Wednesday Morning Reads

Economy

Back on? The White House is proceeding with its proposal to impose 25% tariffs on $50B worth of goods from China, and place new limits on Chinese investments in U.S. high-tech industries. "This statement is obviously in violation of the consensus reached in Washington recently by both China and the U.S," China's Commerce Ministry declared, pointing to the "trade war hold" announced by Treasury Secretary Steven Mnuchin less than 10 days ago.

"Mexico is going to pay for the wall and they are going to enjoy it," President Trump said at a rally in Nashville, adding that the country was doing "absolutely nothing to stop" an influx of immigrants from Central America. Following the comments, President Enrique Pena Nieto took to Twitter to reject the assertion: "NO. Mexico will NEVER pay for a wall. Not now, not ever."

European Trade Commissioner Cecilia Malmstrom is set to meet U.S. counterparts Wilbur Ross and Robert Lighthizer in Paris, two days before a temporary reprieve from U.S. metal tariffs is due to expire. The European Commission is seeking a permanent exemption from the duties, stating the EU is a U.S. ally and not responsible for global overcapacity of either steel and aluminum.

Looking to put an end to the political turmoil, Italy's Five Star Movement is renewing its attempt to form a coalition government, while the League said it hoped to return to an election as soon as possible. Following Tuesday's unprecedented selloff, Italian bonds are now rebounding amid a local debt auction today that will be a key test of investor appetite.

The nationwide trucker protest in Brazil has been slow to unwind despite a raft of concessions the government offered over the weekend. While major cities are running short on food, gasoline and medical supplies, President Temer downplayed the threats of a military coup. 'What I see is a rejection both in the Ministry of Defense and throughout the military forces to any kind of military intervention."

Stocks

Disney shares closed down 2.5% on Tuesday after ABC announced an abrupt cancellation of hit sitcom Roseanne, a response to a racist tweet from the show's star. "Muslim brotherhood & planet of the apes had a baby=vj," wrote Roseanne Barr, referring to Valerie Jarrett, a former adviser to President Obama. According to Disney (NYSE:DIS) CEO Bob Iger, "there was only one thing to do here, and that was the right thing."

When Google first passed Microsoft's (NASDAQ:MSFT) market cap six years ago, it looked like the companies were going in opposite directions. But sparked by cloud growth and a reorganization of its Windows and Devices Group, Microsoft has surged 40% over the past 12 months, more than five times Alphabet's (GOOG, GOOGL) gain. As of Tuesday's close, Microsoft again topped the market cap of its fellow tech giant at $749B.

Investors are getting ready for Amazon's (NASDAQ:AMZN) annual shareholder meeting today in Seattle, where Jeff Bezos will recap the company's recent moves and take a few questions from shareholders. The gathering will also see some advocacy groups argue that he should separate his dual roles as CEO and chairman, but with Amazon's share price jumping more than 60% over the past year, the governance measure could be a hard sell.

"Why wasn't anybody fired at Facebook (NASDAQ:FB) over the situation at Cambridge Analytica?" COO Sheryl Sandberg was asked on stage at the Code Conference. "The controls in the company on this are under me, and I hold myself responsible for the ones we didn't have," she responded. "And we do fire people at Facebook, but we don't trot them out and make examples of them."

Martin Sorrell is staging a comeback just six weeks after being ousted from WPP, using his same 1980s formula that transformed a shell company into the world’s biggest advertising group. The ad guru is investing £40M of his own money into London-listed Derriston Capital, which will be renamed S4 Capital, in a reverse takeover that will prove if his model is the best way to deliver adverts in the digital age.

Sears CEO Eddie Lampert's hedge fund, ESL, has received "numerous inbound inquiries from potential partners" since it made an offer last month to buy the Kenmore brand and other Sears (NASDAQ:SHLD) assets. In a letter penned to a special committee of the board, Lampert asked for permission to "engage" with those interested parties "to allow us to put forward a definitive proposal that will result in the most benefit to Sears."

Following months of delays, Bayer (OTCPK:BAYRY) has won U.S. approval for its planned takeover of Monsanto (NYSE:MON) - after agreeing to sell about $9B in assets - clearing a major hurdle for the $62.5B deal that will create by far the largest seeds and pesticides maker. The asset sales were the "largest ever divestiture ever required by the U.S.," according to the DOJ's Antitrust Division.

Morgan Stanley led the across the board bank drop on Tuesday, weighed down by the political drama taking place in Italy. Shares fell 5.8%, the most in almost two years, further pressured by comments from Andy Saperstein. Morgan Stanley's (NYSE:MS) co-head of wealth management said he sees "headwinds' in transaction revenue as activity slowed in March and remained slower in April and May.

Fresh off a $7B rescue for its South Korean unit, General Motors (NYSE:GM) is facing a new threat of higher U.S. vehicle import tariffs that could "make or break" its Asian subsidiary. "The success of its restructuring plan hinges on more production for exports, and the two new models to be manufactured here are primarily targeted at the U.S. market to serve that purpose," a source told Reuters.

A Tesla Model S in Autopilot mode has slammed into a parked police cruiser in Laguna Beach, California, as the feature comes under scrutiny following other recent crashes. "When using Autopilot, drivers are continuously reminded of their responsibility to keep their hands on the wheel and maintain control of the vehicle at all times. Autopilot doesn't make the car impervious to all accidents," Tesla (NASDAQ:TSLA) said in a statement.

Virgin Galactic reached 114K feet above Earth in the second powered flight of its Unity spacecraft, putting the company only months away from launching its first commercial passengers. "It will be something like two or three more flights before we're actually in space," declared founder Richard Branson. Galactic, which is competing with Jeff Bezos' Blue Origin (BORGN), has more than 700 would-be astronauts signed on to launch, with tickets priced at $250K per flight.