US stocks up – Uber & Lyft gained

The US stocks gained modestly in New York on Wednesday trading. The Fed, central bank left the key rates unchanged and expects that there is no need to change the rates during next year. The inflation is estimated to increase next year and would reach the inflation 2 % target in 2021.

Dow Jones closed up 0,11% to 27911,09 points, S&P 500 -index closed up 0,29% to 3141,62 points and tech-focused Nasdaq up 0,44 % to 8654,05 points. Tech and materials were the leaders of the trading day.

The ride-hailing companies Uber (UBER) and Lyft (Lyft) gained on Wednesday due to the positive report from Barclays. According to the estimate, Barclays estimates that both companies are well positioned to turn profit. Uber closed up 1,86 % to 28,42 dollars and Lyft closed up 4,64 % to 47,36 dollars.

Tesla (TSLA) closed up 1,11 % to 352,70 dollars, Ford up 0,44 % to 9,11 dollars and Apple (AAPL) up 0,85 % to 270,77 dollars.

The Fed also published its economic outlook, which estimates moderate growth for the next year and the unemployment rate is expected to stay at 3,5 %.

The big question of the US China trade deal is still open. The 15th December trade tariffs deadline is on Sunday and according to some media information, there have been talks to delay the deadline.

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EU presented the Green Deal – climate-neutral continent (updated)

The European Commission presented today the “Green Deal” proposal for the climate-neutral continent in the world.  According to the Commission, becoming the world’s first climate-neutral continent by 2050 is the greatest challenge and opportunity of our times.

According to the Deal, it should “enable European citizens and businesses to benefit from sustainable green transition. Measures accompanied with an initial roadmap of key policies range from ambitiously cutting emissions, to investing in cutting-edge research and innovation, to preserving Europe’s natural environment.”

The European Green Deal covers all industry sectors, for example transport, energy, agriculture, buildings, and industries such as steel, cement, ICT, textiles and chemicals.

The EU Commission will also present the first European Climate Law and Biodiversity Strategy for 2030, the new industrial Strategy and Circular Economy Action Plan. The aim is also to make the Farm to For Strategy for sustainable food and pollution-free Europe.

All these actions require major investment and therefore the EU is also presenting a Green Financing Strategy next year.

-Achieving the current 2030 climate and energy targets is estimated to require €260 billion of additional annual investment, representing about 1.5% of 2018 GDP. This investment will need the mobilisation of the public and private sectors. The Commission will present in early 2020 a Sustainable Europe Investment Plan to help meet investment needs, the release says.

-At least 25% of the EU’s long-term budget should be dedicated to climate action, and the European Investment Bank, Europe’s climate bank, will provide further support. For the private sector to contribute to financing the green transition, the Commission will present a Green Financing Strategy in 2020, the EU said on Wednesday.

 

 

 

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US stocks closed down due trade situation in the superweek start (corrected)

Corrected: Morgan Stanley is expected to cut jobs 1500, not 500

The US stocks closed down in New York on Monday. The main reason for the trend was the US China trade situation and with the 15th December deadline on Sunday. Apple (AAPL) was one of the biggest losers with its 1,4 % decline. Morgan Stanley is expected to cut about 1500 jobs globally, which may lead to 150 -200 million dollars onetime costs during the last quarter of this year, the Bloomberg News says.

Dow Jones closed down 0,39 % to 27910,7 points, S&P 500 -index closed down 0,32 % to 3135,99 points and Nasdaq down 0,40 % to 8621,83 points.

Morgan Stanley is said to cut job cuts that are related to changing banking sector due to technology and will include up to 200 million dollars onetime costs. The estimate is based on Bloomberg News. The company shares closed down 0,39 % to 49,60 dollars. Apple was also down due to the unsolved US China trade negotiations. Apple closed down to 266,92 dollars.

The US and Mexico are heading to the USMCA trade deal, the Trump administration officials said on Monday. According to Bloomberg News, President Donald Trump secured approval for his U.S.-Mexico-Canada Nafta trade agreement from a key U.S. labor leader, clearing one of the final hurdles. The deal is to get a vote in Congress next week.

The markets are also waiting for more info related to central banks monetary policies during this week with the FOMC meeting on Wednesday and the ECB on Thursday. The central banks are expected to keep the rates unchanged in their last meetings this year.

The UK Brexit vote on Thursday did not have any significant impact on stocks while the FTSE 100 index was down slightly 0,80 % to 7233,90 points in London. In Germany the DAX-index closed down 0,4 0% to 13105,61 points and in France the CAC40 -index closed down 0,59 % to 5837,25 points.

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Europe is planning to be climate-neutral economy -Bloomberg

The European Union is planning to become a climate-neutral economy. According to Bloomberg News, the formal signing could be made on Thursady in the leaders meeting in Brussels.

According to the plans, this European Green Deal roadmap would be published on Wednesday. This plan would also include a proposal for a global carbon scheme and would mean increasing taxes for airlines, shipping and car manufacturers.

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Superweek in the financial markets next week

Next week will be a superweek for the financial markets globally. There will be more information about the UK Brexit elections, the trade deal tariffs with US China will come into force if no new deal is agreed and there are several central banks meetings regarding the interest rates.

The US Federal Reserve will start its FOMC meeting on Tuesday the 10th December and the rate decision is expected on Wednesday the 11th December in press conference. The last Friday data of US payrolls was better than expected and the estimate is that Fed will not make any changes in its last meeting this year. So Fed rates are expected to be unchanged. The press meeting will start at 2.0 pm local time.

On Wednesday the 11th December, the debut of the Saudi oil company Aramco´s trading will start on the Saudi Stock Exchange. The IPO price was 32 riyals and the company was valued at 1,7 trillion dollars making it the world largest IPO ever.

On Thursday the 12th December the UK will vote in the general elections regarding the Brexit. According to several polls the Tories are leading the race. According to Telegraph newspaper,  the PM Boris Johnson’s lead over Labour has stabilised at 10 points, although the Labour Jeremy Corbyn has slowly started to narrow the gap.

On Thursday there will be also the European Central Bank´s Governing Council meeting in Frankfurt. The expectations of rate cut are not high due to the lates economic data and the widely concerns related to subzero rates. The Russian Central Bank is having a rate meeting on Friday the 13th with the expectation of interest rate cut.

The Bank fo England and the Japan Central Bank are holding their interest rates meeting on the following week, on the Thursday 19th December. Well behind the UK elections and the US China trade situation.

On Sunday the 15th December the US will raise the tariffs in China trade if no new deal is reached before that. The countries have been discussing about the Phase 1 deal during the autumn time and it was widely expected that the deal would be done by the end of this year.  The US support to the democratic movement in Hong Kong has delayed the negotiations.

On the other hand the latest data from China shows that the China exports dropped 1,1% in November and the exports to US declined 23 %. This might indicate that the countries, on both sides, are willing to make the deal before the year end.

 

 

 

 

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Fed added 70 billion dollars into markets – digital money on agenda (updated)

Updated: The Japanese stimulus package

The US Federal Reserve has added 70 billion dollars to the financial markets on Wednesday, the Wall Street Journal writes. According to the news, the central bank made the intervention using overnight repurchase agreements, repos. The aim is to ensure that the financial system has enough liquidity.

The financial and banking markets have been in turmoil due to the negative rates, global growth concerns and new technology. And during this week, the European Central Bank, said it is now considering to launch its own digital currency if the private sector cannot make cross-border payments faster. According to Bloomberg, the central bank wants the transactions also more cheaper.

This would be somewhat similar what the US Federal Reserve Bank said four months ago. According to Fed, the central bank is developing a new service called FedNov that would allow all banks in the US to offer real-time payment services every day of the week. FedNow was estimated to be available by 2023 or 2024 and it is expected to help the small & midsize companies and households to better balance their transactions.

The digital currency on the other hand would then be rival for example to Facebook´s Libra project which has caused several privacy and legacy issues by authorities globally and the tech giant has said it is postponing the digital currency project in order to meet the regulatory requirements. But there are also other digital bitcoin currencies as well and China has expressed their interest to evaluate the new money in its own financial markets systems for example in the stock markets.

The banking industry play field has also changed in Europe due to the UK departure of the Union. The Brexit has caused some international banks to relocate their services also in the EU area in order to continue to service as full potential.

This in turn has caused that the big US securities companies like Goldman Sachs, JP Morgan and Morgan Stanley are now under the European Central Bank´s supervision of their European operations.

This larger regulation scope will increase also the impact of the ECB and its decisions from now on. ECB is then becoming a new power house in the financial industry. This is also good to remember when the EU-countries are calling ECB to stop the asset purchase programme or the stimulus packages.

What is the role of the ECB in the future, will be in the hands of the new Central Bank President Christine Lagarde. Will ECB defend its independence to ask governments to increase their fiscal spending and thus increase the needed economic stimulus in the Brexit and trade talks aftermath? And how the ECB is balancing the different economic outlooks in the euroarea for unite monetary policy? And what is the euro-strategy after Brexit?

The global trade tensions and trade concerns have caused for example Japan to make a new spending package.  On Thursday the PM Shinzo Abe launched the country’s first stimulus package since 2016 and the total amount of the package was about 121 billion dollars. The aim is to repair typhoon damage, invest in infrastructure and new technologies.

So, the central banks are watching. Will the economies survive?

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Alphabet: Larry Page to leave CEO-role

The US tech company Alphabet Inc. (NASDAQ: GOOG, GOOGL) has today announced that the CEO Larry Page will leave his role in the company management, but will stay in the Board. The change is effective immediately.

According to the company information Larry Page and Sergey Brin, the CEO and President, respectively, of Alphabet, have decided to leave these roles. They will continue their involvement as co-founders, shareholders and members of Alphabet’s Board of Directors.

– Sundar Pichai, the CEO of Google, becomes the CEO of Google and Alphabet. He will remain the CEO of Google, and assumes the role of managing Alphabet’s investment in its portfolio of Other Bets. Pichai will remain a member of Alphabet’s Board of Directors, the company says.

The company share closed up 0,46% to 1294,74 dollars in New York on Tuesday.

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