Hillary Clinton last night became the first woman to accept a major party’s nomination for president, and said her primary mission as president “will be to create more opportunity and more good jobs with rising wages right here in the United States.”
She also held no punches in her attack on Donald Trump, saying he lacked the temperament to be commander-in-chief. “A man you can bait with a tweet is not a man you can trust with nuclear weapons,” she said. Trump instantly tweeted his response: “Hillary’s refusal to mention Radical Islam as she pushes a 550% increase in refugees is more proof that she is unfit to lead the country.”
And so they are off, in what is likely to be the most negative general election campaign in the last 100 years. Whether either candidate will have enough political capital left after it’s over to govern effectively is a question worth asking.
Meanwhile, Amazon founder Jeff Bezos became the world’s third richest man yesterday after his company’s strong earnings report. Amazon shares, which Bezos owns 18% of, have spiked by fifty percent since February.
Amazon was once known as a profit-free zone. But in the latest quarter, profits reached a record $857 million, up 800% from the same quarter last year. A good part of the rise is attributable to its booming cloud business, which jumped 58% from last year, to $2.89 billion. The big drag on profitability in Amazon’s retail business is shipping, which cost $3.36 billion in the quarter, up 44% from last year.
You can read Fortune’s Lena Rao on five big takeaways from the Amazon report here.
Finally, yesterday’s CEO Daily contained a regrettable error. Geoff tells me that, in his grief at the thought of a world without 747s, he mixed up his Boeings. It was of course the 747-8, not the Dreamliner, which has suffered due to airlines’ preference for smaller planes.
More news below.
• Florida May Have a Zika Problem
Public health officials in Florida are concerned that local mosquitoes may have started to carry and transmit the Zika virus. They’re investigating four cases of Zika infection which appear to have no connection to travel to places such as Brazil, where the virus has caused serious birth defects in over 5,000 babies. The Food and Drug Administration (FDA) has called on blood donation centers in the affected regions to stop accepting blood until it can be tested for Zika, according to USA Today. The potential damage of a health scare, not just to Florida’s tourist industry, is clear. The U.S. has yet to pass legislative measures to prepare for and fight the virus. A $1.1 billion anti-Zika funding bill died in the Senate last month before lawmakers left for their summer recess, which falls right in the middle of heavy mosquito season. Fortune
• An ‘Alpha’ Bet on Other Bets
Google’s parent Alphabet said it advertizing business delivered $7 billion in profits on $21 billion in revenue, up 21% from a year earlier and evidence that it’s not about to surrender the advertizing game to Facebook (or the European Commission) any time soon. The company’s shares rose 6% after the bell in response. However, it also dropped $859 million on other, ‘moonshot’ bets to generate what the portfolio managers call ‘alpha’ (intrinsic value growth independent of broader market performance) and they didn’t do quite so well, generating only $185 million in revenue. So far, the only ‘moonshots’ making any money for Alphabet are Nest, health care company Verily, and its high speed internet unit Fiber. Fortune
• Underwhelming BoJ Sends Yen Higher
The Bank of Japan held off from major new stimulus measures at a keenly-watched policy meeting, sending the dollar sharply lower against the yen. The BoJ said it would only slightly expand its quantitative easing program by increasing its purchases of exchange-traded funds. That’s a lot less than markets had been expecting (but appears more justifiable in the light of better-than-expected industrial output numbers released today). Elsewhere, a miserable consumer confidence reading from the U.K.--showingthe steepest monthly drop in 26 years--made it all but certain that the Bank of England will either cut rates or boost QE or both next week at its Monetary Policy Council meeting. Fortune
• Oracle Snaffles NetSuite
Confirming one of the worst-kept secrets on the west coast, Oracle agreed to buy cloud software company NetSuite for $9.3 billion—a premium of over 30% to Netsuite’s closing price on Wednesday. Like Oracle, NetSuite, offers financial accounting and related applications delivered over the Internet. It has traditionally focused more on mid-market companies compared to Oracle’s larger enterprise clientele. The addition of NetSuite’s customers and cloud Software-as-a-Service talent may help it compete better with Oracle’s rival (and sometimes partner), Salesforce. Oracle’s CEO Mark Hurd said the two companies’ applications were “complementary, and will coexist in the marketplace forever,” adding that "We intend to invest heavily in both products--engineering and distribution." Fortune
Around the Water Cooler
• The $31 Billion Radioactive White Elephant
It’s hard to think of a bigger non-fatal embarrassment in the whole checkered history of nuclear power. The British government has postponed its final approval for the Hinkley Point C power station, only days after French energy giant EDF finally succumbed to pressure from its government masters and gave its provisional approval to the project. HPC is already years late and the EU Commission’s cost estimate is $11 billion more than EDF’s original one. In order to get it built, London has locked consumers into a fixed-price contract of 92.50 pounds ($120) per megawatt-hour for 35 years—an implicit subsidy from households of nearly $40 billion over the project lifetime. This at a time when the cost of renewable power and grid management technology is falling steeply thanks to technological advances. Despite the subsidy, EDF’s spiralling debts mean it can hardly finance the project: seven of the company’s 18 directors voted against the project and its last CFO resigned in March. EDF shares rose 10% in Paris Friday on hopes that Westminster’s prevarication would turn into a more concrete refusal. Fortune
• The Bear is Back (if You're an Oil Trader)
It seems like only yesterday that Halliburton was telling the world that the oil market had bottomed (OK, it was a full week, but hey...). Anyways, crude is back in bear market today, having fallen more than 20% from its peak back in June. The U.S. benchmark WTI is back at a three-month low of $40.63, down 8% from a week ago, while the global Brent benchmark is at $42.67, mainly due to a glut in gasoline stocks which is damping refiners’ demand for more crude. ConocoPhillips said yesterday it lost $1.1 billion in the second quarter, and Italy’s Eni just reported a loss of 830 million euros. ExxonMobil and Chevron are due to report later today. Reuters
• Microsoft’s Mobile Misery
Microsoft’s retreat from the smartphone business gathered pace, as the company said it would lay off another 2,850 people in addition to the 1,850 jobs it cut in May. Apart from smartphone hardware, the job cuts will also target the global sales business. The company has already written off all of the $7.6 billion it paid for Nokia’s handset business back in 2014, and any further severance-related costs will just add insult to injury. Investors can only hope that the $26 billion it recently agreed to pay for LinkedIn will work out better. Either way, the fate of the smartphone business is a stark contrast to the company’s buoyant recent performance in cloud computing, which appears to be entrenching its ever-present suite of office software into the business sector for years to come. Fortune
• Nothing Says “Weekend” Quite Like…
…the publication of the European Banking Authority’s annual stress tests, of course! There’s a good reason for this: the EBA likes to give global markets a full 48 hours to realize how badly capitalized Eurozone banks are, allowing investors and ratings agency analysts time to hit the drinks cabinet and sober up again ready for the start of Asian trading on Monday. Unlike previous years, there is no pass/fail threshold to fret over this time. The thinking is that the figures will speak for themselves and that market discipline will do the rest. A pious hope: the one certainty from this round is that they won’t solve the furious argument over how to value €360 billion (nominal) of bad loans in Italy, which is causing another one over how much in fresh capital the Italian government has to squeeze out of anyone who can’t run away fast enough. FT, subscription required