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USA EDITION
 
THURSDAY, SEPTEMBER 19, 2019


TOP NEWS
Fed cuts interest rates, signals holding pattern for now
The U.S. Federal Reserve cut interest rates again on Wednesday to help sustain a record-long economic expansion but signaled a higher bar to further reductions in borrowing costs, eliciting a fast and sharp rebuke from President Donald Trump.
U.S., Chinese trade deputies face off in Washington amid deep differences
U.S. and Chinese deputy trade negotiators were set to resume face-to-face talks for the first time in nearly two months as the world's two largest economies try to bridge deep policy differences and find a way out of a bitter and protracted trade war.
U.S. and Gulf allies discuss response to Saudi oil attack
The United States was discussing with Saudi Arabia and other Gulf allies possible responses to an attack on Saudi oil facilities they blame on Iran and which U.S. Secretary of State Mike Pompeo described as an act of war on the kingdom.
• Trump administration to tell California: You can't make clean car rules
The Trump administration is expected to revoke California's authority to set its own greenhouse gas and vehicle fuel efficiency standards, a move with high stakes for the auto industry, consumers and the environment.
Bank of England keeps rates steady, warns Brexit delay would hurt growth
The Bank of England said Brexit uncertainty was causing slack to re-emerge in Britain's economy and damaging productivity, and a failure to reach a transition deal by Oct. 31 could lead to further weakness.



BEFORE THE BELL
Futures for Wall Street’s major indexes fell after the U.S. Federal Reserve cut interest rates but set a higher bar for further reductions. A rally in bank stocks lifted European shares. Major Asian bourses ended mixed, with Hong Kong stocks dipping on lingering worries over political protests, while Japanese shares rising on investors' appetite for riskier assets. In currencies, the Swiss franc rallied after the Swiss National Bank declined to match the European Central Bank and the U.S. central bank in easing policy, and the Japanese yen rose after the Bank of Japan kept interest rates on hold. Among commodities, oil gained on supply risks brought about by last weekend's drone attacks on Saudi oil infrastructure, and gold was little changed after a sharp fall in the previous session. Weekly jobless claims and home sales data are scheduled on economic calendar.​


STOCKS TO WATCH
American Express Co (AXP) & Marriott International Inc (MAR). Some 15 executives from companies associated with the tourism industry, such as American Express and Marriott, have urged the U.S. government to renew federal funding of Brand USA, which promotes the United States as a travel destination. The country has seen slower growth in tourism in recent years, versus global growth, and the part-public body Brand USA is "critical to the U.S. effectively competing for lucrative international tourism dollars", industry group U.S. Travel Association said in a statement on Wednesday. Executives from companies such as Seaworld Parks & Entertainment and Carnival Cruise Line were also among those calling for federal funding of Brand USA, the statement shows.
Amazon.com Inc (AMZN) & Walmart Inc (WMT). The company said on Wednesday it will make donating to a U.S. presidential candidate as easy as turning on the lights or replenishing a household's toilet-paper stocks, via its Alexa digital assistant. Alexa Political Contributions, powered by Amazon Pay, the company's payment system, will allow customers to contribute up to $200 to a campaign simply by saying "Alexa, donate to [candidate name]," according to a blog post from the world's largest retailer. The service will begin next month and will work only for candidates who have chosen to participate. Separately, some vaping products were still listed on the Indian websites of Amazon.com and Walmart's Flipkart, while several other websites discontinued their sales a day after the government's nationwide ban.
Archer Daniels Midland Co (ADM). An executive director at Archer Daniels Midland in São Paulo has left the firm to take over as Brazil general manager at rival grain trading house Gavilon do Brasil, two sources told Reuters on Wednesday. Marcelo Grimaldi served most recently as a director at ADM responsible for Andean countries and the biodiesel business, according to his LinkedIn profile, which has not been updated. In a statement sent to Reuters, ADM confirmed Grimaldi's departure but said it did not have any information "on his next professional challenges".
AT&T Inc (T) & Dish Network Corp (DISH). The two companies are not in discussions over a deal due to regulatory issues, a source familiar with the matter said on Wednesday, after the Wall Street Journal reported the wireless carrier was considering parting ways with its satellite TV division DirecTV. AT&T has also considered a spinoff of DirecTV into a separate public company, the report said. Last week, at a conference AT&T Chief Financial Officer John Stephens cited regulatory hurdles for any deal. "So there's been some stories out there about the industrial logic about putting 2 satellite providers. It hasn't been successful and I don't know that there's any change in that regulatory perspective," he said.

• Boeing Co (BA). India's aviation safety regulator may ask the company to set up simulators in India to train pilots on the 737 MAX planes once it clears the aircraft as safe for flying, a senior official with direct knowledge of the matter told Reuters. India's Directorate General of Civil Aviation will also conduct an independent inspection of the grounded planes once they are cleared for flying by the U.S. regulator, the Federal Aviation Administration (FAA). "Once FAA re-certifies it and says these issues have been resolved then we will evaluate whether what they are saying is right or wrong ... We will carry out our own inspections," the official said, adding that it is unlikely the planes will fly in Indian skies until next year. The 737 MAX, the fastest-selling plane in Boeing's history, has been grounded the world over since March in the aftermath of two fatal crashes in five months that killed 346 people.​
China Biologic Products Holdings Inc (CBPO). The company said on Wednesday it had received an offer from a consortium of buyers that will pay $1.93 billion in cash to buy shares that they do not already own to take the company private. The offer of $120 per share represents a premium of 16.3% to China Biologic's Wednesday close of $103.10, valuing the company at $4.59 billion. The buyer group includes Beachhead Holdings, CITIC Capital China Partners, PW Medtech, Parfield International, HH Sum-XXII Holdings and V-Sciences Investments. 

• Comcast Corp (CMCSA). The media and communications giant has struck a distribution deal with digital global sports provider DAZN Group, further blurring the line between traditional television operators and streaming services that have disrupted them. Comcast's internet customers who use its Xfinity Flex box for streaming apps - its answer to the Amazon Fire Stick and Apple TV - will gain access to the DAZN app, according to Ben King, DAZN's SVP of Global Distribution and Business Development. The app will also become available to Comcast cable customers on its Xfinity X1 set-top boxes in time for DAZN's line-up of high-profile fall championship fights starting Oct. 5. Customers must pay to subscribe to DAZN.​
Deutsche Bank AG (DB). Some senior bank officials have discussed the possibility of putting additional problematic assets worth billions of euros into a unit it created earlier this year, if the bank is able to sell assets already held within that "bad bank," according to three bank sources. The discussions in recent weeks, which have not been previously reported, are preliminary, the sources said, adding that there is nothing imminent. A Deutsche Bank spokesman said the bank has no plans to add additional assets into the so-called capital release unit, or bad bank. Nevertheless, it is one of the options that has come up for discussion at the highest levels at the bank, as executives grapple with the problem of having to turn around the bank on a tight budget, according to the three people familiar with the talks.
Diageo PLC (DEO). The spirits maker said it was "not immune" to changes in global trade policies but based on the current environment expects to meet its full-year organic sales targets. The Johnnie Walker whisky and Tanqueray gin maker said it continues to expect organic net sales growth to be towards the mid-point of a 4% to 6% range and organic operating profit to grow roughly one percentage point ahead of organic net sales. The company also said it expects first-half organic operating profit growth to be in-line with or slightly behind organic net sales growth, due to stronger prior year comparables.
Facebook Inc (FB). The company's Chief Executive Mark Zuckerberg met with a half-dozen U.S. senators on Wednesday for dinner as the company seeks to boost its reputation in Washington. Senator Mark Warner, a Democrat and vice chair of the Intelligence Committee, helped organize a dinner for Zuckerberg with other senators at the company's request, Warner spokeswoman Rachel Cohen said. At an unnamed restaurant, the senators and Zuckerberg discussed "the role and responsibility of social media platforms in protecting our democracy, and what steps Congress should take to defend our elections, protect consumer data, and encourage competition in the social media space," she said. 
GlaxoSmithKline PLC (GSK). An independent expert panel to the U.S. Food and Drug Administration on Wednesday recommended approval of GSK's over-the-counter nicotine oral spray that aims to help smokers quit their addiction. The panel voted 9-6 in favor of the therapy, saying its benefits as a smoking cessation aid outweighed risks. The FDA usually follows the recommendations of its experts but is not mandated to do so. Each spray delivers one milligram of nicotine and is meant to be used within the recommended limits of 4 sprays per hour and a maximum of 64 sprays per day when the person gets an urge to smoke.
KKR & Co Inc (KKR). The company is seeking to raise as much as A$825 million for an Australian credit fund, in what would be its first listed investment vehicle in the country. The move is part of the U.S. buyout firm's efforts to tap retail investors globally. "For 40 years of KKR's history, we primarily have relied on institutional capital to grow our business," Jeremiah Lane, head of the fund, said in a phone interview. "In the individual market, we see a market that is 1) bigger and 2) growing faster." It aims to offer annual dividend payments of 4% to 6%, according to the prospectus, while the targeted total return is up to 8%.
Microsoft Corp (MSFT) & Eros International PLC (EROS). The company said on Wednesday its board had approved a new share repurchase program of up to $40 billion and raised its quarterly dividend. Microsoft, which said it would hold its annual shareholders meeting on Dec. 4, also declared a quarterly dividend of 51 cents per share, 11% higher than the preceding quarter. The repurchase program, which has no expiration date, may be terminated at any time. Separately, India's Eros Now said it is tying up with Microsoft's Azure cloud platform to host and stream its digital video offerings, in a boost to the U.S. software giant's push to expand in the Indian market.​
Royal Dutch Shell PLC (RDS). The company has loaded the first cargo of low-sulphur fuel oil from its Pulau Bukom refining site in Singapore, it said. Demand for stable low-sulphur marine fuel supplies is rising as the shipping sector prepares for the International Maritime Organization's (IMO) lowering of the cap on sulphur in marine fuels to 0.5% from 3.5% beginning in January 2020. The cargo will be blended to a finished product, which Shell will supply to bunker customers, enabling its customers to be prepared for the implementation of the IMO 2020 mandate, Shell said.
Ryanair Holdings PLC (RYAAY). The company's Chief Executive Michael O'Leary said he plans to cut 500-700 jobs at the airline as shareholders narrowly approved a bonus scheme that could earn him around 100 million euros over five years. The bonus scheme, which requires him to either double the profitability or share price of the carrier within five years, was backed by 50.5% of votes at a shareholder meeting. Separately, Ryanair expects to be flying the first of its grounded Boeing 737 MAX aircraft by late February or the start of March, which would require the plane to be flying in the United States before Dec. 25, CEO Michael O'Leary said.​​ 
Meanwhile, the British Airline Pilots Association said that Ryanair pilots in the UK have been told by the airline that their benefits will be removed should they take part in strike action started on Wednesday. 
Tesla Inc (TSLA). The company's Model 3 electric sedan has earned the top safety rating from the Insurance Institute of Highway Safety (IIHS), becoming the first Tesla to do so. The IIHS has given the Model 3 its highest rating, top safety pick+. It said the Model 3 earned good ratings across the board for crashworthiness. The car's structure held up well in the driver-side small overlap front test, IIHS said. Tesla Chief Executive Officer Elon Musk has been one of the strongest proponents of the idea that car insurance rates should plummet as driver-assist and self-driving technology become standard.
Toyota Motor Corp (TM). The company announced a 1 billion reais expansion at a plant in the Brazilian state of Sao Paulo, joining Volkswagen and General Motors in new investments in the region. Toyota said the funding would allow the Sorocaba plant, which builds the Etios and Yaris sedan models, to produce a new vehicle model. It did not provide details on the new model. "During the last decade, which involved challenging times for the economy and the auto industry, Toyota remained faithful in its commitment ... growing in a sustainable way," Rafael Chang, who heads Toyota in Brazil, said in a statement.​



INSIGHT
Fire and hail push insurers to rethink climate change risks
By the time David Kaisel got back from selling his flour at a farmers' market, a wildfire in California's Capay Valley had burnt both his tractor and the shipping container where he kept some tools. His insurer is set to pay out a sixth of his losses.​



ANALYSTS' RECOMMENDATION
Acuity Brands Inc (AYI). Credit Suisse raises target price to $154 from $148, expecting FQ4 gross margin to turn positive year-on-year, after seeing sequential adjusted gross margin improvement through FY19.
Akamai Technologies Inc (AKAM). KeyBanc cuts rating to sector weight, saying potential M&A could derail the company's margin expansion story.
CME Group Inc (CME). Berenberg cuts rating to hold from buy, stating falling interest rates imply tougher times.
Kimco Realty Corp (KIM). Capitalone Securities raises target price to $21, after the company redeemed $350 million in preferred stock, primarily from the proceeds of 30-year bonds issued earlier in the quarter.​



ECONOMIC EVENTS (All timings in U.S. Eastern Time)
0830 Current account for Q2: Expected -$127.8 bln; Prior -$130.4 bln
0830 Initial jobless claims: Expected 213,000; Prior 204,000
0830 Jobless claims 4-week average: Prior 212,500
0830 Continued jobless claims: Expected 1.672  mln; Prior 1.670 mln
0830 (approx.) Philly Fed Business Index for Sep: Expected 11.0; Prior 16.8
0830 (approx.) Philly Fed 6M Index for Sep: Prior 32.60
0830 (approx.) Philly Fed Capex Index for Sep: Prior 22.60
0830 (approx.) Philly Fed Employment for Sep: Prior 3.60
0830 (approx.) Philly Fed Prices Paid for Sep: Prior 12.80
0830 (approx.) Philly Fed New Orders for Sep: Prior 25.80
1000 Existing home sales for Aug: Expected 5.37 mln; Prior 5.42 mln
1000 Existing home sales percentage change for Aug: Expected -0.4%; Prior 2.5%
1000 (approx.) Leading index change mm for Aug: Expected 0.1%; Prior 0.5%



COMPANIES REPORTING RESULTS
No S&P 500 companies are scheduled to report.


CORPORATE EVENTS (All timings in U.S. Eastern Time)
0830 Darden Restaurants Inc (DRI). Q1 earnings conference call
0930 Herman Miller Inc (MLHR). Q1 earnings conference call
1300 Nike Inc (NKE). Annual Shareholders Meeting
1400 Conagra Brands Inc (CAG). Annual Shareholders Meeting
1630 Scholastic Corp (SCHL). Q1 earnings conference call​



EXDIVIDENDS
Advance Auto Parts Inc (AAP). Amount $0.06
Allegiant Travel Co (ALGT). Amount $0.70
Apollo Investment Corp (AINV). Amount $0.45
Designer Brands Inc (DBI). Amount $0.25
Dine Brands Global Inc (DIN). Amount $0.69
Douglas Dynamics Inc (PLOW). Amount $0.27
Eversource Energy (ES). Amount $0.53
Flowserve Corp (FLS). Amount $0.19
Heartland Express Inc (HTLD). Amount $0.02
Hill-Rom Holdings Inc (HRC). Amount $0.21
Hudson Pacific Properties Inc (HPP). Amount $0.25
KAR Auction Services Inc (KAR). Amount $0.19
LTC Properties Inc (LTC). Amount $0.19
New Jersey Resources Corp (NJR). Amount $0.31
Omega Flex Inc (OFLX). Amount $0.28
Omnicom Group Inc (OMC). Amount $0.65
Parsley Energy Inc (PE). Amount $0.03
Prologis Inc (PLD). Amount $0.53
Royal Caribbean Cruises Ltd (RCL). Amount $0.78
RPT Realty (RPT). Amount $0.22
Sabre Corp (SABR). Amount $0.14
Sempra Energy (SRE). Amount $0.96
Tiffany & Co (TIF). Amount $0.58​



(All analysts' estimates are according to I/B/E/S Refinitiv data)


PICTURE OF THE DAY

 
Greta Thunberg and former U.S. President Barack Obama fist bump during a meeting at Obama's personal office in Washington, D.C., September 16, in this screen grab obtained from a social media video. Obama Foundation/via REUTERS
 
 
 
 
 
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