U.S. stock index futures fell on Monday, the first trading day of June, after China's rhetoric on U.S. trade relationship intensified over the weekend.
At around 8 a.m. ET, Dow Jones Industrial Average futures slipped 58 points, indicating a drop of 60 points at the open. Futures on the S&P 500 and Nasdaq 100 also fell. The Dow came into Monday's session having logged in six straight weeks of losses, the index's longest weekly slide since 2011.
Shares of Boeing, a trade bellwether of global trade, fell 1.2%. Alphabet shares also dropped 3.4% after the Justice Department is reportedly investigating the tech company for antitrust violations.
Chinese Vice Commerce Minister Wang Shouwen said in a white paper Sunday that Washington would not be able to use pressure to force a trade deal on Beijing. He also refused to say whether the leaders of both countries would meet at the G-20 summit to work out an agreement later this month.
Wang added: "The U.S. has backtracked, and when you give them an inch, they want a yard."
The remarks from Wang follow a month of heightened trade tensions between the world's largest economies. The U.S. hiked tariffs on $200 billion worth of Chinese goods in May. China retaliated with higher tariffs on U.S. imports.
Trade worries also rattled Wall Street last week after President Donald Trump threatened to slap a 5% charge on all imports from Mexico. The threat sent stocks tumbling on Friday.
On the data front, a final reading of manufacturing PMI (Purchasing Managers' Index) data for May will be released at around 9:45 a.m. ET. The Institute for Supply Management (ISM) manufacturing index for May, construction spending figures for April and latest light vehicle sales data will all follow slightly later in the session.
U.S. stock index futures were sharply lower Monday morning, as market participants monitor an intensifying trade dispute between the world's two largest economies.
At around 05:05 a.m. ET, Dow futures slipped 132 points, indicating a negative open of more than 134 points. Futures on the S&P and Nasdaq were both seen slightly lower.
Market focus is largely attuned to global trade developments, amid growing fears that Washington's latest tariff threats against Mexico could tip the global economy into a recession.
Tensions between the U.S. and China escalated over the weekend, as the two countries clashed over trade, technology and security issues.
A senior Chinese official and trade negotiator said Sunday that Washington would not be able to use pressure to force a trade deal on Beijing. Vice Commerce Minister Wang Shouwen also refused to say whether the leaders of both countries would meet at the G20 summit to work out an agreement later this month.
On the data front, a final reading of manufacturing PMI (Purchasing Managers' Index) data for May will be released at around 9:45 a.m. ET. The Institute for Supply Management (ISM) manufacturing index for May, construction spending figures for April and latest light vehicle sales data will all follow slightly later in the session.
In corporate news, Box and Coupa Software are both expected to release their latest quarterly results after market close.
On Friday, the Dow tumbled more than 350 points after President Donald Trump said the U.S. would impose a 5% tariff on all Mexican imports from June 10. The Trump administration has threatened to raise those charges up to 25% over the coming months if Mexico does not take significant action in stopping migrants reaching the southern border.
Friday's declines added to a torrid week and month for stocks. The Dow dropped 3% last week and notched its sixth straight weekly loss. That's the longest weekly losing streak for the Dow since 2011. The S&P 500 and Nasdaq posted their fourth straight weekly loss. The major indexes also snapped a four-month winning streak.
Tesla’s Version 3 (V3) Superchargers will first begin rolling out in locations used for long-distance travel, according to an update provided by CEO Elon Musk. He additionally revealed during a recent interview on Ride the Lightning, a weekly podcast hosted by Ryan McCaffrey, that first generation Superchargers will also be prioritized for replacement.
“We’ll focus on long-distance routes, so if you’re in a hurry to get from one city to another, you can go as fast as possible. Then also, we’re replacing some of the Version 1 Superchargers – some of the old Superchargers will take priority,” Musk detailed. “There are some out there that still charge at 75 kW, so we’ll replace those first on long-distance routes.”
Despite Tesla’s open patents for utilizing its Supercharger technology and declared willingness to allow other manufacturers to access its network, Musk said that he hasn’t yet been contacted yet about sharing its facilities and technology. “Nobody’s contacted me, so…Maybe they’ve contacted other people at the company and they haven’t mentioned it to me. But, none of the other manufacturers have contacted me and said that they want to use it,” he explained.
Tesla Supercharger V3 stalls being constructed at the LA Design Center in March 2019.
Tesla does have preconditions for sharing its Supercharger Network, though, which may be part of the reluctance to taking the all-electric car maker up on its offer. “We do require that the car be able to charge at a high rate and then obviously share in the cost of the system,” Musk said. “Probably…we will get some takers down the road, but they don’t seem to be particularly interested right now.”
On the topic of developing its Supercharger Network, Tesla’s CEO also explained that the company tries to stay ahead of demand and avoid congestion, but empty Supercharger stations are not in the company’s best interest, either. Also, business permits can slow down expansion efforts despite Tesla’s best efforts to meet its customers’ charging needs. Overall, it’s a balancing act between congestion and freedom to travel.
The V3 Supercharger was unveiled in March this year at Tesla’s factory in Fremont, California where the first (beta) stalls are located. The V3 Superchargers are able to charge twice as fast the Version 2 (V2) with a maximum power output of 250 kW, or 1,000 miles per hour. Additionally, Tesla owners using V3 Superchargers will no longer need to split power with neighboring vehicles, thereby substantially increasing the charge rate and reducing the overall amount of charging time by nearly half.
In Tesla’s first annual report to New York’s Empire State Development Corp., the company announced that a new manufacturing line for the electrical components of Supercharger V3 stations were added at Gigafactory 2 in New York. The facility was originally designed to produce Tesla’s Solar Roof tiles, which look like conventional roofing material but are capable of functioning like solar panels. Given Tesla’s aggressive expansion of its Supercharger Network, this move towards expanded capability is indicative of plans for a quick rollout of its latest charging technology.
Listen to Ryan McCaffrey’s interview with Elon Musk here.
Tesla Supercharger V3 rollout will prioritize long-distance routes, says Elon Musk
Infineon Technologies has agreed to buy Cypress Semiconductor in a deal that values the chip maker at $10 billion.
Infineon is paying $23.85 per share in cash ($10 billion enterprise value, counting debt) in addition to continuing its dividend through closing. That’s 55 percent higher than the stock price was last week before the news started to leak.
The deal shows that trend toward consolidation of the chip industry — which has swallowed many Silicon Valley companies from Altera to NXP — is continuing.
The stock price represents an-all time high for Cypress, and it’s a nice way for a legendary Silicon Valley to go out in style.
Cypress was founded in 1982 by T.J. Rodgers, a Green Bay Packers fan who was also brilliant chip engineer. He helped Cypress rise from an also-ran to a skilled maker of a wide variety of memory, sensor, and Internet of Things chips.
Above: T.J. Rodgers of Cypress Semiconductor
Image Credit: Cypress/Wikipdia
Early to recognize the value of improved solar cells made from silicon, Rodgers invested in SunPower in 2002 and later helped it launch an initial public offering in 2005. Cypress got a big return on that deal.
But Cypress was known for its larger-than-life founder, who said outrageous things (like “real men have fabs”) and yet was known as a smart and fiercely independent libertarian. Regarding fabs, or wafer fabrication plants (chip factories), Rodgers was adamant that owning your own factories was the path to success in semiconductors. (That eventually proved to be wrong). Rodgers’ firm grew to thousands of employees.
Rodgers stepped down in 2016 and was replaced by but he was an activist shareholder within Cypress. He set a personal goal of creating the best pinot noir in the world at his vineyard in the Santa Cruz Mountains. I walked through his vineyard once, when it was equipped with some of the early monitoring equipment for the internet of things. We laughed as he told tales of getting the Cypress staff to (voluntarily) come pick his grapes.
In the 1980s and 1990s, Rodgers was known as the toughest boss in Silicon Valley, always holding executives and employees accountable. He said he liked corporations to set “big, hairy, audacious goal,” or BHAGs, so they could always achieve higher results. When I was still at the San Jose Mercury News,
At the time of the acquisition, Cypress was valued at 18.2 times NTM EBITDA ( a measure of profitability).
The companies expect the transaction to close by the end of 2019 or early 2020.
T.K. Thorne says the $20 monthly solar fee she pays to Alabama Power will double the time it will take to pay off her rooftop solar system.
Julia Simon for NPR
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Julia Simon for NPR
In Alabama's Blount County, off the highway, down a dirt road and up a hill is writer T.K. Thorne's house. She points to her roof and a shining row of black solar panels.
It's a 4-kilowatt system — pretty typical for residential solar — and Thorne got it almost four years ago hoping to help the environment and reduce her electricity bill.
It was a big investment — $8,400 even after a federal tax break. Thorne estimated how long it would take to pay off the solar system, installed the panels, and began waiting for the savings to begin.
But then she found out about a monthly $5-per-kilowatt solar fee from the state's largest utility, Alabama Power.
"That's $20 a month," Thorne says. While that doesn't sound like a lot of money, she says, it will double the time it will take her to pay off the system.
Because of the fee, 65-year-old Thorne says it'll take almost two decades to pay back her panels.
"Yes," she says and laughs, "I may not be alive."
Green energy groups say this solar fee is a key reason why, according to Wood Mackenzie and the Solar Energy Industries Association, Alabama comes in 48th out of 50 states in residential solar capacity. (North Dakota and South Dakota trail Alabama).
Alabama Power spokesman Michael Sznajderman says there's a good reason for the fee: If a customer's rooftop solar panels don't provide enough energy, Alabama Power's still on the hook for backup electricity.
"There is a cost to have backup power service available to customers who demand it," he says.
Other regulated utilities across the U.S. have proposed residential solar fees. And New Mexico had one but got rid of it; Wisconsin is currently considering one.
And while there are fees in Arizona, Kansas and Texas, Alabama Power's backup fee seems to be in a class of its own. It currently has the highest backup fee based on the size of the residential solar system of any regulated utility in the U.S. That's according to data from the North Carolina Clean Energy Technology Center, which produces the 50 States of Solar report, as well as the National Regulatory Research Institute.
"How is that possibly the best they could do from a cost perspective when regulated utilities in other states do much better?" asksGautam Gowrisankaran, a public service professor of economics at the University of Arizona.
He says Alabama Power is overcharging its solar customers in a couple of ways. First, solar customers in Alabama get paid a lot less for making solar energy than customers in other states.
On top of that, Alabama solar customers are paying for backup power in their regular bills, and paying an extra backup power fee. Gowrisankaran says he thinks this means Alabama's solar customers might be paying the utility twice.
"The bottom line is that ultimately they seem to be double counting — double charging essentially for the costs of backup generation," he says.
Alabama Power says there's no double-charging — it's simply covering backup costs. It notes that another payment option for solar customers doesn't include the backup fee, but critics say that ends up being even more expensive.
The Southern Environmental Law Center has filed a complaint with the state regulator, the Alabama Public Service Commission. The center is asking to get rid of the backup fee, saying it's unjust for solar customers like Thorne. Alabama Power wants the regulator to dismiss the complaint, and wants to increase the monthly fee from $5 to $5.42 per kilowatt.
Keith Johnston, who leads the law center's Birmingham office, says what's going on in Alabama should concern people across America because it goes to the heart of how utilities have been charging for power for more than 100 years.
"The traditional model of the utility is that ... they build large power generation systems such as coal-fired power plants or dams, and they have a captive audience that has to buy that energy," he says.
Today, though, homeowners have the option to install solar panels on their rooftops and become power generators themselves.
"Solar is a real disruptor because it allows people to create their own energy, and so the utilities typically get very nervous about that," Johnston says. "One way they can thwart that is to increase the cost to have one of those systems on your home."
Now, following the complaint, the Alabama Public Service Commission will decide if the solar fee is fair. In the meantime, if any of Thorne's neighbors ask her if it's worth it to get solar, she tells them, no. Not in Alabama Power territory.
Julia Simon is a regular contributor to NPR's Planet Money. You can also hear her on the NPR business desk and the NPR podcasts Code Switch and Rough Translation.
Google is dominant in myriad areas of technology, to the point where the Justice Department is preparing to investigate it on antitrust grounds. Here, the auditorium at the company’s office in Berlin.
Photo:
Krisztian Bocsi/Bloomberg News
WASHINGTON—The Justice Department’s plans to investigateAlphabet Inc.’s
GOOG -1.28%
Google have been building over time, amid a growing public conversation about whether the government should do more to scrutinize the handful of giant tech firms that dominate the U.S. landscape.
The department’s antitrust division and the Federal Trade Commission, which share federal antitrust enforcement authority, have sent a variety of signals that they were eager to explore cutting-edge questions about how big tech is affecting the competitive landscape.
While the FTC in February announced a new task force to consider tech competition, the Justice Department has been planning its approach behind the scenes, while also holding public events to educate its staff and the public about the contours of the tech debate.
The department last July hosted a speech by Franklin Foer, author of “World Without Mind: The Existential Threat of Big Tech,” a book that raises alarm bells about Google and other tech giants that have built their dominance on the collection and use of big data.
“There’s so much hanging in the balance when we talk about their size and dominance. And therefore so much is resting in your hands,” Mr. Foer told the Justice Department audience.
“It’s something we should all be thinking about,” Justice Department antitrust chief Makan Delrahim said in opening remarks during Mr. Foer’s appearance.
“
Having that 800-pound gorilla on your side is a big advantage
”
—Louisiana Attorney General Jeff Landry
A couple of months later, the department met with a group of state attorneys general, including both Republicans and Democrats, who have raised concerns about big-tech dominance and tech-firm practices on issues like privacy. The two sides pledged to continue talking.
Louisiana Attorney General Jeff Landry, a Republican, said it was encouraging that the department now seems to be moving.
“Getting them to the table is going to really help accelerate the things that AGs on both sides of the aisle want to do,” Mr. Landry said. “Having that 800-pound gorilla on your side is a big advantage.”
In March, the department presented a speech by tech investor Roger McNamee, who has been deeply critical of
Facebook Inc.
and Google. And last month it held a public workshop exploring competition issues in advertising, including digital advertising, an issue that is likely to be a key piece of the Google probe, according to people familiar with the matter.
The Wall Street Journal reported Friday that the Justice Department is gearing up for an antitrust probe of Google. Out of public view, it built plans for an investigation while it worked out turf issues with the FTC. The commission conducted a broad U.S. probe of Google that ended in 2013 without enforcement action; this time, the department directly asked to be the agency to conduct an investigation, and the FTC agreed, people familiar with the matter said. That allowed Justice to begin moving forward in earnest.
Google critics, including rival businesses, that had been lodging complaints with the FTC are now being sent to the Justice Department instead, the people familiar with the matter said, adding that some have been in contact with the department already and others will be soon.
News Corp,
which owns The Wall Street Journal, has complained about Google’s business practices to regulators in multiple countries.
The department is aiming to explore how Google uses its dominant position in search across a broad range of its businesses and whether the company exerts its market power unfairly to squelch smaller rivals whose innovations could make them competitive threats to Google, the people said. Justice Department officials, they said, have expressed an interest in a broad range of markets, from Google’s Android smartphone operating system to its third-party digital ad business, where Google is both a giant platform for selling ads on sites across the web and a dominant conduit for marketers to purchase online ads.
Google has grown to its current size and influence largely through its dominance in online search and its ability to leverage its search function into a massive advertising business. In addition, the company’s Android smartphone operating system has become even more widely used than
Apple Inc.’s
, allowing it to become a powerful force in the mobile revolution. Its YouTube unit has become a huge source of online video. New ventures into self-driving vehicles, artificial intelligence and other technologies could extend Google’s dominance.
Underlying many of those concerns is the vast array of data the company compiles.
Still, there is an active debate over Google’s dominance. While critics complain that Google has too much power over users and businesses on the internet, and even over society and politics, defenders believe many of those concerns are exaggerated, and they question whether antitrust law is the best way to address them; some argue that market forces will balance the equation over time.
Despite the FTC’s handling of the prior Google probe, the Justice Department does have previous experience of its own with Google. The department’s antitrust division in 2008 effectively torpedoed a planned Google partnership with
Yahoo
; the company walked away from the deal after the department indicated it would challenge the pact.
The department in 2011 allowed Google to acquire flight-data company ITA Software, though it imposed conditions on the deal.
Google critics spent the weekend trying to make sense of how the department’s next chapter with the company might unfold.
“For the good of consumers and competition on the internet, we welcome any renewed interest by U.S. regulators into Google’s anticompetitive behavior,” said Stephen Kaufer, chief executive of TripAdvisor, a travel-review website that has long complained about the company.
But others doubted that the Trump administration would circumscribe what they view as Google’s anticompetitive practices. “Holding dominant platforms accountable for anticompetitive conduct is imperative, but I don’t have a lot of faith that President Trump’s Justice Department will stand up for working people against powerful corporations like Google and Facebook,” said Rep. David Cicilline (D., R.I.), who chairs a House antitrust subcommittee.
(Reuters) - The U.S. Justice Department is preparing an investigation of Alphabet Inc’s Google to determine whether the technology company violated laws to ensure fair competition, two sources familiar with the matter said.
FILE PHOTO: A sign is pictured outside a Google office near the company's headquarters in Mountain View, California, U.S., May 8, 2019. REUTERS/Dave Paresh/File Photo
The potential investigation, first reported on Friday, is the latest challenge for Google which already faces a raft of complaints about its business practices from rivals, as well as Democrats and Republicans. EU regulatory actions have already led to multibillion dollar fines and reforms to Google’s business practices.
The U.S. probe would focus on accusations Google gave preference to its own businesses in search results, one source said.
Google declined to comment on the possible probe.
The latest news underscores a growing U.S. backlash aimed at Silicon Valley companies, and marks one of the biggest steps yet by the Trump administration toward regulating a giant technology firm.
The following explains the antitrust concerns about Google from other companies, critics in Washington and the EU, and how a Justice Department probe could impact the sprawling U.S. company.
WHY ARE ANTITRUST REGULATORS INTERESTED IN GOOGLE?
Google’s dominance of the search engine market has transformed it from a start-up into one the world’s most valuable companies.
Google controls much of the technology used to buy online ads, and its Android operating system runs most of the world’s smartphones.
Digital advertising revenue accounted for about 85% of revenue for Google’s parent Alphabet last year.
Some web companies, including Yelp Inc and TripAdvisor Inc, have long complained that Google skews search results and uses its market dominance to unfairly promote its own services over theirs.
Google has said it is transparent about how it promotes its own services, and that its focus has been on benefiting consumers.
The U.S. Federal Trade Commission, which enforces antitrust laws along with DOJ, previously investigated Google’s business practices. The 2013 settlement with the FTC was widely viewed as a victory for Google because the company was only required to make modest changes to its practices and was allowed to continue to highlight its own services in search results.
Under FTC pressure, Google agreed to end the practice of “scraping” reviews and other data from rivals’ websites for its own products, and to let advertisers export data to independently assess campaigns.
Europe’s competition authority has taken a tougher stance against Google, handing down three fines totaling more than $9 billion in recent years.
In a 2017 deal with the EU, Google agreed to pay $2.7 billion to resolve claims it unfairly steered business toward its shopping platform. In March it was fined $1.7 billion in a case focused on illegal practices in search advertising brokering from 2006 to 2016.
COULD THE DOJ TRY TO BREAK UP GOOGLE?
Yes, in theory, but experts have said such action against a technology firm is unlikely.
The Justice Department would have to file a lawsuit and convince judges that Google has undermined competition.
It is rare to break up a company but not unheard of, with Standard Oil and AT&T being the two biggest examples.
Perhaps the most famous case is the government’s effort to break up Microsoft Corp. The Justice Department won a preliminary victory in 2000 but was reversed on appeal. The case settled with Microsoft intact.
Justice Department antitrust probes more often result in an agreement to change certain business practices.
WHY IS GOOGLE UNDER INCREASED SCRUTINY?
Google and Facebook Inc collect personal data on users to target their advertisements.
Data privacy has become an increasingly important issue as massive breaches have compromised the personal information of internet and social media users.
Congress has long been expected to take up privacy legislation after California passed a strict privacy law that goes into effect on Jan. 1.
Some Republican Party lawmakers have also said Google, Facebook and Twitter Inc discriminate against conservative viewpoints and suppress free speech. Representatives of the companies have denied the censorship claims.
Soon after news of the possible Google probe, Republican Senator Josh Hawley said on Twitter: “This is very big news, and overdue.” As attorney general of Missouri, Hawley probed Google over allegations it misappropriated content from rivals and claims it demoted competitors’ websites in search results.
Beyond Congress, Google’s Washington critics have included the United States’ top general who in March said the Chinese military was benefiting from the work Google was doing in China, where the technology giant has long sought to have a bigger presence.
Google, which did not comment at the time, has previously said it has invested in China for years and plans to continue to do so, but that the company also was continuing to work with the U.S. government on projects in healthcare, cybersecurity and other fields.
Reporting by Jan Wolfe; Editing by Chris Sanders and Lisa Shumaker
