US FINANCIAL MARKET
ENERGY, HEALTHCARE STOCKS DRAG WALL STREET LOWER
- Wall Street’s main indexes slightly dropped on Tuesday, dragged down by oil and healthcare stocks as investors nervously awaited further developments on the U.S.-Iran conflict.
- The Pentagon said Monday that it plans to send B-52 bombers and additional troops to the Middle East following the targeted killing of Iranian Maj. Gen. Qassem Soleimani in Iraq last week. But markets appeared to take a wait-and-see approach.
- Futures on Brent crude, the global benchmark for oil prices, dropped 0.9% on Tuesday to $68.29 a barrel after rallying Friday and Monday. U.S. oil futures also reversed course, dropping 0.9% to $62.71 a barrel.
- Latest data showed new orders for U.S.-made goods fell in November, pulled down by steep declines in demand for machinery and transportation equipment, pointing to sustained weakness in manufacturing.
- Apache’s shares surged more than 20% after the energy company reported what it termed a significant oil discovery off the coast of Suriname.
Commodities trader Cargill’s quarterly adjusted profit rises over 19%
- Commodities trader Cargill reported a more than 19% rise in adjusted quarterly profit, boosted by growth in its animal nutrition and protein business.
- Minnesota-based Cargill’s quarterly revenue rose 4% to $29.2 billion.
- The largest privately held U.S. company by revenue said its adjusted operating earnings rose to $1.02 billion in the second-quarter, from $853 million a year earlier.
- Cargill’s net earnings rose 61% to $1.19 billion from $741 million a year earlier.
GM Posts Its Biggest China Sales Decline
- General Motors posted its biggest ever sales decline in China last year and warned of another tough year ahead, underscoring the challenges car makers are facing as the world’s largest auto market suffers its first protracted decline in nearly three decades.
- GM said Tuesday that it sold more than 3.09 million vehicles last year in China, its biggest overseas market, roughly a 15% drop from 2018. It was the second straight year of falling sales in China.
- GM’s troubles in China add to growing headaches back home.
- In 2019, it sold nearly 2.9 million vehicles in the U.S., a 2.3% decline compared with 2018.
Boeing Reassigns Staff as Spirit Eyes Furloughs
- Boeing said it would reassign as many as 3,000 workers that make the 737 MAX, and its biggest supplier announced plans for voluntary layoffs ahead of a planned production halt of the grounded jetliner.
- The aerospace giant said it would shift workers to look after the fleet of around 800 grounded jets and build other aircraft.
- Spirit AeroSystems, which makes the fuselage and other parts for the MAX, is also suspending production and said Monday it is evaluating a voluntary layoff package for some employees to address ramifications from the suspension of a production program that accounts for half of its sales.
Boeing, FAA reviewing wiring issue on grounded 737 MAX
- Boeing and the Federal Aviation Administration (FAA) confirmed they are reviewing a wiring issue that could potentially cause a short circuit on the grounded 737 MAX.
- The New York Times reported Boeing is reviewing whether two bundles of wiring are too close together, which could lead to a short circuit and potentially result in a crash if pilots did not respond appropriately.
- Boeing is currently working to design separating the wiring bundles if necessary and conducting extensive analysis to establish if the electrical fault could occur in a real-world scenario, a company official said.
- The FAA flagged the wiring issue as potentially “catastrophic.” It is possible other protections like shielding, insulation and circuit breakers could prevent the short circuit, a company official said.
American Airlines reaches settlement with Boeing for 737 MAX compensation in 2019
- American Airlines said on Monday it had reached a confidential agreement with Boeing to address damages the airline incurred in 2019 due to the ongoing grounding of its fleet of Boeing 737 MAX aircraft.
- American said it does not expect any material financial impact of the agreement to be realized in its fourth-quarter 2019 earnings and it will continue talks regarding compensation for damages related to the MAX grounding beyond 2019.
- American, the largest U.S. airline, said the compensation will be received over several years.
- The airline will use more than $30 million of the compensation for the airline’s 2019 employee profit-sharing program.
Mexico’s Aeromexico reaches compensation agreement with Boeing on MAX crisis
- Mexican airline Aeromexico said on Monday it had reached a compensation agreement with Boeing in relation to the temporary grounding of the planemaker’s 737 MAX aircraft.
- The airline did not disclose the size of the payment, but added that it remains in talks with Boeing and regulatory authorities.
Tesla Set to Expand China Assembly with Compact SUV
- Tesla plans to build its Model Y compact sport-utility vehicle in China, the electric-car maker said Tuesday, in a move to expand the company’s production capabilities and boost sales in the world’s biggest auto market.
- The company said Tuesday that it is starting work related to production of the Model Y at Gigafactory Shanghai, Tesla’s first overseas plant.
- The company didn’t elaborate on the nature of the work being conducted, but Tesla’s Chinese website said that the first Model Ys could be produced as early as 2021.
- Unlike the Model 3 sedan, which Tesla has been producing at its Shanghai plant for several months, the Model Y, introduced at a March event in California, is an SUV—a popular vehicle segment both in China and the U.S.
Plant-Based Meat Makers Want to Put Fake Pork on Your Fork
- Impossible Foods said Monday that it will introduce imitation ground pork and sausage, including a patty for a new sandwich at dozens of Burger King restaurants later this month.
- Rival Beyond Meat last year began supplying plant-based sausage to Dunkin’ Brands, Carl’s Jr. and Tim Hortons restaurants, mainly for breakfast sandwiches.
- Pork is the world’s most widely consumed meat, according to the U.S. Agriculture Department.
- Plant-based food makers are also developing chicken and seafood alternatives.
Apache Finds Oil in South America Offshore Block
- Apache and Total said they found oil off the coast of Suriname, characterizing the find as a significant one in a region energy investors have been watching closely.
- “Data indicates the potential for prolific oil wells,” Apache Chief Executive John Christmann said in a statement Tuesday about the company’s discovery in the waters near the South American nation.
- News of the successful find sent shares of Houston-based Apache up 15% in premarket trading.
- Last month, Apache released an update about its exploration efforts at the well that contained relatively little information about search results. That update sent shares in the Houston-based company sharply lower.
Qualcomm launches autonomous driving computer, aiming to hit roads by 2023
- Qualcomm announced a computing system for autonomous vehicles designed to handle everything from lane controls to full self-driving that it aims to have on the road by 2023.
- The system, dubbed Snapdragon Ride, is the company’s first foray into a full system to power self-driving cars.
- Qualcomm’s new computers can fit in one hand and do not need fans or liquid cooling systems to prevent them from overheating.
- Lower power consumption will become important in electric vehicles, in which computers will have to compete with the drive train for battery power.
US ECONOMY & POLITICS
US trade deficit falls more than expected to hit lowest level since Trump took office
- The U.S. trade deficit narrowed in November for the third straight month, dropping to its lowest level in three years as the rate of imports dropped and exports picked up.
- The foreign-trade gap in goods and services contracted 8.2% from the prior month to a seasonally adjusted $43.09 billion in November.
- Economists had expected a trade deficit of $43.6 billion in November.
- Imports decreased 1.0% $251.7 billion in November from the prior month. The drop was due to lower imports of capital goods like computers and consumer goods such as cellphones.
- Exports, meanwhile, rose by 0.7% to $208.6 billion in November from the prior month. Exports of consumer goods and capital goods like oil field equipment picked up.
U.S. factory orders fall as machinery, transportation weigh
- New orders for U.S.-made goods fell in November, pulled down by steep declines in demand for machinery and transportation equipment, pointing to sustained weakness in manufacturing despite an easing in trade tensions between Washington and Beijing.
- Factory goods orders dropped 0.7%, the Commerce Department said on Tuesday. Economists polled by Reuters had forecast factory orders falling 0.8% in November.
- Data for October was revised down to show orders rising 0.2% instead of increasing 0.3% as previously reported.
- The government also said November orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, gained 0.2% instead of edging up 0.1% as reported last month.
- Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, fell 0.3% in November as previously reported.
U.S. Adds Troops to Mideast as Iranians Call for Revenge at General’s Funeral
- The Pentagon said it plans to send B-52 bombers and more troops to the Mideast as anger simmered Monday in Baghdad and Tehran over the U.S.’s targeted killing of Iranian Maj. Gen. Qassem Soleimani in Iraq.
- The plans outlined Monday by the Pentagon call for about 200 members of the 173rd Airborne Brigade Combat Team, based in Vicenza, Italy, to be sent to the Middle East.
- They will join more than 10,000 U.S. troops who have been moved toward the Middle East or placed on alert since Gen. Soleimani was killed early Friday.
- Among them are about 5,000 Marines and sailors headed to the region aboard the USS Bataan, an amphibious assault ship, and its ready group, which includes the 26th Marine Expeditionary Unit.
- The new deployments will put the total number of U.S. troops, airmen and sailors in the Middle East at more than 80,000.
Democratic Senators Want Soleimani Document Declassified
- Top Senate Democrats called on President Trump to immediately declassify the White House notification to Congress of the drone strike last week that killed prominent Iranian military leader Qassem Soleimani.
- The War Powers Resolution of 1973 requires the president to notify Congress within 48 hours of committing armed forces to military action. The White House sent the notification on Saturday, within the necessary time frame, but classified its contents.
- Under the law, the contents would describe the circumstances necessitating the use of U.S. military force, the constitutional and legislative authority for the action and the estimated scope and duration of the hostilities.
- Senators are set to get a briefing on Wednesday about the killing from Gen. Mark Milley, the chairman of the Joint Chiefs of Staff; Secretary of State Mike Pompeo ; Defense Secretary Mark Esper ; and Central Intelligence Agency Director Gina Haspel.
- House lawmakers also are expected to get a briefing that day.
John Bolton Says He Will Testify in Senate Impeachment Trial if Subpoenaed
- Former national security adviser John Bolton, described by witnesses who testified at President Trump’s impeachment hearings as alarmed at the pressure put on Ukraine, said he would testify in a Senate trial if subpoenaed by lawmakers.
- Mr. Bolton’s statement Monday spurred partisan wrangling over how the Senate impeachment trial would be conducted and added pressure on Republicans to call the former official.
- Mr. Bolton has previously conveyed that he has new information about the White House’s Ukraine policy.
- Mr. McConnell reiterated on Monday his position that requests for witnesses should be addressed after the trial begins, as during former President Clinton’s impeachment trial.
EUROPE & WORLD
Euro zone inflation picks in December before early 2020 fall
- Euro zone inflation jumped as expected last month, offering some temporary relief for European Central Bank policymakers before price growth is expected to dip again.
- Eurostat said on Tuesday that inflation in the 19 countries sharing the euro currency rose to 1.3% as expected in December from 1.0% a month earlier as energy prices rebounded and the cost of food products rose.
- Prices excluding food and energy costs, an underlying gauge closely watched by the ECB’s policymakers, held steady at 1.4% last month while an even narrower gauge, which excludes alcohol and tobacco prices, was unchanged at 1.3%.
- Adding to the relatively positive data, Eurostat said that retail trade, an indicator of household demand, was much stronger than expected in November, rebounding from two consecutive monthly falls to a 1.0% monthly rise.
Trump administration pressed Dutch hard to cancel China chip-equipment sale: sources
- The Trump administration mounted an extensive campaign to block the sale of Dutch chip manufacturing technology to China, with Secretary of State Mike Pompeo lobbying the Netherlands government and White House officials sharing a classified intelligence report with the country’s Prime Minister.
- The high-level push, which has not previously been reported, demonstrates the importance the White House places on preventing China from getting hold of a machine required to make the world’s fastest microprocessors.
- It also shows the challenges facing the U.S. government’s largely unilateral efforts to stem the flow of advanced technology to China.
- Over the following months, U.S officials examined whether they could block the sale outright and held at least four rounds of talks with Dutch officials, three sources told Reuters.
Stampede at Funeral Procession for Iranian Commander Leaves Dozens Dead
- At least 50 people died and more than 200 were injured in a stampede at a funeral procession for Maj. Gen. Qassem Soleimani, as Iranian authorities struggled to manage the large crowds rallying against the targeted killing of the powerful military leader.
- The stampede was caused by overcrowding as mourners gathered to pay their respects to Gen. Soleimani in the city of Kerman, Pirhossein Koulivand, the head of Iran’s emergency medical services, told state television.
- Gen. Soleimani was initially scheduled to be buried in Kerman, his hometown, on Tuesday, but organizers postponed the ceremony because the large crowds prevented vehicles from reaching the cemetery.
TODAY in HISTORY
- Harry Truman announced that the U.S. had developed the hydrogen bomb. (1953)
- Japan’s Emperor Hirohito (1989)
- The impeachment trial of President William Clinton began in the Senate. (1999)
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