WSJ : Review of Bob Woodward’s ‘Rage’: On the Record, Such as It Is

Review of Bob Woodward’s ‘Rage’: On the Record, Such as It Is
The star reporter’s new book begs the question: What’s the point of an insider account of the White House if the president himself does most of the talking?

Most readers of this review will already know the big news item issuing from “Rage,” Bob Woodward’s second account of the Trump White House. On Feb. 7 of this year the president told Mr. Woodward in an interview that the novel coronavirus is “deadly stuff”—“more deadly than even your strenuous flus”—but continued to de-emphasize the virus’s lethality, comparing it to “the regular flu that we have flu shots for” and so on. The president even tells Mr. Woodward—or “admits” to him, to use headline language—that he deliberately downplayed the virus. “I wanted to always play it down,” he told the author on March 19. “I still like playing it down, because I don’t want to create a panic.”

These presidential reflections are helpfully related in the prologue, on pages xviii and xix, presumably in order to allow reporters at the nation’s largest news organizations to announce the book’s big reveal without having to read its 400 pages. A few hours after I received my copy, news websites were ablaze with headlines announcing newfound evidence of Mr. Trump’s perfidy. That he knew the virus was “deadly” but continued to “play it down” makes him, according to a certain kind of media personality, uniquely responsible for the deaths of tens of thousands of Americans.

Mr. Trump’s logorrhea is a problem as always, but the idea that he “knew” the truth about the virus and misled Americans is stupid. It assumes that any early acknowledgment of the virus’s “deadliness” must have entailed a clear and agreed-upon set of policies. If Mr. Trump believed on Feb. 7 that the virus was “deadly,” in this reading, he should have come out gung-ho for an array of mitigating measures, perhaps including a nationwide lockdown. But not even the now-lauded public-health experts were calling for major behavioral changes in February. On Feb. 29, three weeks after Mr. Trump’s “deadly” remark to Mr. Woodward, Anthony Fauci himself stated on the Today show that “at this moment, there’s no need to change anything that you’re doing on a day-by-day basis . . . the risk is still low”; and on that same day CDC director Robert Redfield told reporters that “the risk is low. We need to go on with our normal lives.” Both statements are included in Mr. Woodward’s book, but you don’t get to them until pages 254 and 255.

I mention all this simply to point out that the book’s one headline-making revelation is noteworthy only if you already believe that any terrible thing in the world is probably in some way the fault of Mr. Trump. But if that is your outlook, you don’t need a hefty book to tell you that Mr. Trump is a terrible guy. What is the point of “Rage,” then? The typical Woodward account, based on the author’s interviews with top decision makers, tells the story of a tense year or two in the White House. This one, building on “Fear” (2018), the author’s account of Mr. Trump’s chaotic first year in office, purports to show that this capricious and unprincipled real-estate mogul is incapable of handling a crisis of the sort that now confronts America.

I confess I have always liked Mr. Woodward’s White House chronicles. High-ranking officials of both parties are apt to blab to him, mostly I suspect because he allows them to speak without attribution. I find it easy to ignore the author’s consensus-liberal interpretations of events and enjoy the books for what they are: aggrieved cabinet officials and senior White House staffers anonymously grousing about each other and portraying themselves as martyrs.

There is some of this in “Rage,” but not enough. And the sources rarely reveal anything worth knowing. Former secretary of defense Jim Mattis is evidently a source; from him we learn that Mr. Trump treats senior staff abominably and doesn’t understand the importance of international allies. Who knew? We learn from former director of national intelligence Dan Coats, also clearly a source, that Mr. Trump’s constant changes of mind very nearly drove Mr. Coats insane. Mildly interesting, but hardly news. Mr. Coats, we’re also told, thought for a time that Mr. Trump might indeed be in cahoots with the Russians; the intel chief and his staff “examined the intelligence as carefully as possible” and found nothing. I can think of some people who would call that a revelation, but I am not one of them.

What ruins the book—what makes it one long retelling of what everybody already knows—is the presence, on the record, of the president of the United States. Mr. Woodward interviewed Mr. Trump 17 times for the book. This contrasts with the author’s previous White House books. Those other works, whatever their flaws, have an attractive off-the-record, I-shouldn’t-be-telling-you-this feel about them. Mr. Woodward interviewed President Obama for “Obama’s Wars” (2010), but only once, and the chief’s presence in that book is fleeting. In long passages of “Rage,” by contrast, you feel you’re getting more of what you already had too much of. Mr. Woodward puts questions to Mr. Trump and Mr. Trump responds with answers that are by turns hyperbolic or factually wrong or irrelevant. As usual, he refuses to play by the rules set for him by his questioner.

The effect is unbearably boring, like reading transcripts of White House press briefings. At one point Mr. Woodward tries—rather too obviously, if you ask me—to bait Mr. Trump into saying something racially insensitive. The president remarks, “I’ve done more for the Black community than any president in history with the possible exception of Lincoln.” Mr. Woodward: “He had said so publicly at least five times by that point in 2020 alone.” OK—but if he had said this publicly so often, why are we hearing about it in a Bob Woodward book?

A number of commentators, particularly those sympathetic to Mr. Trump, have wondered why he agreed to speak to Mr. Woodward, whose account was certain to damage the president in an election year. I don’t know, but it looks like a savvy move to me: By the simple expedient of making himself lavishly available, Mr. Trump has turned what might have been an engaging book into a dud.

>>> US After Hours Summary: EXLS +6.9%, NEE +6.8%, CWH +4.7%, SMG

After Hours Summary: EXLS +6.9%, NEE +6.8%, CWH +4.7%, SMG +4.6% up on bullish guidance; LEN -4.6% falls on earnings, NKLA -7.7% continues weakness

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: EXLS +6.9%, NEE +6.8% (also announces 4-for-1 stock split), CWH +4.7%, SMG +4.6%, MPWR +0.2%

Companies trading higher in after hours in reaction to news: MRNS +64.5% (announces "positive" top-line results from Phase 3 Marigold Study), NYMT +3.9% (raises dividend), GNMK +2.4% (receives CE mark for ePlex Respiratory Pathogen Panel 2), CTRN +2.2% (reaffirms Q3 comp guidance; reinstates share repurchase program), FCAU +2.2% (FCAU and Peugeot amend combination agreement), SKT +1.6% (provides operational update), MDC +1.2% (says sharp increase in demand for new homes has extended into Q3), FDX +0.9% (raises shipping rates), IAC +0.6% (provides August performance metrics for ANGI), GILD +0.2% (S&P places on CreditWatch Negative ahead of IMMU acquisition), GOOG +0.1% (Bloomberg report that co faces lawsuit in UK over claims that YouTube tracks children online)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: LEN -4.6%, PPD -4.6% (also announces 38 mln share offering by selling shareholders), GTES -0.1%

Companies trading lower in after hours in reaction to news: NKLA -7.7% (SEC to assess fraud allegations, according to Bloomberg), FRTA -5.1% (stock offering), TGH -5.1% (authorizes $50 mln increase to share repurchase program), LPTX -4.1% (mixed shelf offering), LMPX -2.1% (new CFO), KRNT -1.8% (stock offering), ETNB -1.3% (stock offering), WK -0.1% (announces that two US agencies select its platform), JBT -0.1% (CEO returns)

FT : Nikola’s fender bender with the facts

Nikola’s fender bender with the facts
Life comes at you faster than a hydrogen-powered electric truck rolling down a hill when you go from running a privately owned business to a public company. Just ask Trevor Milton (pictured below).

One day you’re a high-flying chief executive of an electric truck company who’s inking multibillion-dollar deals with General Motors and the next you’re having to defend allegations that your vehicles can only go downhill. 


Welcome to the ups and downs (ahem) of running a publicly traded company. 

Since that sleepless night back in June after Nikola agreed to go public via a reverse merger with a special purpose acquisition company, Milton has been on a wild ride. 

Despite having no product to sell, Nikola’s stock price shot up to a peak of almost $80 during its first few days as a publicly traded company. At one point it reached a valuation of more than $30bn, on par with Ford. The listing made Milton a billionaire on paper. 

Better yet, the Arizona-based company agreed to sell an 11 per cent stake to GM last week. Shares in Nikola jumped 50 per cent. 

But just 48 hours later, short-sellers at Hindenburg Research called Nikola “an intricate fraud” in a scathing report released on Thursday. Nikola’s market capitalisation is now down to about $13bn. In response, Milton said the company “has nothing to hide”.

If you’ve got some time, the Hindenburg report is worth a full read. One particular allegation stands out — that Nikola faked a demonstration of one of its trucks in 2018 by rolling it downhill. The claim was backed up by FT reporting last week. 

Then Milton himself confirmed it in a 2,700-word rebuttal to Hindenburg’s claim. “Nikola never stated its truck was driving under its own propulsion in the video,” he clarified on Monday. 

Yes, Nikola described the video as “in motion” but didn’t say the truck was “under its own propulsion”. And it was a “gentle hill”. Glad we got that sorted. 

The elements are all there: a founder who wants to “change the world”, a company with a large valuation but a product that doesn’t yet exist, and a “haters gonna hate” mentality at the first sign of criticism. 

Milton doesn’t get any points for originality here — he did after all name his company Nikola when its biggest rival is called Tesla. 

It’s important to remember that GM has not paid cash for its Nikola stake. It will instead contribute its battery and fuel cell technology to help develop Nikola’s vehicles. 

If things do go wrong with the investment, it will be embarrassing but there’s likely little financial loss. 

For Spacs, however, it could be a huge blow. It was just a few weeks ago that team DD asked whether blank-cheque companies could shake their bad reputation. 

We’ll be talking about this very topic at the next DD forum on the Spac comeback this Thursday at 1pm New York time with DD’s James Fontanella-Khan and Ortenca Aliaj. Joining us will be Steve Girsky, a Nikola board member. Sign-up here.

FT : Economists warn of US ‘wasteland’ without stimulus deal

Economists warn of US ‘wasteland’ without stimulus deal
Hopes fade for $1tn or more in government aid for workers, businesses and local governments

The US economic recovery is in danger of being weaker and more uneven if Congress and the White House fail to agree on a new round of fiscal stimulus, according to mounting warnings from Wall Street and academic economists.

In recent weeks, hopes have faded for an accord before November’s election to pump $1tn or more in government money into the world’s largest economy through direct payments to households, enhanced jobless benefits and aid to small businesses and state and local governments.

The diminished chances of additional fiscal support have caused many economists to fret that the US rebound will lose steam in later 2020 or early 2021, creating a drag on the global economy as it tries to recover from the worst contraction since the second world war.

“The risk of fiscal fatigue where policymakers stop providing stimulus or start trying to claw back too early is a meaningful global risk,” said Nathan Sheets, chief economist for PGIM Fixed Income. “What’s going on in Washington right now is in some sense exhibit A for that.”

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said US output could grow at an annualised rate of 25 per cent or more in the third quarter as it bounces back from the historic contraction in the first half of the year. But he expects that figure to drop to 10 per cent in the fourth quarter and would not be surprised if it was less than that.

“What they are doing now, or rather what they are not doing now, is raising the risk that large bits of the economy will be a wasteland by the time a [Covid-19] vaccine comes through,” Mr Shepherdson said. “That doesn’t mean it can never recover but it does mean that the recovery will be longer and harder and more painful and there’ll be a lot more misery in the meantime. It seems very counterproductive to me.”

The chance of a last-minute compromise on Capitol Hill remains a possibility as lawmakers from both sides call for a solution. But there have been no signs of forthcoming concessions, and the legislative calendar is running out of days before members of Congress return home ahead of the election.

Economists say one of the biggest dangers to the recovery is that consumption could falter after being supported so heavily by direct payments to households worth up to $1,200 per adult and emergency federal unemployment benefits of $600 per week that were included in the $3tn of stimulus approved at the start of the pandemic.

Aneta Markowska and Thomas Simons, economists at Jefferies, have estimated that disposable personal income growth would slow from 9.5 per cent in July to about 3 per cent by the end of the year without a deal. If a stimulus package of $1tn or more is agreed, they believe that growth in disposable personal income would be about 6 per cent at year’s end.

“It most certainly will have an impact,” said Julia Coronado, founder of Macropolicy Perspectives. “Does it double dip (into recession)? That’s not my base case but at a minimum it flattens out the recovery and deepens the permanent damage and that’s not good.”

Ms Coronado said the lack of fiscal support could fuel the economic disparities that have emerged as a key feature of the pandemic recovery. “You’re just going to have more of that bifurcation, with wealthy people and professional jobs in the service sector doing just fine . . . and then a lot of people in working class jobs in deep distress.”

Economists of many stripes also have been lamenting the lack of agreement on federal assistance to cash-strapped state and local governments. President Donald Trump has argued that such aid would represent a bailout for badly run Democratic local governments.

Ben Bernanke, the former Federal Reserve chair appointed by former Republican president George W Bush, in July warned of a “significantly worse and protracted recession” if no additional federal help was given to state and local governments.

“If we have to see states reducing spending, cutting teachers, cutting police, and other things that states and local governments do, you’re really playing with fire,” said Alan Blinder, a Princeton University economics professor who formerly served as Fed vice-chair, appointed by Democratic president Bill Clinton.

Maurice Obstfeld, the former IMF chief economist and now a senior fellow at the Peterson Institute for International Economics, said local and state governments were facing estimated budget shortfalls of between $500bn and $1tn. “Without the federal government effectively borrowing in order to support them, you’re going to have a wave of austerity, and that’s not healthy for the overall economy,” he said.

One reason a deal on Capitol Hill has proved elusive is that the economy has done better than many expected, with unemployment falling to 8.4 per cent from its April peak of 14.7 per cent, even as many states were hit by a surge of coronavirus cases in the summer.

Paul Ashworth of Capital Economics said the recovery would be slower if there was no stimulus deal, but it would not be reversed. “As the private economy gets up, back and running, you would expect to see less fiscal spending anyway. These were emergency measures and now we’re in less of an emergency situation,” he said.

Markets, too, have been fairly relaxed about the lack of agreement on a new stimulus package. “I think market participants have a sense if things start to sour in terms of economic performance that the Fed will provide further stimulus and in some sense remove a good chunk of the downside tail risk for them,” said Mr Sheets of PGIM Fixed Income.

Yet Mr Shepherdson said there have been warning signs in recent employment numbers, including higher weekly jobless claims, and other high-frequency data that suggested the labour market was stalling.

“People can see with their own eyes that the economy is not motoring along,” he said, adding: “It’s very hard to see how taking away the single biggest support for personal incomes can do anything other than depress growth.”

FT : Why investors cannot resist immunotherapy

Why investors cannot resist immunotherapy
Research into ways of tweaking the body’s cellular defences has huge clinical potential

The pandemic has brought unprecedented public attention to the human immune system. Anyone interested in ­Covid-19 has learnt how antibodies, B-cells and T-cells play a vital role in determining the course of disease and in developing drugs to treat it and vaccines to prevent it.

Yet Covid-19 is just the latest and most vivid example of the growing role that immunology is playing in medicine. Immunity-based therapies are transforming oncology and the treatment of diseases in which the immune system damages a patient’s own body, as well as the more traditional field of infections.

Martin Murphy, chief executive of the UK life sciences group Syncona, has a wide perspective on the field because his company is building a portfolio of cell and gene therapy start-up investments focusing on immunotherapies, particularly for cancer, which exemplify the possibilities. “We are deeply engaged in modulating the immune system,” he says. “The advent of cell and gene therapies around 2013 or 14 really made this possible, achieving remarkable outcomes in patients who were poorly served by existing technologies.”

Syncona’s Autolus is one of many innovative companies developing Car-T therapies, which seek to overcome the natural reluctance of the immune system — designed to handle external threats — to attack tumours. The technology involves extracting T-cells from the patient, genetically engineering them in the lab to recognise the cancer cells, and then infusing them back into the bloodstream.

Another Syncona company, Achilles Therapeutics, is developing a personalised therapy based on “clonal neoantigen” molecules that are unique to each patient’s tumour. These proteins are present on all cancer cells but not on any healthy cells. As with Car-T, this technology involves manufacturing personalised T-cells in the lab and putting them into the patient. An important difference is that Achilles does not genetically engineer immune cells but finds and multiplies natural ones that have arisen early in the evolution of the cancer — and are likely to be present in all its cells.

A third Syncona venture, Quell Therapeutics, uses T-cells in a quite different way — not in oncology but to treat autoimmune and inflammatory diseases, as well as preventing rejection in organ transplantation. It focuses on a category called T regulatory cells or Tregs, which can dampen an excessive immune response.

Unlike its sister companies Autolus and Achilles, Quell’s cell therapies are not yet in the clinic. The first application will be in liver transplants, where the company hopes its Tregs will reduce the toxic cocktail of immunosuppressant drugs that patients have to take today to prevent rejection.

A new Syncona cell therapy company will be set up shortly, Mr Murphy says, building on research at the University of Edinburgh into macrophages. These are another type of white blood cell which play a bigger role in the innate immune system than in adaptive immunity where T-cells operate. The start-up (to be called Resolution Therapeutics) will begin by using macrophages to treat liver disease such as cirrhosis.

“Macrophages are cells that eat dead material in the body and help fight infections, but recently researchers have found that they are able to break down scar tissue and . . . stimulate regeneration in tissue such as the liver — and help co-ordinate the regenerative response in those organs,” says Stuart Forbes, director of Edinburgh’s Centre for Regenerative Medicine.

While therapies based on white blood cells are a fast-growing novelty, the other key component of the immune system — antibodies — has expanded over the past 30 years into one of the largest and most profitable sectors of the pharmaceutical industry, with sales of about $150bn last year. 

In the body, B-cells make antibodies to target specific proteins — antigens — on pathogens. In the lab and now in biological production facilities, identical copies of “monoclonal antibodies” can be made in large quantities to treat cancers, autoimmune, metabolic and infectious diseases.

The best-selling drug in history, at least in revenue terms, is AbbVie’s Humira, with global sales of $19bn a year, for treating a range of autoimmune diseases from arthritis and psoriasis to Crohn’s disease and ulcerative colitis. It targets tumour necrosis factor, a protein produced by the immune system. When the body produces too much TNF, inflammation results. Humira works by binding to TNF molecules and blocking them — helping to reduce the inflammation that can lead to symptoms of Crohn’s disease or ulcerative colitis. 

But most of the other successful antibody therapies treat cancer. An important feature of the immune system is its use of “checkpoints” to distinguish between the body’s own healthy cells, which it leaves alone, and foreign intruders, which it attacks. 

Checkpoints are molecules on certain immune cells that need to be activated or inactivated to start an immune response. Cancer cells evolve ways to use checkpoints to hide from the immune system; checkpoint inhibitors strip away this camouflage.

A favourite target is PD-1, a checkpoint protein on T-cells that normally acts as a type of “off switch” to stop them attacking other cells in the body, by attaching to another protein called PD-L1. This binding is a signal for the T-cell not to attack. Monoclonal antibodies that target PD-1 or PD-L1 can block this binding and boost the immune response against cancer cells. 

PD-1 inhibitors include Keytruda (Merck of the US) and Opdivo (Bristol-Myers Squibb), while PD-L1 inhibitors include Tecentriq (Roche) and Imfinzi (AstraZeneca). A different protein on T-cells that keeps the immune system at bay is CTLA-4; Bristol-Myers Squibb’s Yervoy, an antibody that attaches to CTLA-4 and stops it from working, is one of the fastest-growing cancer treatments.

The world’s attention is rightly focused this year on antibodies and other immunotherapies for Covid-19 but the big financial action and most extensive research remain elsewhere — particularly in treating cancer and autoimmune disease. 

FT : UK universities see record admissions, despite the pandemic

UK universities see record admissions, despite the pandemic
Jump in A-level grades following government’s Ofqual U-turn aids rise in accepted places

UK universities are heading for a “bumper year” of new admissions, according to preliminary figures, defying warnings of a downturn because of coronavirus.

Data from the University and College Admissions Service analysed by DataHE, a consultancy, indicates that 22 days after A-level results 508,090 applicants had accepted places at universities across the UK, an increase of 3.5 per cent compared with the same time in 2019.

The figures put the sector, which feared a sharp fall in admissions as a result of the pandemic, on course for a record year. But experts warn that final numbers remain uncertain and universities still face months of volatility.

The boost in admissions is partly down to the continued enthusiasm of foreign students for studying in the UK. International recruitment has so far increased by 1.7 per cent to a record 71,400 this year, in spite of warnings the pandemic would reduce demand.


But the main reason for the higher numbers is the jump in A-level grades after the government’s eleventh hour U-turn on results last month, when it dropped those moderated by exam regulator Ofqual in favour of the more generous “centre-assessed” marks awarded by teachers.

This, coupled with the dropping of a government cap in student numbers for top universities, has left a larger than usual proportion of school leavers with the grades needed for university, with the number of 18-year olds going into higher education increasing by 5 per cent compared with 2019.

“Universities have done a brilliant job in responding to the fallout from this summer’s exams crisis, leaving the sector with unexpectedly buoyant levels of recruitment,” said Mary Curnock Cook, a former CEO of UCAS.

But the boost has created losers as well as winners. At top tier universities, enrolment is up by 11 per cent from 2019, while it is up 1 per cent at mid tier institutions. Lower tier institutions have seen virtually no change in application numbers. 

“Because the centre-assessed grades elevated the overall attainment, the currency of qualifications got devalued so it pushed everything up the system,” said Andrew Hargreaves, the co-founder of DateHE. 

This left lower-tier institutions with a “deficit” of students, according to Mr Hargreaves, who added that some institutions have seen their pool of potential students decrease by 50 per cent.


At London Metropolitan University, around 200 students “self-released” from places they had accepted after teacher-assessed grades were accepted — around 50 per cent more than in a normal year.

“There was a lot of shifting around,” said Gary Davies, the pro vice-chancellor for student recruitment.

London Met’s diverse intake, which includes a high proportion of mature and postgraduate students, have helped it stay on track to meet its recruitment targets this year. But Mr Davies said other universities are facing a significant shortfall. “There’s definitely a squeezed middle,” he said.

More competitive universities, meanwhile, are struggling to accommodate the unexpectedly large student intake. “What you have this week is admissions and planning staff in a mad scramble to find out exactly what our needs on different courses are going to be, how much accommodation do we need, what’s the capacity for extra curricular activities and so on,” said Erik Lithander, pro vice-chancellor for global engagement at Bristol University. 

One of the UK’s most sought after universities, Bristol has admitted several hundred more students than usual since the A-level grades were announced. The increase is manageable, but logistically challenging given social distancing requirements, said Dr Lithander.

But he warned that the numbers are not confirmed, as many students have not made a final decision about whether they will attend. “It’s not until the students actually walk through the door that we actually know who’s coming or not,” he said.

Nick Hillman, the director of the Higher Education Policy Institute, agreed that the final size of the intake will remain unclear for some time. “The real uncertainty is around international students and postgraduate students. We don’t know exactly how many international students will turn up until they actually turn up.”

He added that given the disruption of coronavirus, it is likely that dropout rates could be higher than average this year.

Vanessa Wilson, the chief executive of the Universities Alliance which represents technical universities, does not expect to have a clear idea of the admissions impact until next spring. “Taking into account January starts, postgraduates, and students changing their minds we may not have a full picture until March next year,” she said. 

The government has committed extra funding for more expensive courses, such as engineering or nursing, at universities with large intakes this year and has dropped restrictions on student numbers for those which involve work placements.

But the situation for those with a shortfall in student numbers is less clear. In July the government published details of rescue funding for struggling universities, but made clear that any bailout would come with tough conditions. Sector leaders are now pushing for a less onerous settlement.

University leaders also fear the government is underestimating the resources needed for the sustainability of the sector. They point out that while the number of 18-year-olds in the UK hit a low this year, from 2021 it will begin to rise and is projected to increase 27 per cent in the next decade.

“The sector still had a bumper year despite the demographic low,” said Mr Hargreaves. “We have a surge in demand coming.”

FT : Dieselgate could not happen again, VW executive claims

Dieselgate could not happen again, VW executive claims
German carmaker says it has strengthened its compliance and complaints procedures

Scandals such as “Dieselgate” could no longer pass undetected at Volkswagen due to the strengthening of compliance and complaints procedures under the guidance of a US court-appointed monitor, the German carmaker said on Monday.

“A company the size of Volkswagen, with 670,000 employees, probably will have issues in future,” Hiltrud Werner, VW’s board member responsible for integrity and legal affairs, told the Financial Times, but she added that “fraudulent activities, I’m absolutely certain, cannot creep into processes and the organisation for 10 years as it was with [Dieselgate]”.

Ms Werner’s comments come as Larry Thompson, a former deputy attorney-general in the George W Bush administration who prosecuted Enron officials, concluded his stint as independent compliance monitor at the world’s largest carmaker.

“Volkswagen is a better organisation today than it was three years ago,” said Mr Thompson, who was appointed to the role as part of a US consent decree, but he warned that “continued vigilance” would be required to prevent further wrongdoing.

The diesel emissions scandal, which came to light in 2015, forced VW to admit to installing software in 11m vehicles that could manipulate nitrogen oxide tests.

The scandal has already cost the manufacturer more than €32bn in legal fees, settlements and compensation, a similar sum to VW’s investment package into electric vehicle technology.

However, despite admitting to wrongdoing in the US, and Germany’s Federal Motor Transport Authority declaring that the software installed was a “defeat device”, VW has always denied fraud in Europe, where it was forced to recall millions of cars.

Ms Werner, who joined VW’s management board in 2017, said a new “speak-up culture” would make it easier for employees to bring wrongdoing to the attention of the company’s compliance department, which has grown from 30 people to 130.

She added that approximately 2,000 reports come through VW’s whistleblower service each year, of which 60 to 70 per cent turn out to be notifications of “serious violations”, including breaches of labour law and environmental law.

The former BMW executive also insisted that with the introduction of a new code of conduct, “everyone knows what the company stands for”, and that if there was an ongoing scandal, such as human rights abuses somewhere in VW’s vast supply chain, it would be flagged.

The carmaker has repeatedly defended its decision to continue to produce cars in the Chinese region of Xinjiang, which is home to so-called “re-education” camps, in which more than 1m Muslims, mostly Uighurs, have been detained.

Earlier this year, VW was forced to apologise for the publication of an apparently racist Golf 8 advertisement, which the company blamed on a lack of “intercultural sensitivity”. 

Ms Werner said that VW’s 20-person supervisory board needed to be more diverse, and include a representative from Asia, which is the group’s largest market.

“A company like Volkswagen probably should have an expert on energy supply in the board room and a digital expert,” she added, arguing that the Wolfsburg-based auto giant needed more people at the top who would ask “uncomfortable questions”.

WSJ : Revlon Faces Debt Crunch After Bond Exchange Fails

Revlon Faces Debt Crunch After Bond Exchange Fails
Cosmetics company’s inability to garner support for debt swap comes as majority owner Ron Perelman reshapes his investment portfolio

Revlon Inc. has failed to complete a distressed-bond exchange that would have extended a debt maturity and given the troubled cosmetics company more time to get a handle on hundreds of millions in debt due in the coming months.

The New York-based company sought at least 95% participation in the exchange offer, which would have extended until 2024 the maturities on bonds scheduled to come due in February. But the deal generated little interest among bondholders owning the 5.75% notes, which total about $400 million. Only about 5% of the bondholders said they would accept the new securities, the company said Monday.

Unless Revlon can find another solution, the outstanding debt will trigger several other term loan facilities to come due in mid-November.

“We are continuing to work through options for addressing these maturities and will have further updates at the appropriate time,” the company said Monday.

Billionaire Ron Perelman’s investment firm, MacAndrews & Forbes Inc., owns 87% of Revlon stock. Mr. Perelman has recently moved to reshape the MacAndrews portfolio amid fallout from the coronavirus pandemic.

Revlon’s financial standing is highly challenged due to the coming maturities. Its bonds trade at deeply distressed levels, including some that changed hands last week at just 14 cents on the dollar.

During Revlon’s quarterly earnings call last month, a listener brought up the exchange offer and asked management about plans to deal with its capital structure. “You clearly don’t have enough cash to meet your covenants,” the participant said. “It seems like you’re just kind of bouncing from one near-crisis to the next.”

Debra Perelman, Revlon’s chief executive and Mr. Perelman’s daughter, said the company was “hyper-focused” on liquidity and on completing the exchange offer. Revlon is also always talking with lenders about how to deal with maturities as they come due, she said.

Revlon last year hired Goldman Sachs Group Inc. to help review strategic alternatives, including the sale of all or parts of its business, as it copes with changing consumer tastes.

Mr. Perelman has said that he has been resetting his priorities to include a simpler and less leveraged business life. Over the past six months, Mr. Perelman said he has been mostly at home, like most New Yorkers, and spending more time with his family.

MacAndrews has been streamlining operations and selling some assets. Mr. Perelman said the company also would seek new investment opportunities.

In recent days, Mr. Perelman struck a deal to sell most of MacAndrews & Forbes’s 39% stake in Scientific Games Corp. to a group of investors led by Australia’s Caledonia Investments. Las Vegas-based Scientific Games, which provides products and services to lottery and gambling companies, has been hurt by shutdowns related to the pandemic. Mr. Perelman has served as executive chairman of Scientific Games and has owned shares in the company for more than a decade.

MacAndrews & Forbes owned about 36.8 million shares of the gambling-industry supplier. Shares of Scientific Games closed Friday at $18.97 a share. MacAndrews is selling a 35% stake for $28 a share.

Scientific Games has more than $10 billion in liabilities. It recorded a loss of $353 million for the first half of the year, more than triple its year-earlier loss.

Last year, another MacAndrews & Forbes business, Deluxe Entertainment Services Group Inc., won court approval of a bankruptcy plan that removed Mr. Perelman as owner and put senior lenders in control of the video-services company.

In July, private-equity firm KPS Capital Partners LP agreed to buy Humvee maker AM General LLC from MacAndrews for an undisclosed amount.

The MacAndrews portfolio also includes large stakes in publicly traded drug companies Siga Technologies Inc. and vTv Therapeutics LLC. Other businesses in which MacAndrews owns stakes include privately held analytics businesses Vericast Corp. and Valassis Communications Inc. and checks maker Harland Clarke Corp., according to its website.

>>> US Close Dow +1.18% S&P +1.27% Nasdaq +1.87% Russell +2.65%

Closing Stock Market Summary

The S&P 500 rose 1.3% on Monday, as a spate of corporate deals and encouraging vaccine news helped the market rebound from back-to-back weekly declines. The Nasdaq Composite gained 1.9%, and the Dow Jones Industrial Average gained 1.2%. The Russell 2000 outperformed with a 2.7% gain.

The gains were broad and steady, with all 11 S&P 500 sectors finishing in positive territory, including seven that rose at least 1.0%. The information technology sector's 2.1% gain was the most influential, but the real estate sector (+2.2%) eked out the top spot. The communication services sector (+0.1%) underperformed. 

Starting with the key M&A news, NVIDIA (NVDA 514.89, +28.31, +5.8%) agreed to acquire Arm Holdings from Softbank for $40 bln in cash and stock; Gilead Sciences (GILD 66.34, +1.44, +2.2%) agreed to acquire Immunomedics (IMMU 83.65, +41.40, +98.0%) for about $21 bln, or $88.00 per share, in cash; and Verizon (VZ 60.32, +0.53, +0.9%) agreed to acquire Tracfone for $6.25 bln in cash and stock. 

Separately, Oracle (ORCL 59.46, +2.46, +4.3%) reportedly formed a partnership with TikToK U.S. after Microsoft's (MSFT 205.41, +1.38, +0.7%) acquisition bid was rejected. Walt Disney's (DIS 131.20, -0.55, -0.4%) ESPN entered into two separate multi-year agreements with Caesars Entertainment (CZR 55.39, +5.28, +10.5%) and DraftKings (DKNG 48.62, +7.16, +17.3%).

As for today's dose of vaccine news, AstraZeneca (AZN 54.02, +0.29, +0.5%) resumed its COVID-19 vaccine trials in the UK. Pfizer (PFE 37.01, +0.94, +2.6%) for its part reiterated expectations to have conclusive results from its Phase 3 COVID-19 vaccine trial in October while also planning to expand enrollment. 

Citigroup (C 48.15, -2.85, -5.6%) was a notable laggard after its CFO issued a revenue warning and The Wall Street Journal reported that the company could get reprimanded for failing to improve its risk-management systems. Shares of Citigroup fell 5.6%, versus a 1.3% gain in the S&P 500 financials sector. 

The U.S. Treasury market was rather quiet today despite the bullish action in the stock market. The 2-yr yield increased one basis point to 0.14%, and the 10-yr yield was flat at 0.67%. The U.S. Dollar Index declined 0.3% to 93.06. WTI crude futures decreased 0.3%, or $0.12, to $37.22/bbl.

Investors did not receive any economic data on Monday. Looking ahead to Tuesday, investors will receive Industrial Production and Capacity Utilization for August, the Empire State Manufacturing Survey for September, and Import and Export Prices for August. 

  • Nasdaq Composite +23.2% YTD
  • S&P 500 +4.7% YTD
  • Dow Jones Industrial Average -1.9% YTD
  • Russell 2000 -7.9% YTD