TikTok’s Takeover Enters the Endgame

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Both Microsoft — with an unexpected new partner — and a consortium led by Oracle have submitted bids to buy TikTok’s U.S. operations, The Times’s Mike Isaac reports. That means the video app could have a new owner within weeks.

Walmart’s teaming up with Microsoft is the latest surprise in the complex deal talks. The retail giant could provide a significant e-commerce component for TikTok while Microsoft handles the crucial cloud-computing infrastructure needed to run a major social network. (Other social networks, like Instagram, have also focused on adding shopping features.)

• “It’s a way to offer customers a hyperpersonalized experience in both content and commerce,” Deborah Weinswig of the data firm Coresight Research told Bloomberg. Walmart’s shares jumped on the news yesterday.

• The move is another effort by Walmart to reshape its business and take on Amazon through M.&A. The retailer is already trying to sell its British grocery arm, Asda, for about $9 billion, and it bought control of India’s Flipkart for about $16 billion in 2018.

• But it will test the political skills of Walmart’s C.E.O., Doug McMillon. So far, he has managed to stay in President Trump’s good graces — the president has praised him in public — despite chastising Mr. Trump for his response to a white supremacy rally in Charlottesville, Va., and taking stands on politically touchy issues like gun control.

Oracle and its partners have a different pitch. “Oracle could use TikTok’s data about social interactions to benefit its cloud, data and advertising businesses,” Mike reports. Oracle’s consortium includes General Atlantic and Sequoia, which are investors in TikTok parent company, ByteDance, and want to keep a piece of the app after a deal.

ByteDance is expected to decide on a winner in the next few days, with an eye on completing a deal by a Sept. 15 deadline set by President Trump. (That said, given the whipsawing nature of these talks and TikTok’s lawsuit challenging one of Mr. Trump’s executive orders, that timing could change.) Any suitor hoping to prevail must win over both the Trump administration and Beijing, as well as ByteDance’s founder and C.E.O., Zhang Yiming.

If Microsoft wins, kudos would be due to its lobbying team. The Times notes that its Washington influence operation has become “one of the most potent forces in the nation’s capital,” helping the tech giant win a major Pentagon cloud-computing contract while avoiding the antitrust scrutiny that rivals now face.

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

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By law, the Federal Reserve is required to foster both maximum employment and stable inflation — that is, setting policy so that jobs can grow strongly without stoking higher prices. In a widely anticipated speech yesterday, the Fed chair, Jay Powell, announced a major shift in the way the central bank guides the economy, emphasizing job growth much more than the risk of rising prices.

Inflation will be allowed to rise higher than in the past without leading to rate hikes. That is a significant shift from the Fed’s traditional stance, in which it often preemptively raised interest rates as unemployment fell, to avoid inflation rising above a 2 percent target. Now, the Fed will allow inflation to average 2 percent over time, instead of setting it as an absolute goal.

• “It is hard to overstate the benefits of sustaining a strong labor market,” Mr. Powell said, particularly for low-income households. An increase in jobs allows economic gains to be “shared more widely across society,” including “many who had been left behind for too long.”

Were past rate rises overkill? The pandemic-induced recession had already led analysts to expect rock-bottom interest rates for years, but the policy overhaul also calls into question the wisdom of past rate increases. The Fed raised rates nine times from 2015 to 2018, four of which were under Mr. Powell’s watch. Despite historically low unemployment, inflation never really threatened to surpass the Fed’s 2 percent target.

This is a “defining moment” in Mr. Powell’s tenure, The Times’s Jeanna Smialek writes. It’s also momentous for central banking in general, challenging a central tenet of modern monetary policy: that inflation tends to rise when joblessness falls, a rule of thumb known as the Phillips Curve. Given factors like an aging population and low productivity growth, this relationship does not seem as strong as before. That implies a long period of cheap mortgages and business loans ahead.

• It also leaves the Fed with less room to stimulate the economy when the next downturn comes. That might mean another policy overhaul in the future if interest rates aren’t the tool they once were. (Hello, negative rates?)

Prime Minister Shinzo Abe of Japan said today that he was resigning because of illness. His departure introduces a new period of political uncertainty — and an opportunity to reckon with the economic overhaul that came to be known as “Abenomics.”

The program consisted of “three arrows”: monetary easing, fiscal stimulus and corporate reform, all meant to revive Japan’s moribund economy, which was reflected in long periods of low inflation or outright deflation. Mr. Abe’s ambitious proposals jolted the economy, lifted Japanese stocks and inspired Western investors, including shareholder activists like Dan Loeb, to bet big on the country.

Abenomics’ record ultimately proved mixed. Mr. Abe succeeded in raising the employment rate for women, though it remains lower than in other industrialized nations. And other countries, including the U.S., have adopted Japan’s attitudes toward monetary easing. But corporate reforms, including reducing nepotism and a hidebound work culture, fell short.

Investors are worried about what comes next, with Japanese stocks falling as much as 2 percent after reports of Mr. Abe’s plans emerged.

President Trump attacked Joe Biden while accepting the Republican presidential nomination. His 70-minute speech also repeatedly misrepresented his record on the coronavirus and the economy. Earlier in the program, the Senate majority leader, Mitch McConnell, warned of the dangers of Republicans losing control of the chamber; Rudy Giuliani criticized crime in New York City; and Ivanka Trump praised her father “for being real.”

N.B.A. players pledged to end their walkout. The athletes said they would resume the league’s playoffs either today or tomorrow, having raised a public conversation about racial injustice by refusing to play yesterday’s games. Though some — like the White House adviser Jared Kushner — dismissed the move, the walkout’s effects spread far beyond basketball.

Hurricane Laura left a path of devastation across Louisiana. The storm proved less powerful than initially expected, but was still one of the strongest to strike the U.S. mainland and was responsible for at least six deaths in Louisiana.

Nancy Pelosi is pushing a hard bargain on additional coronavirus relief. The House Speaker told reporters that Republicans must agree to spend at least $2.2 trillion in a new rescue bill — less than the $3 billion that the Democratic-controlled House approved weeks ago, but over $1 trillion more than the G.O.P. has proposed.

Tiffany made its takeover look better. In the same week that it delayed the closing of its deal with the French luxury conglomerate LVMH by a few months, the jeweler reported better than expected earnings, as sales in China rebounded strongly. Although the once shaky deal still looks likely to go ahead, Tiffany’s shares are trading at a discount to price agreed by LVMH, suggesting that some doubts remain.

📈 “This quarter really is a victory for stakeholder capitalism.” — Marc Benioff, the Salesforce C.E.O., about earnings that led to the company’s biggest ever one-day stock gain

😷 “We sold about $130 million in masks in Q2 through compelling consumer marketing and digital storytelling that has us ranked as the No. 1 Google search results for ‘face mask style guide.’” — Sonia Syngal, Gap’s C.E.O.

🍳 “We are excited about the growing interest in cooking, especially for millennials.” — Laura Alber, the Williams-Sonoma C.E.O.

🐸 “We introduced what could be the top toy of the year, Baby Yoda, and sold tens of thousands in a matter of days.” — Michael Witynski, Dollar Tree’s C.E.O.

🐶 “We are seeing the pet category perform largely as it normally does. … Pets always eat at home, so the increase from stay-at-home consumption is largely focused on humans.” — Mark Smucker, the C.E.O. of J.M. Smucker

The billionaire real estate mogul and owner of upscale fitness brands like SoulCycle and Equinox alienated liberal customers when he raised millions for President Trump at an event last year. In a Corner Office interview with The Times’s David Gelles, he tried to put that decision in context.

He said he was taken aback by the reaction. “If I would have known the impact of what happened last year, would I have thought about it differently? Of course,” he told David. The $250,000-a-plate fund-raiser at his Hamptons estate was born out of political expediency, he said: “I was looking for certain things to benefit New York.”

He suggested that he might not vote for Mr. Trump in November. When asked why he supported the president’s re-election, the developer responded, “First of all, who said I was?” He added, “I’ve known President Trump for a long time. I’ve known him and I’ve liked him. I don’t agree with a lot of his policies. I believe there’s a lot of good, and I believe there’s a lot of bad.”

Some of the academic research that caught our eye this week, summarized in one sentence:

• The link between union membership and job satisfaction switched from negative to positive in the 2000s. (David Blanchflower and Alex Bryson)

• Behold the “underdog effect”: Workers sometimes perform better when they think others expect them to fail. (Samir Nurmohamed)

• When youth voter turnout rises, so does state government spending on education. (Graziella Bertocchi, Arcangelo Dimico, Francesco Lancia and Alessia Russo)

• People are less likely to behave unethically at work when there are photos of loved ones within sight. (Ashley Hardin, Christopher Bauman and David Mayer)

• In the early stages of pandemic lockdowns, people sheltering at home reported feeling more “hopeless” than first-time prisoners. (Mandeep Dhami, Leonardo Weiss-Cohen and Peter Ayton)

Deals

• Warby Parker, the direct-to-consumer seller of trendy eyeglasses and contact lenses, has raised $245 million in new funding at a $3 billion valuation. (TechCrunch)

• After being forced to scrap a controversial stock sale, the bankrupt rental car company Hertz is pursuing a more traditional $1.5 billion loan to fund it through Chapter 11. (WSJ)

• The billionaire Ron Perelman is reportedly selling rare art valued at hundreds of millions from his private collection to repay a big loan owed to Citigroup. (Bloomberg)

Politics and policy

• President Trump’s planned payroll tax suspension has been delayed amid confusion over whether companies would eventually pay the employee portion of the tax. (NYT)

• The White House plans to buy 150 million rapid coronavirus tests from Abbott Laboratories, which recently won F.D.A. approval, days after the C.D.C. changed guidelines to clamp down on testing. (NYT)

Tech

• Amazon unveiled a new wearable device that can track users’ health and mood. The first impression of one tech columnist: It’s “creepy.” (Reuters, WaPo)

Best of the rest

• “What if the First Coronavirus Vaccines Aren’t the Best?” (NYT)

• The pandemic is changing the geography of LinkedIn connections. (Quartz)

• Four high school seniors shared their college application essays that touch on money, work or social class. Reading them, “it’s hard not to feel at least a little bit optimistic for the future,” The Times columnist Ron Lieber writes. (NYT)

Correction: In yesterday’s newsletter, we gave Ben Carson a new job. He is the secretary of housing and urban development, not the secretary of health and human services.

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