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U.S. STOCKS SLIDE AFTER TRUMP SIGNALS FURTHER DELAYS TO CHINA DEAL

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US FINANCIAL MARKET

U.S. STOCKS SLIDE AFTER TRUMP SIGNALS FURTHER DELAYS TO CHINA DEAL

  • The Dow Jones Industrial Average fell more than 400 points Tuesday after President Trump suggested a trade war with China could continue well into next year as he threatened new tariffs on several more countries.
  • All 30 stocks in the blue-chip index fell, from tech giant Apple to pharmaceutical company Merck.
  • The index’s 1.5% decline would be its first drop of more than 1% since early October, if the losses hold through the closing bell.
  • Mr. Trump said he had “no deadline” for reaching a trade accord with China during a meeting with the North Atlantic Treaty Organization secretary-general. He added that he liked “the idea of waiting until after the election” to reach a deal.
  • His latest comments appear to dash hopes that an agreement with China could be reached before another round of tariff hikes kicks in on Dec. 15.
  • Tuesday’s losses also appeared to factor in Mr. Trump’s threat to expand tariffs beyond imports from China.
  • The Trump administration has proposed tariffs of up to 100% against $2.4 billion of French imports in response to a new French tax on some revenue that technology companies in France.
  • France said Tuesday that it was prepared to push the European Union to respond in kind if the United States followed through on its threats to raise tariffs.

UnitedHealth forecasts 2020 earnings, midpoint below estimates

  • Health insurer UnitedHealth issued its adjusted earnings forecast for 2020, the midpoint of which was below analysts’ estimates.
  • The company said it expects 2020 earnings between $16.25 and $16.55 per share, compared with estimates of $16.46 per share.
  • UnitedHealth, however, said it expected revenue of $260 billion to $262 billion for 2020, largely above Wall Street expectations of $260.81 billion.
  • The insurer said in October that it was targeting earnings growth of between 13% and 16% in the long term.

Cyber Monday online sales hit record $9.4 billion, boosted by late-night spending spree, Adobe says

  • Cyber Monday shoppers spent a record $9.4 billion online, up 19.7% from a year ago, according to data released by Adobe Analytics.
  • Online shopping on Black Friday hit a record of $5.4 billion, up 22.3% from a year ago, but both Thanksgiving and Black Friday online sales fell short of Adobe’s initial estimates.
  • Adobe is forecasting that online sales for the entire holiday season will hit $143.8 billion.
  • So far, shoppers have spent $81.5 billion online between Nov. 1 and Dec. 2, according to Adobe.

India weighs tougher rules for Boeing 737 MAX on return to flying: source

  • India is considering setting an experience threshold for pilots who fly Boeing’s 737 MAX planes, as it moves to ensure safety once the aircraft returns to service, a senior official of the air safety regulator told Reuters.
  • India’s Directorate General of Civil Aviation (DGCA) may consider mandating a minimum number of flying hours for pilots of the 737 MAX, the source said, adding a decision would be made once it is clear when the planes are fit to return to the air.
  • The regulator will also make it mandatory for Boeing to set up simulators in India and for airlines to carry out comprehensive pilot training before it allows the planes to start flying, the source added.

Cleveland-Cliffs to Buy AK Steel in $1.1 Billion Stock Swap

  • Cleveland-Cliffs agreed to buy AK Steel in a $1.1 billion stock swap aimed at creating a vertically integrated producer of iron-ore and steel products.
  • The Cleveland company said the transaction, which it expects to complete in the first half of 2020, implies a total enterprise value of about $3 billion for AK Steel.
  • Cleveland-Cliffs said its shareholders will own about 68% of the combined company, while AK Steel shareholders will own about 32%.
  • The company said it expects to realize about $120 million in annual cost savings within the first 12 months after closing.

Amazon Rolls Out Quantum-Computing Service

  • Amazon.com’s cloud-services division is offering select enterprise customers the ability to experiment with early-stage quantum-computing services over the cloud, following other companies racing to commercialize the emerging technology.
  • Amazon Web Services said the new service, Amazon Braket, is “in preview” as of Monday.
  • The platform lets enterprise customers explore how they could benefit from quantum computers by developing and testing quantum algorithms in simulations.
  • Braket refers to “bra-ket,” a standard notation for describing quantum states. The service is expected to launch to all customers in 2020.

PG&E Had Systemic Problems With Power Line Maintenance, California Probe Finds

  • PG&E failed to adequately inspect and maintain its transmission lines for years before a faulty line started the deadliest fire in California history, a state investigation has found.
  • In a 700-page report detailing the problems that led the Caribou-Palermo transmission line to malfunction on Nov. 8, 2018, sparking the Camp Fire, investigators with the California Public Utilities Commission said they found systemic problems with how the company oversaw the safety of its oldest lines.
  • The new report goes well beyond earlier findings, alleging numerous serious violations of state rules for maintaining electric lines and specific problems with upkeep of the transmission line that started the fire.

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US ECONOMY & POLITICS

Trump says China trade deal might have to wait for 2020 election

  • President Donald Trump said a trade agreement with China might have to wait until after the U.S. presidential election in November 2020, denting hopes of a resolution soon to a dispute that has weighed on the world economy.
  • “I have no deadline, no,” Trump told reporters in London, where he was due to attend a meeting of NATO leaders.
  • “In some ways, I like the idea of waiting until after the election for the China deal. But they want to make a deal now, and we’ll see whether or not the deal’s going to be right; it’s got to be right.”
  • U.S. Commerce Secretary Wilbur Ross has said that Dec. 15, when a further 15% U.S. tariff on about $156 billion worth of Chinese imports is set to take effect, is a natural deadline for an agreement.

Trump Administration Proposes Tariffs Against $2.4 Billion of French Goods

  • The Trump administration proposed tariffs of up to 100% against $2.4 billion of French imports, saying the nation’s new digital-services tax unfairly targets U.S. tech companies such as Apple and Alphabet’s Google unit.
  • The French tax, which was signed into law July 24, applies a 3% tax on revenue that tech companies reap in France from such activities as undertaking targeted advertising or running a digital marketplace.
  • In a statement, U.S. Trade Representative Robert Lighthizer said the U.S. action “sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on U.S. companies.”
  • The USTR also threatened that such tariffs could be enacted in the future against Austria, Italy and Turkey, all of which also have digital-services taxes.

U.S. may increase tariffs after WTO rejects EU claims over Airbus

  • The World Trade Organization on Monday rejected European Union claims that it no longer provides subsidies to planemaker Airbus, prompting the United States to say it could increase retaliatory tariffs on a wider range of European goods.
  • A new compliance report from the Geneva trade watchdog found that the Airbus A380 and A350 jetliners continue to be subsidized as a result of past European government loans.
  • In Monday’s finding, a three-person panel rejected EU claims that a recent decision by Airbus to stop producing the slow-selling A380 meant the giant airliner could no longer be seen as a threat to Boeing, whose competing 747 is also out of fashion.
  • While the WTO no longer faulted Airbus for causing lost sales to Boeing with the A380, which is no longer marketed, it ruled that the superjumbo would cause market-share damage to Boeing for as long as it is produced and delivered.
  • USTR, which imposed tariffs of 10% on large civil EU aircraft and 25% on selected farm and other products in October, said it would look at raising tariff rates and subjecting additional EU products to the tariffs.

Trump says he is looking at sanctions against Turkey over S-400 missile deal

  • President Donald Trump said on Tuesday he was looking at imposing sanctions on Turkey over its purchase of a Russian missile system, blaming his predecessor for not selling Ankara a U.S. missile system.
  • Sitting alongside French President Emmanuel Macron, Trump was asked whether he would issue sanctions on Turkey over the purchase of the S-400 missile system.
  • “We are looking at it now, and we’re talking about it now,” he told journalists.

Treasury Eases Minimum-Tax Burdens on U.S. Multinationals

  • U.S.-based multinationals will be less exposed to certain U.S. taxes after the Treasury Department issued new rules implementing two major pieces of the 2017 tax law.
  • The regulations, unveiled on Monday, will help ease the burden of two separate minimum taxes that were designed to put a floor under corporate tax collections.
  • One minimum tax affected by the regulations is the Global Intangible LowTaxed Income tax, or GILTI, which affects U.S.-based companies with foreign operations.
  • It was designed to limit companies’ ability to book profits in low-tax jurisdictions without paying U.S. taxes and was projected to raise $112 billion over a decade.

U.S. Considers Easing Drug Protections to Break Logjam Over Trade Pact

  • The Trump administration is considering scaling back intellectual-property protections for big drugmakers to help win Democratic support for a new trade pact with Mexico and Canada, according to people familiar with the matter.
  • Many Democrats, backed by labor unions and consumer groups, are pushing the administration to reduce the length of time that leading biologic drugs would be protected from generic imitators in the U.S.-Mexico-Canada Agreement, or USMCA.
  • The Trump administration, eager to win passage of USMCA, is considering easing the standard, the people said. That assessment was bolstered by Jesus Seade, Mexico’s senior envoy to North America.
  • Mexico City and Ottawa would have to agree to any changes to the three-way accord they signed a year ago.

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EUROPE & WORLD

Exclusive: White House considered kicking Huawei out of U.S. banking system – sources

  • The Trump administration considered banning China’s Huawei from the U.S. financial system earlier this year as part of a host of policy options to thwart the blacklisted telecoms equipment giant, according to three people familiar with the matter.
  • The plan, which was ultimately shelved, called for placing Huawei, the world’s second largest smartphone producer, on the Treasury Department’s Specially Designated Nationals (SDN) list.
  • One of the people familiar with the matter, who favors the move, said it could be revived in the coming months depending on how things go with Huawei.
  • Administration officials drafted a memo and held interagency meetings on the issue, showing the extent to which administration officials mulled deploying the United States’ most aggressive sanctioning tool against the Chinese company.

NATO Meeting Overshadowed by France’s Macron

  • NATO has choreographed its 70th-anniversary meeting in England this week to display unity and avert the kind of blowup by President Trump that scarred last year’s summit for alliance leaders.
  • But this time the public broadside came before the meeting from French President Emmanuel Macron, who declared that the North Atlantic Treaty Organization is experiencing “brain death.”
  • Mr. Macron said his comment was intended as a wake-up call for NATO, which has sought to paper over political cracks caused by Mr. Trump’s questioning of its value, and Turkey’s flirtation with Russia and incursion into Syria.
  • The French president’s comments are a sign that internal disagreements within NATO are worsening even as the organization has increased military spending and bolstered its forces in Europe to counter threats from Russia.
  • Several allies sympathize with Mr. Macron’s aims, but many bristled at the harsh tone of his comments in the Economist, which were praised by Russia.

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TODAY in HISTORY

  • Christiaan N. Barnard performed the world’s first successful human heart transplant. (1967)
  • A cloud of deadly poison gas leaked from the Union Carbide plant in Bhopal, India, killing over 4,000 people. (1984)

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