Market Morning: Futures Down, Cyber Monday Blowout, Ma Joins Communists Honoring Capitalists

Volatility Continues As Futures Back Down Again

It’s two steps forward and three steps back as the decline continues. After yesterday’s rally of over 1.5% in the S&P 500 (^GSPC), futures are back down again moderately about 0.4%. The Nasdaq is down in the premarket a little heavier at 0.6% and oil is flat at around $51. Europe is down slightly and Asian stocks are moderately higher, Japan up but China flat. Bond yields are mostly steady while the cryptocurrency market has stabilized for the day. It looks like it may actually be a calm day, relatively, in the capital markets. Enjoy it while you can. Take a breath or two, but not three. That might take too long.

Cyber Monday Brings In Nearly $8B in Sales

Cyber Monday in the United States was a big hit, with Amazon (NASDAQ:AMZN) saying it was the biggest sales day in the company’s history. Interesting to see how the stock will respond to such news, but so far investors don’t seem to care, as Amazon is down about 1% in premarket trading. Adobe (NASDAQ:ADBE) underestimated sales by about $100M, and across the board, company’s Cyber Monday sales were about 20% higher than last year. However, it wasn’t all positive. Shoppers were complaining about getting inundated with way too many promotional emails. Will one day of sales turn around the slumping American economy? Wait a month or two and find out.

Alibaba’s Ma Joins Communist Party At Ceremony Honoring Capitalism

China’s biggest company with or without a middle eastern name, Alibaba’s (NYSE:BABA) CEO Jack Ma has joined the People’s Republic’s Communist Party. Honored at a ceremony ironically marking 40 years since the country’s opening up economically and basically eschewing communist policies after the death of Mao Zedung, Ma was among 100 business leaders honored for being successful capitalists by the Communist Party’s central committee, which as of now likes business activity, but who knows what will happen if and when things turn sour. By joining the party, Ma may be implicitly looking for special treatment or at least less harassment by the political establishment in China.

Trump “Unlikely” To Scrap Tariff Plan on $200B in Chinese Goods

Speaking of China, President Trump has said that it is “highly unlikely” that he would accept a request by China’s Communist Party Leader Xi Jinping to delay tariffs in the name of capitalism. “If we don’t make a deal, then I’m going to put the $267 billion additional on,” at a tariff rate of either 10% or 25%, Trump said in an interview with the Wall Street Journal. Tariffs are set to rise on $200B in Chinese goods starting January 1st to 25%, up from the current 10%. “What I’d advise is for them to build factories in the United States and to make the product here,” he said. Trump didn’t mention that making products in the United States would increase labor costs significantly, making doing so impossible, which is why companies outsource labor to China in the first place. Perhaps Xi will try to encourage Trump to open up the United States to labor competition by getting rid of the regulations and minimum wage laws and insurance mandates that make American labor noncompetitive, but this is also highly unlikely.

General Motors Tries To Save Itself, Government Cries Foul

General Motors (NYSE:GM) is planning to idle factories and cut jobs, as all business do when they need to conserve capital, but the US government is having none of it, complaining that they should be consulted about business decisions. Plants in Ohio, Michigan, and Canada are scheduled to be idled in the move. GM has been feeling the crunch of rising interest rates that have affected its auto loan sector. As long as rates keep rising, GM will keep struggling in this regard, and may have to shut off even more production in the near future to stay healthy, though government officials will keep complaining loudly.

 

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