Orange Hair Populism Crosses The Pond As Boris Johnson Wins Tory Race
As expected, Boris Johnson, the long-time front runner in the race for the leadership of the United Kingdom’s Conservative Party, has now won that race officially. He is now the Tory leader, and slated to become the next Prime Minister of the UK, assuming he can get the nomination from Queen Elizabeth II and a vote of confidence from Parliament. Though likely, this is actually not entirely certain because there is a sizeable group of Tory rebels intent on stopping a no-deal Brexit by any means, which could include refusing to back Johnson’s new government. Some key figures, including Chancellor of the Exchequer Phillip Hammond, have explicitly stated that they would resign before Johnson becomes Prime Minister so as not to further the chances of a no-deal Brexit.
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In order to force through a no-deal Brexit, Johnson would likely have to prorogue Parliament, in other words suspend it, given that he probably does not have a majority that would acquiesce to the UK crashing out of the European Union. The whole matter is very convoluted and confusing though, since Parliament does not really have the power to vote to stay in the EU in the first place, unless the Article 50 exit clause already triggered is reversed by legislation, effectively canceling Brexit entirely. It is unclear if there is a majority in Parliament for such a move, meaning the UK could end up crashing out by default, without Boris Johnson having to do anything actively. British stocks (NYSEARCA:EWU) are actually responding positively to the development, the FTSE 100 moving up over 1% today.
Kamala Harris To Introduce Marijuana Decriminalization Senate Bill
Democrat presidential hopeful Kamala Harris is making her move on cannabis. She is planning to introduce a bill that would decriminalize marijuana use on the federal level and even erase past convictions, clearing the criminal records of millions of people and potentially freeing thousands of prison inmates. Harris’s initiative is being supported by Congressman Jerrold Nadler of New York, who will introduce the bill in the House. “Times have changed — marijuana should not be a crime. We need to start regulating marijuana, and expunge marijuana convictions from the records of millions of Americans so they can get on with their lives.” Pot stocks (NYSEARCA:MJ) aren’t reacting much in the premarket, but we’ll see what happens if and when the bill passes.
Government Spending To Rise Another $360B, Debt Elevator Raised
The federal government has finally figured out how to spend even more money. The debt elevator, formerly known as the debt ceiling, is moving even higher, and won’t stop moving higher until 9 months after the coming elections, when another agreement will probably be made to keep it moving higher still. This should help government deficits get bigger by about another $360 billion or so until that time. Meanwhile, federal deficits are already topping $1 trillion annually. The additional spending will have to funded by foreign sources, or monetized by the Federal Reserve through more rounds of monetary inflation, commonly known as quantitative easing. This will require an even heavier issuance of short term bonds, which the federal government prefers issuing because rates are lower on the short end, but this could hurt the Fed’s ability to control rates on the short end, which is the Fed’s modus operandi. Meanwhile, gold (NYSEARCA:GLD) should be the prime beneficiary of this increased spending over time, though it remains steady on the news.
Snap, Crackle, Earnings Pop?
Snap Inc. (NASDAQ:SNAP), parent company of Snapchat, will report earnings today, and will probably move wildly in after hours trading given that earnings reports tend to move the stock in the double digits in either direction. Premarket trading shows shares already up about 3.3%, though the stock is still down about 50% since its 2017 IPO. There is considerable optimism surrounding the imminent earnings report, which means investors could be in for a waterfall if earnings miss expectations. On the bull side, it has updated its Android app, so maybe that’ll goose things up a bit.