The daily business briefing: January 29, 2020

1. Apple reports better-than-expected profit and revenue

Apple on Tuesday reported fourth-quarter 2019 profit and revenue that beat analysts' expectations. The company got a boost from holiday sales that were stronger than predicted, as iPhone sales rose for the first time in a year and demand surged for AirPods wireless headphones and other accessories. Apple shares rose by 2 percent in after-hours trading following the report. The stock has more than doubled over the last 13 months, lifting the company's market value to $1.4 trillion. Apple gave a revenue forecast for the current quarter that also exceeded expectations. The company has suppliers in the Wuhan, China, area where the coronavirus outbreak is centered, so its prediction range was wider than normal due to uncertainty about how that will affect production.

Reuters

2. U.K. to let Huawei provide some 5G equipment

Britain on Tuesday decided to allow Huawei to supply some high-speed 5G network equipment to wireless carriers, despite a warning from the Trump administration that it would stop sharing intelligence with any country that did not ban the Chinese tech giant. The British government's decision marked a first among major U.S. allies in Europe. The U.S. has warned that doing business with Huawei could put government secrets at risk because Huawei could give China's government access to data, a charge Huawei denies. Foreign Secretary Dominic Raab said the British government would never do anything to threaten British national security, or that of its intelligence-sharing partners. "We know more about Huawei and the risks that it poses than any other country in the world," Raab said.

The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

The Associated Press

3. CBO: U.S. debt to reach 98 percent of GDP by 2030

The Congress Budget Office released a report Tuesday predicting U.S. debt will reach 98 percent of the country's GDP by 2030, up from the 81 percent the office foresees the deficit reaching by the end of 2020. The CBO projects the government will spend $1 trillion more than it collects in 2020. The prognostication is reportedly mostly a result of tax cuts and the assumption that the government will continue to increase spending. If the Trump administration's tax cuts enacted in 2017 are extended beyond their current expiration at the end of 2025, the latest CBO estimates may fall short. CBO Director Phillip Swagel expects the deficit level to eventually reach some historic highs, especially for a time of low unemployment. He said his office's projections will approach figures not seen "since World War II."

The Wall Street Journal

4. Fed expected to keep interest rates steady

The Federal Reserve is expected to keep interest rates steady when it concludes a two-day meeting on Wednesday. The central bank reduced rates three times in 2019, and signaled that it would hold off on further changes until there is a significant shift in the economy. Little has changed since the Fed's last meeting in December, with economic growth remaining in the 2 percent range and job growth remaining strong. President Trump has called for the Fed to get more aggressive on reducing its benchmark short-term lending rate, accusing Fed policymakers of holding back economic growth. U.S. stock index futures gained early Wednesday as investors remained focused on the Fed and concerns about possible economic fallout from China's coronavirus outbreak.

Reuters CNBC

5. Starbucks closes 2,000 stores in China over coronavirus outbreak

In response to the Wuhan coronavirus outbreak, Starbucks has closed more than 2,000 stores in China. The flu-like virus originated in the Chinese city of Wuhan, and there are more than 4,500 confirmed cases; at least 130 people have died. Starbucks is the world's largest coffee chain, and China is the company's biggest growth market, Reuters reports. There are 4,292 Starbucks locations in China, and the stores that are staying open have revised operating hours. The company does expect the shutdown to temporarily affect its finances, but won't know the financial toll until March. Other companies also are reacting to coronavirus fears. British Airways is suspending flights to and from China.

Reuters CNBC