DealBook Briefing: A Reborn Uber Faces Its First Big Reckoning

DealBook Briefing: A Reborn Uber Faces Its First Big Reckoning

The policies would be the latest move by the Trump administration to punish China over fears that national security is compromised by the theft of American intellectual property.

Elsewhere in trade: What the U.S.-China trade war looks like on the front line, as well as for G.E. and for cheesemakers. Why Europe may be happy to join the tit-for-tat dispute. And how China is shoring up its economy.


Nicholas Roberts/Agence France-Presse — Getty Images

A Lehman accounting trick makes a comeback

For years before its collapse, Lehman Brothers used an accounting trick to disguise how much debt it had. Now, other banks, primarily in Europe, are using similar means to comply with regulatory measures, according to the Bank for International Settlements.

How it works: Bloomberg explains that banks have been fiddling with so-called repurchase agreements, a kind of short-term loan, close to the end of financial reporting periods. Using them allows lenders to game a so-called leverage ratio so that they look less indebted than they really are.

Where the trick works, and doesn’t: U.S. and British banks calculate leverage ratios using daily averages, making the trick less useful. But European banks, including those in France, Germany and Switzerland, report their ratios at the end of every quarter. That raises serious questions about what could be lurking under the hood of the Continent’s lenders.

Wall Street has its eye on interest rates

Sure, there is the potential trade war with China, or the specter of higher oil prices. But what economic prognosticators are really watching is the relationship between short-term and long-term interest rates, known as the yield curve. Long-term rates are normally higher than short-term ones, but the two have begun to converge.

Matt Philips of the NYT points out that the result — a flattening of the curve — has traditionally been a predictor of recession. Yet some on Wall Street think that the culprit this time may be the Fed — and that a flat curve is here to stay.


Eric Gaillard/Reuters

At the Cannes Lions advertising festival, execs re-examined their industry’s morals

Between slurps of rosé and shows by Jon Bon Jovi, bigwigs of the marketing and media worlds last week considered something more serious at their annual meet-up in the South of France: ethics.

The backlash against big tech companies, which are now inextricably linked with advertising, is rippling through the world of marketing. More on that from Sapna Maheshwari of the NYT:

Paired with the heady exuberance this year was a growing sense of unease among some marketers about what kind of return they are actually getting once they pour money into big technology platforms — and also what sort of societal problems they may be unwittingly financing in the process.

An example: Scott Hagedorn, the C.E.O. of the advertising agency Hearts & Science, recounted being emotionally scarred by manually reviewing YouTube videos as part of one campaign. “I think we’ve been unaware, or not paying attention potentially, to what we’re monetizing and funding,” he said.


How Larry Fink woke up Wall Street

As the C.E.O. of the $6.3 trillion investment giant BlackRock, Mr. Fink has long pressed companies to change their behavior. But a letter he wrote to his firm’s portfolio companies in January — in which he urged corporate America to contribute positively to society, or else — hit boardrooms like a bombshell.

Here’s more from Barron’s on the origins of that letter, born on a fishing trip and sharpened by the firm’s head of sustainability, Brian Deese:

Deese says he pushed to sharpen the concept, introduced in The Letter, about the public’s loss of faith “in government’s ability to solve big problems and challenges that they see in front of them.” Then he advocated for a “very clear and crisp articulation, from an investment perspective, of how we see sustainability- and ESG-related issues, and why they’re actually integral to our fiduciary obligation.”

In related news: The firearms industry is feeling squeezed as lenders impose restrictions on gun sales — and asking sympathetic lawmakers for help.


Jonathan Friedland, left, with Reed Hastings, Netflix’s C.E.O.

Berenice Bautista/Associated Press

Revolving door

Netflix fired its chief communications officer, Jonathan Friedland, over the use of a racial epithet. (NYT)

Elliott Management is said to have hired Jean Yves Magnan, previously a senior executive in Citigroup’s credit cards division, as its deputy chief financial officer. (Business Insider)

The speed read


• Before AT&T struck a deal for Time Warner, it reportedly asked Shari Redstone about the possibility of buying CBS — but was rebuffed. (WSJ)

• Shares in Weight Watchers have risen 1,400 percent since Oprah Winfrey bought into the company. (FT)

• Some pension funds are said to be re-examining their relationship with KKR over concerns about how workers are being treated in the Toys “R” Us bankruptcy. (FT)

Politics and policy

• How a three-year affair between a reporter and a senior Senate Intelligence Committee staffer — and an investigation into leaks by the legislative aide — have rattled Washington media. (NYT)

• Republicans want to campaign on tax cuts. Voters don’t care. (Bloomberg)

• Insurance price increases since President Trump took office could hurt Republicans in the midterm elections. (Politico)


• Germany’s Commerzbank is testing A.I. to write analyst reports. (FT)

• The E.U. is clamping down on Big Tech. But Big Tech hasn’t changed. (Bloomberg Opinion)

• America may be home to the world’s fastest supercomputer, but China is by far the most prolific maker of such machines. (NYT)

• Amazon’s private label business is booming. Will it fall afoul of antitrust laws? (NYT)

• Why the Federal Trade Commission should consider investigating Microsoft’s takeover of GitHub. (WSJ)

Best of the rest

• McKinsey’s new global managing partner, Kevin Sneader, explains how he plans to make the consulting firm more transparent. (FT)

• Apple’s Tim Cook says that coming out as gay cost him his privacy, but that it was worth it for the greater good. (CNBC)

• Cooperating with a government investigation sounds like a good idea. But it can be very, very expensive. (DealBook)

• Media chieftains on average earned double what other C.E.O.s did last year — even though their companies underperformed. (WSJ)

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