C4 LATIMES.COM/BUSINESS
Major U.S. stock indexes
finished little changed Fri-
day after a day of mostly qui-
et trading capped the
Standard & Poor’s 500 in-
dex’s second straight weekly
gain.
The market shook off an
early stumble thanks largely
to gains in healthcare
stocks, retailers and makers
of consumer products. Tech-
nology, communications
and utilities stocks fell, as
did bond yields and gold
prices.
Facebook dropped 1.8%
after New York’s attorney
general announced an an-
titrust investigation into the
company.
Traders had a muted re-
action to new data showing
that U.S. employers added
fewer jobs in August than ex-
pected. The report also indi-
cated more people entered
the workforce last month,
wages rose more than ex-
pected and the unemploy-
ment rate remained near the
lowest level in five decades.
The jobs report was the
latest in a mixed batch of
economic data that in-
vestors scrutinized this
week in search of clues about
how the economy is weath-
ering the U.S.-China trade
war. Investors have been en-
couraged this week by news
that envoys from Washing-
ton and Beijing plan to begin
another round of trade talks
next month.
“It’s been a pretty bullish
week and I’m a bit surprised
the market has gone as far as
it has,” said Randy Freder-
ick, vice president of trading
and derivatives at Charles
Schwab. “I don’t think the
trade tariffs issue is going to
get resolved anytime soon,
and I don’t see that we’re a
whole lot further along right
now than where we were a
month ago, when the market
was significantly lower than
it is.”
The S&P 500 inched up
2.71 points, or 0.1%, to 2,978.71.
The benchmark index
gained 1.8% for the week.
The Dow Jones industrial
average rose 69.31 points, or
0.3%, to 26,797.46. The
Nasdaq wobbled much of
the day, ending with a loss of13.75 points, or 0.2%, to
8,103.07. The Russell 2000 in-
dex of smaller-company
stocks fell 5.58 points, or
0.4%, to 1,505.17.
Markets have been tur-
bulent in recent weeks as
worries about the trade war
have waxed and waned.
Stocks slid Tuesday after ex-
panded tariffs between
Washington and Beijing
kicked in and new data indi-
cated that U.S. manufactur-
ing contracted in August for
the first time in three years.
But more encouraging
economic reports on hiring
by private companies and
productivity, in addition to
the planned resumption of
trade negotiations, put in-
vestors in a buying mood
that culminated in a strong
market rally Thursday. The
S&P 500 ended the week at
its highest level in five weeks
and just 1.6% below its
record high, set July 26.
The market got a modest
bounce Friday after Federal
Reserve Chairman Jerome
Powell said the central bank
is not expecting a U.S. or
global recession. In remarks
at a conference in Switzer-
land, Powell said the Fed is
monitoring a number of un-
certainties, including trade
conflicts, and will “act as ap-
propriate to sustain the ex-
pansion.”
Economists said Friday’s
jobs report did little to
change their forecasts for
the Fed to cut interest rates
at its meeting in two weeks.
Traders remain nearly cer-
tain the Fed will cut short-
term rates by a quarter of a
percentage point.
Major indexes in Europe
rose Friday. Earlier in the
day, China’s central bank
cut a key interest rate, which
helped lift Asian markets.
Benchmark crude oil
rose 22 cents to settle at
$56.52 a barrel. Brent crude
oil, the international stand-
ard, rose 59 cents to close at
$61.54 a barrel. Wholesale
gasoline rose 2 cents to $1.57
a gallon. Heating oil climbed
1 cent to $1.90 a gallon. Natu-
ral gas rose 6 cents to $2.50
per 1,000 cubic feet.
Gold fell $9.20 to $1,506.20
an ounce. Silver fell 69 cents
to $17.97 an ounce. Copper
was unchanged at $2.62 a
pound.Interest rates
T-bill: 1 year 1.73 -0.04 -0.80 -0.77
T-note: 5 year 1.41 +0.03 -1.10 -1.41
T-note: 10 years 1.55 +0.05 -1.14 -1.39
T-bond: 30 years 2.02 +0.05 -1.05 -1.08Weekly 6 month 1 year
Treasuries Yield change change changeMajor stock indexes
Dow industrials 26,797.46 +69.31 +0.26 +14.88
S&P 500 2,978.71 +2.71 +0.09 +18.82
Nasdaq composite 8,103.07 -13.75 -0.17 +22.12
S&P 400 1,911.51 -1.12 -0.06 +14.94
Russell 2000 1,505.17 -5.58 -0.37 +11.61
EuroStoxx 50 3,190.41 +10.89 +0.34 +15.59
Nikkei (Japan) 21,199.57 +113.63 +0.54 +5.92
Hang Seng (Hong Kong) 26,690.76 +175.23 +0.66 +3.38Daily Daily % YTD %
Index Close change change change6 Month CD 0.84 0.85 0.86 0.77
1 Year CD 1.41 1.40 1.42 1.34
2 Year CD 1.39 1.42 1.49 1.55
30 Year Fixed 3.75 3.69 3.83 4.31
15 Year Fixed 3.06 3.06 3.09 3.67
30 Year Jumbo 4.66 4.55 4.24 4.45Week 6 months 1 year
Bank & mortgage rates Rate ago ago agoCommodities
Oil: Barrel Oct 19
Gold Ounce Sep 19
Silver Ounce Sep 19Delivery Close Weekly 1 year
Commodity: Unit date in $ change change
56.52 +1.42 -11.23
1,506.20 -12.90 +312.60
17.97 -0.22 +3.90
Source: The Associated Press (Bank and mortgage rate figures from Bankrate.com)Online updates
For current market coverage plus stock prices and
company data, go to latimes.com/business2200023000240002500026000270002800022000230002400025000260002700028000MAMJ J SAFriday:26,797.46
Up 69.31Dow: six months
MARKET ROUNDUP2nd straight
weekly gain
for S&P 500
associated pressfueling tensions among Soft-
Bank employees.
The WeWork IPO comes
at a crucial time for Soft-
Bank, which is trying to per-
suade investors to bankroll a
second, $108-billion iteration
of its Vision Fund. The com-
pany is already mopping up
the fallout from another
poorly performing IPO.
SoftBank put $7.7 billion into
Uber, whose market value
promptly fell after shares
listed publicly at $45 in May.
That price has since fallen to
about $35, well below the
price SoftBank paid for part
of its stake.
Some staffers at the Vi-
sion Fund are now con-
cerned that WeWork’s valua-
tion could fall further, to
even below $20 billion — the
valuation of SoftBank’s orig-
inal investment made by the
Vision Fund, according to
people familiar with the
company who asked not to
be identified discussing pri-
vate matters.
Because the Vision Fund
is so exposed to WeWork, it
will play a substantial role in
compensation for employ-
ees of the fund. People at the
Vision Fund are not paid on
a deal-by-deal basis, as with
some other venture firms.
Vision Fund employees, in-
cluding high-profile bankers
and investors, receive base
salaries and bonuses, but
they get payouts only when
profits are booked. They are
also on the hook for poten-
tial losses, facing clawbacks
of 20% or more for some sen-
ior staff, and 7% for more
junior employees.
There is also a possibility
that WeWork could delay its
IPO. Adam Neumann, We-
Work’s chief executive and
co-founder, pledged to Soft-
Bank CEO Masayoshi Son
this year that WeWork would
have a valuation of at least
$47 billion when it goes pub-
lic, people familiar with the
matter said. A SoftBank
spokeswoman declined to
comment for this article.
Neumann also met with Son
in Tokyo last week to discuss
a potential capital infusion,
the Wall Street Journal
reported, citing unnamed
people familiar with the
matter. The possibility of
SoftBank investing money
to enable WeWork to delay
the IPO until 2020 was also
raised in the discussions, the
Journal said.
SoftBank’s massive bet
in WeWork is emblematic of
Son’s overall approach.
“Why don’t we go big bang?”
he told Bloomberg in an in-
terview last year when asked
about his investing style,
and added that other ven-
ture capitalists tend to think
too small. His goal of sway-
ing the course of history by
backing potentially world-
changing companies re-
quires that those companies
make large outlays in areas
such as customer acquisi-
tion; hiring talent; and re-
search and development — a
spending tactic that he ac-
knowledged sometimes
brings him into conflict with
other investors.
“The other shareholders,
they try to create clean, pol-
ished little companies,” Son
said. “And I say: ‘Let’s go
rough. We don’t need to pol-
ish. We don’t need efficiency
right now. Let’s make a big
fight. Let’s make a big, suc-
cessful — a big win.’ ”
Sometimes, though, the
investors he comes into con-
flict with are his own. The Vi-
sion Fund’s backers, par-
ticularly Saudi Arabia’s
Public Investment Fund and
Abu Dhabi’s Mubadala In-
vestment Co., early this year
scuttled a $16-billion invest-
ment in WeWork that Son
had championed — some-
thing Son alluded to in an in-
terview with CNBC in
March. SoftBank ended up
making only a $2-billion in-
vestment separately from
the Vision Fund.
SoftBank’s huge bet on
WeWork has also caused fric-
tion among members of the
Tokyo company itself. Al-
though Son has the final say
on investments, WeWork isseen internally as the bet of
Ron Fisher, the Boston-
based SoftBank executive
and a longtime aide to Son,
the people said. Fisher, who
grew up in South Africa, was
SoftBank’s highest-paid
executive, with $31 million in
compensation, in the last fis-
cal year — 62% more than a
year earlier.
Before SoftBank first in-
vested in WeWork in 2017,
Fisher met with executives
at IWG, a European com-
petitor with a much lower
valuation and — at the time
— 10 times as many sites,
people with direct knowl-
edge of the matter said.
Some Vision Fund employ-
ees were surprised when in-
stead of persuading Fisher
not to invest in WeWork, the
unfavorable metrics seemed
to encourage him, leaving
him convinced that tremen-
dous growth lay ahead for
the fledgling company. Son
agreed.
A month later, the Vision
Fund led a $4.4-billion in-
vestment round in WeWork
at a $20-billion valuation.
Fisher and Mark Schwartz,
the former Asia Pacific
chairman at Goldman
Sachs Group Inc. who was
appointed to SoftBank’s
board that year, joined We-
Work’s board.
WeWork, by far the larg-
est in the grouping of Soft-
Bank’s real estate invest-
ments, serves as the linchpin
of Son’s broader strategy
around real estate.
In all the sectors where
SoftBank makes big bets, in-
cluding financial services,
transportation and health,
it believes that too many
small companies with out-
dated technology drag down
the industry, creating op-
portunities for bigger, up-
dated iterations.
SoftBank has also
backed start-ups such as
brokerage services provider
Compass, mortgage lender
Social Finance Inc. and con-
struction-tech firm Katerra
Inc., with the belief that
these companies could fun-nel business to one another
and boost growth in the sec-
tor overall.
But Fisher and Son’s
plans weren’t wholeheart-
edly shared by investors in
the Vision Fund. That’s part
of the reason SoftBank’s We-
Work stake is split between
SoftBank itself and its giant
tech fund. Of SoftBank’s
114 million WeWork shares,
about 64 million are owned
by the Vision Fund and the
rest by SoftBank Group, ac-
cording to financial filings.
Once SoftBank completes a
contract that will result in it
buying more shares next
year, SoftBank Group’s
stake will increase to
roughly the same as the Vi-
sion Fund’s, the filings said.
A spokeswoman for Soft-
Bank declined to comment
on the reasons behind split-
ting the stake.
In its results for the quar-
ter that ended in June, Soft-
Bank said the Vision Fund’s
fair value was $82.2 billion.
The cost of the investments
in the most recent results
was $66.3 billion, up from
$60.1 billion the prior quar-
ter, and the fair value doesn’t
reflect the Vision Fund’s
handful of exited invest-
ments such as the money the
Vision Fund made when it
sold its stake in the Indian
retailer Flipkart to Walmart
last year.
For the most part, the fair
value includes the portfolio
companies that have held
IPOs, because the Vision
Fund typically holds on to
most of its shares rather
than selling them in the IPO,
as was the case with Uber.
That means as the price of
those listed shares declines,
the drop will hit the Vision
Fund’s fair value in the next
reported results.
The Vision Fund will be
able to book some increases
due to some successes but
that still falls far short of off-
setting the expected de-
clines in other holdings.McBride and Turner write
for Bloomberg.SOFTBANKChief Executive Masayoshi Son made a massive bet on WeWork that is emblematic of his overall
approach to investing in promising companies. “Why don’t we go big bang?” he said last year.
Kazuhiro NogiAFP/Getty ImagesSoftBank’s bet on WeWork
[We Wo r k , from C1]
LAX has been a testing
ground for facial recognition
technology by various air-
lines and federal agencies.
U.S. Customs and Border
Protection began testing fa-
cial recognition technology
in a 30-day trial last summer,
calling the trial period a suc-
cess.
“Although CBP has a very
thorough and robust bio-
graphic vetting system, bio-
metrics provides additional
assurance and confirmation
of identity,” the agency said
in a statement.
American Airlines indefi-
nitely extended a 90-day test
period for use of facial recog-
nition technology that was
first installed at LAX last
winter.
The Transportation Se-
curity Administration
launched a three-week test
last year of facial recognition
cameras, but a TSA repre-
sentative could not be
reached to describe the re-
sults of the test.
LAX kicked off a pilot
program in January of facial
recognition technology at
three boarding gates used by
several international
carriers at Tom Bradley In-
ternational Terminal. The
testing is ongoing, airport of-
ficials said.
Delta’s deployment Fri-
day of facial recognition
technology in Terminal 2
won’t be a test. The airline is
permanently installing the
cameras, planning an ex-
pansion to 13 of its 21 board-
ing gates.
The cameras use facial
recognition technology to
match the faces of departing
travelers with images and
names already collected by
Customs and Border Patrol
and other government agen-
cies. If the name that corre-
sponds to the image cap-
tured by the cameras is on
the flight manifest, the pas-
senger is allowed to board.
The technology can save
an average of nine minutes
when boarding a wide-body
aircraft, or two seconds per
customer when compared
with traditional boarding,according to Delta.
The carrier defended the
use of the technology, saying
the airline does not store the
images taken at the check-
point and gives passengers
the option to instead have a
gate agent visually confirm
the passengers’ identity.
“Maintaining the privacy
and security of customer in-
formation is a responsibility
Delta takes very seriously,”
Delta spokeswoman Liz
Savadelis said.
Delta officials say that
when Customs and Border
Protection has tested facial
recognition technology at
other airports, fewer than
2% of passengers have opted
out of using it.
An audit released lastyear by the Department of
Homeland Security’s Office
of Inspector General found
that pilot programs to test
the technology at nine air-
ports had a combined match
rate of only 85% — below the
agency’s goal of a 97% to
100% match rate.
The audit also blamed
poor quality of digital im-
ages for difficulty matching
travelers under the age of 29
and over the age of 70. In ad-
dition, the system had more
difficulty matching certain
nationalities — specifically
U.S. citizens, Mexicans and
Canadians — because the
government’s “digital
gallery” had fewer photos of
those nationalities than of
other foreign travelers, the
audit said.
Delta, which has a repu-
tation in the airline industry
for its use of cutting-edge
technology, announced
plans in June to install facial
recognition cameras at 49
boarding gates at Harts-
field-Jackson Atlanta Inter-
national Airport, Minneapo-
lis-St. Paul International
Airport and Salt Lake City
International Airport.
American Airlines said
this week that it was adding
facial recognition cameras
to confirm the identity of in-
ternational travelers at
three boarding gates at Dal-
las Fort Worth International
Airport.Delta adds facial recognition
DELTA SAYSit does not store images taken at the
checkpoint and allows passengers to opt out.Robert GauthierLos Angeles Times[Delta,from C1]