DAILY MARKET REPORTS
- U.S. stocks rose Friday and looked set to close out the quarter with their best gains in nearly a decade, buoyed by signs that inflationary pressures remained contained, and renewed trade optimism as the latest round of trade talks ended positively.
- All three indexes are on track to notch quarterly gains, with the S&P 500 up almost 13% and headed for its best showing since 2009.
- U.S. Treasury Secretary Steven Mnuchin said he held “constructive” talks in Beijing, concluding the latest round of dialogue, which will be followed by a round in Washington next week.
- Commerce Department data Friday showed personal-consumption expenditures, a gauge of household spending on everything from soap to bagels, rose just 0.1% in January from the prior month—less than the 0.3% that economists expected.
- U.S. consumer spending rebounded less than expected in January and incomes rose modestly in February, suggesting the economy was losing momentum after growth slowed in the fourth quarter.
- The yield on the benchmark 10-year U.S. Treasury note—considered a bedrock for global finance because it is used to help set borrowing costs—was at 2.419% Friday, up slightly from Thursday but well below the 2.684% where it ended last year.
US FINANCIAL MARKET
Lyft valued at $24.3 billion in first ride-hailing IPO
- Lyft was valued at $24.3 billion in the first initial public offering (IPO) of a ride-hailing startup on Thursday, raising more than it had set off to do as investors overlooked uncertainty over its path to becoming a profitable company.
- Lyft raised $2.34 billion its IPO, pricing 32.5 million shares, slightly more that it was offering originally, at $72, the top of its already elevated $70-$72 per share target range.
- Lyft’s revenue was $2.16 billion for 2018, double the previous year’s and far higher than $343 million in 2016.
- It posted a loss of $911 million in 2018 versus $688 million in 2017.
- Lyft’s IPO sets the stage for the stock market debut of larger rival Uber, which Reuters has reported will kick off in April. Uber has been told by its investment bankers that it could be valued at as much as $120 billion.
Investigators Believe Boeing 737 MAX Stall-Prevention Feature Activated in Ethiopian Crash
- Officials investigating the fatal crash of a Boeing 737 MAX in Ethiopia have reached a preliminary conclusion that a suspect flight-control feature automatically activated before the plane nose-dived into the ground, according to people briefed on the matter, the first findings based on data retrieved from the flight’s black boxes.
- The emerging consensus among investigators, one of these people said, was relayed during a high-level briefing at the Federal Aviation Administration on Thursday, and is the strongest indication yet that the same automated system, called MCAS, misfired in both the Ethiopian Airlines flight earlier this month and a Lion Air flight in Indonesia.
- Boeing outlined its planned overhaul of the MCAS system to make it less aggressive and more controllable by pilots.
- However, Boeing’s 737 MAX will remain grounded around the world until the FAA and other aviation regulators certify the software fix and crews are trained on the revised system.
Regulators knew before crashes that 737 MAX trim control was confusing in some conditions: document
- U.S. and European regulators knew at least two years before a Lion Air crash that the usual method for controlling the Boeing 737 MAX’s nose angle might not work in conditions similar to those in two recent disasters, a document shows.
- The European Aviation and Space Agency (EASA) certified the plane as safe in part because it said additional procedures and training would “clearly explain” to pilots the “unusual” situations in which they would need to manipulate a rarely used manual wheel to control, or “trim,” the plane’s angle.
- Those situations, however, were not listed in the flight manual, according to a copy from American Airlines seen by Reuters.
- EASA and the U.S. Federal Aviation Administration (FAA) ultimately determined that set-up was safe enough for the plane to be certified, with the European agency citing training plans and the relative rarity of conditions requiring the trim wheel.
Cost of Boeing groundings rises as TUI takes $200 million-plus hit
- Anglo-German tour operator TUI became the latest Boeing 737 MAX operator to warn of a hit to its profits as the U.S. planemaker moved to restore confidence in its best-selling model after two fatal crashes that have grounded the planes worldwide.
- TUI said it was planning for the planes to remain grounded until at least the middle of July, costing it upwards of 200 million euros ($224 million) in core profit, with “considerable uncertainty” about when the 737 MAX would return to service.
- On Thursday, a lawsuit against Boeing was filed by the family of Jackson Musoni, who died in the Ethiopian Airlines crash.
- The lawsuit alleges that Boeing had defectively designed the automated flight control system.
Wells Fargo CEO Tim Sloan Steps Down
- Wells Fargo Chief Executive Tim Sloan stepped down Thursday, ending a 31-year career at the bank and a 2½-year slog to get it back on solid footing after a fake-account scandal badly damaged its reputation and standing with regulators.
- C. Allen Parker, Wells Fargo’s general counsel, has been named interim CEO. Mr. Parker joined the bank in 2017 from law firm Cravath, Swaine & Moore LLP to help clean up after the 2016 sales scandal.
- Many of Wells Fargo’s top executives, including Mr. Sloan, have spent decades at the bank, and critics have said those long-tenured leaders have hindered the company from adequately fixing deep-rooted issues.
Amazon to Expand Tech Hub in Austin
- Amazon said it plans to add 800 new technology jobs to its tech hub in Austin, Texas, expanding in a city that was on its short list for its second headquarters.
- The new jobs will be in areas such as software and hardware engineering, research science and cloud computing.
- The company said it has hired 1,000 people in Austin in the last four years.
- As part of the expansion, Amazon said it would move to a new 145,000-square-foot office in Austin in 2020.
- Amazon said it has committed $7 billion to Texas since 2011, including investments in infrastructure and employee compensation, and has added more than 22,000 full-time jobs in the state.
AstraZeneca Strikes $6.9 Billion Cancer Deal with Japanese Drugmaker
- AstraZeneca has agreed to pay up to $6.9 billion to Japan’s Daiichi-Sankyo for the shared rights to a new cancer drug, as the British drugmaker further expands its presence in oncology.
- The company said it would pay $1.35 billion upfront to the Japanese drugmaker, with further payments dependent on the drug’s development and sales performance.
- In return, AstraZeneca will receive half the profits from future sales. The deal applies everywhere outside Japan, where Daiichi-Sankyo will retain exclusive rights.
- The drug, DS-8201, targets a range of cancers, including breast, gastric and lung, that produce a protein known as HER2, combining breast-cancer treatment Herceptin with another drug and has shown promise in certain difficult-to-treat cancers.
Mondelez in advanced talks for Campbell’s international business: Bloomberg
- Oreo cookies maker Mondelez International is in advanced talks to buy international brands of U.S. food company Campbell Soup, Bloomberg reported late on Thursday.
- Mondelez is negotiating final terms of purchase of the business, which includes Australian cookie brand Arnott’s and Danish baked snacks maker Kelsen Group, the report said, citing people familiar with the matter.
- The report said the companies have been discussing a price of around $2.5 billion for the assets, but no final agreement has been reached, and talks could fall apart or another buyer could emerge.
Florida Power & Light to Build World’s Largest Solar-Powered Battery System
- Florida Power & Light said it plans to build the world’s largest battery, which would collect electricity from solar panels during the day and discharge it as needed during periods of high power demand.
- FPL, a utility that serves large portions of Florida and is a unit of NextEra Energy said it expects the battery—planned for a location in Manatee County on the state’s Gulf Coast—to be operational by 2021.
- The company said the battery, when fully charged, would be able to provide 409 megawatts of electricity for two hours, enough by FPL’s estimates to power about 329,000 average Florida homes.
US ECONOMY & POLITICS
U.S. Inflation Gauge Slid in January to Slowest Pace Since 2016
- A key measure of U.S. inflation fell in January to its slowest pace since 2016, underscoring concerns about softening price pressures that have confounded policy makers at the Federal Reserve.
- The Fed’s preferred inflation gauge, the price index for personal-consumption expenditures, fell 0.06% in January from December and was up just 1.37% from a year earlier, the smallest gain since September 2016.
- Stripping out volatile food and energy components, the so-called core PCE price index rose 0.06% from December and 1.79% from January 2018, an 11-month low.
- Economists had expected core PCE prices to rise 0.2% from December.
New Home Sales Rose in February
- Purchases of newly built single-family homes-a relatively narrow slice of all U.S. home sales-rose 4.9% to a seasonally adjusted annual rate of 667,000 in February, the Commerce Department said Friday. This is the highest level since last March.
- Economists surveyed by The Wall Street Journal had expected a 2.1% rise.
- Sales were up 0.6% in February from the prior year.
- The pace of new-home sales remains well below the elevated levels seen before the 2007-09 financial crisis and recession.
U.S. Consumer Spending Edged Up in January
- Personal-consumption expenditures (PCE), a measure of household spending on everything from Netflix subscriptions to big-screen TVs, increased a seasonally adjusted 0.1% in January from the prior month, the Commerce Department said Friday.
- Personal income, reflecting Americans’ pretax earnings from wages, salaries and investments, rose 0.2% in February, recovering from a 0.1% decline in January.
- Economists had forecast a 0.3% rise in January consumer spending and a 0.2% increase in February incomes.
- The personal saving rate—the difference between disposable income and spending—in January was 7.5%, down from 7.7% a month earlier but still relatively high by historical standards.
U.S. Trade Negotiators Take Aim at China’s Cybersecurity Law
- U.S. and Chinese trade negotiators haggled over how to get Beijing to walk back China’s tough cybersecurity law as both sides push to resolve deep-seated irritants and settle a yearlong tariff fight.
- During discussions Friday, issues related to Chinese regulations of information security and cross-border data flows, as well as high-tech sectors such as cloud computing, crowded the negotiation agenda, said people briefed on the matter.
- The cybersecurity law presents a significant challenge for U.S. businesses operating in China, Washington officials have said, as it requires them to store sensitive data in China and to favor Chinese network equipment over foreign ones.
- In recent weeks, Chinese officials have shown a willingness to discuss those issues, which they previously viewed as off-limits for negotiation to try to clear remaining stumbling blocks to reaching a trade agreement.
Trump, Congressional Republicans in Standoff Over Health Law
- President Trump continued to reach out to Republican lawmakers Thursday to take the lead on crafting a health plan to replace the Affordable Care Act, working to hand off the politically sensitive effort ahead of the 2020 elections.
- Senate Republicans, meanwhile, want the administration to take the lead on developing a plan while they remain on politically safer ground, working on popular voter issues such as lowering drug prices and ending surprise medical bills.
- The standoff means no clear path to a GOP health plan, or certainty that a replacement will be crafted, a sign of just how sensitive the issue has become for Republicans still stinging over voter backlash against their attempt to repeal the health law.
Federal Judge Blocks Trump Rule on Association Health Plans
- A federal judge struck down a Trump administration rule expanding access to certain health plans that don’t comply with the Affordable Care Act, a blow to the president just as he promises to deliver a replacement package for the health law.
- The administration’s rule loosened requirements on association health plans, where groups or associations join together and obtain health coverage that is generally lower cost but lack benefits mandated under ACA.
- U.S. District Judge John Bates said in his ruling that the administration’s rule on association health plans rule was designed to “end run” ACA requirements.
Lawmakers Call for Termination of NSA Domestic Surveillance Program
- A bipartisan group of lawmakers introduced legislation to end the National Security Agency’s practice of collecting records of Americans’ phone calls and text messages, a push that comes amid uncertainty about the fate of the surveillance program.
- Sens. Rand Paul (R., Ky.) and Ron Wyden (D., Ore.) sponsored the legislation. A companion version was introduced Wednesday in the House by Reps. Justin Amash (R., Mich.) and Zoe Lofgren (D., Calif.).
- The spying program once sought to vacuum up in bulk the metadata of all domestic call records—including their date, time and phone numbers—but not their contents. It was exposed publicly by Edward Snowden nearly six years ago.
EUROPE & WORLD
May’s Brexit Deal Is Rejected for a Third Time by Lawmakers
- Britain’s Parliament rejected Prime Minister Theresa May’s Brexit deal for a third time Friday, increasing the chances that the U.K.’s departure from the European Union will again be delayed and further pushing the country toward a constitutional crisis.
- Despite Mrs. May’s offer to quit if her agreement was passed, lawmakers voted it down by 344 to 286.
- While some anti-EU lawmakers in Mrs. May’s Conservative Party switched sides to support Mrs. May, a hard-core group continued to hold out. Mrs. May’s political allies from Northern Ireland, the Democratic Unionist Party, also voted no.
- It means that, as things stand, the U.K. will leave the bloc on April 12 without any agreement to ease the expected disruption. Brexit was originally scheduled to take place Friday.
Major Apple Supplier Foxconn Suffers Profit Drop
- Foxconn Technology, a major supplier to Apple, said the Taiwanese company’s net profit fell 12.6% in the fourth quarter.
- Revenue rose 4.6% to NT$1.81 trillion from NT$1.73 trillion.
- The world’s largest electronics contract manufacturer delivered net profit of $62.62 billion New Taiwan dollars (US$2.0 billion), compared with NT$71.66 billion a year earlier.
- The result, however, did top the NT$37.68 billion average estimate of analysts polled by FactSet.
Huawei Shakes Off U.S. Offensive to Post Strong Results
- Chinese technology giant Huawei said revenue rose 20% last year to $107 billion, signaling that a U.S.-led campaign to block its rise in networking technology hasn’t curbed its overall growth.
- The Chinese company said revenue for 2018 rose to 721.2 billion yuan from 603.6 billion yuan a year earlier.
- Smartphone shipments rose 35% last year to 206 million units, bucking an overall slowdown in the industry
- Huawei reported a slower pace of profit growth for 2018 as its network business saw its first drop in revenue in two years, overshadowing a robust 45% jump in its smartphone unit.
- Net income for 2018 rose 25% to 59.3 billion yuan.
- Huawei expects all three business groups – consumer, carrier and enterprise – to post double-digit growth this year, although did not provide a specific number. The company has previously said it was targeting total revenue of $125 billion this year.
BlackBerry profit beats on higher fee from licensing, patented tech
- BlackBerry’s quarterly profit topped analysts’ estimates, helped by a sharp rise in fees for licensing and using its technologies as it develops more software and solutions for customers.
- Revenue rose 9% to $255 million.
- Revenue from its licensing and intellectual property division rose 71% to $99 million in the fourth quarter, while the technology and solutions segment, which includes software used in next-generation autonomous cars, rose nearly 20%.
- The company’s net profit was $51 million in the quarter, compared with a loss of $10 million a year ago.
COSCO Shipping flags risks from oil price, trade dispute as profit halves
- China’s COSCO Shipping said trade frictions and high oil prices pose risks for the global shipping industry this year, after confirming on Friday that its net profit for 2018 fell by more than half.
- Revenue rose 33.6% as demand for its container shipping and terminal business remained strong, COSCO said.
- However, its marine fuel costs rose in tandem with increases in global oil prices over the year, it added.
- The state-owned company, the world’s third largest container shipping line, said net profit slid 53.8% to 1.2 billion yuan ($178.83 million) last year from 2.7 billion yuan a year earlier.
- “Looking ahead to 2019, we are cautiously optimistic on the global economy and shipping situation,” the company’s chairman Xu Lirong said in the statement.
TODAY in HISTORY
- The North America Act was passed by the British parliament, creating the dominion of Canada. (1867)
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