Follow the money
The shock waves from President Biden ending his re-election bid, after weeks of pressure to step aside, are still reverberating around the world.
Many Democratic officials and financial backers have followed his lead and endorsed Vice President Kamala Harris as his successor in the race. But the conspicuous silence of some senior party leaders and warnings from prominent donors suggest that the party’s ticket isn’t a done deal.
The latest: Biden’s withdrawal opened a flood of Democratic donations, with more than $50 million pouring in on Sunday, in what one strategist said might be “the greatest fund-raising moment in Democratic Party history.”
Wall Street and Hollywood donors came back in force, while stalwart Biden backers, including the tech billionaire Reid Hoffman and the hedge fund scion Alex Soros, pledged their support to Harris.
Not all senior Democrats crowned Harris as their preferred candidate. Some, including Senator Chuck Schumer, the majority leader, and Representative Hakeem Jeffries, the minority leader, didn’t endorse anyone. Neither did Representative Nancy Pelosi, the influential former Speaker, who previously indicated that she wants an open nomination process. Barack Obama didn’t either, though The Times reported that he was simply staying neutral and didn’t have an alternative candidate in mind.
And many outspoken donors were withholding their endorsements:
Reed Hastings of Netflix: “Dem delegates need to pick a swing state winner.”
Vinod Khosla, the venture capitalist: “I want an open process at the convention and not a coronation.”
Mike Novogratz, the crypto investor: “The donor community I speak to doesn’t think she’s the best to win, but everybody thinks she deserves a fair chance.”
Is money really a roadblock for potential challengers? The common consensus is that Harris has a huge financial edge, given her existing base of donors and her being the only candidate who could easily take over Biden’s campaign apparatus, including the $96 million in its coffers. Others would effectively start from zero.
DealBook hears that not everyone is convinced this is necessarily an insurmountable hurdle for would-be rivals. Some Democratic supporters believe that, were someone else to win the nomination, they could simply take the Biden money and fight it out in court, a process that could take years to play out. A handful of Republicans plan to challenge Harris’s taking over the Biden money in any case.
Less-radical workarounds could include Biden transferring his campaign’s funds to the Democratic National Committee — an approach used in 2020 by Mike Bloomberg that the Federal Elections Committee has since approved — or picking a billionaire candidate like Gov. JB Pritzker of Illinois, who could self-fund a presidential run.
For now, Harris remains the favorite to lead the Democratic ticket. The online gambling site Betfair showed she has the highest chances of getting the nomination. (Many would-be rivals have either endorsed Harris or don’t plan to challenge her.)
That said, the odds on Betfair and recent polls suggest that Harris trails Trump (though she is outperforming Biden versus Trump among some voter groups), giving skeptics hope that Democrats won’t crown the vice president as its standard-bearer just yet.
HERE’S WHAT’S HAPPENING
Travel disruption from the global I.T. outage persists. Delta alone canceled more than 500 flights on Monday, after Secretary of Transportation Pete Buttigieg had singled out the airline for customer service issues in the wake of Friday’s widespread software outage. Government agencies around the world warned about scams tied to the incident.
China cuts key lending rates to boost sluggish economy. The country’s central bank surprised investors by lowering borrowing costs for the first time since last August. The decision was announced days after top Chinese officials held a twice-a-decade economic policy meeting that centered on ways to kick-start China’s economic growth.
Earnings and economic reports are in focus this week. Companies including Alphabet, Coca-Cola, Tesla and Spotify will disclose their latest quarterly results, providing fresh insight into the state of the consumer, advertising and more. And the Commerce Department is set to publish G.D.P. data for the second quarter on Thursday.
How would Harris govern?
Supporters and opponents alike are examining what Vice President Kamala Harris would mean for business if she is elected in November. DealBook dug into her background and talked to insiders to understand how she might govern.
Harris is inextricably tied to much of President Biden’s agenda. Insiders on Wall Street and in Washington said that there isn’t much daylight between her and the president on policy priorities. Her focuses when she was California’s attorney general and then senator included affordable housing and consumer protection, issues the Biden administration also embraced.
Among her recent moves have been touting investments made via the CHIPS and Science Act to increase domestic semiconductor research and manufacturing, and being one of the administration’s point people on how to regulate artificial intelligence.
Her record suggests she might be more progressive, The Times’s Alan Rappeport writes. As a presidential candidate in 2020, she pushed for policies including universal health care and funding bigger tax breaks for working-class Americans with higher taxes on businesses. She called for raising the corporate tax rate to 35 percent from the 21 percent of the Trump years. The Biden administration increased it to 28 percent.
Harris’s relationship with the business community has improved, executives told DealBook. She faced skepticism at the start of her vice presidency, but reached out behind the scenes to business leaders via lunches and dinners. That has included events organized by the Democratic megadonor and investment banker Blair Effron, two people familiar with the matter told DealBook.
Many business moguls hope that Harris as president would be more receptive to their suggestions than Biden, and that she would be more willing to give key administration roles to those with corporate backgrounds.
Harris counts some Wall Street V.I.P.s among her backers. They include Ray McGuire, Lazard’s president and one of the top Black leaders in finance, who introduced her to prominent New York figures at his house in 2018. (His wife, Crystal McCrary McGuire, held a gathering of female Harris supporters at their home in May, DealBook hears.)
Others who would likely back her include Peter Orszag, the C.E.O. of Lazard, and Roger Altman, the senior chairman of Evercore.
“I’ve heard from more than 200 people just today since the announcement, saying that they want to host events and make donations,” Jon Henes, a corporate adviser who served as Harris’s campaign finance chair during her 2020 run, told DealBook.
Harris also has close relationships with Silicon Valley. Over the years, heavyweight tech donors have supported her, including John Doerr, the venture capitalist; Sheryl Sandberg, the former C.O.O. of Meta; Jony Ive, the onetime Apple design chief; and Ron Conway, the start-up investor. (Also of note: Her brother-in-law, Tony West, is Uber’s chief legal officer.)
One thing donors are watching: her pick of running mate. Many are hoping she will choose a moderate governor from a battleground state, such as Josh Shapiro of Pennsylvania or Gretchen Whitmer of Michigan. (A frequently mentioned candidate in political circles is Roy Cooper, the outgoing governor of North Carolina.)
Less obvious names being tossed about, include Senator Mark Warner of Virginia, who is close with the Business Roundtable, and Liz Cheney, the former Republican lawmaker from Wyoming.
Arnault’s Olympics
Bernard Arnault’s LVMH, the world’s biggest luxury group, reports quarterly earnings tomorrow, but the main event on the company’s calendar begins on Friday: The Olympics open in Paris, and the company is involved in almost every aspect of the two-and-a-half week competition.
DealBook spoke to Vanessa Friedman, The Times’s fashion director, about why this is Arnault’s Olympics and what it could reveal about a big question: Which of his children could take over from the 75-year-old leader?
How is LVMH central to this Olympics?
LVMH spent €150 million, about $163 million, to be one of the top-line sponsors — the first luxury group to play that role in any Olympics. LVMH is a “creative partner,” which means it isn’t just putting its branding on the stadium sides, but is making its products central to the games themselves.
How does this manifest itself?
The Olympics will be a quasi-LVMH ad (not the least for the group as a benign force in France, rather than a vampire squid), with its brands on display everywhere. Chaumet, the fine jewelry brand, made the medals, which will be presented in Louis Vuitton-branded trays, by Louis Vuitton-dressed officials. Drinks from Moët Hennessy will be served in hospitality suites. Berluti, the men’s wear brand, is dressing the French delegation for the opening ceremony, and Dior, the couture brand, is rumored to have a role in the performance on the night.
What does LVMH’s role tell us about Arnault’s relationship to the French state?
It suggests they are synonymous and this is effectively an argument for luxury as a defining representation of Frenchness.
LVMH has been making this pitch for a while, usually by reminding everyone how much tax it pays (€8.1 billion in 2023 in France alone), how much it contributes to the French economy (the group shipped €23.5 billion worth of goods abroad last year, or 4 percent of total exports), and how many people it employs (almost 40,000 in France).
Will the Olympics tell us anything about succession at LVMH?
All of Arnault’s five children have senior roles in the company: Antoine is head of image and the environment at LVMH and is overseeing the Olympic partnership; Delphine is C.E.O. of Dior; Frédéric heads the entire watch division and is managing director of the family’s holding company; Alexandre is a senior executive charged with reinventing Tiffany; and Jean is head of watches at Louis Vuitton. They seem to get along, and Arnault has repeatedly said it is not a given that any of them will get his job. But that hasn’t stopped the questions.
A lot of eyes are Antoine this week. Last fall, he stepped back from his role as C.E.O. of Berluti to focus on the Games, which is LVMH’s largest-ever marketing investment. If the Olympics is a roaring success, it could up his odds; if it doesn’t, well …
Antoine says the Games are a big “risk” for the group, but they are also a risk for him. When I asked what he was going to do after the Olympics, he politely declined to answer.
THE SPEED READ
Deals
How the financier Mark Patricof became the investing partner of choice to dozens of pro athletes, including Jason Kelce and Dwyane Wade. (NYT)
Vivendi, the French media giant, will list its Canal+ TV business in London as part of a plan to break up the conglomerate. (FT)
Elections, politics and policy
FGS Global, the communications and consulting firm, has hired Josh Tzuker, who was most recently the chief of staff and senior counsel at the Justice Department’s antitrust division, as its global head of antitrust and competition, DealBook is first to report.
Nippon Steel has hired Mike Pompeo, Donald Trump’s former secretary of state, as an adviser to help win political approval for its deal to buy U.S. Steel. (Bloomberg)
Best of the rest
Some on Wall Street have increasing doubts about the future of Fanatics, the sports merchandising giant. (Air Mail)
Faiza Saeed, the presiding partner of the law firm Cravath, Swaine & Moore, opens up on her decades as one of Wall Street’s top corporate advisers. (FT)
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