Stocks on track for worst December since the Great Depression

Few people on Wall Street remember the last time the stock market had this tough of a December. That’s because the Dow and S&P 500 are currently on track for their biggest December loss since the Great Depression. The Dow and S&P 500 were each down about 7.8% through Monday. That’s the largest drop for … Continue reading “Stocks on track for worst December since the Great Depression”

Few people on Wall Street remember the last time the stock market had this tough of a December. That’s because the Dow and S&P 500 are currently on track for their biggest December loss since the Great Depression.

The Dow and S&P 500 were each down about 7.8% through Monday. That’s the largest drop for each key market barometer since 1931, according to data from LPL Research. But those Depression-era losses were much bigger: the S&P 500 plunged 14.5% while the Dow plunged 17%. Still, the December 2018 swoon is making investors nervous that earnings growth may have peaked this year. They’re worried that the economy could slow in 2019 because of continued trade tensions with China and rate hikes by the Federal Reserve.

    The Dow and S&P 500 are both in the red for the year, putting stocks on track to have their worst annual loss since the 2008 Great Recession — and first annual loss since 2015.Dow falls 508 points, Nasdaq turns negative for the yearBut investors can still hope that the markets will turn around in the month’s (and year’s) final days. Read MoreDecember is usually a very solid month for the market. Professional money managers tend to buy top-performing stocks to make their portfolios look good — a phenomenon known as window dressing. There’s also the somewhat mysterious Santa Claus rally effect. The market tends to do well in the final week of the year, which some chalk up to light trading volume with so many people off for the Christmas holiday.

      To that end, stocks did rise a little more than 1% Tuesday morning. So as of right now, the market’s current monthly losses are more on par with the poor market performance of December 2002, when the Dow and S&P 500 each fell more than 6%.

Dow falls 508 points, Nasdaq turns negative for the year

The US stock market sank deeper into the red following sluggish economic reports on Monday and bad news from a couple of blue chip giants.

The Dow fell 508 points, or 2.1%. The S&P 500 lost 2.1% and retreated to its lowest level of the year. And the Nasdaq joined the Dow & S&P 500 in negative territory for 2018. All three indexes have plunged nearly 8% so far this December.And the Russell 2000 index of small-cap stocks tumbled into a bear market, marking a decline of more than 20% from the record highs notched in late August.

    A weaker reading from the New York Federal Reserve about manufacturing in the Empire State and a drop in confidence from the nation’s homebuilders weighed on the markets.”Investors are zeroing in on this idea of slower growth for 2019,” said Michael Arone, chief investment strategist at State Street Global Advisors. “More people are worried about a recession in late 2019 or 2020.”Read MoreBruce McCain, chief investment strategist at Key Private Bank, said Wall Street might be overreacting to the economic headlines.”Most of the economic signs point to slowing but not radical slowing. We think the market is overestimating how bad it will be,” said McCain.The political noise in Washington isn’t helping either. President Donald Trump, in a tweet Monday morning, repeated his criticism of the Federal Reserve for its recent rate hikes. The Fed meets Wednesday and is widely expected to raise rates again. But Trump tweeted that “it is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!”The Fed is supposed to be politically independent. Any evidence that it might be swayed by attacks from Trump could unnerve the markets. “If the Fed doesn’t raise rates it will look like it’s succumbing to the bullying of Trump’s tweets,” Arone said. But Nancy Perez, managing director at Boston Private, said the Fed is likely to slow down its pace of rate hikes in 2019 simply because the economy is slowing, not because of pressure from Trump. Perez added that the recent market turmoil is justified because investors are readjusting to this fact. “We have been getting a bump in profit margins due to lower taxes but the earnings growth itself is not sustainable,” Perez said. “Projections will come down and volatility will continue.”

    J&J, UnitedHealth and Goldman Sachs were the day’s big movers

    Investors had more to worry about than the economy and politics though.The Dow’s losses were led by a continued drop in healthcare and consumer products giant Johnson & Johnson. J&J (JNJ) plunged 10% Friday following a bombshell report by Reuters alleging that J&J was aware its trademark baby powder contained asbestos. J&J has said the Reuters report is factually incorrect. But the stock still fell another 3% Monday. Dow component UnitedHealth (UNH) fell nearly 3% after a federal judge in Texas ruled late Friday that the individual mandate of the Affordable Care Act, aka Obamacare, was unconstitutional. This is unlikely to affect health coverage for Americans for quite some time, but it does lead to further uncertainty about the ultimate fate of the landmark law. Here's what's at risk in the Texas Obamacare rulingShares of rival insurer Cigna (CI) — which is in the process of merging with pharmacy benefits manager Express Scripts (ESRX) — and drugstore giant CVS (CVS), which recently acquired insurer Aetna — were lower Monday as well.Energy stocks were also under pressure after US oil prices shed another 2.6%, closing below $50 a barrel for the first time since October 2017. And Dow component Goldman Sachs (GS) was weighing on the broader market too. The Wall Street investment banking giant is in the middle of a scandal in Malaysia.The Malaysian government filed criminal charges against Goldman Sachs Monday due to its involvement with investment fund 1MDB.

      Malaysia has accused Goldman Sachs of misleading investors about bond sales for the fund that were underwritten by Goldman Sachs. The Fed is said to be looking into Goldman Sachs’ ties to 1MDB as well. Shares of Goldman Sachs fell 3% Monday, extending its losing streak to nine days. It is now down nearly 34% this year, making the stock the Dow’s worst performer of 2018.

Corporate America gives out a record $1 trillion in stock buybacks

Corporate America celebrated the first full year under the new tax law by rolling out a record-setting $1 trillion of stock buybacks.

US companies, led by Lowe’s (LOW) and AbbVie (ABBV), rewarded shareholders by unveiling $34.4 billion in buybacks last week, according to TrimTabs Investment Research. That lifted repurchase announcements above $1 trillion for the first time ever, TrimTabs said, exceeding the prior record of $781 billion set in 2015.And the trend continued on Monday. Johnson & Johnson (JNJ), mired in a controversy over its iconic baby powder product, announced a $5 billion buyback. Boeing (BA) also ramped up its buyback program.

    The buyback boom has been fueled by strong economic growth and the corporate tax overhaul that was signed into law a year ago.”It’s no coincidence,” said David Santschi, TrimTabs’ director of liquidity research. “A lot of the buybacks are because of the tax law. Companies have more cash to pump up the stock price.”Read MoreNot only did the tax law reduce the corporate rate, but it gave a big break to companies returning foreign profits. Companies have used a sizable chunk of that windfall to reward shareholders. Buyback announcements have spiked 64% so far this year, TrimTabs said. .m-infographic–1545067803660 { background: url(//cdn.cnn.com/cnn/.e/interactive/html5-video-media/2018/12/17/20181217_stock_buybacks_tax_cut_MOBILE.png) no-repeat 0 0 transparent; margin-bottom: 30px; padding-top: 170.66666666666669%; width: 100%; -moz-background-size: cover; -o-background-size: cover; -webkit-background-size: cover; background-size: cover; } @media (min-width: 640px) { .m-infographic–1545067803660{ background-image: url(//cdn.cnn.com/cnn/.e/interactive/html5-video-media/2018/12/17/20181217_stock_buybacks_tax_cut.png); padding-top: 56.282051282051285%; } } @media (min-width: 1120px) { .m-infographic–1545067803660{ background-image: url(//cdn.cnn.com/cnn/.e/interactive/html5-video-media/2018/12/17/20181217_stock_buybacks_tax_cut.png); padding-top: 56.282051282051285%; } } <!–

    Buy (back) high?

    Wall Street loves buybacks because they artificially inflate earnings and backstop prices by providing a price-insensitive buyer. But critics complain that companies often launch buybacks when prices are elevated, not necessarily when they spot a bargain. That appeared to play out this year, which started with stocks racing to all-time highs.US companies announced $113 billion of buybacks per month during the first half of the year. But the pace of buybacks decelerated to $54 billion a month during the last six months of the year — even as stock prices plunged. “Companies tend to buy high. When markets go down, buybacks go down,” said Santschi. “They are doing buybacks because they feel confident and business is good. Most companies don’t care what the stock price or valuation is.”Consider the buyback misadventures at two storied American companies now in decline: General Electric and Sears. Nearly half of US CFOs fear a 2019 recessionUnder former CEO Jeff Immelt, GE (GE) shelled out $24 billion on share repurchases in 2016 and 2017 at what turned out to be extremely high prices. Now, GE is grappling with a cash crunch that wiped out 59% of its value this year. Sears (SHLD) has spent $6 billion buying back its own shares since 2005. The company’s stock price has plummeted 99% since peaking in 2007. Sears filed for bankruptcy in October. Buybacks have been a hallmark of the bull market that began in March 2009. Corporate America has repurchased more than $4.3 trillion of its own stock since 2009, according to Yardeni Research.

    Business spending isn’t booming

    The market appears to have become more reliant on repurchases, with stocks stumbling when buybacks get turned off. To avoid tripping insider trading rules, companies typically avoid repurchasing shares during the two weeks prior to reporting earnings. So-called “blackout” periods have coincided with multiple market tailspins, including the one that began in early October. Opponents of buybacks argue that companies would serve the economy better by sharing more profits with employees and investing in the future. While companies spent heavily on buybacks after the tax law was enacted, investments in job-creating plants and equipment has been more mixed. One measure of business spending, real nonresidential fixed investment, climbed 11.5% in the first quarter of 2018 before sharply decelerating. That metric slowed to 2.5% in the third quarter, compared with 3.4% during the third quarter of 2017.Florida GOP Senator Marco Rubio said on Twitter last week that the tax code shouldn’t encourage buybacks. “When [a] corporation uses profits for stock buy back it’s deciding that returning capital to shareholders is better for business than investing in their products or workers,” Rubio said. “No surprise we have work life that is unstable & low paying.”But others defend buybacks as a legitimate way to redistribute cash that would otherwise be trapped in bank accounts. Shareholders can then redeploy that cash into the economy and by investing in businesses.”It’s not like the money disappears,” JPMorgan Chase Jamie Dimon told reporters earlier this month during a conference call held by the Business Roundtable. “The notion that it’s somehow only going to shareholders and CEOs is completely wrong.”Even though buybacks slowed in the past few months, they’re expected to be a major source of demand in 2019. JPMorgan recently estimated $800 billion of buybacks next year on higher profits and further cash repatriation inspired by the tax law.

      Of course, that could change if companies grow more concerned about the outlook. Fears about slowing economic growth have put the S&P 500 on track for its worst quarter since 2011. And finance chiefs, the execs in charge of spearheading spending decisions, are getting worried. Almost half of US chief financial officers believe the United States will be in recession by the end of next year, according to a Duke University survey released last week.

Goldman hit in Malaysia; Nissan board meeting; Retail pain

1. Charges against Goldman Sachs: Malaysia has filed criminal charges against Goldman Sachs over its dealings with scandal-hit investment fund 1MDB.

The US investment bank and two of its former employees are accused of breaking Malaysia’s securities laws, Malaysian Attorney General Tommy Thomas said in a statement Monday.The case relates to $2.7 billion that was allegedly misappropriated from 1MDB bond sales, Thomas added.

    A Goldman Sachs (GS) spokesman said in a separate statement that the bank would “vigorously defend” itself against the charges.2. Carlos Ghosn fallout: Nissan’s (NSANY) board is meeting Monday amid signs that the Japanese automaker’s relationship with Renault has become strained.Read MoreRenault (RNSDF) and Nissan are partners, but the strength of their alliance has been tested by the arrest and indictment of Carlos Ghosn in Japan. Ghosn has been ousted as chairman at Nissan, and temporarily replaced at the French automaker. Nissan has also been indicted as part of the investigation into financial wrongdoing. Renault has sent a letter to Nissan’s CEO asking him to call a shareholder meeting, the Wall Street Journal reported. That would allow Renault to push for a new chairman at Nissan. According to the Journal, the letter warns that Nissan’s indictment “creates significant risks to Renault” and to the “stability of our industrial alliance.”Nissan and Renault declined to comment on Monday. Nissan is expected to hold a press conference following its board meeting.3. Retail gloom: Shares in UK online fashion retailer Asos (ASOMY) plunged 40% after the company cut its full year guidance. The company cited “significant deterioration” in the crucial month of November.Asos had appeared to be immune from the sickness affecting UK retailers, many of which have struggled with the transition to online shopping and an economic slowdown caused by Brexit.The warning from Asos could be a sign that even savvy online sellers won’t escape the pain.4. Global market overview: US stock futures were pointing higher.European markets opened mostly lower, following a mixed trading session in Asia.The Dow closed 2% down on Friday. The S&P 500 lost 1.9% and the Nasdaq dropped 2.3%.Before the Bell newsletter: Key market news. In your inbox. Subscribe now!

      5. Earnings: Oracle (ORCL) and Red Hat (RHT) will release their earnings after the close.6. Coming this week:
      Monday
      — Oracle (ORCL) earnings
      Tuesday
      — FedEx (FDX) and Darden (DRI) earnings
      Wednesday
      — General Mills (GIS) earnings; Fed decision on interest rates
      Thursday
      — Nike (NKE), Walgreens Boots Alliance (WBA) and Blackberry (BB) earnings; Bank of England meeting
      Friday
      — Carmax (KMX) earnings; GDP third estimate.

Xi fails to impress; Oil drops below $49; Global market jitters

1. China jitters: Chinese President Xi Jinping struck a defiant note during a speech Tuesday marking four decades since the country embarked on its economic transformation.

But stock markets in Asia fell in reaction to the speech, which was short on economic and trade specifics.Xi did not unveil concrete policies to tackle China’s increasingly complex economic problems, which include weakening growth, rising debt and an ongoing trade war with the United States.

    “President Xi’s lack of any encouragement for expectations of further reform gave markets the jitters,” said Kit Juckes, a strategist at Societe Generale. One thing Xi made clear that Beijing alone will decide China’s future direction. Read More”No one is in a position to dictate to the Chinese people what should or should not be done,” he told the audience.2. Oil plunges: US oil futures plunged to a new 15-month low on Tuesday, dropping 3.5% to below $49 per barrel. Crude prices have been under pressure because of concerns over excess oil supplies and a weaker global economy.US oil prices are down almost 35% so far this quarter. Brent crude, the international oil benchmark, has dropped 30% over the same period and was trading at $57.50 per barrel on Tuesday.OPEC and allies including Russia agreed to slash oil production earlier this month despite pressure from President Donald Trump to keep pumping. The cuts will remove 1.2 million barrels a day from world markets, but won’t kick in until January.3. Global market overview: US stock futures were slightly higher, suggesting that Wall Street may finally snap out of its funk.European markets opened lower, following a day of negative trading in Asia. The Dow and the S&P 500 both closed down 2.1% on Monday. The Nasdaq dropped 2.3%. The small-cap Russell 2000 tumbled into a bear market.The Russell 2000’s downfall is significant because the index is viewed as a barometer for confidence in American growth. The index contains 2,000 smaller companies that do little business overseas, making them highly exposed to swings in the domestic economy.Before the Bell newsletter: Key market news. In your inbox. Subscribe now!4. Earnings and economics: Darden Restaurants (DRI) will release earnings before the open. FedEx (FDX) will follow after the close.

      The US Census Bureau will release data on Housing Starts for November at 8:30 a.m. ET.5. Coming this week:
      Tuesday
      — FedEx (FDX) and Darden (DRI) earnings
      Wednesday
      — General Mills (GIS) earnings; Fed decision on interest rates
      Thursday
      — Nike (NKE), Walgreens Boots Alliance (WBA) and Blackberry (BB) earnings; Bank of England meeting
      Friday
      — Carmax (KMX) earnings; GDP third estimate.

Wall Street’s darkest quarter since 2011 just got worse

Mounting global growth fears rippled across Wall Street on Friday.

The Dow dropped 497 points, or 2%, on Friday. The S&P 500 declined 1.9%, sinking to the lowest level since early April. The Nasdaq tumbled 2.3%. Markets were dinged by a batch of negative corporate and economic developments, especially weak growth numbers out of China and Europe.

    “Something is wrong here. There is this global slowdown. We can’t deny it,” said Michael Block, market strategist at Third Seven Advisors, a private wealth management firm.Johnson & Johnson (JNJ), a popular defensive stock, plunged 10% on a Reuters investigation that found the company knew for decades that asbestos sometimes tainted its Baby Powder. J&J, the worst stock in the Dow on Friday, suffered its worst day since 2002. J&J’s lawyers told Reuters that its findings are “false and misleading.”Read MoreThe sharp selloff for J&J had a pronounced impact on the Dow. And the fact that it’s a widely held stock means the pain is being felt broadly. “This is supposed to be a hiding place. It’s certainly a blow to a lot of folks,” said Block. “Pain begets pain.”

    $39 billion yanked from stocks

    Friday’s slide left US markets with a second consecutive week of losses. The S&P 500, down 11% in the fourth quarter, is on pace for its worst quarter since 2011. That kind of fourth-quarter loss is rare. The S&P 500 has only closed down 10% or more in the final quarter of the year 10 times since 1928, according to Bespoke Investment Group.Jittery investors yanked a record $39 billion from global equities in the latest week, according to a Bank of America Merrill Lynch report released Friday. That included $28 billion that exited US stocks, the second-highest on record. And a record $8.4 billion was pulled from investment grade bonds.”Capitulation out of risk” is how Bank of America chief investment strategist Michael Hartnett described it.And money continues to flow to the safety of the US dollar, which climbed to an 18-month high on Friday against a basket of currencies.Growth fears invaded the commodities markets as well. US oil prices tumbled 2.6% to $51.20 a barrel.

    Weak numbers from China, Europe

    Investors were not placated on Friday by positive news on the trade front. China said it will temporarily reduce tariffs on imports of American-made cars as the two nations continue to negotiate.Wall Street was similarly unfazed by President Donald Trump hinting at an imminent breakthrough with China. At midday, Trump tweeted that a “big and very comprehensive deal” with China could happen “rather soon.” The Dow closed about 200 points below where it was trading at when Trump sent that tweet.Global markets fell sharply on Friday. Japan’s Nikkei 225 plunged 2%, while China’s Shanghai Composite declined 1.5% and the Hang Seng lost 1.6%. In Europe, major markets lost about 1%.China’s retail sales decelerated in November to 8.1%, the weakest pace since 2003, according to Bannockburn Global Forex. Industrial output was the slowest since 2002.In Japan, a quarterly survey of business confidence by the Bank of Japan revealed that companies anticipate conditions to worsen in over the next three months.Europe is also facing a deceleration. Business growth in the eurozone slowed in early December to the weakest level in more than four years, according to IHS Markit. The report found that the slowdown was “exacerbated” by the protests rocking France. Hints of more muted growth in the United States are also emerging. The US private sector expanded in early December at the weakest pace since May 2017, according to IHS Markit.

    Recession jitters

    PIMCO estimates that the odds of a US recession over the next 12 months have climbed to about 30%, the highest level during the nine-year economic expansion. “The models are so far flashing orange rather than red,” PIMCO’s Joachim Fels and Andrew Balls wrote in a report published on Thursday. US markets were also pressured by disappointing corporate developments. Costco (COST) lost 9% on a slight earnings miss. And Adobe (ADBE) slumped 7% after reporting mixed results. The consumer news was more encouraging. US retail sales jumped more than anticipated in November, led by surging online growth. The numbers provided evidence that while the housing and auto industries are slowing, American consumers remain resilient.

      Wall Street received some optimistic news from an unlikely source: Steve Eisman, the “Big Short” investor who correctly called the subprime mortgage crash. Eisman told CNN’s Julia Chatterly on Friday that American consumer credit quality remains robust despite the slowdown fears.”I don’t see a recession on the horizon at all,” Eisman said.

This is why presidents shouldn’t mess with the Fed

1. Fed in the hot seat: President Donald Trump may have boxed Federal Reserve chief Jerome Powell into a corner that neither of them want to be in.

Wall Street widely expects the Fed to raise interest rates on Wednesday. But Trump told Reuters last week that another rate hike would be “foolish.” He said on Fox News: “Hopefully the Fed won’t be raising interest rates anymore.”Yet Trump’s repeated attacks on the Fed mean the central bank may not be able to pause now — even if it wanted to. Forgoing a rate hike, one that was already baked into the market, would rattle nervous investors and prompt talk that the Fed is caving to White House pressure.

    “It would shock markets if they didn’t hike and it would show political capitulation,” said David Kotok, co-founder and chief investment officer at investment firm Cumberland Associates. “Trump’s attacks on the central bank are of no help to anybody.”Greg Valliere, chief global strategist at Horizon Investments, argues that tame inflation and slipping growth estimates would give the Fed room to skip a rate hike on Wednesday — except for the Trump factor.Read More”We don’t think Chairman Jay Powell pays much attention to the president, but cynics in the bond market and elsewhere would howl that a stand-pat Fed has become politicized,” Valliere told clients in a recent note.Valliere described “two great Fed ironies.” First, the central bank will have to raise rates precisely because of Trump’s pressure. And secondly, Trump had “the most dovish Fed chairman in our lifetimes — but he fired her.” In fact, Trump complained to Fox News that former President Barack Obama had years of “zero” interest rates. Of course, at that time former Fed chief Janet Yellen was attempting to nurse the economy back to health. In any case, Trump is very likely to be disappointed on Wednesday by the Fed. Nearly half of US CFOs fear a 2019 recessionDespite the recent market mayhem, investors are pricing in a 77% chance of a quarter-point rate hike, according to the CME FedWatch Tool. However, Wall Street is expecting the Fed to trim its 2019 forecast for rate hikes (the infamous dot plot) because of emerging signs of slowing global growth and evidence that higher borrowing costs are squeezing the housing market and auto sales. PIMCO’s Joachim Fels and Andrew Balls wrote in a report last week that a “pause” in the first half of 2019 “looks increasingly likely.” Bank of America Merrill Lynch thinks the Fed’s dot plots will signal two hikes in 2019 and just one in 2020. Even Goldman Sachs, which long called for four rate hikes in 2019, has softened its view on Fed policy. Still, Trump’s attacks on the Fed make any shift in policy awkward for Powell, who was nominated by the president. While Trump is worried about short-term swings in the economy and the stock market — especially before the 2020 election — the Fed has broader concerns. The central bank, an institution that prides itself on being above politics, is charged with guarding against the risk of runaway inflation. The 1970s showed how debilitating inflation spikes can be.And bigger picture, the Fed must protect the central bank’s reputation for being independent. Without that, investors could lose faith in the stability of the system. “History records the misuse of central banks influenced by political forces resulting in inflation and eventually hyperinflation. Venezuela, Zimbabwe, the Weimar Republic,” Kotok said. “The importance of central banks’ independence cannot be overstated.”2. Bank of England: With the United Kingdom deep in Brexit turmoil, investors will be closely watching the Bank of England’s meeting on Thursday. It left interest rates unchanged at 0.75% when it last met in September. “Since the committee’s previous meeting, there had been indications, most prominently in financial markets, of greater uncertainty about future developments in the withdrawal process,” it said at the time. The UK government is still no closer to a Brexit deal and the BOE warned that leaving the European Union will mean trouble for its economy.3. US GDP: The US Bureau of Economic Analysis will release its third estimate of third-quarter GDP Friday. The second estimate, released at the end of November, was a rate of 3.5% annualized growth, mirroring its October estimate. That’s a slower than the 4.2% rate in the second quarter, because of a deceleration in business investment. The economy boomed in the first half of the year in part because of the dramatic tax cut enacted at the end of 2017.4. Earnings: A smattering of tech, retail and consumer companies will report earnings this week including FedEx (FDX), Olive Garden owner Darden (DRI), General Mills (GIS), Walgreens Boots Alliance (WBA), Blackberry (BB) and Oracle (ORCL).One to watch is Nike (NKE). Despite the stock being up 16% for the year, its value has sharply fallen since its last earnings report. Some concerns include Trump’s tariffs on its bottom line and narrowing its focus. Thursday’s earnings will also be its first full report since it debuted its controversial Colin Kaepernick ad. 5. Coming this week:Monday — Oracle (ORCL) earningsTuesday — FedEx (FDX) and Darden (DRI) earningsWednesday — General Mills (GIS) earnings; Fed decision on interest rates

      Thursday — Nike (NKE), Walgreens Boots Alliance (WBA) and Blackberry (BB) earnings; Bank of England meetingFriday — Carmax (KMX) earnings; GDP third estimate.

LVMH just bought some of the world’s most luxurious hotels

One of the biggest luxury brands is buying some of the world’s most luxurious hotels and restaurants.

France’s LVMH (LVMUY), which owns iconic brands like Louis Vuitton, Christian Dior and Dom Pérignon, will take over the Belmond hotel group in a deal valued at $2.6 billion, it announced Friday. The acquisition gives LVMH control of 46 hotels, restaurants and luxury trains and cruises across 24 countries. The portfolio includes the Hotel Cipriani in Venice and the 21 Club in New York, a storied Manhattan restaurant which reportedly counts President Donald Trump and US Treasury Secretary Steven Mnuchin among its regulars.

    “This acquisition will significantly increase LVMH’s presence in the ultimate hospitality world,” LVMH CEO Bernard Arnault said in a statement. LVMH already owns some high-end properties like the Cheval Blanc and Bulgari hotel chains.Belmond also owns one of New York’s best-known restaurants, the 21 Club. Investors in LVMH reacted with caution to the news — the luxury group’s shares fell 1.3% in Paris on Friday morning. Belmond’s shares, on the other hand, soared 39% in premarket trading.Read MoreAcquiring Belmond will give the French conglomerate access to a far wider portfolio of luxury experiences, including the iconic Orient Express and Royal Scotsman trains as well as luxury cruises in France.

      But the biggest attraction will likely be the Cipriani, the 96-room Venice hotel with Michelin-star restaurants that Belmond acquired 40 years ago. The hotel played a starring role in George and Amal Clooney’s celebrity-filled wedding in 2014. The deal is expected to be completed in the first half of 2019, subject to approval from shareholders and regulators.

Global market gloom; ’21’ Club sold; Pound pressured

1. Global gloom: Seasonal cheer is in short supply after weak economic data from Japan, China and Europe sent shivers through global markets. A quarterly survey of business confidence by the Bank of Japan showed companies expect conditions in the world’s third biggest economy to worsen in the months to come.

There was also a slew of disappointing Chinese data, including industrial production and retail sales, that showed the giant economy lost more steam in November. “The latest data show an economy that is under pressure on both the external and domestic front, with policy efforts to shore up growth still falling short,” said Julian Evans-Pritchard, senior China economist at Capital Economics.And in Europe, a survey of purchasing managers indicated that growth in business activity in the countries using the euro slowed in December to its weakest level in over four years.

    “Companies are worried about the global economic and political climate, with trade wars and Brexit adding to increased political tensions within the euro area,” said Chris Williamson, chief business economist at IHS Markit.Stocks in Asia fell, with the major indexes losing between 1% and 2%. European markets fell about 1% in morning trade, and US stock futures were similarly weak. Oil prices were soft, with US crude futures below $53 a barrel.Read MoreConfirmation that China would slash tariffs on US auto imports from January 1 helped stocks such as BMW (BMWYY) and Daimler (DDAIF) trim early losses, but didn’t improve the overall market mood.2. Luxury deal: One group of investors celebrating Friday will be the shareholders of Belmond (BEL), the operator of Venice’s Cipriani hotel and the ’21’ Club in Manhattan, one of New York’s most storied restaurants. French luxury good group LVMH (LVMUY) said it had agreed to pay $25 a share for London-based Belmond, valuing the company at $2.6 billion. Including debt, the deal is worth $3.2 billion. The price represents a 42% premium over Belmond’s closing price on Thursday of $17.65. Belmond stock soared 39% premarket. The deal will give LVMH a much bigger presence in luxury hotels, but its shareholders gave the deal a cautious welcome. LVMH shares fell 1.3% in Paris. 3. Pound pressured: The pound fell 0.5%, taking it back below $1.26, after Prime Minister Theresa May failed in the latest attempt to salvage her plan for taking the United Kingdom out of the European Union in March while minimizing the hit to the British economy.EU leaders reaffirmed their support for the original deal on Thursday night, adding it is “not open for renegotiation.” Given the strength of opposition to the deal in the UK parliament, the lack of progress raises the risk of a damaging no-deal Brexit that would rip apart trading relationships, or a delay to the entire process. “For now, we have an impasse with no new deal … from the EU and no chance of the current one getting through parliament,” noted Kit Juckes, a strategist at Societe Generale.4. Market recap: US markets ended Thursday mixed after a choppy session. The Dow Jones Industrial Average closed up 0.3%, giving back much of an early 200-point rally. The S&P 500 was flat, while the Nasdaq was down 0.4%.General Electric (GE) climbed 7% after Wall Street’s biggest GE bear upgraded the stock. Tailored Brands (TLRD), the owner of Men’s Wearhouse, plummeted 30% on a profit warning. Retailers closed sharply lower.

      Before the Bell newsletter: Key market news. In your inbox. Subscribe now!

      5. Coming this week:
      Friday
      — US retail sales for November

Apple goes big in Austin; ECB meeting; Brexit nerves

1. Apple goes big in Austin: Apple (APPL) said Thursday that it will invest $1 billion to build a new campus in Austin, Texas.

The tech firm also said it would establish new sites in Seattle, San Diego and Culver City. It will expand operations in Pittsburgh, New York and Boulder.The expansion plans were accompanied by a commitment to invest $10 billion in US data centers over the next five years.

    Apple has been criticized by President Donald Trump for manufacturing most of its products abroad. Apple said Thursday that it added 6,000 jobs to its American workforce in 2018.2. Europe puts its bazooka away: The European Central Bank has formally announced its huge money printing program will end this month. Read MoreThe bank launched its stimulus program in March 2015 to support a fragile economy that was still recovering from the financial crisis. In total, the central bank has spent around €2.6 trillion ($3 trillion) on the program.There are growing concerns about weak economic data in Europe and a potential slowdown in growth. The central bank affirmed on Thursday that it will keep interest rates on hold at least through Summer 2019.3. Brexit confusion: British Prime Minister Theresa May survived a leadership challenge on Wednesday. But the future of her Brexit divorce deal is far from certain.May is back in Brussels on Thursday in an attempt to win concessions from the European Union. But she’s unlikely to come back with anything that convinces a significant number of UK lawmakers to back her plan.With no clear path forward for the prime minister, uncertainty is likely to continue for weeks. The pound rebounded from a 20-month low to trade at $1.26 on Thursday.4. Global market overview: US stock futures were pointing higher. European markets opened mixed, while stocks in Asia gained.The Dow closed 0.6% higher on Wednesday. The S&P 500 added 0.5% and the Nasdaq gained 1%.Before the Bell newsletter: Key market news. In your inbox. Subscribe now!

      5. Earnings and economics: Adobe Systems (ADBE) and Costco (COST) will release earnings after the close.6. Coming this week:
      Thursday
      — Adobe (ADBE) and Costco (COST) earnings
      Friday
      — US retail sales for November