Fiat Chrysler’s second shot at a merger

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It’s auto merger Round 2 for Fiat Chrysler

Stop us if you’ve heard this one before: Fiat Chrysler confirmed this morning that it is in talks to combine with another automaker. This time it’s Peugeot — and it comes just months after Fiat’s attempts to merge with Renault failed.

An all-stock merger of equals is being weighed by the two companies as a potential deal option, according to the WSJ. Peugeot’s C.E.O., Carlos Tavares, would keep that role in the combined automaker, while Fiat’s chairman, John Elkann, would retain that title.

It reflects a belief that smaller car companies must combine if they’re to compete. Tough global competition, increasingly stringent emissions limits and pressure to invest heavily in electric and autonomous vehicles have made becoming bigger look increasingly better as a strategy for survival.

A deal with Peugeot might be easier to strike than one with Renault. Peugeot doesn’t have to win over a business partner like Nissan to agree to a merger. And analysts think the French government might be reluctant to be seen blocking another auto deal.

But a merger would still face challenges. Given how big Fiat and Peugeot are, a deal would undergo tough regulatory scrutiny. And the new company would still be far smaller than global rivals like Volkswagen, Toyota and G.M.

Boeing’s first day in Washington was tough

The plane maker’s C.E.O., Dennis Muilenburg, was pummeled by questions from lawmakers yesterday when he testified before the Senate commerce committee about the 737 Max jet, Natalie Kitroeff and David Gelles of the NYT report.

He at times looked shaken in front of lawmakers and as he faced grieving relatives of victims from two deadly crashes involving the plane. “If we knew everything back then that we know now, we would have made a different decision,” he testified.

Mr. Muilenburg made one big admission: He knew before the second crash that a top pilot had voiced concerns about the plane while it was in development. That will “most likely lead to more questions about why Boeing did not act more decisively” before the second crash, Ms. Kitroeff and Mr. Gelles write.

He also defended the current regulatory system. While senators harangued him about the close relationship between Boeing and the F.A.A., he didn’t endorse proposals to overhaul aviation laws.

The public pain isn’t over yet. Mr. Muilenburg will appear today before the House transportation committee, which is expected to be even more adversarial.

More: Airbus has surpassed Boeing in new jet orders — by a lot.

Can PG&E survive the California wildfires?

The giant utility has been in bankruptcy protection for months, with two camps of investors having submitted plans to reorganize it. But the latest California wildfires could undermine those rescue attempts, Peter Eavis and Ivan Penn of the NYT write.

The latest fires have raised concerns about its finances. A multibillion-dollar state wildfire fund is supposed to help utilities bear the cost of this year’s fires. But because PG&E’s equipment is suspected of having caused some of the recent blazes, the company may end up facing another huge bill for damages.

Blackouts complicate matters. PG&E has been turning off power because fallen power lines are a major cause of wildfires. The blackouts have drawn widespread criticism, but if PG&E limits the scope of its power cuts, there could be more fires.

And that could upend the rescue plans. Proposals submitted by investors include provisions allowing the investment offers to be changed or withdrawn if new fires attributed to the company cause the destruction of at least 500 structures before the end of the year.

Other options are now being raised. There’s speculation that Berkshire Hathaway could buy PG&E, though analysts are skeptical that Warren Buffett would expose his company to hard-to-estimate losses. Meanwhile, some politicians have proposed turning PG&E into a customer-owned utility.

More: The next PG&E blackout could affect 1.3 million Californians.

WhatsApp’s fight against spyware

WhatsApp sued the Israeli cybersurveillance firm NSO Group in federal court yesterday over the way its spying technology had been used on the messaging service, Nicole Perlroth of the NYT reports.

NSO tools were used to spy on more than 1,400 people in 20 countries, including journalists and human rights activists, the lawsuit claims. It’s unclear who was doing the spying, but targets were particularly concentrated in Mexico, Bahrain and the U.A.E.

The privacy intrusions used a WhatsApp call to embed spyware on the phone of a target and provide access to its contents. The target didn’t even need to answer the call.

WhatsApp is seeking to block NSO from its service. The company, which is owned by Facebook, also called on lawmakers to ban the use of such cyberweapons, which currently go largely unregulated.

“This should serve as a wake-up call for technology companies, governments and all internet users,” Will Cathcart, the head of WhatsApp, writes in a WaPo op-ed. “Tools that enable surveillance into our private lives are being abused.”

NSO disputed the claims in the lawsuit in the “strongest possible terms,” it said, and “will vigorously fight them.”

Are cars holding back the global economy?

Autos have long been considered the linchpin of the world’s manufacturing sector and a huge catalyst for economies. But Greg Ip of the WSJ argues that the industry might be hurting economic growth.

• “The I.M.F. thinks autos contributed a fifth of last year’s slowing in global gross domestic product and a third of the slowdown in trade,” Mr. Ip writes.
• Part of the problem: Automakers are huge consumers of materials like steel, rubber, plastic and electronics. When they slow down, other industries take a hit.
• Trade barriers imposed by President Trump and other countries are raising costs and depressing sales of autos.
• Stricter emissions standards are also making cars more expensive.
• And we may have hit “peak car,” Mr. Ip writes: Auto sales plateaued in developed countries years ago and are slowing in emerging markets like India and China. Ride-sharing services threaten to further reduce individual car ownership.

Washington celebrates A.I.G., a decade after its bailout

The insurer, whose near-collapse in 2008 and federal bailout made it the subject of scorn during the financial crisis, commemorated its first century of business in Washington this week. Lawmakers were on hand to help celebrate, Zachary Warmbrodt of Politico reports.

A.I.G. held its party in the hearing room of the House Ways and Means Committee, with festivities led by Representative Richard Neal, the committee’s Democratic chairman. Members of both parties attended, along with lobbyists from the financial industry.

No one highlighted the company’s taxpayer-financed bailouts, Mr. Warmbrodt writes. (The federal government eventually turned a profit on its A.I.G. investment.) Speakers “instead focused on things like retirement savings legislation, which is a high priority for Neal and the insurance industry.”

“A display at the event outlining milestones in the company’s history jumped from 1999 to 2015 — omitting the financial crisis and taxpayer-backed rescue,” Mr. Warmbrodt adds.

The celebration stirred criticism. “It is deeply troubling that Congress would celebrate such a negligent and self-serving financial behemoth,” Craig Holman of the watchdog group Public Citizen told Politico. Even invitees were “shocked” by the event, Mr. Warmbrodt tweeted.

Can an election break Brexit deadlock?

British lawmakers voted yesterday to hold a general election on Dec. 12 — the latest gamble to settle the impasse over Brexit, Mark Landler of the NYT reports.

The opposition Labour Party backed the proposal by Prime Minister Boris Johnson. The country’s political parties essentially threw the issue of Brexit — which has bedeviled two prime ministers now — to voters.

It sets up “one of the most momentous and unpredictable campaigns in post-World War II Britain, a six-week race that could forever alter Britain’s relationship to Europe and its place in the world,” Mr. Landler writes.

There are clearly risks. Perhaps the biggest: Britain remains in a political quagmire, with no party winning a clear majority and Parliament divided about how to move forward, three years after Britain’s vote to leave the E.U.

And this hasn’t made things easier for the markets. Mr. Johnson’s actions have “virtually ensured that the relative calm that has settled on British asset markets in the last few days will soon be broken,” John Authers of Bloomberg Opinion writes.

Revolving door

Alan Howard will step down as C.E.O. of Brevan Howard, the $7.5 billion hedge fund he co-founded, to focus on investing.

Juul has ousted a number of top executives, including its C.F.O., Tim Danaher, who will be replaced by Guy Cartwright.

Joe Euteneuer will step down as C.F.O. of Mattel, as the toymaker concluded an investigation into its accounting practices.

TPG has hired Marc Mezvinsky, a veteran investor and the husband of Chelsea Clinton, as an executive at its new Tech Adjacencies fund.

The speed read

Deals

• Saudi Aramco plans to formally launch its I.P.O. on Sunday, aiming to begin trading on the Saudi stock exchange in December. (Reuters)
• Murray Energy, a major coal producer, filed for bankruptcy protection as the coal industry struggles against declining demand. (NYT)
• Digital Realty agreed to buy InterXion, a European data center operator, for about $8.4 billion, including debt. (WSJ)
• Shares in Beyond Meat tumbled 22 percent yesterday as investors feared huge sell-offs by early backers of the plant-based food company. (FT)
• Revolution, Steve Case’s venture capital firm, has raised $150 million for its second Rise of the Rest investment fund, which is focused on start-ups outside Silicon Valley and New York. (Forbes)

Trump impeachment inquiry

• The National Security Council’s top Ukraine expert testified yesterday that a transcript of the July call between President Trump and Ukraine’s leader had omitted key phrases linking the conversation to a demand to investigate Joe Biden’s family. (NYT)
• Meetings between White House staff members and Ukrainian officials on July 10 have become a key focus of the House impeachment inquiry. (WaPo)
• House Democrats unveiled proposed rules for the public phase of their impeachment investigation. (NYT)

Politics and policy

• The Fed is expected to cut interest rates again at its policy meeting today, but where it goes from there is anybody’s guess. What is clear: The central bank must walk a fine line. (NYT, WSJ)
• An array of economic data that will be released this week could have implications for the 2020 elections. (Upshot)
• Treasury Secretary Steven Mnuchin said he was open to relaxing crisis-era rules requiring banks to hold more cash as liquidity reserves. (Bloomberg)
• An analysis of legal arguments by Mr. Trump’s lawyers show that they believe he would be immune from any criminal prosecution — even if he were to commit murder. (WSJ)

Trade

• How the book publisher Bloomsbury got dragged into the U.S.-China trade war. (FT)
• China’s refusal to provide details on its pledges to increase purchases of American farm goods has become a sticking point in trade negotiations with the U.S. (Reuters)
• Senator Ron Wyden, the top Democrat on the Senate Finance Committee, asked Trump administration officials to make clear whether they were linking trade talks to President Trump’s efforts to find compromising information on Joe Biden. (FT)
• Vietnam benefited hugely from the trade battle. Now it needs to figure out how to keep those gains. (Bloomberg)

Tech

• Australia has proposed using face scans to verify the age of people watching porn. (NYT)
• Uber and Lyft submitted a ballot initiative in California to alter a statewide law that reclassifies contract workers as full-time employees. (WSJ)
• The E.U.’s antitrust chef, Margrethe Vestager, is considering adopting higher standards of proof for internet companies in competition cases. Also: The numbers show that Europe is leading the tech regulation charge. (FT)
• Why Silicon Valley should take Senator Josh Hawley’s war on the industry seriously. (Recode)

Best of the rest

• G.M.’s earnings tumbled in the wake of a workers’ strike, by as much as $3 billion for the year. (NYT)
• HBO Max will start streaming in May — and will be more expensive than its rivals, at $15 per month. Also: Here’s what you need to know about Apple TV’s premiere this week. (NYT)
• Johnson & Johnson says its recalled baby powder doesn’t contain asbestos. (NYT)
• The N.C.A.A. is considering letting college athletes profit from their fame. (NYT)
• “Inside the sexy Halloween costume industrial complex.” Also: There’s a shortage of black turtlenecks in Silicon Valley, potentially because people are dressing up as Elizabeth Holmes of Theranos. (WaPo, Business Insider)

Thanks for reading! We’ll see you tomorrow.

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