Friday Morning Reads
- Durable goods orders fall short of estimates for the second month
- Q3 GDP revised down a tick to 3.4%
- Trump: `Shutdown today if Democrats do not vote for border security!'
- Shutdown adds to worries; futures slide
- Facebook developing crypto for WhatsApp transfers - Bloomberg
- RBC sees $19B in Alexa revenue
- Big deal announcements for Boeing
- Morgan Stanley slices FedEx target
- Berkshire's Jain buys the dip
- Freeport McMoRan, Indonesia close long-awaited $3.85B deal
- Indian regulator issues Baby Powder order to J&J
- FDA reiterates oversight role on cannabis food & drink
- When Market Ills Make the Economy Sick
- Investors Are in Retreat
- A History of Fed Rate Hikes
- More Stimulus in 2019
- An Independent Fed
- The Fed Marched Ahead
- Hemp Going Legal
- Partnership Is Win-Win
- Shed $1 Billion
- Now Comes The Hard Part
- Surveying the Damage
Stock markets around the world continued to slide Friday as a last minute Santa Rally continued to look increasingly unlikely. Adding to worries triggered by the Federal Reserve, President Trump is refusing to sign a stopgate spending bill unless he gets border wall funding, sparking fears of a weekend government shutdown. U.S Defense Secretary James Mattis, largely seen as a moderating influence on the president, also resigned overnight, extending political tensions after Trump announced a decision to withdraw U.S. troops from Syria.
China's top policy makers confirmed that more monetary and fiscal support is on the way, as the world’s second-biggest economy grapples with a slowdown that's yet to show signs of ending. "Significant" cuts to taxes and fees will be enacted in 2019 and while monetary policy will remain "prudent," officials will strike an "appropriate" balance between tightening and loosening, according to a statement published after the annual Economic Work Conference.
A flurry of IPOs in Hong Kong propelled the financial center to first place in volumes globally in 2018. Companies raised a total of $36.3B, well ahead of New York Stock Exchange's $28.9B, and a 174% increase year-on-year. Dealmakers also celebrated their third-strongest M&A year on record, up 20% from a year ago to $3.91T, but 2019 is looking dimmer due to a stock market selloff and Sino-U.S. trade war.
It's a big day for Spain's Socialist Prime Minister Pedro Sanchez, who will decree a 22% rise in the minimum wage that will take the country from being among the lowest base pay in Europe to one of the highest. The IMF and business groups say the move will lead to job losses while the OECD is more positive about it. Spain chose the low-cost economy route out of the financial crisis of 2008/09, slashing wages to create a competitive advantage.
Focusing first on the remittances market in India, Facebook (NASDAQ:FB) is working on making a cryptocurrency - called stablecoin and pegged to the U.S. dollar - that will let users transfer money over WhatsApp, Bloomberg reports. The company has long been expected to make a move in financial services, after hiring former PayPal president David Marcus to run its Messenger app in 2014. In May, Marcus became the head of Facebook's blockchain initiatives.
The first futures contract, launched by the Intercontinental Exchange (NYSE:ICE), that will pay out in cryptocurrency rather than cash is expected to soon get regulatory approval from the Commodity Futures Trading Commission, WSJ reports. Bitcoin futures currently allow investors to bet on the price of the cryptocurrency. Other bitcoin-futures contracts exist but they pay out in dollars. Bitcoin +7.2% to $4,010.
More companies are distancing themselves from Huawei, while the Chinese firm faces a new hurdle: reduced access to the global financial system. Two banks that helped power Huawei's rise as a global technology supplier, HSBCand Standard Chartered (OTC:SCBFY), won't provide it with fresh funding or banking services. Citigroup (NYSE:C) is also putting new banking business with Huawei on review due to national security risks.
Qualcomm has won a second court skirmish in its worldwide patent dispute with Apple (NASDAQ:AAPL), with the iPhone maker saying it would pull some older models from its German stores. At issue were phones containing a chip from Qorvo (NASDAQ:QRVO), which violated a Qualcomm (NASDAQ:QCOM) patent related to envelope tracking, a feature that helps conserve battery power while transmitting wireless signals. The complex legal battle is likely to spin into overdrive in the coming months.
Chinese regulatory officials have cleared some new video games from Tencent (OTCPK:TCEHY) in the world’s largest gaming market, propelling shares up by as much as 4.6% in Hong Kong. China stopped approving new titles from March amid a regulatory overhaul triggered by growing criticism of video games for being violent, leading to myopia and addiction among young users.
Malaysia's finance minister is seeking $7.5B in reparations from Goldman Sachs (NYSE:GS) over its dealings with scandal-linked state fund 1MDB, FTreports. The sum is the highest reparations target so far demanded by Malaysia, and follows comments by Anwar Ibrahim, the country's probable next prime minister, calling for restitution in excess of the $600M the bank gained in fees from 1MDB.
Juul is now worth more than SpaceX (SPACE) at a $38B valuation after Altria (NYSE:MO) finalized a $12.8B deal for a minority stake in the e-cigarette company. It's part of an overall trend from traditional smoking into non-combustible products and marijuana. In related news, shares of Canopy Growth (NYSE:CGC) are up 4% premarket after President Trump signed the Farm Bill, which legalized commercial production of hemp in the U.S.
Campbell Soup has named former head of Pinnacle Foods (NYSE:PF) Mark Clouse as its new chief executive officer, effective Jan. 22, 2019. He'll succeed Keith McLoughlin, who will remain on the board. Clouse, who left Pinnacle earlier this year when it sold to ConAgra Brands (NYSE:CAG), reportedly has the support of Campbell (NYSE:CPB) shareholder and activist investor Third Point, which hopes Campbell will eventually put itself up for sale.
India's drugs regulator has reportedly ordered Johnson & Johnson (NYSE:JNJ) to stop manufacturing its Baby Powder using raw materials at two of its Indian factories until test results prove they are free of asbestos. "All talc in India fully meets the regulatory standards," J&J said in a statement, adding that it's routinely tested by both suppliers and independent labs to ensure the mineral is free of asbestos.
In one of the biggest demands for back taxes ever made in Ireland, local authorities are demanding drugmaker Perrigo (NASDAQ:PRGO), formerly known as Elan, pay €1.64B in taxes relating to the calendar year 2013. According to the filing, intellectual property sales, including multiple sclerosis drug Tysabri, was taxed as trading income at 12.5% instead of 33%. Perrigo strongly disputes the assessment and will appeal. PRGO -8.4% premarket.
Japanese prosecutors have re-arrested former Nissan (OTCPK:NSANY) Chairman Carlos Ghosn on more serious allegations of financial misconduct, including charges of making Nissan shoulder $16.6M in personal investment losses. The latest twist in the saga has jolted the global auto industry and Nissan's alliance with France's Renault (OTCPK:RNLSY), while dealing a blow to the car titan's efforts to end his month-long stay in jail and seek bail.
Mitsubishi is seeking the dismissal of a trade secrets case brought by Bombardier (OTCQX:BDRAF, OTCQX:BDRBF) because the allegations are "baseless" and designed to "disrupt development" of its long-delayed MRJ regional jet. The lawsuit alleges that Bombardier employees who were recruited by Mitsubishi (OTCPK:MSBHY) brought with them confidential documents and data related to the certification of airplanes in Canada and the U.S.
General Motors will respond by Jan. 7 to a Canadian union's proposals for keeping an Ontario auto assembly plant open, according to the head of Canada's largest private sector union Unifor. Meanwhile, Tesla (NASDAQ:TSLA) CEO Elon Musk raised hopes in a Twitter exchange with outgoing Ohio Governor John Kasich that he could ride to the rescue of a threatened GM car plant in Warren, Ohio, but its fate would depend on union talks next year.
Accenture (NYSE:ACN) -4.9% on light revenue outlook.
BlackBerry (NYSE:BB) +2.7% with software, services growth.
Carnival (NYSE:CCL) -9.5% giving downside guidance.
ConAgra (CAG) -16.5% posting light forecast for 2019.
Nike (NYSE:NKE) +7.9% AH crushing earnings expectations.
Walgreens (NASDAQ:WBA) -5% seeing big restructuring charges.
In Asia, Japan -1.1%. Hong Kong +0.5%. China -0.8%. India -1.9%.
In Europe, at midday, London %. Paris %. Frankfurt %.
Futures at 6:20, Dow -0.5%. S&P -0.5%. Nasdaq -0.6%. Crude -0.6% to $45.61. Gold -0.4% to $1262.90. Bitcoin +7.2% to $4010.
Ten-year Treasury Yield flat at 2.79%
Today's Economic Calendar
8:30 Durable Goods
8:30 GDP Q3
8:30 Corporate profits
10:00 Personal Income and Outlays
10:00 Consumer Sentiment
11:00 Kansas City Fed Mfg Survey
1:00 PM Baker-Hughes Rig Count