US FINANCIAL MARKET
U.S. STOCKS WAVER, AWAITING TRADE DEVELOPMENTS
- U.S. stocks drifted lower Monday, kept in a narrow range by a dearth of economic data and earnings.
- China’s state media Xinhua reported that senior officials from both nations had “constructive discussions” on Saturday morning regarding each other’s concerns about a “phase one” deal.
- Still, many investors say they are skeptical the two countries are close to a full resolution of their trade conflict.
- Talks have hit snags in recent weeks over China’s reluctance to commit to a specific targets for purchases of U.S. agricultural goods, as well as Beijing’s concerns about President Donald Trump’s willingness to lift existing tariffs.
- CNBC’s Eunice Yoon reported, citing a government source, that Chinese officials are pessimistic about the prospect of a U.S.-China trade deal.
- Meanwhile, shares of Xerox Holdings fell 1% after PC and printer maker HP rejected a $33 billion takeover offer.
- Coty gained 1.9% after saying it would pay $600 million for a majority stake in Kylie Jenner’s make-up and skincare businesses, as it looks to tap into the reality TV star’s huge social media reach.
HP Rejects Xerox Offer but Remains Open to a Deal
- HP rejected a $33 billion takeover offer from Xerox as too low, but the PC and printer maker made clear it is interested in discussing a deal to combine with its smaller rival.
- Xerox’s unsolicited offer of $22 a share significantly undervalues the company, HP’s board said in a public letter to Xerox Chief Executive John Visentin on Sunday.
- It also voiced concern about the debt a transaction would put on the combined company and said it needs more information about Xerox’s business.
- Still, HP said it recognizes the benefits of consolidation and is “open to exploring a potential combination with Xerox.”
U.S. expected to grant Huawei 90-day license extension Monday: sources
- The Trump administration is set to issue a 90-day extension of a license on Monday allowing U.S. companies to continue doing business with China’s Huawei, two sources familiar with the deliberations said.
- Reuters reported Friday that an initial extension of around two weeks was expected and a longer extension was in the works, but had not yet been finalized due to regulatory hurdles.
- Over the weekend, the Trump administration’s plans changed and it now plans to renew the temporary extension for the same 90-day period as it did in August, the sources said.
- The Commerce Department is also considering whether to grant individual licenses for U.S. firms to sell components to Huawei after receiving more than 200 requests. No action on those are expected on Monday.
John Legere to step down as T-Mobile CEO next year
- T-Mobile President and COO Mike Sievert will succeed John Legere as CEO on May 1, 2020, the company announced Monday.
- Legere’s contract ends on April 30, 2020, according to the announcement.
- Leger tweeted Monday that the decision “has been under development for a long time.”
- When T-Mobile and Sprint first announced their intention to merge in April 2018, the companies said Legere would lead the combined business as CEO, with Sievert continuing to serve as President and COO.
Boeing says timing of 737 MAX return in hands of regulators
- Boeing moved on Saturday to ease tensions with regulators over the return to service of its 737 MAX, saying it was up to the U.S. Federal Aviation Administration and its global counterparts to approve changes to the jet in the wake of two accidents.
- The FAA told its staff this week to take whatever time was needed to review the grounded plane after Boeing said it expected the FAA to certify the 737 MAX in mid-December.
- U.S. officials privately said this week that Boeing’s timetable was aggressive — if not unrealistic — and was not cleared in advance by regulators.
Ford’s Big Bet: New Electric SUV to Wear Mustang Logo
- Ford is expanding the Mustang nameplate beyond its traditional two-door sports car for the first time in the vehicle’s 55-year history, a bid to keep the famed insignia relevant at a time when interest in performance vehicles in the U.S. is waning.
- A new all-electric SUV, unveiled by executives at an event in Los Angeles Sunday, will be called the Mustang Mach-E and wear the galloping pony logo.
- The new Mach-E, scheduled to go on sale late next year, is expected to start at around $44,000 and offer at least 230 miles in travel range off a single battery charge.
- While the Mustang coupe is built in Michigan, this new SUV will be produced at a Ford assembly plant in Mexico.
- Ford plans to build about 50,000 Mach-Es in the first year of production for sale in the U.S. and Europe, more than twice the current production rate of GM’s Chevrolet Bolt electric, but less than a quarter of Tesla’s Model 3, its lowest-priced vehicle.
Ford’s UAW members vote to ratify new four-year contract
- The United Auto Workers union said on Friday that rank-and-file members at Ford have voted in favor of a new four-year labor contract with the No. 2 U.S. automaker.
- The UAW will now focus on Fiat Chrysler Automobiles (FCA), the sole remaining Detroit automaker without a new labor contract. Talks with FCA are expected to begin on Monday, a UAW spokesman said.
- UAW leaders said earlier this month that Ford under the deal agreed to invest more than $6 billion in its U.S. plants, and to create or retain more than 8,500 UAW jobs.
Bristol-Myers Squibb wins antitrust approval to buy Celgene, but must divest psoriasis drug
- Bristol-Myers Squibb and Celgene have won U.S. antitrust approval for their merger on condition that they sell Celgene’s psoriasis drug Otezla, the Federal Trade Commission said in a statement on Friday.
- Bristol-Myers Squibb said the decision meant it had all the needed regulatory approvals and would close the acquisition on Wednesday.
- Amgen has agreed to buy Celgene’s Otezla business, valued at $13.4 billion.
- Bristol-Myers Squibb announced in January it would buy Celgene in a cash-and-stock deal for about $74 billion, combining two of the world’s largest cancer drug businesses in the biggest pharmaceutical deal ever.
US ECONOMY & POLITICS
Homebuilder confidence slips slightly in November
- The nation’s single-family homebuilders are feeling very positive about their business, but a monthly sentiment indicator fell in November from a recent high.
- The national association of Home Builders/Wells Fargo Housing Market Index (HMI) fell one point to 70, after rising steadily since June to the highest level of the year last month
- Of the index’s three components, current sales conditions fell two points to 76, traffic of prospective buyers dropped one point to 53 and sales expectations in the next six months rose one point to 77.
- The average rate on the 30-year fixed mortgage was around 5% in November of 2018 and is now hovering just below 4%.
Mood in Beijing about trade deal is pessimistic, government source says
- The mood in Beijing about a trade deal is pessimistic due to President Donald Trump’s reluctance to roll back tariffs, which China believed the U.S. had agreed to, a government source told CNBC’s Eunice Yoon.
- China has pushed for a removal of the additional duties imposed on each other’s products in different phases, as part of the deal.
- However, Trump said a week ago he has not agreed to scrap tariffs on Chinese goods, conflicting the signal from China and dampening hopes about a coming resolution to a jarring trade conflict.
- The Chinese are looking carefully at the political situation in the U.S. including the impeachment hearings and the presidential election, the source said, adding the officials are wondering if it is more rational to wait things out since it is unclear what Trump’s standing will be even in a few months.
- There is disagreement over issues such as a specific number of agricultural purchases, and the Chinese are resisting because, in part, they could risk alienating other trading partners, the source told CNBC.
Trump Delays Decision on Possible E-Cigarette Restrictions
- President Trump has delayed a decision on restrictions on e-cigarettes that he had been considering, following pushback from the industry and users, according to an administration official.
- A policy is still expected to emerge, but the president is less adamant than he had been when he said in September that he would seek to bar sales of sweet, fruit-flavored e-cigarettes aimed at young people.
- An administration official confirmed reporting by the Washington Post that Mr. Trump on a flight to Kentucky this month declined to agree on a memo outlining the policy, citing the impact on jobs.
Trump Says He Will Consider Testifying in Impeachment Probe
- President Trump said Monday he would consider testifying in the House impeachment probe despite calling it a witch hunt, saying he was intrigued by the possibility of providing his own version of events.
- Democrats plan several public hearings this week for witnesses in the probe, including Ambassador to the European Union Gordon Sondland, seen as a pivotal figure in the Ukraine controversy.
- The White House said last month it wouldn’t cooperate with the House impeachment probe, and several key officials including acting chief of staff Mick Mulvaney have refused to testify.
Trump Administration Releases Transparency Rule in Hospital Pricing
- Hospitals and insurers would be forced to disclose their secret negotiated rates for the first time under a far-reaching plan released Friday by the Trump administration.
- Administration officials said the final rule will compel hospitals in 2021 to publicize the rates they negotiate with individual insurers for all services, including drugs, supplies, facility fees and care by doctors who work for the facility.
- The administration proposed extending the disclosure requirement to the $670 billion health-insurance industry.
- Insurance companies and group health plans that cover employees would have to disclose negotiated rates, as well as previously paid rates for out-of-network treatment, in file formats that are computer-searchable, officials said.
EUROPE & WORLD
Trade Flows Set to Stay Weak, Says WTO
- Global flows of goods across borders are set to stay weak as 2019 draws to a close, according to the World Trade Organization, although there are some signs of stabilization in export orders and container shipping.
- The body that mediates trade disputes Monday released its leading indicator for trade flows, which rallied slightly from its August level, but remained well below the level that signals average rates of growth in exports and imports around the world.
- The WTO said there are signs of a pickup in export orders, container shipping, and automobile shipments, offset by weakness in airfreight, and shipments of raw materials and electronic components.
- Last month, the International Monetary Fund slashed its forecast for the growth of trade flows in 2019 to 1.1% from 2.5%, although it does expect to see a rebound in 2020.
Yahoo Japan and Chat App Line Agree to Merge
- Internet portal Yahoo Japan and chat app Line said Monday they have reached a basic agreement to merge in a deal that includes a $3.1 billion buyout of Line’s minority shareholders.
- Under the merger terms, a SoftBank Group subsidiary and Line parent Naver of South Korea will each hold 50% of a joint-venture company that in turn will control a holding company housing the operations of Yahoo Japan and Line.
- The deal, which would combine the providers of two of Japan’s top QR code payment services, offers Yahoo Japan access to 164 million Line users and their data in Japan and Southeast Asia as SoftBank expands into services outside its core wireless business.
Aramco IPO Aims to Value Energy Giant at Up to $1.7 Trillion
- Saudi Aramco said it is aiming for a valuation of $1.6 trillion to $1.7 trillion from the planned initial public offering of the state-owned energy company, falling short of the initial $2 trillion targeted by Saudi Crown Prince Mohammed bin Salman in what could still be the world’s biggest-ever IPO.
- In a statement Sunday, Aramco said that it aims to price the offering at between 30 and 32 Saudi riyals (between $8 and $8.52) a share and sell a stake of 1.5%, or 3 billion shares, in the IPO.
- International investors have so far signaled that a valuation of $1 trillion to $1.5 trillion would be more reasonable for them to consider investing, according to some investors who have met with underwriting banks.
- Aramco is selling up to 0.5% of the 1.5% stake to individual investors.
Airbus Books Bittersweet $16 Billion Deal with Emirates
- Airbus secured a $16 billion order for its A350 wide-body jets from Emirates Airline, a significant commitment for one of its biggest jets but less than an earlier promise by the Mideast carrier to buy $21 billion worth of Airbus planes.
- At the Dubai Air Show on Monday, Emirates said it would now take 50 A350s instead of its initial plan for 40 A350s and 30 A330neos.
- In a separate blow to Boeing, Abu Dhabi’s Etihad Airways said earlier Monday that it was planning to take 20 fewer 787 aircraft from Boeing than it had counted on.
- Etihad Chief Executive Tony Douglas said the carrier plans to have a fleet of only 51 787s by 2023, from 36 now.
- Etihad previously canceled the majority of its own backlog for Airbus’s A350s and deferred deliveries of the remainder.
Hong Kong Police Try to Storm University in Bid to Retake Campus from Protesters
- A standoff between protesters and police at a university here extended into a second evening, with police keeping the area on lockdown while refraining from using the lethal force they had threatened, as increasingly militant antigovernment activists battled back.
- The university confrontation, which began a week ago and intensified Sunday morning, has marked an escalation in the tactics underlying the protesters’ strategy.
- In some of the fiercest clashes since protests began in the Chinese-ruled city five months ago, police on Sunday used water-cannon blasts, tear gas and beanbag rounds against students who started a massive fire on a bridge, shot a police officer in the leg with an arrow and set fire to an armored car.
- As the fighting continued, police said they would fire their guns if attacked by people police Superintendent Louis Lau called “coldblooded rioters.”
TODAY in HISTORY
- Mickey Mouse made his debut in Steamboat Willie. (1928)
- Jim Jones, a U.S. pastor, led 914 of his followers to their deaths at Jonestown, Guyana, by drinking a cyanide-laced fruit drink. Cult members who refused to swallow the drink were shot. (1978)
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