US FINANCIAL MARKET
WALL STREET EDGES HIGHER AFTER JOBLESS DATA; MARKETS SHRUG OFF IMPEACHMENT
- U.S. stocks opened slightly higher on Thursday as data showed a dip in weekly jobless claims, while investors looked past the impeachment of President Donald Trump, who is unlikely to be removed from office.
- Shares of consumer staple companies led the S&P 500 higher Thursday after Conagra Brands reported solid earnings and sales for its fiscal second quarter. Shares of Conagra were up 13% in recent trading.
- Technology stocks also boosted the market, led by memory chip maker Micron Technology. Shares of the company rose 2.7% after it said that the current quarter would be the “bottom” of a rough period.
- At the same time, investors were weighing the broader implications of the House’s decision late Wednesday to impeach President Trump, making him the third U.S. president ever to face a trial in the Senate.
- For now, analysts and investors say they are monitoring the situation and aren’t factoring the political ruckus into their investment decisions.
- On the economic data front, weekly jobless claims fell to 234,000 from 252,000 the week before. However, economists polled by Reuters expected claims to fall to 225,000.
Micron signals recovery in 2020, says received supply licenses for Huawei
- Micron said on Wednesday it expected a recovery in 2020 after a “cyclical bottom” in the second quarter, and that it had received all requested licenses to supply some products to its largest customer, Huawei Technologies.
- Revenue fell to $5.14 billion from $7.91 billion, but beat estimates of $5.01 billion, according to IBES data from Refinitiv.
- Net income fell to $491 million in the quarter, from $3.29 billion a year earlier.
- The company forecast second-quarter revenue between $4.5 billion and $4.8 billion, while analysts were expecting $4.78 billion.
- The chipmaker said on Wednesday it had received all requested licenses that enable it to provide support for certain products and qualify new products for Huawei’s mobile and server businesses.
- The licenses are not expected to have a material impact on the company’s revenue in the next couple of quarters, Micron said.
Conagra Tops Sales Expectations
- Conagra reported quarterly sales that exceeded estimates as it recorded gains in its snack-food and frozen-meal brands and included the results of its Pinnacle Foods business, which it acquired for $8.2 billion last year.
- The company said its sales rose 18% to $2.82 billion for its fiscal second quarter, topping the $2.8 billion analysts had expected.
- Organic sales, which excludes the effects of currency fluctuations, mergers, asset sales and the Pinnacle acquisition, rose 1.6% from the year-ago period, Conagra said.
- Conagra posted net income of $260.5 million, compared with $131.6 million in the comparable quarter last year.
- Conagra lowered its sales-growth outlook for fiscal 2020 to reflect the sale of its DSD snacks business and the exit of its private-label peanut butter business. It now sees sales growth of 12.4% to 12.9%, compared with its prior guidance of 13.5% to 14%.
- It also lowered its range of adjusted earnings expectations by a penny to $2.07 a share to $2.17 a share.
Goldman Sachs in Talks to Admit Guilt, Pay $2 Billion Fine to Settle 1MDB Probe
- Goldman Sachs is in talks with the U.S. government to pay a multibillion-dollar fine, admit guilt and agree to continuing oversight of its compliance procedures in order to resolve a criminal investigation into its role in a Malaysian corruption scandal.
- The bank and U.S. officials have discussed a deal in which a Goldman subsidiary in Asia—not the parent company—would plead guilty to violating U.S. bribery laws, some of the people said.
- The discussions also involve Goldman installing an independent monitor to oversee and recommend changes to its compliance procedures, the people said.
- Talks are continuing and the outlines of a deal, which could be reached early next year, may change.
Broadcom Looks to Sell Unit That Could Fetch $10 Billion
- Broadcom is looking to sell one of its wireless-chip units, a move that would accelerate the company’s shift away from its roots as a semiconductor maker.
- Broadcom is working with Credit Suisse to find a buyer for its radio-frequency, or RF, unit, a segment of its wireless-chip business that makes filters used in cellphones to clarify signals, according to people familiar with the matter.
- The unit had $2.2 billion in revenue in the 2019 fiscal year and is one of the original businesses of predecessor company Avago.
- It could be worth $10 billion, some of the people said, but it isn’t clear if that’s achievable and there may not be a deal.
GM issues two recalls for more than 900,000 new vehicles
- GM is issuing recalls for more than 900,000 vehicles worldwide in two campaigns to address brake software and fire risks.
- The largest U.S. automaker is recalling more than 550,000 2019 light-duty Chevrolet Silverado 1500, Cadillac CT6 and GMC Sierra 1500 vehicles due to potential software issues related to the vehicles’ service brake system notifications.
- GM is also recalling more than 400,000 2019-2020 Chevrolet Silverado 1500 and GMC Sierra 1500 trucks because battery positive cable rings may have been manufactured with excessive glue, potentially resulting in a fire risk.
EU Legal Opinion on Facebook Case Spells Trouble for Data Transfers
- Companies, including U.S. tech giants, should be blocked from transferring European users’ data in some cases if they can’t guarantee it will be handled in compliance with European Union privacy laws, an adviser to the EU’s top court recommended.
- The recommendation could unleash a series of legal challenges against companies such as Facebook, Google, Amazon and Apple, which all have significant operations in the U.S. and Europe—potentially disrupting their operations.
- Those companies, and thousands of others, currently transfer data out of Europe under several different legal tools that generally require them to comply with EU privacy principles overseas.
US ECONOMY & POLITICS
After House Impeaches Trump, Timing of Next Steps Is Unclear
- The House on Wednesday approved abuse-of-power and obstruction-of-Congress articles against Mr. Trump in the wake of his pressing Ukraine to investigate former Vice President Joe Biden, a leading 2020 Democratic presidential candidate.
- Nearly all Democrats supported the charges, while the chamber’s Republicans rejected them, saying Democrats failed to show that Mr. Trump had committed a crime and that they had managed a flawed process.
- Mr. Trump will now be the third president to face a trial in the Senate, where a two-thirds vote would be required to remove him from office.
- Senate Majority Leader Mitch McConnell (R., Ky.) has said he sees no scenario in which Mr. Trump would be convicted.
Americans Evenly Divided on Trump Removal, WSJ/NBC News Poll Finds
- The three-month House inquiry has failed to build majority support among Americans for or against impeaching President Trump, leaving the nation evenly divided, 48% to 48%, on whether to remove the president from office.
- Some 90% of Republicans oppose impeaching Mr. Trump and removing him from office, while 83% of Democrats favor it.
- Among independents, 50% support impeachment and removal, while 44% oppose it.
- Opinions of impeachment haven’t budged since October, before the House impeachment inquiry heard testimony about the Trump administration’s actions regarding Ukraine.
- At that time, 49% favored impeaching and removing Mr. Trump, with 46% opposing, statistically even with the new poll.
- Similarly, Mr. Trump’s job approval rating remains essentially unchanged in recent months. It stands at 44% in the new poll, with 54% disapproving of how he is handling his office.
U.S. weekly jobless claims fall
- The number of Americans filing applications for unemployment benefits dropped from more than a two-year high last week, pointing to sustained labor market strength.
- Initial claims for state unemployment benefits decreased 18,000 to a seasonally adjusted 234,000 for the week ended Dec. 14, the Labor Department said.
- Economists had forecast claims would fall to 225,000 in the latest week.
- Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid increased 51,000 to 1.72 million for the week ended Dec. 7.
U.S. Existing Home Sales Decreased 1.7% in November
- Sales of previously owned U.S. homes declined more than expected in November, the second drop in three months and a sign limited inventory is likely constraining would-be home buyers.
- Existing-home sales fell 1.7% in November from the previous month to a seasonally adjusted annual rate of 5.35 million, the National Association of Realtors said Thursday.
- Economists expected a 0.4% decrease.
- Sales were up 2.7% last month from November 2018, the fifth straight month of year-over-year gains.
- October sales were revised down to 5.44 million compared with an earlier estimate of 5.46 million.
- There was a 3.7 month-supply of homes on the market at the end of November, at the current sales pace.
China says in touch with U.S. on signing of Phase 1 trade deal
- China and the United States are in touch over the signing of their Phase 1 trade deal, China’s commerce ministry said, which will see lower U.S. tariffs on Chinese goods and higher Chinese purchases of U.S. farm, energy and manufactured goods.
- Both the Chinese and U.S. trade teams are in close communication, Gao Feng, a spokesman at the Chinese commerce ministry, told reporters at a regular briefing on Thursday, adding there is no specific information on the deal to disclose currently.
- Chinese officials have so far not publicly confirmed much of Washington’s version – especially on goods purchase commitments.
- But China said on Friday when the deal was announced that it will import more U.S. wheat, rice, corn, energy, pharmaceuticals and financial services.
China announces new tariff exemptions for U.S. chemical, oil products
- China on Thursday unveiled a new list of import tariff exemptions for six chemical and oil products from the United States, days after the world’s two largest economies announced a Phase 1 trade deal.
- The exemptions will be for one year from Dec. 26, the Finance Ministry said, without providing a value for the imports excluded from duties.
- The tariff waivers will apply to four chemical products, such as metallocene high-density polyethylene (HDPE) and a special grade of linear low-density polyethylene (LLDPE), and refined oil products that include white oil and food-grade petroleum wax.
Headed Into Democratic Primaries, Joe Biden Remains Favorite
- Joe Biden remains the favorite for the Democratic presidential nomination among the party’s voters nationally, a new Wall Street Journal/NBC News poll finds, though the former vice president’s more liberal rivals generate higher voter enthusiasm.
- Mr. Biden was the top choice of 28% of Democratic primary voters in the new survey, while Sen. Bernie Sanders had 21% support and Sen. Elizabeth Warren drew 18%.
- Among the top three candidates, Mr. Biden drew the highest level of discomfort along with the lowest level of enthusiasm.
- Mr. Buttigieg, of South Bend, Ind., who holds a lead in most Iowa polls, was the top choice of 9% of Democratic primary voters in the new survey.
- Ms. Klobuchar, of Minnesota, who has gained traction in Iowa as a midtier candidate, had 5% support.
Trump Administration Weighs Plans to Reduce Student Debt
- The Trump administration is considering ways to help Americans with their student-loan debt, according to senior administration officials, including by refinancing loans at lower interest rates and eliminating debt in bankruptcy.
- White House and Education Department advisers think a program to cancel a large portion of student debt would be unfair to taxpayers and unpopular among Republican voters, senior administration officials said.
- Under one proposal being discussed, the administration would essentially decline to contest borrowers’ requests before judges to have their student loans canceled, a move that likely could be accomplished without congressional action, one official said. The administration is also considering pushing Congress to change bankruptcy law, the official added.
- Mrs. DeVos released a proposal this month to spin off the Office of Federal Student Aid into a stand-alone agency that would be designed to have greater flexibility to negotiate new terms with borrowers for their student loans.
- That would include reducing their interest rate to market rates, the official said.
EUROPE & WORLD
Accenture beats quarterly estimates on digital and cloud strength
- Accenture beat estimates as investments in its fast-growing digital and cloud services businesses continue to pay off.
- Net revenue rose to $11.36 billion, beating estimates of $11.14 billion.
- Net income rose to $1.36 billion in the first-quarter, from $1.27 billion a year earlier.
- The consulting and outsourcing services provider forecast current-quarter revenue between $10.85 billion and $11.15 billion, the midpoint of which is below the average analyst estimate of $11.09 billion.
UK wants 80% of trade covered by new trade deals by 2022
- The British government said on Thursday it wanted to cover 80% of its external trade with new free trade agreements by 2022 as it seeks to build new relationships with the world after leaving the European Union on Jan 31.
- “Our ambition is to cover 80% of total UK external trade with free trade agreements by 2022,” the government said in a briefing note accompanying its legislative agenda.
- The United Kingdom has already announced it will be negotiating free trade agreements with the European Union, United States, New Zealand, Australia and Japan.
Ant Financial takes stake in Vietnam’s eMonkey
- China’s Ant Financial, a fintech affiliate of e-commerce giant Alibaba Group, has quietly acquired a sizable stake in a Vietnamese e-wallet eMonkey, people familiar with the matter said.
- The move, negotiated over the summer, is not being announced due to concerns that anti-China sentiment in Vietnam could result in possible pushback, three people with knowledge of the situation said.
- The strategic investment, Ant’s eight international payments deal, will allow the firm to gain entry to Vietnam’s booming market of nearly 100 million people, a quarter of whom are under 25, and where e-commerce growth is among the highest in the region.
TODAY in HISTORY
- War broke out in Indochina when Ho Chi Minh attacked the French. (1946)
- Britain and China signed an accord returning Hong Kong to Chinese sovereignty on July 1, 1997. (1984)
- President Bill Clinton impeached on two counts by the House of Representatives. (1998)
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