QUOTE OF THE DAY
Like all tech leaders, Mr. Zuckerberg is often hailed as a visionary, but his primary talent is as a reactor.”
Farhad Manjoo in the NYT. Zuckerberg’s clean-up skills will be put to the test, because this time, Facebook has created a big mess.
Market Snapshot
- The S&P and Nasdaq finished higher; 6 of 11 S&P sectors rose.
- The Dow and S&P posted their second straight week of gains.
- Gold ended the week down 2.1%.
- The dollar fell against the yen on North Korea concerns and Fed rate hike expectations.
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Facebook (-0.33%) released the contents of nearly 3,000 Russian-bought election ads to Congress. But that didn’t ease any tension. Senators are now calling for further regulation of political ads on social media sites across the board.
And here’s why Zuck’s still scratching his head. Earlier this week, on his first day back from paternity leave (little August is already 20 lines into her first neural network), Zuckerberg owned up to the issues and released a 9-point-plan to combat them.
In addition to releasing the ads in question, Facebook will:
* Continue its own investigation.
* Conduct thorough political ad reviews in addition to offering more transparency.
* Hire 250 more “election integrity” officials.
Zuckerberg is the first to admit Facebook will not “catch all the bad content in its system,” but Senators Mark Warner and Amy Klobuchar argue more can be done.
The bill they introduced Friday would require any social media sites with 1 million or more users to keep a public record of anyone spending more than $10,000 on election ads.
Speaking of Facebook…
Mark has a little more on his plate than just an angry mob of congressmen. The company finally put to bed the notion of issuing a new class of non-voting stock—an idea that quickly sparked a class-action lawsuit by shareholders.
The reason? Facebook intended to issue two new non-voting shares (Class C stock) for each voting share (Class B stock) that existed. But that didn’t sit well with investors:
* Shareholders’ voting power would have been diluted overnight.
* The new structure would have significantly strengthened Zuckerberg’s majority voting rights (59.7% as of right now) and his control of the company if and when he sold off shares.
Let’s remember, the 33-year-old multi-billionaire does plan on selling 99% of his Facebook shares to raise money for philanthropy. He actually plans to siphon off up to $13 billion in stock over the next 18 months to get the ball rolling.
The only difference now is Facebook won’t be issuing new stock for him to do so. At the very least, that’s one lawsuit Zuck can cross off his list.
“Is Uber Really Going to Close?”
Transport for London (TfL), the city’s top transportation authority, stripped Uber of its private-car hire license, which will expire on September 30th. This could mean the end of Uber in London.
TfL deemed Dara & Co. (woah…that feels weird) “unfit” to operate on the grounds of public safety and security issues, referencing issues like flawed background checks and failure to report criminal offenses.
While Uber will appeal—allowing the ride-hailer to operate for months—this represents one of the biggest legal hurdles it has faced in some time. London (where Uber first arrived in 2012) accounts for 5% of Uber’s global active user base of 65 million and nearly one-third of its user base in Europe.
Of course, reactions were mixed…
* London’s mayor, Sadiq Khan, unions like “Unite,” and mytaxi (Uber’s largest London competitor) said: We’re on board.
* Uber (obviously) and 644,356 (as of writing this) petitioners argued: How am I supposed to get home from the pub?
* New Uber CEO Dara Khosrowshahi sighed: I didn’t sign up for this.
Taxing the Sun
Big news in the world of solar: The U.S. International Trade Commission ruled that imported solar cells have harmed American manufacturers, and it may recommend imposing tariffs.
The federal agency responded to a petition brought by two suffering American manufacturers, Suniva and SolarWorld, which complain they’ve been undercut by cheap imports (because they have been). They argue that greater trade protection would force more manufacturers to set up shop in the U.S.
But the Solar Energy Industries Association, the largest trade group for the $29 billion industry, wasn’t buying it. Its position is the U.S. barely makes any solar panels anyway, with fewer than 1,000 people employed in actual production. Instead, 88,000 jobs that rely on cheap, imported panels could evaporate (the solar industry employs about 260,000 people total nationwide).
Almost certainly, consumer prices would jump as well.
The case will be put on President Trump’s desk, who campaigned on adding protections for American manufacturers. And this seems like a clear-cut example as any.
What Else Is Happening…
- Walmart (-0.59%) is partnering with August, a smart-lock company, to allow delivery people to leave packages inside your house and not on your doorstep.
- Google is testing out crowdsourced TV and movie reviews in India.
- GM (+0.82%) is cutting hundreds of jobs at an SUV production facility in Tennessee.
- With Toys “R” Us’ chapter 11, the retail institutional leveraged loan default rate has risen above 7%.
Economic Calendar
- Friday Earnings: No Events
- Monday Earnings: No Events
- Tuesday Earnings: No Events
- Wednesday Earnings: No Events
- Thursday Earnings: Accenture, McCormick, Rite Aid
- Friday Earnings: No Events
Economic Events: PMI (+)
Economic Events: Chicago Fed National Activity Index, Dallas Fed Mfg Survey
Economic Events: Case Shiller HPI, New Home Sales, Consumer Confidence, Richmond Fed Mfg Index
Economic Events: Durable Goods Orders, Pending Home Sales, Petroleum Status
Economic Events: GDP, International Trade in Goods, Jobless Claims
Economic Events: Personal Income and Outlays, Chicago PMI, Consumer Sentiment
The Breakroom
Rank by Net Worth
Steve Ballmer, Michael Bloomberg, Phil Knight, Carl Icahn.
Stat of the Day
$47 trillion–The amount of mobile payments that China will process by 2021. The U.S. is predicted to hit just $283 billion by that point. We have our other qualities…
