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George Soros is ‘very proud’ to have enemies
Mr. Soros has views that gain him enemies — and he appears to like it. Andrew sat down with the billionaire philanthropist, former trader and liberal champion in his New York City apartment to talk about next year’s elections, taxing the rich and putting Wall Street in its place.
Mr. Soros likes Senator Elizabeth Warren’s chances of becoming the Democratic nominee, saying that she has “emerged as the clear-cut person to beat.” (Though he didn’t go as far as endorsing her as a candidate.)
“I am in favor of taxing the rich,” he said, “including a wealth tax.” That lines up with one of Ms. Warren’s central policies, but Mr. Soros acknowledges that his view “does create a moral problem for me.” He added: “As I became so successful, it basically put a self-imposed constraint on me that actually interfered with making money.”
And he says Wall Street will have little sway in this election cycle. “There are more Main Streets in America than there are Wall Streets,” he said. “So I don’t think that Wall Street, other than being a source of money, will have its way in choosing the president.”
On China, he considers Xi Jinping “the worst threat to an open society.” He added: “It’s a different system. It’s totally opposed to ours, diametrically opposed to ours.” (Though he added: “I’m not anti-Chinese at all. I’m just anti Xi Jinping.”)
If his views make him enemies, so be it. “I’m very proud of the enemies I have,” he said. “It’s a perfect way to tell a dictator or a would-be dictator if he identifies me as an enemy.”
Saving WeWork is a formidable challenge
SoftBank has saved the co-working company from imminent financial disaster. But repairing its business model will be a tough task, Peter Eavis of the NYT writes.
Frantic growth has given WeWork a huge property portfolio. It’s on track to add 9.9 million square feet of space this year in the U.S. and Britain alone, according to the data service CoStar. About 2.6 million square feet of that will be in New York City, where it’s already the biggest private tenant.
But it’s unclear whether its busiest locations are solidly profitable, Mr. Eavis writes. Rivals say the company has spent too much on shared office space and hasn’t managed costs well. Mark Dixon, the C.E.O. of International Workplace Group, likened WeWork’s approach to running a hotel where room service is free: “You might have a full hotel, but you just cannot make any money.”
WeWork could try to end some leases early, but that could upset its relationships with landlords, and could cost the company extra money. It may also have to scrap the deep discounts it uses to lure tenants.
There’s another big reason to worry, the FT reports: WeWork’s operations in China, which it has counted on as an engine for growth, is “bleeding cash” and suffering from high vacancy rates in major cities like Shanghai.
More: The timeline of WeWork’s fall from grace. And troubles with WeWork, Uber and other investments will reportedly force SoftBank’s Vision Fund to take a $5 billion write-down.
Citi may be the first U.S. bank led by a woman
Ms. Fraser is a 15-year veteran of the bank, and most recently led its Latin American operations. She previously ran its global private bank and its U.S. consumer, commercial and mortgage business.
She will now oversee a huge part of Citi’s business. The consumer unit generates almost half of the bank’s revenue, although it represents less than a third of its net income.
This is further than other banks have gone in lining up a potential female chief. JPMorgan Chase has picked out two women who could one day become successors to Jamie Dimon, but its existing succession plan would see one of two men take control.
The bigger picture: Only 27 of the 500 companies that make up the S&P 500 stock index have female C.E.O.s, according to the advocacy group Catalyst.
The Pentagon worries about where its chips come from
Defense Department officials have been holding private discussions with tech industry executives to help ensure that they have access to future supplies of the advanced computer chips needed to keep America’s military edge, Don Clark of the NYT reports.
• “The United States has long fielded the most advanced weaponry by exploiting electronic components once exclusively produced in the country,” Mr. Clark writes.
• “But domestic production lines of many chips have long since moved overseas, raising questions about supply interruptions in the event of political or military crises abroad.”
• “Pentagon officials encouraged chip executives to consider new production lines for semiconductors in the United States,” Mr. Clark reports, citing unnamed sources.
• But “influencing the chip industry used to be easier when the Defense Department accounted for a major portion of chip sales. Now defense applications are dwarfed by civilian uses, such as smartphones and personal computers.”
• A case in point: Mark Liu, the chairman of the chip maker TSMC, which dominates the build-to-order chip market, told Mr. Clark that he had recently discussed options for a new factory in America with the Commerce Department. But a big stumbling block is money, with TSMC saying that major subsidies would be required.
The 737 Max is costing airlines dearly
• Southwest Airlines said that the plane’s troubles had reduced its operating income for the first nine months of the year by $435 million, and that the pain would spill over into next year.
• American Airlines said it expected the grounding to drag down its full-year pretax profits by about $540 million, more than the $400 million it had previously estimated.
• And Norwegian Air Shuttle raised its estimate of lost profits from the grounding in 2019 by nearly 40 percent, to $110 million.
Southwest may consider adding non-Boeing planes to its fleet for the first time. “Where we go from here is a question that we will address next year as to whether or not the strategy we have deployed for 48 years is the one that we want for the next 48 years,” its C.E.O., Gary Kelly, told CNBC yesterday.
And American fears that the 737 Max may stay grounded for the rest of the year. Its C.E.O., Doug Parker, said Boeing’s prediction that the planes would fly by December was a best-case scenario.
Boeing’s shareholders, not American’s, should pay for the planemaker’s failures, according to Mr. Parker. Boeing has estimated that compensating affected airlines could cost it $6.1 billion.
That defied expectations, and shares in the company fell about 8 percent in after-hours trading.
It’s a result of Amazon’s investing in the growth of its core businesses instead of collecting profits. A big part of that is rolling out one-day shipping across the U.S. — a push that could cost it $1.5 billion in the next quarter — along with pumping money into its cloud computing services to increase sales, especially to larger businesses.
This shouldn’t be a surprise. Until 2017, Amazon consistently focused on growth rather than profits. And since then it has posted profits only sporadically, in quarters that didn’t include huge new initiatives or experiments.
But Wall Street remained unhappy all the same. “Who needs Cheetos that fast?” Sucharita Kodali, an analyst at Forrester Research, asked of Amazon’s one-day delivery service.
More: Amazon’s tumbling share price will mean that Jeff Bezos has relinquished the title of world’s richest person to Bill Gates. For now, at least.
Rob Ritchie will step down as the head of U.K. investment banking for HSBC.
Fair, a car-leasing start-up backed by SoftBank, will lay off close to 300 people, about 40 percent of its employees.
The speed read
• Barneys is moving ahead with a potential sale to Authentic Brands, which could lead to the retailer’s liquidation — though it’s still holding out hope that a rival bidder will make a formal takeover offer. (NYT)
• The Trump administration has temporarily blocked transactions involving bonds from Citgo, giving the Venezuela-owned oil producer a temporary financial lifeline. (NYT)
• The billionaire Len Blavatnik plans to raise $500 million for DAZN, the sports-focused video streaming service. (Bloomberg)
• Qualcomm’s venture capital arm is setting aside $200 million to invest in start-ups focused on 5G wireless services. (WSJ)
Trump impeachment inquiry
• The White House reportedly delayed a decision on restoring some of Ukraine’s trade privileges in August, potentially showing that a campaign to pressure Kiev to investigate President Trump’s political opponents was wider than first believed. (WaPo)
• Senator Lindsey Graham, Republican of South Carolina, plans to introduce a resolution condemning House Democrats’ impeachment inquiry. (NYT)
Politics and policy
• The Justice Department is said to have opened a criminal inquiry into its own Russia investigation. (NYT)
• A federal judge has held Education Secretary Betsy DeVos in contempt of court for violating an order to stop collecting on loans owed by students from now-defunct for-profit colleges. (NYT)
• Senator Chuck Schumer, Democrat of New York, has proposed a $450 billion climate-change plan that would replace a fifth of American gas-powered vehicles with hybrid, electric or hydrogen-fueled ones within a decade. (NYT)
• Prime Minister Boris Johnson of Britain challenged lawmakers yesterday to approve a December general election to break the deadlock over Brexit — but the opposition Labour Party may not take the bait. (NYT)
• China will reportedly ask the U.S. to lift some tariffs in exchange for purchases of American farm products during a series of trade talks scheduled for today. (Reuters)
• South Korea will give up its W.T.O. status as a developing country in future trade negotiations. (Reuters)
• Facebook has unveiled its new News service. (NYT)
• Twitter shares fell nearly 21 percent yesterday after the company reported worse-than-expected financial results. (NYT)
• Paris has overtaken Berlin as Europe’s tech start-up hot spot. (FT)
• A former Apple lawyer who was in charge of preventing insider trading has been indicted — on insider trading charges. (CNBC)
• Senators have asked the F.T.C. to investigate Amazon over its role in the Capital One data breach. (WSJ)
Best of the rest
• PG&E is investigating whether its equipment is involved in wildfires currently raging in Sonoma County, Calif., even as hundreds of thousands of people in the state are enduring blackouts. (NYT)
• A huge mall 10 miles from Manhattan, called American Dream, is opening after 15 years of development. Sort of. (NYT)
• Coal is dying. Blame economics, not politics. (Bloomberg Opinion)
• Do central bankers talk too much? (Economist)
• America’s most expensive home went on sale in 2017 for $250 million. Now it’s selling for $94 million. (WSJ)
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