DAILY MARKET REPORTS
- The Dow Jones Industrial Average soared more than 400 points Monday after a cease-fire in the trade spat between the U.S. and China helped renew investor optimism following a rocky stretch for risk assets.
- Washington and Beijing agreed to a 90-day trade ceasefire during the G20 summit in Argentina on Saturday and President Trump said China has agreed to “reduce and remove” tariffs below the 40% level currently charged on U.S. vehicles.
- However, the White House also said that the existing 10% tariffs on $200 billion worth of Chinese goods would be lifted to 25% if no deal was reached within 90 days.
- The trade-sensitive industrials sector rose 1.87% with bellwethers Caterpillar and Boeing up about 5% each.
- The consumer discretionary sector gained 2.1%, helped by a 4.2% rise in shares of Nike and a 4.0% gain in Amazon.
- The Philadelphia Semiconductor index rose 2.8%, its highest in over a month, driven by strong gains in the shares of U.S. chipmakers, which have the highest revenue exposure to China.
- Oil prices also climbed sharply, with U.S. crude adding 4.5% to $53.20 a barrel after Russia and Saudi Arabia agreed to extend efforts by the OPEC to curb production and Canada’s oil-rich province of Alberta also ordered a limit on output.
US FINANCIAL MARKET
Qualcomm Won’t Revive NXP Deal, After White House Flags China Concession
- Qualcomm ruled out a revival of its abandoned takeover deal for NXP Semiconductor, a day after the White House said China would reconsider the merger as part of the truce in their broad trade battle
- Both Qualcomm and its Dutch counterpart had publicly moved on since abandoning the proposed deal.
- Qualcomm in September announced it would repurchase $16 billion in shares as part of a plan to buy back some $30 billion in shares after abandoning the takeover.
Crude Prices Surge After Russia, Saudi Arabia Agree to Extend Cuts
- Speaking on the sidelines of the G-20 summit in Buenos Aires late Saturday, Russian President Vladimir Putin said he had agreed with the Saudis to extend a deal to cut oil production through next year, though he declined to specify volumes.
- Brent crude, the global oil benchmark, was trading up 4.1% at $61.87 a barrel while West Texas Intermediate futures, the U.S. standard, rose 4.4% to $53.18 a barrel.
- The price rises came on the heels of a bearish two months for the oil market that saw both crude benchmarks fall more than 30% since reaching four-year highs at the start of October, amid signs of a burgeoning supply glut and softer demand.
GlaxoSmithKline to Acquire Tesaro for $4.16 Billion
- GlaxoSmithKline has agreed to buy oncology-focused pharmaceutical company Tesaro for about $4.16 billion in cash as it looks to expand its oncology pipeline of commercially viable drugs.
- The British pharmaceutical company said it would offer $75 a share in cash to Tesaro shareholders, a 62% premium from its share price on last Friday’s close.
- Tesaro is a commercial-stage biopharmaceutical company that is best known for Zejula, a treatment for ovarian cancer approved in both the U.S. and Europe for the treatment of adult patients with recurrent ovarian cancer.
Apple Will Wait Until at Least 2020 to Release a 5G iPhone
- Apple plans to hold off until at least 2020 before offering an iPhone that can connect to the next generation of high-speed phone services coming next year, according to people familiar with its plans.
- The decision to sit on the sidelines may be related to the company’s feud with Qualcomm, the leader in 5G-enabled chips, and its alliance instead with Intel, which won’t have chips available in time to support 2019 phones.
- As with 3G and 4G, the two previous generations of mobile technology, Apple will wait as long as a year after the initial deployment of the new networks before its main product gets the capability to access them.
Verizon, Samsung to release 5G smartphones in U.S. in 2019
- Verizon and Samsung Electronics said they plan to release 5G smartphones in the first half of 2019 in the United States.
- Apple’s delay makes it easier for Samsung and Verizon to win customers who are eager to connect to 5G networks, which will provide a leap forward in mobile data speeds when they are introduced in 2019.
- 5G can offer data speeds up to 50 or 100 times faster than current 4G networks.
Toyota, Honda U.S. sales fall in November
- Sales of new Toyota and Honda cars in the United States both fell in November, the Japanese carmakers said on Monday, pointing to an overall dip in U.S. industry numbers last month in the face of rising car prices and interest rates.
- Toyota sales, which rose 1.4% in October, fell about 0.6% to 190,423 units last month, due to decreased demand for its Prius and Camry sedans, the company said.
- Honda said its sales fell 9.5% to 120,534 vehicles, more than doubling the pace of decline as it was hurt by lower volumes on passenger cars like its Civic.
Amazon Tests Its Cashierless Technology for Bigger Stores
- Amazon.com is testing its cashierless checkout technology for bigger stores, and if successful, the strategy would further challenge brick-and-mortar retailers racing to make their businesses more convenient.
- The systems track what shoppers pick from shelves and charges them automatically when they leave a store.
- It is unclear whether Amazon intends to use the technology for Whole Foods, although that is the most likely application if executives can make it work. Amazon has previously said it has no plans to add the technology to Whole Foods.
Losses at Einhorn’s hedge fund Greenlight grow in November
- Billionaire investor David Einhorn told investors on Friday that losses at his hedge fund Greenlight Capital grew this month, leaving the fund down nearly 28% for the year.
- The firm sent an investor update after the close of business on Friday informing clients the fund lost 3.6% net of fees in November, bringing the loss for the first 11 months of the year to 27.7%.
US ECONOMY & POLITICS
Tariff Truce With China Eases ‘Cold War’ Fears
- The U.S.-China cease-fire over tariffs was greeted with relief by businesses around the world as the two largest economies eased concerns over a possible new Cold War.
- The Trump administration agreed to hold back on lifting tariffs on $200 billion of goods to 25% from 10%.
- China has pledged to undertake an American buying spree that the Trump administration said would include agriculture and energy, which would likely lift prices of soybeans and natural gas.
Trump: China to ‘Reduce and Remove’ Tariffs on American Cars
- China has agreed to cut tariffs on American-made cars, President Trump said on Twitter, apparently signaling Beijing’s readiness to make concessions to prevent further escalating trade tensions.
- Chinese officials didn’t immediately confirm or deny Mr. Trump’s assertion, with a Foreign Ministry spokesman on Monday sidestepping questions on auto tariffs.
- The concession would be a notable one on Beijing’s part: U.S. automobile exports to China were worth $9.5 billion last year, according to the U.S. Department of Commerce, topped only by aerospace and agriculture exports.
US factory activity jumps in November
- The ISM manufacturing PMI index hit 59.3 in November, better than the 57.8 expected by economists. The result was up from October’s reading of 57.7.
- A reading above 50 indicates growth in manufacturing, which accounts for about 12% of the U.S. economy.
Construction spending falls for third month
- U.S. construction spending fell for the third straight month in October as outlays on private projects declined, government data showed on Monday.
- Construction spending decreased 0.1% to $1.31 trillion. Economists had forecast construction spending rising 0.4% in October.
- Construction spending increased 4.9% on a year–on–year basis.
Washington invites German car bosses for trade talks
- Executives from BMW, Daimler and Volkswagen have been called to talks with White House economic adviser Larry Kudlow.
- Although the European Commission handles trade negotiations on behalf of the common trading bloc, the Trump administration has summoned auto bosses as part of a campaign to “rebalance” global trade flows.
- The German car bosses will underline the European Commission’s plea to cut tariffs on cars and to explain the importance that German industry plays as a net exporter of vehicles from the United States.
EUROPE & WORLD
Tencent Music presses play on $1.2 billion U.S. IPO
- Tencent Music Entertainment launched its hotly-anticipated U.S. initial public offering (IPO) of up to $1.2 billion on Monday after global stock markets were boosted by a truce brokered by U.S. and Chinese leaders in their trade conflict.
- At $1.23 billion, the IPO would be one of the largest by a Chinese company in the United States this year, behind the $2.4 billion raised by video streaming company iQiyi in March and the $1.6 billion garnered by online group discounter Pinduoduo in July.
- The company is targeting a valuation of between $22 billion and $25 billion, roughly on par with that of its Swedish music streaming counterpart Spotify Technology, which went public in April and has a market value of $24.3 billion.
Qatar to Leave OPEC as Cartel Pressured to Cut Production
- Qatar said it plans to leave the Organization of the Petroleum Exporting Countries, a surprise decision for a member that has long played a key role inside the cartel, but has more recently clashed with de facto leader Saudi Arabia.
- The move “reflects Qatar’s desire to focus its efforts on plans to develop and increase its natural gas production from 77 million tons per year to 110 million tons in the coming years,” he was quoted as saying.
G-20 Agrees to Joint Statement, With Compromises
- After late nights of difficult negotiations, the Group of 20 issued a joint statement that affirms the importance of the multilateral trading system, with concessions in the language to the U.S. and China on protectionism and unfair trading practices.
- As recently as Friday, European negotiators thought the talks would fall apart. They saw reports that day that U.S. national security adviser John Bolton considered pulling out of the G-20 summit statement.
- The compromise text acknowledges that trade and investment are “important engines of growth, productivity, innovation, job-creation and development” but adds that “the system is currently falling short of its objectives and there is room for improvement. We therefore support the necessary reform of the WTO to improve its function.”
‘State of insurrection’ as fuel tax riots engulf central Paris
- Rioters ran amok across central Paris on Saturday, torching cars and buildings, looting shops, smashing windows and clashing with police in the worst unrest in more than a decade, posing a dire challenge to Emmanuel Macron’s presidency.
- In Paris, police said they had arrested almost 300 people while 110 were injured, including 20 members of the security forces.
- The protests have caught Macron off-guard just as he was trying to counter a fall in his popularity rating to 20%.
- His unyielding response has exposed him to charges of being out of touch with ordinary people, particularly in rural villages and the provincial hinterlands.
UK government will not pull December 11 Brexit deal vote, minister says
- Next week’s parliamentary vote on British Prime Minister Theresa May’s deal will go ahead, interior minister Sajid Javid said on Monday, rejecting media speculation that the government might not go ahead with the vote because they could lose it.
- Opposition parties, the small Northern Irish party that props up May’s government as well as many lawmakers in her own Conservative Party have said they would vote against the deal on Dec. 11.
- Javid also said details of Britain’s post-Brexit immigration system would not be published before the vote but he said it would bring net migration down to a sustainable level.
TODAY in HISTORY
- Illinois became the 21st state in the United States. (1818)
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