Good morning. Andrew here. We’ve got a lot more on the debate over the influence of proxy advisers on corporate governance, and whether those firms should be regulated. Lots of you sent me your reactions on this topic; we’ve included some below. We also have the latest on the government reopening — and on one thing that we might never get back. (I won’t spoil it for you.) And we’ve got a look at the future of stablecoins and Circle’s leading role in the sector. A reminder: We’ll be discussing the big issues facing business and policy at the DealBook Summit on Dec. 3 with our guests, including Larry Fink of BlackRock and Brian Armstrong, the C.E.O. of Coinbase. We hope you’ll join us. (Was this newsletter forwarded to you? Sign up here.)
A check on corporate watchdogsFor years, two firms little known outside Wall Street, ISS and Glass Lewis, have been the bane of many business leaders over the power they wield in corporate elections. Now, they’re increasingly in the sights of the Trump administration, which is reportedly investigating them over competition concerns. It underscores a bigger shift in how American companies are being run. The latest: The Wall Street Journal reports, citing unnamed sources, that the F.T.C. is looking into whether ISS and Glass Lewis are breaking antitrust law over how they advise clients on proxy issues like climate- and social-related policy. A Glass Lewis spokeswoman told the publication that the company was “fully cooperating with the F.T.C.’s document request.” An ISS spokesman declined to comment to The Journal. The context: ISS and Glass Lewis once wielded enormous influence by recommending how shareholders should vote on corporate matters. Winning their approval was once seen as key for merger approval votes. But big money managers have increasingly emphasized that they make their own decisions. (The Trump administration is weighing limits on the voting powers of those firms, too, The Journal reports.) Smaller institutions, however, still often rely on ISS and Glass Lewis. Proxy advisers have already faced blowback in recent years:
Boards and C.E.O.s have been gaining power in the corporate governance fight. Companies like Tesla have been moving to more business-friendly jurisdictions such as Texas — more on that below — and adopting super-voting share structures. Hammering proxy advisers only continues that trend. Ann Lipton, a law professor at the University of Colorado Law School, told DealBook that regulators clearly take issue now with proxy advisers that recommend against a company’s wishes. “So a proxy adviser that wants to stay away from that kind of controversy will recommend with management,” she said. Indeed, both Glass Lewis and ISS have already announced plans to stop offering a “house” view on corporate votes.
Jeffrey Epstein’s correspondences with business and policy leaders emerge. Lawmakers yesterday released thousands of emails that Epstein, the disgraced financier, traded with the likes of Larry Summers, a former Treasury secretary; Kathy Ruemmler, now the chief legal officer at Goldman Sachs; and Michael Wolff, a journalist. (There’s no apparent implication those people were involved in his crimes.) House Democrats pointed to some messages suggesting that President Trump, who has opposed broader releases of the government’s files on the financier, may have known more about the convicted sex offender’s conduct than he has previously acknowledged. Coinbase is leaving Delaware. The cryptocurrency exchange plans to reincorporate in Texas, citing “unpredictable” outcomes in the Delaware Court of Chancery. The move, which comes after those by companies like Tesla and others, raised questions about whether others will follow suit. It also drew support from Elon Musk and Bill Gurley, the venture capitalist, both of whom have criticized Delaware’s corporate oversight. Billions more flow into A.I. data centers. Anthropic said it would spend $50 billion building data centers in the U.S., including in Texas and New York, as technology companies continue racing to amass computing power for their artificial intelligence services. Energy companies are also announcing initiatives to support these facilities — Chevron plans to provide power for a Texas data center — as Morgan Stanley analysts foresee an electricity shortfall for the sector by 2028. Your thoughts on shareholder votingThe Trump administration is said to be advancing efforts to limit the influence of proxy advisers and big asset managers. Andrew asked yesterday whether it’s good that firms like BlackRock and Vanguard typically vote on behalf of all of their clients, like the people who have 401(k) plans with them. Here’s what you said. (Responses have been condensed and edited for clarity.)
The shutdown’s data dilemmaThe S&P 500 rose 2.4 percent during the record 43-day government shutdown as investors largely ignored the drama in Washington. But Wall Street is in for a reality check now that President Trump has signed the bill to reopen the government. The shutdown deprived the Fed and market watchers of key government inflation and labor data. Even with that blackout set to end, investors are worried that central bankers could head into next month’s meeting with an incomplete picture of the economy that could force them to pause rate cuts. Don’t count on official data clarifying the matter. The Bureau of Labor Statistics is expected to soon say when it will clear the data backlog. But the extent of that revelation is unclear. Karoline Leavitt, the White House press secretary, said yesterday that the October jobs and Consumer Price Index reports may never come out. Mohamed El-Erian, the economist and a frequent Fed critic, warned that such a move was “virtually guaranteed to fuel conspiracy theories,” including about accuracy. (Trump, for his part, wrote last week on social media that “Our Economy is BOOMING, and Costs are coming way down,” contradicting the findings of some private data firms.) September data is likely to be first up. But some economists argue that it will be of little help to the Fed, given that it won’t include the economic toll of the shutdown. After the shutdown began on Oct. 1, thousands were forced out of work or went without pay checks, while families were deprived of their full food-aid benefits known as SNAP. How might the lag affect the Fed? The central bank is growing increasingly divided as some hawkish members have signaled a desire to leave rates unchanged at its next meeting in December. Susan Collins, the Boston Fed president and a voting member, said yesterday that she was concerned about inflation, which is above the Fed’s 2 percent target. And last week, Austan Goolsbee, the Chicago Fed president who also has a vote, added the data blackout is an issue. “When it’s foggy, let’s just be a little careful and slow down,” Goolsbee told CNBC. Traders seem spooked. The futures market this morning was penciling in roughly 54 percent odds of a December rate cut — down from 67 percent yesterday. It’s not ‘stablecoin summer’ anymoreOver the summer, the stablecoin issuer Circle produced one of the year’s best-performing tech I.P.O.s. Yesterday, it reported earnings for the second time as a public company — and its stock got pummeled. Shares of the crypto darling fell 12 percent despite its revenue rising more than expected, to $739.8 million. Investors appeared uneasy about the effect of rate cuts on Circle’s core business, Niko Gallogly reports. The company earns most of its revenue from interest on U.S. Treasury reserves that back its tokens. And returns on its reserves fell 96 basis points year-on-year, to 4.15 percent, in the last quarter. In an interview, the Circle C.E.O., Jeremy Allaire, dismissed those concerns, arguing that rate cuts inject more money into the economy, which facilitates more transactions. “As rates come down, we make it up in volume,” he told DealBook. Circle had been riding the high of “stablecoin summer,” when strong demand, growing institutional interest and new regulation brought stablecoins — digital tokens tied to the dollar’s value — into the mainstream. Treasury Secretary Scott Bessent predicted the market could grow to roughly $2 trillion by 2028. And this month, Cathie Wood, the prominent hedge fund manager and Bitcoin bull, said she believed that stablecoins would gain ground on Bitcoin.
The passage in July of the Genius Act — which created a regulatory framework for stablecoins in the United States — helped Circle cut into the market share of its larger rival, Tether, which has historically operated outside the United States. According to data from JPMorgan Chase, the total market capitalization of Circle’s Genius-compliant stablecoin, USDC, has recently outpaced the growth of Tether’s USDT, which is not Genius-compliant. “The trend towards more public, more transparent, more audited, more compliant, more regulated” has benefited Circle, Allaire told DealBook. But Circle and Tether’s market stronghold is showing cracks. On Jan. 1, USDT and USDC accounted for 88 percent of the total stablecoin market. By Nov. 1, that number had dipped to 84 percent as competition from newer market entrants — like Ethena’s USDe., and USD1, a Trump family-backed coin — has intensified. “They were the first falafel stand and everyone was standing in line,” Dan Dolev, a financial technology analyst at Mizuho, told DealBook. When there are “50 falafel stands next to each other,” he said, the competition gets a lot tougher. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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