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  • U.S. stocks dipped on Tuesday, extending a selloff from the prior session, as investors waited for developments on the U.S.-China trade talks, but a clutch of upbeat quarterly reports from retailers helped limit losses.
  • U.S. Secretary of State Mike Pompeo said in a media interview that President Donald Trump will reject any trade deal that is not perfect, but added that the United States will still keep working on an agreement.
  • Target jumped 5.1%, while Kohl’s gained 5.8% after the retailers forecast annual earnings above estimates.
  • On the macro front, ISM’s non-manufacturing activity index showed a reading of 59.7 in February, better than estimates of 57.3.
  • Another report showed new U.S. single-family homes rose to a seven-month high in December, but November’s outsized jump was revised lower, pointing to continued weakness in the housing market.


Salesforce Raises Its Full-Year Sales Outlook as Profit Rises

  • Salesforce said it expects revenue to nearly double in four years, benefiting from companies shifting more of their spending to technology innovation.
  • Total revenue rose 26% to $3.60 billion, beating analysts’ average estimate of $3.56 billion.
  • Overall in the fourth quarter, the company reported a profit of $362 million compared with $206 million a year earlier.
  • Salesforce forecast first-quarter profit between 60 cents and 61 cents per share and revenue between $3.67 billion and $3.68 billion, missing expected profit of 63 cents per share and revenue of $3.70 billion.
  • The company also forecast full-year 2020 profit between $2.74 and $2.76 per share and revenue between $15.95 billion and $16.05 billion, in line with expected profit of $2.75 per share on revenue of $15.99 billion.

Target’s Sales Rise on Efforts to Improve Stores, Boost E-Commerce

  • Target said same-store sales in 2018 rose at the fastest rate in more than a decade, boosted by efforts to improve its stores and e-commerce capabilities.
  • Overall total revenue was flat at $22.98 billion from a year ago, roughly in line with analyst estimates of $22.96 billion in sales.
  • For the quarter, comparable sales at the company increased 5.3%, exceeding the consensus estimate of 5% for the quarter, boosted by a 31% rise in comparable digital sales in the fourth quarter.
  • Profit fell 27% at Target to $799 million compared with the same quarter a year ago after a $216 million provision for income taxes, compared with a $76 million benefit a year earlier.
  • The company forecast 2019 adjusted profit between $5.75 and $6.05 per share, above analyst expectations of $5.61 per share.
  • Target also expects comparable sales to clock in a low- to mid-single digit increase, while analysts were expecting it to grow at 2.54%.

Kohl’s forecasts earnings above Wall Street estimates, shares jump

  • Kohl’s projected annual earnings above Wall Street forecasts on Tuesday, as the department store chain offers attractive promotions and begins selling new apparel through partnerships with popular brands.
  • Revenue came in at $6.8 billion versus the $6.6 billion expected by analysts.
  • Sales at Kohl’s stores open for more than a year rose 1% during the fourth quarter, above the 0.3% expected.
  • On an unadjusted basis, the company’s profit slid 42% to $272 million from $468 million during the same quarter a year earlier. The company paid off $413 million in bonds during the quarter, taking a $21 million loss to extinguish outstanding debt.
  • The retailer said it expects 2019 earnings per share between $5.80 and $6.15 per share, better than the expected $5.77 per share.

Chevron expects 3 to 4% annual output growth through 2023

  • U.S. oil major Chevron said on Tuesday it expects its annual production to grow in the range of 3% to 4% through 2023, boosted by strong performance in the country’s top shale region, the Permian basin.
  • The company expects shale production from the basin to reach 600,000 barrels per day (bpd) by the end of 2020, and 900,000 bpd by the end of 2023.
  • Chevron’s Permian production reached 377,000 barrels per day in the fourth quarter of 2018, up 84% compared with the same period a year earlier.
  • The company’s annual capital expenditure is expected to be in the range of $19 billion to $22 billion between 2021 and 2023.

OxyContin maker Purdue Pharma exploring bankruptcy

  • OxyContin maker Purdue Pharma is exploring filing for bankruptcy to address potentially significant liabilities from roughly 2,000 lawsuits alleging the drugmaker contributed to the deadly opioid crisis sweeping the United States.
  • Filing for Chapter 11 protection would halt the lawsuits and allow Purdue to negotiate legal claims with plaintiffs under the supervision of a U.S. bankruptcy judge, the sources said.
  • Shares of Endo International and Insys Therapeutics, two companies that like Purdue have been named in lawsuits related to the U.S. opioid epidemic, closed down 17% and more than 2%, respectively, on Monday.

Lockheed gets $1 billion down payment for Saudi THAAD missile system

  • Lockheed Martin will receive the first payment toward the installation a $15 billion missile defense system in Saudi Arabia as part of a $110 billion arms package the Trump administration said it negotiated with the Kingdom in 2017, the Pentagon said.
  • The Pentagon awarded Lockheed a $946 million payment for the foreign military sale.
  • As a part of the scope of work outlined by the Pentagon, obsolete systems currently in place will be updated to prepare the current Saudi missile defense infrastructure for the new Terminal High Altitude Area Defense (THAAD) technology.

Tesla hits customs roadblock in China over Model 3 imports: report

  • China has suspended customs clearance for Tesla’s Model 3 electric cars, citing various irregularities, including improper labeling of the vehicles, financial publication Caixin reported on Tuesday.
  • Making inroads in China, the world’s largest electric vehicle market, is crucial for the Silicon Valley carmaker as it seeks to offset softening demand in the United States and convince investors of its ability to become consistently profitable.
  • The authority has also urged inspectors at all ports responsible for importing vehicles to step up inspections of other imported Tesla models and suspend their release if similar problems are uncovered, the report added.

Papa John’s founder John Schnatter to leave board in settlement deal

  • Papa John’s International founder John Schnatter has agreed to leave the board as part of a settlement agreement with the company, signaling the end to an acrimonious battle for control over the world’s third-largest pizza delivery chain.
  • The company said in a filing on Tuesday that it would co-operate with Schnatter to find a mutually acceptable independent director, who would not be affiliated with hedge fund Starboard Value or Schnatter.
  • Schnatter, who owns about 30% of the company’s shares, would resign from the board if the independent director is appointed before the 2019 annual stockholder meeting, Papa John’s said.

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New home sales rise to 7-month high in December

  • Sales of new U.S. single-family homes rose to a seven-month high in December, but November’s outsized jump was revised lower, pointing to continued weakness in the housing market.
  • The Commerce Department said new home sales increased 3.7% to a seasonally adjusted annual rate of 621,000 units, the highest level since May 2018.
  • Economists had forecast new home sales, which account for about 11% of housing market sales, falling 8.7% to a pace of 600,000 units in December.
  • December’s sales pace was revised down to 599,000 units from the previously reported 657,000 units.

U.S. Services Gauge Tops Forecast in Sign of Economic Health

  • A gauge of U.S. service industries rebounded in February by more than forecast on strength in new orders, a sign the economy remains on relatively solid footing even with growth projected to cool this quarter.
  • The Institute for Supply Management’s non-manufacturing index rose 3 points to 59.7, the biggest gain in a year, the group’s data showed Tuesday.
  • The increase, driven by 13-year highs in gauges of new orders and business activity, topped all but one estimate in a Bloomberg survey calling for a rise to 57.4.
  • All 18 industries reported growth, ISM said.

Trump scraps trade privilege for India; Delhi plays down impact

  • U.S. President Donald Trump looked set to open a new front in his trade wars on Monday with a plan to end preferential trade treatment for India that allows duty-free entry for up to $5.6 billion worth of its exports to the United States.
  • India played down the impact, saying it was keeping retaliatory tariffs out of its talks with the United States, but the opposition could seize on the issue to embarrass Prime Minister Narendra Modi ahead of general elections this year.
  • Trump, who has vowed to cut U.S. trade deficits, has repeatedly called out India for its high tariffs, and U.S. trade officials said scrapping the concessions would take at least 60 days after notifications to Congress and the Indian government.

Senate Will Block Trump’s Emergency Declaration on Border Wall, McConnell Says

  • Senate Majority Leader Mitch McConnell said a resolution seeking to block President Trump from declaring a national emergency would pass the Senate, likely forcing the president to issue his first veto in a bid to secure the funding he wants.
  • The Senate leader’s prediction came a day after Sen. Rand Paul (R., Ky.) became the fourth GOP senator to say he would vote for the Democratic-crafted resolution of disapproval, giving it enough support to pass the Senate. It passed the House last week.
  • Mr. Trump has said he would veto the resolution. Overriding a veto requires the support of two-thirds of both chambers—something not expected to happen.

Chinese Hackers Target Universities in Pursuit of Maritime Military Secrets

  • Chinese hackers have targeted more than two dozen universities in the U.S. and around the globe as part of an elaborate scheme to steal research about maritime technology being developed for military use.
  • University of Hawaii, University of Washington and Massachusetts Institute of Technology are among at least 27 universities in the U.S., Canada and Southeast Asia that Beijing has targeted, according to a cybersecurity intelligence unit of Accenture.
  • The research, to be published this week, is the latest indication that Chinese cyberattacks to steal U.S. military and economic secrets are on the rise.
  • The findings name a substantial list of university targets for the first time, reflecting the breadth and nature of the ongoing cyber campaign that iDefense said dates to at least April 2017.

NSA Weighs Ending Phone Surveillance Program Exposed by Snowden

  • The NSA is considering ending a once-secret surveillance program that annually collects hundreds of millions of telephone records, including Americans, because it lacks operational value, according to people familiar with the matter.
  • Terminating the program, exposed publicly by former intelligence contractor Edward Snowden nearly six years ago, would represent a stunning concession from a spy agency that once argued the collection of call metadata was vital to national security.
  • The people familiar with the NSA’s internal deliberations cautioned that no final decision had been made and that the discussions about potentially ending the metadata program were in the early and informal stages.
  • Metadata includes the numbers and timestamps of a call or text message but not the contents of the conversation.

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China Expects 2019 Economic Growth of 6% to 6.5%

  • China lowered its economic growth target this year to between 6% and 6.5%, bowing to a deepening slowdown that can’t be quickly arrested without aggravating debt levels that are already high.
  • By adopting a range for the growth target this year rather than a specific number, the leadership is giving itself more flexibility in a system where hitting stated goals remains politically important.
  • Opening the annual session of China’s legislature on Tuesday, Premier Li Keqiang laid out plans to fend off risks in the economy and keep the nation’s jobless rate steady.
  • Chief among the remedies: increasing deficit spending, launching new tax cuts and other fee reductions for businesses—totaling 2 trillion yuan, or 2% of China’s $13 trillion economy—and boosting bank lending to small and private companies by 30%.
  • Among the job-creation initiatives are an 800 billion yuan ($119 billion) investment in railway construction and 1.8 trillion yuan to build roads and waterway transportation.
  • On other priorities, China’s military spending is slated to rise 7.5% to 1.19 trillion yuan, which is lower than last year’s 8.1% increase but still faster than the overall increase in government spending.

Bank of Canada Expected to Keep Key Rate on Hold

  • The Bank of Canada is widely expected to keep its main interest rate on hold at a policy announcement Wednesday in the face of weak domestic growth and widespread uncertainty about the global outlook.
  • Economists from 10 primary dealers of Canadian government securities told The Wall Street Journal they anticipate the Bank of Canada will keep its benchmark overnight interest rate at 1.75% this week.
  • A majority of those surveyed said they anticipate the central bank will raise the key rate just once this year, likely in October or December.

Fiat Chrysler open to mergers but rules out Maserati sale

  • Fiat Chrysler (FCA) is open to pursuing alliances and merger opportunities if they make sense but a sale of its luxury brand Maserati is not an option, Chief Executive Mike Manley said in Geneva on Tuesday.
  • Asked whether he would consider selling Maserati to China’s Geely Automobile Holdings, as suggested by recent media reports, Manley said: “Maserati is one of our really beautiful brands and it has an incredibly bright future… No.”
  • FCA is often cited as a possible merger candidate. Bloomberg said this week that the Italian-American carmaker was attractive to France’s PSA Group given its exposure to the U.S. market and its popular Jeep brand.

After One Auditor Flunked Brazil Dam, Vale Found Another Who Passed It

  • Vale, the owner of a mine-waste dam that collapsed this year, killing more than 180 people, dismissed an auditor that refused to certify the dam as safe in September, according to an initial probe by police and prosecutors.
  • A Journal investigation found that employees of Vale and TÜV SÜD knew for months of dangerous conditions at the dam that collapsed.
  • Yet TÜV SÜD employees certified the dam as safe, expressing worry about losing contracts with Vale, a major client, the investigation found.
  • The task force summary, reviewed by The Wall Street Journal, is the first indication that Vale was warned by another, outside firm about the safety of the dam.

China says Canadian stole secrets; Huawei to sue U.S.

  • China’s government and its leading smartphone maker, Huawei, stepped up pressure on Monday on the U.S. and Canadian governments in a dispute over trade and telecoms technology that has ensnared Huawei’s CFO, who faces U.S. criminal charges.
  • China on Monday accused detained Canadian citizen Michael Kovrig of stealing state secrets passed on to him from another detained Canadian, businessman Michael Spavor, in a move likely to increase tension between Ottawa and Beijing.
  • The telecom gear maker is also preparing a lawsuit against the U.S. government over a law that restricts its market access.

Chinese drone maker EHang plans U.S. IPO: sources

  • Chinese drone maker EHang is planning a U.S. initial public offering (IPO) this year, according to two people with direct knowledge of the matter, with one saying it could raise between $400 and $500 million.
  • Founded in 2014 and headquartered in Guangzhou province, EHang first made headlines in 2016 when it unveiled a passenger drone concept which it said would retail at up to $300,000.
  • Early last year it said it had completed tests for the vehicle which is capable of carrying one person at speeds of up to 130 kph.

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  • The Boston Massacre, a pre-Revolutionary incident that grew out of anger towards British troops, occurred. Five anti-British rioters were killed. (1770)
  • In the last free elections in Germany until after World War II, the Nazi Party received 44% of the vote. (1933)
  • Soviet dictator Josef Stalin died at age 73, after 29 years in power. (1953)

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.

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