Thursday Morning Reads
- China has made an offer to resolve trade dispute such as increasing equity caps for foreign investment, but proposal falls short of demands from The Trump Administration (FXI). Bloomberg Report
- European Union is preparing to retaliate against any auto tariffs from the United States (CARZ). NY Times Report
- Nancy Pelosi may not have enough votes to become speaker in new Congress as 17 Democrats plan to vote against her (Note: Speaker votes are typically held in early January). CNN Report
- Brexit Secretary Dominic Raab has resigned (EWU, RBS, LYG, BCS). Bloomberg Report
- Saudi prosecutors want the death penalty for the individuals involved in the murder of journalist Jamal Khashoggi (USO, XLE). CNN Report.
- Elliott Management still sees path to Arconic (ARNC) sale. NY Post Report
- JD.com (JD) considers sale of Hong Kong insurance unit. Reuters Report
- This investigative report shows how Facebook (FB) managed through the Russian election meddling issue. NY Times Report (Incoming Chair of House Judiciary Committee's antitrust panel believes that Facebookcan't regulate itself).
- Wal Mart (WMT) delivery application Cornershop is planning Canadian expansion. Reuters Report
- Tobacco industry plans to fight against FDA over ban on menthol cigarettes (MO, PM). WSJ Report
- Steve Wynn (WYNN) wants to block release of the Massachusetts gambling regulators report on his sexual misconduct. WSJ Report
- Government has denied accusations from Oracle (ORCL) that could computing contract process is unfair. TechCrunch Report
- Sterling skids after U.K. Brexit minister resigns
- SEC to revisit 'proxy' voting
- Chinese shares buoyed by trade optimism
- Walmart beats by $0.07, misses on revenue
- Ford in a 'delicate dance' with Volkswagen
- FCC's first high-band 5G auction
- American was 'unaware' of some 737 MAX functions
- Berkshire buys JPMorgan, Oracle, exits Sanofi
- Walmart higher after U.S. comparable sales beat
- Natural gas futures surge 18% but most gas-oriented equities fall
- Teekay LNG misses by $0.11, misses on revenue
Sterling plunged 1.5% against the dollar overnight, while U.K. retail banks and homebuilders slumped, after U.K. Brexit Secretary Dominic Raab resigned from his post, stating he couldn't support Theresa May's Brexit deal for two reasons. "First, I believe that the regulatory regime proposed for Northern Ireland presents a very real threat to the integrity of the U.K." "Secondly," he added, "I cannot support an indefinite backstop arrangement, where the EU holds a veto over our ability to exit."
"There are difficult days ahead," Theresa May declared after she obtained enough support from her senior ministers for a draft Brexit deal to move forward. It sets the stage for a battle in parliament that could shake her government and unravel the agreement with the EU for Britain’s orderly withdrawal. With other Brexit resignations, including Work and Pensions Secretary Esther McVey and junior Brexit minister Suella Braverman, she might also face a challenge to her premiership.
U.K. retail sales unexpectedly fell for the second consecutive month during October as shoppers tightened their belts after splashing out during a hot summer. Volumes fell by 0.5%, compared to the previous month, much lower than the 0.2% growth predicted by economists. A return to real wage growth was hoped to help spur consumer spending and power the economy in the final stage of the Brexit negotiations.
Chinese shares got a lift overnight amid signs that Beijing and Washington may be taking steps to de-escalate their bitter trade dispute, as well as strong earnings from tech giant Tencent (OTCPK:TCEHY). For the first time since the summer, Chinese officials delivered a written response to the Trump administration of potential trade concessions, giving hopes to investors that the two sides might bring an end to the spat.
Canada and China will continue to work together towards an "eventual" free trade deal, according to Justin Trudeau. This is despite Ottawa being a signatory to USMCA, which specifies that if a member enters a free trade deal with a "non-market" country, the others can quit in six months and form their own bilateral trade pact. "There is an element of transparency. We have to keep our partners informed on how we're doing," he added.
The EU has vowed to strike back against any U.S. decision to impose tariffs on car imports, stating the retaliatory tariffs would be a "re-balancing list covering a lot of different sectors." After the U.S. imposed duties on steel and aluminum imports earlier this year, the EU retaliated with tariffs on iconic American products like bourbon and motorcycles. Since July, however, the two sides have agreed not to impose any new measures as they work toward eliminating duties altogether.
Fed Chairman Jerome Powell is "very happy about the state of the economy now," and gives himself some of the credit, telling a public forum in Dallas that "our policy is part of the reason why our economy is in such a good place right now." Powell also conceded that the global economy is not growing at the same pace as last year, but said overall the domestic picture looks good.
U.S. state spending topped $2T for the first time in fiscal 2018, according to the National Association of State Budget Officers, with Medicaid expenditures rising the most along with a significant increase in transportation spending. Total expenditures grew an estimated 4.8%, compared to 3.8% in fiscal 2017, representing a "slightly improved fiscal situation than the prior two years," said NASBO executive director John Hicks