Good Wednesday. Want this by email? Sign up here.
Breaking down the speech
In his 82-minute address last night, President Trump cited U.S. economic growth and his efforts to keep it up, while attacking opponents in a speech that ostensibly called for unity in Washington. Here are the highlights for the business world:
Mr. Trump defended his economic record. He took credit for America’s robust economic health — a key message for his 2020 re-election campaign — and assailed critiques of his administration’s efforts, including tax cuts and loosened regulations. “An economic miracle is taking place in the United States — and the only thing that can stop it are foolish wars, politics or ridiculous partisan investigations,” he said.
He kept pressure on China. Mr. Trump promoted his administration’s trade battle with Beijing, saying, “We are now making it clear to China that after years of targeting our industries, and stealing our intellectual property, the theft of American jobs and wealth has come to an end.” Talks between Washington and Beijing over a compromise are continuing.
And he painted his potential rivals as socialists. As Democratic presidential contenders promote policies like Medicare for all, Mr. Trump tried to paint them as peddlers of dangerous ideas. “Here in the United States, we are alarmed by new calls to adopt socialism in our country,” he said.
What didn’t he talk about? “Trump’s speech was notable for what he did not mention, including the ballooning federal debt, once a centerpiece of the Republican agenda; nor did he talk about Social Security, Medicare or other entitlements,” Philip Rucker and Toluse Olorunnipa of the WaPo write.
Democrats fought back. Stacey Abrams, the party’s nominee for Georgia’s governorship last year, focused on “outlining the party’s vision for lower health care costs and a more inclusive immigration policy, and pressing her case that access to the voting booth should be easier, not harder.”
Goldman may shrink its onetime trading powerhouse
Steep cuts could hit Goldman Sachs’s commodities arm, which once generated huge profits for the firm, Liz Hoffman of the WSJ reports, citing unnamed sources.
What may happen: “Executives are discussing pulling back from trading iron ore, platinum and other metals, and are ordering cost cuts to the sprawling logistics network that handles the transport and storage of physical commodities,” Ms. Hoffman writes.
The context: The business was once one of Wall Street’s most envied money makers. But such trading has suffered in recent years, thanks to changing markets and tighter regulations. And Goldman’s current C.E.O., David Solomon, cut his teeth as an investment banker and is focused on operations like lending and asset management.
The symbolism: “By taking a knife to the business, Mr. Solomon is sending a message down the ranks that nothing is sacred,” Ms. Hoffman writes.
Why are stocks rising on mediocre earnings?
In recent weeks, several companies — including Ford, G.E., JPMorgan Chase and Wynn Resorts — have missed Wall Street forecasts, only to see their stock prices rise. It’s a classic relief rally, writes Matt Phillips of the NYT:
• “Stocks of companies that have reported their results have risen by an average of 1.1 percent, the largest post-earnings jump in a decade.”
• “With the Federal Reserve backing off plans to aggressively hike interest rates, more investors view the market’s downturn last year as overdone. And they are giving rousing ovations to corporate results just because they’re not as bad as they could have been.”
• “Analysts said that the current tendency in the markets to see the glass as half-full reflects widespread relief among investors that a recession and a sharp slump in earnings are not in the cards any time soon.”
• “Some analysts said that stocks could keep climbing as the market’s rock-bottom expectations keep getting surpassed.”
• “At the same time, there is a danger that the stock market’s rise could paper over the genuine problems for the economy that are popping up in fourth-quarter results.”
A peek inside Wisconsin’s disastrous deal with Foxconn
When the Chinese electronics manufacturer Foxconn decided to set up shop in the Midwest, President Trump hailed the move as “one of the great deals ever.” But Bloomberg Businessweek, which interviewed 49 people familiar with the project, reports how badly the effort has gone.
The plan was to create a high-tech manufacturing hub. It was to be led by a Mount Pleasant plant housing a large chunk of Foxconn’s LCD TV production. “As Foxconn has discovered, there is no better place to build, hire, and grow than right here in the U.S.,” Mr. Trump said at the time, promising that it would create as many as 13,000 jobs.
But manufacturing hasn’t taken off. “LCD components weren’t made in the U.S.A., according to sources familiar with the operation,” Austin Carr of Businessweek writes. “They were shipped from a Foxconn factory in Tijuana. The Wisconsin plant was only handling the last steps of assembly.” He adds that “during 2018, the company tried and failed to produce its own LCD materials at scale in Wisconsin so it wouldn’t have to import them from Mexico.”
Nor has pay or recruitment. “Pay at the factory started at about $14 an hour with no benefits, much less than the $23 average Foxconn promised. Many people weren’t hired full time,” Mr. Carr writes. “Last fall, the company’s hiring targets began dropping internally,” he adds, with Foxconn importing foreign staff for some roles.
Tracking the biggest public company? Good luck
Keeping hold of the title of most valuable American company is proving to be difficult, Stephen Grocer of the NYT writes:
• “The positions of Apple, Microsoft, and Amazon have been flip-flopping since the wipeout in the iPhone maker’s stock price late last year.”
• “The mantle has changed hands seven times among the three companies. Three of those switches have taken place over the past week as the big tech companies reported quarterly results.”
• “The competition reflects the global economic concerns hanging over the markets as well as the changing technology landscape, and it’s a shift from past years.”
Blankfein vs. Sanders over stock buybacks
A bill introduced by Senators Chuck Schumer and Bernie Sanders to limit companies’ ability to buy back stock drew outrage from many in the corporate world — and tempted Goldman Sachs’s former C.E.O. Lloyd Blankfein to tweet for the first time in nearly seven months.
Mr. Blankfein’s take: “A company used to be encouraged to return money to shareholders when it couldn’t reinvest in itself for a good return,” he tweeted. “The money doesn’t vanish, it gets reinvested in higher growth businesses that boost the economy and jobs. Is that bad?”
Mr. Sanders’s retort: The senator shot back that a buyback, “increases the wealth of billionaires” like Mr. Blankfein. “Instead of making the very rich even richer, how about increasing wages for American workers. Is that a bad idea?”
More buyback news: SoftBank of Japan plans to spend $5.5 billion of proceeds from the listing of its telecommunications arm to repurchase stock.
Taxpayers paid almost $1 million a day for Trump’s Mar-a-Lago trips
The Government Accountability Office has published a report of the president’s travel expenses, which show the cost of his visits to his Florida holiday home:
• From Feb. 3 to March 5 in 2017, Mr. Trump spent portions of 14 days at the holiday home. The G.A.O. said that those trips had cost a total of $13.6 million, or just less than $1 million per day.
• The costs included travel and accommodations, Secret Service expenses and bomb detection. Almost $60,000 was paid directly to Mar-a-Lago.
• The Democratic senators Dianne Feinstein and Gary Peters, who requested the report, said the findings provide “a snapshot of the tens of millions of dollars President Trump spends to travel to his Palm Beach resort — all at taxpayer expense — including government funds that are paid directly to a business in which the president himself has a financial interest.”
Angela Ahrendts will step down as Apple’s retail chief in April after a five-year run. She’ll be succeeded by Deirdre O’Brien, the company’s head of human resources.
SeaWorld Entertainment said it would hire Gus Antorcha, who was most recently Carniva Cruise Line’s chief operating officer, as its new C.E.O.
Goldman Sachs promoted Nick Giovanni to co-head of its global tech, media and telecom investment banking team.
The speed read
• Reddit is reportedly raising as much as $300 million in fresh capital at a valuation of about $2.7 billion. (TechCrunch)
• Tyson Foods has reportedly held talks to buy Foster Farms, a producer of chicken products, for about $2 billion. (CNBC)
• Qatar Petroleum and Exxon Mobil plan to invest $10 billion in a Texas hub for exporting natural gas. (NYT)
• The activist investor Edward Bramson has renewed his push for a seat on the board of Barclays. (Bloomberg)
• Microsoft led a $250 million investment in Databricks, a self-professed “boring A.I.” start-up, at a $2.75 billion valuation. (Bloomberg)
• Spotify has struck deals to buy Gimlet Media, the podcast production company, and Anchor, a start-up that helps people make their own podcasts. (Recode)
• The E.U. has blocked a merger of the rail divisions of Siemens and Alstom, saying the deal reduced competition too much. (European Commission)
Politics and policy
• Imaad Zuberi, a venture capitalist and longtime Democratic donor who later gave to Republicans after the 2016 campaign, has drawn scrutiny in a federal inquiry into President Trump’s inauguration. (NYT)
• Federal prosecutors are investigating foreign payments to three law and lobbying firms — Mercury Public Affairs; the Podesta Group; and Skadden, Arps, Slate, Meagher & Flom — recruited by Paul Manafort. (NYT)
• A bipartisan group of senators proposed reimposing sanctions on ZTE if the Chinese telecom company again violates U.S. laws. (CNBC)
• The Trump administration has sought to shore up support for its pick to lead the World Bank, David Malpass, ahead of an expected announcement of the nomination today. (WSJ)
• Mr. Trump plans to meet with Kim Jong-un of North Korea in Vietnam later this month to revive their nuclear-weapons talks. (NYT)
• The Chinese government says that a U.S. report on its compliance with World Trade Organization rules is incorrect. (Reuters)
• The U.S. has become Britain’s top oil supplier for the first time since the Suez crisis in 1956. (FT)
• U.S. soybean farmers say they don’t share President Trump’s optimism about the sale of their crops to China. (Business Insider)
• France ordered Apple to pay back taxes that could amount to hundreds of millions of euros. (FT)
• Huawei could face a 5G ban in Canada. (Bloomberg)
• China’s economic slowdown is hurting its tech start-ups. (WSJ)
• Facebook has taken down 22 more pages linked to the Infowars founder Alex Jones. And here’s an antitrust argument for blocking the social network’s plan to integrate its messaging services. (Recode, NYT Op-Ed)
• Tesla has again cut the price of its cheapest Model 3, this time by $1,100. (CNBC)
Best of the rest