U.S. markets bounce back and crypto rises after inflation scare

Good morning.

After a week when inflation was front and center in investors’ minds—breaking the five-week winning streak in U.S. markets—attention now turns to slightly less statistical issues. Like, who will be the next Fed chair? Jay Powell’s four-year term ends in February, and President Joe Biden has interviewed both him and Fed governor Lael Brainard. This is historically late in the process for the decision to be made, so Fed watchers expect the choice to come soon.

There are also plenty of sensitive international questions on the market’s mind. As in, how will Monday evening’s virtual summit between Biden and Chinese President Xi Jinping go? Will tariff reductions be on the docket? And will the U.K. trigger Article 16 of the Northern Ireland Protocol this week, perhaps setting off a U.K.-EU trade war?

“Geopolitics will be in focus,” Deutsche Bank’s Jim Reid wrote this morning.

And after a week in which GE, Toshiba, and Johnson & Johnson all announced they would be breaking up, it’s Royal Dutch Shell’s turn to announce big changes (see below).

Crypto, for one, is taking it all in stride. The overall digital coin market is up about 2.2% over the past 24 hours, with both Bitcoin and Ethereum rising slightly above trend. Shiba Inu (–1.5%), however, is still a dog.

Now, let’s check in on what’s moving markets.

Asia

Markets in Asia were mixed, with the Nikkei doing the best of the bunch, up 0.6%, and the Shanghai Composite down 0.2%.

India’s NIFTY 50 index was off ever so slightly on the day that the country reopened its borders to vaccinated tourists from 99 countries after a 20-month closure.

Just days after Beijing watered down the language of the COP26 Glasgow Climate Pact so that the final communiqué pledged to “phase down” rather than “phase out” coal, China’s National Bureau of Statistics reported Monday that coal output at the country’s mines in October hit its greatest volume since 2015.

Europe

The European bourses were mixed. The Stoxx Europe 600 was up 0.3% three hours into trading, while London’s FTSE 100 was down 0.1%, and Germany’s Dax was up 0.2%.

Royal Dutch Shell will no longer be so Royal nor so Dutch after its decision to shift its tax residence from the Netherlands to the U.K. and switch from dual-class to a single line of shares. The CEO and CFO will relocate to the U.K. as well to lead the redubbed Shell, which has been under pressure from activist investor Third Point to split in two. The move comes six months after a Dutch court ruled that Shell needed to do more to trim its carbon footprint and cut more emissions by 2030. The British government was pleased; the Netherlands less so.

“Phase down” versus “phase out,” Part 2: With COP26 barely over, BP chief executive Bernard Looney wants the world to know that oil and gas will be part of the global energy mix for quite a while. “It may not be popular to say that oil and gas is going to be in the energy system for decades to come, but that is the reality,” Looney told CNBC on Monday. “What I want us to do is to focus on the objective…which in this case is to drive emissions down.”

U.S.

U.S. futures were all trading up this morning, with the <strong>Nasdaq</strong> leading the way in a 1.2% rise. That’s after the S&P 500 saw its five-week winning streak ended when unexpectedly high inflation data for October—6.2%, a 30-year peak—ruined the party.

It’s retail week in the U.S.: The Census Bureau releases advance sales numbers for October before the bell Tuesday. Walmart and Home Depot post their results before the bell on Tuesday as well, and Lowe’s and Target chime in Wednesday. (Nvidia and Cisco also report Wednesday, adding a touch of tech to the day.)

President Joe Biden will hold a signing ceremony today for the bipartisan part of his spending agenda, the $1 trillion Infrastructure Investment and Jobs Act. House Democrats aim to vote on—and pass—the almost $2 trillion social spending bookend to the infrastructure bill, but a showdown looms in the 50-50 Senate.