Equities Down on Chinese Data After Failed Rally Yesterday
Stocks tried to rally yesterday as the Dow Jones (NYSEARCA:DIA) rallied by as much as 170 points but the rally fizzled by the end of the day with the Dow the only one of the 3 major indexes to finish positive on the day, closing 70 points up. Much of the reason the Dow had stayed positive Thursday while the Nasdaq and S&P 500 ended the day down was General Electric (NYSE:GE) which, after getting totally walloped and reaching a low of $6.66, surged 7.3% on the day, maintaining most of its gains throughout yesterday. However, the failed rally on Thursday got even worse on Friday, with the Dow down nearly 500 points, this time underperforming the S&P 500 on the day and making up for its outperformance on Friday.
Weakness followed poor price action in Asian markets, led by the Nikkei, which wass down just over 2%, same as the Dow. The poor performance in the East is itself following weak Chinese data showing a slowing of industrial output and slower consumer spending in November. The numbers themselves would be positive for most other countries, but investors generally take Chinese data with a grain of salt, or two, and discount it heavily.
However, not all is negative. Despite the ongoing trade war and potential exacerbation of it following the arrest of Huawei CFO Meng Wanzhou in Canada by Canadian authorities at the behest of the US Justice Department, and the subsequent arrest of Canadian diplomats in China in what is widely seen as retaliation, there are still signs of health in certain sectors of the Chinese economy and more importantly private cooperation with Canadian and US financial institutions.
Case in point, as the trade war was worsening earlier in the year, Chinese financial technology company AGM Holdings (NASDAQ:AGMH) succeeded in both getting listing on the Nasdaq exchange and staking an investment in Canadian currency exchange firm Matrix International. With more private cooperation like this, it’s possible that the worst consequences from the deterioration in international relations could perhaps be avoided.
Starbucks to Open Virtual Stores in China
In another sign of the private economy thawing otherwise cold relations between US and Chinese authorities, Starbucks (NASDAQ:SBUX) has announced a partnership with Alibaba (NYSE:BABA) during an investor event yesterday, in which the coffee chain will use apps together with Alibaba to provide a delivery platform for its products that are available in 2,000 stores in China. It will also be returning $25 billion shareholders through 2020.
Alan Greenspan Negative on US Economy
Former Federal Reserve Chair Alan Greenspan, AKA “The Maestro” so-called because he lowered interest rates to stimulate the economy like most Fed Chairs do, is saying that the US economy is obviously slowing down. “Just wait until the fourth quarter number comes out, it’s going to be down around 2.5 percent,” Greenspan said during an exclusive interview with Maria Bartiromo. “We have monthly data which suggests that we are slowing down, we are not going negative, but we are definitely slowing down – the rate of growth as we go into 2019 probably at a 2 to 2.5 percent pace maximum,” Greenspan said in an interview with Fox Business yesterday.
Brussels Crushes May’s Hope Of Time Limit on Brexit Backstop
Another nudge towards a No Deal Brexit this morning. European Commission President Jean Claude Juncker has shot down May’s request for a time limit on the proposed “Backstop” with Northern Ireland, which would effectively keep the United Kingdom in the European Union, having it be subject to EU laws but without any representation in its institutions. May’s proposed Brexit plan includes no time limit on this Backstop, which is viewed as trap to keep the UK in indefinitely against the will of voters who wanted to leave. May proposed a time limit on the backstop, but the EU isn’t having it, so as it stands there is little chance the May’s deal will ever get through Parliament. The only other option is a No Deal Brexit, unless changes are made to May’s plan that will placate Tory rebels before January 21st, the last day the plan can legally be passed.
