Business review from the Economist
Fed cuts rates, says it will hold awhile
The Federal Reserve cut its benchmark interest rate for the third time this year, shaving off another quarter of a percentage point to a range of between 1.5% and 1.75%. Arguments have raged at the central bank about the need for further easing in the United States' still robust economy. Many have read the runes of the carefully worded statement by Jerome Powell, the Fed's chairman, that "policy is likely to remain appropriate," to suggest that future reductions are on hold.
The U.S. economy grew by 1.9% at an annualized rate in the third quarter. The data underlined the Fed's conundrum; consumer and government spending remained strong, but business investment was weak.
Groupe PSA, the maker of the Peugeot car brand, and Fiat Chrysler Automobiles agreed to merge, creating the world's fourth-largest car manufacturer. Carmakers are under increasing pressure to consolidate in an industry beset by rising costs and disruptive technologies. Earlier this year Fiat Chrysler tried to engineer a merger with Renault. But it hit a dead end when the French government, which owns 15% of Renault, withheld its support.
The recent strike at General Motors is now thought to have cost the company $2.9 billion. The 40-day strike was the longest at the carmaker since 1970.
In a week when it announced that it would have to lay off as much as 15% of its workforce, Juul which dominates the market for e-cigarettes, faced a lawsuit from a former executive accusing it of selling contaminated vaping pods to retailers. It is another blow for e-cigarettes, which are under increased scrutiny in dozens of cases of lung disease.
General Electric reported another huge quarterly net loss, this time of $9.5 billion, as it booked charges connected to its restructuring. Some $8.7 billion of that relates to writing down its investment in Baker Hughes, an oil-services firm.
The long-awaited IPO of Saudi Aramco was reportedly ready to be launched. Shares in the world's biggest oil company, owned by the Saudi state, are expected to start trading in mid-December.
Microsoft won a $10 billion contract to create a "war-fighter" cloud-computing system for the Pentagon. The decision to award the Joint Enterprise Defense Infrastructure project to Microsoft was a surprise, as Amazon had been the front-runner. It might yet challenge the decision, especially given President Donald Trump's animosity toward Jeff Bezos, Amazon's boss. Trump reportedly told then-Secretary of Defense James Mattis to "screw Amazon" over the contract.
Arm, a chip designer based in Britain, is to resume supplying components to Huawei, a Chinese tech firm sanctioned by the U.S. government. Arm is now confident that its designs do not fall under U.S. export-control rules.
LVMH, the world's largest luxury-goods company, made an unsolicited bid to buy Tiffany, a U.S. jewelry firm. Tiffany valued the deal at $14.5 billion.
Global politics from the Economist
Peronist returns to power in Argentina
Alberto Fernández, a Peronist, won Argentina's presidential election, defeating the pro-business incumbent, Mauricio Macri. Voters blamed Macri for a recession, an inflation rate of more than 50% and a poverty rate that tops 35%. Newly elected Vice President Cristina Fernández de Kirchner laid the groundwork for these economic problems when she was president from 2007 to 2015.
The leader of the Islamic State of Iraq and Syria, Abu Bakr al-Baghdadi, killed himself to avoid capture by U.S. soldiers. President Donald Trump said: "He died like a dog."
Bolivia's electoral authority declared that President Evo Morales won re-election, avoiding a runoff by just 0.57% of votes cast.
King Maha Vajiralongkorn of Thailand dismissed two aides for adultery, a week after he stripped his official mistress of her titles for disloyalty.
Hong Kong's government barred a prodemocracy activist, Joshua Wong, from standing in district elections. It linked the decision to Wong's calls for "self-determination" for the territory. Meanwhile, official figures showed that Hong Kong has slipped into a recession.
Boris Johnson, Britain's prime minister, admitted that he could not "get Brexit done" by Oct. 31 and called a general election for Dec. 12. The E.U. granted an extension until Jan. 31. Jeremy Corbyn, the far-left leader of the opposition Labour Party, reversed course and acquiesced to the election.