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Good Morning. In today’s edition, markets stage a comeback, how doctors make referrals, Crispr gene-editing trials come under scrutiny in China, and more.
The Dow Jones Industrial Average staged a big comeback in the final 90 minutes of yesterday’s session. The blue-chip stock index swung more than 850 points and offered a respite to investors bruised by the biggest selloff since the 2008 global financial crisis. Major indexes had spent much of the day in the red, with the Dow industrials slumping more than 600 points, or 2.7%, before receiving a jolt of adrenaline heading into the closing bell. European and Asian stocks rose today.
The moves are symptomatic of the volatility that has rocked markets this month. The Dow’s 1.1% gain yesterday marked the sixth consecutive session that the index either rose or fell by at least 1%—the longest such streak since June 2016.
The volatility, along with weaker expectations for economic growth, weighed down the Conference Board’s index of U.S. consumer confidence for a second straight month.
There aren’t many asset classes in positive territory as 2018 closes. One rare refuge: the Chinese bond market.
Apple has lost more than $9 billion this year on an underperforming investment: its own stock. Companies contend that buybacks are a good way to return excess capital to shareholders, but the sharp declines call into question their decision to devote so much of their tax savings to repurchasing shares.
From reporter Michael Rapoport:
What’s striking is the extent to which companies used their cash to repurchase shares instead of for other purposes, plunging ahead with the buybacks even during a long bull market and with a correction possible down the line. Buybacks by S&P 500 companies set a record in the third quarter, just before the market started falling.
Even Apple, which has indicated it is investing significantly in its business, spends much more repurchasing shares. Apple spent about $63 billion on buybacks in the first nine months of calendar-year 2018; its capital expenditures during that period were about $14.5 billion.
The partial federal government shutdown looked likely to stretch into January.
Trash accumulated on Christmas Eve near the Washington Monument because of a partial government shutdown. PHOTO: WIN MCNAMEE/GETTY IMAGES
Lawmakers and the White House made no progress toward a deal to end the shutdown, likely leaving the border-wall funding fight as the first order of business for the new Congress next year.
The Senate convened briefly yesterday before adjourning until Dec. 31, the latest sign that lawmakers don’t expect to reach an agreement this year. The Senate session Monday is likely to be perfunctory and brief, absent any developments.
As Democrats prepare to take control of the House in January, party leaders are wrestling with whether to push attention-grabbing votes on Medicare for All—a policy idea popular with liberal voters but more contentious in swing districts—or to focus on more-modest health-care moves.
A hidden system explains how your doctor makes referrals. More primary-care doctors work directly for hospitals, and they are being pushed to keep lucrative referrals in-house.
Patients are often in the dark about why their doctors referred them to a particular physician or facility. Increasingly, those calls are being driven by pressure to keep business within a hospital system, even if an outside referral might benefit the patient.
Losing patients to competitors is known as “leakage.” Hospitals, in response, use an array of strategies to encourage “keepage” within their systems. The efforts at keepage can mean higher costs—health-care services are often more expensive when provided by a hospital.
Saudi Arabian officials arrested a partner at consulting giant McKinsey in the fall of 2017; he has been in detention since then. In recent months, he has been repeatedly beaten, according to two people familiar with the matter. A McKinsey spokesman said that as of early this year the consultant, Hani Khoja, is no longer an employee of the company.
Mr. Khoja co-founded a consulting firm, Elixir Creative Solutions, that McKinsey bought in 2017. The deal made him a McKinsey partner.
Yesterday, the Saudi king moved to bolster his son and heir apparent, Crown Prince Mohammed bin Salman, and contain political fallout after the killing of dissident journalist Jamal Khashoggi, elevating the prince’s allies and surrounding him with experienced advisers.
Chinese scientists have raced ahead in experimenting with gene-editing on humans in recent years, using a powerful new tool to edit the DNA of dozens of cancer patients. These trials involving the nascent Crispr-Cas9 technology are coming under scrutiny from Chinese health authorities for the first time, after a gene-editing announcement last month sparked international concern over whether there is adequate regulation and oversight in the country.
One such trial has lost touch with patients whose DNA was altered, alarming some Western scientists who say subjects should be monitored for many years.
Three doctors involved in Crispr trials said they received inquiries from China’s science and health ministries in recent weeks seeking details about their trials.
Unlike in the U.S., no federal body in China is overseeing these trials, meaning standards vary across experiments. The approach is troubling for many doctors in the U.S. who fear missteps with early trials could set back development of the promising science by years.
From reporters Preetika Rana and Wenxin Fan:
Crispr holds the promise to correct intractable diseases by rewriting a person’s genetic code, but it isn’t foolproof and can cause changes in genes other than the ones intended.
Using it to modify the genes of embryos is more controversial than applying it on terminally ill patients because any changes in embryos are heritable, meaning a tiny blip could have far-reaching consequences for future generations.
Teachers and other public-education employees are quitting their jobs at the fastest rate on record. A tight labor market with historically low unemployment has encouraged Americans to leave their jobs at elevated rates, with the expectation they can find something better. But quitting among public educators stands out because they are in a field where stability is viewed as a key perk and longevity is often rewarded.
From reporter Michelle Hackman:
The teaching profession is really going through a once-in-a-generation transformation. Across the board, funding levels for education are lower than they were during the 2008 financial crisis, and teachers feel that in their larger class sizes, out-of-date school supplies and, often, lower salaries. Districts, in an effort to save money, are setting longer timelines for teachers to earn tenure or begin vesting in their pension plans.
At the same time, economists say there is a broad sense that younger workers don’t have the same expectations of stability in their careers. They’re content to move six or seven times, and teaching for a few years then moving on to a different career fits neatly into that idea.
“Millennials have different expectations for their careers than what the status quo of the profession allows,” said Tamara Hiler, deputy director of education policy at Third Way, a think tank in Washington.
Elon Musk Defamation Lawsuit: The Tesla CEO sought to dismiss the suit, with his lawyers arguing that no one could have taken seriously his claim that a British cave diver is a pedophile.
Carlos Ghosn Case: The latest investigation by Tokyo prosecutors into the former Nissan chairman centers on his relationship with a Saudi businessman who runs part of the company’s Middle East operation.
U.K. Insider-Trading Probe: The U.K.’s top law-enforcement body is examining allegations that an employee leaked information to a suspect in exchange for money, undermining a probe into a suspected network of European insider traders.
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PHOTO ILLUSTRATION: WSJ; PHOTOS: OLD FARMER'S ALMANAC, FARMERS' ALMANAC
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McDonald’s wants customers to eat more breakfast during breakfast. (Read)
A power utility’s substation in Queens, N.Y., briefly caught fire last night, causing a thunderous boom and pulsating blue light that illuminated the New York skyline. (Read)
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What Else We’re Reading
Inside Facebook’s secret rulebook for global political speech. (New York Times)
NASA’s New Horizons spacecraft will zip past a scrawny, icy object far out in space to ring in the new year. Ultima Thule will be the farthest world ever explored by humankind. (Associated Press)
Michael Cohen, President Trump’s former personal attorney, again denied ever having visited Prague after news outlet McClatchy reported foreign intelligence agencies had tracked a cellphone traced to Mr. Cohen to the area around the city in late summer 2016. (MarketWatch)
In response to our question about the use of drones to make deliveries:
Sue Fogarty of Texas wrote: “Drones are here to stay and the factor of noise is one that will be quickly remedied with innovation. Delivery services should be strongly monitored for safety, accuracy and security of any data gathered. Drone operators should be licensed.”
Colin Taylor in New Jersey said: “Living in New Jersey, my sky is full of birds—finches and woodpeckers close by; hawks and vultures soaring high above. Oh... and plenty of airplanes. The thought of polluting our airspace any further with man-made noise, visual distractions, lights, hazards and perpetual annoyances is horrifying. Drones may have their uses, but invading personal or public airspace just to have someone else’s coffee or online purchases delivered in minutes is obscene. For those who want to see what life is like for humans dependent on such devices, the film ‘WALL-E’ provides ample warning signs!”
Bill Benton from New York shared: “As the innovation capital of the world, we will continue to embrace new technologies or risk being left behind. As with autonomous vehicles and quantum computing, the market will determine the right use cases for these technologies—improving our lives. I welcome the use of drones for reasons we don’t even understand yet.”
Question for the next 10-Point: Going back to our article above, what are your thoughts on the fact that teachers and other public-education employees are quitting their jobs at the fastest rate on record? Email us your comments, which we may edit before publication, to email@example.com, and make sure to include your name and location.