Business

Apple on Wednesday cut the revenue forecast for its latest quarter, citing fewer iPhone upgrades and weak sales in China, and its shares tumbled in after-hours trade. 

 

The company forecast $84 billion in revenue for its fiscal first quarter ended Dec. 29, which is below analysts’ estimate of $91.5 billion, according to IBES data from Refinitiv. Apple originally forecast revenue of between $89 billion and $93 billion. 

 

“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in greater China,” Chief Executive Officer Tim Cook said in a letter to investors. “In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in greater China across iPhone, Mac and iPad.”

Wednesday was the first time that Apple issued a warning on its revenue guidance ahead of releasing quarterly results since the iPhone was launched in 2007. 

Sharp drop

 

Apple shares, which had been halted ahead of the announcement, skidded 7.7 percent in after-hours trade, dragging the company’s market value below $700 billion. 

 

A slew of brokerages reduced their first-quarter production estimates for iPhones after several component makers in November forecast weaker-than-expected sales, leading some market watchers to call the peak for iPhones in several key markets. 

 

On Apple’s earnings call in November, Cook cited slowing growth in emerging markets such as Brazil, India and Russia for the lower-than-anticipated sales estimates for the company’s fiscal first quarter. But Cook specifically said he “would not put China in that category” of countries with troubled growth. 

 

That all came before the damage to the Chinese economy from trade tensions with the United States became clear. On Wednesday, China’s central bank magazine said the country’s economic growth could fall below 6.5 percent in the fourth quarter as companies face increased difficulties there. 

 

Apple has held firm on its premium pricing strategy in China despite the risk of a slower economy, a factor that has been exacerbated by the strong U.S. dollar. Apple tends to set its prices in U.S. dollars and charge a broadly equivalent amount in local currencies.  

 

“The question for investors will be the extent to which Apple’s aggressive pricing has exacerbated this situation and what this means for the company’s longer-term pricing power within its iPhone franchise,” James Cordwell, an analyst at Atlantic Equities, told Reuters. 
…

Few experiences capture old New Orleans and the Mississippi River quite like a paddlewheel riverboat coming around a muddy bend with its tooting whistle, towering smoke stacks and water-churning propeller. 

 

This month, a new riverboat is set to launch in this Louisiana port city. A plunge in tourism after Hurricane Katrina in 2005 forced the New Orleans Steamboat Co. to sell off one of its two boats, but the arrival of the City of New Orleans is a sign of the steadily rising tide of tourists each year to this Southern city of Mardi Gras fame. 

 

“People come from all over the world. It is astonishing. They really want to see the river,” said Adrienne Thomas, marketing director for the company, which also owns another riverboat, the Natchez. 

 

Once numerous

A century ago, countless paddlewheel riverboats plied the Mississippi and its tributaries. Today, New Orleans has two: the Natchez and the Creole Queen, which is operated by New Orleans Paddlewheels. 

 

Now the City of New Orleans is coming full circle, back to the state where it was built in 1991. For years it operated as a casino boat in Rock Island, Ill., until the mid-1990s. But after that state legalized onshore casinos, the boat became obsolete, said Matthew Dow, project manager heading the vessel’s renovation. The then-named Casino Rock Island sat unused for years until the New Orleans Steamboat Co. bought it in 2016. 

 

“We instantly fell in love with the boat,” Dow said. “We saw the potential in her and knew that we could do her justice and bring her back not only to her former glory but well beyond that.”  

  

Dow said the vessel already looked the part of a New Orleans riverboat, with its curved decks, plentiful windows, decorative fleurs de lis and giant paddlewheel.  

Initially, it was brought to a dry dock for hull repairs, then towed to New Orleans for a makeover. 

 

“We had to rip all of the walls out, all the ceilings, a lot of the insulation,” Dow said. “Basically, we had to strip this boat down to the superstructure, to bare bones, and everything had to go back new.” 

 

There were additions, too. A dumbwaiter was added to connect the galley to all three decks for food transport, along with passenger elevators and handicapped-accessible restrooms.

Dow says the company is aiming to have the boat ready for tours by Jan. 21, when the Natchez goes into its annual service and maintenance layup. After that, both boats will operate simultaneously. 

More spacious

 

The two riverboats look similar, both painted red and white with giant red paddlewheels and exterior deck space for close-up views by passengers of the giant propeller. But the new boat has more indoor space. 

 

The Natchez was built in the 1970s for sightseeing with a lot of open deck space, and its main deck is occupied mostly by the boat’s vintage 1925 steam engines, an attraction for passengers. The Natchez is one of only six commercially operated steamboats left in the U.S.  

The new boat is run with a modern diesel-electric system. It takes up less room, allowing for more indoor space for dinner seating, jazz brunches and special events. 

 

“Even though we don’t have the steam engines, we do have the working paddlewheel, and we want to show that off,” Dow said.  

  

As with the Natchez, cruises on the City of New Orleans will include narration about the city and shoreline sights such as the port, historic Jackson Square, the Chalmette Battlefield, which marks the Battle of New Orleans in the War of 1812, and the Chalmette National Cemetery. And there will be plenty of live music. 

 

Cyndi Gruenberg of Houston, Texas, rode the Natchez with her husband and two daughters recently and said they learned much about the city. 

 

“It was a great trip, a little bit of history along the river and just a fun ride,” said Gruenberg. “It’s pretty cool.” 

 

‘Back in every way’

Tourism officials say they don’t expect a shortage of passengers, as the number of visitors to New Orleans has surpassed pre-Katrina levels in recent years. 

 

Stephen Perry, head of New Orleans & Co., which promotes tourism, says the city is “back in every way” with increased hotel and restaurant bookings. Riding a paddlewheel is part of the New Orleans experience, he noted. 

 

“This is one of the most eclectic, authentic places left in America,” Perry said. “People don’t come here only for food and music. What they like is other experiences. 

 

“A paddlewheeler is just one of the great added attractions of imagining yourself in a time gone by.”
…

The roller-coaster ride on Wall Street resumed Wednesday, the first trading day of the new year, as stocks plunged early on, then slowly recovered and finished with a slight gain.

The Dow Jones Industrial Average dropped as much as 398 points in the first few minutes of trading after more shaky economic news from China. But it gradually recouped those losses, and a small rally over the last 15 minutes of trading left major indexes a bit higher than where they started.

That kind of whiplash was typical during the last three months of 2018, and many strategists think it is likely to continue.

A Chinese government survey and one by a major business magazine showed manufacturing in China weakened in December as global and domestic demand cooled. That weighed on big exporters, with tech companies like Microsoft and industrials like Boeing taking sharp losses early on, only to bounce back.

Some of last year’s worst performers, including energy and internet companies, led the gains Wednesday.

After gliding gently higher for years, propelled by rising corporate profits and extremely low interest rates from the Federal Reserve, stocks have been heaving up and down in recent months as a host of fears weigh on investors, including threats to global economic growth.

Stocks are coming off their worst year in a decade, and many Americans could be in for a shock when they open their monthly and end-of-the-year 401(k) statements.

The benchmark S&P 500 fell 6 percent in 2018, its first substantial loss since 2008, and dropped 14 percent since late September. Many other stock indexes around the world fared even worse last year.

The U.S. economy has been expanding for almost a decade, and stocks have risen steadily over that time. From September through the end of December, however, investors became more and more worried that challenges such as U.S.-China trade tensions, rising interest rates and political uncertainty could slow the economy and company profits, and possibly tip the U.S. economy and the global one into a recession.

Many Wall Street banks are forecasting a year of modest gains for stocks. But most also say they expect these sharp reversals to continue as investors try to handicap so many unknowns.

Vinay Pande, head of trading strategies for UBS Global Wealth Management, said company earnings jumped in 2018 and are likely to keep improving.

The S&P 500 index finished with a gain of 3.18 points, or 0.1 percent, at 2,510.03, while the Dow rose 18.78 points, or 0.1 percent, to 23,346.24. The Nasdaq composite climbed 30.66 points, or 0.5 percent, to 6,665.94.

Most markets were closed Tuesday for New Year’s Day.

Oil prices

Prices on long-term government bonds rose, a sign investors were looking for safer options. The yield on the 10-year Treasury note fell to 2.65 percent from 2.69 percent.

After sharp losses at the start of trading, benchmark U.S. crude jumped 2.5 percent to $46.54 per barrel in New York. Brent crude, used to price international oils, rose 2.1 percent to $54.91 per barrel in London. Those gains helped send energy stocks higher.

Oil prices have fallen about 40 percent since early October 2018 as investors reacted to the possibility of weaker demand for energy as economic growth slowed. That led to sharp drops in energy companies.

Julian Emanuel, chief equity and derivatives strategist for BTIG, said investors often start a new year by buying shares of the companies that did the worst the year before.

Meanwhile, health care companies, the best-performing part of the market in 2018, fell Wednesday as drugmakers and insurers lost ground.

In other trading:

• The dollar fell to 109.21 yen from 109.61 yen. The euro fell to $1.1344 from $1.1445. The British pound slid to $1.2609 from $1.2752.

• France’s CAC 40 fell 0.9 percent and the British FTSE 100 added 0.1 percent. Germany’s DAX rose 0.2 percent. Hong Kong’s Hang Seng tumbled 2.8 percent and Seoul’s Kospi gave up 1.5 percent. Tokyo’s markets were closed.

• Wholesale gasoline rose 1.8 percent to $1.33 a gallon. Heating oil gained 1.3 percent to $1.70 a gallon. Natural gas rose 0.6 percent to $2.96 per 1,000 cubic feet.

• Gold rose 0.2 percent to $1,284.10 an ounce and silver added 0.7 percent to $15.65 an ounce. Copper fell 0.3 percent to $2.62 a pound.
  …

Rotting hides on the road are all that is left of three butchered cows.

Such carnage is common in Venezuela’s cattle country, where thieves, squatters and government policy threaten a vital food resource.

Venezuela’s severe economic crisis is felt keenly in cities — where food sources are limited — but it’s also cutting a swath through what should be the country’s food basket.

Seeing the hides on the road — the handiwork of cattle poachers — Jose Labrador stops his truck and explodes with rage.

“It’s as if they were telling us: ‘We are killing your cattle, so what?'” the 46-year old rancher says, fuming that complaining is useless — police and local authorities will do nothing.

Labrador and other farmers in the cattle-rearing region of San Silvestre, in the western state of Barinas, say they are in a state of siege — from squatters, gunmen and government price controls that make their farms unprofitable.

“I can’t sleep on the farm anymore because I’m scared,” said Jose Antonio Espinoza, owner of a 600-head herd in San Silvestre. “They have come around here and tied people up, and then stolen everything — chainsaws, water pumps, cattle.”

He said as many as 74 bulls have been stolen over the past year from his family farm.

Cowboys on horseback herd his traditional Venezuelan Brahman and Carora breeds, as well as buffalos, to and from their fertile grazing land.

But they are powerless when the rustlers strike.

The wheeling of vultures overhead is a warning that the poachers have struck once again. When they arrive, only bones and skin remain, the meat cut up and taken away to feed a hungry black market.

Farm Policy Failures

In a 2016 survey, three-quarters of Venezuelans reported they had lost weight since the economic crisis began, by an average of 19 pounds (8.5 kilos).

Chronic shortages of protein in the cities should provide an opportunity for the country’s farmers, but farms are producing less and less.

Meat produced in Venezuela now barely accounts for 40 percent of  domestic consumption, less than half the 97 percent of two decades ago, according to the National Federation of Cattle Ranchers.

Per capita meat consumption went from 20 kilos per year in 1999 to only seven kilos at present, the federation says. Even then, farmers can’t fulfill demand.

“We are going backwards… even though those of us who remain on the land work tooth and nail,” federation president Armando Chacin told AFP.

Chacin warned that government policies, far from easing the problem, have served only to strangle growth.

Venezuela, a country of more than 30 million people, raises less than 10 million head of cattle, the federation says; in 1999, when the population was 20 million, there were 14 million cattle.

Dwindling resources makes meat more expensive in the capital Caracas, 560 kilometers (350 miles) away, where it costs the equivalent of the minimum monthly wage to buy two kilos of meat.

Land Expropriations

Since the arrival in power in 1999 of Hugo Chavez, the socialist government has expropriated five million hectares (12.4 million acres) of agricultural land, the cattle ranchers federation says.

At the same time, high oil prices meant Venezuela imported more of its food, to the detriment of its own agriculture industry.

Now, Chavez’s hand-picked successor Nicolas Maduro sets prices for basic foodstuffs, often below production costs, leading many farmers to bankruptcy.

Price controls mean farmers get little for the meat they produce.

After years of fattening, a big animal brings in about $250.

But with Venezuela’s staggering inflation set to top one million percent this year — according to the International Monetary Fund — it barely covers the cost of a truck tire.

Land invasions are another problem. Emboldened by government policy, armed squatters invaded a large maize farm in San Silvestre and ransacked it in the space of three days.

“They robbed nine tractors and three harvesters, they destroyed the house. We got tired of complaining about it and neither the national guard nor the police intervened,” said Marisela Febres, the owner.

The incident happened in 2016, but she was never able to recover her land. Arguing that the land was idle, the state-run National Land Institute awarded the farm to the squatters earlier this year.

In border areas, farmers can be even more exposed, regularly becoming the target of extortion by armed groups, engaged in running contraband or drug trafficking.

Late last month, the government took over the running of a score of slaughterhouses. Officials accused their owners of speculation and promptly slashed prices by two-thirds.

There have also been cases of pro-Maduro state governors demanding that farmers sell part of their production, setting the prices themselves, to distribute to their supporters at low cost.

Making matters worse on a local level is that the poachers don’t discriminate.

The animals killed include breeding bulls and dairy cows alike, animals that remain productive for up to 12 years. One cow alone can produce 4,000 liters of milk a year.

Labrador says he was a recent victim.

“They killed a bull of mine with incredible genes, one that was going to be a very productive stud,” he said.

Farmers have difficulty buying seeds and fertilizers, even vaccines for livestock, he says.

“If there are no medicines for people, imagine what it is like for the animals.”
…

Laborers milled around an unfinished eight-story building in an expansive field in Konza dotted with zebra and antelope — the only visible sign of progress in a decade-old plan to make Kenya into Africa’s leading technology hub by 2030.

Grandiose plans, red tape and a lack of funding have left Konza Technopolis — the $14.5 billion new city to be built some 60 km (37 miles) southeast of Nairobi — way behind schedule on its goal of having 20,000 people on site by 2020.

“It has taken too long and I think people have moved on,” said tech entrepreneur Josiah Mugambi, founder of Alba.one, a Nairobi-based software company, who was initially excited by the government’s ambitious project.

Dubbed the Silicon Savannah, Konza aims to become a smart city — using tech to manage water and electricity efficiently and reduce commuting time — and a solution to the rapid, unplanned urbanization which has plagued existing cities.

About 40 percent of Africa’s 1 billion people live in towns and cities and the World Bank predicts the urban population will double over the next 25 years, adding pressure to already stretched infrastructure.

Konza’s dream is to become a top business process outsourcing hub by 2030, with on-site universities training locals to feed into a 200,000-strong tech-savvy workforce providing IT support and call center services remotely.

But the first building has yet to be completed on the 5,000-acre former cattle ranch, three years after breaking ground, and business has shifted its focus to other African countries, like Rwanda, with competing visions to become modern tech hubs.

“Nobody can wait that long for a city to be built. For a tech entrepreneur, they think about where their startup will be two to three years down the line,” said Mugambi.

Other smart cities planned across Africa include Nigeria’s Eko Atlantic City near Lagos that will house 250,000 people on land reclaimed from the sea, Ghana’s Hope City and an Ethiopian city styled as the real Wakanda after the film “Black Panther.”

Utopian

Bringing such utopian schemes to life is no easy task for African governments that are struggling to provide adequate roads, power, water and security to their existing cities.

“Upgrading infrastructure in places like Kibera (slum) in Nairobi to provide water and a better sewerage system is equally as important as building a new city such as Konza,” said Abdu Muwonge, a senior urban specialist with the World Bank in Kenya.

Some critics say Konza was ill-conceived from the start.

“The vision is wrong; the vision is too big,” said Aly-Khan Satchu, a Nairobi-based independent financial analyst.

“This is miles from anywhere. There are not leveraging the existing infrastructure … It is assuming that you can bring in academia, you can bring in venture capital, you can bring in corporates.”

The first serious hurdle arose in 2012 when the National Land Commission (NLC), which manages public land, introduced a cumbersome land acquisition procedure, said Bitange Ndemo, who led a team that conceived Konza Technopolis in 2008.

“The NLC was saying we should follow the processes of acquiring public land, which would take years to complete,” Ndemo, now an associate professor of business at the University of Nairobi, told the Thomson Reuters Foundation.

The delays caused at least one deal with a German university to fall through, he said, as the process was much slower than the old one where investors signed deals directly with government ministries which took care of land leases.

To resolve this, the government transferred ownership of the site to the Konza Technopolis Development Authority (KoTDA), set up in 2012 to co-ordinate development of the new city, which now allocates land to investors on 50-year renewable leases.

Cold Feet

Financing has also proven a major issue.

In its strategic plan, the government promised to fund 10 percent of Konza, laying the infrastructure, while the private sector would come in with the rest of the money to build universities, offices, housing and hotels.

But the government was slow to contribute its share and has yet to pass a law to create KoTDA as a legal entity which would make it easier to sign contracts with external lenders, said Lawrence Esho, one of Konza’s project planners until 2013.

“They are way behind schedule partly because the government took time to give Konza money,” he said, adding that no money came in until 2013.

“This stopped any work from starting at the site and investors may have developed cold feet as they waited.”

KoTDA’s chief executive, John Tanui, said the government has committed to invest more than 80 billion shillings ($780 million).

“When I say committed does not mean we have absorbed. Our absorption is less than 10 percent of that figure,” he said, without elaborating.

The government has stepped up funding since 2017, said Abraham Odeng, deputy secretary at Kenya’s Information Communications and Technology ministry, without giving figures.

Odeng pointed to a 40 billion shilling contract signed in 2017 with an Italian firm to build roads, water and sewerage infrastructure by 2021, funded by the Italian government.

“That is a concessional loan, which is a long-term loan that the Kenyan government will pay,” he said.

Drop in the Ocean

But Kenya’s growing reliance on loans is causing jitters, with the International Monetary Fund warning of an increased risk of default.

The Washington-based lender forecast Kenya’s total public debt will reach 63 percent of economic output or GDP for 2018, up from 53 percent in 2016, citing the government’s public investment drive and revenue shortfalls.

The World Bank’s Muwonge said the issue is eliminating challenges for the private sector to do business.

“Getting Konza city off the ground will require that we pull in private capital with concessions for them to deliver certain kinds of infrastructure for which the government may not have resources,” he said.

Five local investors, including Nairobi-based software developer Craft Silicon and the state-run Kenya Electricity Transmission Company, are expected to build offices, residential buildings and hotels by 2020, KoTDA head Tanui said.

But critics say it is not enough.

“What (investors) have allocated so far is still a drop in the ocean,” said Ndemo, the former government technocrat.

And international interest is shifting elsewhere.

Rwanda — widely regarded as the least corrupt country in East Africa — launched its Kigali Innovation City in 2015, designed to host 50,000 people in universities and tech companies on a 70-hectare site outside the capital.

The $2 billion plan, due for completion by 2020, is seven times cheaper than Konza.

“All these other (cities) have better proximity, have better density and have better collaborative feedback loops,” said financial analyst Satchu. “We are now at a serious disadvantage vis-a-vis these other countries.”

($1 = 102.5000 Kenyan shillings)
…

Think of public spaces in big cities, and formal parks, bustling markets and grand squares come to mind.

Think again.

In the Georgian capital of Tbilisi, residents have redrawn the map and come up with innovative ways for locals to congregate in their ancient and fast-changing city.

A boxing ring was built on a bridge. Next to it — architects installed art to amuse commuters as they hurried over the river.

The grimy gaps between garages were turned into a ‘stadium’ where locals could face off over dominoes. Inside the disused garages, bakeries, barbers and beauty salons plied their trade.

It is not how most cities do public spaces, but Tbilisi — which stands at the crossroads of Europe and Asia — has a long history shaped by diverse masters, all of whom left their architectural imprint on the Caucasus.

As the city shakes off decades of Soviet rule and reinvents itself again, developers have bent once-tight planning rules and a building boom is underway — one that is changing the face of the city and jeopardizing the open areas where Georgians meet.

“Left behind … (in) the construction boom, public spaces are still important and constitute a resource, a big treasure to be preserved,” says Nano Zazanashvili, head of the urban policy and research division at Tbilsi’s Department of Urban Development, a city office. “The main challenge of the City Hall is to protect these areas.”

Boxing Bridge

The DKD bridge — which connects two Soviet-era residential districts — is a perfect example of how locals adapted centrally-imposed urban design to fit their own suburban needs.

Flat dwellers in this northeastern sprawl live in the sort of anonymous, concrete blocks typical of any Soviet city.

Beauty is not their selling point, so in the 1990s architects installed informal shops, a hotel and a boxing gym on the bridge, which connects two identikit micro-districts.

The bridge building was part of an outdoor exhibition created for the Tbilisi Architecture Biennial earlier this year.

The event – the first since Georgia regained independence in 1991 – brought together experts to study the city’s rapid transformation and to involve locals in the debate.

“It is the very beginning, not even a first step,” Tinatin Gurgenidze, co-founder of the Biennial, told the Thomson Reuters Foundation. “The local community needs to understand what is the necessity of working on these issues.”

Rich Mix

Downtown, the cityscape makes for an eclectic backdrop.

Deco mansions jostle with Soviet constructivism. Ancient sulphur baths and tiny churches squat at the feet of futuristic skyscrapers, while rickety wooden houses lean into the hills, their gaily painted balconies perched in thin air.

Much of this history is fading into oblivion, sagging walls propped up with outsize beams to stop whole ghost streets crashing to dust.

Other parts of town are bulldozed and built over.

The city center is a decade into a frenetic construction boom, but the drab Gldani suburb mostly cleaves to its 1970s integrity, an era when uniform blocks were built to accommodate workers relocated from older, central neighborhoods.

This dormitory suburb became the area of the city with the highest density of population – and as communism and central control began to crumble, residents stole the chance to tack on ad-hoc balconies, garages and makeshift gardens.

With Georgian independence came a headlong rush to architectural deregulation, free of any supervision or control, changing the look, feel and use of once sacred public spaces.

“People came up with their own solutions to the problems,” said Gurgenidze, who trained in Georgia as an architect. “The informal structures need to be taken into consideration when decision makers and architects plan the future of these areas.”

Informal and Changed

Take the garages — erected in front of flats to park cars in the 1990s, they were later transformed into basic fruit and vegetable shops, bakeries, barbers and beauty salons.

Rented for 40-100 lari ($15 to £38) a month, the self-declared shops generate extra income for the residents and many were legalized after the fact into formal commercial spaces.

Now they face a possible next life.

The mayor of Tbilisi, former soccer star Kakha Kaladze, this year launched an initiative with local backing to replace the ‘garages’ with playgrounds or gardens.

So far, the plan has had limited success.

But according to architect Nikoloz Lekveishvili, locals are regaining the tiny spaces in between to play dominoes, soak up the greenery and relax with neighbors.

“People see this public space as an opportunity,” he said.

Lali Pertenavi, an artist who grew up in Gldani, temporarily turned Block 76 — a local residential building — into an exhibition space in October as part of the biennial. Residents opened their homes to artists, who in turn transformed them into social spaces recalling the best of Soviet-era collectivism.

While a master plan for the whole city is under discussion at municipal level, public spaces for ordinary people are low in the pecking order of priorities.

“Public spaces and green areas are a hot topic in the local debate but people don’t have enough time to fight for it,” said Anano Tsintsabadze, a lawyer and activist managing the Initiative for a Pubic Space, an NGO that focuses on urban planning and supports residents fighting for public spaces.

In parts of the city, such as Saburtalo and Didi Digomi, the community is slowly mobilizing against the privatization of public spaces amid a drive to keep them free and accessible.

“The social tissue has grown more than the local government.

People know what happens in Europe and are asking for more organised, clean urban spaces,” said architect Nikoloz Lekveishvili, co-founder of Timm Architecture, an international network stretching from Milan to Moscow, Istanbul to Tbilisi.

($1 = 2.6550 laris)
…

Digital developments that have upended businesses throughout the global economy, from music to manufacturing, are also changing what the world trades and how manufacturers and merchants move and sell their goods. Experts tell VOA’s Jim Randle, the digital revolution presents significant opportunities, but also serious problems, for countries.
…

Equities around the world rose Monday as possible progress in resolving the trade dispute between the United States and China engendered some investor optimism in what has been a punishing end of year for markets.

The U.S. benchmark S&P 500 stock index advanced in light trading volume after U.S. President Donald Trump said he held a “very good call” with China’s President Xi Jinping on Saturday to discuss trade and said “big progress” was being made.

Chinese state media were more reserved, saying Xi hoped the negotiating teams could meet each other halfway and reach an agreement that was mutually beneficial.

The rise in U.S. equities mirrored that in Asian and European markets, which were also buoyed by trade optimism.

Despite Monday’s advance, equities ended the year largely in the red, victims of investor anxiety over trade tensions and slowing economic growth. Asian and European shares had been sluggish for much of the year, and in recent months, U.S. stocks followed suit.

“If the European economy continues to decelerate and the Chinese economy decelerates because of tariffs, there is definitely going to be spillover to the United States,” said Shannon Saccocia, chief investment officer at Boston Private.

The S&P 500 dropped more than 9 percent in December, its largest decline since the Great Depression. For the year, the index slid more than 6 percent, its biggest drop since the 2008 financial crisis.

Asia-Pacific shares outside Japan ended down 16 percent for the year, while the STOXX 600 was more than 13 percent lower.

MSCI’s gauge of stocks around the globe fell 11.1 percent in 2018.

A further blow to the Chinese economy could spur a quicker resolution to the U.S.-China trade dispute and thus boost global equities, Saccocia said. Survey data on Monday showed Chinese manufacturing activity contracting for the first time in two years even as the service sector improved.

On Monday, the Dow Jones Industrial Average rose 265.06 points, or 1.15 percent, to 23,327.46, the S&P 500 gained 21.11 points, or 0.85 percent, to 2,506.85 and the Nasdaq Composite added 50.76 points, or 0.77 percent, to 6,635.28.

MSCI’s emerging markets index rose 0.32 percent, while the MSCI world stock index gained 0.66 percent.

No more hikes

Yields on U.S. Treasuries fell on Monday, keeping with the trend over the past two months as investors moved to lower-risk investments.

Benchmark 10-year notes last rose 15/32 in price to yield 2.686 percent, compared with 2.738 percent late Friday.

The fall in Treasury yields reflects expectations of a slowdown, if not a pause altogether, in the Federal Reserve’s progression of interest-rate hikes.

The precipitous drop in yields has undermined the U.S. dollar in recent weeks. The dollar index, which measures the greenback against a basket of six other currencies, was down 0.3 percent and on track to end December with a loss. It is, however, still set for its highest yearly percentage gain since 2015.

On Monday, the dollar fell to a six-month low against the yen.

The euro was up 0.2 percent to $1.1459, on track to end the year down nearly 5 percent against the dollar.

Oil posted its first year of losses since 2015, with Brent crude futures down 19.5 percent and U.S. West Texas Intermediate crude futures down 24.8 percent.

On Monday, Brent crude settled 59 cents higher, or 1.11 percent, at $53.80 a barrel. U.S. crude settled up 8 cents, or 0.18 percent, at $45.41 a barrel.
…

China’s factory activity shrank in December for the first time in more than two years, an official survey showed Monday, intensifying pressure on Beijing to reverse an economic slowdown as it enters trade talks with the Trump administration.

The purchasing managers’ index of the National Bureau of Statistics and an industry group, the China Federation of Logistics & Purchasing, fell to 49.4 from November’s 50.0 on a 100-point scale. Any reading below 50 shows that activity is contracting. The December figure was the lowest since February 2016 and the first drop since July 2016.

 

In the quarter that ended in September, China’s economic growth sank to a post-global crisis low of 6.5 percent compared with a year earlier. The slowdown occurred despite government efforts to stem the downturn by ordering banks to lend more and by boosting spending on public works construction.

 

Forecasters expect annual growth of about 6.5 percent, down slightly from 2017’s 6.7 percent. But some industry segments, including auto and real estate sales, have suffered more serious declines.

 

“Downward pressure on the economy is still large,” economist Zhang Liqun said in a statement issued with the PMI.

 

Overall orders and exports both contracted, indicating that Chinese factories are suffering from weak demand at home and abroad. Exports to the United States kept growing at double-digit monthly rates through late 2018 despite President Donald Trump’s punitive tariffs. But growth in exports to the rest of the world fell sharply in November and forecasters expect American demand to weaken in early 2019.

 

That adds to complications for Chinese leaders who are trying to reverse a broad economic slowdown and avert politically dangerous job losses.

 

Chinese and U.S. envoys are due to meet in early January for negotiations that are intended to resolve their economically threatening trade war. Over the weekend, Trump sounded an optimistic note, tweeting that he had spoken with President Xi Jinping by phone.

 

“Deal is moving along very well,” Trump tweeted. “If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!”

 

But economists say the 90-day moratorium on new penalties that was agreed to by Trump and Xi on Dec. 1 is likely too little time to resolve their sprawling dispute.

 

Chinese economic activity already was weakening after Beijing tightened controls on bank lending in late 2017 to cool a debt boom. The downturn was more abrupt than expected, which prompted regulators to shift course and ease credit controls. But they moved gradually to avoid reigniting a rise in debt. Their measures have yet to put a floor under declining growth.

 

Chinese leaders promised at an annual economic planning meeting in mid-December to shore up growth with tax cuts, easier lending for entrepreneurs and other steps.

 

 
…

Kenya’s economy expanded faster in the third quarter of this year than in the same period last year due to strong performance in the agriculture and construction sectors, the statistics office said on Monday.

The Kenya National Bureau of Statistics said the economy grew 6 percent in the third quarter of 2018, compared with 4.7 percent in the same period in 2017.

It said the agriculture sector expanded by 5.2 percent compared with 3.7 percent in the third quarter of 2017, helped by better weather.

“Prices of key food crops remained low during the quarter compared to the corresponding quarter of 2017, an indication of relative stability in supply,” KNBS said.

Manufacturing grew by 3.2 percent from a 0.1 percent contraction in the third quarter of 2017, KNBS said.

It said that the electricity and water supply sector grew by 8.5 percent from 4.5 percent in the third quarter of 2017, mainly due to a big increase in the generation of electricity from hydro and geothermal sources.

Gross foreign reserves increased to 1,222.5 billion from 1,085.6 billion in the same period of last year.

The current account deficit narrowed by 23 percent to 116 billion Kenyan shillings ($1.14 billion), it said.

This was mainly due to lower imports of food and higher value of exports of goods and services.

The government forecasts that the economy will expand by 6.2 percent in 2019, up from a forecast 6.0 percent this year.
…

The euro currency turns 20 years old on January 1, surviving two tumultuous decades and becoming the world’s No. 2 currency.

After 20 years, the euro has become a fixture in financial markets, although it remains behind the dollar, which dominates the world’s market.

The euro has weathered several major challenges, including difficulties at its launch, the 2008 financial crisis, and a eurozone debt crisis that culminated in bailouts of several countries.

Those crises tested the unity of the eurozone, the 19 European Union countries that use the euro. While some analysts say the turmoil and the euro’s resilience has strengthened the currency and made it less susceptible to future troubles, other observers say the euro will remain fragile unless there is more eurozone integration.

Beginnings 

The euro was born on January 1, 1999, existing initially only as a virtual currency used in financial transactions. Europeans began using the currency in their wallets three years later when the first Euro notes and coins were introduced.

At that time, only 11 member states were using the currency and had to qualify by meeting the requirements for limits on debt, deficits and inflation. EU members Britain and Denmark received opt-outs ahead of the currency’s creation.

The currency is now used by over 340 million people in 19 European Union countries, which are: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.

Other EU members are required to join the eurozone when they meet the currency’s monetary requirements.

Popularity

Today, the euro is the most popular than it has ever been over the past two decades, despite the rise of populist movements in several European countries that express skepticism toward the European Union.

In a November survey for the European Central Bank, 64 percent of respondents across the eurozone said the euro was a good thing for their country. Nearly three-quarters of respondents said they thought the euro was a good thing for Europe.

In only two countries — Lithuania and Cyprus — did a majority of people think the euro is a bad thing for their nation.

That is a big contrast to 2010, the year that both Greece and Ireland were receiving international bailout packages, when only 51 percent of respondents thought the euro was a good thing for their country.

Challenges

The euro faced immediate challenges at its beginning with predictions that the European Central Bank (ECB) was too rigid in its policy and that the currency would quickly fail. The currency wasn’t immediately loved in European homes and businesses either with many perceiving its arrival as a price hike on common goods.

Less than two years after the euro was launched — valued at $1.1747 to the U.S. dollar — it had lost 30 percent of its value and was worth just $0.8240 to the U.S. dollar. The ECB was able to intervene to successfully stop the euro from plunging further.

The biggest challenge to the block was the 2008 financial crisis, which then triggered a eurozone debt crisis that culminated in bailouts of several countries.

Tens of billions of euros were loaned to Greece, Ireland, Portugal, Cyprus and Spain, either because those countries ran out of money to save their own banks or because investors no longer wanted to invest in those nations.

The turmoil also highlighted the economic disparity between member states, particularly between the wealthier north and the debt-laden southern nations.

Poorer countries experienced both the advantages and disadvantages to being in the eurozone.

Poorer countries immediately benefited from joining the union, saving trillions of euros due to the lowering borrowing costs the new currency offered.

However, during times of economic downturn, they had fewer options to reverse the turmoil.

Typically in a financial crisis, a country’s currency would plunge, making its goods more competitive and allowing the economy to stabilize. But in the eurozone, the currency in poorer countries cannot devalue because stronger economies like Germany keep it higher.

Experts said the turbulent times of the debt crisis exposed some of the original flaws of the euro project.

However, the euro survived the financial crisis through a combination of steps from the ECB that included negative interest rates, trillions of euros in cheap loans to banks and buying more than 2.6 trillion euros in government and corporate bonds.

Future

ECB chief Mario Draghi was credited with saving the euro in 2012 when he said the bank would do “whatever it takes” to preserve the currency.

Some experts say the flexibility of the bank proves it is able to weather financial challenges and say the turmoil of the past two decades have left the ECB better able to deal with future crises.

However, other observers say that the 19 single currency nations have not done enough to carry out political reforms necessary to better enable the countries to work together on fiscal policy and to prepare for future downturns.

Proposals for greater coordination, including a eurozone banking union as well as a eurozone budget are still in the planning phases.
…

U.S. President Donald Trump said on Twitter on Saturday that he had a “long and very good call” with Chinese President Xi Jinping and that a possible trade deal between the United States and China was progressing well.

As a partial shutdown of the U.S. government entered its eighth day, with no quick end in sight, the Republican president was in Washington, sending out tweets attacking Democrats and talking up possibly improved relations with China.

The two nations have been in a trade war for much of 2018 that has seen the flow of hundreds of billions of dollars worth of goods between the world’s two largest economies disrupted by tariffs.

Trump and Xi agreed to a ceasefire in the trade war, agreeing to hold off on imposing more tariffs for 90 days starting Dec. 1 while they negotiate a deal to end the dispute following months of escalating tensions.

“Just had a long and very good call with President Xi of China,” Trump wrote. “Deal is moving along very well. If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!” Chinese state media also said Xi and Trump spoke on Saturday, and quoted Xi as saying that teams from both countries have been working to implement a consensus reached with Trump.

Chinese media also quoted Xi as saying that he hopes both sides can meet each other half way and reach an agreement that is mutually beneficial as soon as possible.

Having canceled his plans to travel to his estate in Florida for the holidays because of the government shutdown that started on Dec. 22, Trump tweeted, “I am in the White House waiting for the Democrats to come on over and make a deal.”

The Republican-controlled Congress was closed for the weekend and few lawmakers were in the capital.

The shutdown, affecting about one-quarter of the federal government including 800,000 or so workers, began when funding for several agencies expired.

Congress must pass legislation to restore that funding, but has not done so due to a dispute over Trump’s demand that the bill include $5 billion in taxpayer money to help pay for a wall he wants to build along the U.S.-Mexico border.
…

The end of 2018 seemed to signal good things to come for America’s farmers. Fresh off the passage of the farm bill, which reauthorized agriculture, conservation and safety net programs, the Agriculture Department last week announced a second round of direct payments to growers hardest hit by President Donald Trump’s trade war with China.

Then parts of the government shut down.

The USDA in a statement issued last week assured farmers that checks would continue to go out during the first week of the shutdown. But direct payments for farmers who haven’t certified production, as well as farm loans and disaster assistance programs, will be put on hold beginning next week, and won’t start up again until the government reopens.

There is little chance of the government shutdown ending soon. Trump and Congress are no closer to reaching a deal over his demand for border wall money, and both sides say the impasse could drag well into January.

Although certain vital USDA programs will remain operational in the short term, that could change if the shutdown lasts for more than a few weeks.

The Supplemental Nutrition Assistance Program, or food stamps, helps feed roughly 40 million Americans. According to the USDA, eligible recipients are guaranteed benefits through January. Other feeding programs, including WIC, which provides food aid and nutrition counseling for pregnant women, new mothers and children, and food distribution programs on Indian reservations, will continue on a local level, but additional federal funding won’t be provided. School lunch programs will continue through February.

USDA has earmarked about $9.5 billion in direct payments for growers of soybeans, corn, wheat, sorghum and other commodities most affected by tariffs. The first round of payments went out in September. The deadline to sign up for the second round of payments is January 15.

The impact of the shutdown, which began shortly before most federal workers were scheduled for a holiday break, started coming into focus by midweek.

About 420,000 employees are working without pay, while 380,000 are being forced to stay home. In the past, federal employees have been paid retroactively. But government contractors won’t get paid for hours they’ll lose staying home, causing problems for those who rely on hourly wages.

In anticipation of the financial bind many federal workers and contractors may soon find themselves in, the Office of Personnel Management offered some advice: haggle with landlords, creditors and mortgage companies for lower payments until the shutdown is over.

The shutdown also is affecting national parks, although unevenly: Some remain accessible with bare-bones staffing levels, some are operating with money from states or charitable groups, while others are locked off.

 
…

The storm winds of the recent trade war between the United States and China have settled in a truce for now, but the weeks of agitation — of rising tariffs and counter duties — battered one economy close to Beijing: Hong Kong’s.

In December, Hong Kong government economist Andrew Au said he anticipated near-term troubles for the territory’s economic forecast. GDP growth — a year after a record high of 341.5 billion — slowed significantly, from 4.6 percent growth in the first quarter to 2.9 percent in the third.

The government says the impact of the trade war can be seen in consumer prices, slower spending and lighter trade. Consumer price inflation ticked up 2.8 percent in the third quarter. The government warned that inflation could head upward as local costs rise along with residential rental rates.

Kelvin Ho-Por Lam, a former economist with HSBC based in Hong Kong, predicted another problem for Hong Kong from overseas.

Double whammy

“It’s not just the trade war, it’s facing a double whammy at the moment,” Lam said. “The trade war impacts on this economy, which is showing up in this Hong Kong GDP over the last two quarters. The second impact is from rising interest rates in the U.S.” The Federal Reserve raised rates four times in 12 months. A slower U.S. economy means less buying from China.

Adding to the impact is great unease. 

“It poses uncertainty on the economic agents in society. Businesses are more concerned going ahead with their investment plans,” Lam said. “They’re shelving their investments and therefore they are not investing in capacity in Hong Kong or in China.”

Trade and logistics — the apparatus to move the shoes and dresses and smartphones from Chinese factories to markets worldwide — are central to Hong Kong’s economy. The sector accounts for nearly one-fifth of the city’s GDP, higher than the substantial financial and banking industry here. When tariffs hit, goods cost more to sell in the United States, which means companies decrease stock and consumers buy less.

China’s economic growth weakened in the third quarter from a year earlier, its lowest expansion since the global financial crisis in 2008.

Consumers wary

Clearly consumers are wary. Retail sales in Hong Kong, the semi-autonomous Chinese territory, grew in September at their slowest pace in 15 months. Also hurting the city was substantial damage from typhoon Mangkhut.

Favorite shops of mainland tourists — Sa Sa International, Chow Tai Food Jewelry, and Luk Fook Holdings, all posted slowed sales in the third quarter.

Hong Kong also saw its economy lag for local reasons. Home prices in what is often called the world’s least affordable market chilled this year as interest rates rose. The number of residential property transactions fell by 24 percent from 18,900 in the second quarter to 14,400 in the third quarter, according to the government.

Property sellers saw the slowdown in sales set in this summer, after the residential property market had churned hard for 28 consecutive months. Median home prices dropped by as much as 5 percent from June, agents told the South China Morning Post in October. The city’s rating and valuation Index, which tracks prices of older homes, in August marked the first monthly decline in more than two years. Even the government offered discounts. A 97,300-square-foot plot of the former Kai Tak airport in the city’s Kowloon district sold for $1.03 billion to a unit of China Overseas Land & Investment, nearly 13 percent lower than another Kai Tak sale in November.

The market chill began in August after Carrie Lam, Hong Kong’s chief executive, introduced a tax to compel developers to create more housing. Meanwhile, banks raised mortgage rates for the first time in 12 years.

That means mortgage holders have less extra money to spend, Kelvin Lam said. He forecast that there will be fewer tourists visiting Hong Kong, perhaps because of the volatility in China.

“The Hong Kong economy is very sensitive to these things,” he said. “It will reduce people spending for their own personal consumption.”

​Folded into China’s economy

Hong Kong produces very little domestically, Kelvin Lam pointed out. Lam said because the territory’s economy is so entwined with China’s, and because the range of products and services are so narrow, the impact of the extra tariffs will be felt on whatever the city acquires from China and re-exports.

Hong Kong is likely to suffer more during China’s downturns as the former British colony is folded into China’s economy and as the government plans for a massive technology hub to be rooted in nearby Shenzhen.

Andrew Sheng, a distinguished fellow at the Asia Global Institute at the University of Hong Kong, wrote in an email that he didn’t think the city would encounter much inflation, despite the downward pressure coming from lower property prices and a slowing global economy.

“The Hong Kong economy will suffer from the trade conflict,” said the former central banker and financial regulator in Asia. “Although it is very resilient to overseas shocks.”
…

Sears Holdings Corp. Chairman Eddie Lampert submitted a $4.4 billion takeover bid for the bankrupt U.S. retailer, representing its only chance of escaping liquidation and laying off tens of thousands of workers, a spokesman for the billionaire’s hedge fund said Friday.

Lampert’s bid is backed in part by $1.3 billion in financing from three different financial institutions, the spokesman for his hedge fund, ESL Investments Inc., said. It would preserve about 425 stores that Sears has yet to close and secure the jobs of up to 50,000 workers out of the 68,000 employed by the retailer. An affiliate of ESL, Transform Holdco LLC, submitted the bid, the spokesman said.

​People familiar with the matter said the financing comes from Sears’ existing lenders Bank of America Corp. and Citigroup Inc, as well Royal Bank of Canada, which was not previously a lender, which together agreed to provide a $950 million asset-based loan and a $350 million revolving credit line.

Some of Lampert’s bid relies on $1.8 billion of Sears debt that ESL already holds and plans to forgive to back the offer, the sources said. The bid also includes about $400 million in financing from non-bank lenders, the sources said.

The bid contemplates assuming protection agreements Sears has previously sold to reassure customers who have bought appliances, televisions, lawn tractors and other big-ticket items, the ESL spokesman said.

“Factoring for all considerations, we believe that our going concern bid provides the best path forward for the company, the best option to save tens of thousands of jobs and is superior for all of Sears’ stakeholders to the alternative of a complete liquidation,” the ESL spokesman said. “Much work remains and there is no assurance our proposal will be completed.”

Next move is Sears’

Sears will now evaluate the bid to determine whether it is viable, and there remains a possibility the company could reject it, some of the sources said.

A Sears spokeswoman declined to comment. Bank representatives either had no immediate comment or did not immediately respond to requests for comment.

A U.S. bankruptcy court judge must approve any sale of Sears. The judge will weigh the opinions of other stakeholders, including unsecured creditors who have argued they could recover more of their investment if the department store operator winds down.

Without the financing or another buyer, Sears faces the prospect of closing its doors for good and putting roughly 68,000 people out of work.

​125-year-old retailer

The 125-year-old retailer filed for bankruptcy Oct. 15 and developed plans to restructure around the sale of 500 stores and businesses including Kenmore, DieHard and the company’s home services division. Only Lampert’s ESL offered to buy the entire company.

The only other bids Sears has received are from suitors interested in pieces of the company and liquidators prepared to run going-out-of-business sales at stores and shut down the retailer.

Sears dates back to the late 1880s. Its mail-order catalogs with merchandise ranging from toys, medicine and gramophones to automobiles, kit houses and tombstones made it the Amazon.com Inc. of its time.

But the iconic retailer gradually lost its shine as consumers increasingly favored brick-and-mortar rivals such as Walmart Inc and Target Corp and e-commerce.

Lampert, who through ESL is Sears’ biggest shareholder and creditor, formed Sears Holdings in 2005 by acquiring Sears Roebuck in an $11 billion deal and combining it with discount chain Kmart, which he had also taken over.

Lampert had pledged to restore Sears to its glory days, when it owned the Sears Tower in Chicago, then the world’s tallest building, and companies that included a radio station and Allstate insurance. But the company stopped turning a profit in 2011, and it gradually started to sell assets, such as its legendary Craftsman brand and many of its properties, to stay afloat.

Sears Holdings listed $6.9 billion in assets and $11.3 billion in liabilities in documents filed in the U.S. Bankruptcy Court in the Southern District of New York.

The largest U.S. toy retailer, Toys ‘R’ Us, tried to emerge from its 2017 bankruptcy filing but was forced to liquidate six months later after creditors lost confidence in its turnaround plan.
…

Wall Street capped a week of volatile trading Friday with an uneven finish and the market’s first weekly gain since November. 

 

Losses in technology, energy and industrial stocks outweighed gains in retailers and other consumer-focused companies. Stocks spent much of the day wavering between small gains and losses, ultimately unable to maintain the momentum from a two-day winning streak. 

 

Even so, the major stock indexes closed with their first weekly gain in what’s been an otherwise painful last month of the year. The Dow Jones industrial average and S&P 500 rose more than 2 percent for the week, while the Nasdaq added nearly 4 percent. The indexes are still all down around 10 percent for the month and on track for their worst December since 1931. 

 

“It seems like convulsions in either direction have been the real norm for much of December and that’s certainly been the case this week,” said Eric Wiegand, senior portfolio manager for Private Wealth Management at U.S. Bank. “The initial push higher and then seeing it subside a little bit is perhaps getting back to a little bit more of a normal environment, reflecting the reality that we have still a number of issues overhanging the market.” 

 

The market’s sharp downturn since October has intensified this month, erasing all its 2018 gains and nudging the S&P 500 closer to its worst year since 2008. 

 

Investors have grown worried that the testy U.S.-China trade dispute and higher interest rates would slow the economy, hurting corporate profits. This week, with trading volumes lower than usual because of the Christmas holiday, served up some pronounced swings in the market. 

 

A steep sell-off during the shortened trading session on Christmas Eve left the major indexes down more than 2 percent. On Wednesday, stocks mounted a stunning rebound, posting the market’s best day in 10 years as the Dow shot up more than 1,000 points for its biggest single-day point gain ever. 

Late reversal

 

The market appeared ready to give much of those gains back on Thursday, before a late-afternoon reversal that erased a 600-point drop in the Dow left the market with a two-day winning streak. 

 

“The market was so oversold and then Wednesday and Thursday were key reversal days, but also stronger closes than opens,” said Janet Johnston, portfolio manager at TrimTabs Asset Management. 

 

“The market was starting to price in the worst-case scenario: a recession,” Johnston said 

 

Still, the market’s downturn has left stocks substantially less expensive than they were heading into the fourth quarter, Johnston noted. 

 

“And that sets up a good buying opportunity,” she said. 

 

On Friday, the S&P 500 index fell 3.09 points, or 0.1 percent, to 2,485.74. The Dow Jones industrial average dropped 76.42 points, or 0.3 percent, to 23,062.40. The average had briefly climbed to 243 points. 

 

The Nasdaq added 5.03 points, or 0.1 percent, to 6,584.52. The Russell 2000 index of smaller-company stocks climbed 6.11 points, or 0.5 percent, to  1,337.92. 

 

Technology companies, a big driver of the market’s gains before things deteriorated in October, were among the big decliners. Alliance Data Systems dropped 1.4 percent to $149.82. 

 

Oil prices recovered after wavering in midmorning trading. Benchmark U.S. crude rose 1.6 percent to settle at $45.33 a barrel in New York. Brent crude, used to price international oils, inched up 0.1 percent to close at $52.20 a barrel in London. 

 

Despite the rise in oil prices, energy sector stocks declined. Cabot Oil & Gas slid 3.5 percent to $22.95, while Hess lost 2.8 percent to $40.38. 

 

Retailers and other consumer-focused companies fared better. Amazon rose 1.1 percent to $1,478.02. 

 

Wells Fargo settlement

Wells Fargo rose 0.5 percent to $45.78 on news that the lender has agreed to pay $575 million in a national settlement with state attorneys general over its fake bank accounts scandal. The San Francisco-based bank has acknowledged that its employees opened millions of unauthorized bank accounts for customers in order to meet unrealistic sales goals. 

 

Tesla climbed 5.6 percent to $333.87 after naming two independent directors to its board under an agreement with federal regulators. 

 

Homebuilders fell broadly in the morning after the National Association of Realtors said its pending home sales index fell last month as fewer Americans signed contracts to buy homes. Higher mortgage rates and prices are squeezing would-be buyers out of the market, especially in the West. The stocks mostly recovered by midafternoon. William Lyon Homes gained 3.4 percent to $10.81. 

 

Bond prices recovered after a midday dip, sending the yield on the 10-year Treasury down to 2.72 percent from 2.74 percent late Thursday. 

 

The dollar declined to 110.41 yen from Thursday’s 110.74 yen. The euro weakened to $1.1442 from $1.1449. 

 

Gold edged up 0.1 percent to $1,283 an ounce and silver gained 0.8 percent to $15.44 an ounce. Copper rose 0.5 percent to $2.68 a pound. 

 

Overseas, major indexes in Europe closed higher while markets in Asia mostly rose. London’s FTSE 100 gained 2.3 percent, while the Nikkei 225 index fell 0.3 percent.  
…

In South Korea’s largest shipyard, thousands of workers in yellow hard hats move ceaselessly between towering cranes lifting hulks of steel. They look like a hive of bees scurrying over a massive circuit board as they weld together the latest additions to the rapidly growing fleet of tankers carrying super-chilled liquefied natural gas across the world’s oceans. 

 

The boom in fossil-fuel production in the United States has been matched by a rush on the other side of the Pacific to build the infrastructure needed to respond to the seemingly unquenchable thirst for energy among Asia’s top economies. When Congress lifted restrictions on shipping crude oil overseas in 2015, soon after the Obama administration opened the doors for international sales of natural gas, even the most boosterish of Texas oil men wouldn’t have predicted the U.S. could become one of the world’s biggest fossil-fuel exporters so quickly.  

  

Climate experts say there is little doubt increased American production and exports are contributing to the recent rise in planet-warming carbon emissions by helping keep crude prices low, increasing consumption in developing economies.  

Better than dirtier fuel, some say

  

Backers of U.S. exports of liquefied natural gas, or LNG, argue that the boom will produce environmental benefits because it will help China and other industrial nations wean themselves from coal and other dirtier fossil fuels. 

 

Environmentalists counter that the massive new supplies unleashed by American advances in extracting natural gas from shale doesn’t just make coal-fired power plants less competitive. LNG also competes with such zero-carbon sources of electricity as nuclear, solar and wind — potentially delaying the full adoption of greener sources. That’s time climate scientists and researchers say the world doesn’t have if humans hope to mitigate the worst-case consequences of our carbon emissions, including catastrophic sea-level rise, stronger storms and more wildfires.  

  

“Typically, infrastructure has multi-decadal lifespans,” said Katharine Hayhoe, a climate scientist and director of the Climate Science Center at Texas Tech University. “So, if we build a natural-gas plant today, that will impact carbon emissions over decades to come. So those are the critical and crucial decisions that are being made today. Do we increase access to and use of fossil fuels, or do we make decisions that limit and eventually reduce access to fossil fuels?”  

Boon to shipyards

While it is difficult to estimate how much America’s rise as major exporter of fossil fuels is contributing to a hotter climate, some of the economic benefits are plain to see in South Korea’s shipyards. 

 

At the sprawling Daewoo Shipbuilding and Marine Engineering facility on the island of Geoje, more than half of the 35 vessels scheduled for delivery in 2018 were LNG carriers. A similar number of vessels are lined up for completion next year. 

 

It’s the same story at the two other major Korean yards. The construction of the big gas tankers has been credited with lifting the nation’s shipbuilding sector out of the doldrums from a decade ago, when the Great Recession caused a downturn in transoceanic trade.  

South Korea’s big three shipbuilders — Daewoo, Hyundai Heavy Industries and Samsung Heavy Industries — won orders for 53 new LNG carriers in 2018 at about $200 million each, soaking up the lion’s share of the 62 vessels ordered globally, according to numbers compiled by the London-based shipping group Clarkson Research. South Korea is expected to finish 2018 at the top spot in overall orders for new commercial ships, surpassing China for the first time in seven years. 

 

“We are getting out of a long tunnel,” Song Ha-dong, a senior Daewoo executive, said as he surveyed the company’s 1,200-acre yard from above the British Contributor, a gargantuan LNG carrier with a freshly painted deck covered in a maze of pipes. “The U.S.-led shale gas boom is getting fully under way, and China, Japan and South Korea are increasing their consumption of natural gas.”  

During a recent visit by The Associated Press, three of the LNG carriers were being assembled inside a massive dry dock. Another 13, including the British Contributor, had been floated out to nearby berths where workers were putting on finishing touches.  

  

The Korean shipyards have developed a niche in building ships with the complex systems needed to transport natural gas. The gas is compressed and liquefied for storage by keeping it really cold, about -260 Fahrenheit. In this liquid state, natural gas is about 600 times smaller than at room temperature. 

Top three importers

 

The British Contributor is as long as three football fields and can carry enough liquefied gas to fill about 70 Olympic-sized swimming pools — nearly two days’ national supply for South Korea. The country used about 1.9 trillion cubic feet of LNG in 2017, finishing third behind China and Japan as the world’s biggest importers, according to data from the U.S. Energy Information Administration. 

 

With no domestic oil and gas resources and an unfriendly neighbor blocking overland shipments from the north, South Korea relies exclusively on oceangoing tankers. Nearly half of South Korea’s gas imports come from Qatar and Australia, but the share shipped from the U.S. is growing fast as additional export terminals along the Gulf coast are coming online to handle the glut of gas unleashed by hydraulic fracturing in the Permian Basin of West Texas and southeastern New Mexico. 

 

U.S. LNG exports quadrupled in 2017, with this year on track to see similarly exponential growth. Nearly a fifth of all that gas goes to South Korea.  

The British Contributor is the third of six LNG carriers being built by Daewoo for British energy giant BP, which will mainly use them to transport U.S. gas to Asia under a 20-year contract with the Freeport LNG facility south of Houston. Daewoo delivered four similar ships this year to the government-owned Korea Gas Corporation, which has a 20-year deal to buy gas exported from Cheniere Energy’s Sabine Pass LNG terminal in Louisiana. 

 

South Korea has been vying with Mexico for the title of the largest importer of U.S. LNG, and its reliance on gas could further increase under the government of President Moon Jae-in, who has pledged to transition his country away from nuclear power following the Fukushima meltdown in Japan.  

  

Park Moo-hyun, a senior analyst at Hana Financial Investment, predicts shipping companies will need to place orders for around 480 new LNG carriers over the next decade to match the U.S.-driven increase in global LNG trade — roughly doubling the current worldwide fleet. 

 

“The impact brought by the emergence of shale is not just about an increase in U.S. energy exports — there has been tremendous growth in the production of energy sources that hadn’t been used much, such as LNG,” Park said. “Once the groundwork is established for the stable use of these new energy sources, industries are pushed to adapt.” 

 

Natural gas has the added appeal of producing about half the carbon dioxide of coal when it’s burned. Its increased adoption for generating electricity has been pitched by the U.S. and others as a way for nations to make progress toward meeting their emissions reductions goals under the 2015 Paris climate accord. Burning gas also creates less particulate pollution. 

 

In China, the Communist government has declared a “Blue Sky Defense War” to reduce the choking smog in Beijing and two dozen surrounding cities with a program to convert hundreds of thousands of homes and industrial facilities from burning coal to gas.  In February, Texas-based Cheniere signed a 25-year deal with the state-controlled China National Petroleum Corporation to export LNG from its export terminal in Corpus Christi. 

Carbon emissions increase

 

But the increased gas exports from the U.S. and other sources hasn’t really put much of dent in Chinese coal consumption, which has remained largely flat in 2018. Overall carbon emissions for China, the globe’s biggest emitter, increased nearly 5 percent in 2018.  

Daniel Raimi, a researcher at the Washington-based think tank Resources for the Future, said determining whether U.S. gas exports are a net good or bad for the climate is difficult. When considering China, researchers can’t just look at whether coal use or carbon emissions are falling. They must also try to calculate how much more coal would have been burned had ample supplies of gas not been available. 

 

Another challenge is that the primary component of natural gas is methane, a potent greenhouse gas that traps far more heat in the atmosphere than a comparable amount of carbon dioxide. Studies have shown that a significant amount of natural gas leaks into the air at almost every stage of its production and transport — from wells to pipelines, processing facilities to ships. Raimi said the impact of all that leaking methane on the climate is roughly 84 times more powerful than the same amount of carbon dioxide over a 20-year time frame. 

 

As part of its broad rollback of environmental rules, the Trump administration moved in September to weaken Obama-era regulations designed to prevent methane from escaping into the atmosphere during oil and gas operations. The regulatory rollbacks are part of President Donald Trump’s pro-industry “Energy Dominance” strategy to ramp up U.S. fossil fuel production without concern for the corresponding increase in greenhouse gas emissions. Trump has falsely claimed climate change is a “hoax,” and he moved in 2017 to pull the United States out of the 2015 Paris accord. 

 

“With or without increased U.S. oil and gas exports, ambitious policy measures are the essential ingredient to achieving long-term climate goals such as those laid out in the 2015 Paris Agreement,” Raimi said. “For U.S. LNG exports to reduce global emissions, they must primarily displace coal, and methane emissions must be limited both domestically and abroad.” 
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Wall Street stocks finished solidly higher Thursday following a late-afternoon surge as worries over slowing economic growth gave way to bargain-hunting.

The Dow Jones Industrial Average finished at 23,138.82, an increase of 1.1 percent and up some 870 points from the low point of the session.

The broad-based S&P 500 climbed 0.9 percent to 2,488.83, while the tech-rich Nasdaq Composite Index advanced 0.4 percent to 6,579.49.

The push into positive territory came in the final 30 minutes of the session. While trading is usually light during Christmas week, data has suggested volumes more in line with non-holiday sessions.
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Tesla Inc has registered a financial leasing company in China, a local business registration filing shows, in the latest sign the U.S. electric car maker is attempting to speed up its push into China.

The California-based carmaker, led by billionaire Chief Executive Elon Musk, has opened a wholly-owned financial leasing unit in Shanghai’s free trade zone with registered capital of $30 million, according to China’s National Enterprise Information Publicity System.

Its scope includes leasing and consultancy, the document said, which listed the firm’s legal representative as Zhu Xiaotong, Tesla’s boss in China.

Tesla declined to comment.

The company has opened a tender process to build its Shanghai Gigafactory and at least one contractor has started buying materials, Reuters reported earlier this month.

The $2 billion factory, Tesla’s first in China, marks a major bet by the U.S. electric vehicle (EV) maker as it looks to bolster its presence in the world’s biggest auto market where it faces rising competition from a swathe of domestic EV makers and its earnings have been hit by increased tariffs on U.S. imports.
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Retail sales in the U.S. for the 2018 holiday season were up more than 5 percent to more than $850 billion, according to data Mastercard released Wednesday, making 2018 the best holiday retail season in the last six years.

The Mastercard SpendingPulse report tracks retail spending across all payment types, including cash and checks, from Nov. 1 through Dec. 24.

The report said online sales also jumped more than 19 percent from last year.

Clothing and home improvement items were the seasonal favorite, while the sale of electronics fell.

The National Retail Federation had predicted holiday sales to increase between 4.3 and 4.8 percent from 2017, for a total of $717.45 billion to $720.89 billion.

Online giant Amazon said 2018 was a record year for its global holiday sales. Amazon said it shipped a billion products for free in the U.S. alone for its Amazon Prime customers.
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