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Beyond Words — CEO Daily, Tuesday, 3rd October

Good morning.

The worst mass shooting in modern U.S. history is dominating news coverage this morning. A single gunman perched on the 32nd floor of a Las Vegas hotel-casino unleashed a hail of bullets on a crowd at a country music festival, killing at least 58 people. Horrific beyond words.

Both Uber and Lyft took the high road and offered free rides to people donating blood. And Allegiant Air, which has Las Vegas as its home base, offered free flights for family members of the victims. Facebook and Google came in for criticism after their networks promoted false narratives posted by alt-right sites above more reputable reporting.

Gun control advocates were quick to point out the absurdity of allowing civilians to buy weapons of mass assault. But, as is usual after such events, gun stocks went up in anticipation of a surge in sales sparked by fears of new gun restrictions. The White House tried to downplay such fears.

Shares of MGM, which owns the Mandalay Bay from which the shots were fired, took a nosedive.

More news below.

Alan Murray

Top News

Strong Data Drive Stocks to New Records

Global stocks hit new highs with the U.S. at the fore. The DJIA, S&P 500, Nasdaq Composite, and Russell 2000 all closed at record highs, after the Institute for Supply Management’s monthly survey of business activity beat expectations, and Goldman Sachs came out with a bullish outlook for the economy. The 2-year Treasury yield hit 1.50% for the first time since 2008 after Dallas Fed President Robert Kaplan said the Fed wouldn’t need to wait for inflation to hit 2% before raising interest rates again. Kaplan said he was open-minded about raising rates in December, but said the Fed would “look hard” at the option. WSJ, subscription required

Tesla Misses the Up-Ramp

Oops. Tesla produced a measly 160 Model 3s in September, badly missing Elon Musk’s forecast of 1,500. It blamed “production bottlenecks”, specifically, a handful of manufacturing subsystems at its assembly plant in Fremont and at its “Gigafactory” battery plant in Nevada. Tesla needs to generate cash flow from the Model 3 on schedule, or else risk having to ask the markets for yet more capital. After a strong rally earlier in the year, the company’s shares have fallen 12% in the last two weeks and lost 1.6% after the bell Monday. Elsewhere, GM said it would introduce 20 new all-electric vehicles by 2023, of which two will come in the next 18 months. Fortune

Goldman Prepares to Start the Music

Goldman Sachs may set up a new trading operation dedicated to Bitcoin and its ilk. The bank told The Wall Street Journal the move was a response to client interest in cryptocurrency. The massed ranks of Wall Street’s anti-money laundering and compliance teams fell into a choreographed swoon reminiscent of the glory days of Busby Berkeley. It’s just over 10 years since Citigroup’s Chuck Prince said of subprime that “as long as the music is playing, you’ve got to get up and dance.” If Goldman does go ahead, at least it will be clear who struck up the band. Less controversially, but in similar vein, Goldman’s asset management division said it would absorb the cost of external research under the EU’s new MiFID rules—another decision likely to be an industry trend-setter in the sector in Europe. Fortune


Shares in Nordstrom fell nearly 7% after the New York Post reported that the company’s plans to go private were in trouble. Private equity group Leonard Green & Partners is reportedly struggling to raise finance for the buyout, with Wall Street wary of lending to traditional retailers ahead of what for many will be a make-or-break holiday season. The collapse of Toys’R’Us, which was caused to a large degree by overloading its balance sheet with debt through a leveraged buyout, appears to have prompted second thoughts among potential lenders. New York Post


Around the Water Cooler

Mr. Smith Goes to Washington

Equifax’s fallen CEO Richard Smith goes before a special House of Representatives panel later to testify about the data breach that compromised the details of 145.5 million people (2.5 million more than Equifax first thought). It emerged Monday that Smith had waited three weeks to tell the company’s board about the breach, while experts tried to figure out its scale. The one silver lining for Smith is that Elizabeth Warren won’t be able to grab the mike and give him the “Full Stumpf.” In other hacking news, SEC Chairman Jay Clayton said he expected to spend a lot more in the future on protecting the EDGAR database for regulatory filings after it too was breached by hackers. Fortune

Uber Changes the Guard in London

Dara Khosrowshahi will meet London’s Transport Commissioner Mike Brown today in a bid to save his company’s business in the U.K. capital. Uber confirmed Monday that its former U.K. head Jo Bertram had left the company. London Mayor Sadiq Khan had savaged Uber’s “arrogant” U.K. management last week, giving many the impression that fresh faces would be required for a change of heart by regulators. London accounts for some 5% of Uber’s global user base by some accounts. Fortune

Immelt Heads Early for Pastures New

John Flannery slipped quietly into the chairman’s position at General Electric after Jeff Immelt stepped down three months ahead of schedule. Immelt put it down to the leadership transition progressing smoothly. The move means that Immelt, who was repeatedly linked to the CEO vacancy at Uber, won’t be conflicted if any similar opportunities come up in the future. GE also installed Lorenzo Simonelli, already CEO of GE Baker Hughes, as the oil services unit’s chairman. Fortune

Unilever Can’t Stop Bingeing on Health Foods

Big Food’s spending spree on healthier labels isn’t restricted to the U.S. Unilever agreed to buy Brazil’s Mãe Terra, a maker of organic cereals, cookies, and other snacks for an undisclosed sum. It said the 38 year-old company is growing at over 30% annually in a Brazilian market worth some $10 billion. It’s Unilever’s 18th deal in the last three years. FT, metered access

Summaries by Geoffrey Smith;