US FINANCIAL MARKET

S&P 500 Trades Within a Whisker of All-Time High: Markets Wrap – Bloomberg, 12/26/2023

• The final week of 2023 is expected to be much quieter on Wall Street after a ferocious rally that put the US stock market within striking distance of its record.
• Equities barely budged on Tuesday, following the S&P 500’s longest weekly run since 2017.
• The so-called Santa Claus rally typically encompasses the last five trading sessions of the year and the first two of the new one.
• Since 1969, the S&P 500 has averaged a gain of 1.3% over the seven-day period, according to the Stock Trader’s Almanac.
• The S&P 500 rose 0.1% as of 9:30 a.m. New York Times. The Nasdaq 100 rose 0.3%. The Dow Jones Industrial Average had little change.
• Treasuries were mixed ahead of a $57 billion sale of two-year notes at 1 p.m. New York Times.
• Swap contracts tied to Fed meetings imply an over 90% probability the US central bank will bring down its current 5.25% to 5.5% target rate range in March.
• Across 2024, traders are penciling in nearly 160 basis points of rate reductions — more than twice as much as Fed officials signaled earlier this month in their new round of quarterly forecasts.
• In corporate news, the White House declined to overturn a sales ban on Apple’s smartwatches in the US, failing to offer a reprieve to the tech giant.
• Intel confirmed it will invest a total of $25 billion in Israel after securing $3.2 billion in incentives from the country’s government.
• Bristol Myers Squibb agreed to buy radiological drug developer RayzeBio for about $4.1 billion.
• Elsewhere, oil rose as tensions remained high over shipping disruptions in the Red Sea due to a spate of Houthi attacks against vessels in the vital waterway and after US military strikes in Iraq. Iron ore rallied to its highest since June 2022.

Intel to Invest $25 Billion in Israel After Winning Incentives – Bloomberg, 12/26/2023

• Intel confirmed it will invest a total of $25 billion in Israel after securing $3.2 billion in incentives from the country’s government.
• The outlay, announced by the Israeli government in June and unconfirmed by Intel until now, will go toward expanding the company’s wafer fabrication site in Kiryat Gat, south of Tel Aviv.
• The incentives amount to 12.8% of Intel’s planned investment.
• The Israeli government asked Intel to begin operations at the plant by 2028 and continue them until at least 2035.
• Intel also committed to spending 60 billion shekels ($16.6 billion) with Israeli suppliers over the next decade, creating thousands of direct and indirect jobs.
• The company currently employs 11,700 people in Israel. Construction work for the expansion is underway.

Bristol Adds to Buying Spree With $4.1 Billion Purchase – Bloomberg, 12/26/2023

• Bristol Myers Squibb agreed to buy radiological drug developer RayzeBio for about $4.1 billion, the latest deal in a buying spree to bolster its pipeline.
• Bristol will pay $62.50 a share for San Diego-based RayzeBio, which targets a variety of tumors in the lung, pancreas, liver, and other organs with radioactive drugs, according to a statement Tuesday.
• That’s more than double the company’s Friday closing price of $30.57.
• RayzeBio jumped 98% before US markets opened.
• Pharmaceutical companies are increasingly interested in drugs that can precisely deliver medication to tumors while leaving surrounding tissues relatively unscathed.
• Bristol is also getting $500 million in cash with the purchase, making it worth $3.6 billion net.

AstraZeneca to Buy Gracell Biotechnologies for $1.2 Billion – Wall Street Journal, 12/26/2023

• AstraZeneca has agreed to buy Gracell Biotechnologies for a transaction value of $1.2 billion as part of the former’s efforts to grow its cell therapies business.
• The upfront cash portion of the deal is $1.0 billion, a 62.0% premium to Gracell’s last closing price for its American depository shares of $6.19, AstraZeneca said in a statement Tuesday.
• The deal’s total value would reach $1.2 billion when combined with potential contingent value payments.
• The acquisition will help grow AstraZeneca’s pipeline of cell therapies for potentially treating cancer and autoimmune diseases.

Apple Watch Ban Stands After White House Fails to Offer Reprieve – Bloomberg, 12/26/2023

• The US International Trade Commission determined in October that Apple violated two Masimo health-technology patents with a blood-oxygen sensor in its watches.
• The White House had 60 days to review the import ban, with the decision resting with US Trade Representative Katherine Tai.
• Ahead of that deadline, Apple moved to stop selling the Apple Watch Series 9 and Ultra 2 in the US at the company’s online store and retail outlets.
• The ban threatens a business that generated about $17 billion in revenue in the last fiscal year, according to analyst estimates.
• The Series 9 and Ultra 2 models account for most of Apple’s watch sales.
• The company doesn’t disclose the revenue the product line brings in, but it’s a core part of its Wearables, Home, and Accessories business, generating sales of more than $40 billion annually.

Oil Rises After Red Sea Ship Incidents Keep Tensions in Focus – Bloomberg, 12/26/2023

• Oil rose as tensions remained high over shipping disruptions in the Red Sea due to a spate of Houthi attacks against vessels in the vital waterway and after US military strikes in Iraq.
• Global benchmark Brent climbed above $80 a barrel after rallying by more than 3% last week, its biggest weekly advance since October. US marker West Texas Intermediate advanced to $75.
• The US strikes in Iraq on Christmas Day targeted what it said is an Iranian-based terrorist group blamed for attacks on American personnel, including one Monday, which left three people injured.
• The UK Navy on Tuesday reported an explosion and missiles seen 4 nautical miles from a vessel off the coast of Yemen, hours after blasts were reported near another ship. In both cases, the ships and their crew were unharmed.
• The incidents are the latest in a string of attacks by Iranian-backed Houthi rebels based in Yemen.
• Despite container giant A.P. Moller-Maersk A/S stating Sunday that it’s preparing to resume using the Red Sea under the protection of the new multinational maritime task force, many other shippers continue to shun the route through the Suez Canal in favor of safer but longer voyages, delaying the delivery of oil cargoes.

US ECONOMY & POLITICS

US Home Prices Extend Records, Rising for a Ninth Straight Month – Bloomberg, 12/26/2023

• A national gauge of prices rose 0.6% in October from September, according to seasonally adjusted data from S&P CoreLogic Case-Shiller. A seasonally adjusted measure of prices in 20 of the largest cities also rose 0.6%.
• On a year-over-year basis, price gains accelerated, climbing 4.8% in October, compared with a 4% annual increase in September.
• Detroit had the biggest increase, at 8.1%, followed by San Diego with 7.2% and New York with 7.1%.
• Portland, Oregon, was the only one of the 20 cities where prices fell year over year.

Shoppers Kept Spending This Holiday Season – Wall Street Journal, 12/26/2023

• Shoppers opened their wallets this holiday season as they have for much of 2023, even crowding into shopping malls to scoop up last-minute holiday gifts and discounts in the days before Christmas.
• US retail sales rose 3.1% from November 1 through December 24, according to Mastercard SpendingPulse, which measures sales in stores and online. The estimate, which isn’t adjusted for inflation, reflects a year marked by rising prices and a strong US job market.
• Online retail sales increased 6.3% year over year, while in-store sales rose 2.2%, according to Mastercard SpendingPulse, which excludes automobile purchases and travel services.
• There were pockets of weakness, with sales of electronics and jewelry declining year over year from November 1 through December 24.
• The strongest growth category was in restaurants, as people dined out and menu prices were higher.
• The National Retail Federation, a trade group, has predicted holiday sales will rise between 6% and 8% to between $942.6 billion and $960.4 billion from November 1 through December 31. The figures exclude spending at car dealers, gas stations, and restaurants.

Samsung Delays Production at New US Factory to 2025, Daily Says – Bloomberg, 12/26/2023

• Samsung Electronics has delayed mass production plans at its new chip plant in Taylor, Texas, the Seoul Economic Daily said, potentially dealing another blow to the Biden administration’s ambition to increase domestic semiconductor supplies.
• Mass production at the upcoming $17 billion fab would begin in 2025, the newspaper reported, citing a speech by President Choi Siyoung of Samsung’s foundry business at an industry event in San Francisco.
• Samsung previously said the factory would start production in the second half of 2024 when it announced the investment in 2021.
• The report followed an earlier decision by Samsung’s bigger rival, Taiwan Semiconductor Manufacturing, to postpone production at its new Arizona fab to 2025 from next year due to a shortage of experienced construction workers and machine installation technicians.
• More than a year after Biden signed the Chips Act into law, promising $100 billion in support to new semiconductor plants in the US, his government has made one grant of only $35 million to the American subsidiary of British aerospace firm BAE Systems.

EUROPE & WORLD

UK Economy Forecast to Narrow GDP Gap With Germany by 2038 – Bloomberg, 12/26/2023

• The UK will be Europe’s best-performing major economy in the next 15 years, narrowing the gap with Germany and extending its lead over France, according to new long-run forecasts.
• The Centre for Economics and Business Research predicted that GDP growth in the UK will settle between 1.6% and 1.8% in the period up until 2038, helping it retain its position as the world’s sixth-largest economy.
• Under CEBR’s long-run world economic rankings, the UK is expected to grow faster than all of the eurozone “big four” economies — France, Germany, Italy and Spain — but not as rapidly as the US.
• By 2038, Italy will drop out of the world’s top 10 economies by size, replaced by South Korea.
• The US and Germany will slip down the rankings, while India and Brazil — two developing economies with large populations — will rise within the top 10.

Russia Says Ukraine’s Strike Damaged Warship in Crimean Port – Bloomberg, 12/26/2023

• Russia said a warship at the eastern Crimean port of Feodosia had been damaged in a Ukrainian missile strike that targeted a fleet used to launch attacks on Ukrainian cities.
• The Russian Defense Ministry didn’t specify the extent of damage to the landing ship Novocherkassk, according to the state RIA Novosti news service. One person was killed and two wounded in Feodosia, the Russia-installed Crimea Governor Sergei Aksyonov said on his Telegram channel Tuesday.
• Ukraine is challenging Russia’s naval superiority in the region despite lacking its own warships by relying on missiles and unmanned maritime drones.
• Crimea, which Russia illegally annexed from Ukraine in 2014, has been the target of Ukrainian drone and missile attacks for months.

Factmonster – TODAY in HISTORY

• Christopher Columbus established the first Spanish settlement in the New World. 1492
• George Washington defeated the Hessians at Trenton. 1776
• James H. Nason received a patent for a coffee percolator. 1865
• The 33rd president of the United States, Harry S. Truman, died in Kansas City, Mo. 1972
• In the Indian Ocean, a 9.0 magnitude earthquake, the largest in 40 years, triggered a tsunami that ultimately killed more than 280,000. 2004

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