DealBook Briefing: Will Trump’s Iran Sanctions Work?
His administration may be running low on effective ways to crimp the nation's economy.
June 25, 2019
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President Trump signing an executive order for additional Iran sanctions. Pool photo by Kevin Dietsch/EPA, via Shutterstock
Trump hits Iran with more sanctions. What will their impact be?
President Trump announced new sanctions on Tehran yesterday to further squeeze the Iranian economy in retaliation for what the U.S. says are recent acts of aggression, Edward Wong of the NYT reports.
• “The new sanctions are aimed at preventing some top Iranian officials from using the international banking system or any financial vehicles set up by European nations or other countries.”
• “The move came on top of actions taken by the administration this spring to cut off all revenues from Iranian oil exports.”
The new sanctions may have little effect. “Iranian officials most likely do not keep substantial assets in international banks, if any at all, or use those institutions for transactions, and any additional pressure from the new sanctions is likely to be minimal,” Mr. Wong writes.
The largely symbolic nature of the sanctions “indicates that the Trump administration is running low on arrows in its economic quiver,” Mr. Wong writes. It must wait to see if its oil clampdown — which looks like a far more effective tool — will force Iranian leaders to capitulate to American demands.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.
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Trump says the Fed ‘blew it’
The Fed’s decision last week not to cut interest rates wasn’t too surprising. But that doesn’t mean President Trump is happy about it.
“Think of what it could have been if the Fed had gotten it right,”he tweeted yesterday, imagining huge gains in market indexes and G.D.P. growth in the 4 percent to 5 percent range. He likened the Fed to “a stubborn child” and said the central bank “blew it.”
But the economy doesn’t need much goosing, Jeanna Smialek of the NYT writes. As of July 1, America’s economic expansion will have been the longest on record. Unemployment is at its lowest in almost 50 years, and inflation is basically in check. First-quarter growth still clocked in at a solid 3.1 percent.
And the Fed signaled that it will do what Mr. Trump wants. Most analysts expect the central bank to lower interest rates at its policy meeting next month, and probably in September as well. The Fed chairman, Jay Powell, may give more clarity on that at hearings on Capitol Hill in two weeks.
It’s unclear whether Mr. Trump is just blowing off steam, as he is wont to do when it comes to the Fed, or whether he’ll continue to explore ways to demote Mr. Powell.
Abigail Disney Mike Coppola/Getty Images for Women's Media Center
Meet the 1-percenters who want higher taxes
Eighteen individuals — including self-made billionaires and scions of business dynasties — published an open letter yesterday calling for a federal wealth tax on America’s richest people to help reduce income inequality.
• “The next dollar of new tax revenue should come from the most financially fortunate, not from middle-income and lower-income Americans.”
• “America has a moral, ethical and economic responsibility to tax our wealth more.”
• “It is a key to both addressing our climate crisis, and a more competitive, stronger economy that would better serve millions of Americans.”
Among the signatories: George Soros; Chris Hughes, a co-founder of Facebook; Abigail Disney, an heir to the Disney fortune; Liesel Pritzker Simmons, a member of the wealthy Pritzker family; and Molly Munger, a daughter of the Berkshire Hathaway vice chairman Charlie Munger.
They want 2020 presidential candidates to support a wealth tax. And they specifically lauded Senator Elizabeth Warren’s version — a tax of 2 cents on the dollar for assets above $50 million and an additional 1 cent on the dollar for assets above $1 billion.
This is part of a growing trend of rich people urging action on wealth inequality. Warren Buffett pointed out in 2011 that he effectively enjoyed a lower tax rate than his office staff. And Ray Dalio of Bridgewater recently called America’s income inequality “a national emergency.”
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Nissan shareholders tear into Renault
Investors in Nissan didn’t hold back at the Japanese carmaker’s annual meeting today, with its C.E.O. and its corporate partner, Renault, facing most of the criticism.
Nissan’s C.E.O., Hiroto Saikawa, was reappointed to the company’s board. But he was blamed for the chaos that has enveloped the company after the downfall of its now-former chairman, Carlos Ghosn. Mr. Saikawa apologized for the scandals and then bowed to shareholders.
But Renault took most of the heat. Shareholders expressed anger at its attempt to block corporate governance changes at Nissan and to orchestrate a merger with Fiat Chrysler without consulting Nissan executives. One unnamed questioner exclaimed at the meeting, “French people are very sly!”
Mr. Saikawa’s focus: Repairing the Renault-Nissan alliance. “We want a win-win relationship with Renault,” he said at the meeting. “The alliance has been successful until now because we have respected each others’ independence.”
But the anger shows how difficult that will be. There’s mutual distrust: Nissan is unhappy with Renault’s power play, and Renault executives hold Nissan partly responsible for the death of the Fiat deal. It’s unclear whether Mr. Saikawa will be able to fix that damage.
Stephen Moore Tom Williams/CQ Roll Call
Stephen Moore’s next act: a crypto central bank
He may have lost out on a governorship at the Fed. But Stephen Moore is now working with Decentral, a start-up that describes itself as “the world’s decentralized central bank,” Fox Business reports.
The company plans to regulate the supply of cryptocurrencies in an attempt to stabilize their price. According to Fox, Decentral plans to exchange its own digital token, which would be pegged to an established benchmark like the dollar, for other cryptocurrencies. The start-up would control the supply of its cryptocurrency using algorithms.
Exactly how that would work is unclear. “One money manager with knowledge of the product said company officials approached him on an investment, but they didn’t seem to have a firm grasp on exactly how Decentral will be able to convince the crypto world of its mission,” Fox reports.
But Mr. Moore is enthusiastic. “I’m really excited about doing this,” Mr. Moore, who is joining Decentral as its chief economic officer on July 1, told Fox. “I hope it makes me rich.”
Fehim Demir/EPA, via Shutterstock
Hackers reportedly spied on call records of global cell networks
Security researchers say that hackers broke into the networks of at least 10 wireless service providers around the world last year to steal data about individuals’ phone usage and location, Reuters reports.
The hackers stole metadata, which means they didn’t have access to the content of calls or text messages. But they were able to see times, phone numbers and locations, which would allow them to build an accurate representation of a person’s behavior. The attacks reportedly sought to gather information on at least 20 people in government, law enforcement and politics.
None of the cellular providers have been named, but they were reportedly in Africa, Asia, Europe and the Middle East. North America so far doesn’t appear to have been affected, according to the cybersecurity company Cybereason.
There may be links to China. The hackers appeared to use tools that were used in previous attacks made by China, and the scale of this breach suggests that a government was behind the operation.
Danske Bank firedJesper Nielsen, its former interim C.E.O. and the head of its domestic banking arm, over a new scandal about customers being overcharged.
Recent management changes at Alibaba show how the company is preparing for the eventual departures of its co-founder Jack Ma and its executive vice chairman, Joe Tsai.
The speed read
Deals
• Eldorado Resorts announced that it would buy Caesars Entertainment for about $8.54 billion. (Reuters)
• Shares in Bristol-Myers Squibb and Celgene tumbled yesterday after the drugmakers said they were still working to win regulatory approval for their merger. (WSJ)
• American and British financial regulators said they would work together to respond to a rise in manufactured defaults, in which companies miss bond payments to profit from related trades. (WSJ)
• The British online bank Monzo doubled its valuation to 2 billion pounds, or $2.55 billion, in a new fund-raising round. (FT)
• Tech I.P.O.s have performed strongly this year — aside from Uber and Lyft. (DealBook)
Politics and policy
• President Trump signed an executive order yesterday requiring hospitals to disclose more pricing information to patients. (WSJ)
• Analysts said that Senator Bernie Sanders’s plan to tax trading to pay for student loan forgiveness would hurt Main Street investors. (Bloomberg)
• The Treasury Department’s inspector general will look into the delayed rollout of the Harriet Tubman $20 bill. (NYT)
• Democrats are split over providing $4.5 billion in emergency border aid, with some worried that the money would be used for additional immigration crackdowns. (NYT)
• Japan’s draft communiqué for the upcoming Group of 20 summit meeting played down climate change, in what analysts say is an effort to placate the Trump administration. (FT)
Trade
• FedEx has sued the Commerce Department, claiming that it is “logistically impossible” for it to comply with restrictions aimed at preventing Huawei from exporting prohibited items. (WSJ)
• The Chinese drone maker DJI is shifting some production to the U.S. and changing product features to help allay American national security concerns. (NYT)
• The Supreme Court has refused to hear an appeal challenging President Trump’s steel tariffs. (Bloomberg)
Tech
• How e-commerce sites manipulate you into buying things you may not want. (NYT)
• Google’s competitors are getting ready to hand over evidence to the Justice Department’s antitrust investigation into the company. (WSJ)
• Alphabet’s “smart city” subsidiary, Sidewalk Labs, has unveiled grand plans for remaking Toronto. City officials aren’t yet convinced. (WSJ)
• Huawei’s U.S.-based research arm is trying to separate its operations from its corporate parent. (Reuters)
• The House Financial Services Committee will hold a hearing next month on Facebook’s planned cryptocurrency. (Hill)
Best of the rest
• Companies that disclose S.E.C. investigations have much lower returns than those that do not, according to new research. (Institutional Investor)
• New York City taxi officials were grilled by the City Council yesterday over their role in allowing reckless lending to drivers. (NYT)
• The Supreme Court struck down a federal law barring the registration of “immoral” or “scandalous” trademarks. (NYT)
• “What would companies do if buybacks were banned?” (Bloomberg Opinion)
• One of Boeing’s parking lots is getting crowded — by undelivered 737 Max jets. (Business Insider)
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