04Dec2018 Market Close: Wall Street Skids 3.1%, Dow Waterfalls 800 Points Over Over Slowing Economic Growth, Commodities Relatively Steady, Nasdaq Plunges 3.8%

Written by Gary

US major stock indexes were led lower by bank and industrial shares (SPY -3.2%), as the US bond market sent unsettling signs about economic growth and investors worried anew about global trade.

The Market in Perspective

Here are the headlines moving the markets.
	Volkswagen says last generation of combustion engines to be launched in 2026 Volkswagen’s strategy chief said on Tuesday the German carmaker’s core brand will develop its final generation of vehicles using combustion engine technology in 2026.
	Global stocks fall on growth concerns, doubts over trade truce Global stocks sank and the dollar fell on Tuesday as a flattening Treasury yield curve sparked recession warnings, while optimism that the U.S. and China would quickly resolve their trade dispute dwindled.
	As markets turn, Fed says it is not fazed U.S. Federal Reserve officials convinced the massive U.S. bond market has fundamentally changed in the last decade are about to test their commitment to that idea against investors who have begun betting against the U.S. central bank’s ability to continue raising interest rates.
	Wall Street drops 2 percent, spooked by growth and trade worries Wall Street tumbled more than 2 percent on Tuesday, led lower by bank and industrial shares, as the U.S. bond market sent worrisome signs about economic growth and investors worried anew about global trade.
	Stocks slammed, yield curve flattens on trade doubts, growth worries U.S. stocks plunged on Tuesday and more points along the Treasury yield curve inverted as doubts arose over a speedy resolution to the U.S.-China trade dispute and over the health of the global economy.
	EU ministers fail to break digital tax deadlock European Union finance ministers failed to agree a tax on digital revenues on Tuesday, despite a last minute Franco-German plan to salvage the proposal by narrowing its focus to companies like Google and Facebook .
	Ireland still concerned about EU digital tax despite new proposal: minister Ireland’s finance minister poured cold water Tuesday on a new Franco-German proposal for a European tax on companies’ digital revenues, saying it failed to address his concerns.
	U.S. judge concerned over government nod for CVS-Aetna deal A federal judge who has been asked to sign off on the U.S. government’s decision to approve CVS Health Corp’s acquisition of insurer Aetna Inc said Tuesday he was “less convinced” than the government that the companies had struck a deal that ensured the merger was legal under antitrust law.
	Volkswagen says it may use Ford’s U.S. manufacturing capacity Volkswagen’s chief executive said on Tuesday after a meeting at the White House that the German automaker was building an alliance with Ford Motor Co and might use the U.S. automaker’s plants to build cars.
	Bloodbath – From Triumphant Truce To Deal Dysphoria In 36 Hours Trump and Xi were the powdered sugar awesomeness on the top of the Powell vanilla latte yumminess from last week… and then this happens… China stocks held up overnight… European Stocks continued to give back Sunday night gains… US Equity indices rapidly erased not just Sunday night gains but Friday afternoon’s pre-emptive push and Wednesday’s Powell Put leve …
	“Everybody’s Miserable”: Why Hedge Fund Analysts Suddenly Find Themselves In An Existential Crisis As hedge funds continue their ‘monumental struggle’ to outperform passive investments and market indices that have provided impressive and steady double-digit returns over the last decade to earn their modest billions in fees, analysts in the industry – especially those at the mid- and senior-level – are having trouble finding, and keeping, work. A prime example is David Goldburg, the title character in a Bloomberg profile of the deteriorating hedge fund environment. After working on Goldman Sachs’ prop desk, managing money for Michael Milken and failing at his own attempt to start a hedge fund, he couldn’t even find a job for one simple reason: at the not-so-tender age of 55, and with his experience, he was just too expensive. David Goldburg That’s why instead of spending high 7-digits (or more) to retain “experienced” talent, hedge funds are instead hiring several younger analysts for the same price of one senior analyst, a process being called “juniorfication”. There is a good reason for that: despite the S&P rising modestly in 2018, hedge funds have posted deplorable returns this yea …
	Here Is What Triggered Today’s Sudden Stock Liquidation Earlier this morning, Nomura’s Charlie McElligott noted something which in retrospect was quite prophetic: the cross-asset strategist highlighted that his Risk Parity model showed that the market’s most important strategy is in “de-risking” mode as the economic cycle turns sharply: In a positioning confirmation / “nod” then to this growth- and inflation- slowdown scenario, it is finally worth noting that we see our Risk Parity model having added enormous notional size in global Government Bonds (USTs and JGBs) over the past month, against very large selling of global Equities and Credit. The implication – and confirmation – judging by today’s market, is that the trade was a long way from finished, looking at the recent risk parity deleveraging in equities… … offset by buying of gov’t bonds.
	Trump Admin Targets Amazon And Other E-Commerce Sites With Postal Reforms President Trump has followed through on a July promise to reform the US Postal Service (USPS), which he referred to as Amazon’s “Delivery Boy.” On Tuesday, the Trump administration released a report that recommends a series of measures that the Trump’s USPS task force says are needed to bring in more revenue for the profit-challenged Postal Service, which reported $3.9 billion in losses during fiscal year 2018, according to The Hill. “Although the USPS does have pricing flexibility within its package delivery segment, packages have not been priced with profitability in mind,” the report’s executive summary states. “The USPS should have the authority to charge market-based prices for both mail and package items that are not deemed ‘essential services.'” The report recommends that the USPS divide its mail and package shipments into essential and commercial service categories. Many e-commerce shipments would fall into the latter category, which would not be protected by existing price caps and thus be subject to rate increases. Senior administration officials say the Postal Service would be able t …
	October 2018 CoreLogic Home Prices Up 5.4% Year-over-Year Written by Steven Hansen CoreLogic’s Home Price Index (HPI) shows that home prices in the USA are up 5.4 % year-over-year year-over-year (reported up 0.5 % month-over-month). CoreLogic HPI is used in the Federal Reserves’ Flow of Funds to calculate the values of residential real estate. The quote of the day was in this data release: …. Renters really want something to call their own. However, until affordability comes back into balance, renters will have a hard time purchasing a home ….
	In One Chart: Brace for a 15% plunge in S&P 500 next year if the Treasury yield curve fully inverts Bond market is already firing a warning shot, says Oliver Jones, a Capital Economics analyst.
	Burger King trolls McDonald’s with penny Whoppers to promote new app Burger King has launched a promotion for its new app that also takes a dig at its biggest competitor, McDonald’s.
	Home-builder stocks sink after Toll Brothers blames rising rates, negative media for further market slowdown Shares of home builders took a broad beating Tuesday, after luxury builder Toll Brothers confirmed investors fears by saying it witnessed the housing market “soften further” in November, especially in California, because of reduced affordability and fewer foreign buyers.