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Rate rises appear to be off the table
The Federal Reserve painted a far less rosy economic picture than the White House as it left interest rates unchanged yesterday, and signaled little appetite for any raises in the near future, Jim Tankersley of the NYT writes.
Growth appears to be slowing from last year, Jay Powell, the Fed chairman, said. That’s a result of the trade war, economic slowdowns in Europe and China and fading stimulus from the 2017 tax cuts. The central bank now expects 2.1 percent growth this year, down from its 2.3 percent forecast in December — and more than a percentage point less than the 3.2 percent the White House predicts.
Rate hikes seem to be off the table. Forecasts show that Fed officials broadly expect not to raise rates at all this year, with a single rate increase in 2020 and none in 2021. In December, they expected two rate increases this year and another in 2020.
“The Fed is effectively giving Mr. Trump what he wants from monetary policy, but with a twist,” Mr. Tankersley writes. “The president has publicly pushed Mr. Powell to stop raising rates. But if the Fed is correct and growth falls well below 3 percent this year, without a single rate increase, it will be difficult for Mr. Trump to pin the blame on Mr. Powell.”
Wall Street couldn’t be happier. Sectors sensitive to interest rates have posted some of the bigger gains in the current stock market rally, Matt Phillips of the NYT writes, despite forecasts of an economic slowdown.
More: Mr. Trump’s tax cut won’t power the growth he predicts, White House officials have conceded. C.E.O.s’ economic confidence, as measured by a Business Roundtable survey, fell for the fourth quarter in a row.
Europe’s antitrust assault on Big Tech continues
European regulators slapped Google with a $1.7 billion fine yesterday for antitrust violations involving the search service it offers other websites — the third major financial penalty imposed on the tech company in Europe since 2017.
Google demanded websites using its search bar let it limit the display of any search-driven ads from rivals, according to E.U. officials. “There was no reason for Google to include these restrictive clauses in its contracts, except to keep its rivals out of the market,” Margrethe Vestager, the E.U.’s top antitrust official, said yesterday.
The E.U. forced Google to change its behavior even before the fine. The company stopped its ad requirements when Ms. Vestager began her inquiry in 2016, leading to what Lionel Laurent of Bloomberg Opinion calls “clear changes to its business model,” which have “gone some way to opening it up slightly to more competition.”
Europe isn’t done with Google yet. “The commission is continuing its investigations into other conduct by the company, including its handling of local search results,” the WSJ reports, adding that those inquiries may not lead to charges.
Expect broader action against Big Tech. Adam Satariano of the NYT reports that the E.U. is expected to adopt new copyright proposals to stop unlicensed content being shared on tech platforms, as well as restrictions on spreading hate speech. And its antitrust lawyers are taking a close look at Amazon, Apple and Facebook as well.
But does any of this matter? The E.U. has now fined Google $9.2 billion, but that’s a drop in the bucket compared to the company’s $137 billion in annual revenue, and its shares rose 2 percent yesterday. Some worry that, without breaking up these kinds of companies, it’s hard to get them to really change their behavior.
Trump wants to keep Chinese tariffs for now
Even as his officials prepare for more negotiations with Beijing, President Trump said yesterday that he expects tariffs on Chinese imports to remain “for a substantial period of time,” Bob Davis and Rebecca Ballhaus of the WSJ report.
• “ ‘We have to make sure that if we do the deal with China that China lives by the deal,’ Mr. Trump told reporters as he left Washington for Ohio.”
• “The president didn’t explain whether the U.S. is pressing to keep in place tariffs on all the $250 billion of Chinese goods the U.S. has hit with levies, or some portion of them, nor did he indicate for how long.”
• U.S. negotiators “are more willing to roll back at least some of the 10 percent tariffs on $200 billion of Chinese goods, which took effect in September as the U.S. tried to put more pressure on China.”
• But they’re more resistant to removing 25 percent levies on $50 billion of Chinese goods, imposed in response to “harm to U.S. companies caused by China’s forced technology transfers.”
• “As part of any enforcement plan, the U.S. is also asking China for another important concession — that it agree not to retaliate against U.S. tariffs reimposed for at least some violations of a trade pact.”
Britain’s high-risk play for a Brexit delay
With just eight days to go until Britain is scheduled to withdraw from the E.U., a standoff appears to have put the possibility of a chaotic no-deal Brexit back on the table.
• Ms. May requested from the E.U. a short delay to Britain’s exit, until June 30.
• But the E.U. said it would only allow that if lawmakers endorsed her Brexit plan.
• That seems unlikely, given that lawmakers have twice rejected it already.
“European Union officials appeared to be trying to strengthen Mrs. May’s position and pressure British lawmakers to fall into line behind her plan, which would allow Britain to exit the bloc but maintain its trade ties until at least the end of 2020,” Stephen Castle of the NYT writes.
“If they don’t, the alternative may be an outcome many of the lawmakers like even less than the prime minister’s plan: a break from the bloc with no provisions for cushioning its economic impact — a so-called no-deal Brexit — or an even lengthier delay. And that could potentially mean no withdrawal from the bloc at all.”
One man is holding up the Pentagon’s cloud contract
The Pentagon still hasn’t awarded its $10 billion cloud computing contract, which is supposed to go to a single provider. Amazon, Microsoft, Google, IBM and Oracle are all technically still in the running. The delay stems from a legal fight between Amazon, the favorite, and Oracle, concerning a former entrepreneur called Deap Ubhi, Karen Weise and Thomas Kaplan of the NYT write.
• Mr. Ubhi worked at Amazon from 2014 to 2016, and then joined a Pentagon initiative to help the military hire techies. He also worked on the cloud contract, known as JEDI. He has since returned to Amazon.
• “In court documents, Oracle argues that Mr. Ubhi worked on JEDI when the Pentagon decided to take the approach of hiring a single cloud provider. Oracle cites internal documents in which Mr. Ubhi expressed support for a single cloud,” Ms. Weise and Mr. Kaplan write.
• “Amazon has countered that the Pentagon identified 72 people substantially involved in developing the contract and its requirements, and that Mr. Ubhi worked on JEDI for only seven weeks, in the early stages.”
• “The delays from the Oracle lawsuit could help Microsoft. In the months since the request for proposals went out, the company, which has supplied the Pentagon for decades, has improved its capabilities to the point that some experts believe it is an increasingly credible competitor to Amazon.”
London’s insurance hub is criticized as a “meat market” for women
Lloyd’s of London, the British insurance brokerage, is one of the oldest redoubts of capitalism in the world. But 18 women told Bloomberg Businessweek that they faced sexual assault and harassment there.
• A ban on women on the Lloyd’s trading floor was lifted in 1973, but a macho, sexist culture remains. Women are still referred to as “totty” and are rated for their “shaggability,” according to financial executives.
• One female executive in her mid-30s told Bloomberg Businessweek that she was assaulted by a male manager after a night drinking with colleagues. She said she was marginalized, especially after filing a complaint — while her manager remained in his job.
• Inga Beale, the first female C.E.O. of Lloyd’s, tried to increase diversity at the firm — but was told to “tone it down.”
• She tried to ban daytime drinking, a staple of the Lloyd’s culture, in 2017. Some workers “sneered that Beale was trying to run their life as if she was their mother.” The ban reportedly remains widely ignored.
• Ms. Beale left before her fifth anniversary in the role last fall, and was replaced by John Neal — whose former employer had docked his pay “for not disclosing he was in a relationship with his personal assistant.”
Jeremy King is stepping down as Walmart’s chief technology officer.
JPMorgan Chase is phasing out college recruiting trips in favor of video interviews and online behavioral-science games.
The speed read
• Levi Strauss priced its I.P.O. at $17 a share, valuing it at about $6.6 billion. (WSJ)
• Indonesia’s Lion Air is reportedly working on an I.P.O. (Reuters)
• UBS said its investment banking business has had one of its worst starts to the year in recent history. (FT)
• Bill Ackman’s Pershing Square Capital Management is up 30 percent so far this year, rebounding from years of underperformance. (CNBC)
• Starbucks has set up a venture fund with Valor Equity Partners to invest in food start-ups. (CNBC)
Politics and policy
• To assess Howard Schultz’s leadership, should you look at Starbucks — or his botched sale of the Seattle SuperSonics? (NYT)
• Representative Devin Nunes, Republican of California, sued a Twitter account that pretends to be one of his cows. It now has more followers than he does. (NYT)
• A Senate commerce subcommittee will examine oversight of the Boeing 737 Max in the wake of two crashes. (Axios)
• And the F.B.I. has joined the Department of Transportation’s criminal investigation into how the jet was certified. ()
• The Defense Department’s inspector general is investigating complaints that the acting defense secretary, Patrick M. Shanahan, promoted his former employer, Boeing, and disparaged rival military contractors. (NYT)
• A subscription news service from Apple, expected to be announced Monday, is said to include the WSJ, but not the NYT or WaPo. (NYT)
• And David Solomon of Goldman Sachs is reportedly planning to attend Apple’s event, suggesting that his bank will unveil a long-rumored personal-finance collaboration with the tech giant. (Bloomberg)
• The Supreme Court took a pass on how class-action lawsuit settlements are distributed in a case involving Google, suggesting it may not be ready to help Congress go after Big Tech. (WSJ, Bloomberg Opinion)
• Beto O’Rourke joined the Democratic voices calling to rein in Big Tech, saying that the companies should be treated “a little bit more like a utility.” (Business Insider)
Best of the rest
• New Zealand will ban the sale of military-style semiautomatic weapons, the kind used to kill 50 people at two mosques in Christchurch last week. (NYT)
• Carlos Ghosn’s trial in Japan could start in the fall, sooner than previously expected. (WSJ)
• Greece is enjoying an economic revival, thanks to Chinese and Russian investors. (NYT)
• Jeff Ubben of ValueAct Capital Management criticized PG&E for again postponing a deadline for board nominations. (Bloomberg)
• Business schools are starting to teach softer skills, too. (FT)
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