Five Things You Need to Know to Start Your Day
U.S. stocks suffer another rough outing, the fallout of Carlos Ghosn’s arrest is already spreading through his automotive empire, and the cryptocurrency plunge is getting worse. Here are some of the things people in markets are talking about.
Stocks Stumble — Again
Stocks in Asia are poised to decline Tuesday after weakness in some of the biggest technology companies sent U.S. shares tumbling, adding to pessimism about escalating trade tensions. The yen advanced while the dollar and Treasuries were little changed. Futures from Tokyo to Sydney signaled losses after software developers and semiconductor manufacturers led the S&P 500 Index lower. The Nasdaq 100 Index plunged more than 3 percent, to the lowest since April, on renewed concern the trade war will hurt global demand and disrupt supply chains for the major technology companies that have carried the bull market for almost 10 years. Europe’s Stoxx 600 Index fell following a plunge in Renault SA on misconduct allegations against the carmaker’s leader, Carlos Ghosn.
End of the Ghosn Era?
The shock of Ghosn’s arrest in Japan was barely a few hours old when cracks began to appear in the automotive alliance that the globetrotting executive had sustained for almost two decades. Appearing at a late-evening news conference in Tokyo, Nissan Motor Co. Chief Executive Officer Hiroto Saikawa, a former Ghosn confidant, painted a dark picture of an executive with too much power and too little oversight. But he also took a swipe at the Renault-Nissan partnership, saying the Japanese market had been undervalued and that some product decisions were biased. The turmoil created by Ghosn’s downfall speaks to the executive’s outsize role in holding together a house he almost single-handedly built. As CEO of Renault SA as well as the chairman of Nissan and new partner Mitsubishi Motors Corp., he was the common denominator and driving force of the partnership, formed in 1999. More than once since then, Ghosn had stepped in to appease bickering shareholders, and his departure leaves no obvious person to fill that role.
The slide in cryptocurrencies accelerated, with Bitcoin piercing the $5,000 mark for the first time since October 2017, amid speculation that increased regulatory scrutiny will prompt issuers of initial coin offerings to liquidate holdings. Bitcoin declined as much as 14 percent to $4,693, falling for an eighth consecutive day in what is the longest string of losses on record for the 10-year-old digital token. So-called alternative coins slumped even more, with Ether and Litecoin both tumbling as much as 15 percent. XRP, the token associated with Ripple, was the lone gainer among major digital currencies.
Apple Nears Bear Territory
Apple Inc. shares dropped close to bear-market territory Monday on concern consumers are no longer clamoring for its cornerstone product, the iPhone. The stock closed at a record of $232.07 on Oct. 3. Since then it’s plunged almost 20 percent -- the official bear market threshold -- as multiple suppliers indicated the company is cutting parts orders for the latest iPhones. Apple earnings on Nov. 1 compounded concern when it reported flat unit growth and said it will stop disclosing how many smartphones it sells each quarter. Apple and its supporters say the company can still generate revenue growth in a stalled smartphone market by charging more per device and selling customers an increasing amount of digital music, movies and other services. However, those strategies are relatively untested, especially compared to the past decade of iPhone ascendance.
BOJ Taper Wager
AllianceBernstein Japan Ltd. is shunning super-long government bonds as it sees the central bank pressing ahead with tapering of its debt purchases into 2019, causing the nation’s yield curve to steepen. The Bank of Japan may widen the trading range for the 10-year yield again as early as January, should global financial markets remain stable, according to Masahiko Loo, a portfolio manager of fixed income at AllianceBernstein, which oversees about $550 billion. The company has been piling into inflation-linked securities as it expects consumer-price gains to pick up next year. “We are underweight in 30-year JGBs, with a 10- to 30-year steepening position, and are overweight in linkers as a tapering hedge,” Loo said in an interview. “The BOJ’s intention of steepening the yield curve is quite clear.”
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Ray Dalio says get ready for a long stretch of low returns.
- The PBOC needs regular press conferences.
- It’s not just trade pressuring the yuan anymore.
- Australia is mulling migration cuts to ease the strain on clogged cities.
- Switzerland is the world’s best at attracting talent.
- Xi Jinping is off to Manila for China’s first state visit since 2005.
- Qantas, Delta, Singapore are tops for premium economy cabins.
©2018 Bloomberg L.P.