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China Tariffs, CBS War, Facebook Fightback: CEO Daily for August 1, 2018

Good morning. Alan Murray here, back from a week’s vacation that included three days of cycling in France and a prime seat for the final stage of the Tour de France, courtesy of CA Technologies CEO Mike Gregoire—a blazing bicyclist himself.

In the news this morning: Apple has taken a clear lead in a competition as exciting as Le Tour—the race to become the world’s first trillion-dollar company. Earlier this year, analysts thought Alphabet, Amazon or even Microsoft might make the attack first. But Apple hammered ahead with an earnings report that pushed the company’s market value to $956 billion—well past the peloton of Alphabet at $885 billion, Amazon at $876 billion, and Microsoft at $848 billion.

Ironically, the surge came the same day reports showed Chinese phone maker Huawei had overtaken Apple to become the world’s second largest supplier of smartphones, after Samsung. But what Apple lost in volume share, it made up for in price…enjoying a 20% jump in the average price of iPhones shipped. The company also saw a stunning 31% growth in services revenue—which includes ApplePay, iCloud and AppleMusic. And it saw a solid 19% sales increase in China. To top it off, Apple CEO Tim Cook said the company expected an even stronger third quarter, with revenue of $60 billion to $62 billion, up from $53 billion in the current quarter.

With numbers like those, the only thing likely to stop Apple from winning the trillion-dollar race is a trade war with China. Cook talked at length about trade in his earnings conference call, saying he was “optimistic that countries will get through this.” He explained: “There’s an inescapable mutuality between the U.S. and China that serves as a magnet to bring both countries together. Each country can only prosper if the other does. And of course the world needs both the U.S. and China to prosper for the world to do well.”

By the way, while some investors are eager to see Apple use more of its $244 billion cash hoard to buy back shares, that won’t help the company reach the trillion dollar mark. A buyback boosts the stock price, but that’s offset by a decline in shares outstanding.

Also this morning, Pepsi CEO Indra Nooyi has penned a piece for Fortune explaining why the company has decided to go “all in” on recycling. You can read it here.

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

Top News

China Tariffs

President Trump’s advisors are reportedly urging him to impose 25% tariffs on $200 billion in Chinese imports, rather than the 10% that was originally proposed. The debate over the tariff levels comes as the Trump administration’s initial tariffs on Chinese imports seem to have failed to achieve much in the countries’ trade spat. Wall Street Journal

CBS War

The battle between Sumner and Shari Redstone’s National Amusements and CBS’s board has just gotten even uglier. Per an unsealed filing by National Amusements, CBS executives “destroyed” evidence by communicating between themselves with an app called TigerText, that deletes messages after they have been read. In another filing, CBS officials noted that CBS director Arnold Kopelson videotaped the stricken elder Redstone during a visit to “memorialize” his physical state. Shari Redstone subsequently pushed to have Kopelson kicked off the board. Bloomberg

Facebook Fightback

Facebook has identified and nuked a series of Facebook and Instagram accounts and pages that were apparently trying to promote discord in the U.S. ahead of the midterms. The culprits aren’t clear, but experts suspect the Russians. Facebook recently dismantled a misinformation network in Brazil, too, and is clearly trying to step up its efforts to clean up its platforms. Guardian

Brexit Fudge

The EU is reportedly prepared to agree to a Brexit deal that includes a “vague blueprint for future ties with the bloc” in order to help British Prime Minister Theresa May avoid a “no deal” outcome to talks. “The priority is to get the withdrawal agreement done. That will be the dignified farewell,” an EU source told the Financial Times. “The rest we can see after Brexit.” FT

Around the Water Cooler

Rio Tinto

Mining giant Rio Tinto is planning an extra $1 billion share buyback for a total of $7.2 billion, after it reported a 12% year-on-year rise in first-half profits (now $4.42 billion.) The company is also delivering a $1.27 dividend per share, which is up 15% on the year before. Most of the capital return comes from Rio Tinto offloading assets, in particular Australian coal mines. Australian Broadcasting Corporation

BNP Paribas

BNP Paribas reported a quarter-on-quarter net income growth of 53%, though the year-on-growth was -0.1%. The French bank said it would have delivered better results if it wasn’t for challenging marketing conditions and an unfavourable exchange rate effect. Q2 revenues were $13.08 billion and net income was $2.79 billion. CNBC

NASA Priorities

Asked what NASA’s priorities should be, respondents to a Bloomberg poll put “monitor Earth’s climate” at the top of the list. Next came monitoring asteroids, followed by helping work on the International Space Station, then searching for other life forms. And only then came sending astronauts to other planets and the Moon—which is what the Trump administration wants NASA to focus on. Bloomberg

Zimbabwe Elections

Zimbabwe’s ruling Zanu-PF party, led by Emmerson Mnangagwa, appears to have won the country’s first elections since the fall of President Robert Mugabe, who ruled from 1980 until last year. The official results are only expected Saturday, but the opposition MDC, led by Nelson Chamisa, has accused Zanu-PF of trying to steal the election. Chamisa said the MDC won the popular vote and “will defend it.” Reuters

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.