Good morning. Happy Friday.
The Asian/Pacific markets did poorly. New Zealand posted a solid win, but Japan, China, South Korea, India, Taiwan, Australia, Singapore and Thailand were down big. Europe, Africa and the Middle East are getting hit hard. The UK, Denmark, Poland, France, Germany, Finland, Switzerland, the Netherlands, Italy, Austria and Sweden are down big. Index futures in the States point to a big gap down open for the cash market.
————— VIDEO: My Favorite Setup —————
The dollar is down. Oil is down; copper is up. Gold is up; silver is down. Bonds are up. Bitcoin is down.
Stories/News from Seeking Alpha…
An American dilemma
A Santa rally may be out of the cards this year as troubling headlines from Washington continue to pile up. The first was from the Federal Reserve, which disrupted the market party on Wall Street via a disappointing policy outlook for 2025. Next, was the likelihood of a government shutdown starting later tonight. Last, was how everything went down, with turmoil hitting Capitol Hill and talk of scrapping legislative mechanisms like the debt ceiling.
Backdrop: While Congressional leaders had reached a bipartisan deal to fund the government through March, support for the spending package disintegrated after opposition from President-elect Donald Trump and Elon Musk, who will head up the new Department of Government Efficiency. A slimmed-down bill (that included a provision to extend the debt ceiling until 2027) was quickly drawn up, but the measure failed a vote in the House on Thursday evening due to opposition from Democrats and Republican detractors. It’s not yet clear what will happen next, but a similar fight is likely to take place early next year, and Trump would rather “have this debate now” to “start [the shutdown] with a Democratic president” and cement his control over the GOP.
Millions of federal employees and military service members will be furloughed if additional funding cannot be approved. The SEC would operate with minimal market oversight (putting IPOs on ice) and economic data releases would be delayed at a sensitive time for the U.S. economy. Americans who rely on federal assistance could also face service disruptions, there will be delays on small business loans, and exporters won’t be able to get licenses, while a prolonged shutdown could impact air travel before Christmas or other industries that rely heavily on federal workers.
Abolishing the debt ceiling is the “smartest thing [Congress] could do. I would support that entirely,” Trump told NBC News. “The Democrats have said they want to get rid of it. If they want to get rid of it, I would lead the charge. It doesn’t mean anything, except psychologically.”
Why does the U.S. have a debt ceiling? The U.S. first instituted a statutory debt limit with the Second Liberty Bond Act of 1917, setting the aggregate amount of debt that could be accumulated through individual categories like bonds and bills. Later in 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt limit exists to ensure the “power of the purse” stays with the legislative branch and frees up Congress from approving each individual expenditure, though almost all countries (except for Denmark) do not have a limit and debate the funding of their spending during the budgetary process.
What else is happening…
Dow snaps longest losing streak since 1974, but not by much.
U.S. GDP growth adjusted up to 3.1%; PCE is next.
Nike (NKE) CEO: Turnaround will take time and cost money.
Trump transfers entire DJT stake to trust, with son as sole trustee.
FedEx (FDX) to spin off freight operations, lowers forecast.
Peak holiday season: Amazon (AMZN) faces largest U.S. strike.
Go green? Walmart (WMT) admits it will likely miss emission targets.
El Salvador to sell or discontinue bitcoin wallet as part of IMF deal.
BOJ: Past radical monetary easing was not as effective as planned.
Record year for ETF launches swells industry’s global AUM to $15T.
Today’s Economic Calendar
08:30 AM Personal Income and Outlays
10:00 AM Consumer Sentiment
01:00 PM Baker Hughes Rig Count
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Good morning. Happy Thursday.
The Asian/Pacific markets did poorly. Hong Kong, South Korea, India, Taiwan, New Zealand, Indonesia, Thailand and the Philippines posted moderate or big losses. Europe, Africa and the Middle East are weak. The UK, Denmark, Finland, Germany, South Africa, France, Switzerland, Hungary, Spain, the Netherlands, Italy, Israel and Sweden are leading to the downside. Index futures in the States point to a big gap up open for the cash market.
————— VIDEO: My Favorite Setup —————
The dollar is down. Oil is flat; copper is down. Gold and silver are down. Bonds are down. Bitcoin is up.
Stories/News from Seeking Alpha…
Fed forecast
Over 1,100 points were wiped off the Dow Jones Industrial Average (DJI) on Wednesday after the Federal Reserve revealed a disappointing policy outlook. The central bank is now set to cut rates only twice in 2025, fewer than the four cuts given in its last assessment in September. The forecast helped Treasury yields jump, while the S&P 500 (SP500) and Nasdaq (COMP:IND) also sold off, with economic projections showing inflation would remain sticky next year.
Called it! Trouble was brewing even before the latest FOMC meeting, with the Dow Jones logging its first 10-day losing streak since 1974. In recent days, there had already been fear about the Fed slashing its interest rate outlook, as seen in the latest SA Sentiment poll. A plurality of the 1,300 responses to Wall Street Breakfast’s Survey Monday forecast two rate cuts for 2025, correctly reflecting what would later be displayed in the Fed’s “dot plot.”
“I think we’re in a good place, but I think from here it’s a new phase and we’re going to be cautious about further cuts,” Fed Chair Jay Powell declared. “We have lowered our policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive.” Frothy parts of the market got whacked on the latest statement, with notable plays taking a dive, like Tesla (TSLA) -8.3% and MicroStrategy (MSTR) -9.5%, as well as Bitcoin (BTC-USD) falling back to $100K amid word that the Fed is “not allowed to hold” the cryptocurrency.
What’s next? The most-talked about headline among investors has been the losing streak for the Dow Jones (DJI). Most of the index’s losses have been due to a handful of its price-weighted average constituents, like UnitedHealth (UNH), which has tumbled nearly 20% since the fatal shooting of Brian Thompson and President-elect Trump’s promise to “knock out [the drug industry] middleman”. Interestingly, UNH rose on Wednesday, and the Dow itself is only down about 6% since its last all-time high, with some of its post-election gains even intact. Does it present a buying opportunity?
What else is happening…
Looming TikTok (BDNCE) ban is heading to the Supreme Court.
Trump slams bipartisan funding bill, risking government shutdown.
OpenAI goes retro with dial-in line to access ChatGPT.
Nike’s (NKE) new CEO set to lay out turnaround plan.
Micron (MU) tumbles as weak forecast overshadows results.
Bird flu: California’s Newsom declares state of emergency.
A historic downtown Las Vegas casino gets a refresh.
CVS (CVS) sued for alleged ‘unlawful’ opioid prescriptions.
Amazon (AMZN) could face U.S. strike during busy holidays.
EPA clears California gas-only car ban, Trump may block move.
Today’s Economic Calendar
08:30 AM GDP
08:30 AM Initial Jobless Claims
08:30 AM Philly Fed Business Outlook
08:30 AM Corporate Profits
10:00 AM Existing Home Sales
10:00 AM Leading Indicators
10:30 AM EIA Natural Gas Inventory
11:00 AM Kansas City Fed Mfg Survey
01:00 PM Results of $22B, 5-Year TIPS Auction
04:00 PM Treasury International Capital
04:30 PM Fed Balance Sheet
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Good morning. Happy Wednesday. Happy Fed Day.
The Asian/Pacific markets were mixed. China, Hong Kong, South Korea and Taiwan did well; India, Indonesia and the Philippines were weak. Europe, Africa and the Middle East lean to the upside, but there is minimal movement. Poland and Hungary are up; Switzerland is down. Index futures in the States point to a mixed open for the cash market.
————— VIDEO: My Favorite Setup —————
The dollar is up. Oil and copper are up. Gold and silver are down. Bonds are down. Bitcoin is down.
Stories/News from Seeking Alpha…
Major car shakeup
Today’s FOMC meeting will be the big news this afternoon, but overnight there were other big reports driving around. A new partnership between Honda (HMC) and Nissan (OTCPK:NSANY) is in the middle of being ironed out, which would save the latter from a likely bankruptcy in the coming year. It’s not yet clear what things would look like, but Mitsubishi Motors (OTCPK:MMTOF) – of which Nissan is the top shareholder – is also likely to come aboard the new industry giant.
Snapshot: Whether it’s a merger, alliance, capital tie-up, or even a broad holding company, the new entity would split Japan’s auto industry into two camps: the one of Honda (that includes Nissan and Mitsubishi) and the other under Toyota (TM) (including Subaru, Mazda and Suzuki). Earlier this year, Honda and Nissan agreed to cooperate on electrification, and deepened those ties in June with batteries and software, as well as inking a similar agreement with Mitsubishi Motors.
Like most consumer devices and appliances, cars have been getting a lot smarter over the past decade. This has led to a race to the top in the “software-defined vehicle” market (SDV), putting those that fail to modernize their underlying vehicle architecture at a disadvantage, or even near bankruptcy. It’s been hard for many legacy automakers to balance these needs at a time when they’re spending billions on the EV transition, leading to new partnerships (like Rivian and Volkswagen) that can keep them competitive in the modern era of automobiles.
Newer players on the road have mastered the SDV market and electrification, and are even the forces that have created it. Think of dominant names like Tesla (TSLA) and China’s BYD (OTCPK:BYDDY), which are known for their innovation and over-the-air updates, where features can evolve long after their cars have left the assembly line. They’ve also been leaders in bringing production and development in-house, while maximizing profit margins by securing their supply chains from components to batteries.
Will it work? A partnership between Honda and Nissan is aimed at restoring global competitiveness, like in China, which accounted for almost 70% of worldwide EV sales in November. Once a pioneer with its mass-market Leaf, Nissan will gain stability, as well as a better reputation and financial standing from the new tie-up. Some are questioning the potential benefits for Honda, but it could see cost reductions from shared platforms, better investment in new technologies, and the acceleration of its EV plans. Whether the two can combine their different corporate cultures remains to be seen, with Honda (HMC) shares down 3% in U.S. premarket trading and Nissan (OTCPK:NSANY) surging 24% in Japan to become the top performer on the Nikkei 225 Index (NKY:IND).
What else is happening…
All you need to know for the last FOMC meeting of the year.
Unionized Starbucks (SBUX) workers vote for potential strike.
Costco (COST) dances around $1,000 level amid upbeat outlook.
Hidden junk fees banned in live-event ticketing, short-term lodging.
Microsoft (MSFT) leads rivals in buying Nvidia (NVDA) AI chips.
Funding round sees Snowflake (SNOW) rival score $62B valuation.
Quantum Computing (QUBT) skyrockets (again!) on NASA news.
Salesforce (CRM) is hiring 2,000 people to sell AI software.
Biden administration to offer record $15B loan to PG&E (PCG).
Argentina emerges from recession in huge win for President Milei.
Today’s Economic Calendar
07:00 AM MBA Mortgage Applications
08:30 AM Housing Starts and Permits
08:30 AM Current Account
10:00 AM Atlanta Fed’s Business Inflation Expectations
10:30 AM EIA Petroleum Inventories
02:00 PM FOMC Announcement
02:30 PM Fed Chair Press Conference
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Good morning. Happy Tuesday.
The Asian/Pacific markets closed mostly down with some sizable losses. Australia and New Zealand did well, but Japan, China, Hong Kong, South Korea, India, Malaysia, Indonesia, Singapore, Thailand and the Philippines were weak. Europe, Africa and the Middle East are mostly weak. Israel is up, but otherwise there are solid losses. The UK, Denmark, Poland, Greece, South Africa, Finland, Norway, Hungary, Spain, Italy, Portugal, Austria and Saudi Arabia are down. Index futures in the States point to a moderate gap down open for the cash market.
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The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are down. Bitcoin is up.
Stories/News from Seeking Alpha…
Separate ways
A big divergence is going on in the markets, where value stocks are taking a back seat to growth. While it’s been pronounced for much of the year, things really kicked off in the aftermath of the U.S. presidential election. Fresh highs keep being notched by the Nasdaq (COMP:IND), which recently crossed the 20,000 milestone and inked its 38th record close of the year, compared to the Dow Jones Industrial Average (DJI), which just posted its longest losing streak since 2018.
Bigger picture: Tech stocks are getting another boost amid the outlook for interest rates, as well as the staying power of artificial intelligence and enthusiasm over crypto. New AI favorites like Broadcom (AVGO) recently joined the $1T market cap club and Michael Saylor’s MicroStrategy (MSTR) was just added to the Nasdaq 100 (NDX), helping propel the overall composite index by 35% YTD. On the other hand, the Dow has faced challenges from several of its constituents in the healthcare, energy and industrial sectors.
To clarify, the blue-chip Dow is still up 17% in 2024, which is an impressive return on a historical basis. All indications suggest that U.S. stocks are still the place to be for investors in 2025, as political and economic trouble hits many Western nations, from France and Germany to South Korea and Canada. Many are also betting on the policies of the incoming Trump administration, whose stance on deregulation, tax cuts, efficiency, and tariff-driven investment could point to a resilient economy.
SA commentary: “Continuing high rates versus those which we enjoyed (and needed) during the aftermath of Great Recession and the pandemic are perceived to be a big risk for the economy,” Seeking Alpha Analyst Bill Kort wrote in a new article. “When Chairman Powell talks about going slow on raising rates, those unwarranted fears are reinforced and money exits the economically sensitive areas and continues to pour into that which is perceived not vulnerable (of course, eventually it will be): technology. As it is with everything stock market and cyber currency, higher prices seem to create demand, with the converse – lower prices – creating supply.”
What else is happening…
WSB survey results: Two or three rate cuts likely in 2025.
SoftBank chief and Trump confirm $100B investment in U.S.
TikTok (BDNCE) rushes to Supreme Court to stave off app ban.
… CEO also meets Trump, who has ‘warm spot in heart for TikTok.’
SA Charts: How semiconductor sales have performed this year.
Alphabet’s Waymo picks city for first international robotaxi testing.
The hottest auto stock over the last six weeks is not Tesla (TSLA).
Trump transition team eyes big changes to Biden-era EV incentives.
Tackling Russia’s dark fleet: Ships to face oil spill insurance checks.
Wolfe Research lists worst performing stocks for tax loss selling.
Today’s Economic Calendar
08:30 AM Retail Sales
09:15 AM Industrial Production
10:00 AM Business Inventories
10:00 AM Housing Market Index
01:00 PM Results of $13B, 20-Year Bond Auction
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Good morning. Happy Monday. Hope you had a great weekend.
The Asian/Pacific closed mostly down. China, Hong Kong, Australia, Indonesia and Thailand posted the biggest losses. Europe, Africa and the Middle East lean to the downside. Denmark, the UAE and Israel are up; France, Turkey, Germany, Greece, Finland, Norway, the Netherlands, Italy, Austria and Sweden are down. Index futures in the States point to a positive open for the cash market.
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The dollar is down. Oil is up; copper is down. Gold and silver are up. Bonds are up. Bitcoin is up.
Stories/News from Seeking Alpha…
Grand finale
Federal Reserve policymaking will be in the spotlight this week, with the U.S. central bank wrapping up its final meeting of the year. The FOMC already cut rates twice since it made a highly anticipated U-turn in September, and nearly everyone is expecting one final cut at the gathering on Wednesday. That would bring the Fed’s benchmark rate to a range of 4.25%-4.5%, or a full percentage point below the four-decade high reached in July 2023, though things have also grown more complicated when sizing up the current monetary policy equation.
Fears of going too slow: One doesn’t have to look far to past mistakes by the FOMC, which fell behind the curve following its infamous “transitory call” in 2021. There is also a pretty clear consensus that the Fed has achieved a “soft landing” and tapping the brakes now could jeopardize that accomplishment. It could also hurt the labor market, with signs of unemployment already climbing, and that appears to be more of a focus for the Federal Reserve as it turns to the other part of its dual mandate.
Fears of going too fast: The economic landscape is very fluid, and it may pay to wait for more data before acting again. There is further uncertainty regarding what policies will be instituted by the Trump administration, like big fiscal policy moves, across-the-board tariffs, or deportations that might impact the U.S. labor market. If inflation resurfaces, the central bank would be in a better position to respond by going slow, especially with price pressure growth resurfacing since September.
What’s next? The Fed has penciled in four quarter-point cuts in 2025, or one for each quarter, but that could change in the latest FOMC projections and associated dot plot. Fed Chair Jerome Powell, who is slated to stay in the role until 2026, might also emphasize uncertainty and caution surrounding the guidance. It’s all aimed at targeting the neutral rate of interest – at which monetary policy neither hinders nor fuels economic growth. Take the WSB survey.
What else is happening…
Broadcom (AVGO) hits $1T valuation as Wall Street cheers AI potential.
UnitedHealth (UNH) down 15% amid grief and frustration after shooting.
New lineup: Apple (AAPL) is planning thinner iPhone and foldable iPad.
Arm (ARM), Qualcomm (QCOM) head to court over chip design license.
Bitcoin tops $106K as MicroStrategy (MSTR) added to the Nasdaq-100.
Here is the most likely candidate to become Intel’s (INTC) new CEO.
ABC News (DIS) to pay $15M to settle Trump defamation lawsuit.
Moody’s cuts France’s credit rating; Political turmoil hits Germany.
After a $9.5B fiscal year net loss, should the USPS be privatized?
Lawmakers to Apple, Google: Prepare to axe TikTok from app stores.
SA Quant: Victoria’s Secret (VSCO) leads 10 Buy-rated retailer stocks.
Today’s Economic Calendar
08:30 AM Empire State Mfg Survey
09:45 AM PMI Composite Flash
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