Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.
WeWork wants more money. Hi there, SoftBank!
WeWork has no shortage of ambition — and SoftBank, which is in talks to invest again in the co-working company — is willing to open its wallet to help out. The next investment by the Japanese tech giant’s $92 billion Vision Fund could value WeWork at more than $35 billion.
What Rajeev Misra, the head of that fund, said of WeWork at a conference yesterday, according to Business Insider:
“Maybe it’s overvalued, but I believe they’ll be a $100 billion company in the next few years.”
Michael de la Merced wonders: WeWork says it’s profitable, if one excludes interest, taxes, marketing, administration and other costs. But with its ever-expanding mission — in education, housing and more — will it ever stop raising cash and giving away valuable equity?
What the Fed’s interest rate hike means
America’s central bank raised interest rates on Wednesday by a quarter point, to a range of 1.75 to 2 percent. And it hinted at two more increases this year, inching rates back toward historically normal levels.
The challenge now: to balance America’s growing economy and falling unemployment. More from Greg Ip of the WSJ:
By 2020 the economy will be well into overheating territory, the sort of situation that usually leads to dramatically higher interest rates and a recession. Fed officials must either raise their inflation target, assume some serendipitous boost to the economy’s potential growth rate or decline in the natural unemployment rate, abandon their economic models, or run much tighter monetary policy, especially after 2020.
The political flyaround
• The White House may try to prevent Congress from reimposing penalties on ZTE, after all. (NYT)
• Senator Jim Inhofe, Republican of Oklahoma, and a longtime friend of Scott Pruitt, said that the E.P.A. chief may need to resign. (Bloomberg)
• Tim Draper, the venture capitalist, got his proposal to split California in three on to the state’s ballot in November. (NYT)
• Senate Democrats want the S.E.C. to investigate Michael Piwowar, a Republican commissioner who criticized Citigroup’s stance on gun investments. (Bloomberg)
For a glimpse at the future of work, look at e-commerce
Reports from inside two of the world’s biggest e-commerce companies offer evidence that the robots are coming:
• Replacing warehouse staff. Axios reports that the Chinese e-commerce company JD.com has “built a big new Shanghai fulfillment center that can organize, pack and ship 200,000 orders a day. It employs four people — all of whom service the robots.”
• Automating office work. Bloomberg says that Amazon executives who negotiated multimillion-dollar deals with major brands “are being replaced by software that predicts what shoppers want and how much to charge for it.”
Jamie Condliffe’s take: Companies like to say that automation will free staff to do work that robots can’t, as happened in previous technological revolutions. But a warehouse that needs just four employees is a reminder that the disruption caused by A.I. and robotics could be unlike anything we’ve seen before.
Elsewhere in automation: Microsoft is reportedly experimenting with checkout-free retail, and talking to Walmart about it.
The deals flyaround
• Sinclair’s $3.9 billion takeover of Tribune could be slowed by government scrutiny of its deal to sell three TV stations to an ally, the conservative pundit Armstrong Williams. (Politico)
• Shares in the Dutch payments processor Adyen nearly doubled in their first day of trading yesterday, but investors should take a breath. (Bloomberg Opinion)
• Opendoor, a house-flipping start-up backed by Travis Kalanick, is said to have raised $325 million at a valuation of over $2 billion — and is still in talks to raise more from SoftBank’s Vision Fund. (Recode)
• Samsung has set up the Q Fund to invest in A.I. start-ups. (VentureBeat)
Chicago buys into Elon Musk’s tubular public transit dream
The city’s mayor, Rahm Emanuel, says that Mr. Musk’s Boring Company has been selected to build a futuristic underground transport system, whizzing passengers from downtown Chicago to O’Hare International Airport.
More from Julie Bosman and Mitch Smith of the NYT:
If completed as planned, each electric vehicle — called a “skate” — would transport up to 16 riders and their luggage. The vehicles could leave downtown and O’Hare as frequently as every 30 seconds, the city says. They would exceed 100 miles per hour and make the entire trip from downtown to O’Hare in 12 minutes.
But there are roadblocks ahead. Chicago’s City Council would need to agree to the plan. The city must negotiate a deal with the Boring Company. It will be expensive — up to $1 billion, on current estimates. Oh, and such a system has never been built before.
The tech flyaround
• ZTE is looking for a $11 billion credit line. (FT)
• Cryptocurrencies are supposed to make bank payments cheaper. Western Union’s experiments suggest that isn’t yet the case. (Fortune)
• Apple will close an iPhone security hole favored by the police. (NYT)
• From next year, reportedly, China will begin electronically tracking every new car on its roads. (WSJ)
• A new study found that Bitcoin prices were artificially inflated last year. (NYT)
A new investment trick: Study the $100 billion club
The CNBC host Jim Cramer has pitched a simple way for investors to choose where to put their money: Look at what companies with market capitalizations of $100 billion are doing. More from Mr. Cramer:
“Why should we care about these megacap stocks? Because unlike an index, the $100 billion club isn’t selected by anyone. There’s no nominating committee. The only way a company gets its name on this list is by producing years and years of gains. In the last 12 months, this club has seen 15 new members. That’s a lot, and it turns out this list is a veritable who’s who of what’s working.”
• G.M. named Dhivya Suryadevara as C.F.O. It now has women in its two top management positions, a first in the auto industry. (Bloomberg)
• Carlos Ghosn said he was likely to step down as Renault’s C.E.O. before his contract is up in 2022. (FT)
• Rolls-Royce plans to cut 4,600 jobs. (BBC)
The speed read
• German prosecutors fined Volkswagen $1.2 billion over its diesel emissions scandal. (NYT)
• The billions Russia is spending on the World Cup may not boost its economy in the long term. (Bloomberg)
• A court case involving a British plumber might provide some lessons for gig economy companies. (NYT)
• China’s economy shows some early signs of losing momentum. (Bloomberg)
You can find live updates throughout the day at nytimes.com/dealbook.
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