An economic setback on the eve of a presidential run
After months of anticipation, Gov. Ron DeSantis of Florida is expected to formally declare his candidacy for president next week, officially taking on Donald Trump for the Republican nomination.
But while Mr. DeSantis privately told donors and supporters on a telephone call on Thursday that he, not Trump, had the best chance of beating President Biden, he suffered another blow in his fight with Disney — one that may cost Florida thousands of jobs and raise more questions about his policies and strategy.
DeSantis dismissed Trump’s chances for victory. During the call, he said that just “two have a chance to get elected president — Biden and me.” Mr. DeSantis also ticked off his list of legislative accomplishments.
He undoubtedly is on strong financial footing, with more than $80 million expected to be transferred from his state account to his Super PAC, which has already raised more than $30 million.
But Disney dealt Mr. DeSantis a significant defeat on Thursday, scrapping plans to build a $1 billion office complex in Orlando that was expected to bring more than 2,000 jobs with an average salary of $120,000. Florida officials had repeatedly cited the development as a promising economic opportunity for Orlando, with hotel chains and retailers arriving in anticipation of the project.
People familiar with the decision told The Times that Disney’s feud with Mr. DeSantis — which had escalated into a bitter fight over control of the entity that oversees Disney World — played a major factor. That said, the plan had been devised under Disney’s former chief, Bob Chapek, and his predecessor/successor, Bob Iger, had long been cool to the idea.
Mr. DeSantis didn’t mention the Disney decision in Thursday’s call, though a spokesman said that it was unsurprising, given Disney’s “financial straits.”
The news may stoke further doubts about Mr. DeSantis’s judgment. Several prominent Republican donors, including the billionaire Thomas Peterffy, have already questioned the governor’s hard-right approach to social issues including abortion and the banning of some books from Florida schools.
The billionaire financier Ken Griffin is among those who have criticized Mr. DeSantis’s use of his office to punish Disney. “It’s important that the leaders in both parties stay above the fray when it comes to retaliation against corporate America,” Mr. Griffin said this month.
The Fox News commentator Dagen McDowell summed up many critics’ points on Thursday when she said on air, “Ron DeSantis does not have an economic plan as of yet, and today Disney just pulled a $1 billion investment out of Florida.”
HERE’S WHAT’S HAPPENING
Volodymyr Zelensky is set to attend the Group of 7 summit. Ukraine’s president will press the leaders in Hiroshima, Japan this weekend for more support, as his armed forces prepare for a renewed counteroffensive against Russia. Mr. Zelensky will most likely push the United States to supply Ukraine with F-16 fighter jets, something President Biden has been hesitant to do.
TikTok users sue Montana over its ban on the Chinese-owned video app. The consumers argued that the new state law, the first in the U.S., violated their First Amendment rights and outstripped Montana’s legal authority. It is the first effort to block the law, which experts had already said would be difficult to enforce.
Twitter accuses Microsoft of improperly using its data. Elon Musk’s social network said the technology giant hadn’t paid for additional use of its user information. The fight may be rooted in the use of Twitter data to train artificial intelligence products. Meanwhile, the advertising agency GroupM has reportedly told clients that Twitter is no longer a “high risk” platform now that the tech platform has hired the former NBCUniversal ad chief Linda Yaccarino as C.E.O.
Dianne Feinstein’s illness is more complicated than initially disclosed. The Democratic senator from California, who recently returned to Washington after a two-month absence to recover from shingles, has also been suffering from Ramsay Hunt syndrome, The Times reports. The condition, which causes paralysis, has added to concerns that Ms. Feinstein cannot effectively do her job.
Is a rate increase back on the table?
Market futures on Friday are pricing in a nearly 40 percent chance that the Fed will raise interest rates at its meeting next month, after a sharp escalation in recent days that puts in doubt a highly anticipated pause in rate increases.
Last week, Wall Street thought another increase was unlikely, especially after the most recent Consumer Price Index report showed that inflation had slowed — barely — for a 10th straight month.
But consumer prices remain well above the Fed’s inflation target of 2 percent and officials at the central bank signaled this week that they’re still feeling hawkish: “We aren’t there yet,” said Lorie Logan, the Dallas Fed president, while the nonvoting member Loretta Mester of the Cleveland Fed said, “I need to see more evidence that inflation is still moving down.”
Another quarter-percent increase is a “serious possibility,” Jim Reid, a strategist at Deutsche Bank, wrote to investors on Friday. And Quincy Krosby, the chief global strategist at LPL Financial, wrote that Fed officials had been sending a message: Don’t even start pricing in a pause in rate increases, let alone a cut.
The latest signal on the Fed’s thinking could come in a speech on Friday by its chairman, Jay Powell. He’s scheduled to speak at the Thomas Laubach Research Conference in Washington. Ms. Krosby of LPL notes that Powell has been “critical of the ‘stop and go’ monetary policy in the 1970s” that led to stagflation.
If Mr. Powell brings up that topic on Friday, Ms. Krosby adds, it may signal to the markets that unless data shows a marked improvement in inflation, “he’ll advocate another rate hike.”
Another factor to keep an eye out for is progress in the debt-limit talks, as Washington edges closer to the so-called X-date, or the point at which the U.S. runs out of money. There’s some cautious optimism that a breakthrough will be reached this weekend, but there’s no certainty that President Biden will be able to win over progressive Democrats.
Tech giants win big at the Supreme Court
Big Tech scored a major victory on Thursday when the Supreme Court ruled unanimously in two cases to leave intact the sweeping legal protections that have helped social media giants like Google, Meta and Twitter become forces in online publishing.
Hanging over the cases was the future of Section 230 of the Communications Decency Act. The tech industry holds that the 1996 law is vital to its business model, shielding it from liability when users publish content to their online platforms. The same law gives the companies protections when they step in to moderate posts.
Lawmakers on the right and left argue that the Section 230 protections are too strong. Democrats want social media outlets do more to police their networks to prevent misinformation while Republicans say the sites have gone too far to muzzle voices on the right.
The cases arose from complaints brought by family members of the victims of ISIS terrorist attacks in Paris and Istanbul who argued that the Google and Twitter platforms helped the group spread its messages.
The justices disagreed, writing, “defendants’ mere creation of their media platforms is no more culpable than the creation of email, cellphones, or the internet generally.” They also found that the company’s recommendations algorithms were “agnostic,” meaning that they did not intentionally give more prominence to ISIS’s posted comments.
The tech industry cheered the decision. “Companies, scholars, content creators and civil society organizations who joined with us in this case will be reassured by this result,” Halimah DeLaine Prado, Google’s general counsel, said in a statement. Tech firms had feared that any watering down of Section 230 would lead to a chilling of internet activity that could harm their businesses.
In the end, the justices sidestepped Section 230. The court’s opinion makes no mention of the law. Instead, the justices leaned heavily on legal questions around antiterrorism laws, finding the firms did not violate those.
Remembering Sam Zell, the “grave dancer”
Sam Zell, the real estate tycoon who built a fortune by buying distressed assets, died on Thursday at 81. Over a decades-long career, he made billions from savvy investments in real estate that others had overlooked, while developing a memorable persona as a foul-mouthed, jeans-wearing financial guru.
Mr. Zell amassed an empire of undervalued real estate assets, including apartments, offices and other pieces of commercial properties, benefiting when markets turned and their worth recovered. It’s an approach he first honed in college, when he and a partner bought cheap homes, fixed them up and rented them to other students.
It became highly lucrative when Mr. Zell sold his holdings — then known as Equity Office Properties — to Blackstone in 2007 for $39 billion, a year before the global financial crisis devastated the real estate market. It was Mr. Zell himself who came up with his most enduring nickname, “grave dancer.”
Of Zell’s impact on the real estate industry, the New York developer Scott Rechler told The Wall Street Journal, “He was an evangelist, cheerleader and disciplinarian making sure it grew in the right way.”
But Mr. Zell made a disastrous investment in Tribune, the newspaper and TV station owner, done through an $8.2 billion deal in which he put up just $315 million and saddled employees with $13 billion in debt. (The Times’s Floyd Norris called it “one of the most absurd deals ever.”)
Though Mr. Zell had sought to apply his real estate playbook to newspapers and TV stations, he failed to effectively stem steep losses in audiences and advertising. Less than a year after buying Tribune, it filed for bankruptcy, emerging years later worth half as much, and with him gone.
THE SPEED READ
The billionaire investor Carl Icahn conceded that he made a mistake in speculating the market would crash beginning in 2017, a bet that cost $9 billion. (FT)
Lazard’s C.E.O., Ken Jacobs, is said to be preparing to step down; it is likely he’ll be succeeded by Peter Orszag, the former Obama administration official who runs Lazard’s financial advisory business. (WSJ)
Alibaba will begin breaking itself up by spinning off its $12 billion cloud-computing arm and exploring listings for its grocery and logistics divisions. (Bloomberg)
President Xi Jinping of China has reportedly put a top security official, Chen Yixin, in charge of a crackdown on foreign firms operating in the country. (WSJ)
Unions accused UPMC, a major Pennsylvania hospital system, of abusing its market position to depress workers’ wages. (NYT)
Best of the rest
Apple has reportedly restricted employees’ use of ChatGPT over worries about data leaks. (WSJ)
“America is getting TikTok all wrong.” (The Atlantic)
How Warren Buffett helped push Japanese stocks to a 33-year high. (WSJ)
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