The Economist - USA (2019-11-02)

The EconomistNovember 2nd 2019 9
The world this week Business

The Federal Reserve cut its

benchmark interest ratefor

the third time this year, shav-

ing off another quarter of a

percentage point to a range of

between 1.5% and 1.75%. Argu-

ments have raged at the central

bank about the need for further

easing in America’s still robust

economy. Many have read the

runes of the carefully worded

statement by Jerome Powell,

the Fed’s chairman, that “poli-

cy is likely to remain appropri-

ate”, to suggest that future

reductions are on hold.

Officialfiguresshowedthatthe

American economygrew by

1.9% at an annualised rate in

the third quarter. The data

underlined the Fed ratesetters’

conundrum; consumer and

government spending re-

mained buoyant, though busi-

ness investment was limp.

Groupe psa, the maker of the

Peugeotcar brand, and Fiat

Chrysler Automobilesagreed

to merge, creating the world’s

fourth-largest car manufactur-

er. Carmakers are under in-

creasing pressure to consoli-

date in an industry beset by

rising costs and disruptive

technologies. Earlier this year

Fiat Chrysler tried to engineer a

merger with Renault, but it hit

a dead end when the French

government, which owns 15%

of Renault, withheld its

support.

The recent strike at General

Motorsis now thought to have

cost the company $2.9bn. The

40-day strike was the longest at

the carmaker since 1970.

In a week when it announced

that it would have to lay off up

to 15% of its workforce, Juul

which dominates the market

for e-cigarettes, faced a lawsuit

froma formerexecutiveaccus-

ingit ofsellingcontaminated

vapingpodstoretailers.It is

anotherblowfore-cigarettes,

whichareunderscrutinyin

dozensofcasesoflungdisease.

GeneralElectricreported

anotherhugequarterlynet

loss,thistimeof$9.5bn,asit

bookedchargesconnectedto

itsrestructuring.Some$8.7bn

ofthatrelatestowritingdown

itsinvestmentinBaker

Hughes,anoil-servicesfirm.

Thelong-awaitedipoofSaudi

Aramcowasreportedlyready

tobelaunchedonNovember

3rd.Sharesintheworld’sbig-

gestoilcompany,ownedbythe

Saudistate,areexpectedto

starttradinginmid-December.

Always in motion is the future

Microsoftwon a $10bn con-

tract to create a “war-fighter”

cloud-computing system for

the Pentagon. The decision to

award the Joint Enterprise

Defence Infrastructure (jedi)

project to Microsoft was a

surprise, as Amazonhad been

the front-runner. It might yet

challenge the decision, espe-

cially given Donald Trump’s

animosity towards Jeff Bezos,

Amazon’s boss. Mr Trump

reportedly wanted to “screw”

Amazon over the contract.

Arm, a chip designer based in

Britain, is to resume supplying

components to Huawei, a

Chinese tech firm sanctioned

by the American government.

Arm is now confident that its

designs do not fall under

American export-control rules

after all. The firm is one of

Huawei’s most important, and

least replaceable, suppliers.

WhatsAppis to sue the nso

Group, an Israeli maker of

commercial spyware. The

encrypted chat service, which

is owned by Facebook, alleges

that nso’s malware was used to

spy on the conversations of

1,400 people in 20 countries,

including lawyers, journalists

and human-rights advocates.

Facebookreported a surge in

revenue and profit for the third

quarter. Mark Zuckerberg used

the occasion to reflect on “the

importance of standing for

voice and free expression”, as

he defended his position not to

“censor” politicians. Earlier,

Twitterannounced a ban on

all political advertising on its

platform worldwide.

Apple’squarterly earnings

retold a now-familiar tale.

Sales from the iPhone were

down, though revenues from

wearable devices and services

jumped; those two segments

accounted for 30% of the com-

pany’s sales in the quarter.

Murray Energy, America’s

fourth-largest coal miner, filed

for bankruptcy protection. It is

the latest firm to go to the wall

in an industry that has been

squeezed by natural gas and

renewable energy, despite

Donald Trump’s many prom-

ises to save coal jobs.

lvmh, the world’s largest

luxury-goods company, made

an unsolicited bid to buy Tiffa-

ny, a jewellery firm. Tiffany

valued the deal at $14.5bn. The

offer is the largest acquisition

yet attempted by Bernard

Arnault, lvmh’s multi-billion-

aire boss, and another big bet

on bling; in 2011lvmhtook a

majority stake in Bulgari.

Mass tourism it ain’t

Virgin Galacticbecame the

first space-tourism venture to

become a publicly traded

company when it floated in

New York (it avoided an ipoby

combining the business with

an already-listed investment

vehicle). Galactic thinks it can

eventually turn a profit by

persuading enough rich folk to

pay $250,000 for a 90-minute,

50-mile trip above the Earth’s

surface, part of its “mission” of

“democratising space”.

United States

Source: US Bureau of Economic Analysis

GDP, % increase on previous quarter

at an annualised rate

2016 17 18 19

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Trump

takes

office