Investing.com -- The U.S. brokerage market is up for grabs as Charles Schwab (NYSE:SCHW) and TD Ameritrade announce merger talks, posing awkward questions for anyone in the space who doesn't have a plan to deal with a race-to-the-bottom on commissions. The euro zone's economy may be bottoming out but it isn't bouncing, and Christine Lagarde's first speech as European Central Bank president suggests her first instinct is to sit tight and hold fire. Tesla (NASDAQ:TSLA) is launching an all-electric pickup truck. Meanwhile Bitcoin and other digital currencies are falling sharply and, as ever, only the privileged few with knowledge of the flows have any idea why.
Here's what you need to know in financial markets on Friday, 22nd November.
1. Schwab and Ameritrade roll the dice
The future of the U.S. brokerage market looks different after the announcement that Charles Schwab (NYSE:SCHW) is in talks to merge with TD Ameritrade (NASDAQ:AMTD). The deal would combine the U.S.’s two biggest brokerages, as long as antitrust regulators approve it.
There’s every reason to believe it will get the regulatory ok, given how the brokerages are being squeezed both by roboadvisor startups and more established competition, including Wall Street’s biggest banks.
The news confirmed speculation that consolidation would surely follow as a result of the price war that erupted last month when Schwab, Ameritrade and others all cut commissions on trading basic U.S. products to zero. The shares of both Schwab and Ameritrade rose sharply on Thursday, putting the near-term focus squarely on the likes of E*Trade (NASDAQ:ETFC), which now needs to come up with some kind of strategic response. E*Trade’s stock fell over 9% on Thursday.
2. Lagarde signals continuity, as do Europe's weak PMIs
It looks like more of the same in Europe, at least in the short term: on the economic front, flash purchasing manager indices for the euro zone showed stabilization but nothing more in November.
Optimists will point to the bigger-than-expected upticks in French and German manufacturing activity; pessimists will counter that the fundamental cause of their weakness – the U.S.-China trade war – is as far as ever from being resolved. They’ll also chip in that service sector activity and job creation are also cooling.
The fact that things aren’t getting noticeably worse will, however, lessen the need for any urgent policy action from Christine Lagarde, whose first major speech as European Central Bank president suggested she would stick to Mario Draghi’s strategy of keeping monetary policy loose while badgering euro zone governments to do more heavy lifting. Bank stocks advanced after she omitted to say anything that smelled of cutting rates further into negative territory.
3. Stocks set to edge higher at end of a down week
U.S. stock markets are set to open higher but are still on course to end the week down after belief in a quick trade deal with China slipped.
The U.S. Chamber of Commerce’s Myron Brilliant told CNBC earlier Friday that the increase in tariffs on Chinese imports scheduled for Dec. 15th is likely to go ahead, given that there is little prospect of the two sides finding common ground before then.
By 6:30 AM ET (1100 GMT), Dow futures were up 20 points, or 0.1%. S&P 500 Futures were also up 0.1% and Nasdaq 100 futures were up 0.3%.
Retailer Nordstrom (NYSE:JWN) looks set for a pop at opening after reporting sharply better-than-expected profit numbers for the third quarter, while Gap (NYSE:GPS) stock also rose in after-hours trading after it beat expectations. Auto components group Wabco (NYSE:WBC) may be in for a tougher time after missing forecasts.
4. Tesla's taking aim at the pickup segment
Tesla (NASDAQ:TSLA) stock is poised to open at a nine-month high after the company showcased its latest vision: an all-electric pickup truck with a price tag starting at $40,000. Higher-end versions of the so-called ‘Cybertruck’ would have a towing capacity of 14,000 pounds, CEO Elon Musk said at a presentation. That would compare favorably with Ford’s F-150, which tows up to 13,200 lbs.
The presentation was only slightly marred by an embarrassing failure of the truck’s glass, which turned out to be not as strong as Musk claimed.
The pickup truck segment has been Detroit’s most reliable money-spinner in recent years. Expanding its product range could give Tesla (NASDAQ:TSLA) an extremely valuable extra source of revenue and profit.
5. Unsafe havens crash
Bitcoin fell to its lowest in six months, extending losses in a miserable week that has seen it slide 17%.
The world’s most valuable digital currency touched $7,000 overnight before recovering to trade at $7,182.40 by 6:15 AM. Ethereum and XRP, the two next most valuable, have lost 18% and 12% respectively this week.
As so often with cryptocurrencies, there has been no visible trigger for the move, the mere fact of which has only served to undermine the notion of digital assets as a “safe haven”.