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WALL STREET DIPS ON TRADE UNCERTAINTY, WEAK NEW HOME SALES DATA

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US FINANCIAL MARKET | US ECONOMY & POLITICS
 EUROPE & WORLD | TODAY IN HISTORY

DAILY MARKET REPORTS

  • U.S. stocks dipped on Thursday weighed down by concerns of a delay in trade talks between the United States and China, and data which showed a higher-than-expected fall in new home sales in January.
  • On Thursday, sluggish Chinese economic data weighed on investor sentiment.
  • Official data showed that industrial output there slowed more than expected in January and February, adding to concerns that the world’s second-biggest economy is slowing down.
  • Meanwhile, a Commerce Department report showed new home sales fell 6.9% to a seasonally adjusted annual rate of 607,000 units in January, well below estimates, suggesting the housing market weakness persisted early in the first quarter.
  • In Thursday’s action, shares of struggling conglomerate General Electric rose 2.6% as it outlined plans to cut costs and debt but warned investors of another year of lower profits and weak cash flow from its core industrial operations.
  • In Europe, the Stoxx Europe 600 rose 0.6% after U.K. lawmakers late Wednesday ruled out a no-deal exit from the European Union.
  • Lawmakers will now likely vote Thursday in favor of a further proposal to request a delay in Britain’s scheduled exit date beyond March 29.

US FINANCIAL MARKET

GE Warns of Falling Profits, $2 Billion Cash Burn in 2019

  • General Electric warned investors of another year of lower profits and weak cash flow from its core industrial operations, while detailing its plans to cut costs and debt.
  • In a conference call Thursday, GE executives described 2019 as a “reset year” with first-quarter profit and cash flow down significantly from a year ago.
  • But the presentation was in keeping with recent commentary that 2019 would be a difficult year with negative cash flow.
  • GE forecast on Thursday that its industrial operations could burn up to $2 billion more cash than they generate in 2019 and expects adjusted earnings of 50 cents to 60 cents per share, compared with the 70 cents forecast by analysts
  • The conglomerate, which also has large aviation and health–care divisions, aims to get costs at its corporate operations—which oversees the individual businesses—to below $700 million in 2021 from $1.2 billion last year.

Higher store spending to hit Dollar General 2019 profit, shares fall

  • Dollar General forecast 2019 profit below analysts’ expectations on Thursday as the discount retailer ramps up spending on stores to pull in more customers, sending its shares down more than 7%.
  • Net sales rose 8.5% to $6.65 billion and beat analysts’ expectations of $6.61 billion.
  • The company’s same-store sales rose 4% and beat the 2.6% increase analysts had estimated, as its customers, who benefited from an earlier-than-usual distribution of food stamps, spent more on groceries.
  • Dollar General said it expects to earn $6.30 to $6.50 per share in fiscal 2019, below the average analyst estimate of $6.65.

Crashed Ethiopian Jet’s Black Boxes to Be Probed for Clues to 737 MAX’s Safety

  • The black boxes from Ethiopian Airlines Flight 302 arrived in France early Thursday for analysis, a key step in a probe that could help determine how long Boeing’s 737 MAX jetliner remains grounded around the world.
  • The French air accident investigation office, known by its acronym BEA, said late Wednesday that Ethiopia had asked it for assistance in analyzing the information contained in the devices.
  • The devices arrived at the BEA’s laboratory outside Paris on Thursday. Downloading the data and making early conclusions can take only a few hours, though detailed analysis typically can take months.
  • U.S. officials urged Ethiopian counterparts to send the devices to the U.S., The Wall Street Journal previously reported. Ethiopia decided instead on a European agency.

Blue Air to decide on Boeing 737 MAX order after crash investigation

  • Romania’s Blue Air will take a decision on its order for 12 Boeing 737 MAX 8 jets only after an investigation into a fatal crash of one of the planes in Ethiopia at the weekend, CEO Marius Puiu told Reuters.
  • “We trust the world-wide precautionary suspension of flights, a decision that puts civil aviation transport safety first,” said Puiu, adding the first 737 MAX 8 plane was planned to arrive in Romania this summer.
  • Currently, Blue Air operates 25 Boeing 737 series aircraft – 737-300, 737-400, 737-500, 737-700 and 737-800, with capacities ranging from 120 to 189 seats.

Microsoft targets video game developers, in challenge to Amazon’s cloud dominance

  • Microsoft said it is combining elements of its video gaming and Azure cloud computing businesses to court game developers, an action designed to use the strength of its Xbox gaming franchise to gain ground on cloud services leader Amazon.com.
  • Microsoft said it will start rolling out “Microsoft Game Stack,” a group of services that lets game developers do things like host multiplayer games and match players of similar skill levels.
  • The services are designed to work for titles played on any device – including those with operating systems from Microsoft’s onetime rivals like Apple and Google.

Facebook and Instagram Suffer Lengthy Outages

  • A widespread outage that affected millions of Facebook, Instagram and WhatsApp users Wednesday stretched well into Thursday morning, in one of the longest disruptions for the tech giant’s service in years.
  • While internet companies occasionally experience outages caused by problems ranging from natural disasters to surges of web traffic, it is rare for such an established company to go down for so long.
  • The outage could force Facebook to issue refunds to advertisers—many of which use its platforms as a core means of reaching consumers—and further damage a brand already dented by scandals surrounding privacy and data protection.

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US ECONOMY & POLITICS

U.S. Jobless Claims Rose Last Week

  • Initial jobless claims, a proxy for layoffs, increased by 6,000 to a seasonally adjusted 229,000 in the week ended March 9.
  • Economists had forecast 224,000 new applications for jobless benefits last week.
  • Claims for the week ending March 2 were unrevised at 223,000.
  • Thursday’s report also showed the number of continuing unemployment benefit claims—those drawn by workers for more than a week—increased by 18,000 to 1,776,000 in the week ended March 2. Continuing claims are reported with a one-week lag.

U.S. import prices post largest gain in nine months

  • U.S. import prices increased by the most in nine months in February, but the trend remained weak, with prices declining for a third straight month on an annual basis.
  • Import prices rose 0.6% last month, the biggest gain since May, boosted by increases in the costs of fuels and consumer goods.
  • Economists polled by Reuters had forecast import prices rising 0.3% in February.
  • Data for January was revised higher to show import prices edging up 0.1% instead of falling 0.5% as previously reported.
  • In the 12 months through February, import prices fell 1.3%. That followed a 1.6% decline in January.

WSJ Survey: Economists Cut Forecasts for Jobs and Economic Growth in Early 2019

  • Economists sharply lowered their forecasts for employment and economic growth in the first quarter in a new Wall Street Journal survey, after recent government data suggested the U.S. economy is cooling.
  • Private-sector economic forecasters surveyed in recent days expect U.S. economic output to grow, on average, at a 1.3% pace in the first quarter.
  • That is a sharp drop from the last survey, in early February, when they predicted a 2% growth rate for the period.
  • Economists also trimmed their assumptions for monthly payroll growth in the first quarter by nearly 18%, to an average pace of 170,805 new jobs per month from 207,583 in the February survey.
  • Just under half of economists expect the next recession to start in 2020, while about a third forecast a downturn to begin in 2021. Those levels were little changed from the prior survey.

U.S. New-Home Sales Fell in January

  • New-home sales fell 6.9% in January from a month earlier to a seasonally adjusted annual rate of 607,000, the Commerce Department said Thursday.
  • Economists had expected new-home sales to rise to an annual rate of 622,000 in January.
  • The rate in December was revised up to 652,000 from an initial estimate of 621,000.
  • Sales of new homes were down 4.1% in January compared with a year earlier.

China Aims to Placate U.S. With Law Banning Theft of Foreign Trade Secrets

  • China made last-minute changes to a proposed foreign-investment law, trying to address U.S. complaints about forced technology transfer and bolster a compromise seen as crucial to striking a trade deal with Washington.
  • The draft, expected to be passed into law Friday, adds language to bar officials from divulging corporate secrets and threatens criminal prosecution for doing so, according to a copy of the draft, dated March 12, reviewed by The Wall Street Journal.
  • The new language takes aim at the regulatory review panels, known as “conformity assessments,” that foreign companies must pass before manufacturing new cars and other products or setting up plants.
  • The Trump administration says the process is used to leach proprietary information and force technology transfers.

House Votes for Public Release of Mueller Report

  • The House passed a resolution—with overwhelming bipartisan support—calling for a public release of special counsel Robert Mueller’s anticipated report on his investigation into Russian interference in the 2016 presidential election.
  • The vote was 420-0.
  • Under the regulation governing Mr. Mueller’s work, he must submit a report at the conclusion of his investigation to the U.S. attorney general explaining his decisions to pursue or decline prosecutions, including explanations of cases he investigated but he decided not to bring charges.

Senate to Rebuke Trump on Border Wall

  • The Senate is set to pass a resolution Thursday rejecting President Trump’s emergency declaration to build more of the border wall, after the president poured cold water on a bill that could have peeled off some Republican votes.
  • The Senate move would set the stage for Trump’s first veto, highlighting the depth of Republicans’ unease over his recent action.
  • Still, Congress isn’t expected to override his veto, which would require a two-thirds majority in each chamber. Only 13 Republicans supported the resolution when it passed the Democratic-controlled House last month.

Democrat Beto O’Rourke Announces 2020 Presidential Run

  • Former Texas Rep. Beto O’Rourke announced Thursday he is running for president, aiming to parlay his turn as one of the Democratic stars of the 2018 midterm elections into a run at his party’s nomination.
  • Mr. O’Rourke is the 15th Democrat to enter the contest. He joins the race as an instant first-tier candidate, commanding an online donor network second in size only to the one Vermont Sen. Bernie Sanders carried over from his 2016 presidential effort.
  • O’Rourke, who represented El Paso for three terms in the House, became a national figure during his 2018 Senate race against Republican Ted Cruz, lost by less than 3 percentage points while raising $80 million, smashing Senate fundraising records.

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EUROPE & WORLD

U.K. Lawmakers Set to Delay Brexit as Political Turmoil Drags On

  • British lawmakers are expected Thursday to vote to delay the U.K.’s departure from the European Union, scheduled for March 29, in the latest installment in an extraordinary week for the Brexit saga.
  • Such a result would set the stage for a possible third vote on Prime Minister Theresa May’s EU withdrawal deal early next week, allowing Mrs. May to use the threat of a long delay to press anti-EU lawmakers to finally support her plan.
  • Parliament on Tuesday spurned the deal for a second time and Wednesday rejected a no-deal exit under any circumstances.
  • Wednesday’s vote was nonbinding and doesn’t formally take a no-deal Brexit off the table, but it sharply reduces the chances of it happening. By doing so, it has actually provided Mrs. May’s deal with a ghost of a chance.

China’s Slowdown Broadens, Despite Government Bid to Bolster Growth

  • China’s economy isn’t done slowing, with industrial activity and home sales cooling in the first two months of the year, despite a rebound in investment driven by Beijing to shore up growth.
  • A range of indicators released by the government on Thursday showed a steepening of the downturn that began last year in the world’s second-largest economy.
  • Value-added industrial output, which measures the economy’s manufacturing, mining, utilities and other output, rose 5.3% in the January-to-February period from a year earlier, slowing from a 5.7% year-over-year increase in December.
  • Home sales by value climbed 4.5% in the two months from a year earlier, sharply down from last  year’s 14.7% gain.
  • A national urban survey unemployment rate inched up to 5.3% in February from December’s 4.9%; January’s figure wasn’t released. Beijing aims to keep the unemployment rate at about 5.5% this year.

Embraer posts unexpected loss due to charge in executive jet division

  • Brazilian planemaker Embraer reported an unexpected loss of $18.1 million in the fourth quarter after an impairment charge and fewer deliveries hurt operating results in its executive jets segment, the company said on Thursday.
  • The results missed the consensus estimate in a Refinitiv poll of six analysts for the planemaker to earn $8.4 million in the period.
  • Overall in 2018, Embraer lost $178 million, compared to a profit of $264 million in 2017. Revenue last year fell to $5.1 billion, its lowest since at least 2014.

Huawei pleads not guilty to U.S. charges in New York court

  • China’s Huawei on Thursday pleaded not guilty to a 13-count indictment filed in a New York federal court against the company, as tensions have ratcheted up between the U.S. and Beijing.
  • Huawei, the world’s largest telecommunications equipment maker, was charged with bank and wire fraud, violating sanctions against Iran and obstructing justice.
  • The company’s chief financial officer, Meng Wanzhou, was arrested in December in Canada on charges in the indictment, which was not unsealed until January. She has said she is innocent of the charges and is fighting extradition.

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TODAY in HISTORY

  • The cotton gin was patented by Eli Whitney. (1794)
  • The FBI’s “Ten Most Wanted Fugitives” list made its debut. (1950)
  • Jack Ruby was found guilty of the murder of Lee Harvey Oswald, alleged assassin of President John F. Kennedy. (1964)

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