Good morning.
Is the U.S. economy about to enter recession? Economists almost never see a downturn until it’s upon them, and it seems clear the next one will be no exception. Despite the Federal Reserve’s decision to cut rates by a quarter percentage point yesterday, the central bank has no agreed view on the matter. Fed Chairman Powell said the cut wasn’t intended to combat weakness, but rather “to keep the economy strong.” Only seven of 10 Fed officials supported him, with two opposing the rate cut, and one arguing for a larger, half-point cut.
Blackstone CEO Stephen Schwarzman, who has lived through seven downturns in his 50 years on Wall Street, says there are “simple rules” for identifying them, and those rules tell him a downturn is “unlikely now.” The yield curve—which turned upside down a few weeks ago, raising recession fears—is pointing upward again.
But Deloitte’s quarterly CFO survey, fresh out this morning, shows financial officers’ optimism about their own firms’ prospects has turned negative for the first time in seven years. Deloitte’s Sanford Cockrell III, head of the CFO program, said financial officers “are concerned about how Brexit, our US trade policy, and how the 2020 elections will impact the economy.”
And FedEx CEO Fred Smith, who also has weathered his fair share of global downturns, told investors: “I watch the business press every day and I have to tell you, I think there’s a lot of whistling past the graveyard about the U.S. consumer and the U.S. economy versus what’s going on globally.”
Best advice: buckle your seat belts. News below.
Alan Murray
alan.murray@fortune.com
@alansmurray
TOP NEWS
Fukushima Verdict
Three former Tokyo Electric Power executives, including former chairman Tsunehisa Katsumata, have been cleared of negligence for the 2011 Fukushima nuclear disaster. Protestors had been calling for a guilty verdict, which would have come with five years' jail time. BBC
AT&T and DirecTV
AT&T is reportedly considering getting rid of DirecTV. The shrinking satellite business could be spun off or combined with rival Dish—or it might stay in the fold. Activist investor Elliott Management is keen for the telco to drop DirecTV. Wall Street Journal
FAA and Boeing
The Federal Aviation Administrator says he won't clear Boeing's grounded 737 Max for commercial takeoff until he flies one himself. Steve Dickson is due to visit Boeing's Seattle facilities today for a briefing on software updates to the aircraft's control system, which may have caused two fatal crashes. It is far from regular for the FAA chief to demand to fly a plane himself before allowing it to enter service. CNBC
Trump Communications
President Trump reportedly made a "promise" to a foreign leader in a phone call that was so troubling that an intelligence community official filed a formal whistleblower complaint. Which foreign leader? What promise? Lawmakers would like to know, and the House Intelligence Committee will be questioning Intelligence Community Inspector General Michael Atkinson in a classified session today. Washington Post
AROUND THE WATER COOLER
Female CEOS
Why has Wall Street never had a female CEO? As Fortune's Claire Zillman writes, the banking world's male leaders claim they want more diversity, "but as women well know, what happens to a decades-long career inside an institution isn’t the result of big proclamations. It’s the result of a thousand tiny interactions and decisions. Some her choice, some not. Some assignments not offered, some cocktail parties not attended, some business trips not booked." Fortune
Trudeau Brownface
Canadian Prime Minister Justin Trudeau, who is fighting for reelection, has apologized for wearing brownface at a party some 18 years ago, when he was a teacher. Time published a photo of him at the party yesterday. He says "it was a racist thing to do" and he should have known better. Guardian
Chinese Data
There's a struggle underway between China's government and its big tech companies, Tencent and Alibaba, over user data. Beijing wants the firms to hand over customer loan data for the benefit of a government-backed credit-scoring system, but they're not playing ball. The government previously revoked Tencent and Alibaba's permissions for developing their own credit-scoring systems. Financial Times
Trump vs Homeless
President Trump has threatened to sanction San Francisco for—he alleges without evidence—an increase in ocean pollution caused by the homeless. Bloomberg
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
