MORNING NEWS CALL

TOP NEWS

• Trump says May's Brexit plan kills hope of a U.S. trade deal

President Donald Trump directly criticised Prime Minister Theresa May's Brexit strategy, saying it had probably killed off hope of a

U.S.-British trade deal and that she had failed to take his advice on how to negotiate with the European Union.

• JPMorgan reports 18.3 percent rise in profit

JPMorgan Chase reported an 18.3 percent rise in quarterly profit, helped by tax gains, a rise in interest rates and higher trading reve-

nue.

• China's trade surplus with US hits record as exporters rush to beat tariffs

China's trade surplus with the United States swelled to a record in June as its overall exports grew at a solid pace, a result that could

further inflame a bitter trade dispute with Washington.

• PNC Financial quarterly profit rises 25 percent

PNC Financial Services Group posted a 25 percent rise in quarterly profit, as the U.S. regional bank earned more from higher interest

rates and fee income rose.

• Jury orders J&J to pay $4.7 billion in Missouri asbestos cancer case

A Missouri jury on Thursday ordered Johnson & Johnson to pay a record $4.69 billion to 22 women who alleged the company's talc-

based products, including its baby powder, contain asbestos and caused them to develop ovarian cancer.

BEFORE THE BELL

Wall Street futures were little changed as investors keenly await a flurry of bank results through the day. European shares were

higher as optimism about the next corporate earnings season picked up, and Asian stocks closed mostly up. The dollar strength-

ened amid trade tensions between U.S. and China, while the euro and gold prices dipped. Oil prices fell as Libyan ports reopened

and on hopes that Iran will export oil despite U.S. sanctions.

STOCKS TO WATCH

Results

• JPMorgan Chase & Co (JPM). The bank reported an 18.3 percent rise in quarterly profit, helped by tax gains, a rise in interest

rates and higher trading revenue. The bank said net income rose to $8.32 billion, or $2.29 per share, in the second quarter ended

June 30, from $7.03 billion, or $1.82 per share, a year earlier. Analysts were expecting earnings of $2.22 per share. It was not imme-

diately clear if the reported numbers were comparable with estimates.

• PNC Financial Services Group Inc (PNC). The firm posted a 25 percent rise in quarterly profit, as the U.S. regional bank earned

more from higher interest rates and fee income rose. Net income attributable to diluted common shares rose to $1.28 billion, or $2.72

per share, in the second quarter ended June 30, from $1.03 billion, or $2.10 per share, a year earlier. Revenue rose to $4.32 billion

from $4.06 billion a year ago.

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MORNING NEWS CALL

Moves

• Northrop Grumman Crop (NOC). The company said on Thursday its Chief Executive Officer Wes Bush would step down, effective

January 1, 2019. The company said its board has elected Chief Operating Officer Kathy Warden to take over Bush's role early next

year. Northrop said Warden will join the board of directors, effective immediately.

In Other News

• Apple Inc (AAPL). The company will launch a $300 million clean energy fund in China, the firm said in a statement, working with its

suppliers to invest in renewable energy projects that could power close to 1 million homes in the country. Apple's chief executive Tim

Cook earlier this year called for calm heads in Washington and Beijing as the world's two largest economies have veered towards a

trade war and exchanged tit-for-tat tariffs on billions of dollars of goods.

• Apollo Global Management LLC (APO). The firm and its Chief Executive Leon Black are being sued by Caldera Holdings, a ven-

ture founded by Imran Siddiqui, a former managing director at the buyout firm, a court filing on Thursday showed. Caldera's com-

plaint, filed in the New York Supreme Court, alleges that Apollo pursued a campaign of "systematic defamation and interference,"

including "disparaging the company in the marketplace." Caldera is also asking for at least $1.5 billion in damages, according to the

filing. "We strongly believe Caldera's claims completely lack any merit, and we intend to defend ourselves vigorously," Apollo spokes-

man Charles Zehren said in an emailed statement.

• AT&T Inc (T). The U.S. Justice Department said on Thursday it would appeal a federal judge's approval of the entertainment com-

pany’s $85.4 billion acquisition of Time Warner, raising the prospect barely a month after the deal closed that it could be un-

done.AT&T Chief Executive Randall Stephenson told reporters on Thursday at a conference in Sun Valley, Idaho, that the company

was not surprised about the Justice Department's decision to appeal. "They have the right to appeal. Everyone has the right to ap-

peal. We have a very fact-based thoughtful order. It will be evaluated on those grounds," he said.

• Boeing Co (BA). Britain's government is nearing a decision to buy four to six surveillance planes built by the aerospace giant

sources familiar with the plans said on Thursday, a move that could stir a growing debate over UK and European defence jobs.

The contract to replace its six ageing E-3D Sentry airborne early warning planes with a fleet of Boeing E-7 Wedgetail jets would, if

confirmed, be worth over $1 billion. But the decision, which could be announced in coming weeks, is likely to anger some UK law-

makers who have called for a full competition, and may also spark formal protests by European defence companies keen for the busi-

ness.

• Build-A-Bear Workshop Inc (BBW). The global stuffed-animal retailer had to limit a popular pay-your-age event on Thursday as

long lines stretched outside its U.S., Canada and UK stores and crowds clogged mall corridors. The one-day promotion, available

only in the retailer's stores, allowed customers to buy a furry friend for a dollar price equal to the person's age. Customers would pay

a minimum of $1 and no more than $29 for any stuffed animal in stock. Teddy bears were priced from $6 to $75 on the store's web-

site on Thursday. The promotion included stores in the United States, Canada and the United Kingdom.

• Facebook Inc (FB). The social media giant has assured the Indonesian government that personal data of about one million of its

citizens had not been improperly accessed by political consultancy Cambridge Analytica. Indonesia, where more than 115 million

people use Facebook, has also been pressing the firm to explain how its citizens' personal data was harvested by Cambridge Analyti-

ca via a personality quiz. "Facebook has reported to the Communications Ministry that no data from any Indonesian users was col-

lected," Deputy Communications Minister Semuel Pangerapan said.

• Johnson & Johnson (JNJ). A Missouri jury on Thursday ordered the company to pay a record $4.69 billion to 22 women who al-

leged the company's talc-based products, including its baby powder, contain asbestos and caused them to develop ovarian cancer.

The verdict is the largest J&J has faced to date over allegations that its talc-based products cause cancer. The company is battling

some 9,000 talc cases. J&J denies both that its talc products cause cancer and that they ever contained asbestos. It says decades of

studies show its talc to be safe and has successfully overturned previous talc verdicts on technical legal grounds.

• Kellogg Co (K).The U.S. Food & Drug Administration said on Thursday recalled the company’s Honey Smacks cereal was still be-

ing sold at retail outlets and warned consumers not to purchase the product. Kellogg in June recalled an estimated 1.3 million cases

of its Honey Smacks cereal from more than 30 U.S. states due to the potential for Salmonella contamination. The FDA said on Thurs-

day it would follow up with retailers to prevent the sale of the product.

• McDonald Corp (MCD) The Iowa and Illinois health departments said on Thursday that they were investigating cyclospora infec-

tions linked to salads at the company’s restaurants. The Illinois Department of Public Health said it had seen about 90 cases, and the

Iowa Department of Public Health said it had recorded 15 cases.In about one-fourth of the Illinois cases people reported eating sal-

ads from McDonald's in the days before they became ill. McDonald's said in a statement that it had been in contact with public health

authorities in both states.

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MORNING NEWS CALL

• Netflix Inc (NFLX). An Indian politician has taken the streaming giant to court, asking that it delete "offensive scenes" and derogato-

ry remarks about former Prime Minister Rajiv Gandhi in its first Indian original series. The Delhi High Court adjourned the case on

Thursday to give judges and respondents time to study the petition filed by Nikhil Bhalla, a lawyer and a member of the opposition

Congress party, which Gandhi led for seven years until his assassination in 1991.

• Total SA (TOT). The oil and gas major said that it has completed a $1.5 billion deal to acquire Engie's upstream Liquefied Natural

Gas (LNG) business to become the second-largest player in the global LNG market. Under the deal, Total said it would make addi-

tional payments of up to $550 million to Engie if there was an improvement in the oil markets in the coming year. Total Chief Execu-

tive Patrick Pouyanne said in a statement that the deal will give the company a worldwide market share of 10 percent.

• Twitter Inc (TWTR). A company policy change on Thursday to increase the service's credibility cost its 100 most popular users

about 2 percent of their followers, on average, according to social media data firm Keyhole. Twitter is no longer counting as followers

any accounts that have been locked because of suspected fraud, Chief Executive Jack Dorsey posted on Thursday. Locked accounts

had already been kept out of Twitter's daily and monthly active user figures. The accounts are locked if Twitter detects unusual be-

havior such as a burst of activity after months of dormancy.

• Walmart Inc (WMT). The retailer on Thursday said it has not decided to sell its Japanese supermarket chain Seiyu and would con-

tinue to develop its business in Japan. "Walmart has not made a decision to sell Seiyu. We are not in any discussions with prospec-

tive buyers, and we continue to build our Japan business towards the future to meet the changing needs of customers there," a

spokesperson for Walmart told Reuters.

• Walt Disney Co (DIS). Britain's Takeover Panel said that the entertainment company would need to make a minimum bid of 14

pounds per share for Sky if it succeeds in buying Twenty-First Century Fox. Sky plans to request that the hearings committee be con-

vened in order to review this ruling and each of Disney and Fox is considering its position, the Panel said. The 14 pounds per share is

lower than Comcast's offer of 14.75 pounds per share, but at par with Fox's current bid.

ANALYSIS

Fed's escape from crisis holdings could hit dead end

Not long ago the Federal Reserve expected to quietly shed nearly half of its $4.5-trillion portfolio by around 2022, leaving little trace of

the extraordinary steps it took to face down the financial crisis. But an unexpected market kink could force the Fed to scrap the plan

two or three years early and permanently leave it holding $1 trillion more than it wanted.

ANALYSTS' RECOMMENDATION

• Acceleron pharma Inc (XLRN). Morgan Stanley cuts rating to equal-weight from overweight, on expectations of limited near-term

upside to the company shares post luspatercept Phase-III data

readouts.

• Alliance Data Systems Corp (ADS). BMO raises target price to $240 from $230, expecting the company’s card services and brand

loyalty to drive strong earnings growth for 2018.

• Alphabet Inc (GOOG). Cowen and Company raises price target to $1,350 from $1,245, to reflect strong core business of the com-

pany, especially Search and YouTube.

• BlackRock Inc (BLK). KBW raises rating to outperform from market perform, on a belief that recent sell-off in the company has cre-

ated a better entry point for investors and now offers a better risk/reward given its strong positioning in faster-growing parts of the

industry.

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MORNING NEWS CALL

ECONOMIC EVENTS (All timings in U.S. Eastern Time)

0830 Import prices mm for June: Expected 0.1 pct; Prior 0.6 pct

0830 Export prices mm for June: Expected 0.2 pct; Prior 0.6 pct

1000 U Mich Sentiment Preliminary for July: Expected 98.2; Prior 99.3

1000 U Mich Conditions Preliminary for July: Prior 117.9

1000 U Mich Expectations Preliminary for July: Prior 87.4

1000 U Mich 1 year inflation preliminary for July: Prior 2.9 pct

1000 U Mich 5-year inflation preliminary for July: Prior 2.6 pct

COMPANIES REPORTING RESULTS

Citigroup Inc (C). Expected Q2 earnings of $1.56 per share

Wells Fargo & Co (WFC). Expected Q2 earnings of $1.12 per share

CORPORATE EVENTS (All timings in U.S. Eastern Time)

0830 JPMorgan Chase & Co (JPM). Q2 earnings conference call

0930 PNC Financial Services Group Inc (PNC). Q2 earnings conference call

1000 First Republic Bank (FRC). Q2 earnings conference call

1000 Wells Fargo & Co (WFC). Q2 earnings conference call

1130 Citigroup Inc (C). Q2 earnings conference call

EXDIVIDENDS

Alamo Group Inc (ALG). Amount $0.11

BankUnited Inc (BKU). Amount $0.21

Hormel Foods Corp (HRL). Amount $0.19

Hercules Capital Inc (HTGC). Amount $0.39

Blackrock Corporate High Yield Fund Inc (HYT). Amount $0.07

IDEX Corp (IEX). Amount $0.43

Life Storage Inc (LSI). Amount $1.00

Microsoft Corp (MSFT). Amount $0.08

(All analysts' estimates are according to Thomson Reuters I/B/E/S)

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MORNING NEWS CALL

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British Prime Minister Theresa May and her husband Philip stand together with U.S. President Donald Trump and first Lady Melania Trump at the entrance to Blenheim Palace, near Oxford, Britain, July 12. REUTERS/Kevin Lamarque

PICTURE OF THE DAY