Plus, there are now multiple whistleblowers in the impeachment case, UAW workers are still on strike at GM, and Domino’s lost a key appeal this morning.
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Stocks fell to start Monday, with the Dow and S&P 500 both trading -0.4% lower. The Nasdaq slipped 0.3%.
“The silver lining to last week’s disappointing economic data appeared to be twofold as it 1) materially increased the probabilities for further FOMC interest rate cuts and 2) also increased the pressure on the U.S. and China to work toward a timely trade resolution,” Craig Johnson, chief market technician at Piper Jaffray, said in a note.
Chinese officials have signaled they are growing reluctant to sign a broad trade deal that’s being pursued by President Donald Trump. The world’s two largest economies are set to restart high-level trade negotiations in Washington this week, and Vice Premier Liu He—who is leading the Chinese delegation—has reportedly told visiting dignitaries that he will bring an offer to the talks that will not include commitments on reforming Chinese industrial policy or the subsidies that have been the target of U.S. complaints, issues that are among the Trump administration’s core demands in the trade talks. Analysts say it’s indicative that Chinese leadership see the U.S.’ hand weakened by both the impact of the trade war on U.S. manufacturing and Trump’s impeachment fight, and will thus be willing to make compromises on a deal as a result. But Trump indicated on Friday that unless a deal is what the U.S. is seeking, he won’t sign it. “We’ve had good moments with China. We’ve had bad moments with China. Right now, we’re in a very important stage in terms of possibly making a deal,” Trump said to reporters on Friday. “But what we’re doing is we’re negotiating a very tough deal. If the deal is not going to be 100% for us, then we’re not going to make it.”
Speaking of the Trump impeachment fight, the lead attorney representing the whistleblower at the center of the House impeachment inquiry said this weekend that his firm is now representing multiple whistleblowers in the case. “I can confirm that my firm and my team represent multiple whistleblowers in connection to the underlying August 12, 2019, disclosure to the Intelligence Community Inspector General,” Andrew Bakaj, an attorney with Compass Rose Legal Group, tweeted on Sunday. Mark Zaid, a lawyer with the firm, said they are representing a second whistleblower who has first-hand knowledge of the allegations spelled out in the first whistleblower’s complaint. While the news is dominating politics in Washington, in New York, a federal judge has dismissed Trump’s lawsuit seeking to block the release of his personal and corporate tax returns to the Manhattan District Attorney, who is conducting a criminal investigation related to the president’s business. Judge Victor Marrero rejected what he called an “extraordinary claim” by the president that while he is in office, he is immune from both criminal prosecution and also from being criminally investigated by a state prosecutor.
The United Auto Workers’ strike agains General Motors continues Monday after the union said that talks between the two sides had “taken a turn for the worse.” UAW Vice President Terry Dittes wrote in a letter to members on Sunday that the union plans to continue to negotiate by that GM’s proposal yesterday morning had “reverted back to their last rejected proposal and made little change.” “The Company’s response did nothing to advance a whole host of issues that are important to you and your families,” Dittes wrote. “It did nothing to provide job security during the term of the Agreement.” GM said that it continues “to negotiate in good faith with very good proposals that benefit employees today and builds a stronger future for all of us. We are committed to continuing discussions around the clock to reach a resolution.” The rejected offer represents a setback for the contract negotiations. 48,000 UAW members with GM have been on strike since September 16, and the work stoppage has rippled through the automaker’s North American operations and has cost the company more than $1 billion.
General Electric said this morning that it will freeze pension plans for 20,000 salaried U.S. workers as the industrial conglomerate attempts to cut debt. GE also plans to pre-fund $4 to $5 billion of its estimated requirements for 2021 and 2022. The moves are meant to help trim the company’s pension shortfall by as much as $8 billion and reduct GE’s industrial debt by $4 to $6 billion. “Returning GE to a position of strength has required us to make several difficult decisions, and today’s decision to freeze the pension is no exception,” said GE’s chief human resources officer, Kevin Cox.
An appeal from Domino’s Pizza was rejected by the U.S. Supreme Court Monday. The decision upholds a federal appeals court ruling that the company must face a lawsuit by a blind man, Guillermo Robles, who says the pizza chain’s website and mobile-phone app don’t comply with the Americans with Disabilities Act (ADA) as they don’t work with the common screen-reading software he uses on other sites. “The alleged inaccessibility of Domino’s website and app impedes access to the goods and services of its physical pizza franchises,” wrote the three judge panel of a San Francisco-based federal appeals court. Domino’s, however, contends that companies don’t have to make websites and apps fully accessible as long as disabled customers can access goods and services by other means. The ADA “does not demand full accessibility for each and every means of accessing the good or services a public accommodation provides to the public,” and what matters is the “combined means of access to those goods or services,” Domino’s said in its appeal. Robles argues that the popular reading software he uses on websites can’t read Domino’s website and app, and thus he doesn’t have access to the benefits of online ordering. “Domino’s offers these online options because many customers find them more convenient and they ensure that orders are more accurate,” Robles argues in court papers. “And Domino’s provides some discounts exclusively online.”
Stocks We’re Watching
Natera Inc (NASDAQ: NTRA): Shares of this prenatal diagnostics company are up 154% so far this year and nearly 11% over the last month. Natera recently announced that has agreed to sell its Evercord cord blood and tissue banking business to California Cryobank Life Sciences’ CBRunit. “This divestiture will allow Natera to focus squarely on its core genetic testing business in reproductive health, oncology and organ transplantation,” said Natera CEO Steve Chapman. “We are proud of what we’ve accomplished with Evercord and believe that CBR, as the recognized industry leader in newborn stem cells, is the best partner for cord blood services moving forward.”
Hess Midstream Partners (NYSE: HESM): Hess Midstream’s parent is oil-producer Hess Corporation (NYSE: HES). Hess created Hess Midstream to focus on operating the midstream infrastructure in North Dakota’s Bakken shale region. Shares of Hess Midstream have jumped nearly 6% over the last week after it was announced that it would acquire Hess Corporation’s and Global Infrastructure Partners’ ownership interests in Hess Infrastructure Partners LP. The combined business will be a large-scale midstream company with greater than $7.25 billion enterprise value. “This accretive transaction provides a more attractive long term growth platform for our portfolio,” said Jonathan Stein, CFO of Hess Midstream Partners. “We can continue to generate strong free cash flow growth and fund our capital program and consistent 15% distribution per unit growth at an increased coverage level with conservative leverage and no need for equity funding to meet our targeted growth.”