MARKETS

The Stock Market Is Getting Weird

All three major US indexes tumbled yesterday as investors prepared for a wave of economic growth. 

You might think that sentence needs to be fact-checked, but in fact it has zero Pinocchios. Bloomberg explains what's going on: 

• "From stocks to bonds and commodities, traders are moving in sync on the belief that the most ambitious vaccination campaign in history is about to supercharge economic growth and unleash price pressures that have long been dormant."

Let's analyze the bond market

Perhaps not the best intro line on Hinge, but it’s crucial for understanding what's currently happening in the stock market. 

Investors are dumping bonds, sending yields (which is your return on a bond) higher. Much higher. This month alone, the yield on the 10-year Treasury note has gained the most in four years. Yesterday, it touched a one-year high above 1.6%. 

Rising yields are spooking the stock market for a couple reasons:

1. It shows that investors are generally worried about inflation (whether they should be or not). Remember, Fed Chair Jerome Powell said this week he wasn't concerned that inflation would spiral out of control.
2. The more a bond yields, the more it competes with stocks. Yesterday, the yield on the 10-year note briefly surpassed what's known as the S&P's "dividend yield," a threshold investors use to measure the relative attractiveness of stocks vs. bonds. Right now, it's a tight contest. 

Tech stocks are getting hit especially hard

Shares in companies like Amazon, Microsoft, and Tesla, all of which thrived at the height of the pandemic, are becoming less attractive in this brave new stock market world. "Value" stocks like utilities, which may have less growth potential than a high-flying software company but are also less risky, are gaining more favor.

Some perspective before we move on: The Dow hit a record high on Wednesday, and the S&P is less than 3% below its all-time high.

WORK

Costco’s Sweet 16

Yesterday, Costco CEO Craig Jelinek said his company is bumping starting pay to $16/hour—$1 more than Target, Best Buy, and Amazon. 

Costco has consistently paid employees more than retail rivals. Its 180,000 US workers earn an average wage of $24/hour and have received $2/hour hazard pay throughout the pandemic.

• "This isn't altruism," Jelinek said. "It helps in the long run by minimizing turnover, maximizing employee productivity, commitment, and loyalty."

Your friendly neighborhood Amazon, which implemented a $15/hour min. wage in 2018, recently embarked on a PR blitz for a $15 federal minimum wage. Raising pay has helped the company recruit and pressure competitors, particularly Walmart, which just last week upped wages for 425,000 employees. 

Zoom out: This conversation is also happening at the highest levels of government. Yesterday, Senate Parliamentarian Elizabeth MacDonough said a $15 federal minimum wage should not move through the budget reconciliation process being used to push President Biden's proposed stimulus package forward.  

GRAB BAG

Key Performance Indicators

Quote: "We agree we've been slow."—Twitter CEO Jack Dorsey acknowledged the company's molasses-like product innovation as he announced several new product innovations, including a feature, Super Follows, that allows users to charge followers for more content. Twitter's stock surged to an all-time high. 

Stat: In its S-1 filing to go public yesterday, Coinbase revealed it has zero corporate headquarters. The company, which is reportedly valued at more than $100 billion ahead of its direct listing, went remote-first in May 2020. 

Read: How Chess.com built a streaming empire. (Protocol)

SPONSORED BY CALIBER

The Best Investment Tip?

Get to know the right investing experts. And when it comes to investing in sophisticated, private real estate investments that have been traditionally reserved for mustache-twirling millionaires, there’s no better expert than Caliber.

So how do you get tight with Caliber? You invest in them. They’re giving you the opportunity to become a co-owner of Caliber by investing in their Series B. 

You don’t need to be an expert (or have a twirlable mustache) to reap the benefits of real estate investment—owning stock in Caliber allows you to become a real estate insider, all before a planned IPO.

Today (February 26) is the last day to invest early in the startup, which had a consolidated total revenue of $77M in 2019 and was a seven-time consecutive recipient of the Inc 500 | 5000 "Fastest-Growing Private Companies in America."

Now put that in your metaphorical mustache and twirl it.  

Invest in Caliber before their campaign closes tonight. 

LEISURE

Soho House Trotting to the Public Market

Yesterday, the Financial Times reported that upscale members' club Soho House plans to go public in New York as early as next month at a reported valuation of up to $3 billion. 

The IPO is kinda like Soho House itself—we all poke fun at its upper-crust, jet-set brand, right up until we're two Sancerres deep and considering a mortgage refinance to cover a membership. Which is to say, SH is looking pretty good right now, as some travel-related stocks surge in anticipation of an industry rebound when Covid-19 vaccines roll out. 

• Shares in the world's largest hotelier, Marriott, are up 26% since the beginning of February, and CEO Tony Capuano said he's optimistic about the return of not just leisure travel, but business travel, which is key for the industry. 
• Airbnb is up over 40% since its December IPO—and it crushed revenue estimates in Q4.

Reality check: We’re still in a global pandemic, and Soho House faces serious headwinds, despite recent enthusiasm for its sector. It had to lay off 1,000 employees during the pandemic and has been using a workaround called "payment in kind" to diminish interest payments to creditors. 

QUIZ

One More Quiz

The feeling of getting a 5/5 on the Brew's Weekly News Quiz has been compared to ordering a piece of clothing online that fits perfectly.

It's that satisfying. Ace the quiz.

WHAT ELSE IS BREWING

• Best Buy is laying off 5,000 workers and closing more than 20 big-box stores as it moves deeper into e-commerce.
• Robinhood responded to Charlie Munger's "disappointing and elitist" comments on investors who use its platform. Then Munger replied that Robinhood is luring people "into engaging in speculative orgies."
• AT&T is spinning out its US video business, including DirecTV, into a new $16.3 billion company called...New DIRECTV.
• Hard seltzer and ready-to-drink cocktails have offset AB InBev's slumping beer sales.
• PepsiCo must have heard the news, because it's launching a line of cocktail mixers, Neon Zebra, Monday.
• Hasbro is dropping the "Mr." from its Potato Head toy this year to keep the plastic spud gender neutral. 

BREW'S BETS

We hold the card to a superior cashback card. We happen to know about a certain credit card that will give you up to 5% cash back, no annual fee, and no interest until mid-2022. Reveal the card here.*

Turn your dream creamer flavor into cash. Chobani makes coffee creamer with real cream and no added oils—and now you’ve got a chance to dream up their next flavor. First prize wins $75k and the winner’s flavor in dairy aisles everywhere. Enter for a chance to win.*

Kill 30 seconds: This facetious Clubhouse bio generator is spot on. 

Follow Friday: Watch Justin Schiele answer the question “Can I hit that with a hammer?” on TikTok, then go down a rabbit hole of Honest Trailers on YouTube.

Mario Madness: Vote in The Ringer’s “The Best video game Character Bracket” and follow along with the competition. 

^{*This is sponsored advertising content}

TAXES

If you're one of the increasing number of Americans working in the gig economy, you know that filing your taxes is more frustrating than untangling headphone wires. 

To help, we've compiled a comprehensive tax guide that includes:

• Important facts and dates about the 2021 tax season
• Profiles of freelancers who've been there and done that
• Everything you need to know about filing taxes as a sole proprietor or an LLC

Get smart on taxes here. 

GAMES

Friday Puzzle

Here is a classic puzzle—don't shout if you know the answer. Without lifting your pencil, draw four straight lines to connect all nine dots.

ANSWER

** A Note From Caliber

Caliber is offering securities through the use of an Offering Statement that has been qualified by the Securities and Exchange Commission under Tier II of Regulation A. A copy of the Final Offering Circular that forms a part of the Offering Statement may be obtained from: Caliber: https://www.seedinvest.com/calibercos 

**A Note From Chobani

NO PURCHASE NECESSARY. Enter Contest by: 2/28/21. To enter and for Official Rules, visit http://www.chobanicoffeecreamer.com/