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Business Highlights

January 20, 2015

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Global economy squeezed by worsening slowdown in China

HONG KONG (AP) — The global economy, slowed by stagnation in Europe and Japan, is being further hampered by China’s decelerating growth.

The Chinese economy grew 7.4 percent in 2014, its weakest performance in nearly a quarter-century. And its growth is forecast to slow even more over the next two years.

The figures released Tuesday remain, by just about any measure, impressive. China continues to grow at more than twice the pace of the overall world and about three times as fast as the U.S. economy. Yet its growth rate marks a sharp drop from China’s sizzling double-digit expansion in previous years.

And given its size, China has an outsize effect on the world. China’s share of the global economy climbed from 4.5 percent in 2000 to an estimated 11.3 percent last year, according to the World Bank.

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IMF cuts growth forecasts, citing sluggish EU, Japan, BRICS

TOKYO (AP) — The International Monetary Fund lowered its forecasts for global growth over the next two years, warning Tuesday that weakness in most major economies will trump gains from lower oil prices. The IMF’s report was released as China reported its slowest growth in 24 years.

The IMF downgraded projections it issued in October by 0.3 percentage point each, predicting global growth at 3.5 percent this year and 3.7 percent in 2016.

But even with those reductions, the world economy will be growing faster than in 2014, when the IMF estimates it expanded 3.3 percent. Much of the momentum is coming from an accelerating recovery in the U.S., the world’s largest economy.

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Yahoo CEO poised to make fateful decision on Alibaba stake

SAN FRANCISCO (AP) — Yahoo CEO Marissa Mayer is facing her biggest business decision since she left Google two-and-a-half years ago to lead its struggling rival: how to manage Yahoo’s most valuable asset, a 15 percent stake in Chinese Internet star Alibaba Group worth nearly $37 billion.

Mayer has promised to outline her Alibaba plans on or before Jan. 27, when the company will release its fourth-quarter earnings. Most investors are hoping Mayer will spin off the Alibaba stake to ease Yahoo’s tax bill after the company sells those holdings. Mayer also is under pressure to return windfalls from Yahoo’s Asian investments to shareholders instead of plowing more money into an acquisition strategy that some think hasn’t paid off.

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Government health care website quietly sharing personal data

WASHINGTON (AP) — The government’s health insurance website is quietly sending consumers’ personal data to private companies that specialize in advertising and analyzing Internet data for performance and marketing, The Associated Press has learned.

The scope of what is disclosed or how it might be used was not immediately clear, but it can include age, income, ZIP code, whether a person smokes, and if a person is pregnant. It can include a computer’s Internet address, which can identify a person’s name or address when combined with other information collected by sophisticated online marketing or advertising firms.

The Obama administration says HealthCare.gov’s connections to data firms were intended to help improve the consumer experience. Officials said outside firms are barred from using the data to further their own business interests.

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Why cheaper jet fuel won’t mean lower airfares anytime soon

DALLAS (AP) — Airlines will save billions this year thanks to cheaper jet fuel, but they aren’t likely to share the bounty with passengers — not while so many flights are already full.

Instead, the airlines will use their windfall to pay down debt and reward shareholders.

Airline CEOs worry that oil prices could just as easily go higher. They hope consumers benefiting from cheaper gasoline will splurge on airline tickets. But the biggest reason airfares aren’t falling: Planes are plenty full at current prices.

Fuel is the biggest single expense at most airlines, and spot prices for jet fuel have tumbled by half since mid-September. If prices stay around these levels, U.S. airlines could save $20 billion this year by some estimates.

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The lowdown on the European Central Bank’s stimulus plans

FRANKFURT, Germany (AP) — Europe’s economy could be sinking in deflationary quicksand. On Thursday, the European Central Bank is expected to throw it a rope — in the form of massive purchases of government bonds using newly printed money.

The step, known as quantitative easing, or QE, is considered a last resort in the bank’s effort to pull the economy out of stagnation that could ultimately threaten the currency’s existence.

Here are some basic facts about QE — and what it might mean for the global and U.S. economies.

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US homebuilder confidence, sales outlook slip in January

U.S. homebuilders are feeling slightly less confident in their sales prospects ahead of the spring homebuying season, traditionally the peak period for home sales.

The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday slipped this month to 57, down one point from a revised reading of 58 in December.

Even so, builders’ overall sales outlook remains favorable. Readings above 50 indicate more builders view sales conditions as good rather than poor.

Builders’ outlook for sales over the next six months and a measure of traffic by prospective buyers both declined, while a view of current sales conditions held steady.

The index also found sentiment improved in the West, Northeast and Midwest, but took a step back in the South.

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Johnson & Johnson tops 4Q earnings expectations

TRENTON, N.J. (AP) — The strong dollar and stiff competition for some products squeezed Johnson & Johnson in the fourth quarter and it missed Wall Street expectations for revenue, triggering a rare sell-off of its shares.

The world’s biggest maker of health care products did edge past profit forecasts and there were other bright spots, including a 10 percent jump in prescription drug sales and increasing use of medical care in the U.S.

Spending on health care slowed when the recession began in 2008 and workers started losing their jobs and, in the U.S., their health insurance as well.

Gorsky said utilization has now risen for two quarters — a good sign for prescription drug and medical device makers. Hospital admissions and surgeries are increasing, the company said. That boosts sales of Johnson & Johnson’s surgical devices, wound care products and medicines.

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Morgan Stanley misses Wall Street 4Q forecast

NEW YORK (AP) — Morgan Stanley’s fourth-quarter profit rose as the investment bank recovered from huge legal expenses last year. But it suffered from the same trading slowdowns at other banks and fell short of Wall Street expectations.

The bank said Tuesday it earned $1.05 billion, or 47 cents a share, in the quarter, compared with $95 million, or 2 cents a share, a year earlier.

Revenue totaled $7.76 billion, down from $7.84 billion in the same period a year earlier.

Like the other big Wall Street firms, Morgan Stanley had difficulties in its fixed income and commodities division. The bank reported adjusted net revenues of $599 million, down from $694 million a year earlier.

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Netflix reels in 4.3M more subscribers 4Q; stock surges

SAN FRANCISCO (AP) — Coming off its best quarter yet, Netflix is hoping to hook millions more Internet video subscribers with the lure of original programming as the company tries to build the leading network for the digital-streaming age.

Netflix Inc. added 13 million worldwide subscribers last year, including 4.3 million during the final three months, according to figures released Tuesday in the company’s fourth-quarter earnings report. The performance marked Netflix’s biggest quarter of subscriber gains ever, eclipsing the 4.07 million added in the final three months of 2013.

Earnings also rose to a new quarterly high of $83.4 million, or $1.35 per share, a 72 percent increase up from $48.4 million, or 79 cents per share, at the same time last year.

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By The Associated Press=

The Dow Jones industrial average climbed 3.66 points, less than 0.1 percent, to close at 17,515.23. The Standard & Poor’s 500 index rose 3.13 points, or 0.2 percent, to finish at 2,022.55. The Nasdaq composite rose 20.46 points, or 0.4 percent, to 4,654.85.

Benchmark U.S. crude for February delivery fell $2.30 to close at $46.39 a barrel in New York on the last day of trading for the contract. Brent crude for March delivery, a benchmark for international oils used by many U.S. refineries, fell 85 cents to close at $47.99 in London. Wholesale gasoline fell 4.6 cents to close at $1.313 a gallon. Heating oil fell 7.5 cents to close at $1.591 a gallon. Natural gas fell 29.6 cents to close at $2.831 per 1,000 cubic feet.

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