|Day's Range||9.17 - 9.17|
China's economic growth slumped to its lowest level in almost three decades, weakened by the the trade war with the United States. Yahoo Finance's Seana Smith and Senior Vice President at UBS Wealth Advisors Kathy Entwistle discuss.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Amazon.com Inc. faces a full-blown European Union antitrust probe as the bloc’s competition chief Margrethe Vestager prepares for a summer finale to her five-year crackdown on U.S. technology giants.The Dane, who heads the EU’s competition division, is poised to open a formal investigation into Amazon within days, according to two people familiar with the case, who asked not to be named because the process isn’t public.Vestager has hinted for months that she wanted to escalate a preliminary inquiry into how Amazon may be unfairly using sales data to undercut smaller shops on its Marketplace platform. By ramping up the probe, officials can start to build a case that could ultimately lead to fines or an order to change the way the Seattle-based company operates.“If powerful platforms are found to use data they amass to get an edge over their competitors, both consumers and the market bear the cost,” said Johannes Kleis of BEUC, the European consumer organization in Brussels.The probe comes as Qualcomm Inc. could be hit with a second hefty EU penalty as soon as next week for allegedly underpricing chips to squeeze a smaller competitor. The U.S. chipmaker was fined last year for thwarting rival suppliers to Apple Inc. and has been the subject of on-and-off antitrust scrutiny since 2005.Vestager has already slapped Google with record fines and ordered Apple to repay billions of euros in back taxes. By taking on Amazon’s Chief Executive Officer Jeff Bezos, Vestager is keeping up the pressure on big tech right to the very end of her mandate, due to expire in October.Amazon and the European Commission in Brussels both declined to comment on the plans to open the probe. Qualcomm representatives declined to immediately comment.Business ModelWhile it will be the first time the EU has directly targeted Amazon’s online retail business model, it’s the third time the company has been probed by the regulator, following tax and e-book investigations.Although Google has been fined once a year for the past three years, racking up 8.2 billion euros ($9.2 billion) in penalties, the Alphabet Inc. unit still faces early-stage inquiries into local business and jobs searches. Apple also has to contend with a complaint from Spotify Technology SA and Facebook Inc. is getting questions on how it uses and shares data from apps.To contact the reporter on this story: Aoife White in Brussels at email@example.comTo contact the editors responsible for this story: Peter Chapman at firstname.lastname@example.org, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Just what is AMS AG up to?On Monday, the supplier to Apple Inc. made a short-lived, 3.7 billion-euro ($4.2 billion) effort to snatch Osram Licht AG from private equity firms Bain Capital and Carlyle Group LP, which had sewn up a lower-priced takeover of the German lighting-maker earlier this month.The abortive effort will underscore investor concerns about the company’s strategy under Chief Executive Officer Alexander Everke. The former NXP Semiconductors NV executive has spent billions of dollars trying to position AMS to capitalize on demand for new sensing technology used in the iPhone’s Face ID recognition system. But after his three years at the helm, the stock is trailing peers Finisar Corp. and Lumentum Holdings Inc.The flirtation with Osram was short and not particularly sweet. At 5:52 p.m. in London, Bloomberg News reported that AMS had made an offer for the Munich-based firm, some 11 days after Osram’s board accepted the private equity firms’ 3.4 billion-euro bid. Within 15 minutes, the target released a statement confirming it had received a non-binding offer from AMS. The company dismissed “the probability of this transaction materializing as rather low.” By midnight, AMS declared it was ending the takeover talks.Maybe the approach was an attempt to get a closer look at Osram’s books, or its 3-D sensing technology. If it was, then full credit to the lighting giant for calling Everke’s bluff, since financing for AMS’s bid wasn’t yet fully in place. While Osram said it would let the bidder perform due diligence, it was quick to emphasize that it could only do so under strict conditions.If it was a serious bid, then AMS shareholders have every right to feel bewildered. The target largely operates in the slowing automotive market, so would have hardly offset stagnating smartphone sales. Concern that the company may be more open to outsized and strategically questionable dealmaking than investors assumed helped to push the stock down by as much as 4.6% on Tuesday morning.Everke would have been asking for a lot of faith from investors to finance the deal. The company was planning to sell new stock – but would still have been left with net debt equivalent to about 27 times this year’s predicted free cash flow. This would have tried investor patience, which has already been sorely tested. AMS has spent $2 billion over three years buying companies and expanding production capacity to secure a dominant position supplying components for 3-D scanners in the latest generation of iPhones, only for sales of the handsets to promptly slow. AMS shares are 66% below their 2018 peak.In 2017, Everke predicted 2019 sales would exceed $2.7 billion, with an Ebit margin of at least 30%. After scrapping its dividend and year-ahead guidance figures in May, analysts now expect the company to report a 10% Ebit margin on sales of just $1.9 billion. Communication from management has been particularly poor, according to Hauck & Aufhaeuser Privatbank analyst Robin Brass.Everke’s short-lived move on Osram looks like a shot in the dark. If his big bet on smartphones isn’t paying off, he needs to shed some light on what his new strategy is.To contact the author of this story: Alex Webb at email@example.comTo contact the editor responsible for this story: Edward Evans at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Executives from tech giants Apple Inc, Amazon.com Inc, Facebook Inc and Alphabet's Google go before the House Judiciary Committee's antitrust panel Tuesday to discuss competition in online markets. The committee is likely to discuss antitrust probes of the four companies under way at the Justice Department and Federal Trade Commission, as well as allegations that the companies seek to thwart nascent competitors. Democrats, in particular, are expected to press Facebook about a proposed $5 billion settlement between the company and the FTC to resolve allegations that the company violated a 2011 consent agreement by inappropriately sharing information on 87 million users with the now-defunct British political consulting firm Cambridge Analytica.
(Bloomberg) -- U.S. technology giants are headed for their biggest antitrust showdown with Congress in 20 years as lawmakers and regulators demand to know whether companies like Alphabet Inc.’s Google and Facebook Inc. use their dominance to squelch innovation.Executives from Google, Facebook, Apple Inc. and Amazon.com Inc. are set to appear Tuesday before the House antitrust panel, whose Democratic chairman is leading an investigation into the market power of the biggest tech companies and their effect on competition.The hearing harkens back to Microsoft Corp. co-founder Bill Gates’ appearance before the Senate in 1998 when Microsoft was the target of government scrutiny into its monopoly in computer operating systems. Two months later, the Justice Department filed a landmark antitrust lawsuit against Microsoft that reined in its practices and nearly led to the company’s breakup.“This is really a deep dive by the committee to understand what’s going on in the tech sector, what needs to be done in terms of antitrust enforcement but also to understand better whether there is a need for change in the law,” said Gene Kimmelman, a senior adviser at the policy group Public Knowledge, who served in the Justice Department’s antitrust division under President Barack Obama.While the executives testifying Tuesday don’t have the star power of Gates, their appearance marks the first time the largest technology companies will face questions from lawmakers amid a rising chorus of criticism that they are violating antitrust laws. That was the same accusation leveled at Microsoft two decades ago.Rhode Island Democrat David Cicilline, who leads the antitrust panel, is bearing down on technology companies as antitrust enforcers prepare their own scrutiny of the industry. The Justice Department and the Federal Trade Commission, which share antitrust jurisdiction, have taken the first steps toward investigating conduct by the biggest companies, with the Justice Department taking responsibility for Google and Apple, and FTC overseeing Facebook and Amazon.For more: Far From Silicon Valley, Trustbusters Plotted Big Tech AssaultTuesday’s hearing will focus on innovation and entrepreneurship. One of the key complaints from critics of the big tech companies is that they can use their power to thwart competition from smaller rivals. Academic research has shown a steady decline in business start-ups across the economy. One possible explanation is that rising market concentration across industries effectively shuts out entry by new businesses.While some barriers to competition are inherent in any business, the key question for the antitrust committee is whether and how dominant tech platforms can intentionally raise barriers to new entrants, said Michael Kades, the director of markets and competition policy at the Washington Center for Equitable Growth.A report by the University of Chicago’s Stigler Center this year found that digital markets tend to be winner-take-all in which one firm comes to dominate. That creates an incentive for the companies to edge out new challengers that could threaten that dominance.Lack of competition can lead to reduced innovation, which harms consumers over time, according to the report. “The evidence thus far does suggest that current digital platforms face very little threat of entry and are negatively impacting investment in key digital areas,” it said.For more: YouTube’s Trampled Foes Plot Antitrust RevengeOne of the authors of the Chicago report -- Yale University economist Fiona Scott Morton -- will testify Tuesday. The company executives scheduled to appear are Adam Cohen, Google’s director of economic policy, Matt Perault, head of global policy development at Facebook, Amazon associate general counsel for competition Nate Sutton, and Kyle Andeer, vice president of corporate law at Apple.E-commerce trade association NetChoice, which includes Google and Facebook, will tell the committee a different story: The reach of tech platforms gives small businesses the opportunity to target large audiences of potential customers through digital advertising. Not long ago, their only choice was expensive advertising in a local newspaper or television station, the group said.“These platforms are helping small businesses the same way a large retailer operates as an anchor for a shopping center or mall,” Carl Szabo, vice president of NetChoice, will say, according to his prepared remarks. “The larger these platforms grow means the more customers small businesses can reach with better targeting and lower costs.”Sarah Miller, deputy director of Open Markets Institute, which advocates for aggressive antitrust enforcement, countered that tech platforms are harming entrepreneurs.“These companies were the darlings of most Democrats and now the dynamic has changed profoundly,” she said. “There is really a period of learning going on in Congress, with staffers, with the broader public, around the varying ways that all of these tech companies, these tech monopolies, are destructive.”To contact the reporters on this story: David McLaughlin in Washington at email@example.com;Ben Brody in Washington, D.C. at firstname.lastname@example.orgTo contact the editors responsible for this story: Sara Forden at email@example.com, John HarneyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Since the U.K. decided more than three years ago to leave the European Union, the nation's savviest investors have succeeded by putting their money where Brexit matters least.Uncertainty about the date of Britain’s departure (now pushed back to Oct. 31) and the terms of the divorce has meant purging the U.K. from their holdings or limiting them to investments traditionally impervious to man-made and natural disasters. Over 38 months, British sterling depreciated 16 percent, the worst shrinkage for any similar period in 8 years. The pound remains the poorest performer in the actively-traded foreign exchange market and inferior to the No. 3 euro.Europe's strongest major economy in the 21st century became a shadow of its former self, reversing two decades preceding the June 23, 2016 referendum when the U.K. outperformed the European Union in growth and investment. London's stock and bond markets similarly languished as laggards to world benchmarks, after beating them consistently in the 20 years prior to the decision to leave the EU, according to data compiled by Bloomberg.“If I give myself some credit, I would say that we acted reasonably fast liquidating U.K. shares” in 2016, said Ben Rogoff, whose Polar Capital Technology Trust PLC has been the most consistent winner out of the 212 British global funds with at least 1 billion pounds this year and during the past three years. His team's 114 percent total return (income plus appreciation) was 22 percentage points better than the Dow Jones World Technology Index, mostly because 68% of the fund is invested in the U.S., two-thirds of that in California companies, according to data compiled by Bloomberg. “It's all about the Internet and where do you get exposed to the Internet? The U.S. and China,” Rogoff said last month during an interview at Bloomberg in London.While Rogoff reduced his holdings of three California tech powers during the past year — Cupertino-based Apple Inc., Menlo Park-based Facebook and Santa Clara-based Advanced Micro Devices — he acquired more shares in Hong Kong-based Tencent Holdings Ltd, Hangzhou-based Alibaba Group Holding Ltd, South Korea's Samsung Electronics Co. and Tokyo-based Yahoo Japan Corp., according to data compiled by Bloomberg.The 46-year-old graduate of St. Catherine's College, Oxford, became the lead manager of the trust in 2006, “and at that time,” he said, “the U.K. weighting might have been 5% to 10%, so if you had already been backing away to the door, it's a lot easier to escape than if you built a career around being an expert in U.K. equities.” Since the Brexit referendum, he said, “There's just been a complete buyers' strike of U.K. equities.”Proof of such disdain comes with the crisis this year at the LF Woodford Equity Income Fund, Britain's most-prized investment when it was launched by star money manager Neil Woodford in 2014. The celebrated stock picker became even more prominent with his contrarian bullish stance on Brexit. The fund plummeted 31% during the past two years by holding a combination of large and small U.K. companies and has frozen redemptions indefinitely.“It's symptomatic of a broader problem,” Bank of England Governor Mark Carney told reporters earlier this month. “Our sense is that the financial-stability risks are increasing.”One U.K. investor who’s successfully resisted the trend away from domestic stocks is Nick Train, who manages Finsbury Growth & Income Trust. It returned 61% the past three years — more than twice the FTSE All-Share Index benchmark — as the most consistent one- and three-year performer among the 129 U.K.-based funds investing mostly in domestic stocks or bonds, according to data compiled by Bloomberg. Unlike Woodford, who doubled down on the British economy writ large, Train, a 60-year-old graduate of Queen’s College, Oxford, dramatically increased his holdings in consumer staples. These are the companies that make such essentials as food, beverages and household goods and can resist business cycles because their products always are in demand.Train, who declined to be interviewed, increased the consumer staples weighting relative to the benchmark to 27% from 23% in 2015 and he enhanced his holdings of Deerfield, Illinois-based Mondelez International Inc., which manufactures and markets packaged food products, and London-based Diageo PLC, the world's largest producer of spirits and beer, according to data compiled by Bloomberg.That's likely to be a safe bet as no one is counting on the British economy rebounding significantly from near the bottom of the EU while the uncertainty created by Brexit persists. “If you take a long view, then this may well be a great time to be investing in U.K. equity,” said Rogoff. “Thankfully, I don't have to make that binary call because there are very few U.K. companies I'm frankly interested in.”\--With assistance from Shin Pei, Richard Dunsford-White, Kateryna Hrynchak and Suzy Waite.To contact the author of this story: Matthew A. Winkler at firstname.lastname@example.orgTo contact the editor responsible for this story: Jonathan Landman at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Matthew A. Winkler is a Bloomberg Opinion columnist. He is the editor-in-chief emeritus of Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- The company that brought you free digital maps and email wants to do the same thing for your drone.Wing LLC, an offshoot of Alphabet Inc.’s Google, on Tuesday unveiled a new app it calls OpenSky that it hopes will become the basis for a full-fledged air-traffic control system to manage the expected growth of this new class of flying devices.It’s been approved to manage drone flights in Australia, where it is free. Wing has been working on demonstration programs with the U.S. Federal Aviation Administration and is also holding discussions with other countries on getting its app approved, according to James Burgess, Wing’s chief executive officer.“This is Wing’s effort to try to make drone flying easier and safer for all operators,” Burgess said in an interview. “We envision a future where it’s easy to access the sky and all drone operators are collaborative, able to follow the rules and work within the constructs of whatever aviation regulation and rules are in place in a country.”Wing isn’t alone in attempting to create a system that helps drone operators plan flights, ensure they adhere to legal restrictions and prevent mid-air collisions. Numerous companies, such as AirMap Inc. and Iris Automation Inc., are developing similar products and have been conducting tests with FAA.But Wing, with its ties to the global data behemoth Google and its simultaneous attempt to create a vast drone delivery network, brings a new heft to the arena.For companies like Wing, Amazon.com Inc.’s Prime Air and scores of others seeking to use drones for deliveries, having a robust air-traffic system for small drones flying at low altitudes is critical. Their business model for robot-like devices zipping across the skies won’t work unless they can keep track of each other and avoid collisions.“It’s a fundamental part,” Burgess said. “Because, for Wing to do the advanced delivery operations and provide that service that we envision, drones will have to share the skies safely and be able to operate in a highly automated fashion while still being compliant and interoperable with everything around them.”Helping build the air-traffic system and inducing all drone operators to participate will help Google reach its goal.Both Burgess and Reinaldo Negron, who heads Wing’s drone air-traffic efforts, said they welcome participation by other companies. Australia’s Civil Aviation Safety Authority has created a computer platform that will allow multiple competitors to provide a similar service as Wing.While the U.S. hasn’t finalized its drone air-traffic plans, officials have said that they anticipate a similar system. Unlike the air-traffic network for traditional aircraft, which is operated by the government, drone tracking and management will be done by private companies, the officials have said.The company has made 80,000 test flights using its OpenSky app in three continents. It is available to Australian users of Apple Inc. and Android operating systems. There is also a PC version.In its initial guise, it will be free to anyone. Burgess declined to speak about Wing’s future plans for whether the app would contain advanced features for which the company would charge a fee.So far, systems such as OpenSky allow users to plan a flight. The Australian app tells drone pilots whether a flight is legal and also provides notifications of no-fly zones, such as a sporting event.As more and more drones become equipped with tracking devices, such apps may become the underpinning of an air-traffic management system for low-level drone flights that uses computers to automatically keep flights flowing orderly.When civilian drones burst onto the scene several years ago, there were few limits on who could fly them and enforcement of aviation regulations was spotty. As their use has exploded, so have safety incidents and the FAA has gradually begun adding restrictions.NASA has been crafting a framework for how drone traffic could be monitored and the FAA is working on regulations to require that the devices send out some type of radio beacon that will identify them, both to prevent midair collisions as well as to ensure they aren’t used illegally.Wing in April was the first U.S. drone company to receive government approval as an airline. The delivery flights the company envisioned haven’t begun yet.To contact the reporter on this story: Alan Levin in Washington at firstname.lastname@example.orgTo contact the editors responsible for this story: Jon Morgan at email@example.com, John HarneyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Billionaire Foxconn founder Terry Gou never considered an independent run for Taiwan’s presidency, a spokeswoman for the electronics tycoon said, after Gou lost the nomination to lead the island’s opposition party into January’s election.Speculation that Gou will leave the Kuomintang to pursue leadership of Taiwan is a “fake issue,” his spokeswoman Amanda Liu said in a text message on Tuesday. Gou’s response comes one day after Han Kuo-yu, the firebrand mayor of the southern port city of Kaohsiung, overcame Gou and three other candidates in the party’s presidential primary.Liu declined to elaborate further when asked if Gou still intended to seek Taiwan’s presidency in another capacity, leaving the door open to speculation that the tech tycoon -- who in June quit as chairman of Hon Hai Precision Industry Co., Foxconn’s main listed arm -- would find another way to run in the election. A solo bid by Gou could have a significant impact on the outcome, likely siphoning votes from the KMT as it tries to unseat incumbent President Tsai Ing-wen.Shares of Hon Hai climbed as much as 2.8% to their highest in about two months as investors expect Gou to focus more on the company.Power BrokerThe 68-year-old is a major power broker in the global electronics industry, with unusually strong ties to both the U.S. and China. He built Foxconn Technology Group from a maker of television knobs into a global powerhouse that is now Apple’s largest supplier and China’s largest private employer, with as many as 1 million mostly migrant workers assembling everything from iPhones to Dell desktop computers.Earlier: China-Friendly Mayor Tops Foxconn’s Gou to Vie for Taiwan LeaderGou also has ties to U.S. President Donald Trump, agreeing to build a 13,000-worker facility in the state of Wisconsin in exchange for more than $4.5 billion in government incentives.Hailed by Trump as “one of the great deals ever,” the project has since been criticized for low-paying jobs and sudden dismissals. Foxconn says the plant is on track to begin producing LCDs next year.\--With assistance from Miaojung Lin and Adela Lin.To contact the reporters on this story: Debby Wu in Taipei at firstname.lastname@example.org;Iain Marlow in Hong Kong at email@example.comTo contact the editors responsible for this story: Brendan Scott at firstname.lastname@example.org, Edwin Chan, Karen LeighFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Netflix (NFLX), the cable killer, is continuing its tear with subscription growth appearing to be proliferating to no end, although Disney's (DIS) Disney+ video streaming platform has some investors nervous.
Earning Season is coming. And this time, it might be a tough one, as more than 80 S&P; 500 companies have warned that second quarter earnings will likely be flatter than anticipated. Time Of The Season As we’ve said earlier Earning Call Season is when “a company’s management gets on a big, public conference call with analysts to answer questions about what’s in its quarterly earnings report and what’s going on with the profits, losses, and anything else that might move the stock.” (Not an analyst? Here’s some info on how to ask questions on a bunch of upcoming calls via Say.) Down Market These calls start this week, and for a number of reasons expect management to deliver bad news. Apple, who is just not having a great year, is expected to report a 14.7% decline in second quarter profit margins. Road and railway freight companies are generally considered the canary in the coal mine for growth, and unfortunately the trucking company JB Hunt is expecting profit growth of 1.7% this quarter, which is quite a drop from the 15.2% increase analysts expected only six months ago. All in all, this could be the biggest quarterly contraction in three years. But Why? Last year corporate earnings went through the roof because of President Trump’s 2017 tax cuts. That effect has largely worn off. While Trump’s tax cuts were helpful in making corporations richer, it would seem his tariff war is well on its way to undoing that growth. And China’s ongoing economic slowdown isn’t helping the situation either. It would seem that just like the Federal Reserve, companies everywhere are feeling a bit nervous about the state of the world. But hey, maybe the interest rate cut will help? -Michael Tedder Picture: Adobe
With Q2's Netflix earnings just around the corner, here's what you can expect from the online streaming giant and the broader streaming space.
Executives from Alphabet Inc., Amazon.com Inc., Apple Inc., and Facebook Inc. should brace for tough questions around antitrust as federal probes gain steam.
China released its second-quarter GDP report today. The country’s GDP expanded 6.2% in the second quarter, marking its slowest growth since 1992.