By Aaron Tilley 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

If there is one trait that would link a TikTok acquisition with the other big deals Microsoft Corp. Chief Executive Satya Nadella has done, it is his willingness to pay big bucks to expand the software giant's universe of users.

Getting new users is one thing, linking them into a cohesive business strategy is another. As Microsoft negotiates with TikTok's Chinese parent over a possible deal to buy the app's operations in the U.S. and a few other countries, Mr. Nadella and his lieutenants also must plan how to leverage the youth-focused video-sharing platform into a company heavily focused on serving corporate users. Analysts point to several ways they could do that.

Since taking over six years ago, Mr. Nadella has paid $2.5 billion to buy the maker of the "Minecraft" videogame, about $26 billion for the professional networking site LinkedIn, and $7.5 billion for the coding-collaboration site GitHub Inc. Those deals collectively included hundreds of millions of users.

TikTok would bring another 100 million or so U.S. users, most of them young, and a business focused on digital advertising. Microsoft does have an existing pool of younger users through its Xbox videogame business. And, though it gets scant attention, Microsoft has a substantial ads business, thanks to its Bing search engine: the company said $7.7 billion of its $143 billion in total revenue for the fiscal year through June came from search advertising.

TikTok globally isn't profitable. Beijing-based ByteDance Ltd., TikTok's parent, projects the app will have $1 billion in revenue this year and $6 billion next year, said a person familiar with the matter. The U.S. historically has accounted for about a tenth of TikTok users, though that group is generally considered more valuable to advertisers.

While ads in TikTok operate differently than those on Bing, "Microsoft is better positioned to help TikTok achieve its revenue potential than many other companies," Ben Thompson, a tech industry analyst, wrote in his Stratechery newsletter Monday.

TikTok also would deliver more of the young, enthusiastic kind of users that have propelled growth in Microsoft's Xbox gaming business. And they would arrive as videogames increasingly function as social-media networks with real-time interaction among players.

Investors seem confident that Mr. Nadella can pull off a successful deal. Microsoft's stock rose 5.62% in Monday trading.

"If Microsoft can close a deal it would undoubtedly be a huge win," said Robert Majek, analyst at Raymond James & Associates, calling TikTok a trophy asset.

Still, much about a potential deal remains unclear -- not least how much Microsoft would pay. Neither it nor ByteDance have disclosed potential deal terms, though industry analysts say it has the potential to top LinkedIn as Mr. Nadella's bigger-ever acquisition. President Trump on Monday said the U.S. government should receive payment for clearing a purchase.

A deal could still fall through. Following a week of head-spinning twists and turns that culminated in a phone call between Mr. Nadella and the president, Microsoft on Sunday said it was committed to pursuing the acquisition of TikTok's operations in the U.S., Canada, Australia and New Zealand -- but also warned that discussions were preliminary and that there was no certainty that a transaction would be completed. Microsoft said it would conclude talks by Sept. 15.

The Redmond, Wash.-based company would have to invest in TikTok to address cybersecurity, privacy and other technology issues, while also shifting the service onto its own Azure cloud-computing system, Bernstein Research analyst Mark Moerdler said Monday. "This could be a complex and resource intensive process."

And Microsoft would take on a deep-pocketed rival. Facebook Inc. plans to launch its own video-sharing app, called Instagram Reels, as a rival to TikTok. The social-media giant has already shown its willingness to spend to make Reels a success, offering financial incentives to lure influential TikTok users to its platform.

The deal could also jeopardize some of Microsoft's business in China, which has bristled at the U.S. government's actions against TikTok. China has long been a frustrating market for Microsoft, which has said it represents less than 2% of sales, though the company has enjoyed successes, selling its software to the Chinese government and winning business for its booming cloud-computing service.

The interest in TikTok has surprised investors after years during which Mr. Nadella principally focused on growing Microsoft's business customers, a strategy that revived the company's fortunes and has propelled its market valuation beyond $1.6 trillion.

Mr. Nadella has done 161 deals since taking over in 2014, spending around $54 billion, according to Dealogic. The company still has ample money to spend: it closed the latest financial year with more than $136 billion in cash or otherwise easy-to-tap funds. Microsoft has said it may invite other American investors to take a minority stake in the TikTok operations it is pursuing.

The deal for Minecraft's maker, Mojang AB, came only a few months into his tenure. At the time, Minecraft had sold more than 50 million copies since its initial release in 2009. Under Microsoft, sales doubled by 2016 and hit 200 million games in the financial year just ended. Microsoft doesn't disclose revenue by game, though Minecraft has been part of the company's successful Xbox gaming product line that saw revenue increase 65% year-over-year in the last quarter.

When Microsoft bought LinkedIn two years later, the service had more than 400 million registered users and growth was slowing. That turned around under Microsoft. The professional network now has more than 706 million users with revenue growth, in recent years, as high as 37% -- though its business has suffered during the pandemic, as the economic slump cuts into the revenue it gets from recruiting services.

GitHub has also grown since Microsoft bought it in 2018. GitHub user numbers swelled from 28 million when Microsoft bought the company to more than 50 million users today.

Though many details around the TikTok deal remain uncertain, analysts said Mr. Nadella's record built on past billion-dollar bets such as Mojang, LinkedIn and GitHub has been strong. "Nadella has been a far better acquirer than Microsoft has been since the [Bill] Gates days," said Mr. Moerdler.

Write to Aaron Tilley at aaron.tilley@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

By Liza Lin, Jing Yang and Eva Xiao 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

Washington's ultimatum to the Chinese owner of TikTok -- sell the app's U.S. operations or leave the country -- is hardening long-held suspicions in China that the U.S. aims to sabotage the country's efforts to grow its technology, while raising concerns about the precedent it could set for Chinese companies with global ambitions as U.S.-China relations unravel.

After months in which TikTok owner Bytedance Ltd. fought to appease the Trump administration, Washington's push for Bytedance to sell TikTok's U.S. operations to Microsoft Corp. means China will likely lose control over its first true global internet sensation -- one with ambitions of becoming a top-tier global technology giant -- in its most important market.

Turning over the U.S. operations to Microsoft would also likely ripple across other Chinese internet companies that have harbored global aspirations, like Alibaba Group Holding Ltd. and Tencent Holdings Ltd., whose mobile app WeChat has been mentioned by top U.S. officials as a potential target.

In the eyes of Beijing's leadership, Washington's move to strong-arm one of its most valuable global tech companies into selling a lucrative overseas unit is further proof that the U.S. views any Chinese tech company with international success as a challenge to its technology primacy, regardless of the product or how it runs its business.

For much of the past two years, Washington's national-security concerns revolved around Huawei Technologies Co., a Chinese telecom giant that the U.S. has tried to blacklist world-wide with increasing effectiveness.

On Monday, Beijing -- which has barred Silicon Valley's biggest companies from gaining a foothold in China, saying they don't adhere to Chinese law -- slammed the U.S. move to force TikTok's sale of its American unit as hypocritical, saying it reflected Washington's double standards.

"Stop politicizing economic and trade issues, stop abusing the concept of national security and stop pursuing policies of discrimination and exclusion," Chinese Foreign Ministry spokesman Wang Wenbin said at a regular briefing, in words aimed at Washington.

President Trump's remark over the weekend that he was weighing an outright ban of TikTok in the U.S. sparked nationalist sentiments in China, where the Global Times, a Communist Party tabloid, derided the situation as "the hunting and looting of TikTok by the U.S. government in conjunction with U.S. high-tech companies."

On Chinese social media, users likewise expressed outrage. Many on the Twitter-like Weibo platform accused the Trump administration of pandering to voters by stemming the rise of TikTok -- and by extension, China.

On Douyin, Bytedance's domestic analogue to TikTok, where videos commenting on a possible U.S. ban circulated widely, one popular comment suggested Huawei be allowed to buy Apple Inc.'s China operations.

Other Chinese social media users also aimed their ire at Zhang Yiming, Bytedance's 37-year-old founder, for acquiescing to the pressure -- a move that some Chinese commenters ridiculed as "kneeling" to Washington.

After a weekend in which confusion swirled around TikTok's future in the U.S., Mr. Zhang told staff in a Monday afternoon letter that Bytedance was facing immense pressure overseas, and that despite the company's attempts at convincing Washington that it could offer technical solutions to mitigate concerns, TikTok was still being asked to sell its U.S. operations.

"I hope everyone can maintain good morale amid the commotion and challenges," Mr. Zhang wrote, saying that Bytedance's desire to become a global company hasn't changed. "Trust that the company can make good decisions in complex situations."

Unlike other Chinese tech titans, which have largely struggled to expand globally while winning fans at home by cloning Western platforms, TikTok's breakout success has been the product of its own innovation, said Matthew Brennan, a China-based tech consultant.

"TikTok was the moment when China technology went from 'copy to China' to 'copy from China,'" he said. "Short video had first found more traction in China, and when Bytedance moved into the U.S. market, they were leading the big trend."

Even as Bytedance negotiates to sell TikTok's U.S. operations to Microsoft, it is looking at other ways to mitigate global concerns, including moving TikTok's headquarters outside China. London has emerged as a front-runner, according to people familiar with the matter, with the decision close to being made, one of these people said.

Splitting TikTok's overseas operations from its Chinese roots could prove nettlesome. Engineers would have to disentangle TikTok's technical back end from its Chinese sister app Douyin, with which it shares some of the code used in its recommendation engine -- the secret sauce that drives TikTok's notoriously addictive video feed, according to people familiar with the company.

The two apps' algorithms are handled by engineers in Beijing and Shanghai, these people said, and if Microsoft were to acquire TikTok's U.S. operations, the algorithms would likely diverge over time, according to a person familiar with the company.

Banning TikTok from the U.S. would also have deep financial repercussions for Bytedance. Though the U.S. isn't TikTok's largest market by downloads -- that would be India, which banned the app last month -- the U.S. is among TikTok's most lucrative and promising regions, where the app says it has 100 million users.

In a document shared with investors earlier in the year and viewed by The Wall Street Journal, Bytedance -- which in addition to TikTok operates several other news and social media services -- said it racked up 140 billion yuan ($20 billion) in sales last year, mostly from advertising. It expects to have revenue of 200 billion yuan this year.

Bytedance's investors include Japanese investment giant SoftBank Group Corp., as well as U.S. investment firms General Atlantic and Sequoia Capital. In March, New York-based Tiger Global Management invested in Bytedance at a valuation of $100 billion to assist in the company's path toward a U.S. initial public offering, according to people familiar with the company.

Even as Mr. Zhang has faced increasing pressure from all sides, he has maintained his belief that TikTok would come to rival Alphabet Inc.'s Google and Facebook Inc. as an online advertising juggernaut.

Besides TikTok, other Chinese tech companies could face the wrath of U.S. officials and encounter similar dilemmas. Senior U.S. officials including Secretary of State Mike Pompeo and White House trade adviser Peter Navarro recently threatened to ban WeChat, China's popular do-everything mobile app.

Unlike TikTok, WeChat never gained much traction abroad. The app's 244 million daily active overseas users are mostly Chinese and foreigners who need to engage with Chinese contacts for business or personal reasons.

Like TikTok, WeChat has been kicked out of India, its largest overseas market with 69 million users, following this year's deadly skirmish on the China-India border. In the U.S., WeChat has 19 million users, according to app data tracker Apptopia.

Although any potential ban would inconvenience users -- and Chinese authorities, who use the app as a tool to monitor the Chinese diaspora and intimidate exiled dissidents -- analysts say the impact on Tencent's bottom line is minimal since it doesn't rely on overseas users to earn money.

What's more concerning is any long-term impact on Tencent's global ambitions for its other operations in gaming, cloud services and financial services, they say.

"A potential ban of WeChat would sound the alarm for Tencent and make the company even more cautious about expanding its overseas businesses. It will rely more on local partners in doing businesses overseas," said Shawn Yang, managing director of research and investment advisory firm Blue Lotus Capital Advisors.

--Lingling Wei, Lekai Liu and Raffaele Huang contributed to this article.

Write to Liza Lin at Liza.Lin@wsj.com, Jing Yang at Jing.Yang@wsj.com and Eva Xiao at eva.xiao@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

Shifting FDA standards for face masks made in China have sown confusion over which products can be trusted for medical use, potentially putting the public at risk.

Democratic leaders and White House officials sounded cautiously upbeat notes after another round of negotiations on a new coronavirus aid package.

Congressional Democrats issued subpoenas to four State Department officials in connection with a probe into the firing of the agency's ex-inspector general.

Anthony Tata was named to a top Pentagon policy job on an acting basis after the retired general's nomination to a similar position stalled in the Senate.

The U.S. reported more than 47,000 new coronavirus cases, the smallest daily rise in almost four weeks.

Trump publicly criticized Birx after she warned of "extraordinarily widespread cases" in a new phase of the pandemic.

Hurricane Isaias made landfall in North Carolina near the South Carolina state line, and residents were told to prepare to evacuate.

Islamic State claimed responsibility for a deadly attack on an Afghan prison holding hundreds of its members that allowed many inmates to escape.

The Israeli military said its aircraft struck a number of targets in southern Syria belonging to the Syrian military.

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

By Ryan Dube and Andrew Scurria 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

Argentina's government is finalizing an agreement with a group led by BlackRock Inc. and a handful of large U.S. investment firms to restructure about $65 billion in foreign debt and resolve the country's third sovereign default in 20 years, said people involved in the talks.

Committees representing investors holding the bulk of Argentina's external debt have agreed to exchange their defaulted bonds for new securities under a settlement worth nearly 55 cents on the dollar, these people said.

If signed, the deal would avoid the fiery litigation that marked Argentina's 2001 default while supplying a much-needed boost for Latin America's third-largest economy after it was laid low in 2018. The settlement would add to concessions made by private lenders in the U.S. and other large economies to borrowers in the developing world facing an economic downturn intensified by the new coronavirus.

Many creditors that bet on an Argentine economic resurgence in recent years lost money when the government took steps toward restructuring and bonds plummeted in value. But some investors bought in at depressed prices and stand to make profits on the restructuring, people familiar with the matter said.

Major Argentine bondholders include Fidelity Management & Research Co., Monarch Alternative Capital LP, VR Capital Group, Greylock Capital Management and Pharo Management LLC.

"It prevents a really disastrous impasse that could have locked Argentina out of credit markets potentially for years," said Benjamin Gedan, an Argentina expert at the Wilson Center, a Washington policy group. "This scenario of a prolonged dispute that would have left Argentina once again isolated financially would have been a worst-case scenario for everyone involved."

The creditors accepted a deal ahead of a Tuesday deadline set by the government. Economy Minister Martín Guzmán had said the government wouldn't improve its offer and would start talks with the International Monetary Fund on refinancing a bailout loan if there wasn't a deal with bondholders.

Officials at the Economy Ministry and president's office said Monday they couldn't confirm an agreement had been reached. Argentina owes $44 billion to the IMF, which has said the country's debts are unsustainable and projected a nearly 10% economic contraction this year.

Economic contraction, spiraling inflation, a hard-currency squeeze combined with the coronavirus pandemic made Argentina the largest of several sovereigns to seek concessions from creditors this year, joining Ecuador and Lebanon as lockdowns and travel restrictions roiled the global economy.

Slashing the country's debts has been a priority for President Alberto Fernández, a member of the nationalist Peronist movement who took office in December. The country has been mired in a recession since a 2018 currency crisis while facing double-digit inflation.

Argentina has spent the bulk of the last two decades quarreling with investors after it stopped payment in 2001 on more than $80 billion in debt, the largest default in history by a sovereign at the time. Most bondholders settled for roughly 30 cents on the dollar while a minority battled for full repayment, eventually winning U.S. court rulings that led to another default in 2014 before a settlement in 2016 that delivered enormous gains to the few determined holdouts.

Debt markets soon welcomed the country back, gobbling up 100-year bonds, the first such issuance of so-called century bonds by a junk-rated government.

Last year's election of Mr. Fernández fueled concerns about a prolonged dispute with creditors after he announced plans to restructure tens of billions of dollars in debt he inherited from his predecessor, Mauricio Macri.

Mr. Fernández's powerful vice president, Cristina Kirchner, who governed from 2007 to 2015, often blamed Argentina's economic troubles on the IMF and foreign creditors, which her government referred to as "vulture funds." But Mr. Fernández, a more moderate Peronist, was more willing to sit down with creditors, analysts say.

Argentina's dire economic outlook, worsened by a pandemic that has caused a surge in poverty in the vast working-class neighborhoods that surround Buenos Aires, likely helped the two sides reach a deal, said Nicolás Saldias, a political analyst and expert on Argentina.

"I think there certainly was a role played by Covid-19 in reducing the expectations of creditors of what is reasonable and what is acceptable almost morally in this context," said Mr. Saldias. "For the creditors, it would look bad if you are asking in the middle of the worst economic recession since the Great Depression and a pandemic which is killing hundreds of people...in the country for an exorbitant amount of money."

Negotiations were difficult at times, reflecting disagreements among bondholders over the size of discount they were willing to take. Differences reflected factors including the different prices at which various creditors purchased Argentine bonds.

BlackRock sought earlier this year to broker a deal but faced resistance from certain creditors. Throughout the process, bondholders were aware that they were the subject of critiques in the local press and from economists that they were taking advantage of Argentina. Over the weekend, creditor groups started to coalesce around a deal. They felt reaching agreement quickly was preferable in light of the economic damage wrought by the pandemic, two people said. Some believed the IMF would be less willing to be generous to creditors if the spread of Covid-19 hurt the Argentine economy further.

Argentina could now face more difficult talks with the IMF over restructuring its bailout from the fund, which will likely pressure the government to pass economic reforms that are unpopular in the country and opposed by the ruling Peronists.

"It is going to be really politically dangerous in Argentina," said Mr. Saldias. "The IMF's board is not just going to roll over and give Argentina whatever it wants."

--Alexander Gladstone and Dawn Lim contributed to this article.

Write to Ryan Dube at ryan.dube@dowjones.com and Andrew Scurria at Andrew.Scurria@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

By Juliet Chung 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

Raising money for a new hedge fund long was contingent on a host of in-person meetings. But a slate of managers are launching sizable startup funds despite complications wrought by the new coronavirus.

Hedge-fund manager Gaurav Kapadia has raised one of the biggest, with more than $1 billion in committed capital for his new firm, XN LP, according to people familiar with the firm. XN invests in stock markets as well as in private companies and is up 7.4% after fees since its July 1 start, according to a person familiar with the fund. In a Monday letter to clients viewed by The Wall Street Journal, Mr. Kapadia wrote he had started fundraising in February -- "what now seems a lifetime ago."

"We know that it would have been easier for you to defer a decision or default to working with your existing investees. Instead, many of you made exceptions to your investment and operational due diligence processes to accommodate the new remote world," wrote Mr. Kapadia, 39 years old. He previously co-founded stockpicking hedge fund Soroban Capital Partners.

"XN" references the mathematical notation for exponential growth.

Just a few months ago, Covid-19 and the ensuing lockdowns appeared to wreak havoc on fund startups, dashing opportunities for investors to vet managers and their teams and sites in-person. Research-firm HFR said launches in the first quarter fell to an estimated 84, the lowest quarterly figure it had tracked since the fourth quarter of 2008.

But executives for both Goldman Sachs Group Inc. and Morgan Stanley currently expect to launch about 20% more hedge funds this year than last year if plans hold.

"We thought back in March and April that people planning on launching would delay, but they've gone forward" looking at the investment environment, said Darren Levy, Morgan Stanley's co-head of prime brokerage in the Americas.

He said the managers were more focused on starting up and posting strong returns than on the size of their firms on day one.

Fundraisers say relatively strong March performance by hedge funds is driving some of the interest from investors, even if new firms this year are smaller than they might otherwise have been. Hedge funds lost roughly a third of the stock market's peak-to-trough loss in the first quarter, better than in the financial crisis and some more recent selloffs, according to a Goldman Sachs report.

The Goldman report surveyed more than 250 institutional investors and found hedge funds had become the most popular area in which investors wanted to increase their exposure, with 37% of the investors looking to add to the space. Private debt and private equity were the next most popular choices, at 25% and 19%.

Other notable launches in recent months include New York-based Hein Park Capital Management, started by former Soros Fund Management portfolio manager Courtney Carson, and stockpicking fund Washington Harbour Partners LP.

Mr. Carson, 40, launched credit fund Hein Park in February and has raised roughly $1.2 billion in committed capital, including money committed in recent months, said people familiar with the firm. Mr. Carson sat on the management committee at George Soros's personal investment firm before he left in 2019 and counts Jonathan Soros and Robert Soros as investors, one of the people said.

Mina Faltas, 42, started Washington Harbour in May and now manages more than $500 million. He has commitments to take in more money this fall. Mr. Faltas previously co-founded hedge-fund Nokota Management LLP. His new fund has gained 27% since May investing in small- to midcap stocks, said a person familiar with the fund.

Additionally, Neeraj Chandra started Untitled Investments LP in April. Untitled invests in public and private companies and had about $260 million in assets under management as of early July, according to a regulatory filing. It has several hundred million more in additional commitments expected this year, people familiar with the fund said, and was up more than 20% since April.

Mr. Chandra, 38, was one of Tiger Global Management's earliest employees.

One of the most anticipated potential launches is Alua Capital Management, from former Viking Global Investors co-chief investment officer Tom Purcell and former Lone Pine Capital managing director Marco Tablada. The firm could start trading with client money as early as the fourth quarter, said people familiar with the matter. Mr. Purcell and Mr. Tablada, who have invested their personal wealth together for several years, have spoken with possible investors, the people said.

Mr. Purcell has discussed putting several hundred million dollars of his own money into the fund, one of the people said.

The virus has impacted fundraising beyond restricting in-person meetings. With endowments and hospital systems grappling with uncertainty about the pandemic's impact on their business models, some managers are allowing them to commit to a certain size investment but fund it over time instead of all at once, said Morgan Stanley's Mr. Levy.

In his letter, Mr. Kapadia wrote that XN had a 22-person team and that nearly all clients had opted into a share class allowing for up to 35% of their money to be invested in private companies. XN will have a concentrated portfolio and hold positions for the long term, he wrote. As of July 1, it had about $655 million in assets under management, according to a regulatory filing.

He also said Carl Bass and Rob Marcus, former chief executives of Autodesk Inc. and Time Warner Cable, would be joining as executive partners to help source and vet investments. The investment environment is "among the most compelling of our careers," Mr. Kapadia wrote. He said significant dispersion across the market and among "COVID winners" was likely to occur.

Write to Juliet Chung at juliet.chung@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

Microsoft looks to a valuable pool of young users as it negotiates for app's American unit

By Bob Davis, Alex Leary and Kate Davidson 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

WASHINGTON -- President Trump said he was ready to approve a purchase of the U.S. operations of the Chinese video-sharing app TikTok, but only if the government receives "a lot of money" in exchange -- an assertion of presidential power that appeared to lack precedent.

Microsoft Corp. said it hopes to acquire TikTok's business in the U.S. and three other countries. Mr. Trump said he told the company's chief executive, Satya Nadella, that "a very substantial portion of that price is going to have to come into the Treasury of the United States because we're making it possible for this deal to happen."

The White House had been pushing for a sale to U.S. owners, citing national-security risks that the Chinese government could exploit the personal data the app collects.

The software giant Microsoft sees the deal as an opportunity to absorb a new universe of users, although leveraging a youth-focused platform into a company heavily focused on serving corporate users could be difficult.

TikTok would bring another 100 million or so U.S. users, most of them young, and a business focused on digital advertising. Microsoft does have an existing pool of younger users through its Xbox videogame business. And, though it gets scant attention, Microsoft has a substantial advertising business, thanks to its Bing search engine.

TikTok globally isn't profitable. Beijing-based ByteDance Ltd., TikTok's parent, projects the app will have $1 billion in revenue this year and $6 billion next year, said a person familiar with the matter. The U.S. historically has accounted for about a tenth of TikTok users, though that group is generally considered more valuable to advertisers.

Since taking over six years ago, Mr. Nadella has paid $2.5 billion to buy the maker of the "Minecraft" videogame, about $26 billion for the professional networking site LinkedIn, and $7.5 billion for the coding-collaboration site GitHub Inc. Those deals collectively included hundreds of millions of users.

Mr. Trump indicated the deal faces a deadline of Sept. 15, after which TikTok would be banned in the U.S. Microsoft said Sunday that it would move quickly to pursue discussions with ByteDance and it aims to complete the negotiations by Sept. 15.

Legal analysts and others pointed out that the White House had been pushing for a sale of the U.S. parts of TikTok to U.S. owners, making the demand for payment all the more extraordinary.

"It is completely unorthodox for a president to propose that the U.S. take a cut of a business deal, especially a deal that he has orchestrated. The idea also is probably illegal and unethical," said Carl Tobias, a law professor at the University of Richmond.

While the U.S. government for decades has analyzed foreign investments in the U.S. to see whether they could create national-security problems, the decisions are usually left to the members of a secretive interagency group called the Committee on Foreign Investment in the U.S.

Under Mr. Trump, the U.S. has taken a hard line on China through Cfius. Last year, for instance, Cfius ordered a Chinese company to sell gay-dating app Grindr.

Mr. Trump and his national-security team cited concerns about TikTok, raising the prospect that ByteDance could be forced to share data it collects on U.S. users with the Chinese government.

With TikTok, however, the president's requirement for a payment showed a much greater involvement. That follows two years of personal attention to the trade battle with China, including deciding how and when to assess tariffs -- and when to back off and cut a deal.

"This is an extension of Trump's generalized view that he can micromanage the industrial sphere," said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics.

Mr. Hufbauer said Mr. Trump's proposal reminded him of medieval kings who oversaw salt monopolies. "If you wanted to mine some salt, you put money into royal Treasury," he said.

The president often presents himself as a master negotiator on everything from international trade accords to dealings with North Korean leader Kim Jong Un.

With TikTok, he likened his payment idea to "key money" -- or an extra fee paid to secure a hard-to-get property. "It's a little bit like the landlord-tenant," the GOP president said at the White House on Monday. "Without a lease, the tenant has nothing."

"It's a great asset," Mr. Trump said of TikTok. "But it's not a great asset in the United States unless they have the approval of the United States."

Later in the day, he was asked to clarify his remarks. "It would come from the sale," Mr. Trump said. "Whatever the number is, it would come from the sale. Which nobody else would be thinking about but me. But that's the way I think. And I think it's very fair."

Washington's move, in the eyes of Beijing, strong-arms one of China's most valuable global tech companies into selling a lucrative overseas unit. Chinese officials say it is further proof that the U.S. views any Chinese tech company with international success as a challenge to its technology primacy, regardless of the product or how it runs its business.

Mr. Trump's comments also amplify how deeply he involves himself in trade and investment decisions, which economic historians also say is a big departure from the past.

Douglas Irwin, a Dartmouth College economic historian, said early in Franklin Roosevelt's first term, his advisers debated whether the U.S. should cut barter deals with other governments, but the president ultimately rejected the idea and negotiated trade agreements instead. No president since has looked to get so deeply entwined with commercial deals with foreign companies, he said.

The president also often made broad assertions of presidential power, which may be popular with his political base, only to back off later.

"Trump often tries to prove how strong he is by taking novel and extreme positions," said Alex Conant, a Republican strategist in Washington. "A lot of people in Washington may roll their eyes at Trump's off-the-wall proposals, but we shouldn't underestimate their simplistic appeal to many voters."

The comments, though, can make life tough for companies, which don't want problems in Washington.

In this case, Microsoft declined to comment beyond its statement released in a blog post Sunday night. In that post, Microsoft said it is "committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury." It wasn't clear whether Microsoft was talking about the taxes it would pay or some other arrangement.

The White House referred questions on how a payment would work to the Treasury Department. A Treasury spokeswoman referred a reporter back to the president's comments, and declined to comment further.

TikTok says it has 100 million users in the U.S. A TikTok spokeswoman on Monday said the platform is "committed to continuing to bring joy to families and meaningful careers to those who create on our platform....TikTok will be here for many years to come."

Write to Bob Davis at bob.davis@wsj.com, Alex Leary at alex.leary@wsj.com and Kate Davidson at kate.davidson@wsj.com

Corrections & Amplifications President Trump said he was ready to approve a purchase of the U.S. operations of the Chinese video-sharing app TikTok. An earlier version of this article incorrectly implied that all of TikTok was for sale. (Corrected on Aug. 4)

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

By Isaac Taylor 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

Blackstone Group Inc. has collected at least $3.5 billion so far in its latest Strategic Capital fundraising to back a strategy of investing in other private fund managers, regulatory filings show.

The fund is expected to collect around $4 billion before wrapping up and will fuel a strategy that focuses on acquiring stakes in established alternative asset managers with proven track records and good reputations, according to a person familiar with the matter. The strategy calls for leveraging Blackstone's purchasing power and expertise in selecting asset managers to back.

Along with making capital commitments to fund managers, the strategy provides strategic advice, including in such areas as global portfolio operations, communicating with limited partners and capital allocations, according to Blackstone's website.

Blackstone's Strategic Capital unit last year agreed to invest EUR500 million ($588.6 million) in U.K. private-equity firm BC Partners, WSJ Pro Private Equity has reported. The deal was expected to provide BC Partners with permanent capital for long-term investments in its business.

Earlier last year, Strategic Capital acquired a minority interest in GI Partners, a midmarket-focused buyout shop.

Stake sales by fund managers can provide liquidity for partners that wish to leave. Other major players in the market for stakes in general partners include Neuberger Berman Group LLC's Dyal Capital Partners and Goldman Sachs Group Inc.'s Petershill LP.

New York-based Blackstone received its first commitments for its Blackstone Strategic Capital Holdings II LP and related vehicles about a year ago, regulatory filings indicate.

The previous fundraising for the strategy wrapped up in 2015 with $3.3 billion in capital, the person familiar said.

Write to Isaac Taylor at isaac.taylor@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

By Ben Dummett 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

Nasdaq Inc. is cleaning up on both sides of the Atlantic.

In the U.S., the stock-exchange operator's Nasdaq indexes are the country's best-performing major stock benchmarks this year. In Europe, the Nasdaq-owned Copenhagen exchange's index is leading the charge.

Like its U.S. counterpart, Denmark's stock exchange is thriving in a coronavirus world. But the narrower base of big stocks behind the gain could make it a riskier bet.

The Copenhagen exchange's OMX Copenhagen 20 index is largely dominated by the health-care sector. High single- and double-digit gains in three constituents -- Novo Nordisk A/S, Genmab A/S and Coloplast A/S -- all of which are health-care stocks, have helped lift the benchmark more than 13% year to date. Meanwhile, Europe's other 18 country equity benchmarks are all trading lower.

That outperformance comes as Europe battles the coronavirus-induced recession, pushing investors into so-called growth and defensive sectors. Health-care stocks are often in that group because sick people can't do without drugs and treatment. Insulin maker Novo Nordisk and Coloplast, a supplier of continence care and other products, both reported higher sales for their latest quarters, citing supply stockpiling as a reason.

Still, the concentration leaves the market index at risk of an abrupt downturn if any of these health-care companies suffer a surprise setback. Novo Nordisk, for example, carries an index weighting of 33%. That compares with a combined weighting of about 40% for the five biggest stocks in the Nasdaq Composite Index -- Apple Inc., Microsoft Corp., Amazon.com Inc., Facebook Inc. and Alphabet Inc. -- big drivers behind its outperformance in 2020. Together with Genmab, a Danish biotech company, and Coloplast, the three health-care stocks' total weighing is close to 50%.

"There is some stock-specific risk that you really need to look out for, " said Kenneth Lamont, a research analyst at Morningstar.

In 2018, Novo Nordisk fell 7.3% in one session on disappointing earnings. Danske Bank at the time blamed the sell off for a big part of a 3% drop in OMXC20 and its underperformance against rival markets that day.

The Xact OMXC25 and iShares MSCI Denmark ETF are exchange-traded funds that allow investors to bet on the Copenhagen exchange. While each ETF tracks more companies than included in the OMXC20, health-care weightings remain the biggest for each.

The OMXC25 trades at around 29 times projected earnings of the constituent companies, compared with a 10-year average of 18.6 times, according to Danske Bank, suggesting valuation is another potential risk. The growth outlook of companies such as Genmab helps to explain the richer valuation. In June, the biotech company struck a $750 million deal with AbbVie Inc. to develop cancer treatments, and the stock is up about 15% since then.

Still, Danske Bank recommends underweighting the Danish market. Growth stocks like health care are expensive, and more cyclical stocks should perform relatively better over the next three to nine months as the economy recovers, said Chief Equity Strategist Mattias Sundling.

Germany's DAX stock index, which has big weightings in industrials and autos, has gained more than 45% from its low in March, outperforming the OMXC20's 37% gain over the same period, in a possible sign of support for that view.

-- To receive our Markets newsletter every morning in your inbox, click here.

Write to Ben Dummett at ben.dummett@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

By Leslie Scism and Maria Armental 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

Global insurance conglomerate American International Group Inc. swung to a loss for the second quarter driven in part by substantial costs tied to the pandemic as well as losses on the sale of most of its Fortitude Group Holdings LLC stake.

AIG, one of the nation's biggest sellers of property-casualty insurance to businesses, reported $674 million of catastrophe losses, before taxes, in its core General Insurance unit in the most recent quarter. That included $458 million of estimated pandemic-related losses and $126 million of losses tied to nationwide protests in the wake of the May death of George Floyd in the custody of Minneapolis police.

AIG also noted that its large Life and Retirement unit experienced a higher volume of death claims than usual, an increase tied to the pandemic.

AIG is the latest big insurer to update on the impact of Covid-19. Industrywide, claims are rolling in from a variety of policyholders. These include hospitals whose employees became infected and are collecting workers' compensation benefits; restaurants and other nonessential businesses seeking payments under "business-interruption" policy provisions, and sporting events that had cancellation coverage. Workers' compensation pays for medical care and wages of employees who are injured on the job.

Industrywide, property and casualty insurers are posting large, but not crippling losses, from Covid-19's unprecedented toll on the U.S. economy. Estimates put the industrywide total of insured claims tied to Covid-19 for property-casualty carriers at $50 billion to $100 billion.

At the low end, the damage would be equivalent to the nation's costliest hurricane, Katrina in 2005, with about $53 billion of insured damages in 2019 dollars, according to trade group Insurance Information Institute.

AIG said in the earnings release that "impacts from Covid-19 remain manageable." Chief Executive Officer Brian Duperreault said that the pandemic "remains an earnings, not a capital, event for AIG."

Overall, AIG swung to a second-quarter loss of $7.94 billion, or $9.15 a share, from a profit of $1.1 billion, or $1.24 a share, a year earlier. AIG completed the sale of a 76.6% stake in Fortitude on June 2, in a move that Mr. Duperreault said "de-risks our balance sheet," by reducing the company's exposure to long-term liabilities in products it no longer sells. This so-called runoff business exposed AIG to interest-rate risk over a large number of years, as premiums are invested and reinvested over time before liabilities come due, among other reasons for its divestiture.

On an adjusted basis, profit fell to 66 cents a share from $1.43 a share a year earlier. Analysts surveyed by FactSet expected 50 cents a share.

The New York-based insurer, which nearly collapsed during the 2008 financial crisis and needed one of the largest federal-government bailouts, has struggled to improve results over much of the past decade. AIG said in the earnings release that key commercial lines "continued to show strong improvement" in the second quarter, citing changes to the business mix and adequate premium rates.

AIG also is one of the nation's biggest sellers of travel insurance. Premium volume for the business line plummeted during the second quarter amid the government stay-at-home orders and travel restrictions.

At the same time, carriers also have benefited as the stay-at-home orders kept millions of consumers' cars parked in their driveways for weeks, reducing wreck claims. And eateries closed to dine-in service meant fewer slip-and-fall accidents.

Analysts are expected to pepper AIG executives about such Covid-19 developments at a Tuesday morning earnings call.

For the first quarter, AIG had estimated $272 million of pandemic-related losses, which drove an underwriting loss for its General Insurance unit.

Write to Leslie Scism at leslie.scism@wsj.com and Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

By Simon Clark 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

LONDON -- HSBC Holdings PLC's net profit plummeted in the second quarter as the impact of the coronavirus pandemic complicated the bank's efforts to refocus on Asia while dealing with rising U.S.-China political tensions.

Profit for the global bank with Asian roots fell 96% to $192 million in the three months ended June. The London-based lender set aside $3.83 billion in provisions for losses from loans during the quarter, almost seven times more than in the same period last year. Almost 40% of the new provisions were for the bank's unprofitable U.K. unit. HSBC set aside $3 billion in the first quarter. HSBC set aside $3 billion in the first quarter.

"Current tensions between China and the U.S. inevitably create challenging situations for an organization with HSBC's footprint," Chief Executive Noel Quinn said in a statement.

Mr. Quinn said he would accelerate plans announced in February to streamline the bank's operations by shedding 15% of its 235,000-strong workforce and cutting business lines and customer relationships across the U.S. and Europe to refocus on its more profitable Asian heartland. HSBC was founded in Hong Kong and Shanghai in the 1860s and makes most of its profit in Hong Kong and mainland China.

HSBC's U.S. unit is taking a major hit in the pullback. The bank said Monday that its U.S. unit is on track to slash risk-weighted assets in its global markets unit by $5 billion, or about 45%, and to consolidate some fixed income activities in London by the end of 2020. The bank closed 80 U.S. branches this year as part of its restructuring plan.

HSBC joined other British lenders earlier this year in canceling dividend payouts at the request of the Bank of England, a move aimed at shoring up their capital buffers against economic shocks stemming from the pandemic. This hit the bank's mom-and-pop investor base in Hong Kong hard, and its shares are down about 45% this year. The stock dropped as much as 7% Monday.

The bank will set aside as much as $13 billion for bad loans in 2020 as the economic outlook remains uncertain, particularly in the U.K. HSBC's U.K. unit swung to a pretax loss of $857 million in the second quarter, as it became the latest lender to report weak results at its operations in the U.K., which has recorded more deaths from coronavirus than any other European country. The U.K. also faces uncertainty as it still has to strike an agreement with the European Union on a future trade relationship.

"The U.K. economy is facing two things both at the same time," HSBC Chief Financial Officer Ewen Stevenson said in an interview. "Relative to some of the Asian economies Covid is having a more dramatic economic impact here, and it's also facing the prospect of Brexit."

The bank's rebalancing toward China has become more complicated because of rising political tensions. In June, U.S. and British politicians strongly criticized HSBC after its Asia chief publicly signed a petition backing a security law Beijing was imposing on Hong Kong. U.S. Secretary of State Mike Pompeo called HSBC's support for the law a "show of fealty" that "seems to have earned HSBC little respect in Beijing."

After supporting the law, HSBC drew strong criticism in the world's most populous nation for its involvement in a U.S. legal case against China's Huawei Technologies Co.

Chinese newspaper People's Daily wrote on July 24 that HSBC set "traps" for Huawei to break U.S. sanctions against doing business in Iran. HSBC said the U.S. Department of Justice made formal requests for information about Huawei, a former HSBC client. HSBC said it wasn't involved in the DOJ's decision to investigate Huawei or to arrest Huawei finance chief Meng Wanzhou. Ms. Meng and Huawei deny any wrongdoing.

"HSBC does not have any hostility towards Huawei and did not 'frame' Huawei," the bank said in a July 25 statement.

As HSBC strains to maintain good relations with both Washington and Beijing, executives have become increasingly exasperated by the rising political tensions. Sherard Cowper-Coles, HSBC's head of public affairs and a former British ambassador to Afghanistan, in June described the tension between the U.S. and China as "an ideological war reminiscent on the American side of the depths of McCarthyism."

Write to Simon Clark at simon.clark@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

By Pietro Lombardi and Patricia Kowsmann 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

French banking giant Société Générale SA, stung by coronavirus-related trading losses earlier this year, plans a retreat in its investment-banking unit and posted a surprise loss Monday, even as rivals thrived on the increase in stock and bond trading.

While competitors such as Goldman Sachs Group Inc. and Morgan Stanley have gained from customers moving their investments around to adapt to market shifts under the pandemic, Société Générale took losses in one of its specialties, creating and selling complex investment products.

The bank on Monday reported a EUR1.26 billion ($1.48 billion) net loss for the second quarter, compared with a profit of EUR1.05 billion in the same period a year earlier. Much of the loss was related to EUR1.33 billion in charges related to the reduction in value of its investment-banking business and deferred-tax assets that it no longer expects to recover.

Net banking income, the bank's top-line revenue figure, fell almost 16% to EUR5.3 billion. Analysts had forecast a small profit and slightly higher revenue.

Revenue from equities trading fell 80% in the from the year-earlier period, trailing rivals who showed gains in revenue or more modest declines.

Société Générale, in addition to being a major French retail bank, concentrates on producing and trading complex derivatives related to the stock market. It took major losses in the first quarter when the market panic related to the coronavirus pandemic upended trades in that business.

The bank said it had concluded a review and will cut back on risk-taking in such structured products tied to the performance of stocks and bonds. Lower risk-taking at its trading operations will mean it will be less likely to lose money when markets are dislocated. But it will also result in a revenue decline of between EUR200 million and EUR250 million, it said. It plans to counter the fall with cost cuts worth some EUR450 million by 2022-23.

"The group will continue to adapt its activities to the new post-Covid crisis environment, extending in particular the efforts to reduce costs, " Société Générale's Chief Executive Frédéric Oudéa said. Overall costs were down 10% in the second quarter.

Investment products tied to those structured trades promise investors high returns when markets are calm, and generate strong fees for the bank. But the wild and violent swings in markets in March and April left the bank exposed.

Société Générale has suffered most because companies canceled dividend payments to save money. Some of Société Générale's structured products are tied to shareholder payouts.

The bank had been among the worst-performing major bank stocks in Europe this year. Shares have fallen almost 60% since the beginning of the year and were down 2% Monday. Investors are deeply skeptical of its ability to generate profits and avoid trading losses. Its shares are valued at just 16% of book value, compared with 44% for rival BNP Paribas SA and 124% for JPMorgan Chase & Co.

BNP Paribas, which also sells complex structured products to customers, reported strong second-quarter profits last week, attributing it to a diversified business model.

Mr. Oudéa said Société Générale has designed a new range of products for clients that will be less risky for the bank, but added it wants to retain its market share in equity structured products. He said business improved in the second half of the quarter when there was a rebound in activities from mid-May.

Like other European banks, Société Générale took substantial provisions for soured loans, as the impact of the coronavirus shutdowns rippled through the economy. It stowed away EUR1.28 billion for provisions, up from EUR314 million a year earlier.

Bank officials, however, said retail activity was back to normal in June after falling sharply during the lockdown in France.

Write to Pietro Lombardi at Pietro.Lombardi@dowjones.com and Patricia Kowsmann at patricia.kowsmann@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

By Liza Lin 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

A Shanghai company has filed a patent-infringement lawsuit against Apple Inc. that, if successful, could prevent the American tech giant from selling many of its products in its most important market outside the U.S.

Shanghai Zhizhen Network Technology Co. said Monday that it is suing Apple for an estimated 10 billion yuan ($1.43 billion) in damages in a Shanghai court, after a court decision in June that upheld the validity of its Chinese patent for a chatbot similar to Apple's Siri. Shanghai Zhizhen alleged the iPhone and iPad maker's products violated the patent the Chinese artificial-intelligence company owns for a virtual assistant whose technical architecture is similar to Siri's.

Siri, a voice-activated function in Apple's smartphones and laptops, enables users to dictate text messages or set alarms on their devices.

As part of the suit, Shanghai Zhizhen, also known as Xiao-i, asked Apple to stop sales, production and the use of products flouting the patent -- a category that includes virtually all the U.S. company's devices.

Apple said it was disappointed Xiao-i filed the lawsuit, adding that Siri doesn't contain features included in the Chinese company's patent, which relates to games and instant messaging.

"We look forward to presenting the facts to the court and we will continue to focus on delivering the best products and services in the world to our customers," Apple said in a statement.

China's Supreme Court ruled in late June that Shanghai Zhizhen's patent for the virtual assistant in China was valid. The decision ended an eight-year-long legal battle between the two companies in Chinese courts. Siri was introduced as an iPhone feature in 2011, and Shanghai Zhizhen sued Apple the following year.

If Shanghai Zhizhen applies for a preliminary injunction, the court could decide to bar Apple from selling products loaded with Siri in China for the duration of the trial, said Fang Jianwei, a former Chinese judge who is now a litigation partner at Zhong Lun Law Firm in Shanghai.

However, Mr. Fang said such injunctions have to meet strict conditions and are rarely granted by Chinese courts. And the patent-infringement suit isn't a surefire win for Shanghai Zhizhen, he added. While the Supreme Court ruled that the Chinese company's patent is valid, the current court could still find that the underlying technology behind Siri and Shanghai Zhizhen's patent is different enough to rule in favor of Apple.

China is second only to Apple's home market in terms of sales for the American brand. Apple boasts considerable cachet in China but has recently faced more competition from domestic device makers including Huawei Technologies Co., which surpassed Apple to become the world's top seller of smartphones in the second quarter of the year.

Apple said last week that its quarterly sales in China rose slightly to $9.33 billion, accounting for roughly 16% of its overall revenue for the three months ended June 27. Bolstering results were discounts on its iPhone 11 models and China's earlier recovery from the new coronavirus compared with the rest of the world.

Conflicts over intellectual property, technology and trade are driving bilateral relations between the U.S. and China to their lowest point in decades. Most recently, President Trump threatened to ban Chinese short-video app TikTok on national-security grounds. U.S. officials have been involved in talks over a potential sale of TikTok's American business to Microsoft Corp.

Apple has faced three lawsuits over intellectual property in China since 2012, when it agreed to pay $60 million to settle a trademark dispute with the mainland Chinese unit of another company, Proview International Holdings Ltd., which claimed ownership of the "iPad" name in China.

Apple lost another trademark battle four years later when a Beijing court ruled in favor of a Chinese company, Beijing Xintong Tiandi Technology Co., that made handbags, smartphone cases and other leather goods under the label "IPHONE."

Raffaele Huang contributed to this article.

Write to Liza Lin at Liza.Lin@wsj.com

Corrections & Amplifications China's Supreme Court upheld the validity of Shanghai Zhizhen Network's Chinese patent for a voice assistant similar to Apple's Siri in June. An earlier version of this article incorrectly said the company was awarded the patent in June. (Corrected on Aug. 3, 2020)

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

By Dave Sebastian 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

Google has agreed to buy a 6.6% stake in security-monitoring provider ADT Inc. for $450 million, as part of the search-engine company's effort to bolster its hardware business and capitalize on growth in the market for smart-home security products.

The two companies said Monday they would combine Google's Nest hardware and services with ADT's offerings. ADT sells security and automation systems to help detect intrusion and hazards such as smoke, fire and flooding, and it employs personnel to react to alarms by relaying information to first responders.

ADT expects to offer some Google devices to its customers starting this year, and the companies will debut a jointly developed product in 2021, Jim DeVries, ADT's president and chief executive, told analysts on a conference call. Each company is committing an additional $150 million, subject to certain milestones, for joint marketing and product development, among other initiatives.

The partnership will help ADT compete better in the smart-home market, the company said, adding that it will use transaction proceeds to expand its business and reduce debt. Google said its machine-learning capabilities will support ADT's smart-home offerings, aiming to provide fewer false alarms, more ways to receive notifications and better detection of potential incidents.

ADT shares rocketed nearly 57% in Monday trading, to finish the trading day at $13.48. Google parent Alphabet Inc. shares edged down 0.35% to $1,482.76

Google bought Nest, a maker of internet-connected home electronics, for $3.2 billion in 2014. It renamed the popular Google Home Mini as Nest Mini last year, and the company placed under the Nest name an upgraded mesh router that includes accessories that double as smart speakers.

Google has been investing billions of dollars in recent years to bolster its hardware unit, which had been a laggard among other business segments.

Nest competes with products such as Amazon.com Inc.'s Ring and other tech-enabled home-security devices. But acquisitions such as Nest have contributed to antitrust concerns among critics.

Leaders of Google, Amazon, Facebook Inc. and Apple Inc., grilled on Capitol Hill last week, defended their business practices before Congress, saying they face stiff competition that forces them to serve customers and innovate.

ADT said while it aims to develop products with Google, it will continue to have a relationship with Amazon, with customers being able to integrate their security systems through Amazon's Alexa voice assistant.

Google's stake in ADT will be in the form of a newly created class of stock, though it won't have voting rights to appoint or remove ADT board directors. The transaction is expected to close in the current quarter.

ADT said Monday its losses in the second quarter were roughly flat from the year-ago period, when it reported a $104.1 million loss, and that its monthly performance improved as the quarter progressed. ADT ended the June quarter with about $45 million in cash and cash equivalents, it said.

The company is due to release its full second-quarter financial report Wednesday.

--Michael Dabaie contributed to this article.

Write to Dave Sebastian at dave.sebastian@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

By Nora Naughton 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

General Motors Co. has asked a federal judge to reconsider the tossing of a lawsuit it filed last fall against Fiat Chrysler Automobiles NV, in GM's latest attempt at reviving an unusual legal battle between the two Detroit rivals.

In a motion filed Monday in Detroit, GM said it had uncovered new evidence to further support its earlier claims that Fiat Chrysler was trying to weaken its larger competitor by bribing top officials with the United Auto Workers union.

Federal Judge Paul Borman last month dismissed GM's civil racketeering lawsuit, ruling the auto maker had failed to show it would have been a primary victim of any misconduct allegedly perpetrated by Fiat Chrysler executives.

GM's new motion not only claims it has new evidence to prove it was the victim of direct harm, but also for the first time names former UAW President Dennis Williams as a defendant.

Among the new allegations, GM claims Fiat Chrysler and Mr. Williams schemed to plant a top UAW official on GM's board to steal confidential information. The amended lawsuit also alleges Fiat Chrysler used overseas accounts to fund a bribery scheme, which GM claims benefited this official along with Mr. Williams.

Lawyers for Mr. Williams didn't respond to requests for comment.

In a statement Monday, Fiat Chrysler reiterated that it believes GM's lawsuit is without merit, noting that a federal court judge already dismissed the case.

GM's filing is the latest twist in an unprecedented legal tussle between two automotive rivals that compete against each other in many categories, including profit-rich pickup trucks.

GM last fall filed the civil racketeering lawsuit, alleging Fiat Chrysler intentionally tried to harm it by paying off UAW officials to win labor contracts with lower costs and more flexibility than its larger rival.

GM had previously based much of its case against Fiat Chrysler on evidence uncovered in a yearslong federal investigation into union corruption within the auto industry. The criminal probe, which first became public in 2017, has led to numerous convictions, including of a former top bargainer at Fiat Chrysler and several UAW officials.

This latest filing, however, makes new allegations that haven't surfaced in court documents related to the continuing federal investigation.

In its amended complaint, GM accuses Mr. Williams and Joe Ashton, a former UAW vice president, of taking payments in return for their participation in a larger plot by Fiat Chrysler to weaken GM and force a merger between the two companies.

GM had alleged in its original lawsuit that Sergio Marchionne, Fiat's chief executive at the time, orchestrated a scheme that involved bribing UAW officials to gain lower labor costs and a competitive advantage over Fiat's rivals in union contracts.

GM publicly resisted the merger proposal in 2015. Mr. Marchionne died in 2018.

In its amended complaint, GM alleges that Fiat Chrysler's scheme was broader than it had outlined originally, involving Mr. Williams and Mr. Ashton, who for a period sat on GM's board as a representative for the union's health care trust.

The filing alleges that Fiat Chrysler, through unidentified "agents," directed funds into a network of bank accounts in places such as Switzerland, Luxembourg and the Cayman Islands that then benefited Mr. Williams, Mr. Ashton and other UAW officials.

Some of those accounts were also allegedly used to pay Alphons Iacobelli, formerly Fiat Chrysler's top labor negotiator, who is among the executives GM has named in its suit.

Mr. Iacobelli in 2018 pleaded guilty to making illegal payments to UAW leaders and to filing a false tax return that failed to include income illegally siphoned from the company.

He is serving a 5 1/2 -year prison sentence for his involvement in corruption prosecutors previously uncovered at Fiat Chrysler.

GM said it recently learned about the accounts by using third-party investigators, according to an exhibit filed in support of the motion.

The Detroit auto maker alleges both Mr. Ashton, who served on GM's board between 2014 and 2017, and Mr. Iacobelli, who the company hired into its labor relations department in 2016, were "informants" placed at GM who then passed along confidential information to Fiat Chrysler.

GM alleges that in return both men received payments into foreign bank accounts that they controlled. GM alleges that Mr. Ashton solicited and received hundreds of thousands of dollars from Fiat Chrysler that were held in an offshore account in the Cayman Islands.

Mr. Iacobelli declined to comment through an attorney. A lawyer for Mr. Ashton didn't reply to requests for comment.

"These actions were not done to nor did they harm the UAW," attorneys for GM claimed in the amended complaint. "Instead they were intended to and did cause harm to GM, the intended target of the FCA bribery scheme."

The UAW said it was unaware of the offshore accounts, and that GM's new allegations haven't surfaced in its discussions with federal prosecutors.

Last year, federal prosecutors charged Mr. Ashton and two aides in a kickback scheme involving the GM training center's vendors. Prosecutors say Mr. Ashton and the aides demanded kickbacks in return for steering more than $10 million worth of contracts for providing backpacks, jackets and watches intended for GM workers.

Mr. Ashton later pleaded guilty to charges of conspiracy to commit fraud and money laundering. He hasn't been sentenced.

Ben Foldy contributed to this article.

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

By Rebecca Elliott 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2020).

U.S. fuel makers slashed production during the second quarter as they reeled from a historic decline in demand for gasoline and jet fuel.

Long a bright spot in the oil patch, refiners such as Valero Energy Corp., Marathon Petroleum Corp. and Phillips 66 pumped the brakes as the coronavirus pandemic kept people off the roads and out of the skies, crushing demand for the fuels they produce.

U.S. consumption of gasoline and distillates including diesel has rebounded from its April trough to more than 90% of year-ago levels, Energy Information Administration data show. But demand for jet fuel remains anemic, at little more than half of last year's level, a sign that global oil demand is likely to remain depressed for years.

World-wide, fuel makers have coped by processing far less crude, shutting down some facilities and constraining spending. This year's average global refinery utilization rates are expected to be the lowest in 37 years, according to the International Energy Agency. Refiners typically make less money when they operate well below capacity because the cost of running their facilities doesn't decline by much.

In the latest sign of pressure on the sector, Marathon told employees Friday that it has no plans to restart two refineries that it idled in April. The company had tried unsuccessfully to sell one of the facilities, Chief Executive Michael Hennigan said Monday.

Marathon on Sunday evening also announced that it was selling its gas-station business to the owner of the 7-Eleven convenience store chain for $21 billion in the largest U.S. energy-related deal so far this year.

U.S. refiners' second-quarter results provide a glimpse of the challenging future that fuel makers face as tougher fuel-efficiency requirements and electric vehicles threaten their businesses. That is the reality already facing refiners in Europe, where demand for transportation fuels had fallen even before the pandemic.

"To a degree, the pandemic is a harbinger of the coming energy transition more broadly, where oil demand declines year after year," said Kurt Barrow, a vice president at analytics firm IHS Markit.

Phillips 66 ran its refineries at 75% of capacity during the second quarter, down from 97% in the same period a year earlier. Its refining business lost $878 million pretax during the period, whereas in the year-ago period it generated $983 million in pretax profit.

The company's margin on each barrel of oil that it processed fell to $2.60 from $11.37 a year earlier. That contributed to a second-quarter loss of $141 million, compared with profit of $1.4 billion in the year-ago period.

Valero processed some 22% less crude during the second quarter than it did a year earlier, and its margin per barrel fell to $5.10 from $9.58. The company largely reversed the $2.5 billion inventory write-down that it took during the first quarter, as oil prices roughly doubled from the end of March to the end of June.

That reversal helped to lift Valero's second-quarter profit to $1.3 billion from $612 million in the year-ago period. Excluding one-time adjustments, the company reported a $504 million loss, compared with $665 million in profit during the same period last year.

Valero executives said the company is refining more oil to meet improving demand but cautioned that jet-fuel consumption remains severely depressed.

"That would be the only sign that we're seeing that's a little bit troubling," Valero Chief Commercial Officer Gary Simmons told investors last week.

Many observers expect jet-fuel consumption to remain low for years, as people avoid flying because of the coronavirus and businesses conduct more meetings by videoconference, constraining global oil demand.

By the end of next year, the IEA expects world oil consumption will be about 2% below levels from late 2019. Some refineries likely will have to shut down, much as they did after the 2007-09 recession, when some eight million barrels a day of refining capacity permanently closed, according to the IEA.

"There is going to be continued rationalization," Thomas Nimbley, chief executive of New Jersey-based PBF Energy Inc., told investors last week.

PBF ran about 21% less oil through its systems during the second quarter than it did a year earlier as its margin on each barrel plummeted to $1.54 from $9.10. The company generated $413 million in second-quarter profit versus a year-ago loss of $22 million, thanks in part to asset sales and an increase in inventory value.

Mr. Nimbley said PBF is focused on weathering the pandemic and reducing debt, at which point it will look to diversify into areas such as renewable diesel, a fuel made from products such as vegetable oil or grease.

Refiners are increasingly interested in alternative fuels. Marathon, for example, is considering converting one of the refineries it closed this spring to a facility that produces renewable diesel.

Marathon ran its refineries at 71% of capacity during the quarter, down from 97% during the same period a year earlier. Its margin-per-barrel declined to $7.13, from $15.24 a year earlier.

The company partially reversed a $3.2 billion inventory charge it took earlier this year, helping to lift first-quarter profits to $9 million, compared with $1.1 billion a year prior. Excluding one-time adjustments, Marathon had a quarterly loss of $868 million, compared with a $1.1 billion profit a year earlier.

IHS, the analytics firm, expects global oil consumption will surpass 2019 levels in 2023 and continue to grow at least through the end of the decade, yet remain far lower than it would have been had the pandemic never happened. Others such as Rystad Energy think world oil demand will peak before the end of the decade as electric vehicles gain market share and people travel less.

Either scenario is challenging for fuel makers.

U.S. refining companies raked in cash in recent years, despite relatively flat domestic fuel consumption, because of an uptick in exports and a shale boom that outpaced domestic pipeline infrastructure. Soaring production created crude bottlenecks in pockets of the U.S. and regional price dislocations that fuel makers took advantage of.

Such severe regional price disparities are unlikely to re-emerge soon because U.S. oil production has fallen to around 11 million barrels a day, from some 13 million barrels a day earlier this year, relieving pressure on the conduits that move crude around the country, said Sandy Fielden, director of oil and products research for Morningstar Inc. For those looking to unload weaker assets, buyers are few and far between.

"They're in the same boat as the European refiners have been in for years, which is too many refineries, not enough demand," Mr. Fielden said.

Write to Rebecca Elliott at rebecca.elliott@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:47 ET (06:47 GMT)

By Jaime Llinares Taboada

BP PLC on Tuesday launched a new green strategy, reported a swing to an underlying replacement cost loss for the second quarter of the year, and reset the quarterly dividend to a significantly lower level.

The FTSE 100 oil major said it is targeting a 10-fold increase in low carbon investment, a 40% cut in production, a 30%-35% cut in emissions from its operations, and reduction of over 15% in carbon intensity from the products it sells by 2030. In addition, it has committed not to undertake exploration in new countries.

In a separate statement, BP posted a $6.68 billion underlying replacement cost loss--a figure similar to the net-profit figure U.S. oil companies use but strips out one-off items--for the quarter, swinging from a $2.81 billion profit a year earlier. This was better than the market forecast of a $6.8 billion loss compiled by the company and based on 20 brokers' estimates.

The net loss came in at $16.85 billion compared with a $1.82 billion profit a year earlier.

"These headline results have been driven by another very challenging quarter, but also by the deliberate steps we have taken as we continue to reimagine energy and reinvent BP. In particular, our reset of long-term price assumptions and the related impairment and exploration write-off charges had a major impact," Chief Executive Bernard Looney said.

BP reset the quarterly dividend at 5.25 cents down from 10.25 cents in the second quarter of 2019. It also said it will return at least 60% of surplus cash as share buybacks under its new corporate strategy.

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

(END) Dow Jones Newswires

August 04, 2020 02:40 ET (06:40 GMT)

By Joe Hoppe

Diageo PLC said Tuesday that its fiscal 2020 pretax profit more than halved and net sales fell amid the coronavirus pandemic, and declared a final dividend of 42.47 pence.

The world's largest liquor maker--which owns Johnnie Walker whisky and Tanqueray gin--said operating profit, its preferred metric, fell as the coronavirus pandemic drove down sales in the second half of the year.

Operating profit for the period was 2.14 billion pounds ($2.80 billion), down from GBP4.04 billion.

Pretax profit for the year fell to GBP2.04 billion from GBP4.24 billion, compared with analysts' consensus forecasts of GB3.45 billion, according to FactSet.

Net sales fell to GBP11.75 billion from GBP12.87 billion, Diageo said.

The company declared a final dividend of 42.47 pence a share, flat on last year and bring the total dividend for the year up 2% to 69.8 pence.

Diageo said organic net sales fell 8.4%, while organic volumes declined 11.2%, at growth in North America was offset by declines in its other markets.

Chief Executive Ivan Menezes said that while the trajectory of the recovery is uncertain, with volatility expected to continue into fiscal 2021, he was confident in Diageo's strategy and resilience, and said it was well-positioned to emerge from the crisis stronger.

Write to Joe Hoppe at joseph.hoppe@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:37 ET (06:37 GMT)

By Kim Richters

Bayer AG Tuesday said it swung to a loss in the second quarter of the year, as it set aside provisions for settlements related to its glyphosate-based Roundup herbicide.

The German pharmaceutical and chemical conglomerate said its net loss for the period was 9.55 billion euros ($11.23 billion) due to special items for litigations, compared with a profit of EUR404 million a year earlier. Charges included costs for the Roundup cases as well as provisions for other litigations such as for the dicamba herbicide, the company said.

Bayer continues to expect total costs of up to $10.9 billion to settle the tens of thousands of lawsuits related to the Roundup herbicide and resolve possible future litigations.

Earnings before interest, taxes, depreciation and amortization before special items rose 5.6% to EUR2.88 billion, compared with EUR2.73 billion in the same quarter the previous year.

Quarterly sales came in at EUR10.05 billion down from EUR10.71 billion year prior.

Analysts expected sales of EUR10.40 billion and adjusted Ebitda of EUR2.74 billion, according to consensus estimates provided by Vara Research.

Bayer lowered its outlook for the year due to the coronavirus pandemic. It now expects sales to be between EUR43 billion and EUR44 billion and Ebitda before special items of around EUR12.1 billion, both on a currency-adjusted basis.

Write to Kim Richters at kim.richters@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:32 ET (06:32 GMT)

By Cecilia Butini

Infineon Technologies AG on Tuesday posted an after-tax loss for the third quarter of its fiscal year, while revenue rose.

The German chip maker reported a quarterly loss of 128 million euros ($150.6 million), compared with a profit of EUR224 million in the same period of the previous fiscal year.

Revenue for the period increased to EUR2.17 billion compared with EUR2.02 billion the year prior.

The company's segment result margin came in at 10.1%, compared with 15.7% a year earlier, it said.

"The pandemic continues to have a significant impact on our target markets, resulting in weaker demand in many product areas," Chief Executive Reinhard Ploss said.

Infineon confirmed its guidance for the year, which includes revenue of around EUR8.5 billion and a segment result margin of about 13%.

The company forecasts fourth-quarter revenue for the group to be in the range of EUR2.3 billion to EUR2.6 billion.

Write to Cecilia Butini at cecilia.butini@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:23 ET (06:23 GMT)

By Olivia Bugault

Intesa Sanpaolo SpA said late Monday that it now owns around 91% of Unione di Banche Italiane SpA's capital after the closing of a successful takeover bid for its smaller Italian rival.

Intesa said that 90.2% of UBI's shares were tendered to the offer and that, according to the law regarding compulsory squeeze-out, it will purchase the remaining shares that represent roughly 9.8% of UBI's capital.

If conditions are met, UBI's shares will be delisted, it said.

Intesa launched a bid to take over its smaller rival in February, in a deal that is set to create Italy's largest bank.

Write to Olivia Bugault at olivia.bugault@wsj.com

(END) Dow Jones Newswires

August 04, 2020 02:03 ET (06:03 GMT)

   By Chester Tay 
 

Hartalega Holdings Bhd. said net profit for the first quarter ended June 30 more than doubled from a year earlier, thanks to higher glove sales in the wake of the Covid-19 pandemic, along with lower raw material and energy costs.

Net profit for April to June rose to 219.7 million ringgit ($52.0 million), while revenue grew 44% to MYR920.1 million.

The glove maker expects demand to continue growing in the coming years due to the Covid-19 pandemic.

The group said the overall projected growth in glove demand is expected to outstrip supply for the next few years due to the pandemic and heightened hygiene awareness in emerging markets.

The glove maker said it will continue its capacity expansion and plans to grow annual installed capacity to 44 billion pieces by fiscal 2022 from the current 39 billion pieces.

Write to Chester Tay at chester.tay@wsj.com

(END) Dow Jones Newswires

August 04, 2020 01:34 ET (05:34 GMT)

Democrats, White House Upbeat After  New Talks on Coronavirus Aid Bill 
 

Democratic leaders and White House officials sounded cautiously upbeat notes after another round of talks Monday on a new coronavirus aid package, while President Trump floated potential executive actions.

 
U.S. Will Borrow Estimated $2 Trillion in Second Half of 2020, Treasury Says 
 

The U.S. expects to borrow an additional $2 trillion in the second half of the year as federal spending ramps up to combat the coronavirus pandemic.

 
U.S. Stocks Climb to Start the Month 
 

The Dow industrials and S&P 500 rose as big technology companies surged and the U.S. registered its lowest number of new Covid-19 infections in weeks.

 
RBA Keeps Policy Unchanged, Signals More Bond Buys 
 

The Reserve Bank of Australia kept its official cash rate at a record-low 0.25%, as it weighs the economic impact of tougher lockdown measures to contain the coronavirus in the southeastern state of Victoria.

 
Argentina Near $65 Billion Restructuring Deal With Bondholders 
 

The government is finalizing an agreement with its biggest private creditors to restructure about $65 billion in foreign debt and resolve the country's third sovereign default this century, according to people involved in the talks.

 
Covid Supercharges Federal Reserve as Backup Lender to the World 
 

When the coronavirus halted the global economy in March, the U.S. central bank lent massively to counterparts abroad. The action-among its most significant expansions of power yet-cemented the dollar's dominance.

 
Hedge-Fund Launches Pick Up Despite Pandemic 
 

Hedge-fund manager Gaurav Kapadia has raised more than $1 billion in committed capital for his new firm, XN, according to people familiar with the fund, and is up 7.4% after fees in its public investments since its July 1 start.

 
Global Factories Increase Production, but Overseas Demand Remains Soft 
 

Factories across the U.S., Europe and parts of Asia increased production in July, but the upswing was held back by weak global trade and suggested a long and precarious road ahead for the global economy.

 
U.S. Counts Smallest Daily Rise in Coronavirus Cases in Weeks 
 

The U.S. reported more than 47,000 new coronavirus cases, the smallest daily increase in almost four weeks, despite signs of an uptick in new infections in some Northeast and Midwest states.

 
Nasdaq Indexes Lead Way on Both Sides of Atlantic 
 

In the U.S., the stock-exchange operator's indexes are the country's best-performing major stock benchmarks this year. In Europe, the Nasdaq-owned Copenhagen exchange's index is leading the charge.

(END) Dow Jones Newswires

August 04, 2020 01:15 ET (05:15 GMT)

FAA Formally Proposes Fixes for Return of Boeing's 737 MAX 
 

U.S. air-safety regulators for the first time publicly spelled out the full range of hardware, software, crew training and maintenance changes they are proposing before Boeing's 737 MAX jets will be allowed to resume flying passengers

 
With Potential TikTok Deal, Microsoft CEO Looks to Expand Audience 
 

If there is one trait that would link a TikTok acquisition with the other big deals Microsoft Chief Executive Satya Nadella has done, it is his willingness to pay big bucks to expand the software giant's universe of users.

 
Twitter Could Pay FTC Fine Over Alleged Privacy Violations 
 

Twitter Inc. said it could pay at least $150 million to the Federal Trade Commission related to alleged violations of a 2011 consent order for using consumers' private data in targeted advertising.

 
Trump Says U.S. Should Get Slice of TikTok Sale Price 
 

President Trump said he was ready to approve a purchase of the U.S. operations of the Chinese video-sharing app TikTok, but only if the government receives "a lot of money" in exchange.

 
AIG Swings to Quarterly Loss 
 

Global insurer American International Group swung to a loss for the second quarter driven in part by substantial costs tied to the pandemic.

 
Texas Hotelier Monty Bennett's Companies Under SEC Investigation 
 

The SEC is investigating companies affiliated with Texas hotelier Monty Bennett, whose companies were among the biggest recipients of federal government bailout money.

 
Lord & Taylor Limps Into Bankruptcy Looking for a Suitor 
 

The department-store chain kicked off its bankruptcy proceeding with a full-page newspaper ad announcing its search for a new owner, but it has little time or money to reach a deal.

 
Commerzbank Names New Chairman, Defying Big Investor Cerberus 
 

German lender Commerzbank appointed former state bank executive Hans-Jörg Vetter as its new chairman, ignoring opposition from its second-largest shareholder, Cerberus Capital Management.

 
GM Tries to Revive Legal Battle With Fiat Chrysler 
 

General Motors wants a federal judge to reconsider the tossing of its suit against Fiat Chrysler in which it accused its rival of bribing UAW officials to gain a competitive advantage.

 
Vornado Faces Rent-Collection Challenge From Retailers 
 

Vornado Realty Trust said it collected 72% of second-quarter rents due to it from retailers, a performance that illustrates the challenges retail-property owners face as the pandemic complicates in-store shopping for many tenants.

(END) Dow Jones Newswires

August 04, 2020 01:15 ET (05:15 GMT)

   By David Winning 
 

SYDNEY--The Reserve Bank of Australia left its policy settings unchanged at its board meeting Tuesday, as it weighs the economic impact of tougher lockdown measures to contain the coronavirus in the southeastern state of Victoria.

The RBA kept its official cash rate at a record-low 0.25% and reaffirmed its 0.25% target for the yield on three-year government bonds. Cementing that yield target will involve the central bank buying bonds in the secondary market on Wednesday, Governor Philip Lowe said in a statement.

"The Bank's mid-March package of support for the Australian economy is working as expected," Mr. Lowe said. "This accommodative approach will be maintained as long as it is required."

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

August 04, 2020 00:58 ET (04:58 GMT)

President Trump said he was ready to approve a purchase of the U.S. operations of the Chinese video-sharing app TikTok. "Trump Says U.S. Should Get Slice of TikTok Sale Price," at 7:04 p.m. ET on Aug. 3, incorrectly implied that all of TikTok was for sale.

(END) Dow Jones Newswires

August 04, 2020 00:54 ET (04:54 GMT)

Oil Ends Higher Despite Rising OPEC Output 
 

U.S. benchmark oil prices ended 1.8% higher at $41.01 a barrel on hopes demand will continue to recover after the daily toll of new coronavirus cases in the U.S. fell to the lowest daily total in nearly a month.

 
Refiners Retrench as Demand for Gasoline, Jet Fuel Shrivels 
 

U.S. fuel makers ran below capacity in the second quarter in a preview of the challenges they are likely to face as the world transitions away from fossil fuels.

 
Trump Fires Tennessee Valley Authority Board Members, Cites Shift to Foreign Workers 
 

President Trump removed the chairman and another board member at the Tennessee Valley Authority and called for firing the federally owned utility's CEO, as he signed an order meant to protect U.S. federal workers from displacement by foreigners.

 
Offshore Driller Fieldwood Energy Preps for Imminent Bankruptcy Filing 
 

Fieldwood Energy, an oil driller that operates in the Gulf of Mexico, is preparing to file for bankruptcy within days as it grapples with the prolonged slump in commodity prices exacerbated by the coronavirus pandemic.

 
Marathon to Sell Gas-Station Chain to 7-Eleven Owners for $21 Billion 
 

Fuel maker Marathon Petroleum agreed to sell its gas stations to the owners of the 7-Eleven convenience-store chain for $21 billion in the largest U.S. energy-related deal of the year.

 
Energy & Utilities Roundup: Market Talk 
 

The latest Market Talks covering Energy and Utilities.

 
Gas Finds Trigger a Standoff in the Mediterranean Between an Isolated Turkey and Rivals 
 

The contest over newfound gas riches in the Eastern Mediterranean has triggered a slew of rival maritime claims, pushing the region's main powers-all of them America's partners or allies-toward open confrontation.

 
Drillers Go Remote as Pandemic Reshapes Oil Business 
 

After cutting thousands of jobs during the coronavirus pandemic, the oil industry is accelerating its embrace of remote drilling and fracking, changes that will reshape its workforce permanently.

 
Exxon Dividends: Jam Today, Jammed Tomorrow? 
 

The oil giant can manage its dividends, but it comes at a long-term cost that may not seem immediately apparent.

 
Denbury Resources Files for Bankruptcy, Handing Control to Creditors 
 

The oil-and-gas company plans to hand ownership over to creditors as part of a bankruptcy strategy that would eliminate $2.1 billion in bond debt.

(END) Dow Jones Newswires

August 04, 2020 00:15 ET (04:15 GMT)

AIG Swings to Quarterly Loss 
 

Global insurer American International Group swung to a loss for the second quarter driven in part by substantial costs tied to the pandemic.

 
Manhattan Prosecutor Seeking Trump Taxes Says Request Is Justified 
 

The Manhattan district attorney's office says it is justified in seeking financial documents from President Trump and his company as part of a complex investigation into alleged insurance and bank fraud.

 
Commerzbank Names New Chairman, Defying Big Investor Cerberus 
 

German lender Commerzbank appointed former state bank executive Hans-Jörg Vetter as its new chairman, ignoring opposition from its second-largest shareholder, Cerberus Capital Management.

 
Société Générale Retreats From Risky Structured Products 
 

Société Générale, stung by coronavirus-related trading losses earlier this year, plans a retreat in its investment banking unit and posted a surprise loss, even as rivals thrived on the increase in stock and bond trading.

 
HSBC Profit Slumps on Coronavirus, Trade Tensions 
 

HSBC's net profit plummeted in the second quarter as the impact of the coronavirus pandemic complicated the bank's efforts to refocus on Asia while dealing with rising U.S.-China political tensions.

 
SocGen Reports Another Quarterly Loss 
 

Societe Generale vowed to cut costs in its global markets business after the lender swung to an unexpected loss of EUR1.26 billion in the second quarter, as it set aside more money for potential loan losses.

 
GCM Grosvenor to Merge With Cantor Fitzgerald SPAC 
 

GCM Grosvenor is merging with a special purpose acquisition company in a deal that will take the Chicago asset manager public.

 
Hedge-Fund Launches Pick Up Despite Pandemic 
 

Hedge-fund manager Gaurav Kapadia has raised more than $1 billion in committed capital for his new firm, XN, according to people familiar with the fund, and is up 7.4% after fees in its public investments since its July 1 start.

 
Financial Services Roundup: Market Talk 
 

The latest Market Talks covering Financial Services

 
Fed Weighs Abandoning Pre-Emptive Rate Moves to Curb Inflation 
 

The U.S. central bank is preparing to effectively abandon its strategy of pre-emptively lifting interest rates to head off higher inflation, a practice it has followed for more than three decades.

(END) Dow Jones Newswires

August 04, 2020 00:15 ET (04:15 GMT)

   By P.R. Venkat 
 

Bandhan Bank Ltd.'s promoters have sold a portion of their stake to meet the Reserve Bank of India's requirement to limit their stake to 40% in the lender.

The bank's holding company Bandhan Financial Ltd. which held a 60.95% stake, sold 20.9% stake in the secondary market, the lender said late Monday.

"In view of the above dilution, all the licensing conditions for the Bank are now complied with," Bandhan Bank said.

According to data from the Bombay Stock Exchange, foreign firms including Credit Suisse, Morgan Stanley and Societe Generale were among those that purchased the shares of Bandhan Bank.

Camas Investments Pte., a unit of Temasek Holdings Pte. also purchased the lender's shares, the data showed.

Write to P.R. Venkat at venkat.pr@wsj.com

(END) Dow Jones Newswires

August 03, 2020 23:33 ET (03:33 GMT)

China's Supreme Court upheld the validity of Shanghai Zhizhen Network's Chinese patent for a voice assistant similar to Apple's Siri in June. "Apple Faces $1.4 Billion Lawsuit by Chinese AI Firm in Siri Patent Fight -- 2nd Update" at 12:41 p.m. ET, incorrectly said the company was awarded the patent in June. The error was also in "Apple Faces $1.4 Billion Lawsuit by Chinese AI Firm in Siri Patent Fight -- Update" at 6:39 a.m. ET and "Apple Faces $1.4 Billion Lawsuit by Chinese AI Firm in Siri Patent Fight" at 2:41 a.m. ET.

(END) Dow Jones Newswires

August 03, 2020 23:22 ET (03:22 GMT)

Democrats, White House Upbeat After  New Talks on Coronavirus Aid Bill 
 

Democratic leaders and White House officials sounded cautiously upbeat notes after another round of talks Monday on a new coronavirus aid package, while President Trump floated potential executive actions.

 
U.S. Stocks Climb to Start the Month 
 

The Dow industrials and S&P 500 rose as big technology companies surged and the U.S. registered its lowest number of new Covid-19 infections in weeks.

 
U.S. Will Borrow Estimated $2 Trillion in Second Half of 2020, Treasury Says 
 

The U.S. expects to borrow an additional $2 trillion in the second half of the year as federal spending ramps up to combat the coronavirus pandemic.

 
Argentina Near $65 Billion Restructuring Deal With Bondholders 
 

The government is finalizing an agreement with its biggest private creditors to restructure about $65 billion in foreign debt and resolve the country's third sovereign default this century, according to people involved in the talks.

 
Hedge-Fund Launches Pick Up Despite Pandemic 
 

Hedge-fund manager Gaurav Kapadia has raised more than $1 billion in committed capital for his new firm, XN, according to people familiar with the fund, and is up 7.4% after fees in its public investments since its July 1 start.

 
Covid Supercharges Federal Reserve as Backup Lender to the World 
 

When the coronavirus halted the global economy in March, the U.S. central bank lent massively to counterparts abroad. The action-among its most significant expansions of power yet-cemented the dollar's dominance.

 
Global Factories Increase Production, but Overseas Demand Remains Soft 
 

Factories across the U.S., Europe and parts of Asia increased production in July, but the upswing was held back by weak global trade and suggested a long and precarious road ahead for the global economy.

 
U.S. Counts Smallest Daily Rise in Coronavirus Cases in Weeks 
 

The U.S. reported more than 47,000 new coronavirus cases, the smallest daily increase in almost four weeks, despite signs of an uptick in new infections in some Northeast and Midwest states.

 
Coffee Drinkers Stay Home, Hitting Some Beans Harder Than Others 
 

The coffee bean market has bifurcated since lockdowns forced a shift in consumer behavior. Futures linked to arabica beans, which are popular in cafes and restaurants, have fallen much more than those tied to robusta beans, which are consumed largely at home.

 
7-Eleven's $21 Billion Deal Could Be a Marathon 
 

The massive deal makes strategic sense but still looks pricey, particularly given the struggling state of the U.S. petroleum industry.

(END) Dow Jones Newswires

August 03, 2020 23:15 ET (03:15 GMT)

FAA Formally Proposes Fixes for Return of Boeing's 737 MAX 
 

U.S. air-safety regulators for the first time publicly spelled out the full range of hardware, software, crew training and maintenance changes they are proposing before Boeing's 737 MAX jets will be allowed to resume flying passengers

 
With Potential TikTok Deal, Microsoft CEO Looks to Expand Audience 
 

If there is one trait that would link a TikTok acquisition with the other big deals Microsoft Chief Executive Satya Nadella has done, it is his willingness to pay big bucks to expand the software giant's universe of users.

 
Twitter Could Pay FTC Fine Over Alleged Privacy Violations 
 

Twitter Inc. said it could pay at least $150 million to the Federal Trade Commission related to alleged violations of a 2011 consent order for using consumers' private data in targeted advertising.

 
Trump Says U.S. Should Get Slice of TikTok Sale Price 
 

President Trump confirmed Monday he is open to a deal in which Microsoft or another U.S. company buys the video-sharing app TikTok, but he said the government should receive payment for clearing a purchase.

 
AIG Swings to Quarterly Loss 
 

Global insurer American International Group swung to a loss for the second quarter driven in part by substantial costs tied to the pandemic.

 
Texas Hotelier Monty Bennett's Companies Under SEC Investigation 
 

The SEC is investigating companies affiliated with Texas hotelier Monty Bennett whose companies were among the biggest recipients of federal government bailout money.

 
Lord & Taylor Limps Into Bankruptcy Looking for a Suitor 
 

The department-store chain kicked off its bankruptcy proceeding with a full-page newspaper ad announcing its search for a new owner, but it has little time or money to reach a deal.

 
Commerzbank Names New Chairman, Defying Big Investor Cerberus 
 

German lender Commerzbank appointed former state bank executive Hans-Jörg Vetter as its new chairman, ignoring opposition from its second-largest shareholder, Cerberus Capital Management.

 
Vornado Faces Rent-Collection Challenge From Retailers 
 

Vornado Realty Trust said it collected 72% of second-quarter rents due to it from retailers, a performance that illustrates the challenges retail-property owners face as the pandemic complicates in-store shopping for many tenants.

 
GM Tries to Revive Legal Battle With Fiat Chrysler 
 

General Motors wants a federal judge to reconsider the tossing of its suit against Fiat Chrysler in which it accused its rival of bribing UAW officials to gain a competitive advantage.

(END) Dow Jones Newswires

August 03, 2020 23:15 ET (03:15 GMT)

By Bob Davis, Alex Leary and Kate Davidson 

WASHINGTON -- President Trump said he was ready to approve a purchase of the U.S. operations of the Chinese video-sharing app Tik Tok, but only if the government receives "a lot of money" in exchange -- an assertion of presidential power that appeared to lack precedent.

Microsoft Corp. said it hopes to acquire TikTok's business in the U.S. and three other countries. Mr. Trump said he told the company's chief executive, Satya Nadella, that "a very substantial portion of that price is going to have to come into the Treasury of the United States because we're making it possible for this deal to happen."

Legal analysts and others pointed out that the White House had been pushing for a sale of the U.S. parts of TikTok to U.S. owners, making the demand for payment all the more extraordinary.

"It is completely unorthodox for a president to propose that the U.S. take a cut of a business deal, especially a deal that he has orchestrated. The idea also is probably illegal and unethical," said Carl Tobias, a law professor at the University of Richmond.

While the U.S. government for decades has analyzed foreign investments in the U.S. to see whether they could create national-security problems, the decisions are usually left to the members of a secretive interagency group called the Committee on Foreign Investment in the U.S.

Under Mr. Trump, the U.S. has taken a hard line on China through CFIUS. Last year, for instance, CFIUS ordered a Chinese company to sell gay-dating app Grindr, citing the risk that Beijing could exploit the personal data it collects.

Mr. Trump and his national-security team cited similar concerns about TikTok, raising the prospect that its Chinese owner, Beijing-based ByteDance Ltd., could be forced to share data it collects on U.S. users with the Chinese government.

With TikTok, however, the president's requirement for a payment showed a much greater involvement. That follows two years of personal attention to the trade battle with China, including deciding how and when to assess tariffs -- and when to back off and cut a deal.

"This is an extension of Trump's generalized view that he can micromanage the industrial sphere," said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics.

Mr. Hufbauer said Mr. Trump's proposal reminded him of medieval kings who oversaw salt monopolies. "If you wanted to mine some salt, you put money into royal Treasury," he said.

The president, a former New York real-estate developer, often presents himself as a master negotiator on everything from international trade accords to dealings with North Korean leader Kim Jong Un.

With TikTok, he likened his payment idea to "key money" -- or an extra fee paid to secure a hard-to-get property. "It's a little bit like the landlord-tenant," the GOP president said at the White House on Monday. "Without a lease, the tenant has nothing."

"It's a great asset," Mr. Trump said of TikTok. "But it's not a great asset in the United States unless they have the approval of the United States."

Later in the day, he was asked to clarify his remarks. "It would come from the sale," Mr. Trump said. "Whatever the number is, it would come from the sale. Which nobody else would be thinking about but me. But that's the way I think. And I think it's very fair."

Washington's move, in the eyes of Beijing, essentially strong-arms one of China's most valuable global tech companies into selling a lucrative overseas unit. Chinese officials say it is further proof that the U.S. views any Chinese tech company with international success as a challenge to its technology primacy, regardless of the product or how it runs its business.

Mr. Trump's comments also amplify how deeply he involves himself in trade and investment decisions, which economic historians also say is a big departure from the past.

Douglas Irwin, a Dartmouth College economic historian, said early in Franklin Roosevelt's first term, his advisers debated whether the U.S. should cut barter deals with other governments, but the president ultimately rejected the idea and negotiated trade agreements instead. No president since has looked to get so deeply entwined with commercial deals with foreign companies, he said.

Tony Fratto, a former George W. Bush Treasury official and partner at the Washington public-affairs firm Hamilton Place Strategies, said it was unlikely any payment would stand up.

"There is no situation where either Microsoft or the Chinese or TikTok or ByteDance will be sending a check to the U.S. government, except in the normal course of their regular tax obligations," Mr. Fratto said.

The president also often made broad assertions of presidential power, which may be popular with his political base, only to back off later. In August, 2019, at the height of the U.S.-China trade battle, he tweeted that he "hereby ordered (U.S. companies) to immediately start looking for an alternative to China, including bringing your companies HOME." Nothing came of that.

This year, Mr. Trump said he had the power to force states to reopen their economies amid the coronavirus pandemic, though he backed off that claim, too. He has recently pointed to a Supreme Court decision on an immigration program for young undocumented residents, arguing that it gives him authority to make more sweeping changes without Congress. He cited the same decision as grounds for a health-care overhaul, though he has yet to offer one.

"Trump often tries to prove how strong he is by taking novel and extreme positions," said Alex Conant, a Republican strategist in Washington. "A lot of people in Washington may roll their eyes at Trump's off-the-wall proposals, but we shouldn't underestimate their simplistic appeal to many voters."

The comments, though, can make life tough for companies, which don't want problems in Washington.

In this case, Microsoft declined to comment beyond its statement released in a blog post Sunday night. In that post, Microsoft said it is "committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury." It wasn't clear whether Microsoft was talking about the taxes it would pay or some other arrangement.

The White House referred questions on how a payment would work to the Treasury Department. A Treasury spokeswoman referred a reporter back to the president's comments, and declined to comment further.

Mr. Trump indicated a deadline of Sept. 15, after which TikTok would be banned in the U.S. Microsoft said Sunday that it would move quickly to pursue discussions with ByteDance and it aims to complete the negotiations by Sept. 15.

TikTok says it has 100 million users in the U.S. A TikTok spokeswoman on Monday said the platform is "committed to continuing to bring joy to families and meaningful careers to those who create on our platform....TikTok will be here for many years to come."

--Aaron Tilley contributed to this article.

Write to Bob Davis at bob.davis@wsj.com, Alex Leary at alex.leary@wsj.com and Kate Davidson at kate.davidson@wsj.com

(END) Dow Jones Newswires

August 03, 2020 22:35 ET (02:35 GMT)

   By Dan Molinksi 
 

Chevron Corp. reported a shutdown related to a gasoline-making fluid catalytic cracking unit at its Pasadena, Texas refinery late Monday.

The refinery's statement to the Texas Commission on Environmental Quality said the incident happened Sunday and resulted in emissions of carbon monoxide, sulfur dioxide and other gases that lasted more than three hours.

The shutdown at the 110,000-barrel-a-day Houston-area refinery comes less than a month after the refinery performed FCCU-related maintenance.

Write to Dan Molinski at dan.molinski@wsj.com

(END) Dow Jones Newswires

August 03, 2020 21:38 ET (01:38 GMT)

By Bob Davis, Alex Leary and Kate Davidson 

WASHINGTON -- President Trump said he was ready to approve a purchase of the Chinese video-sharing app Tik Tok, but only if the government receives "a lot of money" in exchange -- an assertion of presidential power that appeared to lack precedent.

Microsoft Corp. said it hopes to acquire TikTok's business in the U.S. and three other countries. Mr. Trump said he told the company's chief executive, Satya Nadella, that "a very substantial portion of that price is going to have to come into the Treasury of the United States because we're making it possible for this deal to happen."

Legal analysts and others pointed out that the White House had been pushing for a sale of TikTok to U.S. owners, making the demand for payment all the more extraordinary.

"It is completely unorthodox for a president to propose that the U.S. take a cut of a business deal, especially a deal that he has orchestrated. The idea also is probably illegal and unethical," said Carl Tobias, a law professor at the University of Richmond.

While the U.S. government for decades has analyzed foreign investments in the U.S. to see whether they could create national-security problems, the decisions are usually left to the members of a secretive interagency group called the Committee on Foreign Investment in the U.S.

Under Mr. Trump, the U.S. has taken a hard line on China through CFIUS. Last year, for instance, CFIUS ordered a Chinese company to sell gay-dating app Grindr, citing the risk that Beijing could exploit the personal data it collects.

Mr. Trump and his national-security team cited similar concerns about TikTok, raising the prospect that its Chinese owner, Beijing-based ByteDance Ltd., could be forced to share data it collects on U.S. users with the Chinese government.

With TikTok, however, the president's requirement for a payment showed a much greater involvement. That follows two years of personal attention to the trade battle with China, including deciding how and when to assess tariffs -- and when to back off and cut a deal.

"This is an extension of Trump's generalized view that he can micromanage the industrial sphere," said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics.

Mr. Hufbauer said Mr. Trump's proposal reminded him of medieval kings who oversaw salt monopolies. "If you wanted to mine some salt, you put money into royal Treasury," he said.

The president, a former New York real-estate developer, often presents himself as a master negotiator on everything from international trade accords to dealings with North Korean leader Kim Jong Un.

With TikTok, he likened his payment idea to "key money" -- or an extra fee paid to secure a hard-to-get property. "It's a little bit like the landlord-tenant," the GOP president said at the White House on Monday. "Without a lease, the tenant has nothing."

"It's a great asset," Mr. Trump said of TikTok. "But it's not a great asset in the United States unless they have the approval of the United States."

Later in the day, he was asked to clarify his remarks. "It would come from the sale," Mr. Trump said. "Whatever the number is, it would come from the sale. Which nobody else would be thinking about but me. But that's the way I think. And I think it's very fair."

Washington's move, in the eyes of Beijing, essentially strong-arms one of China's most valuable global tech companies into selling a lucrative overseas unit. Chinese officials say it is further proof that the U.S. views any Chinese tech company with international success as a challenge to its technology primacy, regardless of the product or how it runs its business.

Mr. Trump's comments also amplify how deeply he involves himself in trade and investment decisions, which economic historians also say is a big departure from the past.

Douglas Irwin, a Dartmouth College economic historian, said early in Franklin Roosevelt's first term, his advisers debated whether the U.S. should cut barter deals with other governments, but the president ultimately rejected the idea and negotiated trade agreements instead. No president since has looked to get so deeply entwined with commercial deals with foreign companies, he said.

Tony Fratto, a former George W. Bush Treasury official and partner at the Washington public-affairs firm Hamilton Place Strategies, said it was unlikely any payment would stand up.

"There is no situation where either Microsoft or the Chinese or TikTok or ByteDance will be sending a check to the U.S. government, except in the normal course of their regular tax obligations," Mr. Fratto said.

The president also often made broad assertions of presidential power, which may be popular with his political base, only to back off later. In August, 2019, at the height of the U.S.-China trade battle, he tweeted that he "hereby ordered (U.S. companies) to immediately start looking for an alternative to China, including bringing your companies HOME." Nothing came of that.

This year, Mr. Trump said he had the power to force states to reopen their economies amid the coronavirus pandemic, though he backed off that claim, too. He has recently pointed to a Supreme Court decision on an immigration program for young undocumented residents, arguing that it gives him authority to make more sweeping changes without Congress. He cited the same decision as grounds for a health-care overhaul, though he has yet to offer one.

"Trump often tries to prove how strong he is by taking novel and extreme positions," said Alex Conant, a Republican strategist in Washington. "A lot of people in Washington may roll their eyes at Trump's off-the-wall proposals, but we shouldn't underestimate their simplistic appeal to many voters."

The comments, though, can make life tough for companies, which don't want problems in Washington.

In this case, Microsoft declined to comment beyond its statement released in a blog post Sunday night. In that post, Microsoft said it is "committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury." It wasn't clear whether Microsoft was talking about the taxes it would pay or some other arrangement.

The White House referred questions on how a payment would work to the Treasury Department. A Treasury spokeswoman referred a reporter back to the president's comments, and declined to comment further.

Mr. Trump indicated a deadline of Sept. 15, after which TikTok would be banned in the U.S. Microsoft said Sunday that it would move quickly to pursue discussions with ByteDance and it aims to complete the negotiations by Sept. 15.

TikTok says it has 100 million users in the U.S. A TikTok spokeswoman on Monday said the platform is "committed to continuing to bring joy to families and meaningful careers to those who create on our platform....TikTok will be here for many years to come."

--Aaron Tilley contributed to this article.

Write to Bob Davis at bob.davis@wsj.com, Alex Leary at alex.leary@wsj.com and Kate Davidson at kate.davidson@wsj.com

(END) Dow Jones Newswires

August 03, 2020 21:36 ET (01:36 GMT)

   By Dan Molinski 
 

Marathon Petroleum Corp. reported a small fire Monday at its Galveston Bay refining complex in Texas that it said was quickly extinguished.

"Wastewater lift station caught fire, lifting hatches and releasing material to atmosphere," the refinery said in a regulatory filing to the Texas Commission on Environmental Quality.

Marathon's 585,000-barrel-a-day Galveston Bay complex is the second-largest refinery in the U.S. after Saudi Aramco's 600,000-barrel-a-day Motiva Port Arthur refinery.

The system was isolated and the fire extinguished, Marathon said in the filing.

The company said the incident resulted in the release of some 50 pounds of benzene emissions over the course of one hour Monday morning.

Write to Dan Molinski at dan.molinski@wsj.com

(END) Dow Jones Newswires

August 03, 2020 21:26 ET (01:26 GMT)

By Mengqi Sun 

A U.K. enforcement agency is urging the maritime industry to be on the lookout for illicit practices that could be used to evade sanctions, the latest regulator to warn about compliance risks facing the industry.

Guidance by the U.K.'s Office of Financial Sanctions Implementation, which is part of the country's Treasury department, indicates companies are susceptible to suspicious shipping practices such as the intentional disabling of vessel-tracking systems to conduct illegal trade and the falsifying of documentation for maritime transactions.

Maritime insurance companies, charterers, customs and port state controls, and flag registries are among the sectors exposed to the risks, the agency said.

The guidance, which was issued last week and amplified in a government blog post Monday, adds to a evolving list of guidelines aimed at the maritime industry and underscores compliance complexities facing those operating in the U.S., the U.K. and the European Union, sanctions experts say.

Three U.S. agencies issued guidance for the maritime sector in May, saying the industry may need to develop procedures to avoid being exploited by terrorists and other illicit actors seeking to trade with countries subject to U.S. sanctions.

The U.K. operates the largest share of the global maritime insurance market, and 13 of the major international protection and indemnity associations of marine insurance providers operate from management offices in the U.K., the OFSI said.

Entities and individuals in the maritime sector need to assess their own risks and conduct sufficient due diligence to ensure compliance with sanctions, according to the agency, which emphasized the importance of understanding sanctions regulations in high-risk jurisdictions and using vessel-tracking systems and subscription-based resources to verify ownership structures of customers and business partners.

The guidance highlights the additional compliance obligations for companies operating in the maritime industry as they navigate the similar but different sanctions systems between the U.S. and the U.K., said Eric Lorber, a vice president at advisory firm K2 Intelligence/Financial Integrity Network.

The U.K. is in the process of transitioning to its own set of sanctions compliance guidelines as part of its departure from the European Union.

During the transition period, which ends Dec. 31, individuals and companies in the U.K. are still required to comply with the EU's sanctions policies, in addition to United Nations sanctions and the U.K.'s own sanctions programs. The U.S. has its own sanctions programs and follows UN sanctions as well.

A shipping company based in the U.K. that conducts U.S. dollar transactions would need to comply with more than one sanctions system.

"It's the first time you're beginning to see this balancing act by a number of institutions in the maritime industry between two different regulatory jurisdictions that require similar actions but don't line up one to one," he said. "It's really challenging for an industry that doesn't have the sanctions expertise."

Write to Mengqi Sun at mengqi.sun@wsj.com

(END) Dow Jones Newswires

August 03, 2020 21:19 ET (01:19 GMT)

FAA Formally Proposes Fixes for Return of Boeing's 737 MAX 
 

U.S. air-safety regulators for the first time publicly spelled out the full range of hardware, software, crew training and maintenance changes they are proposing before Boeing's 737 MAX jets will be allowed to resume flying passengers

 
With Potential TikTok Deal, Microsoft CEO Looks to Expand Audience 
 

If there is one trait that would link a TikTok acquisition with the other big deals Microsoft Chief Executive Satya Nadella has done, it is his willingness to pay big bucks to expand the software giant's universe of users.

 
Twitter Could Pay FTC Fine Over Alleged Privacy Violations 
 

Twitter Inc. said it could pay at least $150 million to the Federal Trade Commission related to alleged violations of a 2011 consent order for using consumers' private data in targeted advertising.

 
Trump Says U.S. Should Get Slice of TikTok Sale Price 
 

President Trump confirmed Monday he is open to a deal in which Microsoft or another U.S. company buys the video-sharing app TikTok, but he said the government should receive payment for clearing a purchase.

 
AIG Swings to Quarterly Loss 
 

Global insurer American International Group swung to a loss for the second quarter driven in part by substantial costs tied to the pandemic.

 
Lord & Taylor Limps Into Bankruptcy Looking for a Suitor 
 

The department-store chain kicked off its bankruptcy proceeding with a full-page newspaper ad announcing its search for a new owner, but it has little time or money to reach a deal.

 
Commerzbank Names New Chairman, Defying Big Investor Cerberus 
 

German lender Commerzbank appointed former state bank executive Hans-Jörg Vetter as its new chairman, ignoring opposition from its second-largest shareholder, Cerberus Capital Management.

 
Vornado Faces Rent-Collection Challenge From Retailers 
 

Vornado Realty Trust said it collected 72% of second-quarter rents due to it from retailers, a performance that illustrates the challenges retail-property owners face as the pandemic complicates in-store shopping for many tenants.

 
GM Tries to Revive Legal Battle With Fiat Chrysler 
 

General Motors wants a federal judge to reconsider the tossing of its suit against Fiat Chrysler in which it accused its rival of bribing UAW officials to gain a competitive advantage.

 
Trump Fires Tennessee Valley Authority Board Members, Cites Shift to Foreign Workers 
 

President Trump removed the chairman and another board member at the Tennessee Valley Authority and called for firing the federally owned utility's CEO, as he signed an order meant to protect U.S. federal workers from displacement by foreigners.

(END) Dow Jones Newswires

August 03, 2020 21:15 ET (01:15 GMT)

Democrats, White House Upbeat After  New Talks on Coronavirus Aid Bill 
 

Democratic leaders and White House officials sounded cautiously upbeat notes after another round of talks Monday on a new coronavirus aid package, while President Trump floated potential executive actions.

 
U.S. Stocks Climb to Start the Month 
 

The Dow industrials and S&P 500 rose as big technology companies surged and the U.S. registered its lowest number of new Covid-19 infections in weeks.

 
U.S. Will Borrow Estimated $2 Trillion in Second Half of 2020, Treasury Says 
 

The U.S. expects to borrow an additional $2 trillion in the second half of the year as federal spending ramps up to combat the coronavirus pandemic.

 
Argentina Near $65 Billion Restructuring Deal With Bondholders 
 

The government is finalizing an agreement with its biggest private creditors to restructure about $65 billion in foreign debt and resolve the country's third sovereign default this century, according to people involved in the talks.

 
Hedge-Fund Launches Pick Up Despite Pandemic 
 

Hedge-fund manager Gaurav Kapadia has raised more than $1 billion in committed capital for his new firm, XN, according to people familiar with the fund, and is up 7.4% after fees in its public investments since its July 1 start.

 
Covid Supercharges Federal Reserve as Backup Lender to the World 
 

When the coronavirus halted the global economy in March, the U.S. central bank lent massively to counterparts abroad. The action-among its most significant expansions of power yet-cemented the dollar's dominance.

 
Global Factories Increase Production, but Overseas Demand Remains Soft 
 

Factories across the U.S., Europe and parts of Asia increased production in July, but the upswing was held back by weak global trade and suggested a long and precarious road ahead for the global economy.

 
U.S. Counts Smallest Daily Rise in Coronavirus Cases in Weeks 
 

The U.S. reported more than 47,000 new coronavirus cases, the smallest daily increase in almost four weeks, despite signs of an uptick in new infections in some Northeast and Midwest states.

 
Coffee Drinkers Stay Home, Hitting Some Beans Harder Than Others 
 

The coffee bean market has bifurcated since lockdowns forced a shift in consumer behavior. Futures linked to arabica beans, which are popular in cafes and restaurants, have fallen much more than those tied to robusta beans, which are consumed largely at home.

 
7-Eleven's $21 Billion Deal Could Be a Marathon 
 

The massive deal makes strategic sense but still looks pricey, particularly given the struggling state of the U.S. petroleum industry.

(END) Dow Jones Newswires

August 03, 2020 21:15 ET (01:15 GMT)