It was another exciting year for investors in 2018, with end-of-the-year bear market blues and a stock market roller coaster ride. Other highlights: The U.S.-China trade war, Cambridge Analytica scandal (NASDAQ:FB), Iran deal exit, Brexit fireworks and the Italian budget, U.S. unemployment at historic lows, revamped NAFTA, iPhone estimates and patent battles (NASDAQ:AAPL), cannabis stocks, EV and self-driving revolution, Amazon's new headquarters (NASDAQ:AMZN), GE dropped from the Dow and the collapse of Sears (OTCPK:SHLDQ), OPEC output cuts, end of ECB bond buying, rate hike drama, and the current government shutdown.

Economy

U.S. stock index futures are rallying ahead of the final trading session of the year amid optimism surrounding talks between the world's two largest economies. President Trump said he had a "very good call" on trade with China's Xi Jinping on Saturday, claiming that "big progress" was being made on this front, while the latter said both sides wanted "stable progress."

The dialogue took place as activity in China's manufacturing sector contracted for the first time in over two years in December. The official PMI fell to 49.4, below the 50-point level that separates growth from contraction, while new export orders shrunk for the seventh straight month. China is expected to roll out more economic support measures in coming months on top of a raft of initiatives this year.

Already hit by low commodity prices and China's punitive trade tariffs, U.S. farmers are bracing for a tough 2019 as the refurbished Trans-Pacific Partnership came into effect. Known as CPTPP, the pact will slash tariffs among the 11 nations that cover 14% of global growth. It's already a reality for Australia, Canada, Japan, Mexico, New Zealand, Singapore and Vietnam, while the remaining four members - Brunei, Chile, Malaysia and Peru - are soon expected to follow suit.

The Italian parliament has approved the government's 2019 budget, soothing market angst after Rome reached a compromise with the European Commission last week that averted disciplinary measures. The re-draft lowers next year's budget to 2.04% of GDP by adding new taxes, such as those on web-based businesses, and aims to drum up revenue through the sale of government properties.

There is a "50-50" chance that Brexit may be stopped if parliament rejects the government's divorce agreement with the EU, according to Britain's Trade Minister Liam Fox. Lawmakers are set to vote on the deal in the week starting Jan. 14. The news comes as Philip Hammond, Chancellor of the Exchequer, was accused by his cabinet colleagues of failing to release the necessary funding required to prepare Britain for a no-deal Brexit.

Stocks

Having failed to broker a deal on a digital tax during its EU presidency, Austria said it plans to introduce its own levy on tech companies including Facebook (FB) and Amazon (AMZN) while the bloc works out its plan. France has also announced plans to tax tech giants at a national level from 2019 if EU states cannot reach an agreement.

China has cleared the release of 80 online video games, but curiously enough, none of them are from the country's biggest publisher, Tencent (OTCPK:TCEHY). Approvals had been frozen since March amid a regulatory overhaul triggered by growing criticism of video games for being violent, leading to myopia and addiction among young users. Looking to get back into the market, Tencent in November began to require users to prove their ages and identities.

The origins of a cyberattack that disrupted the Los Angeles Times and Tribune Publishing (NASDAQ:TPCO) newspapers are still unclear after causing weekend delivery delays and being brought to the attention of federal investigators. The West Coast editions of the Wall Street Journal (NASDAQ:NWS) and New York Times (NYSE:NYT) were also hit - as they are printed on a shared production platform - but the publishers are aiming to deliver newspapers on schedule today.

Verizon customers can continue to watch ESPN, ABC, and other channels owned by Disney (NYSE:DIS) after the two companies struck a new carriage agreement over programming fees. Fios reached about 4.6M subscribers at the end of 2017. Last quarter, Verizon (NYSE:VZ) said it lost 63K video subscriptions, "impacted by ongoing shifts away from linear video offerings," but notched a net add of 54K Internet connections.

Carlos Ghosn has been re-arrested on new allegations of aggravated breach of trust, meaning he will spend at least 10 more days in prison and be detained until Jan. 11. The daughters of the ex-Nissan (OTCPK:NSANY) chairman, who has been in jail for over a month, suspect the accusations against him are part of a revolt within Nissan to ensure a potential merger with Renault (OTCPK:RNLSY) never came to fruition, the NYT reported at the weekend.

California's attorney general has told a federal judge it's possible that Pacific Gas & Electric (NYSE:PCG) could face charges up to murder if investigators find reckless operation of power equipment caused any deadly wildfires in the past two years. According to the Sacramento Bee, the brief is purely advisory, and any criminal charges would most likely be filed by county district attorneys, not the state. PCG -3.7% premarket.

Amazon is planning to build and expand Whole Foods stores across the U.S. to put more customers within range of its two-hour delivery service called Prime Now, WSJ reports. The push, which would likely focus on regions in Western North America, is a shift from the layoffs and slowing store growth Whole Foods experienced for several years before Amazon (AMZN) bought it for $13.5B in 2017.

U.S. toy sales fell at a high-single digit percentage in Q4, according to UBS, with the two weeks before Christmas failing to provide as big a lift as they did in previous years. Retailers like Target (NYSE:TGT), Walmart (NYSE:WMT) and Amazon (AMZN) fought hard for sales, but the loss of Toys "R" Us was in some ways an irreplaceable force in the industry. The results may prove worse at Hasbro (NASDAQ:HAS) and Mattel (NASDAQ:MAT), although the latter's Barbie sales were "surprisingly robust."

Sears may have staved off liquidation after Chairman Eddie Lampert and his ESL Investments submitted a $4.4B takeover bid for the bankrupt retailer that would keep around 425 stores open. The plan would still need to pass muster with creditors and the bankruptcy court, and Lampert could still be outbid by a group of liquidation firms looking to shut Sears (OTCPK:SHLDQ) and sell off the pieces.

Today's Markets

In Asia, Japan closed. Hong Kong closed. China closed. India flat.
In Europe, at midday, London -0.1%. Paris +0.9%. Frankfurt closed.
Futures at 6:20, Dow +0.9%. S&P +0.8%. Nasdaq +0.9%. Crude +1.1% to $45.82. Gold +0.2% to $1286.10. Bitcoin +0.1% to $3873.
Ten-year Treasury Yield steady at 2.74%

Today's Economic Calendar

10:30 Dallas Fed Manufacturing Survey