The daily business briefing: January 8, 2019

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1. Samsung blames disappointing profit on weak chip demand
2. China, U.S. resume trade talks
3. Stock futures rise on optimism on trade, interest rates
4. Ghosn says he's 'wrongly accused' in first appearance since arrest
5. White House says IRS will process refunds despite shutdown

published 8 January 2019

1. Samsung blames disappointing profit on weak chip demand

Samsung Electronics said Tuesday its quarterly profit likely dropped sharply due to weak demand for its memory chips and growing competition from rival smartphone makers. The South Korean tech giant predicted its operating profit for the final quarter of 2018 would come in at $9.7 billion, nearly 29 percent less than a year earlier and 18 percent below analysts' expectations. The company said demand would remain soft in the first quarter of 2019 but probably improve in the second half of the year as new smartphones come out. "What's happening is that memory demand has really fallen off a cliff in (the fourth quarter)," Mark Newman, managing director at Sanford C. Bernstein, told CNBC on Tuesday.

Chinese and American trade negotiators met in Beijing on Monday to start fresh talks on ending a months-long trade war between the U.S. and China. Both sides have expressed optimism heading into the negotiations, the first face-to-face discussions since President Trump and Chinese President Xi Jinping in December agreed to a 90-day truce in the trade war. "These talks will have a positive outcome because both sides are trying to deal with the issue in an active and practical manner," said Wei Jianguo, a former vice commerce minister. "I'm not saying there could be positive results; I think there definitely will be." In Washington, Commerce Secretary Wilbur Ross said there was "a very good chance" the two sides would reach a deal.

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Futures for the three main U.S. stock indexes were up by about 0.7 percent early Tuesday on rising hopes for progress toward a U.S.-China trade deal. The Dow Jones Industrial Average was poised to open with triple-digit gains after rising by 0.4 percent on Monday. The broader S&P 500 and tech-heavy Nasdaq also were up beat after Monday gains of 0.7 percent and 1.3 percent, respectively. The pre-market moves came as U.S. and Chinese officials continued trade talks that started Monday in Beijing. Friday comments by Federal Reserve Chairman Jerome Powell continued to boost expectations that the Fed will end its multi-year cycle of interest rate hikes, lifting stocks in the U.S. and overseas.

Former Nissan chairman Carlos Ghosn appeared in a Japanese court on Tuesday and denied any wrongdoing in the case that got him ousted. Ghosn headed a huge car-making alliance of Nissan, Renault, and Mitsubishi until he was arrested in Japan in November on charges of financial crimes, including underreporting his income. "I have always acted with integrity and have never been accused of any wrongdoing in my several-decade professional career," Ghosn said in prepared remarks for his first public appearance since his arrest. "I have been wrongly accused and unfairly detained based on meritless and unsubstantiated accusations." The judge said Ghosn was being detained because he was a flight risk, and could conceal evidence if released on bail.

The Internal Revenue Service will pay tax refunds despite the partial federal government shutdown, the White House announced Monday. "Tax refunds will go out," the acting director of the White House Office of Management and Budget, Russell Vought, told reporters. The decision came after reports that if the shutdown, now in its third week, dragged into filing season, taxpayers would have to wait for their refunds. The decision to send refund checks even though the IRS is affected by the shutdown would remove a key incentive for both sides to reach a spending deal to reopen the quarter of the government now closed.

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Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.