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The Morning Ledger: Global Trade Tensions Unnerve Plane Makers |
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A jet comes in to land in view of a Boeing 787 Dreamliner aircraft ahead of the Farnborough International Airshow 2018 in Farnborough, U.K. PHOTO: SIMON DAWSON/BLOOMBERG NEWS
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Good morning. Aerospace executives at Boeing Co. and Airbus SE are worried new trade barriers could drive up manufacturing costs and make airlines put off purchases, report the WSJ's Andrew Tangel and Robert Wall.
Bad timing for trade tensions: The companies are struggling to deliver a flurry of orders on time amid a supply crunch for items including engines and wing components. New tariffs or additional customs checks -- after Britain's exit from the European Union -- could magnify the strain, executives said, reports the BBC.
[Continues below…]
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No aerospace tariffs -- yet: Airplanes have so far largely avoided being targeted by tariffs from the U.S. and China. The U.S., though, has taken aim at some airplane parts imported from China. China had threatened to target finished jetliners, but so far has not.
Tariffs could help Airbus, says Boeing: The U.S. clash with China is particularly fraught for Boeing because it has big business in both countries. In a letter to the U.S. Trade Representative’s office, Boeing executive Timothy Keating said China could retaliate by slowing or refusing imports of commercial jetliners, opening the door for rival Airbus. The company said it would decide next year whether to pursue a new commercial airline project -- its first in about 15 years.
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U.S. retail sales data for June is due out at 8:30 a.m. E.T. Economists surveyed by the Wall Street Journal forecast a 0.5% increase after a 0.8% uptick in May. Excluding cars, economists expect a 0.3% rise compared to the 0.9% increase recorded in May.
Bank of America Corp. and Netflix Inc. are among the companies slated to report earnings today. The WSJ's Rachel Louise Ensign has five things to watch for Bank of America.
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On Tuesday, the Federal Reserve releases June U.S. industrial production. Industrial output -- a measure of everything produced by the nation’s factories, mines and utilities -- slipped 0.1% in May from April in seasonally adjusted terms. Fed Chairman Jerome Powell is scheduled to testify on Capitol Hill over two days, beginning Tuesday in the Senate, as part of hearings mandated by law.
On Wednesday, the Commerce Department releases data on June U.S. housing starts. In May, housing starts rose 5% from the prior month to a seasonally adjusted annual rate of 1.35 million.
On Friday, Japan’s statistics bureau releases the consumer-price index for June (release time is Thursday evening in the U.S.).
And, investors will take a fresh look at U.S. government bond yields this week after a tame inflation report and concerns about trade frictions helped push the yield on the benchmark 10-year Treasury note to a fifth consecutive weekly decline.
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Earnings growth surged for U.S. private middle-market companies in the first two months of the second quarter, according to a report by Golub Capital, a lender to these companies.
Earnings grew 12.6% during April and May when compared with the same two-month period in 2017, nearly double the 6.2% growth pace recorded in the January-February period, according to the Golub Capital Altman Index.
“This is all pre-tax profit,” Mr. Golub told CFO Journal's Tatyana Shumsky, adding that the strong second-quarter performance points to an uptick in economic activity and isn’t a result of changes to the federal tax law enacted in December.
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Trade tariffs ultimately hurt consumers and allow some companies to disguise unrelated price increases, Jay Rembolt, finance chief of WD-40 Co., told CFO Journal's Ezequiel Minaya.
The San Diego-based company has some 65% of sales outside the U.S., muting the impact of trade tensions, he said in some of his first public comments about escalating disputes between the U.S. and its trade partners. WD-40 makes cleaning and maintenance products, in their signature blue and yellow cans, including a namesake lubricant.
“We source and manufacture as close as we can to our consumers, we are not doing a lot of building of product in just one jurisdiction,” Mr. Rembolt said, explaining why WD-40 is not impacted by the tariffs. Still, he added, “I think they are unfortunate, I think they are ill-advised.”
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Bubbles in front of the Deutsche Bank headquarters in Frankfurt, Germany. PHOTO: MICHAEL PROBST/ASSOCIATED PRESS
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Deutsche Bank AG on Monday said second-quarter profit and revenue would come in above analysts’ forecasts, welcome news for the German bank’s new chief executive as he seeks to revive the lender’s fortunes.
Shares in ZTE Corp. rose more than 16% in Hong Kong on Monday, after the Trump administration cleared the path for the Chinese telecommunications equipment maker to restart operations, reports the Financial Times.
The Pentagon said Sunday that it had reached a multi-billion-dollar “handshake deal” with Lockheed Martin Corp. on buying the next batch of F-35 combat jets after months of wrangling over price and other terms.
AT&T Inc. Chief Executive Randall Stephenson said his company won’t alter its plans for running Time Warner Inc.’s media assets despite a U.S. Justice Department appeal of the court decision that allowed the transaction.
Aerospace-parts maker Arconic Inc. is the subject of takeover interest from private-equity firms, according to people familiar with the matter.
Private-equity firm General Atlantic LLC has made a minority investment in lending startup Greensill Capital UK Ltd., continuing its strategy of placing bets on companies that use technology to try to disrupt the traditional financial system.
Aytu BioScience Inc., a small Colorado drugmaker, recently raised the price for a spray form of sleep aid Ambien by as much as 843%, the latest example of how some firms are increasing prices despite mounting pressure.
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Lei Jun, chairman and CEO of Xiaomi, strikes a gong during the company's listing ceremony at the Hong Kong Stock Exchange this month. PHOTO: ANTHONY KWAN/BLOOMBERG NEWS
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China’s two main stock exchanges said investors on the mainland won’t be able to use a trading link with Hong Kong to buy into companies with super-voting shares, a setback for recently listed smartphone-maker Xiaomi Corp.
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Airbnb Inc. has been warned by the European Union to expect a regulatory clampdown unless its terms and conditions comply with EU standards by the end of August, reports Bloomberg.
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Big U.S. banks are revamping their lobbying approach as Trump-appointed regulators set out to ease rules put in place after the financial crisis.
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The U.S. government is taking steps to protect agricultural markets from high-frequency traders -- a move some say will make little difference down on the farm. Starting on Aug. 1, the Agriculture Department will change how it releases crop and livestock reports.
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Arif Naqvi, the founder of embattled private-equity firm Abraaj Group, has reached a settlement on a $48 million bounced-check allegation, his attorney said, allowing him to avoid prosecution as he manages a crisis at his firm.
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Workers build housing modules in the BoKlok factory in Gullringen, Sweden, a partnership between Skanska and IKEA. PHOTOS: ANDERS ANDERSSON FOR THE WALL STREET JOURNAL
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While top companies are getting more productive, gains are stalling for everyone else. And the gap between the two is widening, with globalization and new technology delivering outsize rewards to the titans of the global economy.
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Trade fears have slammed markets around the world, but U.S. stocks are rising as strong profits and spending lead investors to overlook the risks of a downturn.
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Miners are considering new ways to make metals as customers including Apple Inc. and Audi AG demand more environmentally friendly products.
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China’s economic expansion slowed a notch in the second quarter, weighed down by a government debt cleanup even before growth takes an expected hit from the trade fight with the U.S.
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U.S. history suggests economic expansions come with expiration dates, but Australia’s 27-year expansion points to a different way.
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The eurozone’s surplus for goods traded with the rest of the world dropped in May as exports fell and imports increased, one month before U.S. tariffs on European steel and aluminium kicked in, reports Reuters.
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McKesson Corp., a San Francisco healthcare company, said its Chief Accounting Officer Erin M. Lampert will resign from her role, effective July 25, 2018. Ms. Lampert will remain with the company for a transition period ending in early August.
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McKesson said it plans to appoint Sundeep Reddy as corporate controller, effective July 25, 2018. In that role, Mr. Reddy will serve as principal accounting officer. He is currently working as assistant controller after joining the company in 2013. Compensation details weren't immediately available.
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