Markets struggle as the Trump rally loses steam

Dow jumped 304, advancers over decliners 4-3 & NAZ  inched up 11.  The MLP index was steady in the 285s & the REIT index slipped 2+ to the 425s.  Junk bond funds wavered & the Treasury market was closed today for the holiday.  Oil remained lower, down 2+ to 68 on China stimulus disappointment, & gold plunged 69 to 2625 (more on both below).

Dow Jones Industrials 

Toyota Motor (TM) sounded the alarm that California-led electric vehicle mandates that are set to start next year are “impossible” to meet &, if they're not changed, will lead to less customer choice in several states.  Current requirements under the California Air Resources Board’s “Advanced Clean Cars II” regulations call for 35% of 2026 model-year vehicles, which will begin to be introduced next year, to be zero-emission vehicles, or ZEV. Battery-electric, fuel cell &, to an extent, plug-in hybrid electric vehicles qualify as zero emission under the regulations.  “I have not seen a forecast by anyone … government or private, anywhere that has told us that that number is achievable. At this point, it looks impossible,” Jack Hollis, COO of TM North America, said.  “Demand isn’t there. It’s going to limit a customer’s choice of the vehicles they want.”  The California Air Resources Board reports 12 states & DC, have adopted the rules.  Roughly ½ of them did so starting with the 2027 model year.  The EV mandates are part of CARB's Advanced Clean Cars regulations that require 100% of new vehicle sales in the state of California to be zero-emission models by 2035.  JD Power said no states are in accordance with the EV mandate as of this year.  Only California (27%), Colorado (22%) & Washington (20%) have seen at least 20% of retail sales being EVs or PHEVs this year.  Other states such as New York (12%), New Mexico (5%) & Rhode Island (9%) are far from compliant.  The national average of EV/PHEV adoption for retail sales is only 9% thru Oct JD Power said.  Hollis said if the mandates are unchanged, it will lead to “unnatural acts” in the automotive industry that have already begun at some automakers, where companies are supplying states which have agreed to the rules with a disproportionate amount of electrified models.  “It’s going to distort the industry. It’s going to distort the business.  Why?  Because it's unnatural to regulate what the current demand in the marketplace is,” Hollis, a longtime automotive exec, said.  Several automotive insiders said that the EV mandate issue needed to be addressed regardless of who won election this year.  TM stock rose 2.07.

Toyota warns California-led EV mandates ‘impossible’ regardless of election

Amazon (AMZN) is developing smart eyeglasses for its delivery drivers to guide them to, around & within buildings, as it tries to smooth the final stretch of an order's journey to a customer's home, 5 people familiar with the matter said.  If successful, the glasses would provide drivers with turn-by-turn navigation on a small embedded screen, along their routes & at each stop, according to the people.  Such directions could shave valuable seconds off each delivery by providing left or right directions off elevators & around obstacles such as gates or aggressive dogs.  With Ms of packages delivered daily, seconds add up.  The glasses would also free drivers from using handheld Global Positioning System devices, allowing them to carry more packages.  The project underscores the online seller's efforts to reduce delivery costs per package & support margins as it fights increased competition which has stepped up e-commerce efforts & cut prices.  Its delivery glasses, the people warned, could be shelved or delayed indefinitely if they do not work as envisioned, or for financial or other reasons.  The sources said they may take years to perfect.  “We are continuously innovating to create an even safer and better delivery experience for drivers,” an AMZN spokesperson said, when asked about the driver eyeglasses.  “We otherwise don’t comment on our product roadmap.”  AMZN has worked for years to develop an in-house delivery network, including its own airline, long-haul trucking & sprawling suburban warehouses.  In doing so, it hopes to speed deliveries & pare expenses by reducing its reliance on other couriers.  AMZN's shipping costs rose 8% in the 3rd qtr to $23.5B.  The stock fell 1.34.

Amazon developing driver eyeglasses to shave seconds off deliveries

The House of Representatives is highly likely to be under GOP rule next year, cementing Reps' unified control of power across DC.  The party currently needs just 4 seats to maintain its lower chamber majority, & current vote totals show Reps ahead in 8 of the 18 still undecided contests.  With the drama slowly fading away, party leaders have turned to openly planning their agenda in recent days in expectation of what some observers have termed a GOP trifecta, alongside already established party control of the Senate & White House, or, more bluntly, a "full Trump" scenario.  "The American people have spoken and given us a mandate," House Speaker Mike Johnson recently posted.  "We will be prepared to deliver on day one."  But it will also be an exceedingly narrow House majority when the final tallies are in, likely less than 5 seats in the 435-seat chamber even as leaders lay out plans to push thru an aggressive 2nd Trump economic agenda quickly.  "Next year is really an inflection point on fiscal policy," Bipartisan Policy Center exec director of economic policy Shai Akabas said.  It could be an opportunity to begin to correct the US gov's fiscal imbalance, Akabas added, "but there's also a chance that things go south and we keep digging the hole deeper."

The GOP is closing in on the House. Here's what it'll do first

Gold fell to a near 2-month low as the $ continued to rally following Donald Trump's win in the US presidential election.  Gold for Dec was last seen down $74 to $2619 per ounce, the lowest since Sep 19.  The drop comes as the $ rose to the highest since Jul, with the ICE dollar index last seen up 0.58 points to 105.58.  The currency's rally began after Trump defeated VP Kamala Harris in the Nov 5 election & comes despite a 2nd cut to US interest rates on Thurs by the Federal Reserve.  An eventful week saw precious & industrial metals trade lower due to a stronger USD & higher yields.

Gold Falls to Lowest in Nearly Two Months as Dollar Rises to the Highest Since July

Oil extended declines as a soft outlook for demand in China, the world's largest crude importer, continued to plague the market.  West Texas Intermediate (WTI) retreated 3.3% to settle near $68 a barrel, while Brent settled below $72.  Data over the weekend showed anemic Chinese consumer inflation in Oct & another decline in factory-gate prices.  The $ climbed further, making commodities priced in the currency less appealing.  The retreat in crude prices comes alongside weakness in key market indicators.  The nearest WTI futures contract traded at its smallest premium to the following month since Jun on an intraday basis, indicating that short-term tightness in the physical oil market is easing.  That signals a marked shift in sentiment from the days leading up to the US election, when hedge funds raised their bullish position on WTI crude by the most since Mar.  An OPEC+ decision to push back an anticipated output hike & a flare-up in the Middle East conflict fostered a risk-on mood that has since dissipated.  The cartel's move to delay the production increase provided only a temporary boost to the supply risk baked into crude oil prices, but the decomposition of energy market returns suggest that another delay just won't cut it.  Without a resurgence in geopolitical risk tied to oil supplies, the set-up would favor continued downside in prices.  WTI for Dec plummeted 3.3% to settle at $68.04 a barrel & Brent for Jan declined 2.8% to settle at $71.83 a barrel.

Oil Retreats on Weak Outlook for Chinese Demand, Stronger Dollar

Doubts about the stock market rally's staying power are starting to emerge. Traders are waiting for Oct consumer inflation data on Wed for pointers to the path of rates.  Last week, Chair Jerome Powell stayed mum on the Fed's thinking in the face of Trump policies, like promised tariffs — that could keep price pressures in play.  And a low number for the advance decliner ratio is not encouraging.