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Biden gets Wall Street’s money and Silicon Valley’s advice
The wallets of Wall Street are with Joe Biden, if not the hearts, report The Times’s Kate Kelly, Shane Goldmacher and Thomas Kaplan. The millions of dollars that financiers donated to the Democratic presidential candidate’s once flagging campaign saw him through the primaries, and into a lead in national polls.
The prospect of higher taxes and stricter regulation are not scaring them away, with the prospects of a “more seasoned and methodical presidency” proving appealing, The Times’s team reports. For example, Seth Klarman, founder of the hedge fund Baupost who was once a big donor to the Republican Party, has given $3 million to groups supporting Mr. Biden in this cycle.
• Financiers are closely watching Mr. Biden’s pick for his running mate. Their support could wane if he chooses Elizabeth Warren, who has proposed a wealth tax and much tougher financial regulation than Mr. Biden.
In Silicon Valley, the tech giants are also making overtures. The Times’s David McCabe and Kenneth Vogel report that Mr. Biden’s campaign has welcomed staff members and advisers who have ties to Big Tech, “raising concerns among the industry’s critics that the companies are seeking to co-opt a potential Biden administration.”
• The Innovation Policy Committee, a nearly 700-person volunteer group advising the Biden campaign, includes at least eight people who work for Amazon, Apple, Facebook and Google, in addition to economists and lawyers who have advised those companies, and officials from think tanks funded by them. The group’s list of rules, obtained by The Times, urges participants not to disclose that they are members, nor to speak with the news media. And “under no circumstances should your efforts on behalf of the campaign be used to further the interests of your employer, clients or others who have retained your professional services,” it adds.
Here’s what is happening
A pro-democracy media mogul was arrested in Hong Kong. The mogul, Jimmy Lai, is an outspoken critic of Beijing and was detained today on charges of violating Hong Kong’s new national security law. The law’s role in suppressing the territory’s pro-democracy movement was the motivation for the U.S. in imposing financial sanctions on a range of Chinese officials on Friday, including Hong Kong’s chief executive, Carrie Lam. China announced today that it would impose unspecified sanctions on 11 U.S. citizens, including Senators Ted Cruz and Marco Rubio, in a tit-for-tat escalation.
President Trump’s executive actions are causing confusion. The stimulus measures, signed on Saturday, attempt to sidestep a gridlocked Congress with edicts of dubious legality. What’s more, the proposals — extending supplemental unemployment benefits, suspending some payroll taxes, suggesting an eviction ban and offering student loan relief — are unlikely to deliver cash quickly to support the economic recovery. Of the measures, the student loan relief seems the least controversial and easiest to carry out.
Amazon is reportedly considering turning bankrupt department stores into fulfillment centers. The online retail giant is looking at converting J.C. Penney and Sears stores in malls owned by Simon Property Group into distribution hubs, according to The Wall Street Journal.
Berkshire Hathaway reported a big rebound in profits. The recovery at Warren Buffett’s firm was because of the surging value of its investment portfolio, it reported on Saturday, pushing reported earnings to around $26 billion in the second quarter, versus a $50 billion loss in the previous quarter.
The week ahead
🗣 It’s a relatively light week for earnings, with a majority of the S&P 500 having already reported their latest quarterly results. Notable releases include Simon Property Group on Monday; InterContinental Hotels and SoftBank on Tuesday; Cisco, Lyft and Tencent on Wednesday; and Applied Materials and Deutsche Telekom on Thursday.
🗳 Joe Biden is expected to announce his running mate for vice president. From a field of about a dozen likely choices, Senator Kamala Harris is the favorite in betting markets, followed by the former national security adviser Susan Rice.
🇬🇧 On Wednesday, Britain’s G.D.P. is forecast to have fallen by 20 percent in the second quarter, a far worse result for the period than in the U.S. or in the rest of Europe.
🛍 On Friday, U.S. retail sales data for July are expected to show a smaller gain than the previous two months, as activity remains well below pre-pandemic levels.
Take Note: Going hostile
Unsolicited takeover proposals can be complicated and expensive, even in the absence of a pandemic. Since the beginning of summer, CoreLogic, a real estate data analytics firm, has been waging war with the Las Vegas-based investment company Cannae Holdings and Senator Investment Group, a New York-based hedge fund, over interest from Cannae and Senator in acquiring CoreLogic for $7 billion, including debt.
On Friday, things got messier, with CoreLogic disclosing that it had received a civil investigative demand and a subpoena from the Federal Trade Commission seeking details about the proposed acquisition, which CoreLogic has consistently rejected. The disclosure implies that the F.T.C. is ratcheting up its investigation of the deal. On July 15, CoreLogic, based in Irvine, Calif., disclosed in a filing that it had received “written notification” from the F.T.C. seeking information about the approach.
Cannae, which is publicly traded, reported second-quarter earnings on Friday but never mentioned a subpoena or investigation by the F.T.C. in either the earnings release or in an accompanying conference call. While there’s no rule mandating that a company disclose a subpoena to investors, it’s fairly common for companies to acknowledge that sort of thing in a filing. Companies have four business days after a significant event to reveal important developments, so Cannae might still choose to disclose this, particularly now that CoreLogic has done it for them.
The fight dates back to late June, when Cannae and Senator sent the unsolicited proposal to buy CoreLogic for $65 a share. (At the time, CoreLogic was trading at around $53 a share.) In the letter, Cannae and Senator said they owned about 15 percent of CoreLogic’s shares. CoreLogic formally rejected the proposal as too low on July 7. The three companies met a week later, and shortly thereafter, CoreLogic issued a statement rejecting a request for private due diligence by the bidders. On July 29, Cannae and Senator upped the ante by calling for a special meeting and proposed nine new directors for CoreLogic’s 12-person board, criticizing what they called the company’s “scorched earth” tactics in rejecting their approach. (In 2012, CoreLogic settled a spat with the hedge fund Highfields Capital Management by appointing a handful of new directors.)
Yesterday, CoreLogic called a special meeting for Nov. 17 for investors to vote on the directors proposed by Cannae and Senator, “in order to remove uncertainty” over the “convoluted” takeover proposal. The plot thickens.
Race and corporate America
Corporate leaders have been pledging support for civil rights initiatives and re-examining their records on racial inequality, but critics contend that well-intentioned promises have had little effect. On our latest DealBook Debrief call, Nikole Hannah-Jones, a Pulitzer Prize-winning reporter for The Times Magazine and creator of the 1619 Project, said that “corporate America has a much, much larger role to play.” If you missed the call, listen to a recording here. Some of the highlights:
• “How are corporations using the power that they have in Congress?”
Although hiring and promotion practices are important, “I’m thinking much, much bigger than, ‘Can we raise our Black staff from 6 percent to 10 percent?’ ” Nikole said, adding, “That’s very minimal if we’re talking about a moment of reckoning.” Companies can use their political heft to address “much bigger societal issues” like education, she noted. A push for integrating and improving public schools would have broad community benefits, including when it comes to hiring. “A lot of times you look at what companies are saying, and then you look at what candidates and issues they’re supporting, and there’s a deep incongruence there, if not hypocrisy,” she said.
• “A meritocracy is not built on continuing to advance and advantage the same people who have already had every advantage.”
When recruiting, companies tend to stick too rigidly to requirements on education and experience that ignore structural inequalities, Nikole said. “We need the person who is Black, but also has the exact same résumé and criteria as the white person, despite the fact that we know there’s a great deal of structural inequality,” she said, describing a common thought process among corporate recruiters. “The typical Black child attends a high-poverty, underresourced school,” she noted, and “they’re not going to have the same internships, they’re not going to have the same letters of reference. But that kid has worked really hard, and that kid is going to come into your institution with certain skills and knowledge and fight.”
• “Maybe they can just wait this moment out.”
Is there a risk for companies to not take action during the national uproar about racial inequality? The “cynical way of thinking about it,” Nikole said, is that “our country’s attention to racial injustice is very fleeting.” Public pressure on companies will determine whether they act or not. “In the end, I don’t think not doing anything has ever been that risky,” she said, “except for these kind of key moments — the end of the civil rights movement for one, and perhaps now — but that’s likely going to depend on us.”
The speed read
• Are megadeals back? Eight acquisitions worth $10 billion or more have been signed in the past six weeks. (FT)
• Biotech I.P.O.s have raised a record amount of money, surpassing the previous annual record in just the first eight months of the year. (WSJ)
Politics and policy
• What if everyone voted by mail in 2016? (NYT Opinion)
• “How Pro-Trump Forces Work the Refs in Silicon Valley” (NYT)
• The dire warnings about tech start-ups failing in the pandemic have not led to the shakeout many expected. (NYT)
• Nokia’s new chief is trying to maintain a neutral stance in the geopolitical tech wars. (Bloomberg)