• Market Crumbs

Trade War Has Reached Peak Ridiculousness

On the eve of the highly anticipated trade talks in Washington between the Chinese and U.S. delegations, every bear and bull futures trader was likely wiped out. After rallying most of the day yesterday, markets began to sell off into the close as the Chinese lowered their expectations for progress following the addition of Chinese companies to the U.S. trade blacklist. Starting just after 6:00 PM EST, you had to continuously pound F5 to keep up with the alternating negative and positive headlines that hit the wires nonstop throughout the night.

The first headline that sparked selling was a report that deputy-level talks leading up to the high-level talks failed to make any progress. The sources said the talks failed to get anywhere on some of the largest issues, which include Chinese state subsidies and forced technology transfers, as well as delaying an increase in tariffs that is set to go into effect next Tuesday. The sources said the Chinese delegation could potentially leave the talks a day earlier than planned.

It wasn't long before the White House released a statement in an attempt to stop the selling. They said the initial report was incorrect and "We are not aware of a change in the Vice Premier’s travel plans at this time.” It worked - futures surged and recovered the losses from the first headline.

Then, almost immediately, markets gave up the gains following the White House's statement after a report said the Chinese delegation will only stay for one day of talks, rather than both days.

As markets sold off once again, the White House took a second stab at halting the selling. The latest report said the U.S. is considering a partial deal via a previously agreed currency pact that could see the tariff increases frozen. Coincidentally, just a few weeks ago, Trump said he wanted a "complete deal."

Additional alternating positive and negative headlines continued to pour in. They included Trump giving the OK for American companies to sell nonsensitive goods to Chinese company Huawei, the Trump administration weighing options to crack down on shipments of contraband goods from China and U.S. Commerce Secretary Wilbur Ross saying "China trade practices have gotten worse."

The bottom line is this whole process has become a complete farce and is bad for markets as they swing on the whims of fake, real and repeated news.

Leftover Crumbs

  • Mortgage rate dip buyers emerge. As mortgage interest rates dropped to their lowest level since August last week, refinance applications spiked 10% from the prior week and were 163% higher than the same week one year ago. The portion of overall mortgage activity attributed to refinancing increased to 60.4% of total applications from 58.0% the prior week. However, consumers remain hesitant to buy a home with many citing fears over losing their job as a reason. Mortgage applications to purchase a home fell 1% over the same period but remain 10% higher than the same week one year ago.

  • That's more than they spent on share buybacks. Johnson & Johnson was ordered to pay $8 billion in damages following a claim the company didn't warn its drug Risperdal could cause young men to grow breasts. Risperdal, which is an antipsychotic drug used to treat schizophrenia, bipolar disorder and irritability caused by autism, has been on the market since 1994 and has a history of controversy. Johnson & Johnson replied by saying the verdict is "grossly disproportionate with the initial compensatory award in this case, and the Company is confident it will be overturned."

  • Can he do it twice? Shares of troubled retailer Bed Bath & Beyond surged more than 20% yesterday after announcing former Target executive Mark Tritton will become its new president and CEO. Tritton, who was executive vice president and chief merchandising officer at Target, improved customers' shopping experience both in store and online, led store revamps and helped introduce private labels and secure big-name brand collaborations. Tritton has been in the retail sector for more than 30 years with previous stints at other companies such as Nike, Timberland and Nordstrom.

  • If you can't beat them, join them. A who's who of automobile manufacturers, chipmakers and suppliers have joined forces to create the "Autonomous Vehicle Computing Consortium." The consortium, comprised of Arm, Bosch, Continental, GM, Toyota, Nvidia, NXP and DENSO, stated its goal is to “solve some of the most significant challenges to deploy self-driving vehicles at scale.” The AVCC invites all interested parties and members of the worldwide automobile ecosystem to "build the future of the industry one milestone at a time."

  • It's not just Adam Neumann. According to Challenger, Gray & Christmas, 2019 is on track to be a record year for CEO departures. There were 1,160 CEO departures from U.S.-based companies through September, which exceeds the previous year-to-date high of 1,132 through September 2008. August saw the highest monthly total of CEO departures on record with 159 head honchos heading for the exit.