2019年5月31日 星期五

DealBook Briefing: Trump Makes a Huge Economic Gamble on Immigration

New tariffs on all imported goods from Mexico are a dare to stop the flow of undocumented immigrants — and a tax rise that could start at over $17 billion a year.
May 31, 2019
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A Honda car plant in Celaya, Mexico.
A Honda car plant in Celaya, Mexico.  Eduardo Verdugo/Associated Press
Trump brings tariffs to his immigration fight
President Trump plans to impose a 5 percent tariff on all imported goods from Mexico starting June 10, then “gradually increase” it until the flow of undocumented immigrants across the border into the U.S. stops, the NYT reports.
• “Tariffs would be raised to 10 percent on July 1 ‘if the crisis persists,’ and then by an additional 5 percent each month for three months.”
• “They would remain at 25 percent until Mexico acted.” Exactly what it would have to do is unclear.
• Mexico is Washington’s largest trading partner, and sent the U.S. $346.5 billion of goods last year — 5 percent of that is more than $17 billion.
Mr. Trump has “essentially dared” Mexico to risk economic catastrophe on both sides of the border if it’s not willing to meet his demands, the NYT writes.
The tariffs could be hugely damaging. They could upend supply-chain dynamics, exact a serious toll on American consumers and corporations, and potentially derail the renegotiation of Nafta. They could even make a trade deal with China less likely, some analysts said.
“Markets reacted quickly. The Mexican peso weakened against the American dollar, while shares of Japanese automakers fell because many of them have manufacturing facilities in Mexico.” And U.S. stock futures are down this morning.
An obvious question: Where does this end? Tariffs are already in place on imported metals and Chinese goods, and there’s a looming threat of auto tariffs, too. “This whipsaw diplomacy weakens America’s ties with its allies and causes capital to hunker down and wait for more predictable times,” David Fickling of Bloomberg Opinion writes.
More: The U.S.-China trade war is reshaping supply chains in ways that will be hard to reverse. Metal tariffs raised consumer prices but created a few thousand jobs. China reportedly has a rare earth minerals attack plan. (The Pentagon is trying to reduce fallout from such a move, while Bloomberg Opinion argues that the threat is overrated.) And the U.S. is still letting a few countries import some Iranian oil.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.
The Fed may consider lower rates
If inflation and global risks worsen, the central bank’s officials could rethink their cautious stance on interest rates, the NYT’s Jeanna Smialek reports.
That’s according to the Fed’s vice chairman, Richard Clarida. During a speech in New York yesterday, he suggested that a persistent shortfall in inflation below a 2 percent target or big threats from global economic and financial developments could factor into a “call for more accommodative policy.”
The Fed has little to gain by signaling rate cuts, because the storm clouds could disperse if the U.S. and China strike a trade deal at the Group of 20 summit meeting in Osaka, Japan, late next month. “But if the meeting does not produce a path toward an agreement, the Fed might find that it needs to respond,” Ms. Smialek writes.
“Mr. Clarida is just one of 17 Fed officials — albeit an important one — and his remarks are hardly a battle cry for rate cuts,” Ms. Smialek writes. “But they are a sign that the Fed’s top brass is watching global developments warily.”
New inflation data is due out this morning. “While it is possible that the trade war could temporarily lift prices, the Fed is likely to overlook that as a one-off shock or could even welcome it,” Ms. Smialek writes.
More: The bond market is screaming that investors want a rate cut.
  Joshua Lott/Getty Images
Salesforce pressures retailers to curb gun sales
The business software giant is telling stores to stop selling assault-style rifles if they want to keep using its products, Jay Greene of the WaPo reports.
• “The pressure Salesforce is exerting on those retailers — barring them from using its technology to market products, manage customer service operations and fulfill orders — puts them in a difficult position,” Mr. Greene writes.
• “Camping World, for example, spends more than $1 million a year on Salesforce’s e-commerce software, according to one analyst estimate. Switching to another provider now could cost the company double that to migrate data, reconfigure systems and retrain employees.”
• The change affects “a small number of existing customers when their current contracts expire,” as well as all new customers, a Salesforce spokeswoman told Mr. Greene.
• It’s the latest move by Salesforce to take a stand on political and social issues. The company’s C.E.O., Marc Benioff, has been outspoken on immigration, religious freedom and homelessness.
• But some industry advocates called Salesforce’s approach “corporate-policy virtue signaling” that discriminates against gun owners, according to Mr. Greene.
Uber’s growth is still slowing
A $1 billion quarterly loss and slowing revenue growth made Uber’s first earnings report as a publicly traded company painful. But there were bright spots.
Sales growth is leveling off. First-quarter revenue grew 20 percent from the same time a year ago, down from 25 percent in the fourth quarter of 2018. It was Uber’s slowest quarterly growth rate in two years, something it warned would happen as it grew.
Competition is growing around the world, especially in important new businesses like food delivery. That will continue to force Uber to spend money — hence the big losses. Nelson Chai, the company’s C.F.O., told analysts, “We will not hesitate to invest to defend our market position globally.”
One glimmer of hope: Price wars appear to be receding. “We’ve more recently seen signs of competition becoming more focused on brand and products, versus incentives,” Dara Khosrowshahi, Uber’s C.E.O., said on the analyst call.
Another: Uber’s newer businesses are succeeding. Sales for Uber Eats meal delivery more than doubled from a year earlier; those for its freight division more than tripled.
Shares in Uber rose nearly 2 percent in after-hours trading yesterday.
More: Why Uber’s earning report is so confusing. How ride-hailing could hurt mass transit. And people are freaking out about Uber’s plans to ban riders with low customer ratings.
Carl Icahn
Carl Icahn  Brendan McDermid/Reuters
Icahn sues Occidental over Anadarko
The financier accused Occidental Petroleum of pushing for a “fundamentally misguided” and “hugely overpriced” $38 billion takeover of Anadarko — putting himself up against a fellow billionaire, Warren Buffett.
Carl Icahn has a nearly 5 percent stake in Occidental, and wants to know more about how the transaction came about.
Remember that Occidental outbid Chevron in a closely watched M.&A. contest. Chevron had offered $33 billion for Anadarko, but Occidental (which had pursued Anadarko for months) came back with its $38 billion proposal.
Mr. Icahn also dislikes Warren Buffett’s involvement. To help pay for the transaction, Occidental agreed to sell $10 billion in preferred shares to Berkshire Hathaway, which will cost nearly $1 billion a year in annual dividends.
Mr. Icahn concedes that he probably can’t stop the deal, but he is threatening to call a special shareholder meeting to elect new board members.
Occidental defended the deal, saying that the Anadarko purchase would create “compelling” shareholder value. But its shares fell slightly yesterday after Mr. Icahn sued.
A victory for fathers at JPMorgan, and beyond
JPMorgan Chase reached a tentative settlement in a class-action case begun by a father who was denied the 16-week paid parental leave that the company began offering in 2016, Noam Scheiber of the NYT reports.
• “As part of the proposed settlement, the company will take steps to ensure that its policy is administered in a gender-neutral way.”
• “And it will create a $5 million fund to compensate up to about 5,000 fathers who were shortchanged in the past.”
• Experts said the settlement, if approved by a judge, “would be the first to result from a class-action case brought by employees.”
• “This gives an incentive for other workers to come forward” at other companies, said Peter Romer-Friedman of the firm Outten & Golden, one of the lawyers representing the plaintiffs.
Revolving door
HSBC reportedly plans to cut hundreds of jobs at its investment bank.
Rob Lloyd will resign as the C.F.O. of GameStop, the video game retailer.
Andrew Wolstenholme stepped down as the head of the naval and armored vehicles division at BAE Systems after just a year in the role.
The speed read
• Amazon is reportedly interested in buying Sprint’s Boost Mobile prepaid wireless brand, which would be spun off as part of Sprint’s sale to T-Mobile. Comcast and Charter may reportedly buy wireless spectrum that T-Mobile would sell as part of the deal. (Reuters, Bloomberg)
• CBS’s board reportedly plans to start merger talks with Viacom in a few weeks. (CNBC)
• Gannett has reportedly held talks to buy Gatehouse Media, which owns the Palm Beach Post. (WSJ)
• Human Ventures, a venture capital firm focused on new media and health companies, has drawn backers like James Murdoch and the veteran media executive Bob Pittman. (Information)
Politics and policy
• New abortion laws in Republican-led states are testing the activist credentials of media C.E.O.s. (FT)
• The Trump administration is reportedly finalizing a plan to re-privatize the mortgage-finance giants Fannie Mae and Freddie Mac. (WSJ)
• Britain’s Conservative Party has suffered a sharp drop in fund-raising, apparently because donors weren’t happy with Prime Minister Theresa May. (FT)
• Italy’s populist governing coalition is close to breaking up over a flat-tax proposal and other issues. (Bloomberg)
• The Confederation of British Industry, a trade group, again warned that a no-deal Brexit would hurt businesses. (FT)
• Car production in Britain fell 45 percent in April ahead of the country’s originally scheduled date for Brexit. (Business Insider)
• Could Brexit break Britain’s constitution? (Economist)
• During a visit to Britain next week, President Trump will reportedly threaten to stop sharing U.S. intelligence with the U.K. if it uses Huawei gear in its 5G networks. (FT)
• “Huawei has ordered employees to cancel technical meetings with U.S. contacts and repatriated Americans working at its Shenzhen headquarters.” (FT)
• Algorithms developed by DeepMind, Google’s artificial intelligence subsidiary, can now beat human teams at capture the flag. (NYT)
• Makers of digital well-being apps purged from Apple’s App Store proposed a technical fix. (NYT)
• Facebook investors sought to put checks on Mark Zuckerberg during a shareholder meeting — but Mr. Zuckerberg, who holds majority voting power, wasn’t having it. Elsewhere: Mr. Zuckerberg’s personal security chief has been suspended over allegations of racism, and the company’s efforts to reduce vaccine misinformation have been slow. (FT, Bloomberg, WSJ)
• Some U.S. university endowments, foundations and retirement plans are heavily invested in Chinese facial-recognition start-ups. (BuzzFeed News)
Best of the rest
• A nursing home chain’s collapse highlights a little-known, and perhaps risky, government loan-guarantee program. (NYT)
• “Enrollment at colleges and universities is down for the seventh year in a row.” (WSJ)
• North Face added pictures featuring its gear to Wikipedia pages — and drew a swift backlash. (NYT)
• Single mothers are surging into the work force, thanks to a booming economy, increasingly family-friendly policies and a fraying federal safety net. (Upshot)
• FedEx will start Sunday deliveries. (WSJ)
• Budweiser wants to make you a cocktail. (FT)
Thanks for reading! We’ll see you next week.
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