SoftBank Breaks Records, But Can It Last?

What a difference a year makes.,

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Masa Son has much to celebrate.Credit…Kim Kyung Hoon/Reuters

SoftBank is riding high — for now

A year ago, SoftBank disclosed its biggest-ever operating loss, and its voluble founder, Masa Son, spoke ruefully of the “valley of coronavirus” that ensnared its investments. Now, thanks to huge I.P.O.s, the tech giant is setting a different — and much happier — record.

SoftBank just broke profit records for a listed Japanese company. It earned 1.93 trillion yen ($17.7 billion) in three months ended March 31, bringing its fiscal-year profit to $46 billion. That’s a huge turnaround for the company, which has staked its future on its ability to identify and bet on the most promising tech companies through its Vision Funds.

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A few wagers paid off handsomely. The I.P.O.s of the Korean e-commerce giant Coupang (which contributed $24.5 billion in paper profit), DoorDash and other companies powered the Vision Funds’ nearly $21 billion in earnings for the quarter. In a show of confidence, SoftBank said it was tripling its contributions to its second Vision Fund, to $30 billion. (Unlike the first Vision Fund, which has $100 billion and a variety of investors, the second is solely company money.)

Son professed nonchalance over the volatility of SoftBank’s performance at an investor presentation today: “I’m not overjoyed or depressed so easily, just stay calm,” he said.

Can SoftBank keep it up? While the Vision Fund reaped the reward of big bets over the past year — and some portfolio companies yet to list, like ByteDance and Didi, could generate similar returns — other investments, like the British lender Greensill Capital, imploded. And Son has yet to commit to renewing the biggest driver of SoftBank’s rising stock price in recent months: its enormous buyback program, in which the company bought some $23 billion of its own shares.

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HERE’S WHAT’S HAPPENING

The big pipeline hack has prompted some panic buying. Gasoline prices across the Southeast rose as much as 10 cents a gallon, as the Colonial Pipeline — which supplies nearly half the East Coast’s transportation fuel — remains offline after a ransomware hack. Gas prices nationwide rose 2 percent, to their highest since 2014.

All eyes are on inflation. The Consumer Price Index for April is set to be published at 8:30 a.m. Eastern, adding more grist for the debate about whether rising prices will lead to interest rate hikes (which helped drive yesterday’s stock market drop). Economists expect the report to show a 3.6 percent year-on-year rise, the biggest in nearly a decade, largely due to short-term “base effects.”

The C.D.C. faces pressure over cautious pandemic guidance. At a Senate hearing yesterday, the head of the federal health agency, Dr. Rochelle Walensky, defended it against criticism that it was too slow to update rules on social distancing measures. Lawmakers pressed for new recommendations on cruise ships and other businesses.

The N.R.A.’s bankruptcy filing is thrown out. A federal judge dismissed the gun-rights group’s Chapter 11 case, calling it an attempt to evade a financial investigation by New York’s attorney general. The ruling casts doubt on the future of Wayne LaPierre, the N.R.A.’s longtime chief.

Coinbase introduces another controversial H.R. policy. The cryptocurrency exchange, which last year banned political discussions at work, said it would no longer negotiate over salary in hiring, and would instead offer identical pay by position and location. It said the move would eliminate pay disparities.

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Exclusive: TIAA spells out its net-zero investing plan

Several of the world’s biggest asset managers have joined the movement to cut the carbon emissions of their investments to zero. Now TIAA, which oversees $1.3 trillion in assets, is unveiling its net-zero plan, DealBook is first to report.

TIAA’s $280 billion General Account will go zero-carbon by 2050, the firm is set to announce today. The account, which supports its flagship annuity offering, will do so by focusing on investments in areas like renewable energy and greener real estate, and using offsets to balance out the rest. “Climate risk is an investment risk that we must manage over time,” said Thasunda Brown Duckett, TIAA’s chief executive, describing the firm’s strategy to cut emissions as “investment selection, disposal and engagement with companies.”

The company’s third-party investment manager, Nuveen, already abides by the U.N.’s responsible-investing principles and factors E.S.G. into investing decisions.

TIAA also said it would lay out five-year interim targets for its net-zero plan, with the first set for 2025. Other money managers embracing net-zero goals, like BlackRock and Brookfield Asset Management, have also said they will stick to such milestones — though those firms are setting 2030 as their initial target.

The plan is a bet that net-zero investing is good for the bottom line. Nick Liolis, the investment chief for the General Account, said that the move would create a “resilient portfolio” better placed to meet obligations to pension investors, “which extend into perpetuity.”

“It’s got to be somewhere in the $80,000 to $90,000 range, if not higher.”

–Ray McGuire, the former Citigroup executive who’s running for New York mayor, when asked by The Times’s editorial board to guess the median price of a house in Brooklyn. Responses from seven other candidates ranged from $100,000 to $1.8 million, and only Andrew Yang guessed correctly: $900,000.

Bitcoin E.T.F. dreams deferred (again)

The S.E.C. warned of the risks of mutual funds investing in Bitcoin derivatives in a statement yesterday, setting back the hopes of crypto enthusiasts in a separate but related area: Bitcoin exchange traded funds.

The agency called Bitcoin futures a “highly speculative investment,” and suggested that investors may not appreciate the risks of funds with exposure to the cryptocurrency. It also said that it would study whether the Bitcoin futures market could accommodate the money that would flow in from the entry of E.T.F.s (some of which could invest in futures instead of actual Bitcoin).

Bitcoin E.T.F. expectations were running high. For many crypto fans, this is the holy grail: U.S. regulatory approval of a Bitcoin E.T.F. would be a sure sign of mainstream legitimacy. It would allow the crypto-curious to get exposure without buying tokens. Recent investor and institutional interest in crypto, generated partly by Coinbase’s public listing last month, suggested that approval was almost inevitable. (Several major financial players have applied to list Bitcoin E.T.F.s.) The crypto crowd were also encouraged when the S.E.C. chair went to Gary Gensler, who taught classes on crypto as an M.I.T. professor.

The S.E.C. recently delayed a decision on a Bitcoin E.T.F. from the investment manager VanEck, saying it needed more time. This latest staff note shows more signs of wariness about the suitability of crypto E.T.F.s “in light of the experience of mutual funds.” So it seems the dream will remain deferred.

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Biden’s climate plan pits blue versus green

A tension between labor unions and environmentalists could complicate President Biden’s ambitious green energy plans, which he says will create jobs. Noam Scheiber, a work and labor reporter for The Times, spoke with DealBook about his new article on the divide.

How did you come to this story?

Biden has made a lot of his ambition to both decarbonize the economy and create jobs while doing it. Over the past few months, I’ve tried to understand what the tradeoffs are and what it would take to execute it. It was about stress-testing a very high-altitude claim.

How do unions and environmentalists think about the transition to green energy differently?

If you talk to the mineworkers’ union or the steelworkers’ union, they will say that they have to build the solar panels and wind turbines, not just assemble them. It has to be a deep, rich supply chain that can employ a lot of workers.

From the green perspective, standing up a whole supply chain that might not yet exist takes a lot of time, costs a lot of money and other countries have already invested in building really deep supply chains. So it’s cheaper and quicker just to buy from them.

Is the tension between these two groups a big problem for Democrats?

It’s a tension that both sides anticipated several years ago, and we’ve seen them come together in different coalitions and agree to goals. I think it has worked to some extent. Now, we’re beyond the moment of agreement on principle, and we’re starting to get into writing legislation and having to actually make these tradeoffs. That’s where it starts to get trickier.

When you start trying to point to specific jobs, and labor pushes for more of them, then very quickly you see that manifest in higher costs. Do you try to slow it down and do less on renewable energy to create more jobs? Or do you try to speed it up and accelerate the transition to renewables at a cost of fewer jobs?

What remains to be seen?

We’ve seen some of this get hammered out in a way that doesn’t necessarily satisfy everybody on the state level. But it remains to be seen how it will play out on the federal level.

For example, the federal government spends billions of dollars on tax credits to subsidize the purchase of equipment for renewable energy. There is some thought that a version of these tax credits could have strings attached to them that require a certain fraction of the equipment to be manufactured in the U.S. In cases like these, the Biden administration is going to have to take a position, and where they are going to come down on that tradeoff is still unknown.

Read Noam’s full story: “For Clean Energy, Buy American or Buy It Quick and Cheap?

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THE SPEED READ

Deals

Peter Thiel, Louis Bacon and Alan Howard are among the investors in a new crypto exchange, Bullish Global, that will launch this year with $10 billion in assets. (FT)

In I.P.O. news, the oat milk producer Oatly is aiming for a $10 billion valuation in its market debut, while the salad chain Sweetgreen is reportedly planning to list, too. (Bloomberg, Reuters)

In SPAC news, an Asia-focused fund backed by James Murdoch filed to list; the biotech company Ginkgo merged with Harry Sloan’s SPAC in a $17.5 billion deal; and blank-check firms are set to generate fees for banks long after the boom. (Hollywood Reporter, Bloomberg)

Politics and policy

Lex Greensill testified at a parliamentary hearing in Britain about the collapse of his business, while lawmakers parsed texts sent by the former prime minister David Cameron lobbying for the firm. (NYT)

Iowa and Tennessee are the latest states to reject extra unemployment payments. (WSJ)

Tech

Uber and Lyft will provide free rides to vaccination sites in the U.S., as part of a White House effort to reverse a slowing in immunizations. (NYT)

Christie’s auctioned a collection of CrytoPunks, “among the oldest and most coveted” nonfungible tokens, for $16.9 million. (Decrypt)

Best of the rest

Mike Bloomberg is donating $150 million to universities to help increase racial diversity among science and tech Ph.Ds. (NYT)

The Carlyle Group is linking the pay of its C.E.O. to diversity and inclusion goals. (Bloomberg)

Meet the meme king of Wall Street. (NY mag)

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