President Trump continues his assiduous efforts to woo business leaders, bringing in a group of 50 assembled by Blackstone CEO Steve Schwarzman and Citigroup CEO Michael Corbat for a two-hour “town hall” style meeting yesterday. The discussion focused on infrastructure, training, reducing regulations, and tax reform. One of the CEOs attending said the President and his team seemed especially eager to score some wins on the economic front. And the CEOs are eager to help—despite the administration’s recent setbacks.
Separately, JP Morgan chief Jamie Dimon, who also chairs the Business Roundtable, released his annual letter to shareholders. It included a lengthy section on public policy that managed to avoid any direct reference to Trump, but put Dimon’s own spin on the U.S. economic agenda. A few excerpts:
- “America today is probably stronger than ever before.”
- “But our economy has been growing much more slowly in the last decade than in the 50 years before then.”
- “Education is leaving too many people behind.”
- “Our corporate tax system is driving capital and brains overseas.”
- “Infrastructure needs planning and investment.”
- “Excessive regulations reduce growth and business formation.”
- “We need to dramatically expand the Earned Income Tax Credit to help more low paid individuals… earn a living wage.”
The letter highlighted a few areas where Dimon clearly disagrees with the President—including immigration, NAFTA, China and climate change. But in his own town hall event yesterday, Dimon downplayed any disagreements, saying: “Mr. Trump doesn’t agree with everything he says himself.”
More news below.
• Lockheed’s Bet on Sikorski Pays Off
The Pentagon gave Lockheed Martin approval to start production of 200 new heavy cargo helicopters for the U.S. Marines, a contract worth $27 billion, including $6 billion research and development costs. Deliveries of the helicopters, which will replace the 30 year-old CH-53E Super Stallion, are due to start next year. It’s by far the biggest order for the Sikorski helicopter business since Lockheed bought it from United Technologies in 2015, and one that accounted for most of the $9 billion that Lockheed paid for it. The helicopters will cost some $87 million each, making them almost as expensive as the new F-35 fighter.
• Payless Beats a Well-Trodden Path to the Bankruptcy Court
Payless ShoeSource bowed to the inevitable, filing for Chapter 11 bankruptcy protection with $10 billion in liabilities and only $1 billion in assets. Its model of self-service, a novelty in shoe stores, has been copied and superseded. The company said 400 stores will close as it tries to make another go of it in a slimmed-down form. The company said its debt restructuring proposal has the support of investors holding about two-thirds of its first-lien and second-lien term debt. It will look for up to $385 million of debtor-in-possession financing from certain existing lenders.
• …While Staples Seeks to Save Itself From the Same
Shares in Staples rose nearly 10% after a report that it is in talks to sell itself to one of a handful of interested private equity buyers. At close of trade, it was worth around $6.2 billion. The company has struggled for direction since its bid to merger with Office Depot was stopped on antitrust grounds, a decision that looks increasingly strange as value leaks from the company under pressure from Amazon and other online retailers. Analysts expect any buyer would want to make deep cuts in store numbers.
• FTC Carves More Pesticides Out of New Agrochemical Giants
The Federal Trade Commission waved through the $43 billion merger of chemicals giants ChemChina and Swiss-based Syngenta, on the condition that the merged group divests certain pesticides made on the basis of generic chemicals. The EU had made similar requirements for its approval last week of the Dow/Dupont merger. Keeping competition in the pesticide business has been a key concern for regulators in the current merger wave, as farmers struggle with low crop prices. The deal has also been approved today by the EU. Elsewhere, Qualcomm said its merger with NXP Semiconductors was also free to proceed, after no-one raised objections within the provided timeframe.
Around the Water Cooler
• Fox in the Court of Public Opinion
Advertisers continue to desert Fox News’s The O’Reilly Factor. The count stood at 21 Tuesday, including insurer Allstate, automakers BMW, Lexus, Mitsubishi and Hyundai, drug companies GlaxoSmithKline and Sanofi, and asset manager T. Rowe Price. It would look very much like the recent advertiser boycott of Google over its problems with programmatic ads, if it weren’t for the fact that Fox is actually standing by its presenter. The company’s already-documented governance problems have obviously eroded the credibility of formulaic defense lines such as taking “matters of workplace behavior very seriously,” and advertising buyers clearly trust the New York Times‘ reporting enough to relegate the presumption of innocence well down the list of their concerns.
• Facebook Loses Landmark Privacy Case
Facebook lost a landmark case in which had tried to resist orders to turn over account information for users suspected of defrauding the Social Security system. Out of the 134 users suspected, 62 were later indicted. New York’s Court of Appeals said it lacked jurisdiction to hear Facebook’s appeal. Apple, Alphabet, Microsoft and Twitter had supported the appeal, seeing far-reaching Internet privacy implications in the case. Facebook had argued that the warrants were overbroad, and that state attorneys went too far by prohibiting it from telling users that the warrants existed. There was better news for the company out of Germany, which now seems willing to dilute a new law that would fine it for not taking down illegal material quickly.
• Spotify Edges Toward IPO With Universal Deal
Spotify signed a new multi-year streaming deal with Universal Music Group, extending its rights to the French-owned company’s vast catalog. The deal gives subscribers to Spotify’s premium service two weeks of exclusive access to new material, as long as the artists themselves consent. The erection of temporary paywalls is a concession from Spotify that gives it a valuable degree of clarity as it (reportedly) prepares for an IPO next year. It’s still in talks for similar deals with Warner Music and Sony Music.
• Amazon Raises The NFL Streaming Stakes
Amazon struck a deal to broadcast 10 Thursday night games for the National Football League this year, with a view to streaming them on its Amazon Prime service. Recode said it had paid $50 million for the rights, a figure that Amazon didn’t confirm. If true, there will be some sharp intakes of breath at Twitter, who paid only $10 million for a similar deal last season to put NFL games on its streaming service Periscope. Live sports events are one of the few categories of content that the public is still prepared to pay for to watch live, and Twitter’s first-mover advantage among streaming services, welcomed by analysts and users last year, appears to have been short-lived.
Summaries by Geoffrey Smith; firstname.lastname@example.org