The Rock's guest of honor

MARKETS

• U.S. markets: Major indexes posted a three-day rally, but futures fell after hours when President Trump had more to say about tariffs...
• International: European stocks finished higher led by gaming firm Ubisoft (up 11%).

INTERNATIONAL

The Man Bringing Hollywood to the Desert

If we asked you to name the most influential leaders in the world, you'd probably rattle off Putin, Trump, Jinping, Merkel.

But add one more to the list: Mohammed bin Salman (MBS), the 32-year-old Crown Prince of Saudi Arabia.

Hey, don't take our word for it. Ask Jeff Bezos, Bill Gates, Tim Cook, Michael Bloomberg, Oprah Winfrey, Richard Branson...and Dwayne Johnson. They're just a fraction of the business moguls MBS has met with during a three-week U.S. tour.

And while MBS didn't hit the squat rack with the Rock, he did come prepared with an important agenda: encourage American firms to invest in Saudi Arabia.

Vision 2030...heard of it?

It's MBS' ambitious plan to transform Saudi Arabia from an oil-dependent, ultra-conservative nation to one with a more diversified economy and liberal outlook.

So how does one begin to transform an economy? By wining and dining American innovators. In one initiative, he's looking to partner with Amazon and Alphabet to build data centers.

But while tech is important to Vision 2030, MBS is learning one, quintessentially American lesson:

There's no business like show business

Shows, resorts, concerts, films, you name it—MBS wants it. In just one Hollywood week, he pitched Disney on a theme park, discussed partnerships with Netflix, and ate dinner with Rupert Murdoch.

And there's already some traction. AMC will open the first movie theater in Saudi Arabia in 35 years, and a debut Cirque du Soleil performance isn't too far behind. Remember, this is a country where music is still rarely played in public spaces.

Which is why MBS still has a long way to go to execute his vision. But with plenty of charm and a rolodex to match, he's one to keep your eye on.

Be in the know: MBS has plenty of critics, thanks to brutal military intervention in Yemen and a "corruption" purge that detained political rivals. Here's a tough but fair interview with MBS if you're interested in learning more.

INVESTING

It’s an Investor Exodus at Ackman’s Pershing Square

Investors are leaving Bill Ackman's Pershing Square hedge fund without even saying goodbye (WSJ).

After three years of "particularly unsatisfactory" performance (his words...not ours), investors have withdrawn about 66% of all the capital they could have removed. And the damage is severe: total AUM is at $8.2 billion, down from $18.3 billion in 2015.

If that wasn't bad enough...JPMorgan said it would stop writing letters of recommendation for Ackman to its clients (even though he is a self-starter with a strong work ethic).

What happened at Pershing Square?

Ackman lost $4 billion betting on Valeant Pharmaceuticals, and called Carl Icahn his daddy after a failed $1 billion Herbalife short. He's down 8.6% already this year.

The path forward? Slim down, move to a smaller HQ, and have Ackman focus on...you know...managing money.

Oh, and pray to the burrito gods. Pershing has a ~10% stake riding on a Chipotle comeback.

GROCERY

Instacart Fills Its Grocery Bags with $150 Million

While its relationship status with Whole Foods remains uncertain, grocery delivery service Instacart hasn't been afraid to shop around. It just raised another $150 million, bringing its total Series E to $350 million at a $4.35 billion valuation (Axios).

That money should go towards winning (or keeping) strategic partnerships with other grocers. Instacart already works with Albertsons, Kroger, Costco, and Publix. And it recently locked in a deal with Sam's Club, Walmart's retail wholesaler.

Zoom out: The new round is a big W for the six-year-old startup. If Sam's is impressed with the service, Walmart—the largest grocer in the U.S.—could get in line. Rumor has it, it already is.

Food for thought: Instacart and Amazon now offer competing delivery services at Whole Foods. Who's going to deliver that last $9 cantaloupe?

PHARMA

AbbVie Marks Its Territory on Humira

Pharma firm AbbVie (-0.79%) just wheeled and dealed its way to a BIG win: its competitor, Samsung Bioepis, agreed to not sell a knock-off version of AbbVie's Humira in the U.S. until 2023.

Don't know Humira? It's the world's top-selling prescription med, treating ailments like rheumatoid arthritis, psoriasis, and Crohn's. And it accounts for roughly two-thirds of AbbVie's top line. But who's counting...

AbbVie is. And it's suing. Pretty much any firm looking to sell a biosimilar version of Humira has been prescribed a lawsuit—a tactic against patent infringement that's paid off nicely. Amgen, another AbbVie competitor, also can't sell its cheaper version of Humira in the U.S. until 2023.

Bottom line: AbbVie now has a tighter monopoly on U.S. joints than Martha Stewart and Snoop Dogg. Which means prices could rise...more so than they already have...

WHAT ELSE IS BREWING

• President Trump is really ramping up the rhetoric on China, proposing an additional $100 billion in tariffs.
• Delta (+0.65%) is the latest in a long line of companies that have reported data breaches.
• Sheryl Sandberg sounded remorseful over Facebook's (+2.73%) recent crisis in an interview with Bloomberg.
• BlackRock announced new investing strategies and products that exclude firearms manufacturers and retailers.
• Turns out, investing may bring out the doves in us. A Stanford experiment showed that when Israelis invest in stocks, they are more supportive of peace negotiations.
• The redesigned Mac Pro is coming in 2019.

WATER COOLER

TAKING INVENTORY

Who doesn't love a list on Friday?

It's hard to top Buffett's annual letter to Berkshire shareholders. But if one person comes close, it's JPMorgan's CEO, Jamie Dimon. This year's letter came in at a whopping 46 pages. He covered JPMorgan's performance and a mixtape of macro issues.

Here are a few soundbites:

1. On recent market volatility: "The biggest negative effect of volatile markets is that it can create market panic, which could start to slow the growth of the real economy."
2. On the recent tax overhaul: "Our previous tax code was increasingly uncompetitive, overly complex, and loaded with special interest provisions that created winners and losers. The good news is that the recent changes in the U.S. tax system have many of the key ingredients to fuel economic expansion."
3. On trade relations: Although he agrees with Trump's stance on China, Dimon said, "Retreating from the world is not the solution, nor is burning down the current system and starting anew."
4. On the $9 trillion in ETFs: "It is reasonable to worry about what happens if these funds went into large liquidation."
5. On immigration: "We need to resolve immigration—it is tearing apart our body politic and damaging our economy. Immigration reform is important both morally and economically. Immigration has been a critical part of America's economic and cultural vitality."

THE BREAKROOM

WHAT THE CREW IS READING
New Power by Jeremy Heimans and Henry Timms. This book really helped the Crew get a handle on the rapidly-changing world we live in. The authors discuss the idea of "new power," and explain how companies and movements (like Airbnb, Uber, and #MeToo) are successfully leveraging it in our interconnected world. And you can too.

TALK LIKE THE CREW
Underwriting—During an IPO, underwriting is when investment banks assist a company in selling its shares on the public market, thus helping the company raise money. Banks use their network of institutional investors to gauge demand for shares and set a fair price for the stock. Shares that don't get sold to these investors are typically purchased by the investment banks. For assuming this risk, banks get paid a hefty fee. (Note: Spotify skipped this process when it direct listed).

BRAIN TEASER
Four friends, Josh, John, Kim, and Amber, went to a party. Each of them had different color eyes and hair. The eye colors were blue, green, brown, and hazel. The hair colors were blonde, red, brown, and black. Match the person to their correct hair color and eye color.

1. The girls do not have green eyes.
2. Josh doesn't have blonde hair, but John's is red.
3. The person who has brown hair and hazel eyes sat next to the blonde with brown eyes.
4. John's eyes are not brown.
5. Amber's hair is black.

(Answer located at bottom of newsletter)

Breakroom Answers