China Trade Pact, Ford, Bank Earnings, Aerospace Merger, Boeing - 5 Things You Must Know Monday

Stock futures are higher Monday; the U.S.-China phase one trade agreement is expected to be signed Wednesday; fourth-quarter earnings season begins this week with reports from big U.S. banks.
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Here are five things you must know for Monday, Jan. 13:

1. -- Stock Futures Rise Ahead of Signing of U.S.-China Trade Pact

Stock futures were higher Monday as Wall Street awaits details of the U.S.-China phase one trade agreement expected to be signed Wednesday and prepare for the start of fourth- quarter earnings season.

Treasury Secretary Steven Mnuchin told Fox News that details of the trade pact would be made public when the two sides put their signatures on the accord at a White House ceremony.

He also denied reports that terms of the arrangement had been changed during the translation process, and reiterated the Trump administration's position that China has agreed to increase U.S. imports by $200 billion over the next two years, including agricultural products worth between $40 and $50 billion.

"The language will be released this week and people can see this is a very, very extensive agreement," Mnuchin said.

The signing ceremony Wednesday will come just as fourth-quarter earnings season begins, with big U.S. banks leading the charge.

Contracts linked to the Dow Jones Industrial Average rose 119 points, futures for the S&P 500 were up 12.30 points and Nasdaq futures gained 44.75 points.

Stocks declined Friday after the U.S. added fewer jobs than expected to payrolls in December but earlier in the session the Dow topped 29,000 for the first time. 

2. -- Big U.S. Banks Mark Start of Earnings Season

The fourth-quarter earnings season kicks off Tuesday with reports from JPMorgan Chase (JPM) - Get Report, Citigroup (C) - Get Report, Wells Fargo (WFC) - Get Report and Delta Air Lines (DAL) - Get Report. Later in the week reports are expected from Bank of America (BAC) - Get Report, Goldman Sachs (GS) - Get Report, UnitedHealth Group (UNH) - Get Report, Morgan Stanley (MS) - Get Report and Schlumberger (SLB) - Get Report

JPMorgan Chase, Citigroup, Goldman Sachs, UnitedHealth and Schlumberger are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells the stocks? Learn more now.

The economic calendar in the U.S. Monday includes the Treasury Budget for December at 2 p.m. ET. The Consumer Price Index, Retail Sales, Housing Starts and Consumer Sentiment will be released throughout the rest of the week.

3. -- Ford's Sales in China Fall for Third Straight Year

Ford's (F) - Get Report sales in China declined for the third straight year, falling 26.1%, and the automaker said sales pressure will continue into 2020.

Sales in China for Ford dropped 37% in 2018, following a 6% decline in 2017.

Ford sold 567,854 vehicles during 2019 in China, its second-biggest market.

“The pressure from the external environment and downward trend of the industry volume will continue in 2020, and we will put more efforts into strengthening our product lineup with more customer-centric products and customer experiences to mitigate the external pressure and improve dealers’ profitability," said Anning Chen, president and CEO of Ford Greater China.

Ford said it plans to launch more than 30 new models in China over the next three years - a third of them will be electric vehicles. 

The stock was rising 0.97% in premarket trading to $9.34.

4. -- Boeing Suppliers Woodward and Hexcel to Merge

Aerospace parts maker Woodward (WWD) - Get Report will merge with Hexcel (HXL) - Get Report, a company that makes lightweight materials for aircraft, space and defense equipment, in a deal that values the combined companies at around $6.4 billion.

Under the so-called merger of equals, current Woodward shareholders will own about 55% of the new company called Woodward Hexcel. Hexcel shareholders will own about 45%.

Hexcel shareholders will get 0.625 shares of Woodward common stock for each share of Hexcel common stock - which equals about $76.23 based on Friday's close for Woodward. 

Woodward shares rose 0.44% in premarket trading to $122.50, while Hexcel declined 1% to $72.18.

The combined company, to be based in Colorado, would create a major aerospace and defense supplier with about 16,000 employees, operations in 14 countries and estimated net revenue of $5.3 billion. 

The companies make parts for Boeing (BA) - Get Report, including the grounded 737 MAX jet, and Airbus.

"This merger accelerates our technology investments and creates greater benefits and growth opportunities than either company could have achieved alone," said Woodward CEO Tom Gendron.

5. -- Boeing Faces Fine for Faulty 737 MAX Parts

Boeing faces a $5.4 million penalty for installing faulty parts on 178 of its 737 MAX aircraft, according to the Federal Aviation Administration.

The agency charged that “Boeing failed to adequately oversee its suppliers to ensure they complied with the company’s quality assurance system,” according to a press release announcing the proposed penalty.

Separately, ousted Boeing CEO Boeing Dennis Muilenburg will leave the aerospace giant and planemaker with $62 million in compensation and pension benefits. He will receive no additional severance pay, said a regulatory filing from Boeing.

Muilenburg was fired from Boeing in December after he failed to contain the fallout surrounding the 737 MAX jet, which has been grounded since mid-March 2019 after two fatal crashes.

New CEO Dave Calhoun, a long-time board member, will take over as CEO on Monday.