DAILY MARKET REPORTS
- U.S. stocks fell, following the path of shares overseas, as the latest payroll figures further stoked concerns about the economy.
- The ADP National Employment Report on Wednesday beat muted expectations—the private sector added 135,000 jobs in September, above expectations.
- But the firm cut its August estimate by nearly 40,000, and the three-month average of 145,000 is down from 214,000 a year ago.
- Germany’s leading economics research institutes jointly lowered their growth forecasts for Europe’s largest economy.
- They cited slowing global demand for capital goods, structural changes in the auto sector—one of Germany’s most important industries—and political uncertainty.
- The market odds of a Fed rate cut in October rose to 72% Wednesday morning, up from 53% a week ago, according to data from CME’s FedWatch tracker.
- Prime Minister Boris Johnson presented his latest Brexit proposal and warned he is still prepared to take the U.K. out of the EU at the end of October without a deal.
US FINANCIAL MARKET
U.S. Can Levy Tariffs on EU Exports Over Airbus, WTO Says
- The U.S. is entitled to levy tariffs on $7.5 billion of exports from the European Union over the bloc’s subsidies to Airbus, the World Trade Organization said, potentially opening up a new front in the Trump administration’s global trade fight.
- The WTO will rule on a separate EU case against U.S. subsidies to Boeing, also previously deemed illegal, in the first half of next year, determining the value of U.S. exports the EU will be permitted to hit with tariffs.
- EU officials in Brussels have proposed negotiating a settlement to avoid tit-for-tat tariffs, but U.S. officials say Europe must first comply with WTO rulings.
- Washington has prepared a list of European goods valued at $21 billion from which it can select for tariffs.
- Brussels has a $20 billion list of U.S. exports to target.
- President Trump is poised to decide by Nov. 13 whether to levy tariffs on EU cars and auto parts, raising the threat of a rapid escalation of trans-Atlantic duties on goods worth some $100 billion.
Lennar profit boosted by higher demand for cheaper homes
- Homebuilder Lennar’s quarterly profit beat expectations on Wednesday, as cheaper consumer borrowing rates and a focus on low-priced houses helped offset slowing growth in California, one of its largest markets.
- Revenue rose 3.3% to $5.86 billion. Analysts on average had expected Lennar to earn $1.32 per share on revenue of $5.48 billion.
- Overall, home sales rose 7%, while average selling price fell 5% largely due to incentives and higher sales of low priced homes.
- Net income rose 13.3% to $513.4 million in the quarter.
Weak oil prices hit Exxon’s third-quarter earnings: filing
- Exxon Mobil’s operating profits fell last quarter for the fourth consecutive period, according to a regulatory filing on Tuesday that showed all three of its major businesses slumping from a year ago.
- Lower oil prices, weaker results in its chemical business and the lack of a tax benefit from the year-ago period combined to cut earnings to about $4 billion for the third quarter, according to a securities filing.
- Earnings in the company’s oil and gas production unit are expected to fall about 45% from last year’s $4.23 billion in operating profit, Exxon’s data showed.
- Exxon this year began disclosing quarterly comparisons just after the period ended to deliver more timely information on its businesses to investors. Official results are due Oct. 31.
Ford U.S. sales fall 5% in the third quarter
- Ford Motor reported a 5% fall in U.S. auto sales for the third quarter, hurt by declining sales of its passenger cars including the Taurus sedan and Mustang sports car, as well as its Explorer sport utility vehicle.
- The No. 2 U.S. automaker said it sold 580,251 vehicles last quarter, compared with 609,934 automobiles, a year earlier.
Visa, Mastercard, Others Reconsider Involvement in Facebook’s Libra Network
- Cracks are forming in the coalition Facebook assembled to build a global cryptocurrency-based payments network.
- Visa, Mastercard and other financial partners that signed on to help build and maintain the Libra payments network are reconsidering their involvement following a backlash from U.S. and European government officials.
- Wary of attracting regulatory scrutiny, executives of some of Libra’s backers have declined Facebook’s requests to publicly support the project.
- On Oct. 14, representatives from the companies are slated to meet in Geneva to review a charter for the Libra Association and appoint a board of directors, according to a memo reviewed by The Wall Street Journal.
BlackRock in Talks with Tencent on China Tie-Up
- BlackRock has held talks over the past year with Chinese internet giant Tencent as the world’s largest money manager explores ways to strengthen its foothold in China, according to people familiar with the matter.
- The preliminary discussions with Tencent have been about how to make BlackRock’s tools and models for building investment portfolios broadly available to the Chinese market, the people said.
- Tencent is among a number of companies that BlackRock is in talks with as it evaluates potential partners in China, said one of the people familiar with the discussions.
UPS Gets FAA Nod for Widespread Drone Deliveries
- United Parcel Service said it received the first-of-its-kind federal approval to start setting up a fleet of unmanned aircraft to deliver health supplies and eventually consumer packages potentially throughout the U.S.
- In the latest regulatory boost for expanded commercial drone services, the company also intends to gradually phase in routine night flights and heavier cargo limits—areas now generally off-limits to most operators.
- Under the Federal Aviation Administration’s announcement Tuesday, the company’s Flight Forward unit obtained an immediate green light to ship medical products and specimens in North Carolina across various hospital campuses.
- But the broad approval for an entire fleet of future drones and pilots on the ground—going beyond what the FAA approved previously—opens the door for many other types of longer-range applications spanning rural and suburban areas.
Johnson & Johnson Agrees to Settle Ohio Opioid Lawsuits for $20.4 Million
- Johnson & Johnson on Tuesday said it has agreed to a $20.4 million deal to avoid a coming trial accusing the company of helping spark an opioid-addiction crisis in two Ohio counties.
- The settlement makes J&J the fourth drugmaker to reach such a deal ahead of the trial, slated to begin later this month in federal court in Cleveland.
- The trial is considered a bellwether for thousands of opioid-related lawsuits that municipalities and states have filed against drugmakers.
- Yet the deal, which includes no admission of liability, still leaves J&J facing hundreds of other opioid lawsuits.
UAW rejects new GM offer as strike forces 6,000 Mexico layoffs
- The United Auto Workers union said on Tuesday it rejected a new comprehensive offer from General Motors to end a two-week-old strike, saying the automaker came up short on several fronts including wages, healthcare and temporary workers.
- Also on Tuesday, GM said the strike by U.S. workers forced it to halt production at its pickup and transmission plants in Silao, Mexico, resulting in temporary layoffs of 6,000 workers.
- About 48,000 UAW members went on strike on Sept. 16 seeking higher pay, greater job security, a bigger share of the leading U.S. automaker’s profit and protection of healthcare benefits.
Deere to lay off 163 U.S. workers as trade war dents equipment demand
- Deere on Tuesday announced indefinite layoffs for 163 U.S. manufacturing workers at plants in Illinois and Iowa that make agricultural, forestry and construction equipment, citing decreased customer demand.
- The layoffs come weeks after the company said it would reduce production by 20% at its facilities in Illinois and Iowa in the second of half of the year to keep inventory in line with retail demand.
- The world’s largest farm equipment maker is reeling from the fallout of the U.S.-China trade war that has slowed purchases from farmers.
Tesla’s China production to start, eyes on mass production timing: sources
- Tesla’s China factory aims to start production this month but it is unclear when it will meet year-end production targets due to uncertainties around orders, labor and suppliers, sources with knowledge of the matter said.
- The vehicle maker aims to produce at least 1,000 Model 3s a week from the new factory by the end of this year, the centerpiece of its ambitions to boost sales in the world’s biggest auto market and avoid higher import tariffs imposed on U.S. cars.
- The $2 billion factory – Tesla’s first car manufacturing site overseas – gained key government approvals last month and is on schedule to start production in October, the sources said.
US ECONOMY & POLITICS
U.S. Private Sector Added 135,000 Jobs in September
- Private employers in the nonfarm sector added more jobs in September than economists expected, but the pace of job creation remains muted compared with last year.
- The private sector added 135,000 jobs last month, according to the ADP National Employment Report.
- Economists were expecting 125,000 jobs.
- Data for August was revised downward to show private payrolls increasing by 157,000 jobs instead of the previously reported 195,000 positions.
- Service-providing companies produced most of the new positions last month, adding 127,000 jobs, according to the ADP report.
- The goods-producing sector added 8,000 jobs, with companies in the manufacturing industry generating 2,000 jobs.
Sanders Cancels Events ‘Until Further Notice’ Due to Health Issues
- Sen. Bernie Sanders had surgery to insert stents to open an artery blockage, his campaign said, after the Democratic presidential candidate experienced chest pain during a campaign event Tuesday night.
- The campaign said Mr. Sanders (I., Vt.) will cancel his events and appearances until further notice.
- The campaign said Mr. Sanders, 78 years old, “is conversing and in good spirits.”
New York Fed Adds About $42.1 Billion to Financial System
- The Federal Reserve Bank of New York added $42.05 billion to the financial system Wednesday by using the market for repurchase agreements, or repo, to relieve funding pressure in money markets.
- Banks asked for $42.05 billion in overnight reserves, all of which the Fed accepted, offering collateral in the form of U.S. Treasury and mortgage securities.
Pompeo Confirms Listening to Trump-Zelensky Phone Call in July
- Secretary of State Mike Pompeo acknowledged for the first time that he listened in on the phone call between President Trump and Ukraine’s leader that has resulted in a House impeachment inquiry, and said the conversation occurred in the context of normal U.S. foreign policy toward Ukraine.
- Mr. Pompeo, asked at a news conference in Rome on Wednesday if he heard anything inappropriate while taking part in the call, didn’t address the question directly.
- Mr. Pompeo had been asked several times about the call but until Wednesday hadn’t said that he listened in on the conversation.
Trump, RNC Raise $125 Million in Third Quarter
- President Trump and the Republican National Committee together raised $125 million in the past three months, the re-election campaign said, continuing its upward fundraising trajectory this year.
- Mr. Trump and the RNC had reported raising $105 million in the second quarter and about $76 million in the first three months of the year
- The campaign said it saw an $8.5 million cash infusion from small donors in the 48 hours after House Speaker Nancy Pelosi announced a formal impeachment inquiry of President Trump.
- Four of the 19 Democratic contenders announced their third-quarter fundraising hauls on Tuesday.
- Taken together, they raised $62 million in the most recent three months.
- Two of the strongest Democratic fundraisers, former Vice President Joe Biden and Massachusetts Sen. Elizabeth Warren, haven’t yet said what they raised.
Elizabeth Warren Unveils Plan to Tax Lobbying by Corporations, Trade Associations
- A new proposal from Massachusetts Sen. Elizabeth Warren would impose a hefty tax on corporations and trade associations that spend more than $500,000 lobbying the federal government each year.
- The proposed tax, unveiled Wednesday, is part of what the Democratic presidential candidate has billed as her plan to “end lobbying as we know it.”
- Under her latest plan, groups that spend between $500,000 and $1 million on lobbying annually would have to pay a 35% tax on those expenditures.
- The rate would increase to 60% for expenditures between $1 million and $5 million and top out at 75% for those exceeding $5 million.
EUROPE & WORLD
Boris Johnson Makes Last-Ditch Brexit Bid to EU
- British Prime Minister Boris Johnson on Wednesday announced a revised Brexit proposal, warning the European Union that he remains prepared to take the U.K. out of the bloc at the end of October without a deal.
- The U.K. government is set to disclose the details of its proposals in a letter later Wednesday, officials said.
- The EU negotiating team will meet with diplomats from the remaining 27 countries to discuss the proposal on Wednesday evening, European officials said.
- Mr. Johnson indicated that under the proposal, Northern Ireland would withdraw along with the rest of the U.K. from the EU’s customs union, while remaining inside the bloc’s regulatory orbit for agriculture and manufactured goods.
- But his approach toward negotiating a deal before the end of the month risks further entrenching division between the two sides, with time running short before a crunch summit in Brussels that starts on Oct. 17.
Huawei phones lose access to install Google’s apps – Bloomberg
- Huawei’s newly launched Mate 30 devices have lost their access to manually install Google’s Android apps.
- According to the report, security researcher John Wu published a blog post Tuesday that explained how users of Huawei’s Mate 30 Pro were able to manually download and install Google apps, despite a U.S. blacklisting that prohibits the Chinese company from using American components and software.
- But in the wake of the revelations, the Mate 30 devices, made to work on new 5G mobile networks, lost their clearance to manually install Android apps, as reported by a number of smartphone experts, Bloomberg said.
Samsung ends mobile phone production in China
- Samsung has ended mobile telephone production in China, it said on Wednesday, hurt by intensifying competition from domestic rivals in the world’s biggest smartphone market.
- The shutdown of Samsung’s last China phone factory comes after it cut production at the plant in the southern city of Huizhou in June and suspended another factory late last year, underscoring stiff competition in the country.
- The South Korean tech giant’s ceased phone production in China follows other manufacturers shifting production from China due to rising labor costs and the economic slowdown.
- Sony also said it was closing its Beijing smartphone plant and would only make smartphones in Thailand.
Hong Kong office workers, schoolmates denounce police shooting of teen
- Hong Kong office workers and high-school students turned out in their hundreds under a sweltering midday sun on Wednesday to denounce a policeman for shooting and wounding a teenager during the most violent clashes in nearly four months of unrest.
- The teen was in stable condition in hospital on Wednesday.
- More than 100 people were wounded during Tuesday’s turmoil, the Hospital Authority said, as anti-China demonstrators took to the streets across the Chinese-ruled territory, throwing petrol bombs and attacking police who responded with tear gas and water cannon.
- Five remained in a serious condition with 35 stable.
- Thirty police were injured, with five in hospital.
TODAY in HISTORY
- President Woodrow Wilson suffered a stroke, which left him partially paralyzed. (1919)
- The “Peanuts” comic strip, by Charles M. Schultz, first appeared in newspapers. (1950)
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