DealBook: U.S. Strike Against Iran Rattles Markets

January 3, 2020

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Maj. Gen. Qassim Suleimani in 2016. Ebrahim Noroozi/Associated Press

Tensions, and oil prices, rise after U.S. move against Iran

America’s killing of Iran’s top security and intelligence commander, Maj. Gen. Qassim Suleimani, this morning has sharply escalated tensions between Washington and Tehran. And markets are taking notice.

U.S. officials said General Suleimani had been hit in a drone strike at Baghdad International Airport. He was “the architect of nearly every significant operation by Iranian intelligence and military forces over the past two decades,” the NYT notes. (Here’s a smart long read on his importance.)

Critics of the killing worry that it will cause huge trouble for the U.S. and allies like Israel, including putting America closer to war with Iran. “Managing the trouble this strike seems likely to produce will further weaken the United States and entangle it in peripheral conflicts disconnected from U.S. security,” said Daniel Davis, a senior fellow at Defense Priorities, a think tank in Washington.

How the markets are looking:

• Oil prices were up 4 percent after news of the strike emerged, with Brent crude reaching nearly $70 a barrel.

• Futures for the S&P 500, the Dow and the Nasdaq all plunged this morning.

• Gold hit a nearly four-month high.

“This was supposed to be a holiday week for many traders,” Olivier Jakob of the oil consultancy Petromatrix told the FT. “Many will be cutting the holidays short and called in for an emergency risk meeting.”

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Today’s DealBook Briefing was written by Andrew Ross Sorkin and Michael J. de la Merced.

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Amazon employees protesting the company's environmental policies in September. Lindsey Wasson/Reuters

Amazon warns workers over climate change critiques

The tech giant has cautioned at least two employees that they could be fired if they continue to publicly criticize the company over its environmental policies, Jay Greene of the WaPo reports.

• “A lawyer in the e-commerce giant’s employee-relations group sent a letter to two workers quoted in an October Washington Post report, accusing them of violating the company’s external communications policy,” Mr. Greene writes.

• The two told the WaPo last year that the company was “contributing to climate change as its cloud computing business aids oil- and gas-company exploration.”

• An Amazon spokeswoman told the WaPo (which is owned by the Amazon boss Jeff Bezos) that employees were “encouraged to work within their teams.”

• One of the workers, Maren Costa, was defiant: “It’s our moral responsibility to speak up — regardless of Amazon’s attempt to censor us.” Other employees also pledged to keep protesting.

Senator Bernie Sanders Stephen Maturen/Getty Images

Democratic contenders raked in cash in fourth quarter

Many top candidates for the Democratic presidential nomination reported a huge haul for the last three months of 2019. That means one thing: Primary season could go down to the wire.

Senator Bernie Sanders was the clear winner, raising $34.5 million during the quarter. Pete Buttigieg reported $24.7 million, while Joe Biden announced $22.7 million and the Twitter-favorite Andrew Yang disclosed $16.5 million.

Senator Elizabeth Warren hasn’t announced her haul yet, but she had set a lower-than-expected $20 million target. She said yesterday that unlike some rivals, she “didn’t spend one single minute selling access to my time to millionaires and billionaires.”

The positive and negative takeaways for Democrats:

• Supporters are eager to beat President Trump and are opening up their wallets to help make that happen.

• But that means candidates might stay in the race long after they’re politically viable, leaving less time for the party to unite around its eventual candidate.

• And Mr. Trump is amassing a huge war chest, raising $46 million during the quarter.

C.E.O.s’ biggest worry for 2020: recession

Goldman Sachs economists may think the U.S. economy is nearly unstoppable. But corporate leaders feel differently, according to a new survey by the Conference Board.

• C.E.O.s worldwide ranked recession as their main worry for the second year in a row. American chiefs now say it’s their biggest concern, up from third last year.

• Most economists think U.S. economic growth will continue this year, though not as fast as in 2019.

• “Business leaders are like normal people. We just don’t quite understand where this all will be going,” Bart van Ark, the Conference Board’s chief economist, told the WSJ.

• Trade was the second-biggest worry over all, followed by fiercer competition.

Saumya Khandelwal for The New York Times

SoftBank’s latest headache is its India jewel

The Japanese giant is in the middle of cleaning up WeWork. But another big investment looks messy: Oyo, a fast-growing Indian hotel operator with lots of problems, according to Vindu Goel and Karan Deep Singh of the NYT.

• Oyo — in which SoftBank has invested several hundred million dollars — offers rooms from unavailable hotels, current and former employees told the NYT. That includes those that have left its service, falsely inflating its capacity.

• The company also offers rooms in guesthouses and unlicensed hotels — and it wards off legal trouble by sometimes giving free accommodations to the police and other officials.

• “Some hotel operators have sought to file criminal complaints against Oyo, which said it withheld payments primarily over the hotels’ customer service issues,” Mr. Goel and Mr. Singh add.

• The company expects to lose money through at least 2021.

“It’s a bubble that will burst,” Saurabh Mukhopadhyay, a former Oyo operations manager who left the company in September, told the NYT.

Richard Plepler Jesse Dittmar for The New York Times

HBO’s former chief is in Apple’s corner now

Richard Plepler led HBO for years, helping pick hits like “The Sopranos” and “Game of Thrones,” before resigning last year. Now he’ll help produce content for one of the channel’s biggest new rivals, Apple, amid the streaming video wars.

His Eden Productions signed a five-year deal to create TV series and movies exclusively for Apple TV Plus, John Koblin of the NYT writes.

The tech giant hopes that he’ll bring a magic touch to its lineup, which has received mixed reviews. (It’s unclear how many subscribers Apple TV Plus has or how many people have watched shows, including “The Morning Show” and “See.”)

The move pits Mr. Plepler against his former employer, which he left after clashing with its new owner, AT&T. But he told the NYT that there was “plenty of room out there for everybody to do well” and that “I don’t think of it for two minutes as rivaling HBO.”

Choose carefully. @gplatinum_

Picture of the day: Which subway seat are you?

Andrew picks No. 1. Michael just wants to avoid Nos. 2 and 4. Which would you pick?

Revolving door

Tadashi Yanai, the founder of the Japanese clothing chain Uniqlo, has resigned from SoftBank’s board.

Charles Lin has stepped down as Vanguard Group’s head of Asia. He’ll be replaced on an interim basis by Axel Lomholt.

The speed read

Deals

• Investors are increasingly worried that a federal judge will block T-Mobile’s deal to buy Sprint. (Bloomberg)

• Private equity firms are starting 2020 with nearly $1.5 trillion in unspent capital, the highest cash pile on record for the industry. (Bloomberg)

• Beijing has reportedly put a temporary block on cross-border listings between the Shanghai and London stock exchanges because of political tensions. (Reuters)

Politics and policy

• The Trump administration’s partial ban on flavored e-cigarette products was a political compromise meant to appease tobacco industry groups, parents and health officials. (NYT)

• Bill Gates has urged lawmakers to raise taxes on the wealthy by closing loopholes and raising estate and capital gains taxes. (Bloomberg)

Tech

• The European authorities used an Israeli spyware tool to track a suspect’s WhatsApp account — until the messaging service notified users, including the suspect, that their accounts had been hacked. (WSJ)

• Google’s former head of international relations, who’s now the Democratic candidate for one of Maine’s Senate seats, says the company has strayed from its “don’t be evil” roots. (Medium)

• Shares of Apple closed yesterday above $300, a first for the tech giant. (FT)

• Why robots aren’t taking away jobs — at least not yet. (FT)

Best of the rest

• Interpol issued a “red notice” for Carlos Ghosn, asking Lebanon to arrest the former Renault and Nissan chief for fleeing prosecution in Japan. Separately, Mr. Ghosn had pitched a Hollywood producer on a possible movie about his legal troubles. (FT, NYT)

• Hong Kong residents are putting off major life decisions — or considering leaving the city altogether — amid the continuing unrest. (NYT)

• American pharmaceutical companies raised drug prices this week by an average of 5.8 percent, less than in that period last year. (WSJ)

• Firing a C.E.O. doesn’t change much at a company. (Axios)

Thanks for reading! We’ll see you next week.

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