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The Morning Ledger: U.S. Metal Tariffs Set to Heat Up Transatlantic Trade War |
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Cylindrical billets of aluminium sit stacked inside the Trimet Aluminium SE plant in Essen, Germany, May 4, 2018. PHOTO: JASPER JUINEN/BLOOMBERG NEWS
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Good morning. The Trump administration is planning to push ahead with European steel and aluminum tariffs after negotiators were unable to win concessions from their counterparts, report the WSJ's William Mauldin, Bojan Pancevski and Vivian Salama.
The move is expected to draw retaliation from the European Union, which has threatened to impose its own tariffs on American goods such as motorcycles, jeans and bourbon.
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U.S. officials say the steel and aluminum tariffs -- as well as possible future auto-industry tariffs -- are based on national security, putting them in line with U.S. law and a World Trade Organization exception that allows trade measures that protect a country’s security.
The EU says the Trump administration is disguising a move to protect American steel and aluminum industries economically. “We have not seen any analysis that shows these exports pose a problem to national security,” said David O’Sullivan, the EU ambassador in Washington.
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American Eagle Outfitters Inc., Ciena Corp., Costco Wholesale Corp., Lululemon Athletica Inc. and Ulta Beauty Inc. are among the companies reporting earnings today.
U.S. consumer spending data are due out at 8.30 a.m. ET, with economists predicting a 0.4% uptick. Meanwhile, the Chicago purchasing managers index, due out at 9.45 a.m. ET, is forecast to climb to 58.5 in May from 57.6 in April.
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The debt taken on by global companies has eclipsed pre-crisis levels, and credit quality has sunk as finance chiefs take advantage of low interest rates and strong investor demand, according to a report by Moody’s Investor Service.
Roughly 4,000 non-financial firms rated by Moody’s say their leverage is about 20% higher now than in 2007, reports CFO Journal's Nina Trentmann.
The total share of companies with an investment grade Aaa- to A-rating has fallen to 15% from 21% before the financial crisis in 2007. Baa-ratings -- at the lower end of the investment grade spectrum -- have increased to 63% from 55% in 2007.
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“Companies have increased their leverage, many of them to pursue mergers and acquisitions."
| — Mariarosa Verde, group credit officer at Moody’s |
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Executives are less optimistic about the U.S. economy and their own company’s prospects, according to the second-quarter economic outlook survey by the American Institute of CPAs released Thursday.
The share of executives that are optimistic about the economy fell to 74%, down five percentage points from last quarter amid concerns about trade and political uncertainty. Optimism about their own company's outlook fell one percentage point to 70%, according to the survey of 831 certified public accountants. They hold various leadership positions at their companies, including chief financial officer or controller.
Profit growth estimates slipped to 4% from 4.4% in the first quarter, while revenue growth forecasts eased to 4.8% from 5%.
Still, the share of businesses who said they planned to hire immediately rose to 30% from 27%. However, the availability of skilled workers remained the top challenge for companies for the fourth quarter in a row.
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The Financial Reporting Council, the U.K. regulator for reporting, accounting and audit, has filed formal complaints against the auditors and two former finance executives of Autonomy Corp. PLC. This comes after Hewlett-Packard Co. bought the British software company for $11 billion in 2011 but afterwards wrote down the value of its acquisition as doubts about Autonomy's accounting practices emerged, reports Ms. Trentmann.
The conduct of auditors Deloitte LLP, Richard Knights and Nigel Mercer, as well as of former CFO Sushovan Hussain and former Vice President of Finance, Stephen Chamberlain, fell significantly short of standards expected of them, the FRC said in a statement.
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Facebook’s Mark Zuckerberg testified before the House Energy and Commerce Committee, April 11, 2018. PHOTO: CHIP SOMODEVILLA/GETTY IMAGES
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Wells Fargo & Co., Facebook Inc. and Uber Technologies Inc. are among several companies spending millions of dollars on advertising campaigns to apologize for a range of corporate missteps, rolling out elaborate atonement tours to reach consumers in the era of social media.
Walmart Inc. will subsidize online college tuition at three schools for its U.S. workers as the country’s largest private employer looks to attract and retain talent in a tight labor market.
General Motors Co. faces a new threat as President Donald Trump considers higher vehicle import tariffs that could “make or break” its South Korean operation weeks after the automaker agreed on a $7 billion bailout for the unit, reports Reuters.
21st Century Fox Inc. shareholders will vote on July 10 on the company’s proposed asset sale to Walt Disney Co., potentially giving Comcast Corp. about six weeks to submit its own bid for the slate of film studios, cable networks and other entertainment businesses.
Warren Buffet proposed investing $3 billion in Uber Technologies Inc. earlier this year, but the talks fell apart following disagreements over the terms and the size of the deal, people familiar with the matter told Bloomberg.
Uber Technologies Inc. is asking lenders to lower pricing on its $1.13 billion term loan due in 2023, reports Reuters.
Exxon Mobil Corp. shareholders rejected a proposal to split the roles of chairman and chief executive, securing CEO Darren Woods's role as he looks to improve results at the world's largest publicly traded oil producer, reports Reuters.
Allergan PLC is exploring the sale of two relatively small businesses -- women’s health and infectious disease -- in a bit to jolt sagging shares and ease the minds of worried investors.
Toyota Motor Corp.’s RAV4 sport-utility vehicle is the company’s most popular model among American consumers, and none are made in the U.S., highlighting the problem it faces if the Trump administration makes good on threats to impose higher tariffs on imports.
Tesla Inc. was able to improve the braking distance of Model 3 cars by as much as 20 feet simply by wirelessly transmitting a software update to the vehicles -- a significant achievement in the auto industry that shows how the company can boost performance without costly dealership repairs.
U.S. automakers this year are exporting more partly-assembled cars, a sign that manufacturers are resetting their factory and overseas distribution strategies to adjust to growing threats of tariffs.
Dick’s Sporting Goods Inc. posted higher quarterly profit and sales, allaying investor concerns about the sport-goods chain’s controversial decision to tighten its gun sales policies.
Canadian Pacific Railway Ltd. and the union representing conductors and locomotive engineers on Wednesday reached a tentative four-year deal, ending a strike that temporarily shut down operations.
ValueAct Capital Management LP made its first foray in Japan by taking a 5% stake in medical-device maker Olympus Corp., the latest example of U.S.-based activist shareholders playing a bigger role in Asia.
U.S. corporate profits were bolstered in the first quarter by tax cuts enacted at the end of 2017, but the underlying trend showed some signs of strain.
General Electric Co.'s industrial gas engine business Jenbacher would complement Wartsila Oyi's portfolio, reports Reuters.
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A view of the Federal Reserve is seen on May 2, 2018 in Washington, D.C. PHOTO: BRENDAN SMIALOWSKI/AFP
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The U.S. Federal Reserve on Wednesday unanimously voted to loosen compliance requirements for all banks to conduct short-term trading without running afoul of the Volcker rule.
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GDPR, the EU's new privacy law, is drawing advertising money toward online-ad services offered by Alphabet Inc.'s Google and away from competitors that are straining to show they’re complying with the sweeping regulation.
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Blackstone Group LP backed off a controversial bet on home builder Hovnanian Enterprises Inc. following an admonishment from U.S. regulators, ending a standoff with other investors that shook confidence in the multitrillion-dollar credit derivatives market.
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Legg Mason Inc. said Wednesday it soon would resolve U.S. investigations into a unit’s business practices in Libya and it had taken a $67 million charge to last quarter’s earnings to pay for a possible settlement.
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The chief executive of the U.K. Pensions Regulator, Lesley Titcomb, is set to leave the watchdog after members of parliament criticized her handling of the Carillion PLC collapse, reports the Financial Times.
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A U.S. judge dismissed a pair of lawsuits filed by Russian cybersecurity firm Kaspersky Lab demanding the U.S. government rescind a ban on the use of its software in U.S. government computers, saying the action was justified to reduce cybersecurity risk.
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Israel’s banking regulator is poised to publish policy proposals that will allow the country’s banks to buy back their own shares in addition to making dividend payouts, potentially increasing the appeal of banking stocks to investors, reports Reuters.
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Technicians worked on the wiring of a helicopter at a factory in Columbus, Miss., U.S., May 2018. PHOTO: ROGELIO V. SOLIS/ASSOCIATED PRESS
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Economic activity expanded at a moderate pace across most of the U.S. this spring, driven in part by a pickup in manufacturing activity despite trade tensions, according to the Federal Reserve’s beige book report released Wednesday.
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The first cracks are showing in an alliance of petroleum-producing countries whose efforts have propped up oil prices, with some OPEC members accusing Saudi Arabia of capitulating to U.S. and Russian pressure for lower prices.
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The Bank of Canada kept its benchmark interest rate unchanged at 1.25% on Wednesday and signaled the next rate increase could come soon, despite ongoing concerns over trade uncertainty.
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A deadly E.coli outbreak tied to romaine lettuce has shaken consumers’ faith in the U.S.'s favorite salad green, resulting in millions of dollars in losses for growers, retailers and restaurants.
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The eurozone’s annual rate of inflation rose more sharply than expected in May as energy prices increased, a development that will likely reinforce the European Central Bank’s belief that the metric will return to its target over the coming years.
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Diago PLC, the U.K. spirits maker, named Lavanya Chandrashekar as chief financial officer of its North America division, effective July 1. Ms. Chandrashekar joins from Mondelez International Inc., where she most recently held regional CFO roles in both EMEA and North America. Compensation details were not immediately available.
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Essentra PLC, a U.K.-based maker of plastic, fibre, foam, and packaging products, has appointed Lily Liu as CFO, effective Nov. 15. Ms. Liu succeeds the company's current CFO Stefan Schellinger who is set to leave Essentra on Nov. 30. Prior to her appointment, Ms. Liu served as finance chief at Xaar PLC, an inkjet printing technology group. Compensation details were not immediately available.
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