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| | August 8, 2016 | |
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| | Donald Trump will attempt to get his presidential campaign back on track today by making a speech to the Detroit Economic Club that will appeal to business and conservative voters.
Among other things, the GOP candidate will call for a moratorium on new financial regulations - after an Obama administration that imposed more major new regulations than any in the last four decades. When we surveyed Fortune 500 CEOs earlier this year, some 70% said increased regulation was one of their companies' top three or four challenges, including 11% who said it was their "single biggest challenge."
In addition, Trump will reportedly call for cutting the corporate tax rate to 15% from 35%, repealing the estate tax, and, in a nod to working families, allowing parents to deduct childcare expenses.
Just how he will pay for those tax cuts remains unclear. The only tax increase suggested so far is the elimination of the tax break for carried interest - a long-criticized provision in tax law that allows managers of private equity funds to be taxed at the capital gains rate.
What's remarkable about the paragraphs above is that they harken back to a forgotten era when GOP candidates gave prepared speeches focused on reliably pro-growth policies that were leaked out to reporters by politically-experienced advisers in advance. Could this be the beginning of a new, more disciplined Trump campaign? If so, it will be less interesting for journalists, but more comforting for business. Let's see how long it lasts.
Also yesterday, Michael Phelps and Katie Ledecky won gold. More below.
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| | Top News | |
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| | • Global Markets Upbeat After Jobs Report The optimism fueled by the strong Employment Report for July has driven global stock markets higher again this morning, with Japan up over 2% and Eurozone markets up by around 0.8%. Strong German industrial output figures and a surprisingly upbeat growth forecast for the summer quarter in France have offset disappointing data out of figures, where both imports and exports undershot expectations. Crude oil is also a dollar a barrel higher, on hopes that OPEC (which forecast rising demand in the third and fourth quarters) may freeze its output in response to the summer slide in prices. However, the oil minister of Russia-which would have to play along to make any action credible—has poured cold water on such speculation this morning. The biggest loser is gold, which is down 0.5% as expectations of a Fed rate hike increase. Reuters • Erdogan in Russia Turkey's President Recep Tayyip Erdogan makes his first foreign visit this week since the failed coup attempt him last month, dropping in on Russia's Vladimir Putin in St. Petersburg. The visit is being viewed with unease in Washington and Europe, as it suggests that Turkey is pivoting away from its western allies as it plots a more authoritarian course. It may be more accurate to describe the trip as an act of contrition for challenging Russia's support for Syrian leader Bashar al-Assad, which culminated in the shooting down of a Russian fighter last year. The sanctions that Russia imposed on Turkey's agriculture and tourist sectors since have hit the economy, and Russian has reportedly increased its support for the Kurdish rebels who have resumed their military campaign against Ankara. Erdogan promised "a new beginning" in an interview to TASS yesterday. That will almost certainly have to start with accepting that Assad will stay in power, at least during a transitional phase. Fortune • Antitrust Problem for Amazon The word 'cloud' has come to be synonymous with the latest sharp leg up in Amazon's stock price, but it's now facing one of the more traditional, darker variety. Japan's Fair Trade Commission has raided Amazon's local office on suspicion of pressuring retailers to offer products on more favourable conditions than on rival sites, according to business daily Nikkei. It didn't say when the raid took place. Amazon Japan is suspected of imposing conditions on retailers such as forcing them to sell products at a lower price if they were also advertising on other online shopping sites, the Nikkei said, citing sources with knowledge of the case. As of now, this cloud is still no bigger than a man's hand. But antitrust regulators across the world are showing an increasing appetite for taking on the new generation of dominant giants in the tech sector, and the investigation goes straight to the heart of Amazon's core business. Signs of similar action in Europe, where the company is already in bad odor thanks to its tax practices, could make life a little less comfortable for the prophets of Bezos. Fortune • An Unlikely Rescue for Sleepy's Owner Steinhoff International Holdings, The company known as "Africa's IKEA" has agreed to buy Mattress Firm Holding Corp., the owner of Sleepy's, Tempur-Pedic and Sealy's, for $3.8 billion. Nearly $3 billion of that is in the form of debt—the legacy of expensive acquisition-based growth that has so far only burned through large amounts of cash. The bid price of $64 a share is more than double the company's market valuation at the close of business Friday, raising questions about why a strategic buyer would reward management so handsomely for a failing strategy. Mattress' losses have widened sharply even as it has expanded revenues. Part of the reason for its generosity may be that it's a first venture into the U.S. market for Steinhoff, which has a broad portfolio of retail brands across Africa, Australia and Europe. Its last foray was an $800 million bid for a British dollar-store chain in June. Either way, at least Mattress shareholders (and management) will get their first good night's sleep in a year. Fortune
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| | Around the Water Cooler | |
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| | • Airbus Faces Criminal Probe Airbus is facing a long disruption to its business after it confirmed on Sunday that it is under criminal investigation in the U.K. for issues related to its use of third-party agents to win commercial jet sales. The Serious Fraud Office opened the probe after a tip-off from the U.K.'s export credit agency which, along with its French and German counterparts, have suspended new loans to one of their biggest clients. A Reuters source said the inquiry was likely to last "years", and the news has pushed the company's stock price down 1.5% on a day when most other stock are up. Liability may be reduced by the fact that Airbus itself had flagged the issue as part of a new internal compliance drive. The case ironically goes some way to leveling the playing field with Boeing, which is currently hobbled by the U.S. Export Import Bank's inability to give it new loans while it's paralyzed by a political deadlock. Reuters • Suicide Squad Smashes Records Suicide Squad crushed the record for an August weekend Box Office opening, bringing in an estimated $135 million for its maker, Time Warner Inc. That was the first time a movie opening in August had ever generated over $100 million—the previous record was Disney's Guardians of the Galaxy, which drew $94 million two years ago. Outside the U.S. it took another $132 million, for a total of $255 million—easily recouping its $175 million budget. This of course for a flick that has been roundly panned by critics. Viewers gave it a B+ grade on CinemaScore, suggesting that, like its predecessor Batman v Superman, the numbers are unlikely to stay spectacular for long. Entertainment Weekly • Delta Grounded By Global Systems Outage Delta Air Lines grounded all its flights after a global system outage, the cause of which isn't yet clear. "Our systems are down everywhere. Hopefully it won't be much longer," the airline's twitter account said in response to passenger queries. The outage has already lasted over three hours. The airline is encouraging travelers to keep close tabs on the status of their flights. Delta • Swimming Golds and More Doping Woes The phenomenal Michael Phelps added another Olympic gold medal to his collection—his 19th in all—as the U.S. team won the 4 x 100m freestyle at the Rio games. Phelps's achievement, which may or may not mean that he now has more unpledged gold than the central banks of Venezuela and Ukraine combined, still didn't overshadow that of Katie Ledecky, who broke her own world record in winning the women's 400m freestyle. No amount of feelgood news can distract from the ongoing row over doping, however. Over the weekend, the Russian team was banned from the Paralympic Games wholesale, reigniting the row over the IOC's decision to allow Russia to compete in the main games. The U.K.'s Sunday Times, meanwhile, published detailed allegations that the head of the Kenyan track and field association also helped athletes to get round doping tests. Sports Illustrated, Sunday Times, subscription required | |
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