bitcoin20180402_61.txt

 Good Thursday. Here’s what we’re watching: • The leeway in President Trump’s tariff order. • President Trump authorizes tariffs. • What happens when the bond market and the Fed disagree? • Cigna struck a big deal for Express Scripts. • The White House plans to unveil its tariffs today. • Protesters want Visa to stop processing sales of assault-style rifles. Want this in your inbox each morning? Sign up here. President Trump has backed trade restrictions for much of his public life, but his tariff orders have some wiggle room. This leeway could come in useful if his administration needs to step back in the face of economic or political pressure. First, the secretary of commerce, Wilbur Ross, has leeway to exempt certain steel and aluminum imports from the restrictions if he determines that the United States lacks the capacity to produce them. There is also a national security exemption, notable since national security concerns are the legal basis for the tariffs. Second, the order leaves the door open to discussions with allies other than Mexico and Canada, which are currently exempt. It says that a country that has a security relationship with the United States is welcome to discuss ways to allay the United States’ national security concerns. If successful, the president might decide to modify or remove the tariffs. — Peter Eavis The president defied allies both in his own party and overseas Thursday and signed an order imposing sweeping new tariffs on imported steel and aluminum, reports the NYT’s Peter Baker and Ana Swanson. Still, he sought to soften the impact on some of America’s closest allies. For now, Canada and Mexico are exempt and there is the possibility of later excluding allies such as Australia. But the order could hit South Korea, China, Japan, Germany, Turkey and Brazil. From the NYT: The details • The orders will raise levies on foreign steel by 25 percent and on imported aluminum by 10 percent. • Mr. Trump said the order would give him the authority to raise or lower levies on a country-by-country basis and add or take countries off the list as he deems fit. • The order goes into effect in 15 days. Tariff flyaround • A group of 11 nations — including major United States allies like Japan, Canada and Australia — signed a broad trade deal on Thursday that challenges Mr. Trump’s view of trade as a zero-sum game filled with winners and losers. (NYT) • The chances of a complete breakdown in the global trade system remain remote, if a little less remote than a week ago. (NYT) • The marriage of establishment and populist economic thinking was always an uneasy one. Now President Trump’s steel and aluminum tariffs are forcing the Republican party to choose between its core business supporters and populist voters. (WSJ) • The tariffs have caused much concern about President Trump’s trade policy. A probe into Chinese intellectual property policy could prove more devastating. (Breakingviews) When the Federal Reserve and the bond market are at loggerheads, it’s almost as if the economy’s parents are fighting. The kids, stock investors and borrowers in this analogy, just don’t know who to side with. This dynamic appears to explain what happened in early February when inflation fears sent bond prices lower and, in turn, set off panicked selling in the stock market. Now, as the Fed gets ready to raise interest rates several times, differences between the central bank and the bond market could start to matter more. There is no conclusive way to measure the degree of disagreement between the Fed and the bond markets. But that didn’t stop us having a go. One approach is to compare the yield on the bellwether 10-year Treasury note with Fed policymakers’ forecasts for the central bank’s target rate. Several times a year, the policymakers project where the federal funds target rate will be at different points in the future. In this exercise, we compared the 10-year’s yield with the median forecast made in December for the target rate at the end of the next year. In December of 2014, 2015 and 2016, the 10-year’s yield was around 1 percentage point higher than the forecast. But in December last year, the difference between the two numbers had shrunk markedly. The yield was only 0.26 of a percentage point above the forecast. One interpretation of this narrowing: The bond market was behind in reacting to economic strength. And when it did snap out of its possibly complacent state, it did so sharply. The 10-year yield is now 2.88 percent, up from 2.39 percent before the meeting in Dec. 2017. With that increase, there was a 0.77 percentage point difference between the policymakers forecast and the yield on the 10-year Treasury on Monday. But if the 10-year yield moved up to reestablish a 1-percentage point difference, it would sail past the psychologically important 3 percent mark. The problem, of course, with using Fed policymakers’ forecasts is that the Fed has made them public only for a few years. To get a much longer perspective, we looked back at the actual interest rate that the Fed targets, which is set in the market for the funds that banks must keep on deposit at the Fed. We compared this effective federal funds rate with the 10-year’s yield. On Monday, that spread was 1.46 percentage points. How does that compare? It’s tighter than the median for the past eight years, 1.95 percentage points. The 10-year yield would have moved a lot higher to take the spread back there. But there is a less alarming viewpoint. The current 1.46 percentage point spread is only slightly higher than the median 1.24 percentage points for the 50-plus years we studied. And, perhaps most reassuringly, 1.46 percentage points is very close to the 1.67 percentage point median for June 2003 till the end of 2006, a period in which the Fed raised interest rates repeatedly. — Peter Eavis Cigna finally got a big deal done by buying Express Scripts, one of the U.S.’s largest drug benefits managers, for $69 billion, including debt. The bigger point: as always, health care companies want to get bigger and gain negotiating leverage, while branching out into different businesses. The details: The insurer agreed to pay $48.75 a share in cash and 0.2434 of a newly issued share for each Express Scripts share. That’s about $96.03 as of yesterday’s close, a roughly 30 percent premium to Express Scripts’ closing price. The context: Cigna’s planned sale to Anthem finally collapsed last year, as did Humana’s sale to Aetna, which was then acquired by CVS. Courtesy of our friends at Thomson Reuters: • At $69 billion, Cigna-Express Scripts would be the biggest deal of the year. • It is the 33rd deal valued at more than $5 billion announced this year. That is a record number for any year through March 8. • The value of those 33 transactions is $419 billion, or 53 percent of all acquisitions announced in 2018. • With nearly $800 billion in acquisitions announced globally this year, deal making is off to its best start since 2000. Protesters plan to gather at the payment processor’s headquarters in Foster City, Calif., at 11 a.m. P.T. today to demand that such companies stop doing business with sellers of assault-style rifles. It’s a demonstration that grew out of Andrew’s column last month arguing that the financial industry could help alter gun regulations. “Visa quite literally has the power to save lives and their customers are demanding it,” said Nita Chaudhary of UltraViolet, one of the organizers of the protest. Elsewhere in guns and business: Why Wells Fargo is the biggest lender to the firearms industry. And Republican lawmakers are turning to measures to bolster school security, rather than gun control, just as makers of metal detectors and bulletproof clipboards have hoped. Late last month, Goldman Sachs announced Dina Powell, a former deputy national security adviser to President Trump, would be joining the firm’s management committee. Lloyd Blankfein, the firm’s chief executive of Goldman Sachs, had seized on the chance to bring back Ms. Powell, Bloomberg reports, in the hope that her experience in the White House would help the firm navigate the Trump presidency. But the move has not sat well with some at the bank. Bloomberg reports: • President Trump went against legal counsel and asked witnesses in Robert Mueller’s investigation what the special counsel had asked. Mr. Mueller reportedly has gathered evidence that a Seychelles meeting in 2016 between a Trump adviser and a Russian official was an attempt to create a backchannel to the Kremlin. And Hope Hicks reportedly told House investigators that her emails were hacked. • Some blue-collar Trump voters think the tax overhaul’s results have been meh. (NYT) • Mr. Trump’s personal lawyer, Michael Cohen, obtained a restraining order against the adult-film actress Stormy Daniels. (NYT) • How Trump campaign workers were rewarded. (NYT) So serious is the Trump administration’s review of the chip maker’s takeover bid for Qualcomm that Broadcom has pledged to advance the American lead in 5G wireless research and to create a $1.5 billion fund to train U.S. engineers. Broadcom’s legally headquartered in Singapore for now, but Michael looked at how foreign it is on measures like number of employees and facilities in the U.S. The short answer: It looks a lot like Qualcomm. Elsewhere in Broadcom: A customer, Western Digital, has accused the company of playing unfair hardball. And why China views Huawei with pride — and the U.S. views it with fear. The deals flyaround • Univision’s C.E.O., Randy Falco, plans to retire at year end, and the broadcaster has called off its I.P.O. • Mellanox said that it would hold a special shareholder meeting to vote on two corporate governance items, but the activist Starboard Value began a board fight at the chip maker and is unlikely to be happy with a delay in the annual meeting. • Spotify has picked Citadel Securities to set the price for its direct listing debut, according to unnamed sources. (WSJ) • Meet JAB, the secretive conglomerate that bought brands like Peet’s and Dr Pepper Snapple and is taking on Nestlé. (WSJ) • Analysts at JPMorgan said Archer-Daniels Midland would probably bid for Bunge, but the economics of a takeover weren’t compelling. (FT) • J.M. Smucker is considering selling its bakery brands, including Pillsbury, unnamed sources say. (Bloomberg) • Bayer is in talks to sell its vegetable seeds business to BASF to win approval for its takeover of Monsanto. (Bayer) Here are some highlights from his interview with David Streitfeld of the NYT. On Facebook: the board was “far from perfect” in thinking about the tech giant’s longer-term problems. And the anger now focused on the company is about the industry’s arrogance: “Silicon Valley says the future is going to be better than the past. That is the propaganda, if you will.” On Mr. Trump: He’s not that close to the president anymore, and the White House has “fallen short” of expectations. But this administration is better than Hillary Clinton’s or any other Republican’s would have been. On Gawker: He doesn’t want to buy the defunct site to erase its archives, he asserts. “Preserve them, study them instead.” Virtual currency corner: Bitcoin is at about $10,058 this morning, down after some exchanges reportedly had problems processing orders. The S.E.C. says that digital money trading platforms need to register with it. Japanese regulators punished seven exchanges after the CoinCheck heist. The tech flyaround  • Travis Kalanick is going from Uber C.E.O. to venture capitalist, with focuses on China and India. (WSJ) • Uber is retreating from Southeast Asia and is close to selling its operations in parts of the region to Grab, the dominant ride-hailing service, unnamed sources said. (Bloomberg) • Amazon is offering a discount on its Prime membership program to Medicaid recipients. And Alexa is now less likely to produce spontaneous, sinister laughter. • Snap is preparing to lay off about 100 people, its biggest round of job cuts to date. (Cheddar) • Ad prices rose on Facebook after it revamped its News Feed algorithm. (Recode) • Ireland’s data regulator has threatened big fines for tech giants who run afoul of new European privacy laws. (FT) • What our tech columnist, Farhad Manjoo, learned after getting his news only in print for two months. (NYT) The talk of the ad industry today: @DietMadisonAve, an anonymous Instagram account dedicated to exposing sexual harassment in the business. It has published names of alleged harassers and what they’ve been accused of, including men fired by agencies like Droga5 and Wieden & Kennedy. More from Sapna Maheshwari of the NYT: Critics, including women who work with agencies, say it’s trial by social media. Elsewhere in misconduct: Two directors at Wynn Resorts said they would step down in the wake of the Steve Wynn scandal. And the head of the U.S. Forest Service resigned amid sexual harassment accusations. His day job is head of Vista Equity Partners, one of the top-performing private equity firms. But Mr. Smith is also the wealthiest African-American around, with an extensive record of philanthropy, a topic that he spoke about to Forbes for its annual billionaires issue. From a statement he had prepared for his signing of the Giving Pledge: The top 5 billionaires in this year’s list and their estimated net worth: • Jeff Bezos, $112 billion • Bill Gates, $90 billion • Warren Buffett, $84 billion • Bernard Arnault, $72 billion • Mark Zuckerberg, $71 billion Watch the billionaire investor Paul Tudor Jones sing backup on his daughter Caroline’s song “The Difference.” (He really hits the “ooh-wee.”) • The E.C.B. was expected to take a step away from crisis mode, but then Italy had an election. (NYT) • Saudi Arabia’s crown prince and Britain’s prime minister agreed to an economic and investment partnership worth billions of dollars. London has been plastered with advertisements for Crown Prince Mohammed bin Salman during his visit. • The rise of passive investing has attracted scrutiny to corporate governance advisory groups like I.S.S. and Glass Lewis. (FT) • Deutsche Bank is close to securing Nippon Life as a strategic investor in its asset management division, which it plans to float this month. (FT) • K.K.R. has agreed to buy a majority stake in Heartland Dental, the U.S.’s largest dental support organization. (WSJ) We’d love your feedback. Please email thoughts and suggestions to bizday@nytimes.com.