Trump Slams Social-Media Companies Over ‘Censorship’

President Trump on Saturday threatened action against social-media companies, saying they were suspending accounts in a manner that was “totally discriminating” against conservatives.

Tweeting from his golf resort in Bedminster, N.J., Mr. Trump said unnamed social-media companies were “closing down the opinions of many people on the RIGHT, while at the same time doing nothing to others.”

“Speaking loudly and clearly for the Trump Administration, we won’t let that happen,” Mr. Trump said. “Censorship is a very dangerous thing & absolutely impossible to police,” he continued. “Let everybody participate, good & bad, and we will all just have to figure it out!”

Social-media companies have faced criticism over bullying as well as false and abusive content on their platforms. Their efforts to rein in such content have also drawn fire, however, as critics say the services are censoring unpopular opinions.

Tech companies have said they don’t single out conservatives for stricter enforcement. Representatives for Twitter Inc., Facebook Inc., Apple Inc. and Alphabet Inc.’s YouTube didn’t immediately respond to requests for comment on Saturday.

Mr. Trump’s comments came several days after Twitter suspended for a week the account of far-right talk-show host Alex Jones for violating the social-media company’s policies, amid intensifying public scrutiny and criticism of Mr. Jones’s posts on the platform.

Earlier, other technology companies, including Apple, YouTube and Facebook removed content from Mr. Jones or his site, Infowars.

The conspiracy theories promoted by Mr. Jones and Infowars have been at the center of the tech industry debate. Earlier this year, parents of two children killed in the 2012 Newtown, Conn., elementary-school shooting massacre sued Mr. Jones, saying he repeatedly called the shooting fake and accused them of taking part in a hoax designed to promote gun control. Mr. Jones described the lawsuit as frivolous.

This week, after he was banned or suspended by several tech platforms, Mr. Jones issued an appeal to the president to “come out before the midterms and make the censorship the big issue.”

Mr. Jones also urged Mr. Trump to “come out and point out that the communist Chinese have penetrated and infiltrated and are way, way worse than the Russians.”

On Saturday, the president tweeted: “All of the fools that are so focused on looking only at Russia should start also looking in another direction, China.”

Mr. Trump on Saturday also criticized CNN and MSNBC again as “Fake News” but said he wasn’t asking for social media companies to ban their “sick behavior.” He added: “I get used to it and watch with a grain of salt, or don’t watch at all.”

Mr. Trump has made attacks on mainstream media outlets, which he often dubs “fake news,” a hallmark of his presidency and a way to rally supporters ahead of the midterms. He has come to calling some media organizations the “enemy of the people,” and crowds at his rallies regularly jeer reporters covering the events.

Write to Rebecca Ballhaus at Rebecca.Ballhaus@wsj.com

https://www.wsj.com/articles/trump-slams-social-media-companies-for-censorship-of-the-right-1534609973?mod=rss_Technology

Beer Giants Tap Into Africa With Brews Under $1

In the world’s poorest continent and fastest-growing beer market, global brewers are being forced to reinvent themselves.

Most Africans can’t afford the beers that brewers like Anheuser-Busch InBev NV, Heineken NV and Guinness maker Diageo PLC sell in other markets. That, combined with commodity price swings and the risk of high taxes on premium beers that could threaten steady profits, has led brewers to embrace low-price, locally formulated concoctions that would be unrecognizable to most Western consumers.

In Uganda, off a red-dirt road in the Bugolobi suburb of the economic capital Kampala, customers crowd into a pub the size of a freight elevator and sip on warm mugs of beer served out of a 50-liter keg. Brewed from local sorghum, the beers, called Senator, are produced by a local unit of Diageo, the world’s largest liquor maker, and sell for about 1,700 Ugandan shillings (46 U.S. cents), or roughly half the price of local malt barley beers.

“It’s the most popular beer for my business here,” said Florence Neeza, known in Bugolobi as “Mama Keg.” She sells about 10 kegs of Senator a week.

Diageo, along with AB InBev, Heineken and closely held Castel, which is 20% owned by AB InBev, already generate 98% of the region’s beer profits, largely helped by acquisitions of local brewers, according to Bernstein Research.

Beer consumption in Africa today is by far the lowest in the world, at about 10 liters of beer per capita, compared with 70 liters in North America and Western Europe. However, it is the fastest-expanding market and more profitable than other emerging economies in Eastern Europe and Asia, according to Bernstein. As drinkers in Europe and the U.S. turn away from beer in favor of spirits and nonalcoholic beverages, Africa’s importance to brewers is growing.

In a year-end update in July, Diageo Africa President John O’Keeffe told investors the company’s strategy in the continent has been to tap consumers who cannot afford to drink its core brands. “This allows us to rely less on the pace at which the middle class emerges given economic volatility, and more on accessing the opportunity here and now,” Mr. O’Keeffe said.

Still, the African market remains unpredictable for multinational companies hoping to build a long-lasting business, analysts say. For some companies whose brews were hits with the continent’s poorest drinkers, their fortunes were quickly reversed by currency shortages and fluctuations in commodity prices tied to African economies, which are often heavily reliant on commodities. Such booms and busts can hit company bottom lines and consumers’ pockets.

In Angola, Bernstein estimates that beer sales volumes fell more than 30% over the past three years as the economy took a major blow from weak prices for its oil exports that led the country to devalue its currency. For Diageo, sales increases in Ghana were offset by declines in Cameroon because of social unrest and Ethiopia because of political instability and currency devaluation. In Zimbabwe, hyperinflation has led to a beer shortage because brewers were unable to obtain enough dollars to import packaging materials.

Some national governments, seeing beer’s rising popularity, have also been raising taxes, forcing brewers to decide whether to absorb higher costs or pass them on to consumers, many of whom can barely afford a brand-name brew. That turns drinkers back to illicit brews, which still make up 60% of the market in poor African nations.

In 2014, sales volumes of Senator dropped 75% in Kenya after the brewer passed along a 46% tax increase to consumers to compensate for the pullback of a government tax break. The next year, the government reversed its decision, choosing instead to increase taxes on premium brands in the market that were less price sensitive. Senator volumes doubled.

“When you have no money at all, you will drink the cheapest form of alcohol you can find, beer fermenting in an old oil barrel, industrial alcohol with a bit of color added in, alcohol distilled from bananas,” said Bernstein Research analyst Trevor Stirling. “Drinking a branded beer shows your friends you’ve made it.”

Africa could account for 40% of global volume and profit growth for the beer industry over the next decade, according to Deutsche Bank. The lender cited affordability as a key issue, since only 15% of consumers in Africa can currently afford a beer. By halving the price, the share of adults who can afford a beer rises from 15% to 40%.

“[In Africa], there is an ingrown beer culture, the population is very young and income levels are rising,” said Babatunde Ojo, a portfolio manager at Harding Loevner invested in African breweries. “But the price point is very important.”

In Bukele, another dusty suburb of Kampala, Chibuku Shake Shake, made by a unit of AB InBev from locally produced sorghum, is a popular drink at 1,500 Ugandan shillings a bottle.

Dickens Tugume, a plumber sipping on a bottle of Chibuku, said he switched to the brand two years ago to cut on down on personal costs.

“With Chibuku, I can afford a few more bottles than before,” said the 31-year-old father of two, who drinks three to four beers a day.

In Nigeria, brews with returnable bottles like Satzenbrau sell for 100 naira (28 cents). In Uganda, Ngule, a beer made with 95% local raw materials, retails for 2,200 Ugandan shillings for a half-liter bottle; and Eagle Lager, a clear beer brewed with local sorghum, sells for 2,500 shillings.

Write to Julie Wernau at Julie.Wernau@wsj.com and Alexandra Wexler at alexandra.wexler@wsj.com

https://www.wsj.com/articles/beer-giants-tap-into-africa-with-brews-under-1-1534608000?mod=pls_whats_news_us_business_f

Paramount Network Finds a Hit in ‘Yellowstone’

When Spike TV became Paramount Network, it set out to build a new brand that reached women as well as men, while developing television that could stand out in a crowded environment.

Eight months in, it appears to have addressed these challenges in “Yellowstone,” a drama starring Kevin Costner as the head of a ranching family jockeying for power in Montana. Ahead of its finale on Wednesday, “Yellowstone” has become the second-most watched TV series on ad-supported cable, which excludes shows on streaming services and premium cable channels such as HBO and Showtime, according to Nielsen ratings provided by Paramount.

“Yellowstone” was created by John Linson and Taylor Sheridan, who is best known for the films “Sicario” and “Hell or High Water,” which he wrote, and “Wind River,” which he wrote and directed. Mr. Costner, who won a directing Oscar for the 1990 movie “Dances With Wolves,” lent “Yellowstone”—his first regular TV role—some star power.

When the network was Spike TV, it attracted mostly male viewers, “but what we’re trying to do with Paramount Network is really broaden it to women, too,” said Kevin Kay, its president. “The family drama here, I think—and it’s proven out to be true in the ratings—is really appealing to women without alienating men.”

The family dynamic can be seen in other critically praised TV, including HBO’s “Succession” and NBC’s “This Is Us,” but in “Yellowstone,” set in the American West, Mr. Kay saw an opportunity to portray a world that isn’t often depicted onscreen.

“So much of what we watch on TV is set in New York or set in California or set in Hollywood, or maybe it’s set in Atlanta now,” he said. “What you don’t see is big open blue skies and the West. That to me was tremendously refreshing.”

According to executive producer Art Linson, the idea for “Yellowstone” came from his son and producing partner, John Linson, while the two of them were working as executive producers on FX’s “Sons of Anarchy.” The younger Mr. Linson had become friends with Mr. Sheridan, who was then working as an actor on “Sons of Anarchy” but had already written some of the scripts that would later make his name as a writer.

The Linsons brought him on to write the “Yellowstone” pilot. Paramount Network picked it up, committing to a full season order and renewed it for a second season a month after its debut.

The elder Mr. Linson, whose previous work includes films like “The Untouchables,” “Heat” and “Fight Club,” credits his son and Mr. Sheridan’s genuine understanding of the material, as well as their abilities—Mr. Sheridan was nominated for a screenwriting Oscar for “Hell or High Water”—with the success of “Yellowstone.” As an example, he cites a scene in which Mr. Costner’s character John Dutton blows air into a horse’s mouth to calm the horse down before he has to shoot it, calling the moment “magnificent, because it comes from a true place.”

“At the end of the day, and John is my maestro in this, it’s things he’s interested in, whether it’s bikers or cowboys,” Mr. Linson says. “For me, personally, it starts with the quality of the idea and the quality of the writing, and if you have both of them—that’s why Kevin Costner decided to star.”

Why It’s Working

  • The Show: “Yellowstone”
  • The Plot: A family of ranchers in Montana must defend their empire against rivals, including politicians, land developers and the leaders of a nearby Indian reservation—all in the shadow of Yellowstone National Park.
  • The Reaction: “Yellowstone” has become the second-most watched series on ad-supported cable television, behind AMC’s “The Walking Dead,” providing the 8-month-old Paramount Network with a defining hit.
  • The Formula: Combine writer-director Taylor Sheridan, of “Sicario” and “Hell or High Water,” with Kevin Costner, the great outdoors and a compelling family drama.

https://www.wsj.com/articles/paramount-network-finds-a-hit-in-yellowstone-1534597180?mod=pls_whats_news_us_business_f

Retailer House of Fraser Locked Down in Logistics Standoff

The sale of a struggling British retailer has turned into a standoff at the warehouse door.

House of Fraser, an iconic British department store chain sold to Sports Direct International SPD -1.06% PLC earlier this month after entering a U.K. equivalent of bankruptcy protection, shuttered its website, canceled consumer orders and said it would refund all online purchases that had not been sent after logistics provider XPO Logistics Inc. XPO -0.68% locked up the two U.K. warehouses it runs for the retailer.

The British division of Greenwich, Conn.-based XPO stopped processing orders at the distribution centers on Aug. 10, the day the 169-year-old retailer entered administration and was sold for $114.9 million, or 90 million pounds. The company, one of many creditors owed money by the retailer, has not allowed deliveries in or out of both warehouses, according to a person familiar with the matter.

“The sense is that XPO are holding the company for ransom,” the person said. “It’s very much a standoff at the moment.”

XPO is working to understand who owns the inventory of goods in the distribution centers, according to a separate person with knowledge of the situation. The company is seeking to put a new agreement in place with Sports Direct and recommence services, that person said.

On Friday, the retailer’s online site said the storefront was “working hard to make some improvements to the website. Don’t worry, we will be back up and running as soon as possible.”

XPO is in a long line of companies that say they are owed millions by the retailer. According to a document provided Friday by Ernst & Young, the accounting firm appointed administrator for House of Fraser, XPO is owed nearly $39 million. Luxury apparel brands including Ralph Lauren’s Polo UK Ltd., J. Barbour and Sons Ltd. and Giorgio Armani SPA are also owed millions, the Ernst & Young document said.

XPO is seeking to recoup about $15.3 million from Sports Direct for services it provided before House of Fraser entered administration, said the person with knowledge of the logistics company’s situation.

The dispute highlights the battles over large amounts of inventory that may be in legal limbo when a company becomes insolvent as creditors seek leverage to recoup some portion of what they are owed.

Typically contracts between retailers and logistics companies dictate what happens in the case of new ownership, with inventory on hand becoming the property of the new owner, said Evan Armstrong, president of logistics-consulting firm Armstrong & Associates.

“We usually recommend that there is a succession clause, and if either party goes bankrupt the contract is null and void,” Mr. Armstrong said. That can lead to disputes over what to do with the stock on hand, for example, and whether the warehouse operator can start liquidating inventory to pay some bills, he said.

“It can cause a lot of problems,” Mr. Armstrong said, especially ”when you have orders in the pipeline that can’t get fulfilled because of bankruptcy.”

House of Fraser’s quick sale after entering administration complicates the task of reconciling the company’s bills and its inventory. The Sports Direct deal gave the firm ownership of House of Fraser’s stock, including inventory stored in its warehouses, an Ernst & Young spokesman said, but those facilities also hold goods belonging to merchants that sell through House of Fraser.

Write to Jennifer Smith at jennifer.smith@wsj.com

https://www.wsj.com/articles/retailer-house-of-fraser-locked-down-in-logistics-standoff-1534584595?mod=pls_whats_news_us_business_f

What Your Car Knows About You

Car makers are collecting massive amounts of data from the latest cars on the road. Now, they’re figuring out how to make money off it.

With millions of cars rolling off dealer lots with built-in connectivity, auto companies are gaining access to unprecedented amounts of real-time data that allow them to track everything from where a car is located to how hard it is braking and whether or not the windshield wipers are on.

The data is generated by the car’s onboard sensors and computers, and then stored by the auto maker in cloud-based servers. Some new cars have as many as 100 built-in processors that generate data.

Already, some car makers are gathering this data to provide feedback to help improve a car’s performance, refine features and alert them to any potential quality problems early on. They’re also using it to create new and more personalized services for drivers.

But many car makers have bigger plans, including using the data to craft targeted in-car advertisements or selling it to mapping firms looking to provide more accurate traffic information.

General Motors Co. , Ford Motor Co. and other major car makers are hoping these connected-car services will generate new revenue streams that can help them diversify beyond their core business of building and selling cars. While it is still early days, McKinsey & Co. estimates monetizing data from connected cars will be worth up to $750 billion by 2030 as more cars are shipped with pre-installed modems and other internet-connected devices.

“To some extent, the sky is the limit for what could be done with the data,” said Cason Grover, Hyundai Motor Co.’s senior group manager for vehicle technology planning.

Hyundai early next year will launch a new program that gathers data from vehicles on driving habits—such as how hard a car brakes or the miles it travels in a day—and use it to help owners get discounts on auto insurance. Hyundai says the data is only collected with the owner’s permission and shared with the auto insurer as a score rating the driver’s performance. Ford, GM and other car makers are also working with auto insurers to offer discounts based on driving data.

GM, through its Marketplace app, uses location and other vehicle data to help drivers find parking and schedule service appointments at nearby dealerships. The auto maker also uses location data and a vehicle’s keyless entry feature to offer in-car delivery of Amazon packages.

Later this year, GM also plans to introduce a new feature that can detect when a vehicle’s fuel tank is low and then offer a coupon on the car’s display for a discount at a nearby gas station, said Brian Hoglund, a business development director for GCCX, GM’s connectivity unit. Retailers then pay GM a fee for steering customers their way.

The Marketplace app is currently available in more than 2 million GM vehicles in the U.S. That number is expected to expand to 4 million by the year’s end.

Mr. Hoglund said customers benefit from sharing the data by having access to these services. But they must opt in first to each new app or feature before it can collect any data.

Ford recently launched a new service that contracts with companies and municipalities to gather data generated by vehicles used in fleets, such as police cars and delivery vans. The service can track fuel consumption and miles traveled, as well as monitoring driver behavior, such as whether the car is speeding or the seat belt is in use. The auto maker then sells the data and analytics to the fleet operators as a service.

Employers determine whether a driver can opt out of the monitoring, a Ford spokeswoman said.

Ford is also looking at other ways to monetize vehicle data, estimating that in the longer term, the effort could generate up to $100 per vehicle each year in additional value, said Don Butler, Ford’s executive director for connected vehicle and services.

The efforts come at a time when privacy concerns have increased due to recent controversies at Facebook Inc. and Alphabet Inc. over their handling of consumer data.

Car companies stress that they get the owner’s consent first before gathering any data. In cases where it is collected and provided to third parties, the data is anonymized, meaning it is scrubbed of all personal information and batched together with data from other vehicles to provide a more generalized picture of a car’s operations or consumer driving habits.

Still, privacy experts say it is not always clear to consumers when they are giving consent. As with other electronic devices, the data disclosures are often buried in the terms and service agreement and described in ways that aren’t always easy for customers to understand.

“That’s not going to give consumers a full sense of how their data is being used and collected any more than it is online,” said Ryan Calo, a law professor at the University of Washington, who specializes in digital privacy.

The auto industry is in many ways following the lead of tech sector, where companies collect user data online and via mobile-phone usage, and then use it to either improve their own services or sell it to third-party app developers and marketers.

“A lot of the reason an app or service in a car may be free is because you’re paying with your data,” said Mark Boyadjis, an analyst with IHS Markit, who leads the firm’s connected car research.

Today, auto makers can pull hundreds of different data points from the car, including everything from the odometer reading and blinker status to the tire pressure level.

“It’s really like your cellphone but it is bigger and on wheels,” said Lisa Joy Rosner, of Otonomo, an Israeli-based startup that works with auto makers to process and license vehicle data.

Otonomo’s business model is built around it taking car maker-provided data, cleaning it up so it is easier to use and read, and then licensing it to third-parties, such as app developers, insurance companies and municipalities. All the data is stripped of any personal information. Auto makers then collect the licensing revenue with Otonomo getting a small cut.

The firm is one of a number that have emerged in recent years to serve as a marketplace for vehicle data. Other startups include U.K.-based Wejo Ltd. and Germany’s Caruso GmbH.

One application the auto industry is exploring is providing windshield wiper data to weather-service providers to more accurately track rainstorm patterns. Car makers also sees potential in using the vehicle’s onboard cameras and sensors to provide mapping firms with more accurate roadway information, as well as real-time data on traffic patterns, analysts say.

Hyundai’s Mr. Grover said eventually car companies will use the data for more predictive applications, such as learning a driver’s habits and making route suggestions.

“Over time, we will know where you usually go for coffee and know what your commute is,” Mr. Grover said. If the car detects a traffic jam along the way, it can suggest an alternative route, he added.

“Once the vehicle is autonomous, it will use all the same data to make its own decisions.”

Write to Christina Rogers at christina.rogers@wsj.com

Appeared in the August 18, 2018, print edition.

https://www.wsj.com/articles/what-your-car-knows-about-you-1534564861?mod=pls_whats_news_us_business_f

Martin Shkreli’s Former Lawyer Sentenced to 18 Months in Prison

Evan Greebel, a former corporate lawyer found guilty last year for helping “Pharma Bro” Martin Shkreli defraud a publicly traded pharmaceutical company, was sentenced Friday by a federal judge in Brooklyn to 18 months in prison.

Prosecutors from the Brooklyn U.S. Attorney’s office had sought no less than five years for Mr. Greebel, describing him as a “corrupt lawyer” who, as outside counsel to Retrophin Inc., abused his position as a lawyer to help Mr. Shkreli steal millions of dollars’ worth of cash and shares from the…

https://www.wsj.com/articles/martin-shkrelis-former-lawyer-sentenced-to-18-months-in-prison-1534541458?mod=pls_whats_news_us_business_f

Purdue Pharma Hires Davis Polk for Restructuring Help

OxyContin maker Purdue Pharma LP has hired restructuring lawyers at Davis Polk & Wardwell as it grapples with mounting litigation over its alleged role in fueling the opioid epidemic, people familiar with the matter said.

The company, owned by the Sackler family, faces more than 1,000 lawsuits brought by cities, counties and states that claim the company, along with other drugmakers, misled the public about the addictive nature of their opioid painkillers. The lawsuits seek to recoup the cost of opioid addiction borne by the government entities.

President Donald Trump this week called on the Justice Department to file its own “major lawsuit” against drugmakers that “are really sending opioids at a level that it shouldn’t be happening.”

New York this week became the 27th state to sue Purdue, following others including Ohio, Florida and Texas.

Purdue has denied wrongdoing in the lawsuits. Of Mr. Trump’s remarks, the company said Thursday it shares the president’s concern about the opioid crisis and is committed to working on meaningful solutions.

Purdue declined to comment Friday on its engagement with Davis Polk, saying the company “retains firms with a variety of expertise.” It added that “Purdue is preparing for a bright future that includes diversification into non-opioid products.”

Reuters earlier reported Davis Polk’s hiring.

Last month, Purdue added turnaround expert Steve Miller as chairman of its board and hired a new general counsel, moves it said came as it pursues new medications to treat cancer and central nervous system disorders.

Stamford, Conn.-based Purdue said in June it was laying off the remainder of its sales force, months after it said it would no longer actively promote the sale of OxyContin to U.S. doctors. The company currently has about 550 employees.

Hundreds of the lawsuits filed in federal court against drugmakers and distributors have been consolidated before a single federal district-court judge in Ohio. That judge, Dan Polster, has pushed both sides to settle, saying at a hearing earlier this month that if the defendants “go to war with every government in this country,” there is a chance “everyone is going to go into bankruptcy.”

While settlement talks continue, the litigation is moving toward a September 2019 trial date.

The Sackler family acquired Purdue Pharma in the 1950s, then a small New York City pharmaceutical company that sold laxatives, earwax remover and arthritis treatment.

After bringing OxyContin to the U.S. market in the mid-1990s, the company faced a federal investigation in 2007 that led it and three of its executives to plead guilty to criminal charges of misleading the public about the addiction risk related to the drug. Purdue paid $634.5 million in government penalties and costs to settle civil litigation.

Write to Sara Randazzo at sara.randazzo@wsj.com and Lillian Rizzo at Lillian.Rizzo@wsj.com

https://www.wsj.com/articles/purdue-pharma-hires-davis-polk-for-restructuring-help-1534536369?mod=pls_whats_news_us_business_f

How Erdogan’s Push for Endless Growth Brought Turkey to the Brink

ISTANBUL—The Turkish lira’s fall has been sudden and sharp. The cause traces back nearly a decade when the country’s leader decided to turn Turkey into something resembling China on a smaller scale, a world-class economy under one man’s firm control.

Eager to pull his nation out of an economic contraction that had marred much of the world at the start of 2009, Recep Tayyip Erdogan signed a decree easing access to foreign-exchange loans for Turkish companies.

The new rules lifted restrictions that barred companies without revenue in hard currencies from doing such borrowing—as long as the loans exceeded $5 million. “It was tantamount to saying: If you drink, drink a lot,” said one official in Ankara, Turkey’s capital.

In the following years, Turkish companies gorged on euro and dollar loans, granting Mr. Erdogan’s wish of brawny economic expansion that helped him and his ruling Justice & Development Party power through successive national and local elections. Memories of the 2009 recession evaporated, as did those of the 1990s crisis that had led Turkey to seek international assistance.

Mr. Erdogan was, in effect, mirroring in ways the approach of Chinese President Xi Jinping and his party, which consolidated political power in an authoritarian regime and encouraged heavy borrowing to supercharge the economy.

Turkey’s financial trouble shows the limitation of that approach, especially for countries more susceptible to the forces of global finance and without the kind of control exerted by China’s Communist Party. Vulnerabilities in the Turkish expansion model were so severe it took only two tweets by President Trump in recent weeks—one announcing sanctions against two Turkish officials and another on the doubling of some tariffs—to spark panic.

Nonfinancial corporations built a $330 billion debt pile that is now at the heart of global investor concerns over Turkey’s perilous financial situation. Compounded by a protracted dispute with the U.S. over the fate of an American pastor, those concerns have caused a currency debacle, with the Turkish lira collapsing to its lowest level ever against the dollar on Monday.

Although the lira pared some of its losses, it has shed roughly a third of its value against the dollar since the start of the year. On Friday, the lira sank more than 4% against the dollar after the U.S. administration threatened new penalties against the country over its detention of the pastor, Andrew Brunson. In late European trading Friday, a dollar bought 6.12 lira; a month ago, it bought 4.75.

The lira’s drop has sent ripples through the global financial system, raising concerns about the exposure of some European banks and denting investor appetite for emerging markets.

“It feels like going back to the 1990s,” when a deep Turkish financial crisis had ripple effects on global finance, said Zumrut Imamoglu, chief economist at Tusiad, one of Turkey’s leading industry and business-lobbying groups.

Among businessmen caught on the wrong side of the lira is Atilla Kulekcioglu. In April, Citir Usta, the food chain he founded in 2003, filed for protection from creditors over debt of more than 10 million lira. Mr. Kulekcioglu said he had always resisted the temptation of contracting foreign-currency loans because clients pay in lira for the pide, a Turkish dish similar to flatbread he serves at his restaurants.

Yet, the shopping malls that house his outlets, built on the back of euro or dollar loans, charge rents indexed on foreign currencies, he said. Unable to pass on the higher rent costs to his customers, Mr. Kulekcioglu said he closed 25 of his 65 restaurants and began scouting for foreign investors. “We were one of the four biggest chains in the sector,” he said.

Investor concerns over Turkey’s vulnerable finances have long been pervasive, especially as Mr. Erdogan consolidated his one-man rule and increased his sway over the central bank and monetary policy. In the spring, Mr. Erdogan called snap elections. And in June, he won a new five-year mandate that came with expanded executive powers, securing his political future before those concerns took hold.

The currency storm was a far cry from Mr. Erdogan’s electoral promise to place Turkey among the world’s top 10 economies by the end of his term from its current rank of 17th. As the lira storm raged last weekend, the president was touring the Black Sea region, delivering speeches to thank voters for his re-election. He made no mention of the corporate-debt challenge. Rather, he denounced the tariffs the U.S. has introduced on some Turkish imports as an “act of economic war.”

“Once again, we are facing a surreptitious political plot,” he told supporters in the Black Sea town of Trabzon on Sunday. “God permitting, we will overcome this.”

On Thursday, Turkish Finance Minister Berat Albayrak—Mr. Erdogan’s son-in-law—said on a conference call with about 3,000 investors and financial analysts that the lira rout was excessive and didn’t reflect Turkey’s core economic strength.

Economists say years of heavy corporate borrowing, during which liquidity minted by the U.S. Federal Reserve and other central banks met Mr. Erdogan’s thirst for higher economic growth, has reached a limit.

Refet Gurkaynak, a professor of economics at the Bilkent University in Ankara, said souring U.S. relations were a trigger that awakened investors to the reality of Turkey’s financial pain.

“The problem here is that our corporate sector is deeply, deeply indebted,” he said, warning of a looming rise in defaults and layoffs. “You can’t dump all the corporate problems on the banks, so there will have to be some sharing of the problems by the banks and the government, hence the public.”

Turkish officials didn’t reply to messages seeking comment. During his call with investors, Mr. Albayrak said the government would announce a detailed action plan in September.

At the start of his national political career, Mr. Erdogan cut a more accommodating figure. When he became prime minister in 2003, Turkey was two years into a bailout plan run by the International Monetary Fund, receiving billions of dollars of loans in exchange for implementing the fund’s recipe of fiscal and budget rigor.

Carrying out the remaining IMF measures, Turkey reaped the benefits with lower inflation and a jump in exports, becoming a darling of emerging-market investors. Europeans greeted Mr. Erdogan as a strategic partner and, in December 2004, the European Union formally granted Turkey the right to begin accession talks, kicking off large aid and investment programs.

At a conference around that time at the European Parliament, Franco-German lawmaker Daniel Cohn-Bendit walked up to the Turkish leader, video of the meeting shows. “Mr. Erdogan, I have a present for you,” the lawmaker said, handing him a coin. “The first euro in Turkish.”

With the flow of money, Turkey became a construction site, as Mr. Erdogan, who had developed a penchant for infrastructure projects when he was Istanbul’s mayor in the 1990s, launched train, highway and bridge projects. Istanbul’s skyline, which counted 19 high-rises when he became prime minister, now has 98, according to the Council on Tall Buildings and Urban Habitat, a Chicago-based nonprofit.

In 2007, his honeymoon with the EU took a hit. Several European leaders, such as then-President Nicolas Sarkozy of France, publicly said they would veto Turkey’s membership to the bloc.

In 2008, the IMF assistance program expired. Mr. Erdogan minimized the fund’s role, instead crediting his own stewardship for Turkey’s economic miracle and vowing to follow his own course.

Durmus Yilmaz, an opposition lawmaker, said Mr. Erdogan and his ruling AKP party began behaving more confidently. “After 2008, they felt they knew better,” said Mr. Yilmaz, a former governor of Turkey’s central bank.

That is when the global recession hit Turkey. In the first quarter of 2009, the Turkish economy shrank more than 13%. The government switched to expansionary measures such as the easing on foreign-currency loans.

Within months, the Turkish economy was back on its feet. Mr. Erdogan wanted more growth and didn’t reduce budget spending. “With demand increasing a lot in an economy that was already at full capacity,” said Mr. Gurkaynak, the economics professor, “we began to run the humongous current-account deficit and inflation began to creep up.”

In May 2013, then Turkish Deputy Prime Minister Ali Babacan boasted that Turkey had finished paying its $23.5 billion IMF debt. “For the first time in 19 years, Turkey owes no debt to the IMF,” Mr. Babacan said after initiating the final wire transfers from a computer at Turkey’s central-bank headquarters.

Two weeks later, two tremors shook Turkey. One came from the U.S., where then Federal Reserve Chairman Ben Bernanke signaled in an address to Congress that years of Fed stimulus might come to an end. For Turkey, the message was a warning that the days of easy access to foreign funding, vital to plugging holes in its current account, could be numbered.

The other occurred in Istanbul, where a small sit-in protesting the destruction of the tree-lined Gezi park escalated into nationwide, often-violent protests against Mr. Erdogan’s increasingly authoritarian rule.

Mr. Bernanke’s speech and the political upheaval weighed on the lira, which lost ground against the dollar, heightening pressure on the Turkish central bank to raise interest rates. But Mr. Erdogan vetoed a rate increase. In a series of speeches in June, he blamed what he called “the interest-rate lobby” for the Gezi protests and negative pressure on the lira.

“He believes the economy works in a way that is different from what the faculty says” in economic literature, said Mr. Yılmaz, the former central-bank governor.

After a failed coup in July 2016, the Turkish economy shrank abruptly. The emergency rule introduced by the government spooked foreign companies, which sharply cut direct investment.

Last year, the government dramatically expanded its support to small companies through a state fund that guaranteed bank loans worth about 200 billion lira in total, up from about 15 billion in 2016. Economists say the move helped turbocharge the Turkish economy to a growth rate of 7.4% in 2017, the highest of all Group of 20 economies.

At the start of 2018, the lira was falling on simmering concerns over Turkey’s large corporate debt. Some of the president’s advisers talked on television about the need to cool Turkey’s economic engine after such a bewildering run.

But surrounded by businessmen in a hall of the presidential complex in April, Mr. Erdogan distributed framed “incentive certificates” as he announced another $34 billion stimulus program.

“Some people say ‘too much growth is not a good thing,’ ” he said. “Why? Because they are jealous. It is nothing else.”

The fallout has been harsh on companies such as partly state-owned Turk Telekom , Turkey’s largest phone operator. Last month, it blamed a second-quarter net loss of 889 million lira on “unfavorable forex movements,” saying almost all of its bank borrowings, which stood at 14.7 billion lira as of June 30, were in dollars and euros. Stripping out those effects, it said, it would have posted a net profit of 676 million lira.

“Turk Telekom has debt in foreign currencies but this is at a manageable level and actually is a low amount,” a Turk Telekom spokeswoman said Friday.

Having announced this spring his intention to seek a new mandate, Mr. Erdogan hit the campaign trail. He promised that a landmark mosque in Istanbul and the city’s new airport, cast as the world’s biggest, would soon be completed. He announced details of a grand project to connect the Black and Marmara seas with a canal that would house a population of seven million along its banks.

In May, the lira’s drop intensified after the president told a London conference he intended to have a bigger say in monetary policy in the future. In a bid to support the Turkish currency, the central bank sharply raised interest rates. That same month, the government reintroduced most of the restrictions on foreign-currency loans it had lifted in 2009.

“That was too late,” said Ms. Imamoglu, the Tusiad economist. “They should have done it before 2015.”

Write to David Gauthier-Villars at David.Gauthier-Villars@wsj.com

https://www.wsj.com/articles/how-erdogans-push-for-endless-growth-brought-turkey-to-the-brink-1534526348?mod=pls_whats_news_us_business_f

U.S., China Draw Up Plan to Settle Trade Dispute by November

Chinese and U.S. negotiators are drawing up a road map for talks to try to end their trade impasse ahead of planned meetings between President Trump and Chinese leader Xi Jinping at multilateral summits in November, said officials in both nations.

The planning represents an effort on both sides to keep a spiraling trade dispute—which already has involved billions of dollars in tariffs and comes with the threat of hundreds of billions more—from torpedoing the U.S.-China relationship and shaking global markets.

https://www.wsj.com/articles/u-s-china-plot-road-map-to-resolve-trade-dispute-by-november-1534528756?mod=pls_whats_news_us_business_f

The Game Has Changed at Tesla

Tesla’s investors, captivated by the electric car maker’s future growth prospects, have ignored its rickety finances. That is no longer possible.

Tesla is in trouble after a chaotic week. Elon Musk’s supposed plan to take the company private at $420 a share looks more like a fantasy. The Securities and Exchange Commission is investigating the company on multiple fronts, including issues related to disclosure about production of the Model 3 sedan. Shares dove 8% Friday morning.

The SEC investigation is a threat to investors, albeit not in the way one might expect. Whatever fine might come if Tesla was found to violate regulations would have minimal impact. The most important impact is Tesla may struggle to raise the cash it badly needs while the investigation is going on. Few investors will buy new shares in a company under investigation. Those who would will likely demand tough terms, which would come at the expense of current investors.

These investigations can take time, and a look at Tesla’s balance sheet suggests there isn’t much time to spare. The company had $2.2 billion in cash at the end of the second quarter, but it burned through $1.8 billion of cash in the first half of the year. Accounts payable, meanwhile, topped $3 billion. Tesla has more than $10 billion in total debt and $23 billion in total liabilities, and has never generated profits over a full year. Moody’s Investors Service warned back in March that Tesla needs to raise $2 billion of capital in the “near term.”

Mr. Musk has disputed the idea that Tesla needs to raise money, in part because profits are right around the corner. He claimed on the second-quarter earnings call earlier this month that Tesla will generate profits and cash flow in the third quarter, but executives demurred when an analyst asked if Tesla turned a profit in July. The company didn’t immediately respond to a question on whether Tesla made money in the quarter through Thursday.

Like many fast-growing companies in capital-intensive businesses, Tesla (and its investors) bet that it would generate profits and cash before its debt became unsustainable. That explains the urgency around production of the Model 3. The SEC investigation upends that strategy.

Mr. Musk has long-threatened to squeeze investors betting against Tesla’s stock. There is a squeeze coming, but it isn’t what Mr. Musk predicted.

Related Reading

Write to Charley Grant at charles.grant@wsj.com

https://www.wsj.com/articles/the-game-has-changed-at-tesla-1534521887?mod=pls_whats_news_us_business_f

Deere Reports Strong Demand Despite Tariff-Concerned Farmers

Deere DE 1.60% & Co. reported strong demand in its construction and farming markets in the latest quarter but said it would cut costs and raise prices due to higher raw material and logistics expenses.

Costs for steel and aluminum have been pushed up by U.S. tariffs on imported metal and a nationwide truck shortage has led to increased shipping expenses for many companies.

Deere is just the latest manufacturer to face concerns over whether rising costs will take away some of the gains from a strong global economy.

Shares fell 3.2% in premarket trading as the company posted adjusted earnings per share in the quarter that were below analyst expectations.

Deere also said Friday it continued to see demand for agricultural equipment in its third quarter even as customers worried what potential tariffs on farmed products would mean to their businesses.

“Replacement demand for large agricultural equipment is driving sales even in the face of tensions over global trade and other geopolitical issues,” Deere Chief Executive Sam Allen said.

The Moline, Ill., company reaffirmed its overall revenue and profit forecast for the year.

The company predicts overall sales of farm and construction equipment will increase by about 30% for the year ending Oct. 31, up from $33.7 billion the previous year. The company continues to forecast adjusted net income of $3.1 billion.

Total revenue rose 32% to $10.31 billion. Third-quarter results were boosted by the company’s December purchase of German road-paving equipment company Wirtgen Group for €4.48 billion ($5.33 billion).

The company now expects sales of farm equipment to grow 15% this year, up from its prior forecast due to more favorable dairy and livestock sectors.

The company expects sales in its construction equipment unit to jump 81% this year, with 55% due to the Wirtgen deal, as it also sees increased home building in the U.S., more activity in the oil and gas sector and economic growth globally.

In all for the quarter ended July 31, Deere reported net income of $910.3 million, or $2.78 per share, up from $641.8 million, or $1.97 per share, a year earlier. On an adjusted basis, excluding certain items, the company earned $2.59 a share, as equipment sales rose 36% to $9.29 billion. Analysts were expecting $2.75 a share on sales of $9.21 billion.

Write to Bob Tita at robert.tita@wsj.com and Austen Hufford at austen.hufford@wsj.com

https://www.wsj.com/articles/deere-considers-cost-cuts-and-higher-prices-1534508670?mod=pls_whats_news_us_business_f

How Ergodan’s Push for Endless Growth Brought Turkey to the Brink

ISTANBUL—The Turkish lira’s fall has been sudden and sharp. The cause traces back nearly a decade when the country’s leader decided to turn Turkey into something resembling China on a smaller scale, a world-class economy under one man’s firm control.

Eager to pull his nation out of an economic contraction that had marred much of the world at the start of 2009, Recep Tayyip Erdogan signed a decree easing access to foreign-exchange loans for Turkish companies.

The new rules lifted restrictions that barred companies without revenue in hard currencies from doing such borrowing—as long as the loans exceeded $5 million. “It was tantamount to saying: If you drink, drink a lot,” said one official in Ankara, Turkey’s capital.

In the following years, Turkish companies gorged on euro and dollar loans, granting Mr. Erdogan’s wish of brawny economic expansion that helped him and his ruling Justice & Development Party power through successive national and local elections. Memories of the 2009 recession evaporated, as did those of the 1990s crisis that had led Turkey to seek international assistance.

Mr. Erdogan was, in effect, mirroring in ways the approach of Chinese President Xi Jinping and his party, which consolidated political power in an authoritarian regime and encouraged heavy borrowing to supercharge the economy.

Turkey’s financial trouble shows the limitation of that approach, especially for countries more susceptible to the forces of global finance and without the kind of control exerted by China’s Communist Party. Vulnerabilities in the Turkish expansion model were so severe it took only two tweets by President Trump in recent weeks—one announcing sanctions against two Turkish officials and another on the doubling of some tariffs—to spark panic.

Nonfinancial corporations built a $330 billion debt pile that is now at the heart of global investor concerns over Turkey’s perilous financial situation. Compounded by a protracted dispute with the U.S. over the fate of an American pastor, those concerns have caused a currency debacle, with the Turkish lira collapsing to its lowest level ever against the dollar on Monday.

Although the lira pared some of its losses, it has shed roughly a third of its value against the dollar since the start of the year. On Friday, the lira sank more than 4% against the dollar after the U.S. administration threatened new penalties against the country over its detention of the pastor, Andrew Brunson. In late European trading Friday, a dollar bought 6.12 lira; a month ago, it bought 4.75.

The lira’s drop has sent ripples through the global financial system, raising concerns about the exposure of some European banks and denting investor appetite for emerging markets.

“It feels like going back to the 1990s,” when a deep Turkish financial crisis had ripple effects on global finance, said Zumrut Imamoglu, chief economist at Tusiad, one of Turkey’s leading industry and business-lobbying groups.

Among businessmen caught on the wrong side of the lira is Atilla Kulekcioglu. In April, Citir Usta, the food chain he founded in 2003, filed for protection from creditors over debt of more than 10 million lira. Mr. Kulekcioglu said he had always resisted the temptation of contracting foreign-currency loans because clients pay in lira for the pide, a Turkish dish similar to flatbread he serves at his restaurants.

Yet, the shopping malls that house his outlets, built on the back of euro or dollar loans, charge rents indexed on foreign currencies, he said. Unable to pass on the higher rent costs to his customers, Mr. Kulekcioglu said he closed 25 of his 65 restaurants and began scouting for foreign investors. “We were one of the four biggest chains in the sector,” he said.

Investor concerns over Turkey’s vulnerable finances have long been pervasive, especially as Mr. Erdogan consolidated his one-man rule and increased his sway over the central bank and monetary policy. In the spring, Mr. Erdogan called snap elections. And in June, he won a new five-year mandate that came with expanded executive powers, securing his political future before those concerns took hold.

The currency storm was a far cry from Mr. Erdogan’s electoral promise to place Turkey among the world’s top 10 economies by the end of his term from its current rank of 17th. As the lira storm raged last weekend, the president was touring the Black Sea region, delivering speeches to thank voters for his re-election. He made no mention of the corporate-debt challenge. Rather, he denounced the tariffs the U.S. has introduced on some Turkish imports as an “act of economic war.”

“Once again, we are facing a surreptitious political plot,” he told supporters in the Black Sea town of Trabzon on Sunday. “God permitting, we will overcome this.”

On Thursday, Turkish Finance Minister Berat Albayrak—Mr. Erdogan’s son-in-law—said on a conference call with about 3,000 investors and financial analysts that the lira rout was excessive and didn’t reflect Turkey’s core economic strength.

Economists say years of heavy corporate borrowing, during which liquidity minted by the U.S. Federal Reserve and other central banks met Mr. Erdogan’s thirst for higher economic growth, has reached a limit.

Refet Gurkaynak, a professor of economics at the Bilkent University in Ankara, said souring U.S. relations were a trigger that awakened investors to the reality of Turkey’s financial pain.

“The problem here is that our corporate sector is deeply, deeply indebted,” he said, warning of a looming rise in defaults and layoffs. “You can’t dump all the corporate problems on the banks, so there will have to be some sharing of the problems by the banks and the government, hence the public.”

Turkish officials didn’t reply to messages seeking comment. During his call with investors, Mr. Albayrak said the government would announce a detailed action plan in September.

At the start of his national political career, Mr. Erdogan cut a more accommodating figure. When he became prime minister in 2003, Turkey was two years into a bailout plan run by the International Monetary Fund, receiving billions of dollars of loans in exchange for implementing the fund’s recipe of fiscal and budget rigor.

Carrying out the remaining IMF measures, Turkey reaped the benefits with lower inflation and a jump in exports, becoming a darling of emerging-market investors. Europeans greeted Mr. Erdogan as a strategic partner and, in December 2004, the European Union formally granted Turkey the right to begin accession talks, kicking off large aid and investment programs.

At a conference around that time at the European Parliament, Franco-German lawmaker Daniel Cohn-Bendit walked up to the Turkish leader, video of the meeting shows. “Mr. Erdogan, I have a present for you,” the lawmaker said, handing him a coin. “The first euro in Turkish.”

With the flow of money, Turkey became a construction site, as Mr. Erdogan, who had developed a penchant for infrastructure projects when he was Istanbul’s mayor in the 1990s, launched train, highway and bridge projects. Istanbul’s skyline, which counted 19 high-rises when he became prime minister, now has 98, according to the Council on Tall Buildings and Urban Habitat, a Chicago-based nonprofit.

In 2007, his honeymoon with the EU took a hit. Several European leaders, such as then-President Nicolas Sarkozy of France, publicly said they would veto Turkey’s membership to the bloc.

In 2008, the IMF assistance program expired. Mr. Erdogan minimized the fund’s role, instead crediting his own stewardship for Turkey’s economic miracle and vowing to follow his own course.

Durmus Yilmaz, an opposition lawmaker, said Mr. Erdogan and his ruling AKP party began behaving more confidently. “After 2008, they felt they knew better,” said Mr. Yilmaz, a former governor of Turkey’s central bank.

That is when the global recession hit Turkey. In the first quarter of 2009, the Turkish economy shrank more than 13%. The government switched to expansionary measures such as the easing on foreign-currency loans.

Within months, the Turkish economy was back on its feet. Mr. Erdogan wanted more growth and didn’t reduce budget spending. “With demand increasing a lot in an economy that was already at full capacity,” said Mr. Gurkaynak, the economics professor, “we began to run the humongous current-account deficit and inflation began to creep up.”

In May 2013, then Turkish Deputy Prime Minister Ali Babacan boasted that Turkey had finished paying its $23.5 billion IMF debt. “For the first time in 19 years, Turkey owes no debt to the IMF,” Mr. Babacan said after initiating the final wire transfers from a computer at Turkey’s central-bank headquarters.

Two weeks later, two tremors shook Turkey. One came from the U.S., where then Federal Reserve Chairman Ben Bernanke signaled in an address to Congress that years of Fed stimulus might come to an end. For Turkey, the message was a warning that the days of easy access to foreign funding, vital to plugging holes in its current account, could be numbered.

The other occurred in Istanbul, where a small sit-in protesting the destruction of the tree-lined Gezi park escalated into nationwide, often-violent protests against Mr. Erdogan’s increasingly authoritarian rule.

Mr. Bernanke’s speech and the political upheaval weighed on the lira, which lost ground against the dollar, heightening pressure on the Turkish central bank to raise interest rates. But Mr. Erdogan vetoed a rate increase. In a series of speeches in June, he blamed what he called “the interest-rate lobby” for the Gezi protests and negative pressure on the lira.

“He believes the economy works in a way that is different from what the faculty says” in economic literature, said Mr. Yılmaz, the former central-bank governor.

After a failed coup in July 2016, the Turkish economy shrank abruptly. The emergency rule introduced by the government spooked foreign companies, which sharply cut direct investment.

Last year, the government dramatically expanded its support to small companies through a state fund that guaranteed bank loans worth about 200 billion lira in total, up from about 15 billion in 2016. Economists say the move helped turbocharge the Turkish economy to a growth rate of 7.4% in 2017, the highest of all Group of 20 economies.

At the start of 2018, the lira was falling on simmering concerns over Turkey’s large corporate debt. Some of the president’s advisers talked on television about the need to cool Turkey’s economic engine after such a bewildering run.

But surrounded by businessmen in a hall of the presidential complex in April, Mr. Erdogan distributed framed “incentive certificates” as he announced another $34 billion stimulus program.

“Some people say ‘too much growth is not a good thing,’ ” he said. “Why? Because they are jealous. It is nothing else.”

The fallout has been harsh on companies such as partly state-owned Turk Telekom , Turkey’s largest phone operator. Last month, it blamed a second-quarter net loss of 889 million lira on “unfavorable forex movements,” saying almost all of its bank borrowings, which stood at 14.7 billion lira as of June 30, were in dollars and euros. Stripping out those effects, it said, it would have posted a net profit of 676 million lira.

“Turk Telekom has debt in foreign currencies but this is at a manageable level and actually is a low amount,” a Turk Telekom spokeswoman said Friday.

Having announced this spring his intention to seek a new mandate, Mr. Erdogan hit the campaign trail. He promised that a landmark mosque in Istanbul and the city’s new airport, cast as the world’s biggest, would soon be completed. He announced details of a grand project to connect the Black and Marmara seas with a canal that would house a population of seven million along its banks.

In May, the lira’s drop intensified after the president told a London conference he intended to have a bigger say in monetary policy in the future. In a bid to support the Turkish currency, the central bank sharply raised interest rates. That same month, the government reintroduced most of the restrictions on foreign-currency loans it had lifted in 2009.

“That was too late,” said Ms. Imamoglu, the Tusiad economist. “They should have done it before 2015.”

Write to David Gauthier-Villars at David.Gauthier-Villars@wsj.com

https://www.wsj.com/articles/how-ergodans-push-for-endless-growth-brought-turkey-to-the-brink-1534526348?mod=pls_whats_news_us_business_f

Late to the Driverless Revolution

Early in 2011, two top engineers for Google traveled together to Detroit on what amounted to a diplomatic mission. They had just spent 18 months on a top-secret project called Chauffeur: the development of a car that could drive itself over 10 different 100-mile routes on public roads. Now they were looking for a partner to carry the project forward. “The idea was, if you’re going to make self-driving cars, you have to work with a car company,” recalls Chris Urmson, who made the trip with fellow engineer Anthony Levandowski….

https://www.wsj.com/articles/late-to-the-driverless-revolution-1534520404?mod=rss_Technology

U.S. Consumer Sentiment Soured in August

U.S. consumer sentiment slid in August to its lowest level in nearly a year, as consumers registered concern about rising prices.

The University of Michigan said Friday its preliminary index of consumer sentiment was 95.3 this month, down from July’s final reading of 97.9 and the lowest level since last September.

Economists surveyed by The…

https://www.wsj.com/articles/u-s-consumer-sentiment-soured-in-august-1534519043?mod=pls_whats_news_us_business_f

Trump Asks SEC to Study Six-Month Earnings Reporting

WASHINGTON—President Trump on Friday said he asked the Securities and Exchange Commission to consider scaling back how often public companies report results to investors, citing business leaders who say it could promote growth.

In a tweet early Friday morning, Mr. Trump said he consulted “some of the world’s top business leaders” on steps to create jobs and make business “even better.” He said one had told him, “Stop quarterly reporting & go to a six month system.”

https://www.wsj.com/articles/trump-directs-sec-to-study-six-month-reporting-for-public-companies-1534507058?mod=pls_whats_news_us_business_f

U.S. Leading Economic Indicators Rose in July

An economic index that measures U.S. business trends rose again July.

The Conference Board Leading Economic Index increased 0.6% in July to 110.7. Economists polled by The Wall Street Journal expected a 0.5% gain in the index.

Comprising 10 factors, including initial claims for jobless benefits, factory orders and the S&P 500’s price change,…

https://www.wsj.com/articles/u-s-leading-economic-indicators-rose-in-july-1534517532?mod=pls_whats_news_us_business_f

When Digital Platforms Become Censors

Call 2018 the “Year of Deplatforming.” The internet was once celebrated for allowing fresh new voices to escape the control of gatekeepers. But this year, the internet giants decided to slam the gates on a number of people and ideas they don’t like. If you rely on someone else’s platform to express unpopular ideas, especially ideas on the right, you’re now at risk. This raises troubling questions, not only for free speech but for the future of American politics and media.

The most famous victim of deplatforming is, not coincidentally, the least popular: Alex Jones, the radio host known for promoting outrageous conspiracy theories about everything from vaccinations to the Sandy Hook massacre. In a concerted action earlier this month aimed at loosely defined “hate speech,” Facebook , Apple , Spotify and YouTube removed from their services most of the material by Mr. Jones and his InfoWars network. Twitter recently followed suit with a seven-day suspension.

Apple cited its “terms of use” in removing InfoWars from its iTunes podcast listings but couldn’t explain why it didn’t remove the InfoWars app, which shares the same content, from its App Store. YouTube made general reference to its “terms of service and community guidelines,” but didn’t say what Mr. Jones had done wrong. Facebook’s reasons were similarly vague.

Their evasiveness isn’t hard to explain. After all, Mr. Jones isn’t doing anything different from what he has been doing for years. The real reason for his removal is that technology companies don’t like his views and have come under increasing pressure to deny him the use of their platforms.

Nor is it just Alex Jones who’s been subjected to digital unpersoning lately. The Austin-based “crypto-anarchist” Cody Wilson creates and distributes designs for guns that can be produced using 3-D printers. Shopify recently shut down the online storefront of Mr. Wilson’s company, Defense Distributed.

But there is nothing illegal about what Mr. Wilson is doing—he recently won two First Amendment victories in federal court—and he did not violate Shopify’s rules. In fact, since 2017, Shopify has operated according to a self-declared “free speech” policy regarding what people can sell on its site. Unable to explain its grounds for excluding Mr. Wilson, the company has now overturned that policy. It is also worth noting that a site set up to support Mr. Wilson, CodeIsFreeSpeech.com, has been blocked by Facebook.

This week, Vice co-founder Gavin McInnes was suspended from Twitter along with his far-right Proud Boys organization, who call themselves “Western chauvinists,” though they say they oppose white supremacy. Twitter doesn’t like them, and it doesn’t like their politics. But even a mainstream conservative figure like radio host and author Dennis Prager has complained that YouTube placed age restrictions on some of the videos he produced. Facebook blocked an advertisement for Republican Congressional candidate Elizabeth Heng, ostensibly because her video mentioned the Cambodian genocide, which her family survived. Microsoft even threatened to shut down the web services used by conservative Twitter-competitor Gab because a single user on the network had posted anti-Semitic content.

If internet megaplatforms like YouTube and Facebook were publishers, none of this would be especially problematic. One of the essential duties of a publisher is deciding what to publish and what not to publish. The Supreme Court has even held, in Miami Herald v. Tornillo (1974), that the law can’t compel newspapers to print replies to their articles, because it would interfere with their choice of what to publish.

But internet platforms don’t want to be treated as publishers, because publishers are also responsible for their decisions. If a newspaper publishes a libelous story, it can be sued. If it infringes someone’s copyright, it can be held liable for damages. And everything it chooses to publish or not to publish is a reflection on its reputation.

Today, the big internet companies are treated not as publishers but as conduits—tools that other people use to spread their own ideas. That’s why the “safe harbor provision” of the 1996 Communications Decency Act, a landmark in internet regulation, states that platforms aren’t legally responsible for what other people publish on their sites. The law was originally intended to protect things like newspaper comment sections, but its application has become very broad, encompassing virtually all of the content on social media and sharing sites.

Now these companies are trying to have it both ways. They take advantage of the fact that they are not publishers to escape responsibility for the endless amounts of problematic material on their sites, from libel to revenge porn. But at the same time, they are increasingly acting like publishers in deciding which views and people are permitted on their platforms and which are not. As a narrow matter of First Amendment law, what these companies are doing will probably pass muster, unless some federal court decides, as in Marsh v. Alabama (1946), that their platforms are functionally equivalent to “company towns,” where the public square is privately owned.

More Essays

As a more general issue of free speech, however, the fact that a few corporations can play such a disproportionate role in deciding what subjects are open for debate is a problem. It is made more so by the pronounced leftward leanings of the big tech companies, which lately appear determined to live up to the right’s worst fears about them. Extremists and controversialists on the left have been relatively safe from deplatforming.

Some politicians are fine with corporations putting their thumbs on the scale. Senator Chris Murphy (D., Conn.) wants more online censorship, not less. He tweeted that Mr. Jones’s InfoWars site is just the “tip of a giant iceberg of hate and lies,” and that “These companies must do more than take down one website. The survival of our democracy depends on it.” But the tech giants rightly fear legislation that will force them to be open to everyone, or perhaps worse, that will make them financially responsible for everything published on their platforms.

The notion that Silicon Valley megabillionaires are actively limiting what ordinary Americans can talk and write about is likely to produce a backlash. The tech industry’s image has already suffered over revelations about Facebook’s experiments aimed at manipulating users’ newsfeeds to test their emotional states, as well as various cases of invasion of privacy and data mishandling. Twenty years ago, most Americans saw Silicon Valley as liberating; now it seems to have gone from the hammer-wielding woman in that famous “1984” Apple commercial to the Big Brother figure up on the screen.

And then there is the competition angle. Mr. Jones’s InfoWars is itself a media operation, in competition not only with Facebook and YouTube but with cable channels like CNN and MSNBC, which have made him a target. What happened to Mr. Jones could be described as “a conspiracy in restraint of trade,” in which one group of media companies gets another group of media companies to knock off a competitor.

One of the arguments for leaving tech industries unregulated has been that the industry is in constant ferment. But with a few companies now dominating the field, that ferment is less likely to continue. When giant companies combine to kick out their competitors and start interfering in politics, you can be sure that, even if they claim they are acting in the interests of decency, that’s not where it will end.

https://www.wsj.com/articles/when-digital-platforms-become-censors-1534514122?mod=rss_Technology

Tesla Was Under Regulator Scrutiny Prior to Musk’s Tweet

Securities regulators began investigating last year whether Tesla Inc. TSLA -3.60% misled investors about its Model 3 car production problems, according to people familiar with the matter.

The Securities and Exchange Commission subpoenaed a parts supplier for the auto maker as part of the probe, one of the people said, well before the regulators began looking into Elon Musk’s tweet last week about taking the company private.

Regulators have also subpoenaed Tesla’s directors seeking to learn what they knew about Mr. Musk’s plan to take Tesla private, according to another person familiar with the matter.

Both issues are being handled by the SEC’s San Francisco office, one of the people said.

The Wall Street Journal reported in October that the Tesla assembly plant’s body shop wasn’t fully installed until around September and that major portions of the Model 3 were being hand built weeks after Mr. Musk announced production had begun in July 2017. As production started, he claimed about 1,600 cars would be made in the third quarter of 2017 before reaching 20,000 in December. Those forecasts were far below what he predicted roughly a year earlier, when he said as many 200,000 Model 3s would be made in the second half of 2017.

Instead, Tesla made 2,700 Model 3s during 2017. The sedan, priced to start at $35,000, is designed to propel the luxury electric-car maker into the mainstream.

Under U.S. securities law, Tesla and its executives could face sanctions if regulators determine they misled investors about the cause or extent of production delays. SEC probes can last months or even years, and sometimes end without the regulator charging a target with wrongdoing.

An SEC spokesman declined to comment.

Tesla didn’t respond to a request for comment.

Brad Bennett, a lawyer at Baker Botts LLP, said the SEC has brought enforcement actions in the past against companies over operational projections. They are hard claims to prove, he said, because they require digging into the details of what a company is building.

“You would have to prove the speaker didn’t believe those things, or there was no rational basis for it,” said Mr. Bennett, who was formerly director of enforcement for the Financial Industry Regulatory Authority.

Tesla already faces private litigation in a San Francisco federal court, where a group of investors alleged the company misled investors about how quickly it could ramp up Model 3 production. Tesla has argued for the class-action lawsuit to be dismissed, saying it disclosed production problems in a timely fashion.

Regarding Mr. Musk’s hope to take Tesla private, regulators are pressing Tesla’s directors to reveal how much information Mr. Musk shared with them before he tweeted about it last week.

The SEC is investigating whether Mr. Musk intentionally misled investors when he tweeted about the proposal in a bid to hurt short sellers by driving up Tesla’s stock price, a person familiar with the matter said.

Establishing what the board knew and when is key to the SEC’s probe. For instance, if Mr. Musk didn’t show the board a relatively firm deal with potential investors, it could indicate that the conversations weren’t as far along as he suggested when he tweeted that he had “funding secured” for a deal.

Mr. Musk surprised investors on Aug. 7 when he tweeted that he was considering taking the electric-car maker private at $420 a share, or $72 billion. Tesla shares surged on the news. The next day, Tesla’s independent directors said Mr. Musk had informed them about the proposal the prior week.

In a blog post on Tesla’s website Monday, Mr. Musk clarified that discussions with Saudi Arabia’s sovereign-wealth fund about financing the deal were the basis for his assertion. He said the fund hadn’t signed off on a deal.

Mr. Musk often wields his Twitter account as a weapon against short sellers, or those who bet that Tesla’s stock price will go down, and he has said going private would end “negative propaganda” from investors betting against Tesla. On June 17, Mr. Musk tweeted that short sellers “have about three weeks before their short position explodes.”

A person who intentionally misleads shareholders can be charged with fraud under U.S. securities laws. If Mr. Musk can show he had a basis to make the statement—such as advanced talks with the Saudi fund or a promise from them to fund the deal—regulators would be less likely to allege that his statement was misleading or false.

To go private, Mr. Musk would have to pare back the number of Tesla stockholders. Firms with over 2,000 shareholders—or more than 500 retail investors who don’t meet certain wealth and income thresholds—are required to report results quarterly and provide detailed risk disclosures.

But Mr. Musk outlined an unorthodox setup for a potential deal, saying he expected a significant number of the company’s shareholders would remain after Tesla became a private firm. He estimated about two-thirds of all shares owned by current investors would be rolled over into a private Tesla.

Mr. Musk and Tesla insiders own about 25% of Tesla, and individual investors hold a little more than 17% of the stock. The rest—nearly 58%—is held by big institutional investors, according to FactSet.

Write to Dave Michaels at dave.michaels@wsj.com, Emily Glazer at emily.glazer@wsj.com and Tim Higgins at Tim.Higgins@WSJ.com

Appeared in the August 17, 2018, print edition as ‘SEC Was Probing Tesla Before CEO Tweet.’

https://www.wsj.com/articles/sec-pressing-tesla-directors-for-details-on-communications-with-elon-musk-1534450010?mod=rss_Technology

Trump Directs SEC to Study Six-Month Earnings Reporting

WASHINGTON—President Trump on Friday said he asked the Securities and Exchange Commission to consider scaling back how often public companies report results to investors, citing business leaders who say it could promote growth.

In a tweet early Friday morning, Mr. Trump said he consulted “some of the world’s top business leaders” on steps to create jobs and make business “even better.” He said one had told him, “Stop quarterly reporting & go to a six month system.”

Mr. Trump said the move would promote flexibility and save money for firms.

“I have asked the SEC to study!” the president wrote.

Mr. Trump’s comments could reignite a long-running debate over whether there is too much emphasis on quarterly results at the expense of long-term investment and growth. They also are likely to pressure the SEC to accelerate its work on cutting red tape that affects capital-raising decisions.

SEC Chairman Jay Clayton hasn’t to date embraced the idea of moving away from quarterly reporting, which is a bedrock principle of laws that date to the Great Depression.

In opinion article in The Wall Street Journal earlier this year JP Morgan Chase Chief Executive Jamie Dimon and Berkshire Hathaway Chairman Warren Buffett said companies should stop giving quarterly earnings guidance, saying it puts too much weight on hitting short-term targets and discourages longer-term investment. Mr. Dimon chairs the Business Roundtable, a group of CEOs who lobby Washington and announced support halting quarterly guidance.

At the same time, the executives said they still supported quarterly reporting, saying transparency about results is an “essential aspect of U.S. public markets” and that quarterly and annual results let the public “reliably assess real progress.”

A Treasury Department report issued last October proposing regulatory changes to make it easier for companies to raise capital didn’t address how often companies should disclose results to investors. The report said smaller firms need more flexibility to raise money, but suggested more targeted measures such as scaling back specific rules related to audits and executive-pay disclosures.

Write to Dave Michaels at dave.michaels@wsj.com and Michael Rapoport at Michael.Rapoport@wsj.com

https://www.wsj.com/articles/trump-directs-sec-to-study-six-month-reporting-for-public-companies-1534507058?mod=pls_whats_news_us_business_f

Deere Considers Cost Cuts, Higher Prices

Deere DE -0.76% & Co. reported strong demand in its construction and farming markets in the latest quarter but said it would cut costs and raise prices due to higher raw material and logistics expenses.

Costs for steel and aluminum have been pushed up by U.S. tariffs on imported metal and a nationwide truck shortage has led to increased shipping expenses for many companies.

Deere is just the latest manufacturer to face concerns over whether rising costs will take away some of the gains from a strong global economy.

Shares fell 3.2% in premarket trading as the company posted adjusted earnings per share in the quarter that were below analyst expectations.

Deere also said Friday it continued to see demand for agricultural equipment in its third quarter even as customers worried what potential tariffs on farmed products would mean to their businesses.

“Replacement demand for large agricultural equipment is driving sales even in the face of tensions over global trade and other geopolitical issues,” Deere Chief Executive Sam Allen said.

The Moline, Ill., company reaffirmed its overall revenue and profit forecast for the year.

The company predicts overall sales of farm and construction equipment will increase by about 30% for the year ending Oct. 31, up from $33.7 billion the previous year. The company continues to forecast adjusted net income of $3.1 billion.

Total revenue rose 32% to $10.31 billion. Third-quarter results were boosted by the company’s December purchase of German road-paving equipment company Wirtgen Group for €4.48 billion ($5.33 billion).

The company now expects sales of farm equipment to grow 15% this year, up from its prior forecast due to more favorable dairy and livestock sectors.

The company expects sales in its construction equipment unit to jump 81% this year, with 55% due to the Wirtgen deal, as it also sees increased home building in the U.S., more activity in the oil and gas sector and economic growth globally.

In all for the quarter ended July 31, Deere reported net income of $910.3 million, or $2.78 per share, up from $641.8 million, or $1.97 per share, a year earlier. On an adjusted basis, excluding certain items, the company earned $2.59 a share, as equipment sales rose 36% to $9.29 billion. Analysts were expecting $2.75 a share on sales of $9.21 billion.

Write to Bob Tita at robert.tita@wsj.com and Austen Hufford at austen.hufford@wsj.com

https://www.wsj.com/articles/deere-considers-cost-cuts-and-higher-prices-1534508670?mod=pls_whats_news_us_business_f