9/17/2018
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Top business donors break from the G.O.P.
Seth Klarman of the hedge fund Baupost Group was the biggest Republican donor in New England. Now, he’s donating millions to Democrats to help them take back Congress. Such is the rate of his giving that, according to the Center for Responsive Politics, he could end up giving more to Democratic candidates than George Soros does over this election cycle.
Les Wexner, chief executive of L Brands and one of the biggest Republican donors in the Midwest, is also withdrawing his support of the party. “I won’t support this nonsense,†the Columbus Dispatch quoted him as saying.
President Trump and his policies have alarmed many traditional conservative backers, but many others remain quiet, satisfied with tax cuts and the appointment of conservative judges. Mr. Klarman told Bari Weiss of the NYT’s editorial pages that those points don’t make up for Mr. Trump’s failings:
“One of the reasons I’m willing to come out of my shell and talk to you is because I think democracy is at stake. And maybe I’ll be able to convince some other people of that. And get them to support Democrats in 2018.â€
Marc Benioff is the latest billionaire-turned-media mogul
The Salesforce co-founder and his wife, Lynne, will buy Time magazine from the Meredith Corporation for $190 million. Mr. Benioff follows in the footsteps of other billionaires, including Jeff Bezos, who bought the WaPo; Patrick Soon-Shiong, who acquired the L.A. Times; and Sheldon Adelson, who purchased the Las Vegas Review-Journal.
The Benioffs, whose estimated net worth is $6 billion, will provide the news publication with deep pockets and, for now, a promise to maintain Time’s editorial independence. (Mr. Benioff told the NYT: “We are only stewards of a historic and iconic brand.â€)
Still, the deal highlights the tension of media outlets selling themselves to billionaires. Doing so may provide financial security, but there’s no way to prevent new owners from exerting more editorial control in the future. And if the outlets can’t make money, benefactors could sell them or shut them down.
Bonus: Mr. Benioff spoke to the S.F. Chronicle about his philanthropy.
Wall Street would help China on trade if it could
American financial titans like the Blackstone Group’s Steve Schwarzman often lobbied presidents to go easy on China. Their hope: winning business in China, from advising on mergers to lending money and selling financial services. But Wall Street’s influence in Washington isn’t helping to ease trade tensions.
More from Alexandra Stevenson, Kate Kelly and Keith Bradsher of the NYT:
Even as they win tax cuts and regulatory rollbacks from the Trump administration and the Republican-controlled Congress, they appear to be able to do little to stop the trade war. “What’s really surprising is that the connections that used to work, the formula that used to work, just don’t work at this point,†said Marshall W. Meyer, an emeritus professor of management at the Wharton School of Business.
Senior finance executives held talks with Chinese officials and bankers over the weekend. But with Wall Street holding less sway in Washington, the trade war (which could escalate this week; more on that below) might mean that such relationships won’t pay off.
More trade news: It’s another crunch week for Nafta. European leaders will meet in Salzburg, Austria, this week, and Brexit tops the agenda. And Deutsche Bank could move as much as 450 billion euros, or $525 billion, in assets to Frankfurt from London over Brexit.
The day ahead
New American tariffs on China could be coming. President Trump is expected to announce levies of around 10 percent on $200 billion worth of Chinese goods as soon as today. That is less than the 25 percent first suggested in August, a reduction reportedly spurred by objections from businesses and a desire to reduce the impact on American consumers. Chinese officials say they could block exports of crucial components for Western supply chains if the trade war continues.
The 70th Primetime Emmy Awards will be broadcast on NBC at 8 p.m. Eastern. A big question: Will HBO, which has dominated the awards for 16 straight years, still win more Emmys than Netflix?
SpaceX will announce the name of its first space tourist. The passenger will fly around the moon aboard one of the company’s BFR rockets (which haven’t been built yet).
Elon Musk’s new hell: car deliveries
The Tesla C.E.O. famously said that the company would have to endure “production hell†to speed up manufacturing of its Model 3 sedan. Now he says there’s a new source of fire and brimstone.
“We’ve gone from production hell to delivery logistics hell,†Mr. Musk wrote in a tweet apologizing to a customer whose car delivery had been indefinitely delayed — despite the fact she could see the vehicle parked at a railroad depot.
The Tesla chief said that the delivery problem was “far more tractable†than the production issues, but that the company was “making rapid progress†on solving it. Mr. Musk expects to build twice as many cars in the third quarter as the second — so a delivery fix will have to come quickly.
More Tesla news: The automaker plans to take its collision repairs in-house.
Amazon is reportedly suffering from data-fueled bribery
The e-commerce giant is said to be investigating a series of data leaks and employee bribes as part of a push to stamp out seller scams from its service. More on that from Jon Emont, Laura Stevens and Robert McMillan of the WSJ, citing anonymous sources:
In exchange for payments ranging from about $80 to more than $2,000, brokers for Amazon employees in Shenzhen are offering internal sales metrics and reviewers’ email addresses, as well as a service to delete negative reviews and restore banned Amazon accounts, the people said. Amazon is investigating a number of incidents involving employees, including some in the U.S., suspected of accepting these bribes, according to people familiar with the matter.
Amazon told the WSJ that it had introduced systems that restrict and audit the kinds of data that employees can access. Sources told the newspaper that the company has also reorganized the roles of key executives in China to try to find the source of the problem.
What happens at Kleiner Perkins without Mary Meeker?
The famed venture capitalist, known for annual reports on internet trends, said on Friday that she and her team were leaving the investment firm. That raises big question about the uncertain prospects of Kleiner, which made its name with investments in Google and Amazon.
The departure of Ms. Meeker strips Kleiner of its late-stage investing arm at a time when rivals are piling into that business. (The firm shut down its seed-stage investing arm nearly two years ago.) It has also lost a number of partners in recent years, and is still recovering from a P.R. hit after the Ellen Pao discrimination lawsuit.
While Kleiner has hired new high-level partners, it still has a lot to do to convince Silicon Valley that it remains a top-flight V.C. firm.
Rein in the federal deficit? Almost impossible
As the federal government prepares for a new fiscal year, one thing is certain: The national deficit will grow. The Congressional Budget Office predicts the deficit will hit $28.7 trillion — 96 percent of G.D.P. — in 10 years. Barron’s latest cover story explains how hard it would be to prevent that growth:
Just holding the line at 78% of GDP over the next three decades would require finding massive, immediate savings in the budget — $400 billion over the coming year, rising gradually to $690 billion by 2048, using 2019 dollars. In comparison, America spent $590 billion in fiscal 2017 on defense, and $610 billion on all other discretionary items. (The rest of the $4 trillion in spending went for mandatory programs, such as Social Security and Medicare, and for interest on the debt.)
Many Republicans favor extending Trump’s tax cuts, and the president is pushing an expensive infrastructure bill. There’s little reason to think that borrowing won’t increase.
Revolving door
Mary Daly, the San Francisco Fed’s head of research, will become its next president.
The speed read
Deals
• The battle for the British broadcaster Sky could be resolved behind closed doors. (WSJ)
• Wow Air, the low-cost Icelandic airline, plans to raise about $300 million in an I.P.O. (FT)
• Japanese companies are buying up more U.S. companies than ever. (FT)
• Credit Suisse is nearing the end of its yearslong financial restructuring. (Bloomberg)
Politics and policy
• Some Republican senators want to postpone a vote on Brett Kavanaugh’s nomination until they review an accusation of sexual assault against him dating from decades ago. (WaPo)
• The economy is doing well. But Republicans aren’t enjoying any political benefit. (NYT)
• Companies have repatriated only a sliver of the estimated $2.7 trillion of cash they hold overseas. (WSJ)
• No, Jamie Dimon isn’t running for president in 2020. (Bloomberg)
Tech
• Robots could handle 52 percent of current work tasks in seven years — but also create 60 million more jobs than they destroy by 2022. (World Economic Forum)
• Silicon Valley firms are still hiring with gusto — especially outside San Francisco. (S.F. Chronicle)
• Wall Street investors are using technology to become America’s biggest landlords. (WSJ)
Best of the rest
• The Les Moonves fiasco shows that America needs to overhaul its corporate governance system. (WSJ)
• M.B.A. applications to America’s top business schools are declining. (FT)
• Why activism like #NikeBoycott rarely dents sales figures. (WSJ)
• Paying clients to manage their money may not be as crazy as it sounds. (FT)
Thanks for reading! We’ll see you tomorrow.
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