☕️ What really happened

Amateur investors have a new target
February 01, 2021 View Online | Sign Up

Daily Brew

Bombas

Good morning. It's a tradition unlike any other: the Morning Brew MacBook giveaway. Every several months, like storks delivering babies, we ship new computers to readers who share the Brew with their network.

But this time...we're spicing it up. 

Read closely: Over the next two days, readers who share the Brew will be entered into a raffle to win one of four MacBook Pros. You get 1 raffle ticket for 1 referral, but there's a catch: Once you hit 3 referrals you get a Power Boost that doubles your ticket count during the giveaway. 

We'll walk through it again later, but if you don't want to wait...start sharing here.

MARKETS YTD PERFORMANCE

NASDAQ

13,070.69

+ 1.42%

S&P

3,714.24

- 1.11%

DOW

29,982.62

- 2.04%

GOLD

1,849.80

- 2.72%

10-YR

1.072%

+ 15.30 bps

OIL

52.14

+ 7.68%

*As of market close. Here's what these numbers mean.

  • Covid-19: There are fewer than 100,000 Americans hospitalized with Covid for the first time in nearly two months. And starting this week, the CDC is requiring mask-wearing on all public transportation, including planes, subways, taxis/rideshares, and buses.   
  • Government: 10 Senate Republicans announced a counterproposal to President Biden's $1.9 trillion stimulus package, this one costing about $600 billion. We'll hear the details today. 

TRADING

Robinhood Tries to Make People Hate It Less

Robinhood illustration

Francis Scialabba

When Robinhood and other online brokerages restricted buying on certain highly volatile stocks including GameStop and AMC last Thursday, the internet went ballistic

Lots of folks immediately assumed the company curbed trading to "protect'' naive retail investors from hurting themselves. And more nefarious rumors spread that panicked hedge fund managers secretly worked out a deal with Robinhood leadership to halt trading on GameStop. 

Robinhood's vague statement Thursday morning and a CNBC interview with CEO Vlad Tenev that evening did nothing to douse the fire.

So what really happened? 

Over the weekend, Robinhood tried to explain: Basically, the company was concerned that it wouldn't have enough money to fulfill its IOUs. Without getting into too much detail (you can do that here if you want), a trade you make on Robinhood isn't actually settled until two days after you press "buy" or "sell." In the interim, Robinhood and other brokerages provide collateral to a third-party, the Depository Trust and Clearing Corporation (DTCC), to cover your transaction.

Last week, because of the tremendous volatility around certain stocks and the volume of trading, Robinhood needed to deposit 10x as much money as it typically does—money Robinhood wasn't sure it had. So it shut down buy orders on those stocks, tapped hundreds of millions in credit, and raised $1 billion overnight. 

  • What happened to Robinhood happened to other brokerages, too. The CEO of Webull, a Chinese-owned trading platform that also restricted trading on "meme" stocks, said, "It wasn't our choice...this has to do with settlement mechanics in the market." 

Bottom line: What's that saying about there's no such thing as bad publicity? Well, it definitely applies here. Robinhood was downloaded more than 177k times last Thursday, twice its download rate the previous week. That day, it also recorded more daily active users than all of its competitors combined. 

        

COMMODITIES

Tired: GameStop
Wired: Silver

Amateur investors on Reddit have a new target for speculative trading: a white, lustrous metal known for its electrical conductivity called silver. 

Prices shot up around 7% when trading opened yesterday evening to their highest level in five months. Ahead of the trading window this weekend, demand for silver bars and coins was so enormous that several websites including Apmex, which Bloomberg labels "the Walmart of precious metals products in North America," were unable to process transactions. 

The storm had been brewing for a few days. Last week, as we were all focused on stocks like GameStop, users on r/WallStreetBets were also rallying traders to buy the precious metal, sending March silver futures up more than 5% for the week. 

Why silver? Bloomberg has some insight: "Market manipulation has been the rallying cry of conspiracy theorists in precious metals circles for decades, if not centuries. With their constant railing against banks and big government colluding to mask inflation, it was only a matter of time before they and retail investors raging against the financial machine joined forces."

        

PUBLIC HEALTH

An Origin Story More Mysterious Than Superman's

Thea Fischer, Marion Koopmans, Peter Daszak and other members of the World Health Organization (WHO) team investigating the origins of the Covid-19 pandemic, leave the Hilton Wuhan Optics Valley Hotel where the team is currently based post-quarantine in Wuhan.

Hector Retamal via Getty Images

Late last week, a team of World Health Organization researchers wrapped up their quarantine after arriving in Wuhan, China, and began a formal investigation into the coronavirus's origins.

Their mission: to understand where the virus started (China's CDC thinks Wuhan was the spreader, not the birthplace) and how it jumped to humans. To do so, they'll take field visits to the city's hospitals, labs, and the seafood market where the outbreak started. 

The WHO has stressed that the purpose of this investigation is to learn more about the virus and help prevent future outbreaks. Still, questions about China's attempts to hide information about the virus linger.

  • At the Sundance Film Festival, filmmaker Nanfu Wang premiered In the Same Breath, a documentary exploring the propaganda, coverups, and disinformation spread by Chinese and American governments during the pandemic. 

Looking ahead...we'll have two more installments from George R.R. Martin before researchers have answers. It took over a decade to figure out where SARS started, and Ebola's origins are still a mystery. 

        

SPONSORED BY BOMBAS

We'll Keep This Brief

Bombas

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You buy a pair, they donate a pair to someone in need, and everyone (and their feet, especially) wins.

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Styles range from briefs and trunks to thongs and bikinis, and with seven shades of nudes and inclusive sizing from XS to 2X, Bombas has got your back (and behind) covered.

Plus with the Bombas Happiness Guarantee, you can buy and try any pair stress-free.

Take 20% off your first order with code BREW today.

ENERGY

Exxon Mobil, Chevron Explore the Buddy System

Harry Styles and Olivia Wilde weren't the only unexpected romance of Covid-19. When pandemic shutdowns clobbered the fossil fuel sector last year, the US' largest oil producers reportedly discussed merging

While Chexron Mobil never made it down the aisle, WSJ sources say the deal, which would create a $350 billion oil behemoth, could happen later. 

The backstory: Exxon and Chevron are descendants of John D. Rockefeller's Standard Oil, which regulators dismantled in 1911. Their tie-up would be the biggest oil merger since Exxon + Mobil in 1999 and Chevron + Texaco in 2001.

But now, as the industry faces financial hurricanes, consolidation could speed up. Exxon was the country's most valuable public company just seven years ago, but it was kicked off the Dow last year and is expected to report its first full-year loss in modern history tomorrow. Chevron lost $5.5 billion last year. 

Big picture: While some competitors are investing in renewables, Chevron and Exxon believe "the world will need vast amounts of fossil fuels for decades to come, and that they can capitalize on current underinvestment in oil production," the WSJ writes. Doing it together could save billions...assuming they'd get the Biden administration's signoff. 

        

CALENDAR

Week Ahead: Winter Wonderland

Snowstorm in DC

Joshua Roberts/Getty Images

Shoveling: A snowstorm is currently pummeling the Northeast, and it's likely to snarl travel into Tuesday. 

Earnings: We're on the downslope of Q4 earnings season, but there are plenty of big names still to come this week, including Alphabet, Amazon, Exxon Mobil, Pfizer, and Snap. 

Economy: The first jobs report of Biden's presidency will arrive Friday, and it could influence the conversation about the various stimulus proposals floating around Washington.

Black History Month starts today: Throughout February, organizations and businesses across the US will honor the central role Black Americans have played in the country's history. We're excited for NPR's special Black History Month Tiny Desk series, which features 13 home concerts by Black artists.

Everything else: 

  • Groundhog Day is tomorrow. Hoping Punxsutawney Phil will predict an early end to the pandemic.
  • The Golden Globe nominations are announced on Wednesday.
  • The Super Bowl is Sunday.
        

WHAT ELSE IS BREWING

  • Myanmar's military said it took over the country for one year in a coup against the democratically elected government. It detained top politicians, including leader Aung San Suu Kyi. 
  • Melvin Capital, the hedge fund that shorted GameStop, reportedly lost 53% in January.
  • There's drama in the new Google workers union.
  • Toys R Us has closed its final two stores. 
  • Lionel Messi's leaked contract was published by the Spanish paper El Mundo, and it's...astonishing. The deal the soccer star signed with FC Barcelona in 2017 works out to $674 million over four years.
  • Coachella, which was scheduled to take place in April, was canceled again. 

SPONSORED BY H&R BLOCK

H&R Block

We'll never return to the old way of doing returns. Morning Brew is doing our taxes with H&R Block this season, and we ain't ever looking back. Why? Block has many ways to file. On our phones. In person. Even from the couch in our comfy slippers. With H&R Block Online, you could even save $10 or more when you switch from TurboTax. Block has our back—now let 'em have yours.

GIVEAWAY

The MacBook Pro Giveaway, Now With a Power Boost

Giveaway mario GIF

The legend himself, Milo Booke

Even giveaways can get a little stale, which is why we're giving our MacBook Pro raffle a bigger upgrade than when TV went high-definition.

Here are the details. 

What: Morning Brew is giving away four MacBook Pros (the new ones, with the fancy M1 chips) to readers who share the Brew using their unique referral link. 

When: The giveaway runs today and tomorrow.

How you can enter: When you share the Brew with your network, you'll get entered into the raffle. 1 ticket = 1 referral. BUT, you want to try as hard as possible to hit a minimum of three referrals. At that point, you'll get a Power Boost and your raffle tickets will double.

  • 2 referrals = 2 tickets, 3 referrals = 6 tickets, 4 = 8, 100 = 200, and so on.

Got it? Start sharing now

*Some disclaimers: Your current referral count does not matter in the context of the giveaway, and we only ship to the US.

BREWS BETS

Dive back into the week:

Two more videos: 1) Tony Hawk offering up some Monday Motivation and 2) the incredible supermoon motif in movies. 

GAMES

Know Your Worth

Match each public company with its current market value.

Companies

  1. Twitter
  2. GameStop
  3. McDonald's
  4. JetBlue Airways
  5. Procter & Gamble

Values

  1. $315.7 billion
  2. $154.9 billion
  3. $40.2 billion
  4. $22.7 billion
  5. $4.5 billion

SHARE THE BREW

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ANSWER

1. Procter & Gamble = $315.7 billion
2. McDonald's = $154.9 billion
3. Twitter = $40.2 billion
4. GameStop $22.7 billion
5. JetBlue = $4.5 billion

Related content

              

Written by Alex Hickey and Neal Freyman

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