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US FINANCIAL MARKET
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DAILY MARKET REPORTS

  • Wall Street rose to fresh high at open on Tuesday, with gains for healthcare and bank stocks extending the new year rally that is powered by expectations of strong quarterly earnings.
  • Investors are waiting for the start of the quarterly earnings season for more readings on the impact of recent tax cuts and profit forecasts.
  • Earnings for S&P 500 companies are expected to rise 11.8 percent in the fourth quarter, compared with an 8 percent increase a year earlier.

US FINANCIAL MARKET

Target lifts profit forecast after holiday sales jump

  • Target reported strong same-store sales for November and December on Tuesday, more customer visits and higher online sales, putting the United States’ second largest mass retailer on track for the best quarter in five years.
  • Target poured $1 billion of its profits into an effort to boost sales last year, mainly by investing in its online business and delivery options to take on Amazon.com.
  • The company said same-store sales rose 3.4 percent in November and December.
  • The retailer raised its same-store sales growth forecast for the quarter ending in January to 3.4 percent from a prediction of up to 2 percent growth earlier.

Allergan forecasts 2018 revenue below estimates

  • Allergan said it expects total net revenue of $15.0 billion-$15.3 billion for full-year 2018.
  • The company also said in a filing that it would record a tax benefit of $3.5 billion to $4 billion related to the U.S. tax reform in the fourth quarter.
  • The Botox-maker had said in November that it would sell under a quarter of its 10 percent stake in Teva during the first quarter of 2018.

T-Mobile Gains 891,000 Branded Postpaid Customers in Fourth Quarter

  • T-Mobile reported a net gain of 891,000 branded postpaid accounts in the fourth quarter, bringing it to end the year with 38.04 million postpaid accounts.
  • T-Mobile said it ended the quarter with 72.59 million total customer accounts.
  • In all for the quarter, T-Mobile added 1.1 million total postpaid customers, down from 1.74 million in the same quarter last year.
  • The company also said that it had bought about $444 million worth of its own shares through a repurchase program and still had $1.1 billion remaining in the authorization as of Dec. 31.

Altice to Spin Off U.S. Arm as Part of Broader Overhaul

  • Altice intends to spin off its controlling stake in its U.S. arm as part of a broader reorganization that will split the company in two: Altice Europe, which would include its international holdings, and Altice USA Inc.
  • The debt-laden company has been under pressure to improve performance, following disappointing third-quarter results, when Altice disclosed unexpected weakness in its French and Portuguese businesses that wiped €6 billion ($6.99 billion) off the market value of the Amsterdam-listed company.

Intel says Mobileye’s autonomous driving tech to be used in two million vehicles

  • Intel said 2 million vehicles from BMW, Nissan and Volkswagen would use its unit Mobileye’s autonomous vehicle technology to crowdsource data for building maps that enable autonomous driving.

Microsoft halts some AMD chip Meltdown patches after PCs suffer ‘blue screen errors’

  • Microsoft said in a support blog that it was working with AMD to resolve the issues and would resume Windows operating system software updates to affected AMD devices via its Windows Update process as soon as possible.
  • It had received complaints from AMD customers that their machines stopped loading the Start menu or taskbar after installing Windows operating system security updates.
  • Upon investigation, Microsoft said some AMD chipsets did not conform to technical documentation the chipmaker had provided, preventing Microsoft from successfully patching affected machines.
  • AMD said last week that differences in its chip designs from rival Intel meant its products were at “zero risk” from Meltdown flaw but that one variant of the Spectre bug could be resolved by software updates from vendors such as Microsoft.

The Price Gap That’s Squeezing the Auto Market

  • The widening difference in prices between new and used cars augurs pain for auto-makers profits in the U.S.
  • U.S. car sales remain strong by historical standards, but last year slipped 1.8%—the first annual decline since the 2008 recession.
  • A major reason for this downturn, despite the strong economy, is increasingly stiff competition from the secondhand market, which is inundated with cars coming off three-year leases.
  • The average gap between new and three-year-old vehicle prices last year was $14,200, up from $10,500 in 2010.
  • With 12% more vehicles coming off lease in 2018 than did in 2017, this effect will only get stronger. Hence industry forecaster IHS expects another dip in U.S. unit sales this year.

Jamie Dimon says he regrets calling bitcoin a fraud and believes in the technology behind it

  • J.P. Morgan Chase CEO said he regrets calling bitcoin a fraud.
  • “The blockchain is real,” Dimon tells Fox Business.
  • Dimon remains concerned about how “governments are going to feel about bitcoin when it gets really big.”

Fitbit is reportedly working on a smartwatch for kids

  • It’s unclear how the smartwatch would differ from Fitbit wearables already on the market.
  • The line of child-sized wearables has apparently been under discussion for months.
  • Fitbit is facing increasing pressure from Apple’s push into health tech.

Jeff Bezos’ wealth hits $105.1 billion, more than Bill Gates at his richest

  • Amazon stock is up 6.6 percent year to date, nudging the e-commerce CEO’s net worth just past $105 billion, passing Microsoft co-founder Bill Gates’ previous record from 1999.
  • Bezos first passed $100 billion in November on impressive Black Friday sales.
  • Gates, once the world’s richest man, is now worth $93.3 billion.

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US ECONOMY & POLITIC

Job Openings in U.S. Declined in November to a Six-Month Low

  • There were a record 6.18 million openings in September. Last week’s December jobs report pointed to an economy at full employment, with the jobless rate holding at the lowest level since 2000.

U.S. Consumer Credit Posts Largest Gain in 16 Years

  • U.S. consumer borrowing posted the largest monthly gain in 16 years, buoyed by increased consumer confidence in the economy.
  • Outstanding consumer credit rose by $27.95 billion in November from the prior month, the biggest increase since November 2001
  • This measure of non-real-estate debt climbed at an 8.83% seasonally adjusted annual rate, the fastest pace in more than two years
  • Revolving credit outstanding, mostly credit cards, increased at a 13.3% annual pace in November.
  • This category of debt grew by $11.19 billion, the largest increase in a year.
  • Household debt totaled $12.955 trillion in the third quarter, up 0.9% from the spring.

Federal Regulators Rule Against Trump Administration on Power Plants

  • Federal energy regulators on Monday rejected a Trump administration proposal aimed at shoring up struggling coal-fired and nuclear power plants to bolster the nation’s electricity grid, saying the administration hadn’t persuaded them the plan was needed to ensure the system’s reliability.

U.S. Spy Satellite Believed Lost After SpaceX Mission Fails

  • An expensive, highly classified U.S. spy satellite is presumed to be a total loss after it failed to reach orbit atop a Space X rocket on Sunday.
  • The secret payload—code-named Zuma and launched from Florida on board a Falcon 9 rocket—is believed to have plummeted back into the atmosphere, they said, because it didn’t separate as planned from the upper part of the rocket.
  • Northrop Grumman not only was the prime contractor for the satellite, it was also responsible for choosing the launch provider.

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EUROPE & WORLD

Samsung profit guidance disappoints, memory outlook cloudy

  • Samsung Electronics said it would likely rake in a record fourth-quarter profit but the guidance fell short of consensus estimate
  • Samsung pegged its October-December operating profit at 15.1 trillion won ($14.1 billion), an all-time high and up 64 percent from a year ago but shy of a 15.9 trillion won average estimate from 17 analysts.
  • It estimated revenue at 66 trillion won, also slightly below expectations.
  • The world’s biggest chipmaker became one of the first major semiconductor firms to indicate disappointing results could be on the radar at a time when NAND memory chip prices are easing.

Mexican Inflation Ended 2017 at Highest Level in 17 Years

  • Mexican inflation accelerated in 2017 to its fastest rate in 17 years, led by higher food and energy costs that were affected by a weaker peso and an end to government controls on gasoline and other fuels.
  • Consumer-price index rose 0.59% in December, bringing the annual inflation rate to 6.77%.
  • It was the highest rate since May 2001, and the most for a calendar year since 2000.
  • Core CPI, which excludes energy and fresh fruit and vegetables, rose 0.42% in December and was up 4.87% in all of 2017, the highest full-year rate since 2008.

Alibaba will ‘seriously consider’ Hong Kong listing, says founder Ma

  • Alibaba will “seriously consider” listing in Hong Kong, founder Jack Ma said, potentially providing a powerful boost to the financial hub which is preparing to allow dual-class share listings.
  • Alibaba held its record $25 billion public float in New York in 2014 after Hong Kong, its favored venue, refused to accept its governance structure where a self-selecting group of senior managers control the majority of board appointments.
  • Hong Kong is now set to allow dual-class shares under rule changes to be proposed by the city’s stock exchange as it raises the stakes in its battle against New York for blockbuster Chinese initial public offerings.
  • Such shares grant differentiated voting rights and underpin the alternative governance and shareholding structures favored by many owners of new age industries such as technology.

German industrial output surges, signaling a healthy 2018

  • Industrial output jumped 3.4% for the month, the biggest increase since September 2009, the Federal Statistics Office reported.
  • Seasonally adjusted exports for November rose 4.1 percent on the month and domestic demand pushed imports up 2.3 percent.
  • Soon after the data, the government raised its 2017 growth forecast to 2.2 percent from a previous estimate of 2.0 percent.

Euro Defies Treasury Market’s Gravitational Pull

  • The single currency has surged against the U.S. dollar, even as German bond yields have collapsed to multidecade lows against their American peers. That’s not usually what happens.
  • The gap between two countries’ short-term bond yields is one of the most popular indicators for the exchange rate between their currencies.
  • As yields go up in one region, investors move their money there to capture higher returns, driving up the local currency’s value.
  • That spread has only ever been wider in the summer of 1999, and then for only a few days. But the euro has resisted that relationship.

Switzerland’s Central Bank Made $55 Billion Last Year—More Than Apple

  • Switzerland got a lot wealthier in 2017, thanks to its central bank’s emergence as a major money manager with a near $800 billion portfolio of foreign stocks and bonds.
  • The Swiss National Bank said Tuesday it expects to report a record annual profit of 54 billion Swiss francs ($55 billion) for last year—a staggering sum equal to 8% of the country’s entire gross domestic product.
  • The Federal Reserve has earned an annual profit of around $100 billion in recent years.
  • The SNB’s profit was lifted by a trio of positive forces: low bond yields preserved the value of its foreign bonds that account for 80% of its foreign reserves; higher stock prices raised the value of its equity holdings and the weaker Swiss currency made those foreign assets worth more in franc terms.
  • The SNB employs about 800 people. Its chairman—among the best-paid central bankers—earns about $1 million a year.

Airbus says to boost China assembly, but wins no new jet order

  • Airbus said it planned to boost the number of planes it makes in China under a deal signed in Beijing on Tuesday to expand co-operation at its Tianjin assembly plant.
  • The agreement would result in production increasing to six aircraft per month – up from four at present – at the local final assembly line for the Airbus A320-family of jets.
  • A Beijing signing ceremony did not, however, include any deal for Airbus to sell aircraft to China, despite earlier expectations of a contract timed to coincide with Macron’s visit.
  • Industry sources had said Airbus was negotiating to sell around 100 planes to China’s state purchasing agency

German industrial output surges, signaling a healthy 2018

  • Industrial production and exports from Germany rose more than expected in November, prompting the government to raise its estimate of growth for 2017 and signaling that its expansion would carry on this year.
  • Industrial output jumped 3.4 percent for the month, the biggest increase since September 2009, overshooting a 1.8 percent forecast in a Reuters poll.
  • Seasonally adjusted exports for November rose 4.1 percent on the month and domestic demand pushed imports up 2.3 percent, widening the trade surplus to 22.3 billion euros ($26.61 billion) from 19.9 billion euros in October.
  • Soon after the data, the government raised its 2017 growth forecast to 2.2 percent from a previous estimate of 2.0 percent.

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TODAY in HISTORY

  • Connecticut became the 5th state in the United States (1788)
  • The Russian Revolution of 1905 was sparked in St. Petersburg (1905)
  • Surveyor 7, the last of America’s unmanned lunar probes, landed on the Moon (1968)

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