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Good Morning. In today’s edition, consumer lending powers bank earnings, big tech companies draw fire from politicians in Washington, and the U.S. withholds sales of F-35 stealth jet fighters to Turkey. |
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Consumer lending is powering the earnings of big banks, upstaging Wall Street. U.S. consumers are taking advantage of low interest rates to borrow and spend, boosting banks that cater to Main Street. The trend drove quarterly profits higher at JPMorgan Chase, Wells Fargo and Citigroup, while trading and deal fees shrank. Goldman Sachs, which lacks a big consumer operation, was the only large U.S. bank that reported lower profit in the second quarter than it had a year earlier. Bank of America and U.S. Bancorp are among the companies set to report financial results today. From reporter David Benoit: JPMorgan’s results highlight the divide among bank earnings in the second quarter. The nation’s biggest bank by assets posted a record profit, but that was thanks almost entirely to its consumer businesses. The consumer operations’ profit rose 22%, with particular strength in credit-card spending. But profit in the investment-bank half of the house dropped 8% on lower advisory and trading revenue. Investors are most focused on what is looming if and when the Federal Reserve cuts interest rates, expected as soon as this month. Those consumer profits might be cut away right along with them. |
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| Are you optimistic about the economy? Would you borrow for purchases or buy a house right now? Join the conversation. |
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Concerns about the power of big tech companies echoed in Washington. | | Matt Perault, Facebook’s director of public policy, testified before the House Antitrust Subcommittee on Tuesday. PHOTO: PATRICK SEMANSKY/ASSOCIATED PRESS |
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Politicians in both parties demanded more regulatory scrutiny of the tech giants’ reach and plans for expansion. Companies took punches from lawmakers on a range of political and policy issues in three hearings, which focused on Facebook’s cryptocurrency plans, alleged Google censorship and an antitrust examination of Apple, Amazon, Facebook, Google and its owner, Alphabet. President Trump said the U.S. government would look into national-security concerns about Google’s ties to China that had been raised by billionaire investor and Facebook board member Peter Thiel. Hours later at a Senate hearing, Google confirmed for the first time that it had killed plans for a censored search engine in China dubbed “Dragonfly.” Scrutiny of Facebook’s plan to release its own digital coin, known as Libra, has spoiled bitcoin’s big rally this year. The world’s most popular cryptocurrency has lost almost a third of its value after trading above $13,000 a week ago, which was near its high for the year. Google’s searchable database of political ads, set up last summer after calls for greater transparency, is under fire from campaigns and political consultants who say the archive is riddled with errors and rife with delays. Amazon faces a European Union antitrust investigation into its dealings with third-party merchants, expanding a multipronged regulatory push that has ensnared Facebook and Google. Separately, Amazon agreed to change the terms of service on its platforms for third-party sellers around the world after a German probe of the company’s practices in its fast-growing marketplace segment. |
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Civil-rights and immigration groups filed a lawsuit challenging a new Trump administration policy that could dramatically limit asylum claims by Central American migrants seeking entry to the U.S. The Department of Homeland Security hasn’t provided details on how it would change its method of processing the hundreds of people who daily cross the border illegally and typically request asylum. Yesterday, U.S. immigration agents proceeded as usual at the border, and about two dozen people were allowed to cross and ask for protection at ports of entry in Texas and California. The new rule would require asylum seekers who pass through a third country to first apply for refugee status there rather than in the U.S. If the rule withstands legal challenges, thousands of migrants could be stranded at the border. Secretary of State Mike Pompeo is headed to Latin America this week amid concerns over immigration and the crisis in Venezuela. |
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| What would be a good solution for the migrants at the border that the U.S. and Mexico can work on together? Join the conversation. |
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U.S. Trade Representative Robert Lighthizer has charmed Congress, but is still having trouble selling USMCA, the proposed replacement for Nafta. When he isn’t trying to forge an elusive trade deal with China, Mr. Lighthizer can often be found working Capitol Hill, schmoozing with lawmakers on the new trade agreement with Mexico and Canada. He has impressed lawmakers with his attention to their concerns and the sheer amount of time he is devoting to win support for USMCA. However, Mr. Lighthizer is struggling to overcome resistance to ratification of the deal, struck by the president last year, and Democrats are asking for stricter enforcement provisions, among other changes. |
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| How important is it that the U.S. pass a new trade deal with Mexico and Canada to replace Nafta? Join the conversation. |
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President Trump said the U.S. would withhold sales of advanced F-35 stealth jet fighters to Turkey after the country received a new air-defense system from Russia. The move to cancel the shipment had been expected, but until Mr. Trump’s remarks the administration had held off on responding to Turkey’s decision to accept delivery of the Russian system. The actions by Washington and Ankara inject uncertainty into the security pact between Turkey and other NATO members. |
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What We’re Following | | House Speaker Nancy Pelosi (D., Calif.) walks out of the House chamber Tuesday evening. PHOTO: PATRICK SEMANSKY/ASSOCIATED PRESS |
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House Vote: After a chaotic afternoon on the chamber’s floor, lawmakers passed a resolution condemning as racist President Trump’s tweets calling for four U.S. congresswomen to “go back” to unspecified countries. John Paul Stevens Dies: The retired Supreme Court justice, who served 34 years on the court during an era of great change and co-authored some of its seminal decisions, died yesterday at the age of 99. Point72 Turnover: About 20 portfolio managers have left Steven A. Cohen’s hedge-fund firm this year. European Leadership: German Defense Minister Ursula von der Leyen was approved for the EU’s top job by a razor-thin margin. Separately, Christine Lagarde submitted her formal resignation as chief of the International Monetary Fund to prepare for the nomination process to be the next president of the European Central Bank. Brain-Computer Interfaces: Elon Musk and top-level scientists from his neuroscience startup Neuralink, who are developing a next-generation brain-computer interface, unveiled what they billed as a significant advance toward a therapeutic device. Texas Water Wars: A Texas oil dynasty wants to sell its vast water trove, pitting neighbor against neighbor. |
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Trending Stories at WSJ.com | |
In-flight Wi-Fi prices and quality vary wildly depending on the airline and type of plane, but service that is more reliable—and free of charge—could soon become the standard. (Read) How Kim Jong Un smuggled armored Mercedes limos into North Korea. (Read) A gigantic gold coin valued at about $45 million made its way to Wall Street this week. (Read) |
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What Else We’re Reading Unidentified hackers stole the personal details of five million of Bulgaria’s seven million people from the national revenue agency; local officials said there was a possible Russian link to the case. (Associated Press) New research shows that extreme weather and fires—in knocking chemicals loose from soil, homes, industrial sites or other sources and spreading them—can expose people to an array of physical ailments including respiratory disease and cancer. (New York Times) |
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Today’s Question and Answer In response to our question about your thoughts on the opioid case against Johnson & Johnson and whether pharmaceutical companies should be held accountable in the opioid crisis: Anne Etra, New York Seems to me a slippery slope. Do you then demand giant payouts from alcohol manufacturers for liver disease or drunk-driving deaths? Should gun manufacturers pay for all the inner-city gun murders? Paul Wutz, New Hampshire So why should pharmaceutical manufacturers be singled out and penalized for the outcomes caused by numerous other factors? Yes, opioids are addictive and can wreak havoc with their end users. However, supply-chain availability is ultimately determined by retail pharmacies and, most importantly, prescribing physicians. These drugs are Class II narcotics whose distribution in theory is tightly controlled by state and federal regulations. Bureaucratic oversight is what should be evaluated for its success or failure in controlling availability of these drugs. Jim Kiser, Virginia Did no one learn anything from the tobacco settlements? When I was on the Loudoun County, Va., Parks and Recreation Advisory Board the staff used to come in and tell us with glee about the thousands of dollars the agency was getting from the state to spend on parks, all due to the tobacco settlement. This is just government telling companies that to stay in business, a company must pay a bribe. If doctors and patients have no responsibility for their actions in abusing a product, then every business is subject to this draconian idea of so-called justice. Holding business responsible for product misuse is insanity. Say goodbye to GM, Ford, Boeing, Colt and others. Chris Weaver, Iowa Big pharma has a real responsibility to own its role in the pervasive and often dangerous overuse of opioids. However, there is plenty of blame to go around, from regulation, compliance and accountability applied to federal agencies, doctors and patients. Destroying companies that do more good than bad isn’t the answer, but they should be held accountable and make reparations to families who have suffered from lackluster efforts to get in front of the opioid crisis. Question for tomorrow’s 10-Point: Do you agree with the House’s action in response to the president’s comments? Why or why not? Email us your comments, which we may edit before publication, to 10point@wsj.com, and make sure to include your first and last name and location. |
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| The 10-Point was the name given to the news column that runs on the front page of The Wall Street Journal. Today’s newsletter was curated and edited by Eleanor Miller in New York and Keith Collins in Hong Kong in collaboration with Editor in Chief Matt Murray. Let us know what you think by replying to this email. The 10-Point is a WSJ member benefit. If someone forwarded you this email, we invite you to join us and enjoy the full breadth of scoops, analysis and great storytelling from our journalists around the globe. |
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