DAILY MARKET REPORTS
- A bruising stock selloff continued Monday, knocking major U.S. indexes lower as Treasury Secretary Steven Mnuchin tried to instill calm into a jittery market.
- Coming off the stock market’s worst week since the 2008 financial crisis, the Dow, S&P 500 and Nasdaq fell further Monday as investors continued to confront rising interest rates, slowing U.S. growth, and the ramifications of a government shutdown.
- With the selloff showing little signs of slowing, Mr. Mnuchin attempted to reassure investors, saying he had spoken individually with the chief executives of six large banks to ensure they had sufficient lending capacity.
- The group, formed after the stock market crash of October 1987, is known more commonly as the “Plunge Protection Team” and met in 2009 in the latter stages of the financial crisis.
- Some investors remain bullish about growth in the U.S. continuing next year, pointing to positive economic data, even though the Federal Reserve ignored Mr. Trump’s calls for easy monetary policy and raised rates last week.
- Top of mind for many are the continuing trade tensions between the U.S. and China. Markets have been thrown by comments by President Trump on Twitter since the president sat down with his Chinese counterpart in Argentina a few weeks ago.
US FINANCIAL MARKET
Stores Finishing the Holidays on a High Note
- Stores have met the lofty sales expectations set by analysts and industry groups, showing that many chains continue to reap the benefits of a strong economy and rising consumer confidence, as well as company investments to boost their online business.
- Total U.S. retail sales, excluding automobiles, rose 5.2% from Nov. 1 through Dec. 19 compared with last year, according to Mastercard SpendingPulse, which tracks both online and in-store spending with all forms of payment.
- As in recent years, online sales continued to grow faster than sales overall, rising 18.3% during that time and accounting for 13% of total sales, the highest percentage ever recorded by Mastercard. In-store sales grew 4.3% during the same period.
- Another tracking firm, Adobe Analytics, found that a record $110.6 billion was spent online during the same period measured by Mastercard, a 17.8% increase compared with last year.
Apple to pull some iPhones in Germany as Qualcomm extends global wins
- Chip supplier Qualcomm won a second court skirmish in its worldwide patent battle with Apple on Thursday, with the iPhone maker saying it would pull some older models from its German stores.
- The German victory may affect only a few million iPhones out of the hundreds of millions that Apple sells each year.
- Still, it is a small but clear win in a complex legal battle that will spin into overdrive in the coming months as antitrust regulators and Apple both take Qualcomm to court in the United States.
- Apple alleges that Qualcomm engaged in illegal behavior to preserve a monopoly on modem chips, which help mobile devices, Qualcomm has accused Apple of using the chip supplier’s vast stable of technology innovations without proper compensation.
Tesla cuts Model 3 prices in China
- According to the California-based electric carmaker’s Chinese website, prices of certain Model 3 cars were cut by up to 7.6%.
- The starting price for a Model 3 in China now is 499,000 yuan ($72,000).
- It was the third time in the last two months that Tesla has adjusted its prices in China. In November, the company cut the prices of its Model X and Model S cars by 12 to 26%.
Banks Sharply Lower Oil-Price Forecasts
- Banks in December significantly lowered their forecasts for oil prices in 2019, as crude markets remained under firm pressure amid worries over weakening demand and signs of a burgeoning global supply glut.
- Brent crude, the global oil benchmark, is now expected to average just over $69 a barrel next year, down from an estimate last month of roughly $77 a barrel, according to a poll of 13 investment banks conducted by The Wall Street Journal.
- West Texas Intermediate, the U.S. oil standard, should average just over $63 a barrel, compared with a November forecast of around $70 a barrel, the poll showed.
- The new forecasts also come on the heels of a decision earlier this month by the Organization of the Petroleum Exporting Countries and its allies, led by Russia, to begin cutting crude output by a collective 1.2 million barrels a day next month.
US ECONOMY & POLITICS
Trump Administration Warns Shutdown Could Last Into January
- The Trump administration warned Sunday that the partial government shutdown could stretch into January, squeezing furloughed workers and shifting a high-stakes spending fight into a new Congress where Democrats control the House.
- The third shutdown of the year started early Saturday after President Trump and House Republicans upended a bipartisan Senate agreement to fund the government until February.
- The partial shutdown closed a quarter of federal offices and means hundreds of thousands of workers must take unpaid leave.
Four New Voters to Join Fed’s Key Panel Amid Rate-Increase Uncertainty
- Four veteran Federal Reserve officials—most of whom have signaled support for more interest-rate increases—will step into the limelight in 2019 as they become voters on the central bank’s rate-setting committee.
- That status prompts greater scrutiny of their views because they will be taking an official and public stand by voting on monetary policy—and will have the opportunity to directly dissent to Federal Open Market Committee decisions and detail their objections.
- The turnover comes at an uncertain time for the central bank, when officials generally expect to raise interest rates in 2019, but are unsure how far or fast.
Trump advisers have discussed arranging meeting with Fed’s Powell
- The advisers of President Donald Trump have discussed in recent days arranging a meeting between him and Federal Reserve Chairman Jerome Powell in the coming weeks, the Wall Street Journal reported on Sunday.
- Trump has recently been critical of the Fed for raising borrowing costs this year, especially as U.S. stocks have tumbled and yields on U.S. government debt have begun to signal a possible recession ahead.
- Reuters reported on Saturday that Trump has privately discussed the possibility of firing Powell. U.S. Treasury Secretary Steven Mnuchin later said Trump told him he had “never suggested firing” the Fed chairman.
China imports zero U.S. soybeans in November for first time since trade war started
- China’s soybean imports from the United States plunged to zero in November, marking the first time since the trade war between the world’s two largest economies started that China, the world’s largest soybean buyer, has imported no U.S. supplies.
- China brought in 5.07 million tonnes of soybeans from Brazil in November, up more than 80% from 2.76 million tonnes a year ago, data from the General Administration of Customs showed.
- Meanwhile, U.S. imports plunged from 4.7 million tonnes in November 2017 and were down from 67,000 tonnes in October.
Top Trump official calls bankers, will convene ‘Plunge Protection Team’
- U.S. President Donald Trump’s Treasury secretary called top U.S. bankers on Sunday amid an ongoing rout on Wall Street and made plans to convene a group of officials known as the “Plunge Protection Team.”
- U.S. stocks have fallen sharply in recent weeks on concerns over slowing economic growth, with the S&P 500 index on pace for its biggest percentage decline in December since the Great Depression.
- The Treasury said Mnuchin will convene a call on Monday with the president’s Working Group on Financial Markets, which includes Washington’s main stewards of the U.S. financial system and is sometimes referred to as the “Plunge Protection Team.”
Trump Moves Up Departure Date for Defense Secretary Mattis
- President Trump sped up the departure of Defense Secretary Jim Mattis by two months while outlining a slower withdrawal from Syria, reshaping his international policies and personnel amid a torrent of negative reaction at home and abroad.
- The developments kicked off a week in which Mr. Trump’s overseas endeavors will take one of the most dramatic turns of his presidency as he drastically alters U.S. policy in Syria and shrinks the U.S. footprint in Afghanistan, doing so as two top military and diplomatic officials resigned in protest and with other departures now widely expected, officials said.
- Mr. Trump wrote on Twitter after a phone call Sunday with President Recep Tayyip Erdogan of Turkey that he would undertake a “slow & highly coordinated” withdrawal of U.S. forces from Syria, in contrast to a speedy pullout described by the administration to defense officials last week.
EUROPE & WORLD
China fourth-quarter business confidence index lowest since second quarter of 2017: central bank survey
- Business confidence among entrepreneurs in China worsened in the fourth quarter compared with the previous one, and was at the lowest since the second quarter of 2017, according to a survey by the People’s Bank of China published on Monday.
- The entrepreneurs’ confidence index dropped to 67.8% in the fourth quarter, 3.4%age points lower than in the third quarter, the central bank survey showed.
- A separate PBOC survey of urban households showed a decline in the number of respondents believing housing prices will continue to rise in the next quarter. It found that 27.4% expect a price increase, down from 33.7% in the survey done three months ago.
China to remove some import, export tariffs including alternative feed meals
- China plans to remove import and export tariffs in 2019 on a range of goods, including import taxes on alternative meals used in animal feed, to secure supplies of raw materials amid trade tensions with the United States and boosting outbound cargoes.
- Import tariffs on so-called alternative meals, which include rapeseed meal, cotton meal, sunflower meal and palm meal, will be removed from Jan. 1, 2019, the finance ministry said in a statement on its website on Monday.
- While China has resumed some purchases of U.S. soybeans, the tariffs on the oilseed from America remain in place, and the removal of tariffs on alternative meals could help improve the reliability of supply of animal feed meal in China, analysts said.
Ant Financial in talks to buy UK payments firm WorldFirst
- Ant Financial Services Group, Chinese e-commerce giant Alibaba’s fintech affiliate, is in advanced talks to buy British currency exchange startup WorldFirst in a deal that could be worth more than 500 million pounds ($632.5 million).
- Ant Financial, China’s biggest online payments platform, has been in talks with WorldFirst for several months, according to the report.
- The Sky News report also said that it was unclear whether existing investors would retain a stake in WorldFirst, which was founded in 2004 in the basement of a house in South London.
TODAY in HISTORY
- The War of 1812 between America and Britain ended with the signing of the Treaty of Ghent. (1814)
- Gen. Dwight Eisenhower was appointed supreme commander of Allied Forces by President Franklin Roosevelt. (1943)
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