Neumann’s no Longer a Royal We

Adam Neumann is stepping down as CEO of The We Company, the parent of WeWork. He’ll remain with the office rental company as non-executive chairman, aka a pilot who doesn’t get to touch the controls. 

The main instigator: Masayoshi Son, CEO of major WeWork investor SoftBank. 

  • Masa was gaga over Neumann as recently as this January, when he plugged $2 billion into WeWork at a $47 billion valuation.

But WeWork aged as gracefully into fall as the New York Mets

As it prepared for a monster IPO this summer, WeWork filed regulatory documents that left people who write words for a living “at a loss for words.” Convoluted financials, incomprehensible corporate governance structures, billions of dollars in losses…it’s all there. 

As Masa and other investors watched WeWork slash its valuation from $47 billion to $15 billion to salvage the IPO, their collective blood pressure climbed. When WeWork delayed its public offering last week, they’d had enough. 

First there was Adam, then came We 

Neumann co-founded WeWork in 2010, and with the right mix of charisma, capital, and shrewdness, he turned it into one of the most valuable startups in the country. 

  • Don’t forget how big WeWork is. Last September, the company topped JPMorgan to become the largest tenant of office space in Manhattan. 
  • WeWork has over 800 locations in cities as far-flung as Xi’An, China, and Columbus, Ohio. 

But unflattering media reports in recent weeks showed that Neumann’s eccentric leadership style and cozy financial relationship with the company had turned WeWork’s IPO radioactive on Wall St. 

Where does WeWork go from here? 

CFO Artie Minson and Vice Chairman Sebastian Gunningham will take over as co-CEOs, but don’t expect them to ring the bell at the Nasdaq this morning. Heavy job cuts could be on the horizon, and WeWork has a long way to go to resolve its governance, financial, and reputational issues.

The UN Circus Comes to Town

Manhattan readers: If you see more jacked people in sunglasses this week, it’s because they’re protecting the leaders of the world who are here for the United Nations General Assembly. There’ll be 600 meetings (none of which could have been emails) for the 193-member GA. We took a peek at a few leaders’ agendas…

German Chancellor Angela Merkel

Climate change. Following “tortuous all-night negotiations” over Germany’s $60 billion climate plan, Merkel is struggling to find her place on the climate change A-team, writes Bloomberg. Some one-star reviews:

  • From activists: insufficient for a “climate emergency.”
  • From economists: too gentle to force any changes from big business.

Today, Merkel joins ~60 heads of state at the UN’s Climate Action Summit. They’ve been told to leave the “beautiful speeches” at home and come instead with “concrete plans” for carbon neutrality by 2050.

India’s Prime Minister Narendra Modi 

Economic uncertainty. After years of 8%-plus economic growth, India’s GDP is now growing closer to 5%. Unemployment is at 8.4% and rising.

Modi was in Houston yesterday at a rally with President Trump called “Howdy, Modi!” that drew more than 50,000 people to the Texans’ NRG Stadium—hope you picked him up on waivers. Trump and Modi were expected to iron out trade differences and could reportedly sign a deal this week.

As for other world leaders…

Iranian President Hassan Rouhani will present a regional security plan for the Gulf, but don’t expect a handshake with Trump.

Brazilian leader Jair Bolsonaro will open the UNGA with a speech to “reaffirm the issue” of Brazil’s sovereignty after criticism of Bolsonaro’s handling of the Amazon rainforest fires.

U.S. President Trump will put his dealmaking chops to the test. Some tensions that could use a little de-escalating this week, per Axios: Iran, North Korea, China, and the Taliban.

And then there are the leaders playing hooky from the UN: China’s Xi Jinping, Russia’s Vladimir Putin, Israel’s Benjamin Netanyahu, and Venezuela’s Nicolás Maduro.

To the Hong Kong Stock Exchange, London Is Perfect

While you were sleeping Tuesday night, Hong Kong Exchanges & Clearing (or HKEX) made an unsolicited $36.6 billion offer to acquire the London Stock Exchange.

HKEX’s idea of a big picture: The exchanges have a combined market value of over $70 billion, together topping the price tag on the $50 billion Intercontinental Exchange, the NYSE’s parent company.

But the picture is bigger than just London and Hong Kong. The potential tie-in reminds us just how intertwined the world’s trading hubs have become as technological advancements take finance cross-border.

  • HKEX bought the London Metal Exchange’s parent company in 2012.
  • Germany’s Deutsche Börse Group has tried twice and failed twice to buy the LSE. The U.S.-based Nasdaq also made a run for it…unsuccessfully.
  • Nasdaq owns and operates exchanges in the Nordic and Baltic regions, where day traders barely work in the winter. 

The LSE has proven difficult to tie down. Its recent bid for Refinitiv won’t make things easier…and LSE chief David Schwimmer (not that David Schwimmer) called the deal “preliminary and highly conditional.”

How to Make Amazon Your Ex

If you’re a barber who cuts someone’s hair, and then that person opens a salon next door…you’ll probably stop cutting their hair. 

Same goes in the world of logistics. FedEx (-0.33%) said yesterday it will not renew its contract to make ground deliveries for Amazon (+0.31%), which has itself emerged as a major logistics player. The announcement came two months after FedEx said it would discontinue U.S. air delivery service for Amazon. 

Cut to the chase: The two companies are taking the arrows from their logos and pointing them straight at each other.

When a customer becomes a rival

Seeing more Amazon Prime-branded trucks on the highway? The company is investing in its own delivery capabilities to include cargo planes, local delivery vehicles, big rig trucks, and a network of warehouses. 

  • Amazon is already its own biggest shipper. According to Rakuten Intelligence, Amazon delivers 48% of its own packages, up from around 15% two years ago. 
  • And in classic Amazon fashion, it’s turned a cost into a service it can offer to others. Amazon quietly launched a freight brokerage platform in April that undercuts competitors’ prices by 26–33%, per FreightWaves.

FedEx changes its tune

Last month, FedEx finally admitted that Amazon was opening a competing salon. “Some high-volume package shippers, such as Amazon.com, are developing and implementing in-house delivery capabilities and utilizing independent contractors for deliveries, and may be considered competitors,” it said in a filing. 

But going to battle with Amazon may not be as painful for FedEx as you think. 

  • Amazon accounted for 1.3% of FedEx’s revenue in 2018—not even $1 billion. 
  • There are other fish in the growing e-commerce sea. Think of this move as a party invite to retailers like Target and Walmart who 1) also need the delivery services FedEx can provide and 2) want to take down Amazon.

China Isn’t Buying It

The Chinese Commerce Ministry confirmed Tuesday it’s pausing U.S. agricultural imports in response to President Trump’s new tariffs. The move could hobble an already stumbling U.S. farm sector. 

Zoom out: China is the fourth largest export destination for U.S. farms. China spent $9.1 billion on U.S. farm products in 2018, according to the American Farm Bureau Federation.

  • The trade war has already stung: U.S. soybean exports to China dropped 70% from September 2017 to May 2018, while dairy exports are down 54% so far this year. 

It’s not like U.S. farmers don’t have enough to worry about. Crop prices are lower than usual and the spring’s heavy rains delayed planting. The USDA has begun handing out $14.5 billion to farmers to offset the costs of the trade war and bad weather, but it may not be enough as Chinese buyers find alternatives

FedEx Cuts Off Amazon

After everyone left the office for Summer Fridays, FedEx (+0.75%) announced its own exit. It’ll stop providing express delivery for Amazon (+2.93%) packages in the U.S. this summer.Why this matters: From a numbers perspective, Amazon represented under 1.3% of FedEx’s total revenue last year. But from a broader perspective, FedEx’s decision is telling Amazon, “we’d like to see you do it better.”That’s because Amazon has been busy building out its own delivery network, which looks a lot like the early days of FedEx.Amazon has 42 branded aircraft in the U.S. and plans to grow the fleet to 50 by the end of the year.Last month, it broke ground on its own air cargo hub in Kentucky set to open in 2021.And drones!But FedEx isn’t weeping into its purple and orange pillow. Execs say there’s plenty of demand for its services from parties that aren’t building homegrown competitors (like Target, Walmart, and Walgreens). FedEx is prepping for e-commerce to double to 100 million packages per day in the U.S. by 2026.

Discover Italy: A Wine & Food Paradise

It is hard to think of a place more suited to the wine and food lover than the rolling hills and lush valleys of central Italy’s Tuscany and Umbria. Cyprus trees and ancient oaks dot the landscape, and as you wind the many white gravel roads you’ll find yourself in awe that somewhere so unspoiled extends in every direction.

All those pictures in the coffee table books, online travel sites, even those on your wall calendar are rolled out before you – tangible, inspiring and ready to delight every one of your senses.

Things To Do in Central Italy | Places to Visit in Central italy | Winetraveler.com

Beyond Florence – Small Towns in Central Italy and Things to Do

While Florence is known to food and wine lovers the world over, and is renowned for its art museums, shopping, and breathtaking sunsets atop Piazzale Michelangelo, many of the region’s treasures lie beyond the city in the small towns and villages scattered throughout Chianti, Tuscany and Umbria.

From San Gimignano and Pienza to Assisi and Cortona, Italy’s charm, warmth and authenticity will have you wishing you never had to leave. The days are dream-like as you stroll through streets and walls built hundreds of years ago sampling the local Pecorino cheese, house-made gelato or sipping one of Italy’s finest red wines; all the while you’re surrounded by colorful flowers, the clanking of dishes in the kitchen as a meal is prepared from scratch, and the quiet chatter and laughter of others simply relishing in the good life.

While you can easily find such scenes across the countryside, here are a few destinations we highly recommend:

San Gimignano

A small walled village, San Gimignano, known for its medieval architecture and the 14 towers that rise above the city is a UNESCO World Heritage Site, which will transport you back in time. Food and wine lovers will delight in the locally grown saffron and its white wine, the Vernaccia di San Gimignano. We also recommend finding a local, family vineyard for an intimate encounter with Chianti – call ahead to schedule an appointment.


Pienza

Another UNESCO World Heritage Site, Pienza is a small medieval village known as the “ideal city of the Renaissance.” It was created by Enea Silvio Piccolomini, later known as Pope Pius II, who had both the means and influence to transform his birthplace village into his version of a utopian city. Located in the Val d’Orcia region of Tuscany, Pienza is known for its local sheep’s cheese, Pecorino and is the ideal place for a stroll. Make sure to sample the local gelato shop’s flavor of the day too!


Montepulciano

Now, this is a wine lover’s dream destination. Set atop a hill with views of the surrounding Tuscan farms, Montepulciano is an easy village to burn through your camera card! Make sure to visit one of the many wine cellars which extend deep beneath the city streets – the Vino Nobile di Montepulciano is the local red wine and it shouldn’t be missed.


Montalcino

Wine lovers would be remiss to pass up this destination, another idyllic hilltop town, set within fortified walls. Montalcino is renowned for the production of Brunello red wine which you can taste at any number of wine shops scattered throughout town while taking in the view of the surrounding countryside with its picturesque olive groves, ancient trees and miles upon miles of vineyards. If you’re there for a meal, which we recommend so you can take in more wine, make sure to try the wild boar ragu.


Montefalco

In Umbria, the charming town of Montefalco will delight you with its simplicity and welcoming hospitality. A small village in the heart of Italy, you can spend the afternoon sampling the local wines at a family-owned vineyard, taking a private cooking class in a chef’s home or dining al fresco at one of the many eateries tucked in this town’s winding streets. You’ll want to grab a bottle of Sagrantino di Montefalco for the cellar – it’s an ager!


Assisi

Obviously one of the more well-known destinations of Umbria, Assisi made famous by St. Francis, is a crown jewel of the region. We recommend visiting in the evening when the crowds disperse and the city takes on a beguiling atmosphere. Tour the church near closing for a more personal and less crowded viewing, and then snag a seat for dinner on a westward facing balcony to watch the sunset over the Umbrian valley. We guarantee it will be difficult to leave this enchanting village, and while you’re there make sure to taste the Umbrian olive oil. It’s simply superior.


Believe the Hype

Italy is one of those dream destinations. We’ve all heard the stories, read the descriptions or watched the travel shows depicting a paradise for the food and wine traveler. Fortunately, for those lucky enough to visit, it does not disappoint.

The rolling hills with scattered ancient castles and old farm houses provide a picturesque backdrop, but the intimate encounters with the food, wine, landscape and above all, the Italian people are the true treasures.

The Best In The World

Tesla detailed its plans for driverless cars at its Autonomy Investor Day, which started 43 minutes late…or if you’re Elon Musk, right on time.

Tesla, but make it driverless

The big news: the Full Self-Driving computer, hardware that took three years to develop, fits behind a Tesla’s glove box, and holds two independent chips that exclusively run Tesla-encrypted software.

  • Because if you want something done right, get Samsung to build it for you. Tesla (-3.85%) had previously tapped Nvidia’s computing skills but took issue with its long client list and “generalized solution.”

Musk called this new computer solution the “best chip in the world…by a huge margin” and said today’s Teslas have everything they need for self-driving—aside from the software, which Musk says will undergo a plug-and-play update to make new models fully driverless down the road.

While yesterday was all about looking ahead, Tesla will be forced by its close buddies at the SEC to look back when it reports quarterly results tomorrow afternoon—and they’re all but guaranteed to show a loss.

As the WSJ points out, this week goes to show you…

There are two types of Tesla investors

The believers consider Tesla more tech than car company. Yesterday they got another taste of the Tesla Network, Musk’s vision of a shared fleet of super-efficient driverless cars to roll out as soon as next year.

  • ARK Investment says a successful Tesla Network could send the company’s stock to $4,000 per share in 2023. That’s appreciation of about 1,364%.

Then there are skeptics, who highlight severe operational hurdles that have plagued autonomous carmakers from Ford to Waymo. They say Autonomy Day is a tried-and-true play for Tesla, designed to ratchet up excitement ahead of bad news. Mainstay’s David Kudla to the Journal: “I’ve seen this movie before.”

It’s a bedding budget game-changer

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GDP’s Like Shrimp Cocktail

Without Cocktail Sauce

Still good, but definitely could be better. U.S. gross domestic product grew at a 2.6% annual rate in the fourth quarter of last year. While that’s better than economists predicted, it’s not quite the 3.4% GDP growth we saw in Q3.

But all in all, not too shabby for a quarter synonymous with uncertainty. Stocks slipped into bear market territory, the government partially shut down, and Pete & Ariana split up.

Let’s keep things in perspective:

  • Comparing Q4 to the rest of 2018 doesn’t feel right—tax cuts and government spending increases juiced Q2 GDP growth above 4%, the fastest rate since 2014.
  • And even with this cooling (which wasn’t as severe as expected), 2018 on the whole was one of the best years for the economy since the Great Recession.

Looking ahead: Many economists expect growth to drop under the 2% threshold in Q1 (in part because of the tail end of that government shutdown).

+ Slept through the lesson on GDP in Econ 101? Here’s a look at why it’s important.