As sure as Washington's cherry blossoms are blooming, it must be time for the Spring Meetings of the IMF.
I'll be moderating a discussion on inequality Tuesday morning with plutocrat gadfly Anand Giridharadas and Winnie Byanyima of Oxfam: Do come join us if you're in town. On Friday afternoon, I'll be moderating the closing panel at DebtCon3, aka Woodstock for sovereign debt nerds. Again, it's free and open to the public, if you want to come along.
Tuesday also marks the launch of Axios Space, Miriam Kramer's new weekly email covering the trends, business and science of space. Sign up here to get the first edition.
If you spend $450 million on this and then lose it, that's a sign you might have too much money. Photo: Christies
Saudi Aramco, the world's most profitable company, revealed this week that it had $224 billion of pre-tax earnings in 2018. Some of those earnings were paid to the Saudi royal family in taxes, while $111 billion was retained as profit for Aramco's sole shareholder, which is also the Saudi royal family. That kind of wealth helps to explain why Goldman Sachs CEO David Solomon found himself back in the kingdom this week, less than 6 months after he joined the rest of the world in publicly avoiding the country.
Jeff Bezos, the world's richest man, revealed this week that he would retain the lion's share of his marital property after his divorce from his wife MacKenzie. She is giving up any ownership stake in Blue Origin or the Washington Post, and she's retaining only 25% of their jointly owned shares in Amazon. Still, that 25% is enough to make her the world's fourth-richest woman.
My thought bubble: For nearly all of us (Jeff Bezos would seem to be one exception to the rule), there is some level of wealth at which having more money would not make us better off in any meaningful way. Almost none of us ever become that rich. But for the very, very rich, there's real value in being able to identify that amount and take the actions necessary not to exceed it.
Illustration: Rebecca Zisser/Axios
It's crunch week. Britain is due to leave the EU without any kind of deal on Friday — an outcome only the most extreme Brexiteers want.
U.K. Prime Minister Theresa May did give Remainers a glimmer of hope on Friday. Writing an official letter to European Council President Donald Tusk, she for the first time admitted that she was willing and able to hold European Parliament elections on May 23. Her party hates the idea of contesting European elections, but her government is now making all necessary preparations for that vote. May added that she would prefer to leave the EU before that date and cancel the election, but Parliament has repeatedly voted down all her attempts to do so.
The bottom line: If Tusk can't get unanimous approval for another extension on Wednesday, Britain's prime minister will be faced with a stark choice. Either she drives her country off a cliff by letting it crash out without a deal or she destroys her party by repealing Article 50, keeping the U.K. in the EU after all. Her words and actions to date indicate that she would probably end up choosing her party over her country — unless the U.K. Parliament somehow takes the decision out of her hands.
Axios' Courtenay Brown writes: The world’s poorest countries are using more and more of their domestic revenue to pay down foreign debt, according to new findings released by the Jubilee Debt Campaign ahead of this week’s IMF meetings.
Why it matters: Jubilee examined the lowest-income nations, defined by the World Bank as having a gross national income per capita of $995 or less. They found that when debt payments rose, public spending per person fell.
What's happening: Per the World’s Bank count, 11 low-income economies are in debt distress or at a high risk of debt distress, up from 6 in 2015.
One example: Mozambique, already in default on about $2 billion of external commercial debt thanks to the tuna bonds scandal, put 25% of its government revenue toward debt payments last year. That's nearly triple the equivalent number in 2017.
Illustration: Lazaro Gamio/Axios
Lyft has been a public company for just over a week now, during which its market capitalization has fluctuated between $30 billion (the high, just after the stock opened for trading on March 29) and $22 billion (the low, on Tuesday).
Trading in Lyft shares was rocky in the early days, with the stock falling below its IPO price. (It’s slightly higher now.) At one point, short sellers needed to pay an interest rate of more than 100% if they wanted to borrow the stock. Things got so nasty that Lyft threatened to sue Morgan Stanley, one of the underwriters of the rival Uber IPO, claiming tortious interference in its stock trading.
The next big test for Lyft shares will come when Uber files its own S-1. If Uber provides significantly more transparency into its unit economics than Lyft did, investors are likely to conclude that Lyft had something to hide and rushed to go public before anybody could demand like-for-like comparisons with its larger rival.
The bottom line: "You can be a ride-sharing bull and still hate the Lyft IPO. You can even be a Lyft bull and hate the Lyft IPO," as Rett Wallace, the CEO of private-company intelligence firm Triton, wrote to his clients on Wednesday. "Lyft made obvious, avoidable, and un-forced errors that the other unicorns coming behind will only repeat if they are not paying attention."
Photo: Brendan Smialowski/AFP/Getty Images
David Malpass, running unopposed, became the new president of the World Bank on Friday. As the FT's James Politi drily notes, the former senior adviser to Donald Trump's presidential campaign "still does not yet enjoy the benefit of the doubt among foreign officials, the development community or World Bank staff."
Why it matters: The malign neglect of the executive branch detailed in Michael Lewis' "The Fifth Risk" has now been extended to multilateral institutions and even the Federal Reserve. This is uncharted territory. Medieval mapmakers would put dragons in areas they had yet to explore, denoting unknown dangers. Perhaps these nominations should come with dragon-shaped asterisks.
Illustration: Lazaro Gamio/Axios
What we're reading: The NYT's Patricia Cohen reports on how a long list of Wall Street heavyweights is embracing Modern Monetary Theory, or MMT. Quoted in her article: Jan Hatzius, chief economist at Goldman Sachs; Paul McCulley, former chief economist at Pimco; Mohamed El-Erian, former Pimco CEO; Ray Dalio, founder of Bridgewater Associates; Richard C. Koo, chief economist at Nomura; and Dan Alpert, managing partner at Westwood Capital.
While none of the Wall Streeters can be considered doctrinaire adherents of MMT, they all find it useful in terms of understanding the point at which government spending stops being a productive investment in the economy and starts risking harmful levels of inflation. None of them think we're anywhere near that point today.
"For me an economic approach must help me understand the world, and provide me with some useful insights (preferably about my day job — investing). On those measures let me assure you that MMT thrashes neoclassical economics, hands down."— James Montier, strategist at GMO
When the government runs a budget deficit, it has to borrow money by selling Treasury bills — instruments that need to be repaid in full on a certain maturity date. Alternatively, it can literally print money. We're doing the latter with abandon.
Why it matters: That $1.6 trillion is effectively an interest-free loan that the U.S. government never needs to pay back. Economically, it makes perfect sense for us to print as much currency as there's demand for. Better yet, that demand doesn't seem to be diminishing in the slightest.
The cover of today's New York Times Magazine, by Craig Cutler and Matt Willey
Worthy of your time: the NYT Magazine's 20,000-word deep dive into the Murdoch empire. The cover image is a riff on Shepard Fairey's legendary OBEY poster, while also referencing Apple's equally iconic "1984" Super Bowl ad. The message from the NYT's Jonathan Mahler and Jim Rutenberg: Rupert Murdoch is exactly what those dystopian visions were warning against.
"To see Fox News as an arm of the Trump White House risks missing the larger picture. It may be more accurate to say that the White House — just like the prime ministers’ offices in Britain and Australia — is just one tool among many that this family uses to exert influence over world events."— Jonathan Mahler and Jim Rutenberg, "How Rupert Murdoch's empire of influence remade the world"
Rarely has the employment situation looked this good. The official unemployment rate is down to 3.8%, and a record-low number of individuals made their first claim for unemployment benefits last week. Meanwhile, as Axios' Dion Rabouin points out, the number of job cuts has hit a new high.
Illustration: Rebecca Zisser/Axios
For the first time since the financial crisis, the CEOs of America's biggest banks — Goldman Sachs, Citi, Bank of New York Mellon, JPMorgan, Bank of America and Morgan Stanley — will testify together before the House Financial Services Committee on Wednesday, writes Courtenay.
The banks will also be in focus on Friday when JPMorgan and Wells Fargo report first-quarter profits, marking the official start of earnings season.
In Europe, the European Central Bank isn't expected to announce any rate changes after its policy meeting on Wednesday. Attention will be on what ECB president Mario Draghi says about the fragility of the eurozone economy and whether he gives more details on the ECB's new, cheap long-term bank loan program.
Probably not happening this week: Former Nissan Motor chairman Carlos Ghosn likely won't hold a scheduled press conference on Thursday, considering he was re-arrested in Japan on new allegations of financial misconduct.
Correction: Per the House Financial Services’ hearing posting, Wells Fargo will not be testifying this week, but BNY Mellon will.
Photo by Martin Schutt/picture alliance via Getty Images
The Bauhaus Museum Weimar opened Friday night, marking the 100th anniversary of the founding of the most important art, design and architecture school of the 20th century. Heike Hanada's minimalist cube incorporates 24 horizontal LED light strips. The total budget was about $25 million.