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Aug 5, 2020

News | Business| Tech Deals: Is TikTok a Good Buy? It Depends on What’s Included

By Kevin Roose

The Shift

TikTok’s most valuable assets, a hyper-effective algorithm and a community of popular creators, may not be as easy to acquire as the company itself.
Credit...Manjunath Kiran/Agence France-Presse — Getty Images
TikTok is going to get acquired or die trying.
The hit video app appears headed for a shotgun wedding after President Trump has decided to force its owner, the Chinese tech conglomerate ByteDance, to sell TikTok to an American acquirer or be barred from operating in the country. On Monday, the president — acting as a combination of investment banker, regulator, and back-room mafioso — said he would approve a bid by Microsoft for TikTok’s U.S. operations, provided that both parties meet his as-yet-unspecified demands and hit a Sept. 15 deadline.
There are a million questions still swirling around a possible TikTok-Microsoft deal.But the most glaring question mark is that nobody I’ve talked to has figured out exactly what “buying TikTok” will mean, or whether what many experts consider TikTok’s golden goose — the complex algorithms that make the app so addictive — would be included in a deal.
A Microsoft spokesman declined to comment. A TikTok spokeswoman, Ashley Nash-Hahn, declined to offer details about what parts of TikTok’s technology were and weren’t up for sale.
“While we do not comment on rumors or speculation, we are confident in the long-term success of TikTok,” she said in an emailed statement.
Some corporate acquisitions are straightforward. In the simplest kind of deal — say, a big restaurant buying a smaller restaurant — the acquirer buys everything on the other company’s balance sheet: all its assets and liabilities, including its kitchen equipment, its secret recipes, and any real estate it owns. Lawyers and bankers try to place a value on those things, and estimate the company’s future cash flows. Then they hash out terms, negotiate a price and sign a deal.
A TikTok acquisition is far, far more complicated.
For starters, even though TikTok has gone to great lengths to distance itself from its Chinese parent company, the app is still very tightly integrated with ByteDance’s Chinese operations. As The Information recently reported, most of TikTok’s core features were developed by ByteDance’s Chinese engineers using a suite of shared software tools — known as “zhongtai,” or “central platform” — that is available to all of ByteDance’s more than two dozen apps. And most of the important decisions about TikTok’s operations and strategy have been made by executives in China.
Separating TikTok from ByteDance would, by definition, require untangling many of these Chinese connections. That could present problems. Many of TikTok’s top American executives — including Kevin Mayer, its chief executive — are new to the company, and presumably still getting up to speed. And while TikTok does have engineers based in the United States who could theoretically help with the technical untangling, many of the engineers with the deepest knowledge of TikTok’s systems are presumably Chinese nationals in Beijing.
Credit...Wu Hong/EPA, via Shutterstock
And what about the algorithm? By all accounts, TikTok’s core algorithm — which selects videos for the central feed users see when they open the app, called the “for you page” or FYP — could be the most valuable asset the company owns. Eugene Wei, a longtime tech executive and blogger, likens TikTok’s FYP algorithm to the Sorting Hat from the Harry Potter series — a “rapid, hyper-efficient matchmaker” that analyzes users’ behavior and places them into personalized niches, based on their interests.
The FYP algorithm is TikTok’s secret sauce, and a big part of what makes it so accurate is ByteDance’s global reach. Every swipe, tap and video viewed by TikTok users around the world — billions and billions of data points a day — is fed into giant databases, which are then used to train artificial intelligence to predict which videos will keep users’ attention.
Sometimes, that might mean showing American users videos made in India or China. (I once fell into a delightful rabbit hole of TikTok dances by multigenerational Chinese families.) Other times, it could mean using data from one country’s users to inform another country’s recommendations. It could even mean using data gleaned from an entirely different ByteDance app — such as Douyin, the Chinese equivalent of TikTok — to inform what TikTok users are shown.
ByteDance considers itself, first and foremost, an A.I. company. And the nature of building A.I. is that the more data you have, the better your algorithms generally are. Would an American TikTok algorithm, trained only on American users’ data, be less addictive? It’s certainly possible.
But even if ByteDance was willing to part with TikTok’s algorithms and the machine learning models they rely on — a big if — it’s not clear that an American acquirer would be able to recreate TikTok’s magic right away.
Karl Higley, a recommender systems engineer who previously worked at Spotify, said that without access to historical data — data about what TikTok’s users swiped, tapped and lingered on weeks or months earlier — a new, Americanized TikTok might essentially need to start from scratch.
“In order to personalize the app for existing users, they’re going to need historical data for U.S. folks unless they want to wipe the slate clean, which would be a terrible user experience,” Mr. Higley said.
American tech giants, of course, are no slouches when it comes to building addictive algorithms. And it’s possible that an American-owned TikTok could rebuild the app’s core technology without users even noticing a difference. But it’s not trivial work, and it could take months or years to do — months or years in which Facebook, Snapchat and other competitors would be nipping at TikTok’s heels. And if users sensed that their algorithm was degrading in the meantime, or showing them fewer interesting videos than it once did, they could be tempted to jump ship.
In addition to recreating TikTok’s algorithms, an American acquirer would also need to work quickly to preserve TikTok’s other valuable asset: its creator culture. As my colleague Taylor Lorenz has written, TikTok is home to a large, vibrant community of creative talent, some of whom make a full-time living from the app. Those people are attracted to TikTok partly because the platform gives them a way to reach a mass audience. But they’re also attracted to it because TikTok has cultivated an aura of cool through advertising, striking partnerships with music festivals and other popular events, and hosting exclusive parties for TikTok creators at industry events like VidCon.
Already, Facebook is reportedly trying to poach popular TikTok creators for Instagram Reels, its new TikTok clone, by dangling six-figure deals in front of them. And if TikTok is acquired by Microsoft — a company not historically known for its youth appeal — creators could sense that it’s time to move on.
TikTok could try to lower the risk for an acquirer by striking multiyear exclusive deals with its most popular American creators, the way that platforms like YouTube and Twitch have done. It could also accelerate its plans to let popular users earn money from the platform. But without a firm grip on its A-list talent, TikTok’s acquirer won’t be assured that the platform isn’t losing its edge.
Hank Green, a YouTube star and chief executive of the education company Complexly, who has more than 600,000 followers on TikTok, said that a TikTok acquisition could make creators more skeptical of the company’s motives.
“One of the things about TikTok is they’ve been able to make lots of changes really fast, and people are open and receptive to that,” Mr. Green said. “If you see that change as coming from outside the ecosystem, that can feel like a foreign change.”
Many of the people I spoke to agreed that even with the potential pitfalls and unresolved questions, the opportunity to buy TikTok is a once-in-a-decade deal for the right acquirer. Popular, growing social networks are exceedingly rare, and TikTok has already made itself a fixture of American culture in a way that few other apps ever have.
“TikTok is compelling, not just because of its large and growing user base, but also because of its platform potential to expand into e-commerce and livestreaming,” said Connie Chan, a partner at the venture capital firm Andreessen Horowitz. “Video is a fantastic way to sell things and short videos are perfect for product discovery.”
Mr. Green, the YouTube star, agreed.
“If I had the opportunity to buy TikTok, I’d buy TikTok,” he said. “There’s so much value on that platform right now that is completely untapped.”

DealBook: Racial Injustice and Corporate America

7-8 minutes - Source: NYT

Credit...Marcio Jose Sanchez/Associated Press

There has been a lot of competition, but in 2020 few issues have reshaped the business world as much as race, as a surge in support for combating racial injustice swept across the country. Corporate America has rushed to show which side it was on.
Our guest on tomorrow’s DealBook Debrief, The Times reporter Nikole Hannah-Jones, brought key ideas in the movement to the fore with the Pulitzer-winning 1619 Project, which she spearheaded.
R.S.V.P. here for the discussion with Nikole about the role for business in addressing racial inequality at 11 a.m. Eastern. If you have questions you would like to ask her beforehand, send them to
Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut and Michael J. de la Merced and Jason Karaian in London.
At its core, The 1619 Project is a re-examination of America’s national narrative, placing the pernicious consequences of slavery at the center of the story for nearly every major institution. Advocates for racial equality have long pointed out the uneven playing field in the business world, surfacing the effects of slavery throughout the American capitalist project.
• As part of The 1619 Project, Matthew Desmond, a sociology professor at Princeton, dissected the business of cotton, arguing that “enslaved Black people became America’s first modern workers, their productivity increasing at an astonishing pace.”
• Mehrsa Baradaran, a professor at U.C. Irvine School of Law, asserts in her book “The Color of Money” that Jim Crow laws and other racist policies trapped Black communities, sapping them of the capital they need to flourish.
• Jay Powell, the Fed chairman, has spoken of “financial deserts” where poorer communities, including Black ones, have suffered from a lack of access to capital.
As protests across the nation have grown — sparked by George Floyd’s death, and bolstered by more outrage over incidents of police violence — big business has responded.
Corporate leaders spoke out against systemic racism. Among the most eloquent was Robert Smith, the founder of Vista Equity Partners, who is America’s wealthiest Black billionaire and who published a poignant memo to employees shortly after Mr. Floyd’s death. “Progress still feels so elusive,” he wrote, and “it’s natural to feel helpless in light of the events we’re seeing in the news.” But he implored them to look forward and put in the work: “Each of us has to choose to overcome.”
And businesses have taken action to address the issue:
• Corporations pledged millions to racial justice causes: Apple and YouTube each announced $100 million pledges, for instance.
• Several investors, including SoftBank and Andreessen Horowitz, announced new funds aimed at backing minority entrepreneurs.
• Netflix’s Reed Hastings and his wife, Patty Quillin, pledged $120 million to historically Black colleges and universities.
Black leaders have said progress must be made with bigger, concrete proposals and not just well-intentioned pledges, hashtag activism or one-off donations.
“Corporate America has failed Black America,” Darren Walker, the president of the Ford Foundation, told The Times’s David Gelles. “It is going to take a systemic response to sufficiently address this crisis that has been decades in the making.”
Some have embraced the opportunity to think bigger:
• Mr. Smith of Vista Equity called on U.S. companies to invest 2 percent of their annual profits in Black-focused lenders. Such a move, he said, would give these banks and other financial institutions the cash to help Black communities grow in the long term.
• Separately, Netflix devised a plan to deposit up to 2 percent of its cash holdings, or $100 million, with Black-focused financial institutions. Though conceived independently of Mr. Smith, the idea is the same: “You need capital to build more capital,” Professor Baradaran of U.C. Irvine, an adviser on the plan, said. The move addressed racial inequality not through charity but via a routine commercial aspect of Netflix’s business, a crucial distinction.
• The S.E.C. is investigating Kodak’s disclosure of a large government loan that sent its shares soaring, boosting the value of executives’ stock option grants. (WSJ)
• Argentina reached a deal with creditors, including BlackRock and Greylock Capital Management, to restructure $65 billion in debt. (NYT)
• People news: After three years of mixed results, Ford replaced its C.E.O., Jim Hackett, with its C.O.O., Jim Farley; Apple’s long-serving marketing chief, Phil Schiller, is stepping down, to be replaced by the product marketing head, Greg Joswiak; and the advertising group Publicis cut ties with Tom Goodwin, its head of futures and insight, because his Twitter posts about the coronavirus were “not aligned” with company values. (NYT)
Politics and policy
• Senator Mitch McConnell, Republican of Kentucky and the majority leader, signaled that he might be open to extended $600-per-week unemployment assistance payments, a sticking point in negotiations. (NYT)
• U.S. prosecutors are reportedly seeking $13 billion in penalties against the OxyContin producer Purdue Pharma to resolve investigations into its practices. (Reuters)
• Anthony Levandowski was sentenced to 18 months in prison for stealing self-driving car trade secrets from Google, which he left to found a start-up that he sold to Uber. (NYT)
• Speaking of Uber and Google, both companies have now told office-based employees that they can work from home through June 2021. (CNBC)
• “Is Microsoft Sure It Wants to Buy TikTok?” (NYT Opinion)
Best of the rest
• Disney lost nearly $5 billion in its latest quarter, but investors cheered a surge in subscriptions for its streaming services. (NYT)
• Hong Kong’s richest family has lost $8 billion over the past year, a reflection of the city’s turmoil. (Bloomberg)
• Interest rates are low, so why are loans so hard to get? (NYT)

Analysis | The Cybersecurity 202: Trump’s endorsement of mail voting in Florida is about politics not security

Joseph Marks

The dramatic shift comes after months during which the president has slowly pared back his criticism of mail voting by drawing a series of distinctions between good and bad instances of the practice that often strained logic.
This most recent change, however, probably was driven more by electoral politics than by a newfound respect for the security of Florida’s mail voting system.
It comes after a string of reports showing Republican distrust of mail voting is rising and that GOP requests for mail ballots are lagging behind Democrats’ requests in numerous states. That could spell disaster for the Trump campaign during an election in which many people may choose to stay home rather than risk contracting the novel coronavirus by voting in person.
In Florida, which is a perennial swing state in presidential elections, Republicans often outpace Democrats in voting by mail. But this year, GOP mail ballot requests are trailing Democratic requests by nearly 600,000.
I think he’s looking at the lead Democrats have in requested ballots now and tactically softening his stance on mail balloting in Florida,” Michael McDonald, a University of Florida political science professor who studies voting trends, told me. “His campaign knows this is important.” 
Trump hasn't reversed himself entirely on mail voting, though. His campaign also sued Nevada over a plan to send mail ballots directly to all registered voters saying it would make voter fraud “inevitable," the Nevada Independent reports.

Trump justified his reversal by claiming Florida had worked harder at establishing mail voting than other states. 

“Florida’s been working on this for years and they have a very good system of mail in,” he said during a news conference, suggesting it was the result of good management by two Republican leaders, Gov. Ron DeSantis and former governor and now Sen. Rick Scott.
The president acknowledged “maybe a couple other states they worked out a system,” but he didn’t name any names.
Florida has indeed invested many years in expanding mail voting and ensuring it runs smoothly.
“Our counties are used to handling large volumes of mail ballots,” Escambia County Supervisor of Elections David Stafford (R) told me. “There are processes and procedures my colleagues and I have put in place that have been tested over the years.”
With mail voting surging during the pandemic “it’s just a matter of scaling up,” he said.
But numerous other states have made similar investments, including some the president has attacked, such as California. And states that have put the most work into mail voting are the ones where nearly all voters cast ballots by mail as a default — a system Trump has also attacked. Those states are Washington, Oregon, Colorado, Utah and Hawaii.
For states that don’t have well established mail voting systems there is indeed a chance of delays and mishaps, but no significant chance of widespread fraud as the president has repeatedly claimed.

The mail voting process and safeguards also aren’t substantially different in Florida than elsewhere. 

All states require a process to verify voters’ identities such as a signature and a bar code on ballot envelopes. And they ensure voters aren’t also casting ballots in person.
When it comes to authorizing people to vote by mail, Florida is, if anything, on the permissive end of the spectrum.
The state has allowed anyone to cast a mail ballot without an excuse since 2002. Since 2014, anyone who signs up for a mail ballot in one election will automatically receive mail ballots through the next two general elections.
That would seem to run afoul of one of the main criticisms Trump has lobbed at mail voting in recent months  — that the voters don’t go through a sufficiently rigorous request process.
Indeed, when Michigan Secretary of State Jocelyn Benson (D) opted to send mail ballot request forms to all voters in just this year’s primary and general election contests, Trump threatened to hold up federal funding to the state. He said at the time that “common sense would tell you that massive manipulation can take place,” and warned of “fraudulent ballots.” Election officials say it’s nearly impossible to fake a mail ballot because of verification procedures.
Trump also crowed in his tweet that Republicans had halted Democrats from undermining Florida’s mail voting system. In fact, progressive who brought the case he’s probably referring to reached a settlement. They had sought changes mostly around the edges of the system — an extended deadline for mail ballots to be returned, free postage for those ballots and the removal of a restriction on paid workers collecting mail ballots to return them in bulk.

Florida also doesn’t square with another Trump claim — that absentee voting is good, but mail voting is bad. 

Those terms are used interchangeably in many states, but Trump drew a stark distinction until very recently.
At a news conference as recently as Monday he declared, “Absentee ballots are great. Absentee ballots, they have to request them, they go through a process, they get them. But the universal mail-in ballots have turned out to be a disaster.”
He backpedaled on that claim in yesterday’s tweet, declaring, “Whether you call it Vote by Mail or Absentee Voting, in Florida the election system is Safe and Secure.”
In fact, Florida officials shifted to describe the practice as voting by mail versus absentee voting after the 2014 law passed to stress that it was available to anyone, whether they were absent from the state or not.
“You can live next door to your polling place and request a ballot under Florida law,” Stafford told me.

The keys

GOP concerns about mail voting were also on display in primary contests in Kansas and elsewhere yesterday. 

Ron Harrison, 70, a retired mechanical engineer and conservative Republican voter in Olathe, Kan. called mail voting “a disaster in the making.”
He also warned the Postal Service, which is suffering a severe budget shortfall,would not be able to handle the surge in ballots, a claim Trump himself has also made. “It’s silly,” Harrison said. “There is no reason to do that and open up potential problems. The post office can’t handle that amount of mail.”
Voters in Michigan, meanwhile, cast a record-breaking 1.6 million mail ballots, prompting concerns that mail voting in November will outpace election officials’ ability to handle it, Paul Egan, Dave Boucher and Frank Witsil at the Detroit Free Press report. Officials there are pushing for a rule change so they can start counting mail ballots before Election Day to ensure they’re tallied in a timely manner.
The Michigan secretary of state and other election officials urged primary voters to bring their mail ballots to physical drop boxes rather than risk sending them through the mail. Michigan voters complained they received their ballots just before Tuesday's vote or, in some cases, not at all.

The NSA wants military and intelligence personnel to turn off location-sharing on their devices. 

The advisory comes as a government push against the Chinese-owned app TikTok is highlighting national security concerns related to the reams of data many apps collect for marketing and advertising purposes, Byron Tau and Dustin Volz at the Wall Street Journal report.
That data can be especially damaging if it falls into the hands of U.S. adversaries, the National Security Agency warns.
“Location data can be extremely valuable and must be protected. It can reveal details about the number of users in a location, user and supply movements, daily routines (user and organizational), and can expose otherwise unknown associations between users and locations,” the agency bulletin warned.
Apps don't need to connect to a device’s location data to pose a risk, the NSA warns. That’s because savvy hackers can figure out an app’s location by looking at the WiFi signals it’s connecting to or by spying on location data in photos. U.S. military branches have already banned TikTok. The Pentagon imposed a similar ban on location-tracking fitness apps in 2018 after it was revealed data from run tracking app Strava could be used to map out military bases.

The Florida teen who allegedly masterminded a massive Twitter hack plead not guilty.

Graham Ivan Clark, a Tampa-based 17-year-old, is facing 29 separate fraud charges in connection with the hack of 130 high-profile Twitter accounts last month, the Associated Press reports. Clark and two accomplices breached the accounts of high-profile users such as former vice president Joe Biden and Tesla CEO Elon Musk to spread a Bitcon scam that duped users out of more than $100,000.
He’s scheduled for a bond hearing today with bail set at $725,000.
Mason Sheppard, 19, of the United Kingdom, and Nima Fazeli, 22, of Orlando, were also charged separately for the hack last week in California federal court.

Chat room

Senators were yesterday briefed on foreign threats to the 2020 election. Here's what Sen. Richard Blumenthal (D-Conn.) had to say:

Hill happenings

Democrats wants to know whether a data-mining company sold protester data to the police.

The company, Mobilewalla, released a report in June that showed the demographics of protesters based on their location data, as BuzzFeed News first reported. “We have serious concerns that your company’s data could be used for surveillance of Americans engaging in Constitutionally-protected speech.” Sens. Elizabeth Warren (D-Mass.) and Ron Wyden (D-Ore.) and Rep. Mark DeSaulnier (D-Calif.), and House Committee on Oversight and Reform Chair Carolyn Maloney (D-N.Y.) wrote to the company's CEO.
Sharing the cellphone data with government agencies may have allowed police to evade a Supreme Court ruling that requires them to obtain a warrant for cellphone data first, they suggested.

A new bill would ban companies from using facial recognition on customers without their consent.

The legislation, introduced by Sens. Jeff Merkley (D-Ore.) and Bernie Sanders (I-Vt.) follows a recent Reuters report that Rite Aid used facial recognition technology in hundreds of its U.S. stores for nearly a decade without consumers knowing.
The legislation would require companies to get written consent from consumers before collecting their biometric data. Failure to do so could open the door for state or consumer lawsuits. Facial recognition technology used by private companies is largely unregulated in the United States. Only three states including Illinois have biometric privacy laws on the books.
More government cybersecurity news:

Global cyberspace

There's no reason for Australia to ban TikTok, prime minister says.

The security review of the Chinese-owned app departs from a decision by U.S. allies to consider banning the app, Reuters reports.
“We’ll obviously keep watching them, but there’s no evidence to suggest to us today that that is a step that is necessary,” Australian Prime Minister Scott Morrison told reporters at the Aspen Security Forum yesterday.
Microsoft is in talks to buy some TikTok's English-country assets from parent company ByteDance, including its business in New Zealand and Australia.

A former NSA director says the United States needs to push back against Chinese cybertheft.

The coronavirus pandemic is the time for the United States to regain its edge in an ongoing cyberwar, Gen. Keith B. Alexander, former director of the National Security Agency, and Jamil N. Jaffer, the former chief counsel and senior adviser to the Senate Foreign Relations Committee, write in Barron's.
"We must…push back, using all elements of national power, to end the Chinese campaign of cyber-enabled economic warfare, including through the use of trade measures, sanctions, persistent cyber engagement, and, where necessary, more aggressive actions," they write. "We cannot allow trade deals or our desire for cheap Chinese goods to force us to sit on our hands, leaving our private sector alone to fight this war. Doing so means certain defeat.”


  • Black Hat will take place virtually through Thursday.
  • The Senate Energy and Natural Resources Committee will hold a hearing to examine federal and industry efforts to improve cybersecurity in the energy section today at 10 a.m.
  • DEF CON will take place virtually August 5-8.

Secure log off

Tech columnist Geoffrey A. Fowler gives new Alexa-enabled glasses a spin:

US Market | Futures Indicator:The Dow is set to rise for a 4th day after Disney reports better-than-expected earnings

Maggie Fitzgerald

U.S. stock futures rose on Wednesday with the Dow Jones Industrial average poised to climb for a fourth day.
Dow futures added 185 points or 0.7%. S&P 500 futures rose 0.5%. Nasdaq-100 futures gained 0.3%.
Gains were capped as investors watched for progress from Washington on a new coronavirus stimulus package.
The White House and Democratic congressional leaders have reported some progress in the negotiations, but they remain apart on some issues.
“I think the expectation for the market is that we are going to get that stimulus,” Ally Invest’s Lindsay Bell said on CNBC’s “Closing Bell” on Tuesday. “There may be a few weeks of waiting while these folks don’t get their extra benefits or there may be uncertainty around evictions and that uncertainty could lead to some volatility.”
Better-than-expected earnings from Disney helped sentiment on Wall Street. The theme park and media giant earned a profit of 8 cents per share, while analysts expected a loss of 64 cents per share. Disney said it now has 100 million paid subscribers across its streaming services, which include Disney+, Hulu and ESPN+.
Disney shares jumped by 6% in premarket trading.
On Tuesday, all three major averages notched gains. the Dow Jones Industrial Average climbed more than 150 points, for its third straight day of gains. The S&P 500 rose about 0.35%.
The Nasdaq Composite rose 0.35%, closing at a record high for its fifth day in a row. 
Earning season continues on Wednesday with CVS Health, Humana and closely-watched Moderna reporting before the opening bell. Following the market close on Wednesday, Etsy, Roku and Square report their quarterly results.
A slew of economic news comes Wednesday morning that could move stocks. Private payrolls data from ADP will be released at 8:15 am ET and investors will be watching if companies continued to bring back workers from their pandemic furlough in July. Economists polled by Dow Jones are expecting 1 million private workers were added in July, down from the 2.369 million added in June.
The final read on July Services PMI will be released at 9:45 am ET. Economists polled by Dow Jones are expecting a read of 49.6, the same as June. Finally, the ISM nonmanufacturing survey is set to release at 10:00 ET. Economists estimate a red of 55, according to Dow Jones, down from June’s read of 57.1.
The Wall Street Journal said Tuesday U.S. trade representative Robert Lighthizer and Chinese Vice Premier Liu will meet in mid-August to discuss the Phase One trade deal between the U.S. and China. 

Market Insider | Biggest Moves Premarket: Stocks making the biggest moves premarket: Apple, CVS, Blackstone, Wynn Resorts and more

Peter Schacknow

Check out the companies making headlines before the bell:

Apple – B of A Securities downgraded Apple to “neutral” from “buy”, while raising its price target on the stock to $470 per share from $420. The firm said there are many positives for Apple but risks as well, and that risk/reward is balanced at current price levels.
CVS Health – CVS reported better-than-expected profit, revenue, and same-store sales for the second quarter, and also raised its full-year forecast. Among the factors helping the bottom line: lower medical costs for the company’s pharmacy benefits management business due to the pandemic.
Walt Disney – Disney reported adjusted quarterly profit of 8 cents per share, compared with a consensus estimate of a 64 cent loss. Disney’s bottom line was hit hard by pandemic-related theme park closures and the lack of live sports for its TV networks, but it did report strong growth for its Disney+ streaming service.
Beyond Meat – Beyond Meat lost an adjusted 2 cents per share for its latest quarter, matching estimates, with revenue for the plant-based burger maker coming in above Street forecasts. However, the company spent more than expected dealing with Covid-19 related operation costs.
WW – WW reported lower-than-expected profit and revenue for the second quarter, hit by the pandemic-related halt of its in-person meetings. The company formerly known as Weight Watchers did offset part of that drop through its digital offerings.
Novavax – The drug maker reported positive results in an early study of its coronavirus vaccine candidate, saying it produced promising immune responses and was well tolerated by patients.
Blackstone – The private equity firm has a deal in place to buy for $4.7 billion, according to sources who spoke to CNBC.
Activision Blizzard – Activision Blizzard is raising its full-year forecast, after the videogame maker reported stronger-than-expected bookings for the second quarter. As with other gaming companies, Activision benefited from a jump in gaming activity from users forced to stay at home due to the pandemic.
Wynn Resorts – Wynn lost $6.14 per share for its latest quarter, wider than the loss of $4.98 that analysts were expecting. The casino operator’s revenue also fell short of forecasts, as the Covid-19 pandemic kept customers away.
Nikola – The electric vehicle maker lost an adjusted 16 cents per share for its latest quarter, wider than the 13 cent loss that Wall Street analysts were anticipating. Nikola said it was impacted by a pandemic-related supply chain disruption.
Exxon Mobil – The energy giant will suspend matching 401(K) contributions to employee accounts beginning in October, according to a memo to workers seen by Reuters.
Square – The payments processor posted a quarterly loss, but saw a 64% jump in second quarter revenue and nearly tripled its transaction volume. Square’s businesses got a boost from the surge in people shopping online due to the pandemic.
Match Group – The operator of Tinder and other dating services reported better-than-expected second-quarter revenue, and gave an upbeat forecast for the current quarter. The company’s dating services attracted more users amid the pandemic, with stay-at-home orders limiting face-to-face meetings.
Palo Alto Networks – The cybersecurity company’s stock was upgraded to “buy” from “neutral” at BTIG, which cited solid demand and good sales execution for Palo Alto’s core firewall business.
Livongo – The maker of remote health monitoring technology is merging with Teladoc Health, a provider of virtual physician visit services, in an $18.5 billion cash and stock deal. Livongo shareholders will receive a little over 0.59 shares plus $11.33 in cash for each share they now own.

News | Business | Economy | Sweden: Sweden’s economy shrank less than eurozone’s at height of pandemic

Richard Milne

Sweden’s economy performed better than most of Europe at the height of the pandemic even though its economy shrank by the most since the second world war, as the Scandinavian country appeared to benefit from its lighter-touch approach to coronavirus.
Gross domestic product in the second quarter fell 8.6 per cent compared with the previous three months, according to a flash estimate from Statistics Sweden published on Wednesday. But that was significantly better than the 12 per cent contraction experienced across the eurozone in the same period.
The hardest-hit major European economy was Spain, which logged an 18 per cent contraction; the German economy shrank by about a tenth.
Sweden has been at the centre of a fierce international debate about the merits of locking down as a means of tackling the spread of the virus. It refused to follow the rest of Europe into a formal shutdown, keeping its schools, restaurants and borders open while urging people to work from home and keep a distance from each other.
After being one of the very few European countries to eke out positive growth in the first quarter, Sweden continued to be an outlier in April, May and June — the peak of the pandemic so far in Europe. According to flash estimates last week, only Latvia and Lithuania performed better with GDP declines in the second quarter of 7.5 per cent and 5.1 per cent respectively.
David Oxley, senior Europe economist at Capital Economics, said the contraction showed Sweden was not “immune to Covid”. He added: “Nonetheless, the economic crunch over the first half of the year is in a different league entirely to the horror shows elsewhere in Europe.”
For several weeks this spring, Sweden had the highest death rate per capita in Europe, and one that was 20 times that of neighbouring Norway. But its overall death rate per capita now lags behind several countries that locked down such as Belgium, Spain and the UK.
Economists expect Sweden’s economy to shrink by about 4 to 5 per cent this year — better than the forecasts for the eurozone and its major economies, but in line with estimates for neighbouring Denmark and Norway, both of whom locked down.
On Wednesday economists at Swedish lender SEB upgraded their forecast for Sweden’s GDP this year to a fall of 4 per cent, from 5 per cent previously.
“It is too early to evaluate how different strategies to deal with Covid-19 have affected the economies,” said Torbjorn Isaksson, chief analyst at Nordea.
Sweden’s central bank has kept its main interest rate at zero after raising it at the end of last year, arguing that monetary policy is not the best response to tackle the fallout from coronavirus.

News | Business | Banking | Germany Banks: Commerzbank takes greater loan loss from Wirecard than Covid-19 debt

Olaf Storbeck 

Commerzbank took a greater hit from the collapse of Wirecard in the second quarter than from the economic fallout of the coronavirus pandemic, according to people familiar with the matter.
Germany's second-largest listed lender, which is embroiled in a leadership crisis after both its chairman and chief executive announced plans to resign last month, wrote off €175m of loans it made to the defunct payments provider which filed for insolvency in June.
Loan-loss provisions relating to the pandemic stood at €131m, the lender said when it reported results on Wednesday.
Commerzbank’s operating profit collapsed 34 per cent to €205m in the three months to June compared with a year earlier, while its net profit fell by 21 per cent to €220m.
Both numbers were better than expected by analysts but the bank warned investors that it would swing to a net loss for the full year as credit losses and restructuring charges were likely to rise.
Commerzbank did not name Wirecard in its earnings release but said that its provisions contained a €175m charge “from a single case”. People familiar with the details told the Financial Times that this was related to Wirecard.
The lender was part of a consortium of 15 banks which provided a €1.75bn revolving credit facility to the collapsed fintech. At the time of Wirecard’s collapse, 90 per cent of this had been drawn. Commerzbank, which was one of four lead arrangers of the loan, provided €200m to the credit facility.
The group’s common equity tier one ratio — a core benchmark of its balance sheet strength — stood at 13.4 per cent at the end of the quarter, up from 12.9 per cent a year ago. Its return on equity dropped by a quarter to 2.9 per cent.
On Monday, the bank defied its second-largest shareholder, Cerberus, by electing Hans-Jörg Vetter, the former chief executive of state-owned German lender LBBW, as its next chairman. Cerberus had previously raised “serious doubts” that Mr Vetter was “the right person for this job or has the right experience for it”. On Tuesday, the private equity group promised to work constructively with the new chairman despite its misgivings. 

News | Investments | Pension Funds: Big investors to trial ‘net zero’ tools to decarbonise their portfolios

Chris Flood 

A coalition of more than 70 pension funds and investment managers representing assets of $16tn have designed a “net zero” framework to help strip out damaging carbon emissions across their portfolios by 2050.
Efforts by large investors to tackle climate change have been hampered by a lack of consensus on the best way to limit the increase in global temperatures to 1.5C above pre-industrial levels, a goal agreed at the 2015 Paris conference.
But a blueprint published on Wednesday by the Institutional Investors Group on Climate Change provides pension funds with a set of tools to help them decarbonise their portfolios. It also aims to encourage greater investment in renewable energy projects, low-carbon buildings and energy efficient technologies
“Countries, cities and companies around the globe are committing to achieve the goal of net zero emissions and investors need to show similar leadership,” said Stephanie Pfeifer, IIGCC chief executive.
The framework proposes that institutional investors set rigorous top-down and bottom-up targets to limit emissions at an overall portfolio level as well as for their holdings by asset class in equities, bonds and real estate. Private equity and infrastructure are to be added at a later date.
The framework’s impact on performance will be tested by five investors: APG of the Netherlands, Brunel Pensions Partnership, the Church of England Pensions Board, PKA of Denmark and Phoenix Group. Results of this analysis will be published later this year.
Adam Matthews, director of ethics and engagement at the Church of England Pensions Board, said setting a long-term net zero target was “the easy part” for investors.
“The challenge is to have a credible and transparent framework that enables a fund to convert intent into practical decisions and action,” he said.
The IIGCC has invited members and other interested parties to provide feedback and answers to a questionnaire on its website as part of a consultation that ends on September 25.
Laura Chappell, chief executive of Brunel Pension Partnership, said the framework was a big step forward. “It answers the fundamental and urgent question of what a Paris-aligned portfolio actually looks like.”
Sceptics question whether such initiatives possess real teeth and encourage pension funds to cut holdings in fossil fuel companies.
Mr Matthews said divestment often did not encourage alignment with climate change targets as it reduced an investor’s ability to influence company behaviour.
“However, divestment is relevant as a tool where a company’s exposure to climate risks poses an unacceptable financial threat or if efforts at engagement are unsuccessful or if businesses pursue activities that are no longer permissible within net zero pathways,” said Mr Matthews.
Other investors contributing to the development of the framework include Legal & General Investment Management, Allianz Global Investors, JPMorgan Asset Management, UBS Asset Management and Standard Life Aberdeen.
Nest, the £22bn UK government-backed workplace pension scheme that announced plans last month to achieve a net-zero carbon position by 2050 at the latest, has also signed up to the IIGCC framework.

News | Business | Banking | UK Banks: Metro Bank hit by loss after sharp rise in loan provisions

Nicholas Megaw 

Metro Bank fell to a £241m loss in the first half of the year as it became the latest lender forced to set aside hefty sums to deal with expected souring loans stemming from the pandemic.
The bank, which is dealing with the first recession since it was established a decade ago, announced £112m of expected credit losses in the six months to June, up from just £4.4m in the same period last year. The vast majority of the total — £97m — was due to changes in economic forecasts rather than actual customer defaults.
Government rescue schemes and programmes such as loan repayment holidays have so far kept customer default rates low, but banks are predicting a sharp increase later in the year as more businesses collapse and the unemployment rate rises.
Metro Bank insisted the disruption caused by coronavirus had not derailed its turnround plans. The group recently announced a four-year restructuring programme based on cutting costs and shifting its focus towards more profitable areas of lending, after a reporting error last year forced it to abandon its previous strategy of rapidly expanding its branch network and lending in the highly competitive mortgage market. Earlier this week it agreed to buy peer-to-peer lender RateSetter in a £12m deal to help it push into other types of consumer lending.
Chief executive Dan Frumkin said that “while the pandemic has weighed heavily on our financial performance, we’ve made early progress delivering against the strategic priorities”.
In the short term, however, restructuring costs added to its losses due to a number of one-off costs such as write-offs relating to the early exit from an expensive central London office.
Total revenue in the first half of the year dropped 29 per cent year on year, to £153m. Operating costs rose 13 per cent mainly due to the restructuring and a slight increase in day-to-day expenses as it adapted to the pandemic and opened six new branches.

News | Business | UK Automotive Industry: New car registrations to see first rise this year

 Theo Leggett 

New cars in a dealership Image copyright Getty Images
New UK car registrations went up in July for the first time this year, according to the motor industry.
Figures from the Society for Motor Manufacturers and Traders are expected to show an 11% rise compared with the same month in 2019.
The last time there was an increase was in December last year.
It follows four months of dramatic declines due to the effects of the coronavirus pandemic.
At the height of the lockdown in April, with dealerships closed and factories shut down, sales almost ground to a halt.
The figure of about 175,000 new car registrations in July will offer some welcome relief to an industry which has suffered significant harm as a result of the coronavirus pandemic.
Now a recovery appears to be under way. But although new registrations have risen sharply, concerns remain about the true health of the sector.
People within the industry believe that the increase simply reflects pent-up demand from consumers who had been planning to buy new vehicles earlier in the year, but were unable to do so.
With the government's job retention scheme coming to a close in October, and many companies now laying off staff, there are concerns that a fall in consumer confidence could hurt future sales.
Meanwhile, registrations for the year as a whole are expected to be 30% lower than they were in 2019.
Andy Barratt, managing director of Ford of Britain, which employs about 14,000 people in the UK, said he was "pleased to see any rise in consumer demand, but I don't think this is a long term indication of a V-shaped recovery".
He told the BBC's Today's programme: "I think that there will be reasonable demand through September, when the registration plate changes, but without government intervention this sector won't recover until at least the middle of next year."
He said a key consumer stimulus would be incentives to change older vehicles for new ones, especially help towards changing more polluting cars for cleaner ones.

Hard work ahead

Rachael Prasher, managing director of What Car?, said the latest SMMT figures were good news, but she also warned against reading too much into the figures.
"This is very welcome news to the UK's automotive sector and a testament to all the hard work put in to kickstart the industry by dealers and manufacturers as lockdown eased.
"After nearly three months of closed doors, it is great that the industry has demonstrated its remains so robust.
"However, with this month's success driven largely as a result of pent-up demand and lease cycles there is still much hard work to do ahead."

News | Business | Price of Gold: Gold price rises above $2,000 for first time

3minutes - Source: BBC

Gold bars stacked in a safe deposit box room. Image copyright Reuters
Gold has topped $2,000 (£1,527) an ounce for the first time as traders look for havens amid the pandemic.
Investors have moved cash into the precious metal as Covid-19 cases rise in the US and more money is pumped into the global economy.
The record high gold price has also been driven by concerns over tensions between Washington and Beijing.
Prices of other precious metals, including silver, have also risen sharply since the start of this year.
The price of gold has increased by more than 30% this year as coronavirus cases continue to rise in America, causing dozens of states to halt or reverse their plans to reopen.
The rapid rise in cases, which has dented hopes of a swift US economic recovery, has also helped to drive up the price of silver by around a third this year.
Among the reasons for those rises is investors preparing themselves for a possible pick-up in inflation due to the impact of trillions of dollars of stimulus from governments and central banks around the world.
In Washington, Trump administration negotiators have said that they will work "around the clock" with Democrats as they attempt to strike a deal on more economic relief measures by the end of the week.
According to Bank of America, governments around the world have already announced approximately $20tn worth of stimulus to combat the economic impact of the pandemic.

Media playback is unsupported on your device
Media captionThe BBC’s Frank Gardner has been given access to the Bank of England’s gold vaults
Some investors see the fallout from the Covid-19 crisis, along with ongoing tensions between the US and China, continuing to push up the price of gold.
Market strategist Margaret Yang says she sees potential for bullion to continue rising in the coming weeks and months: "The mid-to-long-term prospect of gold and other precious metals remains bullish against the backdrop of low interest rate environment and fiscal and monetary stimulus."
Peter McGuire from said he sees gold reaching "$2,200 by Christmas" with silver, platinum and palladium also set to see strong gains.

News | World | Middle East | Beirut: Rescue workers search rubble after deadly Beirut blast

8-10 minutes - Source: BBC

Media caption"Now I'm shaking, all the way from up to down" - Eyewitnesses describe the power of the explosion
Rescue workers in Lebanon are searching for more than a hundred people who are missing after a huge explosion devastated the port are of the capital Beirut on Tuesday.
The blast killed at least 100 people and injured more than 4,000 others.
The whole city was shaken by the explosion and a mushroom cloud could be seen spreading over the port area.
President Michel Aoun said the blast was caused by 2,750 tonnes of ammonium nitrate stored unsafely in a warehouse.
Ammonium nitrate is used as a fertiliser in agriculture and as an explosive.

He scheduled an urgent cabinet meeting for Wednesday, and said a two-week state of emergency should be declared.The country will observe an official period of mourning for three days from Wednesday.

What happened?

The explosion occurred just after 18:00 (15:00 GMT) on Tuesday after a fire at the port.
Eyewitness Hadi Nasrallah says that he saw the fire but did not expect the blast. "I lost my hearing for a few seconds, I knew something was wrong, and then suddenly the glass just shattered all over the car, the cars around us, the shops, the stores, the buildings. Just glass going down from all over the building." he told the BBC.
The BBC's Lina Sinjab said she could feel the wave of the explosion from where she was, a five-minute drive from the port area . "My building was shaking, it was about to fall, all windows were forced open," she said.
The blast was also felt 240km (150 miles) away on the island of Cyprus, in the eastern Mediterranean, with people there saying they thought it was an earthquake.
BBC journalist Rami Ruhayem said there was chaos in the aftermath of the blast as ambulances with their sirens wailing inched their way through heavy traffic to get to the site. "Shards of glass blanketed the highway leading into Beirut from the north, as a tractor cleared the rubble."

Local media showed people trapped beneath rubble and video footage showed wrecked cars and blast-damaged buildings. Hospitals were said to be overwhelmed.
The head of Lebanon's Red Cross, George Kettani, described it as a "huge catastrophe", adding: "There are victims and casualties everywhere."
His organisation said more than 100 people had died and that a search and rescue operations was still under way to locate the more than 100 people missing.
Journalist Sunniva Rose said there was still smoke going up into the sky late into the evening. "The whole city was black. It was very hard to walk around, people were covered in blood. I saw an 86-year-old woman being treated by a doctor who had just run out of his home with a first aid kit."

What triggered it?

Officials said that an investigation was under way to find the exact trigger which caused the ammonium nitrate - which had reportedly been stored in a warehouse after it was unloaded from a ship impounded at the port in 2013 - to explode.
British former intelligence officer Philip Ingram told the BBC's Today programme that ammonium nitrate could only be turned into an explosive substance under certain circumstances.

Ammonium nitrate has a number of different uses, but the two most common are as an agricultural fertiliser and as an explosive.
It is highly explosive when it comes into contact with fire - and when it explodes, ammonium nitrate can release toxic gases including nitrogen oxides and ammonia gas.
There are strict rules on how to store it safely - including requiring the storage site to be thoroughly fire-proofed, and not have any drains, pipes or other channels in which ammonium nitrate could build up and create an additional explosion hazard.
Mr Ingram said that safely stored it was relatively safe but that in confined space and when contaminated with items such as fuel oil it could cause an explosion.
Lebanon's Supreme Defence Council said those found responsible for the explosion would face the "maximum punishment" possible.

What's the background?

The explosion comes at a sensitive time for Lebanon. With Covid-19 infections on the rise, hospitals were already struggling to cope. Now, they are faced with treating thousands of injured people.
The country is also going through an economic crisis. Lebanon imports most of its food and large quantities of grain stored in the port have been destroyed causing fears of widespread food insecurity to come.
The future of the port itself is in doubt due to the destruction caused and with many building and homes reduced to an uninhabitable mess of glass and debris many residents have been left homeless.
President Aoun announced that the government would release 100 billion lira (£50.5m; $66m) of emergency funds but the impact of the blast on the economy is expected to be long-lasting.
The blast happened close to the scene of a huge car bombing which killed former Prime Minister Rafik Hariri in 2005. A verdict is due in the trial of four men accused of orchestrating the attack on Mr Hariri at a special court in the Netherlands.
Even before the blast, tensions were high in Lebanon, with street demonstrations against the government's handling of the worst economic crisis since the 1975-1990 civil war.

Many blame the ruling elite who have dominated politics for years and amassed their own wealth while failing to carry out the sweeping reforms necessary to solve the country's problems. People have to deal with daily power cuts, a lack of safe drinking water and limited public healthcare.
There has also been tension on the border with Israel, which said last week that it had thwarted an attempt to infiltrate Israeli territory by Hezbollah, a militant Shia Islamist organisation that wields considerable power in Lebanon.
But a senior Israeli official has told the BBC that "Israel has no connection" to the Beirut blast.