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China-U.S. trade talks continue ahead of deadline, ECB may announce QE end date, and markets are unhappy with Italy's new government.
Horse trading
China and the U.S. are continuing to try to knock together a trade deal ahead of a [deadline later this month]( that would see the imposition of tariffs on Chinese imports to America should no accord be reached. Coal miners, farmers and oil-drillers would be the main beneficiaries of an offer by Beijing to boost purchases of U.S. goods by [about $25 billion this year](. On the American side, the Trump administration is putting the [finishing touches on a deal]( which would allow ZTE Corp. to resume operations. Although the White House insists the ZTE agreement and trade talks are separate issues, China made easing the ZTE sanctions a pre-condition for engaging in the trade discussions.Â
Live meeting
Next weekâs European Central Bank monetary policy meeting in Riga, Latvia will discuss the timing of the [end of the bankâs quantitative easing program](, according to euro-area officials familiar with the matter. An assessment would have to be made on whether progress has been sufficient to warrant [a gradual unwinding of asset purchases](, ECB Chief Economist Peter Praet said this morning. Bundesbank President Jens Weidmann said that market expectations of an end to QE this year are plausible. The euro strengthened to trade at $1.1763 by 5:40 a.m. Eastern Time.Â
Sponsored by PIMCO
Value in Short Bonds: âWeâre Not in Kansas Anymoreâ
Much like Dorothy in "The Wizard of Oz," investors are suddenly waking up to a bright new world: The trend toward higher rates has fundamentally altered the investment landscape and appetite for risk. Right now, the front end of the fixed income market looks attractive for the first time in almost a decade. [In fact, short-term yields look much more attractive than many stock dividends and longer-dated fixed income instruments. Here are five reasons to like the front end of the U.S. bond market.](
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Italian weakness
Markets have greeted the new Italian prime minister [with little enthusiasm](, as both that countryâs bond and equities sold off again today. Italyâs 2-year bond yield [rose 28 basis points]( to trade at 1.282 percent, while the main Milan benchmark equity gauge slid more than 1 percent. For now, markets seem to have decided that Italian risks will [not spill over]( to a wider euro crisis.Â
Markets riseÂ
Overnight, the MSCI Asia Pacific Index rose 0.4 percent, while Japanâs Topix index closed 0.2 percent higher, a fifth consecutive daily gain, spurred by the weaker yen. In Europe, the Stoxx 600 Index was 0.2 percent higher at 5:40 a.m, with Italian stocks the only major drag on the region. S&P 500 futures pointed to a [gain at the open](, the 10-year Treasury yield was at 2.948 percent and gold was lower.
PrimariesÂ
At least [35 of the 92 women]( competing in the biggest primary night of election season won spots on the ballots for House or Senate races. In California, Lieutenant Governor Gavin Newsom and Republican businessman John Cox won the most votes in the [gubernatorial primary]( meaning they will advance to Novemberâs election. Senate incumbents saw their time for campaigning ahead of Novemberâs vote cut short yesterday when Majority Leader Mitch McConnell [canceled most of the chamberâs August recess]( to work through a legislative backlog.Â
What we've been reading
This is what's caught our eye over the last 24 hours.
- Can any G-7 leader [corral Trump](?
- [World bear market]( would likely start in euro zone, analyst says.Â
- Why Switzerlandâs [Vollgeld vote]( has the central bank nervous.
- Elon Musk says Tesla manufacturing shifting from âhellâ [to strength](.
- Republican senators warn Trump not to [obstruct justice or pardon himself](.
- [Short-volatility complex returns](, hopes everyone forgets about February.
- Cabbages to oil: Inflationâs [many fathers](.Â
And finally, hereâs what Joeâs interested in this morning
Everyone knows how amazing the big tech stocks are doing. But it's not just the FAANGs; tech shares of all shapes and sizes are on a killer tear right now. Here are just a few, and their 2018 gains: Square (payments, 77 percent), Shopify (e-commerce, 59 percent), Liveperson (online customer service, 89 percent), Tableau (data analytics software, 45 percent), Twitter (65 percent), Red Hat (software, 44 percent), Zillow (Real estate data, 48 percent), Adobe (software, 48 percent), Salesforce (cloud software, 32 percent), Workday (cloud software, 26 percent), NVidia (chips, 36 percent), Micron (chips, 44 percent), Etsy (e-commerce, 61 percent), Wix.com (web development software, 61 percent). My point is that if you throw a dart at the stocks page, there's a good chance you'll hit a surging tech name. So are investors being indiscriminate in their buying, or are all these going to be real winners? No idea. But [yesterday on TV we talked to Rett Wallace](, whose firm Triton Research comes up with proprietary scores on IPOs so that investors can judge the health of private companies beyond just the basic financials they release. According to him, investors are bidding up any recent tech offering, whether they score well or not. Here's a few names he spotlighted, along with their gains since their recent IPOs: Docusign (online document signing, 88 percent), Dropbox (file storage, 47 percent), Cardlytics (marketing tech, 64 percent) Bilibili (Chinese video website, 45 percent). Keep an eye on this: What's going on in tech stocks is way bigger than just Facebook and Amazon.
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