Like a boss

MARKETS

• Brexit update: She won the battle, but the war is far from over. UK Prime Minister Theresa May announced that her Cabinet is supporting a preliminary Brexit agreement with the EU. Now comes a high-stakes showdown with Parliament.
• Crypto: Bitcoin fell below $6,000 on its way to hit its lowest level of the year. Other cryptocurrencies (like Ether and XRP) had an even worse day.

UTILITIES

PG&E Faces a Potential Financial Disaster

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 California's history.

The Camp Fire in Northern California has killed at least 48 people (while about 100 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.

The numbers don't look good

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."

What's the path forward?

"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.

RIDE-HAILING

Uber's Losses Keep Growing

Uber's main refrain from its (self-reported) Q3 earnings? It takes money to make money.

On the top line...the ride-hailing firm raked in $2.95 billion, up 38% annually (though growth is slowing). And gross bookings reached $12.7 billion, up 34% YoY.

• UberEats was a standout—the food delivery service earned $2.1 billion in gross bookings, up more than 150% from a year ago.

But on the bottom line...things look a little different. Uber's net loss (on a GAAP basis) for the quarter hit $1.07 billion (it lost $891 million in Q2).

So what's going on? What was in 2010 just a ride-hailing service now does food delivery, bike-sharing, scooter-sharing, autonomous vehicles, "vomit fraud," and more. Apparently, becoming an all-inclusive "urban mobility platform," as CEO Dara Khosrowshahi likes to call it, is expensive.

Zoom out: Uber is attempting to prove itself in "competitive markets" ahead of a slated 2019 IPO. But these growing losses might make it harder for bankers to back what some expect to be a $120 billion valuation.

ENERGY

Cloudy With a Chance of Rising Natural Gas Prices

When we're not writing business newsletters, we spend our free time poring over weather forecasts. So when we saw that a deeper freeze than expected is predicted this winter...we had a feeling natural gas markets were in for a ride.

Natural gas futures skyrocketed as much as 20% yesterday. Traders are worried about skimpy supply levels (at a 15-year seasonal low) heading into what could be a frigid few months.

• Of course, the weather and supply concerns aren't the only factors at play here. Wonky strategies employed by hedge funds contributed a great deal to the market volatility, according to some analysts.

Still, natural gas prices are up more than 50% this year. That means (possibly) a higher heating bill this winter (especially if you're in the Northeast, which suffers from Pipeline Deficiency Syndrome).

+ The more you know: A common unit of measurement for natural gas is "mmBtus," or one million British Thermal Units. A Btu is the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit.

RETAIL

Headline of the Day

Do bosses...

• Report four consecutive quarters of sales growth at existing locations?
• Boost earnings guidance for the year?
• Invest more than $200 million renovating a specific set of stores (called "magnets") with new technology and more varied merchandise?
• Expect to hit $1 billion in mobile sales this year?

Apparently. But we're also guessing a 7.2% drop in share price isn't part of the job description.

So why did investors knock Macy's yesterday? Because everything's relative.

• Bloomberg's Sarah Halzack points out investors have set a high bar for retailers given a high-flying economy and strong consumer sentiment.
• Plus, keep in mind financials are often compared year-over-year. Q3 2017 for Macy's was "grisly." The true test will be how it performs during this holiday season.

+ If your life is in need of more department store earnings...well, you're in luck: We've got J.C. Penney and Nordstrom reporting today, and Kohl's will step up to the plate next week.

ENTERTAINMENT

The Boy Who Lived...And Earned Billions

Each week, the Brew is partnering with the infographic wizards at Statista to visualize the most interesting stories happening in business and the economy.

We try to keep our personal opinions out of this newsletter as much as possible. But when it comes to Harry Potter? All bets are off. "Fantastic Beasts: The Crimes of Grindelwald" (out this weekend) could literally be made with the production value of "The Blair Witch Project" and we'd still see it.

But Harry Potter hasn't just captured our imagination, it's also captured our wallets. Check out this breakdown of major revenue streams for the franchise as a whole.

WHAT ELSE IS BREWING

• Levi Strauss is planning an IPO at a valuation of up to $5 billion, per CNBC.
• Warren Buffett's Berkshire Hathaway (-0.87%) added more than 35 million shares of JPMorgan stock to its portfolio last quarter.
• Facebook (+1.45%) employee morale has taken a "sharp turn for the worse" this year, per the WSJ.
• Canopy Growth stock slumped 10.86% after its earnings showed pot legalization in Canada didn't have the positive impact investors had hoped for.
• Victoria's Secret CEO Jan Singer will resign from her post after two years.
• Dan Gilbert, the owner of the Cleveland Cavaliers, is selling the Greektown Casino-Hotel in Detroit for $1 billion.

BREAKROOM

From the Crew
What's the only thing better than a shower debate? An airport debate. Yesterday, the WSJ ranked the largest airports in the U.S. based on criteria like security-line wait times, restaurant quality, and number of nonstop destinations.

Here's their top 10: 1) Denver 2) Orlando 3) Phoenix 4) Atlanta 5) Dallas-Fort Worth 6) Las Vegas 7) Seattle-Tacoma 8) Charlotte 9) Los Angeles 10) Boston

Agree? Disagree? Which airport is your favorite? More importantly, which is your least favorite? Let us know here.

Thursday Riddle
Jean was born on December 28, but her birthday always falls in the summer. How is this possible

(Answer located at bottom of newsletter)

Breakroom Answers