U.S. STOCKS MIXED AFTER JOBS REPORT; GLOBAL SHARES DOWN
- A forthcoming referendum in Italy and concerns about the pace of Wall Street’s rally help to make investors cautious.
- Nonfarm payrolls rose by a seasonally adjusted 178,000 in November from the previous month.
- The unemployment rate fell to 4.6% last month, the lowest since August 2007, from 4.9% in October.
- In government bond markets, the 10-year U.S. Treasury yield was at 2.405%.
- Money has flown out of long-dated government bonds and into financial and industrial shares for the last month.
- These moves come as many expect Mr. Trump’s policies to include fiscal stimulus and reduced regulation, driving expectations for stronger growth and higher inflation.
US FINANCIAL MARKET
- Chief Operating Officer Kevin Johnson to take reins; Schultz remains chairman.
- Mr. Schultz, who is credited with taking the company from small beginnings to an international behemoth, began handing over daily oversight of the company to Mr. Johnson a few months ago.
- Mr. Schultz changed the way Americans drink coffee and even socialize, creating what he called a “third place” where people could gather outside home and work.
- Starbucks showed Americans that coffee could be more ambitious than home-brewed Folgers.
- Mr. Schultz joined the original company as its marketing director in 1982.
- Delta Air Lines said it will take a half-a-billion-dollar hit in the fourth quarter from a new contract that pilots approved on Thursday, which hikes pay retroactively to the beginning of 2016.
- Delta, the No.2 U.S. airline by passenger traffic, said it will pay $475 million in higher wages and profit-sharing for pilots, including $380 million related to the first three quarters of the year.
- That is expected to push down its operating profit margin about five points to between 9.5% and 10.5%.
- The pilot agreement raises wages 30% by 2019, just one example of the wage crunch that top airlines are facing.
- The recall includes certain 2013-16 Ford Fusion, 2015-16 Ford Mondeo and 2013-15 Lincoln MKZ cars, Ford said.
- Costco said on Thursday that Ontario’s health ministry would launch a probe into allegations it got illegal kickbacks from drugmakers, becoming the Canadian province’s second regulator to scrutinize the matter.
- The retailer has been informed by the Ontario Ministry of Health and Long-Term Care that it would conduct an inspection into its compliance with the Ontario Drug Benefit Act and other regulations.
- The move comes two weeks after investigators at the Ontario College of Pharmacists said they found sufficient evidence to indicate that two Costco pharmacy directors had sought illegal kickbacks.
- A federal jury in Dallas on Thursday ordered Johnson & Johnson and its DePuy Orthopaedics unit to pay more than $1 billion to six plaintiffs who said they were injured by Pinnacle hip implants.
- The jurors found that the metal-on-metal Pinnacle hip implants were defectively designed and that the companies failed to warn consumers about the risks.
- J&J, which faces more than 8,000 lawsuits over the hip implants, said in a statement it would immediately appeal the verdict and was committed to defending itself and DePuy from further litigation over the Pinnacle devices.
- The SEC said Pimco overstated the ETF’s value and provided “misleading” reasons for the fund’s early success, which was premised on buying small pieces or “odd lots” of mortgaged-backed securities that sell at a discount to larger units.
- The asset manager used a third-party pricing service that valued the bonds as though they were larger pieces, overstating its performance, regulators said.
- Despite fairly small trades, the strategy added as much as 54% to the fund’s monthly cumulative performance returns in 2012, the SEC said.
- Assets in BOND ETF fell from $5.2 billion at its 2013 peak to $2.3 billion currently.
- Total income reported on the top 400 individual tax returns rose 20% in 2014.
- The figures reveal the concentration of earnings at the pinnacle of the income distribution, in a club that required $126.8 million of adjusted gross income to enter.
- That group, out of nearly 150 million tax returns in 2014, received 1.3% of income and 10% of capital gains that get preferential rates.
- The same 400 households also made 6.9% of all charitable contributions.
- Their average tax rate was 23.13%, the highest since 1997, when Congress cut capital-gains taxes.
US ECONOMY & POLITICS
- Federal Reserve is likely on track to raise interest rates later in December.
- Nonfarm payrolls rose by a seasonally adjusted 178,000 in November from the prior month.
- The unemployment rate dropped to 4.6% last month from 4.9% in October as some people found jobs while others dropped out of the workforce.
- At 4.6%, the headline figure is the lowest since August 2007.
- Average hourly earnings for private-sector workers rose 2.5% in November compared with a year earlier.
- A broad measure of unemployment and underemployment, which includes those who have stopped looking and those in part-time jobs who want full-time positions, was 9.3% in November, down from 9.5% the prior month and the lowest level since April 2008.
- The rate averaged 8.3% in the two years before the recession.
- The labor-force participation rate, those with jobs or actively seeking work, edged down to 62.7% in November from 62.8% the prior month and continues to hover near a four-decade low.
- “Companies are not going to leave the U.S. anymore without consequences,” Mr. Trump said. “Leaving the country is going to be very, very difficult.”
- The Indiana governor was offering $7 million over 10 years to encourage the company to keep in the state roughly one-third of the 2,100 jobs it planned to ship to Mexico.
- After receiving a phone call from Mr. Trump and a package of $7 million in state tax breaks, Carrier’s parent, United Technologies, agreed to keep open the furnace factory it had planned to move to Mexico and retain another 300 research and management workers in the state.
- Chances of a rate hike at the Fed’s Dec. 13-14 meeting were pegged at 95% after the report, based on CME’s FedWatch page.
- President Barack Obama is poised to block a Chinese company from buying Aixtron SE in Germany, marking only the third time in a quarter century that the White House has rejected an overseas buyer as a national security risk.
- Blocking the 670 million euro ($714 million) acquisition would derail China’s ongoing quest to buy Western engineering prowess, which has sparked political concerns about foreign ownership in Europe and the U.S. Chinese companies have announced or completed deals worth a record 11.3 billion euros in Germany alone this year.
EUROPE & WORLD
- The Bloomberg Barclays Global Aggregate Total Return Index lost 4% in November, the deepest slump since the gauge’s inception in 1990.
- November’s rout wiped a record $1.7 trillion from the global index’s value in a month that saw world equity markets’ capitalization climb $635 billion.
- Investors are bracing for Italy’s referendum on constitutional reform Sunday, which many expect Matteo Renzi’s government to lose.
- Italy is discussing with the European Commission the terms of a state bailout of ailing bank Monte dei Paschi.
- Italy’s third-largest bank needs to raise 5 billion euros ($5.3 billion) by the end of the year to plug a capital shortfall identified by European Central Bank stress tests or face the risk of being wound down.
TODAY in HISTORY
The first controlled nuclear chain reaction was demonstrated at the University of Chicago (1942)
The Environmental Protection Agency (EPA) was established (1970)
Barney B. Clark became the first person to receive an artificial heart in a transplant operation (1982)
Benazir Bhutto was sworn in as the Prime Minister of Pakistan, becoming the first woman to head a Muslim nation (1988)
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