The Big Takeaways for Business from Debate Night

A test of performance

For business leaders and others, last night’s presidential debate was more notable for how the candidates performed rather than for the policy measures they discussed.

Still, the 90-minute clash between Vice President Kamala Harris and Donald Trump represented a key moment for many in the corporate world and beyond: How would the Democratic standard-bearer fare onstage? And would the two candidates shed more light on their economic and business stances?

“This was a debate of social media memes more than in-depth policy analysis,” Paul Donovan, the chief global economist for UBS Global Wealth Management, wrote to clients on Wednesday, summing up the discourse. Most of the reactions centered on Harris goading Trump into traps, including about the crowd size at his rallies and his standing with world leaders.

Still, there were moments when economic and business policy came up. Among them:

• Harris attacked Trump on his favoring of increased tariffs on Chinese-made goods, which he has said would raise trillions of dollars, as a “Trump sales tax” that would be borne by middle-class families.

• Trump attacked Harris over the sharp rise in inflation during the Biden administration, calling it a “disaster for people, for the middle class, for every class.”

• Harris denied that she would impose a ban on fracking — an important issue to voters in the battleground state of Pennsylvania, where the debate was held — continuing to walk back comments she made as a Democratic presidential candidate in 2019.

Many, including some Trump supporters, thought Harris won the debate. On the Harris side, Aaron Levie, the C.E.O. of the software company Box, wrote on X: “Kamala is doing a great job at reinforcing the pro business message and policies right now. She’s a centrist.”

Elon Musk, one of the former president’s most prominent backers, wrote, “While I don’t think the debate hosts were fair to @realDonaldTrump, @KamalaHarris exceeded most people’s expectations tonight.” He later added that Trump would better help business and streamline government.

Harris won a prominent endorsement that touched on policy as well. In announcing her support of Harris after the debate, Taylor Swift cited A.I.-generated images falsely claiming that the pop star was backing Trump. “It really conjured up my fears around AI, and the dangers of spreading misinformation,” Swift wrote on Instagram (where she has 283 million followers).

The debate showed a boost for Harris in other ways. The political prediction market PredictIt showed a steady increase in bets on a Harris victory over the course of the debate. Meanwhile, shares in Trump Media & Technology Group, the parent company of Trump’s social network whose stock tends to track his political fortunes, were down sharply in premarket trading on Wednesday.

The Times’s Theodore Schleifer noted that ActBlue, the Democratic online fund-raising platform, has now collected more than $1 billion since President Biden dropped out of the race and endorsed Harris on July 21. ActBlue recorded $24 million in donations in the three hours after the debate began.

HERE’S WHAT’S HAPPENING

Speaker Mike Johnson’s plan to avert a government shutdown collapses. The $1.6 trillion spending proposal ran into opposition from Democrats and lawmakers in Johnson’s own Republican Party, forcing him to try again this week. But he’s caught between deficit hawks who want more cuts and Democrats who oppose a plan, backed by Donald Trump, that would include a provision for tougher voter I.D. requirements at the polls.

Southwest Airlines shakes up its board after pressure from an activist investor. Gary Kelly will step down as executive chairman next year, bowing to pressure from Elliott Investment Management, which owns a roughly 11 percent stake in the company and had pushed for big management changes at the airline. But the struggling company threw its support around Bob Jordan, the C.E.O. whom Elliott has also sought to oust.

A Nippon Steel executive flies to Washington to try to salvage its $15 billion U.S. Steel takeover. The Japanese steel maker’s vice chairman is set to meet on Wednesday in Washington with U.S. officials, The Financial Times reports. Both Vice President Kamala Harris and Donald Trump oppose the proposed acquisition, as they court blue-collar voters in battleground states like Pennsylvania.

Basel III ends with a whimper

America’s largest banks have scored a major victory in their expensive and bruising battle with Washington over tough new capital proposals.

But there was hardly time to celebrate, as the lenders themselves have warned of difficult times ahead for the U.S. economy.

The Fed said on Tuesday that it would dial back the so-called Basel III endgame requirements. Following the global financial crisis, and again last year after the collapse of Silicon Valley Bank, regulators called for midsize and large lenders to hold more capital against their assets as a cushion to soak up losses in the event of another banking shock.

Bank executives, including JPMorgan Chase’s Jamie Dimon, lobbied fiercely against the beefed-up rules. They argued that the tougher regime would crimp lending and put them at a competitive disadvantage to overseas rivals. They gained powerful allies, including Republican lawmakers and even liberal Democrats in Congress, who voiced their fears that a mandate to set aside billions to fight the next potential crisis could hurt businesses and households.

The Fed’s point person on banking rules acknowledged that regulators got the message. “Capital has costs, too,” a humbled Michael Barr, the Fed’s vice chair for supervision, said in a speech on Tuesday at the Brookings Institution in Washington.

Jay Powell, the Fed chair, signaled in March that regulators would most likely capitulate to the banks. And alongside the U.S. pullback, there is a global retreat on banking rules, with the European Union putting its own banking overhauls on pause.

Here are the big takeaways from the revised proposals:

• The largest banks would be required to keep an additional 9 percent in capital on their books, down from 19 percent.

• Midsize lenders carrying $100 billion to $250 billion in assets would mostly “no longer be subject to the endgame changes,” Barr said.

The Financial Services Forum, an industry lobbying group, said it would review the revisions. And Senator Elizabeth Warren, the Massachusetts Democrat who has urged more stringent rules, called the changes “a Wall Street giveaway.”

Investors largely shrugged off the news. Bank stocks tumbled on Tuesday after Dimon warned that the Fed’s pivot to lower interest rates (which could come as soon as next week) would dent its lending margins. And Ally Financial put markets on alert about households’ deteriorating credit.

A new round for golf’s big deal

After months of on-again, off-again talks, representatives of the PGA Tour and Saudi-backed LIV Golf met in Manhattan on Tuesday to kick-start efforts to get a deal to combine forces over the line, DealBook’s Lauren Hirsch reports.

But despite the momentum, there’s no guarantee that an accord will be reached.

Plans for the meeting came together in the past week, DealBook hears. The talks, which are expected to continue on Wednesday, include executives from the tour and Saudi Arabia’s wealth fund, which backs LIV, as well as their advisers. Also in town is at least one executive from a consortium of U.S. investors, led by Fenway Sports Group, that has already committed to back the tour.

Players aren’t attending the meeting, despite reports that Tiger Woods was in town. That spurred speculation that he might be involved, but the golf superstar was actually attending an event to support his charity foundation.

Momentum has been building. When the two sides met in New York in June, they signed a nonbinding letter of intent that laid out the broad strokes of a potential deal. The sides have submitted a draft of that document to the Justice Department to try to get ahead of potential antitrust concerns.

A potential deal could see the Saudi wealth fund invest $1.5 billion into a commercial arm created by the PGA Tour and a U.S. investment group.

But any agreement would have to answer major questions. They include: how to combine tournament schedules, what role the Saudi wealth fund would have on the board of the PGA Tour, and how to navigate regulatory scrutiny.

The political backlash hasn’t been resolved. A group of survivors and supporters of victims of the attacks on Sept. 11, 2001 criticized the timing of the latest talks in New York, which come on the anniversary of the tragedy. “It is disgusting, unacceptable and incredibly painful,” the group, 9/11 Justice, said in a statement.

Does the U.S. need a sovereign wealth fund?

President Biden and Donald Trump disagree on many things. But there’s one policy on which they both agree: The U.S. should create a sovereign wealth fund. Yet they differ on what it would look like, The Times’s Alan Rappeport writes.

Biden and Vice President Kamala Harris want a fund focused on securing supply chain resilience, tech superiority and energy security. Trump envisions one that would invest in national development projects, with an eye toward earning profits to pay down the national debt. His version would be funded by income from new tariffs that he has made the centerpiece of his economic agenda.

Creating one is far from straightforward, however, Rappeport notes:

It would most likely require an act of Congress and the ability of the federal government to stop running the kind of annual deficits that have allowed the national debt to top $35 trillion.

“The only way would be to levy taxes, not spend the money and build the fund,” Douglas Holtz-Eakin, the president of the American Action Forum and a former director of the Congressional Budget Office who has advised Republicans, wrote this week. “I don’t know if anyone has noticed, but the federal government does levy taxes, but not as much as it does spend money, and has only accumulated debt in the process.”

Another big question is who would run such a fund? (Trump has said that John Paulson, the billionaire financier and a donor, would be an adviser.)

“How could it be assured that sovereign wealth fund funding didn’t serve as a slush fund for politicians?” asked Mark Sobel, the U.S. chairman of the Official Monetary and Financial Institutions Forum and a former Treasury official.

THE SPEED READ

Deals

• Commerzbank said it was open to talks about a potential tie-up with UniCredit, after the Italian bank acquired a 9 percent stake in the German lender. (FT)

• Rightmove, Britain’s biggest online real estate listings platform, rejected a $7.3 billion takeover bid by REA Group, the Australian properties advertising company majority-owned by Rupert Murdoch’s News Corp. (Bloomberg)

Elections, politics and policy

• Deere, the farm equipment maker, agreed to pay $9.93 million to settle S.E.C. charges that a subsidiary in Thailand offered massage parlor services and other improper gifts to win business. (Reuters)

• “Poverty Increased in 2023 as Prices Rose and Pandemic Aid Programs Expired” (NYT)

Best of the rest

• Google struck a deal with a carbon-removal start-up to capture carbon dioxide emissions from its operations for $100 per ton, a far lower price than market rates. (The Verge)

• Some of the top executives for Neom, Saudi Arabia’s huge construction project, have a history of inappropriate workplace behavior, racist and misogynistic comments and corruption charges. (WSJ)

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