US FINANCIAL MARKET
U.S. STOCKS TICKED HIGHER IN HOLIDAY-THINNED TRADING
- The S&P 500 was on course for its best year since 2013 on optimism over an imminent U.S.-China trade deal.
- Traders returned from the Christmas break to Beijing’s reaffirmation that it was in close contact with Washington about the initial agreement, which is widely expected to be signed in early January.
- The gains came after the Labor Department said Thursday that initial jobless claims decreased by 13,000 in the week ended Dec. 21 to a seasonally adjusted 222,000, a level consistent with a healthy labor market.
- Underlining relatively strong consumer confidence, a report on Wednesday showed U.S. shoppers spent more online during the holiday shopping season, with e-commerce sales hitting a record high.
Amazon Gain Leads S&P 500 After Reporting ‘Record’ Holiday Sales
- Amazon’s stock had the biggest advance on the S&P 500 Index after the e-commerce giant said its holiday season this year was “record breaking,” with billions of items shipped and “tens of millions” of Amazon devices like the Echo Dot sold.
- Five million new customers started Prime free trials or paid memberships globally, while the number of items that were delivered with one-day or same-day shipping quadrupled compared to last holiday season.
- Amazon didn’t release specific sales figures, but its statement backs up broader reports that shopping — particularly of the online variety — picked up this year.
- Web sales in the U.S. during the holiday season grew almost 19% compared to last year, according to Mastercard Spending Pulse data.
- Online sales now make up almost 15% of total retail sales during the holiday, according to Mastercard.
- The holiday season generates about a fifth of retailers’ revenue each year in the U.S., according to the National Retail Federation. It can be even higher for specialized companies like toy and game stores.
- Adobe Analytics found that shoppers spent $125.6 billion online from Nov. 1 through Dec. 19, a 13.6% increase from last year.
- Buying on smartphones accounted for 35% of that revenue, according to Adobe, which tracks hundreds of retail websites.
Tiffany sees rise in holiday sales on higher China spending
- Tiffany estimated sales growth of 1% to 3% during the holidays, with the biggest contribution coming from China and a recovery in the Americas.
- Sales in the Americas were up 2% to 4%.
- Europe was stronger, with Tiffany reporting a sales gain of 3% to 5% for the period.
- Overall, sales in Tiffany’s Asia-Pacific region rose 7% to 9% after accounting for currency movements.
- Japan proved to be a challenge for Tiffany with sales falling 12% to 14% after excluding the effects of currency fluctuations.
Holiday season package returns to hit a record high, says UPS
- United Parcel Service expects returned packages to hit a record high following this year’s holiday shipping season, as consumers shopped more online, the package delivery company said on Thursday.
- UPS said it expects to process 1.9 million returns on Jan. 2, up 26% from a year earlier and a seventh-consecutive annual record.
New Boeing 737 MAX documents show ‘very disturbing’ employee concerns: U.S. House aide
- Boeing documents under review by a U.S. congressional panel appear to point to a “very disturbing” picture of commentary from the planemaker’s employees over the grounded 737 MAX aircraft, a congressional aide said on Tuesday.
- The documents were submitted to the House of Representatives transportation infrastructure committee and the Federal Aviation Administration, the same day Boeing announced the firing of chief executive Dennis Muilenburg.
- The latest batch of documents submitted to the FAA contained instant messages from a former Boeing senior pilot, Mark Forkner, according to a person briefed on the matter.
- In October, Boeing turned over 2016 messages to the FAA between Forkner and another pilot that said he might have unintentionally misled the U.S. regulator and raised questions about the performance of a key safety system during testing.
Italy Follows France in Levying a Digital Tax
- Italy soon will join France in applying a new tax on large tech companies, a move that could deepen trans-Atlantic trade tensions and snarl up already-faltering negotiations over how best to tax companies such as Facebook and Alphabet.
- The new tax, passed this week by Italy’s parliament, will take effect Jan. 1.
- Similar to the tax implemented this year in France, Italy’s imposes a 3% levy on some digital revenue for companies with more than €750 million in global revenue, including least €5.5 million in Italy.
- The Italian announcement, combined with the French tax, complicates a broader effort among more than 100 countries to overhaul corporate taxation for the digital age.
- Many countries say U.S. tech companies pay too little income tax in the territories where they have users.
US ECONOMY & POLITICS
U.S. jobless claims fall, point to sustained labor market strength
- Initial claims for state unemployment benefits decreased 13,000 to a seasonally adjusted 222,000 for the week ended Dec. 21, the Labor Department said on Thursday.
- Economists had forecast claims would fall to 224,000 in the latest week.
- The Labor Department said claims for California, Hawaii, Kansas, Pennsylvania, South Dakota, Virginia and Puerto Rico were estimated for the latest week.
- Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid fell 6,000 to 1.72 million for the week ended Dec. 14.
Minimum wage hikes hit 21 states in 2019—and more are on the way in 2020
- The move toward a $15 minimum wage is gaining steam, with 21 states raising minimum wages in 2019 and more increases on the way in 2020.
- Nearly 7 million workers will be getting a pay raise starting Jan. 1, thanks to new minimum wage hikes going into effect, according to the Economic Policy Institute.
- Seven states and Washington, D.C., have passed laws that will eventually bring their wage floors to $15 an hour.
- Some municipalities, like New York and Seattle, have already succeeded in raising their minimum wages to $15 an hour.
- Restaurant operators have coped with the changes by raising menu prices and cutting worker hours, according to a Harri survey of 173 restaurants.
- Analysis from the Congressional Budget Office found that raising the minimum wage to $15 by 2024 would benefit up to 27 million workers — but 1.3 million people would lose their jobs.
China commerce ministry says in close touch with U.S. on signing trade deal
- China is in close touch with the United States on signing a Phase 1 trade deal, the country’s commerce ministry said on Thursday, adding that both sides are still going through necessary procedures before the signing.
- Gao Feng, commerce ministry spokesman, made the comments to reporters at a regular briefing.
China’s November soybean imports from U.S. rise as tariff-free cargoes arrive
- China’s November soybean purchases from the United States surged from a year earlier, data showed on Wednesday, as cargoes booked by importers with tariff-free quotas cleared customs.
- China brought in 2.56 million tonnes of U.S. soybeans, up from zero a year ago and 1.147 million tonnes in October, after Beijing issued waivers to exempt importers from hefty tariffs for some American cargoes.
- Also, in November, China brought in 3.86 million tonnes of soybeans from Brazil, down 24% from 5.07 million tonnes in the same month last year.
- U.S. soybeans usually dominate the market in the fourth quarter as the autumn harvest kicks in.
Trade-Court Lawsuits Take on Trump’s Tariff Campaign
- The White House’s tariff strategy faces a potential threat from a series of lawsuits challenging whether the administration has followed the law closely enough in imposing new customs duties.
- The court cases involve Section 232 and Section 201 tariffs, known by their places in the U.S. legal code.
- The levies affect goods, imported from almost all U.S. trading partners, such as steel, aluminum and solar panels.
- So far, none of the active cases challenge the tariffs directly against China, but trade attorneys say that could change.
- The administration has argued that the various trade statutes allow enough flexibility for the actions that it has taken, and that once an action has been taken, the president has broad authority to make modifications.
Murkowski ‘Disturbed’ by McConnell’s Senate Impeachment Strategy
- Republican Sen. Lisa Murkowski of Alaska said she is disturbed by the Senate majority leader’s promise of “total coordination” with the White House on impeachment proceedings against President Trump, marking a note of GOP dissension as party leaders prepare for the president’s impeachment trial.
- The comments mark a rare instance of dissent in a party that has been largely unified behind the president and the first sign of potential disharmony among Senate Republicans.
- Even a handful of GOP senators opposing procedures could force Mitch McConnell, the Senate majority leader, to change his strategy on impeachment, given the party’s thin majority of 53 seats in the chamber.
- Senate Democrats have said they want to hear from four witnesses whose testimony the White House blocked during the House investigation.
- McConnell has said he doesn’t want witnesses to testify, and stressed he plans to work in concert with the White House in formulating the next steps in the process.
EUROPE & WORLD
State Support Helped Fuel Huawei’s Global Rise
- A Wall Street Journal review of Huawei’s grants, credit facilities, tax breaks and other forms of financial assistance details for the first time how Huawei had access to as much as $75 billion in state support as it grew from a little-known vendor of phone switches to the world’s largest telecom-equipment company—helping Huawei offer generous financing terms and undercut rivals’ prices by some 30%, analysts and customers say.
- The largest portion of assistance—about $46 billion—comes from loans, credit lines and other support from state lenders.
- The company saved as much as $25 billion in taxes between 2008 and 2018 due to state incentives to promote the tech sector.
- Among other assistance, it enjoyed $1.6 billion in grants and $2 billion in land discounts.
- Mega-lenders China Development Bank and Export-Import Bank of China in the last two decades made available more than $30 billion in credit lines for Huawei’s customers.
- A Huawei spokesman told the Journal that CDB’s $30 billion credit line “has seldom been more than 10% subscribed” and that customers’ use of the facility “fluctuates over time.”
Protesters, Police Clash as Hong Kong Tensions Rise
- Christmas in Hong Kong descended into a flurry of tear gas and arrests as police clashed with protesters in neighborhoods around the city, signaling an escalation of tensions after weeks of relative calm.
- The Christmas Day clashes followed a night of turmoil around Hong Kong marked by rubber bullets and Molotov cocktails.
- Hundreds gathered on Christmas Eve in the tourist-heavy neighborhood of Tsim Tsa Tsui to chant “Fight for Hong Kong” and “Five demands,” referring to the five demands for change sought by residents.
- Riot police fired several rounds of tear gas near the Peninsula hotel, a luxury British colonial-era establishment that has been hit hard by slumping tourist numbers.
Brazil’s Shrinking Rainforest Prompts Nestlé, H&M, Others to Shake Up Supply Chains
- Brazil’s accelerating deforestation is pressuring food makers, retailers, investors and commodity traders to shake up supply chains in an effort to push back on land-clearing and achieve environmental goals.
- The rate of deforestation in Amazon states this year hit its highest level since 2008, according to Brazilian government data released in November, with nearly 4,000 square miles of rainforest lost over the 12 months ended in July 2019.
- In response, some companies are trying to shield well-known brands from being linked to environmental degradation.
- Environmental sustainability increasingly informs consumers’ shopping decisions, pushing brands to scrutinize how basic ingredients and materials are produced.
TODAY in HISTORY
- The 33rd president of the United States, Harry S. Truman, died in Kansas City, Mo. (1972)
- Zoologist Dian Fossey was found murdered in Rwanda. (1985)
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