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Wall Street ends flat as mixed economic data signals caution

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U.S. stocks barely budged on Monday, with slight gains in shares of Apple offset by mixed economic data that added to caution over the prolonged U.S.-China trade war.

Apple Inc (AAPL.O) rose 0.5% after U.S. trade regulators approved 10 of 15 requests for tariff exemptions by the iPhone maker. Micron Technology Inc (MU.O), which supplies components to Apple, advanced 0.9%.

U.S. employment in the services sector shrank for the first time in 9-1/2 years in September, IHS Markit’s Purchasing Manager’s Index showed. The data also showed manufacturing activity rose in September, topping expectations.

Earlier in the day, a survey showed a manufacturing recession deepening in Germany, Europe’s biggest economy.

“What’s been a question within the market is whether or not we are headed toward a recession within the next 12 months. So all of the data releases are increasingly important,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

Any upbeat data offers investors hope the United States will be able to avoid a recession, she said.

Investors also have been cautious about progress in Sino-U.S. trade talks after a Chinese agriculture delegation canceled a visit to Montana.

The Dow Jones Industrial Average .DJI rose 14.92 points, or 0.06%, to 26,949.99, the S&P 500 .SPX lost 0.29 points, or 0.01%, to 2,991.78 and the Nasdaq Composite .IXIC dropped 5.21 points, or 0.06%, to 8,112.46.

“People are tentative and want to sit on the sidelines. We’re sitting here just below highs, and there’s no urgent need to chase them unless they break out, and of course no one wants to sell them either,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

American Express (AXP.N) shares gained 1.2% after it announced a share repurchase plan and a dividend increase.

Juniper Networks Inc (JNPR.N) rose 2% as Needham upgraded the network gear maker’s stock to “buy.”

Boeing .BA.N edged lower after that European antitrust regulators were set to investigate the planemaker’s $4.75 billion bid for the commercial aircraft arm of Brazil-based Embraer SA (EMBR3.SA).

Additionally, the chief of the U.S. Federal Aviation Administration was to detail progress on the Boeing 737 MAX aircraft inquiry to international air regulators.

Social network Facebook Inc (FB.O) fell 1.6% and was among the biggest drags on the S&P 500 along with Amazon.com (AMZN.O), down 0.5%.

Advancing issues outnumbered declining ones on the NYSE by a 1.22-to-1 ratio; on Nasdaq, a 1.21-to-1 ratio favored decliners.

The S&P 500 posted 19 new 52-week highs and one new low; the Nasdaq Composite recorded 42 new highs and 50 new lows.

Volume on U.S. exchanges was 5.90 billion shares, compared with the 7.1 billion average for the full session over the last 20 trading days.

Timeline: Key events in Huawei CFO Meng Wanzhou’s extradition case

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Meng Wanzhou, chief financial officer of Huawei Technologies Co Ltd [HWT.UL], will appear in a Vancouver, Canada, courtroom on the first of three days of trial starting on Monday. Here is a timeline of the case and its geopolitical implications.

AUG. 22, 2018: A New York court issues an arrest warrant for Meng, so that she could be detained to stand trial in the United States.

NOV. 29, 2018: The United States learns that Meng will be passing through Vancouver International Airport on her way to Mexico.

DEC. 1, 2018: Meng is arrested by Canadian police in Vancouver as she changes planes. The arrest is not made public until Dec. 5. The Chinese embassy in Canada demands her release.

DEC. 6, 2018: Chinese officials say they have not been given a reason for Meng’s arrest. The White House and Canadian Prime Minister Justin Trudeau both move to distance themselves from the arrest.

DEC. 7, 2018: Court proceedings show that the United States issued the arrest warrant because it believes Meng covered up attempts by Huawei-linked companies to sell equipment to Iran, breaking U.S. sanctions against the country.

DEC. 8, 2018: China says the arrest of Meng was “extremely nasty” and threatens Canada with consequences if it does not release her.

DEC. 10, 2018: Two Canadians are detained in China – a former Canadian diplomat, Michael Kovrig, and businessman Michael Spavor. China denies their arrests are related to Meng’s case. The arrests are made public on Dec. 11 and Dec. 12.

DEC. 11, 2018: Meng is released on bail by a British Columbian court. U.S. President Donald Trump says he will intervene in the case if it would serve national interests.

DEC. 21, 2018: The United States and Canada call on China to release the detained Canadian citizens, after reports that they are questioned daily, have not been given access to lawyers, and are not allowed to turn the lights off at night.

JAN. 8, 2019: Huawei’s links to companies suspected of operating in Iran and Syria, breaking sanctions.

JAN. 22, 2019: The U.S. Justice Department announces it will formally seek the extradition of Meng to the United States.

JAN. 23, 2019: John McCallum, Canada’s ambassador to China, tells Chinese-language media that Huawei can make a good case against extradition, thanks in part to Trump’s comments about his willingness to get involved.

JAN. 26, 2019: Trudeau fires McCallum after his comments to the press, marking the first time a Canadian ambassador had ever been fired.

FEB. 4, 2019: Canadian canola shipments are delayed in clearing Chinese customs, slowing trade to one of Canada’s biggest exporters.

MARCH 1, 2019: Canada approves the extradition order of Meng to the United States.

MARCH 3, 2019: Huawei sues the Canadian government over Meng’s arrest. China claims detained Canadian Michael Kovrig stole state secrets.

MARCH 6, 2019: China says it found “hazardous pests” in Canadian canola samples and blocks most shipments of the crop.

APRIL 29, 2019: Canadian farm exports across the board hit obstacles at Chinese ports.

MAY 1, 2019: China blocks shipments entirely from two Canadian pork producers.

MAY 5, 2019: Canada pressures the United States to help with its diplomatic dispute, with limited success.

JUNE 25, 2019: China blocks all pork shipments from Canada.

JULY 15, 2019: Canada will postpone the decision on whether to allow Huawei to build a 5G cellphone network in Canada, due to the ongoing dispute.

AUG. 22, 2019: U.S. Secretary of State Mike Pompeo tells Trudeau that American officials are working to release the detained Canadians.

SEPT. 5, 2019: Canada appoints veteran business consultant Dominic Barton as the new ambassador to China.

Exclusive: We Company CEO Neumann starts talks on his role at WeWork parent – sources

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WeWork co-founder Adam Neumann has started talks with board directors and investors to discuss his future role at the U.S. office-sharing start-up, including the possibility of giving up his title as chief executive, people familiar with the matter said on Monday.

Neumann has not yet agreed to step aside as CEO of WeWork parent We Company, and there is no certainty he will do so, the sources said. However, a board challenge planned by investors, including SoftBank Group Corp (9984.T) and Benchmark Capital, has been put on hold until these discussions produce an outcome, the sources added.

Were the talks with Neumann to lead to a resolution, they could avert a showdown between SoftBank and one of its biggest investments. We Company postponed its initial public offering last week following push-back from perspective investors, not just over its widening losses, but also over Neumann’s unusually firm grip on the company.

This was a blow for SoftBank, which was hoping for We Company’s IPO to bolster its fortunes as it seeks to woo investors for its second $108 billion Vision Fund. It invested in We Company at a $47 billion valuation in January.

But investor skepticism led to the start-up considering a potential IPO valuation earlier this month of as low as $10 billion.

One possibility that Neumann is discussing is transitioning to a chairman role, the sources said. Details of the discussions and what Neumann would request in exchange for giving up his CEO title could not be learned.

Another option would be for Neumann to remain as CEO, with an independent chairman brought in to join the board, according to one of the sources.

Were Neumann to agree to a leadership transition, it would make it unlikely that We Company can proceed with its plans to complete an initial public offering by the end of the year. This would mean it would have replace a $6 billion debt deal it reached with banks this summer that is contingent on the start-up going public.

We Company is considering slowing its expansion so it burns through less cash and would therefore require less funding in the absence of an IPO in the near team, one of the sources said.

The sources asked not to be identified because the matter is confidential. WeWork and SoftBank declined to comment. Neumann and Benchmark Capital did not immediately respond to requests for comment.

As co-founder of We Company, Neumann holds special voting shares that enable him to dismiss dissident board directors and shoot down any challenge to his authority.

However, SoftBank also has leverage. It could choose not to back We Company’s IPO or provide it with more funding. It has already funded the cash-burning start-up to the tune of $10 billion and was discussing committing another $1 billion to the IPO.

POWERFUL CEO

It is not uncommon for founders of fast-growing start-ups to be eccentric and control their companies tightly, even as they seek to attract stock market investors. Neumann, however, was criticized by investors and corporate governance experts for arrangements that went beyond the typical practice of having majority voting control through special categories of shares.

These included giving his estate a major say in his replacement as CEO, and tying the voting power of shares to how much he donates to charitable causes.

Neumann also entered several transactions with We Company over the years, making the company a tenant in some of his properties and charging it rent. He has also secured a $500 million credit line from banks using company stock as collateral.

Following criticism by potential investors, Neumann agreed to some concessions without relinquishing majority control. He agreed to give We Company any profit he receives from real estate deals he has reached with the New York-based start-up.

No member of Neumann’s family will be on the company’s board and any successor will be selected by the board, scrapping a plan for his wife and co-founder, Rebekah Neumann, to help pick the successor.

These changes did little to address concerns about the business model for We Company, which rents out workspace to clients under short-term contracts, even though it pays rent under long-term leases. This mix of long-term liabilities and short-term revenue raised questions among investors about how the company would weather an economic downturn.

Fox Corp’s Rupert Murdoch gets paid $42.2 million in 2019

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Fox Corp (FOXA.O) Chairman Rupert Murdoch was paid $42.2 million in fiscal 2019, lower than last year, following the media company’s sale of its film and TV assets to Walt Disney Co (DIS.N).

In a filing on Monday, Fox said Murdoch’s compensation in 2018 was $49.2 million.

CEO Lachlan Murdoch’s compensation for the year ending June 30, 2019 was $42.1 million compared with $50.7 million a year earlier.

Rupert and Lachlan Murdoch will earn $29.3 million and $23.6 million respectively, from next year onwards, excluding compensation related to the Twenty-First Century Fox deal. (bit.ly/2laTNpv)

The newly spun-off media company Fox Corp debuted on the Nasdaq earlier in March following the $71 billion sale of Twenty-First Century Fox’s film and television assets to Walt Disney.

Fed’s Bullard: U.S.-China trade relations probably had to come to a head

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St. Louis Federal Reserve President James Bullard said on Monday it was probably inevitable that the United States and China would clash on trade, given that China has not lived up to commitments made when it was allowed into the World Trade Organization.

“The Chinese were allowed into the WTO on an implicit promise that they would abide not just with the letter but with the spirit of the WTO and that they would transition toward democracy,” Bullard said. “Neither of those things have happened.”

Canada says officials did not act improperly when Huawei CFO was arrested

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There is no evidence Canadian border officials or police acted improperly when Huawei Chief Financial Officer Meng Wanzhou was detained and arrested at Vancouver’s airport nearly 10 months ago, the attorney general of Canada said in a filing released on Monday.

The filing was made available as Meng and her lawyers sought additional disclosures relating to the arrest in British Columbia Supreme Court in Vancouver, including contacts between U.S. and Canadian authorities. The defense claims Meng was unlawfully searched and questioned under the ruse of an immigration check and is seeking to halt extradition proceedings.

Meng, 47, was detained at Vancouver’s airport on Dec. 1 at the request of the United States, and was charged with bank fraud and accused of misleading HSBC Holdings Plc about Huawei Technologies Co Ltd’s business in Iran. She has said she is innocent and is fighting extradition.

The disclosure hearing is scheduled through Wednesday this week and to resume on Sept. 30 for another five days. Meng’s extradition hearing is not scheduled to start until January.

“There is no evidence that the conduct of officials, either Canadian or foreign, has compromised the fairness of the extradition proceedings,” Canada’s attorney general said through counsel in the filing.

“No purpose would be served in providing further disclosure,” the attorney general said, adding her lawyers have not shown her claims could justify halting extradition proceedings.

The defense had already been provided with extensive disclosure, the filing said, including handwritten notes from police and border officers, and video footage from the airport.

The arrest has strained China’s relations with both the United States and Canada. Shortly after the arrest, Beijing detained Michael Kovrig, a former diplomat, and Michael Spavor, a businessman, and later charged them with espionage. China has also blocked imports of Canadian canola seed and meat.

Huawei, the world’s largest telecommunications equipment maker, has been accused by the United States of activities contrary to national security or foreign policy interests. It is also a defendant in the U.S. case against Meng. Huawei denies the charges.

At Monday’s hearing before Justice Heather Holmes, Meng lawyer Richard Peck said the Canadian border agency and police delayed implementing Meng’s rights and the border agency was given an opportunity to interrogate her, with plans to share the information with the Canadian police and the Federal Bureau of Investigation (FBI).

“We refer to this as a ‘covert criminal investigation’ under the pretext of an admissibility examination for immigration purposes,” Peck said.

In Beijing, China’s Foreign Ministry reiterated the government’s call for Meng to be immediately released and allowed to return to China.

“The United States and Canada abused their bilateral extradition treaty and arbitrarily took coercive measures against a Chinese citizen seriously harming their lawful rights. This is a serious political case,” the ministry said.

BURNT ORANGE COAT

The attorney general of Canada said in the filing that the border officers acted pursuant to “lawful authority to determine whether the applicant and her goods were admissible to Canada.”

The government said there was no legal reason an arrest warrant must be executed before a person goes through immigration and customs, and that there was nothing wrong with border agency and foreign law enforcement officials sharing information about people of interest to the agency. They said Meng’s legal team was on a “fishing expedition.”

Meng arrived at the Vancouver court on Monday in a burnt orange coat, an electronic monitor on her left ankle above glittery silver shoes. She sat in the well of the courtroom next to an interpreter, wearing a bright purple dress and with her hair pulled back with a black velvet bow.

Meng’s lawyers have said after landing from a flight from Hong Kong, she was detained, searched and questioned for three hours by border officials before she was arrested. They also argue there were omissions in Canadian officers’ notes, including of a meeting between police and border officers the morning Meng was due to arrive.

Peck said the U.S. made it a priority to seize Meng’s electronic devices, including phones, which a Canadian border officer took and then gave to a Canadian police constable. He told the judge U.S. authorities have a history of using and misusing immigration and border control powers to investigate.

Extradition proceedings against Meng should be halted if officials abused the process, her lawyers say. Besides accusations of misconduct related to her detention, they argue the United States is using Meng for economic and political gain, noting that after her arrest, U.S. President Donald Trump said he would intervene if it would help close a trade deal.

When court adjourned on Monday, Meng said: “Good. Thank you.”

Meng, the daughter of Huawei founder Ren Zhengfei, spent 10 days in jail in December but was then released on C$10 million ($7.5 million) bail and is living in one of her two multimillion-dollar homes in Vancouver.

U.S. and Chinese officials resumed trade talks last week, as the world’s two largest economies try to negotiate a way out of a 14-month trade dispute.

UBS, Banco do Brasil to create investment banking venture in South America

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Switzerland’s UBS Group AG (UBSG.S) and state-controlled Banco do Brasil SA (BBAS3.SA) signed a preliminary agreement on Monday to create a joint venture in investment banking in South America, the Brazilian bank said in a securities filing.

According to the filing, the new joint venture will provide investment banking services in Brazil and a number of other South American countries: Argentina, Chile, Peru, Paraguay and Uruguay.

Banco do Brasil said in the filing UBS would hold 50.01% of the joint venture. the deal talks earlier this month.

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