AXios : The upcoming U.S.-China trade talks are huge

Investors will be closely watching today's U.S. nonfarm payroll report, but they will also have 1 eye out for news on a potentially pivotal meeting between U.S. and Chinese negotiators next week.
What's happening: President Trump downplayed the importance of the meeting on Thursday, telling reporters he has "a lot of options on China. But if they don’t do what we want, we have tremendous power."
  • It's becoming clear the market doesn't see it that way.
Reality check: The U.S. economy continues to grow, but is increasingly struggling to do so. By the day, more economic indicators — from manufacturing to consumer and business sentiment and now the all-important services sector — are turning negative with more industries beginning to follow manufacturing, trade and transportation into outright contractions.
  • The trade talks are "the main concern" Bernard Baumohl, chief global economist at The Economic Outlook Group, has about the stock market.
  • "If once again nothing gets accomplished we could see another substantial fall," he tells Axios.
Where it stands: U.S. equities rebounded on Thursday, as traders continued to buy the dip despite data showing growth in the U.S. services sector badly missed expectations.
  • Investors increased bets that the Fed would step in next month with rate cuts to help stabilize the economy.
  • However, many are losing faith in the power of monetary policy to help steady the ship, especially in light of the continued struggles in the eurozone and Japan, which have instituted negative interest rates and considerable stimulus.
"Monetary policy is not going to do a damn thing," Baumohl says. "Monetary policy is being held hostage to this trade conflict."
But, but, but: There may be nothing Trump can do to get a meaningful deal with China at this point, as Beijing seems to be participating in negotiations "with the primary intention of staving off further tariff hikes,” Eleanor Olcott, China policy analyst at independent consultancy TS Lombard, told the South China Morning Post.
  • “Trump’s actions throughout the trade war, escalating tensions in a wildly unpredictable manner, has made the U.S. an unreliable negotiating partner in the eyes of the Chinese political elite. This, in turn, has relieved pressure on Xi to strike a deal because he is able to convincingly lay the blame for derailment on the U.S."
  • “The impeachment proceedings tie Trump’s hands when it comes to his domestic agenda, so his attention will be focused on his foreign policy stance, meaning we are likely entering a period of more volatile trade war news.”

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:

  • SGH -8.2%, COST -1.4%

Other news:

  • OVID -17.1% (proposes concurrent public offerings of common stock and preferred stock)
  • HRTX -8.1% (prices public offering of 8,571,429 shares of its common stock at a price of $17.50 per share)
  • HPQ -6% (sees FY20 EPS in line; to eliminate 7-9K jobs; restructuring plan to result in annualized gross run rate savings of about $1.0 bln by the end of FY22; authorizes $5 bln share repurchase program and raises dividend by 10%)
  • WLL -3% (downgraded to Underperform from Neutral at Credit Suisse)
  • TERP -2.9% (announces public offering of Class A common stock and concurrent private placement; also files mixed securities shelf offering)
  • ACAD -0.8% (announces late-breaking oral presentation of Phase 3 HARMONY pimavanserin data at CTAD 2019)
  • RRC -0.6% (downgraded to Neutral from Outperform at Credit Suisse)

Analyst comments:

  • AR -2.8% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
  • PODD -1.8% (downgraded to Neutral from Buy at UBS)
  • CSX -0.9% (downgraded to Neutral from Overweight at JP Morgan)
  • TXRH -0.7% (downgraded to Equal Weight from Overweight at Barclays)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:

  • N/A.

M&A news:

  • HESM +7.8% (to acquire Hess Infrastructure Partners LP)

Other news:

  • AVYA +16.6% (RingCentral and Avaya enter strategic partnership ; also authorized $500 mln share repurchase program and plans to pay down $250 million of the principal debt under its Term Loan B)
  • RNG +6% (RingCentral announces strategic partnership with Avaya)
  • MEIP +5% (provides updated data from ongoing Phase 1b study of investigational ME-401 in patients with indolent B-cell malignancie)
  • GO +1.7% (prices secondary offering of 13 mln shares of common stock at an initial price to the public of $33.75 per share)
  • LGIH +1.3% (Sep closings)

Analyst comments:

  • SNAP +2.5% (upgraded to Equal-Weight from Underweight at Morgan Stanley)
  • TNDM +2.3% (upgraded to Buy from Neutral at UBS)
  • AAPL +1.6% (positive comments from Wedbush analyst Daniel Ives on CNBC)
  • SAM +0.9% (upgraded to Neutral from Sell at UBS)

>>> US Early premarket gappers

Early premarket gappers

Gapping up:

  • MEIP +16.1%, AVYA +11.7%, RNG +6%, GO +1.4%, LGIH +1.3%, ETSY +1.1%, ACAD +1%, AZN +0.6%

Gapping down:

  • OVID -16.8%, HRTX -9.1%, SGH -4.8%, HPQ -3.5%, TERP -3.3%, WLL -2.3%, COST -1.5%, RRC -0.6%

WSJ : Ukraine to Review Investigations Into Firm Linked to Biden’s Son

Ukraine to Review Investigations Into Firm Linked to Biden’s Son
Hunter Biden was a board member at gas company Burisma between 2014 and April 2019

KYIV—Ukraine’s general prosecutor’s office said Friday it is reviewing past investigations into a gas company linked to former U.S. Vice President Joe Biden’s son, raising the possibility of reopening them amid pressure from President Trump.

Any steps toward reopening the cases, or implicating Mr. Biden’s son in the process, would be the strongest signal yet from Kyiv that it will abide by Mr. Trump’s entreaties over the past several months to investigate the company.

The cases, closed in 2016, didn’t focus on Hunter Biden but rather tax irregularities at Burisma Group, one of Ukraine’s biggest private gas-production companies, as well as money-laundering and illegal-enrichment allegations related to the owner of the company, Mykola Zlochevsky.

Hunter Biden was a board member at Burisma between 2014 and April 2019.

Mr. Zlochevsky was never charged and a lawyer for his company said at the time that the cases were closed due to a lack of evidence, and that Mr. Zlochevsky, who he said cooperated on the cases, was exonerated from any allegations of wrongdoing.

The company didn’t immediately respond to a request for comment on Friday.

“Now we are conducting an audit of those proceedings that were previously carried out by the General Prosecutor’s Office,” Ruslan Ryaboshapka, the general prosecutor, said at a press conference in Kyiv. “We are reviewing all cases that were closed…to make a decision on whether this was illegal.”

Mr. Ryaboshapka said his office is auditing 15 cases in total.

During a July 25 phone call, Mr. Trump repeatedly pressured Ukrainian President Volodymyr Zelensky to investigate Mr. Biden’s son, urging him to work with his personal lawyer, Rudy Giuliani.

Mr. Zelensky said during the phone call that the prosecutor general “will look into the situation.” But no formal announcement was made.

Following the call, Mr. Zelensky has said that he wouldn’t abide by pressure from Mr. Trump and stressed the independence of Ukraine’s law-enforcement agencies. Mr. Ryaboshapka was appointed by the president at the end of August.

Democrats have called for the impeachment of Mr. Trump over pressure on his Ukrainian counterpart to launch an investigation into Hunter Biden’s role at Burisma to damage his father, one of Mr. Trump’s main political rivals.

Last week, Ukraine’s National Anti-Corruption Bureau said it was investigating activity at Burisma from 2010-12, before Hunter Biden’s involvement in the company. Parliamentarians have also said they want to look at the cases.

FT : Watchdog considers ban on UK insurers charging loyalty premium

Watchdog considers ban on UK insurers charging loyalty premium
Financial Conduct Authority says about 6m policyholders are overcharged £1.2bn a year

The UK’s financial regulator is weighing whether to ban insurers charging a so-called loyalty premium in an attempt to stop about 6m policyholders in the UK being overcharged about £1.2bn a year.

The Financial Conduct Authority said the market for the pricing of home and motor insurance products “is not working well for all consumers” as it laid out its findings of a sector-wide study on Friday. It is particularly concerned about how customers who do not shop around for products are penalised by higher prices.

The watchdog’s study found that insurers jack up prices for customers unlikely to switch, and make it hard for policyholders to shop around.

In response, it is considering tough measures such as forcing companies to put customers on the cheapest equivalent deal, or making them publish the price differentials between customers, or even an outright ban on raising premiums for policyholders who renew. It will put out its final rules in the first quarter of 2020.

Christopher Woolard, the executive director for strategy at the FCA, said: “This market is not working well for all consumers. While a large number of people shop around, many loyal customers are not getting a good deal. We believe this affects around 6m consumers.”

The watchdog is worried that vulnerable people account for about a third of these policyholders, and that those on lower incomes are paying higher margins for combined contents and building insurance.

The FCA’s study comes after Citizens Advice, a leading consumer charity, made a “super complaint” a year ago to the Competition and Markets Authority over the loyalty penalty that it thought amounted to about £4bn a year across five sectors. Citizens Advice said the mobile, broadband, home insurance, mortgages and savings markets were ripping off loyal customers by about £900 a year.

The FCA said at the time it would support the CMA’s work on the loyalty penalty.