DAILY MARKET REPORTS
- U.S. stocks were little changed on Tuesday, as gains in technology stocks helped the Nasdaq regain footing and curbed losses in the materials and industrials sectors due to fears of an escalation in Sino-U.S. trade spat.
- China has decided to approach the WTO next week for permission to slap sanctions on the United States, for Washington’s non-compliance with a ruling in a dispute over U.S. dumping duties.
- Also in focus was Hurricane Florence, now a Category 4 storm that is expected to grow stronger before making landfall on Thursday, most likely in southeastern North Carolina near the South Carolina border.
- Insurers fell for the second straight day on the storm warning with Travelers down 0.4%, Progressive 0.1% and American International Group 1.4%. However, home improvement chain Home Depot rose about 0.6%.
- Integrated Device Technology jumped 11.3% after Japan’s Renesas Electronics agreed to buy chipmaker in a $6.7 billion deal to deepen its push into semiconductors for self-driving cars.
US FINANCIAL MARKET
- Revenue was down 6% year over year, coming in at $208.4 million, vs. $208 million as expected by analysts.
- Sonos’ biggest category, wireless speakers, did see a gain, rising 1% to $93.9 million, but the company’s revenue from home theater speakers declined 20% to $66.7 million.
- Sonos posted a loss of $27 million compared to a loss of $14.5 million a year earlier.
Hudson’s Bay Strikes European Merger Agreement
- Hudson’s Bay said Tuesday it has agreed to sell and combine parts of its European business with Austria’s Signa Retail Holdings, the latest in a series of sales by the Canadian retailer.
- Hudson’s Bay will merge its European operations with Signa’s German department-store chain Karstadt Warenhaus.
- Signa will also acquire 50% of Hudson’s Bay’s German real-estate assets, valued at €3.25 billion ($3.77 billion), and form a 50-50 joint venture to manage them.
- The deal will join Germany’s two biggest department-store chains—Karstadt and Galeria Kaufhof, which Hudson’s Bay bought for $2.7 billion in 2015—under one company with combined annual revenue of more than €5 billion.
Boeing calling back retirees to fix 737 production snags
- Boeing is bringing retired workers back on the job as the world’s largest planemaker tries to fix delays at its 737 jetliner plant outside Seattle, a union official told Reuters on Monday.
- Boeing started hiring retired mechanics and inspectors on a temporary basis after reaching an agreement with the International Association of Machinists and Aerospace Workers on Aug. 15.
- The snarl at its plant in Renton, Washington, triggered by shortages of engines and fuselages as Boeing sped production to record levels in June, is likely to hurt third-quarter results and threatens its goal to boost build rates again in 2019.
- Boeing has already deployed about 600 employees and new hires to Renton in recent weeks to help fix delays, analysts said.
Boeing ups forecast Chinese new plane purchases over 20 years by 6.2%
- Chinese airlines will buy 7,690 new planes worth $1.2 trillion over the next two decades to keep pace with booming consumer and business demand for air travel, Boeing said on Tuesday, raising a previous forecast.
- The U.S. planemaker’s latest estimate for the period to 2037 is 6.2% higher than its previous prediction of 7,240 planes until 2036 made last year.
- Boeing also predicted that China will account for 18% of the world’s commercial airplane fleet by 2037, up from 15% currently, and forecast that the country will need over $1.5 trillion in commercial services to support its fleet.
- The company has so far been mostly spared in an ongoing trade war between the United States and China, as large airplanes have been left out of China’s retaliatory tariff lists
Musk says Tesla to drop some color options for cars to simplify production
- Tesla will eliminate some color options for its electric cars to streamline production, Chief Executive Officer Elon Musk tweeted on Tuesday, as the company intensifies its efforts to ramp up production.
- Tesla currently offers seven colors for its vehicles that include top variant Model S, mid-level Model X and its most affordable sedan Model 3.
- The company is trying to iron out production bumps after struggling to produce Model 3 sedans and failing to meet several production deadlines.
- The color options that will still be available are solid black, midnight silver metallic, deep blue metallic, pearl-white multi-coat, and red multi-coat.
Steel Workers Demand Higher Pay Raises as Tariffs Lift Profits
- Workers at two of the biggest U.S. steelmakers are demanding higher compensation as tariffs on foreign metal push prices and profits to their highest point in years.
- Leaders for some 30,000 members of the United Steelworkers union say United States Steel and ArcelorMittal aren’t passing those benefits to workers yet.
- Workers have authorized union leaders to call a strike against U.S. Steel and say they could do the same at ArcelorMittal if an agreement isn’t reached soon.
- U.S. Steel has forecast a more-than-60% increase in adjusted pretax income this year from 2017, but ArcelorMittal, which has mills throughout the world, doesn’t issue a profit forecast for its U.S. operations.
- U.S. Steel and ArcelorMittal account for 40% of the U.S. production capacity for flat-rolled steel.
U.S. oil exports to Japan, South Korea soar as refiners reap steep discounts
- U.S. oil exports to Japan and South Korea will rise to record highs this month as Asian refiners take advantage of the steep discounts American sellers are offering after losing Chinese customers amid the trade dispute between Washington and Beijing.
- Ship tracking data in Thomson Reuters Eikon showed that oil exports from the United States to South Korea in September will rise to a record average of at least 230,000 barrels per day (bpd).
- U.S. shipments to Japan will also rise to a record average of at least 134,000 bpd, the data showed.
- South Korean and Japanese refiners have been taking advantage of steep discounts of up to $10 per barrel between the U.S. crude benchmark West Texas Intermediate (WTI) and the international Brent crude benchmark.
US ECONOMY & POLITIC
- Job postings exceeded the number of unemployed people by 659,000 in July, the most in data back to 2000.
- The gap helps explain why wages rose in August at the fastest pace since 2009, as employers struggle to find qualified workers and Americans become more confident in leaving their jobs for better pay elsewhere.
- Layoffs declined to 1.6m from 1.65m; layoffs rate unchanged at 1.1%
- There was 0.91 unemployed person per job opening, compared with 1.9 people when the recession began at the end of 2007
- In the 12 months through July, the economy created a net 2.5 million jobs, representing 66.7 million hires and 64.2 million separations
House Republicans Unveil Plan to Make Individuals’ Tax Cuts Permanent
- House Republicans have introduced legislation to lock in cuts to individual tax rates beyond 2025, a proposal that will have trouble advancing in the Senate but which sends a signal about GOP priorities ahead of competitive midterm elections.
- The extension of lower, individual tax rates is contained in legislation that is part of a three-bill package.
- Besides permanently lowering individual rates, the measure would also lock in the new standard deduction and the special deduction for owners of pass-through businesses.
Congress Unveils Funding Deal in Race to Avoid Shutdown
- Lawmakers struck a bipartisan deal Monday on a trio of spending bills they hope to pass this week in a rare example of Congress reaching an agreement over funding part of the federal government weeks before the next fiscal year begins.
- House and Senate negotiators announced they had hammered out an agreement on three spending bills totaling almost $147 billion, including funding for the Energy Department, Veterans Affairs and the legislative branch of government.
- Congressional leaders are hoping to pass the package of bills, known as a “minibus,” this week, sending it to the White House for President Trump’s signature.
U.S. Holds Talks with U.K., France on Possible Syria Strikes
- The U.S. is working with France and the U.K. on plans for a coordinated military strike in Syria if the regime uses chemical weapons in an expected offensive against the country’s last major rebel haven, President Trump’s national security adviser said.
- The coordinated planning comes as the U.S. and its allies are trying to stave off a Syrian offensive in the country’s northwest, where more than 3 million civilians and as many as 70,000 militants are bracing for an attack.
- In recent days, Russia has launched more than 70 airstrikes in the area, while the Syrian regime has dropped dozens of barrel bombs, according to monitoring groups.
- The U.S. is set to chair a U.N. Security Council meeting on Idlib on Tuesday morning, while Russia is to brief diplomats on a summit held in Tehran last week.
- U.S. officials estimate that 10,000 to 15,000 of the Syrian rebels in Idlib province are aligned with al Qaeda, and the Pentagon has urged Russia and Syria to carry out a targeted campaign against those forces. The two countries have rebuffed the appeal.
The US has spent $1.5 trillion on war since Sept 11 attacks
- The collective wars in Afghanistan, Iraq, and Syria have cost U.S. taxpayers more than $1.5 trillion since Sept. 11, 2001, according to a Defense Department report.
- The current U.S. military operations, designated Operation Freedom’s Sentinel in Afghanistan, Operation Inherent Resolve in Syria and Iraq, and Operation Noble Eagle for homeland security missions in the U.S. and Canada, have accounted for $185.5 billion of that sum.
- Of the three current operations, Freedom Sentinel takes the lion’s share of costs at $134.3 billion, followed by Noble Eagle at $27.7 billion, and Inherent Resolve at $23.5 billion.
Hurricane Florence Grows to Category 4 as Coastal Evacuations Begin
- Authorities ordered widespread coastal evacuations in the Carolinas and Virginia as they braced for life-threatening flooding and extreme winds from Hurricane Florence.
- Florence was recently churning about 410 miles south of Bermuda, maintaining Category 4 strength with maximum sustained winds of nearly 140 miles an hour.
- Florence is expected to grow stronger still as it nears the coast and could be the strongest storm to hit the region since Hurricane Hugo 29 years ago.
- Mandatory evacuations were set to begin at noon Tuesday across the coast in South Carolina, with about a million people expected to flee the coast, and authorities will reverse lanes on major roadways to handle the traffic.
California Law Mandates Carbon-Free Electricity by 2045
- California Gov. Jerry Brown signed a controversial and aggressive law for the state to mandate carbon-free electricity by 2045.
- The Democratic governor went further by also issuing an executive order for the entire state, and not just its electric industry, to become carbon neutral by 2045 and net greenhouse gas negative thereafter.
- The much-anticipated signing puts California at odds with President Trump, who announced last year the U.S. would withdraw from the 2015 Paris climate accord that has been signed by every nation on the planet.
- California is the first large state to set a goal of carbon-free electricity generation under the new law, which passed the state Legislature late last month.
EUROPE & WORLD
- Hong Kong’s stocks fell into a bear market Tuesday, another casualty of an international selloff driven by trade tensions, a stronger dollar, and worries about the resilience of developing economies.
- On Tuesday, the Hang Seng Index, which has a market capitalization of $2.1 trillion, ended 0.7% lower at 26422.55.
- The index has fallen more than 20% from a recent closing high—in this case, on Jan. 26—meeting the common definition of a bear market.
- This is the latest setback for global stocks, which have struggled after surging last year.
- U.S. growth has been robust and the Federal Reserve has kept raising borrowing costs, boosting the appeal of U.S. assets at the expense of other markets.
Renesas to Buy Chip Maker Integrated Device Technology for $6.7 Billion
- Renesas Electronics said it would buy California-based Integrated Device Technology for $6.7 billion, a move by the Japanese chip maker to add to its portfolio of devices for smart cars.
- If the deal is approved by shareholders and antitrust authorities, Renesas would pay $49 per share, a 29.5% premium over IDT’s stock price as of Aug. 30, when the Japanese company initially said it was considering the acquisition.
- Renesas was the second-largest semiconductor supplier to the automotive industry by revenue in 2017 with $3.5 billion, following No. 1 NXP Semiconductors NV of the Netherlands at $4.4 billion.
Alibaba Teams Up With Russian Tech Giant
- Chinese e-commerce giant Alibaba agreed to take a 10% stake in one of Russia’s biggest tech players—part of a broader deal creating what Alibaba and its new Russian partners say will be the biggest online-shopping platform in the country.
- The stake in Mail.Ru, one of Russia’s earliest and most prominent internet firms, is worth about $484 million, based on Mail.Ru’s market valuation Monday.
- That’s a modest investment, in a relatively small market, for Alibaba, but it represents an unusually high-profile strategic partnership between Chinese and Russian tech giants.
- Apart from the geopolitical overtones, the deal represents one of the highest-profile commercial alliances between the separate internet infrastructures that have grown up in China and Russia, largely apart from the West.
China Joins Russian Drills in Sign of Growing Military Ties
- Chinese and Russian troops began joint maneuvers Tuesday, marking the first time Moscow has invited a country outside a tight circle of former Soviet allies to its largest annual exercises and offering Chinese generals rare and valuable experience training outside their country’s borders.
- The five days of drills in Russia’s far east, near the Chinese border, are also meant to demonstrate the extent to which the two sides are moving beyond symbolic displays of force to coordinate weapons systems and command structures.
- The military relationship between Beijing and Moscow has gathered pace in the past few years as both countries have seen their relations with Washington deteriorate.
- Washington says the two countries have developed capabilities that could test U.S. military dominance in times of crisis.
More than 30,000 displaced in Syria’s Idlib in latest offensive: U.N.
- More than 30,000 people have so far fled their homes in northwest Syria since Syrian government and allied forces resumed air and ground bombardments there last week, the U.N. agency coordinating relief efforts said on Monday.
- The U.N. Office for the Coordination of Humanitarian Affairs (OCHA) said an all-out military assault on the last major stronghold of active opposition to President Bashar al-Assad could set 800,000 people to flight.
- Russian and Syrian warplanes resumed their bombing campaign last week and the presidents of Turkey, Iran, and Russia on Friday failed to agree on a ceasefire that would forestall the offensive.
- About 2.9 million people live in the opposition-held area, which comprises most of Idlib province and adjacent small parts of Latakia, Hama and Aleppo provinces. Around half of them are already displaced from other parts of Syria.
TODAY in HISTORY
- Alexander Hamilton was appointed the first Secretary of the Treasury. (1789)
- Two hijacked commercial jets were crashed by terrorists into the north and south towers of the World Trade Center in New York City, causing the collapse of both towers. (2001)
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