>>> US After Hours Summary: Quiet after hours; SDRL up on contract ext

After Hours Summary: Quiet after hours; SDRL up on contract extension; UROV trades up on NDA submission

After Hours Gainers:

Companies trading higher in after hours in reaction to news: SDRL +19% (contract extension for AOD II and AOD III), UROV +5% (submits NDA for 75mg vibegron for overactive bladder), SPNE +1.9% (announces full commercial launch of Mariner Midline Posterior Fixation System), GBCI +0.2% (special dividend)

After Hours Losers:

Companies trading lower in after hours in reaction to news: SPWR -0.6% (adopts restructuring plan)

>>> US Close Dow -0.64% S&P -0.58% Nasdaq -0.67%

Closing Stock Market Summary

The stock market succumbed to some profit-taking interest on Monday, leaving the S&P 500 down 0.6% for the session. The Dow Jones Industrial Average (-0.6%) and Nasdaq Composite (-0.7%) finished in-line with the benchmark index, while the Russell 2000 (-0.3%) fared slightly better.

Having entered today's session fresh off a series of record highs, including one on Friday, the broader market appeared overdue for some selling activity before the new year. All 11 S&P 500 sectors finished in negative territory with the communication services sector (-1.0%) declining the most. 

There was little news of consequence to generate excitement in the market, although it was reported that China's Vice Premier Lie Hue could visit Washington this weekend to sign a Phase One trade deal. U.S. negotiators are still waiting for their agreement to be translated into English, according to Director of Trade and Manufacturing Policy Peter Navarro.

Today's decline also fostered some hedging interest against further downside, made evident by the 10% spike in the CBOE Volatility Index (14.79, +1.36, +10.1%). Interestingly, Apple (AAPL 291.52, +1.72, +0.6%) remained resilient and finished with a solid gain. 

In automotive action, shares of Tesla (TSLA 414.70, -15.68, -3.6%) pulled back from record territory amid a cautious outlook from Cowen. Chinese competitor NIO (NIO 3.72, +1.30, +53.7%) rallied 54% following its earnings results. 

U.S. Treasuries ended the session mixed, contributing to some curve-steepening activity. The 2-yr yield declined two basis points to 1.56%, while the 10-yr yield increased two basis points to 1.90%. The U.S. Dollar Index declined 0.2% to 96.78. WTI crude declined 0.2%, or $0.10, to $61.64/bbl. 

Reviewing Monday's economic data:

  • Pending Home Sales increased 1.2% in November (consensus +1.0%). Today's reading follows a revised 1.3% decline in October (from -1.7%).
  • The Advance report for International Trade in Goods for November showed a deficit of $63.2 billion versus $66.8 billion in October. The Advance report for Retail Inventories for November fell 0.7%, and the Advance report for Wholesale Inventories for November was unchanged.

Looking ahead, investors will receive the S&P Case-Shiller Home Price Index for October, the FHFA Housing Price Index for October, and the Conference Board's Consumer Confidence Index for December on Tuesday.

  • Nasdaq Composite +34.8% YTD
  • S&P 500 +28.5% YTD
  • Russell 2000 +23.4% YTD
  • Dow Jones Industrial Average +22.0% YTD

WSJ : Juul Finds It Is Tough to Quit Vaping in the Office

Juul Finds It Is Tough to Quit Vaping in the Office
E-cigarette maker tries to snuff out a habit from its early days: use of its own product at headquarters

Every new year brings a wave of smokers pledging to quit. Many people who work at Juul Labs Inc. have already ditched cigarettes. Trouble is, they won’t stop vaping in the office.

Vaping at work has been part of Juul’s culture since the startup’s early days. Last year, the leader of the e-cigarette market prohibited its staff from vaping in most of its U.S. offices, saying it had to do so to comply with local and state laws as well as some of its lease agreements.

But Juul is still struggling to enforce the rule, even after threatening in September to dock employees’ bonuses as punishment.

Employees vape at their desks, in hallways, in meetings and on videoconferences—at the company’s San Francisco headquarters and elsewhere around the country, Juul employees say.

One employee compared the scene to the workplace depicted in the 1960s-period cable drama “Mad Men.” “Just replace the cigarettes with e-cigarettes,” he said.

“We remain committed to maintaining a smoke and vapor-free workplace in compliance with state and local laws,” a Juul spokesman said. “We take this commitment very seriously and take appropriate actions against violations.”

From the early days of Ploom Inc.—the company that would become Pax Labs and later Juul—founders Adam Bowen and James Monsees vaped often in staff meetings, according to former employees. The practice began with their first product, Ploom, a device that heated but didn’t burn solid tobacco leaf. It continued after the 2015 launch of the Juul e-cigarette, a sleek device that is shaped like a USB drive and heats a flavored nicotine solution. Many staffers have used Juul to quit smoking traditional cigarettes, company officials have said.

Last December, after the startup received inquiries from the city of San Francisco and other officials, the company’s then-chief executive, Kevin Burns, sent an email to employees announcing they could no longer vape in the office.

“It may feel nonsensical to prohibit at-work use of the very products we work hard to create and promote,” Mr. Burns wrote in the email. “But the bottom line is we need to comply with legal requirements the same as any company.”

He promised in the email to erect a tent for e-cigarette use outside the company’s San Francisco headquarters. The shelter was never installed.

In June, the city became the first in the U.S. to prohibit sales of all e-cigarettes.

Vaping in Juul’s offices abated somewhat after Mr. Burns’s email, employees said. Some tried to vape more discreetly, by tucking a Juul into the sleeve of a sweater, for example. But others, including the founders, have continued to do it openly, employees said. Messrs. Bowen and Monsees didn’t respond to requests for comment.

Juul’s human-resources department this year fielded complaints from a few employees about colleagues vaping in their workspaces, according to people familiar with the matter. One woman requested permission to work from home because she had concerns about the health effects of inhaling secondhand vapor, the people said. She was moved to a different work location.

In September, not long after the woman’s complaint, Mr. Burns issued a new memo. This time, he outlined disciplinary action. Employees caught vaping would receive a warning on the first offense. On the second and third offenses, their bonuses would be docked in increasing amounts. The fourth offense could be punishable with termination.

It was one of his last memos. Soon afterward, a top executive from tobacco giant Altria Group Inc., which is a major Juul investor, succeeded Mr. Burns. Seeking to address concerns about youth vaping, Juul pulled most of its flavors off the market. Then it laid off 650 staffers.

WSJ : The Deals and Dealmakers That Made the Year in M&A

The Deals and Dealmakers That Made the Year in M&A
U.S. deal value rose 12%, but uncertainty over Brexit, trade grounded some companies

This year was a big one for mergers and acquisitions, but it could have been even better.

The value of deals announced globally reached $3.8 trillion through Dec. 27, making 2019 the fourth-best year on record for M&A. The combined value of deals fell just 4% short of last year’s total, according to Dealogic, as the appetite for megamergers reached a new high.

Companies struck 12 deals worth more than $25 billion, twice last year’s total, led by United Technologies Corp. UTX -0.29% ’s $86 billion combination with defense contractor Raytheon Co. , which is subject to regulatory approval.

The U.S. was the standout region, with total deal value up 12% to $1.8 trillion.

But those numbers belie weakness under the surface evidenced by a 1.6% decline in the amount of transactions as many companies remained on the sidelines, cowed by uncertainty surrounding the U.K.’s departure from the European Union and the U.S.-China trade confrontation.

Nowhere was that hesitation on display more than in Europe, where the total deal value sank by 30% as countries including Germany faced economic slowdowns and uncertainty over Brexit gripped the U.K and the rest of the region.

Another factor deal makers cite: valuations. With stocks in or near record territory, acquisitions are pricey. That has prompted many acquirers, like United Technologies, to use their own surging stocks as payment.

With President Trump appearing to make progress on a limited deal with China, and Brexit looking more certain following Boris Johnson’s decisive election victory in the U.K., some of that uncertainty could dissipate in the new year. Together with signs that the U.S. economy is on solid footing, that has put most bankers and lawyers who help arrange tie-ups in an optimistic mood as the year draws to a close.

Still, there are lingering fears that the yearslong deals boom will run out of gas, and many of the same advisers are mindful that the presidential election represents a major unknown—a word the executives and boards they counsel detest.

The Wall Street Journal spoke to some of the advisers behind this year’s biggest deals and asked them about the current environment and what lies in store for 2020.

Ms. Saeed, presiding partner of Cravath, Swaine & Moore LLP, says 2019 was the year that big, strategic tie-ups that seemed inevitable finally came together. She advised on several major deals, including Viacom Inc. ’s recombination with CBS Corp. , Occidental Petroleum Corp. ’s purchase of Anadarko Petroleum Corp. and TD Ameritrade Holding Corp.’s sale to Charles Schwab Corp. She says the string of megadeals was driven in large part by companies teaming up to respond to technological disruption. “In the last year or two, both acquirers and targets came to the realization at the same time,” she says.

Mr. Effron and his Centerview Partners co-founder Robert Pruzan steered the firm to another year in which it punched above its weight. Among the deals Mr. Effron worked on: Tiffany & Co.’s sale to LVMH Moët Hennessy Louis Vuitton SA, the CBS-Viacom merger and AT&T Inc.’s truce with activist investor Elliott Management Corp.

Mr. Effron, a prominent Democrat, is optimistic about the deal-making environment going into 2020 and beyond, regardless of who sits in the Oval Office. Corporate boards are cautious but not pessimistic and mainly just want certainty, he says. “I generally discount the impact of the election. We’ve gotten so good at managing through volatility and uncertainty.”

Frank Aquila
Mr. Aquila, a partner at Sullivan & Cromwell LLP, notched roles on Tiffany & Co.’s planned sale to LVMH, Novartis AG ’s acquisition of Medicines Co. and Amgen Inc. ’s $13.4 billion purchase of anti-inflammatory drug Otezla from Celgene Corp. He sees the resolution of some Brexit and trade uncertainty as a boon for Europe and Asia, whose recovery could provide major ballast for the M&A market. Deals that got shelved amid the uncertainty will come back as companies adjust to a low-growth environment, he says. “If you want outsized growth, the way you get it is through transactions that yield revenue growth with immediate synergies.”

Eric Schiele
Mr. Schiele, a partner at Kirkland & Ellis LLP, was around two of the year’s largest deals: AbbVie Inc. ’s $63 billion purchase of Botox maker Allergan PLC and Bristol-Myers Squibb Co. ’s $84 billion acquisition of Celgene, which he was brought in to help defend after an activist challenged it.
He isn’t as sanguine as others on the M&A market. “The number of deals, rather than value, is probably the better sign of health,” he says. He expects that figure to modestly decline again in 2020, with boards still on edge over macroeconomic risk. But if valuations drop, private-equity buyers could provide a jolt to smaller-deal activity, the heart of the M&A market, he says.

Mark Shafir
Mr. Shafir, Citigroup Inc. ’s global co-head of M&A, had a hand in Occidental’s purchase of Anadarko, Tiffany’s sale to LVMH and Broadcom Inc.’s purchase of Symantec Corp.’s enterprise business. He has stayed involved at Occidental as Carl Icahn wages a proxy fight against the oil giant, expanding the traditional role of an M&A banker. “Back in the old days, you get to the announcement and we go away until closing,” he says. “Now you have to be vigilant and do a lot of prep work around shareholder reaction and the activist threat.”

Scott Barshay
Mr. Barshay, global head of M&A at law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP, says 2019 was an “uncanny imitation” of 2018, with a continued raft of large deals. He was involved in several, including Chevron Corp. ’s proposed acquisition of Anadarko, which ultimately agreed to the sale to Occidental instead; General Electric Co. ’s $21 billion sale of its biotechnology business to Danaher Corp. and Gardner Denver Holdings Inc.’s deal with a division of Ingersoll-Rand PLC. Despite the political and economic unknowns around the world, clients feel confident in their outlooks, especially in the U.S., he says. “They’re looking for reasons to do deals. They’re not looking for reasons to run away from deals.”

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up: NIO +3.7%, TTM +3.7%, MJ +2.7%, MFGP +2.6%, ATNX +2.2%, DBVT +2%, IIPR +1.3%, AXSM +1%, OXY +0.8%
  • Gapping down: PHAS -6.3%, RAD -5.6%, SDRL -2.7%, PRGO -0.8%, APTO -0.7%, MAXR -0.5%

FT : Trump’s financial records battle: what will happen in 2020?

Trump’s financial records battle: what will happen in 2020?
US Supreme Court decision likely to have far-reaching implications for future presidencies

The US Supreme Court will rule in 2020 on a set of historic cases involving Donald Trump that will define the presidency for decades to come and determine whether he can continue to keep his tax and financial records secret.

Mr Trump is battling Democrats in Congress and a New York City prosecutor to stop them investigating his business affairs with subpoenas to his accountant and two lenders, Deutsche Bank and Capital One.

Though the president has been defeated in the lower courts, in March his lawyers will try to persuade nine justices on the conservative-majority high court to endorse Mr Trump’s expansive argument that he has immunity from investigation while in office.

Here’s what you need to know:

What cases will the Supreme Court hear?
Two involve House Democrats, who are investigating Mr Trump’s business affairs and possible Russian influence, and the third involves the Manhattan district attorney, Cyrus Vance, who is investigating alleged hush money payments.

In all three, investigators issued subpoenas for copies of Mr Trump’s financial records to various companies that have worked with the president and his businesses. The president sued the companies — accounting firm Mazars USA and banks Deutsche Bank and Capital One — to stop them from complying with the subpoenas.

What is Mr Trump arguing?
In the US, both parties have long argued that the president occupies a unique role in the constitutional structure. The president is the only elected official in the entire executive branch — one of three coequal branches of government — and therefore requires some protection from interference and distraction while fulfilling his or her duties.

Mr Trump has advanced two separate but connected arguments that rest on this foundation: that he is absolutely immune from any form of criminal investigation while in office, and that House Democrats do not have a valid legislative reason to look into his affairs. Rather, Mr Trump claims, the requests are just efforts to harass him.

The immunity line extends a longstanding justice department policy that considers the president immune from indictment by federal prosecutors while in office. But that has never been affirmed by the courts, nor has it ever applied to investigative steps before indictment.

Taken together with the president’s defiance of the impeachment inquiry, the arguments amount to a broad declaration that Mr Trump, as head of the executive branch, cannot be investigated by anyone as long as he remains in the White House.

How have courts ruled so far?
Most of the judges who have heard Mr Trump’s arguments have responded with scepticism, even apparent disdain at times, as they have repeatedly ruled against him at the district and appeals court level.

Two weaknesses in Mr Trump’s position that judges have noted is that the subpoenas issued by House Democrats and Mr Vance concern the president’s personal affairs, rather than sensitive government matters, and the subpoenas were issued to third parties, rather to the president himself.

Rather than interfering with his duties as president, the subpoenas do not require Mr Trump to produce documents, appear for testimony or “lift a finger”, said David Strauss, a professor at the University of Chicago Law School, who was a lawyer for Bill Clinton in his Supreme Court battle in the 1990s.

“Trump doesn't have to do anything . . . the burden falls entirely on the banks and accounting firms,” he added.

There are areas where the president could be on stronger ground, however.

Though the Supreme Court has repeatedly affirmed the right of Congress to investigate whatever it wants in order to fulfil its legislative and oversight functions, the court has also weighed the question of whether that power might be misused.

The idea that congressional investigators might use their powers to hobble executive branch officials for purely political reasons is not so far-fetched, said Mr Strauss. Though he said he did not view the current situation as harassment, “that argument in the abstract is not an empty argument”.

What is the historical precedent?
There are three key Supreme Court decisions that have set the scope of presidential immunity in modern times, two involving Richard Nixon and one involving Bill Clinton. The rulings have given the president mixed protections in civil litigation, while not resolving the question of criminal probes.

In US v Nixon, the Supreme Court ruled unanimously that the president had to turnover evidence for a criminal trial in response to a subpoena. A later, less well-known case, Nixon v Fitzgerald, found in a 5-4 split decision that the president was absolutely immune from civil liability for official acts he took in office. And in Clinton v Jones, a unanimous court ruled that the president could face civil lawsuits for non-official actions that occurred before he took office.

How might the Supreme Court rule?
The court is split 5-4 between conservatives and liberals. Two of the conservatives — Brett Kavanaugh and Neil Gorsuch — were appointed by Mr Trump himself, and a key question will be whether John Roberts, the chief justice, can find a way to achieve consensus on such a fiercely political case.

In US v Nixon and Clinton v Jones, appointees of the presidents involved in those cases ruled against them as the court presented a united front. When the court hears arguments in March, close attention will be paid to whether Mr Kavanaugh and Mr Gorsuch will follow in those footsteps.

“The contrast if the court were to divide along partisan lines here would be especially bad for the court,” said Mr Strauss.

NYT : How Big Companies Won New Tax Breaks From the Trump Administration

How Big Companies Won New Tax Breaks From the Trump Administration
As the Treasury Department prepared to enact the 2017 Republican tax overhaul, corporate lobbyists swarmed — and won big.

The overhaul of the federal tax law in 2017 was the signature legislative achievement of Donald J. Trump’s presidency.

The biggest change to the tax code in three decades, the law slashed taxes for big companies, part of an effort to coax them to invest more in the United States and to discourage them from stashing profits in overseas tax havens.

Corporate executives, major investors and the wealthiest Americans hailed the tax cuts as a once-in-a-generation boon not only to their own fortunes but also to the United States economy.

But big companies wanted more — and, not long after the bill became law in December 2017, the Trump administration began transforming the tax package into a greater windfall for the world’s largest corporations and their shareholders. The tax bills of many big companies have ended up even smaller than what was anticipated when the president signed the bill.

One consequence is that the federal government may collect hundreds of billions of dollars less over the coming decade than previously projected. The budget deficit has jumped more than 50 percent since Mr. Trump took office and is expected to top $1 trillion in 2020, partly as a result of the tax law.

Laws like the 2017 tax cuts are carried out by federal agencies that first must formalize them via rules and regulations. The process of writing the rules, conducted largely out of public view, can determine who wins and who loses.

Starting in early 2018, senior officials in President Trump’s Treasury Department were swarmed by lobbyists seeking to insulate companies from the few parts of the tax law that would have required them to pay more. The crush of meetings was so intense that some top Treasury officials had little time to do their jobs, according to two people familiar with the process.

The lobbyists targeted a pair of major new taxes that were supposed to raise hundreds of billions of dollars from companies that had been avoiding taxes in part by claiming their profits were earned outside the United States.

The blitz was led by a cross section of the world’s largest companies, including Anheuser-Busch, Credit Suisse, General Electric, United Technologies, Barclays, Coca-Cola, Bank of America, UBS, IBM, Kraft Heinz, Kimberly-Clark, News Corporation, Chubb, ConocoPhillips, HSBC and the American International Group.

Thanks in part to the chaotic manner in which the bill was rushed through Congress — a situation that gave the Treasury Department extra latitude to interpret a law that was, by all accounts, sloppily written — the corporate lobbying campaign was a resounding success.

Through a series of obscure regulations, the Treasury carved out exceptions to the law that mean many leading American and foreign companies will owe little or nothing in new taxes on offshore profits, according to a review of the Treasury’s rules, government lobbying records, and interviews with federal policymakers and tax experts. Companies were effectively let off the hook for tens if not hundreds of billions of taxes that they would have been required to pay.

“Treasury is gutting the new law,” said Bret Wells, a tax law professor at the University of Houston. “It is largely the top 1 percent that will disproportionately benefit — the wealthiest people in the world.”

It is the latest example of the benefits of the Republican tax package flowing disproportionately to the richest of the rich. Even a tax break that was supposed to aid poor communities — an initiative called “opportunity zones” — is being used in part to finance high-end developments in affluent neighborhoods, at times benefiting those with ties to the Trump administration.

Of course, companies didn’t get everything they wanted, and Brian Morgenstern, a Treasury spokesman, defended the department’s handling of the tax rules. “No particular taxpayer or group had any undue influence at any time in the process,” he said.

Racing for a Win
Ever since the birth of the modern federal income tax in 1913, companies have been concocting ways to avoid it.

In the late 1990s, American companies accelerated their efforts to claim that trillions of dollars of profits they earned in high-tax places like the United States, Japan or Germany were actually earned in low- or no-tax places like Luxembourg, Bermuda or Ireland.

Google, Apple, Cisco, Pfizer, Merck, Coca-Cola, Facebook and many others have deployed elaborate techniques that let the companies pay taxes at far less than the 35 percent corporate tax rate in the United States that existed before the 2017 changes. Their playful nicknames — like Double Irish and Dutch Sandwich — made them sound benign.