US defense leaders said yesterday that the Chinese balloon they shot down was a high-tech spying machine likely capable of collecting communications.

And it’s not the only one of its kind: The spy balloon was part of a massive balloon armada operated by the Chinese military that has snooped on other countries from ultra-high altitudes, according to US officials.

• Chinese surveillance balloons have floated over more than 40 countries across five continents, a senior administration official said, including Japan, India, the Phillippines, and notably, Taiwan.
• In the US, at least five Chinese spy balloons were observed during the Trump and Biden administrations (but the three balloons detected during Trump’s tenure were initially deemed unidentified aerial phenomena).

Not your average balloon

While China maintains that the balloon was intended for weather research, the US has shot back: Would a weather balloon really need large solar panels to power multiple intelligence collection sensors? Probably not, which has led officials to determine that the balloon was “clearly for intelligence surveillance.”

The US learned all this by dispatching U-2 surveillance planes to do their own spying on the spy balloon as it floated across the country last week. And they’re already confident that the balloon’s manufacturer has a direct business relationship with the Chinese military.

China is betting big on balloons

Kind of like what Microsoft is doing with Bing right now, the Chinese military has been infusing archaic technology with new capabilities. While balloons have been around much longer than satellites, they maintain a competitive edge in several areas, and Chinese scientists have been working on improving their durability and their ability to evade tracking.

Big picture: China’s ballooning investments show the rising importance of “near space” to 21st century militaries. Near space, which lies between 12 miles and 60 miles above the Earth’s surface, is the unclaimed in-between layer of the atmosphere above the flight path of commercial airlines but below satellites.—NF

The latest on the earthquake: The death toll from Monday’s quakes in Turkey and Syria rose above 20,000 people as hopes of finding survivors amid the rubble dwindled. It is now the world’s deadliest earthquake disaster since the 2011 quake and ensuing tsunami in Japan. A significant international relief effort is underway: A UN aid convoy entered northwest Syria and the World Bank has offered $1.78 billion in assistance.

US cracks down on crypto staking. In a first-of-its-kind settlement with the SEC, the crypto exchange Kraken will stop offering crypto staking services in the US. The regulatory crackdown sent a chill across the crypto industry, since staking (crypto’s version of a high-yield savings account, as CoinDesk explains it) is a growing source of revenue for crypto platforms. Shares of Coinbase, the largest crypto exchange in the US, dropped the most since July on the news.

The Disney board gets its happily ever after. Nelson Peltz, the activist investor and head of Trian Fund Management, called a cease-fire yesterday after a monthlong proxy fight with Disney. Peltz said he was happy with the restructuring plan CEO Bob Iger announced on Wednesday and will no longer try to nab a seat on the board. Along with that restructuring plan, Disney said that Toy Story, Frozen, and Zootopia will all get more sequels in an effort to boost the company’s streaming numbers.

Here are three letters you probably haven’t read in the Brew in a minute: IPO.

That’s because the number of public listings in 2022 hit its lowest level since 2016 amid the stock market rout, dropping from 1,035 in 2021 to just 181.

But with stocks staging a comeback in early 2023, companies are rejoining the lineup. In fact, this week was the busiest week for IPOs since October. It was highlighted by solar energy firm Nextracker, which became the biggest public offering in four months yesterday. It raised $638 million and sold about 15% more shares than anticipated, per CNBC, and other renewable energy firms plan to follow its lead into the public markets.

Also making reservations at the IPO table:

• Restaurant companies, including the parent companies of Fogo de Chão, Panera, and Cava, may go public before midyear, per the WSJ.
• Chinese companies, which had pulled back from listing in the US last year due to geopolitical tensions, are also plotting their return. Several of them listed on the NYSE this week.

And that’s just the preview for the first half of the year. After the halftime show, heavy hitters including Instacart, Stripe, Epic Games, and Fanatics are all considering IPOs.—JW

It seems like Amazon fantasied itself out with The Rings of Power, because the studio’s next major release is based on a true story about contracts and shoes. The studio is making a 22W-sized bet on Air, a drama about the genesis of Nike’s partnership with Michael Jordan. The trailer dropped yesterday.

The film, which stars Matt Damon, Ben Affleck, and Viola Davis, centers around former Nike exec Sonny Vaccaro (Damon) and his pursuit of a partnership with rookie Michael Jordan—a deal that [spoiler ahead] shot the company to stratospheric levels. Amazon is counting on this heartwarming drama about a licensing deal to do similar things for its studio.

Amazon’s putting a ton of muscle behind the effort, too. It bought a $7+ million slot to air the trailer during Sunday’s Super Bowl, and it’s planning a major theatrical release: Air will be shown on 3,000+ movie theater screens domestically for a release window comparable to films from major studios that do not go directly to streaming (for context, Netflix released Glass Onion on ~600 screens for just one week).

Them apples: The film, which debuts April 5, marks the first time Affleck has directed Damon. And it’s the pair’s first release from their new production company, Artists Equity, which aims to share more profits with actors and crew.—MK

Stat: In a nail-biter not seen since the Memorial Day flip cup tournament of ’09, spirit supplier sales accounted for 42.1% of the US beverage alcohol market in 2022, compared to 41.9% for beer. Why is that a big deal? Because it’s the first time that spirits boasted a larger market share in the US than beer. This regime change was a long time coming: Spirits have been gaining market share for 13 straight years, and last year’s growth was boosted by soaring sales for tequila/mezcal and canned cocktails.

Quote: “It’s going to be a celebration of my catalog in the best way that we could have put it together.”

Rihanna discussed her upcoming Super Bowl halftime show and first live performance in seven years at a press event yesterday. A new mom, Rihanna said she was initially worried she would regret deciding to perform, but now she’s just excited for the “challenge of it all.” Hopefully that challenge was extending “Pon de Replay” to last the whole 13-minute performance.

Read: Taliban fighters who’ve moved to Kabul talk about their experiences in the big city. (Afghanistan Analysts Network)

Getting a 5/5 on the Brew’s Weekly News Quiz has been compared to just letting your plants die.

It’s that satisfying. Ace the quiz.

YouTube gem: This might be the tiniest bird you’ve ever seen.

Places not to travel: Fodor’s No List 2023.

Ranking college towns: Here are the collegiest college towns in every state.

Film watch: The trailer for Paint shows Owen Wilson playing a Bob Ross-esque TV painter.

Grab coffee: Have the smoothest morning cup of coffee straight from your fridge. With Wandering Bear, you can get cold brew on tap in 6 tasty flavors.*

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Picdoku: What happens when you take a sudoku puzzle and substitute goofy symbols for the intimidating numbers? You get Picdoku. Try it here.

Friday puzzle

Point Nemo is the name given to the point on the Earth’s surface that is the farthest from any other body of land. When you’re at Point Nemo, which is in the middle of the Pacific Ocean, where are the nearest humans most likely to be?

Do you get a paycheck and then a week later wonder what happened to it? Money with Katie will help you create an intentional spending (and saving) plan that actually works with her on-demand online master class, Budget Like a Millionaire. Learn more here.

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