The Wall Street Journal - 02.08.2019

A2| Friday, August 2, 2019 ** THE WALL STREET JOURNAL.

THE WALL STREET JOURNAL

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The Federal Reservelow-

ered its benchmark short-

term rate to a range between

2% and 2.25%. In some edi-

tions Thursday, a Page One

article about the rate cut in-

correctly gave the range as

between 2% and 2.5%.

The U.S. unemployment

rate in June was 3.7%, near a

50-year low. A July 24 Page

One article about home sales

incorrectly said the rate was

at a 50-year low.

A magnetic-resonanceim-

age of the lower back costs

$7,646 at a hospital in Tor-

rance, Calif., according to

data from Clear Health Costs,

a company that publishes in-

formation about health-care

costs. A U.S. News article

Tuesday about a proposal for

price transparency in hospi-

tals incorrectly said the price

was $47,646.

The U.S. has proposed

tariffs on $300 billion in Chi-

nese goods. A June 28 Busi-

ness & Finance article about

the departure of Apple Inc.

design chief Jony Ive incor-

rectly said the proposed tar-

iffs themselves totaled $

billion.

Readers can alert The Wall Street Journal to any errors in news articles by

[email protected] by calling 888-410-2667.

CORRECTIONSAMPLIFICATIONS

tensions are resolved soon,

and one in which they aren’t.

“There isn’t a lot of experi-

ence in responding to global

trade tensions,” Mr. Powell

said.

In early May, Fed officials

thought their wait-and-see

stance on interest-rate

U.S. NEWS

At Titan Steel Corp., a Bal-

timore-based distributor and

processor of steel products,

business has slumped since

President Trump’s decision to

impose steel tariffs last year,

offsetting any benefit from a

cut to corporate taxes in 2017.

Tariffs have been “an un-

mitigated bad,” said Bill Hut-

ton, president of Titan Steel,

which buys American and for-

eign steel. It also exports steel

products used to make paint,

aerosol and food cans, which

are now subject to retaliatory

tariffs. “Uncertainty is the en-

emy of long-term investment

decisions,” he said. “Who’s to

guess what the trade-policy

environment will be.”

The Trump administration

views tariffs as a critical tool

needed to pressure other

countries into renegotiating

trade agreements.

U.S. trade policies have

made it very difficult to fore-

cast demand or make equip-

ment-purchasing and other

decisions with a three- to five-

year horizon, which in turn

has made the company more

cautious about hiring, said Mr.

Hutton.

A decline in borrowing

costs could help some highly

indebted firms, particularly in

the capital-intensive manufac-

turing and rate-sensitive con-

struction sectors, by letting

them shore up balance sheets,

said Constance Hunter, chief

economist at accounting giant

KPMG.

Fed Chairman Jerome Pow-

ell pushed back Wednesday

against the premise that lower

rates wouldn’t boost the econ-

omy. “The evidence of my eyes

tells me that our policy...sup-

ports economic activity,

household and business confi-

dence,” he said.

In calibrating short-term

interest rates, Fed officials

face similar challenges as

business executives because

they are deciding between two

outlooks: one in which trade

changes was appropriate.

Shortly after that, Mr. Trump

announced plans to increase

tariffs on Chinese goods after

trade talks faltered.

He subsequently unveiled

plans to impose tariffs on

Mexico to stem an increase in

Central American asylum seek-

ers at the southern U.S. bor-

der. Those tariffs were sus-

pended before they took

effect.

“Everyone in April thought

and through May...that the

economy was going to get bet-

ter in the back half of the year,

trade war is going to sort of

settle, certainly not escalate.

And now we’re just in differ-

ent world,” said Mark Costa,

chief executive of Eastman

ChemicalCo., in an earnings

call last week.

Sales were holding up until

a “dramatic slowdown” in

June before the G-20 summit

between Mr. Trump and Chi-

nese President Xi Jinping, said

Mr. Costa. “People got very

nervous about what’s going to

happen in that meeting and

they also decided to start

managing inventory down and

reducing their orders given

that risk,” he said. The two

leaders agreed to restart talks

at the summit.

On Thursday, Mr. Trump

announced plans to impose an

additional tariff of 10% on

$300 billion in Chinese goods

beginning Sept. 1 after talks in

Shanghai didn’t yield enough

progress. Unlike previous

rounds of tariffs, which have

focused largely on industrial

goods, the latest tranche in-

cludes a host of consumer

products, from electronics and

cellphones to apparel.

Activity in the U.S. factory

sector slowed for the fourth

straight month in July to its

lowest level in nearly three

years, the Institute for Supply

Management said on Thurs-

day. Its manufacturing index

fell to 51.2 in July from 51.7 in

June.

Federal Reserve officials

cited weak global growth,

slumping trade and a chill in

business investment when

they cut interest rates

Wednesday.

One question now is how

much a decline in borrowing

costs, spurred earlier this year

by the Fed’s decision to shelve

rate increases and now by

their move to cut rates, will

help businesses and cushion a

broader slowdown driven by

some factors outside the Fed’s

control. The central bank’s

policy may be an imperfect in-

strument if investment is be-

ing held back chiefly by

doubts about tariffs, analysts

said.

“The real issue facing the

global economy is trade uncer-

tainty, and monetary policy is

not well-targeted to address

that uncertainty,” said Cathe-

rine Mann, chief global econo-

mist at Citigroup Inc.

BYNICKTIMIRAOS

Trade Woes Cast Doubt on Fed Firepower

Inflation-adjustedbusiness

investmentspending,change

fromayearearlier

Source: Commerce Department

14

0

2

4

6

8

10

12

%

2011 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’

Mario Draghi had caused the

euro to drop against the U.S.

dollar by signaling that the

bank could roll out more stim-

ulus measures, “making it un-

fairly easier for them to com-

pete against the USA.”

Interest-rate cuts typically

cause currencies to fall as cap-

ital flows to economies with

higher rates in search of

higher returns. But the U.S.

dollar strengthened Wednes-

day after the Fed lowered its

benchmark interest rate by a

quarter-percentage point,

partly because some currency

traders had expected the cen-

tral bank to reduce rates more

or to more strongly signal ad-

ditional cuts to come. The

move left the Fed’s rate higher

than those in other major de-

veloped economies.

While the dollar appreci-

ated against the currencies of

U.S. trading partners last year,

when the Fed was raising in-

terest rates, it has been

roughly stable this year and is

weaker than in 2016 and 2017.

Fed officials say the Trea-

sury Department has responsi-

bility for exchange-rate policy

and refrain from commenting

on the level of the dollar or

trade policy.

Ms. Shelton also on Thurs-

day took the unconventional

step for a potential Fed nomi-

nee of commenting on its lat-

est policy action.

The effect of a quarter-

point cut “is like tasing an in-

ert body. It’s not causing any

growth to be stimulated,”

Ms. Shelton said.

WASHINGTON—One of

President Trump’s latest picks

for the Federal Reserve Board,

conservative economic com-

mentator Judy Shelton, said

foreign countries are devalu-

ing their currencies to prop up

their economies.

Ms. Shelton said in an in-

terview on CNBC Thursday

that central banks in Europe,

China and Japan are all deval-

uing their currencies against

the dollar through monetary

policy. When asked if the U.S.

should follow suit, she said

yes.

She likened the current sit-

uation to the “beggar thy

neighbor” economic policies of

the 1930s, when countries

raced to devalue their curren-

cies in hopes of gaining com-

petitive advantages against

their trading partners.

“I don’t think that we

should make it harder for our

own manufacturers to com-

pete domestically against im-

ports from other countries

where they have resorted to

cheating, really, through cur-

rencydevaluationtomakeit

look like they’re offering the

same thing at better price,”

Ms. Shelton said.

She said that central-bank

stimulus policies are more ef-

fective at manipulating cur-

rencies than kindling eco-

nomic growth.

Her comments echoed Mr.

Trump’s comments in June

when he tweeted that Euro-

pean Central Bank President

BYPAULKIERNAN

Trump Pick Echoes

Currency Concerns

U.S. WATCH

Flames illuminated the sky early Thursday in Kentucky after a deadly pipeline explosion that damaged rail lines and burned other structures.

AARON STAMPER VIA REUTERS

subcommittee that the com-

pany’s acquisitions have fueled

innovation and brought to-

gether firms of complemen-

tary strengths.

Companies purchased by

Facebook “have had more op-

portunity to innovate as part

of Facebook than they would

have on their own—enhancing

users’ experience and result-

ing in more choice for more

people overall, not less,” Mr.

Perault said.

An FTC spokeswoman de-

clined to comment. The inves-

tigation comes on the heels of

a separate case in which the

commission fined Facebook $

billion for alleged privacy mis-

steps.

One acquisition that could

come under scrutiny was the

2013 takeover of Onavo Mobile

Ltd. Facebook used Onavo’s

behavior-tracking technology

to identify and target fast-

growing companies as poten-

tial purchases or to scope out

new product categories, The

Continued from Page One

Wall Street Journal reported

in 2017. Facebook used data

from Onavo in deciding to buy

WhatsApp. Documents U.K.

lawmakers released late last

year confirmed Onavo’s impor-

tance to Facebook’s strategy.

Facebook eventually shut

down the controversial app.

Other tech giants, such as

Alphabet Inc.’s Google, also

have been on buying sprees.

The top five tech firms have

made more than 400 acquisi-

tions over the last decade, a

U.K. blue-ribbon antitrust

panel said in March.

The FTC has for months

signaled its interest in

whether tech companies are

squelching competition by sys-

tematically buying startups

that could one day challenge

them.

When the commission

formed a task force in Febru-

ary to examine potential anti-

trust violations in the tech in-

dustry, Bruce Hoffman,

director of the FTC’s bureau of

competition, said the issue

was ripe for exploration.

“This is a completely legiti-

mate and real theory of com-

petitive harm,” he said last

year, while stressing that the

FTC would need “an eviden-

tiary and economic basis” for

determining that an acquired

startup really could have be-

come a significant competitor.

Mr. Hoffman acknowledged

the potential negative conse-

quences of cracking down on

such acquisitions: Large tech

firms may be able to move

startup technologies to market

more quickly, and capital mar-

kets for startups could shrink

if the opportunity to be pur-

chased by a big tech company

is constrained, he said.

If the FTC were to identify

antitrust issues with any of

Facebook’s past acquisitions,

the commission could pursue a

range of remedies, from seek-

ing a spinoff of certain acqui-

sitions to restricting Face-

book’s conduct with some of

the assets it has acquired. Any

such effort could lead to litiga-

tion.

The FTC’s investigation

isn’t the only antitrust scru-

tiny the company faces.

The Justice Department

said last week that it was

launching a broad review of

whether and how online plat-

forms have engaged in prac-

tices that reduce competition,

stifle innovation or otherwise

harm consumers. That in-

cludes social media, the de-

partment said. The reviews by

both U.S. antitrust agencies

signal the federal government

is training significant fire-

power on Facebook.

U.S. antitrust enforcers

typically challenge mergers

and acquisitions that propose

to combine major head-to-

head competitors. But some

critics have argued the gov-

ernment has focused too

much on the current size of

tech takeover targets and

failed to consider how they

could grow.

When the FTC allowed

Facebook to acquire Instagram

in 2012, there was discomfort

within the commission about

possible antitrust implications,

according to people familiar

with the matter. But FTC offi-

cials were concerned they

might not win an antitrust

case in court, the people said.

The FTC blessed the Whats-

App purchase in 2014.

Some tech acquisitions by

Facebook and other firms

wouldn’t necessarily have

been subject to federal scru-

tiny at the time the deals were

reached because they were

smaller in monetary value and

didn’t require government ap-

proval.

KENTUCKY

At Least One Dead

In Pipeline Blast

A natural-gas pipeline in Ken-

tucky ruptured and exploded

early Thursday, killing at least

one person and injuring five oth-

ers, emergency authorities said.

The blast occurred near a

cluster of homes in a rural part

of Lincoln County, about 43

miles southwest of Lexington.

About 75 people were evacu-

ated.

The over-9,000-mile-long

Texas Eastern Transmission

pipeline is owned and operated

by Enbridge, and runs from the

U.S.-Mexico border to New York

City.Inawrittenstatement,En-

bridge said it had isolated the

affected line.

—Talal Ansari

KENNEDY FAMILY

RFK Granddaughter

Dies at Age 22

Robert F. Kennedy grand-

daughter Saoirse Kennedy Hill

has died, the family announced.

She was 22 years old.

The Kennedy family’s state-

ment followed reports of a death

at the storied Kennedy com-

pound in Hyannis Port, Mass.

Ms. Hill was the daughter of

Robert and Ethel Kennedy’s fifth

child, Courtney, and Paul Michael

Hill, who was one of four falsely

convicted in the 1974 Irish Re-

publican Army bombings of two

pubs.

“She lit up our lives with her

love, her peals of laughter and

her generous spirit,” the state-

ment said, adding that she was

passionate about human rights

and women’s empowerment and

worked with indigenous commu-

nities to build schools in Mexico.

She attended Boston College,

where she was a member of the

class of 2020, the university

confirmed to the Boston Globe.

The family statement didn’t

include a cause of death.

The Cape and Islands district

attorney’s office said Barnstable

police responded to a home “for

a reported unattended death”

Thursday afternoon, according to

a statement cited by news out-

lets. Barnstable police and Mass-

achusetts State Police detectives

assigned to the district attorney’s

office are investigating.

“The world is a little less

beautiful today,” Ms. Hill’s 91-

year-old grandmother, Ethel Ken-

nedy, was quoted as saying in

the family’s statement.

—Associated Press

HOUSING

HUD Looks to Allow

Private Financing

The U.S. Department of

Housing and Urban Development

is close to completing a major

change in its senior-housing

portfolio, allowing nonprofit

owners of 125,000 apartments

to tap private sources of financ-

ing for the first time.

HUD built nearly 2,900 of

these properties over the past

three decades. Though owned by

nonprofits, the government

funded their construction and

subsidized tenant rents.

Under the proposed change,

senior-housing owners would be

able to apply to HUD for permis-

sion to use private financing

sources.

—Will Parker

FTC Eyes

Facebook’s

Purchases

Facebook acquired

about 90 companies

over roughly the last

15 years.