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China’s Retaliation to Pelosi’s Trip Keeps Chips Off the Menu for Now

Speaker of the House Nancy Pelosi, left, received Taiwan’s highest civilian honor from President Tsai Ing-wen, right, in Taipei.

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China’s fresh blockade of food imports from Taiwan wasn’t enough to further destabilize markets nervous about House Speaker Nancy Pelosi’s historic visit to the island.

Beijing’s four days of military drills in the waters surrounding Taiwan, beginning Thursday after Pelosi’s departure, could be, however.

U.S. determination, according to Pelosi, “to preserve democracy here in Taiwan and around the world remains ironclad” won’t go down well with Chinese President Xi Jinping, who regards the territory as a breakaway province.

But investors are taking the standoff in their stride, with Hong Kong’s

Hang Seng Index
ending the day in positive territory, the yield on 10-year U.S. Treasury notes steadying, and shares in major microchip producer


Taiwan Semiconductor Manufacturing Co.

up 1.8%.

Adding biscuits, citrus fruits, and more to the list of foodstuffs that China won’t buy from Taiwan is largely symbolic. Semiconductors and other electronic components are the biggest contributor by far to last year’s record $189 billion of imports from its neighbor and they won’t be affected.

Xi can’t risk further destabilizing his economy, where factory activity is shrinking even as the latest Covid-19 outbreaks appear to be under control. It is a reminder that Taiwan sits at the heart of a complex supply chain that won’t be unwound soon.

For


Advanced Micro Devices
,
one of TSMC’s largest customers, the deteriorating personal-computer market is of bigger concern than geopolitics right now, as seen in its weak third-quarter outlook. China accounted for a quarter of group sales last year, whereas for


Qualcomm

it makes up two-thirds.

At least AMD is outpacing its old foe


Intel

in server chips. Still reeling from last week’s warning, Chipzilla could yet benefit from ongoing Taiwanese tensions, one analyst reckons, as its manufacturing assets have “significant strategic value” to the U.S.

James Ashton

*** Join MarketWatch deputy personal finance editor Leslie Albrecht today at noon as she talks to housing reporter Aarthi Swaminathan about the state of the housing market. Sign up here.

***

Robinhood Cuts Another 23% of Staff Amid Trading Slowdown


Robinhood Markets

is cutting jobs again, this time nearly one-quarter of its staff amid a sharp slowdown in online trading activity. The move comes just months after the digital brokerage slashed 10% of its staff, and this time around, it admits that didn’t go far enough.

CEO Vlad Tenev said high inflation and this year’s crypto market crash cut customer activity and assets under custody. Staff levels, which assumed that the higher activity levels from the Covid era would persist into this year, are too high for current conditions, he said.

Robinhood also released its earnings early. A second-quarter loss of 34 cents a share was worse than expected, and it added 100,000 net new customer accounts. Monthly active users plunged 34% from last year, to 14 million. Revenue fell 44%, to $318 million.

Robinhood reported 21 million active users in last year’s second quarter. The layoffs focus on operations, marketing, and program management, Tenev said.


Twitter

and


Netflix

have also cut staff amid the tech sector’s slowdown while other companies have slowed or suspended hiring.

Also on Tuesday, New York State Department of Financial Services fined Robinhood’s crypto trading unit $30 million for alleged violations of anti-money-laundering and cybersecurity regulations. Robinhood told Barron’s it was pleased the matter was settled.

What’s Next: In a bid to diversify, Robinhood introduced stock lending this quarter, saying $3 billion had already been enrolled and ready to lend. It plans to introduce advanced charting and screening tools and retirement accounts later this year.

Liz Moyer

***

PayPal Gets a Jolt as Elliott Confirms a $2 Billion Stake


PayPal Holdings
,
the digital-payments company, offered an earnings report chock-full of other news, including a plan to buy $15 billion of its shares, a new chief financial officer, and a $2 billion stake by activist investor Elliott Management. Earnings beat expectations.

PayPal shares, which are down 52% this year, jumped 12% after the announcement late Tuesday. Part of the gain was attributed to Elliott’s confirmation of its stake, as it confirmed a stake in


Pinterest

on Monday.

PayPal hired


Electronic Arts

CFO Blake Jorgensen to serve in the same role, succeeding John Rainey, who stepped down earlier this year to become


Walmart
’s
CFO. A search for a new chief product officer is also under way after Mark Britto announced retirement plans.

The company also announced the $15 billion share-purchase program and a cost-saving plan designed to achieve $900 million in savings this fiscal year and $1.3 billion in savings next year.

PayPal had 429 million active accounts as of the second quarter, about flat from the first-quarter total but up from 403 million active accounts in the second quarter of 2021.

What’s Next: Executives forecast 10% revenue growth for the year, or 11% growth on a currency-neutral basis, which is at the low end of a previous range, MarketWatch reported. Adjusted earnings per share are projected at $3.87 to $3.97 for the full year.

Liz Moyer

***

Airbnb Beats Expectations While Match Group Makes Changes


Airbnb

reported a second-quarter profit for the first time since 2020 as people booked rooms and experiences despite rising inflation causing them to cut back elsewhere in their budgets, though some investors remain divided over whether the demand is sustainable with a potential economic downturn.

Airbnb’s profit of $379 million beat expectations and revenue was 58% higher than last year’s second quarter. Nights and experiences booked rose 25% and were the highest quarterly total for the company. Third-quarter growth should be about the same.


Marriott International

revenue jumped 70% from last year and beat expectations. Revenue per available room rose, too, led by an 88% increase from international operations, and a 66% gain in the U.S. and Canada.

The hotel giant’s third-quarter and year-end guidance beat expectations. Marriott bought back $300 million of its shares in the second quarter plus $148 million more in July. Airbnb’s board approved buying back $2 billion of its shares.


Match Group

detailed a slowdown for its popular dating app Tinder, pausing such initiatives as Tinder-based crypto and “metaverse” dating. Shares plunged 22% late Tuesday. Match will write down $217 million on its acquisition of Hyperconnect, an Asian dating company attempting to integrate “metaverse” features.

What’s Next: Match’s third-quarter guidance is below analysts’ forecasts, and it is going to cut back on marketing and hiring this year, though maybe not in enough time for fourth-quarter results. It expects limited fourth-quarter improvement in year-over-year revenue growth from the third quarter.

Janet H. Cho

***

Oil Prices Fall Ahead of Key OPEC Meeting

Oil prices fell Wednesday, as traders worried that the Organization of the Petroleum Exporting Countries will decide to keep output unchanged despite concerns demand will fall ahead of an expected slowdown in economic growth.

OPEC and its allies, known as OPEC+, will discuss September output amid an escalating energy cost crisis. Brent crude, the international benchmark, fell more than 1%, and West Texas Intermediate, the U.S. standard, fell almost 1%.

Ricardo Evangelista, a senior analyst at ActivTrades, wrote, “No surprises are expected and therefore the price of the barrel is unlikely to move much, even if a modest increase in production is announced, as members of the oil cartel haven’t been hitting their output targets.”

Barron’s has explained that OPEC’s power has diminished significantly the past few months, because non-OPEC players have been able to increase drilling while several of the cartel’s members have struggled.

What’s Next: Some countries have been tapping their strategic petroleum reserves. The U.S. strategic petroleum release is set to end in October. Oil prices probably can’t keep falling without some action from OPEC to increase production. That makes OPEC’s Wednesday meeting particularly important.

Rupert Steiner and Avi Salzman

***

Americans Rack Up Credit-Card Debt Most in 20 Years

Americans charged an extra $46 billion on their credit cards during the second quarter, and the 13% cumulative increase in credit-card debt since last year’s second quarter is the highest rate in more than 20 years, according to the New York Federal Reserve Bank.

Total U.S. household debt is $16.15 trillion, more than $2 trillion higher than before the pandemic. Consumers also added $312 billion in mortgage and nonmortgage debt during the second quarter, according to the New York Fed.

Some of the increase in mortgage, auto, and credit-card loan balances reflects higher prices, according to Joelle Scally, administrator of the New York Fed’s Center for Microeconomic Data. But the Fed is seeing rising delinquencies among subprime and low-income borrowers.

Credit-card issuers are aggressively wooing new customers with mailers, advertising, and extra rewards, and new account openings are surging. Consumers paid down debt during the pandemic when they were stuck at home and flush with government stimulus checks, The Wall Street Journal reported.


Citigroup

booked 1.07 million new credit cards in the second quarter, up 18% from last year;


Wells Fargo

added 524,000 cards, up 62%; and


Bank of America

added 1.07 million, up 15%.


American Express
’s
Platinum card, Gold card, and


Delta Air Lines

cards saw record U.S. sign-ups in the second quarter.

What’s Next: Bank executives say higher payment rates, low unemployment, and credit-card delinquencies below prepandemic levels show that consumers are in good financial shape and able to manage their debts, the Journal reported.

Janet H. Cho

***

Dear Quentin,

I have been with my boyfriend for over two years and he recently dumped me, which caught me off guard, blindsided me and left me so confused. We spent every weekend together; he would call me at 8:30 p.m. every night and I would always wake up to a good-morning text.

When I met him, I was in the middle of a total house renovation. He is a contractor. Weekends consisted of doing projects around my house together. I felt like Chip and Joanna Gaines, exercising and enjoying my home-cooked meals and watching Netflix.

Last weekend, he hung some blinds for my daughter. Then I asked him to take a look at my pond, as it was leaking. We worked on the pond for a few hours and, when we were done, he was angry and tired of doing things around my house. He said it wasn’t his house, even though he stays there 12 to 15 times a month.

He took me to dinner on rare occasions, but I prefer to cook and he does not contribute to the grocery bill, which is fine. Something snapped inside him. He told me that he loves me, but said this isn’t working out for him. He was tired of driving 45 minutes after work on Fridays to see me.

I told him that once he closed on his condo, I would drive to see him. He is living with his daughter and she has not been very friendly to me. He responded that he would not want to take me away from my paradise. I told him I would never ask him to do another thing around my house, and to leave his tools at home.

Although it was an amicable breakup, I am still in shock. I have not reached out to him, as he told me that I have to let him go. Any insight on your part would be greatly appreciated.

—The Reluctant Ex

Read The Moneyist’s response here.

Quentin Fottrell

***

Learn how to shake up your financial routine at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. Join Carrie Schwab, president of the Charles Schwab Foundation. Sign up here.

***

—Newsletter edited by Liz Moyer, Camilla Imperiali, Rupert Steiner, Joe Woelfel

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