Friday Morning Reads, News, Options, Charts

Economy

President Trump has snubbed an offer from the EU to eliminate tariffs on cars if the U.S. did the same, declaring it "not good enough" as European "consumer habits are to buy their cars, not to buy our cars." In the interview with Bloomberg, he also said the EU is "almost as bad as China, just smaller," then told aides he supports tariffs on an additional $200B in Chinese goods as early as next week.

Other Trump statements: He doesn't regret appointing Jerome Powell as Fed Chairman and said Jeff Sessions' job is safe until at least the November elections. Trump is also thinking about linking capital gains taxes to inflation and is seeking to eliminate pay raises for civilian federal employees next year. He'll also withdraw from the World Trade Organization if it doesn't "shape up."

Growth in China's factory sector unexpectedly picked up in August after a two-month slide, with the official manufacturing PMI coming in at 51.3, up from 51.2 in July. Trade tensions? Despite the slight improvement, export orders shrank for a third straight month and there was a rise in the inventories of finished goods, suggesting that demand was not keeping up with output.

It's a data-heavy day in Brazil, with second-quarter gross domestic product figures coming out at 8 a.m. ET amid worsening forecasts. A trucker strike weighed heavily on the economy during the period, bringing commerce and business activity to a near halt. Later, at 9:30 a.m., the central bank will release budget data amid a persistent fiscal crisis.

The Argentine peso has overtaken Turkey's lira to become the worst performer in foreign exchange markets in 2018 after a 15 basis points rise in interest rates on Thursday failed to halt the decline of the currency. That takes the peso's year-to-date decline against the dollar to 51.7%, past the 42.9% drop the lira is nursing. Other emerging market currencies are also in pain, like the South African rand and India's rupee.

Gold rose overnight as investors hedged against risks stemming from ongoing trade tensions, with $1,200 acting as a strong support, but the bullion was headed for its fifth straight monthly decline. That's the longest monthly losing streak since 2013. Prices have declined about 7.7% so far this year amid rising U.S. interest rates and international trade disputes, with investors preferring the dollar as a safe haven.

The SEC wants to make it easier for individuals to invest in private companies, including some of the world's hottest startups, and is considering an overhaul of rules intended to protect mom-and-pop investors. For decades, regulators have typically walled off most private deals from smaller investors, who must meet stringent income and net-worth requirements to participate because of the added risk private investing holds.

Stocks

Coffee dreams... Britain's Whitbread (OTCPK:WTBCY) has agreed to sell coffee chain Costa to Coca Cola (NYSE:KO) for an enterprise value of £3.9B ($5.1B). Whitbread bought Costa, now Britain's biggest coffee chain, for £19M in 1995. At the time, it had just 39 outlets, but now has more than 2,400 U.K. coffee shops, as well as some 1,400 outlets in 31 overseas markets. KO +1.1% premarket.

Lyft has started the process for an initial public offering, hiring adviser Class V Group to work closely with management as they embark on the process, Bloomberg reports. The ride hailer raised $600M in its most recent funding round led by Fidelity Management in June, doubling its valuation to $15.1B. LYFT operates in roughly the same number of U.S. cities as rival UBER, which is also planning to go public next year.

Not often seen at car expos, Tesla (NASDAQ:TSLA) is heading to the new and selective Grand Basel show next week that will center on "automotive masterpieces." The EV automaker got in with a mystery car (next-gen Roadster?), according to Electrek. Separately, a new SEC filing has revealed BlackRock (NYSE:BLK), a top-10 Tesla stockholder, voted in favor of the recent proposal that would have replaced Elon Musk with an independent chairman.

With Tesla shares briefly dipping below the $300 level on Thursday, the electric carmaker ceded its spot as the most shorted U.S. stock to Amazon (NASDAQ:AMZN), according to data from S3 Partners. Still soaring? Amazon shares rose above $2,000 for the first time yesterday (approaching a $1T market cap) as the company announced plans to sell food and drinks online in Mexico, including snacks, sweets and wines.

At a briefing with the media in New York, Walmart (NYSE:WMT) said it will expand its assortment of toys by 30% at all brick-and-mortar locations this holiday season and will offer 40% more toys on Walmart.com. The aggressive push comes after hundreds of Toys R Us stores were shuttered earlier this year, leaving a window for other retailers to step in and take market share.

More from the IFA consumer electronics show in Berlin... Chinese tech giant Lenovo (OTCPK:LNVGY) has launched the world's first dual screen laptop. The Yoga Book C930, which includes a digital keyboard and bluetooth stylus, will cost €999 and be available at the end of September. After a difficult couple of years, Lenovo saw PC shipments rise over 11% Y/Y in the second quarter of 2018.

Marking its first official accounting of the period, China's ZTE (OTCPK:ZTCOY) disclosed a loss of 7.8B yuan ($1.1B) during the first half of the year after a ban on purchasing American supplies forced a life-threatening shutdown of the telecom equipment maker. The Trump administration eventually reversed the sanctions in exchange for a $1B fine, a purge of senior management and a new compliance monitor.

A trading blip at Nasdaq. In an error that dates back to November 2011, the exchange said certain orders, called minimum quality orders, were mistakenly included in the opening and closing "cross" where outstanding orders are executed. While the glitch affected more than a thousand trades, it represents a tiny fraction of Nasdaq's (NASDAQ:NDAQ) trading activity.

Boeing has scored a major contract to build new MQ-25A Stingray drones for the U.S. Navy that will fly from aircraft carriers to refuel combat jets. It beat out Lockheed Martin (NYSE:LMT) and General Atomics to secure an initial $805M contract to build the first four Stingrays, but there are plans for an additional 72 of the drones for a total program cost of about $13B. The win could give Boeing (NYSE:BA) an advantage in developing future unmanned systems for the military.

Japan's defense ministry is requesting its biggest budget increase in five years at 5.3T yen ($48B). A large chunk of the spend is for Lockheed Martin's (LMT) Aegis Ashore ballistic missile defense system to shield the entire Japanese archipelago. Besides threats from North Korea, Japan has come under pressure to buy more military equipment from the U.S., which defends Japan under a postwar security pact and stations some 54K military personnel there.

More time... The Federal Reserve is giving Deutsche Bank (NYSE:DB), Barclays (NYSE:BCS), Credit Suisse (NYSE:CS), UBS and Prudential Financial (NYSE:PRU) an additional year to submit "living wills" detailing how they could be safely dissolved in a crisis. The Fed, along with the FDIC, said the extension would allow them to provide additional feedback to banks and give them more time to prepare the new plans.

Google and Mastercard are said to have formed a secret partnership to track whether online ads led to sales at physical stores, sources told Bloomberg, amid heightened concerns over consumer data. Neither company publicly announced the partnership, which gave Google (GOOG, GOOGL) an invaluable tool for measuring retail spending, but the tech giant paid Mastercard (NYSE:MA) millions of dollars for the information.

As part of plan to combat vision problems and other ills, the Chinese government is tightening its control over videogames, including restricting the number of online games and limiting play time for children. The clampdown, which sent shares of Tencent (OTCPK:TCEHY) and NetEase (NASDAQ:NTES) down as much as 7%, builds on a wider campaign against online content that started in March when Chinese regulators froze sales of new game releases.

The California Assembly has voted to enshrine net neutrality in state law, the latest effort by California lawmakers to drive national policy and rebuff President Trump. The measure, if signed by Gov. Jerry Brown, is likely to face a legal challenge. The FCC has declared that states cannot pass their own net neutrality rules, though proponents of the California legislation say that only Congress can tie states' hands. Related stocks: ATUS, CMCSA, CTL, CHTR, FTR, T, VZ, NFLX, DISH, CCOI, S, TMUS