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The United States and China may be moving toward a “phase one” trade deal, but a hawkish speech by Vice President Mike Pence on Thursday is a reminder of the deep divide between the world’s two biggest economies — a chasm that is unlikely to be bridged any time soon.
What Pence said: The vice president chided Beijing for economic and human rights abuses. He also used the occasion to take aim at the NBA and Nike, its official apparel partner.
Pence accused the NBA of acting “like a wholly-owned subsidiary of the authoritarian regime” in China, adding that the league is “siding with the Chinese Communist Party and silencing free speech.” Nike, Pence claimed, “promotes itself as a so-called ‘social-justice champion'” but prefers “checking its social conscience at the door” on Hong Kong.
The context: The NBA, which sees China as a major growth market, recently came under fire in the United States after initially failing to back Houston Rockets general manager Daryl Morey. Morey had tweeted his support for protesters in Hong Kong, sparking an outcry in China. Nike later pulled Houston Rockets merchandise from some store shelves in China, according to a Reuters report.
Nike shares have had a rough week (the company announced Wednesday that its CEO will leave the company in January). But they’re still beating the S&P 500 year-to-date.
With Pence’s comments, it’s clear that American companies that want to maintain access to China’s lucrative market won’t have an easy path forward, at home or abroad.
It’s almost enough to spark envy of Facebook, which has been kept out of China. This has allowed CEO Mark Zuckerberg to stand up the social media website as an all-American enterprise when he makes his case to lawmakers and would-be regulators.
Last week, in a speech at Georgetown, Zuckerberg said that efforts to rein in US tech companies could lead to unintended consequences, such as allowing Chinese competitors to dictate the terms of speech and innovation.
“If another nation’s platforms set the rules, our nation’s discourse could be set by a completely different set of values,” he said. “We should be proactive and write policies that help free expression triumph around the world.”
Faster delivery hits Amazon’s profits
Amazon is spending heavily to keep growing. That’s hitting profits — and making investors nervous.
The internet giant said Thursday that its profit between June and September fell to $2.1 billion as the company makes big investments to expedite delivery. That’s down 28% from $2.9 billion last year. Shares were off 5.5% in premarket trading.
The scene: The company announced in April that it would spend $800 million to make one-day shipping standard for customers who subscribe to Prime, its membership service. Three months later, Amazon said the actual cost ended up being even higher. The company’s shipping costs for the quarter hit $9.6 billion, up 46% from the prior year.
CEO Jeff Bezos said Thursday that moving to one-day Prime delivery would be worthwhile in the long run. “It’s a big investment, and it’s the right long-term decision for customers,” he said.
Another catch: Amazon is pumping money into delivery just as AWS, its cloud service, sees slower growth, my CNN Business colleague Clare Duffy reports. The division posted nearly $9 billion in sales, up almost 35% from the same time last year — but below the growth it saw in prior quarters.
Also watch: Anheuser-Busch InBev. The world’s largest brewer, which makes Stella Artois and Budweiser, reported lower-than-expected profits for the third quarter, and said it now only expects “moderate” growth for the year due to challenges in the second half of 2019. (That includes a slowdown in China.) Shares fell 9.5% in early European trading.
Women are in the running to lead top US banks
Citigroup has tapped as new president: Jane Fraser, formerly the head of the bank’s Latin America unit. The move puts her in line to succeed CEO Michael Corbat — which means she could also become the first female chief executive of a major US bank.
The decision recalls an episode in April, when top US banking CEOs were called to testify before Congress. All were white men — and none raised their hands when asked if they believed their successor would be a woman or a person of color.
Later that month, JPMorgan Chase tapped Jennifer Piepszak as its chief financial officer, replacing Marianne Lake. Both are viewed as lead contenders to eventually replace CEO Jamie Dimon.
The question now: Will one of these women eventually score the top job, shaking up an industry that touts diversity but often struggles at the highest ranks?
Earnings season marches on. Barclays, Renault and Verizon all report results Friday.
- The final University of Michigan consumer sentiment survey for October arrives at 10 a.m. ET.
Coming next week: It’s a big week for US economy watchers, with a Fed meeting closely followed by the October jobs report.