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Would a Broadcom-Qualcomm Deal Really Shift the 5G race?: DealBook Briefing

Credit...Graham Walzer for The New York Times

Good Friday. Here’s what we’re watching:

• Would a Broadcom-Qualcomm deal really shift the 5G race?

• Mrs. May’s reasonableness may not win over Europe.

• Has Gary Cohn reached a breaking point?

• The silver linings in President Trump’s tariff plans.

• The questions BlackRock is asking gun makers.

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Lawmakers have pressed the government panel that scrutinizes deals for national security concerns — known as Cfius — to take a close look at Broadcom’s hostile bid for its fellow chip maker, which includes a proxy fight to gain a majority of Qualcomm’s board seats. (The shareholder vote is scheduled for Tuesday.)

Most notable among them is Senator John Cornyn of Texas, the No. 2 Republican, whose letter to Cfius raises two issues:

• Whether foreign companies like Singapore’s Broadcom can gain control of American counterparts through proxy fights

• Concern that Broadcom would sell off parts of Qualcomm to win regulatory approval, disrupting the work of the main American developer of 5G wireless technology — and therefore ceding the race for a superfast internet to China

The WSJ recently reported that members of Cfius have been examining the former point. It’s an interesting issue since the panel generally doesn’t get involved until a potential transaction has been submitted to it for review, and obviously, there’s nothing of the sort yet. Some officials pointed out that the panel has the jurisdiction to consider board takeovers as a form of foreign acquisition, though the article said that Treasury Secretary Steven Mnuchin isn’t sold yet on the argument.

But let’s consider the second point. The WSJ reported that some Cfius members share Mr. Cornyn’s concerns about a weakened or distracted Qualcomm falling behind Huawei of China in the 5G contest.

But that ignores Qualcomm’s very public collaboration with Chinese tech companies on 5G. The American chip maker said in January that it has shared information on some of its hardware with Lenovo, Xiaomi and other Chinese companies.

And last week, Qualcomm and Huawei announced that they have jointly conducted significant tests for a 5G standard. Here’s what Serge Wilenegger, a Qualcomm Wireless executive, said in the news release:

“As the industry works toward the goal of commercial launches of 5G NR products and networks in 2019, close collaboration among global mobile industry leaders is necessary to validate the technologies and continue to build and improve our capabilities.”

The research analyst Stacy Rasgon of Bernstein isn’t convinced by Mr. Cornyn’s point either, arguing in an investor note that Intel can also play a role in developing 5G tech and that, more importantly, Broadcom itself is very interested in the wireless standard.

Broadcom has a reputation for being a cost-cutter, which Qualcomm has argued would likely stunt its ability to keep innovating. That question hasn’t been settled. But the question of whether a deal would endanger the U.S.’s role in the 5G race appears to go a bit too far.

A related consideration: Cfius’s ability to review Broadcom’s moves depends on that chip maker being considered a foreign company. But shareholders of the manufacturer are scheduled to vote on moving its legal residence to the U.S. from Singapore on May 6. It’s unclear whether the panel will act before then — or if it would ultimately have to decide that it has no jurisdiction after that change in address.

— Michael de la Merced

President Donald Trump’s trade tariffs are unlikely to amount to effective policymaking. They target stanch allies and ignore far greater problems in the world trading system. But there may something to salvage from the wreckage.

First, on the face of it, the president seems willing to risk a stock market plunge to pursue a policy that Wall Street opposes. Too often, the disfavor of investors is taken as evidence that a policy is terrible when it might be just inconvenient to powerful interests.

Second, Mr. Trump’s tariffs have kept an important debate over trade going. One hope for Mr. Trump’s administration is that its skepticism toward free trade leads to policies that help workers whose jobs are vulnerable to free trade. The proposed tariffs on steel and aluminum are unlikely to provide longer-term assistance to workers in those industries. Still, the skepticism toward free trade may now be permanent and provide future administrations with greater leeway to address its drawbacks.

— Peter Eavis

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British Prime Minister Theresa MayCredit...Pool photo by Wpa

Britain’s Prime Minister Theresa May on Friday described the highly preferential relationship her government is seeking to establish with the European Union after it leaves the bloc next year.

And to win over skeptics, she attempted to make Britain’s goals seem as reasonable as possible. Her requests for a unique relationship will no doubt get short shrift from those who say Britain cannot be allowed to enjoy the benefits of trading with Europe without accepting most of the obligations. Mrs. May’s response is that both sides can benefit under a new arrangement. She said:

We both want good access to each other’s markets; we want competition between us to be fair and open; and we want reliable, transparent means of verifying we are meeting our commitments and resolving disputes.

But what is clear is that for us both to meet our objectives we need to look beyond the precedents, and find a new balance.

And Mrs. May said Britain would not, as some fear, reduce regulation to win business from the European Union and still expect a high degree of access to the bloc’s markets. She said:

But in practice we are unlikely to want to reduce our standards: not least because the British public would rightly punish any government that did so at the ballot box.

The big questions:

Will the European Union be willing to set up a whole new regulatory infrastructure to oversee a stand-alone trading arrangement with Britain? Why would the bloc go to such lengths when it has the clout to insist that Britain abides by its rules?

What would Britain do if the European Union says no to most of what’s in Mrs. May’s speech? It would almost certainly deepen tensions within the British government between those who want a deeply entwined trading relationship with Europe and those who favor a looser one. Mrs. May, who has spent weeks trying to build a consensus in her cabinet, may then find it even harder to present a coherent position to the European Union, giving it even less reason to want to compromise.

— Peter Eavis

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Credit...Tom Brenner/The New York Times

President Trump’s national economic adviser has threatened to quit before, most notably in the wake of the controversy over the violence in Charlottesville, Va. But now that Mr. Cohn apparently has been outplayed in the battle over trade, will he finally decide to depart?

The former Goldman Sachs president had managed to hold off trade hard-liners like the policy adviser Peter Navarro and Commerce Secretary Wilbur Ross during previous debates on tariffs. But an exodus of like-minded White House officials diminished Mr. Cohn’s standing — and let his rivals reassert their positions.

From Damian Paletta and Josh Dawsey of the WaPo:

“Gary got rolled and was entirely kept in the dark,” a person close to the White House said of Trump’s top economic adviser.

Or as Mike Allen and Jonathan Swan of Axios put it:

The tariffs call was also a big middle finger to economic adviser Gary Cohn, who has fought for more than one year to kill tariffs that would provoke a trade war or higher prices for consumers, a de facto tax increase.

Our colleagues Mark Landler and Maggie Haberman have reported that Mr. Cohn threatened to resign if the president followed through on the tariff threat. (That cost him standing with Mr. Trump, though he seemed to regain much of his political capital, particularly after the passage of the tax overhaul.)

Mr. Landler and Ms. Haberman point out that Mr. Cohn is still waiting to see if Mr. Trump actually rolls out the tariffs — a fair question, given how quickly his boss appears to switch policy positions.

But if the White House does impose tariffs on imported aluminum and steel, will Mr. Cohn finally pull the trigger?

On a related note, let’s talk about the resuscitation of Mr. Ross’s political fortunes:

Axios, on Jan. 21: “President Donald Trump has put Commerce Secretary Wilbur Ross out to pasture,” the publication reported, noting that Mr. Ross had been criticized for falling asleep in meetings.

Axios, today: “White House staff, most of whom were in the dark about Trump’s planned tariffs announcement, are referring to Commerce Secretary Wilbur Ross, the victor in the policy coup, as ‘Chief Ross.’”

— Michael de la Merced

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Credit...Stefan Simonsen/European Pressphoto Agency

Expect today to be rough in the markets, after President Trump doubled down this morning on his threat to impose tariffs on international steel and aluminum. S. & P. 500 futures are down in premarket trading, after falling yesterday.

The current plan: A 25 percent tariff on steel and a 10 percent one on aluminum.

The winners: U.S. sellers of industrial metals, like AK Steel and U.S. Steel, whose stocks jumped yesterday; trade hard-liners like Wilbur Ross, the commerce secretary, Robert Lighthizer, the White House’s top trade negotiator, and Peter Navarro, its trade policy guru.

The losers: Big metal consumers like Ford, G.M., Boeing and United Technologies; free-trade proponents like Gary Cohn, who has threatened to resign; many Republican lawmakers; Brazil; and Canada.

The world’s response: China could retaliate with tariffs on some U.S. goods. The E.U. could, too. Japan and Korea are hoping that, as allies, they would be exempted — but they appear prepared to fight back.

The context: George W. Bush imposed tariffs on imported steel in 2002. He lifted them a year later.

Peter Eavis’s take: Mr. Trump’s tariffs may be quite narrow in focus and exist for a relatively short period. Investors could learn to live with those. But the U.S. economy and stock markets have some vulnerabilities that could magnify the damage from a trade war.

Goldman Sachs’s economists wrote that while the potential tariff’s on imported steel and aluminum “could alleviate political pressure on the White House to pursue other trade restrictions in the near-term,” it would increase “the probability of trade-restrictive outcomes to other pending issues.”

On Nafta:

“We believe the most likely outcome in the near-term is the announcement of a few small agreements on technical trade issues, but we continue to expect negotiations to stall on major issues like rules of origin and government procurement. There is a good chance that this could eventually lead the President to announce he intends to withdraw from NAFTA, but such an announcement does not appear likely in the near term, in our view.”

On China’s practices regarding intellectual property and technology transfer:

“We expect that the Administration will ultimately announce restrictions on investment by Chinese companies in the US, and possibly broader trade restrictions, in response to its ongoing Section 301 investigation. The deadline for that decision is not until August, however, and it is not clear when an announcement in this area will be made.”

The Commerce Secretary appeared on CNBC and downplayed the impact of President Trump’s planned tariffs, using a can of Campbell Soup.

“In a can of Campbell Soup, there are about 2.6 pennies worth of steel. So if that goes up by 25 percent, that’s about six-tenths of one cent on the price on a can of Campbell Soup,” Ross argued. “I just bought this can today at a 7-Eleven ... and it priced at a $1.99. Who in the world is going to be too bothered?”

Not everyone agrees with that view:

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Laurence D. Fink, the chief executive of BlackRock. The company, the world’s largest money manager, has been one of the main beneficiaries of the current bull market.Credit...Mike Cohen for The New York Times

BlackRock, the largest investor in the world, is doubling down on pushing gun makers to consider their responsibilities to the public. BlackRock said that in the wake of the Parkland, Fla., shootings it has been speaking with public gun manufacturers and retailers.

“For manufacturers and retailers of civilian firearms, we believe that responsible policies and practices are critical to their long-term prospects. Now more so than ever. That is why, over the past week, we have reached out to the major publicly traded civilian firearms manufacturers and retailers to engage in a discussion of their business practices. We have already had constructive discussions with some, and we are continuing to pursue our engagement with them all.”

Blackrock said it is asking companies to answer questions like:

• “What is your strategy and process for managing the reputational, financial and litigation risk associated with manufacturing civilian firearms?”

• “How do you assess the financial, reputational and litigation risk of the various aspects of your product lines and how each of those products is distributed?”

— Andrew Ross Sorkin

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Ali Sharif Al Emadi, Qatar’s finance minister.Credit...Zoubeir Souissi/Reuters

An article in The Intercept says that not only did the real estate firm — which Jared Kushner led until joining the White House — try to convince Qatar to invest in its embattled 666 Fifth Avenue property in Manhattan, but that it spoke directly with the emirate’s top money man.

The meeting between Charles Kushner, Mr. Kushner’s father, and Ali Sharif Al Emadi of Qatar was last April, a month before Saudi Arabia and others set up a blockade of the emirate. Mr. Kushner supported the move, while Secretary of State Rex Tillerson did not.

More from Clayton Swisher and Ryan Grim of The Intercept:

The 30-minute meeting, according to two sources in the financial industry who asked not to be named because of the sensitivity of the potential transaction, included aides to both parties, and was held at a suite at the St. Regis Hotel in New York.

A follow-up meeting was held the next day in a glass-walled conference room at the Kushner property itself, though Al Emadi did not attend the second gathering in person.

A Kushner Companies spokeswoman said that the company doesn’t “do business with any sovereign funds.”

The context: Mr. Kushner’s family business has appeared to become more of a liability to his work in the White House. Remember that he held meetings with top financiers whose firms later lent money to Kushner Companies, which has aroused concerns. Or that several countries have reportedly discussed using his complicated financial ties as negotiating leverage over him.

— Michael de la Merced

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Credit...Tom Brenner/The New York Times

Mr. Trump has long thrived on chaos as an organizing principle. But how much disorder is too much?

Remember that the White House has suffered from: very public infighting; off-the-cuff policy proposals by the president; a historically high 34 percent turnover rate; officials threatening to quit to win policy arguments; and an array of investigations into advisers (including Mr. Trump’s daughter Ivanka) and cabinet members.

Jim Stewart spoke with a number of experts for their takes on how the president has been running his White House. Here’s a taster:

• Jeffrey Pfeffer of Stanford University, said of the White House’s turnover rate, “This reflects badly on his leadership.”

• Charles Elson of the University of Delaware said, “He isn’t bound by any traditional norms of management.”

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Credit...Erin Schaff for The New York Times

Here’s what the Federal Reserve chairman told the Senate Banking Committee: “Nothing is suggesting to me that wage inflation is at a point of accelerating. I would expect that some continued strengthening in the labor market can take place without causing inflation.”

But new data from the Commerce Department suggest the opposite:

• Consumer prices as measured by the personal consumption expenditures price index, or PCE, rose 0.4 percent, the biggest increase since September.

• So-called core PCE, which excludes food and energy, advanced 0.3 percent in January — the largest gain since January 2017.

• Year-over-year core PCE, the Federal Reserve’s preferred inflation measure, rose 1.5 percent in January.

In other Fed news: The White House plans to name Richard Clarida, an economist at Columbia University and an executive at Pimco, as the Fed’s vice chairman, the WSJ reported, citing unidentified sources.

• Mr. Trump may have switched his position on gun control again, after a meeting with the National Rifle Association. Georgia lawmakers punished Delta Air Lines for eliminating discounted fares for N.R.A. members. Kroger and L.L. Bean are the latest retailers to restrict gun sales to customers age 21 and older.

• An overhaul of the Dodd-Frank financial rules that would ease regulations on regional banks is moving toward a vote next week in the Senate. (Bloomberg)

• The venture capitalist Elliott Broidy, a longtime Republican donor, was in talks to earn millions if the Justice Department dropped its corruption investigation of a Malaysian government fund. (WSJ)

• Anthony Scaramucci publicly fretted that the White House chief of staff, John Kelly, would block the sale of his SkyBridge Capital to HNA of China. (Bloomberg)

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Credit...Noah Berger/Associated Press

Facebook has drawn criticism for inconsistencies regarding which body images are allowed in ads on its platform: a man’s bare chest was found acceptable, but a woman’s bare back was not. (The company later said the latter should have been.)

More from Sapna Maheshwari and Sheera Frenkel of the NYT:

The company has flagged a photo of a woman in a T-shirt reading in dim lighting, for example, while allowing a provocative image of a man’s bare stomach for an ad from a Facebook group dedicated to “steamy romance novels” called Beyond 50 Shades. That image, in which the man had his thumb on the inside of his pants, was incorrectly approved, a Facebook spokeswoman recently said.

Elsewhere in digital ads: Procter & Gamble says that most online advertising is a waste. And News Corporation is still pushing Google and Facebook to share more ad revenue.

The tech flyaround

• Jack Dorsey admits that Twitter still hasn’t done enough to address fake news and cyberbullying. (WSJ)

• Facebook has ended an experiment in some countries that separated news from other content — and that may have led to a rise in misinformation. (NYT)

• Germany has blamed Russian hackers for infiltrating its government’s data network. (NYT)

• Amazon hasn’t changed much at Whole Foods — yet. (NYT)

• Garrett Camp, a co-founder of Uber, is starting a virtual currency. (TechCrunch)

• Mark Carney of the Bank of England called for more regulation of virtual currencies. (CNBC)

• Google is considering whether to hire a construction start-up like Katerra to build thousands of apartments for employees and others in the San Francisco Bay Area. (The Information)

• Don’t count on 4G wireless service on the moon anytime soon. (NYT)

• A former Google employee is suing the company for allegedly restricting the hiring of white and Asian males for technical positions at YouTube. (WSJ)

• An additional 2.4 million Americans were affected by a cybersecurity breach at Equifax. (Axios)

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Credit...Mike Blake/Reuters

On the U.S. front: Members of Cfius, the panel that reviews transactions for national security concerns, have debated whether it can step in before there’s even a deal, the WSJ reported, citing unidentified sources. Those who say it can point to Broadcom’s campaign to win a majority of seats on Qualcomm’s board as effectively a change in control, which will come to a head on March 6.

On the international front: European lawmakers are concerned about the privacy of E.U. citizens, according to the FT, because NXP — a chip maker that Qualcomm has agreed to buy — makes chips for German passports.

• Dell and VMware are working out the details of a combination of the two companies, though a deal is more than a month away, unidentified sources said. (CNBC)

• DoorDash has raised $535 million from SoftBank’s Vision Fund, GIC of Singapore and Sequoia Capital for a $1.4 billion valuation. (Recode)

• Carl Icahn has taken a stake in the Crock-Pot maker Newell Brands, amid the company’s fight with fellow activist investor Starboard Value. (Bloomberg)

• The Athletic has joined ABC News and The Atlantic as finalists to buy Nate Silver’s FiveThirtyEight, unidentified sources said. (The Big Lead)

• GKN, a British industrial parts maker, is in talks to sell its auto components business to Dana Inc. of the U.S. to stave off a hostile takeover bid by Melrose. (FT)

• Nippon Life of Japan will buy an 85 percent stake in the U.S. insurer MassMutual for $982 million. (FT)

• Fosun of China has bought a majority stake in the lingerie maker Wolford for 55 million euros, about $67 million. (Reuters)

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Maria Contreras-Sweet leads an investor group pursuing a purchase of most of the Weinstein Company.Credit...Earl Wilson/The New York Times

At the beginning of the week, the offer by the businesswoman Maria Contreras-Sweet and the investor Rob Burkle appeared to have dissipated. But, after a meeting between the two sides at the offices of the New York attorney general, Eric Schneiderman, there is now an agreement.

What the deal entails, according to Brooks Barnes of the NYT:

• Paying off the studio’s $225 million in debt;

• Investing $275 million in the new business;

• Forming a $90 million fund for victims of Harvey Weinstein.

In other misconduct news: Two massage therapists have sued the casino mogul Steve Wynn in separate lawsuits, each accusing him of coercing them into sex more than a dozen times.

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Credit...Wang K'aichicn/Visual China Group,via Getty Images

Travis Kalanick has joined the board of Kareo, a medical software start-up. (Axios)

Brian Gu, JPMorgan’s chairman of Asia-Pacific investment banking, will join the Chinese electric carmaker Xiaopeng Motors as vice chairman and president. (WSJ)

Nancy Daniels, the president of TLC Network, will become the head of the Discovery Channel, replacing Rich Ross amid a ratings decline. (NYT)

Xavier Niel, the deputy chairman of the French telecommunications company Iliad, has joined K.K.R.’s board. (K.K.R.)

• Four Wells Fargo directors plan to resign next month. The bank also disclosed that the Justice Department had ordered an independent investigation into misconduct allegations in its wealth-management business.

• Nasdaq has sued IEX, an electronic stock exchange, for allegedly infringing on seven of its patents by hiring former employees with knowledge of the technology. (Axios)

• The S.E.C. may be warming up to the idea of forced arbitration, unnamed sources said. (Bloomberg)

• According to the Hurun Report, the net worth of China’s Parliament and its advisory body has grown by nearly a third, to just below Switzerland’s annual economic output. (NYT)

• Harvard’s endowment made one big miscalculation: believing its top money managers were smarter than everyone else. (Bloomberg)

• Ye Jianming, who runs the conglomerate CEFC China Energy, is under investigation by the Chinese authorities, unnamed sources said. (Caixin)

• During his annual state of the nation address in Moscow, President Vladimir Putin effectively acknowledged that Russians cannot feed their families on restored imperial glory. (NYT)

• Row 7 Seed Company, co-founded by the chef Dan Barber, is aiming to build an audience for new vegetables (sweeter peppers, milder beets) that might otherwise never attract interest. (NYT)

• Color forecasters at Pantone have tremendous influence over the visible elements of the global economy — the parts of it that are designed, manufactured and purchased — though their profession itself is all but invisible. (NYT)

We’d love your feedback. Please email thoughts and suggestions to bizday@nytimes.com.

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