November Jobs Report Preview, China Bans Critical Elements.

Morning Stock Market

Dec 6

Markets

Economists project a significant rebound in the November jobs report, expecting a net gain of around 207,500 jobs, following October's disappointing figure of just 12,000, attributed to hurricanes and a labor strike.
Despite the recent uptick in jobless claims, the labor market remains tight with historically low layoffs, indicated by a unemployment rate expected to hold steady at 4.1% and an increase in job openings to 7.7 million.
The outcome of the upcoming jobs report could inform Federal Reserve policy, especially with potential changes in labor supply due to promised tariffs and immigration restrictions by the incoming administration, which could impact business and consumer dynamics in 2024.

The Chinese government has banned the export of critical minerals essential for semiconductors and military equipment to the US, including gallium, germanium, and antimony, in retaliation to recent US export restrictions.
This move could significantly impact the US economy, with estimates suggesting a potential $3.4 billion decrease in GDP if a total ban on gallium and germanium exports occurs, as these materials are vital for various technologies.
China has expressed strong protests against US sanctions, claiming these actions disrupt international trade and may destabilize global supply chains, while implementing stricter reviews on dual-use items.

OPEC+ has postponed planned oil production increases, initially set for January 1, 2025, until April 2025 due to weaker demand and competition from non-member countries, which may lead to stagnant oil prices throughout 2025.
U.S. gasoline prices have fallen to their lowest in 2.5 years, with the current average at $3.03 per gallon as a result of reduced crude oil prices, benefiting consumers.
Analysts predict that Brent crude prices will average $75 per barrel in Q1 2025, with potential upward revisions expected in the following quarters, especially with a shift in U.S. administration toward increased fossil fuel production.

xAI, the AI company founded by Elon Musk, has successfully raised $6 billion in funding, bringing its total capital raised to $12 billion, with expectations of a $50 billion valuation.
The funding round was limited to previous investors, including notable backers like Valor Equity Partners and Sequoia Capital, and marks a significant step for xAI, which aims to enhance its generative AI model Grok and compete with rivals such as OpenAI.
The company is rapidly expanding, currently generating around $100 million annually and has ambitious plans to leverage data from Musk’s other ventures, potentially facing legal challenges and pushback from Tesla shareholders.

Amazon has made significant strides in the AI space with announcements of new generative AI models, the Trainium2 chips designed to compete with Nvidia and AMD, and the development of a supercomputer named Rainier to enhance its AI capabilities.
The company's new large language models under the Nova brand are set to significantly undercut market prices and work across multiple languages and media types, showcasing Amazon's intention to disrupt the AI landscape similarly to how it transformed various other industries.
Experts highlight Amazon's move towards vertical integration in the AI market, with ambitions to become an end-to-end AI service provider, potentially forcing competitors to accelerate their strategies and drawing increased regulatory scrutiny over AI market concentration.

Chipotle has implemented a 2% price increase on its menu items to counteract the effects of inflation, marking its first price hike in over a year.
The company's third quarter earnings revealed that food, beverage, and packaging costs accounted for 30.6% of total revenue, an uptick attributed to rising ingredient costs, particularly avocados and dairy.
This pricing adjustment follows a missed market expectation for same-store sales growth and comes amid changes in company leadership after former CEO Brian Niccol's departure to Starbucks.

Rodney Scott, former chief of the U.S. Border Patrol, has been appointed by President-elect Donald Trump to lead Customs and Border Protection (CBP), where he will manage key border enforcement policies and oversee a workforce of over 60,000.
Caleb Vitello has been named the acting director of Immigration and Customs Enforcement (ICE), bringing over 23 years of experience to the role, focused on enhancing safety and security within American communities affected by illegal immigration.
Both Scott and Vitello will collaborate with South Dakota Governor Kristi Noem, nominated to lead the Department of Homeland Security, alongside key figures like Stephen Miller and Tom Homan, to implement stringent immigration policies.

The ruling party in South Korea is advocating for the suspension of President Yoon Suk Yeol's powers following his controversial martial law decree, with impeachment proceedings gaining momentum as opposition parties seek support to achieve the required majority in parliament.
The political crisis has escalated tensions within the country, prompting thousands of citizens to protest against Yoon's actions, and could see the Prime Minister assume presidential duties if Yoon is indeed impeached.
The ongoing turmoil has raised concerns among neighboring nations and the United States, with investigations into potential rebellion charges against Yoon and accusations of unlawful orders to detain key opposition figures during the brief period of martial law.