US FINANCIAL MARKET
STOCKS PARE LOSSES AS TRADERS ASSESS IRAN TENSIONS
- Stocks pared losses as investors assessed the potential economic impact of rising tensions in the Middle East.
- The S&P 500 erased nearly all of its earlier decline that reached more than 0.6% as traders weighed how the conflict between the U.S. and Iran would affect global markets.
- On Sunday, the Iraqi parliament passed a nonbinding resolution to expel American troops. President Trump responded by threatening sanctions and demanding billions of dollars from Baghdad if the U.S. is forced to withdraw.
- Iraq is the second-largest oil producer among OPEC nations and a hit to its oil industry would reverberate widely.
- Meanwhile Tehran stated it would no longer honor the terms of its 2015 nuclear pact and threatened to avenge the killing of its commander, while Trump warned that the U.S. would strike back, “perhaps in a disproportionate manner”, if Iran retaliated.
- Gold producer Newmont Goldcorp rose 1%. Shares of defense stocks also gained, with Raytheon up 0.5%.
- Airlines stocks fell, meanwhile, as investors worried about higher jet-fuel prices and slower economic activity. American Airlines dropped 1.3% and Delta Air Lines declined 1%.
Ford U.S. sales fall 1.3% in fourth quarter
- Ford reported a 1.3% fall in sales for the fourth quarter in the United States, hurt by declining sales of passenger cars.
- The No. 2 U.S. automaker said it sold 601,862 vehicles in the quarter, compared with 609,693 a year earlier.
Oil tops $70 as Iran and Trump trade threats
- Oil prices increased by about 1% on Monday, pushing Brent above $70 a barrel, as rhetoric from the United States, Iran and Iraq fanned tensions in the Middle East after a U.S. air strike killed a top Iranian military commander.
- U.S. West Texas Intermediate crude was up 54 cents at $63.59 a barrel after touching $64.72, its highest since April.
- The gains extended Friday’s more than 3% advance after a U.S. air strike in Iraq killed Iranian military commander Qassem Soleimani, heightening concerns about an escalation in conflict in the Middle East and the possible impact on oil supplies.
- The region accounts for nearly half of the world’s oil production, with a fifth of the world’s oil shipments passing through the Strait of Hormuz.
Boeing Considers Raising Debt as MAX Crisis Takes Toll
- Boeing is considering plans to raise more debt to bolster finances strained by the grounding of its 737 MAX.
- Analysts expect Boeing to raise as much as $5 billion in additional debt to help cover expenditures that could top $15 billion in the first half of this year.
- In addition to spending on maintenance for the MAX’s stalled production facilities and finished planes, the company plans to close its $4 billion acquisition of an 80% stake in the Brazilian plane maker Embraer’s commercial airliner business.
- Now, alongside raising more debt, Boeing is also thinking of deferring some capital expenditures, freezing acquisitions and cutting spending on research and development to preserve cash, people familiar with those possibilities said.
Xerox Firms Up Financing for Bid to Take Over HP
- Xerox has secured financing for its takeover offer for HP, according to people familiar with the matter, a sign the printer-and-copier company is pushing forward with an unsolicited $33 billion bid that its larger rival has resisted.
- Citigroup, Mizuho Financial Group and Bank of America have agreed to back Xerox by lending up to $24 billion.
- While HP in its original rejection expressed a willingness to discuss a deal to combine with Xerox, the situation turned contentious when the two sides couldn’t agree on terms to examine each others’ businesses.
Little Caesars Teams Up with DoorDash on Delivery
- Little Caesars Pizza struck a deal with DoorDash to add delivery to its operations for the first time in its 60-year history, as more chains face pressure to get food to customers beyond their restaurants.
- Beginning Monday Little Caesars will add delivery via DoorDash from most of its nearly 5,000 stores in the U.S. and Canada.
- More restaurants are making their food available through delivery companies as customers migrate to those online platforms.
- A recent survey of 2,500 diners by analysts at Cowen & Co. found that 26% had used an online delivery service in September 2019, up 10% from a year earlier.
Yum Brands to Buy Habit Burger Grill
- Yum Brands said it would buy fast-casual burger chain Habit Restaurants as it seeks to broaden its range of restaurants and reach more customers.
- Yum said it had struck a deal to buy the parent of Habit Burger Grill for $14 a share, or about $375 million in cash.
- The deal is Yum’s first acquisition of a stand-alone fast-casual restaurant chain since the company went public in 1997.
US ECONOMY & POLITICS
Trump Pushes Iraq, Threatens Sanctions After Vote to Expel U.S. Troops
- President Trump threatened Iraq with sanctions and a bill for billions of dollars if the U.S. is forced to withdraw its troops from the nation after the Iraqi parliament, responding to a U.S. airstrike that killed a powerful Iranian general on its soil, voted in favor of expelling American forces.
- The nonbinding resolution—passed Sunday with the backing of Shiite politicians—urges Prime Minister Adel Abdul-Mahdi to rescind Iraq’s invitation to U.S. forces that helped rescue the country after Islamic State overran about one third of its territory in 2014.
- Unless the U.S. exits Iraq on a “very friendly basis,” Mr. Trump said, the U.S. “will charge them sanctions like they’ve never seen before ever.”
- Mr. Trump also repeated his threat that the U.S. could target Iranian cultural sites if tensions between the two countries escalate further.
Iran Says It No Longer Will Honor Nuclear Enrichment Limits Under 2015 Pact
- Iran said Sunday it no longer will comply with limits on uranium enrichment under its 2015 nuclear pact, as hundreds of thousands gathered across the country to mourn the death of a military leader killed Friday in a U.S. airstrike in Iraq.
- In its announcement on Iranian television Sunday, Tehran stopped short of an abrogation of the nuclear pact, which limited the country’s nuclear program in return for lifting multination sanctions.
- But its decision means Tehran could install new centrifuges—machines that produce enriched uranium—and further ramp up the purity of the fuel it produces closer to weapons-grade material.
- That would allow Iran to reduce to less than six months the time needed to amass enough nuclear fuel for one bomb, once it reinstalls a sufficient number of its centrifuges, a process expected to take months, nuclear experts have said.
- If Iran significantly boosts production of enriched uranium, Europe would almost certainly trigger a dispute mechanism in the pact, which could lead to reimposed international sanctions within two months.
House to vote on limiting Trump’s military powers regarding Iran, Pelosi says
- The House of Representatives will introduce and vote on a war powers resolution this week to limit President Donald Trump’s military actions regarding Iran, according to Speaker Nancy Pelosi.
- In a letter to colleagues Sunday, Pelosi said the resolution is similar to one introduced in the Senate by Democratic Sen. Tim Kaine of Virginia.
- Kaine introduced his resolution on Friday. It seeks a debate and vote to prevent escalation of hostilities with Iran.
- Democrats have complained that Trump did not notify lawmakers before carrying out a drone strike that killed Iran’s top military commander, Qasem Soleimani, in Baghdad.
Congress Returns with Trump Impeachment Trial Unresolved
- Congress dives into its new session with unresolved questions about when and under what rules the impeachment trial of President Trump will take place.
- Senate Majority Leader Mitch McConnell (R., Ky.) has left the calendar for January open for what would be the third presidential impeachment trial in American history.
- The House approved abuse-of-power and obstruction-of-Congress articles in December alleging that the president pushed Ukraine to open investigations benefiting him politically.
- The immediate cause of the deadlock was a decision by House Speaker Nancy Pelosi to delay sending over the two articles until the Republican Senate leader could guarantee what Democrats consider a fair trial, with new witness testimony and documents that have been withheld by the White House.
- Under its rules, the Senate can’t have a trial without the impeachment articles in hand, so until one side budges, the Senate’s plans are unsettled.
EUROPE & WORLD
Iranians Rally in Display of Unity as Calls for Revenge on U.S. Deepen
- Hundreds of thousands of people marched through Iran’s capital in a funeral procession for Maj. Gen. Qassem Soleimani, as Iranian officials rallied the nation and threatened retaliation against the U.S. for the targeted killing of the powerful military leader.
- Gen. Soleimani was the architect of deadly Iranian shadow wars throughout the Middle East and oversaw a campaign that, according to the U.S., killed hundreds of U.S. and coalition soldiers in Iraq following the American-led invasion in 2003.
- His successor as the commander of the Quds Force, the foreign wing of Iran’s Revolutionary Guard, said Monday he would continue the path of Gen. Soleimani.
- Ayatollah Khamenei has promised “harsh revenge” for Gen. Soleimani’s death.
Turkey says it will send military experts, advisers to Libya
- Turkey will send military experts and technical teams to support Libya’s internationally recognized government, Foreign Minister Mevlut Cavusoglu said on Monday, a day after President Tayyip Erdogan said Turkish military units were moving to Tripoli.
- Prime Minister Fayez al-Serraj’s Government of National Accord asked for Turkish support last month as it fends off an offensive by forces led by eastern leader Khalifa Haftar, backed by Russia, Egypt, the United Arab Emirates and Jordan.
- Erdogan said on Sunday that Turkish military units had started moving to Libya to support the GNA. Asked to elaborate on Erdogan’s comments, Cavusoglu said Turkey would send experts, advisers and technical teams under a military cooperation agreement signed with the GNA in November.
Indonesia mobilizes fishermen in stand-off with China
- Indonesia will mobilize fishermen to join warships in the South China Sea to help defend against Chinese vessels, the government said on Monday, as the biggest stand-off with China for years escalated off Southeast Asia’s largest country.
- The stand-off since last month in the northern Natuna islands, where a Chinese coastguard vessel has accompanied Chinese fishing vessels, has soured the generally friendly relationship between Jakarta and Beijing.
- China claims much of the South China Sea, a global trade route with rich fishing grounds and energy reserves, as its own based on what it says its historic activity.
- But Southeast Asian countries – and the United States and much of the world – say such claims have no legal basis.
- Indonesian vessels often confront Chinese fishermen off the Natuna islands, but the presence of the Chinese coastguard vessel has marked an escalation this year over which Indonesia summoned the Chinese ambassador.
Australia’s Catastrophic Fires Threaten to Upend the Way People Live
- The human, environmental and economic toll of Australia’s devastating wildfires is mounting each day, but the country has barely begun to grasp the total cost of the “unprecedented” blazes and how it will change the way people live.
- Igniting two months earlier than the usual start of the Australian fire season, the flames have torn through an area about the size of West Virginia—killing at least 20 people, shrouding cities in choking haze and stretching firefighters to a breaking point.
- The environmental toll has also been severe. A researcher from the University of Sydney has estimated that as many as 480 million animals have been killed by wildfires in New South Wales alone since September.
- Australia’s carbon emissions have also ballooned. Fires in Australia’s New South Wales alone from August through Dec. 31 emitted 260 million tons of carbon dioxide—nearly half of the country’s regular annual greenhouse-gas emissions according to government data.
TODAY in HISTORY
- King Henry VIII of England married his 4th wife, Anne of Cleves. (1540)
- Samuel Morse gave the first public demonstration of the telegraph. (1838)
- Former president Theodore Roosevelt died in Oyster Bay, N.Y. (1919)
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