US FINANCIAL MARKET

Stocks Drop as Bank, Economic Worries Lift Bonds: Markets Wrap – Bloomberg, 8/8/2023

• Stocks fell around the world as traders rushed into bonds after a raft of news on China, Italy and the US fanned worries about the financial system and the global economy.
• The S&P 500 fell 1.1%. The Nasdaq 100 fell 1.4%. The Dow Jones Industrial Average fell 1.3%.
• Financial shares bore the brunt of the selling as Moody’s Investors Service downgraded 10 small and midsize American lenders and said it may do the same with a handful of major firms.
• All 24 companies in the KBW Bank Index retreated, with the gauge down about 3.5% — its biggest drop since May.
• Among the lenders that were cut by Moody’s, M&T Bank slid 3.8% and Webster Financial declined 3.2%.
• The firm also adopted a “negative” outlook for 11 banks, including PNC Financial Services Group, which retreated 4%, and Capital One Financial, down 2.3%.
• Italy’s tax on the industry’s profits erased as much as €10 billion ($11 billion) from the value of the country’s banks.
• Commodities got hit on disappointing Chinese trade figures.
• Megacaps remained under pressure, with Microsoft and Amazon.com leading losses in the Nasdaq 100.
• Treasury 10-year yields slid almost 10 basis points to around 4%.
• The bond market is also bracing for the biggest round of refunding auctions since last year.
• The dollar rose against all of its developed-market peers. The Bloomberg Dollar Spot Index rose 0.6%.
• West Texas Intermediate oil slipped to $81 a barrel, while copper hit a one-month low.
• Gold futures fell 0.4% to $1,962.70 an ounce.
• Investors also waded through remarks from Federal Reserve officials. Fed Bank of Richmond President Thomas Barkin said despite the efforts, inflation still remains too high.
• His Philadelphia counterpart Patrick Harker said the Fed may be able to cease rate hikes, barring any surprises in the economy, though rates would need to stay at their current elevated levels for some time.
• In addition to the economic picture. some traders cited the fact that the equity market is also pulling back after a rally that drove the S&P 500 up almost 20% this year.
• Sentiment among stock traders rose in July to the highest levels since the start of the year — a short-term bearish sign that historically has signaled a mild decline for US equities in the coming months.
• Palantir Technologies, the software maker that has for years sold artificial intelligence-powered programs to governments, fell after issuing a sales forecast that disappointed Wall Street.
• Eli Lilly’s shares shot up as sales of its promising weight-loss treatment blew past expectations and a new study raised the prospect that its drug could benefit heart disease as well.
• Dish Network is proposing to buy EchoStar, the satellite network operator it once owned, in an all-stock deal as billionaire Charlie Ergen works to shift his struggling legacy pay-TV business empire toward a future in wireless communications.
• The Stoxx Europe 600 fell 0.4%.

US Bank Shares Drop as Moody’s Cuts Ratings, Warns on Risks – Bloomberg, 8/8/2023

• US bank stocks declined after Moody’s Investors Service lowered its ratings for 10 small and midsize lenders and said it may downgrade major firms including U.S. Bancorp, Bank of New York Mellon, State Street, and Truist Financial.
• Higher funding costs, potential regulatory capital weaknesses and rising risks tied to commercial real estate are among strains prompting the review, Moody’s said late Monday.
• “Collectively, these three developments have lowered the credit profile of a number of US banks, though not all banks equally,” the rating company said.
• “Rising funding costs and declining income metrics will erode profitability, the first buffer against losses,” Moody’s wrote in a separate note explaining the moves.
• “Asset risk is rising, in particular for small and midsize banks with large CRE exposures.”

UPS Cuts Outlook Amid Slowdown in Parcel Volumes – Wall Street Journal, 8/8/2023

• United Parcel Service cut its financial outlook for the year as a slowdown in global delivery volumes continues to hamper the business.
• Revenue in the second quarter slipped nearly 11% from a year earlier to $22.1 billion, missing the $23 billion consensus forecast from analysts polled by FactSet.
• In the U.S. domestic market, average daily package volume fell 9.9% in the June quarter, and the amount of revenue earned per package rose 3.3%.
• Internationally, average daily package volume fell 6.6% over the same period.
• On a per-share basis excluding special items, its profit was $2.42, which also missed analysts’ forecasts.
• UPS said revenue this year would be about $93 billion. Earlier this year, the company said it expected 2023 revenue to be between $97 billion and $99.4 billion, down from $100.3 billion last year.
• The company now expects an adjusted operating margin of around 11.8% this year, down from an earlier guidance of 12.8% to 13.6%.

Fox Revenue Remains Flat Amid Soft Ad Market – Wall Street Journal, 8/8/2023

• Fox’s revenue remained flat in the recently ended quarter, as the soft advertising market weighed on growth.
• The company said revenue for the three months ended June 30 was flat at $3.03 billion, in line with analysts’ expectations.
• Higher revenue from affiliate fees was offset by a 4% decrease in advertising revenues and lower political advertising for Fox TV stations compared with the same period last year.
• In Fox’s cable-network programming business, which houses the Fox Business Network and Fox Sports 1 channel as well as Fox News, revenue fell about 3% as sales from advertising and affiliate fees declined.
• Fox’s television business posted 4% growth in revenue, as a 9% increase in affiliate fees offset a drop in advertising.
• Stripping out one-time items, Fox Corp. reported an adjusted profit of 88 cents a share, topping the 71 cents a share that analysts expected.
• The company also raised its semiannual dividend by a penny to 26 cents a share.

Eli Lilly raises full-year guidance as Mounjaro, other drugs drive second-quarter profit up 85% – CNBC, 8/8/2023

• Eli Lilly on Tuesday raised its full-year guidance as second-quarter profit jumped 85% from the same period a year ago on strong sales from the pharmaceutical giant’s diabetes treatment Mounjaro and other drugs.
• Revenue: $8.31 billion, vs. $7.58 billion expected
• Revenue growth was also driven by sales of breast cancer pill Verzenio, which rose 57% to $926.8 million for the quarter.
• Sales of Jardiance, a tablet that lowers blood sugar in Type 2 diabetes patients, climbed 45% to $668.3 million for the second quarter.
• Newer drugs like Mounjaro, the company’s Type 2 diabetes injection, also fueled revenue growth, posting $979.7 million in sales for the quarter.
• But sales of cancer drug Alimta weighed on revenue.
• The treatment, first launched in 2004, saw sales plunge 73% to $60.9 million for the second quarter.
• Adjusted earnings: $2.11 per share, vs. $1.98 per share expected
• The company now expects full-year revenue of between $33.4 billion and $33.9 billion, up from a previous forecast of $31.2 billion to $31.7 billion.
• Eli Lilly also increased its adjusted earnings guidance to a range of $9.70 to $9.90 per share for the year, up from a range of $8.65 to $8.85.

Lucid Pledges to Reach Output Target Amid Sales Challenges – Bloomberg, 8/8/2023

• Lucid Group assured investors it’s on track to its achieve full-year production target after the maker of luxury electric sedans posted worse-than-expected quarterly results.
• The company’s shares jumped in postmarket trading after Chief Executive Officer Peter Rawlinson said in a statement Monday that Lucid is on pace to manufacture more than 10,000 vehicles this year.
• Revenue of $150.9 million also fell short of expectations.
• The second-quarter loss came to 40 cents a share, or 6 cents deeper than analyst estimates compiled by Bloomberg.
• The company has repeatedly revised its ambitions, most recently saying that it is only expecting to produce near the low-end of its 10,000 to 14,000 vehicle goal for this year.

Datadog’s stock plummets as company whiffs on revenue forecast – Market Watch, 8/8/2023

• Shares of Datadog were tanking in Tuesday’s premarket trading after the software company, which provides observability and security solutions for cloud applications, fell short of its revenue forecast for the balance of the year.
• Revenue increased to $509.5 million from $406.1 million, whereas the FactSet consensus was $501.6 million.
• On an adjusted basis, Datadog earned 36 cents a share, while analysts tracked by FactSet were modeling 28 cents a share.
• For the third quarter, Datadog expects $521 million to $525 million in revenue, along with 33 cents to 35 cents in adjusted earnings per share.
• The FactSet consensus was for $536 million in revenue and 29 cents in adjusted EPS.
• Looking at the full year, executives at Datadog anticipate $2.05 billion to $2.06 billion in revenue and $1.30 to $1.34 in adjusted EPS.
• Analysts had been looking for $2.24 billion in revenue, along with $1.18 in adjusted EPS.

Novavax shares jump after Covid vaccine maker posts surprise quarterly profit – CNBC, 8/8/2023

• Shares of Novavax jumped on Tuesday after the Covid vaccine maker reported a surprise second-quarter profit.
• The biotech company generated second-quarter sales of $424.4 million, up from the $185.9 million from the same period a year ago.
• The company reported R&D expenses of $258 million and SG&A expenses of $162 million last year.
• Earnings per share: 58 cents per share, vs. a loss of $1.39 per share expected
• Novavax on Tuesday lowered its full-year revenue forecast to $1.3 billion to $1.5 billion, down slightly from the $1.4 billion to $1.6 billion guidance provided in May.
• The new guidance does not include $100 million in cash that Canada paid during the second quarter – an amount that “would have been revenue” had the parties completed the transaction, he said.
• Separately on Tuesday, Novavax announced a new strategic partnership agreement with SK bioscience, a South Korea-based biotech manufacturer.
• Novavax CEO Jacobs noted the company will receive royalty payments for sales in those markets and an upfront payment of $4 million from SK bioscience.
• SK bioscience will also purchase $85 million in Novavax common stock at $13 per share, reflecting a 59% premium to the past 90-day trading value.

Palantir Slides as AI Hype Fails to Deliver Strong Sales Outlook – Bloomberg, 8/8/2023

• Palantir Technologies, the software maker that has for years sold artificial intelligence-powered programs to governments, sank by the most in eight months after issuing a sales forecast that disappointed Wall Street.
• Revenue was $533 million, up from $473 million in 2022.
• Adjusted operating income increased by 25% to $135 million.
• Palantir beat analysts’ estimates for second-quarter profit and revenue.
• Palantir’s AI platform now has users across more than 100 organizations, Karp said in a letter to shareholders Monday, and the company is in sales discussions with more than 300 additional enterprises.
• The company’s commercial revenue grew faster in the US than other markets, but came in slightly under analysts’ estimates.
• Its revenue from government clients meanwhile rose 15% to $302 million, beating forecasts of $301.8 million.
• Palantir’s forecast for profits were stronger, with a forecast of $576 million in adjusted income from operations, exceeding Wall Street expectations of $530.3 million, according to estimates compiled by Bloomberg.
• The company announced a stock buyback program of as much as $1 billion.
• The Denver-based firm expects to bring in $2.21 billion in revenue during 2023, falling toward the low end of Wall Street’s estimates.

Paramount to Sell Simon & Schuster to KKR for $1.62 Billion – Wall Street Journal, 8/8/2023

• Paramount Global said it has agreed to sell book publisher Simon & Schuster to private-equity firm KKR for $1.62 billion in cash, a financial boost that the entertainment conglomerate said it would use in part to reduce debt levels.
• The deal comes less than a year after a federal judge in late October 2022 blocked Penguin Random House from acquiring Simon & Schuster for about $2.18 billion, saying the deal would have financially harmed some authors.
• The announcement of the sale comes as Paramount reported second-quarter earnings Monday.
• The company said it swung to a loss of $299 million from a profit of $419 million in the year-earlier period, while revenue fell 2.1% to $7.62 billion.
• The loss was partly caused by nearly $700 million in programming charges, which Paramount said are tied to contract termination costs, development costs sunk into abandoned projects and other impairment charges related to content that the company has decided to remove from its streaming platforms.
• The company said its flagship Paramount+ streaming service gained 700,000 subscribers in the quarter, totaling approximately 61 million.
• Overall, Paramount’s streaming unit lost an adjusted $424 million in the quarter, less than the adjusted $445 million it lost in the year-earlier period.
• The company, home of the CBS broadcast network, cable channels including Comedy Central and Nickelodeon, and the Paramount Pictures movie studio, said its filmed-entertainment unit saw revenue fall sharply to $831 million from $1.36 billion in the year-earlier period, when megahit “Top Gun: Maverick” was released.

Beyond Meat Falls After Backing Away From Cash-Flow Target – Bloomberg, 8/8/2023

• Beyond Meat fell in late trading after the plant-based burger company said it’s unlikely to hit its goal of becoming cash-flow positive in the second half of the year.
• Second-quarter revenue of $102 million fell short of the average analyst estimate compiled by Bloomberg.
• By volume, sales of refrigerated meat alternatives slid 22% in the 52 weeks ending July 16 from the same period a year earlier, according to market-data tracker Circana.
• Frozen meat alternatives fell 10% by the same measure.
• In the US, sales fell in both retail and foodservice, despite some increased discounts and less product being sent to liquidation.
• International sales remained a bright spot, outpacing analysts’ estimates. International foodservice posted a 19% increase in volume of products sold, thanks to fast-food customers in Europe, the company said.
• As of July 1, the company had $211 million of cash on hand — down from the $259 million reported the previous quarter.
• The company reported weakness in the US market and trimmed its 2023 revenue outlook to a range of $360 million to $380 million, down from a previous range of as much as $415 million.
• “With respect to the company’s previously stated target of achieving cash-flow positive operations within the second half of 2023, in light of greater-than-expected consumer and category headwinds and their anticipated impact on net revenues, the company now believes this is unlikely to be met in the stated timeframe,” Beyond Meat said.

Restaurant Brands’ sales rise, fueled by Burger King and Tim Hortons growth – CNBC, 8/8/2023

• Restaurant Brands International on Tuesday reported double-digit same-store sales growth at Burger King and Tim Hortons for its second quarter.
• Revenue: $1.78 billion vs. $1.75 billion expected
• Restaurant Brands’ same-store sales climbed 9.6% in the quarter, driven by strong growth at Tim Hortons and Burger King.
• Tim Hortons, which accounts for more than half of Restaurant Brands’ revenue, reported same-store sales growth of 11.4%, topping StreetAccount estimates of 6.5%.
• The coffee chain’s same-store sales climbed 12.5% in its Canadian home market.
• Burger King’s same-store sales rose 10.2%, beating estimates of 5.3%.
• Popeyes saw same-store sales growth of 6.3%, topping expectations of 3.5%.
• Firehouse Subs, the most recent addition to Restaurant Brands’ portfolio, reported same-store sales growth of 2.1%.
• The company’s international markets and Tims’ locations in Canada saw customer visits increase during the quarter, Restaurant Brands CEO Josh Kobza told CNBC.
• However, U.S. traffic ranged from flat to “a little bit negative” across Popeyes, Burger King and Firehouse Subs.
• Earnings per share: 85 cents adjusted vs. 77 cents expected

Coterra Energy quarterly profit slumps as gas prices tumble – Reuters, 8/8/2023

• U.S. oil and gas producer Coterra Energy joined its peers in posting a sharp drop in quarterly profit on Monday, as gas prices scaled back from last year’s peaks, sending its shares down about 2% in extended trading.
• Excluding hedges, Houston-Texas based Coterra’s average realized price for natural gas fell 71.5% to $1.65 per thousand cubic feet from a year earlier.
• Total production rose 5.2% to 665,000 barrels of oil equivalent per day (boepd) for the reported quarter, aided by strong well performances.
• On an adjusted basis, the company reported earnings of 39 cents, ahead of analysts’ estimate of 34 cents, according to Refinitiv data.
• It also forecast third-quarter production in the range of 625,000 to 655,000 boepd.

Barrick Gold 2Q Profit Slides as Costs Mount, Output Declines – Market Watch, 8/8/2023

• Barrick Gold on Tuesday reported a decline in second-quarter profit, weighed down by lower production and higher costs in the period.
• Barrick Gold reported sales in the period edged lower to $2.83 billion from $2.86 billion, which missed analyst expectations of a rise to $2.9 billion.
• Adjusted earnings were also lower, falling to 19 cents a share from 24 cents a share while analysts polled on FactSet expected a greater decline to 17 cents.
• Gold production was lower, at 1.01 million ounces from 1.04 million ounces a year earlier while the all-in sustaining cost rose 12% to $1,355 an ounce from $1,212 an ounce.
• Realized gold prices were higher, however, at $1,972 an ounce from $1,861 an ounce.
• Copper production was also lower, declining 11% to 101 million pounds, and all-in sustaining costs rose to $3.13 a pound compared with $2.87 a pound.

Under Armour ekes out profit instead of expected loss as revenue tops estimates – Market Watch, 8/8/2023

• Under Armour blew past earnings estimates for its fiscal first quarter on Tuesday, posting a small profit instead of an expected loss, and said it was making no changes to the guidance provided in May.
• Revenue fell to $1.317 billion from $1.349 billion a year ago.
• The Baltimore-based sporting goods retailer said it had net income of $8.549 million, or 2 cents a share, for the quarter to June 30, up from $7.682 million, or 2 cents a share, in the year-earlier period.
• The FactSet consensus was for a loss of 2 cents a share and revenue of $1.294 billion.
• “Based on this performance, we are maintaining our outlook for fiscal 2024.” The company is still expecting fiscal 2024 revenue to be flat to slightly higher and for EPS to range from 47 cents to 51 cents. T

Dish to Buy EchoStar as Ergen’s TV Empire Shifts to Wireless – Bloomberg, 8/8/2023

• Dish Network is proposing to buy EchoStar, the satellite network operator it once owned, in an all-stock deal as billionaire Charlie Ergen works to shift his struggling legacy pay-TV business empire toward a future in wireless communications.
• Every share of EchoStar will be converted into 2.85 shares of Dish, representing a premium of 12.9% for EchoStar stockholders, according to a company statement issued Tuesday.
• Existing Dish investors will own about 69% of the merged company.
• The merger reunites EchoStar with its former parent, which spun off the business in 2008.
• EchoStar has $702 million in cash and $1.5 billion in debt as of June.
• The company provides satellite services including secure communications technologies through its Hughes Network Systems and EchoStar Satellite Services businesses, its website shows.

Goldman Sachs CEO Brings Back Blankfein Confidant in Key Internal Role – Bloomberg, 8/8/2023

• Goldman Sachs Group is turning to a longtime Lloyd Blankfein confidant as the Wall Street giant grapples with internal bickering and dissatisfaction in the ranks.
• Russell Horwitz will take over as chief of staff from John Rogers in a role that has been used to build consensus in top management and help maintain Goldman’s clout in government circles.
• Both Horwitz and Rogers have been known for their willingness to be critical of management missteps and for fostering close connections in Washington.
• Rogers will maintain some of his roles, including his perch as an adviser to Goldman’s board of directors.
• A key adviser to the investment bank’s top leaders, Horwitz was once described by Blankfein, the New York-based company’s former CEO, as the most important person at the firm whose role nobody knows.

Obesity Drug Wegovy Cuts Risk of Heart Attacks and Strokes by 20%, Study Shows – Bloomberg, 8/8/2023

• Novo Nordisk’s blockbuster obesity medicine Wegovy reduced the risk of heart attacks and strokes in a highly anticipated study, buoying shares of the Danish drugmaker and the US maker of a potential rival treatment, Eli Lilly.
• People with obesity or overweight and a history of heart issues taking the Novo drug were 20% less likely to suffer a cardiovascular event than those who took a placebo, the Danish drugmaker said on Tuesday.
• Lilly surged in early trading after the company raised its outlook on the back of stronger-than-expected sales of Mounjaro, a diabetes drug that’s expected to be approved for obesity soon.
• Sales of that treatment hit nearly $1 billion in the latest quarter.

Wall Street to Pay Hundreds of Millions More in WhatsApp Cases – Bloomberg, 8/8/2023

• Wells Fargo and BNP Paribas are among firms that will pay hundreds of millions of dollars total in penalties for employees using unofficial communications like WhatsApp to conduct business — the latest salvo in US regulators’ crackdown on how Wall Street keeps records.
• Wells Fargo units agreed to pay $125 million to the Securities and Exchange Commission and BNP will pay $35 million, the regulator said on Tuesday.
• Meanwhile, the two lenders will pay $75 million each over similar violations by their derivatives brokerage units, the Commodity Futures Trading Commission said.
• In all, the CFTC announced penalties of $260 million, while the SEC said that firms had agreed to pay it $289 million.

US ECONOMY & POLITICS

US wholesale inventories revised lower in June – Reuters, 8/8/2023

• U.S. wholesale inventories fell more than initially estimated in June, which could have implications for the second-quarter gross domestic product estimate.
• The Commerce Department said on Tuesday that wholesale inventories dropped 0.5% instead of falling 0.3% as previously reported last month.
• Stocks at wholesalers declined 0.4% in May.
• Economists polled by Reuters had expected that inventories would be unrevised.
• They increased 1.3% on a year-on-year basis in June.
• Wholesale motor vehicle inventories increased 1.1% in June after advancing 1.6% in May.
• There were big decreases in wholesale stocks of metals, lumber, petroleum, farm products, apparel and chemicals.
• Excluding autos, wholesale inventories fell 0.7% June.
• Sales at wholesalers decreased 0.7% after dropping 0.5% in May.
• At June’s sales pace it would take wholesalers 1.41 months to clear shelves, up from 1.40 in May.

Harker Says Fed May Now Be at Point Where It Can Hold Steady – Bloomberg, 8/8/2023

• Federal Reserve Bank of Philadelphia President Patrick Harker said the US central bank may be able to cease interest-rate increases, barring any surprises in the economy, though rates would need to stay at their current elevated levels for some time.
• “Absent any alarming new data between now and mid-September, I believe we may be at the point where we can be patient and hold rates steady and let the monetary policy actions we have taken do their work,” Harker, who holds a vote on policy decisions this year, said Tuesday in remarks prepared for an event organized by the Philadelphia Business Journal.
• “Should we be at that point where we can hold steady, we will need to be there for a while,” Harker said.
• “I do not foresee any likely circumstance for an immediate easing of the policy rate.”
• Harker said he expects the Fed’s preferred measure of core inflation, based on the personal consumption expenditures price index, to fall to an annual rate slightly below 4% by the end of 2023, and to below 3% by next year, reaching the Fed’s 2% target in 2025.
• “I expect only a modest slowdown in economic activity to go along with a slow but sure disinflation,” he said.
• “In other words, I do see us on the flight path to the soft landing we all hope for and that has proved quite elusive in the past.”
• Speaking elsewhere on Tuesday, Richmond Fed President Thomas Barkin argued it was too soon to say whether another rate increase at the Fed’s next meeting in September would be appropriate.
• “I’m leaning toward waiting until September to decide,” Barkin, who does not vote on policy decisions this year, said after an event at the Loudoun County Chamber of Commerce in Virginia.
• “We’ll get two labor reports, we’ll get two inflation reports, including one that’s coming Thursday. I don’t see any reason to pre-judge.”
• Barkin also acknowledged the strength in recent economic data, saying that the labor market in particular has been “remarkably resilient.”

US trade deficit shrinks as imports hit more than 1-1/2 year low – Reuters, 8/8/2023

• The U.S. trade deficit narrowed sharply in June as businesses cut back on purchases of foreign-made capital goods, resulting in imports falling to the lowest level in more than 1-1/2 years.
• The trade deficit contracted 4.1% to $65.5 billion.
• Data for May was revised to show the trade gap narrowing to $68.3 billion instead of $69.0 billion as previously reported.
• Economists polled by Reuters had forecast the trade deficit shrinking to $65 billion.
• Imports of goods and services declined 1.0% to $313.0 billion, the lowest level since November 2021.
• Goods imports tumbled 1.2% to $253.3 billion, the lowest level since October 2021.
• Capital goods dropped $2.3 billion, with imports of computers decreasing $1.6 billion.
• Imports of industrial supplies and materials, which include crude oil, fell $2.2 billion to the lowest level since May 2021.
• June petroleum imports were the lowest in nearly two years.
• But the nation boosted imports of motor vehicles, engines and parts, which increased $1.3 billion to a record high.
• Consumer goods imports edged up $0.4 billion as an increase in pharmaceutical preparations was offset by a decline in artwork and other collectibles.
• Imports of services decreased $0.2 billion to $59.7 billion.
• Exports dipped 0.1% to $247.5 billion.
• Goods exports also slipped 0.1% to $165.1 billion.
• Exports of industrial supplies and materials declined $0.7 billion to the lowest level since September 2021.
• Decreases in crude oil, fuel oil and natural gas liquids more than offset increases in exports of nonmonetary gold and other chemicals. Petroleum exports were the lowest since October 2021
• Consumer goods exports fell $0.4 billion, led by a decline in pharmaceutical preparations.
• Capital goods increased $0.8 billion, lifted by shipments of industrial machinery and telecommunications equipment.
• Exports of civilian aircraft dropped $0.8 billion.
• Services exports decreased $0.2 billion to $82.3 billion.

Storms in Eastern U.S. Knock Out Power for Thousands, Disrupt Air Travel – Wall Street Journal, 8/8/2023

• At least two people died as powerful storms ripped through the Eastern U.S. Monday, resulting in hundreds of thousands of power outages and disrupting air travel.
• A 15-year-old boy from Anderson, S.C., died after a large tree fell on him shortly after he arrived at his grandparent’s house Monday, the Anderson County Coroner’s Office said.
• A 28-year-old man was struck by lightning during the storm Monday and died, the Florence Police Department in Alabama said.
• The storms carried hail and lightning to communities across the Eastern U.S. and resulted in hundreds of thousands of power outages Monday.
• The National Weather Service warned residents across the mid-Atlantic of large hail, damaging winds and the potential for tornadoes.
• By Tuesday morning, about 300,000 customers were without power across Pennsylvania, North Carolina, Maryland, Tennessee and Georgia, according to data from PowerOutage.us.
• The Knoxville Utilities Board in Knoxville, Tenn., said about 8,000 customers remained without power Tuesday morning, down from more than 56,000 Monday afternoon.
• Remaining repairs may take several days to complete, the utility said.

EUROPE & WORLD

China’s Trade Plunges More Than Forecast in Blow to Recovery – Bloomberg, 8/8/2023

• China’s trade plunged in July as slowing global demand clouded the outlook for exports, while domestic pressures weighed on imports in a hit to the economic recovery.
• Overseas shipments dropped 14.5% in dollar terms last month from a year earlier — the worst decline since February 2020 — while imports contracted 12.4%, the customs administration said Tuesday.
• That left a trade surplus of $80.6 billion for the month.
• Among the worst-hit regions due to China’s falling demand were South Korea, Japan, Taiwan, South Africa and Canada, which dropped by double-digit rates.
• That indicated subdued appetite for electronic products and minerals.
• Imports from the US fell 11.2%, while those from the EU were down 3%.
• Shipments to the US plummeted 23.1% in July, according to the customs data. Exports to other markets including Japan, South Korea, Taiwan, Asean, the EU, Brazil and Australia all dropped by double digit percentages, too.

SoftBank Plans Fresh AI Bets After First Investment Gains in 18 Months – Wall Street Journal, 8/8/2023

• SoftBank Group posted its first investment gains in a year and a half and said it would cautiously press ahead with new bets in artificial-intelligence-related fields.
• The Japanese technology investor reported $1 billion in investment gains at its flagship Vision Fund unit during the April-June quarter, a result that Chief Financial Officer Yoshimitsu Goto said encouraged the company to look for new places to park its money.
• In a sign of improving market conditions, the company said the number of companies in its Vision Fund 1, Vision Fund 2 and Latin American funds whose value increased during the latest quarter nearly doubled from the previous quarter.
• The Vision Fund unit made investments valued at $1.8 billion in the quarter, compared with $500 million in each of the previous three quarters.
• Overall, SoftBank reported a net loss of 477.6 billion yen, equivalent to about $3.3 billion, for the quarter ended June 30.
• The yen’s weakness inflated the company’s dollar-denominated debt, while revenue at chip designer ARM declined amid a slowdown in the semiconductor industry.
• On Tuesday, Vision Fund Chief Executive Officer Navneet Govil said Vision Fund 2 still has about $8 billion for new investments.

Li Auto beats on earnings, but stock moves lower – Market Watch, 8/8/2023

• Li Auto topped earnings expectations Tuesday, but shares of the Chinese electric-vehicle company were falling about 2% in premarket action.
• Revenue rose to RMB28.65 billion from RMB8.73 billion a year before, while analysts were modeling RMB26.74 billion.
• The company posted adjusted earnings of RMB2.58 per ADS, while the FactSet consensus was for RMB1.76 per ADS.
• The company delivered 86,533 vehicles in the period, up more than 200% from a year before.

U.S.-Made Cluster Munitions Fuel Ukrainian Counteroffensive – Wall Street Journal, 8/8/2023

• Newly delivered, American-made cluster munitions have given fresh impetus to Ukraine’s campaign to retake territory captured by Russia, after weeks of little progress.
• Ukrainian soldiers say they have used the cluster bombs—which release dozens of smaller bomblets and can cause devastation over a broader area than ordinary artillery shells—to hit concentrations of Russian infantry, groups of vehicles and other targets, clearing the way for ground advances.
• Kyiv’s counteroffensive operations have struggled in the face of wide minefields and Moscow’s superior air power, which have impeded large-scale efforts to use Western-supplied tanks and armored vehicles to reach and punch through lines of entrenched Russian forces.
• While the cluster bombs alone won’t tilt the battlefield balance of power decisively in Ukraine’s favor, soldiers say they have helped them retake Russian positions that they had struggled to reach.
• The munitions have been coupled with a change in tactics, which has allowed Ukrainian troops to advance to within striking distance of the main Russian defensive lines in some places.

Anheuser-Busch Selling Shock Top, Blue Point to Cannabis Company Tilray – Wall Street Journal, 8/8/2023

• Anheuser-Busch is selling eight beer and beverage brands, including Shock Top and Blue Point, to the cannabis company Tilray Brands for an undisclosed amount.
• The cannabis company’s acquisition also includes brands such as Breckenridge Brewery, Redhook Brewery and HiBall Energy, among others.
• The transaction includes breweries and brewpubs associated with these brands, as well as current employees.
• The purchase price will be paid in cash and the transaction is expected to close this year, Tilray said.

China Drafts Rules for Facial-Recognition Use – Wall Street Journal, 8/8/2023

• China released draft rules on Tuesday to curb uses of facial recognition, taking a step to limit the expansion of a polarizing technology while leaving large carve outs for national-security-related uses.
• The draft from the internet regulator, the Cybersecurity Administration of China, proposes to restrict the use of the technology to instances where it has a specific purpose and is sufficiently necessary.
• The rules also ban the use of the technology for identifying race, ethnicity, religious belief or health status—applications that haven’t been scientifically proven—unless a person has given consent or for the purposes of national security.
• The stipulations bring China’s stance on private and commercial uses of facial recognition closer to Western norms, including rules proposed in the European Union and by local governments in the U.S.
• It also leaves exceptions for national-security-related uses of the technology, a common feature among China’s data and security regulations.

China’s Property Ills Worsen as Former Biggest Builder Wobbles – Bloomberg, 8/8/2023

• Chinese developer Country Garden Holdings’s stock and bonds plunged as noteholders said they haven’t received coupon payments effectively due Monday, further darkening sentiment in the crisis-stricken property sector.
• Some holders of two different notes said they didn’t receive coupon payments as of Tuesday afternoon.
• The company owed $10.5 million of interest on a dollar bond that matures in 2026 and $12 million on a note due 2030, according to data compiled by Bloomberg.
• Both bonds have a 30-day grace period before a missed coupon payment can constitute a default, according to the notes’ prospectuses.

Factmonster – TODAY in HISTORY

• English forces attacked the Spanish Armada, permanently crippling Spain’s “invincible” fleet. – 1588
• Michael-Gabriel Paccard and Jacques Balmat became the first to climb Mont Blanc. – 1786
• Thomas Edison patented the mimeograph machine. – 1876
• In “The Great Train Robbery,” some 15 thieves robbed the Glasgow-to-London mail train, making off with more than $6 million in cash. – 1963
• Sharon Tate, wife of director Roman Polanski, and four others were murdered by members of Charles Manson’s “family.” – 1969
• President Nixon announced he would resign the following day as a result of the Watergate scandal. – 1974

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