Keep Apple weird

MARKETS

• Budget: The U.S. budget deficit hit a record $205 billion for the month of November. And suddenly, your credit card bills seem pretty manageable.

FINTECH

Robinhood's Now Stealing From the Banks

Robinhood, the popular zero-fee stock trading app, has set its sights on something bigger than Wall Street's brokerages: the entire consumer banking sector.

It unveiled "Robinhood Checking & Savings" yesterday, causing millennials to pause their biweekly canned tuna ritual bonfires to get on the list for the sleek debit card.

Beyond aesthetically pleasing plastic, Robinhood is offering no fees, and it's giving users a 3% annual interest rate in both savings and checking accounts—that's roughly 30x the national average.

(FYI, it's insured by the SIPC, not the FDIC. The Securities Investor Protection Corp. covers brokerage accounts.)

Robinhood's trying to live up to the name

The startup has been sending the big fish scrambling...

• Its no-fee trading undercut old-school brokerages—remember, TD Ameritrade charges $6.95 per equity trade and Schwab $4.95.
• Now, retail banking will put the likes of Bank of America, Citi, and Wells Fargo under pressure, especially given Robinhood's "basically unheard-of rate."

How to outbank a bank

Banks make money using account, ATM, and penalty fees (among others). So how will Robinhood keep the lights on in its no-fee world?

Call it the Amazon Method—prioritizing growth over profits. Robinhood was most recently valued at $5.6 billion and grew to 6 million customers this year (keep in mind, Fidelity manages 26.7 million accounts).

There are always buts

There's competition. Goldman Sachs's Marcus runs a similar offer with a 2.05% annual return, and JPMorgan unveiled a free trading app in August.

Plus, there's controversy. An October Bloomberg report found Robinhood gets more than 40% of its revenue from selling customers' orders to high-frequency trading firms. Most every brokerage does it, but the news was a bad look for "trust us, we're different" Robinhood.

Bottom line: Robinhood is on its way to becoming a bona fide bank. It doesn't have a charter yet, but its CEO says that could be in its future.

TECH

Keep Apple Weird

Apple (+1.09%) is investing $1 billion in a new campus in Austin, TX, where it expects to create up to 15,000 jobs. It's also setting up other large satellite offices in Seattle, San Diego, and the Los Angeles area.

Why Austin?

• As much as it still wants to keep its counterculture vibe alive, Austin (with its highly educated workforce) is now a high-tech hub. Apple's been there since 1992, and Facebook, Google, and many other tech firms also call it home away from home.
• Plus, there's a bat bridge.

We know what you're thinking: No contest? No real estate feeding frenzy? No helipad? It's true—Apple's search for a new campus was significantly more tame than Amazon's HQ2 gladiator battle (to be sure, it's also creating fewer jobs). Apple CEO Tim Cook said in March he wasn't interested in "doing the beauty contest thing."

Zoom out: Big tech firms are under pressure from D.C. to show they can be trusted. So now's definitely a good time to invest in the U.S...and an accompanying photo op doesn't hurt.

INTERNATIONAL

The ECB Story You’ve Been Waiting Four Years to Read

The European Central Bank announced it's ending its quantitative easing program, a bond-buying bonanza that juiced the eurozone economy with $2.9 trillion over the last few years.

And since this will certainly be the talk of your holiday party tonight, make sure you're prepared for the conversation...

• The European Central Bank (ECB) is in charge of monetary policy for the eurozone, a group of 19 European countries that've adopted the euro as their currency (not to be confused with the European Union and its 28 members).
• In 2015, the ECB started a program of quantitative easing, economist-speak for buying massive amounts of government and corporate bonds. The game plan? Keep down borrowing costs to increase liquidity, spark investment, and stimulate the economy.

So...did it work? For the most part. Inflation grew to hit targets, but the eurozone's recovery lagged behind the U.S.' And just yesterday, the ECB cut growth forecasts.

And finally, some birthday preparations are in order: The euro is turning 20 in just a few weeks. We're thinking Benihana?

GROCERY

Amazon Drives Another Wedge

Looks like they missed the cuffing season memo. Grocery delivery service Instacart's relationship with Amazon's Whole Foods is officially ending (and well ahead of when the five-year deal was set to expire).

That means Instacart will be winding down the 1,415 in-store shoppers it previously had placed in 76 Whole Foods locations.

Instacart saw this breakup from a mile away...or at least since Amazon announced plans to acquire Whole Foods back in June 2017.

• Since then, Amazon's (-0.31%) ramped up its own grocery delivery service, AmazonFresh.
• It's now also offering free two-hour Whole Foods delivery for Prime members in more than 60 cities.

While that was happening, Instacart was plotting its next move, signing deals with Kroger, Aldi, Sam's Club, and Walmart Canada. $871 million in new funding also helped numb the pain.

+ While we're here: Instacart and Whole Foods are splitting, but Starbucks (+1.18%) and UberEats are looking like the next power couple. The coffee giant will test Uber's delivery program where drive-thrus aren't feasible.

QUIZ

The Brew’s Weekly News Quiz

More bubbly than bitcoin. Going public faster than Uber or Lyft. Knows how to use pastiche in a sentence. It's the Brew's weekly news quiz.

1. Fill in the blank(s): According to a study from Pew Research, more U.S. adults often get their news via ________ than _________.

2. Which startup am I? I just raised $250 million at a $2.65 billion valuation. I link your bank account to companies like Venmo and Coinbase. I am very fashion forward.

3. Who said this to Congress? "We use a robust methodology to reflect what is being said about any given topic at any given time...I can assure you we do it without regards to political ideology."

4. We used Google Maps to check out the downtown of a midwestern city—a city where some startups will be supported by a new accelerator called 100K Ventures. What's the city?

5. What is the most streamed song from the 20th century, per Universal Music Group?

6. A Virgin Galactic spacecraft successfully completed a mission to the edge of space yesterday. What is generally considered the altitude at which space begins?

Answers: 1) More get their news via social media than print newspapers 2) Plaid 3) Google CEO Sundar Pichai 4) Flint, MI 5) Queen's "Bohemian Rhapsody" 6) 62 miles

WHAT ELSE IS BREWING

• SoftBank, which runs Japan's third largest wireless network, is considering removing Huawei equipment from its ecosystem.
• United Airlines (-2.40%) flight attendants gathered by the hundreds outside several airports yesterday to protest staffing cuts.
• Netflix (+0.41%) has a new star: Taylor Swift is releasing a film documenting her "Reputation" stadium tour exclusively on the streamer on New Year's Eve.
• YouTube said it removed 1.6 million channels last quarter, mostly because they were scam or spam accounts.
• SeaWorld (-0.43%) said the Justice Department is ending its investigation into whether the company misled investors following the "Blackfish" scandal.

BREAKROOM

Friday Puzzle
Think of four common six-letter words that all end in the same five letters, in the same order. And the first letters of these four words are consecutive consonants in the alphabet (like B, C, D, F). What are the words?

(Answer located at bottom of newsletter)

Breakroom Answers