DealBook: Bloomberg’s Bruising Debate Dents His Odds

February 20, 2020

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Mike Bloomberg, Elizabeth Warren and Bernie Sanders at Wednesday's debate. John Locher/Associated Press

A no good, very bad night for Bloomberg

Mike Bloomberg has spent over $400 million during his ascent in the polls for the Democratic nomination. But money apparently couldn’t save the billionaire from a widely panned performance at last night’s presidential debate. It was like “the gap between an influencer marketing campaign and putting an actual product in front of reviewers,” as Nilay Patel of The Verge put it. (As a professional tech reviewer, he knows what he’s talking about.)

Mr. Bloomberg didn’t seem prepared. “His meek rebuttals seemed to inspire a wider reckoning among his peers, who slashed and bickered with an eagerness the race had not seen before,” Matt Flegenheimer of the NYT writes. He did get in a jab at Senator Bernie Sanders, though: “What a wonderful country we have. The best-known socialist in the country happens to be a millionaire with three houses. What did I miss here?”

How the other candidates whacked Mr. Bloomberg:

• Senator Elizabeth Warren: “I’d like to talk about who we’re running against: a billionaire who calls women fat broads and horse-faced lesbians, and no, I’m not talking about Donald Trump.”

• Joe Biden: “The fact of the matter is, he has not managed his city very — very well when he was there. He didn’t get a lot done.”

• Pete Buttigieg: “Most Americans don’t see where they fit if they’ve got to choose between a socialist who thinks that capitalism is the root of all evil and a billionaire who thinks that money ought to be the root of all power.”

• Senator Amy Klobuchar: “I don’t think you look at Donald Trump and say, ‘We need someone richer in the White House.’”

A hot topic was the issue of nondisclosure agreements that some former female employees of Bloomberg L.P. signed after accusing Mr. Bloomberg of harassment and discrimination. Mr. Bloomberg refused to release those women from the N.D.A.s, calling them “consensual” — then appeared flustered by further attacks by Ms. Warren and others.

Prediction markets quickly soured on Mr. Bloomberg’s performance. His odds of securing the Democratic nomination have tumbled about 10 percentage points in 24 hours, to about 19 percent, according to ElectionBettingOdds.com.

Our favorite snark from Twitter comes from @IvanTheK, with one for the Bloomberg terminal users: “Team Bloomberg right now: <HELP><HELP>”

The takeaway: “There was little in the debate to suggest that Mr. Sanders, the national front-runner and the favorite to win Nevada’s caucuses on Saturday, had been knocked off balance,” Alex Burns and Jonathan Martin of the NYT write.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York and Michael J. de la Merced and Jason Karaian in London.

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Les Wexner Jay Laprete/Associated Press

End of an era for Les Wexner and Victoria’s Secret

The longest-serving C.E.O. in the S&P 500 will step down after selling a majority stake in Victoria’s Secret, the WSJ reports. The deal between Mr. Wexner’s L Brands and the private equity group Sycamore Partners would value the lingerie company at $1.1 billion, the NYT writes.

Mr. Wexner bought Victoria’s Secret for $1 million in 1982. It now accounts for more than half of revenue at L Brands, which the 82-year-old billionaire has run for the past 57 years. Mr. Wexner will remain on the L Brands board and retain his stakes in both Victoria’s Secret and Bath & Body Works, which will be what’s left in the L Brands empire. (When Mr. Wexner steps down, Berkshire Hathaway’s Warren Buffett becomes the longest-serving blue-chip C.E.O., at 50 years.)

The retail tycoon’s long tenure ends under a cloud, with the NYT revealing a culture of misogyny, bullying and harassment at Victoria’s Secret and increased scrutiny over Mr. Wexner’s deep ties to disgraced financier Jeffrey Epstein. From its peak in 2015, L Brands’ market value has fallen by about 75 percent as Victoria’s Secret has struggled to adjust to changing trends in fashion, especially notions of female beauty and representation in advertising.

Ralph Hamers, who will be UBS's new chief. Nicolas Lambert/Agence France-Presse, via Belga/Afp Via Getty Images

An unexpected choice for UBS’s new boss

Ralph Hamers of the Dutch bank ING has been named the next C.E.O. of the Swiss banking giant, replacing Sergio Ermotti. Although it was an open secret that UBS was looking for Mr. Ermotti’s successor, Mr. Hamers was not at the top of market watchers’ shortlist.

What’s the plan now? Mr. Hamers has spent nearly 30 years at ING, and as chief was credited with a digital transformation of the predominantly retail-focused bank. UBS is a different beast, relying much more on its high-touch wealth management operations. It’s not hard to imagine that Mr. Hamers’ cost-cutting at ING could come to bear at UBS, which has recently struggled to keep its spending in check.

Mixed signals from the markets: The share prices of both UBS and ING were up on the news.

The White House sees no problem with monopolies

Having a few big companies dominating markets isn’t necessarily a bad thing, according to the Trump administration, Jim Tankersley of the NYT reports:

In their annual Economic Report of the President, released on Thursday, Mr. Trump and his advisers effectively dismiss an emerging line of economic research that finds large American companies increasingly dominate industries like telecommunications and tech, stifling competition and hurting consumers.

Yes, but: The administration is nonetheless looking into whether tech companies are too big, though that may be driven by settling political scores instead of purely economic concerns.

Ursula von der Leyen, the European Commission president. Virginia Mayo/Associated Press

The E.U. sees many problems with monopolies

Officials in Brussels yesterday unveiled proposals to gain “technological sovereignty,” as policymakers in Europe fear that their economies are becoming overly reliant on “gatekeeper” tech companies based elsewhere (mainly the U.S.).

A key passage in the report suggests an expansive view of antitrust policy that could make life difficult for many U.S. tech giants:

Competition policy alone cannot address all the systemic problems that may arise in the platform economy. Based on the single market logic, additional rules may be needed to ensure contestability, fairness and innovation and the possibility of market entry, as well as public interests that go beyond competition or economic considerations.

Further reading: This being the E.U., the policy plan is spread across a convoluted array of reports, factsheets and communiqués. Politico has a useful summary.

The speed read

Deals

• Alstom and Bombardier are trying to shield their train merger from the political turmoil that sank Alstom’s previous deal with Siemens. (Bloomberg)

• Chinese conglomerate HNA is reportedly in talks for a state bailout, which could involve selling off its airline assets. (Bloomberg)

• Forever 21’s deal to sell itself to its two biggest landlords is official. (Reuters)

• Founders Fund, the venture capital firm co-founded by Peter Thiel, has raised $3 billion for its latest funds. (Axios)

• The political comms firm SKDKnickerbocker plans to announce this morning that it has acquired Sloane Communications, a financial P.R. shop. “This is our first (not last) acquisition,” the SKDK chief Josh Isay tells us.

Politics and policy

• The White House conceded yesterday that the trade war had hurt U.S. economic growth. (Bloomberg)

• Boeing has pushed Washington State lawmakers to end tax breaks for the plane maker to avoid international trade sanctions. (NYT)

• The Fed flagged the coronavirus outbreak as an economic risk at its meeting last month. (NYT)

• How the pharmaceutical industry lost some of its pull in Washington. (WSJ)

Tech

• Some Oracle employees are planning a walkout today over the company’s founder, Larry Ellison, hosting a fund-raiser for President Trump. (Business Insider)

• Google reportedly plans to end E.U. data protection practices for British users post-Brexit. (Reuters)

• The first wave of next-generation 5G wireless networks will probably cover only a quarter of the world’s population, according to McKinsey. (Fortune)

• MGM Resorts said that it suffered a data breach last year, but that customers’ financial data was not exposed. (NYT)

Best of the rest

• Some companies have stopped hiring smokers. (FT)

• Want to buy one of WeWork’s Gulfstream jets? It’s on the market. (Business Insider)

• Jho Low, the fugitive financier at the heart of the 1MDB fraud scandal, was reportedly spotted recently in Wuhan, China, the epicenter of the coronavirus outbreak. (Bloomberg)

• Hate corporate buzzwords? “Take a deep dive” into this article and let’s “touch base” later. (The Atlantic)

Thanks for reading! We’ll see you tomorrow.

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