DAILY MARKET REPORTS
- U.S. stocks fell on Thursday as investors turned risk averse in the run up to U.S.-China trade talks at the upcoming G20 Summit after President Donald Trump said there was “a long way to go” on tariffs with Beijing.
- The dip in markets comes a day after all three major indexes rallied to close more than 2% higher on dovish tone from Federal Reserve Chair Jerome Powell.
- He said the policy rate is now “just below” estimates of a level that neither brakes nor boosts a healthy economy.
- President Donald Trump’s uncompromising tone before he is set to meet his Chinese counterpart Xi Jinping at the Summit indicates that the meeting could ease or worsen the trade war between two of the world’s largest economies.
- The Federal Open Market Committee is scheduled to release the minutes from its Nov. 7-8 policy meeting at 2:00 p.m.
- Data showed U.S. consumer spending in October increased by the most in seven months, but underlying price pressures slowed, with an inflation measure tracked by the Fed recording its smallest annual increase since February.
US FINANCIAL MARKET
Abercrombie & Fitch forecasts upbeat holiday quarter, shares soar
- U.S. teen apparel retailer Abercrombie & Fitch forecast same-store sales for the holiday quarter above analysts’ estimates, driven by strong sales at its Hollister and flagship stores, sending its shares soaring 24% in early trading.
- Net sales rose 0.2% to $861.2 million. Analysts, on average, expected revenue of $853 million.
- Sales at established stores rose 3% in the third quarter, well above an increase of 1.6% estimated by analysts.
- The retailer now expects to close fewer stores in the current year based on improved performance and successful lease renegotiations. It anticipates closing up to 40 stores by year-end, down from its previous expectation of closing up to 60 stores.
Dollar Tree same-store sales miss estimates, shares fall
- Dollar Tree missed analysts’ estimates for quarterly same-store sales, hit by a surprise drop in sales at its Family Dollar stores and the discount store operator also cut its full-year sales forecast.
- Net sales rose 4.2% to $5.54 billion, short of estimates of $5.55 billion.
- Same-store sales at Family Dollar reported a surprise fall of 0.4%, while its Dollar Tree stores showed a 2.3% rise. Analysts on average had expected same-store sales to rise 0.07% and 2.53% respectively.
- Net income rose to $281.8 million in the third quarter, from $239.9 million a year earlier.
Cloud storage firm Box reports smaller-than-expected loss, shares rise
- Cloud storage provider Box reported a smaller-than-expected quarterly loss as it added more customers, and forecast full-year revenue estimates above analysts’ estimates.
- The company’s revenue rose 20.6% to $155.9 million, above expected revenue of $154.6 million.
- The company’s net loss narrowed to $40.2 million in the quarter, from $42.9 million a year earlier.
- For full year 2019, Box forecast an adjusted loss of between 15 cents and 16 cents per share and revenue between $608.2 million to $609.2 million, above expectations of a loss of 17 cents per share on revenue of $607.5.
J.M. Smucker blames competition for forecast cuts, shares fall 5%
- J.M. Smucker missed Wall Street estimates for second-quarter results, as stiff competition forced the food company to cut prices for Folgers coffee and Jif peanut butter, and also lower its full-year forecasts.
- Net sales rose 5% to $2.02 billion, missing analysts’ average estimate of $2.05 billion.
- Net income fell to $188.5 million in the quarter, below consensus on a per share basis.
Amazon’s treatment of sellers comes under scrutiny in Germany
- Germany’s antitrust authority has launched an investigation into whether U.S. ecommerce giant Amazon is exploiting its market dominance in its relations with third-party retailers who use its website as a marketplace.
- The cartel office said the probe will seek to address any violations of German competition or anti-trust law, but does not foresee significant fines unless they are considered part of a ruling requiring a company to end abusive market practices.
- The European Commission is also investigating Amazon’s dual function and is asking retailers and manufacturers whether Amazon’s sales of own-brand products similar to theirs have harmed their business.
Saudi Arabia inks deal for Lockheed’s missile defense system
- Saudi Arabia will buy Lockheed Martin’s $15 billion missile defense system, after aggressive lobbying by the administration to close the deal that included a personal call between President Donald Trump and Saudi King Salman.
- The State Department said the Saudis and U.S. officials signed the letters of offer and acceptance documents on Monday, formalizing terms for purchase of 44 Terminal High Altitude Area Defense (THAAD) launchers, missiles and related equipment.
Microsoft wins $479.2 million contract from U.S. Army
- The U.S. Army said that it has awarded Microsoft a $479.2 million contract to supply prototypes for the Army’s augmented reality systems helping soldiers in training and combat missions.
Google’s cheap and super-simple cellphone service will now work with iPhones
- Google Fi (formerly known as Project Fi) is a mobile virtual network operator (MVNO), which means that instead of just using one of the “big four” carriers, it automatically jumps between several cellular networks depending on which has better service.
- Fi hops between Sprint, T-Mobile, and US Cellular, and also favors Wi-Fi whenever possible, including for calls and texts.
- Starting Wednesday, Google Fi will work with iPhones running iOS 11, as well as many new Samsung, LG, Moto and OnePlus phones running Android 7.0 or higher. Previously Fi only worked with Motorola and Pixel phones.
Altria is reportedly in talks to take a minority stake in Juul
- Altria is in talks to take a significant minority stake in e-cigarette company Juul, The Wall Street Journal reported.
- Any deal is likely several weeks away. Juul was last valued at $16 billion in a private fundraising round this summer.
- Juul commands the e-cigarette market, holding about 75% of share, according to Nielsen numbers.
Kraft Heinz nears deal for paleo mayo and dressing company Primal Kitchen
- Kraft Heinz is nearing a deal for paleo condiment and dressing company, Primal Kitchen, as the ketchup maker looks for a platform to help compete against upstart brands, people familiar with the matter tell CNBC.
- Primal Kitchen has about $50 million in revenue, the people said. Kraft Heinz is paying between $200 million to $500 million for the brand.
US ECONOMY & POLITICS
U.S. consumer spending surges, underlying inflation slows
- U.S. consumer spending increased by the most in seven months in October, but underlying price pressures slowed, with an inflation measure tracked by the Federal Reserve posting its smallest annual increase since February.
- Consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 0.6% last month after a downwardly revised 0.2% advance, as households spent more on prescription medication and utilities.
- Excluding food and energy, the Fed’s preferred price measure rose 1.8% from a year earlier, missing forecasts for 1.9%.
Jobless Claims in U.S. Hit Six-Month High During Holiday Week
- Filings for U.S. unemployment benefits rose for a third week to the highest level since May, potentially reflecting volatility around two consecutive periods that included holidays.
- Jobless claims increased by 10,000 to 234,000 in the week ended Nov. 24, Labor Department figures showed Thursday.
- Continuing claims, which are reported with a one-week lag, rose by 50,000 to 1.71 million in the week ended Nov. 17.
U.S. pending home sales drop in October
- The NAR’s pending home sales index decreased to a reading of 102.1, down 2.6% from the prior month. September’s index was revised to 104.8 from 104.6.
- Economists polled by Reuters had forecast pending home sales rising 0.5% last month.
- Home resales rose 1.4% in October from the prior month but were down 5.1% from a year earlier, the sharpest 12-month drop since July 2014.
Fed’s Powell, in apparent dovish shift, says rates near neutral
- U.S. Federal Reserve Chair Jerome Powell injected investors with a strong dose of optimism, saying that the central bank’s policy rate is now “just below” estimates of a level that neither brakes nor boosts a healthy U.S. economy, comments that many investors read as signaling the Fed’s three-year tightening cycle is drawing to a close.
- On their face, the comments were a reversal from early last month, when Powell said the key interest rate was probably still a “long way” from a so-called neutral level and that the Fed might even tighten policy beyond that level.
- The Fed has settled into a quarterly rate-hike cycle and is still expected to raise rates again next month, in what would be the fourth hike this year.
Trump says he is ‘close to doing something’ with China on trade
- President Donald Trump told reporters Thursday he was “close” to doing something on trade with China.
- He made the remarks as he prepared to depart for the G-20 summit meeting of world leaders in Argentina.
- Reuters reported Trump saying though he was close, “he doesn’t know if he wants to do it.”
Senate advances measure to end military support for Saudis in Yemen
- The U.S. Senate voted on Wednesday to advance a resolution to end U.S. military support for the Saudi-led coalition in Yemen’s civil war, setting the stage for a possible final vote on the measure within days.
- Underscoring bipartisan unhappiness with President Trump’s response to the humanitarian crisis in Yemen and the murder of a journalist at a Saudi consulate, many of Trump’s Republicans joined Democrats to advance the measure by a vote of 63-37.
EUROPE & WORLD
China hopes for positive results from talks with U.S. at G20
- China is hoping for “positive results” in resolving a trade dispute with the United States at a G20 summit in Argentina, the commerce ministry said on Thursday, ahead of a closely watched meeting of Chinese and U.S. leaders.
- U.S. President Donald Trump and Chinese President Xi Jinping are due to hold trade discussions on the sidelines of the G20 summit in Buenos Aires on Saturday.
Deutsche Bank offices raided in money laundering probe
- Police raided six Deutsche Bank offices in and around Frankfurt on Thursday over money laundering allegations linked to the “Panama Papers”, the public prosecutor’s office in Germany’s financial capital said.
- The prosecutors said they are looking at whether Deutsche Bank may have assisted clients to set up offshore companies in tax havens so that funds transferred to accounts at Deutsche Bank could skirt anti-money laundering safeguards.
- In 2016 alone, over 900 customers were served by a Deutsche Bank subsidiary registered on the British Virgin Islands, generating a volume of 311 million euros, the prosecutors said.
Bayer sells assets, cuts jobs, takes impairment charge
- Bayer, the German drugmaker that bought U.S. seed company Monsanto, on Thursday announced the sale of a number of businesses, job cuts affecting 10% of its staff and 3.3 billion euros ($3.8 billion) in impairments.
- The group is looking into strategic options for product lines Coppertone for sunscreen and Dr. Scholl’s for foot care, among the main brands of Merck’s consumer healthcare division it bought in 2014 for $14 billion.
- Bayer will also divest its animal health division, the number five player in the industry, which analysts have said could fetch 6-7 billion euros ($7.94 billion).
- Under a cost cutting program that will also target synergies expected from the $63 billion acquisition of Monsanto, Bayer will cut around 12,000 of its 118,200 jobs worldwide.
TODAY in HISTORY
- Commander Richard E. Byrd and a crew of three became the first to fly over the South Pole. (1929)
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