Yes we ban

MARKETS

• Global markets: They should “calm down and try to see the reality,” the WHO’s director general said in a panel discussion. What is the reality? Containment of the coronavirus is possible but “we need to [start] preparing side by side for a pandemic.”
• To recap: Stocks are coming off their worst week since the financial crisis. And prices of commodities, like oil and industrial metals, are also tanking.
• 2020: Former VP Joe Biden won big in the South Carolina Democratic primary, while former Mayor Pete Buttigieg dropped out of the race. Super Tuesday, when 14 states hold nominating contests, is tomorrow.

GROCERY

Trader Joe’s and the Golden Age of Private Label

Shopping at Trader Joe’s, a weekend ritual for so many Americans, was a little more subdued this weekend. Founder Joe Coulombe died on Friday at 89.

Coulombe built a grocery brand that borders on cult status. True story: One Brew writer limited her apartment search to buildings within a few blocks of a Trader Joe’s. And at least in New York City, the crowds are so huge you do most of your shopping while waiting in line for the register.

How that happened

In the mid-’60s, Coulombe owned a bunch of convenience stores in the LA area. But when 7-Eleven entered the market, he knew he simply could not compete with its scale and rotisserie taquitos.

So in 1967, Coulombe opened the first Trader Joe’s in Pasadena, CA. There was no grocery store like it—staff in Hawaiian shirts, exotic food products, and cheap wine for days.

• “He grafted the gourmet store onto the convenience store onto the health food store onto the liquor store,” Los Angeles Magazine wrote in 2011. All with a weird-but-it-works South Seas vibe.

Coloumbe sold his interest in Trader Joe’s to German supermarket chain Aldi in 1979 and retired nine years later. Now, Trader Joe's has over 500 locations nationwide.

The industry impact

Trader Joe’s has perfected the art of the “private label,” when a retailer contracts directly with manufacturers to sell products under its own brand name (think Room Essentials by Target).

• With private label brands, you get differentiation, more control of production, and higher margins.
• But...shunning popular brand names is risky. A startup literally named Brandless shut down just a few weeks ago.

Still, the grocery industry appears to be moving down the path carved by Trader Joe’s. Big names like Target, Albertsons, and Kroger are all refreshing their private label offerings to appeal to millennials—the generation most likely to eat Crispy Hexagons cereal if it’s the right price.

INVESTING

When a Firm Named Elliott Tells You What to Do

It hurts.

On Friday, Bloomberg reported rumblings of a c-suite showdown at Twitter. Activist hedge fund Elliott Management has reportedly:

1. Taken a $1 billion stake
2. Nominated four directors to the board
3. Spoken with management about getting a full-time CEO

Doesn’t Twitter have a CEO? Twitter is Jack Dorsey’s side hustle. He also runs the fintech company Square and tweeted in November that he wanted to live in Africa for three to six months this year. Shareholders did not love that.

Where you know Elliott from: The firm has recently bought chunks of, then played hardball with, household names like AT&T and eBay. Thus far, it hasn’t brandished its favorite weapon—taking management fights public—against Twitter. But that could change.

Zoom out: While Twitter is the platform of choice for media elites’ musings on underrated snacks, it’s not a financial juggernaut. Shares are down 6.2% since Dorsey’s 2015 return and Twitter airballed Q3 earnings in October.

RETAIL

Yes We Ban


We never knew so many of our coworkers had canvas totes, but they’re all over the office today. On Sunday, New York State’s ban on most types of single-use plastic bags went into effect.

There's a little more to the story, though.

• A plastic bag manufacturer and an association of NYC convenience store owners filed a lawsuit on Friday challenging the law.
• So the state decided to hold off on levying penalties until April 1, making the law effectively toothless until the weather gets a bit nicer.

The backstory: The State Assembly passed the law last March, following in California’s footsteps.

The case for the ban: New Yorkers use an estimated 23 billion nonbiodegradable single-use plastic bags every year. 85% of them are discarded, freeing them to clog streams and rivers, harm wildlife, litter cities, and play central roles in creepy movies.

The case against: Opponents say the ban unfairly harms small businesses and low-income people. Frank Garcia of the National Association of the Latino State Chambers said of NYC’s beloved bodegas, “They’re not gonna survive.”

ECONOMY

ISM Manufacturing Report: The Super Bowl of Supply Chain

We’re kicking off our weeklong series on actually understanding economic data releases with the ISM Manufacturing Report.

Frequency: It’s released on the first business day of each month at 10am ET.

Who’s doing the releasing: The Institute for Supply Management (ISM), a supply chain nonprofit with 50,000 members. Turning 105 this year, the ISM says it’s the first supply management institute in the world.

How they do it: The ISM surveys hundreds of supply chain execs about specifics like new orders, production, and inventories. The ISM then wraps up the responses to create the Purchasing Manager’s Index (PMI), an easily digestible number that can be tracked over time.

Who cares: Everyone. Manufacturing accounts for 11% of U.S. GDP, so getting a good read on the industry tells us important information about the broader economy.

Where we stand now: The PMI showed a reading of 50.9 for January, the highest level since July 2019. A PMI reading of more than 50 means the country's manufacturing sector is growing. Under 50 means it’s shrinking.

CALENDAR

The Week Ahead

We expect to hear the word "coronavirus" in virtually every report listed below.

Monday: ISM Manufacturing Report (now you know what this is)

Tuesday: Super Tuesday nominating contests; earnings (Target, Kohl’s, Nordstrom)

Wednesday: Fed beige book; earnings (Zoom)

Thursday: OPEC meeting in Vienna; NASA announces name of Mars rover; Spotify Awards in Mexico City; earnings (Kroger)

Friday: Hillary Clinton doc becomes available on Hulu; February jobs report; make sure your boss knows it’s Employee Appreciation Day

WHAT ELSE IS BREWING

• The NCAA is being asked to discuss holding March Madness without an audience because of coronavirus concerns.
• Harley-Davidson’s CEO is leaving the company (not coronavirus-related...declining sales-related).
• Wendy’s is launching its breakfast menu today. Its rivals are ready.
• Updates on where the coronavirus spread this weekend.

BEYOND CROSSWORD

Down
1. A top Colombian export
2. MLS expansion team Inter _______
3. Frito-Lay owner

Across
4. Ex-Disney CEO
5. Weekend TV staple
6. Whisky, in Glasgow

BEYOND CROSSWORD ANSWERS

Across
4. Ex-Disney CEO = Bob Iger
5. Weekend TV staple = SNL
6. Whisky, in Glasgow = scotch