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US FINANCIAL MARKET | US ECONOMY & POLITICS
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US FINANCIAL MARKET

Dow Jones Industrial Average Crosses 29,000 for First Time

  • Wall Street’s main indexes opened at record levels on Friday, powered by technology stocks, but data showing slower-than-expected domestic job growth in December kept further gains in check.
  • The jobs data showed employers added 145,000 jobs in December, capping a 10th straight year of payroll gains.
  • Private-sector wages advanced 2.9% in December from a year earlier, the smallest annual gain since July 2018 and missing expectations of 3.1%.
  • Investors were closely watching the U.S. Labor Department’s December jobs report for any signs of a slowing economy.
  • The figures don’t stoke concerns about the economy overheating or heading toward an imminent recession.
  • Low wages alongside robust hiring have buoyed markets in recent years, and the latest data indicated that scenario persists.
  • The continued job creation in 2019—on the heels of payroll gains every year since 2010—would help bolster the Federal Reserve’s view that monetary policy doesn’t need to be eased further as the U.S. economy is continuing to grow.

‘Designed by clowns’: Boeing employees ridicule 737 MAX, regulators in internal messages

  • Boeing has released hundreds of internal messages that contained harshly critical comments about the development of the 737 MAX, including one that said the plane was “designed by clowns who in turn are supervised by monkeys”.
  • In particular, some of the communications reveal efforts by Boeing to avoid making pilot simulator training – an expensive and time-consuming process – a requirement for the 737 MAX.
  • In an instant messaging exchange on Feb. 8, 2018 – when the plane was in the air and eight months before the first of two fatal crashes, an employee asks another: “Would you put your family on a MAX simulator trained aircraft? I wouldn’t”.

Boeing 737 Max supplier Spirit Aerosystems to cut 2,800 jobs

  • A key Boeing 737 Max supplier said Friday that it is planning to cut about 2,800 jobs as the planes remain grounded far longer than expected after two fatal crashes and the financial impact ripples through its supply chain.
  • Spirit Aerosystems, which makes fuselages for the beleaguered planes, said it made the decision due to uncertainty around the plane’s return to service
  • “The difficult decision announced today is a necessary step given the uncertainty related to both the timing for resuming 737 Max production and the overall production levels that can be expected following the production suspension,” Spirit’s CEO Tom Gentile said.
  • “We are taking these actions to balance the interests of all of our stakeholders as a result of the grounding of the 737 Max, while also positioning Spirit to meet future demand.”

Boeing may have to lower 787 Dreamliner production rate: Air Lease CEO

  • Boeing could be forced to cut production of its bigger 787 Dreamliners to 10 aircraft per month, amid a drought of orders from China, U.S. airplane leasing firm Air Lease Chief Executive Officer John Plueger said on Thursday.
  • Boeing said last year it expects to lower the production of its 787 Dreamliners in late 2020 to 12 aircraft per month, from 14 currently, following some order cancellations and weak demand.
  • China, a major buyer of the 787, hasn’t been buying airplanes from Boeing recently, and “it’s hard to see the rate of 12 being sustainable” beyond 2020 without China in the marketplace, Plueger said at a Bank of America conference.
  • Plueger said Boeing’s momentum to develop a new mid-size airplane (NMA) “has diminished significantly” due to the prolonged 737 MAX crisis.

Amazon in Talks to Sell Streaming TV Ads Outside of Fire TV

  • Amazon has been building a business selling ads on its Fire streaming television platform.
  • Now, it wants to sell some ads for the first time on other streaming TV systems such as Apple TV and Xbox.
  • In a new initiative, Amazon is talking with TV app owners about integrating technology to let it sell some of their ad inventory on other streaming TV systems, which would also include PlayStation and Android TV.
  • Amazon uses data on shopping and browsing behavior it collects from its websites and apps to target the ads it sells on Fire TV.
  • Amazon has told publishers it can fill ads at higher prices—as much as $40 per thousand impressions—than other third-party ad-selling platforms.

Landmark Facebook Settlement Still Working Its Way Through Court

  • Almost six months after Facebook agreed to a $5 billion settlement of privacy violations, the issue is anything but settled for the social-media giant.
  • The deal with the FTC announced in July to settle allegations that Facebook broke its promises to protect users’ privacy is still under review by a federal judge, who has been weighing objections from opponents who believe the deal is inadequate.
  • Judge Timothy Kelly of the U.S. District Court for the District of Columbia has ordered Facebook and the government to file by Jan. 24 written responses to privacy advocacy groups critical of the settlement.
  • The groups’ chief complaint is a provision releasing Facebook from liability for past missteps, including any unfair or deceptive actions the FTC was aware of as of June 2019.

U.S. Music Streams Topped a Trillion in 2019

  • U.S. music streams on services like Spotify, Apple Music and YouTube rose 30% last year to top one trillion for the first time, according to Nielsen Music’s annual report, fueled by big releases from artists like Taylor Swift, Billie Eilish and Post Malone.
  • Streaming services have upended how people listen to and pay for music, and now account for 82% of music consumption in the U.S., according to Nielsen.
  • Sales of physical albums, meanwhile, dropped off 19% in 2019 and now make up just 9% of overall music consumption.
  • Hip-hop, which has risen in popularity along with music-streaming, continued its reign as the biggest genre, with a 28% share of total listening, followed by rock at 20% and pop at 14%.

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US ECONOMY & POLITICS

US will slap new sanctions on Iran following strikes on US targets

  • Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin announced Friday that the U.S. would impose new sanctions on Iran’s metal exports and a handful of the country’s senior officials.
  • Another senior State Department official added that the Trump administration has sanctioned approximately 1,000 individuals and entities with links to Iran’s malign activities.

Trump says China trade deal may be signed shortly after January 15

  • U.S. President Donald Trump, who announced last month that the Phase 1 trade deal with China would be signed on Jan. 15, said on Thursday the agreement could be signed “shortly thereafter.”
  • The Phase 1 deal, struck last month, is expected to reduce tariffs and boost Chinese purchases of American farm, energy and manufactured goods while addressing some disputes over intellectual property.

U.S. Economy Added 145,000 Jobs in December

  • U.S. employers have added jobs for a record 10 years, pointing to steady economic growth heading into 2020.
  • The economy added 145,000 jobs last month and unemployment stayed at a 50-year low of 3.5%, capping a 10th straight year of payroll gains and the longest stretch in 80 years of data, the Labor Department said Friday.
  • Private-sector wages advanced 2.9% from a year earlier, the smallest annual gain since July 2018.
  • Economists had forecast a gain of 160,000 new jobs in December, a 3.5% unemployment rate and 3.1% annual wage growth.
  • The underemployment rate, which captures those underemployed and marginally attached to the workforce, or U-6, fell to 6.7%, the lowest on records back to 1994.
  • The labor-force participation rate was 63.2%.
  • For all of last year, employers added 2.11 million jobs.
  • That was a slowdown from 2018’s robust gain of 2.68 million and ranked 2019 eighth for job growth in the past 10 years.
  • Revisions showed payrolls for November and October were revised down by a net 14,000.

Trump’s tariffs cost U.S. companies $46 billion to date, data shows

  • Tariffs imposed by President Donald Trump to restructure the United States’s top trade relationships have cost American companies $46 billion since February 2018, and U.S. exports of goods hit by retaliatory tariffs have fallen sharply, according to an analysis of Commerce Department data.
  • The lion’s share of the higher tariff costs, some $37.3 billion, stemmed from duties on imports from China, said Washington-based consultancy Trade Partnership Worldwide, which calculated cumulative tariff costs through November 2019.
  • Exports of U.S. goods hit by retaliatory tariffs from China and other countries fell by 23% in the 12 months ended November, compared with 2017, before the tariffs began, the analysis showed.
  • Two states that hold early primaries in the 2020 presidential election, Nevada and New Hampshire, saw their exports of goods facing retaliatory tariffs drop by nearly twice the national average.

Trump Moves to Speed Infrastructure Projects by Curbing Environmental Reviews

  • President Trump proposed the first comprehensive overhaul of National Environmental Policy Act rules in more than 40 years, saying changes are needed to streamline approval of highways, energy pipelines and other infrastructure projects, as part of his administration’s broader efforts to pare environmental regulations.
  • The proposal was hailed by business groups and construction unions but criticized by environmentalists, who said it comes as mounting threats posed by climate change make thorough review of infrastructure projects more critical than ever.
  • Among the more than a dozen proposed changes to NEPA’s environmental-permit rules, the government for the first time would set limits for completion of environmental reviews, which can sometimes take a decade or longer.
  • Full environmental impact statements would need to be completed within two years, while less comprehensive environmental assessments would have to be concluded within one year.

Majority of Americans favor wealth tax on very rich: Reuters/Ipsos poll

  • The idea of imposing a wealth tax on the richest Americans has elicited sharply divergent views across a spectrum of politicians, with President Donald Trump branding it socialist and progressive Democratic presidential contenders Senators Elizabeth Warren and Bernie Sanders prominently endorsing it.
  • Among the 4,441 respondents to the poll, 64% strongly or somewhat agreed that “the very rich should contribute an extra share of their total wealth each year to support public programs” – the essence of a wealth tax.
  • While support among Democrats was stronger, at 77%, a majority of Republicans, 53%, also agreed with the idea.

Pelosi Says House Will Continue to Hold On to Articles of Impeachment

  • House Speaker Nancy Pelosi (D., Calif.) said the Senate needs to show “what the terms of engagement will be” in President Trump’s trial before she turns over the articles of impeachment, but she signaled a resolution to the deadlock could come soon.
  • Mrs. Pelosi said she was unmoved by calls from Republicans and some Democrats to transmit the articles, and reiterated she was waiting for more information from the Senate before naming impeachment managers and sending over the case.
  • Senate Majority Leader Mitch McConnell (R., Ky.) told Senate Republicans at a lobster lunch on Thursday that he expected to receive the articles within days.

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EUROPE & WORLD

Canada gains surprise 35,200 jobs in December, unemployment rate falls to 5.6%

  • Canada gained a higher-than-expected 35,200 net jobs in December, entirely in full-time positions, while the unemployment rate fell to 5.6%, official data showed, figures that could ease some concerns about the strength of the Canadian economy.
  • Analysts in a Reuters poll had forecast a gain of 25,000 jobs in December and an unemployment rate of 5.8%.
  • Wages rose by 3.8%, Statistics Canada said, lower than the 4.4% gain seen in each of the previous two months.
  • Canada shed an unexpected 71,200 net jobs in November, the biggest decline since 2009, while unemployment rose to 5.9%.

Iran Says It Is Willing to Share Jet’s Black Boxes, Denies Hostile Act

  • Iranian investigators said they would be willing to hand over the so-called black boxes in a Ukrainian airliner crash to another country for analysis, as Tehran denied assertions by that the Boeing 737-800 was downed by antiaircraft missiles.
  • Iran also invited investigators from Boeing, the U.S., Ukraine, France and Canada to probe the causes of the crash.
  • U.S., Canadian and U.K. officials said Thursday they believe the Ukraine International Airlines single-aisle jet was downed by a missile system fired by Iran, possibly by mistake.
  • A U.S. official said the plane was tracked before it went down by Iranian radar used to aim missiles and then hit by a Russian-made SA-15 surface-to-air missile system.

Airbus boosts output at U.S. plant amid tariff dispute

  • Airbus will increase production of A320-family jets at its Mobile, Alabama, plant to seven a month by the beginning of 2021, adding 275 jobs, the European planemaker said on Thursday.
  • Airbus currently produces close to six single-aisle jets a month at the plant and expects to reach that level in the next few weeks.
  • Aircraft assembled at its U.S. plant and delivered to U.S. airlines are currently exempt from the 10% duties.
  • Airbus reiterated on Thursday it aims to increase overall A320-family production to 63 a month in 2021.

China’s bid to challenge Boeing and Airbus falters

  • Development of China’s C919 single-aisle plane, already at least five years behind schedule, is going slower than expected as the state-owned Commercial Aircraft Corporation (COMAC) struggles with a range of technical issues that have severely restricted test flights.
  • Delays are common in complex aerospace programs, but the especially slow progress is a potential embarrassment for China, which has invested heavily in its first serious attempt to break the hold of Boeing and Airbus on the global jet market.
  • The most recent problem came down to a mathematical error, according to four people with knowledge of the matter.
  • COMAC engineers miscalculated the forces that would be placed on the plane’s twin engines in flight – known in the industry as loads – and sent inaccurate data to the engine manufacturer, CFM International.
  • As a result, the engine and its housing may both have to be reinforced, the people said, most likely at COMAC’s expense – though another source denied any modification.

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TODAY in HISTORY

  • Thomas Paine’s Common Sense, which greatly influenced the authors of the Declaration of Independence, was published. (1776)
  • The first underground passenger railway, the Metropolitan, opened in London. (1863)

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