US FINANCIAL MARKET
S&P 500, NASDAQ HIT NEW RECORDS; BOEING LIFTS DOW
- The S&P 500 and the Nasdaq hit fresh record highs on Monday as President Donald Trump said an initial U.S.-China trade pact would be signed “very shortly”, while Boeing shares lifted the Dow after the planemaker fired its chief executive officer.
- Boeing jumped 3.2% after it ousted Chief Executive Officer Dennis Muilenburg, following a year of intense scrutiny and industrial setbacks set off by twin fatal crashes of its 737 MAX jetliner.
- Signs of easing trade tensions between the U.S. and China also lifted shares at the start of the holiday-shortened week.
- China said it would cut tariffs on products including frozen pork, avocado and some types of semiconductors next year.
- On Monday, new data showed that demand for long-lasting factory goods made in the U.S. fell in November, a sign that the manufacturing sector was uneven last month.
- Orders for durable goods—products designed to last at least three years—decreased a seasonally adjusted 2% in November versus the previous month, the Commerce Department said.
Boeing CEO Is Out In Wake of Debacle Over the 737 MAX
- Boeing has fired Chief Executive Officer Dennis Muilenburg, following a year of intense scrutiny and industrial setbacks set off by twin fatal crashes of its 737 MAX jetliner.
- Chairman David Calhoun will take over as CEO and president, effective Jan. 13, the company said, adding that a change in leadership was necessary to restore confidence in the company.
- The management shakeup comes as the world’s largest planemaker struggles to win regulatory approvals for its grounded best-selling jetliner while trying to regain trust with passengers and airline customers.
- The company estimates the MAX crisis will cost it $10 billion, a figure analysts expect to at least double. Regulators recently warned the company that it was setting unrealistic expectations for when the jetliner would be allowed to fly again.
‘Star Wars’ Leads Box Office with Disappointing $175.5 Million
- After mixed fan reaction and thumbs-down from most critics, “Star Wars: The Rise of Skywalker” took in an estimated $175.5 million in the U.S. and Canada over the weekend, the lowest opening of the trilogy produced by Walt Disney.
- The “Skywalker” opening, which theater owners had hoped would debut north of $200 million, is 29% below the 2015 installment “The Force Awakens” and 20% below “The Last Jedi” from 2017.
- Overseas grosses added $198 million to the weekend total. In China, “The Rise of Skywalker” faltered as previous installments have, opening in the country to a paltry $12.1 million.
- It will also be the last Star Wars movie until 2022, since Disney decided to put the series on a “hiatus” after “Skywalker,” and the downward trend of Star Wars openings appears to affirm that decision.
PayPal Continues to Scout for Potential Takeover Targets
- PayPal will continue to pursue potential takeover targets in 2020 amid robust deal activity in the payments sector.
- “There’s a lot of opportunities to acquire companies inorganically,” Chief Financial Officer John Rainey said in an interview.
- PayPal over the past two years has pursued an acquisition strategy that involved annual transactions in the range of $1 billion to $3 billion and has spent more than $7 billion on targets since then, Mr. Rainey said.
- He said the company would continue to look within that existing range.
Tesla to take new $1.4 billion loan from Chinese banks for Shanghai factory – sources
- U.S. electric vehicle maker Tesla and a group of China banks have agreed a new 10 billion yuan ($1.4 billion), five-year loan facility for the automaker’s Shanghai car plant, part of which will be used to roll over an existing loan.
- The Chinese banks earlier this year already offered Tesla a 12-month facility of up to 3.5 billion yuan, which is due to be repaid on March 4, 2020, according to a filing the automaker made to the U.S. Securities and Exchange Commission.
- The new loan’s interest rate will be pegged at 90% of China’s one-year benchmark interest rate, the same as the 3.5 billion yuan loan, the first source said. This is a rate that China banks offer to their best clients.
Electric vehicle startup Rivian scores $1.3 billion investment from T.Rowe Price, others
- Electric vehicle startup Rivian said on Monday it closed a $1.3 billion investment round, led by fund manager T. Rowe Price but also including existing investors online retailer Amazon.com and No. 2 U.S. automaker Ford Motor.
- The investment round, which also included BlackRock, is the fourth this year for Rivian and positions the company as one of the better-financed players in a crowded EV manufacturing market where Tesla is the most established player.
- Prior to Monday’s announcement, Rivian had raised $2.2 billion from investors, according to investor website PitchBook, and was valued at an estimated $5 billion to $7 billion.
U.S. government says verdict in Bayer’s Roundup case should be reversed
- The U.S. Environmental Protection Agency and the Justice Department said a federal appeals court should reverse a lower court verdict finding Bayer AG liable in the case of a California man who blamed its Roundup weed killer for his cancer.
- The government said in a friend of the court brief filed on Friday that glyphosate, the weed killer’s active ingredient, is not a carcinogen and as a result a warning on the label was not required as California state law demands.
- The backing by the EPA and Justice Department comes days after Bayer asked a U.S. federal appeals court to throw out a $25 million judgment it was ordered to pay Edwin Hardeman. Bayer had denied its Roundup weed killer causes cancer.
DraftKings to Go Public Following Merger with Diamond Eagle, SBTech
- DraftKings said Monday it will become a public company following an acquisition by Diamond Eagle Acquisition and SBTech.
- The companies said Diamond Eagle will change its name to DraftKings Inc., reincorporate in Nevada and remain Nasdaq-listed under a new ticker symbol.
- It is anticipated that the combined company will have an equity market capitalization at closing of about $3.3 billion and have more than $500 million of unrestricted cash on the balance sheet.
- The transaction is expected to close in the first half of 2020.
US ECONOMY & POLITICS
U.S. new home sales rebound in November; October sales revised lower
- Sales of new U.S. single-family homes increased in November, suggesting low mortgage rates continued to support the housing market, though sales activity in the prior month was weaker than previously reported.
- The Commerce Department said on Monday new home sales rebounded 1.3% to a seasonally adjusted annual rate of 719,000 units last month, lifted by gains in activity in the Northeast and West regions. Sales surged 16.9% from a year ago.
- Economists had forecast new home sales rising to a pace of 734,000 units in November.
- October’s sales pace was revised down to 710,000 units from the previously reported 733,000 units.
U.S. Durable Goods Orders Fell in November
- New orders for key U.S.-made capital goods barely rose in November and shipments fell, suggesting business investment will probably remain a drag on economic growth in the fourth quarter.
- Orders for durable goods—products designed to last at least three years—decreased a seasonally adjusted 2% in November versus the previous month, the Commerce Department said Monday.
- That was well off from expectations. Economists had projected a 1.2% increase.
- Orders for defense capital goods fell 35.6% on the month.
- Excluding the volatile defense category, overall orders were up 0.8% in November.
- Durable orders for October were revised down to a 0.2% increase from an earlier reading of up 0.5%.
Senators See House Sending Over Trump Impeachment Articles Soon
- Lawmakers signaled they believe congressional leaders will reach a deal that will prompt the House of Representatives to send the articles of impeachment to the Senate soon, amid a standoff over the rules and additional witnesses in the trial.
- On CBS’s “Face the Nation,” Sen. Roy Blunt (R., Mo.) said he sees the Senate starting its trial in January, arguing that further delays wouldn’t politically benefit Democrats.
- He said it wasn’t the Senate’s job to make the impeachment case against Mr. Trump but didn’t rule out more witnesses being called.
- Both houses of Congress are now on recess, and Mr. Trump is in Florida until the new year.
EUROPE & WORLD
China to Cut Tariffs on Range of Goods Amid Push for Trade Deal
- China will cut import tariffs for frozen pork, pharmaceuticals and some high-tech components starting from Jan. 1, a move that comes as Beijing and Washington are trying to complete a phase-one trade deal.
- The plan, approved by China’s cabinet, will lower tariffs for all trading partners on 859 types of products to below the rates that most-favored nations enjoy, the Finance Ministry said Monday.
- The lower levies will apply to frozen pork, as China aims to shore up its meat supplies amid an outbreak of swine fever, as well as semiconductor products and medicines to treat asthma and diabetes.
- The plan will also cut import levies for more than 8,000 products even lower for 23 countries and regions that have free-trade agreements with China, including Australia, South Korea, Iceland, New Zealand and Pakistan, from the beginning of next year.
- Monday’s tariffs cuts appear to pave the way for China to import more from the U.S. without violating international trading rules that ban managed trade.
Canada GDP Unexpectedly Contracts in October
- Canada’s economy unexpectedly shrank in October, following steep retreats in manufacturing and retail sales.
- Canada’s gross domestic product, which tracks broad activity in goods and services in the economy, declined 0.1% in October from the previous month to a seasonally adjusted 1.975 trillion Canadian dollars ($1.5 trillion), Statistics Canada said Monday.
- Market expectations were for a 0.1% advance.
JD.Com’s logistics unit taps banks for potential $8-$10 billion IPO
- The logistics unit of Chinese e-commerce company JD.com has held early discussions with banks about a potential overseas IPO that could raise $8 billion to $10 billion, two people with direct knowledge of the matter told Reuters.
- JD Logistics is targeting a valuation of at least $30 billion, according to the people.
- The listing could happen in Hong Kong or New York, although a timetable and venue have not been finalized and the numbers are subject to changes, the people said.
- As of Sept. 30, JD Logistics operated more than 650 warehouses, which covered an aggregate gross floor area of approximately 16 million square meters.
TikTok Searches for Global Headquarters Outside of China
- Bytedance is considering setting up a global headquarters for its hit video-sharing app TikTok outside of China, part of continuing efforts to shake off its Chinese image, people familiar with the company said.
- Senior executives at Beijing-based Bytedance—a startup valued at $75 billion—have been brainstorming ideas to rebrand TikTok as it comes under mounting scrutiny from U.S. lawmakers over national-security concerns.
- Global downloads for TikTok outstripped Instagram and Snapchat in 2019, according to mobile-data aggregator App Annie.
- It had 665 million smartphone monthly active users world-wide in October, up 80% from a year earlier, App Annie said, with about 20 million of those users in the U.S.
Nord Stream 2 to press on with Europe gas pipe, despite U.S. sanctions
- The group behind Nord Stream 2 said on Saturday it aimed to complete a pipeline to boost Russian gas supplies to Europe as soon as possible, after U.S. sanctions prompted a major contractor to suspend pipe-laying activities.
- U.S. President Donald Trump signed a bill on Friday that included legislation imposing sanctions on firms laying pipe for Nord Stream 2, which seeks to double gas capacity along the northern Nord Stream pipeline route to Germany.
- Nord Stream 2 will help Russia bypass Ukraine, the main route for Russian gas.
- German Finance Minister Olaf Scholz said Berlin “firmly rejects” U.S. sanctions but would not retaliate.
TODAY in HISTORY
- President Woodrow Wilson signed the act creating the Federal Reserve System. (1913)
- The transistor was unveiled by American physicists John Bardeen, Walter H. Brattain, and William Shockley. (1947)
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