Thursday 14 June 2018
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BUSINESS DAY
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FINANCIAL TIMES Theresa May plans Brexit bill amendment after Commons rebellion
Stocks hold nerve ahead of central bank rates decisions Page 35
Page 34
World Business Newspaper
US, Canada and Mexico win joint bid to host 2026 football World Cup
The decision was between Morocco and a joint bid from the US, Canada and Mexico MURAD AHMED
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he US, Canada and Mexico have won the right to host the 2026 football World Cup, overcoming reluctance in some countries to hand the prize to American President Donald Trump. The joint North American bid, dubbed “United 2026,” defeated Morocco in the race to hold one of the world’s biggest sporting events, following a vote on Wednesday by more than 200 member nations of Fifa, international football’s governing body. During a public ballot held at Fifa’s annual congress meeting in Moscow, the day before the opening match of this year’s World Cup in Russia, members voted 134-65 in favour of the North American bid. The so-called United bid was considered a strong favourite after promising $11bn in profits to Fifa,
far more than any previous World Cup. The pledge compared to just $5bn in profits offered by Morocco. The US will hold the vast majority of matches, including the final. In the run up to the vote, Fifa officials and others close to the process said they were concerned that attitudes towards Donald Trump were having an effect on how nations intended to vote, particularly those in Africa who resented the president’s description of them as “shithole countries”. Earlier this month, an inspection task force released its long-awaited technical assessments on the two bids. It rated the North American bid highly, as all the infrastructure to hold the event is already in place. The inspectors judged Morocco to be a far riskier proposition since the country plans to build nine new stadiums and must renovate existing ones to host the event.
Trump says North Korea no longer a nuclear threat On arriving back in US, president tweets: ‘Everybody can now feel much safer’ DEMETRI SEVASTOPULO, SONG JUNG-A AND ROBIN HARDING
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onald Trump said that North Korea was no longer a nuclear threat, as he arrived back in the US after his historic summit with the country’s leader Kim Jong Un in Singapore. “There is no longer a Nuclear Threat from North Korea,” Mr Trump tweeted after Air Force One touched down at Andrews Air Force Base on Wednesday, adding: “Everybody can now feel much safer than the day I took office.” Earlier on Wednesday, Pyongyang said Mr Trump would ease sanctions on North Korea, in language that suggested a different interpretation to how the US president described the historic summit between the two leaders. KCNA, North Korea’s state media agency, said Mr Trump had agreed to “lift sanctions . . . along with advance in improving the mutual relationship through dialogue and negotiation”. In his press conference on Tuesday, however, Mr Trump said the sanctions would remain until “we are sure that the nukes are no longer a factor”. The US has stressed that they would remain until North Korea undertook “complete, verifiable and irreversible denuclearisation”. But Mr Trump drew fire on Tuesday when his joint statement with Mr Kim included no mention of CVID. Underscoring how North Korea
is selling the summit as the dawn of a new era, the Rodong Sinmun newspaper, another state-run media outlet, ran the front-page headline, “Meeting of the Century Pioneers a New History in DPRK — US Relations”, over photos of the meeting. In another sign that Washington and Pyongyang were further apart than Mr Trump had suggested, KCNA said the two leaders had agreed to a step-by-step process. “Kim Jong Un and Trump had the shared recognition to the effect that it is important to abide by the principle of step-by-step and simultaneous action in achieving peace, stability and denuclearisation of the Korean peninsula,” it said. While that approach has been endorsed by China, the US has said it was unacceptable since it would allow North Korea to drag out negotiations and increase the odds that Pyongyang would repeat history by reneging on any deal. KCNA also emphasised Mr Trump’s announcement that he would halt joint military exercises with South Korea that the US president said were a “provocation”, as he offered a big concession that was criticised at home. That move also sparked concern in Tokyo, where Japanese Prime Minister Shinzo Abe had feared that Mr Trump would be outplayed by Mr Kim because of his desire to secure a Continues on page 34
US Fed lifts rates and projects four rises for 2018 Central bank moves to 2% and says inflation risks are roughly balanced SAM FLEMING AND ROBIN WIGGLESWORTH
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he Federal Reserve lifted interest rates by a quarter point and signalled that two more increases are likely in 2018 as policymakers gave a bullish assessment of the US economy amid accelerating growth and rapid job creation. The Federal Open Market Committee raised the target range for the federal funds rate from 1.75 to 2 per cent, in the seventh increase of the current cycle and the second this year. Interest-rate forecasts released by Fed policymakers pointed to a total of four rate rises in 2018, followed by another three in 2019. In a statement, the central bank dropped previous crisis-era assurances that it will keep rates below their longerrun norms. “The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labour market conditions, and inflation near the Committee’s symmetric 2 per cent objective over the medium term,” the Fed said, adding that risks to the outlook are roughly balanced. The US stock market dipped 0.2 per cent on the news that Fed officials planned to increase interest rates another two times this year — on top of the two that came in March and on Wednesday — while the 10-year Treasury yield jumped 3 basis points
to 2.98 per cent. The dollar climbed 0.4 per cent against the euro to trade at $1.174. The Fed’s statement suggested the central bank is getting increasingly confident about inflation, as policymakers dropped earlier statements that they are carefully monitoring price readings. The Republicans’ $1.5tn tax cutting package and $300bn federal spending increase are fuelling a further pick-up on the US economy, overshadowing global hazards including the risk of a Trump-induced trade war with nations including China. As a result Jay Powell, the Fed’s chairman, has vowed to continue with the programme of gradual rate rises that the Fed kicked off in late 2015. Officials also ditched previous guidance that said that rates will for some time remain below levels “expected to prevail in the longer run”, in a sign they think policy is heading closer to neutral. However the FOMC retained its earlier assessment that policy is “accommodative” — meaning rates are still low enough to support growth. “The decision you see today is another sign that the US economy is in great shape. Growth is strong, labour markets are strong, and inflation is close to target,” Mr Powell said at a press conference. In a bid to enhance transparency, Mr Powell added that he will move to doing a press conference after every Fed meeting. This would start in January. Mr Powell insisted
this should not be taken as implying a change in the timing or pace of future rate increases. Wednesday’s rate rise was widely predicted by financial markets given the recent fall in the unemployment rate to just 3.8 per cent and signs that inflation is moving closer to the Fed’s 2 per cent target. In their latest forecasts on Wednesday Fed policymakers projected core inflation will rise to a median 2.1 per cent next year, slightly above the Fed’s target, and stay there in 2020. “Inflation is still subdued, but there remains the risk that the Fed could end up behind the curve and having to tighten more quickly if inflation accelerates more sharply,” said Kully Samra, vice-president at Charles Schwab. “Markets have already been bumpy this year, and additional rate hikes could add to the volatility in the stock market.” The question remains how high the Fed will ultimately lift rates as it balances rapid hiring against a history of disappointing wage and inflation readings. Lael Brainard, a Fed governor, is among the officials who have suggested that the central bank will need to lift rates to neutral — the level it thinks is consistent with keeping the economy on an even keel — before lifting them somewhat further. The Fed forecasts put the midpoint of the Fed’s target range at 3.4 per cent in 2020, higher than the median prediction for the rate in the longer-run, which stood unchanged at 2.9 per cent.
Judge clears way for $80bn AT&T bid for Time Warner Court sides with two corporate giants in landmark antitrust litigation
KADHIM SHUBBER AND ERIC PLATT
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T&T won the green light for its $80bn takeover of Time Warner on Tuesday after a federal judge in Washington rejected the US government’s argument that it would harm competition, paving the way for a blockbuster transaction that could reshape the US media sector. Judge Richard Leon sided with the two corporate giants in what was the government’s first big antitrust litigation against a vertical merger in decades. He allowed the proposed deal to go ahead without any conditions, sending shares of Time
Warner higher. The ruling is a blow to Makan Delrahim, the justice department’s antitrust chief, whose attempt to stop the deal was cast by AT&T as being politically motivated. President Donald Trump had promised to block the transaction as a candidate in the 2016 elections. Judge Leon had excluded the political argument from the case, but still came out comprehensively in the companies’ favour. He rejected the government’s arguments that AT&T would harm consumers, such as by threatening to exclude Time Warner content from rival distributors and
driving up prices. “If there ever were an antitrust case where the parties had a dramatically different assessment of the current state of the relevant market and a fundamentally different vision of its future development, this is the one,” the judge said. He noted that Time Warner’s Turner division, which includes the TBS, TNT and CNN channels, had never turned to longterm blackouts of its networks when negotiating with distributors. And he rejected the government’s suggestion that AT&T would prevent rival distributors from using Time Warner content in marketing materials.