DAILY MARKET REPORTS
- U.S. stocks rose Tuesday as optimism that U.S. and Chinese negotiators were making progress toward a broad outline of a trade agreement eased some of investors’ trepidations.
- Negotiation teams from the U.S. and China are meeting this week to narrow the gap between concessions China is willing to offer and what the Trump administration will accept.
- Investor sentiment was also buoyed by an agreement in principle among U.S. lawmakers late Monday, which would avoid another partial government shutdown later this week. The deal would provide $1.38 billion of funding for 55 miles of modern physical barriers along the border with Mexico, below President Trump’s initial demands.
US FINANCIAL MARKET
Under Armour Posts Flat Sales in Holiday Quarter
- Under Armour reported flat revenue in the holiday quarter, as strong gains overseas offset declines in North America and in its footwear business.
- Total revenue rose 1.5% to $1.39 billion, including a 6% decline in North America and a 24% increase overseas.
- The Baltimore company had a quarterly profit of $4 million, compared with a loss of $88 million a year ago.
- For the full year, Under Armour posted a small loss and revenue rose 4% to $5.19 billion. In December, executives forecast 2019 sales would rise 3% to 4%.
Burger King’s Parent Aims for More Global Growth
- Restaurant Brands International, the parent of Burger King, Tim Hortons and Popeyes Louisiana Kitchen, is marching ahead on expanding the international presence of all three brands as it scouts for sales growth.
- Revenue increased 12% to $1.39 billion. Analysts expected $1.37 billion.
- U.S. comparable sales rose 0.8% at Burger King and declined 0.1% at Popeyes, while comparable sales at Tim Hortons rose at their fastest pace in more than two years.
- For the quarter, net income fell to $163 million as the year-earlier results contained a nonrepeating income-tax benefit.
Shopify reports slower growth in vendor sales, shares fall 7%
- Shopify beat analysts’ estimates for quarterly profit on Tuesday, but a slowing rate of growth in total sales by vendors using the ecommerce company’s software sent its U.S.-listed shares down about 7% before the bell.
- Overall revenue rose to $343.9 million from $222.8 million.
- Shopify said gross merchandising volume rose just 54% compared with a 65% jump in the same period a year earlier.
- Shopify said its net loss narrowed to $1.5 million in the quarter, from about $3 million a year earlier.
Livent’s weak outlook for Chinese lithium demand drags on shares
- U.S. lithium producer Livent said that it expects demand for the white metal to sag in China for the rest of the year.
- Livent’s 2018 revenue of $443 million came in at the low end of a forecast $440 million to $450 million.
- Livent, which produces lithium in Argentina and processes it at several sites around the world, posted net income of $25.9 million, compared with a net loss of $10.9 million in the year-ago period.
- For 2019, the company expects revenue of $495 million to $525 million.
- The lackluster results and weak outlook for China – the world’s largest lithium consumer – seemed to reinforce concerns about market oversupply for the electric vehicle battery ingredient despite bullish expectations for electric car demand.
Amazon to Acquire Home Wi-Fi Company Eero
- Amazon.com disclosed its latest bet to control the so-called smart home, adding to its fold a company that offers a Wi-Fi system that ditches the traditional router.
- The Eero device plugs into a modem. Users can then customize the system, adding additional devices that plug into outlets, based on the size—and shape—of the house.
- By buying Eero—a company that promises no Wi-Fi dead zones by deploying a customizable armada of small wireless routers around the house—Amazon will go head-to-head against Google’s OnHub.
- Financial terms weren’t disclosed, but Eero was valued at $251 million in a 2016 private financing round, according to an estimate by Sand Hill Econometrics.
OPEC Production Falls Significantly on Saudi Output Cuts
- OPEC significantly reduced its crude-oil production in January, making good on its latest deal to curb output and rebalance an oversupplied market, the oil cartel said Tuesday.
- In its closely watched monthly oil market report, the Organization of the Petroleum Exporting Countries said its crude output had fallen by 797,000 barrels a day in January, month-on month, to average 30.81 million barrels a day.
- Saudi crude output came down by 350,000 barrels a day last month, according to secondary sources, Tuesday’s report showed.
- The cartel slightly lowered its oil demand growth forecast for 2019, by 50,000 barrels a day, for a growth rate of 1.24 million barrels a day, mainly the “result of downward revisions to the economic outlook for major economies,” OPEC said.
Latest Funding Values Reddit at $3 Billion
- Reddit, the discussion forum known for its “ask me anything” online town halls with celebrities and politicians, was valued at $3 billion after a new financing round that brought in Chinese internet giant Tencent as an investor.
- Tencent accounts for half of the $300 million in fresh financing for the company.
- While the site has 330 million monthly active users, the company remains private.
Amazon Slashed Prices at Whole Foods. Now They’re Climbing Back Up.
- The natural grocer raised prices this month on dozens of items from Dr. Bronner’s soaps to Häagen-Dazs ice cream, according to an email viewed by the Journal.
- A separate company email in December listed 550 additional price increases on products including crackers, olives and cookies.
- Whole Foods said in the December email that suppliers were charging more for those products due to inflation. The separate price increases this month followed the expiration of annual contracts to sell about 700 goods at low prices, Whole Foods said.
- The inflation-based increases at Whole Foods range from 10 cents to several dollars, while the average hike was 66 cents.
EA’s ‘Apex Legends’ tops ‘Fortnite’ record with 25 million signups in a week
- Shares of Electronic Arts jumped 8.5% on Tuesday after the videogame maker said it signed up 25 million players for its new battle royale game “Apex Legends” in a week, setting it up for a showdown with Epic Games’ wildly popular “Fortnite”.
- “Apex Legends” signed up 10 million players within three days of its launch, EA said last week, a milestone that Fortnite took two weeks to reach. EA disclosed the new number on Monday on Twitter.
- While the initial numbers mark a victory for EA, the company still has a long way to go to match Fortnite’s more than 200 million subscribers.
India watchdog probes accusations that Google abused Android – sources
- India’s antitrust commission is looking into accusations that Alphabet’s unit Google abuses its popular Android mobile operating system to block its rivals, four sources with direct knowledge of the matter told Reuters.
- The Competition Commission of India (CCI) has for the past six months been reviewing a case similar to one Google faced in Europe that led to a fine of 4.34 billion euro ($5 billion) by antitrust regulators last year, three of the sources said.
- The European Commission found Google had abused its market dominance since 2011 with practices such as forcing manufacturers to pre-install Google Search and its Chrome browser, together with its Google Play app store on Android devices.
US ECONOMY & POLITICS
Lawmakers Reach Agreement in Principle to Fund Border Security, Avoid Shutdown
- Senior lawmakers said Monday night they had reached an agreement in principle on a sweeping deal to end a monthslong fight over border security and avoid a partial government shutdown this weekend.
- The deal would include $1.38 billion for 55 miles of modern physical barriers along the border with Mexico, according to congressional aides from both parties.
- Lawmakers said they expected the agreement could be written into legislation that could pass both chambers of Congress before the Friday midnight deadline, avoiding a second partial government shutdown.
- The biggest question is likely to be whether Mr. Trump will sign the congressional deal. Mr. Trump had sought $5.7 billion to build a border wall and the agreement’s funding is far lower than that.
China, U.S. Seek to Narrow Gap on Trade for Trump, Xi to Close at a Summit
- Chinese and U.S. negotiators are focusing this week on producing a broad outline of a trade agreement for their presidents to clinch at a possible summit, according to people with knowledge of the matter.
- Both sides hope to hash out a framework of a deal, the people said, with the goal of getting it finalized in a meeting between President Trump and Chinese President Xi Jinping. The date for such a session hasn’t been set.
- If the two sides don’t agree by March 1 or don’t agree to extend the deadline, tariffs on $200 billion of Chinese goods will jump to 25% from 10% at 12:01 a.m., Saturday March 2.
U.S. job openings jump to record 7.3 million in December
- U.S. job openings surged to a record high in December, led by vacancies in the construction, accommodation and food services sectors, which could bolster views that the economy is experiencing a dearth of workers.
- Job openings, a measure of labor demand, increased by 169,000 to a seasonally adjusted 7.3 million, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, on Tuesday. That was the highest level since the series started in 2000.
- The job openings rate climbed to 4.7% from 4.6% in November, while hiring rose to 5.9 million from 5.8 million in November.
U.S. small business confidence falls to more than two-year low
- U.S. small business optimism tumbled last month to its lowest level since President Donald Trump’s election more than two years ago amid growing uncertainty over the economic outlook.
- The National Federation of Independent Business said on Tuesday its Small Business Optimism Index dropped 3.2 points to 101.2 in January, the weakest reading since November 2016.
- The NFIB said its uncertainty index jumped 7 points to 86 last month, the fifth highest reading in the survey’s 45-year history. The rise in uncertainty coincided with the longest partial shutdown of the federal government in history.
U.S. solar jobs down for second year as Trump tariffs weigh
- The number of jobs in the U.S. solar industry dropped by 3.2% in 2018, a second year of losses, as the Trump administration’s tariffs on foreign panels and state-level policy changes hit demand for installations.
- The number of solar energy workers fell by 8,000 to 242,000 in 2018, according to the Solar Jobs Census, released annually by the non-profit research firm The Solar Foundation, following a loss of 10,000 jobs in 2017.
- In early 2018, President Donald Trump imposed 30% tariffs on imported solar panels to boost domestic manufacturing, leading developers to cancel or freeze billions of dollars of investments in large-installation projects because most of the solar panels used in the United States are made abroad.
- The Solar Foundation said it expects a rebound in jobs of 7% next year, however, due to recent declines in solar panel prices that have made them more affordable.
National Enquirer Publisher Asked Justice Department for Advice on Saudi Connection
- The dust-up between Amazon founder Jeff Bezos and National Enquirer parent American Media has raised questions about the media company’s connections to Saudi Arabia.
- American Media has had plenty of contacts with Saudi Arabia in recent years, including seeking financial backing from Saudi investors to fund acquisitions and producing a magazine celebrating the country’s new crown prince.
- It also sought advice last year from the U.S. Justice Department over whether the publisher should register as a foreign agent, a person familiar with the matter told The Wall Street Journal.
- “The Post’s essential and unrelenting coverage of the murder of its columnist Jamal Khashoggi is undoubtedly unpopular in certain circles,” Mr. Bezos wrote in his blog post Thursday. Mr. Bezos owns the Washington Post.
EUROPE & WORLD
Rough ride: Nissan slashes outlook, unveils Ghosn-related charge
- Nissan Motor warned its annual profit will plumb six-year lows on waning global sales, underlining the challenges it faces as it also grapples with the fallout from the shocking arrest and ouster of its former chairman Carlos Ghosn.
- The Japanese automaker, in its first results since Ghosn was detained in November, unveiled an $84 million charge linked to deferred compensation for the executive who has been indicted for under-reporting his salary at Nissan over 2010-2018.
- Nissan cut its annual global retail vehicle sales view by 5.5% and projected weaker sales in China, its biggest market, and the United States.
- While it still sees sales growing in China, the world’s top auto market, it trimmed its forecast for the country to 1.56 million units from 1.70 million units.
- In the United States, it now sees sales tumbling 8.6% on the year to 1.46 million units, from 1.55 million last year.
- Japan’s second-biggest automaker projected an operating profit of 450 billion yen ($4 billion) for the year to March, down 22% from the previous year and 17% below an earlier forecast, hurt by a slowdown in global sales.
Gaming firm Supercell’s 2018 profit falls as hit titles age
- Finnish mobile game maker Supercell reported a 26% drop in 2018 core profit on Tuesday due to falling revenue for its ageing hit games Clash of Clans and Clash Royale.
- Company revenue dropped 24% to 1.37 billion euros from 1.8 billion a year ago.
- The Helsinki-based firm, majority owned by China’s Tencent, said earnings before interest, tax, depreciation, and amortization (EBITDA) fell to 537 million euros ($605.15 million) from 729 million a year earlier.
- The company did not disclose sales figures for its titles, but Paananen said its biggest titles, Clash of Clans and Clash Royale, saw the deepest declines.
Canadian pot producer Aurora Cannabis beats revenue estimates
- Aurora Cannabis reported a better-than-expected quarterly revenue, as the company benefited from higher sales after Canada legalized the use of recreational cannabis in October.
- The company’s net revenue rose to C$54.2 million ($40.75 million) from C$11.7 million a year ago, beating the C$51.84 million average, while marijuana sales in the reported quarter rose to 6,999 kg from 1,162 kg.
- Aurora disclosed losses of C$237.8 million, after reporting a profit of C$7.7 million a year ago.
- Large losses were expected due to a decline in marijuana-related equities last quarter, as Aurora has invested heavily in other companies in the industry and must track their performance as part of its earnings — Aurora said that those adjustments accounted for about C$190 million of its losses.
India’s SpiceJet sees improving outlook despite profit plunge
- Higher passenger yields for Indian low-cost carrier SpiceJet in its third quarter only partially offset higher crude oil prices and foreign-exchange losses that resulted in a sharp drop in profit.
- The airline’s standalone net profit, which excludes results of its SpiceJet Merchandise and SpiceJet Technic businesses, fell to 550.7 million rupees ($7.74 million) from 2.4 billion rupees a year earlier, the airline said here.
- Though profit plunged by 77% after a 34% jump in oil prices and 11% depreciation of the rupee against the dollar sent, shares closed up on the 8% increase in passenger yields – a measure of fares and distance flown.
North Korea Keeps Stockpiling Materials to Make Nuclear Weapons, Report Finds
- North Korea has kept producing raw materials needed to make nuclear weapons, though the threat has subsided since 2017 as the country’s suspension of missile tests has halted its progress on delivery systems capable of hitting the U.S. mainland, according to a new report.
- North Korea, despite promising last year to fully denuclearize, has continued to operate facilities that produce plutonium and highly enriched uranium, according to three Stanford University researchers.
- The production enables Pyongyang to enlarge its nuclear arsenal, though the report didn’t specify whether Kim Jong Un’s regime had done so.
In Germany, a Cold War Deal to Host U.S. Nuclear Weapons Is Now in Question
- German Chancellor Angela Merkel’s ruling partners are reconsidering their support for a decadesold arrangement that puts Germany under the U.S. nuclear shield, a development that could further undermine the country’s already-tense relationship with the Trump administration.
- The center-left Social Democrats have appointed a commission to re-evaluate their positions on strategic, foreign and security policy, including the merits of “nuclear sharing,” a Cold War-era agreement under which German warplanes would be used to launch U.S. nuclear weapons in case of a Russian attack on Europe, a senior party official said.
- The deliberations came partly as a result of President Trump’s withdrawal from a treaty with Russia that regulates the presence of nuclear missiles in Europe, according to SPD officials.
Spain Is Pushed Closer to Snap Elections by Trial of Catalan Separatists
- The trial by the government of Prime Minister Pedro Sánchez of 12 politicians and activists who organized an unauthorized independence referendum in Catalonia in 2017 has intensified the clash over the future of the northern Spanish region.
- Separatist parties—whose backing brought Mr. Sánchez to power last year—are angered at the trial and a lack of progress on the Catalonia issue.
- They are now threatening to withhold their support for this year’s budget in a crucial procedural vote Wednesday.
- Defeat in that vote would expose the weakness of Mr. Sánchez’s minority Socialist government, making snap elections increasingly likely, possibly as early as this spring.
TODAY in HISTORY
- The first release of American prisoners of war from the Vietnam war took place. (1973)
- The Senate voted to acquit President Clinton on charges of perjury and obstruction of justice. (1999)
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.