Say ahhhhhh

MARKETS

• U.S. markets: Stocks didn’t fluctuate much between bells yesterday. Investors must've been power napping before the Fed meeting today and tomorrow.
• Brexit: The pound took a beating yesterday after 10 Downing’s newest resident, Boris Johnson, ramped up his no-deal Brexit rhetoric.

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TRAVEL

United Skips the Line With Clear

United Airlines (+0.09%) is taking an equity stake in Clear, a company that uses biometric information (like fingerprints and iris scans) to whisk you through security checkpoints and run laps around TSA PreCheck.

The details of the partnership:

• Clear will launch at United’s hubs in Newark, Houston, and (probably) Chicago's O’Hare in the coming months. It’s already in service at United’s Denver, LA, SF, and Washington Dulles hubs.
• United will offer Clear memberships to its all-star customers for free or at heavy discounts. A standard Clear membership costs $179/year.

But people seem willing to pay for convenience. Clear has grown from 2.5 million members to 3.8 million in under a year, per the WSJ. It operates at 31 airports, has a presence at stadiums/arenas, and signed up Delta as another equity stakeholder (7%).

Clear’s growth reflects changes in travel tech

For travel companies, biometric technology is as refreshing as a 7am airport beer. The World Travel & Tourism Council counts at least 53 different biometric systems being used in the industry, from plane boarding to car rentals.

The technology allows customers to save time and businesses to save money. A couple examples:

• Hertz is partnering with Clear to install facial recognition and fingerprint screeners at 40 locations this year. Checkout is expected to take 30 seconds.
• British Airways has used biometric technology to board more than 400 customers in 22 minutes at LAX.

Pushback: The patchwork of biometric systems currently in use lacks organization and oversight. And the increased use of the technology at travel checkpoints has raised questions about privacy and surveillance.

But that doesn’t appear to bother Clear members strolling up to Departures five minutes before boarding. Or the travel industry, which needs to act quickly to address bottlenecks. The number of air passengers is expected to double to 8.2 billion in 2037, per the IATA.

IPO

2019 IPO Checkup

It’s time for your midsummer checkup on 2019 IPOs. Because the public market game doesn’t end after the tailgaters pack up and head home.

1. After a wildly successful May IPO, Beyond Meat reported both wider losses (24 cents per share) and greater revenue ($67 million) than analysts expected for Q2 yesterday.

• By Monday's close, Beyond stock had catapulted nearly 800% since the IPO as the vegan meat maker gobbled up partnerships with both restaurants and meal kit delivery services. But shares fell as much as 13% in extended trading after it announced plans for a secondary offering.

2. Lyft stock sank over 2% on news that its COO, Jon McNeill, is leaving the company after 18 months. Interesting note from the WSJ: In 2018 only 32% of large companies surveyed had a COO.

3. Uber (-1.44%) also made some personnel changes: It laid off a third of its marketing team (about 400 people) yesterday to get its “edge” back, per CEO Dara Khosrowshahi. Uber’s on the quest for profitability, which tech firms look at the way the rest of us look at buying a hot tub. It’d be nice, but do we really need it right now?

CYBERSECURITY

Capital One Plays 1 vs. 106 Million

U.S. credit card issuer Capital One (-4.04% after hours) said yesterday the personal info of about 106 million credit card customers and applicants in the U.S. and Canada had been illegally accessed. That includes about 140,000 Social Security numbers and 80,000 bank account numbers. No credit card numbers were compromised, per Capital One.

You’re probably picturing a secret network of state-sponsored hackers pulling off this gigantic data breach. But it was a Seattle woman named Paige Thompson who was arrested yesterday in connection with the hack.

How she did it, according to the criminal complaint:

• The FBI says Thompson broke into Capital One’s server while working at a cloud-computing firm (the WSJ reports she’s a former employee of Amazon Web Services).
• But then, as one does when one has illegally accessed data on 106 million people, Thompson allegedly boasted about her accomplishments online. Capital One was alerted on July 17 about the digital chest-thumping.

The breach is expected to cost Capital One $100–$150 million this year—no cash back.

HEALTHCARE

Harris to Private Insurers: We Can Work Something Out

Yesterday, 2020 Democratic candidate Sen. Kamala Harris unveiled a healthcare plan intended to split the difference between candidates to her right and left.

• Kamala’s plan: Harris would expand a program under the government-run Medicare system to include private insurers.
• The hair influencer to her left: Sen. Bernie Sanders’s bill currently in Congress would grant everyone coverage from the federal government and abolish private insurance (Medicare for All). Harris is a co-sponsor of the bill.
• The aviator to her right: Under former Vice President Joe Biden’s plan, private insurance would stay intact, but you could also sign up for a government-run insurance plan if you wanted. That’s known as the public option.

Zoom out: The AP reported Sunday that about 90% of Americans are covered by the U.S. health system, indicating that high costs may be a bigger problem than coverage.

Looking ahead...the second Democratic debates begin tonight. We’ll get to see Harris defend her position in round two tomorrow.

FED

The Fed Believes in Preventive Monetary Medicine

The last time the Fed cut interest rates, some of you had braces, Rihanna was still regularly releasing music, and the financial crisis was nearing its crescendo. The year was 2008.

Like 2008, today’s low inflation has concerned central bankers. Unlike 2008, the stock market and employment situation are A1. So why is the Fed expected to cut rates tomorrow?

Well...ask your coworkers if they’d prefer slower economic growth. Yeah, didn’t think so. The Fed agrees—and lowering short-term borrowing rates is a precautionary strategy to keep the decade-long expansion alive and insulate the U.S. from a global growth slowdown.

Cheaper borrowing is intended to boost the economy by incentivizing businesses to invest and everyday consumers to buy big ticket items like houses and cars.

Keep in mind: This forecasted rate cut is widely considered an insurance policy to keep the economy on track, so there’s a chance it’s a one-off event, not the beginning of a rate-cutting campaign.

WHAT ELSE IS BREWING

• Deutsche Bank’s (-1.26%) latest restructuring headache: Some ex-employees still had access to the lender’s email system for weeks after being fired.
• President Trump’s administration is proposing a rule that would require hospitals to disclose the prices they negotiate with insurers in the name of transparency.
• Pfizer (-3.83%) officially announced a deal to merge its off-patent drugs biz with Mylan and reported a jump in Q2 profit.
• Grab, the giant Southeast Asian ride-hailer, is using $2 billion of an investment from SoftBank to ramp up transportation and other services in Indonesia.
• Lil Nas X has set the record for the longest streak at Billboard’s No. 1 spot with “Old Town Road.” His life really is a movie.

BREAKROOM

Raising the Bar
Best of luck to all the Brew readers taking the bar exam today. We know this section of the newsletter is all the prep you've needed.

Let’s see how well the rest of you know basic legal vocabulary by answering these three questions:

1. What is the name of the classification of crime which is less serious than a felony?
2. What is the legal term for a voluntary written statement made under oath?
3. What is the basic, general difference between libel and slander?

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Breakroom Answers

1. Misdemeanor
2. Affidavit
3. Libel is written or printed or broadcast. Slander is only spoken.