CEO Daily: Wednesday, May 4
Donald Trump easily won the Republican primary in Indiana last night, clearing his path to the nomination. Ted Cruz suspended his campaign. Hillary Clinton lost to Bernie Sanders in the state, a defeat unlikely to stop her from securing the nomination, but one that underscores her weakness even within her own party.
How will this play out in November? When the folks at Politico surveyed political insiders from ten key battleground states recently, nearly ninety percent – including three quarters of Republicans – said Clinton would defeat Trump in their states. In the three biggest swing states – Ohio, Florida, Pennsylvania – Republicans were particularly downbeat about Trump’s chances, and worried about the effect on other GOP candidates on the ticket. Not since at least 1964 have Republican party leaders been so pessimistic about their own chances of winning the White House.
Of course, you should take such predictions with a truckload of salt. If one thing is true about Election 2016, it’s that the “insiders” have been consistently wrong, and “outsiders” have been stubbornly determined to upend conventional wisdom. Moreover, there are six months between now and election day – plenty of time for events to intervene, including, but not limited to: an economic downturn, a terror attack inside the U.S., an FBI finding in Clinton’s email case, an unexpected stumble on the campaign trail, a health issue with either candidate, and so on. This is far from settled.
An early test for fractured Republicans will come as they shape their platform for adoption at the convention. Will they stick to their support for free trade? Or take a Trump-friendly tilt toward protectionism?
More news below
• Brazil's Deepwater Horizon
Prosecutors in Brazil have hit mining companies BHP Billiton and Vale with a a claim for $43.5 billion in damages after a dam burst sent a lethal wave of toxic waste water across two states in November. The Samarco dam disaster killed at least 17 people and left hundreds homeless and is the biggest environmental disaster to hit the natural resources sector since BP's Deepwater Horizon spill in the Gulf of Mexico in 2010. “It does not seem credible, neither technically nor morally, that the value of the human, cultural and physical environment in Brazil should be worth less than in other countries," prosecutors said in their filing. BHP's shares were down by over 6% this morning in London. Financial Times, metered access
• Will Pfizer Bid for Medivation?
Pfizer has approached Medivation about a possible takeover bid, according to Reuters sources. The San Francisco oncology drug specialist has rejected as too low an offer of $52.50 a share from France's Sanofi. On Tuesday, Pfizer had announced stronger-than-expected earnings for the first quarter that highlighted the need for it to do something with the cash it's churning out, now that its plan to take over Allergan has collapsed. CEO Ian Read said he was open to fresh M&A activity, especially for 'late-stage assets' that don't add to its own heavy R&D commitments. Fortune, Bloomberg
• Europe Can Gross Smokers out of Their Habit
A big defeat for Big Tobacco: The European Court of Justice, the E.U.'s highest court, has ruled that member states have the right to put graphic images of the damage caused to bodies by smoking on the packaging of cigarettes, a measure aimed at deterring sales. Philip Morris International and British American Tobacco were among those who had challenged a new U.K. law in 2014, arguing that it went "beyond the limits of what is appropriate and necessary." The ruling is likely to accelerate the decline in cigarette consumption in developed markets, and strengthen the resolve of encourage poorer emerging countries to regulate likewise. Elsewhere Wednesday, India's Supreme Court also upheld new rules expanding the health warning to 85% of a cigarette pack's surface). The ECJ upheld less stringent measures on e-cigarettes, in a move that will pressure the industry to migrate smokers more quickly to the joys of 'vaping.' Bloomberg
• Apple to Revamp Streaming Service
More signs that Apple has lost its life-transforming buzz: Bloomberg reports that the company is going back to the drawing board to revamp its music streaming service after mixed reviews and the loss of some key executives. Bloomberg's sources say the company wants to do a better job of integrating its streaming and download businesses, and expand its online radio service. With the global smartphone business slowing down, the company can ill afford the whiff of stagnation spreading to other businesses, especially if that stagnation is sourced back to failing to provide best-in-class consumer experiences, as Bloomberg suggests is the case here. Bloomberg
Around the Water Cooler
• Adidas To Sell Taylor-Made
Adidas' love affair with golf is over. The German group is putting its Taylormade, Adams and Ashworth brands up for sale to concentrate on running shoes and clothing, where its U.S. business is doing much better. Taylormade, its biggest golfing brand, had seen revenue fall by a third between 2012 and 2014. Revenue appears to have stabilized after a firesale of unsold inventory last year. Adidas' move reflects a generational shift in the leisure and exercise business: the number of golfers across the country has fallen 20% in the last decade, as baby boomers age and millennials opt for other forms of sports-based networking. WSJ, subscription required
• Alphabet, Fiat Chrysler Team up on Autonomous Driving
Google's parent, Alphabet, is collaborating with Fiat Chrysler Automobiles to put a fleet of self-driving minivans on the road, marking the first time the tech company has worked directly with an automaker to create its autonomous vehicles. Alphabet, which wants to commercialize self-driving cars by 2020, said in a blog post Tuesday that it plans to double its fleet of self-driving cars for testing by adding about 100 Chrysler Pacifica Hybrid minivans. They'll have to be adapted to accommodate Google’s self-driving systems, including sensors and computers. Expect a long and complex struggle for control over the mobility industry over the next decade between the tech companies that have the data expertise and the auto companies that have the skills of mass production. Fortune
• Takata Recall May Double in Size
The biggest and most complex auto recall in U.S. history is about to get even bigger. More than twice as big, probably. Takata is expected to announce that it needs to fix another 35-40 million airbag inflators, on top of the 28.8 million already fixed in 24 million vehicles across the country. Last month, the NHTSA said there were about 85 million unrecalled Takata air bag inflators in U.S. vehicles that would need to be recalled by 2019 unless the company can prove they are safe. The recall expansion leaves open the question of whether about 50 million inflators-- including 18 million side inflators and about 32 million frontal and side airbags with drying agents-- will eventually need to be recalled. Fortune
• Skip the Ribs, Rams
The NFL has warned players to stay away from meat when they travel to China and Mexico. The players’ association released the warning yesterday, highlighting a feed agent called clenbuterol that was in the news as recently as 2011 in China. The country’s largest meat processor was caught using it to bulk up pigs. Apparently, it also trips the league’s drug test. The NFL seems to be making sure that nobody can claim ignorance ahead of its first foray into China: the NFL is expected to announce a game there between the Los Angeles Rams and another team for the 2018 season, while Commissioner Roger Goodell said in March that: “We actually have multiple teams that are interested in playing.” Fortune