Morning Brew - ☕️ Guilty

What’s next after Trump’s felony convictions…
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May 31, 2024 View Online | Sign Up | Shop

Morning Brew

Fidelity Investments

Good morning. R-E-S-P-E-C-T to Bruhat Soma, who was the champion of last night’s Scripps National Spelling Bee. Soma, a 12-year-old from Tampa, won the trophy after the Spelling Bee’s version of a tiebreaker—a “spell-off”—where he correctly spelled 29 words in 90 seconds, including stumpers like heautophany and nachschläge.

Merriam-Webster, lock this kid into an NIL deal before he gets scooped up by Dictionary.com.

—Adam Epstein, Cassandra Cassidy, Matty Merritt, Neal Freyman

MARKETS

Nasdaq

16,737.08

S&P

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Dow

38,111.48

10-Year

4.554%

Bitcoin

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Foot Locker

$25.89

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*Stock data as of market close, cryptocurrency data as of 5:00pm ET. Here's what these numbers mean.

  • Markets: Stocks slid yesterday after investors were disappointed by underwhelming earnings reports. But Foot Locker said not so fast. The shoe store that still makes its employees cosplay as referees surged after it said it’s seeing higher foot traffic after remodeling several locations.
 

POLITICS

Trump found guilty on all 34 counts

Donald Trump after his guilty convictions Steven Hirsch/Getty Images

Donald Trump can still run for president, but he might not be allowed to vote. The former president and presumptive 2024 Republican nominee was convicted of all 34 charges of falsifying business records by a Manhattan jury in his criminal hush money trial yesterday. The verdicts make Trump the first former commander-in-chief to be a convicted felon.

Outside the courtroom, Trump told reporters, “I’m a very innocent man,” and repeatedly claimed the trial was “rigged.” He’ll be sentenced on July 11, just a few days before the Republican National Convention.

What was Trump convicted of?

Prosecutors alleged—and a jury has now agreed—that Trump took part in a criminal conspiracy to undermine the 2016 presidential election by paying off adult film star Stormy Daniels to keep quiet about their alleged sexual encounter.

  • Central to the case was the testimony of Trump’s former personal lawyer, Michael Cohen, who said he was directed to pay Daniels $130,000 in hush money to keep the entanglement out of the press.
  • The prosecution had a paper trail of evidence, including invoices and checks, that showed Trump signed off on the illegal payments.

Now what?

Trump will appeal the conviction, arguing that he wasn’t given a fair trial because it was held in New York City. The appeals process could extend well beyond Election Day.

In the meantime, the former president will be sentenced. The charges against Trump are class E felonies, which each carry a maximum sentence of four years in prison.

  • He could be sentenced to jail. If so, he may not serve time before the election—if at all. Pundits are divided on whether or not it’s logistically possible to put a former president behind bars.
  • The more likely sentence is probation and/or fines, per most legal experts. Some believe that Judge Juan Merchan will place Trump under house arrest.

Biden’s take. The current president and Trump’s likely 2024 competitor was relatively muted in response to the verdict. “We respect the rule of law, and have no additional comment,” the White House said in a statement.

The Ackman curse? Just hours before the verdict came down, the Financial Times reported that hedge fund billionaire Bill Ackman intends to endorse Trump after previously supporting failed candidates Dean Phillips and Nikki Haley. Ackman is just one of several billionaires, including Nelson Peltz and Elon Musk, who appear likely to back Trump.

DJT’s down. Shares of Trump Media plummeted in after-hours trading following news of the convictions.—AE

   

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WORLD

Tour de headlines

An NRA supporter outside the Supreme Court Stefani Reynolds/Getty Images

The NRA won its free speech SCOTUS case. In a decision with major implications for how government officials can pressure private companies, the Supreme Court ruled unanimously to allow the National Rifle Association to pursue its First Amendment lawsuit against a New York state official who allegedly urged banks and insurers to cut ties with the pro-gun group after the 2018 Parkland mass shooting. “The First Amendment prohibits government officials from wielding their power selectively to punish or suppress speech,” Justice Sonia Sotomayor wrote. The NRA, which elected a new CEO last week following former leader Wayne LaPierre’s corruption scandal, called the ruling a “landmark victory” for free speech.

Boeing told the FAA how it plans to improve safety. The airplane manufacturer endured the travel industry equivalent of getting sent to the principal’s office yesterday when it outlined its plan to regain the public’s trust in a three-hour meeting with federal regulators. Per the Federal Aviation Administration, Boeing executives pledged that the company will enhance oversight, simplify processes, and improve employee training in response to the cavalcade of safety incidents that have garnered international headlines in recent months. The FAA will “actively monitor” Boeing’s progress with parent-teacher conferences weekly review meetings.

Nelson Mandela’s party is likely to lose its majority in South Africa. For the first time since the end of apartheid in 1994, the African National Congress is poised to lose its majority in Parliament based on early election results. The political party, which gained power as a liberation movement under Mandela 30 years ago, is on pace to earn less than 50% of the vote, which would force it to form a coalition government with other parties. The ANC has won every national election since 1994, but corruption scandals and economic turmoil in the last decade have soured some South Africans on the party’s long-running dominance.

TECH

AI is the thorn in Salesforce’s side

Salesforce logo with rain coming down from it Anna Kim

Aside from its annual company conference that advertises as if it were a musical festival for children, Salesforce isn’t in a very happy place right now. The cloud software company posted some of its worst results ever on Wednesday, a worrying sign that the enterprise software industry is struggling to contend with AI.

In response to Q1 earnings that showed growth slowing down, Salesforce stock fell 20% yesterday. It was the stock’s worst day in 20 years and could cause Salesforce’s market value to drop by nearly $50 billion if these doldrums persist. Some lowlights:

  • For the first time since 2006, the company missed estimates. It reported 11% revenue growth to $9.13 billion, short of Wall Street’s $9.17 billion forecast.
  • Billings increased by a record-low 3% year over year.

What’s got Salesforce so blue? That would be AI. There’s less money flowing to enterprise software spending because investors are pumping so much money into AI, and analysts aren’t convinced that Salesforce can use AI to boost profitability anytime soon.

Big picture: Cloud software isn’t the cash cow it used to be. Other companies like Workday and UiPath have seen their stocks sell off after posting less-than-stellar results.—CC

   

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SPACE

Outer space finally meets wood

Wooden satallite. STR/Getty Images

How much wood would a woodchuck chuck if a woodchuck knew it was going to space? Forget about that goo they had to breathe in The Abyss—the hottest new material is wood, baby. Specifically, the magnolia that Japan used to create the first-ever wooden satellite, LignoSat.

Developed by Kyoto University and Sumitomo Forestry, the 10-cubic-centimeter satellite took about four years to build and was designed using a traditional Japanese method without screws or glue. The cube will launch in the fall from the Kennedy Space Center to the International Space Station, where it will chill for a month before deploying to outer space for six months.

  • Material samples like cherry and birch were tested for “strength and workability” on Earth and aboard the ISS.
  • Scientists noted specifically that magnolia saw no signs of damage in space, likely because there’s no oxygen to burn it, or creatures (that we know of) to rot it.

Why wood? Normally, satellites are made with aluminum, which produces toxic chemicals during their fiery reentry into Earth’s atmosphere. If successful, the wooden satellite, which burns into a little pile of ash upon reentry, opens up the possibility of more eco-friendly spacecraft and less space debris.—MM

   

STAT

Prime number

copper wire Getty Images

Your weird neighbor who said he found buried treasure in the woods may be on to something. There are billions of dollars’ worth of copper wire in the ground, and telecommunications giants like AT&T plan to dig it back up and sell it, Bloomberg reported. Over the next decade, telcos hope to unearth up to 800,000 metric tons of copper wire, worth about $7 billion. The copper has kinda just been sitting there ever since companies switched to fiber-optic cable, but it’s a hot commodity again due to its use in EV batteries and other green tech. The increased demand has driven copper prices up by 50% since before the pandemic, per Bloomberg.

QUIZ

Abercrombie & Quiz

New Friday quiz image

The feeling of getting a 5/5 on the Brew’s Weekly News Quiz has been compared to when you tear a perforated edge perfectly.

It’s that satisfying. Ace the quiz.

NEWS

What else is brewing

  • Nelson Peltz made about $1 billion by selling his entire stake in Disney after losing his proxy battle against the entertainment giant.
  • Emirates added turbulence detection tools to its flights after two extreme incidents last week.
  • Amazon increased its stake in food delivery app Grubhub to 18% and will now allow US users to order takeout directly from the Amazon website and app.
  • The IRS is expanding its free TurboTax-alternative filing tool to all 50 states starting next year.
  • The French Open banned spectators from drinking alcohol in the stands because they have been way too annoying this year, tournament officials said.

RECS

Friday to-do list

Mangia: The 20 best food cities in the world right now.

Watch: Ethan and Maya Hawke charmingly walk you through their movie picks from the Criterion Collection.

Impress your friends: A “virtually complete” Stegosaurus fossil just went up for auction if you have $6 million to spare.

Listen: Go inside the buy now, pay later boom with Affirm CFO Michael Linford, who was a guest on the After Earnings podcast. Listen on Apple, Spotify, or YouTube.

Healthy orgs ahead: Don’t let bad company culture slow down your business. BambooHR’s free guide digs into how you can unite your teams, boost retention, + help your organization thrive. Read on.*

*A message from our sponsor.

GAMES

The puzzle section

Jigsaw: If you’ve ever been to Hood River, OR, then you know it’s the windsurfing capital of the world. If you haven’t been, travel there virtually in today’s aquatic jigsaw.

Friday puzzle

For the following strings of letters, find a word that contains those letters in order with nothing else in between. It probably won’t be obvious at first glance.

Example: XOP -> Saxophone

  1. NSW
  2. TANTAN
  3. ONIG
  4. PTC
  5. GUAG
  6. HIPE

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ANSWER

  1. Answer
  2. Instantaneous
  3. Tonight
  4. Bankruptcy
  5. Language
  6. Archipelago

Source

Word of the Day

Today’s Word of the Day is: cavalcade, meaning “a dramatic sequence or procession.” Thanks to Joe from Pittsburgh, PA, for the orderly suggestion. Submit another Word of the Day here.

✢ A Note From Fidelity Investments

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