The daily business briefing: December 5, 2018
U.S. stocks plunge on renewed fears of trade tensions, VW to launch its last generation of gas-powered cars in 2026, and more
U.S. stocks dive on renewed fears of trade war, economic slowdown
U.S. stocks plummeted on Tuesday on disappointing bank earnings and growing skepticism about the temporary truce in the U.S.-China trade war. The Dow Jones Industrial Average fell by 799 points or 3.1 percent, while the broader S&P 500 index dropped by 3.2 percent and the tech-heavy Nasdaq Composite plunged by 3.8 percent. Shares of banking giants Citigroup, Morgan Stanley, and Capital One sank to 52-week lows. The yield on the three-year Treasury note rose above that of its five-year counterpart. Such a so-called yield curve inversion often signals a coming recession. U.S. stock markets are closed Wednesday, a day of mourning for former President George H.W. Bush, but futures point to a modest rebound on Thursday.
VW to stop developing new gas-powered cars after 2026
Volkswagen will develop its last generation of gas- and diesel-powered cars in 2026, the German automaker's strategy chief, Michael Jost, said Tuesday. "In the year 2026 will be the last product start on a combustion engine platform," Jost told the Handelsblatt automotive summit conference at VW's Wolfsburg, Germany, headquarters. Volkswagen has shifted its focus toward electric vehicles since its diesel-emissions cheating scandal erupted 2015, forcing the company to pay $31 billion in fines after installing software in diesel vehicles to fool emissions tests and hide excessive pollution.
Moonves obstructed sexual-misconduct investigation, report says
Ousted CBS chief executive Leslie Moonves destroyed evidence and misled investigators in an effort to protect his reputation and $120 million severance deal, according to a draft of a report lawyers prepared for the company's board reviewed by The New York Times. Moonves was once one of Hollywood's most influential executives, but he was forced to step down in September after numerous women accused him of sexual misconduct in and outside the workplace. Lawyers hired by the network said Moonves was "evasive and untruthful at times," and "deliberately lied about and minimized the extent of his sexual misconduct." His actions would justify denying him his lucrative severance package, the lawyers said.
U.S. charges four over alleged Panama Papers tax-evasion scheme
U.S. prosecutors announced charges Tuesday against four people who allegedly participated over decades in a tax-evasion scheme uncovered in the massive "Panama Papers" leak of financial documents. Three of the defendants have been arrested in the case, the first brought by the U.S. in connection with the firm involved in the leak, Mossack Fonseca & Co. Mossack Fonseca client Harald Joachim von der Goltz was arrested in London Monday; Dirk Brauer, an employee of an asset management company linked to the firm, was arrested in Paris on Nov. 15; and U.S.-based accountant Richard Gaffey was arrested in Massachusetts on Tuesday. The fourth suspect, Mossack Fonseca lawyer Ramses Owens, remained at large. Lawyers for the defendants were not immediately available for comment.
New York approves first minimum pay rule for ride-share drivers
New York City's Taxi and Limousine Commission on Tuesday approved a minimum pay formula for drivers for Uber, Lyft, and other ride-hailing companies. Under the new policy, drivers will earn at least $17.22 per hour in take-home wages. The minimum is the ride-hailing industry equivalent of a $15 minimum wage, after factoring in payroll taxes and the fact that the drivers get no paid time off, the commission said. The move is expected to increase the average driver's pay by $9,600 per year. When it takes effect in 30 days, the minimum pay floor will be the first in the nation for the ride-hailing industry. Worker advocates said the plan would guarantee drivers a livable wage, but Uber said it would result in higher than necessary fares.