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U.S. confirms phase one trade deal would include tariff rollback, doubts increase over Aramco’s valuation, and markets drop their defensives. Here are some of the things people in markets are talking about today.
White House economic adviser Larry Kudlow confirmed to Bloomberg that tariff agreements and concessions would be part of a phase one trade deal. There does seem to be some division within the administration over the timing of the move, with trade adviser Peter Navarro saying that there is no agreement in place to ease tariffs, adding that only President Donald Trump can make that decision. The toll of the trade war was evident in data showing a continued contraction in China’s imports and exports last month.
The closer Saudi Aramco gets to having a valuation put on it, the further the possible number seems to be getting from Crown Prince Mohammed Bin Salman’s originally hoped for $2 trillion valuation. Analysts at AllianceBernstein and Frankfurt-based Union Investment Privatfonds say it’s worth less than $1.5 trillion, and possibly closer to $1.2 trillion. Their qualms include regional risks and the marginalized position of minority shareholders. The kingdom is negotiating with its wealthiest citizens over stakes in the company, with some considering purchasing several hundred millions of dollars worth of shares. Elsewhere in stock-listing news, Alibaba Group Holding Ltd. is moving ahead with plans to raise as much as $15 billion in a Hong Kong share sale.
Precious metals are selling off, with gold heading for its biggest weekly drop in two years as hopes of a trade breakthrough hurt haven plays. Silver was also hit in what was a wider market move away from risk-off plays. Treasury yields tumbled the most since the summer and defensive equities sank. Bonds in Europe and Asia also slumped, with Japan’s benchmark 10-year bond yield poised for its biggest weekly jump in more than six years.
Global equity markets are taking a bit of a breather this morning after yesterday’s trade talks gains. Overnight, the MSCI Asia Pacific Index dropped 0.3%, while Japan’s Topix index closed 0.3% higher, rising for a fifth straight week. In Europe, the Stoxx 600 Index was 0.2% lower at 5:45 a.m. Eastern Time with miners leading the losses. S&P 500 futures pointed to some easing at the open and the 10-year Treasury yield was at 1.910%.
U.S. September wholesale inventories data and the University of Michigan consumer sentiment number for November are both due at 10:00 a.m. Today’s Fed speakers are Atlanta Fed President Raphael Bostic, San Francisco Fed President Mary Daly and New York Fed President John Williams. Earnings season is starting to wind down, with Ameren Corp. and Duke Energy Corp. among the smaller-than-recent number of companies reporting.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Michael Bloomberg considers run for president against Trump.
- Billionaires’ wealth fell for first time in three years.
- Young homebuyers are vanishing from the U.S.
- Gold and silver get crushed as end-of-world trade implodes.
- $28,000 electric SUV to lead China’s charge into European market.
- Thirty years after the Berlin Wall fell, the battle for East Germany still rages.
- Don’t yell at your bad dog.
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