No Clue When Phase Two of Reopening Starts in NYC, Says Ravitch

Jun.08 -- Dick Ravitch, former New York lieutenant governor, talks about the reopening of New York City after the coronavirus pandemic. He appears on "Bloomberg Markets."

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  • Can Investors Woo Bolsonaro to Save the Amazon?

    (Bloomberg Opinion) -- Investors with more than $4.5 trillion in assets want Brazilian President Jair Bolsonaro to stop loosening environmental rules and do more to control escalating deforestation in the Amazon and beyond. This may be their moment. Upcoming virtual discussions are well-timed: Faced with a pandemic-shattered economy and record outflows, the populist government that has brushed off foreign donors as interfering busybodies will find it harder to ignore sovereign bond holders and equity owners. They can help their case with a show of support for extra green incentives, like biodiversity and carbon credits.Big funds are becoming increasingly outspoken with governments, and not for pure altruism. It’s clear that poor management of Brazil’s natural wealth — most immediately with a proposed law that will legalize land grabs — is a symptom of deeper dysfunctions that manifest themselves in other areas, too, directly increasing risks for investors. Bolsonaro has failed to take the coronavirus seriously and garbled official guidance. Having parted company with two health ministers since April, Brazil has the second-highest number of cases after the United States. Brazil had previously done well in combatting deforestation, but the rate has worsened significantly under Bolsonaro. Last month, at the start of the dry season when farmers and loggers seek to clear ground, the number of fires rose to a 13-year high, according to the National Institute for Space Research. That will lift carbon emissions this year, even as the rest of the world sees a drop in climate-warming gases. Earlier in the year,  Environment Minister Ricardo Salles was caught on camera suggesting that the government use the pandemic to push through more deregulation.The 32 major investors, led by Norway’s Storebrand ASA, said in a letter sent to Brazilian embassies last month that all of this increases “reputational, operation and regulatory risks.”The question of how the wider world convinces emerging economies to put global environmental priorities first has never been easy to answer. Concepts like payment for ecosystem services — compensating governments for forgoing the immediate benefits of land clearance — are helpful, but have often been resisted. Norway, which has paid $1.2 billion into the Amazon Fund under just such a program, suspended payments last year after Bolsonaro’s government, suspicious of non-governmental organizations, questioned the organization and closed the committee that selected projects. Investors have a louder voice than most, not least because Covid-19-era Brazil has little choice but to listen. Public debt is edging toward 100% of gross domestic product, the budget gap has ballooned and the currency has performed dismally of late. The economy could shrink more than 9% this year, according to the International Monetary Fund.Yet how do fund managers turn talks with ministers into actually bringing change? Engaging with a government, be it South Korea or Brazil, is less straightforward than lobbying a company, where enough unsatisfied shareholders can ultimately spill the board.Raising awareness and highlighting concerns publicly as a group, as investors have done, is one step, coming when Brasilia is more sensitive to outside perceptions. Funds can afford to be specific in their demands, making it easier for both sides to measure success.There’s always the threat of divestment, most effective when made with the promise of reinvestment if behavior improves —  a stick with a carrot attached. Done coherently, that can mean not just selling out of government bonds or shares in locally listed firms, but dumping shares in companies like beef producers and others with unsustainable Brazilian supply chains, widening eventual sources of pressure on the government. In one of the more creative examples, a green bond issued by Norway’s Grieg Seafood ASA last month explicitly promised the cash would not be used to buy feed from trader Cargill Inc. due to “soy-related deforestation risk.” Investors cannot dictate government action, but they can point to portfolio risk and cause plenty of direct and indirect pain. A few more carrots might help, though, in dealing with a government that has responded better to investment arguments than to moral ones. Options could include support from major investment firms to develop means of monetizing Brazil’s natural wealth by, say, the sale of carbon credits, as the head of wood-pulp producer Suzano SA pointed out last week, or biodiversity credits, increasingly in demand as firms scramble to offset emissions. Salles has estimated $120 per hectare would be necessary annually to protect the Amazon — a small price to pay given the region has the capacity to absorb as much as 5% of the world’s carbon emissions.Policy makers can provide backup for investor-led efforts at a time when a free trade deal agreed between the European Union and Mercosur, South America’s commercial block, has already met resistance. Real change in Brazil cannot happen without the agricultural sector lobbying for conservation. Bard Harstad, who works on environmental economics at the University of Oslo, says that will happen when producers anticipate that market access is under threat. Withholding the ratification of the agreement until conservation measures are re-introduced, or writing in credible conservation as a condition, would make the message plain.In the simple terms populists like: Money talks.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Miller Samuel Expects Busy Summer for NY Real Estate

    Jul.06 -- Jonathan Miller, president and CEO of Miller Samuel Inc., talks about the real estate market for New York City as more consumers are allowed to actually visit properties. He appears on "Bloomberg Markets."

  • Uber Eats + Postmates Offers Amazon-Sized Opportunity

    (Bloomberg Opinion) -- Uber Technologies Inc.’s deal to acquire Postmates Inc. isn’t just about the need for consolidation in the food-delivery industry. The company also has its eyes on a bigger prize: nabbing business from Amazon.com Inc. and Walmart Inc. in the local commerce market.Early Monday, and following reports of a deal last week, Uber announced it was buying Postmates for $2.65 billion in an all-stock transaction. A combined Uber Eats-Postmates would vault the company to second place in the U.S. food-delivery market with total share of about 30%, versus DoorDash’s 45% share, according to the latest Second Measure data. I previously wrote about how Uber should acquire Postmates, even though the option wasn’t as ideal as its failed merger with Grubhub, as it would still move the needle for the company by rationalizing the overly promotional industry environment and generating significant cost synergies. And in fact, Uber confirmed Monday that the merger would result in more than $200 million annualized savings after the first year, primarily through cuts in marketing and administrative expenses. Uber shares rose 6% following the acquisition news.But as important as the merger is in creating a bigger player with the chance of improving profitability and increasing scale, it also opens the door for an even more important longer-term opportunity to compete with big retailers for all categories in local commerce, Uber CEO Dara Khosrowshahi  told investors on a call Monday. He explicitly called out Amazon and Walmart.Uber Eats has experimented with non-food deliveries. Earlier this year, the company expanded partnerships with supermarkets and local stores in a small number of markets to deliver groceries and certain essential items. But the merger will help to accelerate such efforts because of Postmates’ advanced technology platform, which offers better capabilities for batching orders together and increasing efficiencies. “The vision for us is to become an everyday service,” he said. Postmates is a “great step along that vision” of delivering anything to consumers homes within a couple hours.The Postmates’ website offers more clues on this future. The upstart already delivers groceries, alcohol and drug-store items in some markets, so for the combined company, grocery may be the best area of focus to start. But Postmates’ platform also can be used for other retail products such as home goods as well. Investors should take note of this, especially given Uber management’s clear message that the deal has much deeper ramifications beyond food delivery. As the pandemic is structurally boosting the trends towards all things digital, the deal may pay bigger dividends for Uber —  and make Postmates less of a consolation prize.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Supreme Court's Robocall Ban Has a Big Downside

    (Bloomberg Opinion) -- There’s more than meets the eye in today’s Supreme Court decision striking down a 2015 law that allows some robocalls to your mobile phone — namely, calls seeking to collect government debts. On the surface, the court straightforwardly said that if Congress bans robocalls across the board (as it did in the 1990s) it violates the First Amendment to make an exception for calls with certain content (as it did in 2015). Sensibly, the court didn’t re-allow all robocalls; it just eliminated the more recent debt collection exception.But underneath, the justices were engaged in an important, ongoing debate about how the First Amendment applies to government regulation.The court’s conservatives deepened their commitment to a rigid, formalistic view of free speech that says the government may never treat speech differently on the basis of its content. That doctrine could be used to attack the many forms of government regulation that arguably do exactly that — for example, by saying what information must or must not appear on a drug warning label.The court’s liberals responded by pointing out the looming threat to progressive regulation that may come from the conservatives’ attachment to the ban on content-based laws. Justice Stephen Breyer, in his partial dissent, made it clear that he views the conservatives as gathering their forces to stage a free-speech assault on the administrative state.The general ban on robocalls to your mobile device goes back to 1991. (Although, as anyone who ever answers a call from an unknown number knows, this law is still very imperfectly enforced.) Writing for the conservative plurality, Justice Brett Kavanaugh may actually have understated the case when he said that although Americans “passionately disagree about many things … they are largely united in their disdain for robocalls.”In 2015, Congress passed and Barack Obama signed a short provision carving out an exception for calls “made solely to collect a debt owed to or guaranteed by the United States.” That provision was good news for some debt collectors and bad news for the rest of us.Today’s case, Barr v. American Association of Political Consultants, arose when a group of political consultants challenged the scheme as a form of discrimination against the kinds of calls they want to make, namely political robocalls. Their goal wasn’t to get the debt collection exception rolled back. Their stated aim was for the Supreme Court to strike down the 1991 robocall ban.The consultants’ argument relied on a 2015 case called Reed v. Town of Gilbert — the most important free-speech decision you’ve never heard of. In the Reed case, written by Justice Clarence Thomas, the court struck down the town’s complicated and slightly ridiculous scheme for regulating which signs could go where (and even their size) based on factors like whether they were political signs or temporary directional signs for events.In the Reed case, Thomas said that because the sign ordinance was based on the content of the signs — what they said, in other words — it must be subject to “strict scrutiny,” the toughest form of judicial review of government action. Once a speech restriction is subject to strict scrutiny, it’s almost always held to be unconstitutional. The only way a speech restriction can survive strict scrutiny is if the government shows that it serves a compelling government interest and is narrowly tailored to achieving that end.When Reed v. Gilbert was decided, this bright-line rule — all content-based regulation gets strict scrutiny — was radically new. Traditionally, the court applied strict scrutiny only to government regulation that discriminated based on viewpoint, like favoring Democrats over Republicans or certain ideas over others. The core idea was that in a democracy, the government should not be picking and choosing between different ideas, but should let the different ideas fight it out on a (nominally) level playing field.The Reed rule goes further. Not all content-based regulation is really about the government favoring certain ideas over others.For the last five years, court watchers like me have been poring over the court’s free-speech decisions to see whether the justices really meant what they said in Reed v. Gilbert. Until now, it’s been genuinely unclear. I teach my First Amendment students all about Reed and what it might or might not mean, but I haven’t ever put the question on my exam, because answering it would just take too long and be too complicated.The robocall case offers some clarity. Kavanaugh’s opinion squarely applies the Reed standard. Because the current robocall scheme is content-based, he reasons, it gets strict scrutiny, and it loses. Justices Neil Gorsuch and Clarence Thomas wanted the result to be that the 1991 robocall ban would be struck down. Kavanaugh is far more practical than that, and with a grudging assist from the court’s liberals, he reaches the result of striking down only the 2015 exception for government debt.Breyer’s partial dissent reveals the true stakes. He warns that the courts must not “use the First Amendment in a way that would threaten the workings of ordinary regulatory programs posing little threat to the free marketplace of ideas.” He points out that nearly all regulations — including of securities, food and drugs, false advertising, and workplace health and safety — involve content-based rules because they tell people what to say and what not to say. If all these regulations are to be subject to strict scrutiny, he reasons, either many will fail, or else the concept of strict scrutiny will itself be weakened.Breyer would like to preserve the administrative power of the regulatory state. He knows Gorsuch and Thomas are coming after it. The First Amendment is one of several angles conservatives can use to attack regulation. Today’s decision suggests that the bright-line rule that content-based regulation gets strict scrutiny is going to be an important weapon as the attack is launched.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Noah Feldman is a Bloomberg Opinion columnist and host of the podcast “Deep Background.” He is a professor of law at Harvard University and was a clerk to U.S. Supreme Court Justice David Souter. His books include “The Three Lives of James Madison: Genius, Partisan, President.” For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.