Flynn Pleads Guilty To Lying To The FBI - Dow Jones & …

Friday, December 01, 2017

Stocks

U.S. stocks lost ground in a turbulent session, sending the Dow Jones Industrial Average sliding as many as 350 points before it trimmed declines in the wake of reports about a guilty plea from former National Security Adviser Michael Flynn.

Treasurys

Government bond prices rose after a report that former national security advisor Michael Flynn is prepared to testify that President Donald Trump "directed him to make contact with the Russians" during the campaign.

Forex

The dollar fell Friday, after ABC reported former National Security Adviser Michael Flynn is prepared to testify that President Donald Trump "directed him to make contact with the Russians" during the campaign.

Commodities

Oil prices settled higher after the Organization of the Petroleum Exporting Countries and other big producers including Russia agreed to keep limiting their output through the end of 2018. Gold futures rose after reports that former National Security Adviser Michael Flynn was prepared to testify against President Donald Trump.

Market Snapshot*

DJIA

24231.59

-40.75

Nasdaq

6847.59

-26.38

S&P 500

2642.22

-5.35

10-Year

2.3615%

15/32

30-Year

2.7588%

1 16/32

Euro

$1.18895

-0.0012

Nymex Crude

$58.36

+0.96

Source: SIX Financial Information, ICAP plc *preliminary values subject to adjustments

Tomorrow's Headlines

Flynn Pleads Guilty To Lying To The FBI

Former national-security adviser Mike Flynn pleaded guilty Friday to lying to federal investigators about his communications with Russia and said he is cooperating with the sprawling special counsel probe into potential links between the Trump campaign and the Kremlin during the 2016 election.

Mr. Flynn, who was a high-profile campaign surrogate for President Donald Trump, becomes the most senior Trump aide to face criminal charges in the investigation by the special counsel, Robert Mueller, and suggests the actions of other prominent Trump associates are facing close scrutiny by Mr. Mueller.

Documents filed in federal court Friday show that Mr. Flynn, who lasted in his White House post for less than a month, lied to the Federal Bureau of Investigation during an interview last January about a series of phone calls he had with the Russian ambassador. A Dec. 29 conversation with the ambassador, Sergey Kislyak, took place the day after the Obama administration imposed sanctions on Russia over Moscow's alleged interference in the election.

In a 45-minute court hearing Friday, Brandon Van Grack, a senior assistant to Mr. Mueller, laid out the case against Mr. Flynn, saying his statements impeded the open FBI investigation into Russian interference and any links to the Trump campaign. Mr. Van Grack's statements, along with documents filed by the special prosecutor's office, depicted a group of incoming Trump officials concerned about the Obama administration's new sanctions on Russia and trying to figure out how to react to them.

Mr. Flynn, in his January interview with FBI agents, "falsely stated" that he hadn't asked the Russian ambassador to refrain from escalating a response to the sanctions, Mr. Van Grack said. In fact, Mr. Flynn had called a senior official of the Trump transition team on Dec. 29--just after the sanctions were announced--to discuss "what, if anything, to communicate to the Russian ambassador," according to a statement filed in connection with Mr. Flynn's plea.

US Auto Makers Post Mixed November Sales

Top auto makers reported mixed results for November vehicle sales, with two of Detroit's players pulling back on low-margin deliveries to rental car companies, a move that threatens to push the market share of domestic brands to an all-time low.

General Motors Co. and Fiat Automobiles NV each reported November declines Friday. While both companies said retail traffic at dealerships remained steady due to Black Friday clearance sales, GM and Chrysler are selling a far lower percentage of cars to daily-rental fleets, leading to declines of 3% and 4% respectively last month compared with the prior year.

continued on page 2

Monday's Calendar

2:45 p.m. 3:00 p.m.

Nov ISM-NY Report on Business Oct Manufacturers' Shipments, Inventories & Orders (M3)

Copyright ? Dow Jones & Company, Inc. All Rights Reserved.

page 1

Friday, December 01, 2017 4 p.m. ET

Tomorrow's Headlines

continued

Ford Motor Co., the No. 2 seller in the U.S., reported a surprisingly strong performance, gaining 7% over the prior November as demand for its F-Series pickup truck remains healthy and as it delivered an abnormally high percentage of sales to fleet customers. Ford, like its crosstown rivals, has also reduced sales of passenger cars to companies like Enterprise X and Avis Budget Group over the course of 2017.

Rental-car sales once represented a lifeline for Detroit car companies as they struggled to unload products that everyday customers didn't want to buy. The auto makers needed to keep factories humming to support a high cost structure, but the practice cheapened brands like Chevy and Chrysler, requiring higher discounts on new cars coming from U.S. factories.

Bitcoin Futures Get Regulatory OK

The U.S. Commodity Futures Trading Commission said it would allow two major Chicago exchanges to launch bitcoin futures.

The Friday announcement paves the way for the start of bitcoin futures on CME Group Inc. and Cboe Global Markets Inc. in the coming weeks -- a potentially huge step in the evolution of the digital currency, making trading bitcoin easier for Wall Street banks and small investors alike.

CME said its bitcoin futures would launch Dec. 18. Cboe said it would shortly announce the start date for its new bitcoin contract.

After "extensive discussions" in recent weeks, the two exchanges made significant changes to their proposals at the regulator's request, the CFTC said.

Those included steps to reduce the risk of market manipulation. The agency said it expects CME and Cboe to closely monitor trading in their partner bitcoin exchanges, and to assist the CFTC in surveillance of those marketplaces.

FDA OKs Mylan Biosimilar For Breast, Stomach Cancer Treatment

The U.S. Food and Drug Administration approved Mylan NV's Ogivri, a biosimilar to Roche Holding AG's Herceptin, for the treatment of patients with certain types of breast and stomach cancer.

The federal agency said it is the first biosimilar approved in the U.S. for treating breast or stomach cancer and the second biosimilar approved in the U.S. for the treatment of any type of cancer.

Biologic drugs are created from living cells, and biosimilar products are their generic equivalents. To get approval, biosimilars must show they are "highly similar" to an already-approved biological drug. The FDA approved the first biosimilar treatment in 2015.

Suspected Bomb Dismantled Near Christmas Market in Potsdam

German police found and defused a suspected bomb near a Christmas market in the center of Potsdam on Friday amid heightened terrorism concerns in Germany.

Police ordered the evacuation of the city center after the device was found. A high-powered water jet was used to dismantle the device, which police described as a cylindrical with batteries, nails and cables, according to state police. A police spokesman said a detonator hadn't been found.

Authorities in Potsdam didn't say whether they had a suspect or viewed the incident as terrorism. Potsdam, a city of 165,000 people about 45 minutes drive from Berlin, is the capital of Brandenburg State.

Investigators were trying to determine whether the device contained explosives or non-explosive materials such as plaster or another "fake" material, Brandenburg's Interior Minister Karl-Heinz Schroter said.

Ireland To Have Final Say On Brexit Border Issue, EU Says

The Irish government will have final say on whether the U.K. government's proposals for avoiding customs checks on the island are acceptable, the European Union's president, Donald Tusk, said Friday.

Republic of Ireland officials fear that Britain's decision to leave the European Union, slated for March 2019, will cleave Irish business links and social ties that have deepened since the end of violence almost two decades ago.

The EU has said that without sufficient progress on the divorce bill, citizens' rights and avoiding a hard border in Ireland, they won't start working on a future trade deal with Britain.

When the U.K. leaves the EU, it will take Northern Ireland with it. That poses a problem because Northern Ireland shares a land border with the Republic of Ireland, an EU stalwart.

"I will consult the Taoiseach if the U.K. offer is sufficient for the Irish government," Mr. Tusk said after meeting with Irish Prime Minister Leo Varadkar in Dublin. "Let me say very clearly, if the U.K. offer is unacceptable for Ireland, it will also be unacceptable for the EU."

Fed's Bullard: More Rate Hikes May Raise Recession Risk

Federal Reserve Bank of St. Louis President James Bullard on Friday warned that more rate increases by the central bank would raise the risk the U.S. economy could fall into recession.

In materials for a presentation in Little Rock, Ark., Mr. Bullard, a veteran policy maker, repeated his long-held view

continued on page 3

Copyright ? Dow Jones & Company, Inc. All Rights Reserved.

page 2

Friday, December 01, 2017 4 p.m. ET

Tomorrow's Headlines

continued

that current economic circumstances call for the Fed to hold steady on short-term interest rates.

Mr. Bullard zeroed in on recent developments in the bond market as a reason to be worried about the Fed's interestrate policy choices.

He flagged what is called a flattening of the bond-market yield curve as a reason for worry. This flattening means the normally positive difference between the yields of shortand long-dated bonds has gotten smaller.

Tencent Music, Spotify Weigh Stake Swap Ahead of IPOs

The music group of Chinese internet giant Tencent Holdings Ltd. and Sweden's Spotify AB are in talks to swap stakes of up to 10% in each other's businesses ahead of their expected public listings next year, according to people familiar with the matter.

The deal would align the two services in future licensing negotiations with the major music labels--and offers potentially lucrative returns from their public listings, which are expected to value both in the billions of dollars, these people said.

As Stockholm-based Spotify has a higher valuation than Tencent Music Entertainment Group, Tencent Holdings would pay Spotify the difference in cash so both firms would own an equal stake in each other's music operations, the people added.

Manufacturing Expands at Slower Rate in November

A gauge of U.S. manufacturing activity cooled modestly for the second straight month in November, but the reading still shows a strong factory sector.

The Institute for Supply Management on Friday said its manufacturing index fell to 58.2 in November, but remained solidly in a growth mode. A reading above 50 indicates activity is expanding across the factory sector, while a number below 50 signals contraction.

"It's a really good performance," said Timothy Fiore, head of the ISM survey. "Demand is coming from all sectors."

Dudley: Tax Cuts Could Lead Fed to Raise Rates

A top Federal Reserve official said that he sees a "reasonable case" to raise short-term interest rates next month and that any new fiscal stimulus approved by lawmakers in Washington could shape the central bank's expectations for additional rate increases next year.

New York Fed President William Dudley said in an interview Thursday that any effort to make the tax code less

complex "makes sense." But with the economy expanding solidly and the unemployment rate at a low level of 4.1%, Fed policy makers will be watching closely to see whether any tax changes might cause the economy to overheat.

Carlyle Paring Its Stake In Bond Manager TCW Group

Carlyle Group LP said it agreed to sell a stake in bond manager TCW Group Inc. to Japan's Nippon Life Insurance Co.

The private-equity firm, which bought 60% of TCW from French bank Societe Generale SA in 2013, will pare its position in the asset manager to 31%. Nippon Life will own just under 25% of the firm. TCW executives, including fixedincome investment chief Tad Rivelle, will boost their holdings to 44%, the companies said. Terms weren't disclosed.

Carlyle will receive hundreds of millions of dollars on the sale, people familiar with the matter said.

Carlyle's stake grew more valuable as TCW emerged as one of the bond market's best-known managers. The firm now oversees about $200 billion in assets, and last year its MetWest Total Return Bond Fund briefly overtook Pacific Investment Management Co. as the world's largest actively managed bond fund.

Official: Export-Import Bank Could Be A Drain On Taxpayers

U.S. taxpayers could be on the hook starting next year for operating expenses at the Export-Import Bank, a tradefinance agency that can't generate enough revenue because its leadership is in limbo due to congressional inaction.

C.J. Hall, the government agency's acting chairman, who is stepping down Saturday, said in an interview that the bank could become a drain on U.S. taxpayers next year if the Senate doesn't act to fill its board, because it has stopped bringing in enough revenue through the fees it charges to guarantee financing deals for U.S. exporters.

Tilton Loses Fight For Control Of Portfolio Companies

A Delaware corporate law judge has backed a bid to oust distressed company manager Lynn Tilton from control of some of the companies she has been running, finding the businesses belong to investors that once backed her but now want her gone.

The ruling Thursday from Vice Chancellor Joseph Slights of Delaware's Court of Chancery is a setback for Ms. Tilton, a pioneer in raising investor funds to salvage troubled companies. She recently was cleared of fraud charges from the Securities and Exchange Commission but failed to persuade the Delaware judge that she is the true owner and rightful manager of some of the most valuable companies in her collection of distressed businesses.

Copyright ? Dow Jones & Company, Inc. All Rights Reserved.

page 3

Friday, December 01, 2017 4 p.m. ET

Copyright Dow Jones & Co., Inc.

Tomorrow's News Today is made available as a complimentary service to Dow Jones News Service paying subscribers. No further redistribution is permitted without written permission from Dow Jones. Tomorrow's News Today is intended to provide factual information, but its accuracy cannot be guaranteed. Dow Jones is not a registered investment adviser, and under no circumstances shall any of the information provided be construed as a buy or sell recommendation or investment advice of any kind.

Want to send a co-branded daily version to your valued clients?

Dow Jones offers subscribing firms the opportunity to co-brand Tomorrow's News Today for redistribution to their clients. If your firm is interested in co-branding, please contact us at service@ or 1.800.223.2274.

Talking Points

Globalization, In A Nutshell

Behold the humble cashew nut. Turns out it isn't so humble, or even a nut.

Dangling from the bottom of the cashew apple, a rare example of a seed that grows outside its own fruit, the cashew embodies globalization--and some of its discontents.

How global?

Cashew trees were transported to India by Portuguese explorers sailing from Brazil in the 16th century. The trees soon found their way to the city of Kollam, an Indian Ocean port on trade routes once plied by the Italian wanderer Marco Polo and the Muslim adventurer Ibn Battuta.

The crescent-shaped kernels made it into the world market from there starting in the late 1920s, when executives from a subsidiary of the former General Foods Co. contracted with local Indian entrepreneurs to collect raw cashews and remove them from their hard shells. General Foods shipped the shelled kernels to Hoboken, N.J., using a patented vacuum packing process. From there they were roasted, packaged and sold across the U.S. under the brand name Baker's Vitapack Cashews.

This was the beginning of what is now a rapidly growing $6.5 billion global business. In the U.S., the largest export market, cashews are pitched as healthy snacks and have made their way into products from nut bars to substitutes for butter and milk. In India, the largest overall consumer market for cashews, a growing middle class is increasingly adding them to cakes and sweets served at weddings and births.

For decades, Kollam was the cashew capital of the world. The factories that did nearly all the shelling, peeling and sorting -- the guts of the cashew industry -- remained in the southern Indian city, exactly where General Foods executive Lindsay Johnson first nurtured them in the 1930s.

Today Vietnam is cashew king, thanks to an ingenious push to automate the business. Kollam is reeling, a victim of misguided government protectionism and its own unwillingness to adapt to the realities of the freewheeling global economy.

It is a parable of the global age. Globalization creates sprawling world-wide markets. International supply chains crisscross the Earth. The combination can raise communities up out of dire poverty, and generate brutal competition that can undercut those communities just as quickly.

Kollam's cashew tycoons displayed an early entrepreneurial bent. After a few years visiting to forge supply contracts for General Foods, Mr. Johnson and his wife moved across the world to Kollam, where he set up his own cashew processing outfit with a local partner and sold to General Foods himself.

He amassed a small fortune and even named a daughter born there Kerala, after the state. After the U.S. entered World War II and ordered all American women and children out of India, Mr. Johnson left, fully expecting to return. He never did.

A handful of families came to dominate. Known locally as cashew barons, they wrangled with a local labor force even as they provided the main source of jobs.

From the beginning the cashew business turned on cheap but skilled labor to carry out the complicated process of removing cashews from their shells. Almost all of it was done by women. They earned a small, often second income for their families.

"They were sitting in their homes before that," says 85-year-old K. Ravindranathan Nair, whose father was among the first into cashews. "The income was not very big, but for them it was additional money."

continued on page 5

Copyright ? Dow Jones & Company, Inc. All Rights Reserved.

page 4

Friday, December 01, 2017 4 p.m. ET

Talking Points

continued

Mr. Nair took over the family business at age 24 when his father died. He built it into one of Kollam's biggest cashew processors, VijayAlaxmi Cashew Co.

One generation of workers taught the next. Experienced workers who could quickly shell, peel and cull tens of thousands of kernels each day were highly valued, though their pay didn't reflect it. Especially talented ones could quickly, by sight and feel, sort kernels into specific grades that measured out to exactly the number of flawless kernels per pound that demanding international buyers required.

Actually, You Do Like Christmas

J'accuse, consumers.

You love to complain when Christmas merchandise rolls out before Thanksgiving, but it's time to come clean. You say you hate it. But the data suggest otherwise.

By October, around 40% of you start shopping for the holidays. By November, more than 80% are buying. And rather than holding out till later in the season, fewer of you than ever wait until December to begin hunting for gifts. In 2004, nearly a quarter of consumers delayed holiday shopping until the 12th month. Now, only 17% wait that long.

The figures, for online and in-store shopping, are from the National Retail Federation and Prosper Insights & Analytics, which ask early holiday shoppers why they do it.

The No. 1 reason, given by 64% of early shoppers, is to spread out gift spending to make it easier on the budget.

Other top reasons are to avoid the stress of last-minute shopping (49%), escape the traditional crowds associated with November and December (48%) and take advantage of sales or promotions (43%). The total is greater than 100% because consumers can select more than one answer.

"I seriously start thinking about it when Halloween is done," said Rebecca Stearns, a mother of three boys who lives in central Massachusetts and completed most of her shopping before Thanksgiving. "I like to focus the holiday on my family not on shopping, so I'm really happy to do it early."

Although stores encourage early shopping by putting up decorations, piping in holiday music and luring in potential buyers with sales, the phenomenon isn't necessarily beneficial to merchants.

If early shoppers buy more stuff, retailers reap the rewards. But if consumers simply chase sales without becoming loyal customers or if early purchases merely supplant later buys, it may be a wash for retailers or perhaps a loss, since other merchandise must be cleared out to make way for holiday goods.

Copyright ? Dow Jones & Company, Inc. All Rights Reserved.

page 5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download