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DealBook: How Much Did Trump Win by Losing?



Good morning. Below, check out highlights from Elon Musk’s appearance on Sway, the Times Opinion podcast hosted by Kara Swisher. And read on for a scoop on Jessica Alba’s Honest Company exploring a sale. (Was this email forwarded to you? Sign up here.)

President Trump’s finances have remained under wraps for years. But a major investigation by The Times’s Russ Buettner, Sue Craig and Mike McIntire has cracked open his business, revealing from tax records that he paid just $750 in federal income taxes in 2016 and 2017 and nothing for most of the past 15 years.

Here’s what the report shows about the state of the Trump Organization — and the enormous financial and legal pressures Mr. Trump faces.

Huge losses across the Trump empire: Mr. Trump’s golf resorts, including Doral in Florida and three in Europe, have lost $315.6 million since 2000. The Trump Corporation, a real estate services company, has lost $134 million in that time.

• Those reported losses were used to offset profits from Mr. Trump’s brand-licensing business, which netted $427 million from 2004 to 2018. Other moneymakers include Trump Tower and a 30 percent stake in two office towers run by Vornado.

Ticking time bombs: Mr. Trump hasn’t repaid any principal for the mortgage on Trump Tower, which means $100 million will come due in 2022. He personal guaranteed company loans totaling $421 million, most of which comes due within the next four years. And a defeat in a dispute with the I.R.S. over a $73 million tax refund could mean he owes $100 million (plus interest).

Questionable financial maneuvers: Mr. Trump appears to have used aggressive accounting, particularly by writing off about $26 million in “consulting fees” as business expenses to reduce income. Those included $747,622 in consulting fees that match income reported by his daughter Ivanka, a Trump Organization executive at the time. (He also expensed $70,000 in hairstyling during his run on NBC’s “The Apprentice.”)

The fallout: Mr. Trump insisted at a news conference that he had “paid a lot” in taxes. Democratic lawmakers renewed demands for his tax returns and criticized him for paying less in taxes than most Americans. Representative Alexandria Ocasio-Cortez tweeted, “In 2016 & ’17, I paid thousands of dollars a year in taxes *as a bartender.*”

What may lie ahead: “Should he win re-election,” our colleagues write, “his lenders could be placed in the unprecedented position of weighing whether to foreclose on a sitting president.”


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


ImageOn Elon Musk’s mind: Tesla’s share price ... and the end of the world.
Credit…Aly Song/Reuters

The Tesla C.E.O. sat down with our Times Opinion colleague Kara Swisher for the latest episode of her new podcast, Sway, out this morning. The riveting conversation ranges from his company’s stratospheric stock price to the end of the world. Find the highlights below — and check out the full podcast.

On politics:

Mr. Musk remains noncommittal about how he intends to vote: “Let’s just see how the debates go.” But he told Kara that climate change — which he has called the planet’s biggest threat — is on his mind: “I want to see if Biden has it together. If he does, he probably wins.”

On Tesla’s stock price:

He noted that he had described it as “a bit high,” well before where it’s trading now. (It closed at $407.34 on Friday.) But he added, “Do I think Tesla will be worth more than this in five years? I think the answer is yes.”

On the future of energy:

He said that the end of vehicles relying on fossil fuels is near, but also expressed sympathy for the industry’s workers: “For a lot of the people in the oil and gas industry, especially if they’re on the older side, they kind of bought their companies and did their work before it was clear that this was a serious issue.”

On managing:

Long criticized for being a micromanager, Mr. Musk says that he does want to delegate responsibilities. But he said, “The practical reality of it is that I cannot delegate, because I can’t find people to delegate it to.”

How the world ends:

Mr. Musk worries about a lot, including meteors, “supervolcanoes” and increasingly severe climate variation. “And then,” he adds, “eventually the sun’s going to expand and engulf Earth.”

Credit…Thos Robinson/Getty Images for The New York Times

The natural beauty and baby care company has hired Morgan Stanley and Jefferies to run a sale process that it hopes will value the company at more than $1 billion, DealBook’s Lauren Hirsch has learned. (Morgan Stanley declined to comment, and Jefferies and The Honest Company didn’t respond to requests for comment.)

Its valuation will be a test of its turnaround. After making a splash with natural products and celebrity backing — and raising funds at a $1.7 billion valuation as it considered an I.P.O. — it ran into trouble in 2016 when reports questioned its ingredient-labeling practices. Growth stalled, and the company’s valuation had dropped to less than $1 billion by 2017.

It has embarked on a turnaround. The company hired as its C.E.O. Nick Vlahos of Clorox, who focused on expanding R.&D. operations and rolling out a clean-beauty line. And it now sells in physical stores like Walgreens.

• It now has about $300 million in sales and is profitable, Lauren hears.

Who might bid? Potential suitors include larger consumer companies looking to expand their foothold in the clean-beauty market or a special-purpose acquisition vehicle that could merge with Honest and give it a public stock listing.

TikTok scored a win over the Trump administration in court. A federal judge granted it an 11th-hour preliminary injunction against the federal government’s order to ban its video app from Apple’s and Google’s app stores.

Florida has eased much of its lockdown. Gov. Ron DeSantis lifted restrictions on restaurants and other businesses on Friday, and banned fines against people who wear masks. The move revived debate over economic closures, particularly as health experts fear a second wave of infections.

Alphabet settled lawsuits over sexual harassment claims. The parent company of Google agreed to give its board more oversight over future cases of sexual misconduct, and pledged to spend $310 million over the next decade to bolster corporate diversity programs. The tech giant faced shareholder claims after revelations of a big pay package for a senior executive, Andy Rubin, accused of sexual harassment.

Uber can keep operating in London. A judge in Britain found that the ride-hailing company met a “fit and proper” standard to stay in business, after the city’s transport regulator revoked its taxi license over safety issues.

What to watch this week: The first U.S. presidential debate is tomorrow at 9 p.m. Eastern. Shares in the data-mining company Palantir and the workplace organization app Asana will begin trading on the Big Board on Wednesday, via direct listings. Wednesday is also when payroll grants for U.S. airlines expire — unless Congress acts.

Credit…Carlos Barria/Reuters

President Trump named Judge Amy Coney Barrett on Saturday as his choice to replace Justice Ruth Bader Ginsburg on the Supreme Court.

Some relevant opinions from Judge Barrett’s time on the Seventh Circuit Court of Appeals:

Gig workers: Judge Barrett ruled that drivers couldn’t sue the online food delivery platform Grubhub for overtime pay because they didn’t fall under a federal exemption to mandatory arbitration for some workers involved in interstate commerce.

Business torts jurisdiction: She blocked an electronics parts maker’s trade secrets suit because the link between the company’s accusations and the defendants’ ties to Illinois, where the suit was filed, were too tenuous.

Consumer class action: She decided in a Telephone Consumer Protection Act decision involving AT&T that the company’s feedback tool didn’t qualify as a prohibited auto-dialer that improperly sent customers texts.

How she may rule on business issues: Judge Barrett follows the philosophy of Justice Antonin Scalia, who was a staunch ally of corporations. She would miss a copyright showdown between Google and Oracle, for which oral arguments are next month. But if confirmed, she could be seated in time for a December hearing on U.S. companies’ liability for foreign human rights violations, brought by former child laborers in cocoa fields against Nestlé and others.

Before the first presidential debate, Steve Ballmer, the billionaire former C.E.O. of Microsoft and current owner of the L.A. Clippers, is introducing a $10 million campaign to persuade Americans to rely on verified data. It’s through USAFacts, the website he founded in 2017 to collect and present government data to the public in an accessible way.

Here are excerpts from Andrew’s conversation with Mr. Ballmer from late last week.

Why are you doing this?

People are going to spend all this money on political advertising, candidates, blah blah blah, and I just said, “Look, we’ve got to put some money into data in politics.” We’ve got to tell people there’s data there, data that you can act on. In a way, it’s the weirdest thing I’ve ever done.

It feels like people don’t seem to always care about accurate information, so long as it confirms their own point of view.

I found this quote that I think is one of the great quotes of all times: “A popular government, without popular information, or the means of acquiring it, is but a prologue to a farce or a tragedy, or perhaps both.” That’s James Madison from the founding of this country, essentially saying you’ve got to give people the facts.

Your entire effort appears to be something the government should be doing itself: making data accessible to Americans. You’re also focused on making sure politicians have real data. Does that frustrate you?

A business would ask: Can we re-engineer the process of data collection? Can we agree on a standard taxonomy for police and criminal justice data from the states, and just standardize the reporting? That is not a high-expense thing. There’s a one-time conversion cost. Are we going to do that?


• Two U.S. shale producers, Devon and WPX, are reportedly in talks to combine in an all-stock deal that would value the combined company at $6 billion. (Reuters)

• Caesars said it was in advanced discussions to buy the bookmaker William Hill in a potential deal worth £2.9 billion ($3.7 billion). (Sky News)

• The shoe brand Allbirds raised $100 million in a new round of funding led by the money manager Franklin Templeton, reportedly at a valuation of $1.7 billion. (WSJ)

Politics and policy

• Cash-strapped U.S. cities and states are turning to private donors like Mark Zuckerberg for hundreds of millions of dollars to fund election operations. (NYT)


• The Trump administration put new export limits on Semiconductor Manufacturing International Corporation, China’s most advanced computer chip company, deepening the tech cold war. (NYT)

• How a team of eBay operatives conspired to harass a blogger. (NYT)

• The electric vehicle maker Nikola said its founder had devised plans for its flagship truck in its basement. Tesla says he bought them from a designer in Croatia. (FT)

Best of the rest

• London-based bankers and traders are balking at being moved to the E.U. as part of Brexit planning. The reason: coronavirus travel restrictions. (FT)

• Scientists may have figured out why children fight off the coronavirus better than adults. (NYT)

• The world has Steve Wynn and Sheldon Adelson partly to thank for the career of DJ D-Sol. (Financial News)

Thanks for reading! We’ll see you tomorrow.

We’d love your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.


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The Trump campaign celebrated a growth record that Democrats downplayed.



The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.


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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.



The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.


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Ant Challenged Beijing and Prospered. Now It Toes the Line.



As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.


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