1. Dollar Rises as Stocks, U.S. Futures Retreat
After a buying frenzy swept across global markets last week, investors are starting Monday in a cautious mood. The dollar climbed against all its major peers, with demand supported by elevated US bond yields. European stocks pulled back from a 10-month high and S&P 500 futures dipped. Weighing on the minds of investors are worries that equities are running too hot and valuations are stretched at a time when major parts of the world are grappling with the worst of the pandemic.
Futures on the S&P 500 Index decreased 0.9% as of early morning New York time.
The Stoxx Europe 600 Index fell 0.2%.
The MSCI Asia Pacific Index declined 0.2%.
The MSCI Emerging Market Index increased 0.2%.
2. Democrats Eye Fast Trump Impeachment Days Before Biden Sworn In
House Speaker Nancy Pelosi is readying Democrats for a lightning-fast second impeachment of President Donald Trump this week that risks consuming Congress in a bitter political fight just as President-elect Joe Biden’s administration is attempting to get off the ground. With a groundswell of anger among Democrats over the storming of the Capitol on Jan. 6 by a mob encouraged by Trump, Pelosi said Sunday night the House would take up a resolution to impeach Trump for the second time in less than two years unless Vice President Mike Pence and the cabinet invoke the 25th Amendment this week to remove Trump from office.
3. Wall Street Cuts Campaign Spending to Condemn U.S. Politicians
Wall Street will use the power of its campaign-giving to broadly condemn U.S. politicians, including those whose attempt to overturn the November presidential election spurred last week’s attack on the Capitol. Goldman Sachs Group will probably curtail donations to leaders who tried to block the election result, and Morgan Stanley similarly singled out members of Congress who withheld their votes to certify President-elect Joe Biden’s win in November, pausing its contributions to them. JPMorgan Chase & Co., the largest U.S. bank by assets, said it’s planning a six-month suspension to both Republicans and Democrats, and Citigroup said it intends to temporarily stop all political contributions this quarter.
4. Tech Under Attack After Parler Goes Dark, Twitter Drops
Tech firms tried to contain a mounting backlash against their social media sites, with shares of Twitter and Facebook falling in early trading and rival platform Parler forced offline by Amazon.com. Twitter fell 7.8% in pre-market trading in New York after it banned President Donald Trump permanently for risking incitement to violence, citing posts referring to riots in the U.S. capital last week, removing one of Twitter’s biggest accounts. Facebook’s shares were down 2%. Free-speech-centric network Parler was taken offline early on Monday after Amazon Web Services shut down access to its servers, leaving it without an online home. Both Google and Apple kicked Parler from their stores, making it almost impossible to download the app.
5. Bitcoin’s Biggest Plunge Since March Shakes Faith in Crypto Boom
A steep selloff in Bitcoin is fueling concern that the cryptocurrency bubble may be about to burst. Bitcoin slid as much as 21% over Sunday and Monday in the biggest two-day slide since March. While the digital token recovered some of the losses during the European session, it was still down for the day. “It’s to be determined whether this is the start of a larger correction, but we have now seen this parabola break so it might just be,” said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore. Bitcoin has more than quadrupled in the past year, evoking memories of the 2017 mania that first made cryptocurrencies a household name before prices collapsed just as quickly. Prices almost reached $42,000 on Jan. 8 with retail traders and Wall Street investors clamouring for a piece of the action.
6. China Stocks Slump Most in Three Weeks on Valuation Concerns
Chinese stocks fell the most in three weeks, led by consumer shares and commodity producers, amid concern valuations for the most popular stocks were stretched and as metal prices slumped. The CSI 300 Index dropped as much 1.5% before paring losses to 1% at the close. Gauges tracking energy, consumer staples and materials producers slumped more than 2%. Mainland investors appeared to flock to Hong Kong equities instead, buying a record HK$19.5 billion ($2.5 billion) of the city’s shares through trading links Monday. Jitters are appearing in China’s $11 trillion equity market after the gauge surpassed its bubble peak in 2015.
7. Hedge Funds Head for Cover as Dollar Rebound Gathers Pace
The dollar rebound is picking up pace, with signs that speculative traders are busy covering short positions after U.S. Treasury yields surged. Traders are reporting strong demand from leveraged funds for the dollar on Monday, with the greenback leading major currency advances. That adds to data released from the Commodity Futures Trading Commission that showed them trimming long positions on major currencies including the euro and the pound. “The dollar is so extremely oversold, over-hated, and over-shorted that it all but has to rally for a while at some point soon,” said Matt Maley, chief market strategist at Miller Tabak + Co. “The dollar is getting very ripe for a tradable bounce — one that will last at least several weeks and maybe even a couple of months.”
8. Brexit Drags U.K. Below U.S. in Global Business Location Ranking
Britain is significantly less attractive as an international business location because of Brexit but remains well positioned compared with other major economies. The U.K. slipped behind the U.S. to second place in the latest rankings, though it remains ahead of the rest of its Group of Seven partners. Canada was fourth, followed by Germany in 17th, France in 18th, Japan in 20th and Italy in 21st and final spot. “Brexit has been a major liability for the U.K.,” the authors of the study wrote. “Future British governments have a long road ahead if they wish to regain their economic dynamism, as promised by Brexit advocates.”
9. T-Mobile to Borrow Up to $2 Billion in Heated Spectrum Bid
T-Mobile US Inc. is borrowing as much as $2 billion as the mobile carrier engages in an expensive battle to buy more spectrum assets. The company will issue the debt in three parts, maturing as late as 2031. Communications providers are amping up their bids in a 5G airwaves auction in the U.S., which may see T-Mobile’s peers such as Verizon and AT&T tap the debt markets as well. The auction — which still has several more rounds of bidding ahead — has now surged past $80 billion, well above analysts’ estimates of $47 billion. The frenzy underscores how crucial these mid-band frequencies are to companies trying to seize global leadership in emerging 5G technology. The airwaves are expected to drive a yearslong surge of profits when deployed for next-generation mobile devices, autonomous vehicles, health-care equipment and manufacturing facilities.
10. Staples Seeks to Buy Office Depot Parent in $2.1 Billion Deal
There could be consolidation ahead in the office-products space, with Staples outlining Monday a proposal to acquire the parent company of Office Depot in a deal that would value the target company at $2.1 billion. A deal would bring together two of the biggest names in office supplies at a time when brick-and-mortar retailers are struggling to cope with broad economic shutdowns in the pandemic. Staples had previously tried to buy Office Depot, but the $6.3 billion acquisition was called off in 2016 amid antitrust scrutiny.
