ECONOMY

The Balance of Powell

In a week filled with a crush of push notifications and 72pt font headlines, yesterday the Federal Reserve decided no news is the best news. 

Following its November policy meeting, the central bank is sticking to near-zero interest rates (already the plan through 2023) and running inflation at a 2% average. To kickstart a slowing economic recovery, the Fed will also continue flexing its quantitative easing muscles, buying assets like mortgage-backed securities and U.S. Treasuries to put around $120 billion/month in circulation. 

• Reminder: The Fed handles monetary policy, manipulating the money supply to shape macroeconomic conditions like inflation and employment. Congress, on the other hand, sets fiscal policy—taxing and spending.

Fed Chair Jerome Powell acknowledged the rising wave of Covid-19 cases is "particularly concerning" and the path forward "extraordinarily uncertain." But against the backdrop of an undecided election, the Fed wasn't expected to make big changes.  

This election has personal implications for Powell

While the Fed's Board of Governors has two open seats that require Senate confirmation to fill, they've been empty for years, and the bigger question is who takes over as chair when Powell's term ends February 2022. 

The leading pick may be *drumroll please*....Mr. Jerome Powell. The bespectacled banker was appointed to the board by former President Barack Obama in 2012 and made chair by President Trump in 2018. Over the last eight years, he's built a lot of capital on the Hill ;).

• Unlike previous chairs, he's held long talks and swapped secret handshakes with lawmakers on both sides of the aisle. That bipartisan goodwill helped Congress entrust the Fed with a prominent role in the CARES Act pandemic response.

Powell has also pushed for more transparency with the public, doubling the number of press conferences about monetary policy, setting up a "Fed Listens" series, and leaning more into conversations about inequality in the U.S. economy. 

Big picture: For investors, the Fed chair can be just as (if not more) important than who sits in the Oval Office. Even after this election ends in 2135, Powell may not be going anywhere.

EARNINGS

U.S. Consumers in 2020: Hike All Day, Then Order Pizza

Yesterday, two companies’ earnings reports revealed a pair of consumer trends that have endured in a year when nothing's certain. 

Papa John's

The pizza joint reported a fifth straight quarter of same-store sales growth. CEO Rob Lynch added that sales spiked on Tuesday and Wednesday, as everyone gnawed on pepperoni while watching Steve Kornacki defy the limits of human endurance. That's not unusual when an election happens, but this year delivery sales are continuing to soar as the election drags on. 

Yeti

The premium outdoor brand reported revenue up 29% to $295 million and profit up a staggering 126% on increased interest in outdoor activities.

• Yeti has a loyal customer base despite selling coolers that cost more than small diamonds. It began in 2006 by targeting hunters and anglers, but has since broadened to anyone who likes their coffee warm and their iced tea chilled.
• Its reach has only grown during the pandemic, since outdoor recreation has become the safest recreation.

TECH

Uber, But For a Mediocre Q3

Yesterday, Uber posted Q3 earnings that gave investors that "sure seems like this guy is taking a pretty roundabout route to the airport" feeling. 

A Covid-induced plunge in business and consumer travel has hit Uber's core ride-hailing business hard. 

• Gross bookings were down 53% year-over-year...which was actually an improvement over Q2 when they dropped 75% yearly. Total revenue fell 18% to $3.1 billion. 

Zoom out: Despite these numbers, this is a good week for Uber. On Tuesday, California voters approved Prop 22, a ballot measure which challenged a state law that undermined the foundational business models of Uber and other gig economy companies—the classification of drivers as independent contractors, not employees. Uber shares popped 15% Wednesday on news of the victory. 

Speaking of gig economy companies...the Prop 22 win gave DoorDash and Instacart a boost as they both eye IPOs later this year. EB Exchange Funds Managing Partner Larry Albukerk told CNBC he's seen serious demand for both companies in the private markets, though Uber's and Lyft's stock charts since going public in 2019 don't inspire much confidence. 

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MEDIA

Layoffs Hit Bristol

ESPN is laying off 300 employees and letting 200 open positions go unfilled, chairman Jimmy Pitaro said yesterday. That's equivalent to roughly 10% of the network's workforce.

What happened? The pandemic caused a "tremendous disruption in how fans consume sports," said Pitaro, which is to say we do it at our homes, by ourselves, and less often than before.   

• ESPN is paying more than $7 billion for the rights to air live sports in 2020, the NYT writes. But due to the Covid-19 outbreak, it basically had no games to broadcast for four months of the year. 
• And when live sports did return in the summer, TV ratings didn't return with them. 

Broken record alert: The pandemic accelerated pre-existing trends for many businesses, ESPN included. Because of the pickup in cord cutting, the Disney-owned network was already reorienting itself around direct-to-consumer offerings, such as the streaming service ESPN+. These layoffs reflect the ongoing shuffling of resources. 

QUIZ

Key Quiz Alert

The feeling of getting a 5/5 on the Brew's Weekly News Quiz has been compared to correctly pronouncing Chopin in front of all your friends.

It's that satisfying. Ace the quiz. 

WHAT ELSE IS BREWING

• New Covid-19 cases are at their highest levels in the U.S. and yesterday surpassed 114,000.
• Facebook removed a pro-Trump group that called for "boots on the ground." 
• The DOJ sued to block Visa's $5.3 billion acquisition of fintech company Plaid.
• GM reported a big earnings beat thanks to its popular trucks and SUVs. Still, it was surpassed in market cap by Chinese electric vehicle maker Nio. 
• Bitcoin has once again entered the chat, pushing past $15,000 to its highest level since January 2018. Also yesterday, U.S. officials said they seized $1 billion worth of bitcoin that was linked to the dormant darknet marketplace Silk Road.
• Vimeo, the IAC-owned video platform, is now worth $2.8 billion after raising $150 million. 

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BREW'S BETS

Can’t get enough of the election? Check out this visual analysis of voters in battleground states. 

Admittedly very random: but pretty good at the same time. Mongolian heavy metal.

Follow Friday: For cinema TikTok, watch Baron Ryan, lastmanstanley, logan_allison’s Twilight parodies, Stanzi’s take on horror films, and Angel Tavera’s “Guess the Movie” series. 

FROM THE CREW

Work in Retail? Stop Scrolling.

If you work in retail or have a mild-obsession with DTC trends, make sure you read Retail Brew, where our very own Halie LeSavage breaks down all the news and insights retail pros need to know 3x/week. A few recent stories to give you a taste:

• What Crocs can teach retailers about adapting to consumer demand
• How to build a referral program people will actually use, according to DTC experts
• Why TikTok's recent partnership with Shopify matters to retailers

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GAMES

Friday Puzzle

It's been a while since we went straight-up logic puzzle, so here it goes:

A girl meets a lion and unicorn in the forest. The lion lies every Monday, Tuesday, and Wednesday, and the other days he speaks the truth. The unicorn lies on Thursdays, Fridays, and Saturdays, and the other days of the week he speaks the truth. “Yesterday I was lying,” the lion told the girl. “So was I,” said the unicorn. What day is it?

ANSWER

Thursday