Wall Street is little changed in pre-session trading, although with a slight upward bias, after the new series of records recorded last week. Operators are rather welcoming the outcome of the early legislative elections in France with the absence of an absolute majority for the RN as for the left-wing coalition. “A parliament without a majority is not necessarily a bad result because it means that the most extreme policies are less likely to be adopted by Parliament,” Azad Zangana, senior European economist at Schroders, told Bloomberg. Gilles Moec, chief economist of the AXA Group, believes for his part that the absence of an absolute majority is “a problem”, because it will make “very complicated the search for a direction for the development of French policy” in the future.
In the United States, Jerome Powell’s two speeches, who will address both houses of the US legislature on Tuesday and Wednesday, will be particularly closely watched after the latest employment data. The Fed chairman will probably say that the members of the Institution need further confirmation that they have beaten inflation before being ready to cut interest rates. In this regard, the consumer price figures for June, due on Thursday, will be the other highlight of the week before the start of the quarterly season on Friday.
Note that US Treasury Secretary Janet Yellen will also testify before the House Financial Services Committee on Tuesday, while Michael Barr, Fed Vice Chair for Supervision, and Governor Michelle Bowman will also speak tomorrow.
Traders are also keeping an eye on US political news as Joe Biden’s candidacy becomes more controversial than ever. Several influential Democrats in Congress said privately on Sunday that they want the US president to withdraw from the race.
The euro/dollar parity reaches $1.0840. A barrel of Brent is trading at $86.22. An ounce of gold is trading at $2,372 and Bitcoin is down 0.2% at $57,200.
Values
* Boeing has agreed to plead guilty to criminal fraud charges in the Justice Department’s investigation into the two fatal 737 MAX crashes in 2018 and 2019 that killed 346 people. Under the tentative agreement with prosecutors, Boeing will pay an additional $243.6 million in fines. Boeing also agreed to invest at least $455 million over the next three years to strengthen its safety and compliance programs. The Justice Department will appoint a third-party monitor to monitor the company’s compliance with the rules. The monitor will provide the court with annual reports on the company’s progress. A Boeing spokesman confirmed that the company has “reached an agreement in principle” on a resolution of the litigation with the Justice Department.
The DoJ said in May that Boeing violated a 2021 agreement that shielded the company from criminal prosecution for the two fatal crashes in exchange for reforming its compliance practices. On June 30, the DoJ offered the Seattle-based company a deal and gave it until the end of the week to accept the deal or face trial on charges that it conspired to defraud the Federal Aviation Administration in connection with a key software function linked to the fatal crashes. A lawyer representing the victims’ families said his clients would oppose the new deal. “The families intend to argue that the Boeing plea agreement unfairly gives Boeing concessions that other criminal defendants would never have obtained and fails to hold Boeing accountable for the deaths of 346 people,” the lawyer said.
The American giant admitted three years ago that two former employees had misled the FAA about a new flight control system (MCAS) feature on the 737 MAX that was not supposed to activate under normal flight conditions. In the fatal crashes in Indonesia and Ethiopia, pilots were unable to regain control after the plane’s nose pitched downward due to repeated and erroneous activations of the flight control system. The new MCAS software had saved Boeing money by requiring less intensive pilot training. By pleading guilty, Boeing could see its ability to win lucrative government contracts, such as those with the Pentagon and NASA, compromised, although it will be able to request exemptions. The deal also allows the group, still in turmoil and which will have a new CEO this year, to try to turn the page on this unprecedented crisis.
* PepsiCo. Carlsberg is to buy British soft drinks maker Britvic for £3.3 billion ($4.2 billion). The Danish brewer, which had its first two offers rejected, finally offered 1,315 pence per share to convince the board of its target. The latest offer represents a 36% premium on Britvic’s share price, which preceded the wave of speculation surrounding the group. Britvic is known for its Robinsons and Tango brands as well as its Teisseire cordials. The group is also PepsiCo’s main partner in the United Kingdom and Ireland with exclusive rights to manufacture, bottle and sell brands such as Pepsi, 7UP and Lipton Ice Tea.
* Paramount Global. The saga that has kept Hollywood on tenterhooks is coming to an end. After many twists and turns, Paramount Global has agreed to merge with Skydance Media in a deal that gives producer David Ellison control of the famed Hollywood studio. First, Skydance and its partners will acquire National Amusements, which owns the Redstone family’s majority stake in Paramount, for $2.4 billion in cash. Then, Skydance will merge with the parent company of CBS and MTV, offering $4.5 billion in cash/stock to shareholders and $1.5 billion in debt repayments from Paramount. Loaded with more than $14 billion in debt, the iconic Hollywood company has struggled to compete with the rise of streaming and has suffered as many viewers abandon traditional networks like CBS and Nickelodeon. The entertainment giant has also been plagued by tensions among its executives. Chief Executive Bob Bakish was fired in April after a feud with Sumner Redstone’s heiress Shari Redstone over the Skydance merger. Paramount’s stock has lost more than half its value since the Redstones combined CBS and Viacom in 2019 to create Paramount Global. The owner of the movie studio behind films such as Titanic and The Godfather has been controlled by the Redstone family for three decades.
“Given the changes in the industry, we want to strengthen Paramount for the future while ensuring that content remains king,” Redston said. “As a long-time production partner of Paramount, Skydance knows Paramount well and has a clear strategic vision and the resources to take it to its next stage of growth. We believe in Paramount and always will.” D. Ellison, son of Larry Ellison, will be chairman and CEO of the combined entity. Jeff Shell, a former NBCUniversal executive, will be chairman. The deal is expected to close in the first half of 2025.
* Microsoft. Goodbye Android. Microsoft teams in China will soon be restricted to using iPhones for work. The American giant will require its employees based in the country to use only Apple devices to verify their identity when logging into work computers or phones, according to an internal memo reviewed by Bloomberg News. The move, part of Microsoft’s global Secure Future initiative, will affect hundreds of workers across the Chinese mainland and aims to ensure that all staff use the Microsoft Authenticator password manager and Identity Pass app.
Microsoft has chosen to block these devices from accessing its corporate resources because they do not have Google mobile services in the country, the note said. Any staff member using Android handsets — including devices made by Huawei or Xiaomi — will receive an iPhone 15, as a one-time purchase, the note said. The company will make the iPhones available at various hubs across China, including Hong Kong, where Google services are accessible. The company has been beefing up its security around the world after suffering repeated attacks from hackers, with a Russia-linked flaw disclosed in January affecting dozens of U.S. government agencies, including the State Department. It has faced significant pressure and criticism from domestic lawmakers to improve its performance.
* Eli Lilly did not hesitate to offer a 79% premium on the last share price of Morphic Holding to acquire this biopharmaceutical company. The American giant will thus pay approximately 3.2 billion dollars to acquire the experimental therapies of the Massachusetts firm against inflammatory bowel diseases and other chronic diseases. The transaction should be finalized in the third quarter. Morphic’s main drug, MORF-057, is an oral treatment evaluated in two phase 2 studies in patients with ulcerative colitis and Crohn’s disease.
* United Airlines. U.S. airlines canceled more than 1,300 flights Monday as Hurricane Beryl intensified and made landfall in Texas. Beryl, the earliest Category 5 hurricane on record, made landfall near the coastal city of Matagorda early in the day, lashing the coast with dangerous storm surges, the U.S. National Hurricane Center said. Texas’ major ports also closed.
