S&P, Dow set for record open as focus shifts to corporate earnings

(Reuters) – The SP 500 and the Dow were on track for a record open on Tuesday, keeping alive the 2018 rally powered by robust economic data and expectations of strong quarterly earnings.

A handful of retailers such as Target (TGT.N), Kohl’s Corp (KSS.N) and Lululemon Athletica (LULU.O) have already reported solid rise in same-store sales for the holiday period and raised their profit forecasts for the fourth quarter.

U.S. stocks also found support from gains across global stock markets in the day, buoyed by upbeat industrial production data from Germany and jump in oil prices.

Oil rose above $68 a barrel, touching its highest since May 2015, supported by OPEC-led production cuts and expectations of lower U.S. crude inventories. [O/R]

“we are looking at a quiet day, with no major news. But investors are starting to prepare for the next round of earnings that could keep the market on fire,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

“People are going to look for what is going to create opportunity for more money to flow into equity.”

At 8:29 a.m. ET, Dow e-minis 1YMc1 were up 60 points, or 0.24 percent, with 19,077 contracts changing hands.

SP 500 e-minis ESc1 were up 3.5 points, or 0.13 percent, with 107,978 contracts traded.

Nasdaq 100 e-minis NQc1 were up 13 points, or 0.19 percent, on volume of 22,376 contracts.

The winning streak of U.S. stocks had dimmed a bit on Monday but gains in technology, utilities and real estate stocks helped the SP 500 and the Nasdaq end higher.

Investors are waiting for the start of the quarterly earnings season for more readings on the impact of recent tax cuts and profit forecasts for the rest of the year.

Earnings for SP 500 companies are expected to rise 11.8 percent in the fourth quarter, compared with an 8 percent increase a year earlier, according to Thomson Reuters I/B/E/S.

Among stocks, Target (TGT.N) jumped about 4 percent in premarket trading after the retailer said its same-store sales for November and December rose 3.4 percent.

Advanced Micro Devices (AMD.O) slipped 1.6 percent after Microsoft (MSFT.O) suspended patches to guard against security threats for computers running AMD chipsets after complaints that the software updates froze their machines.

GoPro (GPRO.O) fell 2 percent, extending losses from Monday after the action camera-maker flagged a weak holiday quarter that triggered sale talks. The company said it was not actively trying to sell itself but would be willing to partner with a larger sector player.

PayPal (PYPL.O) climbed 1.2 percent after Cowen Co upgraded the digital payments company’s stock to outperform.

The U.S. Labor Department is set to release data on job openings and labor turnover for November at 10:00 a.m. ET. Job openings are expected to have risen to 6.038 million from 5.996 million in October.

Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur

GM races to build a formula for profitable electric cars

DETROIT (Reuters) – General Motors Co Chief Executive Mary Barra has made a bold promise to investors that the Detroit automaker will make money selling electric cars by 2021.

What Barra has not explained in detail is how GM intends to do what, so far, no major automaker has done.

The answer is a big bet on combining proprietary battery technology, a low-cost, flexible vehicle design and high-volume production mainly in China, according to six current and former GM and supplier executives and six industry experts interviewed by Reuters.

If GM can meet Barra’s ambitious profitability target, then it will house two different businesses by the mid-2020s: A traditional focus in North America on trucks, sport utility vehicles and cars fueled with petroleum, and a global electric car company centered in China, branching into pay-per-use services such as robotaxis.

Barra’s promise to turn a profit is a bold claim in a market segment that has been driven more by government policy than consumer demand, and where Tesla Inc – the world’s largest electric-vehicle manufacturer – is burning through more than $1 billion in cash each quarter selling premium-priced vehicles.

Barra and GM have invested heavily in the electrification strategy, and worked during the past year to persuade investors that GM can compete with Tesla by building on the success of the automaker’s latest electric vehicle, the Chevrolet Bolt EV, and cutting costs along the way.

A key element of the plan, according to two people familiar with the company’s strategy, is slashing the amount of cobalt in GM’s new EMC 1.0 battery system. The price of cobalt – the single most costly ingredient in current lithium-ion battery cells – has soared in the past two years in expectation of a surge in demand from automakers. Cobalt prices hit a record high this month on the London Metal Exchange.

GM’s new battery design increases the amount of nickel, which enables batteries to store and produce more energy, these people told Reuters.

GM engineers are also working on other design and technological advances, according to executives and company patent filings, including more efficient packaging of batteries in vehicles and improved systems for managing energy flow and cooling the battery cells.

Without providing details, GM has said it expects these changes to cut the cost of battery cells by more than 30 percent, from $145 per kilowatt-hour to less than $100 by 2021.

Battery experts said the full cost of a GM battery pack, such as the one used now in the Bolt EV, is $10,000-$12,000, or nearly one-third of the car’s $36,000 sticker price.

By 2021, however, that price could drop to $6,000, according to consultant Jon Bereisa, a former GM engineering director who helped develop the Chevrolet Volt hybrid and spearheaded much of the automaker’s early lithium-ion battery development.

With improvements in battery chemistry and packaging, Bereisa said, the next-generation Bolt “could deliver a 45-percent increase in range for about the same (battery) pack cost, or the same range at 45 percent less pack cost.”

Pam Fletcher, vice president in charge of GM’s global electric vehicle programs, and other GM executives would not comment on specifics of the new battery system, which is slated to be introduced in 2020-2021.

To be sure, electric vehicles account for only a small fraction of global auto sales. Like other manufacturers, GM is banking not only on reducing its own costs and improving vehicle performance, but also on increased demand driven by higher government-mandated electric vehicle quotas in China that are intended to help reduce pollution and the country’s dependence on petroleum.

In addition to improving battery and vehicle design and performance, GM is working with Chinese partner SAIC to reduce the cost of assembling electric cars. Sources said GM and SAIC are designing dedicated electric vehicle factories in China that are far smaller, less complex and more efficient than a conventional car plant.

BARRA‘S BOLD CLAIM

GM has more capital for electric vehicle development because of Barra’s decisions to sell money-losing European operations, exit other unprofitable markets and invest in a new generation of highly profitable, petroleum-fueled large pickup trucks, launching later in 2018.

The automaker now has more than 1,700 engineers, designers and researchers working on batteries and electric vehicles, many of them at the GM Technical Center in Warren, Michigan, where the company opened a dedicated battery research center in 2009, a week after it filed for bankruptcy reorganization.

Automotive experts say GM’s battery and EV group is one of the largest in the world, rivaled only by Toyota Motor Corp in Japan and Daimler AG in Germany.

Toyota has patented more battery technology in recent years than GM, although its focus has been mainly the Prius family of hybrid gasoline-electric vehicles, rather than on pure battery-powered cars like GM’s Bolt EV.

GM was issued 661 U.S. patents on battery technology from 2010 through 2015, the latest that such data is available from the United States Patent and Trademark Office, trailing only Toyota’s 762 battery patents among global automakers.

For a graphic, click tmsnrt.rs/2CHPWnx

In addition to the battery work, GM engineers are developing a new dedicated “plug and play” structure for its next-generation electric vehicles that is flexible and modular, meaning it will be able to accommodate battery systems of different sizes, as well as hydrogen fuel cells, one of the sources said.

In an interview, Mark Reuss, head of global product development, said GM’s strategy to reduce battery cost is not tied to a single improvement such as a change in battery chemistry, but rather a series of continuous enhancements in battery technology and packaging.

“There are no silver bullets here,” Reuss said. GM also has not solved all the problems required to achieve its goal, he said. “It’s called ‘product development’ for a reason,” he said.

The most recent developments and enhancements in battery technology have not been made public, according to GM’s Fletcher.

“There’s a lot of stuff that we choose not to patent because we don’t want to make it visible” before the new technology goes into production, Fletcher told Reuters.

LESSONS OF BOLT

GM’s patent history since 2010 shows a focus on improvements in battery technology, packaging and processing, some of them designed to help boost the battery’s energy and extend vehicle range between charges, according to company filings.

GM jointly developed its current battery know-how with Korea’s LG Group, which makes batteries and electronic components for the Bolt. Introduced in October 2016, Bolt was the first mass-produced electric vehicle to go more than 200 miles between charges, and sell at a sticker price of under $40,000. GM sold 23,297 Bolts in 2017.

Tesla reported producing just 1,770 of its $35,000 Model 3 sedans in 2017, well short of the company’s original targets.

The launch of the Bolt and its warm reception by reviewers, customers and investors was a watershed event for Barra and GM’s top management.

“It was a ‘holy shit’ moment that made us rethink what might be possible,” said one GM insider.

Reporting by Paul Lienert and Joseph White in Detroit; Editing by Edward Tobin

Intel says Mobileye’s autonomous driving tech to be used in two million vehicles

(Reuters) – Intel Corp (INTC.O) Chief Executive Brian Krzanich said on Monday 2 million vehicles from BMW (BMWG.DE), Nissan Motor Co Ltd (7201.T) and Volkswagen AG (VOWG_p.DE) would use its unit Mobileye’s autonomous vehicle technology to crowdsource data for building maps that enable autonomous driving.

The world’s largest chipmaker bought Israeli firm Mobileye last year to compete with peers such as Qualcomm Inc (QCOM.O) and Nvidia Corp (NVDA.O) and tap the fast-growing market of driverless cars.

Intel will also tie up with SAIC Motor Corp Ltd (600104.SS), which will use Mobileye technology to develop cars in China, the chipmaker said.

Krzanich also said Intel had not received any information of customer data being compromised so far after the company confirmed last week that the security issues reported by researchers in its widely used microprocessors could allow hackers to steal sensitive information from computers, phones and other devices.

Security researchers had disclosed two security flaws exposing vulnerability of nearly every modern computing device containing chips from Intel, Advanced Micro Devices Inc (AMD.O) and ARM Holdings.

Reporting by Philip George in Bengaluru; Editing by Amrutha Gayathri

BOJ bond tweak buoys yen, stocks rally rumbles on

LONDON (Reuters) – A tweak to the Bank of Japan’s bond-buying program shunted the yen higher on Tuesday, while gains from commodity stocks as oil hit its highest since 2015 helped world shares maintain their flying start to the year.

MSCI’s all-country world stocks index posted another record high as Europe’s main markets [.EU] shrugged off a tech wobble in Asia and instead cheered Christmas trading updates, the oil gains and more forecast-beating data from Germany.

Wall Street was expected to inch to fresh peaks too when trading resumes, though there will be plenty of cross-market cross-winds to tack through.

U.S. Treasury yields — the biggest driver of global borrowing costs — had briefly touched a nine-month high in Europe on the mix of higher oil prices, good economic data and an unexpected move by the BOJ to trim its long-dated bond buys.

That stoked speculation it could start to wind down its stimulus policy this year and saw the yenrise as much as half a percent to 112.50 yen to the dollar [/FRX].

“It shouldn’t be perceived as a monstrous signal of the end of monetary easing but it shows that even the tiniest announcement on a quiet day can have a reaction,” said Societe Generale’s global head of currency strategy Kit Juckes.

“And it shows that when they start turning their ship around from this policy, the yen is going to go miles.”

Since it adopted its yield-curve-control policy in 2016, the BOJ has occasionally tweaked its buying, but some market players seemed to take Tuesday’s move as a signal of possible intent.

The dollar, meanwhile, was rising against most other major currencies including the euro, which having approached three-year highs last week slipped to a 10-day low of $1.1941.

That was despite the biggest increase in German industrial output since September 2009 and suggested investors might be becoming more cautious after a months-long rally that has pushed “long” euro positions to record levels.

“I don’t think right now levels substantially above $1.20 are justified,” Reichelt said. “I know the market is very optimistic about the euro, but if you look at the data and the central bank, the ECB (European Central Bank) is still on an expansionary path.”

HOT OIL, EVEN HOTTER EARNINGS

Wall Street’s expected tick higher later comes with the fourth-quarter earnings season there just beginning and investors unashamedly upbeat.

Citi analysts say global earnings revisions have now been upgraded for 14 weeks in a row, the best run of weekly upgrades since their data series started in 2000.

Although high levels of earnings revisions are usually seen at the start or end of the economic/market cycle, they said “it is still too early to call the end of this cycle”.

Commodity markets are one of potential factors in that. Oil prices jumped to their highest since mid-2015 on Tuesday amid OPEC-led production cuts and a dip in American drilling.

Brent crude the international benchmark, jetted as high as $68.29 a barrel, its highest since May 2015, with U.S. WTI crude doing the same as it rose to $61.91.

Beyond equaling that 2015 high, which was a short intra-day spike, Tuesday’s high was the strongest for WTI since December, 2014, at the start of the oil market slump.

“Speculators continued to increase their net long in ICE Brent … According to exchange data, speculators increased their position by 4,175 lots to leave them with a record net long of 565,459 lots,” ING bank said.

Asian trading saw its own milestones. Japan’s Nikkei closed at its highest since November 1991 [.T], China chalked up an eighth day of gains [.SS] and stocks in the Philippines jumped 2 percent to a new all-time high.

South Korea’s KOPSI was dragged down though by a 3.1 percent drop in Samsung’s shares after its profit guidance disappointed some analysts who are also wary about longevity of the boom in demand for the firm’s memory chips.

Emerging market stocks were a touch lower anyway having hit a 6-1/2 year high this week. [EMRG/FRX]

Angola’s kwanza currency was braced for an expected devaluation, while Venezuela’s battered bonds were dealt another blow as a key market body recommended that they should be traded on the presumption that they have as-good-as defaulted.

Additional reporting by Jemima Kelly in London; Editing by Catherine Evans

IPhone addiction may be a virtue, not a vice for investors

NEW YORK (Reuters) – Apple Inc (AAPL.O) investors are shrugging off concerns raised by two shareholders about kids getting hooked on iPhones, saying that for now a little addiction might not be a bad thing for profits.

Hedge fund JANA Partners LLC and the California State Teachers’ Retirement System (CalSTRS) pension fund said on Saturday that iPhone overuse could be hurting children’s developing brains, an issue that may harm the company’s long-term market value.

But some investors said the habit-forming nature of gadgets and social media are one reason why companies like Apple, Google parent Alphabet Inc (GOOGL.O) and Facebook Inc (FB.O) added $630 billion to their market value in 2017.

“We invest in things that are addictive,” said Apple shareholder Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment Management.

He also owns stock in coffee retailer Starbucks Corp (SBUX.O), casino operator MGM Resorts International (MGM.N) and alcohol maker Constellation Brands Inc (STZ.N).

“Addictive things are very profitable,” Gerber said.

Still, the investment community is increasingly holding companies to higher social standards, and there is some concern that market-leading tech companies could draw attention from regulators much like alcohol, tobacco and gambling companies have in the past.

Alphabet and Facebook could not immediately be reached for comment on Monday. Facebook has said social media can be beneficial if used appropriately.

In a statement to Reuters, Apple said it has offered a range of controls on iPhones since 2008 that allow parents to restrict content, including apps, movies, websites, songs and books, as well as cellular data, password settings and other features.

“Effectively anything a child could download or access online can be easily blocked or restricted by a parent,” Apple said in the statement.

Apple shares fell marginally on Monday. CalSTRS holds $1.9 billion in Apple stock, a sliver of the company’s nearly $900 billion market value, while JANA declined to disclose the size of its smaller stake.

“Before Apple speaks, I think it’s too early to change the narrative” for investors, said Peter Jones, vice president of research for Ferguson Wellman Capital Management, which has about 350,000 Apple shares.

Social media companies, not hardware makers, are more deserving of any addiction-related scrutiny, some said.

Jordan Waldrep, who invests in alcohol, tobacco and gambling stocks as manager of the USA Mutuals Vice Fund (VICEX.O), said blaming Apple for its customers’ addiction was analogous to blaming makers of cigarette packs instead of tobacco companies.

“The social media, the cigarettes, are the addictive product,” he said. Waldrep’s Vice fund does not own Apple, but Waldrep said he would consider including social media companies.

Kim Forrest, senior portfolio manager and vice president at Fort Pitt Capital Group, agreed that companies like Facebook, Twitter Inc (TWTR.N) and Snap Inc (SNAP.N) might be more at risk than Apple if investors and regulators push back on how much time people spend on mobile devices.

“Apple is just the delivery device,” said Forrest, who said Fort Pitt has limited Apple holdings. “It’s only compelling with software. Software is the dopamine releaser that keeps you coming back.”

Twitter declined to comment and Snap could not immediately be reached.

The letter from JANA and CalSTRS recommends Apple set up a committee of child-development experts and make more new tools available to parents.

In its statement, Apple did not directly respond to the investors’ demands but said changes are in store for its parental controls. It did not provide details.

“We are constantly looking for ways to make our experiences better,” Apple said. “We have new features and enhancements planned for the future, to add functionality and make these tools even more robust.”

The addiction issue gained notoriety when former Disney child star Selena Gomez said she canceled a 2016 world tour to go to therapy for depression and low self-esteem, feelings she linked to a social media addiction.

Fears about smartphone addiction have already kicked off regulatory backlash. In December, the French education minister said mobile phones would be banned in schools, and draft legislation in France would require children under 16 to seek parental approval to open a Facebook account.

Even tech insiders are among the vocal critics of social media and its addictive potential.

“Apple Watches, Google Phones, Facebook, Twitter – they’ve gotten so good at getting us to go for another click, another dopamine hit,” said Tony Fadell, a former Apple executive, on Twitter.

John Streur, chief executive of Calvert Research and Management, an Apple shareholder that focuses on social responsibility, said it is plausible that tech devices may some day be understood to hold risks we do not currently understand well.

That would hurt investors if evidence later emerged that companies intentionally built features that create dependency and had evidence that doing so was unsafe.

For the time being, John Carey, a portfolio manager at Amundi Pioneer Asset Management in Boston, said concerns over the human impacts from being glued to screens are not likely to cut into profits. The company holds Apple stock, but the funds Carey manages do not.

“I doubt there will be any impact on the use of smartphones,” he said. “We’re already addicted to them.”

(Adds statement from Apple)

Reporting by Trevor Hunnicutt; Additional reporting by Ross Kerber, April Joyner, Sinead Carew, David Ingram, Elizabeth Dilts and Stephen Nellis; Editing by Megan Davies, Meredith Mazzilli and Leslie Adler

Oil prices edge up on lower U.S. rig count, but below recent highs

SINGAPORE (Reuters) – Oil prices firmed on Monday on the back of a slight decline in the number of U.S. rigs drilling for new production, with crude holding just below near three-year highs reached last week.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $61.61 a barrel at 0209 GMT, 17 cents, or 0.3 percent, above their last settlement, and not far off the $62.21 May 2015 high reached last week.

Brent crude futures LCOc1 were at $67.74 a barrel, 12 cents, or 0.2 percent, above their last close. Brent hit $68.27 high last week, the highest since May 2015.

Traders said the gains were due to a slight decline in the number of U.S. rigs drilling for new production, which eased by five in the week to January 5, to 742, according to data from oil services firm Baker Hughes.

Despite this, U.S. production C-OUT-T-EIA is expected to break through 10 million barrels per day (bpd) very soon, largely thanks to soaring output from shale drillers. Only top producers Russia and Saudi Arabia produce more.

Rising U.S. production is the main factor countering production cuts led by the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) and by Russia, which began in January last year and are set to last through 2018.

Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore, said “the OPEC vs shale debate will rage” this year, being a key price driving factor.

However, Innes added that Middle East turmoil would remain a key focus for oil markets, which he warned had the potential to “send oil prices rocketing higher”.

Reporting by Henning Gloystein; editing by Richard Pullin

SEC probing Kushner Cos use of wealthy investor visas: WSJ

(Reuters) – The real estate company of Jared Kushner, President Donald Trump’s senior adviser and son-in-law, is being investigated by the U.S. Securities and Exchange Commission for its use of a federal program that grants visas to wealthy foreigners investing in the United States, the Wall Street Journal reported on Saturday.

Kushner Cos was asked by the SEC for information on its use of the visa program, known as EB-5, in May 2017, according to a person the Journal said was familiar with the matter.

The EB-5 visa is a method for eligible immigrants to become lawful permanent residents, or “green card” holders, by investing at least $500,000 into a business in the United States that will employ 10 or more American workers. Most holders are wealthy Chinese individuals.

The Journal said the company also received a separate request from New York federal prosecutors in the same month for information on development projects financed in part by the EB-5 program.

Kushner, the White House and New York prosecutors did not reply to requests for comment from Reuters. The SEC could not be reached for comment.

“As we said months ago, we are cooperating with all government requests for information about our past legal use of the EB-5 program,” a Kushner Cos representative said in a statement to Reuters.

The exact subject of the SEC’s inquiry, or whether it identified particular projects, is not clear, the Journal reported.

The Kushners’ use of EB-5 visas to raise cash to finance developments came to broad attention in May last year, when Kushner’s sister, Nicole Kushner, spoke at a publicly advertised event in Shanghai to attract Chinese investment into a two-tower luxury apartment complex in New Jersey, called One Journal Square, being developed jointly by Kushner Cos and KABR Group. The company later apologized for mentioning Jared Kushner’s name while wooing investors.

The developers were seeking to raise $150 million, or 15.4 percent of funding for the project, from investors through the EB-5 visa program, according to marketing materials posted by the event’s organizer, immigration agency Qiaowai, Reuters reported at the time.

Kushner Cos is not a publicly traded company but the EB-5 is considered a securities offering, the Journal said, hence the SEC’s interest.

Kushner resigned from his role leading Kushner Cos when he was appointed Trump’s senior White House adviser early last year but still owns a stake in parts of the business, according to his most recent personal financial disclosure form, the Journal said.

Reporting by Bill Rigby; Editing by Bill Trott

Williams paints benign picture of Fed rate hikes, strong U.S. economy

PHILADELPHIA (Reuters) – The Federal Reserve should raise interest rates three times this year given the already strong economy will get a boost from tax cuts, and can tighten more or less aggressively if needed, a key U.S. rate-setter said on Saturday.

In an interview, San Francisco Fed President John Williams painted a benign picture of the world’s largest economy operating at or near its full capacity over the next few years.

While his colleagues at the U.S. central bank see unemployment dipping only slightly from 4.1 percent currently, Williams predicted it would fall to 3.7 percent this year without any risk of a worrisome jump in inflation.

The comments from Williams, a veteran policymaker at a time of an unprecedented leadership overhaul at the Fed, suggest the central bank remains confident in its approach after a year of gradual tightening even in the face of the $1.5-trillion tax-cut bill passed last month.

“We’re in a pretty good situation: the economy is doing great, everyone expects us to raise rates gradually … and if the data change we can respond to that,” said Williams, who has a vote on policy this year under a rotation.

“I‘m not worried about inflation suddenly taking off,” he told Reuters over lunch during an American Economic Association conference in Philadelphia. “Something like three rate hikes makes sense to me” this year, he added.

The U.S. central bank hiked rates three times in 2017 in response to robust growth and falling unemployment, despite sagging inflation which has fallen short of a 2 percent goal for more than five years.

Median forecasts from Fed officials see three more hikes in 2018 as the tax stimulus, including cuts for corporations and individuals, seeps into the economy.

The Trump administration argues the tax cuts will boost both business and consumer spending. But the individual income tax cuts are skewed toward higher-income households, which economists say have a low propensity to consume more as taxes fall.

Many economists also believe companies will use much of the windfall on stock buybacks and debt reduction rather than capital expenditure.

Williams said the cuts should have a “modest, positive effect” on economic growth over the next three years due to consumer spending and business investment. He expects gross domestic product growth of 2.5 percent in 2018, in line with overall Fed estimates, as well as a modest boost to the labor force and productivity, which has been surprisingly weak through the recovery from recession.

The U.S. economy will be “in a very positive place two years from now: I think we’ll be at 2 percent inflation and around 4 percent unemployment,” Williams said.

Reporting by Jonathan Spicer and Howard Schneider; Editing by Meredith Mazzilli

Starbucks wins dismissal in U.S. of underfilled latte lawsuit

(Reuters) – Starbucks Corp has won the dismissal of a U.S. lawsuit accusing the coffee chain of overcharging customers by underfilling lattes and mochas to reduce milk costs.

U.S. District Judge Yvonne Gonzalez Rogers on Friday found a lack of evidence that Starbucks cheats customers by making its cups too small, using “fill-to” lines on baristas’ pitchers that are too low, and instructing baristas to skimp on ingredients, such as by leaving a quarter-inch of space atop drinks.

The Oakland, California-based judge also rejected a claim that milk foam added to lattes and mochas should not count toward advertised volumes. She said reasonable customers expect foam to take up some volume, and the plaintiffs conceded that foam is an essential ingredient in their drinks.

“Accordingly, plaintiffs fail to show that lattes contain less than the promised beverage volume represented on Starbucks’ menu boards,” Rogers wrote.

Lawyers for the plaintiffs did not immediately respond on Sunday to requests for comment. Starbucks did not immediately respond to similar requests.

Lattes contain espresso, steamed milk and foam. Mochas are similar but also contain a chocolate sauce.

Siera Strumlauf and Benjamin Robles, both of California, and Brittany Crittenden of New York had accused Starbucks in their proposed nationwide class action of fraud and false advertising by underfilling 12-, 16- and 20-ounce lattes by about 25 percent, causing unspecified damages.

Starbucks countered that its cups hold more than the advertised number of ounces, and that the “fill-to” lines provide guidance to baristas as to how much cold milk, which expands when steamed, to pour into pitchers.

In 2016, two federal judges dismissed separate lawsuits accusing the Seattle-based company of cheating customers who bought iced beverages, finding that reasonable customers would understand that ice counts toward their drinks’ contents.

The case is Strumlauf et al v Starbucks Corp, U.S. District Court, Northern District of California, No. 16-01306.

Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker

Asia stocks near historic highs, U.S. earnings loom

SYDNEY (Reuters) – Asian shares neared all-time peaks on Monday after Wall Street boasted its best start to a year in over a decade, with brisk economic growth and benign inflation proving a potent cocktail for risk appetite.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.1 percent having climbed 3.1 percent last week, its strongest performance in six months.

At 587.99 the index is within spitting distance of the record top of 591.50 hit in November 2007.

Australian stocks gained 0.3 percent to notch another decade summit, while South Korea .KS11 rose 0.1 percent. Japan’s Nikkei .N225 was closed for a holiday but touched its highest since 1992 last week.

“It was the global synchronized growth that drove earnings and equity markets higher last year and the global economy has entered 2018 firing on all cylinders,” said analysts at Bank of America Merrill Lynch, predicting the global economy could expand at 4 percent or more this year.

“This growth is keeping our quant models bullish and driving earnings revisions to new highs,” they added. “We stay long outside the U.S., with Asia ex-Japan and Nikkei our growth plays, Europe still for yield.”

Friday’s U.S. jobs report did nothing to challenge that outlook.

While payrolls missed forecasts, the report was perfect for equities given unemployment stayed low but with little sign of the inflationary pressures that would make the Federal Reserve more aggressive in tightening policy.

Wall Street has already enjoyed its best start to a year in more than a decade, with the Dow .DJI up 2.3 percent last week and the SP 500 .SPX 2.6 percent. The tech-heavy Nasdaq .IXIC led the charge with a rise of 3.4 percent.

The quarterly U.S. earnings season kicks off this week with the Street expecting solid growth of around 10 percent, though many companies are also likely to be announcing one-off charges to account for recent tax changes.

INVESTORS STUFFED WITH EUROS

The next major data hurdles will be U.S. consumer prices and retail sales on Friday. In Asia, China reports inflation on Wednesday and international trade numbers on Friday.

In currency markets, the dollar had steadied for the moment after a rocky couple of weeks.

With economic activity picking up globally, the dollar .DXY has been undermined by expectations the Fed will not be the only central bank tightening policy this year.

On Friday, surprisingly strong Canadian jobs data stoked speculation interest rates there could rise as early as next week and sent the local currency to a three-month peak CAD=.

Upbeat euro zone data has likewise underpinned the single currency at $1.2036 EUR=, though it has so far failed to clear major chart resistance at the September top of $1.2092.

The dollar has fared better on the yen at 113.15 JPY=, thanks in part to expectations the Bank of Japan will stick with its super-easy policies.

Japanese Prime Minister Shinzo Abe on Sunday called on central bank governor Haruhiko Kuroda to keep up efforts to reflate the economy, but added he was undecided on whether to reappoint Kuroda for another five-year term.

The combination of a soft U.S., dollar and strong global growth has been positive for commodities, with everything from coal to iron ore to copper in demand.

Spot gold XAU= made a 3-1/2-month high last week and was trading at $1,320.51 an ounce on Monday.

Oil prices reached their highest since 2015 helped in part by political tensions in Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC).

Brent LCOcv1 was last up 15 cents at $67.77, while U.S. crude CLcv1 rose 20 cents to $61.64 per barrel.

Editing by Sam Holmes