 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Monday's Headlines 1. Markets Manage Small Gains Amid Antitrust Probes 2. Google Faces Antitrust Probe by U.S. Attorneys General 3. Activist Investor Takes Stake in AT&T 4. JUUL Taking Heat from FDA Markets Closed
 Markets Today
The DJIA traded higher for the fourth session in a row as the buzz around trade talks continues to be positive. The S&P 500 closed slightly in the red amid pressure on Google, one of its largest components, given news of a countrywide antitrust probe. Shares of GOOGL fell just under 1%, but recovered by the close. The Nasdaq also failed to close higher for the day.
Texas Attorney General Leads Probe of Google It's not just Google that has the attention of regulators. Ken Paxton, the attorney general for the state of Texas, announced that he will lead an antitrust probe into anti-competitive practices by Google.
Here's a key clip from the Texas attorney general's news release:
"...When most Americans think of the internet, they no doubt think of Google," said Attorney General Paxton. "There is nothing wrong with a business becoming the biggest game in town if it does so through free market competition, but we have seen evidence that Google's business practices may have undermined consumer choice, stifled innovation, violated users' privacy, and put Google in control of the flow and dissemination of online information."
Google acknowledged as much in a blog post earlier today:
"...We have answered many questions on these issues over many years, in the United States as well as overseas, across many aspects of our business, so this is not new for us. The DOJ has asked us to provide information about these past investigations, and we expect state attorneys general will ask similar questions. We have always worked constructively with regulators and we will continue to do so."
Facebook is also facing an antitrust investigation, according to the WSJ, and, in July, it agreed to pay a $5 billion fine to the Federal Trade Commission over its privacy practices.
As for Google, it's not the first antitrust investigation it has faced. In March, the company agreed to pay a $1.7 billion fine to the European Union over its advertising practices. In 2017, it agreed to pay a $2.7 billion fine to the EU over practices related to its Android operating system.
Alphabet, Google's parent company, brought in $136.8 billion in revenue in 2018, with 85% of it coming from advertising. Google controls more than 70% of the search engine market, according to NetMarketShare.
As its dominance in search and internet advertising has grown, so has the scrutiny it has drawn from regulators around the world. There is an increasingly louder drumbeat growing around the world and in the U.S. among presidential candidates to break up big tech companies like Google, Facebook, and Amazon. But Google has been a focal point of antitrust regulators given its dominance in internet search. When it comes to search, no one is even close. According to sparktoro.com, 94% of all searches happen on a Google property. Zoom in to see who controls the remaining tiny slivers of the pie.
chart courtesy sparktoro.com  Activist Investor Takes Stake in AT&T AT&T, the telecom giant that acquired Time Warner and DirectTV in the last few years, is facing serious backlash from activist investor Elliott Management. According to the WSJ, Elliott Management Corp., a New York-based hedge fund founded by billionaire Paul Singer, disclosed a $3.2 billion stake in AT&T, criticized its longtime CEO's acquisition strategy, and called on the company to shed some assets.
In particular, Elliott has singled out AT&Ts $50 billion acquisition of DirectTV in 2015, and its $80 billion acquisition of Time Warner in 2018. Both deals left the company with $170 billion in net debt at the end of 2018.
In a letter to shareholders, Elliott cited those deals and the company's overall strategy in trying to assemble a conglomerate of content and content delivery companies at a time when consumers are cutting the cable cord and disavowing their loyalty to large cable companies.
"AT&T has transformed itself into a sprawling collection of businesses battling well-funded competitors, in new markets, with different regulations, and saddled with the financial repercussions of its choices," according to the letter.
Elliott says AT&T's heavy debt burden has caused it to underperform in the broader market over the past several years. Elliott is not wrong (AT&T in orange, the S&P 500 in blue).  Vaping Companies Feel the Heat Just days after the Food and Drug Administration released a scathing report on the harmful health effects of vaping e-cigarettes, JUUL, one of the more popular companies in the market, was singled out by the FDA for violating federal laws in the sales and marketing of its products as a healthier alternative to tobacco cigarettes.
The FDA's latest warning come amid a public health crisis over more than 400 cases of vaping-related lung illnesses that may be related to five fatalities. Public health investigators, including the FDA and the Center for Disease Control, have cited the use of nicotine and cannabis vaping products from several companies as possible suspects. JUUL, which is privately held, but has investments from several publicly traded companies, including a 35% stake owned by Marlboro-maker Altria, had yet to be mentioned in the FDA's warning, until today.
Read more: Who owns JUUL?
In a letter sent to JUUL Labs' CEO, Kevin Burns, the FDA rebukes him for a testimony to Congress wherein he denied marketing the product to teenagers, and for not disclosing some of the potentially harmful chemical components the company uses to make its popular vaping product.
chart courtesy CNBC 
chart courtesy www.koyfin.com  Shares of Helmerich & Payne rose by almost 9% following the company revising its projected CapEx guidance, significantly lowering it compared to the previous outlook. L Brands' share price increased by nearly 7% today, despite the release of a report that the company's year-to-date sales are down by 35%.  Shares of MarketAxess Holdings fell by almost 12% today, following nine analysts giving the company a "Hold" rating. PayPal's stock price decreased by more than 4% amid a general decline in the payments sector.   Chart of the Day: We wrote last Friday about how Fed Chair Jerome Powell and other Fed governors do not see a recession on the horizon. That may well be true, but an awful lot of people are searching for it on Google. We know that because many of those people wind up on Investopedia when they do. While interest was at a fever pitch about a month ago, it has calmed down a bit since then. We'll see what happens at the Fed meeting next week.  Today in U.S. History Sept. 9, 1850: California, in the midst of a gold rush, enters the Union as the 31st state. Today, California has a GDP of $3 trillion. It is the fifth largest economy in the world, larger than the U.K. It is the most populous state in the U.S., with over 39.5 million residents. Its GDP per capita is $76,000, and 13% of its residents live below the poverty line.
How can we improve the Market Sum? Tell us at marketsum@investopedia.com
Enjoy the Market Sum? Share it with a friend. Or share the link below to invite friends to sign up.
CONNECT WITH INVESTOPEDIA
Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here.
114 West 41st St, floor 8 New York NY 10036 © 2019, Investopedia, LLC. All Rights Reserved | Privacy Policy |
Monday, September 9, 2019
It's About Trust
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment