Don't mess with the Geek Squad

MARKETS

• U.S. markets: Well...it wasn't a good day. Fears of a trade war sent the Dow down 700 points with all 30 stocks falling. Nine out of 11 S&P sectors ended lower. The VIX rose 20% during midday trading.
• International: Euro stocks fell on fears of a trade war as well. The Bank of England decided to keep interest rates unchanged.

INTERNATIONAL

Huawei Takes Another Hit as Best Buy Stops Selling Phones

After President Trump slapped China with up to $60 billion in tariffs, Best Buy (-1.74%) said, 'we want in.' The electronics retailer will no longer sell phones from China's biggest smartphone maker, Huawei.

But Best Buy's move isn't the early rumblings of a potential trade war. It's likely based on an entirely separate issue the U.S. has with our Far East "friend": Huawei—the largest telecom equipment manufacturer in the world—could be a conduit for Chinese government cybercrime and espionage.

Bold claim, U.S. Got any proof?

Well, no...not exactly. But, these concerns tie all the way back to Huawei's 1987 founding by Ren Zhengfei, an engineer in the Chinese communist army. And during his first few years at Huawei, he got ahead by stealing and reverse engineering competitors' products.

In 2004, an undercover Huawei employee was even caught diagramming and photographing another company's circuit boards. ‘Sir what are you doing?' ‘Oh sorry thought this was the bathroom...'

But U.S. scrutiny of Huawei ramped up around 2012

Congress issued a report sounding the alarm: Huawei is too closely tied to the Chinese government and could be coerced to use its massive telecom ecosystem to spy on and disable communication networks.

The U.S. acted on those suspicions when it banned Huawei equipment from U.S. nuclear weapon infrastructure in December.

Then a few more blows:

* AT&T backed out of a deal to sell Huawei phones.
* A National Security Council official proposed the U.S. develop 5G infrastructure to beat out Huawei in the next-gen tech.
* The White House blocked the Broadcom-Qualcomm deal due to similar 5G concerns.

Bottom line: At face value, Huawei is clean. But businesses like Best Buy might remain skeptical when the U.S. government and others including Canada, Australia, and South Korea all question Huawei's intentions.

ECONOMY

Speaking of the New Tariff Announcement

‘Why do they keep hitting us with tariffs? Is it something I said?' — Chinese President Xi Jinping to his therapist.

Within the next 15 days, U.S. officials will present a plan to tax up to $60 billion worth of Chinese tech imports at 25%. That'll span industries from robotics to aerospace to maritime to railways. And with any luck, it'll cut down the U.S.' $375 billion trade deficit with China.

What the bulls say: This is the hard stance we've been hesitant to take. National security is at stake as China steals IP on its quest to become the world's biggest economy.

What the bears say: Companies' earnings are in for a hit. And consumers? Get ready for higher prices on your household items.

What the Crew says: Keep an eye on this story—a trade war could destabilize the Fed's strong outlook on the economy and hurt the stock market (like it did yesterday).

FINANCE

Citigroup Restricts Clients' Gun Sales

A few weeks ago, we wondered whether banks would use their financial muscle to move the needle in the gun debate. Citigroup (-4.11%) didn't take long to respond, announcing it'll require new business customers to follow guidelines around the sale of firearms.

According to CEO Michael Corbat, the move was "designed to respect the rights of responsible gun owners while helping to keep firearms out of the wrong hands."

Who's included? A pretty big group. Small businesses, commercial and institutional clients, and credit card partners.

What they can't do:

* Sell bump stocks or high-capacity magazines
* Sell to people who haven't passed a background check or are younger than 21

Of course, some retailers—Dick's, Kroger, and Walmart—are already taking similar measures. But with this announcement, Citigroup becomes the first major financial institution to use its business relationships to make sure assault-style guns don't fall into the wrong hands.

The big question: Will other banks follow?

Elsewhere in guns: YouTube is putting tighter restrictions on videos promoting firearms.

INVESTING

Bill Ackman Exits Nike with a Nice Payday

It's your classic riches to riches story: billionaire hedge fund manager Bill Ackman cashed out of his stake in Nike, making a quick $100 million in just six months.

Ackman's firm Pershing Square was in desperate need of a W. It lost $4 billion from a failed investment in Valeant Pharmaceuticals, not to mention its famous $1 billion short of Herbalife that was also a disaster.

But Nike turned out to be a great bet

It just beat earnings and revenue targets on strong international growth...though it isn't 100% in the clear:

* North American sales continue to be a problem. This quarter, they fell 4%.
* The newly announced tariffs on Chinese goods could hurt the footwear industry.
* Last week, two senior executives (including its future CEO) left the company due to complaints of inappropriate workplace behavior.

WHAT ELSE IS BREWING

• President Trump will exempt the EU and four other allies from the steel and aluminum tariffs.
• The fatality caused by Uber's self-driving car supposedly could have been avoided by the human driver.
• Read the arguments from the opening session of the AT&T/DOJ trial.
• Byron Allen's Entertainment Studios is acquiring the Weather Channel for around $300 million.
• Instagram is switching up its algorithm to favor newer posts after user complaints.
• In the midst of its liquidation, Toys 'R' Us founder Charles Lazarus has died.
• Everyone ready for Dropbox's IPO today?

WATER COOLER

TAKING INVENTORY

What's better than a list to take you into the weekend?

Airbnb. Dropbox. Reddit. Stripe.

Just a few moderately successful companies backed by Y Combinator, the legendary Silicon Valley accelerator. YC provides seed-stage funding to some of the world's most promising startups, and then releases them into the wild after three months of invaluable advice and connections.

This week, 141 more startups joined the alumni network. Over two days of graduation (known as Demo Day), they presented to VCs and celebrated by tossing their original pitch decks in the air.

Here are our favorite startups from YC's winter 2018 class:

1. OpenSea
A peer-to-peer marketplace to buy and sell crypto goods, from CryptoKitties to EtherTulips.

2. Avro Life Science
It’s on a mission to revolutionize drug delivery by replacing pills with skin patches. Avro is on track for FDA approval by 2019.

3. Shone
Developed proprietary tech to make cargo ships autonomous. As with trucking, ocean freight is a sector poised for disruption.

4. California Dreamin’
A cannabis-infused sparkling beverage. The legal cannabis market in North America is already nearing $10 billion, and growing…

5. Voicery
Created a bank of ultra-realistic computer voices that sound just like humans. Think you can tell the difference? Take their quiz.

THE BREAKROOM

WHAT THE CREW IS READING

The Elephant in the Brain: Hidden Motives in Everyday Life by Kevin Simler and Robin Hanson. Have you ever wondered why you act the way you do? What you say? How you say it? Well, whatever you thought...this book will flip that on its head. An engaging, often mind-blowing read about our selfish impulses. Highly recommended.

FONT CHANGE ALERT

Netflix developed its own typeface it says will save "millions" of dollars.

BRAIN TEASER

Arrange eight eights in an equation so they add up to one thousand. (Broad question...open to your interpretation.)

(Answer located at bottom of newsletter)

Breakroom Answers

888 + 88 + 8 + 8 + 8 = 1000