Take the leap

Quote of the Day

A single actor likely drove the USD/BTC exchange rate from $150 to $1000 in 2 months.”

Market Snapshot

• Dow futures charged forward on the market's day off.
• The Hang Seng closed lower after a 14-day winning streak.
• The dollar hit its lowest level in three years on Friday.
• Ethereum held steady at $1,300.

Ford Joins the Electric Vehicle Bonanza With a Major Bet

Ford entered the Detroit Auto Show leaning on its horn, announcing it’ll be investing $11 billion in electric vehicles (EVs) and producing 40 electrified models by 2022. That’s a pretty big uptick from the $4.5 billion it had previously planned to spend.

To Ford Executive Chairman Bill Ford, “that means we’re all in now.”

Why is Ford throwing its chips on the table?

It’s afraid of being lapped by other automakers already betting big on an EV market poised to explode. VW has pledged $40 billion to revamp its fleet into an electric powerhouse. And GM claims to have figured out how to make an EV 30% cheaper than its current Chevy Bolt. That’ll be helpful when it introduces 20 all-electric models by 2023.

And, of course, there’s the buzzy Tesla, which passed Ford in market cap last year (despite never turning an annual profit). Its mass-market sedan, the Model 3, has earned rave reviews...but simmering in “manufacturing hell,” it can’t seem to escape the factory floor.

You could argue Elon Musk has had more success sending rockets into space than making this car.

But Musk—and Ford—see the writing on the wall

The race to develop an electric fleet is a response to both changing market trends (h/t climate change) and regulators cracking down on the internal combustion engine. Countries like the UK, France, and China (the world’s largest auto market) all plan on moving away from fossil-fueled cars in the next several decades.

Reality check: For all the talk of a fully-electric future, the present isn’t exactly an EV paradise. Of the 17 million million cars and trucks sold in the U.S. in 2017, unit sales of pure-electric and plug-in hybrids didn’t top 200,000. That’s less than 1%.

Expect that figure to jump. Depending on oil prices, 33% of all global autos could be electric by 2040.

SoftBank Considers an IPO—But Would It Be Raising Money for the Right Reasons?

When you’ve got a $93 billion Vision Fund, you shouldn’t have a care in the world. But for Masayoshi Son and SoftBank, that’s not exactly the case. Strapped for cash, it’s now considering listing 30% of its telecom business in what would be an $18 billion IPO. And with that cash plug, it’ll take a page out of the Vision Fund's playbook and invest more in…you guessed it…technology companies.

Here’s the thing: these massive tech bets better start paying off, because SoftBank’s telecom business isn’t just its bread and butter, it’s the knife, plate, and table too.

Here’s the other (worse) thing: SoftBank has over $50 billion in debt sitting on its books—$23 billion of which matures over the next three years.

If SoftBank likely won’t use the $18 billion to wash out impending IOUs, could it issue more debt to pay off the principal loans?

Unlikely.

Most Japanese banks are putting the kibosh on additional Masayoshi funding after years excessive borrowing. So, even if he wanted to take more from Peter to pay off Paul...he can’t.

Let’s just hope SoftBank injects this money into assets with high growth potential—like our instagram.

Braeburn Raised $110 Million to Fight Opioid Addiction

In his battle against the opioid-Goliath, David's getting a better slingshot.

Braeburn Pharmaceuticals raised $110 million in new funding for its opioid addiction treatment, CAM2038. The drug has already been fast-tracked by the FDA and would become the market's first long-acting injection to help combat the national epidemic—now the leading cause of death among Americans under 50.

That's a lot of scratch. Will it even make a dent?

It may. Braeburn's drug (investigational buprenorphine, if you're nasty) can be administered weekly or monthly, as part of a more comprehensive treatment plan that includes counseling. And considering only 20% of those who need help are getting it, this could be exactly what the doctor ordered for turning those numbers—and lives—around.

But, of course, the treatment is just a Band-Aid for the problem. Because as it turns out, the epidemic may not be a consequence of “despair,” but the simple economics of too much supply...

Lego Builds a Partnership With Tencent

Danish-toymaker Lego is hitting the bricks—by building itself a digital partnership (and lifeline) with Chinese tech giant, Tencent.

As the rest of the industry caters to children’s decreasing attention spans—and attachment to physical toys—the plastic bricks-and-mortar company hopes to follow suit and reconnect via online games, videos, and a social media network.

This isn’t the first time a plastic and tech company have clicked. Last year, Mattel, Alibaba, and online content developer BabyTree struck a deal to sell interactive versions of Fisher-Price toys.

Aimed directly at children in China, Lego’s digital restructuring could not have a sturdier foundation. That is, Tencent’s market cap of $537 billion and its proprietary video platform should be the missing piece to boosting Lego’s dwindling growth.

Speaking of boosts...another cog in the partnership wheel, Lego Boost is a building and coding set that lets amateur construction workers, i.e. children, turn their brick masterpieces into animate (but luckily not sentient) objects.

Wonder how much a digital Lego hurts if you step on it...

What Else Is Happening…

• Sheryl Sandberg and Jack Dorsey are leaving Disney’s board, citing conflicts of interest. No kidding.
• Airbus booked more 2017 plane orders than Boeing thanks to a strong December.
• Jeff Bezos and his wife, MacKenzie, donated $33 million to fund 1,000 scholarships for DACA recipients.
• Here’s all you need to know from the Detroit Auto Show.

Economic Calendar

• Monday     Earnings: No Events (Markets Closed)

                    Economic Events: No Events (Markets Closed)

• Tuesday    Earnings: Citigroup, CSX, UnitedHealth

                  Economic Events: Empire State Mfg Survey

• Wednesday    Earnings: Alcoa, Bank of America, Goldman Sachs

                        Economic Events: Industrial Production, Housing Market Index

• Thursday   Earnings: American Express, Morgan Stanley

                   Economic Events: Jobless Claims, Philadelphia Fed Business Outlook

• Friday       Earnings: SunTrust

                 Economic Events: Consumer Sentiment

Venture This: Magic Leap

Magic Leap is a “mixed reality” startup, but its current valuation of over $6 billion is definitely real.

What we like

Magic Leap’s reputation in augmented reality (AR) tech has been called “nearly mythical,” and there are rumors that under its spell, users sometimes lose sense of reality. Where do we sign up?

It’s got muscle at the top, too. Founder and CEO Rony Abovitz, an eccentric bioengineer, used the proceeds from selling Mako Surgical ($1.65 billion) to fund the first four years of Magic Leap. He’s also been able to pull in $1.9 billion in funding so far from big shots like Google and Alibaba.

Sounds like a home run! But wait a sec...

What’s taking so long? Magic Leap was founded in 2011, and only a few months ago unveiled its first consumer product, an augmented reality headset. So for all the talk of revolutionary tech, it’s taken seven years for Magic Leap to have anything to show for it. And why all the secrecy?

Even when the headset drops this year, making AR or VR hardware that’s actually viable for consumers is notoriously difficult. Google is still trying to figure out Glass, while Facebook and HTC have slashed prices on their own VR headsets.

Decision time

Is Magic Leap the future of human-computer interaction? Or are we just so mesmerized with the tech to realize there’s no actual business there?

The Breakroom

Question of the Day

Consider the following. What is the number that fits in the "?"

8809=6
1234=1
5482=3
8805=5
7777=0
6363=2
2172=0
4141=2
8523=2
1257=0
2581=?

(Answer located at the bottom of newsletter)

Business Trivia

What is the best-selling product of all time?

1. iPhone
2. Rubik’s Cube
3. Cassette player
4. Slinky

(Answer located at the bottom of newsletter)

Obvious Fact of the Day

35%—Increase in sales for online grocery-delivery service AmazonFresh after Amazon bought Whole Foods last summer.

Breakroom Answers

Question of the Day: 2 (Explannation)

Business Trivia: Rubik’s Cube