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Weekend Scan: S&P 500 back in the black; PBOC slashes rates
Good morning everyone. The bulls were all out this week after ECB President Mario Draghi signaled a Christmas treat from the ECB. Spoos wiped out all of its losses for the year, while the FTSE 100 surged to a two-month high. The Nikkei also posted its best session in a month, climbing over 2% just as the yen – always negatively correlated – chalked up its sixth-straight decline against the resurgent dollar.
It wasn’t all Draghi’s doing though. Strong earnings in the U.S. also gave stocks a boost, while another round of cheap money from the PBOC added a bit of oomph to the party as well.
Here’s what else you need to know:
PBOC cuts rates. In a surprise move, China’s central bank slashed its benchmark one-year lending and deposit rates by 0.25 bps. This is the sixth rate cut from the bank since November. Interestingly, Capital Economics points out that this cut came 59 days after the previous one, which in turn came 59 days after the move before. Wall Street Journal (paywall)
“Let Hong Kong elect its own leader.” British Prime Minister David Cameron, speaking to Chinese President Xi Jinping at Chequers, reportedly sought assurance that Hong Kong “would remain semi-autonomous and entitled to choose its own leadership without prior vetting by the Chinese government.” Hong Kong lawmakers however seem to be disappointed: “He should have raised it at a higher level occasion, such as a press conference or other public events...not raising the matter publicly has given people an impression the city a low priority for Britain” South China Morning Post (paywall)
Deutsche Bank may slash bonuses by a third. Deutsche Bank, in what appears to be a trend in large investment banks, is expected to cut its bonus budget by $566 million – almost a third. Some MDs are reportedly getting stiffed altogether. Fortune
Here comes Patricia. Mexico is battening down the hatches as the strongest hurricane ever recorded heads toward the country’s Pacific coast. Winds are reaching 200-mph, making this storm the most dangerous as well. CNN
Nigeria bombing kills 37. At least 37 people were killed and more than 100 wounded Friday when bombs went off in mosques. Militant group Boko Haram is suspected to be behind the attack. Reuters
Died: Pimco’s Walter Gerken. The 93-year-old Gerken served as chairman and CEO of Pacific Life Insurance from 1975 to 1986. In the 1960s, Gerken helped turn the firm’s investment unit into the separate subsidiary that became Pimco in 1971. New York Times
Google, Amazon in the stratosphere on strong earnings. It wasn’t enough that Google, now a subsidiary of Alphabet, has joined Apple in the $500 billion+ club after blow out earnings. Plus, the newly restructured company announced a $5.1 billion stock buyout. That is some debut. Meanwhile, Amazon shocked with two consecutive quarters of earnings, pushing its capitalization to more than $300 billion.