Bill Gates reinvents the toilet

MARKETS

• U.S. markets: Investors were mostly on standby as they awaited election results. Trading volume was below average.
• Crypto: Wondering why all the crypto news disappeared from the Brew? Here's one reason...bitcoin volatility is now at a nearly two-year low.
• Energy: It might be less work for us to just permanently stick a red arrow next to U.S. crude oil, which dropped for a seventh straight session. Some context? On Monday, the U.S. reimposed sanctions on Iran, but allowed a few large customers to keep importing oil from the Islamic Republic.

ELECTION

What D.C. Gridlock Means for Business

Will you look at that...the pre-election polls got it right. In the most expensive midterm in history, the Democrats surfed a toned-down "Blue Wave" to take back the House of Representatives, while the Republicans kept control of the Senate (they've also got the White House).

So what does that mean? Gridlock. And a divided D.C. is generally viewed as a positive sign for markets.

• With the two parties each controlling one house of Congress, there's a slim chance you'll see major legislation (like additional tax cuts) getting passed. "Nothing done, nothing undone," is how Bank of America Merrill Lynch put it.
• One major question mark for markets? How House Dems will use their new powers to investigate the president and create a cloud of uncertainty around the government.

So what will change for business?

In yesterday's Brew, we acknowledged that across many issues (like trade and tech regulation) the needle might not move all that much with more Dems on Capitol Hill. But there could be some new developments in store...

• Infrastructure: Trump has floated the idea of an infrastructure bill, which might also earn support from
• The best of the rest, per Cowen: "The Venn Diagram of potential areas of compromise includes everything from infrastructure and drug pricing, to a federal minimum wage hike and student debt relief."

Midterms, shmidterms

While the election is critically important for business, the WSJ notes investors have plenty of other events circled on their calendars this November.

• Interest rates will be on the agenda when the Fed meets today and tomorrow. No hike is expected this time around...but all signs point to another bump in December.
• Powerful world leaders will clink glasses at the G20 summit in Buenos Aires later this month. Can President Trump and Chinese President Xi Jinping make any progress on trade?

ELECTION

Here’s a Roundup of Some Other Statewide Results

Remember last week? Back when your Halloween candy trove still looked appetizing and there was only going to be one Amazon HQ2? We told you about some business-centric state ballot measures...and now it's time to check back in.

California's Prop 10, which would have given some cities the ability to expand rent control, got the thumbs down from voters.

Nevada's Question 3: This was the billionaire battle (Buffett vs. Adelson) that would require Nevada to switch from a regulated monopoly model to a competitive retail model for electricity by 2023. Buffett took the W...this one got rejected.

Florida's Amendment 3 intended to give voters the ability to block expansions of casino gambling. Know when to hold 'em and know when to fold 'em, because Amendment 3 passed.

And legal marijuana was up in...

• Michigan (recreational adult use)—approved.
• North Dakota (recreational adult use)—rejected.
• Missouri (medical use)—go for it.
• Utah (medical use)—we're in, too.

MANUFACTURING

To Those of You Who Aren’t Cheeseheads...

...you probably know Foxconn as the Taiwanese iPhone parts supplier. But for the people of Wisconsin? Foxconn is a much more contentious word.

Let's review: Last year, Foxconn pledged to build a 22-million-square-foot plant, hire 13,000 employees, and invest $10 billion in the state after Wisconsin offered it $3 billion in incentives (plus another $764 million from local authorities). Not even Aaron Rodgers makes that kind of money.

But now...things have changed

First, the jobs. Foxconn shifted its workforce needs to require fewer blue-collar workers and more skilled engineers (which, in Wisconsin, are in shorter supply). Just yesterday, the WSJ reported the company was struggling to find those qualified engineers, and might have to source personnel from China (a claim Foxconn has denied).

Plus, the massive cost to the state is starting to come into focus. Wooing Foxconn is estimated to cost nearly $1,800 per Wisconsin household, according to The New Yorker.

Zoom out: Wisconsin's roller coaster ride with Foxconn and Amazon's HQ2 search are shining a spotlight on the use of tax incentives to create local jobs. The question is...at what cost?

RETAIL

Stats That Make You Go...'Wow'

Total retail sales this holiday season will pass $1 trillion for the first time ever, per eMarketer.

That's a gain of ~6% from last year and the strongest uptick since 2011. You can credit the rise to low unemployment, solid GDP growth, and strong consumer sentiment.

And it'll mostly be online, right? Well...no.

• Brick-and-mortar sales will account for 87.7% of total 2018 holiday retail spending.
• Online shopping is set to rake in ~$123.7 billion of that $1 trillion total, up 16.6% annually.

Still, it could be a blue Christmas (had to) for some e-tailers: "When the consumer is happy or feels good, they're more likely to be in the stores and doing things experiential because it's fun...Amazon is not fun," ex-retail exec Jan Rogers Kniffen told CNBC.

SANITATION

Today in Headlines We Weren’t Expecting…

Yes, you read that correctly: Bill Gates held up a jar of human feces in a speech yesterday in Beijing.

...why?

He was at the Reinvented Toilet Expo, where companies are displaying innovative takes on the porcelain throne. Think toilets that recycle water for hand-washing and others with solar-panel roofs.

And although many fourth graders will take this and run with it, the expo highlights an important and overlooked issue.

• Roughly 4.5 billion people (more than half the world's population) live without access to safe sanitation.
• According to Gates, unsafe sanitation costs ~$223 billion/year in higher health costs and lost productivity.

So what's Gates doing about it? For starters, he pledged to give $200 million more to efforts to get human waste on the radar of Big Business (the Gates Foundation has already poured $200+ million into sanitation efforts since 2011). And FWIW, every dollar invested in sanitation yields ~$5.50 in global economic returns, per the WHO.

WHAT ELSE IS BREWING

• The European Union has approved Disney's (+1.12%) $71.3 billion purchase of 21st Century Fox's (+0.62%) entertainment assets, subject to Disney selling some assets.
• Wells Fargo (-0.19%) said an underwriting error caused it to incorrectly deny 870 customers mortgage changes...and 545 of them lost their homes to foreclosure as a result.
• A JPMorgan (+0.49%) trader pleaded guilty to manipulating the U.S. precious metals market for about seven years.
• Papa John's (+1.35% after hours) missed estimates on both top and bottom lines. Looks like a same-store sales slump was only made worse by the chain's founder drama.
• China will overtake France as the No. 1 global tourist destination by 2030, per Euromonitor International.

BREAKROOM

Guess the Logo(s): Mashup Edition

(Answer located at bottom of newsletter)

Breakroom Answers