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The FTC is strengthening Biden’s fight against inflation

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A paradox at the heart of the US economy is that consumers are feeling pressured even though growth indicators appear strong – weighing this against President Biden’s approval ratings.

So the White House on Monday likely welcomed an initiative by the FTC and several states to block Kroger’s $25 billion bid to buy Albertsons, arguing that the largest supermarket merger in U.S. history would raise prices and weaken bargaining power. of union workers.

The Biden administration has little control over inflation, but it continues to be pressured. Consumers spend the most of their income on food in thirty years, and an internal White House analysis found that grocery prices had the greatest impact on consumer confidence.

The Fed has raised interest rates to a 20-year high in an effort to cool inflation, but progress on that front has slowed in recent months.

Biden blames big corporations. In a video released on Super Bowl Sunday, he took a dig at “shrinkflation,” lashing out at companies for reducing package sizes and food portions without lowering prices. Biden is expected to reiterate that view in his speech State of the Union Address next month.

The president could point to the FTC’s tough approach to mergers and acquisitions. The agency operates independently, but Lina Khan, chair of the FTC, has taken the most aggressive and comprehensive antitrust enforcement stance in decades. That could help Biden’s message to voters that he is fighting for their interests.

“When large companies are not controlled by healthy competition, they too often fail to pass on cost savings to consumers and exploit their workers,” a National Economic Council official said on Monday.

Some companies don’t help themselves. Kellogg’s, for example, is marketing cereal as an affordable meal option for cash-strapped families. “Dinner cereal is something that is probably more on trend now, and we expect that to continue as that consumer is under pressure,” says the Kellogg CEO. Gary Pilnick told CNBC last week.

Perhaps his comments were predictable backlash on social media.

There will be another big test on Thursday with a new set of inflation data to be published. Economists expect to see inflation is rising again.

Macy’s will close nearly a third of its nameplate stores. The shuttering of 150 Macy’s stores – along with an expansion of the Bloomingdale’s and Bluemercury brands – is an attempt by Tony Spring, the retailer’s new CEO, to turn the company around. Macy’s has suffered a years-long decline and an unwanted takeover bid.

Chipmakers are seeking more than $70 billion in federal subsidies. Semiconductor companies have requested about double the money set aside to support domestic chip production, according to Commerce Secretary Gina Raimondo. She added that the US will produce about 20 percent of the most advanced types of logic chips by the end of the decade.

Exxon Mobil threatens to derail Chevron’s $53 billion acquisition of Hess. Exxon and China’s CNOOC said they had a right of first refusal for deployment in an oil project in Guyana owned by Hess, Chevron disclosed in a regulatory file. Chevron disagreed; the two parties are in discussions. Much of what Chevron finds attractive in Hess rests on the Guyana project, one of the most promising oil resources in the world.

It was a coup for Citigroup to poach Vis Raghavan from JPMorgan Chase to head its banking division. The hire fills the last open leadership position created by a major overhaul from the Wall Street giant.

It means that Jane Fraser, Citi’s CEO, has now put together her team, and she is expected to show that she can change the company.

Fraser was already under pressure to deliver results. Her restructuring was designed to give her more hands-on control over the bank’s key operations (and led to the elimination of at least 20,000 jobs across the company). Citi’s board recently increased her annual salary to $26 millionciting her announcement what it called “the most consequential set of changes to its organizational and management model since the 2008 financial crisis.”

Analysts doubt it will be different this time. “I count twelve restructurings at Citigroup. And I count 12 restructurings that have failed at Citigroup,” Mike Mayo, the veteran banking analyst, said on an earnings call last month. “Why is it different this time?”

Raghavan is a crucial asset. He will oversee one of Citi’s most prominent businesses. He will also hold the title of executive vice chairman, meaning he will “help shape and drive our company-wide strategy and assist me with key strategic initiatives,” Fraser wrote in an internal memo on Monday.

It’s a step forward for Raghavan. The longtime JPMorgan veteran became the sole head of the investment banking division last month. He was also the head of Europe, the Middle East and Africa.

But he remained several layers away from Jamie Dimon, the bank’s CEO. At Citi he reports directly to Fraser.

Can he help Citi break back into Wall Street’s investment banking elite? The company has long lagged behind JPMorgan, Morgan Stanley and Goldman Sachs in key areas: it is not in the top three for mergers and acquisitions. or equity capital markets, as measured by deal volume, over the past decade, Dealogic said.

It has outperformed in the debt capital markets, ranking second or third at the time.

Fraser knows she is under scrutiny. “I realize that ’24 is a pivotal year,” she said during an earnings call last month. But while Citi’s share price has risen 32 percent since she revealed her reorganization plan, it has fallen 19 percent since she took over as CEO in March 2021.

The latest from Microsoft dealing with a vibrant artificial intelligence start-up is already causing concerns among supervisors. The Windows maker pitched its partnership with France’s Mistral as an effort to go beyond its relationship with OpenAI and help AI innovation, but skeptics say it’s the latest example of Big Tech trying to stifle competition.

Now, European regulators say they can investigate this the relation.

Mistral is one of Europe’s biggest AI hopes. The company was founded last year by a trio of former Google and Meta researchers and a former French digital minister, and has raised hundreds of millions of euros at a $2 billion valuation.

It has cast itself as a rival to OpenAI, and its backers include Andreessen Horowitz, General Catalyst, Lightspeed Venture Partners and Eric Schmidt, the former CEO of Google.

Microsoft and Mistral signed a “multi-year partnership” but released few details. The tech giant will reportedly invest approx 15 million euros ($16.2 million) and provide the cloud computing firepower needed to scale the startup’s algorithms.

Mistral’s services will also be offered on the Azure cloud platform.

Regulators on both sides of the Atlantic are already on high alert. US, British and European authorities are investigating Microsoft’s relationship with OpenAI, in which Microsoft has already invested $13 billion and has a non-voting board seat.

A European Commission representative has said regulators will analyze the deal once they have a copy of the agreement. That could lead to a formal investigation, according to Reuters.

Microsoft downplayed regulatory concerns about its Mistral investment. The company is likely hoping that its partnership with another startup will please regulators investigating ties to OpenAI.

Still, Max von Thun, director of the Open Market Institute, a competition policy think tank, said this could backfire if Mistral were now unable to compete with OpenAI and Microsoft’s competitors. “If you want a truly competitive AI ecosystem, you don’t want an OpenAI challenger dependent on Microsoft’s infrastructure and investments,” he told DealBook.

Ruth Gottesman’s $1 billion donation to the Albert Einstein College of Medicine in the Bronx, which will make tuition free, is notable for more than just the eye-popping figure. It is also part of the legacy of her late husband, the financier Sandy Gottesman, a close friend of Warren Buffett.

Gottesman made his billions by investing early in Berkshire Hathaway. (He also founded First Manhattan, an asset management firm that now manages about $20 billion.) By the time he died in 2022, Forbes estimated his net worth at $3 billion.

“There has probably never been a better return in the history of Wall Street on any stock held for 44 years,” Gottesman wrote of Berkshire a decade before his death.

He and Buffett were close for almost 60 years. From Gottesman’s obituary by The Times:

From 1963 to 1965, Mr. Gottesman regularly flew to Omaha, Mr. Buffett’s base, where he met him in the afternoon, had dinner with him and then talked with him until 2 or 3 in the morning. On one occasion, they talked so late that they found themselves locked in Mr. Buffett’s office building. Mr. Gottesman usually took an early morning flight back to New York.

Gottesman is said to have inspired Berkshire’s investment in Apple. Then Gottesman lost his iPhone in a taxi News of the incident reached Buffett in 2016, according to the book “After Steve: How Apple Became a Trillion-Dollar Company and Lost its Soul” by Tripp Mickle, a tech reporter at The Times.

Buffett saw in his friend’s desperate reaction a sign that the iPhone, and its maker, had become indispensable. He quickly built up Berkshire’s stake in Apple, shares now worth $174 billion.

Gottesman left an unexpected bundle of Berkshire stock to his wife when he died. she told The Times. His instructions were simple: “Do with it what you think is right.”

Dr. Gottesman, a former professor at Einstein and chairman of the board of trustees, decided to help the school. When asked what her husband would think of the gift, she said: “He gave me the opportunity to do this, and I think he would be happy with it – I hope so.”

Offers

  • Shein is reportedly considering going public in London or Asia instead of New York, as the Chinese-founded retailer comes under heavy scrutiny in the US (Bloomberg)

  • Charter Communications is said to be considering a takeover bid for a rival cable operator. Altice USA. (Bloomberg)

Policy

The best of the rest

  • How the deal to take Donald Trump’s social media platform public could give him a financial lifeline from his legal troubles. (NYT)

  • Jacob Rothschild, who broke away from his famous family’s banking empire to start his own financial firm, has died; he was 87. (NYT)

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