Trump tanks stocks Presented by U.S. Bank

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Quick Fix

Markets tank on Trump talk — We hate to say we told you so. OK, we actually love it. But as MM wrote, President Trump’s 2020 hopes depend in part on the China trade war ending and USMCA passing or at least the existing NAFTA staying in place. One of those took a big hit Tuesday with Trump pivoting back to saying he’d be fine waiting for a China deal until after the election.


That means the next round of consumer tariffs would hit on Dec. 15 and the reduction in existing tariffs slamming farmers, consumers, retailers and manufacturers would remain and perhaps rise. Trump also quite comically said he didn’t really care about the immediate 400-point Dow drop after his China comments.

Trump, in fact, is obsessed with markets and tweeted just days ago about the market increase since he first instituted tariffs (never mind the increase came in spite of tariffs). He asks advisers regularly what is moving markets and follows movements in real time. The free-traders inside the administration hope Trump is just trying to rattle the Chinese to make a better deal.

But no one really knows which way Trump will go here, not even Trump. He’s partly sold on the idea that continuing to hammer away at China will work for him in 2020. And partly sold on the idea that he needs to actually deliver a result that gooses markets, gets farmers off his back and doesn’t continue to weigh on U.S. and global GDP.

GOOD WEDNESDAY MORNING — Email me on [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on [email protected] and follow her on Twitter @AubreeEWeaver.

Driving the Day

House Financial Services has a hearing on prudential regulators at 10:00 a.m. featuring NCUA Chairman Rodney Hood; FDIC Chair Jelena McWilliams; and Randal Quarles, vice chairman of supervision at the Fed …

There is a small chance it could get overshadowed by a House Judiciary Committee hearing, also at 10:00 a.m., on possible impeachment articles against the President of the United States Time will tell. …

Trump continues multiple NATO meetings … ADP private employment at 8:15 a.m. expected to show a gain of 140K … ISM non-manufacturing at 8:15 a.m. expected to tick down to 54.5 from 54.7 …

TRUMP TAKES LEGAL HIT ON FINANCIAL RECORDS — Our Victoria Guida: “Trump suffered another loss … in his effort to block House Democrats from obtaining his financial records, a matter that is now likely to make its way to the Supreme Court.

“A federal appeals court ruled 2-1 that Deutsche Bank and Capital One should comply with subpoenas from the House Financial Services and House Intelligence committees seeking information about Trump’s finances, upholding a decision by a federal court in May.”

CONSUMER CONFIDENCE BUMPS UP — Via Morning Consult: “U.S. consumer confidence increased yet again last week for the seventh consecutive week. While we saw a slight drop in confidence on Black Friday, the longer term trends over the past seven weeks indicate that consumers increasingly feel upbeat about their personal finances and business conditions in the country as a whole. When you combine increased confidence with solid gains in wages and salaries, the picture for holiday shopping looks promising.”

Markets

STOCKS FALL FOR 3RD STRAIGHT DAY — AP's Alex Veiga: "Stocks closed broadly lower and bond prices rose sharply on Wall Street Tuesday after … Trump cast doubt over the potential for a trade deal with China this year. Technology companies, banks and industrial stocks accounted for much of the sell-off, which extended the S&P 500’s losing streak to a third day. Utilities and real estate stocks rose as traders favored less-risky assets."

WHEN TRUMP TWEETS ON CHINA, BUY CANADIAN STOCKS — Bloomberg's Divya Balji and Eddie van der Walt: "There’s no question about it — global stock markets are roiled when … Trump tweets about the U.S.-China trade negotiations. Here’s one way to hedge against all that volatility: Buy Canadian stocks. Just like that, clients get exposure to a developed $2 trillion market with a stable government and one more thing: a gold and silver haven.

MORE VOLATILITY AHEAD — Mohamed A. El-Erian on Bloomberg Opinion:

“The three-day sell-off in U.S. stocks … is a timely reminder to investors that they need to temper a bias toward short-term optimism with the recognition of unusual uncertainties stemming from the global system. It also raises interesting questions as to the best tactical response to what I believe will be increased volatility leading up to the 2020 elections, if not beyond.”

TWITTER PLANS FIRST SALE OF HIGH-YIELD DEBT — WSJ's Sam Goldfarb and Daniel Kruger: "Twitter Inc. is marketing its first-ever unsecured bonds, aiming to raise $600 million as it tries to bounce back from disappointing third-quarter earnings. The social-media company held a call with investors Tuesday afternoon, with the goal of selling the bonds later in the week, investors said.”

Fly Around

McCORMICK TO BE SOLE CEO OF BRIDGEWATER — WSJ’s Rachael Levy: “Bridgewater Associates said Eileen Murray plans to step down as co-chief executive in March, culminating a sometimes rocky leadership transition at the world’s largest hedge fund. David McCormick, who has shared duties with Ms. Murray since 2017, will become sole CEO, the firm said Tuesday.

“Bridgewater, which manages $160 billion in assets, said the change marks the end of founder Ray Dalio’s succession planning. … Mr. McCormick, 54, is married to Dina Powell, a longtime Goldman Sachs executive who worked as deputy national security adviser to the Trump White House.”

HOUSE GOP PRESSES FED ON DEREGULATION — Our Victoria Guida: “House Financial Services Committee Republicans are pressing the Federal Reserve's leaders on how they plan to further ease capital requirements for the largest banks.

“‘We write to inquire about the status of the Federal Reserve Board's ongoing review of the post-crisis regulatory framework,’ they said in a Nov. 19 letter led by Reps. Trey Hollingsworth (R-Ind.) and Patrick McHenry (R-N.C.), the panel's top Republican. The lawmakers publicized the letter ahead of Fed Vice Chair of Supervision Randal Quarles' testimony before the committee on Wednesday.”

ALPHABET MAKES CHANGES AT THE TOP — WSJ’s Allison Prang: “Google Chief Executive Sundar Pichai was named CEO of Google’s parent company, Alphabet Inc. Google founders Larry Page and Sergey Brin said in a letter on Google’s website that it is a ‘natural time to simplify our management structure’ and that Google and its parent ‘no longer need two CEOs and a president.’

“The change is effective immediately. Mr. Page had served as CEO of Google and Mr. Brin had served as president. They will stay on Alphabet’s board. Mr. Pichai was named CEO of Google in 2015. He’s been with Google since 2004.”

For Your Radar

NEW FROM PwC ON POLICY TRENDS — New from PwC’s 2020 Top Policy Trends Report out this a.m.: “69% of executives say their organization is 'very actively' seeking to shape data privacy policy 53% of CFOs, 45% of large companies, 41% of tech, media, and telecom respondents rank trade policy among top 3 most impactful to their business; 45% of respondents are 'very actively' looking to shape U.S. anti-trust policy in the year ahead”

SMALL BUSINESS INDEX RISES — Per new U.S. Chamber of Commerce’s Q4 Small Business Index done with MetLife out later this a.m.: “The overall Index score increased again this quarter to 71.3, up 0.6 points from Q3, marking the highest number since the Index’s inception. …

“Not only are small business owners confident in the economy as a whole, but the number of small business owners who have a positive outlook on their local economies has increased three percentage points from Q3 to 59%”

BIG BET ON U.S. RIO TINTO — Fox’s Jonathan Garber: “Rio Tinto is investing $1.5 billion in the Salt Lake City-based Kennecott copper mine to extend its life until at least 2032. The move reinforces its bet on America and will guarantee job security for thousands of workers.”

NEW FROM NAFCU — Per release: “NAFCU unveiled six data privacy principles in a new white paper, emphasizing the need ‘for a comprehensive federal data privacy standard that protects consumers, harmonizes existing federal data privacy laws, and preempts state privacy laws.’”

TRANSITIONS — Nicolette Davis, an in-house lobbyist for Aflac, is leaving the company at the end of the year to join the U.S. Army. She'll enroll in Officer Candidate School after completing basic training.

Michael Moran has rejoined Credit Suisse as head of U.S. policy. He previously was head of federal affairs for Zurich North America.

Follow us on Twitter Mark McQuillian @mcqdc



Ben White @morningmoneyben



Aubree Eliza Weaver @aubreeeweaver



Victoria Guida @vtg2



Katy O'Donnell @katyodonnell_



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