Good morning from the Financial Times.
Today is Thursday, October 30th.
This is your FT News Briefing.
Meta had tech earnings yesterday.
It probably wants to forget.
Microsoft, not so much.
And the Federal Reserve is going to stop shrinking its balance sheet.
Plus, the cable cowboy is saying howdy to retirement.
I'm Mark Filippino, and here's the news you need to start your day.
Meta and Microsoft left investors with mixed feelings when they reported earnings yesterday.
Let's start with Meta.
Revenues rose 26% last quarter, but its net income fell by a whopping 83%.
The company said that was because of a one-off income tax charge of nearly $15 billion.
That charge is related to U.S.
President Donald Trump's one big beautiful bill.
Meta's share price dropped more than 7% in after-hours trading.
Then there was Microsoft, and this one really comes down to investors having super high expectations.
Its cloud computing business, Azure, saw its revenue grow 39%.
That was higher than estimates, but it wasn't high enough.
Investors thought there would be even faster expansion because of Microsoft's partnership with OpenAI and Microsoft's after our share price fell nearly 4.
One more piece of tech news from yesterday.
In case you're keeping score at home, NVIDIA became the world's first $5 trillion company.
Its share price is up more than 49% on the year.
The Federal Reserve made two big moves yesterday to ease borrowing conditions.
First of all, it cut interest rates by a quarter point.
And second of all, it said it would stop shrinking its balance sheet.
If you want to get wonky, it's ending quantitative tightening.
Here to tell us more is the FT's U.S. economics editor, Claire Jones.
Hi, Claire.
Hi, Mark.
So let's start with interest rates.
Why did the Fed decide to cut rates again?
Because they did it last meeting too, right?
They did indeed.
This was a very well-trailed move.
And Jay Powell, Fed chair, said a few weeks ago that they'd seen more signs of weaknesses in the US labor market.
So that was really what prompted yesterday's cut.
However, a lot of people have been assuming that another cut in December was nailed on.
Powell surprised a lot of people yesterday when he said another quarter point move down in December is far from a foregone conclusion and suggested there's some very, very mixed views on whether or not the Fed has room to cut interest rates again.
So, Claire, the Fed is always careful about committing to cutting or raising interest rates.
But I found it interesting that Powell yesterday said that they wouldn't necessarily commit to an interest rate cut in December.
Why get so far out ahead of it?
I think one reason is the government shutdown and the impact that that's having on the release of official data.
Powell was quite clear yesterday on this.
We're going to collect every scrap of data we can find, evaluate it and think carefully about it.
I mean someone asked him, you know, if come December, we don't have the latest official data on what's happening on the jobs market?
Now, how do you respond to that?
And, you know, he put it very nicely.
He said, you know, what do you do if what do you do?
And if you're driving in the fog, you slow down.
So.
And there is that sense in which, if they don't have more official data pointing to a kind of collapse in the job market, they'd like to be a little bit more cautious about cutting, especially at a time when growth is yet to fall off a cliff.
That was the first really big thing from yesterday's meeting.
The second big thing, as I mentioned, was quantitative tightening.
Now I'm not going to sit here and say that I can speak with any authority about quantitative tightening.
So, Claire, can you first define what that is for us?
I think the best way to define it is explain what the opposite of it is, which is quantitative easing.
So quantitative easing was a policy that was started to really help the US economy and the financial system recover from the global financial crisis.
And the idea was that the Fed bought bonds in mass quantities to kind of flush the system with cash.
It did QE again during the pandemic.
But when we saw high inflation, it then switched to quantitative tightening.
And what that's involved is allowing when these U.S.
Treasury securities that the Fed hold mature, they let them run off the balance sheet.
It removes cash liquidity from the system.
So now switch to this more neutral policy where it's halting quantitative tightening.
It's going to keep the balance sheet at the same size by basically when these securities mature.
It'll basically replace the treasury holdings that roll off the balance sheet.
Got it.
So I understand a little bit more now.
Why did the Fed, though, decide to stop quantitative tightening?
Yeah, sure.
I mean, the Fed likes to have control of short term interest rates.
And what we've seen in recent weeks is that there's been some episodes where they haven't had that much control, where we've seen funding pressures in certain pockets of US money markets.
And that's meant banks have had to borrow at rates in excess of the Fed's target range for interest rates.
They really don't like that because it signifies that a liquidity shock could be on the way.
We know from the earlier episode of quantitative tightening back in 2019 that that caused a liquidity shock and the Fed's very very, very reluctant to repeat that experience.
So we've seen some signs of liquidity tensions in money markets.
And that's been enough for the Fed to think, right, we're going to stop QT.
That's the FT's US economics editor, Claire Jones.
Thanks, Claire.
Thanks, Morg.
The U.S. and South Korea have a trade deal.
Seoul will invest hundreds of billions of dollars in the US and in return, get lower tariffs on car exports.
The tariffs will drop by 10%, and that's a big deal for South Korea.
About a third of its exports to the US last year were vehicles, and the country has been subject to higher auto tariffs than its rival Japan.
Now.
In exchange, South Korea will invest 350 billion into the US, 200 billion of it in cash and the remaining 150 billion will come in the form of a shipbuilding partnership between the two countries.
The deal still needs to be ratified by South Korea's National Assembly, though.
Telecoms tycoon John Malone is stepping down as chair of Liberty Media and Liberty Global.
Malone is known as the cable cowboy, which sounds really cool, and he's credited with shaping modern broadcast infrastructure.
His departure comes at a critical time for his businesses.
Here to tell us more is the FT's Kieran Smith.
Hey, Kieran.
Hey, Mark.
So before we dive into Malone as a person, what do we know about his plans to leave?
Yeah, so the Financial Times reported yesterday that Malone was set to step down as the chair of two of the companies on January, the 1st.
The first of those is Liberty Global, which is the company behind telecoms groups such as Verge Media, O2 here in the UK.
Malone will be succeeded by the chief executive there.
And the same will happen with his Liberty Media empire, which is behind F1 and has a hefty stake in Live Nation.
So let's just say Malone may not be quite so well known, but his brands certainly are.
So Malone is seen as kind of the godfather of the telecoms industry.
Tell us more about his career and the legacy he's leaving behind.
Yeah, so John Maloney is now 84.
He was born in 1941 in Connecticut, but his career really kicked off when he founded his cable company TCI.
That company.
He grew through the 70s and 80s and ended up selling it to ATT for 48 billion in 1999.
Since then, he's diversified his interests internationally.
His Liberty Media Group counts F1 and MotoGP amongst some of its companies.
And those brands have, let's just say, skyrocketed the value of Liberty Media through the roof in recent years.
Drive to Survive the Netflix series and also the recent Apple movie F1.
On the telecom side, Malone diversified more into European telecoms.
In the UK.
He owns 50 of Virgin Media O2, one of the largest mobile and broadband providers here, but also has several companies on the continent as well.
So not only has John Malone diversified his business interests away from telecoms, he's also managed to do so across continents.
So Kieran, I've heard you describe John Malone as a businessman from a bygone era.
What do you mean by that?
Well, I think that you know.
My colleague, Dan Thomas, interviewed John in August around the release of his autobiography.
And John made a couple of comments which I just think wouldn't resonate with some business leaders today.
You know, John has several personal holdings, including Warner Brothers Discovery, where he's chairman emeritus, and also the Atlanta Braves.
It's because of his lifelong friendship with former owner Ted Turner.
And as long as Ted Turner's alive, John says, he won't be setting that stake.
I just think it's reminiscent of a businessman who potentially came from an era where friendship and collegiate respect amongst other business leaders was potentially more transparent and more important than today.
That's really interesting.
So getting back to today, Malone is leaving at a critical juncture for his businesses.
They're adapting to the changing telecoms landscape.
What's been going on there?
Yeah, I think we'll take this step by step, because on the telecom side, Malone's Liberty Global Group has had to diversify away from just holding companies within itself as private organizations, but has now started to spin them out.
They had a Swiss telecoms group that span out last year.
And they're also looking to do the same across other portfolios.
So other portfolio companies, according to their chief executive, Mike Fries.
It's a difficult time for Liberty Global.
They're undergoing a restructuring at the moment which is not only seeing them make redundancies but is also going to let them sell one of their private jets.
I guess you have to do everything you can for cost cutting.
In the Liberty Media space, it's going from strength to strength, really.
Formula One has massively grown in the US, under Liberty Media's ownership, of course, buoyed by Netflix series and Apple movies, but also the group recently acquired MotoGP which, although might not be quite as popular in the United States, the group is hoping to grow.
So it's a critical junction, not only in the telecom space, but also in the media landscape as well.
Kieran Smith is the FT's telecoms and technology correspondent.
Thanks, Kieran.
Thanks, Mark.
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