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In today’s edition: A dockworkers’ strike, a new name in the Harris-Wall Street job stakes, and a cl͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
 
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October 1, 2024
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Liz Hoffman
Liz Hoffman

Hi, and welcome back to Semafor Business.

It’s been a week for tail risks. Dockworkers went on strike up and down the US eastern seaboard, threatening a repeat of the supply-chain hell from 2021. A widening war in the Middle East has barely hit oil prices, but only because Saudi Arabia finally decided to increase production. And Hurricane Helene shut down one of the world’s only mines for a type of quartz needed for semiconductors.

More on those stories in today’s newsletter, plus a new candidate emerges for senior jobs in a Harris administration — not straight from Wall Street, but pretty close.

I’ve written a lot recently about the rise of the centrist Democrats this cycle after years spent in a political wilderness. They feel ascendant right now, though it could just be my proximity. Harris has to win first, and by a healthy enough margin to have some political capital to spend. Republicans likely need to control the Senate to pass the gauntlet of Elizabeth Warren. And this could all just be a Manhattan fever dream.

See you Thursday.

Buy/Sell

➚ BUY: Competition. Apollo laid out plans to double in size and become one of the biggest lenders in the world. Its goal of making $275 billion in annual loans would rival JPMorgan.

➘ SELL: Congestion. The East and Gulf coast dockworkers’ strike, their first since 1977, has shut down ports from Maine to Texas. It threatens a repeat of the shipping meltdowns of a few years ago. One industry analyst estimates the walkout will cost between $3 billion and $5 billion a day.

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The Tape

CVS weighs breakupCanadian dockworkers might strike next... VP debate tonight… FTC: Hess CEO conspired with Saudis to keep oil supply down… ‘Liverwurst smoothie’ sparked giant meat recall…Nike’s ‘Jordan hangover’...

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Evidence

Nearly half of the S&P 500, by market cap, is currently under government antitrust scrutiny, a stat that combines the two big forces in today’s corporate world: stock-market concentration and Lina Khan. Her agency, the US Federal Trade Commission, along with the Justice Department and competition authorities in Europe and the UK have active probes or lawsuits against nearly every big tech company plus scores of others, including Visa, Kroger, and Coca-Cola. (One caveat: Regulators don’t always say if they’ve closed an investigation without finding illegal activity.)

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Intel

Former American Express CEO Ken Chenault has emerged as a leading candidate for jobs in a Kamala Harris administration, including Treasury secretary, people familiar with the matter said.

A significant but low-key Democratic donor who has known Harris for years, Chenault ran Amex for nearly two decades before retiring in 2018 as one of the only Black CEOs of a major company. He has donated more than $100,000 to a PAC associated with the Biden-Harris campaign, federal records show, and was among the dozens of business executives who endorsed Harris last week.

His speech at the Democratic National Convention pitched Harris to the business community as predictable and calm, a contrast to the the chaos around Donald Trump: “Business requires stability and certainty,” he said.

Chenault sits on the boards of Airbnb and Berkshire Hathaway and was a member of Barack Obama’s economic advisory board.

“Ken is one of the most well-respected business leaders whether you are right, left or center,” Robert Wolf, a Harris surrogate and former UBS executive, said in an interview. “Few people in industry have his experience on the global stage.”

Chenault and the Harris campaign didn’t immediately respond to requests for comment.

Chenault would be an envoy to a corporate class that’s been largely shut out of power since the mid-2000s. His roles at Airbnb and General Catalyst make him an olive branch to a Silicon Valley set that has turned on Democrats. His tenure at Amex was mostly scandal-free, rare among crisis-era Wall Street CEOs, and he’s probably confirmable even in a Republican Senate. He would also be the first Black Treasury secretary — though so would Wally Adeyemo, Janet Yellen’s 43-year-old current deputy.

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Deep Dish

The DirecTV-Dish merger is among the strangest I’ve seen in a decade of covering deals. It’s really three transactions: TPG is throwing Dish an emergency lifeline to avoid a near-certain bankruptcy filing, then buying the 70% of DirecTV it doesn’t already own, then buying for $1 while assuming its giant pile of debt, replacing that debt with new debt, and hoping creditors go along. Here are a few ways to think about it:

  • The last stop on AT&T’s apology tour: Buying DirecTV was part of the company’s disastrous bid during the 2010s to turn itself into a media player. It unwound the centerpiece of that transformation in 2022 when it shed TimeWarner, which it had bought for $85 billion just four years earlier. Verizon has been on a similar journey, backtracking from its own media ambitions and ending a strange and wildly unsuccessful experiment for the telecom industry.
  • A game of chicken with antitrust regulators. Companies trying to get their mergers past competition authorities always claim it’s the only way to survive, though that’s probably true here. Pay television is a dying industry, and the hope — or at least the companies’ best argument to the FTC — is that a merged Dish and DirecTV will die more slowly. It would have more negotiating leverage with content providers like Disney, which yanked its networks off DirecTV for two weeks this fall.
  • A sign of how quickly Wall Street has changed. When TPG first bought a stake in DirecTV, in 2021, it borrowed $6 billion from banks to pay for it. This time, TPG is lending much of the money itself, via a credit shop it bought last year. Private-equity firms have barrelled into credit — see above re: Apollo — and are edging banks out of big deals.

Correction: The original version of this newsletter said TPG was buying the 70% of Dish it doesn’t own. It’s buying the 70% of DirecTV it doesn’t own and merging that with Dish.

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