The messaging service lists its shares directly on the N.Y.S.E. today.
June 20, 2019
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Stewart Butterfield, Slack's C.E.O. Noah Berger/Agence France-Presse — Getty Images
Slack goes public today
The messaging service that has taken the corporate world by storm reaches a new milestone today: Its shares will begin trading on the N.Y.S.E. (Its ticker symbol: “WORK.”)
Slack could be valued at nearly $16 billion. The company set the “reference price” for its shares at $26, which puts its valuation at more than double the level of its last private funding round.
But the company is staging a direct listing, not an I.P.O. That means it isn’t using underwriters or actually determining the price at which it will sell its shares. (The only other major company to have held a direct listing was Spotify.)
Slack could set a template for others to follow. If today goes well, expect more start-ups to consider going down this route. Airbnb has reportedly explored a direct listing instead of an I.P.O.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.
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Jay Powell, the Fed chairman Manuel Balce Ceneta/Associated Press
The Fed sticks to its guns, for now
The Fed chose not to lower interest rates yesterday, defying President Trump’s repeated demands for cuts. But the central bank strongly suggested that it will do so later this year.
“The committee felt that the right thing to do was to wait and see,” Jay Powell, the Fed’s chairman, said at a news conference yesterday. The central bank will pay particular attention to developments in the trade war with China and whether wages continue to mostly stagnate.
But there’s growing support inside the Fed for a cut. Seven of its governors expect the central bank to cut rates by 0.5 percentage points by the end of the year, and one recommended cutting rates immediately.
Markets moved accordingly, with stocks edging higher and yields on Treasury bonds tumbling. “The assumption is that they will cut,” Roberto Perli, an economist at Cornerstone Macro, told the NYT. “The question is how much, and when.”
But Mr. Trump may not be satisfied. He has reportedly said as recently as yesterday that he believed he had the authority to remove Mr. Powell from his position. The president has openly called for the Fed to cut rates to stimulate the economy, which has raised criticism about the politicization of the central bank.
Demoting Mr. Powell could get messy. The Fed chairman said yesterday that he intends to serve out his four-year term. And a former Fed governor, Robert Heller, told CNBC that markets would revolt if the president made such a move.
The inquiry comes after complaints by parents and consumer groups about the way the video giant had collected data about young users. The groups also said that YouTube allowed harmful and adult content to appear in searches for children’s content, and that misinformation and inappropriate content appeared in the service’s recommendation engines.
It could lead to a fine. In February, the agency fined the company behind the app TikTok $5.7 million for violating child privacy laws, because it had allowed children under the age of 13 to use the site with little enforcement of its minimum-age requirement.
The investigation is the latest cloud over YouTube. The Google-owned service has been criticized for not doing enough to filter inappropriate or dangerous content, promoting videos containing extreme opinions and inconsistently applying its own rules.
YouTube has been weighing changes to the way it handles children’s videos, the WSJ reports, citing unnamed sources. They could include shifting children’s content into a separate app or removing the auto-play feature for young viewers.
• “The investigation includes a review of Deutsche Bank’s handling of so-called suspicious activity reports that its employees prepared about possibly problematic transactions.”
• Some of those are linked to President Trump’s son-in-law and senior adviser, Jared Kushner, according to unidentified sources.
• It is one of several government examinations into how illicit funds flow through the American financial system, according to five of the sources. Several other banks are also under investigation.
The broader scope of the investigations is unknown, as are details of what is being examined. It is also not clear whether the inquiries will result in criminal charges.
But the scrutiny has weighed on Deutsche Bank’s stock price. Its shares are near historic lows, as investors question the bank’s future in the face of attention from regulators, members of Congress, and now the Justice Department and the F.B.I.
Larry W. Smith/EPA, via Shutterstock
Welcome to post-American globalization
As President Trump deploys tariffs as weapons in international disputes, he has ceded America’s role as champion of global trade, Peter S. Goodman of the NYT writes.
Globalization is probably irreversible, Mr. Goodman writes. Modern manufacturing is so complex that “a few unexpected tariffs will not prompt companies to swiftly close factories in China and Mexico and replace them with plants in Ohio and Indiana.”
But “what does appear to be ending is the post-World War II era in which the United States championed global trade as immunization against future conflict, selling the idea that the free exchange of goods was a pathway toward a more stable world order.”
Mr. Trump has “weakened the rules-based trading system while removing a counterweight to China, whose transactional approach to trade places scant value on transparency and human rights.”
“This is now the post-American world economy, one in which globalization is much more spotty,” Adam S. Posen, president of the Peterson Institute for International Economics in Washington, told the NYT. “In a world in which there is arbitrary use of commercial regulation by the United States, no cross-border investment looks to be as safe and useful as it used to.”
Chief Justice Earl Warren, whose Supreme Court made an important ruling on antitrust law in 1962. George Tames/The New York Times
The tech backlash: Back to the future?
The battle to rein in tech giants like Google and Facebook could revive decades-old debates about how to police competition in the U.S. — which would be a problem for Big Tech, David Streitfeld of the NYT writes.
• “For decades, antitrust regulation has been overwhelmingly focused on the welfare of the consumer. No cost to the consumer, no problem,” Mr. Streitfeld writes.
• But “now a backlash is mounting as renegade scholars try to reverse years of established doctrine that they say does not appropriately take the clout of those companies into account.”
• “People might enjoy using the tech platforms but they are also asking, What kind of society do we want?” Hal Singer, a senior fellow at George Washington University’s Institute of Public Policy, told Mr. Streitfeld.
• One thing to watch: whether antitrust decisions start to re-emphasize Brown Shoe Co. Inc. v United States, in which the Supreme Court argued that preserving smaller, local competitors was more important than lower prices.
• “The case could give Amazon, Facebook, Google and Apple nightmares,” Mr. Streitfeld writes.
More: Don’t forget about the slew of small mergers that have reduced competition in corporate America.
• Axalta, the maker of paint coatings spun out from DuPont, said that it has hired Evercore and Barclays to help it consider selling itself. (Bloomberg)
• The hedge fund manager John Paulson is reportedly closing his firm’s London office. (FT)
• Despite high-profile offerings by companies like Uber and Lyft, I.P.O. activity is down so far this year compared with 2018. (Axios)
• Ilana Weinstein is one of the most powerful women in the hedge fund industry — only she doesn’t run an investment firm. (WSJ)
Politics and policy
• Lawmakers and White House officials clashed in talks yesterday to avert another government shutdown over the federal budget. (WSJ)
• Senator Chuck Schumer asked the Treasury Department’s inspector general to open an inquiry into why the introduction of a new $20 bill featuring Harriet Tubman is delayed. (NYT)
• Senate negotiators agreed to a $4.6 billion bill to fund settlement of refugees who come to the southern border, as well as additional money for immigration judges and Customs and Border Protection. (WSJ)
• Facebook has spoken with the Fed about Libra. (CNBC)
• Privacy experts are skeptical of Facebook’s promises about user protections for the new currency. (FT)
• Is Facebook overstepping by trying to change how we structure money and payments? (NYT Op-Ed)
Tech
• An investigation into a Facebook content moderation center revealed that one contractor had died at the office, and that working conditions are often unsanitary. (Verge)
• Waymo has struck a deal with Renault and Nissan to develop self-driving vehicles for use in France, Japan and potentially beyond. (CNBC)
• Google was grilled about its work in China during its annual investor meeting yesterday. Its C.E.O., Sundar Pichai, didn’t answer any questions during the Q.&A. session. (Business Insider)
• HSBC will become one of WeWork’s biggest tenants, agreeing to rent over 1,000 desks in London. (FT)
• Britain will reportedly delay its age-verification system for online pornography indefinitely. (Sky)
Best of the rest
• Boeing was heavily criticized for its handling of the 737 Max crisis at a House hearing yesterday. And the company’s latest fear is that some pilots may not be strong enough to turn a hand crank in the jet that is required to avert disasters in extreme emergencies. (NYT, WSJ)
• Five NY1 anchorwomen have sued the cable channel for age and gender discrimination. (NYT)
• A United Nations report on the killing of Jamal Khashoggi unveiled new details about the murder and its cover-up. (NYT)
• Meet “the hedge fund founder giving big bucks to anti-vax groups.” (Institutional Investor)
• Working women are spending longer hours on the job, doing more child care and sleeping less. (WSJ)
• Adidas’s three-stripes branding didn’t qualify as a trademark, according to the General Court of the European Union. (WSJ)
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