The Week in Business: Let the Apple vs. Facebook Battle Begin, and China Goes Soybean Shopping
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Which kind of Super Bowl watcher are you? One who A) cares about the actual game, B) is in it for the snacks, or C) wants to see how the $5.3 million ads stack up? That’s the top asking price for a 30-second commercial during CBS’s broadcast, although some spots are going for the relative steal of $5.1 million. (Oh, and if you’re wondering, I’m a solid C, plus B if spicy wings are available.) This is the first year in a decade that the cost of a Super Bowl ad hasn’t increased — NBC charged $5.25 million in 2018 — mostly owing to waning viewer numbers. You can drop that factoid when the cheese-dip conversation hits a lull, or any of the other business and tech tidbits you’re about to devour in this email. You can have a nachos-and-beer hangover on Monday and still be on top of the news.
Jan. 27-FEB. 2
The Privacy Police
Which would be more fearsome in a dark alley: Apple or Facebook? We may soon find out as the companies face off over privacy standards. Both announced their fourth-quarter earnings last week, and as expected, Apple’s numbers were a flop (to blame: China’s economic lethargy and a dwindling consumer demand for iPhones). Facebook, on the other hand — or thumb? — reported record profits. It would seem that Facebook won this round — until Apple rained on its parade by shutting down an app that Facebook was using to snoop around in users’ online activity. Apple hasn’t been shy about policing privacy issues before, but this move is downright aggressive, and a convenient distraction from its bad week.
Hitting the Brakes on Rates
One fear you can put to rest, if you have it: higher interest rates on your loans. The chairman of the Federal Reserve, Jerome Powell, said last Wednesday that “the case for raising rates has weakened somewhat,” signaling that rates may not go up this year after all. This was an about-face from the Fed’s previous indications that it was planning to raise rates twice more in 2019. The markets were cheered by Mr. Powell’s remarks, and American stocks surged to their best January levels in 30 years. But some investors were puzzled by the Fed’s sudden change of heart, and others worried that it revealed the risk of a recession on the horizon.
Venezuela Threatens Vengeance
President Nicolás Maduro of Venezuela issued a threat to the United States last Wednesday, saying if the Trump administration doesn’t quit trying to oust him and install the opposition leader, Juan Guaidó, its officials would get “a Vietnam worse than they can imagine.” He’s widely viewed as an illegitimate dictator who drove his once-prosperous country into an economic catastrophe, but he’s got some heft on his side. Russia, which has provided financial and military backing to Venezuela for years, is also none too pleased about the United States’ oil sanctions against Mr. Maduro’s government. Not by coincidence, the Russian state owns part of Venezuela’s energy sector — a cash cow that it doesn’t want to lose.
In Quite a State
Now that the government has (temporarily) reopened, Mr. Trump will deliver the postponed State of the Union address on Tuesday. He has said he will emphasize “unity,” and he will surely point to the country’s economic growth and low unemployment numbers. (January’s jobs report was better than expected, even with the shutdown.) He may also reiterate his demand for a border wall, which he said last Thursday he would build regardless of whether he gets congressional support before the Feb. 15 deadline for a new spending bill. If he decides to bypass Congress, the government could close again — which no one wants. The Congressional Budget Office has estimated that last month’s shutdown would cost the country’s economy an estimated $3 billion in reduced output in 2019.
To Be Continued
China and the United States made some progress in trade talks last week, but China still isn’t willing to make all the concessions that United States officials have demanded. So what will it take to settle this trade war before the 90-day truce ends on March 2? Mr. Trump says he wants China to buy more American goods (on top of Beijing’s recent pledge to purchase five million tons of soybeans) and open its markets to American businesses more than it has ever done. He is planning to meet with President Xi Jinping of China sometime in February, ostensibly to sign a deal in person, but details are still forthcoming (as is the deal itself).
And around we go again. British lawmakers voted on Tuesday to send the beleaguered Prime Minister Theresa May back to European Union leaders to renegotiate the terms of Britain’s departure from the bloc. The problem is, those European Union leaders are done talking, as they’ve said before and will say again. That gives Mrs. May little time (and even fewer options) to come up with a new plan before the next scheduled vote in Parliament on Feb. 14, followed by the actual Brexit deadline on March 29. As a no-deal scenario appears more likely, more British companies are hoarding products and moving operations elsewhere to protect themselves from a potential economic meltdown.
The record-low temperatures that gripped the country last week could cost the economy up to $5 billion in business closings, property damage, flight cancellations, power cuts and even beer deliveries. The entire nation of Tonga had to go without internet access for 11 days after an essential underwater cable was severed. And more companies are covering infertility treatments and egg-freezing costs as part of their employee health care benefits: 44 percent of big employers (those with at least 20,000 workers) offered some sort of in vitro fertilization benefit in 2018, compared with only 37 percent in 2017.