DAILY MARKET REPORTS
- U.S. stocks rose on Thursday after the European Central Bank (ECB) promised not to raise euro zone interest rates before the middle of next year and on better-than-expected May retail sales data.
- The bank’s statement came as a relief, especially after the U.S. Federal Reserve raised interest rates for the second time this year on Wednesday and hinted at two more hikes by the end of 2018.
- ECB, however, said it would wind down its 2.55 trillion euro stimulus program by the close of the year.
- Retail sales for May rose 0.8% from a month earlier to $502 billion, the biggest one-month jump since November.
- The number of workers filing new claims for unemployment benefits fell below expectations, a signal of a further tightening labor market.
- Mylan fell 3.8% after the company said U.S. regulators were unable to approve its generic version of inhaled lung drug Advair as they found “minor deficiencies” in the treatment.
- Comcast jumped 4.4% after the company offered Twenty-First Century Fox $65 billion to lure Fox away from a merger with Walt Disney, with a 20% higher offer.
US FINANCIAL MARKET
Comcast offers $65 billion to lure Fox from Disney bid
- Comcast offered $65 billion on Wednesday to lure Twenty-First Century Fox away from a merger with Walt Disney, launching the first salvo with its 20% higher offer and setting up a bidding war between two of the largest U.S. media companies.
- Comcast Chief Executive Brian Roberts said he was highly confident regulators would allow Comcast to acquire most of Fox’s media assets after AT&T’s court victory on Tuesday, which allowed it to buy Time Warner for $85 billion.
- Comcast said it intended to pursue its $30 billion acquisition of Sky in parallel with its Fox bid. Comcast bid for Sky in April, after Fox’s bid for the remainder of European pay-TV group it did not already own was delayed by regulators.
FDA finds deficiencies in Mylan’s generic Advair; shares fall
- Mylan NV said on Wednesday that U.S. health regulators were unable to approve its generic version of GlaxoSmithKline’s blockbuster inhaled lung drug Advair for the second time, as they found “minor deficiencies” in the treatment.
Apple to undercut popular law-enforcement tool for cracking iPhones
- Apple said it will change its iPhone settings to undercut the most popular means for law enforcement to break into the devices.
- The privacy standard-bearer of the tech industry said it will change default settings in the iPhone operating system to cut off communication through the USB port when the phone has not been unlocked in the past hour.
- That port is how machines made by forensic companies GrayShift, Cellebrite and others connect and get around the security provisions that limit how many password guesses can be made before the device freezes them out or erases data. Now they will be unable to run code on the devices after the hour is up.
Microsoft takes aim at Amazon with push for checkout-free retail
- Microsoft is working on technology that would eliminate cashiers and checkout lines from stores, in a nascent challenge to Amazon’s automated grocery shop, six people familiar with the matter told Reuters.
- Microsoft has shown sample technology to retailers from around the world and has had talks with Walmart about a potential collaboration.
- Microsoft’s technology aims to help retailers keep pace with Amazon Go, a highly automated store that opened to the public in Seattle in January. Amazon customers scan their smartphones at a turnstile to enter. Cameras and sensors identify what they remove from the shelves.
Musk’s Boring Company wins bid to build high-speed system in Chicago
- The City of Chicago has selected billionaire entrepreneur Elon Musk’s The Boring Company to build a high-speed underground commuter system from the Loop to O’Hare International Airport, one of the world’s busiest.
- The system will be comprised of 16-passenger vehicles that will travel up to 150 miles (240 km) per hour through a tunnel that will cut the current 30 to 45-minute trip between the airport and Chicago’s business district down to 12 minutes.
Elon Musk buys 72,500 of Tesla shares
- Elon Musk bought 72,500 shares of the company’s common stock, a regulatory filing showed on Wednesday.
- Musk bought the shares at between $342.44 and $347.44 per share in multiple transactions on Tuesday and Wednesday.
- He is already the electric car maker’s largest shareholder and now owns 33.74 million shares worth about $11.6 billion.
Ford says fuel cell venture with Daimler will close
- Ford and Daimler are winding down a joint venture formed to develop automotive fuel cell technology, Ford said on Wednesday, as both companies plan to take their respective fuel cell technology development in-house.
- Despite years of research and investment by major automakers and startups, vehicles powered by fuel cells remain a tiny niche in the global vehicle market.
- Honda and General Motors are collaborating on fuel cell development, and Toyota is ramping up efforts to mass-produce fuel cell stacks. Earlier this week, Ballard Power extended a contract with Volkswagen’s Audi unit to work on fuel cell development.
Snapchat Zigs Where Facebook Zags
- Snapchat is opening its platform to outside software developers in a push for growth that could also test its commitment to privacy.
- Starting Thursday, the Snapchat platform will allow developers to add features and integrate outside apps, which Snap hopes will draw more users.
- Snap’s developer platform shares just a sliver of the information that Facebook shares with developers and was built with privacy in mind, Snap says. But under pressure to prove that it can attract more users, the company is opening access slightly.
- Snap’s track record with protecting user security isn’t flawless. In 2014, unauthorized third-party developers built apps that tricked Snap’s servers into sharing information, letting users secretly save Snaps.
Grabbing an Uber? Now You Can Buy Your Own Insurance for the Ride
- Chubb has teamed with a technology startup to sell insurance to passengers of ride-hailing services like Uber to cover medical and other costs in the event of an accident.
- The startup, Sure, has developed a product for passengers to purchase accident and death coverage on an on-demand, per-day basis via a smartphone application. It covers costs of injuries sustained when traveling in a ride-sharing vehicle.
- Chubb will underwrite Sure’s ride-sharing policies, which will pay up to $10,000 in medical costs per accident and include a $100,000 death benefit, the firms said. It costs $2.40 for a 24-hour period.
Royal Caribbean to Buy Controlling Stake in Silversea
- Royal Caribbean Cruises will buy a roughly 67% stake in privately held Silversea Cruises for about $1 billion.
- Silversea’s largest ship can serve just over 600 passengers, but many have a capacity of 100 to 200. Earlier this year Royal Caribbean debuted Symphony of the Sea, the world’s largest cruise ship, which can serve 5,518 guests.
- The deal, which Royal Caribbean expects to finance with debt, is expected to close later this year.
US ECONOMY & POLITIC
Fed Raises Interest Rates, Sets Stage for Two More Increases in 2018
- The Federal Reserve said it will raise interest rates by another quarter-percentage point and signaled it could lift them at a slightly faster pace this year to keep a strengthening economy on an even keel.
- The latest increase, the second this year, will bring the benchmark federal-funds rate to a range between 1.75% and 2%.
- Officials penciled in a total of four rate increases for this year, up from a projection of three increases at their March meeting.
- 8 of 15 officials now expect at least four rate increases will be needed this year, up from seven in March and four in December.
- Most officials expect the Fed would need to raise rates at least three more times next year and at least once more in 2020, leaving rates in a range between 3.25% and 3.5% by the end of 2020.
- They now see gross domestic product rising 2.8% this year, up from an earlier projection of 2.7%, and they see the unemployment rate falling to 3.6% this year and 3.5% next year, from earlier projections of 3.8% and 3.6%, respectively.
U.S. Retail Sales Soared in May
- Sales at U.S. retailers rose 0.8% from a month earlier to $502 billion, the Commerce Department said Thursday.
- That marked the biggest one-month jump since November.
- Americans boosted spending on cars, building supplies, sporting goods, healthcare products, clothing and other goods. Excluding auto sales, which tend to fluctuate significantly month to month, retail spending grew 0.9%.
- The report far exceeded economists’ expectations of a 0.4% increase in overall retail sales and a 0.5% rise in sales excluding autos.
- Retail sales rose 5.9% in the year through May, roughly double inflation, as measured by the consumer-price index.
U.S. Jobless Claims Fell Last Week, Reflecting Tight Labor Market
- Initial jobless claims, a proxy for layoffs across the U.S., decreased by 4,000 to a seasonally adjusted 218,000 in the week ended June 9. Economists expected 225,000 new claims last week.
- The four-week moving average of claims, a more-stable measure, decreased by 1,250 to 224,250 last week-just above the lowest levels recorded since the 1960s, when the labor force was much smaller.
- Thursday’s report showed the number of claims workers made for longer than a week decreased by 49,000 to 1,697,000 in the week ended June 2. That was the lowest level since 1973.
Trump to meet with top trade advisers on activation of China tariffs
- U.S. President Donald Trump will meet with his top trade advisers on Thursday to decide whether to activate threatened tariffs on billions of dollars in Chinese goods, a senior Trump administration official said.
- Trump is due to unveil revisions to his initial tariff list targeting $50 billion of Chinese goods on Friday.
- People familiar with the revisions said that the list will be slightly smaller than the original, with some goods deleted and others added, particularly in the technology sector.
- It remains unclear when Trump would activate the tariffs if he decides to do so. Several industry lobbyists told Reuters that they expect the move to come as early as Friday, with publication of a Federal Register notice, or it could be put off until next week.
Attorneys for Michael Cohen, Trump’s Lawyer, Are Quitting His Case
- The attorneys for Michael Cohen, President Donald Trump’s longtime personal lawyer, are expected to stop representing him in the criminal investigation into his business dealings, according to a person familiar with the matter.
- Mr. Cohen’s attorneys are reviewing more than 3.7 million documents federal prosecutors seized in an April raid of Mr. Cohen’s home, office and hotel room to designate which communications they see as protected by attorney-client privilege, ahead of a Friday deadline set by the Southern District of New York.
- Mr. Cohen hasn’t yet decided whether he will cooperate with prosecutors in the case. He hasn’t been charged with any crime.
DOJ Watchdog’s Clinton Report Expected to Reignite Battle Over FBI Probes
- The Justice Department’s in-house watchdog is set to release on its long-awaited report on the FBI’s handling of the 2016 investigation into Hillary Clinton’s use of a private email server, an event certain to fuel a renewed fight over the bureau’s handling of politically sensitive probes of Mrs. Clinton and President Donald Trump.
- The report is set to be released at 2 p.m. Eastern time, while Mr. Trump and members of Congress will receive briefings earlier in the day.
- The document, expected to run as long as 500 pages, will provide a detailed examination of actions taken by top leaders of the Justice Department and FBI in the high-profile email probe, according to people familiar with its contents.
- The review is expected to sharply criticize former FBI Director James Comey and other top Justice Department officials for how they handled the Clinton investigation, the people said.
GOP Senate Campaign Arm Shuns Corey Stewart in Virginia
- The Senate Republican campaign arm doesn’t plan to get behind the party’s newly nominated candidate in Virginia, the group’s leader said, after a Tuesday primary that threatens to put the party on the defensive in several key races in the state.
- Corey Stewart, who won Tuesday’s primary, has repelled GOP leaders over his embrace of Confederate monuments and endorsements of far-right politicians such as Paul Nehlen, a self-described “pro-white” Wisconsin congressional candidate. Mr. Stewart on Wednesday said it is his wing of the party that is ascendant.
- Mr. Stewart last year campaigned for governor largely on a pro-Confederate emblem platform; he barely lost the Republican primary to Ed Gillespie, a former Republican National Committee chairman.
- Mr. Stewart will face Democratic Sen. Tim Kaine in the general election. Republicans didn’t consider Mr. Kaine to be vulnerable in the general election, but there is fear in the GOP that Mr. Stewart’s nomination could depress turnout among Republican voters in four GOP-held House districts that Democrats hope to flip.
EUROPE & WORLD
ECB to End Bond-Buying Program in December as Crisis-Era Policies Wind Down
- The European Central Bank laid out plans Thursday to wind down its €2.5 trillion ($2.9 trillion) bond-buying program by December but said it didn’t expect to raise rates “at least through the summer of 2019.”
- The ECB’s decision to start phasing out easy-money policies comes despite mounting evidence that the eurozone economy is slowing, amid threats ranging from international trade conflicts to political turbulence in Italy.
- The bank lowered its forecast for 2018 gross domestic product growth from 2.4% to 2.1%.
- However, inflation has steadily increased and at 1.9% in May, was near the ECB’s target of just below 2%. It raised its inflation projections for this year and next, to 1.7%.
- Thursday’s decision leaves Japan as the only major central bank with no end in sight to its purchases of bonds and other assets. The Bank of Japan meets Friday and isn’t expected to announce any policy changes.
China holds fire on rates, posts ‘shockingly weak’ activity growth
- China’s central bank sparked concerns over the health of the economy earlier in the day when it left short-term interest rates unchanged, surprising markets which had expected it to follow a hike by the Federal Reserve, as it has tended to do.
- Industrial output, investment and retail sales all grew less than expected, suggesting further weakness ahead if Beijing perseveres with its crackdowns on pollution, questionable local government spending and off-balance sheet “shadow” financing.
- China’s fixed-asset investment (FAI) growth cooled to 6.1% in January-May from the same period a year earlier, the slowest pace since at least February 1996. Analysts had expected it to remain steady at 7.0%, the same as in January-April.
- Retail sales grew 8.5% in May, the slowest since June 2003. Analysts had expected a slight pick-up to 9.6%.
- Growth in infrastructure spending, a powerful economic driver last year, slowed to 9.4% in the first five months, from 12.4% in January-April.
Volkswagen fined one billion euros by German prosecutors over emissions cheating
- Volkswagen was fined one billion euros ($1.18 billion) over diesel emissions cheating in what amounts to one of the highest ever fines imposed by German authorities against a company, public prosecutors said on Wednesday.
- The German fine follows a U.S. plea agreement from January 2017 when VW agreed to pay $4.3 billion to resolve criminal and civil penalties for installing illegal software in diesel engines to cheat strict U.S. anti-pollution tests.
- The prosecutor’s office in Braunschweig imposed the fine against VW on Wednesday for organizational deficiencies which failed to prevent “impermissible software functions” from being installed in 10.7 million cars between 2007 and 2015.
- The fine is the latest blow to Germany’s auto industry which cannot seem to catch a break from the diesel emissions crisis. Germany’s government on Monday ordered Daimler to recall nearly 240,000 cars fitted with illicit emissions-control devices, part of a total of 774,000 models affected in Europe as a whole.
Civilians flee bombardment as Arab states pound Yemen port
- Arab warplanes and warships pounded Houthi positions in Yemen’s Hodeidah for a second day on Thursday, as a Saudi-led alliance tried to seize the main port in the largest battle of a war that has created the world’s worst humanitarian crisis.
- Coalition forces were now just 2 km from the airport, Emirati Ambassador to the United Nations Obeid Salem Al Zaabi told reporters in Geneva.
- The United Nations is struggling to avert disruption to the port, the main lifeline for food aid to a country where 8.4 million people are on the verge of starvation, potentially the world’s worst famine for generations.
- Capturing Hodeidah, the Houthis’ only port, would give the coalition the upper hand in the war, in which neither side has made much progress for years. Western countries have quietly backed the Arab coalition, but the threat of humanitarian catastrophe could unravel that support.
- The United Nations says 22 million Yemenis need humanitarian aid, and the number at risk of starvation could more than double to more than 18 million by year end unless access improves.
Engine makers on track with recovery plan for A320 engines, Airbus says
- Engine makers Pratt & Whitney and CFM are on track with a recovery plan after delays left Airbus having to park dozens of aircraft without engines, an executive at the European planemaker said on Thursday.
- The delays in getting engines from United Technologies unit Pratt & Whitney and CFM International, co-owned by Safran and General Electric, have left Airbus lagging behind the pace it needs to reach its full-year delivery goal.
- “We have agreed on a plan with both of them to catch up with production, both are now hitting the targets and are on track, which is good news,” Klaus Roewe, head of the A320 jet family program, told reporters in Hamburg.
Rolls-Royce cuts 4,600 jobs at ‘pivotal moment’ for business
- Rolls-Royce is to cut 4,600 jobs over two years in the latest attempt by boss Warren East to reduce costs and complexity and make Britain’s best known engineering company more profitable and dynamic.
- The announcement marks the biggest round of job cuts since the company had to retrench during the aviation crisis that followed the 9/11 attacks in the United States in 2001.
- The plan will remove 10% of the workforce, targeting duplication in corporate, administration and management roles to try to save 400 million pounds ($536 million) a year by 2020.
- Two thirds of the job cuts will fall in Britain. Rolls is the biggest employer in the city of Derby, central England, with 15,700 at its headquarters.
French parliament approves SNCF reform bill in breakthrough for Macron
- France’s parliament overwhelmingly approved a bill overhauling the indebted state-run rail company SNCF on Wednesday, handing a significant victory to President Emmanuel Macron in his bid to outflank the unions and reform the economy.
- It represents the most fundamental reform of the 150,000-strong SNCF since rail nationalization in the 1930s, and Macron has overcome a challenge that defeated previous administrations.
- The new law will turn the SNCF into a joint-stock company, giving its management greater corporate responsibility, will phase out its domestic passenger monopoly from 2020 and put an end to generous benefits and pensions for future employees.
- The government has also said it will write off 35 billion euros of the SNCF’s 47 billion euros ($55 billion) of debt, giving the company more room to maneuver and prepare for greater competition from other European operators.
Venezuela eyes first-ever refining of foreign oil – documents
- Venezuela is considering refining foreign crude for the first time to produce fuels, according to internal documents seen by Reuters, the latest sign of the country’s strain to meet its obligations despite having the world’s largest crude reserves.
- State-run oil company PDVSA has drawn up a plan to process up to 57,000 barrels per day (bpd) of foreign crude in June at the country’s largest refinery.
- The fuels produced would fulfill export contracts largely to Russian and Chinese customers and reduce purchases of fuels for domestic use, the documents seen on Wednesday showed.
- To meet its domestic demands and PDVSA’s fuel supply contracts, Venezuela would have to produce some 850,000 bpd of fuels, the documents show.
- Neither of the June alternatives show it getting close to that level. If PDVSA decides to process the foreign crude, it would produce 606,000 bpd, and less if it does not.
Embattled ZTE seeks $10.7 billion credit line, nominates 8 board members
- Chinese telecommunications giant ZTE has proposed a $10.7 billion financing plan and nominated eight board members in a drastic management overhaul, as it seeks to rebuild a business crippled by a U.S. supplier ban.
- The news indicates China’s No.2 telecom equipment maker is working towards meeting conditions laid out by the United States so it could resume business with American suppliers, who provide about 25-30% of the components used in ZTE’s equipment.
- As part of its deal with the United States, ZTE needs to replace its 14-person board and fire all leadership members at or above the senior vice president level, along with any executives or officers tied to the wrongdoing.
Antarctic thaw quickens, trillions of tons of ice raise sea levels
- An accelerating thaw of Antarctica has pushed up world sea levels by almost a centimeter since the early 1990s in a risk for coasts from Pacific islands to Florida, an international team of scientists said on Thursday.
- The frozen continent lost almost three trillion tons of ice between 1992 and 2017, the 84 scientists said in what they called the most complete overview of Antarctic ice to date.
- The thaw, tracked by satellite data and other measurements, contributed 0.76 cm to sea level rise since 1992, and the ice losses quickened to 219 billion tons a year since 2012, from 76 billion previously.
TODAY in HISTORY
- The United States Army was founded. (1775)
- The Continental Congress adopted the Stars and Stripes as the official flag of the U.S.(1777)
- German troops entered Paris. The Nazis opened the Auschwitz concentration camp in Poland. (1940)
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