Good morning. Andrew here. Today marks a year since Hamas's barbaric murder spree in Israel, in which about 1,200 people were killed and some 250 others abducted. It was a moment that reshaped geopolitics, prompting Israel to go to war in Gaza in an effort to eliminate Hamas and giving rise to an escalating war in the Middle East that has killed tens of thousands and could ultimately transform the region. It also marked a tipping point within many major American institutions, in business, higher education and beyond. Debates about diversity, equity and inclusion policies and so-called wokeness were raging before Oct. 7, 2023, but they took on new life after the attacks as protests broke out on college campuses and company messaging apps — some even before Israel had officially begun its military retaliation. Elements of those demonstrations were laced with antisemitism, raising questions for some about what younger generations were being taught. And for some Jewish business leaders — many of whom had vocally supported D.E.I. initiatives — what emerged was a sense that there hadn't been reciprocal protection from harassment and harm. A renewed backlash against D.E.I. erupted, including from prominent executives such as the hedge fund manager Bill Ackman and the private equity mogul Marc Rowan, and some institutions played down their commitment to the approach. The end result, sadly, is that we as a society are more divided than ever — when such a tragic event should have brought us together. (Was this newsletter forwarded to you? Sign up here.)
A top investor backs away from TrumpThe presidential election is less than a month away, but that's still plenty of time for surprises to shake up the excruciatingly tight race. The past few days brought some from the tech community. Elon Musk appeared at a Donald Trump rally on Saturday, bringing his intense online rhetoric to the real world. But the bigger surprise came the day before, when Ben Horowitz, a venture capital mogul who endorsed Trump over the summer, revealed that he would give money to help elect Vice President Kamala Harris. Musk said, "I'm not just MAGA, I'm dark MAGA," onstage at the Trump rally, in Butler, Penn. The appearance had some symbolism: The event was at the same venue where a gunman had shot at Trump in July, an attack that prompted Musk to publicly endorse the Republican candidate. An animated Musk repeated many of the sort of things he regularly says online without providing evidence, including claims that Democrats were seeking to restrict free speech and disenfranchise voters. Silicon Valley was more abuzz about Horowitz's about-face. The venture capitalist told his firm, Andreessen Horowitz, on Friday that he and his wife, Felicia, planned to make "a significant donation to entities who support the Harris Walz campaign." It was a remarkable turn for Horowitz, who, along with Musk, was for months considered part of the tech elite's pro-Trump arm. In July, Horowitz and Marc Andreessen, his firm's co-founder, endorsed the former president because of what they called the Biden administration's bad tech policy, including on crypto and artificial intelligence. The San Francisco Standard dove into why that move was so surprising — including that Horowitz and his wife were friends with Harris, whose moderate politics are the kind they have tended to support — and detailed a social backlash against the couple after the Trump endorsement. That prompted Horowitz to attack Sequoia's Mike Moritz, one of the publication's major benefactors and a longtime venture capital rival. Horowitz made clear there were limits to his reversal. He cautioned that Andreessen Horowitz itself wasn't taking a stance on the Harris campaign because she hadn't fleshed out her positions on tech policy. And he reiterated that the Biden administration "has been exceptionally destructive on tech policy." Andreessen reposted Horowitz's messages but hasn't said much otherwise. It's still a win for the Harris camp. The vice president already counts many tech investors and entrepreneurs among her supporters, including Reid Hoffman, Reed Hastings, Melinda French Gates, Laurene Powell Jobs and others.
The oil price nears a six-week high on worries about the widening Middle East conflict. The price of Brent crude was close to $80 a barrel this morning, after spiking last week when Iran launched a retaliatory missile attack on Israel. Israel sent more troops to Lebanon to bolster its fight against Hezbollah, the Iran-backed militant group, and Hamas fired rockets at Israel on the anniversary of the Oct. 7 attacks. Hurricane Milton heads for Florida. The storm is expected to make landfall on Wednesday morning, possibly at Category 3 strength. That arrival would come as crews are still cleaning up after Hurricane Helene, which slammed into Florida's Big Bend region and went on to cause destruction across the Southeast. Oil executives reportedly urge Donald Trump to spare the Inflation Reduction Act. President Biden's signature climate legislation has become popular with business leaders, including some at Exxon Mobil, Phillips 66 and Occidental Petroleum, The Wall Street Journal reports. Executives were said to have lobbied Trump and Republican lawmakers to preserve the law and to keep tax credits flowing to help finance their giant investments in carbon capture, hydrogen and alternative fuel projects. Pfizer faces a new threatThe heat is rising on Albert Bourla, the Pfizer C.E.O. Antsy investors have shaved more than $160 billion from the drugmaker's value over the past 30 months as fears grow that its pandemic-era heyday is well in the past. Now, Bourla has a new worry: The activist investor Starboard has amassed a $1 billion stake in Pfizer, and is pushing for big changes at the pharmaceutical giant, according to The Wall Street Journal. Bourla was one of the faces of the Covid recovery. Pfizer produced the world's first vaccine, with BioNTech, and investors betting on society reopening made Pfizer a favorite stock pick — shares hit a record high in late 2021. But growth has slowed. Pfizer booked roughly $100 billion in revenue from the sales of the coronavirus vaccine and from Paxlovid, a Covid-19 treatment, in 2022 alone. Since then, the company has been forced to dial back its growth outlook on expected softer demand for Covid-related drugs. Starboard is trying to enlist the help of two former Pfizer executives. The investor has approached Ian Read, who, as C.E.O., was credited with restoring Pfizer's fortunes last decade and who chose Bourla as his successor, and Frank D'Amelio, a former C.F.O., to add clout to its turnaround plan, The Journal reported. They are said to have shown an interest in participating. Other clouds on Pfizer's horizon include:
Pfizer isn't the only post-pandemic stock darling that is struggling. Moderna, another major Covid vaccine maker, has been hit with analyst downgrades. Both companies have been forced to roll out cost-cutting plans as they seek ways to grow. Is the Vista deal saga over?After months of sparring with an unwanted suitor, Vista Outdoor may finally have landed a knockout blow. The company is hoping that a deal to sell its Revelyst consumer business, which makes CamelBak water bottles and other products, to a private equity firm will finally persuade shareholders to support its earlier plan to sell its ammunition business. (Yes, it's complicated — stay with us …) Vista has agreed to sell Revelyst to Strategic Value Partners for $1.125 billion, the companies said late on Friday. The deal is contingent on Vista's closing a separate deal to sell the ammo division to the Czechoslovak Group, a transaction that Vista has sought to do in some form over the past year. CSG, as the Czech defense contractor is known, has also bumped up its price for the ammo division again, to $2.225 billion. The Revelyst deal followed weeks of negotiations between Vista and S.V.P., which had been backing a bid by the investment firm MNC Capital for all of Vista, an approach the company repeatedly rebuffed. (MNC was interested in owning the ammo business and would have let S.V.P. take over Revelyst.) Last month, Vista said that it had begun negotiations with an unnamed investment firm, after that investor had raised the prospect of doing a deal without involving MNC. We now know that that firm was S.V.P. A representative for MNC declined to comment. Until then, MNC appeared to have the upper hand. Vista had postponed a shareholder vote on the CSG transaction several times as MNC argued that its bids — the most recent was valued at $2.5 billion — were higher than that of CSG's buying the ammo business alone and then leaving Revelyst to trade on its own. (The latest shareholder vote on CSG's deal, scheduled for Wednesday, has now been delayed.) Shareholders are the big winners here, assuming that the CSG and S.V.P. deals go through. When Vista first announced a deal with CSG last October, the Czech company was set to pay $1.91 billion for the ammo business, leaving Revelyst to an uncertain fate as a publicly traded company. The wrangling has seen the price for the ammo business lifted significantly, and the CSG and S.V.P. transactions together are valued at $3.35 billion. DealBook has heard that at least some shareholders think this is the likely final outcome for Vista. The week aheadInflation, Fed minutes and corporate earnings will be in focus this week. Here's what to watch: Tomorrow: Samsung and PepsiCo report quarterly results, unofficially kicking off the start of earnings season. Elsewhere, the Justice Department faces a deadline to file proposed remedies in the Google antitrust case that centers on whether the tech giant is running an illegal monopoly in search. And mainland Chinese stock markets reopen after a weeklong national holiday, with all eyes on whether a huge rally will continue. Wednesday: Minutes from last month's Fed meeting are set for release, with investors looking for more clues on the path of interest rate cuts. Thursday: The September Consumer Price Index report is scheduled to be published, the next big economic indicator after last week's strong jobs report. Forecasters expect headline inflation to have fallen, bringing the rate closer to the Fed's 2 percent target. Friday: Wall Street earnings begin, with JPMorgan Chase, BlackRock and Wells Fargo scheduled to report results. We hope you've enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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Monday, October 7, 2024
DealBook: Two tech moguls split on Trump
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