MARKET RECAP at 4 pm ET

Wall Street's main indexes ended

lower after a report that the Federal

Reserve plans to cut interest rates by

only a quarter-percentage point at the

end of July. Treasury yields rose.

Gold fell as the dollar firmed. Oil

prices rose, supported by rising

tensions between the U.S. and Iran.

Coming Up - On Monday Halliburton Co is set to post a fall in

second-quarter profit on Monday on

lower demand for its equipment and

services as oil producers rein in their

spending and drill less. Investors will

look for hard evidence of pricing

recovery after Halliburton said in April it

was seeing signs that weak pricing was

on the verge of turning a corner.

Whirlpool Corp is expected to report

higher second-quarter earnings on

Monday, as the U.S. home appliance

maker tries to offset higher steel and

aluminium cost with price increases

and cost controls. Investors will look for

comments on demand trends amid

concerns of an economic slowdown. STOCKS Close %Chng Yr-high Yr-low Chng

DJIA 27154.61 -68.36 -0.25 27398.68 21712.53

Nasdaq 8146.49 -60.75 -0.74 8264.78 6457.13

S&P 500 2976.61 -18.50 -0.62 3017.80 2443.96

Toronto 16485.94 -8.29 -0.05 16672.71 13776.88

FTSE 7508.70 15.61 0.21 7622.58 6599.48

Eurofirst 1523.31 1.40 0.09 1548.20 1308.86

Nikkei 21466.99 420.75 2.00 22362.92 19241.37

Hang Seng 28765.40 303.74 1.07 30280.12 24896.87

TREASURIES Yield Price

10-year 2.0500 -3 /32

2-year 1.8183 -3 /32

5-year 1.8064 -3 /32

30-year 2.5777 -7 /32

FOREX Last % Chng

Euro/Dollar 1.1218 -0.51

Dollar/Yen 107.72 0.40

Sterling/Dollar 1.2501 -0.36

Dollar/CAD 1.3061 0.28

TR/HKEX RMB 93.49 0.04

COMMODITIES ($) Price Chng % chng

Front Month Crude /barrel 56.17 0.87 1.57

Spot gold (NY/oz) 1424.56 -21.44 -1.48

Copper U.S. (front month/lb) 0.0274 0.0004 1.29

CRB Index Total Return 187.49 1.20 0.65

S&P 500 Price $ Chng % Chng

GAINERS

State Street Corp 60.07 3.78 6.72

Citizens Financial Group Inc 36.82 2.20 6.34

Kansas City Southern 123.46 5.47 4.64

LOSERS

Alliance Data Systems Corp 151.59 -6.41 -4.06

Gilead Sciences Inc 65.04 -2.17 -3.23

Symantec Corp 22.27 -0.73 -3.17

Coming Up - Week Ahead

Amazon.com Inc is expected to post a rise in second-quarter revenue on Thursday as the world's biggest online retailer continues to benefit from soaring demand for its cloud and advertising businesses and a surge in online shopping. Investors will keep eyes on the forecast, which would also be helped by Prime Day sales, net sales in North America (its biggest market), AWS sales and ad sales. Facebook Inc is expected to post a

rise in second-quarter revenue on Wednesday as the world's largest social network continues to see a steady rise in its advertising business despite concerns that cloud its privacy and data protection standards. Will be on the lookout for any new comments on user privacy across its platforms, the $5 billion FTC charge, its cryptocurrency (Libra) and concerns over it. On Friday, Twitter Inc is scheduled to report a rise in second- quarter revenue, boosted by growth in its advertising business. Investors will keep a close eye on the company's costs and forecast for the third quarter. Additionally, Snap Inc is expected to post a rise in its second-quarter revenue on Tuesday as its photo-messaging app Snapchat is anticipated to add more users. Investors will focus on daily active user additions, a widely watched metric by investors and advertisers, the company's plan amidst

KEY ECONOMIC EVENTS

National activity Index for June 0830 -- -0.05

Events ET Poll Prior

REUTERS/Brendan McDermid

2

fierce competition from Instagram, average revenue per user and forecast. Google parent Alphabet Inc is expected to post a rise in second-quarter revenue on Thursday, as it benefits from higher ad sales as well as strong contributions from its other businesses like YouTube, Play, Cloud and its hardware initiatives. Investors will be keeping an eye on Google's expenses and any comments by the company on a possible probe by the U.S. Department of Justice. U.S. gross domestic product likely increased at a 1.8% annualized rate in the second quarter, the Commerce Department is expected to say in its advance GDP report scheduled for release on Friday. On Thursday, the Commerce Department is expected to say overall orders for durable goods edged up 0.7% in June after May's 1.3% drop. Also, on Thursday, the Labor Department is scheduled to report initial claims for state unemployment benefits rose to 217,000 for the week ended July 20. On Wednesday, research firm IHS Markit is expected to say its manufacturing purchasing managers index progressed to a reading of 51.4 in July. Additionally, on the same day, the Commerce Department is scheduled to say new home sales for the month of June likely rose 6.6% to a seasonally adjusted annual rate of 659,000. Separately on Tuesday, the National Association of Realtors is scheduled to report existing home sales, which likely remained unchanged at 5.34 million units in June. Boeing Co is scheduled to report lower second-quarter profit and revenue on Wednesday, hurt by the grounding of its best-selling 737 MAX aircraft following two deadly crashes. Investors will look for comments on full-year financial forecast and the progress Boeing is making to get the MAX in the air again. Tesla Inc is expected to post a rise in its second-quarter revenue on Wednesday, powered by record

number of deliveries in the quarter. Investors will look out for any updates on the company's forecast. The company in the past has said it would post a second-quarter loss but return to profit in the third quarter. Ford Motor Co will report second-quarter earnings on Wednesday. The market will be watching to see how the company's restructuring is faring amid falling U.S. and Chinese new vehicle sales. Ford's sales in the United States, its most profitable market, were down more than 3 percent in the first six months of 2019. Caterpillar Inc will release its second-quarter results before market hours on Wednesday. The heavy-duty equipment maker is expected to report higher quarterly profits. Investors, however, will likely focus on how slowing demand for construction machines and rising costs are impacting the company's profit margins. United Technologies Corp is expected to report an increase in second-quarter profit and revenue on Tuesday, helped by higher demand for

aircraft parts and spares. Investors will look for an update on the announced merger with weapons maker Raytheon Co, which will create the world's second biggest aero-and-defense company by sales. Separately on the same day, Lockheed Martin Corp is expected to report a higher second-quarter profit and revenue, helped by an increase in sales of its F-35 jets. Investors will look for comments on the financial implications of the Pentagon's decision to remove Turkish defense firms as parts suppliers for the F-35 program. On Wednesday, General Dynamics Corp is expected to post a rise in revenue for the second quarter as the U.S. defense contractor benefits from strong demand for its Gulfstream business jets. Investors will look for updates on the company's financial forecast. Additionally on Thursday, Raytheon Co is expected to report an increase in second-quarter revenue, helped by higher global demand for advanced weapons and munitions. Investors will look for an update on the announced merger with United Technologies Corp, a deal which will create the world's second largest aero-and-defense company by sales.

A Google logo is seen at the company's headquarters in Mountain View, California, U.S.,

November 1, 2018. REUTERS/ Stephen Lam

3

Visa Inc is slated to report its third-quarter results on Tuesday after markets close. The company is expected to post a rise in quarterly profit, helped by higher customer spending. Harley-Davidson Inc is expected to report lower quarterly earnings on Tuesday, hurt by higher tariff costs as well as a continued slide in sales in the United States. Faced with these headwinds, the company is trying to grow its customer base through rider academies and higher marketing spending. Investors will look for guidance on the potential impact of Harley's strategy on profitability.

McDonald's Corp is expected to post a rise in second-quarter profit and comparable store sales on Friday as its low-price "value" meals drew in more customers. McDonald's has also been making technology-driven investments to improve ordering and delivery. McDonald's international business, however, is expected to face forex and macro headwinds. On Tuesday, Chipotle Mexican Grill Inc is expected to report higher second-quarter sales and profit as new delivery options and a loyalty program get customers to order more often from the burrito chain. Profit margins will also be closely watched as the company invests more in marketing and faces paying higher employee wages. Starbucks Corp is expected to post a rise in third-quarter same-store sales on Thursday, powered by a strong rewards program and innovations like Dragon Drink, Mango Dragon Fruit Refreshers, Cocoa Cloud Macchiato. Growth in China, where it competes with local upstart Luckin' Coffee, will be watched, especially after the coffee

giant opened a new 'Starbucks Now' store in Beijing, that focuses on delivery and order-and-pay customers. AT&T Inc is expected to post a rise in second-quarter revenue on Wednesday. Investors will be on the lookout for postpaid phone subscribers additions/losses, satellite TV losses and revenue from WarnerMedia. On Thursday, Comcast Corp is expected to report a rise in second-quarter revenue, boosted by growth in high-speed internet customers. Investors will be on the lookout for numbers on video subscriber losses and revenue from its NBCUniversal segment as well as any comments on its streaming service, which is expected to launch in 2020. Biogen Inc is expected to report a rise in second-quarter profit on Tuesday on the strength of its multiple sclerosis franchise and Spinraza. Investors will watch out for commentary on the company's strategy after its Alzheimer's trial failures and updates on its pipeline as its biggest products face competition. On Friday, AbbVie Inc, which is buying Botox-maker Allergan, is expected to report second-quarter results. Investors will be looking for progress towards closing the $63 billion deal, and also focus on sales of Humira, AbbVie's blockbuster arthritis treatment that faces competition from cheaper versions in Europe. Anthem Inc will report second-quarter results on Wednesday, when it is expected to provide updates on the progress of its plan to transition customers to its revamped pharmacy benefits business. Investors will also watch for comments on how the health insurer views policy-related uncertainty that could affect its core business in the run up to the 2020 presidential election. Coca Cola Co is expected to report a rise in second-quarter sales on Tuesday on higher demand for its zero-calorie drink Coke Zero Sugar, new orange-vanilla cola and flavored waters in North America. Investors will keep an eye on the performance of its water and energy drink segments, which may have taken a hit due to increased competition. Hershey Co is expected

to post its slowest quarterly sales growth in five quarters on Thursday, as it faces increased competition in North America amidst consumers shifting away from sugary products to healthier options. Investors will look for any comments on the company's pricing strategy and update of full-year forecast.

Intel Corp is expected to report a drop in second-quarter revenue on Thursday, hurt by sluggish demand for its data center and modem chips. Intel had said that China's economy was consuming fewer microchips than it had expected, adding to concerns that an industry wide slowdown could persist until the end of 2019. Texas Instruments Inc is expected to report a drop in second-quarter revenue on Tuesday, hurt by a slowdown in demand for microchips that started late last year. The company's broad lineup of products makes it a proxy for the industry. United Parcel Service Inc is expected to report lower second-quarter earnings per share on Wednesday, due to a global trade cool-down. Investors will look for an update on the company's full-year financial forecast. Hilton Worldwide Holdings Inc is expected to report an increase in second-quarter revenue and profit on Wednesday, as it benefits from steady demand for rooms by corporate travelers in North America. Investors will look for an update on its full-year financial forecast amid concerns of a global economic slowdown. Toy maker Hasbro Inc is expected to report a rise in second-quarter sales and profit on Tuesday, powered by higher demand for action toys following

REUTERS/Yves Herman

REUTERS/Mike Blake

4

the box-office success of "Avengers: End Game". Investors will be interested to know about the company's outlook for the rest of the year, especially given the recently released and upcoming Disney movies. On Thursday, rival Mattel Inc is expected to report a narrower loss in the second quarter boosted by sales of toys based on the new Toy Story movie and the hugely popular Korean boy band BTS. Investors will still keep a lookout for any outlook the company gives for its Barbie dolls over fears that sales could slow due to an upcoming "Frozen" movie, whose doll licenses are held by Hasbro.

3M Co is expected to report lower second-quarter profit and revenue on Thursday, hurt by a slowdown in its high growth markets such as China. Investors will look for an update on the company's full-year financial forecast. Interpublic Group is expected to

report a rise in second-quarter revenue on Tuesday, as the U.S. advertising firm benefits from higher client spending worldwide. Investors will be interested in the ad firms "organic revenue" — a closely-watched industry measure. Travelers Companies Inc reports second-quarter earnings on Tuesday before markets open. PulteGroup Inc is expected to post a fall in second-quarter profit and revenue on Tuesday, as the U.S. homebuilder faces higher raw material costs that could dent margins. Investors will look for updates on the company's financial forecast. Canadian National Railway Co is expected to report a rise in second-quarter profit on Tuesday, benefiting from transporting higher volumes of crude and grains. Investors will look for details on the company's crude-by-rail volumes and a timeline around when Alberta's government could look to end a mandatory output cut that has raised prices and hit shipments. On Tuesday, Rogers Communications Inc is expected to report higher second-quarter profit, as more customers sign up for its wireless services. However, analysts says

average revenue per user are likely to be pressured in near-term as telecoms migrate to unlimited plans. Investors will look out for comments on any impact from these plans in a competitive market that has seen high investments. Food retailer Loblaw Companies Ltd is expected to report higher second-quarter revenue on Wednesday helped by a surge in vegetable prices in Canada. Investors are keen to hear more on Loblaw's unit Shoppers Drug Mart's partnership with a blockchain company to implement a tracking system for medical cannabis industry. Canada's Teck Resources Ltd is expected to report lower second-quarter profit on Thursday, hurt by lower copper and zinc prices. Investors are however more keen on comments on the progress of its Quebrada Blanca Phase 2 copper project in Chile as well as the pace of its shareholder returns after the company announced a C$600 million buyback in May. LIVECHAT – MARKETS UPDATE Mike Dolan, Reuters EMEA Markets Editor, evaluates the state of European markets. (0600 ET/1000 GMT on Monday) To join the conversation, click here

REUTERS/Mike Blake

Company Name* Quarter ET EPS Estimates** Year Ago Rev Estimates (mln) Smart Estimates

KEY RESULTS

Cadence Design Systems Q2 AMC $0.53 $0.53 $0.45 $579.48

Halliburton Co Q2 BMO $0.30 $0.30 $0.58 $5,971.15

Whirlpool Q2 16:10 $3.74 $3.70 $3.20 $5,027.64

*Includes companies on S&P 500 index. **Estimates may be updated or revised; release times based on company guidance or past practice.

I/B/E/S EPS and revenue estimates, and StarMine Smart Estimates, provided by Refinitiv.

5

Wall Street's main indexes edged

lower following a report that the

Federal Reserve plans to cut interest

rates by only a quarter-percentage

point at the end of the month.

According to the Wall Street Journal

report, while the U.S. central bank is

not prepared to make a bigger 50-basis

-point cut, it may make further rate cuts

in the future given concerns about a

decline in global economic growth and

uncertainty about trade. The Dow

Jones Industrial Average fell 0.25%

to 27,154.61, the S&P 500 lost 0.62%

to 2,976.62 and the Nasdaq

Composite dropped 0.74% to

8,146.49. For the week, the S&P 500

fell 1.23%, the Dow lost 0.64% and the

Nasdaq shed 1.19%.

Treasury yields rose after the Wall

Street Journal wrote that the Federal

Reserve is likely to cut rates by 25

basis points when it meets later this

month, after comments by a Fed official

on Thursday raised expectations a

larger cut may be on the cards. The

U.S. central bank is viewed as certain

to cut its benchmark rate at its July 30-

31 meeting. But Fed officials are not

prepared for a 50 basis point rate

decrease, despite increasing market

expectations of such a move, the

Journal said, citing recent public

statements and interviews with

policymakers. Benchmark 10-year

notes fell 3/32 to yield 2.05%. The 30-

year bonds were down 6/32 to yield

2.58%.

Oil prices rose, supported by rising

tensions between the United States

and Iran, but weighed by concerns

slowing economic growth could dent

global oil demand. "Our opinion of the

complex still favors some wide

swinging trade in both directions as

pricing continues to be buffeted by an

array of cross currents that include a

heightening of tensions between the

U.S. and Iran on the bullish side and

mounting global oil demand concerns

on the bearish side," Jim Ritterbusch of

Ritterbusch and Associates said in a

note. Brent futures rose 2.08% to

$63.22 a barrel. West Texas

Intermediate futures were up 1.48%

to $56.12 a barrel.

The dollar rose as fears of a larger-

than-expected 50-basis-point interest

rate cut in July abated after the New

York Federal Reserve walked back

dovish comments from its president the

prior day. At a conference on

Thursday, New York Fed President

John Williams argued for pre-emptive

measures to avoid having to deal with

too-low inflation and interest rates.

Investors are now pricing in a 24.5%

chance of a 50-point cut in U.S. rates

later this month, according to CME

Group's FedWatch tool, easing off the

60.2% probability hit on Thursday. The

dollar index was 0.38% higher at

97.16. The euro was 0.51% lower at

$1.1218.

Gold fell as the dollar firmed and

investors took profits after prices briefly

surpassed $1,450 to hit a six-year peak

on dovish signals from the U.S. Federal

Reserve and is still on course for a

second week of gains. "Speculators

and traders are taking some profits off

the table after the good gains we had in

the past two days. Also, there is always

a little bit of pressure on gold when the

dollar is up," said Michael Matousek,

head trader at U.S. Global Investors.

"With a breakout in gold market,

positions have gotten larger and more

players are in. So, it can get quite a bit

more whippy," said Tai Wong, head of

base and precious metals derivatives

trading at BMO. Spot gold was down

1.48% at $1,424.63 per ounce. U.S.

gold futures were 0.13% lower at

$1,426.30 per ounce.

Market Monitor

6

Top News

BlackRock profit misses estimates,

hit by lower fees for lending stocks

BlackRock took in less cash last

quarter as investors moved into lower-

cost bond funds, and it made less

money lending out stocks. The

company, manager of $6.8 trillion in

assets, missed analysts' estimates for

quarterly sales and profits, despite

attracting $151 billion in new money, as

much of that cash moved into lower-fee

fixed income funds and accounts used

to store cash. The company's revenue

for the three months through June 30

fell 2.2% to $3.52 billion from a year

earlier, affected also by some fee cuts

the company has made and lower fees

for attaining performance targets. Net

income attributable to New BlackRock

fell to $1 billion, or $6.41 per share,

from $1.07 billion, or $6.62 per share, a

year earlier.

Schlumberger names new CEO as

North American business faces

softer demand

Oilfield firm Schlumberger named Chief

Operating Officer Olivier Le Peuch as

its chief executive as the company

looks to shore up its world-leading

position in oil and gas technology

services. The oilfield services provider

also posted higher-than-expected

second-quarter revenue and a year-

over-year profit increase, as demand in

international markets countered

weakness in North America. "North

America remains a challenging

environment," Le Peuch told investors

during a conference call, pointing to

softer pricing and an overcapacity of

equipment, particularly in hydraulic

fracturing. Net income rose about 14%

to $492 million in the second quarter.

Excluding items, the company earned

35 cents per share, in line with Wall

Street estimates.

PepsiCo to buy South Africa's

Pioneer Food for $1.7 billion

PepsiCo has struck a deal to buy South

Africa's Pioneer Food Group for $1.7

billion, the companies said, lifting

Pioneer's shares and boosting a sector

that has been hit by drought and tough

trading conditions. The U.S. drinks and

snack group said that Pioneer's

product portfolio was complementary to

its own and would help PepsiCo to

expand in sub-Saharan Africa by

adding manufacturing and distribution

capabilities. PepsiCo has offered 110

rand ($7.94) per Pioneer ordinary

share in what would be its second

largest deal since 2010, the companies

said, with the news lifting the South

African company's shares by 29.32%

to more than 100 rand.

AmEx warns of higher costs as it

boosts rewards program

American Express warned of higher

operating costs this year as the credit

card issuer spends heavily on rewards

programs to attract customers in an

increasingly crowded market, sending

its shares down. Card reward

expenses jumped 9% in the second

quarter to $2.65 billion, compared with

a 4% rise in the first quarter. "Customer

engagement cost has been and, I

expect, will continue to grow a little

faster than our revenues, and so that

creates a little bit of margin

compression," Chief Financial Officer

Jeffrey Campbell said on a post-

earnings call with analysts. Net income

rose 8.5% to $1.76 billion, or $2.07 per

share. At market close, shares of the

company ended 2.79% lower at

$124.82.

U.S. to grant final approval to

American Airlines-Qantas joint

venture -sources

The U.S. Department of Transportation

(DOT) is set to grant American Airlines

Group and Qantas Airways final

A file photo of traders working on the floor at the New York Stock Exchange in New York, U.S.,

July 16, 2018. REUTERS/Brendan McDermid

7

approval to operate a joint venture after

a prior effort was rejected in 2016, two

people briefed on the matter told

Reuters. An application for a joint

venture covering the United States,

Australia and New Zealand was

rejected in November 2016 by former

President Barack Obama's DOT which

tentatively concluded after a 17-month

review that the venture "would reduce

competition and consumer choice." The

deal will allow the airlines to coordinate

planning, pricing, sales and frequent

flyer programs, with new options and

customer service improvements. The

two OneWorld alliance carriers are

planning up to three new routes within

the first two years as well as increased

capacity on existing routes, the

department has said.

Cummins makes offer for VW's large

engines unit -sources

United States-based diesel engines

maker Cummins has made an

indicative offer for Volkswagen's MAN

Energy Solutions unit, people close to

the matter said, as the carmaker seeks

to slim down its portfolio of disparate

assets. VW has held talks with

Cummins, and received an offer from

the U.S. company for MAN Energy

Solutions, the sources said. VW Chief

Executive Herbert Diess has vowed to

simplify the group which has 12

brands, trucks, buses, motorbikes, cars

and electric bicycles as part of its

business. A Volkswagen spokesman

reiterated that VW is reviewing all

options for the asset, but declined to

comment further on Cummins.

J.C. Penney taps debt restructuring

advisers-sources

J.C. Penney has hired advisers to

explore debt restructuring options that

would buy more time for the money-

losing U.S. retailer to forge a

turnaround, people familiar with the

matter said on Thursday. The

department store chain's move

represents a high-stakes attempt to get

its financial house in order before its

cash coffers dwindle and its debt,

totaling roughly $4 billion, comes due in

the next few years. While J.C. Penney

has more than $1.5 billion available

under a revolving credit line, investors

have continued to sell off the retailer's

shares in response to financial losses.

Its credit rating is deep in junk territory,

increasing its borrowing costs.

Bayer welcomes judge's call for

reduced damages in $2 billion

glyphosate case

Bayer welcomed a call by a U.S. judge

to cut a $2 billion damages award to a

Californian couple by a jury which

found that its glyphosate-based weed

killer had caused their cancer. The

company had in June asked Judge

Winifred Y. Smith, of California's

Alameda County Superior Court, to

overrule the jury verdict that its

Roundup weed killer caused Alva and

Alberta Pilliod's non-Hodgkin's

Lymphoma (NHL), arguing it was not

supported by the evidence. "The

court's tentative order proposes

changes in the damage awards, which

would be a step in the right direction,"

Bayer said in a statement. "Bayer will

wait for a final order on the post-trial

motions before commenting in further

detail."

Airbag maker Autoliv revs up cost

cuts to counter car market slump

Autoliv said it would step up cost cuts

as the car safety equipment maker

became the latest casualty of a

deteriorating auto industry to lower its

2019 sales growth and profit margin

expectations. Autoliv said it would cut

about 1,000 jobs in areas like sales

and R&D and sharpen its purchasing

process, adding it had already slashed

1,200 production jobs during the

second quarter. It reported a fall in

second-quarter operating profit to $170

million from $229 million a year ago.

Kansas City Southern profit beats

on cost controls

Kansas City Southern reported a better

-than-expected quarterly profit, as cost

controls helped the U.S. railroad to

make up for flat carload volume amid

concerns of slowing economic growth.

It reiterated 2019 profit and revenue

forecasts, even as it lowered volume

expectations. It now sees flat to slightly

lower volume for the year, down from

its previous call for growth of 2% to 3%.

Based on the new volume forecast, the

railroad pared its capital spending plan

to "below $600 million" for 2019, versus

up to $660 million previously. Net

income available to common

stockholders fell to $128.7 million, or

$1.28 per share, in the quarter ended

June 30, from $148.2 million, or $1.45

per share, a year earlier.

REUTERS/Edgard Garrido

8

As 'superstar' cities keep winning,

worrisome U.S. divide widens

In the depths of the financial crisis,

when the world was shunning debt and

battening down for the worst, city

officials here zagged in what seemed a

preposterous direction and spent $600

million on a new convention center. A

decade later thousands of new hotel

rooms soar over the site, including a 33

-story Marriott that is just a tiny part of

the investment and jobs boom that has

made Nashville an envy of other cities

trying to find their footing, an image

cemented when Amazon announced it

would put a 5,000-job logistics center

here. "Look at the skyline, see the

activity - whether it is a Monday night

or a Saturday night - the city is

thriving," said Tom Turner, president of

the Nashville Downtown Partnership.

COLUMN-Fed will try to create

firebreak to contain downturn: Kemp

Like booms, recessions help

individuals and businesses make

sense of changes in the level of

economic activity and drive those

changes with their impact on spending

and savings. As the world economy

slows, the U.S. Federal Reserve is now

openly discussing an interest rate cut

designed to ensure a recessionary

narrative does not take root and to

keep the economy expanding. If

policymakers want to avoid recession,

they must avert the initial disturbance

through regulation or prevent it

propagating and accelerating through

the system. In the current slowdown,

the origin was likely the rise in

economic tensions between the U.S

and China.

FOCUS-Expiring US solar subsidy

spurs rush for panels

America’s biggest solar power

developers are stockpiling panels to

lock in a 30% federal tax credit set to

start phasing out next year, a strategy

that could backfire if projects do not

materialize or panel prices slide

substantially. Duke Energy, 8minute

Solar Energy and Shell-backed Silicon

Ranch are among those working to

claim the full subsidy, which is

available to firms that either start

construction or spend 5% of a project’s

capital cost by the end of 2019.

Consumers who purchase residential

solar this year are eligible for the full

tax credit, but the rules that allow the

subsidy to be locked in now for

systems installed much later apply only

to companies.

Venezuelan opposition leader Juan Guaido waves a national flag as he arrives in a boat for a meeting with supporters near Porlamar, Isla de

Margarita, Venezuela, July 18. Prensa Juan Guaido/Leo Alvarez/ Handout via REUTERS

Insight and Analysis

9

CANADA COMING UP - ON MONDAY Market Monitor

Top News

Bad weather unexpectedly hits

Canada retail trade, setback seen as

temporary

The value of Canadian retail trade

unexpectedly dipped by 0.1% in May

as unusually bad weather hit sales of

food, drink and clothing, prompting

analysts to predict the setback would

be temporary. Statistics Canada said

sales fell in four of the 11 subsectors,

representing 39% of total retail trade.

The overall decline was the first in four

months. Sales of food and drink

dropped by 2.0%, which Statscan

linked to unseasonably cold weather

across Canada and heavy rainfall in

some major cities. It was the largest

month-on-month decrease since a

2.4% fall in January 2015. The poor

conditions also helped cut sales of

clothing and clothing accessories by

2.7%. "The weather in May was simply

awful, generally a negative for retail

activity. The sectors hit hardest ... are

consistent with bad weather," said

Benjamin Reitzes of BMO Capital

Markets.

Barrick set to take full control of

Acacia after raising bid

Barrick Gold has struck a deal to buy

out its fellow shareholders in Acacia

Mining with a higher bid than originally

proposed, raising expectations

Acacia's long-running tax dispute with

the Tanzanian government will finally

be resolved. The original buyout

proposal from Barrick, which owns

63.9% of Acacia, drew accusations

from minority shareholders that Barrick

was taking advantage of the Tanzania-

focused company's woes to buy it on

the cheap. But Acacia acknowledged

that a takeover would be the best

solution to its problems. "We will... get

these businesses back on track,"

Barrick Chief Executive Mark Bristow

said in a phone interview, indicating the

company could also sell some of

Acacia's three mines in Zambia, along

with most of its exploration properties.

Health Canada to keep importing

Kaleo's epinephrine shot amid

shortages

The Canadian health regulator said it

would keep importing U.S.-based

Kaleo's epinephrine auto-injectors and

expects adequate supply of the devices

in the country over the coming months.

Health Canada's announcement comes

after Pfizer, that makes Mylan's

EpiPen, notified the regulator that a

shortage of the 0.3mg dose of the

emergency allergy shots may lead to

temporary supply constraints in

Canada. The supply of EpiPen Jr, or

the 0.15 mg dose, is not affected by

this shortage, Health Canada said.

TSE's S&P/TSX composite Price C$ chng % chng

GAINERS

Hudbay Minerals Inc 7.14 0.43 6.41

First Quantum Minerals Ltd 13.31 0.79 6.31

Baytex Energy Corp 1.88 0.10 5.62

LOSERS

CannTrust Holdings Inc 3.62 -0.22 -5.73

BRP Inc 44.83 -2.26 -4.80

Turquoise Hill Resources Ltd 0.83 -0.03 -3.49

Canada's main stock index ended

lower with the Toronto Stock

Exchange's S&P/TSX composite

index closing down 0.05%, at

16,485.94.

The materials sector rose 0.67% to

260.87.

The U.S. dollar rose 0.28% against its

Canadian counterpart to C$1.3061.

Statistics Canada will report the

country's wholesale trade data for

May that is expected to increase by

0.5%.

REUTERS/Mark Blinch

REUTERS/Mark Blinch

WEALTH NEWS TRADE NEGOTIATIONS

U.S.-China officials discuss trade;

Mnuchin eyes possible in-person talks

U.S. and Chinese officials spoke by

telephone on Thursday as the world's two

largest economies seek to end a year-long

trade war, with U.S. Treasury Secretary

Steven Mnuchin suggesting in-person talks

could follow. The United States and China

have been embroiled in a tit-for-tat tariff battle

since July 2018, as Washington presses

Beijing to address what it sees as decades of

unfair and illegal trading practices. China has

countered that any deal needs to be fair and

equitable, leaving the two sides apparently

still far from an agreement to end the back-

and-forth that has roiled global supply chains

and upended financial markets.

U.S. CURRENCY SYSTEM

Fed's Bullard sees cryptocurrencies shifting U.S. financial system

Cryptocurrencies are changing the U.S. currency system in ways that may facilitate illegal activity and instability in prices, St.

Louis Federal Reserve President James Bullard said.

FAILED AGREEMENT

Icahn launches proxy fight after stalled talks with Occidental CEO

Activist investor Carl Icahn formally launched on Thursday a proxy fight against Occidental Petroleum to win control of four

board seats, a regulatory filing showed, after talks with the oil company's CEO failed to reach an agreement.

WALL STREET WEEK AHEAD

Prospect of Fed cut pushing dividend investors into tech, energy

An expected interest rate cut by the Federal Reserve later this month is pushing yield-oriented U.S. fund managers further

afield in search of income at attractive prices.

GLOBAL ECONOMY

Will ECB walk or just talk as rate circus comes to Europe?

The global march towards lower interest rates reaches Europe this week with the European Central Bank expected at least to

signal easier monetary policy, while Turkey's new banking chief is seen taking an axe to the country's rates.

ACQUISITION OFFER

Apollo Global makes offer for France's Coface - sources

Buyout firm Apollo Global Management has approached Coface, the credit insurance company partly owned by French bank

Natixis, with an acquisition offer, people familiar with the matter said.

U.S. SPENDING DEAL

Trump says will not use U.S. debt ceiling to negotiate spending deal with Congress

President Donald Trump said he could not imagine using the United States' debt ceiling as a tool to negotiate a spending deal

with lawmakers in Congress, saying the government's credit rating was sacred.

U.S. Treasury Secretary Steven Mnuchin arrives to attend a news conference at the G7

finance ministers and central bank governors meeting in Chantilly, France, July 18.

REUTERS/Pascal Rossignol

ON THE RADAR

Events ET Poll Prior

Tue: Monthly home price mm for May 0900 -- 0.4%

Monthly home price yy for May 0900 -- 5.2%

Monthly Home Price Index for May 0900 -- 274.7

Existing home sales for June 1000 5.34mln 5.34mln

Existing home sales percentage change for June 1000 0.2% 2.5%

Rich Fed Compostion Index for July 1000 -- 3

Rich Fed, Services Index for July 1000 -- 17

Rich Fed Manufacturing Shipments for July 1000 -- 7

Wed: Build permits R number for June 0800 -- 1.220mln

Build permits R change mm for June 0800 -- -6.1%

Markit Composition Flash PMI for July 0945 -- 51.5

Markit Manufacturing PMI Flash for July 0945 51.4 50.6

Markit Services PMI Flash for July 0945 51.6 51.5

New home sales-units for June 1000 0.659mln 0.626mln

New home sales change mm for June 1000 6.6% -7.8%

Thu: Durable goods for June 0830 0.7% -1.3%

Durables ex-transport for June 0830 0.2% 0.4%

Durables ex-defense mm for June 0830 -- -0.5%

Nondefe Cap ex-air for June 0830 0.2% 0.5%

Advance goods trade balance for June 0830 -- -75.05bln

Wholesale inventories advance for June 0830 -- 0.4%

Retail inventories ex-auto advance for June 0830 -- 0.3%

Initial jobless claims 0830 217,000 216,000

Jobless claims 4-week average 0830 -- 218.750

Continued jobless claims 0830 -- 1.686mln

KC Fed Manufacturing for July 1100 -- -3

KC Fed Composite Index for July 1100 -- 0

Fri: GDP advance for Q2 0830 1.8% 3.1%

GDP sales advance for Q2 0830 -- 2.6%

GDP Cons spending advance for Q2 0830 -- 0.9%

GDP deflator advance for Q2 0830 1.9% 0.6%

Core PCE prices advance for Q2 0830 2.0% 1.2%

PCE prices advance for Q2 0830 -- 0.5%

The Day Ahead - North America is compiled by Pathikrit Bandyopadhyay and Nidhi C Sai in Bengaluru.

For questions or comments about this report, email us at: TheDay.Ahead@thomsonreuters.com.

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A Honduran migrant girl looks on next to her relatives as they rest after their return to Mexico from the U.S. under the Migrant Protection Protocol to wait for their court

hearing for asylum seekers, in Ciudad Juarez, Mexico, July 18. REUTERS/Jose Luis Gonzalez