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The Morning Ledger: All Eyes on Fed After ECB Signals Potential Stimulus
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The central bank is widely expected to hold interest rates steady at the conclusion of a two-day meeting Wednesday. Here, Fed Chairman Jerome Powell earlier this month. PHOTO: KIICHIRO SATO/ASSOCIATED PRESS
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Good morning. As the markets await a key monetary policy decision from the Federal Reserve, the European Central Bank signaled it could announce fresh stimulus measures as soon as next month, paving the way for its U.S. counterpart to do the same.
Fed officials have been debating whether to cut interest rates amid a darkening economic outlook, or whether more information is needed. Recent U.S. economic data paint a mixed picture, with consumer spending still solid, but with manufacturing, inflation and global growth having slowed even before the recent escalation in trade tensions. And while some economists disagree on the likely path forward, Fed officials are expected to release a policy statement at 2 p.m. today.
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ECB President Mario Draghi on Tuesday indicated the bank could launch policies meant to stimulate growth as soon as July. The ECB’s pivot is a sign that the region’s economy is at risk of getting further bogged down in a period of little expansion and an absence of inflation.
Mr. Draghi’s support for additional ECB stimulus could make it easier for Mr. Powell to signal that Fed officials plan to join the ECB in supporting growth by cutting rates. With stocks and bonds rallying on expectations that the ECB will become more supportive, the Fed would risk undermining market confidence if U.S. officials appeared disinclined to take steps to prevent growth from slowing, said Rick Rieder, BlackRock Inc.’s global chief investment officer of fixed income.
Mr. Powell is also facing renewed pressure from President Trump, who on Tuesday suggested he could demote the Fed chairman depending on the outcome of the central bank’s interest rate decision.
When asked by a reporter Tuesday if he sought to demote Powell, Mr. Trump replied, “Let’s see what he does.” Mr. Trump repeatedly has called on the Fed to cut interest rates to boost the economy, but legal experts say it is unclear whether Mr. Trump has the authority to oust Mr. Powell as Fed chairman. The president nominated Mr. Powell to the position in 2017, and his Fed chief term expires in 2022.
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The District of Columbia’s governing body and its chief financial officer agreed that the district can pull surplus cash from the Washington Convention and Sports Authority to balance the budget. PHOTO: SAUL LOEB/AGENCE FRANCE-PRESSE/GETTY IMAGES
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A financial spat that pitted the District of Columbia’s governing body against its chief financial officer was resolved Tuesday with a workaround that would allow the district to tap into cash sitting in restricted reserves, Maria Armental reports for CFO Journal. The agreement, brokered behind closed doors over days of back-and-forth discussions, essentially allows the district’s council to present a balanced budget over the next four years, as required, and clears the way for the council’s spending proposal to head to the mayor and ultimately to Congress for approval.
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Federal Reserve officials are scheduled to release a monetary policy statement at 2 p.m. ET. Economists widely expect the central bank to keep interest rates steady, but will be looking for clues about potential future rate cuts. The WSJ's Nick Timiraos has five things to watch in the Fed's statement.
Barnes & Noble Inc., Shopify Inc. and Oracle Corp. are among the companies scheduled to report earnings today.
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Viacom’s Bob Bakish is widely believed to be in pole position to become CEO of the combined company. PHOTO: CHRISTOPHER GOODNEY/BLOOMBERG NEWS
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CBS Corp. is preparing to make an offer for sister media company Viacom Inc. in the coming weeks, following a meeting of CBS directors last week in which a potential deal was discussed, people familiar with the situation say.
Merck & Co. is searching for small and midsize deals, including more transactions aimed at expanding its portfolio of cancer treatments beyond the company’s top-selling product Keytruda.
Amazon.com Inc. is expanding its domestic air-cargo operation, adding smaller jets to its rented fleet in order to link its distribution centers and extend the reach of its next-day delivery service.
Nissan Motor Co. and Renault SA are poised to resolve a standoff about Nissan’s corporate governance ahead of the Japanese car maker’s shareholder meeting next week.
Boeing Co. won a landmark 737 MAX order from British Airways parent IAG on Tuesday, ending a sales drought in the wake of the grounding of the aircraft following two fatal crashes.
PG&E Corp. has agreed to pay $1 billion to compensate more than a dozen California cities, counties and agencies for losses resulting from deadly wildfires sparked by its equipment.
Brazil’s huge state-controlled banks are bracing for heavy losses after Odebrecht SA filed Monday night for one of Latin America’s largest-ever bankruptcies.
Kellogg Co. will cut about 150 salaried positions in its North American segment as part of a reorganization linked to the $1.3 billion sale of its Keebler cookies business and other brands.
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7.4 tons
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The estimated weight of gold, with a market value of more than $300 million, that the government of Venezuelan President Nicolás Maduro moved on a Russian charter jetliner to a refinery in Uganda to evade U.S. sanctions, The Wall Street Journal reports.
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Chanel Will Never Be for Sale, CFO Says
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Chanel Chief Financial Officer Philippe Blondiaux denied market speculation that the French luxury-fashion house is eyeing a sale or initial public offering.
“It will never happen,” he said late Monday after the privately owned company released annual figures for the second time in its history, which spans more than a century.
Chanel’s debut results last year revealed it to be one of luxury’s biggest revenue earners and fueled speculation that its owners might be looking to sell or float it.
But the Chanel executive ruled out both scenarios, quashing investors’ hopes of owning a piece of the iconic business, which LVMH CFO Jean-Jacques Guiony recently said was worth well over €50 billion. “Being private and independent is a core part of our model,” Mr. Blondiaux said.
—Cristina Roca
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‘Vigorous competition among broadcast stations allows American businesses across the country to obtain competitive advertising rates,’ Assistant Attorney General Makan Delrahim, the Justice Department’s top antitrust official, said in a statement. PHOTO: PATRICK T. FALLON/BLOOMBERG NEWS
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CBS Corp., Cox Enterprises Inc., E.W. Scripps Co., Fox Corp., and Tegna Inc. agreed to settle Justice Department charges that they used third-party firms to illegally coordinate on sales of local advertising.
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Swedbank AB late Monday suspended the chief executive and chief financial officer of its Estonian business amid a continuing internal investigation into compliance of money laundering rules at the bank.
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Former French soccer star and high-ranking soccer administrator Michel Platini was detained in Paris following a corruption investigation by French authorities into the awarding of the 2022 World Cup hosting rights to Qatar.
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Workers lifted a wall frame at a home under construction in Plano, Ill., in May. PHOTO: DANIEL ACKER/BLOOMBERG NEWS
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U.S. housing starts fell 0.9% in May from the prior month to a seasonally adjusted annual rate of 1.269 million, the Commerce Department said Tuesday. That was a steeper decline than the 0.4% decrease economists had expected and a fresh sign of weakness in the housing market.
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President Trump set the stage for an “extended meeting” with China’s President Xi Jinping on Tuesday, saying the two leaders had a “very good” telephone conversation and he looks forward to their discussion later this month in Japan.
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A boom in employee bonuses handed out by some companies in the wake of the 2017 GOP tax cut proved to be temporary, Labor Department data released Tuesday showed.
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