May Rejects Corbyn Compromise On Brexit
As the week begins, a potential Brexit deal breaks down again. Labor leader Jeremy Corbyn had proposed to support British Prime Minister Theresa May’s soft Brexit plan on the condition that it included a customs union with the European Union, which is essentially what the European Union is anyway, a customs union. May responded in an open letter, “I am not clear why you believe it would be preferable to seek a say in future EU trade deals rather than the ability to strike our own deals?” A customs union would also cause the Tories, her party, to split, meaning that her plan would probably not pass anyway even with Labor’s support in the event that May actually agreed to a customs union. It is looking increasingly likely that Brexit will be delayed, perhaps indefinitely, because UK politicians can’t seem to figure out what they are supposed to do now.
US China Deal Deadline Now 17 Days Away
As if the Brexit deadline 46 days away on March 29 weren’t enough, another deadline looms only 17 days away that could arguably disrupt the global economy in even more extreme ways than a Hard No Deal Brexit would. The deadline for a US/China trade deal is March 1st, at which point tariffs on $200 billion in Chinese imports to the US will be taxed at 25% instead of 10% as the credit cycle begins to tilt towards contraction. In order to spice up the talks a bit, the US has decided to bring warships into the mix, which is just great for Chinese heart-cockle-warming and will surely inject an ambience of calm into these negotiations. Specifically, these were two guided missile destroyers, designed to destroy things with guided missiles, off the coast of the disputed Spratly Islands, which the Chinese way are theirs and which the US is for some reason upset about even though these islands have nothing to with the US at all. The US claims that China is trying to limit freedom of navigation in these waters. Asian markets meanwhile opened mixed this week. Japan’s Nikkei is down especially hard, over 2%. (NYSEARCA:EWJ)
Another Shutdown Looms Over Beds, Futures Meander
Democrats want to limit the number of beds in immigrant detention centers and Republicans want beds galore, according to Republican Senator Richard Shelby, who is part of the talks on border security funding and says that the talks are stalled now because of the bed issue. The negotiating politicians, 17 of them in fact that are on a “team” are hoping that a deal is completed by Monday to allow President Trump to sign yet another spending bill that will keep the government borrowing money past Friday, when the current funding expires. Stocks will probably ignore all the noise surrounding a shutdown, assuming it won’t happen because it will make Trump look pretty bad, which he wants to avoid going into crunch time for the US China trade deal talks. Stock futures are meandering around unchanged this morning as markets await more concrete news and anything. The Dow is basically unchanged, and the S&P 500 (NYSEARCA:SPY) is up about 0.2%. Nasdaq futures (NASDAQ:QQQ) are leading the pack, up a quarter of a percentage point.
New York Times, Washington Post Duel on Amazon New York Plans
The Washington Post claims that Jeff Bezos, owner of the Washington Post and CEO of Amazon (NASDAQ:AMZN) is backing out of his plans to open a second headquarters in New York amid a furor of whining over too many jobs and too much economic activity without enough taxes, because that’s just way unjust. However, the New York Times (NYSE:NYT), not owned by Jeff Bezos as it is a public company, claims that the article by the Jeff Bezos-owned newspaper is inaccurate concerning the details about the plans of Jeff Bezos, and that the plans are only “strained” not “cancelled”.
Economic Calander for This week
Wednesday CPI and 30Y mortgage rate.
Friday inflation expectations and foreign buying of T bonds.
Not much else this week of consequence.