The fortunes of
Apple
the world’s largest public company, have a tendency to lead around much of the rest of the stock market. After the tech giant’s woes contributed to widespread declines last week, investors can now breath…
Tag: Regulation/Government Policy
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Apple Stock Is Rising. Tech Names From Tesla to Nvidia Can Breathe a Sigh of Relief.
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Canopy Growth stock soars on heavy volume again, amid cannabis investor optimism over possible favorable legislation
Shares of Canopy Growth Corp.
CGC,
+22.61%
shot up 21.7% toward a near four-month high in very active afternoon trading, putting them on track for the fifth double-digit percentage gain in seven sessions. The stock has rocketed 130% over the past seven session. Trading volume was 107.7 million shares as of Friday afternoon, to mark the fourth 100+-million-share volume day in the past six sessions, while the average volume over the past 30 days was about 36.3 million shares. The stock’s surge comes as Senate Banking Committee chair Sherrod Brown said Wednesday that there is “an agreement imminent” on the SAFE Banking Act, according to a Politico report, which could make it easier for the financial industry to work with cannabis companies. Among other cannabis stocks, shares of Tilray Brands Inc.
TLRY,
+2.03%
gained 2.4%, of Cronos Group Inc. climbed 6.0% and of Aurora Cannabis Inc.
ACB,
+14.75%
jumped 12.5%. The AdvisorShares Pure US Cannabis ETF
MSOS,
+3.88%
rose 7.5% on volume of 13.9 million shares, compared with the full-day average of about 5.6 million shares, while the S&P 500
SPX,
+0.14%
slipped 0.1%. The cannabis ETF has soared 77% over the past seven sessions. -
White House Situation Room gets renovated — here’s what a $50 million makeover looks like
A storied part of the White House complex — the Situation Room — has emerged from a $50 million makeover, with President Joe Biden taking part in a ribbon-cutting ceremony earlier this week to mark the occasion.
The White House Situation Room is actually a highly secure complex of rooms on the West Wing’s ground floor, including a reception area, a main conference room known as the “JFK room,” a smaller conference room, breakout rooms and a 24-7 operations center called the “watch floor.”
The operations room is shown in the photo above, while the main conference room is shown in the photo below.
The main conference room for the White House Situation Room is shown here.
White House handout
Biden shared a video on Friday that shows the ribbon-cutting ceremony and his tour of the revamped facility, writing in a post on X, formerly known as Twitter, that it’s “incredible.”
The renovation involved digging five feet underground to make more room and install cutting-edge technology allowing White House officials to bring together intelligence from different agencies with the push of a few buttons. The goal is to never need a complete renovation again, as now panels can be removed and updated and new technology swapped in.
The Situation Room’s yearlong renovation came up in July when cocaine was found in a heavily traveled part of West Wing. Biden’s national security adviser, Jake Sullivan, criticized what he described as “questionable reporting” on the room’s connection to the incident.
“The Situation Room is not in use and has not been in use for months because it is currently under construction. We are using an alternate Situation Room in the Eisenhower Executive Office Building,” Sullivan told reporters in July. “There was no issue with the Situation Room relative to this. “
The Associated Press contributed to this report.
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Here’s why Wall Street may be overreacting about Apple’s China’s challenges
Apple Inc. shares sold off for the second session in a row Thursday amid swirling concerns about the company’s China business, but some analysts say those fears may be overblown.
The Wall Street Journal reported earlier this week that China was banning government officials from using iPhones for work purposes, while Bloomberg News reported that the ban could ultimately extend to government-backed agencies and state companies. The question for investors is whether the issue will be limited to state-affiliated employees in…
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Fed’s Williams says monetary policy is in a ‘good place,’ recession talk ‘has vanished’
New York Fed President John Williams on Thursday sounded content with the current level of interest rates, but said he will be watching data closely to make sure the level of rates is high enough to keep inflation moving down.
“We’ve done a lot,” Williams said during a discussion at a conference sponsored by Bloomberg News.
“Right now, we’ve…
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Dominion Sells Natural Gas Utilities to Enbridge for $9.4 Billion
Dominion Sells Natural Gas Utilities to Enbridge for $9.4 Billion
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FTC antitrust suit against Amazon coming in September: report
The Federal Trade Commission is set to file an antitrust lawsuit against Amazon.com Inc.
AMZN,
-0.62%
in September after the two sides could not reach a settlement over antitrust claims, according to a Wall Street Journal report, citing people familiar with the matter. Members of Amazon’s legal team held a video call with FTC officials on Aug. 15 during a so-called last-rites meeting, but were unable to agree on concessions, the report said. Amazon declined comment on the report. -
Chinese property developer stocks jump on easing mortgage policy
Shares of Chinese property developers rose sharply Monday, as more major Chinese cities said over the weekend that they would ease mortgage policies in a bid to shore up the real-estate sector.
The Hang Seng Mainland Properties Index rose 8.2%. Hong Kong-listed Longfor Group Holdings
960,
+8.11%
climbed 10% and Seazen Group
1030,
+18.30%
jumped 17%. Shanghai-Listed Gemdale
600383,
+1.63%
added 4.1% and China Vanke
000002,
-0.07%
gained 1.4%.Major Chinese cities across the country, including Beijing and Shanghai, lowered mortgage requirements for some home buyers late last week, lowering the bar for home purchases.
“This nationwide policy measure marks a significant step in stimulating the property sector, as top policymakers become increasingly worried about the collapse of the property sector, the downward spiral, and a rising number of credit risk events among major developers and financial institutions since mid-August,” Nomura analysts said in a note.
Separately, news reports over the weekend saying that property giant Country Garden Holdings
2007,
+14.61%
received creditor approval to extend a bond also lifted the mood and supported the company’s shares. Country Garden shares were last up 9.0% at 0.97 Hong Kong dollars (12 U.S. cents).Year to date, Country Garden’s stock has slumped 64% after the company posted its worst loss since going public 16 years ago and missed $22.5 million in interest payments on its dollar bonds in August.
Despite Chinese authorities’ supportive policies and Country Garden’s bond extension, some analysts warned that the extension could just be a near-term reprieve.
“With the lack of an eventual resolution [for Country Garden],” headwinds linger for the Chinese property sector, IG Asia analysts said in a note.
“Persistent earnings weakness will no doubt drive the sector’s leverage higher,” said S&P Global Ratings credit ratings analyst Oscar Chung.
S&P believes industry leaders and real-estate companies with a diverse business mix such as rental and service incomes can better withstand declining development margins.
Write to Bingyan Wang at bingyan.wang@wsj.com
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Congress returns to face shutdown fears — here’s what it means for markets
U.S. lawmakers are due to get back to work Tuesday on Capitol Hill, and there are growing expectations that one fruit of their labors will be a partial government shutdown.
“My guess is that we will have a lot of screaming and shouting, and we’ll end up shutting down the government, and a lot of people will be inconvenienced or hurt as a result of doing that, but we’ll do it,” said Republican Sen. Mitt Romney of Utah in an interview with a TV station in his home state.
“And by the way, we’ll shut down government, and then we’ll open it. It’s not like that means that we win. No, no. We just shut it down to show that we’re fighting and making noise.”
Investors should view the shutdown as largely noise, according to a number of analysts in Washington, D.C., who track lawmakers’ moves for Wall Street.
“The stakes here are significantly lower than they were back in June, when we were facing default,” said Ed Mills, Washington policy analyst for Raymond James, referring to lawmakers’ efforts to reach a deal on raising the U.S. debt ceiling in order to avoid a market-shaking default.
“For the most part, this is a 1 or 2 on a scale of 1 to 10 in terms of concern,” Mills told MarketWatch, adding that a U.S. default, on the other hand, would have registered as a 10 on that scale.
There have been six government shutdowns since 1978 that lasted five days or more, and the S&P 500 stock index
SPX
gained in the four most recent shutdowns. Brian Gardner, chief Washington policy strategist at Stifel, emphasized that history in a note to clients.“Headlines regarding a potential budget impasse will grow and there could be a whiff of panic in the air, but investors should take all of this in stride. Markets tend to ignore the impact of a government shutdown,” Gardner wrote, as he offered the chart shown below.
There have been six shutdowns since 1978 that lasted five days or more. Here’s how stocks handled them.
Stifel
From MarketWatch’s archives (September 2021): Here’s how the stock market has performed in past government shutdowns
And from January 2019: The latest government shutdown is ending, after becoming the longest on record — by a wide margin
How government shutdowns can hurt
Stifel’s Gardner said that while past shutdowns suggest that investors should not panic, there still is some damage.
“There will be extensive media coverage of closed entrances at national parks and other government facilities. Government salaries will not be paid on time which is, certainly, a hardship for some families,” he wrote. At the same time, he emphasized that “much of the country will operate as usual,” including the military
ITA
and air traffic controllers — and missed paychecks will come through once the shutdown ends.From MarketWatch’s archives (January 2019): How furloughed federal workers can rebuild their finances after the shutdown
“From a market perspective, the biggest concern relating to a government shutdown is that it could delay official government data reports at a pivotal time for the Federal Reserve,” said BTIG’s Issac Boltansky and Isabel Bandoroff in a note.
Related: Jackson Hole recap: Fed rate hikes likely on hold for ‘several meetings’
The BTIG analysts said they expect a shutdown will occur but it should be a “nonevent for markets” overall, because it “would have no impact on debt payments and any missed activity would be settled on the other side of reopening.”
There could be a greater-than-anticipated impact on stocks
DJIACOMP
if the shutdown lasts for a longer time than expected, and if the deal to end the shutdown features unexpectedly large cuts to spending along with significant repeals of Democrats’ Inflation Reduction Act, according to Mills, the Raymond James analyst.“The most likely scenario is that it’s days, not weeks,” he said, regarding the length of any shutdown. He also noted it could hit consumer confidence and disrupt the initial-public-offering process for some companies.
What’s likely to happen on Capitol Hill
Only one chamber of Congress is returning to Washington on Tuesday, the day following Labor Day, after an August recess — the Senate. The House of Representatives is slated to resume its work on Capitol Hill a week later, on Sept. 12.
Ahead of their returns, the Biden White House’s budget office has pushed for passage of a short-term funding measure to avoid a partial federal government shutdown on Oct. 1, when the government’s 2024 fiscal year starts.
Such a measure is known as a continuing resolution, or CR, and they’re often used as the House and Senate work to agree on a dozen appropriations bills that would fund government operations for a full fiscal year.
The debt-ceiling deal negotiated between House Speaker Kevin McCarthy and President Joe Biden set spending levels over the next two years, keeping nonmilitary spending for 2024 the same as 2023 levels. But House Republicans have adopted spending targets for the coming fiscal year at levels below the McCarthy-Biden agreement.
McCarthy has raised the idea of a short-term funding bill with his fellow Republicans.
“The thing that Kevin McCarthy is trying to tell his caucus is that we probably need to have a short-term CR, so that the House can finish its work on appropriations bills and establish the best negotiating position,” Mills said.
The House Freedom Caucus, a hardline GOP group known for causing headaches for the chamber’s leaders, has voiced concerns. It said in an Aug. 21 statement that its members want to rein in outlays and will oppose any spending measure that doesn’t include a House-passed bill focused on security at the U.S. southern border. In addition, the group said any spending measure must address the “unprecedented weaponization” of the Justice Department and the FBI, as well as end “woke policies in the Pentagon.”
The most likely path forward is the GOP-run House passes a short-term funding measure that incorporates House Freedom Caucus goals, and then there’s a showdown with the Democratic-controlled Senate over those policy riders, with a short-lived shutdown potentially taking place, Mills said.
The Raymond James analyst said the most likely deal is a budget that’s in line with what was negotiated as part of the debt-limit deal. He also expects supplemental measures that provide relief for areas hit by Hurricane Idalia and the Maui wildfires, as well as some funding for Ukraine as it continues its fight against Russia’s invasion.
“For investors, they have seen McCarthy go up to the brink, go through a tough situation and be able to pull a rabbit out of it,” Mills said, referring to his January battle to become House speaker and the spring’s debt-limit talks. And they’ve “gone through government shutdowns in the past, mostly with very minimal market reaction,” he added.
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Intuit braces for negative FTC ruling on free tax prep advertising, vows appeal
More than a year ago, the Federal Trade Commission sued Intuit Inc., the maker of TurboTax, for allegedly tricking people into thinking they could file their income taxes for free with the tax-preparation giant.
Now, an administrative judge inside the agency has ruled against Intuit — and the company said in a Friday afternoon SEC filing that it’s going to keep fighting the case, even if that means incurring “significant costs.”
“We expect to appeal this decision to the FTC Commissioners and, if necessary, then to a federal court of appeals. We intend to continue to defend our position on the merits of this case,” the company said in its 10-K filing.
“There is no monetary penalty, and Intuit expects no significant impact to its business,” Intuit spokesman Rick Heineman said in a statement. The company will appeal “this groundless and seemingly predetermined decision by the FTC to rule in its own favor,” he said.
Intuit already reached a $141 million settlement with state attorneys general about the allegations of deceptive advertising. The company says it has been clear and upfront with customers about costs. It did not admit liability in the settlement.
The FTC could not be immediately reached for comment Friday afternoon.
In March 2022, the regulator sued Intuit in federal court to immediately stop commercials that repeated “free” over and over. Intuit pulled some of the advertising and after filing season ended, a San Francisco federal judge said the FTC bid for emergency halts didn’t need to happen under the circumstances.
FTC lawyers also lodged an internal administrative complaint. “Intuit widely disseminated ads on television, on the radio, and online that gave consumers the impression that they could use TurboTax for free, even though two-thirds of taxpayers don’t qualify for Intuit’s free TurboTax offerings,” they wrote in administrative complaint proceedings.
The ongoing legal fight is happening while the broader fight over of free tax preparation is heating up. The Internal Revenue Service is planning to test its own pilot program in the upcoming filing season where taxpayers can file their taxes directly with the IRS instead of through tax preparation companies or individual preparers.
TurboTax and the tax software industry oppose the proposed IRS direct file system. So do Congressional Republicans.
One sticking point in the looming government shutdown is how much money the IRS should be getting in its budget. The House appropriations bill would forbid the IRS from using any money to build the direct file system.
Intuit Inc.
INTU,
+1.44%
shares closed 1.4% higher Friday, at $549.60, and the disclosure didn’t seem to be having much effect on the shares in after-hours trading. Shares are up 41% year to date, while the Dow Jones Industrial Average
DJIA
is up 5% and the S&P 500
SPX
is up 17.6%. -
China ETFs book best day in a month after PBOC vows to support weak yuan with forex reserve ratio cut
U.S. exchange-traded funds that invest in Chinese stocks notched their best day in a month after China ramped up its efforts to support the country’s flagging currency as investors’ concerns over the economic weakness persist.
The People’s Bank of China said Friday it will lower the amount of foreign-exchange deposits financial institutions are required to hold for the first time in 2023, a move seen as a bid to shore up the Chinese yuan, which has tumbled this year as the world’s second largest economy has faltered due to a property-market downturn, sluggish domestic consumption, and the ballooning local government debt pile.
The Invesco Golden Dragon China ETF
PGJ,
which tracks the American depositary shares of companies based in China, rose 3% on Friday, while the KraneShares CSI China Internet ETF
KWEB,
which offers exposure to Chinese software and information technology stocks, gained 3.5%. The iShares MSCI China ETF
MCHI
advanced nearly 2.2% and the SPDR S&P China ETF
GXC
surged 2%, according to FactSet data.The iShares MSCI China ETF and the KraneShares CSI China Internet ETF booked their biggest daily percentage advance since August 3, according to FactSet data.
China’s central bank will cut the foreign-exchange reserve requirement ratio to 4% from 6% beginning Sept. 15. The move is expected to increase the supply of foreign currencies available in local markets, making the Chinese yuan more appealing for domestic investors.
See: China’s central bank to cut FX reserve ratio
Based on about $822 billion foreign-exchange deposits in July, the 200-basis-point cut in the reserve requirement ratio could release about $16 billion, which will improve the supply of the U.S. dollar onshore, and could move spot USDCNY lower, said strategists at Citigroup led by Johanna Chua, chief Asia economist.
“In a broader picture, this can be also seen as part the current round of accelerated policy rollout which works more directly on asset markets. If the accelerated pace [of policy rollout] continues, it may help stabilize sentiment to some extent and prevent outsized bearish moves on China risk assets including the RMB FX,” they wrote in a Friday note.
The onshore yuan
USDCNY,
weakened around 1.7% against the dollar in August, extending its losses for the year to nearly 5%, according to FactSet data. The offshore yuan
USDCNH,
-0.03%
was trading at 7.27 per dollar Friday afternoon.See: Chinese Property Stocks Gain on Stimulus Measures
Friday’s change to reserve requirement ratio came a day after Chinese authorities announced that homebuyers’ minimum down payment will be reduced to 20% for first-time home purchases, and 30% for second-home purchases nationwide, according to a joint statement from the People’s Bank of China and National Administration of Financial Regulation late Thursday.
Currently, homebuyers in largest cities such as Beijing and Shanghai have a 30% down payment ratio for first homes, and 40% or more for second homes.
Separately, big banks, such as Industrial & Commercial Bank of China
601398,
-1.08%
and Bank of China
601988,
-1.07% ,
have said they would cut their one-year yuan deposit rate by 10 basis points to 1.55% and their two-year yuan deposit rate by 20 basis points to 1.85%. The banks also plan to cut mortgage rates to boost consumption and aid the troubled property sector.The broader U.S. stock market finished mostly higher on Friday as traders weighed the latest jobs report to conclude the final trading day before the Labor Day holiday weekend. The S&P 500
SPX
was up 0.2%, while the Dow Jones Industrial Average
DJIA
advanced 0.3% but the Nasdaq Composite
COMP
ended nearly flat. -
Private equity, hedge funds sue SEC over new disclosure rules
A consortium of groups representing the private funds industry filed a lawsuit against the Securities and Exchange Commission Friday in an attempt to block new rules that would require private equity and hedge funds to disclose quarterly performance, fees and expenses.
The rules, adopted last week, would also ban so-called side letters, or agreements between a fund and specific investors that give them preferential treatment, unless those arrangements are made available to all investors.
Read more: SEC votes to require private equity and hedge funds to disclose performance and fees
“The SEC has overstepped its statutory authority and core legislative mandate, leaving us no choice but to litigate,” said Bryan Corbett, president and CEO of the Managed Funds Association, one of the litigants in the suit.
“The Private Fund Adviser rule will harm investors, fund managers, and markets by increasing costs, undermining competition, and reducing investment opportunities for pensions, foundations, and endowments,” he added.
The MFA was joined by several other industry groups in filing the lawsuit, including the National Association of Private Fund Managers, National Venture Capital Association, American Investment Council, Alternative Investment Management Association and the Loan Syndications & Trading Association.
An SEC spokesperson told MarketWatch that “the Commission undertakes rulemaking consistent with its authorities and laws governing the administrative process, and we will vigorously defend the challenged rule in court.”
SEC Chair Gary Gensler argued in recent speeches and statements that the new rules are necessary to protect investors, including the pension funds and endowments that have increasingly turned to alternative investments in recent years to boost returns.
He said in a May speech that private funds are of growing importance to the U.S. economy, noting that advisers report that they now manage $25 trillion in assets — up from $1 trillion in 1998 — surpassing the size of the U.S. banking sector.
“The private fund industry plays an important role in each sector of the capital markets,” he said.
“It also plays an important role for investors, such as retirement funds and endowments,” he added. “Standing behind those entities are a diverse array of teachers, firefighters, municipal workers, students, and professors.”
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Robinhood buys back shares from the U.S. Marshal Service, originally owned by FTX founder Sam Bankman-Fried
Shares of Robinhood Markets Inc.
HOOD,
+2.62%
galloped 2.6% higher Friday, after the trading app disclosed that it bought back 55.3 million of its shares from the U.S. Marshal Service. The company said it paid $605.7 million for the shares, which represents 6.1% of the company’s market capitalization of $9.93 billion at Thursday’s close. The shares were originally acquired through Emergent Fidelity Technologies Ltd. by Sam Bankman-Fried, founder of failed cryptocurrency exchange FTX that collapsed last year. The shares were seized and transferred to the custody of the U.S. Robinhood’s stock has rallied 20.7% over the past three months through Thursday, while the S&P 500
SPX,
+0.24%
has gained 6.8%. -
How the stock market’s performance under Biden is worse than under Obama or Trump — in one chart
U.S. stocks so far haven’t fared as well under President Joe Biden as they did in Donald Trump’s single term or in either of Barack Obama’s two terms.
The research team at Wilshire Indexes is pointing that out this month with the chart below, which features the FT Wilshire 5000
XX:W5000FLT,
an index that aims to reflect the performance of the total U.S. stock market.U.S. stocks haven’t performed as well in Biden’s current term as they did under Obama or Trump.
Wilshire Indexes
Biden and his allies could be worried about how stocks
SPX
are doing, and it’s possible his administration will try to help the market somehow in 2024, according to Philip Lawlor, managing director of market research at Wilshire Indexes.“With the 2024 election in sight, the disparity in cumulative equity return generated so far under the Biden administration compared to the superior return trajectory delivered by the Trump and Obama presidencies could cause some concern,” Lawlor wrote. “Electoral cycle logic points to the Biden administration doing its utmost to ensure that the gap closes next year.”
Biden officially launched his re-election campaign in April, and the Democratic incumbent and his cabinet officials have traveled around the U.S. in recent months to talk up their economic policies, including measures such as the Inflation Reduction Act.
When asked about the stock market’s struggles earlier this year, one White House official told MarketWatch that the administration wants to see “strong performance,” but he also noted that roughly half of Americans don’t hold stocks and highlighted other economic indicators.
“The markets are going to go up and down. The main measure that the president has about the state of the economy is, how are middle-class families doing?” said Bharat Ramamurti, deputy director of the White House’s National Economic Council.
“Do they have good-paying jobs that allow them to support themselves and their families? Are they seeing their wages go up? Do they feel like they have good opportunities to advance in their career, good opportunities to switch jobs and make more money? Or live in a better neighborhood, or whatever the case may be? By those metrics, we think that the economy is doing very, very well.”
Republican presidential hopefuls made their economic pitches at a debate on Wednesday night in Milwaukee, with Florida Gov. Ron DeSantis, who is currently running second in GOP primary polls, saying the country “must reverse ‘Bidenomics’ so that middle-class families have a chance to succeed again.” Trump, the current frontrunner in the 2024 primary, skipped the debate and instead released an interview just before the event kicked off.
Betting markets tracked by RealClearPolitics give Biden a 35% chance of winning the 2024 presidential election, while Trump is at 27% and DeSantis is at 6%.
COMP
were higher in choppy trading Friday after Federal Reserve Chair Jerome Powell warned that the central bank may need to raise interest rates even higher to temper a strong U.S. economy and quell inflation, while assuring investors that the Fed would proceed cautiously.From MarketWatch’s archives (Dec. 31, 2022): U.S. stocks log their worst year since 2008, crushed by Fed’s rate hikes
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New coronavirus variant has experts on alert and WHO is urging countries to step up COVID surveillance
A new variant of the SARS-CoV-2 coronavirus has put epidemiologists around the world on alert, and the World Health Organization is asking countries to sustain early warning, surveillance and reporting systems as it works to evaluate the current COVID-19 risk level.
The BA.2.86 variant, which was first detected in Israel, was designated a new variant under monitoring by the WHO on Aug. 17, after the agency received nine sequences from five countries — three in the WHO’s European Region, one in the African Region and one in the Region of the Americas.
The variant has more than 30 mutations in the spike protein compared with the XBB variants that are currently dominant in the U.S. and around the world, namely XBB.1.16 and EG.5, which has been dubbed Eris, following the Greek-alphabet designation used for other variants.
The WHO made EG.5 a variant of interest, or VOI, earlier this month, which is an upgrade from the designation of variant under monitoring, or VUM.
But BA.2.86 is worrying experts because there is too little data to assess its potential impact.
“It is crucial to sustain early warning, surveillance and reporting, variant
tracking, early clinical care provision, administration of vaccine boosters to high-risk groups, improvements in ventilation, and regular communication,” the agency said in its latest weekly update.That update, which reviews the state of the virus for the 28-day period through Aug. 20, contains no data from the WHO’s Region of the Americas, as reports for the period were incomplete. That’s a worry that the WHO has consistently warned about as countries pull back on their monitoring of the illness as they seek to put the pandemic behind them.
The WHO officially declared the emergency phase of the pandemic to be over on May 5 but emphasized that COVID remains a major threat. Many countries have dismantled much of their systems of oversight and greatly reduced testing and data measurement.
See also: New ‘Eris’ COVID variant is dominant in the U.S., but a shortage of data is making it hard to track
The U.S. Centers for Disease Control and Prevention offered an update this week on BA.2.86 — which it said has been detected in Denmark, South Africa, Israel, the U.S. and the U.K. — and said the multiple locations are a sign of international transmission. The CDC acknowledged the surveillance challenge.
“Notably, the amount of genomic sequencing of SARS-CoV-2 globally has declined substantially from previous years, meaning more variants may emerge and spread undetected for longer periods of time,” the U.S. agency said in its update.
The CDC also noted a current increase in hospitalizations in the U.S., although it said that’s not likely driven by the BA.2.86 variant.
“It is too soon to know whether this variant might cause more severe illness compared with previous variants,” said the CDC.
Perhaps the bigger issue is whether the new variant has greater escape from existing immunity from vaccines and previous infections, compared with other recent variants.
“One analysis of mutations suggests the difference may be as large as or greater than that between BA.2 and XBB.1.5, which circulated nearly a year apart,” the CDC said. “However, virus samples are not yet broadly available for more reliable laboratory testing of antibodies, and it is too soon to know the real-world impacts on immunity.”
Americans gearing up for what’s expected to be an annual COVID vaccine booster this fall can be confident those vaccines will be designed to protect against all subvariants of XBB, including Eris, the agency said.
The CDC said it’s likely that antibodies built up in the population through infection, vaccination or both will provide protection against BA.2.86. However, it said, “this is an area of ongoing scientific investigation.”
Eric Topol, the chair of innovative medicine at Scripps Research in La Jolla, Calif., said the ability to neutralize the virus depends on the levels of neutralizing antibodies, and those are bound to be lower against BA.2.86 than earlier variants that people have been exposed to or immunized against.
“Also to note, the burden of new mutations for BA.2.86 is not confined to the spike and is seen broadly across other components of the virus,” he wrote in commentary this week. “If BA.2.86 takes off, it will be a real test of how good our T-cell response can rev up to meet the challenge.”
Meanwhile, the CDC’s weekly projections for where Eris and other variants are circulating continue to be hampered by a shortage of data. In early August, the CDC said it would unable to publish its “Nowcast” projections because it did not have enough sequences to update the estimates.
“Because Nowcast is modeled data, we need a certain number of sequences to accurately predict proportions in the present,” CDC representative Kathleen Conley told MarketWatch at the time.
The agency had received data from just three U.S. regions. In its most recent weekly update for the week through Aug. 19, it also got data from just three regions.
Separately, the CDC reported a 21.6% increase in U.S. hospitalizations for COVID in the week through Aug. 12. Deaths rose 21.4% in the week through Aug. 19.
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3M charged with violating Foreign Corrupt Practices Act in China, pays $6.6M settlement
3M Co.
MMM,
+0.46%
agreed to pay disgorgement plus prejudgment interest totaling $4.58 million and a $2 million civil penalty for charges that it violated the books and records and internal controls provisions of the Foreign Corrupt Practices Act (FCPA) in its business activities in China, the Securities and Exchange Commission said Friday. The SEC’s order found that 3M’s Chinese subsidiary paid about $1 million for at least 24 trips for Chinese government officials that included tourism activities as part of efforts to persuade them to buy 3M products, from at least 2014 to 2017. Without admitting or denying the findings, 3M agreed to cease and desist from future violations. 3M stock was up by 0.1% on Friday, while the S&P 500
SPX,
+0.67%
rose fractionally. -
China Rolls Out New Mortgage Rules to Boost Home Sales, Xinhua Says
Chinese regulators eased the nation’s mortgage requirements to let more home buyers enjoy favorable mortgage conditions that were previously limited to first-time home purchasers, the state-run Xinhua News Agency said on Friday.
China’s central bank, the Ministry of Housing and Urban-Rural Development and the National Financial Regulatory Administration jointly eased the requirements for home buyers who have already purchased homes to boost property sales as the real-estate slump continued, according to Xinhua.
Home buyers who don’t have family members with houses registered under their names can enjoy favorable terms that were previously limited to people buying their first homes, according to Xinhua.
First-home buyers are normally given cheaper mortgage rates than other buyers who have at least one apartment. First-home buyers are also required to make smaller down payments, as low as 20% of the total property value.
Write to Singapore editors at singaporeeditors@dowjones.com
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Trump surrenders, is booked in Georgia election-interference case
Former President Donald Trump turned himself in at Georgia’s Fulton County jail on Thursday evening, with this latest move in his numerous legal fights standing out in part because it’s expected to yield a mug shot.
See: Donald Trump’s mug shot could become ‘the most famous in the world’
Trump’s private plane landed in Atlanta around 7 p.m. Eastern, and a motorcade took him directly to the Fulton County jail in Atlanta. After about 20 minutes of processing inside the jail, the motorcade then took him back to his plane for his return to New Jersey.
Trump made a brief statement before boarding his plane, calling his indictment a “travesty of justice.”
Fulton County’s booking system recorded Trump as having “blonde or strawberry” hair, a height of 6-foot-3 and weighing 215 pounds.
Former President Donald Trump poses for his booking photo at the Fulton County Jail on Thursday.
Fulton County Sheriff’s Office via Getty Images
Trump was quickly released on a $200,000 bond and will now wait until an arraignment next month to enter pleas in this election-interference case. Fulton County District Attorney Fani Willis is seeking an Oct. 23 trial date for Trump and the other 18 defendants in the case, but Trump is opposing that start date.
Earlier in the day, Trump replaced his lead counsel, Drew Findling, with veteran criminal attorney Steven Sadow, who is known for defending a number of prominent rappers in high-profile criminal cases. The New York Times reported Trump used a commercial bail bondsman, Charles Shaw of Foster Bail Bonds, to post his bond, and paid him a $20,000 fee, or 10% of his bail amount.
The former president was indicted last week by a grand jury in Fulton County over his efforts to overturn Georgia’s results in the 2020 presidential election, which he lost to Democrat Joe Biden. He faces 13 criminal counts, including racketeering, filing false documents, conspiracy to commit forgery and solicitation of violation of oath by a public officer.
Thursday’s proceedings in Atlanta mark the fourth time that the 45th president has surrendered this year following an indictment.
Trump, the frontrunner in the undefined, also is dealing with a Manhattan case over hush-money payments, a Miami case over classified documents and a Washington, D.C., case over his efforts to overturn the 2020 election, including his role in the Jan. 6, 2021, attack on the U.S. Capitol.
He has denied wrongdoing and argued all of the cases are politically motivated. Many Republican voters have agreed with his take and rallied around Trump in the past few months, leaving him with 55.4% support in primary polls, according to a RealClearPolitics moving average of surveys as of Thursday.
The Fulton County prosecutor’s case was spurred in part by a recording of a Jan. 2, 2021, phone call between Trump and Georgia Secretary of State Brad Raffensperger in which Trump said Raffensperger, a Republican, should “find 11,780 votes,” or enough to erase Biden’s edge in the state.
In a post on his Truth Social platform Thursday afternoonu, Trump reiterated his assertion that the phone call was “perfect,” and he repeated his criticisms of Willis, describing her as a “Radical Left, Lowlife District Attorney.”
Willis, a Democrat, has set a Friday deadline for defendants to turn themselves, and Trump associates Rudy Giuliani and Mark Meadows are among the high-profile individuals who have met that deadline.
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U.S. banks and regional lenders slide across the board as S&P is latest to downgrade ratings
U.S. banks and regional banks fell across the board on Tuesday, after S&P Global Ratings downgraded five smaller players after a review of risk related to funding, liquidity and asset quality with a focus on office commercial real estate.
Adding to the gloom, Republic First Bancorp. Inc.’s stock
FRBK,
-41.90%
tanked by 39%, after Nasdaq told the company that its stock would be delisted on Wednesday, after it failed to file its annual report in time.S&P’s move comes just days after Fitch Ratings analyst Christopher Wolfe reduced his operating environment score for U.S. banks to aa- from aa due to the unknown path of interest rate hikes and regulatory changes facing the sector.
And Moody’s Investors Service just two weeks ago upset investors when it downgraded some lenders and said it was reviewing ratings on bigger banks, including Bank of New York Mellon
BK,
-1.71% ,
State Street
STT,
-1.59%
and Northern Trust
NTRS,
-1.73% .For more, see: Bank asset quality, weaker profits spark Moody’s reviews and downgrades as it weighs potential 2024 recession
The S&P 500 Financials Sector has fallen for seven consecutive days, and is on pace for its longest losing streak since April 7, 2022, when it also fell for seven straight trading days.
Individual bank names are also performing poorly, with Goldman Sachs Group Inc.
GS,
-0.94%
and Citigroup Inc.
C,
-1.68%
down for 10 of the past 11 days and Charles Schwab Corp.
SCHW,
-4.84%
down 11 straight days.Goldman alone has fallen for seven straight days for a total loss of 6.3%. It’s the longest losing streak since Feb. 28, 2020, when it also fell for seven straight days as the pandemic was taking hold.
The KBW Nasdaq Regional Banking Index
KBWR
is down for 11 straight days. and the KBW Nasdaq Bank Index
BKX
is down for seven straight days.S&P downgraded Associated Banc. Corp.
ASB,
-4.20% ,
Comerica Inc.
CMA,
-3.82% ,
KeyCorp
KEY,
-3.58% ,
UMB Financial Corp.
UMBF,
-2.42%
% and Valley National Bancorp.
VLY,
-4.19%
by one notch and said the outlook on all five is stable.Read also: More challenges await U.S. banks but analysts think the worst may be over for the year
The rating agency affirmed ratings on Zions Bancorp
ZION,
-4.17%
and maintained a negative outlook, meaning it could downgrade them again in the near-term. And it affirmed ratings and a stable outlook on Synovus Financial Corp.
SNV,
-3.37%
and Truist Financial Corp.
TFC,
-1.36% “We reviewed these 10 banks because we identified them as having potential risks in multiple areas that could make them less resilient than similarly rated peers ,” S&P said in a statement.
“For instance, some that have seen greater deterioration in funding—-as indicated by sharply higher costs or substantial dependence on wholesale funding and brokered deposits—-may also have below-peer profitability, high unrealized losses on their assets, or meaningful exposure to CRE.”
The steep rise in interest rates orchestrated by the Federal Reserve over the past year has raised deposit costs as banks are now competing for savers seeking higher returns and that’s forced some to pay up on deposits and discourage their clients from heading to other institutions and instruments.
The sector has been skittish this year following the collapse of Silicon Valley Bank and other lenders that led to a run on deposits at a number of regional lenders.
However, S&P said about 90% of the banks it rates have stable outlooks and just 10% have negative ones. None have positive outlooks.
The widespread stable outlooks shows that stability in the U.S. banking sector has improved significantly in recent months.
S&P is expecting FDIC-backed banks in aggregate to earn a relatively healthy ROE of about 11% in 2023.
KeyCorp. and Comerica both fell more than 3% on the news. Of the two, KeyCorp. has more outstanding debt and its 10-year bonds widened by about 5 to 10 basis points, according to data solutions provider BondCliq Media Services.
As the following chart shows, the bonds have seen better selling on Wednesday with buyers emerging around midmorning.
KeyBank net customer flow (intraday). Source: BondCliQ Media Services
The next chart shows customer flow over the last 10 days.
Most active KeyBank issues with net customer flow (last 10 days). Source: BondCliQ Media Services
The next chart shows the outstanding debt of the downgraded banks, with KeyCorp. clearly the leader with almost $16 billion of bonds.
Outstanding S&P downgraded banks debt USD by maturity bucket. Source: BondCliQ Media Services
Don’t miss: Capital One confirms roughly $900 million sale of office loans as property sector wobbles
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Microsoft proposes Ubisoft license to win U.K. approval for Activision Blizzard buyout
Microsoft will change the terms of its Activision Blizzard buyout offer in a new effort to win approval from the U.K. competition regulator.
The regulator, the Competition and Markets Authority, said Microsoft
MSFT,
+1.71%
will now license Activision’s global cloud streaming to Ubisoft Entertainment, for any game available now or in the next 15 years. Ubisoft, in its own release, highlighted the ability to stream the popular Call of Duty franchise.Financial terms were not released, but the regulator said Ubisoft will make a one-off payment and also agree a market-based wholesale pricing mechanism.
The license will be exclusive except in the European economic area. Ubisoft would have the ability to require Microsoft to provide versions of games on operating systems other than Windows, such as Linux.
Ubisoft shares
UBI,
+5.80%
jumped nearly 5% in opening Paris trade.The regulator now says it’s inviting comments on the structure of the new offer. “This is not a green light. We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments,” said the regulator’s CEO, Sarah Cardell.
Microsoft last year agreed to buy Activision Blizzard for $68.7 billion, or $95 per share. Activision stock
ATVI,
+0.28%
closed Monday at $90.72.In a blog post, Microsoft Vice Chair Brad Smith said it anticipates the CMA review processes can be completed before the 90-day extension in its acquisition agreement with Activision Blizzard expires on Oct.18. He also said the deal with Ubisoft was carefully structured not to interfere with an existing deal struck with European regulators.
