Huge IPO

MARKETS

• World: Japanese Prime Minister Shinzo Abe said his country will spend close to $120 billion to kickstart its economy. Japan has the biggest debt load among developed nations.
• More world: Mass protests in France led to grounded flights, a paralyzed train system, and the closing of the Eiffel Tower.
• Back home: The November jobs report will be released this morning at 8:30am accompanied by bagels. Economists predict that the economy added 180,000 jobs last month.

AUTO

Automakers Do the Electric Slide

As winter creeps in, households typically ease off the electricity and crank up the gas. But this season, automakers are doing the opposite.

Yesterday, GM and South Korea’s LG Chem said they’re investing $2.3 billion in a landmark electric vehicle battery cell plant that will employ more than 1,100 people in Ohio. And Lucid Motors, a Cali-based electric vehicle (EV) startup, broke ground this week on a $300+ million factory in Arizona that’s expected to generate 4,800 jobs.

• Faced with stricter emissions regulations and rising demand, automakers are pushing ambitious plans for electric vehicles.
• But those plans could hollow out the workforce building gas-powered cars.

Crunching the numbers

Internal combustion engines have a few thousand parts; EV drivetrains, a few hundred. So EVs require less labor (3.7 man-hours/car compared to 6.2) and maintenance.

The warning signs have arrived:

• Mercedes parent Daimler will cut at least 10,000 jobs over the next three years as it works on releasing 20 hybrids and EVs.
• Audi’s eliminating 9,500 jobs over five years to accommodate EV development costs (though it plans to do so through employee turnover rather than layoffs).
• BMW’s trimming German employees’ bonuses after checking its last electric bill.

Unions are worried

The impact of EV manufacturing is a top concern for the United Auto Workers union, which has been negotiating new contracts with Fiat Chrysler, Ford, and GM. The last two agreed to keep EV work in the U.S. for the next four years…

• But EVs will be a relatively small share of overall production during that time.
• The union expects EVs to swipe 35,000 jobs in the next few years.

Looking ahead...the 2020s industry forecast is about as promising as A Christmas Prince 3. A German auto union predicted 75,000 lost jobs over the decade, and a research group said it could take at least four years for global car sales (which just fell at the fastest rate since the recession) to rebound to 2017 levels.

ENERGY

Saudi Aramco Prices Big Huge Ginormous IPO

619 miles from the world’s tallest building, Saudi Aramco raised $25.6 billion in the biggest IPO ever yesterday.

• The listing values the state-owned oil company at $1.7 trillion. That’s more than the market caps of the next five biggest international oil companies…combined.

Here’s the but: The valuation is well under the $2 trillion Saudi Crown Prince Mohammed bin Salman initially sought. Plus, the offering itself was pretty limp. Aramco, which listed just 1.5% of shares, was reportedly more popular among domestic and regional investors than deep-pocketed international financiers.

• Those investors couldn’t stomach Aramco’s murky corporate structure, geopolitical uncertainty, and that whole climate change problem, Reuters reports.

Zoom out: MBS had been working to sell a piece of Saudi Aramco for nearly four years, but questions around the valuation and the listing location delayed the IPO. Mission kinda accomplished.

Looking ahead...shares are scheduled to start trading Dec. 11.

+ Can you name the tallest building in the world? Answer at the bottom.

BIOTECH

Beantown Biotechs: You're Just a Kid

Cambridge, MA, isn’t just known for savant janitors and scorpion bowls at the Kong. It’s also home to biotech companies that live and die by clinical trials.

Sage Therapeutics took a beaker to the chin

The biopharma company’s value was more than sliced in half after it revealed that its depression treatment failed a Phase 3 study. CEO Jeffrey Jonas claimed “the drug displays good activity on most measures,” but the result is a major surprise given the drug’s otherwise solid performance in tests.

Biogen shared better news

At a presentation in San Diego yesterday, the pharma company gave more details about its experimental Alzheimer’s drug, aducanumab.

The backstory: Scientists have been searching for an effective Alzheimer’s treatment for decades—drugs available currently target the symptoms but don’t slow memory loss or cognitive decline. Biogen believes aducanumab could do the trick.

• In March, Biogen shocked the medical community when it pulled trials for the drug. Then in October, it shocked everyone again by bringing it back to life.

Looking ahead…Biogen will seek FDA approval for aducanumab next year.

TAXES

O Beautiful for Spacious Skies and Low Taxes

U.S. tax revenues fell to 24.3% of GDP in 2018, according to the Organization for Economic Cooperation and Development (OECD). The U.S. tax burden is now the fourth-lowest among major world economies, and 10 points below the OECD average.

What’s behind the drop: The Trump administration's 2017 tax cuts...what else? And while lower taxes can spur growth, they also bring in less revenue for the government. The U.S. budget deficit in fiscal 2019 hit $984 billion, up 26% from the previous year.

QUIZ

I’m Sorry, Quiz Jackson

Never meant to make your daughter cry. Top Spotify genre for 2019 was "vapor soul," whatever that means. Finally got our blue checkmark. It’s the Brew’s Weekly News Quiz.

1. Fill in the blank: The _____ in March accounted for 14.2% of Russia’s foreign currency reserves, up from 5% last year.

2. In 2014, NATO members agreed to spend a percentage of their GDPs on defense by 2024. But not all countries are on track to meet the target, something that was top of mind when NATO met this week. What is the target?

3. Google’s two cofounders stepped down from their roles as Alphabet’s CEO and president this week. What are their names?

4. It took 20+ years to create me. I can (allegedly) last in the fridge for up to a year. $10.5 million was spent on my pre-launch marketing. You guessed it—I’m a new apple variety. What am I called?

5. Put these 2019 Reddit AMAs in order from the most upvoted to the least: Cookie Monster, Bill Gates, and Andrew Yang.

Answers: 1) Chinese yuan 2) 2% 3) Larry Page and Sergey Brin 4) the Cosmic Crisp 5) Bill Gates, Cookie Monster, Andrew Yang

WHAT ELSE IS BREWING

• United Airlines CEO Oscar Munoz will step down from his post next May. President Scott Kirby will step up.
• World food prices hit their highest point in more than two years in November.
• Unrelated: Beyond Meat will start selling its plant-based Beyond Burgers at some Costco stores
• Execs at Away, a direct-to-consumer luggage startup, created a culture of "intimidation and constant surveillance," an investigation by The Verge found.
• Apple analyst Ming-Chi Kuo predicts the 2021 iPhone will be a "completely wireless experience."

FRIDAY PUZZLE

Pantone has released its 2019 color of the year: Classic Blue. According to Pantone, Classic Blue is “honest,” “easily relatable,” and “nonaggressive.” That’s great and all, but what we really want to know is whether you can pick Classic Blue out of the following four shades.

Answers

The tallest building in the world is the Burj Khalifa in Dubai.