DAILY MARKET REPORTS
- U.S. stocks declined on Tuesday after President Donald Trump’s threat to move ahead with additional tariffs on Chinese goods dampened hopes of resolving the trade spat at the upcoming G20 Summit.
- Ahead of the meeting between the leaders of the world’s two largest economies, Trump expects to raise tariffs on $200 billion in Chinese imports to 25%, calling it “highly unlikely” that he would accept China’s request to hold off on the increase.
- Apple fell 1.6% and led the declines in the technology sector after Trump said tariffs could also be placed on laptops and iPhones imported from China.
- United Technologies tumbled nearly 6%, the most on the benchmark S&P 500 index. The industrial conglomerate was up in premarket trading after it announced plans to separate into three companies.
- Federal Reserve Vice Chairman Richard Clarida said the central bank should continue to gradually raise interest rates, but it is “especially important” to closely monitor new economic data as monetary policy is getting close to a neutral stance.
US FINANCIAL MARKET
Cyber Monday on track for U.S. online shopping record
- Cyber Monday was on track to bring in a record $7.9 billion in U.S. online sales, as millions of shoppers scoured for steep discounts on everything from Lego sets to big-screen TVs.
- Companies’ sales were up 20% from a year earlier as of 7 p.m. ET, including a surge in orders placed via mobile phones, Adobe Analytics found.
- Adobe said the nationwide average shopping basket was $138 so far for Cyber Monday, up 6% from last year.
- In another estimate, Mastercard SpendingPulse forecast a 25% jump in e-commerce sales to at least $3 billion, based on sales via the Mastercard payments network and estimates for other payment forms such as cash and check.
United Technologies to separate into three companies
- United Technologies said on Monday it would separate into three companies consisting of its aerospace, elevators and building divisions, making it the latest industrial conglomerate to pursue such a break-up.
- The decision follows the completion this month of United Technologies’ $30 billion acquisition of avionics maker Rockwell Collins, which gave enough scale to its aerospace business to be a standalone company.
- United Technologies said it planned to keep the newly acquired Rockwell Collins business, along with its Pratt and Whitney engines unit and aerospace systems.
- United Technologies said it will spin off its Otis elevators and Carrier air-conditioning businesses tax-free to shareholders.
Tesla China sales plunge 70% in October: auto industry body
- Tesla’s vehicle sales in China sank 70% last month from a year ago, underscoring how the Sino-U.S. trade war is hurting the U.S. electric carmaker.
- An official from China Passenger Car Association said data from the industry body showed Tesla sold just 211 cars in the world’s largest auto market in October.
- The electric carmaker, which imports all the cars it sells in China, said in October that tariff hikes on auto imports were hammering its sales there.
- In July, Beijing raised tariffs on imports of U.S. autos to 40% amid a worsening trade standoff with the United States.
Disney, Fox sued in U.S. for $1 billion over Malaysia theme park
- Walt Disney and Twenty-First Century Fox were sued for more than $1 billion on Monday by casino operator Genting Malaysia, which accused them of abandoning a contract related to its planned construction of the first Fox-branded theme park.
- Genting said “seller’s remorse” induced Fox, with Disney’s help, to breach its 2013 contract with Fox Entertainment Group to license intellectual property for Fox World, a proposed addition to its Resorts World Genting complex.
- According to the complaint, Disney is now “calling the shots,” and wants to end the contract because associating with a gaming company didn’t fit its “family-friendly” brand strategy.
US ECONOMY & POLITICS
Trump says he expects to raise China tariffs
- U.S. President Donald Trump said he expected to move ahead with raising tariffs on $200 billion in Chinese imports to 25% from the current 10% and repeated his threat to slap tariffs on all remaining imports from China.
- “The only deal would be China has to open up their country to competition from the United States,” Trump told the Wall Street Journal. “As far as other countries are concerned, that’s up to them.”
- Trump, who is due to meet Xi on the sidelines of a G20 summit in Buenos Aires this week, said that if negotiations were unsuccessful, he would also put tariffs on the rest of Chinese imports.
Consumer confidence hits 135.7 in November, vs. estimate of 135.9
- Consumer confidence slipped slightly in November but remained near historically strong levels, according to data released on Tuesday.
- The Conference Board’s Consumer Confidence Index slipped to 135.7 this month, slightly more than economists had expected.
- Economists expected the consumer confidence index to slip to 135.9 in November from 137.9 in October.
Home price gains shrink to the lowest level since January 2017
- Home values are still rising, but the gains have now shrunk to the lowest level since January 2017, as rising mortgage rates cut into affordability.
- Prices increased 5.5% annually in September, down from 5.7% in August, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index.
- The average rate on the 30-year fixed mortgage is now a full percentage point higher than it was one year ago, and affordability has fallen to the weakest level in over a decade.
Fed’s Clarida says interest rates are ‘much closer’ to neutral
- Federal Reserve Vice Chairman Richard Clarida expressed a cautious view Tuesday about how the central bank should proceed in raising interest rates.
- The Federal Open Market Committee’s newest member, in a speech delivered to bankers in New York, emphasized the importance of policymakers being “data dependent” in how they approach future moves.
- Assessing the current state of interest rates, Clarida said the FOMC, which sets Fed monetary policy, is “much closer” to a so-called neutral level that is neither stimulative nor restrictive than it was when the rate-hiking cycle began in December 2015.
U.S. lawmakers’ concern on Saudi Arabia prompts Pompeo, Mattis briefing
- Secretary of State Mike Pompeo and Secretary of Defense Jim Mattis will brief the U.S. Senate on Wednesday on the latest developments related to Saudi Arabia, Senator John Cornyn, the number two Senate Republican, told reporters on Monday.
- Many U.S. lawmakers, including some of President Trump’s fellow Republicans, have rejected Trump’s embrace of Saudi Arabia, calling for a strong U.S. response to the murder of prominent Saudi journalist Jamal Khashoggi, and the war in Yemen.
- Trump vowed last week to remain a “steadfast partner” of Saudi Arabia and said it was not clear whether Saudi Crown Prince Mohammed bin Salman knew about the plan to kill Khashoggi last month at the Saudi consulate in Istanbul.
Pelosi seen closing in on House speakership
- Nancy Pelosi was expected on Wednesday to become the Democratic nominee for speaker of the U.S. House of Representatives, giving her the inside track to reclaim the House’s top job in January, unless critics in her own party block her.
- The 78-year-old San Francisco liberal, a frequent target of Republicans on the campaign trail, faces a small faction of Democrats who are refusing to back her for the post in which she made history from 2007 to 2011 as the first woman speaker.
- No one has stepped forward to directly challenge her in Wednesday’s closed-door party election. If she wins, she will become the party’s nominee to be speaker for 2019-2020.
Race, Trump factors in final U.S. Senate race of 2018, in Mississippi
- Voters in Mississippi on Tuesday will decide a U.S. Senate special election runoff marked by racial controversy and capped by a last-minute visit by President Donald Trump to shore up the beleaguered Republican incumbent.
- Senator Cindy Hyde–Smith, a white former state lawmaker who was appointed to the seat in April, is still favored over black Democrat Mike Espy in the reliably Republican state, which has not sent a Democrat to the U.S. Senate since 1982.
- The last contest of the midterm election cycle, Tuesday’s election will not affect the balance of power in the new Congress that sits in January.
EUROPE & WORLD
EU’s top court will give ‘quick’ verdict on whether UK can reverse Brexit
- Europe’s top court said on Tuesday it would decide “quickly” whether Britain can unilaterally reverse its decision to leave the European Union, a ruling supporters of EU membership hope could lead to a second referendum and ultimately stop Brexit.
- Lawyers for a group of Scottish politicians want the European Court of Justice (ECJ) to interpret whether Britain can revoke its notice to withdraw from the EU under Article 50 of the Lisbon Treaty without agreement of the other 27 states.
- Article 50 of the EU treaty, which sets the rules for leaving the bloc, states that if a country decides to withdraw, it has two years to agree an exit deal, a deadline which can be extended only if the remaining EU states unanimously agree.
With parliament vote in doubt, PM tours UK to drum up support for Brexit deal
- Prime Minister Theresa May began a tour of the United Kingdom to drum up support for her Brexit divorce deal with the European Union, while her deputy said on Tuesday parliament might reject it if asked to vote on it now.
- May has warned skeptical lawmakers that if they reject the deal the world’s fifth largest economy will either leave without an agreement or Brexit could be delayed or even reversed. The vote in parliament is scheduled for Dec. 11.
- May sealed a deal with EU leaders on Sunday that would see Britain leave the bloc on March 29 with continued close ties, but now faces an uphill struggle to get it approved by a divided parliament where lawmakers of all parties and on both sides of the Brexit debate have criticized it.
Canada blindsided by GM closure, workers walk out in protest
- Hundreds of workers walked off the job and Canadian Prime Minister Justin Trudeau expressed “deep disappointment” after General Motors announced the closure of its Oshawa plant, catching governments and employees by surprise.
- GM said the closure affects 2,973 assembly line jobs in the Ontario city, out of the automaker’s Canadian workforce of 8,150.
- The end of automotive production in Oshawa is a blow to workers in Canada’s manufacturing heartland and comes as Trudeau’s Liberal government is trying to head off the economic impact of low oil prices in Western Canada.
- Trudeau is up for re-election next October.
Airbus hints at decision on new A321 version next year
- The incoming chief executive of Europe’s Airbus hinted at a decision next year on whether to launch the A321XLR, a longer-range version of its best-selling A321 single-aisle jet.
- Airbus is considering adding extra endurance to the longest-range version of its A321 with a new model called A321XLR as part of efforts to pre-empt a new jet being studied by U.S. rival Boeing
- Airbus’s proposed A321XLR would carry extra fuel and expand the range of the already enhanced A321LR version, which recently claimed a long-distance record for single-aisle jets.
EU trade chief urges U.S. to join talks on WTO reform
- The European Union called on Washington on Tuesday to start talking over ways of reforming the World Trade Organization to prevent a paralysis of the international body.
- The EU published proposals on Monday for reform of dispute settlement at the WTO that it has agreed with China, India and other countries, hoping to overcome U.S. objections voiced by President Donald Trump that have thrown the WTO into crisis.
- The WTO is scrambling to develop a plan for the biggest reform in its almost 24-year history after Trump brought the world’s top trade court to the brink of collapse by blocking appointments of its judges and threatening a U.S. withdrawal.
TODAY in HISTORY
- Alfred Nobel signed his last will, which established the Nobel Prize. (1895)
- Gerald R. Ford was confirmed by the Senate to become vice president, succeeding Spiro T. Agnew. (1973)
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