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This is an audio transcript of the FT News Briefing podcast episode: ‘Trump indicted over attempt to overturn 2020 election’
Marc Filippino
Good morning from the Financial Times. Today is Wednesday, August 2nd, and this is your FT News Briefing.
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Former president Donald Trump is facing another indictment. Uber is finally profitable and a major rating agency downgraded its US debt rating. Plus, the Federal Reserve isn’t just dealing with inflation. It’s become a target for Republican presidential candidates, too.
Ron DeSantis
We need to rein in the Federal Reserve.
Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.
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US prosecutors charged Donald Trump with attempts to overturn the results of the 2020 election. The Department of Justice filed the indictment in federal court yesterday. It shows that Trump is being charged with four criminal counts. Investigators focused on Trump and his allies in the run-up to the January 6th insurrection of the US Capitol. Here’s special counsel Jack Smith talking yesterday about the attack.
Jack Smith
It was fuelled by lies, lies by the defendant, targeted at obstructing a bedrock function of the US government — the nation’s process of collecting, counting and certifying the results of the presidential election.
Marc Filippino
Trump is running for president again, and this is the third time he’s been indicted since March. Trump responded to yesterday’s indictment in a statement calling it a continued, pathetic attempt by President Joe Biden and the Justice department to interfere with the 2024 election.
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Uber reported its first operating profit ever yesterday — $326mn for the second quarter. The ride share company has been bleeding money for years. It’s racked up more than $30bn in losses since 2014. Here to talk more about this is the FT’s Richard Waters. Hi, Richard.
Richard Waters
Hey, Marc. Nice talk to you.
Marc Filippino
Good to have you back. So how big of a deal is this for Uber?
Richard Waters
Well, it is a historic moment for Uber, quite honestly. This was a company that came to symbolise the cheap money era that we’ve just come through. For a decade Uber just burnt cash. And many people thought, you know, it is never going to make money. It’s simply an unprofitable business. Well, for Uber to finally make a profit based on formal accounting principles shows at least that, you know, it’s turned some kind of corner. I mean, obviously, you know, there’s a question long term, how profitable a business is this? But at least they got this far.
Marc Filippino
Now, Richard, we should probably mention that there isn’t just mounting pressure on Uber because of the debt. It’s also because it’s a public company. It listed in 2019. So it’s, you know, it’s got to answer to shareholders.
Richard Waters
Yeah. I mean, you know, you have to be a pretty patient investor to wait this long. Uber has been around for 14 years, and it was really built on a very simple principle. Uber’s plan from the beginning was simply to offer uneconomic prices. They were subsidising rides purely to gain market share, and that was not sustainable. They managed to raise, you know, tens of billions of dollars to keep this going. But really, two things change. One is they went public and public investors wanted a profit. The other is that the free money era really came to an end, and they can no longer raise money at such cheap rates as they used to. So, you know, they’ve had to change their plan, and that’s essentially meant putting out prices. I think if you’re an Uber rider you’ll know that this service is not as cheap as it was. The other thing they’ve done is really pare back on costs. And all of that together has amounted to a business that at least breaks even or slightly better than breaks even.
Marc Filippino
Yeah, but even with all this good news, Richard, the stock price yesterday was down 6 per cent. Why did that happen?
Richard Waters
So one thing that we learned from these figures is that the chronic price wars that have long characterised the ride-hailing market and the food delivery market, these are still going on. Uber is not out of the woods completely. So earlier this year, Lyft cut its ride-hailing prices in the US and that’s taken some growth out of Uber. DoorDash, the delivery company, is mounting a huge marketing campaign at the moment. And that actually led Uber to report lower than expected revenue in the latest quarter. So that’s taken some shine off the latest numbers. You know, we shouldn’t forget that the stock is up hugely over the last year. So this is not a big move but it’s a reminder that, you know, everything we know about these markets, these are companies that are prepared to go to war over prices. That hasn’t gone away completely.
Marc Filippino
Richard Waters is the FT’s west coast editor. He covers all things tech. Thanks, Richard.
Richard Waters
Well, pleasure to talk to you.
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Marc Filippino
Fitch Ratings cut its US debt rating yesterday. It unexpectedly went from a triple A to a double A plus. Fitch said the downgrade was because of an unexpected, “fiscal deterioration and a growing government debt burden”. It also said the, “erosion of government led to repeated debt limit stand-offs”. The US narrowly avoided hitting its debt ceiling and defaulting earlier this year. Fitch is one of three major rating agencies that investors watch closely. Moody’s still has a triple A rating for the US. The S&P slashed its US rating to a double A plus back in 2011.
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US Republican presidential candidates are hitting the road, and they’re making their pitches to voters ahead of the 2024 election. One of their punching bags is the Federal Reserve. Here to talk more about why the Fed has become such a big target is the FT’s Washington bureau chief James Politi. Hi, James.
James Politi
Hi, Marc.
Marc Filippino
So first of all, why are Republicans coming down so hard on the Fed?
James Politi
Well, the Fed is an easy target and has long been sort of a bugbear for conservative activists. And their main complaint at the moment is that the Fed has been behind the curve on inflation and that the easy money policy since the financial crisis and then during the pandemic, combined with big spending by the government, have sort of fuelled the inflationary crisis and forced the Fed to raise interest rates to very high levels. But I think it goes beyond that. They also believe that the Fed has sort of strayed beyond its mandate and is veering into social policy, is too focused on sort of climate risks and social equity. They would prefer that the Fed is only focused really on inflation and stable prices.
Marc Filippino
Now, James, the Fed is an independent body. So how do these candidates say they would behave towards the Fed if they were elected president?
James Politi
So Florida governor Ron DeSantis, who is challenging Donald Trump for the Republican nomination, said on Monday that he would seek to replace Jay Powell as head of the Federal Reserve. He may even do so before Powell’s term expires in 2026. And there is a sort of a long history in a way dating back to Donald Trump and his attacks on Powell of an increasing Republican push to sort of challenge the Fed and sort of undermine its independence. And I think we can probably look forward to that again if someone like Ron DeSantis wins the White House.
Marc Filippino
Yeah, and I remember this because it was around 2019 and Trump was pushing at the time when he was president for lower interest rates. You know, when we look at central banks around the world where the leader of the country has a lot of influence on the central bank, does it get people worried?
James Politi
I think it does get people worried. I mean, I think certainly there’s a very strong streak in sort of conservative America of opposition to the Federal Reserve, dating back to its very creation. And to the extent that it sort of undermines the Fed’s independence, then the US will look more like some of the countries with less established democracies where the central bank and the fiscal authorities and the government work hand in hand. And that’s not necessarily a very good thing. The Fed has always tried to insulate itself from political pressure, but it’s hard to do in certain situations.
Marc Filippino
James Politi is the FT’s Washington bureau chief. Thanks, James.
James Politi
Thank you.
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Marc Filippino
The German gas importer Uniper laid out an €8bn green overhaul yesterday. The state took control of Uniper late last year. The company was brought to the brink of collapse as gas prices surged after Russia invaded Ukraine. CEO Michael Lewis recently spoke to the FT in his first interview since stepping into the role in June. He said that he’s confident that the green transition will make Germany’s takeover of Uniper profitable. Because of EU rules, the German government has to reduce its stake in Uniper to 25 per cent by 2028. But Berlin is expected to lay out a strategy for exiting the company by the end of the year.
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You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.
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