DealBook Briefing: What the State of the Union Means for Business

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In his 82-minute address last night, President Trump cited U.S. economic growth and his efforts to keep it up, while attacking opponents in a speech that ostensibly called for unity in Washington. Here are the highlights for the business world:

Mr. Trump defended his economic record. He took credit for America’s robust economic health — a key message for his 2020 re-election campaign — and assailed critiques of his administration’s efforts, including tax cuts and loosened regulations. “An economic miracle is taking place in the United States — and the only thing that can stop it are foolish wars, politics or ridiculous partisan investigations,” he said.

He kept pressure on China. Mr. Trump promoted his administration’s trade battle with Beijing, saying,We are now making it clear to China that after years of targeting our industries, and stealing our intellectual property, the theft of American jobs and wealth has come to an end.” Talks between Washington and Beijing over a compromise are continuing.

And he painted his potential rivals as socialists. As Democratic presidential contenders promote policies like Medicare for all, Mr. Trump tried to paint them as peddlers of dangerous ideas. “Here in the United States, we are alarmed by new calls to adopt socialism in our country,” he said.

What didn’t he talk about? “Trump’s speech was notable for what he did not mention, including the ballooning federal debt, once a centerpiece of the Republican agenda; nor did he talk about Social Security, Medicare or other entitlements,” Philip Rucker and Toluse Olorunnipa of the WaPo write.

The symbolism: “By taking a knife to the business, Mr. Solomon is sending a message down the ranks that nothing is sacred,” Ms. Hoffman writes.

In recent weeks, several companies — including Ford, G.E., JPMorgan Chase and Wynn Resorts — have missed Wall Street forecasts, only to see their stock prices rise. It’s a classic relief rally, writes Matt Phillips of the NYT:

• “Stocks of companies that have reported their results have risen by an average of 1.1 percent, the largest post-earnings jump in a decade.”

• “With the Federal Reserve backing off plans to aggressively hike interest rates, more investors view the market’s downturn last year as overdone. And they are giving rousing ovations to corporate results just because they’re not as bad as they could have been.”

• “Analysts said that the current tendency in the markets to see the glass as half-full reflects widespread relief among investors that a recession and a sharp slump in earnings are not in the cards any time soon.”

• “Some analysts said that stocks could keep climbing as the market’s rock-bottom expectations keep getting surpassed.”

• “At the same time, there is a danger that the stock market’s rise could paper over the genuine problems for the economy that are popping up in fourth-quarter results.”

When the Chinese electronics manufacturer Foxconn decided to set up shop in the Midwest, President Trump hailed the move as “one of the great deals ever.” But Bloomberg Businessweek, which interviewed 49 people familiar with the project, reports how badly the effort has gone.

The plan was to create a high-tech manufacturing hub. It was to be led by a Mount Pleasant plant housing a large chunk of Foxconn’s LCD TV production. “As Foxconn has discovered, there is no better place to build, hire, and grow than right here in the U.S.,” Mr. Trump said at the time, promising that it would create as many as 13,000 jobs.

But manufacturing hasn’t taken off. “LCD components weren’t made in the U.S.A., according to sources familiar with the operation,” Austin Carr of Businessweek writes. “They were shipped from a Foxconn factory in Tijuana. The Wisconsin plant was only handling the last steps of assembly.” He adds that “during 2018, the company tried and failed to produce its own LCD materials at scale in Wisconsin so it wouldn’t have to import them from Mexico.”

Nor has pay or recruitment. “Pay at the factory started at about $14 an hour with no benefits, much less than the $23 average Foxconn promised. Many people weren’t hired full time,” Mr. Carr writes. “Last fall, the company’s hiring targets began dropping internally,” he adds, with Foxconn importing foreign staff for some roles.

Keeping hold of the title of most valuable American company is proving to be difficult, Stephen Grocer of the NYT writes:

• “The positions of Apple, Microsoft, and Amazon have been flip-flopping since the wipeout in the iPhone maker’s stock price late last year.”

• “The mantle has changed hands seven times among the three companies. Three of those switches have taken place over the past week as the big tech companies reported quarterly results.”

• “The competition reflects the global economic concerns hanging over the markets as well as the changing technology landscape, and it’s a shift from past years.”

A bill introduced by Senators Chuck Schumer and Bernie Sanders to limit companies’ ability to buy back stock drew outrage from many in the corporate world — and tempted Goldman Sachs’s former C.E.O. Lloyd Blankfein to tweet for the first time in nearly seven months.

Mr. Blankfein’s take: “A company used to be encouraged to return money to shareholders when it couldn’t reinvest in itself for a good return,” he tweeted. “The money doesn’t vanish, it gets reinvested in higher growth businesses that boost the economy and jobs. Is that bad?”


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