Iowa stubborn

MARKETS

• Markets: The Dow and the S&P wiped out their gains for the year (see above) following a disastrous Friday. This week will feature more earnings reports from major companies and close with the January jobs report.
• Energy: OPEC and its pals are considering having an emergency meeting to figure out a response to downer oil prices. After falling almost 16% in January over coronavirus-related concerns, they’re at a six-month low.

2020

Iowant to Talk About Politics

Today, Iowans will head to libraries, schools, and church basements to cast the 2020 election’s very first votes in the Iowa caucuses.

Because the outcome of the election will (obviously) affect the economy, biz analysts’ ears are pricked. One surprise? On the surface, President Trump’s approach to some issues isn't all that different from the stances of the leftier Democrats.

Trade, the deficit, and taxes

On trade: Both Sens. Bernie Sanders and Elizabeth Warren, the Democratic Party’s left flank, are free trade skeptics (both, for example, opposed former President Obama’s TPP trade deal). Their hawkish positions on trade with China might not look too different from President Trump’s.

• Warren’s chances in Iowa don’t look good, but Sanders took the lead in some recent polls.

On the deficit: A Sanders adviser said it’s safe to add $500 billion to the federal deficit to pay for education and fighting climate change. The White House is already planning another round of tax cuts after the election, 2020’s projected $1 trillion deficit notwithstanding.

On taxes: Okay fine, President Trump and the Dems don't really have anything in common here. Warren and Sanders would tax the gold-plated bejesus out of the nation’s wealthiest people and corporations to fund their initiatives. Trump’s 2017 tax cut lowered the corporate tax rate to 21% from 35% and granted bigger exemptions to rich Americans’ wealth-building vehicles of choice, like estates.

• Colony Club dinners are going to get awkward. On Saturday, former NYC Mayor and presidential candidate Mike Bloomberg rolled out a plan to raise taxes on wealthy Americans and corporations. He’d add a 5% surtax on annual incomes over $5 million to help generate $5 trillion for his policy agenda.

Then there’s former Vice President Joe Biden, the moderate Democratic frontrunner. As a longtime deficit hawk and free trade advocate, he’d be more likely to dial back tariffs and at the very least give the deficit a passing glance.

Bottom line: With nine months before Election Day, investors are already taking cover from political risk in safe-haven assets like Treasuries.

+ Want to keep up with the election, how it shapes the biz world, and vice versa? Subscribe to The Turnout, Morning Brew’s weekly biz/politics newsletter.

MARKETS

Chinese Stock Market Reopens, Immediately Regrets Decision

The Chinese stock market opened more than 8% lower as investors bit their nails over the coronavirus outbreak and its implications for the country’s economy.

Markets had been closed since Jan. 23 for the Lunar New Year holiday, but...it wasn’t much of a holiday.

• More than 360 people have died and over 17,000 have been infected worldwide.
• Officials on Sunday confirmed a coronavirus-related death in the Philippines—the first outside of China.

Chinese central bankers knew this sell-off was coming, so they injected an unprecedented $174 billion of liquidity into markets to try and stabilize them.

Zoom out: The broader economic impacts of the outbreak are still being hashed out. White House economists are reportedly busy crunching the numbers, while other experts think the health emergency could knock Chinese GDP growth in the first quarter below 5%.

While we’re here:

• Apple is closing all of its stores and corporate offices in mainland China through Feb. 9.
• The Chinese city of Wuhan, where the virus is believed to have originated, is building hospitals to accommodate the influx of patients. Construction timeline: two weeks.

C-SUITE

A New Captain for SS WeWork

New year, new beverage policy, new CEO. On Saturday, WeWork said real estate exec Sandeep Mathrani will be its new chief.

The details: Mathrani will take over for Sebastian Gunningham and Artie Minson, who have been subbing in as co-CEOs since former CEO and founder Adam Neumann’s departure last fall. Mathrani will report to chairman Marcelo Claure, who recruited him through persistent LinkedIn DMs.

The backstory: After a catastrophic 2019, WeWork is getting back to first principles.

• Principle 1: Real estate. Mathrani used to run Brookfield Property Partners’ retail group, one of the U.S.' largest mall owners. His presence signals WeWork will focus on bread-and-butter office leasing, as opposed to the Neumann-era positioning as a consciousness-elevating tech company...that also runs a school for some reason.
• Principle 2: Profitability. WeWork has sustained huge losses driven by massive spending for years, and hasn’t come within sniffing distance of profitability. Mathrani and Claure will be responsible for nursing the company's financial health.

Looking ahead...Mathrani starts on Feb. 18.

C-SUITE

No Rookies Wanted

WeWork's not the only company replacing a young hotshot with a grizzled vet. As this chart from Business Insider shows, the average age at hire for bigtime CEOs has skyrocketed in recent years.

CALENDAR

The Week Ahead

If you thought January felt long, wait until you hear about February. It has 29 days this year.

Monday: ISM Manufacturing Index; Iowa caucuses; New York Fashion Week begins; earnings (Alphabet)

Tuesday: State of the Union address; World Cancer Day; Corelogic House Price index; earnings (Disney, Ford, Chipotle, Snap, BP)

Wednesday: Trade balance report; earnings (Merck, GM, GlaxoSmithKline, Qualcomm, GoPro)

Thursday: Earnings (Bristol-Myers Squibb, Twitter, News Corp, Uber, Tyson Foods, Pinterest, Toyota, Activision Blizzard, Dunkin Brands)

Friday: New Green Day album; Democratic presidential debate in NH; January jobs report

WHAT ELSE IS BREWING

• Victoria’s Secret had an “entrenched culture of misogyny, bullying, and harassment” according to a NYT investigation.
• The FDA approved the first treatment for peanut allergies.
• Global M&A activity in January was its slowest in seven years, the FT reports.
• A British startup claims it has developed the first drug created using artificial intelligence to be tested on humans.
• Relive the Super Bowl commercials.

BEYOND CROSSWORD

We've been informed this is not technically a crossword puzzle in the same way Beyond Meat isn't technically meat. So we're going to call it Beyond Crossword.

BEYOND CROSSWORD ANSWER