DAILY MARKET REPORTS
- The S&P 500 and the Dow Jones Industrial Average were largely flat on Friday hit by concerns about ongoing trade talks between the United States and other major economies, but gains in Apple and Amazon lifted the Nasdaq.
- Wall Street’s rally came to a halt on Thursday after a report that U.S. President Donald Trump was ready to impose tariffs on $200 billion more of Chinese goods next week.
- A separate report on Friday about Canadian government officials expressing concerns that a final North American Free Trade Agreement (NAFTA) pact will not be reached within the Friday deadline, added to the trade worries.
- Apple rose 1.6%, extending its gains for the seventh day.
- Warren Buffett said Berkshire Hathaway had added to its stake and Apple announced a Sept. 12 event, at which it is expected to unveil new iPhone models.
- Amazon.com was up 0.8%, topping $2,000 for the second day to renew its push to join Apple in the $1 trillion market cap club.
US FINANCIAL MARKET
- Canadian athletic apparel maker Lululemon Athletica posted a second-quarter profit that almost doubled from a year earlier, beating estimates, lifted by strong growth in online sales, particularly in China.
- Revenue rose to $723.5 million from $581 million a year ago, ahead of the $668 million expected by analysts, boosted by e-commerce sales growth of nearly 50%.
- Sales at Lululemon stores open for at least 12 months were up a staggering 20% during the quarter. Analysts were forecasting same-store sales growth of 9.6%.
- Comparable sales in Asia grew 55% from a year ago, with the company’s China e-commerce business expanding more than 200%.
- The company reported net income of $95.8 million in the quarter, compared with analyst estimates of $66.5 million, and up from $48.7 million a year earlier.
Gunmaker American Outdoor Brands jumps more than 20% after earnings beat
- Shares of American Outdoor Brands jumped more than 20% after the bell on Thursday after the company reported earnings that beat Wall Street analysts’ expectations.
- American Outdoor Brands had revenues of $138.83 million for the quarter, compared to year-ago revenues of $129.02 million and slightly ahead of expectations of $134.5 million.
- The company posted a profit of $7.6 million compared to a loss of $2.2 million a year earlier and 9 cents ahead of estimates on a per share basis.
Coca-Cola takes plunge into coffee with $5.1 billion Costa deal
- Coca-Cola has agreed to buy coffee chain Costa for $5.1 billion to extend its push into healthier drinks and take on the likes of Starbucks and Nestle in the booming global coffee market.
- The purchase from Britain’s Whitbread of Costa’s almost 4,000 outlets thrusts the world’s biggest soda company into one of the few bright spots in the sluggish packaged food and drinks sector.
- Paying about 1 billion pounds ($1.3 billion) more than some analysts had expected, Coke will use its distribution network to supercharge Costa’s expansion as it chases current market leader Starbucks and its almost 29,000 stores across 77 markets.
- Beyond coffee shops, Costa would provide an important growth platform ranging from beans to bottled drinks in what is one of the world’s fastest-growing drink categories, growing around 6% a year.
Boeing wins U.S. contract for carrier-based refueling drones
- Boeing has been awarded an $805 million contract for design, delivery, and support of four unmanned drones based on aircraft carriers that will be used to refuel aircraft for the U.S. Navy.
- The Navy published a request for proposals in 2017 that sought a drone that could refuel and extend the combat range, of fighter jets including Boeing F/A-18 Super Hornets, Boeing EA-18G Growlers, and Lockheed Martin F-35 fighters.
- The Navy said it expected the contract to be completed in 2024 and that Boeing won the deal over two other bidders.
Apple expected to unveil new iPhone models on September 12
- Apple will host an event on Sept. 12 at the Steve Jobs Theater, where it is widely expected to unveil new iPhone models.
- Analysts believe they will release three new smartphones this year, including one with a larger display than previous models.
- Apple is expected to release an iPhone with an edge-to-edge display similar to the X but using less-costly LCD screen technology.
- A few hours after Apple’s announcement, 9to5Mac, a technology news website, posted photographs of two gold iPhone models stacked on top of each other, with a larger-screened model on the bottom.
- 9to5Mac told Reuters the photographs were not mockups and represented Apple’s actual planned products but declined to say how it had obtained them.
Coming Soon to Facebook: Lots of Extreme Political Ads
- Campaign strategists are gearing up to flood Facebook with inflammatory and polarizing ads heading into the midterm elections, saying its advertising platform rewards extreme messaging more than other venues.
- The disconnect highlights the social network’s often-controversial role as a political tool, where Facebook wants to be viewed as a promoter of a healthy debate while some believe its platform contributes to divisive civic discourse.
- Campaign consultants for both the Republican and Democratic parties said they are urging candidates to spend more of their advertising budgets on Facebook this election cycle.
- Campaigns spent about $1.4 billion on online political advertisements in 2016, a large portion of which went to Facebook, according to Borrell Associates, a research firm that tracks political ad spending.
- Its cost structure and ability to target narrow slices of voters make it a uniquely effective tool for motivating people to act in support of a cause or a candidate.
Walmart adds toys and shelf space for holidays, expands online offerings
- Walmart has significantly increased the selection of toys in its stores and online for the holiday season, and is expanding its toy aisles in certain markets, all to lure shoppers after rival seller Toys R Us went out of business earlier this summer.
- Walmart added 30% more new toys to its stores and expanded its online selection by 40%, including some toys that are exclusive to the retailer.
- The retailer also plans more than 2,000 in-store demos of toys, “a lot more” than last year, to let kids play with the items before parents decide to buy.
- The world’s largest retailer will also begin its layaway program on Friday, one day earlier than last year, allowing customers to pay off purchases in installments.
- Layaway plans can have a sizeable impact on sales and past analyst estimates suggest the program accounted for as much as 15% of holiday revenue at Walmart stores in poorer areas of the United States.
US ECONOMY & POLITIC
- Canada and the United States will make a final push to iron out differences on a pact to modernize the North American Free Trade Agreement (NAFTA) by a Friday deadline set by President Donald Trump, but the atmosphere soured late on Thursday.
- Canadian officials are now expressing concern that a final NAFTA deal will not be concluded on Friday, the Globe and Mail reported, citing a source familiar with the situation.
- They will reconvene on Friday morning, with Mexico on standby to return to talks aimed at ending a year of hard-fought three-way negotiations.
- U.S. Trade Representative Lighthizer refused to budge despite repeated efforts by Freeland to offer concessions to maintain an independent trade dispute mechanism in a revamped trade deal, which has been the biggest sticking points for Canadians.
- Canada has reportedly offered to make concessions to its protected dairy industry, which has come under attack from Trump, in an effort to retain Chapter 19, a mechanism that has hindered the U.S from pursuing anti-dumping and anti-subsidy cases.
Trump ready to ratchet up China trade war with more tariffs
- U.S. President Donald Trump is prepared to quickly ramp up a trade war with China and has told aides he is ready to impose tariffs on $200 billion more in Chinese imports as soon as a public comment period on the plan ends next week.
- Washington is demanding Beijing improve market access and intellectual property protections for U.S. companies, cut industrial subsidies and slash a $375 billion trade gap.
- Washington’s new proposed 25% tariffs would affect consumer products including home building supplies, technology products, bicycles, and apparel.
- A public comment period on the proposal is set to end on Sept. 6, and Trump plans to impose the tariffs after that deadline, Bloomberg said.
EU’s Top Trade Official Proposes Ending All Car Tariffs With U.S.
- The European Union’s top trade official Thursday proposed going beyond a U.S.-EU trade plan agreed at the White House last month and eliminating all car tariffs.
- Cecilia Malmström told members of the European Parliament that for autos, the EU is “willing to bring down even our car tariffs to zero, all tariffs to zero if the U.S. does the same.”
- Mr. Trump has attacked the EU’s 10% tariff on imports of passenger cars from the U.S., which levies a tariff of 2.5% on EU passenger cars.
- But the U.S. imposes a 25% duty on light trucks, which today account for roughly 60% of the U.S. passenger-vehicle market.
- The next day in the Senate, U.S. Trade Representative Robert Lighthizer said that talks on slashing vehicle tariffs should also bring in agriculture—a sector that the EU has deemed not open for negotiation.
Japan to Spend Billions on U.S. Missile-Defense System
- Japan is set to pay $2.1 billion for a new U.S. missile-defense system, one of its largest military acquisitions, as pressure from President Trump accelerates Tokyo’s spending on American military hardware.
- A large chunk of planned spending is for two units of Lockheed Martin’s Aegis Ashore ballistic-missile-defense system, which will give the entire Japanese archipelago a new shield from North Korean missiles.
- Last year Mr. Trump called for Tokyo buy “massive amounts” of U.S. military equipment to reduce its trade surplus with Washington and its dependency on U.S. protection.
- Mr. Trump has found a partner in Prime Minister Shinzo Abe, who favors a shift away from Japan’s strict postwar pacifism and wants to hold a referendum to rewrite part of Japan’s constitution to explicitly state the country’s right to have a military.
Trump Says He’ll Eliminate Pay Raises for Civilian Federal Employees Next Year
- President Trump said Thursday he would invoke his emergency authority to freeze pay for more than two million civilian federal workers next year, citing the need to restrain the growth of federal spending.
- Under current law, federal civilian employees are set to receive a 2.1% across-the-board pay increase beginning on Jan. 1, 2019, but Mr. Trump said he is eliminating those raises.
- Democrats and federal workers’ unions decried the move, coming at a time of vigorous economic growth and after Congress passed a sweeping tax cut that congressional scorekeepers estimate will increase the budget deficit by $1 trillion over a decade.
- The president is authorized to submit alternative plans for federal employee pay if a “national emergency or serious economic conditions affecting the general welfare” would render the planned pay increases inappropriately.
Trump to Sign Executive Order on Retirement Savings
- President Trump is expected to sign an executive order Friday directing the government to review rules requiring retirees to start taking annual withdrawals from retirement funds after they turn 70 ½ and to consider making it easier for small businesses to offer employees 401(k) plans.
- As part of the initiative, the Treasury Department would review the rules on required minimum distributions see if investors can keep more money for a longer time in 401(k)s, individual retirement accounts and other tax-sheltered savings plans.
- The executive order also would direct the Treasury and Labor departments to consider issuing regulations that could make it easier and cheaper for smaller employers to band together to offer 401(k)-type plans for their workers.
- The arrangement has been available, but only to employers with an affiliation or connection, such as members of the same industry trade association.
SEC Chairman Wants to Let More Main Street Investors In on Private Deals
- The Securities and Exchange Commission wants to make it easier for individuals to invest in private companies, including some of the world’s hottest startups, the agency’s chairman said in an interview.
- SEC Chairman Jay Clayton said the commission also wants to take steps to give more individual investors a shot at companies that have been out of their reach because they haven’t gone public.
- Mr. Clayton said the SEC is now weighing a major overhaul of rules intended to protect mom-and-pop investors, with the goal of opening up new options for them.
EUROPE & WORLD
- China will limit video game releases and set new restrictions on play time for youths, further punishing companies in the world’s largest game market.
- The action followed increasing government scrutiny of video games in China, which have been criticized in state media for graphic violent content as well as the amount of time young people spend playing them.
- The new measures were announced by China’s Ministry of Education as part of a broader plan to combat vision problems among schoolchildren and adolescents.
- No further details, such as the number of games to be released or specific playtime restrictions, were released.
Japanese Chip Maker Renesas in Talks to Buy Integrated Device Technology
- Japanese chipmaker Renesas Electronics said Friday that it was in the late stages of negotiations to acquire California-based Integrated Device Technology seeking to strengthen its position as a major provider of autonomous-driving components.
- The acquisition, if completed, would be for about $6 billion, a person with direct knowledge of the matter said.
- The Japanese company has been accelerating efforts to develop semiconductors used in vehicles so that it can keep pace with the rapidly consolidating industry.
- Integrated Device Technology is a Nasdaq-listed company known for components used in device-to-device wireless communications.
Argentina’s Central Bank Lifts Policy Rate to 60%
- Argentina’s peso tumbled again on Thursday as President Mauricio Macri grapples with a crisis of confidence sparked by growing social unrest and skepticism about his ability to contain runaway inflation, cut spending and meet financing needs.
- The Central Bank of Argentina sharply raised its key interest rate to 60% from 45% at an unscheduled meeting early Thursday in an effort to shore up the plunging peso.
- Despite the rate increase, the selloff in the peso continued, falling 15% to a record low of 39.1 to the U.S. dollar.
- The peso has depreciated 53% so far this year, the worst-performing major currency in the world outside of Venezuela.
TODAY in HISTORY
- Thomas Edison received a patent for his “Kinetoscope,” and moving pictures were born. (1887)
- Russia officially ended its military presence in former East Germany and the Baltic states. (1994)
- Princess Diana and her companion Dodi al-Fayed were killed in a car accident in Paris. (1997)
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, the Wall Street Journal.
Content posted by third parties on this site is screened in order to protect clients’ privacy and comply with regulatory requirements. Content containing sensitive personal information, inappropriate language, information about specific investments, misleading information, information about other companies or websites, or information related to litigation will be removed. Content posted by third-parties on this site remains the responsibility of the party posting the content and is not adopted or endorsed by Pence Wealth Management or LPL Financial. Any opinions or statements posted by third parties are their own and may not be representative of the experience of others and are not indicative of future performance or success. Third party content on this site does not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness.