The move comes as China is grappling with the escalating coronavirus outbreak. The disease has killed 565 people, mostly in China, and infected more than 28,000 people in over 25 countries and territories.
The reduction affects US goods that China imposed tariffs on last September. Starting next week, China will cut the additional 10% tariff rate it enacted back then on some goods to 5%. Other goods that were taxed an extra 5% will now be levied 2.5%, according to a statement from China's State Council Tariff Commission.
The commission added that other tariffs on US goods will be maintained while it continues to work on exemptions.
"China hopes that both sides will abide by bilateral agreements and make an effort to implement relevant provisions so that we can boost market confidence, promote bilateral trade relations and global economic growth," the statement said.
"Nevertheless, the announcement may help boost market sentiment, especially at a time when China is battling with the economic impact of the coronavirus outbreak," he said.
Wu and other experts have warned that the coronavirus outbreak could dent China's economic growth this year and have knock-on effects for the global economy.
When the outbreak hit, Beijing took the extraordinary step of placing major cities on lockdown in order to contain it. The government also extended the Lunar New Year holiday, effectively bringing factories around the country to a standstill as workers have been ordered to stay home. Millions of people have pulled back on consumption, as they hunker down indoors and avoid public spaces.
Washington officials earlier this week said the outbreak could delay exports of US goods to China. Last month, Beijing had agreed to buy an additional $200 billion worth of products from the United States as part of a "phase one" trade deal.
"It is true the 'phase one' trade deal, the export boom from that trade deal, will take longer because of the Chinese virus," Larry Kudlow, US President Donald Trump's chief economic adviser, said in an interview with Fox Business on Tuesday.
Agricultural goods such as soybeans, pork, cotton and wheat had accounted for a big chunk of the new purchases.
On Wednesday, US Secretary of Agriculture Sonny Perdue said the United States should be patient with China's ability to meet those trade pledges, given the coronavirus outbreak.
"If they're really trying and it really just blows the economy out of the water, then we would have to be understanding of that," Perdue said, according to Reuters.
Oxford Economics earlier this week cut its GDP forecast for China, saying that even with a rebound in the second quarter of this year, "we now forecast 5.4% growth for 2020, compared with 6% previously."
The move comes as China is grappling with the escalating coronavirus outbreak. The disease has killed 565 people, mostly in China, and infected more than 28,000 people in over 25 countries and territories.
The reduction affects US goods that China imposed tariffs on last September. Starting next week, China will cut the additional 10% tariff rate it enacted back then on some goods to 5%. Other goods that were taxed an extra 5% will now be levied 2.5%, according to a statement from China's State Council Tariff Commission.
The commission added that other tariffs on US goods will be maintained while it continues to work on exemptions.
"China hopes that both sides will abide by bilateral agreements and make an effort to implement relevant provisions so that we can boost market confidence, promote bilateral trade relations and global economic growth," the statement said.
"Nevertheless, the announcement may help boost market sentiment, especially at a time when China is battling with the economic impact of the coronavirus outbreak," he said.
Wu and other experts have warned that the coronavirus outbreak could dent China's economic growth this year and have knock-on effects for the global economy.
When the outbreak hit, Beijing took the extraordinary step of placing major cities on lockdown in order to contain it. The government also extended the Lunar New Year holiday, effectively bringing factories around the country to a standstill as workers have been ordered to stay home. Millions of people have pulled back on consumption, as they hunker down indoors and avoid public spaces.
Washington officials earlier this week said the outbreak could delay exports of US goods to China. Last month, Beijing had agreed to buy an additional $200 billion worth of products from the United States as part of a "phase one" trade deal.
"It is true the 'phase one' trade deal, the export boom from that trade deal, will take longer because of the Chinese virus," Larry Kudlow, US President Donald Trump's chief economic adviser, said in an interview with Fox Business on Tuesday.
Agricultural goods such as soybeans, pork, cotton and wheat had accounted for a big chunk of the new purchases.
On Wednesday, US Secretary of Agriculture Sonny Perdue said the United States should be patient with China's ability to meet those trade pledges, given the coronavirus outbreak.
"If they're really trying and it really just blows the economy out of the water, then we would have to be understanding of that," Perdue said, according to Reuters.
Oxford Economics earlier this week cut its GDP forecast for China, saying that even with a rebound in the second quarter of this year, "we now forecast 5.4% growth for 2020, compared with 6% previously."
The World Dream cruise liner was denied port call in Taiwan and was forced to return to Hong Kong for an early arrival Wednesday.
Photo:
miguel candela/Shutterstock
Two major U.S. airlines suspended flights to Hong Kong and 10 people on a cruise ship under quarantine in Japan tested positive for the new coronavirus, as more Chinese cities imposed restrictions on movement meant to help contain the fast-spreading pathogen that has killed nearly 500 people.
United Airlines Holdings Inc.
and
American Airlines Group Inc.
said they were halting flights into and out of Hong Kong until Feb. 20, citing a lack of demand. Both airlines and several other global carriers had previously halted service to the Chinese mainland.
Hong Kong, which earlier reported its first death from the virus, said Wednesday it would impose a 14-day quarantine on all people arriving from the mainland—an escalation from a previous rule barring only people who were residents of or had recently been to the Chinese province worst-hit by the virus. The death in Hong Kong was the second outside the mainland, where by the end of Tuesday the number of fatalities from the virus had reached 490. The number of confirmed cases on the mainland exceeded 24,000 since the virus originated in December in the central Chinese city of Wuhan.
The Latest on the Coronavirus
American Airlines and United suspended flights to Hong Kong
10 people on a quarantined cruise ship in Japan tested positive
The death toll neared 500, with more than 24,000 confirmed cases
Hong Kong will quarantine all travelers from mainland China for 14 days
As of Wednesday afternoon, Hong Kong authorities had confirmed nearly two dozen cases. The city was hit hard in 2002 and 2003 by an outbreak of severe acute respiratory syndrome. Of the nearly 800 deaths from SARS, 299 were in Hong Kong.
United Airlines aircraft parked at the San Francisco International Airport as United said it would pause all China flights.
Photo:
Yichuan Cao/Zuma Press
The new policy applies to all travelers from mainland China—including Hong Kong residents, mainland Chinese nationals and foreign visitors—and will take effect Saturday night.
Chief Executive
Carrie Lam
said the special Chinese territory would immediately shut down two of its cruise terminals after a cruise ship that had previously carried eight people confirmed to be infected with the coronavirus docked in the city on Wednesday morning. All passengers and crew members are blocked from disembarking until a health check was completed, a Hong Kong official said.
Coronaviruses: From Animals to Humans
Researchers aren't sure how the novel coronavirus first infected people in China, but the viruses that cause SARS and MERS, which originated in bats, provide clues.
2
1
Proteins on the outer shell of the virus allow it to latch onto cells in the host’s respiratory tract. The proteins’ shapes are determined by the virus’s genes.
To infect new hosts, the virus’s genes undergo mutations that alter its surface proteins, allowing them to latch onto the cells of new species.
Bat respiratory tract
Human respiratory tract
Cell
Virus
Gene
Protein
Mutation
3
In the case of SARS, the virus jumped from bats to civet cats before gaining the ability to infect humans. In the case of MERS, camels served as the intermediate host.
Original host
Intermediate host
Human
4
Coronaviruses can also jump directly to humans, without mutating or passing through an intermediate species.
5
Researchers aren't sure from what animal the novel coronavirus originated or whether it passed through an intermediate species before infecting humans.
2
1
Proteins on the outer shell of the virus allow it to latch onto cells in the host’s respiratory tract. The proteins’ shapes are determined by the virus’s genes.
To infect new hosts, the virus’s genes undergo mutations that alter its surface proteins, allowing them to latch onto the cells of new species.
Bat respiratory tract
Human respiratory tract
Cell
Virus
Gene
Protein
Mutation
3
In the case of SARS, the virus jumped from bats to civet cats before gaining the ability to infect humans. In the case of MERS, camels served as the intermediate host.
Original host
Intermediate host
Human
4
Coronaviruses can also jump directly to humans, without mutating or passing through an intermediate species.
5
Researchers aren't sure from what animal the novel coronavirus originated or whether it passed through an intermediate species before infecting humans.
2
1
Proteins on the outer shell of the virus allow it to latch onto cells in the host’s respiratory tract. The proteins’ shapes are determined by the virus’s genes.
To infect new hosts, the virus’s genes undergo mutations that alter its surface proteins, allowing them to latch onto the cells of new species.
Bat respiratory tract
Human respiratory tract
Cell
Virus
Gene
Protein
Mutation
3
In the case of SARS, the virus jumped from bats to civet cats before gaining the ability to infect humans. In the case of MERS, camels served as the intermediate host.
Original host
Intermediate host
Human
4
Coronaviruses can also jump directly to humans, without mutating or passing through an intermediate species.
5
Researchers aren't sure from what animal the novel coronavirus originated or whether it passed through an intermediate species before infecting humans.
1
Proteins on the outer shell of the virus allow it to latch onto cells in the host’s respiratory tract. The proteins’ shapes are determined by the virus’s genes.
Bat respiratory tract
Cell
Virus
Gene
Protein
2
To infect new hosts, the virus’s genes undergo mutations that alter its surface proteins, allowing them to latch onto the cells of new species.
Mutation
Human respiratory tract
3
In the case of SARS, the virus jumped from bats to civet cats before gaining the ability to infect humans. In the case of MERS, camels served as the intermediate host.
Original host
Intermediate host
4
Human
4
Coronaviruses can also jump directly to humans, without mutating or passing through an intermediate species.
5
Researchers aren't sure from what animal the novel coronavirus originated or whether it passed through an intermediate species before infecting humans.
Source: Timothy Sheahan, University of North Carolina
Alberto Cervantes and Josh Ulick /THE WALL STREET JOURNAL
Earlier this week, Hong Kong had shut down four checkpoints with China amid a five-day strike by the city’s hospital workers who are demanding a full border closure.The cruise-terminal closures leave the city with three open checkpoints. Mrs. Lam said a full closure wouldn’t be practical.
Cathay Pacific Airways Ltd.,
the city’s flagship carrier, asked all its employees to take three weeks of optional unpaid leave from March 1 to June 30 because of the virus and a drop in demand, according to a representative of the airline. Previously, the airline, already suffering from reduced travel to Hong Kong because of months of protests, said it was reducing its capacity by 30%.
In Yokohama, Japan, just south of Tokyo, nine passengers and one crew member from the cruise ship Diamond Princess were taken to hospitals after testing positive for the virus, and all 3,700 people still on board are likely to be kept there for two weeks, Japan’s health minister said Wednesday. The ship was put under quarantine after an 80-year-old man who had disembarked in Hong Kong tested positive.
In the U.S., two planes carrying hundreds of Americans evacuating Wuhan landed at the Travis Air Force Base in Fairfield, Calif., early Wednesday morning. One plane will stay at the Air Force base, while the second will refuel and fly to Marine Corps Air Station Miramar in San Diego. The continued evacuations come a week after more than 200 Americans returned to the U.S. in a State Department-led effort.
Throughout their journey to the U.S., passengers were screened for symptoms of the highly contagious virus. The evacuees will undergo a 14-day quarantine at both of these sites, officials said, led by the U.S. Department of Health and Human Services and the Centers for Disease Prevention and Control.
At Travis Air Force Base, evacuees will stay at the on-site lodging facility Westwind Inn. On Tuesday, officials at the Marine Corps Air Station Miramar handed out pamphlets and held information sessions for the community ahead of the arrival of evacuees, according to social media posts.
At the center of the crisis in Wuhan, designated hospitals started taking only severe or critical patients confirmed to have the virus on Wednesday, according to an agency set up to deal with the outbreak. The medical system in Hubei province has been overwhelmed by the virus, and front-line staff have been forced to turn patients away as authorities race to build new hospitals.
Hu Lishan, a local Communist Party official, said at a Wednesday night press conference that many patients confirmed to have the coronavirus hadn’t been admitted to those designated hospitals because of a lack of available beds. Stressing the severity of the situation, he said the patients were “forming a dammed lake, which is very distressing and painful.”
Jiang Rongmeng,
a member of the National Health Commission’s team studying the virus, said inadequate medical resources in Wuhan were contributing to a higher mortality rate there.
“The medical resources in Wuhan, especially the ICU team, are not enough to deal with this severe treatment,” he said in a Tuesday interview with state broadcaster China Central Television. The death rate from the virus in the city is 4.9%, more than twice the nationwide 2.1%, according to the health commission.
On Wednesday, Wuhan Children’s Hospital said it had two cases of the coronavirus being transmitted in the womb from mother to baby, according to the Communist Party-run People’s Daily. The younger of the infected babies was 30 hours old.
In a Wednesday Foreign Ministry news briefing—held over the Chinese messaging app
WeChat
instead of at the Foreign Ministry because of the outbreak—spokeswoman Hua Chunying said the U.S. would dispatch experts to join a China-World Health Organization joint group. A batch of supplies sent by American businesses and institutions had arrived in Wuhan on Tuesday, she added. China has previously singled out the U.S. for imposing what it called excessive travel restrictions since the outbreak began.
Cities throughout China are putting increasingly severe restrictions on residents. Zhumadian, a city in Henan province—which borders the outbreak-stricken province of Hubei—is allowing one person per household to leave every five days to buy supplies.
At least a half-dozen Chinese cities, including the tech hub of Hangzhou, near Shanghai, have imposed similar regulations, though typically allowing shopping every other day. Wuhan, Hubei’s capital, has been under lockdown for two weeks.
In Beijing, catering services were prohibited from organizing and hosting group gatherings, according to a notice issued by the local government.
The government of Taiwan joined counterparts world-wide in tightening its borders to Chinese citizens: Those living in the mainland will be barred entry starting Thursday, Taiwan’s Centers for Disease Control said. Beijing largely bars its nationals from traveling to the self-ruling island.
The Taipei government, which had previously said it would refuse entry starting Friday to foreigners who had traveled to mainland China in the past two weeks, said those who had traveled to Hong Kong or Macau will have to self-quarantine.
Related Video
Challenges for travel and leisure stocks, slower economic growth and a weaker Chinese yuan are among the new market implications investors are dealing with as the new coronavirus spreads rapidly. Photo: Bloomberg/Qilai Shen
The world of finance took a hit from the coronavirus as Credit Suisse Group AG canceled its signature Asian Investor Conference in Hong Kong, one of the city’s biggest financial-industry gatherings, due to health and safety risks, a spokeswoman said Wednesday. It marked the first time that the conference, scheduled for March each year, has been canceled since it began in 1998. The conference attracted more than 2,000 investors from around the world last year.
—Jennifer Calfas, Bingyan Wang,
Jing Yang
and Frances Yoon contributed to this article.
DETROIT – General Motors lost $194 million in the fourth-quarter heavily due a 40-day labor strike against the company that cost it four weeks of vehicle production and eroded any profit.
The strike, according to the automaker, cost it $2.6 billion in earnings before interest and taxes during the three months ended Dec. 31, shaving $1.39 per share off of its EPS on an adjusted basis. The impact for the year was $3.6 billion.
The company still beat Wall Street's earnings expectations for the fourth quarter, but its revenue came in slightly below expectations.
Here's what GM reported on Wednesday compared to what Wall Street expected, according to Refinitiv consensus estimates:
Adjusted earnings: 5 cents per share compared to 1 cent per share expected.
Revenue: $30.8 billion compared to $31.04 billion expected.
GM's operating profit remained healthy. The company reported an operating profit, which is earnings before interest and taxes, of $8.4 billion for the year, including $105 million in the fourth-quarter. That's down from $11.8 billion compared to 2018 and $8.4 billion for the fourth-quarter of that year.
The company's 2020 guidance includes adjusted earnings of $5.75 per share to $6.25 per share and adjusted operating cash flow of $13 billion to $14.5 billion.
Wall Street's attention is expected to be on the Detroit automaker's operations in China, which experienced a 15% sales decline last year, as well as the company's 2020 outlook amid growing challenges in North America and China.
GM reported its fourth-quarter and 2019 earnings ahead of an investor day from 10 a.m.-2 p.m. Wednesday from the New York Stock Exchange. GM executives, including CEO Mary Barra, will discuss the company's operations and outlook at-length as it pivots toward all-electric vehicles, including at least 20 new EVs globally by 2023.
GM's earnings come a week after the automaker confirmed plans to resurrect Hummer, best known as a gas-guzzling, military-style SUV, as an all-electric "super truck" with massive horsepower, acceleration, and torque.
Tesla's next gigafactory might be in the Lone Star State.
James Martin/CNET
Elon Musk seems to be eyeing the second largest US state for Tesla's third American gigafactory. The electric car company's CEO put the idea to his 31 million Twitter followers late Tuesday.
"Giga Texas?" he tweeted, with the poll options "Hell yeah" and "Nope."
As of early Wednesday, the reaction seemed overwhelmingly positive: "Hell yeah" stood at nearly 80%. Musk also confirmed to a follower that he'll be at the SpaceX development facility in Boca Chica, Texas, on Thursday for the "Starship career day" he previously invited people to. This suggests he could be using the Texas trip to build hype around a Tesla announcement.
Tesla is
TSLA, +13.73%parabolic. The yield on the benchmark 10-year Treasury note
TMUBMUSD10Y, +2.15%,
even before the coronavirus outbreak, couldn’t top 2%, and the yield curve even when it isn’t inverted has been very flat.
Commercial construction has tapered off. Vehicle sales have peaked. Banks plan to tighten lending standards at the same time as they expect a flattening of demand, according to a survey released this week. Even those loss-making initial public offerings, or near IPOs in the case of real-estate company WeWork, are starting to run a tighter ship.
Over two years, zero-coupon Treasurys
EDV, -2.01%
have produced nearly double the return of the S&P 500
SPY, +1.52%.
“It is the type of stuff you see at the end of credit and economic cycles,” says Mike Larson, senior analyst at Weiss Ratings. “I am concerned about the durability of this market and economic expansion.” He is dismissive of the three interest-rate cuts from the Federal Reserve, calling them both too late and too timid to make a major difference, though he concedes the housing market has stabilized in response.
Data through the end of January.
Larson says over two years, “boring” stocks like utilities, real-estate investment trusts and consumer staples have done well, and in the call of the day he expects those sectors to continue to perform, even if they are overbought in the short term. Larson says these sectors offer high dividend yields and protection from economic weakness—even if talking about utilities may put you to sleep.
He also likes precious metals, including gold
GC00, +0.15%
and silver
SI00, +0.14%.
“Metals sat out most of the bull market, there’s catch-up potential there,” he says.
The buzz
Traders took an optimistic view toward the coronavirus, which has killed 494 as of Thursday morning from nearly 25,000 confirmed cases, on reports from China and the U.K. on progress toward treating it. A World Health Organization spokesman said there’s no known therapeutics so far against the virus.
Earnings season continues with 16 S&P 500 firms reporting results. Late on Tuesday, mass media conglomerate Walt Disney
DIS, +2.41%
exceeded forecasts on subscriber growth for its streaming service, while car maker Ford Motor Company
F, +2.23%
missed expectations as volumes fell and costs rose.
The economics calendar features the ADP private-sector jobs report as well as the nonmanufacturing index by the Institute for Supply Management.
The markets
It was full risk-on mode for markets—U.S. stock futures
ES00, +0.74%
rallied, and crude-oil
CL.1, +2.48%
and copper
HG00, +1.93%
futures gained.
The yield on the 10-year Treasury rose 2 basis points.
A man stood up on board a flight from Toronto to Jamaica and said that he had coronavirus, forcing the plane to turn around. He didn’t and was arrested.
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Tesla's stock soaring 300% in six months shows markets are messed up, VGI Partners says.
"When a market cap of that size can go hyperbolic in a short period of time for no real reason, it is certainly symptomatic of an environment that is not normal."
However, the asset manager hasn't shorted Tesla stock because of its huge potential customer base and its "billionaire genius" CEO, Elon Musk.
VGI hasn't bought shares either as the electric carmaker faces intense competition and an uncertain future.
Tesla's stock has skyrocketed more than 300% in six months, boosting the electric carmaker's market capitalization to about $160 billion.
The astronomical rally is a sign that markets are messed up, according to VGI Partners Global Investments, an Australia-based asset manager with nearly $1 billion invested across stocks such as Amazon, Spotify, and Mastercard.
"Do I think that this is an indication of euphoria or an indicator of a party where the punch bowl has been aggressively spiked later in the night?" Robert Luciano, VGI's portfolio manager, asked rhetorically on an earnings call this week.
"It certainly feels like it," he continued. "When a market cap of that size can go hyperbolic in a short period of time for no real reason, it is certainly symptomatic of an environment that is not normal."
Luciano may be skeptical of Tesla's rally, but he's wary of betting against a company with a huge number of potential customers and a super-rich, brainiac CEO in Elon Musk.
"Tesla has multiple total addressable markets and it's founded and managed by a billionaire genius," Luciano said. "We find that a highly difficult combination to short."
He added that the multiple strands of Tesla's business — electric vehicles, energy storage, solar panels — mean it could also be considered a "platform business" that is "highly scalable."
However, Luciano explained why VGI doesn't own any Tesla shares either.
"At various points in time, the mathematics and the outlook for the business has made little sense to us," he said. Fierce competition in electric vehicles and Tesla's other business areas poses another risk, he added.
