US data boost: retail sales jump & job claims slow

Good morning. Here's what happened overnight and what you need to know today.

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1.

Data wave: Data released Thursday showed retail sales accelerated in the US and jobless claims slowed for a second week, suggesting the economy might not need more than a 25 basis point cut by the Fed in September. US retail sales surged 1% in July, the strongest increase since early 2023, driven by a rebound in car sales and gains in electronics and appliances, while initial jobless claims dropped to the lowest level since early July, with a 7,000 decrease to a lower than expected 227,000. Rounding out the data in the US was a decline in industrial output by 0.6% in July, impacted by Hurricane Beryl and reduced motor vehicle production. The data boosts expectations the central bank will cut interest rates at its mid-September meeting amid cooling inflation and rising unemployment. However, Fed officials increasing focus on the labour market mean the upcoming jobs report on 6 September will be crucial for the bank’s decision. (Capital Brief)

2.

Betting ad-ban: The Albanese government is finalising plans to restrict gambling advertising on streaming services amid a continued backlash over its watered down plans to reform betting on live sport. Streaming services which air sport such as Amazon’s Prime Video and Optus Sport are now expected to face similar restrictions to their broadcast counterparts, industry sources told Capital Brief, following confidential talks over the past fortnight. The planned restrictions include a ban on ads one hour before and after live sports and a cap on ads before 10pm, limited to two per hour. The Labor government is also considering frequency caps and whether these restrictions are feasible for standalone streaming platforms. The plans, first reported by Nine newspapers, also include prohibiting gambling ads on social media, with exceptions for search engines. The final proposal will be presented to the cabinet within the next month. (Capital Brief)

3.

Paramount play: Edgar Bronfman Jr, heir to the Billionaire Canadian entrepreneur, is preparing an offer for Paramount Global, potentially sparking a bidding war for the media company that owns CBS, MTV and Network 10 in Australia, The Wall Street Journal reported. Bronfman is weighing an offer for National Amusements, the Redstone family vehicle that controls Paramount, as well as a direct investment in Paramount itself, the publication said citing unnamed sources. The move follows Paramount’s agreement last month to merge with Skydance Media in a deal that reportedly included an USD8 billion ($12 billion) investment from the film production company’s founder David Ellison and RedBird Capital Partners. That deal had a 45-day period in which other bidders could table competing offers. Bronfman's proposal is being framed as more favourable for investors, avoiding the dilution from the Skydance merger, Bloomberg reported, citing sources. Talks are ongoing with potential backers like Fortress Investment Group, streaming device-maker Roku, and Hollywood producer Steven Paul, the Journal said. Paramount's shares surged as much as 8.5% to USD11.10 after the reports. The company this week announced a major restructure that would cut approximately 2,000 jobs. (The Wall Street Journal)

4.

Sodium power: Natron Energy, a startup innovating in sodium-ion battery technology, plans to invest USD1.4 billion ($2.12 billion) to build a plant in North Carolina, The Wall Street Journal reported. Natron's batteries use sodium instead of lithium, making them cheaper and safer and avoiding problematic metals. The new facility would increase Natron's production capacity by 40 times, following its initial plant in Michigan. The company has received roughly USD300 million in investment and support from the US Energy Department, as Natron's expansion aims to reduce reliance on Chinese imports. The firm counts Chevron and United Airlines among its backers and is hoping to raise roughly USD500 million from private investors in the next six months, the paper reported. (The Wall Street Journal)

5.

Retail boost: Walmart lifted annual sales and profit forecasts for the second time this year, flagging sales will grow as much as 4.75% in its fiscal 2025 year, up from previous upper guidance of 4%, driven by strong demand for essentials from consumers coping with high inflation. Shares rose as much as 8.4% to a record high of USD74.43 on Thursday after the world’s largest retailer by sales said consumers focused on value were flocking to its stores looking for cheaper goods. “We aren’t experiencing a weaker consumer overall,” Chief Executive Officer Doug McMillon said on a call with analysts. “They want value. They want a broad assortment of items and services.” In contrast, Home Depot earlier this week lowered its sales outlook, as its customers seemed reluctant to spend on major home projects amid high interest rates and inflation. (Capital Brief)

6.

Alibaba blues: China’s e-commerce titan Alibaba disappointed investors with plummeting profits and weaker-than-expected revenue growth of 4% during the June quarter, amid a weakening Chinese economy and intense competition from rivals such as JD.com and Temu-owner PDD Holdings. Revenue from core platforms, Taobao and Tmall, fell 1%, while Alibaba’s cloud computing unit showed modest growth of 5.9%. Alibaba is undergoing a strategic overhaul under CEO Eddie Wu, focusing on commerce, cloud computing and AI. While Alibaba struggled with a shrinking domestic market share and increased operational costs, JD.com’s profits beat 2Q forecasts. Meanwhile, official economic data from China released Thursday showed the economy is fighting to recover, with retail sales rising 2.7% in July compared to a year earlier. But fixed-asset investment growth moderated and property investment fell sharply. (Capital Brief)(Bloomberg)(Reuters)

7.

Microsoft’s transformation: Microsoft’s corporate vice president, Charles Lamanna, told Capital Brief that the tech giant would have been reluctant to invest in OpenAI in 2013 due to its insular culture under then-CEO Steve Ballmer. “Back then, Redmond had all the answers,” Lamanna said, referring to Microsoft’s headquarters in Redmond, Seattle. “You looked inward to figure out the future.” Since Satya Nadella’s leadership began in 2014, the company has radically transformed, embracing collaboration and external ideas. “We [now] don’t think Microsoft has all the answers. That is a cultural change that unlocked the OpenAI investment… that is a very different Microsoft,” she said. The shift has been crucial in Microsoft’s AI strategy, with Copilot now a key growth driver. In an interview Lamanna rejected claims of internal competition over Copilot’s future, Microsoft’s commitment to innovation and said unity was stronger than ever. (Capital Brief)

8.

Scandinavian pitch: Glenn Kolomeitz, a former military lawyer and ex-Labor state candidate, will announce his candidacy for a Senate seat with the Jacqui Lambie Network (JLN) in NSW at the next federal election on Monday. Kolomeitz, who previously ran unsuccessfully for a state seat in Kiama, believes JLN's centrist approach and Lambie’s influence might help him overcome the challenge of securing a federal seat in a competitive NSW landscape. He told Capital Brief defence spending should be balanced with social issues like health and housing, arguing Australia should look to Scandinavian countries as a model. Kolomeitz has been critical of Australian Defence Force handling of war crime allegations and has advocated for a royal commission into veteran suicide. (Capital Brief)