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Tesla is under pressure to limit spending as it emerges from what Musk called the “most challenging” year in its history. While it succeeded in scaling up output of its Model 3, the company missed analysts’ production targets during the fourth quarter, and it’s had to cut prices to make up for the halving of a U.S. tax credit that’s acted as a buyers’ incentive. The credit is set to drop again in July before going away entirely at the end of the year.
https://www.bloomberg.com/news/articles/2019-01-18/tesla-to-cut-7-percent-of-jobs-to-lower-costs-for-model-3-ramp?srnd=premium
Elon Musk said he’ll cut Tesla Inc.’s workforce by 7 percent, or more than 3,000 jobs, warning that the “road ahead is very difficult” in making electric cars more affordable for the mass market.

 

“Goldman Sachs should understand the agony and the trauma suffered by the Malaysian people as a result of the 1MDB scandal,” Lim said in the administrative capital of Putrajaya. “An apology is just not sufficient. Not enough. There must be the necessary reparations and compensations.”
https://www.bloomberg.com/news/articles/2019-01-18/malaysia-may-discuss-dropping-goldman-s-charges-for-7-5-billion?srnd=premium 
An apology from Goldman Sachs Group Inc. doesn’t cut it for Malaysia, which said it may consider a discussion to absolve the bank of blame for its role in the 1MDB scandal for $7.5 billion.
The country filed criminal charges against the lender in December, the first for Goldman, and may discuss dropping those allegations if the bank pays the sum, Finance Minister Lim Guan Eng told reporters on Friday. Units of the bank were accused of making false statements in documents submitted to a local regulator in arranging $6.5 billion bond offers for troubled state fund 1MDB.

 

After a prolonged summer drought, the bustling traffic at one of the shallowest points on the Rhine ground to a halt for nearly a month late last year, choking off a critical transport artery. The impact damped Germany’s industrial machine, slowing economic growth in the third and fourth quarters.
https://www.bloomberg.com/news/articles/2019-01-18/europe-s-most-important-river-is-running-dry?srnd=premium 
“You can see the water levels are lower each year,” said Kilps, who added extra flotation equipment to the 150-ton boat during the stoppage to enable it to finally cross the river again. “It’s scary to watch the climate changing.”
With its source high in the Swiss Alps, the Rhine snakes 800 miles through the industrial zones of Switzerland, Germany and the Netherlands before emptying into the sea at Rotterdam, Europe’s busiest port. It serves as a key conduit for manufacturers such as Daimler AG, Robert Bosch GmbH and Bayer AG. 
Constraints on the Rhine cost BASF SE around 250 million euros ($285 million) by pushing the chemical maker to use more expensive transport options. In a recent newspaper interview, BASF Chief Executive Officer Martin Brudermueller called for major infrastructure investments such as locks and dams that can release water to ensure shipping lanes remain open. 
“The Alps are warming at an even faster rate as snow and ice melts,” Hagg said. “A warming climate means that incidents like the low river levels this summer are more likely to occur.”

 

It’s a grim week in global growth when the brighter take is that Italy’s more in stagnation than recession. Elsewhere, the tone is almost universally downbeat, with an OECD gauge affirming a deep sluggishness in the world’s major economies. Outside of sour trade data, China also saw its first car sales dip three decades, adding to a slowdown that has the government cutting taxes to nudge consumption. Germany barely dodged a recession at the end of 2018, and Mario Draghi sees the weakness across Europe even as he doesn’t want to apply the R-word. Economic policy uncertainty is at a record high globally, and the likes of Brexit and the U.S. government shutdown are adding dark clouds on the horizon. On a hopeful note, here’s a case for a pleasant surprise in the Philippines economy. And here’s a Bloomberg Economics analysis to help you read the tea leaves on global growth.
https://www.bloomberg.com/news/articles/2019-01-18/-goldilocks-economy-references-are-doomed-as-the-storms-set-in
Esther George won the week for monetary policy doves, as the famously hawkish regional Fed chief called for patience on raising interest rates. That marked just the latest sign that 2019 will be a year of caution at central banks, outlined in our quarterly decision guide. China’s quietly cutting borrowing costs while holding rates. The Bank of Japan probably will cut its inflation forecast on cheaper oil, and here’s a guide to its language on the yen. Brexit chaos could delay action at the Bank of England, and markets already were coming around to a more dovish view there. Turkey, Indonesia and South Africa all kept rates on hold. 

 

The index of small-cap stocks has gained more than 8 percent year to date — a far cry from its 2018 performance, when the index saw its worst annual loss since the financial crisis.
https://www.cnbc.com/2019/01/17/small-caps-russell-2000-best-start-to-year-since-1987.html
But the recent strength may just be a head fake. According to TradingAnalysis.com founder Todd Gordon and Strategic Wealth Partners’ Mark Tepper, investors should look elsewhere for value.
Smaller companies are typically more susceptible to economic cycles. They usually hold more debt than their large-cap peers, which means they are especially sensitive to factors like rising rates and wage inflation. 
Since Tepper believes we could be nearing the end of this historic bull run, he thinks Russell 2000 companies might have a tough road ahead. 
“Large caps typically outperform small caps late cycle,” he said. “When the economy slows and eventually contracts, those companies with high debt levels are going to get hit the hardest. Cash flow slows, rates go up, and that’s a recipe for trouble. Beyond that, wages are going up and that’s going to eat into margins.”

 

The growing likelihood of even a limited trade deal with the United States combined with a ramp-up in Chinese stimulus are jointly making some experts more optimistic about the 2019 prospects for the world’s second-largest economy.
https://www.cnbc.com/2019/01/18/china-economy-investors-increasingly-positive-amid-trade-war-signals.html
The atmosphere, however, has changed after a 90-day truce began early in December. Negotiations in Beijing earlier this month were mutually hailed and more talks are in store. And the U.S. is reportedly even considering lifting tariffs to reach a deal. That is all helping create a positive atmosphere for some kind of agreement. 
“The point is that both sides are now under a lot of pressure to get a deal done,” Stefan Hofer, chief investment strategist at LGT Bank in Hong Kong, told reporters on Tuesday, calling it “just something that has to happen.” 
LGT’s base forecast is for a deal by the middle of 2019, but Hofer said now is the time to get into Chinese markets. 
“I think it’s perfectly okay for investors to take on China exposure now in anticipation of that,” he said. 
Political risk consultancy Eurasia Group said in a Thursday note it sees “increasing signs of momentum towards some type of interim deal” within this year. In its view, that’ll be driven mostly by U.S. President Donald Trump’s wish to calm markets and have a win to take into next year’s expected re-election bid.

 

In a meeting of top advisers at the White House on Tuesday, the sources, who declined to be identified since the meeting was not public, said participants discussed aspects of a potential infrastructure plan and whether to include details of it in Trump’s State of the Union address scheduled for later this month.
https://www.reuters.com/article/us-trump-infrastructure-exclusive/exclusive-trump-meets-with-cabinet-officials-to-revive-infrastructure-push-sources-idUSKCN1PC1A5
About 20 officials took part in the more than hour-long meeting with Trump, including Vice President Mike Pence, White House senior adviser Ivanka Trump, acting Chief of Staff Mick Mulvaney, Treasury Secretary Steven Mnuchin and Transportation Secretary Elaine Chao, the sources said. 
They discussed how to incorporate into the plan funding for a next-generation wireless network, known as 5G, and potentially using the plan to modernize the U.S. air traffic control system, the people said. It followed a senior staff-level meeting on infrastructure earlier this month. 
A White House official confirmed the meeting took place but declined to comment further. 
The administration is considering a 13-year program but has not settled on key issues, including whether it will propose new ways to pay for increased spending.

 

U.S. oil production growth combined with a slowing global economy will put oil prices under downward pressure in 2019, challenging OPEC’s resolve to support the market with output cuts, the International Energy Agency said on Friday.
https://www.reuters.com/article/us-iea-oil/u-s-crude-gains-slowing-global-economy-challenge-oil-market-in-2019-iea-idUSKCN1PC0PV
The IEA, which coordinates the energy policies of industrial nations, said it was keeping its estimate of oil demand growth for this year unchanged at 1.4 million barrels per day, close to 2018 levels. 
“The impact of higher oil prices in 2018 is fading, which will help offset lower economic growth,” the Paris-based IEA said in its monthly report.


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