Good morning.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Scanning the headlines at this hour, it is hard to escape the impression that we have all become bit players in Donald Trump’s reality TV show. This morning’s sampler:
Trump set to name Exxon CEO to be Secretary of State.
Trump officially names Goldman Sachs President to be National Economic Adviser.
Trump postpones press conference to reveal his plans for leaving his business until January.
Bill Gates pitches Trump on clean energy.
Why Trump and tech need each other.
Trump eyes Carly Fiorina for Director of National Intelligence.
Trump tells Romney he won’t be Secretary of State.
Top Republicans back probe on whether Russia meddled in Trump’s election.
Will Trump tweet after Fed’s rate decision Wednesday?
Trump tweet knocks Lockheed Martin stock down 4%.
Those last two have Wall Street traders especially roiled, as they realize the big money to be made these days comes not from their existing algorithms, but from rapid response to the President-elect’s Twitter posts.
Non-Trump news below.
Top News
• Google and the Holocaust
And so to something less controversial. OK, maybe not. It seems that not even the shades of Sergey Brin and Larry Page’s Jewish ancestors can shake the Google bosses’ trust in their algorithm. The top search result for the question “Did the Holocaust happen?” is a resounding ‘no’ from the white supremacist group site Stormfront. Two articles from other Holocaust denial sites also make the front page, giving further respectability to one of the vilest slurs in modern human history. And yet Google, like Facebook, claims there is no problem with the way they present and promote news, and that they have no influence in determining how people see the world. Advertizers take note: if Google really thinks that Stormfront’s take on the Holocaust is the most appropriate and authoritative out there, how good can the rest of its analysis be? Fortune
• Chipotle Loses a CEO
Chipotle Mexican Grill ended its experiment with co-CEOs, in an effort to speed its recovery from the biggest crisis in the burrito chain’s history. The company said Monday that founder Steve Ells has become its sole CEO effective immediately and that Monty Moran, co-CEO since 2009, was leaving the company altogether early next year. The company’s profit has evaporated in the wake of a multi-state outbreak of e.coli due to sloppy hygiene procedures. Ells’s first action as sole CEO was to announce Chipotle will treat its staff better to incentivize better performance. It will now start employees at pay levels above the federal minimum wage, with benefits like vacation time, paid sick leave and tuition reimbursement. Fortune
• Boeing Trims Output, Appeases Shareholders
Boeing raised its dividend by 30% and authorized a $14 billion share buyback, reflecting what some analysts suggest is the peak for cash flow in the current cycle for makers of civil aircraft. The news sent its shares up 2% in after-hours trading. But the dressing including a bit of vinegar as well as the lashings of oil: Boeing will trim production of the twin-aisle 777 airliner to five a month from August next year, from a current rate of 100 a year (equivalent to 8.3 per month). The 777 has been one of the company’s great cash cows in recent years. Fortune
• Redstones Scupper Viacom-CBS Merger
Shares in Viacom tanked 7% as National Amusements, the holding company of controlling shareholder Sumner Redstone, abandoned plans to merge it with CBS. The deal appears to have foundered on resistance from CBS CEO Les Moonves, who was reportedly unwilling to pay a premium for Viacom as well as being uninterested in taking on the challenge of fixing his sister company. Redstone’s daughter Shari said only that she and her father have become more confident about Viacom’s prospects under new CEO Bob Bakish. Fortune
Around the Water Cooler
• Prudential Tries to Limit Wells Fargo Fallout
Prudential Financial suspended the distribution of a low-cost life insurance policy through Wells Fargo & Co, in an effort to limit the damage from the scandal over the bank’s abusive sales practices. California Insurance Commissioner Dave Joes has ordered an investigation into allegations that Wells (and others) have signed up customers for Prudential’s life insurance policies without their permission. Regulators in Prudential’s home state of New Jersey are also investigating. Customers seeking redress filed a class action lawsuit in a New Jersey district court Monday. Reuters
• Florida Is Zika-Free – For the Winter Anyways
Florida was officially declared free of Zika, after no new cases of the virus being transmitted were discovered in the last 45 days. The bad news is that the respite is likely only seasonal, due to the onset of winter. Tom Frieden, director of the Centers for Disease Control, said “we must take what we have learned and be prepared for next season.” A community in South Miami Beach was found to have active, ongoing Zika transmission from local mosquitoes over the summer. Zika can be transmitted sexually from people who have contracted the virus from sexual partners infected in endemic regions and cause serious birth defects in the children of afflicted pregnant women. But the presence of local mosquitoes that can spread Zika significantly increases the chance of infection. Fortune
• Unicredit's Gigantic Cash Call
Italy’s second-largest bank, and its most internationally active, said it wanted to raise 13 billion euros ($13.8 billion) in new capital and cut 14,000 jobs, around 11% of its staff, in a desperate attempt to shore up its balance sheet. The measures, if implemented in full, should push the bank’s core capital ratio up to 12.5% by 2019, ending any speculation about its viability. It’s the bank’s fourth and biggest capital raising since 2008, and is bigger than the bank's whole market cap as of Monday, but the market appeared to give new CEO Jean-Pierre Mustier the benefit of the doubt. The bank’s shares rose 8% to a seven-month high. Sentiment has also been helped by the fact that the new Italian government looks pretty much like the old one, minus the energetic but discredited Matteo Renzi. A degree of continuity thus seems assured. Reuters
• Asahi Scoops up the Crumbs From AB Inbev's Table
Japan’s biggest brewer Asahi picked up another five brands jettisoned by AB Inbev and SAB Miller to gain antitrust clearance for their merger. Asahi had already bought Grolsch and Peroni from SAB Miller for 2.55 billion euros ($2.8 billion) and has now added Czech market leader Pilsner Urquell and Polish lagers Tyskie and Lech for 7.3 billion. Competition from private equity group Bain Capital drove the price up to twice what Asahi had originally intended to pay, and its shares fell 4.6% on the news. Fortune
Summaries by Geoffrey Smith Geoffrey.smith@fortune.com;
@geoffreytsmith
