Aug 5, 2019

DealBook Briefing: Corporate America Considers Its Role in Gun Violence

12-15 minutes

CreditCreditJim Wilson/The New York Times
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Two shootings that killed nearly 30 people in the U.S. over the weekend have again prompted political outrage — and forced some businesses to consider their role in promoting gun violence.
The attacks, in El Paso, Tex., and Dayton, Ohio, came within 12 hours of each other. The authorities said that the suspect in the Texas shooting had published an online manifesto citing a “Hispanic invasion of Texas” as the reason for his killing spree. Little is known about the suspect in the Ohio shooting.
“The shootings ground the 2020 presidential campaign to a halt, reignited a debate on gun control and called into question the increasingly angry words directed at immigrants on the southern border in recent weeks by right-wing pundits and President Trump,” the NYT writes.
Walmart is grappling with the Texas shooting, which took place at one of its stores. The retailer, which has bolstered security as the frequency of mass shootings has increased, now faces renewed pressure to stop selling guns. (It has continued to sell firearms and ammunition despite other retailers having curbed sales.)
Other businesses also reckoned with their roles in the violence:
• The founder of 8chan — a website that has hosted racist screeds linked to mass shootings, and where the manifesto purportedly linked to the El Paso shooting was posted — said that the site should be shut down.
• Cloudflare, a cybersecurity provider, ended its contract for 8chan, with its C.E.O. tweeting, “There comes a time when enough is enough.”
• But Tucows, the internet registrar that hosts 8chan, said it did not plan to take action against the site.
President Trump is expected to speak about the shootings at 10 a.m. Eastern. So far, he has condemned the violence and suggested that mental illness was a factor.

CreditRoman Pilipey/EPA, via Shutterstock
• In mainland China, the renminbi traded this morning at roughly 7.02 to the dollar, compared with about 6.88 late on Friday. (A higher number represents a weaker currency.)
• The last time China’s currency was this weak was in 2008, during the financial crisis.
• The Chinese government controls the renminbi’s value to within a tight range anchored to a midpoint set daily by the People’s Bank of China.
• That means that its value is effectively government-controlled, and could continue to weaken if the central bank sees fit.
U.S. officials have long suggested that Beijing manipulates the currency to help its exporters. Today’s move is symbolic and won’t technically change trade relations with America — but if the currency continues to weaken, the Trump administration may see it as further retaliation to mounting tariffs.
Some traders think it could start a currency war. “It’s a natural extension of the trade war that’s just taken a turn for the worse,” George Boubouras, director at Salter Brothers Asset Management in Melbourne, Australia, told Bloomberg. “I expect to see the yen, dollar and Treasuries continue to strengthen as things heat up.”
The markets aren’t reacting well. Stocks already tumbled last week as Washington renewed its tariff war with Beijing. Markets in Tokyo and Hong Kong fell more than 2 percent today, and futures markets indicated that Wall Street will probably open lower, too.
More: The trade war between Washington and Beijing has vaulted Mexico over China as America’s biggest trading partner. And a look at how Mr. Trump overruled advisers to increase tariffs on China.

CreditStefan Rousseau/Agence France-Presse — Getty Images
John Flint has resigned less than two years after taking over Europe’s biggest lender, leaving the bank to search for a new leader while it navigates geopolitical tensions and tries to move on from a series of corporate scandals.
Mr. Flint took over in February 2018 from his mentor, Stuart Gulliver. He had long been considered Mr. Gulliver’s preferred successor, and had spent three decades at HSBC.
But Mr. Flint’s suitability was often questioned. Some at the bank thought he had been under Mr. Gulliver’s shadow for too long, the FT reports. Others considered his leadership style too low-key, according to the WSJ.
Among HSBC’s challenges that a successor must tackle:
• questions about preparedness for Brexit
• potential obstacles in its plan to grow in China
• fallout from a money-laundering scandal that led to a settlement with the U.S. Justice Department
• an underperforming North American banking division
HSBC also reported a 16 percent rise in first-half profits from the same time a year ago, to $12.5 billion. And it announced a $1 billion stock buyback. But it also dropped a 2020 target for hitting a 6 percent return on average tangible equity, suggesting that business headwinds will dent its profitability.
Shares in HSBC were down about 1 percent in trading this morning.
The hacker who stole the personal data of 106 million people from Capital One may have taken advantage of a security flaw that researchers have warned about for years, according to a WSJ analysis of the suspect’s online messages and interviews with experts.
• The suspect, Paige Thompson, “ran a scan of the internet to find vulnerable computers that could give her access to a company’s internal networks,” the WSJ reports.
• “In the case of Capital One, she found that a computer managing communications between the company’s cloud and the public internet was misconfigured.”
• “Through that opening, she was successfully able to request the credentials needed to find and read Capital One’s cloud-stored data from a system on the Amazon cloud, called the metadata service.”
• “Once she found the Capital One data, she was able to download it.”
This flaw had been known since 2014, according to security researchers who spoke to the WSJ. An analysis in February showed that 800 Amazon accounts may have similar metadata vulnerabilities.
The hack was a result of errors on Capital One’s part, according to the F.B.I. But Amazon’s cloud systems are supposed to warn companies when suspicious activity like this occurs, and it’s not clear why that didn’t happen here.
More: What consumers who are weary of security breaches can learn from the Capital One hack.

CreditAnna Moneymaker/The New York Times
The Trump administration is reportedly considering unveiling its long-promised health care plan this fall. That would be an effort to counter Democrats promising single-payer medical insurance, the WSJ reports, citing unnamed sources.
The plan may cover people with pre-existing medical conditions and allow insurance to be sold across state lines. It could also expand health savings accounts and link price transparency to quality metrics.
Republicans worry that health care is a vulnerability for President Trump. His administration is still backing a court fight to dismantle Obamacare, which critics say could leave millions of Americans uninsured or vulnerable to spiraling medical costs.
“They definitely want to show they’re protecting pre-existing conditions,” an unnamed Republican legislative staffer told the WSJ.
But the plan may come to nothing. Mr. Trump hasn’t yet signed off on anything, and has not advanced health care overhauls in the past. Parts of any proposal would require congressional approval, which would be unlikely in the Democratic-led House.

CreditDominick Reuter/Agence France-Presse — Getty Images
The European Union nominated Kristalina Georgieva, a Bulgarian economist, on Friday to replace Christine Lagarde as managing director of the International Monetary Fund, Alan Rappeport of the NYT reports.
“European countries had struggled to reach a consensus on who would fill the post, one of the most prominent in global economic diplomacy,” Mr. Rappeport writes. “After multiple rounds of voting, Ms. Georgieva, the chief executive of the World Bank, emerged victorious.”
“Ms. Georgieva won out over Jeroen Dijsselbloem, a former Dutch finance minister,” Mr. Rappeport adds. “The selection is a victory for France, which had been lobbying for Ms. Georgieva since Ms. Lagarde, who is French, was tapped last month to become president of the European Central Bank.”
Other countries have until Sept. 6 to offer alternatives. While the fund is usually led by a European, there has been speculation that President Trump may buck tradition and nominate an American for the role.
And that’s not the only obstacle in Ms. Georgieva’s way. The I.M.F. would need to alter its bylaws, which currently prohibit a managing director from being older than 65. (Ms. Georgieva turned 65 this year.)
HBO’s show about the power struggles of a media family dynasty often closely track with real-world events. Ed Lee of the NYT reports on how its producers seek to have the drama mirror the real-world corporate landscape.
• “‘I don’t want to be in a fake version of the world,” the show’s creator, Jesse Armstrong, told Mr. Lee.
• “The series grew out of a screenplay by Mr. Armstrong, ‘Murdoch,’ that got some attention in Hollywood but remained stubbornly unproduced,” Mr. Lee writes.
• “Succession” relies on consultants like Merissa Marr, a former media editor and writer at the WSJ, and the business journalist Bill Cohan.
• The patriarch of the Roy family on the show, Logan Roy, is an amalgam of Rupert Murdoch, Sumner Redstone and other media moguls. (A family in the second season is based in part on the Sulzberger family, which controls the NYT.)
• Jerry Hall, Mr. Murdoch’s wife, has reportedly told people that she’s an avid watcher of the show.
Saikat Chakrabarti, who as Representative Alexandria Ocasio-Cortez’s chief of staff was accused of provoking fights with fellow Democrats, will step down.
Bank of America has hired Amy Lissauer from Evercore as its global head of M.&A. activist and raid defense advisory.
• Fiat Chrysler said it was open to renewing merger talks with Renault. None have been opened yet. (FT)
• CBS and Viacom are said to have reached a deal on who would run their combined businesses should they merge. (WSJ)
• WeWork is reportedly poised to name JPMorgan Chase and Goldman Sachs as the lead underwriters for its forthcoming I.P.O. (Bloomberg)
• Dean & DeLuca, the debt-ridden gourmet grocery chain, has defaulted on worker payouts and closed more stores. (NYT)
• Kayco plans to buy its big rival in the kosher food industry, Manischewitz. (NYT)
Politics and policy
• The Trump administration dropped plans to nominate Representative John Ratcliffe as director of national intelligence. (NYT)
• The business ventures of Joe Biden’s family have often cashed in on the former vice president’s work on foreign relations and ties to unions. (Politico)
• New York’s attorney general and other state authorities are investigating Eli Lilly over insulin treatment prices. (CNBC)
• How the Trump administration has been trying to unmask anonymous government whistle-blowers. (Intercept)
• The European Union may not be prepared for a no-deal Brexit. (WSJ)
• Prime Minister Boris Johnson is hoping that fiscal stimulus could prepare Britain for leaving the E.U. (FT)
• The U.S. has reportedly identified three Chinese tankers that are carrying Iranian oil in violation of sanctions against Tehran. (FT)
• Iran claims to have seized a third foreign tanker in the Persian Gulf. (WaPo)
• The Trump administration imposed new economic sanctions on Russia in response to the Skripal poisoning. (FT)
• Huawei is reportedly testing a smartphone that runs its own operating system and could go on sale this year, according to the Chinese state news media. And the company’s domestic sales are soaring. (Reuters, WSJ)
• Facebook will add its name to Instagram and WhatsApp to unify its brands, as it faces antitrust scrutiny over its acquisitions of those companies. (WSJ)
• Google will let rivals bid to be the default search engines on Android phones in Europe. (FT)
• How 5G wireless technology became a cash cow for some governments. (FT)
• It’s boom time for tech start-ups that service other start-ups. (NYT)
Best of the rest
• Boeing may completely overhaul the software for its troubled 737 Max jets. (Seattle Times)
• Russians have embraced credit cards, and their debt is spiraling. (NYT)
• The secret to Sunday deliveries at FedEx and UPS? Cheap weekend labor. (WSJ)
• Retail is the only U.S. sector to have lost jobs in the past two years. (FT)

Source: NYT

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