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Illustration: Lazaro Gamio/Axios

President Trump today proposed a major change to corporate transparency, in a tweet calling for the Securities and Exchange Commission to change quarterly reporting for publicly-traded corporations.

A tweet previously embedded here has been deleted or was tweeted from an account that has been suspended or deleted.

The bottom line: This was just a request to study the idea, but it gives Trump another talking point in addition to deregulation and the tax cuts when he hears CEO concerns over social issues and immigration.

That "one" was outgoing Pepsi CEO Indra Nooyi, who told Axios today in a statement:

  • "Many market participants, as well as the Business Roundtable which we are a part of, have been discussing how to better orient corporations to have a more long-term view."
  • "Most agree that a short-term only view can inhibit long-term strategy, and thus long-term investment and value creation. My comments were made in that broader context, and included a suggestion to explore the harmonization of the European system and the U.S. system of financial reporting."

One case for ending quarterly guidance (but not reporting, as Trump proposed):

  • "The pressure to meet short-term earnings estimates has contributed to the decline in the number of public companies in America over the past two decades. Short-term-oriented capital markets have discouraged companies with a longer term view from going public at all, depriving the economy of innovation and opportunity." [Jamie Dimon and Warren Buffett]

The other side: "Scrapping the quarterly requirement 'is a solution in search of a problem,' said Charles Elson, a professor and director of the University of Delaware's Weinberg Center for Corporate Governance. 'Earnings manipulation can take place whether quarterly or every six months.'" [AP]

Between the lines, from Axios business editor Dan Primack:

  • Europe only requires publicly-traded companies to report full financials on a semi-annual basis.
  • But some European exchanges still require quarterly reports, at least for large companies, while many European companies continue to report at least top-line numbers on a quarterly basis (often to satisfy shareholders).
  • Halving the number of reporting periods is certain to reduce the amount of information available to investors, without solving the core problem of CEOs trying to meet artificial data deadlines.
  • A much more commonly-suggested fix would be to change CEO incentives, primarily by decoupling compensation from short-term stock price goals.

Go deeper

California governor declares drought emergency in most counties

A sign in April on the outskirts of Buttonwillow in California's Kern County, one of the top agriculture producing counties in the San Joaquin Valley, after historically low winter rainfall. Photo: Frederic J. Brown/AFP via Getty Images

California Gov. Gavin Newsom (D) extended a drought emergency declaration to cover 41 of the state's 58 counties on Monday.

Why it matters: Most of California and the American West are experiencing an "extreme" or "exceptional" drought, per the U.S. Drought Monitor. Newsom and other officials are concerned California could experience a repeat of the catastrophic 2020 wildfire season.

3 hours ago - World

Jerusalem crisis escalates after Hamas and Israel trade rocket fire

Israeli air strikes in the southern Gaza Strip on May 10. Photo: Said Khatib/AFP via Getty Images

Nine children were among 20 Palestinians killed in Israeli airstrikes after Hamas fired dozens of rockets at Jerusalem for the first time since 2014 Monday, per AP and Reuters.

The big picture: The rockets come after escalating violence in Jerusalem has injured 250 Palestinians and several Israeli police officers during protests over the planned evictions of Palestinian families from their homes that began Friday.

Pelosi's Republican playbook

Illustration: Aïda Amer/Axios

As Republicans fight among themselves, House Speaker Nancy Pelosi (D-Calif.) is showing the myriad ways she deals with the GOP herself.

Between the lines: We've seen Pelosi cut opponents off at the knees, like she did with President Trump, or pretend to forget their names, as she did to Sen. Ron Johnson (R-Wis.). Now she's feeding oppo research against her House counterpart, Minority Leader Kevin McCarthy (R-Calif.), so others can use the same harsh rhetoric to frame the Republicans as the party of dysfunction.