The Brew's big announcement

MARKETS

• U.S. markets: November is off to a much better start than the month-that-shall-not-be-named. The Dow has surged more than 900 points in the last three sessions.

FRAUD

What Do You Know About the 'Billion Dollar Whale'?

The U.S. charged two ex-Goldman Sachs bankers and a Malaysian financier in a vast global scheme to launder billions from Malaysia's sovereign wealth fund, 1MDB. It's one of the biggest instances of financial fraud...ever.

The defendants:

• Jho Low, the Malaysian financier and the alleged ringleader of the entire scandal. He remains at large.
• Tim Leissner, a former partner for Goldman in Asia. He pleaded guilty to conspiring to launder money and violating anti-bribery laws.
• Roger Ng, another ex-Goldman banker, was arrested in Malaysia.

Is this the first time you're hearing about the 1MDB scandal? We've got you covered.

Let's go back a few years

Goldman Sachs underwrote more than $6 billion in bonds for 1MDB in 2012 and 2013. Then, per the court filings, over $2.7 billion of that was siphoned off. So where'd it allegedly go?

• Bribes for Malaysian and Abu Dhabi officials to secure more business for Goldman.
• Shell companies controlled by Low, Leissner, Ng, and others.
• The pockets of former Malaysian Prime Minister Najib Razak (who set up 1MDB) and his family.
• Luxury real estate in NYC and artwork from an auction house.
• The "Wolf of Wall Street." Seriously—some of the money is alleged to have wound up funding production of that 2013 film.

What it means for Goldman, per the WSJ: The guilty plea is the "biggest black eye for a Goldman partner" in nearly three decades. Plus, it'll put new CEO David Solomon (who was Leissner's ultimate boss at the time) to the test. Goldman's already placed former co-head of investment banking in Asia, Andrea Vella, on leave.

Final thoughts

WSJ reporters Tom Wright and Bradley Hope recently published a book on Low's heist and (extremely) lavish lifestyle, called Billion Dollar Whale. Here's a taste of what they found...

"Casino operators and nightclubs refer to their highest rollers as 'whales,' and one thing was certain about Mr. Low: He was the most extravagant whale that Vegas, New York, and St. Tropez had seen in a long time—maybe ever."

TECH

Apple’s Bigger Price Tags Bring Bigger Profits

After hiking prices on new models, Apple smashed through earnings expectations on the top and bottom lines, tallying a fourth consecutive quarter of record revenue and profit...

...if only that were the whole story. Shares fell ~7% after hours when Apple's important holiday quarter forecast (between $89 billion and $93 billion in revenue) failed to impress. Its market cap also fell below $1 trillion briefly. So...does that mean it gets to throw another party?

Let's take a peek at Apple's fiscal Q4 stats:

• Revenue came in at $62.9 billion, up ~20% YoY.
• Profit jumped 32% to $14.13 billion.

The biggest takeaway: Average selling price (ASP) for iPhones was a massive $793...up 28% from last year and well above projections.

• Not to mention...Apple's $999 iPhone XS and $1,099 iPhone XS Max (which debuted in Sept.) had only ~10 selling days before the quarter ended.

Apple's Services unit—aka the symbol of Apple's effort to diversify its revenue streams—reached a record high of ~$10 billion in revenue last quarter.

+ Thanks for the memories: Apple said it will stop reporting unit sales figures for its iPhones, iPads, and Macs starting in fiscal 2019.

WORKPLACE

You're Invited: A Google Employee Walkout

What: Google's employee-wide walkout protesting "a workplace culture that's not working for everyone."

When: 11:10 am local time (well, yesterday)

Where: 20+ Google offices globally

Why: Last week, the NYT published an investigation of Google's past practice of shielding top execs from accusations of sexual misconduct. According to the report, Google would either a) keep the accused on staff or b) gift them generous exit deals.

• Per the Times, Google gave Android creator Andy Rubin a $90 million exit package even after finding sexual misconduct claims against him were credible.

Walkout organizers demanded more transparency from Google surrounding its handling of sexual harassment, equal pay and opportunity, and employee empowerment in general.

What they're saying: "Substantive actions to address systemic racism, increase equity, and stop sexual harassment have been few and far between...ENOUGH. Reassuring PR won't cut it: we need transparency, accountability, and structural change."

ELECTION

Nevada Question 3 Has Warren Buffett’s Attention

Each day this week, the Brew will take on one state-level ballot measure that'll impact the business world following midterm elections Nov. 6. After all, they don't say "all politics is local" for nothing.

The Nevada Energy Choice Initiative is about more than just keeping the lights on in the desert. Known as Question 3, its goal is to require Nevada to switch from a regulated monopoly model to a competitive retail model for electricity by 2023.

And it's a battle between billionaires
Warren Buffett's Berkshire Hathaway runs government-regulated NV Energy (where the state currently gets the majority of its electricity). He's against Question 3.

But fellow billionaire (and Las Vegas Sands Corp. CEO) Sheldon Adelson thinks the state—and his casinos—would be better off with more supplier choices. He wants Nevadans to vote yes.

Both Buffett and Adelson have poured millions into their respective campaigns, each promising lower energy prices if they take the W. And wouldn't you know, Question 3 has attracted more than 3x the money Nevada's state Senate race has this cycle.

There's a twist: Nevada requires constitutional amendments to pass twice. Question 3 passed with 72% of the vote in 2016...but in 2018? Not looking as good. Recent polling shows 32% of likely voters support it this time around.

QUIZ

The Brew’s Weekly News Quiz

Spookier than Halloween. More stuffing than Thanksgiving. More lit than Hanukkah or Christmas. It's the Brew's weekly news quiz.

1. Which company's CEO said its $34 billion deal for Red Hat was the "most significant tech acquisition of 2018"?

2. What problem is California's Proposition 10 designed to address?

a) Ultra-high rent prices b) Entertainment monopolies c) Climate change d) Money in politics

3. In the past few months, Warren Buffett's Berkshire Hathaway has invested ~$600 million in an industry (that had been) outside his comfort zone. What is that industry? Extra credit: What are the names of the two companies in which he invested?

4. On what issue have Americans completely reversed course?

5. What company am I? I am the creator of Fortnite. I just raised $1.25 billion at a nearly $15 billion valuation. Some of my other investors include Disney and Tencent.

6. Fill in the blank: As of last Tuesday, more than a third of S&P companies that had reported earnings had discussed _______ on analyst calls.

7. Speed round: Let's go back to Buffett for this one. How many companies currently in Berkshire Hathaway's portfolio can you name? You have 60 seconds...go!

Answers: 1) IBM 2) Ultra-high rent prices 3) Fintech (extra credit: StoneCo and the parent of Paytm) 4) Legalizing marijuana 5) Epic Games 6) Fallout from tariffs 7) Here's a list

ANNOUNCEMENT

Are You Ready for More Brew?

We bring you all the most important business news Monday through Friday. The only problem? When we gather up the news for Monday morning, the stories that broke on Friday often feel too stale to include for your (busy, bleary-eyed, caffeine-fueled) Monday morning.

That's why we're adding Saturday to our weekly coverage, starting tomorrow.

We figured you could use some biz news to go along with your cartoons and Frosted Flakes. Get pumped and see you in the morning.

WHAT ELSE IS BREWING

• Starbucks shares popped 9% after hours following a strong quarterly report that showed same-store sales growth accelerated.
• Spotify (-5.70%) reported Q3 financials mostly in line with projections. Premium subscribers jumped 40% annually.
• The U.S. has accused a Chinese state-owned company (and its partner in Taiwan) of stealing trade secrets from America's largest memory-chip maker, Micron.
• The New York Times (+6.89%) beat expectations on the top and bottom line. Digital subscriptions jumped 24%, too. BTW, here's a recap of its DealBook conference yesterday.

BREAKROOM

Friday Puzzle
Take these three phrases:

1. Turkey breast
2. Ski slope
3. Cash drawer

What very unusual property do they have in common? (Via NPR)

Breakroom Answers

Friday Puzzle
In each phrase, the second word can be anagrammed to complete another common phrase:
Turkey breast --> turkey baster
Ski slope --> ski poles
Cash Drawer --> cash reward