China's $278 Billion Lifeline

CHINA: Rescue Package

Chinese officials are planning measures to stabilize the faltering stock market, responding to prior ineffective attempts and Premier Li Qiang's call for decisive action. The strategy involves setting up a 2 trillion yuan ($278 billion) stabilization fund, sourced mainly from Chinese state enterprises' overseas accounts, to buy shares through the Hong Kong exchange. Additionally, at least 300 billion yuan will be invested in domestic shares via local institutions.

This initiative reflects the urgency to curb the market decline, which has brought the CSI 300 Index to a five-year low, and to reassure retail investors hurt by the long-lasting property market downturn. It's also crucial for maintaining social stability. Despite discussions about a state-backed fund since October, there's skepticism about its effectiveness due to mixed results from previous government interventions.

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EARNINGS: Johnson & Johnson

Johnson & Johnson recently reported its fourth-quarter earnings, slightly exceeding Wall Street forecasts with a notable boost from its pharmaceutical and medical devices sectors. The company anticipates 2024 revenues to be between $87.8 billion and $88.6 billion, with adjusted earnings of $10.55 to $10.75 per share. In the last quarter of 2023, J&J's total sales were $21.40 billion, up 7.3% from the previous year, with a net income of $4.13 billion.

This performance comes after J&J's major reorganization six months ago, where it separated from its consumer health unit, Kenvue. Now, J&J is concentrating on pharmaceuticals and medical devices for growth. The medical devices segment saw a 13.3% increase in sales, partly due to the acquisition of Abiomed. Meanwhile, the pharmaceutical division reported a 4.2% increase in sales, driven by treatments like Darzalex for multiple myeloma and Erleada for prostate cancer. Notably, this was the third quarter without U.S. sales of J&J’s Covid vaccine.

UNITED: First-Quarter Loss

United Airlines recently announced an expected first-quarter loss due to the FAA's grounding of Boeing 737 Max 9 planes following a part failure on an Alaska Airlines flight. The company predicts an adjusted loss of 35 to 85 cents per share, reflecting the impact of not being able to fly its 79 Boeing 737 Max 9s – the largest fleet of this model among airlines. This grounding has also led to numerous flight cancellations. Despite this, United's other planes, including the Boeing 737 Max 8, are not affected by the grounding.

The airline anticipates increased unit costs, excluding fuel, due to the grounding but expects flat unit revenues for the first quarter. This comes after United's strong holiday performance but reduced net income in the last quarter of 2023, at $600 million with revenues of $13.63 billion.

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