U.S. Stock Market Outlook | The three major index futures are mixed, and the market holds its breath for tonight's CPI

1. As of December 11th (Wednesday) before the US stock market opens, the three major US stock index futures are mixed. As of the time of writing, Dow futures are down 0.13%, S&P 500 futures are up 0.11%, and Nasdaq futures are up 0.22%.

1. As of the time of writing, the German DAX index is up 0.08%, the UK FTSE 100 index is up 0.08%, the French CAC 40 index is up 0.07%, and the Euro Stoxx 50 index is down 0.07%.

1. As of the time of writing, WTI crude oil is up 1.04%, priced at $69.30 per barrel. Brent crude oil is up 0.97%, priced at $72.89 per barrel.

Market News

Is a rate cut by the Federal Reserve next week a foregone conclusion? The market holds its breath for tonight's CPI. The U.S. Bureau of Labor Statistics will release the U.S. Consumer Price Index (CPI) for November at 21:30 Beijing time on Wednesday. This report is expected to show that progress in reducing inflation has stalled, but it is not yet at the point where the Federal Reserve will not cut rates next week. The market expects the U.S. November CPI to rise 2.7% year-on-year, an increase from the previous month's 2.6%. The CPI is a broad measure of the cost of goods and services in the U.S. economy. The market expects the core CPI, excluding food and energy, to rise 3.3% year-on-year and 0.3% month-on-month in November, both unchanged from October. Given that the Federal Reserve has set a target annual inflation rate of 2%, this report will provide more evidence of the high cost of living faced by American households.

90% of economists predict the Federal Reserve will announce a 25 basis point rate cut next week. 90% of economists predict that the Federal Reserve will announce a 25 basis point rate cut at its policy meeting on December 18, lowering the federal funds rate to 4.25%-4.50%. Meanwhile, most economists expect the Federal Reserve may pause further rate cuts in late January, mainly due to concerns over rising inflation risks. Policies proposed by Trump—from import tariffs to tax cuts—are expected to bring inflationary pressures. Trump is expected to quickly push his policy agenda after taking office on January 20, which could have significant implications for the Federal Reserve's monetary policy. In the latest survey, 93 out of 103 economists expect the Federal Reserve to cut rates by 25 basis points at the meeting on December 17-18. Only 10 economists believe the rates will remain unchanged. The pricing in the interest rate futures market also almost fully reflects this rate cut expectation The Bank of Japan believes the cost of waiting for the next interest rate hike is not high, and the yen experiences significant short-term fluctuations. The Bank of Japan believes that the cost of waiting for the next interest rate hike is not high. If a rate hike is proposed, some policymakers do not oppose raising rates in December. Officials reportedly believe that the next rate hike is just a matter of time, rather than whether to raise rates. Additionally, they believe that the risk of the yen's depreciation increasing inflationary pressures at this stage is low. The yen subsequently experienced significant volatility, with the USD/JPY briefly dropping to a low of 150.99 before rebounding by about 100 points, now returning to around the 152 level. From the current situation, traders expect about a 26% chance that the Bank of Japan will raise rates by 25 basis points next week.

Goldman Sachs remains bullish on gold: Gold prices could rise to $3,000 even with a strong dollar! Goldman Sachs stated that the recent decline in gold prices is only temporary, and it is still on the rise. Goldman Sachs pointed out three main reasons why gold prices will continue to rise: the Federal Reserve's loose monetary policy, global central bank purchases, and investor buying. Since 2022, even as U.S. interest rates have climbed, gold prices have surged by 40%. Typically, higher interest rates reduce the attractiveness of gold, as gold does not pay any interest like bonds. Then, Goldman Sachs presented a familiar argument that in 2022, during the outbreak of the Russia-Ukraine war and the subsequent freezing of Russian assets by Western countries, gold became an attractive option relative to the dollar. Global central banks are buying gold to "diversify reserves, reduce dependence on the dollar, and turn to an asset that cannot be frozen... gold."

Individual Stock News

GameStop (GME.US) Q3 sales decline year-on-year, earnings exceed expectations. American video game retailer GameStop has released its latest third-quarter financial report, showing a year-on-year decline in sales, falling short of Wall Street expectations. However, the company's adjusted earnings per share exceeded market expectations. GameStop's adjusted earnings per share for the third quarter were $0.06, higher than the loss of $0.03 expected by FactSet analysts. Net sales were $860.3 million, below analysts' expectations of $888 million. Compared to $1.08 billion in the same period last year, this represents a 20% decline. Despite sales falling short of expectations, GameStop's stock price rose over 10% in after-hours trading due to earnings exceeding market expectations.

Biden is expected to formally block Nippon Steel's acquisition of U.S. Steel (X.US). Sources reveal that Biden plans to formally block the deal for U.S. Steel (X.US) to be sold to Nippon Steel for approximately $15 billion later this month on national security grounds. Additionally, some insiders indicated that if Biden decides to block the deal, Nippon Steel and U.S. Steel are prepared to file a lawsuit. A spokesperson for U.S. Steel stated, "This deal should be approved based on its actual circumstances." Nippon Steel, in a statement, said, "Politics continues to override genuine national security interests, which is inappropriate—especially given the indispensable alliance between the U.S. and Japan is an important foundation." "Nippon Steel remains confident in the fairness and equity of the U.S. and its legal system. If necessary, we will work with U.S. Steel to consider and take all possible measures to reach a fair conclusion Trump leans towards financial deregulation, Goldman Sachs (GS.US) cheers as the M&A market welcomes good news. Goldman Sachs' stock is expected to achieve its largest increase in 15 years. The company's CEO David Solomon stated that good days may just be beginning. Solomon said on Tuesday that the incoming Trump administration "seems to be a government that will run a growth script, which will be beneficial for Goldman Sachs." He expressed optimism that this administration will implement a very, very growth-friendly agenda. Solomon pointed out that expectations for a new business environment suggest that Trump may reduce regulation, which would drive up asset prices and encourage trading activity—key factors in driving the growth of his company's business. When discussing expectations for a relaxed regulatory environment, Solomon stated, "It seems we will swing the pendulum back a bit, which will benefit more investments."

Tesla (TSLA.US) sees a "good start" in December sales in China: 21,900 cars sold in the first week, setting a Q4 record. Tesla China announced on Wednesday that the brand's electric vehicles sold a total of 21,900 units in the first week of December in the Chinese market, marking the highest weekly car sales since the start of Q4 2024. Since Trump won the U.S. presidential election, Tesla's stock price has surged over 65%, significantly outperforming the U.S. stock market—S&P 500 index—and also outpacing the other six giants in the "Magnificent Seven." This rare weekly sales disclosure comes after Tesla achieved its best single-month sales performance in China this year, with overall sales exceeding 73,000 units in November, setting a new monthly record for the year.

General Motors (GM.US) exits the autonomous taxi market! Its subsidiary Cruise will merge with the technology team. General Motors announced on Tuesday that it will no longer fund the development of autonomous taxis (robotaxis) for its autonomous driving division Cruise, but will merge the division into its broader technology team. GM stated that the decision was made due to the increasingly competitive autonomous taxi market, capital allocation priorities, and the significant time and resources required to develop the business. The company added that it plans to "realign its autonomous driving strategy," focusing on advanced driver-assistance systems and autonomous driving systems for personal vehicles. GM stated in a press release that it currently holds about 90% of Cruise's shares and has reached an agreement with other shareholders to increase its stake to over 97%.

Important Economic Data and Event Forecasts

Beijing time 21:30: U.S. November CPI year-on-year unadjusted (%).

Beijing time 23:00: U.S. December IPSOS main consumer sentiment index PCSI.

Beijing time 23:30: U.S. EIA crude oil inventory change for the week ending December 6 (10,000 barrels).

Next day early morning Beijing time 02:00: U.S. December 11 10-year Treasury auction - total amount (billion USD)

Earnings Forecast

Thursday morning: Adobe (ADBE.US)

Thursday pre-market: Broadcom (AVGO.US), Costco (COST.US)