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4:01 p.m. ET: Markets close at session lows as tariff deadline looms
Here’s how the market settled at the end of regular trading Monday:
S&P 500 (^GSPC): -0.32%, or 9.95 points
Dow (^DJI): -0.38%, or 105.46 points
Nasdaq (^IXIC): -0.40%, or 34.70 points
Crude oil (CL=F): -0.37% to $58.98 per barrel
Gold (GC=F): +0.01% to $1,465.20 per ounce
1:23 p.m. ET: Democrats, Trump near tentative deal on USMCA
House Democrats and President Donald Trump are near a tentative agreement on the U.S.-Mexico-Canada Agreement, the Trump Administration’s proposed replacement for NAFTA, CNBC reports.
Note: Corrects previous CNBC report that a tentative deal had been reached.
12:00 p.m. ET: Target to spend big on store renovation
The retail giant is planning a $3 billion spending spree to remodel its stores, CEO Brian Cornell tells Yahoo Finance, in an effort to maintain their “newness and excitement” for shoppers:
“You'll continue to see us spend probably in the neighborhood of $3 billion of capital a year. So we said, that's what it's going to take to remodel stores and continue to invest in our business,” Cornell said. “Over time, we'll probably go from remodeling 200 or 300 stores to you know, 150 to 200.
11:30 a.m. ET: Amazon lashes out at “improper pressure” in loss of Pentagon contract
A big cloud deal with the Defense Department that pitted Amazon (AMZN) against Microsoft (MSFT) — which the latter actually won — isn’t settled just yet. In a complaint filed on Monday, Amazon accused President Donald Trump of exerting "improper pressure" and bias that led the Department of Defense to award a lucrative $10 billion cloud contract to its rival.
Trump has a longstanding (and long) list of grievances against the retail giant, given CEO Jeff Bezos’ ownership of The Washington Post, whose coverage of Trump has been critical.
11:00 a.m. ET: Repo market mayhem caused by hedge funds, big banks: BIS
The Bank of International Settlements is out with a new analysis of the repo market strains that bedeviled investors this fall, and prompted the Fed to inject billions into the market to ease liquidity strains. According to the study, the problem wasn’t just a temporary hiccup, Bloomberg reports:
This market, which relies heavily on just four big U.S. banks for funding, was upended in part because those firms now hold more of their liquid assets in Treasuries relative to what they park at the Federal Reserve, officials at the Basel-based institution concluded in a report released Sunday. That meant “their ability to supply funding at short notice in repo markets was diminished.”
And hedge funds are financing more investments through repo, which “appears to have compounded the strains,” the researchers added.
10:30 a.m. ET: Trump gains support in key swing states: Poll
New battleground state poll by Firehouse Strategies shows President Donald Trump seeing a boost in support, even as Congress moves toward filing articles of impeachment this week. The Firehouse survey dovetails with a similar poll conducted last month by Eurasia Group, and makes the case that U.S. economy is clearly providing a ballast for the president’s chances, as growth and jobs defy the trade war.
10:20 a.m. ET: Intel’s solution to the battle of the tangled cords
Via Reuters, Intel (INTC) on Monday announced a chip that it hopes will end one of quantum computing’s most nettlesome problems: The tangle of wires in the background connected to equipment that controls the quantum computer.
Called “Horse Ridge,” the invention will take all the work being done by wires and shrink it down to a chip the size of a tea cup saucer. Intel’s stock is flat on the day around $56.78.
10:15 a.m. ET: Goldman on growth, jobs
Reading the economic tea leaves, Goldman Sachs’ Jan Hatzius says November’s blowout jobs report is good for growth:
Nonfarm payrolls grew 266k, boosting the 3- and 6-month averages to around 200k, or roughly twice the breakeven rate. If maintained, this pace of job growth should push down the unemployment rate by about ½pp per year. Even under our above-consensus view of the US and global growth outlook, we don’t expect the pace to remain this brisk. But if it does, this would imply meaningful downside risk to our unemployment rate forecast of 3¼% by the end of 2020.
...The broader growth signals remain mixed, but with a slightly stronger tilt. We estimate that GDP growth is tracking 1.9% in Q4, and other estimates such as the Atlanta Fed’s GDPNow have moved back up to similar levels in recent weeks. Together with our current activity indicator (CAI) of 1.4% in November, this continues to indicate growth in the neighborhood of our 1¾% estimate of the long-term trend. Over the next few quarters, we expect gradual acceleration to a 2¼-2½% pace on the back of easier financial conditions, an end to the trade escalation, and a reduced drag from the inventory adjustment in the goods-producing sector.
However, he warns the U.S.-China trade war, which is approaching a crucial deadline this weekend, could be a drag on the outlook (naturally):
Our baseline assumption remains that China will purchase more US agricultural products in exchange for a rollback of the September 1 tariff step of 15% on about $100bn of US imports from China as well as cancellation of the December 15 tariff threat of 15% on the remaining $150bn. If this materializes, we think the drag from the trade war on the annualized pace of GDP growth will diminish from our current estimate of 0.4pp to near zero by the end of 2020. If this assumption proves wrong and the escalation continues, however, the drag could remain near current levels or even increase from here.
9:55 a.m. ET: Bank of America-Merrill Lynch sees oil at $70 by Q2
Fallout from last week’s decision by OPEC to cut production will eventually push crude up by at least another $10 per barrel, according to a BofA-ML research note issued Monday.
Prices have been relatively tame as global growth slows, but analysts think black gold may have yet run higher, as countries like Iraq may not deliver on their cuts:
OPEC members signaled their intention to prevent stock builds during 1Q19, which is a seasonally weak period for demand. We forecast a surplus of 700k b/d in 1Q and in an optimistic scenario, where OPEC members of the agreement meet the agreed targets, inventory builds are reduced by 200k b/d. The Saudis will be closely watching compliance levels and will review market conditions in March 2020 at an extraordinary meeting. If other members are producing egregiously above their targets, Saudi may opt to boost output to its agreed quota levels. Strong compliance, coupled with other positive economic developments, such as a pick-up in global inventory restocking and a small US-China trade deal, could push Brent to our $70 price target ahead of schedule.
In early Monday trading, crude (CL=F) shed 0.5% to trade under $59 per barrel.
9:45 a.m. ET: Yahoo Finance’s company of the year is...
Target (TGT). Thanks to some luck and lots of investments, the Minneapolis company’s stock has surged 88% year-to-date — leaving the S&P 500 and its major rivals Walmart (WMT) and Amazon (AMZN) in the dust. Editor at large Brian Sozzi breaks it all down, explaining why Target has risen to the top in the midst of a retail cage-fight between Amazon and Walmart.
9:30 a.m. ET: Stocks take a breather as busy week looms
Stocks began the week on a down note, with investors cautious ahead of a jam-packed week that includes a Federal Reserve decision and a deadline in the U.S.-China trade talks.
Here’s where major benchmarks began trading:
S&P 500 (^GSPC): -0.13%, or 3.97 points
Dow (^DJI): -0.17%, or 52.37 points
Nasdaq (^IXIC): flat, or 1.65 points
Crude (^CL=F): -0.79% to $58.73
10-year Treasury yield (^TNX): -0.032 to 1.812%
Gold (GC=F): flat to $1,467.20 per ounce
9:00 a.m. Paul Volcker, Fed Chair who whipped inflation, dead
The man who headed the Federal Reserve, tamed runaway prices and helped inspire a wholesale rethink of monetary policy, died Sunday at the age of 92.
During his 8 years at the central bank, Volker oversaw the Fed’s response to multiple crises, including an unstable dollar, the Latin American sovereign debt crisis, and the collapse of Continental Illinois National Bank.