Global stock markets took a tumble on Tuesday, spooked by the specter of tariff hikes promised by Donald Trump. European markets bore the brunt, with Paris, London, Frankfurt and Milan all down by about 1%. This downturn underscores the market's ongoing jitters since Trump's election victory. Investors are on edge over a potential 10% tariff on goods entering the US, a key promise from Trump.

Across the pond, US equity futures barely budged as traders await tomorrow’s consumer inflation report. Dow Jones Industrial Average futures rose 0.1%, S&P 500 futures and Nasdaq futures stayed flat. Wall Street indices seem to be catching their breath after recent record highs. Meanwhile, Bitcoin is on a tear, nearing $90,000, fueled by hopes of favorable cryptocurrency regulation under Trump. Analysts speculate that Trump might appoint pro-cryptocurrency regulators, potentially leading the US to embrace Bitcoin as a strategic reserve asset.

The debate over the overheating of risky assets isn't cooling down with the gains since Trump's re-election. Let's dive into some telling figures. The Russell 2000 has jumped 7.7% since November 6. This index of small US stocks is highly sensitive to Trump's rhetoric, more so than to the prospect of lower interest rates, and is rich in small industrial and regional financial stocks.

Bitcoin has surged 28% since November 6. Other cryptos have also ridden the Trump wave, notably Solana (+33%), along with the broader ecosystem, including crypto mining company Riot Platforms (+54%) and MicroStrategy (+50%) with its Bitcoin reserve. MicroStrategy's market cap reached $68 billion, because it owns 279,420 bitcoins, worth around $24.6 billion today.

Tesla has soared 39% since the election. The company isn't more profitable, nor has it solved its electric vehicle market gridlock, but its CEO is now firmly aligned with Trump's policies. It's the only energy transition issue that hasn't been scattered lately, thanks to Elon Musk's political positioning. The S&P 500 index is up 26% since January 1, after breaking the 6,000-point barrier for the first time last night. The performance is impressive, though not unprecedented.

Over the last 30 years, the US broad index has outperformed seven times (record: +34.1% in 1995). Most strategists at major US banks believe Trump's election will drive the index higher by year-end. Other examples of the so-called Trump trade include regional banks and prisons.

Ed Yardeni, a tireless US market statistician, noted similarities between the current situation and Trump's first election, which also sparked a wave of investor optimism. Yardeni predicts the S&P 500 could reach 10,000 points by the decade's end, a 67% rise. This translates to an average annual increase of 8.9% over 2025-2030, lower than the long-term average for the index. More pragmatically, Yardeni sees the S&P 500 at 6,100 points by year-end, suggesting a modest 1.7% upside. Fans of Christmas rallies might be disappointed if this scenario pans out.

Yesterday, Wall Street wavered, weighed down by tech stocks. However, the Dow Jones and S&P 500 still ended the day at new record highs. Globally, the previous day's session saw a rebound in Europe, where fears persist that Trump's return will squeeze the continent's economy between the American hammer and the Asian anvil. The euro continues to slide, resembling an emerging market currency. Oil is also falling, as America's pro-pumping policy challenges OPEC+'s efforts to boost prices by cutting production without losing market share.

In China, the situation remains fluid, with rumors about support policies. Bloomberg reports that Beijing might ease taxes on home purchases. With Trump's return confirmed, Chinese authorities seem to be accelerating in anticipation of a more challenging trade future, albeit with a hint of improvisation. To complicate matters, Trump plans to appoint Marco Rubio as foreign affairs minister and Mike Waltz as national security adviser, both known for their hostility toward Beijing.

In the Asia-Pacific region, markets turned red. Japan's Nikkei 225 lost 0.4%. China took a dive, with the CSI 300 down 1.1% and the Hang Seng 2.8%. South Korea plunged over 2%, while India fell 1.2%. Australia fared better, with losses limited to 0.1%. European indices are bearish, with the Stoxx Europe 600 down 1%.

Today's economic highlights:

The second reading of German inflation for October and the ZEW index of German financial confidence are on the calendar.

The dollar is up to EUR 0.9417 and GBP 0.7802. The ounce of gold is down to USD 2,605. Oil regains some ground, with North Sea Brent at USD 72.22 a barrel and US light crude WTI at USD 68.45. The yield on 10-year US debt stands at 4.36%. Bitcoin is up to USD 86,000.

In corporate news:

  • Sylvamo reported a Q3 revenue of $965M, alongside a rise in adjusted operating earnings and net sales.
  • Chipotle Mexican Grill has appointed Scott Boatwright as its permanent CEO after an extensive search, amid facing a lawsuit from shareholders over alleged inconsistencies in portion sizes that purportedly led to increased costs and a decline in stock price.
  • AstraZeneca plans to invest $3.5 billion to expand its research and manufacturing capabilities in the US by 2026, while also progressing with new drug applications and reporting strong financial results, despite concerns over the detention of its China president.
  • Healthcare stocks fluctuated as AbbVie's failed drug trial and Humana's merger uncertainty led to declines, while Bristol-Myers Squibb gained after unfavorable competitor data, and Richter's CEO confirmed positive guidance following a strong quarter.
  • Home Depot's fiscal Q3 earnings exceeded expectations, prompting the company to raise its fiscal 2024 outlook due to strong demand from professional contractors and increased hurricane-related spending.
  • Gatos Silver's Q3 2024 financial results showed a significant improvement with net income increasing to $9.9 million from $3.3 million, and revenue growing 40%.
  • Tesla's stock price surged due to a potential alliance with Trump, boosting its valuation significantly, while Starlink seeks security clearance in India, amidst generally lower premarket stocks on Wallstreetbets.
  • Shopify reported a rise in Q3 profit and revenue, surpassing forecasts and delivering an optimistic holiday outlook, attributed to the success of its AI-powered tools that are attracting more merchants to its platform.
  • At the Zhuhai air show, China's state-owned aerospace company unveiled its first commercial uncrewed spaceplane, while Boeing secured an order for 40 737 MAX jets from Avia Solutions Group, announced the retirement of its quality chief Elizabeth Lund, and saw a rise in shares amid optimism about Trump's policy.
  • The European Commission has notified Apple to cease its geo-blocking practices within a month following a joint investigation that revealed potential non-compliance with EU anti-geo-blocking regulations.

Analyst recommendations:

  • Airbnb, Inc.: Phillip Securities downgrades to reduce from neutral with a target price of USD 120.
  • International Flavors & Fragrances Inc.: Morgan Stanley upgrades to overweight from equal weight with a target price reduced from USD 111 to USD 110.
  • Range Resources Corporation: Gerdes Energy Research LLC downgrades to neutral from buy with a target price of USD 37.
  • Stellantis N.v.: Morgan Stanley maintains its overweight rating with a reduced target price from USD 15.30 to USD 15.10.
  • Albemarle Corporation: RBC Capital maintains its outperform rating and raises the target price from USD 108 to USD 133.
  • Bill Holdings, Inc.: Citigroup maintains its buy recommendation with a price target raised from USD 65 to USD 100.
  • Block, Inc.: Canaccord Genuity maintains its buy recommendation and raises the target price from USD 95 to USD 120.
  • Carnival Corporation: Morgan Stanley maintains its underweight recommendation and raises the target price from USD 16.50 to USD 20.
  • Corpay, Inc.: Mizuho Securities maintains a neutral recommendation with a price target raised from USD 265 to USD 330.
  • Discover Financial Services: HSBC maintains its hold recommendation with a price target raised from 152 to USD 189.
  • Estee Lauder: Redburn Atlantic maintains a neutral recommendation with a price target reduced from 91 to USD 70.
  • Fortinet, Inc.: CITIC Securities Co Ltd maintains its buy recommendation and raises the target price from USD 73 to USD 103.
  • International Paper Company: Seaport Global maintains its buy recommendation and raises the target price from USD 52 to USD 63.
  • Kkr & Co. Inc.: Autonomous Research maintains its neutral recommendation with a price target raised from USD 114 to USD 146.
  • Live Nation Entertainment, Inc.: Wolfe Research maintains its outperform recommendation and raises the target price from USD 125 to USD 152.
  • Norwegian Cruise Line Holdings Ltd.: Morgan Stanley maintains its underweight recommendation and raises the target price from USD 19 to USD 26.
  • Robinhood Markets, Inc.: JMP Securities maintains its market outperform recommendation and raises the target price from USD 33 to USD 40.
  • Sunrun Inc.: Truist Securities maintains its hold recommendation with a price target reduced from 18 to USD 12.
  • Tapestry, Inc.: Daiwa Securities maintains a neutral recommendation with a price target raised from 42 to USD 53.
  • Toast, Inc.: D.A. Davidson maintains its buy recommendation and raises the target price from USD 35 to USD 44.
  • Twilio Inc.: Daiwa Securities maintains its outperform recommendation and raises the target price from USD 66 to USD 97.
  • Wayfair Inc.: Evercore ISI maintains its outperform recommendation and reduces the target price from USD 80 to USD 60.
  • Antofagasta Plc: Barclays upgrades to equalweight from underweight with a price target raised from GBP 15 to GBP 20.
  • Big Yellow Group Plc: Jefferies downgrades to hold from buy with a target price reduced from GBX 1359 to GBX 1224.
  • Convatec Group Plc: Peel Hunt downgrades to hold from reduce with a target price of GBX 225.
  • Direct Line Insurance Group Plc: Jefferies downgrades to hold from buy with a target price reduced from GBX 235 to GBX 165.
  • Gsk Plc: Jefferies downgrades to hold from buy with a target price reduced from GBX 2000 to GBX 1525.