HBO or Netflix?

MARKETS

• Trade: President Trump said a China trade deal is “coming along nicely,” but his administration will stick with tariffs on Beijing “for a substantial period of time.”
• Bonds: The yield on the 10-year Treasury note dipped to its lowest since January 2018 after the Fed made an interest rate announcement (keep reading ). Remember, yields move inversely to prices.

COURTROOM

Bayer’s Biggest Challenge Comes From the Inside

When Bayer bought Monsanto for $63 billion last summer, the two probably thought they’d ride off into the sunset, holding hands and peddling agricultural solutions ’til death do them part.

But Bayer’s (-9.28%) big bet—aimed at flipping what had become grim future prospects—hasn’t quite turned out to be the dose of Aspirin it needed.

Bayer’s in legal trouble

And a lot of it. A San Francisco jury found Tuesday that exposure to Monsanto weedkiller Roundup was a “substantial factor” in causing a man’s non-Hodgkin lymphoma.

It’s the second legal defeat in seven months for Bayer. Back in August (just two months after the ink dried on its Monsanto deal), a jury smacked Bayer (-9.28%) with a $289 million judgment for its failure to warn customers there were cancer risks associated with using Roundup—though the penalty was later cut to $78.5 million.

Throughout the legal process, Bayer has refuted claims that the chemical glyphosate in Monsanto’s Roundup causes cancer.

How about the road ahead?

As our Colorado readers would say, “chain up.” Tuesday's verdict was part one of a two-part trial.

And there will likely be more battles. Bernstein analysts predict that settling litigation could cost Bayer up to $5 billion. The company has set aside $696.4 million for defense costs over the next three years—much of which will go directly to fighting Roundup cases.

• FYI, Bayer’s facing lawsuits from about 11,200 farmers, home gardeners, and landscapers claiming glyphosate caused
• Since that first trial, Bayer has lost more than $33.8 billion in market value.

Bottom line: Bayer fought hard for Monsanto, taking on significant debt and shedding more assets than anticipated to get the deal past the finish line. It also worked to convince the naysayers that criticisms of Monsanto would fade away. They...haven’t.

ECONOMY

The Fed Sticks With the Status Quo

For all our readers parlaying Duke winning the national championship with the Fed holding interest rates steady, you're one down, one to go.

And not only did Fed officials decide not to hike rates this time around...the majority forecast zero additional rate hikes for the rest of the year. That’s quite the turnaround from December, when they projected two rate increases in 2019.

And we finally got a date (September) for when the bank will stop unwinding the massive amount of Treasury holdings it bought to stimulate the economy post-crisis.

What it all means:

• Well, it shows Fed Chair Jerome Powell is slightly worried about slowing economic growth, specifically household spending and business fixed investment. And he’s right, we couldn’t make the slip ’n slide work financially.
• But with a strong labor market, wages on the way up, and inflation close to the Fed’s sweet spot, “The U.S. economy is in a good place,” Powell said.

IPO

IPOs Come in Different Fits

Slim, tapered, athletic, straight, skinny...and in the case of Levi Strauss, relaxed.

When the company goes public for the second time in its history today, it could become one of the biggest retail/consumer goods IPOs of the past decade, says the WSJ.

• While Lyft’s and Uber’s upcoming IPOs are sucking up the oxygen on Wall Street, Levi’s has been quietly navigating a wave of disruption in its industry to surprising success.
• It priced its IPO at $17 a share, valuing the company at $6.6 billion.

The backstory: Your jeans may look like they’ve been around for a while, but rest assured, Levi’s is older. The company dates back to the Gold Rush in 1853, when pioneering Levi Strauss opened up a dry goods business in San Francisco. It was taken private in 1985, but now it’s back—and just raised about $623 million in this IPO.

One more thing...remember that dual-class share structure we mentioned Lyft was instituting? Levi’s is doing something similar.

MEDIA

The Subscription Fatigue Is Real

In the U.S., there are 300+ over-the-top video options. And the average U.S. consumer has to remember their ex’s passwords for three video streaming services, per Deloitte research.

• The biggest players include—inhale now—Netflix, CBS All Access, Hulu, Amazon Prime Video, YouTube Premium, HBO, Showtime...and (soon) Apple, Disney, WarnerMedia, and NBCUniversal.

It’s getting to be a bit much. 47% of U.S. consumers are frustrated by the number of services required to watch what they want, Deloitte found.

• “Consumers want choice—but only up to a point...We may be entering a time of subscription fatigue,” Deloitte Vice Chairman Kevin Westcott said.
• Seems like an opportunity for larger players to “reaggregate” these services in a way that creates a better experience for the consumer, Variety suggests.

We may have reached peak subscription service with the NY Mets’s new “Netflix-style subscription deal.” The $39/month service allows fans to download standing-room-only tickets on their smartphones...right up until the start of the game.

MARCH MADNESS

At the NCAA Tournament, Only the Top Seeds Make It

For some future NBA stars, March Madness is a time to shine. For other prospects, it’s the end of the line.

We’re talking about vasectomies, of course. A study by athenahealth found that urologists across its network performed 30% more vasectomies during the first round of the 2016 NCAA tournament than they did during a typical week.

Makes sense. The tournament is the perfect time for a group of friends to simultaneously get the procedure, recover on the couch while enjoying the best few days on the sports calendar, and join Zion Williamson in going one-and-done.

The trend hasn’t escaped marketers. Everyone from an Oregon urological center (welcome to “Snip City”) to Buffalo Wild Wings (pull up a “Jewel Stool”) is hoping to capitalize.

Bottom line: Offense sells tickets, but vas deferens wins championships.

WHAT ELSE IS BREWING

• The EU fined Google $1.7 billion for abusing its dominant position in the online ad market.
• Apple (+0.87%) launched a new generation of AirPods with optional wireless charging, longer talk time, and hands-free Siri access.
• Starbucks (+0.35%) is testing out compostable and recyclable cups. And you thought StrawGate was the last of it.
• Volvo said it expects margins on electric vehicles to match those of traditional combustion engine models by 2025.
• Mozambique is suffering from what some are calling "the worst humanitarian crisis" in its history in the aftermath of Cyclone Idai.

BREAKROOM

Final Jeopardy

Breakroom Answers