Business News at a Glance
Posted January 10, 2018 10:15 p.m. EST
Fears of End to Global Buying Spree Spook Investors in Bond Markets
For nearly a decade, central banks around the world have been the biggest buyers of bonds, sending interest rates plummeting and stock markets soaring. Now, investors are starting to worry about what would happen if the richest nations start to scale back. That vulnerability has been on display, with many investors selling out of their bond positions, pushing the yield on the benchmark 10-year U.S. Treasury bill up to a high of 2.59 percent Wednesday from 2.3 percent late last year. Bond markets appeared to be further spooked by a report that China’s central bank may be poised to slow or even halt its buying of U.S. debt.
Canada Challenges U.S. Tariffs in Appeal to World Trade Body
Canada has filed a sweeping trade case against the United States at the World Trade Organization, lobbing a diplomatic grenade at the Trump administration’s “America First” approach. The trade case could exacerbate tensions between the two nations as they wrestle with trade disputes and attempts to renegotiate NAFTA. Canada’s case challenges the United States’ use of tariffs to punish unfair trade practices and protect its markets, saying those actions violate World Trade Organization rules. The case could expand into a multinational trade dispute given that Canada filed it in a way that allows other countries to join.
Toyota and Mazda to Build $1.6 Billion Alabama Plant
Five months after announcing that they would reward some U.S. city with a $1.6 billion car plant and 4,000 jobs, Toyota Motor and Mazda Motor said Wednesday that they had a winner: Huntsville, Alabama. Huntsville, home to a number of aerospace manufacturers, is the latest location in the Deep South to emerge as an auto-manufacturing hub. “This is indeed a great day in Alabama,” Gov. Kay Ivey said. The two Japanese companies said the plant would open in 2021 and be capable of making 300,000 cars a year. Toyota’s chief executive, Akio Toyoda, said he was confident that the plant would be a “built-in-America success story.”
India Eases Investment Rules, Aiding Foreign Retailers
India’s central government on Wednesday moved to reinvigorate the country's sluggish economy by relaxing rules governing foreign investment in industries including retailing and air travel. The changes could lead Apple and other companies based outside the country of 1.2 billion to significantly expand their retail presence here. In addition to the changes in the retail sector, the government also said it would allow up to 49 percent of Air India, the troubled national air carrier that is up for sale, to be bought by foreign airlines. The moves are the latest steps taken by the government to open India’s economy to outside companies.
Buffett Succession Blueprint Is Narrowed to 2 Candidates
Who might succeed Warren Buffett became clearer Wednesday. Buffett’s investment vehicle, Berkshire Hathaway, named Gregory E. Abel and Ajit Jain as vice chairmen. Abel is the chief executive and chairman of Berkshire’s energy unit and will become vice chairman of the conglomerate’s non-insurance businesses. Jain, the longtime head of Berkshire’s vast reinsurance operations, will serve as vice chairman of Berkshire’s insurance operations. "This would have made sense five years ago, too," Buffett said in an interview on CNBC. “They both have Berkshire in their blood. They love the company. They know their operations like the back of their hand. So it’s very good for Berkshire.”
Fed Delivers $80.2 Billion in Profits to Treasury
The Federal Reserve’s economic stimulus campaign continued to generate large profits in 2017, helping to reduce the federal deficit, but the windfall is showing signs of tapering. The Fed, which remits its profits to the Treasury Department, disclosed on Wednesday that its payments last year totaled $80.2 billion — about 12 percent less than the $91.5 billion in 2016. The decline in profits reflects the Fed’s efforts, as the economy gains strength, to conclude the economic stimulus campaign it waged in the wake of the 2008 financial crisis. The Fed’s contribution to the government’s coffers still remains well above pre-crisis levels.
IRS Paid $20 Million to Collect $6.7 Million
When Treasury Secretary Steven Mnuchin was asked at his confirmation hearing what he thought about using private companies to collect money owed to the government, he replied that it “seems like a very obvious thing to do." It may have been obvious, but it was not economical. Private debt collectors cost the IRS $20 million in the last fiscal year but brought in only $6.7 million in back taxes, the agency’s taxpayer advocate reported Wednesday. That was less than 1 percent of the amount assigned for collection. What’s more, private contractors in some cases were paid 25 percent commissions on collections that the IRS made without their help.
Trump Again Vows Review of ‘Sham’ U.S. Libel Laws
President Donald Trump on Wednesday repeated a pledge to make it easier for people to sue news organizations and publishers for defamation, a day after his personal lawyer filed a lawsuit against BuzzFeed News. The salvo from Trump followed a dayslong effort by him and his team to undercut the unflattering portrayal of the White House in a new book by Michael Wolff. First Amendment lawyers were quick to point out that Trump has little power to modify those laws, barring a Supreme Court appeal or constitutional amendment. Other libel laws are determined at the state level, where Trump, as president, has no direct influence.