Brace yourself for another down day in the U.S. stock market, after Thursday’s brief respite. Futures are plunging, in the wake of another nose dive in China, with the Shanghai composite losing 3.5%. Oil prices are also down.
Speaking of China, General Electric of Boston announced this morning it is selling its appliances business to China’s Haier for $5.4 billion in cash. That comes only weeks after GE abandoned a $3.3 billion deal to sell the appliances business to Sweden’s Electrolux, following opposition from U.S. antitrust regulators.
The antitrust regulators killed the Electrolux deal because they were trying to protect U.S. consumers from higher prices. Haier’s products are set to get 45% more expensive due to a new import tariff if Donald Trump has his way, so buying a big domestic manufacturer could keep it one step ahead of the GOP frontrunner. Trump’s tariffs are intended to punish China for devaluing the yuan – at a time when the Chinese government is struggling to slow the currency’s decline.
And if you skipped last night’s GOP debate because you think that by ignoring him, Donald Trump will go away – well, you are wrong. Trump put in a good performance, invoking the 9-11 terror attacks to beat back Ted Cruz’s criticism of his “New York values.” There is no reason to think his lead in the polls – which has surged, according to a Wall Street Journal/NBC News poll released before the debate – is going away.
There was a brief moment in last night’s debate when Ohio governor John Kasich concisely articulated a pro-business agenda: freeze regulation, cut taxes, restrain spending and restore some modicum of bipartisan dialogue. But he was largely ignored.
Enjoy the day.
• BHP Billiton cuts value of U.S. assets
The biggest foreign-owned player in the U.S. shale oil patch is writing $7.2 billion off the value of its operations there, blaming weaker prices and “significant volatility.” The news comes in a week that crude oil prices have fallen below $30 a barrel for the first time in nearly 13 years. For Australia-based BHP, the woes in the U.S. are the latest in a string of problems that includes a collapse in iron ore prices due to an economic slowdown in China. It is also facing huge legal bills after a dam burst in Brazil caused a trail of pollution hundreds of miles long. Fortune
• Global malaise spurs U.S. worries
Forecasters in The Wall Street Journal‘s latest survey of economists said there is a 17% chance the U.S. will enter a recession in 2016, the highest percentage in three years. Also problematic: 80% said they see downside risks to the economy. What could be causing the concern? Well, falling oil prices and a weakened Chinese economy have battered stock markets and weakness abroad is raising questions about the American economy’s ability to continue to grow in the face of such strong headwinds. But while some sectors, notably energy, are facing serious problems, economists point out that job growth has been fairly broad across other pockets of the economy. They believe that trend would allow the U.S. expansion to survive. The Wall Street Journal (subscription required)
• Murdoch tightens grip on his empire
A report from New York magazine has claimed that media mogul Rupert Murdoch may be squeezing out his long-time lieutenant Roger Ailes. Ailes, the man who has led the strategy at Fox News for about 20 years, has been responsible for the division at 21st Century Fox that accounts for a bulk of the company’s profits. But the issue, the magazine alleges, may be ego driven as Ailes was reportedly miffed about having to report to Murdoch’s two sons – who have been elevated to senior positions inside the business. Fortune
• Goldman agrees to $5.1 billion settlement
Goldman Sachs has agreed to a tentative settlement of the federal and state investigation of the company’s handling of mortgage-backed securities before the national financial crisis. The investment banking giant will pay a $2.4 billion civil monetary penalty, make $875 million in cash payments and provide $1.8 billion in consumer relief – which includes foreclosure prevention. The settlement will reduce the bank’s fourth-quarter profits, scheduled to be announced Wednesday, by about $1.5 billion on an after-tax basis. USA Today
Around the Water Cooler
• U.S. wants more details from AB InBev
U.S. antitrust officials are seeking additional information from Anheuser-Busch InBev regarding the company’s planned takeover of SABMiller, a deal that would unite the two largest brewers in the world. The Justice Department’s antitrust division issued a “second request” to the brewer, an inquiry that was expected by the companies and lengthens the review process about how the deal will affect competition and beer pricing. Competition authorities around the world will have to weigh how the more than $100 billion takeover would affect the beer market in their various nations. Bloomberg
• Foursquare gets a new CEO
Foursquare CEO and co-founder Dennis Crowley has relinquished his chief executive role to Jeff Glueck, the company’s chief operating officer for the past year and a half. In addition, Foursquare raised $45 million in Series E funding, with media reports claiming the funding would value the New York City app maker at $250 million. That’s a steep haircut to its earlier valuation of $650 million. The executive shakeup comes as Foursquare, which was greatly hyped several years ago, has aimed to position itself as a big data startup providing “location intelligence” after the appeal of “checking in” on the app lost some of its luster. Fortune
• Obama to halt coal mining leases
The Obama administration will reportedly announce on Friday a decision to halt new coal mining leases on public lands as part of a regulatory overhaul that the New York Times claims could lead to increased costs for energy companies. The move is seen as a big setback for the coal industry, essentially freezing new coal production on federal lands and sending a signal to the energy sector that could turn away investors. About 40% of the nation’s coal is mined on public land, and most of that land is in Wyoming. New York Times (subscription required)