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Jan 22, 2019

What's News: China's Growth Slows; Davos Begins; Superbowl Matchup Angers America

The Wall Street Journal.
Newspaper.
What’s News
Sun icon. Good Morning
Here’s what we’re watching as the U.S. business day gets under way:
China's economic growth lagged to its slowest pace since 1990. The 6.6% growth rate for 2018 reported Monday marked a slowdown that deepened in the year's final months amid a bruising trade fight with the U.S. Global stocks slipped this morning as economic concerns resurfaced.
  • The downturn is hitting industrial cities. Economic growth is slowing in areas that once depended on auto-parts or textile businesses, posing a challenge to policy makers as they try to arrest the slowdown.
     
  • U.S. business groups weigh in on China's tech push. The Chamber of Commerce and the American Chamber of Commerce in China issued a critical report to the U.S. Trade Representative about the Made in China 2025 plan, as trade talks are set to resume next week. 
 
Companies try to push IPOs forward amid the shutdown. Biotech companies are exploring a workaround that would let them begin trading without approval from the SEC, which remains largely closed. The attempts underscore worries that the partial government shutdown is hurting businesses.
  • The Senate will weigh a proposal to end the shutdown. Lawmakers are expected to vote this week on President Trump's border-security proposal, but it is unlikely to pass.
     
  • The border-wall fight has crystallized a cultural divide. The debate concerns not just immigration policy, but the character of America, writes our Gerald F. Seib.
 
Theresa May's new Brexit plan strongly resembles the old one. Britain's prime minister said she wants to return to the European Union to seek more tweaks to the agreement rejected last week, promising Parliament more say in future negotiations.
Carlos Ghosn's revised bail request is denied. The decision by a Tokyo court means the former Nissan Motor chairman, who has been detained since Nov. 19 and offered to wear an ankle monitor in his request, will likely remain in jail until March.
 
The World Economic Forum's annual meeting begins. World leaders will discuss issues ranging from climate change to trade this week in Davos, Switzerland—without President Trump, Mrs. May and French President Emmanuel Macron, who skipped the event this year amid turmoil at home.
  • The world braces for slower growth. China's trade dispute with the U.S., Brexit, Italian fiscal troubles and a fall in German industrial production are all signs of the sweep of a brewing synchronized global slowdown.
     
  • Follow all of the Journal's Davos coverage here.
 
Big names are set to report earnings today. Johnson & Johnson will post its fourth-quarter results before the bell, and IBM is on tap after markets close.

What's Trending

President Trump walks with North Korea's Kim Jong Un in Singapore in June 2018. PHOTO: ANTHONY WALLACE/AGENCE FRANCE-PRESSE/GETTY IMAGES
U.S. and North Korean spies have met secretly for a decade. The meetings, which began by 2009, helped lead to President Trump's summit with North Korean leader Kim Jong Un and aided in detainee releases. Some former U.S. officials question whether the communication diminished the State Department's negotiating role.
 
The tech boom shows strain, fostering investor restraint. Worrying signs: Early-stage investments in startups are falling, and the Nasdaq is down 12% from its high set in August. Companies, from Elon Musk's Space Exploration Technologies to scooter startup Lime, are scaling back.
Investors increase their cash holdings, adding to the stock market's volatility. Assets in money-market funds, used as a proxy for net new cash flows, have grown by more than $2 billion this month—on top of the $190 billion added to the funds in the last three months of 2018, their biggest deposit since 2018. The rise is highlighting doubts about the durability of the market's 2019 rebound.
A 2014 poll prompted a threat by Trump's team to sue. President Trump's then-attorney Michael Cohen threatened CNBC after the real-estate tycoon failed to crack the top 100 in the network's list of top U.S. business leaders. Mr. Trump also called CNBC executives to complain.
The Super Bowl matchup angers America. Fans outside of New England are annoyed that the Patriots have reached the title game again, Jason Gay writes. And the pass-interference penalty the referees missed in the NFC Championship will forever shroud the game in controversy, reporter Andrew Beaton explains.

Trade Watch

Highlights from our trade coverage
U.S. officials are debating whether to ease tariffs on China. Some Trump administration officials hope the move would calm markets and entice China toward a long-term trade deal.
The U.S. and China are in talks to resume chicken trade. The negotiations to reopen China’s market to U.S. chicken exports are part of efforts to resolve broader trade disputes between the two sides over market access, intellectual-property protections and other matters.
U.S. trade negotiations could be postponed. The U.S. trade representative’s office, the White House and other key offices are operating with reduced staff during the partial government shutdown, potentially delaying talks with the European Union and Japan.
Trump's lead trade negotiator warned against allowing China into the WTO. Now, U.S. Trade Representative Robert Lighthizer is steering a policy course that bypasses World Trade Organization rules and threatens Beijing with tariffs on up to $500 billion of imported goods.
China’s economy grew at its slowest pace last year since 1990. Beijing's trade fight with the U.S. exacerbated weakness in the world’s second-largest economy and adds pressure on the government to strike a deal.
U.S. consumer sentiment fell to its lowest in more than two years. The causes: worries about the government shutdown, trade tensions, volatile markets, a cooling global economy and uncertainty over the Federal Reserve's next moves.
Want more on trade? Sign up to get our daily Real Time Economics newsletter delivered to your inbox for the latest insight and analysis.
 

Chart of the Day

Fliers find more empty seats. U.S. airlines are adding larger planes and more rows to existing jets, resulting in more empty seats on flights—and delighted passengers—even as demand for air travel grows. U.S. domestic flights were 83.5% full in November, down from a record 86.3% in July, and they had an average of 118 seats last year, up 20% over the last decade. Airline investors fear the industry might not trim capacity enough to protect a record run of profitability.
 

News From Other Sources

Tesla says it received battery quotes from China's Lishen but haven't signed an agreement. The companies haven't yet reached a decision on how large an order the U.S. electric car company would place for its new Shanghai factory, and Lishen is still working out what battery cell size Tesla would require.
via Reuters
World Bank defection highlights appeal of green financing. Jim Yong Kim's decision to quit as head of the bank three years early to join Global Infrastructure Partners highlights the growing influence of fund managers specializing in green energy.
via Financial Times
Greenland's ice is melting faster than previously thought. Surface ice is melting as global temperatures rise and pushing up sea levels, say researchers. The fresh evidence reveals the dangers posed to vulnerable coastal places such as Miami, Shanghai and various Pacific islands.
via the Guardian
 

This Day in History

Jan. 22, 2002
Kmart Files for Bankruptcy
The department store chain Kmart filed for chapter 11 bankruptcy protection in an effort to shut down underperforming stores and restructure $4.7 billion in debt. After bouncing back from bankruptcy, Kmart's management went on to purchase Sears for $11 billion in 2004, creating the Sears Holdings Corporation led by billionaire Edward Lampert. Mr. Lampert has been scrambling to keep Sears alive after it filed for bankruptcy in October 2018. On Wednesday, he won a bankruptcy auction, which will keep the struggling chain from shutting its remaining stores.
THE WALL STREET JOURNAL
 
—Compiled and edited by JuJu Kim in New York and Bryony Watson in London.

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