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What’s eating American C.E.O.s?
We have some insight, thanks to the Yale C.E.O. Summit with Jeffrey Sonnenfeld last week in New York. The event was strictly off the record, but DealBook has the results of a survey of 134 business leaders who were there:
President Trump. Three in four C.E.O.s said they often apologized to their international business partners about the president’s messages. Eighty-seven percent said Mr. Trump’s negotiating style had cost the nation the trust of its allies, and three-quarters felt he wasn’t leading effectively on issues critical to U.S. national security.
Trade and Huawei. Just over three-quarters said it was appropriate for Canada to arrest Meng Wanzhou, the C.F.O. of the Chinese tech giant Huawei. But just one in five supported the idea of President Trump intervening in the case. Three-fifths said the issues surrounding Huawei and Ms. Meng would affect trade tensions, and just under half said that they could affect future travel plans.
A recession. Almost half of the respondents thought the U.S. could wind up in a recession by the end of the month. The greatest threats to U.S. markets, 67 percent said, are U.S. political instability and trade negotiations.
Tech regulation. An overwhelming message here: 90 percent of respondents said technology companies needed to be regulated more closely.
Malaysia files criminal charges against Goldman
The country filed charges today against subsidiaries of the investment bank in connection with the 1MDB scandal. Alexandra Stevenson and Sharon Tan of the NYT have the highlights:
• The charges accuse three Goldman subsidiaries of making false and misleading statements.
• Malaysia also charged several individuals, including the former Goldman investment banker Timothy Leissner and Jho Low, the Malaysian financier who American investigators say masterminded the scheme.
• Malaysia is seeking fines in excess of $2.7 billion related to the charges.
• “We believe these charges are misdirected, will vigorously defend them and look forward to the opportunity to present our case,” Edward Naylor, a Goldman spokesman in Asia, said in an emailed statement.
The Senate’s best look yet at 2016 election interference
WaPo has reviewed a draft report on Russian disinformation efforts during the 2016 campaign. Prepared by Oxford University’s Computational Propaganda Project and by the network analysis firm Graphika, the report is said to be “the first to study the millions of posts provided by major technology firms to the Senate Intelligence Committee.” Here are some highlights:
There was a focus on helping the Trump campaign. “Russians aimed particular energy at activating conservatives on issues such as gun rights and immigration, while sapping the political clout of left-leaning African-American voters by undermining their faith in elections and spreading misleading information about how to vote,” WaPo reports.
Operations were built on numerous fronts. Many of the efforts involved Facebook and Twitter, but the report also provides details about how YouTube and Instagram were used, as well as “other social media platforms — Google+, Tumblr and Pinterest — that have received relatively little scrutiny.”
And well coordinated. “Efforts shifted over time, peaking at key political moments, such as presidential debates or party conventions.”
What next? The Senate Intelligence Committee reportedly plans to publicly release this and another report this week. It’s unclear whether the panel will endorse the findings.
Plus: How the National Enquirer may have been more powerful than a Russian troll army .
How McKinsey gave authoritarian states an edge
At a time when democracies and their core values are under attack, McKinsey & Co. has helped raise the stature of authoritarian and corrupt governments around the world, sometimes in ways that run counter to American interests, according to an investigation by the NYT.
The company’s clients have included:
China: McKinsey has advised at least 22 of the 100 largest state-owned Chinese companies, those carrying out some of the government’s most strategic and divisive initiatives. One helped build the country’s artificial islands in the South China Sea, a major point of tension with the United States.
Russia: McKinsey has worked with companies linked to the Kremlin that have been placed under sanctions by Western governments, and in some cases it continues to advise those firms.
Ukraine: McKinsey and Paul Manafort — a former Trump campaign chief who has been convicted of financial fraud — were paid by the same oligarch to help burnish the image of a disgraced presidential candidate, Viktor F. Yanukovych.
Saudi Arabia: The firm produced a report tracking how Saudi policies were viewed by the public, and singled out three individuals for promoting conversations on Twitter that were frequently critical of the government. One of the people was later arrested, according to a human rights group.
South Africa: McKinsey was harshly criticized this year for its role in a vast corruption scandal in South Africa that led to the resignation of President Jacob Zuma. The ensuing crisis was the most serious in McKinsey’s 92-year history.
Everything in the markets is awful
For the first time in decades, every major type of investment has fared poorly, and that could be the start of a troubling, and vicious, cycle.
Stocks around the world are being pummeled. Commodities are tumbling. So are bonds. All of this has left investors with few places to put their money. Matt Phillips of the NYT explains what that could mean:
If this persists, or grows worse, it could create a damaging feedback loop, with doubts about the economy hurting the markets, and trouble in the markets undermining growth.
Pessimism emanating from the stock market could leave consumers and businesses scared to spend. The rout in junk bonds makes it more expensive for financially fragile businesses to borrow. The collapse in crude oil prices discourages new investment and hiring in the oil patch, which has been a source of job growth.
In that sense, the markets are both a gauge of what investors expect to happen in the economy, and a potential catalyst for their decisions. The mood in the financial markets ultimately feeds into spending by companies and consumers, and if they pull back, based on panicky ups and downs, growth could suffer.
Google announces a $1 billion New York push
Amazon may be rushing to set up huge offices in New York, but Google seems to think that slow and steady is the best approach.
The company plans to invest “over $1 billion in capital improvements” to establish a new campus on Hudson Street in Manhattan, and lease agreements at 315 and 345 Hudson Street will give it a 1.7 million-square-foot hub. Google says the new site, along with expansions it has planned in New York, will allow it to “more than double the number” of workers it employs in the city over the next 10 years. (It had just one employee there in 2000, and there are 7,000 today.)
In contrast, Amazon plans to add 25,000 workers at new offices in Long Island City, Queens. Winnie Hu and J. David Goodman of the NYT compare how the two companies are expanding in the area: Google, they write, has had the “chance to adapt its West Coast ideas to the confines of crowded New York City,” while Amazon has “riled people by seeking to avoid public scrutiny over its move.”
Inside the downfall of Carlos Ghosn
A WSJ investigation, based on interviews with “dozens” of Nissan veterans and people linked to the investigation into charges that Carlos Ghosn underreported his earnings, describes how employees at the automaker tried to bring down their chairman. Some highlights:
• “Accusations of hidden pay and lavish spending on the company dime were intertwined with a deep sense of discontent over Mr. Ghosn’s long reign over the automaker.”
• “Nissan employees had groused that Nissan profits were propping up Renault, and many feared Mr. Ghosn was preparing a Renault takeover of its bigger Japanese partner.”
• “For months, a group of Nissan executives secretly gathered information on Mr. Ghosn, laying the groundwork for a Nov. 19 strike against the executive and a top aide, Greg Kelly.”
• “The maneuvering allowed Japanese prosecutors to swiftly arrest both men, then raid company offices and his Tokyo apartment in the space of hours, say people familiar with the events.”
More Carlos Ghosn news: Renault has reportedly urged Nissan to call a shareholder meeting after Nissan’s indictment on allegations of underreported pay. And a Nissan subsidiary in the Netherlands is also under scrutiny for its role in the affair.
Should we test banks’ resilience to climate change?
Central banks already do stress tests of big financial institutions, to measure the lenders’ ability to withstand major financial crises. Now the Bank of England is wondering whether the impact of climate change should be included, too.
Political progress on climate change is still slow. Discussions at the U.N. climate conference in Poland over the past two weeks were tense. Officials ultimately agreed this weekend on a playbook for tracking climate emissions and policies, but only after talks almost failed. Some important plans, including an international carbon market, were postponed until later, suggesting that progress in cutting emissions would remain behind the curve, and that the impact of climate change might be more serious than feared.
Banks could easily feel the shock. Mark Carney, the governor of the Bank of England, told the FT that he was weighing whether stress tests this year or next should consider the risk and opportunities of climate change. The central bank used a similar “exploratory” test to look into the threat that fintech poses to banks, which Mr. Carney said was “quite instructive.” He didn’t elaborate on how a new test might work.
The French government may back Jean-Dominique Senard, the C.E.O. of Michelin, to succeed Carlos Ghosn as chairman of Renault. (Reuters)
Jaguar Land Rover reportedly plans to cut thousands of jobs. (FT)
The speed read
• The Swiss engineering company ABB is said to be nearing an agreement to sell around 80 percent of its power-grid unit to Hitachi. (Bloomberg)
• Qatar is reportedly considering increasing its stake in Deutsche Bank. (Bloomberg)
• CVS urged a federal judge to approve its acquisition of Aetna. (Reuters)
• T-Mobile and Sprint are said to hope that the Huawei debacle could help the U.S. authorities approve their merger. (Reuters)
• Merck plans to buy Antelliq, which creates digital technology to track animals, for $2.4 billion. (Reuters)
Politics and policy
• White House officials say that drug prices are inflated, but so are some of their claims about a possible solution. (NYT)
• President Trump announced on Saturday that Ryan Zinke, the interior secretary, would leave his post at the end of the year. The agency’s deputy secretary, David Bernhardt, a former oil lobbyist, is likely to run things for the time being. (Plus: Here’s what the shake-up inside the White House looks like.)
• The deadline to avoid a government shutdown is Friday, but it’s not clear that the Republican Party can get some lawmakers to show up for a vote. (NYT)
• Democrats can’t agree on how to handle voter data that could be crucial to their success in the 2020 presidential election. (WSJ)
• Speculation about a second referendum on Britain’s withdrawal from the E.U. grew over the weekend, but Prime Minister Theresa May has rejected the idea. (Bloomberg)
• Germany reportedly plans to lower the threshold it uses to determine whether foreign takeovers should be vetted. (Reuters)
• President Trump’s comments about getting involved in the arrest of Meng Wanzhou, Huawei’s C.F.O., could undermine Washington’s ability to enforce tough sanctions on rogue nations. (NYT)
• How Boeing is walking a fine line to please China, its biggest export market, without causing a backlash in the U.S. (WSJ)
• Tech workers paid in company stock are now using it to agitate for change. (NYT)
• Amazon is eliminating unprofitable items from its inventory and asking manufacturers to change some packaging so that items are better suited to being sold online. (WSJ)
• A Facebook bug may have exposed the private photographs of 6.8 million users. (WSJ)
• Netflix got people to cut their cable cords. Can it persuade them to give up the movie theater, too? (NYT)
• Lawyers representing Apple’s contract manufacturers struck out at Qualcomm, denying that settlement talks were underway. (Reuters)
Best of the rest
• Colin Kroll, the co-founder and chief executive of the popular HQ Trivia app, was found dead in his Manhattan apartment on Sunday, apparently of a drug overdose. (NYT)
• Asbestos has opened a new legal front in the battle over Johnson’s Baby Powder. (NYT)
• A tough fourth quarter means Wall Street bonuses might be lower this year. (FT)
• Which city should you move to if you want to make the most money? (WSJ)
Thanks for reading! We’ll see you tomorrow.
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