Today, we start with a scoop about TikTok, the video-sharing app that’s caught in the middle of the U.S.-China tech war. (Want this delivered to your inbox each day? Sign up here.)
TikTok isn’t standing still
As TikTok negotiates its potential sale, which must be completed within 90 days to prevent the Chinese-owned app from being shut down in the U.S., it is signing a different sort of deal.
TikTok is partnering with UnitedMasters, a music distribution company, to allow artists on the video-sharing platform to distribute their songs directly from the app to streaming services like Apple Music, Spotify and YouTube. UnitedMasters also arranges music deals with brands like ESPN and the N.B.A. The deal is expected to be announced today.
It’s the first major transaction for Kevin Mayer, TikTok’s C.E.O., who joined the company in May after a long career at Disney. Much of his time has been spent reacting to geopolitics, with TikTok’s parent company, the Beijing-based ByteDance, ensnared in the tech cold war between the U.S. and China. Citing national security concerns, President Trump has ordered TikTok’s U.S. operations to be sold to an American owner — Microsoft is the most likely buyer — or shut down.
• Despite the uncertainty of TikTok’s fate in the U.S., the UnitedMasters deal shows that the company is not standing still, even if the benefits of the new partnership will probably accrue to a new owner.
It’s an effort to deepen relationships with influential artists who use the app. TikTok’s young and engaged audience has helped songs go viral, jump-starting the careers of musicians like Lil Nas X and BMW Kenny. Trying to keep these creators engaged with the app is particularly important as TikTok faces competition from deep-pocketed rivals like Facebook’s Instagram, which recently launched a TikTok clone called Reels.
It’s a sign of the times for the music industry. Instead of selling their rights to a label, artists who sign with UnitedMasters keep 90 percent of their royalties, as well as ownership of the master recordings. UnitedMasters was founded in 2017 by the former label executive Steve Stoute and funded by the likes of Alphabet and Andreessen Horowitz. The deal, which creates a platform designed to circumvent the traditional music-label business model, is aimed at “tomorrow’s stars who will be famous, fiercely independent and wealthy,” said Mr. Stoute, a long-established tastemaker in the hip-hop industry.
• In many ways, TikTok has already upended the music business: Scouts no longer go to bars and clubs to discover the hottest unsigned artists — they scroll through the app instead. By partnering with UnitedMasters, the app is aiming to bolster its appeal to independent-minded artists who operate outside the traditional industry machinery.
But what about that other deal? TikTok would not comment on the state of the company’s takeover talks with Microsoft. The deal with UnitedMasters does not appear to be contingent upon that transaction, and is billed as a “global” partnership. However, if TikTok were to shut down in the U.S., it would clearly affect the reach of the music deal. Terms of the transaction were not disclosed.
Here’s what is happening
Democrats are pushing back against President Trump’s overhaul of the Postal Service. House Speaker Nancy Pelosi is calling the House back early from summer recess to block changes that critics say could harm mail-in voting. Democratic state attorneys general also said they were considering legal action. (Here’s a look at Louis DeJoy, the major Trump donor who became postmaster general in June.)
TikTok and WeChat aren’t the only companies in the White House’s cross hairs. Mr. Trump suggested over the weekend that he might punish other Chinese companies that operate in the U.S., including the e-commerce titan Alibaba. “We’re looking at other things,” he said, though officials didn’t elaborate.
Japan’s economy suffered its worst decline on record. The country’s G.D.P. shrank 7.8 percent in the second quarter — nearly 28 percent on an annualized basis — prompting one economist to compare the pandemic’s economic damage to the 2008 financial crisis, compressed into a few months.
There’s a campaign to declare a food supplement a treatment for Covid-19. Axios reports on efforts to persuade Mr. Trump to support a plant extract, oleandrin, as a treatment for the coronavirus, despite no proof that it works. Oleandrin’s supporters include Ben Carson, the housing and urban development secretary; and Mike Lindell, a major Trump financial donor who is an investor in the company that makes oleandrin.
Asset management C.E.O.s got a big pay raise last year. An analysis of 31 firms by The Financial Times showed that their leaders received a 12 percent rise in compensation, on average, even as many funds posted disappointing results. (Larry Fink of BlackRock received a 5 percent bump, to an industry-leading $25.3 million.)
Warren Buffett’s favorite bank
Late on Friday, Berkshire Hathaway revealed its holdings as of the end of the second quarter. Mr. Buffett’s conglomerate sold its stakes in several big banks — with one notable exception — and bought gold (well, a gold mining company).
Berkshire sold all of its shares in Goldman Sachs and big chunks of JPMorgan and Wells Fargo. Mr. Buffett had started cutting back on these holdings in previous quarters. Wells Fargo’s travails are well known, but Berkshire sold Goldman and JPMorgan stock as their trading arms posted record revenues because of frenzied market activity.
• It’s a different story with Bank of America. Berkshire added billions to its stake in the bank last month. It’s the company’s second-largest holding, behind Apple.
The most eye-catching new investment is Barrick Gold. Berkshire’s stake in the mining company, worth more than $500 million, comes despite Mr. Buffett’s dismissing the metal as a worthwhile investment in recent years. Alongside the sales of financial stocks — Berkshire also trimmed its holdings in Mastercard and Visa — Mr. Buffett’s moves suggest that he is feeling somewhat defensive about the state of the economy.
Take Note: The people have spoken
Michelle Leder is the founder of the S.E.C. filing site footnoted*. Here, she takes the mood of investors by sifting through the public comments to a contentious regulatory proposal. You can follow her on Twitter at @footnoted.
In the weeks since the S.E.C. announced plans to effectively reduce institutional investors’ public disclosure of their holdings, more than 1,500 people have submitted comments to the commission. The overwhelming majority are opposed to the proposal.
A quick recap: On July 10, the commission said it wanted to raise the threshold for filing the 13-F quarterly disclosure form, which is mandatory for investors who manage over $100 million, to $3.5 billion. The S.E.C. says this would eliminate about 90 percent of all 13-F filings.
The gist of the public comments — some more colorful than others — is that the change would reduce transparency, going against the commission’s stated mission of protecting investors.
• Ralph P. Dixon, who describes himself as “just your average investor,” asked in his letter, “On what planet is this good for the average investor?”
• Larry A. Koehler, who used all caps in several places, wrote that the four commissioners should all be replaced, and called the timing of the proposal during the pandemic “particularly vulgar.”
• Chad Gassaway, a chartered market technician, backed the proposal: “In no other industry are companies required to divulge their proprietary strategies.” He said the forms were already flawed, since they do not require institutional investors to disclose their debt holdings or short positions.
Instead of raising the disclosure threshold, some comments suggested shortening the filing window to 30 days after the end of a quarter, instead of the current 45, or requiring funds to disclose all of their investment positions, including short bets. The S.E.C. is under no obligation to act on the public comments.
This is one of the most-commented-on regulatory issues in the S.E.C.’s history, and comments are being accepted until Sept. 29. The most recent public comments go only through July 28, so there are probably a few thousand more that have yet to be published.
The week ahead
🗣 The Democratic National Convention will take place mostly virtually, spread out over four nights, starting tonight. Speakers include former President Barack Obama, Hillary Clinton and Senator Bernie Sanders. Senator Kamala Harris of California, the Democratic vice-presidential candidate, will speak on Wednesday, and Joe Biden will wrap it up on Thursday. The Times has a guide for how to watch, and will offer live analysis throughout.
🛍 Retail earnings are in the spotlight this week, with Home Depot, Kohl’s and Walmart reporting on Tuesday; Lowe’s and Target on Wednesday; and TJX on Thursday.
💰 Other noteworthy reports include Norway’s sovereign wealth fund on Tuesday; the shipping giant A. P. Moller-Maersk and the chip maker Nvidia on Wednesday; and the heavy machinery manufacturer Deere & Company on Friday.
🏦 Investors will have a chance to scrutinize the latest minutes of recent meetings at the U.S. Federal Reserve, released on Wednesday, and the European Central Bank, due on Thursday, for clues as to what monetary policymakers are thinking about whether more stimulus is needed.
🗓 From the TimesMachine: On Aug. 17, 1936, the first unemployment check was issued in the U.S., to an out-of-work engraver in Wisconsin. Recognizing the importance of this event, the recipient never cashed the $15 check — he sold it for $25 to the professor who had helped set up the pioneering system. (Check it out on the site of the Wisconsin Historical Society.)
The speed read
• The Japanese government reportedly tried to persuade Nissan and Honda to merge earlier this year. (FT)
• Meet Jamie Salter of Authentic Brands, the investment company that is snapping up bankrupt retailers like Barneys New York, Forever 21 and Brooks Brothers. (Bloomberg)
• Sixth Street Partners, the former credit arm of TPG, has collected $10 billion for its flagship fund since April, raising one of the biggest investment pools in recent years. (WSJ)
Politics and policy
• Nursing-home operators have hired a fleet of lobbyists to bolster their profits and win federal cash infusions. (NYT)
• Exhibit A in how tech companies’ embrace of remote working is transforming San Francisco: Rents are falling. (WSJ)
• Facebook joined Epic Games’ battle against the 30 percent fee Apple charges for in-app sales, calling it a tax on developers. (CNBC)
Best of the rest
• The former New York Times Building in Midtown Manhattan, which is owned by Jared Kushner’s family, has been foreclosed upon and will be listed for auction. (The Real Deal)
• Get your flu shot to help prevent a “twindemic” this winter, health officials like Dr. Anthony Fauci implore. (NYT)
• The pandemic has sapped cities like Kyoto, Japan of tourists. Some locals hope it stays that way. (WSJ)
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