January 20, 2021

What Did the Trump-Biden Debate Mean for Business?

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What to make of last night’s chaotic presidential debate? The Times’s Jonathan Martin and Alexander Burns called it an “ugly melee,” CNN’s Jake Tapper dubbed it “a hot mess inside a dumpster fire inside a train wreck” and The Washington Post’s Dan Balz described it as “an insult to the public.” But in between the shouting, the invective and the trampling of the debate moderator — one transcript noted 73 instances of “[crosstalk]” — there was some discussion of issues that matter to business.

The highlights (if you can call them that):

The Affordable Care Act: President Trump disputed Joe Biden’s claim that 100 million people with pre-existing conditions might lose their health care if the law is overturned, before falsely claiming that as president he has promoted a comprehensive replacement for Obamacare. Mr. Trump also accused Mr. Biden of “going to socialist medicine,” which Mr. Biden forcefully denied.

The economy: Mr. Trump took credit for spurring job creation amid the pandemic: “We had 10.4 million people in a four-month period that we’ve put back into the work force.” Mr. Biden criticized the president’s handling of the coronavirus and said Mr. Trump would be “the only president in modern history to leave office with fewer jobs than when he took office.”

Taxes: Mr. Trump disputed The Times’s reporting on his tax returns: “I paid millions of dollars in taxes, millions of dollars of income tax.” Mr. Biden said that the president’s policies had disproportionately helped the wealthy — “Billionaires have made another $300 billion because of his profligate tax proposal” — and that average Americans paid far more in taxes than the $750 that Mr. Trump paid in both 2016 and 2017.

The main takeaway is that the debate didn’t alter the race. UBS’s Paul Donovan wrote in a note to clients today that, if anything, “the debate may have increased expectations for a contested election result,” particularly as Mr. Trump again suggested that he would challenge an unfavorable outcome. Political betting markets also showed little change, maintaining odds implying Mr. Biden is still the favorite to (eventually) win.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin and Lauren Hirsch in New York, Ephrat Livni in Washington, and Michael J. de la Merced and Jason Karaian in London.

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The listings could steal glory from other ways of going public. Companies going public increasingly consider a three-track process, weighing traditional I.P.O.s, direct listings and SPACs. SPACs are dilutive but also offer fresh cash, whereas direct listings do not (though that may soon change). Traditional I.P.O.s also raise cash, and may be a better fit for companies that lack brand recognition and need help telling their story to investors but are criticized for steep fees and a tendency to underprice shares to produce a first-day “pop.” A smooth, well-received performance for Asana and Palantir today may help tip the scale in direct listings’ direction.

The powerful business lobbying group’s top political strategist, Scott Reed, resigned over what he called a drift to the political left. The chamber disputes his account.

Mr. Reed said he had left because of a string of endorsements of Democrats and what he characterized as a lack of commitment to defend Republicans’ majority in the Senate. Mr. Reed is a longtime Republican operative who managed Bob Dole’s 1996 presidential campaign and was credited with helping oust Representative Steve King of Iowa over his hard-line views on immigration.

The chamber said he had been fired for improper conduct, including breaching confidentiality and leaking to news outlets. The group noted that it has endorsed 192 House Republicans, versus 30 Democrats, and it supports President Trump’s nomination of Judge Amy Coney Barrett to the Supreme Court.

The dispute highlights the minefield of political endorsements. Bruce Mehlman, a partner at the bipartisan Washington lobbying group Mehlman Castagnetti, told DealBook that his corporate clients increasingly faced questions about which candidates and issues to endorse, and it’s “definitely accelerating.” The hyperpartisan atmosphere affects perceptions of brand values and company culture, which can be fraught for executives trying to balance competing views.

By the end of today, U.S. lawmakers must decide whether to extend a $25 billion grant program offered to airlines to keep employees on the payroll. And airlines must decide whether they want to tap a $25 billion loan program to cover general costs.

Seven carriers have said they will take up the loans before the deadline — including American and United, but not Delta or Southwest. All have pushed for an extension of payroll grants, and warned of tens of thousands layoffs without an agreement.

Three ways this might play out:

1) Congress strikes a deal. House Democrats rolled out a $2.2 trillion stimulus bill on Monday that included aid to airline workers. Speaker Nancy Pelosi said she was hopeful about a deal with Republicans after a 50-minute call with Treasury Secretary Steven Mnuchin on Tuesday. The two plan to resume talks today. Even an agreement in principle may be enough to stave off airline layoffs, as the companies expect a bill to make its way to the president’s desk before too long.

• If talks over a comprehensive coronavirus relief package falter, lawmakers could also pass a stand-alone bill for airlines. Yet executives would prefer not to be placed in the spotlight: The industry, which has binged on buybacks, is facing heat for receiving aid while others, like retail and hospitality, suffer under the pressure of the pandemic.

2) President Trump acts on his own. The administration has spoken on and off about offering aid to airlines through an executive order. From a political standpoint, it could be framed as a job-saving “win” for Mr. Trump, but the logistics of such a maneuver remain unclear. “We think the better plan is to get legislation passed,” Doug Parker, American Airlines’ C.E.O., recently said.

3) The aid expires with no sign of more money. This is when airlines’ dire warnings will be revealed as either negotiating tactics or founded in reality. Some, like United and Delta, have mitigated layoffs through voluntary buyouts. Others, like American, haven’t been able to strike such deals. Industry experts say that without more aid, the biggest airlines are likely to survive for at least the short term. Regional airlines, though, may face bankruptcy and even liquidation. And troubles for carriers would be likely to ripple broadly, hitting suppliers, service providers and more.

Grapes untouched by flames can be tarnished by ash or smoke taint, and the extent of the damage is revealed only in the fermentation process. Since red wines are fermented along with their skins, which bear the brunt of smoke taint, they are more affected than whites. How bad is the taint? There is a testing backlog, Gladys Horiuchi of the lobbying group Wine Institute told DealBook, so the economic effects aren’t yet known.

Most California wine grapes are sold in advance, leaving only 20 percent on the market for harvest bidding. Vineyards and wineries are working together to mitigate the impact of the fires, Ms. Horiuchi said, and the goal is to avoid any smoke-tainted wine ever going on sale. That means drinkers may not notice any difference while, behind the scenes, supply chains and longstanding industry relationships come under severe pressure.

• Reports suggest that some wineries are offering growers reduced payments to keep them in business but avoid potentially tainted grapes, while major buyers like Constellation warn that contracts could be voided for elevated taint. Others are turning to the bulk market, which is usually quiet over the harvest, to cover the shortfall.

Assessing the immediate damage: The San Francisco Chronicle is keeping a running list of wineries and vineyards in Napa that have been hit by the Glass Fire, with extensive damage reported at Castello di Amorosa (although its famous castle survived), Chateau Boswell and LVMH-owned Newton Vineyard, among others.

Deals

• What pandemic? Blockbuster deals made for the busiest summer for M.&A. activity in three decades. (FT)

• NTT’s $40 billion deal for its wireless affiliate has revived speculation about another take-private possibility in Japan: SoftBank. (Bloomberg)

SPAC corner

• Joanna Coles, the former editor of Hearst magazines, is leading a blank-check company that seeks to raise $300 million for acquisitions. (Reuters)

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