DAILY MARKET REPORTS
- The United States and China engaged in tit-for-tat tariffs on Friday, both countries imposing duties worth $34 billion on each other’s goods.
- China’s securities regulator said on Sunday it plans to ease restrictions on foreign investment in stocks listed on the Shanghai or Shenzhen exchanges to attract more foreign capital and support the economy.
- S&P 500 companies are expected to report 21% growth in earnings per share for the June quarter.
- But focus will be on any warnings companies might give about the impact of trade tariffs.
US FINANCIAL MARKET
Starbucks to Eliminate Plastic Straws by 2020
- Starbucks Coffee plans to phase out single-use plastic straws from its more than 28,000 company-operated and licensed stores by 2020 in an effort to reduce its global waste footprint.
- The food and beverage retailer said Monday that it would switch to a strawless lid or alternative-material straw in place of plastic straws.
- The company has already designed and developed a strawless lid that it expects to become a standard for its iced coffee, tea and espresso beverages. reduce its global waste footprint.
Saudi Arabian Airlines in Boeing 777X order talks: sources
- A potential Saudi order could alleviate production pressure for Boeing which is now unlikely to sell 80 jets that IranAir ordered before the United States withdrew from a nuclear deal with Iran and said it would reimpose sanctions on Tehran.
- Companies from Saudi Arabia and the United States have signed business deals worth tens of billions of dollars since Trump took office in 2017.
- The 777X is an upgrade to Boeing’s successful mini-jumbo series. The 406–seat 777-9 is due to enter service in 2020.
PayPal to spend $3 billion a year on M&A
- PayPal is on the lookout for further acquisitions following its recent takeover of iZettle, the Swedish fintech startup, for $2.2 billion, in the U.S. payments company’s biggest ever deal.
- Since separating from online marketplace eBay in 2015, PayPal has shifted from mostly processing online transactions for its parent company to offering a suite of digital payment services.
Buffett Starts to Say Goodbye to a Pile of Equity-Index Options
- Buffett initiated the deals between 2004 and 2008 to bet that stock prices would rise in the long run.
- The options, tied to four major equity indexes, added a total of $2.4 billion to earnings from 2008 to 2017.
- Buffett, 87, already ended some other derivative bets, exiting his last credit-default agreement in 2016.
Third of sovereign funds plan to cut equity holdings, cite trade war fear
- Over a third of sovereign investors plan to cut their equity exposure over the next three years after a strong run in 2017, citing trade wars, geopolitics and high valuations as headwinds to performance, a study by asset manager Invesco showed.
- The annual report, which is based on interviews with 126 sovereign investors and central bank reserve managers with $17 trillion in assets, found equities had overtaken bonds to become the biggest asset class in portfolios, averaging 33 percent. This is up from 29 percent in 2017.
- Nearly half of sovereign investors are now incrementally or materially overweight equities, but while 40 percent said they were happy with the status quo, 35 percent plan to reduce their equity exposure over the medium term, Invesco noted.
US ECONOMY & POLITIC
Wage Gains Threaten to Squeeze Retail, Industrial Profits
- Rising wages are beginning to eat into the profits of some U.S. companies.
- Firms from dollar stores to hotel operators to fast-food chains have warned in recent months that higher labor costs have been a drag on their profits—a potential headwind for the nine-year stock-market rally as it struggles for momentum ahead of the second-quarter earnings season.
- Average hourly earnings increased 2.7% in June from a year earlier.
- According to a report from Bank of America Merrill Lynch Global Research, 10% of companies in the S&P 500 mentioned higher labor costs as a factor that weighed on their first-quarter results, up from 8% in the fourth quarter and the highest level since the bank began tracking the data in late 2015.
Trump Making Supreme Court Pick to Cement Conservative Majority
- After a short but intense build-up since Justice Anthony Kennedy announced his retirement less than two weeks ago, the president has scheduled a prime-time event from the White House East Room at 9 p.m. New York time to name his choice.
- Appeals court Judge Thomas Hardiman was solidly in the mix as of Sunday after being first runner-up a year ago.
- Judge Brett Kavanaugh looked to have the inside track within the White House last week but may have hit a snag.
- Other finalists are said to be appeals court judges Amy Coney Barrett, 46, and Raymond Kethledge, 51. Trump had a strong favorable reaction to Kethledge, while Barrett was seen as a less likely choice.
- The president’s interview with her was only about 30 minutes — shorter than with the others.
EUROPE & WORLD
Boris Johnson Quits, Upending May’s Brexit Plans
- Boris Johnson has resigned as foreign secretary, becoming the third minister in 24 hours to walk out of the government rather than back Theresa May’s plans for a soft Brexit.
- The prime minister hammered out a compromise with her deeply divided cabinet in an all-day meeting at Chequers on Friday, but after consulting friends and allies, Johnson decided he could not promote the deal.
- Pressure on the foreign secretary had been mounting since fellow pro-Brexiter David Davis resigned as Brexit secretary on Sunday night, swiftly followed by his No 2 at the Department for Exiting the EU, Steve Baker.
- A Downing Street spokesman said: “This afternoon, the prime minister accepted the resignation of Boris Johnson as foreign secretary. His replacement will be announced shortly. The prime minister thanks Boris for his work.”
Nissan Admits Emissions-Test Data Was Falsified
- It is the second compliance scandal for Nissan, after faults in vehicle inspection procedures saw it recall more than a million cars last year.
- Staff at four Nissan plants altered emissions and fuel-economy data for 913 cars tested as far back as 2013, the company said.
- More than a dozen vehicle models for the Japanese market were affected.
- An internal review of vehicle testing also found other problems such as erroneous calibration of testing equipment.
- Combined, bad testing and rewritten data affected a total of more than 1,000 cars.
World’s Largest Mobile Phone Factory Set to Open in India
- Samsung opened the world’s largest mobile phone factory in India, in a win for Prime Minister Narendra Modi’s flagship program to lure investors to manufacture in the South Asian nation.
- The factory was inaugurated by Modi and South Korean President Moon Jae-in during their visit to the facility located at the outskirts of Delhi. This will double Samsung’s Noida unit capacity for mobile phones to 120 million units a year from 68 million units a year.
- The phase-wise expansion will be completed by 2020.
Chinese Smartphone Maker Xiaomi Falls in Hong Kong Trading Debut
- Chinese smartphone maker Xiaomi wants the world to believe it is the next big internet stock. But investors took a cautious view of that sales pitch, sending its shares moderately lower in their Monday trading debut.
- The lackluster start came after Xiaomi priced its $4.7 billion initial public offering at the low end of an expected range, yielding a valuation of $54 billion. If the shares perform poorly in the coming days and weeks, they could hurt the prospects of other technology outfits that are preparing their own multibillion-dollar listings in Hong Kong.
Tesla raises car prices in China amid trade war
- Tesla has raised prices on its Model X and S cars by over $20,000 in China, automotive news website Electrek reported on Monday, making it one of the first U.S. carmakers to hike prices in the wake of rising trade tensions.
- China planned to reduce import tariffs to 15 percent from 25 percent for most vehicles from July 1.
- China contributed about 17 percent to Tesla’s total revenue in 2017 and the electric car maker ships an estimated 15,000 cars a year to the country.
BMW Unveils Plan to Boost Production in China
- BMW is increasing capacity at two car manufacturing plants in China in a move that comes just days after U.S. President Donald Trump started a trade war with the Asian nation.
- BMW and Chinese partner Brilliance Automotive Group Holdings signed an agreement Monday to expand their joint venture BMW Brilliance Automotive, the German automaker said in a press release. The deal will boost the number of cars they produce at two facilities in China to 520,000 annually in 2019.
TODAY in HISTORY
- Argentina formally declared independence from Spain (1816)
- Zachary Taylor, the 12th president of the U.S., died after only 16 months in office (1850)
- The British Parliament proclaimed that as of Jan. 1, 1901, the six Australian colonies would be united at the Commonwealth of Australia (1900)
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