Good Tuesday morning. Because of technical glitches, U.S. tax day is actually today. And Morgan Stanley (the bank, not the trader) reported a 42 percent jump in first-quarter profit. Some links require subscriptions.
So much for the U.S. rejoining the Trans-Pacific Partnership
That seems out — for now, anyway, given President Trump’s tweet from Mar-a-Lago yesterday: “Too many contingencies and no way to get out if it doesn’t work.” Here are a few takeaways about the end of a public flirtation:
• Trade partners and allies are again left wondering about the White House’s trade policy. That’s especially pertinent as the U.S. continues to feud with China; yesterday the F.C.C. blocked wireless carriers from using federal subsidies to buy Chinese telecom equipment.
• The tweet put Prime Minister Shinzo Abe of Japan, who’s at Mar-a-Lago with Mr. Trump, in an awkward position. Japan has been leery of a bilateral trade pact with the U.S., since it risks having to make more concessions than in the TPP with little hope of much in return. Tokyo would like exemptions from potential U.S. tariffs, however.
Fact-check: Despite Mr. Trump’s tweet, South Korea isn’t in the TPP.
Elsewhere in trade: China’s plans to relax foreign ownership rules for carmakers could be great for Elon Musk and bad for Warren Buffett. Or, in Mr. Musk’s case, maybe not.
Today’s DealBook Briefing was written by Michael J. de la Merced and Amie Tsang in London.
Will other tech giants take a turn in the hot seat?
Facebook has born the brunt of fury over the tech industry’s practices, particularly after the Cambridge Analytica scandal shed light on how user data is shared. But another behemoth’s practices could come under scrutiny, particularly if Democrats take back Congress in the midterm elections.
More from Mark Bergen and Ben Brody of Bloomberg:
Another thought on Google’s weaknesses, from our colleague Mike Isaac:
Elsewhere in privacy: Facebook has previewed how its privacy policies are changing to comply with European regulations. Those same rules have emboldened the company to resume face-scanning photographs in Europe — if consumers opt in. Eduardo Porter argues that Facebook is creepy, but still potentially good for you.
How will the Supreme Court rule in the state sales tax case?
Justices appeared split yesterday over whether U.S. states could force online retailers to collect sales tax somewhere they had no physical presence.
Justice Sonia Sotomayor said that Congress, rather than the Supreme Court, should settle the matter. But Chief Justice John Roberts said “it would be very strange for us to tell Congress it ought to do something in any particular area.”
The stakes: The case in question, South Dakota v. Wayfair, could upend a decades-old status quo in online retail — and bring states some much-needed revenue.
Elsewhere in taxes: Morgan Stanley analysts say they are uncertain whether the Republican tax overhaul will extend the boom in U.S. business. The chairman of the Council of Economic Advisers asserts that the changes will benefit American workers the most. President Trump filed for a six-month extension for preparing his income taxes. And if you think your taxes are complicated, be glad (on one level) that you’re not Meghan Markle.
The political flyaround
• Starbucks will close its more than 8,000 U.S. stores for a day of anti-bias training on May 29, after outrage over the arrest of two African-American men at a Philadelphia store. It’s a positive example for corporate America, Breakingviews says.
• David Hogg, a survivor of the Parkland, Fla. school shooting, called for a boycott of BlackRock and Vanguard because of their holdings in gun makers like Sturm Ruger. (Yahoo Finance)
• How President Trump decided to overrule Nikki Haley on additional sanctions on Russia over Syria. (NYT)
• The C.I.A.’s chief, Mike Pompeo, secretly visited Kim Jong-un a week ago to help prepare for a meeting with Mr. Trump. (WaPo)
• Mitch McConnell said he wouldn’t let a bill meant to protect Robert Mueller go to the Senate floor. (CNN)
• Fox News admitted that it was surprised by Sean Hannity’s having been a client of Michael Cohen, but gave him “full support.” Here’s what Mr. Hannity has said about Mr. Cohen since the April 9 F.B.I. raids on the lawyer’s office and hotel room.
• What Elon Musk (who, granted, can’t run for president) can tell us about future presidential candidates. (WaPo)
Behind Cambridge Analytica’s cryptocurrency plans
Even before it emerged as a target of international scorn, the consulting firm sought to develop a virtual currency and raise money through an initial coin offering, the NYT reports. (The project, which was led by the former C.E.O. Alexander Nix, appears to be on hold.)
More from Nathaniel Popper and Nicholas Confessore of the NYT:
Extra credit: Cambridge Analytica helped Dragon Coin, a virtual currency for gamblers linked to a notorious Macau gangster whose street name was “Broken Tooth.”
The tech flyaround
• The Supreme Court will not decide whether federal prosecutors can force Microsoft to turn over digital data stored outside the U.S. (NYT)
• Harbor, a blockchain platform for creating securities based on real-world assets, raised $28 million in a round led by Founders Fund. AppOnboard, which helps design interactive demos, has raised $15 million.
• Some 50 of Kickstarter’s 120 staff members have left since its co-founder Perry Chen returned as C.E.O. in July, including seven of his predecessor’s eight executives. (BuzzFeed)
• IBM posted a second consecutive quarter of higher revenue after nearly six years of decline, an indication that Ginni Rometty’s turnaround may be taking hold. (WSJ)
• The cryptocurrency exchange Kraken has stopped trading services for Japanese residents after regulators there stepped up oversight. (WSJ)
Did Goldman’s trading business perform too well?
The Wall Street firm’s first-quarter earnings raise a familiar dilemma. As Goldman moves to diversify its operations beyond high-risk trading — one notable example is its Marcus online bank — the strength of its trading shop in the first quarter threatens to overshadow those efforts, Peter Eavis writes.
Stock and bond markets are unpredictable, even in good times, so the helpful trading conditions this quarter may not last. What can Goldman’s senior executives offer to persuade investors that the bank far more than a trading house? More explanations, perhaps — and time.
In tax-related news: The U.S.’s four biggest banks benefited from the Republican tax cuts — to the tune of $2.5 billion.
The deals flyaround
• Bill Ackman said that Newell Brands had “made a deal with the devil,” after it agreed terms with Carl Icahn to avoid a proxy fight with Starboard Value. Meanwhile, Mr. Icahn is said to have taken a stake in VMware.
• Toys “R” Us rejected a bid for some of its U.S. and Canadian stores by the C.E.O. of MGA Entertainment. (FT)
• G.E. is said to be working on selling its industrial gas engine business for more than $3 billion. (Bloomberg)
• Martin Sorrell’s departure from WPP will make it harder for creative entrepreneurs to sell out and get rich, John Gapper writes. (FT)
• Steven Cohen has backed a start-up that defends stock-pickers (like him) from high-frequency traders. (WSJ)
• How the funded equity collar, a complex financial product, has grown in popularity with acquisitive groups like SoftBank and HNA Group. (FT)
• Morgan Stanley — well, Morgan Adam Stanley — has left Morgan Stanley. (Bloomberg)
• Mignon Clyburn, an outspoken longtime Democratic commissioner on the F.C.C., will step down. (Axios)
• Two more Nike executives, Vikrant Singh and Daniel Tawiah, have been forced out as it overhauls its management ranks after a workplace misconduct review. (WSJ)
Quote of the day
— Marissa Mayer, in the latest Corner Office column
The speed read
• Merchandise, a traditional way to express fandom, has been amped up for the social media age. (NYT)
• The chairman of the state-controlled China Huarong Asset Management is facing a graft investigation. (Bloomberg)
• KPMG South Africa is flying in troubleshooters and hurriedly meeting with clients after becoming embroiled in three scandals. (Bloomberg)
• Elaine Wynn, the largest shareholder in Wynn Resorts, has demanded that the company restructure its board and improve oversight while regulators investigate how it handled misconduct allegations against Steve Wynn, its ex-C.E.O. and her ex-husband. (WSJ)
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