At risk

MARKETS

  • U.S. markets: We're not writing off this month's rally just yet, but stocks fell for a second day
  • Economy: The U.S. deficit widened 38.8% annually to $738.6 billion in the first eight months of the fiscal year. So far, the government's revenue increase of 2.3% hasn't kept up with a 9.3% jump in spending.

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INTERNATIONAL

Why Hong Kong Matters

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This week, we've gotten really good at typing "Hong Kong" really fast. After weekend protests spilled (at times violently) into this week, we're keeping a close eye on what exactly is going on in the global financial hub.

The backstory: You already know hundreds of thousands have taken to the streets to oppose a bill that would permit extradition from Hong Kong to mainland China, undermining the "one country, two systems" framework that's been in place since China gained sovereignty over Hong Kong in 1997.

  • Business leaders with Hong Kong outposts are concerned the bill could put some executives in the crosshairs.

The big picture: The NYT reports many in the business community are wondering if Hong Kong could lose its status as preferred venue for international business should the bill pass.

The local business impact

  1. Rabobank's Michael Every: "Foreign firms could leave Hong Kong for Singapore, where you won't be at risk of ending up in the Chinese judicial system." Btw, about 1,300 U.S. businesses have bases in Hong Kong, per Nikkei.
  2. Hong Kong property developer Goldin pulled out of a $1.4 billion bid for a city property citing "recent social contradiction and economic instability."

The global perspective

You don't just become the go-between for China and everyone else by visualizing it. For Hong Kong, it took a lenient, independent governance system paired with the noted absence of Communist Party-controlled courts to get there.

It also helps to have special trading privileges with the U.S., which keep Hong Kong mostly immune to the China trade war.

But those are at risk:

  • The State Department said this week that the "continued erosion" of one country, two systems "puts at risk Hong Kong's long-established special status in international affairs."
  • And Congressional leaders from both parties voiced readiness to yank those special privileges if Hong Kong loses more autonomy.

TECH

Zuck Hits Inbox Zero Confidence

Yesterday, the WSJ threw a carefully worded wrench into Mark Zuckerberg's hopes of putting the Cambridge Analytica scandal behind him, courtesy of unnamed company sources.

The Journal reported that, while digging up materials to submit to the FTC for its privacy investigation, Facebook (-1.72%) discovered emails that indicate Zuckerberg may have known about privacy problems earlier than he has previously admitted. Then, some of those people decided to tell reporters.

Remember, business narcs have been poking around Facebook for a while. The FTC has spent over a year investigating whether the Cambridge Analytica breach violated a 2012 consent decree it had with Facebook. In April, Facebook said it had dug up $3 billion from between the couch cushions to cover a potential fine, but it's anticipating an invoice for as much as $5 billion from the FTC.

Facebook knows this doesn't look good. WSJ sources said that inside Facebook, people were worried that if the emails got out, they would prevent a speedy resolution to the FTC probe. They were probably right to worry.

CYBERSECURITY

Investors CrowdStrike While It's Hot

Rideshare IPOs might have gotten all the attention recently, but business technology was back Wednesday reminding us that endpoint security deserves tailgates, too.

Shares of cloud-based software provider CrowdStrike catapulted a tick over 70% its opening day. It's now worth $11.4 billion.

How it works: CrowdStrike uses artificial intelligence to analyze what users are doing on company networks and raises a flag if anything weirder than those deep, post-lunch internet forays goes down. And it's offering those solutions through the platform more customers are living on-the cloud.

  • The company is skilled enough that even with the investigative capabilities of Detective Pikachu, The Pokémon Company turns to CrowdStrike for endpoint security.
  • And when the North Koreans broke in Sony Pictures's door in 2014 and Russian intelligence agents allegedly hacked the DNC's emails in 2016, CrowdStrike was called in to investigate.

Zoom out: CrowdStrike joins a growing list of successful recent software IPOs, including Dropbox, PluralSight, and security firm Zscaler.

GAMING

How Do American Teens Spend Their Time?

  • 1719: Compare whose loaf of bread has more worms
  • 1819: Outhouse Olympics
  • 1919: Learning how to make moonshine
  • 2019: Fortnite

According to a new study from National Research Group (NRG), the video game Fortnite consumes 25% of free time among teens who play once a week. And there's a lot of people who play once a week: The game has over 250 million active users.

What's going on?

NRG says Fortnite is much more than a video game...it's an immersive community in which teens feel like they can make authentic connections and "feel like [they're] not alone." Tugging at those basic human instincts has allowed Fortnite to capture consumers' attention and $2.4 billion in 2018 revenue.

And it's doubling down on social. Yesterday, Fortnite maker Epic Games acquired Houseparty, a video chat app you used in 2016 to hang out with your friends online.

+ While we're here…Israel's power company asked Epic Games to outlaw players from climbing electric poles in Fortnite because the activity's become popular among Israeli children.

BANKING

Ain't No Party Like a Bank Name Reveal Party

BB&T (-0.94%) and SunTrust (-0.55%) have decided on a name for the combined company emerging from their merger.

Rewind to February: When the banks first announced the deal, we turned to you for name ideas…and we regret to report that Banky McBankFace and Too Medium to Fail were passed up in favor of Truist Bank.

The companies say the merger will close in the second half of the year. And while Truist may sound like a carb-free investment app, the deal...

  • Has been valued at $28.2 billion
  • Will create the sixth largest retail bank in the U.S.
  • Represents the largest bank merger since the financial crisis

Because marriage is about compromise, it will be headquartered in Charlotte, NC, a bank paradise in between SunTrust's Atlanta and BB&T's Winston-Salem. One thing we're guessing Truist doesn't compromise on: barbecue.

WHAT ELSE IS BREWING

  • Bird has acquired e-scooter rival Scoot, which also rents mopeds and bikes. This could mean Bird will finally get access to San Francisco, where it's banned but Scoot isn't.
  • Volvo and Uber (-0.82%) unveiled their first self-driving car, almost two years in the making.
  • Foxconn isn't only focused on making TVs at its forthcoming Wisconsin plant. It'll also crank out servers, networking products, and auto controls.
  • Google's payroll shrank by about six large lobbying firms recently. It's overhauling global government affairs in light of more...intense lawmaker scrutiny.
  • Netflix (-1.63%) is launching video games based on its megahits. First up? Stranger Things but in game form this July 4.

BREAKROOM

HQ, Too

  1. Which HQ is father north? Amazon or Ben & Jerry's
  2. Which HQ is farther west? Coca-Cola or GM
  3. Which HQ is farther south? Walmart or Bank of America
  4. Which HQ is farther east? Target or FedEx

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Breakroom Answers


HQ, Too
1. Which HQ is farther north? Amazon > Ben & Jerry's (Seattle's farther north than S. Burlington, VT)
2. Which HQ is farther west? Coca-Cola > GM (Atlanta is farther west than Detroit)
3. Which HQ is farther south? Bank of America > Walmart (Charlotte is farther south than Bentonville, AR)
4. Which HQ is farther east? FedEx > Minneapolis (Memphis is farther east than Minneapolis)

Comments (1)

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Career Advancement Opportunities

November 2022 Investment Banking

  • Jefferies & Company (▲08) 99.6%
  • Lincoln International (= =) 99.3%
  • Financial Technology Partners (+ +) 98.9%
  • Evercore (▽01) 98.5%
  • Bank of America Merrill Lynch (▲01) 98.1%

Overall Employee Satisfaction

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  • PJT Partners (= =) 99.6%
  • Evercore (▲02) 99.3%
  • Greenhill (▲06) 98.9%
  • Canaccord Genuity (▲15) 98.5%
  • William Blair (= =) 98.1%

Professional Growth Opportunities

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  • Lincoln International (▲03) 99.3%
  • Jefferies & Company (▲04) 98.9%
  • William Blair (▽02) 98.5%
  • Evercore (▽01) 98.2%

Total Avg Compensation

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  • Director/MD (10) $613
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