Snubbed

MARKETS

  • Government shutdown: Gridlock? What gridlock? Top lawmakers emerged from a closed-door meeting to announce that an agreement had been reached "in principle" to fund border security and avoid another shutdown. Now they’ll be seeking President Trump’s signature.
  • Currency: The U.S. dollar is on its longest winning streak in three years. It’s climbed every trading day since the Fed announced its decision to be patient with interest rate hikes on Jan. 30.

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ECONOMY

Wheel of Misfortune

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Has anyone checked in on Pat Sajak lately? Yesterday’s episode felt really...dark, from China to corporate America.

We’ll take Brexit for 1,500 pounds

British economists estimated that higher inflation and lower growth since the 2016 referendum have cost that much on average for real household incomes. That's 4.1% lower than incomes would have been had Brexit not been approved.

It was the data-cherry on top after the U.K. tallied its weakest annual growth in six years during 2018. Now, most economists agree: Brexit has cost the U.K. 1.5% to 2.5% of its GDP.

We’d like to buy a vowel

I—as in the IMF, whose chief economist just echoed the Fed’s decision to take a break from interest rate hikes in the face of “weakening momentum” and “considerable and rising” risks.

  • It’s another downer of a message from the IMF, which estimated last month that the world economy would grow at a 3.5% rate this year...down 0.2 percentage points from its October forecast.

The IMF suggested its lingering worries were based on trouble in Europe and a possible contraction in world trade thanks to...no surprise here, concerns in China.

We’d like to solve the puzzle

C-H-I-N-A. The world’s second-largest economy continues to be a source of furrow lines for analysts concerned its slowing growth could drag down the rest of the global economy.

Those experts went from frown to all-out grimace yesterday when data showed consumer spending growth over China’s Lunar New Year holiday (a peak retail period) was the slowest since 2005.

Bonus round

The U.S. isn’t going home with a car...or probably much earnings growth in 2019.

  • Analysts tracked by Bloomberg now expect S&P 500 corporate profits to grow 5.4% this year, down from the 7.7% they expected last month.
  • And Morgan Stanley equities guru Mike Wilson: “Our earnings recession call is playing out even faster than we expected...Earnings recession is here.”

BANKING

Morgan Stanley Knows One Thing Is True...

Today’s Allbirds-wearers are tomorrow’s Gucci sled-wearers. That’s why the bank agreed to buy Solium Capital for about $900 million in cash.

Solium’s an employee stock compensation administrator—aka it manages the wealth of unicorn millionaires (and many of you hoping to become one). It has 3,000 corporate clients who employ 1 million workers from Uber to Stripe to SpaceX.

  • Why it works for Solium: Morgan Stanley’s (-1.47%) wealth arm manages $2.3 trillion for some 3.5 million American households. We’d call that scale.
  • Why it works for Morgan Stanley: Solium’s growing roster of the young and wealthy haven’t yet aligned themselves with a traditional financial firm...so think of it as an investment in tomorrow’s 1%. We’d call that grounds for inking your biggest deal since the financial crisis.

And don’t forget about tech. We’ve told you before that it’ll play a pivotal role in big banks attracting younger clients—Morgan Stanley effectively just acquired its way into staying ahead of the curve.

STARTUP

50 Future Unicorns

CB Insights and the NYT teamed up to predict the 50 startups that will eventually be valued at $1 billion. And we’re reading the list very closely...

Here’s why: 48% of startups they identified in a similar analysis in 2015 became unicorns. If that hit rate’s good enough for Cooperstown, it’s good enough for us.

Straight to the main takeaway: This roster of wannabe unicorns is not like the previous cohort (Uber, Airbnb, etc.), per the NYT’s Erin Griffith.

  • The old “benefited from the spread of smartphones and cheap cloud computing. Many of these companies built global empires by simply taking existing businesses...and making them mobile.”
  • The new “largely focus on software for specific industries like farms, banks and life sciences companies.”

Maybe you think the new class isn’t as sexy. But there’s nothing sexier to a farmer with a lot of data than a company that can analyze that information and give insights. Which is why Farmers Business Network has raised almost $200 million and has 7,700 farms as customers.
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AUTO

Let’s Go From Future Unicorns to Current Unicorn

Meet Nuro, an autonomous delivery startup that received $940 million in funding from...who else? SoftBank’s Vision Fund. Nuro’s now valued at $2.7 billion, impressive considering the company was founded in 2016.

In fact, it might be the most accomplished three-year-old since Secretariat. Nuro’s already locked in a partnership with Kroger to trial a delivery service in Scottsdale, AZ, and it’s got software that other autonomous vehicle companies (like Ike) are interested in licensing.

That thing got a Hemi?
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Uh, no, but what Nuro’s cars lack in muscle they make up for in practicality. With a top speed of 25 mph, they’ve got a short stopping distance and don’t need to “see” too far down the road, per Ars Technica. That could be ideal for suburban environments.

Zoom out: Nuro’s got cash to play with, but so do competitors. Aurora Innovation announced a $530 million round last week (Amazon contributed), and Zoox raised $500 million last year.

HEALTH

Time to Clean Out the Medicine Cabinet

goat’s milk detox plans. The FDA announced the broadest dietary supplements policy modernization it’s made in decades.

Step one in the overhaul: Send a warning to 17 supplement manufacturers claiming (without proof) that their products prevent/treat Alzheimer’s, diabetes, and cancer.

  • FYI: The FDA doesn’t currently review dietary supplements, but it can step in if those products are deemed unsafe or misleading.

In this Instagram-skinny-tea-obsessed world, about 75% of Americans take dietary supplements regularly. That’s helped the industry balloon to $50 billion in annual sales.

  • The FDA hasn’t meaningfully updated its policy governing dietary supplements since 1994, when the industry was doing $4 billion in sales and Dr. Oz was still a decade out from his first Oprah appearance.

But now, FDA Commissioner Scott Gottlieb is giving supplement manufacturers the Juul treatment: The firms targeted by the FDA with those warnings have 15 business days to back up their claims or face further FDA enforcement.

WHAT ELSE IS BREWING

  • Reddit announced it raised $300 million at a $3 billion valuation from investors including Tencent.
  • Amazon (+0.18%) said it is acquiring Eero, a developer of internet routers. This is all about its push into the smart home.
  • Apple’s (-0.58%) iPhone sales fell 20% YoY in China in Q4, per research firm IDC. Meanwhile, U.S. public enemy No. 1 Huawei watched its smartphone sales grow 23% over the same time frame.
  • Disney (-1.86%) has inked a deal with Hulu to create four animated Marvel superhero series exclusively for the streamer. Finally, Howard the Duck will have his day.
  • Former Snap exec Imran Khan is reportedly launching a retail startup aimed squarely at Amazon.

BREAKROOM

Math Puzzle
Since we could all use a little algebra refresher...

The length of a rectangle is 9 centimeters more than half the width. Find the length if the perimeter is 60 centimeters.

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Breakroom Answers


Math Puzzle
16 centimeters

 

Enim aut quae quaerat architecto. Aut reiciendis est voluptatem illum enim deleniti. Harum vitae qui voluptas suscipit deserunt eos. Odit aut quod id voluptatem.

Delectus earum alias sint non consequatur sed quis. Ratione nihil sit aspernatur quasi molestiae omnis voluptates. Eligendi illum quam autem recusandae dolorem eaque ipsa. Laborum error quia fugiat quos vel qui.

Atque quo veniam sint voluptatem. Ipsa numquam quos cumque animi accusamus et fugit. Asperiores quis et molestiae omnis ullam qui vel.

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