Stock market news of companies and geopolitics, threats from Moscow, new appointments of Trump
Stock market news
• U.S. Treasuries enjoyed a rare rally on Tuesday as speculation over Donald Trump's nomination for Treasury Secretary focused on a relatively familiar face in Kevin Warsh, while a geopolitical "security bet" was fueled by Russia's nuclear weapons. Similar security trades surfaced in Europe on Tuesday after Moscow responded with nuclear threats to Washington's decision this week to allow Ukraine to use U.S.-supplied weapons to strike Russian territory.
Sovereign debt, gold and the Japanese yen jumped, while European stocks and the euro fell after reports that Russian leader Vladimir Putin updated Moscow’s military policy and “nuclear doctrine.” The revision said Moscow could respond with nuclear weapons if it came under attack with conventional missiles backed by a nuclear power. Given the gravity of the threat, the steps so far have been relatively modest — largely because Putin has repeatedly threatened to use nuclear weapons since Russia invaded neighboring Ukraine 1,000 days ago.
• For markets, the sudden drop in Treasury yields, recently fueled by Trump’s tax and tariff plans, volatile inflation readings and the Federal Reserve’s cuts in monetary easing rates, was perhaps the biggest blow. Two-year yields fell to their lowest in 11 days, while 10-year yields fell below 4.35%. And while that would normally also push the dollar lower, the safe-haven bet — certainly against the euro — was enough to lift the broader dollar index.
• Betting site Polymarket on Tuesday priced Warsh at 44%, nearly 20 points above the second-favorite, hedge fund manager Scott Bessent, and the third-most popular, Apollo Global Management CEO Marc Rowan. Warsh, a visiting fellow at Stanford University’s Hoover Institution, has a track record of taking hawkish views on both inflation and deficits. He was a White House economic policy adviser from 2002 to 2006 before being appointed to the Federal Reserve. He left the central bank in 2011, months after joining his colleagues in unanimously supporting an expansion of the Fed’s bond-buying program and then publicly voicing his doubts about expanding the Fed’s balance sheet.
• European shares, already depressed by the prospect of a looming global trade war, fell more than 1%, with the index again hovering near its lowest in three months. Bank of Italy Governor Fabio Panetta said the European Central Bank needed to “focus on the sluggishness of the real economy” and move official interest rates to a “neutral or even expansionary level.”
• Earlier in Asia, similar trade concerns initially weighed on China markets, with mainland stocks hitting two-week lows before returning to positive territory before the close. China's central bank is expected to leave benchmark lending rates unchanged on Wednesday, as rate cuts a month earlier dented bank profitability and the yuan came under renewed pressure from Trump's tariff threats.
• On Wall Street, stock futures fell ahead of trading on Tuesday, in line with worsening global risk sentiment.
• Chip giant Nvidia's results on Wednesday dominate the week's news, but Walmart reports its retail earnings later on Tuesday. Meanwhile, the New Year's predictions from the biggest investment banks are starting to trickle in.
• Goldman Sachs forecasts the S&P 500 will rise another 10% to 6,500 by the end of 2025, in line with its peer Morgan Stanley, amid continued growth in the U.S. economy and corporate earnings.
• Oil prices rose 3% after news that Ukraine was given permission to fire ATACMS missiles at Russia. Goldman Sachs and Morgan Stanley cut their forecasts for the Chinese market. Both banks expect the yuan to weaken and recommend investing in mainland China instead of Hong Kong, as the latter may not benefit significantly from China's economic support measures.
• Xiaomi reported record revenue from electric vehicles in the third quarter of 2024, amounting to $1.3 billion.
• Traders are making bullish bets on Nvidia shares ahead of its quarterly earnings report on Wednesday, WSJ. Nvidia shares fell after reports of problems with Blackwell AI servers ahead of the earnings call.
• Since taking over as CEO on September 27, 2023, PayPal's new CEO Alex Chriss has driven 50% profitability in the global payments business. At $85 per share, PayPal is back to levels not seen since February 2023.
• IBM to deploy AMD accelerators in IBM CLOUD. AMD shares rise on news.
• Revolut to start trading shares in the UK and EU with new licence Revolut will now compete with the likes of Trading 212, Freetrade, Hargreaves Lansdown, AJ Bell in the UK trading market.
• Samsung shares rise 7% after surprise $7 billion buyback plan - CNBC
• MicroStrategy (MSTR) bought 51,780 bitcoins for $4.6 billion at an average price of ~$88,627.
• MSTR to sell another $1.75 billion in convertible bonds to buy BTC.
• MSTR shares rose 13% yesterday and are reacting neutrally to the news. MicroStrategy has a market value of about $86 billion, and is now valued at almost three times the value of its Bitcoin holding of 331,200 Bitcoin. The company is the largest corporate holder of Bitcoin, with more than 1.5% of Bitcoin in circulation. The company previously announced plans to raise $21 billion over three years to buy Bitcoin. MSTR has become a symbol of the current Bitcoin fever.
• Morgan Stanley's latest report values the brain-computer interface market at $400 billion, signaling to investors that this revolutionary technology is the next big bet in medical technology.
• Trump team seeks to ease U.S. rules on self-driving cars. Members of President-elect Donald Trump’s transition team have told advisers they plan to make a federal framework for self-driving cars a priority. TSLA shares rose 6% on the news, while UBER fell 5%.
• Meta Adds Certain AI Features to Ray-Ban Meta Glasses in Europe After a brief delay, Meta says it has begun rolling out certain AI features to users of its Ray-Ban Meta AR glasses in France, Italy, and Spain. Starting today, people in those countries can summon the Meta AI assistant using their voice to get answers to common questions.
• Goldman Sachs (GS) plans to spin off its digital assets platform. Plans for the new company are in the early stages, but Goldman aims to complete the spinoff within the next 12 to 18 months, said Matthew McDermott, the bank's global head of digital assets.
• Newmont (NEM) sells Canadian gold mine for $850 million in latest deal.
• Boeing (BA) will lay off 2,199 workers in Washington state. BA shares rose 3%.
• SMCI shares rose 16% yesterday and are up another 40% premarket to $30. The company received an extension to delist. Super Micro filed a deferred reporting plan with Nasdaq, appointed a new auditor, BDO USA.
• Bitcoin ETF IBIT options trading will begin today, taking the power of investors and speculators to a new level. It will finally be possible to convert Bitcoin volatility into profitability.
• Foreign ownership of U.S. government bonds hit a fifth straight record, $8.6729 trillion in September from $8.5034 trillion in August. Britain, Canada, France and India bought more U.S. debt, offsetting Japan and China, the world's two largest holders of Treasuries, which reduced their holdings.
• Google could face an antitrust order to spin off Chrome. Bloomberg reported Monday that U.S. Justice Department lawyers will ask Judge Amit Mehta to force Alphabet to sell Chrome as a penalty after Google's search business was ruled an illegal monopoly in August. But that ruling appears unlikely for now.
GOOG shares fell 1% in after-hours trading.
• HOOD shares rose 8% yesterday.
• Needham analysts upgraded the stock to buy from neutral. The company stands to benefit from leadership changes at the SEC and looser regulation under Trump on cryptocurrency trading.
• CVS shares rose 5% yesterday. Wells Fargo analysts upgraded the pharmaceutical and health care company's stock rating to "outperform" from "equal weight." The company also named four new members to its board of directors after successful talks with hedge fund Glenview Capital Management.
• So far, everything is calm. We are monitoring Trump's appointments and the reports of NVDA and WMT.
Key events that should provide more guidance for U.S. markets later Tuesday:
- U.S. housing starts/building permits in October; Canada CPI inflation in October.
- G20 leaders' summit in Rio de Janeiro.
- Kansas City Federal Reserve President Jeffrey Schmid speaks.
- U.S. corporate earnings: Walmart, Medtronic, Keysight Technologies, Jacobs Solutions, Lowe's, etc.
Fundamental news
• Trump has picked Brendan Carr to chair the Federal Communications Commission. In a statement, Trump called Carr a “free speech champion who has fought against regulations that suppress Americans’ freedoms and hold back the economy.”
Carr has vowed to fight the “censorship cartel” that includes Facebook, Google, Apple, and Microsoft.
Carr, who is a China hawk, has repeatedly called TikTok a national security threat and advocated for a ban on the app. Trump has vowed to “save” TikTok from being banned.
• Candidates for German Chancellor from the Christian Democrats and the Greens promise Kyiv TAURUS. Vice Chancellor and Minister of Economy Robert Habeck of the Greens promised to send long-range cruise missiles TAURUS to Ukraine if elected to the post of head of government. Earlier, another candidate for the post of German Chancellor, Friedrich Merz of the Christian Democratic Union (CDU), made a similar promise. He accused Scholz of lacking a strategic vision.
• The EU has tightened sanctions against Iran over the transfer of drones and missiles to Russia. The restrictions include a ban on the export of components for UAVs, as well as sanctions against shipping companies involved in the transportation of weapons.
• French farmers are protesting. They are against the EU's free trade agreement with South American countries (Mercosur).
Farmers fear that the Mercosur agreement will lead to increased imports of beef, chicken, sugar and corn from Brazil and Argentina.
• The G20 summit is starting in Brazil. The summit will be attended by key political leaders, including Joe Biden and Xi Jinping, who is considered the central figure at the meeting. “We are not only concerned about geopolitical issues, but also about the fact that China’s economic and financial role is becoming extremely important in many aspects,” said an anonymous German official.
• Finland has reported a break in an underwater communications cable with Germany. A fault has been discovered in the C-Lion1 cable, which runs from Santahamina (Finland) to Rostock (Germany). The cable is about 1,200 kilometers long and runs close to the Russian Nord Stream gas pipeline.
• Moldova is abandoning its dollar peg. The National Bank of Moldova will use the euro as the base currency for setting the official exchange rate of the Moldovan leu, replacing the US dollar, starting January 2, 2025. The NBM believes that this change will reduce fluctuations in the exchange rate of the Moldovan leu against the euro, as well as the difference between the buying and selling rates of the euro. This will benefit the economy and help reduce currency exchange costs, the NBM noted.
• Hungary has been in recession for 2 years - Bloomberg. The country has a crisis with industry and agriculture. The country also has a weak currency and a high interest rate of 6.5%, which is the highest in the European Union.
• Confidence among U.S. home builders rose to a seven-month high in November, amid a jump in sales expectations and optimism that the Trump administration will ease regulatory burdens.