Wall Street Game Theory
With leading Democrats privately saying President Biden should drop out of the presidential race, the party's most powerful allies on Wall Street spent the weekend debating what to do next.
The group, which includes BlackRock's Larry Fink, former Treasury Secretary Robert Rubin, Blackstone's Jon Gray, Lazard's Peter Orszag, Centerview Partners' Blair Effron and Robert Wolf, a former UBS executive close to Barack Obama, discussed with friends, colleagues and in some cases among themselves whether to support Biden, a person with knowledge of the discussions told DealBook.
If they agreed to ask him to step down, they discussed what their next steps should be.
Wall Street takes a different approach than Hollywood. Many media heavyweights, including Netflix's Reed Hastings, IAC's Barry Diller, director Rob Reiner and media mogul Abigail Disney, have publicly called on Biden to step aside. (Many are also reportedly furious at Biden's campaign co-chair Jeffrey Katzenberg.)
But the financial business is built on prudence, and many donors want to maintain their influence within the Democratic Party.
Wall Street says: One CEO told Dealbook that Biden's departure was “inevitable” and a matter of timing and position. Several executives said they were “concerned.”
Negotiators are simulating a range of scenarios. Some donors have discussed a “classy” way for Biden to step down to save his reputation.
Others were more focused on how such a move would affect the Democratic Party and ultimately the election campaign.
There are concerns about timing:
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Some aides suggested to Dealbook that it would be a mistake for Biden to step down without becoming the nominee, arguing that doing so would strip him of the power to nominate a successor — something he could be held responsible for if an open convention led to intraparty divisions and a victory for Donald Trump.
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Some donors suggested it would also be difficult for the president to step down before a NATO summit in Washington this week.
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Others think a quick withdrawal would be better. If Biden withdraws now, it could give more time for a mini-primary election that could add legitimacy to whoever ends up as the nominee. It could also energize the party with the Republican National Convention starting next week and draw attention away from Trump.
Biden and his allies have so far resisted pressure to step down. One reason is that polls show Biden's support in battleground states has remained unchanged since the debate, and even if Biden were to refuse to concede, some major donors would be unlikely to tighten their purse strings given their strong opposition to Trump.
What next? Tuesday could be key, as the House Democratic caucus meets in the morning and more lawmakers could call for Biden to resign.
And Theodore Schleifer of The Times reports that Biden's campaign will hold a conference call with fundraisers today, with one co-host being Maryland Governor Wes Moore, who has been mentioned as a possible successor.
What's going on?
Boeing pleaded guilty in a deal with the Department of Justice. The company pleaded guilty to felony charges of conspiracy to defraud the federal government over the deadly 737 MAX crashes in 2018 and 2019. The settlement includes a $487.2 million penalty and a commitment to invest at least $455 million over the next three years in compliance and safety programs, but it did not allay concerns from families of the crash victims, who had sought stricter terms.
Beryl has made landfall in Texas, with more than one million residents under a hurricane warning. The storm brought winds and rain to coastal areas, forcing hundreds of flights to be canceled in Houston. Forecasters warned of flooding and power outages and said Beryl's strength was an ominous sign for the rest of the hurricane season.
Inflation and bank earnings are key focus on the calendar this week. Federal Reserve Chairman Jay Powell is scheduled to testify before Congress on Tuesday and Wednesday, where questions are expected about interest rates and a strong but slowing labor market. On Thursday, the Consumer Price Index is expected to show that inflation was flat last month. On Friday, Citigroup, JPMorgan Chase and Wells Fargo are expected to report second-quarter profits, boosted by recoveries in their investment banking divisions.
A major merger takes shape
The biggest media deal of the year has finally happened.
Shari Redstone was scheduled to fly to Sun Valley, Idaho, for Allen & Company's annual tentpole gala (more on that below) when a deal was reached that paved the way for Paramount to merge with upstart studio Skydance, a deal that cemented Skydance founder David Ellison's status as one of Hollywood's most important executives.
The deal is pending regulatory approval, but if the merger goes through, it would herald an uncertain new era for one of Hollywood's most prominent studios, write Dealbook's Lauren Hirsch and The Times' Ben Mullin.
Can anyone beat Ellison? The deal gives Paramount a 45-day “go-shop” period to find a better offer, and other bidders have already expressed interest, including billionaire Barry Diller and a group made up of Sony and investment giant Apollo Global Management.
How will the company change its streaming strategy? Paramount's critics have accused the company of spending hundreds of millions of dollars a year on its streaming service, Paramount+, which is projected to continue losing money through next year.
Some analysts have recommended adopting the “arms dealer” approach taken by Sony, which sells movies and TV shows to other general-purpose services.
Skydance's announcement last night showed it has no intention of giving in completely to the streaming wars, saying it would distribute its content on Paramount+ and Pluto.
To what extent will Redstone remain involved? Redstone and his son, Tyler Kolff, are considering joining the combined company's board of directors, but it remains unclear how much involvement the Redstones will have.
How long does it take for a transaction to be approved? Under traditional antitrust standards, the deal doesn't raise any major issues. But the outcome of a review by the Federal Communications Commission could still raise questions. Jessica Rosenworcel, who will be Biden's FCC chair, has been aggressive in blocking media deals. If Donald Trump wins in November, could Rosenworcel lobby for action before he leaves office?
In any case, the last time a broadcast network was sold – Comcast's purchase of NBCUniversal – the FCC review lasted 14 months. If Paramount gets bogged down in a regulatory quagmire, will it lose out to other media companies striking their own deals?
So what about France?
An uneasy calm spread across France, the euro zone's second-largest economy, after a vote on Sunday prevented the far-right from gaining control of parliament, and the euro fell along with French government bonds.
But French stocks were volatile as the country faces political paralysis and uncertainty, reports DealBook's Vivienne Walt.
“That's crazy”: A front-page headline in Monday's Liberation newspaper summed up the mood:. President Emmanuel Macron's gamble last month to call elections may have stalled the efforts of Marine Le Pen's far-right National Rally party to take power.
But a surge in support for left-wing parties means the country is heading toward a hung parliament, which could undo President Macron's pro-growth policies that have helped attract billions of dollars of foreign investment and pose broader challenges for Europe.
“We can foresee a weaker France in Europe and, as a consequence, a weaker Europe in the world,” André Roeselk-Pietri, a former venture capitalist who chairs the Joint European Disruptive Initiative, an agency that funds science and technology research, told DealBook.
Investors are increasingly concerned about the country's finances. The spread between French and German government bonds, a key gauge of Europe's financial stability, has surged in recent weeks to its highest level since the 2012 European debt crisis.
Analysts brace for possible credit downgradesBusiness leaders are also nervous about Jean-Luc Mélenchon, the leader of a far-left party, who has called for the introduction of corporate and wealth taxes.
One outcome is certain: Mr Macron's party's legislative powers have been reduced.
Corporate investment and talent may go elsewhere. Macron's term has seen a boom in tech startups, with U.S. tech giants and Silicon Valley venture capitalists pouring money into French artificial intelligence startups like Mistral. “The president has been very supportive of innovation and startups,” says Roessekrug Pietri. “We've also seen a lot of international investors.”
This situation may not last if Macron's political options are limited.
Sun Valley Without Buffett
Top leaders from media, technology and politics are heading to Sun Valley, Idaho this week for Allen & Company's annual retreat, but one of the gathering's most famous regulars won't be attending, writes DealBook's Michael de la Merced.
Warren Buffett is not on the guest list, according to media reports, and instead Berkshire Hathaway's other top executives — Buffett's designated successor Greg Abel and investment aides Todd Combs and Ted Weschler — are expected to attend, another indication of leadership changes at the conglomerate.
Buffett has been a regular at the gathering for many years. He participated in informal panels and presentations with dozens of other attendees. He once joked that the conference was perfect for “ABWA,” short for “walk around and buy,” with big corporate deals being crafted on the sidelines.
But Buffett has significantly cut back on his travel schedule. Mr. Abel hosted Berkshire's annual investor conference in May, in which he played a larger role than in years past. Mr. Abel, Mr. Combs and Messrs. Weschler have all attended Allen & Co. conferences before.
It's also worth noting that Sun Valley sits 5,750 feet above sea level, and Buffett, who is nearing 94, was spotted getting around the resort in a golf cart last year. (Buffett did not respond to a request for comment.)
Buffett recently shared some of his estate plans, telling The Wall Street Journal that he plans to donate most of his remaining fortune to a new charitable trust controlled by his children.
Notable people scheduled to attend include: According to media reports:
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OpenAI's Sam Altman has been busy signing licensing deals with Hollywood and media heavyweights.
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NBA Commissioner Adam Silver is in the final stages of negotiating a broadcast package that is reportedly worth $76 billion.
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Disney's Bob Iger will be accompanied by several potential successors, including Alan Bergman, Dana Walden, Josh D'Amaro and Hugh Johnston.
Others include Amazon's Jeff Bezos and Andy Jassy, Apple's Tim Cook, Meta's Mark Zuckerberg, Warner Bros. Discovery's David Zaslav, and Salesforce's Marc Benioff.
Speed Read
Bargain Deals
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Danish beer giant Carlsberg has agreed to buy British soft drinks maker Britvic for $4.2 billion. (CNBC)
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Eric Trump is pursuing more deals in the Gulf region, raising concerns about conflicts of interest if his father is re-elected. (FT)
Elections, politics, policies
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