STOCKS

How Stocks Started Off the Week

We wrote in Monday morning’s newsletter that the September stock sell-off “hasn’t been that steep.” Looks like we angered the ghost of Adam Smith, because US stocks had their worst day in months, following similarly miserable trading days for Asian and European markets.

What happened? It’s always rough sledding for stocks in September, which is historically the worst month for US equities. Plus, stocks typically save their worst performances for the second half of the month.

But if you’re looking for a specific goat to scape, the Evergrande crisis is one place to start. Global financial markets could be spooked by the potential collapse of the Chinese real estate giant, which is more than $300 billion in debt and faces a big payment deadline on Thursday. 

• The Chinese government could still step in to save Evergrande, but...it could also let it crash and burn to teach the country’s real estate industry a lesson in reckless spending. 

The sell-off is likely not Evergrande-specific, though. Perhaps it’s just that an epic run is losing steam. The S&P has hit an all-time high more than 50 times this year, and has remained within 5% of its record for the last 220+ days. Analysts from Citigroup, Bank of America, and others warned that a bumpier fall was possible because, well, “What good news is left? A lot of optimism is already priced in,” BofA Securities wrote. 

So what’s next?

Experts say persistently high Covid cases, lower consumer sentiment, and overblown valuations could lead to an even larger pullback as Meg Ryan fall gets underway. 

• In a new note, Morgan Stanley analysts said their optimistic view is a 10% downturn in the S&P 500. Their worst-case, and increasingly likely, scenario is a plunge of more than 20%. 

Zoom out: Absent catastrophic news, periodic downturns in the stock market are like receiving a granola bar on Halloween—disappointing but still healthy. JPMorgan analysts, for one, joined many social media users in advocating for #buyingthedip. —NF

ENERGY

Europe’s Running out of Gas

Add natural gas to the “way too expensive” list along with space travel and succulents. Europe is facing a serious gas crisis after prices have surged 280% this year, compounding supply crunches in areas like food, shipping, and home energy.

• Two fertilizer plants that supplied 60% of the UK’s CO2 for food and beverage production were forced to close. Now, experts are warning that food (and even worse, beer) shortages could hit European consumers within weeks.
• Some UK steel producers have also stopped production because of the outrageous energy costs.

What’s going on? There’s just not enough gas getting to the right places right now. A number of factors, including rising demand around the world for heat and lower supplies being delivered from Russia, are contributing to the crunch.

Looking ahead...elevated natural gas prices aren’t just a European problem. Prices in the US have increased over 100% already this year, and depending on how cold it gets this winter, we could all face uber-expensive heating bills—especially if you live in New England and California. —MM

TRAVEL

We Missed You, Tourists

The White House said fully vaccinated international visitors will be allowed to enter the US starting in early November. That's a big update to current travel policies that ban entry for foreigners who’ve been in a handful of countries, including China, India, and most of the EU, within two weeks of trying to enter the US.

Why it matters: It's a big win for companies that rely on international travel, such as airlines. More than 70% of adults in Europe are fully vaccinated, and airlines hope tourists will want to fulfill their Disney World fantasies during the upcoming holiday season. Transatlantic routes were the most profitable segment of the aviation market before Covid-19, filled with premium travelers willing to pay extra for more legroom. 

• “We are simply not Virgin without the Atlantic," Virgin Atlantic’s CEO Shai Weiss said. 

Zoom out: After the EU opened its borders to Americans in June, European leaders were peeved that the US didn’t return the favor. For them, this move is way overdue. —SQ

SPONSORED BY THE MOTLEY FOOL

A Possibly Picture Perfect Pick

Rumor has it that the biggest selling point for the newest iPhone will be the enhanced camera. But we’re not just telling you this so you can take better selfies.

The Motley Fool’s feelers are tingling, because behind the newest iPhone, they’ve spotted some possibly huge investing potential.

While everyone and their mother is focused on Apple shares, The Motley Fool’s radar has caught a tiny company behind their latest breakthrough. This company makes an essential part of the new iPhone’s camera, and Tim Cook himself has said the tech this company helps achieve is critical to Apple’s future.

When Apple’s dad calls a company critical, The Motley Fool pays attention. With 44% of current iPhone users ready to upgrade to the newest model, they think this could spell potential windfall for the lesser known company behind the lens.

Curious? Learn more about The Motley Fool’s pick here.

GRAB BAG

Key Performance Indicators

Stat: More Americans (675,000) have now been killed by Covid-19 than the Spanish flu in 1918–19, making the coronavirus the US’ deadliest pandemic. Hundreds of thousands of white flags have been placed on the National Mall in Washington, DC, to remember those who have died.

Quote: “I’ve heard that people in their teens and 20s today are being referred to as Covid’s lost generation. I think it’s a stretch to say they’re lost, just because the path they tread can’t be seen by grown-up eyes.”

RM, a member of the K-pop boy band BTS, delivered some remarks at the UN General Assembly in New York yesterday. More than 1 million viewers tuned in to BTS's speech.

Read: What I learned from a year on Substack. (Platformer)

SOCIAL MEDIA

Trending on TikTok: True Crime

Amateur detectives have flooded TikTok after Gabby Petito, a 22-year-old #VanLife influencer, went missing on a road trip with her fiancé, Brian Laundrie, in August. Over the past month, many TikTok users sifted through Petito’s and Laundrie’s social media profiles for clues and turned Petito's case into one of the most viral moments of the year.

• Petito’s Instagram, which had around 1,000 followers at the time of her disappearance, has more than 854,000 followers as of last night.
• The #GabbyPetito hashtag on TikTok has over half a billion views. 

On Sunday, the FBI found human remains that they believe to be Petito’s in a location reportedly close to where some YouTubers claimed they saw her van.

Big picture: While tips from the public can be useful for cracking a case, TikTok sleuths are being accused of co-opting a traumatic episode for self-promotional content.

For more: Read this thread by a TikTok researcher for an in-depth breakdown. –SQ

WHAT ELSE IS BREWING

• SEC 1, Coinbase 0. The crypto exchange dropped plans to launch its lending product, Lend, after getting heat from the SEC.  
• More SEC: The agency is investigating Activision Blizzard over its handling of employees’ accusations of sexual misconduct and discrimination. 
• Universal Music Group, the home of Taylor Swift and other A-list artists, will begin trading today at a valuation of ~$39 billion.
• Emmy TV ratings rose 16% from last year, bucking the trend of declining awards show audiences.

BREW'S BETS

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You know the drill; get off the plane, reset your watch. Unless you have a World Time watch by Zodiac. Through its design, you can track time zones around the world at a glance. It's convenient...and also just cool. Get yours here.*

Tech Tip Tuesday: Everything you need to know about Apple’s iOS 15, which was released yesterday.

Docs to watch: LuLaRich on Amazon Prime, the new Muhammad Ali doc by Ken Burns on PBS, and Countdown: Inspiration4 Mission to Space on Netflix.

A product’s circle of life: Ever wonder how seemingly random products end up on store shelves? We’re exploring the answer at Retail Brew’s The Checkout event next Tuesday. RSVP here to learn from a PepsiCo exec about their product strategy, from consumer insights → marketing and distribution. 

GAMES

The Puzzle Section

Brew Mini: Complete the puzzle here, then share it with your coworkers to see if they can beat you.

UN Pop Quiz

The 76th session of the UN General Assembly begins today in New York City. Here are 4 rapid-fire questions that test your knowledge of the organization.

1. Name 3 of the 6 official UN languages.
2. What is the leader of the UN called? 
3. Which country was most recently added as a member state?  
4. Name the five countries that are permanent members of the UN Security Council.

FROM THE CREW

The Newsletter for People People

Welcome to Morning Brew’s newest newsletter, HR Brew.

There are huge stories to tell in HR—seismic cultural changes amid a pandemic, the new era of remote work, demands for systemic change in pay disparity and racial equity, and transformative workplace tech and tools.

HR Brew will bring you expert advice on Zoom fatigue, chronicle companies’ back to office decisions, and so much more.

Subscribe to get the newsletter that’s made for the people in the people profession.

ANSWER

1. The 6 official languages are: Arabic, Chinese, English, French, Russian, and Spanish
2. Secretary-general
3. South Sudan in 2011
4. Russia, China, France, the UK, and the US

✤ A Note From eToro

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