Party wave

Quote of the Day

Our biggest competitor is word of mouth.”

Market Snapshot

• The Dow and Nasdaq are off to their best start to a year since 2006.
• Emerging markets are soaring.
• The total market value of cryptocurrencies hit $780 billion. Look out, Apple.
• Global debt rose to $233 trillion in Q3 2017, a new record.

The Economy Is Doing Pretty, Pretty Well

We know it’s Monday morning...but we just can’t help ourselves from high-fiving each other around the office. Weird, yes. But that’s what we do when the U.S. economy is in full swing.

Let’s start with job creation

The U.S. added another 148,000 new jobs in December, bringing the 2017 total to 2.1 million. Even though the monthly number fell below expectations, it marks the seventh straight year we’ve added more than 2 million jobs, and the 87th consecutive month of employment growth.

If you’re looking for a time when we produced jobs for as long as we have at the current clip, you’ve got to go back to the days of Seinfeld and popper joggers—the ‘90s.
And as plenty of jobs come online, fewer people are looking for work.

The unemployment rate is at record lows

4.1%, but who’s counting? For the last few months, the rate has remained the lowest it’s been since December 2000. At this point, we’ve almost hit “full employment,” a wonky term that basically means anyone who’s job hunting can find one.

Full employment sounds great in theory, but there’s always the worry that a tight labor market will drive up your paycheck too fast and cause prices to increase, otherwise known as inflation. Is the economy flying too close to the sun?

So far, inflation hasn’t made much of an appearance

In 2017, wages grew a lukewarm 2.5% and inflation barely ticked above 2%. Why this is happening with unemployment at historically low levels is an issue that’s probably keeping economists up at night.

One person tossing and turning is newly installed Fed chair Jerome Powell. We know he’s reading his Brew very closely (‘sup, Jerome!) to decide when to pump the brakes via interest rate hikes. Right now, the smart money is on the Fed raising rates three times in 2018.

Kalanick: Uber Outcast, Billionaire Entrepreneur, or Both?

Imagine signing a document and becoming a billionaire.

For ex-CEO Travis Kalanick, that’ll soon be a reality as he is expected to sell 29% of his Uber stake to a SoftBank-led consortium. Sure, it’s not how Kalanick originally drew it up. He’ll sell his shares at SoftBank’s discounted valuation of Uber ($48 billion vs. $68 billion), but he’ll pocket $1.4 billion and retain 7% of the company all the same.

And it's not like Kalanick's all-in on Team Uber anymore. He’s been ousted from his position, removed from day-to-day operations, publicly humiliated, sued by early investors, and stripped of his superior voting rights on the board.

But that still leaves the question: who will own what now? Here’s what we know:

* Kalanick will own 7%
* SoftBank will own 15%
* Side investors in the SoftBank deal (TPG, Tencent, Sequoia, etc.) will own 3%
* Benchmark Capital will own 11% (after selling 2% to the SB group)

And the remaining ~59% is controlled by a mosh pit of big-name investors, ranging from Jeff Bezos to Goldman Sachs.

For Sale: $500 Million (Film) Studio

Weinstein just keeps falling from grace. This time, the tarnished name is in the news as The Weinstein Company nears a sale for less than $500 million, roughly half of which is debt. Insult to injury: shareholders risk losing all equity.

Of the 20 bids the film studio has received since December, six have made the short-list, including former Obama cabinet member Maria Contreras-Sweet. Some other contenders: production company Killer Content (supported by Abigail Disney), studio Lionsgate, and investment firm Shamrock Capital (founded by another Disney, Walt's nephew Roy).

After co-chairman Harvey was fired following dozens of high-profile sexual assault and harassment allegations, Weinstein Co. found itself in cinema purgatorio. Its slate of upcoming releases—including drama Current War about Thomas Edison and George Westinghouse—is collecting dust while the studio tries to write a happier ending.

And in Hollywood, timing is everything. While operating expenses and legal bills continue to pile up, Weinstein Co. may soon have no choice but to file for bankruptcy.

Quiksilver and Billabong Catch a Party Wave

Iconic Australian surf brand Quiksilver is purchasing its hometown rival Billabong for $300 million. Kyles, Tylers, and Blakes everywhere are freaking out.

That’s because if you didn’t wear a Billabong or Quiksilver shirt in sixth grade to complement your long hair and seashell necklace, you weren’t cool. But neither company has been especially cool lately.

Billabong wiped out in 2013, admitting its brand was a thing of the past. And Quiksilver hung zero when it filed for bankruptcy in 2015.

Luckily, PE shop Oaktree Capital was there to scoop up Quiksilver. And after two years of financial CPR, it’s hoping a Quiksilver-Billabong duo will be gnarly enough to bring back the glory days.

All together, they’ll have 600 stores in 28 countries. Surf’s up.

What Else Is Happening…

• Neiman Marcus didn’t take long to hire a new CEO, tapping former Ralph Lauren exec Geoffroy van Raemdonck.
• David Letterman’s new show on Netflix landed a big guest for its debut—Barack Obama.
• Celgene is expected to announce a deal for Impact Biomedicines that could reach up to $7 billion.
• Alexa, beware. In 2017, Google sold “tens of millions” of its home devices.
• The Chinese city that makes everything (Morning Brew).

Economic Calendar

• Monday     Earnings: No Events

                    Economic Events: Consumer Credit

• Tuesday    Earnings: No Events

                  Economic Events: Small Business Optimism Index

• Wednesday    Earnings: No Events

                        Economic Events: MBA Mortgage Applications, Wholesale Trade

• Thursday   Earnings: No Events

                   Economic Events: Jobless Claims, PPI

• Friday       Earnings: BlackRock, JPMorgan, Wells Fargo

                 Economic Events: CPI, Retail Sales

Coffee Chats: Marco Zappacosta

This is part three of a six-interview series on the gig economy. We’re highlighting the industry leaders who are shaping the “future of work” worldwide.

Marco Zappacosta has something to say that you may not want to hear: “Following your passions can be bad advice because your passions may not be a career.”

Bummer, right? He continues: “That said, following your passions is often a really good way to meet other passionate people.”

And he did just that. Marco bonded with his future co-founder over social security reform. One thing led to another and their shared frustration about how hard it is to find a plumber led to Thumbtack—the online destination that quickly and efficiently pairs customers with the right professionals.

We’ll let Marco tell you how one Thumbtack is worth $1.3 billion…

The Breakroom

Question of the Day

Arrange the digits 0, 1, 2, 2, 3, 4, 4, 5, 6, and 9, to form a single fraction that equals 1/2. (Here is one example that, alas, turns out not to be true: 32145/24690=1/2)

(Answer located at the bottom of newsletter)

Business Trivia

What was the most popular album of 2017? Can you name the top 3?

(h/t Nielsen Music)

Stat of the Day

$135 billion—The record amount insurers paid out for natural disasters in 2017. We can’t imagine many parents named their babies Harvey, Maria, or Irma last year.

Breakroom Answers

Question of the Day: One solution: 12345/24690=1/2 (Explannation)

Business Trivia: 1) Ed Sheeran—Divide 2) Kendrick Lamar—DAMN 3) Taylor Swift—Reputation