🌊 DJT to the Moon? 🚀

Plus: Visa and Mastercard to cut credit card fees

We don’t talk about Beethoven enough.

Beethoven wrote this when he was completely deaf. The Ninth Symphony…completely deaf. If that doesn’t blow your mind, then you’re probably just better at music than us. I can barely play chopsticks after eight years of piano lessons. And despite listening to Green Day very loudly on an iPod Shuffle for all of middle school, my hearing is just fine.

In today's edition:

Bridge collapse in Baltimore

🏈 NFL votes in another major change

💰Blackrock Part 2

And so much more!

–Max, Max, Jen, and Alex


Visa and Mastercard Settle

In a landmark settlement, Visa and Mastercard agreed to cut and cap credit card swipe fees

  • Visa and Mastercard own and operate the infrastructure that processes credit card payments. They charge merchants swipe fees per transaction

  • On Tuesday, Visa and Mastercard settled a class-action antitrust lawsuit brought by merchants. Per the terms of the settlement, both companies will cut and cap swipe fees over the coming years, which merchants estimate will save them $29.8B over the next five years

  • For the first time, merchants will also be able to charge customers different amounts based on their card’s swipe fee

Dig Deeper

  • Lawyers for the merchants claimed that merchants’ ability to charge different amounts based on credit card swipe fees will pressure Visa and Mastercard to offer increasingly competitive swipe fees, thereby further lowering fees on merchants in the long term


RFK Jr. Picks Running Mate

Robert F. Kennedy Jr. (RFK) chose Nicole Shanahan as his running mate

  • A California lawyer and entrepreneur, Shanahan was formerly married to Google co-founder Sergey Brin. The WSJ reported that she had an affair with Elon Musk, although Shanahan and Musk deny that

  • Shanahan, a longtime Democratic donor, recently became a major RFK donor, donating $4M to fund a Super Bowl ad supporting him. Analysts speculate she could boost RFK’s appeal among women and allow him to access financing from her and others in Silicon Valley

  • In a speech on Tuesday announcing her vice presidential candidacy, Shanahan endorsed RFK’s views on the environment, the two-party system, and the “capture” of government agencies by big corporations

Dig Deeper

  • A representative from a pro-RFK fundraising group told Roca that RFK is campaigning to qualify for all 50 states’ ballots. He couldn’t qualify for the ballot in at least 23 states without declaring a vice presidential running mate, which forced him to choose one early


This AI company is disrupting the $4.1T hospitality industry

Frustrated by the inefficiencies within a fragmented hospitality industry, Luca Zambello and his team transitioned from managing 300+ units in five major US cities to revolutionizing the hospitality sector with Jurny

  • Partnered with Airbnb, Vrbo, & Expedia, Jurny’s award-winning tech automates operations for thousands of hotel and short-term rental properties worldwide.

  • In 2023, Luca and his team grew their customer base 5x and processed $35M+ in bookings

  • They raised $12M from top VCs + 1,100 investors, and Bloomberg, McKinsey & Co, Skift and others recognize Jurny as an AI leader

Dig Deeper


TMTG Skyrockets

The stock price of Truth Social’s parent company jumped 16% during its first day of trading, valuing the company at $7.8B

  • On Monday, TMTG, Truth Social’s parent company, went public by merging with a shell company. It began trading Tuesday under the ticker “DJT” – Trump’s initials – at a valuation of $6.8B

  • TMTG’s stock price jumped 50%+ during the first few minutes of trading, but then cooled. It closed Tuesday up 16%, valuing it at $7.8B

  • Trump owns 59% of TMTG’s stock, adding billions of dollars to his net worth, although he can’t sell his stock for at least 6 months

Dig Deeper

  • Truth Social – Trump’s social media platform – made just $3.4M in revenue through September of last year, while losing $49M. Its active users also fell 51% over the year to February

  • TMTG’s stock surge came a day after a judge gave Trump 10 days to pay a $175M bond to prevent enforcement of a civil fraud penalty against him


Diddy on the Run?

Speculation was rife about the whereabouts of Sean “Diddy” Combs a day after federal agents raided two of his properties

  • On Monday, federal investigators from the Department of Homeland Security raided Sean “Diddy” Combs’ Los Angeles and Miami properties, reportedly in connection with a potential sex trafficking probe

  • The raids came after a series of recent lawsuits accusing Combs of sexual assault and sex trafficking. Authorities previously interviewed four unidentified individuals about sex trafficking, sexual assault, and the illegal solicitation and distribution of narcotics and firearms linked to Combs

  • Flight tracking apps showed a jet owned by Combs landing in the Caribbean nation of Antigua and Barbuda shortly after the raids

Dig Deeper

  • It’s not clear if Combs was on the jet, which has since been taken off tracking sites

  • The news has sparked unverified reports that Diddy is on the run

Some Quick Stories for the Office

⚖️ A majority of SCOTUS justices appeared skeptical about a lawsuit challenging access to mifepristone, an abortion pill. Analysts widely interpreted the skepticism to mean SCOTUS will strike down the lawsuit

🐘 Following a backlash from top MSNBC hosts, NBC News reportedly plans to cut ties with former Republican chairwoman Ronna McDaniel

🏴󠁧󠁢󠁥󠁮󠁧󠁿 A UK court ruled that WikiLeaks founder Julian Assange can’t immediately be extradited to the US. It gave the US three weeks to guarantee Assange’s fair treatment and that he won’t receive the death penalty

🐄 Milk from cows in Texas and Kansas tested positive for bird flu, US officials said. Despite the breakout, there is “no concern” of bird flu in the milk supply, they added

🇨🇳 A Chinese court sentenced the former head of China’s soccer association to life in prison for corruption. Chinese authorities have cracked down on corruption in soccer despite setting a goal to become a global soccer power by 2050


Weekly Debate

Most news companies repress ideas they don’t agree with. We are different. To prove it, we’re making this a place where people can have a free and open debate. Each week we lay out a debate on Monday and feature responses below, replies to those the following day, and so on.

This week’s Roca Votes Wrap asks:  Can Artificial Intelligence create art? If yes, who is the author of AI-generated art: The algorithm itself or the team behind it?

I think the question of whether AI can create art needs to start with a discussion about what is art? It is not about whether AI can make a picture, music, etc. that is indistinguishable from what a human makes but whether art is merely the picture. I would say that art as a medium is meant to convey a message, whether that be as simple as beauty or a more complex social commentary. So can AI generate art independent of a message, I would say no. Could someone use AI to create art with a message, yet. 

Jeffrey from Elmira, Canada

I do agree with Jeffrey, art is a medium meant to convey a message, and the author has to give the AI program the right instructions so he can "bring to life" his idea.

Andrés from Torreón, Mexico agrees with Jeffrey

No! These AI generated images are not art. They are mish-mashes of actual art pieces, usually stolen, and other images/photos they scrap off the internet at large. If anyone is responsible for these images, I guess it would be the algorithms, but I wouldnt consider it art. No creative procress is involved whatsoever.

Charlie from North Carolina, USA

As an artist/designer, I think yes; AI art can create cheap imitations of art. True art has originality, quality, emotion, and expression, which AI in its current state cannot produce. It creates to check a box, not to fulfill a purpose. AI art falls perfectly into the category of low art, or art without intention/purpose, art that is made just to sell, and that is meant to simply look nice.


Today's Poll:

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Some Quick Stories for Happy Hour

🇦🇺 Do you come from a drain down under? Aussie police arrested a man in Brisbane who claimed he spent 36 hours in a sewer after trying to retrieve his phone. Police claimed he had fled into the sewer from a crime scene

💸 7-Dollar Tree: Dollar Tree will reportedly raise the price cap in its stores to $7 as it plans target customers with higher incomes

🚓Now boarding all fugitives”: Authorities arrested billionaire rapper Sean “Diddy” Combs’ alleged “drug mule” at a Miami airport, following federal raids on Combs’ properties

🌋 The ground is lava: A thief in Washington state led police on an hours-long chase before getting stuck on a telephone wire (see above). He stayed there for about 45 minutes 

😖 One-day contract: A Nevada probationary officer got arrested for a DUI one day after he celebrated his graduation from Henderson’s police academy

🏈 New rules kicking off: NFL owners voted 29-3 to approve a major overhaul of the kickoff play for the 2024 season. The changes aim to reduce injuries

BlackRock: The Power

This is part 2 of a 2-part Roca Wrap series on BlackRock. Part 1 was in yesterday’s newsletter.

Public companies are required to hold annual meetings where shareholders vote on major decisions, such as who to elect to the company’s board or substantial operational changes. At any of the largest companies’ meetings, you’ll find BlackRock.

BlackRock owns at least 3% of the US’ 500 most valuable companies. Its holdings are divided between ~500 equity funds, which are placed into one of two baskets based on management style: Active or passive. Active funds are managed by a portfolio manager, or PM.

A PM’s job is to maximize the value of their portfolio by buying and selling stocks. If the portfolio does well, so do a PM’s clients; their incentives are aligned.

Most – about two-thirds – of BlackRock’s equity holdings are passively managed.

Passive investors aim to mimic the returns of indices, such as the S&P 500. Matching an index is less risky than betting on a few companies and a good way for investors to get consistent returns. The simplest way to passively invest is to buy a share of an exchange-traded fund, or ETF.

ETFs, which are provided by companies like BlackRock, pool money from investors to purchase shares of companies within that index, allowing investors to match the index’s performance without having to buy shares from every single company themselves.

BlackRock acts as a middleman and buys company shares on behalf of ETF holders. In doing so, it earns voting rights at these companies

But because ETFs aim to mimic indices – rather than outperform them, like actively-managed funds – their managers (in this case BlackRock) have no incentive to maximize the value of their investment. They only need to match the market. This mismatch of investor and asset manager interests is known as “decoupling.” 

Whether the S&P 500 and corresponding BlackRock ETF skyrocket or plummet, BlackRock will earn the same ETF maintenance fee. That means BlackRock has massive voting power – but isn’t incentivized to make as much money as possible.

So how does BlackRock vote? What motivates that? 

For BlackRock’s multi-trillion dollar holdings, the responsibility falls on 65 people.

Those 65 people make up the BlackRock Investment Stewardship (BIS) team, the division of the company to which BlackRock gives its passive investment voting power. With offices around the world, the team has significant voting power on decisions made by the world’s largest companies.

According to BlackRock, the “BIS voted at 18,200+ shareholder meetings during the 2022-23 proxy year,” doing so with 2,640 companies across 49 markets.

The BIS says five principles guide its voting decisions: Board and company performance to date; forward-looking strategy; executive compensation plan; approach to climate change; and “impact on people”. The BIS determines how each of those are measured.

Companies want to win investments from BlackRock, because its deep pockets can push up a stock price and attract other investors. Companies across the economy are therefore incentivized to align with BlackRock’s values, either to hold a BlackRock investment or incentivize one. In recent years, that relationship helped create the ESG industry.

BlackRock, and other financial institutions, have become proponents of factoring in environmental, social, and governance (ESG) factors into investment decisions. In 2020, Larry Fink wrote a letter to CEOs in which he cites climate change or risk 29 times: “Climate risk is investment risk,” he said. That led new ESG rating agencies to begin assigning companies “ESG risk scores,” the way a rating agency does so for a company’s financial risk.

A high ESG risk rating meant a company had environmental, social, or governance “risks” and made investments unattractive; a low one helped secure investments from BlackRock and other giants.

That relationship created financial incentives for companies to better their scores, including by reducing emissions or increasing “diversity, equity, and inclusion.” But as companies have tried to tout their ESG credentials by emphasizing diversity and holding company Pride events, Blackrock has become divisive: Is it a force for good, or is one of the world’s most powerful corporations forcing its values on everyone else?

Republican states have since set their sights on BlackRock, with the Texas school fund announcing this week that it would pull $8.5B from the company over its ESG emphasis.

BlackRock has the power, but can it use it without consequence?

Reply to this email to let us know what you think!

Final Thoughts

Happy Hump Day Roca! We appreciate all the positive feedback on the BlackRock Wrap series. Have ideas about places or people we should write about next? Let us know by replying to this email!

— Max, Max, Alex and Jen