The daily business briefing: June 29, 2018
Trump touts Foxconn groundbreaking as a result of his 'pro-American' policies, Toys R Us closes shop, and more
Trump touts Foxconn groundbreaking as win for 'pro-American agenda'
President Trump attended the groundbreaking for a major new Foxconn electronics production plant in Wisconsin on Thursday, touting the project as one of "the results of the pro-American agenda." Foxconn, an Asian electronics component maker, announced plans for the factory, where it will make LCD flat-screen panels, 11 months ago as part of a $10 billion investment. The attempt to show off the Foxconn plant as a sign of Trump's push to create jobs came days after Harley-Davidson, which is based in Milwaukee not far from the Foxconn site, said it would have to move production of motorcycles to be sold in Europe overseas to avoid European Union tariffs imposed in retaliation for Trump's steel and aluminum levies.
Last Toys R Us stores closing
Toys R Us is closing its last U.S. stores on Friday, completing a shutdown that is leaving more than 30,000 employees out of work. The retail company, which also owned Babies R Us, was burdened by $5 billion in debt after a leveraged buyout, leaving it unable to make investments as it struggled against online competition. Toys R Us filed for bankruptcy protection last fall and said it would stay open. In January, after poor holiday sales, the company announced it was closing 180 stores, then two months later said it would have to shut all of its 700-plus locations. Its downfall has rattled the stocks of Mattel, Hasbro, and other toy makers.
Stocks rise during lull in trade-war headlines
World stocks mostly gained on Friday during a lull in trade tensions. Stocks have struggled on days when the trade war was in the news. At the end of a turbulent week, however, "Risk sentiment has firmed noticeably on the dearth of new headlines surrounding trade tensions," said Chang Wei Liang at Mizuho Bank in Singapore. In the U.S., futures for the Dow Jones Industrial Average rose by 0.5 percent, and those of the S&P 500 and Nasdaq-100 were up by 0.4 percent and 0.5 percent, respectively. More than half of the Dow's rise came as Nike's shares soared by 9 percent after the sports apparel maker reported better-than-expected earnings and a $15 billion share buyback.
Deutsche Bank fails Fed stress test
Deutsche Bank's U.S. subsidiary failed the second part of the U.S. Federal Reserve's annual stress tests on Thursday. The Fed board objected unanimously to Deutsche Bank's capital plan due to "widespread and critical deficiencies." The German lender's stock dropped by 1 percent in after-hours trading. The Fed also imposed conditions on Goldman Sachs, Morgan Stanley, and State Street Corp., although they all passed the tests. Goldman Sachs and Morgan Stanley can't increase their capital distributions, and State Street has to make some risk management improvements.
California lawmakers pass online privacy law
California lawmakers on Thursday passed a digital privacy law aiming to give consumers greater information about and control over the treatment of their personal information online. The new law is widely seen as the most sweeping set of regulations protecting online privacy in the U.S. It gives consumers the right to know what data companies are collecting and why, as well as how it is shared. The legislation, which goes into effect in January, also makes it easier for people to sue companies over data breaches. Also on Thursday, a watchdog group in Norway released a report describing ways Facebook and Google allegedly give users the impression they have control over their data while nudging them toward making choices that give them less control.