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Herman Cain gives up on the Fed
President Trump said yesterday that Herman Cain no longer wanted to join the Federal Reserve board. Political analysts want to see if Stephen Moore, another potential nominee whose qualifications are in question, will follow.
Mr. Cain faced accusations of sexual harassment and criticism of his qualifications for becoming a Fed governor. At least four Republican senators planned to oppose his nomination — enough to kill his chances.
The salary wasn’t enough, according to Mr. Cain, a former pizza company C.E.O. who sought the Republican presidential nomination in 2012. “Without getting too specific about how big a pay cut this would be, let’s just say I’m pretty confident that if your boss told you to take a similar pay cut, you’d tell him where to go,” he wrote on a conservative website. (Fed governors earn $183,100 a year.)
Mr. Moore is also under pressure. He, too, has a more political background than is typical at the Fed, most notably as founder of the conservative group the Club for Growth. And he’s written some derogatory things about women: He once argued that female tennis players “want equal pay for inferior work” and that women should be banned from the N.C.A.A. men’s basketball tournament unless they were attractive.
The bigger issue is the Fed’s independence and whether Mr. Trump favors candidates who would erode it. “As long as Mr. Trump continues his Twitter campaign against Chairman Jerome Powell and the Fed, he’ll be hamstringing his own nominees and the broader case for more intellectual diversity” at the central bank, the WSJ editorial board writes.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.
Tesla’s self-driving promises hit skepticism
Elon Musk boldly predicted yesterday that Tesla was on the cusp of making cars that could operate as autonomous “robo-taxis.” But experts say it’s another exaggerated promise.
Mr. Musk unveiled a new Tesla-designed computer processor that he claimed put the company way ahead in autonomous vehicle design. He said the company’s artificial intelligence software let its vehicles operate using only data from cameras and radar sensors.
By the end of next year, Mr. Musk said Tesla would be running a fleet of robo-taxis. Owners will in theory be able to let their cars join that fleet when they’re not using them. He also predicted that in two years the company would be making cars without steering wheels or pedals. (He did caution, “Sometimes I am not on time, but I get it done.”)
Analysts had doubts:
• “The idea that you can have a vehicle that can make complex decisions for full self-driving is just not plausible at this point,” Mike Ramsey of Gartner told the NYT.
• “In Tesla’s case, a significant reliance on computer vision introduces an extra level of difficulty,” Bart Selman, a computer science professor at Cornell, told Quartz.
• “It seems today’s presentations had more to do with investors than consumers’ safety,” David Friedman, vice president of advocacy for Consumer Reports, said.
Tesla shares fell 4 percent yesterday, suggesting investors weren’t impressed either. Tomorrow, they’re scheduled to see the company’s latest financial results.
Sexual misconduct ran rampant at a jewelry giant
Sterling Jewelers may not be a familiar name, but its brands — Kay, Jared the Galleria of Jewelry, Zales and more — are among the best-known in jewelry. It has also been a hotbed of sexual harassment and discrimination, Taffy Brodesser-Akner writes in the NYT Magazine.
• Female employees who called a confidential tip line complained of earning less than their male counterparts.
• Some also “talked about groping and sexual coercion and sexual degradation and rape.”
• One set of instructions to regional vice presidents read: “Put them in a push-up bra and get them on the lease line. That’s how you’ll get sales.”
• Many of the allegations stayed hidden for years because employees were forced to sign arbitration agreements, which kept them out of the public eye.
• Ms. Brodesser-Akner writes of her reporting, “What emerged was not just a list of individual horrors and degradations but an accounting of the systems put in place that allowed the abuse to proliferate and kept it from ever becoming known.”
• An arbitration case against the company now has class-action status, at one point having 69,000 claimants.
Google employees describe retaliation over walkout
Two Google workers who called for an employee protest over the company’s treatment of sexual harassment said that they were later demoted or told their roles would change, Kate Conger and Daisuke Wakabayashi of the NYT report.
• Claire Stapleton and Meredith Whittaker shared a letter with co-workers at the company on Monday. A copy was reviewed by the NYT.
• “Ms. Stapleton, a marketing manager at YouTube, said Google had demoted her after she urged colleagues to walk out from the company last year.”
• “Ms. Whittaker, an artificial intelligence researcher, said in the letter that she had also been ‘informed my role would be changed dramatically.’ ”
“More than 300 other employees have shared stories of retaliation since the walkout, Ms. Stapleton and Ms. Whittaker wrote in their letter.” They said they planned to share theirs at a company meeting on Friday.
Google said, “We prohibit retaliation in the workplace, and investigate all allegations.” The company added that “employees and teams are regularly and commonly given new assignments, or reorganized, to keep pace with evolving business needs. There has been no retaliation here.”
Surprise! Samsung’s folding phone isn’t ready
After several tech reviewers reported last week that Samsung’s folding smartphone broke easily, the company said yesterday that it would postpone its release, Brian Chen and Raymond Zhong of the NYT report.
The phone was due out on Friday. The company said it would set a new release date in the coming weeks. “The device needs further improvements that could ensure the best possible user experience,” it said in a statement.
It’s unclear what went wrong. Samsung said that “some problems could be related to exposed areas of a hinge that allows the device to fold up like a book,” and “in one instance, substances found inside the device affected the screen,” Mr. Chen and Mr. Zhong write.
The issues are “another black eye for Samsung” and may cement its reputation for valuing rapid innovation over quality assurance, Mr. Chen and Mr. Zhong write. Remember, for instance, the Galaxy Note 7, whose batteries spontaneously combusted.
This misstep won’t be a big financial hit. This is a $2,000 smartphone, a niche product. But it could tarnish Samsung’s image — and perhaps sour consumers on folding phones even before they can buy one.
China grapples with a pig crisis
An epidemic of African swine fever is shaking the country’s food industry — and could upend global markets.
More than a million pigs have been culled, the Chinese government said. The disease, which is harmless to humans, is nearly always fatal and has no treatment or vaccine. It is expected to kill a third of the country’s pigs.
That would be an economic disaster. China is the world’s biggest producer and consumer of pork, and rising prices helped push overall inflation to a five-month high in March.
But the global meat industry stands to benefit. Hog futures in Chicago have rallied, on the hope of more exports to China. Shares in the Brazil-based JBS, the world’s biggest meat processor, have also jumped.
What’s next for crypto?
Some people say that cryptocurrencies are a fad, like Holland’s tulip boom in the 1600s. Evangelists think they represent a revolutionary technology yet to reach its potential. The truth is most likely in the middle, Nathaniel Popper of the NYT writes.
• Bitcoin, the world’s most popular cryptocurrency, still hasn’t caught on with ordinary people.
• “Speculative transactions accounted for roughly 60 to 80 percent of all transactions on the blockchain, according to Chainalysis, a start-up that does analysis of the blockchain for big companies and governments.”
• What accounts for the remaining 20 to 40 percent “is still quite a bit of mystery,” but includes fees for companies handling payments — and illegal or clearly unethical activity.
• But “there are still plenty of areas where, smart entrepreneurs think, the open nature of cryptocurrencies could be useful.”
• “Many venture capitalists have made bets on Ethereum and EOS, alternative cryptocurrency networks that can be programmed for more sophisticated applications, like financial contracts, than Bitcoin’s software allows.”
• “Perhaps the biggest thing that cryptocurrencies have going for them is that serious people still want to fix the flaws. The value of digital tokens — however volatile they may be — has created incentives for people to work on them.”
One way to avoid cyber threats: Ban external email
Northern Trust, a Chicago-based asset management firm, may do just that, according to Business Insider.
Its email system already shows pop-up warnings against sending information outside. But “These warnings are typically disregarded,” according to an unidentified executive cited by Business Insider
So the firm is considering a closed system, at least for employees it thinks “need to communicate solely with other internal Northern Trust staff.”
Regular email would be limited to staff who work with clients and other groups outside of the company, according to the report.
Kraft Heinz hired Miguel Patricio, a veteran of Anheuser-Busch InBev, as its C.E.O., succeeding Bernardo Hees.
Facebook hired Jennifer Newstead, a former top lawyer for the State Department, as general counsel, and John Pinette, previously Bill Gates’s personal spokesman, as its vice president of global communications.
PG&E named Fred Buckman, the former C.E.O. of Consumers Energy, as a director to settle a fight with the hedge fund BlueMountain Capital.
Five directors of Bed Bath & Beyond will step down, including the co-founders Warren Eisenberg and Leonard Feinstein, to settle a proxy battle.
The speed read
• Beyond Meat, which makes beeflike plant-based burgers, hopes to raise nearly $184 million from its I.P.O. at a $1.2 billion valuation. (NYT)
• Luckin Coffee, a Chinese rival to Starbucks, reportedly plans to raise up to $800 million in its I.P.O. It will list in the U.S. (Reuters)
• T-Mobile and Sprint executives met regulators in Washington last week to lobby for their $26.5 billion merger. (Reuters)
• Pax Labs, which makes tobacco and cannabis vaporizers, raised $420 million (sigh) from investors like Tiger Global Management. (TechCrunch)
• The NYSE plans to test its I.P.O. systems on Saturday, to be ready for Uber. (WSJ)
Politics and policy
• The Supreme Court will decide whether the Civil Rights Act of 1964 protects gay and transgender employees. (NYT)
• President Trump and his businesses sued the chairman of the House Oversight and Reform Committee to keep his financial records private. (NYT)
• The House Judiciary Committee subpoenaed Don McGahn, the former White House counsel, after he emerged as a key witness for Robert Mueller’s investigation. (Axios)
• Speaker Nancy Pelosi urged Democrats to hold off on seeking to impeach Mr. Trump. (NYT)
• China is reportedly delaying data transfer regulations to avoid a fight with the U.S. during their trade talks. (FT)
• But it’s strongly resisting a new American effort to stop countries buying Iranian oil. China is Tehran’s biggest customer. (NYT)
• AT&T settled a lawsuit with Sprint over whether its “5G E” network connection icon was misleading. (Bloomberg)
• Facebook so far has community rules in 41 languages. That may not be enough to keep control. (Reuters)
Best of the rest
• A United Airlines employee accused of using racial slurs toward a customer has been charged in Texas with disorderly conduct. (NYT)
• Social Security’s costs are expected to exceed its income in 2020, for the first time since 1982. (WSJ)
• A trial about alleged malpractice at Theranos has been delayed because so much evidence is involved. (WSJ)
• American millennials expect to get rich. (Economist)
• Could perishable money fend off a recession? (Bloomberg Opinion)
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