The news at a glance
Companies: Profit growth hits six-year high
Profits at U.S. companies are growing at the fastest pace in six years, said Theo Francis and Thomas Gryta in The Wall Street Journal. Earnings at S&P 500 firms are expected to rise 11 percent in the second quarter, on top of a 15 percent increase in the first quarter. It would be the first time there have been two consecutive quarters of double-digit profit gains since 2011. The strong corporate performance comes even as President Trump’s pro-business agenda, including tax cuts and increased spending on infrastructure, has “been sidetracked amid political infighting.” Economists say profits have been boosted “by years of cost cutting, a weaker dollar, and stronger consumer spending.”
Ironically, surging corporate profits could undercut Republicans’ ability to accomplish major tax reform, said David Morgan in Reuters.com. GOP lawmakers intend to spend the fall arguing that “a cut in the corporate income tax is needed to help corporations be more competitive.” But that message could clash with President Trump’s desire to “brag about” high corporate profits during his tenure. He tweeted this week that “Corporations have NEVER made as much money as they are making now.” The White House hopes to have a tax bill signed by year’s end, but “there is little consensus” among Republicans on what final reforms will look like.
Autos: July brings big declines in U.S. car sales
Auto sales have been skidding all year, and last month was even “weaker than expected,” said Neal Boudette in The New York Times. Sales of new cars and trucks fell 7 percent to 1.4 million in July—the seventh straight month of declines and the biggest percentage drop this year. Strong truck and SUV sales typically have offset steep declines in cars and compacts, but a sudden drop in many popular truck models in July has raised fears “about whether this pillar is finally starting to weaken, too.” Automakers sold a record 17.5 million vehicles in 2016 and are now beginning to “trim production as sales slump.”
Retail: Under Armour to cut staff
Even basketball star Steph Curry “can’t stop the retail swoon,” said Jill Disis in CNN.com. Under Armour—“known for its Curry-branded shoe line and other big-name athlete endorsements”—said this week that it will eliminate 280 jobs, or 2 percent of its workforce, after slower-than-expected sales. The sportswear company “has been trying to claw its way back from a bad 2016, when its stock dropped nearly 30 percent because of weak sales.” Rival Nike has been under pressure as well, announcing in June that it’s eliminating 2 percent of its staff.
Media: Steve Jobs’ widow to buy The Atlantic
Laurene Powell Jobs is becoming a media mogul, said Kate Vinton in Forbes.com. The widow of Apple founder Steve Jobs announced last week that her organization, the Emerson Collective, is acquiring a majority stake in The Atlantic magazine and intends to take full ownership “within the next three to five years.” Jobs, whose personal fortune is estimated at $20.7 billion, is among a number of billionaires to buy high-profile media brands in recent years, including Amazon founder Jeff Bezos (The Washington Post), Red Sox owner John Henry (The Boston Globe), and Sheldon Adelson (Las Vegas Review-Journal).
M&A: Discovery buys Scripps for $11.9B
Discovery Communications is buying Scripps Networks “in a major consolidation of cable TV networks,” said Nathan Bomey and Mike Snider in USA Today. Discovery, whose networks include the Discovery Channel, TLC, Animal Planet, and the Oprah Winfrey Network, reached an agreement this week to acquire Scripps for about $11.9 billion. Scripps’ properties include HGTV, Food Network, and Travel Channel. The newly combined company will control “about one fifth of all advertising-supported paid TV in the U.S.,” giving Discovery more clout in its negotiations with traditional pay-TV operators.