DealBook Briefing: Trump’s Big Promise on Infrastructure

Good Wednesday morning. Can President Trump follow through on his State of the Union promises on immigration and infrastructure? The team of Jeff Bezos, Warren Buffett and Jamie Dimon is a formidable — but untested — force for changing health care. And Xerox’s deal with Fujifilm marks the end of an era.

At least, that’s what the president said in last night’s State of the Union address. But how much progress can he make on either front?

More from Julie Davis and Michael Shear of the NYT:

Mr. Trump offered few details on his infrastructure proposal. A report by McKinsey & Company says that a comprehensive fix would cost $1.8 trillion, while the American Society of Civil Engineers put the price tag at $2 trillion.

All but $200 billion is supposed to come from private investors, but lawmakers are skeptical. Senator John Cornyn, Republican of Texas, told reporters, “You tell me how we pay for it, and I’ll tell you what we can do.”

“Leveraging private dollars is a good start,” he added, “but we got a lot of work to do.”

Don’t forget immigration

Congress has until Feb. 8 to agree on government funding, and Democrats say they still want a deal to protect the young immigrants known as Dreamers. The White House’s immigration proposal isn’t sitting well with them — nor with some House Republicans. Meanwhile, businesses are preparing for the worst if legal protections for the Dreamers expire in March.

The Washington flyaround

• As the national deficit approaches $1 trillion, both parties are expressing concern — while pushing to increase spending. (NYT)

• The Justice Department and the F.B.I. are bracing for the release of a secret memo alleging improprieties in the surveillance of a Trump campaign aide. (NYT)

• What companies are doing with their tax savings. (NYT)

• The head of the C.D.C., Brenda Fitzgerald, bought shares in Japan Tobacco despite leading an agency charged with reducing tobacco use. (Politico)

• Expect populist politics to stick around, Eduardo Porter writes in his latest Economic Scene column. (NYT)

• Todd Ricketts, the Chicago billionaire, will replace Steve Wynn as the Republican National Committee’s finance chairman. (WaPo)

• The Treasury Department’s list of Russian oligarchs was compiled primarily from Forbes’s list of global billionaires. (Forbes)


Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.


Warren Buffett has called the U.S. health care system “a hungry tapeworm on the American economy” because of its ever-growing costs. So his Berkshire Hathaway has teamed up with Amazon and JPMorgan Chase to create a new — and as of now largely undefined — health care provider.

Our colleague Peter Eavis had four questions about the initiative:

• What is it, beyond the thin description of an independent company “free from profit-making incentives and constraints”?

• How big will it be?

• What expertise will these companies bring?

• How will this venture cut costs?

The numbers that matter

• $18,764: the average premium for family coverage for employees nationwide, according to the Kaiser Family Foundation.

• 30 percent: the current amount of the premium paid for by workers.

• 5 percent and 7 percent: how much the shares of Anthem and Cigna fell yesterday. (Insurers and prescription benefits managers as a whole took a hit on the news.)

Critics’ corner

• Margot Sanger-Katz and Reed Abelson offer reasons to temper expectations. (Upshot)

• Robert Cyran writes, “Amazon is already perceived as a potential threat to many U.S. businesses. Add other big employers, and the threat is multiplied.” (Breakingviews)

One of the icons of 20th-century corporate America, the long-struggling company will now be controlled by Fujifilm Holdings of Japan.

It’s a complicated transaction

• Xerox will be folded into an existing 55-year-old joint venture.

• Xerox investors will receive a special cash dividend of $9.80 a share and will own 49.9 percent of the combined business, which will be publicly traded.

• The move is expected to save at least $1.7 billion in costs, though Fujifilm will cut 10,000 jobs.

The context: Xerox has struggled over the years with a decline in corporate printing, and it spun out its business services unit last year. Two of its biggest investors, Carl Icahn and Darwin Deason, have pressured the company to explore a deal — including revising or ending the Fujifilm joint venture.

Behind the deal: Fujifilm relied on Mitsubishi UFJ, Morgan Stanley and the law firm Morrison & Foerster. (It is also borrowing from Citigroup and Morgan Stanley.) Xerox took advice from Centerview Partners and the law firm Paul, Weiss, Rifkind, Wharton & Garrison.

Blackstone’s $20 billion deal (including debt) for control of the company’s financial and risk division highlights the growing ambitions of private equity firms — and how they need to spend nearly $1 trillion in uninvested capital.

Behind the deal

Blackstone believes that the financial and risk division, which includes Thomson Reuters’s Eikon terminal service, can continue to grow. “We are excited to partner with Thomson Reuters — one of the most trusted companies in financial technology,” Martin Brand of Blackstone said in a statement.

Meanwhile, Thomson Reuters gets a cash infusion as it competes against Bloomberg LP and tries to deal with customers spending less on financial data. Bloomberg pointed out that the company’s controlling Thomson family is essentially retreating to the news business.

Critics’ corner

• Gillian Tan writes, “Despite the $20 billion price tag, the deal seems like a bargain.” (Gadfly)

• Lex writes, “Any spinoff would put paid to the Thomson family’s decade-long hopes for combining a media business with financial services.” (Lex)

• The trial in Waymo’s lawsuit accusing Uber of stealing its driverless car technology is set to start today. (NYT)

• The Justice Department and the S.E.C. are investigating whether Apple violated securities laws concerning its disclosures about a software update that slowed older iPhone models, according to unidentified sources. (Bloomberg)

• Google’s rivals have complained to European regulators that the search giant is still stymying competition in online shopping, despite an order to change its behavior. (WSJ)

• An app that inadvertently revealed the locations of military personnel is the latest sign that we need better control over our data, writes Zeynep Tufekci, a professor at the School of Information and Library Science at the University of North Carolina. (NYT)

• SoftBank’s Vision Fund finally struck a deal to invest $300 million in Wag, the dog-walking start-up. (NYT)

January has been the worst month for the virtual currency in three years, with its price down 30 percent. And it’s because of the very thing that Bitcoin and other digital currencies were supposed to be free from: central authorities and regulators.

• The S.E.C. froze a $600 million initial coin offering yesterday run by AriseBank.

• China has continued to clamp down on Bitcoin mining.

• South Korea is still weighing legal checks on virtual currency trading.

Add in Facebook’s banning of ads for digital money, and mining or trading virtual currencies has become a lot harder.

But not everyone has gotten the memo: The Japanese messaging service Line has plans to open its own virtual currency exchange, while the embattled publisher of Penthouse magazine wants to promote its own adult-entertainment-focused token.

As Steve Wynn faces allegations of sexual assault and other misconduct, the board of his casino empire is increasingly coming under scrutiny, too.

The proxy adviser ISS has long criticized the compensation of Mr. Wynn over the years, going so far as to say that the company had an “overall corporate governance profile that ranks among the worst, not the best, of U.S. companies.”

The board said that it was setting up an independent committee to look into the allegations. It will be led by Patricia Mulroy, Wynn’s only female director and a former official at Nevada’s gaming commission.

Meanwhile, investigating Wynn are gaming regulators for Nevada, Massachusetts and Macau.

The misconduct flyaround

• Vice said that its chief digital officer, Mike Germano, would not return to the company after sexual harassment allegations against him prompted an internal investigation. (NYT)

• #MeToo has put pressure on companies, especially financial firms, to disclose information on their work force diversity. (Reuters)

• Hillary Clinton said that she should have fired a 2008 campaign aide after he was accused of sexual harassment. (Facebook)

• Och-Ziff Capital Management has named Rob Shafir, previously the head of Credit Suisse’s American operations, as the successor to Daniel Och, laying to rest questions about its leadership planning. (Och-Ziff)

• Volkswagen suspended its chief lobbyist on Tuesday amid a growing furor over experiments on monkeys that were meant to promote the virtues of diesel-powered vehicles. (NYT)

• A California woman is suing Walmart, accusing it of racial discrimination because her local store keeps African-American personal care products locked up in a glass case. (NYT)

• David Cameron, the former British prime minister, has courted China’s sovereign wealth fund as a potential investor for his $1 trillion infrastructure fund. (FT)

• Carlos Slim is increasingly at odds with his onetime mentee, AT&T C.E.O. Randall Stephenson. (WSJ)

• Exxon Mobil said that it would triple its oil and gas production in the Permian Basin, which straddles West Texas and New Mexico. (NYT)

• ISS has become the kingmaker in proxy contests between hedge fund activists and their multibillion-dollar prey — an astonishing fact given that ISS is worth less than $1 billion and that it started out as a back-office support system. (Institutional Investor)

• Lex examines whether share buybacks undermine companies’ financial health, juice bonuses and threaten the real economy. (FT)

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