DAILY MARKET REPORTS
- U.S. stocks rose at the open on Monday, led by industrial companies, as the United States and China began their latest round of trade talks to hammer out a deal before the looming March deadline.
- China struck an upbeat note on the talks, while White House senior counselor Kellyanne Conway also expressed confidence of a possible deal.
- U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are landing in Beijing Monday and scheduled to meet with China’s vice premier later in the week.
- Also, on investors’ watchlist is the border security funding talks, which collapsed on Sunday after Democratic and Republican lawmakers clashed over immigrant detention policy.
- A special negotiating panel is aiming to reach a deal by Monday ahead of a Friday deadline to avert another government shutdown.
- Of the S&P 500 companies that have reported fourth-quarter earnings, 71.2% have topped estimates, but analysts’ estimates for first-quarter earnings have turned negative for the first time since 2016.
- Electronic Arts gained 8.8% after analysts were upbeat about a strong start to the videogame publisher’s newly launched rival to “Fortnite”.
US FINANCIAL MARKET
EA Climbs as Apex Legends Lauded as Its ‘Hottest Game in Years’
- Electronic Arts rose to the highest in nearly four months as some Wall Street analysts weighed in favorably on the potential success of the company’s latest game, Apex Legends.
- Free-to-play Apex Legends could be a competitor to the wildly popular game Fortnite, Bank of America Merrill Lynch suggested.
- Buckingham analyst Matthew Harrigan said that “gamers strongly welcomed an appealing alternative to Fortnite and we are confident that the game is a significant success”.
Apple iPhone sales in China fell by a fifth in fourth quarter: IDC
- Apple iPhone sales in China fell 20% year-on-year in the fourth quarter of 2018, while sales for smartphones made by home-grown rival Huawei soared by 23%, data from industry research firm IDC showed on Monday.
- That reduced Apple’s market share to 11.5% from 12.9% a year earlier, the report said.
- A separate report from another common industry source, Hong Kong-based Counterpoint, earlier this month confirmed a similar sharp fall in sales in India – another big emerging market where Apple is struggling.
Morgan Stanley, in Its Biggest Deal Since Crisis, Courts Future Millionaires
- Morgan Stanley is making a play for the thousands of employees in the startup economy who might one day be millionaires.
- The Wall Street bank will pay $900 million to acquire Solium Capital, which manages the stock that corporate employees receive as part of their pay. The deal is the bank’s largest acquisition since the financial crisis.
- Solium’s 3,000 corporate clients employ 1 million workers and include startups such as Stripe and Instacart, whose employees tend to be younger and have fewer relationships with traditional financial firms.
- The luckiest will become millionaires overnight if their companies go public.
U.S. sues Lockheed, others for alleged kickbacks on nuclear site cleanup
- The United States has sued Lockheed Martin, Lockheed Martin Services, and Mission Support Alliance, as well as a Lockheed executive for alleged false claims and kickbacks on a multibillion-dollar contract to clean up a nuclear site.
- The complaint alleges Lockheed paid more than $1 million to Mission Support Alliance executives in order to win a $232 million subcontract for providing management and technology support at the Hanford, Washington site from 2010 through the middle of 2016 at inflated rates.
- It also says the defendants lied about the amount of profit included in Lockheed’s billing rates.
Boeing’s tanker program records $2.31 billion in losses over 3 years
- Boeing said it had recorded reach-forward losses of $2.31 billion related to the U.S. Air Force KC-46A aerial refueling tanker over 2016, 2017 and 2018, bringing the total pre-tax cost of the program to $3.6 billion.
- The world’s largest planemaker said in a filing that in 2018, it had recorded reach-forward losses of $736 million on the contract, reflecting higher estimated costs related to certification, flight testing and change incorporation on aircraft, among other things.
- The U.S. Air Force recently accepted the long-delayed first delivery of the KC-46 tanker jet made by Boeing.
‘The Lego Movie 2’ Collapses at the Box Office
- Hollywood looked to “The Lego Movie 2: The Second Part” to help it recover from a dismal January at the box office, but the Warner Bros. franchise failed to deliver.
- The movie, a subversive take on the building-block toys, collected a disappointing $35 million in the U.S. and Canada, according to preliminary box-office estimates.
- After a record-setting year at the box office in 2018, Hollywood suffered its worst January in eight years.
- The early months are always a slow time for the industry, but last month saw several bombs, including “Miss Bala” and “The Kid Who Would Be King.”
US ECONOMY & POLITICS
Trump Heads to Border for First Rally of Year
- President Trump will return in earnest to campaign posture on Monday, holding his first rally of the year in the shadow of the Mexican border and in the hometown of a potential rival, former Democratic Rep. Beto O’Rourke.
- Mr. Trump will use his appearance to make a case for a congressional spending deal that would fund a physical barrier along the Southern border and avert another government shutdown before the deadline at week’s end, campaign aides said.
- As of Sunday, negotiations between the two parties had broken down.
Trump Seeks to Boost AI as Chinese Competition Grows
- President Trump is expected to sign an executive order Monday aimed at boosting U.S. development of artificial intelligence—and at blunting China’s momentum in the field.
- The order will direct federal agencies to prioritize artificial intelligence in their research and development, administration officials said.
- The president will also direct agencies to expand researchers’ access to government data that could sharpen AI applications.
Rural U.S. Carriers Resist Proposed Chinese Telecom Ban Aimed at Huawei
- President Trump is weighing an executive order that could ban Chinese telecommunications gear from U.S. networks, but the plan is facing resistance from U.S. carriers in rural areas whose networks run on Huawei Technologies equipment.
- While the executive order would likely not identify companies by name, Huawei is considered the prime target.
- Rural U.S. carriers, many of whom have built their networks on Chinese gear, have been quietly lobbying against such a ban.
- The federal government and analysts estimate Chinese hardware makes up less than 1% of U.S. telecom networks, after Congress in 2012 effectively banned it from nationwide phone and internet providers.
China upbeat on U.S. trade talks, but South China Sea tensions weigh
- China struck an upbeat note on Monday as trade talks resumed with the United States, but also expressed anger at a U.S. Navy mission through the disputed South China Sea, casting a shadow over the prospect for improved Beijing-Washington ties.
- White House senior counselor Kellyanne Conway on Monday also expressed confidence in a possible deal. Asked if the two countries were getting close to a trade agreement, she told Fox News in an interview, “It looks that way, absolutely.”
- The two sides are trying to hammer out a deal before the March 1 deadline when U.S. tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25% from 10%.
New Rules Could Ease Patients’ Access to Their Own Health Records
- The Trump administration is proposing steps aimed at improving patients’ access to their own health data, bolstering efforts to bring information including insurance claims, hospital and doctor records to digital devices such as smartphones.
- Federal health regulators are set to unveil two major proposed regulations closely watched by health and technology companies, amid a growing flood of health data that has become an ever-more-valuable asset.
- The draft rules touch on a broad array of issues, including technology standards that are supposed to help unlock digital data stored in the electronic health records used by hospitals and doctors to track patients’ care.
EUROPE & WORLD
Chinese Investment in Israel Raises Security Fears
- Security officials are raising alarms over Chinese investment in Israeli technology companies, prompting the Israeli government to scrutinize the money flows and businesses to reconsider accepting Chinese funds.
- Israel is moving to create an interagency government body to oversee sensitive commercial deals involving foreign companies, U.S. and Israeli officials said, akin to the U.S.’s Committee on Foreign Investment, or Cfius.
- U.S. and Israeli officials said they are especially concerned about stepped-up Chinese investments in Israeli companies whose products are dual use, meaning they have both military and commercial applications, such as drones and artificial intelligence.
- They also worry about China using Israeli companies as a way to uncover U.S. secrets and about Beijing transferring Israeli technological know-how to its ally, Iran, an arch foe of Israel.
U.K. Posts Slowest Growth in Six Years Amid Brexit Worries
- The U.K. economy experienced its weakest growth in six years during 2018 as businesses slashed investment in the face of growing uncertainty about the way in which the country will leave the European Union.
- The Office for National Statistics said Monday that the U.K.’s gross domestic product—the broadest measure of goods and services produced in the economy—was 1.4% higher in 2018 than in 2017, the weakest expansion since 2012.
- The economy slowed more sharply as the year drew to a close, with GDP rising at an annualized pace of 0.7% in the three months through December, down from 2.5% in the third quarter.
- In December alone, GDP fell by 0.4% from November.
- Falling investment was largely responsible for the 2018 slowdown, and was down 0.9% from the previous year, the largest drop since 2009.
SoftBank Invests $940 Million in Nuro for Driverless Deliveries
- SoftBank is investing almost $1 billion in a robotic-delivery vehicle startup, a hefty injection of capital that could help accelerate the race to put driverless vehicles on the road.
- Nuro raised $940 million from SoftBank’s nearly $100 billion tech-focused Vision Fund.
- Founded in 2016, Nuro is now valued by investors at $2.7 billion.
- The Mountain View, Calif., startup has plotted a different path in the development of driverless vehicles from its competitors, focused on creating its own electric vehicles specially made for in-town deliveries, rather than robot taxis or long-haul trucking.
China’s Demographic Danger Grows as Births Fall Far Below Forecast
- The end of China’s draconian one-child policy has failed to bring an expected boom in births, adding yet another headwind to the country’s economy and compounding worries about its long-term growth potential.
- The number of newborns in China dropped to 15.23 million in 2018, according to the National Bureau of Statistics.
- That’s two million less than 2017 and 30% below the median official forecast of more than 21 million.
- It was also the lowest level of births since 1961, when millions were struggling to survive during China’s Great Famine.
Vale Denied Having ‘Upstream’ Dams Ahead of Deadly Accident
- Mining giant Vale had denied owning the sort of mine-waste dam that collapsed in January and killed at least 157 people at one of its old mines in Brazil, underscoring the industry’s reluctance to disclose information about such structures
- Vale’s denials to investors and the news media came after another so-called upstream tailings dam, known as Fundão, failed in 2015, killing 19 people in what was then considered Brazil’s worst-ever environmental disaster.
- That dam was co-owned by Vale and Australia’s BHP Group.
- Despite the two accidents, many large miners have declined to give information about the tailings dams they manage and their exposure to upstream structures.
- This leaves investors and the public with little chance to gauge the risks of such structures, even those built near their homes.
TODAY in HISTORY
- Yalta Agreement signed by President Franklin Roosevelt, British Prime Minister Winston Churchill, and Soviet leader Josef Stalin during World War II. (1945)
- Ayatollah Khomeini’s followers seized control of the Iran government. (1979)
- South African resistance leader, Nelson Mandela, was released from prison after more than 27 years. (1990)
This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, the Wall Street Journal.
Content posted by third parties on this site is screened in order to protect clients’ privacy and comply with regulatory requirements. Content containing sensitive personal information, inappropriate language, information about specific investments, misleading information, information about other companies or websites, or information related to litigation will be removed. Content posted by third-parties on this site remains the responsibility of the party posting the content and is not adopted or endorsed by Pence Wealth Management or LPL Financial. Any opinions or statements posted by third parties are their own and may not be representative of the experience of others and are not indicative of future performance or success. Third party content on this site does not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness.