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Biden preps for a big student loan announcement...
April 29, 2022 View Online | Sign Up | Shop

Morning Brew

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Good morning. About 500 hours of video are uploaded to YouTube every single minute, and some of that is our doing. For deeper dives into the business topics you care about, interviews with fascinating people, and humorous explainers, make sure to hop on over to our channel whenever you need a break from work.

Have a great weekend!

Matty Merritt, Max Knoblauch, Neal Freyman

MARKETS

Nasdaq

12,871.53

S&P

4,287.50

Dow

33,916.39

10-Year

2.826%

Bitcoin

$39,837.70

Teladoc

$33.51

*Stock data as of market close, cryptocurrency data as of 8:00pm ET. Here's what these numbers mean.

  • Markets: Booming tech shares lifted the market to its best day in seven weeks, giving Wall Street a much-needed confidence boost. It wasn’t all peachy—telemedicine company Teladoc, which is one of investor Cathie Wood’s biggest holdings, plunged 40% on a gloomy forecast. The pandemic winner is now down nearly 90% from its high in February 2021.
  • Ukraine: President Biden asked Congress to approve $33 billion in additional funding, a major bump from the $13.6 billion in aid it had already allotted, to help Ukraine’s prolonged fight against Russia. “The cost of this fight is not cheap,” Biden said, “but caving to aggression is going to be more costly.”

EDUCATION

Biden preps big student debt announcement

The White House wearing a graduation cap Francis Scialabba

President Biden said he’ll make his much-anticipated student loan forgiveness announcement in a couple weeks, which—same, dude, we push off answering thorny questions too.

So while we wait, let’s dive into what moves we can expect from Biden on this highly politicized, $1.7 trillion issue.

Forget about $50k. The president said he’s “considering dealing with some debt reduction,” but explicitly said it won’t be the $50,000 per borrower that progressives were pushing for. While campaigning via drive-in rallies, Biden supported $10,000 of relief per individual borrower. This would completely erase student loans for almost 12 million people, but would leave about 70% of the 40 million total borrowers with outstanding student debt.

He could opt for an income-driven overhaul. Biden has historically been skeptical of broad-based student debt relief, and his advisors have discussed focusing forgiveness on lower- to middle-income individuals. Just last week, the Department of Education promised significant changes to its broken income-driven repayment (IDR) plans that were created to help low-income borrowers.

Focus on scam schools. The Biden admin forgave $238 million in loans yesterday that had been given to students who attended the Marinello Schools of Beauty. That reflects Biden’s focus on updating the borrower defense program and making it easier for groups of students defrauded by for-profit schools to apply for loan forgiveness. But of the $18.5 billion in student debt that’s been forgiven since Biden took office, only $2 billion comes directly from updates to this program.

Zoom out: Earlier this month, Biden extended the pause on federal student loan payments through August 31. Since that moratorium was introduced in spring 2020, 37 million borrowers have saved $195 billion in loan payments, per the NY Fed. But once it’s lifted (whenever that is), the bank expects delinquencies to spike.—MM

        

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WORLD

Tour de headlines

Amazon truck Mikemareen/Getty Images

Big Tech on the struggle bus. Amazon recorded its first quarterly loss since 2015, raising concerns about slowing e-commerce growth and higher labor and energy costs. Its shares tanked 12% after hours. And while Apple posted a stronger-than-expected quarter as customers shelled out for iPhones and services offerings, its stock also fell post-bell after it warned that supply constraints could dent sales in the current quarter.

Twitter reported one of its final earnings before Elon Musk’s takeover. And, like you, the company has no idea what’s next for it. Twitter scrapped guidance for the remainder of the year, and its execs didn’t hold their customary conference call. Twitter also said that it overstated its users by nearly 2 million during the past three years, the second time it’s made a flub like that.

White House moves closer to menthol cigarette ban. The Biden administration released its plan to halt the sale of menthol cigarettes in the US (which account for one-third of all cigarettes in the country, or more than $20 billion in sales). A menthol ban would likely not go into effect until 2024, but when it does, it will be the most significant step by the federal government to reign in cigarette sales since 2009.

ECONOMY

Q1 GDP was like an egg salad sandwich

GDP shrinking Francis Scialabba

Pretty foul on the first whiff, but once you take a bite…you find it’s actually not so terrible.

The foul part: The US Gross Domestic Product (GDP) fell 1.4% annually in Q1, its weakest quarter since those lockdown-heavy days of spring 2020.

  • GDP, the most widely used measure of economic growth, is a tally of the value of all goods and services produced in a country.

And while you certainly don’t want to see it shrink, a closer look at the Q1 number reveals a few idiosyncrasies that may make things appear worse than they are. Two volatile components of GDP, lower inventories and a widening trade deficit, were primarily responsible for dragging the metric much lower last quarter—which isn’t too concerning to economists.

Experts are more focused on the fundamentals: consumer spending (the economy’s No. 1 driver) and business investment. And despite the Omicron wave, soaring inflation, and the war in Ukraine, both individuals and companies continued to spend like a Gen Zer at a thrift store.

Looking ahead…the US economy is expected to expand again in the current quarter and keep up a modest pace of growth throughout the year. Some, though, are predicting a recession as the Fed moves to hike interest rates.—NF

        

TECHNOLOGY

Keep your streaks alive with a drone

Snap's Pixy drone, against a blue sky Snap

Technology has once again discovered a new way to replace the outstretched arm. On Thursday, Snap unveiled a selfie game changer in the form of a yellow minidrone called Pixy.

The quarter-pound Pixy retails for $229.99 and promises to be your very own personal flying Michael Bay. The gadget launches out of a user’s palm and travels along one of four preset flight paths, capturing video and still images and wirelessly transferring them to Snapchat Memories.

In terms of battery life, Pixy is not equipped for Atlantic crossings: On a full charge, it needs to be plugged after five to eight flights. Snap’s not planning on a full pivot into unmanned flight, though—the company said it’s only selling a limited number of units while supplies last in the US and France.

Zoom out: Aside from the progress made by its drone department, Snap also touted the growth of Snapchat. The messaging app has over 330 million daily active users, 100 million more than Elon’s Twitter. Plus, Snap announced that over 1 billion Bitmoji avatars have been created globally (most, but not all, by your Uncle Mike).—MK

        

GRAB BAG

Key performance indicators

Pine Valley Golf Club in NJ David Cannon/Getty Images

Stat: At the elite Pine Valley Golf Club in Camden County, NJ, men accounted for 99% of members as of July 2021 (three out of 700 were women). This week, the club was sued by the State of New Jersey for gender discrimination, and allegations include restricting women from becoming members for the vast majority of its 108-year history. Pine Valley began allowing female members in April of last year, after NJ began its investigation.

Quote: “When we’re together, she makes me smile. In that sense, she’s real.”

Akihiko Kondo, a 38-year-old Japanese man, is one of a growing number of “fictosexuals,” or people who are attracted to fictional characters. In 2018, he unofficially married the computer-synthesized pop singer Hatsune Miku and credits her with pulling him out of depression. Thousands of people in Japan have entered into such unions with fictional characters in recent decades, per the NYT.

Read: In defense of friction. (Gabriel Kahane: Words & Music)

QUIZ

Quiztopher Robin

News Quiz image

The Brew’s Weekly News Quiz has been compared to boarding a plane only to find out no one else is in your row.

It’s that satisfying. Ace the quiz.

TOGETHER WITH STATE OF MATTER

State of Matter

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BREW'S BETS

A fresh slate of podcasts for weekend listening:

Going on a hike this weekend? Or planning a longer trek this summer? You need AllTrails.

Iconic items for sale: The dress Judy Garland wore in The Wizard of Oz (which was assumed to be lost), and the “da Vinci of violins.”

WHAT ELSE IS BREWING

  • Eli Lilly said that patients taking the highest dose of its experimental weight-loss drug lost 21% of their body weight in a late-stage clinical trial.
  • James Corden will leave The Late Late Show next year, presumably to go full-time on Carpool Karaoke.
  • Moderna asked the FDA to authorize its Covid-19 vaccine for kids younger than six. If given the thumbs up, it’d be the first kids vaccine available.
  • Travon Walker, a defensive end out of Georgia, was selected No. 1 overall in the NFL Draft by the Jacksonville Jaguars.

GAMES

Friday puzzle

In the following code, each symbol stands for one of five letters.

; stands for N, O, L, U, or T

( stands for K, B, M, E, or Y

3 stands for H, E, P, C, or W

* stands for F, A, J, E, or R

The four-letter code word 3;*( can be translated into two English words that are opposites. What are the two words?

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ANSWER

“Work” and “play” (Source)

         

Written by Neal Freyman, Max Knoblauch, and Matty Merritt

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