Wednesday Morning Reads

Economy

Saudi Arabia's plan to erase its budget deficit by 2023 relies on a scenario that would see oil revenue surge by about 80%, sources told Bloomberg. Officials predict rising crude prices and output will push income from oil sales to 801.4B riyals ($214B) from 440B riyals this year. The six-year fiscal program also assumes the price of oil will reach $75 a barrel.

Eight Northeastern states are suing the EPA to force it to impose more stringent controls on a group of mostly Midwestern states whose air pollution they claim is being blown in their direction. "Smog pollution continues to pour in," New York AG Eric Schneiderman declared. The coalition wants the territory to be added to the "Ozone Transport Region," which requires stricter pollution controls.

China's ruling Communist Party will meet next month to discuss amending the constitution for the first time since 2004, the Xinhua News Agency reports. Speculation has swirled that Xi Jinping might seek to stay in office beyond 2022 after unveiling a leadership lineup in October that didn't include a potential heir. Under the current constitution, the president can only serve two five-year terms.

Mexico's central bank sold an additional $500M in foreign exchange hedges on Tuesday to ease pressure on the peso, but the measures provided only fleeting relief for the currency. The peso has slumped to its lowest level in almost 10 months against the dollar due to concerns over inflation and the potential impact on Mexico of new U.S. corporate tax cuts.

Stocks

Convicted of bribing the country's former president, Samsung Group (OTC:SSNLF) heir Jay Y. Lee denied allegations of wrongdoing today as the appeals trial of his five-year jail term for corruption neared its end. The Seoul High Court is expected to rule on the appeal in late January. Whichever side loses could take the case to the Supreme Court, the final court of appeal in South Korea.

Shares in Apple and several of its suppliers fell on Tuesday after a report by Taiwan's Economic Daily and comments from some analysts suggested iPhone X demand could come in below expectations. Apple (NASDAQ:AAPL) will slash its sales forecast in the first quarter to 30M units, according to the newspaper, down from what it said was an initial plan of 50M devices.

Meanwhile, eight more lawsuits have been filed in various federal courts in the week since Apple (AAPL) opened up about its year-old software change, which slows down the performance of aging iPhones. The cases - filed in California, New York and Illinois - seek class-action to represent iPhone owners nationwide and demand unspecified damages along with, in some cases, reimbursement from Apple.

"Have had the core design/engineering elements in my mind for almost 5 years," tweeted Tesla's (NASDAQ:TSLA) Elon Musk, promising to get working on a pickup truck after Model Y. "Am dying to build it." Past reports suggested that the Model Y, to be built on the same platform as the Model 3 sedan, was tentatively scheduled to begin production in mid-2019.

Boost for hybrid and electric carmakers? China's Finance Ministry will extend a tax rebate on purchases of new-energy vehicles from the end of this year until the end of 2020 amid a shift away from the internal combustion engine. The extension comes as automakers in China brace to meet strict quotas starting in 2019 that are sparking launches of NEV models and a flurry of new deals.

Zhejiang Geely, the Chinese owner of Volvo Cars, is to become the biggest shareholder of Volvo Group (OTCPK:VOLVY), paying €3.25B for a major stake in the truckmaker. Talk of reuniting the two brands - split up when Volvo Group sold Volvo Cars to Ford in 1999 - is "premature," FT reports, but Geely (OTCPK:GELYY) sees potential for joint marketing, shared technology projects and helping the company perform better in China.

Retail stocks soared yesterday after MasterCard (NYSE:MA) released strong early Christmas numbers. Excluding autos, sales rose 4.9% from Nov. 1 through Christmas Eve, marking the fastest pace since 2011. E-commerce naturally drove the gain, up 18.1%. Helping the figure was Christmas falling on a Monday, giving retailers a full weekend to reel in extra sales.

Amazon is experimenting with ad products both on and off its platform for a 2018 push, which could involve targeting e-commerce searches and video products, as well as third-party partnerships to sell TV and mobile ads. Why would advertisers choose Amazon (NASDAQ:AMZN) over Google (GOOG, GOOGL) and Facebook (NASDAQ:FB)? Sources told CNBC that the tech giant has offered to share more user data if the price is right.

Royal Dutch Shell expects recently enacted U.S. tax reform legislation to have a "favorable" impact on its operations, but added that the "analysis of the actual impact is not yet complete." While Shell (RDS.A, RDS.B) will provide details of the tax impact in its Q4 results, it would have incurred a charge to earnings of $2B-2.5B, on the basis of its third-quarter statements.

More tax talk... Barclays (NYSE:BCS) expects to take a writedown of about £1B on its annual post-tax profit as a result of the U.S. tax overhaul. The lender will also see its common equity Tier 1 capital ratio, a key measure of its financial strength, fall by about 20 bps as a result of the reform. The tax impacts will be accounted for in Barclays' annual results.

Nintendo has told outside game developers it's delaying delivery of 64-gigabyte game cards for the Switch (OTCPK:NTDOY) until 2019, WSJ reports, meaning gamers may have to wait longer for some data-rich software titles. The delay comes after a successful first year on the market for the Switch, a hybrid console that has sold more than 10M units.

Santa delighted Amazon this year with the company announcing its biggest ever holiday season as the Echo Dot became the top selling product across all categories. Shoppers even asked Alexa (AMZN) to order more Alexa devices as "tens of millions" of devices were sold powered by its smart voice assistant. The Fire TV Stick with Alexa Voice Remote was a hot product, while the Echo Spot and Echo Buttons sold out.