DAILY MARKET REPORTS
- U.S. stocks surged almost 2% on Tuesday as the Trump administration said it would delay 10% tariffs on some Chinese products, including laptops and cell phones, driving a 5% surge in shares in iPhone maker Apple.
- The Office of the U.S. Trade Representative said tariffs would also be delayed until Dec. 15 on “computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.”
- Wall Street’s main indexes had initially opened lower, adding to a global slide in stocks due to geopolitical concerns, with a Labor Department report also showing the core consumer price index rose 2.2% in the 12 months through July.
- For some analysts, that data spoke against the U.S. Federal Reserve delivering another swift cut in interest rates.
- Financial markets have fully priced in a rate cut at the U.S. central bank’s September meeting following a recent escalation in the bruising trade war between the United States and China.
- Elsewhere, the selloff in Hong Kong stocks accelerated, with the Hang Seng Index falling 2.1% amid continued unrest.
- This week’s selloff in Hong Kong stocks meant the Hang Seng Index—which has lost 11% since the beginning of July, when the protests turned more violent—has joined Korea’s Kospi as the second major global benchmark in negative territory this year.
US FINANCIAL MARKET
CBS, Viacom reach agreement in principle: sources
- CBS and Viacom have reached an agreement in principle, sources familiar with the matter told Reuters on Tuesday, taking one step closer to reuniting media mogul Sumner Redstone’s U.S. entertainment empire after 13 years apart.
- Viacom shareholders will receive 0.59625 CBS shares for each share they own, representing a slight premium to Viacom’s closing price on Monday.
- Viacom Chief Executive Bob Bakish is expected to be named the CEO of the combined company.
- Joe Ianniello, interim CEO of CBS, is expected to be named Chairman and CEO of CBS Networks, which will exclude the Showtime cable network and book publisher Simon & Schuster, a source familiar with the matter said on Monday.
Falling Bond Yields Make Equities Hard to Ignore
- A plunge in bond yields has left investors with few alternatives to stocks.
- Nearly 60% of stocks in the S&P 500 offer a dividend yield of at least 1.7%, according to FactSet, better than the 1.640% yield where 10-year U.S. Treasurys settled Monday.
- The percentage of outperformers is among the highest of the more-than-a-decade-old bull mark.
- On average, about 17% of S&P 500 stocks have carried dividend yields exceeding those of 10-year Treasurys since 1990.
Amazon in talks to buy up to 10% stake in India’s Future Retail
- Amazon.com is in late-stage talks to buy as much as 10% of India’s Future Retail, Bloomberg reported on Tuesday.
- The retail group currently operates more than 900 stores in India and owns nine supermarket brands, including Big Bazaar.
- The move comes as Amazon is looking to expand its reach in the Indian brick-and-mortar market, about a year after retailer Walmart bought a majority stake in Indian e-commerce firm Flipkart.
- The world’s largest online retailer has been slowly building up stake in brick and mortar stores in India.
- Deloitte expects India’s fast-growing e-commerce market to more than treble to $84 billion between 2017 and 2021.
Google’s jobs search draws antitrust complaints from rivals
- Google’s fast-growing tool for searching job listings has been a boon for employers and job boards starving for candidates, but several rival job-finding services contend anti-competitive behavior has fueled its rise and cost them users and profits.
- In a letter to be sent to European Union competition commissioner Margrethe Vestager on Tuesday and seen by Reuters, 23 job search websites in Europe called on her to temporarily order Google to stop playing unfairly while she investigates.
- Similar to worldwide leader Indeed and other search services familiar to job seekers, Google’s tool links to postings aggregated from many employers. It lets candidates filter, save and get alerts about openings, though they must go elsewhere to apply.
- Some rivals allege that positioning is illegal because Google is using its dominance to attract users to its specialized search offering without the traditional marketing investments they have to make.
Verizon to Sell Tumblr to WordPress.com Owner
- Verizon Communications has agreed to sell its blogging website Tumblr to the owner of popular online-publishing tool WordPress.com, unloading for a nominal amount a site that once fetched a purchase price of more than $1 billion.
- Verizon became Tumblr’s owner through the carrier’s 2017 acquisition of Yahoo as part of a bid to build a digital media and advertising business.
- It discussed a potential transaction with a handful of parties, and the sale price isn’t material to Verizon.
GM, Volkswagen Say Goodbye to Hybrid Vehicles
- Auto makers for two decades have leaned on hybrid vehicles to help them comply with regulations on fuel consumption and give customers greener options in the showroom.
- Now, two of the world’s largest car manufacturers say they see no future for hybrids in their U.S. lineups.
- GM plans to launch 20 fully electric vehicles world-wide in the next four years, including plug-in models in the U.S. for the Chevy and Cadillac brands.
- Volkswagen has committed billions to producing more battery-powered models, including introducing a small plug-in SUV in the U.S. next year and an electric version of its minibus around 2022.
- GM’s view contrasts with other auto-making giants, including Toyota and Ford, which are working on full electrics but also expanding their U.S. hybrid offerings.
Cashierless Stores Make Inroads in U.S.
- U.S. retailers large and small are pressing ahead with testing the use of artificial intelligence to track what products shoppers pick up and to automatically bill their accounts when they walk out the door, eliminating the need for checkout lines.
- The concept got a push from Amazon Go stores, which Amazon.com Inc. launched in early 2018; there are now 15 stores, with two opening last week, in New York and San Francisco.
- A global survey of about 400 retailers conducted in June by research and advisory firm International Data found that 28% are testing or piloting cashierless systems, said Leslie Hand, vice president of IDC’s Retail Insights division.
Snap, in augmented reality push, launches new Spectacles
- Snap said it will launch a new version of its Spectacles sunglasses, which will have the capability of capturing photos and videos and uploading them directly to Snapchat, as the technology company works to develop its augmented reality features.
- Snap has struggled to make money from its Spectacles business, and wrote down $40 million in unsold glasses in 2017.
- Spectacles 3, which will begin shipping in the fall, will cost $380, almost twice the previous version at $200 apiece.
- It will have dual cameras to add depth and dimension to photos and videos.
US ECONOMY & POLITICS
U.S. Will Delay Some Tariffs Against China
- The Trump administration will delay tariffs on cellphones, laptop computers, toys and some other items until Dec. 15, softening the blow of levies that were scheduled to take effect on Sept. 1 against roughly $300 billion of imports from China.
- The USTR said it would release precise details of the delayed tariffs later Tuesday, but the items that will be delayed are some of the biggest ticket items facing tariffs.
- Cellphones alone represent more than $40 billion of trade.
- The USTR didn’t provide a reason beyond saying the decision was “part of USTR’s public comment and hearing process.”
U.S. Inflation Picks Up in July as Core Prices Strengthen
- U.S. consumer prices rose at a robust pace in July on the back of higher prices for energy and most other goods and services, a possible sign that inflation is finding its footing after a weak start to the year.
- The consumer-price index (CPI), which measures what Americans pay for goods and services ranging from mutton chops to motel rooms, rose a seasonally adjusted 0.3% last month from June and 1.8% from July 2018.
- Economists had expected prices to rise 0.3% on the month.
- The so-called core consumer-price index, which excludes volatile food and energy categories, was up 0.3% in July from June and 2.2% from a year earlier. The monthly increase exceeded economists’ forecast for a 0.2% gain.
- Adjusted for inflation, average hourly earnings for all private-sector, nonfarm workers slipped 0.1% in July from June.
U.S. Budget Gap Widens 27% in First 10 Months of Fiscal Year
- The U.S. budget gap widened further in July as federal spending outpaced revenue collection, bringing the deficit to $867 billion so far this fiscal year, a 27% increase from the same period a year earlier.
- The Treasury Department said Monday federal receipts rose 3% from October through July, totaling $2.9 trillion, while outlays climbed 8%, to $3.7 trillion.
- Over the 12 months that ended in July, the deficit totaled $961.8 billion, or 4.5% as a share of gross domestic product.
- Revenues over the previous 12 months rose 2.4%, while federal spending was up 6.3%.
- Revenue from tariffs, or customs duties, also increased 75% through July, a significant boost from the same period a year earlier but just 2% of total receipts collected during that time.
Americans’ View of China Worsens as Trade Conflict Persists
- Negative attitudes toward China are hardening among Americans, who increasingly see Beijing as an economic and military adversary, according to new research that shows opinions souring as the trade war between the two countries intensifies.
- Sixty percent of Americans hold negative views of China—a record high—compared with 47% in 2018, a Pew Research Center poll conducted in the spring shows.
- China now matches Russia as the most frequently mentioned potential threat to the U.S., the research organization said.
- Seven in 10 Republican-leaning respondents were critical of China, up from about half last year, but this group is also more likely to say economic ties are fine, Pew said. It noted that 59% of Democratic Party supporters were negative about China.
President Trump asked Japan PM to buy farm products: Kyodo
- U.S. President Donald Trump has directly asked Japanese Prime Minister Shinzo Abe to buy farm products worth a ‘huge amount’, Kyodo news agency reported on Tuesday, citing unidentified Japanese and U.S. government sources.
- Japan and the United States have agreed to target a broad deal on bilateral trade by September, seeking to bridge differences of opinion over tariffs on beef and the automobile sector, the Nikkei business daily reported earlier this month.
- Trump had requested that Japan buy specific products such as soybeans and wheat, Kyodo reported, adding that the request was separate from the framework of current trade talks between Washington and Tokyo.
- Kyodo said the Japanese government would consider its response and one proposal floated was to purchase the farm products as food support for African countries.
EUROPE & WORLD
Foxconn Profit Fell 2.5% in Second Quarter
- Foxconn’s net profit fell 2.5% in the second quarter, as its biggest customer, Apple, continues to struggle with weak iPhone sales.
- Its revenue for the quarter rose 7.4% to NT$1.16 trillion from the previous year’s NT$1.08 trillion.
- Taiwan-based Foxconn said Tuesday that its net profit in the April-to-June quarter was 17.05 billion New Taiwan Dollars (US$541.5 million), higher than the NT$15.97 billion average estimate.
- The company reported a net profit of NT$17.49 billion in the year-earlier period.
Chinese online retailer JD.com beats estimates on strong sales
- China’s JD.com reported better than expected second-quarter revenue on Tuesday, boosted by stronger sales in its online retail business, sending its shares 5% higher in pre-market trading.
- Revenue rose 23% to 150.28 billion yuan ($21.28 billion), ahead of estimated revenue of 147.49 billion yuan.
- Sales from its product business, which includes online retail sales, rose about 21% to 133.52 billion yuan.
- Net income reached 618.8 million yuan ($90.1 million), up from a net loss of 212.4 million the year prior.
- For the third quarter, JD expects revenue between 126 billion yuan and 130 billion yuan, the mid-point of which was above analysts’ estimates of 126.21 billion yuan.
China’s Tencent Music revenue misses estimates, share fall 4%
- China’s Tencent Music Entertainment Group on Monday missed quarterly revenue estimates as it reported the slowest increase in a widely-watched metric for growth since its debut, sending the shares of media streaming company down 4%.
- Overall revenue rose to 5.90 billion yuan ($835.95 million) from 4.50 billion yuan a year earlier, but missed estimates of 5.95 billion yuan.
- Monthly average revenue per user from its social entertainment services rose 16.5% to 130.2 yuan ($18.45), the slowest growth since it went public in December last year.
- The company, controlled by Chinese tech giant Tencent, reported net income of 928 million yuan for the quarter compared with 903 million yuan a year earlier.
Hong Kong Protesters Overwhelm Airport for Second Day
- Protesters swamped Hong Kong International Airport for a second straight day Tuesday, blocking the gates to the security and immigration areas, and snarling the busy transit hub.
- Demonstrators stationed themselves in front off the doors leading to security checks and departure gates and used luggage carts to barricade their positions. Many wore masks to hide their faces.
- An overwhelming turnout a day earlier forced the airport to halt all outbound flights. The airport was still contending with those cancellations Tuesday, with hundreds of morning and afternoon flights taken off the board and dozens of others delayed.
China media says Hong Kong protesters are ‘asking for self-destruction’ as military assembles nearby
- Chinese propaganda outlets warned on Tuesday that protesters in Hong Kong are “asking for self-destruction,” as they released a video showing military vehicles amassing near the border of the city.
- On Monday afternoon, Chinese state-owned English tabloid the Global Times tweeted a video showing the People’s Armed Police assembling in Shenzhen, a city bordering Hong Kong, about a 1.5 hour- drive away.
- In a Tuesday social media post from the Global Times‘ Chinese edition, the outlet said “if Hong Kong rioters cannot read the signal of having armed police gathering in Shenzhen, then they are asking for self-destruction,” according to a CNBC translation.
Western Companies in Hong Kong Activate Contingency Plans as Turmoil Spreads
- Western companies with large operations in Hong Kong are activating plans for employees to work remotely, and considering how to respond to a variety of possible scenarios, as protests and police actions in the city become more widespread and unpredictable.
- The situation has led many companies to hold employee briefings and circulate memos advising staffers on what to do if they find themselves in danger or can’t travel to work.
- Despite business disruptions and a growing economic hit to Hong Kong, most companies contacted by the Journal said it is largely business as usual and they aren’t making plans to move personnel, significant assets or certain job functions out of the city because of the protests.
South Korea Kicks Japan Off List of Favored Trading Partners
- Seoul said Monday it would remove Japan from a list of countries that qualify for accelerated imports of South Korean products, a move South Korea had signaled earlier this month when Tokyo enacted a similar measure against it.
- Starting in early September, importing certain South Korean goods will require a process taking up to 15 days versus the current window of five days, Seoul’s Ministry of Trade, Industry and Energy said.
- The trade spat threatens to create delays all along the world’s tech-supply chain. Japan and South Korea play central roles in the manufacturing of electronics products from Apple’s iPhones to Amazon’s data servers.
TODAY in HISTORY
- The border between East and West Berlin was closed and marked with a barbed wire fence. (1961)
- S. swimmer Michael Phelps won his 11th career gold medal, becoming the first athlete in Olympic history to do so. (2008)
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