Market Report.
📰 We included this in our daily report last Thursday, but the rumors are coming back: Trump team internally floats selling Nvidia H200 chips to China.
💻 The Trump administration is considering allowing Nvidia to sell its H200 AI chips to China, which would represent a significant shift in U.S. export controls: The H200 is Nvidia’s latest high-performance AI accelerator chip. The U.S. has imposed strict export controls on advanced AI chips to China since 2022 to limit Beijing’s access to cutting-edge technology.
💬 Treasury Secretary Scott Bessent expressed optimism about the U.S. economy in 2026 in an interview yesterday. He claim that the country is not at risk of entering a recession. Bessent said the Trump administration’s economic policies on trade and taxes have “set the table for a very strong, noninflationary growth economy.”
📈 He stated that parts of the GOP’s “One Big, Beautiful Bill Act” are still going into effect and have yet to be fully felt in the economy, including permanent tax cuts and new benefits like a “senior bonus” to offset Social Security taxes.
🏠 However, Bessent acknowledged some economic struggles in housing and interest-rate-sensitive sectors, while citing the services economy as contributing to inflation. This is interesting, considering that the US labor structure (the base of the service sector) may be changing, with fewer immigrants and more IAs.
🏦 New York Fed President John Williams stated that the U.S. Federal Reserve can still cut interest rates “in the near term” without jeopardizing its inflation goal: Williams said monetary policy is currently “modestly restrictive,” and he sees “room for a further adjustment in the near term” to move the policy stance closer to neutral.
💹 This moves the balance of traders again, in favor of a possible rate cut at the 9-10 December Fed meeting. As we said, central bankers and their ambiguous comments play with the emotions of Wall Street.
🔥 Williams acknowledged that progress on inflation has “temporarily stalled,” with prices rising well above the Fed’s 2% target. However, he expects price pressures to ease as the impact of tariffs passes through the economy. Williams emphasized the need for the Fed to reach its inflation target “without creating undue risks to our maximum employment goal.”
🏭 Friday’s US PMIs remain in expansion but with some drawbacks.
⚙️ The U.S. manufacturing sector slowed to a 4-month low in November. The S&P Global flash U.S. manufacturing PMI fell to 51.9 in November, down from 52.5 in October. A reading above 50 indicates growth. New orders received by factories dropped to 51.3 from 54.0 in October, while inventories rose to the highest level in the survey’s history.
📦 Manufacturers reported a “worrying combination” of slower new orders growth and a record rise in unsold inventory, hinting at slower factory production in the coming months. However, the overall U.S. Composite PMI, which tracks both manufacturing and services, increased to 54.8 from 54.6 in October, as the services sector offset the manufacturing slowdown.
🇬🇧 In the UK, government is facing a litmus test. Reeves had initially planned to raise income taxes, but had to backtrack on this after a plot emerged to oust Prime Minister Keir Starmer. This U-turn has unsettled bond markets. Reeves now faces what a Bloomberg calls a “trilemma” – trying to satisfy bond investors, keep her party’s manifesto promises, and address the cost-of-living crisis, all while finding around £30 billion in savings.
💷 Reeves’ first budget in 2024 was seen as business-unfriendly, and the government’s economic management has contributed to Labour’s declining poll numbers.
🧮 However, Reeves is expected to try to address inflation by controlling government-influenced prices, while sticking to fiscal rules and pursuing a longer-term growth strategy. Markets remain “super-optimistic” that Reeves can deliver, but there are doubts about how she will navigate these competing pressures in the upcoming budget announcement this week.
🐢 Despite Reeves’ efforts to fire up the UK economy, productivity growth has remained sluggish, similar to a broader malaise seen since the financial crisis.
💡 Bank of England Governor Andrew Bailey suggests the problem may be less about politics and more about the cyclical nature of technological innovation driving economic growth. Bailey cites the ideas of economist Joseph Schumpeter, who argued that growth comes in waves driven by general-purpose technology innovations, which have recently petered out.
🤖 However, AI is seen as a potential game-changer that could significantly boost productivity, and the UK may be well-positioned to benefit as a major services exporter. Some CEOs warn they will scale back or halt investment in the UK if Reeves goes ahead with planned measures like raising business rates.
🏙️ Five years after being hit hard by the pandemic and the shift to remote work, Canary Wharf is experiencing a notable revival. Visitor numbers arriving by rail and Tube have now exceeded pre-Covid levels, driven by more bankers returning to the office and increased weekend traffic drawn by new restaurants, bars, shops, and entertainment venues. The resurgence has been helped by JPMorgan CEO Jamie Dimon’s directive requiring most employees to work five days a week in the office, prompting the bank to lease additional space.
💣 Could the Hong Kong bond market be at risk? The local debt of China remains one of the points to strengthen in order to avoid serious problems of the Chinese real estate. Cash-strapped Chinese local government financing vehicles (LGFVs) are turning to unorthodox methods to raise funds in Hong Kong.
💰 The hidden returns are provided through mechanisms like discounted bond prices and supplementary “consultation fees” paid to the underwriters, who then pass on the extra payments to investors. This allows LGFVs to attract investors despite their weak financials and credit profiles, but it breaches Hong Kong’s securities rules on bond pricing and sales incentives.
📉 The practice leads to volatile trading in the LGFV bonds, as some investors quickly sell to pocket the hidden returns, causing yields to surge. Regulators have warned they will take action against licensed firms engaging in such conduct, but the scale of the problem suggests local governments’ debt burdens remain severe.
⚔️ China’s escalating dispute with Japan is reinforcing Beijing’s growing economic influence and its penchant for abrupt actions that can create uncertainty for businesses. The cancellations appear to be the latest fallout from an escalating diplomatic spat between China and Japan over Japanese Prime Minister Sanae Takaichi’s comments supporting Taiwan.
🧠 The CEO of Nvidia recently said that China would win the race for AI and here they come: Alibaba’s newly relaunched Qwen app has seen over 10 million downloads in the week since its relaunch, signaling strong initial interest in the platform. Alibaba is positioning Qwen to be its main rival to OpenAI’s ChatGPT, with plans to gradually add more AI-powered features to support shopping on its platforms like Taobao.
📲 The rapid growth in Qwen downloads comes as Alibaba has unified several of its pre-existing apps under the Qwen brand, aiming to build it into a fully functioning AI agent. Alibaba’s fintech affiliate Ant Group has also recently launched its own multi-modal AI assistant tool called LingGuang, which saw over 1 million downloads in its first four days.
Geopolitics.
🤝 U.S. Secretary of State Marco Rubio led talks in Geneva with a high-level Ukrainian delegation, where they narrowed down unresolved issues in a 28-point peace plan championed by President Donald Trump.
🇪🇺 Of course, the European Union has proposed a modified version of the U.S. plan that pushes back on proposed limits to Ukraine’s armed forces and territorial concessions. NATO no longer seems to lead the US foreign policy with Trump in the white house, now it seems to have only the political class of Europe.
📰 According to The Telegraph, Europe has put forward a counterproposal to President Trump’s 28-point Russia–Ukraine peace plan, rejecting several key provisions viewed as overly favorable to Moscow. Specifically, Europe rejects point 6, which would impose no restrictions on the size of Ukraine’s military; point 7, allowing Ukraine to join NATO rather than remain neutral; point 8, granting Ukraine the right to invite foreign forces; and point 21, calling for an immediate ceasefire with front lines frozen and no land exchanges.
🚫 The problem seems to be the same as from the origin of the conflict, and even before the Russian aggression. Russia refuses to let NATO deploy its weapons in front of its borders.
🎯 If a peace agreement is finally signed between Ukraine and Russia, the US military industry could look for other places to maintain active conflicts, the next stop could be Taiwan, employing its actors in the region. Japan is a territory occupied by the USA since the Second World War.
🪖 According to Bloomberg, Japan is preparing to deploy mid‑range missiles on Yonaguni Island, located about 110 kilometers from Taiwan’s coast. If a conflict between China and Taiwan or Japan were to succeed, the US could force Europe to close its markets to China, as it did with the Russian energy market thanks to the Ukraine conflict.
Market View.
📈 Wall Street managed a modest recovery before Friday’s close. Mini S&P 500 futures climbed to around 6,650 points, where they have remained since. Nasdaq 100 futures also advanced, approaching 24,500 points, and are currently trading at 24,480.
💵 The DXY dollar index retreated slightly in recent hours but continues to hold above 100. EUR/USD is trading below 1.1550, currently at 1.1530.
🇩🇪 In Europe, DAX 40 futures also recovered on Friday, supported by Wall Street’s rebound. They begin the week near 23,330 points, while EuroStoxx 50 futures have posted similar gains, holding above 5,500 points and currently trading at 5,565.
🛢️ The crude oil market continues to weaken, starting the week with Brent spot prices below $62, now at $61.70 per barrel.
🏆 Gold futures have seen reduced volatility, remaining above $4,050 per ounce.
💸 Bitcoin is showing a slight upward rebound from Friday’s lows, when it fell to around $80,500. It is currently approaching $87,000.
