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U.S. STOCKS CLIMB AS CHINA SIGNALS A MORE STABLE YUAN

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DAILY MARKET REPORTS

  • U.S. stocks rose after China’s central bank’s set the yuan at a stronger-than-expected rate against the dollar, easing concerns that the trade spat between the two countries was about to move into an all-out currency war.
  • Also feeding into the sense of relief was an unexpected turnaround in Chinese exports, which climbed 3.3% in July from a year earlier.
  • Domestic data also pointed to a robust labor market as the number of Americans filing applications for unemployment benefits unexpectedly fell last week, allaying some worries about a recession and helping U.S. Treasury yields rise.
  • Symantec shares jumped 9.4% after sources said chipmaker Broadcom was in advanced talks to buy the cybersecurity company’s enterprise business.
  • Advanced Micro Devices gained 9.8% after the chipmaker launched its second generation of its processor chip for data centers and said that it had landed Alphabet’s Google and Twitter as customers.
  • Lyft advanced 4.3% after the ride hailing service raised its outlook for the year and forecast a faster path to profitability.
  • However, the consumer staples sector came under pressure after Kraft Heinz shares tumbled 15% as the packaged food maker pulled its full-year forecast and wrote down the value of several business units by over $1 billion.

US FINANCIAL MARKET

Lyft Raises 2019 Revenue Outlook and Sees Smaller Annual Loss

  • Lyft boosted its outlook for the year, as the company gained more riders and amid new signs that the once-raging price war with rival Uber is abating.
  • Its revenue in the second quarter rose 72% to $867.3 million, above the average analyst estimate of $809.3 million.
  • On average, Lyft received $39.77 in revenue from each of its nearly 22 million active riders in its second quarter as a public company, a 22% rise in revenue per rider and 41% increase in riders over the same period in 2018.
  • Another positive sign appeared in Lyft’s decreasing use of discounts and advertising. Sales and marketing expenses grew only 3% to $181 million, which management said was a result of using fewer discounts and becoming more efficient.
  • But its net loss widened to $644.2 million from $178.9 million a year earlier as costs more than doubled to $1.54 billion.
  • Lyft now projects 2019 revenue to be $3.47 billion to $3.5 billion, compared with a previous range of $3.275 billion to $3.3 billion.
  • Excluding expenses like interest, taxes, depreciation and amortization, the company expects a loss of $850 million to $875 million in 2019. It had previously forecast a loss of $1.15 billion and $1.175 billion.

Kraft Heinz Adds $1.2 Billion Impairment Charge as Brands Wither

  • Kraft Heinz further slashed the value of its brands and said it could add more impairment charges as the food conglomerate faces the effects of an accounting scandal and lackluster sales.
  • Kraft Heinz said its net sales fell 5% in the first half of this year compared with the first two quarters of 2018 to $12.37 billion.
  • Organic sales, which exclude currency fluctuations and the impact of deals, dropped about 2%.
  • Kraft Heinz said Thursday that it recorded $1.22 billion in impairment charges related to several of its businesses for the first six months of its fiscal year.
  • They included impairment charges worth $744 million related to businesses including its U.S. refrigerated foods unit, along with $474 million in charges connected to what it said was the “markets’ perceived risk in the company’s valuation.”
  • Kraft Heinz in February wrote down the value of its Oscar Mayer and Kraft Heinz brands by $15.4 billion, and slashed its dividend.
  • Net income for the six-month period fell to $854 million, from $1.76 billion during the comparable period last year.

Fox beats quarterly profit estimates on higher affiliate fees

  • Media company Fox reported quarterly results that beat Wall Street estimates on Wednesday, boosted by higher fees collected from cable and satellite operators and online distributors.
  • Revenue, which rose nearly 5% to $2.51 billion in the quarter, also beat Wall Street expectations of $2.47 billion.
  • Overall revenue growth in Fox’s fiscal fourth quarter was largely driven by a 7.4% increase in affiliate revenues, or the fees collected from cable and satellite operators and online distributors, to $1.41 billion.
  • Those increases were offset by a 6% decline in advertising revenues with fewer World Cup soccer matches, the company said.
  • Sales in the broadcaster’s cable network programming business rose 2.2% to $1.3 billion.
  • Net income for the quarter fell to $454 million in the quarter, from $471 million a year earlier.

Viacom’s Revenue Increases on Movie Division Growth

  • Viacom, the owner of MTV, Comedy Central and Nickelodeon, beat estimates for quarterly revenue and profit on Thursday, as it posted rare growth in domestic advertising revenue after about five years of declines.
  • Total revenue rose to $3.36 billion from $3.24 billion, beating the average estimate of $3.33 billion.
  • Revenue from the filmed entertainment division rose 14% to $877 million, above estimates of $855.7 million.
  • Revenue from its media-networks division was roughly flat at $2.5 billion in the quarter compared with a year earlier.
  • The company said domestic revenue was buoyed by strong advertising performance, especially from its marketing-solutions segment, which grew in the quarter.
  • Net income rose to $544 million in the third quarter, from $522 million a year earlier.

Albemarle shares rise on profit beat, upbeat 2019 earnings forecast

  • Albemarle, the world’s largest lithium producer, posted a better-than-expected quarterly profit on Wednesday, aided by higher sales and prices of bromine and lithium, and raised its 2019 adjusted profit forecast, sending shares up 6% in extended trading.
  • The company said total revenue rose nearly 4% to $885.1 million.
  • Sales from the company’s largest segment lithium rose 2.3% to $324.8 million in the second quarter, and sales of bromine surged 15.8% to $255.4 million during the quarter.
  • Net income fell to $154.2 million in the quarter, from $302.5 million a year earlier.
  • The company raised its full-year adjusted profit forecast to between $6.25 and $6.65 per share, from $6.10 to $6.50 expected earlier and maintained its sales forecast.

Marathon Oil profit jumps 50% on higher U.S. shale production

  • Marathon Oil reported a 50% jump in quarterly adjusted profit on Wednesday, as higher U.S. shale output countered lower realized crude prices and production costs fell.
  • U.S. production at the company jumped 11.4% to 332,000 barrels of oil equivalent per day (boepd) in the second quarter, while total production rose 3.8% to 435,000 boepd.
  • Marathon said realized per barrel of crude oil and condensate price fell 10.4% to $59.18 per barrel in the quarter.
  • The company said U.S. unit production costs dropped 14% to $4.89 per barrel of oil equivalent (boe) in the quarter.
  • Adjusted net income rose to $189 million in the quarter, from $126 million a year earlier.

IAC explores option to spin off Match, ANGI; beats quarterly revenue

  • IAC/InterActiveCorp said it was exploring the possibility of spinning off its stake in Tinder-parent Match Group and online homeservices provider ANGI Homeservices as it reported a better-than-expected quarterly revenue on Wednesday.
  • Strong sales in IAC’s dating and homeservices platforms led to a 12% rise in its second-quarter revenue to $1.19 billion, above analysts’ estimate of $1.18 billion.
  • ANGI Homeservices, formed by merging IAC’s HomeAdvisor and consumer review platform Angie’s List, reported 17% higher revenue of $343.9 million on Wednesday, but missed estimates of $352.9.
  • The digital media company owns an 80.4% economic interest in Match and an 83.3% in ANGI.
  • Net income fell to $113.5 million for the quarter, from $218.4 million a year earlier.

AIG profit beats on strong underwriting, investment income

  • Insurer American International Group beat Wall Street estimates for quarterly profit on Wednesday, boosted by improved underwriting in general insurance business and higher investment income, sending its shares up 3% in extended trading.
  • Gross premiums in the general insurance business remained steady at $8.65 billion from the year-ago period.
  • A strong performance in commercial and personal insurance in regions outside of North America helped the insurer post an underwriting profit of $147 million in its general insurance business compared with a loss of $89 million a year earlier.
  • Net income rose to $1.10 billion in the second quarter, from $937 million a year earlier.

Zillow incurs heavy losses to expand home unit; shares tumble

  • Online real estate company Zillow Group said on Wednesday it lost more money in the second quarter than it lost last year as it spent heavily to boost its home segments business, sending shares down 17% in extended trading.
  • Zillow’s revenue jumped 84% to $599.6 million, beating the average analyst estimate of $584.9 million.
  • Zillow bought 1,535 homes in the quarter, while it sold just 786. Its purchase was 71% more than the prior quarter, while its sales doubled.
  • The company, famous for Zestimates that gives the market value of a house based on their property data, said more than 69,000 homeowners requested an offer for homes from its platform in the second quarter, up 94% from the first quarter.
  • Net loss widened to $71.9 million for the second quarter, from $3.1 million a year earlier.
  • Zillow forecast its third quarter revenue to be between $694 million and $727 million, above analysts’ estimates of $665.8 million.

Salesforce to buy Israel’s ClickSoftware for $1.35 billion

  • U.S. cloud-based service provider Salesforce agreed to buy U.S.-Israeli software developer ClickSoftware for $1.35 billion in cash and shares, in a bid to accelerate growth of its cloud-based products to manage customer service operations.
  • The deal comes a week after Salesforce completed its more than $15 billion purchase of data analytics firm Tableau.
  • This is the second major deal by Salesforce in Israel since July 2018 when it paid $850 million for Datorama, a cloud-based artificial intelligence marketing platform that makes up one of Salesforces’s two research and development facilities in Israel.

Broadcom Nears Deal to Buy Symantec’s Enterprise Business

  • Broadcom is nearing a deal to buy Symantec’s enterprise business after its attempted purchase of the entire cybersecurity firm fell apart.
  • A deal for the Symantec business could be announced as early as Thursday, when Symantec reports its results, according to people familiar with the matter.
  • Broadcom had previously been in late-stage discussions to buy all of Symantec before the talks collapsed last month.
  • Since then, the two sides have restarted discussions, with Broadcom zeroing in on the Symantec business that serves businesses and accounts for roughly half its $5 billion in annual revenue.

Samsung Rolls Out Latest Galaxy Note 10 Smartphone

  • Samsung Electronics unveiled its latest flagship smartphone Wednesday, hoping extra variety with the new Galaxy Note 10 device attracts consumers who aren’t so likely anymore to want the same new thing.
  • For the first time, the South Korean technology giant chose to offer two sizes of the phone, with screens measuring diagonally at 6.3 inches and 6.8 inches respectively.
  • Samsung said the base model of the Galaxy Note 10, with 256 gigabytes of memory, would be priced at $949 in the U.S.—a $50 reduction from the prior year.
  • The larger Galaxy Note 10+ starts at $1,099, with a 5G version available initially through Samsung’s website and Verizon.

Facebook Tests Selling Video Subscriptions in Watch

  • Facebook said it would start testing the sale of subscriptions to video services that can be viewed inside its Watch video hub.
  • The test will include Dropout, a fledgling, advertisement-free service from IAC/InterActiveCorp ’s CollegeHumor; Discovery Communications’ MotorTrend on Demand; BritBox, owned by BBC Studios and ITV; and Tastemade Plus.
  • For $4.99 a month, for example, Dropout subscribers will get access to the service’s library of original content through Facebook, as well as the ability to participate in virtual watch parties where they can talk with other viewers.

AMD lands Google, Twitter as customers with newest server chip

  • Advanced Micro Devices on Wednesday released the second generation of its processor chip for data centers and said that it had landed Google and Twitter as customers.
  • AMD’s newest generation of server chip, called EPYC, uses a new chip-making technology from its contract manufacturers that helps the chips have better performance while consuming less power.
  • AMD said on Thursday that Google is using its second-generation EPYC server chip in Google’s internal data centers and that Google will offer it to external developers as part of its cloud computing offerings later this year.
  • Intel, which said that both Google and Twitter remain customers, is the dominant supplier of data center chips, with more than 90% of the market under its control.

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US ECONOMY & POLITICS

U.S. weekly jobless claims fall; labor market strong

  • The number of Americans filing applications for unemployment benefits unexpectedly fell last week, suggesting the labor market remains strong even as the economy is slowing.
  • Initial claims for state unemployment benefits declined 8,000 to a seasonally adjusted 209,000 for the week ended Aug. 3.
  • Economists had forecast claims would be unchanged at 215,000 in the latest week.
  • Data for the prior week was revised to show 2,000 more applications received than previously reported.
  • Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid dropped 15,000 to 1.68 million for the week ended July 27.

Economists Upgrade U.S.-China Trade Conflict to ‘War’

  • A year ago, the economists in a monthly survey by The Wall Street Journal were evenly split over whether to describe the situation in those terms.
  • Of the 48 respondents, 24 said the U.S. was in a “trade war,” while the other 24 said they preferred other terms, such as “trade skirmish,” “trade tensions,” “trade battle” or “trade dispute.”
  • But in the latest survey, conducted Aug. 2-6, 87% of respondents were good to go with “trade war.”

Economists See Greater Chance of September Rate Cut, WSJ Survey Says

  • Economists’ expectations for a September Federal Reserve rate cut rose sharply this month, along with their expectations for a recession in the next year.
  • Private-sector economic forecasters surveyed in recent days by The Wall Street Journal on average saw a 63.9% probability for a rate cut at the Fed’s Sept. 17-18 meeting, up from 49.8% in the prior month’s survey.
  • Economists on average expect the federal-funds rate will be 1.84% by the end of this year, which implies another quarter-percentage-point cut from the current range of 2% to 2.25%.
  • Economists’ expectations for a recession rose. On average, they saw a 33.6% probability of a recession in the 12 months, up from 30.1% in July and the highest level in The Wall Street Journal survey going back to 2011.
  • The average probability was just 18.3% a year ago.

Banks Hand Over Documents on Russians Possibly Linked to Trump

  • Major Wall Street banks have given congressional committees investigating President Trump thousands of pages of documents related to Russians who may have had dealings with Mr. Trump, his family or his business, people familiar with the congressional probes said.
  • Wall Street firms including Bank of America, Citigroup, Deutsche Bank, JPMorgan, Morgan Stanley and Wells Fargo have recently provided thousands of financial documents related to Russians who may have had dealings with Mr. Trump or his family or his business to congressional investigators.
  • Separately, Deutsche Bank, Mr. Trump’s primary bank, has turned over emails, loan agreements and other documents related to the Trump Organization to the office of New York Attorney General Letitia James, in response to a civil subpoena sent earlier this year.
  • Mr. Trump has filed several lawsuits seeking to block lawmakers and states from getting access to his bank, accounting and tax records.

White House to Move Forward With Ban on U.S. Government Business With Huawei

  • The White House is expected to start implementing provisions of a law that bars the U.S. government from doing business with Huawei Technologies Co., moving ahead despite the Chinese telecommunications giant’s efforts to block the rule in court.
  • The Office of Management and Budget issued an interim rule this week laying out steps to ensure U.S. government agencies aren’t doing business with Huawei and several other Chinese companies.
  • The rule, posted Wednesday on a General Services Administration website, is set to go into effect Aug. 13.
  • The administration then has another year to comply with a separate, more restrictive provision that would bar the government from contracting with any company that uses products or services from Huawei or the other banned companies, a senior administration official said.

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EUROPE & WORLD

China Exports Stage Surprising Turnaround in the Face of U.S. Trade Battle

  • Chinese exports rebounded in July thanks to increased shipments to Europe and Southeast Asia, but economists expect the turnaround to be short-lived as Beijing and Washington escalate their trade battle.
  • China’s exports rose 3.3% from a year earlier last month, reversing a 1.3% decline in June, data from the General Administration of Customs showed.
  • A Wall Street Journal poll of 13 economists had forecast a drop of 2%.
  • Exports to the Association of Southeast Asian Nations bloc and EU rose 15.6% and 6.5%, respectively, from a year earlier in July, according to official data.

Adidas promises revival after sluggish quarter

  • Adidas said supply shortages for North America will be fixed by the end of the year and the European market should return to growth after the German sportswear company reported weaker-than-expected second-quarter sales and profits.
  • Second-quarter sales rose a currency-adjusted 4% to 5.51 billion euros ($6.18 billion), shy of average analyst forecasts for 5.54 billion as the company saw a strong decline in the soccer category a year on from the World Cup.
  • Operating profit rose 9% to 643 million euros, also lagging average analyst forecasts for 651 million.

Japan’s Rakuten swings to quarterly loss on Lyft, mobile service

  • Japan’s Rakuten reported an unexpected quarterly loss on Thursday, hit by the depressed value of its investment in ride-hailing firm Lyft and heavy spending on a new wireless service.
  • The company said it booked a 1.8 billion yen ($17 million) operating loss in the April-June quarter compared with a 61.6 billion yen profit in the same period a year earlier and below the expected 5.2 billion yen profit.
  • Rakuten recorded a 28.4 billion yen unrealized loss on its stake in the ride-hailing firm for April-June, as it had warned in July. It recorded a 110 billion yen gain in the previous quarter.
  • Rakuten cited an operating loss in its mobile services business, as it steps up investment in a new wireless service that is due to launch in October. The move will make it Japan’s No.4 mobile carrier.

Toshiba Memory posts first-quarter loss on plant suspension, chip downturn

  • Japan’s Toshiba Memory, the world’s No.2 producer of NAND flash memory chips, on Thursday reported a bigger loss for the first quarter versus the previous three months, hit by a downturn in the chip market and a temporary plant suspension.
  • The unlisted company, which was spun off by Toshiba last year, posted an operating loss of 98.9 billion yen ($931.96 million) for the first quarter. That compared to a 28.4 billion loss for the January-March quarter.
  • A one-month output halt at its plant in central Japan, due to a power outage in mid-June, had a negative impact of 34.4 billion yen, the company said, adding that its earnings will continue to be affected in the current quarter.

Honda to recall 222,674 Accord vehicles in China

  • Honda’s venture with Guangzhou Automobile Group will recall 222,674 Accord sedans in China, market regulators said on Thursday, after recent complaints on social media about the car engine’s quality.
  • The recall is linked to a problem caused by the intercooler of the car’s 1.5T turbocharged engine.
  • Honda recalled hundreds of thousands of vehicles including popular Civic and CR-V last year, due to a cold-climate engine problem.

Hong Kong Police Draw Protester Rage, but Beijing Doesn’t Think They’re Tough Enough

  • With Hong Kong’s summer of unrest escalating, its police are in a bind.
  • The local population increasingly accuses them of inflaming protester rage by using excessive force, while mainland Chinese authorities are exhorting them to get tougher to resolve the crisis.
  • Hong Kong’s police said they have made nearly 600 arrests and fired more than 1,800 rounds of tear gas and at least 160 rubber bullets since the protests began in June.
  • Antipolice anger surged last month after dozens of men with sticks burst into a subway station and injured some 45 people, including a pregnant woman. Police arrived around a half-hour after the first emergency calls.

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TODAY in HISTORY

  • Sharon Tate, wife of director Roman Polanski, and four others were murdered by members of Charles Manson’s “family.” (1969)

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