DealBook Briefing: 2018’s Big Questions for Business, Trump and More

DealBook Briefing: 2018’s Big Questions for Business, Trump and More

• Stevie Cohen is finding takers for his new hedge fund. But how much presence will he retain in the industry?

• In the world of M. & A. fights, who will AT&T or the Justice Department prevail? Broadcom or Qualcomm? And will Disney and Fox get their deal done?


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



President Trump said last month at a news conference that he had rolled back 22 regulations for every one he’d imposed.

Doug Mills/The New York Times

Businesses are opening their wallets.

And the Trump administration’s deregulatory push looks to be a reason for that — even if skeptics question whether rolling back government rules stimulates corporate growth.

Corporate leaders always cite “uncertainty” as a reason to hold back on capital expenditures or transformative acquisitions. And fewer than half of the respondents in the National Association of Manufacturers’ most recent survey said they faced an “unfavorable business climate.”

Yet some see a bigger phenomenon at work. This is what Mark Zandi of Moody’s Analytics told the NYT:

“The fundamental backdrop here is that this is a global synchronized expansion lifting everyone’s spirits, from Tokyo to New York.”

The tax flyaround

• Corporate America’s great loophole scavenger hunt has begun. (NYT)

• China has responded to the tax law by temporarily exempting foreign companies from taxes on their earnings in the country — but there’s a catch. (NYT)

• Democrats in high-tax states are seeking ways to blunt some of the impact of the tax overhaul. (NYT)

• The gig economy could get a boost. (NYT)

• Betting on the dollar continuing to strengthen in 2018, thanks to the tax law. (WSJ)

Where are stocks heading in 2018?

The Dow Jones industrial average jumped 25 percent in 2017. Does that mean investors should turn bearish on stocks this year? The answer is no if history is any indicator, LPL Financial’s Ryan Detrick points out.

Also, is the first day of trading predictive of the stock market’s performance for the full year?


Cameron Spencer/Getty Images

The Murdoch family tensions behind the Disney deal.

It may have been a brief sales negotiation with Verizon that prompted Rupert Murdoch to consider selling pieces of 21st Century Fox. But the NYT reports that friction between the media mogul and his son James helped push the family toward the Disney transaction.

From the article by Brooks Barnes and Sydney Ember:

• James Murdoch has privately grumbled about the control that his father still exerted at Fox and has chafed at some of the elements of Fox News’s coverage.

• Rupert Murdoch was wary of how Hollywood was being reshaped by digital giants like Netflix, Apple and Amazon, and unsure his empire could compete.

• Lachlan Murdoch, who is more conservative than his brother, has become the heir apparent at what would remain of Fox, but was initially uneasy about a sell-off.

What they gain: Beyond easing family tensions among the trio, the deal could make the Murdochs some of Disney’s biggest shareholders.


Baron Funds

The mutual fund king bucking the low-fee wave.

Yes, Ron Baron has lowered fees on some of his smaller funds. But he’s unapologetic about charging roughly 54 percent more than the industry average.

Here’s what he told Landon Thomas Jr. of the NYT:

“Since inception, 98 percent of our funds have beaten their benchmark,” he said in an interview. “If you want the lowest fee, you should not invest with us.”

How he (and other mutual funds) do it: Chalk it up to a combination of looser oversight, the $10 trillion of investor money still dedicated to actively managed funds and a lack of investor awareness that high fees don’t necessarily pay for performance.

Can this go on?

One fund investor’s take in the NYT:

“I won’t say performance warrants the fees they charge,” said Barry Edelman, a Las Vegas retiree and a 20-year Baron shareholder. “But I appreciate how they differentiate themselves from the competition.”

Tragedy strikes Bridgewater.

Bruce Steinberg, an executive at the hedge fund, and his family were among the 12 killed when a single-engine plane crashed in Costa Rica on Sunday.

Ray Dalio of Bridgewater posted this to Facebook yesterday:


Also of note: Richard Cousins, the C.E.O. of Compass Group, the world’s biggest catering company, was one of six killed in a plane crash in Sydney on Sunday.


Backers of Time’s Up, clockwise from top left: America Ferrera, Eva Longoria, the lawyer Nina L. Shaw, Reese Witherspoon, Shonda Rhimes, and the lawyer Tina Tchen.

Clockwise from top left: first two photos, Brinson+Banks for The New York Times; Oriana Koren for The New York Times; Jimmy Morris/European Pressphoto Agency; Brinson+Banks for The New York Times; Alex Wong/Getty Images

Hollywood organizes to fight sexual harassment.

What’s notable is that Time’s Up — formed by more than 300 women and including a legal-defense fund — isn’t focused only on the entertainment industry. It plans to offer help to janitors, nurses, hotel staff and other blue-collar workers.

Here’s what Shonda Rhimes, a backer of the initiative, told Cara Buckley of the NYT:

“If this group of women can’t fight for a model for other women who don’t have as much power and privilege, then who can?”

Who else is involved: The actresses America Ferrera, Eva Longoria and Reese Witherspoon; Donna Langley, the chairwoman of Universal Pictures; and roughly 295 other women in Hollywood.

What’s different: The Time’s Up Legal Defense Fund, which is backed by $13 million in donations and is overseen by Tina Tchen, a former chief of staff to Michelle Obama. It will help provide less-privileged women with lawyers to bring misconduct cases to court and protect them from blowback.

The misconduct flyaround

• Take a peek behind the curtain at the monthly drug- and sex-fueled monthly parties attended by some of Silicon Valley’s most powerful men, in an excerpt from “Brotopia,” the forthcoming book by the Bloomberg anchor Emily Chang. (Vanity Fair)

• The former Fox News anchor Gretchen Carlson, who was a Miss America, will take over as chairwoman of the pageant as it works through its harassment scandal. (NYT)

• Business schools in the United States are hastily reshaping their curriculums with case studies on sexual harassment. (NYT)

• Political partisans are starting to exploit the #MeToo movement. (NYT)

• The former C.E.O. of SoFi, Mike Cagney, has approached potential investors about backing a fintech start-up. (Recode)

• The longtime leader of the New York City Ballet, Peter Martins, has retired after accusations of sexual harassment and verbal and physical abuse. He denies wrongdoing. (NYT)


The East Side Access tunnel, which will connect Grand Central Terminal in Manhattan with the Long Island Rail Road.

Todd Heisler/The New York Times

Read this story. (Lloyd Blankfein said so.)

Last week, the NYT reported on how the Metropolitan Transportation Authority ends up with some of the highest construction costs in the world. Some facts:

• The Second Avenue subway cost $2.5 billion. Expanding Grand Central Terminal is now expected to cost $12 billion.

• Construction companies inflate their projected costs by up to 50 percent for M.T.A. work. Labor unions have arranged for up to four times the necessary staffing on some projects.

• Consultants have persuaded officials to spend heavily on design and management.

Here’s what Mr. Blankfein, Andrew’s choice as 2017’s best corporate tweeter, had to say:


(Mr. Blankfein has good reasons for pique over the tax law: Goldman Sachs is taking a $5 billion charge in its fourth-quarter earnings tied to the changes.)

The Speed Read

• Caterpillar faces a potential tax bill of $2 billion from the I.R.S., which says it has underpaid on profits from parts sales through its Swiss unit. (WSJ)

• The new Salesforce Tower in San Francisco is the tallest office building west of the Mississippi, and a symbol of tech’s triumph in the city. (NYT)

• Morgan Stanley is entering the robo-advice market, with an automated service that includes a choice of exchange-traded funds, mutual funds and seven themed portfolios. (FT)

• Europe’s new “MiFID II” investment rules — on how research is paid for, how trades are documented and executed, and how brokers share information — come into force tomorrow. (Bloomberg)

• Playboy Enterprises is considering shutting the print magazine to concentrate on licensing deals and brand partnerships. (WSJ)

• Retail cannabis shops in California opened their doors on Monday, inaugurating what proponents say will become the world’s largest legal market for recreational marijuana. (NYT)

• One of America’s biggest rehab companies built an empire. But after a patient died, its enemies — investors and rivals alike — struck hard. (NYT)

• Andrew picked his favorite business (and business-adjacent) books of 2017, including “The Spider Network” by David Enrich, “Reset” by Ellen Pao” and “Principles” by Ray Dalio. (NYT)

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