Opening up a can of

Quote of the Day

The paradox about Bitcoin is that it may well turn out to be a genuinely revolutionary breakthrough and at the same time a colossal failure as a currency.”

Market Snapshot

• Treasury yields hit a 3-year high.
• U.S. indexes ended Friday on a high note, led by gains in the consumer goods sector.
• Even a shutdown won't hurt the U.S.' AAA rating.
• ADT shares fell below their $14 IPO price after the company's second IPO.

So Your Government Shut Down?

You know that classic scenario: you’re out with friends and you can’t settle on how you should split the bill because Heather didn’t have any of the appetizer, but Kevin ordered two extra rounds of drinks. And instead of coming to the literal table for a compromise, you just...leave?

Well, as of 12:01 am on Saturday, the U.S. government—unable to come to a bipartisan agreement on the 12 appropriations bills for annual spending—has shut down.

And how did we get here?

Imagine Heather and Kevin (from our very realistic scenario up top) were trying to compromise on their food and drink tab, but were also using this as an excuse to negotiate other things like raising budget caps for defense and domestic spending or funding the Mexico border wall or extending the Deferred Action for Childhood Arrivals (DACA).

DACA specifically has drawn the bulk of negotiating heat, despite both sides claiming to support it. Plus, more than 100 CEOs—including Mark Zuckerberg (Facebook), Tim Cook (Apple), Jeff Bezos (Amazon), and Mary Barra (GM)—have called on Congress to provide immediate legal relief for the more than 800,000 young immigrants brought to the U.S. illegally as children.

So, the big question: what does this mean?

Effective immediately, any non-essential federal employees are furloughed (given a temporary leave of absence), many (but not all) government functions are frozen, and all Smithsonian museums are closed. Those agencies with funding outside the annual appropriations process are being asked by the Trump administration to remain open, including the Energy Department and national parks (unlike the 2013 shutdown).

If the shutdown—currently in Day 3—continues for much longer, other agencies and processes will feel the effects. That could mean delays in the processing of passport and visa applications and mortgage approvals (because of IRS furloughs), and no maintenance of .gov websites.

But the bigger question: what does this mean for business as usual?

For the first few days, the answer is “nothing really.” But we’re fast-approaching the "something really" stage. Here’s what can and/or will happen:

• The Securities and Exchange Commission (SEC) and the U.S. Commodity Future Trading Commission will be furloughing staff. So, while corporations can still file documents, no one will be reviewing them. And the suspension of SEC services may disrupt financial markets.
• For the economy at large, the halt can stall the U.S.’ recent growth since it costs productive work time and government revenue (think museum fees).
  Companies in the private sector are disrupted if they have any government contracts.
• A general diminishment in consumer confidence and economic outlook.
  According to Standard & Poor’s, all told, a shutdown could cost the economy $6.5 billion a week.

Next time, we’re picking the restaurant.

Coca-Cola Opens Up a Can of Environmental Sustainability

With great fizz, comes great responsibility.

That’s Coca-Cola’s new unofficial motto as it plans to collect and recycle the equivalent number of plastic bottles and cans it produces by 2030. It also hopes to manufacture all plastic bottles using 50% recycled material by the same year.

Maybe Coca-Cola took a hint from McDonald’s, which last week announced it would switch to 100% renewable or recycled material for its packaging by 2025. But more likely it’s responding to the public outcry against plastic pollution—the beverage giant distributes more than 110 billion single-use plastic bottles.

That number would be 0 if operation “World Without Waste” went off without a hitch. But execution is usually the bane of corporate sustainability efforts. And since more than 200 countries—including developing nations—sell Coke throughout the world, setting up the infrastructure for bottle collection would be a nightmare.

On other hand, so is a seal swallowing an empty 2-liter.

Amazon Jacks Up Monthly Prime Rate

It's official. Amazon monthly membership rates for Prime jumped from $10.99 to $12.99.

What’s the deal? It doesn’t take Bezos’ brain to figure it out: Amazon is using the 18% hike to turn month-to-month Prime subscribers into annual members. At $99, the yearly rate is far below the new monthly equivalent of $156, and experts predict only 2% of Amazon customers will leave Prime altogether.

With benefits like Amazon Prime Video, Prime Music, photo storage, free 2-day delivery (max), and more, Bezos’ creation from 2005 has been a hit with consumers. The service currently boasts a staggering 90 million U.S. subscribers (or ~28% of the population).

As for Amazon, it pays to have as many customers as possible aboard S.S. Prime. Members spend nearly double on the site each year compared to those who haven’t subscribed.

This Week in Earnings: What We're Watching

Can you smell it the air? Yep, we’re neck-deep in earnings season—those weeks every quarter when public corporations bare their financial souls.

Here are three companies we’ll be watching this week:

Netflix (Monday)—When it comes to reporting earnings, it’s all about exceeding expectations. And for a surging Netflix, those expectations are sky-high. We’ll be on the lookout for how those price increases are working out, and the jump in international subscribers.

GE (Wednesday)—How low can GE go? We know the American icon will take a $6.2 billion charge on its legacy insurance business, and investors will hope that’s the extent of the damage. New CEO John Flannery’s attempt to resurrect GE isn’t going according to plan...so far.

Caterpillar (Thursday)—If you’re looking to gauge the health of the global economy, all you’ve got to do is look at CAT’s financials. And given how well the economy is doing (not to mention the recent tax cuts), the maker of those yellow earth-movers should bulldoze Q4.

What Else Is Happening…

• Now there’s an app for your phone addiction.
• Fortune released its list of the 50 most admired companies in the world.
• Google and Tencent are now friends-with-patent-benefits.
• Facebook wants you to give a thumbs-up to the news sources you trust.

Economic Calendar

• Monday     Earnings: Netflix, UBS

                    Economic Events: Chicago Fed National Activity Index

• Tuesday    Earnings: Capital One, Johnson & Johnson, LG, P&G, Travelers, Verizon

                  Economic Events: Rich Fed Mfg Index

• Wednesday    Earnings: Comcast, Discover, Ford, GE, Novartis

                        Economic Events: PMI, Existing Home Sales

• Thursday   Earnings: 3M, American Airlines, Caterpillar, Celgene, FCA, Intel, Northrop Grumman, Raytheon, Southwest, Starbucks

                   Economic Events: Jobless Claims, New Home Sales

• Friday       Earnings: Honeywell, Rockwell Collins

                 Economic Events: Durable Goods, GDP

Doyle Rules: After a Job Well Done, the CEO of Domino’s Prepares to Leave

This June, Domino’s CEO Patrick Doyle will step down having dominated the pizza world. In December of 2009, Domino’s shares traded below $8. Doyle became CEO in March 2010. Today, the stock price sits around $213—a nearly 1,500% jump.

Over the same period, Papa John’s stock climbed ~360%, and Yum! Brands (Pizza Hut’s owner) rose ~245%. Domino’s also outperformed all FAANG stocks during Doyle’s tenure.

Doyle’s success at Domino’s offers a perfect segue into the debate on CEO compensation. Some point to the figure that CEOs at the top 350 U.S. companies make 271x more than the average worker as a symbol of a broken and inherently unequal system.

Others say some top CEOs are actually underpaid, given their influence on the stock’s value. The marginal benefit a “great” CEO over a merely “good” CEO could theoretically net the company billions of dollars in market cap.

What do you think? Are CEOs egregiously overpaid, or does that argument devalue their ability to change the entire fortunes of a corporation?

The Breakroom

Question of the Day

What word, when you remove the first letter and put it at the end, gives you the past tense of the word?

(Answer located at the bottom of newsletter)

Business Trivia

What is the most commonly misspelled word on job resumes?

(Answer located at the bottom of newsletter)

Stat of the Day

24—How many workers Snap laid off in New York and London. A dozen worked on the content team.

Breakroom Answers

Question of the Day: Eat (Ate) (Explannation)

Business Trivia: Confusing “lead” with “led.” If, at your current job, you run meetings, you lead (in the present tense). If you ran them in a former position, you led (in the past tense)—you didn’t lead (pronounced led), as in the chemical element.