Good morning! Today’s word count is 1,364 words, or a 9-minute read. Let’s get to it:
U.S. stocks opened high to begin the month of August as investors weighed the muddy waters toward a new Covid-19 relief package, and the U.S. registered its lowest number of new infections in weeks.
- S&P 500: $3,288.26
- Nasdaq: $10,848.60
- Bitcoin: $11,039.89
- U.S. 10-Year: 0.558%
Microsoft Aims for a Deal to Buy TikTok’s U.S. Business
TikTok might make it after all. Following a conversation between President Trump and Microsoft CEO Satya Nadella, the tech company said it would move forward with plans to buy the short-form video app’s U.S. operations. The deal could “reshape the global landscape and further strain already tense U.S.-China relations. It may also include TikTok’s operations in Canada, Australia and New Zealand.
The app from Chinese tech company ByteDance has been under some scrutiny for quite some time now. In July, Secretary of State Mike Pompeo first raised the idea of banning the app in the U.S. due to national security concerns.
- U.S. officials expressed concerns China would have access to the data collected.
- They also worried the app could be used to censor content and spread Chinese propaganda.
Things came to a head Friday when news of Microsoft’s and TikTok’s covert talks broke, immediately followed by Trump’s intention to shoot down a potential deal and ban the app. But a conversation between Trump and Nadella staved off the doomsday option, and now we’re all waiting to see if Microsoft can get a deal done.
Why It Matters
Somebody had to give ground eventually.
- ByteDance remains desperate to avoid a U.S. ban. India, TikTok’s largest market, recently banned the app and fears of a domino effect were omnipresent.
- Keeping TikTok alive helps maintain competition in the U.S. against companies like Facebook. Plus, Trump banning the app could have resulted in a massive political backlash among younger voters.
If things work out:
- Microsoft lands the “breakout social-media player of this decade.”
- Washington gets a win over Beijing by bringing over a Chinese tech crown jewel.
- ByteDance would resolve the national-security concerns that almost tanked the business.
The whole TikTok situation is representative of “how global corporations can be used as political bargaining chips.” And while a deal between Microsoft and TikTok would resolve “one of the most dramatic corporate battles in the U.S.-China feud, the takeover of the “first Chinese app to be a global smash” looks to only sour the situation further.
Numbers to Consider
- $30 Billion – TikTok’s estimated value, as reported by The Wall Street Journal.
- 100 Million – The app’s American-based users, according to TikTok.
- 730 Million – The number of views tied to the hashtag #SaveTikTok.
Read More: (WALL STREET JOURNAL)
Dwayne “The Rock” Johnson Buys XFL With Redbird Capital as Partner
It looks like the XFL has staved off certain death once again. The formerly Vince McMahon-owned spring football league has been sold to a group that includes former WWE wrestler and Hollywood star Dwayne “The Rock” Johnson and Gerry Cardinale’s RedBird Capital.
Why It Matters
After two years spend rebooting the league, which folded after one season in 2001, the second incarnation of the XFL fell victim to Covid-19.
- The (kind of) promising upstart filed for bankruptcy after the pandemic resulted in the cancellation of its inaugural season.
But with new backers and the star power of The Rock, it may have new life.
- Live sports are traditionally a “reliable vehicle” to deliver ratings, so there’s a possibility several TV networks or streaming platforms could be interested in adding the XFL to their offerings.
- Johnson’s involvement with the league could sweeten any broadcast deal. He’s an executive producer of the sports competition reality series, “The Titan Games,” on NBC.
RedBird Capital has an impressive sports portfolio, which now includes a blank-check company.
- The private equity firm is an investor in the Yankee’s regional broadcast outlet, YES Network, and recently bought French soccer club Toulouse.
- RedBird has notably been in the news for collaborating with Oakland A’s executive Billy Beane to form the first-ever sports SPAC.
Numbers to Consider
- $15 Million – The price of the sale.
- $10 Million — $50 Million – The range of the XFL’s assets and liabilities listed in its bankruptcy filing.
- 3 Million – The number of viewers the XFL drew in its first week.
Read More: (SPORTICO)
A Quick Look
U.S. Counts Smallest Daily Rise in Coronavirus Cases in Weeks
- Despite signs of an uptick in new infections in some Northeast and Midwest states, the U.S. reported more than 47,000 new Covid-19 cases, the smallest daily increase in nearly four weeks.
- Total Covid-19 cases surpassed 18 million Monday, according to Johns Hopkins University. Americans comprise more than a quarter of the total count. The U.S. death toll is now higher than 155,000.
- California reported 9,032 new cases Saturday, an increase from the previous day but an overall drop from its peak of 12,000 in July. The state has the highest number of confirmed Covid-19 cases in the country.
- According to the Florida Department of Health, Florida reported 7,084 new cases among residents, with more than 481,000 cases in the state since the start of the pandemic.
Read More: (WALL STREET JOURNAL)
Worth Your Time
Change Up: In a move abandoning three decades of strategy, the Federal Reserve is weighing a decision to no longer pre-emptively lifting interest rates to head off higher inflation. “Instead, Fed officials would take a more relaxed view by allowing for periods in which inflation would run slightly above the central bank’s 2% target, to make up for past episodes in which inflation ran below the target,” The Wall Street Journal writes. (WALL STREET JOURNAL)
Copied Keys: Apple’s Siri voice assistant has been a market-changing innovation since its launch last decade. But according to one Chinese artificial intelligence firm, the technology used to build out the idea is a copycat. After winning an eight-year patent battle in China, Shanghai Zhizhen Network Technology Co. is suing the U.S. tech giant for more than a billion dollars in damages and demanding Apple halt sales of any products in violation of the patent. Apple and other western companies have had issues with Chinese patents in the past, but as U.S. and Chinese relations continue to sour, the implications could be more severe. (THE INFORMATION)
Join Our Club: SPAC news! Chicago-based asset manager GCM Grosvenor is merging with a blank-check company affiliated with financial-services firm Cantor Fitzgerald LP known as CF Finance Acquisition Corp. The deal is worth $2 billion, including debt, the companies announced Monday. (WALL STREET JOURNAL)
Face To Face: It sounds straight out of a science fiction movie, but when sports fans return to live play, their tickets may be their faces. “Several pro sports teams, including the New York Mets and the Los Angeles Football Club, are testing facial-recognition technology in stadiums. The idea is to admit fans for entry by authenticating their faces, to make the process as touchless as possible during the coronavirus pandemic,” The Wall Street Journal writes. Large sporting events, including the soccer match in Italy blamed for accelerating the country’s outbreak, are viewed as “contagion points” for the virus’ spread. (WALL STREET JOURNAL)
Tailored Brands, the owner and operator of Men’s Wearhouse and JoS A. Bank, has filed for bankruptcy, citing pandemic shutdowns and falling consumer demand for office attire.
In the most significant U.S. energy-related deal of the year, fuel maker Marathon Petroleum has agreed to sell its gas stations to the 7-Eleven convenience store chain for $21 billion.
In a move signaling unprecedented dissent within the media mogul Murdoch family, James Murdoch, son of Rupert, has resigned from the News Corp board.
Eli Lilly & Co. is testing an antibody-based drug in senior homes to determine whether its experimental Covid-19 drug can prevent infections among vulnerable residents and staff.
The mix of East and West business has been a pillar for HSBC in the past, but as political tensions heighten, it’s getting harder for the Asia-focused bank to balance its priorities.
A Couple Cents Content
We’re giving away $1,500 and a bunch of prizes for our Stock Pitch Contest! Take a look: (POST)
This year has undoubtedly been the “Year of the SPAC,” so I took a look at the sector and what could be the next major blank-check company acquisition – Topgolf. (POST)
In case you missed it, check out Thursday’s Live Show where Justin Oh discussed Kodak, Bitcoin, Tattooed Chef and more. (YOUTUBE)
Watch Justin Oh breakdown Rush Street Interactive’s SPAC merger and why it may be the best long-term bet on online gambling. (YOUTUBE)