Trade War Escalates, Consumers Lose, Greenspan Worried
Nonagenarian Alan Greenspan, all of 92 and still kicking, doesn’t like where the trade war is going and believes that the notion that foreigners are “ripping us off” is “complete nonsense” since the people that buy imported goods are American citizens, who do not really tend to feel ripped off when they buy something imported cheaper than they would buy something produced domestically. He says we are on “the edge” of a trade war though it hasn’t affected the economy much yet. Wall Street isn’t liking the tit-for-tat tariff for tariff with China either, and futures are down this morning after the entire commodity sector got smashed on Friday. The S&P 500 (^GSPC) is down 0.4% in the premarket and tech (^IXIC) is down over half a percent.
Alphabet Ignores Trade War, Invests in JD.com
Alphabet’s (NASDAQ:GOOGL) doesn’t seem to share President Trump’s enthusiasm for making it hard for Chinese companies to sell to American consumers, as it has decided to partner with Chinese retailer JD.com (NASDAQ:JD) to the tune of $550 million in an effort to battle Amazon (NASDAQ:AMZN), a fellow domestic American company. Perhaps the Trump administration will decide to prosecute Google for partnering with a foreign firm for the purpose of fending off competition from a domestic one, which may endanger national security somehow. For its part, JD is trying to fend off competition from Alibaba (NYSE:BABA) which, although being a Chinese company, has an Arabic name. Perhaps the Xi administration will prosecute JD for partnering with a foreign firm for the purpose of fending off competition from a domestic one. What is the deal with all these partnerships across international lines anyway? Can’t we all just stop getting along and focus on the trade war? National security is at stake.
Citibank Coughs Up $100M for LIBOR Manipulation
In a settlement with 42 Attorneys General in 42 states, Citibank (NYSE:C) agreed to pay $100 million for manipulating the London InterBank Loan Offered Rate, AKA LIBOR, and profiting from this. The profits now go to various state governments, who will spend it. No word yet on whether these same states plan on suing the Federal Open Market Committee for manipulating the overnight federal funds rate and profiting from this, AKA expanding its balance sheet.
Iraq, Venezuela, Iran, Plan to Veto Saudi Arabian Oil Supply Increase
Could the oil cartel finally be breaking up? Three OPEC founders are not happy about Saudi Arabia’s stated plans to increase the oil supply, and say they are planning on vetoing the move. “Three OPEC founders are going to stop it,” Iran’s representative to the bloc Hossein Kazempour Ardebili said in comments to Bloomberg on Sunday. “If the Kingdom of Saudi Arabia and Russia want to increase production, this requires unanimity. If the two want to act alone, that’s a breach of the cooperation agreement.” Since Saudi Arabia and Iran are not quite friends and Iraq is under the influence of the United States, and Venezeula is a complete basket case and unable to pretty much do anything at all, now would be as good a time as any for Saudi Arabia to go its own way. Oil (NYSEARCA:USO) is down this morning about 1.6% in the premarket, perhaps on the possibility of an OPEC breakup , even if temporary.
Bank of International Settlements Bashes Bitcoin, Says It’ll Break the Internet
The Bank of International Settlements, the Central Bank for the world’s Central Banks of Central Banks, came out with a report over the weekend bashing the decentralized nature of cryptocurrencies like bitcoin (BTC-USD), saying the way that cryptos are structured could break the internet if, theoretically, all monetary transactions in the world were conducted using blockchain. The amount of electricity that bitcoin and ether (ETH-USD) use even now is enormous. What would happen if everybody actually started using digital currencies for everything? Cyberspace may explode, or at least Iceland would, since that’s where a lot of the world’s miners are situated, taking advantage of thermal vents under the island to power bitcoin mining.