Business News Archives for 2019-09

Officials from the Trump administration issued a partial -- and qualified -- denial to the revelation that there have been discussions about imposing limits on U.S. investments in Chinese companies and financial markets. A statement over the weekend said there were no current plans to stop companies from the world’s second-largest economy listing on American exchanges. The statement did not address nor rule out other possibilities. Authorities in Beijing, meanwhile, insisted they would continue to take measures to open the country’s financial markets to foreign investment.  (Bloomberg)

Forever 21, the fashion retailer whose constantly changing styles and low prices once made it a hit among young women, has filed for bankruptcy protection, felled by intense competition and its own aggressive global expansion.  After weeks of questions about its future, the California-based company said on Sunday night that it planned to shut as many as 350 of its 800 stores around the world as part of a Chapter 11 restructuring. (First FT)


Congressional antitrust investigators are scrutinizing plans by Google to use a new internet protocol because of concerns that it could give the company a competitive advantage by making it harder for others to access consumer data.  The new standard modernizes a fundamental building block of the internet known as the domain name system, or DNS.  (WSJ)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Stocks were lower yesterday as investors remain on edge about the trade war with China and the potential for impeachment.

The number of people who applied for jobless benefits in mid-September rose slightly — largely reflecting a General Motors worker strike in Michigan — but the level of new “claims” nationwide remained near a 50-year low.
An index of pending home sales increased 1.6% in August, following July’s decline.  This is only the third month this year in which contract signings have risen.  The highest gain occurred in the West, where the pending home sales index rose 3.1% from July.


Beyond Meat shares rallied 11.6% after global fast food giant McDonald’s announced plans to try their plant-based burgers in Canada. The 12-week trial will begin Sept. 30 and be marketed as the P.L.T., short for plant, lettuce, and tomato.


The connected fitness company Peloton Interactive went public yesterday and investors weren’t buying.  The shares dropped over 11% in their first trading session as investors seem to be shunning these growth at all cost companies in favor of companies actually making money.
With Northwest Quadrant Wealth Management, I'm Tyler Simones

Shares in the world's biggest sportswear maker, Nike, surged as much as 5% to an all-time-high after their earnings results showed its margins soaring and sales up 42% through apps and websites it has developed under its Nike Direct strategy.  That signaled an end to a rough period marked by strong competition from German rival Adidas and prompted at least 11 Wall Street brokerages to raise price targets on its stock far above a current $87.


The Federal Reserve is expected to resume its balance sheet expansion in response to demand for bank reserves.  The central bank is reacting to a crunch last week in the overnight lending markets that sent short-term borrowing rates for bank’s surging.  In doing so, the Fed will be embarking on a different kind of program from the asset purchases used to pull the economy out of the financial crisis.  The Fed’s goal is for the overnight rate for loans stays constant at 1.75%-2%.


According to attorney Jeff Eager and the Bend Entrepreneur Report the number of new Bend businesses registered with the Oregon Secretary of State May through August 2019 (1,099 businesses) is down 9.5 % versus the same timeframe from 2018, and about on par with registrations from that timeframe in 2017. Bend continues to have more businesses registered per capita compared to any other large-ish Oregon city other than Keizer. Furthermore, the rate of registrations in 2018 was probably unsustainable, given labor and real property constraints.
With Northwest Quadrant Wealth Management, I'm Tyler Simones

The pace of home price appreciation across much of the U.S. continued to peter out last month.  The S&P CoreLogic Case-Shiller 20-city price index remained the same in August on a monthly basis after seasonal adjustments.  On an annual basis, the index only increased 2% from August 2018. This represents the slowest rate of home price appreciation since 2012.  Seattle continued to be the only city where home prices have fallen over the past year, but the rate of home price declines has slowed.


Escalating trade tensions with China undermined consumer confidence in September, underscoring the dangers of a conflict that has harmed key business sectors such as manufacturing and farming and poses a threat to a record U.S. economic expansion.  The consumer confidence index fell to a three-month low of 125.1 this month from 134.2 in August.

Shares of Netflix have tumbled over 15% in the last 5 trading sessions as the company continues to get downgraded by Wall St. analysts.   In their annual report out in January, Netflix reported 2018 free cash flow of negative $3.02 billion, compared with negative $2.02 billion in 2017, and said it expected negative free cash flow “for many years” as it continues to “significantly increase” investment in streaming content.
WeWork co-founder Adam Neumann has agreed to resign as chief executive of the U.S. office-sharing company but will remain as non-executive chairman, bowing to pressure from some of his investors.  The decision, taken at a board meeting yesterday, follows a challenge to Neumann's authority by his biggest investors, including Japan's SoftBank Group.


With Northwest Quadrant Wealth Management, I'm Tyler Simones

US Stocks finished near the flat line yesterday as investors continue to digest US-China trade wars news.
The initial reading of U.S. manufacturing Purchasing Managers’ Index for September reached 51.0, the highest figure since April and up from 50.3 in August. Readings above 50 show an expansion.  The escalated trade war between the U.S. and China has taken a big bite from the manufacturing sector.
AT&T shares climbed more than 2% in trading following a Wall Street Journal report that the company is exploring a spinoff of DirecTV unit as its own company or a combination with Dish, which also saw its share price rise 3.75%.
Microsoft shares rose more than 1% after the company announced a quarterly dividend increase of 5 cents to bring it up to 51 cents per share and a new stock buyback worth up to $40 billion. The tech giant has regularly bought back its shares and has seen its stock almost quadruple under CEO Satya Nadella’s tenure.
Shares of United States Steel, meanwhile, dropped more than 8% during extended trading after the company gave weak third-quarter guidance.  The company expected an adjusted diluted loss per share at 35 cents compared to the 7 cent loss per share forecast of analysts.
With Northwest Quadrant Wealth Management, I'm Tyler Simones

US Stocks snapped a 3 week winning streak last week to finish lower on news that Chinese officials were cutting short their visit to the U.S., dampening hope around trade negotiations between the two countries.
In the past year, since Facebook CEO Mark Zuckerberg’s last official visit to Washington, D.C., lawmakers around the world have scolded the executive for failing to give them face time.  But this week, Zuckerberg suddenly made himself extremely accessible to U.S. lawmakers and even President Donald Trump. During a surprise visit to D.C., Facebook was the one requesting meetings, including a Wednesday night dinner between Zuckerberg and a group of senators, some of whom have threatened regulations that could fundamentally change his business. Over the next two days, he met with several more lawmakers, including one who suggested he sell two of Facebook’s most successful acquisitions before regulators potentially try to force a breakup.
The manufacturing sector here in the US has been hurt by U.S.-China trade tensions, helping to drive the Institute for Supply Management’s manufacturing index down to 49.1% in August. That reading below 50% indicates a contraction in activity.
According to the Oregon Employment Department, Oregon workers enjoyed broad wage gains last year, reflecting continued strength in the state’s labor market.  The most new jobs, were concentrated at the top and bottom ends of the wage scale.  Oregon’s median hourly wage rose 4.5% in 2018 to $17.79. That works out to $37,000 annually for a full-time worker. Accounting for inflation, though median wages were up just 2.0%.
With Northwest Quadrant Wealth Management, I'm Tyler Simones.

Lines are forming outside major Apple stores across the globe as shoppers line up to score the newest models of the iPhone 11. Analysts are betting the new smartphone will be a key sales driver for the tech giant heading into the holiday season, with JPMorgan expecting iPhone 11 shipments to reach 184M units in 2019 and 195M units in 2020. Others focused in on the device's aggressive pricing in U.S. dollars, which was discounted to previous rollouts, and the impact it would have on Apple's overall profit margins. (SA)

Airbnb has said that it plans to go public next year, making the announcement a day after it reported more than $1bn in second-quarter revenue.  The 11-year-old company stands to be among the biggest listings in 2020, having been valued at $31bn in its most recent funding round. But a series of rocky debuts for other so-called unicorns has raised questions about the durability of investor demand for new offerings.  In a press release, Airbnb said it made “substantially more” than $1bn in revenue in the second quarter of 2019 and that Airbnb hosts — people who rent out rooms or apartments on the platform — have made more than $80bn from renting their homes since it was created. (FT)


The U.S. is temporarily exempting more than 400 types of Chinese products - like Christmas lights, plastic straws and printed circuit boards - from tariffs, according to documents set to be published today by the U.S. Trade Representative. The exemptions stem from more than 1,100 exclusion requests made by American companies and other entities.  (Bloomberg)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Oregon wine sales broke $607 million last year up from $550 million in 2017 according to the Oregon Wine Board.  The increase was driven by a 19% increase in direct-to-consumer shipments. Canadians purchased 47,338 cases of Oregon wine in 2018, representing 45% of Oregon’s export sales. Oregon had 793 wineries in 2018, up 24 from 2017. The number of acres planted to grapes totaled 35,972 acres in 2018, an increase of approximately 6%. Pinot noir represents 56% of all planted acreage. 


Oregon wood products manufacturing sector jobs have been cut in half since 1990, according to the Oregon Employment Department. Going from 46,100 in 1990 to just 23,000 in 2017. Growth in tourism-related jobs has offset the decline in timber-related ones in some locations. However, In Coos County tourism jobs paid half the $52,000 timber jobs paid. Not all jobs are created equally.


Millennials are changing how we eat. Pizza Hut is selling a gigantic Cheez-It stuffed pizza. The Stuffed Cheez-It Pizza will cost just $6.49. (CNN)


U.S. industrial production grew at 0.4% year over year beating estimates of 0.2%. 

Gregory Bryant and Michelle Johnston Holthaus are now executive vice presidents at Intel. Bryant runs Intel’s PC group and is located in Hillsboro. Holthaus runs Intel’s sales, marketing and communications and is a graduate of Linfield.  Intel is Oregons largest employer. 


With Northwest Quadrant Wealth Management on Troy Reinhart.

Fed officials are set to inject another $75 billion of cash to the market this morning after funding shortages drove the rate on one-day loans backed by Treasury bonds -- known as repurchase agreements, or repos to as high as 10%.  The first cash infusion in more than a decade came Tuesday as an overnight liquidity squeeze threatened everything from Treasury bond trading to lending to companies and consumers. It’s a structural money problem that’s hard to ignore. While the spike wasn’t evidence of any broader crisis, it highlighted how the Fed was losing control over short-term lending, one of its key tools for implementing monetary policy.  (Bloomberg)


Facebook is teaming up with eyewear giant Luxottica to develop augmented-reality Ray-Bans, sources told CNBC. The smart glasses, code-named "Orion," will take years to develop, with the company hoping to get them to consumers between 2023 and 2025. Smartphone replacement? According to the report, Facebook is including the ability to take calls, see info via a small display, livestream what the wearer sees and allow for interaction with an AI voice assistant. (SA)


U.S. homebuilding surged to more than a 12-year high in August as both single- and multi-family housing construction increased, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market.  Housing starts jumped 12.3% to a seasonally adjusted annual rate of 1.364 million units last month, the highest level since June 2007.  (CNBC)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

The Federal Reserve convenes a two-day monetary policy meeting today that is expected to result in a second consecutive quarter point cut to interest rates. The attack on the Saudi Arabia’s oil infrastructure  the weekend adds to the long list of geopolitical uncertainties the US central bank must consider before reaching a decision. (FT)


The U.S. has inked initial trade agreements with Japan on tariff barriers and digital trade that won't require congressional approval. Not so many other details were provided, including whether President Trump had agreed to rule out imposing tariffs on Japanese automobiles. Coming to terms with Japan is seen as especially important because the President withdrew from the Trans-Pacific Partnership on his fourth day in office. (SA)


Saudi Aramco could take months to fully restore output at its giant Abqaiq plant with oil analysts saying that damage at the facility is more severe than originally thought. Crude futures are holding close to yesterday’s level as investors await a clearer picture of supply disruption and worry about future attacks in the region. One thing seems almost certain: the market seems to have underappreciated the geopolitical risk premium that should be reflected in crude prices.  (Bloomberg)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

The world's biggest tax case hits the courtroom this week. Apple is battling the EU's Competition Commissioner Margrethe Vestager, who in 2016 ruled that Apple's tax deals with Ireland allowed the company to pay far less than other businesses and levied a €13B tax bill on the iPhone maker. The first hints of how the Apple case may turn out will come from a pair of rulings scheduled for Sept. 24, but a final ruling could take months and empower a potential new crackdown on internet giants. (FT)
The United Auto Workers union has begun a nationwide strike against General Motors, with some 46,000 members walking off the job after contract talks hit an impasse. Shutting down North American production will cost GM about $400M/day. GM has enough inventory for a short strike of one or two weeks. The strike does not include Ford and Fiat Chrysler, whose UAW contracts were extended while the union tries to negotiate a deal with GM. (SA)
Brent crude futures posted their biggest-ever jump when trading opened in the wake of the weekend’s attack on a Saudi Arabian oil facility that has removed 5% of global supplies. The estimated 5.7 million barrels a day of lost production is the single biggest disruption on record, surpassing the 1979 hit to Iranian output from the Islamic Revolution as well as the loss of Kuwait and Iraq supplies during the 1990 Gulf War. All eyes are now on how quickly the country can restore supplies, with people familiar saying significant volumes could come back on stream within days, while it could take weeks to restore full capacity. President Donald Trump authorized the release of oil from the U.S. emergency reserve, declaring on Twitter that there is “plenty of oil.”


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Stocks traded higher yesterday as Apple outperformed after their annual fall new product launch, pushing the major indexes back to levels not seen since late July.
President Donald Trump’s announcement that he will delay implementing higher tariffs on $250 billion of Chinese goods for two weeks as a “gesture of good will.”  In a series of tweets, Trump said the tariff hikes — from 25% to 30% — that were scheduled to take effect Oct. 1 will now go into effect Oct. 15.
The wholesale cost of U.S. goods and services rose slightly in August, but inflation more broadly was still quite low and showed little sign of stirring up any trouble for the U.S. economy.  The producer price index edged up 0.1% last month. Economists had predicted no increase.

California lawmakers passed a landmark bill on Wednesday that threatens to reshape how companies like Uber and Lyft do business. The legislation, known as Assembly Bill 5 (AB5), was passed in the state Assembly and now heads to Democratic California Gov. Gavin Newsom’s desk.  The bill would require gig economy workers to be reclassified as employees instead of contractors. 
Seven states, including Oregon, and the District of Columbia have sued the Securities and Exchange Commission, saying the regulatory agency is putting investors in jeopardy by relaxing rules designed to ensure that securities brokers keep the interests of their customers ahead of their own.
With Northwest Quadrant Wealth Management, I'm Tyler SImones

Stocks ended the day little changed yesterday, weighed down by a continuing decline in tech shares while Ford was pressured by a downgrade to its credit rating.
Apple kicked off their annual fall product launch yesterday where they unveiled new iPhone 11’s, Apple Watches and an iPad, as well as new details about Apple TV+ and Apple Arcade.  Shares of Roku, Netflix, and Disney all fell on the Apple TV+ news.
The National Federation of Independent Business small business optimism index fell 1.6 points to a seasonally adjusted 103.1 in August, the worst showing since March. There was an 8-percentage point drop in those expecting the economy to improve, and a 5-point drop in those expecting real sales higher.
The share of people with health insurance fell last year for the first time since the Great Recession, according to data released by the U.S. Census Bureau.  Approximately 27.5 million Americans, or 8.5% of the population, were without health coverage at some time last year. That’s up from the 25.6 million Americans in 2017. It’s the first annual increase since 2009.

Ford Motor fell 1.4% after Moody’s downgraded the auto maker’s credit rating to junk status, citing below-expectations profit margins and cash flow.
With Northwest Quadrant Wealth Management, I'm Tyler Simones.

Stocks traded near the flat line yesterday breaking a 3 day winning streak after a slew of analysts downgrades offset optimism over the US-China trade war news.
Fifty attorneys general are joining an investigation into Google over possible antitrust violations, Texas Attorney General Ken Paxton, the initiative’s leader, said in a news conference the bipartisan probe includes attorneys general from 48 states, the District of Columbia and Puerto Rico. California and Alabama are not involved in the probe.  At the press conference announcing the probe, attorneys general emphasized Google’s dominance in the ad market and use of consumer data.
Mortgage rates are around the lowest in three years, but buyers are suddenly much more cautious about purchasing a home. Competition is cooling, and consequently sellers can no longer command any price.  Consumer sentiment in housing did improve in August, according to a monthly survey from Fannie Mae, but only because of a big jump in the share of those who think mortgage rates will keep falling. Other components of the survey were not so rosy. Fewer people think now is a good time to buy or sell a home, and fewer said they are not concerned about losing their job in the next year.


With Northwest Quadrant Wealth Management, I'm Tyler Simones.

US Stocks have notched back to back weekly gains and are only 2% below their all-time-highs as easing fears around the US-China trade war is lifting investor sentiment.
Job growth continued at a tepid pace in August, with nonfarm payrolls increasing by just 130,000 thanks in large part to the temporary hiring of Census workers, the Labor Department reported Friday.  The increase fell short of Wall Street estimates for 150,000, while the unemployment rate stayed at 3.7%, as expected.
J.P. Morgan Chase is close to winning the lead advisory role for the initial public offering of Saudi Aramco, the world’s most profitable corporation, edging out rivals for the plum assignment, according to people with knowledge of the situation. A final decision is expected next week.
On Sunday, a new report showed China’s trade with the U.S dropped sharply in August, as new tariffs by both sides were announced. Imports of American goods tumbled 22% in August from a year earlier to $10.3 billion, customs data showed Sunday. Exports to the United States, China’s biggest market, sank 16% to $44.4 billion.
With Northwest Quadrant Wealth Management, I'm Tyler Simones.

Global stocks are advancing this morning amid optimism of thawing geopolitical tensions, after the US and China announced that they would resume trade negotiations next month.  The risk-on mood among investors was prompted by the announcement that Chinese officials would hold high-level talks with US trade negotiators in Washington in early October, in the latest effort at seeking a resolution to the trade war between the world’s top two economies. The US later confirmed the talks. (FT)


Company payrolls surged by 195,000 in August, well above Wall Street estimates and at a time when recession fears have been growing.  Economists surveyed by Dow Jones had been looking for a gain of just 140,000.  August’s payroll growth was the best showing since the 255,000 jobs added in April. (CNBC)


Taking advantage of the steep decline in benchmark interest rates, Apple is joining U.S. companies including Deere and Disneyby launching its first bond deal since 2017 and selling $7B of debt. All three companies issued 30-year bonds with yields below 3%, a first for the corporate debt market. High-grade corporate bonds give investors a relatively safe alternative that still pays more than government bonds. (SA)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Activity in the US manufacturing sector has shrunk for the first time in three years, according to data released on Tuesday, as the US-China trade war weighed on the industrial economy and added to fears about slowing domestic growth. An index released by the Institute for Supply Management fell below 50, the level that marks contraction in the sector.  Although manufacturing only accounts for 11 per cent of the US economy and 8 per cent of its workforce, there are concerns among economists and policymakers that weakness in the sector will spread to other areas of output, like the much larger service sector.  One particular part of the report was especially ugly: new export orders fell to their lowest since April 2009, when global trade was hit following the financial crisis. (First FT)

You soon may be able to walk out of Whole Foods without having to pay cash or swiping your card. Amazon engineers are quietly testing scanners that can identify an individual human hand as a way to ring up store purchases, according to the New York Post. Unlike fingerprint scanners found on mobile devices, the system uses vision and depth geometry to identify the shape and size of each hand before charging a credit card on file. The technology is hoped to be rolled out by the beginning of next year. (New York Post)


The next couple of weeks see major decisions at both the Federal Reserve and the European Central Bank. The list of ECB policymakers pushing back against a resumption of asset purchases is growing daily.  Incoming ECB President Christine Lagarde faced lawmakers in Brussels this morning and pledged to act with “agility” when she takes charge on Nov. 1. From the Federal Reserve there have been mixed messages, with St. Louis Fed President James Bullard saying an aggressive 50 basis-point reduction is warranted, while Federal Reserve Bank of Boston President Eric Rosengren is unconvinced that the bank needs to cut rates at all at the upcoming meeting.  (Bloomberg)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Chinese and U.S. officials are having difficulty agreeing a date for the next round of trade talks after Washington rejected Beijing’s request to delay tariffs that took effect over the weekend. Authorities in the Asian nation said they planned to file a complaint at the World Trade Organization against the U.S. moves. The fallout from the prolonged trade war is biting deeper into global factory production, with manufacturing PMIs from across the world yesterday showing increasing weakness. (Bloomberg)


The main event on the data front will be the US non-farm payrolls report Friday. The jobs market remains one of the bright spots of the US economy, at a time when investors are weighing up the broader domestic fallout from Mr Trump’s trade war with China and what that could mean for the Federal Reserve’s interest rate outlook.  Economists polled by Thomson Reuters estimate that non-farm payrolls expanded by 159,000 jobs in August. US job growth hit 164,000 during the prior month, while the labour force participation rate rose to its highest since March. The unemployment rate stands at 3.7 per cent, and economists expect it to hold steady with the August report. (FT)


It will be a light week on the earnings front, particularly with Wall Street closed on Monday for the Labour Day holiday.  US tech companies Palo Alto Networks, Slack, CrowdStrike and Zoom Video Communications will publish earnings this week, as will yoga apparel group Lululemon. (Refinitiv)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.


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