Happy Trade War, Pruitt Pruned, Cohen Blocked: CEO Daily for July 6, 2018
It’s Friday, so time for feedback—of which I’ve gotten lots this week in response to my Tuesday post criticizing tech workers for pushing their companies to abandon work for the U.S. government. Most of the response was positive. “Bravo,” said T. D. “Well-said,” wrote J.F. “An extremely important message,” responded L.M. “Keep fanning those embers,” said N.R. And E.B. even went so far as to call it “the best thing you have EVER written”—leading me to reevaluate a four-decade journalistic career.
But there were some naysayers. L.M. quoted Thomas Jefferson saying “the spirit of resistance to government is so valuable on certain occasions, that I wish it to be always kept alive.” He asked: “Can’t we have both ‘good government’ and technological innovation?”
And M.B. took me to task for “Chinese fear mongering… Remember the 1980s when Japan, Inc. was going to buy the U.S.? They bought buildings and Pebble Beach. Look at them now… The answer isn’t China, it’s within ourselves.” I’ll leave for another day the argument on why China isn’t Japan. But for now, I’d point out that I wasn’t intending to monger fear—just saying that in a two-superpower world, it’s not wise for U.S. companies to deny their best technology to the government, while Chinese companies give theirs full access.
Speaking of China: we’ll be taking a break from our normal Saturday China missive tomorrow, because Clay Chandler is on vacation. But I’ll be in China all next week, reporting from there.
More news below, including the end of a cabinet career that was swallowed by scandal. And: what’s next for the EPA.
Happy trade war, everyone. The U.S.'s tariffs on $34 billion in Chinese imports went into effect today, and China has hit back with equivalent tariffs. So let's mark the occasion with a selection of quotes from both sides. Chinese state media is particularly combative on this occasion—here's a gem from the Global Times: "If the U.S. is determined to escalate conflicts with China, then so be it. Perhaps the Trump administration can only clear its mind after a fight." Fortune
Stock Market Reaction
As everyone has already priced in the start of the trade war, the initial Asian stock market reaction isn't so bad. The Shanghai Composite and Hang Seng indexes were both up 0.5%, and Japan's Nikkei was up 1.1%. Let's see how long that continues if President Trump makes good on his threat to hit the Chinese with tariffs on a further $500 billion worth of goods, in future rounds of the trade war. Reuters
Scott Pruitt is out as EPA chief after an extraordinary string of petty scandals, ranging from excessive travel and personal protection expenses to trying to get his wife a Chick-fil-A franchise. So, with many environmental protections already abandoned, what is next for the Environmental Protection Agency? New acting director Andrew Wheeler is an agency veteran, but also a former energy sector lobbyist. Fortune
The U.S. hedge fund manager Steven Cohen, who was banned for two years by the SEC over insider trading, wants to get back into Europe by reopening his fund to investors in the U.K. However, the British Financial Conduct Authority is reportedly blocking him on the basis that he is not "fit and proper" to manage other people's money there again. Financial Times
Around the Water Cooler
Netflix and Amazon are reportedly finding the lucrative Indian video-streaming market "a tough nut to crack," thanks to the dominance of local rivals such as Hotstar. There are apparently more than 35 Indian streaming services, many owned by local television networks and production houses. The Indian online video market is currently worth around $700 million, but that's set to expand to $2.4 billion by 2023. CNBC
With mere months of Brexit negotiations with the EU left on the schedule, British Prime Minister Theresa May is gathering her cabinet today for negotiations over their own stance. As the Europeans keep saying, how can a deal be struck when the Brits can't even agree on what they want? May has a complex plan for collecting customs tariffs on goods that are destined for the EU, with the aim of avoiding customs checks at the Irish-British border. Leading Brexiteers say the plan is unworkable. Bloomberg
UBS has "digitally cloned" its chief economist, Daniel Kalt, so his avatar can meet with clients via interactive video chat. Kalt was imaged by over 120 high-def cameras and he trained IBM's Watson to have his avatar answer questions just as he would. Allegedly. It will be interesting to see whether UBS's clients find a virtual Daniel Kalt as value-for-money as a real someone-else. Fortune
Elon Musk is still angry about his treatment by the media, accusing publications of publishing false stories about Tesla. Not only is he going after specific outlets, including Reuters, Business Insider and CNBC, but he's also singling out specific reporters with claims of conflicts of interest. Many publications have been critical of the electric car outfit, over accidents involving its vehicles and its troubles meeting production targets. CNBC