The daily business briefing: May 26, 2017
Trump heads to G-7 summit to discuss trade and climate, lawsuit accuses GM of diesel emissions cheating, and more
Trump heads to G-7 summit with trade and climate in focus
President Trump meets with his fellow Group of 7 leaders Friday to start two days of talks in Sicily that are expected to focus on trade and climate change. The other G-7 leaders — from Japan, Canada, Germany, France, Britain, and Italy — are expected to press Trump to ease off his campaign threat to promote a protectionist agenda, and his threat to pull out of the 2015 Paris climate agreement. Trump on Thursday told EU officials that Germany was "very bad" because it sells too many cars in the U.S., vowing to "stop that." White House economic adviser Gary Cohn said on Thursday that Trump will emphasize that doing what's right for domestic economic growth is key. "We will have a very robust discussion on trade and we will be talking about what free and open means," Cohn said on the plane taking Trump to Italy. "What the president means by free and open is, we will treat you the way you treat us, meaning if you don't have barriers to trade or you don't have tariffs, we won't have tariffs."
Lawsuit accuses GM of diesel emissions cheating
General Motors stock dipped late Thursday, closing down by 1.8 percent after a lawsuit was filed in Detroit accusing the automaker of rigging hundreds of thousands of diesel Silverado and Sierra HD vehicles to pass emissions tests. The suit, which is seeking class-action status, says GM used devices similar to those used by Volkswagen to help 705,000 Sierra HD and Silverado models of heavy-duty trucks with Duramax diesel engines cheat on emissions tests. The court papers also say that German auto parts maker Bosch was "an active and knowing participant," supplying key hardware. The trucks allegedly emit two to five times the legal pollution levels in normal driving. The company said it would vigorously fight the lawsuit. "These claims are baseless," GM spokesman Dan Flores said.
Sears shares soar after retailer reports rare profit
Sears reported its first quarterly profit in two years on Thursday, sending its stock rocketing up by as much as 32.5 percent. The struggling retailer boosted its numbers by cutting costs by a third and selling its popular Craftsman tool brand. Sears shares had fallen by 18 percent since March, when company executives expressed concerns about whether the company would be able to turn itself around. Despite the good news, Sears' sales continued to decline, as they have for years due to competition from Walmart, Amazon, and other much stronger rivals.
Judge orders UPS to pay New York $247 million over untaxed cigarette shipments
A federal judge on Thursday ordered UPS to pay $247 million in damages and penalties to New York City and New York state over illegal cigarette shipments. U.S. District Judge Katherine Forrest found the company liable in March, saying it ignored "red flags" indicating that its trucks were being used to ship untaxed cigarettes from Indian reservations. The city and state filed a lawsuit in 2015 accusing UPS of shirking its responsibility to respect local and state tax laws. City and state officials called the penalties a win for public health. UPS said it was unfair to expect the business to serve in a "quasi-law enforcement role" and figure out when sealed packages shipped by customers might contain contraband.
Oil prices struggle in sign of disappointment in OPEC cuts
European stocks and oil prices edged down early Friday as OPEC's agreement to extend oil output cuts underwhelmed investors who had been hoping for deeper reductions to address oversupply problems. "The lack of deeper cuts, or a longer duration, sent [U.S. benchmark West Texas Intermediate] below $48.92," Ipek Ozkardeskaya, a market analyst at London Capital Group, wrote in a note. Oil prices bounced back somewhat after falling by 5 percent after the deal was announced, suggesting volatility after two weeks of price gains as it became increasingly clear that OPEC and non-OPEC producers would renew the deal to reduce output.