默默新聞08

August 1, 2019

Good Thursday morning. Just in: The London Stock Exchange Group agreed to buy Refinitiv, the former financial division of Thomson Reuters, for $27 billion. More below. (Was this email forwarded to you? Sign up here.)

The Fed chairman, Jay Powell. Manuel Balce Ceneta/Associated Press

Jay Powell disappointed the markets and Trump

The Federal Reserve finally made its long-awaited move to cut interest rates. But stock investors, President Trump and even some Fed governors were left unhappy, Jeanna Smialek of the NYT reports.

The Fed cut its benchmark rate by a quarter of a percentage point yesterday, matching analyst expectations. Jay Powell, the Fed chairman, cited slowing global economic growth and the uncertainty wrought by Mr. Trump’s trade war with China. He also announced another move to bolster growth: an early end to the central bank’s effort to shrink its balance sheet.

But Mr. Powell made clear that this was an intentionally small step. He said the move was “not the beginning of a long series of rate cuts,” disappointing those who either wanted a bigger rate cut or the hint of future reductions this year.

The reactions were unkind:

• The S&P 500 fell 1.1 percent, its biggest drop since May 31.

• Mr. Trump tweeted, “As usual, Powell let us down.”

• “Powell increased uncertainty around the direction of policy,” Scott Minerd, the chief investment officer of Guggenheim Partners, told the WSJ.

Not all Fed policymakers agreed to the cuts. Eric Rosengren of the Boston Fed and Esther George of the Kansas City Fed voted against yesterday’s decision, the second and third dissents of Mr. Powell’s tenure. They preferred to leave rates unchanged, saying that the U.S. economy remains strong.

But Mr. Powell is in a difficult spot, Neil Irwin of The Upshot writes. The Fed chairman is trying to respond to a new economic reality — one where slow growth, an aging population and low inflation are the new normal — that no one really knows how to deal with.

More: Anemic economic growth in Europe will probably force the European Central Bank to act to avoid a recession. And why lower rates won’t necessarily help the housing market.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York and Michael J. de la Merced in London.

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Tolga Akmen/Agence France-Presse — Getty Images

London Stock Exchange bets big on financial data

The parent of the centuries-old stock market agreed this morning to buy Refinitiv, the former data arm of Thomson Reuters, for $27 billion. It’s a bet that market data is a path to big profits.

The deal would raise the London exchange’s fastest-growing unit, which provides data and trading services for customers. Refinitiv, which is controlled by a group led by Blackstone, sells Eikon data terminals and has a majority stake in the popular Tradeweb bond-trading platform.

The transaction shows that running financial markets isn’t enough these days. Top L.S.E. rivals like the IntercontinentalExchange, which owns the N.Y.S.E., already make millions from market data services.

Blackstone turns out to be a big winner. The investment giant led a group that bought majority control of Refinitiv less than two years ago. It has already seen a huge return on its investment in Refinitiv, and its consortium will now become the biggest shareholders in the L.S.E.

But the London exchange will have plenty of competition. Both the IntercontinentalExchange and Bloomberg L.P. are entrenched rivals in the markets and financial information industries, and could be hard to beat.

Jeffrey Epstein's ranch in New Mexico. Drone Base/Reuters

Jeffrey Epstein wanted to seed humanity with his DNA

The financier, who is accused of abusing scores of underage girls, had for years confided in award-winning scientists his belief in unusual theories like impregnating scores of women to remake humanity in his genetic code, the NYT reports.

• Mr. Epstein used the same tactics that got him connected with prominent businessmen and politicians to “insinuate himself into an elite scientific community, thus allowing him to pursue his interests in eugenics and other fringe fields like cryonics,” the NYT reports.

• Among the scientists Mr. Epstein spent time with: Murray Gell-Man, who discovered the quark; the physicist Stephen Hawking; and the paleontologist Stephen Jay Gould. He offered millions to finance many researchers’ work.

• Mr. Epstein was interested in “perfecting the human genome” and in cryonics, in which a person’s body is frozen in hopes of being revived later. (Mr. Epstein told an associate that he “wanted his head and penis to be frozen.”)

• Then there were his ambitions to “use his New Mexico ranch as a base where women would be inseminated with his sperm and would give birth to his babies.”

• Not every scientist was impressed: The Harvard psychologist Steven Pinker dismissed Mr. Epstein as an “intellectual impostor.”

More: A judge set Mr. Epstein’s tentative trial date for mid-2020. The private equity mogul Leon Black spoke publicly about his ties to Mr. Epstein during Apollo Global Management’s earnings call yesterday.

Maybe China really is slow-walking the trade talks

President Trump may be right in accusing Beijing of dragging its feet in trade discussions, as the latest round of talks ended yesterday without a deal. It appears to be part of China’s new strategy, Chao Deng of the WSJ reports.

The two sides called the latest set of negotiations “constructive,” despite criticisms from both Mr. Trump and Chinese state media outlets that accused the other of belligerence and bad faith.

But officials still can’t come to an agreement on key issues like protections for U.S. intellectual property and a continued blacklisting of Huawei, the Chinese tech giant.

Part of that may be a deliberate move by China to bide its time while appearing to want a quick resolution, experts and unnamed sources told Ms. Deng. Beijing thinks it can get better terms by waiting, because it believes the Chinese economy’s woes have bottomed out while America’s haven’t.

Mr. Trump tweeted this week that China appeared content to wait until after the 2020 presidential election to reach a deal, and he threatened to take an even tougher stance if he won re-election.

Beijing’s strategy could backfire, since not everyone is convinced the Chinese economy is poised to recover. “The Chinese economy is still in the middle of a downturn cycle,” an analyst, Larry Hu, told Ms. Deng. “The worst hasn’t come yet.”

Brendan Smialowski/Agence France-Presse — Getty Images

Health policy is dominating the Democratic race

Night 2 of the latest Democratic presidential debates again revolved in large part around candidates’ proposals for overhauling America’s health care system, as well as trade and immigration policies.

Joe Biden argued that Medicare-for-all proposals were too disruptive and costly. (He said he would create an optional government-run insurer.) “My response is: Obamacare is working,” he said.

But both he and Senator Kamala Harris took heat for more moderate plans. Mr. Biden was pressed on how his preference for amending Obamacare would still leave millions of American uninsured. And Ms. Harris faced skepticism for her proposal to switch Americans to government-provided insurance after a decade.

“Medicare for all is shaping up as the primary’s defining issue,” write David Siders and Steven Shepard of Politico. They add, “The issue is not only top-of-mind for voters, but also nuanced enough that it will likely feature prominently in every future debate.”

Still, other topics featured heavily last night, including trade (Mr. Biden said he no longer supported the Trans-Pacific Partnership, the Obama administration’s signature trade deal that President Trump rejected after taking office) and immigration.

Bloomberg Businessweek

Next year, the streaming wars get serious

Media behemoths have been preparing to compete against Netflix and others in the arena of online video for a while now. Next year will be the start of a big battle, Felix Gillette and Gerry Smith write in Bloomberg Businessweek.

• “By this time next year, AT&T’s WarnerMedia division, Comcast’s NBCUniversal, Walt Disney and Apple will all have released sinewy new streaming video services, taking on the existing ones from Amazon.com, CBS, Hulu and Netflix,” they write.

• Among the dangers they face, according to the analyst Brett Sappington: Streaming customers are much more finicky, with cancellation rates significantly higher for video services than the 4 percent for traditional video providers.

• Then there’s the cost of buying content: Disney paid $71 billion for most of 21st Century Fox, while Amazon is paying $250 million to develop a “Lord of the Rings” series.

• “It’s unlikely that any of these media and tech giants will escape this looming showdown unscathed,” Mr. Gillette and Mr. Smith write. “Even the ultimate winners are expected to limp into the future bloodied and battered.”

More: How Imagine, the entertainment company run by Brian Grazer and Ron Howard, has remade itself for the streaming age.

Revolving door

Mark Hunter is stepping down as C.E.O. of Molson Coors Brewing amid the company’s struggles to compete with craft beers. He’ll be replaced by Gavin Hattersley.

Jamie Miller is stepping down as C.F.O. of General Electric.

IBM has laid off as many as 100,000 employees in recent years in an attempt to make its work force look “cool,” according to testimony in a lawsuit accusing the company of age discrimination.

The speed read

Deals

• States suing to block T-Mobile’s $26 billion takeover of Sprint asked that their lawsuit be allowed to start in December instead of October. (Reuters)

• The eyewear behemoth EssilorLuxottica agreed to buy GrandVision, a big operator of optician chains, for $8 billion. The deal is expected to draw antitrust scrutiny. (Reuters)

• Nordstrom’s founding family is reportedly discussing plans to increase its stake in the troubled department store chain to over 50 percent. (WSJ)

• BlackRock is said to have ended talks to buy out Pamplona Capital Management’s stake in the cybersecurity company Cofense. (WSJ)

• SmileDirectClub, a maker of clear braces, is reportedly planning an I.P.O. (CNBC)

Politics and policy

• The Trump administration has proposed allowing less-expensive prescription drugs to be imported from other countries to help lower drug prices. (NYT)

• A swell of House Republicans are unexpectedly retiring, raising alarms for the G.O.P. (Politico)

• The Trump administration imposed sanctions on Iran’s foreign minister, Mohammad Javid Zarif, escalating tensions with Tehran. (NYT)

• William Perry Pendley, who was recently named acting director of the Bureau of Land Management, doesn’t believe the federal government should have any land. (WaPo)

Boeing

• F.A.A. officials defended their certification of the 737 Max in testimony before Congress yesterday, but acknowledged they may change how future aircraft are reviewed. (NYT)

Tech

• Federal authorities are examining whether Paige Thompson, the suspect in the Capital One data breach, attacked other companies. And the education company Pearson warned that a breach may have exposed thousands of students’ personal data. (WSJ)

• The F.T.C. said that so many people had claimed damages from Equifax’s data breach that they’re unlikely to get the $125 payout they were initially offered. (NYT)

• DeepMind, the London-based artificial-intelligence lab owned by Alphabet, unveiled a big step toward predicting a patient’s likelihood of developing one type of kidney disease — but has raised concerns about privacy. (NYT)

• Facebook has reportedly approached Netflix, Disney and other media companies about allowing their content to stream on a new device that lets video calls be made from a TV. (Information)

Best of the rest

• Arizona filed a lawsuit directly with the Supreme Court to order members of the Sackler family to return billions of dollars that the state says was looted from Purdue Pharma, the maker of OxyContin. (NYT)

• UBS plans to charge wealthy people for storing more than $2 million in deposits with the lender, as a means of coping with negative interest rates in Switzerland. (FT)

• Why Martin Shkreli lost his appeal to overturn his convictions. (DealBook)

• V.G. Siddhartha, who beat Starbucks in the race to dominate coffee in India but later faced financial troubles, was found dead yesterday. (NYT)

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