Inside Finance - August 19th, 2019

Inside Finance (Aug 19th, 2019)

Businesses Consider "All Stakeholders" / POTUS "Not Ready" for Trade Deal / GE Expands on Fraud Claim Response

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1. Stocks are up again today after White House officials spent the weekend downplaying recession concerns. At last check, the Nasdaq was leading gains with a 1.65 percent rise. The S&P 500 was up 1.45 percent and the Dow was up 1.11 percent. The gains follow comments from White House economic adviser Larry Kudlow, trade adviser Peter Navarro, and the president himself—all disputing the validity of rising recession concerns (Navarro went so far as to dispute that the yield curve inverted last week). Meanwhile, China and Germany announced recession-style stimulus packages to help their economies. – CNN

2. Should businesses put their shareholders first, above all else? For a long time, the answer from U.S. business leaders has been a resounding "yes." But that changed this morning when nearly 200 leaders behind the country's biggest companies said businesses should instead consider "all stakeholders." Instead of just shareholders (those who own stock in the company), stakeholders include employees, customers, suppliers, and the society in which businesses operate. The impact of this statement remains to be seen, but it certainly demonstrates a shift from the thinking of previous decades. The group is led by JPMorgan Chase CEO Jamie Dimon, who said the shift reflects the business community's view that "the American dream is alive, but fraying." – WSJ

3. In the latest trade war development, the Trump administration has delayed a ban on Huawei technology. Commerce Secretary Wilbur Ross cited concerns about rural areas, where some companies rely entirely on Huawei products for its telecom services. Meanwhile, the president says he's "not ready" to strike a trade deal with China. That might not be a problem, since the president himself said last month that China wants to wait until after the 2020 election to get serious about trade negotiations. Separately, President Trump said Apple's Tim Cook "made a very compelling argument" against tariffs. Cook compared Apple's situation to that of Samsung's, which produces many of its products domestically and doesn't face tariff barriers. – NPR

4. GE has further responded this morning to the serious fraud allegations leveled against the company last week. In the detailed response and its accompanying Q&A, the company said: "We operate with absolute integrity and stand behind our financial reporting." Separately, former SEC chairman Harvey Pitt raised concerns about the way the fraud claims surfaced. He questioned why Harry Markopolos, who is famous for blowing the whistle on Bernie Madoff's Ponzi scheme, didn't first report his findings to the SEC. Markopolos' report claimed that GE was "the next Enron" and "on the verge of insolvency." – CNBC

5. The women who play soccer on the U.S. team are taking their fight for equal pay to court. Talks between the U.S. Soccer Federation and players broke down last week. Megan Rapinoe, the national team's co-captain, said: "We want to be paid equally [to men], period." The USSF, in turn, accused the players' representation of taking an "aggressive and ultimately unproductive approach" to negotiations. It also claimed that women have, in fact, been paid more than men, but the national men's team was quick to dispute that claim. – ESPN

6. Federal Reserve Chairman Jerome Powell is preparing to give a speech on Friday, and analysts will be paying close attention. They'll be looking for any signs of further rate cuts, in light of recent economic data and recession concerns. Powell coupled July's rate cut with a warning that analysts shouldn't necessarily expect any more rate cuts. – BLOOMBERG

7. Kroger grocery stores have started selling vegan egg alternatives. It's the latest step into the mainstream for animal product alternatives. Beyond Meat has seen its stock value increase by more than 400 percent, since it first went public in May. – CNN

8. J.P. Morgan analysts say the newest round of tariffs, set to take effect in September and December, will bring the total tariff cost on each household to $1,000. So far, the tariffs have cost each household an average of $600. The tariff's effects aren't felt evenly, but neither are the Trump administration's efforts to curb the effects with government subsidies. Those subsidies have, so far, gone to the agriculture sector. – CNBC

9. The auctioning of a 1939 Porsche prototype went horribly wrong, and it was caught on camera. The auction started at $13 million, but the screen showed $30 million. The mistake continued from there until the auction ended at $17 million, or $70 million by the screen's reading. However, $17 million didn't meet the reserve price, so even if there hadn't been the screen mishap, the auction still wouldn't have gone through. – BUSINESS INSIDER

10. In the latest streaming wars news, Disney plans to snub Amazon when it rolls out its streaming service. Disney+ is slated to debut in November, and you'll find it on most streaming devices—Roku, iOS, Chromecast, Xbox One, and more—but you won't find it on Amazon's Fire TV. However, there's still plenty of time for Disney to change its mind before November. Cue backroom negotiations... – CNBC

Schuyler Durham writes Inside Finance. He’s a lifelong Portlander who got his start covering the local music scene, but later became enamored with the complexities of financial and political reporting. After three years in broadcast news, he's now diving back into the digital realm. You can keep up with his writing on Twitter at @SchuylerWriter or watch him goof around on Instagram at @bitterbuddha.

Editor: David Stegon (senior editor at Inside, whose reporting experience includes cryptocurrency and technology).

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