Markets wobble ahead of the Fed meeting next week

Dow was off 17, decliners over advancers about 5-2 & NAZ slid back 21.  The MLP index slid 1 to 302 the REIT index was flat at 418.  Junk bond funds were mixed & Treasuries saw more selling which raised yields.  Oil was fractionally higher above 70 & gold dropped 30 to 2679 after its recent rally.

Dow Jones Industrials

Pres Xi Jinping sent a strong signal this week that Beijing was ready to work with Pres-elect Donald Trump to resolve trade disputes amid risks of a potential trade war.  In a letter to the US-China Business Council, Xi said the 2 sides should “choose dialogue over confrontation, win-win cooperation over a zero-sum game,” while reiterating his commitment to open up the China market for foreign companies, including US businesses.  The remarks echoed his speech at a this wee with visiting heads of major intl economic organizations, where he said “there will be no winners in tariff wars, trade wars, technology wars.”  Xi called both sides to maintain dialogue and manage differences.  The flurry of messages from Beijing reflects “a sense of anxiety”& “these overtures have occurred in a very public way,” said Kenneth Jarrett, senior advisor at Albright Stonebridge Group.  “This could mean that Chinese authorities lack channels to the new Trump team ... and that Beijing believes there are political benefits in projecting a public image of a willingness to work together with the new U.S. administration,” Jarrett added.  Trump has vowed an additional 10% tariffs on all US imports of Chinese goods.  During his election campaign, Trump had threatened to impose tariffs in excess of 60% on China.  Earlier this month, the Joe Biden administration announced broader restrictions on US exports of advanced memory chips & chipmaking machinery to Chinese companies.  The next day, Beijing responded by banning exports of several rare materials used in semiconductors & military applications.

China signals readiness to mend ties with U.S. ahead of Trump inauguration

Shares of Broadcom (AVGO) popped, pushing the company's market cap beyond $1T for the first time.  The move comes after the company reported 4th-qtr results that beat expectations for earnings & showed strong artificial intelligence revenue growth.  AVGO reported $14.05B in revenue for the 4th qtr, up 51% year over year but shy of the $14.1B estimate.  In its semiconductor solutions group, which includes its AI chips, revenue increased 12% to $8.23B from $8.03B a year ago.  The company said AI revenue jumped 220% for the year to $12.2B.  The stock popped when CEO Hock Tan said the company is developing custom AI chips with large cloud customers.  Net income came in at $4.3B (90¢ per share), up 23% from $3.5B (83¢ per share) in the same qtr a year earlier.  The stock soared 36 (20%).

Broadcom stock jumps 21%, pushing company past $1 trillion market cap for the first time

Charles Schwab (SCHW) raised its full-year revenue growth forecast on optimism around investor engagement & strength in the equity market following the US presidential election.  SCHW now expects revenue to increase 3-3.5%, up from its previous forecast of 2-3% growth.  In addition to increased engagement & stronger markets, the firm said the slowing pace of customers searching for higher-yielding alternatives for their cash also contributed to the rosier revenue outlook.  The firm's total client assets also surpassed $10T for the first time in Nov, reaching $10.3T at the end of the month.  Transactional sweep cash, which helps the firm pay down costly debt it previously accumulated, ended the month at $393.7B, flat from Oct.  SCHW is expecting leadership changes at the end of this year, with CEO Walt Bettinger retiring & Rick Wurster slated to step into the CEO role.  The milestone for client assets & raised guidance represent a marked contrast from last year, which Bettinger called the firm's “most challenging” in decades.  In addition to the CEO change, a new chief financial officer was named to oversee the books of the Westlake, Texas-based firm, founded more than 5 decades ago.  The stock fell 3.22.

Schwab lifts revenue outlook on post-election market optimism

AVGOs market cap surpassed $1T after execs predicted an AI sales gain of around 65%, a much brisker pace than expected.  This week, the Dow has struggled, partly on the back of a continued plunge in UnitedHealth (UNH)) shares as the insurance industry continues to grapple with the fallout of the UnitedHealthcare CEO's fatal shooting.  Shares of the healthcare giant are down over 15% in the week since the shooting.  Meanwhile, the last pieces of economic data have teed up another rate cut from the Federal Reserve next week.  But persistently sticky inflation could force the Fed to tread more slowly next year.