DAILY MARKET REPORTS
- U.S. stocks rose Wednesday as investors awaited the resumption of U.S.-China trade talks and looked for fresh signals from the Federal Reserve on monetary easing.
- High-level U.S.-China trade talks are set to resume in Washington on Thursday after what seemed to be escalating tensions to start the week.
- China signaled it’s open to a limited deal, provided no more tariffs are imposed.
- In return, Beijing would offer non-core concessions like purchases of agricultural products without giving in on major sticking points.
- Minutes of the Fed’s most recent rates meeting will be released Wednesday, providing further insight into policy makers’ thinking ahead of their next meeting at the end of the month.
- The Fed will increase its purchases of short-term securities soon in an effort to avoid stress in lending markets, Mr. Powell said Tuesday.
- The yield on the 10-year U.S. Treasury note inched up to 1.563%, from 1.532% Tuesday. Yields rise as prices fall.
- Among individual companies, Johnson & Johnson shares fell 1.4% after a Philadelphia jury ordered the company to pay $8 billion in damages to a man who said that using antipsychotic drug Risperdal caused enlarged breasts.
US FINANCIAL MARKET
J&J Hit With $8 Billion Jury Award Over Antipsychotic Drug
- A Philadelphia jury on Tuesday ordered Johnson & Johnson to pay $8 billion in damages to a Maryland man who said his use of J&J’s antipsychotic Risperdal as a child caused enlarged breasts and the company failed to properly warn of this risk.
- It was the biggest award to date among more than 13,000 lawsuits against J&J alleging that Risperdal caused a condition called gynecomastia in boys, which involves enlargement of breast tissue. The lawsuits generally claim that J&J was aware of the risk of this side effect, but understated the risk to doctors.
- It is also the latest in a series of costly legal setbacks for J&J in a slew of lawsuits alleging injuries from products and other claims. In August, an Oklahoma judge ordered the company to pay $572 million for contributing to the state’s opioid-addiction crisis.
- Last year, a St. Louis jury found J&J should pay $4.69 billion in damages to 22 women and their families who blamed ovarian-cancer cases on use of the company’s baby powder.
- J&J has denied the allegations and is seeking to appeal the baby-powder and opioid decisions.
AT&T to Sell Its Puerto Rico and U.S. Virgin Islands Operations
- AT&T has agreed to sell its Puerto Rican and U.S. Virgin Islands businesses to Liberty Latin America for $1.95 billion in cash, allowing the telecommunications giant to shave its debt load and move closer to repurchasing shares.
- AT&T’s operation in Puerto Rico provides cellular, landline and internet connections. It had 1.1 million wireless subscribers.
- As part of the deal, about 1,300 AT&T employees will be transferred to Liberty Latin America.
- The two companies said they expect the deal to close within six to nine months.
Lions Gate Considers Spinning Off Starz Through Investment Vehicle
- Lions Gate is considering splitting off its Starz premium-cable channel into a separate company, as the studio looks to reduce its hefty debt load and allow shareholders to invest directly in either of the businesses, according to people familiar with the matter.
- Lions Gate, the studio behind the “John Wick” and “Hunger Games” movie franchises, is facing financial headwinds as its studio and TV businesses come under pressure.
- Earlier this year, Lions Gate discussed the possibility of selling Starz to CBS.
- While CBS floated an offer of about $5 billion, the talks never came to fruition. In 2017, Hasbro had talks about acquiring Lions Gate, but negotiations fell apart.
PG&E Starts to Cut Power for Nearly 800,000 California Customers on Wildfire Risk
- PG&E has begun to shut off power to hundreds of thousands of people in California as it seeks to prevent its electric lines from sparking more deadly wildfires, in what is believed to be the largest such pre-emptive blackout ever.
- The outages are poised to hit areas across the northern and central parts of the state, including the famous wine country region, the rural Sierra Nevada foothills and portions of Oakland and San Jose.
- PG&E said early Wednesday the shut-offs will occur in three phases, the first of which began affecting about 513,000 customers from around midnight local time.
- The second phase is set to occur around noon Wednesday, turning off service to approximately 234,000 customers in seven additional counties, PG&E said.
American Delays 737 MAX’s Return as Grounding Costs Mount
- American said it expects Boeing’s 737 MAX will remain out of service until January.
- The global fleet of MAX jets was projected to be near 1,000 by the end of this year.
- Some analysts estimated the daily costs associated with each grounded MAX ran as high as $150,000 for some carriers, which included renting replacement jets, finance costs on grounded planes, crew expenses and accommodations made to passengers.
Nobel Prize in Chemistry Awarded to Developers of Lithium-Ion Batteries
- The Nobel Prize in Chemistry was awarded to three scientists for their work developing lithium-ion batteries—power sources that touched off a technological revolution that gave rise to cellphones and electric cars.
- U.S. engineer John B. Goodenough, M. Stanley Whittingham of the U.K. and Akira Yoshino of Japan shared the 9 million Swedish kronor ($906,000) prize awarded by the Royal Swedish Academy of Sciences.
US ECONOMY & POLITICS
Job Openings in U.S. Decline to Lowest Since March 2018
- U.S. job openings unexpectedly declined in August to the lowest level since March 2018, underscoring the slowdown in hiring across American employers even as the labor market remains generally tight.
- The number of positions waiting to be filled fell by 123,000 to 7.05 million, according to the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS, released Wednesday.
- The quits rate dropped to 2.3%, in line with readings over the past year and signaling workers remain confident about job opportunities.
Credit Card Delinquencies in U.S. on Rise for Smaller Issuers
- Despite a 50-basis point decline in the U.S. 10-year note yield since late July, the average interest rate on credit cards continues to hover close to record levels, newly released data from the Federal Reserve show.
- Delinquent accounts for the largest banks were at 2.44% in the second quarter, while other banks saw the rate spike to 6.34% from 5.73% the prior quarter. At 3.9 percentage points, the spread between the two measures is also at an all-time high.
- Since 2010, more than 100 million new accounts have been created, bringing the total to 486.5 million in the U.S. as of the second quarter.
Fed to Increase Supply of Bank Reserves
- The Federal Reserve will soon increase its purchases of short-term Treasury securities to avoid a recurrence of the unexpected strains experienced in money markets last month.
- Fed officials stopped shrinking the assets on their balance sheet in August but never said when they would allow the balance sheet to grow again.
- As a result, a crucial liability on the balance sheet—bank deposits held at the Fed, called reserves—have continued declining.
- Reserves dropped to less than $1.4 trillion last month, from $2.8 trillion in 2014, when the Fed stopped buying assets.
- Most of the decline occurred over the past two years after the Fed pared its asset holdings by allowing some bonds to mature without replacing them.
- The repo market is an arcane but important part of the financial system. With more than $1 trillion in funding flowing through it every day, any disruptions—if allowed to fester—could influence the rates businesses and consumers pay and drag on economic growth.
White House Says It Won’t Cooperate With Impeachment Inquiry
- The White House said it won’t cooperate with the House impeachment probe and the administration blocked the deposition of a U.S. ambassador seen as central to the Ukraine controversy.
- House committees responded by subpoenaing Gordon Sondland, the U.S. ambassador to the European Union, after the State Department early on Tuesday directed him not to appear for his planned testimony.
EUROPE & WORLD
China Open to Small Trade Deal If Trump Eases Tariff Threats
- China is still open to reaching a partial trade deal with the U.S., an official with direct knowledge of the talks said, signaling that Beijing is focused on limiting the damage to the world’s second-largest economy.
- Negotiators heading to Washington for talks starting Thursday aren’t optimistic about securing a broad agreement that would end the trade war between the two nations, said the official, who asked not to be named as the discussions are private.
Apple Angers China by Approving Cop-Tracking Map App for Hong Kong
- Apple has joined the list of American companies under fire in China over the Hong Kong protests.
- The iPhone maker triggered an angry response from Chinese state media and consumers when it approved a map app that allows protesters to track police movements.
- Critics say HKmap.live—which denotes the presence of police with an emoji of a dog, a widely used insult for police officers during the protests—will help protesters commit crimes and evade arrest.
TODAY in HISTORY
- For the first time the public was admitted to the Washington Monument. 1888
- Aviator Laura Ingalls became the first woman to make a solo transcontinental flight across the United States. 1930
- Soviet scientist Andrei Sakharov was awarded the Nobel Peace Prize for his work to end the nuclear arms race. 1975
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