04Apr2018 Pre-Market Commentary: Wall Street Set To Open Sharply Lower, DOW Futures Down Over 500 Points, Boeing, Tesla Shares Plunge 5% As China Announces New Tariffs, WTI Trades Down In The Mid 62 Handle

Here is the current market situation from CNN Money

Boeing, Ford lead list of casualties in China-U.S. trade spat

(Reuters) – U.S. aerospace companies, automakers, grain merchants and chipmakers were the early casualties on Wednesday after China and the United States announced tariffs on $50 billion of imports, cementing fears they were spiraling towards a trade war.

China retaliates, slaps duties on U.S. soybeans, planes; markets skid

BEIJING/WASHINGTON (Reuters) – China hit back quickly on Wednesday against the Trump administration’s plans to slap tariffs on $50 billion in Chinese goods, retaliating with a list of similar duties on key U.S. imports including soybeans, planes, cars, beef and chemicals.

Spotify shares jump in record-setting direct listing

NEW YORK/SAN FRANCISCO (Reuters) – Shares of Spotify Technology SA ended up 12.9 percent on their first day of trade on the New York Stock Exchange, a smooth debut that could pave the way for other companies looking to go public without the aid of Wall Street underwriters.

WPP investigates CEO Sorrell for alleged misconduct, which he denies

LONDON (Reuters) – WPP is investigating an allegation of misconduct against Martin Sorrell, who has built the world’s biggest advertising empire over more than three decades of relentless expansion.

Elliott boosts hopes for change at South Korean auto giant Hyundai

SEOUL/NEW YORK (Reuters) – A unit of U.S. activist hedge fund Elliott Management revealed on Wednesday that it holds more than $1 billion worth of shares in key affiliates of South Korea’s Hyundai Motor Group and called for more rapid reform of the auto giant’s governance.

Oil giants stay in their own backyards in U.S. auction

NEW YORK (Reuters) – The Trump administration heralded the government’s sale last month of U.S. drilling leases in the Gulf of Mexico as a bellwether.

Japan braces for Trump assault on trade, yen policy as summit looms

TOKYO (Reuters) – Japanese government officials are bracing for Donald Trump to get tough in trade talks, and are particularly anxious that the U.S. president could target Prime Minister Shinzo Abe’s weak-yen policies.

India’s Jet Airways agrees to buy 75 Boeing 737 MAX jets worth $8.8 billion

NEW DELHI (Reuters) – India’s Jet Airways Ltd has entered into an agreement to buy 75 Boeing Co 737 MAX narrowbody jets, worth $8.8 billion, to meet passenger demand which has shown no sign of abating after years of growth.

Deutsche Bank nominates U.S. banker Thain to supervisory board

FRANKFURT (Reuters) – Former Merrill Lynch CEO John Thain is being nominated to the supervisory board of Deutsche Bank , Germany’s largest lender said on Wednesday.

ADP Reports “Rip-Roaring” 241,000 Jobs Added In March

“Late-cycle” or not, the US jobs market – according to ADP – is firing on all cylinders as for the fourth month in a row, employment rose over 200k (+241k in March vs +210k exp).

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market is rip-roaring. Monthly job growth remains firmly over 200,000, double the pace of labor force growth. The tight labor market continues to tighten.”

All sub-cohorts (except education) saw job gains…

All industries gained

Trump: “We Are Not In A Trade War With China; That War Was Lost Many Years Ago…”

With US stock futures plunging toward their Wednesday lows following China’s decision to strike back against the US by announcing 25% tariffs on on some $50 billion of US imports, including soybeans, airplanes, cars and chemicals, as the news revived fears of an escalating trade war.

But in a pair of tweets sent Wednesday, President Trump suggested that the market had it wrong. We aren’t about to start a trade war with the Chinese, the president said. Rather, we’ve been fighting a losing battle for years.

“We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the US. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!”

We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people …

What Will Trump Pick: Plunging Stocks Or Trade War? We Now Know The Answer

One of the long-running debates on Wall Street has been when faced with two choices, a plunging stock market or a full-blown, (perhaps) popularity boosting trade war with China, which one would Trump choose. After all, for much of the first year of his administration, Trump took delight in pointing out the daily surge in the S&P, which he was all too quick to take credit for, which prompted many to ask what happens when stocks plunge, and will Trump wash his hands from the red tape.

This morning we finally got the answer, thanks to CNBC’s Eamon Javers who moments ago tweeted that a “White House official said the the WH recognizes that Trump’s actions are hitting the stock market, but this is “a longer term thing,” and the president has to follow through on a key campaign promise. The White House feels that China simply has to be held to account.”

The White House official said the the WH recognizes that Trump’s actions are hitting the stock market, but this is “a longer term thing,” and the president has to follow through on a key campaign promise. The White House feels that China simply has to be held to account.

— Eamon Javers (@EamonJavers) April 4, 2018

Which means that Marko Kolanovic was wrong once again. Recall that in mid-March the JPM quant said that there is no way Trump would launch a “significant trade war” as that would risk “destabilizing markets” and Trump would “open a path” to his own impeachment:

A significant trade war started by this administration would destab …

Blain: “A Horrible, Foreboding Sense That Something Is Happening And We Don’t Know What It Is”

Submitted by Bill Blain of Mint Partners

If there is nothing to worry about why are we so scared? Maybe its the corporate bond market?

“The Texan turned out to be good-natured, generous and likable. In three days no one could stand him.”

Another round of tariff slapping as Donald’s White House hits China with 25% on 1300 more products. It won’t improve the US trade deficit and won’t make many friends, but its there on page 217 of the “Art of the Deal”: keep up the pressure and remind them of the risks. The papers say the Chinese ambassador smirked saying: “its only polite to reciprocate”. He won’t be getting out the Ferrero Rocher then?

But… trade wars are nothing to worry about. On the first proper day trading in Q2, the market rallied (ok, in the last 90 minutes), the S&P is back above the 200 Day moving average (the Danger, Will Robinson, Danger level), the dollar remains constructively weak, oil prices aren’t about to shock us, bond yields remain low, and the fundamentals remain as sound as a pound… Move along there.. nothing to see..

Except, of course, for the horrible foreboding sense that something is happening and we don’t know what it is? We might hope stocks are a buy here, that Treasury yields aren’t going to suddenly spike higher, or there are no inflation shocks just around the corner…

Hope is never a strategy. It’s never the things you expect that get you. It’s the no-see-ums… and they are probably sitting there in plain sight.

One of my clients brought a great note to my attention y’day on the credit market – warning about just how big and risky the booming Corporate Bond market might be. Sure, we have concerns – especially in terms of over-levered zombies companies that could tumble from investment grade to junk in a flash of …

How Trump’s Tariffs Could Really Hurt China

The Trump administration has detailed $50 billion of tariffs on Chinese imports ranging from television sets to grenade launchers. China has vowed to respond in kind. Is a full-scale trade war now inevitable?

At AT&T Trial, Government Sends a Message About Future Deals

The Justice Department kicked off its antitrust case against AT&T by calling a string of media executives to the witness stand. Their presence, meant to expose the dangers of mega media mergers, is a warning from the government that it will look hard at future deals.

Spotify’s High Valuation Is Bait for Other Tech Unicorns

The public market thinks Spotify is worth almost $27 billion, well above private valuations, which could tempt other big-brand tech companies to follow the same IPO path.

Europe Markets: European stocks fall as China pulls out ‘big guns’ against U.S. tariffs

Losses for stocks in Europe accelerated Wednesday, after China hit back against U.S. tariffs on its products by issuing its own list of U.S. goods that will be subject to levies by the world’s second-largest economy.

Amazon not likely to pay higher Postal Service rates despite Trump attacks

PiperJaffray analysts don’t think Trump’s tweets about Amazon’s use of the U.S. Postal Service will lead to higher rates.

Market Extra: The S&P 500 has already tripled the number of 1% moves seen in all of 2017

Does it feel like there’s a lot more action in the stock market this year compared with 2017? It should.