DAILY MARKET REPORTS
- U.S. stock markets were lower on Monday as technology names such as Apple and Amazon.com fell, bearing the brunt of expectations President Trump will make good on threats to set new tariffs on $200 billion of Chinese goods, and that Beijing will retaliate.
- The Trump administration is planning to unveil new tariffs on $200 billion in Chinese products entering the U.S., and Beijing is debating new ways to retaliate against U.S. corporations.
- Chinese officials said if President Trump carries out his plans early this week, talks could be scuttled.
- That came after the prospect of trade talks with Beijing had soothed investors last week, helping most benchmarks eke out small gains.
- The latest trade worries continued to hurt Asian stocks. The Shanghai Composite fell 1.1% to its lowest level since November 2014, while Hong Kong’s Hang Seng dropped 1.3% and South Korea’s Kospi fell 0.7%.
- Beyond trade, investors and analysts say they are looking ahead to next week’s Federal Reserve meeting, with the central bank expected to continue gradually raising interest rates but also monitoring trade tensions.
- Amazon.com slid 3.4% after confirming a Wall Street Journal report that it was investigating suspected data leaks and bribes of employees.
US FINANCIAL MARKET
- Amazon.com is investigating suspected data leaks and bribes of its employees as it fights to root out fake reviews and other seller scams from its website.
- The practice, which violates company policy, is particularly pronounced in China, according to some of these people, because the number of sellers there is skyrocketing.
- In exchange for payments ranging from about $80 to more than $2,000, brokers for Amazon employees are offering internal sales metrics and reviewers’ email addresses, as well as a service to delete negative reviews and restore banned accounts.
For Apple, U.S.-China Trade Fight Grows Riskier
- The U.S.-China trade fight is becoming more perilous for Apple as the Trump administration’s tariffs threaten some of its gadget sales in the U.S. and as China weighs retaliatory measures that could target iPhone production there.
- Because Apple assembles almost all of its gadgets in China, its watches, AirPods and other devices are vulnerable to the Trump administration’s plans to widen the scope of tariffs on Chinese imports—a risk Apple warned about earlier this month.
- That reliance also could make the iPhone and other devices vulnerable if Chinese officials follow through on retaliatory moves to restrict sales of materials, equipment and parts key to U.S. manufacturers—measures reported that Beijing is considering.
- The timing of the countries’ new measures could be especially bad for Apple, which this week starts shipping two of its three new iPhones and a new smartwatch.
Musk says Tesla now in ‘delivery logistics hell’
- Tesla Chief Executive Officer Elon Musk acknowledged that the electric carmaker’s problems have now shifted to delivery logistics from production delays, the latest speed bump in its efforts to achieve profitability.
- The 47-year-old billionaire has indicated in the past that Tesla’s customers may face a longer response time because of a significant increase in vehicle delivery volume in North America.
- The company said in August that it expects to build a total of up to 55,000 Model 3s in the third quarter.
Coke eyeing cannabis-infused drink market
- Coca Cola said it was closely watching the growing marijuana-infused drinks market, responding to a media report that the world’s largest beverage maker was in talks with Canada’s Aurora Cannabis.
- The discussions over a possible product tie-up could open a new front in Coke’s battle to overcome sluggish demand for its sugar-heavy sodas by diversifying into coffee and health-focused drinks.
- The marijuana industry has been attracting interest from a handful of big corporate names as Canada and a wave of U.S. states move to legalize recreational use of the drug.
- However, U.S. corporations are still cautious about taking steps into a business that remains illegal under U.S. federal law.
EU regulators to rule on Disney’s $71 billion bid for Fox assets by October 19
- EU antitrust regulators have set an Oct. 19 deadline for their ruling on Walt Disney’s $71.3 billion bid for Twenty-First Century Fox’s entertainment assets, the European Commission said on Monday.
- The U.S. Justice Department gave the green light to the deal in June on condition Disney sells Fox’s 22 regional sports networks.
- Acquisition of Fox’s assets would broaden Disney’s unrivaled portfolio of some of the world’s most popular characters, uniting Mickey Mouse, Luke Skywalker and Marvel superheroes with Fox’s X-Men, “Avatar” and “The Simpsons” franchises.
EU antitrust ruling on Microsoft buy of GitHub due by October 19
- EU antitrust regulators will decide by Oct. 19 whether to clear U.S. software giant Microsoft’s $7.5 billion acquisition of privately held coding website GitHub.
- GitHub, the world’s largest code host with more than 28 million developers using its platform, is Microsoft’s largest takeover since the company bought LinkedIn for $26 billion in 2016.
- The EU competition enforcer can either give the green light with or without demanding concessions, or it can open a full-scale investigation if it has serious concerns.
Oil higher as U.S. sanctions on Iran raise supply concerns
- Oil prices rose on Monday as investors focused on the impact of U.S. sanctions on Iran despite assurances by Washington that Saudi Arabia, Russia and the United States could together raise output fast enough to offset falling supplies.
- Iran’s oil exports have been falling in recent months as more buyers, including its second-largest buyer India, cut imports ahead of U.S. sanctions that take effect in November.
- A leading Iranian official said on Saturday that Saudi Arabia and Russia had taken the oil market “hostage” and accused other producers of turning the Organization of the Petroleum Exporting Countries into “a U.S. tool”.
US ECONOMY & POLITIC
- President Trump’s economic conflict with China is set to escalate this week, as the administration plans to unveil fresh tariffs on $200 billion in Chinese products and Beijing debates new ways to retaliate against U.S. corporations doing business in China.
- The threats from both sides of the Pacific risk upending a fragile new diplomatic initiative to see if they can broker negotiations aimed at staving off a new round of tit-for-tat penalties.
- Chinese officials said that if Mr. Trump carries out his plans to announce the fresh tariffs early this week—as people familiar with his plans said over the weekend that he would—then those talks could get scuttled.
- Some Chinese officials advising the leadership are proposing to step up the trade fight a notch by restricting China’s sales of materials, equipment and other parts key to U.S. manufacturers’ supply chains.
- Meanwhile, the Trump administration is looking at lowering the tariff rate on the $200 billion in goods to about 10%—down from the 25% level they said in early August that they would impose on those imports
New Doubts Emerge About U.S.-Led Sanctions on North Korea
- Fresh doubts are emerging about the potency of a U.S.-led sanctions campaign aimed at crippling North Korea’s economy and forcing the country to end its atomic-weapons programs, as denuclearization talks have stalled.
- A confidential new United Nations report, reviewed by The Wall Street Journal, says Pyongyang, often with help from people in Russia and China, has been able to circumvent restrictions, rendering “the latest U.N. sanctions ineffective.”
- Citing U.S. intelligence, U.N. investigators found a “massive increase” in fuel shipments to North Korea involving Russian and Chinese ships, as well as numerous examples of coal shipments to China from North Korea.
- The U.N. report also called out Chinese companies for buying tens of millions of dollars of North Korean iron, steel and other products.
At least 17 are dead from Florence and the worst flooding is yet to come for the waterlogged Carolinas
- Deadly storm Florence moved across western North Carolina early on Monday and continued to dump rain that has nowhere to go except to swell rivers, flood highways and homes, and threaten more lives as it heads towards Virginia and New England.
- The coastal city of Wilmington remained cut off by high flood waters early on Monday, tens of thousands of homes were damaged and at least 17 deaths were reported in North and South Carolina.
- In Leland, a low-lying city north of Wilmington, homes and businesses were engulfed by water that rose up to 10 feet (3 meters) over Highway 17 in what local people called unprecedented flooding.
- Florence has dumped up to 40 inches (100 cm) of rain on North Carolina since Thursday and continued to produce heavy rain over much of North Carolina and eastern South Carolina.
Kavanaugh Vote in Question After Assault Allegation
- A woman who accused Supreme Court nominee Brett Kavanaugh of sexual assault went public with her name for the first time, injecting immediate uncertainty into Republicans’ push to quickly confirm the next high-court justice.
- Christine Blasey Ford, the woman who has accused Supreme Court nominee Brett Kavanaugh of sexual assault when they were teenagers, is willing to testify before the Senate Judiciary Committee about the episode, her attorney said Monday morning.
- Mrs. Ford’s decision to speak publicly is likely to focus more attention on the two GOP senators whom Democrats have targeted as most likely to defect in a floor vote on Judge Kavanaugh: Susan Collins of Maine and Lisa Murkowski of Alaska.
- Neither senator has raised serious concerns about Judge Kavanaugh, but both are strong supporters of women’s rights who Democrats believe might support a delay in the confirmation process.
- Brett Kavanaugh said Monday that he is willing to testify before the Senate Judiciary Committee once again in order to “refute” a “completely false” allegation of sexual misconduct against him.
EUROPE & WORLD
(Michael Martina, Ryan Woo, Christian Shepherd, and Susan Heavey)
- China will not be content to only play defense in an escalating trade war with the United States, a Chinese tabloid warned, as U.S. President Donald Trump was expected to announce new tariffs on $200 billion in Chinese goods as early as Monday.
- Besides retaliating with tariffs, China could also restrict export of goods, raw materials and components core to U.S. manufacturing supply chains, former finance minister Lou Jiwei told a Beijing forum on Sunday, according to an attendee.
- The person who attended the event and is familiar with the White House’s thinking said such a move would likely attract sharp retaliation from Washington, which has studied its own limits on exporting key technologies to China.
- Beijing may also decline to participate in the proposed trade talks with Washington later this month if the Trump administration goes ahead with the additional tariffs, the Wall Street Journal reported on Sunday, citing Chinese officials.
BMW to recall more than 139,000 of its 3-series cars in China from November
- German automaker BMW will recall more than 139,000 of its 3-series cars in China from Nov. 9, because of a defect in the air-conditioning system.
- The recall covers 89,309 vehicles produced in China between May 2005 and July 2011, and 50,143 imported vehicles manufactured between January 2005 and July 2011, the State Administration for Market Regulation said in a statement.
China Rebukes Local Officials Over Debt Pile
- China’s Finance Ministry is upping the pressure on local governments that run up debt, reprimanding dozens of officials in one province that has seen its debt troubles spill into public protests.
- Spending by local governments has soared since the global financial crisis, when Beijing opened the credit taps to forestall an economic downturn.
- In recent years, Beijing has begun trying to tamp down the borrowing, worrying that the debts of local governments—which are estimated to amount to 46% of the economy—are a long-term danger, especially as overall economic growth slows.
TODAY in HISTORY
- The Constitution was completed and signed by a majority of the delegates attending the constitutional convention in Philadelphia. (1787)
- The American Professional Football Association—a precursor of the NFL—was formed in Canton, Ohio. (1920)
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