(We are resending today’s CEO Daily because an earlier version misstated the day. We apologise for the confusion.)
Today is Amazon Prime Day (well, actually the window for promotions opened already last night, to be precise). Did you know there is such a thing as Amazon Prime Day? If you’re a Prime subscriber, you can order lots of things at big discounts. If you have an Echo, you can do it without even touching a computer. If you don’t have an Echo, well, they were on sale yesterday for only $90. J.P. Morgan estimates the manufactured holiday could drive a billion dollars worth of sales.
Actually, Prime Day has been around for nearly a decade, and most of that time it’s been a lot of hype with more than a whiff of the ridiculous. But no-one was laughing yesterday as the ballyhoo around Amazon’s garage sale triggered the latest in a series of gut-wrenching sell-offs in retail stocks.
Prime Day wasn’t solely responsible for that. The blame can also be shared with Abercrombie & Fitch, whose shares fell over 21% after it said it had given up trying to find a buyer, and a Wall Street Journal report noting that department stores had started to discount cosmetics, one of their last remaining high-margin lines. The Whole Foods deal has also left Wall Street hyper-sensitized to the issue of disruption through e-commerce.
But the hype, it seems, has generated its own reality.
Elsewhere, the health care bill continues to be stalled in Congress, and the White House says it will have a tax reform plan “locked in place” by the end of the summer, ready to be put through the same Republican-only meat grinder in September.
However, the most important thing you can do this morning is to fill out this survey, which will keep CEO Daily’s sponsors happy, and allow us to continue to offer you this newsletter at a price lower than anything you can buy from Amazon.
More news below.
• Donald Jr.’s Russia Woes Deepen
Donald Trump Jr. was warned in advance in an email that the information on Hillary Clinton that was offered to him was part of a Russian government campaign to help his father’s presidency, the New York Times reported. Trump Jr. continued to assert that the meeting was typical of a normal campaign and that nothing of significance came out of it. The author of the e-mail in question denied having any knowledge of the Russian government’s involvement and said he was merely doing a favor for his client, Emin Agalarov. Agalarov is the son of a Russian-based tycoon who partnered with the Trump organization in bringing the 2013 Miss Universe pageant to Moscow.
• Quarles Set to Succeed Tarullo at Fed
President Donald Trump is set to nominate Randal Quarles, a former partner at Carlyle Group and law firm Davis Polk & Wardwell, to oversee bank supervision at the Federal Reserve. He’ll effectively be succeeding Daniel Tarullo. Quarles, who also served in the Treasury Department under President George W. Bush, is on record as criticizing the burden of post-crisis regulation as a force that drives up the cost of credit, and has also been critical of the Fed’s zero interest-rate policy since the crisis. The issue may come up later this week as Fed chairwoman Janet Yellen testifies to Congress.
• Oncor! Encore!
Warren Buffett faces competition from Paul Singer’s Elliott Management Corp. for Energy Future Holdings, the bankrupt parent of power grid operator Oncor Electric Delivery. Elliott’s bid of $18.5 billion, including debt, would allow higher recoveries for its bondholders (Elliott itself holds $2.9 billion of that debt, enough to block the deal provisionally agreed to with Berkshire Hathaway, according to Reuters). Elsewhere, Buffett’s plan to give away his massive fortune advanced with a $3.17 billion donation of Berkshire stock to the Bill & Melinda Gates Foundation.
• Microsoft’s New Bundle
Microsoft debuted a bundled package of Windows 10, Office 365 and security software for mobile devices. It’s part of an effort to streamline sales strategy (something that was also behind reports of heavy job cuts to the overseas sales division last week). The new bundled package, aimed at small and medium-sized enterprises, broadly replicates a similar collection of Windows and Office software now being sold to big business as Microsoft 365 Enterprise. Elsewhere, Microsoft pushed back to September the release of its latest Azure Stack suit of products, which will let customers run the company’s cloud technology within their own data centers.
Around the Water Cooler
• A Revolving Door in Citrix’s C-Suite
Kirill Tatarinov, hired as CEO of Citrix barely a year ago to resolve tensions caused by activist investor pressure, has resigned. The development comes against the backdrop of rumors that Citrix is preparing to sell itself, possibly to a private equity buyer. However, the company’s statement focused more on its plans to refocus on cyber security and data analytics, and to migrate to a software subscription model. The company’s shares fell 4% in after-hours trading.
• Travis Is in Good Bad Company
Uber is far from being alone with its leadership troubles, it seems. One in three tech employees feel that their bosses have a negative impact on company culture, according to a survey of 20,000 workers in the tech industry (a sample that seems big enough to carry some weight). The survey reinforces perceptions of sexism and exclusion that have dogged the industry recently. It also showed that nearly two-fifths of employees in legal department felt reservations about giving negative feedback to their bosses, in what may reflect concern about how the sector is pushing the limits of the law.
• Mt Gox CEO Goes on Trial
Mark Karpeles, the CEO of the now-defunct Bitcoin exchange Mt Gox, went on trial Tuesday in Tokyo, pleading not guilty to charges of embezzlement and data manipulation. Karpeles was indicted for transferring $3 million from a Mt. Gox account holding customer funds to an account in his name in 2013. Mt. Gox went bankrupt in 2014 after losing around $500 million worth of Bitcoin, something Karpeles blamed on hackers. Such governance issues haven’t stopped a mania for digital currencies: Bitcoin’s dollar value has more than doubled since then. Ethereum’s quadrupled in the space of six weeks this spring, although it has now fallen 50% from its peak.
• The Less You Know, the Better You Sleep
Details about Wanda Group’s sale of its tourism and theme parks business to Sunac continue to dribble out, and they are not pretty. It emerged Tuesday that Wanda will lend the already highly-indebted Sunac $4.4 billion to fund the final parts of the $9.3 billion deal (for reference, Sunac’s market value before the deal was $7.5 billion, while its net debt was 1.6 times its equity). The excessive leverage in China Inc. that motivated the deal is thus only changing hands. Moody’s and Fitch have cut their outlook for Sunac’s debt, while S&P put it under review for a downgrade.
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Summaries by Geoffrey Smith Geoffrey.email@example.com;