DAILY MARKET REPORTS
- The S&P 500 and the Nasdaq dropped on Thursday, as internet stocks faltered for a second day on concerns about increased regulation, while Micron led a decline in chip stocks.
- Declines in technology stocks come after Facebook and Twitter executives defended their companies before skeptical U.S. lawmakers on Wednesday and the U.S. Department of Justice said it would discuss concerns that social media platforms are “intentionally stifling the free exchange of ideas”.
- Investors were keeping an eye on trade developments, with a public comment period on the Trump administration’s plan for fresh China tariffs ending on Thursday.
- China has warned of retaliation if Washington implements any new tariff measures. Recent reports have said U.S. President Donald Trump is ready to move ahead with tariffs on $200 billion in Chinese imports.
- Markets also focused on the North American Free Trade Agreement negotiations, which Canadian Foreign Minister Chrystia Freeland said on Wednesday continued to be “constructive”.
US FINANCIAL MARKET
- Barnes & Noble’s sales swooned in the latest quarter as the bookseller continued to struggle to attract people to its stores.
- Total sales declined 6.9% to $794.8 million, as comparable sales for Barnes & Noble declined 6.1% for the period.
- Problems for the company also extended to its online channel, as sales fell 14%, due in part to fewer promotions.
- The nation’s largest bookstore chain reported a loss of $17 million, compared with a year-earlier loss of $10.8 million.
FBI Investigating American Express Foreign-Exchange Pricing
- The FBI has launched a probe into pricing practices within American Express’s foreign-exchange unit.
- The investigation is in its early stages and is focused on whether the foreign-exchange international payments department misrepresented pricing to clients in order to win their business.
- The FBI began its investigation in August after The Wall Street Journal reported that AmEx’s foreign-exchange unit had recruited business clients with offers of low currency-conversion rates before raising prices without warning.
- The Office of the Comptroller of the Currency also is looking into how AmEx disclosed pricing to customers, including what the customers were told about potential rate increases and who knew about the practice within the company
Justice Department Nearing Antitrust Approval of Health Mergers Combining CVS-Aetna, Cigna-Express Scripts
- Justice Department antitrust enforcers are preparing to give the green light to two major deals in the health-care industry, CVS Health’s planned acquisition of health insurer Aetna and Cigna’s planned purchase of Express Scripts.
- The Justice Department has identified some competition concerns surrounding the nearly $70 billion CVS-Aetna deal, and the companies will be required to sell off assets related to Medicare drug coverage to resolve those concerns.
- The size of the asset sales couldn’t immediately be learned, but one potential buyer in talks is WellCare Health Plans.
- The department’s approval of the $54 billion Cigna and Express Scripts combination could come without the government requiring the companies to sell off any assets.
- Both deals could receive formal antitrust approval as soon as the next few weeks.
Justice Department Probing Wells Fargo’s Wholesale Banking Unit
- The Justice Department is probing whether employees committed fraud in Wells Fargo’s wholesale banking unit, following revelations that employees improperly altered customer information.
- The Justice Department in recent weeks has sought more information from the bank to examine if management pressure prompted the employees to improperly alter or add the information.
- The employees in the wholesale banking unit, the side of the bank that deals with corporate customers, mishandled the documents last year and earlier this year.
Justice Department to Examine Whether Social-Media Giants Are ‘Intentionally Stifling’ Some Viewpoints
- Attorney General Jeff Sessions plans to gather state attorneys general to discuss whether social-media giants may be harming competition and “intentionally stifling” viewpoints, stepping up pressure on the platforms over alleged anticonservative bias.
- The Justice Department raised the prospect of a possible investigation as Facebook Chief Operating Sheryl Sandberg and Twitter Chief Executive Jack Dorsey was wrapping up morning testimony about protecting their platforms from foreign influence.
- There was no representative of Alphabet’s Google at Wednesday’s Senate hearing.
- The company was invited but declined when the committee said its proposed representative wasn’t sufficiently senior in rank.
- The topic of anti-conservative bias wasn’t a major focus during the roughly three hours of testimony in the Senate.
CBS board in $100 million exit negotiations with CEO Moonves
- CBS’s board is in settlement talks with Chief Executive Officer Les Moonves and has offered about $100 million exit package.
- A New Yorker report in late July featured claims against Moonves from six women spanning different time periods over two decades, from 1985 to 2006.
- Moonves is locked in a legal battle over control of the company with National Amusements, its largest shareholder, owned by Shari Redstone who also control media company Viacom.
- Moonves received a total compensation of $69.33 million in 2017, making him one of the highest paid U.S. executives.
Facebook, Under Rising Scrutiny, Picks Singapore for First Asia Data Center
- Facebook said it would invest more than $1 billion in a new data center in Singapore, its first in Asia and a win for the city-state as other jurisdictions such as China tighten controls over where user data is stored.
- The social-media giant is facing pressure globally to remove offensive and inflammatory content, a development that has emboldened countries including China, India, and Vietnam to compel tech companies to store user data in the country of origin.
- That has raised concerns about privacy and how that data could be treated and shortened the list of places that offer both, infrastructure sufficient for a data center and freedom of data transfer.
Ford Recalls F-150 Models for Seat-Belt Equipment Issue
- Ford is recalling 2 million trucks after it received reports of a seat-belt equipment malfunction that could cause smoke or fire.
- The automaker said the recall is for Regular and SuperCrew Cab F-150 vehicles between the model years 2015 through 2018.
- Ford said in a news release that some front seat passenger belt pretensioners “can generate excessive sparks when they deploy” and that it knows of 23 total reports of smoke or fire in North America, the bulk of which took place in the U.S.
- Ford expects to incur about $140 million in expenses in its third quarter in connection with the recall but maintained its full-year adjusted earnings forecast of between $1.30 and $1.50 a share.
Whole Foods Workers Push to Unionize
- A group of workers plans to send an email to workers at most Whole Foods stores urging them to back their unionization drive.
- The workers said they want to push Whole Foods and Amazon for better compensation, benefits, and profit-sharing.
- The unionization push presents a potentially high-profile challenge to Amazon, which has opposed past organizing efforts by warehouse workers and other employees that are less visible to customers than grocery-store clerks.
- The Retail, Wholesale and Department Store Union, a national organization with 100,000 members, is assisting the effort.
Tribune Media in new sale talks after Sinclair deal collapse
- U.S. TV station owner Tribune Media is kicking off a new round of talks to sell itself after its planned $3.9 billion sale to peer Sinclair Broadcast Group failed to get regulatory clearance
- Tribune terminated its deal with Sinclair last month and filed a lawsuit arguing that the latter mishandled efforts to get the transaction approved by taking too long and being too aggressive in its dealings with regulators.
- Tribune Media owns or operates 42 local television stations reaching approximately 50 million households.
- It also owns national entertainment cable network WGN America, whose reach is more than 77 million households, and a variety of digital applications and websites commanding 54 million monthly unique visitors online
Lilly’s Elanco unit expects IPO to raise up to $1.45 billion
- Eli Lilly’s Elanco Animal Health unit said it expects its initial public offering of 62.9 million shares to raise up to $1.45 billion.
- The IPO is expected to be priced between $20-$23 per share. At the high end, the company would be valued at about $8 billion.
- In July, Lilly said it would take Elanco public, marking the end of a nine-month review that weighed options for the unit.
US ECONOMY & POLITIC
- Initial jobless claims, a proxy for layoffs across the U.S., declined by 10,000 to a seasonally adjusted 203,000 in the week ended Sept. 1, the lowest level of unemployment benefit applications since the end of 1969.
- Economists expected 211,000 new claims last week.
- Though data can be volatile from week to week, the four-week moving average of claims, a steadier measure, also fell to a 49-year low at 209,500.
- The report showed the number of claims made for longer than a week fell by 3,000 to 1,707,000 in the week ended Aug. 25.
U.S. Worker Productivity Rose in Spring at Best Pace Since 2015
- The productivity of nonfarm workers, measured as the output of goods and services for each hour, increased at a 2.9% seasonally adjusted annual rate in the second quarter from the prior quarter, the Labor Department said, revising last month’s report.
- From a year earlier, productivity advanced at a still-modest 1.3% rate, also unchanged from the initial estimate.
- That matched the average annual rate recorded from 2007 to 2017 and was less than the 2.1% annual average recorded since the end of World War II.
- Thursday’s report showed output in the second quarter rose at a 5% annual rate, while hours worked increased at a 2% pace in the second quarter from the first.
Kavanaugh Pledges Fairness as Supreme Court Justice
- Supreme Court nominee Brett Kavanaugh wouldn’t say whether a president could pardon himself or must comply with a subpoena, instead promising senators Wednesday to be an independent justice unswayed by politics.
- Judge Kavanaugh’s comments came as he faced sharp questions from Democrats pressing him on abortion rights, gun regulation, and executive power during a pivotal segment of his weeklong confirmation hearing before the Senate Judiciary Committee.
- Democrats—and some Republicans—pushed Judge Kavanaugh on “the elephant in the room:” President Trump, whose 2016 election campaign and subsequent administration face legal probes that have brought the conviction of his former campaign chairman and guilty pleas by his former lawyer.
- Clearly anticipating such questions, Judge Kavanaugh at the outset praised Supreme Court cases in which justices voted against the interests of the president who appointed them.
- U.S. v. Nixon—in which the court unanimously ordered then-President Richard Nixon to turn over potentially incriminating audiotapes in the Watergate scandal—is “one of the four greatest moments in Supreme Court history,” he said.
Senior White House Officials Deny Writing Anonymous Op-Ed Piece
- Three top Trump administration officials on Thursday denied writing an anonymous opinion column claiming a group of aides inside the administration is secretly acting as a check on President Trump’s worst inclinations.
- The denials from Mike Pence’s office and Mike Pompeo were the first attempts from officials to distance themselves from the column in the New York Times, which President Trump called a “disgrace,” slamming its author as “gutless.”
- Director of National Intelligence Dan Coats soon after denied he or his principal deputy had written the piece.
- Speculation on the identity of the author remained rampant inside the White House after the column was published.
- Several top officials guessed that it was most likely a junior aide without direct access to the president, even though the Times described the author as a “senior official in the Trump administration.”
U.S., Canadian trade negotiators set for second day of talks
- Top U.S. and Canadian trade negotiators were set for the second day of talks on Thursday over a revised North American Free Trade Agreement after their subordinates worked late into the night to flesh out opportunities for a compromise deal.
- Canadian Foreign Minister Chrystia Freeland sounded sanguine on Wednesday as she emerged from negotiations with top U.S. trade negotiator Robert Lighthizer, although she cautioned that no trade deal was done until the last issue was nailed down.
- U.S. President Donald Trump has threatened to push ahead with a bilateral deal with Mexico, effectively killing the almost 25-year-old three-country NAFTA pact, which covers $1.2 trillion in trade.
- Trump sounded a more upbeat note earlier and said he expected to know whether a deal could be struck in the next few days.
Bernie Sanders Strikes at Amazon With New Tax Bill
- An unusual public spat between Amazon and Sen. Bernie Sanders over workers’ wages escalated Wednesday as the Vermont independent introduced a bill aimed at taxing big companies whose employees rely on federal benefits to make ends meet.
- The legislation is aimed at ending what Mr. Sanders has said is middle-class taxpayers’ subsidization of large, profitable companies owned by billionaires.
- The bill, co-sponsored by Rep. Ro Khanna (D., Calif.), would tax companies with 500 or more employees an amount equal to federal benefits received by their low-wage workers, effectively forcing them to pay more one way or another.
- While Mr. Sanders said the legislation is “not just about Amazon,” he only called out the Seattle retail giant in announcing the bill—the Stop Bad Employers by Zeroing Out Subsidies Act—which he shortened in a press release to the BEZOS Act.
EUROPE & WORLD
China warns of retaliation if U.S. slaps new tariffs
- China will be forced to retaliate if the United States implements any new tariff measures, China’s commerce ministry warned on Thursday, as the world’s two biggest economies remain locked in an intensifying trade war.
- Global markets were on edge after President Donald Trump threatened fresh tariffs on another $200 billion in Chinese imports.
- China will closely monitor the impact of any fresh tariffs and adopt strong measures to help Chinese or foreign firms operating in China to overcome difficulties.
- The Trump administration is ready to move ahead with the next round of tariffs after a public comment period ends at midnight in Washington on Thursday, but the timing is uncertain.
- British fashion house Burberry said it would stop burning its unsold inventory, shedding light on a technique that luxury-goods companies have quietly used for years to maintain the exclusivity of their brands.
- Marco Gobbetti, Burberry’s chief executive, said the company would immediately stop the practice, after disclosing in its annual report that it had destroyed £28.6 million ($34.6 million) worth of product last fiscal year, and £26.9 million the year before.
- High-end brands destroy unsold goods to protect their image against discounting when inventory winds up in outlet stores or in the gray market.
- The change at Burberry is a measure of how environmental concerns are upending the fashion industry.
Novartis sells U.S. generics assets to India’s bargain-hunting Aurobindo
- New Novartis Chief Executive Vas Narasimhan has further reshaped the Swiss drugmaker, announcing on Thursday he is selling U.S. dermatology and generic pill assets to India’s Aurobindo Pharma for up to $1 billion.
- The deal, which comes after price pressure hurt the U.S. pills business, includes some 300 products.
- An initial $900 million cash payment could be followed by $100 million in performance-based payments to the drugmaker.
- The U.S. Sandoz pills business has long been a problem child for Novartis, with price pressure hurting results and becoming the main reason the division has pared back its growth targets, most recently in July.
Drugmaker GSK to eliminate 650 U.S. jobs
- British drugmaker GlaxoSmithKline said it would cut about 650 positions in the United States related to a global restructuring program it announced in July.
- The job cuts would include about 100 each in its back office in Philadelphia and at Research Triangle Park, North Carolina, and 450 sales representatives.
- GSK employs about 15,000 people in the United States.
TODAY in HISTORY
- President William McKinley was shot by anarchist Leon Czolgosz at the Pan American Exposition in Buffalo, N.Y. McKinley died on September 14th. (1901)
- More than 2 billion people watched Princess Diana’s funeral on TV. (1997)
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