Good Tuesday morning. The markets dropped yesterday after the raid on Michael Cohen’s office and residence. The deficit is expected to exceed $1 trillion soon. And get discounted tickets to Corner Office’s interview with Chobani’s founder. Some links require subscriptions.
The must-watch Facebook hearings start at 2:15 p.m. E.T.
That’s when Mark Zuckerberg will testify before the Senate Judiciary and Commerce committees; you can watch here. In his prepared testimony, published yesterday, he apologized for not doing more to stop fake news. Here’s where lawmakers are likely to press him:
• Privacy, and whether 2 billion Facebook users can consider their data safe.
• The reach of Russia’s election chicanery, and how slow the company was to publicize it. (According to a Columbia researcher, Peter Eavis notes, Facebook is still understating that reach. The company disagrees.)
• The F.T.C.’s 2011 consent decree with the company, and whether it was violated in the Cambridge Analytica scandal. (Facebook says not.)
• Political bias and violent radicalization (an especially big topic in countries like Myanmar).
The bigger point: Andrew writes in his latest column that, however harshly lawmakers question Mr. Zuckerberg, the public still seems willing to be hand Facebook personal information.
More from the column:
Elsewhere in Facebook news: Wildlife preservation advocates complained to the S.E.C. that the company is serving ads on the pages of wildlife traffickers.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.
Are these two things related?
The Dow Jones industrial average and the S.&P. 500 tumbled in the last 10 minutes of trading yesterday.
What had happened? The NYT reported that the F.B.I. had raided the office and hotel room of Michael Cohen, President Trump’s personal lawyer, looking into potential bank fraud. The searches, which arose from a referral by Robert Mueller (and prompted a lengthy public complaint by Mr. Trump) suggest the special counsel’s investigation is moving closer to the president.
To put the market move into perspective:
But today’s another day: S.&P. 500 futures are up after President Xi Jinping of China urged “dialogue rather than confrontation” in trade talks.
Will the tax cuts pay for themselves?
The Congressional Budget Office doesn’t think so, and now projects that the federal deficit will surpass $1 trillion by 2020.
The question is how much growth the cuts will stimulate. Republicans projected G.D.P. growth rates of 3 percent. The C.B.O. is expecting an average of 1.9 percent over the next decade.
Critics’ corner: The Peterson Foundation said, “It’s clear that lawmakers have added significantly more debt on top of an already unsustainable trajectory.” Harm Bandholz of UniCredit said, “The C.B.O. strongly contradicts the administration’s claim that the stimulus will pay for itself.”
The political flyaround
• A year before Apollo Global Management lent millions of dollars to Kushner Companies, Jared Kushner reportedly approached its co-founder Josh Harris about leading the Office of Management and Budget. (The Guardian)
• Investors are looking for a “Kudlow put” or a “Powell put.” (The Upshot)
• Russian markets, bonds and the ruble plunged yesterday after the U.S. imposed new sanctions. (NYT)
• Gov. Rick Scott’s run for Senate in Florida could hurt Democrats nationwide: It’s an expensive market, he’s rich, and he’s ready to spend. (Politico)
• Qatar may be bringing President Trump around to its point of view on the blockade against it. (NYT)
The ‘Forrest Gump of Bitcoin’
Gary Shteyngart’s New Yorker profile of Mike Novogratz — hard-partying financier turned accidental cryptocurrency evangelist — is worth a read. Some notable lines:
• “Some of Novogratz’s fellow hedge funders have questioned his grasp of the finer details of his trading strategies. ‘He acts like a visionary, but at heart he’s still a salesman,’ one manager told me.”
• Novogratz is said to consider himself “halfway between center-left and progressive,” and “During my lunch with him at the Mercer Kitchen, he told me, ‘I’ve always said I’d run for office if I had a five-year period in my life where really I felt, like, Hey, my behavior is laudable.’”
Where do CBS and Viacom go from here?
Public negotiations between the corporate siblings have intensified. Viacom’s counterproposal — 0.68 of a CBS share for every Viacom share, or $14.7 billion; CBS had offered 0.55, or $11.9 billion — is likely to be rejected.
Price may be less of a sticking point, however, than CBS’s insistence on keeping its chief operating officer, Joe Ianniello, in the No. 2 spot after a merger. That’s the job Viacom wants for its C.E.O., Bob Bakish. Michael has heard that this is a serious disagreement, with little movement toward a compromise as yet.
A shareholder speaks: Below is an excerpt from a letter sent to CBS’s board and reviewed by DealBook, by what was described as a top 10 investor:
The deals flyaround
• The Justice Department has reportedly approved Bayer’s $56 billion purchase of Monsanto after the companies agreed to sell more businesses. (WSJ)
• Ant Financial is reportedly raising another $9 billion, making it the world’s biggest unicorn. (WSJ)
• How Saudi Arabia’s Tadawul stock exchange — current value listed: $500 billion — is preparing to host Aramco, at a valuation of up to $2 trillion. (WSJ)
• Uber has agreed to buy Jump, a maker of electric (sorry, “pedal-assist”) bikes after the two tested a bike-sharing program in January. (NYT)
• Elliott Management has raised its stake in Telecom Italia to 9 percent ahead of a vote at the company’s board on May 4. (FT)
• I.P.O. corner: Why the San Mateo Superior Court, Calif., hears so many cases about listings. Regulations might not be responsible for a drop in U.S. publicly traded companies. And a plan to turn Eminem royalties into a publicly traded company has collapsed.
The most and least diverse venture capital firms
The Information and Social Capital just released their third survey of diversity at the big tech investment firms. Key findings:
• Canvas Ventures and Kirsten Green’s Forerunner Ventures tied for first place on The Information’s V.C. Diversity Index. Tied for last: Tiger Global Management and Slow Ventures.
• The number of women in senior positions at U.S. venture firms rose to 14.2 percent last year, from 10.7 percent. The percentage of Hispanic decision makers rose to 2.3 percent from 1.9 percent, while that of black senior leaders stayed roughly flat at just over 1 percent.
Come watch Corner Office interview Chobani’s founder live
On April 14 at 5 p.m., hear from Chobani’s founder and C.E.O., Hamdi Ulukaya, who has resurrected economies in two communities and made headlines for his leadership practices. He’ll be interviewed by David Gelles for a live version of the Corner Office column.
DealBook readers get $10 off tickets.
• Galaxy Digital, the cryptocurrency start-up run by Mike Novogratz, has hired a C.O.O.: Richard Kim, most recently a London-based V.P. at Goldman Sachs. (Bloomberg)
• Glencore’s C.E.O., Ivan Glasenberg, has left Rusal’s board after the Russian aluminum producer was sanctioned by the U.S. (CNBC)
• Coinbase has hired Rachael Horwitz, formerly head of marketing at Spark Capital, as its first V.P. of communications. (Recode)
• The C.E.O. of Gizmodo Media Group, Raju Narisetti, has left, as Univision reportedly considers deep cuts. (The Daily Beast)
The speed read
• The Consumer Financial Protection Bureau is seeking a record fine against Wells Fargo for abuses in auto insurance and mortgage lending, unnamed sources said. (Reuters)
• Investors from the Middle East and Asia have offered about $25 billion to buy an expanded version of FIFA’s Club World Cup. (NYT)
• The S.E.C. has widened the definitions of “micromanaging” and business relevance, making it harder for shareholders to put up proxy resolutions. (WaPo)
• Elon Musk likes it in Adelaide, but the Australian city hasn’t fully transformed manufacturing decline into technological progress. (NYT)
• WPP is expected to publish the findings of its Martin Sorrell investigation next week. (Reuters)
• Wynn Resorts has created a culture and community department after its sexual misconduct scandal. (WSJ)
• Pressure is mounting on Deutsche Bank’s chairman, Paul Achleitner, over the messy sacking of John Cryan and the rush to replace him with Christian Sewing. (FT)
• The European Court of Justice ruled that the French government had the right to ban some transport services, including Uber, without notifying European officials first. (FT)
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