Donors weigh in on the D.N.C.
Vice President Kamala Harris’s acceptance speech may have been short on the details policy watchers were seeking, but she presented a sweeping vision for how she plans to grow an economy that’s showing signs of slowing. “I will bring together labor and workers and small-business owners and entrepreneurs and American companies to create jobs,” she told the Democratic National Convention last night.
The nod to corporate America comes as Democrats try to firm up relations with big business. DealBook has been hitting the phones all week to hear what donors thought of the four-day convention.
Chicago was a hot ticket. A flood of donors decided to go only after Harris became the presumptive nominee. These donors ended up making a big impact on the convention: The event’s host committee said it raised a record $95 million for the event, mostly from sponsorship packages that guaranteed prime seats and other perks if donors gave between $100,000 and $5 million.
Many of the party’s largest Wall Street donors were there, including Brad Karp, the chairman of the law firm Paul, Weiss; Raymond McGuire, the president of Lazard; Blair Effron, a founder of Centerview Partners; and John Rogers Jr., the founder of Ariel Investments.
Harris supporters argued she would be a strong steward of the economy. That was the message in a flurry of private meetings and parties hosted during the convention. They sought to portray her as a steady hand, versus the uncertainty that a second Trump administration would bring.
Wall Street also engaged in a favorite parlor game: guessing Harris’s pick for Treasury secretary. One popular candidate was Gina Raimondo, the commerce secretary. Other possibilities emerged, notably Jamie Dimon of JPMorgan Chase. Still, some donors wondered whether Senator Elizabeth Warren of Massachusetts would ever let a banker sit in that role.
Donors liked what they heard — but they want more detail. For them, the speeches by Doug Emhoff, the second gentleman, and the Obamas were a hit. They also thought Ken Chenault, the former C.E.O. of American Express, made a persuasive case for business leaders to support Harris. “She understands it’s possible, in fact, necessary, for a president to be both pro-business and pro-worker,” Chenault said onstage.
Still, donors said they wanted specifics for her economic policies. These supporters are especially eager to hear more about whether she would continue President Biden’s aggressive antitrust policy; her position on the capital gains tax, given that the White House wants to raise taxes on the wealthy and corporations; and whether she would adopt a globalist, as opposed to nationalist, approach to trade.
HERE’S WHAT’S HAPPENING
S&P 500 futures edge higher ahead of Jay Powell’s policy speech on Friday. With unemployment on the rise, investors expect the Fed chair to signal that the central bank would lower interest rates, for the first time in four years, as soon as next month. On their minds: How big would that first cut be, and would more follow this year? The futures market on Friday saw the Fed lowering its prime lending rate by about one percentage point by year-end.
The Canadian government moves to end a rail freight standoff. The national authorities effectively ended a 17-hour standstill, ordering feuding rail companies and their employees to enter arbitration. Freight is expected to move again in the coming days, averting a bottleneck that could have disrupted trade on both sides of the Canada-U.S. border.
Chinese companies are said to use cloud computing services to skirt U.S. sanctions. Beijing-linked enterprises have used services by Amazon and others as a backdoor to gain access to advanced U.S. chips and artificial intelligence technologies, Reuters reports. It’s the latest example of Chinese companies finding workarounds to circumvent Washington’s trade restrictions on such products.
The case against RealPage
The Justice Department is expected to file an antitrust suit against RealPage, a property management software company, as soon as Friday, DealBook’s Lauren Hirsch and The Times’s Danielle Kaye and David McCabe reported first.
At the heart of the lawsuit are two major concerns of the Biden administration: reining in abuse of technology and tackling America’s housing crunch.
The context: RealPage sells software that gathers confidential real estate information used by the company’s algorithm to make rental-price recommendations for its landlord clients.
A number of states have already sued the company, accusing it of colluding with landlords to illegally manipulate prices in the rental market.
States including California, Colorado, Minnesota, North Carolina and Washington are planning to join the Justice Department suit.
In the past, RealPage has denied participating in illegal collusion, arguing that its algorithms merely suggest a rental price and that landlords are free to ignore the recommendations. It has said that similar lawsuits it is facing are without merit.
Housing affordability is a major concern for many Americans. Several economists see it as a factor in rising inflation, and Vice President Kamala Harris has made cheaper housing a central plank of her economic agenda.
“We’ve had multiple years of high growth in housing prices,” Sandeep Vaheesan, the legal director at the Open Markets Institute, told The Times. “There’s no single factor accounting for the rise in rents, but I think RealPage is an underrated contributor.”
Other economists, including Jeremy Schwartz at Nomura, blame housing shortages for the affordability crunch. Pinning the problem on anticompetitive behavior, he told DealBook last week, “could be difficult to demonstrate.”
Regulators are also worried about algorithms being used to set prices. That concern has been around for years, including when government officials took on Uber’s surge pricing for rides during emergencies.
But Jay Powell, the Fed chair, has dismissed the idea that surge pricing is boosting inflation. “I think we need to give companies the freedom to do that, as long as they’re not fixing prices or failing to disclose the nature of the price changes to the public,” he said in March.
Did Skydance just show a weak hand?
The Paramount takeover spectacle is turning into more of a legal drama, DealBook’s Lauren Hirsch and The Times’s Benjamin Mullin report.
Lawyers for Skydance, which has agreed to merge with Paramount, accused a special board committee at the entertainment giant of breaching the terms of their agreement, according to four people with knowledge of the matter. The cause: Paramount agreed to extend a deadline for evaluating a rival bid by Edgar Bronfman Jr.
Skydance’s move, first reported by The Wall Street Journal, is meant to pressure Paramount into closing their deal. But it’s not clear whether it actually hurts Skydance’s cause.
Skydance argues that Paramount violated their deal in two ways:
Bronfman’s offer is not reasonably expected to lead to a superior proposal, it says, a fundamental requirement for extending a so-called go-shop period. Analysts have questioned several aspects of Bronfman’s bid, including its long list of backers; potential regulatory concerns on whether the presence of foreign investors in the group runs afoul of broadcast network ownership rules; and whether it could top Skydance’s $8 billion bid.
Skydance also argues that while lawyers for Paramount’s special committee had provided notice that they had designated Bronfman’s group as an alternative bidder — an “excluded party” in legal parlance — they did not officially say the company intended to extend the go-shop time frame.
It’s not clear how much water Skydance’s threat holds. “You’re not going to win the go-shop debate based on a technical thing,” Jim Woolery, a veteran deal maker who runs the advisory firm Woolery & Co., told DealBook. “The only thing you’re doing is showing your hand.”
Paramount is continuing to talk with Bronfman. The company’s special board committee and its advisers believe there’s reason to do so: Bronfman is still raising money. And unlike Skydance’s offer, the Bronfman bid wouldn’t dilute the holdings of existing shareholders.
But whether that produces a deal that matches or exceeds Skydance’s will take up to another two weeks to figure out.
Remembering Mike Lynch
Italian divers have recovered the bodies of Mike Lynch, the British software mogul, and five other passengers who had been aboard his luxury superyacht, the Bayesian, when it was struck by a violent storm off the coast of Sicily on Monday.
It’s a tragic end for Lynch, who amassed a fortune in software but fought a nearly 13-year legal battle against fraud charges — and had planned the sailing trip to commemorate his acquittal just two months ago.
Lynch was once known as Britain’s Bill Gates. He founded Autonomy, a software company that sorted through clients’ unorganized data to unearth insights, which later became one of the country’s biggest tech successes. In 2011, he sold it to Hewlett-Packard for $11 billion, earning hundreds of millions from the sale and becoming one of the most prominent British tech C.E.O.s.
But HP later accused Lynch of deceiving it about Autonomy’s business, after investors revolted and HP wrote down the deal by $8.8 billion. U.S. prosecutors later charged Lynch and other top executives with fraud.
Lynch steadfastly denied the allegations, arguing that HP had destroyed Autonomy’s value through mismanagement. Still, he suffered several legal defeats, including being found liable in a civil lawsuit that HP had filed in Britain and being extradited to the U.S. last year, confined to a townhouse in San Francisco under 24-hour surveillance.
Lynch was eventually cleared by a U.S. jury in June, following a three-month trial in which he took the stand. His team successfully argued that Lynch wasn’t immersed in Autonomy’s day-to-day operations and that HP was fully aware of what it was buying.
The British entrepreneur said he intended to return to “innovating in my field.” During his trial he had been overseeing research into artificial intelligence.
Other prominent corporate figures died in the sinking:
Christopher Morvillo was a partner at the law firm Clifford Chance who helped lead Lynch’s legal team from the beginning. A scion of a prominent New York family, Morvillo was a former federal prosecutor turned prominent white-collar litigator, praised by former colleagues and other lawyers as a calm and strategic presence in the courtroom.
Jonathan Bloomer was a longtime British financial executive who also chaired Morgan Stanley International, the bank’s London-based arm. His career began at the accounting firm Arthur Anderson before serving as C.E.O. of Prudential and, more recently, as chairman of Hiscox.
THE SPEED READ
Deals
Stripe, the privately held fintech giant, reportedly plans another buyback of employees’ shares amid speculation that it’s planning to go public. (Bloomberg)
Chanel has agreed to buy a 25 percent stake in MB&F, a high-end Swiss watchmaker, as it seeks to expand its presence in the market. (Reuters)
Elections, politics and policy
The National Labor Relations Board ruled that contract workers who delivered Amazon parcels were employees of the e-commerce giant, marking a victory for the International Brotherhood of Teamsters union. (AP)
“Trump Threatens Tariffs on Countries that Don’t Accept Migrants” (Bloomberg)
Best of the rest
In personnel moves: Mark Schneider is stepping down as Nestlé’s C.E.O., and Sreela Venkataratnam, Tesla’s vice president of finance and business, operations, has resigned. (FT, Fortune)
“From Coachella to Burning Man, festivals are having a bad year” (The Economist)
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