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U.S. STOCKS STEADY AS OIL PRICES RISE

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U.S. STOCKS STEADY AS OIL PRICES RISE

  • Stocks edged higher Wednesday, lifted by rising oil prices and a stabilization in bank shares in Europe.
  • U.S. factories posted flat orders of big-ticket goods in August.
  • In corporate news, shares of Nike fell 1.2% after the sportswear maker signaled slowing future demand for its sneakers and apparel.
  • Wells Fargo rose 0.72%, following its statement that CEO John Stumpf would forfeit unvested equity awards worth about $41 million and will not get a salary while the board investigates its sales practices.

US FINANCIAL MARKET

OPEC Ministers Reach for Compromise on Oil Output

  • Iran probably won’t budge until it reaches full output, but that could happen by November’s full meeting.
  • Iran would be willing to consider capping its output at 4 million barrels a day—up from 3.6 million a day now.
  • Saudi Arabia supports a plan that would cut almost 1 million barrels a day of oil from the market over the next year.

Nike Revenue and Profit Rise

  • Still, growth slowed in the company’s so-called futures orders.
  • Nike’s revenue was $9.06 billion as North American sales grew 6.1% to $4.03 billion.
  • Overall, Nike reported a profit of $1.25 billion, up from $1.18 billion a year earlier.

Wells Fargo Claws Back Millions from CEO after Scandal

  • CEO John Stumpf to forfeit $41 million in unvested equity awards, forgo salary during investigation; former retail banking head Carrie Tolstedt to forfeit $19 million in unvested equity awards.

Wells Fargo Isn’t the Only Bank That Draws Cross-Selling Complaints

  • While customer complaints don’t equal illegal conduct, the complaint database run by the Consumer Financial Protection Bureau shows that Wells Fargo hasn’t been much of an outlier when it comes to complaints associated with cross-selling and other sales abuses.
  • The analysis of the database by S&P Global Market Intelligence shows that the CFPB received 1,576 complaints about Wells Fargo’s account management.
  • Other banks had similar levels of complaints. Citigroup customers’ 1,722 account-management issues during the nearly 21-month period represented 1.8 complaints for each $1 billion of deposits at the bank.
  • Bank of America customers had 1.7 complaints, using the same metric, while customers of J.P. Morgan Chase had 1.1.

Nationwide to Acquire Annuities Company Jefferson National

  • Nationwide Mutual is acquiring an annuities company that specializes in fee-based products.
  • It is buying Jefferson National Insurance, an issuer of annuities that are marketed to financial advisers who prefer fee-based compensation arrangements with their clients, rather than sales commissions.
  • The companies, which aren’t disclosing the terms of the deal, said they expect to complete the transaction early next year.

Elon Musk Outlines Plans for Missions to Mars

  • Entrepreneur seeks public-private partnership to send humans to Mars in 10 years.
  • Musk envisions hosts of giant, reusable rockets standing more than 300 feet tall eventually launching fleets of carbon-fiber spacecraft into orbit.
  • The boosters would return to Earth, blast off again into the heavens with “tanker” spaceships capable of refueling the initial vehicles, and then send those serviced spacecraft on their way to the Red Planet.
  • The rockets would be twice as powerful as the Saturn 5 boosters that sent U.S. astronauts to the Moon.
  • Each fully developed spacecraft likely would carry between 100 and 200 passengers, Mr. Musk said.

Cord-Cutting Could Cost Pay TV Industry $1 Billion in a Year, Study Says

  • Pay-TV providers could lose nearly $1 billion in revenue as 800,000 customers cut the cord over the next 12 months, according to a new study from the firm cg42.
  • TV providers lose about $1,248 per cord-cutter annually. That’s because the average cord-cutter saves $104 a month—about 56% of their bill–from dropping cable TV.
  • A “cord-haver” spends about $187 a month on average prior to cutting the cord, including cable TV, phone, internet access and streaming services.
  • Meanwhile, a typical “cord-never” — someone who never had a pay-TV connection — spends about $71 on streaming services and home internet combined, and the average cord-cutter spends $83.

BlackBerry Outsourcing Handset Business

  • BlackBerry said it would outsource the making of handsets—the business that once allowed it to dominate the consumer smartphone market—and instead turn its full focus to developing secure software and services to drive growth.

Wal-Mart in Talks to Invest in Indian Startup Flipkart

  • Deal would help Flipkart battle Amazon while giving Wal-Mart inroads into the South Asian nation.
  • Earlier this month, Wal-Mart completed its acquisition of U.S. online discounter Jet.com for $3.3 billion, the largest-ever purchase of an e-commerce startup.
  • Wal-Mart’s e-commerce sales hit nearly $14 billion, or 3% of its $482 billion in annual revenue last year, but quarterly e-commerce growth has slowed in recent years.
  • Amazon’s revenue was $107 billion last year, including its web-services business, its growth far outpacing that of Wal-Mart.

Amazon’s Newest Ambition: Competing Directly with UPS and FedEx

  • Shipping costs as a percentage of sales have risen every year since 2009.
  • Last year, Amazon spent $11.5 billion on shipping, or 10.8% of sales, compared with 7.5% in 2010.
  • Total revenue for the year was $107 billion.
  • The company could save $1.1 billion annually if it stopped using UPS and FedEx, according to Citigroup.
  • The average cost to ship a package via UPS or FedEx is $7.81, they estimate.
  • Tackling the delivery business, Amazon executives publicly say, is a logical way to add delivery capacity—particularly during the peak Christmas season.
  • But interviews with nearly two dozen current and former Amazon managers and business partners indicate the retailer has grander ambitions than it has publicly acknowledged.

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Uber to move freight, target trucking for the long haul

  • Uber is plotting its entry into the long-haul trucking business, aiming to establish itself as a freight hauler and a technology partner for the industry.
  • Otto plans to expand its fleet of trucks from six to about 15 and is forging partnerships with independent truckers.
  • Starting next year, Otto-branded trucks and others equipped with Otto technology will begin hauling freight bound for warehouses and stores.

Cisco plans $4 billion worth of expansion in Mexico

  • The move will happen between 2016 and 2018.
  • Cisco’s Chief Executive Officer Chuck Robbins made the announcement during a meeting with Mexican President Enrique Pena Nieto
  • The expansion would boost output in Mexico of products ranging from routers, servers, switches and wireless access points, as well as spur the creation of 270 jobs and 77 indirect jobs.

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US ECONOMY & POLITICS

CMO Today: Debate Breaks TV Viewership Record

  • As expected, Monday’s matchup between Hillary Clinton and Donald Trump generated the highest ratings of any presidential debate in history, CMO Today reports.
  • The 84 million viewers that tuned in beat the prior record of 80.6 million that watched Jimmy Carter and Ronald Reagan spar in 1980.
  • The numbers also easily beat the 67.2 million that watched Barack Obama and Mitt Romney square off in the first debate four years ago.

Orders for U.S. Durable Goods Were Little Changed in August

  • Excluding transportation, orders slipped 0.4 percent and inventories fell, down 0.1 percent.
  • Readings on core capital goods (nondefense excluding aircraft) are mixed with orders up 0.6 percent, which points to shipment strength ahead.

EIA Petroleum Status

  • Crude oil inventories decreased 1.9 million barrels compared to the decrease of 6.2 million barrels prior.
  • Gasoline increased 2.0 million barrels compared to the decrease of 3.2 million barrels prior.
  • Distillates decreased 1.9 million barrels compared to the increase of 2.2 million barrels prior.

Yellen Calls for Regulatory Relief for Small Banks

  • Federal Reserve Chairwoman Janet Yellen said Wednesday regulators need to do more to alleviate the regulatory burden on small lenders, a signal the central bank may soon propose easing rules for community banks.
  • Ms. Yellen, in her testimony, mentioned a number of tweaks to community-bank rules that have been proposed or are under consideration, including changes to capital rules—a priority for small lenders.

IMF chief sees lower U.S. growth, calls trade barriers ‘malpractice’

  • Director Christine Lagarde said on Wednesday the institution would lower its 2016 U.S. growth forecast again and called policies that restrict trade “economic malpractice” that would choke off growth.

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EUROPE & WORLD

U.K. Faces Reckoning Over RBS Bailout

  • In the weeks after Brexit, U.K. Treasury officials began to reassess the value of the nation’s 73% stake in Royal Bank of Scotland.
  • The market’s answer: substantially less than before.
  • RBS was saved with £45.5 billion ($59 billion) of taxpayer money in one of Europe’s biggest bank bailouts.
  • The British government plans to sell £25 billion of RBS shares in the next four years.

Deutsche Bank Puts Germany in a Bailout Bind

  • Deutsche Bank’s shares ended Tuesday unchanged at €10.55 ($11.82), after a 7.5% drop on Monday to their lowest price in decades.
  • Chancellor Angela Merkel has sought to keep a low profile on the bank’s woes.
  • On Tuesday, she said that “Deutsche Bank is one part of the German banking and financial sector, and of course we wish all companies, even when they are experiencing temporary difficulties, to perform well.”

SABMiller, AB InBev Shareholders Approve $100 Billion-Plus Merger

  • Anheuser-Busch InBev on Wednesday won approval for its $100 billion takeover of rival SABMiller, ushering in a new world order for the beer industry.
  • Deal turns AB InBev into a brewing powerhouse with an estimated 46% of global beer profits and 27% of global volume.

China economy seen growing 6.6 percent in fourth quarter

  • “Economic growth in the fourth quarter is likely to fall slightly but within a normal and stable range,” the newspaper quoted Wang Hongju, a senior researcher at CASS.
  • The consumer price index (CPI) was seen likely to rise 2.1 percent for the fourth quarter and about 2 percent for the full year.

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TODAY in HISTORY

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Portuguese explorer Juan Rodríguez Cabrillo arrived at present-day San Diego (1542)

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Two U.S. Army planes landed in Seattle after completing the first round-the-world-flight in 175 days (1924)

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Japan and Communist China agreed to re-establish diplomatic relations (1972)

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This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, Wall Street Journal.

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