President Trump announced yesterday he will withdraw the U.S. from the Paris agreement on climate change. That’s nothing new for a Republican president—George W. Bush steered clear of the Kyoto Protocol. But what’s changed in the last decade is the position of business. This time, a long list of CEOs urged the President to stay in the agreement. That not only included the left coast crowd—Apple CEO Tim Cook called the White House to lobby Trump, and Tesla’s Elon Musk quit the President’s advisory council after the announcement (as did Disney's Robert Iger)—but also the likes of ExxonMobil CEO Darren Woods. GE's Jeff Immelt and JP Morgan's Jamie Dimon also dissented, while Goldman Sachs's Lloyd Blankfein pointedly chose the President's favorite medium, Twitter, to slam the decision.
Nick Akins, the head of American Electric Power—long one of the nation’s top coal consumers—typifies the change in business attitudes on climate change. In an interview with Fortune’s Susie Gharib, he argued that the U.S. should stay engaged in global climate agreements, and said Trump’s talk of reviving the coal industry was not realistic.
“We are going to stay on the path that we are on” toward reduced coal use, Akins said. “We get a lot of questions from investors, we get a lot of questions from customers, that … want renewable energy solutions, clean energy solutions. And we at AEP want to be as benign to the environment as we can.”
Separately, I received a lot of response to my report Tuesday that a majority of Fortune 500 CEOs recognize that CEO pay “has undermined public support for business,” but still feel it is “fairly set by the marketplace in most cases.” One clever reader cited my own (forgotten) words from a 2006 column, in which I said “there’s something perverse about chief executives who defend their paychecks with surveys of their peers. By doing this, the world’s pre-eminent capitalists revert to a form of CEO socialism: From each according to his ability; to each according to Towers Perrin.”
But former Treasury Secretary Lawrence Summers argues what’s going on here is something broader. “Often bankers who advise CEOs are paid more than they are,” he writes, “and CEOs of top 100 companies who typically serve for only a few years make 4 or 5 times annually what the legions of senior partners in top law or consulting firms make for much of a career… The real challenge for fairness is that markets reward anyone near multibillion dollar decisions.”
News below—and enjoy the weekend.
• Back to Work
Job creation resumed with a bang in May. According to ADP, nonfarm employment rose 253,000, way above the 173,000 consensus forecast for the Bureau of Labor Statistics’ official release, which is due this morning. If the BLS number corroborates the ADP, it could be the sharpest monthly gain in jobs since 2014. Combined with a strong set of purchasing managers’ indexes from around the world, yesterday’s data gave fresh impetus to a stock market that had started to lose faith in the Trump administration’s ability to deliver stronger growth. All three main U.S. stock indexes closed at new record highs. Reuters
• Discounts Help Ford Edge Past GM
It was too little, too late to save Mark Fields’s job, but Ford’s new vehicles sales in the U.S. overtook those of GM in May. They were up 2.2% on the year at 241,126, while GM’s dropped 1.3% to 237,364. The news reflects how Ford has stuck to a policy of heavily discounting fleet sales while GM has accepted lower sales in the defense of its profit margins (a tactic replicated at global level by its varying degrees of withdrawal from Europe, India and South Africa). Analysts said the numbers did nothing to change the perception of a weakening boom. Fortune
• Trump Seeks Reinstatement of Travel Ban
The Trump administration asked the Supreme Court to let through its plan for a temporary ban on travelers from six mainly Muslim countries from entering the U.S. The plan, as much as part of Trump’s campaign agenda as withdrawal from the Paris Climate Accord, has been rejected repeatedly by lower courts across the country, with the Fourth U.S. Circuit Court of Appeals saying last week it “drips with religious intolerance, animius and discrimination.” WSJ, subscription required
• Guess We’ll Just Carry on, Say China and Europe
China and the EU will use a long-scheduled meeting today to stress that they will remain committed to the Paris Climate Accord regardless of the U.S.’s withdrawal. Premier Li Keqiang is due in Brussels after meeting yesterday in Berlin with Chancellor Angela Merkel. At the meeting, Daimler and Volkswagen both inked big investment deals to make electric vehicles in China, while Robert Bosch firmed up its alliance with Baidu on autonomous driving technologies. Air quality issues alone are forcing the pace of investment in cleaner transport both in China and in diesel-plagued Europe. Fortune
Around the Water Cooler
• Deere Shows PPG How It’s Done
Note to PPG, Kraft Heinz, and Elliott: this is how to execute a takeover in Europe. John Deere is to buy German road-building engineer Wirtgen for $5.2 billion in cash. The privately-held company, like many family-owned Mittelstand champions, had been looking for a buyer for nearly two years, and finally found one who would maintain its brands and geographical footprint, and not fire most of its workforce. The deal strengthens Deere’s expertise in construction ahead of an anticipated splurge in spending by the new administration. Fortune
• All Aboard the Crypto-Currency Bandwagon
A startup called Brave raised the equivalent of $35 million in about 30 seconds through what the crypto-currency crowd calls an “initial coin offering.” It’s the biggest ICO to date. The tokens sold are convertible into Ethereum, one of a handful of digital currencies whose notional value has skyrocketed in recent weeks in anticipation of their gaining broader acceptance by investors, retailers, and regulators. This article for Fortune by Jerry Brito explains how far that dream still is from being realized. The current rally in crypto-currencies checks more than a few boxes on the speculative bubble list (and at least Mumsnet hasn’t succumbed to the frenzy yet), but Bitcoin, Ethereum and others are currently holding on to most of their stellar gains this year. If it is a bubble, it still probably has further to inflate. Fortune
• Patriots Are the First Refuge of a Scoundrel
Vladimir Putin acknowledged that “patriotic” hackers in Russia could be targeting foreign election campaigns, although he repeated his claims that the Russian government would never dream of stooping so low. His language echoes former Kremlin statements admitting that “patriotic” Russians may have gone to fight (as private volunteers) in eastern Ukraine. Western researchers have presented thorough evidence that whole units of the Russian army have been rotated through that theater over the last three years. His acknowledgment comes on the eve of a series of Putin interviews with Oliver Stone being broadcast in the U.S. FT, metered access
• Brazil's Messy Clean-Up
It may be the largest foreign bribery settlement in history. The parent company of Brazil’s JBS, the world’s largest meat-packer, agreed to pay $3.2 billion to settle charges that it bribed local politicians. It comes less than six months after construction company Odebrecht agreed a $2.5 billion settlement of similar charges. It would have been more if former JBS chairman Joesly Batista hadn’t agreed to cooperate and wear a wire for a conversation that incriminated President Michel Temer as well as his two predecessors, Dilma Rousseff and Luiz Inacio Lula da Silva. As ever, the comparison with Russia and China, where corruption cases are more tightly orchestrated in the absence of political competition, is instructive. WSJ, subscription required
Summaries by Geoffrey Smith; email@example.com @geoffreytsmith