Good morning,
It is Feedback Friday, and time to share some of the swarm of commentary I continue to receive on the tax bill being rushed through Congress. My comments yesterday clearly left many CEO Daily readers unsatisfied.
This is from F.S.:
“My concern w/ the tax bill and the relatively positive view you have of it is simple—the bill is religious in nature and not fact based.”
And this from G.S., one CEO who is not celebrating:
“I am not on the fence. $20 trillion in debt and counting does not end well in any universe I’m aware of. If we don’t get our arms around it, it will get its arms around us and most likely in a subsequent generation—which puts a moral imperative in play.”
R.L.—also a CEO—proposes a compromise:
“The corporate tax cut is being framed as a yes/no question. If that is the question I agree with you the answer is yes, for all the reasons you articulate. But it is of course a sliding scale—before the election, corporate leaders would have been happy with 25% and a competitive international system. Now we are at 20% and that last 5% costs a lot.”
And my friend J.G. continues to excoriate me:
“Why not also extol the deliberative democratic process, consisting of experts on all sides, thorough debate across the country, while you are at it?”
I’m in Hong Kong today, on my way to Guangzhou, where we will be hosting Fortune Brainstorm Tech International and the Fortune Global Forum next week. I’ll be reporting from there all week, so stay tuned.
News below. Have a great weekend.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
• Stocks Shudder as Tax Bill Hits Late Hurdle
Stocks fell sharply after the Senate’s tax bill ran into an eleventh-hour hurdle. The Joint Committee on Taxation ruled that the plan’s growth projections were too optimistic. Meanwhile, the outgoing NY Fed President Bill Dudley warned that the economy didn’t need a fiscal stimulus right now. Dudley is one of a number of officials who will be leaving the Fed in 2017 and 2018. With Daniel Tarullo, Janet Yellen, and Stanley Fischer all bowing out too, it will be a relatively inexperienced Fed board that has to deal with any inflationary tensions created by the tax bill. Fortune
• CVS Closes in on Aetna
CVS, which operates the massive Caremark pharmacy benefits manager as well as the CVS drugstore chain, is closing in on a deal to buy Aetna in a deal for more than $66 billion in cash and stock. The Wall Street Journal reported the deal could be announced as early as Monday and would value Aetna at between $200-$205 a share. The deal will make CVS a huge presence in virtually all areas of health care, a scale that it apparently hopes will defend it against the ravages of Amazon, if Jeff Bezos ever fancies a swing at the pharmacy business. Fortune
• McWilliams Tapped for FDIC
President Donald Trump plans to nominate Jelena McWilliams to head the Federal Deposit Insurance Corporation, the White House said. McWilliams is currently chief legal officer at Fifth Third Bancorp. She had also spent three years as an attorney for the Federal Reserve’s board of governors. Trump’s first pick, James Clinger, had withdrawn his name from consideration in July, citing family issues. Fortune
• Apron Blues
Blue Apron CEO Matt Salzberg is stepping down after a miserable start to life as a public company for the mealkit delivery service. The company’s shares have lost over two-thirds of their value since its July IPO, which coincided cruelly with Amazon’s move into the grocery business with the acquisition of Whole Foods. It said in October it would cut 300 jobs, about 6% of its workforce, mirroring a drop in the number of its active customers in the year to September. Fortune
Around the Water Cooler
• VW’s and GM’s Future Takes Shape
Volkswagen said it would likely start building electric cars at its Chattanooga plant by 2023, a move that will both appease the fury of the CARB and DoJ post-Dieselgate, and pre-empt any further protectionist drift in the White House. A combination of cost cuts and more SUVs is also driving profit margins at the core VW brand, the company’s chronic Achilles Heel, above 4% for the first time in years. Elsewhere, GM said it aims to have a fleet of self-driving taxis on U.S. roads by 2019. Fortune
• OPEC’s Hot and Cold Shower
As expected, OPEC and its partners renewed their oil output cut deal through the end of 2018. However, lest Texas and North Dakota get too excited, they also promised to review the deal in June. That means U.S. companies only have six months of certainty, rather than 12, which many would have regarded as a free pass to ramp up output. Bloomberg aptly likened the cartel to someone desperately trying to adjust the temperature, equally scared of an oil market that can run too hot as well as too cold. The bottom line is, though, that the $60/barrel range targeted still required wrenching adjustments in many countries’ budgets—notably Saudi Arabia’s. Bloomberg
• Burnishing Sales of Reputation
Three weeks after it went on sale, Taylor Swift is releasing all of her Reputation album on the world’s leading streaming services. The Wall Street Journal noted that downloads of Reputation only just fell short of the number for her previous album 1989 in 2014, despite the fact that streaming has taken a huge chunk out of the download business since then. WSJ, subscription required
• Can Tesla Keep the Lights on at the Cricket?
Tesla switched on the world’s biggest battery, a grid-scale storage unit designed to stabilize the electricity system of South Australia. The flagship project is aimed at showing that there is a clean and affordable answer to the grid management issues created by unpredictable flows of renewable power (South Australia’s grid has suffered repeated blackouts in recent years). There had better be no teething problems: any blackout in Adelaide over the next five days will ruin the first day-night ‘Ashes’ test match between Australia and England. Assuming England last the full five days, that is. Fortune
Summaries by Geoffrey Smith; geoffrey.smith@fortune.com
@geoffreytsmith
