The stock markets wavered based on corporate earnings results but also on Trump’s statements about tariffs. More importantly, the press conference with Trump and Macron… the former is keeping his cards close to his chest, while the latter is getting lost in dubious rhetoric.
The holiday season is a great time for entertainment, and here are a few riddles:
Trump/Putin. Who is the puppet?
Trump/Silicon Valley. Who is the strongest?
1940/2003. Who is history’s fool?
Answers:
During the third 2016 presidential debate between Democrat Hillary Clinton and Republican Donald Trump, Trump expressed his willingness to restore normal relations with Vladimir Putin. “That’s because he’d rather have a puppet as President of the United States,” the Democrat retorted.
Thiel and Musk founded PayPal, and Thiel also co-founded Palantir Technologies. In 2007, Fortune magazine used the term “PayPal Mafia” to describe 13 highly influential figures in the tech world. These individuals supported Trump. So, Trump may be the strongman of the moment, but Silicon Valley will be the long-term winner.
On May 10, 1940, German troops attacked Holland and Belgium despite both countries’ neutral status. Later, the armistice with France was signed, and Hitler demonstrated that a new order would now reign over the French capital, which would have to live on “German time.” On March 20, 2003, a coalition led by the United States, with allies like the United Kingdom and Spain, invaded Iraq after U.S. intelligence claimed Saddam Hussein possessed weapons of mass destruction. We know how that turned out… The fool is Europe, which—except for France—endorsed Bush’s decision.
In conclusion, we can hypothesize that Europe finds itself in the position of a boxer practicing the art of dodging against a Mike Tyson, who will eventually land a violent blow and win by knockout.
Note: Trump and Macron’s press conference will likely roll off Putin like water off a duck’s back. We’ll see today and later in the week when the British Prime Minister meets with Trump what the latter will write on his website… Overnight, the UN Security Council adopted a U.S.-backed resolution calling for a swift peace in Ukraine, with Russia’s support, but without any reference to the country’s territorial integrity. The four EU countries (France, Slovenia, Greece, Denmark) and the UK abstained.
Meanwhile, in the markets…
European stock markets closed lower on Monday, except for Frankfurt. The CAC 40 lost 0.78%, the DAX gained 0.60%, and in London, the FTSE 100 remained flat. The EuroStoxx 50 fell 0.42%, the FTSEurofirst 300 dropped 0.12%, and the Stoxx 600 declined 0.10%. German defense companies Rheinmetall, Hensoldt, and Renk rose between 3% and 6.4%, boosted by expectations of increased military spending after Sunday’s conservative victory. In contrast, electrical equipment suppliers involved in data center construction (Siemens Energy, Schneider Electric, and ABB) lost between 4% and 7% after Microsoft secured U.S. AI data center leasing contracts. In Switzerland, the SMI ended up 0.04%. Notably, Nestlé performed well (+3.2%) after Goldman Sachs raised its price target to CHF 93. The American investment bank may be positioning itself as the orchestrator of a potential spin-off or sale of Nestlé’s Water division.
In the U.S., Trump’s statements on tariffs imposed on Canada and Mexico sent a chill through the markets. The Dow Jones edged up 0.08%. However, the Nasdaq fell 1.21%, and the broader S&P 500 lost 0.50%. Chinese tech giant Alibaba’s stock plummeted more than 10% in New York on Monday after announcing plans to invest €50 billion “over the next three years” in artificial intelligence (AI) and cloud computing. Data analytics company Palantir also tumbled more than 10%, marking its fourth consecutive decline after the U.S. Department of Defense announced a budget review. Nvidia also fell (-3.09%) ahead of its quarterly earnings report, which investors will closely watch on Wednesday.
In the bond market, German Bunds fluctuated before settling at 2.489%. French OATs followed suit, closing at 3.224%. Further south, Italian BTPs remained stable at around 3.555%, while Spanish bonos rose +2.5bps to 3.164%. In the UK, Gilts continued to decline (+1.5bps) to 4.626%. Meanwhile, the yield on U.S. 10-year Treasuries eased to 4.40% from 4.43% on Friday.
In currency markets, the euro’s recent gains vanished, bringing the currency back to its level from the start of the week, trading at $1.0461. The U.S. dollar rebounded from its lowest point in two and a half months against major peers, reaching 106.75.
In commodities, spot gold remained largely unchanged at $2,950.39 per ounce, about $6 below its all-time high of $2,956.15. Spot silver rose 0.3% to $32.45 per ounce. Platinum held steady at $966, while palladium fell 0.4% to $936.25.
Commodities Lagging… Except for Oil
Chicago Board of Trade wheat futures closed lower on Monday due to weakness in corn and soybeans, along with reduced concerns about weather conditions for winter wheat crops in the Northern Hemisphere, traders reported.
Three-month copper on the London Metal Exchange (LME) fell 0.3%. Among other metals, LME aluminum dropped 0.8%, zinc lost 0.5%, nickel declined 0.3% to $15,395, tin fell 0.3%, while lead gained 0.1%.
Brent crude rose 0.2% to $74.93 per barrel, while U.S. crude climbed 0.3% to $70.92 per barrel.
This Morning in Asia
The broadest MSCI index of Asia-Pacific stocks outside Japan fell 1.3%. Japan’s Nikkei returned from a holiday with a 0.9% drop. Hong Kong’s Hang Seng Index tumbled 2.3%, extending Monday’s losses after U.S. President Donald Trump signed an order restricting Chinese investments in strategic sectors such as semiconductors, AI, and aerospace. Chinese blue-chip stocks fell 0.9%.
