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Johnson Controls raises 2025 profit forecast on sustained demand

Johnson Controls raises 2025 profit forecast on sustained demand

Reuters07-05-2025

May 7 (Reuters) - Johnson Controls International (JCI.N), opens new tab raised its 2025 profit forecast after beating second-quarter expectations on Wednesday, helped by sustained demand from data centers for its building and industrial equipment.
Data centers worldwide have enjoyed a boom in demand as businesses increasingly invest in artificial intelligence technology.
Johnson Controls - which makes liquid cooling systems used for IT equipment at data centers, as well as specialized security and fire systems - has benefited from this trend.
The Cork, Ireland-based company now expects 2025 adjusted profit per share of $3.60, the top end of its previous forecast range of $3.50 to $3.60.
Excluding items, the company reported second-quarter profit of 82 cents per share, compared with analysts' estimates of 79 cents per share, per data compiled by LSEG.
Total revenue for the quarter ended March 31 was $5.68 billion, up 1.4% from a year earlier. Analysts, on average, were expecting revenue of $5.64 billion.

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TRADING DAY Good vibrations turn sour
TRADING DAY Good vibrations turn sour

Reuters

timean hour ago

  • Reuters

TRADING DAY Good vibrations turn sour

ORLANDO, Florida, June 11 (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist I'm excited to announce that I'm now part of Reuters Open Interest (ROI), an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X. The US and China have reached a trade deal, or at least agreed on the framework of a deal, which together with surprisingly soft U.S. inflation data, gave markets a lift on Wednesday. But Wall Street's gains were mild, and they were later wiped out by rising tensions in the Middle East. In my column today I look at the 'equity risk premium' and other metrics that suggest relative U.S. equity and bond valuations are getting very stretched. More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Good vibrations turn sour It's a "done" deal, according to U.S. President Donald Trump, although the he and Chinese leader Xi Jinping still have to finalize the wording of the trade agreement between the two superpowers and sign off on it. The main points of the deal appear to be: China will remove export restrictions on rare earth minerals and other key industrial components; U.S. tariffs on Chinese goods will total 55%; Chinese tariffs on U.S. goods will total 10%. Trump could not have been more enthusiastic in his praise for the agreement on Wednesday, and Commerce Secretary Howard Lutnick said 'deal after deal' with other countries will follow in the weeks ahead. Yet, judging by the relatively muted market reaction, investors are less enthused. And given the chaotic and unpredictable nature of the Trump administration's tariff announcements thus far, the irony of Treasury Secretary Scott Bessent calling on China to be a "reliable partner" in trade negotiations will not be lost on some observers. Especially, one suspects, in Beijing. Based on these proposed China levies, and with the US expected to conclude more trade deals in the coming weeks, the overall U.S. effective tariff rate will be lower than feared a couple of months ago. That's a relief. But the effective tariff rate of around 15% that many economists expect will still be significantly higher than the 2.5% rate at the end of last year, and would be the highest since the 1930s. Also, as the May inflation figures showed, tariffs have yet to be felt on prices. Investors - and Fed policymakers, who meet next week - are in a state of limbo. How will corporate profits and consumer spending be affected? What proportion of the tariffs will companies "swallow", and how much will they pass on to their customers? Zooming out, inflation appears to be cooling around the world, although this trend is expected to reverse once tariffs start to fuel higher goods price inflation. Figures on Wednesday showed that U.S. consumer inflation and Japanese wholesale inflation were lower than expected in May. These reports follow similar numbers from Europe recently, and China remains stuck in its battle against deflation. Next up is India, which releases consumer inflation figures on Thursday, which are expected to show annual inflation slowed to 3.0% in May, the lowest in more than six years. Another focus for investors on Thursday will be the auction of 30-year U.S. Treasury bonds. US stocks-bonds warnings flash amber again Calm has descended on U.S. markets following the 'Liberation Day' tariff turmoil of early April. But Wall Street's rally has revived questions about U.S. equity valuations, as stocks once again look super pricey compared to bonds. Since the chaotic days of early April, U.S. equities have rebounded fiercely, with the S&P 500 up 25%, putting the Shiller cyclically adjusted price-earnings (CAPE) ratio for the index in the 94th percentile going back to the 1950s, according to bond giant PIMCO. Stocks are looking expensive in absolute terms, and in relation to bonds. The equity risk premium (ERP), the difference between equity yields and bond yields, is near historically low levels. According to analysts at PIMCO, the ERP is now zero. The previous two times it fell to zero or below were in 1987 and 1996–2001. In both instances, the ultra-low ERP precipitated a steep equity drawdown and sharp fall in long-dated bond yields. "The U.S. equity risk premium ... is exceptionally low by historical standards," they wrote in their five-year outlook on Tuesday. "A mean reversion to a higher equity risk premium typically involves a bond rally, an equity sell-off, or both." But reversion to the mean doesn't just happen by magic. A catalyst is needed. Equities have recovered largely because they were oversold in April, trade tensions have been dialed down, and investors remain confident that Big Tech will drive solid AI-led earnings growth. So even though huge economic, trade, and policy risks continue to hang over markets, there is no sign of an imminent catalyst that would cause an equity market selloff. The flip side of equities looking expensive is that bonds look like a bargain. Indeed, the relative divergence between stocks and bonds is such that, by one measure, U.S. fixed income assets are the cheapest relative to equities in over half a century. Using national flow of funds data from the Federal Reserve, retired strategist Jim Paulsen calculates that the total market value of U.S. bonds as a percentage share of the total market value of U.S. equities is the lowest since the early 1970s. "Since the aggregate U.S. portfolio is currently aggressively positioned, investors may have far more capacity and desire to boost bond holdings in the coming years than most appreciate," Paulsen wrote last week. But bonds are 'cheap' for a reason. Washington's profligacy – the reason ratings agency Moody's recently stripped the U.S. of its triple-A credit rating – and inflation worries have kept yields stubbornly high. The term premium - the risk premium investors demand for holding long-term debt rather than rolling over short-dated loans - is the highest in over a decade, reflecting concerns about Uncle Sam's long-term fiscal health. And the diagnosis here shows no signs of improving. Trump's 'Big Beautiful Bill' is expected to add $2.4 trillion to the U.S. debt over the next decade, according to the nonpartisan Congressional Budget Office, likely putting more upward pressure on yields. Of course, equity investors do seem to be pricing in a very rosy scenario, and the past few months have shown how quickly the market landscape can change. The U.S. economy could weaken more than expected, the trade war could escalate, or there could be a geopolitical surprise that causes bond yields and equity prices to fall. Investors should therefore be mindful of the warnings being sent by ERPs and other absolute and relative valuation metrics. However, they should also remember that stretched valuations can get even more stretched. As the famous saying goes, markets can stay irrational longer than investors can remain solvent. What could move markets tomorrow? Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.

Disney and Universal sue AI firm Midjourney for copyright infringement
Disney and Universal sue AI firm Midjourney for copyright infringement

Belfast Telegraph

time2 hours ago

  • Belfast Telegraph

Disney and Universal sue AI firm Midjourney for copyright infringement

Filed in federal district court in Los Angeles, the complaint claims Midjourney pirated the libraries of the two Hollywood studios to generate and distribute 'endless unauthorised copies' of their famed characters, such as Darth Vader from Star Wars and the Minions from Despicable Me. 'Midjourney is the quintessential copyright free-rider and a bottomless pit of plagiarism. Piracy is piracy, and whether an infringing image or video is made with AI or another technology does not make it any less infringing,' the companies state in the complaint. The studios also claimed the San Francisco-based AI company ignored their requests to stop infringing on their copyrighted works and to take technological measures to halt such image generation. Midjourney did not immediately respond to a request for comment Wednesday. In a 2023 interview with The Associated Press, Midjourney CEO David Holz described his image-making service as 'kind of like a search engine' pulling in a wide swath of images from across the internet. He compared copyright concerns about the technology with how such laws have adapted to human creativity. 'Can a person look at somebody else's picture and learn from it and make a similar picture?' Mr Holz said. 'Obviously, it's allowed for people and if it wasn't, then it would destroy the whole professional art industry, probably the nonprofessional industry too. 'To the extent that AIs are learning like people, it's sort of the same thing and if the images come out differently then it seems like it's fine.' Major AI developers do not typically disclose their data sources, but have argued that taking troves of publicly accessible online text, images and other media to train their AI systems is protected by the 'fair use' doctrine of American copyright law. The case joins a growing number of lawsuits filed against developers of AI platforms — such as OpenAI, Anthropic — in San Francisco and New York. Meanwhile, the first major copyright trial of the generative AI industry is under way in London, pitting Getty Images against artificial intelligence company Stability AI.

Disney and Universal sue AI firm Midjourney for copyright infringement
Disney and Universal sue AI firm Midjourney for copyright infringement

South Wales Guardian

time3 hours ago

  • South Wales Guardian

Disney and Universal sue AI firm Midjourney for copyright infringement

Filed in federal district court in Los Angeles, the complaint claims Midjourney pirated the libraries of the two Hollywood studios to generate and distribute 'endless unauthorised copies' of their famed characters, such as Darth Vader from Star Wars and the Minions from Despicable Me. 'Midjourney is the quintessential copyright free-rider and a bottomless pit of plagiarism. Piracy is piracy, and whether an infringing image or video is made with AI or another technology does not make it any less infringing,' the companies state in the complaint. The studios also claimed the San Francisco-based AI company ignored their requests to stop infringing on their copyrighted works and to take technological measures to halt such image generation. Midjourney did not immediately respond to a request for comment Wednesday. In a 2023 interview with The Associated Press, Midjourney CEO David Holz described his image-making service as 'kind of like a search engine' pulling in a wide swath of images from across the internet. He compared copyright concerns about the technology with how such laws have adapted to human creativity. 'Can a person look at somebody else's picture and learn from it and make a similar picture?' Mr Holz said. 'Obviously, it's allowed for people and if it wasn't, then it would destroy the whole professional art industry, probably the nonprofessional industry too. 'To the extent that AIs are learning like people, it's sort of the same thing and if the images come out differently then it seems like it's fine.' Major AI developers do not typically disclose their data sources, but have argued that taking troves of publicly accessible online text, images and other media to train their AI systems is protected by the 'fair use' doctrine of American copyright law. The case joins a growing number of lawsuits filed against developers of AI platforms — such as OpenAI, Anthropic — in San Francisco and New York. Meanwhile, the first major copyright trial of the generative AI industry is under way in London, pitting Getty Images against artificial intelligence company Stability AI.

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