FT : Chinese exports edge higher for first time in 6 months

Chinese exports edge higher for first time in 6 months
Uptick seen as boost to policymakers eager to stimulate recovery in world’s second-biggest economy

China’s exports rose slightly in November, breaking a six-month run of consecutive declines and giving a boost to policymakers looking to revive a flagging recovery in the world’s second-largest economy.

Exports rose 0.5 per cent year on year in dollar terms, official data showed on Thursday, compared with a forecast 1.1 per cent decline in a Reuters poll of analysts. In October exports dropped 6.4 per cent compared with the same period a year earlier.

Imports, however, fell 0.6 per cent, compared with a forecast 3.3 per cent increase and a 3 per cent bump in October, raising concerns that domestic demand remains weak.

In China’s markets, the uptick in exports was overshadowed by rating agency Moody’s decision to lower the country’s credit rating outlook to negative. Mainland- and Hong Kong-listed shares hit a near-five-year low as the negative outlook weakened investor confidence in China’s prospects for stronger economic growth.

China’s tepid international trade is one of the main sources of pressure for policymakers in Beijing, who are also grappling with a liquidity crisis in the property sector and low domestic consumption since it relaxed Covid-19 restrictions at the end of last year.

Beijing has embarked on a charm offensive since the middle of this year, seeking to mend ties with its principal markets in the US and European Union after foreign investors turned sour on the country.


On Thursday, EU leaders including Ursula von der Leyen, president of the European Commission, met President Xi Jinping in an attempt to smooth out growing differences over China’s huge trade surplus with the bloc and European opposition to its tacit support for Russia in the war in Ukraine.

The stronger than expected export figures follow mixed signals from other data, including the official purchasing managers’ index, which pointed to a decline in manufacturing activity last month.

The lower than expected imports indicated weaker domestic demand, with the economy hit by a property slowdown, while the pick-up in exports pointed to improved global demand for Chinese goods, economists said.

Nomura’s chief China economist Ting Lu said in a research note that next year would be slightly better for China’s exports, which he forecast would fall 1.5 per cent year on year, compared with a 5 per cent decline this year.

“Exports of consumer electronics and mobile phones may benefit from a potential global tech upswing,” he said.

China’s low inflation and weaker currency could also help its exports maintain a competitive edge, while electric vehicles, lithium batteries and solar modules may also continue to grow.

China’s exports helped prop up its economy during the three pandemic years when it was shut to the world, but they have struggled in 2023 as high global inflation and rising interest rates damp demand for its goods.

China’s customs administration said the EU was its second-largest trading partner in the first 11 months of the year after the Association of Southeast Asian Nations trading bloc.

Exports measured in the local currency renminbi to the EU fell 5.8 per cent during the period against a year earlier, while exports to the US, the third-largest trading partner, declined 8.5 per cent.

>>> US Close Dow -0.19% S&P -0.39% Nasdaq -0.58% Russell -0.22%

Closing Stock Market Summary

Today's session started on a mostly positive note. Relative weakness in the mega cap space limited index performance throughout the session, but buying activity was more robust under the surface in the early going. The market-cap weighted S&P 500 was up 0.5% at its high today, but closed with a 0.4% loss. The Invesco S&P 500 Equal Weight ETF (RSP) was up 0.9% at its best level of the day, but closed the session nearly unchanged from yesterday. 

Many stocks rolled over in the afternoon trade with no specific catalyst to account for the price action. Still, the market held up okay when considering how far stocks climbed in a relatively short period of time. At its high today, the equal-weighted S&P 500 was up 13% from its October 27 low. The Russell 2000 had been up as much as 1.8% at its high today before closing with a 0.2% decline. 

Shortly after the open, advancers had a better than 3-to-1 lead over decliners at the NYSE. By the close, decliners had an 11-to-10 lead over advancers at the NYSE. Only three of the S&P 500 sectors registered a gain -- utilities (+1.4%), industrials (+0.5%), and health care (+0.1%) -- while the energy sector (-1.6%) saw the largest decline by a wide margin.

The energy sector was responding to the sharp drop in oil prices. WTI crude oil futures settled below $70.00/bbl at $69.37/bbl. 

The early upside moves were the result of an inclination to buy on weakness after yesterday's losses, which was supported by another drop in the 10-yr yield in response to this morning's economic data. The 10-yr note yield fell five basis points today to 4.12%, but the 2-yr note yield climbed five basis points to 4.61%.

Briefly, the ADP Employment Change Report for November showed 103,000 jobs were added to private-sector payrolls following a downwardly revised 106,000 (from 113,000) in October. The other reports featured an upwardly revised 5.2% increase in Q3 Productivity (from 4.7%), a downwardly revised 1.2% decline (from -0.8%) in unit labor costs, and a widening in the October trade deficit to $64.3 billion from an upwardly revised -$61.2 billion (from -$61.5 billion) in September that was the result of exports being $2.6 billion less than September exports and imports being $0.5 billion more than September imports.

  • Nasdaq Composite: +35.2%
  • S&P 500: +18.5%
  • Dow Jones industrial Average: +8.8%
  • S&P Midcap 400: +7.2%
  • Russell 2000: +5.2%

Reviewing today's economic data:

  • Weekly MBA Mortgage Applications Index 2.8%; Prior 0.3%
  • November ADP Employment Change 103K (consensus 127K); Prior was revised to 106K from 113K
  • Q3 Productivity-Rev. 5.2% (consensus 4.8%); Prior 4.7%; Q3 Unit Labor Costs-Rev. -1.2% (consensus -0.8%); Prior -0.8%
    • The key takeaway from the report is the connection between rising productivity and falling unit labor costs. Each is headed in the right direction for the Fed's purposes, which means interest rates should continue to move in the right direction for the market's purposes.
  • October Trade Balance -$64.3 bln (consensus -$64.4 bln); Prior was revised to -$61.2 bln from -$61.5 bln
    • The key takeaway from the report is the different paths taken by exports and imports, as that fits with a narrative that underscores weaker activity abroad versus what has been seen in the U.S.

Thursday's economic calendar features:

  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 223,000; prior 218,000) and Continuing Claims (prior 1.927 mln)
  • 10:00 ET: October Wholesale Inventories (consensus -0.2%; prior 0.2%)
  • 10:30 ET: Weekly natural gas inventories (prior +10 bcf)
  • 15:00 ET: October Consumer Credit (consensus $9.0 bln; prior $9.0 bln)

>>> AbbVie confirms it will acquire Cerevel Therapeutics

AbbVie confirms it will acquire Cerevel Therapeutics (CERE) for $45.00/share in cash; total equity value of approximately $8.7 bln; to be accretive to EPS in 2030

Under the terms of the transaction, AbbVie will acquire all outstanding shares of Cerevel (CERE 36.93 +1.34) for $45.00 per share in cash. The transaction values Cerevel at a total equity value of approximately $8.7 billion. The boards of directors of both companies have approved the transaction. This transaction is expected to close in the middle of 2024, subject to Cerevel shareholder approval, regulatory approvals, and other customary closing conditions.
Proposed acquisition adds robust pipeline of assets focused on best-in-class potential for psychiatric and neurological disorders where significant unmet needs remain.
Cerevel's clinical-stage pipeline complements AbbVie's current on-market portfolio and emerging neuroscience pipeline.
Emraclidine has the potential to transform the standard of care in schizophrenia and other psychiatric conditions.
The proposed transaction is expected to be accretive to ABBV's adjusted diluted earnings per share beginning in 2030

>>> US After Hours Summary

After Hours Summary: ABBV will acquire CERE +16.2%; BRZE +13%, VRNT +10.7%, SMTC +6.9% higher on earnings; SPWH -13.5%, AGX -9.8%, AI -9.5%, CHWY -9%, GEF -6.2% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: BRZE +13%, VRNT +10.7%, SMTC +6.9%, BASE +0.2%, OXM +0.1%

Companies trading higher in after hours in reaction to news: CERE +16.2% (ABBV to acquire CERE for $45/sh), LIAN +3.7% (turns down buyout offer from Concentra Biosciences), ASR +2% (reports Nov traffic), FWRD +2% (provides mid-quarter update), FSR +1.8% (issues statement, says negative reports about co have been overblown), DNA +1.2% (signs MoU with Synplogen to accelerate the development of DNA manufacturing and gene therapy in Japan), PAX +1.1% (to acquire Credit Suisse's real estate business in Brazil for ~$130 mln), CMPS +0.9% (study results of psilocybin published in JAMA Psychiatry), DDD +0.7% (to repurchase $135 mln in convertible notes), OPCH +0.7% (increases share repurchase auth from $250 mln to $500 mln), CVX +0.2% (announces $16 bln 2024 capex budget), CNI +0.1% (acquires Iowa Northern Railway)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: SPWH -13.5%, AGX -9.8%, AI -9.5%, CHWY -9% (also names new CFO), GEF -6.2%, CXM -4.2%, NAPA -3.5%, GME -2.6%, VEEV -2.2%, CHPT -1.5%

Companies trading lower in after hours in reaction to news: WVE -20.1% (commences $100 mln offering; subsequent 15% buyback), NKLA -15.6% (announces $100 mln stock offering; also $200 mln convertible notes offering), SEAT -10.3% (files for 18.5 mln share offering by selling shareholder), ETNB -6.8% (commences $125 mln public offering; subsequent buyback), HCI -6.3% (stock offering), PYCR -3% (selling shareholder commences 5 mln share offering), CNM -2.2% (selling shareholders commence 15 mln share offering; CNM to repurchase of 3.13 mln of these shares and 1.87 mln partnership interests), BECN -1.3% (selling shareholder commences 5 mln share offering), AORT -1% (CFO retires, names new CFO), MDT -0.7% (to terminate agreements to acquire EOFlow), ABBV -0.5% (ABBV to acquire CERE for $45/sh), MCD -0.2% (starts testing CosMc's, a new small-format)

WSJ : BAT Takes $31.5 Billion Charge on U.S. Cigarette Brands

BAT Takes $31.5 Billion Charge on U.S. Cigarette Brands
Maker of Camel, Newport and Pall Mall brands says U.S. sales hit by smokers switching to cheaper products

British American Tobacco BTI -8.61%decrease; red down pointing triangle is booking a $31.5 billion charge to slash the value of its U.S. cigarette business, one of the biggest corporate write-offs in recent history.

The accounting charge, largely stemming from its 2017 takeover of the U.S. maker of Newport and Camel cigarettes, approaches the value erased by the failed merger of AOL and Time Warner. The media company took a $45.5 billion charge in 2003 a few years after its deal.

BAT spent $49 billion six years ago to take full control of U.S. tobacco company Reynolds American. In the face of an accelerating decline in cigarette smoking, BAT and other tobacco giants have been trying in recent years to pivot to cigarette alternatives such as e-cigarettes and heated tobacco devices.

BAT also faces a planned U.S. ban on menthol-flavored cigarettes, which account for more than half of the tobacco giant’s U.S. cigarette sales. The Food and Drug Administration is expected to publish the new rule next year, though it wouldn’t take effect immediately and BAT and other tobacco companies are expected to challenge it in court.

BAT, whose portfolio includes Newport, the leading U.S. menthol brand, Kent, Dunhill and Lucky Strike, said its performance in the U.S. had been hindered by smokers switching to cheaper, nonpremium brands and a rise in illegal disposable vapes.

Citing macroeconomic pressures on its traditional cigarette business and its plan to invest more in its so-called noncombustibles business, the London-listed company said Wednesday that it would book an accounting charge of around £25 billion this year. BAT has a market value of around £50 billion.

The company said the charge mainly relates to U.S. brands it acquired, as it assesses their carrying value and economic usefulness in the years to come.

Shares of BAT dropped about 8% in Wednesday trading, putting it on course for its lowest close in more than a decade. Shares of rivals Altria and Philip Morris International also fell in Wednesday trading, by 3% and 2%, respectively.

Other big deals have resulted in big write-downs. In 2008, ConocoPhillips recorded a $25.4 billion charge connected to its 2005 acquisition of natural-gas producer Burlington Resources. In 2018, General Electric took a $22 billion charge on its 2015 acquisition of Alstom’s power business. Procter & Gamble took an $8 billion charge on Gillette in 2019 and a smaller write-down on the shaving business this week.

BAT, long one of the world’s largest cigarette companies, expanded in the U.S. in 2017 when it agreed to take full control of Reynolds American, a deal that at the time marked renewed interest among international players in the U.S. tobacco market.

BAT paid more than $49 billion in cash and stock that year for the nearly 58% of Reynolds it didn’t already own. BAT had been a Reynolds shareholder since 2004, when BAT’s U.S. unit Brown & Williamson merged with R.J. Reynolds to create Reynolds American.

In more recent years, BAT and rivals have sought to shift their focus to smoke-free products to reduce their reliance on traditional cigarettes. Altria paid $12.8 billion for a big stake in vaping startup Juul Labs, an investment it later wrote off almost entirely after a regulatory crackdown.

Global tobacco volumes are forecast to slump 3% in 2023, the company said Wednesday. It said its market share so far this year was flat, with a decline in the U.S. offset by growth elsewhere.

BAT did, though, report strong volume and revenue growth from its new products, which it expects to broadly break even this year, two years ahead of schedule.

The company said it plans to generate up to 50% of its revenue from noncombustibles by 2035, covering products such as vapes and tobacco-free nicotine pouches. The company is fighting in court a recent decision by the FDA ordering Reynolds’s top-selling Vuse Alto menthol e-cigarettes off the U.S. market.

Overall, BAT said it expects revenue growth for 2023 to be at the low end of its previous guided 3%-5% range, and low single-digit revenue growth next year.

FT : Venezuela orders oil drilling in Guyana-run territory

Venezuela orders oil drilling in Guyana-run territory
Fear rises in Georgetown as Caracas claims ‘overwhelming’ mandate to exploit deposits in disputed Essequibo region

Venezuela’s revolutionary socialist President Nicolás Maduro has ordered state companies to exploit oil deposits and mines in territory run by Guyana after boasting of an “overwhelming” people’s mandate to pursue a longstanding claim to two-thirds of its neighbour’s land.

Maduro’s bellicose speech on Tuesday night has increased fears in Guyana that Venezuela might use force to seize the remote territory of Essequibo, which controls access to a rich oilfield.

He ordered Venezuela’s state-owned companies to grant licences to explore and exploit oil deposits and mines in the sparsely populated Essequibo region, which is administered by Guyana but claimed by Venezuela. A special military unit would be created for the territory, based in a neighbouring Venezuelan state, said Maduro.

“I propose a special law to ban all companies that operate with Guyanese concessions from any transaction,” said Maduro on state television, adding that “they have three months to withdraw” after the law passes. He also ordered the publication of new maps of Venezuela showing Essequibo as part of its territory.

In response, Guyanese President Irfaan Ali said he would report the matter to the UN Security Council and the International Court of Justice on Wednesday.

“The Guyana Defence Force is on high alert,” said Ali in a late-night televised address. “Venezuela has clearly declared itself an outlaw nation.”

Guyana’s vice-president Bharrat Jagdeo earlier said the South American nation had to be “very vigilant” and “prepared for any eventuality” after Venezuela’s referendum on the issue on Sunday. “The Venezuelan leadership has shown itself to be very unpredictable,” he told local media.

Venezuelan officials claimed majorities of more than 95 per cent in favour of five questions on Essequibo, including the creation of a new Venezuelan state encompassing the remote territory, the granting of Venezuelan citizenship to Essequibo’s population of more than 100,000 and the rejection of the ICJ’s jurisdiction to hear the dispute.

“This referendum is binding and I accept the people’s mandate,” said Maduro after Sunday’s official results were declared. Using Venezuela’s name for the territory, he added: “Now we really are going to recover Venezuela’s historic rights in Guayana Esequiba.”


A conflict between two oil-rich nations in the Americas would be a new crisis for US President Joe Biden’s administration, which has bet on a rapprochement with Maduro in the hope that relief from Donald Trump-era economic sanctions would encourage Venezuela’s leader to move towards free and fair elections and help improve global oil supplies.

The US state department initially gave a low-key response to Sunday’s vote, urging Venezuela and Guyana “to continue to seek a peaceful resolution of their dispute . . . This is not something that will be settled by a referendum”.

Experts said that Maduro’s principal motive for running a high-profile patriotic referendum campaign was to take voters’ minds off his own unpopularity and the increasing momentum behind the main opposition candidate in next year’s presidential election, María Corina Machado.

Venezuela has long disputed an international arbitration tribunal’s decision in 1899 to award the Essequibo region to what was then colonial British Guiana. It had not pursued the claim of late, but this changed after US oil major ExxonMobil made what turned out to be one of the world’s biggest recent oil finds off the coast of Essequibo in 2015.

Despite Venezuela’s rejection of the ICJ’s jurisdiction, Exxon chief executive Darren Woods said on Wednesday that there was broad international support for the arbitration process, which he predicted would take time to play out.

“My expectation is [the dispute] will continue to work its way through that justice system, and we’ll get a result there,” he said. “I expect and certainly hope that both countries will respect the outcome of that arbitration — but that’s a couple of years probably into the future.”

Exxon is now building up production from the Stabroek offshore block, something Venezuela’s government has seized on to paint Guyana as a lackey of US imperialism. Woods told Bloomberg after the referendum: “I’m not sure the press has captured the true intensity of the situation there, but we’re keeping an eye on it.” He did not elaborate.

Any military conflict in the mountainous and jungle-covered Essequibo region would heavily favour Venezuela, whose Russian-equipped armed forces far outnumber and outgun Guyana’s tiny defence force.