Five Things You Need to Know to Start Your Day
Markets continue their rebound following the U.S.-China trade truce, while America’s recession-predicting yield curve inverts for the first time in a decade. Here are some of the things people in markets are talking about.
Markets Rebound Continues
Stocks rallied after the U.S. and China declared a truce in their trade war, while the dollar weakened and oil gained. The benchmark S&P 500 Index jumped more than 1 percent, building on gains posted during the biggest weekly increase in almost seven years, after leaders of the two countries agreed to hold off on new tariffs and intensify trade talks. European and Asian shares closed higher. “The very positive reaction from stock means that for the time being, investors have put behind them the concern that the tariff war might escalate,” said Donald Selkin, chief market strategist at Newbridge Securities.
China Auto-Tariffs Confusion
Treasury Secretary Steven Mnuchin said China has agreed to eliminate tariffs on imported automobiles but declined to give details after President Donald Trump jolted car stocks by announcing a deal had been reached. Trump said in a tweet late Sunday that China agreed to “reduce and remove” tariffs on American-made vehicles, raising more questions about the outcome of his meeting with counterpart Xi Jinping during the Group of 20 meeting in Argentina this weekend. Trump gave no other details in his tweet, which came shortly after he agreed with Xi to the trade war detante. It’s unclear whether China would reduce its car tariffs immediately or as a result of a broader deal. In a briefing in Beijing a few hours after the tweet, China’s foreign ministry spokesman Geng Shuang declined to comment on any car tariff changes.
IP Theft Breakthrough
White House economic adviser Larry Kudlow said the U.S. and China are “ pretty close” to an agreement on stopping intellectual property theft. The two countries are “pretty close on some agreements on IP theft, pretty close to some agreements on the forced transfer of technology from American companies,” Kudlow, director of the White House National Economic Council, told reporters Monday in a briefing on trade talks. “When I say pretty close, they are kind of on the front burner, hot list that we’ve developed with them.”Kudlow didn’t provide any details of what progress has been made. U.S. complaints about alleged Chinese theft of intellectual property and forced technology transfers from American companies seeking to do business in China are central issues in President Donald Trump’s trade war with Beijing.
U.S. Yield Curve Inverts
One section of the U.S. Treasuries yield curve just inverted for the first time in more than a decade. The spread between 3- and 5-year yields fell to negative 0.6 basis points Monday, dropping below zero for the first time since 2007. It’s not the best-known measure of the curve. The 2- to 10-year gap is more closely watched as a potential indicator of pending recessions. But Monday’s move could be the first signal that the market is putting the Federal Reserve on notice that the end of its tightening cycle is approaching.
Ghosn Faces Re-Arrest
Former Nissan Motor Co. Chairman Carlos Ghosn faces likely re-arrest next week as Tokyo prosecutors add a fresh claim that he understated his income by more than has previously been reported, according to a Japanese media report. Prosecutors plan to re-arrest Ghosn and Greg Kelly, a fellow member of Nissan’s board, on Dec. 10, Sankei reported, citing people familiar with the matter. The prosecutors believe that Ghosn’s pay was understated by about 9 billion yen ($79.2 million), the newspaper said. Ghosn and Kelly were arrested Nov. 19 over allegations that the longtime leader of the Japanese automaker understated his income by 5 billion yen over the five years that ended in fiscal 2014. The new claim by prosecutors involves the years ended in fiscal 2017.
What we’ve been reading
Here’s what caught our eye over the past 24 hours.
- Trump’s advisers struggle to explain the deal he says he cut with Xi.
- What to buy a billionaire for the holidays.
- How India is tackling the world’s worst smog.
- Why the flattening U.S. yield curve is a huge deal.
- What’s behind the surge in oil?
- Wall Street’s rule for the #MeToo Era: Avoid women at all costs.
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