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THE HEADLINES

 

HE JUST WANTS TO GET YOU A LOAN …

Masayoshi Son is going all used car salesman on ‘em.

MaSon is looking for SoftBank employees to tie their wealth to the success of the company via loans from the company. I feel like there has to be a proverb about this …

The plan

SoftBank plans to lend up to $20B to its 400-ish employees with a roughly 5% interest rate. The catch? The cash-money must be invested in the firm’s second $100B+ Vision Fund. For those keeping track at home, $20B represents 18.5% of the estimated $108B fund.

The incentive “opportunity” is strange, even by Silicon Valley standards. Most VCs tie fund’s profits to an employees bonus or incentive pay but few, if any, have an arrangement like the SoftBank deal. Then again most funds wouldn’t find it prudent to invest roughly $10B in The We Co.

For what it’s worth, SoftBank offered $8B in loans to employees for its first Vision Fund.

But, why?

“Because MaSon has a fever and the only prescription is more leverage.”

Adam Neumann’s BFF, Masayoshi Son, believes that the unique opportunity makes employees more accountable and serves as a selling point for outside investors. In reality, it probably has to do with the fact that SoftBank announced a $100B+ fund at a time when the startup market is soft as baby sh*t (see: Uber).

Sure the fund has investors lined up. Banks such as Goldman Sachs and Standard Chartered have pledged “hundreds of millions of dollars” but this will barely make a dent in the fundraising effort. It’s worth noting that the financial institutions are likely (read: definitely) ponying up now to make sure they get hired when the fund’s portfolio companies IPO.

SB has yet to land an anchor investor, similar to the Saudi or Abu Dhabi sovereign wealth funds for Vision Fund 1.0. The giant is in talks with the government fund of Kazakhstan which has committed $3B and claims it has had discussions with other sovereign funds, insurers and pension funds.

 

WTF IS HAPPENING?

In case you were living under a rock (presumably one made out of a safe-have metal like gold or palladium) last week, US markets were more volatile than the emotions of an auditor at GE. We see you, KPMG.

The turmoil started on Monday when all three major indices fell in excess of 1% thanks to lingering trade war fears and political uncertainty in Hong Kong. ICYMI POTUS announced an additional 10% tariffs on $300B worth of Chinese goods earlier this month and markets are still struggling to wrap their heads around it.

Of course, we thought we were in the clear on Tuesday when the White House delayed those tariffs until mid-December to protect US consumers.

And that’s when sh*t hit the fan …

The Dow suffered its largest one-day point drop in history on Wednesday after the yield curve inverted (the 10-year Treasury yield briefly dropped below the rate on 2-year yield). Markets panicked and the Dow dove 800 points.

After a volatile day on Thursday (US indices closed higher), shares closed the week on a high note buoyed by news of stimulus packages that China and the ECB are set to unveil, sending the Dow up 300 points.

Still, the damage was done. The Dow, S&P, and Nasdaq dropped 1.5%, 1%, and 0.8%, respectively over the course of the week.

Meeting of the minds

To ease his mind, Donny Politics got bank CEOs Jamie Dimon, Brian Moynihan, and Michael Corbat on a conference call Wednesday after the sell-off to figure out how to right this ship after three weeks of market decline.

Although details are sparse, according to Moynihan, the banks don’t see a potential recession on the horizon. The White House could not figure out who the f*ck is actually leading Wells Fargo so decided not to extend the invite.

 

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IN OTHER NEWS

• “Free candy!” *Weight Watcher’s PR person rolls up to an elementary school in a van with this painted on the side*. Weight Watchers has come out with a new app called ‘Kurbo by WW’ to help address childhood obesity. Kids from 8 to 17 years of age are the main target of this program, which will assign a green, yellow, or red rating based on what meals the user ate during the day. The program is free but will bring in revenue through it’s $69 monthly fee for those who want to receive consultation from a digital coach. Unsurprisingly, people are not happy about the electronic equivalent of fat camp.

 

• GE’s shares rebounded 9.74% Friday after an 11% drop the day prior thanks to the scathing whistleblower report that accused GE of accounting fraud “worse than Enron and WorldCom combined.” CEO Larry Culp literally put his money where his mouth was with his purchase of roughly 252k GE shares for $2M. Culp fiercely denied the report and pointed out that it was commissioned by an unnamed hedge fund that took a short position in the stock.

 

• Cathay Pacific Airway’s CEO Rupert Hogg and Chief Commercial Officer Paul Loo have resigned following several employees’ (including two pilots) involvement in the anti-government protests in Hong Kong. Protests have rocked Hong Kong for more than two months as residents of the semi-autonomous Chinese region show their displeasure of extradition laws and more broadly, HK leadership. Cathay’s shares reached their lowest level in a decade this week after some employers and individuals in mainland China considered boycotting the airline.

 

• Bitcoin futures exchange Bakkt had its charter approved by the New York State Department of Financial Services to hold custody of customers’ tokens. Beginning on September 23rd, investors will be allowed to buy derivatives that payout in bitcoin. While other bitcoin futures opportunities were launched by CME Group and Cboe Global (no longer offered), those paid out in US dollars. Bakkt’s one day and one-month contracts will be the first to pay in the cryptocurrency. Finally, a quicker way to lose money.

 

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