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  • Hollywood writers strike declared over after boards approve new contract with studios

    Hollywood writers strike declared over after boards approve new contract with studios

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    LOS ANGELES — Leaders of the screenwriters union declared their nearly five-month-old strike over Tuesday after board members approved a contract agreement with studios, bringing Hollywood at least partly back from a historic halt in production.

    The governing boards of the eastern and western branches of the Writers Guild of America and their joint negotiating committee all voted to accept the deal, two days after the tentative agreement was reached with a coalition of Hollywood’s biggest studios, streaming services and production companies. After the vote they declared that the strike would be over and writers would be free to start on scripts at 12:01 a.m. Wednesday.

    Late-night talk shows — the first to go dark when writers walked out on May 2 — are likely the first shows that will resume. Scripted shows will take longer to return, with actors still on strike and no negotiations yet on the horizon.

    The writers still have to vote to ratify the contract themselves in early October, but lifting the strike will allow them to work during that process, the guild told members in an email.

    After Tuesday’s board votes, the contracts were released for the first time to the writers, who had not yet been given any details on the deal, which their leaders called “exceptional.”

    The three-year agreement includes significant wins in the main areas writers had fought for — compensation, length of employment, size of staffs and control of artificial intelligence — matching or nearly equaling what they had sought at the outset of the strike.

    The union had sought minimum increases in pay and future residual earnings from shows of between 5% and 6%, depending on the position of the writer. The studios had wanted between 2% and 4%. The compromise deal was a raise of between 3.5% and 5%.

    The guild also negotiated new residual payments based on the popularity of streaming shows, where writers will get bonuses for being a part of the most popular shows on Netflix
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    Max and other services, a proposal studios initially rejected. Many writers on picket lines had complained that they weren’t properly paid for helping create heavily watched properties.

    The writers also got the requirement they sought that shows intended to run at least 13 episodes will have at least six writers on staff, with the numbers shifting based on the number of episodes. They did not get their desire for guaranteed staffs of six on shows that had not yet been ordered to series, settling instead for a guaranteed three.

    Writers also got a guarantee that staffs on shows in initial development will be employed for at least 10 weeks, and that staffs on shows that go to air will be employed for three weeks per episode.

    On artificial intelligence, the writers got the regulation and control of the emerging technology they had sought. Under the contract, raw, AI-generated storylines will not be regarded as “literary material” — a term in their contracts for scripts and other story forms a screenwriter produces. This means they won’t be competing with computers for screen credits. Nor will AI-generated stories be considered “source” material, their contractual language for the novels, video games or other works that writers may adapt into scripts.

    Writers have the right under the deal to use AI in their process if the company they are working for agrees and other conditions are met. But companies cannot require a writer to use AI.

    Still-striking members of the Screen Actors Guild-American Federation of Television and Radio Artists returned to the picket lines earlier Tuesday for the first time since the writers struck their tentative deal, and they were animated by a new spirit of optimism.

    “For a hot second, I really thought that this was going to go on until next year,” said Marissa Cuevas, an actor who has appeared on the TV series “Kung Fu” and “The Big Bang Theory.” “Knowing that at least one of us has gotten a good deal gives a lot of hope that we will also get a good deal.”

    Writers’ picket lines had been suspended, but they were encouraged to walk in solidarity with actors, and many were on the lines Tuesday, including “Mad Men” creator Matthew Weiner, who picketed alongside friend and “ER” actor Noah Wyle as he has throughout the strikes.

    “We would never have had the leverage we had if SAG had not gone out,” Weiner said. “They were very brave to do it.”

    The Alliance of Motion Picture and Television Producers, which represents the studios in negotiations, chose to deal with the longer-striking writers first, and leaders of SAG-AFTRA said they had received no overtures on resuming talks. That’s likely to change soon.

    Actors also voted to authorize their leadership to potentially expand their walkout to  include the lucrative videogame market, a step that could put new pressure on Hollywood studios to make a deal with the performers who provide voices and stunts for games.

    The Screen Actors Guild-American Federation of Radio and Television Artists announced the move late Monday, saying that 98% of its members voted to go on strike against videogame companies if ongoing negotiations are not successful. The announcement came ahead of more talks planned for Tuesday.

    Acting in videogames can include a variety of roles, from voice performances to motion capture work as well as stunts. Video game actors went on strike in 2016 in a work stoppage that lasted nearly a year.

    Some of the same issues are at play in the video game negotiations as in the broader actors strike that has shut down Hollywood for months, including wages, safety measures and protections on the use of artificial intelligence. The companies involved include gaming giants Activision Blizzard
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    Electronic Arts
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    -1.13%
    ,
    Epic Games, Take 2 Productions
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    -0.99%

    as well as Disney
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    -1.19%

    and Warner Bros.′
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    videogame divisions.

    “It’s time for the videogame companies to stop playing games and get serious about reaching an agreement on this contract,” SAG-AFTRA President Fran Drescher said in a statement.

    Audrey Cooling, a spokesperson for videogame producers, said they are “continuing to negotiate in good faith” and have reached tentative agreements on more than half of the proposals on the table.

    So far this year, U.S. consumers have spent $34.9 billion on videogames, consoles and accessories, according to market research group Circana.

    The threat of a videogame strike emerged as Hollywood writers were on the verge of getting back to work after months on the picket lines.

    The alliance of studios, streaming services and producers has chosen to negotiate only with the writers so far, and has made no overtures yet toward restarting talks with SAG-AFTRA. That will presumably change soon.

    SAG-AFTRA leaders have said they will look closely at the writers’ agreement, which includes many of the same issues, but it will not effect their demands.

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  • Manufacturing stalled in the first half. But now the stage is set for a recovery, says JPMorgan.

    Manufacturing stalled in the first half. But now the stage is set for a recovery, says JPMorgan.

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    The Institute for Supply Management’s manufacturing index is due for release Tuesday, which outside of inflationary periods (i.e., now), tends to be one of the more important economic indicators for financial markets, given its record as a bellwether.

    ISM manufacturing data during the current rate-hike cycle (in red) has lagged other periods.

    Even compared to other rate-hike cycles, the ISM manufacturing series has been one of the worst in history, points out Jason Daw, head of North America rates strategy at RBC Dominion Securities. Daw makes the case that the U.S. economy overall is not very strong for this period of the cycle, and the manufacturing data, not just ISM but also industrial production, has been particularly feeble.

    But the call of the day comes from JPMorgan’s economic team. They note that while global manufacturing stalled in the first half, the non-manufacturing components rose at a 3.2% annualized rate, allowing the global economy to grow at an above trend 2.7% rate.

    The team led by Bruce Kasman say that the typical channels through which weak manufacturing would bring down the broader economy haven’t materialized. “A major channel by which weakness in goods sectors broadens out is through depressing corporate income and pricing power. While our start-of-year outlook anticipated elevated wage gains to pressure corporate profits, the surprising strength in [first-half] global GDP was accompanied by upside surprises to inflation,” they say. In turn, there have been solid gains in both labor income and profits, and while margins have come off their peaks, they are well above pre-pandemic levels.

    Business hiring, they add, is the ultimate signal of confidence, and employment growth has continued even though expectations have soured.

    Now, say the JPMorgan team, the stage is set for a goods sector recovery. Labor income, when adjusted for inflation, is rising, while finished goods inflation is falling sharply.

    Also, business capital spending continues to expand, particularly in emerging economies outside of China. And importantly, inventories are swinging from a drag to a lift. In the first half, the step down in the pace of stock building depressed global industrial production by 3.4 percentage points.

    “Even if the pace of stockbuilding was only to level off, the impulse to global industry would be material. Add to that a potential desire to align the pace to firming demand growth and the boost could generate a jump in factory output in the coming months,” they say.

    Finally, they note, the tech spending decline after the 2020 to 2021 surge looks to be ending, and global motor vehicle production is picking up as supply-chain bottlenecks ease.

    The markets

    After an okay finish for the S&P 500
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    -0.29%

    to a strong July, U.S. stock futures
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    -0.36%

    NQ00,
    -0.42%

    were a bit lower as the seasonally weak month of August commenced. Gold futures
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    -1.28%

    were trading below $2,000 an ounce. The dollar
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    +0.42%

    rose.

    For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

    The buzz

    The ISM report is due out at 10 a.m. Eastern, when the job openings and construction spending reports also come out. Monthly auto sales also will be released throughout the day.

    Pfizer
    PFE,
    -0.03%
    ,
    Caterpillar
    CAT,
    +4.05%
    ,
    Uber Technologies
    UBER,
    -3.96%

    and after the close, Starbucks
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    -0.35%

    and Electronic Arts
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    -0.61%

    highlight the day’s earnings reports. Pfizer lowered its sales guidance while Caterpillar beat Wall Street earnings estimates and Uber reported a surprise profit.

    JetBlue Airlines stock
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    -8.56%

    slumped as the airline says it no longer expects to report a profit in the third quarter, owing to what it called a challenging environment in the northeast, as well as a preference by consumers for long-haul international flights.

    CVS Health
    CVS,
    +0.48%

    is going to cut 5,000 corporate jobs, according to The Wall Street Journal.

    Best of the web

    BlackRock
    BLK,
    -0.56%

    and MSCI
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    -0.42%

    are targets of a Congressional probe into facilitating U.S. investment in China.

    The first new U.S. nuclear reactor in nearly seven years starts operations.

    Modern-day Oppenheimers see the future of nuclear energy — and it’s mobile.

    Top tickers

    Here were the most active stock-market tickers as of 6 a.m. Eastern.

    Ticker

    Security name

    TSLA,
    -1.13%
    Tesla

    TUP,
    +14.28%
    Tupperware Brands

    NIO,
    -4.97%
    Nio

    AMC,
    -0.27%
    AMC Entertainment

    PLTR,
    -2.60%
    Palantir Technologies

    GME,
    -1.80%
    GameStop

    NVDA,
    -0.74%
    Nvidia

    AAPL,
    -0.15%
    Apple

    NKLA,
    +14.79%
    Nikola

    AMSC,
    +54.02%
    American Superconductor

    The chart

    The inflation-adjusted equity premium is looking pretty bleak. That’s calculated by taking the expected return to the S&P 500 and subtracting 10-year TIPS yields. “While admittedly this graphic is skewed by the few megacaps trading at huge multiples, it’s sobering nonetheless,” says Michael Ashton, better known as the Inflation Guy.

    Random reads

    Granted, Philadelphia’s a big sports town, but there were actual tailgates to get the Eagles’ throwback Kelly green jerseys that went on sale.

    A Chinese zoo has denied that a bear is human after video of the creature standing on two feet.

    Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

    Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.

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  • Amazon and Apple to headline Q2 earnings this week

    Amazon and Apple to headline Q2 earnings this week

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    When Amazon.com Inc. and Apple Inc. report quarterly results on Thursday, we’ll get a look at two big companies, with big expectations, trying to do smaller things — or at least less exciting things, or things that might be more inconveniencing to customers — to stay bigger.

    For Apple
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    +1.35%
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    D.A. Davidson analyst Tom Forte said, the focus will be on the iPhone, as always, as well as demand abroad and a new VR headset, as its stock hovers near record highs and its market value holds above $3 trillion. And he said that Amazon
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    meanwhile, could face questions about the impact of cost cuts on e-commerce growth, and what AI could do to boost slower growth in its cloud business.

    The results from those companies, which are big enough to make or break a single quarter’s worth for the S&P 500 Index
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    will follow those from the other tech giants like Microsoft Corp.
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    +2.31%

    and Facebook parent Meta Platforms Inc.
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    .
    And they’ll arrive as Wall Street starts to get a tad more realistic about AI: Microsoft shares fell after management said the expansion of its AI capabilities would be “gradual” — and gradually more expensive.

    D.A. Davidson analyst Tom Forte, in a research note this month, said Amazon, like other big tech companies, was taking more steps to control its costs. That might help margins, he said. But he said he’d be watching for any impact to e-commerce sales growth, following thousands of layoffs and pulling back on its expansion of Amazon Fresh.

    Amazon began tacking on servicing fees onto some Amazon Fresh delivery orders this year. And Forte noted what he said were other tweaks to service: Charging for a home pickup of a defective smoke alarm that used to be free, and incentives to wait longer during Prime Day.

    “In our view, Amazon is playing a ‘game of chicken’ and banking on other e-commerce companies not to offer a superior service, instead of its historical approach of working backwards with a customer-obsessed approach,” D.A. Davidson analyst Tom Forte said in a research note.

    He added later: “We believe there is something to be said about the experience of having an Amazon-branded delivery vehicle show up at your house EVERY day. Having one show up once a week or twice is not the same.”

    At Apple, Forte said in a separate note, the iPhone, whose sales were still solid, had turned into more of a consumer staple than a discretionary buy. He also said he’d be looking for more detail about the upcoming iPhone 15 — likely to be modestly fancier than previous iPhones — the recovery in China and growth in India. Apple last month also unveiled its Vision Pro VR headset — for $3,499. Forte said he had his doubts.

    “We believe Apple will have to overcome a number of structural challenges to achieve mass adoption for its AR/VR headset,” he said.

    This week in earnings

    Apple and Amazon will report as more companies than normal report quarterly profit ahead of estimates, according to a FactSet report on Friday. For the week ahead, 170 S&P 500 companies report results, with four from the Dow, the repot said.

    Results from Uber Technologies Inc.
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    +3.28%

    and DoorDash Inc.
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    +4.20%

    will offer an update on the gig economy and how far app-based deliveries can go, while results from Kraft Heinz Inc.
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    -0.11%

    will offer an update on food prices and how much they might ease from the highs seen in recent months.

    With the “Barbie” movie lifting rival Mattel Inc.
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    -2.40%
    ,
    results from Hasbro Inc
    HAS,
    -0.29%

    during the week will offer a glance at the rest of the toy industry, where demand hasn’t exactly been great, and what entertainment options Hasbro has up its sleeve to keep apace with its archrival. Drug maker Pfizer Inc.
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    -0.36%

    reports, as does video-game maker Electronic Arts Inc.
    EA,
    +0.25%
    .
    Starbucks Corp.
    SBUX,
    +0.47%

    reports as well.

    The call to put on your calendar

    “Barbie,” the Hollywood strike and Warner Bros. Discovery: Mattel has said it wants to turn “Barbie” into a content franchise. Now we’ll hear what Warner Bros. Discovery Inc.
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    +4.07%
    ,
    the media conglomerate that produced the film, thinks about the film’s results and its prospects, as studios increasingly pump out sequels or offshoots of well-known, established character universes like “Star Wars,” Marvel and DC. The company — which reports oversees Warner Bros. CNN, TNT and the streaming service Max — reports quarterly results on Thursday. But even as “Barbie” and “Oppenheimer” carry the parts of the entertainment industry that are still functioning through the Hollywood strike, Wall Street will likely be focused on contingency plans, and any sense of whether more viewers are turning to streaming with productions on pause.

    The number to watch

    Payments and crypto volumes: Results this week from trading app Robinhood Markets Inc.
    HOOD,
    +4.09%

    and crypto exchange Coinbase Global Inc.
    COIN,
    +2.23%
    ,
    along with PayPal Holdings Inc.
    PYPL,
    +2.71%

    and Block
    SQ,
    +3.42%
    ,
    will land at the intersection of rebounding markets and job-market concerns.

    UBS analysts predicted solid growth and cost control for Block, and “steady” e-commerce trends for PayPal. But BofA analysts said PayPal’s search for a new chief executive, following the announcement of Dan Schulman’s retirement at the end of the year, would become more important, adding that “we think investors should rightfully expect the CEO search to conclude in the near-term.” While Bitcoin’s rebound helped Coinbase, the company and others in the industry face the prospect of tougher regulations. Robinhood and PayPal report on Wednesday. Coinbase and Block report on Thursday.

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  • U.S. stocks struggle for direction as traders digest inflation data in April

    U.S. stocks struggle for direction as traders digest inflation data in April

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    U.S. stock indexes were little changed in choppy trade on Wednesday after data showed U.S. consumer price inflation cooled to the lowest annul rate in two years in April, though the core inflation, which excludes food and energy prices, remained high.

    How are stock-indexes trading

    On Tuesday, the Dow Jones Industrial Average fell 57 points, or 0.17%, to 33562, the S&P 500 declined 19 points, or 0.46%, to 4119, and the Nasdaq Composite dropped 77 points, or 0.63%, to 12180.

    What’s driving markets

    Stocks…

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  • EA laying off 6% of staff in cost-cutting push for videogame publisher

    EA laying off 6% of staff in cost-cutting push for videogame publisher

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    Electronic Arts Inc. on Wednesday announced intentions to slash 6% of its workforce as the videogame publisher looks to cut costs.

    “As we drive greater focus across our portfolio, we are moving away from projects that do not contribute to our strategy, reviewing our real estate footprint, and restructuring some of our teams,” Chief Executive Andrew Wilson said in a note to employees that was also shared publicly.

    Wilson…

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