The Fallout From Michael Wolff’s Trump Book: DealBook Briefing

The Fallout From Michael Wolff’s Trump Book: DealBook Briefing

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The political flyaround

• Paul Manafort sued Robert Mueller to limit the scope of the special counsel’s investigation into Russian interference in last year’s presidential election. DealBook’s White Collar Crime Prof doesn’t rate his chances. (NYT)

• Will 2018 be the year that Mr. Trump follows through on his hard-line trade stance and starts imposing tariffs? (NYT)

• Gov. Andrew Cuomo said that New York State would challenge the new tax plan in court, and asked the state legislature to add a statewide payroll tax. (NYT)

• Mr. Trump shut down a White House commission on voter fraud. (CNN)

• The administration must decide on two policy choices this year that could batter the American solar industry. (WaPo)

• Would Twitter ever suspend Mr. Trump’s account? (NYT)

Dow 25,000.

The Dow Jones industrial average broke past 25,000 points for the first time.

Yes, 1,000 point moves aren’t what they used to be, but the pace of the rally is still notable. If the blue-chip index closes above 25,000, it will have taken the Dow just 23 trading sessions to go from 24,000 to 25,000. That would be the fastest move from one millennial marker to the next on record, writes the WSJ’s Amrith Ramkumar.

“Of course, each 1,000-point milestone gets easier as the index marches higher. The climb from 24000 to 25000 was a 4.2% gain, compared to a 7.1% climb when the Dow hit 15000 in 2013.”

A strong rally in technology shares has powered stocks in the new year. The Nasdaq Composite surpassed 7,000 on Tuesday, and both it and the Standard & Poor’s 500 index are at record highs. In fact, this might be the best start to a year for the S.&P. 500, writes Instinet’s Frank Cappelleri.

“The SPX has logged consecutive gains of least 50 basis points while notching 52-week new highs. That may not sound too outlandish, but according to SentimenTrader, this combination has never happened before. Thus, it equates to the BEST start ever…”

Why are shares in Scotts Miracle-Gro down this morning?

We’re believers that correlation does not necessarily prove cause causation, but … maybe it has something to do with this, via the AP:

Attorney General Jeff Sessions is rescinding the Obama-era policy that had paved the way for legalized marijuana to flourish in states across the country, two people with knowledge of the decision told The Associated Press. Sessions will instead let federal prosecutors where pot is legal decide how aggressively to enforce federal marijuana law, the people said.

As the AP notes, the move will make it more difficult for people to figure out whether it is legal to grow or consume marijuana.

As for Scotts: The company has become a publicly traded proxy for the business of marijuana growing, with its C.E.O. having openly courted the pot industry.

Political backlash: It’s coming from Republicans as well. Take Senator Cory Gardner of Colorado:

— Michael J. de la Merced

Toshiba’s bankrupt nuclear power unit gets a new owner.

Toshiba agreed today to sell its Westinghouse Electric unit to Brookfield Business Partners for $4.6 billion, finally separating itself from its troubled nuclear division.

The terms: Brookfield’s offer comprises approximately $1 billion in equity, $3 billion in debt financing and the rest by assuming obligations like pensions and environmental charges. The deal is expected to close by Sept. 30, pending approval by the Delaware federal bankruptcy court.

The context: Westinghouse’s troubles — including delays and cost overruns at two U.S. nuclear plant projects — led to the business filing for bankruptcy last year. That has been one of the biggest drags on Toshiba, saddling the Japanese company with $6 billion in write-offs and the sale of its prized chip business to help keep the conglomerate afloat.

Tara Lachapelle of Gadfly adds this as well:

— Michael J. de la Merced

Spotify’s headquarters in Stockholm.

Credit
Jonathan Nackstrand/Agence France-Presse — Getty Images

Will other unicorns follow Spotify’s direct listing plans?

As the music streaming giant moves toward a public market listing — it confidentially filed paperwork last month — Wall Street and Silicon Valley are waiting to see if other privately held tech giants also eschew the traditional I.P.O. process and just flip their shares onto a stock market.

From Ben Sisario and Michael in the NYT:

Deal makers and analysts have said a direct listing is available to Spotify because of its already wide name recognition among potential investors, which makes the standard I.P.O. meet-and-greets largely unnecessary.

Uber, Airbnb and a few other giant start-ups also have readily recognizable brands and little need for the money raised in a standard I.P.O. process. If they follow suit, investment banks might stand to lose out on big fees — though it’s worth noting that Spotify has retained several firms as advisers.

Paul Kocher, left, a member of the research team that found the flaws, at a security technology conference last year.

Credit
Jim Wilson/The New York Times

How bad are the new computer chip security flaws?

Depends who you ask. Security experts say that both Meltdown (which affects virtually every Intel processor) and Spectre (which afflicts most other processors) have big costs.

From Cade Metz and Nicole Perlroth of the NYT:

The two problems could allow hackers to steal the entire memory contents of a computer. There is no easy fix for Spectre, which could require redesigning the processors, according to researchers. As for Meltdown, the software patch needed to fix the issue could slow down computers by as much as 30 percent — an ugly situation for people used to fast downloads from their favorite online services.

Companies like Amazon, Google and Microsoft have started working on updates. And chip makers may have to eventually swap out all affected hardware.

Investors have already shown concern about the effects:

• Shares in Intel fell 3.4 percent yesterday. (The chip giant played down the problem.)

• Shares in AMD jumped 5.2 percent.

• Shares in Nvidia leapt 6.6 percent.

Intel’s chief executive, Brian Krzanich, sold off a large chunk of his stake in the company after the chip maker had been made aware of the security flaws. An Intel spokeswoman told MarketWatch the sale was unrelated to Meltdown and Spectre.

The tech flyaround

• Expect smarter cars and digital assistants this year, Brian Chen writes in his C.E.S. preview. (NYT)

• Technology means 2018 will be more chaotic, as our interconnected world amplifies butterfly effects, Farhad Manjoo predicts. (NYT)

Ted Sarandos, chief content officer at Netflix.

Credit
Steve Marcus/Reuters

Could the G.O.P. tax overhaul cut executive pay?

The new law does away with corporate tax deductions for performance-based pay — like the huge stock-based packages C.E.O.s have enjoyed since the 1990s.

Here’s what Sarah Anderson of the social justice think tank Institute for Policy Studies told Renae Merle of the WaPo:

“We would like to think this would result for an overall decline in compensation that it could inject some rationality.”

The dissenting view

Skeptics think that the law will simply prompt companies to increase executives’ base salaries. Let’s use Ted Sarandos of Netflix as an example:

2017: $1 million salary, $9 million bonus target

2018: $12 million salary

The tax flyaround

• Bank of America Merrill Lynch thinks the new tax code will boost corporate profits this year, but create headwinds later. (NYT)

• The overhaul includes help for craft breweries, but critics say that the biggest alcohol companies will enjoy the biggest benefit. (WaPo)

President Nicolás Maduro of Venezuela speaking beside a computer used to produce virtual currency.

Credit
Presidencia/Agence France-Presse — Getty Images

Can virtual currencies help Venezuela evade sanctions?

Countries like Russia and Venezuela are drawn to the lack of central authority — particularly U.S. authority — inherent in Bitcoin and other digital money systems.

But their own currency experiments may not work out quite as they hope, according to Nathaniel Popper, Oleg Matsnev and Ana Vanessa Herrero of the NYT:

That’s because Bitcoin and other virtual currencies are decentralized systems with no one in charge, while the Russian and Venezuelan plans would give the leaders of both countries a measure of control over the new currencies. That runs counter to some of the most basic concepts of virtual currency.

Where Bitcoin is still a no-go zone: Merrill Lynch, which has blocked clients and financial advisers from investing in the currency or in related financial instruments.

What people are missing about Bitcoin: Glenn Hutchins, the co-founder of Silver Lake, told the FT that while he has invested about $5 million from his family office on companies working with virtual currency, he has yet to buy a Bitcoin. “Bitcoin could turn out to be the winner; it also could turn out to be Betamax,” he said.


Credit
Alexandria Sage/Reuters

What happens when Tesla overpromises on Model 3 targets.

Its shares fell 2 percent in after-hours trading yesterday. Here’s why:

In July, Elon Musk predicted that Tesla could build 20,000 Model 3s by December.

In September, analysts projected that Tesla would deliver 15,900 Model 3s in the fourth quarter.

Yesterday, with the analysts in FactSet’s compilation of estimates still expecting 4,100 Model 3s in the quarter, Tesla announced that it had delivered 1,550.

What Tesla says: “During Q4, we made major progress addressing Model 3 production bottlenecks, with our production rate increasing significantly towards the end of the quarter.”

What a critic says: “The premise of the stock’s sky-high valuation has long been of Tesla eventually dominating the auto industry. That notion has hardly ever seemed more fanciful,” writes Charley Grant of Heard on the Street.

One way to change Hollywood’s treatment of women.

The Times’s chief film critics, Manohla Dargis and A. O. Scott, discussed the year in Hollywood and Mr. Scott had a suggestion:

The movie business might start by designating a pool of money — maybe equivalent to the value of the Miramax and Weinstein Company libraries, and the budgets of every Brett Ratner film and some fraction of Pixar’s worldwide revenues — to fund movies written and directed by women.

And Meryl Streep responded to comments about her lack of comments on the Weinstein accusations in an interview with Cara Buckley of the NYT:

“I don’t want to hear about the silence of me. I want to hear about the silence of Melania Trump. I want to hear from her. She has so much that’s valuable to say. And so does Ivanka. I want her to speak now.”

Revolving Door

• The White House named Geoffrey Berman, Rudy Giuliani’s law partner, as the interim U.S. attorney for the Southern District of New York. (Bloomberg)

• Weil, Gotshal & Manges has hired Michael Hickey, formerly the head of Goldman Sachs’s leveraged finance legal team, as a partner in its capital markets team.

The Speed Read

• Peter Thiel wants to start a conservative cable news network and his representatives have talked to the Mercer family about funding, according to sources familiar with the situation. (BuzzFeed)

• Americans have more debt than they have assets and income to support. This will be a drag on growth and markets, while making the economy more vulnerable to higher interest rates, says Ray Dalio. (WSJ)

• Richelieu Dennis, the founder of the Sundial Brands personal care products company, bought Essence magazine from Time Inc. (NYT)

• Saudi Aramco is seeking a bank to advise it on acquiring more natural gas assets, according to people familiar with the matter. (Bloomberg)

• Scana, the South Carolina utility behind an abandoned plan to build new commercial nuclear reactors in the United States, has accepted an all-share takeover offer from Dominion Energy valued at $14.6 billion, including debt. (FT)

• Fierce competition to underwrite debt offerings in Asia’s dollar bond market is forcing some big global banks to work on deals for next to nothing. (WSJ)

• Why Amazon might not buy Target: Its mishmash of businesses isn’t necessarily something that Amazon wants badly enough to justify spending $36 billion. (CNBC)

• Iceland began putting a law in place this week that requires companies and government agencies to prove they pay men and women equally. (NYT)

• A revised gender pay lawsuit seeking class action status accused Google of asking new hires about their prior salary, a banned practice in California. (AP)

• In China, even panhandlers now prefer mobile payments to cash. (WSJ)

We’d love your feedback as we experiment with the writing, format and design of this briefing. Please email thoughts and suggestions to bizday@nytimes.com.

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