Morning Note: Markets on the Move: Stocks Rally Amid Economic Uncertainty

Honouring Art Cashin

RIP Art Cashin, the best of market commentators. He had unrivalled market knowledge and a knack for telling a good story in his notes. Here’s an excerpt from one I remember from around this time of year in 2019, just before the Covid pandemic changed a whole lot for so long.

On this day (+2) in 1823, a N.Y. publisher issued a poem by a professor of Oriental and Greek literature. Now, if that wasn't enough to scare most people off, the guy was also a clergyman.

Several people who knew poetry told the publisher it was a terrible waste of paper and ink. Such a little trifle as Clem's poem wouldn't be remembered days later let alone years later. But this flimsy verse which began "Twas the Night Before Christmas...." tended to hang on. And, after its author, Clement Clark Moore, died it was illustrated with drawings by Thomas Nast. Now it really took off. Not only did we know the legend of Santa, now we knew what he looked like.

To celebrate the birth of a classic, have an eggnog or two. Tell the red-faced guy, with a beard, on the next stool he can make extra Christmas money betting people they don't know the real name of the poem. ("A visit from St. Nicholas".)

There were lots of creatures stirring in the stock market Wednesday as the Dow and S&P rallied into resistance several times before easing back into the close…

Today’s Highlights

Back to today –

European stock markets are pushing higher, with the DAX setting a fresh record high above 20k despite the weak economic outlook for Germany and political troubles brewing. The stock market is not the economy – the mid-caps are down 3% for the year in Germany. The FTSE 100 extended its gain yesterday to reach its best in about six weeks. Wall Street was mixed as the S&P 500 ground higher by a quarter of a percent, the Nasdaq rose 1%, and Dow Jones fell a touch after hitting 45k. Both the S&P 500 and Nasdaq hit record highs as bulls continue to grind the market upwards. The dollar trades a little lighter today, allowing GBP and EUR to push up a bit. Crude oil may have found a bottom, and bulls look to break $69 (WTI spot) to reverse the trend.

A Delaware judge has blocked Tesla’s second attempt to push through a mammoth pay award to CEO Elon Musk. The deal was worth $56bn in January, when it was voided, but would have been worth over $100bn today after the stock’s rally this year. Let’s see how much influence Musk has. Shares rose about 3.5% after Roth MKM upgraded the stock to buy from neutral, citing his relationship with Trump.

Marine Le Pen said her Rassemblement National party would topple France's minority government after he attempted to push through unpopular budget measures. Fresh parliamentary elections cannot be held until July; Macron has until 2027. The chaos will continue as France remains in a state of ‘ungovernance’. French debt has been affected, with the spread between the OAT and German bund widening. French stocks were trading at the lowest in some months but have rebounded a touch in the last couple of sessions. And the rest of the Eurozone does not seem to be suffering any contagion from France for the time being.

Meanwhile, the focus this month is also on some big central bank decisions. RBA (Dec 10th), BOC (Dec 11th), SNB and ECB on the 12th, then the Fed on December 18th and Bank of England and Bank of Japan on the 19th.

Fed governor Christopher Waller said he is inclined “at present” to support an interest rate cut this month. NY Fed president John Williams said, “monetary policy remains in restrictive territory…I expect it will be appropriate to continue to move to a more neutral policy setting over time…the path for policy will depend on the data”.

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