Equities around the world rose Monday as possible progress in resolving the trade dispute between the United States and China engendered some investor optimism in what has been a punishing end of year for markets.

The U.S. benchmark S&P 500 stock index advanced in light trading volume after U.S. President Donald Trump said he held a “very good call” with China’s President Xi Jinping on Saturday to discuss trade and said “big progress” was being made.

Chinese state media were more reserved, saying Xi hoped the negotiating teams could meet each other halfway and reach an agreement that was mutually beneficial.

The rise in U.S. equities mirrored that in Asian and European markets, which were also buoyed by trade optimism.

Despite Monday’s advance, equities ended the year largely in the red, victims of investor anxiety over trade tensions and slowing economic growth. Asian and European shares had been sluggish for much of the year, and in recent months, U.S. stocks followed suit.

“If the European economy continues to decelerate and the Chinese economy decelerates because of tariffs, there is definitely going to be spillover to the United States,” said Shannon Saccocia, chief investment officer at Boston Private.

The S&P 500 dropped more than 9 percent in December, its largest decline since the Great Depression. For the year, the index slid more than 6 percent, its biggest drop since the 2008 financial crisis.

Asia-Pacific shares outside Japan ended down 16 percent for the year, while the STOXX 600 was more than 13 percent lower.

MSCI’s gauge of stocks around the globe fell 11.1 percent in 2018.

A further blow to the Chinese economy could spur a quicker resolution to the U.S.-China trade dispute and thus boost global equities, Saccocia said. Survey data on Monday showed Chinese manufacturing activity contracting for the first time in two years even as the service sector improved.

On Monday, the Dow Jones Industrial Average rose 265.06 points, or 1.15 percent, to 23,327.46, the S&P 500 gained 21.11 points, or 0.85 percent, to 2,506.85 and the Nasdaq Composite added 50.76 points, or 0.77 percent, to 6,635.28.

MSCI’s emerging markets index rose 0.32 percent, while the MSCI world stock index gained 0.66 percent.

No more hikes

Yields on U.S. Treasuries fell on Monday, keeping with the trend over the past two months as investors moved to lower-risk investments.

Benchmark 10-year notes last rose 15/32 in price to yield 2.686 percent, compared with 2.738 percent late Friday.

The fall in Treasury yields reflects expectations of a slowdown, if not a pause altogether, in the Federal Reserve’s progression of interest-rate hikes.

The precipitous drop in yields has undermined the U.S. dollar in recent weeks. The dollar index, which measures the greenback against a basket of six other currencies, was down 0.3 percent and on track to end December with a loss. It is, however, still set for its highest yearly percentage gain since 2015.

On Monday, the dollar fell to a six-month low against the yen.

The euro was up 0.2 percent to $1.1459, on track to end the year down nearly 5 percent against the dollar.

Oil posted its first year of losses since 2015, with Brent crude futures down 19.5 percent and U.S. West Texas Intermediate crude futures down 24.8 percent.

On Monday, Brent crude settled 59 cents higher, or 1.11 percent, at $53.80 a barrel. U.S. crude settled up 8 cents, or 0.18 percent, at $45.41 a barrel.
…

China’s factory activity shrank in December for the first time in more than two years, an official survey showed Monday, intensifying pressure on Beijing to reverse an economic slowdown as it enters trade talks with the Trump administration.

The purchasing managers’ index of the National Bureau of Statistics and an industry group, the China Federation of Logistics & Purchasing, fell to 49.4 from November’s 50.0 on a 100-point scale. Any reading below 50 shows that activity is contracting. The December figure was the lowest since February 2016 and the first drop since July 2016.

 

In the quarter that ended in September, China’s economic growth sank to a post-global crisis low of 6.5 percent compared with a year earlier. The slowdown occurred despite government efforts to stem the downturn by ordering banks to lend more and by boosting spending on public works construction.

 

Forecasters expect annual growth of about 6.5 percent, down slightly from 2017’s 6.7 percent. But some industry segments, including auto and real estate sales, have suffered more serious declines.

 

“Downward pressure on the economy is still large,” economist Zhang Liqun said in a statement issued with the PMI.

 

Overall orders and exports both contracted, indicating that Chinese factories are suffering from weak demand at home and abroad. Exports to the United States kept growing at double-digit monthly rates through late 2018 despite President Donald Trump’s punitive tariffs. But growth in exports to the rest of the world fell sharply in November and forecasters expect American demand to weaken in early 2019.

 

That adds to complications for Chinese leaders who are trying to reverse a broad economic slowdown and avert politically dangerous job losses.

 

Chinese and U.S. envoys are due to meet in early January for negotiations that are intended to resolve their economically threatening trade war. Over the weekend, Trump sounded an optimistic note, tweeting that he had spoken with President Xi Jinping by phone.

 

“Deal is moving along very well,” Trump tweeted. “If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!”

 

But economists say the 90-day moratorium on new penalties that was agreed to by Trump and Xi on Dec. 1 is likely too little time to resolve their sprawling dispute.

 

Chinese economic activity already was weakening after Beijing tightened controls on bank lending in late 2017 to cool a debt boom. The downturn was more abrupt than expected, which prompted regulators to shift course and ease credit controls. But they moved gradually to avoid reigniting a rise in debt. Their measures have yet to put a floor under declining growth.

 

Chinese leaders promised at an annual economic planning meeting in mid-December to shore up growth with tax cuts, easier lending for entrepreneurs and other steps.

 

 
…

Kenya’s economy expanded faster in the third quarter of this year than in the same period last year due to strong performance in the agriculture and construction sectors, the statistics office said on Monday.

The Kenya National Bureau of Statistics said the economy grew 6 percent in the third quarter of 2018, compared with 4.7 percent in the same period in 2017.

It said the agriculture sector expanded by 5.2 percent compared with 3.7 percent in the third quarter of 2017, helped by better weather.

“Prices of key food crops remained low during the quarter compared to the corresponding quarter of 2017, an indication of relative stability in supply,” KNBS said.

Manufacturing grew by 3.2 percent from a 0.1 percent contraction in the third quarter of 2017, KNBS said.

It said that the electricity and water supply sector grew by 8.5 percent from 4.5 percent in the third quarter of 2017, mainly due to a big increase in the generation of electricity from hydro and geothermal sources.

Gross foreign reserves increased to 1,222.5 billion from 1,085.6 billion in the same period of last year.

The current account deficit narrowed by 23 percent to 116 billion Kenyan shillings ($1.14 billion), it said.

This was mainly due to lower imports of food and higher value of exports of goods and services.

The government forecasts that the economy will expand by 6.2 percent in 2019, up from a forecast 6.0 percent this year.
…

The euro currency turns 20 years old on January 1, surviving two tumultuous decades and becoming the world’s No. 2 currency.

After 20 years, the euro has become a fixture in financial markets, although it remains behind the dollar, which dominates the world’s market.

The euro has weathered several major challenges, including difficulties at its launch, the 2008 financial crisis, and a eurozone debt crisis that culminated in bailouts of several countries.

Those crises tested the unity of the eurozone, the 19 European Union countries that use the euro. While some analysts say the turmoil and the euro’s resilience has strengthened the currency and made it less susceptible to future troubles, other observers say the euro will remain fragile unless there is more eurozone integration.

Beginnings 

The euro was born on January 1, 1999, existing initially only as a virtual currency used in financial transactions. Europeans began using the currency in their wallets three years later when the first Euro notes and coins were introduced.

At that time, only 11 member states were using the currency and had to qualify by meeting the requirements for limits on debt, deficits and inflation. EU members Britain and Denmark received opt-outs ahead of the currency’s creation.

The currency is now used by over 340 million people in 19 European Union countries, which are: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.

Other EU members are required to join the eurozone when they meet the currency’s monetary requirements.

Popularity

Today, the euro is the most popular than it has ever been over the past two decades, despite the rise of populist movements in several European countries that express skepticism toward the European Union.

In a November survey for the European Central Bank, 64 percent of respondents across the eurozone said the euro was a good thing for their country. Nearly three-quarters of respondents said they thought the euro was a good thing for Europe.

In only two countries — Lithuania and Cyprus — did a majority of people think the euro is a bad thing for their nation.

That is a big contrast to 2010, the year that both Greece and Ireland were receiving international bailout packages, when only 51 percent of respondents thought the euro was a good thing for their country.

Challenges

The euro faced immediate challenges at its beginning with predictions that the European Central Bank (ECB) was too rigid in its policy and that the currency would quickly fail. The currency wasn’t immediately loved in European homes and businesses either with many perceiving its arrival as a price hike on common goods.

Less than two years after the euro was launched — valued at $1.1747 to the U.S. dollar — it had lost 30 percent of its value and was worth just $0.8240 to the U.S. dollar. The ECB was able to intervene to successfully stop the euro from plunging further.

The biggest challenge to the block was the 2008 financial crisis, which then triggered a eurozone debt crisis that culminated in bailouts of several countries.

Tens of billions of euros were loaned to Greece, Ireland, Portugal, Cyprus and Spain, either because those countries ran out of money to save their own banks or because investors no longer wanted to invest in those nations.

The turmoil also highlighted the economic disparity between member states, particularly between the wealthier north and the debt-laden southern nations.

Poorer countries experienced both the advantages and disadvantages to being in the eurozone.

Poorer countries immediately benefited from joining the union, saving trillions of euros due to the lowering borrowing costs the new currency offered.

However, during times of economic downturn, they had fewer options to reverse the turmoil.

Typically in a financial crisis, a country’s currency would plunge, making its goods more competitive and allowing the economy to stabilize. But in the eurozone, the currency in poorer countries cannot devalue because stronger economies like Germany keep it higher.

Experts said the turbulent times of the debt crisis exposed some of the original flaws of the euro project.

However, the euro survived the financial crisis through a combination of steps from the ECB that included negative interest rates, trillions of euros in cheap loans to banks and buying more than 2.6 trillion euros in government and corporate bonds.

Future

ECB chief Mario Draghi was credited with saving the euro in 2012 when he said the bank would do “whatever it takes” to preserve the currency.

Some experts say the flexibility of the bank proves it is able to weather financial challenges and say the turmoil of the past two decades have left the ECB better able to deal with future crises.

However, other observers say that the 19 single currency nations have not done enough to carry out political reforms necessary to better enable the countries to work together on fiscal policy and to prepare for future downturns.

Proposals for greater coordination, including a eurozone banking union as well as a eurozone budget are still in the planning phases.
…

U.S. President Donald Trump said on Twitter on Saturday that he had a “long and very good call” with Chinese President Xi Jinping and that a possible trade deal between the United States and China was progressing well.

As a partial shutdown of the U.S. government entered its eighth day, with no quick end in sight, the Republican president was in Washington, sending out tweets attacking Democrats and talking up possibly improved relations with China.

The two nations have been in a trade war for much of 2018 that has seen the flow of hundreds of billions of dollars worth of goods between the world’s two largest economies disrupted by tariffs.

Trump and Xi agreed to a ceasefire in the trade war, agreeing to hold off on imposing more tariffs for 90 days starting Dec. 1 while they negotiate a deal to end the dispute following months of escalating tensions.

“Just had a long and very good call with President Xi of China,” Trump wrote. “Deal is moving along very well. If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!” Chinese state media also said Xi and Trump spoke on Saturday, and quoted Xi as saying that teams from both countries have been working to implement a consensus reached with Trump.

Chinese media also quoted Xi as saying that he hopes both sides can meet each other half way and reach an agreement that is mutually beneficial as soon as possible.

Having canceled his plans to travel to his estate in Florida for the holidays because of the government shutdown that started on Dec. 22, Trump tweeted, “I am in the White House waiting for the Democrats to come on over and make a deal.”

The Republican-controlled Congress was closed for the weekend and few lawmakers were in the capital.

The shutdown, affecting about one-quarter of the federal government including 800,000 or so workers, began when funding for several agencies expired.

Congress must pass legislation to restore that funding, but has not done so due to a dispute over Trump’s demand that the bill include $5 billion in taxpayer money to help pay for a wall he wants to build along the U.S.-Mexico border.
…

The end of 2018 seemed to signal good things to come for America’s farmers. Fresh off the passage of the farm bill, which reauthorized agriculture, conservation and safety net programs, the Agriculture Department last week announced a second round of direct payments to growers hardest hit by President Donald Trump’s trade war with China.

Then parts of the government shut down.

The USDA in a statement issued last week assured farmers that checks would continue to go out during the first week of the shutdown. But direct payments for farmers who haven’t certified production, as well as farm loans and disaster assistance programs, will be put on hold beginning next week, and won’t start up again until the government reopens.

There is little chance of the government shutdown ending soon. Trump and Congress are no closer to reaching a deal over his demand for border wall money, and both sides say the impasse could drag well into January.

Although certain vital USDA programs will remain operational in the short term, that could change if the shutdown lasts for more than a few weeks.

The Supplemental Nutrition Assistance Program, or food stamps, helps feed roughly 40 million Americans. According to the USDA, eligible recipients are guaranteed benefits through January. Other feeding programs, including WIC, which provides food aid and nutrition counseling for pregnant women, new mothers and children, and food distribution programs on Indian reservations, will continue on a local level, but additional federal funding won’t be provided. School lunch programs will continue through February.

USDA has earmarked about $9.5 billion in direct payments for growers of soybeans, corn, wheat, sorghum and other commodities most affected by tariffs. The first round of payments went out in September. The deadline to sign up for the second round of payments is January 15.

The impact of the shutdown, which began shortly before most federal workers were scheduled for a holiday break, started coming into focus by midweek.

About 420,000 employees are working without pay, while 380,000 are being forced to stay home. In the past, federal employees have been paid retroactively. But government contractors won’t get paid for hours they’ll lose staying home, causing problems for those who rely on hourly wages.

In anticipation of the financial bind many federal workers and contractors may soon find themselves in, the Office of Personnel Management offered some advice: haggle with landlords, creditors and mortgage companies for lower payments until the shutdown is over.

The shutdown also is affecting national parks, although unevenly: Some remain accessible with bare-bones staffing levels, some are operating with money from states or charitable groups, while others are locked off.

 
…

The storm winds of the recent trade war between the United States and China have settled in a truce for now, but the weeks of agitation — of rising tariffs and counter duties — battered one economy close to Beijing: Hong Kong’s.

In December, Hong Kong government economist Andrew Au said he anticipated near-term troubles for the territory’s economic forecast. GDP growth — a year after a record high of 341.5 billion — slowed significantly, from 4.6 percent growth in the first quarter to 2.9 percent in the third.

The government says the impact of the trade war can be seen in consumer prices, slower spending and lighter trade. Consumer price inflation ticked up 2.8 percent in the third quarter. The government warned that inflation could head upward as local costs rise along with residential rental rates.

Kelvin Ho-Por Lam, a former economist with HSBC based in Hong Kong, predicted another problem for Hong Kong from overseas.

Double whammy

“It’s not just the trade war, it’s facing a double whammy at the moment,” Lam said. “The trade war impacts on this economy, which is showing up in this Hong Kong GDP over the last two quarters. The second impact is from rising interest rates in the U.S.” The Federal Reserve raised rates four times in 12 months. A slower U.S. economy means less buying from China.

Adding to the impact is great unease. 

“It poses uncertainty on the economic agents in society. Businesses are more concerned going ahead with their investment plans,” Lam said. “They’re shelving their investments and therefore they are not investing in capacity in Hong Kong or in China.”

Trade and logistics — the apparatus to move the shoes and dresses and smartphones from Chinese factories to markets worldwide — are central to Hong Kong’s economy. The sector accounts for nearly one-fifth of the city’s GDP, higher than the substantial financial and banking industry here. When tariffs hit, goods cost more to sell in the United States, which means companies decrease stock and consumers buy less.

China’s economic growth weakened in the third quarter from a year earlier, its lowest expansion since the global financial crisis in 2008.

Consumers wary

Clearly consumers are wary. Retail sales in Hong Kong, the semi-autonomous Chinese territory, grew in September at their slowest pace in 15 months. Also hurting the city was substantial damage from typhoon Mangkhut.

Favorite shops of mainland tourists — Sa Sa International, Chow Tai Food Jewelry, and Luk Fook Holdings, all posted slowed sales in the third quarter.

Hong Kong also saw its economy lag for local reasons. Home prices in what is often called the world’s least affordable market chilled this year as interest rates rose. The number of residential property transactions fell by 24 percent from 18,900 in the second quarter to 14,400 in the third quarter, according to the government.

Property sellers saw the slowdown in sales set in this summer, after the residential property market had churned hard for 28 consecutive months. Median home prices dropped by as much as 5 percent from June, agents told the South China Morning Post in October. The city’s rating and valuation Index, which tracks prices of older homes, in August marked the first monthly decline in more than two years. Even the government offered discounts. A 97,300-square-foot plot of the former Kai Tak airport in the city’s Kowloon district sold for $1.03 billion to a unit of China Overseas Land & Investment, nearly 13 percent lower than another Kai Tak sale in November.

The market chill began in August after Carrie Lam, Hong Kong’s chief executive, introduced a tax to compel developers to create more housing. Meanwhile, banks raised mortgage rates for the first time in 12 years.

That means mortgage holders have less extra money to spend, Kelvin Lam said. He forecast that there will be fewer tourists visiting Hong Kong, perhaps because of the volatility in China.

“The Hong Kong economy is very sensitive to these things,” he said. “It will reduce people spending for their own personal consumption.”

​Folded into China’s economy

Hong Kong produces very little domestically, Kelvin Lam pointed out. Lam said because the territory’s economy is so entwined with China’s, and because the range of products and services are so narrow, the impact of the extra tariffs will be felt on whatever the city acquires from China and re-exports.

Hong Kong is likely to suffer more during China’s downturns as the former British colony is folded into China’s economy and as the government plans for a massive technology hub to be rooted in nearby Shenzhen.

Andrew Sheng, a distinguished fellow at the Asia Global Institute at the University of Hong Kong, wrote in an email that he didn’t think the city would encounter much inflation, despite the downward pressure coming from lower property prices and a slowing global economy.

“The Hong Kong economy will suffer from the trade conflict,” said the former central banker and financial regulator in Asia. “Although it is very resilient to overseas shocks.”
…

Sears Holdings Corp. Chairman Eddie Lampert submitted a $4.4 billion takeover bid for the bankrupt U.S. retailer, representing its only chance of escaping liquidation and laying off tens of thousands of workers, a spokesman for the billionaire’s hedge fund said Friday.

Lampert’s bid is backed in part by $1.3 billion in financing from three different financial institutions, the spokesman for his hedge fund, ESL Investments Inc., said. It would preserve about 425 stores that Sears has yet to close and secure the jobs of up to 50,000 workers out of the 68,000 employed by the retailer. An affiliate of ESL, Transform Holdco LLC, submitted the bid, the spokesman said.

​People familiar with the matter said the financing comes from Sears’ existing lenders Bank of America Corp. and Citigroup Inc, as well Royal Bank of Canada, which was not previously a lender, which together agreed to provide a $950 million asset-based loan and a $350 million revolving credit line.

Some of Lampert’s bid relies on $1.8 billion of Sears debt that ESL already holds and plans to forgive to back the offer, the sources said. The bid also includes about $400 million in financing from non-bank lenders, the sources said.

The bid contemplates assuming protection agreements Sears has previously sold to reassure customers who have bought appliances, televisions, lawn tractors and other big-ticket items, the ESL spokesman said.

“Factoring for all considerations, we believe that our going concern bid provides the best path forward for the company, the best option to save tens of thousands of jobs and is superior for all of Sears’ stakeholders to the alternative of a complete liquidation,” the ESL spokesman said. “Much work remains and there is no assurance our proposal will be completed.”

Next move is Sears’

Sears will now evaluate the bid to determine whether it is viable, and there remains a possibility the company could reject it, some of the sources said.

A Sears spokeswoman declined to comment. Bank representatives either had no immediate comment or did not immediately respond to requests for comment.

A U.S. bankruptcy court judge must approve any sale of Sears. The judge will weigh the opinions of other stakeholders, including unsecured creditors who have argued they could recover more of their investment if the department store operator winds down.

Without the financing or another buyer, Sears faces the prospect of closing its doors for good and putting roughly 68,000 people out of work.

​125-year-old retailer

The 125-year-old retailer filed for bankruptcy Oct. 15 and developed plans to restructure around the sale of 500 stores and businesses including Kenmore, DieHard and the company’s home services division. Only Lampert’s ESL offered to buy the entire company.

The only other bids Sears has received are from suitors interested in pieces of the company and liquidators prepared to run going-out-of-business sales at stores and shut down the retailer.

Sears dates back to the late 1880s. Its mail-order catalogs with merchandise ranging from toys, medicine and gramophones to automobiles, kit houses and tombstones made it the Amazon.com Inc. of its time.

But the iconic retailer gradually lost its shine as consumers increasingly favored brick-and-mortar rivals such as Walmart Inc and Target Corp and e-commerce.

Lampert, who through ESL is Sears’ biggest shareholder and creditor, formed Sears Holdings in 2005 by acquiring Sears Roebuck in an $11 billion deal and combining it with discount chain Kmart, which he had also taken over.

Lampert had pledged to restore Sears to its glory days, when it owned the Sears Tower in Chicago, then the world’s tallest building, and companies that included a radio station and Allstate insurance. But the company stopped turning a profit in 2011, and it gradually started to sell assets, such as its legendary Craftsman brand and many of its properties, to stay afloat.

Sears Holdings listed $6.9 billion in assets and $11.3 billion in liabilities in documents filed in the U.S. Bankruptcy Court in the Southern District of New York.

The largest U.S. toy retailer, Toys ‘R’ Us, tried to emerge from its 2017 bankruptcy filing but was forced to liquidate six months later after creditors lost confidence in its turnaround plan.
…

Wall Street capped a week of volatile trading Friday with an uneven finish and the market’s first weekly gain since November. 

 

Losses in technology, energy and industrial stocks outweighed gains in retailers and other consumer-focused companies. Stocks spent much of the day wavering between small gains and losses, ultimately unable to maintain the momentum from a two-day winning streak. 

 

Even so, the major stock indexes closed with their first weekly gain in what’s been an otherwise painful last month of the year. The Dow Jones industrial average and S&P 500 rose more than 2 percent for the week, while the Nasdaq added nearly 4 percent. The indexes are still all down around 10 percent for the month and on track for their worst December since 1931. 

 

“It seems like convulsions in either direction have been the real norm for much of December and that’s certainly been the case this week,” said Eric Wiegand, senior portfolio manager for Private Wealth Management at U.S. Bank. “The initial push higher and then seeing it subside a little bit is perhaps getting back to a little bit more of a normal environment, reflecting the reality that we have still a number of issues overhanging the market.” 

 

The market’s sharp downturn since October has intensified this month, erasing all its 2018 gains and nudging the S&P 500 closer to its worst year since 2008. 

 

Investors have grown worried that the testy U.S.-China trade dispute and higher interest rates would slow the economy, hurting corporate profits. This week, with trading volumes lower than usual because of the Christmas holiday, served up some pronounced swings in the market. 

 

A steep sell-off during the shortened trading session on Christmas Eve left the major indexes down more than 2 percent. On Wednesday, stocks mounted a stunning rebound, posting the market’s best day in 10 years as the Dow shot up more than 1,000 points for its biggest single-day point gain ever. 

Late reversal

 

The market appeared ready to give much of those gains back on Thursday, before a late-afternoon reversal that erased a 600-point drop in the Dow left the market with a two-day winning streak. 

 

“The market was so oversold and then Wednesday and Thursday were key reversal days, but also stronger closes than opens,” said Janet Johnston, portfolio manager at TrimTabs Asset Management. 

 

“The market was starting to price in the worst-case scenario: a recession,” Johnston said 

 

Still, the market’s downturn has left stocks substantially less expensive than they were heading into the fourth quarter, Johnston noted. 

 

“And that sets up a good buying opportunity,” she said. 

 

On Friday, the S&P 500 index fell 3.09 points, or 0.1 percent, to 2,485.74. The Dow Jones industrial average dropped 76.42 points, or 0.3 percent, to 23,062.40. The average had briefly climbed to 243 points. 

 

The Nasdaq added 5.03 points, or 0.1 percent, to 6,584.52. The Russell 2000 index of smaller-company stocks climbed 6.11 points, or 0.5 percent, to  1,337.92. 

 

Technology companies, a big driver of the market’s gains before things deteriorated in October, were among the big decliners. Alliance Data Systems dropped 1.4 percent to $149.82. 

 

Oil prices recovered after wavering in midmorning trading. Benchmark U.S. crude rose 1.6 percent to settle at $45.33 a barrel in New York. Brent crude, used to price international oils, inched up 0.1 percent to close at $52.20 a barrel in London. 

 

Despite the rise in oil prices, energy sector stocks declined. Cabot Oil & Gas slid 3.5 percent to $22.95, while Hess lost 2.8 percent to $40.38. 

 

Retailers and other consumer-focused companies fared better. Amazon rose 1.1 percent to $1,478.02. 

 

Wells Fargo settlement

Wells Fargo rose 0.5 percent to $45.78 on news that the lender has agreed to pay $575 million in a national settlement with state attorneys general over its fake bank accounts scandal. The San Francisco-based bank has acknowledged that its employees opened millions of unauthorized bank accounts for customers in order to meet unrealistic sales goals. 

 

Tesla climbed 5.6 percent to $333.87 after naming two independent directors to its board under an agreement with federal regulators. 

 

Homebuilders fell broadly in the morning after the National Association of Realtors said its pending home sales index fell last month as fewer Americans signed contracts to buy homes. Higher mortgage rates and prices are squeezing would-be buyers out of the market, especially in the West. The stocks mostly recovered by midafternoon. William Lyon Homes gained 3.4 percent to $10.81. 

 

Bond prices recovered after a midday dip, sending the yield on the 10-year Treasury down to 2.72 percent from 2.74 percent late Thursday. 

 

The dollar declined to 110.41 yen from Thursday’s 110.74 yen. The euro weakened to $1.1442 from $1.1449. 

 

Gold edged up 0.1 percent to $1,283 an ounce and silver gained 0.8 percent to $15.44 an ounce. Copper rose 0.5 percent to $2.68 a pound. 

 

Overseas, major indexes in Europe closed higher while markets in Asia mostly rose. London’s FTSE 100 gained 2.3 percent, while the Nikkei 225 index fell 0.3 percent.  
…

Wells Fargo agreed to a $575 million nationwide settlement over its opening of millions of unauthorized customer accounts and other alleged predatory practices, the bank and U.S. authorities announced Friday.

The agreement between the bank and attorneys general from the 50 states plus the District of Columbia covers a series of scandals that have dogged the big U.S. bank since 2016, when it was fined $185 million by U.S. regulators over its so-called fake accounts scandal.

Wells Fargo, which replaced its chief executive and overhauled its system for compensating staff in the wake of the debacle, said the deal “underscores our serious commitment to making things right in regard to past issues as we work to build a better bank.”

In addition to the payments, the San Francisco-based bank agreed to maintain a dedicated team and website to help consumers work through the problem and to periodically report to the states on the status of remediation efforts.

The agreement will help address conduct that was “unlawful and disgraceful,” said California Attorney General Xavier Becerra, whose state will receive $148.7 million, by the far the largest settlement.

“Instead of safeguarding its customers, Wells Fargo exploited them, signing them up for products — from bank accounts to insurance — that they never wanted,” Becerra said.

“This is an incredible breach of trust that threatens not only the customers who depended on Wells Fargo, but confidence in our banking system.”

Wells Fargo has identified some 3.5 million accounts and 528,000 online bill-pay enrollments that may have not been authorized by customers, according to allegations listed in the settlement.

Other alleged violations short-changed consumers on auto insurance, mortgage rates and collateral protection insurance.
…

In South Korea’s largest shipyard, thousands of workers in yellow hard hats move ceaselessly between towering cranes lifting hulks of steel. They look like a hive of bees scurrying over a massive circuit board as they weld together the latest additions to the rapidly growing fleet of tankers carrying super-chilled liquefied natural gas across the world’s oceans. 

 

The boom in fossil-fuel production in the United States has been matched by a rush on the other side of the Pacific to build the infrastructure needed to respond to the seemingly unquenchable thirst for energy among Asia’s top economies. When Congress lifted restrictions on shipping crude oil overseas in 2015, soon after the Obama administration opened the doors for international sales of natural gas, even the most boosterish of Texas oil men wouldn’t have predicted the U.S. could become one of the world’s biggest fossil-fuel exporters so quickly.  

  

Climate experts say there is little doubt increased American production and exports are contributing to the recent rise in planet-warming carbon emissions by helping keep crude prices low, increasing consumption in developing economies.  

Better than dirtier fuel, some say

  

Backers of U.S. exports of liquefied natural gas, or LNG, argue that the boom will produce environmental benefits because it will help China and other industrial nations wean themselves from coal and other dirtier fossil fuels. 

 

Environmentalists counter that the massive new supplies unleashed by American advances in extracting natural gas from shale doesn’t just make coal-fired power plants less competitive. LNG also competes with such zero-carbon sources of electricity as nuclear, solar and wind — potentially delaying the full adoption of greener sources. That’s time climate scientists and researchers say the world doesn’t have if humans hope to mitigate the worst-case consequences of our carbon emissions, including catastrophic sea-level rise, stronger storms and more wildfires.  

  

“Typically, infrastructure has multi-decadal lifespans,” said Katharine Hayhoe, a climate scientist and director of the Climate Science Center at Texas Tech University. “So, if we build a natural-gas plant today, that will impact carbon emissions over decades to come. So those are the critical and crucial decisions that are being made today. Do we increase access to and use of fossil fuels, or do we make decisions that limit and eventually reduce access to fossil fuels?”  

Boon to shipyards

While it is difficult to estimate how much America’s rise as major exporter of fossil fuels is contributing to a hotter climate, some of the economic benefits are plain to see in South Korea’s shipyards. 

 

At the sprawling Daewoo Shipbuilding and Marine Engineering facility on the island of Geoje, more than half of the 35 vessels scheduled for delivery in 2018 were LNG carriers. A similar number of vessels are lined up for completion next year. 

 

It’s the same story at the two other major Korean yards. The construction of the big gas tankers has been credited with lifting the nation’s shipbuilding sector out of the doldrums from a decade ago, when the Great Recession caused a downturn in transoceanic trade.  

South Korea’s big three shipbuilders — Daewoo, Hyundai Heavy Industries and Samsung Heavy Industries — won orders for 53 new LNG carriers in 2018 at about $200 million each, soaking up the lion’s share of the 62 vessels ordered globally, according to numbers compiled by the London-based shipping group Clarkson Research. South Korea is expected to finish 2018 at the top spot in overall orders for new commercial ships, surpassing China for the first time in seven years. 

 

“We are getting out of a long tunnel,” Song Ha-dong, a senior Daewoo executive, said as he surveyed the company’s 1,200-acre yard from above the British Contributor, a gargantuan LNG carrier with a freshly painted deck covered in a maze of pipes. “The U.S.-led shale gas boom is getting fully under way, and China, Japan and South Korea are increasing their consumption of natural gas.”  

During a recent visit by The Associated Press, three of the LNG carriers were being assembled inside a massive dry dock. Another 13, including the British Contributor, had been floated out to nearby berths where workers were putting on finishing touches.  

  

The Korean shipyards have developed a niche in building ships with the complex systems needed to transport natural gas. The gas is compressed and liquefied for storage by keeping it really cold, about -260 Fahrenheit. In this liquid state, natural gas is about 600 times smaller than at room temperature. 

Top three importers

 

The British Contributor is as long as three football fields and can carry enough liquefied gas to fill about 70 Olympic-sized swimming pools — nearly two days’ national supply for South Korea. The country used about 1.9 trillion cubic feet of LNG in 2017, finishing third behind China and Japan as the world’s biggest importers, according to data from the U.S. Energy Information Administration. 

 

With no domestic oil and gas resources and an unfriendly neighbor blocking overland shipments from the north, South Korea relies exclusively on oceangoing tankers. Nearly half of South Korea’s gas imports come from Qatar and Australia, but the share shipped from the U.S. is growing fast as additional export terminals along the Gulf coast are coming online to handle the glut of gas unleashed by hydraulic fracturing in the Permian Basin of West Texas and southeastern New Mexico. 

 

U.S. LNG exports quadrupled in 2017, with this year on track to see similarly exponential growth. Nearly a fifth of all that gas goes to South Korea.  

The British Contributor is the third of six LNG carriers being built by Daewoo for British energy giant BP, which will mainly use them to transport U.S. gas to Asia under a 20-year contract with the Freeport LNG facility south of Houston. Daewoo delivered four similar ships this year to the government-owned Korea Gas Corporation, which has a 20-year deal to buy gas exported from Cheniere Energy’s Sabine Pass LNG terminal in Louisiana. 

 

South Korea has been vying with Mexico for the title of the largest importer of U.S. LNG, and its reliance on gas could further increase under the government of President Moon Jae-in, who has pledged to transition his country away from nuclear power following the Fukushima meltdown in Japan.  

  

Park Moo-hyun, a senior analyst at Hana Financial Investment, predicts shipping companies will need to place orders for around 480 new LNG carriers over the next decade to match the U.S.-driven increase in global LNG trade — roughly doubling the current worldwide fleet. 

 

“The impact brought by the emergence of shale is not just about an increase in U.S. energy exports — there has been tremendous growth in the production of energy sources that hadn’t been used much, such as LNG,” Park said. “Once the groundwork is established for the stable use of these new energy sources, industries are pushed to adapt.” 

 

Natural gas has the added appeal of producing about half the carbon dioxide of coal when it’s burned. Its increased adoption for generating electricity has been pitched by the U.S. and others as a way for nations to make progress toward meeting their emissions reductions goals under the 2015 Paris climate accord. Burning gas also creates less particulate pollution. 

 

In China, the Communist government has declared a “Blue Sky Defense War” to reduce the choking smog in Beijing and two dozen surrounding cities with a program to convert hundreds of thousands of homes and industrial facilities from burning coal to gas.  In February, Texas-based Cheniere signed a 25-year deal with the state-controlled China National Petroleum Corporation to export LNG from its export terminal in Corpus Christi. 

Carbon emissions increase

 

But the increased gas exports from the U.S. and other sources hasn’t really put much of dent in Chinese coal consumption, which has remained largely flat in 2018. Overall carbon emissions for China, the globe’s biggest emitter, increased nearly 5 percent in 2018.  

Daniel Raimi, a researcher at the Washington-based think tank Resources for the Future, said determining whether U.S. gas exports are a net good or bad for the climate is difficult. When considering China, researchers can’t just look at whether coal use or carbon emissions are falling. They must also try to calculate how much more coal would have been burned had ample supplies of gas not been available. 

 

Another challenge is that the primary component of natural gas is methane, a potent greenhouse gas that traps far more heat in the atmosphere than a comparable amount of carbon dioxide. Studies have shown that a significant amount of natural gas leaks into the air at almost every stage of its production and transport — from wells to pipelines, processing facilities to ships. Raimi said the impact of all that leaking methane on the climate is roughly 84 times more powerful than the same amount of carbon dioxide over a 20-year time frame. 

 

As part of its broad rollback of environmental rules, the Trump administration moved in September to weaken Obama-era regulations designed to prevent methane from escaping into the atmosphere during oil and gas operations. The regulatory rollbacks are part of President Donald Trump’s pro-industry “Energy Dominance” strategy to ramp up U.S. fossil fuel production without concern for the corresponding increase in greenhouse gas emissions. Trump has falsely claimed climate change is a “hoax,” and he moved in 2017 to pull the United States out of the 2015 Paris accord. 

 

“With or without increased U.S. oil and gas exports, ambitious policy measures are the essential ingredient to achieving long-term climate goals such as those laid out in the 2015 Paris Agreement,” Raimi said. “For U.S. LNG exports to reduce global emissions, they must primarily displace coal, and methane emissions must be limited both domestically and abroad.” 
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Wall Street stocks finished solidly higher Thursday following a late-afternoon surge as worries over slowing economic growth gave way to bargain-hunting.

The Dow Jones Industrial Average finished at 23,138.82, an increase of 1.1 percent and up some 870 points from the low point of the session.

The broad-based S&P 500 climbed 0.9 percent to 2,488.83, while the tech-rich Nasdaq Composite Index advanced 0.4 percent to 6,579.49.

The push into positive territory came in the final 30 minutes of the session. While trading is usually light during Christmas week, data has suggested volumes more in line with non-holiday sessions.
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