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CEO Daily: Wednesday, 7th June

Good morning.

The 63rd annual Fortune 500 list is out this morning, and—drum roll, please—the five biggest public companies in the U.S., measured by revenue, are:

1) Walmart

2) Berkshire Hathaway

3) Apple

4) Exxon Mobil

5) McKesson

Walmart has a pretty firm lock on the top spot, which it has occupied for five years straight. But what’s interesting is the rise of Warren Buffet’s Berkshire Hathaway, which may seem like yesterday’s company but this year achieved its highest ranking ever. That’s partly because both Apple and Exxon saw revenues slip, 7.7% and 16.7% respectively.

Still, tech hasn’t lost its mojo, with Amazon weighing in at number 12, up from 18 last year; Alphabet moving up to 27 from 36; Facebook jumping to 98 from 157; and Netflix moving to 314 from 379. If you rank them by market value, Apple is 1, Alphabet is 2, Microsoft is 3 and Amazon is 4—giving a clear sense of where investors think the future lies.

There are also some interesting newcomers to the list this year, including Tesla, which weighed in at number 383, Activision Blizzard, and Adobe. If you are still puzzling over Monday’s quiz question, the answer is Activision’s Bobby Kotick, who earned $33 million last year and is dating Facebook’s Sheryl Sandberg. You can read Fortune’s new stories about Tesla’s growth in China and Activision’s stunning ascent here and here.

A few fun facts based on our survey of Fortune 500 CEOs:

  • Most of the CEOs believe over the next twelve months the global economy will either be about the same as last year (60%) or better (36%). Only 4% think it will be worse;
  • 68% expect to increase their company’s employment over the next two years; only 19% plan to cut;
  • 61% say the election of Donald Trump has had no effect on their business; 26% say he’s been good for their business; and 13% say bad; and
  • 77% say Trump’s election has had no effect on their hiring plans this year, while 22% say they will hire more than planned because of Trump and his policies; only 1% said they will hire less than planned.

You can find the full list here. More news below.

Alan Murray

Top News

Uber Fires 20 After Harassment Probe

Uber fired over 20 employees in connection with its investigation into harassment and discrimination, a number that appears consistent with accusations of systematic problems with the company’s culture. Another 31 are in counseling or training, and seven more have received written warnings. It’s not clear how high up the buck stopped. The NYT and Bloomberg reported that some of those fired were senior management, but Uber isn’t expected to give public details until next week. Ahead of that, Uber burnished its diversity credentials with the appointment of Bozoma Saint John, the Ghanaian-born head of global consumer marketing at Apple Music, as chief brand officer, and Harvard Professor Frances Frei as head of leadership and strategy. Fortune

Amazon Abandons Its Neutrality

With its exponentially-growing streaming service Prime and its ubiquitous e-store, Amazon is the kind of player that stands to benefit more than most from the end of Net Neutrality. Internet providers, you would think, would be falling over themselves to offer its sites the kind of “fast lane” currently banned by the FCC. What to make, then, of its decision to sign up to a nationwide ‘Day of Action’ in defense of the current arrangements? It’s the first of the big tech firms to come out openly and strongly in such a manner. Jeff Bezos is clearly hoping to set an example that his peers will follow. If they do, it will open another fault line between the country’s most dynamic sector and the administration, to add to the ongoing spat over Climate Change policy. Fortune

Trump Backs Gulf Move Against Qatar

President Donald Trump publicly backed Saudi Arabia, Egypt, and the UAE in their dispute with Qatar, appearing on Twitter to accept their arguments that it was chiefly responsible for sponsoring terror in the Middle East. While Trump traced the move back to his recent trip to the region, Reuters reported State Department officials as saying that they had no advance warning of the decision by six countries at the weekend to sever ties with the Emirate and blockade it. Elsewhere, the Pentagon praised Qatar for its “enduring commitment to regional security” and for hosting U.S. forces. The UAE has threatened anyone publishing expressions of sympathy with Qatar with up to 15 years in jail, strengthening suspicions that the move is motivated at least party by a desire to stifle domestic dissent. Fortune

At Last, Europe Gets a Bank Failure Right

Santander agreed to take over Banco Popular, Spain’s sixth-largest bank, for the nominal sum of one euro, after the ECB said it was “likely to fail.” Popular had refused to take advantage of Spain’s Eurozone-led bailout to bolster its capital, mistakenly believing it could turn round its bad loan problem by itself. It’s a surprisingly smooth execution of the “bail-in” principles adopted by the EU in the wake of the crisis. All three classes of the bank’s loss-absorbing capital (shares and convertible and subordinated debt) have been written down to zero, while Santander will make a €7.9 billion provision against Popular’s remaining bad loans. It will also raise €7 billion in fresh capital to bolster its own balance sheet. The taxpayer, it seems, won’t pay a penny. If (and that’s a big ‘if’) Italy can match the trick, great indeed will be the rejoicing. Fortune

Around the Water Cooler

Terror in…Teheran

Terrorists attacked Iran’s parliament and the mausoleum of the Islamic Revolution’s founding father, Ayatollah Ruhollah Khomeini, in near-simultaneous assaults that killed as many as seven people, according to local reports. It’s unclear who was behind the attacks, which come less than two weeks after Hassan Rouhani won a second term as President in an election. The first instinct of lawmakers inside the chamber, unsurprisingly, was to blame the U.S. Fortune

Macy’s Triggers Another Rout

Macy’s triggered a fresh rout in department store stocks with a warning that its profit margins would continue to shrink this year (by nearly a full percentage point). CFO Karen Hoguet told analysts that Macy’s was taking longer than expected to clear excess inventory, with additional problems hitting sales of watches and beauty products. The remarks sent Macy’s own shares down 8.2% to a new seven-year low, and also hit J.C. Penney (-4.1%), Kohl’s (-5.8%), and Nordstrom (-3.6%). Despite all that, Macy’s isn’t cutting its sales and profit targets for the year yet, hoping to make good the damage with further cost cuts and sales measures. WSJ, subscription required

MSNBC Chips Away at Fox Dominance

Less than two months after losing Bill O’Reilly, Fox News has also lost the no.1 spot in weekday prime-time cable news for the first time in years. MSNBC, and its host Rachel Maddow, edged it in the ratings in May, the New York Times reported, citing Nielsen data. Fox was still top in overall primetime viewers, and in total day viewership, but the development underlines both the bump enjoyed by leading mainstream media, and the challenges that Fox faces after a changing of the guard in the C-suit and in front of the camera. Fortune

Carbon Pricing—Not Dead Yet?

Paris Accord or no, there are still arguments for setting a national price on carbon emissions, University of Texas research fellow Joshua Rhodes argues in our Fortune Insiders section. Among the arguments most likely to appeal to the President’s ears are that a single national price is better than the patchwork of local and state initiatives that will continue to confuse and frustrate businesses, and that it will make it easier to save jobs in the nuclear industry. Nor does it need to be a tax, if the money collected from emitters is paid out by the government to citizens at the end of the year. Of course, why you would want to deter carbon emissions per se, if you believe that Climate Change is a hoax, is another question. Fortune

Summaries by Geoffrey Smith; @geoffreytsmith