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  • U.S. stocks fell broadly on Thursday, mirroring weakness in the global markets, as government bond yields surged to multi-year highs on robust U.S. economic data and optimistic views from the Federal Reserve.
  • The yield on the benchmark 10-year note hit a high of 3.232%, as strong economic data on Wednesday raised expectations that the non-farm payrolls report due out on Friday morning would come in stronger than anticipated.
  • Fed Chairman Jerome Powell said the economy can expand for “quite some time,” which also helped the yield curve steepen to its highest in two months.
  • That boosted bank stocks, which jumped 1.6%, outstripping the 1.3% rise in the financial sector, which was the only gainer among the 11 major S&P sectors.
  • An explosive Bloomberg report brought down shares in Apple and Amazon after saying a Chinese equipment manufacturer may have allowed microchips used for spying into some equipment used by Amazon Web Services and the iPhone maker, with the equipment being used throughout US Intelligence Agencies. Both companies dispute the report.
  • Among gainers, Constellation Brands shares jumped 4.9% after the Corona beer maker raised its full-year profit forecast and topped Wall Street’s estimates for second-quarter sales and profit.
  • Eli Lilly rose 5% after the company’s experimental diabetes drug showed promise in a mid-stage trial.


(Nivedita Balu)

  • Constellation Brands raised its full-year profit forecast and topped Wall Street estimates for second-quarter sales and profit on Thursday, as it benefited from strong demand for Corona beers during the summer, sending shares up 4%.
  • The company launched the first major addition to the Corona franchise in nearly three decades earlier this year, the low-carb, low-calorie Corona Premier, aimed at seducing millennial consumers as it battles competition from craft beers.
  • These additions drove beer sales up about 11% to $1.53 billion in the second quarter.
  • Its wine and spirits business, which sells Nobilo and Meiomi wines, also reported 9.3% sales growth.
  • Net sales rose 10.1% to $2.30 billion, above estimates of $2.25 billion.
  • Net income rose to $1.15 billion in the quarter, from $501.6 million a year earlier.

Chinese spy chips are found in hardware used by Apple, Amazon, Bloomberg says; Apple, AWS say no way

  • Data center equipment run by Amazon Web Services and Apple may have been subject to surveillance from the Chinese government via a tiny microchip inserted during the equipment manufacturing process, according to Bloomberg.
  • The chips, which Bloomberg said have been the subject of a top-secret U.S. government investigation starting in 2015, were used for gathering intellectual property and trade secrets from American companies and may have been introduced by a Chinese server company called Super Micro that assembled machines used in the centers.
  • The problem was discovered in 2015 and confirmed by independent security investigators hired by the cloud providers.
  • The assembler, Super Micro Computer, manufactured servers found in Department of Defense data centers, the CIA’s drone operations, and the onboard networks of Navy warships.
  • China has long been suspected — but rarely directly implicated — in en masse spy campaigns based on hardware made there. The majority of electronic components used in U.S. technology are manufactured in China.
  • Companies including component manufacturers Huawei and ZTE, as well as surveillance camera maker Hikvision, have all fallen under intense suspicion and scrutiny from the U.S. government in the past year.
  • Intellectual property theft is one of the core arguments for tough trade restrictions on China by the Trump administration.

Ebay alleges Amazon poached sellers from its platform

  • eBay on Wednesday accused Amazon of trying to poach sellers for its own platform through Ebay’s internal messaging system.
  • The Wall Street Journal, in a report earlier on Wednesday, said that an eBay investigation found about 50 Amazon employees across the world had sent more than 1,000 messages to sellers on its platform.
  • eBay said it was alerted of the situation about 10 days ago after a seller reached out to the company after being contacted by an Amazon employee under false pretenses.

J&J, Arrowhead in gene-silencing drug deal worth up to $3.7 billion

  • Arrowhead Pharmaceuticals said on Thursday Johnson & Johnson would develop and market its gene-silencing Hepatitis B treatment and buy a minor stake in a deal that could be potentially worth more than $3.7 billion, sending its shares surging.
  • Under the deal, J&J’s Janssen Pharmaceuticals unit will obtain a worldwide license for Arrowhead’s ARO-HBV drug and an option to collaborate on up to three new RNA interference (RNAi) drugs, which use gene-silencing technology.
  • J&J’s investment comes a month after Arrowhead released data from an early trial testing ARO-HBV, dubbed “revolutionary” by analysts who also said the company was positioned to develop a functional cure for Hepatitis B.
  • Arrowhead is also eligible to receive up to $1.6 billion in milestone payments for the Hepatitis B license and about $1.9 billion in option and milestone payments for the three additional treatments.

Lilly’s diabetes drug data impresses, hurts rival Novo’s shares

  • Eli Lilly said on Thursday its new two-in-one diabetes drug was successful in lowering blood sugar and reducing weight, sending its shares to a record high and weighing on those of arch-rival Novo Nordisk.
  • The novel drug targets two key gut hormones at the same time and could pose a threat to currently available single-hormone drugs, which form a large and growing part of Novo’s business.
  • Lilly’s treatment reduced blood sugar levels in type 2 diabetes patients by up to 2.4% and produced an average weight reduction of up to 12.7% in a mid-stage study by targeting the GLP-1 and GIP hormones.

Cadillac edges Tesla in semi-automated driving test

  • General Motors’s Cadillac outscored Tesla in a new ranking of partially automated driving systems tested by Consumer Reports and released on Thursday.
  • The organization said its tests, conducted on a private track and on public roads, were designed to measure the systems’ ability to automatically control steering and speed while helping drivers pay attention and regain control of the vehicle when required.
  • Each system has limitations. Cadillac’s Super Cruise, for instance, only functions on divided highways that have been mapped by GM.
  • In contrast, Tesla’s Autopilot can be used even on small, curvy roads with poor lane markings, but “operates erratically in those situations,” Consumer Reports said.

Amazon’s hourly workers lose monthly bonuses and stock awards as minimum wage increases

  • Amazon’s minimum-wage increase for its hourly workers comes with a trade-off: no more monthly bonuses and stock awards.
  • Amazon confirmed in an email to CNBC that the company is getting rid of incentive pay and stock option awards as it increases the minimum wage to $15 per hour.
  • The company, however, stressed that the wage increase “more than compensates” for the loss in other benefits.
  • The confirmation follows multiple reports on Wednesday that some of Amazon’s warehouse employees say they will make less as a result of this change.

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(Reuters Staff)

  • The number of Americans filing for unemployment benefits fell to a near 49-year low last week, pointing to sustained labor market strength, which should continue to underpin economic growth.
  • Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 207,000 for the week ended Sept. 29.
  • Data for the prior week was revised to show 1,000 more applications received than previously reported.
  • Economists had forecast claims slipping to 213,000 in the latest week.

Factory orders up 2.3% in August, vs. 2.1% increase expected

  • New orders for U.S.-made goods recorded their biggest increase in nearly a year in August, boosted by a surge in demand for aircraft, but signs of weakness in business spending on equipment suggested that the manufacturing sector could be slowing.
  • Factory goods orders surged 2.3%, the largest increase since September 2017. Orders increased 8.6% on a yearly basis in August.
  • Economists had forecast factory orders rebounding 2.1% in August.
  • Data for July was revised up to show factory orders falling 0.5% instead of the previously reported 0.8% drop.

U.S. Consumer Comfort at 17-Year High on Record GOP Sentiment

  • U.S. consumer sentiment advanced to a new 17-year high on record confidence among Republicans and broad improvement across economic, financial and purchasing moods, the Bloomberg Consumer Comfort Index showed Thursday.
  • Republicans are more upbeat before midterm elections next month that will determine control of Congress. Their confidence gauge rose to 82, the highest in data since 1990.
  • The reading for Democrats ticked up to 49.8, while the level for independents dipped to 58.9.
  • The weekly index edged up to 61.6, highest since Dec. 2000, from 61.2

Senators get FBI report on Kavanaugh, Republicans push vote

  • The White House rebuffed Democratic criticism over its handling of an FBI report on Supreme Court nominee Brett Kavanaugh, saying on Thursday it had not micromanaged the agency or edited the report on allegations of sexual misconduct.
  • The White House sent the FBI report to the U.S. Senate Judiciary Committee early on Thursday. Senators were poring over the document to determine whether it satisfies their concerns about the nominee.
  • Some Democrats said the FBI had not interviewed enough people, reflecting the partisan struggle that has developed around the report, and more broadly, over Kavanaugh’s confirmation.
  • Several people with information related to allegations against Kavanaugh told Reuters they had not heard from the FBI, suggesting its report may be narrower than was desired by some lawmakers who demanded it just days ago.

U.S. indicts seven Russian intel officers in alleged doping scandal hack

  • The United States indicted seven Russian intelligence officers for conspiring to hack computers and steal data to delegitimize international anti-doping organizations and expose officials who revealed a Russian state-sponsored athlete doping program.
  • The charges of conspiracy to commit computer fraud and abuse and to commit wire fraud and money laundering came hours after Dutch authorities said they had disrupted an attempt by Russian intelligence agents to hack into the Hague-based Organization for the Prohibition of Chemical Weapons in April.

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(Laharee Chatterjee)

  • Canadian Pacific Railway estimated third-quarter profit above Wall Street expectations and raised its full-year earnings forecast on Thursday, as Canada’s No.2 railroad operator benefits from a surge in shipments.
  • Rail capacity has been tight in the country against the backdrop of oil companies looking to transport crude through railways as production surges and pipelines run in full capacity.
  • Canadian Pacific said it expects an adjusted profit of C$4.10 per share for the third quarter, while analysts were expecting C$3.64.

Canada PM takes Quebec dairy gamble to preserve big trade deal

  • With his political future at stake, Canadian Prime Minister Justin Trudeau will mount a charm offensive to placate dairy farmers who say he sold them out in order to win approval of a continental trade deal.
  • Compounding Trudeau’s challenges in the influential province of Quebec, where many dairy farmers are based, voters there tossed out one of his allies on Monday in favor of a new center-right party that opposes immigration and supports supply management, as Canada’s dairy protection system is known.
  • Unhappy Quebec farmers – who are a political force – are already complaining to legislators from the ruling Liberals, and insiders concede there is no guarantee of winning them over, leaving Trudeau potentially vulnerable in a federal election in 2019.
  • The dairy industry is concentrated in Ontario and Quebec, which together account for 61.5% of the population. Trudeau has no chance of retaining power unless the Liberals do well in both provinces.

Italy dismisses concern the EU will reject its budget plan

  • Italy’s populist government on Thursday dismissed concerns that the European Commission will reject its plan to hike deficit spending next year and signaled that it would not backtrack, even under market pressure.
  • After a selloff hit Italian bonds on Tuesday, the government made up of the anti-establishment 5-Star Movement late on Wednesday watered down its original plan to keep its deficit steady at 2.4% of gross domestic product (GDP) in 2020-21.
  • But it stuck to its 2.4% target for next year, and on Thursday morning government officials said they had no plans to make further revisions to that goal, which is three times more than one set out by the previous government.

U.S inquiry deepens Danske money-laundering crisis

  • Danske Bank faces a U.S. criminal investigation into a 200 billion euro ($230 billion) money laundering scandal at its Estonian branch which has rocked investor faith in Denmark’s biggest lender and forced its chief executive to quit.
  • Danske Bank said it had “received requests for information from the U.S. Department of Justice (DOJ) in connection with a criminal investigation relating to the bank’s Estonian branch”.
  • Danske Bank’s troubles are having a ripple effect across the region and on Wednesday Estonia’s central banks said banks there handled more than $1 trillion in cross-border flows between 2008 and 2017.
  • n a sign of the impact of criminal and regulatory investigations in Estonia, Denmark, Britain and now the United States, Danske Bank said it would end its plan to buy back shares worth 10 billion Danish crowns ($1.5 billion) by February.

Toyota, SoftBank in first-ever alliance, target self-driving car services

  • Toyota and SoftBank are teaming up to develop self-driving car services, signaling deepening alliances between the top automaker and tech firms as the global race to develop autonomous cars intensifies.
  • Japan’s biggest automaker and its most influential tech firm will jointly develop a platform to operate self-driving vehicles which can be used as mobile shops, hospitals, and other services.
  • The joint venture will start small with an initial capital of 2 billion yen ($17.5 million). SoftBank will own just over half of the business, which will initially focus on Japan and eventually go global.

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  • The Soviet Union launched the first artificial satellite, Sputnik, into orbit around the earth, ushering in the Space Age and Space Race. (1957)
  • The German parliament met for the first time since the reunification of Germany. (1990)

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