Even an unusual Trump-Powell meeting can't spook investors right now
Posted November 19, 2019 7:20 a.m. EST
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You'd think that Monday's surprise meeting between Federal Reserve Chairman Jerome Powell and President Donald Trump might leave investors feeling shaken.
After all, it's the first time the president and the nation's top monetary policymaker have had such a meeting since an informal dinner last February. And Trump has routinely attacked Powell since then, pressuring him to cut interest rates. His tweets have been shown to move markets.
But though the dollar initially dropped —Trump tweeted that the "very good & cordial meeting" included a discussion of "dollar strength & its effect on manufacturing" — the currency has since bounced back, and US stocks are on track for another day of record highs. Where's the worry?
First, the Fed explicitly said that Powell refrained from discussing what policymakers planned to do at upcoming meetings, distancing itself from any suggestion of political interference, per my CNN Business colleague Donna Borak.
It's also getting harder to puncture optimism among traders that the United States and China are getting close to a "phase one" trade deal that could include some tariff relief, despite some anxiety coming out of Beijing. News that the Trump administration has once again extended a waiver allowing American companies to sell components to Huawei could be read as a goodwill gesture.
Goldman Sachs, which believes tariffs have probably peaked, said in a note this week that it expects the global economic impact of the trade war to ease next year.
"Barring another round of major escalation, we expect the negative effect of the trade war on both US and China real GDP growth to gradually fade in 2020," chief economist Jan Hatzius and colleagues wrote in a note.
Of course, some skeptics remain. Here's Simona Gambarini from Capital Economics: "Optimism about trade has been a factor behind the rally in global equities in the past month. But with a 'mini-deal' now largely discounted in the markets, and economic growth unlikely to do better than stagnate over the next couple of years, we suspect that any further upside for stock prices will be limited."
Demand for Alibaba's Hong Kong listing is through the roof
Investors are falling over themselves to buy into Alibaba's debut on the Hong Kong stock market, my CNN Business colleague Sherisse Pham reports.
China's biggest e-commerce company will stop taking orders from retail investors for its massive share sale on Tuesday after seeing stronger-than-expected demand, according to a person familiar with the matter.
The backdrop: The enthusiasm is a vote of confidence in the Asian financial hub, which has been rocked by months of civil unrest. The Hang Seng index fell 4.8% last week as the city grappled with increasing levels of violence. So far this week, the index has gained 2.9% despite further escalation centered around the siege of a university.
Alibaba's call: The company will close its order books on Tuesday at 12 p.m. ET, half a day earlier than originally planned. The Hong Kong listing was "multiple times subscribed," the person familiar said.
They added that the final price retail investors will pay for the Hong Kong listing will be based on Alibaba's closing price Tuesday in New York, where its shares have been traded since 2014.
At current prices, the listing should bring in $13 billion if the company's bankers exercise an option to purchase additional shares.
This major airline is going carbon neutral
European airlines have been leading the way in cutting their carbon footprint amid growing alarm about the climate crisis. But EasyJet, one of the continent's top carriers, just took a big leap forward.
The company announced Tuesday that it will begin offsetting the emissions from its airplanes effective immediately — and in so doing become the world's first major airline to reduce its net emissions to zero, my CNN Business colleague Rishi Iyengar reports.
The British budget airline said it expects to spend more than $32 million in the next year to offset all carbon emissions from its fleet of 331 planes, either by planting trees or reducing emissions elsewhere in its business. But it wants to go further; the carrier also has partnerships to research hybrid and electric aircraft that could be used for short-haul European flights.
Big picture: Airlines are under increasing pressure to take urgent action as rising global awareness about the climate crisis poses ever greater risks to their business, Rishi notes. Environmental activists argue that aviation emissions are rising fast, and if the industry were a country, it would rank among the top 10 emitters.
Aramark, Home Depot, Kohl's and TJX report earnings before US markets open. Urban Outfitters follows after the close.
US housing starts and building permits for October arrive at 8:30 a.m. ET.
Coming tomorrow: Investors will pore over minutes from the Federal Reserve's October meeting for clues on its next move.