S&P and Nasdaq close at record levels.

New all time highs in the S&P and Nasdaq too

The S&P and NASDAQ indices are closing at record levels. They also moved to all time record highs intraday.
The final numbers are showing:
  • S&P index, +26.91 points or 0.86% to 3168.55. The new all time intraday high price reached 3176.28
  • NASDAQ index up 63.265 points or 0.73% to 8717.314. The new intraday all-time high price reached 8745.82
  • Dow up 220.62 points or 0.79% to 28131.92

Some winners on the day include:

  • AMD, +7.98%
  • Deutsche Bank, +4.26%
  • FedEx , +3.7%
  • Micron, +3.47%
  • Nvidia, +3.13%
  • Bank of America, +3.09%
  • Cisco, +3.07%
  • Charles Schwab, +2.98%
  • J.P. Morgan, +2.85%
  • PNC financial, +2.54%
  • Bristol-Myers Squibb, +2.48%
Some losers include:
  • Box, -2.82%
  • Facebook, -2.73%. There was an article in the Wall Street Journal saying that the FTC is looking for an injunction on how Facebook apps interact
  • Boeing, -3.66%
  • LYFT, -1.73%
  • Chipotle, -1.4%
  • Philip Morris, -1.13%
  • Twitter, -0.85%
  • Papa John’s, -0.62%
  • Lockheed Martin, -0.5%
  • Gilead, -0.21%

US negotiators offer to cut Chinese tariffs by up to 50% on $360B in imports – WSJ sources

Breaking report

  • US would reimpose original tariff level if China fails to carry out pledges
  • Would also cancel planned Dec tariffs
  • US tariff offer made in recent days as both sides seek trade deal
  • US asking China for firm commitments on increased US products
Aside from the ‘firm commitments on purchases’ we don’t know what the US is asking for from China. We also don’t know if it’s acceptable to Beijing. Looks like they’ve left the ball in Xi’s court but I’d assume (hope?) they already had some indication from China about what they wanted.
What’s also important to note here is that this would be a pretty substantial phase one trade deal. Lowering tariffs by 50% on $360B in imports would be a big step. The total tariffs right now are on $550B of goods with China countering on $185B billion.
It’s not clear which tariffs these might be as the US added tariffs in sequences on $34B, $200B, $300B and $125B along with some tweaks at various points. Chances are that this is mostly from the Sept 1 round of $125B. China had previously demanded the US remove these but the compromise here might have been that these stay on at a lower rate (it would be 5%) with tariffs from previous rounds being cut.
Update: The full story is out right now with a few more details
  • The tariff-reduction offer was made in the past five days or so
  • US side has demanded that Beijing make firm commitments to purchase large quantities of US agricultural and other products, to better protect US IP rights and to allow greater access to China’s financial-services sector
China has already taken action on Items #2 and #3. I doubt firm commitments on purchases is a deal breaker but the WSJ report notes that China has balked at firm purchases because they run counter to WTO rules. In the bigger picture, the US demanding China violate the WTO is part of the US strategy to undermine the WTO.

The major US indices snap their two-day slide

Major indices close higher on the day

The major US indices not there today slide and are closing near the days highs in the process. Chair Powell’s view that it would take significant and persistent inflation before the next Fed hike, gave traders the green light to take stock higher.  Ahead, however, will be the US China tariffs scheduled to be hiked on December 15. That along with the UK election on the next key events for not only the US stock market but global stocks.
The final numbers are showing:
  • S&P index, +9.09 points or 0.29% at 3141.61. The high reached 3143.98. The low extended to 3133.21
  • NASDAQ index rose and 37.867 points or 0.44% at 8654.05. The high reached 8658.48. The low fell to 8622.355
  • The Dow rose 29.37 points or 0.11% to 27911.09. The hi reached 27925.50. The low extended to 27801.80

US auctions off $38 billion of 3 year notes at 1.632%

That is below the WI level of 1.634%

  • high yield of 1.632%. That is below the WI of 1.634%
  • bid to cover 2.56x vs six-month average of 2.48x
  • Directs 23.8% vs six-month average of 16.8%
  • Indirects 49.1% vs six-month average of 49.5%
  • Dealers take 27.1% versus six-month average of 33.7%
Overall, decent demand. The yield stopped through the WI level by a touch. The bid to cover was higher than the six-month average. Dealers took down a relatively small amount suggesting decent demand.

Its a big week coming up (FOMC, UK election & more) – Asian events to take note of also

Its a huge market week with loads of central bank decisions and more:

  • FOMC (Wednesday 11 December)
  • ECB, SNB and UK election (Thursday 12 December )
Also, take note of events in Asia that could well be significant also:
  • China inflation data for November on Tuesday 10 December
  • Philip Lowe, Governor of the Reserve Bank of Australia. speaks. Also on Tuesday
  • Bank of Japan’s quarterly Tankan survey is on Friday December 13
And, while not during market hours, Sunday December 15 will bring US President Trump’s latest mood swing decision on tariffs on China. Which should set up a volatile Monday morning (the 16th)
Its a huge market week with loads of central bank decisions and more:

Morgan Stanley fires four FX traders after concealing $100-$140m loss

Traders may have mismarked emerging markets trades

Morgan Stanley has fired or placed on leave four FX traders suspected of mismarking trades linked to emerging market currencies, Bloomberg reports.
The New York and London-based traders are part of a probe into mismarked trades that concealed a loss of $100-$140 million and is related to options trades.

Global stock market rally has further to run in 2020 – Reuters poll

But much depends on the US-China trade war still

Poll

The bias has turned more favourable in the most recent poll with a slim majority of respondents (53/102) viewing that risks to the outlook are now skewed more to the upside.

In comparison, just three months ago, a clear majority of respondents (69/97) viewed that risks to the outlook were skewed more to the downside instead.
A lot of this of course owes to the more optimistic US-China trade rhetoric, as both countries look to move closer towards a trade truce by the end of this year.
Among those who answered an additional question in the poll, 50 respondents said the bull run in the stock market will end within a year with 40 respondents saying that it would within the next two years.
That shows that sentiment is leaning more towards the bull run still going strong although I reckon its strength may not be as what we are seeing this year.
I mean with stretched valuations, flagging global growth and more political uncertainty i.e. US elections all at play next year, the S&P 500 may find it tough to post another 25% year like this one and so will its peers.

The Dow Rose 55 Points Because the U.S. and China Are Talking Trade Turkey

All three main U.S. stock indexes closed with modest gains on Tuesday, adding to Monday’s record highs. U.S.-China trade negotiations continued ahead of the Thanksgiving holiday, as representatives from both countries made another high-level call on Tuesday. Consumer confidence slipped again in November, but still remains at a relatively high level. In today’s After the Bell, we…

  • watch U.S. and China negotiators push trade talks a step further
  • gauge Trump’s position on Hong Kong’s pro-democracy movements;
  • and check on how American consumers feel in November.

Time to Be Thankful

Stocks edged up again on Tuesday as trade negotiators from the U.S. and China hold another high-level phone call to resolve core issues. The Dow Jones Industrial Average gained 55.21 points, or 0.20%, to close at 28,121.68. The S&P 500 added 6.88 points, or 0.22%, to finish at 3140.52, and the Nasdaq Composite increased 15.44 points, or 0.18%, to close at 8647.93.

The major indices end the week with modest gains. Dow and S&P broke 3 day slides

For the week, the major indices moved lower

The major indices are ending the week with modest gains. The Dow and S&P ended a three-day slide.
  • S&P index rose 6.64 points or 0.21% at 3110.18.
  • NASDAQ index rose 13.68 points or 0.16% at 8519.89
  • Dow rose 107.32 points or 0.39% at 27873.68
For the week, the major indices closed lower. The NASDAQ index is closing lower for the 1st time in 7 weeks.  The declines were relatively modest. The numbers are showing:
  • S&P index, -0.33%
  • Nasdaq index, -0.25%
  • Dow, -0.47%
Overall, if this is a down week, it certainly was not a disaster.

Moody’s cut German banking outlook to negative from stable as profitability weakens

Deposits are proving to be costly for German banks

Germany

Moody’s just revised their outlook for the German banking industry to ‘negative’ from ‘stable’, as they expect German banks’ profitability and overall creditworthiness to weaken in a low interest rate environment.
It’s not exactly blockbuster news but again, it just reaffirms the fact that Germany is resigned to some troubling times ahead as the economy continues to slow down further. In that regard, the lack of fixed income alternatives is also hurting banks.