WSJ : TikTok National-Security Deal Faces More Delays as Worry Grows Over Risks

TikTok National-Security Deal Faces More Delays as Worry Grows Over Risks
Officials and executives had hoped for year-end deal to address national-security concerns over social-media platform

WASHINGTON—A potential deal between the Biden administration and TikTok—once expected around year-end—has run into more delays, according to people familiar with the situation, as worry grows over national-security concerns that U.S. officials say the popular app poses.

The review has dragged on amid a range of concerns, including how TikTok might share information related to the algorithm it uses to determine what videos to show users, and the level of trust Washington would need to place in the company, these people said. U.S. officials haven’t returned to TikTok with additional demands to address the recent concerns, some of the people said, leaving the path forward unclear.

A TikTok spokeswoman said the company is looking forward to a “timely conclusion to our agreement with the U.S. government, much of which we have already started implementing in earnest, so that we can put these concerns to rest.” She said the government hasn’t shared any remaining, unmet concerns with the company.

The delay is raising political risks for TikTok and its owner, Beijing-based ByteDance Ltd., as both Biden administration officials and newly-empowered congressional Republicans amp up their rhetoric on the company. ByteDance has spent around $9 million lobbying in Washington over the past two years, according to disclosure reports.

The company had previously reached a tentative deal with the U.S. government this summer, but senior U.S. officials, including at the Justice Department, don’t believe that proposed agreement is adequate, according to people familiar with the matter.

The U.S. side of the negotiations is being led by the Committee on Foreign Investment in the U.S., a secretive government panel that reviews business deals for security concerns. The talks have been aimed at reducing Chinese government influence on the U.S. operation, without completely severing TikTok’s Chinese ties, according to people familiar with the discussions.

Both sides had broadly agreed that TikTok’s data on U.S. users will be stored on Oracle Corp. servers in the U.S., people familiar with the deal said. TikTok has said it expects to delete U.S. users’ private data from its own data centers in Virginia and Singapore as it pivots to fully store data with Oracle cloud infrastructure.

It has also said that access to U.S. data by anyone outside of a newly set-up division that governs U.S. data security would be limited by and subject to its protocols, monitored and overseen by Oracle.

TikTok’s defenders say the agreement would give the U.S. government control of and access to much more information about TikTok than they have with any U.S. social-media company.

But some administration officials have sought to make any TikTok security agreement tougher in some respects in response to what they say are growing concerns over TikTok’s access to consumer data and its potential use for influence operations, according to the people familiar with the matter. Republicans, meanwhile, have begun pushing to ban the app altogether.

TikTok says it doesn’t collect search and browsing history outside the TikTok app, according to the spokeswoman. The company does collect information within the app so it functions correctly, she said, like returning relevant search results and ensuring a user isn’t served up the same videos repeatedly.

>>> US Gapping up

Gapping up
In reaction to earnings/guidance
:

  • GTLB +18%, SUMO +9.6%, SIG +6.9%, KDP +0.8% (guidance)

Other news:

  • VVNT +32% (NRG Energy (NRG) to acquire Vivint for $12 per share or $2.8 bln in an all-cash transaction)
  • EDIT +9.4% (safety and efficacy data from the first two patients treated in the RUBY Trial of EDIT-301)
  • CENX +3.9% (moving higher after US and EU weigh new tariffs on Chinese steel and aluminum according to Bloomberg)
  • ZLAB +3.6% (Presents Late-Breaking Results Evaluating Concurrent Adagrasib and Pembrolizumab)
  • LILM +3.5% (releases Q3 Business Update)
  • LQDA +3.3% (collaborating with Sandoz and Mainbridge Health Partners)
  • MNOV +2.8% (Results from Secondary Analysis of Phase 2 Trial of MN-166 (ibudilast) Published in The American Journal of Drug and Alcohol Abuse)
  • AA +1.7% (moving higher after US and EU weigh new tariffs on Chinese steel and aluminum according to Bloomberg)
  • EBS +1.7% (receives FDA acceptance and Priority Review of Supplemental NDA for over-the-counter NARCAN)
  • NWSA +1.5% (News Corp. Special Committee provides update on exploration of combination with Fox (FOX))
  • BHR +1.4% (reports November 2022 RevPAR)
  • GME +1% (begins round of layoffs according to Axios)

Analyst comments:

  • PFSI +1.2% (upgraded to Overweight from Equal Weight at Wells Fargo)
  • ATVI +0.5% (upgraded to Buy from Hold at Edward Jones)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • VVNT +31.6%, GTLB +18.1%, BIVI +14.6%, EBS +8.9%, SUMO +8.6%, ZLAB +3.6%, LQDA +3.3%, MNOV +2.8%, CENX +2.1%, NWSA +1.5%, BHR +1.4%, GME +1.3%, AMCX +1.3%, STNG +1.2%, FOX +1.2%, HOOD +0.8%, AA +0.8%, QTRX +0.8%, DRS +0.6%, CBOE +0.6%
  • Gapping down:
    • MRTX -10.5%, HLF -9.8%, PSTX -4.1%, LSCC -3.9%, CONN -3.7%, AXON -2.2%, FNKO -0.9%, SI -0.7%, META -0.5%

>>> Europe : Brokers Upgrades & Downgrades - 6th of December 2022 V2(+)

>>> Up
* Activision Blizzard Raised to Buy at Edward Jones
* Barclays Raised to Overweight at JPMorgan; PT 220 pence
* DS Smith Raised to Outperform at Credit Suisse; PT 390 pence
* Elior Group Raised to Hold at Stifel; PT 2.90 euros
* JPMorgan Raised to Overweight at Morgan Stanley; PT $153
* PVA TePla Raised to Outperform at Oddo BHF; PT 26 euros (+)
* Sweco Raised to Hold at Handelsbanken
* UCB Raised to Overweight at Barclays; PT 120 euros

>>> Down
* AMS-Osram Cut to Underperform at Oddo BHF; PT 7 Swiss francs (+)
* Ashmore Cut to Sell at Citi; PT 200 pence
* Bankinter Cut to Underweight at JPMorgan; PT 5.70 euros
* Benchmark Holdings Cut to Hold at Investec; PT 44 pence
* BNY Mellon Cut to Underweight at Morgan Stanley
* Close Brothers Cut to Underweight at JPMorgan; PT 1,120 pence
* Conagra Cut to Sell at Deutsche Bank; PT $34
* flatexDEGIRO Cut to Market Perform at KBW; PT 8 euros
* General Mills Cut to Hold at Deutsche Bank; PT $88
* Kimberly-Clark Cut to Sell at Deutsche Bank; PT $123
* Know IT Cut to Hold at Handelsbanken
* Lloyds Cut to Neutral at JPMorgan; PT 58 pence
* Medica Cut to Reduce at Peel Hunt
* Molson Coors Cut to Sell at Deutsche Bank; PT $50
* Mondi Cut to Underperform at Credit Suisse; PT 1,600 pence
* Netcompany Cut to Sell at Handelsbanken
* SAP Cut to Underperform at Oddo BHF; PT 94 euros (+)
* Siltronic Cut to Neutral at Oddo BHF; PT 85 euros
* SocGen Cut to Neutral at JPMorgan; PT 28 euros
* State Street Cut to Equal-Weight at Morgan Stanley
* United Utilities Cut to Neutral at JPMorgan; PT 1,100 pence

>>> Initiation
* Cellnex Resumed Equal-Weight at Morgan Stanley; PT 44 euros
* Hikma Rated New Outperform at RBC; PT 1,750 pence
* Ipsen Reinstated Equal-Weight at Barclays; PT 115 euros
* P&G Rated New Outperform at CICC; PT $166
* Restore Reinstated Buy at Panmure Gordon; PT 450 pence
* Richter Rated New Outperform at RBC; PT 12,600 forint
* Romande Energie Rated New Add at Baader Helvea
* Vianet Rated New Buy at Finncap; PT 210 pence (+)

>>> Call
* Apple Wait Times Improve as Supply Chain Headwinds Abate: UBS (+)
* Barclays Now Top UK Bank Pick at JPM; Lloyds and Close Bros. Cut (+)
* Cellnex a ‘Multi-Faceted’ Story, MS Resumes at Equal-Weight
* Citi Strategists Say Stock Rally Is Marked by Weak Positioning
* Citi Cautious on Traditional Asset Managers, Downgrades Ashmore
* Elior Raised to Hold by Stifel, Downside Risk Seen Limited
* Esker Rated New Buy at TP ICAP Midcap; PT 184 euros (+)
* Fresenius Medical CEO Departure ‘Unexpected and Negative’: CS (+)
* Hikma Rated New Outperform at RBC on Stronger Outlook for 2023
* JPMorgan Relatively Cautious on EU Banks; Cuts SocGen, Bankinter (+)
* JPMorgan Opens Negative Watch on UK Water, United Utilities Cut (+)
* JPMorgan Double-Upgraded, State Street and BNY Mellon Cut at MS (+)
* Goldman Strategists Recommend Hedges as Stock Volatility Dips
* Mondi Double-Downgraded, DS Smith Raised Among Packagers at CS
* UCB Upgraded, PT Hiked at Barclays With Re-Rating Seen Ahead

FT : Blackstone’s mammoth property fund gets a helping hand


Blackstone’s mammoth property fund gets a helping hand
Over the summer, investors were pulling money out of Blackstone’s private real estate investment fund Breit at an increasingly rapid pace.

As they did, Blackstone’s Stephen Schwarzman and Jonathan Gray were putting money in. They added more than $100mn apiece to their investments in the $69bn-in-assets trust, which was launched in 2017 and has become the biggest engine of growth inside the Blackstone empire.

But redemptions last month were so heavy that Breit limited withdrawals, a decision that has provoked some scepticism about Blackstone’s ability to continue growing its assets and its overall stock market valuation.


The purchases and sales underscore a reality within the broader private equity universe that will be the big story in coming years.

Private equity firms and their executives are still flush with cash after an epic decade for buyouts, but their investors who have committed to illiquid funds are facing a crunch amid sharply rising interest rates and unwinding public markets.

Blackstone’s Briet perfectly encapsulates the state of play.

The fund was hit with redemptions from Asia in the spring and summer from overleveraged investors who were exposed to troubled property markets in the region, DD’s Antoine Gara and Sujeet Indap reported. As some investors faced margin calls, Breit turned into a perfect source of liquidity where they could pull cash out quickly without realising losses.

Then the selling spread globally.

But Breit did have some big buyers — Blackstone insiders such as Schwarzman, Gray and other executives. Collectively, they now own a staggering $1.4bn in Breit, according to calculations from Credit Suisse analyst Bill Katz, more than double their holdings since the beginning of the year.

In July, when Breit investors increased their redemptions to troubling levels, Schwarzman had an interesting anecdote to share on an earnings conference call.

He recounted a surprise meeting with a Breit investor who told him: “I love you people. This is so amazing. All of my friends are losing a fortune in the market and I’m still making money.”

There’s some truth to the statement, though its provenance remains a mystery. Breit has invested in logistics and multifamily US real estate where supply remains short and rents are up.

The only issue — unless Schwarzman and Gray want to continue buying Breit — is that even happy clients can monetise the fund whenever they want to pay bills, or bargain hunt in public markets.

Now that investors have tripped withdrawal limits — 2 per cent of net assets a month or 5 per cent a calendar quarter — Blackstone will find out whether they value its investing acumen enough to find liquidity elsewhere, or will pull out more cash in the coming months and years.

>>> Stoxx 600 Pre-Market Indications

  • UCB (UNC TH) +1.5%
  • Vestas (VWSB TH) -1%
  • Enel (ENL TH) -1.1%
    • Solar Is Pillar of European Utilities’ Green Ambitions
  • Puma (PUM TH) -1.1%
    • Porsche to Join Germany’s DAX Index Benchmark as Puma Drops Out
  • ING (INN1 TH) -1.1%
  • Tomra (TMRA TH) -1.3%
  • TUI (TUI1 TH) -1.4%
  • SAP (SAP TH) -1.5%
    • SAP Cut to Underperform at Oddo BHF; PT 94 euros
  • Fresenius Medical (FME TH) -1.6%
    • Fresenius Dialysis Unit CEO to Leave Over Strategic Differences
    • Fresenius Medical’s Sudden CEO Exit Raises Questions: React
  • SocGen (SGE TH) -2.5%
    • SocGen Cut to Neutral at JPMorgan; PT 28 euros
  • ADP (W7L TH) -6.5%
    • Schiphol Group Sells Remaining ADP Stake at €133/Shr

>>> TradeGate Pre-Market Indications

DAX:
  • Puma (PUM TH) -1.2%
    • Porsche to Replace Puma in Germany’s DAX Index
  • SAP (SAP TH) -1.6%
    • SAP Cut to Underperform at Oddo BHF; PT 94 euros
  • Fresenius Medical (FME TH) -1.6%
    • Fresenius Dialysis Unit CEO to Leave Over Strategic Differences
MDAX:
  • Talanx (TLX TH) +2.2%
    • Talanx Targets Net Income of About EU1.6b by End of 2025
  • Thyssenkrupp (TKA TH) +0.8%
  • Siltronic (WAF TH) -1.7%
SDAX:
  • flatexDEGIRO (FTK TH) +1.9%
    • Stock plunged 37% yesterday
  • PVA TePla (TPE TH) +1.5%
  • Deutz (DEZ TH) +1.2%
  • Uniper (UN01 TH) +0.8%
  • MorphoSys (MOR TH) -1%
  • Eckert & Ziegler (EUZ TH) -7.8%

>>> What to look at today - 6th of December 2022

Asian stocks retreated as investors weighed unexpectedly strong US services data which fueled bets for a higher Federal Reserve terminal rate. A gauge of regional stocks headed for its lowest close in almost a week, with almost all sectors posting a drop. US futures trimmed an earlier advance following a third day of declines for the S&P 500 on Monday.  Treasury yields were steady in Asian trading after surging Monday. The dollar was little changed. 
Australia’s central bank raised its key interest rate by 25 basis points as expected while giving itself flexibility for future decisions. The yield on Australia’s three-year government bond rose and the Australian dollar extended its advance. The yen reversed gains after the Bank of Japan reiterated its dovish policy stance. The offshore yuan remained below 7 to the greenback. Swaps showed an increase in expectations for where the Fed terminal rate will be, with the market indicating a peak above 5% in the middle of 2023. The current benchmark sits in a range between 3.75% and 4%. Beijing announced it will scrap Covid testing requirements for most public venues in what is seen as an accelerated move toward the exit of Covid Zero policy. But the possibility of new tariffs on Chinese steel and aluminum by the US and European Union may weigh on sentiment. Oil was up for the first time in three days on optimism that China’s reopening will buoy demand. Gold climbed. US After Hours GTLB +20.8%, SUMO +11.8% on strong earnings reports, PEP +0.2% on news it will lay off hundreds of workings, according to WSJ

Nikkei +0.35% Hang Seng -0.99% CSI +0.43% Shanghai -0.13% Shenzen +0.22%

Eur$ 1.0488 CNH 6.9788 CNY 6.9832 JPY 136.96 GBP 1.2187 CHF 0.9434 RUB 62.8369 TRY 18.6327 WTI$ 77.20+0.36% Gold 1,770 +0.07% BTC 16,989 +0.05% ETH 1,257 -0.20%

S&P -0.04% Nasdaq -0.17% EuroStoxx -0.40% FTSE -0.13% Dax -0.36% SMI -0.20%

Macro :
- EU Should Counter US Climate Law With Own Version, France Says

Keep an eye on :
- ADS GY : Nike Cuts Ties With Kyrie Irving: The Athletic
- ADP FP : ADP Holder Royal Schiphol Group Offers ~3.87m Shares: Terms
- AAPL US : Apple Sued by Women Over ‘Dangerous’ AirTag Stalking by Exes
- ARBN SW : Arbonia Agrees to Buy 100% of Shares in Cirelius S.A
- AI FP : Air Liquide to Sell Business in Trinidad and Tobago
- BCART BB : Biocartis Says Recapitalization Transactions Completed Dec. 2
- BWO NO : BW Offshore Repurchases $12m of Senior Unsecured Bonds Due 2024
- COV FP : Covivio Aiming to Dispose €1.5B of Assets by End of 2024
- FRE GY : Fresenius Medical's Sudden CEO Exit Raises Questions: React
- OMV AV : OMV Prefers to Give Up Gas-Trading Arm in Austria Supply Dilemma
- P911 GY : Porsche to Join Germany’s DAX Index Benchmark as Puma Drops Out
- SPM IM : Saipem Exercises Option to Buy Santorini Drillship for $230m
- SGO FP : Saint-Gobain Said to Near Sale of UK Retail Unit Jewson to CVC
- SKFB SS : SKF Said to Explore Sale of Aerospace Business After Cevian Push
- SKFB SS : Cevian's SKF Stake Opens the Door to Structural Change: React
- SWMA SS : Swedish Match Applies for Delisting from Nasdaq Stockholm
- TLX GY : Talanx Aktiengesellschaft to Boost FY Div. to EU2/Shr
- TLX GY : Talanx Targets Net Income of About EU1.6b by End of 2025
- TEP LN : Telecom Plus Holder Charles Wigoder, Others Offer ~3.5m Shares
- VLA FP : Valneva Sees ‘Substantial Growth’ in Next 12 to 36 Months
- VIE FP : Saur Starts Exclusive Talks W/ Veolia for UK’s Suez Industrial
- VOD LN : Xavier Niel Offers Vodafone Help to Break Up Telecom Giant
- VLTSA FP : Voltalia Offering of 35.8m Shares Prices at EU13.70/Share