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Mar 16, 2021

Axios Closer

Welcome back.

๐Ÿ”” The dashboard: The S&P 500 fell 0.1%.

  • Biggest decliner? Oilfield equipment provider NOV (-10%), after warning about a worse-than-expected toll on profits. (One reason? Texas deep freeze.)
  • Biggest gainer? Fox Corp. (+4%), amid a continued rally in cable stocks.

Today's newsletter is 589 words, or a 2-minute read.

1 big thing: Businesses kick-start tax fight

Illustration: Sarah Grillo/Axios

An anti-tax hike campaign is already underway in corporate America.

Why it matters: The ink is barely dry on President Biden's relief bill โ€” but since there's optimism about economic prospects and defeating the virus, attention is turning to a trillion-dollar infrastructure package.

  • Companies are onboard. But they don't want to be on the hook in the form of higher taxes to pay for it.

Catch up quick: Hiking corporate tax rates is reportedly one way that's being considered to help fund an infrastructure plan.

  • Per Bloomberg: The rate could go up to 28% from 21%.
  • Flashback: Corporations paid a 35% rate before Trump's 2017 tax cuts.

What they're saying:

  • Jay Timmons, head of the National Association of Manufacturers, told Congress today that "reducing tax rates drove historic growth" in the industry, while voicing support for an infrastructure bill.
  • The Business Roundtable โ€” also in favor of infrastructure โ€” told reporters it would be "actively opposing efforts to raise corporate taxes ... certainly in the present context of an economic crisis, but even beyond," Joshua Bolten, head of the influential lobbying group, said.
  • Questions about the prospect of higher taxes are increasingly popping up in corporate earnings calls: "I probably do expect [some increase]. What I do hope is we have a fact-based dialogue," Johnson & Johnson CFO Joe Wolk said earlier this month.

The bottom line: Get ready to hear a lot about โ€œpay forsโ€ โ€” i.e., how the infrastructure plan will be funded โ€” and predictably, pushback from those in the firing line.

Thought bubble, via Axios' Felix Salmon: Paying for the stimulus would have been self-defeating. It would have made it less stimulative. But the infrastructure program is not about artificial stimulus, itโ€™s about building long-term economic capacity. And itโ€™s entirely possible to do that without going further into debt.

2. Charted: The spending slump in perspective
Expand chart
Data: U.S. Census Bureau via FRED; Chart: Axios Visuals

Consumer spending fell a worse-than-expected 3% in February, new data shows โ€” though it remains well above pre-pandemic levels.

  • Spending in January surged (7.6%) even more than initially reported (5.3%).
  • The only category to see a meaningful jump in sales? Gas stations, on the back of higher prices at the pump.

The bottom line: Economists are writing off February's drop-off as a blip that wasn't helped by the brutal storms that crimped spending.

  • They're penciling in a strong snapback as stimulus checks hit accounts and vaccinations pick up pace.
3. โšพ Just in ... LeBron is coming to Boston

LeBron James at the NBA All-Star Game earlier this month. Photo: Kevin C. Cox/Getty Images

Axios' Dan Primack reports: Boston Red Sox parent company Fenway Sports Group is selling an 11% stake to RedBird Capital Partners โ€” and around 1% to an entity affiliated with LeBron James, per a source familiar with the situation.

Why it matters: The deal makes James part-owner of the Red Sox.

  • It's also a massive return for Red Sox majority owner John Henry. The deal values Fenway Sports Group at around $7.3 billion.

Why it matters to Red Sox fans: Because there's a certain amount of sacrilege at play.

  • RedBird is led by Gerry Cardinale, who made his name as the Goldman Sachs banker who helped the New York Yankees create the country's largest regional sports network (YES Network).
  • LeBron grew up as a Yankees fan, and he's known to sport the team's iconic cap. He already had a small ownership stake in soccer club Liverpool FC, which is part of the Fenway Sports Group portfolio.

Keep reading.

4. Whatโ€™s moving

โ›ณ Video game developer Take-Two Interactive struck a deal with Tiger Woods for his likeness and name to appear in upcoming golf video games. Shares rose over 2%. (Fortune)

๐Ÿ“‰ Wall Street's volatility gauge touched the lowest level since the pandemic hit. (Reuters)

๐Ÿš— Ford said it would raise $2 billion in convertible debt. Shares fell 5%. (CNBC)

๐Ÿ‘€ Buffett's Berkshire Hathaway pushes back against diversity and climate disclosures ... Bankrupt Purdue's restructuring plan would divert the company's profits to the opioid crisis fight ... No-fee trading platform eToro is going public ahead of rival Robinhood ... Power provider Griddy is the third to file for bankruptcy in the wake of the Texas storm that sent power prices skyrocketing. (via SPAC).

5. 1 year ago today ... Pandemic-era Black Monday

Screenshot via CNBC broadcast on March 16, 2020

March 16, 2020: Wall Street gets a new "Black Monday" โ€” with the worst day for stocks since 1987.

Now: The Dow and S&P 500 closed a touch below their highest levels ever, as vaccines rollout and the economy stages a comeback.

6. What theyโ€™re saying

One level deeper ... Tesla's "Technoking" is selling the tweet above as a non-fungible token, Marketwatch reports. (My head hurts, too.)

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