Talk of a downturn could make it a realityPresident Trump’s trade war with China and the gloom hanging over the global economy have many people thinking about the threat of recession in America. But some worry that there’s a danger of simply talking the U.S. into a downturn.
The U.S. economy is sending mixed messages about its health:
• G.D.P. “rose at a seasonally adjusted annual rate of 2.0 percent in the second quarter, a solid pace but down from a 3.1 percent rate in the first quarter and 2.9 percent overall in 2018,” the WSJ reports.
• The Economist says that some parts of the U.S. may already be in recession.
• But American corporate profits rose in the second quarter as companies reduced investment, the WSJ notes, and “U.S. households boosted spending at a 4 percent annual rate in the second quarter, the strongest pace since late 2014.”
• There is no guarantee that a recession is coming. And “by several measures, the American economy continues to thrive, particularly when compared with other rich countries,” Jim Tankersley and Jeanna Smialek of the NYT write.
• But “consumers drive about 70 percent of economic activity in America, and if they become spooked and pull back on purchases, growth could slow more sharply,” they add. “Stock market losses could unsettle Americans and cause them to clamp their wallets shut.”
Mr. Trump continues to shrug off economic worries. The economy is “doing GREAT, with tremendous upside potential,” he tweeted yesterday, while suggesting that he had little intention of backing down from the trade war with China.
The expensive fight to keep gig workers as contractorsUber, Lyft and DoorDash each pledged $30 million to fight legislation in California that would force them to treat their drivers as employees instead of independent contractors, Kate Conger of the NYT reports.
• The companies plan to fund a ballot initiative that would essentially exempt them from the proposed law, which is part of California’s Assembly Bill 5.
• “The companies said their proposed ballot initiative would preserve drivers’ ability to set their own schedules, while Uber and Lyft would offer a concession on minimum wage standards, health benefits and collective bargaining rights,” Ms Conger writes.
• “But the bill’s sponsor, Assemblywoman Lorena Gonzalez, a Democrat from San Diego, has said she does not foresee a deal with the companies,” Ms. Conger adds.
The companies oppose classifying drivers as employees. As contractors, drivers receive almost no regular benefits, such as sick pay or vacation time, which saves businesses like Uber and Lyft millions of dollars. Both have said that categorizing drivers as full-time workers is a risk to their businesses.
But time is running out. A vote on the bill is expected before the legislative session ends in mid-September, and the companies’ ballot has not yet been drafted.
Parts of the energy industry don’t like Trump’s methane rollbackThe Trump administration announced plans to relax Obama-era methane emissions rules this week, in a move that might be expected to be welcomed by oil and gas producers. But not all of them approve, Cliff Krauss of the NYT writes.
The benefit of the rollback to them isn’t clear cut. It depends on whether the new rules would do more to benefit domestic energy production or tarnish the reputation of natural gas as a clean fuel:
• Natural gas often escapes unburned during production and distribution. Its main component is methane, which is far more potent than carbon dioxide as a greenhouse gas.
• Removing constraints on its emissions could hurt the argument that gas should replace coal in generating power.
Many global energy companies distanced themselves from the administration’s decision, Mr. Krauss writes. Royal Dutch Shell and BP said they supported regulation of methane emissions in some form, citing their commitments to environmental causes.
But smaller domestic companies support the rollback, Mr. Krauss adds. They often produce as little as 10 barrels a day and say they can’t afford higher compliance costs.
The difference in opinion mirrors larger divides over Mr. Trump’s other deregulation efforts, Mr. Krauss writes. Oil executives have shown little enthusiasm for new rules that could open the Arctic National Wildlife Refuge and deepwater areas off the Atlantic coast for further exploration.
New accusations that Huawei stole U.S. techFederal prosecutors are studying new allegations that Huawei stole American technology, according to Dan Strumpf of the WSJ, citing unidentified sources.
• “Among the situations being examined are episodes in which Huawei was accused of stealing intellectual property from multiple people and companies over several years.”
• The inquiries “suggest that the government is investigating aspects of Huawei’s business practices that weren’t covered in indictments of Huawei issued earlier this year.”
• “They include alleged theft of smartphone-camera technology from a Portuguese multimedia producer and Huawei’s practices of recruiting employees from rival companies, the people said.”
Huawei can’t catch a break from the U.S. right now. It remains on the so-called U.S. entity list, which means American companies can’t sell it components and software without a license. (However, the Trump administration recently extended a waiver that allows some transactions for another 90 days.)
But China isn’t sitting still. It plans to release its own “unreliable-entity list,” which would restrict foreign organizations from dealing with Chinese counterparts. And Beijing is reportedly studying Chinese companies’ exposure to U.S. suppliers to minimize the effect of current and future bans on purchases.
More: A court case brought by the Justice Department against the Chinese chip maker Fujian Jinhua Integrated Circuit over theft of American intellectual property, which was announced 10 months ago, still hasn’t gone to court. And the Chinese authorities effectively expelled a WSJ reporter after he wrote an article about a cousin of President Xi Jinping.
How Amazon is taking on FedEx and UPSWhen FedEx decided this month to cut ties to Amazon, it brought into focus a new reality: that the e-commerce giant is now a shipping force in its own right and a huge rival to incumbents, according to Sebastian Herrera and Vanessa Qian of the WSJ.
• “Amazon has quietly blanketed the nation with hundreds of sprawling suburban warehouses and neighborhood package-sorting centers, flooded the streets with tens of thousands of vans and even taken to the airways,” Mr. Herrera and Ms. Qian write.
• Amazon has increased the number of its delivery facilities to roughly 400, from about 65 in 2013 , according to the consulting firm MWPVL International.
• Over the past decade, Amazon’s spending on shipping and fulfillment has risen to about $61.7 billion in 2018, from $5.5 billion in 2010. That equals about a quarter of Amazon’s revenue.
• Amazon now handles an estimated 4.8 million packages every day in the U.S., according to MWPVL, as the company now delivers nearly half of its orders itself.
Investigators focus on how Epstein recruited girlsSince Jeffrey Epstein’s death, the federal authorities have refocused their investigation on the more than half-dozen employees, girlfriends and associates who prosecutors say recruited girls for him to abuse, the NYT reports.
Mr. Epstein relied on a network of underlings, according to civil suits. Some trained girls how to sexually pleasure him; others ensured that he always had a fresh supply of teenage girls at the ready.
There was a hierarchy to the sex-trafficking ring, accusers say. At the top was Ghislaine Maxwell, Mr. Epstein’s longtime companion. Below her was Sarah Kellen, referred to as the “lieutenant” in one lawsuit, who is accused of managing contact information for girls.
The federal authorities are eyeing possible charges that include sex trafficking and sex trafficking conspiracy, the NYT reports, citing people with knowledge of the investigation. So far, federal prosecutors have not charged or named any co-conspirators.
Revolving doorBennett Goodman, the co-founder of Blackstone’s powerful credit-investing unit, GSO, plans to retire at the end of the year.
UBS named Sabine Keller-Busse, currently its C.O.O., as its president of Europe, the Middle East and Africa. It also appointed Suni Harford as head of asset management.
Madeleine Westerhout has resigned as President Trump’s personal assistant, after sharing details about his family and administration at an off-the-record dinner with reporters.
The speed readDeals
• Disney agreed to sell its stake in YES Network, the New York Yankees’ regional sports network, to a group including Amazon, the Sinclair Broadcast Group and the team, for $3.47 billion. (CNBC)
• G.E. said it planned to sell an aircraft-financing unit with $3.6 billion in receivables to Apollo Global Management and Athene Holding. (Bloomberg)
• Sony plans to sell its $760 million stake in Olympus back to the imaging company, a move called for by Third Point’s Dan Loeb. (Reuters)
• Activist investors are taking stakes in Groupon with a goal of pushing the e-commerce company to consider share buybacks or a sale of itself. (WSJ)
• CNH Industrial, the Italian-American industrial vehicles maker, is reportedly considering a spinoff of its Iveco truck unit. (Reuters)
Politics and policy
• The Democratic National Committee blocked plans to let Iowans vote by phone in next year’s presidential caucuses, citing cybersecurity concerns. (NYT)
• The Trump administration reportedly plans to unveil a new rule expanding the number of Americans eligible for overtime pay. (WSJ)
• Mr. Trump authorized the creation of a U.S. Space Command yesterday, describing it as a precursor to a full-fledged space branch of the military. (NYT)
• Joe Biden dismissed a report that he has been telling an embellished story about a war hero while on the campaign trail. (NYT, WaPo)
• Legal experts say that court challenges to a British government plan to suspend Parliament, which would hurt efforts to block a no-deal Brexit, would be unlikely to succeed. (FT)
• Some members of the governing Conservative Party have allied themselves with the opposition Labour Party to help prevent Britain from leaving the E.U. without a deal. (FT)
• Negotiations between British and European officials over Brexit will take place twice a week starting in September. (Politico)
• Why Britain’s economy isn’t ready for a no-deal Brexit. (FT)
• India’s restaurants are rebelling against food delivery apps like Zomato and Uber Eats. (NYT)
• Apple will unveil its latest iPhones on Sept. 10. (Bloomberg)
• Here’s what the U.S. could learn from Europe about antitrust regulation of Big Tech. (Politico)
• Uber’s C.E.O., Dara Khosrowshahi, said “it sure looked like” the company’s former engineer Anthony Levandowski had taken information on self-driving cars from Google. (Bloomberg)
Best of the rest
• State attorneys general say that a proposed deal for Purdue Pharma to settle more than 2,000 lawsuits over its role in the opioid crisis doesn’t offer enough money. (WSJ)
• The marketing practices of the e-cigarette manufacturer Juul are reportedly under investigation by the F.T.C. (WSJ)
• “Fears of a world domination by a handful of asset managers are overblown.” (Institutional Investor)
• China’s renminbi looks set to suffer its biggest monthly fall in value in more than 25 years. (FT)