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DAILY MARKET REPORTS

  • U.S. crude futures rose to $63.82 a barrel, its highest since December 2014, boosted by a surprise drop in U.S. production and lower crude inventories.
  • The S&P and the Nasdaq snapped their six-day rally on Wednesday after Bloomberg News reported Chinese officials had recommended halting its U.S. bond purchases, which China dismissed later.
  • Earnings for S&P 500 companies are expected to increase by 11.8% on average, with the biggest contribution from the energy sector.
  • Earnings season begins tomorrow, with Blackrock, JPMorgan Chase, Wells Fargo, and PNC Financial all reporting fourth quarter earnings before the bell.
  • Delta Air Lines was up 1.3% after the company’s profit for the fourth quarter beat estimates.
  • Data showed U.S. producer prices fell in December for the first time in nearly 1-1/2 years amid declining costs for services.
  • The yield on the 10-year U.S. Treasury note edged up slightly to 2.561%.

US FINANCIAL MARKET

Delta raises profit forecast

  • Delta Air Lines on Thursday posted fourth-quarter earnings that beat Wall Street’s expectations, and it raised its 2018 guidance about 20 percent due to tax law.
  • Delta reported better-than-expected profit for the fourth quarter on Thursday, helped by higher business fares and a busy holiday travel season, and forecast even better performance in the current quarter on strong demand for seats.
  • Total operating revenue rose 8.3 percent to $10.25 billion from $9.46 billion. Analysts on average had expected revenue of $10.13 billion.
  • Delta’s net income dipped to $572 million in the quarter ended Dec. 31, from $622 million a year earlier. That included a one-time charge of $150 million due to changes in the U.S. tax code enacted in December.
  • Year over year, Delta’s costs, excluding fuel and special items, increased 5.6 percent, driven by higher labor expenses and accelerated depreciation from aircraft retirements.
  • Delta forecast total unit revenue, a measurement closely watched by investors, to increase by 2.5 percent to 4.5 percent in the first quarter of 2018.

Toyota, Mazda announce $1.6 billion plant for Huntsville, Alabama

  • Toyota and Mazda Motor said they will build a $1.6 billion joint assembly plant in Alabama that will employ up to 4,000 workers.
  • The plant will produce 300,000 vehicles a year and should open in 2021, about 14 miles from Toyota’s engine plant in Huntsville.
  • In September, Daimler said it would invest $1 billion to expand its Alabama Mercedes-Benz plant to start building electric sport-utility vehicles there from about 2020.
  • Mazda and Toyota said they still need approvals and authorization by antitrust agencies for the new joint venture.

Walmart uses lower U.S. tax bill to raise minimum wage to $11 an hour

  • Walmart said the increase would take effect in February and that it would also expand maternity and parental leave benefits and offer a one-time cash bonus, based on length of service, of up to $1,000.
  • The giant retailer is the largest private employer in the world with 2.3 million employees, including around 1.5 million in the U.S. Its current starting salary in the U.S. is $10 an hour after workers take a training course.
  • The pay increase and bonus will benefit more than 1 million U.S. hourly workers, it said.
  • The increase in wages will cost approximately $300 million on top of wage hike plans that had been included in next fiscal year’s plans, the company said.
  • Walmart’s announcement follows companies like AT&T, Wells Fargo and Boeing, which have all promised more pay for workers after the Republican-controlled U.S. Congress passed a tax bill last month.

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US ECONOMY & POLITIC

U.S. Jobless Claims Rose Last Week

  • Initial jobless claims, a proxy for layoffs across the U.S., rose by 11,000 to a seasonally adjusted 261,000.
  • Weekly jobless claims have held below 300,000, viewed by many economists as a healthy level, for almost three years, the longest streak since the 1970s.
  • Meanwhile, the number of claims workers made for longer than a week dropped to 1,867,000.

U.S. producer prices fall; jobless claims up for fourth straight week

  • The Labor Department said its producer price index for final demand slipped 0.1 percent last month, the first drop in the PPI since August 2016 and followed two straight monthly increases of 0.4 percent.
  • In the 12 months through December, the PPI rose 2.6 percent after accelerating 3.1 percent in November.

Canada Files WTO Complaint Over U.S. Use of Tariffs

  • Canada is challenging the Trump administration’s use of tariffs in a complaint filed with the World Trade Organization, just weeks before crucial talks on revamping the North American Free Trade Agreement
  • Canada says the complaint is part of “broader litigation” to defend the country’s softwood-lumber producers, which were hit last year with U.S. tariffs of 20% or more.
  • Besides softwood lumber, the U.S. has targeted Canada with tariffs on jetliners made by Montreal-based Bombardier, following a complaint from Boeing and on Canadian-made newsprint, in a decision issued Tuesday.
  • Trade-law experts say Canada’s WTO filing is among the broadest challenges to date against the U.S. practice of imposing countervailing and anti-dumping tariffs against imports it deems to be hurting U.S. industries.

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US ECONOMY & POLITIC

U.S. Jobless Claims Rose Last Week

  • Initial jobless claims, a proxy for layoffs across the U.S., rose by 11,000 to a seasonally adjusted 261,000.
  • Weekly jobless claims have held below 300,000, viewed by many economists as a healthy level, for almost three years, the longest streak since the 1970s.
  • Meanwhile, the number of claims workers made for longer than a week dropped to 1,867,000.

U.S. producer prices fall; jobless claims up for fourth straight week

  • The Labor Department said its producer price index for final demand slipped 0.1 percent last month, the first drop in the PPI since August 2016 and followed two straight monthly increases of 0.4 percent.
  • In the 12 months through December, the PPI rose 2.6 percent after accelerating 3.1 percent in November.

Canada Files WTO Complaint Over U.S. Use of Tariffs

  • Canada is challenging the Trump administration’s use of tariffs in a complaint filed with the World Trade Organization, just weeks before crucial talks on revamping the North American Free Trade Agreement
  • Canada says the complaint is part of “broader litigation” to defend the country’s softwood-lumber producers, which were hit last year with U.S. tariffs of 20% or more.
  • Besides softwood lumber, the U.S. has targeted Canada with tariffs on jetliners made by Montreal-based Bombardier, following a complaint from Boeing and on Canadian-made newsprint, in a decision issued Tuesday.
  • Trade-law experts say Canada’s WTO filing is among the broadest challenges to date against the U.S. practice of imposing countervailing and anti-dumping tariffs against imports it deems to be hurting U.S. industries.

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EUROPE & WORLD

ECB Minutes Signal Pivot on Stimulus, Sending Euro Higher

  • ECB indicated Thursday that it might move sooner than investors had expected to phase out its giant bondbuying program, sending the euro and eurozone government bonds higher.
  • Specifically, the ECB might soften its pledge to continue its €2.5 trillion bond-buying program, known as quantitative easing, until inflation reaches its target of just below 2%.
  • The news came as something of a surprise to investors because ECB President Mario Draghi gave no indication after the bank’s December meeting that its policy mix might soon change.
  • In a nod to those developments, the ECB pledged to extend its QE program through September 2018 but at a greatly reduced pace of €30 billion ($36 billion) a month instead of €60 billion.

Qualcomm Set to Win European Backing for $39 Billion NXP Buy

  • Qualcomm is set to clinch conditional European Union antitrust approval for its $39 billion acquisition of NXP Semiconductors, as soon as next week, according to people familiar with the matter
  • Qualcomm agreed to buy NXP in October 2016, in a deal that would make it one of the top suppliers of chips used in cars, at a time when manufacturers are building automobiles with greater computer power and self-driving models develop.
  • The EU opened an in-depth probe into the Qualcomm-NXP deal last June on concerns the deal could lead to higher prices, less choice and reduced innovation in the semiconductor industry.
  • The U.S. has already cleared the deal, but the merger still faces review from other jurisdictions, including China.
  • Qualcomm’s merger with NXP would enlarge the company, just as Broadcom has been angling to take it over. Broadcom has proposed replacing Qualcomm’s board of directors and the matter will be put to a shareholder vote in March.

China’s Auto Market Slips into Slow Lane—Except for EVs

  • Chinese passenger-car sales grew at their slowest pace in at least 15 years, rising just 1.4% over 2016 levels, signaling an end to the boom in the world’s largest car market.
  • Sales of electric passenger cars rose 72% to 578,000—four times as many as was sold in the U.S. last year. EV sales constituted just 2.7% of China’s total auto sales at 28.88 million.
  • That 3% increase was well off the 2016 pace, when sales overall grew 14% year-over-year and passenger-car sales jumped 15% and the slowest growth overall since 2011, when the sector was slammed by a collapse in commercial sales.

Bitcoin Plunges as South Korea Crafts Cryptocurrency Crackdown

  • A top official from South Korea said the government is preparing a bill to ban the trading of cryptocurrencies on exchanges, stepping up its efforts to curb speculation.
  • Bitcoin prices tumbled as much as 13.7% Thursday, falling more sharply on Korean exchanges than other trading venues.
  • “Cryptocurrency trading is looking similar to speculation and gambling,” Mr. Park said at a press conference Thursday.

Canada Files WTO Complaint Over U.S. Use of Tariffs

  • The complaint alleges the U.S. application of tariffs, and their calculation, are “inconsistent” with WTO obligations.
  • Trade-law experts say Canada’s WTO filing is among the broadest challenges to date against the U.S. practice of imposing countervailing and anti-dumping tariffs against imports it deems to be hurting U.S. industries.
  • A senior Canadian official said the government has no information suggesting Mr. Trump will imminently follow through on his oft-repeated threat to withdraw from Nafta.
  • Canada continues to work toward finding common ground with the U.S. and Mexico.

Sony’s New Aibo Robot Dog Goes on Sale

  • Izumi Kawanishi, head of Sony’s AI Robotics Business Group, unveiled the Aibo, a robot dog, in Tokyo on Thursday. The new model features improved artificial-intelligence software and enhanced motors and sensors.

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TODAY in HISTORY

  • Amelia Earhart became the first person to fly solo from Hawaii to California (1935)
  • The first government report regarding the dangers of cigarette smoking was issued by the U.S. Surgeon (1964)

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