The daily business briefing: September 25, 2018

Instagram founders leave Facebook, Federal Reserve policy makers start two-day meeting, and more

1. Instagram founders leave to start 'new chapter'

Instagram co-founders Kevin Systrom and Mike Krieger on Monday notified parent company Facebook that they were resigning and plan to leave within weeks, saying they are "ready for our next chapter." Systrom, the photo-sharing app's CEO, and Krieger, its chief technology officer, reportedly have been clashing increasingly with Facebook CEO Mark Zuckerberg, whose company bought Instagram for $1 billion in 2012. Systrom and Krieger had managed to keep Instagram's brand and product independent while using Facebook's resources to grow, but Zuckerberg has increasingly woven Instagram into plans for Facebook's future. Systrom and Krieger reportedly were frustrated by Zuckerberg's involvement in Instagram's day-to-day operations, and said they would be "taking some time off to explore our curiosity and creativity again." Zuckerberg said he was "looking forward to seeing what they build next."

2. Fed starts meeting expected to end with rate hike

Federal Reserve policy makers on Tuesday start a two-day meeting that is expected to end with the central bank's third interest rate hike of the year. The Fed has signaled that, with the job market making steady gains and inflation roughly on track, another rate increase would be justified, although President Trump's trade war with China could cause problems that would make it necessary to slow down the rate increases to avoid stifling growth as the benefits of last year's tax cuts fade. The economy is now in its 10th year of expansion, the second-longest such winning streak on record.

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The Associated Press

3. Sears CEO hints rescue plan necessary to avoid bankruptcy

Sears CEO Eddie Lampert said in a proposal made public Monday that the struggling retailer "now faces significant near-term liquidity constraints" that can only be fixed with his latest restructuring plan. He suggested in a regulatory filing that the alternative is filing for bankruptcy protection. Lampert is both Sears' chairman and chief executive, and his hedge fund holds much of Sears' debt. He disclosed that he wants to acquire more Sears real estate. He also wants to acquire the company's home services unit and its popular Kenmore appliance brand, both of which he offered to buy this summer. He said the moves were necessary to slash the company's debt by 78 percent to $1.2 billion.

The Wall Street Journal New York Post

4. Stock futures turn higher after losses and latest tariffs

Futures for the Dow Jones Industrial Average and the S&P 500 rose by 0.3 percent early Tuesday, regaining some footing following Monday's losses as attention shifts from trade tensions to the Federal Reserve's two-day policy meeting. The Dow fell by 0.7 percent on Monday while the S&P dropped by 0.4 percent. The turmoil came as the latest tariffs took effect in President Trump's trade war with China. A Chinese trade envoy said there could be no negotiations to ease the trade tensions while Washington "holds a knife" to Beijing's neck by hiking tariffs. The rhetoric suggests China "might prefer to wait out the current U.S. administration, rather than embarking on potentially futile negotiations," said Cheng Wei Liang of Mizuho Bank in a report.

The Associated Press

5. Starbucks shakeup expected to include layoffs

Starbucks plans to make "significant changes" to its organizational structure, possibly including corporate layoffs, according to an internal memo to employees by CEO Kevin Johnson. "We must increase the velocity of innovation that is relevant to our customers, inspires our partners, and is meaningful to our business," Johnson said in the memo. The coffee giant will make the changes from this week to November. A spokeswoman for the company told Bloomberg the moves would include an undetermined number of layoffs, as well as moving some employees to different departments. As of a year ago, Starbucks had about 10,000 employees in U.S. support facilities, store development, and roasting, manufacturing, warehousing, and distribution operations.

Bloomberg CNBC

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Harold Maass, The Week US

Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.