Market Snapshot* DJIA

18493.06

-77.78

5097.63

-2.52

S&P 500

2168.48

-6.54

10-Year

1.5724%

-1/32

Nasdaq

Monday, July 25, 2016

30-Year

2.2902%

8/32

Euro

$1.09905

+0.0016

$43.13

-1.06

Nymex Crude Source: SIX Telekurs, ICAP plc

Stocks Energy shares led U.S. stocks lower Monday as oil prices fell, pulling major indexes away from record highs.

Treasurys Lackluster demand on a new debt sale generated a bout of selling in the U.S. government bond market on Monday, sending the yield on the two-year note to a one-month high.

Forex The dollar was steady Monday as investors turned their attention to central bank decisions later in the week. The WSJ Dollar Index, which measures the U.S. currency against 16 others, rose 0.1% to 88.14. The dollar rose against the Canadian dollar and emerging-market currencies amid lower oil prices.

Commodities U.S. oil fell to a three-month low as a summer glut coupled with fading demand keep pulling crude prices back from their strongest rally in years.

*preliminary values subject to adjustments

Tomorrow’s Headlines

Verizon Doubles Down on Media With Yahoo Deal Verizon Communications Inc.’s planned $4.83 billion acquisition of Yahoo Inc. deepens the nation’s largest wireless carrier’s investment in digital media but hands it a troubled company in need of restructuring. By combining Yahoo’s content and its one billion monthly active users with Verizon’s 110 million customers, executives from both companies said the transaction would help Verizon achieve its goal of increasing its global audience to two billion users and $20 billion revenue by 2020. Acquiring Yahoo will bring in more viewers from Yahoo sites like Finance, Sports and News. The carrier also will gain the rights to royalty payments from Yahoo Japan worth tens of millions of dollars annually. But it will also assume about $1 billion worth of employee stock-based awards. The deal “takes us from being millions in terms of audience to billions,” said Marni Walden, Verizon’s head of product innovation and new business, who will oversee the integration of Yahoo into Verizon. That will help the carrier better leverage the advertising platform it acquired from AOL last year, and accelerate revenue growth in its nascent media business. Verizon last year’s $4.4 billion AOL dealoutbid several other suitors to get Yahoo. Private-equity firm TPG, telecom rival AT&T Inc., Vector Capital and a consortium led by Quicken Loans founder Dan Gilbert also submitted final bids for Yahoo, according to a person familiar with the matter. continued on page 2

Tomorrow’s Calendar 7:45 a.m.

8:55 a.m.

9:00 a.m.

9:45 a.m. 10:00 a.m. 10:00 a.m. 10:00 a.m.

4:30 p.m.

N/A

07/23 The Retail Economist/Goldman Sachs Weekly Chain Store Sales Index, Chain Store Sales, W/W% (previous -0.5%), Chain Store Sales, M/M% (previous +1.5%) 07/23 Johnson Redbook Retail Sales Index, Ret Sales Mo-toDate, M/M% (previous -0.5%), Ret Sales Mo-to-Date, Y/Y% (previous +0.6%), Latest Wk, Y/Y% (previous +0.4%) May S&P / Case-Shiller Home Price Index, 10-City Idx, M/M% (previous +1%), 10-City Idx, Y/Y% (previous +4.7%), 20-City Idx, M/M% (previous +1.1%), 20-City Idx, Y/Y% (expected +5.7%), National Idx, M/M% (previous +1%), National Idx, Y/Y% (previous +5%) Jul US Flash Services PMI, PMI, Services (expected 52.0) Jul Richmond Fed Business Activity Survey, Mfg Idx (previous -7), Retail Revenues Idx, Services Rev Idx, Shipments Idx (previous -3) Jul Consumer Confidence Index, Cons Conf Idx (expected 96.7), Expectation Idx (previous 84.5), Present Situation Idx (previous 118.3) Jun New Residential Sales, New Home Sales (expected 560K), New Home Sales, M/M% (expected +1.6%), New Home Sales Months Supply (previous 5.3) 07/22 API Weekly Statistical Bulletin, Crude Stocks, Net Chg (Bbls) (previous -2.3M), Gasoline Stocks, Net Chg (Bbls) (previous +0.8M), Distillate Stocks, Net Chg (Bbls) Refinery Runs (previous -0.5M) U.S. Federal Open Market Committee meeting

Copyright © Dow Jones & Company, Inc. All Rights Reserved. www.dowjones.com

page 1

Monday, July 25, 2016 4 p.m. ET

Tomorrow’s Headlines

criticized it as a sweetheart deal for Baidu’s chief to profit at the expense of public shareholders.

continued

Sprint’s Reboot Gains Ground Sprint Corp. reported strong new customer additions in the latest quarter and signaled it may end the deep discounts it has used to attract new subscribers, raising hope that its turnaround may be taking hold. Shares of the company rose 26% to $5.80, their highest level since late 2014. Sprint added 173,000 postpaid net subscribers—its mostprofitable type of customer—for its fourth-consecutive quarter of additions after several years of losses. By comparison, AT&T Inc. reported last week that is lost 180,000 phone connections in the same period. As a result, Chief Executive Marcelo Claure said the carrier may soon stop the deep discounting it has been using to attract customers, noting that the carrier has been raising prices for unlimited customers. “You will see us move pricing up because we’re committed to increasing the average billing per user,” Mr. Claure said. As Sprint gains momentum in the market and the network improves the company will “move price up,” he said, and will revert to “traditional rate plans” in the “not so distant future.”

Exxon, Saudi Firm Mull Petrochemical Joint Venture Exxon Mobil Corp. is considering a major new petrochemical complex on the U.S. Gulf Coast that would be developed as a joint venture with Saudi Basic Industries Corp., one of the biggest chemical companies in the world. Monday’s announcement is another signal that energy companies continue to find potential investment opportunities even as oil and natural gas prices remain depressed. The project, if developed, would be located in Texas or Louisiana near abundant supplies of cheap natural gas, the companies said. It would also include a stream cracker, which is capable of producing the chemicals used to make plastic products from football helmets to bulletproof vests. No final investment decision has been made yet. The companies plan to carry out further studies and consult with state and local officials to help identify a potential site. Neither company disclosed how much such a complex would cost. A Gulf Coast chemical plant on this size and scale could compete internationally with other similar projects around the world, said Neil Chapman, president of ExxonMobil Chemical Co.

Group Abandons Bid To Buy Out Baidu Video Unit A consortium led by the chief executive of Chinese search giant Baidu Inc. dropped its $2.3 billion bid to buy out the company’s video-streaming operation after investors

Baidu said Monday that a consortium including its CEO, Robin Li, and the CEO of video site iQiyi.com, Yu Gong, withdrew their February offer to acquire iQiyi because they couldn’t reach an agreement on the deal structure and purchase price. The aborted bid comes after New York hedge fund Acacia Partners, which says it owns more than $400 million in Baidu shares, wrote an open letter to Mr. Li last week criticizing the low sale price of the video unit. Acacia argued that the consortium’s offer valued Baidu’s video platform at $2.8 billion compared with a $4.8 billion valuation for rival Youku Tudou, which Alibaba Group Holding Ltd. bought in 2015. Acacia said the short-term upside to Baidu’s earnings from the sale was minimal compared with the potential long-term value for Baidu shareholders if they continued to own the video unit. A person familiar with the deal said neither the investor’s letter nor the corporate-governance issue led to the withdrawal. The person said Mr. Li’s ownership would have been only around 20%, with the other investors taking most of iQiyi’s shares, and that Mr. Li wouldn’t have had voting control.

Starbucks Shifts Roles of Senior Management Starbucks Corp. said Monday it was reorganizing the roles of its senior leaders, a week after the coffee giant said it had a sales-target miss for its third consecutive quarter. Chief Executive Howard Schultz said he is shifting his focus to the company’s long-term strategy and innovation efforts. Previously, he was focused on the company’s digital technology efforts. Last week, the company cited global economic uncertainty and a “profound weakening in consumer confidence” as reasons for its sales slowdown in the latest quarter. Executives said the quarter was an anomaly and a company spokesman said the organizational changes “have nothing to do with prior quarters.”

Apple Taps iPad Exec To Oversee Car Project Apple Inc. has tapped a highly regarded senior executive who helped bring to market many of Apple’s signature products to oversee its fledgling automobile project, according to people familiar with the matter. Bob Mansfield had stepped back from a day-to-day role at the company a few years ago, after leading the hardware engineering development of products including the MacBook Air laptop computer, the iMac desktop computer, and the iPad tablet. Apple now has Mr. Mansfield running the company’s secret autonomous, electric-vehicle initiative, code-named Project Titan, the people said.

Copyright © Dow Jones & Company, Inc. All Rights Reserved. www.dowjones.com

continued on page 3

page 2

Monday, July 25, 2016 4 p.m. ET

the new agreement follows “extensive negotiations,” and he called it a “compelling” transaction.

Tomorrow’s Headlines continued Mr. Mansfield, who joined Apple in 1999 and was one of its top executives under former Chief Executive Steve Jobs, had been an adviser at the company since leaving Apple’s executive team in 2013. At the time, Apple said Mr. Mansfield was going to remain at Apple to work on special projects and report to CEO Tim Cook. One of those projects — the Apple Watch — was introduced last year. Until recently, Mr. Mansfield — who, along with design chief Jony Ive, was one of the few executives to appear in Apple’s carefully-crafted product announcement videos— had all but retreated from the company aside from the occasional visit, these people said. Earlier this month, employees at Apple noticed in the company directory that all the senior managers on the car project were now reporting to Mr. Mansfield, they said.

UK Knocks Goldman On Soured Deal A U.K. parliamentary inquiry has criticized Goldman Sachs Group Inc. over its role in the sale of a major British retailer that later collapsed, saying a lack of clarity over the Wall Street bank’s involvement led to it having “authority without accountability” on the ill-fated deal. The U.S. bank was rapped in the report for its involvement in the sale of department-store chain BHS by billionaire retail mogul Philip Green for a symbolic 1 pound ($1.30) to former racing driver Dominic Chappell, who had no major retail experience, in March 2015. BHS fell into administration in 2016, threatening 11,000 jobs and igniting a controversy that has drawn in politicians, high-profile retail magnates and a number of advisers, including Goldman Sachs. Mr. Green had told lawmakers that he relied on Goldman as a “gatekeeper” to assess Mr. Chappell’s suitability to buy the firm, while Goldman said it provided only informal advice to a longstanding client.

AMC, Carmike Agree to Sweetened Takeover Deal AMC Entertainment Holdings Inc. and Carmike Cinemas Inc. said Monday they had agreed to a sweetened takeover deal at more than $800 million, after a vote to approve the deal was twice postponed following concerns among some Carmike shareholders that the sale price was too low. Under the latest terms, Carmike shareholders can opt to receive either $33.06 in cash or 1.0819 shares of AMC, wherein 30% of Carmike’s outstanding shares are exchanged for AMC shares and 70% are exchanged for cash. The companies valued the transaction at about $1.2 billion—consisting of about $585 million in cash and $250 million in stock, plus debt. The new offer is about 10% higher than AMC’s original $30-a-share all-cash offer. The Carmike board has unanimously approved the amended agreement, and recommended shareholders vote in favor. Carmike Chief Executive Officer David Passman said

E*Trade to Buy OptionsHouse for $725M E*Trade Financial Corp. on Monday said it had agreed to buy Aperture New Holdings Inc., the parent of online broker OptionsHouse LLC, for $725 million in cash to increase its derivatives capabilities. E*Trade’s shares recently declined 2.4% to $25.18 and are down 15% so far this year. Chicago-based OptionsHouse has 154,000 customer accounts with $3.6 billion in customer assets. It made about $104 million in revenue over the past 12 months. E*Trade Chief Executive Paul Idzik said the deal will allow the delivery of enhanced options capabilities to the company’s customers and give E*Trade access to OptionsHouse’s active customer base. “We believe options are an important component of an investor’s arsenal, and this deal will intensify our derivatives firepower,” said Mr. Idzik.

Kimberly-Clark Hurt by Current Rates Kimberly-Clark Corp. took a hit from currency fluctuations, which weighed on its quarterly results, but Chief Executive Thomas Falk said that the worst has past. The maker of Kleenex tissues and Huggies diapers reported lower sales across its divisions with currency moves shaving 4% from its top line. Total sales slipped 1.2% from a year earlier to $4.59 billion while organic sales—which excludes currency rates—rose 3%. The company said the negative impact of weak currencies outside the U.S. should be less severe than initially forecast for the rest of 2016.

Nintendo Stock Sinks 18% As ‘Pokemon Go’ Hype Fades After soaring over the previous two weeks, shares in Nintendo Co. plunged Monday following a company warning that the smash-hit smartphone game “Pokemon Go” would make a limited contribution to its earnings. Nintendo shares ended down by the maximum permitted amount, 5,000 yen, at 23,220 yen ($218.73)—a decline of 18%. The company’s share price had doubled since “Pokemon Go” was released in the U.S. and other markets this month. Shares of McDonald’s Corp.’s Japan unit, which announced a “Pokemon Go” tie-up last week, also reversed direction Monday, closing 12% lower at 3,200 yen. Based on a Nintendo franchise, “Pokemon Go” is the Japanese videogame maker’s first mobile-gaming hit. But it was developed by Tokyo-based Pokemon Co., in which Nintendo owns a 32% stake, and San Francisco-based Niantic Inc. Nintendo and Pokemon Co. both own undisclosed stakes in Niantic.

Copyright © Dow Jones & Company, Inc. All Rights Reserved. www.dowjones.com

page 3

Monday, July 25, 2016 4 p.m. ET Copyright Dow Jones & Co., Inc.

Talking Points

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

Will Democrat Convention Be Pro-Clinton Or Anti-Trump?

Want to send a co-branded daily version to your valued clients? Dow Jones offers subscribing firms the opportunity to co-brand Tomorrow's News Today for redistribution to their clients. If your firm is interested in co-branding, please contact us at [email protected] or 1.800.223.2274.

Democrats who have gathered here for their national convention want people to vote for Hillary Clinton. They also want people to vote against Donald Trump. Which do they want more? That question represents a fundamental strategic choice the party and its nominee face as they frame their week in Philadelphia, to say nothing of the 15 weeks remaining before Election Day. Sadly for those in search of uplifting political messages, this is a year of a sour and angry electorate in which getting people to vote against the other candidate may well seem the easier path. So the temptation for Democrats will be to make this week, and the general-election campaign to follow, about voting against Donald Trump. His record-high personal unpopularity certainly makes that a tantalizing approach. Yet it’s also a risky approach. Mrs. Clinton, in fact, would benefit by providing voters this week a simple, concise and memorable explanation of why people should vote FOR her—something Mr. Trump has done more masterfully. It’s true that Republicans spent a lot of time at their convention last week trying to persuade Americans to vote against Mrs. Clinton — more, in fact, than they spent trying to make the case to vote for Mr. Trump. The cries of “lock her up” rising nightly from the convention floor were an apt illustration. The impulse was understandable. Mr. Trump’s personal approval ratings may make him a tough sell with many voters, but Mrs. Clinton is an equally inviting target for attack. She has been a national figure for 25 years, and a controversial one for much of that time. She inspires great loyalty among many, but deep loathing among others. Rare is the voter who hasn’t already formed an opinion of some kind about her. One theory of politics says that voters who haven’t yet decided to vote for an incumbent politician this well known actually may be leaning toward voting against that person, whether they know it or not. Mrs. Clinton isn’t the incumbent president, obviously, but she’s a close facsimile. So those who aren’t already for her actually may be leaning against her. Republicans tried to push those leaners all the way against Mrs. Clinton last week, and apparently with some success. A new CNN/ORC poll released Monday shows Mr. Trump moving into a national lead. Republican pollster Frank Luntz tracked throughout the Republican convention week a group of undecided voters and concluded afterward: “Everyone except one said their attitude toward Hillary Clinton was worse after.” In short, Republicans did a fine job of making the case against Hillary Clinton. So why shouldn’t Democrats simply return the favor? To some extent they will. Much as a television commercial the Clinton camp has been airing effectively reminds voters of some of Mr. Trump’s cruder moments, so too will the convention program this week. Yet there is also reason to believe that if this election devolves into a simple downward spiral of negativity, Mr. Trump has an advantage. For starters, it is hard to out-insult Donald Trump. Sen. Marco Rubio of Florida tried that in the Republican presidential primary, and ended up flat on his back as a result. But there is a more important reason. Mr. Trump’s supporters seem willing — in some cases, eager — to look beyond the personality traits they don’t like and support him anyway, because they believe he has made a simple and compelling case for his candidacy. This Trump case is by now almost universally understood: I will make America great again, build a wall to stop immigrants, block Muslims continued on page 5 Copyright © Dow Jones & Company, Inc. All Rights Reserved. www.dowjones.com

page 4

Monday, July 25, 2016 4 p.m. ET

Talking Points

“I have decided that in the interest of making sure that we can start the Democratic convention on a high note that I am not going to gavel in the convention,” Ms. Wasserman Schultz told the Florida Sun Sentinel on Monday.

continued from suspect countries and tear up bad trade deals. To that riff he has now added: I am the law-and-order candidate.

DSW To Keep Low Profile At Convention The embattled chairwoman of the Democratic National Committee decided Monday to forgo addressing the party’s convention, Democrats familiar with her plans said, amid continued hostility from Bernie Sanders’s supporters. On Sunday, Debbie Wasserman Schultz, a Florida congresswoman, said that she would resign on Friday, after the convention, but that she still planned to gavel in and close out the proceedings, and to speak from the stage. She changed her mind after a rough reception at a morning meeting of the Florida delegation, where she was booed and jeered, according to a person familiar with her thinking. Long a controversial figure inside the party, Ms. Wasserman Schultz came under fire this weekend after a trove of hacked emails from the DNC showed party officials mocking Mr. Sanders, presumptive Democratic nominee Hillary Clinton’s primary rival, and discussing ways to undermine his presidential bid.

One of the people familiar with her plans said she intends to stay in Philadelphia this week and then go to the DNC’s scheduled meeting on Friday, where she will formally pass leadership of the committee to vice chairwoman Donna Brazile. The hacked emails, posted late last week on the WikiLeaks website, opened up fresh wounds that the Clinton camp was hoping to close this week to unify Democratic primary voters behind the former secretary of state. In a separate demonstration of the challenge, Sanders supporters booed Mr. Sanders when in a midday speech he said it was critical to elect Mrs. Clinton and defeat Republican nominee Donald Trump. Brian Fallon, press secretary for Mrs. Clinton, told reporters Monday that the campaign doesn’t condone the content of the leaked emails, singling out as particularly egregious one message that questioned Mr. Sanders’s Jewish faith and suggested casting the Vermont senator as an atheist. “It’s very distressing to learn that anybody would contemplate using somebody’s religion as an issue in the campaign,” Mr. Fallon said. “That’s completely unacceptable and against our values as Democrats.”

Copyright © Dow Jones & Company, Inc. All Rights Reserved. www.dowjones.com

page 5