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MARKETS

• U.S. markets: Tech weighed on the markets with all three indexes finishing lower.
• Commodities: Holy oil. Brent Crude popped above $80 a barrel—a number we haven't seen in four years.

GROCERY

In the Online Supermarket World, Love Is in the Air

We get it—the royal wedding is grabbing all the headlines. But there's another marriage making waves: Kroger agreed to a major partnership with UK online grocer Ocado that'll give food e-commerce a good shakeup.

Will the lovely couple please recite its vows?

• "I, Kroger, one of the largest U.S. grocers, will take a 5% stake in Ocado. That's a value of about $247 million."
• "I, Ocado, a pioneer and global leader in online grocery, will share my first-class technology exclusively with Kroger in the U.S. Together, we will start developing 20 warehouses in the next three years."

Now, please sign the appropriate documents. Mazel Tov!

This partnership vaults Kroger into the e-commerce major leagues
And it needed to get there yesterday, because online grocery is just about as competitive as it gets.

The entire space was thrown for a loop after Amazon bought Whole Foods last summer, and Walmart is also getting its act together. In its Q1 earnings report yesterday, Walmart predicted its food delivery service will reach 40% of the U.S. population in the next six months.

So can Ocado, a company you've never heard of, really help Kroger compete?

Possibly. If the supermarket of the future looks anything like Ocado's current operation...

• An army of robots zoom across the warehouse floor, traveling up to 9 mph and communicating with each other over 4G.
• These bots pick and pack as much as 65,000 orders a week. Ocado brought in $1.9 billion in revenue in fiscal 2017, growing its active customers over 11%.

So here's the path forward for Kroger: Leverage Ocado's automation and AI to increase user adoption and hack away at Amazon (18%) and Walmart's (9%) market share in online grocery.

Buckle up: This baby's just getting started. Online orders accounted for only 1.5% of U.S. grocery sales in 2017.

MUSIC

Introducing YouTube Music, Spotify’s Worst Nightmare

Spotify is now playing: "Say It Ain't So" by Weezer. But YouTube Music, YouTube's new premium offering, has "God's Plan" blasting on repeat. And for just $9.99 a month you can listen ad free.

Bottom line: The subscription music service space is getting crowded. And now industry leader Spotify (which just IPO'd), is wrestling with Apple Music and YouTube Music for paid subscribers.

+ YouTube Red, its video subscription service, is getting a makeover: it'll now be called YouTube Premium, include YouTube Music, and charge new users $11.99 month.

TRADE

You Don’t Think...the U.S. and China Are...Wait, Is It True?

China: *Walks into dimly lit room* "I'm sorry about all those things I said."

U.S.: "Me too babe, me too. It never had to be like this."

China: "So let's do something about it." *leans in for kiss*

[End scene]

Woah, did you feel that too? Something's in the air with the U.S. and China this week after...

1. President Trump tweeted Sunday that he'd work with the Chinese government to get ZTE back up and running. The smartphone maker had to shut down its main operations after the U.S. cut it off from American suppliers last month.
2. Yesterday, China approved the $18 billion acquisition of Toshiba's memory-chip business—a deal led by U.S. strongmen like Bain Capital and Apple.

What's it mean? Hard to say. As the U.S. cracks down on every Chinese tech company it can find, everyone figured China would swing back by rejecting the Toshiba deal.

Or maybe it's China saying, "We won't give you trouble, if you don't give us trouble." Either way, there's a bit of sunshine peering through the clouds this week.

+ What a load off for Toshiba. The tech giant has been fighting for its life and will use this cash to pay off plenty of IOUs.

+ Maybe it was all a dream: Trump seemed doubtful about U.S.-China negotiations late yesterday.

FRIDAY QUOTES

They Said It

"The spread of [credit default swaps] without proper limits has encouraged the growth of a finance of chance, and of gambling on the failure of others, which is unacceptable from the ethical point of view."

—The Vatican released a 15-page document attacking global capitalism, calling for greater regulation of the financial system.

"The great inconvenience we placed upon our customers was truly inexcusable."

—Japan Railways is asking forgiveness for this mistake: on May 11, a conductor departed a train station a whole 25 seconds early. Can you imagine the chaos?

TECH

Google’s Selfish Ledger

Ever wonder what the brightest minds at Google envision for the future? Well, thanks to a 9-minute video obtained by The Verge, we might finally have an idea. The 2016 short film, "The Selfish Ledger," walks you through how collecting user data might lead to a utopian world, free of disease and poverty.

How would it work? Imagine if Google had so much user data...

• It could tell you what decisions to make (what food to buy, what jobs to take).
• It could learn from this data, passing these insights to future generations.

It all sounds great. But every utopia has a dystopian twist...

• Google would need access to everything. Privacy? Forget about it.
• Who wants to live in a world where Google makes every decision for you?

Black Mirror, 1984, chills...yup, you'll feel all those vibes and more.

WHAT ELSE IS BREWING

• CBS (-4.12%) got turned down in its restraining order request against Shari Redstone.
• Walmart (-1.90%) found its legs in Q1, with e-commerce revenue jumping 33%.
• BJ's Wholesale Club is filing for an IPO. Come get your shares in bulk.
• Wells Fargo (-1.49%) update: some employees were caught altering business documents.
• PayPal (+1.76%) is acquiring fintech company iZettle for $2.2 billion. Your move, Square.
• Remington, the gun manufacturer, has emerged from bankruptcy ready to take on the world.

BREAKROOM

CAPTION CONTEST

Our caption: *Pulls up Ask Jeeves*

"How to start a $750 billion company?"

Think you can beat that?

WHAT THE CREW IS READING
Bad Blood by John Carreyrou—Remember Theranos? It was a multi-billion dollar biotech startup founded by Elizabeth Holmes—a Stanford dropout and the "next Steve Jobs.” Here’s the catch: it turned out to be a giant scam. The book was written by the WSJ journalist who originally broke the story.

GUESS THE COMPANY
Market Cap: $215 billion

Lives in: The Dow

Industry: Consumer Retail

Co-Founder: The current owner of the Atlanta Falcons

Last seen: Flopping on Q1 sales expectations.

(Answer located at bottom of newsletter)

Breakroom Answers