US FINANCIAL MARKET
US Stocks Wobble After Selloff as Boeing Sinks: Markets Wrap – Bloomberg, 1/8/2024
- Stocks, bonds, and the dollar saw small moves at the start of a week that will bring critical inflation data and bank earnings.
- The Dow Jones Industrial Average underperformed major benchmarks, with Boeing slumping as the grounding of its 737 Max 9 quickly gathered pace after a fuselage section on a brand-new Alaska Airlines jet blew out during flight.
- Energy shares weighed on the S&P 500 as oil declined after Saudi Arabia cut official selling prices for all regions.
- The S&P 500 rose 0.1%. The Nasdaq 100 rose 0.3%. The Dow Jones Industrial Average fell 0.3%.
- Markets are looking for direction after mixed US economic data on Friday capped a week that saw global equities sink the most since October on speculation the Federal Reserve was in no rush to reduce interest rates.
- Further catalysts may come from the US inflation print due Thursday and the earnings season kicking off Friday with US financial names, including JPMorgan Chase and Citigroup.
- Abercrombie & Fitch raised its fourth-quarter and full-year sales outlook after better-than-expected holiday sales buoyed the already outperforming retailer.
- Moderna’s product sales for 2023 modestly beat analyst estimates as it eked out a more significant US market share for Covid shots. However, the biotech giant reiterated a downbeat outlook for the year ahead.
- Boston Scientific agreed to pay $71 a share in cash for medical technology firm Axonics, a device maker for treating urinary and bowel dysfunction.
- Johnson & Johnson will pay $2 billion in cash to acquire Ambrx Biopharma, gaining a developer of widely sought drugs that target tumors with lethal drugs.
- The Stoxx Europe 600 rose 0.1%.
- The yield on the 10-year Treasury was changed a little at 4.05%.
- West Texas Intermediate crude fell 4.1% to $70.75 a barrel.
- Spot gold fell 1.3% to $2,019.72 an ounce.
Abercrombie Raises Outlook After Women’s Business Boosts Sales – Bloomberg, 1/8/2024
- Abercrombie & Fitch raised its fourth-quarter and full-year sales outlook after better-than-expected holiday sales buoyed the already outperforming retailer.
- Sales for the fourth quarter are now expected to be up in the high teens percentage, compared with previous guidance for a rise in the low double-digits.
- For the year, the New Albany, Ohio-based company expects sales growth of as much as 15%, versus previous guidance for growth of as much as 14%.
- Abercrombie also raised its full-year operating margin outlook to around 11% from about 10% and said the results will help it reach its 2025 financial targets “ahead of schedule,” according to a statement on Monday.
- The move is driven primarily by sales in its women’s business, which is on track to deliver its highest-ever fourth-quarter sales results, the company said on Monday.
Moderna Covid vaccine sales plunge by two-thirds in 2023, but meet company’s $6 billion forecast – CNBC, 1/8/2024
- On Monday, Moderna said its Covid vaccine sales plunged by about two-thirds in 2023 to $6.7 billion, as fewer people rolled up their sleeves for an updated jab version.
- The revenue from the shots met Moderna’s forecast for the year, even as sales plummeted from the more than $18 billion the company booked in 2022.
- Roughly $6.1 billion of Moderna’s revenue related to the shot came from vaccine sales.
- Another $600 million was deferred revenue related to the company’s work with Gavi, a nongovernmental global vaccine organization that coordinated a global shot distribution program, Moderna said in a release.
- Moderna, during its third-quarter earnings report in November, forecasted at least $6 billion in full-year COVID-19 vaccine sales but did not provide a range for that guidance.
J&J to Purchase Tumor-Antibody Biotech Ambrx for $2 Billion – Bloomberg, 1/8/2024
- Johnson & Johnson will pay $2 billion in cash to acquire Ambrx Biopharma, gaining a developer of widely sought drugs that target tumors with lethal drugs.
- J&J will pay $28 a share for Ambrx, according to a statement Monday, or about double the firm’s Friday closing price of $13.63.
- Ambrx is developing drugs to target multiple cancers in the prostate, breast, and other tissues.
- Drug giant J&J needs to plug a revenue hole approaching 2025, when its top seller, Stelara for psoriasis, is expected to face generic competitors.
- Ambrx is developing antibody-drug conjugates — cancer therapies that deliver high doses directly to tumors while minimizing damage to surrounding tissues.
Boston Scientific To Acquire Axonics For About $3.7 Bln – Wall Street Journal, 1/8/2024
- Boston Scientific will acquire Axonics for about $3.7 billion in cash.
- The companies said on Monday that Axonics had agreed to be bought for $71 a share.
- Boston Scientific said the deal gave Axonics an equity value of $3.7 billion and an enterprise value of $3.4 billion.
- Axonics is developing medical technology focused on treating urinary and bowel issues.
- Boston Scientific said the deal would add technologies to its portfolio to serve urologists further.
- The deal is expected to close in the first half of 2024, subject to the approval of Axonics stockholders and the receipt of regulatory approvals.
Bank of America to take a non-cash charge of $1.6 billion in Q4 after cessation of a loan index – Reuters, 1/8/2024
- Bank of America will take a charge of about $1.6 billion in the fourth quarter as it phases out the use of a Bloomberg interest rate benchmark.
- The non-cash and pre-tax earnings charge was triggered by the announcement by Bloomberg that they will stop publishing its short-term bank yield index in 2024, which the bank uses for some commercial loan contracts.
- BofA said the $1.6 billion net impact is expected to be recognized back into its interest income in subsequent periods, primarily through 2026; the bank said that Bloomberg’s move to end the index affected the accounting treatment of transactions executed using the index.
Newell Brands to Cut 7% of Office Roles, Reduce Footprint – Wall Street Journal, 1/8/2024
- Newell Brands will slash about 7% of its office roles and pare down its real-estate footprint in an organizational realignment.
- The Atlanta-based maker of Rubbermaid and Sharpie said it expected to realize annual pretax savings of $65 million to $90 million net of reinvestment, most of which is expected this year.
- The company expects restructuring and related charges of $75 million to $90 million.
- According to a regulatory filing, $60 million to $70 million in charges are related to severance and other termination benefits, with $11 to $16 million connected to office space reduction.
- Newell said most of its workforce reductions would be complete by the end of the year.
Boeing Is Back in the Spotlight—This Time Over a MAX 9 – Wall Street Journal, 1/8/2024
- The last thing Boeing needed was more trouble with its 737 MAX jet. That is precisely what it has to start the new year.
- The company had just started to regain its footing after years of tumult around the famous but troubled line of narrow-body jets when a MAX 9 operated by Alaska Airlines had a structural failure Friday night.
- A panel that plugs an emergency door ripped away at 16,000 feet, leaving a gaping hole in a cabin full of passengers.
- The Federal Aviation Administration responded Saturday by ordering airlines to ground about 171 MAX 9 planes and conduct inspections.
- The checks take about four hours; if cleared, planes can return to service.
- Jennifer Homendy, chair of the National Transportation Safety Board, said Saturday that its investigation is focused on the Alaska Airlines incident and isn’t looking more broadly at Boeing’s 737 MAX.
- Other airlines that install extra seats on MAX 9 jets would have an emergency exit door placed in the plug location that broke off.
Apple Vision Pro headset launches in the US on February 2; pre-orders begin January 19 – CNBC, 1/8/2024
- Apple’s Vision Pro will launch in the US on February 2, the company said in a press release Monday, with pre-orders beginning January 19.
- Pre-orders will open at 5 PM Pacific Time on the 19th, according to the Vision Pro’s product page.
- The company also said that prescription lens inserts for the Vision Pro would cost $149 and that the headset would have 256 GB of storage.
- The $3,500 headset is Apple’s answer to Meta’s Quest headsets and has reportedly been in development for years.
Twilio CEO Lawson steps down after bruising activist battles – CNBC, 1/8/2024
- Twilio co-founder Jeff Lawson said on Monday that he is stepping down as CEO of the enterprise communications software company.
- The move comes as the company grapples with two activist investors who have been pushing for significant changes at the company.
- “The time has come for me to pass the reins of this extraordinary company to a new CEO to lead Twilio through its next chapter,” Lawson said in a blog post announcing the change.
- Khozema Shipchandler, a longtime Twilio executive, will assume the top role, effective Monday.
Instacart Expands In-Store Shopping Cart Business to Include Ads – Bloomberg, 1/8/2024
- Instacart will show advertisements on the high-tech shopping carts it sells to grocery stores, the latest addition to the company’s growing ads business and a sign of investment in products outside grocery delivery.
- The company will begin advertising on the carts, including self-checkout and equipped with cameras and sensors to detect items, at Good Food Holdings’ Bristol Farms stores in Southern California before expanding to additional stores in the coming months, Instacart said Monday.
- The intelligent shopping carts, called Caper Carts, are available at retailers including Kroger Wakefern Food’s ShopRite and Fairway Market.
US ECONOMY & POLITICS
Congressional Negotiators Reach Agreement on $1.6 Trillion Government Spending Level for 2024 – Wall Street Journal, 1/8/2024
- Congressional leaders reached a bipartisan deal on Sunday setting a roughly $1.6 trillion federal spending level for the year. Still, the pact drew quick criticism from some conservatives, and it remained unclear whether lawmakers could pass legislation to avert a government shutdown quickly.
- The House and Senate now have less than two weeks to craft underlying bills funding the government, with several federal agencies set to run out of money later this month and the rest to follow in February, a tall order in a Congress that has struggled to pass significant legislation on time.
- The deal leaves some key battles unresolved. It could open up more friction between House Speaker Mike Johnson (R., La.) and his conservative flank, which has outsized power because of Republicans’ narrow majority and has repeatedly derailed bills in the chamber.
- Among other things, some House Republicans plan to fight for so-called policy riders, which can be used to advance conservative social policies and which Senate Democratic leaders have called nonstarters.
- Johnson said the deal contains “hard-fought concessions” from Democrats, including canceling unspent pandemic aid.
- “These final spending levels will not satisfy everyone, and they do not cut as much spending as many of us would like,” Johnson said.
Defense Secretary Lloyd Austin’s Hospitalization Deepens Mystery of His Absence – Wall Street Journal, 1/8/2024
- The Pentagon’s No. 2 official didn’t learn that her boss was hospitalized on January 1 until four days after she had assumed some of his duties, US military officials said Sunday, deepening the mystery of why Defense Secretary Lloyd Austin was hospitalized and why he hid his medical situation from senior defense officials and even President Biden until days after he was admitted.
- Deputy Secretary of Defense Kathy Hicks, who was on scheduled leave in Puerto Rico, had already assumed some of Austin’s duties that week, which happens from time to time, Pentagon officials said.
- Hicks had secure communications at her location while on vacation, as is routine.
- But she wasn’t informed of the gravity of Austin’s hospitalization, which included some time in the intensive care unit of Walter Reed National Military Medical Center in Washington, until Thursday.
- Austin, who resumed his responsibilities as defense secretary Friday night, remained hospitalized Sunday.
- He had had what officials described as an elective procedure during scheduled leave on December 22, returning home the next day, Pentagon officials said, without disclosing what the treatment was, citing privacy reasons.
Winter Storm Dumps Snow and Rain on Northeast – Wall Street Journal, 1/8/2024
- A wintry mix of snow and sleet made for a miserable weekend across much of the Northeast, and a second storm moving coast to coast could bring blizzard conditions to the Plains and Midwest and potential flooding to the Northeast early this week.
- The worst weekend storm was over for much of the Northeast by Sunday, except in southern New England, where snow was expected to continue until evening, according to the National Oceanic and Atmospheric Administration’s Weather Prediction Center.
- Southern New England along the New Hampshire border with Massachusetts got some of the most concentrated snowfall, ranging from 15 to 17 inches, the weather prediction center said.
- A second winter storm dumped over a foot of snow in northern California on Saturday night and moved over Arizona, Utah, and New Mexico Sunday, the center said.
- Flagstaff, Ariz., recorded 8 inches of snow by midafternoon.
Vulcan Rocket Launches, Kicking Off First U.S. Moon Race in Decades – Wall Street Journal, 1/8/2024
- A powerful new rocket from United Launch Alliance blasted off Monday, taking a vehicle expected to make the first US lunar landing in more than half a century.
- The Vulcan Centaur rocket, which took to the skies from Florida’s Cape Canaveral Space Force Station at 2:18 a.m. local time, included the Peregrine Lunar Lander vehicle, which, if successful, would carry out the first lunar exploration since the final Apollo mission in 1972.
- The uncrewed lunar landing is expected to take place next month.
- ULA, a joint venture between Boeing and Lockheed Martin, will now look to accelerate its launches for customers ranging from Amazon.com to spy agencies.
- Pittsburgh-based Astrobotic Technology developed the lunar lander on the ULA flight and carries several NASA instruments, including one designed to measure radiation risk for future astronauts.
EUROPE & WORLD
Deep Oil Price Cut by Saudis Highlights Soft Physical Market – Bloomberg, 1/8/2024
- A substantial cut in official oil pricing to Asia by OPEC+ leader Saudi Arabia has reinforced signs of a softer physical market in the critical region.
- Saudi Aramco cut the official selling price for its flagship Arab Light crude to a $1.50-a-barrel premium to the regional benchmark for February, the lowest level since November 2021.
- The $2-a-barrel reduction was more profound than had been foreseen and followed a weakening of spot differentials for Middle Eastern crudes due to lackluster Chinese appetite and increased global supplies.
- Saudi pricing has been lowered in line with the spot market, which may potentially boost margins for customers using the kingdom’s cargoes as their baseload, refiners, and traders.
- Aramco’s pricing is typically followed by other major producers in the Middle East, such as Kuwait and Iraq.
- Still, at least three Asian customers said the price drop was unlikely to lead to requests for incremental deliveries from the Saudis as cheaper, rival supplies are still available in the spot market.
Biden Urged to Curb China’s Dominance of Older-Generation Chips – Wall Street Journal, 1/8/2024
- The Biden administration needs to take more decisive action to stem China’s growing dominance in making older-generation microchips that are essential across several US industries, according to the bipartisan leaders of a House of Representatives panel.
- The lawmakers’ call for new efforts, including potential tariffs, is intended to counteract an overreliance on China for less-advanced chips, according to a letter seen by The Wall Street Journal.
- Republican Mike Gallagher of Wisconsin, chairman of the House Select Committee on the Chinese Communist Party, and Raja Krishnamoorthi of Illinois, ranking Democratic member, wrote to President Biden’s top business and trade officials on Friday.
- In their letter, the representatives suggested China could become a dominant supplier of essential technology and then use that position to punish foreign competitors.
Shell Flags Earnings Hit of Up to $4.5 Billion From Impairments – Wall Street Journal, 1/8/2024
- Shell said its fourth-quarter earnings took a hit of between $2.5 billion and $4.5 billion in impairments offset by significantly higher gas trading, while its overall production volumes are on track to meet targets.
- The London-based energy giant said Monday that the impairments were primarily driven by macro developments and portfolio choices, including its Singapore chemicals and products assets, which it has been trying to sell.
- The FTSE 100 leader by market cap also said it expects its cash flow from operations to be hit by a $900 million charge from emissions permits in Germany and the US.
- Gains from integrated gas trading are expected to be significantly higher on-quarter despite declining oil and gas prices. Oil hits a five-month low in early December, reflecting supply and demand concerns despite support from geopolitical uncertainty.
Israeli Airstrike Kills Senior Hezbollah Commander In Lebanon, Official Says – Bloomberg, 1/8/2024
- An Israeli airstrike killed an elite Hezbollah commander in southern Lebanon on Monday, the latest in an escalating exchange of strikes along the border that have raised fears of another Mideast war even as the fighting in Gaza exacts a mounting toll on civilians.
- The strike on an SUV killed a commander in a secretive Hezbollah force that operates along the border, according to a Lebanese security official, who spoke on condition of anonymity according to regulations.
- Hezbollah identified the slain fighter as Wissam al-Tawil without providing details.
- He is the most senior militant in the armed group to have been killed since Hamas’ October 7 attack into southern Israel triggered all-out war in Gaza and lower-intensity fighting between Israel and Hezbollah, which has escalated since an Israeli strike killed a senior Hamas leader in Beirut last week.
Nord Stream Probe Hampered by Resistance From Poland – Wall Street Journal, 1/8/2024
- Polish officials have resisted cooperating with an international probe into sabotaging the Nord Stream natural gas pipelines and failed to disclose potentially crucial evidence, according to European investigators working on the case.
- Those Polish officials have been slow to provide information and withheld vital evidence about the alleged saboteurs’ movements on Polish soil, investigators said.
- They hope the new government in Warsaw, which took office in December, will help shed light on the attack.
- European investigators have long believed the attack was launched from Ukraine via Poland.
- But they say Warsaw’s failure to cooperate fully has made it hard to establish whether the attack happened with or without the former Polish government’s knowledge, according to senior officials.
China Says It Has Detained a British Spy – Wall Street Journal, 1/8/2024
- China has taken into custody an alleged British spy, the country’s national security agency said Monday, as Beijing steps up warnings over national security and the infiltration of foreign spies in the country.
- In a social-media post, China’s Ministry of State Security alleged that MI6, the UK intelligence service, 2015 recruited a foreign national surnamed Huang and provided training and “specialized spy equipment for intelligence liaisons.”
- According to the MSS, the British instructed Huang to enter China as a representative of a consulting agency and send back intelligence.
- The Chinese agency didn’t specify Huang’s nationality or name the consulting firm.
Factmonster – TODAY in HISTORY
- The Battle of New Orleans, the last battle in the War of 1812, was fought. – 1815
- Woodrow Wilson outlined his Fourteen Points peace program. – 1918
- Bobby Fischer won the United States Chess Championship for the first time at age 14. – 1958
- Charles de Gaulle became the first president of France’s Fifth Republic. – 1959
- President Lyndon Johnson announced his War on Poverty. – 1964
- The AT&T Bell System telephone monopoly agreed to divest itself of 22 Bell System companies and split itself into seven “Baby Bells.” – 1982
- The mastermind of the 1993 World Trade Center bombing, Ramzi Yousef, was sentenced to life in prison. – 1998
- Arizona Representative Gabrielle Giffords is among 17 shot by a gunman at a meeting outside a grocery store. Six people were fatally wounded, including United States District Court Judge John Roll and a young girl. Police identify the gunman as Jared Lee Loughner. – 2011
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