GOOOOOAL

MARKETS

• U.S. markets: In the first trading day of 2019, stocks clawed back from early losses to score modest gains. But then Apple happened (keep reading...).
• Energy: U.S. crude finished at a two-week high, pushed along by news that Saudi output tightened in December.

SHUTDOWN

The Government Shutdown: On Wall Street and Main Street

the last 13 days? We're guessing quite a few (maybe even more than "Kim and Kanye expecting fourth child").

How we got here: Hung up on funding for a U.S.-Mexico border wall, lawmakers in D.C. failed to reach a spending deal to keep the lights on at about a quarter of the government's offices in late December. Wondering who's affected?

On Wall Street…

Remember that rush of initial public offerings everyone was looking forward to in the new year? Yeah, not going to happen as long as this shutdown continues.

That's because the SEC is one of the federal agencies affected. Since no one is working to sign off on new IPO registrations or give feedback on confidential filings, the slate of early-2019 offerings is on hold for the time being.

• "While timing is always uncertain, this makes it even more so," IPO adviser Lise Buyer told Axios.

On Main Street…

Small businesses are starting to feel the crunch: Some mom-and-pop shops waiting on government loan approvals may have to wait even longer.

• FYI, the Small Business Administration guaranteed more than $30 billion in loans in the fiscal year that ended in 2017...now most loan processing has been suspended on account of the shutdown.

With nine of the 15 federal departments affected, some 380,000 federal workers are on unpaid leave. Another 420,000 employees deemed "essential" are working without pay.

And the impact of the shutdown is getting even more pronounced. Since the shutdown began just before the holidays (when federal offices were going to be closed anyway), the real effects started to come into focus this week as most of us returned to the #riseandgrind.

Looking ahead…

When Congress reconvenes today, Democrats will control the House. They plan to vote on a bill to open much of the government...while axing any border wall money. President Trump rejected that bid in a tweet this week.

TECH

Why Apple Cut Its Fiscal Q1 Guidance

C'mon Apple. Lowering your quarterly revenue forecast to only $84 billion? That's only…*checks CIA World Factbook*...greater than the GDP of well over 100 countries.

But snark aside, here are some reasons CEO Tim Cook gave for his ultra-rare move to slash sales guidance from a previous range of between $89 billion and $93 billion.

1. China

• "Most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad."

2. China

• "We believe the economic environment in China has been further impacted by rising trade tensions with the United States."

3. China

• "Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline."

Bottom line: Apple's stock fell over 7% after hours on the news, and other companies followed the leader. If you thought investors were jittery about the global economy before, seeing a (one-time) trillion-dollar tech darling walk back its forecasts is only going to raise stress levels.

AUTO

Tesla Sputters Again...Sort of

It wasn't a total late-season collapse (looking at you, Steelers), but Tesla didn't exactly head into 2019 looking like a playoff team.

Bad news first: Despite Elon Musk's best efforts to boost production, his electric carmaker delivered 90,700 vehicles in the fourth quarter...about 2,000 short of Wall Street's estimates. That sank Tesla stock almost 7% yesterday.

Plus, Tesla's slashing prices by $2,000 on the Model S, X, and 3 to help mitigate a cutback in the federal tax credit for electric vehicle owners (that once-$7,500 credit was cut in half Jan. 1).

• It's all about how you spin it. Bears said the price cut was Tesla's attempt to reignite flattening demand, while bulls said it was cushioning Tesla from that tax credit drop.

But now, the good news: Tesla managed to ramp up Q4 production to 86,500 vehicles, up from 80,142 a quarter earlier. Plus, Q4 deliveries more than tripled from the same time last year to hit an all-time high.

MEDIA

Roku: Small Remote, Big Ambitions

The company announced yesterday it'll be offering premium subscription services through its streaming service, The Roku Channel.

But to really understand what that means, let's hash out your experience using Roku before and after the change.

• Before: You used Roku (+6.14%) like your smartphone, downloading third-party apps such as Prime Video to check in on Mrs. Maisel. You could also browse free content on The Roku Channel.
• After: You'll be able to buy subscription services directly via The Roku Channel. For users, it streamlines the login process...and for the company, it (hopefully) better monetizes users.

One hang-up? Available apps include Showtime, Starz, and Epix, but not HBO, Hulu, and Netflix (yet). So, kind of like the time you traveled to Oktoberfest only to find out they ran out of all the best beer.

The numbers plastered on the office walls of Roku execs: In Q3, hardware accounted for $73.3 million in revenue. The ad and subscription business? Over $100 million

PHARMA

How Much More Will That CVS Trip Cost This Year?

The short answer: More than it did last year...but that's par for the course these days.

Starting Jan. 1, more than three dozen pharmaceutical companies hiked drug list prices, according to Rx Savings Solutions (which sells software that helps employers and health plans choose the path of least-dollar-resistance). The average price increase? 6.3%.

Breaking it down by drug list price (which excludes rebates, discounts, and insurance payments) for some of pharma's heaviest hitters...

• AbbVie's blockbuster Humira (which had $15 billion in sales in the first nine months of 2018) will increase in price by 6.2%.
• Allergan is upping prices for 27 products by 9.5%, and Teva is slapping a 9% increase on some of its drugs.
• Hikma Pharmaceuticals will increase the price of its injectable morphine pain reliever by 10%.
• GlaxoSmithKline raised prices on 36 drugs, although none of the increases topped 3%.

Zoom out: Big Pharma has put on the earmuffs to tune out Washington's calls for cheaper drugs—January price hikes have become the norm year after year.

SPORTS BIZ

Warm Up Your Voice, and Repeat After Us

I

I believe

I believe that

I believe that we

I believe that we…have entered a new era in U.S. soccer (and sports media) thanks to 20-year-old soccer phenom Christian Pulisic. He was bought by London-based Chelsea Football Club from a German team for $73 million, making him the most expensive American soccer player ever.

The clear media winner: Partying with the Pulisics last night was Comcast (+0.94%), whose NBC owns the broadcasting rights to the English Premier League (EPL) in the U.S.

• If you still aren't convinced that this league is important to Comcast, remember that it paid $39 billion last year for Sky, the EPL's longtime rights-holder in the UK.

But this is about the U.S. Global soccer business interests have been scrambling to grab a slice of the world's No. 1 economy, where Premier League viewership is surging: Bloomberg reported ratings for live matches on NBC are up 8% over last year.

We'll keep an eye on those numbers next season when Pulisic heads to London.

WHAT ELSE IS BREWING

• Qatar Airways bought a 5% stake in China Southern Airlines. China's aviation market is expected to leapfrog the U.S.' by 2023, per the International Air Transport Association.
• Mary Meeker and friends are calling their new VC firm "Bond," and will target a $1.25 billion debut fund, per Axios.
• Blake Nordstrom, co-president of the eponymous retailer, died yesterday morning at 58. Nordstrom (+1.87%) disclosed Blake had been diagnosed with lymphoma last month.
• Sears (+82.16%) Chairman Eddie Lampert has now made two offers to save the retailer: one would stave off liquidation, and a backup plan would salvage its real estate in the event of a partial liquidation.

BREAKROOM

Word Puzzle
Any King Arthur fans in the house? See how many words you can find located within the word “Excalibur.” There are at least 37 four-letter-long and 17 five-letter-long words.

(Answer located at bottom of newsletter)

Breakroom Answers