War and peace

MARKETS

  • Trade: President Trump said the U.S. will impose a 5% tariff on all goods imported from Mexico starting on June 10. The reason? Trump believes Mexico isn’t doing enough to stop Central American migrants from crossing the U.S.-Mexico border.
  • Economy: Q1 GDP grew 3.1% last quarter, per revisions yesterday. That's a tenth of a percent lower than the initial reading but above forecasts.
  • U.S. markets: It’s the last trading day of the month, and who else but bitcoin has been among May’s biggest winners. The crypto is up over 60% this month

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WELLNESS

A CBD-Infused Hearing

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Today, the FDA is holding its first public hearing on how to regulate products with cannabis compound CBD, even if they end up prying it from your mellow, pain-free hands.

Quick refresher: The compound’s full name is cannabidiol, but friends call it CBD...and there are a lot of friends. CBD, which unlike distant cousin THC doesn’t get you high, has become the wellness community’s favorite trend. Some allege it’s a cure-all, applicable to ailments ranging from insomnia to acne to epilepsy.

And where Gwyneth Paltrow evangelists lead, money follows. Cowen estimates the U.S. CBD market could be worth $16 billion by 2025.

So about this hearing...

It’s complicated. Last December, Congress passed the Farm Bill to remove industrial hemp and its compounds (i.e. CBD) from the purview of the Controlled Substances Act, a win for CBD.

But, the FDA has banned CBD in food products ever since it approved GW Pharma’s CBD-derived seizure medication Epidiolex last summer. That's because producers are prohibited from putting FDA-regulated drugs into food.

In reality, though, CBD-infused food and drinks are everywhere. Count how many CBD-infused sodas you see on your lunch break today.

  • Officials have been slow on the enforcement uptake, leaving room for smaller firms to make CBD-infused...everything.
  • Still, most large companies like Pepsi or Coca-Cola have stayed on the sidelines.

What’s on the line today?

Money. New Frontier told NPR over $1 billion in future CBD product sales is largely dependent on the FDA’s judgment.

Starting today, the FDA will work to decide whether CBD should be regulated as a) a dietary supplement like Vitamin C that can be added into food or b) a prescription-required drug. But don’t hold your breath—drafting and implementing a rule could take years.

RIDE-HAILING

Public Uber Isn't so Different From Private Uber

Yesterday, Uber (+2.84% after hours) reported earnings for the first time as a public company. We thought about hosting a tailgate like we did at the IPO, but we had a feeling the mood wouldn’t be as celebratory.

We were...not wrong. Mostly. While Uber’s earnings weren't awful, they showed a company struggling with slowing growth and steep losses.

  • Revenue hit $3.1 billion, up 20% annually and at the top end of Uber’s projections. But sales grew 25% a quarter earlier.
  • Uber lost over $1 billion last quarter, compared to a divestiture-driven profit a year earlier.

Shares have fallen about 12% since Uber’s bruising IPO. In light of a lackluster public debut and lacklusterer first report, CEO Dara Khosrowshahi is focusing on the good: at least Uber’s beating rivals in important markets.

Bottom line: Despite concerns about its spending habits, Uber remains confident that this is the right approach to fend off the competition. “We will not hesitate to invest to defend our market position globally,” CFO Nelson Chai said. Translation: It’s better to be deeply unprofitable than be in last place.

INTERNATIONAL

Let’s Go for a Spin Around the World

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Brazil: The economy shrunk by 0.2% in the first quarter. Know what that means? One more consecutive quarter of negative GDP growth and Brazil’s back in a recession. New president Jair Bolsonaro will need to move quickly to reform an unsustainable pension system.

New Zealand: The budget’s out, and...GDP isn’t the only game in town anymore. As part of what it says is the world's first “wellbeing” budget, the government is evaluating success using metrics other than economic growth. That’s why it’s spending billions on mental health services and child poverty reduction efforts.

Africa: If there can be trade wars, there can be trade peace. The landmark African Continental Free Trade Area (AfCFTA) came into force yesterday. The agreement, which ushers in the largest free trade area in the world, intends to scrap 90% of tariffs to promote lagging intra-Africa trade.

+ Flash poll: Which of these free trade agreements would you name your child?

  • AfCFTA
  • CAFTA-DR
  • AANZFTA
  • USMCA
  • COMESA
  • GAFTA

ENTERTAINMENT

Disney Shoots First, Asks Questions Vader

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Opening today, Disneyland’s Star Wars attraction, Galaxy’s Edge, barely fits in California. To squeeze it into a single newsletter, we have to pick just one question to answer: What is Galaxy’s Edge?

It’s a huge investment. Disney reportedly spent $1 billion to build out each 14-acre Star Wars expansion (another is opening in Orlando later this summer). Set on the planet of Batuu, "it's the most immersive land that we've ever built," Disney’s chairman of parks told CNN.

It’s a store. Disney’s ecosystem works like this: Hook someone on a franchise like Star Wars, then sit back and watch them buy merch. At Galaxy’s Edge, you can shell out $199 for a custom lightsaber or $15 for Dagobah Slug Slinger, a tequila-based cocktail.

It could be very profitable. When it comes to profit growth, Disney’s park division is skywalking over the rest of its segments. Operating income ($4.5 billion in 2018) surged more than 2x in the last five years while the media business wrestles with the streaming age.

QUIZ

Quizimodo

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Incredibel speller. Rarer than rare earths. Goes to Broadway on first dates. It’s the Brew’s weekly news quiz.

1. Which two companies are close to a merger that would make the world’s third-largest automaker?

2. Fill in the blank: Expert climbers are blaming several recent Mount Everest deaths on __________.

3. A fintech startup is close to acquiring the naming rights to this NFL stadium in Los Angeles (it also just raised $500 million). What’s the company’s name? Three points of extra credit available: What’s the company’s full name?
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4. Which of the following stats is not true about Broadway shows last season?

  • Tourists made up 63% of Broadway show attendees.
  • The total box office gross was $1.8 billion, up 10.3%.
  • There were 72 different Broadway shows—38 plays, 29 musicals, and five special events.
  • Five million more people attended Broadway than went to Yankees, Mets, Knicks, Nets, Rangers, Islanders, Giants, and Jets games last season...combined.

5. Facebook users in the Middle East have spent 5% more time on its platforms over the past month. Why?

Answers: 1) Fiat Chrysler Automobiles and Renault 2) Overcrowding 3) SoFi aka Social Finance 4) c. is wrong...there were 38 musicals and 29 plays 5) Ramadan

WHAT ELSE IS BREWING

  • Juul is mulling over plans to open its own U.S. retail shops for adults only, according to the WSJ.
  • FedEx (-0.98%) will begin delivering packages seven days per week starting next year. See what your online shopping addiction is doing?
  • Gannett (+1.57%), publisher of big-time titles like USA Today, has held merger talks with GateHouse Media (+4.65%), per the WSJ.
  • Revolve Group, the online fashion giant that dominated your Insta feed during Coachella, is going public at a $1.2 billion valuation.
  • Hillary and Chelsea Clinton are forming a production company to pursue TV and film projects, Bloomberg reports.

BREAKROOM

Friday Puzzle
In each of the cases below, scramble the letters and then add an X at the end to make a new word.

Example: coven + x = convex

1) real + x =
2) torah + x =
3) compel + x =
4) claim + x =
5) nasty + x =
6) hoboes + x =

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Breakroom Answers


Friday Puzzle
1) Relax 2) Thorax 3) Complex 4) Climax 5) Syntax 6) Shoebox

 

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