Econ_May_05_2018

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The Economist May 5th 2018 The world this week 9
T-Mobile and Sprint decided
to have another go at merging,
announcing a deal that values
the combined company at
$146bn, including debt. The
pair toyedwith the idea of
hooking up in 2014. Antitrust
regulatorswere not keen, as a
mergerwould reduce the
number of bigwireless carriers
in America from four to three.
That issuewill come to the fore
again now. T -Mobile and
Sprint argue that their new
companywould have the
capacity to roll out a nation-
wide 5G networkquickly.
Competition concernswere
also raised in Britain after
Sainsbury’s said that it had
reached an agreement to buy
Asda, which is owned by
Walmart. Themelding of
Britain’s second- and third-
biggest supermarket chains
would create a colossus in the
industry, though both brands
would be retained—Asda
pitches its appeal tomore
cost-conscious shoppers than
Sainsbury’s.
Steady on
At its latest meeting, the Feder-
al Reserve left its benchmark
interest rate unchanged at a
range of between1.5% and
1.75%. The central bank is ex-
pected to raise rates at its next
meeting, in June. The Fed’s
decision came after data indi-
cated that the American econ-
omy grewat an annualised
rate of 2.3% in the first quarter,
the slowest pace in a year.
In an abrupt move, Argenti-
na’s central bank raised its
benchmark interest rate from
27.25% to 30.25% in an effort to
shore up the peso, which has
taken a battering in currency
markets amidworries about
stubbornly high inflation.
The Trump administration
postponed implementing
tariffs on steel and aluminium
imports fromcountries in the
EuropeanUnion by amonth,
saying it wantedmore time for
negotiations. The Europeans,
annoyed that they should be
bracketedwith countries like
China, want permanent ex-
emptions from the tariffs,
which Argentina, Australia
and Brazil have attained.
In a $36bn deal that creates
America’s biggest oil-refining
company, Marathon Petro-
leum said it would buy
Andeavor. Andeavor operates
ten refineries in thewestern
United States. Marathon owns
six, but handlesmore oil.
Higher oil prices helped lift
BP ’s headline profit in the first
quarter by 71%, to $2.6bn. The
energy giant hinted that it
would increase its dividend for
the first time in four years if oil
prices remain buoyant; its
stockhit an eight-year high.
A working strategy
Apple reported a net profit of
$13.8bn for the first three
months of the year. Although
the rate of growth in iPhone
sales has slowed over the
years, revenue from its signa-
ture product rose by14% com-
paredwith the same quarter
last year, thanks in part to the
more expensive iPhone X.
With1.3bn Apple devices in
use around theworld, its
income fromassociated ser-
vices, such asmusic, soared by
a third. Swimming in cash,
Apple launched another share
buy-backplan, worth $100bn.
Xiaomi, a Chinese smart-
phone-maker, filed for an IPO
inHong Kong. The company is
reportedly hoping to raise up
to $10bn, whichwouldmake it
one of the biggest tech
flotations to date.
TeslaMotors’ latest earnings
report raisedmore questions
for investors about the rate at
which it is burning through its
cash reserves. Plagued by
production problems for its
Model 3mass-market car, Tesla
ended the first quarterwith
$2.7bn in cash on hand, com-
paredwith $3.4bn inDecem-
ber. It also reported another
headline loss, of $710m.
Cambridge Analytica folded.
The data-mining firmhit the
headlines for obtaining infor-
mation on Facebookusers that
was then deployed to help
Donald Trump’s presidential
campaign. The firmblamed a
media “siege” for its decision
to shut up shop.
Ahead of a visit to Beijing by
senior economic officials in the
Trump administration, China
relaxed the restrictions on
foreign investors becoming
controlling shareholders in
joint-venture securities com-
panies, raising the cap on
foreign ownership from49% to
51%. Only financial institutions
with a “good international
reputation” need apply.
The mouse that roared
Marvel Entertainment, a sub-
sidiary ofDisney, broke box-
office recordswith the release
of “InfinityWar”, the latest of
its Avengersmovies, beating
the global record for an open-
ingweekendwith a total of
$641m. “The Force Awakens”,
Disney’s first StarWars outing
after acquiring the Lucasfilm
franchise, still boasts the best
openingweekend in America
after adjusting for inflation. It is
possible that this Avengers
adventuremay be the biggest
yet and take $2bnworldwide.
Business
Box office opening weekend
Sources: Box Office Mojo; BLS
Gross receipts, $m, 2018 prices
0 200 400 600
Infinity War
The Force Awakens
The Fate of the Furious
Jurassic World
The Deathly Hallows (Part 2)
Spider-Man 3
The Half-Blood Prince
The Last Jedi
Batman v Superman
The Avengers
United States Rest of world
For other economic data and
news see Indicators section
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