A sixth arm

MARKETS

• U.S. markets: The tech-heavy Nasdaq posted its first eight-day winning streak since October as Amazon and Apple led the pack.
• Volatility: About 48% of investors say stock market volatility makes it easier to turn a profit, according to AICPA.

SPACE

The White House Shoots for the Stars

*Cues up Neil deGrasse Tyson audiobook* We're going interstellar, and we're starting in Washington.

Yesterday, VP Mike Pence outlined the Trump administration's plans to institute a Space Force as the sixth arm of the U.S. military by 2020. And he's asking for $8 billion from Congress to get it up and running.

• "It is not enough to merely have an American presence in space—we must have American dominance in space," Pence said.

Who wins, aside from Elon Musk's future Mars colony?

Well, the private sector

The space industry is currently worth ~$350 billion, but Morgan Stanley forecasts it'll undergo "significant development" and could become a $1 trillion industry.

Analysts have also whipped up the "Space 20"—companies that'll benefit most from Washington's skyward gaze. On the list?

• The usual tech suspects like Apple, Alphabet, and Microsoft
• Legacy aerospace players (many of whom already contract with the government) like Boeing, Lockheed Martin, and Northrop Grumman. And how can we not mention SpaceX?

So what'll they do? Develop reusable rocket tech, manage a major increase in wireless data demand, sell investors on the merits of space, and help build space-based military capabilities (aka the Space Force).

But is it legal under international law?

It's messy. The Outer Space Treaty of 1967 says no single country can station nuclear weapons or weapons of mass destruction among the stars.

• It gets even trickier on "celestial bodies" like Mars...the Treaty prohibits parties from building military bases, conducting weapons tests, and testing military maneuvers. Sorry if you're hoping for an Independence Day do-over.

What would it look like?

Much of the nitty-gritty remains to be seen, but Congress received a report on the Space Force yesterday. And as far as aesthetics are concerned (that's important in space, just ask Bowie), Bloomberg asked leading designers to submit potential logos. Pick your favorite:

What'll it take?

Only Congress can make a new military branch (FYI, the last time they did was in 1947 with the creation of the Air Force).

But it sure seems like the White House is excited.

REAL ESTATE

WeWork’s Rapid Growth Hurts Just a Little

WeWork is getting $1 billion in debt from (drumroll please) SoftBank, Silicon Valley's favorite piggy bank.

The major influx comes as revenues and membership grew in a major way in Q2...but then again, so did losses.

• Revenue was $422 million, up 113% from a year earlier.
• $368 million of WeWork's sales came from membership fees (the number of memberships more than doubled over the past year).

But on the bottom line, WeWork tallied a net loss of $723 million for the first half of 2018 (compared to a loss of $154 million during the same period last year).

• Some major cost drivers: Growing expenses for sales and marketing and expanding into new regions.

So back to that big billion: By the end of this month, SoftBank will add another nine zeroes to the $4.4 billion it already invested into WeWork last summer. Then, SoftBank may participate in (but not lead) another $1 billion round...that is if WeWork doesn't IPO before that.

TECH

Phone Shopping With Samsung

In more unwelcome news for jean pockets, the world's largest smartphone maker announced the new, even bigger Galaxy Note 9 smartphone yesterday. And Samsung's really hoping this phone catches fire (figuratively speaking, this time).

Last quarter, operating profit for its mobile business fell 34%. You can thank 1) heated competition from Chinese rivals Huawei and Xiaomi 2) a general lack of innovation and new features and 3) flattening global smartphone demand.

So what's new in the Galaxy Note 9?

• It's expensive: It starts at $999 and tops out above iPhone X prices.
• It has a longer battery life and more memory.
• It's got a new Bluetooth-enabled S Pen stylus: Use it as a remote control to take selfies.
• It's got Fortnite. Galaxy owners will be the first to access the beta version of the popular game for Android.

Samsung didn't stop there, though, announcing more new products: The Galaxy Home smart speaker (Alexa, meet Bixby) and the Galaxy Watch (sound familiar?).

M&A

Breaking Up Isn’t That Hard to Do

After a bad breakup, we recommend a pint of Ben & Jerry's Phish Food, a good cry, and binging The Office. Tribune Media? It prefers a $1 billion lawsuit.

After facing significant pushback from the FCC, Tribune (+2.85%) said yesterday that it's terminating a $3.9 billion merger with Sinclair Broadcast Group (+2.58%).

• Remember: If conservative broadcaster Sinclair had successfully snatched up Tribune's local TV operations, it would have given Sinclair a station in ~59% of U.S. markets.

When the deal was announced in May 2017, most thought it a sure shot, so long as Sinclair divested some stations to appease antitrust regulators. No such luck, Tribune says.

And the fallout isn't pretty. Tribune is seeking $1 billion in damages over the failed merger.

• Tribune: "Sinclair's entire course of conduct has been in blatant violation of the Merger Agreement and, but for Sinclair's actions, the transaction could have closed long ago."

+ Breakup season: Rite Aid and Albertsons also decided to call off their merger (worth $24 billion), just one day ahead of a shareholder vote. Makes sense—some of Rite Aid's biggest investors planned to vote against the deal. Hope they can stay friends.

AUTO

Elon Musk’s Friends in High Places

Yesterday, we asked you who you thought could be funding Elon Musk's bid to take Tesla private. Tesla stock sank nearly 5% yesterday, but you? Well...you did not let us down.

Some of the most popular answers? Jeff Bezos, Warren Buffett, aliens, and SoftBank. And plenty of you bet on Tony Stark and Bruce Wayne getting into private equity.

Some entertaining answers...

• Definitely not MoviePass."
• "The Illuminati...obviously. With assistance from the Spirit of Harambe."
• "After faking his death, Steve Jobs has decided to bankroll Elon Musk for being a dreamer making things into reality, just as he did."

But the Brew Crew's favorite, with points for creativity:

• "Where does Elon Musk live? Los Angeles. Who just made a high-profile move to Los Angeles? That's right, Lebron James. If you rearrange the letters in ‘Lebron,' you get ‘Elon BR' AKA Elon's BankRoller. The Warriors may still win the NBA finals, but the Lakers will be able to drive to Oakland to watch in some fancy new Model 3s."

Well played.

QUIZ

The Brew's Weekly News Quiz

It's our favorite time of the week. Put away your notes, sharpen your pencils, and good luck!

1. Which two countries are locked in a geopolitical spat over the arrest of women's rights activists?

2. Name the company: My main product costs $1,995. I just raised $550 million at a $4.15 billion valuation. My CEO says despite what you might think, I'm a media company "akin to Netflix."

3. Who is this person and what did she announce this week?

4. Complete the Elon Musk tweet: "Am considering taking Tesla private at $420. _________."

5. The Turkish currency has been in the news recently, as its value continues to fall. What's it called?

a) Dinar b) Rial c) Pound d) Lira

6. Must answer in Jeopardy-style: In 2012, Japanese entrepreneur Takanobu Nishimoto started an online platform to rent out these.

7. Speed Round: Gather everyone who's currently around you. Set your timer to 60 seconds. Then, in honor of Casper opening 200 physical stores over three years, write down as many direct-to-consumer companies as you can before time runs out. The winner gets to choose the happy hour spot.

Answers: 1) Canada and Saudi Arabia 2) Peloton 3) PepsiCo CEO Indra Nooyi will be stepping down 4) "Funding secured" 5) Lira 6) What is middle-aged men? 7) You're on your own

WHAT ELSE IS BREWING

• Campbell Soup (+0.71%) is facing pressure from activist investor Dan Loeb and his hedge fund, Third Point, to sell its business.
• Facebook (-1.13%) will ban sites that share digital blueprints for 3D-printed guns from its platform, per Buzzfeed.
• Walmart (-0.58%) and JD.com invested $500 million in Chinese online delivery company Dada-JD Daojia.
• Sumner Redstone's estate planning documents will make it difficult for his heirs to sell off the family's controlling stakes in CBS (+0.77%) and Viacom (+5.37%). BTW, Viacom reported solid earnings with help from the latest "Mission Impossible."
• Amazon (+0.64%) is planning to open a primary care clinic at its Seattle HQ to test the waters in on-site healthcare.

BREAKROOM

LET US PLAN YOUR WEEKEND

• Read: Crashed: How a Decade of Financial Crises Changed the World by acclaimed historian Adam Tooze. This book could become the definitive account of the 2008 crisis and its aftermath.
• Listen: The podcast episode that's going around the Brew office? Preet Bharara's talk with investor Bill Browder about Russia. Even though it's from 2017, you'll be captivated.
• Cook: Black bean salad with corn, red peppers & avocado with lime-cilantro vinaigrette.

BRAIN TEASER
Via Will Shortz: Name an animal in 9 letters. It has two words in its name. Drop the consecutive letters U-R, and the result will name a major U.S. city in 7 letters. What is it?

(Answer located at bottom of newsletter)

Breakroom Answers