Decision Time for Bezos

MARKETS

• U.S. markets: All the back-and-forth over trade has investors feeling conflicted. Be on the lookout for more swings in U.S. markets in the week ahead as earnings season winds down.
• There's an election happening, too: Nate Silver, can we get an update? FiveThirtyEight's models say the Republicans have an ~85% chance of keeping the Senate, while the Democrats have a similar probability of taking the House. As we've discussed, midterms will have an enormous impact on the business world.

ELECTION

Campaign Finance in the Eleventh Hour

With Election Day almost here, fundraising efforts are nearing the end zone on a record-setting drive. By the time midterms are through, candidates will have spent a combined $5.2 billion...easily beating the previous midterms record of $4.2 billion back in 2010.

So where is the money going? Well...digital platforms, increasingly.

• Per the Center for Responsive Politics, digital ad spend will account for ~22% of all political ad spend this cycle. It represented less than 1% just four years ago.
• One platform not benefiting? Twitter, which has brought in only ~$2.1 million in campaign ads since June. And get this, just three candidates (all Democrats) spent 75% of that money.

Of course, Corporate America wrote a few checks

Let's check the numbers:

• Fortune 500 company-affiliated PACs (political action committees) and employees have given more than $180 million to congressional candidates this cycle, per Axios.
• Republican candidates have received $93 million of the funds, while Democrats have brought in $86 million.

Zoom out: Many big companies give to both sides of the political spectrum in the lead-up to an election—they know a thing or two about hedging bets (and make great plus ones at Thanksgiving dinner).

When does it get interesting? When you break it down by sector

Here's what Axios dug up:

• The energy industry has given more than 80% of its $8.5 million in contributions to GOP candidates.
• The tech sector spent 75% of its $17.7 million on Democrat campaigns. Alphabet (with 86% of its $4.7 million going to Dems) led the charge.
• What about Wall Street? For the first time in a decade, the securities industry has given more money to Democrats than Republicans. That could be because the Dems are largely expected to take the House...and with greater political power, they could be a threat to slow down the Trump administration's deregulatory roll.

EARNINGS

Warren Buffett Had a Better Weekend Than You

Well, unless you're Mary Keitany and you won the NYC Marathon women's division for the fourth time.

But back to Buffett...his conglomerate Berkshire Hathaway announced that its operating profit nearly doubled in Q3 thanks to an improved tax set-up and an insurance unit that mostly sidestepped the season's nasty hurricanes.

What are the critics saying? Certified fresh. "This is absolutely one of the biggest quarterly earnings reports that has ever come out of a United States corporation," Smead Capital Management's Bill Smead told the NYT.

• Net income jumped more than 355% to $18.5 billion in Q3 (although that's partly due to a new accounting rule). Still, Buffett's firm finished the quarter with $103.6 billion in cash and similar assets.

What did Buffett do with some of that cash? He bought back nearly $1 billion worth of Berkshire stock, the first time he's done so since 2012.

Read between the lines: The buyback shows Buffett (still) isn't thrilled with the investment opportunities out on the market. Remember, Berkshire hasn't made a major acquisition since 2016.

INTERNATIONAL

Take a Quick Break From Midterms With Some Global News

Starting today, China is kicking off its International Import Expo. It's an opportunity for President Xi Jinping to show China is committed to being a team player in the global economy.

Because right now, it's not popular in the locker room: Countries regularly accuse China of IP theft and making unreasonable demands of foreign investors. And that's just the start of a long list of complaints...

Who/what you'll see walking the Expo floor in Shanghai:

• 3,000+ companies from 130 countries
• 18 heads of state or government (but none from the U.S.)
• Reps from ~180 U.S. companies, including GM, Facebook, Tesla, Microsoft, Boeing, and Google

Also today, the U.S. is reimposing all sanctions on Iran

The move is the second (and more punishing) round of sanctions since President Trump withdrew the U.S. from the Iran nuclear deal in May. With targets including the oil, shipping, and finance industries...it'll be a major gut punch to the Iranian economy.

HQ2

If You’re on Amazon’s HQ2 Team, Give Us a Call

Here's a fun to game to play with your friends: Say you all were told the location of Amazon's future HQ2, but had to keep it a secret. Who'd be the first to spill the beans?

Why we're asking: After months of impressive silence, Amazon's HQ2 team is getting a little chatty.

• The (Jeff Bezos-owned) Washington Post reported that Amazon's zeroing in on Crystal City in northern Virginia, per "people close to the process."
• The WSJ said Amazon has moved on to late-stage talks with Crystal City, Dallas, New York, and a few others, according to "people familiar with the matter."

This speculation is getting a little crazy, folks. The Washington Post even analyzed the routes of Bezos's private jet to see if it could learn something. It didn't learn much.

CALENDAR

What’s on Tap

It's the most consequential week of the year. Make sure to wash your voting socks.

Monday: Earnings (Booking Holdings, Marriott)

Tuesday: Wear your "I Voted" sticker proudly as you walk around the office; JOLTS; earnings (CVS, Twilio, Etsy, Match Group, Eli Lilly)

Wednesday: FOMC meeting begins; earnings (Roku, Square, Qualcomm, Keurig Dr Pepper, Humana, Wynn Resorts); Diwali

Thursday: Jobless claims; earnings (Dropbox, Disney, AMC)

Friday: Consumer sentiment; World Freedom Day; EU leaders meet to discuss trade

CANNABIS

The World’s Largest Cannabis Dispensary Just Opened. Any Guesses Where?

You have three options:

1. Las Vegas
2. Las Vegas
3. Las Vegas

It's called the Planet 13 Superstore, and because this is Vegas we're talking about...it's also an entertainment complex, complete with towering LED flowers and laser graffiti. Planet 13 has 16,500 square feet of cannabis retail space.

More fun facts?

• It has 42 registers to handle the 2,000+ expected visitors each day.
• Recreational marijuana is legal in Nevada, but it's illegal to smoke outside of a private residence.
• Planet 13 Holdings is a publicly traded cannabis company with a market cap of ~$240 million.

A (very bullish) bottom line, courtesy of the Las Vegas Medical Marijuana Association VP: "This is just like Steve Wynn opening the Mirage," he told the Review-Journal.

WHAT ELSE IS BREWING

• Goldman Sachs is set to name its smallest partner class since 1998 this week, per the WSJ.
• Elon Musk said his Boring Co. will be on track to have an unveiling party in LA in about one month.
• JPMorgan said it will direct funds from its urban economic development project to impoverished neighborhoods around Paris.
• "Bohemian Rhapsody," the Freddie Mercury biopic, beat out Disney’s “The Nutcracker and the Four Realms” in the U.S. and Canada this weekend with $50 million in ticket sales.

BREAKROOM

From the Crew
You thought we were done with our HQ2 hypotheticals? You don't know the Brew. Here's our next prompt for you to chew over:

You're Jeff Bezos. You've flown in your private jet all over the country looking for the perfect HQ2. But decision day has finally arrived. Where are you going to put it? Let us know here. (Note: Answers don't have to be limited to the 20 finalist cities.)
Business Before & Afters
Each of the answers will be connected by a shared word.

Ex. Jeff Sessions's favorite automaker=Attorney General Motors

1. A Massachusetts senator lives in Omaha and preaches value investing
2. A controversial musician raps about an oil benchmark
3. A Nintendo game presides over the European Central Bank
4. The jersey sponsor of the Boston Celtics's eco-friendly ride

(Answer located at bottom of newsletter)

Breakroom Answers