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Oct 22, 2019

EU - FX | Currencies: Dollar up against sterling, euro on revived Brexit fears

3minutos - Source: CNBC

GP: Background of dollar bills 191004
Background of U.S. dollar bills.
Alena Vikhareva | iStock | Getty Images
The dollar rose on Tuesday against the pound and euro as uncertainty spread ahead of the British parliament’s vote on the Withdrawal Agreement Bill which will shine light on when and how Britain will exit the EU.
The United Kingdom is expected to leave the European Union on Oct. 31, but the deal Prime Minister Boris Johnson and his European counterparts agreed last week has not been yet voted on in Britain’s parliament, which forced Johnson to request an extension to the leaving date from Brussels.
The bill is expected to be presented for a vote around 1800 GMT.
Sterling was down 0.35% to $1.291 in mid-morning trade after Johnson told parliament that if it delayed his Brexit legislation he would abandon his attempt to ratify the deal to leave the European Union and push for an election instead.
The euro was down 0.19% versus the dollar, though remains up 2.09% this month, driven mostly by recent Brexit developments, as well as by trade disputes between the United States and China.
“I think the clear theme for euro and sterling is consolidation after last week’s Brexit euphoria,” said Mark McCormick, global head of foreign exchange strategy, TD Securities.
Elsewhere, he said, Tuesday morning trade was driven by, among other factors, “a reach for yield, which is probably a function of a ceasefire in the trade wars and the scope for Fed easing next week.”
Hopes the United States and China were making progress to resolve their trade dispute supported the dollar in the Asian trading session. China’s Vice Foreign Minister Le Yucheng said progress was being made in discussions with the United States and that while both sides respected each other, no problem was beyond resolution.
The dollar index was last up 0.17% to 97.489.
Elsewhere, the Canadian dollar weakened against its U.S. counterpart after Prime Minister Justin Trudeau hung onto power after a tight election on Monday that saw his government reduced to a minority. He now looks set to govern with support from the left-leaning New Democrats who would make the construction of new oil pipelines more difficult.
The left-leaning coalition isn’t “beneficial for the Canadian dollar, versus a Conservative majority which would have seen a rally, largely because there is going to be focus on the pipelines, which reinforce some of the competitiveness issues on the Canadian oil front,” said McCormick.

Bonds | Treasury Yields Report: Treasury yields steady amid US-China trade optimism, economic data

Thomas Franck, Sam Meredith

U.S. government debt yields held steady on Tuesday as investors monitored a fresh batch of economic data and Treasury auctions.
Treasurys rates have risen in recent sessions, however, thanks to a combination of de-escalation of U.S.-China trade angst and better-than-expected corporate earnings.
The benchmark 10-year Treasury note was just lower at 1.768%, while the yield on the 30-year Treasury bond was also slightly lower at 2.254%. The 10-year rate, which climbed above 1.8% on Monday, is up about 10 basis points over the last 10 days. Bond yields rise as prices fall.
Market focus remains centered on global trade developments after China’s Vice Foreign Minister Le Yucheng said that Beijing and Washington had achieved some progress in their trade talks. His comments came less than 24 hours after President Donald Trump sounded optimistic about the prospect of a trade agreement by the middle of next month.
Most investors continued to focus on the marginally improved relations between the globe’s two largest economies instead of the details of a “phase one” deal set to be haggled over for the next few weeks.
Last week, the U.S. and China secured a limited trade agreement, prompting Washington to suspend a scheduled tariff hike for October.
The world’s two largest economies have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment.
On the data front, the Philadelphia Fed non-manufacturing index for October will be released at around 8:30 a.m. ET. Existing home sales for September and the Richmond Fed survey for October will follow slightly later in the session.
The U.S. Treasury is set to auction $40 billion in 2-year notes on Tuesday.


US 3-MOU.S. 3 Month Treasury1.6590.0030.00
US 1-YRU.S. 1 Year Treasury1.5890.000.00
US 2-YRU.S. 2 Year Treasury1.601-0.0140.00
US 5-YRU.S. 5 Year Treasury1.587-0.0170.00
US 10-YRU.S. 10 Year Treasury1.766-0.0260.00
US 30-YRU.S. 30 Year Treasury2.253-0.0310.00

Science: Industry dominates Trump’s new council of science advisers

Ben Guarino

President Trump revived the President’s Council of Advisors on Science and Technology on Tuesday after nearly two years without it.
“Under this administration, science and technology in America continues to advance by leaps and bounds,” said the president’s science adviser, Kelvin Droegemeier, who will chair the council, in a statement. “PCAST will be critical to our continued efforts, with each member bringing a unique expert perspective to the table.”
PCAST’s members investigate the country’s pressing scientific questions at the president’s direction. Typically, academic members of a PCAST outnumber its industry scientists. This was true for the councils under George H.W. Bush, Bill Clinton and Barack Obama.
Industry veterans dominate Trump’s inaugural PCAST, as they did under George W. Bush. Only one of Trump’s seven new PCAST members works in academia. Two members do not have doctoral degrees.
The newly announced members are: Catherine Bessant, the chief technology officer at Bank of America; H. Fisk Johnson, chief executive at S.C. Johnson & Son; IBM Research director Dario Gil; Cyclo Therapeutics vice president Sharon Hrynkow; A.N. Sreeram, Dow Chemical’s chief technology officer; HP Labs’ chief technology officer Shane Wall; and K. Birgitta Whaley, an expert in quantum information at the University of California at Berkeley.
Trump’s PCAST will eventually expand to 16 members, according to the White House Office of Science and Technology Policy, including additional academic scholars.
George H.W. Bush chartered the first PCAST in 1990, following a tradition dating back to World War II of soliciting scientists and engineers to advise the White House. Trump’s PCAST comes unusually late in his administration. George W. Bush and Clinton announced their first waves of PCAST appointees within their first year as president. Obama named several scientists to his PCAST in December 2008, while president-elect.
During the Obama administration, PCAST issued 40 reports on topics such as drinking water safety, forensic science and data privacy.
A landmark 2012 PCAST report recommended freeing parts of the radio frequency spectrum that belonged to the government. The Federal Communications Commission adopted spectrum sharing in 2015, and commercial trials are underway; Google tested new wireless technology on the 3.5 GHz band, once restricted to Navy systems, at four NASCAR races in 2017.
After PCAST recommended in 2015 that some hearing aids should be available over-the-counter, the FDA began a regulatory process to allow their sale. Sen. Elizabeth Warren (D-Mass.) cited the PCAST report when she introduced legislation in 2017 to support nonprescription hearing aids.
Read more:

Energy | Oil | Oil Price Report: Oil prices higher on report that OPEC will consider deeper production cuts

3-4 minutos - Source: CNBC

RT: Oil field worker, Texas 190919
Oil field worker, Miguel Holguin, operates a swabbing rig in a field in Seminole, TX, September 19, 2019.
Adria Malcolm | Reuters
Oil prices were higher following a report that OPEC and its allies would consider deeper production cuts when they meet in December.
The report, which appeared on Reuters, quoted sources close to the producer group and reflected rumors that had been in the oil market previously. The cuts are expected to be made in response to the outlook for weaker demand growth.
Oil had been slightly higher earlier after China signaled progress in trade talks with the United States, but gains were capped by bearish forecasts of a buildup in U.S. crude stockpiles.
Brent crude oil was up 0.8% cents at $59.42 a barrel, while U.S. West Texas Intermediate crude was 1.6% higher at $54.15 per barrel.
In July, OPEC and Russia, together with other non-OPEC members agreed to extend a 1.2 million barrel a day production cut for nine months. Saudi Arabia has made the largest cutbacks.
While geopolitical factors have occasionally moved oil prices, the biggest influence in the market for now is the trade war between the U.S. and China and its impact on oil demand growth.
China and the United States have achieved some progress in their trade talks, Vice Foreign Minister Le Yucheng said on Tuesday, and any problem could be resolved as long as both sides respected each other.
“While the encouraging mood across financial markets will remain stimulated by trade optimism, risk aversion could still make an abrupt return should talks drag on or turn sour,” said Lukman Otunuga, analyst at FXTM.
The International Monetary Fund last week forecast that fallout from the U.S.-China trade war and trade disputes across the world would slow global growth in 2019 to 3.0%, the weakest in a decade.
Lower economic growth typically means reduced demand for commodities such as oil.
Oil prices however were pressured by forecasts of a buildup in U.S. crude stockpiles. Inventories are expected to have risen for a sixth straight week, while distillates and gasoline stocks likely fell in the week to Oct. 18, a Reuters poll showed.
The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, and the Energy Information Administration (EIA), an agency of the U.S. Department of Energy.
“Expectations that the API and EIA will report that U.S. crude oil inventories increased by around 3 million barrels over the last week certainly do not help sentiment,” ING analyst Warren Patterson said.
“These more visible stock builds, along with demand concerns continuing to linger, suggest it is becoming increasingly more difficult to see a sustained rally in prices ahead of the OPEC+ meeting in early December.”
The Organization of the Petroleum Exporting Countries, Russia and other oil producers, an alliance known as OPEC+, have pledged to cut production by 1.2 million barrels per day (bpd) until March 2020. The producers meet again on Dec. 5-6.
Russian Energy Minister Alexander Novak said U.S. oil production is likely to peak in the next few years as current oil prices are capping the pace of expansion.
Goldman Sachs has wound back its forecast for growth in U.S. shale oil output in 2020, and slightly reduced its outlook for 2020 global oil demand growth.

Commodities | Gold | Gold Price Report: Gold inches up on Brexit tumult, trade truce hopes limit gains

3-4 minutos - Source: CNBC

GP: Gold and Silver Casting at the Perth Mint 190620
An employee arranges one kilogram gold bars at the Perth Mint Refinery in Perth, Australia, on Aug. 9, 2018.
Carla Gottgens | Bloomberg | Getty Images
Gold posted modest gains on Tuesday as uncertainties surrounding Britain’s exit from the European Union ahead of another crucial Brexit vote offset pressure from a firm dollar and rising optimism for a U.S.-China trade deal.
Spot gold was up 0.1% at $1,485.95 per ounce. U.S. gold futures were also up 0.1%, at $1,489.
Bullion is supported by “all the international worries that investors are facing for the most part. Market participants are looking at all the Brexit news and it’s a new worry, and new worries adds to support for gold,” said George Gero, managing director at RBC Wealth Management.
“And the reason gold is not having a stronger rally is because of the U.S.-China tariffs talks (optimism).”
British Prime Minister Boris Johnson faces two pivotal votes in parliament that will decide whether he can deliver on his pledge to lead Britain out of the EU in nine days’ time.
Lawmakers vote around 1800 GMT on the 115-page Withdrawal Agreement Bill and then on the government’s extremely tight timetable for approving the legislation.
Meanwhile, China and the United States have achieved some progress in their trade talks, Chinese Vice Foreign Minister Le Yucheng said on Tuesday.
Those comments came a day after U.S. President Donald Trump spoke of optimism about a deal, while White House adviser Larry Kudlow said tariffs on Chinese goods scheduled for December could be withdrawn if talks went well.
Also limiting gold’s upside was a firm dollar, which moved away from last week’s over two-month low, making greenback denominated bullion costlier for investors holding other currencies.
“The precious metal is waiting for the next big theme or market-moving event that will influence global sentiment and risk appetite,” FXTM analyst Lukman Otunuga said in a note.
“Until something fresh is brought into the picture, gold is positioned to trade within a modest range in the short to medium term,” Otunuga added.
Investors are also awaiting the Federal Reserve’s month-end monetary policy meeting for further clarity on rates cuts this year.
Federal fund futures imply that traders see a 91% chance for a 25 basis-point rate cut by the U.S. central bank in its month-end monetary policy meeting.
However, amid mixed signals from Fed policymakers it is unclear if they, overall, will support a cut.
Reflecting sentiment, holdings of gold in exchange traded funds tracked by Refinitiv have jumped to their highest since mid-2013.
Elsewhere, silver slipped 0.2% to $17.52 an ounce. Platinum was up 0.1% at $888.47 and palladium was 0.3% lower at $1,753.16 an ounce.

America's News | Canada Elections: Canada's newly elected minority government won't crumble any time soon, analysts say

Sam Meredith

Liberal Leader and Canadian Prime Minister Justin Trudeau delivers his victory speech at his election night headquarters on October 21, 2019 in Montreal, Canada.
Cole Burston | Getty Images News | Getty Images
Canadian Prime Minister Justin Trudeau has won a second term in office after a bruising and scandal-hit campaign that was light on policy and heavy on personality.
Trudeau’s Liberal Party was set to fall short of a majority in the 338-seat House of Commons, according to the latest result projections of Monday’s election.
The Liberals were expected to win 157 seats, 13 short of the 170 needed for a majority government. It means Trudeau will be forced to depend on other parties to govern.
The opposition Conservatives, led by Andrew Scheer, appeared to be slightly ahead in the popular vote, but the party has not translated this success into parliamentary seats.
They are expected to take 121 seats, according to Elections Canada, up from 95.
“Thank you, Canada, for putting your trust in our team and for having faith in us to move this country in the right direction,” Trudeau said via Twitter late Monday.
“Regardless of how you cast your vote, our team will work hard for all Canadians.”
The left-leaning New Democrats, led by Jagmeet Singh, appeared to be on course to take 24 seats in Parliament.
The Bloc Quebecois, a separatist party based in the French-speaking province, was expected to take 32 seats, up from the 10 it won in 2015.
Voter turnout was listed at roughly 66%.

Reality check

“The Liberals should be pleased with this result,” Cailin Birch, a global economist at the Economist Intelligence Unit, told CNBC via telephone.
In a vote that was reflective of a population “not necessarily enchanted by the Conservative offering,” Birch said none of the Liberals’ worst-case scenarios played out in the end.
Trudeau’s victory comes after an intense and, at times, nasty six-week campaign, which prompted many to question his authenticity.
Conservative leader Andrew Scheer and Liberal leader Justin Trudeau gesture at the Federal Leaders Debate in Gatineau, Quebec on October 7, 2019.
Sean Kilpatrick | AFP | Getty Images
That’s because, in addition to facing accusations of bullying by his former attorney general, it emerged that the Liberal party leader had worn blackface makeup on at least three occasions decades ago.
The photos of Trudeau in blackface were at odds with his oft-stated position as a leader seeking to improve the life of minorities in Canada.
It also appeared to tarnish his carefully curated global image as a progressive prime minister.
Nonetheless, Trudeau received a late endorsement from former U.S. President Barack Obama last week.
In a tweet, Obama urged Canadians to back Trudeau, saying he had been “proud” to work with his Canadian neighbor while in office and that the world needed “his progressive leadership now.”
“Much like Obama, who came into office on this wave of optimism as a new political hero, if you will, Trudeau is coming back to reality in the second term,” Birch said.

‘No clear marriage of convenience’

Four years after Trudeau swept to power promising “sunny ways,” the Liberal Party leader appeared to struggle to inspire voters during the campaign.
Just days before the federal election, opinion polls showed Trudeau running practically neck and neck with Scheer. But, with neither party on the cusp of securing a parliamentary majority, Canada is now on headed toward a minority government.
Laura Stephenson, a political science professor at Ontario’s Western University, told CNBC via telephone that a stronger-than-expected minority government for the Liberals would most likely result in the ruling party seeking to govern “issue by issue.”
“I don’t expect it to crumble any time soon,” Stephenson said, before adding Trudeau’s Liberals would most likely pick and choose whom best to work with on a range of issues over the coming years.
Historically, minority governments in Canada have rarely lasted more than two years.
There is “no clear marriage of convenience” for Trudeau’s Liberals when it comes to forming a majority government, Birch said.
“One thing is for sure, it is going to be a whole lot trickier.”

World News | UK Politics: Boris Johnson's Brexit bill faces Parliament vote: Live updates

By Rob Picheta

Boris Johnson will scrap the vote on his Brexit deal and push for a snap general election, if his program motion is voted down by lawmakers later.
If Parliament "gets its way and decides to delay everything," Johnson told the Commons, "the bill will have to be pulled and we will have to go forward... to a general election."
"I will in no way allow months more of this," Johnson added.
The program motion has come under attack for asking MPs to consider Johnson's Brexit deal in just three days.
Boris Johnson just took a question from his brother Jo in Parliament -- which apparently allowed for some brotherly reconciliation.
Jo congratulated the Prime Minister for securing a Brexit deal. "I never doubted it for a minute," he said to laughs on both sides of the House.
The younger Johnson -- who has called for a second Brexit referendum -- in fact resigned from his brother's Cabinet last month, saying he was "torn between family loyalty and the national interest."
Jo then asked whether Parliament would have a proper role in the process.
"I thank my right Honorable friend and brother very much for what he said," Boris Johnson said, reassuring Jo that Parliament would have a role.
Boris Johnson has started pitching his Brexit deal to MPs in the House of Commons, repeating his frequent claim that passing the bill tonight will help "get Brexit done and move our country on."
If the plan passes, Johnson says the country can "de-escalate those no-deal preparations immediately."
"If we do this deal, if we pass this deal and the legislation that enables it, we can turn the page and allow this country and this Parliament to begin to heal and unite," he adds.
The reality may be quite different -- if the bill passes, it's already clear that there will be new divisions over what happens when the transition period ends.
MPs have started debating Boris Johnson's Withdrawal Agreement, ahead of a vote tonight that will indicate whether there is support for the pact in principle.
There'll be around seven hours of debate before we get to that point, though. Keep following this page for live updates of all the important moments.
Most of the 21 Conservative MPs expelled from the party by Prime Minister Boris Johnson in September are expected to back his bill and proposed Brexit timetable later today.
But Jacob Rees-Mogg, the leader of the House of Commons and Johnson ally, seems to be inadvertently tempting some of them to go back on that decision.
Ed Vaizey didn't seem happy with how Rees-Mogg dismissed concerns about the shortened timetable on Twitter.
Juncker shares a laugh with Brexit foe Nigel Farage in the European Parliament on Tuesday.
Juncker shares a laugh with Brexit foe Nigel Farage in the European Parliament on Tuesday. FREDERICK FLORIN/AFP via Getty Images
Jean-Claude Juncker, the President of the EU Commission, spoke in the European Parliament earlier as his term comes to an end. Ursula von der Leyen will take up the role on November 2.
Juncker noted that he's spent a lot of his time in the position talking about one topic.
"In truth, it has pained me to spend so much of this mandate dealing with Brexit when I have thought of nothing less than how this union could do better for its citizens," he said.
"A waste of time and a waste of energy," Juncker added.
Hold on just a little bit longer, Jean-Claude. The votes in Parliament over the next three days could wrap up Brexit. Or at least this stage of it. For now. And then again, they could not.
"I will always regret the United Kingdom’s decision to leave the Union. But at least we can look at ourselves in the eye and say that we have done all in our power to make sure that this departure is orderly," Juncker added.
Much of the debate over Boris Johnson's Brexit bill has focused on what happens at the end of the transition period -- the period running to December 2020 in which much of the status quo will remain in place.
It was designed to give the UK and the EU time to strike a trade deal and other agreements, but such pacts take years to negotiate and it's unlikely one can be reached so quickly.
That's why opposition MPs have been warning that the current deal could lead to, in essence, a no-deal Brexit in 14 months' time.
So Nick Boles, a leader in the ex-Tory, anti-no-deal brigade, has just announced he's tabled an amendment for debate later today seeking to force a government to automatically extend the transition period if it can't reach a deal in the intervening time (unless Parliament votes to the contrary).
The amendment follows hours of reported negotiations between Boles and his fellow independents and Downing Street.
And while it could mean those independents support Johnson's timetable, it could cost him favor with the hardline Tories on the other side who are keen to keep a no-deal split on the table in 2020 and beyond.
Donald Tusk has tweeted after speaking in the European Parliament this morning.
The EU Council President said he has "no doubt that we should treat the British request" for a three-month Brexit extension "in all seriousness."
Tusk had previously confirmed that Johnson's efforts to water down his own request made no difference. The Prime Minister sent an unsigned photocopy of the letter alongside another suggesting the EU disregard it, but it doesn't change the fact that he formally requested a Brexit extension.
Boris Johnson's push to get his Brexit plan through Parliament begins in a couple of hours.
The first hurdle is the second reading of Johnson's Brexit deal. A debate will begin at 12:30 p.m. (7:30 a.m. ET) and the vote will take place around 7 p.m. (2 p.m. ET) Its results will show whether the Commons supports Johnson's Brexit plan in principle, but it won't make Brexit a done deal by any stretch. You can look at CNN's analysis of whether Johnson has the votes below, but it looks like the bill will scrape through.
Immediately afterwards (should Johnson win that vote), there's another vote on the government's planned timetable for the rest of the week -- and that's where it could get harder for Downing Street.
The government wants to ram its Brexit bill through all of its stages in the House of Commons this week, and push it on to the House of Lords for approval as quickly as possible. By contrast, the last big EU upheaval, the Lisbon Treaty, was pored over in 25 sittings over five months.
It's possible that the government could lose this vote. If it does, the whole timetable would be thrown into chaos and Johnson may be forced to take advantage of the extension to the Brexit process that he reluctantly requested from EU on Sunday.
Or, the Prime Minister could abandon the legislation altogether and seek a general election in an effort to resolve the mess.

Market Insider | Stocks Biggest Moves Premarket: Stocks making the biggest moves premarket: Biogen, Under Armour, P&G, Hasbro & more

Peter Schacknow

Check out the companies making headlines before the bell:

Under Armour – Chairman and Chief Executive Officer Kevin Plank will step down as CEO Jan. 1. President and Chief Operating Officer Patrik Frisk will become president and CEO, with Plank moving into the role of executive chairman.
Procter & Gamble – The consumer products giant beat estimates by 13 cents a share, with adjusted quarterly profit of $1.37 per share. Revenue also came in above forecasts, boosted by strong demand for its premium beauty brands.
Hasbro – The toymaker’s quarterly profit came in at an adjusted $1.84 per share, below the consensus forecast of $2.21. Revenue also missed estimates. The company said the threat of tariffs on toys imported from China significantly increased its shipping and warehousing costs.
PulteGroup – The home builder beat estimates by 9 cents a share, with adjusted quarterly earnings of $1.01 per share. Revenue also scored a beat, helped by lower mortgage rates.
Travelers – The property and casualty insurer earned an adjusted $1.43 per share for the third quarter, below the consensus estimate of $2.35 a share. Revenue beat forecasts, however, but the bottom line was hurt by an increase in asbestos reserve costs.
Harley-Davidson – The motorcycle maker earned 55 cents per share for its latest quarter, 3 cents a share above estimates. Revenue also topped expectations. The better-than-expected performance came despite a hit to the bottom line from a drop in U.S. sales and higher costs from European tariffs.
Biogen – The drugmaker plans to file for Food and Drug Administration approval of its Alzheimer’s treatment aducanumab, after promising results for the drug in a clinical trial.
United Technologies – The industrial conglomerate earned an adjusted $2.21 per share for its latest quarter, above the $2.03 a share consensus estimate. Revenue also came in above analysts’ projections, and United Technologies raised its full-year forecast.
TD Ameritrade – TD Ameritrade reported adjusted quarterly profit of $1.05 per share, 7 cents a share above estimates. The online brokerage’s revenue was also above Wall Street forecasts. The company warned it expects an earnings decline as it adjusts to losing revenue after joining its rivals in cutting commissions to zero. – announced a partnership with United Parcel Service which gives discount shipping rates to users of the company’s postage printing services.
Boeing – The jet maker maintained its quarterly dividend at $2.055 amid its struggles involving the grounded 737 Max jet. The latest dividend is payable Dec. 6 to shareholders of record as of Nov. 8.
Howard Hughes Corp. – Howard Hughes plans to sell about $2 billion in assets following a strategic review. The real estate developer also named Paul Layne – who had been president of the company’s central region – as its new CEO. The stock came under pressure after the announcement, with investors having believed the company would be sold or go private.
Bank of America – Bank of America was upgraded to “overweight” from “neutral” at Atlantic Equities, citing what it calls an impressive third quarter with ongoing deposit growth.
Novartis – Novartis posted better-than-expected earnings for its latest quarter, with the Swiss drugmaker also raising its guidance amid growing sales across its pharmaceutical portfolio.
Chevron – Chevron received an extension of its Venezuela-related waiver, allowing it and a number of U.S. oil services companies to operate in that country for another three months.
Celanese – Celanese reported adjusted quarterly profit of $2.53 per share, beating consensus by 2 cents a share. Revenue came in below estimates, however, and the company cut its forecast, citing the September explosion and fire and its chemical plant in Clear Lake, Texas.
Levi Strauss – Levi Strauss was rated “outperform” in new coverage at Macquarie Research, calling the jeans and apparel maker innovative, and praising the diversification of its revenue base.

DealBook: WeWork’s Lifeline Could Wipe $39 Billion Off Its Valuation

12-15 minutos -Source: NYT

CreditCreditKate Munsch/Reuters

The board of the cash-starved office space company must now pick between two financial lifelines, Peter Eavis, Michael de la Merced and Andrew report in the NYT. Either option would be humbling.
The two proposals that WeWork’s board is considering:
• SoftBank has offered to take control of the company by accelerating a $1.5 billion investment that was planned for next year, and buying $3 billion worth of shares held by other investors, according to unnamed sources. It would also lend the company $5 billion.
• JPMorgan Chase has put together a $5 billion debt financing plan from several outside institutions, which would include bonds with high interest rates and secured financing.
SoftBank would slash WeWork’s valuation to just under $8 billion, having valued the company at $47 billion in January. That’s a huge fall for WeWork, which canceled its highly touted I.P.O. last month amid concerns from prospective investors. (It isn’t clear what value JPMorgan’s offer would give the company, though it would dilute existing shareholders’ stakes much less.)
SoftBank would also curb the power of Adam Neumann, the WeWork co-founder whose ambitious growth plans put the company into cities around the globe but also led to its current crisis. Axios reports that Mr. Neumann would receive about $200 million in exchange for giving up his voting shares and backing the conglomerate’s offer.
WeWork is in a cash crunch. It reported having $2.5 billion in cash at the end of June, but is burning through hundreds of millions of dollars every month. The WSJ reports that it had to delay thousands of job cuts because it couldn’t afford the severance costs.
Expect a decision from the company within days, and possibly as soon as today.
Boeing’s board spent more than five hours yesterday discussing how to manage a worrisome cascade of bad news in recent weeks about its grounded 737 Max jets, David Gelles and Natalie Kitroeff of the NYT report.
Weighing on the board’s mind:
• A scathing report about Boeing, the Federal Aviation Administration and the certification of the 737 Max
• The revelation last Friday that a pilot had voiced concerns about an automated system that played a role in two fatal Max crashes
A worry inside Boeing is that the pilot’s concerns may have further complicated efforts to return the Max to service, unnamed sources told the NYT. The F.A.A.’s administrator, Stephen Dickson, sent a frustrated letter to Dennis Muilenburg, Boeing’s C.E.O., asking why his regulator had learned about the messages only last week, months after the Justice Department reviewed them.
Boeing stock slid again yesterday, falling 4 percent after tumbling 8 percent on Friday. Seth Seifman, an analyst at JPMorgan Chase, said the revelation of the messages “makes it more challenging for regulators to endorse the 737 Max near term.”
More: European regulators have reportedly shelved the idea of lifting the grounding of the 737 Max jets simultaneously with the U.S.
Denounced by regulators and lawmakers, and ditched by partners like Visa and Mastercard, Facebook’s cryptocurrency project, Libra, looks to be in bad shape. But Cecilia Kang and Nathaniel Popper of the NYT report that the company has been on a huge charm offensive to convince Washington of the project’s benefits.
• Last week, Mark Zuckerberg met with the House Financial Services Committee’s Democratic chairwoman, Representative Maxine Waters of California, and its ranking Republican, Representative Patrick McHenry of North Carolina.
• “David Marcus, the head of Facebook’s cryptocurrency effort, ran a parallel track of meetings,” Ms. Kang and Mr. Popper write. “He gave speeches defending Libra to global leaders meeting at the World Bank and a meeting of the Group of 30.”
• “All told, Facebook has dedicated at least eight lobbyists to Libra since the project was publicly introduced in June, according to regulatory filings.”
Over a fried chicken dinner with journalists, Mr. Marcus said that while politicians had been negative about the project, regulators had been much more receptive in private meetings.
We’ll find out whether the charm offensive is working tomorrow, when Mr. Zuckerberg is scheduled to testify about Libra before the House Financial Services Committee.
More: A bank C.E.O. warned that lenders might have to sever ties with Facebook if it can’t allay fears about how Libra could be used for money laundering.
A majority of banks around the world may not be economically viable if the global economy falters, according to a new study by McKinsey & Company.
Return on equity has fallen below their costs for nearly 60 percent of banks, which is financially unsustainable in the long run. A downturn in the economy, or even a spread of negative interest rates around the world, could make things even worse.
And banks face new competition from all corners, from fintech start-ups with lower costs to tech giants muscling into lucrative banking activities.
“We believe we’re in the late economic cycle and banks need to make bold moves now because they are not in great shape,” Kausik Rajgopal, a McKinsey senior partner, told Bloomberg. “In the late cycle, nobody can afford to rest on their laurels.”
Some of McKinsey’s recommendations for banks:
• Outsource more functions, like trading and compliance
• Cut costs, including through zero-based budgeting
• Grow, including through acquisitions
A last-minute settlement, struck by three major drug distributors and the opioid manufacturer Teva with two Ohio counties, has avoided a landmark federal trial that was scheduled to start yesterday, Jan Hoffman of the NYT reports.
The companies would pay $260 million, including cash payouts and donations of addiction treatments. The judge overseeing the case, Dan Polster of the Northern District of Ohio, announced yesterday that the deal had been struck around 1 a.m.
“We hope it provides a benchmark for a national resolution for other communities to have the resources to do what is necessary to abate the epidemic,” said Peter Weinberger, a Cleveland lawyer who represents some Ohio counties.
But a global deal is what the drug distributors really want. Along with other corporate defendants in the trial, they are pursuing a settlement worth $48 billion in cash and donated addiction treatments to resolve all opioid lawsuits against them. Four state attorneys general said yesterday that they had reached a tentative agreement to settle cases against the three distributors, Teva, and Johnson & Johnson.
But cities and counties aren’t on board with that plan. They filed lawsuits years ago, and want more money paid out in a shorter time frame than a global deal would provide.
Two weeks ago, a Houston Rockets executive’s tweet defending Hong Kong protesters brought controversy to the league. Now, the N.B.A. commissioner, Adam Silver, tells the WSJ he’s still trying to mend relations with China, its biggest international market.
Mr. Silver said he was surprised by the controversy. He told the WSJ that he was on a plane to Tokyo without internet access when Daryl Morey, the Rockets’ general manager, posted his tweet.
“What I didn’t know until I got to China was that it was not business as usual,” Mr. Silver told the WSJ. “This was unlike anything any of us had ever experienced before in China.”
The N.B.A. was “collateral damage” in the trade war between Beijing and Washington, according to Mr. Silver, who said it was “a bit of a perfect storm” that primed China to react with anger over the quickly deleted post.
The N.B.A. has made some progress in patching up its image, including having its games restored to Tencent’s sports streaming platform. But the Rockets remain banned from broadcasts, and it isn’t clear whether they’ll ever be allowed back on. Mr. Silver said the league was calculating its losses.
But he rejected calls to abandon China, even as politicians accused the N.B.A. of kowtowing to Beijing. “We have no choice but to engage and to attempt to have better understanding of other cultures and try to work through issues,” he said. “What better way than through sports?”
Namal Nawana has stepped down as C.E.O. of the medical device maker Smith & Nephew over a disagreement about his compensation.
The real estate developer Howard Hughes said it was replacing its C.E.O., David Weinreb, with Paul Layne, the president of its Central region.
Nadiem Makarim, the co-founder and C.E.O. of the Indonesian ride-hailing company Gojek, will step down to join the Indonesian cabinet.
Eric Liedtke, who as Adidas’ global brands director was seen as a potential candidate to lead the sportswear giant, will step down.
Google has hired Javier Soltero, the former head of Microsoft’s Outlook division, as the chief of its G Suite division.
• Coty plans to sell an array of businesses, including the Wella, Clairol and OPI brands, as part of a plan to cut debt and simplify its business mix. (FT)
• Hudson’s Bay, the department store company that owns Saks, agreed to sell itself to a group of investors led by its chairman, Richard Baker, for about $1.45 billion. (Bloomberg)
• The online mattress company Casper has reportedly hired Morgan Stanley and Goldman Sachs to help prepare it for an I.P.O. (Bloomberg)
• Innophos, a maker of specialty ingredients for food companies, agreed to sell itself to the investment firm One Rock Capital for about $932 million. (Innophos)
Trump impeachment inquiry
• President Trump’s distrust of Ukraine was reportedly bolstered by a meeting with Prime Minister Viktor Orban of Hungary, which some White House officials had objected to. (NYT)
• House Democrats plan to slow down the timeline of their impeachment inquiry by holding public hearings over the Ukraine affair. (NYT)
Politics and policy
• President Trump dismissed as “phony” a clause in the Constitution that prohibits presidents from illegally benefiting from their business dealings while in office. (NYT)
• The oil industry is concerned about Senator Elizabeth Warren’s pledge to ban fracking if she becomes president. (WSJ)
• Mark Zuckerberg recommended several candidates for jobs in Mayor Pete Buttigieg’s presidential campaign; two were hired. (Bloomberg)
• Prime Minister Benjamin Netanyahu of Israel failed to form a government after last month’s election, giving his political rival, Benny Gantz, a chance to try. (NYT)
• Prime Minister Justin Trudeau of Canada won a second term last night, but his Liberal Party will lose its majority in Parliament. (NYT)
• Prime Minister Boris Johnson of Britain hopes to win support for his Brexit bill from lawmakers today. (NYT)
• British business leaders warned Michael Gove, the government official in charge of Brexit preparations, not to set Britain’s regulations too far apart from the E.U.’s. (FT)
• President Trump said China had signaled that trade talks were advancing, raising hopes for a November deal. (Bloomberg)
• Chinese officials say the country plans to remain open to foreign investment and global industry despite the trade war. (Reuters)
• China is seeking $2.4 billion in countermeasures against the U.S. relating to a seven-year-old case it filed with the World Trade Organization. (Bloomberg)
• Facebook recently found and took down four state-backed disinformation campaigns. (NYT)
• Islamic State militants have reportedly been posting propaganda videos to TikTok. (WSJ)
• New, more sophisticated Chinese hacks are targeting the smartphones of the nation’s ethnic minorities, even while they’re abroad, according to security researchers. (NYT)
• IBM researchers say that Google has overstated the power of its latest quantum computer. (FT)
• Why you probably shouldn’t buy the new Google Pixel 4. (NYT)
Best of the rest
• PG&E has warned of a potential second round of planned blackouts in California. Also: San Jose hopes to turn the company into a state-owned utility. (WSJ)
• Exxon Mobil’s climate change accounting goes on trial in New York starting today. (WSJ)
• Women are underrepresented at central banks. (NYT)
• An Ernst & Young training seminar last year instructed women on how to get manicures and be nice to men. (Huff Post)
• Douglas Hodge, the former C.E.O. of Pimco, pleaded guilty to fraud and money laundering conspiracy charges over his role in the college admissions scandal. (Bloomberg)

World News | Europe: Boris Johnson faces two crucial votes Tuesday as he tries to seal Brexit before the deadline

Silvia Amaro

GS - Boris Johnson, UK Prime Minister
LONDON, ENGLAND - OCTOBER 19: Prime Minister Boris Johnson leaves Downing Street for the House of Commons on October 19, 2019 in London, England.
Peter Summers | Getty Images News | Getty Images
U.K. Prime Minister Boris Johnson is hoping to receive enough backing from lawmakers in two key Brexit votes on Tuesday.
Johnson has seen his plans scuppered on two different occasions over the last few days, but now faces a vote on his Withdrawal Agreement Bill and then on whether he’s able to rush it through Parliament before the October 31 deadline. The bill would see his Brexit deal with Brussels last week turned into U.K. law.

First vote

The first vote will be on the bill that states how the U.K. will leave the European Union. Johnson is expected to win, but it would only be an approval for the bill to proceed in principle. Johnson lost a crucial vote on Saturday which now means that his deal needs to pass through the House of Commons before MPs (Members of Parliament) give their full consent. It would then pass to the upper chamber — the House of Lords — for further ratification.
“Let’s go for a deal that can heal this country and allow us to believe in ourselves once again,” Johnson said Tuesday morning on Twitter. If MPs make major changes to the deal later this week, despite agreeing to it in principle on Tuesday, the government is expected to actually pull the bill.
On Saturday, the U.K. Parliament decided not to have a clear yes or no vote on the deal that the prime minister negotiated with the EU, arguing that politicians should first approve the necessary legislation to leave the bloc. A majority of parliamentarians pushed for this in order to prevent a no-deal scenario at the end of the month as it triggered a law that meant Johnson had to request a deadline extension with the EU.
On Monday, Johnson was then turned down in his request to hold another decisive yes or no vote by the House Speaker.

Second vote

The second vote will be on whether Johnson is allowed to push his legislation through the House of Commons before the end of play Thursday — a relatively short period of time due to the impending Brexit deadline. It would then proceed to the House of Lords and remain on track to pass in time and allow Johnson to keep his promise of a Brexit before the end of the month.
A rejection of this timeframe would effectively mean a deadline extension is inevitable. Some lawmakers have voiced their opposition against what they believe is a rushed schedule.
The Commons is not ready. So don’t blame the (European) Parliament, maybe blame Westminster.
Guy Verhofstadt
Brexit coordinator for the European Parliament
“Ministers are trying to bounce MPs into signing off a Bill that could cause huge damage to our country,” Keir Starmer, from the opposition Labour party, said on Twitter Monday about what he describes as pressure from the government to approve what Johnson negotiated with the EU.
“Boris Johnson knows that the more time people have to read the small print of his deal, the more it will be exposed for the risks it represents to our economy and communities,” Starmer also said.

What about the EU?

In the meantime, the European Union is closely monitoring events in the U.K. Parliament. The other 27 EU member states want to move on with the U.K.’s departure from the bloc, but they will not ratify the Withdrawal Agreement until there’s a clear position from Westminster. The EU Parliament still needs to approve the deal despite EU leaders already doing so last week.
“The Commons is not ready. So don’t blame the (European) Parliament, maybe blame Westminster,” Guy Verhofstadt, who coordinates the European Parliament’s position on Brexit, said Monday.
The EU and the U.K. had previously negotiated a deal with former U.K. leader Theresa May in 2018, but that got rejected three times by U.K. lawmakers.
Johnson, who entered Downing Street in July, renegotiated the most controversial part of that deal — the so-called Irish backstop — with his EU counterparts last week. The European Parliament could approve that deal next week, if needed, but will not do so until Westminster approves the revised text.
Sterling dipped on Tuesday morning to 1.2955 against the dollar after breaking above $1.30 in the previous session and trading at five-and-a-half month highs.

World News: Iraq says U.S. forces withdrawing from Syria have no approval to stay

2minutos - Source: Reuters

Boys wave towards a convoy of U.S. vehicles withdrawing from northern Syria, in Erbil, Iraq October 21, 2019. REUTERS/Azad Lashkari
BAGHDAD (Reuters) - U.S. forces that crossed into Iraq as part of a pull-out from Syria do not have permission to stay and can only be there in transit, the Iraqi military said on Tuesday.
The Iraqi statement contradicts the Pentagon’s announcement that all of the nearly 1,000 troops withdrawing from northern Syria are expected to move to western Iraq to continue the campaign against Islamic State militants and “to help defend Iraq”.
A senior U.S. defense official later clarified that the situation was still fluid and plans could change.
“All U.S. forces that withdrew from Syria received approval to enter the Kurdistan Region so that they may be transported outside Iraq. There is no permission granted for these forces to stay inside Iraq,” the Iraqi military said in a statement.
It is unclear whether the U.S. troops will use Iraq as a base to launch ground raids into Syria and carry out air strikes against Islamic State militants.
The additional U.S. troops would add to the more than 5,000 American troops already based in the country, training Iraqi forces and helping to ensure that Islamic State militants do not make a comeback.
Reporting by Ahmed Rasheed; Writing by Ahmed Aboulenein; Editing by Jon Boyle and Angus MacSwan

U.S. Market | Futures Indicator: US futures point to slightly higher open

Sam Meredith

U.S. stock index futures were slightly higher Tuesday morning.
At around 02:00 a.m. ET, Dow futures rose 40 points, indicating a positive open of more than 53 points. Futures on the S&P and Nasdaq were both slightly higher.
Market focus is largely attuned to global trade developments after China’s vice foreign minister said that Beijing and Washington had achieved some progress in their trade talks.
His comments come less than 24 hours after President Donald Trump sounded optimistic about the prospect of a trade agreement by the middle of next month.
The world’s two largest economies secured a limited trade deal last week, in an attempt to end a protracted dispute that has battered financial markets and hammered global growth.
On the data front, the Philadelphia Fed non-manufacturing index for October will be released at around 8:30 a.m. ET. Existing home sales for September and the Richmond Fed survey for October will follow slightly later in the session.
In corporate news, Biogen, Lockheed Martin and McDonald’s are among some of the major companies set to report earnings before the opening bell.
Texas Instruments, Chipotle Mexican Grill and Snap are poised to report their latest quarterly figures after market close.