In Other SoftBank News
Sprint, which SoftBank controls, has made progress in its on-again, off-again merger discussions with T-Mobile.
The big development is a tentative agreement that T-Mobile’s parent company, Deutsche Telekom, would be the biggest shareholder in the combined company.
But Mr. Son’s role is still a major negotiating point, according to CNBC’s David Faber:
SoftBank would emerge as a large minority holder in any combination. While T-Mobile C.E.O. John Legere is expected to lead any combination that results from a merger, Son has made it clear he wants a say in how the company is run. That desire adds another layer of complexity to an already difficult transaction.
Senate Republicans Push $1.5 Trillion in Tax Cuts
Credit
Al Drago for The New York Times
Senate Republicans have learned to stop worrying and embrace deficit spending.
Their current budget plan: $1.5 trillion in tax cuts over the next 10 years.
But many obstacles remain:
• The New York Times’s Alan Rappeport and Thomas Kaplan note:
While the Republicans may coalesce around a $1.5 trillion tax cut, the details of the actual plan remain fraught with lawmakers divided on some key issues such as the corporate tax rate and which, if any, deductions will be eliminated or scaled back.
• The Senate still needs to reconcile any bill they pass with the less-deficit-friendly House.
• Traditional opponents of growing the deficit are unhappy with the plan. Here’s Michael A. Peterson of the Peter G. Peterson Foundation:
“Irresponsible tax reform is counterproductive and anti-growth because increasing the national debt hurts the economy. Tax reform should grow the economy, not the debt.”
In Other Economic News
The Federal Reserve is expected to announce today that it will gradually reduce its $4.2 trillion portfolio of United States Treasury debt and mortgage-backed securities.
The Wall Street Journal’s Daniel Kruger, Akane Otani and Chelsey Dulaney note that the price of the 10-year Treasury note has fallen for six straight days.
They add:
Investors remain wary that any mistake by the central bank, such as removing stimulus too quickly, could upend months of relative calm. Conversely, if the Fed falls behind and allows inflation grow too quickly that could also put the economic expansion at risk.
Guggenheim Partners Chief Under Fire
Mark Walter, the chief executive of Guggenheim Partners, is under pressure to leave the role or quit the firm completely after reports of internal turmoil.
From The Financial Times’s Sujeet Indap, James Fontanella-Khan, Kara Scannell and Joe Rennison:
Some investors have canceled meetings, threatened to pull their money from the asset manager and vented their frustration with Guggenheim’s top management over what they see as a weak corporate culture, said several people informed about the matter.
And The Wall Street Journal’s Margot Patrick, Justin Baer and Gregory Zuckerman report on other troubles:
Earlier this year, the U.S. Securities and Exchange Commission began looking at Guggenheim’s operations, certain investments and disclosures, according to people familiar with the situation. The regulator has since requested from Guggenheim information on several deals, including one involving the firm’s investment in an entity founded by former Barclays PLC chief executive Bob Diamond, the people said.
The Journal adds that Mr. Walter is weighing giving up the chief executive job. A Guggenheim spokesman’s response: “Mr. Walter has no current plans to relinquish his position as C.E.O. of Guggenheim.”
The Context
• Mr. Walter has been locked in a feud with Scott Minerd, Guggenheim’s chief investment officer and most recognizable executive.
• One point of contention: The appointment of Alexandra Court as global head of institutional distribution. She reorganized Guggenheim’s sales team, which angered Mr. Minerd. She is now considering leaving the firm, according to the reports.
Brazil Is Still Waiting for Foxconn to Deliver Jobs
Credit
Ana Ottoni for The New York Times
The Taiwanese manufacturing giant has pledged to spend $10 billion and create 13,000 jobs in Wisconsin.
But Wisconsin may want to look to Brazil, where Foxconn made a similar promise. After six years, the state of São Paulo is still waiting for those jobs to materialize.
From The Times article by David Barboza:
“The area where Foxconn said it would build a plant is totally abandoned,” said Guilherme Gazzola, the mayor of Itu, one of the cities that hoped to benefit from the project. “They haven’t even expressed an interest in meeting us.”
Foxconn does the “big song and dance, bringing out the Chinese dragon dancers, ribbon cuttings, toasts and signature of the usual boilerplate agreements,” said Alberto Moel, an investor and adviser to early-stage tech companies who until recently was a technology analyst at the research firm Sanford C. Bernstein. “Then, when it gets down to brass tacks, something way smaller materializes.”
The problem? In China, Foxconn enjoys huge government support, including subsidies and help to quash labor protests.
That’s not necessarily available elsewhere. The Times adds:
In Brazil, Foxconn’s plans unraveled quickly. The administration that had wooed the company was soon swept from power amid corruption allegations and an impeachment vote. Some of the tax breaks that had been promised were reduced or abandoned, as economic growth and consumer spending slumped.
Harvard Endowment’s 8.1% Return Disappoints
Credit
Charles Krupa/Associated Press
The school has already made huge changes in how its $37.1 billion endowment is run, including appointing a new chief executive, N.P. Narvekar.
But that wasn’t enough, and Mr. Narvekar described the performance as “disappointing and not where it needs to be.”
From The Times’s Geraldine Fabrikant:
That return significantly trails the mean one-year return of 12.7 percent for more than 400 institutions tracked by Cambridge Associates, which manages money for many nonprofit organizations. And while many of the nation’s largest endowments have yet to report returns, this month the Massachusetts Institute of Technology posted a 14.3 percent return for its $14.8 billion endowment.
