Happy Tuesday, N2K reader!

This week’s world-famous news haiku competition™ is about how cows literally outperformed the S&P500 over the last five years. Send me your entry — to haiku at cheddar dot com — by noon ET Thursday, for consideration by your Cheddar peers.

And now for some news you really N2K…

Matt Davis — Need2Know Chedditor

News You Need2Know

What’s the stock market up to, eh?*

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Companies mentioned in today’s newsletter

$ANTHROPIC ( ▲ 1.54% )   $MSFT ( ▲ 0.11% )   $GOOGL ( ▲ 2.7% )   $EL ( ▼ 0.1% )   $SHI ( ▲ 2.07% )  

Anthropic sues Pete Hegseth for targeting the company

Anthropic just sued the Trump administration, and the central conflict reads like a corporate thriller: the AI company wanted written guarantees its tools wouldn't power mass surveillance or autonomous weapons. The Pentagon's response? “Trust us.”

That standoff has now escalated to federal court. On Monday, Anthropic filed suit after Defense Secretary Pete Hegseth designated the company a "supply-chain risk" — a classification typically reserved for foreign adversaries — and President Trump ordered all federal agencies to stop using Anthropic's Claude models within six months.

"Defendants are seeking to destroy the economic value created by one of the world's fastest-growing private companies," Anthropic argued in its complaint, calling the administration's moves unlawful retaliation for disagreeing on AI guardrails.

The White House fired back: "President Trump will never allow a radical-left, woke company to jeopardize our national security by dictating how the greatest and most powerful military in the world operates."

Here's the irony Anthropic supporters are quick to highlight: Until recently, Claude was the only AI model approved for classified Pentagon settings, including Iran operations.

The designation could force Anthropic's commercial customers to prove they didn't use Claude in any Defense Department work, potentially devastating for its business.

Microsoft $MSFT ( ▲ 0.11% ) and Google $GOOGL ( ▲ 2.7% ) say they're sticking with Anthropic on non-Pentagon projects. The courtroom awaits.

The $145 Florsheim shoes everybody's wearing round the White House, now

Forget challenge coins. Skip the cuff links. The ultimate MAGA status symbol in 2026 is a pair of $145 Florsheims personally bestowed by the commander-in-chief.

President Trump has become America's shoe-salesman-in-chief, doling out the leather oxfords to cabinet secretaries, lawmakers, and Fox News personalities with the enthusiasm of an Oprah car giveaway. "Did you get the shoes?" he asks at cabinet meetings. Some recipients have laced up right there in the Oval Office.

"All the boys have them," one female White House official told the Wall Street Journal. Another joked that "everybody's afraid not to wear them"—and apparently for good reason. The president is watching feet.

Trump discovered Florsheim late last year while searching for something comfortable after long days on the job. The 79-year-old billionaire, known for expensive Brioni suits, fell hard for the century-old American brand. He liked them so much he started buying boxes for others, sometimes signing them or attaching personal notes.

Vice President Vance, Secretary Rubio, Tucker Carlson, Sean Hannity, Lindsey Graham—all inducted into the sole brotherhood. One cabinet secretary reportedly grumbled about shelving his Louis Vuittons to comply.

During a December meeting, Trump studied Vance and Rubio's feet mid-conversation. "Marco, JD, you guys have s—y shoes," he declared, then retrieved a catalog.

The fitting is now in session.

Quote of the Day

Your dog's blueberry facial now costs more than a mortgage payment

Sam Cheow spends $14,000 annually grooming his four Norwich terriers. Ruth Zaplin's poodle Jasper recently clocked a 10-hour salon session — price tag: $1,000. "His haircuts cost more than mine," she admitted to the New York Times.

Welcome to the pet wellness industrial complex, where Fido's anti-aging peptide therapy and brightening eye masks are completely normal line items.

The pet grooming industry is projected to hit $19.5 billion this year and balloon to $46.7 billion by 2036. Estée Lauder $EL ( ▼ 0.1% ) heiress Jane Lauder has even launched a pet wellness venture fund, named after her tiny goldendoodle Thaddeus Alistair Warsh. The goal? "Creating the trust and transparency for pets that we've come to expect in our own beauty, health and wellness world," she said.

Dogs may not be doing cold plunges yet, but give it time.

Not everyone's buying in at these prices. Some owners are going rogue — Paul Londraville of North Carolina bought a vacuum-powered clipper for his fur-factory cocker spaniel. "If I had to pay for grooming, I would have to live under a bridge," he said.

Others are crossing borders. Alan Bateman drives his goldendoodle from San Diego to Tijuana for $40 grooms. Nicole Eaton flies her poodle mix to Serbia. And Brooklyn resident Michelle Marques? She's made the ultimate sacrifice:

"I used to get my eyebrows laminated. I've had to forgo some of my own grooming for his grooming," she told the Times.

#Priorities.

China has a lot to lose from the Iran war

When the U.S. and Israel launched strikes on Iran last week, Beijing started doing some uncomfortable math. Oil prices hit four-year highs. The Strait of Hormuz — China's critical artery for energy and exports — ground to a near-standstill. And $89 billion in Chinese investments across the region suddenly looked a lot riskier.

"The region is basically considered the biggest growth potential for China," said Dan Wang of Eurasia Group. That growth is now squarely in the crosshairs.

The timing couldn't be worse. After America slammed the door on Chinese goods, the Middle East became Beijing's plan B. The UAE emerged as the fastest-growing market for