Markets drop as investors digest global turmoil

Dow sank 331, decliners over advancers 5-2 & NAZ declined 34.  The MLP index was off 2+ to 240 & the REIT index fell 2+ to the 358s.  Junk bond funds fluctuated & Treasuries were steady.  Oil fell below 52 & & gold slid back 1 to 1251 (following its recent rally).

AMJ (Alerian MLP Index tracking fund)

CL=F

Crude Oil

51.34

-1.27

-2.4%

GC=F

Gold

1,251.00

-1.60

-0.1%

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White House trade adviser Peter Navarro downplayed fears that tariffs were the leading cause of  recent declines in the stock market.  “I think that’s a false narrative, in terms of the impact of tariffs on the stock market,” Navarro, director of the White House National Trade Council, said yesterday.  “My view is that this is strictly an interest-rate effect. I think the Fed went too far, too fast.”  The Dow plunged more than 1K at the close of last week's trading session.  On Fri alone, the Dow closed 559 (2.2%) lower.  The S&P 500, in addition to the Dow, is now negative for 2018.  “What we saw basically was a little asset reallocation from the stock to the bond market,” Navarro added.  “We’ve had some impact on the housing market. In terms of the dollar, it’s too strong now and that’s exacerbated our trade deficit. But this is a normal adjustment; to me it’s not even a correction.”  But worries over the trade relationship between the US & China (both countries recently reached a “trade truce”) caused the most volatility last week, particularly after the arrest of Meng Wanzhou, theCFO  officer of Huawei.  Wanzhou, the daughter of Huawei's founder, was arrested in Canada on Dec 1 for allegedly trying to evade US sanctions on Iran & faces extradition to the US.  If she is extradited, Meng would “face charges of conspiracy to defraud multiple financial institutions,” & a “maximum sentence of 30 years for each charge.”  China's Vice Foreign Minister Le Yucheng told US Ambassador Terry Branstad yesterday that DC made an “unreasonable demand” by asking Canadian officials to arrest Meng in Vancouver.  “The actions of the U.S. seriously violated the lawful and legitimate rights of the Chinese citizen, and by their nature were extremely nasty,” Le told Branstad & he also requested the US withdraw the arrest warrant on Meng.  Still, Navarro sees the arrest & market's plummet as 2 independent events & said the focus should be more on what Pres Trump & Chinese Pres Xi Jingping accomplished at the Group of 20 summit in Buenos Aires earlier this month.  “The president of China spent 45 minutes providing a detailed plan to address the various structural issues facing our two nations,” Navarro said, specifically noting matters like forced technology transfer, intellectual property theft & the currency manipulation.  US Trade Representative Robert Lighthizer said yesterday that successful trade negotiations between DC & Beijing must be reached by Mar 1, otherwise the US will impose new tariffs.  "As far as I am concerned, it is a hard deadline. When I talk to the president of the United States he is not talking about going beyond March," Lighthizer said.  And Navarro is confident that the Chinese will deliver on what he called their “promise to have concrete, verifiable actions with concrete, verifiable results.”  “We should be optimistic,” he said.  “But the markets shouldn’t pin their hopes on that, because that’s not what this is all about … The China trade is a small part of our overall economic growth and world trade. And I think what we need to do is focus on the structural adjustments that are occurring here in this economy.”

Wall Street worries? White House trade adviser explains what went wrong

British Prime Minister Theresa May is set to postpone Parliament's vote on her EU divorce deal today to avoid a potential defeat.  The move will throw Brexit plans into chaos just weeks after Britain & the EU reached an agreement.  The House of Commons Speaker's office said May would make a previously unscheduled statement to lawmakers about Brexit shortly.  The Press Association news agency & other British media outlets said May had decided to postpone the vote scheduled for tomorrow.  May's office insisted today that the vote would definitely be held.  Reports have pointed to a big defeat for the prime minister in a Tues vote – a result that could sink May's deal, her leadership, or both.  Today, the European Court of Justice ruled that the UK can revoke Article 50 & halt Brexit without the permission of other member states.  May's Conservative gov does not have a majority in the House of Commons, & opposition parties – as well as dozens of Conservative lawmakers – say they will not back the divorce deal that May & EU leaders agreed upon last month.  Britain voted in 2016 to leave the 28-nation bloc & invoked Article 50 of the EU's Lisbon Treaty in Mar 2017, triggering a 2-year exit process.  Britain is scheduled to leave the bloc on Mar 29.

Brexit: UK's May, facing defeat, to postpone vote, Report

A court in China has granted Qualcomm (QCOM) an injunction against Apple (AAPL), a Dow & NAZ stock).  The court has banned the import & sale of nearly all iPhone models in China, according to QCOM.  AAPL is already disputing the scope of the ban, saying it only applies to iPhones that run on an older operating system. "Qualcomm's effort to ban our products is another desperate move by a company whose illegal practices are under investigation by regulators around the world," AAPL said.  "All iPhone models remain available for our customers in China. Qualcomm is asserting three patents they had never raised before, including one which has already been invalidated. We will pursue all our legal options through the courts."  The Fuzhou Intermediate People's Court in China granted the 2 preliminary injunctions against 4 AAPL subsidiaries in China.  It relates to 2 QCOM patents that enable users to adjust and reformat the size & appearance of photos & to manage applications using a touch screen when viewing & navigating apps on their phones.  iPhones are currently sold with the operating system iOS 12, which AAPL says does not violate the patents in question.  QCOM said, "We deeply value our relationships with customers, rarely resorting to the courts for assistance, but we also have an abiding belief in the need to protect intellectual property rights."  The statement, from General Counsel Donald Rosenberg, added, "Apple continues to benefit from our intellectual property while refusing to compensate us. These Court orders are further confirmation of the strength of Qualcomm's vast patent portfolio."  AAPL stock fell 2.68 & QCOM stock went up 1.45.

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China court grants Qualcomm injunction against Apple, banning sale of some iPhones

It's difficult for investors to figure out what is going on in the world, let alone where this all leads.  One thing, a Santa Claus rally is far from any thoughts today.  There is no point in trying to make sense from these stories.  Fortunately the macro economic news in the US has remained fairly good, but a continuation of that trend is being called in question with all that is going on elsewhere.  The Dow is down again YTD because the bears are in command of the stock market & they are buying gold..

Dow Jones Industrials