Axios - Business
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Immelt is frontrunner for Uber CEO

Steven Senne / AP

Recode's Kara Swisher reports that Jeff Immelt, the former chairman of GE, is the leading candidate to be the next CEO of Uber. Citing several sources, she reports the pick isn't final and others are still in the running, though none of them are women. A decision by the board could come in the next 2 weeks.

Why it matters: Swisher reports Immelt is a strong candidate because as an experienced CEO he'll be able to navigate the tumultuous board dynamic (ousted CEO Travis Kalanick is still a member and an investor is suing to get him removed), and he's well known to Wall Street ahead of a possible IPO.

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Starbucks' digital payment boom could inspire Silicon Valley

Barron's cover story: "Starbucks Teaches Silicon Valley a Lesson in Tech: The coffee giant is creating a buzz in digital payments. Why the stock could jump 20%," by Alex Eule:

  • "[T]he company's mobile order-and-pay feature has become a major hit ... The preorders have actually created bottlenecks at Starbucks' counters, as pickups collide with in-store orders. The company is rethinking store layouts and hiring preorder specialists to handle the demand."
  • "In the latest quarter, 9% of Starbucks' U.S. orders were placed in advance. Moreover, nearly a third of all Starbucks' orders were paid for via the company's phone app."
  • "Starbucks has changed consumer payment behavior in a way that should inspire envy in Silicon Valley."
  • "For Starbucks, the mobile opportunity is about driving loyalty and higher spending per customer. ... [M]obile users are required to sign up for the company's free rewards program, called My Starbucks Rewards."
  • "MSR members ... represented just 18% of Starbucks' 75 million customers ... [L]ast quarter, MSR members accounted for 36% of sales."
  • "Starbucks wants to grow the member base and offer more personalization, with triggers like weather and time of day. That might spur a discount on iced coffee during a heat wave, for example, or an afternoon Frappuccino if it's not otherwise part of a customer's routine.".

Why it matters: "The biggest investing story of 2017 is the destruction of value in the retail sector. ... A narrative has taken hold: Bricks-and-mortar outlets just can't compete with digital competition."

Starbucks "plans to have 37,000 stores worldwide by 2021, up from around 27,000 today. About 40% of those new stores will be U.S.-based. Some 5,000 are slated to open in the Asia-Pacific region."

Free link for Axios readers (with lots of graphics)..

Featured

Trump signs FDA funding bill into law

AP

President Trump has signed into law a bill reauthorizing the user fees that help fund the Food and Drug Administration.

  • It was one of the last bills the Senate passed before leaving for the August recess, and it could have easily turned into a battle, since the Trump administration wanted to restructure the medical product user fees to make the industry pay the full cost of product reviews.
  • But congressional Republicans and Democrats ignored the request, and the administration didn't push the issue.
  • Notable: It's one of the rare health care bills that's significant and yet passed easily, with bipartisan support and without a fight — and it could be one of the last for a while.
Featured

Dell Tech CEO sends Charlottesville email denouncing violence

AP Photo/John Locher

Despite initially deciding to stay on President Trump's American Manufacturing Council (though it was ultimately disbanded), Dell Technologies founder and CEO Michael Dell has now sent an email to employees, denouncing the events last weekend in Charlottesville.

About face: Dell's email is notable because he was one of the few members on the council not to resign following Trump's press conference on Tuesday where he addressed the weekend's events in Charlottesville, saying there was violence on "both sides." This email comes after Trump abruptly dissolved the council on Thursday (and another decided to disband).

Read the whole email:

At the most basic level human emotion can be divided into into love or hate. Hate is evil and we've seen far too much hate lately whether in Charlottesville, Barcelona or elsewhere.
Our company is a place where everyone is welcome. Our team members come from all backgrounds, religions, nationalities, genders and races. This is one of our greatest strengths and we thrive in this culture. Hatred, violence, racism and terrorism like the kind we have seen last weekend in Virginia and more recently in Barcelona are driven only by evil and seek to divide us. These actions and any who support them have no place in our global society.
Our culture code (dell.com/learn/ly/en/ly…) is at the heart of our commitment and it details the expectations we have for our team members and our company. These recent events only strengthen our resolve to make an even greater positive difference in the world.
Featured

Stocks get a Bannon bounce

Wall Street is reacting positively to news that Steve Bannon is out as senior advisor to President Trump.

Axios' Jonathan Swan first reported at 11:13pm ET that Bannon was likely a goner, which caused the Dow Jones Industrial Average to gain more than 60 points over 20 minutes. The momentum then kept going, with another mini-spike after a the NY Times' Maggie Haberman tweeted that a decision had been made.

Data: Money.net; Chart: Andrew Witherspoon / Axios

Confetti: CNBC reports that floor traders on the New York Stock Exchange cheered the news.

Contrast: Stocks yesterday had their worst session in months, partially due to rumors that former Goldman Sachs president Gary Cohn could step down as Trump's top economic advisor, thus potentially threatening tax reform.

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Goldman Sachs: 50% chance of government shutdown

Goldman Sachs believes there is a 50% chance that the federal government will experience a short shutdown next month, according to a note sent out today by firm economist Alec Phillips. Per CNBC:

Presidential approval continues to decline, and is the lowest for any first-term president in his first year in office. Low approval ratings raise legislative risks. In the near term, we believe there is a 50% chance of a brief government shutdown, as the president seeks to solidify support among his base by embracing more controversial positions.
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Australia moves to regulate bitcoin

AP

Australia plans to regulate digital currencies like bitcoin as part of an effort to bolster anti-money laundering laws, the FT reports. Reforms published Thursday would bring digital currency exchanges under the purview of the country's financial crime-fighting agency. Australian justice minister Michael Keenan wants to ensure digital currencies aren't used to fund terrorists.

Not alone: Japan took similar measures this year to regulate bitcoin and other "alternative coin" exchanges, opening them up for annual audits. Japan was the first national government to take such action.

Why it matters: Regulating the currency means Japan and other countries are recognizing bitcoin as a legitimate form of payment. That recognition has helped send the price of bitcoin to record highs.

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Studios reportedly nearing digital distribution deal with Apple, Comcast

AP

Warner Bros. and Universal Pictures are negotiating a deal with Apple and Comcast to offer audiences digital versions of movies two weeks after their theatre releases, Bloomberg reports. Sources familiar with the matter tell Bloomberg that the deal could come as early as next year. As more consumers watch movies via streaming services, studios want a digital distribution package that help will make up for the decline in DVD sales and home entertainment.

Why it matters: The theatre chain and studio businesses have been unable to compromise on a more expensive ($30+) digital movie option. At issue for some studios is the cost/benefit analysis of charging ahead without the blessing of theatre chains, who still hold enormous power distributing movies and driving revenue. Noticeably missing from the negotiations is Disney, which announced it would build its own entertainment streaming package.

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Financial firms slash compliance headcount

Financial institutions have begun to cut compliance headcount for the first time since the economic crisis, according to Bloomberg.

One big question is if the decrease is more due to automation or expected enforcement reduction under Trump's Securities and Exchange Commission — for example, the President supports a House bill that would end private equity registration, thus making fraud extremely difficult to uncover. It's most likely a bit of both:

"While it is impossible to determine any one specific driver of this rollback, it is likely that as the volumes of fines levied in the sector abates—after reaching a staggering cumulative total of $321 billion—senior management may see an opportunity to reallocate resources elsewhere."

Featured

Electricity giant Calpine to be acquired

AP Photo/Paul Sakuma

Energy Capital Partners has agreed to acquire Houston-based power generation giant Calpine for $5.6 billion, or $17 billion including debt. The deal comes with a 45-day "go-shop" provision and works out to $15.25 per share, which represents a 51% premium to price before first media reports of a possible transaction. Also participating on the buy-side are Access Industries and Canada Pension Plan Investment Board.

Why it matters: Calpine claims to be the country's largest producers of electricity from natural gas and geothermal energy, and one of its largest electricity retailers. But it's also gotten hammered by low natural gas prices and competition from renewables, which helped cause a $29 million net loss in Q2 2016 to balloon to a $219 million net loss in Q2 2017.

Data point: Global energy and power M&A is up 28% over year-to-date figures for 2016, per Thomson Reuters.

Bottom line: Deals are not yet done in this sector, nor even deals involving Energy Capital Partners. The New Jersey-based private equity firm is the largest outside holder in Calpine rival Dynegy, which reportedly received a takeover offer from Vistra.