Amazon could march past $1 trillion (and Apple)

Good Wednesday morning and welcome to today's DealBook Briefing. I’m going to be interviewing Senator Elizabeth Warren for a TimesTalk in Washington on Sept. 13. We’ll be talking about the 2008 financial crisis on its 10th anniversary. Buy your tickets here. (Want this by email? Sign up here.)

Amazon may be worth much more than $1 trillion

The e-commerce giant yesterday briefly became the second U.S. company to reach a market value of $1 trillion. (Apple was the first, just over a month ago.)

Not everyone is convinced that’s warranted. Shira Ovide of Bloomberg Opinion argues that the valuation rests in part on businesses like digital ads and health care that don’t exist yet. “The mirage of a much more profitable, even more sprawling and powerful Amazon may be real eventually, but it isn’t today,” she writes.

Amazon’s market capitalization has risen 74 percent this year, compared with a 26 percent increase for Apple, according to data from Capital IQ. As the WSJ points out, at that rate, the iPhone maker’s days as the world’s most valuable company (at yesterday’s close, it was worth $1.1 billion) may be numbered. Morgan Stanley says that an Amazon market cap of $1.2 trillion is reasonable.

Jeff Bezos, Amazon’s C.E.O., is looking even higher. In an interview with Forbes, he said that for all practical purposes for Amazon “the market size is unconstrained.”

More on $1 trillion: How Amazon and Apple reflect the rise of powerful megacompanies. And how Amazon’s valuation will bring it greater scrutiny.

Exclusive: John Studzinski heads to Pimco

He has been a consigliere to C.E.O.s around the world and helped guide A.I.G. through the global financial crisis. Now Mr. Studzinski will take his bulging Rolodex to Pimco, the investment management giant, where he will advise top clients like pension funds, governments and sovereign wealth funds.

Over three decades, Mr. Studzinski — Studs, to his friends — struck deals at Morgan Stanley, at HSBC and then at the Blackstone Group. At Blackstone, which he left last month, his most recent role was essentially working with sovereign wealth funds and giant family offices.

Emmanuel Roman, Pimco’s C.E.O., told DealBook: “I tried to attract him to Pimco basically since I arrived. I thought he’d be a perfect fit. It took a little bit of time and finally, we got there.”

Big Tech’s big day in Washington

This morning, Jack Dorsey of Twitter and Sheryl Sandberg of Facebook will testify before the Senate Intelligence Committee on social media’s role in meddling by foreign powers. (Notably absent: Google, which rejected the committee’s request for someone higher-ranking than its top lawyer.) In the afternoon, Mr. Dorsey will also testify before the House Energy and Commerce Committee on policing what users tweet. Here’s how to watch the hearings.

Lawmakers will ask about a host of issues, including political bias, fake news and the use of algorithms. (Fun aside: Can you spot the deceptive Facebook posts in this quiz?) Expect Mr. Dorsey and Ms. Sandberg to provide a simple message: We’re trying. To that point, Mark Zuckerberg of Facebook has written an op-ed for the WaPo on how protecting democracy is “an arms race” that Facebook can and is willing to help solve.

Behind all this is the threat of a political clampdown on Big Tech. Kara Swisher of the NYT points out why that needs to be done with care:

"America needs a clear explanation of what its social media giants expect to become, before legislation forces all manner of regulations on them. Some of these will be decent, like forcing better privacy rules, but others could hinder innovation and growth in what is arguably the United States’ greatest industry."

More: Ms. Sandberg is trying to fix Facebook’s reputation, but also her own. The F.C.C.’s chairman says that Big Tech may be forced to become more transparent. Social media’s ad-based model may be breaking society.

Theranos is finally, officially dead

The blood-testing start-up has said it will officially dissolve itself. Theranos, which went from being a Silicon Valley darling to a cautionary tale, told shareholders that it was in talks to sell its patents to its most recent lender, Fortress Investment Group, after breaching a loan covenant in a way that allows Fortress to foreclose on the company’s assets. Remaining cash, about $5 million, will go to the company’s other creditors.

The move isn’t surprising. Theranos had laid off most of its staff and its founder, Elizabeth Holmes, has been indicted on fraud charges. But the collapse means that the company’s star-studded list of investors — Rupert Murdoch, the Walton family of Walmart fame, and others — has now collectively lost $1 billion.

An “administrative coup d’état” at the White House

Bob Woodward’s forthcoming book on the Trump presidency was bound to stir controversy. But excerpts from the book, called “Fear,” dropped bombshells. Notably, they claim that administration aides have taken extraordinary measures to prevent the president from embarking on more trade wars or ordering assassinations.

Some of the most surreal actions were taken by Gary Cohn, the former national economic adviser, according to the WaPo:

"According to Woodward, Cohn “stole a letter off Trump’s desk” that the president was intending to sign to formally withdraw the United States from a trade agreement with South Korea. Cohn later told an associate that he removed the letter to protect national security and that Trump did not notice that it was missing."

The book claims that Defense Secretary Jim Mattis once called out the president as having the understanding of a fifth- or sixth-grader. (Mr. Mattis denies the book’s reporting.)

But the White House’s response to the book, according to Axios, tacitly confirms that some incidents described did happen.

Nike bets on Colin Kaepernick for the long term

Making the former N.F.L. quarterback the centerpiece of the latest “Just Do It” campaign was always going to be contentious, given he became the face of player protests two years ago. Shares in Nike fell 3 percent yesterday as #BoycottNike trended on social media. (Though Adidas was down too.)

Analysts — those willing to speak, anyway — largely considered it a shrewd move. Younger consumers tend to want brands to take political stands, Matt Powell of NPD told the NYT, and “this is an opportunity for Nike to do just that.”

With Nike buffeted by slowing sales and accusations of systemic bias against women, changing its story line might be a good idea. As Mary Scott of the marketing agency UEG told the NYT: “When’s the last time we talked about a Nike campaign?”

The jury is out on emerging-market contagion

South Africa slid into recession yesterday. Turkey’s lira continues to fall. So does the Argentine peso. And Indonesia’s rupiah sank to its lowest level in two decades.

Fears have begun to creep from currencies into stocks, with Asian indexes swooning. But whether a full-blown financial crisis is in the works remains to be seen. More from Robert Burgess of Bloomberg Opinion:

"If you’re old-school and contagion means something that spreads into a global crisis that threatens the economy and financial system by catching a few key hedge funds napping, then you can relax. That can be seen in the interbank-funding markets. In a true crisis, demand for dollar funding among financial institutions would skyrocket if they thought that one — or more — of their own was in trouble."

That hasn’t happened. Yet.

Revolving door

Mark Carney is expected to remain the Bank of England’s governorthrough 2020.

Timothy Whall will step down as ADT’s chief executive and will be replaced by Jim DeVries, the security company’s president.

John Gerspach is to retire as Citigroup’s C.F.O. and will be replaced by Mark Mason, the finance chief of the firm’s investment bank.

The speed read

Deals

? How Morgan Stanley wooed Palantir to secure a plum advisory role for the start-up’s potential I.P.O. (Bloomberg)

? The Getty family is buying back Getty Images, at a discount, from the Carlyle Group, six years after selling it. (FT)

? Transocean agreed to buy Ocean Rig, an offshore drilling contractor, for $2.7 billion. (WSJ)

Politics and policy

? Ayanna Pressley upset Representative Michael Capuano in the race for a Massachusetts congressional seat. (NYT)

? Republicans are said to be reconsidering a second round of tax cuts. (Bloomberg)

? British voters would reject Brexit if another referendum were held, a new study says. (Bloomberg)

Trade

? Wall Street can’t shrug off the Trump trade war anymore. (DealBook)

? Canada will stay firm when Nafta negotiations restart today. Among its biggest concerns: cows.

? Chinese and African leaders are strengthening their ties despite swelling debt loads in Africa, much of which is linked to Beijing. (WSJ)

Tech

? A.I. could add 1.2 percent to annual G.D.P. growth for the next decade, according to McKinsey. (CNBC)

? Instagram is said to be building a stand-alone shopping app. (Verge)

? Wireless carriers are slowing online video services, research shows. (Bloomberg)

? For Chinese sellers, eBay and Amazon are tax havens. (Verge)

Best of the rest

? Why huge companies are a big problem for workers. (Axios)

? How the government will crack down on a trading trick called “spoofing.” (NYT)

? Heirs of a top Indian business dynasty are fighting each other in court as their family fortune collapses. (Bloomberg)

? The new fashionable getaway for the wealthy is Antarctica. That could be a problem. (FT)

? What it’s like to party when Goldman’s future C.E.O., David Solomon, is the D.J. (Bloomberg)

Thanks for reading! We’ll see you tomorrow.

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