Baltic Dry Index 1372 +33 Brent Crude 61.67
“We hold these truths to be self evident: that all
men are created equal; that they are endowed by their Creator with certain
inalienable rights; that among these are life, liberty, and the pursuit of
happiness outside of the EUSSR.”
With grateful thanks to the writers of the US
Declaration of Independence.
From America, to
Europe, to China, it was a very bad week to be long stocks. A trade war truce
announced by Presidents Trump and Xi at the start of the week lay in ruins by
Friday, with President Trump seeming to have duped President Xi. A dodgy
year-end lies directly ahead for global stock funds if a wave of redemptions
now rolls in.
Even an alleged leak
from the Fed to the Wall Street Journal about a halt next year to interest rate
rises, wasn’t enough to tempt buyers. And the week ended badly politically for
President Trump via his former lawyer. A newly Democrat controlled House goes
gunning for President Trump starting next month.
In Europe, France buckled
before three weeks of rioting and we await today’s protests again. President
Macron’s polling hit a new low of 18 percent, while rumours now circulate about
his presidency. Italy and the EU are still locked in a budget fight. In Britain, Mrs May’s government is headed to
a well deserved defeat over her ludicrous 585 page binding exit contract. No one
should ever sign a 585 page contract.
But next week Europe’s
“great leaders” meet for their final great brawl of the year. Can the EU survive a 2019, bringing Brexit,
rising interest rates, a stock rout, a global slow down and a coming massive
clash between China and America? Will 2019 be the year the European Union dies?
In China, a slowing
economy is about to get hit with President Xi’s response to President Trump’s
Huawei treachery. I suspect we will not see year-end before we see his
response.
December for stocks
is off to a very bad start. It looks likely to get worse for far longer, before
lower repriced stocks bottom out.
Dow tumbles more than 500 points, wipes out gain for the year to cap wild week on Wall Street
Stocks dropped sharply on Friday, concluding what has been a wild week for Wall Street. A weaker-than-expected jobs report and China-U.S. trade tensions sent the Dow Jones Industrial Average lowerby 558.72 points to 24,388.95 and erased its gains for the year.
At one point, the Dow was up more than 8 percent for 2018.
The S&P 500 pulled back 2.3 percent to 2,633.08 and also turned negative for the year. The Nasdaq Composite dropped 3.05 percent to close at 6,969.25. Shares of large-cap tech companies led the way lower. Facebook, Amazon, Netflix and Google-parent Alphabet all traded lower. Apple's stock also fell 3.6 percent — erasing its gains for the year — after Morgan Stanley cut its price target on the tech giant's shares, citing weakening iPhone sales.
For the week, the major indexes all dropped more than 4 percent.
More
Dow closes down 550 points as stocks post biggest weekly fall since March
By MarketWatch Published: Dec 7, 2018 5:00 p.m. ET
Benchmarks off to worst December start since 2008
U.S. stocks closed sharply lower on Friday as a lack of concrete progress toward reducing U.S-China trade tensions bolstered risk-off sentiment and overshadowed the November employment report.The Dow Jones Industrial Average DJIA, -2.24% fell 558.72 points, or 2.2%, to close at 24,388.95, the S&P 500 index SPX, -2.33% retreated 62.87 points, or 2.3%, to 2,633.08, while the Nasdaq Composite Index COMP, -3.05% slumped 219.01 points, or 3%, to finish at 6,969.25.
Ten of 11 sectors in the S&P 500 lost ground Friday, with only utilities advancing, while all 30 components of the Dow traded lower.
For the week, the Dow fell 4.5%, the S&P 500 retreated 4.6%, and Nasdaq tumbled 4.9%. It was the biggest weekly percentage decline for all three benchmarks since March, while also marking the worst start to a December since 2008, according to Dow Jones Market Data.
The slump pushed the S&P 500 and Dow back into negative territory for 2018, while the Nasdaq is clinging to a 1% year-to-date gain.
Concerns
over global trade continue to weigh on investor sentiment, even after a Friday
morning report from the Labor Department that showed healthy November job gains
for the U.S. economy and the fastest pace of wage growth in nearly 10 years.
Despite
efforts by the Trump administration and its Chinese counterparts to paint an
optimistic picture of ongoing negotiations aimed at reducing trade tensions,
investors are demanding more evidence that the two sides will avoid the
imposition of new and expanded tariffs in 2019, market participants say. Once
again, a pair of administration officials gave opposing views about those
negotiations in separate television appearances Friday.
The effect
of trade concerns on the markets can be observed in sector-by-sector
performance figures, as retail trade took the heaviest losses on Friday, down
6.5%, according to FactSet.
More
China's November export, import growth shrinks; surplus with U.S. record high
December
8, 2018 / 4:48 AM
BEIJING
(Reuters) - China’s exports increased far less than expected in November,
apparently indicating that slowing global demand outweighed any gains from a
rush to ship goods to the United States ahead of a now-postponed Jan. 1
increase in Washington’s import tariffs.
Import
growth also fall sharply in November to the slowest pace since October 2016,
which signals continuing weakness in domestic demand and could prompt Chinese
policymakers to increase efforts to lift it to aid the slowing economy.
The November
headline trade numbers came out less than a week after Presidents Donald Trump
and Xi Jinping agreed to a 90-day truce delaying the planned Jan. 1 U.S. hike
of tariffs to 25 percent from 10 percent on $200 billion of Chinese goods while
they negotiate a trade deal.
November
exports rose 5.4 percent from a year earlier, Chinese customs data showed on
Saturday, the weakest performance since a 3 percent contraction in March.
Exports had
risen 15.6 percent in October from a year earlier, and a Reuters poll of 26
economists had forecast November shipments from the world’s largest exporter
would increase 10 percent.
Growth in
imports for November slowed sharply to 3.0 percent from a 21.4 jump in October,
and far missed analysts’ forecast of 14.5 percent.
This
year, China’s overall export growth has been stronger than expected in almost
every month. Many economists attributed strength in recent months to
front-loading of cargoes to the United States in anticipation of even higher
tariffs.
Also,
the Chinese yuan CNY=CFXS
has weakened more than 5 percent against the dollar so far this year, helping
to make Chinese products more competitive abroad.
More
“The
Brexiteers outside looked from May to Merkel, and from Merkel to May and from May to Merkel again; but
already it was impossible to say which was which.”
With
apologies to George Orwell, Animal Farm.
Eurostat confirms euro zone GDP, employment growth slows in third quarter
December 7, 2018 / 10:10 AM
BRUSSELS (Reuters) - The euro
zone economy grew at its slowest pace in four years in the third quarter of
2018, while employment growth also eased during the period, data released by
the European Union statistics agency Friday showed, confirming earlier
estimates.
Euro zone gross domestic
product (GDP) rose by 0.2 percent in the July-September period, Eurostat
reported, confirming its earlier preliminary estimates.
This was the slowest rate of
economic growth since the second quarter of 2014 and a marked slowdown from 0.4
percent growth in the second quarter.
On the year, the GDP growth
rate in the 19-country currency bloc was 1.6 percent, Eurostat said, revising
down its earlier estimate of a 1.7 percent expansion.
The economy of Germany, the
euro zone’s largest, contracted by 0.2 percent on the quarter, France’s was 0.4
percent stronger, while Italy’s GDP shrunk by 0.1 percent.
In a separate release on
Friday, Eurostat confirmed its previous estimates on employment growth in the
euro zone.
The number of people employed
in the euro zone increased by 0.2 percent quarter-on-quarter and by 1.3 percent
year-on-year, compared with rates of 0.4 and 1.5 percent respectively in the
second quarter.
Irish economy could fall seven percent in no-deal Brexit - Times cites leaked UK document
December 7, 2018 / 7:54 AM
LONDON (Reuters) - Leaked
British government papers indicate Ireland could face food shortages and a 7
percent drop in gross domestic product if the United Kingdom leaves the
European without a deal, The Times newspaper reported on Friday.
The United Kingdom is due to
leave the EU on March 29 yet Prime Minister Theresa May has yet to get her
Brexit deal approved by the British parliament.
France braces for trouble, Macron to address 'yellow vest' anger
December
7, 2018 / 6:44 AM
PARIS
(Reuters) - France hunkered down for another wave of potentially violent
protests on Saturday as embattled President Emmanuel Macron planned to address
the nation next week over public fury at the high cost of living, senior allies
said.
Interior
Minister Christophe Castaner said the three-week-old “yellow vest” revolt had
“created a monster” and vowed police would have no tolerance for violence, with
much of Paris in lockdown and tens of thousands of police deployed nationwide.
Named after
the fluorescent safety vests that all French motorists must carry, the
protesters are billing their planned action on Saturday as “Act IV” of worst
unrest seen in the capital since the 1968 student riots.
Castaner
warned that radicals would likely again infiltrate the protest movement - a
backlash against high living costs but also, increasingly, a revolt against
Macron himself, including his perceived loftiness and reforms favoring a
moneyed elite.
“These last
three weeks have created a monster,” Castaner told reporters. “Our security
forces will respond with firmness and I will have no tolerance for anyone who
capitalizes on the distress of our citizens.”
Some 89,000
policemen will be on duty nationwide to forestall a repeat of last Saturday’s
destructive mayhem in exclusive central districts of Paris. Police in Paris
will be backed up by armored vehicles equipped to clear barricades.
More
In an ill wind and
all that, Parisian shoppers can head over to relatively peaceful London, where a
weak Pound has set off a tourist and retail boom. It certainly beats getting water
cannoned, batten charged, and tear gassed, doing the Christmas shopping.
The difference between a misfortune and a calamity
is this: If Mrs, May fell into the Thames, it would be a misfortune. But if
someone dragged her out again, that would be a calamity.
With apologies to Benjamin Disraeli and Gladstone.
The monthly Coppock Indicators finished November.
DJIA: 25,538 +157 Down. NASDAQ:
7,331 +205 Down. SP500: 2,760 +129 Down.
All three slow indicators are
signalling more correction to come, although not necessarily ahead of the
year-end. However, if a tidal wave of stock fund redemptions hit in December,
2018 could end in a great rising wave of panic selling into a generally thin
markets trading at year-end.
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