CEO Daily: Thursday,19th January

Take time this morning to read my colleague Geoff Colvin’s masterful dissection of how Brazilian private equity firm 3G, the controlling investor in Kraft Heinz, is rapidly reshaping those iconic brands. The firm, overseen by Brazil’s richest man – 77 year-old Jorge Paulo Lemann – and backed by investor Warren Buffett, is a ruthless meritocracy, ready to sacrifice employees and the concerns of local communities in its effective pursuit of profits.

Colvin summarizes its acquisition-driven business model succinctly: 3G is “quite possibly the world’s best at creating value by eliminating costs and focusing on the most promising opportunities, but not adept at growing the top line organically. In such a model, performance is front-loaded in the years right after an acquisition…That’s why the shark must keep swimming.” You can read the full story, which is featured in the February edition of Fortune magazine, here.

Davos is still abuzz about the bizarre role-reversal here, with China positioning itself as the champion of open global markets, while the U.S. threatens protectionism and the U.K. retreats from Europe. Meanwhile, at Fortune, we took the opportunity to announce dates for the next Fortune Global Forum: Dec. 6-8 in Guangzhou, China. This gathering of top CEOs from around the globe will be an opportunity to explore how both changing political dynamics and rapidly advancing technologies are fundamentally altering the nature of business. It’s an invitation-only conference, but you can request an application here.

More news below.

Top News

• Toshiba’s Meltdown

Toshiba’s shares fell another 15% in Tokyo after media reports that it will take a bigger-than-expected charge of $6 billion against its U.S. nuclear business. The company is reportedly planning to spin off and sell a stake of up to 20% in its microchip business, the group’s cash cow, to plug the consequent hole in its balance sheet. Reuters' sources suggested that the company has already approached a government-backed bank for financial support. Fortune

• London Exodus Begins

With Prime Minister Theresa May finally admitting that the U.K. will leave the EU’s Single Market, global banks are coming clean about the cost to London. HSBC CEO Stuart Gulliver said his bank will relocate staff responsible for generating one-fifth of U.K.-based trading revenue to Paris, while the German newspaper Handelsblatt reported that Goldman Sachs could halve its London workforce to around 3,000. UBS Chairman Axel Weber told Davos that around 1,000 UBS jobs in London could be affected. However, given the income divide between London and the rest of the country, public opinion is unlikely to punish the government for choosing a more economically painful Brexit until the exodus gets much more serious. Fortune

• Netflix: A Crown Jewel

Netflix shares surged 8% to a new all-time high after reporting its biggest-ever quarterly rise in subscribers. The figures vindicated management’s fast-paced, global roll-out of its service, an expensive but arguably inevitable strategy given that it will have Amazon Prime trying to eat its lunch for the foreseeable future, as well as HBO and Hulu. Growth was supported by an increasingly broad range of popular original content (Narcos, The Crown, Orange is the New Black, Gilmore Girls etc.). It’s a huge success by any measure, but pricing that success is an increasingly tricky business. The stock now trades at a mere 140 times expected 2017 earnings, a fearsomely aggressive valuation. Fortune

• Post-Election Bond Bonanza on Wall Street

2016 ended with a banner quarter for Wall Street’s biggest banks, but not just because of the stock market. Results from Goldman Sachs, Morgan Stanley and Citigroup this week all benefited first and foremost from increased volatility in the bond market, where most prices fell sharply in the wake of Donald Trump’s election in anticipation of faster growth and higher interest rates. Fortune’s Shawn Tully argues that the sharp division of opinion about whether Trumponomics will succeed or fail is stimulating hectic trade in both safe-haven Treasury bonds and higher-risk credit. Elsewhere, Fed chairwoman Janet Yellen, in a speech, stuck to her baseline scenario of gradual interest rate rises being appropriate this year, with a large dollop of wait-and-see with regard to fiscal and economic policy. Fortune

Around the Water Cooler

• VW’s Winterkorn to Face Lawmakers

Volkswagen’s former CEO Martin Winterkorn is testifying to German lawmakers later today in his first public appearance since his resignation immediately after the diesel emissions scandal broke in September 2015. He’s  being grilled on how much he knew, and when. So far he's not given much away. His answers could have a big impact on the investor suits still outstanding against the company, which rest largely on accusations of having created a false market in VW’s shares by concealing the extent of the problem. FT, metered access

• Safran Bags Zodiac in $9 Billion Deal

French aerospace supplier Safran is to take over Zodiac, a specialist in airliner cabins, for 8.5 billion euros ($9 billion), in what will be seen as a response to increasing pressure from Boeing and Airbus on suppliers as the long boom in civil aviation starts to plateau. The big two have record order backlogs but are determined to avoid paying more to suppliers as they try to meet demand. Zodiac has struggled with production problems in the last two years, leading it to miss out on what is likely to be the sweetest part of the cycle. Reuters

• Lee’s Free, Baby. Lee’s Free.

A South Korean court dismissed a request for a warrant to arrest Lee Jae-yong, the head of the Samsung Group, amid a graft scandal that led to the impeachment of President Park Geun-hye. The decision is likely to come as a major relief to the company and for Lee, who has tried to fill the vacuum in the group's leadership since his father suffered a heart attack in 2014. The probe into the suspect payments made by Samsung and others to Choi Soon-sil, a friend and associate of President Park, continues.  Reuters

• Get Back to Where You Once Belonged

Paul McCartney has filed a federal lawsuit against Sony and its joint venture partner ATV to wrest back ownership of the rights to much of The Beatles song catalogue, whose value has been estimated at around $2 billion. Sony/ATV had until last year owned the rights jointly with the estate of Michael Jackson. McCartney's lawyers cite the 1976 Copyright Act that says that the rights to works made before 1978 must be returned to their creators 56 years after the date of the original copyright; 2018 will be 56 years since Lennon and McCartney first starting writing songs together in 1962. Rolling Stone

Summaries by Geoffrey Smith Geoffrey.smith@fortune.com;

@geoffreytsmith