Friday Morning Reads
- China halts additional auto tariffs; Tesla cuts prices
- Markets drop on global growth fears
- Eurozone business growth plunges to four-year low
- EU leaders to sign off on eurozone reform
- AT&T declares $0.51 dividend
- Apple pushes update to resolve Qualcomm case
- Tesla loses head of digital product
- Organigram Holdings reports Q4 results
- XPO Logistics announces share repurchase authorization, shares up 7% premarket
- Court tosses permit for Atlantic Coast Pipeline to cross Appalachian Trail
- CLMT, COST, SHOP and SNH among notable After hours movers
- Senate Dems introduce bill to block "excessive" increases in drug prices
- Look to these stock market sectors in 2019
- Four experts weigh in on key market factors for 2019
- The perils of trying to time the market
- Growth Fears Pinch Commodities
- China Shows Off the Transformation It Wants You to See
- Teaching Empathy to Machines
- Does Anyone Care About Year-Ahead Outlooks?
- Making of a Computer-Generated Influencer
Stocks across the globe are losing ground after weak economic data from China and Europe (see below) fanned concerns of a worldwide slowdown. Traders had anticipated a "Santa Rally" might have arrived following a rough December start for equities, but current sentiment may now signal a dead-cat bounce. On the U.S. economic calendar for today are retail sales, industrial production and the flash Composite Purchasing Managers' Index.
The world's second-largest economy is showing more signs of stalling, suggesting the latest economic stimulus measures enacted since the summer have failed to reverse flagging growth. Chinese retail sales grew at the slowest pace in 15 years in November and factory output was the weakest in nearly three years, underlining rising risks over the wider impact of a yet unresolved Sino-U.S. trade dispute.
Eurozone business growth plummeted to a four-year low in December. IHS Markit's Flash Composite PMI slumped to 51.3, its weakest since November 2014, as the "yellow vest" protests in France - set for a fifth week this Saturday - and ongoing weak car demand exacerbated a widespread economic slowdown. "It's a relatively gloomy picture to end the year on," said Chris Williamson, chief business economist at IHS Markit.
Theresa May is going back to London empty-handed after racing to Brussels to get a few more "legal and political" reassurances from the EU regarding the controversial Irish backstop. Brexiteers and other U.K. lawmakers are concerned - that if activated - the backstop would keep the U.K. trapped in the EU's customs union indefinitely, with a limited ability to negotiate new trade deals.
EU leaders will approve a long-anticipated list of eurozone reforms today that are meant to strengthen the financial plumbing of the European economy. The centerpiece will be an agreement to pursue a eurozone budgetary "instrument" and expand the responsibilities of the ESM, but the deal ignores far grander visions like designating a eurozone finance minister or setting up a European version of the IMF.
In a largely symbolic vote, the U.S. Senate has voted to withdraw American military assistance for Saudi forces in Yemen following the October killing of journalist Jamal Khashoggi. It comes as Yemen's government and Houthis agreed to a ceasefire in Hodeidah, marking a breakthrough in the nearly four-year conflict. The embattled port city is a major source of rebel income and conduit for 70% of Yemen's imports.
Facing a court ban in China on some of its iPhone models, Apple (NASDAQ:AAPL) said it will push software updates to users in a bid to resolve potential issues. Qualcomm (NASDAQ:QCOM) had brought the case alleging patent infringement, amid a broader intellectual property dispute between the two companies that includes dozens of lawsuits. Apple has already filed a request for reconsideration with the court and all of its iPhones remain on sale in mainland China.
China has confirmed it will suspend additional tariffs on U.S.-made vehicles and auto parts for three months starting Jan. 1, 2019, following a trade truce between the world’s two largest economies. Following the news, Tesla (NASDAQ:TSLA) slashed prices on certain Model S cars by up to 105,000 yuan ($15,200) and Model Xs by up to 65,000 yuan. Next steps? There's word China will soon restart corn purchases.
President Trump told Fox News yesterday that General Motors (NYSE:GM) won't be "treated well" following the company's announcement of U.S. plant closings. He also said GM CEO Mary Barra was making an error by guiding the automaker's EV push. "All-electric is not going to work... It's wonderful to have it as a percentage of your cars, but going into this model that she's doing I think is a mistake."
Customers of California's largest utility, PG&E (NYSE:PCG) - who already pay some of the highest electricity prices in the U.S. - will likely be forced to foot billions of dollars in fire-related costs through massive rate hikes, WSJreports. PG&E already submitted a request for a 12% rate hike in 2020 to fund its community wildfire safety program, insurance liabilities and core gas and electric operations, but the request does not include funding for potential lawsuits.
It's the latest sign luxury travel is booming after an extended downturn. Louis Vuitton Moet Hennessy (OTCPK:LVMUY), better known as LVMH, has agreed to buy luxury hotel group Belmond (NYSE:BEL) in a deal valuing the company at $3.2B. Belmond owns, partly owns or manages 46 luxury hotels, restaurants, train and river cruise properties, and posted $140M in EBITDA in the 12-month period ended on Sept 30.
New York Attorney General Barbara Underwood is suing Target (NYSE:TGT), Walmart (NYSE:WMT) and a toy importer for allegedly distributing children's jewelry-making sets that contained lead at up to 10 times the federal limit. The "Cra-Z-Jewelz" kits were recalled in 2016, but the lawsuit hopes to force Target and Walmart to randomly test toys and make sure imported items have valid certificates of compliance.
Starbucks shares fell 3% AH on Thursday after lowering its long-term forecasts at an investor meeting. The coffee giant predicted global same-store sales growth of 3%-4% annually, marking the lower end of previous estimate. Starbucks (NASDAQ:SBUX) also trimmed its outlook for yearly EPS growth to at least 10%, after it had re-set the forecast in November 2017 to 12% or greater.
As it continues its largest ever restructuring, ThyssenKrupp (OTCPK:TYEKF) is proposing former Bayer (OTCPK:BAYRY) CFO Johannes Dietsch to become its chief financial officer, following a tumultuous summer that led the group's CEO and chairman to resign. Dietsch was CFO at Bayer from October 2014 to May 2018, where he arranged funding for the $63B all-cash takeover of Monsanto (NYSE:MON), as well as the separate listing of Bayer’s chemicals and plastics division Covestro.
The turnover at Tesla continues as Parag Vaish, head of digital product, jumps ship to join Google's (GOOG, GOOGL) internal incubator called Area 120. Vaish was originally hired by Jon McNeill, Tesla's (TSLA) former president of global sales and service who is now COO of LYFT. Vaish had also worked closely with Elon Musk on digital developments after McNeill left and most recently reported to Robin Ren, Tesla's VP of worldwide sales.
Renault is still trying to figure out what to do about embattled boss Carlos Ghosn, sources told Reuters, as board members began to voice doubts about keeping him in office following his indictment in Japan for alleged misconduct. Nissan (OTCPK:NSANY) and Mitsubishi (OTC:MMTOY) fired Ghosn as chairman just days after his detention, but Renault (OTCPK:RNLSY) has resisted pressure to dismiss him, as the scandal strains their carmaking alliance.
A Virgin Galactic rocket plane reached space and returned safely on Thursday, becoming the first U.S. commercial human flight to breach Earth's atmosphere since the U.S. shuttle program ended in 2011. "I would hope sometime in the middle of next year I will be going up and then quite soon after that the public will go up," founder Richard Branson told CNBC, cautioning that he "always get these estimates wrong."
In Asia, Japan -2%. Hong Kong -1.6%. China -1.5%. India +0.1%.
In Europe, at midday, London -0.8%. Paris -1%. Frankfurt -1%.
Futures at 6:20, Dow -1.1%. S&P -0.9%. Nasdaq -0.9%. Crude -0.7% to $52.21. Gold -0.4% to $1242.20. Bitcoin -3.2% to $3251.
Ten-year Treasury Yield -3 bps to 2.88%