May 22, 2018

Good morning.

Our Fortune 500 CEO poll is out this morning, and it shows big company CEOs are notably optimistic about the economy. Some highlights:

— Roughly half—48%—think the economy will be better in the next 12 months than it has been in the last 12.

— Nearly two-thirds—63%—don’t think we will face a recession in the next two years.

— 82% expect to hire more employees over the next two years.

— Roughly half—49%—think President Trump’s policies have been “better than they expected” for their companies; only 18% think they have been “worse than expected.”

— 77% expect the new tax law to reduce their tax liability this year. And what will they use that money for? Increased dividends and share buybacks (50%), reinvestment in the company (43%), additional hiring (32%), additional R&D (32%), and additional wages and employee benefits (29%).

Also out this morning, is Erika Fry’s tough piece about Pfizer’s role in the nation’s critical drug shortages, and Michal Lev-Ram’s story about the huge team Facebook is assembling to police its content. (Note: a full 63% of the CEOs, who aren’t a regulatory-minded bunch, think Facebook is in need of more regulatory oversight.)

News below.

Alan Murray
Top News

ZTE Negotiations

The U.S. and China reportedly have a rough agreement on how to stop the Chinese telecoms giant ZTE from going under. According to the Wall Street Journal's sources, the deal would see the U.S. remove the ban on ZTE buying American parts and software—without which it cannot do business—in exchange for major management changes and possible fines. The ban resulted from ZTE breaking Iran sanctions. WSJ

Iran Sanctions

The U.S. is imposing "the strongest sanctions in history" on Iran, according to Secretary of State Mike Pompeo, who predicted that the Islamic Republic would be "battling to keep its economy alive." However, Pompeo's EU counterpart, Federica Mogherini, noted that there's still no indication of how the U.S. withdrawal from the Iran nuclear deal will stop nuclear proliferation in the Middle East. BBC

Sony Buys EMI

Sony is to spend $1.8 billion on buying EMI Music Publishing, a titan in its field with artists such as Queen and Alicia Keys in its catalog. "We are thrilled to bring EMI Music Publishing into the Sony family and maintain our number one position in the music publishing industry," said Kenichiro Yoshida, Sony's recently-installed CEO. Yoshida also said Sony would continue to boost its content services, while investing in image sensors and other technology. Guardian

Adobe Buys Magento

Adobe is shelling out $1.68 billion on Magento Commerce, maker of tools for operating online stores. The two companies already share a number of big-name customers such as Coca-Cola, Warner Music Group, and Nestle. Magento CEO Mark Lavelle will stay with the operation as part of the deal, which is Adobe's latest play in the marketing analytics sphere. Fortune

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Around the Water Cooler

Siemens Threats

The CEO of industrial giant Siemens has received death threats for speaking out against the far-right German opposition party, the AfD. After AfD co-leader Alice Weidel made a speech in which she said refugees were "girls in headscarves, knife-wielding men on government benefits and other good-for-nothing people," Joe Kaeser attacked her on Twitter, making reference to the Nazis. This is an extremely unusual intervention for a German business leader to make, and Siemens's board and worker council, as well as the extremely powerful IG Metall union, have formally backed Kaeser in this fight. Financial Times

Zuck's Apology Tour

Facebook CEO Mark Zuckerberg will testify before the European Parliament today over the Cambridge Analytica scandal and other misadventures. "Whether it's fake news, foreign interference in elections or developers misusing people's information, we didn't take a broad enough view of our responsibilities," Zuck will say, according to prepared remarks reported by USA Today. Expect the Facebook chief to get a far toastier grilling in Brussels than he did in Washington. USA Today

Tesla Review

What does Consumer Reports think of Tesla's Model 3? There's a lot to like, the publication said yesterday in a review, but it can't recommend the "mass market" car because its braking distance is "far worse than any contemporary car we've tested and about 7 feet longer than the stopping distance of a Ford F-150 full-sized pickup." Also, the control layout "forces drivers to take multiple steps to accomplish simple tasks." Consumer Reports

Bitcoin Mining

With Bitcoin mining nowadays being only barely profitable, if at all—a function of the relatively low Bitcoin price and the enormous cost of mining—it's surprising to see a major supplier of mining "rigs" preparing for an IPO. But Canaan Inc. is apparently doing just that. According to Reuters, Canaan is pitching itself as a chip company rather than a Bitcoin company, associating itself with markets beyond the cryptocurrency world. Reuters

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.

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