Stock and corporate news, Japan bets, US vs China, Trump's people, important events
Stock market news
• Markets had a relatively quiet start to the week, with early action in the currency market marked by the dollar gaining against the yen after Bank of Japan Governor Kazuo Ueda again left investors unsure about the timing of an interest rate hike. While he left open the possibility of a gradual tightening of policy if the economy develops in line with the central bank’s forecasts, he did not mention whether a hike would come in December. That disappointed many in the markets. When Ueda’s event was announced on Friday, markets assumed it was staged because he wanted to say something about policy, rather than simply sticking to the old script. That left the price of a rate hike in December to 0.5% at 54%, although the move will not be fully priced in until March. The dollar rose a modest 0.4% to 154.78 yen, leaving it squeezed between support at 153.86 and resistance around 156.76.
• The outlook for U.S. rates is only slightly clearer, with futures showing a 62% chance the Federal Reserve will cut rates next month after Chairman Jerome Powell's hawkish stance last week. At least seven Fed officials are scheduled to speak this week, and dealers expect their remarks to be cautious about any rate cuts anytime soon.
• President-elect Donald Trump's pick for Treasury secretary could have an impact if he finds someone willing to push for massive tariffs and debt-funded tax cuts. The New York Times reported that Trump has added former Fed Chairman Kevin Warsh and billionaire Marc Rowan to his list of candidates, as well as Scott Bessent and Howard Lutnick, with the latter apparently being Elon Musk's preferred candidate.
• A number of ECB speakers are also scheduled to speak this week, while inflation data from the UK and Canada should help to gauge the prospects for rate cuts there. Early PMIs for November are due on Friday and could hint at how the global mood has changed since Trump's victory.
• All eyes on Wall Street are on Nvidia's results Wednesday, with options implying the prospect of a nearly 9% move in the stock price based on the outcome. Analysts expect Nvidia to boost third-quarter revenue by more than 80% to $32.9 billion.
• The number of foreign workers in China has fallen by 30% since 2020 - SCMP. The main reasons are slowing economic growth, fewer high-paying jobs, high costs of living and geopolitical tensions with the West.
• Nvidia's new AI chips have a problem with overheating servers - The Information. Blackwell GPUs are overheating when connected together in custom server racks designed by the company, the report said, citing people familiar with the issue. The AI chip maker has asked its suppliers to change the design of the racks.
• Asset managers bet that utility stocks will soar in the era of Trump's anti-ESG agenda. After wind and solar stocks fell sharply in the hours after Donald Trump's election victory, asset managers turned their attention to utility stocks.
• Toyota to invest $1.45 billion in Mexico to boost production.
• Tata strikes deal with Pegatron for iPhone plant in India's Tamil Nadu. India's Tata Electronics has agreed to buy a majority stake in Taiwanese contract manufacturer Pegatron's sole iPhone plant in India, forming a new joint venture, sources said.
• Boeing has issued layoff notices to more than 400 workers, part of thousands of job cuts planned as part of its crisis response.
• Disney completes $8.5 billion merger with India's Reliance. Newly formed streaming company JioStar will compete with Netflix and Amazon in India's $28 billion entertainment market.
• Gold prices have fallen nearly 5% in a week, their worst performance in three years, Reuters reported. Silver and platinum are also falling. The main reasons for the decline are the strengthening US dollar and investors' expectations of higher inflation and a slow reduction in interest rates due to Trump's policies.
• Money managers' bullish bets on gold fell to their lowest in more than three months - Bloomberg
• Global M&A activity fell 10.2% in 2024. According to research firm GlobalData, a total of 41,452 mergers and acquisitions (M&A) deals were concluded or announced worldwide from January to October.
• TikTok parent ByteDance Ltd. values itself at about $300 billion, one of the highest valuations ever for a Chinese tech company, even as it struggles to maintain a presence for its popular social media app in the U.S. - Wall Street Journal
• Utilities want Trump, Republicans to keep inflation reduction law, says Edison CEO
This includes the clean energy and electric vehicle incentives in the inflation reduction law.
• T-Mobile Hacked in Massive Chinese Telecom Attack - WSJ. Hackers linked to Chinese intelligence were able to breach T-Mobile as part of a months-long campaign to spy on mobile communications at intelligence-sensitive targets, the publication adds, without specifying when exactly the attack occurred.
• Unions return to work at Canadian ports. The Canadian Industrial Relations Board has ordered port operations in British Columbia and Montreal to resume after a dockworkers' strike halted container shipping.
• JPMorgan Chase's (JPM) credit rating was raised one notch to A by S&P Global Ratings, indicating the bank's ability to weather economic shifts after years of battling rivals for market share.
• Russia has targeted the US nuclear power industry by cutting off access to uranium, posing potential risks to utilities operating US reactors that produce nearly a fifth of the world's electricity.
• Goldman Sachs sees Trump's trade wars leading to more losses for the yuan. The yuan is likely to fall further as President-elect Donald Trump looks to impose tariffs on Chinese exports, potentially triggering a trade war, according to Goldman Sachs.
• Elon Musk's political rise is giving some Wall Street banks hope they will soon be able to write off $13 billion in debt - the kind that underpinned the billionaire's purchase of Twitter, three banking sources said.
• A drone with a 5-ton payload capacity has been unveiled in China. Chinese startup Air White Whale has developed the W5000, an unmanned drone with turboprop engines capable of carrying up to 5 tons of cargo over a distance of up to 2,600 km.
• OpenAI considered acquiring AI chip startup Cerebras, which is in the process of going public, according to new legal documents. New evidence has emerged in Elon Musk’s lawsuit against OpenAI that describes how OpenAI considered acquiring Cerebras around 2017.
• President-elect Donald Trump and his team have consulted with Trae Stevens, executive chairman of defense technology startup Anduril Industries, about the new administration's plans to shake up the U.S. military, according to people familiar with the matter.
• Defense stocks and government contractors fell on Friday, extending recent losses amid uncertainty over President-elect Donald Trump's proposed efficiency program.
• Shelbyville Battery Manufacturing has launched a $712 million project to produce industrial-sized batteries in Shelbyville, Ky. The batteries are used to store and distribute energy, which is increasingly important to ensuring a reliable electric grid in the country.
• Key among the reports this week will be earnings from artificial intelligence leader Nvidia (NVDA), which reports its results after the lunch break on Wednesday.
• Quarterly results from Walmart (WMT), Target (TGT), BJ's (BJ) and Deere & Company (DE) will also be in focus.
Key events that could impact markets on Monday:
- Eurozone trade data for September.
- Speeches by ECB President Christine Lagarde, ECB Chief Economist Philip Lane, ECB Executive Board Member Claudia M. Buch, ECB Vice President Luis de Guindos.
- Speech by Chicago Federal Reserve President Austan Goolsbee.
Fundamental news
• Biden and Xi met in Peru, where they discussed, in particular, Russia's war against Ukraine. During a meeting with Chinese leader Xi Jinping, Biden expressed serious concerns about China's continued support for Russia's defense industry. He also expressed strong dissatisfaction with the deployment of thousands of North Korean soldiers in Russia.
At the same time, the head of China assured that his country's goal for the next four years remains "stable and healthy" relations with America.
• Donald Trump's administration is preparing to deprive Iran of petrodollars in order to stabilize the situation in the Middle East - Financial Times.
• Trump has chosen businessman Chris Wright as his energy secretary - AP. Wright is a supporter of the use of fossil fuels and has denied the existence of a climate crisis.
• The Brussels elite wants to silence us, but we will not give in! - Hungarian Prime Minister Viktor Orban welcomed the election of the head of the far-right faction in the European Parliament. Santiago Abascal is a Spanish far-right politician, leader of the Vox party, which has significant influence on Spanish politics. According to Euronews, Abascal has created a network of international alliances with conservative leaders such as Donald Trump, Jorja Meloni, Javier Miley and Viktor Orban.
• Tehran has secretly selected Mojtaba Khamenei, the second son of Iran's Supreme Leader Ali Khamenei, as the country's next leader - Iran International. Mojtaba could take over the role before the death of his 85-year-old father, who Iran International says is suffering from a serious illness.
• Election campaign in Germany with the help of social networks and AI: the first threats. In Germany, the election campaign for the early elections to the Bundestag on February 23 has effectively begun. And warnings immediately appeared about the role that social networks could play in it.
Friedrich Merz, a candidate for chancellor of Germany from the opposition conservative bloc CDU/CSU, reported at a debate in the Bundestag that fakes about him generated by artificial intelligence had appeared on social networks, in which Merz allegedly expresses “contempt for democracy.”
• The all-inclusive system in Turkish hotels has led to tourists hardly leaving the hotel and eating constantly. And this is harmful both to their health and to the development of the country's tourism potential, said Ertan Ustaoglu, president of the Turkish Small Hoteliers Association.
• Trump has named Interior Secretary Doug Burgum to head a new White House Energy Council. North Dakota Gov. Doug Burgum will also head the newly created National Energy Council, which will seek to establish U.S. “energy dominance” around the world.
• Supplies of Russian gas to Europe via Ukraine are relatively small, but the position of Hungary and Slovakia, which do not want to give up fuel from Russia, is sowing discord in the EU - Reuters.
• Israel Destroys Iran's Nuclear Weapons Center - Axios. The top-secret nuclear weapons center Taleghan-2 at the Parchin military complex was destroyed in an Israeli airstrike in October. Until recently, it was considered inactive, Axios reports.
• DOGE: The US National Institutes of Health spent $442,340 to study the behavior of male prostitutes in Vietnam.
• China said it was ready to partner with the US and “strengthen dialogue.” In a conversation with the US ambassador, Chinese representative Xie Feng emphasized that the countries have “great potential” for working together in several areas and need to “strengthen dialogue.” In particular, the discussion focused on trade, agriculture, energy, healthcare, and artificial intelligence.
• China will fight back if President-elect Donald Trump follows through on his promise to impose 60% tariffs on Chinese imports, said Zhu Min, a former senior official at China's central bank.
• Nikkei: China’s hidden debt may be $6 trillion higher than official figures. Chinese Finance Minister Lan Fo’an said local governments’ hidden debt is 14.3 trillion yuan ($1.97 trillion) in 2023. However, independent analysts estimate it at 50-60 trillion yuan ($7-8.2 trillion), $6 trillion higher than the official figure.
The hidden debt is generated by local governments raising funds through special purpose investment platforms (LGFVs) that finance infrastructure projects. These liabilities remain outside official financial reports, making them difficult to account for.
• UN climate chief asks G20 leaders for support as COP29 finance talks delayed Baku - Reuters: Has the climate money run out?
• The Council of Islamic Ideology of Pakistan has stated that using VPN to access blocked resources is contrary to Sharia.