TALKING POINTS – US-CHINA TRADE WAR, JAPAN, RISK ASSETS, NZD, AUD, CHF, JPY

• US-China trade war poses a serious threat to global growth and markets, despite temporary truce
• Japan’s stagnation from imposition of American tariffs and USD weakness may be a lesson for China
• Ongoing trade talks between Trump and Xi Jinping continue to weigh on equities, pro-risk units

The New Home Company Inc. (NWHM) had a rough trading day for Monday December 24 as shares tumbled 5.1%, or a loss of $-0.27 per share, to close at $5.02. After opening the day at $5.10, shares of The New Home Company Inc. traded as high as $5.23 and as low as $5.02. Volume was 53,433 shares over 442 trades, against an average daily volume of 69,155 shares and a total float of 20.44 million.

World stocks sank Monday, lacking Christmas cheer as investors fretted over a “triple whammy” of a US government shutdown, President Donald Trump’s feud with the Federal Reserve and the ongoing US-China trade war. 

Treasury Secretary Mnuchin conducted calls with major banks over the weekend

BorgWarner Inc. (NYSE:BWA) – Equities researchers at Jefferies Financial Group issued their FY2018 earnings estimates for shares of BorgWarner in a research note issued to investors on Monday, December 3rd, Zacks Investment Research reports. Jefferies Financial Group analyst D. Kelley anticipates that the auto parts company will post earnings of $4.35 per share for the year. Jefferies Financial Group currently has a “Buy” rating and a $50.00 price objective on the stock. Jefferies Financial Group also issued estimates for BorgWarner’s Q4 2018 earnings at $1.07 EPS, FY2019 earnings at $4.61 EPS and FY2020 earnings at $4.96 EPS.

HD Supply Holdings Inc (NASDAQ:HDS) – Equities research analysts at SunTrust Banks boosted their FY2019 EPS estimates for shares of HD Supply in a research report issued to clients and investors on Wednesday, December 5th, Zacks Investment Research reports. SunTrust Banks analyst K. Hughes now expects that the industrial products company will post earnings of $3.35 per share for the year, up from their prior estimate of $3.27. SunTrust Banks also issued estimates for HD Supply’s Q4 2019 earnings at $0.65 EPS, Q1 2020 earnings at $0.85 EPS, Q2 2020 earnings at $1.10 EPS, Q4 2020 earnings at $0.55 EPS and FY2020 earnings at $3.36 EPS.

After seeing a 3% gain this year, the U.S.’s gross domestic product is expected to grow 2.6% in 2019, according to economists surveyed by Wolters Kluwer Blue Chip Economic Indicators.

Often, I am asked where a currency or market will be at a specific date into the future. My response will almost always start with “I don’t know.” Everything in trading is a probability. There are no certainties, and to assume where a market will be and at a specific time is to whittle down the probabilities of success to almost ensure your assumptions will be disproven. That said, there are certain events with such significant weight that markets will inevitably change as they unfold or after they pass. Brexit is one of those events. Considering how volatile the discussions have been through 2018, it is reasonable to anticipate further switchbacks in these negotiations through the opening months of 2019. I have little interest in attempting to trade anything more than very short-term opportunities in the Sterling as they arise through that uncertainty. However, when there is a clear resolution, the lifting of uncertainty will allow for a trend – though that could be ambiguous to direction. A no deal will likely see the Sterling drop further, but once early trade deals are struck with key counterparts, the currency will start to recover from a further depressed level. If there is a compromise – and this is true of most scenarios in this middle ground – the Pound will start to rise over the subsequent months as it is implemented. If there is a second referendum, some degree of uncertainty will remain until the vote is tallied. Revoking the initial Brexit will lead to a Sterling rally while reaffirming the initial decision would push back the time frame for the eventual recovery – the only scenario I wouldn’t expect a more systemic Pound recovery. There are no explicit times or levels in this, but that is the nature of trading – the less obvious the key levels and timetable, the more significant the ultimate move. For pairings, my preference runs less towards those explicitly risk oriented and more dependent on liquidity: GBPUSD and EURGBP.

Discovery Communications Inc. (NASDAQ:DISCA) – Imperial Capital raised their FY2019 earnings per share estimates for shares of Discovery Communications in a note issued to investors on Tuesday, December 4th, according to Zacks Investment Research. Imperial Capital analyst D. Miller now forecasts that the company will earn $2.69 per share for the year, up from their previous estimate of $2.59. Imperial Capital has a “Inline” rating and a $31.00 price target on the stock. Imperial Capital also issued estimates for Discovery Communications’ Q1 2020 earnings at $0.71 EPS, Q3 2020 earnings at $0.82 EPS and FY2020 earnings at $3.38 EPS.