 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Tuesday's Headlines 1. U.S. Markets Soar on Trade Relief 2. Tariffs Eased on iPhones and Apparel 3. Consumers Keep on Spending 4. CBS and Viacom Reunite Markets Closed
 cred: Brandon Wade/Stringer Markets Today
We wouldn't classify it as a trade deal, but the U.S. did back off its hard line stance against China by announcing that it would delay the implementation of tariffs on Chinese-made products like cell phones, laptop computers, video game consoles, and some footwear and apparel until Dec. 15.
That was enough to light a fire under the U.S. stock market, which has been spiraling south for several days. The DJIA and the S&P 500 jumped close to 1.5% each, while the tech-heavy Nasdaq tacked on nearly 2%.
Among the stocks making the biggest moves today:
Here's how the U.S. Trade Representative put it, in a press release announcing the delay:
"Certain products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs of 10 percent. Further, as part of USTR's public comment and hearing process, it was determined that the tariff should be delayed to December 15 for certain articles. Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing..."
President Trump said he agreed to the delays because of "Christmas season," and didn't want to impact consumer spending going into that critical time of year.  It's a smart play given that consumer spending has been the one steady stool that the entire U.S. economy has been standing on throughout the trade war. It's been trending higher, as it always does around this time of year, as illustrated by the above chart from Bank of America. Part of that is due to an increase in promotions and discounts that retailers employ going into the back half of the year. Back to school, Labor Day, Black Friday, Cyber Monday, and Christmas are all stacked up and ready for consumers to open their wallets. This year, Amazon extended its Prime shopping day to make it two days, which also had a big impact.
Not out of the Woods, Though While the delay does signify a willingness on the part of the U.S. to negotiate, many of the underlying problems facing investors and the economy haven't gone anywhere. Yes—the trade war is the elephant in the room, but growth was already slowing in the U.S. and around the world. As we have mentioned, that has manifested itself in the inverted yield curve, which has been a harbinger of past recessions. Lately, it has been the yield on the 10-year U.S. Treasury and the three-month U.S. Treasury that have inverted, but it's the 10-year and the 2-year that keeps a lot of people up at night. In the past 24 hours, we've come dangerously close to seeing that happen. chart courtesy FactSet  Bond Investors Go Long In fact, investors are so concerned about the near-term outlook for the economy that they are piling into super-long bonds, like the 30-Year U.S. Treasury. Yields on the 30-year hit their lowest level in history again this week as investors seek safety.  Hong Kong Unrest Continues
The protests in Hong Kong continued unabated earlier today, forcing the cancellation of most flights in and out of the territory. China has remained defiant and has used the word "terrorism" to describe the movement. Today, Trump said that the Chinese military is gathering on the border of China and Hong Kong.  The unrest and the concerns about China's response has taken a toll on investor confidence in the region, which should come as no surprise. As we mentioned yesterday, Hong Kong is one of the top five financial centers in the world, and its stock market, the Hong Kong Stock Exchange, is the third-largest in terms of market capitalization behind the Tokyo Stock Exchange and Shanghai Stock Exchange, and the fourth single largest stock market in the world.
Hong Kong's Hang Seng Index fell 1.7% today, but the overall trend over the past three months has been bleak, with the index falling 11.5%. chart courtesy koyfin.com  CBS & Viacom Reunited We knew this was coming, we just didn't know the price. Today we do, and the two media companies are back together again after they split in 2006.
The new company will be called ViacomCBS. If you are an existing shareholder in with either company, here is the split:
Beyond the math, the merger is really a statement about the competitive landscape for content companies. Go big or go home is the mantra of 2019, and on their own, neither CBS nor Viacom was big enough. Together, they control 22% of the U.S. television audience. In case you don't think that's a big deal anymore, keep in mind that the average U.S. household watches more than seven hours of television per day. I'm not talking about Netflix and YouTube... I'm talking TV.
That shocked me too.
But it's about more than television for these companies, and together they will reach 4.3 billion people around the world, according to their press release, and generate $23 billion in revenue.
(I spoke about this on Cheddar the other day, in case you are interested)
Here's what the combined company looks like, per the infographic on their release today. 
chart courtesy www.koyfin.com  Shares of Symantec rose by nearly 7% today after the cybersecurity company sold off its enterprise security business for $10.7 billion. Best Buy's stock increased by over 6% following the U.S. Trade Representative delaying tariffs on certain electronic goods until after the holiday season.  Newmont Mining's stock decreased by more than 2% as investors, due to the tariff delays, shifted away from safe bets toward tech companies instead.  Contrary to yesterday's results, there were several strong performers today, most notably Colombia and Brazil. Greece and Qatar were the most unfortunate among a much smaller (and unluckier) group. Word of the Day: A relief rally is a respite from market selling pressure that results in an increase in securities prices. Sometimes it happens when expected negative news ends up being positive, or it's less severe than expected.Market participants price in many different types of events, in addition to corporate earnings. Examples include election results, policy interest rate changes by the U.S Federal Reserve, and new industry regulations. Any of these events can trigger a relief rally when the news is not so bad, relative to widespread negative expectations.  Today in Financial History Aug. 13, 1981: Pres. Ronald Reagan signs into law the Economic Recovery Tax Act of 1981, the biggest tax cut in American history, which streamlines the Federal income tax brackets, lowers the top rate to 36%, and creates the universally-deductible Individual Retirement Account.
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Tuesday, August 13, 2019
Trade Relief
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