Connect with us


DealBook Briefing: Trump Admitted to Exploring Tax Cuts. Here’s Why.



Good Wednesday morning. Apparently President Trump was serious about wanting the U.S. to buy Greenland: He called off a state visit to Denmark after the Nordic country’s prime minister said that the island wasn’t for sale. (Was this email forwarded to you? Sign up here.)

President Trump confirmed yesterday that he is considering tax reductions, after White House officials denied the idea. The reason: The U.S. economy might need the extra help.

Mr. Trump said he’s weighing cuts to payroll taxes and capital gains taxes. He claimed that it’s not because he is worried about a recession, and argued that the U.S. economy remains “incredible.”

But he surely sees warning signs in many of his favored economic indicators:

• Private nonresidential fixed investment has dropped well below its 2018 peak.

• The growth rate for companies’ investments in new equipment is just under 1 percent.


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 company said its screening “will never be perfect, but added that it is “always looking for ways to improve our policies and enforcement.”

The Justice Department is doing it. So are the F.T.C. and Congress. Oh, and state attorneys general, too. We’re talking about antitrust investigations of Big Tech — but it’s unclear what kinds of remedies might result from the inquiries. Steve Lohr of the NYT takes a look at four main possibilities.

Bright-line breakups. The idea here is that a company can’t sell goods on a dominant online marketplace or platform that it owns, Mr. Lohr writes. It’s an aggressive approach that could prevent companies from entering new businesses. Many economists are leery of the approach, but it’s not implausible — and is supported by the presidential candidate Senator Elizabeth Warren.

Selective split-ups. “This is a case-by-case approach to breakups,” Mr. Lohr writes. One example: forcing Facebook to shed Instagram and WhatsApp. It’s probably more palatable to economists than the bright-line approach, but it’s important to consider whether it would actually enhance competition. There’s also a question of how easy it would be, if the businesses have become tightly enmeshed.

A tech watchdog. A new regulator “would be an expert group to supplement traditional antitrust regulators,” Mr. Lohr writes, that would be “able to move faster and have the expertise to constantly track the tech markets and trend.” Yet it’s unclear how much traction this idea would have with the Trump administration, despite bipartisan concern about Big Tech.

Unlocking our data. There are also more targeted ideas, some of which propose loosening companies’ control of user data, letting customers easily move from one service to another. Proponents say this would remove a barrier to competition. But it would require some finely crafted technical solutions.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


GM buyers and owners could soon start feeling impact of UAW strike




General Motors Co. (GM) Chevrolet vehicles are displayed for sale on the lot at Phillips Chevrolet car dealership in Frankfort, Illinois.

Daniel Acker | Bloomberg | Getty Images

The strike against General Motors by 48,000 United Auto Workers Union members is set to enter its second week unless negotiators break through a series of reported logjams over the weekend.

The walkout is costly for both GM and the UAW, but the longer it drags on, the more likely it is to be felt by consumers, as well, both those looking to buy one of the automaker’s new products as well as owners of vehicles needing repairs.

In the weeks leading up to the contract deadline, Detroit’s largest automaker beefed up production to help pad dealer inventory, industry analysts noted. But that will only carry things for so long, especially with high-demand models, as well as hot new products like the 2020 Chevrolet Corvette.

Complicating matters, the closure of GM parts distribution warehouses is already posing problems, especially for owners needing collision and recall repairs.

“We got everything we need for this week, but that doesn’t mean that we won’t be short next week,” said Tiffany Sullivan, the manager at Rainbow Paint and Body, a collision repair shop in Savannah, Georgia, adding that she’s already been alerted about possible shortages by GM representatives.

For now, a number of the dealers that spoke to said they were in reasonably good shape when it comes to new vehicle inventory. Typically, automakers like to have somewhere between 60 and 65 days’ worth of inventory on dealer lots, said Michelle Krebs, a senior analyst with Cox Automotive.

But because of both the ongoing slowdown in the U.S. car market and a bump up in production in anticipation of a strike, GM was able to beef up its national inventory to about 77 days at the beginning of the strike, according to Cox data. The figures, however, vary sharply from one product line to another.

There were 93 days of Chevrolet Silverado pickups, but only 57 days inventory of the popular Chevy Tahoe SUV, below the industry norm. And even those numbers can be misleading, cautioned Tim Jackson, the president of the Colorado Auto Dealers Association. He expects GM’s retailers in the Rocky Mountain state to burn through their allocations quicker than those elsewhere considering that light trucks make up 82% of their sales, well above the national average.

“Right now, we have a cushion,” said Jackson, “but when you get to the hot products, like the high-end Silverado pickups (like the High Country model that can top $80,000), that’s where it’s going to be felt at the local level first.

Complicating matters, Jim Hoffa, the president of the International Brotherhood of Teamsters, last weekend declared that his union would not deliver any GM products that had not already reached showrooms ahead of the strike.

“Teamsters and the UAW have a decades-long relationship of having each other’s back,” Hoffa said. Neither GM nor the Teamsters would discuss how many vehicles might be tied up on factory lots or elsewhere, however.

The shoppers who could be most impacted as the strike stretches on are those that placed custom orders, said Carla Bailo, the head of the Center for Automotive Research, or CAR, in Ann Arbor, Michigan. They will have to wait until factories start operating again, and even then, it could take a few days, possibly a week or more, before production gets back to normal.

The strike will also hit hard those who have been waiting for many new 2020 models, especially those that were just getting into production. The highly anticipated, eighth-generation Chevrolet Corvette is one the products that could face the biggest backlog. GM and its dealers have already taken nearly a full year of orders, so those late on the list could be in for a much longer wait than expected, said Bailo.

But “the real Achilles Heel,” at least in terms of serving customers, will be felt when it comes to repairs, both in GM dealer service departments and at independent garages and repair shops, said the general manager of one of GM’s largest Detroit dealers, asking not to be identified by name.

Even a one-week shutdown, he said, can put his service department two weeks behind, in part, because it will have to wait until everyone is back to work and settled back in at GM warehouses before his dealership can place new orders. Having enough parts to meet ongoing recalls will be a problem for some dealers, but the bigger problem, he said, is with parts like bumpers and fenders needed to handle repairs, especially on older GM products.

“We don’t know who will wreck their car but we’d have to have a warehouse the size of another dealership to keep all the parts we might need in store,” he said.

People who’ve had collisions know they will have to wait, said CAR’s Bailo, but the longer the strike, and the longer the wait, the more likely “people are going to start screaming.” And while some might blame the union, it’s GM they’re most likely to get mad at.

Longer term, the strike could impact consumers in another way.

“We know the cost of (producing) vehicles is going to go up,” said Cox analyst Krebs, noting that consumers are already seeing the impact of things like President Donald Trump’s trade wars in terms of record prices at the showroom. In today’s competitive market, automakers have been trying to absorb costs, where possible, but the higher the price of an eventual settlement, the more likely it will be felt in rising sticker prices.

Continue Reading


Pace of Growth Slowed for U.S. Household Net Worth in Second Quarter




Americans also ramped up borrowing and saved at a slower rate, according to the Federal Reserve report.


Bruno Rocha/Zuma Press

The net worth of American households grew in second quarter, but at a slower rate than the prior quarter.

Household net worth grew 1.64% in the second quarter to $113.5 trillion, compared to a 4.99% growth rate in the previous three-month period. However, the first-quarter growth was largely a bounceback after stock-market declines produced a contraction in household wealth in 2018’s fourth quarter.

Much of that gain comes from a 3.3% rise in the value of household holdings of corporate equities. Stock markets bounced up and down in April and May as the threat of trade conflicts waxed and waned.

Americans also saw a modest rise in their housing wealth. Equity in real estate owned by households rose 0.4%. The housing market has struggled for more than a year, which has weakened the growth of home prices despite low mortgage rates.

Household retirement assets—those held in workplace or personal savings plans such as 401(k)s or IRA’s—grew 1.4%.

The figures come from a quarterly report issued by the Federal Reserve known as the Flow of Funds, which tracks the aggregate wealth of all U.S. households and nonprofit organizations. The report offers no details of how that wealth is distributed among households. The figures also not adjusted for inflation.

Americans also ramped up borrowing and saved at a slower rate. Growth in household debt accelerated to a seasonally adjusted annual rate of 4.26% in the second quarter, the strongest pace since the fourth quarter of 2017.

The household saving rate fell to 8.03% of disposable personal income, down from 8.49% in the first quarter.

The pace of borrowing by businesses slowed, however. Business debt grew at a seasonally adjusted annual rate of 4.36% in the second quarter down from 6.72% in the first quarter.

Federal government debt rose 2.08% in the quarter, a slower pace than in the first quarter, while state and local debt fell 2.51%.

Write to David Harrison at

Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Continue Reading


Trump Calls China a ‘Threat to the World’ as Trade Talks Approach




WASHINGTON — President Trump said on Friday that China was a “threat to the world” and suggested Beijing was eager to make a trade deal because his tariffs were hurting the Chinese economy, coarsening his tone as the two countries prepared to resume negotiations.

The Trump administration has closely tied economic policy and national security and, in remarks at the White House, Mr. Trump said that China was using money pilfered from the United States through unfair trade practices to build up its military. The comments come as midlevel officials from both countries have been holding talks in Washington this week ahead of a planned meeting between senior trade negotiators next month.

“Obviously, China is a threat to the world in a sense, because they’re building a military faster than anybody,” Mr. Trump said. “I view China in many different ways. But right now, I’m thinking about trade. But, you know, trade equals military.”

Mr. Trump also tried to put to rest speculation that he might settle for an interim deal to give markets a lift ahead of the presidential election next year.

“I’m looking for a complete deal, I’m not looking for a partial deal,” Mr. Trump said during a joint news conference with Prime Minister Scott Morrison of Australia. “We’re looking for the big deal.”

Mr. Trump has imposed tariffs on $360 billion of Chinese goods and plans to tax nearly all imports from China by the end of the year. The president said that the tariffs have not had an impact on the United States economy, despite vocal complaints from American businesses, who say that their costs are going up and their supply chains are being disrupted.

Many of those businesses have applied to the United States Trade Representative for relief from the tariffs and, on Friday, the administration excluded hundreds of products from being taxed.

Those products include imported dog leashes, plastic straws and Christmas tree lighting sets.

Despite Mr. Trump’s renewed criticism of China, the two countries have been taking steps to ease tension in recent weeks as they try to resolve a dispute that has cast a cloud over the global economy. China has recently allowed its companies to resume purchases of some American farm products after Mr. Trump agreed to delay increasing tariffs on another batch of Chinese imports by two weeks, to Oct. 15.

As part of a deal, China wants the United States to roll back the tariffs that it imposed and lift restrictions on American companies doing business with Huawei, the Chinese telecommunications giant. In addition to buying more American agricultural products, the United States wants China to make sweeping changes to its industrial policy, protect American intellectual property and open its market to American businesses.

But it remains evident that mending the relationship between United States and China will not happen easily.

During a speech in New York this week, Cui Tiankai, China’s ambassador to the United States, squarely blamed the United States for the trade war.

“The trade war the U.S. launched and repeatedly escalated was based on a wrong rationale in the very beginning, and its negative impact has now hit both countries and spilled over to the whole world,” he said.

A Chinese delegation, led by Minister of Agriculture Han Changfu, was planning to visit farms in Montana on Monday and Tuesday. But on Friday morning, the Montana Farm Bureau was alerted that the visit had been canceled because the group had to return early to China, according to Scott Kulbeck, director of membership development at the bureau.

On Friday, Mr. Trump insisted that even though the relationship between the United States and China has soured on his watch, he continues to have fond feelings for China’s leader, Xi Jinping.

“My relationship with President Xi is a very amazing one, very good one,” he said. “But we have right now a little spat.”

Continue Reading


We use cookies to best represent our site. By continuing to use this site, you agree to the use of cookies.