The daily business briefing: December 13, 2017
The Fed wraps up its meeting with a rate hike widely expected, GOP negotiators near a deal on their tax overhaul, and more
Fed expected to hike interest rates at end of Wednesday meeting
Federal Reserve policy makers wrap up their two-day meeting on Wednesday, and they are widely expected to bump up interest rates by a quarter percent for the third time this year. The meeting is Janet Yellen's last as chair. Her successor, Fed Governor Jerome Powell, said during his recent confirmation hearing that he had "no sense of an overheating economy," suggesting openness to speeding up rate increases as long as the economy continues to strengthen and inflation remains in an acceptable zone. When the Fed releases its statement at 2 p.m., analysts will be looking for indications of how the Fed expects the GOP's proposed corporate and individual tax cuts to affect the economy and the central bank's plans for more interest rate reductions in 2018.
GOP negotiators near agreement on final tax bill
Republican House and Senate negotiators have tentatively agreed to raise the corporate tax rate from 20 percent to 21 percent in their joint bill, GOP sources said Tuesday. A key element in both the House and Senate versions was reducing the corporate rate from 35 percent to 20 percent, but negotiators looked at nudging up the rate to help pay for changes benefiting middle-class families and small businesses, and lowering the top tax rate for the wealthiest Americans. To pass the bill in the Senate under budget rules keeping Democrats from blocking the legislation with a filibuster, the legislation can't add more than $1.5 billion in deficit spending over 10 years. Republican leaders hope to iron out the deal in time for final votes next week.
Facebook hits back at former executive who said it hurts society
Facebook on Tuesday pushed back against investor and former Facebook executive Chamath Palihapitiya for recently saying that the social network contributes to "dopamine-driven feedback loops" that are "ripping apart the social fabric of how society works. No civil discourse. No cooperation. Misinformation. Mistruth." Facebook's response came in the form of a statement noting that Palihapitiya, who was vice president for user growth, had not worked at Facebook for six years. "Facebook was a very different company back then and as we have grown we have realized how our responsibilities have grown too," the statement said. "We take our role very seriously and we are working hard to improve," including investing in research into Facebook's impact on users' well-being.
Bitcoin surge boosts other cryptocurrencies
Bitcoin's recent surge helped lift two lesser-known cryptocurrencies, litecoin and ether, to record highs on Tuesday, forcing the Coinbase exchange to halt their trading. Litecoin jumped by a stunning 40 percent to $312, and it has more than doubled since Dec. 10. Ether has risen by about 40 percent over the same period. The gains exceed even those of bitcoin, which has risen 17-fold this year and set a string of records over the last two weeks ahead of the Sunday debut of bitcoin futures on a major exchange for the first time. "It's both, people are trading out of bitcoin, and new money coming to the space, and they'll be thinking very simply, 'how do I get more of these extraordinary returns?'" said Charles Hayter, co-founder of CryptoCompare. "It's herd-like mentality that takes off, which is very dangerous."
Stock futures flat before Fed decision, after Alabama Senate upset
U.S. stock futures wavered early Wednesday in a sign of uncertainty ahead of the Federal Reserve's policy decision, and after Democrat Doug Jones' upset victory in Alabama's Senate election. Jones' victory over former state Supreme Court chief justice Roy Moore reduced the GOP's Senate majority to 51-49, raising doubts on the GOP's ability to follow through on promises of business-friendly legislation, although Republican congressional leaders are rushing to pass the final version of their tax overhaul next week, before Jones will arrive in Washington. Dow Jones Industrial Average and S&P 500 futures were flat before the open of Wednesday trading, following three days of record closes.