Talking points
At 9 p.m. ET, all eyes will be on CNN when Biden and President Donald Trump face off in their first debate since 2020. Among the most avid viewers will be business executives and investors looking for signs of how the candidates will handle the economy and business in a second term.
The 90-minute debate without an audience included the candidates' remarks and how They say yes. Here's what we'll be looking at. (And for a lighter take, check out the debate's “bingo card” below.)
economy The big question isWhile various indicators point to strong growth under Biden, many voters feel differently. What will Biden and Trump say on some key issues?
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inflation: This is clearly an issue for the president. Americans are unhappy with grocery stores, gas pumps and rent payments. Biden is likely to say price growth is slowing and highlight his administration's efforts to crack down on “corporate greed,” including the introduction of so-called junk fees. Trump will likely emphasize how good the economy was when he took office in 2017. Many Americans want the economy to bounce back.
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tax: Biden's proposed corporate tax hikes would hit profits. “It's simple math,” David Bahnsen, founder and chief investment officer at Bahnsen Group, told Dealbook. Many business leaders also don't like Biden's plan to raise taxes on the wealthy. Trump will likely highlight his intention to extend the 2017 tax cuts and lower the corporate tax rate to 20%. But questions about corporate profits and the economy may overshadow those concerns.
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Protectionism: Both candidates want to raise tariffs on Chinese goods, but Biden has taken a more targeted approach to raising tariffs during his presidency. Trump has proposed significantly higher tariffs across the board, but it's unclear whether he's serious about it. Economists have warned that Trump's potential approach could worsen inflation and harm the economy.
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market: The S&P 500 has set 31 records this year. Investors will be hoping neither party maintains that momentum. “Markets will likely value the presentation more than the policy pledges” in Thursday night’s debate, UBS economist Paul Donovan wrote in a client note. Biden may have a slight edge because investors like to maintain “some continuity,” he added.
Other issues will likely become more prominent. Biden is likely to bring up abortion rights, an issue that helped Democrats win the recent election, while Trump will likely have a lot to say about immigration, perhaps Trump's most influential issue and one that many, including Elon Musk, say is where Biden failed.
The intangibles become important. Executives told DealBook that CEOs will be keeping a close eye on how Biden and Trump perform.
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At 81, the key issue for business leaders and many voters is whether Biden is still fit to serve as president, and a sharp, strong performance would go a long way to quelling any concerns.
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Even the 78-year-old Trump's competence is questionable, but his behavior will also come under scrutiny, especially if he comes off as overly aggressive or mercurial. Some officials said their feelings depended on whether they could keep Trump in office for another four years.
There are also shows that travel around the show. Trump has indicated that his running mate will be coming to Atlanta for the debate, and The Times reports that the list is being narrowed down, with Sen. J.D. Vance of Ohio, Gov. Doug Burgum of North Dakota and Sen. Marco Rubio of Florida being given particular attention.
The choice could have big implications for the Trump campaign, with Republican megadonor Ken Griffin saying it could affect whether he opens up his purse strings for Trump.
What's going on?
The Federal Reserve has issued health certificates to America's largest financial institutions. The central bank's latest stress tests showed that big financial institutions could survive extreme economic circumstances such as a weak dollar or the failure of a major customer, which could bolster banks' argument against regulators' planned hikes to capital requirements.
SpaceX is reportedly planning to sell the shares at a valuation of around $210 billion. Elon Musk's rocket company has boosted its valuation in a tender offer after stronger-than-expected investor demand, up 16% from December, according to Bloomberg, a record for a privately held U.S. startup and second only to TikTok's Chinese parent ByteDance's $268 billion.
Boeing is facing new whistleblower allegations. A subcontractor who worked on building the 787 Dreamliner said he faced retaliation after pointing out “substandard manufacturing and maintenance practices.” Meanwhile, Boeing said it had made significant quality improvements in 737 Max production after a panel on one of its planes broke during flight in January.
Amazon joins the $2 trillion club. The tech giant now ranks alongside Alphabet, Apple, Microsoft and Nvidia, as investors bet on the company's artificial intelligence boom and efforts to cut costs. Separately, The Information reported that Amazon is planning to introduce a system-like service to ship cheaper goods directly from China to compete with lower-cost rivals.
A nice cool down?
Inflation, which rose in the late winter, appears to have subsided this spring, and key data due to be released on Friday will see whether that trend continues and what it means for interest rates.
S&P 500 futures traded slightly lower this morning after modest gains on Wednesday as investors await the release of the Personal Consumption Expenditures Price Index, the Fed's preferred inflation gauge.
Economists expect the May PCE figure to improve. This is notable given that the Consumer Price Index released this month came in below expectations, suggesting that the Fed's interest rate policy is suppressing demand and keeping inflation in check.
Some things to note:
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Core PCE, which excludes volatile food and fuel prices, is expected to grow at an annualized 2.6%, 0.2 percentage point lower than April's reading but still above the Fed's 2% target.
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Analysts will be watching for signs that so-called housing inflation, a measure of home prices, is easing. The housing market remains tight, but there are signs that rising mortgage rates are causing would-be buyers to put off purchases.
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Consumer goods prices have been gradually declining over the past year, a trend that is likely to be confirmed in the report. Last week's retail sales report, for one, showed that consumers are cutting back on purchases, backing up what companies like Target, Walmart and Kohl's are saying about their lower-income customers.
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Services inflation could be an unknown: Economists have seen evidence that demand for airfares and hotel and restaurant reservations isn't growing as sharply as it did a year ago. But the summer travel season is just getting started, and cruise ship operator Carnival Corp. reported strong results and an upbeat outlook this week.
If sobering numbers come out, the stock market could rise. Wall Street is divided over whether the Fed should join other central banks in lowering borrowing costs.
Futures traders put the chances of a rate cut in September at about 60%, but Fed officials have said they need more evidence that consumer prices are falling before acting.
Big Tech Wins in Court
The Supreme Court has dismissed a lawsuit alleging government officials pressured social media companies to censor conservative content, handing the Biden administration and big tech companies another legal victory, one of several that could have a major impact on how the tech giants are regulated.
How we got here: Biden Administration officials had asked social media companies including Facebook and X (then known as Twitter) to remove alleged misinformation about COVID-19 vaccines and election fraud related to the 2020 presidential election. In 2022, the attorneys general of Louisiana and Missouri, both Republicans, along with three doctors and a right-wing website spreading conspiracy theories, accused the government of forcing the companies to silence conservative content.
Last year, a Louisiana judge appointed by Trump ruled against the administration and issued an injunction restricting social media companies from communicating with the government about content.
The Supreme Court disagreed. In a 6-3 decision, the majority said the plaintiffs had failed to prove harm and dismissed the censorship claims in their entirety, saying the companies had acted independently.
The justices expressed concerns about the administration's communication methods. From the majority opinion written by Justice Amy Coney Barrett:
The plaintiffs are asking the Court to investigate communications between dozens of federal employees at different agencies on different social media platforms over a period of years about a variety of topics, despite the lack of a specific connection between their injuries and the defendants' conduct. The Court's standing rules preclude the Court from exercising such general judicial oversight over other government agencies.
This is the Supreme Court's latest ruling on how big tech companies regulate content. Last year, courts dismissed two cases that sought to limit the scope of Section 230 of the Communications Decency Act, a measure that gives companies immunity from liability for user content posted on their sites and allows them to remove information they deem offensive.
Big tech companies say it's crucial to an open internet, and critics argue Section 230 is being unfairly used to shield companies from legal claims.
What next? The Supreme Court is due to decide another social media case about Florida and Texas laws that limit social media companies from removing conservative content, and the justices have already expressed caution about the state laws.
Discussion Bingo Card
If you tune in to the debates, you'll probably hear a lot about policy, age, and consumer prices. Here are some of the terms, references, and quips we'll be watching out for. Call this your DealBook debate bingo card.
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“Shrinkflation.” Biden addressed Americans' frustration with packaging cuts around the time of this year's Super Bowl.
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Cryptocurrency: Donald Trump is close to the cryptocurrency industry, which has benefited from a spectacular rise this year, and is determined to defeat the crypto-skeptical candidate.
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“An inflationary nightmare,” is how Trump summed up the problem, placing the blame entirely on his opponent.
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Nobel Prize: Biden received strong support this week from 16 Nobel Prize-winning economists who have warned that Trumponomics could lead to Trumpinflation.
Have we missed something? Let us know!
Speed Read
Bargain Deals
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German engineering company Bosch is reportedly considering a takeover bid for American home appliance rival Whirlpool (Reuters)
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SoftBank's Vision Fund 2 will reportedly invest in artificial intelligence-powered search engine Perplexity AI at a $3 billion valuation. (Bloomberg)
Elections, politics, policies
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The popular Austin, Texas, festival South by Southwest has announced that the US military and arms manufacturers will not sponsor next year's event amid opposition to its participation due to its support for Israel's response to the Gaza war. (SXSW, NYT)
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Jordan Bardella, a far-right leader who could become prime minister, has said he would cut taxes and France's contributions to the European Union by 2 billion euros ($2.1 billion). (FT)
Best remaining
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