Bud and breakfast

MARKETS

• U.S. markets: BIG rebound day. Riding a wave of strong earnings reports (more on that in a bit) and even stronger economic data (don't you worry, we'll get to that also) the major large-cap indexes had their best day since
• Econ: President Trump called the Federal Reserve his "biggest threat." What's got the president spooked? He thinks the Fed's raising interest rates too quickly.

CANNABIS

Weed the North

Starting today (after 95 years of prohibition), Canada will be the first G7 nation to legalize recreational marijuana.

And since we know you've been eyeing flights to Montreal for some time, let's dive in.

The details

The new federal law will offer a broad regulatory framework, but Canada's 13 provinces and territories will set some of their own rules. Some specs...

• The legal age for marijuana use will be 19 in most provinces.
• Recreational users can possess 30 grams of marijuana. Medical users can carry 150 grams.

Some terminology: Canada's not only decriminalizing weed, but also taxing, regulating, and monitoring the industry's growth, distribution, and sale. That means Canadian pot firms can use traditional banks, trade stocks, and even sponsor medical studies.

Businesses are taking advantage

Canadians could start spending their Saturday afternoons on "cannabis tours." Or how about a romantic getaway at a marijuana-friendly "bud-and-breakfast"?

But patience is key. In Ontario, weed will only be available online at a government-run website...for now. And cannabis-infused edibles likely won't be allowed until next year throughout the country. That doesn't mean vendors aren't getting ready...

• Under-the-radar cannabis lounges offer both places to smoke and classes on growing your own marijuana (is Prof. Snoop a tough grader?).
• Per the NYT, "Cannabis-infused catering has gone so mainstream that...Restaurants Canada is hosting a seminar on it."

But how much will really change?

Maybe there's a reason everyone in Canada is known for being so friendly. Canada's national census bureau found that 42.5% of Canadians have tried marijuana before, and 16% used it in the last three months.

So the biggest impact may be felt in the business world. CIBC analysts said the Canadian weed industry will reach $6.5 billion in retail sales by 2020.

One final stat: The Canadian Securities Exchange (a less regulated, more obscure exchange) completed C$1.4 billion in equity raises in the first half of this year. Almost C$1 billion of that came from cannabis companies alone.

MEDIA

Netflix: The Comeback Kid

We know you have to ask, but Netflix—everyone is definitely still watching. Shares of the streamer soared as much as 15% after-hours yesterday when it smashed Q3 earnings.

A quick peek at the numbers...

• Revenue: $4 billion (in line with expectations)
• EPS: 89 cents, easily topping Wall Street's forecast of 68 cents

But the real kicker? Subscriber additions, which were 6.96 million for the quarter. Netflix added 1.09 million domestic subscribers (vs. an estimated 673,800) and 5.87 million international subscribers (vs. an estimated 4.46 million). Guess that new season of BoJack Horseman really caught on.

Remember, Bloomberg called Q3 the "most important" of the year, especially after Netflix's bummer of a Q2 (you remember—when it missed on subscriber adds for the first time in five quarters).

And FWIW, Netflix had a tough go of it heading into that earnings report. Before the stats came out, Morgan Stanley slashed its 12-month rating on Netflix stock...the third bank to go there in just two days.

IPO

Uber’s IPO Could Be a Whopper

Excuse me? Sir? Your jaw. You might want to pick it up. It's on the floor.

We're guessing it's because you heard the news: major Wall Street banks are valuing Uber at up to $120 billion in its possible upcoming IPO, per the WSJ. If so, it'd be worth more than Ford, GM, and Fiat Chrysler...combined. Not to mention, it was valued at $72 billion in August.

What does that $120 billion mean? Investors will be betting that Uber enters its cocoon as a ride-hailing company...and emerges as what CEO Dara Khosrowshahi calls an "urban mobility platform." For example...

• Uber's anticipating many hip city dwellers will get tired of sitting in traffic and shift to alternatives like e-scooters and e-bikes (see: Uber's acquisition of bike-share startup Jump).
• Its food delivery service, UberEats, is reportedly valued by big banks at as much as $20 billion.

But...Uber's been cashing VC checks for its entire existence, which means we don't know if the business model is actually sustainable as it heads toward an anticipated 2019 IPO.

Bottom line, courtesy of Bloomberg's Shira Ovide: "Most companies that go public have lots of question marks about their future...that goes quadruple for Uber."

+ And while we're here...Lyft reportedly hired JPMorgan to lead the charge on its 2019 IPO plans. The valuation? More than $15 billion.

ECONOMY

Acronym of the Day: JOLTS

Write this down. Tattoo it on your forearm. Commit it to memory.

Job

Openings (and)

Labor

Turnover

Survey

Because yesterday, that survey found there were 7.14 million job openings in the U.S in August. That's a record since the Labor Dept. started keeping track in 2000. What else should you know?

• The "quits rate" (yes, that's a thing) stayed unchanged at a strong 2.4%. That means workers are confident that if they leave one job, they'll be able to find another.
• Here's why: There are now a record 902,000 more job openings than unemployed workers.

So...which industries are hiring?

• Construction: 298,000 openings (+39% YoY)
• Manufacturing: 488,000 openings (+17%)
• Professional and business services: 1.32 million openings (+27%)

Zoom out: You'd think that the struggle to find workers would force companies to pay them more. But average hourly earnings ticked up a completely unremarkable 2.8% in September. Keep an eye on that number moving forward.

TECH

Google (+2.78%) will stop bundling its apps on Android phones and begin charging a licensing fee to phone makers in the EU who want to pre-install apps like Gmail, YouTube, and Maps on their devices. How'd Google get here, you ask?

In the old days...Google bundled together a suite of 11 separate apps that manufacturers would have to pre-install if they wanted to license Google's Play app store.

But then...the EU flexed its antitrust muscles and said that tie-in was anticompetitive. It demanded Google separate its Chrome and Search from Play—and handed Google a monster $5 billion fine. Yesterday's decision (which takes effect Oct. 29) is in response to the EU's ruling.

Now...Google will charge device manufacturers an unspecified per-device fee to pre-install its apps on devices in Europe using Android OS.

WHAT ELSE IS BREWING

• A judge approved the SEC's settlement with Tesla CEO Elon Musk over his "funding secured" tweet.
• Morgan Stanley (+5.31%) and Goldman Sachs (+3.01%) both reported high-flying quarterly earnings on the strength of their equity trading desks.
• IBM (-3.95% after-hours) had less to celebrate—it missed revenue targets as concerns swirl that its pivot into AI, security, and cloud computing won't live up to the hype.
• Twitter (+4.40%) had a moment yesterday afternoon when a back-end bug sent users random strings of numbers and digits in a push notification.
• Sears (+29.03%) CEO Eddie Lampert told employees the company needs to show "material progress" to avoid liquidation.

BREAKROOM

From the Crew
Correction: Yesterday, we said Fidelity had $7.2 trillion in assets under management. The correct number is $2.6 trillion.

Also yesterday, we asked whether you'd invest in unicorn sneaker startup Allbirds. 60% were lacing 'em up, 40% weren't. Here are a few readers' thoughts:

• "Nike, Reebok and the others will glom onto Allbirds's schtick if the movement really takes off."
• "Allbirds has a unique and interesting product that attracts a niche millennial market, which makes an Allbirds investment look promising. However, unless they can demonstrate an ability to innovate/diversify their offerings to capture more business, while maintaining a sense of brand exclusivity, they will struggle."

Guess the Logo
We really zoomed in on this one...

(Answer located at bottom of newsletter)

Breakroom Answers