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Jeff Bezos heads to India as Amazon faces regulatory probes, protests



Jeff Bezos, founder and chief executive officer of Inc., speaks at the National Press Club in Washington, D.C., on Thursday, Sept. 19, 2019.

Andrew Harrer | Bloomberg | Getty Images

Amazon CEO Jeff Bezos will face a wave of protests from small business owners when he travels to India this week.

Bezos will appear on stage Wednesday at Amazon’s Smbhav event for a fireside chat alongside Amit Agarwal, who heads Amazon’s India operations, according to Bloomberg. Smbhav is an annual event held by Amazon in New Delhi that’s aimed at helping the company connect with millions of small and medium-sized businesses in the country.

Bezos has also sought a meeting with India’s Prime Minister Narendra Modi and celebrities from the Bollywood movie industry, Bloomberg reported. An Amazon spokesperson declined to comment on the details of Bezos’ visit.

Not everyone is expected to welcome Bezos when he touches down in India. The Confederation of All India Traders (CAIT), a group that represents 70 million traders and 40,000 trade associations, is planning a “National Protest Day” on Wednesday. The group plans to host protests across 300 cities during Bezos’ visit.

The CAIT claims Amazon is hurting small businesses by using heavy discounts to lure shoppers online and away from brick-and-mortar stores.

“If they could not empower existing retailers on their portal, why they are looking for more retailers?” Praveen Khandewal, CAIT secretary general, and B.C. Bhartia Nagpur, CAIT national president, said in a statement. “Amazon is trying to create false propaganda that it is the true friend of traders, though it is the worst enemy.”

It comes as Amazon faces additional roadblocks that threaten to upend its goal of expanding in India. The Competition Commission of India (CCI) on Monday launched a probe into whether Amazon and Walmart’s Flipkart have violated competition laws by promoting “preferred sellers” on their platforms and offering deep discounts.

“Allegedly, there is an existence of various vertical arrangements between Flipkart with their preferred sellers on the platforms; and Amazon with their preferred sellers on the platforms, respectively which leads to a foreclosure of other nonpreferred sellers from the online marketplace,” the order states. “These preferred sellers are also alleged to be affiliated with or controlled by Flipkart/Amazon either directly or indirectly.”

Representatives from Amazon did not respond to a request for comment on India’s probe. A Flipkart spokesperson said the company is reviewing the CCI notice, but that it’s “fully compliant” with India’s competition laws.

“We take pride in democratizing e-commerce in India and giving market access to [hundreds of thousands] of [micro businesses], sellers, artisans and small businesses, making quality and affordable goods available to consumers through our transparent and efficient marketplace while creating lakhs of jobs,” the spokesperson said.

Amazon and Flipkart were forced to alter their operations in the country after India enacted new e-commerce rules in December 2018. The rules prevent foreign-owned e-commerce companies like Amazon from selling products through affiliated companies they own a significant stake in, or from offering special discounts and exclusive deals in the country. Amazon pulled an estimated 400,000 items from its shelves as a result of the new rules, while Flipkart removed thousands of products from its platform, according to The New York Times.

Amazon and Flipkart have become fierce rivals in India, which is poised to become one of the fastest growing e-commerce markets in the world. Amazon has poured more than $5 billion into its India business, went on a hiring spree in the country last year and announced a partnership with India’s Future Retail earlier this month. Walmart in 2018 paid $16 billion to acquire Flipkart.



Trump Fans or Not, Business Owners Are Wary of Warren and Sanders




Beri Fox, president and chief executive of Marble King in Paden City, W.Va., possibly the last American manufacturer of toy marbles, said she had not yet focused on the candidates’ overall plans, just “bits and pieces.”

Making sure American companies can compete with China is a priority for her, said Ms. Fox, who employs 28 people. She hopes that Mr. Trump’s confrontational approach on trade will work in the long run, but also feels that Mr. Biden cares deeply about domestic manufacturers. She has not decided whom to support for president.

For some, the battle for the Democratic nomination is still mostly background noise.

With so many candidates still in contention, “it just doesn’t seem worth my time to pick a heartthrob at this time,” said Rick Woldenberg, chief executive of Learning Resources in Vernon Hills, Ill., a family-owned manufacturer of educational materials and toys.

Mr. Woldenberg’s primary concern is the future of his business, which employs more than 200 people. The 2017 tax cuts engineered by Mr. Trump and his party helped generate more cash for investment, he said, but tariffs on imports have been punishing, raising the cost of materials and straining relations with customers and international vendors.

He also finds the president’s routine combativeness unsettling, not to mention his impeachment.

“I tend to favor politicians who are more moderate in their views,” Mr. Woldenberg said. “And I would not consider Trump to be especially moderate.”

Yet neither are Mr. Sanders and Ms. Warren, he said. Labeling them “very extreme,” he said that expensive plans like Medicare for all would depress the economy and that a wealth tax would be “catastrophic.”

The generally positive economic outlook, of course, could shift significantly in the coming year. The recent flare-up in tensions between the United States and Iran was a reminder that by the time of the election, international events could eclipse domestic ones.


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Airbnb Imagines a ‘Stakeholder’ World




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Brian Chesky, Airbnb’s co-founder and C.E.O., spoke exclusively to Andrew last night about the company’s announcement today that it will think about all “stakeholders” when it comes to corporate governance, not just investors.

The move is Mr. Chesky’s take on the Business Roundtable’s recommendations last year that companies consider employees, the environment and more in their business decisions.

• Airbnb is planning to hold a “Stakeholder Day.” It would be like a traditional annual shareholder meeting — except that everyone from customers to “hosts” to employees and others will be invited.

• It will also change its compensation program, with factors important to stakeholders like progress on guest safety taken into account when bonuses are calculated.

“I don’t want to be one of those C.E.O.s to say we’re trying to do all this great stuff, but then we treat board meetings exactly like every other board meeting,” Mr. Chesky told Andrew. He added that he doesn’t think this is particularly radical: “I think this is where the world is going.”

The big picture:

• Airbnb remains under fire on a number of fronts, including battles with regulators over housing laws, concerns over the safety of its customers and claims of discrimination by hosts. They’re among the struggles that surround the company’s plans to go public this year.

• It’s unclear whether investors, as one of many groups of stakeholders, will embrace their diminished stature within Airbnb’s universe.

• And it remains to be seen whether the new goals will increase the company’s valuation in its market debut.

Apollo Global Management is one of Wall Street’s biggest private equity firms, managing over $320 billion in assets. Apollo’s success is due in large part to the strategies of its founder, Leon Black, who gets his close-up in this week’s Bloomberg Businessweek cover story.

“Black’s aggressive approach — involving layoffs and slashing benefits — is also among the most profitable,” Caleb Melby and Heather Perlberg of Businessweek write. “Apollo’s flagship private equity fund, which it opened to investors in 2001, has delivered annual returns of 44 percent.”

Highlights from Mr. Black’s career include:

• Working with Mike Milken on junk bonds, a term Mr. Black still hates because competitors came up with it: “We were never accepted by the Goldmans and the Morgans and the Kidder Peabodys and the First Bostons.”

• Investing where others wouldn’t dare. “Everybody else is running for the doors, and we’re backing up the trucks,” Mr. Black told Businessweek.

But his biggest problem right now might be his association with Jeffrey Epstein:

• The depths of Mr. Black’s financial ties to the late financier are unknown, but he is known to have given $10 million to Mr. Epstein’s charity and persuaded the financier to invest in a friend’s muffler company.

• “After Epstein was found dead in his Manhattan jail cell a month later, former Apollo employees joked darkly that his death had made Black’s life easier.”

President Trump ribbed a top JPMorgan Chase executive this week when he said her bank should thank him for its stellar earnings. He may have had a point, at least when it comes to his tax cuts, writes Yalman Onaran of Bloomberg.


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The economy is continuing to catch up to the stock market: Morning Brief




Friday, January 17, 2020

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Consumer, labor, housing data impress and stocks hit new highs

In the December 17, 2019 edition of the Morning Brief newsletter, we said the stock market was catching up to the economy. The stock market had just hit record highs. Housing and manufacturing data had topped expectations. The economic data was filling in the blanks of the story the stock market had been telling investors for a couple months: better days are ahead.

Exactly one month later, the story is once again worth reiterating.

On Thursday, all three major indexes closed at record highs. For the second time in history, the Dow (^DJI) closed above 29,000. And the stock market continues to both indicate better times ahead, while the data continue bolstering the economic story implied by frothy financial markets.

During Thursday morning’s economic data deluge, investors were treated to solid data on the state of the U.S. consumer, the labor market, and the housing market.

The week’s most anticipated economic figure — the December reading on retail sales — impressed. Sales rose 0.3% over the prior month, matching both Wall Street estimates and the increase seen in each of the last two months.

But the data got better when looking at “core” retail sales (which exclude autos, gas, and building materials) as December saw a 0.5% improvement in “core” sales, a notable pickup from the 0.1% advance seen in November.

Core sales are also what feeds into GDP, and analysts at Oxford Economics note this data suggest real consumer spending rose at an annualized rate of 2.2% in the fourth quarter, with overall GDP growth now on track to advance 2.5% to finish the year. Elsewhere, Bloomberg’s consumer comfort index rose to its highest level since October 2000.

“A critical question as we begin this new decade is whether the US consumer can continue to pull more than its weight,” Oxford Economics said in a note published Thursday. “Resilient labor market conditions, surging stock prices, and lower gasoline prices all came together to prop up consumer outlays last year, but we expect this powerful combination to fade gradually.”

Part of Oxford’s analysis is due to what it calls “cooler” employment trends. In December, for instance, the U.S. economy created 145,000 jobs — fewer than expected and a notable slowdown from November’s job gains of 260,000.

The Charging Bull sculpture by Arturo Di Modica, in New York’s Financial District. (AP Photo/Richard Drew, File)

Some investors had also grown wary of the labor market due to weekly initial jobless claims data, which had been somewhat elevated at the end of 2019. Thursday’s reading, however, should quell some of these concerns.

Jobless data fell to 204,000 for the week ending January 11, the lowest level for claims since early November. Economists expected claims would rise modestly to 220,000.

Ian Shepherdson at Pantheon Macroeconomics said Thursday that, “Claims have now reversed their early December spike, which was due to seasonal adjustment problems after Thanksgiving. The trend likely remains about 215K, a record low as a share of the employed workforce.”

The January sentiment index from the National Association of Home Builders released Thursday also showed continued positivity in the housing sector. The index registered a reading of 75, just one point below December’s 20-year high. The last two months mark the highest sentiment levels for home builders since July 1999.

NAHB chief economist Robert Dietz said in a release Thursday that, “with the Federal Reserve on pause and attractive mortgage rates, the steady rise in single-family construction that began last spring will continue into 2020.”

Dietz notes, however, that the housing market is still grappling with headwinds we’ve seen in place for years: A lack of labor to build and a lack of inventory for starter homes.

Which aren’t bad problems to have.

By Myles Udland, reporter and co-anchor of The Final Round. Follow him at @MylesUdland

What to watch today


  • 8:30 a.m. ET: Building Permits, December (1.467 million expected, 1.482 million in November)

  • 8:30 a.m. ET: Housing Starts, December (1.380 million expected, 1.365 million in November)

  • 9:15 a.m. ET: Capacity Utilization, December (77.2% expected, 77.3% in November); Industrial Production month-on-month, December (0.0% expected, 1.1% in November)

  • 10 a.m. ET: University of Michigan Sentiment, January preliminary (99.2 expected, 99.3 prior)



  • Notable reports include Kansas City Southern (KSU), JB Hunt (JBHT), Schlumberger (SLB), Fastenal (FAST) and State Street (STT)

Read more

Top News

Alphabet appears on a screen at the Nasdaq MarketSite in New York. (AP Photo/Richard Drew, File)
Alphabet appears on a screen at the Nasdaq MarketSite in New York. (AP Photo/Richard Drew, File)

Google parent Alphabet market cap hits $1 trillion [Reuters]

China posts weakest growth in 29 years as trade war bites, but ends 2019 on better note [Reuters]

Gap pulls plug on Old Navy spinoff to focus on turning around sales [Reuters]


DoubleLine’s roundtable of experts highlight a big risk lurking in the stock market

Trump’s Apple threat would put every iPhone on Earth at risk

Coca-Cola’s Powerade adds new products to its lineup

Editor’s Note: Morning Brief will be observing Martin Luther King Jr. Day on Monday, January 20. It will resume on Tuesday, January 21.

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