CapMarketComment: Friday December 16 Daily Market Primer

· US stocks rose again yesterday, and European stocks are at 11 month highs
· Verizon renegotiates the deal for Yahoo
· China is feeling pressure from the Fed hike

Happy Friday. US stocks rose yesterday after Wednesday’s Fed day drop, putting the Dow in position for another run at 20,000. Stock markets are mostly up in Asia and Europe on Friday, with European stocks hitting an 11 month high, and S&P futures are pretty flat this morning. Finance stocks had another good day, with AMEX, GS, and JPM up about 1%. The US 10 year is trading at 2.57% this morning after hitting 2.6% yesterday. The dollar rallied following the Fed decision on Wednesday, but is easing today against the Euro and Yen.

	LAST	CHANGE	% CHANGE
DJIA	19,852.24	59.71	0.30%
Nasdaq	5,456.85	20.18	0.37%
S&P 500	2,262.03	8.75	0.39%
Russell 2000	1,366.41	10.39	0.77%
Global Dow	2,545.42	5.68	0.22%
Stoxx Europe 600	359.62	0.83	0.22%
Nikkei 225	19,401.15	127.36	0.66%
UK: FTSE 100	7,008.76	9.75	0.13%
CBOE Volatility	12.61	-0.18	-1.41%
Australia: S&P/ASX 200	5,532.90	-5.70	-0.10%
China: Shanghai Composite	3,122.98	5.30	0.17%
Hong Kong: Hang Seng	22,020.75	-38.65	-0.18%
Europe Dow	1,557.05	7.18	-0.11%
India: S&P BSE Sensex	26,489.56	-29.51	0.46%
France: CAC 40	4,833.94	14.71	0.31%
Germany: DAX	11,400.07	33.67	0.30%
Italy: FTSE MIB	19,028.19	33.40	0.18%
Spain: IBEX 35	9,363.00	22.20	0.24%
U.S. 3 Month	0.51	0/32
U.S. 2 Year	1.261	1/32
U.S. 5 Year	2.07	3/32
U.S. 10 Year	2.574	8/32
U.S. 30 Year	3.141	12/32
Germany 2 Year	-0.793	1/32
Germany 10 Year	0.312	17/32
Crude Oil	51.08	0.18	0.35%
Brent Crude	54.37	0.35	0.65%
Natural Gas	3.415	-0.042	-1.21%
S&P GSCI	389.71	4.07	1.06%
E-mini S&P 500	2262.5	4	0.18%

M&A deals are hitting the news as French drug maker Sanofi is in talks to acquire Swiss biopharma Actelion. Mylan launched a generic EpiPen that is 50% cheaper. Verizon is trying to dial down the price they are willing to pay for Yahoo after the company reported yesterday what may be the biggest hack in history which occurred in 2013. Yahoo should make a fast deal before anything else goes wrong. Mr. Trump may appoint CNBC news contributor and former Bear Stearns chief economist Larry Kudlow, who loves to rant about his time in the Reagan administration, to head the Council of Economic Advisors. And, China is feeling pressure on their foreign currency reserves following the Fed hike (US rate hike shakes up Chinese economy, below).

Here’s the news:

Dollar halts its rally

After yesterday's surge, the dollar is easing against most major peers this morning. The reversal will come as a relief to emerging markets in particular as a strong greenback risked exacerbating what are already short supplies of the U.S. currency. The euro was trading 0.5 percent higher at $1.0466, with the yen at 118.03 to the dollar at 5:13 a.m. ET. There was also relief for holders of gold as the yellow metal recouped some of its post-Fed losses.

Year-end M&A

Sanofi is in advanced talks to acquire Actelion Ltd., with a deal priced at about $275 a share possible by next week, according to people with knowledge of the matter. Shares in Actelion, which trades in Zurich, had jumped 9.3 percent by 5:04 a.m. ET. Meanwhile, Europe's largest insurer, Allianz SE is in discussions with Assicurazioni Generali SpA as it weighs a bid for the company's French operations, according to people familiar with the matter. Despite the obstacle posed, to any proposed deal, by the need for regulatory approval, shares in Generali rose as much as 5.4 percent in Milan.

Brexit talks

It's a day ending in a y, so chatter about talks about Brexit negotiations continue to lead discussions in the U.K. While Theresa May struck a lonely figure at yesterday's EU summit, it was the House of Lords in London that had the latest piece of advice for the Prime Minister, when it warned that Brexit may put Britons' safety at risk. On the European side, there are some signs of division emerging among the numerous parties on how to proceed with negotiations, when they do finally get underway.

Markets mixed

Overnight, the MSCI Asia Pacific Index rose 0.2 percent while Japan's Topix index added 0.5 percent to erase its losses for the year. In Europe, the Stoxx 600 Index was 0.2 percent lower at 5:23 a.m. ET as stocks hovered need their highest level since January. S&P 500 futures were broadly unchanged as investors continue to wait for the Dow to reach 20,000.

Trump appointments

President-elect Donald Trump continues to make appointments, and signaled a major shift in its policy toward Israel by nominating David Friedman, who opposes a two-state solution and backs Israeli settlement activity, as ambassador to that country. The PEOTUS is said to be close to picking economic commentator Larry Kudlow to be chairman of the White House Council of Economic Advisers.

Bonds are flashing a warning sign for stocks. The US 10-year yield ticked above 2.60% on Thursday, the level at which Societe Generale's Cross Asset Allocation team says stocks become "rich" to bonds. The US 10-year yield is down 3 basis points at 2.57%.

Eurozone inflation is finally being sustained. Eurozone final CPI printed 0.6% year-over-year in November, its highest level in more than two years. The euro is up 0.3% at 1.0442 against the dollar.

The UK will have to pay a big tab when Article 50 is triggered. Michel Barnier, one of the European Union's chief negotiators, and other EU officials said the UK would have to pay the European Union 50 billion pounds ($62.1 billion) when it triggers Article 50, the mechanism to begin the UK's exit, Sky News reports. The British pound is stronger by 0.1% at 1.2428 versus the dollar.

The world's oldest bank is getting more time to raise cash. Monte Paschi has received regulatory approval to push back the deadline of its debt-for-equity swap to December 21, Bloomberg reports. The Italian bank must raise €5 billion to avoid needing a state rescue.

Gilead must pay Merck $2.5 billion in royalties. A federal jury has awarded Merck a $2.54 billion reward in a patent verdict against Gilead related to its hepatitis C drugs Sovaldi and Harvoni, Reuters reports.

Trivago's IPO priced below expectations. The hotel-booking site raised $287 million through its initial public offering, which priced at $11 a share, well below the range of $13 to $15 that was expected.

Oracle reported a mixed quarter. The company earned $0.61 a share on revenue of $9.0 billion, compared with Wall Street's expectation for earnings of $0.60 on revenue of $9.11 billion.

Priceline has a new CEO. Glenn Fogel, a 16-year veteran of the firm and current head of strategy and executive vice president of corporate development, has been named CEO.

Stock markets around the world are up. Japan's Nikkei (+0.7%) led the overnight advance, and Italy's MIB (+2.1%) paces the gains in Europe. The S&P 500 is set to open little changed near 2,265.

US economic data is light. Housing starts will be released at 8:30 a.m. ET and the Baker Hughes rig count will cross the wires at 1 p.m. ET.

The Mighty Greenback
A dollar surge that began after the U.S. election has accelerated with this week’s Federal Reserve interest-rate increase, pointing to a possible reckoning in coming months for economies around the globe. The WSJ Dollar Index of the currency’s value against 16 major trading partners hit a 14-year high Thursday. A sharp increase in the dollar stands to have long-lived economic consequences, potentially hampering a U.S. earnings recovery and making the trillions in dollar-denominated debt around the world more expensive to pay back. In China, fears that a rising dollar will destabilize trading in the yuan sent the currency to its lowest against the dollar in over eight years. Meanwhile, Chinese bond yields soared and authorities halted trading in some futures contracts for the first time on Thursday, as a global bond-market selloff worsened.

Failed Attempt
Russian hackers tried to penetrate the computer networks of the RNC, using the same techniques that allowed them to infiltrate its Democratic counterpart, according to U.S. officials who have been briefed on the attempted intrusion. But the intruders failed to get past security defenses on the RNC’s computer networks, indicating a less aggressive and much less persistent effort by Russian intelligence to hack the Republican group than the DNC. The disclosures came as a political furor grows over suspected Russian hacking of U.S. political organizations. The CIA has concluded that Russian hackers, whom analysts say work for that country’s military and intelligence apparatus, stole emails from the DNC, as well as another Democratic organization and the chairman of Hillary Clinton’s presidential campaign, to harm her candidacy and boost Donald Trump’s chances of winning. Mr. Trump has discounted the U.S. intelligence assessments and disparaged intelligence officials.

Generic-drug-makers manipulated prices, 20 states say

The attorneys general of 20 states filed a civil complaint accusing drug companies Teva Pharmaceutical Industries and Mylan, as well as four smaller firms, of conspiring to artificially drive up prices of generic drugs. The state officials said that their investigation into price fixing is continuing and that they expect to bring more charges.

The New York Times (free-article access for SmartBrief readers)

US rate hike shakes up Chinese economy

When the Federal Reserve announced its rate hike this week, the news sent Chinese bond futures, the value of the yuan and mainland stock markets falling. A strengthening US currency and higher dollar-denominated interest rates are putting pressure on China's foreign exchange reserves, prospects for economic growth and currency. South China Morning Post (Hong Kong)

Survey: Almost half of RIAs happy with fees

A Fidelity Investments survey found that 44% of registered investment advisers aren't considering changes to pricing models. It also found that 22% periodically review pricing models to see whether changes are needed. InvestmentNews

Nuveen launches 5 ETFs pursuing ESG strategies

Nuveen has brought to Bats Global Markets five exchange-traded funds that measure investments against environmental, social and governance criteria. The ETFs track indexes managed by TIAA, which owns Nuveen. ETF Trends

Tencent: Inside China’s ‘killer app’ factory

Buffett's era of 8.5 percent Dow dividends is coming to an end.

What global oil flows might look like after OPEC's supply shock.

The inside story of Apple's $14 billion tax bill.

Europe's monetary guardians go quiet as politics set to rule 2017.

Scandinavia's last mint is set to close as region falls out of love with cash.

Fintech firm could help unravel the mysteries behind flash crashes.

Send everyone home for Christmas. Nobody's working anyway.

Yahoo’s Password Move May Put Verizon Deal at Risk

Want a Job in Trump’s Administration? Get on Chris Collins’s Spreadsheet

As ‘The Great Wall’ Hits Theaters in China, Hollywood Is Watching

Investment Banking in Dallas? Goldman Sachs Spreads Banker Web Beyond New York

The Great Financial Crisis and its aftermath ended on November 8, 2016. That's the big lesson from this week. There were two moments that drove that point home. One was Wednesday's announcement from the Federal Reserve. Not only did the Fed hike interest rates and raise its dots, Janet Yellen took something of a "victory lap" over the state of the labor market. The other moment came for me personally, when I was trying to pull up a chart comparing the performance of two different assets. For years and years, I'd instinctively start charts in early 2007 to see how various markets or economic data points performed through the start, middle, and aftermath of the collapse. Now I've subconsciously shifted to wanting to see the performance of things since the election. We don't yet know how this new era will look. We could see a huge boom. We could see stagnation and malaise. We could see another financial crisis. Nobody knows. But the page has turned. The actors have changed. The potential range of policy options, which had been quite constricted for the last eight or nine years, is now wide open. We're in a new era. Now what should we call it?