MARKETS
- Global economy: Fresh off celebrating a Mystics title, D.C. will host the International Monetary Fund (IMF) and World Bank's annual meetings this week. Already, the IMF head has hinted at a downgrade for global growth projections.
- Brexit: While you were parked in front of hour seven of The Great British Bake Off, officials worked through the weekend attempting to iron out a Brexit deal before an EU summit this week.
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GEOPOLITICS
What’s Going on With President Trump and Turkey?
Let’s spend this Monday morning catching up on the U.S./Syria/Turkey headlines and what they mean for the economy.
How we got here
Last week, President Trump pulled U.S. forces from northern Syria, which effectively allowed Turkey to deploy a military offensive against Kurdish-led forces in the region. The Syrian Democratic Forces in the area have been key U.S. allies in the fight against ISIS, but Turkey considers the group an enemy.
What happened next?
On Friday: U.S. Treasury Secretary Steven Mnuchin said President Trump was greenlighting “very significant new sanctions authorities” that could “shut down the Turkish economy” should Turkey continue its military offensive or let ISIS fighters escape from prisons in the region.
- That could include stopping all U.S. dollar transactions with the Turkish government.
- Turkey GDP check: $766.5 billion, good for the world’s 19th largest economy.
Yesterday: Mnuchin said on ABC, “We are ready to go on a moment’s notice to put on sanctions.” Trump later tweeted that he was working with Congress on “powerful” sanctions, and that we should “Stay tuned!”
One important note: The administration has so far been dealing in threats. No sanctions have been implemented yet, but if they are...what kind of economic damage could they inflict?
The major kind. The Trump administration has used economic weapons against Turkey before...
- In August 2018, Turkey’s lira tanked to a record low after the White House doubled tariffs on Turkish steel and aluminum and imposed sanctions on two Turkish officials.
- Those moves were meant to pressure Turkey to release American pastor Andrew Brunson...which it did two months later.
Bottom line: Already on shaky ground (the lira hit a nearly four-month low last week), Turkey’s economy could go from bad to worse with the addition of U.S. sanctions.
2020
This Is Not a Story About Elizabeth Warren Trolling Facebook
Democratic presidential candidate Sen. Elizabeth Warren has been running Facebook ads
that claim Mark Zuckerberg and Facebook endorsed Donald Trump for re-election.
But here’s the thing...Zuck hasn’t endorsed Trump.
But here’s the other thing...Warren knows Zuck hasn’t endorsed Trump. The ad itself states, “You’re probably shocked, and you might be thinking, ‘how could this possibly be true?’ Well, it’s not.”
Warren’s false ads highlight Facebook’s decision to exempt certain political advertising from third-party fact checks. That policy has been in the spotlight following CNN’s rejection of what it called “demonstrably false” Trump campaign ads—ads Facebook allowed to run.
- FB spokesperson response: “If Senator Warren wants to say things she knows to be untrue, we believe Facebook should not be in the position of censoring that speech.”
Zoom out: This is the part of every story where we tie in the news to a larger narrative, but for this...we’ll let you choose. Warren vs. Zuck, Warren vs. Trump, Facebook vs. regulators, Facebook vs. political misinformation, misinformation vs. free speech.
EARNINGS
Accountants Pass the “Busy Season” to Your Brew Writers
Earnings are upon us. Big banks are up first...and it might not be pretty. According to Refinitiv, the biggest U.S. banks will report a 1.2% drop in Q3 earnings, the first year-over-year earnings decline since 2016.
Blame interest rates. The Fed has lowered rates twice since July and looks poised for another cut this month. Lower rates cap profits by hamstringing what banks can charge on loans.
- Bank earnings are also a bellwether for the broader economy. They offer a first look at how businesses are responding to macro changes.
Also blame the tough IPO market. White-glove shops like Morgan Stanley and Goldman Sachs without big consumer banking ops rely on investment banking to drive earnings. You’ve read the WeWork headlines—not pretty. And global investment banking revenue dropped 2% annually last quarter, Dealogic estimates.
Looking ahead...Citi, Wells Fargo, JPMorgan, and Goldman report Tuesday, and Bank of America reports Wednesday. All eyes are on bank execs to address the side effects of unsteady markets and Fed concerns.
SOCIAL MEDIA
Graduating With Honors in Instagram
The Italian online university eCampus is offering a new three-year program to earn a degree in social media influencing, Bloomberg reports. Which makes us wonder...how do you procrastinate studying when studying is scrolling through Instagram? Read a book?
The degree aims to “fill the current educational gap” for students with good bone structure and iPhone 11s—classes include fashion psychology, language philosophy, TV history, intercultural communication, and more.
- One notable backer: Fútfluencer Cristiano Ronaldo, who as the face of eCampus’s publicity campaign is funding 36 student grants—one for each of his ab muscles.
- Critics, though, say achieving #influencer status shouldn’t be Plan A in Italy, where youth unemployment is over 27%.
The big picture: Influencer management platform Traackr found last year that 72% of major brands are spending big on influencer marketing. The Instagram influencer marketing industry alone is set to hit $2.4 billion this year.
CALENDAR
The Week Ahead
Sometimes it takes us a few hours to find worthy calendar events for this section. This was not one of those times.
Monday: Indigenous Peoples’ Day and Columbus Day and Canadian Thanksgiving; Usher turns 41...really?
Tuesday: Google hardware event; Democratic debate in Ohio; earnings (Wells Fargo, UnitedHealth Group, United Airlines, Goldman Sachs, JPMorgan, Citigroup, Johnson & Johnson, BlackRock)
Wednesday: Retail sales; Fed beige book; earnings (BNY Mellon, PNC, Bank of America, Netflix, IBM)
Thursday: Housing starts; jobless claims; earnings (E-Trade, BB&T, M&T Bank, Morgan Stanley, SunTrust, Philip Morris, Honeywell); National Pasta Day
Friday: Earnings (Coca-Cola, American Express)
WHAT ELSE IS BREWING
- Hunter Biden, son of former VP Joe Biden, said he’ll step down from the board of a Chinese-backed private equity firm at the end of the month. He’s pledged not to work for any foreign-owned companies should his father win in 2020.
- Fortnite ended its Season 10 in the most dramatic way possible: sending the entire game ecosystem into a virtual black hole.
- Zedd, the popular DJ and producer, said he's been banned from China permanently for liking a tweet from South Park’s official account.
- Boeing CEO Dennis Muilenburg lost his title as board chairman.
- Brigid Kosgei, a 25-year-old Kenyan marathoner, broke the world record for the event at the Chicago Marathon yesterday in 2 hours, 14 minutes, 4 seconds.
- Bill Gates reportedly met with Jeffrey Epstein on many occasions despite downplaying the relationship earlier this year.
BREAKROOM
Choose the Bigger Number: Influencer Edition
- Number of Instagram followers: @chiaraferragni // @realdonaldtrump
- Rate per sponsored Instagram post: @kendalljenner // @kimkardashian
- Rate per sponsored Instagram post: Fashion influencers // travel influencers
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Breakroom Answers
1. Chiara wins. Ferragni, arguably Italy’s best-known influencer, has 17.5 million followers. President Trump has 14.9 million.
2. Kim. Kendall Jenner reportedly got $250,000 for a single (now-deleted) post about the infamous Fyre Fest. In 2016, Kim Kardashian reportedly earned $300,000 per sponsored post (source).
3. Travel. Influencers posting about trips average $220/post, while fashion influencers charge $173 (source).
