Morning Reads, Charts, and More
It might be time to get on the party hats. Dow futures are up 0.2% after the blue-chip index yesterday came within 20 points of hitting 20,000. Its ongoing flirtation with the key level has become the talk of Wall Street, as only three more days remain for 2016 to claim the milestone - otherwise, assuming it comes to pass, it will be officially credited to 2017. At that level, the Dow's year-to-date gain would total almost 15%.
China's requirement for how much cash banks must hold as reserves is "very high" and should be reduced at an "appropriate time," Banking Regulatory Commission official Yu Xuejun said in Beijing. The People's Bank of China has held the RRR at 17% since February after four cuts last year. It'll be decreased to 16.5% in the fourth quarter of 2017, then 16% in the first quarter of 2018.
The Obama administration is finalizing a package of sanctions and diplomatic censure to punish Russia for its attempts to meddle in the 2016 presidential election, U.S. officials told the Washington Post. The measures are also expected to include covert cyber operations. An announcement describing the public portions of the response could come as early as this week.
Expanding the truce that was established in Aleppo earlier this month, Turkey and Russia have agreed on a plan to declare a nationwide ceasefire in Syria. The proposal would come into force "in all regions" where fighting between pro-government forces and opposition groups is taking place, but terror groups, which weren't mentioned specifically by name, will not be part of the agreement.
The Korea Fair Trade Commission has fined Qualcomm (NASDAQ:QCOM) 1.03T won ($854M) for what it called unfair business practices in patent licensing and modem chip sales. Calling the move "unprecedented and insupportable," the U.S. firm said it would challenge the antitrust regulator's decision in the Seoul High Court. The fine is the largest ever levied in South Korea.
Toshiba shares tumbled 20% overnight, hitting the Tokyo exchange's daily downward limit, after the company said it could face a multi-billion dollar charge on the nuclear power unit it acquired last year from CB&I (NYSE:CBI). Addressing reporters late on Tuesday, Toshiba (OTCPK:TOSYY) executives declined to provide further details about the writedown, adding that the sum would be finalized by mid-February.
More Brexit uncertainty? Lloyds (NYSE:LYG) is planning to establish a subsidiary in Germany or the Netherlands if the U.K. leaves the European Union without retaining access to its single market, FT reports. A number of Japanese banks also said this month they would begin shifting parts of their business by June unless they had clarity on Britain's relationship with the EU.
BP has agreed to buy the Australian fuels business of Woolworths (OTCPK:WOLWF) for $1.3B, adding 527 gas stations and 16 development sites to its retail footprint that already spans around 1,400 sites in Australia. BP also owns the Kwinana oil refinery in Western Australia state, and stakes in the active North West Shelf LNG facility and proposed Browse gas-export venture.
The United States again ranked first in global weapons sales last year, signing deals for about $40B, although the total size of the worldwide arms bazaar dropped to around $80B in 2015 from $89B a year earlier. The study, "Conventional Arms Transfers to Developing Nations, 2008-2015," was prepared by the nonpartisan Congressional Research Service, a division of the Library of Congress. Related tickers: LMT, RTN, GD, NOC, OA, HII, HON, UTX, ITT, TXT, LLL, COL
Hitachi intends to sell power tools unit Hitachi Koki (OTCPK:HKKIY) to U.S. private equity firm Kohlberg Kravis Roberts (NYSE:KKR), according to the Nikkei, in a deal estimated to exceed ¥150B ($1.3B). The sale would enable Hitachi (OTCPK:HTHIY), which owns 51.2% of Hitachi Koki's voting rights, to sharpen focus on its main business segments such as infrastructure. Hitachi Koki shares closed up 16% in Tokyo.
After agreeing to divest two medical device businesses, Abbott Laboratories (NYSE:ABT) has won the green light for its proposed $25B acquisition of St. Jude Medical (NYSE:STJ) from the U.S. Federal Trade Commission. "We continue to work to obtain final regulatory approvals and anticipate closing before the end of the year or shortly thereafter," Abbott spokeswoman Elissa Maurer said in a statement.
The mobility arms race is heating up in the auto industry. Volkswagen's (OTCPK:VLKAY) financing arm has acquired PayByPhone, a Canadian company that lets you pay for parking through smartphone apps, calls and texts. The terms of the deal are hush-hush, but PayByPhone handles about $300M in transactions per year across major cities that include Boston, London, Paris, San Francisco and Seattle.
It's been three years since Ford (NYSE:F) launched its fleet of 10 first-generation Fusion Hybrid autonomous research vehicles, which have seen advancements like driving on snow-covered roads and operating in the dark without headlights. Joining the team in 2017 will be 20 next-generation autos (featuring new hardware, electrical controls and sensor technology) that will triple the Blue Oval's stable of self-driving vehicles.
Taking to the air, or not... Delta (NYSE:DAL) has reached an agreement with Boeing (NYSE:BA) to cancel an order for 18 787 Dreamliner aircraft, which it assumed as a part of its merger with Northwest Airlines in 2008 (the order is valued at $4B). Meanwhile, Airbus (OTCPK:EADSY) is postponing the delivery of 12 A380 planes to Emirates Airline over the next two years, but will step up cost cuts to minimize the impact of the delays.
Carrie Fisher's unexpected death on Tuesday thrust Walt Disney (NYSE:DIS) into a Star Wars-size dilemma over the fate of her iconic character, Princess Leia. The actress had finished filming for the 2017 release of Star Wars: Episode VIII, but was also expected to play a key role in the ninth installment of the sci-fi saga, due for release in 2019.
"Anything you say may be used against you." In what may be the first case of its kind, Amazon (NASDAQ:AMZN) has denied investigators voice data from an Echo owned by a man who has been charged with murder, despite a police warrant. The tech giant refused to hand over the audio data on two separate occasions, although it did share suspect James Bates' account information and purchase history, The Information reports.
Germany is considering imposing a legal regime that would allow fining social networks such as Facebook (NASDAQ:FB) up to €500,000 for each day the platform leaves a "fake news" story up without deleting it. The law would force the social networks to create offices focused on responding to takedown demands and would make the networks responsible for compensation if a post by individual users were found to slander someone.
In Asia, Japan flat. Hong Kong +0.8%. China -0.4%. India flat.
In Europe, at midday, London +0.4%. Paris flat. Frankfurt flat.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.3%. Crude +0.5% to $54.18. Gold flat at $1139.10.
Ten-year Treasury Yield flat at 2.56%