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US FINANCIAL MARKET
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DAILY MARKET REPORTS

  • U.S. proposal to sharply cut taxes on businesses and many individuals boosts government debt yields.
  • Investors appeared to still be digesting the tax proposal and its prospects.
  • U.S. economic output grew at a 3.1% annual rate in the second quarter, slightly stronger than previously thought.
  • The number of Americans applying for new unemployment benefits rose last week.

US FINANCIAL MARKET

Roku Shares Climb in Trading Debut

  • Shares of the company, which makes streaming-media devices and software, rose 14% to $15.90 in their opening minutes of trading, bringing the company’s valuation to about $1.5 billion.
  • The stock priced late Wednesday at $14 a share, the top end of the expected range, to raise about $219 million in its initial public offering.

Toshiba Signs $17.7 Billion Deal with Bain-Apple Group to Sell Chip Unit

  • A nearly $18 billion deal for Toshiba’s memory-chip unit could strengthen the No. 2 player in a fast-growing industry—if the deal survives regulatory and legal hurdles.
  • Eight months after Toshiba said it wanted to sell part of the unit, it finally signed a contract with a buyer Thursday. The buyer group is led by Bain Capital and will get financing from Apple, South Korean chip maker SK Hynix and other major technology companies.

Kellogg CEO John Bryant to Step Down

  • Kellogg Co. Chief Executive John Bryant is stepping down next week after nearly seven years leading the cereal and snack giant through a tumultuous time in the food industry.
  • Steven Cahillane, chief executive of health-and-wellness company Nature’s Bounty and a former Coca-Cola Co. executive, will join Kellogg to succeed Mr. Bryant.
  • Kellogg, the maker of Frosted Flakes, Pop-Tarts and Pringles, has been battling sluggish sales as Americans stray from big brands and processed foods, in favor of fresher, more niche alternatives.

Chevron Names Michael Wirth Chairman, CEO

  • John Watson to retire in February after 37 years with second-largest U.S. oil company.
  • Mr. Wirth, 56 years old, will become chairman and chief executive on Feb. 1, replacing John Watson.

Apple Is Interested in Japan Display’s LCDs for Some iPhones

  • Apple has expressed interest in buying advanced liquid-crystal displays from Japan Display for some iPhones next year.
  • Japan Display said last month that the advanced displays, which it calls Full Active, would account for more than 70% of its business in panels for smartphones and other smart devices in the year ending March 2019.
  • Japan Display has said in a regulatory filing that Apple accounted for about 54% of its revenue in the year ended March 2017.

Accenture revenue beats as bets on digital, cloud pay off

  • Dublin, Ireland-domiciled company’s revenue from “the New” – which includes digital, cloud and security-related services – grew about 30 percent to $18 billion for the year.
  • The company’s revenue rose 7.8 percent to $9.15 billion, beating estimates of $9.01 billion.
  • Net income fell to $974.2 million in the fourth quarter from $1.12 billion a year earlier.

ConAgra tops profit estimates after limiting discounts

  • Net income fell to $5 million in the first quarter from $186.2 million a year earlier.
  • Net sales fell 4.8 percent to $1.80 billion, hurt by weak demand for ConAgra’s grocery and snacks products.
  • ConAgra Brands makes Reddi-Wip whipped cream and Chef Boyardee pasta.

Beef demand drives Cargill’s first-quarter profit

  • The company is one of the world’s largest suppliers of ground beef.
  • Cargill said net income rose to $973 million in the first quarter from $825 million.
  • Revenue came in at $27.3 billion, slightly up from the $27.1 billion it posted last year.

Millionaires’ wealth reached record $63.5 trillion globally in 2016

  • The number of millionaires in the world rose by nearly 8 percent last year to an all-time high of around 16.5 million people, with record total wealth of $63.5 trillion.
  • The wealth of high net worth individuals (HNWI) — which Capgemini defines as those with investable assets of $1 million or more, excluding the primary residence, collectibles and consumables — rose 8.2 percent on the year in 2016 and is on track to surpass $100 trillion by 2025.
  • Some 1.15 million people became millionaires last year.
  • In the United States, their ranks rose to 4.8 million from 4.46 million, while the number of millionaires in China rose to 1.13 million from just over 1 million.
  • Surveys on the millionaires’ financial asset holdings show they held 31.1 percent in equities in the second quarter of 2017, compared with 24.8 percent in 2016.
  • Fixed income held steady at 18 percent, while cash grew to 27.3 percent from 23.5 percent.
  • Alternative investments, such as hedge funds, derivatives, foreign currency, commodities and private equity, fell to 9.7 percent from 15.7 percent.

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US ECONOMY & POLITIC

U.S. Second-Quarter GDP Rose 3.1%

  • U.S. economic output grew at a 3.1% annual rate in the second quarter, slightly stronger than previously thought (3%) and marking the best growth in two years.

U.S. Jobless Claims Rose Last Week, Showing Hurricanes’ Effects

  • Initial jobless claims, which reflect nationwide layoffs, rose by 12,000 to a seasonally adjusted 272,000.
  • Despite the recent rise, overall jobless claims remain historically low. Weekly claims have held below 300,000 each week since March 2015, the longest such streak since the early 1970s.
  • The number of continuing unemployment benefit claims—those drawn by workers for more than a week—decreased by 45,000 to 1,934,000.

Winners and Losers Under the Trump Tax Plan

  • Business owners who live in low-tax states, people who don’t take deductions, and heirs of very large estates are likely to benefit from President Donald Trump’s tax framework for individuals.
  • Salaried workers in high-tax states and people with large medical expenses, such as those in nursing homes, aren’t.
  • Some people in both of those groups could owe more in taxes than they do today.
  • For families with children, the outcome is unclear.

GOP Tax Overhaul Aims for Corporate Cuts, Simpler Code

Business Tax Reform:

  • The plan calls for a 20% corporate tax rate, down from 35% today.
  • Other companies, which pay their taxes through the individual returns of their owners, would get a 25% top rate with unspecified rules that would prevent wealthy business owners from paying that rate on what is considered wage income.
  • Businesses could immediately deduct capital investments, except for buildings, for at least five years, instead of depreciating them over time as is the case today.
  • The move is meant to spur spending on new machines and the workers needed to run them.
  • For multinational corporations, the plan provides a one-time tax on U.S. companies’ stockpiled foreign earnings, with one rate for cash and a lower rate for less liquid assets such buildings or equipment. They would pay this tax whether or not they brought these profits back to the U.S.

Personal Tax Reform:

  • The individual tax rates would be set at 12%, 25% and 35%, with the option of a fourth higher rate on the highest-income households, collapsing the personal tax structure from the current seven brackets to three or four.
  • The plan proposes to double the basic standard deduction to $12,000 for individuals and $24,000 for married couples.
  • But the elimination of the $4,050 personal exemption, which helps hold down reported income, would take back some of that benefit.
  • The proposal also calls for ending the state and local tax deduction for individuals.
  • A taxpayer would have to have at least $24,000 in mortgage interest and charitable deductions before getting a penny’s worth of benefit from itemizing.
  • The plan would repeal the alternative minimum tax and estate tax.
  • The plan calls for significantly increasing the child tax credit, which could prevent that family from seeing a tax increase, but it doesn’t offer details on how big and whether that expanded credit would be fully refundable.
  • The administration officials said the estate tax, which now applies only to 0.2% of Americans who die each year, will be excluded from its calculations of the distribution of the tax burden.
  • The plan doesn’t explicitly call for changing the top tax rates on capital gains and dividends—now 23.8%.

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EUROPE & WORLD

Eurozone Business, Consumer Confidence Surges Despite ECB Signals

  • The European Commission Thursday said its Economic Sentiment Indicator, which aggregates business and consumer confidence, rose to 113.0 from 111.9 in August, to reach its highest level since June 2007.

China’s COMAC says C919 jet completed second test flight

  • China’s domestically developed C919 passenger jet completed its second test flight on Thursday.
  • The narrow-body C919, which will compete with Boeing’s 737 and the Airbus A320, is a symbol of China’s ambition to muscle into a global jet market estimated to be worth $2 trillion over the next 20 years.
  • However, the program has faced lengthy delays and missed its original target of delivery to customers by 2016 – a date reportedly pushed back to 2020.

H&M Hit by Discounting, Slowness to Embrace Digital

  • For the third quarter, H&M reported a 20% fall in net profit to 3.84 billion Swedish kronor ($2 million).
  • Sales, excluding value added tax, rose 4.5% to 23 billion kronor.
  • The group had 4,553 stores as of Aug. 31, a 10% increase from the 4,135 stores it had at the same time last year.
  • It plans to add a net 385 stores this year, compared its forecast of 400 stores at its second quarter earnings.

BlackBerry shares up as software sales hit record

  • BlackBerry said it had about 3,300 enterprise customer orders in the quarter and that 79 percent of its software and services revenue, excluding patent licensing and professional services, was recurring.
  • Total revenue fell 29 percent to $249 million from a year earlier but rose slightly from $244 million in the prior quarter.
  • The company posted net income of $19 million compared with a year-earlier loss of $372 million.

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TODAY in HISTORY

  • William the Conqueror invaded England (1066)
  • Portuguese explorer Juan Rodríguez Cabrillo arrived at present-day San Diego (1542)
  • Japan and Communist China agreed to re-establish diplomatic relations (1972)

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, Wall Street Journal.

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