TheChek News Flow

Cover:

-Investors are focusing on U.S. stocks, creating a dangerous blind spot and missing opportunities to invest in companies that have fueled the U.S. bull market. China's economy is sputtering, and Beijing's efforts to revive it are underwhelming. China is leaning on exports for growth, triggering a wave of protectionism and reshuffling of trade flows as countries try to protect domestic industries. International markets have been in a deep funk, with the S&P 500 index returning an average annual 13% over the past decade. However, the shifting geopolitical and economic forces abroad, including the fraying US-China relationship, changes in China's economy sparking new tariff threats, and the fallout from the wars in Ukraine and the Middle East, create challenges for global giants. Barron's convened four global market watchers on Nov. 21 for a virtual journey around the world and found a relatively upbeat outlook for globe-trotting stockpickers. They found a dozen stocks and notable shifts that will affect all types of portfolios.

Interview:

-No interview this week

Tech Trader:

-Intel's CEO, Pat Gelsinger, stepped down on Monday, leaving the company with no successor in place. The stock initially rallied 6% but lost 13.2% over five trading sessions. Intel's long-term health may be at odds with short-term demands of investors. Intel's main problem is losing chip manufacturing technological leadership to Taiwan Semiconductor Manufacturing in 2018. Gelsinger's main goals were to re-establish tech leadership and accept third parties as manufacturing customers. However, the plan has not produced much, and Intel has been forced to turn to TSMC for some chips. The company continues to rely on its own manufacturing lines, which are due to launch in mid-2025. With Gelsinger's resignation, Intel now has two interim CEOs, and the company is working to find a permanent successor. The board of directors has formed a search committee to find a permanent successor, but the short-term demands of investors may be at odds with the long-term health of the company.

The Trader:

-Housing stocks have not seen the expected boost from the Federal Reserve's interest rate cuts this year, with the iShares US Home Construction exchange-traded fund falling 4.1% since the Fed first moved on Sept 18. This is due to the spike in long-term bond yields and mortgage rates during the Fed's interest rate cuts. Treasury yields have started to recede ahead of the Federal Open Market Committee meeting, which could lead to a dip in mortgage rates, which would be beneficial for prospective homebuyers and investors in housing-related stocks. The housing sector needs support as home sales have been sluggish for two years due to affordability concerns. The 30-year mortgage rate hit its highest level since 2000 in November 2023, dampening buyer interest. However, there are signs of a turnaround, with pending home sales rising in October and existing home sales increasing for the first time since July 2021. Nick Frelinghuysen, co-chief investment officer of equities at Chilton Trust, believes that there will be a rebound in 2025 due to pent-up demand for new construction and housing. Frelinghuysen is betting on the potential rebound through builders and retailers with close ties to housing, including Lennar.

-Verizon Communication has had a subpar 2024, but next year looks more promising. While Verizon's stock has increased by 13%, it has lagged behind the broader market and its top telecom rivals. The S&P 500 has gained 28% this year, AT&T has surged 40%, and T-Mobile has soared more than 50%. However, Verizon is expected to grow its revenue and earnings in 2025 at a slightly faster clip than AT&T, which offered upbeat guidance at its annual investor day presentation. Analysts are forecasting a 2% bump in sales and 3% increase in earnings for Verizon next year, compared to 1% gains in profits and revenue for AT&T. Despite this, Verizon trades at nine times 2025 earnings estimates, a small discount to AT&T's valuation of nearly 11 times next year's profit projections. The best news for Verizon investors is that the company no longer needs to offer aggressively discounted plans to entice people to sign up. Morningstar analyst Michael Hodel believes that pricing discipline will drive most of Verizon's growth, calling it the most attractive of the three major US wireless carriers.

Features:

-General Motors has announced a $2.8B loss in its Chinese venture and plans to incur another $2.7B in equity losses as it restructures the business. The company has been experiencing a persistent decline in China sales since 2017, with a loss of $137M in Q3 2024. GM CEO Mary Barra has stated that the company and its Chinese joint-venture partner, SAIC, are taking steps to ensure sustainable growth in China. However, restructuring may not be enough to reassure investors, as other companies, like Uber, have found the best way to reassure investors is to take China out of their long-term strategy entirely. GM, which entered the Chinese market in 1997 through a joint venture with SAIC Motor, has spent decades attempting to master the Chinese automobile market. In 2010, GM sold over 2.35M vehicles in China, surpassing its US sales. China sales peaked at over 4M vehicles in 2017, but have since declined. In 2023, GM sold 2.1M vehicles in China. Several factors contribute to GM's declining sales in China, making it difficult for the company to reverse the trend.

-The Department of Government Efficiency (DOGE), led by entrepreneur Vivek Ramaswamy, plans to save hundreds of billions of dollars from efficiency improvements to entitlement programs like Social Security and Medicare. Ramaswamy emphasized that many of these funds are not being used as intended, and that there are hundreds of billions of dollars of savings to extract from basic program integrity measures. The government's own accounting shows that major entitlement programs make tens of billions of dollars in "improper payments," but the total amount is less than what appears. In the 2024 fiscal year, the Centers for Medicare & Medicaid Services made about $87.1B in improper payments, while the Social Security Administration had a backlog of cases resulting in projected improper payments of $1.1B. In total, federal agencies made an estimated $236B in improper payments across 71 programs. Ramaswamy believes that hundreds of billions of dollars are not being spent in the way the law dictates in major entitlement programs.

Europe:

-France has experienced political chaos following a motion of no confidence against the government in Parliament. The fallout is expected to remain complicated, but markets have absorbed the news slightly. Stocks rose and bond yields were little changed on Thursday, as the fallout was largely priced in already. The CAC 40 index was up 0.2% and has gained almost 2% over the past five days. Government bond yields have been increasing their spread from German yields to the most in a decade over the past few weeks. The euro bought $1.0545, up 0.3% on the day. Traders have been discounting French assets for a while, with the CAC losing 3.1% this year compared to a 28% gain for the S&P 500 and a 21% increase for Germany's DAX index. France's political and economic backdrop remains shrouded in uncertainty, with thousands of companies offering diversification to a broader portfolio. Germany's coalition collapsed last month, forcing new elections in February. France may be in limbo for a bit longer, as President Emmanuel Macron called early elections for the legislative branch earlier this year, which backfired and his party came second.

Emerging Markets:

-South Africa's Government of National Unity (GNU) has maintained its stability for nearly half a year, leading to a 17% increase in the iShares MSCI South Africa exchange-traded fund and a two percentage point decrease in yields on 10-year sovereign bonds. The GNU joins the African National Congress (ANC) with the Democratic Alliance, a white-dominated, pro-business group. The GNU has consolidated some of the previous government's better policies and changed the PR a bit. The GNU has also passed 250 days without blackouts from national utility Eskom. However, investors are divided on how far the rally can run without more substantial achievements. Official unemployment is above 30%, and investment in the mining sector has dwindled due to bureaucracy. South Africa has fallen to a third-tier mining destination with an anachronistic approach to regulation. However, optimists believe that continued improvements can go a long way. Power provision has improved due to ad hoc creeping privatization, with businesses and households running Eskom with their own solar panels.

Commodities:

-Gold has seen a surge in popularity this year, but its appeal has waned since the election. President-elect Donald Trump's embrace of Bitcoin and Federal Reserve Chair Jerome Powell's comments on Bitcoin's virtual and digital nature could be a concern for gold. Some analysts believe gold could lose appeal in the coming year as investors and the federal government continue to embrace Bitcoin. Rep. Sen. Cynthia Lummis introduced a bill in July calling for the Treasury Department to buy one million Bitcoin over five years and hold them in a Strategic Bitcoin Reserve. This bill also suggests that Federal Reserve regional banks could sell some gold holdings and use the proceeds to purchase Bitcoin. As a result, gold prices have fallen about 3% since Election Day, while Bitcoin has soared more than 30% to above $100,000.

Streetwise:

-Intel is facing a difficult turnaround attempt in 2024, with shares down 52% year to date and CEO Pat Gelsinger's departure. Stellantis is a close second, with its own CEO exit. The company's problems seem to lock each other into place, as it designs and manufactures chips, two different jobs. Intel is losing market share in servers and personal computers to Advanced Micro Devices and Taiwan Semiconductor Manufacturing. To fix this, Intel plans to build new factories to take on Taiwan Semi in contract chip fabrication and race through its own new chip designs to recapture the lead from AMD. However, the cost has taken Intel from generating $38B in free cash to likely burning close to $25B between last year and this year. It is unclear if Intel's rivals in chip design will be comfortable relying on Taiwan Semi for their manufacturing.

FINANCIAL TIMES

-Syrian rebels are advancing south towards President Bashar al-Assad's remaining strongholds, claiming to have liberated the last village on the outskirts of Homs city. Homs is the largest city still controlled by Assad's regime. The rebels, led by Islamist group Hayat Tahrir al-Sham, have already captured Aleppo and Hama. The assault poses the most serious threat to Assad's rule in a decade, reigniting a 13-year civil war that had been largely frozen since 2020. Joint Syrian and Russian forces have shelled rebel forces in Homs's northern suburbs.

-Jean-Louis Bidet and his team of skilled carpenters have transformed 1,300 oak trees into the wooden backbone of Notre-Dame, a Paris cathedral that was nearly destroyed by a devastating fire in 2019. The carpenters used axes and no modern tools to assemble and install the massive wood frame that supports the roof, almost identical to the 13th-century original. In the upper reaches of the gothic cathedral, a state-of-the-art fire protection system was installed to safeguard the wood frame, known as la forêt (the forest). The restoration, made possible with donations of around €840M, took just over five years and involved the work of around 2,000 workers, many of them from small businesses showcasing French craftsmanship.

-A US appeals court has upheld a law requiring TikTok's owner ByteDance to sell the platform or face a ban next year. The law, signed by President Joe Biden, orders TikTok to be banned in the country if the app does not divest from its parent by January 19, 2025. The unanimous ruling from the US Court of Appeals for the District of Columbia Circuit ruled the law constitutional and did not violate First Amendment protections for free speech. The decision puts TikTok in a precarious position in one of its biggest markets, with the law's political future uncertain. TikTok CEO Shou Zi Chew plans to seek an injunction of the ban, pending review by the US Supreme Court.

-South Korean President Yoon Suk Yeol has issued a terse apology for his failed attempt to impose martial law, ahead of an impeachment vote that will decide his political future. In his first public appearance since withdrawing his decree, Yoon apologized for causing anxiety and confusion to the public. He stated that the martial law process caused inconvenience and confusion to the people and sincerely apologized. Yoon's remarks represent a last-ditch attempt to win over wavering members of his own party and save his presidency following a tumultuous week. He insisted he would not make a second attempt to impose martial law.

-A report by investment bank Noble & Co suggests that the value of rare whiskies sold at auction has dropped by 34% by volume and 40% in value in the year to October 1, indicating a potential burst in the asset class popular with wealthy investors. The decline is attributed to a weakening global economy and high inflation, which stifled demand for high-end drinks.

-Romania's constitutional court has canceled the deciding round of the country's presidential election due to allegations that Russia used TikTok to promote the leading candidate, Calin Georgescu. The decision was made after Romanian authorities published documents indicating Moscow had sought to undermine the vote. The move was criticized as anti-democratic by some politicians and analysts. The court argued that the election process was "flawed throughout" by irregularities and breaches of electoral law, distorted the vote and its democratic principles. The date of the new vote will be set by Romania's government, after a new coalition is formed following parliamentary elections.

-The US economy added 227,000 jobs in November, a significant increase from the previous month, which was impacted by hurricanes and the Boeing strike. The unemployment rate rose 0.1 percentage point to 4.2%. The jobs report, published by the Bureau of Labor Statistics, is one of the final big data releases before the Federal Reserve's December 17-18 meeting, where it will decide whether to proceed with a third consecutive interest rate cut. Analysts believe that the figures are not strong enough to undermine the case for a final rate reduction this year.

-France's Crédit Agricole has increased its stake in Banco BPM, complicating UniCredit's approach to the Italian lender. The French lender has entered into financial contracts to lift its holding from 9.9% to 15.1%, and will seek Italian regulators' approval to own up to 19.99% of Banco BPM. This move mirrors UniCredit's use of derivatives to build a surprise stake in Germany's Commerzbank. The move follows Banco BPM rejecting its €10.1B takeover bid last month. The move marks UniCredit's latest attempt to establish a European banking champion. Italian Prime Minister Giorgia Meloni's government had hoped that Banco BPM could encourage consolidation in the banking sector.

-The EU and four South American countries have signed a trade deal that would create a 700M people market by dropping tariffs on over 90% of goods. The agreement, the largest either has signed, was reached after 25 years of talks at a summit in Uruguay. The EU exported €56B in goods in 2023 and €28B in services in 2022. However, European farmers and environmental groups have vowed to mobilize against the deal, claiming that farmers in Mercosur, including Argentina, Brazil, Paraguay, and Uruguay, damage the environment and operate with lower standards for animal treatment and pesticide use.

-Donald Trump's Middle East envoy, Steven Witkoff, has held talks with Israeli and Qatari officials to push for a ceasefire in Gaza and the release of Israeli hostages before returning to the White House. Witkoff met with Qatari Prime Minister Sheikh Mohammed bin Abdulrahman al-Thani, who has been a mediator in Hamas-Israel talks. He then flew to Israel to meet Prime Minister Benjamin Netanyahu and Mossad chief David Barnea in Vienna. The talks, which took place within weeks of the US election, highlight the urgency Trump's victory has injected into negotiations.

-Canada is establishing new consulates in Alaska and Greenland, appointing an Arctic ambassador, and enlisting Indigenous communities to monitor the region. The move is part of a new Arctic security policy announced by foreign affairs minister Mélanie Joly and defence minister Bill Blair. The new ambassador will be Indigenous, and remote communities will serve as "eyes and ears" in the north. Rising temperatures are allowing Arctic areas to become navigable and exploit natural resources, heightening security challenges and geopolitical competition.

NEW YORK TIMES

-South Korean lawmakers are voting on the impeachment of President Yoon Suk Yeol, despite his apology for his declaration of martial law earlier this week. Yoon bowed his head in a speech, expressing his deep regret for causing anxiety and discomfort, but stopped short of resigning. This was his last-minute attempt to avoid being impeached by the National Assembly, where the opposition needs only eight deserters from his governing People Power Party to join them to pass the impeachment bill. It is unclear how many of his party's 108 lawmakers might vote against him. Tens of thousands of protesters from across the country massed outside the Parliament to demand his resignation.

-Protests in Seoul have intensified since President Yoon Suk Yeol's short-lived declaration of martial law, causing a political crisis in the country. The largest rally at the National Assembly on Saturday was expected to be the largest yet, with a festival-like atmosphere. The crowds grew so large that Seoul's subway operator closed three nearby stations, and people continued to flow in, moving through an area that the police had closed off to traffic. People carried signs and blankets to bundle up against the freezing temperatures, and chants and music could be heard from blocks away. The rally was set up along the three-quarter mile stretch of road leading up to the National Assembly, broadcasting speakers and performers leading the crowd in chants and songs, many with lyrics calling for Yoon's impeachment.

-Iran has begun to evacuate its military commanders and personnel from Syria, signaling its inability to help President Bashar al-Assad maintain power amid a resurgent rebel offensive. Top commanders of Iran's powerful Quds Forces, the external branch of the Revolutionary Guards Corps, were among those evacuated to neighboring Iraq and Lebanon. This move signifies a significant turn for both President al-Assad and Iran, which has used Syria as a key route to supply weapons to Hezbollah in Lebanon. Guards personnel, some Iranian diplomatic staff, their families, and Iranian civilians were also being evacuated. The evacuations were ordered at the Iranian Embassy in Damascus and at bases of the Revolutionary Guards. Iranians began to leave Syria on Friday morning, speaking on condition of anonymity to discuss a sensitive issue.

-Rebel groups fighting to overthrow Syrian President Bashar al-Assad have made rapid gains in the country, causing alarm among neighboring countries and prompting border closures. The government's chief patron, Iran, has also withdrawn its military commanders and personnel from the country. The gains have presented the most serious challenge to al-Assad's power in years. The withdrawal of Iranian personnel, including top commanders of Iran's Quds Forces, is significant, as they have been loyal to the regime for over a decade. Iranians are now leaving Syria, heading towards Lebanon and Iraq. The situation has raised concerns about the stability of the country.

-Iran has tripled its production of near-bomb-grade fuel, according to the United Nations' chief nuclear inspector. This move is expected to intensify the challenge it poses to the incoming Trump administration and potentially open the way for a new negotiation with the West. The International Atomic Energy Agency's director general, Rafael M. Grossi, described the acceleration as a "dramatic acceleration." The increase in production of uranium enriched to 60 percent purity is just shy of the levels needed to produce a weapon. It is unclear whether Iran is trying to avoid a crisis or gather bargaining chips for negotiations with the United States. The situation remains uncertain.

-Police have discovered a backpack in Central Park, possibly a link to the gunman who killed Brian Thompson, the chief executive of UnitedHealthcare, in Midtown Manhattan. The discovery came after the police provided the most detailed timeline of the suspect's furtive activities during a 10-day stay in New York City. The suspect likely fled town within an hour of the killing on a zigzag escape route through Manhattan by bike, foot, cab, and bus. The police have made no arrests in the attack on Mr. Thompson, the 50-year-old executive who led UnitedHealthcare, one of the United States' largest health insurance companies. Chief Kenny stated that "we do not have his name," but "at this point, we believe he acted alone." Authorities have disclosed that they obtained DNA from a water bottle at the scene and took it for testing. Experts in facial recognition technology disagree on whether the widely circulated security-camera images of a smiling man wearing a hooded jacket would contain enough detail to identify him.

-The presidential transition to his second term has been influenced by the involvement of wealthy investors, including Elon Musk and Larry Ellison. Musk, the Tesla CEO, and Ellison, the Oracle co-founder, are among the billionaires Trump brought to the meeting. Trump, who had brought these two richest people to the meeting, issued a joking-not-joking challenge to his advisers. He asked them what they brought to the table. The involvement of wealthy investors has made this transition one of the most potentially conflict-ridden in modern history. Elon Musk and Ellison represent a new generation of tech leaders who often have a right-wing ideology and favor fewer constraints on entrepreneurship. The involvement of these wealthy investors has made the transition to his second term potentially conflict-ridden.

-The leaders of the Trump and Harris campaigns met in a tense room in Cambridge to discuss tactics. The room was decorated with maroon tablecloths and roses, and the walls were covered in dark-wood paneling. Senior staff members for the Biden-Harris campaign appeared to be undergoing a collective root canal without anesthesia, while five leading Trump campaign staff members and allies appeared to be holding the dentist's drill. The meeting was a result of a disagreement over the 'flawless' campaign tactics between the two candidates. The meeting was a significant moment in the ongoing political battle between the Democratic and Republican parties. The meeting highlights the ongoing tensions and potential conflicts between the two political parties.

-Greece is reviving Hadrian's Aqueduct, an ancient water supply system that supplied water to the city for centuries. The 15-mile network, which runs beneath the city, is still functional and is being used to alleviate water scarcity due to global warming. The reservoirs that supply water to Athens have dropped to their lowest levels in over a decade, and farmers are struggling to produce crops. To address this, Athens is investing in modern water-sourcing measures, such as a new connection to an artificial lake and desalination units, and turning to an older asset: Hadrian's Aqueduct, which dates back to when Greece was part of the Roman Empire.

-President-elect Donald Trump's second term is set to disrupt trade alliances, with Europe's largest deal with South America potentially signaling how countries will diversify their trade relationships. Trump's threats to impose tariffs on the rest of the world are encouraging some countries to diversify their trading relationships and find alternative avenues for their products. The European Union's tie-up with South America demonstrates the kind of shifting trade alliances that Trump's presidency could bring. The European Union finalized its biggest trade deal to date, signing an agreement with members of Mercosur, a South American trade bloc that includes Argentina, Bolivia, Brazil, Paraguay, and Uruguay. This move could lead to a potentially damaging trade war.

NEW YORK POST

-White House Press Secretary Karine Jean-Pierre has stated that Rep. Jim Clyburn played a crucial role in convincing President Biden to pardon his son Hunter Biden. Biden, 82, "wrestled" with the decision to pardon his son for any and all crimes he committed between 2014 and 2024. However, a visit by Clyburn, 84, tipped the scales and led the president to go back on his repeated promises not to do so. Hunter was convicted of three felony charges in June of lying on a gun purchase form in 2018 claiming he was not using or addicted to drugs when in fact he had an active crack cocaine habit at the time. A sentencing hearing in the case had been set for Dec. 12. Clyburn, who has long had President Biden's ear, spoke with the lame-duck commander in chief two weeks ago and pushed for Hunter's pardon, according to Jean-Pierre.

-Paramount Global's $8B merger with Skydance Media faces several hurdles as it seeks US regulatory approval. The deal's outlook has become murkier since Donald Trump won the presidential election, partly because the president-elect has filed a $10B lawsuit claiming Paramount's CBS network engaged in "voter interference through malicious, deceptive, and substantial news distortion." The beef is over a controversial "60 Minutes" interview with Kamala Harris, which Trump claims was edited to eliminate her clunky language and prop up her image during the crucial days before Election Day. FCC Commissioner Brendan Carr has already expressed concerns about the Paramount merger. One possible scenario is that Paramount, controlled by media heiress Shari Redstone, is forced to conduct an internal investigation into the "60 Minutes" interview to satisfy Trump and FCC Commissioner Brendan Carr.

Investors continued to ride 2024’s year-end, post-election wave of momentum further into uncharted territory. Some potential signs of frothiness surfaced which included Bitcoin crossing $100K for the first time and another brief bout of meme stock volatility related to Roaring Kitty. Corporate credit spreads remained pinned at or near all-time lows over risk free rates. Equity markets were un-phased with the S&P trading north of 22.5x next year’s earnings, climbing towards 6100 for the first time. Strong earnings/investor update commentary from a host of tech, travel and retail companies supported sentiment. Also the extension of a ‘Goldilocks’ soft landing narrative for the US economy overshadowed a growing wall of worry related to geopolitics globally. Importantly, US interest rates continued to back away from the post Nov 7th highs as expectations solidified that the ECB, BOE and Fed remained on track to bring rates down. For the week, the S&P500 gained 1%, the DJIA lost 0.6%, and the Nasdaq surged 3.3%.

Trump 2.0 remained a driving force, creating cross currents globally and here in the US. Emerging market currencies came under pressure after he threatened BRIC nations with significant tariffs. He also continued to fill out key posts in his upcoming administration. Meanwhile, the current US administration and China continued to jab at one another over export controls in the semiconductor industry. Separately, France’s political crisis came to a head as opposition forces in the Parliament on the left and right joined together to pass a no confidence vote on PM Barnier. By Friday though spreads between the Bund and OAT had narrowed after Macron indicated he plans stay on and work to find a suitable budget resolution. The stunning decision by South Korea’s President Yoon to declare emergency martial law while accusing the opposition party of North Korean sympathies was not met well. Parliament quickly voted it down leaving the President’s political fate in jeopardy. Ukraine, Syria, Iran, and the ongoing Israel conflicts continued to simmer amid a growing vacuum of international leadership ahead of the US presidential transition.

The November employment report revealed payrolls that were marginally stronger than expected when revisions were taken into account, but the unemployment rate was somewhat weaker than most forecasted. While the numbers weren’t necessarily decisive, they did tilt the odds further in favor of a Fed rate cut this month. Wages ran hotter than expected, but investors seemed take more solace in the rebound seen following October’s weak payrolls print. The report seemed to support what was heard earlier in the week from Fed Chairman Powell who repeated he still believes both the economy and policy remain in a very good place. Regardless, Powell and others on the Fed continued to emphasize the December meeting was not a lock with CPI and other influential data due out next week within the Fed’s lock-up period. Friday saw two potential hawks emerge when former dissenter Bowman and December voter Hammack suggested they believe the Fed is at or near the point where rate cuts should slow.

Corporate reports continued to provide a picture of mixed results among retailer but generally robust tech industry results. Discount retailer Five Below solidified its place as a destination for teens and preteens as it easily beat analyst expectations for the quarter. The same was not true for Foot Locker, which reported disappoint results and said apparel remained a significant headwind. Import tech names include Salesforce, Hewlett Packard Enterprise, and Docusign reported quarterly numbers that were well received by the investment community, continuing a string of generally positive news from the tech sector. Intel’s CEO Pat Gelsinger said he would retire, but the market was not inspired by the choice to name a co-CEO structure to replace him at the beleaguered tech firm. Another troubled hardware company, Super Micro, gained some relief as it announced a one-person special committee had found no evidence of misconduct by the board or audit committee over questions raised by the company’s former auditor. In M&A news, President-elect Trump affirmed that he opposes the Japanese takeover of US Steel, casting further doubt over the Nippon Steel deal.

MON 12-02

(CN) US Dept of Commerce: Announces new crackdown on Chinese chipmakers

(EU) ECB's Kazaks (Latvia, voter, hawk): Reiterates rate cuts must continue; Likely to discuss bigger December cut, but uncertainty is high

(FR) France PM Barnier: France must have a budget for 2025; Confirms have decided to use constitutional powers [Article 49.3] to push social security bill without vote

(IT) ITALY NOV MANUFACTURING PMI: 44.5 V 46.0E (8th month of contraction and one-year low); Notes most pronounced depletion in backlogged work for over 15 years

(US) Atlanta Fed GDPNow: Raises Q4 GDP forecast from 2.7% to 3.2%

(US) Axios piece: Trump has been telling friends he denied Robert Lighthizer a Cabinet role because he's "too scared to go big"; Elon Musk, discussing administration picks with Trump, often asks if the person embodies "radical reform", like massive cuts and blow-it-up-to-rebuild instincts

(US) Punchbowl: There are no automatic recounts in California, so one of the House Election campaigns must request a recount; Per California law, county election officials must finalize the final results by Dec 5th; Eight days later, the California secretary of state will certify the results.

(US) Fed's Waller (voter for 2024 and 2025): Recent data have raised concerns that inflation progress is stalling meaningfully above 2.0%

(US) TTN Research Alert: Only one outstanding House race yet to be called, with Dem Gray leads GOP Rep. Duarte by 227 votes in California's 13th Congressional District, with results set to be certified in coming days; According to CNN's senior political data reporter, GOP's House majority looks to be the smallest after any election since 1930 with current results; Only one defection from the Republican ranks could bring down entire pieces of legislation [**Reminder: If Democratic challenger Adam Gray wins California’s 13th District, House Republicans would hold 220 seats to 215 for Democrats heading into the next Congress; Then factor in the resignation of former Rep. Matt Gaetz (R-Fla.) and the looming departures of GOP Reps. Stefanik (N.Y.) and Waltz (R-Fla.) for Trump administration posts, the margin would be down to 217R-215D until early April 2025 (v existing 221R-214D split)]

(US) US confirms tightened China curbs on AI memory and semiconductor tools; New rules affect 27 types of chip design and fabrication tools; US to sanction 140 Chinese entities; curb US, foreign-made HBM – press

(US) NOV FINAL S&P MANUFACTURING PMI: 49.7 V 49.0E; Notes rebound in business optimism leads to renewed job creation; Optimism about the year ahead has improved to a level not beaten in two and a half years; Note that November’s fall in overall new orders was the smallest seen over the past five months

(US) NOV ISM MANUFACTURING: 48.4 V 47.6E

AMZN Orbital Materials and AWS enter strategic partnership to develop and pilot test technologies for data center decarbonization and efficiency

INTC CEO Pat Gelsinger retires; David Zinsner and Michelle Johnston Holthaus named interim Co-CEO, effective immediately

SMCI Independent Special Committee supported by forensic accounting firm Secretariat Advisors, finds no evidence of misconduct on the part of management or the Board and that the Audit Committee acted independently; Appoints new CAO and approves transition to new CFO; No restatement of reported financials expected

STLA US DOE announces proposed loan of up to $7.5B for Samsung SDI and Stellantis JV, StarPlus Energy, to build EV battery plants in Indiana

X US Pres-elect Trump says remains "totally against" Co being bought by Nippon Steel (or any foreign company) - financial press

ZS Reports Q1 $0.77 v $0.63e, Rev $628M v $606Me; Guides Q2 about in line with estimates

TUES 12-03

(CH) SWISS NOV CPI M/M: % V -0.1%E; Y/Y: 0.7% V 0.7%E

(CN) CHINA COMMERCE MINISTRY (MOFCOM): BAN GERMANIUM, GALLIUM, ANTIMONY AND SUPERHARD MATERIALS EXPORTS TO US "IN PRINCIPLE"; EFFECTIVE DEC 3RD; TO IMPOSE STRICTER REVIEW OF GRAPHITE EXPORTS TO US - PRESS [**Note: There have been no Chinese shipments of germanium or gallium to the US in 2024 through Oct; Germanium and gallium are critical for semiconductors, military applications, solar panels, and telecommunications equipment; China refines more than 90% of the world’s natural graphite - used in virtually all EV battery anodes]

(US) Adobe Analytics: consumers in US spent record $13.3B on Cyber Monday e-commerce, +7.3% y/y v Abode projection $13.2B

(KR) SOUTH KOREA PRESIDENT YOON DECLARES 'EMERGENCY MARTIAL LAW'" accusing opposition party of North Korea sympathies and paralyzing the govt with anti-state activities

(KR) SOUTH KOREAN PRES YOON TO WITHDRAW MARTIAL LAW DECREE FOLLOWING PARLIAMENTARY VOTE TO BLOCK IT

(US) Cleveland Fed’s Inflation Nowcast forecasting Nov US CPI Y/Y (to be out next week) to accelerate to 2.7% from 2.6% for Oct US CPI Y/Y; Also forecasting Dec US CPI Y/Y to accelerate again to 2.8%

(US) OCT JOLTS JOB OPENINGS: 7.744M V 7.470ME

AMZN Said to plan massive AI supercomputer powered by 64 of its Trainium chips interconnected – press

CTRN Reports Q3 -$0.86 v -$0.47 y/y, Rev $179M v $180M y/y; Notes strong start to holiday season; To resume buyback activity in Q4

CRM Reports Q3 $2.41 v $2.43e, Rev $9.44B v $9.34Be; Raises FY cash flow and margin guidance and low end of rev

CRM TTN Summary of 17:00ET Earnings Call: Launch of Salesforce Agentforce 2.0 scheduled for December 17th, promising further advancements in AI capabilities and accuracy; Expects Agentforce to significantly expand total addressable market, becoming the largest supplier of digital labor, with thousands of deals in the pipeline after delivering 200 deals in Q3.

MRVL Reports Q3 $0.43 v $0.40e, Rev $1.52B v $1.45Be; Guides strong

T Guides initial FY25 adj $1.97-2.07 v $2.31e; Targets 2025-27 service Rev growth 'low-single-digit'; Adj EBITDA growth 3% or better; Capex ~$22B annually

WMT TTN Summary of 12:45ET Morgan Stanley Global Consumer & Retail Conference: Seen some softness in US demand post-election

WEDS 12-04

(FR) FRANCE PARLIAMENT PASSES VOTE OF NO-CONFIDENCE IN PM BARNIER'S GOVT

(IT) ITALY NOV SERVICES PMI: 49.2 V 50.8E (1st contraction in 11 months and lowest print since Oct 2023)

(US) Fed Discount Minutes: Fed directors noted steady economic activity. Directors reported generally positive conditions in labor markets, though some cited limited labor availability in certain sectors

(US) Fed's Musalem (non-voter in 2024; voter in 2025): Time may be approaching to slow or pause rate cuts; Too much policy easing carries risk but additional easing likely needed over time

(US) Fed’s Barkin (voter for 2024; non-voter for 2025): Encouraged where with inflation is headed; Can't ignore Oct jobs report, also inflation still >2%

(US) Reportedly, with narrow majorities in the House and Senate, Republicans have a plan to convert their legislative plans into reality in 2025 using budget reconciliation; Passing the sort of bill Republicans are discussing, with the sort of expansive policies they want, would be incredibly difficult; Republicans are lining up not one, but two reconciliation bills to subvert the Senate’s 60-vote threshold and get their legislative agenda to the Resolute desk – press

(US) Punchbowl: Confirm the US election is finally over with final House results are 220-215 in favor of Republicans, but House Speaker Johnson, quite literally, has no margin for error; For the first several months of 2025, Johnson will have a 217-215 seat majority when factoring in the resignation of Rep. Matt Gaetz (R-Fla.) and the expected departure of Reps. Michael Waltz (R-Fla.) and Elise Stefanik (R-N.Y.) for Trump administration posts

(US) NOV FINAL S&P SERVICES PMI: 56.1 V 57.0E (confirms 22nd month of expansion)

(US) Pres-elect Trump: Will nominate Peter Navarro to serve as senior counselor for trade and manufacturing

(US) Follow up: Senior US Cyber Official: Chinese access to American telecommunications was potentially broad; We do not believe any have fully removed the Chinese from their networks; Until they address their gaps, the Chinese will maintain their access

(US) NOV ISM SERVICES INDEX: 52.1 V 55.6E

(US) OCT FACTORY ORDERS: 0.2% V 0.2%E

TTN Research Alert: According to new research, the first summer on record that melts practically all of the Arctic's sea ice could occur as early as 2027

BTC/USD *Rises to record high >$99,830, later breaks >$100,000 [Trump selected crypto-friendly Paul Atkins as SEC Chairman]

COST Reports Nov Total SSS +4.9% y/y (ex-gas and FX) v +6.5% prior; US SSS +4.3% (ex-gas and FX) v +5.8% prior; Notes hurricane impacts

FIVE Reports Q3 $0.42 v $0.16e, Rev $843.7M v $801Me; Raises FY guidance

FL Reports Q3 $0.33 v $0.39e, Rev $1.96B v $2.01Be; Cuts outlook; Notes trends in early November landed below its expectations, but saw meaningful and positive acceleration over the key Thanksgiving week period, especially in stores

THO Reports Q1 -$0.03 v $0.67e (unclear if comp), Rev $2.14B v $2.25Be; Notes signs of the return of the normalized market are beginning to show in the form of an uptick in dealer optimism

THRS 12-05

(FR) REPORTEDLY FRENCH PRES MACRON LOOKING TO JOIN FORCES WITH THE SOCIALIST PARTY, A STRATEGY THAT WOULD SPLIT A LARGE LEFT-WING COALITION IN THE NATIONAL ASSEMBLY AND POTENTIALLY RETURN ENOUGH POWER TO MACRON'S CENTRISTS TO BE ABLE TO BREAK THE COUNTRY’S POLITICAL GRIDLOCK - PRESS

(JP) BOJ's December and any other meeting in coming months said to be live; BOJ has eyes set on hiking rates by around Mar 2025, but likely wants to leave itself a ‘free hand’ on the exact timing; BOJ becoming more convinced of wage-inflation cycle; cites sources ‘familiar’ with the thinking of the central bank – financial press

(FR) Moody's: French no-confidence vote is credit negative

(US) Atlanta Fed GDPNow: Raises Q4 GDP forecast from 3.2% to 3.3%

(US) INITIAL JOBLESS CLAIMS: 224K V 215KE; CONTINUING CLAIMS: 1.871M V 1.90ME

(US) WEEKLY EIA NATURAL GAS INVENTORIES: -30 BCF VS. -48 BCF TO -43 BCF INDICATED RANGE

(US) Cleveland Fed’s Inflation Nowcast forecasting Nov US CPI Y/Y (to be out next week) to accelerate to 2.7% from 2.6% for Oct US CPI Y/Y; Also forecasting Dec US CPI Y/Y to accelerate again to 2.8% and Dec US CPI M/M to come at 0.4%

(JP) JAPAN OCT LABOR CASH EARNINGS Y/Y: 2.6% V 2.6%E (continuing fastest pace of increases for 2024 since 1992)

CVX Guides initial FY25 organic capex $14.5-15.5B v FY24 expectation $15.5-16.5B; To take ~$1.5B in Q4 charges

CARD.UK Trading update: Encouraged by the start of the Christmas season; Trading in the second half to date has been in line with our expectations, FY expectations unchanged

DOCU Reports Q3 $0.90 v $0.86e, Rev $754.8M v $744Me; Raises FY guidance

GMS Reports Q2 $2.02 v $2.26e, Rev $1.47B v $1.45Be; Notes stubbornly high mortgage rates and generally tight financing availability continued to weaken the broader construction environment for each of its end markets

HPE Reports Q4 $0.58 v $0.55e, Rev $8.46B v $8.23Be; HPE and Juniper expect that the transaction will close in the early part of 2025

OPEC+ confirms to delay oil production hike for 3 months until Apr 2025; These voluntary production cuts to be reversed from Apr 2026 to Sept 2026 v earlier deadline of Dec 2025; Collective group cut of 2Mbpd has been extended till the end-2026 - financial press citing sources [**Note: earlier, Energy Intel's Bakr said OPEC+ might look to extend the timeline of the planned unwinding which means that the unwinding would end in 2026]

SIG Reports Q3 $0.24 v $0.24 y/y, Rev $1.35B v $1.39B y/y; Cuts outlook

XAI.IPO Reportedly Elon Musk’s xAI plans a tenfold expansion of its Colossus data center to incorporate more than 1 million GPUs in an effort to close the gap with rivals such as Google, OpenAI and Anthropic - FT [**Note: Colossus believed to be the largest supercomputer in the world and currently operating a cluster of 100-200K Nvidia GPUs]

FRI 12-06

(CA) CANADA NOV NET CHANGE IN EMPLOYMENT: +50.5K V +25.0KE; UNEMPLOYMENT RATE: 6.8% V 6.6%E

(US) DEC PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 74.0 V 73.3E; 1-year inflation expectations 2.9% v 2.7%e

(US) Fed's Bowman (voter): Doesn't take a dissenting vote on policy lightly; Wants to proceed cautiously and gradually with rate cuts

(US) Nov Manheim wholesale used vehicle Index: 205.4 v 206.1 prior; -0.1% m/m; 0.2% y/y

(US) BOFA INSTITUTE: WEEK-TO-NOV 30TH TOTAL CARD SPENDING +2.0% Y/Y; The corresponding spending growth rate for holiday items was an impressive 5.3%; The holiday season has only started but so far, so good; A later Thanksgiving this year means we need to wait at least another week to get a clean read on holiday spending.

(US) Mid-Nov Manheim wholesale used vehicle Index: 206.1 v 202.8 prior; +1.6% m/m; +0.5% y/y

(US) NOV UNEMPLOYMENT RATE: 4.2% V 4.1%E (1st increase in 3 months)

(US) Bank of America's strategist Hartnett: Froth is building in US stocks and crypto; The risk of ‘overshoot’ in early 2025 is high, but bull-and-bear signal shows no global exuberance yet

(US) NOV CHANGE IN NONFARM PAYROLLS: +227K V +220KE

(NO) TTN Research Alert: Last week, Norwegian govt has paused its H1 2025 deep-sea mining licensing plans in the Arctic (for lithium, cobalt etc.) following demands from the Socialist Left (SV) party, which threatened to withhold support for the budget unless the mining initiative was postponed

288.HK Board approves proposed Smithfield Foods spin-off and listing in US

GCO Reports Q3 $0.61 v $0.57 y/y, Rev $596.3M v $579M y/y; Notes pleased with Journeys’ start to Q4 including the important Black Friday/Cyber Monday period

QCOM Reportedly Apple is planning 3-year model chip rollout in effort to supplant Qualcomm; Looks to gradually reduce use of parts from QCOM and QRVO - press

SMCI Announces Receipt of Extension from Nasdaq Stock Market; Currently expects to file all the required reports by February 25th deadline