DAILY MARKET REPORTS
- U.S. stocks treaded water on Friday heading into a U.S.-China trade meeting on the sidelines of the G20 Summit, whose outcome would decide the fate of the ongoing trade dispute that has roiled financial markets.
- Markets took relief from the comments of U.S. Trade Representative Robert Lighthizer that he would be surprised if Saturday’s dinner between U.S. President Donald Trump and China’s Xi Jinping “wasn’t a success”.
- President Donald Trump said on Thursday he was close to making a deal but was not sure if he wants to do it, while news that Trump’s hardline trade adviser Peter Navarro, will attend the meeting between Trump and Xi, added to worries.
- So far this week, dovish comments from Federal Reserve Chair Jerome Powell and the latest Fed minutes have helped the benchmark S&P 500 rise nearly 4%, setting it on course to post its biggest percentage gain in nine months.Marriott International dropped 5.8% after the company said a guest reservation database of its Starwood Hotel brand was breached, potentially exposing information on about 500 million guests.
US FINANCIAL MARKET
Marriott Says Up to 500 Million Affected by Starwood Breach
- Marriott International, the world’s largest hotel company, said it identified a data breach in its Starwood reservation system that may have exposed personal information of up to 500 million guests.
- For roughly two-thirds of the guests who were possibly affected, an unauthorized party may have had access to names, addresses, phone numbers, email addresses, passport numbers, and travel details, Marriott said Friday.
- Marriott said its internal security tool alerted it of a potential breach to its U.S. database on Sept. 8.
- After an investigation, the company found that the Starwood guest database may have been compromised since 2014, which precedes Marriott’s acquisition of Starwood.
HP revenue tops estimates on personal systems business
- HP’s quarterly revenue beat analysts’ estimates, driven by growth in its personal systems business that sells notebooks and desktops and the acquisition of Samsung’s printer business.
- Net revenue rose 10.3% $15.37 billion. Analysts had expected revenue of $15.1 billion.
- The personal systems business rose 11% to $10.06 billion, beating analysts’ average estimate of $9.78 billion.
- Net earnings rose to $1.45 billion in the fourth quarter, from $660 million a year earlier.
Software firm VMware’s revenue rises 13.5%
- Software maker VMware reported a 13.5% jump in third-quarter revenue on Thursday, as the company benefited from strong demand for its software used by customers to boost cloud computing efficiency.
- Revenue rose to $2.20 billion from $1.94 billion a year earlier.
- However, VMWare’s net income fell to $334 million, in the quarter, from $395 million a year earlier.
Workday results top estimates on subscription services growth
- Workday reported a better-than-expected quarterly profit and forecast sales in its biggest business for the next fiscal year above analysts’ estimates, as more companies signed up for its cloud-based finance and human resources management software.
- Revenue rose 34% to $743.2 million, above analysts’ estimate of $723 million.
- Subscription services revenue rose 34.7% to $624.4 million in the third quarter, while professional services revenue rose 29.4% to $118.8 million.
- The company’s net loss widened to $153.3 million from $85.5 million in the year earlier.
GameStop cuts full-year profit forecast, shares fall 11%
- GameStop cut its full-year adjusted profit forecast, as the world’s largest video game retailer struggles with weakness in used games from developers launching streaming services of old titles, sending its shares down 11.3%.
- Net sales rose 4.8% to $2.08 billion. Analysts on average had expected revenue of $2.03 billion.
- GameStop reported a net loss of $488.6 million in the quarter, compared with a year-ago profit of $59.4 million.
- The reported quarter included a goodwill impairment charge of $557.3 million.
- The company said it now expects full-year adjusted profit to range between $2.55 and $2.75 per share, down from $3.00 to $3.35 earlier.
Boeing eyes Lion Air crash software upgrade in 6-8 weeks
- Boeing is weighing plans to launch a software upgrade for its 737 MAX in six to eight weeks that would help address a scenario faced by the Lion Air crew during last month’s deadly crash in Indonesia.
- Crash investigators are focusing on the possibility that a new anti-stall system that repeatedly pushed the Lion Air jetliner’s nose down was being fed by erroneous data from a faulty sensor left in place after a previous hazardous flight.
- While plans for the possible fix are not final, Boeing’s software upgrade could block the recently modified anti-stall system, known as MCAS, from continuously running until the plane hits its nose-down limit, the sources said.
U.S. judge raises prospect of not approving CVS-Aetna deal
- In an unusual move on Thursday, a federal judge raised the prospect of not approving CVS’s deal to buy insurer Aetna, which closed earlier this week, during a routine portion of the legal process.
- Judge Richard Leon of the U.S. District Court objected to what he said was the government’s and companies’ treatment of him as a “rubber stamp” for the deal, noting that CVS had closed its deal to buy Aetna for $69 billion on Wednesday.
- Leon raised the prospect of not deciding on the deal until the summer, or perhaps rejecting it, before setting another hearing for Monday.
Banks Reverse Course to Lower Oil-Price Projections
- Banks in November lowered their forecasts for oil prices in 2019 amid signs of rising global supply and a price rout in which crude has lost more than 30% since the start of October.
- Brent crude, the global oil benchmark, is now expected to average $76.98 a barrel next year, down from prior forecasts of $77.58, according to a poll of 11 investment banks by The Wall Street Journal.
- Expected prices for West Texas Intermediate, the U.S. standard, experienced a bigger drop, to $69.98 a barrel in 2019 from earlier forecasts of $70.81.
- The latest poll results come just a month after banks had raised forecasts for crude prices on expectations that reimposed U.S. sanctions on Iran’s oil industry starting in November would significantly reduce global supplies, tightening the market.
Texas Airport Plans $11 Billion Bond Gusher as Growth Surges
- The vice president for treasury management at Dallas Fort Worth International Airport said he was planning on selling between $10 billion and $11 billion in municipal bonds over the next five to seven years to add more capacity to an airport that serves one of the fastest-growing areas of the nation.
- In an arms race to expand and improve terminals, municipal-bond sales issued by airports are up more than 30% this year to $13.7 billion, including those in Denver, New York, Los Angeles, San Francisco and Salt Lake City.
- The increase stands in contrast to the rest of the municipal-bond market, where debt sales dropped this year after interest rates rose and the federal tax-overhaul pulled subsidies from a key type of refinancing.
US ECONOMY & POLITICS
Fed Minutes Signal December Rate Increase Likely, But Less Certain Path Next Year
- Federal Reserve officials signaled plans to raise interest rates next month, but they appeared more uncertain about maintaining a pace of quarterly increases after that, minutes of the central bank’s recent policy meeting show.
- Almost all participants at the Nov. 7-8 meeting believed another rate increase “was likely to be warranted fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations,” said the minutes.
- Officials, however, discussed changing their postmeeting policy statement to emphasize their flexibility to respond to fresh economic developments as they weigh their rate moves next year.
U.S., Mexico and Canada Sign Pact to Replace NAFTA
- U.S., Mexico, and Canada took a step on Friday toward easing commercial tensions in the region, as leaders of the three countries signed a new pact overhauling and updating their quarter-century-old free-trade zone.
- The USMCA still requires ratification by legislators in all three countries before it can take effect.
- The pact is expected to pass easily in both Canada and Mexico, but faces a more difficult path in the U.S. Congress, especially as opposition Democrats—some of whom have expressed misgivings with the USMCA—take control of the House of Representatives in January.
U.S.-China dispute casts shadow as world leaders gather in Argentina
- The leaders of the world’s top economies gathered in Argentina on Friday for talks overshadowed by a U.S.-China trade war that has roiled global markets, bracing for the kind of geopolitical drama U.S. President Donald Trump often brings to the international stage.
- All eyes will be on a planned dinner between Trump and Chinese President Xi Jinping on Saturday to see whether they can make progress toward resolving differences threatening the global economy.
- Speaking in Buenos Aires, U.S. Trade Representative Robert Lighthizer said he would be surprised if the dinner was not a success, but it would depend entirely on the two presidents.
U.S. lawmakers seal Farm Bill agreement in principle
- U.S. lawmakers have struck a deal in principle on the Farm Bill, the top agriculture lawmakers and senators said on Thursday, capping months of bitter partisan debate over the legislation to fund $867 billion in food and agriculture programs.
- Programs covered by the bill include crop subsidies and support to access export markets, areas essential for American farmers, a key constituency of U.S. President Donald Trump.
- Such funding is crucial as farmers suffer from Trump’s trade wars with key commercial partners such as China, normally the top buyer of U.S. farm produce but which has been absent from the market after the imposition of tariffs.
EUROPE & WORLD
China reports weakest factory growth in over two years on eve of U.S. trade talks
- Growth in China’s vast manufacturing sector stalled for the first time in over two years in November as new orders slowed, piling pressure on Beijing ahead of crucial trade talks between Presidents Xi Jinping and Donald Trump this weekend.
- The official Purchasing Managers’ Index (PMI), released by the National Bureau of Statistics (NBS), fell to 50 in November, missing market expectations and down from 50.2 in October. It was the weakest reading in 28 months.
- The new orders sub-index — an indicator of future activity — declined to 50.4 from 50.8, with export orders shrinking for a sixth straight month.
- The 50-point mark is considered neutral territory, indicating no expansion in activity or contraction on a monthly basis.
TODAY in HISTORY
- The fossilized remains of a female human ancestor named Lucy were found in Ethiopia. (1974)
- The Brady Bill, requiring a five-day waiting period for handgun purchases, is signed. (1993)
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