US FINANCIAL MARKET
Nasdaq 100 Drops Over 1%, Bonds Retreat From Rally: Markets Wrap – Bloomberg, 1/2/2024
- US stocks and Treasuries dropped as traders trimmed their bets on interest-rate cuts and speculated that the recent rally had been overdone.
- The Nasdaq index slid 1.6% in the tech-heavy benchmark’s most significant drop in about a month.
- The S&P 500 fell 0.8%. The Dow Jones Industrial Average fell 0.2%.
- Tesla reversed a premarket climb after leaving out closely watched Cybertruck delivery details from its quarterly production results.
- The 10-year Treasury yield rose nine basis points to 3.92%.
- The first trading day of the new year brought 2023’s scorching rally to a halt after a more than $8 trillion surge in the S&P 500 last year.
- The dollar gained 0.6%, with almost all emerging-nation currencies trading lower against the greenback.
- The yen weakened in thin trading as investors monitored conditions after an earthquake in Japan on Monday.
- In Asia, sentiment was dented after Chinese President Xi Jinping acknowledged some companies and citizens had endured a difficult 2023 in a rare admission of domestic headwinds facing the country.
- Adding to pressure on China’s markets, people familiar said ASML Holding, which makes semiconductor manufacturing equipment, canceled shipments of some of its machines to China at the request of US President Joe Biden’s administration.
- Despite the persisting weakness in China, some investors consider a slump of almost 60% as a signal to buy Chinese stocks.
- Almost a third of 417 respondents to Bloomberg’s latest Markets Live Pulse survey say they will increase their China investments over the next 12 months.
- The Stoxx Europe 600 fell 0.2%.
- The Bloomberg Dollar Spot Index rose 0.6%.
- West Texas Intermediate crude fell 0.2% to $71.52 a barrel.
- Spot gold rose 0.3% to $2,069.54 an ounce.
Tesla reported 485,000 deliveries for the fourth quarter, bringing 2023 total to 1.8 million – CNBC, 1/2/2024
- Tesla just published its fourth-quarter vehicle production and deliveries report for 2023.
- Total deliveries Q4 2023: 484,507
- Total production Q4 2023: 494,989
- Total annual deliveries in 2023: 1,808,581
- Total annual production 2023: 1,845,985
- Analysts had expected Tesla to report deliveries of 477,000 for the year-ending quarter, according to a consensus of estimates compiled by StreetAccount as of December 28.
- Deliveries are the closest approximation of sales reported by Tesla but are not precisely defined in the company’s shareholder communications.
- Tesla produced 476,777 Model 3 and Model Y vehicles during the quarter and reported 461,538 deliveries.
- It produced 18,212 other models and delivered 22,969 during the quarter.
Rivian’s Quarterly EV Deliveries Fall Short of Estimates – Bloomberg, 1/2/2024
- Rivian Automotive missed expectations for quarterly electric vehicle deliveries, weighing on the manufacturer’s shares even as production ramped up during the past year.
- The company built 17,541 EVs in the final three months of 2023 and delivered 13,972, according to a statement Tuesday.
- The fourth-quarter delivery total marked a sequential decline from the prior period and fell short of analysts’ average estimate of 14,114.
- For all of 2023, Rivian produced 57,232 units across all three model lines, ahead of guidance for 54,000, which Rivian had updated in November.
- The company delivered 50,122 vehicles.
Chevron Warns of Billions in Charges From California Challenges, Gulf of Mexico Assets – Wall Street Journal, 1/2/2024
- Chevron said it would book $3.5 billion to $4 billion in charges for the fourth quarter, citing challenges tied to regulations in California and previously sold oil and gas production assets in the Gulf of Mexico.
- Chevron said it will impair a portion of its US upstream assets, mainly in California, due to regulatory challenges in the state that have led to “lower anticipated future investment levels in its business plans.”
- Chevron said it will continue to operate the affected assets for many years.
- The company also said companies that agreed to buy Chevron’s oil and gas production assets in the US Gulf of Mexico have since filed for Chapter 11 bankruptcy protections.
- Chevron said the obligations for the assets could be reverted to the company and that it would decommission the help over the next decade.
Dish Merges With EchoStar, Buying Time for Ergen’s Mobile Empire – Bloomberg, 1/2/2024
- Dish Network and EchoStar have completed their merger, reuniting Charlie Ergen’s satellite empire once again.
- The deal, which closed on December 31, is critical to Ergen’s plan to transition Dish away from the dwindling pay-TV business and toward wireless services, challenging the likes of Verizon Communications, T-Mobile US, and AT&T.
- Ergen, 70, was chairman and co-founder of both companies before the merger.
- He will be executive chairman of the new combined firm.
- Dish’s notes are now convertible into EchoStar shares as part of the merger, according to a company filing Tuesday.
- The all-stock transaction was announced in August and brings Dish under the control of EchoStar, which runs a satellite network.
Electric Car Models Eligible for $7,500 Tax Credit Cut to 13 – Bloomberg, 1/2/2024
- The number of electric vehicle models eligible for consumer tax credits of as much as $7,500 fell sharply as new rules from the Biden administration kicked in on January 1.
- Narrower criteria reduced the number of qualifying models to 13 from about two dozen, according to federal data from fueleconomy.gov.
- The new rules exclude vehicles that use battery components made by Chinese manufacturers from the tax credit.
- Among the vehicles still eligible for the full or partial consumer credit are the Model Y by Tesla, Rivian Automotive’s R1T pickup truck, Stellantis’s Jeep Wrangler 4xe, and Ford Motor’s F-150 Lightning pickup truck.
- Models that lost access to the credit included Tesla’s Cybertruck and some versions of their Model 3, Nissan Motor’s Leaf, Ford’s E-Transit van, and General Motors electric Blazer and Silverado.
US ECONOMY & POLITICS
US construction spending rises less than expected in November – Reuters, 1/2/2024
- US construction spending rose less than expected in November amid a decline in outlays on public projects. Still, data for the prior month was revised sharply higher, suggesting underlying strength in the sector.
- The Commerce Department said on Tuesday that construction spending increased 0.4%.
- Data for October was revised to show construction spending surging 1.2% instead of gaining 0.6%, as previously reported.
- Economists polled by Reuters had forecasted that construction spending would rise by 0.6%.
- Construction spending shot up 11.3% on a year-on-year basis in November.
- Spending on private construction projects increased 0.7% in November after rising 1.2% in October.
- Investment in residential construction advanced 1.1% after rising 2.0% in the prior month.
- Outlays on new single-family construction projects jumped 2.9%.
- Outlays on multi-family housing projects edged up 0.1% in November.
- Spending on public construction projects fell 0.7% after increasing 1.3% in October.
- State and local government spending declined 0.5%, while outlays on federal government projects tumbled 3.1%.
EUROPE & WORLD
US Pressured Netherlands to Block China-Bound Chip Machinery – Bloomberg, 1/2/2024
- ASML Holding canceled shipments of some of its machines to China at the request of US President Joe Biden’s administration, weeks before export bans on the high-end chipmaking equipment came into effect, people familiar with the matter said.
- The Dutch manufacturer had licenses to ship three top-of-the-line deep ultraviolet lithography machines to Chinese firms until January when new Dutch restrictions took full effect.
- However, US officials contacted ASML to ask them to immediately halt pre-scheduled shipments of some of the machines to Chinese customers, according to people familiar with the matter, who asked not to be identified because the discussions were confidential.
- Shipments of a limited number of machines were canceled following the US request, they said, though it wasn’t immediately clear how many devices, which can cost tens of millions of dollars, were involved.
- ASML, Europe’s largest technology company, confirmed that the Dutch government partially revoked licenses recently for the shipment of specific lithography systems to China, affecting a small number of customers there.
- ASML said it doesn’t expect the latest blockade to have a “material impact on our financial outlook for 2023.”
All Passengers on Japan Airlines Jet Evacuated After Plane Collision – Wall Street Journal, 1/2/2024
- A Japan Coast Guard plane and a Japan Airlines passenger jet collided at Tokyo’s Haneda Airport. Still, all 379 people on board the passenger jet were able to escape, Japan Airlines said.
- Five of the six people aboard the Coast Guard plane died in the crash, Japanese Prime Minister Fumio Kishida said.
- He said they were planning to deliver relief supplies to people affected by an earthquake on the Japan Sea coast on New Year’s Day.
- Passengers in local television interviews said they saw a fire on the side of the Japan Airlines plane after it landed and were guided by cabin attendants to evacuate via escape chutes.
- The accident happened after sunset at around 5:47 p.m. local time, shortly after the Japan Airlines plane arrived at Haneda from Sapporo in northern Japan.
- Japan Airlines said the Airbus A350 plane had 367 passengers, including eight infants and 12 crew.
Japan Quake Death Toll Rises to 48 With Search On for Those Still Trapped – Wall Street Journal, 1/2/2024
- The smoking ruins of what was a famous market for tourists and a seven-story building lying on its side testified to the destruction left by a New Year’s Day earthquake in Japan that killed at least 48 people.
- The city of Wajima in Ishikawa prefecture on the Japan Sea coast suffered some of the worst damage from the magnitude 7.6 quake.
- Japan’s military was mobilized along with police and fire units to deliver relief supplies and try to rescue those buried under homes and buildings.
- The Wajima morning market typically features local producers selling fresh seafood, vegetables, and handmade crafts, including the traditional lacquerware known as Wajima-nuri.
- The market, also popular among foreign tourists, was closed for the New Year holiday when the quake hit.
- The earthquake also caused a tsunami of up to four feet, but no casualties were blamed on the tsunami.
- Many old wooden houses collapsed and trapped people inside. Ishikawa prefecture said at least 48 people in the area had died in the quake, and the toll was likely to rise.
Surpassing Tesla, China’s BYD Will Take On the World in 2024 – Wall Street Journal, 1/2/2024
- China’s electric vehicle maker BYD will be on top of the world this year, with overseas markets as its main battleground.
- In the fourth quarter of 2023, it surpassed Tesla to become the bestselling pure EV maker in the world, having already overtaken Volkswagen last year as the most popular brand of any car in China.
- Sales of new-energy vehicles, which include plug-in hybrids, grew 37% year-over-year in the first 11 months of 2023, according to the China Association of Automobile Manufacturers.
- More than one in three cars sold in China were EVs.
- The Warren Buffett-backed carmaker sold more than 3 million new-energy vehicles in 2023, an increase of 62% from a year earlier.
- Around half of that were plug-in hybrids, but its sales of pure EVs grew even faster at 73%.
- BYD data indicate it sold 526,409 pure EVs in the fourth quarter of 2023, compared with 484,507 vehicles that Tesla said Tuesday it delivered in the same period.
- BYD’s overseas sales in the second half of 2023 more than tripled from a year earlier.
Israel Reshuffles Forces, Prepares for Long-Term Conflict in Gaza – Wall Street Journal, 1/2/2024
- Israel began preparations for prolonged fighting in the Gaza Strip, reshuffling forces as it weighs how to sustain lower-intensity fighting over the long term.
- Israel’s top general said that it would take at least several more months to destroy Hamas’s military capabilities in the enclave.
- On Monday, Israel said it would adjust its ground-force composition in Gaza, with plans to rotate five brigades—estimated to be thousands of troops—out of the Gaza Strip this week, some of which might be replaced.
- The military has also recalibrated the types of troops required, now relying more heavily on commando and combat-engineering forces, as Israel increasingly tries to penetrate subterranean tunnel infrastructure and hunt down senior Hamas leadership.
- “These adaptations are designed to ensure planning and preparation for 2024,” Daniel Hagari, the Israeli military’s chief spokesperson, said Sunday night.
- “The war’s goals require prolonged fighting, and we are preparing accordingly.”
- The prospect of an extended period of hostilities in Gaza comes amid friction between Israel and the US, its main ally, which has been pushing the government of Prime Minister Benjamin Netanyahu to begin winding down a war that has devastated the enclave and killed thousands.
Expiring Pfizer Covid Drug Doses Set to Cost Europe $2.2 Billion – Bloomberg, 1/2/2024
- Stockpiles of Pfizer’s Paxlovid worth $2.2 billion are set to expire by the end of next month in Europe and the UK as demand for the Covid-19 treatment plummets.
- The outdated supply includes $1.1 billion worth of doses that had already expired as of November, according to the London-based analytics firm Airfinity.
- The UK has seen the most significant chunk go to waste with an estimated 1 million past-date courses at a cost of some $700 million, Airfinity said in a report.
China Injects $50 Billion Into Policy Banks in Stimulus Push – Bloomberg, 1/2/2024
- The People’s Bank of China injected nearly $50 billion worth of low-cost funds into policy-oriented banks last month, suggesting the central bank may ramp up financing for housing and infrastructure projects to support the economy.
- The central bank said in a Tuesday statement that the outstanding amount of the PBOC’s Pledged Supplemental Lending program to policy banks climbed to 3.25 trillion yuan ($456 billion) at the end of December from 2.9 trillion yuan in the previous month.
- The net injection of 350 billion yuan was the most significant increase via the tool since November 2022.
- The PSL program is an essential tool in Beijing’s arsenal, which the government can use to shore up the property sector and stabilize growth this year.
Factmonster – TODAY in HISTORY
- Muhammad XI, the leader of the last Arab stronghold in Spain, surrendered to King Ferdinand II and Queen Isabella I. – 1492
- Georgia was admitted to the Union as the 4th state. – 1788
- Louis Jacques Mandé Daguerre took the first photograph of the Moon. – 1839
- The Russo-Japanese war ended. – 1905
- The African American town of Rosewood, Fla., was burned by a white mob. – 1923
- The USSR launched the first spacecraft to fly by the Moon and orbit the Sun, Mechta (Luna 1). – 1959
- Rudolph Giuliani is inaugurated as New York City’s mayor. – 1994
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