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The Morning Ledger: How to Tell If the Tax Cuts Are Working |
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Good morning. Exactly how well is the tax cut working? Both critics and supporters say it will take months or years to draw conclusions on the law’s effect, write the WSJs Theo Francis and Ben Leubsdorf. Meanwhile, here are some key indicators that help reveal how well the changes are aiding businesses, workers and the broader economy.
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U.S. economic activity is on a solid trajectory this year, and overall growth is on track for a strong second quarter after a modest slowdown in the early months of 2018. Large publicly traded companies have funneled much of their tax savings into increased share repurchases. Analysts and economists caution that increased investment and hiring from expansion take more time to implement.
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Companies have stepped up capital spending in recent quarters, an improvement that could reflect new tax-law provisions intended to encourage business investment, including quicker deductions for some purchases, as well as lower tax rates and other changes that make lower-margin investments more attractive.
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Overall, however, profits have largely been growing along with the rest of the economy. Profits as a proportion of overall economic output—the nation’s gross domestic product—haven’t changed much so far.
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President Donald Trump is preparing new tariffs for China, in case Beijing imposes retaliatory levies after the U.S. recently slapped $50 billion tariffs on China earlier this month. PHOTO: QILAI SHEN/BLOOMBERG NEWS
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President Donald Trump launched a pre-emptive strike in the trade conflict with China on Monday, directing his aides to identify $200 billion in Chinese goods for new 10% tariffs—in case Beijing retaliates against the tariffs the U.S. imposed earlier this month.
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Tariffs are starting to ripple through the economy, but a hard to detect amid the booming growth. One early example, the 20% levy on washing machines, sent prices up 17%, but as consumers don't buy major appliances often, they likely don't notice the month-to-month swings.
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The European Union and Australia launched free-trade negotiations Monday, part of a push by U.S. allies world-wide to bolster economic links and counter fallout from President Donald Trump’s “America First” policies.
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Chinese shares fell to their lowest level in nearly two years, approaching a bear market, as investors nervous about the prospect of an escalating trade war between the U.S. and China dumped everything from large insurers to small tech firms.
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The U.S. Commerce Department will release housing-starts data on Tuesday. Economists surveyed by the WSJ predict home construction rose to a 1.31 million seasonally adjusted annual rate in May, reversing a slowdown notched in April.
Oracle Corp., La-Z-Boy Inc. and FedEx Corp. are among the companies slated to report earnings today.
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Accountants need to polish their skills to stay abreast of new technologies and their effect on the profession, according to the Institute of Management Accountants.
The IMA updated its Management Accounting Competency Framework to include new skills areas such as strategic management, technology and analytics and ethics. The changes come as blockchain, robotic process automation and other new technologies are changing how accountants perform their jobs, reports CFO Journal's Tatyana Shumsky.
“Our profession is undergoing significant change,” said Jeff Thomson, IMA president and chief exeucitive officer, in a statement. “As some tasks traditionally done by accountants are automated, there’s a significant opportunity for management accountants to take on strategic roles within their organizations.”
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Goodyear Tire & Rubber Co., the Akron, Ohio tire manufacturer, said its Chief Financial Officer Laura Thompson is slated to retire next year. She has served as CFO since 2013.
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Ms. Thompson, who joined the Goodyear in 1983, said she plans to retire sometime in the first quarter of 2019.
“As I look ahead to marking 35 years with Goodyear in the coming months, I have given this decision a great deal of thought and concluded that the time is right for me to take this step,” Ms. Thompson said in a statement.
Graco Inc., the Minneapolis, Minn., maker of fluid-handling systems, named Mark Sheahan as Chief Financial Officer and Treasurer, effective today. He succeeds Christian Rothe, who was named president of worldwide applied fluid technologies division, effective today.
Mr. Sheahan most recently served as vice president and general manager, applied fluid technologies since February 2008, prior to that he was chief administrative officer from 2006 and prior to that he served as treasurer since 1996. He first joined Graco in 1995. Compensation details were not immediately available.
Comstock Holding Companies Inc., a Reston, Virginia real estate company, named Christopher Guthrie as Chief Financial Officer and principal financial officer, effective June 12. He succeeds Christopher Conover, who resigned as CFO and was appointed executive vice president finance and strategic planning, effective June 12. Mr. Guthrie has served as CFO of Comstock Partners LC since 2013. Previously, he worked for a private equity fund and had also served as an aduti and transaction services manager at PricewaterhouseCoopers LLP. Compensation details were not immediately available.
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Fuji Xerox is a joint venture between Fujifilm Holdings and Xerox. PHOTO: AFLO/ZUMA PRESS
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Fujifilm Holdings Corp. is suing Xerox Corp. for breach of contract and estimated damages of more than $1 billion after the printer and copier company walked away from a planned merger earlier this year.
Roche Holding AG on Tuesday said it would pay $2.4 billion to buy the shares it doesn’t already own in Foundation Medicine Inc., furthering its bet on personalized cancer care.
Wells Fargo & Co. is expected to announce a restructuring of its wealth management business, according to people familiar with the matter, as it grapples with government investigations tied to client referrals and other related matters.
Walt Disney Co. will offer die-hard fans the chance to attend a six-hour preview of a new attraction at Disneyland for $299, the latest move by the company to use fares to control crowds.
General Motors Co. will invest $175 million to modernize and retool a plant in Lansing, Michigan, to build the next generation of luxury Cadillac sedans, reports Reuters.
NextEra Energy Inc. became a wind and solar Goliath almost entirely under the radar, using tax subsidies to help finance projects around the country it has avoided debt and the kind of claims of altruistic motives common among some renewable-energy companies.
GameStop Corp. is in talks with private equity firms about a potential transaction after receiving buyout interest, people familiar with the matter told Reuters.
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JPMorgan Chase & Co. PHOTO: EMMANUEL DUNAND/AGENCE FRANCE-PRESSE/GETTY IMAGES
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JPMorgan Chase & Co. agreed to pay a $65 million fine to settle claims that it tried to manipulate a global interest rate benchmark, The U.S. Commodity Futures Trading Commission said. This is the latest fine levied by U.S. regulators to punish crisis-era manipulation schemes by large banks.
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State legislatures and courts around the country are deciding whether peer-to-peer car-sharing services get regulated the same way as traditional car-rental companies.
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The U.S. Supreme Court will hear a former investment banker’s appeal arguing that the government overreached in suing and expelling him from the business, in a case that could narrow regulators’ ability to charge defendants with securities fraud.
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The U.S. Supreme Court announced that it will hear an Apple Inc. appeal challenging the propriety of a lawsuit brought by consumers who allege that the company illegally monopolized the sale of iPhone apps.
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A shopper strolled down a street in Carytown, a retail area in Richmond, Va. PHOTO: STEVE HELBER/ASSOCIATED PRESS
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U.S. economic confidence among lower-income consumers has taken a recent leap, with confidence among households in the bottom third income tier of the University of Michigan’s consumer-sentiment index up 11.4 points since February, an IHS Markit analysis of sentiment figures shows.
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European Central Bank President Mario Draghi signaled on Tuesday that the bank could extend its giant bond-buying program again and delay any interest-rate increases to counter possible shocks to the eurozone economy.
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China’s central bank on Tuesday delivdered surprise stimulus, lending 200 billion yuan ($31 billion) to financial institutions via its medium-term lending facility, a move that highls concerns over liquidity and potential economic drag from a trade war with the United States, reports Reuters.
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