DAILY MARKET REPORTS
- U.S. stocks ticked higher Monday as expectations of further interest-rate cuts from the Federal Reserve and other central banks continued to give major indexes a boost.
- Investors remained stoked after last week’s weaker-than-expected August jobs report that the Fed will cut interest rates by at least a quarter of a percentage point next week.
- Lower interest rates tend to spur investors to buy riskier assets, such as stocks, over bonds, gold and other havens.
- The yield on 10-year U.S. Treasurys rose to 1.628% on Monday, from 1.552% on Friday.
- European government bond yields also rose across the board on expectations of a rate cut by the European Central Bank later this week.
- Data showed German exports unexpectedly rose in July, a bright spot following a string of negative data from Europe’s biggest economy, though analysts said concerns remained that U.S.-China trade tensions could affect the German economy.
- The U.K. economy also steadied in the three months through July, as its dominant services sector continued to expand, although Brexit uncertainty continued to weigh on manufacturing and construction.
- Data released at the weekend showed that Chinese imports fell for a fourth- straight month in August, as a drop-off in exports to the U.S. steepened, highlighting the impact of the two countries’ prolonged trade spat.
US FINANCIAL MARKET
U.S. states kick off antitrust probe expected to focus on Google
- Texas Attorney General Ken Paxton on Monday will detail a multi-state antitrust probe of potentially anticompetitive practices at major U.S. technology companies, which is expected to focus on Alphabet’s Google.
- Paxton’s office said on Friday that he was leading an investigation of large tech companies without naming them and promised a formal launch of the probe with a news conference in Washington, D.C., on Monday afternoon.
- That probe, likely to include more than 40 state attorneys general, is expected to focus on Google.
- A source previously told Reuters the Google investigation would look at the intersection of privacy and antitrust.
- On the federal level, the Justice Department and Federal Trade Commission are probing Facebook, Google, Apple and Amazon, also for potential violations of antitrust law.
- Another states attorney general probe announced on Friday focuses on Facebook.
Apple, Foxconn say they overly relied on temporary workers in China
- Apple and manufacturing partner Foxconn Technology on Monday rebutted allegations of lapses in people management leveled by a non-profit monitor of worker rights, though confirmed they employed too many temporary workers.
- The response comes after China Labor Watch on Monday issued a lengthy report accusing the two companies of breaching numerous Chinese labor laws, including one barring temporary staff from exceeding 10% of the total workforce.
- In a statement, Apple said it investigated the percentage of temporary workers among the overall workforce and found it “exceeded our standards”. It said it was working with Foxconn to “immediately resolve the issue”.
Activist Investor Elliott Discloses AT&T Stake, Calls for Shake-Up
- Activist investor Elliott Management disclosed a $3.2 billion stake in AT&T, criticized the company’s strategy and called on the telecommunications giant to shed unnecessary assets.
- The New York hedge fund wrote in a letter to the company released Monday that it would seek seats on the company’s board and challenged AT&T to sharpen its focus on its core assets, including its relatively healthy wireless business.
- The fund didn’t ask AT&T to sell specific divisions but said the company should review any assets that lack a strategic rationale, including the DirecTV satellite service and Mexican wireless operations.
- Elliott assailed AT&T management for alleged missteps including the purchase of DirecTV and said it remains cautious about last year’s purchase of Time Warner, a collection of TV and film businesses that was renamed WarnerMedia.
WeWork Parent Weighs Further Valuation Cut
- WeWork’s parent is eyeing a valuation for its initial public offering that could fall below $20 billion as some existing investors push the workspace company to shelve the planned offering, people familiar with the matter said.
- A valuation below the $20 billion level that people familiar with the matter last week said the company was considering would be an even steeper drop from the $47 billion mark where We last raised private capital this year.
- The startup faces skepticism among potential public investors over its governance, business model and ability to turn a profit while continuing to grow.
- Potential investors have been unnerved by co-founder and Chief Executive Adam Neumann’s sales of hundreds of millions of dollars of his stock and loans of more than $740 million tied to his shares in the company.
- Mr. Neumann also controls a majority of the voting rights of the company and recently doubled the potency of his supervoting shares.
FDA says Juul illegally promoted its e-cigarettes as less harmful than cigarettes, orders the company to correct marketing
- Juul illegally promoted its e-cigarette as less harmful than cigarettes, the Food and Drug Administration said in a warning letter addressed to the company Monday.
- The FDA reviewed testimony from the House Committee on Oversight and Reform’s Economic and Consumer Policy subcommittee’s investigation into Juul and found the company broke the law “by selling or distributing them as modified risk tobacco products without an FDA order in effect that permits such sale or distribution.”
US ECONOMY & POLITICS
U.S. home purchase sentiment edges up in August: Fannie Mae
- U.S. consumer sentiment about buying a home ticked up in August as expectations about falling mortgage rates offset reduced optimism about home price appreciation and the timing to buy and sell a home, Fannie Mae said on Monday.
- The largest U.S. home finance agency said its index on home purchase sentiment moved up 0.1 percentage point to 93.8 last month, the highest level since this measure began.
- Mortgage rates have fallen to their lowest levels since the autumn of 2016 in step with lower U.S. bond yields because of anxiety about a softening global economy and trade tensions between China and the United States.
Congress Returns from Summer Break with Lengthy Agenda
- Congress returns from an August recess on Monday evening to face a broad array of issues, with spending, trade policy, guns and an expanded border wall all potential flashpoints.
- The issues have already started to seep into the 2020 elections, stirring up partisan animosity while some negotiators would like to strike deals on trade, guns and border security.
- The primary item on the agenda is to fund the government for fiscal year 2020, which begins on Oct. 1.
- The tight deadline has House Democrats prepared to pass a stopgap spending measure that would likely keep the government funded until Nov. 22 or Dec. 6, according to a House Democratic aide.
- But the Trump administration wants to include more funding for the southern border wall in the stopgap spending bill—a move that Democrats say is unacceptable.
U.S. charges Chinese professor in latest shot at Huawei
- U.S. prosecutors have charged a Chinese professor with fraud for allegedly taking technology from a California company to benefit Huawei, in another shot at the embattled Chinese telecommunications equipment maker.
- Bo Mao was arrested in Texas on Aug. 14 and released six days later on $100,000 bond after he consented to proceed with the case in New York, according to court documents.
- According to the criminal complaint, Mao entered into an agreement with the unnamed California tech company to obtain its circuit board, claiming it was for academic research.
- The complaint, however, accuses an unidentified Chinese telecommunications conglomerate, which sources say is Huawei, of trying to steal the technology, and alleges Mao played a role in its alleged scheme.
Mnuchin strikes positive note ahead of trade talks, says US and China have a ‘conceptual’ agreement on enforcement
- Treasury Secretary Steven Mnuchin on Monday said the U.S. and China have a “conceptual” agreement on enforcement concerns, emphasizing positive progress already made in trade talks, which are set to resume at high levels in the coming weeks.
- “I think the enforcement area we at least have a conceptual, an agreement on,” Mnuchin said in an interview Monday morning on Fox Business Network.
- Yet he also had a warning: President Donald Trump has no problem keeping its heavy tariffs on Beijing in place if a deal can’t be reached.
- Talks at the “vice-minister level” will take place this month, Mnuchin said, followed by talks in Washington with Vice Premier Liu He in early October.
Hong Kong Protesters Flood Streets to Call for U.S. Support
- Pro-democracy protesters made a direct appeal to the U.S. for support in a peaceful mass rally that took marchers past the American consulate, a new strategy after three months of demonstrations have yielded few concessions from the city’s government
- Many of the protesters called on U.S. lawmakers to pass the Hong Kong Human Rights and Democracy Act, which would impose penalties on Hong Kong or Chinese officials who suppress basic freedoms in the city.
- The bill, if passed, would demand more scrutiny of Hong Kong’s status as a separate trading partner, a designation that has helped the city thrive as a finance and business hub.
EUROPE & WORLD
German exports unexpectedly rise in July
- German exports rose in July, data showed on Monday, marking an unexpectedly solid start to the third quarter for the engine room of Europe’s largest economy and suggesting it may withstand some of the impact of tariff disputes and Brexit uncertainty.
- The Federal Statistics Office said seasonally adjusted exports rose 0.7% on the month while imports fell 1.5 %.
- The trade surplus rose to 20.2 billion euros ($22.27 billion) after a downwardly revised 18.0 billion euros in the prior month.
- A Reuters poll of economists had pointed to a 0.5% drop in exports and a 0.3% fall in imports.
- The trade surplus was expected to come in at 17.5 billion euros.
China’s Trade Numbers Send More Distress Signals
- China’s imports fell for a fourth straight month in August as a drop-off in exports to the U.S. steepened, the most recent economic warning signs during a prolonged trade spat with the U.S. that has Beijing turning toward stimulus measures.
- Chinese imports of everything from raw materials to high-tech products dropped 5.6% in August compared with a year earlier, the same decline as July, the Chinese customs data showed.
- Sunday’s customs data showed a 1% decrease in exports in August from a year earlier, reversing a 3.3% gain in July.
- Economists had expected exports to rise 3% in August.
- Although China’s exports to the European Union held up, exports to the U.S. tumbled by nearly 16% last month after falling 6.5% in July from a year earlier, customs data show.
UK economy shows unexpected strength in July, dampening recession fears
- Britain’s economy picked up more than expected in July, data showed on Monday, dampening fears that it will succumb to its first recession since the financial crisis as the Brexit crisis escalates.
- Economic output in July alone was 0.3% higher than in June, the Office for National Statistics (ONS) said, marking the biggest rise since January and topping all forecasts in a Reuters poll of economists that had pointed to a 0.1% increase.
- The ONS said gross domestic product in the three months to July was flat compared with the previous three-month period.
- A Reuters poll of economists had pointed to a 0.1% contraction.
Boris Johnson Insists He Wants a Brexit Deal, Despite No-Deal Planning
- British Prime Minister Boris Johnson stuck to his pledge that the U.K. would leave the European Union on Oct. 31—even as a bill aimed at preventing the country from leaving on that date without an agreement was expected to become law.
- In his first meeting with his Irish counterpart, Leo Varadkar, since taking over in July, Mr. Johnson insisted he wanted to leave the EU with an agreement to smooth its departure from the bloc.
- But although he outlined some ideas, he didn’t give any detail about how he proposed to do it.
- Mr. Johnson traveled to Dublin just hours ahead of a vote in Britain’s Parliament that is expected to reject his call for fresh elections for a second time in a week.
China will not tolerate attempts to separate Hong Kong from China: state media
- Hong Kong is an inseparable part of China and any form of secessionism “will be crushed”, state media said on Monday, a day after demonstrators rallied at the U.S. consulate to ask for help in bringing democracy to city.
- The China Daily newspaper said Sunday’s rally in Hong Kong was proof that foreign forces were behind the protests, which began in mid-June, and warned that demonstrators should “stop trying the patience of the central government”.
- “Hong Kong is an inseparable part of China — and that is the bottom line no one should challenge, not the demonstrators, not the foreign forces playing their dirty games,” the China Daily said in an editorial.
Half-Full Hotels and Cheap Rooms: Hong Kong Tourism Suffers Worst Month Since SARS
- The number of tourists visiting the city suffered one of the biggest drops on record in August, one of the clearest indications that months of antigovernment protests are decimating parts of the local economy.
- Tourist arrivals in Hong Kong fell 40% last month from a year ago, according to city financial secretary Paul Chan, the worst decline since May 2003 when the city was grappling with the SARS virus that killed hundreds of people.
- In July, tourist arrivals had fallen 5% from a year ago.
Britain must make clear Brexit proposals to avoid no-deal – Germany
- Germany and its European partners are open to discussing with Britain how it can avoid a no-deal exit from the European Union on Oct. 31, German Foreign Minister Heiko Maas said on Monday, adding that the British government must first clarify its goal.
- “The British parliament has decided that it wants to prevent a no-deal (Brexit) and we remain ready for discussion in principle,” Maas told a news conference in Berlin.
- “We must also make an orderly exit possible, which is preferable, but for this to happen we finally need a decision and proposals from London,” he added.
Nissan’s Saikawa bows to pressure, to quit as CEO on September 16
- Nissan CEO Hiroto Saikawa will resign on Sept. 16, the automaker said on Monday, bowing to pressure after he admitted to being improperly overpaid and marking further upheaval at a company battered by scandal and plunging profit.
- Saikawa, who admitted to the overpayment last week, will be temporarily replaced by Chief Operating Officer Yasuhiro Yamauchi, Nissan’s chairman of the board, Yasushi Kimura, told a news conference.
- His resignation marks a dramatic early exit for a man who had been tasked with righting the Japanese automaker following the arrest and ouster of former chairman Carlos Ghosn late last year.
Alibaba set for ‘big challenge’ as flamboyant chairman Ma departs
- Alibaba chairman Jack Ma will step down from the Chinese firm on Tuesday, leaving his handpicked successor a daunting task of steering the $460 billion juggernaut at a time when the market for its core e-commerce business has slowed sharply.
- As Ma, who turns 55 on Tuesday, holds centerstage at his farewell party in the 80,000-capacity Hangzhou Olympic Sports Center stadium, attendees will be hoping to get clues on how Alibaba will be run under his heir Daniel Zhang.
- When Ma makes his farewell speech, investors would like to hear how he will be involved in management and whether he will continue to steer the company’s broad strategy. Ma has said that he will continue to mentor management.
British Airways Cancels Hundreds of Flights Over Pilot Strike
- British Airways canceled almost all of its flights globally scheduled for Monday and Tuesday because of strike action by the airline’s pilots over pay.
- The carrier said the move, which was flagged last month after a breakdown in lengthy negotiations between management and pilots, would result in more than 1,700 flight cancellations, affecting 195,000 customers.
- Pilots earlier this year rejected an 11.5% pay rise over three years and accuse the company of refusing to consider alternative proposals or get back together for further constructive talks.
TODAY in HISTORY
- California became the 31st state. (1850)
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