Thursday, 29th June
President Trump dragged Amazon into the political crossfire yesterday, writing in a twitter rant that the “#AmazonWashingtonPost, sometimes referred to as the guardian of Amazon not paying Internet taxes (which they should) is FAKE NEWS.” There’s a lot to unpack in those 140 characters, which our Alana Abramson does nicely here.
But what’s interesting is a separate SurveyMonkey poll showing Amazon is one of the very few companies that’s highly respected on both sides of the political street fight—at least prior to the President’s tweet. When Trump voters are asked to name which companies have had the most positive impact on the U.S., they go mostly industrial:
When former Clinton voters are asked the same question, they lean tech and media:
Amazon has somehow managed to cross the divide. Which makes me think Bezos should be negotiating the health care bill.
Meanwhile, as corporate enthusiasm about artificial intelligence continues to climb the hype cycle, consulting firm PwC put out a new report at the World Economic Forum meeting in Dalian, China, yesterday saying AI could add $15.7 trillion to world GDP by 2030, making the global economy 14% larger than it would otherwise be.
• Bank Bonanzas Beckon After Fed All-Clear
The Federal Reserve said the U.S.’s biggest 34 banks all passed the second, ‘qualitative’, part of its annual stress test. The announcement signals an end to the capital hoarding forced on banks by regulators after 2008 and clears the way for a sharp increase in payouts to shareholders through dividends and buybacks. Bank of America announced a 60% dividend increase and a $12.9 billion buyback. Warren Buffett has said such measures would prompt Berkshire Hathaway to convert his preferred stock into common stock and become the bank’s largest shareholder. Financial shares rose by between 1% and 2% in after-hours trading. Fortune
• Staples Takes Refuge Under Sycamore
Office supplies retailer Staples agreed to be bought by private equity group Sycamore Partners for $6.9 billion, in what is the biggest leveraged buyout of the year to date. Sycamore will pay $10.25 a share for Staples, barely one-third of what Staples was worth 10 years ago. The company’s continuing operations are still making losses despite repeated rounds of cost-cutting, but Sycamore is giving CEO Shira Goodman more time to execute a turnaround. The deal is expected to close by December. Fortune
• Oil Rebounds After Shock U.S. Output Drop
For the first time in what seems an age, crude oil prices rose after official U.S. data. That’s despite the fact that crude inventories rose, defying expectations of a decline, and despite the fact that the headline 100,000 barrel a day drop in U.S. production last week was due more to temporary weather-related effects rather than any sign of shale producers running out of money. Long-term concerns about the global glut refuse to go away though: a UAE official earlier Thursday dismissed any suggestion of additional output cuts, despite increasing evidence that the world will still be oversupplied when the current OPEC-led deal on restraint ends next March. Fortune
• BPI, ABC Settle ‘Pink Slime’ Suit
Beef Products Inc. settled its defamation lawsuit with ABC over its ‘lean finely-textured beef’ product, which the Disney unit had notoriously described as ‘Pink Slime’. BPI had sued for $1.9 billion in damages, a figure that could potentially be tripled under defamation law. Neither side disclosed the terms of the settlement, but their attorneys’ reactions suggested greater satisfaction at the beef company. BPI’s said it “vindicated” the company, while ABC’s acknowledged that “continued litigation of this case is not in the company’s interests,” although they insisted it was neither apologizing nor retracting. BPI had had to close three of its four processing plants and lay off 700 staff due to a public backlash against its product after ABC’s original report on it in 2012. Reuters
Around the Water Cooler
• Coming to America, Episode 94
Two more big foreign companies talked up their job creating in the U.S. against the background of President Trump’s pressure to re-onshore production and services. Wipro, India’s third-largest exporter of software services, said it had hired 1,600 people in the U.S. in the last six months and added that over half of its U.S. workforce is now made up of locals. Samsung, meanwhile, announced it will open a $380 million plant for making home appliances in South Carolina. The announcement came on the eve of a meeting between Trump and South Korea’s new President Moon Jae-in. The two will discuss, among other things, a U.S.-Korea trade deal that Trump had sharply criticized in the past. Fortune
• Blue Apron Trims IPO Price
Shares in Blue Apron are due to list later Thursday, in an important test of market sentiment towards unicorns. The company’s bankers have already cut the price range by around a third in response to lukewarm demand. That has shaved a cool billion off its valuation but still values the company at just over $2 billion. In addition to broader market nerves caused by Janet Yellen’s comments about “rich” valuations, the deal has also been overshadowed by the Amazon/Whole Foods deal, which many fear could create powerful long-term competition for the meal-kit delivery service. By contrast, Delivery Hero, a German-based app provider that power various food delivery services across 40 countries, priced its IPO at the top end of its range, valuing it at nearly $5 billion. Fortune
• Canada Court Deals Google Another Blow
Google’s bad week in the courts continued, as Canada’s Supreme Court ruled, in a temporary injunction, that the company should suppress search results about pirated products globally, not just in Canada. The presiding judge Rosalie Abella ruled that stopping the unlawful sale of goods was more important than any potential implications for free speech and freedom of information. Google wasn’t a party to the suit, which revolved around a trademark dispute between two third parties. The ruling chips away further at the broad freedoms guaranteed to Internet companies in U.S. law at the birth of the Internet Age, a process that appears to be gathering momentum globally. Fortune
• Manafort Registers as Foreign Agent
President Donald Trump’s former campaign chairman Paul Manafort registered with the Justice Department as a foreign agent for political consulting work he did for a Ukrainian political party. His move acknowledges that he coached party members on how to interact with U.S. government officials. Manafort said in a Justice Department filing that his firm, DMP International, received more than $17 million from ex-President Viktor Yanukovych’s Party of Regions, for consulting work from 2012 through 2014. While Yanukovych and the PoR are typically thought of as pro-Russian, they were pursuing a course that would have integrated Ukraine with the EU more closely for almost all of the time that Manafort worked for them, and would likely have sealed that deal if the EU had been more accommodating on transitional measures. Fortune
Summaries by Geoffrey Smith Geoffrey.email@example.com;