Louisiana viral
MARKETS
- Housing: U.S. existing home sales grew 2.5% in July, and it’s no secret why. Average interest rates on 30-year mortgages are at their lowest in almost three years.
- Fed: The minutes from the central bank’s July meeting show that its decision to cut interest rates by 25 basis points was not unanimous. Fed Chair Jerome Powell’s heading out to Jackson Hole, Wyoming, to deliver a big address tomorrow.
Want Morning Brew Daily Served Fresh to Your Inbox?
Drop Your Email Below...
FOOD
This Chicken Sandwich Is Louisiana Viral
This week, the internet has been atwitter about the new Popeyes fried chicken sandwich. Think puppies plus the cold side of the pillow plus Springsteen. Everyone loves it.
The release was amplified by fast food companies taking shots at each other on social media. Chick-fil-A, Popeyes, Wendy’s, and more turned the #celebration into a #fray, quote-tweeting each other with winky insults.
But in 2019, a Twitter dunk contest can reflect important patterns
One of those is the economy and its impact on the fast food sector. Conor Sen writes for Bloomberg Opinion that in times like now, when the economy is humming along and companies are paying higher wages, fast food businesses look for ways to boost margins. So they introduce new products and charge more for them.
Which brings us the chicken sandwich that broke the internet. Sen observes that the most enduring burgers in fast food history were also introduced in super-tight labor markets. Both the Whopper (1957) and the Big Mac (1967) were released in years when the national unemployment rate fell below 4%...like it is now.
Then there’s the influence of Twitter, which fast food companies have used to connect with customers in original ways. Wendy’s Twitter handle has built a famously snarky persona on the platform. And this week’s social media rumble has given Popeyes’s new sandwich the national buzz its promotional team could only dream of. The sandwich has reportedly been selling out at some locations by the early afternoon.
Finally, Popeyes is bucking the trend
...by not jumping on the non-meat meat bandwagon. This year, some of its peers’ new product launches have struck a much more botanical tone:
- Burger King partnered with Impossible Foods for the Impossible Whopper (now going nationwide).
- Dunkin’ is starting to sell a breakfast sandwich made with Beyond Meat’s vegan sausage. Beyond Meat’s remarkable May IPO is one of the business stories of the summer.
We'll be taste-testing chicken sandwiches for lunch today. You can find out whether Popeyes deserves the hype on our Instagram.
BUDGET
The Perfect Budget Storm Costs $1 Trillion
The federal budget deficit will widen to $1 trillion by fiscal 2020 for the first time since 2012, according to the nonpartisan Congressional Budget Office.
How we got here:
- President Trump’s 2017 tax cuts swiped revenue from the Treasury. Lawmakers promised to pay for the cuts with economic growth on steroids, but that hasn’t quite panned out.
- Pair that with 1) bipartisan agreements to hike military and non-defense discretionary spending and 2) no rush to implement pledged spending cuts and…
- You find out spending much more than you’re making creates a trillion-dollar headache. Can you believe we give you these insights for free?
For dramatic effect: As recently as January, the CBO said the U.S. deficit wouldn’t hit $1 trillion until 2022. And next year’s deficit could be even bigger if not for today’s low interest rates.
The silver lining: The deficit will only be 4.6% of GDP, and it’ll stick under the 5% threshold through 2026. That’s about half the share of national output it reached during the financial crisis.
RETAIL
Is That Target or Simone Biles?
Last quarter, Target pulled off a historic triple-double in retail exercise.
- Earnings: $1.82 per share vs. $1.62 expected
- Revenue: $18.4 billion vs. $18.3 billion expected
- Same-store sales: Up 3.4% vs. 2.9% expected
Target also jacked up its guidance for the year, and Wall St. got the message. Target shares hit a record high yesterday, jumping just over 20%.
The backstory: In 2017, Target realized this Amazon site wasn’t going to go away and made a plan to compete. That meant a renewed focus on its website, in-store experience, and customer convenience—pick up, drive up, and delivery.
Now, Target says same-day fulfillment services can claim credit for nearly half of last quarter's same-store sales growth, while digital sales jumped 34% from a year ago. And it hasn’t forgotten about that in-store experience. As Target COO John Mulligan put it on the earnings call, “Inferior brick-and-mortar experiences will go away.”
Zoom out: With Lowe’s ( 10.16%) also posting strong quarterly results, yesterday showed the U.S. consumer remains in top form.
STARTUP
Congrats, Demo Day Grads!
This week, famed incubator Y Combinator held its twice-yearly Demo Day, which showcases its startups to investors and unicorn hunters.
We were too cool to be among the “specially selected investors and press” invited to attend, but we still kept track of some Demo Day startups you should keep your eye on.
- Globe rents space to business professionals by the hour for everything from taking calls to taking naps to taking calls while napping. Globe’s CEO says it “will be bigger than Airbnb”—which also graduated from YC and is now worth around $30.5 billion.
- Vahan uses WhatsApp to connect workers with on-demand companies like Flipkart and Amazon in India, where 12 million on-demand employees get hired every year. Vahan’s part of the 15% of this Demo Day batch focused on overseas markets.
- Waves matches people with similar sexual fetishes, since Bumble isn’t really the place for kink (always use safe word “Brew”). It says the industry could become worth $125 billion.
Get more startup trends from Demo Day in Emerging Tech Brew this afternoon. Click here to sign up.
BOOK RECS
How to Build Your Dream Team
Teamwork is supposed to help us move past our individual limitations, but groupthink and power dynamics frequently get in the way of success. We all remember what happened to the Monstars.
So what’s the secret? In his book, Dream Teams, Shane Snow explains his formula for building and maintaining, well, dream teams. He runs through historical examples from pirates to Wu-Tang Clan to show what makes some teams so successful, and he explains the road bumps that might be getting in the way of yours.
Shane recently sat down with the Brew to discuss:
- The importance of cognitive diversity, intellectual humility, and getting out of your comfort zone
- What to keep in mind if you’re the boss
- Why company values like “integrity” and “accountability” are meaningless
Check out our full conversation, give Dream Teams a read, and let us know what you think.
WHAT ELSE IS BREWING
- Alibaba (-1.03%) is delaying its up to $15 billion IPO in Hong Kong because of political and economic instability in the city.
- JPMorgan ( 0.26%) plans to shut down its Chase Pay smartphone app in another reversal of its digital strategy.
- Nordstrom’s formula for a 12% after-hours stock pop: Report mixed earnings and weakening sales, but top Wall Street’s estimates.
- Knotel, a flexible office space startup, has raised $400 million to achieve unicorn status. How long until it becomes The Kno Co.?
- The Trump administration and Mexican tomato producers ended a monthslong tariff dispute.
- Amazon ( 1.23%) has opened its largest campus yet in Hyderabad, India.
BREAKROOM
City Limits
The following are the top five cities in which category?
- Detroit, MI
- Wilmington, DE
- Salt Lake City, UT
- Boise, ID
- Winston-Salem, NC
Want Morning Brew Daily Served Fresh to Your Inbox?
Drop Your Email Below...
Breakroom Answers
City Limits
Fastest growing home sale price (source: Redfin).
Perspiciatis dignissimos atque illum facere sapiente voluptas. Quia in distinctio ullam nostrum.
Qui blanditiis aperiam delectus velit quis sit omnis exercitationem. Voluptas rerum ratione velit sit omnis. Qui esse consectetur incidunt blanditiis minima natus et perferendis. Quia officiis rerum ut deserunt. Qui rerum sequi omnis facere eum.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...