The daily business briefing: June 14, 2018
The Fed raises interest rates as economy gains steam, Comcast challenges Disney's bid for 21st Century Fox, and more
Fed raises interest rates
The Federal Reserve on Wednesday raised its target short-term interest rate by a quarter of a percentage point for the second time this year, citing falling unemployment and rising inflation. The Fed also indicated that it probably would raise rates two more times this year, up from the single hike previously expected. The move pushes the target rate, which is closely linked with credit cards and home equity credit lines, to a range of 1.75 percent to 2 percent. Stocks edged down after the news, and U.S. stock futures inched down early Thursday. Investors had expected the hike but markets had been pricing in just a 46.5 percent chance of four increases this year, after the Fed indicated in May that three rate hikes were likely.
Comcast offers $65 billion for Fox media assets, topping Disney bid
Comcast on Wednesday offered $65 billion for 21st Century Fox, attempting to lure it away from a planned merger with Walt Disney Co. Comcast's all-cash bid is about 19 percent higher than Disney's, potentially launching a bidding war between two U.S. media giants. Comcast Chief Executive Brian Roberts said he was confident antitrust regulators would not stand in the way, given a judge's Tuesday decision to reject a Justice Department antitrust challenge to AT&T's plan to buy Time Warner for $85 billion. Comcast still could face complications in the effort to combine Fox's movie and TV studios with NBC Universal, which Comcast already owns. Its bid is expected to be the first in a series of efforts by media companies to combine content and distribution to better compete with Netflix and other streaming powerhouses.
Trump finalizing China tariff plan
President Trump is meeting with top advisers Thursday to discuss final plans for new tariffs on Chinese goods. The levies could be imposed as early as Friday, The Wall Street Journal said. The tariffs would cover tens of billions of dollars' worth of imports from China annually. Trump has not given his final approval, and there is a chance he will ease or hold off, due to his dependence on China to maintain pressure on North Korea to denuclearize. Any sanctions would be expected to prompt Beijing to retaliate, as U.S. allies such as Canada, Mexico, and European nations are doing in response to U.S. sanctions on imported steel and aluminum. The White House has said it would release a list of targeted Chinese goods by Friday. It said in April the tariffs would apply to $50 billion worth of products.
Embattled ZTE unveils plan to borrow up to $10.7 billion
ZTE, China's No. 2 telecommunications equipment maker, has nominated eight new board members in a management shakeup, and proposed a $10.7 billion financing plan as it struggles to keep from collapsing due to a U.S. supplier ban. The U.S. imposed the seven-year ban after ZTE violated an agreement to discipline executives for sidestepping sanctions on Iran and North Korea. ZTE is trying to meet U.S. conditions to resume buying from American suppliers, who provide up to 30 percent of its components. ZTE shares plummeted by a record 41 percent in Hong Kong on Wednesday, as the stock resumed trading after being suspended for nearly two months. The shares gained as much as 3.7 percent early Thursday on the news of the financing plan.
Euro gains as ECB prepares to unwind bond-buying program
The euro gained strength against the dollar early Thursday ahead of an announcement by the European Central Bank expected to spell out plans to unwind its economy-boosting bond-buying program. The dollar declined on other fronts, too, as an initially positive mood fizzled after the Federal Reserve decided to raise interest rates for the second time this year, and projected two more hikes this year instead of one. Rising trade tensions also have been weighing on the dollar.