He said Xi said

YTD MARKET PERFORMANCE

  • U.S. markets: The bulls are climbing out of hibernation after last week's dovish speech by Fed Chair Jerome Powell and positive trade news out of the G20 summit. Let's see if markets can close the year on a high note.

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TRADE

Trump and Xi Agree to a Truce (For Now)

Picture
It was quite the scene in Buenos Aires Saturday night. President Trump and a few trusted advisers sat on one side of an ornate table. Across from them sat Chinese President Xi Jinping, also flanked by his aides.

And after everyone finished dessert and all Venmo requests were sent, the two sides agreed to a temporary cease-fire. The details:

  • The U.S. will not hike tariffs on $200 billion of Chinese goods for 90 days (the current rate is 10%...the new rate would've been 25%).
  • China will buy a "very substantial" amount of American industrial, energy, and agricultural products, per the White House.
  • China will consider approving Qualcomm's $44 billion bid for NXP Semiconductors. That deal fell through in July after it didn't get the green light from Chinese regulators.

Zoom out: The agreement isn't necessarily a major de-escalation of the trade war...but a pledge to not escalate further. That's good news in the short term and a W for both leaders, but the fundamental differences between the U.S. and China aren't going anywhere.

  • Here's one example: The U.S. and China released their own independent versions of the deal. And let's just say not everything overlapped.

Give us the hot takes already

President Trump: "It's an incredible deal. It goes down, certainly, if it happens, it goes down as one of the largest deals ever made."

Bloomberg: "For most of the past year, the U.S. and China have failed to make significant headway in resolving issues at the heart of an escalating trade war. Another 90 days is unlikely to change much."

Evercore ISI political analyst Terry Haines: "This is a strongly market positive result for the short term, since over the past few days markets have been nursing hopes that a tariffs pause of this kind would happen."

Save the date: March 1, 2019, when that 90-day period will expire.

BIZ IN DC

George H.W. Bush’s Economic Legacy

On Friday, George H.W. Bush—the 41st President of the U.S. and father of its 43rd—died at age 94. And although Bush was best known for international affairs and his idea of a "kinder, gentler" America, this is a business newsletter...so let's examine his economic playbook.

Bush, long considered a moderate Republican, pivoted to the economic right after getting the keys to the White House. And that started with taxes.

Does "Read my lips: no new taxes," ring any bells? Bush made the promise, but a struggling U.S. economy and ballooning federal deficit held him back from keeping it.

  • In 1990, Bush approved measures to raise some taxes. That contributed to him losing his party's favor and, eventually, reelection.

Fast forward: Markets will close Wednesday for a National Day of Mourning.

And Bush's D.C. funeral could sidetrack congressional leaders' plans to greenlight a spending bill this week (in order to avoid a partial government shutdown when seven other spending bills expire next weekend), per the WSJ's sources. So? Look out for a short term patch instead.

INTERNATIONAL

The Yellow Vests Take to the Streets in Paris

In France this week, authorities are dealing with the fallout of the worst unrest the country's seen in a decade—a string of demonstrations dubbed the "Yellow Vest" protests. Saturday's riots in the capital city alone could cost Paris $1.7 million.

What's going on? It's (at least partly) about gas prices. Starting last month, French drivers began holding demonstrations across the country to push back against rising taxes on gas and diesel.

French President Emmanuel Macron announced those taxes earlier this year in a bid to slash the country's reliance on fossil fuels.

  • The taxes will increase the price of fuel by about 30 cents/gallon to start.
  • Gas already costs about $7.06/gallon in France.

Now, France is considering instituting a state of emergency...just in time for holiday tourists. Protests have damaged popular visitor meccas from the Arc de Triomphe to the Tuileries Garden.

Zoom out: What started as a protest against climbing gas prices has evolved into a full-fledged objection of Macron's economic reforms (which many claim disproportionately favor the rich).

AVIATION

Name the Airport

Picture
You might not believe us...but that's New York's LaGuardia Airport. Yes, the same one former VP Joe Biden compared to a "third world country." Eleven new gates in Terminal B opened on Saturday in the first big reveal of an $8 billion redevelopment.

So when you fly in to visit us in NYC, what can you expect to find in the new concourse?

  • Flights operated by Air Canada, American Airlines, and Southwest...with United joining the party next year.
  • Plenty of new retailers including Shake Shack, Irving Farm Coffee Roasters, and FAO Schwarz.
  • 250,000 sq. ft. of space with 55-foot-high ceilings.

Zoom out: Delta Air Lines and private entity LaGuardia Gateway Partners are paying for two-thirds of the overhaul, with the Port Authority of New York & New Jersey picking up the rest of the tab.

+ Further reading: "The Airports of the Future Have Arrived" in the New York Times.

CALENDAR

What's on Tap

Don't forget to flip to the last page of your "Cats Doing Yoga" wall calendar. It's the final stretch of 2018.

Monday: Construction spending

Tuesday: Motor vehicle sales stats; UK Parliament begins five days of Brexit debate; earnings (AutoZone, Dollar General, Hewlett Packard Enterprise, Toll Bros.)

Wednesday: Google CEO Sundar Pichai testifies in front of Congress; Fed releases its final Beige Book of the year and Fed Chair Jerome Powell gives an economic update to Congress; earnings (American Eagle, Lululemon); Grammy Award nominations announced

Thursday: Trade deficit; OPEC and friends meet in Vienna; earnings (Broadcom, Kroger, Ulta)

Friday: November jobs report; National Pearl Harbor Remembrance Day

WHAT ELSE IS BREWING

  • The G20 summit had plenty more going on than just U.S.-China trade negotiations.
  • Nexstar has reportedly agreed to buy Tribune Media for $4.1 billion, per Reuters. A deal would make it the largest local TV station operator in the U.S.
  • Amazon is reportedly testing its cashierless checkout technology in bigger retail formats in Seattle, per the WSJ.
  • Deutsche Bank said it's not at risk of a takeover despite shares falling to a record low Friday thanks to its money laundering scandal.
  • BuzzFeed News published some of the research Facebook allegedly commissioned on billionaire George Soros.

BREAKROOM

From the Crew
Picture
What other holiday traditions are we missing?

Business Trivia
Rank these social media platforms by monthly active users:

WhatsApp, YouTube, Instagram, Facebook Messenger

(Answer located at bottom of newsletter)

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Breakroom Answers


Business Trivia
YouTube (1.9 billion), WhatsApp (1.5 billion), FB Messenger (1.3 billion), Instagram (1 billlion). (Source: Statista)

 

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