Good morning.
Elon Musk won’t give up. Yesterday, he returned to Twitter, days after signing a settlement with the SEC, to mock the agency as the “Shortseller Enrichment Commission.” That’s despite the fact that his earlier Twitter romp, saying he had “funding secured” for a $420 a share private equity buyout, was about as open-and-shut a case of using false information to move markets as one can imagine. Whoever agrees to become the next chairman of Tesla is going to have a hell of a job on their hands. This guy will not be contained.
Separately, the folks at FleishmanHillard have a report out this morning saying that 61% of “engaged” consumers believe it is important for companies to express their views on key social issues. Among millennials, that number increases to 75%. And the report suggests a majority of those consumers will adjust their buying habits accordingly. “People are making purchase decisions based on whether they agree or don’t agree with the positions of a company,” said Kristin Hollins, who leads the firm’s corporate reputation practice in the Americas. And corporate leaders are feeling the pressure. “It’s no longer really an option to stay silent.”
You can see the study here. More news below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
Stock Fall
U.S. stocks fell yesterday, with the S&P500 down by 0.8%—its biggest loss since June. Investors are waiting for today's employment report—unexpectedly higher wages might prompt the Fed to accelerate rate hikes, in order to prevent the economy from overheating. Yesterday's fall hit tech and other high-growth sectors in particular, while the financial sector saw gains. Wall Street Journal
Chip Fallout
Yesterday's bombshell Bloomberg report, about the Chinese military sneaking spy chips onto server components used across the U.S., had a big impact on Asian tech shares. Lenovo was down 23% at one point, despite the fact that the server maker at the heart of the scandal, Supermicro, is not a supplier. ZTE was down 11.6% and Win Semiconductors was down almost 10%. CGS-CIMB Securities analyst Ray Kwok: "Electronics produced in China may be viewed unsafe due to this news, and tech shares are falling in general because of that." Bloomberg P.S.: Read this techie analysis of the story and the denials from Amazon, Apple etc. by The Register.
Unilever U-Turn
Unilever CEO Paul Polman has egg on his face after the consumer goods giant abandoned its plan to consolidate its headquarters in the Netherlands. There wasn't enough shareholder support for the plan, which was seen as a major symbolic blow to post-Brexit Britain. Now, Unilever will maintain its second base in the U.K., which will keep it on the British stock indexes and avoid the scenario of having investment funds sell their shares. Reuters
Toyota Recall
Toyota has been forced to issue a recall for cars that had already been recalled and fixed for a different reason. This new round takes in over 2.4 million Prius and Auris hybrids told in North America, Japan and Europe—the vehicles have a fault that could cause them to suddenly stall at high speeds, though Toyota said it was not aware of any accidents. The cars will need a software update that takes around 40 minutes. BBC
Around the Water Cooler
Fan Effect
The $129 million bill for the tax-dodging Chinese actress Fan Bingbing is likely to have a major impact on the Chinese film and TV industry. Production already slowed down after Fan disappeared three months ago, as a lot of players use the same "yin-yang" contracts that she did, in order to disguise earnings. Now, after her reappearance and apology, the tax authorities say it is tightening its policies within the industry, and film and TV companies and their investors are pressing pause until they see the result. South China Morning Post
Facebook Unrest
Many Facebook employees have been outraged at the appearance by the company's lobbying chief, Joel Kaplan, in the supporters' gallery behind Brett Kavanaugh at last week's Senate hearing about sexual assault allegations against the Supreme Court nominee. Kaplan, a friend of Kavanaugh's, apologized to Facebook staff, but the internal unrest has not quietened down, with some viewing his appearance as a statement that he believed Kavanaugh rather than his accuser, Christine Blasey Ford. New York Times
SoftBank and Grab
SoftBank is reportedly close to investing $500 million or so in the ride-hailing firm Grab. The Japanese conglomerate has already invested in Grab, as have Chinese rival Didi Chuxing and Toyota. Grab, which took over Uber's Southeast Asian operations earlier this year, is apparently looking for $1 billion to turn itself into a big consumer technology firm. Reuters
AI Caution
The eminent technologist Vivek Wadhwa writes for Fortune that observers should not overestimate the current state of AI's development. "There is no doubt that AI has incredible potential. But the technology is still in its infancy; there are no AI superpowers," he says. "The race to implement AI has hardly begun, particularly in business. As well, the most advanced AI tools are open source, which means that everyone has access to them." Fortune
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
