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TikTok Deal Latest: ‘Who the Hell Knows?’

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Oracle and TikTok’s parent company, ByteDance, may have thought they had struck a deal that appeases both the Trump administration and Beijing. But eyebrow-raising comments by President Trump at a news conference yesterday suggest that it’s too early to tell, even as the White House’s deadline for TikTok to sell itself or get shut down is days away.

Mr. Trump said he wasn’t yet prepared to sign off on the deal. “They’re giving me studies on the deal — it has to be 100 percent as far as national security is concerned,” he told reporters. “No, I’m not prepared to sign off on anything.” He’ll be briefed on the latest proposal this morning.

What about that “big payment” to the Treasury? When asked whether the Oracle deal would include a payment to the U.S. government that Mr. Trump called for early in the process — a demand that took the business community by surprise — he answered, “Amazingly, I find that you’re not allowed to do that.” He implied that the companies were willing to pay, an extraordinary suggestion in itself, and said:

I’m saying, wait a minute, they’re willing to make a big payment to the government, and we’re not allowed to take the money? When does this happen? How foolish can we be? So we’re going to, we’re looking into that right now.

You understand that? In other words, I said I want a big chunk of that money to go to the United States government, because we made it possible. And the lawyers come back to me and they say, ‘Well, there’s no way of doing that.’

You know why? Because nobody’s ever heard of that before, nobody’s ever said that before. Nobody’s ever said, ‘Well we’ll approve the deal, but we want a lot of money to go to the government, because by approving the deal we’re making the deal valuable.’ They’ve never heard of that before. OK? Can you believe that?

There is plenty of other unsettled business. Trump administration officials now want U.S. companies to own a majority stake in TikTok, going against ByteDance’s — and, presumably, Beijing’s — desire to maintain control of the business. Asked whether he would favor ByteDance’s retaining control, Mr. Trump said, “Conceptually, I don’t like that.”

Other issues that are still up in the air:

• Whether Walmart (or others) will join the Oracle consortium. Two people said the retail giant was likely to team up with the group, which may explain why Senator Tom Cotton, who represents Walmart’s home state of Arkansas and is a notable hawk on China, has recently been quiet on the matter.

• Whether other Republican lawmakers will step up their opposition, after Senators Marco Rubio of Florida, Thom Tillis of North Carolina and John Cornyn of Texas said they might favor banning TikTok in the U.S. rather than letting ByteDance maintain control.

• Who will run TikTok, since Kevin Mayer stepped down as C.E.O. last month. Vanessa Pappas, the company’s head of North America since 2018, is leading the company in the interim, but executives are considering bringing in an outsider.

People involved in the negotiations tell DealBook they’re exasperated, given the president’s mercurial wants, the hard line taken by Beijing and constantly shifting commercial terms. Asked what will happen next, one source sighed: “Who the hell knows?”

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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.

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ImageA defense of face masks by Dr. Robert Redfield, the C.D.C. director, drew a rebuke from President Trump.
Credit…Pool photo by Anna Moneymaker/EPA, via Shutterstock

The Fed faced internal dissent after pledging to keep rates unchanged for years. The central bank plans to leave rates near zero through at least 2023 and tolerate periods of higher inflation. Two Fed presidents voted against the plan, for different reasons: Robert Kaplan of Dallas wants more flexibility in setting rates, while Neel Kashkari of Minnesota wants a stronger commitment to keeping rates low for longer.

LVMH wants to delay its legal fight with Tiffany. The French conglomerate opposed an expedited trial over its effort to walk away from its $16.2 billion deal to buy Tiffany. The New York-based jeweler argued that the move was an effort to run out the clock on their merger agreement, which expires on Nov. 24.

U.S. retail sales growth is slowing. Spending climbed for a fourth straight month in August, but there are signs that the expiry of economic stimulus is taking a toll.

President Trump rejected the C.D.C. chief’s comments on Covid-19 vaccines and face masks. Dr. Robert Redfield, the head of the C.D.C., told a Senate panel that vaccines probably wouldn’t be distributed widely until next summer, and that wearing face masks was crucial. Mr. Trump later asserted that a vaccine could be available within weeks and played down the usefulness of masks.

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Short-term thinking is leading to “really dumb decisions,” says Jamie Dimon. The JPMorgan Chase C.E.O. told a CNBC-moderated panel that governments aren’t taking steps to bring about healthy economic growth, including addressing income inequality. “What we focus on is blaming each other and we stifle ourselves, because we are unable to do very basic stuff,” he said.

Credit…Justin Lane/EPA-EFE, via Rex, via Shutterstock, via

Whether — and how — to bring workers back to the office (however that’s defined) remains a contentious issue. Here’s the latest on how some big companies are managing it.

In the cautious camp:

Deutsche Bank told its U.S. employees that they aren’t expected back at the office until next summer, noting “understandable concerns about public transportation, cleanliness, security and other quality-of-life issues.”

Facebook is looking to hire a director of remote working as it carries out a plan to let employees permanently work from home.

In the other camp:

JPMorgan has reportedly stopped letting junior traders expense Uber rides to the office, ending a measure meant to help them avoid taking public transportation, Bloomberg reports.

• And in a different work arena, the Big Ten college football conference plans to play as soon as next month, reversing a decision to put the season off until next year. The announcement comes despite Louisiana State University’s football coach, Ed Orgeron, having casually acknowledged on Tuesday that “most” of his team had contracted Covid-19.

Shares in Snowflake, the data storage and analytics provider, more than doubled in their stock-market debut, making it the biggest I.P.O. ever for a software company. It’s the latest sign that investors’ appetite for tech companies seems insatiable.

The arc of Snowflake’s first day of trading: After its underwriters priced its shares at $120 apiece, the stock opened at $245, rose as high as $319 and closed at $254. That values the company at more than $70 billion, which is about the same as Goldman Sachs. (Another tech company that went public yesterday, JFrog, saw its share price jump 50 percent from its I.P.O. level.)

Excitement for all things from Silicon Valley has powered a boom in tech investing, especially during the pandemic, which has made people more reliant on the internet for work and life. That means rapidly amassing wealth for executives like Snowflake’s C.E.O., Frank Slootman, whose stake is now worth billions, and investors like Jack Dorsey of Twitter and Iconiq Capital, both of which have invested several times in Snowflake.

Snowflake’s first-day pop also gives ammo to critics of traditional I.P.O.s. Silicon Valley executives like the venture capitalist Bill Gurley have argued that such offerings tend to underprice companies’ shares, leaving billions of funds on the table. That view, as summed up in a tweet by the Zillow co-founder Spencer Rascoff: “On the one hand, congrats on the I.P.O. On the other hand, 🤦.”

• Expect to see more companies explore going public by merging with blank-check companies (which are still raising hundreds of millions) or by directly listing their stocks.

Credit…Olivier Douliery/Agence France-Presse — Getty Images

This year’s presidential election will be the first for Patrik Frisk as a U.S. citizen, and the Swedish-born chief executive of Under Armour is marking it with a major get-out-the-vote initiative by the sports apparel business. His efforts have included encouraging employees and customers to vote by limiting internal meetings and deadlines on Election Day, putting voter registration information on product receipts and adding features about voting to the company’s app.

DealBook spoke with Mr. Frisk about voting, the pandemic’s impact on business and the status of Under Armour’s turnaround.

On whether Under Armour is worried about political backlash to its voting drive:

“We might be judged by it, but so be it. I don’t mind,” he said. “We think it’s partly our role as a brand.”

“This absolutely has nothing to do with party lines or anything like that,” he said. “This has to do with the fact that we stand for equality, the fact that we believe in democracy as a brand.”

On the difference between voting in the U.S. and his native Sweden, where turnout in 2018 was nearly 90 percent:

“I just think voting should be easier for everyone in the U.S.,” he said. In Sweden, “it’s very simple: I get my ballot mailed to me, and you can choose to mail it in or go vote with it.”

On how the pandemic has affected the company’s latest restructuring, which it recently updated to include more layoffs and cost cuts:

“The fact that team sports didn’t happen in the fall, the fact that ‘back to school’ didn’t really happen this fall is something everyone dealing with,” he said.

Under Armour has focused its turnaround on bringing new products more quickly to market and repositioning its brand. It is seeing positive signs in international markets, Mr. Frisk said. He declined to comment on investigations into the company’s accounting practices.

On which pandemic consumer trends will endure:

“We think for sure, the e-commerce and digital evolution probably accelerated three to five years,” he said, though how other changes — like a tentative return to cities — will affect business are less clear.

One silver lining: “People are going to think even more about their health and wellness level coming out of this.”

On bringing employees back to the office:

“It’s not going to be the same, at least not in the U.S. and Europe, that’s for sure,” he said. Some employees may need to go back to the office because of the nature of their positions, but others may stay remote for longer — or permanently. The company is taking a “soft opening” approach, allowing workers to stay at home until at least January.

“We’ll be setting ourselves up to manage through whatever ‘normal’ we need to have to be successful,” Mr. Frisk said.

Credit…Christopher Lee for The New York Times

The U.S. Supreme Court will livestream its arguments in October, making the usually exclusive hearings accessible to all. When the court first aired live audio of its sessions in May because of the coronavirus pandemic, more than 130,000 listened live and nearly two million people have since heard the recordings.

Usually, only 50 of about 450 courtroom seats are reserved for the public, scarcity that fuels a cottage industry of paid line-waiters camping on sidewalks ahead of big cases, angling for “the legal version of Willy Wonka’s golden ticket.” Although recordings are released days after arguments, judicial transparency advocates have long demanded more real-time access, and they are likely to protest if livestreaming ends once pandemic restrictions are lifted.

• “It’s going to be very hard to get the genie back in the bottle,” predicts Gabe Roth, the executive director of Fix the Court, a nonpartisan advocacy group.

Even if live audio is here to stay, it won’t necessarily change how law firms work, says Timothy Bishop, a partner at Mayer Brown who argues cases at the court. Lawyers tend to travel to hearings with small teams anyway, and clients want to be present. “Seeing the justices’ facial expressions and interaction with each other tells you a lot,” he says.

More transparency has no significant downsides, Mr. Bishop says, and one important benefit is that it reveals the glory of the court. Though live audio could lead to more media coverage of mistakes or exchanges taken out of context, he says, “the court is a great institution that handles argument well, and it will be good if more people tune in to hear it in action.”

• The sessions begin on Oct. 5, and DealBook readers should take note of a consequential copyright showdown between Oracle and Google slated for Oct. 7.

Deals

• Private equity firms are taking advantage of robust corporate debt markets by having portfolio companies take out big new loans to pay themselves dividends. (FT)

• KKR has raised more than $11 billion for its fourth Asia-focused investment fund. (Reuters)

Politics and policy

• The Business Roundtable endorsed a “market-based mechanism” to battle climate change. (Politico)

• A federal judge criticized the U.S. attorney’s office in Manhattan for efforts to “bury” evidence in a high-stakes Iranian sanctions case. (NYT)

Tech

• One of Nikola’s board members, the hedge fund mogul Jeff Ubben, defended the electric truck maker against a short-seller’s fraud accusations and compared it to Apple. (FT)

• Facebook and Instagram flagged social-media posts from Tucker Carlson’s Fox News show as promoting “false information” about Covid-19. (NYT)

Best of the rest

• Is the company with a 20-second coronavirus test for real? (FT)

• Not being able to visit Chinese food factories is posing problems for rabbis who certify food as kosher. (Bloomberg)

• The pandemic has been good for golf. (WaPo)

Correction: We made a classic big-number error — a hazard of the job — in our item yesterday about the House Problem Solvers Caucus. The group’s compromise stimulus bill was, of course, worth $1.5 trillion and not $1.5 billion.

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.

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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.

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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.

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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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