| By Julia Horowitz • Tuesday, September 3 | | | | Welcome back, and happy Tuesday. 📲 In today's newsletter: JPMorgan stays bullish, the pound breaks $1.20 and Aramco sends another IPO signal.
US stock futures point lower as traders return to work after the holiday. Markets in Europe faced losses in early trading, while stocks in Asia were mixed. The Shanghai Composite, however, closed at its highest level in more than a month.
▸ Forwarded this newsletter? Want global markets news and analysis from CNN Business reporters every morning? You can sign up here. | | | What's happening now in markets: MARKET DATA AS OF 9/3/19 6:25 AM ET | | MARKET FLASH Some say it's time to sell stocks. But not everyone
As trade uncertainty prevails, some investors think it's time to cut exposure to stocks. But that position isn't universal.
Take JPMorgan, which still sees plenty of life left in the longest-ever bull market, and expects stocks to advance through the end of the year.
"We continue to believe that global equities will advance further before the next US recession strikes," strategists including Mislav Matejka, head of global and European equity strategy, said in a recent note to clients.
The thinking: The Fed is easing, and the European Central Bank appears ready to restart its bond-buying program. Jobless claims remain low, and second quarter earnings beat estimates. JPMorgan's strategists also said they see signs that global manufacturing woes have bottomed out, and global activity "is likely to look better into year end." | |
Of course, the trade war remains the big unknown. But JPMorgan believes de-escalation could be in the cards.
"We think ... that the US administration will be sensitive to adverse impacts from trade uncertainty on corporates and on the consumer, and that the latest threats might not be implemented after all," per Matejka's team.
Remember: Last week, UBS advised clients to lower the proportion of stocks in their portfolios — the first time since the eurozone crisis that the world's biggest wealth manager has gone "underweight" on equities.
"We do not see this as the best environment for taking risks on stocks," Mark Haefele, chief investment officer at UBS Wealth Management, reiterated Monday.
But plenty of investors see no reason to sing that tune just yet. Bank of America Merrill Lynch said last week that its Bull & Bear Indicator is showing a "buy" signal for riskier assets like stocks for the first time since January.
Investor insight: This tension is exactly why the US jobs report out Friday will be monitored so closely for any signs of weakness. The US labor market still looks strong. Should that change, it will be harder for the bulls to keep making their case. | | VOICES On the fate of Brexit "The events in Parliament in the next week and a half will be crucial."
PAUL DALES, CHIEF UK ECONOMIST FOR CAPITAL ECONOMICS
Follow along with CNN's live updates. | | CURRENCY MONITOR The pound can't catch a break | |
The pound dropped below $1.20 for the first time since 2017 on Tuesday amid growing uncertainty about the future of Brexit and talk of a third UK general election in four years.
The currency fell as much as 0.9% against the dollar to $1.1957. That's the lowest level since a mystery flash crash in October 2016, according to FXTM, a currency broker.
Big picture: The move comes as UK lawmakers kick off a high-stakes week for Britain's future. Lawmakers who want to prevent a messy exit from the European Union will attempt Tuesday to take control of the parliamentary agenda so they can pass legislation outlawing a no-deal Brexit on October 31.
The risk: UK media reported that Prime Minister Boris Johnson's government could push for an October 14 election if lawmakers derail his "do or die" strategy to deliver Brexit with or without a deal that protects trade.
Investor insight: This environment poses little upside for the pound, which has been gutted over the past three years by the lack of clarity over the UK's future relationship with its biggest trading partner. Expect more volatility ahead. | | UP NEXT
▸ The ISM Manufacturing Index for August is due at 10 a.m. ET.
▸ Britain's Parliament returns for a showdown over Brexit.
Coming tomorrow: The latest US balance of trade arrives just as the US-China trade war heats up.
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WHAT WE'RE READING AND WATCHING
▸ Elon Musk visited China and won a tax break for Tesla (CNN Business)
▸ US and China struggle to set schedule for next meeting (Bloomberg)
▸ The trade war is pushing garment companies back to Bangladesh (WSJ)
▸ Bondholders will determine the fate of Norwegian Air (CNN Business)
▸ Zara tries to distance itself from controversy in Hong Kong (Reuters)
▸ Argentina slaps controls on the peso as currency crisis grows (CNN Business)
▸ Facebook could start hiding like counts, too (TechCrunch)
▸ Getting your medical records through an app? There's a catch (NYT) | | | OKAY, SO... Could the world's biggest IPO be back on? Nothing is set in stone. But signs are growing that Saudi Aramco is once again preparing for a record-breaking public market debut.
Saudi Arabia's state oil producer confirmed Tuesday that it had installed Yasir Al-Rumayyan, head of the country's sovereign wealth fund, as its new chairman. The move is seen as another indicator that the kingdom is getting the company ready for a public offering after a long delay. If all goes well, it could be the biggest IPO in history.
Still, an Aramco IPO in 2020 or 2021 would face substantial risks. Stock markets have been choppy at best recently, and with global growth slowing it's difficult to predict what oil prices will look like in one or two years. Problems that dogged the IPO last time around, including disagreement over the company's valuation, haven't exactly been resolved.
In one line: we'll see. | | | | |
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