US FINANCIAL MARKET
Wall St. edges higher as Trump says trade deal to be signed on January 15
- Wall Street edged higher on Tuesday, recovering from a dip at the open, as President Donald Trump disclosed the date and location for the signing of the much-awaited initial U.S.-China trade deal.
- Trump wrote in a tweet that the Phase 1 agreement would be signed on Jan. 15 at the White House and that he would later travel to Beijing to begin negotiations on the next phase.
- Latest data from China showed manufacturing activity expanded for a second straight month in December, partly driven by seasonal demand.
- The figures align with other signs of stabilization in the Asian economy, including last week’s data that showed profits at China’s industrial firms grew at the fastest pace in eight months in November.
- At home, data showed a reading of the consumer confidence index was 126.5 in December, compared with a revised 126.8 in November.
Lockheed Martin hits 2019 F-35 delivery target of 131 jets
- Lockheed Martin said on Monday it has reached its 2019 target to deliver 131 F-35 fighter jets to the United States and its allies, as the defense contractor built 47% more jets this year.
- The world’s largest defense contractor delivered a total of 134 of the stealthy jets this year and aims to deliver 141 F-35s in 2020.
- In 2019, international deliveries jumped 43% to 30 jets for international partner nations.
- The most common variation of the jet, the F-35A, now costs $77.9 million, beating its goal of lowering the price to below $80 million a year earlier than expected.
Ford says reservations full for high-end version of electric Mustang Mach-E
- Ford Motor said on Monday reservations were full for the high-end Mustang Mach-E First Edition electric sport utility vehicle.
- Ford did not provide details on how many reservations it took for the First Edition, which sells for about $60,000, but has said global production in the first 12 months for all versions of the Mach-E is limited to 50,000 vehicles.
- There are four other versions of the Mach-E in addition to the First Edition.
- It will be built in Mexico, the first of more than a dozen all-electric vehicles Ford plans to launch by 2022 with an investment of $11.5 billion.
Uber, Postmates Sue California Over Gig Law, Escalating Fight
- Uber and Postmates sued California to challenge legislation that could force the companies to treat their drivers as employees, the latest escalation in a battle over the new law set to take effect in the New Year.
- The suit claims that the new law, known as Assembly Bill 5, or AB5, violates constitutional guarantees of equal protection and due process because of how it targets some workers and companies.
- AB5 establishes a test that employers must pass to classify their workers as independent contractors, as is done with drivers by Uber, Postmates and other gig-economy companies.
- Employers who don’t meet the test must treat their workers as employees entitled to benefits including minimum wage and paid sick days.
- Uber, Lyft, Postmates, DoorDash, and grocery-delivery firm Instacart already have contributed $110 million for a statewide ballot initiative next year that would effectively exempt the companies from the law.
Netflix Says Its Own Content Topped All 2019 Releases on Its Service
- Netflix said its original shows and movies were watched more than any other content released on the service in 2019, a sign of the company’s aggressive investment in its own content in anticipation of getting fewer programs from Hollywood suppliers.
- The only program on the streaming service’s top 10 for this year that wasn’t originated by Netflix was “The Incredibles 2” from Walt Disney’s Pixar unit.
- The rankings don’t include the most popular content on Netflix —only the most popular that debuted in 2019.
Turkish Airlines says reaches compensation deal over Boeing 737 MAX
- Turkish Airlines has agreed a compensation deal with planemaker Boeing over the grounding of the Boeing 737 MAX following two fatal crashes, the carrier said on Tuesday.
- It did not specify the size of the payment but Turkey’s Hurriyet newspaper reported that it was worth $225 million including $150 million in compensation and $75 million covering things such as spare parts and training.
- Turkish Airlines had taken delivery of 12 737 MAX planes before the grounding out of 75 it has ordered. It was supposed to have received 12 more since.
Fed sees small take-up of repo, rates steady for critical year-end
- Large banks took only a small portion of the $150 billion on offer at the Federal Reserve’s last overnight repo operation of 2019 and the cost of borrowing was muted on Tuesday, suggesting that the Fed has averted a year-end funding squeeze.
- Banks took $25.60 billion in the Fed’s overnight repurchase agreement (repo) operation, which offers funding over the crucial year-end period. The banks also took only a small share of three liquidity operations on Monday.
- The overnight repo rate jumped to 1.90% on Tuesday, before dropping back to 1.65%, which is in line with the Fed’s target fed funds range of 1.50% to 1.75%.
- Forward repo markets were pricing overnight loans for year-end at 2.50% early on Monday and at around 4% a few weeks ago, according to analysts.
US ECONOMY & POLITICS
Trump Says He Will Sign Phase-One Trade Deal with China on Jan. 15
- President Trump said he would sign the phase-one trade deal with China on Jan. 15 and will later travel to Beijing for talks on a broader pact.
- The president, in a Tuesday morning tweet, said he would be joined at the White House signing by “high level” Chinese officials, but he did not specify who would attend.
- Mr. Trump also pledged to travel to Beijing to begin negotiations on the second phase of the trade deal “at a later date.”
- As part of the agreement, China said it would purchase more American agricultural products.
- The U.S., in return, said it would hold off on a new round of tariffs and agreed to reduce some existing levies.
- U.S. tariffs of 25% would remain on roughly $250 billion in Chinese goods, including machinery, electronics and furniture.
Home Prices Rose at a Slightly Faster Pace in October
- The S&P CoreLogic Case-Shiller U.S. National Home Price Index, which measures average home prices in major metropolitan areas across the U.S., rose 3.3% in October on an annual basis.
- That was a marginally greater increase than the 3.2% year-over-year rise during September.
- Prices were up 2.2%, year over year, in large metro areas in a 20-city composite index tracked by S&P, a smaller increase than the rise nationally.
US consumer confidence dips in December
- U.S. consumer confidence dipped slightly in December, according to data released by The Conference Board on Tuesday.
- The metric came in at 126.5 for the month, down from 126.8 in November.
- Economists polled by Reuters expected a reading of 128.2 for December.
- The Conference Board also announced an upward revision to November’s reading.
Political Power Set to Continue Shift to Southern States, Data Show
- New state census totals show population continuing to shift from the North and Midwest to the South and Southwest in ways that could help states that have voted Republican in recent years.
- The Census Bureau released on Monday state population estimates for the year ended July 1.
- Congressional seats and electoral votes are allocated to states based on a census conducted every 10 years.
- Because the 2019 estimates come less than a year before the next decennial census, they closely approximate which states will gain and lose as a result of the 2020 count that gets fully under way in the spring.
- Based on Monday’s figures, Texas is poised to gain two congressional seats, while Arizona, Colorado, Florida, Montana, North Carolina and Oregon are each expected to gain one.
- Eight states are likely to lose one seat: Illinois, Michigan, Minnesota, New York, Pennsylvania, Rhode Island, West Virginia and California. It would be California’s first such loss since it became a state in 1850.
- The new figures also show the total U.S. population grew 0.5% for the year ended July. 1. That was the slowest pace in a century.
EUROPE & WORLD
Huawei’s Revenue Hits Record $122 Billion in 2019 Despite U.S. Campaign
- Huawei said its revenue rose to a record $122 billion this year, showing the Chinese tech giant’s continued rise despite the Trump administration’s campaign to curtail its global business.
- The pace of growth was slightly slower than expected, said Eric Xu, Huawei’s chairman, predicting more challenges in 2020 and saying the company doesn’t expect to be removed from a U.S. blacklist that has cut it off from certain U.S. technologies.
- The unaudited figure of 18% growth was lower than the company initially projected for the year, he said, and was a slowdown from the 19.5% revenue jump recorded in 2018—though exceeded its 2017 growth clip.
- Huawei shipped 240 million smartphones this year, Mr. Xu said, a 17% increase over 2018 shipments, but it mainly sold smartphones that were launched before the ban.
China says manufacturing activity expanded in December
- China’s official Purchasing Managers’ Index (PMI) for manufacturing came in slightly above expectations at 50.2 for the month of December, the country’s statistics bureau said on Tuesday.
- Economists polled by Reuters expected the official December manufacturing PMI to come in at 50.1.
- The sectors of food and beverage, clothing, medicine, and automobiles were some of the sectors that saw robust expansion in manufacturing activity, the bureau added.
China outbound M&A plummets to 10-year low on trade tensions, economic slowdown
- China’s outbound mergers and acquisitions (M&As) clocked their weakest year in a decade in 2019, as an escalated U.S.-China trade war and tightened regulatory scrutiny of Chinese companies impacted appetite for overseas dealmaking.
- Chinese acquirers announced $41 billion in outbound deals this year, nearly halving from 2018 and less than a fifth of the 2016 peak, showed data from Refinitiv.
- The number was only slightly higher than 2009 when dealmaking plunged after the financial crisis.
- Outbound deals into the United States dropped 80% this year from last to $2 billion.
- Overall, deals involving Asia-Pacific firms worldwide fell to $1.06 trillion from $1.4 trillion in 2018.
Carlos Ghosn Flees Trial in Japan for Lebanon
- Carlos Ghosn, the former chief of Nissan and Renault, unexpectedly left Japan, where he faces trial on charges of financial wrongdoing, and traveled to his homeland of Lebanon.
- It wasn’t clear how he was able to leave Japan; a person familiar with the matter said he arrived in Lebanon via Turkey.
- Lebanon’s criminal code prohibits extradition of its citizens, making it unlikely Mr. Ghosn can be forced to return to Japan if he stays in the country.
Tencent Buys 10% Stake in Record Label of Billie Eilish, Drake
- Tencent is buying a 10% stake in the music giant behind Ariana Grande, Drake and Billie Eilish for €3 billion ($3.36 billion) in a deal that bolsters the Chinese internet giant’s growing presence in the record industry.
- The company said Tuesday it was leading a consortium that has agreed to acquire a stake in Universal Music Group from Vivendi, valuing the world’s largest music company at €30 billion.
- The investment also gives Tencent the option to double its stake in the Los Angeles-based company.
- Tencent said a separate deal would follow soon allowing its streaming business to buy a minority stake in Universal’s Chinese operations.
TODAY in HISTORY
- President Truman officially proclaimed the end of hostilities in World War II. (1946)
This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, the Wall Street Journal.
Content posted by third parties on this site is screened in order to protect clients’ privacy and comply with regulatory requirements. Content containing sensitive personal information, inappropriate language, information about specific investments, misleading information, information about other companies or websites, or information related to litigation will be removed. Content posted by third-parties on this site remains the responsibility of the party posting the content and is not adopted or endorsed by Pence Wealth Management or LPL Financial. Any opinions or statements posted by third parties are their own and may not be representative of the experience of others and are not indicative of future performance or success. Third party content on this site does not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness.