‘Taken together, conditions today are characteristic of those that precede a Minsky Moment, in which excessive speculation and taking on additional credit risk during stable markets leads to a tipping point that leads to a period of instability.’ — Scott Minerd, Guggenheim Partners
HAPPY HOLIDAY & WISHING OUR VIEWERS A HAPPY, HEALTHY AND PROPEROUS NEW YEAR

1. AAII Weekly Sentiment — as the major indices continue to establish fresh record highs in the past week with the Nasdaq eyeing an eleventh consecutive up day today, sentiment has actually not shared in moving higher. The reading on bullish sentiment from the AAII fell this week, down to 41.89% from 44.1% last week. Although it is still elevated, currently in the 96th percentile of the past year’s readings, bullish sentiment is less extended than last week and is now back within one standard deviation of its historical average.

Meanwhile, Bearish sentiment rose just about 1 percentage point this week to 21.53%. As with bullish sentiment, while off of the lowest levels, bearish sentiment is still low relative to where things have stood recently, with this week’s print in the bottom decile of the past year’s readings.

2. Boeing CEO Resigned, Counselor Retires — J. Michael Luttig, who has been managing legal matters associated with the Lion Air and Ethiopian Airlines crashes, will retire from Boeing (NYSE:BA) at year-end. Luttig served as the planemaker’s general counsel since 2006 and assumed his current responsibilities in May 2019. While earlier in the week, CEO Dennis Muilenburg resigned in the wake of the 737 MAX crisis. “The board decided that a change in leadership was necessary to restore confidence in the company moving forward as it works to repair relationships with regulators, customers, and all other stakeholders,” according to a press release. Muilenburg will be replaced by Boeing Chairman David Calhoun, effective January 13, 2020 (CFO Greg Smith will serve as interim CEO during the brief transition period).
3. Super Saturday Sales Top Black Friday by 10% — U.S. consumers are setting more holiday shopping records, as job growth and fatter wallets, along with stronger household finances, have put many in a buying mood this season. Marking the biggest single day in U.S. retail history, Super Saturday (12/21) sales reached $34.4B, topping Black Friday’s $31.2B by 10%, according to Customer Growth Partners. Figures were paced by the ‘Big Four’ mega retailers – Walmart (NYSE:WMT), Amazon (NASDAQ:AMZN), Costco (NASDAQ:COST) and Target (NYSE:TGT) – while online spending this season has so far accounted for 58% of sales growth from a year earlier.
4. China to Cut Tariffs on Range of Goods — China said it will reduce tariffs from Jan. 1 on more than 850 goods, including frozen pork, high-tech components and vital medicines, leading the Shanghai Composite Index to tumble 1.4% overnight. It will also cut import levies for more than 8,000 products for 23 countries and regions that have free-trade agreements with China, known as “most favored nation” rates. While the tariff reduction is not directly linked to the American trade war, it will likely guarantee that the coming Phase One trade deal with the U.S. doesn’t invite complaints from other trading partners.

The week ahead — Economic data from Econoday.com:

“Don’t blindly follow someone, follow market and try to hear what it is telling you.” “You never know what kind of setup market will present to you, your objective should be to find opportunity where risk reward ratio is best.” I do not know what you have received.” — unknown

1. China Makes Move Against Foreign Tech — China’s Communist Party has ordered all state offices to remove foreign hardware and software within three years, FT reported, in a move which could hit Microsoft (NASDAQ:MSFT), Dell (NYSE:DELL) and HP (NYSE:HPQ). Substitutions will take place at a pace of 30% in 2020, 50% in 2021, and 20% the year after, earning the policy the nickname “3-5-2.” Earlier this year, Washington banned U.S. companies from doing business with China’s Huawei, and expanded its blacklist in October to include a number of Chinese surveillance firms like Hikvision.
2. Chevron Gas Assets Take a $10 Billion Hit — in the largest write-down by an energy producer in years, Chevron said that it was cutting the value of a number of properties, notably its U.S. shale holdings in Appalachia, by a combined $10 billion to $11 billion.
3. Aramco Becomes World’s Largest Listed Company — in IPO history, Aramco (ARMCO) shares rose 10% (the daily limit) to 35.2 riyals in Riyadh, raising the company’s valuation to $1.88T and propelling the Saudi Tadawul exchange into the top ten global financial markets. The start of trading of the state-backed oil giant marks the end of a near four-year saga that’s been linked with Crown Prince Mohammed bin Salman’s Vision 2030. The plan hopes to diversify the economy away from energy by pumping funds into mega projects and industries like tourism and entertainment. Aramco valuation hits $2 trillion target. The oil giant’s share price jumped on its second day of trading to reach Saudi Crown Prince Mohammed bin Salman’s coveted valuation target.
4. U.K. Decides the Fate of Brexit — U.K. voters are heading to the polls for a general election that is being seen as a vote on Brexit and will likely shape the country for decades to come. Boris Johnson and his Conservative Party are aiming to win a majority in the 650-seat parliament that will enable them to pass their Brexit deal, formally known as the “Withdrawal Agreement,” and leave the EU by January 31, 2020. Strong short-term impacts are expected on trading floors, but the outcome will also have a long structural influence on U.K. financial asset classes like stocks, sterling and government bonds.
5. FOMC Meeting Recap — the Fed held rates steady and signaled little chance of a near-term move. “Our economic outlook remains a favorable one, despite global developments and ongoing risks,” Jerome Powell said in a statement. President Trump also meets his senior trade team in Washington today about planned Dec. 15 tariffs on nearly $160B in Chinese imports. Many had already expected a Phase One trade deal, but the question now appears to be whether Washington will delay the duties or let them take effect.

The week ahead — Economic data from Econoday.com:

“Stocks take the stairs up and the elevator down.” – unknown

1. Trump Puts Tariffs on Brazil, Argentina, Citing Currencies — A barrage of trade actions was announced by the Trump administration, beginning with tariffs on steel and aluminum from Argentina and Brazil due to a “massive devaluation” of those countries’ currencies. The U.S. Trade Representative also said it would review hiking tariffs on EU products and adding new ones, because of what it called “lack of progress” in resolving a dispute over aircraft subsidies. After the markets closed, the USTR said it planned to slap punitive duties of up to 100% on $2.4B of French products – like Champagne, handbags and cheese – after concluding that a new French digital services tax (DST) would harm U.S. tech companies.
2. Black Friday Online Sales Hit Record $7.4B — online sales rose more than 19.6% to $7.4B on Black Friday, marking the day’s largest revenue grab ever, according to Adobe Analytics, which tracks transactions at 80 of the top 100 U.S. retailers. For Thanksgiving, it estimated web sales grew 14.5% to $4.2B, while Small Business Saturday and Super Sunday sales are projected to surpass $7.6B. Keep an eye today on the usual suspects like Amazon (NASDAQ:AMZN), Walmart (NYSE:WMT), Target (NYSE:TGT) and eBay (NASDAQ:EBAY), as Cyber Monday spending is expected to hit a record $9.4B, an 18.9% jump from a year ago.
3. U.S. Weighing $2.4B of Tariffs in Response to France’s Digital Services Tax — the USTR also threatened that such tariffs could be enacted in the future against Austria, Italy and Turkey, all of which have digital-services taxes. It added that French officials “repeatedly referred to the French DST as the ‘GAFA tax,’ which stands for Google (GOOG, GOOGL), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Amazon (NASDAQ:AMZN).” Before moving forward with the levies, the agency will hold public hearings on the proposed tariffs on Jan. 7 and will accept public comments through at least Jan. 14,.
4. Aramco Valued at $1.7 Trillion in World’s Biggest IPO — Aramco valued at $1.7 trillion in world’s biggest IPO. Saudi Aramco priced its initial public offering at the high end of the targeted range to give the oil giant a total value of $1.7 trillion. While it ranks as the world’s biggest-ever IPO, the share sale falls well short of the initial $2 trillion valuation targeted by Saudi Crown Prince Mohammed bin Salman.

The week ahead — Economic data from Econoday.com:

There will not be any re-cap for the week of Nov 29 2019. We are away for some needed R&R.