It's all Softbank's fault--and a China bombshell

FRI, SEP 27, 2019

YOUR AFTERNOON NEWS UPDATE AND MARKET ACTION FROM CNBC

AS OF FRI, SEP 27, 2019 • 12:11 ET

DJIA		26910.68
		+0.07%	+19.56

S&P 500		2972.90
		-0.16%	-4.72

NASDAQ		7997.00
		-0.42%	-33.66

EDITOR'S NOTE

We've got Peter Eavis--my former Heard on the Street colleague (and an incredible photographer, by the way)--coming up on the show today to talk about the scrutiny on Softbank as people keep reeling from WeWork's "botched" IPO. He explores this in the NYT today.

Here's a killer quote from the piece, from analyst Craig Moffett in discussing Sprint, which was one of Softbank's first splashy U.S. acquisitions back in 2013, when they took a controlling stake: "There's a very solid argument that Sprint's equity is worthless if the [T. Mobile] merger doesn't go through." Yikes.

So there's Sprint, WeWork, Slack (down 40% from its June highs)...a litany of names piling up that don't exactly make Softbank's backing look spectacular right now. Investors have given Softbank founder Masayoshi Son tons of dough--Softbank is currently trying to raise over $100 billion for its second "Vision Fund"--on the back of his smashing success with Alibaba. As the Times points out, Mr. Son put in $20 million in 2000 for a stake now worth nearly $119 billion.

We'll have more on whether Softbank is to blame for pouring billions into start-ups that used the money to delay or avoid taking necessary steps towards being ready for the public markets--like making governance changes, or tightening expenses. Then again, they weren't a Peloton investor, and those shares were down another 8% at the lows today after having the second-worst IPO debut of any company raising over a billion dollars this year.

But speaking of Alibaba, the shares just tanked on a Bloomberg report that Trump officials "are discussing" ways to "limit U.S. investors' portfolio flows into China."

The options reportedly under consideration: de-listing Chinese companies from U.S. stock exchanges; and limiting U.S. government pension funds' exposure to the Chinese markets. Either one--or any other steps the administration may come up with--would be a huge deal, obviously.

The U.S. major indexes immediately gave up their morning gains and turned negative on the report.

Much, much more coming up at 1 p.m.! See you then...

Kelly

Kelly Evans
@KellyCNBC

KEY STORIES

Scandal-plagued Wells Fargo names BNY Mellon's Charles Scharf as CEO

Scharf, chairman and CEO of Bank of New York Mellon, takes over at Wells Fargo as CEO and president on Oct. 21.

Oil rebounds after Trump denies Iran's claim US offered to remove sanctions

Iranian President Hassan Rouhani said Friday that the U.S. offered to remove all sanctions on Iran in exchange for negotiations.

Here are the biggest analyst calls of the day: Amazon, eBay, Lyft, Carnival & more

Here are the biggest calls on Wall Street on Friday

Alibaba, other Chinese stocks drop on report White House considering China investment limits

Shares of Alibaba and other Chinese companies plunged in a sudden move after reports the White House is considering ways to limit U.S. investments in China.

Japan Airlines introduces 'child icon' tool to help passengers avoid sitting near young children

Japan Airlines has introduced a new feature on its booking system to tell passengers where young children will be seated during their flight.

Meet the highly trained super-security dogs that can cost as much as $230,000

The super-rich take security very seriously, and they're willing to spend a fortune to feel safe. In some cases, that means investing in highly trained super-dogs that cost more than a house. With a single command, these four-legged bodyguards can go from cute and cuddly to a bad guy's worst nightmare, and the price of this unique protection can cost as much as $230,000.

Prosecutors agree to pause in subpoena for Trump tax returns

Prosecutors will hold off enforcing the subpoena until two business days after the judge rules on whether to dismiss the case or by Oct. 7 — whichever comes sooner.

Sony and Disney reach deal to continue Spider-Man movie partnership

Sony and Walt Disney announced on Friday that Marvel Studios led by President Kevin Feige will produce a third film in Spider-Man: Homecoming series. The film will star Tom Holland and is scheduled for release on July 16, 2021.