Situational awareness: It looks like Stephen Schwarzman is going to flip the Thomson Reuters terminal business to the London Stock Exchange for $27 billion. (He bought a controlling stake 18 months ago at a valuation of $20 billion, funded mostly with debt.)
Many thanks to everybody who wrote in last week pointing out that the time it takes to close a mortgage has fallen from 74 days to 36 days over the past year and a half. It has not fallen to 36 months!
In this week's 1,951 words (a 7-minute read): The ECB's new monetary policy, the appeal of price disaggregation, the disparate impact of climate change, Les Wexner, Warren Kanders, and a very silly sports team valuation formula. Enjoy!
Illustration: Sarah Grillo/Axios
It's the oldest inflation target in the world, and certainly the one that carries the most political baggage. This week, with very little fanfare, it changed dramatically.
Background: Germany's Bundesbank implemented an inflation target in 1975 — a full 15 years before New Zealand's target was formally adopted. Germany's target started at 4.5%, but it rapidly fell to 2% in 1987, and was never subsequently changed.
For all those 32 years, the inflation target has been a ceiling: The aim of the central bank was to get inflation down to 2% or lower. If inflation in Germany was 3%, that marked a failure on the part of the Bundesbank. If inflation was 1%, that was fine.
Driving the news: The official ECB statement accompanying its latest monetary policy decision this week included an important new word. "If the medium-term inflation outlook continues to fall short of our aim," it says, "the Governing Council is determined to act, in line with its commitment to symmetry in the inflation aim."
What they're saying:
"The symmetry means basically that there is no cap, or 2% cap, and that inflation can deviate on both sides. We don't accept permanently lower inflation rates."— ECB president Mario Draghi, in his post-meeting press conference
No Bundesbank president would ever have said something like "We don't accept permanently lower inflation rates." Quite the opposite. Permanently lower inflation rates were the German central bank's stated aim, and the ECB largely inherited that aim. That's now, officially, a thing of the past.
Why it matters: Draghi is painfully aware that ultra-loose monetary policy — like the deposit rate of -0.4%, which still has the power to startle — has done little to spark inflation in the eurozone. He knows too that his successor, Christine Lagarde, will need to use all her political skills to cajole Europe's governments into providing fiscal support for her monetary actions. With this action, he has given Lagarde all the headroom she needs to keep monetary policy as loose as she possibly can, even if inflation exceeds the 2% target.
Illustration: Aïda Amer/Axios
DoorDash dominated more of the news cycle than it should have this week, after an NYT article brought broad awareness to its idiosyncratic policy on tips. The company would give its "dashers" a guaranteed minimum fee for delivering food; that minimum included any tips. The result was that most tips ended up going to DoorDash rather than to the delivery workers.
The big picture: Americans encounter disaggregated prices every day. Retailers operate under a convention that prices exclude sales tax, so it's never entirely clear how much something is going to cost in total.
Why it matters: Budgeting and spending decisions become much more difficult when all-in prices are mostly invisible. Retailers who disaggregate their prices end up selling more, even as their customers trust them less.
The Axios Trends newsletter on climate change came out yesterday. The subject is massive and existential — but the chart above, from Moody's, goes some way toward explaining why the U.S. government, under both Republican and Democratic administrations, has done very little to address it.
The bottom line: Climate change demands coordinated global action on an unprecedented level, and on the kind of time horizon that bears no relation to electoral cycles.
Photo: Jonathan Newton/The Washington Post via Getty Images
L Brands CEO Les Wexner made an enormous error of judgment when he gave pedophile Jeffrey Epstein a broad-ranging power of attorney over all of his assets.
Meanwhile, car auction company Copart added a woman to its board this week, becoming the last member of the S&P 500 to do so.
Photo: Erik McGregor/Pacific Press/LightRocket via Getty Image
Warren Kanders finally resigned from the board of the Whitney Museum this week, after months of protests. Kanders owns Safariland, a company that makes the tear gas canisters fired on the U.S.-Mexico border in November.
Why did it take so long for Kanders to resign when his presence on the board has been casting the Whitney in a negative light for many months?
There's financial logic, too. By occupying a prominent position on the Whitney board, Kanders benefits in 3 main ways.
The bottom line: Museums feel a perpetual need to collect collectors, whom they butter up with a combination of flattery and board seats. But now tensions are emerging between labor and capital. The artists who make the museum's art have rarely seemed less aligned with the plutocrats who dominate its board.
The most valuable sports teams all seem to be worth $4 billion, plus or minus a billion. That's regardless of what sport they're in, or even what country they're in. It's also regardless of operating earnings: While some of these teams, like the Dallas Cowboys, are extremely profitable, others, like FC Barcelona, lose money.
By the numbers: Here's a highly scientific and reliable formula to work out how much your sports franchise is worth.
Key: b = number of billionaires who grew up supporting the team; B = number of billionaires globally; c = the propensity of the local city to cough up massive tax breaks; f = number of fans; h = historical importance of the team; L = League standing; m = size of the local media market; p = profits; r = revenues; s = the value of the stadium; u = strength of the players’ union; v = the amount of money the last team sold for; and X = a random number generator.
Illustration: Rebecca Zisser/Axios
The Fed will announce an interest rate cut for the first time in 10 years on Wednesday, writes Axios' Courtenay Brown.
On Friday, we’ll get the July jobs report. Economists see 170,000 jobs being added, while the unemployment rate should hold at 3.7%.
167 S&P 500 companies release quarterly results this week. The big one to watch is Apple on Tuesday, particularly for updates on the company's China business.
The 1,483-foot Petronas Towers in Kuala Lumpur, completed in 1996, were the tallest buildings in the world until 2004.
Pelli died this month at the age of 92. His other buildings include Brookfield Place in New York (formerly the World Financial Center), Ronald Reagan National Airport in Washington, D.C., and the Salesforce Tower in San Francisco.
Elsewhere: How Bob Geldof’s African investment fund avoids paying taxes to African countries. Apollo and Leon Black start trying to deal with the Jeffrey Epstein elephant in the room. Robinhood is now worth $7.6 billion, despite exposing its users' passwords. Swiss banks are issuing negative-rate loans. The Payments Modernization Act. Wanda Sports' disastrous IPO.