Your Monday Market Blip 11/25/19

Your Monday Market Blip 11/25/19

Stocks bolted higher with the Dow moving back over 28,000 level thanks to positive trade related news. At the close all indexes were in the green and the Dow was at 28,066 up 190 points on heavy trading volume.

Over the weekend a couple of things happened in China. One was the CCP (Chinese Community Party) said it would tighten enforcement for intellectual property theft and the other was massive local elections in Hong Kong which favored pro-democracy candidates. The IP pledge is a big deal since it is a key item for the US as it negotiates a trade deal with China. China had resisted it since they benefited from the theft but also to go along with reforms means they need to change their court system. Meanwhile the Hong Kong local elections saw voter turnout jump from 47% to 71% as pro-democracy seats in local gubment went from 25% to almost 90%. The CCP had said the “silent majority” would turn out and support pro-China candidates but this did not happen. The vote puts added pressure on the CCP plus pro-democracy sentiments in Taiwan surged following the Hong Kong results.

Charles “Chuck” Schwab (not to be confused with Les Schwab Tire Centers) announced it was buying TD Ameritrade online brokerage for $26 billion. If this goes through it means the combined company will house about $5 trillion in assets. The move is an effort to counter competition from startup fin tech robo advisors. Schwab is trying to bulk up and since margins are tight it needs volume to make up the difference. The buyout highlights a trend of commoditization of investment services where diversity and top down asset allocation takes precedence over creativity and performance.

Shares of Tesla rebounded a bit after Elon Musk announced that over 200k orders had been placed for the new cybertruck. While you only need to put down $100 to reserve your spot the orders showed there is some interest for the tank shaped rig, broken glass and all. I guess this success proves the “Broken Glass economic theory” where economist think that when someone breaks the window of a shoe store it stimulates the economy since the owner of the store needs to spend money and hire workers to get the window replaced.

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