After nine months of protracted negotiations, the EU and Britain went into the late hours of the night finalizing a historic post-Brexit trade deal, just a week before the U.K. would crash out of the bloc's single market. The full legal text and details are likely to be released this morning, and would include provisions for zero tariffs or quotas on all goods, as well as protect cooperation in areas like aviation, transport, security and energy. Sterling is up on the news, climbing 0.8% to $1.3599.

What about fishing rights? The issue has held up an agreement in recent months, but people briefed on the talks say there would be a 5.5-year transition period - under which EU boats can still access U.K. fishing waters - though the bloc's rights will be knocked down by a quarter.

The deal is still being called thin, but could provide the base on which the two sides rebuild relations (it's been over four years since the U.K. voted to leave the European Union). It could also restore the standing of U.K. investment. The average level of British exposure in global equity funds has recently fallen to an all-time low of 5.8%, compared with almost 9% at the start of 2016.

Regulation - China goes after its biggest tech company

The country's top market regulator is launching an investigation into Alibaba (NYSE:BABA), just a month after stopping its sister company Ant Group from going public, in what would have been the world's largest IPO. The State Administration for Market Regulation is looking into suspected anti-monopolistic behavior by Alibaba, like forcing merchants to sell exclusively on its platform, while the news saw its shares slump over 7% in premarket trade. Following a broad crackdown on Big Tech across the globe, Beijing has in recent months increased its scrutiny of its local tech groups, but this was the most aggressive action of regulators thus far. Recent rumors also suggest Jack Ma offered to give parts of Ant Group to the Chinese government. (32 comments)

Stocks - Is a Santa rally in the works?

While stock traders will get some time off for Christmas Eve, with the market closing early at 1 p.m. ET, futures are pointing to slight gains for those sticking around in the holiday-shortened session. Christmas Eves are typically far quieter trading sessions, with volumes on the NYSE and Nasdaq about 36.8% of a normal day, according to data from FactSet, which goes back to 2007. More historical data: The S&P 500 has averaged a 0.5% gain on Christmas Eve, according to Dow Jones Market Data, and could mark the beginning of a Santa Claus rally, which is the tendency for stocks to rise over the last five trading sessions of December and the first two trading sessions of January.

Trending - Breaking ties with Republican-led Senate

Congressional Republicans are facing high-stakes decisions in the coming days over two major pieces of bipartisan legislation that were snubbed by the White House. President Trump vetoed the $740B annual defense policy bill, which did not include a provision to repeal Section 230 of the Communications Decency Act and would create a commission to study renaming military bases named for Confederate officials. A day earlier, he expressed discontent with a $892B coronavirus relief package due to the funding headed overseas and undersized direct payments. While both bills have veto-proof majorities, the response from GOP leaders could affect the outcome of the Jan. 5 Georgia runoff elections that will determine control of the Senate for the next two years. (275 comments)

M&A - Square may diversify with Jay-Z

Bloomberg reports that Square's (NYSE:SQ) Jack Dorsey has discussed a potential deal with Jay-Z for music streaming service Tidal, which the rapper and music mogul acquired for $56M in early 2015. Tidal has struggled to keep pace with rival streaming services, while Jay-Z even put his songs back on Spotify (NYSE:SPOT) last year, raising questions about the health of the closely held service (it hasn't reported subscriber figures since saying it had 3M paying customers in 2016). Dorsey, who spent more than four years on the board of Walt Disney (NYSE:DIS), is thought to have ambitions of building Square into a collection of businesses under one corporate umbrella. The company already has two core products, Square Seller and Cash App. (7 comments)

Trending - SolarWinds hack ongoing

A sprawling cyberattack that used SolarWinds (NYSE:SWI) as a springboard is still "impacting enterprise networks across federal, state, and local governments, as well as critical infrastructure entities and other private sector organizations," the Cybersecurity and Infrastructure Security Agency said in an alert posted to its website. "This threat actor has the resources, patience, and expertise to gain access to and privileges over highly sensitive information if left unchecked. Disconnecting affected devices, as described in Required Action 2 of the ED, is the only known mitigation measure currently available." SolarWinds shares have been volatile over the past week, and have tumbled 32% since the attack was first reported on December 13.

Outlook - How to tax remote workers?

The trend towards remote work is spurring some interesting cases about income tax for employees that are no longer commuting to the office.

New Jersey, Connecticut, Hawaii and Iowa have submitted an amicus brief in a lawsuit that challenges the authority of states to tax nonresidents' income while they've been working from home. The brief also pushes back on New York, which taxes Garden State residents who normally commute there despite hundreds of thousands of NJ residents now working from home.

Center of the controversy: Massachusetts has been taxing New Hampshire residents who have been working remotely since the pandemic, spurring the Granite State to file suit in October.

Generally, a state can tax an individual if he or she is a resident or if they have earned income in that location. States have mitigated this by providing tax credits to offset "double taxation" or have established "reciprocal agreements." Remote work has resulted in additional complexity because seven states have passed what is known as a "convenience rule," which taxes employees based on the location of their office even if they are working remotely.

Today's Markets

In Asia, Japan +0.5%. Hong Kong +0.2%. China -0.6%. India +1.1%.
In Europe, at midday, London flat. Paris flat. Frankfurt +1.3%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.2%. Crude -0.6% to $47.81. Gold +0.1% at $1881.80. Bitcoin +0.6% to $23203.
Ten-year Treasury Yield -1 bps to 0.94%

Today's Economic Calendar

4:30 PM Money Supply
4:30 PM Fed Balance Sheet
NYSE early close at 1:00 PM
SIFMA close 2:00 PM