U.S. Stocks Lost $1 Trillion In Less Than A Week

(Bloomberg)—How bad has the start to December been for U.S. stock investors? Almost $1 trillion has been wiped from the value of stocks in just four days of trading.

The Russell 3000 has plunged 4.9 percent this week as of 3 p.m. Friday in New York, as the six-week rout in American stocks deepened amid concern global growth is slowing and the Trump administration will escalate trade tensions.

Apple’s 5.4 percent plunge lowered its value by $45 billion, while Amazon’s 3 percent slide left it worth $24 billion less than a week ago.

“What the market is doing is repricing stocks, particularly those that have performed extraordinarily well, to a lower growth rate,” Ernie Cecilia, chief investment officer at Bryn Mawr Trust Co., said by phone. “When you’re going through corrections or drawdowns, you get the feeling like they have never happened or that they never will end.”

Late Rally in Tech Stocks Propel Nasdaq Higher After Wild Trading Session

(Bloomberg)—U.S. equities closed up from the lows of the day after a late rally in large technology stocks helped to propel the Nasdaq 100 higher in what was the biggest reversal for the index since April.

The S&P 500 and Dow Jones Industrial Average ended in negative territory. Financial markets remained volatile on bets that the trade truce between China and the U.S. won’t last after the arrest of Huawei’s chief financial officer. Bank shares in the S&P 500 fell as much as 3.9 percent before closing down 1.4 percent, as Treasury yields slid to the lowest since August.

Helping to ease anxiety were comments from two regional Federal Reserve presidents urging policy caution from the U.S. central bank amid mounting economic uncertainties and recent volatility in financial markets.

“The biggest qualm is the trade war escalating and this is haunting the markets,” said Naeem Aslam, chief market analyst at Think Markets U.K. in London, in an email. “It is arduous to find bulls in the market and it seems to me that this game is about to become uglier.”

Oil continued to be a drag on financial markets, with West Texas Intermediate back to $51 a barrel as OPEC ministers seek a deal to cut output. Energy producers in the S&P 500 sank more than 3 percent, and emerging-market equities plunged.

Traders pointed to a spate of other catalysts for the renewed risk-off tone that’s gripping financial markets. Bank of Japan Governor Haruhiko Kuroda said economic risks from abroad could be severe, and the Fed’s Beige Book report showed fading optimism over growth prospects at U.S. firms even as most districts continued to report a modest expansion. The pound drifted as U.K. Prime Minister Theresa May searched for a compromise to avoid a crushing defeat on her Brexit deal in a key vote in Parliament next week.

“There are so many forces weighing against markets right now, whether it’s the China slowdown, weak European data, Fed hikes, uncertainty around trade and now Brexit as well,” Bilal Hafeez, head of fixed-income research for EMEA at Nomura, told Bloomberg TV. “We really need to see some stabilization in any of those factors to see markets stabilize now.”

Whether or not it triggered the slide, Canada’s arrest of the Huawei CFO and reports it may extradite her to the U.S. are a blow to already fragile sentiment, just days after an apparent breakthrough on trade between America and China. The start of the futures session was marred by a sudden and unexpected plunge that sent a shock wave across equity markets.

“The arrest of the Huawei Technologies CFO gives no confidence that anything the administration came back with after Saturday night’s dinner could possibly be positive,” said Bob Iaccino, chief market strategist at Chicago-based Path Trading Partners, in an email. “This is a huge negative.”

Some of the key events investors will be focused on this week:

OPEC ministers meet again in Vienna Friday. Friday brings the U.S. monthly employment report for November. China November trade data are due on Saturday.And here are the main moves in markets:

Stocks

The S&P 500 fell 0.2 percent as of 4:09 p.m. in New York, while the Dow Jones Industrial Average slumped 0.3 percent and the Nasdaq Composite Index rose 0.4 percent and the Nasdaq 100 climbed 0.6 percent. The Stoxx Europe 600 sank 3.1 percent. The MSCI Emerging Market Index slumped 2.3 percent. The MSCI Asia Pacific Index fell 1.8 percent.

Currencies

The Bloomberg Dollar Spot Index fell 0.3 percent. The euro rose 0.3 percent to $1.1380. The British pound gained 0.4 percent to $1.2783. The Japanese yen strengthened 0.6 percent to 112.50 per dollar.

Bonds

The yield on benchmark 10-year Treasuries fell four basis points to 2.87 percent. The three-year note yield dropped four basis points to 2.76 percent as the yield on the five-year note eased four basis points to 2.74 percent. Germany’s 10-year yield fell four basis points to 0.24 percent.

Commodities

West Texas Intermediate crude slumped 2.3 percent to $51.68 a barrel. Gold edged 0.1 percent higher to $1,238.27 an ounce. LME copper fell 1.7 percent to $6,070 per metric ton, the third straight decline.

Congress Failed on Paid Family Leave This Year. But 5 Million Workers Got More Anyway

(Bloomberg)—As the labor market tightened in 2018, organizations turned to one benefit in particular to attract and retain U.S. employees: Paid family leave.

After Starbucks Corp. and Walmart Inc. extended paid time off to hourly workers in January, 18 more large companies followed suit. As a result, an estimated 4.8 million people had access to more generous paid leave benefits this year, according to data compiled by PL+US, a paid leave advocacy organization.

Many employers, like General Mills Inc., increased the amount of paid time off available to new moms and added the benefit for new dads, too. Paid time off to care for a sick relative or loved one is also on the rise, the survey found. About a dozen companies now say they offer paid caregiver leave, up from just two in 2017.

The U.S. remains the only high-income country that fails to provide paid family leave, and companies have typically only extended their benefits to salaried or full-time workers. This year, that started to change. In addition to Starbucks and Walmart, H&M, Dollar General Corp. and Darden Restaurants Inc. extended their policies to cover more classes of workers. Now more than half of the 57 largest employers tracked by PL+US now offer the same amount of leave time to all classes of employees.

“When a few big companies implement a policy there’s a little bit of follow the leader,” said Annie Sartor, an advocacy director at PL+US. “They’re leveling up.”

They’re also getting pressure from their employees. Millennials, now the biggest demographic in the U.S. workforce, have pushed for paid family leave as they age into parenthood. At H&M, union members worked for two years to get paid family leave for part-time workers; their new contract, signed earlier this month, includes the expanded coverage.

“When employees demand it companies have to respond, especially when unemployment is so low,” Sartor said.

Workers aren’t alone in advocating for better family benefits. Earlier this year Microsoft Corp. announced that it would require the companies it contracts with to provide at least 12 weeks of paid time off at the birth or adoption of a new child, establishing the influence a big company can exert over its business partners.

Even so, most employees — 83 percent, according to the Bureau of Labor Statistics — don’t have access to paid family leave. The federal Family Medical and Leave Act guarantees 12 weeks of unpaid leave for certain workers. The policies at many major employers don’t cover large swaths of workers. Contract workers in particular, who make up nearly 7 percent of the workforce, are still largely excluded, though that too is under scrutiny: Google employees recently lobbied the company’s CEO demanding more generous coverage for the tech giant’s contractors.

Stocks Sink to 8-Month Low Over Fears of Escalating Trade War

(Bloomberg)—The sell-off in global stocks deepened, leaving U.S. shares mired in the steepest two-day slide since February and European equities at a two-year low as concern mounted that the rate of global economic growth has peaked. Oil slid as OPEC ministers met in Vienna.

The S&P 500 has tumbled more than 5 percent in two sessions, while the Dow Jones Industrial Average shed almost 1,500 points on bets that the trade truce between China and the U.S. won’t last after the arrest of Huawei’s chief financial officer. Financial shares led the drop, as Treasury yields fell to the lowest since August with traders starting to doubt the Federal Reserve will raise rates even once next year as economic growth falters.

Oil continued to be a drag on financial markets, with West Texas Intermediate back below $51 a barrel as OPEC ministers seek a deal to cut output. Energy producers in the S&P 500 sank more than 3 percent, and emerging-market equities plunged.

Some of the main market moves:

The KBW bank index is down more than 8 percent in two days to the lowest since September 2017. All 30 Dow components dropped, with Boeing off 6.1 percent and Apple down 3 percent. Energy producers tumbled 3 percent as curde slumped to $51 a barrel. The front end of the yield curve continued to lead Treasuries higher, helped by a large block trade in 2-year futures“The biggest qualm is the trade war escalating and this is haunting the markets,” said Naeem Aslam, chief market analyst at Think Markets U.K. in London, in an email. “It is arduous to find bulls in the market and it seems to me that this game is about to become uglier.”

Traders pointed to a spate of other catalysts for the renewed risk-off tone that’s gripping financial markets. Bank of Japan Governor Haruhiko Kuroda said economic risks from abroad could be severe, and the Federal Reserve’s Beige Book report showed fading optimism over growth prospects at U.S. firms even as most districts continued to report a modest expansion. The pound drifted as U.K. Prime Minister Theresa May searched for a compromise to avoid a crushing defeat on her Brexit deal in a key vote in Parliament next week.

“There are so many forces weighing against markets right now, whether it’s the China slowdown, weak European data, Fed hikes, uncertainty around trade and now Brexit as well,” Bilal Hafeez, head of fixed-income research for EMEA at Nomura, told Bloomberg TV. “We really need to see some stabilization in any of those factors to see markets stabilize now.”

Whether or not it triggered the slide, Canada’s arrest of the Huawei CFO and reports it may extradite her to the U.S. are a blow to already fragile sentiment, just days after an apparent breakthrough on trade between America and China. The start of the futures session was marred by a sudden and unexpected plunge that sent a shock wave across equity markets.

“The arrest of the Huawei Technologies CFO gives no confidence that anything the administration came back with after Saturday night’s dinner could possibly be positive,” said Bob Iaccino, chief market strategist at Chicago-based Path Trading Partners, in an email. “This is a huge negative.”

Some of the key events investors will be focused on this week:

OPEC ministers meet in Vienna Thursday. Friday brings the U.S. monthly employment report for November. China November trade data are due on Saturday.And here are the main moves in markets:

Stocks

The S&P 500 fell 2.5 percent as of 11:40 a.m. in New York, while the Dow Jones Industrial Average slumped 2.7 percent and the Nasdaq Composite Index eased 2 percent. The Stoxx Europe 600 sank 3 percent. The MSCI Emerging Market Index slumped 2.4 percent. The MSCI Asia Pacific Index fell 1.7 percent.

Currencies

The Bloomberg Dollar Spot Index fell 0.2 percent. The euro rose 0.4 percent to $1.1387. The British pound gained 0.3 percent to $1.2771. The Japanese yen strengthened 0.7 percent to 112.44 per dollar.

Bonds

The yield on benchmark 10-year Treasuries fell five basis points to 2.87 percent. The three-year note yield dropped six basis points to 2.74 percent as the yield on the five-year note eased six basis points to 2.73 percent. Germany’s 10-year yield fell four basis points to 0.24 percent.

Commodities

West Texas Intermediate crude slumped 2.7 percent to $51.45 a barrel. Gold rose 0.4 percent to $1,242.25 an ounce. LME copper fell 1.1 percent to $6,105 per metric ton.

How the Arrest of a High-Profile Huawei Executive Could Upend President Trump’s Truce with China

(Bloomberg)—On the same day Donald Trump and Xi Jinping struck a trade war truce in Argentina, some 7,000 miles away Canadian authorities made an arrest that now threatens to make the U.S.-China conflict much worse.

The U.S. is seeking the extradition of Wanzhou Meng, chief financial officer of Huawei Technologies Co., after convincing Canada to arrest her on Dec. 1. Canada confirmed she was in custody shortly after the Globe and Mail reported she had been arrested in connection with violating sanctions against Iran.

China promptly reacted with outrage after the news broke, demanding that both countries move to free Meng. Later, the foreign ministry said it was waiting for details on why she was arrested, and said trade talks should continue.

It’s hard to overstate the significance of her arrest in Beijing: Meng is the daughter of the founder of Huawei, a national champion at the forefront of Xi’s efforts for China to be self-sufficient in strategic technologies. While the U.S. routinely asks allies to extradite drug lords, arms dealers and other criminals, arresting a major Chinese executive like this is rare — if not unprecedented.

“The timing and manner of this is shocking,” Andrew Gilholm, director of North Asia analysis at Control Risks Group, said by phone. “It’s not often the phrase OMG appears in our internal email discussions. ”

Right now it’s unclear what role Trump played in Meng’s arrest, or if he will intervene at some point. The U.S. leader has spent the past few days seeking to convince the world — and skeptical equity investors — that China has agreed to major concessions, including reducing or removing tariffs on U.S. cars. Stocks fell across Asia on Thursday.

Read more on Huawei arrest: China Outraged at Canada’s Arrest of Huawei CFO on U.S. Request How Huawei Arrest Extends Troubled History With U.S.: QuickTake Asia Tech Rout Deepens as Trade Truce at Risk With Huawei ArrestAnalysts said it’s more likely the case proceeded separately from the trade talks as part of Trump’s efforts to step up prosecutions against Chinese companies that conduct economic espionage and violate sanctions. In October, the U.S. said Belgium extradited a Chinese intelligence official accused of stealing trade secrets from U.S. companies — an unprecedented development.

Either way, China is almost certain to view Meng’s arrest as a major escalation in the trade war that will foment fears of a wider Cold War between the world’s biggest economies. As part of trade talks, Trump has insisted that China stop providing government support to strategic sectors including artificial intelligence and robotics as part of its “Made in China 2025” policy.

‘New Game’

“It will definitely complicate the negotiations and they may believe this was done to increase the pressure during this 90-day period,” said Dennis Wilder, a former CIA China analyst and senior director for Asia at the National Security Council under President George W. Bush.

“This is sending a signal that there is a new game,” Wilder said of the recent U.S. arrests. “They are trying to deter Chinese espionage and make it clear that there are real consequences.”

Perhaps no company better personifies the perceived trade threat than Huawei. It’s overtaken Apple Inc. in smartphone shipments and aims to surpass Samsung Electronics Co. while targeting record sales of $102.2 billion this year — more than Boeing Co. It’s shooting for the lead in fifth-generation wireless networks and preparing to take on some of America’s biggest chipmakers.

That’s why Trump’s administration invoked its name in blocking a Qualcomm Inc.-Broadcom Inc. merger that would’ve been the largest deal ever, saying it would hand the lead in 5G to China. Huawei has since been blocked from selling its gear in Australia and New Zealand, got frozen out of a Korean contract, and faces U.S.-led competition even in Papua New Guinea.

The latest U.S. action against Huawei may be even more significant. While the company has made advances in developing its own microchips, it still relies on American equipment to make its networking gear and smartphones. ZTE Corp., another Chinese technology company, nearly collapsed due to U.S. penalties for violating Iran sanctions before Trump rescued it following a request from Xi.

The ZTE case showed China’s leaders that they needed to become independent from the U.S. when it comes to critical technologies like semiconductors and network infrastructure, according to Graham Webster, coordinating editor of DigiChina at the Washington-based think tank New America.

“What makes Huawei important is that it is a leader in developing technologies that will make China less dependent on U.S. or European suppliers,” he said. “Targeting Huawei through seeking the extradition of a top executive is a major move by the U.S. government, whether coordinated or not.”

For some analysts in China, it shows that the U.S. national security apparatus isn’t interested in cutting a deal, no matter what Trump thinks.

“Their goal is to decouple with China,” said Wang Yong, a professor at the School of International Studies at Peking University. “Negotiations are the wish of Trump and Wall Street.”

Forget Gold, This Precious Metal Is Going Crazy Amid the Stock Slump

(Bloomberg) — Gold just got left behind by one of its sister metals. After a demand-fueled rally over the past four months that’s seen prices hit successive records, palladium topped gold.

Palladium, which hasn’t traded at a sustained premium to gold in 16 years, has gained as buyers scramble for supplies of the metal used in vehicle smog-control devices. Demand has risen as consumers turn away from diesel toward gasoline-powered cars, which tend to use more palladium in autocatalysts. The metal “should continue to benefit from strong fundamentals in 2019,” according to Bloomberg Intelligence.

While most metals have languished this year amid global trade concerns and a rising dollar, palladium climbed to records four times in November amid expectations that production will continue to fall short of demand. Holdings in exchange-traded products backed by palladium are at the smallest in almost a decade as investors pull the metal and offer the commodity for lease.

“People are grasping for whatever ounces of material they can get” in the palladium market, Tai Wong, head of base and precious metals trading at BMO Capital Markets, said before Wednesday’s levels were hit. “It’s very expensive to borrow, and that is perhaps the biggest factor driving the spot price higher.”

Palladium futures for March delivery climbed 0.4 percent to settle at a record $1,184.40 an ounce at 1:01 p.m. on Nymex in New York.

Palladium for immediate delivery climbed as much as 2.4 percent to a peak of $1,261.80 an ounce, and was at $1,241.47 in New York, according to Bloomberg pricing. Spot gold was 0.1 percent lower at $1,236.69 an ounce.

The cost to borrow palladium for a month was at a record 22 percent, more than seven times higher than the 10-year Treasury yield. Holdings of exchange-traded products backed by the metal are at the lowest since February 2009.

Palladium’s deficit is set to widen to about 1.4 million ounces in 2019, adding to a shortfall of 1.2 million ounces this year, according to London-based Metals Focus Ltd. Supply is likely to remain broadly stable in 2019, while there will be growing demand from the automotive sector, according to Junlu Liang, a senior analyst at the consultancy.

Consumption of palladium in autocatalysts could rise in-line with the production of electric vehicles amid the global effort to cut emissions for cleaner air, Eily Ong, an analyst at Bloomberg Intelligence, said in a report. “The EU has a binding target of cutting emissions by at least 40 percent by 2030 from 1990 levels, while China aims for 26-28 percent cuts from 2005 levels,” she wrote.

Why, in 2018, is Microsoft adding security questions to Windows 10?

Why, in 2018, is Microsoft adding security questions to Windows 10?

Security questions—the annoying shared secrets used as a secondary form of authentication—have been around forever and are used by just about everyone to deal with users who forget their password. That’s starting to change as more enlightened services—most notably Google and Facebook—have recently phased out security questions after recognizing something then vice presidential candidate Sarah Palin learned the hard way in 2008: the answers are easy for hackers to guess.

Enter Microsoft, which earlier this year added a security questions feature to Windows 10. It allows users to set up a list of security questions that can be asked in the event they later forget a password to one of their administrative accounts. By answering questions such as “What was your first car?” the users can reset the forgotten password and regain control of the account. It didn’t take long for researchers to identify weaknesses in the newly introduced feature. They presented their findings today at the Black Hat Europe Security Conference in London.

“Durable, stealthy backdoor”

The problem, the researchers said, is that the password reset questions are too easy to set and too hard to monitor in networks made up of hundreds or thousands of computers. A single person with administrator credentials can remotely turn them on or change them on any Windows 10 machine and there’s no simple way for the changes to be monitored or changed. As a result, malicious users—say a rogue employee or a hacker who briefly gains unauthorized administrative control—can use the security questions as a backdoor that will secretly allow them to regain control should they ever lose it.

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Lawmakers Say Facebook Struck Deals Over Personal Data

(Bloomberg) — Internal emails at Facebook Inc., including those involving Chief Executive Officer Mark Zuckerberg, were published online by a committee of U.K. lawmakers investigating social media’s role in the spread of fake news.

The documents, which had been sealed by a California court, led lawmakers to conclude that Facebook undertook deals with third party apps that continued to allow access to personal data.

Damian Collins, head of the committee, added that Facebook shut off access to data required by competing apps, conducted global surveys of the usage of mobile apps by customers possibly without their knowledge, and that a change to Facebook’s Android app policy that resulted in call and message data being recorded was deliberately made difficult for users to know about.

In one email, dated Jan. 23 2013, a Facebook engineer contacted Zuckerberg to say that rival Twitter Inc. had launched its Vine video-sharing tool, which users could connect to Facebook to find their friends there. The engineer suggested shutting down Vine’s access to the friends feature, to which Zuckerberg replied, “Yup, go for it.”

“We don’t feel we have had straight answers from Facebook on these important issues, which is why we are releasing the documents,” said Collins in a Twitter post accompanying the published emails.

The senior lawmaker said last week that he would release the emails and that he was free under U.K. law to do so. He’d obtained the documents after compelling the founder of U.S. software company Six4Three to hand them over during a business trip to London.

A spokesman for Facebook was unable to immediately comment.

Six4Three’s founder, Ted Kramer, had obtained them as part of a legal discovery process in a U.S. lawsuit against Facebook that his company has brought against the social network in California.

Facebook touted itself as championing privacy four years ago when it decided to restrict outsider developers’ access to data about its users’ friends.

In one email, dated Feb. 4, 2015, a Facebook engineer said a feature of the Android Facebook app that would “continually upload” a user’s call and SMS history would be a “high-risk thing to do from a PR perspective.” A subsequent email suggests users wouldn’t need to be prompted to give permission for this feature to be activated.

Kramer was ordered by a judge on Friday to surrender his laptop to a forensic expert after admitting he turned over the documents to the British lawmakers, in violation of a U.S. court order.

“What has happened here is unconscionable,” California Superior Court Judge V. Raymond Swope said to Kramer and his attorneys during the hearing.

Facebook wants the laptop to be evaluated to determine what happened in the U.K., to what extent the court order was breached, and how much of its confidential information has been divulged to the committee.