Brexit Extension, Facebook Passwords, Boeing Orders: CEO Daily for March 22, 2019
Good morning. David Meyer here, filling in for Alan from Berlin.
Apologies for harping on about Brexit, but it’s just too momentous and horrific a saga to avoid right now, and British Prime Minister Theresa May is just providing too many lessons in bad leadership.
May’s humiliation continued at last night’s European summit. The good news is that the EU has granted the U.K. a two-week extension on the Brexit date, which is now shifted from March 29 to April 12 unless the British Parliament green-lights the negotiated Brexit deal, in which case it’s May 22. The bad news is that the prime minister had asked for an extension until the end of June, but was unable to convince the other EU countries’ leaders that she had the slightest grip on events.
According to both Politico and the Washington Post, May was unable to answer basic questions from her counterparts about what she would do if she fails next week to win parliamentary approval for the Brexit deal, what she was doing to prepare for a no-deal Brexit, or even why she wanted a three-month extension. The result was that they took control of the process. The Brexit timetable is now effectively out of May’s hands.
There’s still a possibility that a long extension could appear, if May’s deal fails a third time as expected and the U.K. heads for new elections or a second Brexit referendum. But the chances of a no-deal Brexit on April 12 are considerable—so I’ve put together a guide to explain what that would actually mean for British businesses. Spoiler: it ain’t pretty.
More news below.
Facebook made an enormous security mistake by leaving hundreds of millions of users’ passwords on an internal database in “plaintext”—i.e. easily readable by anyone who cared to look, and very much what you don’t want a hacker to get their hands on. The company said there’s no evidence that anyone outside the company did look, and it’s not forcing everyone to reset their passwords, but it’s a really good idea to do so nonetheless. Fortune
In the first concrete commercial consequence of the recent 737 Max crashes and groundings, an airline—Indonesia’s Garuda—has cancelled an order for the Boeing planes. The flag carrier had ordered 50 737 Max 8s at a cost of $4.9 billion, and has already received one, but now says its passengers no longer trust the craft, so it no longer wants the other 49. Guardian
Tesla is suing several former employees for allegedly taking its trade secrets to their new employers, the autonomous vehicle firm Zoox and the Chinese electric-car startup XMotors. The latter firm told TechCrunch it “respects any third-party’s intellectual property rights and confidential information [and] has been complying and will comply [with] all applicable laws and regulations.” TechCrunch
Germany’s manufacturing slump has gotten worse, with the country’s IHS Markit Purchasing Managers’ Index unexpectedly falling to just 44.7—German manufacturing’s worst PMI since 2012, and very much into contraction territory. Thank Brexit, the U.S.-China trade war and a general slowdown. The markets are not happy, with the Stoxx Europe 600 slightly down at the time of writing. Bloomberg
Around the Water Cooler
Uber will reportedly float on the New York Stock Exchange rather than the tech-oriented Nasdaq, where smaller rival Lyft is also preparing an IPO. Uber is aiming for a valuation as high as $120 billion. Levi Strauss’s successful flotation yesterday is whetting appetites for more big IPOs this year. BBC
Deutsche Bank’s management board members have taken bonuses for the first time in four years, according to the maybe-not-ailing-so-much-anymore bank’s latest annual report. Their total pay for 2018, including bonuses, was almost twice that in the previous year. CNBC
Sweden’s Swedbank has published a heavily redacted report into allegations that it allowed billions of dollars’ worth of money laundering. Chair Lars Idermark says the board has “continued confidence” in CEO Birgitte Bonnesen. The bank is under investigation by Estonian and Swedish regulators and also facing a criminal complaint from Hermitage Capital Management’s Bill Browder, a notable Kremlin antagonist, as much of the allegedly laundered funds were Russian. Financial Times
South African Power
South Africans have for weeks been subject to regular and severe rolling blackouts, due to corruption and a lack of investment at state-run power company Eskom. Now Goldman Sachs says the so-called “load shedding” could cut 0.3 percentage points off South Africa’s Q1 growth, and if the problem persists, it could take 0.9 points off annual growth. National elections are just around the corner, and none of this will help the ruling ANC party. MoneyWeb