December 15 Tariff Increase Still “On The Table” As U.S. & China Haven’t Yet Come To Trade Agreement

Plus, the Fed likely won’t change its interest rate target today, the FAA says re-certifying Boeing’s 737 Max will “extend into 2020,” and the world has a new most profitable public company.

Stocks were mixed at the open on Wednesday with the Dow down 38 points, or 0.1%. The S&P 500 added 0.1%, while the Nasdaq gained 0.2%.

There’s still no clear indication that the U.S. and China are going to come to agreement on trade before December 15, when the U.S. is scheduled to put a new round of tariffs on Chinese goods into effect. The Wall Street Journal reported yesterday that the U.S. plans to delay the new tariffs, however, White House economic adviser Larry Kudlow said the December 15 deadline is still “on the table,” and White House trade adviser Peter Navarro said that he’s “got no indication that [Trump is] going to do anything other than have a great deal or put the tariffs on.”

The Fed is widely expected to keep rates unchanged today, but investors will be watching for the outlook when the FOMC updates its rate forecast through 2022 this afternoon. Chairman Jerome Powell will give a press conference at 2:30pm and is expected to maintain his upbeat tone regarding the economic expansion, and is likely to promise the central bank will do what’s necessary to keep liquidity high and overnight lending rates steady through the end of the year.

The world has a new most profitable public company. Saudi Aramco debuted on the Riyadh exchange today, climbing 10%—the daily limit on the Saudi Tadawul exchange—and raising $25.6 billion and valuing the oil giant at $1.88 trillion – just below the kingdom’s target valuation of $2 trillion. Saudi officials pulled out all the stops for the local IPO which marks the end of a multi-year saga to take the oil producer public that recently saw international investors largely reject the offer, citing valuation and governance concerns as well as possible security threats. “It’s a great day for Saudi Arabia and the leadership of Saudi Arabia and for the people of Saudi Arabia,” Saudi Energy Minister Prince Abdulaziz bin Salman told Reuters. “It’s a D-Day for Aramco, it’s a day of reckoning and vindication.”

Boeing shares have taken a hit this morning after Federal Aviation Administration chief Steve Dickson said that the recertification process for Boeing’s beleaguered 737 Max plan should stretch into 2020. “Like I said, there are a number of processes, milestones, that have to be completed,” Dickson told CNBC. “If you just do the math, it’s going to extend into 2020. …We’re going to do it diligently because safety is absolutely our priority with this airplane.” The 737 Max has been grounded around the world since last March following two deadly crashes of the plane. “My highest priority is to make sure something like this never happens again,” Dickson said at a House hearing this morning.

And GameStop shares are down nearly -20% so far today following the videogame retailer posting plunging sales and posting a bleak outlook. GameStop reported a quarterly loss of $0.49 per share, compared to the profit of $0.11 per share analysts were expecting. The gaming retailer said it also expects full year comparable sales to fall by a “high-teens” percentage, with earnings per share of just $0.10 to $0.20, compared to analysts expectations for $1.21 per share. “Our third-quarter results continue to reflect the prevailing industry trends, most notably the unprecedented decline in new hardware sales seen across the market as the current generation of gaming consoles reach the end of their life cycle and consumers delay their spending in anticipation of new hardware releases,” said CEO George Sherman.

Stocks We’re Watching

Teranga Gold Corp (OTC: TGCDF): Shares of this gold miner jumped as much as 11% yesterday after Barrick Gold agreed to sell its 90% stake in the Massawa project in Senegal to Teranga Gold in a stock and cash deal valued at around $430 million. “The agreement with Teranga, which will realize the full value of this asset and create a substantial new West African gold-mining company with significant African ownership,” Barrick CEO Mark Bristow said in a press release regarding the deal. “In the case of Massawa, Teranga has the appropriate infrastructure and processing facilities approximately 25 kilometers away, and combining the ore bodies and the geological prospectively will add further beneftis. This is a good example of an instance where assets we own might be better suited in combination with others.”


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