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The World
Americans spent more at stores, auto dealerships and online to close out last year, analysts said, suggesting consumers can continue to drive economic growth in 2024. Economists surveyed by The Wall Street Journal estimate retail sales rose 0.4% in December on a seasonally adjusted basis. That would mark a pickup from November’s surprisingly strong 0.3% gain. Separate credit-card spending data show Americans opened their wallets this past holiday season. Sales of cars and trucks boosted December sales, forecasters said. Excluding auto purchases, sales are estimated to have increased 0.2%, the same as the preceding month. The Commerce Department will release the December retail sales report today. (Wall Street Journal)
In “a rare bipartisan, bicameral feat,” senior lawmakers “announced an agreement for a $78 billion tax package” that “would expand the Child Tax Credit while reviving and extending a trio of major business tax deductions, among other measures.” However, the agreement faces “long odds to become law as Congress struggles to fulfill basic responsibilities like funding the government.” (Semafor)
Senate Majority Leader Chuck Schumer “endorsed the plan but made clear it can’t pass either chamber without help from Republicans.” (Politico)
The House Budget Committee will consider legislation “to create a commission charged with taming the $34 trillion U.S. national debt.” (Reuters)
US forces carried out fresh strikes on targets linked with Houthi militants in Yemen, amid disruption to global trade caused by cargo ships diverting to avoid the Iran-backed group’s attacks in the Red Sea. The US military’s Central Command said its forces struck and destroyed four anti-ship ballistic missiles that the Houthis had prepared to launch from Yemen in the early hours of Tuesday. It was the third round of strikes by American forces on Houthi targets in Yemen in less than a week as the US seeks to deter the rebels’ attacks on shipping in the crucial waterway. (Financial Times)
An Iranian missile strike on targets in northern Iraq set off an unusual dispute between the neighbouring allies, with Baghdad recalling its ambassador in protest and Tehran insisting the attack was intended to deter threats from Israeli spies. (Reuters)
Kim Jong-un overturned “50 years of established North Korean doctrine and practice” by announcing a new policy that characterizes South Koreans “as enemies, not compatriots,” and calls for shutting down North Korean organizations working toward reunification. The new policy also calls for “the destruction of a symbolic monument dedicated to reunification.” (Times of London)
North Korean Foreign Minister Choe Son Hui met with Russian counterpart Sergey Lavrov in Moscow, “where they were expected to work toward arranging what would be President Vladimir Putin's first visit to the North since 2000.” (Nikkei Asia)
Delivery of defensive weapons Taiwan has ordered from the U.S. “is years away,” increasing Taiwan’s vulnerability to a Chinese invasion or blockade. The election of a new Taiwanese president “who rejects China’s demands for submission means Beijing is running out of near-term options to take control of the island without the use of military force.” (Wall Street Journal)
Freezing temperatures sweeping the U.S. shut in more than half of North Dakota’s oil production and curbed refinery operations in Texas. The outage in the second-largest U.S. shale basin briefly lifted West Texas Intermediate futures. Physical oil prices also rose on the Gulf Coast as Midwest refiners seek alternatives to North Dakota’s Bakken oil. (World Oil)
“Last year broke a record for the most heat content present in the upper 2,000 meters (6,562 feet) of the oceans.” Oceans absorb “about 90% of the extra heat in the Earth system trapped by greenhouse gases, making the metric a striking indicator of human-caused global warming.” (Axios)
Economy
Chinese Premier Li Qiang, in his first Davos address as premier, “jumped the gun to reveal that the country's economy grew by 5.2% last year, a day before the official announcement scheduled on Wednesday.” (Nikkei Asia)
Chinese equities decline following release of soft housing data. (Financial Times)
Corporate debt defaults soared 80% in 2023 and could be high again this year, S&P says. The number of companies that failed to make required payments on their debt totaled 153 for 2023, up from 85 the year before, an increase of 80%, according to S&P Global Ratings. “In 2024, we expect further credit deterioration globally, predominantly at the lower end of the rating scale” the firm said. (CNBC)
The Bill Is Coming Due on a Record Amount of Commercial Real Estate Debt: More than $2.2 trillion in debt is maturing before 2028, and much of that will have to be refinanced at higher rates. (Wall Street Journal)
Venezuela’s economy “grew by more than 5% in 2023, according to President Nicolás Maduro, who said growth would reach 8% this year. This marks the nation’s first economic expansion in the last decade — apart from a pandemic bounceback in 2022.” The growth was largely driven by the easing of U.S. sanctions on the Venezuelan oil industry. (Semafor)
A federal judge has blocked JetBlue’s $3.8 billion acquisition of Spirit Airlines, “rejecting a merger that he said would hamper competition and lead to higher fares. The ruling thwarts what would have been the biggest U.S. airline merger in over a decade. It marks a victory for the U.S. Department of Justice,” which sued last year to prevent the merger. (Wall Street Journal)
Goldman Sachs and Morgan Stanley have reported their lowest annual profits in four years, as the Wall Street rivals suffered from slowdowns in their investment banking and bond trading businesses. The results capped a challenging year for the two banks, as a dearth of deals and public listings weighed on their fee income. (Financial Times)
Wall Street Banks See Dealmaking Comeback on Fed Pivot: ‘I’m pretty optimistic,’ Goldman CEO Solomon said in earnings. Morgan Stanley, Goldman tout asset, wealth management units. (Bloomberg)
Google will lay off “‘several hundred’ employees in its advertising sales team,” Chief Business Officer Philipp Schindler told staff in a memo. Google has been shifting marketing staff and “is also attempting to automate more of its processes through products such as Performance Max, which uses Google's AI to determine how advertisers' money should be spent across products.” (Business Insider)
Technology
The Supreme Court will not hear an antitrust dispute between Apple and Epic Games, “leaving the case largely, but not entirely, a win for Apple.” Epic v. Apple “began in 2020 after Epic implemented its own payment system for Fortnite’s virtual currency, bypassing Apple’s commission on in-app purchases. Apple banned Epic from its iOS App Store and Epic filed a lawsuit in response,” claiming antitrust violations. While lower courts rejected most of that argument, they “found that Apple had acted anticompetitively by barring developers from telling users about other payment methods.” (The Verge)
Uber is working with Tesla to encourage drivers to switch to EVs “as part of its broader goal to be emissions-free in the U.S. and Canada by 2030.” While Uber cannot force its drivers to go electric, “various incentives have helped it boost EV uptake in the last few years.” It is offering drivers incentives of up to $2,000 on the purchase of a Tesla, “and is hosting test drive events at select Tesla stores to expose drivers to the EV experience.” (Axios)
Elon Musk, who currently owns 13% of Tesla, “demanded that the company’s board give him shares worth more than $80 billion if it wants him to continue developing products based on artificial intelligence.” Musk says he needs to own 25% of Tesla “to avoid takeovers and have enough control of the company as it develops robots” and other AI technologies. (New York Times)
OpenAI has outlined limits for the use of ChatGPT and Dall-E “in politics during the run-up to elections in 2024, amid mounting concern that artificial-intelligence systems could mass-produce misinformation and sway voters in high-profile races.” OpenAI said its tools cannot be used for political campaigning and lobbying, nor “to create chatbots that impersonate candidates and other real people.” (Wall Street Journal)
Microsoft CEO 'comfortable' with OpenAI non-profit despite Altman ouster. (Reuters)
Chinese state media says the Origin Wukong quantum computer has received remote visitors from 61 countries since it was opened up to global users on January 6. The 33,871 quantum computing tasks came from users from Bulgaria, Canada, Japan, Russia, and Singapore, “but the U.S. led the tally.” (South China Morning Post)
Apple Vision Pro hands-on: eye and hand tracking are very accurate, but typing is frustrating, the killer app is watching movies, can feel heavy after 15+ min. (Engadget)
Apple details select streaming and sports apps available on Vision Pro at launch, including Disney+, ESPN, MLB, PGA, Max, and TikTok; some will have 3D movies. (MacRumors)
“Almost nobody these days is spending much leisure time in the metaverse,” and very few investors “are backing fresh rounds for startups creating the next generation of virtual worlds.” (CrunchBase)
Smart Links
Treasuries sell off as Fed official cools hype on rapid rate cuts. (Financial Times)
Synopsys Strikes $35 Billion Deal to Buy Ansys (New York Times)
BP to appoint interim boss Murray Auchincloss as chief executive (Financial Times)
Ryanair doubles number of engineers overseeing Boeing’s production lines (Financial Times)
Apple Tops Samsung as World’s Largest Smartphone Maker by Volume (Financial Times)
Volkswagen and rivals plug away at solid-state battery puzzle (Reuters)