Musk vs Media

MARKETS

• North Korea: President Trump abruptly canceled a summit with Kim Jong-un, citing "tremendous anger and open hostility." Stocks finished slightly lower with energy leading the way.
• U.S. house prices: Home values have jumped 8.7% since last April, per Zillow. That's the fastest pace since 2006.

MEDIA

Musk Goes to War with the Media

Brace yourself...but we Musk tell you about a new development. It's a website called "Pravda," and it rates the credibility of journalists and news sources (Morning Brew 10/10). The best part?

It doesn't exist.

Pravda is just another one of Elon Musk's attention-grabbing ideas, fueled largely by another negative report on Tesla. As he put it on Twitter, Tesla (-0.44%) gets a bad rap because "journos are under constant pressure to get max clicks...or get fired."

• Cash flow: In trouble. Tesla's burning through $1 billion a quarter with $3.4 billion in cash at the end of 2017.
• Fundraising: Moody's downgraded Tesla's credit rating in March.
• Production: The Model 3 is still not meeting its production target of 5,000 cars per week.
• Leadership: Its Senior VP of engineering is taking some time off.

And remember, Tesla has big plans for the future: It just granted Musk a $2.6 billion compensation plan, contingent on Tesla's valuation reaching $650 billion. It's currently at $46 billion...

So basically, maybe now's not the best time to get distracted with the media

But we sense a pattern...

• October 2017: After a Guardian report on ex-Tesla employees suing over discrimination, the company went on the offensive: "We are disappointed that The Guardian, a corporation that ironically [does] have a track record of proven discrimination, is displaying a complete lack of journalistic integrity by misrepresenting this matter to generate clicks."
• Earlier this month: Musk rejected an analyst's question during Tesla's earnings call: "Excuse me...next. Boring bonehead questions are not cool. Next?"
• Two days ago:

The Crew's take: Musk has built himself a suite of billion-dollar companies, so he might know what he's doing. BUT...he should probably focus on fixing Tesla's (very real) problems rather than getting into petty fights with journalists.

TECH

Where Did Uber's Self-Driving Car Go Wrong?

*Reader groans* "Another story about Uber?"

Yup, another story about Uber. This time we're covering the aftermath of Uber's self-driving accident in March—the one that killed Elaine Herzberg as she crossed the street at night.

The National Transportation Safety Board (aka the feds' investigative team) finally released its preliminary report.

The findings?

• Yes—Uber's tech did see the woman crossing the street 6 seconds before she was hit.
• Yes—The tech identified 1.3 seconds before the strike that the situation required emergency braking.
• No—the car did not brake. It turned off its emergency braking system to avoid "erratic vehicle behavior."

Hold up, let's put this in reverse:

The tech knew of the danger, and didn't brake? Yup. And it also didn't warn the car operator to brake.

Bottom line: The tech functioned properly, but the overall system had major design flaws. And as of two days ago, Uber closed all operations in Arizona.

+ Food for thought: Who should be liable when a self-driving car gets into an accident? Are the developers responsible? The company? The in-car operator? All of the above?

FINANCE

A Lot of Pain, Little Gain for Deutsche Bank

Germany may be the favorite to win the World Cup this summer (+450), but not even goalkeeper Manuel Neuer can save Deutsche Bank (-4.89%) from painful restructuring.

• Germany's legendary lender is cutting more than 7,000 jobs—a serious chunk of its 97,100 total employees.
• Where's that coming from? Equities sales and trading (25% of jobs will be eliminated).

Change is way overdue: Shares are down about a third this year alone. Now that new CEO Christian Sewing is in charge, he's determined to scale back DB's global (over)reach.

And because the world of European banking is never boring...

Barclays is reportedly exploring a merger with fellow British bank Standard Chartered. Apparently, that's what you do when an activist investor (Sherborne) pressures you to turn around your investment bank.

Could StanChart's strength in Asia, Africa, and the Middle East be a good match for Barclays? Stay tuned.

MEDIA

Netflix Just Passed Disney in Market Cap...for a Few Hours

Here's your latest and greatest media company food chain, as of yesterday's close:

1. Disney ($152.2B)
2. Netflix ($151.8B)
3. Comcast ($145B)
4. Time Warner ($73.5B)
5. CBS ($19.2B)
6. Viacom ($11.2B)

FYI: Every single company on that list is involved in merger negotiations except one. We bet you can guess the odd one out...

REGULATION

GDPR Is Officially Here

RIP your inbox.

By now, you've been flooded with emails from Facebook all the way to the Rolling Stones bugging you about GDPR, the EU's new privacy legislation that becomes enforceable today.

What's GDPR? It's a game-changing law that intends to put European consumers more in control of their data. For example, it allows them to share only the personal info that companies need, not want.

Here's a useful metaphor:

• "A birthday cake company needs your name to put on the birthday cake. If it isn't essential information, you can deny them consent to use that data and you still have to get the service" (thanks, Danny O'Brien).

Quick question: Since this is European regulation, will American businesses be affected?

Yep, you must comply with GDPR if you receive any data from EU citizens...which you very well could be.

+ Dive deeper: What GDPR means for American businesses.

WHAT ELSE IS BREWING

• Gap (-7% after hours) tumbled following its earnings report. One culprit? Old Navy, which saw same-store sales growth slow down to 3% (it increased 8% in fiscal 2017).
• President Trump signed a bill that eased some post-financial crisis banking regulations.
• StumbleUpon will shut down June 30. Wait a sec, StumbleUpon is still around?
• Facebook and Twitter are putting tighter guidelines in place for political ads ahead of the midterm elections.
• The DOJ has opened a criminal probe into Bitcoin price manipulation, per Bloomberg.

BREAKROOM

CAPTION THIS

Our caption: "Hey Bill, you sure you don’t mind if I let this foot fungus air out?”

Think you can beat that? Share your caption here, and we'll post the best one on our Instagram later today.

WHAT THE CREW IS READING
Measure What Matters by John Doerr—Doerr is a legendary venture capitalist who's been around the block a few times (he's on the board at Google). Through a tool called OKRs, Doerr will give you a roadmap on how to set goals and actually accomplish them, in business and in life. A really insightful read.

BUSINESS TRIVIA
Which company's app has the most mobile payments users in the U.S.?

(Answer located at bottom of newsletter)

Breakroom Answers