How the election is dividing tech
The tech world has long been divided by rivalries: Macs versus PCs, open source versus closed source. Now perhaps the biggest partition is political.
The presidential election has pit moguls and former colleagues like Elon Musk and Reid Hoffman against one another, The Times’s Ryan Mac, Erin Griffith and Mike Isaac report. It’s a reminder, as DealBook has noted, that Silicon Valley’s libertarian wing is feeling more emboldened to flex its money and influence to buck what has become a traditionally Democratic consensus.
Who’s who: Some of the most vocal Democratic donors among the tech elite are Hoffman; Vinod Khosla, the venture capitalist; Aaron Levie, the C.E.O. of Box; and the investor Roger McNamee. On the Republican side are a camp of libertarians that includes Musk and the investors Peter Thiel, David Sacks, Marc Andreessen and Ben Horowitz.
Then there are those staying neutral, including Mark Zuckerberg of Meta, who are ostensibly trying to avoid antagonizing whoever wins in November.
The election has fomented clashes between longtime colleagues, including venture capitalists who have invested side by side and — in the case of Hoffman, Musk, Sacks and Thiel — part of the so-called PayPal Mafia who worked together at the payments company.
After McNamee called out Andreessen and Horowitz on X for backing Donald Trump, Horowitz shot back: “Really Roger? We’ve know each other for 25 years, you invested in my company, you have my cell #, and your very first idea when we disagree is to attack me in a tweet?”
Pro-Trump techies had a moment. Much ink has been spilled about the prominence of support within Silicon Valley for the former president, driven by libertarian ideology, a distaste for the Biden administration’s crackdown on tech and loathing for tight regulation of the crypto industry.
The Musk-Thiel camp even succeeded in persuading Trump to pick one of their own, Senator JD Vance of Ohio, as his running mate. (Vance attended a fund-raiser in Palo Alto, Calif., yesterday.)
But that group is now on the back foot. New polling shows that Kamala Harris has narrowed the gap with Trump and raised over $200 million in donations in her campaign’s first week. (Harris has gained support among techies, according to a recent reader survey by The Information.)
Vance reportedly conceded to donors recently that Harris replacing President Biden as the Democratic candidate proved to be a “political sucker punch.”
Don’t expect an irreparable schism in Silicon Valley, however. “I’ll work with almost anyone if what I’m working on can change the world,” Khosla told The Times.
In Harris veepstakes news: Gov. Roy Cooper of North Carolina removed himself from contention. Gov. Tim Walz of Minnesota is rising up the ranks of candidates, as is Senator Gary Peters of Michigan. A recent poll put Senator Mark Kelly of Arizona, a favorite of many donors, above contenders including Gov. Josh Shapiro of Pennsylvania and Gov. Andy Beshear of Kentucky.
HERE’S WHAT’S HAPPENING
The U.S. national debt surpasses $35 trillion for the first time. The milestone, which was reached yesterday, is a stark reminder of the fiscal challenges facing whoever wins in November. The Congressional Budget Office has estimated that the national debt could climb to $56 trillion by 2034.
A prominent investor reportedly drops out of Bill Ackman’s upcoming fund I.P.O. The Baupost Group, the hedge fund run by Seth Klarman, won’t participate in the offering for Pershing Square USA after Ackman said in a letter to some investors that Baupost had placed an order for $150 million worth of shares, according to Bloomberg. It would be the latest setback for Ackman’s planned fund after the S.E.C. forced a delay of the I.P.O. to review the letter.
The Olympic men’s triathlon is postponed because of pollution in the Seine. Officials blamed the delay on recent heavy rains causing a rise in bacteria in the river. Organizers of the Paris Games had spent $1.5 billion to clean the river and hoped it would be a showcase for the city. In other Olympics news, Simone Biles is set to compete in all four events in the women’s team gymnastics finals despite nursing a calf injury.
The Fed’s balancing act
The Fed meets this week, and economists and markets expect the central bank to leave rates unchanged at 5.3 percent while setting the stage to start cutting in September. After three years of rapid price increases, inflation has slowed substantially, and the central bank is now focused on its second big objective — the labor market — as officials try to stamp out inflation without causing unemployment to rise.
DealBook spoke with Jeanna Smialek, who covers the Fed for The Times, before the Fed’s two-day meeting, which starts today.
The labor market is strong, but there have been some signs of weakness. How concerned is the Fed?
Unemployment is low, and hiring is strong enough that central bankers are not panicking. But they have definitely made it clear that they would react to any abrupt turn for the worse.
A labor market slowdown wouldn’t necessarily make for an earlier rate cut, but it could set the stage for a more aggressive rate-cutting campaign.
You’ve written that whoever wins the presidential election is likely to inherit a good economy. How much credit does the Biden administration deserve for that?
The Biden administration can point to some wins: infrastructure spending, factory construction and green energy investment that are likely to bear fruit in coming years.
As is always the case, some of the broader economic trends are bigger than any one administration, though. Inflation jumped in part because of global forces, and now it’s coming down in part because of global forces.
Which presidential candidate’s policies are most likely to keep inflation in check?
Most of the economic analyses I’ve seen have suggested that Donald Trump’s policies are likely to be more inflationary — higher tariffs and restricted immigration could make cost pressures worse. That said, we don’t have extremely detailed economic plans from either candidate yet.
To what extent is the election a factor for the Fed’s decision making?
The Fed would say the election does not factor into its decision making, and I think this is mostly true. Former officials sometimes tell me that they would have preferred not to move rates right around elections, all else being equal, because it puts the Fed in the headlines, and central bankers would rather fade into the background.
But in the real world, all else is never equal. The economy changes constantly, and the Fed is much more focused on those fluctuations than on politics when it comes to rate policy.
Vista Outdoor concedes
After months of trying to persuade investors to back its preferred deal, Vista Outdoor, the maker of CamelBak water bottles and Remington-branded ammunition, is waving the white flag.
The company said that it had postponed a shareholder vote today on the proposed $2.15 billion sale of its ammo division to the Czechoslovak Group, known as CSG. Vista will instead weigh a broader range of potential transactions — including a sale to MNC Capital, the investment firm it has long spurned.
Getting shareholder approval for the CSG deal was becoming impossible. Vista had delayed a vote on the transaction several times, as MNC kept raising its offer to buy the entire company. Major shareholders, including Gates Capital Management and GAMCO, publicly opposed the CSG offer as too low, as did the influential proxy advisory firm Institutional Shareholder Services.
Vista finally conceded defeat. “We take the views of our stockholders very seriously and believe it is prudent to evaluate all strategic alternatives,” Mike Callahan, Vista’s chairman, said in a statement.
Among the options Vista will now consider:
A takeover bid by MNC, whose founder is a former Vista board member. Vista noted that MNC said it was willing to raise its bid, currently at $42 a share, “if there were a reason or basis to increase our offer, including Vista engaging with us and providing one.”
Potentially selling off its non-ammo business, known as Revelyst, which has been meant to trade as an independent public company after the sale. Vista said that CSG is willing to consider finding partners to buy Revelyst in addition to the ammo division.
A simpler split of Revelyst and the ammo business.
A new shareholder vote is scheduled for Sept. 13.
Markets appeared to applaud the news, with shares of Vista up nearly 3.5 percent in premarket trading, at $40.19.
Representatives for MNC and CSG declined to comment.
China’s E.V.s take on the world
The U.S. election is casting a shadow over the West’s relations with China, and companies are again caught in the middle.
Few sectors are feeling this more acutely than cars, as China leapfrogs Western rivals to become the world leader in electric vehicles.
Chinese companies just set a record for E.V. sales in Europe. Manufacturers including SAIC Motor, which owns MG, and BYD accounted for 11 percent of all sales in June, according to Dataforce.
Among the drivers of that growth: discounts and a marketing push before European tariffs on imported Chinese E.V.s took effect at the start of July.
China sees an opportunity to exploit a split between the U.S. and Europe. Beijing feels under siege as the U.S. cracks down on Chinese industry via alliances in Europe and elsewhere in Asia.
But the European Union is preparing for a potentially tumultuous relationship with America, if Donald Trump is re-elected, especially if he imposes newtariffs.
And any softening of U.S. support for Ukraine in its war against Russia could make some European governments turn to Beijing, a key Moscow ally, for help to end the conflict. If that happens, China could use its leverage to push Europe to ease trade restrictions.
Europe’s focus on meeting sustainability goals may make it tough to keep blocking Chinese E.V.s. The European Union hopes to reach net zero greenhouse gas emissions by 2050, an aim that’s difficult if it spurns cheap Chinese cars to protect legacy car makers that produce more expensive models.
At the same time, tariffs haven’t stopped Chinese brands from expanding overseas. With the U.S. and Europe increasingly tough to operate in, Chinese car companies have focused on markets including Southeast Asia.
In Thailand, the regional manufacturing hub known as the “Detroit of Asia,” Chinese car makers are grabbing market share by cutting costs and investing heavily to supplant the long dominant Japanese brands, The Times reports.
THE SPEED READ
Deals
BHP and Lundin Mining agreed to buy Filo, a Canadian mining company, for $3.25 billion, to bolster their access to copper. (Reuters)
A group including Sixth Street and the private equity firm led by Steven Mnuchin, the former Treasury secretary, agreed to buy the insurer Enstar Group for $5.1 billion. (WSJ)
Elections, politics and policy
The short seller Andrew Left surrendered to a Los Angeles court to face federal criminal securities fraud charges. (CNBC)
A London court awarded Mozambique more than $825 million in damages tied to a fraud scheme involving “tuna bonds” arranged by banks including Credit Suisse. (FT)
Best of the rest
Commercial real estate foreclosures hit a nearly decade high in the second quarter, though the industry hopes that signals a bottom for the market. (WSJ)
Mark Zuckerberg of Meta and Jensen Huang of Nvidia traded jackets and compliments onstage yesterday, as their companies deepen an A.I. partnership. (Business Insider)
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