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RETAIL SLIDE PRESSURES U.S. STOCKS

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RETAIL SLIDE PRESSURES U.S. STOCKS

  • Consumer-discretionary companies were among the worst performers in the S&P 500 after retailers including Macy’s and Kohl’s warned of weak holiday results.
  • Fed minutes cite uncertainty about impact of Trump on U.S. economy.
  • Elsewhere, China was in the spotlight again Thursday as the Chinese yuan rose sharply against the U.S. dollar.
  • The rise in the yuan came amid broader dollar weakness Thursday following the release of the Federal Reserve minutes.
  • The ADP payrolls report showed that 153,000 jobs were added in the private sector in December compared with economists’ expectation of 170,000.

US FINANCIAL MARKET

Macy’s and Kohl’s Are Hit by Weak Holiday Sales

  • Macy’s said it will slash more than 10,000 jobs and detailed plans to close dozens of stores after another holiday season of weak sales.
  • Like its rival, Kohl’s, which also warned Wednesday of lackluster holiday results, Macy’s hasn’t been able to solve consumers’ shift to online shopping.
  • Macy’s said its sales declined 2.1% on a comparable store basis in November and December from a year ago.
  • Kohl’s warned that holiday results were weak, saying comparable sales declined 2.1% in the months of November and December from a year ago.
  •  The chain, which operates 1,100 stores, lowered its profit targets for the current year.
  • Mastercard SpendingPulse estimated that e-commerce spending jumped 19% during the holidays, compared with an overall 4% increase in retail spending.

Sears Sells Craftsman Brand, to Close 150 Stores

  • Sears said it would close another 150 stores and sell its Craftsman tool brand for $900 million, as the cash-strapped retailer continues to shrink and battle slumping sales.

Walgreens Boots Raises Low End of Annual Guidance

  • Walgreens said it now expects $4.90 to $5.20 in adjusted earnings per share for its new fiscal year, compared with its previous guidance for $4.85 to $5.20 a share.
  • The company posted a profit of $1.05 billion, down from $1.11 billion a year earlier.
  • Revenue slipped 1.8% to $28.5 billion.

Monsanto Returns to Profitability as It Looks to Complete Tie-Up with Bayer

  • Monsanto reported net income of $29 million, compared with a year-prior’s net loss of $253 million.
  • Total sales climbed 19% to $2.65 billion.

Constellation profit beat clouded by Trump tax proposals

  • Beer and wine maker Constellation Brands reported a higher-than-expected quarterly profit, but investors remained jittery about President-elect Donald Trump’s proposals to tighten cross-border trade.
  • The company had previously announced plans to expand its breweries in Nava, its biggest, and Mexicali.
  • It also recently invested in a brewery in Obregon.
  • Beer sales rose 16 percent on higher volumes and pricing, and a boost from its acquisition of craft beer maker Ballast Point last year.
  • Net income rose to $405.9 million from $270.5 million a year earlier.
  • Sales rose 10.3 percent to $1.81 billion, in-line with the average analysts’ estimate.

Audi Pushes toward Fully Autonomous Cars

  • Audi is joining with Nvidia in the race among auto makers and tech companies to bring a fully self-driving car to market.
  • The luxury car unit of Volkswagen said Wednesday it forged a partnership with the chip maker to develop a vehicle for the road in 2020.
  • Nvidia has been developing an artificial-intelligence computing platform that can help enable self-driving cars.
  • BMW is joining with Nvidia-competitor Intel to develop a system along with Mobileye, one the leading suppliers of components required for self-driving features.

Defense Firms Cash In Amid Soaring Demand for Munitions

  • Boeing, Lockheed, BAE ramp up production as surge of airstrikes against Islamic State strains supplies of precise bombs, missiles.
  • As of mid-December, the U.S. had conducted 13,041 airstrikes against Islamic State in Iraq and Syria over about 28 months.
  • Coalition allies carried out an additional 3,747 strikes over the same period.
  • The extremely accurate munitions don’t come cheap. Equipped with sophisticated laser or GPS targeting technology, a single bomb or missile can cost from $30,000 to $115,000.
  • Boeing is producing about 120 GPS guidance kits for the JDAM each day at its plant outside St. Louis, Mo., up from about 40 in early 2015.
  • Production is expected to reach 150 a day by next July, or about 36,500 a year.
  • Lockheed Martin increased deliveries of hellfire missiles for its contract with the U.S. Army.
  • Lockheed reported a $45 million jump in net sales of tactical missiles compared with the prior year.

Boeing wins $8.8 billion in 737 MAX orders, still short of goal

  • The orders mean the world’s biggest plane maker clinched at least 536 net jetliner sales last year compared with its target of selling as many commercial jets as it delivers, a total it puts between 745 and 750. Through November, Boeing had delivered 681 planes.
  • The orders announced Wednesday include 75 Boeing 737 MAX 8s for GE Capital Aviation Services, valued at $8.25 billion at list prices.

Tesla starts battery cell production at gigafactory

  • Electric car maker Tesla Motors has started mass production of lithium-ion battery cells at its gigafactory in Nevada along with Japan’s Panasonic.

Apple confirms $1 billion investment in SoftBank tech fund

  • SoftBank has said it is investing at least $25 billion in the fund and has been in talks with Saudi Arabia’s Public Investment Fund for an investment that could be as much as $45 billion.

Bitcoin plunges by a fifth

  • Digital currency bitcoin fell more than 20 percent in the space of four hours of trading on Thursday, putting it on track for its worst daily performance in nearly two years.
  • The web-based “cryptocurrency” had been on a tear for the two previous weeks, gaining more than 40 percent to hit a three-year high of $1,139.89 on Wednesday, just shy of an all-time high of $1,163 on the Europe-based Bitstamp exchange.

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US ECONOMY & POLITICS

Fed Minutes Cite ‘Considerable Uncertainty’ About Trump’s Impact on Economy

  • Almost all officials indicated that the prospects for fiscal stimulus could boost economic growth.
  • Fed officials grappled with “considerable uncertainty” about the effect the incoming Trump administration could have on the economy when they met last month.
  • Depending on the mix of tax, spending and regulatory policy changes that lawmakers pursue, several officials said economic growth might turn out to be faster or slower than they anticipated in December.
  • Some officials warned the possibility for stronger economic growth and further increases in oil prices, as well as a rise in inflation compensation in recent months, could lead to higher inflation.
  • But others noted that a stronger dollar could continue to keep inflation at bay.

Private-Sector Payroll Growth Reflects Tightening Labor Market

  • ADP reports says private payrolls rose by 153,000.
  • This was less than the 168,000 expected by economists.

U.S. Service-Sector Activity Expanded at Solid Pace in December, ISM Says

  • Institute for Supply Management nonmanufacturing activity index was 57.2 in December, unchanged from November.

U.S. small business borrowing rises as Trump elected president

  • Small Business Lending Index rose to 129.9 in November from a downwardly revised 119.8 in October. Measured from a year earlier, it was the first increase in six months.

U.S. December auto sales surprisingly strong, 2016 sets new high

  • Autodata said 2016 U.S. auto sales of 17.55 million were 0.4 percent higher than the previous record set in 2015.
  • December sales rose 3 percent, and on a seasonally adjusted annualized basis were 18.43 million vehicles.

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EUROPE & WORLD

China’s choices narrowing as it burns through FX reserves to support yuan

  • As China’s foreign exchange reserves threaten to tumble below the critical $3 trillion mark, the biggest fear for investors is not whether Beijing can continue to defend the yuan but whether it will set off a vicious cycle of more outflows and currency depreciation.

Saudi Aramco Raises Oil Prices for Far East Customers

  • State-run company’s move suggests it is reducing production in line with recent OPEC agreement.
  • Aramco has begun initiating a nearly 5% cut in its daily output—about 486,000 barrels a day.

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TODAY in HISTORY

A German newspaper reported German physicist Wilhelm Roentgen’s discovery of X-rays (1896)

Henry Ford introduced the $5-a-day minimum wage (1914)

Nellie Tayloe Ross became the first woman governor of a state (Wyoming) (1925)

President Nixon ordered the development of the space shuttle (1972)


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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, Wall Street Journal.

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