Kill switches and data snooping

MARKETS

  • Trade: To clear things up following a confusing U.S.-China truce, U.S. Trade Representative Robert Lighthizer has set a hard deadline of March 1 for a deal to be reached.
  • France: More than 125,000 "yellow vest" protestors took to the streets across France Saturday to demand changes to the government's economic policies. Finance Minister Bruno Le Maire said of the riots, "This is a catastrophe for commerce, it's a catastrophe for our economy."

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TECH

Why the U.S. Considers Huawei Such a Threat

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Did you find yourself in this situation over the weekend?

  • You: "Pretty crazy that Huawei's CFO was arrested."
  • Friend: "Wild. I know the company is accused of violating U.S. sanctions against Iran. But why is the U.S. so worried about Huawei, again?" *Dodges 25 Santas running down 2nd Ave.*
  • You: "National security concerns."
  • Friend: "Cool. Like what?"
  • You: "Uhhhhhhhh......"

Here to help is the MIT Technology Review, which has laid out six reasons why Huawei, a huge Chinese telecom equipment manufacturer, keeps intelligence officials up at night:

  1. Kill switches: Huawei builds networks carrying data for power grids, financial markets, etc. And some fear the Chinese government could sneak "back doors" into Huawei's gear with the ability to weaken or disable networks in foreign countries if a crisis occurred.
  2. Detecting those "back doors" is far from a science: Even after inspections, British intelligence had "only limited assurance" that Huawei gear wasn't a security threat.
  3. Data snooping: Chinese spies could theoretically gain access to Huawei's networks undetected to extract sensitive info from people and businesses. Another possible avenue for espionage? Smartphones-Huawei's one of the top manufacturers in the world.
  4. The 5G rollout: The next generation of wireless networks is arriving fast...and the last thing the U.S. wants is for Huawei to connect the world with 5G. As the authors note, "This will dramatically expand the number of connected devices-and the chaos that can be caused if the networks supporting them are hacked."
  5. Defying U.S. trade rules: Huawei's CFO is accused of tricking American banks into doing business with Iran, which would be a violation of U.S. sanctions. More of that activity could happen.
  6. Chinese government influence: The U.S. and allies suspect Huawei's execs are cozy with the Chinese government, which is the reason they've taken such a hard stance. But then again, there's no concrete evidence of any "back doors" in its equipment, either.

The latest in the drama: Chinese authorities have "summoned" the U.S. Ambassador to China to protest the arrest.

WEATHER

Winter Is Coming Here

If your intern is a few minutes late to the Monday morning meeting, cut him some slack. The guy might've been stuck in Winter Storm Diego.

The storm hit the Mid-Atlantic with a vengeance over the weekend, grounding more than 1,400 flights and knocking out power for nearly 400,000 customers. It was expected to dump as much as two feet of snow in parts of the Appalachians.

Diego was damaging not only for the region, but also for the country: It pummeled travel hub Charlotte, NC with loads of snow and ice.

We know-when we say "hub," you probably don't think "Charlotte" right away. But keep in mind, Charlotte Douglas International Airport serviced almost 46 million passengers last year as a hub for American Airlines, making it one of the east coast's biggest nerve centers.

  • Yesterday, CLT had 1,100 canceled flights-about 75% of all scheduled departures and arrivals.

This departures board is the stuff of nightmares.
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AUTO

Elon Musk's Team of Rivals

There may be no better one-two punch than a day of NFL football followed by a high-profile interview on "60 Minutes." Our prayers were answered Sunday, when Tesla CEO Elon Musk took the hot seat. What did we learn?

Elon really isn't afraid of the competition. In fact, that's part of his vision for a more sustainable world.

  • "If somebody comes and makes a better electric car than Tesla and it's so much better than ours that we can't sell our cars and we go bankrupt, I still think that's a good thing for the world."

So who else is driving (very, very quietly) to capture the EV crown?

  • There's Nissan, with the all-electric Leaf it introduced in 2010.
  • And General Motors has the Chevy Bolt (not to be confused with the Chevy Volt plug-in hybrid, which GM's dropping in favor of more profitable EV opportunities).
  • Plus, Volkswagen announced a $50 billion investment in an EV "offensive."

Bottom line: Tesla is expanding (hello, Shanghai!). Musk even told "60 Minutes" he "would be interested" in taking over the factory space GM leaves behind in its broad restructuring.

TRANSPORTATION

Pump Those Scooter Brakes

But don't fly over the handlebars. After a wild year for electric scooters, investors have lost some of that zeal that made e-scooter startups like Bird and Lime household names in 2018, reports the WSJ.

  • Bird's reportedly tempered expectations. It had been seeking hundreds of millions in funding at a lofty new valuation, but it lowered that goal due to "lack of interest." It's keeping a $2 billion valuation for any new funding.
  • And rival Lime also got real. It's reportedly looking for new funding at a valuation of between $2 billion-$3 billion...well below that $4 billion valuation it had once relayed to investors.

So what's holding them back? Growing pains, mostly. Remember, only about six months ago, Bird watched its valuation double in just two weeks in two successive rounds. Anyone who went through a 7th grade growth spurt knows that can hurt.

There are also issues of vandalism, regulatory interference, and scooter longevity. But still, that hasn't stopped competitors from moving in-Ford, Razor Scooters, Lyft, and Uber all have two wheels in the race now.

CALENDAR

What's on Tap

There's something special about NYC this time of year...
Monday: JOLTS; earnings (Stitch Fix); Nobel Prizes are awarded; Human Rights Day

Tuesday: British parliament votes on PM Theresa May's Brexit deal; Google CEO Sundar Pichai will testify to Congress; Time Magazine reveals its "Person of the Year"

Wednesday: CPI inflation data

Thursday: Jobless claims, earnings (Adobe, Costco)

Friday: Retail sales

WHAT ELSE IS BREWING

  • Uber joined Lyft in confidentially filing for an IPO last week. 2019 is shaping up to be a record-breaking year for public offerings.
  • Carlos Ghosn-the disgraced former head of Renault-had planned to oust Nissan's CEO before Ghosn was arrested in Tokyo, per the WSJ.
  • SQN Investors, a Yelp shareholder since 2015, is planning to send an angry letter to the company's board pushing for an overhaul, per the WSJ.
  • "Ralph Breaks the Internet" topped the North American box office...again. Meanwhile, in China, "Aquaman" crushed it, bringing in nearly $100 million.

BREAKROOM

From the Crew
An "I told you so" moment only works...if you tell people so in the first place.

We'll explain: We're opening up the floor for readers to give their thoughts on what the Brew community should expect in the business world in 2019. Will Zuck get his mojo back? Who will Amazon buy next? Is MoviePass a lost cause? We want to hear from you, so don't hold back. Give your hottest 2019 predictions here.

Business Trivia
Which brands/products are associated with the following slogans?

  1. "Where a kid can be a kid"
  2. "Obey your thirst"
  3. "Live in your world. Play in ours."
  4. "There is no substitute"

(Answer located at bottom of newsletter)

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Breakroom Answers


Business Trivia
1) Chuck E. Cheese's 2) Sprite 3) PlayStation 4) Porsche

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