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The Morning Risk Report: China Detains FedEx Pilot Amid Trade Dispute
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A FedEx Express airliner at Hong Kong International Airport. Chinese authorities detained a FedEx pilot at China’s Guangzhou airport. PHOTO: ALEXANDER SHCHERBAK/ZUMA PRESS
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Good morning. Chinese authorities detained a FedEx Corp. pilot in the southern city of Guangzhou, elevating pressure on the express shipping giant already in Beijing’s crosshairs amid a U.S.-China trade war.
The pilot, a former U.S. Air Force colonel named Todd A. Hohn, was held a week ago while waiting for a commercial flight to his home in Hong Kong after flying deliveries throughout Asia from the FedEx regional hub in Guangzhou, people familiar with the matter say. When he was detained, Mr. Hohn—a wing commander at the Altus Air Force Base in Oklahoma until 2017—was carrying nonmetallic pellets used in low-power replica air guns in a checked bag, according to the people familiar with the matter.
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“Chinese authorities in Guangzhou detained and later released one of our pilots on bail after an item was found in his luggage prior to a commercial flight,” FedEx said in a statement to The Wall Street Journal. “We are working with the appropriate authorities to gain a better understanding of the facts.”
The company is reeling from the U.S. trade dispute with China and weaker global macroeconomic conditions. In June, FedEx was forced to apologize after it misrouted some of Huawei Technologies’ packages. The Wall Street Journal reported the parcels were misrouted after FedEx changed its internal systems to comply with the Commerce Department’s new restrictions. Huawei publicly complained, and Chinese officials said they were opening an investigation into FedEx.
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Purdue Pharma has been accused of helping fuel the U.S. addiction crisis through its aggressive marketing of OxyContin. PHOTO: GEORGE FREY/REUTERS
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Purdue Pharma LP’s bankruptcy filing this week punctuates a fall from its perch as one of the pharmaceutical industry’s most recognizable marketers of opioid pain pills. Purdue made about 10% of pills containing oxycodone—the active ingredient in OxyContin—that were purchased by U.S. pharmacies from 2006 to 2012, according to a Wall Street Journal analysis. The sales data were obtained by plaintiffs’ attorneys representing municipalities in cases against Purdue and other pharmaceutical-supply-chain players for their alleged roles in the opioid crisis, and made public as the result of a lawsuit brought by the Washington Post and HD Media.
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As concerns about the health hazards of vaping mount, a market for illicit cannabis-vaping products and the tools to create counterfeits is thriving online, according to a review by The Wall Street Journal and interviews with legal cannabis sellers and testing labs. On Instagram, users offer products from cannabis oils to vaping devices and packaging materials. On Amazon.com Inc., third-party sellers hawk empty packaging for vape products, and on Facebook Inc.’s Marketplace, sellers offer vaping products containing tetrahydrocannabinol, or THC, the mind-altering ingredient in cannabis.
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Attorneys for China’s Huawei Technologies Co. argued in court Thursday that a law barring it from doing business with U.S. government agencies is unconstitutional for selectively targeting the company for punishment using legislation. The telecommunications giant filed a lawsuit in March against the U.S. government, seeking to block implantation of certain portions of the National Defense Authorization Act of 2019. Huawei has said it amounts to a so-called bill of attainder—an unconstitutional action that finds a person or entity guilty of a crime via an act of legislation.
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“If a direct listing is providing the same kind of fair information and fair access to the market as your more traditional underwritten IPO, who are we to judge if one is better than the other?”
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— SEC Chairman Jay Clayton
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The Securities and Exchange Commission doesn’t mind when companies go public using a cheaper “direct listing” on exchanges instead of a traditional offering, where investment banks underwrite the deal, the agency’s chairman said. The SEC was initially concerned in 2017 that direct listings could open the door for riskier and less-seasoned companies to access public investors, without giving them as much information or providing some safeguards. In an IPO, investment banks perform a gatekeeping function in which they are responsible for due diligence on the company selling shares.
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President Trump filed a lawsuit to block New York prosecutors’ subpoena for his tax returns, the latest salvo in a continuing battle over the disclosure of the president’s financial information. The suit, filed in federal court in Manhattan against Manhattan District Attorney Cyrus Vance Jr. and accounting firm Mazars USA LLP, comes in response to a subpoena state prosecutors sent last month to the accounting firm requesting eight years of personal and business tax returns.
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Facebook Inc. CEO Mark Zuckerberg kicked off a lobbying trip to the capital by sparring with senators at a private dinner over a range of online woes including election security, privacy and competition. Mr. Zuckerberg was expected to have more private meetings with Democratic and Republican lawmakers on a range of issues. The meetings are aimed at giving the Facebook founder a chance to pitch his own vision for moderate internet regulation and seek to placate lawmakers who are weighing stricter standards for lightly-regulated platforms.
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Indicted insurance executive Greg Lindberg asked a federal judge to dismiss charges that he tried to bribe North Carolina’s insurance commissioner, with his attorneys saying that his actions fell short of criminal conduct in light of recent Supreme Court rulings.
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Colt filed for bankruptcy protection in 2015, citing the loss of key military business and an overload of debt. It emerged from chapter 11 the following year. PHOTO: PATRICK FALLON/ZUMA PRESS
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Gun maker Colt Defense LLC said it would stop producing semiautomatic rifles for civilians, citing a glut in the market.
The company, whose history dates back to the 1830s, is known for its trademarked AR-15 rifle, which is available to civilians. AR-15 style rifles have been used in many of the deadliest mass shootings, including attacks at a country music concert in Las Vegas in 2017, and a high school in Parkland, Fla., in 2018.
The move comes as the gun industry has come under increasing pressure in recent months. Walmart Inc. and Dick’s Sporting Goods Inc. have stopped selling AR-15s and similar rifles and put other restrictions on gun and ammunition sales, such as raising the purchase age to 21 in their stores.
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Amazon.com Inc. plans to buy 100,000 electric delivery trucks as it seeks to reduce its carbon emissions in the face of criticism of its environmental impact.
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The order was part of a broader company pledge made by Chief Executive Jeff Bezos while speaking at the National Press Club in Washington, D.C. He said the company plans to be carbon neutral by 2040 and plans to meet the goals of the Paris climate agreement 10 years early.
Amazon’s climate pledge comes one day before more than 1,550 Amazon employees world-wide threatened to walk out of work if the company didn’t do more to combat climate change. The employees had pressed the company to have zero carbon emissions by 2030, stop providing its cloud-computing services to fossil-fuel companies and to end donations to climate denying lobbyists and politicians.
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A man works at a steel production facility in Sichuan province, China. PHOTO: CHINA STRINGER NETWORK/REUTERS
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The global economy is set to grow at the slowest pace since the financial crisis, according to the Organization for Economic Cooperation and Development. Business investment and trade are being hampered by an escalating dispute between the U.S. and China that could inflict even more damage over coming years. The Paris-based research body said it now expects world output of goods and services to increase by 2.9% this year, the smallest annual rise since 2009, when the global economy was pushed into a recession by the near-collapse of the financial system.
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The U.S. finalized a deal with Mexican tomato growers that American retailers and importers warn could lead to more expensive and lower-quality tomatoes at the supermarket. The U.S. Commerce Department on Thursday said Mexican growers had signed a deal that requires the U.S. Department of Agriculture to inspect round and Roma tomatoes and bulk grape tomatoes.
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Richard Yu, Huawei’s chief executive of consumer businesses, speaking during the launch of the Mate 30 smartphone in Munich on Thursday. PHOTO: HANDREK-REHLE/BLOOMBERG NEWS
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Huawei Technologies Co. unveiled its first smartphone devoid of Google’s most popular apps, a byproduct of the U.S.-China trade dispute that could complicate the Chinese technology giant’s efforts to stoke demand for its consumer products outside China.
Since the company was added to the U.S. Commerce Department’s “entity list” in May, it has been effectively blocked from buying U.S.-sourced technology. This means Huawei’s new Mate 30 phone series will run on an open-source version of Google’s Android operating system, which doesn’t include the Play app store and other Google apps typically built into Huawei devices such as Google Maps and YouTube.
The Commerce Department cited national security concerns as a reason to place Huawei and its affiliates on the list.
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Steel parts are loaded into an end finishing machine at Stripmatic Products in Cleveland on June 4, 2018. PHOTO: ANGELO MERENDINO/THE WASHINGTON POST/GETTY IMAGES
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Companies that supply parts to General Motors Co. are being forced to idle plants and lay off workers, as the national strike called by the United Auto Workers completes its fourth day.
Nearly 46,000 full-time GM workers walked off the job on Monday after the UAW and GM were unable to agree on a new four-year labor agreement before the previous one expired. As of Thursday afternoon, talks were continuing between the company and the union, but the stoppage was likely to enter a fifth day. The strike is now the longest nationwide strike against GM since the 1970s.
By stopping all production at GM’s U.S. plants, the strike is also beginning to affect the web of manufacturers that produce parts that go into the company’s cars. With no vehicles being made, those companies can do little but wait until the strike ends, industry experts say. Economists estimate that every automotive assembly job impacts between five and eight other jobs.
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