WSJ : Bitcoin Isn’t a Currency, It’s a Commodity—Price It That Way

Bitcoin Isn’t a Currency, It’s a Commodity—Price It That Way - Link : http://on.wsj.com/2lSojSf
If bitcoin has more in common with gold than dollars, it could have a long way to fall
Is a bitcoin worth the $15,000 it commands today, or is it really worth about $3,000? The huge runup in value since September suggests the lower figure.

Cryptocurrency fans typically fall into two groups. One sees the currencies as ways to buy and sell things; the other views them as investments. For now, the investment crowd is winning out: Bitcoin remains a cumbersome way to purchase most goods, but its value has skyrocketed, nearly quadrupling since mid-September.

If bitcoin is an investment, it most closely resembles gold. Both are stores of value that provide some built-in protection against inflation because there is a finite supply and because extracting new deposits gets more expensive over time, barring big technology changes.

If bitcoin really is digital gold, however, investors should analyze it like a commodity—looking at supply constraints and the factors driving demand. That exercise produces worrying results.

The most important factor in gold prices over the long run is production costs, which act something like a natural price floor when demand dips. Of course, gold prices can also temporarily move much higher when demand is strong but tend to fall back toward the marginal cost of production once worries about inflation or the dollar subside and gold begins to lose its appeal as a hedge.

The last great bull market in gold is a classic example: Prices peaked around $1,900 a troy ounce in 2011— more than three times the production cost, at the time for Barrick Gold Corp., the largest listed gold producer. By the end of 2016, gold prices had plummeted to $1,151 a troy ounce, above Barrick’s production cost of $844, according to FactSet.

Applying the same analysis to bitcoin suggests its price could face a steep fall if demand dries up. The cost of minting a bitcoin is as low as $3,224 in Louisiana, according to an analysis by the Crescent Electric Supply Co., one of the largest electrical suppliers in the U.S. The Pelican State had the lowest average residential power costs in the U.S. as of October, according to the Energy Information Administration. Electricity is the biggest cost for bitcoin miners once they fork out for their equipment.

On the demand side, some investors appear to be using bitcoin as a hedge against currency weakness in a manner similar to gold. Deutsche Bank reckons that Japanese retail investors were the main force behind the monstrous bitcoin rally last fall—also a period of weakness for the yen, which shed about 6% of its value between early September and mid-November. Around 40% of bitcoin trading is yen-denominated according to Japanese bank Nomura.

If the yen were to rise sharply next year, or even if investors began concluding bitcoin was overpriced as a hedge relative to gold, bitcoin might have a long way to fall.

Write to Nathaniel Taplin at nathaniel.taplin@wsj.com

Corrections & Amplifications
Barrick Gold’s production cost was $844 a troy ounce in 2016, according to FactSet. An earlier version of this article incorrectly stated that amount was the production cost in 2011 and incorrectly stated that the cost in 2016 was $1,118 a troy ounce. (Jan. 4)

>>> Asian Update

Asia Market Update: Nikkei 225 catches up to positive 2018 start seen for other markets ;Upcoming US ADP Nonfarm payrolls data in focus

***Headlines/Economic Data***
General Trend: Nikkei 225 outperforms on catch up rally after being closed for past 3 sessions
-Energy shares gain after Wednesday's up move in oil prices.
-South Korean equities underperform
-China Caixin Services PMI hits more than 3 year high in Dec

Japan
-Nikkei 225 opened +1.4% (in first trading session of 2018); closed +3.3%
-Japanese stocks at highest since 1991 as market reopens after New Year holiday break
-Topix Securities Index +4.3%, Electric Appliances +3.1%, Iron & Steel +2.1%
-Japanese mega banks start 2018 on a positive note: Sumitomo Mitsui Financials +2.7%, Mitsubishi UFJ +2.3%, Mizuho Financial +2.0%
-Automakers track US gains: Toyota +2.3%, Honda +2.5%
-SBI Holdings: +17.5% (gains attributed to the recent strength seen for the Ripple cryptocurrency)
-Fast Retailing +2.7% (to report Dec SSS after close on Friday)
-Softbank +4% (tracks gains on the Nasdaq)
-Nintendo +4.4%: Pokemon Go expected to finally enter China market, said a press report released on Jan 2nd.
-Shin-Etsu Chemical +4.8% (broker commentary)
-Chip-related firm SUMCO +3.8% (broker commentary)
- (JP) Japan Dec Final PMI Manufacturing: 54.0 v 54.2 prelim (highest level since Feb 2014)
- (JP) Japan Fin Min Aso: GDP growth has steadily increased from 5-years ago; Economy, labor and wage environment has also truly changed

Korea
-Kospi opened +0.7%, has since reversed gains
Hyundai Motor -2.5% (union announced partial strike), Kia Motors -2.4%: South Korea Dec Auto Exports Y/Y: -40.4%
LG Chemicals -3.4%: China continues to exclude South Korea battery makers from subsidy, said a South Korean Press report.
Amorepacific -2.5% (broker commentary)
Steelmakers track US gains: Posco +2.5%
Lotte Shopping +5.5% (broker commentary)
Mixed trading in the chip sector: Samsung Electronics -0.9% , Hynix +1.4%
- (KR) South Korea Fin Min Kim and BOK Gov Lee agree to closely monitor risk factors and take swift measures if needed
- (KR) South Korea military: No imminent missile launch seen from North Korea
-(KR) South Korea Dec Foreign Reserves: $389.3B v $387.3B prior (record high): Bank of Korea said weakness in the US dollar (USD) increased the value of its holdings denominated in other currencies when converted.


China/Hong Kong
-Hang Seng opened +0.4%, Shanghai Composite +0.1%
Hang Seng Energy Index +3%, Information Technology +1.4%
- (CN) China researcher sees GDP growth of 6.3%/year by 2020 – 21st Century Herald
-(CN) China PBOC outlined plan to limit power use by some bitcoin miners
- (HK) Hong Kong Dec PMI Services: 51.5 v 50.7 prior (~4-yr high)
- (CN) China PBoC: Skips OMO for 9th straight session; Net drains CNY130B v CNY90B prior
- USD/CNY (CN) China PBoC sets yuan reference rate at 6.5043 v 6.4920 prior
- (CN) CHINA DEC CAIXIN PMI SERVICES: 53.9 V 51.9 PRIOR (fastest rise since Aug 2014); PMI COMPOSITE: 53.0 V 51.6 PRIOR

Australia/New Zealand
-ASX 200 opened +0.2%; closed +0.1%
ASX 200 Energy Index +1.2%, Financials flat ; Utilities -1.1%
-(AU) According to industry expects with the Australia property cycle reaching its peak, new floats of A-REITs are unlikely and major offshore investors instead may be eyeing opportunities - AFR
-(NZ) Realestate.co.nz reported that New Zealand Dec new listings totaled 7,133, -6.2% y/y
Looking ahead: Australia Nov Trade Balance due for release on Friday


Other Asia
- (SG) Singapore Dec PMI Composite: 52.1 v 55.4 prior (first fall in six months and the slowest pace of expansion since July)
-(TW) There is speculation that Taiwan could raise interest rates in Q3, would be first rate hike since 2011 – US financial press
-(TW) Taiwan Premier: concerned about impact from US tax overhaul
-(TW) Taiwan to cut central government budget - Taiwanese Press


North America
-US equity markets ended higher: Dow +0.4%, S&P500 +0.6%, Nasdaq +0.8%, Russell 2000 +1.1%
S&P500 Energy Sector +1.5%, Health care +1%, Tech +0.8%
-Intel: On Wednesday's session, Intel declined by over 3% amid a report from The Register that suggested that a design flaw in Intel's processor chips drove a security-related redesign of the Linux and Windows kernels
- Costco Dec SSS above ests: Reports Dec SSS (ex-gas) 8.8%; US SSS (ex-gas) 9.1% v 6.8%e
-CVS To hold conference call on Thursday Jan 4th to discuss 2017 and 2018 earnings guidance
-(US) FOMC MINUTES FROM DEC 13 MEETING: OFFICIALS SAW MODEST BOOST FROM TAX CHANGES; Generally agreed flatness of yield curve not unusual by historical standards; some expressed concern a possible future inversion could portend economic slowdown; Several Fed officials concerned by low inflation expectations
-(US) DEC ISM MANUFACTURING: 59.7 V 58.2E; PRICES PAID: 69.0 V 64.5E
-(US) Pres Trump: [Former adviser] Steve Bannon has nothing to do with me or my Presidency. When he was fired, he not only lost his job, he lost his mind - White House statement ** NOTE Earlier: Steve Bannon was quoted in a new book saying the June 2016 Trump Tower meeting between Donald Trump Jr. and a Russian lawyer was "treasonous"
-(US) Weekly API Oil Inventories: Crude: -5M v -6M prior
Looking Ahead: US Dec ADP Nonfarm Employment Change due for release on Thursday, along with the weekly DoE Crude Oil Inventories

Europe
- (UK) UK govt reportedly plans to guarantee EU-level farming grants post-Brexit - UK press
-(UK) Tony Blair denies claim he told Trump about UK spying - Sky News
-(UK) London link may allow for UK stock trading during China hours – US financial press
-(DE) Chancellor Merkel's CDU/CSU and SPD agreed to hold exploratory talks on joint govt from Jan 7th
Looking ahead: UK Dec Services PMI to be released


***Levels as of 01:00ET***
- Nikkei225 %, Hang Seng +0.5%; Shanghai Composite +0.7%; ASX200 +0.1%, Kospi -0.5%
- Equity Futures: S&P500 +0.1%; Nasdaq100 +0.2%, Dax +0.3%; FTSE100 -0.1%
- EUR 1.2023-1.2005; JPY 112.78-112.48; AUD 0.7842-0.7815;NZD 0.7110-0.7073
- Feb Gold -0.6% at $1,310/oz; Feb Crude Oil +0.8% at $62.09/brl; Mar Copper +0.5% at $3.27/lb

TheVerge : CES 2018: WHAT TO EXPECT FROM THE YEAR’S BIGGEST TECH SHOW

CES 2018: WHAT TO EXPECT FROM THE YEAR’S BIGGEST TECH SHOW

In a few days, we’ll all descend into Las Vegas for another year of the Consumer Electronics Show, an annual gathering of the latest gadgets, toys, car tech, and more. The Verge and Circuit Breaker are back to bring you all the latest from Vegas, with our teams on the ground this Friday and bringing you coverage all week long.

So what can you expect to see at the show? Every year brings larger television sets with higher resolutions than ever, faster drones, a variety of self-driving vehicles, and more wearables than you can fit on your body. We’re also bringing Circuit Breaker Live to Las Vegas, streaming exclusively on Twitter every day from January 8th to 11th at 2PM PST / 5PM EST. Our colorful cast of Verge staffers will be there to give you our analyses, commentary, inside looks, and demonstrations of the coolest (and weirdest) tech from the CES floor. We’ll also query all your burning questions live if you tweet us! So do that!

Now that we’ve got a little business out of the way, here’s a glimpse at what you can expect to see over the next week at CES 2018.

VR WILL FADE INTO THE BACKGROUND, AND AR WILL RISE TO THE FOREFRONT

Photo by Amelia Holowaty Krales / The Verge
With three well-established commercial headsets on the market, virtual reality has started to feel like a normal corner of the tech industry and no longer like the next big thing. But with normalization and lukewarm adoption (only Sony and its PS VR headset post impressive sales figures), we’ve entered into a kind of VR malaise. Most people still haven’t even tried VR, as it still requires pricey external hardware and remains focused almost entirely on the game community. Even as Steven Spielberg’s big-budget blockbuster adaptation of Ernest Cline’s Ready Player One prepares to hit the silver screen, it’s starting to look like VR will take many more years to manifest as a mainstream consumer product.

In its place, augmented reality has earned a new sense of purpose with industry momentum thanks to Niantic’s Pokémon Go, Apple’s new ARKit framework, and the general rise of computer vision on smartphones that decorate our selfies with all manners of silly virtual objects. Like it was for VR, CES will be a destination for all the forward-looking ideas and far-out prototypes. For AR, that means goggles and glasses that will try to replicate the kind of futuristic tech only seen in science fiction. So while the phones in our pockets handle the low-end of AR, expect the products at CES to showcase what the high-end, experimental realm of this tech has to offer.

ELECTRIC CAR CONCEPTS GALORE

Photo by Anthony Dias for The Verge
CES has become a prime show for dreaming about weird, new ways to get around. But instead of just the big car and concept reveals we’ve seen in past years, this year’s show looks like it will be more about the technology that is in those vehicles, as well as what powers them.

Ford’s new CEO Jim Hackett will deliver a keynote address on Tuesday, January 9th. His speech will undoubtedly be a grab bag of buzzwords like “mobility” and “future of transportation,” and the company’s likely saving its biggest product reveals for Detroit. This is one of Hackett’s most high-profile appearances since he was picked to succeed former CEO Mark Fields. He was chosen for his deeper relationship with Silicon Valley (he previously ran Ford’s Smart Mobility division), so this is a chance to hear him frame the future of one of the biggest carmakers in the world.

Ford and its competitors are so focused on the future, because the auto industry is flush with EV and smart mobility startups these days. Tesla is still the most sound competitor to any of the big three automakers, but there’s a CVS receipt-sized list of others trying to fill the space between "tech company" and “car company." Many of them will be at CES showing off autonomous shuttles, self-driving technologies, electric scooters, and other futuristic transportation ideas — all things that companies like Ford (or Google, Intel, GM, you name it) are also working on in different capacities.

One of those companies is Byton, a Chinese automaker that’s pulled a ton of talent from the flailing Faraday Future. Byton will be at CES showing off its first car, an all-electric SUV that it’s referring to as a “Smart Intuitive Vehicle.” Debuting a fast, flashy, super smart electric car one year after Faraday Future did the same thing is an interesting choice, and it will be up to Byton to prove to everyone why it’s not headed for a similar fate.

Another thing to keep an eye out for is the continued escalation in the arms race between Uber and Lyft. The competing services have only been live in Las Vegas for a little over two years, but Lyft is answering last year’s Uber helicopter stunt by offering real rides in semi-autonomous cars.

All the other major automakers will be at CES in some form or another, too. It won’t be the clash of concepts we see in Geneva every year, and they won’t bring the same kind of news we see at other shows. But it’s possible that some of them could surprise us. And of course, the show floor (and the convention center parking lots) will be full of smart scooters, weird skateboards, and other ways to move.

TVS WILL ADOPT MORE HDR VIDEO FORMATS

Photo by James Bareham / The Verge
Get ready for yet another big showcase of 4K HDR TVs at CES 2018. Over the last year, UHD sets have continued to drop in price to a point where they’ve replaced the bargain-priced 1080p TVs that lined store shelves two or three years ago.

High dynamic range (HDR) video will continue to evolve at the show. Expect many of the new TVs unveiled at CES to support both Dolby Vision and HDR10, though some may stick with just the latter. Advanced HDR is seeing more pickup as we move toward bringing HDR to broadcast TV, and HDR10+ might also begin to see wider adoption beyond just Samsung now that there’s Amazon content to stream.

LG and Sony will highlight their latest OLED sets, while Samsung, TCL, Sharp, Panasonic, and other companies will also show off their latest LCD models. They’ve got OLED handily beat on price, and odds are that Samsung has continued to work at narrowing the gap in picture quality between the two over the last 12 months.

Of course, you’ll see the usual mix of 8K displays, transparent screens, and other eye-grabbing demos that are ultimately little more than prototypes. CES 2018 is going to feel a little repetitive and redundant on the TV front, but the screens will still be very pretty.

WEARABLES GET SERIOUS ABOUT HEALTH

“Wearables” at CES is usually a broad category, one that can include everything from GPS watches to brain headbands to AR glasses to “smart” underwear to gadgets that measure your vertical leap. But if there’s a trend that seems to be emerging in wearables for CES 2018, based on early reporting and pitches we’ve received, it’s health: legitimate medical devices, not-yet-approved medical devices, and likely some devices that make bogus claims, too.

There will be two areas of the CES show floor dedicated to health and fitness tech, together spanning 63,000 square feet. But we’ve heard that companies like Fitbit and Polar won’t have booths this year, likely because they’ll launch any 2018 products on their own cadence; and over all, the number of wearable exhibitors is down: 51 exhibitors in 2018 compared with 82 in 2017.

Instead, there’s a small increase in the number of health and wellness exhibitors, and we’re expecting to see more things like connected blood pressure monitors, medical alert devices designed for seniors, gluten sensors, fertility monitors, and sleep trackers — lots of sleep trackers. (The irony, because CES.)

It’s not surprising that wearables at CES are headed in this direction. The value of basic step counters and sleep trackers has changed as they’ve become commoditized and people start asking the hard questions about whether they truly help with health and fitness goals.

GOOGLE ASSISTANT ATTEMPTS TO TAKE ON ALEXA

Photo by Vjeran Pavic / The Verge
Smart home gadgets have had a big presence at CES for years. But it wasn't until recently that they actually came within reach for most consumers, thanks to increasingly easy installations and connections to our phones and voice assistants.

The past few years, we've seen smart home tech take on the basics — traditional light bulbs, power outlets, speakers, door knobs, and so on. This year, expect to see companies continuing to expand the smart home's reach to new types of devices and diversifying their offerings within existing categories. You may already have a connected light bulb, but there are tons of other places to put lights around your house.

A lot of these companies don't want to get caught in the war between Apple, Google, and Amazon over who controls your home, either. Expect to see more devices that offer support for multiple platforms. Where there’s Alexa, there’s likely to be Google Assistant in the mix.

But most of all, it's CES, so expect some strange smart gadgets you can't ever imagine needing. They'll seem ridiculous now — but they'll show how today's dull, disconnected devices could be (perhaps unnecessarily) smarter in the future.

PC GAMING WILL BE MORE IMPORTANT THAN EVER BEFORE

Image: Razer
2017 was a strong year for PC gaming, with one of the world’s most popular games, Playerunknown’s Battlegrounds, becoming practically a system seller for the entire platform when it launched in beta back in March. It’s also never been cheaper or easier to get into PC gaming than it is today. Inexpensive peripherals, readymade PC bundles for graphics-intensive gaming and VR, and other friction-free entryways into the hobby are more readily available. Anyone who’s been thinking about building out a Steam library and making the transition from lapsed or console gamer to full-fledged PC diehard can now do it with ease.

That means a gadget show like CES will be overrun this year by all manner of PC gaming accessories, prototype towers, and new and experimental VR hardware. There should also be some exciting advancements in GPU enclosure technology, which makes it easier for lower-end laptops and desktops to game without needing a high-end graphics card installed directly, and cloud gaming hardware and software, to let us stream games over the internet and do away with hardware requirements entirely.

BEAUTY GADGETS FIND THEIR NICHE

Photo: The Verge
We’ve been waiting for the day when our homes are equipped with smart mirrors and connected hairbrushes. But fundamentally, we’re just hoping for a gadget that tells us how to look our best. 2018 isn’t going to be the year this happens. Instead, the beauty tech you’ll see at CES 2018 will begin to make its way into salons, makeup stores, and pop-up shops. Various companies will create their beauty gadgets as ways to monetize existing product lines. These tech companies will partner with big-name brands to create devices that offer advice on what skin products or makeup to use. Conveniently, the gadgets will only recommend products from partnered brands.

We’ve already seen this happen with beauty apps, like ones from Sephora and Meitu. Last year, HiMirror also showed off a smart mirror that made recommendations based on your skin’s health. There’s a future for a smart mirror that suggests products from a bevy of beauty companies, but for now, you’ll likely see a bunch of specialized mirrors for every individual company.

That’s just a taste of what’s to come at CES 2018. Stay tuned with us all week for more on a bevy of other gadgets, including headphones, wireless chargers, smart home gear, devices with “artificial intelligence,” and of course, the unexpected.

>>> Tesla delivers a clunker with latest Model 3 figures

Tesla delivers a clunker with latest Model 3 figures

Tesla delivered only 1,550 of its new Model 3 vehicles in the final quarter of last year, well below the 5,200 consensus forecast of Wall Street analysts, as it struggled to overcome the production bottlenecks that have bedeviled its make-or-break mass market car.

The US electric carmaker also pushed back its target for hitting a production rate of 5,000 a week of the new cars to the end of the second quarter, three months later than it had projected. The delay comes only two months after it last pushed back the 5,000-a-week target by a full quarter.

The latest signs of Tesla’s production headaches with the Model 3 wiped nearly 2 per cent off its shares in after-market trading on Wednesday, leaving them 20 per cent below their peak of last summer.

However, the company said it had made “major progress addressing Model 3 production bottlenecks”, with output picking up late in December. Production during the quarter reached 2,500 vehicles, many of them too late to be delivered before the end of the year, the company said.

The first Model 3s, priced from $35,000, rolled off the production lines in July, though Tesla had delivered only 220 of them by the end of September. At the time, it blamed its teething problems on mastering the complexity of a production line in the Nevada plant where lithium ion cells are packaged together into modules, before being assembled into final battery packs.

>>> Zimmer Biomet received FDA clearance for the Sidus Stem-Free Shoulder system

Zimmer Biomet received FDA clearance for the Sidus Stem-Free Shoulder system as a total shoulder arthroplasty solution (124.92 +0.86)
The Sidus system will be available in the United States beginning in the First Quarter of 2018. "The FDA clearance of the Sidus Stem-Free Shoulder system comes at a time when Zimmer Biomet is accelerating the pace of innovation... We launched Sidus in Europe in 2012 and initiated a clinical study in the U.S. in 2015. During that time, the product has demonstrated strong clinical performance. The addition of the Sidus system to Zimmer Biomet's U.S. portfolio reinforces the Company's leadership in the innovation of shoulder solutions."

>>> Casey's General closed 7% higher after receiving JCP letter before the open;

Casey's General closed 7% higher after receiving JCP letter before the open; company comments on letter (120.21 +7.82)
  • "Casey's Board of Directors and management team welcome and appreciate input from all shareholders. To that end, we met with representatives from JCP this past summer. During that discussion they did not raise their recommendation that Casey's explore strategic alternatives, and there has been no substantive engagement with them since that time. However, the Board will review the content of their letter thoroughly." Casey's has a strong track record of delivering value for shareholders. The Company's 5-year total shareholder returns (TSR) of 121% exceed the TSRs of the S&P 500 index (108%) and the S&P Retail index (46%) over the same period. Mr. Handley continued, "The Company is focused on generating increased long-term value for shareholders through new initiatives to accelerate same-store growth and returning cash to shareholders through share repurchases and a steadily increasing dividend. With the combination of the Company's growing acquisition pipeline, new store construction activity, new initiatives aimed at enhancing operations -- such as digital engagement and price optimization projects -- Casey's expects to deliver substantial value for its shareholders."
CASY was up 7% on the day after receiving JCP letter before the open

>>> US Close Dow +0.40% S&P +0.64% Nasdaq +0.84% Russell +0.17%

Closing Market Summary: Records All Around

Wall Street advanced to new record highs for the second day in a row on Wednesday, solidifying a solid start to the new year.

The Nasdaq climbed 0.8% to 7065.53, the S&P 500 jumped 0.6% to 2713.06, the Dow Jones Industrial Average advanced 0.4% to 24922.68, and the Russell 2000 hopped 0.2% to 1552.55. All four indices finished at new all-time highs, with the tech-heavy Nasdaq extending its 2018 gain to 2.4%. The S&P 500 is up 1.5% after the first two sessions of the new year.

Equities opened Wednesday's session just a tick above Tuesday's closing levels, but buyers soon took control, pushing the major stock indices higher through the late morning. The bulls hit pause ahead of the afternoon release of the minutes from the December FOMC meeting, which showed that most members backed a continued path of gradual rate hikes.

Some FOMC members even saw the possibility for more aggressive monetary policy depending on economic growth resulting from the GOP's tax overhaul--which President Trump signed into law two weeks ago. Many Fed officials believe that the tax cuts will boost consumer and capital spending, but there's uncertainty surrounding the magnitude of the growth.

The equity market resumed its upward trend following the minutes, finishing the day at its session high, while the Treasury market gave back some of its opening gains. The yield on the benchmark 10-yr Treasury note finished lower by two basis points at 2.45%, while the 2-yr yield climbed one basis point to 1.93%. Yields move inversely to prices.

Energy shares led the rally on Wall Street as West Texas Intermediate crude futures climbed 2.1% to $61.63 per barrel--which marks their best close since December 2014. Anti-government protests in oil-rich Iran helped fuel the commodity's advance, even though the demonstrations aren't expected to affect production. The S&P 500's energy sector added 1.5%.

The heavily-weighted technology and health care sectors were the next-best performing groups, adding 1.1% and 1.0%, respectively, while the other advancing sectors added between 0.1% and 0.7%. Within the tech space, chipmakers had another solid day overall, extending the PHLX Semiconductor Index's week-to-date gain to 4.5%, but Intel (INTC 45.26, -1.59) did not.

INTC shares lost 3.4% in reaction to reports that a design flaw in Intel's processor chips has forced a significant redesign of kernels for the Windows and Linux operating systems. Intel issued a statement refuting the claims in the late afternoon, which helped INTC shares pare some of their losses before the closing bell.

Only three of eleven sectors finished the midweek session in the red--consumer staples (-0.1%), utilities (-0.8%), and telecom services (-2.2%)--but their impact was modest as they comprise just a little more than 10.0% of the broader market combined.

Elsewhere, the Euro Stoxx 50 (+0.6%) ended a six-session losing streak and the major indices in the Asia-Pacific region also finished in the green. China's Shanghai Composite (+0.6%) paced the advance in Asia while Japan's Nikkei remained closed for a holiday.

Reviewing Wednesday's economic data, which included the ISM Manufacturing Index for December, Construction Spending for November, and the weekly MBA Mortgage Applications Index:

  • The ISM Index for December rose to 59.7 from an unrevised reading of 58.2 in November, while the consensus expected a reading of 58.0.
    • The key takeaway from the report is that growth in December was fueled by increases in eight out of ten index categories with New Order growth (+5.4 to 69.4) leading the way. The December increase leaves the index not far from its 2017 high of 60.8 that was recorded in the September reading.
  • The Construction Spending report for November increased 0.8%, while the consensus expected an increase of 0.7%. The prior month's increase was lowered to 0.9% from 1.4%.
    • The key takeaway from the report--and the downward revision to the October figure--is that construction spending is not sending signals pointing to notable acceleration in overall GDP growth.
  • The weekly MBA Mortgage Applications Index decreased 2.8% to follow last week's 4.9% decline.

On Thursday, investors will receive two economic reports--ADP Employment Change for December (consensus +190K) and weekly Initial Claims (consensus 239K). The two reports will be released at 8:15 AM ET and 8:30 AM ET, respectively.

  • Nasdaq Composite: +2.4% YTD
  • S&P 500: +1.5% YTD
  • Russell 2000: +1.1% YTD
  • Dow Jones Industrial Average: +0.8% YTD

>>> Rite Aid beats by $0.02 (2.11 -0.02)

Rite Aid beats by $0.02 (2.11 -0.02)
  • Reports Q3 (Nov) net of breakeven, may not compare to the Capital IQ Consensus of ($0.02); revenues from continuing operations (ex divested stores) fell 5.6% year/year to $5.35 bln, not comparable to the $7.59 bln Capital IQ Consensus.
  • Pharmacy Segment revenues were $4.0 billion and decreased 3.0% compared to the prior year period primarily as a result of a decrease in same store sales and reimbursement rates. Revenues in the company's Pharmacy Services Segment were $1.4 billion and decreased 12.2% compared to the prior year period, due to an election to participate in fewer Medicare Part D regions and a decline in commercial business. Same store sales from continuing operations for the quarter decreased 2.5% from the prior year, consisting of a 3.5% decrease in pharmacy sales and a 0.5% decrease in front-end sales. Pharmacy sales included an approximate 198 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, decreased 2.4% from the prior year period due in part to exclusion from certain pharmacy networks that Rite Aid participated in the prior year. Prescription sales from continuing operations accounted for 66.5% of total drugstore sales.
  • "Our pro-forma Adjusted EBITDA from continuing operations for the third quarter of $153 million, which includes $24 million in fees that would have been received if all of the divested stores were being managed under the TSA Agreement as of the beginning of the period, was in line with our expectations," said Rite Aid Chairman and CEO John Standley.
  • "The third quarter was a busy time for our team in preparing for and beginning the transfer of stores and related assets to Walgreens Boots Alliance... To date, we have transferred 357 stores and have received ~$715 million in proceeds, which we have used to pay down debt. Looking forward, in addition to completing the transfer process, we will continue to focus on our most significant business-building opportunities as we work together to deliver a great experience to our customers and patients."
  • As previously announced on November 27, 2017, the company completed the pilot closing and first subsequent closing under the amended and restated asset purchase agreement with Walgreens Boots Alliance (WBA), resulting in the transfer of 97 Rite Aid stores and related assets to WBA during the third quarter. Under the amended and restated agreement, WBA will purchase a total of 1,932 stores, three distribution centers and related inventory from Rite Aid for an all-cash purchase price of $4.375 billion. Rite Aid and WBA expect to continue to transfer ownership of the stores in phases over the coming months.

>>> Tesla reports Q4 deliveries of 29,870 vehicles -- 15,200 were Model S, 13,12

Tesla reports Q4 deliveries of 29,870 vehicles -- 15,200 were Model S, 13,120 were Model X, and 1,550 were Model 3 (39.87 +0.07)
  • "This was once again our all-time best quarter for combined Model S and X deliveries, representing a 27% increase over Q4 2016, and a 9% increase over Q3 2017, our previous best quarter... In total, we exceeded our previously announced guidance by delivering 101,312 Model S and X vehicles in 2017.. In addition to Q4 deliveries, about 2,520 Model S and X vehicles and 860 Model 3 vehicles were in transit to customers at the end of the quarter. These will be counted as deliveries in Q1 2018. Q4 production totaled 24,565 vehicles, of which 2,425 were Model 3. As we previously indicated, we slightly reduced Model S and X production in Q4 because of the reallocation of some of the manufacturing workforce towards Model 3 production, which also caused inventory to decline."
  • "During Q4, we made major progress addressing Model 3 production bottlenecks, with our production rate increasing significantly towards the end of the quarter. In the last seven working days of the quarter, we made 793 Model 3's, and in the last few days, we hit a production rate on each of our manufacturing lines that extrapolates to over 1,000 Model 3's per week. As a result of the significant growth in our production rate, we made as many Model 3's since December 9th as we did in the more than four months of Model 3 production up to that point. This is why we were not able to deliver many of these cars during the holiday season, just before the quarter ended. Model 3 deliveries to non-employee customers are now accelerating rapidly, and we're confident our customers will love them. As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time, we expect to have a slightly more gradual ramp through Q1, likely ending the quarter at a weekly rate of about 2,500 Model 3 vehicles. We intend to achieve the 5,000 per week milestone by the end of Q2. We're very grateful to everyone at Tesla who has poured their heart and soul into helping with the Model 3 ramp and creating the progress we are seeing.... Our delivery count should be viewed as slightly conservative, as we only count a car as delivered if it is transferred to the customer and all paperwork is correct. Final numbers could vary by up to 0.5%. Tesla vehicle deliveries represent only one measure of the company's financial performance and should not be relied on as an indicator of quarterly financial results, which depend on a variety of factors, including the cost of sales, foreign exchange movements and mix of directly leased vehicles."