FT : Gold is looking more and more attractive

Gold is looking more and more attractive
Rising US liabilities for entitlements could undermine the dollar

Gold bugs have always struck me as paranoid. You have to really believe the sky is falling in order to horde physical bars in a digital age. So, it’s rather worrying that some investors and central bankers are talking up gold.

The Dutch Central Bank recently argued in an article that if there were to be a major monetary reset, “gold stock can serve as a basis” to rebuild the global monetary system. “Gold bolsters confidence in the stability of the central bank’s balance sheet and creates a sense of security.”

Talk of gold, however, does not. Investor Ray Dalio recently spooked attendees at the Institute for International Finance conference when he mentioned the possibility of a flight to gold because of his concerns about America’s fiscal position.

That is not a new point. Since at least 2016, financial titans including JPMorgan chief Jamie Dimon and hedge fund manager Stanley Druckenmiller have pointed out that unfunded pension and healthcare entitlements are a looming iceberg for the US economy. Indeed, one theory about the recent crisis in the “repo” overnight lending market is that it was caused by the federal deficit and the increasing unwillingness of investors outside the US to fund it.

But Mr Dalio went further, concluding that the American entitlement crisis meant the US Federal Reserve would have to continue to inflate its own balance sheet indefinitely, and keep rates low (or even negative) well into the future so the US could keep paying its bills.

That would depreciate the US dollar. Taken to its extreme, that never ends well. Prior experiments with rapidly falling currencies include late-third century Rome, Germany’s interwar Weimar Republic and Zimbabwe. At some point, Mr Dalio argued, nobody would want to own US debt or the dollar, and investors would look to other assets for safety. “The question is, what else?” he asked. “That’s the environment I think that we’ll be in. And there’s a saying that gold is the only asset you can have that’s not somebody else’s liability.”

I haven’t bought any gold yet myself, though I did sell out of equities entirely in August. That decision has been somewhat painful given the recent upsurge in the S&P 500, and yet it is one that I do not regret. There is logic in believing — as I do — that US blue-chips and bonds are no longer a safe haven while also believing that prices could stay high for some time to come. After all, holding two seemingly contradictory thoughts in your head at once is the sign of a mature mind. I believe US stock prices are staying up for precisely the same reason that investors might need to be in gold someday.

Analyst Luke Gromen laid out the mathematical logic of this very well in a recent newsletter. He calculates that US annual entitlement payments, which he defines as Medicare, Medicaid and Social Security, plus defence spending plus interest on the federal debt adds up to 112 per cent of US federal tax receipts.

That total has risen from 103 per cent only 15 months ago and 95 per cent two years ago, as government revenue fell due to President Donald Trump’s tax cuts. The proceeds of those cuts helped to further inflate equity prices. The US has become “utterly dependent on asset price inflation for tax receipts”, Mr Gromen writes, adding that the only way the US will be able pay its yearly bills is for asset prices to climb on their own, or for the Fed to “print enough money to make asset prices rise”.

I expect the Fed will, like every central bank before it, do what is politically required. Neither the US nor the world can afford for America to nominally default on its Treasury bills. So, stock prices will rise — for now. The essence of economic policy is, as Joseph Schumpeter reportedly put it, “politics, politics, politics”.

Share price inflation has been under way since the Fed switched gears and began lowering rates in July. It will probably be helped along by the easing of financial regulations enacted after the 2008 crisis, and possibly even a new round of tax cuts before the 2020 elections. Mr Trump measures his own success by that of the market.

But in the longer run, this financially engineered growth must erode confidence in the dollar, particularly at a time when the US and China are going in different directions. China is now the world’s largest natural gas buyer, and is looking to start setting prices for this and other commodities in its own currency. China is also doing more business in euros, as it tries to woo Europe into its own economic orbit. China recently issued its first euro-denominated bonds in 15 years. It is also moving away from buying oil in dollars and strengthening ties with EU companies such as Airbus.

The de-dollarisation of Eurasia would support Mr Dalio’s worldview. So would a shift to a non-dollar reserve asset such as gold. Such a change would force the US to sell dollars in order to settle its balance of payments in the new, neutral reserve asset.

One could argue that even if the US dollar were to weaken and creditors to lose faith in America’s ability to repay its debt, markets might still remain high for a period of time. But we are undergoing a period of deglobalisation. And history shows that when that happens, it eventually tends to trigger asset price collapses in whatever country is associated with the “old order”. No wonder gold bugs abound.

FT : Uber in last-ditch talks to extend London licence

Uber in last-ditch talks to extend London licence
City’s transport agency wants more information on passenger protection and driver vetting

Uber is fighting a last-ditch battle to continue operating in London, as the city’s transport agency weighs whether to renew its licence to operate in the UK capital.

Transport for London in September granted Uber an unexpectedly short two-month permit for its ride-hailing service, setting the clock ticking on a frantic round of negotiations. Ahead of the expiry of its current licence just before midnight on Monday, eleventh-hour discussions between Uber and TfL continued over the weekend. 

Uber and TfL declined to comment on Sunday. 

London is one of five cities, alongside New York, Los Angeles, San Francisco and São Paulo, that together accounted for almost a quarter of Uber’s gross bookings last year. 

That makes securing a renewal in London vital to chief executive Dara Khosrowshahi’s push towards more predictable and profitable growth. Uber has also positioned London as a leading example of its attempt to become a one-stop shop for any kind of transportation and logistics, by integrating not just rides but bikes, food delivery and even public transit into its app. 

Yet the company is already facing resurgent competition in the city from rivals including Ola, Kapten and Bolt. 

Uber has already been denied its London licence once before. In 2017, after a series of scandals at the San Francisco-based company, TfL determined it was not a “fit and proper person” to operate in London. After a court battle, Uber overturned that decision in June 2018 but the resulting 15-month permit imposed strict new conditions. 

Two months ago, TfL added even more requirements around protecting passengers and vetting drivers, including insurance and document checks. London’s transport agency said then that the brief licence period was to “allow for scrutiny of additional information” that TfL had demanded from Uber. 

Uber said it would co-operate with the agency but in the meantime, its opponents have sought to exploit the uncertainty. Steve McNamara, general secretary of the Licensed Taxi Drivers’ Association, said it “clearly shows that the firm have failed their probation and are still a huge threat to public safety”. 

This month, on Uber’s quarterly earnings call, Mr Khosrowshahi said the company continued to “have a dialogue” with TfL. London is just one of its regulatory battlegrounds, as Uber fights against new rules in its home state of California that would force it to treat drivers as employees, instead of contractors. 

“When I look at the regulatory framework on a global basis, we always have ups or downs, but the teams are making investments and I think more and more cities and countries around the world are coming to the conclusion that Uber is a good thing for the country and Uber is a good thing for their city as well,” Mr Khosrowshahi said. 

However, he also pointed to London as an example of how “competitive flare-ups” could re-emerge, in spite of its overall push towards greater stability in its ride-hailing business. Its London rivals have flooded the market with discounts and promotions for drivers and passengers, driving down prices and making it harder for Uber — or anyone else — to turn a profit in the city.

WSJ : LVMH Nears Deal to Acquire Tiffany for $16.3 Billion The boards of the two

LVMH Nears Deal to Acquire Tiffany for $16.3 Billion
The boards of the two luxury companies are meeting Sunday to approve the deal, with an announcement set for Monday

LVMH Moët Hennessy Louis Vuitton LVMUY 0.18% is nearing a deal to buy famed jeweler Tiffany TIF -0.78% & Co. for more than $16 billion, according to people familiar with the matter.

The companies have reached a preliminary agreement on a deal that values Tiffany at $135 a share, or about $16.3 billion, the people said.

The boards of the luxury companies are meeting Sunday to finalize the deal and unless there is a last-minute hitch, it is expected to be announced Monday if not sooner.

The companies have been discussing a deal since LVMH last month privately approached Tiffany with an offer to buy the upscale jeweler for $120 a share.

Shares of New York-based Tiffany have surged on hopes of a deal at a higher price, closing Friday at $125.51. The shares traded near $140 in the middle of last year.

LVMH has a market value of nearly €200 billion ($220 billion). Buying Tiffany would increase the Paris-based company’s exposure to jewelry, one of the fastest-growing businesses in the luxury sector.

The Financial Times earlier reported that a deal is close.

FT : LVMH nears deal to buy Tiffany for $16.7bn

LVMH nears deal to buy Tiffany for $16.7bn
Luxury goods giant poised to announce acquisition of US jeweller on Monday

France’s LVMH is nearing a $16.7bn deal to buy Tiffany & Co, after the US jeweller managed to squeeze another higher offer from Bernard Arnault’s luxury group, according to people close to the deal.

The boards of both companies are set to meet on Sunday to approve the latest $135 per share bid from LVMH for the US maker of diamond engagement rings. The all-cash bid values Tiffany shares at $16.3bn and the company has about $350m of net debt.

The takeover may be announced as soon as Monday, these people said, though they cautioned that there were still a few more hurdles to overcome before a transaction was signed.

The deal, one of the biggest in the career of Mr Arnault, Europe’s richest man, would deliver the French owner of Louis Vuitton, Dior and Sephora a new brand that has a considerable footprint in the US and which is popular with Asian customers.

The two sides have been in talks for weeks since it was revealed that LVMH tabled its first offer at $120. Last week, the French group increased its offer to $130 per share and was granted access to Tiffany’s books to conduct due diligence.

Tiffany and LVMH did not immediately respond to a request for comment.

WWD : EXCLUSIVE: Il Makiage Acquires Israeli Tech Start-up NeoWize

EXCLUSIVE: Il Makiage Acquires Israeli Tech Start-up NeoWize
NeoWize will join Il Makiage's team in Tel Aviv.

Il Makiage is continuing to invest in tech.

The maximalist makeup brand unveiled its app and e-commerce platform for microinfluencers, Kenzza, over the summer. In an effort to build out its 25-person tech team, the brand is announcing today that it has acquired NeoWize, a data science start-up based in Israel. NeoWize will join Il Makiage’s team in Tel Aviv, helping the beauty brand further its efforts in artificial intelligence.

“With this NeoWize acquisition, we keep focused on staying at the intersection of beauty, technology and data,” said Oran Holtzman, chief executive officer of Il Makiage. “For us, it’s a huge milestone, adding such a force and proven technology to our existing data capabilities.”

Il Makiage has placed a large focus on data collection as a means of improving what it has dubbed a “broken” online shopping experience. Its AI capabilities include PowerMatch, a quiz meant to match customers with their proper foundation shades with 94 percent accuracy. The quiz has been taken by more than six million users since it launched earlier this year. Il Makiage’s foundation has more than 25,000 reviews.

NeoWize specializes in machine learning, specifically active machine learning. The difference, said cofounder Omer Nevo, is that active machine learning doesn’t just try to convert the user, it seeks to learn more about him or her for potential conversion at a later date.

“Active machine learning means we try to get as much information as possible,” explained Nevo, who previously spent 12 years as an algorithm researcher in the elite intelligence unit of the Israeli defense forces. “That means we can learn much faster what is your intention and what your preferences are. It creates a better user experience.”

NYT : Henry Paulson Sounds Alarm: U.S.-China Relations May Only Get Worse

Henry Paulson Sounds Alarm: U.S.-China Relations May Only Get Worse
Whether or not a trade truce is reached, the two countries have been pushed further apart, the former Treasury secretary said.

by Andrew Ross Sorkin

The United States and China will eventually settle their differences over tariffs — maybe even reach a deal that allows both sides to say they won.

But don’t be fooled. Even if the world’s two biggest economies reach a truce, their relationship is likely to get worse.

That’s the bold warning that Henry M. Paulson Jr., the former Treasury secretary, plans to make to many of the world’s top business and political leaders on Thursday at a Bloomberg L.P. event on the economy in Beijing. During an interview with me this week, he shared a copy of the speech, previewing some of what he will say.

Mr. Paulson has spent a career trying to work with China, starting as a banker at Goldman Sachs, where China represented an enormous business opportunity, and later as Treasury secretary. His think tank, the Paulson Institute, focuses on China. He has close ties to senior officials in both countries and is often consulted by both sides — so the alarm bells he is ringing are likely to sound loudly in corner offices around the globe.

The danger, Mr. Paulson said, is that the animosity between the two countries has merged “military prisms and ideas into economic policies.”

“It should concern every one of us who cares about the state of the global economy that the positive-sum metaphors of healthy economic competition are giving way to the zero-sum metaphors of military competition,” he is planning to say.

Over the summer, President Trump declared on Twitter: “We don’t need China and, frankly, would be far better off without them.” He sent shock through industry when he added: “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.”

Mr. Paulson never mentions Mr. Trump by name in his speech. He is hopeful that the two sides will reach the first stage of an agreement, but he suggested that inflammatory language and the use of tariffs by both sides had been deeply damaging.

“Even when this is done, it won’t be the end of the story,” he said. “The very idea of tariffs has been relegitimated after taking a wallop from the dismal failures of the 1930s.” He added, “We are now living in a world where tariffs have become normalized and even applauded.”

Most worrisome to Mr. Paulson is the prospect that the United States could close off its financial markets to Chinese investment, or even kick some Chinese companies out of American stock indexes.

“Decoupling China from U.S. markets in this way would, of course, harm China,” he said. “But it would not be in America’s interest. It would eventually threaten U.S. leadership in finance, as well as New York City’s role as the world’s financial center. And it would help other financial centers like Tokyo, London and Singapore. And, over time, Shanghai.”

Worse, he described what would happen in an imagined global financial calamity, similar to the 2008 crisis, which consumed Mr. Paulson’s tenure as Treasury secretary.

“When the next crisis comes — and a crisis will come, because financial crises are inevitable — we will regret it if we lack mechanisms for the world’s first- and second-largest economies to coordinate,” he said.

Mr. Paulson raised a worst-case scenario that is often dismissed by policymakers but that he believes deserves a lot more attention.

“Let’s not forget that China is a very large purchaser and holder of U.S. Treasuries,” he said, referring to China ownership of over $1 trillion in United States debt. “This helps support U.S. monetary policy, enabling lower interest rates and supporting our spending and lack of saving.”

Then, he addressed what virtually no United States policymaker has been willing to acknowledge aloud: If the relationship between the countries deteriorates further, China could decide to sell — or at least not buy — as many Treasury bonds, potentially sending their value down and pushing interest rates much higher. That would undoubtedly hurt China, but it could be tremendously damaging to us, an idea this column raised last year.

“That’s why the unilateral, reciprocal and retaliatory steps on both sides concern me so much,” Mr. Paulson said.

Even if the United States isn’t able to accomplish all it wants in leveling the playing field with China, Mr. Paulson said, the very idea of walking away from the country is a worse outcome.

“It is not in our interest to isolate ourselves when the rest of the world is not going to decouple from China,” he said.

Perhaps most provocatively, Mr. Paulson said the United States and China were creating divisions on technology standards in the name of national security.

“I take my nation’s national security as the highest priority of all,” he said. “But when technologies also have the potential for widespread and beneficial commercial use, sequestration risks ceding economic leadership to a rival company and country.”

He added: “A decision, after all, to protect too much of a country’s technology will ultimately undermine both economic competitiveness and national security.” He said he believed there was a middle ground that would allow for tech systems to work in both countries.

Mr. Paulson told me that he titled his speech “Delusions of Decoupling.” But he was quick to point out that the title “doesn’t mean decoupling is a delusion.”

“The delusion,” he said, “is that it will be easy or beneficial.”

WSJ : How a Facebook Employee Helped Trump Win—But Switched Sides for 2020

How a Facebook Employee Helped Trump Win—But Switched Sides for 2020
James Barnes is now focused on using digital-ad strategies to try to get Trump out of office

After the 2016 presidential election, Republican Party officials credited Facebook Inc. FB 0.45% with helping Donald Trump win the White House. One senior official singled out a then-28-year-old Facebook employee embedded with the Trump campaign, calling him an “MVP.”

Now that key player is working for the other side—as national debate intensifies over Facebook’s role in politics.

James Barnes left Facebook this spring, and said he is now dedicated to using the digital-ad strategies he employed on behalf of the Trump campaign to get President Trump out of office in 2020. Mr. Barnes, who had been a lifelong Republican, has registered as a Democrat and recently started working with a progressive nonprofit called Acronym, where former Obama campaign manager David Plouffe is on the board.

In a series of interviews over the past three weeks, Mr. Barnes discussed how he helped the Trump campaign leverage some of Facebook’s powerful tools and products to extend its reach. He talked about the pressure he felt behind the scenes, both from the Trump campaign and some colleagues at Facebook. His account sheds new light on Facebook’s role in the Trump campaign and what Democrats are trying to learn from it going into the next presidential election.

Mr. Barnes said he remains supportive of Facebook’s mission but is uneasy about the company’s influence on political discourse. One question that has nagged him over the past three years about his time at Facebook: “Did I actually do the right thing?”

Social-media platforms are sure to be a critical battlefield in 2020, with political spending on digital advertising expected to hit $2.9 billion, up from $1.4 billion in 2016, according to consulting firm Borrell Associates Inc. The Trump re-election campaign is already pouring money into Facebook ads, and Democratic candidates are ramping up.

Facebook has openly grappled with its approach to political advertising in the wake of revelations that Russian entities purchased digital ads designed to influence the results of the 2016 presidential election. It has also faced criticism for giving political campaigns access to sophisticated targeting tools, which in some cases allowed political actors to single out groups of users for misleading ads. In response, Facebook has made changes to slow the spread of misinformation and eliminated commissions for employees who sell political ads. The company is also considering ways to make it harder to target political ads to very small groups of people.

Another big change that came out of this reckoning: Last year, Facebook said it would no longer embed its employees with political campaigns, as Mr. Barnes had done.

Chief Executive Mark Zuckerberg has discussed his own soul-searching around whether Facebook should accept political ads at all, eventually deciding that it should and that it wouldn’t fact-check those messages as it does other content.

Facebook has played an increasingly large role in each of the last three U.S. presidential elections. In 2008, Barack Obama’s campaign was lauded for using Facebook to help reach young voters. In 2012, President Obama’s re-election campaign created an app that plugged into the Facebook developer platform and allowed users to prod friends in swing states to vote.

The company’s political ad strategy was initially modeled on its playbook for top corporate clients: Facebook employees offered on-site support to the U.S. presidential candidates who were considered the presumptive nominees for their parties.

Mr. Barnes joined Facebook’s political ad sales team in June 2013 in Washington, following a stint at a digital consulting firm that worked for John McCain’s two presidential campaigns.

Like other tech companies, Facebook divvies up its political ad sales team by party. Republican employees usually work with Republican clients; Democrats work with Democrats. Mr. Barnes was part of the team that exclusively dealt with Republicans.

In many ways, Mr. Barnes is the archetype of a Silicon Valley tech worker. He’s analytical and measured. He’s earnest and idealistic, describing on multiple occasions his desire to do good in the world. He fasts intermittently, sometimes going 72 hours between meals.

In other ways, he cuts against type. He grew up in Hendersonville, Tenn., in an evangelical family that attended church on Wednesday nights. His mother, Tami West, says he was an Alex P. Keaton type: independent and staunchly Republican.

By the time the 2016 campaign was heating up, the developer platform used by the Obama campaign was mostly closed off, as part of a shift in Facebook’s strategy, but Facebook’s ad-targeting tools had grown more sophisticated.

Mr. Barnes became the Trump campaign’s go-to resource for figuring out how to maximize those tools. In April 2016, after a weekend at the Coachella music festival in California, he and his manager flew to San Antonio to meet with Brad Parscale, who became the digital director of the Trump campaign. In Mr. Parscale’s office, and later at Bohanan’s, a local steak house, they discussed how Facebook could help the campaign.

One of the first things Mr. Barnes and his team advised campaign officials to do was to start running fundraising ads targeting Facebook users who liked or commented on Mr. Trump’s posts over the past month using a product now called “engagement custom audiences.”

The product, which Mr. Barnes hand-coded, was available to a small group, including Republican and Democratic political clients. (The ad tool was rolled out widely around Election Day.) Within the first few days, every dollar that the Trump campaign spent on these ads yielded $2 to $3 in fundraising dollars, said Mr. Barnes, who added that the campaign raised millions of dollars in those first few days.

Mr. Barnes frequently flew to Texas, sometimes staying for four days at a time and logging 12-hour days. By July, he says, he was solely focused on the Trump campaign. When on-site in the building that served as the Trump campaign’s digital headquarters in San Antonio, he sometimes sat a few feet from Mr. Parscale.

The intense pace reflected Trump officials’ full-throated embrace of Facebook’s platform, in the absence of a more traditional campaign structure including donor files and massive email databases.

The Trump campaign would give Mr. Barnes certain videos or images, such as a video of Donald Trump Jr. urging voters to build the border wall. Mr. Barnes would experiment with different ways to display the ad. One ad might say “donate” while another would say “give.” Some videos would be vertical; others were square. Buttons could be highlighted in red or green.

Each variation of the ad would be targeted to certain demographics. It could be as specific as 18-to-24 year old men who visited the Trump campaign donation page and made it to the third step but never finished, according to Mr. Barnes. They tested all the variations and doubled down on those that raised the most money.

Trump campaign officials have said that some days the campaign churned out 100,000 separate versions of Facebook ads. Mr. Parscale is overseeing the Trump re-election campaign this year.

One official from the 2016 Trump campaign said it primarily relied on Mr. Barnes for troubleshooting and complained to Facebook about periodic technical issues that the campaign argued hurt the campaign’s performance. The official, who is also working on Mr. Trump’s re-election campaign, declined to comment further.

Mr. Barnes’s Democratic counterparts at Facebook weren’t getting the same reception. Tatenda Musapatike, a former Facebook employee who worked with Democratic PACs and other independent expenditure groups in 2016, said she felt many Democrats held Facebook at arm’s length.

“For James, he’d suggest something and they’d say, ‘Sure, let’s try it,’ ” said Ms. Musapatike. “It was a battle for us to get anything accepted at a much smaller scale.”

Hillary Clinton’s campaign didn’t have Facebook employees stationed on site, according to people familiar with the campaign. One former Clinton campaign official said the campaign didn’t want to give Facebook staffers a “24/7 opportunity” to sell more ads by embedding with the staff. A spokesman for Mrs. Clinton didn’t respond to a request for comment.

Facebook referred to its prior comments on the embed program. Last year, Facebook told lawmakers that it didn’t assign anybody “full-time” to either campaign and that it offered “identical support” to both sides.

Mr. Barnes said the experience was exhilarating but isolating. He was thrilled that the tools he helped build were working. But while he had a good relationship with Mr. Parscale and the campaign’s digital advertising director, Gary Coby, at times Mr. Barnes had reservations about Mr. Trump’s tone and rhetoric.

Still, Mr. Barnes said he felt he had a responsibility to help Facebook follow through on its commitment to help candidates regardless of their politics.

“I used to describe my job as defending Trump to Facebook and defending Facebook to Trump,” he said.

Internally, Facebook staffers questioned the company’s role in politics. Sometimes they would ask why Facebook was offering assistance to the Trump campaign in the first place, according to Mr. Barnes and other former Facebook employees.

The critiques wore on Mr. Barnes. “It felt really isolating and lonely that I was at the nexus of all of this stuff,” he said.

During the campaign, Trump campaign officials frequently threatened to go to the press if Mr. Barnes and other Facebook employees failed to address problems to their satisfaction, he said.

For example, the Trump campaign needed a large credit line from Facebook, according to Mr. Barnes and others familiar with the situation. This issue posed unique challenges. Facebook sometimes extends credit to a select group of digital agencies, but Mr. Parscale’s outfit didn’t qualify for a large line because it didn’t have a track record with Facebook, according to people familiar with the matter. The Trump team also wanted to pay for ads with a credit card, but Facebook’s payments system wasn’t set up to handle payments of as much as $300,000 to $400,000 a day on a credit card, according to Mr. Barnes and others familiar with the matter.

As employees looked for ways to mend the problem, Mr. Parscale texted Mr. Barnes to say Mr. Trump would go on TV and “say Facebook was being unfair to him” if the issue wasn’t resolved quickly, Mr. Barnes said. Eventually, Facebook came up with a fix.

Mr. Barnes said he felt responsible for protecting Facebook from these potential attacks.

Mr. Barnes said he ultimately voted for Mrs. Clinton. Ms. Musapatike said Mr. Barnes was in a funk after the election. “He had a difficult time reckoning with the impact of the election and his work,” she said.

A few days after the election, Mr. Coby directly praised Mr. Barnes on Twitter. In a now-deleted tweet, he said “@jameslbarnes of FB was a MVP.”

Being called out by name at a time when Trump supporters were being targeted by threats online was “terrifying,” Mr. Barnes said. Facebook’s security team called him with instructions on how he could protect himself and his privacy online.

Months later Mr. Barnes moved to San Francisco, joining a team that helped retailers like Macy’s use Facebook’s products. He tried to forget politics.

In December 2017, Mr. Barnes said, he was interviewed for nine hours by investigators for special counsel Robert Mueller. At one point they asked him if he noticed any Russians hanging around the campaign, he said. “You wanna make a joke in that scenario,” he said, but “it’s not the opportunity to make a joke.” He told them he didn’t see Russians.

Mr. Barnes said he also spoke to the Securities and Exchange Commission about the company’s connection to Cambridge Analytica, which purchased data of about 87 million users of Facebook from a researcher without the consent of Facebook or the users.

Mr. Barnes doesn’t think Cambridge Analytica uploaded any illicitly gained Facebook user data to target ads, but that it wasn’t the norm for Facebook employees to ask for such details. Former Cambridge Analytica officials have denied using the data for the 2016 election. The SEC declined to comment.

At one point, in mid-2018, Mr. Barnes helped design Facebook’s much-touted war room for managing election integrity in the U.S. and abroad. Shortly before a press junket to showcase the effort, he said, two Facebook public-relations officials advised him to stay away from the event in case journalists raised questions about his role helping the Trump campaign.

That week, as he sat at his desk surrounded by empty seats, his frustration reached a breaking point. “[I’m thinking], when am I going to stop paying the price for this?”

In early 2019, Mr. Barnes took advantage of a Facebook perk called “recharge” which gives employees 30 days off after they have been at Facebook for five years.

He considered going back to Facebook, but opted to take an active role opposing Mr. Trump’s re-election. In a private Facebook post on Aug. 5, he wrote that Mr. Trump’s slogan, Make America Great Again, was about “activating the deepest, darkest, soul of white nationalism.”

One of his calls was to former colleague Ms. Musapatike, who left in March to join Acronym as its senior director of campaigns overseeing the group’s online voter registration and mobilization programs. Chris Cox, Facebook’s former chief product officer, is now an informal adviser to Acronym and, people familiar with the matter say, one of its donors.

Ms. Musapatike warned Mr. Barnes that he might be viewed with suspicion at Acronym because of his work for Mr. Trump. She vouched for Mr. Barnes with Tara McGowan, the founder and chief executive of Acronym.

Mr. Barnes decided he liked Acronym’s goal to beat Mr. Trump at his own game, online and on Facebook. This month, Acronym and its affiliated PAC announced plans to spend $75 million on digital ads. Mr. Barnes oversees Acronym’s analytics, helping Acronym understand if its ads work.

Mr. Plouffe believes the former Facebook employee gives Democrats a secret weapon as part of a revamped effort to meet Mr. Trump on the social-media battlefield.

“He understands the most dominant platform in politics exceedingly well,” Mr. Plouffe said of Mr. Barnes. “He thinks differently from someone who grew up in politics a decade or more ago.”

WSJ : Novartis Nears Deal to Buy Cholesterol-Drug Maker The Medicines Co.

Novartis Nears Deal to Buy Cholesterol-Drug Maker The Medicines Co.
Acquisition would help Novartis bulk up in the heart-treatments market

Novartis AG is nearing a deal to buy cholesterol-drug maker The Medicines Co. for nearly $7 billion, in an expensive bid to expand its reach in the lucrative market for heart treatments.

The pharmaceutical giant has agreed to pay $85 a share in a deal that could be announced this weekend, people familiar with the matter said.

Using a fully diluted share count, the deal is worth about $9.7 billion, one of the people said.

The acquisition would help Novartis, which has a market value of more than $200 billion, bulk up in a corner of the health-care market it is already targeting with drugs including its heart-failure treatment Entresto.

Novartis, based in Basel, Switzerland, had high hopes for Entresto, but early sales haven’t met Wall Street expectations. Prescriptions have picked up, however, and sales jumped to $430 million in the third quarter.

The cholesterol drug under development by Medicines, based in Parsippany, N.J., is aimed at patients who aren’t well-treated by older statin pills.

Pairing the Novartis and Medicines therapies would give sales representatives more products to peddle to heart doctors, potentially boosting sales of each.

The Medicines drug is based on relatively new technology that uses the body’s molecular messengers, known as RNA, to turn off genes playing a role in a disease.The technology is known as RNA interference.

Novartis Chief Executive Vas Narasimhan has been trying to steer the drugmaker into newer technologies through deals, such as its $8.7 billion acquisition of AveXis.

Novartis has faced scrutiny for pricing AveXis’s Zolgensma gene therapy at $2.1 million, and for waiting to notify the U.S. Food and Drug Administration about the manipulation of some of the drug’s test data until after the therapy’s approval.

So far, sales of these so-called PCSK9 drugs from Amgen Inc., Sanofi SA and Regeneron Inc. haven’t met expectations, partly because health insurers have recoiled at their high prices.

Supporters say the Medicines entrant, known as inclisiran, will be different because it is based on a different kind of technology that interferes with the production of a key protein. And patients wouldn’t have to take the drug as often as the others.

Medicines executives have said they would price their cholesterol drug lower, though a deal would leave the decision in Novartis’s hands.

Medicines has said it would file for the therapy’s approval by year’s end in the U.S. and in the first quarter of 2020 in Europe. Medicines licensed inclisiran from Alnylam Pharmaceuticals Inc.

Worldwide sales of cholesterol drugs are growing nearly 11% a year and are projected to reach $17.7 billion in 2024, according to EvaluatePharma. High cholesterol is a leading cause of heart disease.

Medicines shares have risen as the company has reported positive data from testing of its drug. The stock has nearly quadrupled this year—helped by a report from Bloomberg this week that the company was exploring a sale.

The shares closed at $68.55 Friday, meaning that the deal would value Medicines at 20% or more above that.

>>> Barron’s Weekend Summary: Cover story is positive on PFE, which is breaking

Barron’s Weekend Summary: Cover story is positive on PFE, which is breaking from its long-term business model to focus on new drugs; Kubernetes is the next big wave in computing

* Cover story: Positive on PFE: The pharma giant has been steadily shedding many of its businesses, and is taking its most radical step yet by selling consumer brands Advil and Chapstick and spinning off the division that makes Viagra; The moves mark the final break with a business model of many decades as Pfizer commits to focusing almost entirely on new drugs it can build or buy, a shift that provides sharper focus and a platform for faster growth, though there are risks.
* Tech Trader: Kubernetes, the Greek word for helmsman or pilot, is set to become the next big wave in computing—it is accelerating the transition away from legacy client-server technology by making cloud-native software development faster and better, allowing users to automatically deploy, manage, and scale software workloads in the cloud; VMW is among the companies facing the most risk from the growing trend.
* Trader: “With bond yields as low as they are, and the Fed keeping interest rates steady for the foreseeable future, stock valuation multiples won’t necessarily contract—and renewed earnings growth could be the catalyst if stocks were to go higher next year”; +/- I: The satellite company lost 70% of its value in the past two weeks and things could get worse—investors may still be too optimistic about how much money Intelsat could collect from a government sale of its stake in so-called C-Band spectrum for 5G; Overall chief executive tenure is down compared with a few years ago—Barron’s identified 108 S&P 500 chief executives who have been replaced over the past two years, and 56 CEOs on the index have less than one year on the job.
* Interview: Economist Keyu Jin—an associate professor at the London School of Economics and Political Science who is frequently tapped at global economic meetings to explain change in China—offers insight into the biggest China myths, what the next era of globalization will look like, and how younger generations will shake up the country.
* Profile: Randy Pearce, lead manager of the Grandeur Peak International Stalwarts fund, has an investment staff of 29 analysts and managers, focused exclusively on small to midsize stocks globally; the fund’s largest sector allocations are to consumer stocks, 27%, financials, 24%, and technology, 19% (holdings: St. James’ Place, B&M European Value Retail, Aalberts, LULU).
* Features: 1) The current investor narrative that everything is right with the world “papers over just how weak the economic data have become. Even worse, investors appear to have thrown caution to the wind as they load up on stocks out of fear of missing out. Combined, that could be a recipe for a sharp market downturn in 2020”; 2) Positive on SCHW: The market would love to see Charles Schwab and AMTD merge—the combined company would have more than $5T in assets and vast scale across asset management, advisory services, and trading, giving Schwab stock long-term benefits; 3) Cautious on CBOE: The differing market reception to the speed bumps of IEX and Cboe reflect a difference in whose trades they delay—the IEX delays all orders by 350 millionths of a second, but the proposed speed bump at Cboe’s EDGA would be asymmetric, delaying only incoming traders who seek to hit standing orders posted on EDGA by market makers; 4) Calculating the yield on an equity-income mutual fund is difficult for individual investors, given how many pieces to the puzzle and different yield readings there are, but those who turn to sources such as Morningstar need to be aware that a fund’s yield can vary significantly depending on what metric is used.
* European Trader: Positive on Siemens: The Munich-based company is “transforming itself from a dated industrial conglomerate into a modern digital energy, transport, and infrastructure player,” a move that could boost earnings in the long run.
* Asian Trader: In a recent American Chamber of Commerce survey, 80% of respondents saw Hong Kong’s disorder weighing on investment decisions, and 90% tagged Singapore as the best alternative—but investors aren’t quite ready to bet on a Hong Kong dividend for Singapore yet.
* Commodities: “Arctic weather in much of the U.S. in November lifted prices for natural gas to their highest level since March, but ample U.S. supplies of the heating fuel have put the commodity on track for a loss for the month.”
* Streetwise: Cautious on TSLA: The auto industry can’t determine whether Tesla’s recently unveiled “cybertruck” is a mass-market vehicle going after F and GM or a niche “wow factor” model that will be limited in demand and production scale—but either way, says columnist Jack Hough, “the whole industry could be headed for a supply shock in electric vehicles. Consider watching the race from a safe distance.”