Business

By Katanga Johnson

WASHINGTON (Reuters) -The top U.S. corporate lobby group filed a lawsuit on Thursday against Wall Street’s regulator over the agency’s recent vote to rescind rules that critics said impeded the independence of firms that advise investors on how to vote in corporate elections.

The move by the U.S. Chamber of Commerce, in addition to the Washington, D.C.-based Business Roundtable and the Tennessee Chamber of Commerce & Industry, claims the Securities and Exchange Commission (SEC) failed to “follow proper procedures or provide adequate justification for its decision to roll back the 2020 Proxy Advisor Rule before it was allowed to take effect.”

The move by the SEC earlier this month was the latest in a long-running battle over how to regulate proxy advisers like Institutional Shareholder Services and Glass Lewis, which advise investors how to cast their ballot on issues including the election of directors, merger transactions and shareholder proposals.

Corporations have said the advisory companies have amassed too much sway over corporate elections and should be more tightly regulated.

“The 2020 Proxy Advisor Rule was put in place to protect investors and to boost the competitiveness of the U.S. public capital markets,” said Suzanne Clark, the President and CEO of the Chamber of Commerce.

“However, the SEC’s recent actions will deteriorate the public company model, ultimately depriving main street investors and everyday Americans dynamic growth opportunities to help build wealth and save for retirement.”

The agency’s recent rules specifically rescind two exemptions, introduced under former President Donald Trump, including a requirement that proxy advisers provide a first look to corporations of the advice to be placed on the agenda. It also removed a requirement that allowed clients of proxy firms to be notified of any written responses to their advice from companies.

The Wall Street regulator, whose composition has changed under President Joe Biden, first proposed these rule changes in November and said investors had expressed concerns that the conditions created increased compliance costs for proxy advisers and impaired the independence and timeliness of their advice.

The SEC declined to comment.

Wednesday’s lawsuit is the latest in a flurry of such legal challenges filed by industry groups.

The National Association of Manufacturers and The Natural Gas Services Group Inc filed a suit contesting the changes earlier this month.

(Reporting by Katanga Johnson in WashingtonEditing by Nick Zieminski)

source

By Michael Erman and Leroy Leo

(Reuters) -Merck & Co on Thursday reported higher-than-expected second-quarter earnings and revenue on strong sales of its blockbuster cancer immunotherapy drug.

Much of that beat came from better-than-expected sales of Merck’s top-selling drug Keytruda and increased demand for its Gardasil vaccine, which protects against cancers caused by the human papillomavirus (HPV).

The results were reported a day after U.S. Democratic Senator Joe Manchin and Senate Democratic leader Chuck Schumer agreed on a bill to help curb drug prices.

The proposed bill aims to cap out-of-pocket drug costs for recipients of Medicare – the U.S. health insurance for those 65 and older – at $2,000 a year, and also provide free vaccines for seniors.

Merck Chief Executive Rob Davis said the proposed bill could have a “highly chilling” effect on innovation, but he does not see it hurting sales of Keytruda and Gardasil in the near-term, if it is passed.

With Merck expected to lose patent protection for Keytruda in 2028, the company could also consider a subcutaneous or other versions of the drug, which is currently given by intravenous infusion form.

“I think there is a path to think about that innovation,” said Merck research chief Dean Li.

Keytruda has come to the attention of U.S. lawmakers over tax issues.

On Wednesday, U.S. Senator Ron Wyden, a Democrat, sent a letter to Merck suggesting the company had avoided billions of dollars of U.S. taxes owed from Keytruda sales in recent years by booking all the profits from the treatment outside of the United States.

Merck in an emailed statement on Wednesday said they have responded with information they believe appropriately addressed inquiries made in two letters received from the Senate Finance Committee.

Excluding one-off items, the company said it earned $1.87 a share, 17 cents higher than analysts on average expected, according to Refinitiv data.

The company reported $5.3 billion in sales of Keytruda, compared with analyst estimates of $4.9 billion.

Merck also narrowed its full-year earnings forecast to $7.25 to $7.35 per share, below Wall Street estimates of $7.37 per share.

Merck shares were down about 2% on an off day for many drugmakers following Wednesday’s proposed drug pricing bill announcement.

(Reporting by Michael Erman in New Jersey and Leroy Leo in Bengaluru; Editing by Bill Berkrot)

source

By Anshuman Daga

SINGAPORE (Reuters) -Asia-focused lenders HSBC, Standard Chartered and their Southeast Asian peers such as DBS are set to report an improvement in second-quarter net interest income, a key source of revenue, benefiting from higher interest rates.

But analysts warn that rising credit impairments and weak financial markets could weigh on banks’ performance as the macro environment deteriorates.

Singapore banks are expected to report 10 basis points net interest margin expansion on a quarter-to-quarter basis, the highest over the last eight quarters, outperforming Asian peers, according to JPMorgan analyst Harsh Wardhan Modi.

“We are seeing the highest pace of rate hikes in the shortest span of time in at least 20 years,” he said.

“My sense is that not only will second quarter numbers meet our expectations but guidance from managements will reaffirm much better net interest margin outlook for the second half of the year.”

United Overseas Bank, the smallest-listed Singapore lender, unveils results this Friday, followed by Overseas-Chinese Banking Corp on Aug 3, and DBS a day later.

Singapore’s central bank tightened its monetary policy this month, saying the action would slow inflation. It expects the city-state’s growth to come in at the lower half of the 3-5% forecast range for 2022.

Morgan Stanley analysts said their earnings estimates upgrades for Singapore banks were mainly due to higher net interest income, driven by faster than expected rate hikes.

“However, higher net interest income estimates are offset by lower non-interest income estimates, as we expect headwinds for fee income and trading income to remain for a while,” the analysts said.

Refinitiv data shows analysts on average expect OCBC’s Q2 net profit to rise by 10% from a year ago, UOB’s to rise by 9%, while DBS’ profit is set to ease by 1%.

CHINA PROPERTY IMPACT

Analysts will also pay attention to banks exposure to China’s property sector, which has seen a string of debt defaults by developers and protests by homebuyers threatening to stop mortgage payments.

Chinese banks report their half-yearly results next month.

London-listed HSBC and StanChart, both of which make the bulk of their revenue in Asia, are set to report strong underlying net interest income on rising interest rates but impairments and higher costs are likely to be a big drag on results.

European banks are set to show their weak spots when they update investors on how their business has fared this year.

Credit Suisse analysts said in a note that the strength in net interest income at HSBC would be offset by weaker wealth revenue and lower capital ratios in the quarter.

HSBC is expected to post a 22% fall in pre-tax profit to $3.98 billion in the second quarter, based on consensus analyst estimates compiled by the bank. It reports results on Aug 1.

StanChart, which unveils its numbers this Friday, is expected to report statutory pre-tax profit of $989 million, down 14% on the year, according to consensus analyst estimates compiled by the bank.

Beyond the numbers, investor focus will be on HSBC’s response to a break-up proposal put forward by its biggest shareholder, Ping An Insurance Group Co of China.

In India, HDFC Bank, the country’s largest private lender, kicked off banks’ results with a 19% rise in quarterly net profit as provisions for bad loans dropped and loan growth picked up. But the results came below market estimates.

(Reporting by Anshuman Daga; Graphics by Harshita Swaminathan and Shashwat Awasthi; Editing by Sumeet Chatterjee and Elaine Hardcastle)

source

(Reuters) – Netflix Inc said on Wednesday it is currently experiencing issues with streaming on all devices.

There were around 1,300 incidents of people reporting issues with Netflix, as of 0051 GMT, according to outage-tracking website Downdetector, which collates status reports from a number of sources in the United States.

(Reporting by Anirudh Saligrama in Bengaluru; Editing by Sherry Jacob-Phillips)

source

Israel Bans Use of Large Sums of Cash

Cash deals exceeding 6,000 NIS ($1,700) will be illegal, as part of the effort to fight against money laundering and criminal activity; the law will exempt charitable institutions and trade with West Bank Palestinians

A new law is set take effect in Israel starting August 1 that will ban payments of large sums of money in cash and bank checks. The goal of the reform, according to a statement issued by Israel’s Tax Authority, is to fight organized crime, money laundering and tax noncompliance.

Under the new law, any payment to a business above 6,000 NIS ($1,700) must be made using alternative methods, such as a digital transfer or a debit card. Trading between private citizens who are not listed as business owners will be limited to 15,000 NIS ($4,360) in cash. This is another step in Israel’s fight against the use of cash. Previously, cash up to the amount of 11,000 NIS ($3,200) could be used in business deals.

“We want the public to reduce the use of cash money,” Adv. Tamar Bracha, who is in charge of executing the law on behalf of Israel’s Tax Authority, told The Media Line. “The goal is to reduce cash fluidity in the market, mainly because crime organizations tend to rely on cash. By limiting the use of it, criminal activity is much harder to carry out.”

For that to happen, there must be less cash in the market.

Uri Goldman, an attorney who represented clients in an appeal against the law in 2018, claims the main problem with the law is that it is simply not efficient.

“We were in the discussions about the bill. The data we brought showed that since the first phase of the law was in effect, the amount of cash on the market only increased. So clearly, something’s not working,” Goldman told The Media Line.

Goldman also explained the downside of the law. “When the bill passed there were over a million citizens without bank accounts in Israel. The law would prevent them from conducting any business and would, practically, turn 10% of the population into criminals,” he said.

There are some exemptions to the new law: charitable institutions, which are most common in ultra-Orthodox society; and trade with Palestinians from the West Bank, who are not citizens of Israel. In the case of the latter, deals including large amounts of cash will be allowed, yet they will require a detailed report to Israel’s Tax Authority.

Bracha says these exceptions are limited in time and are meant to help institutions and populations that have no other alternative, by giving them time to change their payments methods.

Goldman does not think this will help. “I don’t think anyone will find a solution,” he said. “This part of the law basically promises Palestinians from the West Bank and ultra-Orthodox Jews a way out. It’s unfair to the rest of the people, and I’m doubtful it will change in the future.”

The law, originally proposed in 2015, was initially approved in 2018. In its original form it included an article banning the private holding of large sums of cash money, and limiting the permitted sum to 50,000 NIS ($14,500). While this article did not pass at the time, Israel’s Finance Ministry intends to bring it to a vote in the country’s parliament again after the upcoming elections.

According to the Tax Authority, several other countries have parallel laws, and they have proven to be effective. Critics, however, think at least one aspect must change for the law to work.

“They should permit people, at least once, to declare all the cash money they have and put it in the bank. Otherwise, the cash might not be used like before, but it’s still out there, going around. If they find the legal way to do this, it could start a change,” Goldman said of the idea that he noted was suggested in the preliminary discussions about the law but was never approved.

source

By Richa Naidu and Susan Mathew

LONDON (Reuters) – Europe’s largest consumer-focused firms are seeing no shortage of demand despite a cost-of-living crisis, prompting several to upgrade sales forecasts for the current year.

Britain’s Reckitt Benckiser, maker of Dettol and Lysol cleaning products, on Wednesday raised its full-year revenue forecast after steep price hikes helped it beat second-quarter sales expectations.o

France’s Danone also lifted its annual revenue growth forecast after second-quarter like-for-like sales beat analysts’ estimates on strong demand for baby food and bottled water.

Like rival Unilever, Reckitt and Danone have mainly relied on price rises to drive revenue. The biggest question for investors is how long that will continue.

“What we’ve seen is that the consumer has accepted these price increases but inflation is not pulling back,” said Ashish Sinha, portfolio manager at Unilever and Reckitt shareholder Gabelli. “So as inflation increases, that raises questions on demand elasticity.”

Shops and supermarkets in Britain increased prices by 4.4% in the 12 months to July, the largest rise since these records began in 2005, reflecting a jump in food and transport costs, the British Retail Consortium said on Wednesday.

Even McDonalds, which offers some of the cheapest meals on the high street, said Wednesday that it would raise the price of a cheeseburger by 20 pence to 1.19 pounds ($1.44) – the first increase for 14 years.

LUXURY GOODS IN VOGUE

Middle- and high-income households were able to build up substantial savings during the pandemic as restrictions made everything from foreign holidays to eating out more difficult. While some of these savings have since been eroded by inflation, they still have more flexibility to buy premium items.

In contrast, low-income households have been hit proportionately worse by inflation that richer ones because more of their income is spent on essential items ranging from food to fuel and accommodation.

The increased affluence has resulted in booming demand for luxury items such as sports cars and designer handbags.

LVMH, the world’s biggest luxury goods firm, on Monday reported better than expected second-quarter sales, with robust U.S. growth and a recovery in Europe offsetting declining revenue in Asia.

“We’re growing double digit with most of our brands so we cannot complain about European customers. On top of that we’ve got significant tourist activities in Europe,” said LVMH financial chief Jean Jacques Guiony.

American tourists vacationing in London have been spending more because of the strong dollar.

For now, the increased prosperity of affluent consumers is offsetting the hit to revenues from lower earners spending less.

Automaker Mercedes, healthcare firm GSK, chocolatier Lindt, and sportswear maker Puma also upgraded sales forecasts this week.

“It’s one of those moments where investors are looking at these results in Europe and thinking … business has been resilient,” said Danni Hewson, financial analyst at AJ Bell.

($1 = 0.8293 pounds)

(Reporting by Richa Naidu and Susan Mathew; Writing by Matt Scuffham; Editing by Kirsten Donovan)

source

JOHANNESBURG (AP) — A big pink diamond of 170 carats has been discovered in Angola and is claimed to be the largest such gemstone found in 300 years.

Called the “Lulo Rose,” the diamond was found at the Lulo alluvial diamond mine, the mine’s owner, the Lucapa Diamond Company, announced Wednesday on its website.

The Lulo mine has already produced the two largest diamonds ever found in Angola, including a 404-carat clear diamond.

The pink gemstone is the fifth largest diamond found at the mine where 27 diamonds of 100 carats or more have been found, according to Lucapa, which is based in Australia.

The pink diamond will be sold by international tender by the Angolan state diamond marketing company, Sodiam. Angola’s mines make it one of the world’s top 10 producers of diamonds.

“This record and spectacular pink diamond recovered from Lulo continues to showcase Angola as an important player on the world stage for diamond mining and demonstrates the potential and rewards for commitment and investment in our growing diamond mining industry,” Diamantino Azevedo, Angola’s Minister of Mineral Resources, Petroleum and Gas said, according to the Lucapa website.

The pink diamond is an impressive size but many clear diamonds are larger than 1,000 carats. The Cullinan diamond found in South Africa in 1905 tips the scales at 3,106 carats and it’s in the British Sovereign’s Scepter.

source

Boeing Co. reported a $193 million profit for shareholders in the second quarter, but the results fell short of Wall Street targets for earnings and revenue as its defense business weakened compared with a year ago.

The company generated more cash than in the first quarter by delivering more planes than it has since the start of the pandemic, and it sold more services to airlines and other airplane operators.

However, Boeing remained unable to deliver one of its best-selling planes, the 787, while regulators review steps the company is taking to eliminate production problems.

Revenue from Boeing’s normally steady defense business fell 10% in a year, and it took charges of $147 million related to an unmanned refueling plane being developed for the Navy and $93 million for its Starliner spacecraft, which is designed to ferry crews to the International Space Station.

A Boeing spokesman said the charge for the Starliner was unrelated to the announcement Tuesday by Russia’s top space official that his country will pull out of the ISS program after 2024 and build its own orbiting station.

David Calhoun, who became CEO as Boeing’s financial situation worsened following two deadly of Max jets, said the results showed that “we are building momentum in our turnaround” while acknowledging that “it has been a long road.”

In a note to employees, Calhoun highlighted an increase in the number of 737 Max jets rolling off the assembly line — 31 a month, although that figure could fluctuate. He also said Boeing “is in the final stages” of working with the Federal Aviation Administration to resume deliveries of the larger, two-aisle 787, which Boeing calls the Dreamliner.

Second-quarter net income was $160 million, but the gain attributable to shareholders was $193 million. That was down from $587 million a year earlier.

Excluding adjustments for retirement plan expenses and other special items, the company lost 37 cents per share. Analysts expected an adjusted loss of 13 cents per share, according to FactSet.

Total revenue slipped 2% to $16.68 billion, falling short of Wall Street’s forecast of $17.57 billion, despite an increase in airliner deliveries to 121 planes from 79 a year earlier. Boeing gets much of the purchase price upon delivery.

Shares of Boeing, based in Arlington, Virginia, rose about 3% in trading before the market opened Wednesday.

source

By Oliver Hirt

(Reuters) -Credit Suisse Group AG is expected to announce Ulrich Koerner as its new chief executive, the latest management churn at the Swiss bank as it struggles to recover from a series of scandals, two sources familiar with the situation said on Tuesday.

Pressure had been mounting on current CEO Thomas Gottstein for months over major scandals and losses racked up during his two-year tenure that have hammered shares and angered investors. In recent months some investors had called for replacing Gottstein, but the bank resisted.

Another senior executive, Christian Meissner, head of the lender’s investment bank, is also planning to leave the group, the Financial Times reported.

One of the sources said the bank was expected to announce the change in CEO on Wednesday along with its quarterly results.

Credit Suisse declined to comment. Meissner did not respond to requests for comment from Reuters.

When Gottstein took the helm in 2020, he promised a “clean slate” for the bank, which was recovering from an internal spying scandal that cost his predecessor Tidjane Thiam his job.

Since Thiam left in February 2020, the stock is down nearly 60% and troubles at the bank have only escalated. In 2021, the bank disclosed a $5.5 billion loss from the unraveling of U.S. investment firm Archegos and the collapse of $10 billion worth of supply chain finance funds. The events prompted management ousters, investigations, and a capital increase – followed by further losses and fresh legal cases.

Credit Suisse brought in Koerner in April 2021 to lead its newly separated asset management division following the collapse of the $10 billion worth of supply chain finance funds linked to insolvent financier Greensill Capital.

Koerner returned to Credit Suisse from arch-rival UBS, where he most recently served as adviser to the CEO from 2019 to 2020. He ran UBS Asset Management from 2014 to 2019. Koerner was previously a senior executive at Credit Suisse Financial Services and ran the Swiss business.

Koerner, who used to work for McKinsey, is considered a restructuring expert in Switzerland.

Nevertheless, the appointment would follow other major European banks where diversity at the top has been lacking. The 25 biggest banks by assets have seen 22 changes in chief executive and chair over the past two years according to a Reuters review of senior industry roles. Twenty-one of those 22 jobs went to men.

This spring, Credit Suisse’s chairman Axel Lehmann reiterated his support for Gottstein after Artisan Partners, the bank’s ninth-largest shareholder, had publicly called for Gottstein to be replaced.

“I fully back him because he is good,” Lehmann said in a CNBC interview at the World Economic Forum meeting in Davos. He dismissed as “rumors and speculations” talk that Gottstein could be on his way out.

The WSJ earlier reported that Gottstein may soon be replaced, days after Swiss newspaper SonntagsZeitung reported the bank is considering further cost cuts.

(Reporting by Oliver Hirt in Zurich, Shivam Patel in Bengaluru and Elisa Martinuzzi in London; Additional writing by Megan Davies; Editing by Devika Syamnath and Richard Pullin)

source

By Paresh Dave and Nivedita Balu

(Reuters) -Google search ads lifted parent Alphabet Inc close to Wall Street sales expectations on Tuesday, sending shares up on relief that the world’s biggest seller of online advertising may withstand a global recession better than smaller rivals.

A trio of Alphabet executives sounded caution on a call with investment analysts, using “uncertain” or “uncertainty” at least 13 times to describe the economy. YouTube ad sales grew at their slowest pace since disclosures began in 2018.

But investors focused elsewhere, notably on the fact that second-quarter sales from the company’s biggest moneymaker – Google search – actually topped expectations. Shares of Alphabet jumped 5.5% in after-hours trading following the results.

“Despite the underwhelming quarter, expectations were so low that investors blew a sigh of relief,” said Jesse Cohen, senior analyst at Investing.com.

By contrast, shares of Snap Inc fell more than 25% last week after the company missed sales expectations and warned of an ad market slowdown.

Alphabet executives said Google was not immune to the pullback, which has been brought on by clients facing product shortages, less demand and a variety of other factors. Rising wages as well as rising prices of fuel and other items also have forced some ad buyers this year to pare marketing.

But Google has weathered storms better than social media companies. It brings in revenue through a greater variety of functions in the ad market, and search ads can be less expensive for customers to generate since they often include just text.

Clients sometimes prioritize search ads because the marketing is typically directed at people actively searching for related items, yielding better returns.

Travel and retail advertisers drove an increase of nearly 14% in search ad sales for Google during the second quarter, which at $40.69 billion beat FactSet estimates of $40.15 billion.

Overall, Alphabet reported second-quarter revenue of $69.69 billion, 81% coming from Google’s ad business, and nearly in line with the average expectation of $69.88 billion among investment researchers tracked by Refinitiv.

“Google is relatively well positioned to weather the rough waters that lie ahead,” Insider Intelligence analyst Evelyn Mitchell said.

SALES THREATS

Many factors have motivated concerns about Alphabet’s outlook. Big U.S. multinationals including Alphabet are increasingly bringing in less cash when converting foreign revenue because of the strong dollar.

Alphabet said that sales would have been close to $72 billion if not for currency swings. About 55% of the company’s sales come from outside the United States.

The currency impact will be even greater in the third quarter, Alphabet Chief Financial Officer Ruth Porat said.

Amid scrutiny from antitrust regulators on five continents, Google is taking a smaller cut from sales of apps developed by outside software makers. Users also spent less on apps in the second quarter, Porat said.

Other hits have come from Google suspending sales in Russia due to the war in Ukraine, and YouTube’s ad revenue fluctuating as its options for advertisers grow and wane in popularity.

Sales from Google Cloud of $6.3 billion missed analysts’ target of $6.4 billion and YouTube ads also fell short, coming in at $7.3 billion against estimates of $7.5 billion, according to FactSet data.

Earlier this month, Google lost out on a major new sales partner when Netflix Inc said it had chosen Microsoft Corp’s ad technology to help with its first foray into placing ads on its streaming video service.

With investors accustomed to gross profit margins as high as 60%, Google, like many of its peers, recently began slowing hiring in some units to better manage expenses.

But at the same time, Alphabet is moving forward with expanding its cloud computing footprint, building out new offices and bringing its Google Fiber internet service to new communities.

Alphabet’s second-quarter profit fell to $16 billion, or $1.21 per share, compared with the average estimate of $1.29 per share. Alphabet’s profit tends to be unpredictable due to sporadic gains or losses – at least on paper – in the stakes it holds in many startups.

Alphabet shares had fallen over 27% so far this year heading in to the quarterly results, more than the overall S&P 500 index. Alphabet split its stock 20-for-1 on July 15, briefly boosting shares before disappointing results from Snap and Twitter Inc sent them falling.

Meta Platforms Inc, which through Facebook and Instagram owns the second-biggest online advertising service, reports earnings on Wednesday. Its shares rose nearly 3% on Tuesday after Alphabet’s results.

(Reporting by Nivedita Balu in Bengaluru and Paresh Dave in Oakland, Calif.Editing by Anil D’Silva, Peter Henderson and Matthew Lewis)

source