Stocks opened higher but quickly gave way. At the moment, the Dow is down 86 pts and the SPX is flat. Utilities, telecom and tech sectors are in green whereas industrials and banks are trading lower. CNBC is reporting economist Larry Kudlow is the leading candidate to replace President Trump’s top economic advisor Gary Cohn. Mr. Kudlow is seen as investor-friendly and a consistent opponent to trade tariffs. The White House has acknowledged that Kudlow is on the list of candidates. Again, Wall Street would love to see this happen. The VIX Index is up today around 16.2. Remember, the volatility index spiked over 35 briefly during the recent correction and since then has fallen back to more normal levels. Commodities are mostly lower today, including gold, copper and oil. WTI crude oil is down about 2% to $60.80/barrel. Bonds are mixed, with short-term rates unchanged and long-term rates slightly lower on the day. The 5-year and 10-year Treasury yields are hovering around 2.65% and 2.89%.
Broadcom’s (AVGO) proposed hostile acquisition of Qualcomm (QCOM) just got messier. The US Government says it is investigating possible concerns over national security should the deal go through. The Treasury Department’s Committee on Foreign Investment in the US (CFIUS) is concerned that a tie-up with AVGO (headquartered overseas) would prevent QCOM (a domestic company) from maintaining its technological edge over China in mobile networking. AVGO, in order to allay these concerns, is trying to re-domicile its headquarters from Singapore to the US. AVGO knows that if it becomes a US company, CFIUS wouldn’t have jurisdiction over the issue. So Treasury is now trying to prevent the re-domicile, at least temporarily, in order to finish its investigation and retain jurisdictional authority.
EU officials are talking tough regarding President Trump’s trade tariff proclamation last week. Bloomberg is characterizing the weekend back-and-forth as “brinksmanship.” EU Trade Commissioner Cecilia Malmstrom said, “We are not afraid, we will stand up to the bullies.” She met with her US counterpart over the weekend but didn’t secure assurances that the EU would be exempted from tariffs. In view of NATO alone, many EU leaders feel they should receive an exemption on national security grounds. Mr. Trump in a speech accused European countries of colluding to “screw the US on trade.”