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4:03 p.m. ET: Stocks end higher as markets shrug off impeachment
Here’s where markets settled at the end of regular equity trading Thursday:
S&P 500 (^GSPC): +0.44%, or 14.11 points
Dow (^DJI): +0.48%, or 136.59 points
Nasdaq (^IXIC): +0.67%, or 59.48 points
10-year Treasury yield (^TNX): -1.1 bps to 1.913%
Gold (GC=F): +0.3% to $1,483.20 per ounce
1:27 p.m. ET: Congress sends government funding, tobacco age bill to Trump
The U.S. Senate passed the first of two government funding packages, which includes, among other legislation, a bill raising the legal age for tobacco use from 18 to 21. The bills will now head to President Donald Trump to be signed. The second funding package must be passed and signed to completely avoid a partial government shutdown.
12:55 p.m. ET: New US-Mexico-Canada trade agreement ‘not a breakthrough’ on other issues
Think the USMCA deal represents a bipartisan breakthrough? Think again.
Even as Congress impeached President Donald Trump on Wednesday, the House is poised to pass a new North American trade agreement today, a signature issue for Trump and a major win for the White House.
The successor to NAFTA is a rare convergence of Democratic and Republican interests, but won’t be replicated on other big-ticket items that have bedeviled Washington, Eurasia Group’s Todd Mariano notes:
First, USMCA was a trade agreement rather than a bill. This means that, under TPA procedure, Trump was able to negotiate it on his own – with Congress in a consultative role – and once that was complete, work with members to massage it into form sufficient for passage. Major reform legislation, by contrast, is crafted from the ground up – with the White House only one player in the game – and must navigate a painstaking process that can substantially change a bill’s content, while avoiding the loss of leadership buy-in and majorities in both chambers.
Second, the two sides began negotiations from much closer positions than would be the case for other, more contentious issues. It is an enduring irony of Trump’s Washington that his unorthodox presidency can both cause historic conflict with the Democrats and create anomalous opportunities to work with them. Trump’s trade politics are far out of step with what was previously Republican free-trade orthodoxy and in fact much closer to Democrats’ traditional (albeit waning) protectionist preferences. This enabled the administration to work with Democrats on USMCA in good faith from the start. It is highly unlikely that could have occurred under at least any of Trump’s three Republican forerunners.
Third, USMCA was a conveniently available and needed political offset for Speaker Pelosi after the rapid emergence of the Ukraine whistleblower case. Its passage would not be a heavy lift for her caucus given a high baseline of support but would help vulnerable members in districts where impeachment is unpopular. It also allows Pelosi to not only prove her party could deliver legislative accomplishments, but do so in a way that would give labor unions a victory and ensure union-member turnout in elections next year. This confluence of factors under divided government is rare.
Infrastructure and healthcare are two areas where polling shows that large majorities of Americans support policy intervention. But a major infrastructure spending deal or healthcare reform would need to (1) survive the legislative gauntlet; (2) bridge substantial party divides; and (3) assemble political drivers that would yield sufficient urgency.
Passing a trade agreement is a far easier hurdle than working across the aisle with a divisive president to create legislation that would help him deliver on his agenda, as the recent failed drug pricing endeavor showed. Unlike trade, Trump is ideologically far apart from Democrats on both of these issues – and his party even more so. And as the “Obamacare” and “Trump tax cuts” monikers show, the political benefits of reform legislation are skewed, accruing more to the White House despite the real work being done in Congress, lessening the incentives for Democrats.
12:00 p.m. ET: Americans’ paychecks are getting fatter, Bankrate says
In a good sign that a persistent economic concern — slow wage growth — is being addressed, Bankrate data shows that more U.S. workers saw an increase in pay this year – either through a raise or job change – thanks to persistently low unemployment.
11:30 a.m. ET: S&P 500 vaults over 3200
Given the crosswinds of political turmoil, trade ructions and a slowing economy, that’s quite an accomplishment, and well ahead of what some market analysts expected. Earlier this month, Deutsche Bank called for 3250 by the end of 2020, meaning stocks are already within spitting distance of that target.
11:00 a.m. ET: Report: Trump called Boeing to ask about 737 MAX grounding
U.S. President Donald Trump called Boeing (BA) Chief Executive Dennis Muilenburg this week to ask about the status of 737 MAX production, two people briefed on the matter confirmed.
The call on Sunday was brief and Muilenburg assured Trump that the planned production halt was temporary and that the company would not be laying off any workers. The production halt, set to begin in January, was announced by Boeing Monday after a board meeting.
Boeing and the White House declined to comment on the call, reported earlier by the New York Times.
10:45 a.m. ET: Stocks set new record highs
Underscoring how impeachment isn’t a concern for Wall Street, major benchmarks set fresh records in early trading as the stocks ‘melt-up’ continues. Political betting markets are also pricing in a likelihood that Trump will not only survive, but stands a decent chance of prevailing in his reelection bid.
10:00 a.m. ET: Existing home sales take a dive
Home sales fell short of expectations in November, with data showing sales fell 1.7% to 5.35 million, deeper than market analysts had expected. Those figures are coming off relatively high levels, and analysts expect the low interest rate environment to continue supporting the sector.
9:45 a.m. ET: Why the weak Philly Fed isn’t all bad news
The Philadelphia Federal Reserve said its business activity index fell to 0.3 in December from 10.4 the month before. The Philly Fed’s most recent reading was below economists' expectations of 8.0, according to a Reuters poll, and dovetailed with unexpectedly weak jobless claims.
However, the Philly Fed had some bright spots, as JPMorgan economist Jesse Edgerton noted on Thursday:
...the headline business conditions index in the Philly Fed survey fell more sharply than expected to a 6-month low of 0.3. But the details of the survey were stronger, with increases in the key shipments and new orders indexes, as well as our ISM-weighted composite.
In the details, the Philly Fed new orders index rose slightly from 8.4 to 9.4, with the shipments index posting a larger increase from 9.8 to 15.9. Our ISM-weighted composite rose from 54.4 to 56.0. Expectations for future business conditions edged down from 35.8 to 35.2.
9:30 a.m. ET: Stocks nudged higher as Trump impeachment takes center stage
U.S. markets open near breakeven as President Donald Trump’s impeachment saga dominates headlines, but most investors are largely ignoring the deliberations in favor of fundamentals, which augur for new gains.
Here were the main moves in markets, as of 9:33 a.m. ET:
S&P 500 (^GSPC): +0.15%, or 4.9 points
Dow (^DJI): +0.23%, or 66.06 points
Nasdaq (^IXIC): +0.2%, or 18 points
10-year Treasury yield (^TNX): +1.2 bps to 1.936%
Gold (GC=F): +0.11% to $1,480.40 per ounce
Jobless claims, which rose by more than expected after last week’s surprise spike, were also being parsed by analysts. Peter Boockvar of Bleakley Advisory Group had this to say:
Bottom line, we are just 5k away from seeing the highest 4 week average in jobless claims since February 2018. Thus, we are at a crucial moment in this very important data point. The manufacturing sector has experienced a downturn and the transportation sector has felt the pain in response. Oil and gas too. I'm guessing that these areas are the main reason for this uptick in firing's and we'll soon see whether this is a temporary head fake in the overall picture or the beginning of something more.