Tomorrow’s Calendar - Dow Jones & Company

[Pages:5]Wednesday, August 16, 2017

Stocks

U.S. stocks gained modestly Wednesday, led by a rise in retail shares after Target reported strong same-store sales growth and boosted its outlook.

Treasurys

U.S. government bonds rebounded Wednesday after two days of declines as minutes from the Federal Reserve's latest policy meeting showed a debate over the recent inflation slowdown and when to next raise interest rates

Forex

The dollar reversed gains Wednesday, as minutes from the Federal Reserve's latest meeting raised doubts about whether the central bank will raise interest raise rates again this year.

Commodities

Oil prices settled lower Wednesday as data showing an increase in U.S. oil production outweighed the largest weekly decline in oil stockpiles this year.

Market Snapshot*

DJIA

22024.87

+25.88

Nasdaq

6345.11

+12.1

S&P 500

2468.11

+3.5

10-Year

2.2255%

12/32

30-Year

2.8034%

23/32

Euro

$1.17685

+0.0028

Nymex Crude

$46.78

-0.76

Source: SIX Financial Information, ICAP plc *preliminary values subject to adjustments

Tomorrow's Headlines

Fed Officials Split Over Timing of Next Rate Increase

Federal Reserve officials meeting in July split over the timing of future interest-rate increases as they struggled to understand why inflation has been so weak in recent months. But they agreed to soon begin the yearslong process of drawing down the central bank's holdings, according to minutes of the July 25-26 meeting released Wednesday after the customary three-week lag.

Sagging inflation led some officials to suggest holding off on raising rates again for now, arguing the Fed "could afford to be patient under current circumstances."

Others, however, worried that the strong labor market and high stock prices could produce a spurt of inflation above the central bank's 2% target that could be difficult to control. This group cautioned that waiting too long to raise rates "could result in an overshooting of the [Fed's] inflation objective that would likely be costly to reverse," the minutes said.

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Tomorrow's Calendar

8:30 a.m.

Aug Philadelphia Fed Business Outlook Survey Business Activity (expected 16.0), Prices Paid (previous 19.1), Employment (previous 10.9), New Orders (previous 2.1), Prices Received (previous 9.0), Delivery Times (previous 7.4), Inventories (previous 0.7), Shipments (previous 12.2)

8:30 a.m.

08/12 Unemployment Insurance Weekly Claims Report - Initial Claims Jobless Claims (expected 240K), Net Chg (previous +3K), Continuing Claims (previous 1951000), Net Chg (previous -16K)

8:30 a.m.

U.S. Weekly Export Sales Corn (Metric Tons) (previous 680.4K), Soybeans (Metric Tons) (previous 684.3K), Wheat (Metric Tons) (previous 464.3K)

9:15 a.m.

Jul Industrial Production & Capacity Utilization Industrial Production, M/M% (expected +0.3%), Capacity Utilization % (expected 76.7%), Net Chg (Pts) (previous +0.2)

9:45 a.m.

Bloomberg Consumer Comfort Index

10:00 a.m.

Jul Leading Indicators Leading Index (expected +0.3%), Coincident Index (previous +0.2%), Lagging Index (previous +0.2%)

10:00 a.m.

Q2 Quarterly Retail E-Commerce Sales

10:30 a.m.

08/11 EIA Weekly Natural Gas Storage Report Working Gas In Storage (Cbf) (previous 3038B), Net Chg (Cbf) (previous +28B)

12:30 p.m.

Robert Kaplan speaks at Lubbock Chamber of Commerce event

1:15 p.m.

Neel Kashkari speaks at Edina Rotary Club event

2:00 p.m.

SEC Closed Meeting

4:30 p.m.

Money Stock Measures

4:30 p.m.

Foreign Central Bank Holdings

4:30 p.m.

Federal Discount Window Borrowings

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Tomorrow's Headlines

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The minutes could raise doubts about the prospects of another increase in the Fed's benchmark interest rate by year's end. The central bank has raised rates twice this year and penciled in a third rate increase in 2017 as well as three in 2018.

Fed officials have been publicly airing their disagreement over the proper course of interest rates since the meeting.

Trump's Business Councils Disband After CEOs Defect

Two of President Donald Trump's councils of top business leaders are disbanding following Tuesday's controversial remarks by the president about the weekend's violence in Virginia.

Mr. Trump tweeted Wednesday that he was ending the White House council on manufacturing and the Strategic and Policy Forum.

One of the councils had planned to disband after a conference call of its executives on Wednesday morning, a person familiar with the matter said. Mr. Trump's tweet came after reports that council was disbanding.

Blackstone Group LP Chief Executive Stephen A. Schwarzman, who led the Strategic and Policy Forum, phoned the president on Wednesday to inform him the group was being disbanded, according to people familiar with the call.

After the call, which was described as cordial, the president tweeted that it was his decision to disband that council. In that tweet, he also announced he was disbanding the manufacturing council.

Target's Lower Prices Pay Off as Sales Rise

Target Corp.'s efforts to cut prices and improve its digital operations showed signs of success in its latest quarter, as store sales rose for the first time in a year and the retailer raised its profit forecast.

Sales at stores open at least a year rose 1.3%, driven by stronger-than-expected foot traffic and an increase in online sales. The average amount customers spent fell 0.7%, another effect of the lower prices.

In a call with analysts Wednesday, Target Chief Executive Brian Cornell attributed the improved results to the company's lower prices, which helped it cut down on discounts.

"We saw a meaningful increase in the percent of our business done at regular price and a meaningful decline in the percent on promotion," he said. "This demonstrates the progress we've already made and gives us confidence we're on the right track."

Target has been struggling to compete with Inc., which is benefiting from the movement of consumer

shopping online, as well as Wal-Mart Stores Inc., which has been remodeling its brick-and-mortar stores and lowering prices. In February, after Target posted profit and sales declines and issued a profit warning, it said it would invest billions to improve stores, launch exclusive brands and cut prices.

Apple Readies $1B War Chest For Hollywood Programming

Apple Inc. has set a budget of roughly $1 billion to procure and produce original content over the next year, according to people familiar with the matter, as the iPhone maker shows how serious it is about making a splash in Hollywood.

Combined with the company's marketing clout and global reach, the step immediately makes Apple a considerable competitor in a crowded market where both new and traditional media players are vying to acquire original shows. Apple's budget is about half what Time Warner Inc.'s HBO spent on content last year and on par with estimates of what Inc. spent in 2013, the year after it announced its move into original programming.

Apple could acquire and produce as many as 10 television shows, according to the people familiar with the plan, helping fulfill Apple Senior Vice President Eddy Cue's vision of offering high-quality video, similar to shows such as HBO's "Game of Thrones," on the company's streaming-music service or possibly a new, video-focused service.

UnitedHealth Names David Wichmann as New CEO

UnitedHealth Group Inc. said David S. Wichmann, its current president, will next month succeed Stephen J. Hemsley as chief executive, a widely expected transition at the top of the nation's largest health insurer.

Mr. Wichmann, 54 years old, will take over the CEO job on Sept. 1, and Mr. Hemsley, 65, who has held the title since 2006, will become executive chairman. UnitedHealth Group's current board chairman, Richard Burke, will then take the title of lead independent director.

Mr. Wichmann, who previously served as chief financial officer of UnitedHealth Group as well as president of UnitedHealthcare, its insurance operation, is seen as likely to continue the direction of his predecessor, who transformed the company by building up UnitedHealth's rapidly growing Optum health-services arm and expanding its core insurance business.

Housing Starts Plunge Despite Strong Demand

U.S. housing starts declined for the fourth time in five months, driven by a decline in multifamily housing construction that is likely to remain a drag on the sector in the months to come.

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Tomorrow's Headlines

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Total housing starts decreased 4.8% in July from the previous month to a seasonally adjusted annual rate of 1.155 million, the Commerce Department said Wednesday. Starts edged 0.5% lower for single-family construction and plummeted 17.1% for construction on buildings with five or more units.

Housing starts data are volatile and often are subject to large revisions, but a clear pattern has emerged over the past few months of slowing activity driven by a drop in apartment construction and only gradual improvement in single-family building.

Economists said single-family starts are being constrained by a lack of construction workers and land. That is likely to mean continued gradual recovery in the sector rather than a turbocharged expansion.

MH370: New Analysis Spies Objects Near Plane's Crash Site

An examination of satellite images taken two weeks after Malaysia Airlines Flight 370 vanished suggests a cluster of likely man-made objects were in an area close to where authorities have long thought the plane crashed.

The area where the images were taken wasn't covered by an aerial search at the time. But it is near where authorities originally spent years scanning miles of remote seabed off Western Australia.

Flight 370 vanished from radar en route to Beijing from Kuala Lumpur on March 8, 2014, with 239 people on board from more than a dozen countries, including 152 Chinese nationals. That was followed by a search across thousands of square miles of ocean in what became the most expensive in aviation history--about $160 million. The search was called off in January, with the governments of Malaysia, Australia and China saying they wouldn't resume it without firm new evidence.

Judge Temporarily Shields Car Makers From Some Air-Bag Suits

A bankruptcy judge Wednesday issued a temporary stay shielding car makers from many lawsuits over defective air bags made by Takata Corp.

With one notable exception, Judge Brendan Shannon blocked for 90 days litigation against Honda Motor Co., Toyota Motor Corp., Subaru Corp. and other automobile manufacturers sued along with Takata over air bags that proved dangerous, sometimes fatal, in operation.

Takata's U.S. units have been automatically shielded from lawsuits since they filed for chapter 11 bankruptcy protection in June. The ruling Wednesday extends that shield to car makers, who are alleged to share responsibility with Takata for personal injuries or deaths caused by the defective air bags.

Baltimore Removes Confederate Statues

The city of Baltimore removed several Confederate monuments overnight Wednesday in a stealth operation that highlights the growing backlash against such memorials across the country.

"I said I would move as quickly as I could, and I did," Baltimore Mayor Catherine Pugh said in an interview. "We didn't need those kinds of symbols."

The city's unannounced action came just days after last weekend's violent clashes in Charlottesville, Va., where white supremacists gathered in protest of that city's plan to take down a statue of Confederate Gen. Robert E. Lee. In the aftermath of the weekend's events that left one woman dead, some elected officials have taken a tougher line on tolerating the monuments to those who led the fight to secede in the Civil War.

Fiat Joins BMW-Led Self-Driving Car Tech Alliance

Fiat Chrysler said Wednesday it is joining a BMW-led consortium to develop self-driving car technology, a move that comes more than a year after the group was formed with an aim of producing fully automated vehicles by 2021.

BMW AG and Intel Corp. launched the cross-industry partnership in July of 2016, along with Israeli car-camera software provider Mobileye NV, which Intel purchased earlier this year. The companies are seeking to create an industry standard for future fleets of autonomous vehicles.

The decision by Fiat Chrysler, which previously outsourced its self-driving program to Google's parent company Alphabet Inc., is the latest sign it is ready to embrace nextgeneration technology. The company's chief executive has been skeptical of auto industry efforts to promote autonomously driven and electric-powered vehicles.

Akzo Nobel, Elliott Make Peace After Protracted Spat

Akzo Nobel NV reached a truce with Elliott Management Corp. as the activist investor backed new board members following a monthslong standoff over Elliott's push to force the Dutch chemicals company into talks over a $28 billion takeover bid.

In a joint statement Wednesday, the two sides said they reached an agreement on Akzo's strategy to fully separate its specialty-chemicals business, following a disagreement on whether it should be sold or listed. The deal would "normalize the relationship" between Akzo and its shareholders and suspend all litigation for at least three months, they said.

Akzo also announced two new nominations to its supervisory board, backed by Elliott, and intends to nominate a third supervisory board member, in consultation with major shareholders including Elliott. The activist investor will support the appointment of new Akzo CEO Thierry Vanlancker to the board.

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Talking Points

Big Business Retreats From Right Wing

In January, conservative legislators in Texas backed by Gov. Greg Abbott introduced a bill to regulate transgender access to public facilities such as bathrooms. That proposal went down to defeat Tuesday thanks in part to vociferous opposition by business leaders who condemned it as discriminatory and bad for the state's economy.

In a business-friendly state where Republicans control the entire government, it's a stunning rebuke. It's also not an outlier. Wednesday, two of President Donald Trump's councils of top business leaders disbanded following Mr. Trump's failure to immediately blame white supremacists for weekend violence in Charlottesville, Va.

These episodes show how big business has become, at least on social policy, a check on Mr. Trump and other Republicans, ordinarily their allies.

Politically, business leaders are risk-averse. They prioritize stability and the status quo. What has changed is the definition of the status quo. Gay and transgender rights, and taking action on climate change, were once liberal causes. They are now largely mainstream, particularly in big cities that are home to corporate head offices and the educated workers they covet. Businesses have adapted their own plans, policies and attitudes to this new mainstream. White supremacy, of course, has long been rejected across the political spectrum, but for some companies, merely being associated with a president who didn't clearly condemn it poses risks.

This changes the cost-benefit calculus for corporate executives: Speak up and embroil yourself in unwelcome controversy, or stay silent and invite the opprobrium of customers, employees, social media, foreign governments, and, for some, their own families and consciences.

Increasingly, they have concluded that inaction is the riskier path. Merck & Co. CEO Kenneth Frazier quit Mr. Trump's manufacturing council despite his company's exposure to federal decisions on drug approvals and prices. Google fired an engineer who asserted biological reasons for why women are less suited than men for tech careers, drawing accusations of liberal intolerance.

Typically, business has been a follower on social issues. Anthony Chen, a sociologist at Northwestern University, recounts that in the 1950s businesses resisted equal-employment ordinances across the Northeast and Midwest until change became inevitable.

In the 1960s, Southern hotels, lunch counters, restaurants and other businesses didn't back desegregation until the cost of sit-ins, protests and bad publicity came to surpass any potential loss of white customers. Once they opened themselves to black customers, sales boomed, Stanford University historian Gavin Wright wrote in 2008: "It is small wonder that so many Southern businessmen began to change their tune on the race issue at this time."

Business opposition to the Texas bathroom bill was in great part driven by fear of the boycotts North Carolina experienced after passing a similar bill in 2016. (That measure was watered down earlier this year.) The Texas Association of Business, the state's main business-lobby group, gathered more than 700 signatories in opposition, including the chief executives of Texas-based American Airlines Group Inc., Celanese Corp. and AT&T Inc. IBM Corp. warned the bill imperiled future hiring in the state where it now employs more than 10,000. This apparently swayed many state legislators, who adjourned? their special session Tuesday without acting on the bill, thus killing it.

Business motives are more complex than just fear of bad publicity. Many companies were actually on the vanguard of extending equality to gays, and more recently transgender people, partly to attract employees or customers. Half of Fortune 500 companies provide transgender-inclusive health benefits -- up from none in 2002 -- and 61% offer domestic-partner benefits to gay couples, accord-

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Talking Points

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ing to the Human Rights Campaign, which advocates for gay and transgender people. Restrictive legislation conflicts with those policies.

A similar dynamic is under way on climate. Nearly half the Fortune 500 has some sort of internal target for greenhouse-gas emissions, renewable energy or efficiency, according to the Carbon Disclosure Project, which advocates for climate action. Mr. Trump's decision to withdraw the U.S. from the Paris climate accord ran counter to their adoption of low-carbon technology.

Neo-Nazis Unify With Other Far-Right Groups

The white nationalist drove from South Carolina. The selfdescribed patriot trekked from Tennessee. The college student espousing white pride flew in from Nevada.

The right-wing extremist movement, which until recently was fragmented by division, starved for members and lacking steady leadership, rarely was capable of uniting its forces as it did last weekend. The mayhem in Charlottesville., Va., was a signal that even if not numerous, these groups are unifying.

Patrick LaPorte IV, 35 years old, a white nationalist from South Carolina who attended the rally, said he was drawn to the event even though there wasn't a single group driving the charge, but rather a loose conglomeration of likeminded people connected on social media. Mr. LaPorte, who brought a mouth guard with him for protection in the event of a brawl, said he isn't bothered when people call him a Nazi, though if he were to label himself he would say he subscribes to "white identity."

In the past, he said, white nationalists might have been scared of showing their faces. For many, he said, those days are over.

For law-enforcement officials and others who have long tracked the extremist groups that descended on Charlottesville, the attendance of so many disparate elements made the gathering a watershed. While only several hundred people showed up, far fewer than the tens of thousands who have gathered to demonstrate against President Donald Trump or support immigrant and women's rights, it was among the largest gatherings of its kind in decades.

Among the factors driving this new cooperation: a web-driven rebranding of white nationalism that has broadened its reach and allowed groups to work together; a wave of new young, leaders that helped bridge old divisions; and Mr. Trump's remarks on immigrants, Muslims and media bias, which have left such groups feeling emboldened.

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