Fundamental view of the global economy, Trump's reshuffle, company news
Stock market news
• Bitcoin BTC rate exceeded $81 thousand for the first time in history. Dollar strengthens against yen and gold in the morning. Strengthening yen puts pressure on prices of US government bonds. On Wednesday, inflation data may come out higher than expected due to the low base effect a year ago.
• Trading in Asia was quiet as investors remain unhappy with China’s latest policy package, which has focused heavily on debt swaps but little on outright stimulus. Analysts believe Beijing is keeping its powder dry in case President-elect Trump does implement his proposed 60% tariffs, but that would only prolong the wait for weeks or months. The need for action was underscored by inflation data released over the weekend, which showed Chinese consumer prices rose just 0.3% year-on-year in the year to October, while producer prices fell 2.9% year-on-year as China continued to export deflation. Attention will now turn to retail sales and industrial production on Friday for a hint that Beijing’s policies are gaining traction. A 1.3% drop in Chinese blue chips suggests hopes were not particularly high.
• In Japan, investors are waiting to see whether Prime Minister Ishiba will remain in power after parliamentary elections today. The general assumption is that he will survive, although that leaves him with the difficult task of running a minority government. An additional twist came when Yuichiro Tamaki, the head of Japan's opposition party that has emerged as a potential parliamentary presidential contender, said a tabloid report of his extramarital affair with a model was "mostly true." Such political uncertainty is making life difficult for the Bank of Japan as it considers whether to raise rates next month. Opinions from its last meeting showed some members were already wary of market volatility, and that was before Trump's victory.
• Markets see less scope for further aggressive easing from the Federal Reserve, given that Trump’s stated policies, if fully implemented, are likely to put upward pressure on inflation and bond yields. The implied probability of a December rate cut is back to 66% from 80% before the election, and the January cut is now seen as an outside rate. JPMorgan, for example, sees the Fed’s easing cycle ending at 3.5% rather than 3.0%.
• The US is due to release consumer price data on Wednesday, and a higher-than-expected 0.3% headline figure would be another blow to hopes for monetary easing in December. That helped the dollar rise 0.5% against the yen to 153.40, while the euro was flat at $1.0725.
• The political situation in Europe has not become any clearer as German Chancellor Scholz said he was prepared to put a confidence vote to parliament before Christmas, paving the way for early elections.
• The United States is demanding that Taiwan Semiconductor Manufacturing stop supplying advanced chips used in artificial intelligence applications to Chinese customers - Reuters.
• Apple's iPhone 15 became the best-selling smartphone in the world in the third quarter of 2024. Second and third places were also taken by products from the Apple company - iPhone 15 Pro Max and iPhone 15 Pro, respectively.
• Foreign companies pulled more money out of China last quarter, suggesting some investors remain pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth.
• Bankrupt cryptocurrency company FTX filed 23 lawsuits on Friday against Anthony Scaramucci, his hedge fund SkyBridge Capital and other entities, including Crypto-com and the Mark Zuckerberg-backed lobbying group Fwd.us. The lawsuits are an attempt to recoup money from FTX's creditors after the company collapsed.
• The Bank of Japan hopes to keep its inflation target at 2% even if climate change causes long-term shocks to future price dynamics, Bank Governor Kazuo Ueda said.
• The final monthly retail sales report before the holiday shopping season is due out Thursday.
Economists estimate that retail sales rose 0.3% in October from the previous month. The benchmark, which excludes several volatile categories such as gasoline and directly affects GDP, is also expected to have risen 0.3%. Ahead of the release, several trackers are pointing to the fourth quarter being off to a strong start for economic growth. The Atlanta Fed’s GDPNow tracker is currently projecting U.S. economic growth at 2.5%.
• Goldman Sachs Economics Research on China's auto industry: Trump plans to impose high tariffs on cars from China.
Chinese automakers are virtually independent of the US market: in 2024, the US accounted for only 2.4% of car exports.
Goldman Sachs analysts have a positive view of BYD shares and a negative view of SAIC.
• Fed's Kashkari says stronger economy could mean smaller rate cuts - Bloomberg
• Trump's tariff promises have left retailers who import a lot of goods with a "new reality." Fashion and apparel brands from Steve Madden to Under Armour, elf Beauty and Ralph Lauren are bracing.
• Toyota is seeking to increase production in China, a key element of its strategy. Toyota's strategy differs from that of other global automakers, including Japanese ones, which are either cutting production or moving their companies out of China.
• OpenAI is losing another top security researcher, Lillian Weng, who announced Friday that she is leaving the startup.
• Booking Holdings (BKNG) plans organizational changes and job cuts as part of a series of measures aimed at freeing up resources and reducing operating costs.
• Since Trump's election, spreads on US corporate bonds have fallen to their lowest since 1998, a sign of growing investor confidence in the US economy and amid rising other risks.
• Enphase Energy (ENPH) will lay off 17% of its workforce and pay up to $20 million. The company, which is struggling with a deteriorating home solar market in Europe, will focus on contract manufacturing at four existing sites - two in the U.S., one in India and one in China.
• Tesla (TSLA) shares close at their highest in 2 years as Musk's big bet on Trump pays off
• Boeing (BA) close to financing deal to help supplier Spirit Aero. Spirit AeroSystems and Boeing are close to reaching a financing deal that would give a cash lifeline to struggling supplier Boeing, a source says.
• Salesforce (CRM) plans to hire more than 1,000 workers to sell its new generative AI agent product - Bloomberg
Key events that could impact markets on Monday:
- Speech by ECB Governing Board Member Elizabeth McCaul.
Fundamental news
• Trump and Putin spoke by phone on Thursday, November 7 - WP. They discussed the situation in Ukraine.
Trump advised Putin not to escalate military action in Ukraine, recalling the significant US military presence in Europe.
The presidents "discussed the goal of peace on the European continent, and Trump expressed interest in future conversations to discuss an early resolution to the war in Ukraine."
The Ukrainian government was informed of the call and did not object to the conversation, according to two people familiar with the matter.
• Republicans Nikki Haley and Mike Pompeo will not serve in the next administration of Donald Trump, Trump wrote on his Truth Social page. The Wall Street Journal believes that Trump has harbored a particular grudge against Haley since she challenged him in the Republican primary and became his latest rival.
• Mike Rogers under consideration for US Secretary of Defense. Alabama Congressman Mike Rogers, chairman of the House Armed Services Committee, is being considered for the position of Secretary of Defense in the incoming Trump administration.
• The US is considering declaring a state of emergency to deport migrants en masse - WSJ.
• Trump is going to circumvent the law introduced under Biden that complicates the process of the US withdrawal from NATO. The decision to withdraw the country from NATO must be approved by two-thirds of the Senate or authorized by an act of Congress. Trump may try to use the provision on the exceptional powers of the president in the sphere of foreign policy.
• The US has completed the vote count in the presidential election. Trump wins with 312 votes against Harris's 226. He won all (!) seven swing states (a rout and failure for the Democrats). The Republicans also won the majority in the Senate and are leading in the fight for the House of Representatives.
Qatar asks Hamas leaders to leave the country after pressure from the US.
• The gas-rich state has housed Hamas' political office in its capital Doha since 2012, when the civil war in Syria forced it to abandon its Damascus base and the US asked Qatar to open a channel of communication with the Palestinian group.
• Trump intends to sever ties between Russia, China, Iran and North Korea - The Hill.
• The New York Times reports that Trump's transition team is formulating proposals to withdraw from the Paris climate agreement that would allow for far more drilling and mining than is currently allowed.
• Trump has proposed that the leading protectionist Lighthizer head US trade policy - FT. Beijing is tense.
• Trump may find a way to pull the US out of NATO - Politico. US President-elect Donald Trump is a well-known skeptic of NATO and has repeatedly made statements about America's possible withdrawal from the Alliance. A year ago, the US passed a law that would require Congress's consent for this, but the Republican may find a way to circumvent it, citing presidential powers in matters of foreign policy.
• Trump held a telephone conversation with Palestinian Authority leader Mahmoud Abbas for the first time since 2017 - Axios. In 2017, Trump recognized Jerusalem as the capital of Israel and moved the US embassy there, after which contacts between the politicians were broken off.
• Biden's procrastination has hurt Democrats' chances of winning the election, says Nancy Pelosi. "If the president had stepped down earlier, there might have been other candidates in the race. I expected him to back out and for the party to hold a primary to replace him. We have to live with it now.
• The head of the European Commission suggested to Trump to replace gas from Russia with American gas. Europe still receives a large volume of liquefied natural gas from Russia, noted the head of the European Commission Ursula von der Leyen. "Why not replace it with American LNG, which is cheaper for us and reduces our energy prices."
• China price growth remains near zero as deflation persists China's consumer inflation was anemic in October while factory prices continued to fall, suggesting the latest round of government stimulus is far from enough to free the economy from the grip of deflation.