How do you lose $2.1 billion?
June 22, 2020 [Read in Browser](
[Daily Brew](
TOGETHER WITH
[BlackRock](
Good morning. It was a steamy weekend here in the Northeast, but at least we weren't in the tropical region known as Siberia. The temperature in Verkhoyansk, a small Siberian town, hit 100.4°F on Saturday. Itâs likely the hottest temperature ever recorded inside the Arctic Circle.
MARKETS YTD PERFORMANCE
NASDAQ
9,946.12
+ 10.85%
S&P
3,097.74
- 4.12%
DJIA
25,871.46
- 9.35%
GOLD
1,756.20
+ 15.54%
10-YR
0.700%
- 122.00 bps
OIL
39.43
- 35.58%
*As of market close
- Markets: While you were focused on the rally in the U.S. stock market, emerging markets assets were quietly staging a [comeback]( of their own. Developing nation stocks are near their highest levels since March, per Bloomberg.
- COVID-19:Â On Sunday, the WHO [reported]( the largest single-day increase in coronavirus casesâmore than 183,000.
TECH
[This Year, WWDC Thinks Different](
[Apple Store]
Needpix
Appleâs annual developer conference may be held online this year, but the company says itâsâpause for cringeââfull stream ahead.âÂ
WWDC, or Worldwide Developer Conference, is typically when Apple lays out its hardware/software vision for the year, which whets the appetites of Apple geeks before the major phone event in the fall. WWDC began in 1987, but this year is the first itâs gone virtual.
The backdrop
[Controversy over]( Appleâs App Store. The App Store is a behemoth, bringing in $15.8 billion this quarter alone, Sensor Tower reports. It generated almost 18% of Appleâs total revenue last fiscal year. Â
But you donât hit billions in revenue by being charitable. Apple takes a 15%â30% commission for most App Store sales, a policy thatâs made it a favorite punching bag for companies like Spotify and, most recently, the new email service [Hey](.Â
Last week, the EU's executive arm opened antitrust investigations into the App Store and Apple Pay to determine whether the company is stifling competition and innovation.Â
What else is going on?Â
Besides revealing the [new iOS](, Apple could announce a shift in design that may not appear groundbreaking, but is, in fact, a very big deal. Itâs reportedly planning to [build its own processors]( for Mac computers, instead of using Intelâs chips.Â
- The move will give it more control over its gadgets and ideally boost performance.
- However, itâll be a pain for developers who have to update their software to comply with the new hardware specs.Â
Apple is also dealing with the challenges of COVID-19. On Friday it said it would [close 11 stores]( it had just reopened in four states with rising coronavirus cases. Still, like most of Big Tech, the coronavirus pandemic has only made a small dent in Appleâs overall trajectory.
Looking ahead...CEO Tim Cook will try to atone for The Morning Show with his own versionâa keynote address at 10am PT today. You can [stream it here](.Â
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JUSTICE
[Not Even Federal Prosecutors Are Safe From Job Losses](
[Berman SDNY chief]
Win McNamee/Getty Images
Attorney General William Barr must have taken our advice to make a vision board during quarantine. Â
On Friday night, Barr [said in a statement]( that Geoffrey Berman, the top prosecutor for the powerful Southern District of New York (SDNY), was stepping down. Berman replied âoh yeah? Make meâ in a statement of his own.Â
Then on Saturday...Barr made him. President Trump fired Berman, leaving his No. 2, Audrey Strauss, at the SDNY steering wheel.Â
- Strauss is driving an extremely important vehicle. The SDNY is known as the chief legal watchdog for white-collar shenanigans on Wall Street.
- Paul Giamatti's character on Billions leads the SDNY.Â
How long will she be in the driverâs seat? Unclear. Trump and Barr have proposed a replacement, Securities and Exchange Commission Chair Jay Clayton, but heâll need approval from the Senate.Â
Senate Democrats are skeptical about Clayton because of 1) his coziness with Wall St. and 2) suspicions about Bermanâs removalâBerman helmed several investigations into President Trumpâs allies, including Michael Cohen. A former SDNY prosecutor, Elie Honig, told NPR, âThis is clearly a political takeover.âÂ
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PAYMENTS
[Whatâs Happening at Wirecard](
On Thursday, an auditor for German payments giant Wirecard reported that it [couldnât locate]( $2.1 billion of the companyâs cash. On Friday, Wirecardâs CEO and largest shareholder Markus Braun stepped down. Over the two days, the companyâs shares plunged 80%.Â
Letâs get to your FAQs:
What is Wirecard? Itâs a 21-year-old company that provides digital payment services for merchants such as retailers, travel sites, and gambling sites. Itâs a huge deal in the European fintech scene.Â
How do you lose $2.1 billion? Well, it may [never have existed]( in the first place. Two Philippine banks that Wirecard claimed were holding money on behalf of the company said documents showing Wirecard's supposed balances with them were fabricated.Â
Were people surprised? Not exactly. Wirecardâs accounting practices have been attacked since the 2000s, and it became a favorite target of short sellers who believed it would eventually go down in flames (short sellers are investors who bet on a stock to drop in price). Now, theyâre [vindicated](.
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SPONSORED BY BLACKROCK
[Investing Is ChangingâAre You Prepared?](#)
[BlackRock](
BlackRock sees 5 ways the coronavirus will change everyday lifeâand investing. Technology is shifting to emphasize remote work, sustainable investing is accelerating, and a decades-long commitment to globalization is unwinding. Tony DeSpirito, Chief Investment Officer for Fundamental U.S. Active Equities, explores what this means for investors on [this episode](of the BlackRock Bottom Line.
REAL ESTATE
[The City That Gradually Wakes Up](
[New York City]
Publicdomainpictures.net
NYC enters its second reopening phase today, which means the cityâs office workers can migrate from their Connecticut farmsteads back to their natural habitats. Â
But can and will are different. The NYC real estate community [expects only]( 10%â20% of Manhattan office workers to return today, with a gradual increase to follow. Some sectors are more eager to get back than othersâ¦
- Traders miss floor vibes and office landlords want to show their tenants itâs safe to return. JPMorgan Chase expects about half of its trading staff back at its Manhattan HQ by mid-July, while Brookfield said it anticipates about a quarter of its New York employees back today.Â
- But tech and creative firms like Twitter and ad giant Omnicom are content to keep the Zoom calls rolling.Â
One logistical wrinkle: commutes. People are fearful of public transit, but New Yorkers aren't exactly the driving type. Still, some city parking businesses [are hoping]( for a revenue spike as some companies consider subsidizing parking costs for employees.
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CALENDAR
[The Week Ahead](
If this newsletter looks five years younger tomorrow, it's because barbershops in NYC are now open.Â
Monday: Existing home salesÂ
Tuesday: New home sales; former WH national security adviser John Boltonâs book is released
Wednesday: IMF World Economic Outlook Update launched; Winnebago earnings
Thursday: Third estimate of Q1 GDP; jobless claims; virtual music festival [Electric Blockaloo]( begins on Minecraft; earnings (Nike, Accenture, Rite Aid)Â
Friday: Personal income and spending data; House vote on D.C. statehood; FTSE Russell [reconstitutes]( its stock indexes
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WHAT ELSE IS BREWING
- [Teenage TikTok users]( and K-pop fans say they registered for potentially hundreds of thousands of tickets to President Trumpâs rally in Tulsa, OK, as a prank.
- [The North Face]( is stopping ad spend on Facebook due to its content moderation policies.
- [American Airlines]( will raise $1.5 billion by selling shares and convertible notes.Â
- [MBA applications]( at top-tier business schools have rebounded from four years of declines, an FT analysis shows.
- [The Associated Press]( has changed its style guide to capitalize âbâ in the word Black when used in a racial, ethnic, or cultural sense.
SPONSORED BY BLACKROCK
[BlackRock](
From genomics and immunology to remote technology to clean energy, the coronavirus has accelerated megatrends: the long-term themes shaping society. Jeff Spiegel, BlackRock's U.S. Head of Megatrends and International ETFs, discusses 5 ways to think long term in the downturn in [this episode]( of The Bid podcast.
BREW'S BETS
Into the wild: Last week, the Alaska Army National Guard removed the bus where Christopher McCandless, the subject of Into the Wild, died in the wilderness. Nowâs a good time to [read this remarkable book](, [watch the movie](, or [see the airlift](.Â
Bodyweight workout: Try [this one]( today at home (3 circuits): 20 squats, 10 pushups, 10 walking lunges (each leg), 10 dumbbell rows using a water jug, etc. as weight, 15 second plank, and 30 jumping jacks.
An online geography game:Â [Play a few rounds]( to prep for Morning Brew trivia.
*This is sponsored advertising content
FROM THE CREW
[Start Talking](#)
In this new section of the Brew, we're going to present some of the thorniest topics of the day, give you a jumping-off point with balanced resources, then encourage you to debate it with friends, family, and coworkers. Maybe you'll agree, maybe you won't...point is, start talking and see what you learn.Â
Today's prompt: This Friday, the House will [vote on a bill]( to make Washington D.C. the 51st U.S. state. If passed (and itâs expected to), itâll be the first time in history either chamber of Congress has advanced a statehood bill. However, the bill is not expected to get a vote in the Senate.
So should D.C. become a state? Hereâs your starter kit:
- A quick history + how D.C. functions if itâs not a state ([WAMU]()
- Arguments for and against statehood ([Vox]()
- A constitutional argument against ([Cato]()
- D.C. Mayor Muriel Bowserâs [testimony]( to Congress on why D.C. should be a state
- How race and racism factor into the debate ([DCist](, fourth section)
CROSSWORD
Today's sample clue:Â Square meal? (seven letters).
Find out the answer by [playing the crossword](.Â
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Written by [Neal Freyman](, [Eliza Carter](, and [Alex Hickey](
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