US FINANCIAL MARKET
Wall Street hits fresh record high on trade progress
- Wall Street’s main indexes hit fresh record highs on Thursday, rallying on signs of progress in U.S.-China trade relations and another batch of largely upbeat earnings reports.
- China said on Thursday that it had agreed with the United States to remove tariffs in phases, while the state-owned Xinhua News Agency said Beijing was also considering removing restrictions on poultry imports.
- The yield on 10-year Treasurys rose to 1.889% from 1.814% Wednesday as investors sold U.S. debt, seen as a haven asset.
- Meanwhile, investors continued to digest a parade of quarterly earnings reports.
- Nearly three-quarters of the 383 S&P 500 companies that have reported results so far have beaten profit expectations.
- Shares of Qualcomm rose 7.3% after the chip maker signaled a strong year ahead for 5G phone sales.
- Roku plunged 16.6% after posting a wider net loss as it spent more to attract subscribers to its video streaming platform.
Qualcomm’s licensing forecast, helped by Apple deal, drives share gains
- Qualcomm on Wednesday forecast current-quarter profit above Wall Street expectations, as its all-important licensing segment benefits from a deal with Apple and the annual holiday-quarter boost it brings.
- Revenue in the fourth-quarter fell about 17% to $4.81 billion, but beat analysts’ estimates of $4.70 billion.
- The company posted a profit of $500 million in the quarter, up from a loss of $500 million a year ago.
- The company forecast between $1.3 billion and $1.5 billion in revenue for the licensing segment for its fiscal first quarter, above analyst expectations of $1.23 billion.
- The licensing business drove the profit forecast with a midpoint of 85 cents per share, above expectations of 83 cents per share.
- On the chip side, Qualcomm’s chief executive, Steve Mollenkopf, told Reuters in an interview that the company has won deals to supply 230 device designs with 5G chips, up from 150 a quarter ago.
Roku quarterly net loss widens, shares plunge
- U.S. video streaming service Roku reported a wider net loss in the third quarter on Wednesday, as it spent more to attract subscribers to its video streaming platform.
- Total net revenue rose to $260.9 million, slightly better than forecast, from $173.4 million a year ago.
- The company’s platform revenue for Q3 increased by 79% from the year ago period, to $179.3 million.
- The company reported 32.3 million active accounts, up from 30.5 million during the previous quarter, and an average revenue per user of $22.58 compared to the previous quarter’s metric of $21.06.
- Total operating expenses for the quarter rose about 60% to $145 million from a year ago.
- The company’s net loss widened to $25.2 million in the third quarter, from $9.5 million a year earlier.
Sling TV Boosts Dish Subscriber Count
- Dish Network posted a better-than-expected quarterly profit on Thursday, as the U.S. satellite TV service provider surprised Wall Street by adding more payTV subscribers.
- Revenue fell 6.8% to $3.17 billion, but beat analysts’ average estimate of $3.16 billion, according to IBES data from Refinitiv.
- The company’s pay-TV business added 148,000 subscribers, compared with analysts’ estimates for a loss of 166,000.
- That included a loss of 66,000 satellite-TV customers while internet-based Sling TV added 214,000 customers.
- Dish reported a third-quarter profit of $353.3 million, down from $431.7 million a year earlier.
Fox Revenue Rises on TV Growth, Studio Leasing
- Fox said Wednesday its quarterly revenue rose 5%, boosted by strong growth at its television unit and higher proceeds from its Los Angeles studio lot, which the company is leasing to rivals.
- Revenue for the quarter was $2.67 billion, roughly in line with analysts’ estimates.
- Revenue at the company’s television unit grew 6.2% to $1.36 billion, thanks in part to a 14% increase in programming fees from third-party Fox affiliates and higher average rates per subscriber.
- Cable network programming revenue rose 1.6% to $1.29 billion, primarily because of an increase from pay-per-view boxing and higher sports sublicensing.
- Fox’s net profit fell 17% to $499 million, from $604 million a year earlier, primarily because of a change in fair value of its investment in Roku.
- Fox also said Wednesday its board had authorized a $2 billion stock buyback program, with $500 million of its Class A and Class B shares expected to be repurchased in the near term.
Discovery quarterly revenue up 3% on higher ad sales
- Discovery reported a 3% rise in quarterly revenue on Thursday, as the owner of Discovery Channel and Animal Planet recorded higher advertising sales across its networks.
- Revenue rose to $2.68 billion from $2.59 billion.
- Net income rose to $262 million in the third quarter, from $117 million a year earlier.
Fitbit reports a 12% fall in revenue
- Wearable device maker Fitbit reported its first drop in revenue in five quarters on Wednesday as it faced intense competition from deeper-pocket companies such as Apple and Samsung, underscoring challenges for buyer Google.
- Revenue fell 11.7% to $347.2 million.
- The company’s net loss widened to $51.9 million in the third quarter, from $2.1 million a year earlier.
Square profit tops estimates on growth in subscription and services business
- Payments processor Square beat analysts’ estimates for quarterly profit on Wednesday, as it earned more from its subscription and services business, especially from its Bitcoin-friendly Cash App.
- Total net revenue rose to $1.26 billion from $882.1 million.
- Subscription and services-based revenue, which includes Square’s earnings from selling software, jumped 68% to $279.8 million in the third quarter, with Cash App revenue more than doubling to $159 million.
- Gross payment volume, the total dollar amount of all card payments processed, rose 25% to $28.23 billion in the quarter.
- The company said net income rose to $29.4 million, in the quarter, from $19.6 million a year earlier.
Facebook Feared WhatsApp Threat Ahead of 2014 Purchase, Documents Show
- In the months before acquiring WhatsApp in 2014, Facebook Inc. executives described the messaging service and others like it as a threat to the company’s core business, offering potential evidence to regulators in the U.S. and Europe that are pursuing antitrust probes into the social-networking company.
- In a trove of internal Facebook documents published Wednesday, including email chains and presentations, Chief Executive Mark Zuckerberg and other executives repeatedly called messaging apps including WhatsApp a threat to Facebook and to its own chat app, Facebook Messenger.
- The danger was perceived to be mounting as the social network’s usage moved from desktop to smartphones, where chat apps had proven popular, the documents showed.
- Facebook announced its purchase of WhatsApp in February 2014 and closed the roughly $22 billion deal in October that year.
- The acquisition, as well as the company’s 2012 purchase of Instagram for $715 million, has been a focus for antitrust regulators who are looking into whether Facebook purchased technology startups to keep them from challenging its empire.
California Probing Facebook’s Privacy Practices
- California is investigating Facebook’s privacy practices, the state’s attorney general revealed Wednesday in a lawsuit that accuses the Silicon Valley tech giant of failing to adequately comply with information requests.
- Attorney General Xavier Becerra said he has asked the San Francisco Superior Court to force Facebook to comply with investigators’ subpoenas, the latest of which were issued in June.
- “The responses we have received to date are patently inadequate,” he said at a press conference.
Google Weighs Changes to Political Ad Policy
- Google is in discussions about changing its political ad policy, according to people familiar with the matter, about a week after Facebook and Twitter publicly diverged on how to handle those ads amid the spread of misinformation.
- Google has been holding internal meetings about changing its political ad policy and is expected to share more information with employees this week, the people said, though it is unclear what the changes will be.
- Some Google employees are speculating the changes could be related to what type of audience targeting the company allows ad buyers to place.
Uber faces costly choices after expert finds it uses Waymo self-driving tech
- Uber said it “will likely” have to strike a licensing deal with Waymo or opt for costly changes to its autonomous driving software, after an expert found the ride-hailing giant still used technology from the Alphabet unit.
- The expert review of Uber’s software was part of a legal settlement reached in February 2018 that brought to an abrupt halt a federal jury trial over whether the company unfairly benefited from confidential ideas allegedly secured by making former Waymo engineers key members of its self-driving car team.
- Waymo told Reuters in a statement that the independent software expert’s findings “further confirm Waymo’s allegations that Uber misappropriated our software intellectual property. We will continue to take the necessary steps to ensure our confidential information is not being used by Uber.”
US ECONOMY & POLITICS
U.S. weekly jobless claims fall more than expected
- The number of Americans filing applications for unemployment benefits fell more than expected last week, consistent with strong labor market conditions and continued job growth.
- Initial claims for state unemployment benefits decreased 8,000 to a seasonally adjusted 211,000 for the week ended Nov. 2.
- Economists polled by Reuters had forecast claims would fall to 215,000.
- The four-week moving average of initial claims increased 250 to 215,250 last week.
- Thursday’s claims report also showed the number of people receiving benefits after an initial week of benefits dipped 3,000 to 1.69 million for the week ended Oct. 26.
Home-Price Gains in the U.S. Accelerated as Borrowing Costs Fell
- In the third quarter, the median price of an existing single-family home in the U.S. was $280,200, up 5.1% from a year earlier, the National Association of Realtors said in a report Thursday.
- By comparison, the annual gain in the second quarter was 4.3%.
Facing shorter holiday season, U.S. retailers rev up faster delivery, early deals
- Thanksgiving, the traditional kick-off of the U.S. holiday shopping period, falls on Nov. 28 this year, a week later than last year’s Nov. 22, leaving retailers with six fewer days to drive sales between Thanksgiving and Christmas day.
- The last shortened shopping season was in 2013 – a year when retail chains and delivery companies scrambled to get packages to shoppers in time for Christmas.
- The holiday season spanning November and December can account for as much as 40 percent of annual sales.
- For the first time, Target is offering its “Drive Up” service, which lets shoppers order on the Target app and have their items brought to their car, in all 50 states.
- Similarly, Best Buy has promised free next-day delivery on thousands of items.
- And Walmart is, for the first time, offering free next-day delivery on orders over $35 without a membership fee.
- Mastercard, which measures consumer spending across all payment types including cash and checks, expects U.S. retail sales, excluding automobiles, to grow 3.1% from a year ago between Nov. 1 and Dec. 24.
U.S. Charges Aventura Tech with Illegal Sale of Chinese Gear
- U.S. prosecutors charged Aventura Technologies and seven current and former employees with illegally importing and selling Chinese-made surveillance and security equipment to U.S. government agencies and private customers.
- Six of those charged were arrested Thursday morning, a person with knowledge of the matter said.
- The case was unsealed in federal court in Brooklyn, New York.
- Aventura, which is based in Commack, New York, provides video-surveillance equipment, according to its website.
53 Million in U.S. Have Low-Wage Jobs. They’ll Likely Stay There
- Unemployment is hovering near a five-decade low; workforce participation is at the highest level in six years.
- Yet, 44% of Americans age 18 to 64 are low-wage workers, according to a Brookings Institution report.
- An estimated 53 million Americans are earning low wages, according to the study.
- Their median wage is $10.22 an hour and their annual pay is $17,950.
- Workers who make $10 to $15 an hour have a 52% chance of remaining in that wage bracket when they switch jobs.
- For middle-wage workers, or those earning $19 to $24 an hour, there’s a 46% chance that a job transition would result in lower pay.
EUROPE & WORLD
China Says U.S. Agrees to Tariff Rollback If Deal Reached
- China and the U.S. have agreed to roll back tariffs on each other’s goods in phases as they work toward a deal between the two sides, a Ministry of Commerce spokesman Gao said.
- If confirmed by the U.S., such an understanding could help provide a road-map to a deal de-escalating the trade war that’s cast a shadow over the world economy.
- The two sides continue to negotiate over where and when a “Phase One” deal would be signed.
- Gao said he had no further information on the location or timing.
- Locations in Asia and Europe are being considered instead, the person said, asking not to be identified because the discussions aren’t public.
Baidu Reports Loss Tied to Investment in Travel Company
- Once known as the Google of China, the search giant has been trailing companies such as Tencent and Alibaba.
- Baidu has been trying to shore up its bread-and-butter search-advertising business while it looks for areas for expansion such as artificial intelligence and driverless cars.
- The company reported a loss of 6.4 billion yuan (about $900 million) in the third quarter, compared with a profit of 12.4 billion yuan a year earlier. The results were dragged down by a noncash impairment loss of 8.9 billion yuan on its equity stake in Trip.com.
- Revenue was 28.1 billion yuan, flat compared with a year ago and above the 27.6 billion yuan estimated by analysts polled by FactSet. In its fourth quarter, Baidu said revenue is likely to improve, forecasting a range from a loss of 1% to growth of 6%.
- Although daily active users on the main Baidu app have grown 25% to 189 million compared with a year before, it hasn’t given a significant boost to the company’s bottom line.
- Baidu’s research-and-development expenses rose 20% year over year, while total operating costs grew 8%.
- In September, Baidu launched a pilot program in the city of Changsha with a fleet of 45 cars operated by its Apollo autonomous–driving system.
- Its video-streaming platform iQiyi saw subscribers jump 31% to 105.8 million. That bolstered a segment called “other” that also includes cloud services and smart devices, which had revenue growth of 34% to 7.6 billion yuan.
Lenovo second-quarter profit jumps 20% on strong personal computer sales
- Chinese personal computer maker Lenovo reported a 20% year-on-year jump in second-quarter profit on Thursday, slightly beating analysts’ estimates, on the back of strengthening demand for its products.
- Revenue rose 1% to $13.52 billion, compared to an average estimate of $13.73 billion by 11 analysts.
- Lenovo’s net profit in the quarter rose to $202 million, compared with an average estimate of $199.59 million.
- The global PC market grew 1.1% in the quarter to September, market research firm Gartner said last month. Lenovo took a 24.7% market share during the quarter, ahead of rivals HP and Dell, it said.
Siemens cautions about 2020 after beating quarterly forecasts
- Siemens sounded a cautious note about the global economy over the next 12 months after booming industrial software sales helped the German engineering company beat forecasts during its fourth quarter.
- Orders rose 4% to 24.71 billion euros, and revenue by 8% to 24.52 billion euros – both beating forecasts.
- But Siemens’s flagship Digital Industries business saw tepid revenue growth as a 21% rise in sales of industrial software as offset by weaker demand for factory automation and motion controllers.
- Siemens reported a 20% increase in operating profit of 2.64 billion euros ($2.92 billion), beating expectations for 2.33 billion.
Teva Pharm nudges up earnings forecast, names new CFO
- Teva Pharm nudged up its full-year earnings guidance on Thursday, after reporting a drop in third-quarter profit that broadly met expectations.
- The world’s largest generic drugmaker earned 58 cents per diluted share excluding one-time items in the July-September period, down from 68 cents a year earlier.
- Revenue fell 6% to $4.26 billion due to generic competition.
- Revenue in North America dipped 9% to $2.05 billion.
- CEO Kare Schultz said Teva remained on track to achieve a two-year restructuring target of $3 billion in spending reductions.
- Teva said it had legal settlements of $468 million in the third quarter, mainly in connection with opioid cases in the United States. Its debt load had fallen to $26.9 billion.
Toyota announces $1.8 billion share buyback after strong second-quarter
- Toyota plans a $1.8 billion share buyback, Japan’s biggest automaker said on Thursday, after beating quarterly forecasts on higher global vehicle sales and an improved performance in North America.
- It sold 2.75 million vehicles globally, up from 2.18 million a year earlier.
- Operating profit rose 14% to 662.3 billion yen ($6.1 billion).
- The profit beat an average forecast of 592.3 billion yen, based on estimates from nine analysts, Refinitiv data showed.
- Sales in North America, Toyota’s biggest market, rose 5.6%, while sales in Asia climbed 3.4%.
- It maintained its forecast for operating profit in the year to March to fall 2.7%.
Dubai airport passenger traffic falls 2.4% in third quarter
- the world’s busiest airport for international travelers reported a 2.4% fall in third-quarter passenger traffic.
- The airport, home to airlines Emirates, said it handled 23.2 million passengers in the three months to Sept. 30.
- That compares with roughly 22.6 million in the same period a year ago.
- In the first nine months, 64.5 million passengers traveled through the airport, 4.5% fewer than the same period last year.
- Operator Dubai Airports blamed the year-to-date decline on a 45-day closure of a runway between May and April, and the global grounding of the Boeing 737 MAX jet since March.
- The amount of cargo handled fell 5.9% in the third quarter to 636,575 tonnes, while the year-to-date figure dropped 4.1% to 1.9 million tonnes.
Rolls-Royce takes another $1 billion hit to fix problem engine
- Rolls-Royce’s Trent 1000 engine has risen by another 800 million pounds ($1 billion) as the aerospace group battles to reduce disruption to airline customers that have had to ground Boeing 787 passenger planes for repairs.
- The Trent is one of two engine options for the 787, which can also be powered by rival GE Aviation’s GEnx engines.
Alibaba, Russian Post launch China-Russia flights to cut delivery times
- Alibaba’s logistics operator and Russia’s Pochta postal service have launched their first direct China-Russia cargo flights to deliver AliExpress goods purchased online by Russians.
- The move, which AliExpress Russia hopes will help it cut the time it takes to deliver orders from China to Russia to 10 days, comes with Russia’s rapidly growing e-commerce market producing an annual turnover of more than $14 billion.
- Alibaba’s Cainiao logistics operator is renting 7 cargo planes from Pochta Russia and Aviastar-Tu to fly to the cities of Moscow.
Lufthansa to cut more costs, as cabin crew strike over pay
- Lufthansa announced plans on Thursday to cut costs at its Austrian Airlines, Brussels Airlines and Lufthansa Cargo businesses to revive profits but faces a fresh challenge to its efforts with a cabin crew strike this week.
- Cabin crew launched a strike over pay and pensions that will result in the cancellation of 1,300 flights on Thursday and Friday and affect 180,000 passengers.
- Trade union UFO has called for the walkout on what amounts to one in five of the carrier’s planned 6,000 flights.
- One day of strike action would cost the company an estimated 10 million to 20 million euros.
- Lufthansa is ready to go into arbitration to resolve a long-running staff dispute, the CEO of Germany’s largest airline said.
- UFO said it would talk to the airline this weekend and would not prolong the strike beyond Friday or extend it to other airlines in the group.
- Lufthansa said quarterly adjusted earnings before interest and taxation (EBIT) fell 8% to 1.3 billion euros, ahead of average analyst forecasts for 1.2 billion euros, while revenues rose 2% to 10.2 billion euros, also ahead of consensus.
EU’s Vestager says has received many concerns regarding Apple Pay
- Europe’s antitrust chief Margrethe Vestager said on Thursday that she has received many expressions of concerns regarding iPhone maker Apple’s mobile payment service.
- “We’ve been asking quite a number of questions because we get many concerns when it comes to Apple Pay for pure competition reasons. People see it becomes increasingly difficult to compete in the market for easy payments,” European Competition Commissioner Vestager told a news briefing at Web Summit.
- The trains to turbines maker said on Thursday it expected the macroeconomic environment to remain “subdued” next year, citing geopolitical and economic risks, as well as elections in big markets like the United States.
- Still, Siemens forecast a recovery during the second half of next year and said it expected to outperform the market.
JD.com’s Liu resigns from China parliament advisory body
- Richard Liu, the founder and chief executive of Chinese e-commerce company JD.com, has resigned from the advisory body to China’s parliament for “personal reasons”.
- Leaders of the Chinese People’s Political Consultative Conference, or CPPCC, accepted Liu’s resignation at a meeting.
- Liu has fought allegations of sexual harassment against a Chinese national while studying at the University of Minnesota last year.
TODAY in HISTORY
- The Republican Party was first symbolized as an elephant in a cartoon drawn by Thomas Nast in Harper’s Weekly magazine. 1874
- Jeannette Rankin of Montana became the first woman elected to Congress. 1916
- Vladimir Lenin’s forces overthrew Alexander Kerensky’s government in Russia’s Bolshevik Revolution. 1917
- President Franklin D. Roosevelt won a fourth term in office, defeating Thomas E. Dewey. 1944
- Former first lady Eleanor Roosevelt died in New York City at age 78. 1962
- Carl Stokes of Cleveland became the first African American mayor of a major U.S. city. 1967
- Douglas Wilder was elected governor of Virginia. He became the nation’s first elected black governor. 1989
- The U.S. went to the polls to choose between George W. Bush and Al Gore. The outcome wouldn’t be known for more than a month because of disputed votes in Florida. 2000
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.