Big fat bug

MARKETS

• Consumer confidence: Thanks to some "temporary shocks" including the partial government shutdown, it hit its lowest level since July 2017 this month. No one's panicking though, with morale above historic
• Brexit: UK Prime Minister Theresa May is racking up the airline miles these days. She'll head back to Brussels to negotiate a Brexit plan with the EU after a Parliament vote yesterday. Brexit countdown: eight weeks.

TECH

Apple Plays Defense

All Apple wanted to do this week was find a good 7 layer dip recipe for its Super Bowl party, but it's ended up fighting off two pieces of challenging news. One it saw coming. The other? Not so much.

First, those earnings tho

Apple (+5.55% after hours) reported its first decline in both revenue and profit in the December quarter in more than a decade. The damage?

• Revenue fell 4.5% to $84.31 billion, owing mostly to weaker iPhone sales and a slowdown in China (where sales fell 27%
• But profit dipped just a hair to $19.97 billion, buoyed by a more advantageous tax rate.

Lay it on me: Apple projected revenue for the current quarter will fall short of estimates. Remember, only a couple weeks ago, Apple slashed revenue guidance for last quarter, the first time it had done so in 15+ years.

But it wasn't all bad. Apple's finances were mostly in line with predictions, if not a little better. And sales in its Services segment continued to explode, up 19% YoY. We also found out that gross margins for that segment came in at a juicy 62.8%.

Bottom line: Apple's struggled to boost iPhone revenue, which tumbled 15% from last year. It will need to find answers in 2019.

And second, a big fat

Worse than a cockroach in the middle of the night if you ask us. Apple users sniffed out a software bug Monday that allowed people to eavesdrop on other users utilizing FaceTime's conference call feature.

• Apple updated its system status page to show group FaceTime as temporarily unavailable, meaning the bug should no longer be exploitable. Look out for a software update "later this week."

The bug is one of Apple's biggest privacy-related problems to date, and was discovered on...yep, Data Privacy Day, when Apple chief (and pro-privacy regulation itinerant preacher) Cook called for "action and reform for vital privacy protections." Someone page Alanis Morissette—we've got a new lyric for her.

UTILITIES

PG&E Is in Over Its Head

California's largest utility has filed for Chapter 11 bankruptcy protection after struggling for months in the face of billions of dollars in potential liabilities for its role in Golden State wildfires.

This is going to be a big one. With $71.4 billion in assets, PG&E (+16.49%) will become the sixth largest corporate bankruptcy by assets (pop quiz...what's #1? See the bottom of the newsletter for the answer).

Also big? PG&E's debts. It's sitting on $51.7 billion in approximate total debt, and it also estimated that fire-related liabilities could exceed $30 billion.

• Remember, California officials found PG&E power lines sparked 18 wildfires in October 2017. It's still unclear if PG&E played a role in last year's Camp Fire (the deadliest in CA history).

What does it mean for PG&E's 16 million customers? They may face double-digit price increases in coming years, per the WSJ. And they already pay some of the highest prices in the U.S.

WEATHER

When 'Frigid' Doesn't Even Begin to Describe It

Places that will be warmer than Chicago today: Florida, the Arctic Circle, some regions of Mars...

Not a typo. A polar vortex is slamming the upper midwest, and the high is minus 14°F in Chicago and Minneapolis today. If forecasts hold, that'll be Chicago's lowest high in history.

And with the wind chill...it's terrifying.

Businesses are bracing for impact

Air travel: As early as Monday, 1,600+ flights had been canceled across the U.S., most of which were set to fly in or out of Chicago's two major airports.

Food delivery: One consultant said Chicago restaurant traffic might fall 5% this week, but delivery services will get busier. At least we'll find out how well deep-dish pizza retains heat.

• But this weather will make for dangerous delivery runs. Grubhub said it'll still offer delivery but might consider operational pauses to keep its personnel safe.

Energy: Frigid weather calls for cranking up the thermostat...and gas demand that could be 75% higher than on your typical winter day. Midwestern utilities are prepping for soaring demand and any nightmarish supply disruptions.

MEDIA

How Do You Consume Content? We’re All Ears.

Nothing quite like some clever headline wordplay to introduce a story on the growth of audiobooks and podcasts.

Scribd hits 1 million paying subscribers globally

The "digital library" (where you can find magazines, documents, books, and audiobooks starting at $8.99/month) has grown its paid subscriber base 40% year-over-year. Plus, the number of audio users jumped 100% in 2018.

Zoom out: The Association of American Publishers wrote that downloaded audiobooks were the fastest growing format in the industry, rising 29% from 2016 to 2017.

The Ringer strikes gold with podcasts

While some young media companies dip a nervous toe into the podcast game (or hang up the cleats altogether), Bill Simmons's sports and culture site has gone all-in...and it seems to be working. Podcast ad sales topped $15 million in 2018, per the WSJ, and the company is profitable.

Zoom out: "Podcast advertising has grown quickly—it increased 86% from 2016 to 2017—but it still represents less than 1% of the overall U.S. digital ad market," writes the Journal.

CANNABIS

Who wants POT?

The stock ticker, obviously...

With the company formerly known as POT (Potash Corp.) merging with Agrium, the ticker will become free for the taking this Friday in Canada. The only problem? There are too many companies that want to take it.

The solution: Hold a lottery. Firms had to throw their edibles in the ring by a 5 pm deadline yesterday, and the random drawing will be held today. Good luck!

Zoom out: Seems like the ideal time to do a quick rundown of some other fun tickers used by marijuana firms and funds...

• Canopy Growth: WEED
• ETFMG Alternative Harvest ETF: MJ (Mary Jane)
• 1933 Industries: TGIF
• FSD Pharma: HUGE

INVESTING

Your Investing Habits in Technicolor

Morning Brew partnered with Visual Capitalist, the Monet of econ infographics, to give a snapshot of millennials' investing habits (based on your survey responses). There's some fascinating info, including the one tech giant millennials put their investment faith in the most.

WHAT ELSE IS BREWING

• eBay (-0.97%) will pay its first-ever dividend to shareholders. It's 14 cents, due around March 20, and ships for free.
• AMD (+8.36% after hours) gave a rosy growth and competitive outlook for 2019 after the chipmaker's earnings came in line with estimates last quarter (but revenue fell short).
• Tesla (+0.36%) has a $920 million debt payment coming due March 1. To exchange the note for a mix of cash and stock, Tesla shares have to jump about 21% from their current level.
• Facebook (-2.22%) has hired Nate Cardozo in a privacy role at WhatsApp. Don't know him? He's the ex-legal counsel at Electronic Frontier Foundation, one of Facebook's biggest critics.

BREAKROOM

Real Estate Appraiser
Note: All puzzles/trivia this week will be at least somewhat related to the Super Bowl. No knowledge of football is required.

Win or lose in the Super Bowl (and you'll find out our pick on Friday), the LA Rams at least have a new home to look forward to in 2020: the LA Stadium & Entertainment District at Hollywood Park.

And it's far more than just a football stadium. What you'll find in this massive, privately funded development:

• A 70,240-seat stadium and 6,000-seat performance center
• A 298-acre complex of office buildings, shops, residences, and parks
• An area 3.5x larger than Disneyland and 2x larger than Vatican City

How much is it expected to cost?

(Answer located at bottom of newsletter)

Breakroom Answers

Real Estate Appraiser
$4.963 billion(Source)