French politics ruined Fiat’s merger plans

Good Friday morning. (Want this by email? Sign up here.) The Labor Department will release its estimate of hiring and unemployment for May at 8:30 a.m. Eastern — here’s what to expect.

How politics killed the Fiat-Renault deal

The proposed merger of Fiat Chrysler and Renault fell apart amid efforts by the French government to protect jobs and win over the backing of Japan, and Fiat’s suspicion that Parisian politics would weigh heavily on its future.

French officials tried to micromanage the deal talks. They insisted on job guarantees, a board seat and veto power over future C.E.O.s of the combined company, the NYT reports. Fiat executives thought France would probably never stop trying to exert control.

But French officials also worried about bringing Japan on board, because Nissan — which is Renault’s existing partner — would provide crucial technology for the combined companies. Getting Tokyo’s approval required time, and France’s finance minister, Bruno Le Maire, had planned to fly out for talks this week.

Renault’s board met on Wednesday with divided expectations. Fiat thought the carmaker’s directors were set to approve the merger. But Mr. Le Maire told his representative on the board that he wanted a five-day delay to court the Japanese, the WSJ reported.

And the French interference became too much. Renault’s chairman, Jean-Dominique Senard, called his Fiat counterpart, John Elkann, with the news from Mr. Le Maire. Mr. Elkann decided it was the final straw and withdrew his offer.

What happens next is unclear. It’s possible that Fiat could approach Nissan about a potential partnership. But it’s unlikely to try another deal that includes the French government.

The big loser in all this could be France. Its efforts to be seen as business friendly could be left in tatters. Speaking of President Emmanuel Macron, an unnamed Fiat executive told the FT, “If he was hoping to lift France’s image as a place to do business, that’s over.”

More: The collapse of the Fiat-Renault deal comes as the car industry faces disruptive change. And automakers told President Trump that his efforts to roll back pollution rules could cut their profits.

Mexico could avoid U.S. tariffs

Officials from both countries have made progress in talks to head off President Trump’s tariffs on all Mexican imports. But is that enough?

Big changes could be made to asylum rules. Under the terms being negotiated, migrants would be required to seek asylum in the first foreign country they enter after leaving home; for example, most Guatemalans would need to apply for protection in Mexico, instead of the U.S.

Mexico would also keep asylum seekers on its side of the border while their legal cases proceed, which would expand on a current U.S. program. It may also put troops on its southern border and take more steps to clamp down on drug trafficking.

Trump administration officials were encouraged by the talks. Vice President Mike Pence said that he would speak with Mr. Trump over the weekend.

But it’s unclear whether the talks will satisfy Mr. Trump and ward off tariffs, which are scheduled to take effect next week. Sarah Huckabee Sanders, the White House press secretary, said, “Our position has not changed, and we are still moving forward with tariffs at this time.”

More: September is a key month for Mr. Trump’s trade war — it’s when U.S. retailers import goods for the holiday shopping season. And why you should expect big M.&A. deals to be the next casualty of the trade battles.

Senators want the Fed to examine Deutsche Bank’s Trump deals 

A group of Democratic senators asked senior Fed officials to reviewwhether Deutsche Bank properly followed anti-money-laundering laws after its employees raised questions about transactions tied to President Trump, David Enrich of the NYT reports.

• The letter to the Fed chairman, Jay Powell, and the president of the New York Fed, John C. Williams, called on the regulator to investigate the transactions and whether the bank adhered to money-laundering laws.
• The request came after Mr. Enrich reported that Deutsche Bank employees had recommended that transactions by legal entities controlled by Mr. Trump and Jared Kushner be reported to a federal financial crime regulator. Managers rejected that advice.
• The letter also asked the Fed officials for information about their interactions with Deutsche Bank, including whether they had investigated the issues that the bank employees had raised.
• “This is a test of the Fed’s independence,” said Senator Chris Van Hollen of Maryland, who sent the letter. “It would be gross negligence if they weren’t investigating.”

More: Prosecutors in Germany are investigating the head of Deutsche Bank’s investment-banking arm, Garth Ritchie, and other current and former employees over their possible involvement in potentially illegal tax deals.

It’s time for the Fed to think hard about rates

After a week of interviews and speeches signaling a willingness to consider cutting rates, Fed officials are now entering a quiet period as they prepare for a June policy meeting, Nick Timiraos of the WSJ reports.

“The officials need to decide what would trigger such action, how much more information they want before making a decision and how to signal their intentions and plans,” Mr. Timiraos writes.

A rate cut would be unusual. “It would come at a time when the economy has been growing quickly, and inflation and unemployment are low,” Heather Long of the WaPo writes. “And it could serve almost as an insurance policy on the impact of actions taken by the president, potentially facilitating his use of tariffs in unpredictable ways.”

“The Fed never had to rescue the economy from past presidents’ trade wars, or from policies that presidents embarked upon against the wishes of advisers,” Gary Richardson, a former official Fed historian, told the WaPo.

But investors are still betting on it happening. Futures markets predict a 70 percent chance of there being at least one rate cut by the Fed’s July policy meeting.

More: The European Central Bank has indicated that it could reduce interest rates if the economic outlook worsens. And the Fed is also thinking about how it defines maximum employment.

Mike Bloomberg pledges $500 million to end coal use

The former mayor of New York City will donate $500 million to a new campaign that aims to close every coal-fired power plant in the U.S. and halt the growth of natural gas, Lisa Friedman of the NYT reports.

• “The new campaign, called Beyond Carbon, is designed to help eliminate coal by focusing on state and local governments.”
• “It will fund lobbying efforts by environmental groups in state legislatures, City Councils and public utility commissions that aim to close coal plants and replace them with wind, solar and other renewable power.”
• “The effort will bypass Washington, where Mr. Bloomberg has said national action appears unlikely because of a divided Congress and a president who denies the established science of climate change.”

How should the world tax tech companies?

The internet doesn’t have the same strict borders as the physical world, making it harder to understand where some companies should be taxed. Negotiators from 129 governments are trying to figure that out, Richard Rubin and Paul Hannon of the WSJ write.

• The Organization for Economic Cooperation and Development is overseeing the negotiations, and last week published a report that will be discussed at the forthcoming Group of 20 meeting in Japan.
• “Countries are addressing the mismatch between existing corporate income tax rules that assign profits to jurisdictions, based on where value is created, and a digital economy where profits are harder to trace to particular locations,” Mr. Rubin and Mr. Hannon write.
• Potential solutions run from the relatively straightforward, like a minimum tax on companies, to the complex, including calculating how much intellectual property is used by consumers in different countries.
• Proposals are expected to crystallize over the next 18 months, but expect tensions as countries work out if they stand to win or lose.

Australia says Uber drivers are not employees

An Australian labor regulator made a big decision today: It ruled that Uber drivers aren’t employees, and therefore aren’t entitled to rights like a minimum wage, the FT reports.

Drivers aren’t under a formal obligation to work, according to a two-year investigation by Australia’s Fair Work Ombudsman. Under Australian law, that’s an important distinction, and it means that the regulator has decided that it won’t take action against Uber over whether drivers are staff or contractors.

The U.S. National Labor Relations Board made a similar call last month, saying that Uber drivers were contractors. That has made it harder for drivers to unionize.

This is good news for gig-economy companies. Keeping workers as contractors means companies can save money on expenses like holiday pay and Social Security taxes. Uber and Lyft have both cited their workers being classified as employees as a major threat to their business models.

There is no broad consensus on the issue yet. But as agencies in various jurisdictions increasingly come down one way or the other, a trend could soon emerge.

Revolving door

Bank of America has hired Rick Sherlund, most recently of Perella Weinberg Partners, as a vice chairman of technology investment banking.

IBM plans to lay off more than 1,000 employees.

BuzzFeed promoted Cindy Vanegas-Gesaule to head of programmingat the company, overseeing its film and TV projects as well as news videos.

The speed read

Deals

• Google agreed to buy Looker, a data analytics company, for $2.6 billion despite facing new antitrust scrutiny. (NYT)
• Caesars Entertainment is reportedly near a deal to sell itself to Eldorado Resorts. (WSJ)
• Elliott Management is said to be close to buying the bookseller Barnes & Noble for nearly $500 million. (WSJ)
• Apple is reportedly in talks to buy an autonomous vehicle start-up, Drive.ai. (Information)
• The owners of the Philadelphia 76ers have bought a majority stake in Clutch Gaming, an e-sports team. (Bloomberg)

Politics and policy

• Congressional Republicans are split on whether to sign on to House Democrats’ antitrust inquiry into Big Tech. (Politico)
• Democratic presidential contenders are asking Silicon Valley for money — then attacking the tech industry. (NYT)
• Gov. Janet Mills of Maine signed a bill banning internet service providers from selling consumer data without consent in the state. (Hill)
• Critics questioned how much money was spent on flying the Trump family to Europe for President Trump’s visit — and who ultimately pays for it. (WaPo)

Trade

• President Trump said he would decide on imposing more tariffs on Chinese goods after he has met with President Xi Jinping of China at the forthcoming Group of 20 summit meeting in Japan. (Bloomberg)
• The governor of the People’s Bank of China said the country has “tremendous” room for monetary policy adjustments in its trade war with the U.S. (Bloomberg)

Huawei

• The U.S. has shunned Huawei. But Russia is using the company to build its 5G wireless networks. (NYT)
• Canadian extradition hearings for Huawei’s C.F.O., Meng Wanzhou, are scheduled to start in January. (Bloomberg)
• Facebook has stopped pre-installing its apps on Huawei phones. (Reuters)
• Google reportedly warned the Trump administration that the Huawei blacklisting could create its own national security issues if the Chinese company creates a less-secure version of the Android operating system. (FT)

Tech

• AT&T is reportedly planning to ditch the idea of a tiered streaming service in favor of one package that contains HBO, Cinemax and its Warner Bros. TV and movie libraries. The cost would be $16 or $17 a month. (WSJ)
• Facebook has overhauled its legal, policy and communications teams in recent months — a sign that it is taking a fight with Washington very seriously. (WSJ)
• Google’s Stadia video game streaming service may not live up to its own hype. (WSJ)
• JPMorgan Chase is killing off a digital banking app designed to attract younger customers. (WSJ)
• Microsoft has removed a public database of 10 million faces that was used to train facial recognition systems. (FT)

Best of the rest

• Meet the money whisperer to the N.B.A. elite. (NYT)
• Walmart is going to start delivering groceries inside shoppers’ homes, even when they’re not there. (CNBC)
• Beyond Meat has tripled its sales in the first quarter, and its stock is up 298 percent from its I.P.O. last month. (FT)
• Craig Newmark, the founder of Craigslist, has given $6 million to Consumer Reports. (NYT)
• Who’s the most-photographed N.Y.S.E. trader of all time? It was Peter Tuchman — but now he has a rival. (WSJ)
• Why bankers love running. (FT)

Thanks for reading! We’ll see you next week.

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