US Stock Outlook | Futures on the three major stock indexes are rising, Trump allows Nvidia (NVDA.US) to sell H200 chips to China

1. On December 9 (Tuesday), the futures of the three major US stock indexes rose sharply before the US stock market. As of press release, Dow futures were up 0.08%, S&P 500 futures were up 0.09%, and NASDAQ futures were up 0.04%.

2. As of press release, the German DAX index rose 0.26%, the UK FTSE 100 index rose 0.11%, the French CAC40 index fell 0.59%, and the European Stoxx 50 index fell 0.23%.

3. As of press release, WTI crude oil rose 0.36% to $59.09 per barrel. Brent crude rose 0.34% to $62.70 per barrel.

Market news

Trump: It is possible to lower tariffs on some products. An immediate interest rate cut is a “litmus test” for choosing the new chairman of the Federal Reserve. US President Trump was interviewed by the US political website Politico at the White House on the 8th local time. When asked if he would consider adding more tariff exemptions to products that other Americans think are overpriced, Trump answered “yes”; when asked if he would rule out the possibility of further lowering tariffs on other products, Trump replied, “Some products will (lower tariffs), and some I will raise tariffs. What's happening now is all because of tariffs; for example, all car companies are returning to the US.” Furthermore, when talking about interest rates, Trump answered “yes,” when asked “whether an immediate interest rate cut is a litmus test for choosing a new president,” but did not clearly state that he had communicated with potential presidential candidates.

Goldman Sachs: It is a foregone conclusion that the Federal Reserve will cut interest rates this week, but the easing threshold will be raised in the future. Goldman Sachs said that the market generally expects the Federal Reserve to cut interest rates by 25 basis points for the third time in a row at the December FOMC meeting this week, lowering the federal funds rate target range to 3.5%-3.75%. However, interest rate cuts are expected to be accompanied by “hawkish” signals, indicating that the threshold for further policy relaxation in the future has been raised. Goldman Sachs pointed out in a report that there are plenty of reasons for cutting interest rates this time. In terms of the job market, employment growth continues to fall short of the growth rate of labor supply. The unemployment rate has been rising to 4.4% for three consecutive months. Many indicators of job market tension have generally weakened. Some alternative data shows that the number of layoffs has recently begun to increase, posing new downside risks.

The Supreme Court debated Trump's “right to dismiss,” and the “last line of defense” for the independence of the Federal Reserve may be in a hurry. A key US Supreme Court justice said he wants to protect the independence of the Federal Reserve. Meanwhile, the conservative-majority Supreme Court is considering whether to give President Donald Trump the power to fire members of the Federal Trade Commission and other similarly independent agency officials. During Monday's debate, Justice Brett Kavanaugh raised questions relating to the Federal Reserve several times. He asked the administration's chief attorney and US Deputy Attorney General John Saul to respond to the objectors' argument that if Trump's right to dismiss is interpreted broadly in the FTC case, it will ultimately damage the independence of the Federal Reserve.” I have the same concerns,” said Justice Kavanaugh, who was appointed by Trump during his first term.

New York Federal Reserve Survey: US consumers' inflation expectations are stable, and their views on employment prospects have improved. According to a survey by the New York Federal Reserve, US consumer inflation expectations remained stable in November, while their views on employment prospects improved. According to the monthly consumer expectations survey report released by the New York Federal Reserve on Monday, the inflation forecast for the next year has hardly changed and is still 3.2%; the inflation forecast for the next three and five years also remains at 3%. The interviewees believed that the probability of losing a job fell to 13.8%, the lowest level this year. Markets generally expect the Federal Reserve to cut the benchmark interest rate for the third time in a row on Wednesday to prevent labor market conditions from deteriorating. Despite this, many Federal Reserve officials have expressed concern that tariffs may cause prices to continue to rise, and are closely monitoring estimates of inflation expectations.

Individual stock news

Trump announced that Nvidia (NVDA.US) will be allowed to sell H200 chips to China. According to reports, US President Trump announced in a social media post on the 8th local time that the US government will allow Nvidia to sell its H200 artificial intelligence chips to China, but charge a certain fee for each chip. Trump said that the US side will collect 25% of the relevant chip exports. The US Department of Commerce is finalizing the details, and the same approach will apply to Chaowei Semiconductors (AMD), Intel, and other US companies. In response, Chinese Foreign Ministry spokesman Guo Jiakun said, “We have taken note of the relevant reports. China has always advocated that China and the US achieve mutual benefit and win-win situation through cooperation.”

First time in two years! The sky-high valuation was worrying, and Damo downgraded Tesla (TSLA.US). Morgan Stanley downgraded Tesla's rating to the “hold” level, the first since June 2023, due to the company's overvaluation. The current price-earnings ratio of Tesla stock is about 210 times the expected earnings for the next 12 months, making it the second-highest company by market capitalization in the S&P 500 index, behind Warner Bros. Exploration (WBD.US), which has a price-earnings ratio of 220 times, and far ahead of Palantir (PLTR.US), which is ranked third, with a price-earnings ratio of 186 times. Damo said that Elon Musk is eager to transform Tesla into a robotics and artificial intelligence company, but the electric vehicle manufacturer's stock price already reflects these business elements, and its market value has reached “full valuation level.”

Google (GOOGL.US) has also been investigated by the European Union for antitrust: AI tools are accused of abusing their market position to suppress rivals. The European Union has launched an antitrust investigation against Google, fearing that it is using its own artificial intelligence (AI) tools to crowd out competitors and abuse its dominant position in the market. The European Commission issued a statement on Tuesday saying that it will check whether Google distorts the competitive order of the market by imposing unfair clauses on content creators and giving its own AI model an exclusive advantage over competitors. In addition, EU regulators will also thoroughly check Google's AI overview and AI-model content generation, the extent to which content is taken from online publishers, and whether relevant publishers have received reasonable remuneration. EU antitrust commissioner Teresa Ribera said on Tuesday: “This investigation once again sends a signal, demonstrating our determination to protect online media and other content creators, as well as our firm position on maintaining a level playing field in the emerging AI market.”

Warner Bros. (WBD.US) options trading “speculates on the short term”: Paramount Tianmu (PSKY.US) launched a hostile takeover, adding variables to the prospects of merging with Netflix. Options trading for Warner Bros. shares ushered in the second-busiest day ever after Paramount Sky Dance announced on Monday that it had launched a hostile takeover of Warner Bros. Discovery Channel at a cash price of $30 per share. One clear sign, however, is that traders are not betting on the company's long-term prospects. According to the announcement, Paramount's bid corresponds to a corporate value of 108.4 billion US dollars. Unless the takeover offer is extended, existing shareholders will need to decide whether to hand over their shares before January 8 next year. And just last Friday, Netflix (NFLX.US) announced that it would buy Warner Bros. at a price of $27.75 per share (about $82.7 billion in total corporate value), including its film and television production division, HBO Max, and HBO.

Key economic data and event forecasts

23:00 Beijing time: US JoLTs vacancies in October (10,000).

The next day at 01:00 a.m. Beijing time: US December EIA monthly report estimates - current year's Brent crude oil price (USD/barrel).

The next day at 02:00 a.m. Beijing time: US 10-year treasury bond auction on December 9 - total amount (100 million US dollars).

05:30 a.m. Beijing time the next day: US API crude oil inventory changes for the week ending December 5 (10,000 barrels).

The next day at 01:00 a.m. Beijing time: The EIA released the monthly short-term energy outlook report.

Performance Forecast

Wednesday pre-market: Zhiwen Group (MOMO.US)