Good morning.
When Mr. Market is moody, almost anything will bring him down. It started with fears of rising interest rates, then moved to jitters over a trade war. Now it is concern over regulation of tech companies that is driving the slump.
Yesterday, the tech stocks that have led the market up—Facebook, Amazon, Apple, Netflix, and Google parent Alphabet—took a beating, with Apple down 2.6%, Alphabet down 4.5%, and Facebook down 4.9%. Tesla was clobbered—down 8.2%—after John Thompson, chief investment officer of Vilas Capital Management, wrote a note to investors saying the company “without any doubt, is on the verge of bankruptcy.” And Twitter dropped 12% after short-seller Citron Research took a position in the company, saying “of all social media, they are most vulnerable to privacy regulation.”
Market analysts are now debating whether this is a “correction” or a full fledged “bear market.” But in either case, the prognosis is for many months of volatility, as the market looks for a new normal.
Stocks continued to fall in Asia and Europe on Wednesday, and futures pointed down for the opening in the U.S.
News below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
Saudi-SoftBank Solar
Japan's SoftBank has signed a non-binding agreement with Saudi Arabia's sovereign wealth fund to build "by far the biggest solar project ever." The project will start this year. The plan is for generation of 7.2 gigawatts in 2019 and 200 gigawatts by 2030—proceeds from the generation will fund the ensuing phases of the build-out. As for the panels, those will be imported for a few years until Saudi Arabia can produce its own at a competitive price. Wall Street Journal
Oracle vs. Google
Oracle has won the latest round of its eight-year battle against Google over the latter's Android platform. It's a fairly arcane argument over whether Google's design of Android to be compatible with apps written in the Java programming language (now owned by Oracle) was "fair use" or not. However, it could see Google forced to pay Oracle billions in damages. A federal court yesterday ordered a third trial over the matter. As The Verge's Sarah Jeong wrote: "I think I'm going to die before this lawsuit wraps up." The Verge
Facebook Suit
Three Facebook Messenger users have sued Facebook in California over its collection of call and text message logs, which came to light a few days ago. Facebook says it didn't collect anything without users' permission. This putative class action says otherwise. The data-scraping only affects users of the Android version of Facebook Messenger, as Android gives apps broader permissions than Apple's iOS platform does. Google is not named as a defendant in this case though. Reuters
Shire Stock
Stocks in the Anglo-American drug company Shire rose as much as 26% on Wednesday, following news that Japan's Takeda Pharmaceutical might make an approach. Takeda's plan is still at the "preliminary and exploratory stage." Last year, the Japanese company bought U.S. biotech firm Ariad, for $4.7 billion. A Shire buy would give it a way into the hemophilia market, as well as more drugs for combatting cancer and other illnesses. Bloomberg
Around the Water Cooler
Tesla Crash
Tesla, already under fire over its finances (see above,) says it still doesn't know why one of its Model X cars crashed in California on Friday, killing its driver. The company hasn't said whether the driver had engaged Tesla's autopilot feature. As yet, it hasn't been able to get its hands on the car's logs. It's not a good time for the image of self-driving car technology, as an Uber test car recently struck and killed someone crossing the street in front of it. Bloomberg
Uber Settlement
Uber has settled a gender and race discrimination class action lawsuit for $10 million. Female and minority software engineers at the company accused it of discriminating against them, alleging that management allowed a hostile work environment. Along with the payment, Uber promised to change the way it manages employee compensation and promotions. Fortune
China and Kim
China says North Korean dictator Kim Jong-un has promised to denuclearize the Korean peninsula, in exchange for China's continued backing. Kim caused a stir by making his first known international trip this week, rolling his armored train across to Beijing. "It is our consistent stand to be committed to denuclearisation on the peninsula, in accordance with the will of late President Kim Il Sung and late General Secretary Kim Jong Il," the autocrat said, per Xinhua. CNBC
McDonald's vs. Plastic
McDonald's, which is on a big environmental kick of late, says it will phase out the use of plastic straws in its U.K. restaurants. It will start trialling paper straws in May—and customers will need to ask for them. "Customers have told us that they don't want to be given a straw and that they want to have to ask for one, so we're acting on that," said U.K. CEO Paul Pomroy. "Straws are one of those things that people feel passionately about, and rightly so, and we're moving those straws behind the front counter." Telegraph
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
