🔻 Good time in the U.S.
The unemployment rate, at 3.7% in November, remained at a 49-year low. Economic output rose 3% in the third quarter from a year earlier. Inflation, after a long run below the Federal Reserve’s target of 2%, hit the mark without shooting past it. Wage growth picked up.
Can the good times last next year? It will depend on how much fiscal stimulus fades, how much higher the Fed pushes interest rates and how much farther Mr. Trump continues an aggressive trade agenda meant to strengthen the U.S.’s hand on the global stage in the long run
The unemployment rate, at 3.7% in November, remained at a 49-year low. Economic output rose 3% in the third quarter from a year earlier. Inflation, after a long run below the Federal Reserve’s target of 2%, hit the mark without shooting past it. Wage growth picked up.
Can the good times last next year? It will depend on how much fiscal stimulus fades, how much higher the Fed pushes interest rates and how much farther Mr. Trump continues an aggressive trade agenda meant to strengthen the U.S.’s hand on the global stage in the long run
🔻 Boeing Opens Plant for Top Buyer China
Boeing Co. opened a new Chinese production facility, as the American aviation company tries to cater to its top export market while steering clear of the tensions battering U.S.-China relations.
It will produce 100 jets a year and employ 300 people at full capacity.
Over the next two decades, the company expects China to buy one in six of all jetliners sold globally—some $1.19 trillion in Chinese orders Boeing expects to split with European rival Airbus SE.
Boeing Co. opened a new Chinese production facility, as the American aviation company tries to cater to its top export market while steering clear of the tensions battering U.S.-China relations.
It will produce 100 jets a year and employ 300 people at full capacity.
Over the next two decades, the company expects China to buy one in six of all jetliners sold globally—some $1.19 trillion in Chinese orders Boeing expects to split with European rival Airbus SE.
🔻 Smaller Fed Moves Have Bigger Market Impacts
In a world of low inflation and slow recuperation from the financial crisis, even small interest-rate changes can have outsize effects on markets and the economy.
At the end of its next meeting Wednesday, Fed officials are set to raise their short-term rate for the ninth time since they began raising it from near zero in December 2015, bringing it to a range between 2.25% and 2.5%.
Fed officials expect the so-called neutral interest rate that neither spurs nor slows growth is lower than it used to be, which is one reason smaller changes in the federal-funds rate could have outsize effects.
The Fed’s moves encouraged companies to pile on debt when rates were low. With rates now rising, the Fed’s actions have begun shifting investors away from riskier corporate debt.
Banks initially enjoyed a boost from the Fed’s rate increases. The central bank’s moves allowed lenders such as Bank of America Corp. and JPMorgan Chase & Co. to charge higher rates on loans but not pay out much more in interest to depositors.
In a world of low inflation and slow recuperation from the financial crisis, even small interest-rate changes can have outsize effects on markets and the economy.
At the end of its next meeting Wednesday, Fed officials are set to raise their short-term rate for the ninth time since they began raising it from near zero in December 2015, bringing it to a range between 2.25% and 2.5%.
Fed officials expect the so-called neutral interest rate that neither spurs nor slows growth is lower than it used to be, which is one reason smaller changes in the federal-funds rate could have outsize effects.
The Fed’s moves encouraged companies to pile on debt when rates were low. With rates now rising, the Fed’s actions have begun shifting investors away from riskier corporate debt.
Banks initially enjoyed a boost from the Fed’s rate increases. The central bank’s moves allowed lenders such as Bank of America Corp. and JPMorgan Chase & Co. to charge higher rates on loans but not pay out much more in interest to depositors.
🔻 U.S. Soybean Farmers Work to Loosen China’s Grip
U.S. soybean farmers worked for decades to make China their biggest foreign customer. Now they face a tougher challenge: weaning themselves off the market.
As trade tensions cut deeply into exports, U.S. soybean farmers, industry groups and government officials are seeking a stronger foothold in international markets beyond China, including Europe and Southeast Asia.
Replacing China is a tall order. China last year bought 57% of all U.S. soybeans that were exported, more than eight times the total sold to Mexico
U.S. soybean farmers worked for decades to make China their biggest foreign customer. Now they face a tougher challenge: weaning themselves off the market.
As trade tensions cut deeply into exports, U.S. soybean farmers, industry groups and government officials are seeking a stronger foothold in international markets beyond China, including Europe and Southeast Asia.
Replacing China is a tall order. China last year bought 57% of all U.S. soybeans that were exported, more than eight times the total sold to Mexico
🔻 Apple has looked to India for new growth
With global iPhone sales flattening, Apple needs big emerging markets. The company recently said it would stop reporting data on unit sales, a move analysts interpreted as an acknowledgment the iPhone’s best years have passed.
Even after reporting record annual revenue Nov. 1 on the back of higher iPhone starting prices of nearly $1,000, the company’s shares have fallen more than 25% since early November. The declines followed reductions in planned iPhone production and analysts’ reports that consumer interest in new iPhones is waning.
Apple is up against more daunting issues in India, which will have an estimated 39 million new smartphone owners this year. More than 75% of the smartphones sold in the country cost less than $250 and 95% cost less than $500, analysts estimate. Most sales come from local, unaffiliated shops in the countryside, where the majority of Indians live.
As the iPhone became one of the most popular smartphones in the world, Apple’s annual sales in India rose to more than $1 billion by 2015, from about $100 million in 2011.
That caught the attention of Mr. Cook and Cupertino executives. They wanted to make India the company’s next growth market and created a five-year plan to increase Apple’s sales to $5 billion by 2020.
With global iPhone sales flattening, Apple needs big emerging markets. The company recently said it would stop reporting data on unit sales, a move analysts interpreted as an acknowledgment the iPhone’s best years have passed.
Even after reporting record annual revenue Nov. 1 on the back of higher iPhone starting prices of nearly $1,000, the company’s shares have fallen more than 25% since early November. The declines followed reductions in planned iPhone production and analysts’ reports that consumer interest in new iPhones is waning.
Apple is up against more daunting issues in India, which will have an estimated 39 million new smartphone owners this year. More than 75% of the smartphones sold in the country cost less than $250 and 95% cost less than $500, analysts estimate. Most sales come from local, unaffiliated shops in the countryside, where the majority of Indians live.
As the iPhone became one of the most popular smartphones in the world, Apple’s annual sales in India rose to more than $1 billion by 2015, from about $100 million in 2011.
That caught the attention of Mr. Cook and Cupertino executives. They wanted to make India the company’s next growth market and created a five-year plan to increase Apple’s sales to $5 billion by 2020.
🔻 Nasdaq Is In a Bear Market
Tech-heavy Nasdaq and Dow industrials suffer biggest weekly declines since financial crisis
The fear of slowing growth and a bear market has become much more prominent. There’s not many buyers who want to step up and say they’re willing to buy today, and many are waiting for the new year
The decline of more than 20% from Nasdaq’s Aug. 29 high marks a sharp reversal for the benchmark, which is dominated by the technology giants that powered the broader stock market higher for much of the bull-market run that began in March 2009.
The intensifying selloff since late August has erased about $1.2 trillion in market value from Facebook, Amazon. com, Apple, Netflix, Google parent Alphabet and Microsoft, leaving the stock market without a clear leader.
Investors have long been contending with the possibility that U.S. economic growth will slow next year, raising the specter of a recession. That, along with the fading benefit of the corporate tax cut, the U.S.’s ongoing trade spat with China and a looming government shutdown, have led investors to pare back their riskier investments in an effort to preserve capital ahead of the year’s end
Tech-heavy Nasdaq and Dow industrials suffer biggest weekly declines since financial crisis
The fear of slowing growth and a bear market has become much more prominent. There’s not many buyers who want to step up and say they’re willing to buy today, and many are waiting for the new year
The decline of more than 20% from Nasdaq’s Aug. 29 high marks a sharp reversal for the benchmark, which is dominated by the technology giants that powered the broader stock market higher for much of the bull-market run that began in March 2009.
The intensifying selloff since late August has erased about $1.2 trillion in market value from Facebook, Amazon. com, Apple, Netflix, Google parent Alphabet and Microsoft, leaving the stock market without a clear leader.
Investors have long been contending with the possibility that U.S. economic growth will slow next year, raising the specter of a recession. That, along with the fading benefit of the corporate tax cut, the U.S.’s ongoing trade spat with China and a looming government shutdown, have led investors to pare back their riskier investments in an effort to preserve capital ahead of the year’s end
🔻 Gas Prices Are Falling
Retail gas prices across the U.S. averaged $2.33 a gallon Friday, down more than 10% from earlier this year and reaching the lowest level since August 2017.
Unusually, the low prices aren’t deterring U.S. refiners from producing more gasoline. That is because the prices of other oil products such as diesel fuel and heating oil have soared, thanks to cold weather in the U.S. and new environmental regulations coming into effect in 2020 that are leading to higher diesel demand.
When refiners can make significant sums selling diesel and heating oil, known in the industry as distillates, they become less sensitive to the profitability of each barrel of gasoline, which typically accounts for about half of U.S. oil use
At the same time, plentiful gasoline is typically a positive development for the economy at a time of some uncertainty about what 2019 will bring. Less expensive fuel could mean more discretionary spending for consumers, who in general have kept up their spending even as sectors such as housing and automobiles have slowed.
Retail gas prices across the U.S. averaged $2.33 a gallon Friday, down more than 10% from earlier this year and reaching the lowest level since August 2017.
Unusually, the low prices aren’t deterring U.S. refiners from producing more gasoline. That is because the prices of other oil products such as diesel fuel and heating oil have soared, thanks to cold weather in the U.S. and new environmental regulations coming into effect in 2020 that are leading to higher diesel demand.
When refiners can make significant sums selling diesel and heating oil, known in the industry as distillates, they become less sensitive to the profitability of each barrel of gasoline, which typically accounts for about half of U.S. oil use
At the same time, plentiful gasoline is typically a positive development for the economy at a time of some uncertainty about what 2019 will bring. Less expensive fuel could mean more discretionary spending for consumers, who in general have kept up their spending even as sectors such as housing and automobiles have slowed.
🔻 The U.S. trade balance from January 2017
When Donald Trump entered the White House on a platform of defiant nationalism nearly two years ago, many feared he would dismantle the global trading system the U.S. and its allies had built over the past 70 years.
The U.S. trade deficit reached its highest level in 10 years in October. Especially with China and Mexico, as a strong American economy sucks in imports.
The U.S. is stepping up efforts to draw its other trading partners into a united front to take on China. U.S. Trade Representative Robert Lighthizer and his EU and Japan counterparts have launched an effort at the WTO to crack down on China’s domestic subsidies and its technology-transfer requirements. The Group of 20 nations agreed at their recent summit to reform the WTO to address complaints it doesn’t adequately police China.
When Donald Trump entered the White House on a platform of defiant nationalism nearly two years ago, many feared he would dismantle the global trading system the U.S. and its allies had built over the past 70 years.
The U.S. trade deficit reached its highest level in 10 years in October. Especially with China and Mexico, as a strong American economy sucks in imports.
The U.S. is stepping up efforts to draw its other trading partners into a united front to take on China. U.S. Trade Representative Robert Lighthizer and his EU and Japan counterparts have launched an effort at the WTO to crack down on China’s domestic subsidies and its technology-transfer requirements. The Group of 20 nations agreed at their recent summit to reform the WTO to address complaints it doesn’t adequately police China.
🔻 The Investment That Cost Apple $9 Billion
Apple Inc. has lost more than $9 billion this year on an underperforming investment—its own stock.
Like many large companies, Apple has used much of its windfall from the 2017 tax overhaul to buy back shares. But the recent plunge in stock prices has made that look like a bad idea.
The company’s repurchased shares were worth about $53.8 billion as of Wednesday’s close, some $9.1 billion less than it paid for them. Apple repurchased shares at monthly average prices as high as $222.07, according to securities filings. The stock closed at $157.17 Wednesday.
An Apple spokesman declined to comment.
Still, buybacks can help the company in other ways. Buybacks reduce share counts, boosting the earnings per share companies report to their investors.
Apple Inc. has lost more than $9 billion this year on an underperforming investment—its own stock.
Like many large companies, Apple has used much of its windfall from the 2017 tax overhaul to buy back shares. But the recent plunge in stock prices has made that look like a bad idea.
The company’s repurchased shares were worth about $53.8 billion as of Wednesday’s close, some $9.1 billion less than it paid for them. Apple repurchased shares at monthly average prices as high as $222.07, according to securities filings. The stock closed at $157.17 Wednesday.
An Apple spokesman declined to comment.
Still, buybacks can help the company in other ways. Buybacks reduce share counts, boosting the earnings per share companies report to their investors.
🔻 The World’s Debt
The world has never had as much debt as it has right now—nearly $250 trillion.
That figure is three times what it was two decades ago, according to a Citigroup analysis of data from the Institute of International Finance.
Growing debt goes hand-in-hand with growing economies, and for every borrower there is a lender for whom a loan or a bond is an asset
Investors worry that debt has been curtailed in ways that could hurt the economy. Banks, for example, have retreated from cross-border lending, which some economists said makes global finance less risky but may deal another blow to trade.
Few think debt is about to topple the world’s financial system or major economies. But as central banks end stimulus measures, many investors are on alert.
The world has never had as much debt as it has right now—nearly $250 trillion.
That figure is three times what it was two decades ago, according to a Citigroup analysis of data from the Institute of International Finance.
Growing debt goes hand-in-hand with growing economies, and for every borrower there is a lender for whom a loan or a bond is an asset
Investors worry that debt has been curtailed in ways that could hurt the economy. Banks, for example, have retreated from cross-border lending, which some economists said makes global finance less risky but may deal another blow to trade.
Few think debt is about to topple the world’s financial system or major economies. But as central banks end stimulus measures, many investors are on alert.
🔻 Global Steel Market Now Bows to China
By 2016, China’s steel industry employed about five million.
For anyone wanting to understand how China became dominant in steel, and the global repercussions of that transformation, the story of Baosteel provides answers.
The rich menu of subsidies helped China’s steelmakers set prices 20% to 40% lower than the U.S.
China went from providing 20% of U.S. flatware imports in 1996 to 67% last year.
Beijing provided subsidies on pipes of between 30% and 45% of the product’s value.
But now Beijing facing depressed global prices and growing debt, has forced the closure of smaller mills. The government aided Baosteel by pushing a merger with its largest rival, Wuhan Iron and Steel Group Co., in 2016, nearly doubling Baosteel’s capacity.
By 2016, China’s steel industry employed about five million.
For anyone wanting to understand how China became dominant in steel, and the global repercussions of that transformation, the story of Baosteel provides answers.
The rich menu of subsidies helped China’s steelmakers set prices 20% to 40% lower than the U.S.
China went from providing 20% of U.S. flatware imports in 1996 to 67% last year.
Beijing provided subsidies on pipes of between 30% and 45% of the product’s value.
But now Beijing facing depressed global prices and growing debt, has forced the closure of smaller mills. The government aided Baosteel by pushing a merger with its largest rival, Wuhan Iron and Steel Group Co., in 2016, nearly doubling Baosteel’s capacity.
🔻 Rates Drop
Mortgages rates have fallen after hitting their highest level in seven years. That could boot housing market in the U.S. that in recent months has seen slowdown in sales and prices.
Sales of existing homes rose 1.9% in November from a month earlier to a seasonally adjusted annual rate of 5.32 million, according to the National Association of Realtors.
Mortgages rates have fallen after hitting their highest level in seven years. That could boot housing market in the U.S. that in recent months has seen slowdown in sales and prices.
Sales of existing homes rose 1.9% in November from a month earlier to a seasonally adjusted annual rate of 5.32 million, according to the National Association of Realtors.
🔻 Saudis To Cut Oil Exports to Lift Prices
Saudi Arabia plans to cut crude exports to around 7.1 million barrels a day by the end of January in hopes of lifting oil prices above $80 a barrel.
Oil prices rose on the news. West Texas Intermediate futures, the U.S. oil standard, ended 1.2% higher at $48.52 a barrel. Brent, the global oil benchmark, rose 0.5% to $57.33 a barrel.
The new strategy comes as the kingdom seeks to cover a large government spending boost.
The new Saudi budget requires oil prices to rise to as high as $95 a barrel, according to an official with the Organization of the Petroleum Exporting Countries. But the kingdom would be satisfied with prices at $80 to $85 a barrel.
Saudi Arabia exported about 7.3 million barrels a day of crude last month. That was already down from around 7.9 million barrels a day in November and 7.7 million barrels a day in October.
Saudi Arabia plans to cut crude exports to around 7.1 million barrels a day by the end of January in hopes of lifting oil prices above $80 a barrel.
Oil prices rose on the news. West Texas Intermediate futures, the U.S. oil standard, ended 1.2% higher at $48.52 a barrel. Brent, the global oil benchmark, rose 0.5% to $57.33 a barrel.
The new strategy comes as the kingdom seeks to cover a large government spending boost.
The new Saudi budget requires oil prices to rise to as high as $95 a barrel, according to an official with the Organization of the Petroleum Exporting Countries. But the kingdom would be satisfied with prices at $80 to $85 a barrel.
Saudi Arabia exported about 7.3 million barrels a day of crude last month. That was already down from around 7.9 million barrels a day in November and 7.7 million barrels a day in October.
🔻 Saudi Arabia Sells More Than $7 Billion in Bonds
Saudi Arabia sold $7.5 billion in bonds Wednesday, drawing support from international investors. The bond sale was backed by several high-profile Western banks - BNP Paribas, JPMorgan, HSBC, Citi and NCB Capital. The bond issuance comes at a time of financial strain for Saudi Arabia. Last month, the kingdom announced record new spending, despite a decline in oil prices that would open up a wide budget deficit. Saudi Arabia’s public debt stands at around 19% of gross domestic product and officials have previously said it could grow to about 25% in 2021.
Saudi bonds have generally generated strong demand from investors drawn to the kingdom’s financial strength underpinned by enormous oil reserves. Saudi Arabia is rated A1 and A+ at Moody’s and Fitch, respectively.
Saudi Arabia sold $7.5 billion in bonds Wednesday, drawing support from international investors. The bond sale was backed by several high-profile Western banks - BNP Paribas, JPMorgan, HSBC, Citi and NCB Capital. The bond issuance comes at a time of financial strain for Saudi Arabia. Last month, the kingdom announced record new spending, despite a decline in oil prices that would open up a wide budget deficit. Saudi Arabia’s public debt stands at around 19% of gross domestic product and officials have previously said it could grow to about 25% in 2021.
Saudi bonds have generally generated strong demand from investors drawn to the kingdom’s financial strength underpinned by enormous oil reserves. Saudi Arabia is rated A1 and A+ at Moody’s and Fitch, respectively.
🔻 Mainland Chinese Investors Buy Fewer Shares in Hong Kong
Net inflows to Hong Kong through the so-called stock connect program shrank to 82.7 billion Hong Kong dollars ($10.6 billion) in 2018, down 76% from HK$339.9 billion in 2017.
In contrast, net northbound inflows into equity markets in Shanghai and Shenzhen jumped 47% to 294.2 billion yuan ($43.2 billion) last year, aided by the inclusion of onshore securities, or A-shares, in influential indexes compiled by MSCI.
That means that as of end-2018, mainland markets had drawn a cumulative $94.1 billion through the program, at current exchange rates, while $103.2 billion had flowed south.
There were several reasons why less money flowed into Hong Kong last year - these included increasing demands from end-investors to redeem money from fund managers, and pessimism about the Chinese economy—which matters because Hong Kong’s stock market is dominated by mainland companies. Investors had taken a more defensive stance by shifting funds into Chinese bonds.
Net inflows to Hong Kong through the so-called stock connect program shrank to 82.7 billion Hong Kong dollars ($10.6 billion) in 2018, down 76% from HK$339.9 billion in 2017.
In contrast, net northbound inflows into equity markets in Shanghai and Shenzhen jumped 47% to 294.2 billion yuan ($43.2 billion) last year, aided by the inclusion of onshore securities, or A-shares, in influential indexes compiled by MSCI.
That means that as of end-2018, mainland markets had drawn a cumulative $94.1 billion through the program, at current exchange rates, while $103.2 billion had flowed south.
There were several reasons why less money flowed into Hong Kong last year - these included increasing demands from end-investors to redeem money from fund managers, and pessimism about the Chinese economy—which matters because Hong Kong’s stock market is dominated by mainland companies. Investors had taken a more defensive stance by shifting funds into Chinese bonds.
🔻 German Economy Signals Unease
Fresh signs of a weakening German economy are raising fears that last year’s slowdown could spill into 2019.
Industrial production in Germany dropped in November, the latest reflection of a confluence of headwinds facing the global economy, including trade tensions and weakening demand from China. Industrial production data has clearly increased the risk of a technical recession in Germany.
Production in Germany’s key industrial sector, adjusted for inflation and seasonal swings, fell 1.9% in November from the previous month. It was the second consecutive monthly fall in German industrial output.
Fresh signs of a weakening German economy are raising fears that last year’s slowdown could spill into 2019.
Industrial production in Germany dropped in November, the latest reflection of a confluence of headwinds facing the global economy, including trade tensions and weakening demand from China. Industrial production data has clearly increased the risk of a technical recession in Germany.
Production in Germany’s key industrial sector, adjusted for inflation and seasonal swings, fell 1.9% in November from the previous month. It was the second consecutive monthly fall in German industrial output.
📢 Business news
🔻 Elon Musk’s SpaceX plans to reduce its workforce by 10%, or roughly 600 employees. The move is the most significant cutback since SpaceX gained international prominence about a decade ago. In a statement, Space Exploration Technologies Corp., as the company is formally called, indicated payroll savings are now part of its financial realignment.
🔸 Slack Plans to Follow Spotify on Unconventional IPO Route. Messaging company, recently valued at $7 billion, aims to debut in the second quarter, potentially making it the second big technology company after Spotify Technology SA to bypass a traditional IPO. In August, Slack raised $427 million in a funding round led by Dragoneer Investment Group and General Atlantic valuing the company at $7.1 billion.
🔹 General Motors Co. said its earnings are picking up speed, with added momentum due to come this year from plant closures and job cuts denounced by President Trump. The cuts should boost operating profit in 2019 by nearly 20%, or by more than $2 billion. GM’s shares rose 7% to $37.17 on Friday. GM said its expects earnings per share this year of $6.50 to $7. The average analyst estimate was below $6.
🔻 Elon Musk’s SpaceX plans to reduce its workforce by 10%, or roughly 600 employees. The move is the most significant cutback since SpaceX gained international prominence about a decade ago. In a statement, Space Exploration Technologies Corp., as the company is formally called, indicated payroll savings are now part of its financial realignment.
🔸 Slack Plans to Follow Spotify on Unconventional IPO Route. Messaging company, recently valued at $7 billion, aims to debut in the second quarter, potentially making it the second big technology company after Spotify Technology SA to bypass a traditional IPO. In August, Slack raised $427 million in a funding round led by Dragoneer Investment Group and General Atlantic valuing the company at $7.1 billion.
🔹 General Motors Co. said its earnings are picking up speed, with added momentum due to come this year from plant closures and job cuts denounced by President Trump. The cuts should boost operating profit in 2019 by nearly 20%, or by more than $2 billion. GM’s shares rose 7% to $37.17 on Friday. GM said its expects earnings per share this year of $6.50 to $7. The average analyst estimate was below $6.
🔻 Cloud Should Shine for Amazon, Microsoft Earnings
Can Amazon.com and Microsoft keep their cloud businesses growing strong? The pair are now the two most valuable companies in the world. The two very different companies, whose businesses have been diverging of late, have a common growth engine. Amazon and Microsoft are currently the two largest providers of public cloud services that corporate customers use to offload their computing and software needs. That business is generating nearly $50 billion a year in revenue now between the two and is expected to double by the end of 2020.
Can Amazon.com and Microsoft keep their cloud businesses growing strong? The pair are now the two most valuable companies in the world. The two very different companies, whose businesses have been diverging of late, have a common growth engine. Amazon and Microsoft are currently the two largest providers of public cloud services that corporate customers use to offload their computing and software needs. That business is generating nearly $50 billion a year in revenue now between the two and is expected to double by the end of 2020.
🔻 German Industrial Firms Worry About China
Concerns are rising in German about the impact of the economic slowdown in China on its largest European trading partner. China is Germany’s main trading partner, with bilateral trade between the two totaling €188 billion ($215.69 billion) in 2017, according to German government statistics. That year, German exports to China totaled €86 billion, making China the third-largest market for German exports after the U.S. and France. Germany was the world’s second-largest non-Asian importer of Chinese goods.
But China’s economy has been slowing faster than expected recently. In December, Chinese factory activity hit its lowest level in nearly three years, and official data showed that profits from big Chinese industrial firms declined in November for the first time in three years. Chinese consumers have cut back on spending, leading to a decline in sales of cars and other goods.
Economists at Bank of America Merrill Lynch said this week they expected Germany to have entered a technical recession— two consecutive quarters of negative economic growth— in the second half of 2018.
Concerns are rising in German about the impact of the economic slowdown in China on its largest European trading partner. China is Germany’s main trading partner, with bilateral trade between the two totaling €188 billion ($215.69 billion) in 2017, according to German government statistics. That year, German exports to China totaled €86 billion, making China the third-largest market for German exports after the U.S. and France. Germany was the world’s second-largest non-Asian importer of Chinese goods.
But China’s economy has been slowing faster than expected recently. In December, Chinese factory activity hit its lowest level in nearly three years, and official data showed that profits from big Chinese industrial firms declined in November for the first time in three years. Chinese consumers have cut back on spending, leading to a decline in sales of cars and other goods.
Economists at Bank of America Merrill Lynch said this week they expected Germany to have entered a technical recession— two consecutive quarters of negative economic growth— in the second half of 2018.
📢 Business news
🔻 Volkswagen AG, said on Monday it is investing $800 million to build a new electric vehicle at its plant in Chattanooga, Tennessee, as it shifts toward zero emission vehicles. It is adding 1,000 new jobs and electric vehicle production in Tennessee will begin in 2022.
🔸 FedEx Corp will pay $35.4 million to settle three lawsuits in which New York state and New York City accused the company of shipping millions of untaxed cigarettes to residents over a decade.
🔹 Apple Inc. slashed its quarterly revenue due to Chinese slowing economy. Apple reported about 20% of its sales came from China. The slowdown was sharpened by trade tensions between China and the U.S. Furthermore, Apple’s share of the Chinese smartphone market has been shrinking, crowded out by tech giants such as China’s Huawei Technologies Co. that market increasingly sophisticated phones at a lower price tag. Apple’s share of the Chinese smartphone market contracted to 7.8% in the first three quarters of 2018 from a peak in 2015 of 12.5%.
🔻 Volkswagen AG, said on Monday it is investing $800 million to build a new electric vehicle at its plant in Chattanooga, Tennessee, as it shifts toward zero emission vehicles. It is adding 1,000 new jobs and electric vehicle production in Tennessee will begin in 2022.
🔸 FedEx Corp will pay $35.4 million to settle three lawsuits in which New York state and New York City accused the company of shipping millions of untaxed cigarettes to residents over a decade.
🔹 Apple Inc. slashed its quarterly revenue due to Chinese slowing economy. Apple reported about 20% of its sales came from China. The slowdown was sharpened by trade tensions between China and the U.S. Furthermore, Apple’s share of the Chinese smartphone market has been shrinking, crowded out by tech giants such as China’s Huawei Technologies Co. that market increasingly sophisticated phones at a lower price tag. Apple’s share of the Chinese smartphone market contracted to 7.8% in the first three quarters of 2018 from a peak in 2015 of 12.5%.
🔻 Newmont to Buy Goldcorp in Deal Valued at $10 Billion
Newmont Mining Corp. agreed to buy rival Canadian gold producer Goldcorp Inc. in a $10 billion, all-stock deal, creating the world’s largest gold miner. Newmont, the U.S.’s largest miner measured by market capitalization, said it would acquire each Goldcorp share for 0.328 of its own stock. That represents a 17% premium to the Canadian company’s 20-day volume weighted average share prices.
Gold prices, meanwhile, have languished. They are down about 30% from their 2011 peak. In recent years, they have traded flat, capped in particular by rising U.S. interest rates
Newmont Mining Corp. agreed to buy rival Canadian gold producer Goldcorp Inc. in a $10 billion, all-stock deal, creating the world’s largest gold miner. Newmont, the U.S.’s largest miner measured by market capitalization, said it would acquire each Goldcorp share for 0.328 of its own stock. That represents a 17% premium to the Canadian company’s 20-day volume weighted average share prices.
Gold prices, meanwhile, have languished. They are down about 30% from their 2011 peak. In recent years, they have traded flat, capped in particular by rising U.S. interest rates
