Morning Agenda: Google Gets Serious About Producing Better Phones
S.&P. Downgrades China’s Credit Rating
Standard & Poor’s move, which cut China’s sovereign rating to A+ from AA-, was its first reduction in the rating since 1999. The outlook on China was changed to stable from negative.
“China’s prolonged period of strong credit growth has increased its economic and financial risks,” S.&P. said. “Although this credit growth had contributed to strong real G.D.P. growth and higher asset prices, we believe it has also diminished financial stability to some extent.”
Moody’s had cut China’s credit rating in May.
The S.E.C. Was Hacked
Hackers penetrated the Securities and Exchange Commission’s electronic system for storing public company filings and may have traded on them.
The Wall Street Journal’s Dave Michaels reports:
The commission said the hack was detected in 2016, but that regulators didn’t learn about the possibility of related illicit trading until August, when they started an investigation and began cooperating with what the S.E.C. called “appropriate authorities.”
From the S.E.C. statement:
Specifically, a software vulnerability in the test filing component of the commission’s Edgar system, which was patched promptly after discovery, was exploited and resulted in access to nonpublic information. It is believed the intrusion did not result in unauthorized access to personally identifiable information, jeopardize the operations of the commission, or result in systemic risk.
As The Times’s Carlos Tejada writes:
The disclosure, coming on the heels of a data breach at Equifax, the major consumer credit reporting firm, will likely intensify concerns over potential computer vulnerabilities lurking among pillars of the American financial system.
On that note …
• Someone made a fake Equifax site. Then Equifax linked to it.
• If you were expecting some type of criminal prosecution or regulatory penalty for Equifax, you may be disappointed, DealBook’s Peter J. Henning writes.
Preet Bharara Is Back
“So, as you may have read, I was fired by the president of the United States.”
That’s Preet Bharara, the newly minted podcast host, on the first episode of his show, “Stay Tuned With Preet.” Yes, it’s the same Mr. Bharara who was the former United States attorney for the Southern District of New York and who led the biggest campaign since the 1980s against insider trading.
And it’s the same Mr. Bharara who was fired by President Trump in March.
At the start of the podcast, Mr. Bharara recounted his interactions with Mr. Trump in the months leading up to his dismissal as a United States attorney. The top quote:
“Had I not been fired, and had Donald Trump continued to cultivate a direct personal relationship with me, it’s my strong belief that at some point, given the history, the president of the United States would have asked me to do something inappropriate. And I would have resigned then.”
What else is keeping the former prosecutor busy? Well, he’s a:
• Senior legal analyst at CNN,
• Distinguished scholar in residence at New York University’s School of Law,
• Executive vice president at Some Spider Studios, the media company run by his brother, and
• Author of a forthcoming book about the “search for justice.”
As Mr. Bharara said on Twitter, “Can’t live by 140-character quips alone.”
Beginning of the End for Quantitative Easing
“I think that the American people should feel the steps we are taking to normalize monetary policy are ones that we feel are well justified given the very substantial progress we’ve seen in the economy.”
— Janet L. Yellen, on the decision by the Federal Reserve to eventually end its economic stimulus campaign of buying United States government bonds.
Many analysts and economists are puzzled by a weakening of inflation in recent months, even as the labor market tightens.
Ms. Yellen conceded that the phenomenon is a “mystery.” But she suggested that the Fed still planned to raise lending rates at its next meeting in December.
• The Standard & Poor’s 500-stock index was flat at 2,508.
• The yield on the 10-year Treasury note rose 0.37 percent to 2.276 percent. MarketWatch notes that it was the bond’s highest level in five weeks.
Bloomberg Global Business Forum
Sure, world leaders and top business moguls gathered in New York for the United Nations General Assembly. But many of them also showed up at the Plaza Hotel for Bloomberg’s first Global Business Forum.
Michael R. Bloomberg’s Twitter account highlights some of the boldfaced names in attendance:
• Alibaba’s Jack Ma, like Masayoshi Son of SoftBank, considered the rise of the machines, Axios’s Alayna Treene reported. Mr. Ma said that in “the past 30 years we made people like machines. In the next 30 years we’ll make the machines like people.” But people shouldn’t worry, because although machines will be faster and stronger than humans, “human beings have the heart, soul, beliefs, and value.”
• Mr. Son, who was sitting next to the Microsoft founder Bill Gates, said, “For three days I became richer than Bill Gates. Twelve months later, I became almost broke.”
• And Mr. Gates? “It’s fine to celebrate success, but it is more important to heed the lessons of failure.”
Business Takes on DACA, Round 2
Top executives on Wednesday sent another letter defending the Deferred Action for Childhood Arrivals program, known as DACA. As of this writing, 795 people had signed on.
This time, the letter is addressed to congressional leaders, saying:
Congressional action and a permanent legislative solution is the only path forward to prevent these devastating consequences. This is urgent, and we only have a few months to act.
Tim Cook of Apple, who signed the letter, defended DACA at the Bloomberg forum:
TPG’s co-chief executives, Jim Coulter and Jon Winkelried, were among the co-signers of Wednesday’s letter. But their firm is doing something else as well.
The investment firm said that it would essentially cover portfolio companies’ expenses in helping so-called Dreamer employees renew their DACA status before the Trump administration’s Oct. 5 deadline. (The initiative is specifically for DACA recipients whose legal status expires on or before March 5.)
Stat of the Day
Courtesy of CNBC’s Carl Quintanilla:
Procter & Gamble is locked in a fight with Trian Partners’s Nelson Peltz, who wants a seat on the board of the consumer product giant.
Pilot, an Internet Service Start-up, Raises $17 Million
The company, which provides lower-cost fiber internet services to businesses, has raised $17 million in a new round of financing. (DealBook is the first to report the new round.) The round, led by Foundry Group, brings Pilot’s total fund-raising to $35 million.
• The company built its own software to find unused internet fiber and rewired much of that infrastructure itself.
• Pilot says its service is now used by more than 50,000 users at 1,000 customers.
• It now operates in New York City, Philadelphia, Washington and Boston.
• Its 23-year-old founder, Joseph Fasone, was previously at WeWork.
The telecommunications industry is undergoing consolidation, and a company like Pilot would seem to be a candidate for acquisition. But Seth Levine of Foundry Group told DealBook of the start-up: “It can truly build a public-scale business.”
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