New US Treasury Secretary, ECB and Fed Rates, Company News and Geopolitics
Stock market news
• In Asia, market reaction to the choice of fund manager Scott Bessent as the next US Treasury Secretary dominated, with relief that he was a mainstream choice rather than an unknown. Bessent’s fiscal hawkishness was enough to send 10-year Treasury yields down 6 basis points, although it remains to be seen whether he can cut the deficit while extending expiring tax cuts. In various media appearances, he has talked of cutting the budget deficit to 3% of GDP and tackling the huge US national debt, presumably by cutting spending and boosting economic growth. Skeptics point out that the US has been enjoying robust growth for some time and the deficit is only widening, while the amount of discretionary spending that needs to be cut is small compared to big things like Medicare and defence. Bessent argued in favor of tariffs, suggesting that they should be targets “implemented gradually,” while tariff levels cited, such as 60% on Chinese goods, represented “maximalist” positions that could be relaxed. He also advocated for a strong dollar, seemingly referring to President-elect Donald Trump’s previous tendency to devalue as a way to reduce trade deficits.
• So while the dollar has fallen in line with bond yields today, the longer-term bullish case appears to be intact. The dollar is being strengthened by diverging economic data between the US and Europe, as reflected in last week's PMIs.
• Markets have fully priced in a quarter-percentage point ECB rate cut next month and are pricing in a nearly 58% chance of a 50 basis point rate cut on December 12. Fed rates have moved the other way, with the chance of a December rate cut falling to 52% from 70% a month earlier. The market has priced in just 65 basis points of Fed easing by the end of 2025, compared with 154 basis points for the ECB. The odds will be further boosted this week by the tone of the Fed minutes from its latest meeting and by October inflation data from the US and Europe.
• US core personal consumption expenditure inflation is expected to rise slightly to 2.8%, although this is partly due to higher financial management costs reflecting the rise on Wall Street rather than demand in the economy. EU inflation is also expected to rise due to the base effect, as the year-on-year fall in CPI is dropped from the calculations.
• Elon Musk continues to hold the top spot in the ranking of the richest businessmen on the planet, breaking his own record from 2021. Musk's fortune has increased by $35 billion over the past week and is now estimated at $348 billion.
In second place is Amazon founder Jeff Bezos ($219 billion).
In third place is Oracle CEO Larry Ellison ($206 billion).
• Musk criticized Lockheed Martin's (LMT) F-35. He posted a video on X of a swarm of Chinese drones with the words "Meanwhile, some idiots keep building manned fighters like the F-35."
• In Romania, income tax on cryptocurrency income has been abolished until July 2025. This decision was made to attract investors and increase market transparency. Now, crypto earnings can be safely withdrawn to Romanian banks.
• Northvolt's Countdown to Collapse Began When BMW 'Pulled the Plug' - Bloomberg For Northvolt AB, the Swedish startup that has become the poster child for Europe's electric-vehicle future, the road to collapse began in June when BMW AG canceled a multibillion-dollar order.
• Australia drops plan to fine social media giants that facilitate the spread of misinformation. The Australian government said on Sunday it had dropped plans to fine internet platforms up to 5% of their global revenue for failing to prevent the spread of misinformation online.
• TikTok CEO reaches out to Musk for comment ahead of Trump administration - WSJ In recent weeks, Chu has initiated correspondence with Musk asking for his opinion on topics ranging from the new administration to potential tech policy.
• Next week's economic calendar features fresh data on personal consumption expenditures (PCE), the Fed's main measure of inflation. Updates on third-quarter economic growth and housing activity are also on the schedule.
In corporate news, investors will likely be looking at quarterly results from Zoom (ZM), Dell (DELL), Best Buy (BBY), CrowdStrike (CRWD) and Macy's (M).
• Markets will be closed on Thursday for Thanksgiving, and the trading session will end early on Friday at 1:00 p.m. ET.
• Blue Origin is sending tourists into space again. Jeff Bezos' company launched six space tourists into space on Friday on its ninth manned mission, New Shepard, giving passengers about three minutes of weightlessness and a chance to admire the scenery.
• Polymarket gives a 15% chance that Elon Musk will buy MSNBC. Musk commented on the possible purchase:
“MSNBC is up for sale. Should I buy it? I’m going to fire Rachel Maddow [the TV host who called on the US government to terminate all contracts with Musk if Harris wins] immediately (just for fun) and reformat it into a channel broadcasting top content from X every day. Citizen journalism on cable TV!” he wrote on X.
• Gamblers Are Pouring Billions into Leveraged ETF Bets. Zero for the Casino Crowd: Microstrategy's T-Rex 2x Long MSTR Daily Target ETF Has a Market Cap (Assets Under Management) of Nearly $3 Billion
• Billionaire hedge fund manager Ray Dalio increased his stake in Palantir (PLTR) by 500% in the third quarter. PLTR trades at a PE ratio of 325x.
• Europe faces a new gas crisis, with prices up 45% amid rapidly declining storage stocks and potential cuts in supplies from Russia - Bloomberg. The situation is further complicated by the fact that weak winds in the area of wind farms prevent this energy source from being used to its full potential to generate electricity.
• The creators of Minecraft have announced a partnership with entertainment giant Merlin Entertainments, second in scale only to Disney.
As early as 2026, the first theme parks will appear in the US and UK, where blocks, creatures and other elements of the game will come to life.
• Dubai's property boom has buyers looking for creative ways to save money - Bloomberg Dubai's emergence as one of the world's hottest property markets is increasingly squeezing out buyers, leading to a resurgence of interest in real estate investment trusts and prompting many to turn to fractional ownership programs that require the least amount of investment.
• Saudi Aramco in talks to invest $1 billion in U.S. software maker Mavenir. Saudi Aramco's digital unit is in talks to acquire a significant minority stake in Mavenir in a deal that is likely to value the U.S. telecoms software maker at about $3 billion, sources said.
• Cloud AI platform CoreWeave aims for $35 billion+ valuation in 2025 U.S. IPO - Reuters
• Samsung ordered to pay $118 million for infringing Netlist patents in a lawsuit over technology to improve data processing in high-performance memory products.
• MatX, a startup founded by Google alumni, has raised a Series A with a valuation of over $300 million. MatX is developing chips that support large language models. The investor was the Spark Capital fund.
• Economic Data: Dallas Fed Manufacturing PMI, November (-3 last time)
Reports: BBWI, Zoom (ZM)
Pony AI (PONY) is set to IPO and begin trading later this week. The robotaxi company said it plans to raise up to $4.6 billion in its initial public offering. The Guangzhou-based company currently plans to raise up to $260 million by offering 20 million American depositary shares priced between $11 and $13.
Note that there are no Fed speeches scheduled this week, presumably due to the US Thanksgiving holiday, but there are plenty of speeches scheduled from ECB and Bank of England officials.
Key events likely to impact markets on Monday:
- German IFO Business Climate Survey, November
- Chicago and Dallas Fed surveys
- Speeches by ECB Chief Economist Philip Lane and ECB Member Gabriel Makhlouf
- Speeches by Bank of England Deputy Governor Clare Lombardelli and Monetary Policy Committee member Swati Dhingra
Fundamental news
• Trump has picked former adviser Brooke Rollins to be his agriculture secretary - Bloomberg, bringing in a member of his first-term White House team and elevating another loyalist in the new administration.
• Trump team discord leads to arguments, expulsions from meetings and name-calling - WP Donald Trump's lawyer and adviser Boris Epstein recently arrived at a Cabinet nomination meeting at a tea room in Mar-a-Lago, but was blocked from entering.
Transition committee co-chair Howard Lutnick, CEO of Cantor Fitzgerald, told Epstein in front of others that the meeting was not for him.
• Presidential elections are taking place in Romania. There are 13 candidates running for the post of head of state. According to the results of pre-election polls, the most popular is the current Prime Minister of Romania and the head of the Social Democratic Party (PSD) Marcel Ciolacu, who consistently advocates for supporting Ukraine in the war against the Russian Federation.
• Russia produces as many weapons in three months as the EU does in a whole year - German Defense Minister. According to Boris Pistorius, Europe is facing a long-term threat.
• Bundestag member Rainer Rothfuss stated that it would be beneficial for Germany to normalize relations with the Russian Federation. Namely: to lift sanctions against the Russian Federation and restore the Nord Streams.
• Chinese hackers may have spied on 150 US politicians. The FBI reported the names of the politicians and high-ranking officials who were targeted, Senator Mark Warner told CNN.
• Scott Bessen: I believe we are in the midst of a major restructuring, like the Bretton Woods agreement in world politics and world trade. And I would like to be part of that.
• $1.3 trillion per year for climate protection: the final document of COP29 was agreed in Baku. Participants of the 29th session of the UN Climate Change Conference agreed on the night of November 24 to increase climate aid to poor countries. By 2035, the amount of funds annually allocated for these purposes by industrialized countries should increase to at least $300 billion, and in general, taking into account both public and private financing, poor countries should receive $1.3 trillion per year by that time. This money should allow developing countries to finance measures to combat climate change, as well as adapt to the consequences of global warming, such as more frequent droughts, storms and floods.
• Israeli-Moldovan kosher shop owner Rabbi Zvi Kogan was killed in Dubai on Thursday. UAE authorities arrested three suspects. Israel called it a terrorist attack.
• Switzerland said it was halting exports of ammunition from a Polish company after it emerged that some 645,000 rounds of Swiss-made small-caliber ammunition had been sent to Ukraine - Associated Press.
• The head of the European Parliament called for the delivery of TAURUS missiles to Kyiv. In an interview with the Funke group, Roberta Metsola answered affirmatively to the question of whether EU countries, like the US, are in favor of allowing the Ukrainian Armed Forces to use long-range missiles against targets in the Russian Federation, and whether Germany should deliver TAURUS missiles to Ukraine.
• Rutte and Trump discussed global security. On Friday, NATO Secretary General Mark Rutte and Donald Trump met in Palm Beach, Florida. They discussed security issues facing the Alliance. Mark Rutte also met with Mike Waltz, who will become Trump's national security adviser.
• US actions are an attack on our sovereignty, sanctions against Gazprombank threaten our energy security - Foreign Minister Peter Szijjarto. During a review of the situation with the energy ministers of Turkey, Azerbaijan, Bulgaria and Serbia in Istanbul.
Hungary still relies on pipeline gas from Russia to meet its own demand.
• Elon Musk in one of the leadership positions in the new Trump government is an unheard-of challenge for the entire world - former German Chancellor Angela Merkel.
• Musk warned of imminent US bankruptcy. "America is now heading super fast towards bankruptcy," the entrepreneur wrote.
The volume of US federal spending in the current fiscal year will reach $6.16 trillion, while revenues will amount to only $4.47 trillion.
• Upgrade of Cyprus' credit rating by two notches to A3 from Baa2 opens the door to quality foreign investment that will create new jobs - President.
• Europe's economic outlook is cloudy - Bloomberg. Business activity in the euro zone unexpectedly contracted this month, heightening concerns about the outlook for the European economy and suggesting the European Central Bank will have to be more aggressive in cutting interest rates.
• Saudi Arabia receives first upgrade from Moody's - Bloomberg Saudi Arabia's sovereign rating was upgraded by Moody's Investors Service for the first time since its initial assessment in 2016, driven by continued economic growth.
• The Biden administration plans to unveil new export restrictions on China as early as next week, the American Chamber of Commerce told its members in an email Thursday. The new rules could affect up to 200 Chinese chip companies.
• The US Department of Defense announced an update to its nuclear deterrence strategy. The readiness of Ohio-class strategic submarines with Trident II intercontinental ballistic missiles has been increased.
• Trump's pick for labor secretary was a surprise: Unions love her. Trump chose Rep. Lori Chavez-Deremer, a Republican from Oregon. Chavez-Deremer supported the Protecting the Right to Organize (PRO) Act, a bill pushed by the Biden administration that would have strengthened federal labor laws. Few Republicans supported it.
• Business groups have spoken out against the law. Fearing the loss of a U.S.-Canada trade deal, Mexico is changing its laws to remove Chinese parts. "We have a plan to replace these imports from China and produce most of them in Mexico, either with Mexican companies or primarily North American companies," said Mexican President Sheinbaum.