model.

• U.S. airlines including Southwest and American continued to fly the plane Monday.
• FYI, most countries wait to follow the lead of regulators in Europe and the U.S. before issuing their own groundings. China took the lead for the first time.

Still, Boeing is in trouble

The 737 Max, which is now under heavy scrutiny, is a critical part of its future:

1. So far, Boeing’s delivered about 350 737 Max planes and has orders for over 5,000 more.
2. It’s the latest model of a plane family that generates almost one-third of the company’s total operating profit.
3. And Bloomberg Intelligence estimates the 737 Max will eventually generate $30 billion in annual revenue.

So trouble for the 737 Max is trouble for all of Boeing. Shares fell 5.33% for their worst day in almost five months. And keep an eye on the Dow. The company has “by far the biggest influence” on that index, writes CNBC, because the Dow is price weighted.

Around the world...

Citizens from 35 countries were killed in the crash, illustrating what Quartz calls a “vital economic and trade corridor” and “busy diplomatic track” between Addis Ababa, Ethiopia’s capital, and Nairobi, Kenya’s capital.

FINANCE

Wells Fargo’s Latest High-Wire Act?

Getting out of the dog house. CEO Tim Sloan will testify today in a House Financial Services Committee hearing titled “Holding Megabanks Accountable: An Examination of Wells Fargo’s Pattern of Consumer Abuses” (“Story Time with Tim” was taken).

The pattern of abuses: In 2016, Wells Fargo (-0.08%) employees opened millions of potentially fake accounts to meet sales goals. That exposed other financial wrongdoing across business lines, and as Warren Buffett once put it, “There’s never just one cockroach in the kitchen when you start looking around.”

The Shondaland-level intrigue led to three things:

1. The Fed has capped Wells’s asset growth until Wells shows it can clean up.
2. Just about every one of the bank’s business lines has come under investigation.
3. Sloan embarked on a “long to-do list” to rid the bank of its kitchen cockroaches (like improperly foreclosing on more than 500 homes last year).

Bottom line: Sloan will need to prove Wells Fargo has done more to right its wrongs and fix its broken culture than just hiring lobbyists.

BREXIT

It’s 5 O’Clock in the U.K.

We said now’s the time to tune in to Brexit...so let’s do just that: Parliament is holding a vote today on Prime Minister Theresa May’s withdrawal agreement. To try to secure the most favorable deal possible, she spent yesterday negotiating with EU leaders in France.

It’s crunch time: If no agreement is reached by the March 29 deadline, the U.K. could leave the EU in a “no-deal” scenario, which many experts think will unleash chaos on the country’s business community.

That’s a scary prospect for companies with multinational supply chains, but a few enterprising businesses smell opportunity.

And it smells like hops

• At a British-themed pub in Paris, you can order a “Brexit” beer brewed by a Remain supporter. The barman told Reuters that the beer’s hoppy notes give it a deliberate bitterness.
• And then there’s Bath’s Electric Bear Brewing Co., which put a timely spin on a European pale ale.

AGRICULTURE

Kicking an Industry When It’s Down

The proposed 2020 budget President Trump released yesterday did not get a warm midwestern welcome. It 1) proposed slashing Agriculture Department funding by 15% to $20.8 billion and 2) called some subsidies to farmers “overly generous.”

• And on this farm we had...bad timing. U.S. farmers are in year six of a slump that’s featured super-low incomes and bankruptcy filings at decade highs.

Did you know we’re in a worldwide grain glut? The buildup has put pressure on prices of corn, soybeans, and other commodities—which already had their hands full with ongoing trade disputes.

• The USDA said net U.S. farm income is expected to reach $69.4 billion this year, only a hair higher than last year (and nearly 50% below 2013’s peak).

Remember, America’s heartland played a pivotal role in getting Trump elected. The country’s rural population largely still supports many of Trump’s policies, but farming groups feel like the proposal would slash their safety net.

SXSW

Live Look at SXSW

Morning Brew’s emerging tech writer Ryan Duffy reports from Austin that e-scooters—whether owned by Uber’s Jump, Lime, Bird, Lyft, Spin, or any of the other one-syllable players—are “everywhere.” Don’t forget to walk with your helmet on, Ryan.

The e-scooter phenomenon (which has spawned multiple unicorns) first came to Austin in April 2018, and the city now has 10 licensed operators, per the Verge. And the ensuing sidewalk anarchy may give us a glimpse of the city of the future: “equal parts urban transit nightmare and genuinely transformative social change.”

Related: At the request of Austin Public Health and the Austin Transportation Department, the CDC is launching a study of e-scooter accidents.

WHAT ELSE IS BREWING

• Alphabet (+0.06% after hours) CEO Larry Page allegedly awarded Android creator Andy Rubin a $150 million stock grant without board approval while Rubin was under investigation for sexual harassment, according to a lawsuit recently made public.
• Barrick Gold (+1.85%) withdrew its hostile $18 billion bid for rival gold miner Newmont (-0.74%), opting for the next best thing: a joint venture in Nevada.
• The U.S. reportedly told the German government that it would limit intelligence sharing if Germany chose Huawei to build its 5G network, per the WSJ.
• Apple (+3.46%) announced a “special event” for March 25. We're hearing streaming TV and subscription news services are on tap.
• Levi Strauss wants to offer 36.7 million shares at $14-$16 apiece in its upcoming IPO. That’ll value Levi’s at $6.17 billion, or about 103 million pairs of 501s.

BREAKROOM

Business Trivia
French soccer legend Zinedine Zidane is returning to coach Real Madrid...only 10 months after he left the gig. That got us thinking about all the CEOs who came back to lead their companies for a second time. Which of the following CEOs did not serve their companies as chief executive more than once?

1. Steve Huffman // Reddit
2. Meg Whitman // eBay
3. Reid Hoffman // LinkedIn
4. Jack Dorsey // Twitter

Breakroom Answers