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SILENCE ON ROE
I’ve spent a lot of time writing about the tricky situation businesses find themselves in, especially in the past two years, when political and cultural fissures in America compel virtually every public figure to take a moral stand. Why should every CEO have to weigh in on every hashtag and trending moment on Twitter? Can’t we just let Coca-Cola be Coca-Cola?
There was a time when the answer was yes — in the pre-social media age, it might not have mattered that the CEO of your grocery store didn’t issue a public statement about a Supreme Court decision. There were lanes, and we mostly stayed in them.
But a couple of things happened to blur lines between businesses and their consumers:
- First, Corporate America got much, much bigger. Your local store became a Walmart or a Target, or a chain owned by one of just a few national grocers. Market consolidation, baby.
- Then, social media gave those brands a whole new way to target us with their ads.
- In exchange, we the people got free two-day delivery and a virtually unlimited inventory of goods to choose from.
- The more we put our lives on the internet, the more businesses had access to us, to figure out what we want and better cater to those desires.
Corporate America flopped onto the social media scene awkwardly, not unlike the era when all of our parents decided to join Facebook and turn that site into, well, modern-day Facebook. Businesses scrambled to hire young social media mangers who could “engage” with the people. They wanted in. And we couldn’t really stop them.
So it’s no surprise, then, that some of us are wondering where the heck Corporate America’s voice is when the conversation turns to darker, more complicated matters.
As the Times reported over the weekend, companies had more than a month to craft a response to the overturning of Roe. Most of them, including some that aligned themselves with Black Lives Matter or championed LGBTQ rights, haven’t uttered a word about the dissolution of federal abortion rights.
At most, some companies are saying they’ll fund their own employees’ abortions if they have to travel out of state for the procedure. That’s not insignificant, but it also misses the point: The people most affected by the end of Roe won’t be those who work for a Wall Street bank or a tech startup.
Perhaps the issue is just too polarizing, not worth the risk of offending customers on one side or the other. I mean, just look at poor Bob Chapek, the CEO of Disney who spoke up (albeit sheepishly) for LGBTQ rights and ran that $175 billion global media giant into the dirt…
Oh wait. It turns out Disney is still a $175 billion global media giant and home to such beloved franchises as Star Wars, Marvel, Pixar and ESPN. Did Chapek’s squabbling with Florida’s governor run up Disney’s legal bill and annoy the crap out of his PR team? Sure. It was also the right thing to do — whether you define “right” as a good-for-the-world idea or a good-for-business one, Disney’s fans and employees made it clear they wanted the company to take a stand.
So, here’s my suggestion for the leaders of Corporate America worried about defending the reproductive rights of half the people in the United States: Give it a try?
Like, take the concept of moral leadership out for a test drive and see how it feels? Because you told us you wanted to be involved, and that rainbow flag profile picture is starting to make me think you only wanted to, I dunno, pretend to champion human rights when you thought the fight was already won and your stock price was being inflated by monetary policies designed to keep the economy from cratering under the strain of a once-in-a-generation pandemic? And maybe now that inflation’s biting into revenue and we’re in a bear market, that risk to the bottom line feels a little scarier than it did in 2020?
Just a thought.
NUMBER OF THE DAY: 10%
In these uncertain times, any number of things could torpedo a merger — the bear market, fears of a recession, or, you know, the company and every single member of its board of directors being subpoenaed in a federal criminal investigation.
Or at least that’s the case with Digital World Acquisition Corp, the blank-check company that plans to merge with Donald Trump’s media company. On Monday, DWAC disclosed in a regulatory filing that a federal grand jury in the Southern District of New York had issued the subpoenas related to due diligence around the merger.
Shares tumbled 10% on the news. The stock has lost more than half its value this year as regulatory scrutiny has intensified.
Russia just defaulted on its foreign debt for the first time since the Bolshevik revolution, more than a century ago. And it’s not for lack of funds.
Here’s the thing: Moscow failed to pay $100 million in interest on two bonds that came due last month. A 30-day grace period expired Sunday, officially putting the country in delinquency. This wasn’t unexpected, though it did take longer than most people thought it would (more on that in a minute).
Russia, as you might expect, denied it was in default. And in fairness, it appears that Moscow did send money, but rather than those funds winding up in bondholders’ accounts, they’re stuck in the plumbing of international finance thanks to wide-ranging sanctions that prevent clearinghouses in Europe from doing business with Russian entities.
So Russia’s basically saying look, we did our part — if the money can’t get out of the clearinghouse because of sanctions that sounds like a “you” problem, friend-o.
Defaults are murky territory, and Russia’s basically arguing over semantics here. Being in “default” is a problem because it makes other countries wary of lending you money for big-ticket items like infrastructure that you might want to build.
Creditworthiness might be the least of Russia’s issues right now. It’s like, imagine reading the news and seeing a headline about a mass murdering sociopath who also had a subprime credit score and didn’t rewind their videos before returning them to Blockbuster (or whatever the modern-day equivalent is of violating the “be kind rewind” ethos).
Point is, no one’s going to be caught dead lending to an international pariah like Russia anytime soon.
But it gives the White House and European leaders something to pat themselves on the back about while largely ignoring the fact that Russia’s economy is doing far better than it should be.
Sanctions have largely failed to cripple Russia’s economy as the West has intended. Because even as a pariah, it’s still a petro-state at a time when oil supply is crimped and prices are surging.
Even though Europeans have cut way back on Russian energy imports, other nations like China and India are taking advantage of steep discounts on Russian oil, keeping Moscow flush. Meanwhile, Russia’s currency, which cratered at the start of the war four months ago, has rebounded to a seven-year high against the US dollar.
So, what happens to bondholders who need to be made whole? To be honest, no one seems to know. They have three years to sue to the Russian government, according to the Wall Street Journal.
“This is the messiest and most legally uncertain case of sovereign default that I can think of,” one sovereign-debt specialist told the WSJ. “That’s got to be one of many things that makes investors nervous when they think about the prospect of suing the Russian government.”
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