Apple's new toys

MARKETS

• U.S. markets: Facing the possibility of new trade talks between the U.S. and China, the Dow and S&P 500 managed to close in the green.
• Economy: The folks at the Census are bringing us more good news. U.S. median household income grew for the third-straight year in 2017, up 1.8% to $61,372.

TECH

A Star Is Born in Cupertino

Via Apple

It's been a while since the iPhone wasn't the main talking point at Apple's annual launch event. But yesterday, its new smartwatch may have upstaged its new smartphones. We'll explain.

But first, breakfast.

It's the most important meal of the day

Eat enough? Okay, on to the event...

Introducing the Apple Watch Series 4

Now 30% larger and flaunting an edge-to-edge screen.

• But the real innovation might be the addition of new health features, like a sensor that allows you to take an electrocardiogram (which measures the electrical activity of your heartbeat). That's much more advanced heart-monitoring technology than the Apple Watch currently possesses, and it's received approval by the FDA.

Context: Apple's already got 17% of the smartwatch market, but the new model illustrates a shift in strategy toward health and fitness. Per the WSJ's David Pierce: "Interesting that the Watch is becoming less of a ‘make phone calls while you paddleboard' device, and more a ‘save your life' device."

You hear that, baby boomers? Apple's coming after you.

And now, the new iPhones

We're ditching full sentences for this part.

• iPhone Xs (starting at $999): 5.8-inch screen, more water-resistant, faster chip (called the A12 bionic chip), upgraded camera, pronounced "tennis."
• iPhone Xs Max (starting at $1,099): A bigger version of the Xs (6.5-inch screen), up to 90 min. more battery life than the X, pronounced "tennis max."
• iPhone XR (starting at $749): 6.1-inch screen, facial recognition and an edge-to-edge display, cheaper than the X, LCD screen instead of newer OLED tech, aluminum edges instead of stainless steel.

The timetable: You can order the Watch and both versions of the iPhone Xs this Friday (shipping Sept. 21). The less-expensive XR will be available for preorder on Oct. 19.

Bottom line: Investors weren't too impressed with the new, not-all-that-different iPhones, with shares down 1.2%. Keep tabs on the new health features on the Apple Watch, though. Apple's clearly serious about its push into wellness.

REGULATION

The FDA Drops the Hammer on E-Cigs

"Oh that? That's just a thumb drive, mom."

Some of those e-cigarettes that have taken off in America's high schools could soon be banned for everyone...precisely because they've taken off in America's high schools.

"The number of teenagers we believe are now using these products...has reached an epidemic proportion," FDA Commissioner Scott Gottlieb said yesterday.

• Per the CDC, of the 3.6 million middle- and high-schoolers who identify as tobacco users, 2.1 million (or ~58%) used e-cigs.

So here's what Gottlieb's doing: The FDA told major e-cig manufacturers (Juul, Logic, MarkTen, blu, and Vuse) they have 60 days to come up with strategies to address use among teenagers.

And if they don't...regulators could force e-cig companies to drop all flavored tobacco products that appeal to kids (say goodbye to crème brûlée or fruit medley e-cigs).

Juul, which has captured ~72% of the $2.3 billion e-cig market, says it advertises to adults looking to quit smoking. But Gottlieb's take? "I am willing to narrow the off-ramp for adults to close the on-ramp for kids."

#METOO

‘60 Minutes’ Producer Heads for the Exit

Jeff Fager, executive producer of 60 Minutes, is leaving CBS amid accusations of inappropriate touching.

But that's not the whole story: Fager was named in the recent New Yorker exposé accusing (now former) CBS chief exec Les Moonves of sexual misconduct. Six former CBS employees claimed Fager touched them in a way that made them uncomfortable, and one alleged he groped her at a work party, accusations emblematic of a broader company culture problem at CBS...

But, Fager denied that claim. According to him, CBS terminated his contract because of a "harsh" text he sent a CBS reporter covering the Moonves story.

• CBS News said Fager "violated company policy and it is [their] commitment to uphold those policies at every level," but didn't elaborate.

Zoom out: Still unconvinced of the #MeToo movement's influence? Just take a look at CBS.

WEATHER

Hurricane Florence: The ‘Mike Tyson’ of Weather Systems

Hurricane Florence could be the "storm of a lifetime" when it barrels into the Carolinas this week.

What you need to know: Florence is a slow-moving hurricane, bringing with it "life-threatening" storm surge and flash flooding, the National Weather Service said yesterday.

What they're saying:

• This is not going to be a glancing blow...this is going to be a Mike Tyson punch to the Carolina coast."—FEMA's Jeff Byard.
• "My message is clear: disaster is at the doorstep."—North Carolina Gov. Roy Cooper.
• "They haven't seen anything like what's coming at us in 25, 30 years, maybe ever. It's tremendously big and tremendously wet."—President Trump.

What it'll cost: Potentially $30 billion, per AccuWeather's Joel Myers.

A few ways it'll impact business: The Port of Charleston will be closed through at least Saturday, and Smithfield Foods will shut its North Carolina hog slaughter plant (the world's largest) through the end of the week. Airlines have canceled hundreds of flights. As for insurers? Covered losses could come in between $15 billion to $20 billion.

BIZ HISTORY

10 Years Ago Today

The lede: "The crisis gripping the nation's financial system deepened, with Lehman Brothers Holdings Inc. racing to sell itself over the weekend and other major U.S. institutions scrambling to show they have the financial wherewithal to ride out the crisis."

• Lehman Brothers shares had fallen 77% by Friday night, and the bank was desperately looking for a buyer (maybe Bank of America? Maybe Barclays?).
• With a market cap of $2.7 billion, it was smaller than the cost of its own bonus pool.

There was also the meeting to end all meetings. Get a load of this guest list:

• SEC Chair Christopher Cox, New York Fed President Timothy Geithner, Treasury Secretary Hank Paulson, Fed Chair Ben Bernanke, Morgan Stanley CEO John Mack, and more heavyweights.

Bottom line: That weekend, it became clear the government wasn't going to bail out Lehman (which filed for bankruptcy two days later).

MEDIA

A Lot of People Are Reading ‘Fear’

Or at the very least, buying it.

Barnes & Noble said the book (veteran journalist Bob Woodward's detailed account of turmoil in the Trump White House) has had the "fastest sales for an adult title since Harper Lee's Go Set a Watchman was released in July 2015."

• On Amazon, Fear is already the fourth best-selling book in 2018, despite being released only two days ago.
• Simon & Schuster said that pre-order sales were the largest in the company's history. And after ordering another printing (the ninth, if you're counting), it's now at 1,150,000 hardcover copies.

+ Come for the business news, stay for the literary trivia: Harper Lee is the author of what other famous book, probably assigned by your 8th grade English teacher? (Answer at bottom...)

WHAT ELSE IS BREWING

• Snap stock fell 7% after BTIG cut its rating on the stock to "sell" and said it was "tired of Snapchat's excuses."
• Verizon (+0.45%) announced that Oath CEO Tim Armstrong will step down in October.
• Tesla (+3.97%) is losing another finance exec—worldwide finance VP Justin McAnear is the next to leave.
• Peloton is suing Flywheel Sports for allegedly stealing technology that streams cycling classes into users' homes.
• Discovery stock surged 7% in its best day since 2010 after the company announced a new partnership with Hulu.

BREAKROOM

READERS GIVE THEIR HONEST FEEDBACK...
...On which brand's logo they would get tattooed on their body, given the right price (in response to Domino's misadventures in Russia). Here are a few responses:

• "I would get a tat of the Berkshire Hathaway logo for 10 shares of Class A stock."
• "I'd probably do a Costco tattoo for next to nothing."
• "If you give me a job, I'll get Morning Brew tatted across my forehead" (note from HR: If he knows Excel, we have a winner).

BRAIN TEASER
Create an equation by inserting the fewest possible arithmetic operators (plus and minus only) into:

987654321=100

For example: 98+7-6+5-4+3-2-1=100

Note: the numbers must stay in reverse order from 9 down to 1.

(Answer located at bottom of newsletter)

Breakroom Answers

Literary Trivia
To Kill a Mockingbird