DAILY MORNING CHAI BRIEFING

Global shares were mixed in cautious trading Friday as investors studied fresh data out of China showing that its recovery remains subdued. Shares were on the decline in early European trading after Asian benchmarks finished mostly higher. France's CAC 40 dropped more than 2.0% in early trading to 4,939.72, while Germany's DAX slipped 1.2% to 12,840.34. Britain's FTSE 100 lost 2.4% to 6,040.21. U.S. shares were set to drift lower with Dow futures down 0.7% at 27,634. S&P 500 futures fell 0.4% to 3,353.12 China reported its factory output rose 4.8% from a year earlier in July, on a par with June’s increase. Retail sales fell 1.1%, as consumers remain cautious. Malaysia reported, meanwhile, that its economy contracted at a real annual rate of 16.5% in April-June, its worst downturn on record. The Malaysian central bank forecast that the economy will return to growth in 2021. Widespread worries persist about a second, or third, surge in coronavirus cases in many places. Another afternoon fade for stocks left most benchmarks on Wall Street lower. Japan's benchmark Nikkei 225 gained nearly 0.2% to finish at 23,289.36. South Korea's Kospi slipped 1.2% to 2,407.49. Australia's S&P/ASX 200 added 0.6% to 6,126.20. Hong Kong's Hang Seng gyrated earlier in the day but lost 0.2% to 25,183.01, while the Shanghai Composite index gained 1.2% to 3,360.10. Trade tensions between the U.S. and China are also on investors' minds as so much of Asian regional growth depends on exports to those giant economies. The two sides are due to hold talks online later Friday on a trade deal reached in January that brought a truce in their bruising tariff war. U.S. retail sales, production and productivity data are expected later in the day. Benchmark U.S. crude lost 28 cents to $41.96 a barrel in electronic trading on the New York Mercantile Exchange. It fell 43 cents to $42.24 per barrel on Thursday. Brent crude, the international standard, added 18 cents to $45.14 a barrel.The state of the consumer is in focus as the world's two largest economies release retail sales figures for July, in addition to the latest consumer sentiment index from the University of Michigan. Retail figures from China overnight failed to hit positive territory (see below) and numbers in the U.S. are expected to come in at a clip of 1.9%. While that would continue a rebound seen in previous months, it would not be as rapid of a pace seen in May (17.7%) and June (7.5%), and could suggest growth is cooling. Another consumer gauge will be seen next week as major U.S. retailers like Walmart (NYSE:WMT) and Target (NYSE:TGT) release quarterly results. Recovery loses some momentum China's economy returned to growth in Q2 following a deep plunge at the start of the year, but unexpected weakness in domestic consumption has failed to shake off wariness about the coronavirus. Marking the seventh straight monthly drop, retail sales unexpectedly slipped 1.1% in July from a year ago, worse than a predicted 0.1% rise. Industrial output advanced 4.8%, missing analyst forecasts for 5.1% growth, suggesting the recovery in the world's second-largest economy is still fragile. Record remains elusive It doesn't look like the S&P 500 is going to achieve a fresh record closing high this week as futures contracts tied to the benchmark slipped 0.4% in overnight action. Weighing on sentiment is the stalemate over economic stimulus in Washington, the seizure of Iranian fuel cargo, renewed travel restrictions in Europe and a fall in Chinese retail sales. Traders are also bracing for high-level trade talks between U.S. and Chinese officials over the weekend, with Vice Premier Liu He expected to bring up concerns over the executive orders against WeChat (OTCPK:TCEHY) and TikTok (BDNCE). Digital dollar? Fed Governor Lael Brainard gave some updates yesterday on the Fed's ongoing experimentation with central bank digital currencies (CBDCs). It has been conducting in-house experiments for the last few years, through means that include the Board's Technology Lab, Fed application developers and a collaboration with MIT. Studies are exploring the "implications of digital currencies on the payments ecosystem, monetary policy, financial stability, banking and finance, legal tender status and consumer protection." Big court loss over product liability Amazon (NASDAQ:AMZN) has been successful in the past at shielding itself from lawsuits surrounding third-party sellers, but a new court decision could make it harder for the e-commerce giant to avoid such legal action. The California Fourth District Court of Appeals has ruled that Amazon can be held liable for damages caused by a defective replacement laptop battery that gave a San Diego woman third-degree burns after exploding. Amazon Marketplace, which hosts millions of third-party sellers, now accounts for approximately 60% of the company's e-commerce sales. Go deeper: Amazon axes several delivery partners. If you thought Epic Games was bluffing... After the game company sued Apple (NASDAQ:AAPL) Thursday night over Fortnite's removal from the App Store over payment cuts, Epic additionally sued Google (GOOG, GOOGL) following the game's removal from the Play Store. "While Fortnite remains available on Android, we can no longer make it available on Play because it violates our policies," Google said in a statement, although it let Android customers know the game was available elsewhere. Now that Epic has stepped into the ring, allies like Spotify (NYSE:SPOT) and Match Group (NASDAQ:MTCH) are starting to speak up with words that could help fuel the antitrust case against Apple. Alternative protein expansion Impossible Foods (IMPF) has brought in another $200M as part of its latest funding round, taking total capital raised to $1.5B as it competes against Beyond Meat (NASDAQ:BYND). Coatue Management led the round, with Mirae Asset Global Investments, Temasek Holdings and XN Capital as investors. "We need to meet the incredible demand we're seeing," said CFO David Lee. "Our retails business has grown over 60x to over 8,000 grocery locations, so we're excited to deploy more capital against our mission." Methane regulations lifted for oil and gas industry The Trump administration has rolled back another Obama-era climate regulation, eliminating federal requirements for oil and gas companies to monitor and repair methane emissions from pipelines, storage facilities and wells. "EPA has been working hard to fulfill President Trump's promise to cut burdensome and ineffective regulations for our domestic energy industry," EPA Administrator Andrew Wheeler declared. Proponents of the rule include smaller oil and gas companies that argue the regulations are too expensive, though some of the larger industry players, like Exxon (NYSE:XOM), BP (NYSE:BP) and Shell (RDS.A, RDS.B), have opposed the decision due to their climate change pledges. What else is happening... Novavax (NASDAQ:NVAX) to supply 60M COVID-19 vaccine doses to the U.K. WeWork (WE) secures $1.1B loan from SoftBank (OTCPK:SFTBY) as it cuts cash burn. Tesla (NASDAQ:TSLA) may be working on new car model made in China. ViacomCBS (NASDAQ:VIAC) streaming rebrand, isn't opposed to company sale - FT. Thursday's Key Earnings Applied Materials (NASDAQ:AMAT) +3.3% AH after beats, strong FQ4 guidance. Baidu (NASDAQ:BIDU) -6.6% AH as revenues flag, SEC probes iQiyi. Today's Markets In Asia, Japan +0.2%. Hong Kong -0.2%. China -1.2%. India -1.1%. In Europe, at midday, London -1.9%. Paris -1.8%. Frankfurt -1.2%. Futures at 6:20, Dow -0.5%. S&P -0.4%. Nasdaq -0.2%. Crude -0.6% to $42.00. Gold -0.7% to $1955.90. Bitcoin +3.2% to $11760. Ten-year Treasury Yield -2 bps 0.7% DraftKings (NASDAQ:DKNG) reports revenue of $70.93M and a loss of $160.44M for a quarter that included far less sports than anticipated. "As sporting events began to resume, the company saw increased engagement with its sports-based product offerings, which contributed to sequential monthly revenue improvement during the second quarter. This positive momentum has accelerated with the return of MLB, the NBA, WNBA, the NHL, and MLS." The company says it had $1.2B on its balance sheet at the end of the quarter after a follow-on offering. Looking ahead, DraftKings sees revenue of $500M to $540M in FY20 on a pro forma basis. Growth is still on the agenda as DraftKings is working to enter Virginia and Tennessee for sports betting and Michigan for sports betting and iGaming. DraftKings is hosting a conference call at 8:30 a.m. EDT. The impact of major college football conferences canceling their seasons could be a topic of discussion. Today's Economic Calendar 8:30 Retail Sales 8:30 Productivity and Costs 9:15 Industrial Production 10:00 Business Inventories 10:00 Consumer Sentiment 10:00 Fed's Kaplan Speech 1:00 PM Baker-Hughes Rig Count