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Money & Finance

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  1. Money & Finance

    PG&E

    PG&E Corp.—California's biggest utility—is on the brink of a crisis in light of the possibility a power failure on one of its transmission lines sparked the deadliest wildfire in US history. The Camp Fire in Northern California has killed at least 56 people (while more than 130 remain missing) and destroyed a record 7,600 homes and other structures. So what happened? The cause of the fire hasn't been pinpointed just yet, but authorities are looking into PG&E's equipment as a possible source. It reported an "electric incident" about 15 minutes before the first blaze was reported...and in the same area, too. PG&E said it's got $3.46 billion of cash on its balance sheet, plus another $1.4 billion in wildfire insurance coverage. But damages from the fire could climb as high as $15 billion, Citigroup estimated. Needless to say, if PG&E's equipment problems are to blame for the fire, the cost of the damage would exceed its insurance coverage. Remember: PG&E already faces up to $17.3 billion in potential liabilities for wildfires from last year, according to JPMorgan. PG&E stock is down 46% in November, putting it on track for its worst month in at least 46 years. That's including a 21.8% drop yesterday. And it could get worse. Evercore ISI said, "Every $1 billion of higher exposure to Camp fire liability would impact our [price target for PG&E stock] by a little over $1 per share." "The utility could be subject to significant liability in excess of insurance coverage," PG&E said. But keep in mind: California enacted a law earlier this year to help utilities (like PG&E) cover the costs of last year's catastrophic fires. And while that measure doesn't address the handling of 2018 fires... "We think Sacramento will likely step in to protect the utility and its customers," Citigroup said.
  2. Bayer (-3.08%) is now facing suits from 9,300 plaintiffs alleging its weed killers cause cancer.
  3. Waymo is set to launch the world's first commercial driverless car service in the coming months.
  4. Step one: Starbucks (-0.74%) plans to lay off ~5% of its global corporate workforce.
  5. General Electric (+7.76%) will cut its stake in Baker Hughes to a slight majority position, accelerating a plan to get the conglomerate some much-needed cash.
  6. Money & Finance

    Brexit

    Britain and the EU would agree to a preliminary Brexit deal But that last one is just what went down yesterday. UK Prime Minister Theresa May called an emergency cabinet meeting today to discuss the proposal. And after May held mano-a-minister meetings with cabinet members last night, she'll be hoping for their support on game day. Remember: Uncertainty over what Brexit would actually look like has put businesses on edge. A Brexit without a deal in place could be a disaster, clogging ports and draining supplies. Cadbury has even stockpiled chocolateprepping for the worst case scenario. So that's why this is a big deal. But the process is far from over. First, May will need to get approval from her cabinet...and then get the agreement through a skeptical Parliament. Deal or no deal, Britain's scheduled to leave the EU March 29 next year.
  7. Look, it just got $3 billion in funding from SoftBank. With the new investment, the coworking startup is valued at no less than $42 billion. And if you feel like you've got déjà vu, you don't—SoftBank just really likes WeWork. We present to you as evidence... 1) The Japanese conglomerate is WeWork's biggest investor, and the rest of the pack isn't particularly close. 2) WeWork raised $1 billion from SoftBank in August in a convertible note. 3) SoftBank tossed in ~$4.4 billion in a WeWork funding round last year. So what makes SoftBank so bullish on WeWork? The financials WeWork released yesterday could be a clue. WeWork's Q3 revenue totaled $482 million, up from $241 million last year...but adjusted earnings for the first nine months of 2018 came in at a loss of $415 million (widening from a loss of $108 million last year). WeWork said the losses were expected, given its plans to set up more desks in Q4 than it did in the entirety of 2017. And if it stays on track with sales, WeWork expects revenue to sprint past $2 billion over the next year.
  8. Amazon (-0.35%) announced it'll be opening new "headquarters" in both Crystal City, Virginia and Long Island City, New York...with Nashville getting a smaller logistics center as a consolation prize. It was the most high-profile quest for commercial real estate since the Brew decided we needed a Warehouse 2 for sticker storage. This story has many angles You could... Applaud Amazon for investing billions of dollars and creating tens of thousands of high-paying jobs. Wonder how those jobs might have changed the fortunes of smaller cities (any Detroiters in the house?) rather than the wealthy Northeast. Use Amazon's HQ2 search as a case study of all that's harmful about tax incentives (Amazon's receiving more than $2 billion in incentives across locations). But let's focus on how Amazon's arrival is affecting the local real estate markets in its chosen locations. Long Island City Per the WSJ, Amazon's interest in the Queens neighborhood has "unleashed a condo gold rush." In the six days following initial reports LIC was a strong contender, searches for residential property in the neighborhood on StreetEasy.com increased 295% from a week earlier. "Clients I hadn't spoken to in seven or eight years started texting me...I sold 20 apartments via text," a real estate exec told the Journal. Not all are happy about the inevitable housing crunch, according to Representative-elect Alexandria Ocasio-Cortez. Crystal City, VA It's more of the same, writes the WaPo: "A two-bedroom condo on Crystal Drive, listed more than a month ago at $559,900, generated little interest" until Amazon's intent was known. Then, "The seller, without waiting for the official announcement, raised the price by $20,000." "Realtors have compared the anticipation of an Amazon arrival to the Super Bowl, with amateur investors caught in the excitement gambling on home prices rising." Bottom line: Amazon's HQ2 search went from a fun guessing game...to a PR liability...to what some consider a farce. Other companies will think twice about copying Bezos's playbook.
  9. Boots - Axle - Outer Item Description A boot is a flexible, piece of rubber that protects vital components from dirt, debris and the elements. An axle is the part of the car's frame that supports the weight of the vehicle and the weight of accelerating and braking. An outer axle boot is the boot that protects the outer axle. Reason When damaged, the axle boots leave the axles vulnerable to decay and destruction which can lead to major component damage and damage of connected parts. Somewhat early for a 4 year old car in my humble opinion. Avoid General Motors and Chevrolet.
  10. And this would be a good thing? Have you ever seen a movie where this ends well?
  11. How many HQ's have to exist before there is no actual Headquarters? Just curious. Is HQ2 or HQ3 actually an oxymoron? or is Amazon being "decentralized" so as to avoid government anti-monopoly legislation? oooh.... what a thought.
  12. Amazon's HQ2 plans came into focus (aka there will be two HQ2s). Per a NYT report, which two cities are the leading contenders? Must be specific for full credit.
  13. Netflix (-2.93%) and Warner Bros. are being sued by The Satanic Temple for $150 million for using a statue of a satanic god in "The Chilling Adventures of Sabrina."
  14. Volkswagen reportedly plans to sell its own electric car for less than $23,000, per Reuters.
  15. Turns out, YouTube is used for more than just watching Zion Williamson mixtapes. A new study from Pew digs into the habits and motivations of YouTube users, with fascinating conclusions. Here are some takeaways... DIY: 51% of U.S. adults who use YouTube say the videos are "very important" for figuring out how to do things they've never done before (like pouring beer the right way). The recommendation algorithm: 81% of YouTube users watch videos that YouTube's mysterious algorithm recommends to them. So, Pew thought it was worthwhile to conduct over 170,000 "random walks" through the YouTube universe to see if it could crack the code. It found that YouTube suggests its users watch "progressively longer and more popular content." While the first videos encountered averaged a runtime of 9:31, videos in the fifth and final step of the "walk" averaged almost 15 minutes long. A hotbed of misinformation: Almost two-thirds of users say they sometimes see videos on YouTube that are "obviously false or untrue."
  16. ...literally. U.S. crude oil fell into bear market territory yesterday, down more than 20% from what was a four-year high set last month. It also happened to be the ninth consecutive day of losses. Crude prices have been slumping for the last five weeks. Wondering why? 1. Key producers are ramping up output. U.S. output hit an all-time high of 11.6 million barrels/day last week, per the Energy Information Administration (EIA). It estimates the U.S. is now the world's No.1 crude oil producer. Plus, Saudi Arabia and Russia (the other top producers) have also been boosting production since the summer. 2. Is demand deteriorating? The EIA reported U.S. crude stockpiles increased for the seventh-straight week. When those stockpiles grow, some oil traders get spooked about demand at current prices and sell their positions...leading to a price decline. 3. Geopolitics are shaking things up. The Trump administration reimposed sanctions on Iran earlier this week...but announced waivers for eight countries, allowing them to keep importing Iranian crude for the next 180 days. You can put your fears of a supply squeeze to rest.
  17. Will the collapse of Deutsche Bank cause Wells Fargo to collapse causing a worldwide banking crisis AGAIN? How many TOO LARGE TO FAIL banks actually failing does it take to cause another credit freeze?
  18. Between 13,250 people and 26,500 people could be out of a job So said the third-largest bank in the U.S. yesterday. The what: The bank said it'll cut 5% to 10% of its employee headcount over the next three years. Wells Fargo (+0.60%) currently has about 265,000 employees, meaning between 13,250 people and 26,500 people could be out of a job. The why: It's part of Wells Fargo's ongoing turnaround plan. Remember, Wells (which has $1.9 trillion in assets) is still recovering from a series of scandals in the past two years. In just one example, branch employees opened millions of fake accounts in customers' names to meet sales targets. + While we're here: It's been a tough week all around for Wells CEO Tim Sloan. His team had to deny rumors that former Goldman Sachs exec (and former member of the Trump admin) Gary Cohn would be replacing Sloan atop Wells Fargo.

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