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  • U.S. stocks edged higher Tuesday as investors viewed a fresh round of tariffs on Chinese goods, as well as China’s early response, as more measured than previously expected.
  • Investors sold stocks around the world Monday in anticipation of the Trump administration’s announcement and sent the Shanghai Composite to its lowest level since November 2014.
  • President Trump late Monday announced new tariffs on $200 billion in Chinese goods.
  • The White House said the 10% tax is set to be imposed Sept. 24 on a range of Chinese imports, including luggage and seafood.
  • That levy will rise to 25% at the end of 2018. Investors were expecting introductions of 25% rather than 10%.
  • Some traders were interpreting the staggered introduction of the tariffs as a sign that the Trump administration is still eager to reach a trade deal with China ahead of midterm elections in November.


FedEx Sounds Alarm on Tariffs

  • FedEx executives said fears over the escalating trade fight between China and the U.S. are starting to hurt economic activity between the two countries.
  • Total revenue rose 11% to $17.1 billion, with double-digit revenue increases in all three of FedEx’s main segments.
  • FedEx’s Express segment reported a 5% increase in package volume and 3% increase in revenue per package, while its Ground segment reported a 7% increase in package volume on 6% growth in revenue per package.
  • For the period, FedEx reported earnings of $835 million, up from $596 million a year earlier.
  • The tariffs implemented so far have hit about 10% of FedEx’s business in China, where the carrier generates about 2% of revenue.
  • But uncertainty over further actions, including an expected round of additional U.S. tariffs on $200 billion worth of Chinese imports and how Beijing retaliates, is creating jitters and resulting in a slowdown in economic activity, executives said.

Oracle Revenues Up 1%, Sending Shares Lower After-Hours

  • Oracle managed to boost revenue during its latest quarter, but the performance may further increase pressure on the company to explain how it plans to win customers over to its cloud-based offerings.
  • During the quarter, Oracle said revenue rose 1% to $9.19 billion, less than the $9.24 billion analysts had predicted.
  • Oracle said its largest segment, now called cloud services and license support, booked $6.61 billion during the latest quarter, up 3.2% from the same quarter a year ago but was below analysts’ expectations of $6.68 billion.
  • For the latest quarter, earnings at Oracle rose to $2.27 billion, from $2.21 billion a year earlier.
  • Oracle said Monday that its board of directors had increased the authorization for share repurchases by $12 billion. Oracle now has $20 billion authorized to spend on share buybacks.

General Mills Posts Sales Growth, But North America Underperforms

  • Sales rose in General Mills’ latest quarter despite a decline in its North American business, which brings in most of the food company’s revenue.
  • General Mills said Tuesday that net sales rose 8.6% to $4.09 billion, below expectations of $4.12 billion.
  • In North America, net sales were $2.39 billion, down 2.1% and below analysts’ estimates.
  • While General Mills reported top-line growth, profit declined as the company’s net interest climbed by more than 80% from the comparable quarter a year ago.
  • The company reported earnings of $392.3 million, down 3.1% from the comparable quarter a year ago.

Apple Avoids U.S. Tariffs on Smartwatches, Earbuds

  • Apple dodged duties on its smartwatches and wireless earbuds after the U.S. excluded them from tariffs on $200 billion in Chinese goods, though still faces retaliatory measures being weighed by China that could strike iPhone production there.
  • In the U.S., the proposed tariffs of 10% would have added more than $11 to the import cost of about $115 for a Chinese-made Apple Watch Series 3, according to market researcher IHS Markit.
  • Though the U.S. removed smartwatches and wireless headphones, it estimates the tariffs will still affect about $200 billion in goods when they are implemented.

Mastercard, Visa Agree to Settle Merchant Antitrust Suit

  • Mastercard, Visa and other financial institutions have agreed to settle a long-running antitrust lawsuit with merchants over the fees they pay when they accept card payments for a proposed settlement amount of about $6.2 billion.
  • The merchants argue that they want the ability to negotiate their own fees directly with the banks instead of through card networks like Visa and Mastercard, which settle the fees with the banks independently.
  • Visa’s share of the new settlement is $600 million. Including the 2012 settlement money, Visa’s share is $4.1 billion.
  • Mastercard has agreed to pay an additional $108 million on top of the $790 million it had agreed to pay in a settlement in 2012.

Cigna deal gets antitrust nod, positive sign for CVS/Aetna

  • Health insurer Cigna’s $52 billion acquisition of pharmacy benefits manager Express Scripts has passed U.S. antitrust scrutiny, allowing them to proceed with a combination they say will lead to lower costs by better coordinating pharmacy and benefits.
  • The decision bodes well for the pending U.S. antitrust review of CVS’s proposed $69 billion acquisition of health insurer Aetna.
  • The Justice Department review of CVS’s planned purchase of Aetna may conclude this month, but will take longer because of divestitures needed to resolve competitive concerns.

In Major Auto Partnership, Google’s Android System to Power Dashboard Media Display

  • Google is making a major push into the auto industry, partnering with the Renault-Nissan-Mitsubishi Alliance to use the tech company’s Android operating system to power media display that will eventually be sold in millions of cars world-wide.
  • The alliance, which last year sold a combined 10.6 million vehicles globally, will debut the new system in 2021, giving drivers better integration of Google’s maps, app store and voice-activated assistant from the vehicle’s dashboard, the companies said.
  • This deal will likely put pressure on the alliance’s competitors to further open their car’s multimedia systems to Google or Apple, another software giant trying to play a larger role in the auto industry.

SpaceX’s First Moon Tourist Is a Japanese Billionaire

  • SpaceX’s first paying passenger will be Japanese billionaire Yusaku Maezawa, who is to blast off from earth in 2023, circle the moon and return, Elon Musk said at an event Monday evening, where the space tourist also made brief remarks.
  • A former drummer in a punk band, Maezawa is tentatively planning to make his moon flight in 2023 aboard SpaceX’s forthcoming Big Falcon Rocket spaceship, taking the race to commercialize space travel to new heights.
  • Only 24 astronauts have flown beyond Earth’s protective magnetic shield, in missions spanning a four-year period from December 1968 to December 1972.

HBO and Netflix Tie for Emmy Awards

  • HBO and Netflix tied for the most Emmy Awards with 23 each, highlighting the race for dominance in a television industry whose competitive landscape is rapidly shifting.
  • HBO’s “Game of Thrones” won Outstanding Drama Series for the third time in four years, edging out competing series from Netflix, NBC and AMC, along with last year’s winner, Hulu’s “The Handmaid’s Tale.”
  • In addition to HBO’s win for “Game of Thrones,” “Barry,” about a hit man attempting a career change, picked up several awards.
  • Amazon became the first streaming service to win Outstanding Comedy Series with “The Marvelous Mrs. Maisel,” about a Manhattan woman moonlighting as a stand-up comedian in the 1950s.
  • Netflix scored 112 nominations, slightly more than HBO’s 108, though the network entered Monday’s telecast slightly ahead in wins from previous days of the awards.

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Trump Announces New Tariffs on Chinese Imports

  • President Trump said he will impose new tariffs on about $200 billion in Chinese goods and threatened to add hundreds of billions more to pressure Beijing to change its commercial practices, escalating tensions between the two largest economies.
  • The 10% tax on Chinese imports will take effect on Sept. 24 and will rise to 25% at the end of the year.
  • The tariffs will affect thousands of goods ranging from luggage to seafood, extending the impact of Mr. Trump’s aggressive tariff policy for the first time to a broad population of American consumers.
  • The announcement means that starting next week, Mr. Trump will have imposed tariffs on nearly half of the Chinese goods imported to the U.S., which last year were valued at $505 billion.

Lower lumber prices hold homebuilder sentiment steady, for now

  • Home builder sentiment in September held steady at 67 on the National Association of Home Builders/Wells Fargo Housing Market Index, or HMI.
  • Anything above 50 is considered positive sentiment.
  • Home builder sentiment is up from 64 one year ago, but down from its most recent high of 70 in May.
  • Confidence among builders has been under pressure from rising costs and a continued shortage of skilled labor.

China unlikely to send trade delegation to U.S. after new tariffs

  • China likely will not send a trade delegation to Washington after the Trump Administration announced plans to implement tariffs on $200 billion worth of Chinese goods, the South China Morning Post reported on Tuesday, citing an unidentified government source in Beijing.
  • The report said China is reviewing its previous plans to send a delegation headed by Vice Premier Liu He to the U.S. next week for fresh round of talks.
  • The source told the paper that Beijing has not yet made a final decision but that a show of “sufficient goodwill” was a precondition for the planned talks.

Trump Adviser Kudlow Blames Deficits on Spending, Not Tax Cuts

  • A top economic adviser to President Trump said the U.S. is ready to engage in serious trade talks with China, in comments that also shrugged off massive U.S. budget deficits as largely a function of too much government spending and not tax cuts.
  • Mr. Kudlow rejected Monday the widely held view that recently passed tax cuts favored by the Trump administration and Republicans have significantly exacerbated what were already high government budget deficits.
  • The Congressional Budget Office said higher spending combined with the tax cuts is creating an “unsustainable” path.
  • It is also unusual for government deficits to rise at a time when the economy is growing so strongly, which raises concerns about the state of borrowing when the next economic downturn arrives.

Kavanaugh, His Accuser Will Testify Before Senate Committee

  • The Senate Judiciary Committee said it would hold a hearing next week with Judge Brett Kavanaugh and the woman who has accused him of sexual assault, setting the stage for a dramatic public showdown that could determine the fate of his nomination.
  • The hearing will pit his credibility against an explosive accusation made by Christine Blasey Ford, a California college professor, who said he sexually assaulted her when they were teenagers.
  • The sexual-misconduct allegations may remove pressure that some Democratic senators faced to back his confirmation as a way of reassuring conservative voters in congressional elections just seven weeks away.
  • The most vulnerable Democrats such as Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota and Joe Manchin of West Virginia have not indicated if they would side with their party in opposing Kavanaugh or join Republicans in confirming him.

Trump Orders Declassification of Intelligence Documents Related to Former Adviser Carter Page

  • President Trump ordered the declassification of sensitive documents related to the investigation into Russian election interference, a move that could eventually allow the public unprecedented access to a probe that he has repeatedly railed against.
  • Mr. Trump on Monday ordered that more than 20 pages of a federal warrant used to obtain a secret wiretap on one of his former advisers, Carter Page, be declassified, as well as all FBI interviews that went into obtaining the warrant.
  • Mr. Trump also ordered that text messages from senior Justice Department and FBI officials be made public without redactions.
  • Those officials include former FBI director James Comey, former deputy director Andrew McCabe, former FBI agent Peter Strzok, former FBI lawyer Lisa Page and Justice Department official Bruce Ohr.
  • All were involved at the highest levels of the investigation into Russian interference in the 2016 U.S. election.

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China Retaliates with Tariffs on $60 Billion of U.S. Goods

  • New U.S. tariffs on China’s exports escalated the countries’ trade fight, with Chinese officials scrambling on how to retaliate and whether to accept Washington’s offer for more negotiations.
  • The $60 billion worth of U.S. goods China said last month it would hit with retaliatory tariffs of 5% to 25% include farm products, machinery and chemicals.
  • The levies, if implemented, would come on top of the tariffs on $50 billion that are already in force, bringing the total amount of U.S. products subject to Chinese tariffs to $110 billion—or 85% of U.S. goods entering China last year.
  • Because China imports far fewer goods from the U.S.—just under $130 billion last year—Beijing is running out of products to penalize.
  • Some Chinese officials advising the leadership are proposing to restrict China’s sales of materials, equipment and other parts key to U.S. manufacturers’ supply chains.

EU probes VW, BMW, Daimler over alleged emissions collusion

  • EU antitrust regulators are investigating whether BMW, Daimler and Volkswagen colluded to restrict the rollout of clean emission technology, a move that could lead to hefty fines for the German carmakers.
  • The European Commission opened an in-depth investigation, nearly a year after it raided the companies and two years after a record $3.4 billion fine on a group of truck makers for fixing prices and delaying the adoption of cleaner engine technology.
  • The EU executive said the “circle of five” held meetings where they may have colluded to limit the development and roll-out of certain emissions control systems for cars sold in Europe.
  • Companies can face fines up to 10 percent of their global turnover for breaching EU rules.

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