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| Jesus, the Beatles and … Masa Son? | Jesus, the Beatles and … Masa Son? |
| (3 days later) | |
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| SoftBank just reported its worst annual loss, dragged down by its misfiring Vision Fund. But the Japanese conglomerate’s founder, Masa Son, has kept his trademark optimism — and defiance. | SoftBank just reported its worst annual loss, dragged down by its misfiring Vision Fund. But the Japanese conglomerate’s founder, Masa Son, has kept his trademark optimism — and defiance. |
| Mr. Son conceded that he made mistakes, including his “foolish” decision to invest tens of billions in WeWork. SoftBank slashed its valuation of the co-working business to $2.9 billion, down from a height of about $47 billion. | Mr. Son conceded that he made mistakes, including his “foolish” decision to invest tens of billions in WeWork. SoftBank slashed its valuation of the co-working business to $2.9 billion, down from a height of about $47 billion. |
| He also reportedly compared himself to Jesus Christ on an investor call, according to The Financial Times. He said that Christ was also misunderstood and criticized, and added for good measure that the Beatles weren’t initially popular, either. The point appears to be that his reputation will brighten when his investments recover. | He also reportedly compared himself to Jesus Christ on an investor call, according to The Financial Times. He said that Christ was also misunderstood and criticized, and added for good measure that the Beatles weren’t initially popular, either. The point appears to be that his reputation will brighten when his investments recover. |
| Mr. Son insisted that redemption is coming. On an earnings call, SoftBank showed PowerPoint slides depicting the “Valley of Coronavirus,” with unicorns — referring to billion-dollar start-ups — navigating a deep hole. “Our unicorns are facing serious challenges against the background of the coronavirus outbreak, but I believe that some of them will fly over the Valley of Coronavirus and go beyond and fly high,” he said. | Mr. Son insisted that redemption is coming. On an earnings call, SoftBank showed PowerPoint slides depicting the “Valley of Coronavirus,” with unicorns — referring to billion-dollar start-ups — navigating a deep hole. “Our unicorns are facing serious challenges against the background of the coronavirus outbreak, but I believe that some of them will fly over the Valley of Coronavirus and go beyond and fly high,” he said. |
| • Some context: 47 of the Vision Fund’s 88 investments lost money as of March, and the fund’s portfolio is currently worth less than the cost of its investments. Mr. Son said that SoftBank wouldn’t seek outside investors for a second Vision Fund yet, “because the performance of Vision Fund 1 is not that great.” | • Some context: 47 of the Vision Fund’s 88 investments lost money as of March, and the fund’s portfolio is currently worth less than the cost of its investments. Mr. Son said that SoftBank wouldn’t seek outside investors for a second Vision Fund yet, “because the performance of Vision Fund 1 is not that great.” |
| Also: SoftBank reportedly plans to sell $20 billion worth of T-Mobile shares, in what would be one of the biggest stock trades on record. | Also: SoftBank reportedly plans to sell $20 billion worth of T-Mobile shares, in what would be one of the biggest stock trades on record. |
| Few people now expect a V-shaped economic recovery. A more prolonged U-shaped recovery is also falling out of favor. Instead, the description involves a steep initial fall, followed by a long, drawn-out recovery over a year or more. | Few people now expect a V-shaped economic recovery. A more prolonged U-shaped recovery is also falling out of favor. Instead, the description involves a steep initial fall, followed by a long, drawn-out recovery over a year or more. |
| The swoosh: Nike’s logo has become a go-to descriptor, maybe because everyone is watching “The Last Dance” documentary about Michael Jordan. Torsten Slok, Deutsche Bank’s chief economist, suggested that a “swoosh recovery” was appearing in data on restaurant bookings. | The swoosh: Nike’s logo has become a go-to descriptor, maybe because everyone is watching “The Last Dance” documentary about Michael Jordan. Torsten Slok, Deutsche Bank’s chief economist, suggested that a “swoosh recovery” was appearing in data on restaurant bookings. |
| The check mark: Carlos Rodriguez, C.E.O. of the payroll processor A.D.P., prefers to put it a little differently. “It feels like that recovery will be not a V, but not an L. And so the difference between a V and an L is the check mark,” he told investors. “We have an economist on our board and he referred to it as the Nike swoosh, but that’s probably a copyright or trademark violation.” | The check mark: Carlos Rodriguez, C.E.O. of the payroll processor A.D.P., prefers to put it a little differently. “It feels like that recovery will be not a V, but not an L. And so the difference between a V and an L is the check mark,” he told investors. “We have an economist on our board and he referred to it as the Nike swoosh, but that’s probably a copyright or trademark violation.” |
| The hockey stick: The CFA Institute recently surveyed more than 13,000 members, who are “uniquely positioned to opine about what the economic recovery might look like,” according to Margaret Franklin, the organization’s president. Most of those polled expected a hockey stick-shaped recovery, meaning “some form of stagnation for two to three years before a steady pick up.” | The hockey stick: The CFA Institute recently surveyed more than 13,000 members, who are “uniquely positioned to opine about what the economic recovery might look like,” according to Margaret Franklin, the organization’s president. Most of those polled expected a hockey stick-shaped recovery, meaning “some form of stagnation for two to three years before a steady pick up.” |
| The U.S. has committed trillions of dollars to rescuing the economy from the pandemic. But a lot of that money hasn’t been spent, leading to questions about whether the Treasury Department and the Fed are too risk averse, The Times’s Jeanna Smialek and Alan Rappeport write. | The U.S. has committed trillions of dollars to rescuing the economy from the pandemic. But a lot of that money hasn’t been spent, leading to questions about whether the Treasury Department and the Fed are too risk averse, The Times’s Jeanna Smialek and Alan Rappeport write. |
| The evidence: | The evidence: |
| • Most of a $500 billion rescue fund for businesses and local governments hasn’t been spent, according to a congressional report. | • Most of a $500 billion rescue fund for businesses and local governments hasn’t been spent, according to a congressional report. |
| • The Treasury Department hasn’t extended any of the $46 billion it was given to help airlines and national security-related businesses. Just one of the Fed’s stimulus programs is underway. | • The Treasury Department hasn’t extended any of the $46 billion it was given to help airlines and national security-related businesses. Just one of the Fed’s stimulus programs is underway. |
| • Treasury Secretary Steven Mnuchin has said that federal rescue efforts shouldn’t lose taxpayers money. That could make Jay Powell, the Fed chairman, more cautious. | • Treasury Secretary Steven Mnuchin has said that federal rescue efforts shouldn’t lose taxpayers money. That could make Jay Powell, the Fed chairman, more cautious. |
| Lawmakers on both sides are issuing warnings. Senator Pat Toomey, Republican of Pennsylvania, said that “no losses at all” would suggest that programs aren’t reaching enough troubled companies. Senator Mark Warner, Democrat of Virginia, said that Washington “should err on the side of doing a little too much.” | Lawmakers on both sides are issuing warnings. Senator Pat Toomey, Republican of Pennsylvania, said that “no losses at all” would suggest that programs aren’t reaching enough troubled companies. Senator Mark Warner, Democrat of Virginia, said that Washington “should err on the side of doing a little too much.” |
| • Expect Mr. Mnuchin and Mr. Powell to face questions about this when they testify (virtually) before the Senate Banking Committee today. | • Expect Mr. Mnuchin and Mr. Powell to face questions about this when they testify (virtually) before the Senate Banking Committee today. |
| More reopening and rescue news: | More reopening and rescue news: |
| • Stock markets soared yesterday after the drugmaker Moderna revealed promising early results for its coronavirus vaccine candidate. | • Stock markets soared yesterday after the drugmaker Moderna revealed promising early results for its coronavirus vaccine candidate. |
| • Lloyd Blankfein, Goldman Sachs’s former C.E.O., said that more Americans will inevitably get sick, because the economy can’t remain closed until a vaccine is found. | • Lloyd Blankfein, Goldman Sachs’s former C.E.O., said that more Americans will inevitably get sick, because the economy can’t remain closed until a vaccine is found. |
| • One industry that’s unsure how to restart: conference planners. | • One industry that’s unsure how to restart: conference planners. |
| Steven Davidoff Solomon, a.k.a. the Deal Professor, is a professor at the U.C. Berkeley School of Law and the faculty co-director at the Berkeley Center for Law, Business and the Economy. Here, he asks whether Uber’s proposed takeover of Grubhub is possible. | Steven Davidoff Solomon, a.k.a. the Deal Professor, is a professor at the U.C. Berkeley School of Law and the faculty co-director at the Berkeley Center for Law, Business and the Economy. Here, he asks whether Uber’s proposed takeover of Grubhub is possible. |
| Uber’s attempt to acquire Grubhub is all about risk and uncertainty — at a time when nothing is certain. | Uber’s attempt to acquire Grubhub is all about risk and uncertainty — at a time when nothing is certain. |
| The timing of Uber’s takeover bid is almost certainly a response to the coronavirus pandemic. Normally, a buyer times its approach so that it has time to respond if a target resists — say, by adopting a poison-pill defense that makes a takeover prohibitively expensive. A standard countermeasure is nominating candidates for the target’s board who could help clear the path for a takeover. | The timing of Uber’s takeover bid is almost certainly a response to the coronavirus pandemic. Normally, a buyer times its approach so that it has time to respond if a target resists — say, by adopting a poison-pill defense that makes a takeover prohibitively expensive. A standard countermeasure is nominating candidates for the target’s board who could help clear the path for a takeover. |
| But only a third of Grubhub’s directors are elected each year, limiting that approach. Moreover, the company’s shareholder meeting is today, and its corporate rules block shareholder actions by written consent or any calls for special meetings. In short, Uber missed its chance to pursue a hostile takeover. | But only a third of Grubhub’s directors are elected each year, limiting that approach. Moreover, the company’s shareholder meeting is today, and its corporate rules block shareholder actions by written consent or any calls for special meetings. In short, Uber missed its chance to pursue a hostile takeover. |
| So Uber will have to pay up if it wants Grubhub. It has offered stock worth around $6 billion, but Grubhub reportedly wants closer to $6.8 billion. Closing that gap seems manageable, but winning antitrust approval could be a problem. Together, Grubhub and Uber would control 50 percent of the U.S. meal delivery market, with an overwhelming share in some cities. | So Uber will have to pay up if it wants Grubhub. It has offered stock worth around $6 billion, but Grubhub reportedly wants closer to $6.8 billion. Closing that gap seems manageable, but winning antitrust approval could be a problem. Together, Grubhub and Uber would control 50 percent of the U.S. meal delivery market, with an overwhelming share in some cities. |
| This would be the first real test of the competition authorities’ pledge to examine the network effects of these sorts of deals, which largely sailed through in the past (see Facebook-Instagram). If the market is defined as mobile food delivery instead of takeout and delivery as a whole, approval would be an uphill battle. Regardless, any transaction would take months — if not more than a year — to clear. | This would be the first real test of the competition authorities’ pledge to examine the network effects of these sorts of deals, which largely sailed through in the past (see Facebook-Instagram). If the market is defined as mobile food delivery instead of takeout and delivery as a whole, approval would be an uphill battle. Regardless, any transaction would take months — if not more than a year — to clear. |
| Updated June 5, 2020 | |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | |
| Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. | Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. |
| Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home. | Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home. |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. | Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. |
| The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. | The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. |
| There are three other major hurdles: | There are three other major hurdles: |
| • Since Uber is paying in stock, how can anyone know what those shares would be worth in a year? | • Since Uber is paying in stock, how can anyone know what those shares would be worth in a year? |
| • The buyer usually requires the target to operate in the “ordinary course” of its business, which includes restrictions on changes to operations, borrowing and stock sales. That could limit Grubhub’s leeway to respond to the economic downturn (which puts a lot of risk on the company, as it has for other targets in the past). | • The buyer usually requires the target to operate in the “ordinary course” of its business, which includes restrictions on changes to operations, borrowing and stock sales. That could limit Grubhub’s leeway to respond to the economic downturn (which puts a lot of risk on the company, as it has for other targets in the past). |
| • In return for its cooperation, Grubhub would probably demand a significant breakup fee. | • In return for its cooperation, Grubhub would probably demand a significant breakup fee. |
| I don’t know how Uber and Grubhub can negotiate all these issues at this moment. They may be willing to take such risks, but the payoff is far from certain. | I don’t know how Uber and Grubhub can negotiate all these issues at this moment. They may be willing to take such risks, but the payoff is far from certain. |
| “If capitalism is driven by a search for profit, the food delivery business confuses the hell out of me,” Ranjan Roy writes in the latest edition of the newsletter Margins. | “If capitalism is driven by a search for profit, the food delivery business confuses the hell out of me,” Ranjan Roy writes in the latest edition of the newsletter Margins. |
| In an eye-opening tale of pizza-based arbitrage, Mr. Roy (a former trader) describes how a restaurant owner found out that DoorDash was, without his knowledge, selling his pizzas for less than he charged. So they ordered several — some simply plain dough with no toppings, to cut costs — and cleared a small profit without pushback from the delivery company. | In an eye-opening tale of pizza-based arbitrage, Mr. Roy (a former trader) describes how a restaurant owner found out that DoorDash was, without his knowledge, selling his pizzas for less than he charged. So they ordered several — some simply plain dough with no toppings, to cut costs — and cleared a small profit without pushback from the delivery company. |
| It’s worth a read, and captures some of the heroic assumptions inherent in modern venture-backed business models. Namely, Mr. Roy writes, “how did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners?” | It’s worth a read, and captures some of the heroic assumptions inherent in modern venture-backed business models. Namely, Mr. Roy writes, “how did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners?” |
| Deals | Deals |
| • Nasdaq reportedly plans to tighten I.P.O. rules, possibly making it harder for Chinese companies to list. (Reuters) | • Nasdaq reportedly plans to tighten I.P.O. rules, possibly making it harder for Chinese companies to list. (Reuters) |
| • Saudi Arabia’s sovereign fund quadrupled investments in U.S. companies during the first quarter, to $9.8 billion, including stakes in Boeing and Disney. (Business Insider) | • Saudi Arabia’s sovereign fund quadrupled investments in U.S. companies during the first quarter, to $9.8 billion, including stakes in Boeing and Disney. (Business Insider) |
| • A banker at PJT Partners reportedly complained in an email that junior bankers weren’t working at 3 a.m. (eFinancialCareers) | • A banker at PJT Partners reportedly complained in an email that junior bankers weren’t working at 3 a.m. (eFinancialCareers) |
| Tech | Tech |
| • TikTok hired Kevin Mayer, the head of Disney’s streaming service, as its new chief. (NYT) | • TikTok hired Kevin Mayer, the head of Disney’s streaming service, as its new chief. (NYT) |
| • Most Americans still don’t trust self-driving cars, a new poll finds. (Bloomberg) | • Most Americans still don’t trust self-driving cars, a new poll finds. (Bloomberg) |
| Best of the rest | Best of the rest |
| • WeWork wants a break on its rent, but isn’t doing that for customers . (NYT) | • WeWork wants a break on its rent, but isn’t doing that for customers . (NYT) |
| • A look at the pandemic publishing boom. (NYT) | • A look at the pandemic publishing boom. (NYT) |
| • Bill Gates’s summer reading list. (Gates Notes) | • Bill Gates’s summer reading list. (Gates Notes) |
| We’d love your feedback. Please email thoughts and suggestions to dealbook@nytimes.com. | We’d love your feedback. Please email thoughts and suggestions to dealbook@nytimes.com. |