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US FINANCIAL MARKET
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DAILY MARKET REPORTS

  • The unemployment rate ticked down to 4.1%, its lowest level since December 2000.
  • Technology shares led stocks higher Friday, boosted by a jump in Apple after the tech giant delivered its best quarterly growth in two years.
  • The U.S. nonfarm payrolls report showed a gain of 261,000 jobs in October, a pickup from the prior month, but below the 315,000 jobs expected by economists.
  • The closely watched wage growth figure showed wages rose 2.4% from a year earlier, a slowdown from the prior month.
  • On Friday, investors also continued to parse the details of a Republican tax bill and the nomination of Fed governor Jerome Powell to be the next chairman of the central bank.

US FINANCIAL MARKET

iPhone Demand Charges Apple’s Results

  • Revenue and profit increase by double digits amid sales rise in China, and the company said it expects record revenue in the current period. Apple expects revenue of $84 billion to $87 billion in the current quarter, far above the company’s previous record of $78.35 billion in the final three months of 2016
  • Shipments of the company’s flagship product, iPhone rose 2.6% from a year earlier to 46.7 million units.
  • Demand for the iPhone, which accounts for about two-thirds of total sales, along with an upturn in sales of Mac computers and iPad tablets helped Apple deliver its fourth consecutive quarterly increase in revenue and third quarterly increase in profit.
  • Sales in China, a critical market for Apple, rose for the first time since early 2016.
  • Consistent revenue gains, combined with anticipation for a jump in iPhone sales in 2018, have helped send Apple’s stock up about 50% over the past year and pushed its market value to more than $860 billion.
  • For the quarter, Apple’s revenue rose 12% to $52.58 billion and profit jumped 19% to $10.71 billion from $9.01 billion in the same period a year earlier.
  • Apple’s services business — which includes the App Store and its music and payment services — delivered another strong quarter of double-digit growth, surging 34% to $8.5 billion.
  • Mr. Cook said the company now has 210 million subscriptions to Apple and third-party services, an increase of 25 million over the past 90 days. Apple typically collects a 15% fee on subscriptions for products like Netflix and HBO if users sign up through its App Store.
  • Sales of Mac computers jumped 25% in the quarter to $7.17 billion, capping the product lines’ best year ever.
  • Shipments of the iPad — which rose in the June quarter for the first time in more than three years — rose 11% to 10.3 million units in the latest period.

Starbucks Lowers Long-Term Target, Selling Tazo to Unilever

  • Coffee giant now expects earnings per share growth of 12% in years to come, down from previous target of 15% to 20%.
  • Starbucks said it would sell its Tazo brand of teas in the coffee seller’s latest move to focus on its core operations.
  • Unilever is paying $384 million for the Tazo brand, which is sold primarily in grocery and convenience stores.
  • Starbucks bought the brand for $8.1 million in 1991.
  • The deal is expected to close later this year and Starbucks then plans to start selling packaged Teavana tea next year.
  • For its fourth quarter, the company had comparable-store sales growth of 2% globally, driven by increases in the average order price and the number of transactions.
  • The company reported a U.S. same-store sales increase of 2%, below the company’s benchmark of 5% growth.
  • Membership in its rewards program grew 11% to 13.3 million in the U.S. as mobile orders reached 10% of transactions in U.S. company-operated stores.
  • Starbucks also reported some success in China, where it increased same-store sales by 8%, driven by a 7% increase in transactions.
  • In all for the quarter, the company reported revenue of $5.7 billion, down 0.2% from a year ago.
  • It reported a profit of $788.5 million, compared with $801 million in the year-ago period.

Discovery Communications Reports Loss of Subscribers is Accelerating

  • Discovery Communications reported an accelerating decline in subscribers to its channels in the U.S., a sign that the unraveling of the cable television bundle is picking up speed.
  • The media company lost 5% of its U.S. channel subscribers in the third quarter, an increase from the second quarter and up from 2% in the period a year ago.
  • The subscriber losses have been concentrated among Discovery’s smaller channels, while its flagship channels like Discovery channel, TLC and Animal Planet have held relatively steady.
  • As a result, despite the subscriber decline, Discovery was able to increase its domestic distribution revenue in the third quarter by a healthy 6% and reaffirm its guidance for the year of “mid-single digit growth” in distribution revenue.
  • Overall, Discovery’s net income in the third quarter was flat at $218 million, as better operating results were offset by $142 million in charges tied to its pending merger with Scripps.
  • Revenue grew 6% to $1.65 billion, driven by an 11% rise in the company’s international business and a 4% rise domestically.

CBS Corp reports lower revenues

  • The New York-based broadcaster, home to such popular shows as “The Big Bang Theory” and “Homeland,” reported a profit of $1.11 per share, beating analysts’ average estimate of $1.07.
  • However, Wall Street seized on the company’s revenue results of $3.17 billion, which missed the analysts’ estimate of $3.26 billion.

AIG swings to quarterly loss, adds $836 million to reserves

  • AIG posted a bigger-than-expected quarterly loss on Thursday as the insurer booked huge catastrophe losses, and said it had set aside $836 million to meet losses related to prior-year accident claims.
  • The insurer recorded pre-tax catastrophe losses of $3 billion related to hurricanes Harvey, Irma and Maria, in line with previously disclosed estimates.
  • AIG swung to a net loss of $1.74 billion, compared with a profit of $462 million a year earlier.

Pandora loses a quarter of its value after abysmal revenue forecast

  • The company revised its fourth quarter revenue forecast downward, to a range of $365 million to $380 million.
  • That is well below the consensus estimate of $413 million before the report.
  • Pandora’s revenue in the last quarter was $379 million, also below Wall Street’s expectations of $380.6 million.

LinkedIn report shows a 24% increase in October hiring

  • Hiring across the U.S. was 24.1 percent higher last month than a year earlier, the data showed.
  • The seasonally adjusted hiring figure was just 0.3 percent higher than in September.
  • LinkedIn’s report is compiled from its 141 million user profiles in the U.S., 20,000 company profiles and 3 million monthly job postings.

CNN Plans to Offer Subscriptions for Digital News Next Year

  • After investing in digital verticals focused on business and politics and acquiring an online-video startup, CNN is gearing up for another big step: It plans to launch tiered subscription offerings for its digital news business as early as the second quarter of next year.
  • A proposed premium offering will give subscribers access to special content on topic-specific verticals such as CNN Money and CNN Politics, built around network personalities.
  • The move is part of a broader five-year plan to develop new revenue streams and reach $1 billion in digital revenue by 2022.
  • CNN’s digital arm expects to pull in $370 million this year.

U.S. Weighs Suit Against AT&T’s Deal for Time Warner

  • The Justice Department is laying the groundwork for a potential lawsuit challenging AT&T’s planned acquisition of Time Warner if the government and companies can’t agree on a settlement, according to people familiar with the matter.
  • The department’s antitrust division is preparing for litigation in case it decides to sue to block the deal, these people said.
  • Simultaneously, the department and the companies are discussing possible settlement terms that would lead to the deal winning government approval with conditions attached. The two sides, however, aren’t yet close to an agreement, the people said.

T-Mobile, Sprint Working to Salvage Merger

  • T-Mobile made a revised offer, which Sprint is considering, some of the people said.
  • Terms of the new offer were unclear. The two sides could reach a deal within weeks, the people said, but the two companies could still fail to agree on deal terms. Sprint’s board discussed the situation at a meeting on Thursday, the people said.

Altria, Anticipating FDA Rule, Is Developing Reduced-Nicotine Cigarettes

  • Marlboro maker Altria Group said it has developed ways of producing reduced-nicotine cigarettes and aspires to become the U.S. market leader in noncombustible tobacco products such as e-cigarettes, attempts to get ahead of potential federal requirements for tobacco companies to change their products.
  • Altria has developed technologies to reduce nicotine in cigarettes should the FDA require it, including tobacco-leaf treatments and tobacco seed varieties with “substantially reduced nicotine levels,” said the company’s general counsel.

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US ECONOMY & POLITIC

Hiring Rebounded in October, Unemployment Rate Fell to 4.1%

  • Nonfarm payrolls rose a seasonally adjusted 261,000 in October, a pickup from the prior month.
  • The unemployment rate ticked down to 4.1%, its lowest level since December 2000.
  • Wages failed to break out, rising 2.4% from a year earlier, a slowdown from the prior month.
  • The share of Americans participating in the labor force fell by 0.4 percentage point to 62.7% in October, the lowest reading since May.
  • In October, 6.52 million workers who wanted a job couldn’t find one.
  • And a broad measure of unemployment that includes Americans stuck in part-time jobs or too discouraged to look for work fell to 7.9%, matching its lowest level since 2006.

U.S. Service-Sector Index Rose to 60.1 in October

  • The Institute for Supply Management on Friday said its nonmanufacturing index rose to 60.1 in October from 59.8 in September, highest level since August 2005.
  • A reading above 50 indicates activity is expanding across service and other industries, while a number below 50 signals contraction.

U.S. Trade Gap Expanded Modestly in September on Rising Imports

  • The U.S. trade deficit widened in September, reflecting imports increasing to the highest level since January.
  • The foreign-trade gap in goods and services expanded 1.7% from the prior month to a seasonally adjusted $43.50 billion in September.
  • Imports increased 1.2% in September, and exports increased 1.1% from August.

U.S. factory orders rise, core capital goods orders revised higher

  • Factory goods orders increased 1.4 percent as demand for a range of goods rose.
  • Orders for non-defense capital goods excluding aircraft -seen as a measure of business spending plans – surged 1.7 percent in September.
  • Orders for transportation equipment rose 4.7 percent, reflecting a 30.8 percent jump in civilian aircraft orders.

Trump taps Fed centrist Powell to lead U.S. central bank

  • President Donald Trump on Thursday tapped Fed Governor Jerome Powell to become head of the U.S. central bank, breaking with precedent by denying Janet Yellen a second term but signaling a continuation of her cautious monetary policies.
  • Powell, 64, a lawyer and investment banker appointed to the Fed board in 2012 by then-President Barack Obama, emerged as Trump’s choice from a slate of possible nominees that included Yellen and others who may have pursued a sharp policy shift.
  • Powell has worked alongside Yellen for the past five years, backing her direction on monetary policy and, in recent years, sharing her concerns that weak inflation justified a continued cautious approach to raising interest rates.

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EUROPE & WORLD

U.S. bomber drills aggravate North Korea ahead of Trump’s Asia visit

  • Two U.S. strategic bombers conducted drills over South Korea, the U.S. Air Force said, raising tensions with North Korea just days before President Donald Trump visits the region seeking to shut down Pyongyang’s nuclear program.
  • Trump arrives in Asia on Sunday, beginning his first trip to the region as president in Japan before heading to South Korea and China, then Vietnam and the Philippines.

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TODAY in HISTORY

  • The first Opium War between China and Britain broke out (1839)
  • Panama proclaimed its independence from Colombia (1903)
  • Clarence Birdseye marketed the first frozen peas (1952)
  • The Soviet Union sent the first animal, a dog named Laika, into space aboard the Sputnik II. Laika died in orbit (1957)
  • Carol Moseley-Braun became the first black woman elected to the U.S. Senate (1992)

This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, Wall Street Journal.

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