Bomb cyclone

Quote of the Day

It is a huge loss to have him leaving the Senate. He has been a tireless advocate for the consumers of this industry.”

Market Snapshot

• Tesla shares fell 2% after-hours after missing Model 3 production targets (again).
• Surging truck demand helped Ford and GM beat sales estimates.
• Shake Shack surged 8.5% as investors set high hopes for tax reform.
• The S&P topped 2,700 for the first time.

Scana Gets Dominion-ated

In the U.S. game of Monopoly, your Utilities just got more valuable.

Virginia-based Dominion Energy (-3.85%)—one of the largest utility groups in the country ($52 billion market cap)—slid its golden thimble over to South Carolina’s Scana (+22.06%) with a takeover offer worth $14.6 billion, including $6.7 billion in debt.

Why was Scana ripe for the overtaking?

Well, it attempted to build two new nuclear reactors last year at its V.C. Summer plant, with a twin project planned in Georgia. But plagued with long delays and overrun costs already, the straw that broke the project’s back was a Westinghouse bankruptcy. (Westinghouse designed the nuclear reactors that were, ironically, intended to curb the cost overruns.)

So, Scana pulled the plug

And then passed the buck...onto its customers. Smooth, right? Federal and state investigators are rightfully probing the project, as it took advantage of a now-in-review law that allows utility companies to charge customers for unfinished or abandoned power plant projects.

So, with its financial and political hands tied, and its chairman offering to step down, Scana used its missteps to erect a "for-sale" sign. And it wasn’t the industry’s only one: last year, the utility sector saw a combined $68.2 billion of acquisitions, a result of static electricity prices and razor-thin profit margins.

Dominion is looking to ground all that negative energy

In its largest-ever acquisition, Dominion will make a $1,000 cash payment to each affected Scana customer ($1.3 billion total) and roll back rates by 5% to offset prior and future costs for the failed projects. (Likely made possible courtesy of the expected savings from the corporate tax rate cut.)

Pending the merger’s approval, Scana shareholders are receiving their amends in the form of two-third shares of Dominion stock.

As for Dominion? It’ll service 6.5 million customers across 18 states. And those are golden numbers for a company building a major natural gas pipeline to the South Carolina border.

We Can See Clearly Now, the $850k Check Has Cleared

How much would you pay to see again? With Spark Therapeutics’ (+4.60%) new treatment, Luxturna, it’ll cost $850,000. Unsurprisingly, it takes the cake as the most expensive drug on the market.

Luxturna will treat a rare form of hereditary blindness (affecting 1,750 Americans) using an innovative, and here’s the key, one-time procedure known as gene therapy. The patient’s eye will receive an injection of a functioning gene to replace the inherited one that isn’t working.

It’s sort of a “teach a man to fish” situation, where “a man” is your body and “to fish” is to reproduce critical proteins necessary for eyesight.

But even if the “revolutionary” treatment is a “life-altering value,” as Spark CEO Jeff Marrazzo claims, how can anyone possibly afford it? To make the drug more available, Spark is testing some experimental payment schemes, like tying insurer rebates to drug performance or permitting installment plans (currently not allowed by U.S. regulations).

Sounds like a bargain.

“Alexa, Tell Google to Tell Roku to Turn on the TV"

Roku (+6.47%) is expanding into voice control software with its new Roku Entertainment Assistant. So brace yourself for a line of Roku-connected smart devices.

But it won’t be directly competing with the likes of Alexa and Google Assistant just yet—Roku is hoping to complement more comprehensive home assistants by focusing on the in-home entertainment experience: soundbars, home theater systems, the works.

Just say “Hey Roku, turn up the volume,” or “Hey Roku shut the TV off in an hour,” and your wish is Roku’s command.

This is the company’s first foray outside of video streaming since its October IPO...or ever, for that matter. And already owning the top streaming device in the U.S.—37% market share—now’s as good a time as any to stretch its vocal cords.

It’s even going as far as licensing out the Roku voice assistant software to manufacturers for free. As the company sees it, more engaging products = more engaged customers = longer lifetime value of each customer.

And the formula has worked so far—Roku’s customer base jumped 47% to 16.7 million last year.

Guilty? Not Us, Says Petrobras, as It Pays Out Record Settlement

State-owned Brazilian oil company Petrobras (+2.52%) is paying $2.95 billion to settle a class-action shareholder lawsuit for corruption—a record payout by a foreign firm (although it’s still denying wrongdoing).

You’re going to want to grab popcorn and a Big Gulp for this.

For nearly a decade, Petrobras executives and a group of contractors worked out a cozy arrangement: companies working for Petrobras would inflate contracts and kick back some of the extra cash to execs.

And by “extra cash,” we mean more than $2 billion in bribes. Petrobras officials might have gotten away with it, too, if they hadn’t been so ostentatious with their wealth, buying sports cars, $3,000 wine bottles, helicopters, and rare paintings (heard of Dali?) which eventually wound up in an art museum.

Brazilian authorities, in a high-profile sting known as “Operation Car Wash,” took a break from tailing Walter White to bring down the offending executives—and even the highest-ranking politicians. But what really forced shareholders to pursue legal action? Shares plummeting almost 90% (or $271 billion worth).

What Else Is Happening…

• Spotify officially filed for its direct listing IPO.
• Didi confirmed that it acquired Brazil’s ride-hailer 99 for a ~$600 million price tag, though it was already an investor.
• MoneyGram and Ant Financial called off their $1.2 billion merger after Washington pushback.
• By offering to replace batteries on older models, Apple (-0.02%) may sell 16 million fewer new iPhones this year.
• Intel (-3.39%) is working to fix a security flaw in its chips while trying to avert a PR crisis.

Economic Calendar

• Monday     Earnings: No Events

                    Economic Events: No Events

• Tuesday    Earnings: No Events

                  Economic Events: PMI Manufacturing Index (+)

• Wednesday    Earnings: Rite Aid (+/-)

                        Economic Events: Motor Vehicle Sales (+), Construction Spending (+)

• Thursday   Earnings: Monsanto, Walgreens

                   Economic Events: Jobless Claims, PMI Services Index, Chain Store Sales

• Friday       Earnings: Constellation Brands

                 Economic Events: Employment Situation, International Trade, Factory Orders

Picture This

First steel and now Bitcoin mining?! What’s China going to take over next? Our newsletter? (Morning Brew, brought to you by Alibaba.)

As you may know, Bitcoin consumes more energy per year than 159 countries, including Bolivia, Uruguay, and the Republic of Dwayne “The Rock” Johnson.

Which is why the majority of mining (60%) takes place in China, where energy costs are lower…

Of course, Silicon Valley couldn’t resist jumping into the mix. Mining at 21 Inc. in SF accounts for 3% of global Bitcoin transactions. Check out the rest of the miner makeup below.

The Breakroom

Question of the Day

A rich old lady died and left all her money to her grandchildren and her children. At the end of the will she stated that she had one last thing to give away: her precious diamond. She gave a clue to where it might be. She said "it's in a cylinder surrounded by a thousand squares." One grandchild said, "I know where it is," and found it. Where was it?

(Answer located at the bottom of newsletter)

Business Trivia

In 2010, which social media company reportedly bought the domain name of The American Farm Bureau Federation for $8.5 million?

(Answer located at the bottom of newsletter)

Fact of the Day

U.S. factories expanded in December at the fastest pace in three months. Gains in orders and production capped the strongest year for manufacturing since 2004.

Breakroom Answers

Question of the Day: In a roll of toilet paper. (Explannation)

Business Trivia: Facebook