The daily business briefing: March 22, 2018
The Federal Reserve hikes interest rates, Mark Zuckerberg breaks his silence on Facebook's "breach of trust," and more
Fed raises interest rates for sixth time since financial crisis
The Federal Reserve on Wednesday raised its benchmark short-term interest rate by a quarter point, the sixth such increase in three years. The hike put the rate at a range of 1.5 percent to 1.75 percent, the highest in a decade. The move came at the end of the first two-day policy meeting under the Fed's new chairman, Jerome Powell. The central bank's leaders forecast two more rate hikes this year and three in 2019, signaling a cautious but toughening approach to slowly unwinding the measures they took to stimulate the economy during the financial crisis. Powell, who succeeded Janet Yellen last month, said the Fed is trying to raise rates enough to keep the strengthening economy from overheating, without moving too fast. "We're trying to take that middle ground," he said.
Zuckerberg admits mistakes in Cambridge Analytica privacy breach
Facebook CEO Mark Zuckerberg on Wednesday broke his silence on the scandal over the accessing of more than 50 million users' data by a data-mining firm that did work for President Trump's campaign, saying Facebook had made mistakes and had a "responsibility" to do more to protect people's privacy. "If we can't then we don't deserve to serve you," he posted on his Facebook page. The data firm, Cambridge Analytica, faces question from lawmakers and regulators in the U.S. and the U.K. over suspicions that it used improperly obtained personal information to try to sway elections. Zuckerberg said the company would monitor thousands of apps in response to the "breach of trust."
Meredith to sell Time Inc. news magazines
Meredith Corp. said Wednesday that it planned to sell Time, Sports Illustrated, Fortune, and Money. The company also said it would cut 1,000 jobs over the next 10 months to boost profitability as it combines operations of other Time Inc. publications and the lifestyle monthlies such as Better Homes and Gardens that Meredith already had when it bought Time Inc. in January. The company has already fired 200 employees. The decision to sell the Time titles did not come as a surprise, as the weekly news magazines were never considered a natural fit for Meredith when it made the $2.8 billion acquisition. "That was the plan all along I think," said Craig Huber, an analyst who follows Meredith at Huber Research Partners.
China calls U.S. trade abuser as Trump's new tariffs loom
China accused the U.S. of "repeatedly abusing" international rulings on fair trade practices as Beijing braced for President Trump's planned Thursday announcement of tariffs on about $50 billion in Chinese imports. The World Trade Organization ruled Wednesday that the U.S. had not fully complied with a 2014 ruling against anti-subsidy tariffs on some Chinese products. China's commerce ministry said the ruling showed the U.S. had "seriously damaged" the trade environment by violating WTO rules. Trump's new tariffs are designed as punishment for international property theft by China, which makes U.S. companies share their intellectual property with China in exchange for permission to do business there. The tariffs and the rhetoric around them have increased fears of a trade war between the world's biggest and second biggest economies.
Fed, Facebook, and tariffs weigh on U.S. stocks
U.S. stock futures fell early Thursday as investors digested the latest signals from the Federal Reserve and fretted about the possibility of a trade war. Facebook's ongoing controversy over access of user information by data-mining firm Cambridge Analytica, which did work for the Trump campaign, also weighed on markets. Dow Jones Industrial Average futures fell by 0.7 percent, while S&P 500 and Nasdaq-100 futures declined by 0.8 percent and 1.2 percent, respectively. Global stocks struggled and the U.S. dollar slipped on Thursday on concerns that the Fed was not picking up the pace of its rate hikes despite improving economic data, and anxiety over President Trump's looming announcement on new tariffs targeting Chinese imports.