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STOCKS, BONDS LOWER AS MARKETS CONTEMPLATE TRUMP’S POLICIES

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STOCKS, BONDS LOWER AS MARKETS CONTEMPLATE TRUMP’S POLICIES

  • President-elect pledges to slash taxes, boost infrastructure spending being weighed against impact of protectionist policies on world economy.
  • The dollar index reached to a 14-year high.
  • Bond prices continued to fall after a brief respite Tuesday.
  • The expectation that inflation will pick up under a Trump administration has hurt bonds, because it means central banks may need to start reversing years of ultraloose policies, which have been a boon for fixed income.
  • The 10-year Treasury yield edged up to 2.248%.
  • Yields on German and U.K. 10-year debt, which move opposite to prices, rose to 0.317% and 1.402%, respectively.
  • Target was up 9% after the retailer reported a higher-than-expected quarterly profit and raised its full-year forecast.
  • Lowe’s fell 3.7% after the company cut its full-year profit forecast for a second time.

US FINANCIAL MARKET

Dollar index surges to 14-year high

  • The dollar soared to its highest since April 2003 against a basket of currencies on Wednesday.
  • Trump’s victory has raised concern about further, potentially destabilizing victories for populists in elections across Europe in the coming year, and a number of banks and traders have predicted the euro will head back toward the lows around 1.05 at which the last dollar rally stalled last year.

Fed Rate-Hike Odds Approach 100% in Anticipation of Trumponomics

  • Analysts spent early November warning a Trump victory in the U.S. presidential election would make the Federal Reserve less likely to raise interest rates.
  • What happened instead is that it made a December increase a near certainty.
  • Traders assign about a 94% probability, the highest level this year, to a Fed boost at its final meeting for the year on Dec. 13-14, futures contracts indicate.
  • Trump’s spending plans, and Republican control of Congress, are causing the market to revise higher its outlook for the pace of Fed rate increases.

Apple Considers Wearables Expansion with Digital Glasses

  • Early product testing comes as company searches for next hit.
  • Apple is weighing an expansion into digital glasses, a risky but potentially lucrative area of wearable computing, according to people familiar with the matter.
  • While still in an exploration phase, the device would connect wirelessly to iPhones, show images and other information in the wearer’s field of vision, and may use augmented reality (AR).
  • Should Apple ultimately decide to proceed with the device, it would be introduced in 2018 at the earliest.

Target Boosts Forecast as Profit Rises

  • Strong back-to-school performance helps buoy the retailer.
  • Target has been struggling to find an ecommerce strategy to compete with Wal-Mart and Amazon.
  • Digital growth had decelerated for two consecutive quarters, slowing to 16% during the second quarter, but picked up to 26% in the recent quarter.
  • For the year, Target now expects adjusted per-share earnings in a range of $5.10 to $5.30, compared with prior guidance of $4.80 to $5.20.
  • The results come as Target has been trying to fix its grocery business, which generates about $18.5 billion in annual sales for the retailer.
  • Over all for the quarter, Target earned $608 million, up from $549 million a year earlier.
  • Sales fell 6.7% to $16.44 billion from $17.61 billion a year ago, reflecting the sale of its pharmacy business to CVS.

Lowe’s Cuts Guidance amid Traffic Slowdown

  • Sales at stores open at least a year grew 2.7%, below analyst expectations of 2.9%.
  • For 2016, the company now expects earnings of about $3.52, below the $4.06 a share it expected previously.
  • Lowe’s expects comparable-store sales to rise 3% to 4%, it previously expected 4% growth.
  • Total sales are expected climb 9% to 10%, compared with 10% growth before.
  • Revenue climbed 9.6% to $15.74 billion. Analysts had projected $15.86 billion in revenue.

Facebook Says It Found More Miscalculated Metrics

  • Facebook said it has uncovered several more miscalculated metrics related to how consumers interact with content from marketers and publishers.
  • Social media giant plans to form measurement council and provide more third-party data verification for partners.

Snapchat Parent Files for $25 Billion IPO

  • Messaging company, now called Snap, could be one of the highest-profile stock debuts in years.
  • An IPO, expected as early as March, could value Snap at between $20 billion and $25 billion.
  • The Wall Street Journal reported last month that the valuation could be $25 billion or more.
  • Snapchat app reaches more than 150 million users daily, including 41% of 18- to 34-year-olds in the U.S., according to Nielsen.
  • The company’s revenue has grown quickly since it started running ads in 2014.
  • Snap told investors earlier this year that it expected revenue of between $250 million and $350 million in 2016 and as much as $1 billion in 2017.

Endologix Provides Update on Nellix PMA Process

  • Endologix, developer and marketer of innovative treatments for aortic disorders, announced today that the U.S Food and Drug Administration (FDA) has requested the Company provide 2-year patient follow-up data from its study of the Nellix.
  • The Company expects these data to be available and submitted to the FDA in the second quarter of 2017, followed by a possible FDA advisory panel meeting by the end of 2017, and potential FDA PMA approval of Nellix in the second quarter of 2018.

IEA Sees Peak Oil Demand After 2040

  • Under the IEA’s central scenario in its World Energy Outlook to 2040, global oil demand is set to grow almost 12% to 103.5 million barrels a day in 2040, compared with 92.5 million barrels a day in 2015.
  • Demand will keep rising for longer because there are scant alternatives to oil, says group’s chief Fatih Birol.
  • Oil demand could peak by 2020 if a more stringent approach on climate change is taken, the IEA said.
  • Donald Trump in the U.S. The president-elect has called climate change a hoax and has said he would withdraw from the Paris deal.
  • Today 81% of global energy comes from fossil fuels and in 2040, even if all the pledges are implemented, this share will go down to 74%.

Janus’ Gross says Trump will be one-termer, in failure for populism

  • “Populism Takes a Wrong Turn,” Gross also said “there is no new Trump bull market in the offing,” and that global diversified investors should be “satisfied” with 3 percent to 5 percent annual returns.
  • “The Trumpian Fox has entered the Populist Henhouse, not so much by stealth but as a result of Middle America’s misinterpretation of what will make America great again,” Gross wrote.
  • “[Trump’s] tenure will be a short four years but is likely to be a damaging one for jobless and low-wage American voters,” Gross added. “I write in amazed, almost amused bewilderment at what American voters have done to themselves.”
  • Gross said he did not vote for the Republican Trump or Democratic rival Hillary Clinton.

The $19.8 Trillion Hurdle Facing Higher U.S. Inflation

  • The national debt could increase $5.3 trillion over a decade should Mr. Trump cut taxes and boost spending as he has said during the campaign, according to the nonpartisan Committee for a Responsible Federal Budget.
  • Yields have surged since the U.S. presidential election on the view that Mr. Trump’s tenure will generate a period of rising inflation.
  • $19.8 trillion debt load has grown steadily over time.
  • Between 1952 and 1999, it took about $1.70 in nonfinancial debt for GDP to grow by $1.
  • In the year through June, it took $4.90 to do the same.

U.S. Postal Service Loss Widens as Higher Costs Offset Revenue Growth

  • Growth in shipping, package volume led to higher spending.
  • Over all, USPS reported a loss of $5.6 billion, compared with a year-earlier loss of $5.06 billion.
  • USPS has been competing for share in the growing market for package delivery spurred by an increase in e-commerce against shipping giants UPS and Federal Express, which also have been hit by higher costs.
  • USPS said its total revenue improved by 3.8% to $71.43 billion.
  • Operating expenses increased 4.2% as the growth in shipping and packages volume contributed to higher labor and transportation costs.

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US ECONOMY & POLITICS

U.S. Industrial Production Flat in Warmer-Than-Usual October

  • Utilities production dropped sharply, offsetting modest gains in factory output.
  • Production fell 0.2% in September.
  • Total production fell 0.9% over the past year.
  • Capacity utilization, a gauge of slack in the industrial economy, ticked down 0.1 percentage point to 75.3% last month.
  • Economists had expected an October reading of 75.5%.

U.S. Producer Prices Hold Flat in October

  • Inflation pressures remain mild.
  • The producer-price index (PPI), measuring changes in the prices that U.S. companies receive for their goods and services, was unchanged on a seasonally adjusted basis in October compared with the prior month.
  • From a year earlier, prices rose 0.8%. That was the strongest annual gain since December 2014, but still historically soft.
  • Excluding often-volatile prices for food and energy, the index fell 0.2% last month.
  • From a year earlier, those core prices were up 1.2%.

Home Builder Sentiment Holds Steady

  • U.S. builders say they are upbeat about the market for single-family homes, reflecting steady sales and a stable economy.
  • The NAHB’s housing-market index stood at 63 in November, unchanged from the prior month.
  • A number over 50 indicates more builders view conditions as good than poor.

California Ports See Delayed Import Surge as Hanjin Unwinds

  • A strong October followed a soft September at the Los Angeles and Long Beach container shipping gateways, adding up to a soft start to the fall.
  • Container import volume at the ports of Los Angeles and Long Beach, which together handle the largest share of U.S. inbound trade in goods, expanded 7.1% and exports jumped 11.4%.
  • The shipping volume marked a turnaround from a September in which the California ports reported fading import volume, including a 15% decline at Long Beach, as several Hanjin container ships sat offshore because the South Korean shipping line feared they would be seized by creditors after the company went into Korea’s version of bankruptcy protection in late August.

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EUROPE & WORLD

EU Cracks Budget Whip over Italy, Spain and Portugal

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  • Brussels says several eurozone fiscal programs risk breaching rules.
  • EU’s executive arm said the 2017 spending plans of Italy, Spain, Portugal, Belgium, Cyprus, Lithuania, Slovenia and Finland risk violating the bloc’s spending rules and urged them to ensure they meet EU targets.
  • The EU introduced stricter fiscal rules for countries using the euro in 2013 as a response to the sovereign-debt crisis.
  • The main goal of the rules is to keep public debt in check.
  • Under the pact, eurozone governments have to bring their deficits to below 3% of GDP, while debts can’t be higher than 60% of GDP.
  • But the rules allow some budget items to be stripped out, including the cost of extraordinary events.

China Internet Giant Tencent’s Profit Jumps on Games Gains

  • Tencent said net profit for the quarter rose to 10.65 billion yuan ($1.55 billion) from 7.44 billion yuan a year earlier, while revenue jumped 52% to 40.39 billion yuan.
  • Tencent, one of Asia’s most valuable technology companies with a market capitalization of roughly $240 billion, generates most of its revenue by distributing games and ads through its popular social-networking platforms such as the WeChat messaging application, which has more than 800 million users.

Microsoft offers EU concessions over its $26 billion LinkedIn bid

  • The move came after the EU competition enforcer expressed concerns about the deal at a meeting with Microsoft executives last week..
  • The Commission, which will rule on the deal by Dec. 6, did not provide details. It is expected to seek feedback from rivals and customers before deciding whether to accept the concessions, demand more or open a full investigation.

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TODAY in HISTORY

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Oklahoma became the 46th state (1907)

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President Nixon signed the bill authorizing the construction of the Trans-Alaska Pipeline (1973)

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