Good morning. It’s finally here: The Switch 2, Nintendo’s highly anticipated follow-up to its blockbuster Switch console, hits stores today…which means for the first time in years, you will see a GameStop that is full of people.
—Matty Merritt, Dave Lozo, Molly Liebergall, Abby Rubenstein, Neal Freyman
Markets: Stocks were mixed like a bag of cheese and caramel popcorn yesterday, with the Dow snapping its four-day winning streak as investors digested potentially troubling labor market news and a 50% tariff on steel and aluminum took effect. Asana plunged after the software company revealed weak forecasts.
After spending seven years banished to a squeaky treadmill with a busted TV, Wells Fargo can finally join its rivals muscling up in the free weights section. The Federal Reserve announced Tuesday that it would lift the asset cap it imposed on the bank in 2018 as punishment for its fake accounts scandal.
This is a big win for Wells Fargo, since the restriction stunted its growth and cost the bank an estimated $39 billion in profits.
In case you’ve forgotten the seven-year-old scandal
Wells Fargo escaped the 2008 financial crisis relatively unscathed thanks to a focus on selling customers simple products. But then it implemented aggressive sales targets, tying them to employee performance metrics and compensation, which pushed workers to pad the numbers. From 2009 to 2016, Wells Fargo employees created ~3.5 million fake or unauthorized deposit or credit card accounts for customers.
The fallout was unprecedented: It got hit with a $185 million fine in 2016, and then-CEO John Stumpf resigned and was straight-up banned from the industry. In 2022, the Consumer Financial Protection Bureau slapped the bank with a record $1.7 billion fine.
But the biggest blow was a never-before-seen move from the Fed: Right before Janet Yellen left the office for her goodbye happy hour in 2018, she announced a $1.95 trillion asset cap on Wells Fargo, locking the size of its balance sheet until the Fed determined that the bank had cleaned up its mess.
Since then…
Current CEO Charlie Scharf took the fraying reins in October 2019, and even he didn’t realize how much it would take to get back to business as usual.
But over the past six years, Scharf managed to grow the business…without actually growing the business.
Bottom line…Wells Fargo has a lot of ground to make up, especially to catch up to industry leader JPMorgan, which made about as much money from trading and investing fees in the last quarter of 2024 as Wells Fargo did in all of that year.—MM
The world produces 450 million metric tons of plastic waste each year. Microplastics are seeping into our oceans and food. They even show up in our bodies. So you can imagine how revolutionary a new kind of plastic that completely dissolves in water would be.
The company patented a water-soluble, time-programmable plastic that vanishes without harming the environment. It has the potential to disrupt everything from water bottles to packaging, and even materials beyond plastic.
Major players are already partnering with Timeplast—they had 6,000% revenue growth in a single month.
“Big, beautiful” tax bill would add $2.4 trillion to US debts, CBO says. Senators are still debating possible changes to the megabill on taxes and spending championed by President Trump, but an analysis released yesterday by the nonpartisan Congressional Budget Office found it would substantially add to the deficit over the next decade while cutting taxes by $3.75 trillion. The bill would also leave an additional 10.9 million people without health insurance, the CBO said. Though Republicans united to pass the bill in the House, some GOP senators remain wary, and high-profile Trump supporter Elon Musk also recently spoke out against it. The CBO analysis doesn’t take into account other possible economic changes—including a separate CBO estimate that Trump’s tariffs could shrink budget deficits by $2.8 trillion over ten years if they remain in place.
Trump bans 12 countries’ citizens from entering the US. President Trump signed a proclamation yesterday barring people from Afghanistan, Myanmar, Chad, the Republic of Congo, Equatorial Guinea, Eritrea, Haiti, Iran, Libya, Somalia, Sudan, and Yemen from entering the US as of Monday. The order will also impose new restrictions on the entry of citizens from another seven countries, including Burundi, Cuba, Laos, Sierra Leone, Togo, Turkmenistan, and Venezuela. The move echoes the controversial so-called Muslim Ban restricting entry to people from several countries that Trump issued during his first term in office.
Putin vowed retaliation for Ukraine’s drone attack, Trump says. After speaking with Russian President Vladimir Putin on the phone for over an hour yesterday, President Trump said Russia was determined to respond to Ukraine’s recent drone attack, which severely damaged Russia’s strategic bomber fleet. Trump described the phone call on social media as “a good conversation, but not a conversation that will lead to immediate peace” between Russia and Ukraine, something the US has been trying to broker. The two leaders also discussed Iran, with Trump saying they agreed that “Iran cannot have a nuclear weapon.”—AR
Facing the threat of being forced to shut down factories as their stockpiles dwindle, US automakers are seeking solutions to gain access to magnets made with rare earth metals. The magnets, critical in EV manufacturing, come almost exclusively from China, which stopped exporting them to the US in April in response to tariffs imposed by President Trump.
None of the workarounds for losing the magnets that allow EV engines to operate at high temperatures and enable your headlights and windshield wipers to function are appealing:
One option is to build the motors entirely in China or send nearly completed engines there to have the magnets installed and shipped back, sources at car companies told the Wall Street Journal. Either way, it’s a tariff headache—and achieves the opposite of the tariffs’ goals of spurring US manufacturing.
Carmakers also told the WSJ they could revert to older EV motor technology that doesn’t require magnets, but those engines are more expensive to produce and less efficient.
Cornered market: China mines 70% of the world’s rare earth elements and is responsible for 99.9% of the world’s supply of heat-resistant magnets refined from those elements. China’s export curbs have already resulted in the temporary closure of a Ford factory in Chicago last month. European auto part-makers have also stalled output as they struggle to obtain the magnets.—DL
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Here’s another reminder to complete that overdue security training you owe IT: Over the last few months, a group of hackers has been using voice phishing to steal Salesforce data from about 20 US-based and European companies, Google’s Threat Intelligence Group announced yesterday.
How they did it: Hackers called up mostly English-speaking employees, pretended to be IT support, and tricked them into revealing login info or installing a copycat, malicious version of a Salesforce tool, according to Google. The hackers then demanded a ransom. Salesforce initially warned its customers about “a recent rise” in these types of tactics in March.
Google’s report didn’t name the affected companies, but it follows a rash of data breaches in retail:
Adidas, The North Face, Cartier, and Victoria’s Secret all reported cyber attacks in the past two months, which mainly exposed customers’ contact information, they said.
In the UK, ransomware attacks this year have hit the grocer Co-op, luxury department store Harrods, and department store giant Marks & Spencer, which expects to lose ~$400 million from the hack.
Suspects: The Salesforce data hacks resemble the work of a decentralized hacker group called the Com, Google said. The Com is also linked to another group notorious for voice phishing called Scattered Spider (aka MGM Resorts’s 2023 cyberattacker), which British police believe may be behind the UK hacks.—ML
While retirement often feels like an ever-receding point in the distance, Americans are squirreling away a larger percentage of their earnings than ever to make the dream of playing bingo and luxuriating in a porch rocking chair a reality. In the first three months of the year, Americans stashed an average of 14.3% of their income in their 401(k)s, up from 13.5% in 2020, according to Fidelity Investments, which manages millions of accounts. That’s a record, and it also nearly approaches the 15% that’s recommended to be able to maintain your lifestyle after a 40-year career, per the Wall Street Journal.
But even though people are putting away a bigger percentage of their wages, thanks in part to automatic enrollment by their employers that makes participation easier, average balances declined at the start of the year amid volatility in the stock market. Fidelity said the average balance fell 3% to $127,100 from the end of last year, so it may feel a little like flossing after every meal and still having the dentist find cavities.—AR
Columbia University failed to meet the standards for accreditation by allegedly tolerating the harassment of Jewish students, the Department of Education said yesterday. In a separate move against what the Trump administration claims are universities’ inadequate responses to campus antisemitism, President Trump issued an executive order banning international students from enrolling at Harvard.
The president ordered an investigation into his predecessor Joe Biden, claiming his aides covered up his “cognitive decline.”
President Trump again exhorted Fed Chair Jerome Powell to cut interest rates after ADP reported yesterday that May had the slowest growth in private sector jobs in over two years.
Reddit sued Anthropic, claiming the AI company used its content to train models without permission.
Warner Bros. Discovery shareholders voted down CEO David Zaslav’s $52 million pay package, but he’ll likely still get the compensation as the vote was nonbinding.
Tom Girardi, a former high-profile lawyer and the estranged husband of The Real Housewives of Beverly Hills star Erika Jayne, was sentenced to seven years in prison after being convicted of fraud over a scheme to take money from his clients’ settlements.
RECS
Welcome: Nothing says, “Hello, summer,” like this doormat.**
Today’s Word of the Day is: luxuriating, meaning “indulging oneself luxuriously.” Thanks to Dr. Michaels—who enjoyed the luxury of not giving us their first name or location—for the suggestion. Submit another Word of the Day here.
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“Big, beautiful” tax bill would add $2.4 trillion to US debts, CBO says. Senators are still debating possible changes to the megabill on taxes and spending championed by President Trump, but 
Trump bans 12 countries’ citizens from entering the US. President Trump 
Putin vowed retaliation for Ukraine’s drone attack, Trump says. After speaking with Russian President Vladimir Putin on the phone for over an hour yesterday, President Trump 
Welcome: Nothing says, “Hello, summer,” like 
