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Trump signals interest in ending the U.S. government shutdown stalemate, China and North Korea set out their stalls for 2019 and Asian stocks kick off the year on a cautious note. Here are some of the things people in markets are talking about.
In the first sign of a possible opening for negotiations to break the government shutdown stalemate, U.S. President Donald Trump invited the top congressional leaders from both parties to a White House briefing on border security Wednesday and suggested in a tweet he wants to “make a deal.” Parts of the government have now been shut for 11 days. The offer was extended to the eight top leaders from both parties in the new House and Senate, congressional aides said, and will include a briefing by Homeland Security officials. Democratic leaders haven’t publicly said whether they’ll accept the invitation, which represents a shift from recent remarks that indicated he was digging in on his demand for $5 billion to start constructing a wall or barrier on the U.S. Mexico border.
North Korea’s Kim Warns Trump
North Korea’s Kim Jong Un and China’s Xi Jinping were among the world leaders who used New Year as an opportunity to set out their stalls for 2019. Kim Jong Un issued a pointed warning to President Donald Trump, saying North Korea would take a “new path” in nuclear talks if the U.S. didn’t relax economic sanctions. Ditching the formalities of a podium and microphone bank to speak from a plush leather chair in front of a wooden mantle piece, the atmospherics painted the North Korean leader as a modern politician who could be trusted with a nuclear arsenal. Meanwhile Xi’s address, delivered on New Year’s Eve, stressed self-reliance and China’s ability to weather a storm. The Chinese president cited a series of industrial and technological achievements in 2018 in a speech that comes just days before a U.S. delegation is due to travel to Beijing for the next round of trade talks.
Worst Year for Einhorn’s Greenlight
David Einhorn closed out 2018 with his biggest annual loss on record for the 22-year-old Greenlight Capital. The firm’s main hedge fund fell 9 percent in December, extending this year’s decline to 34 percent, according to an investor update viewed by Bloomberg. Greenlight posted some of the industry’s best returns in its early years, but has stumbled since losing more than 20 percent in 2015. Other value-investing managers have also struggled amid historically low interest rates and the rise of passive investing and quant trading. However, Einhorn remained steadfast in his commitment to value investing, despite repeatedly expressing frustration with the poor performance in 2018.
China’s Drugmakers Look Unhealthy
Even after a plunge last month that wiped $46 billion off Chinese health-care stocks, domestic drugmakers may be far from their floor as a Beijing-led policy shift gathers pace. China’s plan to drive down the prices of generics -- drugs whose patents have expired -- is set to redraw the industry by forcing its thousands of small generic drugmakers to streamline and consolidate after decades of enjoying outsized profit margins. Among the top 100 generic drug makers, Chinese firms had a 74 percent gross margin and an 18 percent profit margin in the third quarter, compared with a global average of 55 percent and 9.5 percent, respectively, according to data compiled by Bloomberg. In order to survive the shifting landscape and rely less on generics many companies are scrambling to pump money into research and development.
Asian stocks look set to kick off 2019 on a muted note, with a holiday in Japan likely to dampen volumes, after global stocks finished their worst year since the financial crisis. In a dismal year that saw bear markets from Japan to Germany, crude slumped to its first annual loss since 2015 while gold barreled into 2019 near a six-month high on haven demand. Later this week, investors may focus on Friday’s U.S. December jobs report and the annual meeting of the American Economic Association, where U.S. Federal Reserve chairman Jerome Powell will be interviewed with predecessors Janet Yellen and Ben Bernanke.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- China’s slowdown is deepening, with factories back in contractionary territory.
- Emerging markets’ reprieve may not last long.
- Sydney’s housing slump is set to get worse.
- Lackluster demand for Asian dollar bonds is likely to recover.
- This cheap and cheerful gadget could replace your personal trainer.
- A guide to 2019’s key events, and how to make sense of them.
- Reading recommendations from some of finance’s most powerful people.
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