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  • When Colorado removed Trump from the ballot, a Supreme Court showdown looked likely. Maine removed all doubt.

    When Colorado removed Trump from the ballot, a Supreme Court showdown looked likely. Maine removed all doubt.

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    DENVER (AP) — First, Colorado’s Supreme Court ruled that former President Donald Trump wasn’t eligible to run for his old job in that state. Then, Maine’s secretary of state ruled the same for her state.

    Both decisions are historic. The Colorado court was the first court to apply to a presidential candidate a rarely used constitutional ban against those who “engaged in insurrection.” Maine’s secretary of state was the first top election official to unilaterally strike a presidential candidate from the ballot under that provision.

    What’s next? Can Trump be put back on the ballot?

    Both decisions are on hold while the legal process plays out. That means that Trump remains on the ballot in Colorado and Maine and that his political fate is now in the hands of the U.S. Supreme Court.

    The Maine ruling will likely never take effect on its own. Its central impact is increasing pressure on the nation’s highest court to state clearly whether Trump remains eligible to run for president after the Jan. 6, 2021, attack on the U.S. Capitol.

    What’s the legal issue that could keep Trump off the ballot?

    After the Civil War, the U.S. ratified the 14th Amendment to guarantee rights to former slaves and more. It also included a two-sentence clause called Section 3, designed to keep former Confederates from regaining government power after the war.

    Section 3 of the 14th Amendment to the U.S. Constitution doesn’t require a criminal conviction to take effect.

    The measure reads: “No person shall be a Senator or Representative in Congress, or elector of President and Vice-President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.”

    Congress did remove that disability from most Confederates in 1872, and the provision fell into disuse. But it was rediscovered after Jan. 6.

    See: Nikki Haley was asked by N.H. voter to name Civil War cause. Slavery was absent from her answer.

    How does this apply to former president Trump exactly?

    Trump is already being prosecuted for the attempt to overturn his 2020 loss that culminated with Jan. 6, but Section 3 doesn’t require a criminal conviction to take effect. Dozens of lawsuits have been filed to disqualify Trump, claiming he engaged in insurrection on Jan. 6 and is no longer qualified to run for office.

    All the suits failed until the Colorado ruling. And dozens of secretaries of state have been asked to remove him from the ballot. All said they didn’t have the authority to do so without a court order — until Maine Secretary of State Shenna Bellows’s decision.

    See: As Colorado court bars Trump from ballot, poll finds 62% of GOP voters would want him as nominee even with more legal woes

    Also: Police investigating ‘incidents’ against Colorado justices after Trump removed from state’s ballot

    The Supreme Court has never ruled on Section 3. It’s likely to do so in considering appeals of the Colorado decision — the state Republican Party has already appealed, and Trump is expected to file his own shortly.

    Bellows’s ruling cannot be appealed straight to the U.S. Supreme Court — it has to be appealed up the judicial chain first, starting with a trial court in Maine.

    The Maine decision does force the high court’s hand, though. It was already highly likely the justices would hear the Colorado case, but Maine removes any doubt.

    Trump lost Colorado in 2020, and he doesn’t need to win it again to garner an Electoral College majority next year. But he won one of Maine’s four Electoral College votes in 2020 by winning the state’s 2nd Congressional District, so Bellows’s decision would have a direct impact on his odds next November.

    Until the high court rules, any state could adopt its own standard on whether Trump, or anyone else, can be on the ballot. That’s the sort of legal chaos the court is supposed to prevent.

    What is Trump’s argument?

    Trump’s lawyers have several arguments against the push to disqualify him. First, it’s not clear Section 3 applies to the president — an early draft mentioned the office, but it was taken out, and the language “an officer of the United States” elsewhere in the Constitution doesn’t mean the president, they contend.

    Second, even if it does apply to the presidency, they say, this is a “political” question best decided by voters, not unelected judges. Third, if judges do want to get involved, the lawyers assert, they’re violating Trump’s rights to a fair legal procedure by flatly ruling he’s ineligible without some sort of fact-finding process like a lengthy criminal trial. Fourth, they argue, Jan. 6 wasn’t an insurrection under the meaning of Section 3 — it was more like a riot. Finally, even if it was an insurrection, they say, Trump wasn’t involved in it — he was merely using his free speech rights.

    Of course, the lawyers who want to disqualify Trump have arguments, too.

    The main one is that the case is actually very simple: Jan. 6 was an insurrection, Trump incited it, and he’s disqualified.

    Why has this process taken so long?

    The attack of Jan. 6, 2021, occurred nearly three years ago, but the challenges weren’t “ripe,” to use the legal term, until Trump petitioned to get onto state ballots this fall.

    But the length of time also gets at another issue — no one has really wanted to rule on the merits of the case. Most judges have dismissed the lawsuits because of technical issues, including that courts don’t have the authority to tell parties whom to put on their primary ballots. Secretaries of state have dodged, too, usually telling those who ask them to ban Trump that they don’t have the authority to do so unless ordered by a court.

    No one can dodge anymore. Legal experts have cautioned that, if the Supreme Court doesn’t clearly resolve the issue, it could lead to chaos in November — or in January 2025, if Trump wins the election. Imagine, they say, if the high court ducks the issue or says it’s not a decision for the courts to make, and Democrats win a narrow majority in Congress. Would they seat Trump or declare he’s ineligible under Section 3?

    Why was this action taken in Maine?

    Maine has an unusual process in which a secretary of state is required to hold a public hearing on challenges to politicians’ spots on the ballot and then issue a ruling. Multiple groups of Maine voters, including a bipartisan clutch of former state lawmakers, filed such a challenge, triggering Bellows’s decision.

    Bellows is a Democrat and the former head of the Maine chapter of the American Civil Liberties Union. Trump’s attorneys asked her to recuse herself from the case, citing social-media posts calling Jan. 6 an “insurrection” and bemoaning Trump’s acquittal in his impeachment trial over the attack.

    She refused, saying she wasn’t ruling based on personal opinions. But the precedent she sets is notable, critics say. In theory, election officials in every state could decide a candidate is ineligible based on a novel legal theory about Section 3 and end their candidacies.

    Conservatives argue that Section 3 could apply to Vice President Kamala Harris, for example — it was used to block from office even those who donated small sums to individual Confederates. Couldn’t it be used against Harris, they say, because she raised money for those arrested in the unrest after the murder of George Floyd by Minneapolis police in 2020?

    Is this a partisan issue?

    Bellows is a Democrat, and all the justices on the Colorado Supreme Court were appointed by Democrats. Six of the 9 U.S. Supreme Court justices were appointed by Republicans, three by Trump himself.

    But courts don’t always split on predictable partisan lines. The Colorado ruling was 4-3 — so three Democratic appointees disagreed with barring Trump. Several prominent legal conservatives have championed the use of Section 3 against the former president.

    Now we’ll see how the high court handles it.

    Read on:

    Trump’s name can appear on ballot in Michigan, says state’s top court

    Georgia election workers sue Rudy Giuliani again, seek to bar him from repeating lies about them

    Trump’s Republican rivals rally to his defense after Colorado ballot ruling

    Supreme Court to hear case that could undermine obstruction charges against hundreds of Jan. 6 defendants

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  • Maine bars Trump from presidential primary ballot, citing insurrection clause

    Maine bars Trump from presidential primary ballot, citing insurrection clause

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    PORTLAND, Maine — Maine’s Democratic secretary of state on Thursday removed former President Donald Trump from the state’s presidential primary ballot under the Constitution’s insurrection clause, becoming the first election official to take action unilaterally as the U.S. Supreme Court is poised to decide whether Trump remains eligible to return to the White House.

    The decision by Secretary of State Shenna Bellows follows a ruling earlier this month by the Colorado Supreme Court that booted Trump from the ballot there under Section 3 of the 14th Amendment. That decision has been stayed until the U.S. Supreme Court decides whether Trump is barred by the Civil War-era provision, which prohibits those who “engaged in insurrection” from holding office.

    The Trump campaign said it would appeal Bellows’ decision to Maine’s state courts, and Bellows suspended her ruling until that court system rules on the case. In the end, it is likely that the nation’s highest court will have the final say on whether Trump appears on the ballot in Maine and in the other states.

    Bellows found that Trump could no longer run for his prior job because his role in the Jan. 6, 2021, attack on the U.S. Capitol violated Section 3, which bans from office those who “engaged in insurrection.” Bellows made the ruling after some state residents, including a bipartisan group of former lawmakers, challenged Trump’s position on the ballot.

    “I do not reach this conclusion lightly,” Bellows wrote in her 34-page decision. “I am mindful that no Secretary of State has ever deprived a presidential candidate of ballot access based on Section 3 of the Fourteenth Amendment. I am also mindful, however, that no presidential candidate has ever before engaged in insurrection.”

    The Trump campaign immediately slammed the ruling. “We are witnessing, in real-time, the attempted theft of an election and the disenfranchisement of the American voter,” campaign spokesman Steven Cheung said in a statement.

    Legal experts said that Thursday’s ruling demonstrates the need for the nation’s highest court, which has never ruled on Section 3, to clarify what states can do.

    “It is clear that these decisions are going to keep popping up, and inconsistent decisions reached (like the many states keeping Trump on the ballot over challenges) until there is final and decisive guidance from the U.S. Supreme Court,” Rick Hasen, a law professor at the University of California-Los Angeles, wrote in response to the Maine decision. “It seems a certainty that SCOTUS will have to address the merits sooner or later.”

    While Maine has just four electoral votes, it’s one of two states to split them. Trump won one of Maine’s electors in 2020, so having him off the ballot there, should he emerge as the Republican general election candidate, could have outsized implications in a race that is expected to be narrowly decided.

    That’s in contrast to Colorado, which Trump lost by 13 percentage points in 2020 and where he wasn’t expected to compete in November if he wins the Republican presidential nomination.

    In her decision, Bellows acknowledged that the U.S. Supreme Court will probably have the final word but said it was important she did her official duty.

    That won her praise from the former state lawmakers who filed one of the petitions forcing her to consider the case.

    “Secretary Bellows showed great courage in her ruling, and we look forward to helping her defend her judicious and correct decision in court. No elected official is above the law or our constitution, and today’s ruling reaffirms this most important of American principles,” Republican Kimberly Rosen, independent Thomas Saviello and Democrat Ethan Strimling said in a statement.

    But other Republicans in the state were outraged.

    “This is a sham decision that mimics Third World dictatorships,” Maine’s House Republican leader, Billy Bob Faulkingham, said in a statement. “It will not stand legal scrutiny. People have a right to choose their leaders devoid of mindless decisions by partisan hacks.”

    The Trump campaign on Tuesday requested that Bellows disqualify herself from the case because she’d previously tweeted that Jan. 6 was an “insurrection” and bemoaned that Trump was acquitted in his impeachment trial in the U.S. Senate after the capitol attack. She refused to step aside.

    “My decision was based exclusively on the record presented to me at the hearing and was in no way influenced by my political affiliation or personal views about the events of Jan. 6, 2021,” Bellows told the Associated Press Thursday night.

    Bellows is a former head of the Maine chapter of the American Civil Liberties Union. All seven of the justices of the Colorado Supreme Court, which split 4-3 on whether to become the first court in history to declare a presidential candidate ineligible under Section 3, were appointed by Democrats. Two Washington, D.C.-based liberal groups have launched the most serious prior challenges to Trump, in Colorado and a handful of other states.

    That’s led Trump to contend the dozens of lawsuits nationwide seeking to remove him from the ballot under Section 3 are a Democratic plot to end his campaign. But some of the most prominent advocates have been conservative legal theorists who argue that the text of the Constitution makes the former president ineligible to run again, just as if he failed to clear the document’s age threshold — 35 years old — for the office.

    Likewise, until Bellows’ decision, every top state election official, whether Democrat or Republican, had rejected requests to bar Trump from the ballot, saying they didn’t have the power to remove him unless ordered to do so by a court.

    The timing on the U.S. Supreme Court’s decision is unclear, but both sides want it fast. Colorado’s Republican Party appealed the Colorado high court decision on Wednesday, urging an expedited schedule, and Trump is also expected to file an appeal within the week. The petitioners in the Colorado case on Thursday urged the nation’s highest court to adopt an even faster schedule so it could rule before March 5, known as Super Tuesday, when 16 states, including Colorado and Maine, are scheduled to vote in the Republican presidential nominating process.

    The high court needs to formally accept the case first, but legal experts consider that a certainty. The Section 3 cases seem tailor-made for the Supreme Court, addressing an area of U.S. governance where there’s scant judicial guidance.

    The clause was added in 1868 to keep defeated Confederates from returning to their former positions of power in local and federal government. It prohibits anyone who broke an oath to “support” the Constitution from holding office. The provision was used to bar a wide range of ex-Confederates from positions ranging from local sheriff to Congress, but fell into disuse after an 1872 congressional amnesty for most former Confederates.

    Legal historians believe the only time the provision was used in the 20th Century was in 1919, when it was cited to deny a House seat to a socialist who had opposed U.S. involvement in World War I. But since the Jan. 6 attack, it has been revived.

    Last year, it was cited by a court to remove a rural New Mexico County Commissioner who had entered the Capitol on Jan. 6. One liberal group tried to remove Republican Reps. Madison Cawthorn and Marjorie Taylor Greene from the 2022 ballot under the provision, but Cawthorn lost his primary so his case was thrown out, and a judge ruled for Greene.

    Some critics of the movement to bar Trump warn that the provision could be weaponized in unexpected ways.

    They note that conservatives could argue, for example, that Vice President Kamala Harris is likewise barred from office because she raised bail funds for people arrested during the unrest following George Floyd’s 2020 murder at the hands of Minneapolis police.

    The plaintiffs in Colorado presented historical evidence that even the donation of small sums to money to those seeking to join the Confederacy was grounds for being barred by Section 3. Why, critics have asked, wouldn’t that apply to Democrats like Harris today?

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  • 60-40 mix of stocks, bonds on verge of historic gains ‘after being written off'

    60-40 mix of stocks, bonds on verge of historic gains ‘after being written off'

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    The traditional portfolio of stocks and bonds has been on a tear over the past two months as the S&P 500 nears a record high, but it’s the big gains in fixed income that stand out, according to Bespoke Investment Group.

    Fixed-income assets are typically the “insurance” part of the classic 60-40  portfolio, usually holding up during market weakness even if that wasn’t the case in 2022, Bespoke said in a note emailed Thursday. Both stocks and bonds in the U.S. have rallied during the fourth quarter and are up so far in 2023.

    “With just two trading days left in the year, the market is on the verge of history,” Bespoke said. “After being written off for dead in the last year, the traditional 60/40 portfolio of 60% stocks and 40% bonds is within a whisker of its best two-month rally since at least 1990.”

    Read: ‘The switch was flipped’: ETF flows pick up as stocks, bonds head for 2023 gains

    In 2022, bonds failed to provide a cushion in the 60-40 portfolio as the Federal Reserve aggressively raised interest rates to battle surging inflation. Stocks and bonds tanked last year, with the S&P 500
    SPX
    seeing its ugliest annual performance since 2008, when the global financial crisis was wreaking havoc in markets.

    Over the past two months, the classic 60-40 mix has seen a gain of 12.16% based on the total returns of the S&P 500 and Bloomberg Aggregate Bond Index, according to Bespoke. The current rolling two-month performance is stronger than gains seen in the two-month rally after the onset of the Covid-19 pandemic through May 2020, the firm found.


    BESPOKE INVESTMENT GROUP NOTE EMAILED DEC. 28, 2023

    “The only other period that was better for the strategy was the two months ending in April 2009,” the firm said. “Back then, the strategy rallied 12.25%, so if the next two trading days even see marginal gains, the current rally will set the record.”

    Bonds surge

    The Vanguard Total Bond Market ETF
    BND
    and iShares Core U.S. Aggregate Bond ETF
    AGG
    have each seen a total return of slightly more than 7% this quarter through Wednesday, according to FactSet data. 

    That puts the Vanguard Total Bond Market ETF on track for its best quarterly performance on record, while the iShares Core U.S. Aggregate Bond ETF is heading for its biggest total return since 2008, FactSet data show. The iShares Core U.S. Aggregate Bond ETF gained a total 7.4% in the fourth quarter of 2008.

    In April 2009, “the bond leg” of the 60-40 portfolio was up just 1.87% on a rolling two-month basis, while in May 2020 it gained 2.25%, the Bespoke note shows.

    “During this current period, bonds have rallied an unprecedented 8.87%, which far exceeds any other two-month period since at least 1990,” the firm said. “While they still underperformed stocks in the last two months, they have never acted as a smaller drag on the strategy during a period of strength.”

    Read: ‘Cash is a trap,’ warns JPMorgan’s David Kelly. Here’s how a traditional mix of stocks and bonds may pay off.

    Also see: Sitting on cash? Stocks, bonds pay off more when Fed on ‘pause’ than in ‘easing periods,’ BlackRock says

    Bespoke found that the S&P 500, a gauge of U.S. large-cap stocks, is up 14.35% over the last two months on a total-return basis, “which is certainly strong relative to history but not anywhere close to a record.”

    The U.S. stock market was trading slightly higher on Thursday afternoon, with the S&P 500 up 0.2% at around 4,791, according to FactSet data, at last check. That’s within striking distance of the index’s closing peak of 4,796.56, reached Jan. 3, 2022, according to Dow Jones Market Data.

    As stocks were inching higher Thursday afternoon, shares of both the Vanguard Total Bond Market ETF and iShares Core U.S. Aggregate Bond ETF were trading down modestly, according to FactSet data, at last check.

    The yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    was rising about seven basis points on Thursday afternoon, at around 3.85%, but is down so far this quarter, FactSet data show. Bond yields and prices move in opposite directions. 

    Bond prices are rallying as many investors anticipate the Fed is done hiking rates — and may begin cutting them sometime next year — as inflation has fallen significantly from its 2022 peak.

    As for year-to-date gains, the S&P 500 has surged 26.6% on a total-return basis through Wednesday, while the iShares Core U.S. Aggregate Bond ETF has gained a total 6.1% over the same period, FactSet data show.

    Read: Case for traditional 60-40 mix of stocks and bonds strengthens amid higher rates, according to Vanguard’s 2024 outlook

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  • Apple can sell its latest smartwatches again after court pauses FTC import ban

    Apple can sell its latest smartwatches again after court pauses FTC import ban

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    The latest Apple Watches are available again after the company scored a legal victory Wednesday.

    “We are thrilled to return the full Apple Watch lineup to customers in time for the new year,” Apple
    AAPL,
    +0.05%

    said in a statement to MarketWatch. “Apple Watch Series 9 and Apple Watch Ultra 2, including the blood-oxygen feature, will become available for purchase again in the United States at Apple Stores starting today and from apple.com tomorrow by 3 p.m. ET.”

    A U.S. appeals court earlier Wednesday temporarily blocked a government commission’s import ban on popular Apple Watch models following a patent dispute with medical-technology firm Masimo Corp.
    MASI,
    -4.57%
    .

    The court’s order allows Apple to temporarily resume selling the Apple Watch Series 9 and Apple Watch Ultra 2. Both watches were pulled from Apple’s website last week and off store shelves this week when the ban went into effect. The appeals court is weighing a longer halt on the import and sales ban.

    Masimo declined to comment.

    On Tuesday, the tech giant filed an emergency request for the U.S. Court of Appeals for the Federal Circuit to halt the ban at least until U.S. Customs and Border Protection decides whether redesigned versions of its watches infringe Masimo’s patents.

    The appeals court’s decision will allow the U.S. Customs department to consider Apple’s redesign of the offending Apple Watch models. A fix is expected by Jan. 12. Apple said in the motion Tuesday it could “suffer irreparable harm” if the ban is kept in place while the appeal is ongoing.

    Shares of Apple were flat in trading Wednesday.

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  • 10-year Treasury yield drops toward 3.8% after market absorbs sale of 5-year notes

    10-year Treasury yield drops toward 3.8% after market absorbs sale of 5-year notes

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    U.S. bond yields fell on Wednesday as investors continued to bet inflation will ease and the Federal Reserve will cut interest rates in 2024, with rates extending their drop in the afternoon after the Treasury Department sold a slug of 5-year Treasury notes.

    What’s happening

    • The yield on the 2-year Treasury
      BX:TMUBMUSD02Y
      fell more than 11 basis points to 4.238%. Yields and debt prices move opposite each other.

    • The yield on the 10-year Treasury
      BX:TMUBMUSD10Y
      dropped 9.9 basis points to 3.803%.

    • The yield on the 30-year Treasury
      BX:TMUBMUSD30Y
      declined 8.5 basis points to 3.96%.

    What’s driving markets

    Benchmark U.S. bond yields extended a drop after market participants absorbed a sale of $58 billion in 5-year Treasury notes
    BX:TMUBMUSD05Y.

    Yields had declined as investors continued to bet that the easing of inflation — down to 3.1% in November — means the Federal Reserve will lower borrowing costs next year.

    The auction produced a high yield of 3.801%, down from 4.42% at the last sale of 5-year supply in October. The bid-to-cover ratio — a measure of bids versus the amount on sale — was 2.50, up from 2.46 in the October auction.

    Markets, meanwhile, are pricing in an 85.5% probability that the Fed will leave interest rates unchanged at a range of 5.25% to 5.50% after its next meeting on Jan. 30-31, according to the CME FedWatch tool.

    “A moderation in headline and core inflation has created a pathway for central banks to ease off on restrictive policies,” said Stephen Innes, managing partner at SPI Asset Management.

    “As inflation subsides, the Federal Reserve sees higher real rates becoming increasingly economically unfavorable, possibly reducing the necessity for policy rates to remain in prohibitive territory,” Innes added.

    But the chances of at least a 25 basis point rate cut at the subsequent meeting in March is priced at 84.6%. Indeed, traders reckon that by December 2024, the Fed’s main rate will be at least down to a range of 3.75% to 4.0%.

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  • This New Jersey financial pro just won nearly $500K on a sports bet. He'll use it to pay off student loans.

    This New Jersey financial pro just won nearly $500K on a sports bet. He'll use it to pay off student loans.

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    After winning nearly $500,000 on a $5 sports bet, a New Jersey financial adviser said he is planning to follow some of the advice he gives to clients and put the money to good use.

    Travis Dufner, a 32-year-old adviser with Millstone Financial Group in Millstone, N.J., is the bettor who has stepped forward to say he won the $489,378.01 parlay payoff. The wager involved picking 14 players who would score a touchdown over the holiday weekend’s NFL games.

    When…

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  • Dow lands second-highest close ever as stocks build on eight-week winning streak

    Dow lands second-highest close ever as stocks build on eight-week winning streak

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    U.S. stocks closed higher Tuesday, building on a streak of eight straight weekly gains as the final, holiday-shortened week of 2023 got under way.

    What happened

    On Friday, stocks finished a choppy pre-holiday trading session mostly higher, with the S&P 500, Dow and Nasdaq each scoring an eighth straight weekly gain. The S&P 500 finished 0.9% away from its record close of 4,796.56, set on Jan. 3, 2022.

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  • Manchester United stock climbs after Jim Ratcliffe clinches 25% stake

    Manchester United stock climbs after Jim Ratcliffe clinches 25% stake

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    Shares of Manchester United Ltd. MANU climbed 4.7% in premarket trades Tuesday after British billionaire Sir Jim Ratcliffe clinched his 25% minority stake in the iconic English soccer club. Manchester United announced the agreement on Christmas Eve, with Ratcliffe acquiring 25% of the Class B shares held by the American Glazer family, which owns the club, and up to 25% of Class A shares. The Glazers and Class A shareholders will receive the same price of $33 a share. The deal values the club at $5.4 billion, falling below initial hopes of $6 billion, according to Bloomberg. Ratcliffe will also provide an additional $300…

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  • The Magnificent 7 dominated 2023. Will the rest of the stock market soar in 2024?

    The Magnificent 7 dominated 2023. Will the rest of the stock market soar in 2024?

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    2023 will go down in history for the start of a new bull market, albeit a strange one.

    Despite some year-end catch-up by the rest of the S&P 500 index, megacap technology stocks, characterized by the so-called Magnificent Seven, have dominated gains for the large-cap benchmark SPX, which is up 23.8% for the year through Friday’s close.

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  • Nike says 'newness' is crucial to its growth. One analyst says it's not working

    Nike says 'newness' is crucial to its growth. One analyst says it's not working

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    As sneaker makers try to stay relevant amid waning demand, Nike Inc. executives on Thursday said they were banking on “newness and innovation” to win over reluctant shoppers. And as sales deals on shoes proliferate, they said interest in its sneakers that cost over $100 is still solid, and that an expansion of its Jordan brand — beyond basketball gear and shoes — represents an opportunity to boost profits.

    But one analyst on Friday cast doubt over whether those plans will work for all of Nike’s
    NKE,
    -11.83%

    customers in the long term.

    “Nike needs improved marketing outside of basketball, streetwear and lifestyle trends,” TD Cowen analyst John Kernan said in a research note on Friday. “Innovation at the higher end of its assortment is not resonating at scale while . . . Nike faces disruption from smaller competitors in footwear and apparel. Jordan brand moving into lower price points and away from a scarcity model creates risk to the fastest-growing piece of the business.”

    That assessment came after Nike’s quarterly results and dimmer outlook after the market close on Thursday sent shares reeling. Management said that consumers were still cautious, as higher prices for essential goods siphon away what they can spend on new sneakers and clothes.

    Following the results, TD Cowen analysts on Friday downgraded the stock to their version of a hold rating. CFRA, meanwhile, also lowered its opinion on the stock to sell from hold.

    Shares of Nike were down 11.6% on Friday.

    During Nike’s fiscal second quarter, sales trends were shaky in both the athletic-gear maker’s digital channels and its markets abroad, executives said Thursday. In North America, sales slipped 4% year over year. For the holidays, sales were softer outside of the big discount days like Black Friday and Cyber Monday. And competition from the likes of Adidas
    ADDYY,
    -5.55%
    ,
    Deckers Brands
    DECK,
    -1.48%

    subsidiary Hoka One One and running-shoe maker On Holding
    ONON,
    -3.71%

    hasn’t gone anywhere.

    Nike’s results, Kernan said, were a sign that Wall Street’s profit estimates were too high for Adidas and other competitors like Vans owner VF Corp.
    VFC,
    -3.23%

    and Under Armour
    UA,
    -3.52%
    .

    On the company’s earnings call Thursday, Nike said it didn’t plan on getting sucked into a “race to the bottom on digital,” where weaker online traffic forced more markdowns. But like Kernan, Raymond James analyst Rick Patel also had questions about Nike’s efforts to push full-priced product.

    “Nike noted that it intends to focus on full-price selling and doesn’t want to participate in aggressive discounting,” he said. “Also, it aims to manage inventories for key franchises more carefully going forward in order to avoid the promotional fray, which also limits sales growth. We view these as the right moves to protect the health of the brand, but also acknowledge that it leaves Nike at a near-term competitive disadvantage to drive revenue.”

    CFRA analyst Zachary Warring, in emailed commentary, said some of Nike’s other rivals could cut into demand.

    “Although Nike maintains a fortress balance sheet with significant capital returns, we believe the multiple will trend back down to pre-pandemic levels as the company faces competition from brands like Hoka and On [Holding] while it looks for new growth drivers and focuses on cutting costs,” Warring said.

    Nike executives on Thursday said Jordan-branded clothing and products for golf, soccer and football, along with products for women and children, would bring stronger results. They said the same for bras, leggings, retro-themed running shoes and other offerings in its business geared toward women.

    The company also announced plans to save up to $2 billion over the next three years. That savings effort, it said, could include simplifying its product selection, bringing more automation into its operations, and “streamlining” the company by shedding management layers.

    Nike has reportedly already begun laying off workers. The company on Thursday said it expected to book pre-tax restructuring charges of around $400 million to $450 million “primarily associated with employee-severance costs.”

    Nike plans to reinvest those savings back into the company. But as the company tries to fatten margins, Jefferies analyst Randal Konik said those reinvestments could do the opposite.

    “We would expect [management] to reinvest a majority of these cost savings, likely leaving less margin and earnings ‘cushion’ should top-line performance continue to soften over the next 6-12 months,” he said.

    In recent years, Nike has been trying to sell fewer items through outside retail chains and more through its own stores and online channels. But executives on Thursday said that multiyear effort had created “complexity and inefficiencies”

    Edward Jones analyst Brian Yarbrough told MarketWatch that Nike is likely cutting costs after weighing the broader economic backdrop and weakness in its digital business against its sales and margin goals.

    “Combined with a slower revenue-growth environment — and the fact that digital, which is their more profitable channel, is slowing and in some markets declining — I think they probably said, ‘If we’re going to get there, it’s probably going to have to come with some cost cuts,’” Yarbrough said.

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  • Trump SPAC Digital World says it expects to complete merger ‘as soon as first quarter of 2024’

    Trump SPAC Digital World says it expects to complete merger ‘as soon as first quarter of 2024’

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    Shares of Digital World Acquisition Corp.
    DWAC,
    -1.68%
    ,
    the blank-check company that wants to merge with former President Donald Trump’s media venture, rose after hours on Friday after the company said in a regulatory filing that it expects to complete that deal “as soon as the first quarter of 2024.” Digital World offered up those expectations after filing an amendment to its registration statement, which it said “includes a preliminary proxy statement of the company, and a prospectus in connection with the proposed business combination” with Trump Media & Technology Group, the company that runs Trump’s social-media platform Truth Social. “With this filing, we are closing in on the final steps before our merger becomes effective and goes to the shareholders for a vote,” Trump Media Chief Executive Devin Nunes said in a statement. Digital World shares were up 4.7% after the bell.

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  • OpenAI discussing new funding round that could give it $100 billion valuation: report

    OpenAI discussing new funding round that could give it $100 billion valuation: report

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    OpenAI, the influential artificial-intelligence startup behind ChatGPT, is in talks to raise new funding that could give it a valuation of at least $100 billion, Bloomberg reported on Friday. The talks are in their early stages, and the terms and valuation haven’t yet been nailed down, Bloomberg said, citing people familiar with the matter. But if that valuation holds, it would make OpenAI the second-most valuable U.S. startup behind Elon Musk’s SpaceX, Bloomberg said, citing data from CBInsights. The report also said that OpenAI has spoken with G42, an Abu Dhabi-based company focused on AI, about potentially raising money for “a new chip venture.” OpenAI did not immediately respond to a request for comment. The company declined to comment to Bloomberg.

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  • Synopsys and Ansys in talks to merge: report

    Synopsys and Ansys in talks to merge: report

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    Shares of Ansys Inc. soared 18% in trading Friday on reports the company is in discussions to be acquired by Synopsys Inc. in a deal that would create a design-software behemoth.

    The potential deal would kick off 2024 with a mega-merger, even as the Federal Trade Commission attempts to crack down on such transactions. Talks remain fluid and a third party might still emerge as a possible suitor of Ansys, according to a Wall Street Journal report, which cited people familiar with the situation.

    Ansys
    ANSS,
    +18.08%
    ,
    which has a market value of nearly $26.3 billion, makes software that helps predict how products in aerospace, healthcare and automotive applications will work in the real world. A deal could be struck early in 2024, according to people familiar with the matter. Ansys reported revenue of $2.1 billion in 2022.

    Synopsys
    SNPS,
    -6.34%
    ,
    with a market value of $85.1 billion, makes software that engineers use to design and test silicon chips used in smartphones, self-driving cars and other forms of artificial intelligence. Its stock has climbed 65% this year as investors have hopped on the AI bandwagon boom. Shares of Synopsys dipped 6% in late trading Friday.

    Synopsys’s customers include Nvidia Corp.
    NVDA,
    -0.33%
    ,
    Intel Corp.
    INTC,
    +1.95%

    and Advanced Micro Devices Inc.
    AMD,
    -0.22%
    .

    Representatives from Synopsys and Ansys were not immediately available for comment.

    Should the companies strike a merger, it would offer a fresh test for the FTC and its chair, Lina Khan, who have opposed large tech mergers and acquisitions. The agency unsuccessfully sued Facebook parent Meta Platforms Inc.
    META,
    -0.20%

    in its pursuit of VR developer Within, as well as Microsoft Corp.’s
    MSFT,
    +0.28%

    $69 billion purchase of Activision Blizzard Inc.

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  • Why this Treasury market trade continues to draw scrutiny

    Why this Treasury market trade continues to draw scrutiny

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    Inside the $26 trillion Treasury market, perhaps the deepest and most liquid place for government debt in the world, a particular trade continues to draw scrutiny ahead of year-end. It’s the “basis trade,” a way of profiting on the differences in prices between Treasurys and Treasury futures. While such differences can be relatively tiny, one’s potential profit or loss can be exponentially magnified when leverage is involved.In a nutshell, the basis trade takes an arbitrage approach: It involves borrowing from the repo market for leverage and financing, and then taking a short Treasury futures position and a long Treasury…

    Master your money.

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  • 'Santa Claus' rally time for stock market? Why investors should dial back their expectations for this seasonal year-end gift.

    'Santa Claus' rally time for stock market? Why investors should dial back their expectations for this seasonal year-end gift.

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    Almost as predictable as the big jolly man himself, many on Wall Street are eagerly waiting for the so-called Santa Claus rally to further fuel stock-market gains that have already put investors in a holiday mood.

    As defined by the Stock Trader’s Almanac, the Santa Claus rally refers to the stock market’s tendency to rise during the last five trading days of the current calendar year and the first two trading sessions of the new year. Friday marks the start of the period, which will run through Wednesday, January 3 this time around. 

    If recent history holds, then stocks are set to have a good run in the next six trading days as Santa Claus tends to come to Wall Street almost every year. Since 1950, the Santa rally has boosted the S&P 500
    SPX
    by an average of 1.3% over the seven trading-day range. The benchmark large-cap index closed higher 78% of the Santa Claus trading window in the past 75 years, and gained during that time for the past seven years, according to Dow Jones Market Data. 

    This time, though, the stock market has already been in a party mood even ahead of Christmas, with some market watchers, including Yardeni Research’s Ed Yardeni thinking the Santa rally has come “ahead of schedule.” 

    U.S. stocks are sitting on hefty gains at the close of a rollercoaster year. The S&P 500 jumped 4.3% in December, just 0.7% shy of its record set nearly two years ago amid growing optimism that the Federal Reserve may begin cutting interest rates as early as the first half of 2024, a fervor that policymakers attempted to rein in since last week’s FOMC meeting. 

    Opinion: Santa Claus is coming to town and bringing presents for your stock portfolio

    But a relentless rally in the run-up to the official Santa rally indicates some of Santa’s largesse may have already been delivered, said Pete A. Biebel, senior vice president and senior investment strategist at Benjamin F. Edwards. 

    “I do think that the market is a little bit extended, so our expectations for this traditional Santa rally period should be dialed back a bit,” Biebel told MarketWatch on Friday. 

    Biebel points to the midweek dip on Wednesday which made the Dow Jones Industrial Average
    DJIA
    down 475.92 points, or 1.3%, for its biggest one-day percentage decline since October. The blue-chip index ended a streak of five straight record finishes as a strong year-end rally briefly lost momentum, according to Dow Jones Market Data.

    While there wasn’t any clear fundamental trigger for the selloff, some Wall Street analysts think a surge in trading of zero-day to expiry options (0DTE) should be blamed for the pullback. Others said the derivatives that have exploded in popularity this year were just one piece of the puzzle, as overbought technical conditions and low year-end trading volumes also were cited as likely factors. 

    The “air pocket” for stocks on Wednesday was an omen or a red flag that the markets have that potential for steep drawdowns, Biebel said. “It doesn’t mean it has to happen, but it’s a warning that the market is not as rosy as it seems — there is potential trouble below the surface.” 

    See: Chasing the Santa rally? Look out below!

    However, some analysts suggest investors not to bet against the seasonal momentum, especially during the bull market with a strong uptrend which took the three indexes off their October lows, said Adam Turnquist, chief technical strategist at LPL Financial. 

    “Stocks are overbought, but the market can stay overbought for longer than most people expect, especially at this stage of a bull market,” Turnquist told MarketWatch via phone. 

    Meanwhile, stock-market returns during this time frame have historically correlated closely to returns in January and the subsequent year. Since 1950, the S&P 500 has generated an average forward annual return of 10.4% when Santa comes to town. That is well above the return when Santa doesn’t show up, which is only around 4%, according to data compiled by LPL Financial. 

    “There’s the potential [for a Santa rally] but we’ll likely see a little bit of a hangover as well as a reset in January or February from these overbought conditions,” he added. 

    Time will tell if investors receive the seasonal presents that history promises in 2023, or if an overly extended rally will let the Grinch steal Christmas. After all, Santa rally is more of a “curiosity” than a phenomenon, said Biebel. 

    U.S. stocks were edging higher on Friday, with three major indexes on pace for their eighth consecutive positive week. The Dow Jones Industrial Average has risen 0.4%, while the S&P 500 was up 0.9% and the Nasdaq Composite
    COMP
    has jumped 1.3% this week, according to FactSet data.

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  • Nike shares dive, company eyes $2 billion in cost cuts amid 'softer' outlook

    Nike shares dive, company eyes $2 billion in cost cuts amid 'softer' outlook

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    Shares of Nike Inc. tumbled after hours Thursday after the athletic-gear giant warned of a “softer second-half revenue outlook” on its quarterly earnings call, and said it is targeting up to $2 billion in cost cuts over the next three years as it looks to shed management and focus on women customers and its Jordan brand.

    Nike
    NKE,
    +0.91%

    said that the savings could come from simplifying its product selection and using more automation and technology. But the athletic-gear giant has also reportedly begun to lay workers off, and said it expected to book pre-tax restructuring charges of around $400 million to $450 million, much of it in the company’s fiscal third quarter, “primarily associated with employee-severance costs.”

    Nike did not immediately respond to questions about job cuts at the company, or how many staff have been or could be laid off. But on the company’s earnings call, management said its plans included “reducing management layers.”

    In Nike’s earnings release, Chief Financial Officer Matthew Friend said the company’s fiscal second quarter — in which per-share profit beat expectations while sales were roughly in line — marked “a turning point in driving more-profitable growth.”

    But investors appeared skeptical after hours on Thursday, as shares slid more than 11%.

    Nike announced the cost-cutting drive as clothing and shoe brands try to steer through weaker demand overall and a broader price-cutting battle in retail stores for inflation-battered customers. Those customers have had to set aside more money to cover the costs of ever-pricier essential goods, at the expense of things like sportswear and sneakers.

    “We are seeing indications of more cautious consumer behavior around the world in an uneven macro environment,” Friend said during the call.

    Nike executives said consumer demand was strong through the back-to-school season, Black Friday and Cyber Monday, but lagged in between. Demand wobbled online, and in China and Europe.

    They also said that the money they planned to save would be reinvested into helping Nike become more nimble and more responsive to consumer preferences, after years of shifting away from selling shoes and gear through traditional retail chains in favor of doing business through its own stores and e-commerce channels. They added that those efforts “added complexity and inefficiencies” as competition grew steeper.

    Chief Executive John Donahoe said on the call that the Nike-brand women’s segment was already a $9 billion business. But he said new products — like bras, leggings, retro-themed running shoes and other offerings that span both sports and lifestyle — would help draw more women customers.

    Within the Jordan category, Donahoe cited opportunities beyond basketball sneakers. Clothing and golf-, soccer- and football-related products, along with offerings targeted toward women and children, would also help drive growth, he said.

    But for the rest of its fiscal year, Nike’s expectations were dimmer. The company said it forecasted “slightly negative” sales growth for its fiscal third quarter. For its fourth quarter, executives expect low-single-digits sales gains. And they said they now anticipate Nike’s full-year sales to increase around 1%, compared to an outlook in September for mid-single-digits gains.

    In its fiscal second quarter, which ended on Nov. 30, Nike reported net income in the period of $1.58 billion, or $1.03 a share, compared with $1.33 billion, or 85 cents a share, in the same quarter last year. Revenue rose 1% year over year, to $13.4 billion.

    Analysts polled by FactSet expected adjusted earnings per share of 84 cents, on sales of $13.39 billion.

    Gross margin rose to 44.6%, helped by price increases and lower costs for ocean-freight shipping.

    Outlooks this year from athletic-gear retailers like Foot Locker Inc.
    FL,
    +1.89%

    and Dick’s Sporting Goods Inc.
    DKS,
    +0.78%

    have also been cautious, and Nike has faced competition from the likes of Adidas
    ADDYY,
    +1.01%

    and On Running
    ONON,
    -1.05%
    .

    Nike management also said in their previous earnings call in September that they aimed to do more to attract women and running-shoe customers. However, they noted that demand for the company’s products remained solid and they were “cautiously planning for modest markdown improvements for the balance of the year,” as the company tightens up its supplies of sneakers and clothing in stock.

    On Thursday’s call, executives said that demand for higher-priced products had been “resilient,” and that they didn’t have to cut prices as much as their rivals. And they said new releases — like the Sabrina 1 and Luka 2 sneakers — were the best way to stand out in a sea of discounts.

    “We know in an environment like this, when the consumer is under pressure and the promotional activity is higher, that it’s newness and innovation which causes the consumer to act,” Friend said.

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  • Why the 60-40 portfolio is poised to make a comeback in 2024

    Why the 60-40 portfolio is poised to make a comeback in 2024

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    Speculation that the 60-40 portfolio may have outlived its usefulness has been rife on Wall Street after two years of lackluster performance.

    But as the yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    hovers around 4%, some strategists say the case for allocating a healthy portion of one’s portfolio to bonds hasn’t been this compelling in a long time.

    And with the Federal Reserve penciling three interest-rate cuts next year, investors who seize the opportunity to buy more bonds at current levels could reap rewards for years to come, as waning inflation helps to normalize the relationship between stocks and bonds, restoring bonds’ status as a helpful portfolio hedge during tumultuous times, market strategists and portfolio managers told MarketWatch.

    Add to this is the notion that equity valuations are looking stretched after a stock-market rebound that took many on Wall Street by surprise, and the case for diversification grows even stronger, according to Michael Lebowitz, a portfolio manager at RIA Advisors, who told MarketWatch he has recently increased his allocation to bonds.

    “The biggest difference between 2024 and years past is you can earn 4% on a Treasury bond, which isn’t that far off from the projected return in U.S. stocks right now,” Lebowitz said. “We’re adding bonds to our portfolio because we think yields are going to continue to come down over the next three to six months.”

    See: Case for traditional 60-40 mix of stocks and bonds strengthens amid higher rates, according to Vanguard’s 2024 outlook

    Does 60-40 still make sense?

    Since modern portfolio theory was first developed in the early 1950s, the 60-40 portfolio has been a staple of financial advisers’ advice to their clients.

    The notion that investors should favor diversified portfolios of stocks and bonds is based on a simple principle: bonds’ steady cash flows and tendency to appreciate when stocks are sliding makes them a useful offset for short-term losses in an equity portfolio, helping to mitigate the risks for investors saving for retirement.

    However, market performance since the financial crisis has slowly undermined this notion. The bond-buying programs launched by the Fed and other central banks following the 2008 financial crisis caused bond prices to appreciate, while driving yields to rock-bottom levels, muting total returns relative to stocks.

    At the same time, the flood of easy money helped drive a decadelong equity bull market that began in 2009 and didn’t end until the advent of COVID-19 in early 2020, FactSet data show.

    More recently, bonds failed to offset losses in stocks in 2022. And in 2023, U.S. equity benchmarks such as the S&P 500
    SPX
    have still outperformed U.S. bond-market benchmarks, despite bonds offering their most attractive yields in years, according to Dow Jones Market Data.

    The Bloomberg U.S. Aggregate Total Return Index
    AGG
    has returned 4.6% year-to-date, according to Dow Jones data, compared with a more than 25% return for the S&P 500 when dividends are included.

    But this could be about to change, according to analysts at Deutsche Bank. The team found that, going back decades, the relationship between stocks and bonds has tended to normalize once inflation has slowed to an annual rate of 3% based on the CPI Index.

    DEUTSCHE BANK

    The CPI Index for November had core inflation running at 4% year over year, a level it has been stuck at for the past several months. The Fed’s projections have inflation continuing to wane in 2024.

    Staff economists at the central bank expect the core PCE Price Index, which the Fed prefers to the CPI gauge, to slow to 2.4% by the end of next year. If that comes to pass, investors should see the inverse relationship between stocks and bonds return, according to Lebowitz and others.

    A window of opportunity

    The dismal performance of 60-40 portfolios over the past two years has inspired a wave of Wall Street think pieces questioning whether it still makes sense for contemporary investors.

    A team of academics led by Aizhan Anarkulova at Emory University in November presented findings showing that over a lifetime, investors would have reaped higher returns via a portfolio consisting of 100% exposure to stocks, split between foreign and domestic markets.

    But fixed-income strategists at Deutsche and Goldman Sachs Group, as well as others on Wall Street, say investors wouldn’t be well-served by excluding bonds from their portfolio, particularly with yields at current levels.

    Rob Haworth, senior investment strategy director at U.S. Bank’s wealth-management business, says investors now have an opportunity to lock in attractive returns for decades to come, ensuring that the bonds in their portfolios will, at the very least, deliver a steady stream of income that would reduce any losses in stocks or declines in bond prices.

    There is, however, one catch: with the Fed expected to cut interest rates, that window could quickly close.

    “The problem is, for investors in cash, the Fed’s just told you that is not going to last. I think that means it is time to start thinking about your long-term plan,” Haworth said.

    Read: Fed could be the Grinch who ‘stole’ cash earning 5%. What a Powell pivot means for investors.

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  • U.S. stocks struggle to resume climb as Dow edges higher after notching 5th straight record close

    U.S. stocks struggle to resume climb as Dow edges higher after notching 5th straight record close

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    U.S. stock indexes were higher on Wednesday as Wall Street tried to build on their year-end rally with a fresh record in sight for the S&P 500 index.

    How are stock indexes trading

    • The S&P 500
      SPX
      was inching up 3 points, leaving it nearly flat, at 4,771

    • The Dow Jones Industrial Average
      DJIA
      was rising 15 points, leaving it nearly flat, at 37,570

    • The Nasdaq Composite
      COMP
      was edging up 35 points, or 0.2%, to 15,038

    On Tuesday, the Dow booked a fifth straight record close, while the S&P 500 rose and the Nasdaq extended its winning streak to a ninth day.

    What’s driving markets

    U.S. stocks were edging higher on Wednesday with the S&P 500 less than 1% shy of the all-time closing high of 4796.56 it recorded at the start of January 2022, while the Dow industrials and Nasdaq were struggling to extend their nine consecutive daily gains.

    The Wall Street large-cap benchmark S&P 500 has jumped 24.3% this year, partially powered by hopes that the U.S. economy has not been too badly damaged by the Federal Reserve’s ratcheting up of interest rates to cool inflation.

    The latest leg of the rally reflects hopes that with inflation back down to 3.1%, the central bank will begin quickly trimming borrowing costs next year. Not even an concerted effort by Fed officials to counter the market’s rate-cut optimism has damped trader’s ardor.

    This dismissal of less-dovish Fedspeak has left some observers bemused.

    “Investors are dreaming of aggressive rate cuts in an environment of strong economic growth, and that is not the right recipe for easing inflation and keeping it sufficiently low,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “The robust economic data and high earnings expectations are not compatible with a dovish Fed,” she said.

    See: Why the 60-40 portfolio is poised to make a comeback in 2024

    Perhaps the current bullishness is also reflective of seasonal trends, with optimism about a festive bounce underpinning stocks. The “Santa Claus Rally” period stretches from the last five trading days of the year and first two trading days of the new year, according to the Stock Trader’s Almanac.

    Since 1950, the S&P 500 has averaged a gain of 1.32% and closed higher 78.1% of the time over that period, according to Dow Jones Market Data.

    SOURCE: DOW JONES MARKET DATA

    In U.S. economic data, existing-home sales rose 0.8% in November to 3.82 million, the National Association of Realtors said on Wednesday. Sales of previously owned homes unexpectedly inched up last month, snapping a five-month slump as easing mortgage rates encouraged some U.S. homebuyers.

    Meanwhile, U.S. consumer confidence index rose to 110 in December, up from a downwardly revised 101 in the previous month, the Conference Board said Wednesday.

    “The consumer is feeling pretty well as rates move lower, employers add to their payroll, and income expectations improve,” said Jeffrey J. Roach, chief economist at LPL Financial. “So far, investors have a green light as they merge into the new year.”

    That said, investors will continue seeking guidance from more economic data due later this week that may provide more clarity on the Fed’s interest-rate path in 2024. A revision of third-quarter GDP print is expected on Thursday morning, followed by Friday’s personal consumption expenditure (PCE) inflation report — the Fed’s preferred inflation gauge.

    Companies in focus

    • Shares of Alphabet Inc.
      GOOGL,
      +2.82%

      were jumping 3.3% on Wednesday following a report that said its Google unit plans to reorganize a large part of its advertising sales unit.

    • Shares of FedEx Corp.
      FDX,
      -10.56%

      were slumping 11% after the package-delivery giant trimmed its full-year sales forecast, amid continued concerns about subdued shipping demand through the peak holiday season.

    • Shares of General Mills Inc. 
      GIS,
      -2.26%

       were off 2.8% after the consumer-foods company reported fiscal second-quarter profit that beat expectations, while revenue missed and the full-year outlook as consumers continue “stronger-than-expected value-seeking behaviors.” 

    • Toro Corp.’s stock 
      TORO,
      -2.15%

      was down 2.2% despite the lawn mower company’s fourth-quarter profit and revenue beat analyst estimates. 

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  • Colorado Supreme Court bars Trump from the state’s primary ballot

    Colorado Supreme Court bars Trump from the state’s primary ballot

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    DENVER — A divided Colorado Supreme Court on Tuesday declared former President Donald Trump ineligible for the White House under the U.S. Constitution’s insurrection clause and removed him from the state’s presidential primary ballot, setting up a likely showdown in the nation’s highest court to decide whether the front-runner for the GOP nomination can remain in the race.

    The decision from a court whose justices were all appointed by Democratic governors marks the first time in history that Section 3 of the 14th Amendment has been used to disqualify a presidential candidate.

    “A majority of the court holds that Trump is disqualified from holding the office of president under Section 3 of the 14th Amendment,” the court wrote in its 4-3 decision.

    Colorado’s highest court overturned a ruling from a district court judge who found that Trump incited an insurrection for his role in the Jan. 6, 2021, attack on the Capitol, but said he could not be barred from the ballot because it was unclear that the provision was intended to cover the presidency.

    The court stayed its decision until Jan. 4, or until the U.S. Supreme Court rules on the case.

    “We do not reach these conclusions lightly,” wrote the court’s majority. “We are mindful of the magnitude and weight of the questions now before us. We are likewise mindful of our solemn duty to apply the law, without fear or favor, and without being swayed by public reaction to the decisions that the law mandates we reach.”

    Trump’s attorneys had promised to appeal any disqualification immediately to the nation’s highest court, which has the final say about constitutional matters.

    “The Colorado Supreme Court issued a completely flawed decision tonight and we will swiftly file an appeal to the United States Supreme Court and a concurrent request for a stay of this deeply undemocratic decision,” Trump campaign spokesman Steven Cheung said in a statement Tuesday night.

    Trump lost Colorado by 13 percentage points in 2020 and doesn’t need the state to win next year’s presidential election. But the danger for the former president is that more courts and election officials will follow Colorado’s lead and exclude Trump from must-win states.

    Colorado officials say the issue must be settled by Jan. 5, the deadline for the state to print its presidential primary ballots.

    Dozens of lawsuits have been filed nationally to disqualify Trump under Section 3, which was designed to keep former Confederates from returning to government after the Civil War. It bars from office anyone who swore an oath to “support” the Constitution and then “engaged in insurrection or rebellion” against it, and has been used only a handful of times since the decade after the Civil War.

    The Colorado case is the first where the plaintiffs succeeded. After a weeklong hearing in November, District Judge Sarah B. Wallace found that Trump indeed had “engaged in insurrection” by inciting the Jan. 6 attack on the Capitol, and her ruling that kept him on the ballot was a fairly technical one.

    Trump’s attorneys convinced Wallace that, because the language in Section 3 refers to “officers of the United States” who take an oath to “support” the Constitution, it must not apply to the president, who is not included as an “officer of the United States” elsewhere in the document and whose oath is to “preserve, protect and defend” the Constitution.

    The provision also says offices covered include senator, representative, electors of the president and vice president, and all others “under the United States,” but doesn’t name the presidency.

    The state’s highest court didn’t agree, siding with attorneys for six Colorado Republican and unaffiliated voters who argued that it was nonsensical to imagine the framers of the amendment, fearful of former Confederates returning to power, would bar them from low-level offices but not the highest one in the land.

    “You’d be saying a rebel who took up arms against the government couldn’t be a county sheriff, but could be the president,” attorney Jason Murray said in arguments before the court in early December.

    Trump’s attorneys argued unsuccessfully that the writers of the amendment expected the Electoral College to prevent former insurrectionists from becoming president.

    They also had urged the Colorado high court to reverse Wallace’s ruling that Trump incited the Jan. 6 attack. His lawyers argued the then-president had simply been using his free speech rights and hadn’t called for violence. Trump attorney Scott Gessler also argued the attack was more of a “riot” than an insurrection.

    That met skepticism from several of the justices.

    “Why isn’t it enough that a violent mob breached the Capitol when Congress was performing a core constitutional function?” Justice William W. Hood III said during the Dec. 6 arguments. “In some ways, that seems like a poster child for insurrection.”

    In the ruling issued Tuesday, the court’s majority dismissed the arguments that Trump wasn’t responsible for his supporters’ violent attack, which was intended to halt Congress’ certification of the presidential vote: “President Trump then gave a speech in which he literally exhorted his supporters to fight at the Capitol,” they wrote.

    Colorado Supreme Court Justices Richard L. Gabriel, Melissa Hart, William W. Hood III and Monica Márquez ruled for the petitioners. Chief Justice Brian D. Boatright dissented, arguing the constitutional questions were too complex to be solved in a state hearing. Justices Maria E. Berkenkotter and Carlos Samour also dissented.

    “Our government cannot deprive someone of the right to hold public office without due process of law,” Samour wrote in his dissent. “Even if we are convinced that a candidate committed horrible acts in the past — dare I say, engaged in insurrection — there must be procedural due process before we can declare that individual disqualified from holding public office.”

    The Colorado ruling stands in contrast with the Minnesota Supreme Court, which last month decided that the state party can put anyone it wants on its primary ballot. It dismissed a Section 3 lawsuit but said the plaintiffs could try again during the general election.

    In another 14th Amendment case, a Michigan judge ruled that Congress, not the judiciary, should decide whether Trump can stay on the ballot. That ruling is being appealed.

    The liberal group behind those cases, Free Speech For People, also filed another lawsuit in Oregon seeking to bounce Trump from the ballot there. The Colorado case was filed by another liberal group, Citizens for Responsibility and Ethics in Washington.

    Both groups are financed by liberal donors who also support President Joe Biden. Trump has blamed the president for the lawsuits against him, even though Biden has no role in them, saying his rival is “defacing the constitution” to try to end his campaign.

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  • S&P 500 eyes record high as interest rate cut hopes underpin sentiment

    S&P 500 eyes record high as interest rate cut hopes underpin sentiment

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    U.S. stock index futures were hovering around their highs of the year and just shy of record levels as investors continued to revel in an expected loosening of monetary policy by the Federal Reserve in 2024 amid a ‘soft landing’ for the U.S. economy.

    How are stock-index futures trading

    • S&P 500 futures
      ES00,
      +0.05%

      rose 3 points, or less than 0.1% to 4796

    • Dow Jones Industrial Average futures
      YM00,
      +0.01%

      added 10 points, or less than 0.1% to 37688

    • Nasdaq 100 futures
      NQ00,
      +0.02%

      were unchanged at 16940

    On Monday, the Dow Jones Industrial Average
    DJIA
    rose 1 points, or 0%, to 37306, the S&P 500
    SPX
    increased 21 points, or 0.45%, to 4741, and the Nasdaq Composite
    COMP
    gained 91 points, or 0.62%, to 14905.

    What’s driving markets

    The S&P 500 was set to open Tuesday’s session only about 1% below its record close as traders remained energized by the prospect of the Federal Reserve starting to cut interest rates by the spring of next year.

    Some Fed officials in recent days pushed back against the market’s hopes for lower borrowing costs as early as March, but equity investors seem to have shrugged off those comments, for now.

    Meanwhile, the Bank of Japan on Tuesday reminded traders that an important spigot of cheap money still remains open. The BOJ left its main interest rate at minus 0.1%, and in the accompanying news conference, Governor Kazuo Ueda provided little evidence he was minded to exit the central bank’s ultra-loose monetary policy anytime soon, despite inflation running above its 2% target for 19 consecutive months.

    The Japanese yen
    USDJPY,
    +1.32%

    fell 1.2% and the Nikkei 225 stock index
    JP:NIK
    rose 1.4% as 10-year government bond yields
    BX:TMBMKJP-10Y
    fell 3.6 basis points to 0.634%, the lowest in nearly four months.

    “Whenever central banks take positions that the market thinks are unsustainable, it’s always the currencies that play the role of the canary in the coal mine. No surprise then to see the Yen weakening by around 1% against every major currency overnight as investors vote with their feet,” said Steve Clayton, head of equity funds at Hargreaves Lansdown.

    Traders were also warily eyeing the oil market, after benchmark Brent crude
    BRN00,
    +0.06%

    jumped on Monday following BP’s statement it was halting shipments through the Red Sea, and thus the Suez Canal, because of attack’s by the Houthi in Yemen.

    Many of the world’s biggest shipping companies have said they also will steer clear of the region, prompting concerns about rising costs that may build inflationary pressures.

    “An extended period of disruption in global trade ways should not only sustain energy prices, but also put a renewed pressure on global supply chains and shipping prices,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

    Read: Attacks in the Red Sea add to global shipping woes

    “The latter is a threat to inflation. Remember, the pandemic-related supply chain disruptions were the major reason that sent inflation to almost 10% in the U.S.,” Ozkardeskaya added.

    However, there was little evidence early Tuesday that investors were overly concerned by that narrative, with 10-year U.S. Treasury yields
    BX:TMUBMUSD10Y
    dipping 2.7 basis points to 3.912%.

    U.S. economic updates set for release on Tuesday include November housing starts and building permits at 8:30 a.m. Eastern.

    Atlanta Fed President Raphael Bostic is due to speak at 12:30 p.m.

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