DAILY MARKET REPORTS
- U.S. stocks fell after Washington expanded its list of blacklisted Chinese firms, a move expected to complicate this week’s trade talks with Beijing.
- The declines came a day after the Commerce Department added 28 Chinese entities to an export blacklist, citing their role in Beijing’s repression of Muslim minorities in northwest China.
- The U.S. said the move wasn’t related to trade negotiations with Beijing.
- High-level trade talks are set to resume Thursday, with a delegation led by China’s top trade envoy, Liu He, scheduled to meet with U.S. officials in Washington.
- German industrial output grew slightly in August, according to official data.
- The pound weakened after Boris Johnson told German Chancellor Angela Merkel a Brexit deal is essentially impossible if the EU demands Northern Ireland stay in the bloc’s customs union.
US FINANCIAL MARKET
Domino’s Warns Sales Growth May Slow
- The world’s largest pizza company said Tuesday it expects U.S. same-store sales, a metric that covers sales from Domino’s locations open for at least a year, to grow between 2% and 5% over the next two to three years.
- Earlier, the company predicted those sales would increase 3% to 6% over three to five years.
- Domino’s faces heightened competition for diners as a broader set of competitors start offering food via third-party delivery companies, often at cheap prices.
- Domino’s reported $820.8 million in revenue, up about 4% compared with last year but weaker than predictions.
- Same-store sales grew 2.4% in the U.S. in the quarter compared with a year earlier.
- The company reported a profit of $86.4 million, compared with earnings of $84.1 million a year earlier.
Friction Between U.S., European Regulators Could Delay 737 MAX Return to Service
- European air-safety regulator has indicated it wants more testing on proposed revisions to flight-control computers.
- Disagreements over various software details, centered on how the MAX’s dual flight-control computers are now intended to start working together, haven’t been reported before.
- The European Union Aviation Safety Agency recently told senior U.S. regulators it wasn’t satisfied that FAA and Boeing officials had adequately demonstrated the safety of reconfigured MAX flight-control computers.
- Boeing and the FAA are finishing testing the dual-computer system, and the final results haven’t been presented to EASA or other regulators. EASA has signaled, though, that it wants additional risk scenarios examined beyond those in the current testing plan, this person said.
Boeing Invests $20 Million in Virgin Galactic’s Space Program
- The relationship is designed as a collaboration aimed at shaping the future of human space travel, the companies said.
- Virgin Galactic also is setting longer-term sights on shuttling airline travelers around the world at high speeds — a mode of transport that will take years to achieve.
- Elon Musk’s SpaceX also has announced plans for such flights in the future.
- Boeing’s investment is contingent on Virgin Galactic going public by year-end as part of a merger with Social Capital Hedosophia, which will hold a 49% stake in the merged company.
- The arrangement to take Virgin Galactic public, announced in July, is designed to raise about $800 million for Branson’s firm.
Apple’s Merged iPad, Mac Apps Leave Developers Uneasy, Users Paying Twice
- Apple rolled out Catalyst, the technology to transition iPad apps into Mac versions, on Monday.
- It’s the initial step toward a bigger goal: By 2021, developers should be able to build an app once and have it work on iPhones, iPads and Mac computers through a single, unified App Store.
Netflix signs deal with Mediaset to co-finance Italian films
- Netflix has struck a deal with Italy’s top commercial broadcaster Mediaset to produce films in the country, the two companies said on Tuesday, as they step up efforts to boost viewers amid tough competition.
- The U.S. streaming service and Mediaset, which is controlled by the family of former Italian Prime Minister Silvio Berlusconi, will co-finance movies shot in Italy by independent local film-makers.
- The movies will be available worldwide on Netflix from next year.
- Mediaset will broadcast the Netflix-branded movies on its free-to-air television channels in Italy twelve months later.
PG&E Warns It May Cut Power for 600,000 Customers Due to Wildfire Risk
- In a news release, the bankrupt utility owner said if it does decide to implement a shut-off, it would begin turning off power early Wednesday morning.
- The utility filed for bankruptcy in January as it struggled with billions of dollars in potential liabilities from its role in sparking wildfires in California, triggering one of the largest corporate-reorganization cases in years.
US ECONOMY & POLITICS
Core U.S. Producer Prices (PPI) Fall Most in More Than Four Years
- A measure of underlying U.S. producer prices posted the biggest monthly drop in more than four years, adding to signs of tame inflation pressures that potentially offer Federal Reserve policy makers more leeway to lower interest rates. The dollar fell.
- Excluding food and energy, so called core producer prices decreased 0.3% in September from the prior month.
- The gauge was up 2% from a year earlier, the smallest gain in two years.
- The overall producer-price index also dropped 0.3% from August and was up 1.4% from a year earlier, the least since November 2016.
U.S. Adds Chinese Firms to Blacklist, Citing Repression of Muslim Minorities
- The U.S. added 28 Chinese entities to an export blacklist Monday, citing their role in Beijing’s repression of Muslim minorities in northwest China.
- The action, which the U.S. said wasn’t related to trade talks, was nonetheless likely to disturb Chinese officials.
- Targets of the action include video-surveillance and facial-recognition giants Hangzhou Hikvision Digital Technology, Megvii Technology and SenseTime Group.
- The U.S. will also add the Xinjiang Public Security Bureau and 19 subordinate entities to the entity list, along with few other Chinese firms. The new policy will take effect later this week.
U.S. Blacklists Eight Chinese Tech Companies on Rights Violations
- The Trump administration placed eight Chinese technology giants on a U.S. blacklist on Monday, accusing them of being implicated in human rights violations against Muslim minorities in the country’s far-western region of Xinjiang.
- The companies include two video surveillance companies — Hangzhou Hikvision Digital Technology Co. and Zhejiang Dahua Technology Co. — that by some accounts control as much as a third of the global market for video surveillance and have cameras all over the world.
- Also targeted were SenseTime Group Ltd. — the world’s most valuable artificial intelligence startup — and fellow AI giant Megvii Technology Ltd., which is said to be aiming to raise up to $1 billion in a Hong Kong initial public offering.
- Backed by Chinese e-commerce giant Alibaba Group Holding Ltd., the pair are at the forefront of China’s ambition to dominate AI in coming years.
Trump Compliments Turkey as White House Says Erdogan Will Visit
- Donald Trump complimented Turkey a day after clearing the way for the NATO ally to conduct operations along its Syrian border, calling the country a “big trading partner” as the White House said its president, Recep Tayyip Erdogan, plans to visit the U.S. in November.
- Trump said in a tweet that Erdogan will visit Washington on Nov. 13.
- He also said Turkey makes the steel frame for the U.S.’s F-35 fighter, without mentioning that the Pentagon suspended Turkey from participating in the multinational project after Erdogan purchased an anti-aircraft missile system from Russia over Washington’s objections.
- The White House on Sunday said American troops “would no longer be in the immediate area” if Turkey moves into Syria, sparking outrage from GOP lawmakers who are normally allies of Trump.
- The U.S. still urges Erdogan not to invade Syria or to attack U.S.-allied Kurdish forces that the Syrian leader considers terrorists.
EUROPE & WORLD
New IMF Chief Warns of ‘Serious Risk’ Global Slowdown Will Spread
- Kristalina Georgieva, in her first major address as head of the International Monetary Fund, painted a downbeat picture of the world economy and said a more severe slowdown could require governments to coordinate fiscal-stimulus measures.
- Georgieva said the fund will cut its growth forecast for both 2019 and 2020 in its next World Economic Outlook due Oct. 15.
- In July, the fund lowered its projection to 3.2% this year and 3.5% next year — its fourth downgrade since last October.
China Signals It Will Hit Back Over U.S. Tech Blacklist
- China signaled it would hit back after the Trump administration placed eight of the country’s technology giants on a blacklist over alleged human rights violations against Muslim minorities.
- Asked Tuesday whether China would retaliate over the blacklist, foreign ministry spokesman Geng Shuang told reporters “stay tuned.” He also denied that the government abused human rights in the far west region of Xinjiang.
Johnson Tells Merkel Deal ‘Essentially Impossible’
- The U.K. stepped up preparations for a no-deal Brexit in three weeks’ time as negotiations with the European Union headed toward a breakdown.
- In a call on Tuesday morning, Boris Johnson told German Chancellor Angela Merkel a divorce agreement is essentially impossible if the EU demands Northern Ireland must stay in the bloc’s customs union.
- He blamed the EU’s refusal to engage with his blueprint for the likely collapse of talks. The bloc’s leaders hit back.
Hong Kong Stock Exchange Drops Nearly $37 Billion Bid for London Rival
- Hong Kong’s stock exchange pulled a $36.6 billion bid for its London rival, a deal that would have united two major trading hubs even as both are clouded in political turmoil.
- Less than a month after it unveiled the surprise proposal, Hong Kong Exchanges & Clearing Ltd. said it couldn’t pursue a takeover of London Stock Exchange Group PLC without any input from LSE’s management.
- The target’s board had quickly rejected the approach.
China, NBA Standoff Deepens Over Basketball Executive’s Tweet
- Beijing and the National Basketball Association (NBA) hardened their standoff on Tuesday, as China canceled broadcasts of preseason games and the league’s commissioner said he wouldn’t apologize for a weekend tweet by a team executive that triggered a firestorm of criticism.
- The escalation in tensions threatened to plunge the NBA’s carefully cultivated China franchise into deeper crisis, with more merchants halting sales of NBA merchandise, many Chinese celebrities pulling out of an NBA event in Shanghai and a major Chinese sponsor yanking its endorsement of the games.
- Tickets from the designated online agent for Thursday’s Shanghai game became unavailable.
Samsung’s Preliminary Earnings Hint a Turnaround Is Near for Chips
- Samsung, the world’s largest producer of memory chips and smartphones, said it expects a third-quarter operating profit of 7.7 trillion South Korean won ($6.4 billion).
- That would be a drop of 56.2% from a year earlier—when profit soared to a record high—though it bested a 7.2 trillion won estimate based on analysts polled by S&P Global Market Intelligence.
Amazon launches bigger local online store in Singapore
- Amazon has launched a bigger local store and marketplace in Singapore, expanding its product selection and intensifying competition with rivals such as Alibaba’s Lazada and Sea’s Shopee.
- Singapore, a small but high-value market with a population of just 5.7 million, is often seen as a launchpad for consumer-focused companies into much bigger Southeast Asian countries such as Indonesia, home to over 260 million people.
Oracle to hire 2,000 workers to expand cloud business to more countries
- Oracle plans to hire nearly 2,000 additional workers as part of an aggressive plan to roll out its cloud computing services to more locations around the world, its cloud chief told Reuters on Monday.
- Seeking to better compete with bigger rivals Amazon Web Services (AWD) and Microsoft, the move will also help transition Oracle’s business software for finance, sales and other functions to new systems over the next year.
- Jobs will be added in Oracle’s software development hubs in Seattle, the San Francisco Bay Area and India, as well as near new data centers.
- The company currently has 16 such regions, a dozen of which it opened in the past year. New locations will be built out in Chile, Japan, South Africa and United Arab Emirates as well as elsewhere in Asia and Europe.
TODAY in HISTORY
- The 14th president of the United States, Franklin Pierce, died in Concord, N.H. 1869
- The Great Fire of Chicago That same day in Peshtigo, Wis., the worst forest fire in U.S. history also began. 1871
- President Harry Truman announced the U.S. would share the secret of the atomic bomb only with Great Britain and Canada. 1945
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