Global stocks are mixed to kick off the week. While shares in China and Japan are slightly higher, European shares are lower. Expect volumes to be lower today due to Martin Luther King, Jr. Day. It’s a good time to remind readers to take care trading any U.S. ETFs. In fact, we would recommend waiting a day to fill any orders simply because bid/ask spreads are likely to be wide enough to drive a truck through.
Bond and currency market activity are muted due to the U.S. holiday, but we’re seeing strength in the energy complex thanks to some supply disruptions in Libya and Iraq. The U.S. dollar continues to prove the doubters wrong. It’s generally stronger in trading this morning, despite speculators driving up the net-short positioning in the futures market.
In Canada, the biggest news of the day besides the absolute dumping of snow in Newfoundland
is the beginning of the extradition trial for Huawei Technologies CFO Meng Wanzhou. She was arrested 13 months ago, and China is once again demanding her immediate release
. It’s a tough position to be in; sandwiched between two superpowers. The hearing is expected to extend five days and examine issues of “double criminality”. This seems to be the key issue of her defense.
Some good news and some bad news from the IMF today. They did trim their global economic forecast for 2020 a little, to 3.3%. The good news is 3.3% is better than the 2.9% of 2019, and they see growth of 3.4% in 2021. There are signs the slump in manufacturing is starting to improve and the risks to the global economy have eased. They also see global trade starting to re-accelerate after an anemic 1% growth in trade for 2019. A few noteworthy adjustments: despite most nations seeing their 2020 growth forecast getting a slight trim, Japan estimates increased as did China’s. On the downside, India’s growth forecast was moved lower by more than a percentage point as domestic demand and credit growth slowed. All-in-all, not a bad outlook for the world in 2020 Rise of the titans
The largest companies in the U.S. have never dominated the S&P 500 like they do now. Markets wouldn’t have been able to make new highs this year if it wasn’t’ for the titans of the index. The top five publically traded U.S. corporations now make up a record 18% share of the benchmark
, as noted in a recent Morgan Stanley report. They are names everyone knows, Apple, Microsoft, Alphabet, Amazon and Facebook, and where they go the market will follow. The rise of passive index investing has been rewarding the largest companies, pushing their prices ever higher. In our Chart of the Day, we plot the growing market caps of these behemoths and would like to congratulate Google
into entering the four comma club. Get out the masks
There is a new virus that has broken out in China that is 70% similar to the genetic make up of SARS
, but “appears clinically milder”. The WHO has labelled the new virus 2019-nCoV. The outbreak started in Wuhan, a city of 11 million people. Scores of people have been hospitalized since mid-December, with some fatalities. Other cases have been reported in Thailand, Japan and other parts of China. On the other hand, patients have recovered and been released, and health care workers have not been infected.When green is not so green
For environmentalists, there has been great debate on the pros and cons for both lead-acid and lithium ion batteries
. While traditional lead-acid batteries are 99% recyclable, there remain concerns on the dangerous health impacts of lead as exposure can still take place during mining and processing. That being said, lithium-ion batteries are new to the market and environmental impacts are still being worked out. Lithium-ion batteries have only been recycled at a rate of 5%, as these batteries last a long time, and most in the market have not reached the end of their life cycle just yet.