Market Morning: Beef Prices to Record Highs, China Warns of Conflict, Germany Against ECB

Market Morning

Beef Prices Rise to Record Highs As Tyson Foods Stays Shut Down

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Despite President Trump’s executive order for meat processing plants to remain open, meat processing plants, particularly of Tyson Foods (NYSE:TSN), remain closed. On the one hand is President Trump, executively ordering them to open back up, and on the other hand is the judicial system, which makes Tyson liable if the coronavirus is spread because they remain open. Apparently then, executive order aren’t magic. Meanwhile, wholesale beef prices have skyrocketed to $410 per 100 pounds, doubling in a month. Retailers are restricting purchases, which means that prices have not nearly risen to market-clearing levels and they have higher to go until the amount of buyers equal the amount of sellers. Included in the shutdowns are plants owned by Conagra Brands (NYSE:CAG), Cargill, Smithfield and JBS.

China Document Warns of Open Conflict with United States

Reuters reports on a report that reports that Chinese communist party officials are concerned of the possibility of open conflict with the United States in the wake of the coronavirus pandemic. The document is being compared to the “Novikov Telegram”, a 1946 cable sent by the Soviet ambassador to Washington, Nikolai Novikov, that emphasized the dangers of U.S. economic and military ambition in the wake of World War II. China itself is staying very tight-lipped about the report. The only thing that Reuters could squeeze out of any official was “I don’t have relevant information.” This from the Chinese foreign ministry spokesman’s office. (NYSEARCA:FXI)

Ford Continues Trudge Towards All Time Lows

Nobody’s driving, nobody’s buying cars, and car companies are heading towards post 2008 lows. Ford (NYSE:F) is being particularly hard hit, down over 40% since the COVID-19 crash began. Recovery may be hard to come by for the immensely indebted auto giant, which owes over $150 billion overall through various forms of financing with its customers. This could be a bit of a problem considering its equity is now below $20 billion, and defaults on auto loans are likely to accelerate as the repercussions of the shutdown deepen. The average price of cars could continue to fall as the prices of basic necessities rise due to shortages, which could end up affecting the extremely low interest rates necessary to grease new car sales. In the mean time, consumers are looking to save in any way they can especially on non-essentials like car expenses, with low income options for car insurance gaining in popularity, what with skyrocketing unemployment lowering average American income significantly since February.

Germany Smacks Down ECB For Too Much Money Printing

Germany, only 97 years removed from the most infamous bout of hyperinflation in world history, is laying the smackdown on the European Central Bank for exceeding its authority on money-printing, though about 5 years after the fact. Germany’s high court has ruled that the European Central Bank exceeded its authority by launching quantitative easing in 2015, ordering the German government to take steps against the program. This has, for some reason, pushed the Euro lower against the dollar, though this would seem counterintuitive, since a ruling against money-printing should have a negative on future money-printing, which should push a currency higher, since it will be printed less. According to the court, the decision does not concern any financial assistance measures taken by the European Union or its institutions in response to the coronavirus pandemic.


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