While you were sleeping, new data from China showed manufacturing activity shrinking at its fastest pace since 2009. That caused another drop in Asian stock, currency and commodities markets. Oil prices in particular look to be racking up their worst run since 1986. And all this sets the stage for another bad day for U.S. stocks, following Thursday’s 358-point Dow rout, and bringing a dismal end to the worst week in markets this year. Are you awake yet?
Emerging markets, which have powered the world economy since the financial crisis, have clearly lost their mojo, sending jitters throughout the globe. Investors also say they are concerned about the Fed’s possible move to raise U.S. interest rates next month – although minutes from the Fed’s last meeting suggest the emerging market woes may cause the Fed to postpone a rate rise in September. I worry about that, too: can we really keep interest rates at zero forever? And if so, what will the consequences be?
While worriers prevail this morning, Fortune columnist Joshua Brown offers a cheerier view, lampooning the doomsayers. Cheap energy, strong corporate profits, and improving U.S. labor and housing markets, he says, should make us all happy. I like Josh’s optimism, but still wonder where the growth is going to come from. If you have the answer, please send it on.
More news below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
• Wall Street posts another loss
Shares on Wall Street were dragged down lower for a third straight day on Thursday, with the Dow Jones Industrial Average suffering from the index's biggest point plunge since November 2011. What's been the cause? Investors are worried about slowing global growth, the timing of the Federal Reserve's first interest rate hike, and pressure on U.S. crude prices that are in danger of slipping below the key $40 a barrel mark. USA Today
• Peltz gains seats on Sysco's board
Activist investor Nelson Peltz and another executive at Trian Fund Management have gained two seats on Sysco's board, avoiding a potential fight with the food distributor's directors. Peltz, who has taken on PepsiCo and Mondelez, often prefers to settle with companies and gain seats rather than wage long fights. Last week, Peltz disclosed owning 7.1% in Sysco, which generated headlines earlier this summer when it walked away from a major merger after pressure from regulators. New York Times (subscription required)
• Why H-P is gearing up for a split
The latest quarterly results from Hewlett-Packard are yet another indication why the massive tech company needs to split into two separate companies later this year. Revenue dropped 8% for the latest three months, the 15th time over the last 16 quarters sales are down. Analysts also wanted to know more about when the costly restructuring process would end, though H-P for now isn't making any promises (except to say it will cost at least $2 billion). Fortune
• Media stocks tank again
We at CEO Daily have been fixated by the sharp decline of the media industry's shares this month after a loss of subscribers at ESPN, a network owned by Disney, raised fresh fears about the rising popularity of cord-cutting. On Thursday, a prominent analyst said the traditional TV industry needs to be re-evaluated, saying the market is valuing the U.S. ad-supported business model as "structurally impaired assets." The warning led investors to dump shares of Disney, Time Warner, Viacom and others. Fortune
• Uber's bookings continue to soar
Ride-sharing startup Uber's global bookings are projected to surge to $10.84 billion this year and climb to about $26 billion next year, according to a recent presentation for potential investors seen by Reuters. At those figures, 2015 revenue would total about $2 billion, though as Fortune and Reuters note, the firm is widely believed to be operating at a loss as it aims to win market share. The presentation also forecasted an initial public offering within 18 to 24 months. Reuters
Around the Water Cooler
• Why oil prices are so weak
The price of crude has plunged almost 60% from the commodity's 2014 peak and there are worries it will stay low for a long time as no major oil producers have yet to back down on production. “Everyone is in the mode of, ‘Oil prices are down and I need to produce as much as I can to make up for it,’” said one energy consultant. U.S. oil companies have either maintained or added production, while the Saudis have actually increased their production to keep competitors like Iraq from stealing customers in Asia. The result? WSJ is calling it the "energy-industry version of trench warfare." WSJ (subscription required)
• How Sprout sold so quickly to Valeant
This week, we've been closely following the news about Sprout's "Female Viagra." First the drug called Addyi won approval from the Food and Drug Administration. A day later, the company was sold to Valeant Pharmaceutical for $1 billion. It has been a great week for Sprout CEO Cindy Whitehead, who told Fortune that there were several suitors after an FDA advisory committee recommended approval in June. Valeant, Whitehead said, successfully wooed Sprout because it promised to keep the company and its staff intact and also offer resources to expand access to the drug. Fortune
