When donkeys fly

MARKETS

• U.S. markets: Bank stocks led the way to solid gains all around. After all, it's hard not to inch higher when Goldman Sachs had its best day in a decade.
• And then there's Brexit, when even winning a confidence vote still leaves you with very little confidence. PM Theresa May survived the gauntlet in Parliament yesterday, but she's still dealing with the headache of all headaches.

SHUTDOWN

Shutdown Chronicles: Day 27

Dear Diary,

The partial government shutdown is now on its 27th day, which is also (about) the same amount of time it takes the Moon to orbit the Earth. Looks like it's going to be a two-werewolf shutdown for me.

Here's the latest:

1. On economic damage, the White House doubles...up?

It said that the negative economic effects of the shutdown are 2x what it originally estimated—that's a drop in quarterly economic growth of 0.13 percentage points per week.

As for long-term damage? Well, that's where the animal metaphors come in handy...

• The bull: "In the fullest of time, this should not have a long-run effect on GDP growth," White House economic adviser Kevin Hassett told CNN.
• The bear: "Some economists have begun to warn that...economic confidence could be undermined as businesses, consumers and investors lose faith"—NYT.

2. Some employees go back to work

The Trump administration has called in almost 50,000 furloughed federal workers to do their jobs without pay. These tasks include processing tax refunds and inspecting food and drugs.

Plus, the Department of Agriculture is reopening some offices for three days to process loans and help farmers file tax docs.

3. The ripple effects extend to the private sector

With many federal agencies closed, small businesses that contract with the government are barely treading water, per a WSJ report. Two eye-opening quotes?

• "I'm out of cash. I don't know how to continue to support these employees...it's a hellacious situation to be in," said one COO.
• "How long can it go on? We're counting the days until we're out of business," said a CEO.

We think we already know the answer to this question, but we'll go for it anyway...is an end in sight? When asked about a path forward introduced by a bipartisan group, Senator John Kennedy (R-LA) said that's only going to happen "When you look outside your window and see donkeys fly."

BANKS

What Do You Really Need to Know About Bank Earnings?

Probably not much more than the headlines: Bank of America (+7.16%) and Goldman Sachs (+9.54%) blew past Q4 estimates yesterday after Citigroup (+1.32%), JPMorgan (+0.81%), and Wells Fargo (+2.66%) missed some key forecasts earlier in the week. But believe it or not, there's big bank news beyond EPS and FICC revenues.

Goldman issued a (kinda) mea culpa

Freshly minted CEO/chart-topping DJ David Solomon apologized to the people of Malaysia, where his bank is facing criminal charges and up to $7.5 billion in fines and refunds for its role in the 1MDB scandal.

"Apologies are nice, but cash is nicer"—the people of Malaysia, probably. Goldman allegedly pocketed $600 million in fees during the 1MDB fiasco, while Malaysian economic development projects missed out on ~$4.5 billion.

And Citi opens up about pay gaps

Female employees earn 29% less than male employees and, in the U.S., people of color earn 7% less than their white colleagues. FYI, Citi is the first U.S. bank to publish these kind of unadjusted pay gap figures.

DEBT

And Now, a Story on Student Loans Starring the Fed and Natty Light

This is uncharted territory, wish us luck...

Let's start with the Fed, which released a new study showing there's a clear link between student debt and low homeownership rates among young Americans. After all, it's hard to save for a down payment or qualify for a mortgage when you're up to your eyeballs in debt.

And you know those Fed researchers—they're gonna hit you with hard numbers:

• 36% of household heads between ages 24 and 32 owned a home in 2014. In 2005, the share was 45%.
• 20% of that decline can be directly attributed to an increase in student loan debt.

About that student loan debt: It increased per capita from $5,000 to an inflation-adjusted $10,000 over the same nearly decade-long period.

And Natty Light wants to show you it cares

It's putting all the money you spent junior year to good use, pledging $10 million over 10 years to help relieve student loan debt. The Anheuser-Busch brand is also running a Super Bowl promotion with the Cash App to cover some fans' monthly payments.

REAL ESTATE

WeWork Teeters Close to We...Own

WeWork CEO Adam Neumann has a perk even better than bottomless cucumber water: The WSJ reports he made millions by snatching up private stakes in several uber-valuable commercial real estate properties under his own name...then leasing those spaces back to WeWork.

If you're keeping score, that makes Neumann both landlord and tenant for some properties. It also leads to some legitimate concerns over potential conflicts of interest, given that Neumann himself could benefit from the company he leads paying higher rents.

• More scorekeeping: Neumann is WeWork's largest individual shareholder and has voting control over the company (which was recently valued at $47 billion).

But as much as it seems sleazy...Bloomberg's Matt Levine argues that conflicts of interest are par for the course in the real estate industry, where stories of the Trump empire's early days set a certain standard.

So here's the question Levine lobs at WeWork: Are you a mission-driven "tech" startup or a regular-ol' real estate company?

SOCIAL MEDIA

YouTube Draws the Line

YouTube's latest message to vlogger wannabes: Tide Pods are for laundry day and Bird Box is for lazy Sunday binge sessions.

The platform is clamping down on content that shows YouTubers engaging in 1) challenges "that can cause death and/or have caused death in some instances," and 2) pranks that can cause "a perceived danger of serious physical injury" or "severe emotional distress."

Wondering why? YouTube's been facing a growing number of reports of people getting seriously hurt (even crashing their cars) in the name of going viral.

• There's the Bird Box challenge, which encourages people to blindfold themselves à la the characters in Netflix's latest hit.
• And don't forget the infamous (and potentially deadly) Tide Pod challenge of last year.

Bottom line: Sure, capitalizing on the extreme popularity of Bird Box in today's cultural moment would be great. But YouTube, which is already under scrutiny for harmful content on its platform, has concluded no number of views or clicks is worth it.

WHAT ELSE IS BREWING

• John Bogle, founder of the Vanguard Group and undisputed retirement savings revolutionary, died yesterday at 89.
• Federal prosecutors are reportedly pursuing a criminal investigation into Huawei's alleged theft of U.S tech trade secrets, per the WSJ.
• Steve Carell will star in a new Netflix comedy series about a Space Force...less than a year after President Trump proposed the creation of a real Space Force.
• Sears (+55.76%) Chairman Eddie Lampert has reportedly won a bankruptcy auction for the ailing retailer after submitting an improved takeover bid, according to Reuters.
• Michelle Obama's Becoming has now enjoyed the longest streak at No. 1 on Amazon since Fifty Shades of Grey came out in 2012.

BREAKROOM

Word Puzzle
Think of an article of apparel in eight letters. Drop the last 2 letters. Move what are now the last 2 letters to the front. You'll get an article of apparel in 6 letters. What is it?

(Answer located at bottom of newsletter)

Breakroom Answers