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Market Morning: Pot Stocks Get Smoked, Bayer Breathing Room, More Tax Cuts,

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Pot Stocks Get Smoked, Crash Nearly 10%

The legal cannabis sector just got smoked, or blazed, but not in a good way. Pot stocks cratered the most in record for a single day, with the ETFMG Alternative Harvest ETF (NYSEARCA:MJ) plummeting 9.5% on volume close to 3x average. On top of it being the worst day on record for cannabis stocks, it has been the worst 5 day skid in 8 months. It’s been buy the rumor sell the fact as full-legalization in Canada has just gone into effect as of October 17. 28 of 37 stocks held by the ETF were down, and the Canadian equivalent fared even worse, as the Marijuana Life Sciences Index ETF  (HMMJ.TO) fell 11.6% on the day.

SEE: LibertyX, Genmega Partnership To Turn 100,000 ATMs In U.S. Into Bitcoin Vending Machines

Bayer Breathes Monsanto-Sized Sigh of Relief

A U.S. judge yesterday upheld a verdict against Bayer (BAYRY) owned Monsanto that holds the company accountable for a man’s terminal cancer due to his use of the weed killer RoundUp, which contains glyophosphates. However, the judge, Suzanne Bolanos said she would cut down punitive damages from $250 million to $39 million of lawyers from both sides agreed. Given that Monsanto is facing lawsuits from 8,000 other purported RoundUp victims, slashing the damages down to $39 million cuts the potential total by close to $2 trillion, give or take a buck or two. If all 8,000 are given $39 million however, Bayer would still owe $312 billion, or about 4x its entire market cap, or 4.7x what Bayer paid for Monsanto. So there’s still quite a bit of slashing to do.

“The court’s decision to reduce the punitive damage award by more than $200 million is a step in the right direction, but we continue to believe that the liability verdict and damage awards are not supported by the evidence at trial or the law and plan to file an appeal with the California Court of Appeal,” Bayer said.

Saudi Arabia Tells Oil Markets to Chill Out

Saudi energy minister Khalid al-Falih was either playing the adult in the room or he’s telling the truth, namely that the lynchpin of OPEC will not use oil (NYSEARCA:USO) as a weapon in the ongoing Muhammad bin Salman Jamal Khashoggi assassination saga. “There is no intention” to repeat the 1973 Saudi oil embargo against the United States. Of course, the Saudis could jack up oil prices in other ways, such as clandestinely cutting production or feigning that they are unable to increase production if and when oil prices get squeezed higher. Meanwhile, world leaders are getting increasingly antsy over the Crown Prince’s alleged role in the gruesome murder of Khashoggi.

Trump Says More Tax Cuts On The Way, But Spending to Continue

In a move to excite his base in preparation for midterm elections and at the same time play towards the Democrat refrain for middle class tax cuts, which they will probably oppose in practice because Trump is Trump and the Democrats don’t like Trump, Trump has said that he will introduce a 10% tax cut for the middle class that he hopes will be voted on immediately after the elections as soon as Congress is back in session. “We’re putting in a resolution sometime in the next week or week-and a-half, two weeks … we’re giving a middle-income tax reduction of about 10 percent – we’re doing it now – for middle-income people,” he told reporters at the White House on Monday. “That’s on top of the tax decrease that we’ve already given.” That should help offset some of the tariff increases he’s made.

Futures Fall on Asian Reversal

Japan (NYSEARCA:EWJ), Hong Kong (NYSEARCA:EWH) and China (NYSEARCA:FXI) are all down heavily, with Japan leading the pack down over 2.5%, as Asian markets have begun reversing the massive gains from the day before. US futures are down as well, the S&P nearly a full percent, approaching the lows since the latest decline that began earlier this month. Gold is up slightly on the decline in equities. Watch the 2,710 level on the S&P, which has held twice since July. A break below that would signal a continued downtrend. A bear market becomes official at 2,352, though we are still a ways away from that level.


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