Convicted

MARKETS

• 2020: Democratic presidential candidates may redirect their fire from Mike Bloomberg to frontrunner Sen. Bernie Sanders in tonight’s debate in South Carolina. Billionaire philanthropist Tom Steyer will join the festivities.

MARKETS

Choose Your Cliché Headline: "Markets Get Sick" or "Markets Have Case of the Mondays"

Stocks had one of their worst days in years yesterday and coronavirus cases spiked outside of China. Probably not a coincidence. The S&P missed the red memo and headed straight for crimson, closing down 3.4% in its largest percentage drop since Feb. 2018.

But stocks are just one piece of the markets puzzle, and that pesky inverted yield curve is back and worrying economists.

What's going on

When a threat like coronavirus puts economic growth at risk, investors pig pile into safer assets like government bonds.

Which brings us to yesterday, when yields on longer-term Treasury notes fell below yields on shorter-term notes—there’s your “inversion.” The gap between the 3-month and 10-year Treasury notes inverted to minus-18 basis points.

• The Fed uses that gap as an indicator of economic downturns. Over the last half century, such yield curve inversions have preceded every recession.

This is the deepest inversion since last October and the third in the last few months. Which means something eerie could be lurking underneath a generally well-returning stock market.

• "A lot of investors have been worried for a while that the bond market knows something that stocks don't," Leuthold Group Chief Investment Strategist Jim Paulsen told the FT.

Big picture: "Bond investors are sending the strongest signal yet that they doubt central banks will be able to avert a recession or revive inflation as the coronavirus's spread darkens growth prospects," writes Bloomberg.

Looking ahead

The Fed’s indicated it wants to keep rates steady this year, but many investors are betting the coronavirus will push it to make additional rate cuts to keep the economy on track.

The WHO clarified yesterday that coronavirus is not a pandemic...but maybe "it is time to do everything you would do in preparing for a pandemic." Per Oxford Economics data cited by the FT, if the virus escalates to that level it could cut global GDP by $1.1 trillion.

#METOO

Weinstein Convicted in Momentous #MeToo Moment

Harvey Weinstein was found guilty of rape and a criminal sexual act by a New York jury yesterday. As the AP reports, the convictions sealed Weinstein's "dizzying fall from powerful Hollywood studio boss to archvillain of the #MeToo movement."

• While Weinstein was found guilty on two counts, he was acquitted on three of the most serious charges, including predatory sexual assault.

The backstory: Since the first allegations surfaced against Weinstein in fall 2017, at least 90 women have accused Weinstein of sexual misconduct including unwanted touching and forced oral sex. As an influential business figure, Weinstein became the face of the #MeToo movement, which aims to hold powerful men accountable for sexual harassment in the workplace.

Looking ahead...Weinstein will be sentenced on March 11, and he'll face up to 29 years behind bars. Weinstein's attorney is appealing the decision.

+ Read the October 2017 investigations that started it all.

• "Harvey Weinstein Paid Off Sexual Harassment Accusers for Decades" in the NYT.
• "From Aggressive Overtures to Sexual Assault: Harvey Weinstein's Accusers Tell Their Stories" in The New Yorker.

WORK

Build a Whole Foods in 1980 and Eventually They'll Come

Austin, TX, keeps trying to convince itself it's still "weird," when it should just embrace what it is...a booming tech hub. The Texas capital was the hottest job market in the U.S. for the second straight year in 2019, per the WSJ.

Home to the first Whole Foods and the University of Texas's flagship campus, Austin has managed to hook some of the most impressive (and high-paying) tech employers in the country. Apple's building a $1 billion campus that will employ up to 15,000 people...on top of the 7,000 Austinites already on Apple payroll.

• Classic methodology bullet: The Journal created the list using Moody's Analytics data that tracked metrics such as wage growth, unemployment rate, and bachelorette party frequency.

Here's the rest of the job market rankings for U.S. metros with 1+ million people…

1. Austin, TX,
2. Nashville, TN
3. Denver, CO (it was ninth last year)
4. Seattle, WA
5. San Francisco, CA
6. Salt Lake City, UT
7. Raleigh, NC
8. Orlando, FL
9. Dallas, TX
10. San Jose, CA

ECONOMY

Trying to Explain the Disconnect in the Economy

As a Brew reader, you know that recent numbers about job growth and living standards show a rip-roaring economy. So why are American families struggling to pay the bills?

A new study from the Manhattan Institute, a conservative think tank, set out to answer that question. It found that a typical male worker's annual income no longer covers a family of four's major expenditures: housing, healthcare, transportation, and college.

Data viz gurus at the WaPo took those numbers and created this colorful chart.

We know you're wondering: The researchers say they focused on men’s wages because empirical research has identified the "unique importance of work" to men's well-being and family stability.

• Whether we should focus on men being able to provide for their families is outside the paper's scope, the researchers say. The point is...men could and now they cannot.

Bottom line: Price increases as measured by inflation don't take into account real-life economic realities. That's led to a discrepancy between an economist’s view of the economy and the typical American family's.

MEDIA

Your Next Netflix Hole May Be Your Last

Ever watched a documentary on Netflix and wondered, "Is anyone else finding this deep dive into Czech orthodontia scandals as fascinating as I am?"

Wonder no more. Netflix said yesterday it will roll out top 10 lists that show the most popular movies and TV series on the platform. The lists will update daily so "you can easily see what's in the zeitgeist."

• Netflix said it's been testing the lists in Mexico and the U.K. for over six months.
• "Members in both countries have found them useful, so we are now rolling them out to even more," it said matter-of-factly.

Why it matters: Netflix is famously protective of viewership data, and famously inconsistent about how it measures it. Last December, Netflix released its most popular movies and TV shows of 2019, but those numbers were calculated differently than the way Netflix previously counted a "view." Plus, no third-party is verifying the data.

These top 10 lists present an interesting thought experiment, though. How will seeing the most popular shows on Netflix influence what you watch?

WHAT ELSE IS BREWING

• Intuit makes it official: The maker of QuickBooks confirmed it's buying Credit Karma for $7.1 billion.
• The late NBA star Kobe Bryant and his daughter Gianna were remembered in a public memorial service at the Staples Center in Los Angeles.
• Cargill, the privately owned food giant, said it'll launch plant-based patties and ground beef in early April.
• HP will increase its share buyback program to $15 billion as it defends against a hostile takeover attempt by Xerox.
• Katherine Johnson, a prolific NASA

WORK WORK WORK WORK WORK

We mentioned that Austin had the hottest job market in the U.S. in 2019, but that's not really the entire story. That list evaluated metro areas with populations of more than 1 million people. Which U.S. city had the hottest job market last year for metros with fewer than 1 million people?

• Hint: Like Austin, it's also home to a large university.

Keep scrolling for the answer.

WORK...ANSWERS