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The Morning Ledger: Central Bankers Raise Alarm Over Trade Friction |
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European Central Bank President Mario Draghi, left, and Federal Reserve Chairman Jerome Powell in Washington, D.C., U.S., April 2018. PHOTO: YURI GRIPAS/REUTERS
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Good morning. The world’s top central bankers warned that escalating trade tension could roil financial markets and damage the global economy, potentially prolonging the era of ultralow interest rates, writes the WSJ’s Tom Fairless.
The comments echo concerns raised by finance chiefs at the WSJ’s CFO Network Annual Meeting, as we reported here earlier this week.
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Global stock markets sagged this week after U.S. President Donald Trump called for a fresh round of tariffs on $200 billion of Chinese goods, upping the ante after the previously approved tariffs on $50 billion of goods.
Rising tensions over trade come at an awkward time for major central banks, which have started moving away from loose monetary policies introduced since the global financial crisis.
The disputes over trade have created “considerable uncertainty” for the 19-nation eurozone economy, which has slowed sharply in recent months, said European Central Bank President Mario Draghi.
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“It’s very worrisome and again, I can’t see any positive.”
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The Federal Reserve releases the first set of results of its stress test for the largest U.S. banks and their ability to withstand crisis-like situations. The WSJ's Lalita Clozel has four things to watch.
AT&T Inc. is expected to unveil a new video service -- tentatively named WatchTV -- on Thursday. It would offer a few TV channels for as little as $15 a month while giving free access to subscribers on unlimited data plans.
American Outdoor Brands Corp., Darden Restaurants Inc. and Methode Electronics Inc. are among the companies slated to report earnings today.
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PayPal Holdings Inc. aims to gain more users in what it calls “underpenetrated” markets such as Mexico, Brazil, China and India, in part, by forming local partnerships, the company’s Chief Financial Officer John Rainey told CFO Journal's Ezequiel Minaya.
Those markets hold over 1.5 billion digital users, presenting an opportunity for substantial growth, Mr. Rainey said on the sidelines of the CFO Network 2018 Annual Meeting last week. “And we have a roughly 1% penetration rate,” he added. “It’s very, very low.”
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International Paper Co. said Chief Financial Officer Glenn Landau will depart the company for personal reasons effective immediately, and will be replaced by company veteran Timothy Nicholls, who returns to the post of CFO, report Mr. Minaya and Tatyana Shumsky.
Mr. Landau’s departure comes less than two weeks after International Paper pulled its proposed €8.9 billion ($10.4 billion) bid for Dublin, Ireland-based competitor Smurfit Kappa Group PLC. International Paper Chief Executive Mark Sutton blamed a lack of engagement on the part of the Irish company’s board and management, according to a statement. Smurfit had said it preferred to remain independent.
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A growing number of multinational companies is altering tax plans or delaying decisions because of uncertainty around the U.S. corporate tax overhaul, according to a survey by Taxand, a global network of tax advisory firms.
Close to 80% of surveyed companies have changed tax plans or postponed decisions, up from 55% last year before the tax law was finalized. Over 75% of respondents -- a total of 103 chief financial officers and other executives at companies of varying sizes -- said that recent global tax changes, including those in the U.S., have complicated matters for crossborder mergers and acquisitions.
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Small and medium-sized British businesses are making less use of the euro ahead of the country's exit from the European Union. Usage of the common currency has declined by 5% since the beginning of the year, according to a survey by East & Partners Pty. Ltd. among over 2,200 businesses with up to £100 million ($131.2 million) in annual revenue.
Instead, U.K. companies are using more U.S. dollars and Chinese yuan. They plan to reduce their use of the euro by an additional 7.4% in the second half of the year, the survey said. Over 90% of U.K. CFOs expect domestic economic expansion this year, compared to 79% across Europe, according to a survey by American Express Co.
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A Mercedes-Benz hood ornament sits on the front of a vehicle at a car dealership in Patchogue, New York, U.S., April 27, 2018. PHOTO: JOHNNY MILANO/BLOOMBERG NEWS
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Daimler AG issued a surprise profit warning, saying Chinese retaliatory import duties on vehicles built in the U.S. would hit sales and profits of the SUVs it builds at its Alabama factory.
Walt Disney Co. raised its offer to purchase most of 21st Century Fox Inc. to more than $71.3 billion in cash and stock, topping an unsolicited offer from rival Comcast Corp. and escalating the bidding war for the coveted media properties.
Warren Buffett’s Berkshire Hathaway Inc. along with Amazon.com Inc. and JPMorgan Chase & Co. have appointed surgeon Atul Gawande as chief executive of their partnership to address rising U.S. employee health-care costs.
Chinese smartphone maker Xiaomi Corp. is planning to raise up to $6 billion from its public listing in Hong Kong next month -- a big drop from the $10 billion previously expected after plans for a dual offering on mainland China were scuttled, according to people familiar with the matter.
Amazon.com Inc. has built a huge presence in Washington, D.C., spending millions to build an army of lobbyists for its multiple businesses and winning billions in contracts from the government. With that comes political risk.
Tesla Inc. in a lawsuit Wednesday accused a former employee of hacking into the auto maker’s computer system to steal company data and send it to an unnamed third party.
U.S. companies with underfunded pensions have a rare opportunity to score a tax break in the coming months. Pension contributions made through mid-September can be deducted from income on tax returns being filed for 2017 -- when the U.S. corporate tax rate was still 35%.
Women are gaining more seats in U.S. boardrooms. In the first five months of 2018, women accounted for 31%, of new board directors at the country’s 3,000 biggest publicly traded companies, according to an analysis of corporate filings by ISS Analytics.
Chinese state-run Cosco Shipping Holdings Co. has offered to put a large container terminal in Long Beach, Calif., in a U.S.-run trust to allay U.S. national-security concerns about Chinese ownership of the facility, according to people familiar with the matter.
Altice Europe NV agreed Wednesday to sell parts of its telecom-tower businesses in France and Portugal for around €2.5 billion in a bid to pay down the company’s heavy debt load.
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Joseph Simons, chairman of the Federal Trade Commission (FTC), speaks during a hearing in Washington, D.C., U.S., May 17, 2018. PHOTO: ZACH GIBSON/BLOOMBERG NEWS
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The U.S. Federal Trade Commission’s new chairman is promising active antitrust enforcement across industries and scrutiny of big technology platforms. The business community should expect vigorous enforcement, Joseph Simons said Wednesday.
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New York’s financial-services regulator said it fined Deutsche Bank AG $205 million over allegations it sought to manipulate currency prices and mislead clients while failing to protect confidential customer information.
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The European Union is on course to rule on a controversial tax break for U.K.-based multinationals later this year, potentially resulting in bills exceeding £1 billion for companies, reports Bloomberg.
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Australia's parliament approved a 144 billion Australian dollar (US$106 billion) tax cut plan, which has echoes of President Donald Trump’s pledge to lower U.S. taxes. It is the largest income tax package ever passed in the country, reports the Guardian.
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Cargo being moved out of the Port of Savannah in Savannah, Ga., U.S., Jan. 2018. PHOTO: STEPHEN B. MORTON/ASSOCIATED PRESS
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The increase in consumer spending and growing concern among manufacturers and retailers over changes to U.S. trade policy are leading to a surge in cargo volume at U.S. seaports.
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Federal Reserve Chairman Jerome Powell said sturdy U.S. economic growth has built a strong case for continuing to gradually lift interest rates, and he warned against policy complacency now that the central bank has nearly achieved its employment and price stability goals.
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Rather than responding to rising prices with fresh investment, Western oil companies have retrenched, a move many now say threatens a longer-term supply crunch.
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Retiring baby boomers are reshaping the U.S. as there are fewer workers to support the growing elderly population -- a shift that will add to strains on social security and sharpen the debate on the role of immigration in the workforce.
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A.P. Moeller-Maersk A/S, the Danish shipping conglomerate, named Carolina Dybeck Happe as chief financial officer, replacing Jakob Stausholm. Ms. Happe will take on her role no later than Jan 1., 2019.
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She joins from Assa Abloy AB, where she is currently serving as CFO and executive vice president. Mr. Stausholm left the CFO position in March. Compensation details were not immediately available.
NCI Building Systems Inc., the Houston manufacturer of construction products, said CFO and Treasurer Mark Johnson will retire, effective June 29. Bradley Little, vice president, finance and chief accounting officer, will serve as interim CFO and treasurer, effective June 29.
The company has launched a search for a successor. Mr. Little will receive incremental compensation of $15,000 per month as part of his acceptance of the interim CFO and treasurer positions. He is also currently eligible for a retention bonus of up to $150,000 to be paid on or before March 31, 2019, the company said in a filing.
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