US FINANCIAL MARKET
Nasdaq 100 Down 1% as Apple Leads Megacap Rout: Markets Wrap – Bloomberg, 9/7/2023
- Stocks fell amid concern over how a Chinese ban on Apple’s iPhone could impact other segments of the American technology industry.
- Treasuries and the dollar were little changed, shrugging off the initial impact of jobless claims data that reinforced the case for the Federal Reserve to keep rates elevated.
- The Nasdaq 100 dropped 1%, while the S&P 500 declined for a third straight session.
- The S&P 500 fell 0.6%. The Dow Jones Industrial Average fell 0.1%.
- Apple extended a two-day slide to 7%. The shares broke below the key 100-day moving average, which is seen as a bearish signal by some technical analysts.
- The company’s suppliers such as Qualcomm and Micron Technology sank, while megacaps like Tesla and Nvidia dropped at least 2.5%.
- Several agencies have begun instructing staff not to bring their iPhones to work, people familiar with the matter said, affirming a previous report from the Wall Street Journal.
- In addition, Beijing intends to extend that restriction far more broadly to a plethora of state-owned enterprises and other government-controlled organizations, the people said, asking not to be identified discussing a sensitive matter.
- Initial jobless claims decreased by 13,000 to 216,000 in the week ended Sept. 2.
- The figure was lower than all forecasts in a Bloomberg survey of economists.
- Boeing fell after warning investors that deliveries of its cash-cow 737 jetliner will come in at the low end of its targeted range this year.
- C3.ai sank after giving a lackluster sales forecast and said profitability will take longer than expected, fueling anxiety the software company is struggling to capitalize on enthusiasm for artificial intelligence.
- The United Auto Workers plans to make a counteroffer to Ford Motor after rejecting the company’s first proposal last week, according to people familiar with the matter.
- The Stoxx Europe 600 fell 0.2%.
- The Bloomberg Dollar Spot Index rose 0.2%.
- The yield on 10-year Treasuries was little changed at 4.28%.
- West Texas Intermediate crude was little changed.
- Gold futures fell 0.1% to $1,942.20 an ounce.
C3.ai’s stock falls 8% despite solid quarter and guidance – Market Watch, 9/7/2023
- Shares of C3.ai initially skidded in extended trading Wednesday after the AI stalwart reported quarterly results.
- “Let’s look at our story: It is about becoming a cash-positive business,” C3.ai Chief Executive Tom Siebel said in an interview about the results, which were in line with analyst estimates. “I have $800 million cash in the bank.”
- Revenue was $72.4 million, compared with $65.3 million a year ago.
- Adjusted earnings came in at a loss of 9 cents a share.
- Analysts surveyed by FactSet had expected on average a net loss of 17 cents a share on revenue of $71.6 million.
- The company forecast second-quarter revenue guidance of between $72 million and $76.5 million, eclipsing FactSet’s mean estimate of $73.8 million.
UiPath stock rises as earnings beat and buyback outweigh conservative outlook – Market Watch, 9/7/2023
- UiPath shares rose in the extended session Wednesday after some initial volatility after the AI startup beat on earnings and announced share buybacks amid a conservative forecast.
- Revenue rose to $287.3 million from $242.2 million in the year-ago quarter.
- Adjusted earnings, which excludes stock-based compensation expenses and other items, were 9 cents a share, versus a loss of 2 cents a share in the year-ago period.
- Analysts had forecast 4 cents a share on revenue of $281.5 million.
- For the third quarter, the company forecast revenue between $313 million and $318 million, and for the year, revenue between $1.27 billion and $1.28 billion.
- Analysts surveyed by FactSet had estimated revenue of $318.5 million for the third quarter with adjusted earnings of 7 cents a share, and revenue of $1.27 billion for the year, on earnings of 34 cents a share.
ChargePoint’s stock slumps on escalating quarterly loss – Market Watch, 9/7/2023
- ChargePoint Holdings’s plunged in extended trading Wednesday after the company reported a deepening loss.
- Revenue did climb 39% to $150.5 million from $108.3 million a year ago.
- Adjusted earnings were a loss of 24 cents a share.
- Analysts surveyed by FactSet had expected on average a net loss of 13 cents a share on revenue of $153.2 million.
GameStop Narrows Quarterly Loss as Costs Drop – Wall Street Journal, 9/7/2023
- GameStop reported a slight increase in sales and a narrower loss for the fiscal second quarter, as the videogame retailer continued to pursue turnaround efforts without a chief executive officer and chief financial officer.
- Texas-based GameStop posted $1.16 billion in sales for the July-ended quarter, up from $1.14 billion a year earlier.
- In the latest second quarter, GameStop said hardware sales were flat, accounting for about half of total sales.
- Software sales increased 25%, while collectibles declined 24%.
- Selling, general and administrative expenses dropped to $322.5 million, or 27.7% of net sales, compared with $387.5 million, or 34.1% of net sales, a year ago.
- Cost-cutting helped narrow its reported loss to $2.8 million, compared with a loss of $108.7 million a year ago.
Summit Materials to merge with Cementos Argos’s US operations in $3.2 bln deal – Reuters, 9/7/2023
- Summit Materials said on Thursday it would merge with the U.S. operations of Cementos Argos in a cash-and-stock transaction valued at $3.2 billion, creating the fourth-largest cement platform in the United States.
- Cementos Argos will receive about $1.2 billion in cash, subject to closing adjustments, and 54.7 million shares of Summit based on its closing price on Wednesday.
- Argos USA has assets comprising four integrated cement plants, 140 ready-mix plants and eight ports, giving Summit a “significantly improved scale” in high-growth markets.
- Cementos Argos will own about 31% of the combined company on upon the closing of the transaction.
Meta’s New Ad Campaign Reminds People That VR Is Already Here – Wall Street Journal, 9/7/2023
- New ads from Meta Platforms replace earlier campaigns’ visions of a futuristic metaverse with scenes depicting virtual reality as a real, present-day and even prosaic technology.
- In one video from the campaign, which is dubbed “The Impact Is Real,” welders practice welding with virtual metals, doctors rehearse surgeries on virtual eyeballs, and the English soccer player Marcus Rashford uses VR to stay connected to the pitch when recovering from an injury.
- Meta hopes the campaign, which is slated to run in the U.S. and Europe across television, podcasts, email newsletters and print, will pique the interest of software developers in various sectors who may not have considered using virtual or augmented reality, according to Rob Sherman, Meta’s vice president overseeing policy at its Reality Labs unit.
- Internal research found that too many people still associate virtual reality purely with videogaming, Meta executives said.
- But the campaign also aims to remind executives, governments and general consumers that virtual reality is already being used in the real world for critical purposes, he said.
- “This is technology that exists now, it’s not science fiction,” Sherman said. “It’s important for us to be transparent and help people see what our vision is, so they can anticipate it and participate.”
Ford Gives Raise to 8,000 UAW Workers Ahead of Strike Deadline – Bloomberg, 9/7/2023
- Ford Motor said Thursday it raised the pay of 8,000 US hourly workers represented by the United Auto Workers union just a week before its union contract expires.
- The raises, negotiated in the 2019 contract with the UAW, lift the pay of the workers by $4.33 an hour, or $9,000 a year, the automaker said in a statement.
- The move accelerates how quickly the workers reach the top pay rate of about $32 an hour, reducing the time from eight years to as fast as four years, Ford said.
- “These pay raises are an example of Ford’s commitment to improving the lives of our hourly workforce,” Bryce Currie, Ford’s vice president, of manufacturing, said in the statement.
- “The negotiating teams nicknamed this deal ‘23 Jump Street’ because in 2023 a significant number of UAW-Ford team members would see a jump in pay. And we are offering further improvements in the next contract.”
- The UAW is a seeking a 46% wage increase in the current round of bargaining and rejected Ford’s initial counter proposal, which offered a 15% raise, including bonuses.
Walmart Cuts Starting Pay for Some New Hires – Wall Street Journal, 9/7/2023
- Walmart is paying some new store workers less than it would have three months ago, a sign that employers are seeking to cut labor costs as the once-hot market for hourly staff cools.
- The country’s largest private employer changed its wage structure for hourly workers in mid-July, according to documents reviewed by The Wall Street Journal and store workers.
- Under the new structure most new hires will make the lowest possible hourly wage for that store.
- In the past, some new hires, such as those who collect items for online orders, would have made slightly more than other new hires such as cashiers.
- Walmart’s minimum hourly wage of $14 remains unchanged and still varies by region, for example starting at $17 in some stores.
- Existing workers don’t receive pay cuts.
- Walmart said the change in pay structure allows workers to move between work groups such as food, registers, stocking or digital fulfillment without pay impacts, according to documents given to some store workers.
Tesla to Supply Hilton Hotels With 20,000 EV Chargers by 2025 – Bloomberg, 9/7/2023
- Hilton Worldwide Holdings is partnering with Tesla to install 20,000 universal electrical vehicle chargers at 2,000 of its hotels in the US, Canada and Mexico.
- The McLean, Virginia-based company said it plans to have at least six wall-mounted chargers at selected hotels that will work with any electric vehicle model, beginning in 2024.
- The move would make Hilton’s EV charging network the largest of any hospitality company, the hotel group said.
- It would also expand Tesla’s dominance in EV charging.
- The installations are expected to be completed by 2025, according to Hilton’s Chief Brand Officer Matt Schuyler.
- “We think in many ways this is going to meet a guest need and a growing need over time,” Schuyler said in an interview.
Comcast, Disney Move Up Start of Hulu Negotiations – Wall Street Journal, 9/7/2023
- Comcast and Disney have agreed to move up the date on which they begin negotiating the fate of their jointly-owned streaming service, Hulu, the cable company’s CEO said Wednesday.
- The companies plan to begin work negotiating a potential sale of Comcast’s minority stake in Hulu on Sept. 30, months earlier than their initial January start date.
- Hulu, home to shows such as “The Handmaid’s Tale” and “The Bear,” is likely worth more than $30 billion, Comcast chief executive Brian Roberts said.
- The negotiations between Disney and Comcast come as entertainment companies struggle to make their services profitable and determine what consumers are willing to pay.
- Under an agreement reached that same year, both Disney and Comcast have the right to force a sale of Comcast’s stake at fair-market value, with a minimum valuation of $27.5 billion for the whole service.
Dave Clark Resigns as Flexport CEO – Wall Street Journal, 9/7/2023
- Flexport Chief Executive Dave Clark, a former top executive at Amazon.com, said Wednesday he is resigning his role a year after joining the digitally focused freight forwarder to transform the company into a full-service logistics provider.
- Clark came to Flexport in September 2022 after a two-decade career building Amazon’s sprawling logistics network, initially joining the company’s founder, Ryan Petersen, as co-CEO before taking over as the sole leader in March.
- Clark has hired political consultants to advise him on a potential 2026 run for governor of Texas, where he resides, according to people familiar with the matter.
- “Today, Ryan and I discussed his desire to return to focusing on growth in the core freight business. In light of that, I feel that he is best suited to lead the company in that direction,” Clark wrote on social-media platform X, formerly known as Twitter.
- Petersen will return to the company as chief executive, a Flexport spokeswoman said Wednesday.
Microsoft Will Use Carbon-Absorbing Rocks to Meet Climate Goals – Wall Street Journal, 9/7/2023
- Most of the world’s efforts to remove carbon from the atmosphere use giant, vacuum-like devices that suck in air and isolate the carbon.
- Microsoft is funding a new approach that uses crushed-up limestone to achieve the same result.
- The tech company said Thursday it agreed to buy credits from startup Heirloom Carbon for the removal of up to 315,000 metric tons of carbon dioxide over 10 years.
- That would amount to a purchase commitment of at least $200 million based on market prices and would offset the equivalent of the annual emissions of around 70,000 gasoline-powered cars.
- The deal will help Microsoft neutralize its carbon emissions and is one of the largest ever purchases of carbon-removal credits.
- Some of Microsoft’s purchase agreement is tied to Heirloom’s work in a government-funded hub in Louisiana, illustrating how the federal funding is accelerating the sector’s development. It is the first new credit-purchase tied to the government projects.
Paper Companies Near Big Merger Deal – Wall Street Journal, 9/7/2023
- WestRock is nearing a deal to merge with Europe’s Smurfit Kappa Group in a move that would create a global paper and packaging powerhouse valued at some $20 billion, according to people familiar with the matter.
- After The Wall Street Journal published a report on the move, Smurfit Kappa confirmed that it is in talks with WestRock over a potential merger.
- Smurfit Kappa said the discussions involve the creation of a new company—Smurfit WestRock—in a combination with a WestRock subsidiary.
- WestRock shareholders would receive shares in the combined group, Smurfit Kappa said.
- A deal could be announced next week, assuming the talks don’t fall apart, the people familiar with the matter said.
- Smurfit Kappa said the combined company would be incorporated and domiciled in Ireland with global headquarters in Dublin.
- If the combination is completed, Smurfit WestRock’s ordinary shares would be listed on the New York Stock Exchange, Smurfit Kappa said.
- Also, Smurfit Kappa’s premium listing on the London Stock Exchange and its listing on Euronext Dublin would be canceled, with the combined company expected to list on the standard segment of the LSE, Smurfit Kappa said.
WeWork Looks to Renegotiate Most of Its Leases as It Fights to Survive – Wall Street Journal, 9/7/2023
- WeWork launched a renegotiation of its office leases globally, testing its leverage against landlords that stand to lose if the embattled co-working space provider goes out of business.
- WeWork’s current lease liabilities are “dramatically out of step with current market conditions,” interim Chief Executive David Tolley said Wednesday.
- WeWork held calls with landlords to inform them that it would be seeking concessions on its office leases, which account for more than two-thirds of its operating expenses.
- The company last month raised doubts that it would continue as a going concern, citing its dwindling cash and market headwinds.
- Once among the world’s most valuable startups at $47 billion, WeWork recently installed several directors with bankruptcy and restructuring experience to its board.
- Some of its major creditors have held preliminary talks among themselves to explore a bankruptcy filing for WeWork.
- Landlords with more popular locations may be less willing to make concessions than less popular ones, but a possible bankruptcy filing on the horizon “will make landlords more negotiable with WeWork,” she said.
US ECONOMY & POLITICS
US Initial Jobless Claims Slide to Lowest Level Since February – Bloomberg, 9/7/2023
- Applications for US unemployment benefits fell to the lowest level since February, adding to evidence of a resilient labor market.
- Initial jobless claims decreased by 13,000 to 216,000 in the week ended Sept. 2, Labor Department data showed Thursday.
- The figure was lower than all forecasts in a Bloomberg survey of economists.
- Continuing claims, which are a proxy for the number of people receiving unemployment benefits, dropped to 1.68 million in the week ended Aug. 26.
- The four-week moving average in initial claims, with smooths out some of the volatility, declined to 229,250.
- On an unadjusted basis, initial claims edged lower, led by declines in Ohio and New York.
- New applications in Ohio fell more than 2,900 after bigger decreases in the prior two weeks.
- Separate figures out Thursday showed productivity, or nonfarm business employee output per hour, rose at an downwardly revised 3.5% annual rate in the second quarter.
- Unit labor costs, or what a business pays employees to produce one unit of output, were revised higher to 2.2%, according to the Bureau of Labor Statistics.
Hurricane Lee to Become Major Hurricane, but Path Still Unclear – Wall Street Journal, 9/7/2023
- Lee became the fourth hurricane to form in the Atlantic Ocean this year and is expected to strengthen into a major hurricane later this week.
- Forecasters say it is too early to predict the storm’s path, but some are urging people in the Caribbean and on the U.S. East Coast to keep an eye on its movement.
- Lee became a Category 1 hurricane Wednesday.
- Forecasters couldn’t rule out the possibility of Lee making landfall or coming close to the Eastern U.S. or Canada, he said Wednesday.
- The storm could also turn away from the mainland and make little impact on North America.
- Lee formed as a tropical storm in the Caribbean Sea Tuesday and reached hurricane strength a day later, the National Hurricane Center said.
- The storm Thursday morning was about 950 miles east of the northern Leeward Islands, according to the National Hurricane Center.
- Lee had maximum sustained winds of 80 miles an hour.
Health-Insurance Costs Are Taking Biggest Jumps in Years – Wall Street Journal, 9/7/2023
- Health-insurance costs are climbing at the steepest rate in years, walloping businesses and their workers.
- Costs for employer coverage are expected to surge around 6.5% for 2024, according to major benefits consulting firms Mercer and Willis Towers Watson, which provided their survey results exclusively to The Wall Street Journal.
- Willis Towers Watson, which goes by the initials WTW, projects the increase will be the biggest in more than a decade.
- Such a boost could add significantly to the price tag for employer plans that already average more than $14,600 a year per employee, driving up health-insurance costs that are among the biggest expenses for many American companies and a drain on families’ finances.
- Among the factors leading to the faster health-insurance cost growth are hospitals’ higher labor costs and heavy demand for new and expensive diabetes and obesity drugs.
Whose Rail Line Is It Anyway? Freight Carriers Could Be Forced to Share Tracks With Competitors – Wall Street Journal, 9/7/2023
- Railroads that fail to provide reliable service could be ordered to share tracks with competitors under a proposed rule that backers say will increase competition in the business of moving cows, corn, chemicals and other goods across America.
- The rule on so-called reciprocal switching, proposed Thursday by the Surface Transportation Board, is seen as a way to improve efficiency among major freight lines that have struggled to move goods and supplies from farms, factories and ports, especially during the Covid-19 pandemic.
- “In my view, it’s likely to lead hopefully to better service, where railroads are going to say, ‘We’d better up our game,’” STB Chairman Martin Oberman, a Democrat, said in an interview.
- The board’s goal, he said, is to have the threat of increased competition motivate railroads to boost their on-time performance: “We’d rather you solve it yourself.”
- The bipartisan, five-member board voted unanimously in favor of the proposed rule.
- If adopted, it would require all six of the nation’s Class 1 railroads to maintain uniform data on their on-time performance.
- When a railroad fails to meet minimum service standards, customers could file complaints and regulators would be empowered to order that it offer competitors the ability to serve the same customers.
Prosecutors Will Seek to Indict Hunter Biden This Month – Wall Street Journal, 9/7/2023
- Special counsel David Weiss said Wednesday he would seek an indictment of Hunter Biden by Sept. 29, keeping the younger Biden’s legal problems in the spotlight as President Biden pursues his re-election campaign.
- Weiss’s statement, issued in an update to the federal court in Delaware, provided confirmation that prosecutors are moving ahead with a criminal case against the younger Biden, after his legal team and the government have traded blame in recent weeks over the implosion of two previously negotiated agreements that would have resolved a long-running investigation into Hunter Biden’s tax and business dealings.
- Biden had expected to plead guilty to two misdemeanor tax counts—and agree to other conditions to skirt prosecution on a gun charge—and avoid jail time.
- Instead, the deal unraveled at a court hearing in July, talks to salvage it approached an impasse and Attorney General Merrick Garland named Delaware U.S. Attorney David Weiss as a special counsel to continue the investigation.
- In the brief filing, Weiss told the federal judge in Delaware that the legal clock set in motion by the initial filing of the case meant that the government was obliged to obtain a grand jury indictment by Friday, Sept. 29.
- “The Government intends to seek the return of an indictment in this case before that date,” the filing said.
EUROPE & WORLD
Apple Faces New Challenge in China as Huawei Releases High-Speed Phone – Wall Street Journal, 9/7/2023
- Apple is facing a new competitive threat in China after the country ordered some officials not to use iPhones: Hardware giant Huawei Technologies is selling a smartphone capable of ultrafast data connectivity.
- Now Huawei is fighting back, releasing a new phone in China with 5G-like speeds and capabilities.
- The initial batch of the phone—the Mate 60 Pro, priced at $960 for presale—sold out within hours, making a splash on Chinese social media.
- Other buyers have placed orders for delivery later.
- The early fervor suggests Huawei could reclaim buyers it lost in China to Apple, which is due to unveil its latest iPhone next week.
- While Huawei isn’t calling its new device a 5G phone, tests by Chinese consumers and domestic testing agencies show it could reach a maximum download speed of 500 to 800 megabits a second.
Huawei’s Breakthrough Still Shows China’s Limits in Tech Race – Wall Street Journal, 9/7/2023
- A new smartphone from China’s Huawei Technologies has caused a stir.
- But on closer inspection, it says as much about the country’s challenges as its promises in a divided technology landscape.
- The company surprised everyone last week when it quietly unveiled the Mate 60 Pro—its new smartphone that apparently comes with 5G capabilities.
- Huawei has mostly been selling 4G phones since 2019, when the U.S. imposed sanctions restricting its access to advanced chips.
- According to a teardown by industry research firm TechInsights, the main chip inside this new phone is made using technology comparable to the so-called 7nm process.
- It is possibly made by China’s leading chip foundry Semiconductor Manufacturing International, or SMIC, said TechInsights.
- Huawei’s new phone is a significant achievement for a Chinese company facing U.S. sanctions.
- But China’s semiconductor industry, and its broader tech ecosystem, look destined to lag behind the U.S. and its partners for the foreseeable future.
China’s Export Slump Eases as Economy Searches for Stability – Bloomberg, 9/7/2023
- China’s trade slump eased in August, adding to early signals the worst may be over for some parts of the world’s second-largest economy as it tries to regain momentum.
- Overseas shipments fell 8.8% in dollar terms from a year earlier while imports contracted 7.3%, both better than estimates and significantly less severe than July’s downturn.
- The trade surplus was $68 billion for the month.
- South Korea’s exports — a bellwether for world trade — also declined at a more moderate pace in August than the previous month.
- Thursday’s data showed China’s shipments to Europe and Asean continuing to record double-digit declines, but there was a notable improvement in US trade: Exports dropped 9.5% in August, compared to a 23.1% slump in July.
Adyen Gets UK Banking License to Replace Temporary Permission – Bloomberg, 9/7/2023
- Adyen has won approval for a UK banking license, replacing its temporary post-Brexit permission to offer embedded finance and other payments services.
- The Dutch company said the Financial Conduct Authority’s authorization allows it to continue operations in its UK branch.
- The firm, which already has European and US banking licenses, launched embedded finance products in October that allow clients in its platforms business to provide financing to their customers.
- “The UK is a key market for Adyen and we’re excited to cement our position here,” said Mariëtte Swart, Adyen’s chief legal & compliance officer.
Blinken Pledges More Than $1 Billion in Aid on Trip to Ukraine – Wall Street Journal, 9/7/2023
- Secretary of State Antony Blinken signaled Washington’s long-term support for Ukraine’s fight to expel Russian invaders, traveling to Kyiv in an effort to reassure the country’s leaders as they pursue a slow-going and difficult counteroffensive against entrenched enemy forces.
- Blinken’s visit, the most high-profile trip by a U.S. official since President Biden went in February, appeared designed to buoy Kyiv and Western allies and to send a message to the Kremlin that Washington doesn’t intend to back down.
- Blinken used the unannounced visit to pledge more than $1 billion in additional aid for Ukraine.
- The financial package includes funds for equipment to clear mines laid by Russia, obstacles that have impeded Ukraine’s progress, as well as $203 million to root out graft in Ukrainian institutions.
- Kyiv replaced its defense minister last week after allegations of corruption against officials in his department.
US, EU Plan New Chinese Steel Tariffs in Bid to End Trump-Era Trade Conflict – Bloomberg, 9/7/2023
- The US and European Union are working on an agreement that would introduce new tariffs aimed at excess steel production from China and other countries, as well as put behind them a Trump-era trade conflict.
- The levies would primarily be focused on imports from China that benefit from non-market practices, according to people familiar with the discussions, who said talks were ongoing.
- The scope of the measures, including other countries that could be targeted and the level of the tariffs, are still being discussed.
- The agreement would be part of the so-called Global Arrangement on Sustainable Steel and Aluminum that the EU and the Biden administration have been negotiating since 2021.
- The talks are aimed at settling a dispute that started when President Donald Trump slapped tariffs on metals imports from Europe, citing risks to national security.
- Brazil declared its independence from Portugal. – 1822
- The Boxer Rebellion in China officially ended with the signing of the Peking Protocol (Peace of Beijing). – 1901
- Nazi Germany began its initial blitz on London during World War II. – 1940
- The Entertainment and Sports Programming Network (ESPN) made its debut on cable TV. – 1979
- Desmond Tutu became the first black to lead the Anglican Church in southern Africa. – 1986