The Lowdown on The Brexit Deal

It’s going to be a weekend of fireworks galore in the United Kingdom, possibly one of the most interesting times in the country’s history since World War II. Except this time nobody is going to get bombed and killed, so that’s definitely a plus.

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Minister Boris Johnson’s new Brexit deal comes to a vote this Saturday. The main difference between Johnson’s deal and former PM Theresa May’s deal is that with Johnson’s deal, there is no backstop, meaning that Northern Ireland will also be exiting the European Union. The purpose of the Backstop was to prevent a hard border on the island of Ireland while ensuring that no goods from the UK would leak into the EU single market, hence the Backstop would have been a customs union and keep Northern Ireland within the EU practically. Johnson’s new arrangement allows a customs border on the Irish Sea, but keeps Northern Ireland within the UK’s customs regime technically and borderline practically by offering rebates on any goods that can prove that they will not leak into the Republic of Ireland that would have no border with the north, and hence not leak into the EU itself. The second difference is in VAT, with a similar arrangement where rebates to EU VAT could be applied for if goods are not leaked into Ireland from Northern Ireland.

The Northern Irish party, the Democratic Unionist Party, is against the deal, something about the Good  Friday Agreement, who knows, so Johnson will need converts from the Spartan group of Brexiters plus all the MPs he previously kicked out of the party for voting for the Benn Act, then the Benn Bill, in order to get it passed. Since the Tory rebels who he kicked out don’t like him too much, he may have to apologize, or give them a bag of chips or something, or restore the “whip,” British for readmit them to the party. Maybe some beef jerky too, which they maybe could use as their new whips.

Labor, meanwhile, wants “worker protections” which means existing worker protections and harassment of business owners and barriers against potential workers but try to tell them that and they’ll have no idea what you’re talking about. So they’re pretty much voting against, but Johnson could maybe get a few rebels who just want this over and done with already.

If the deal passes on Saturday, expect UK stocks (NYSEARCA:EWU) to skyrocket on Monday morning. If it doesn’t, expect them, and the pound (NYSEARCA:FXB) to plummet.

Drug War Finally Succeeds in Mexico, But Not Really

War broke out between the people in charge – drug lords – and the technical legally recognized government in Mexico yesterday. The army of Mexican drug lord El Chapo, previously captured by the Obama Administration, invaded a Mexican town called Culiacan and basically started shooting everyone in order to free El Chapo’s son from government forces. According to Reuters, after invading a house, government forces were outmatched by non government gunmen, and the government forces withdrew “to prevent lives being lost,” which is pretty much the objective of every single withdrawal in human history. Alerted to the attack, the drug lord army then responded in force, all over the city, and basically started shooting all government property in broad daylight. One of the government people explained the decision to run away very casually. “The decision was taken to retreat from the house, without Guzman [a cartel leader], to try to avoid more violence in the area and preserve the lives of our personnel and recover calm in the city.” Though there is no ticker for it, the price of illicit drugs in Mexico probably ticked up on the black market yesterday.

 Danone Plummets Off Lowered Guidance

In slightly less exciting news since nobody starts shooting over yogurt, thankfully, Danone (OTCMKTS:DANOY) lowered its guidance on like-for-like sales even though sales were up to €6.42B from €6.19B last quarter, beating expectations. It wasn’t enough though, and the stock plummeted about 7%. The main problem is bottled water. Guidance was lowered to 2.5-3% growth from 3%, so we’re not talking about a total collapse here. But given constant expectations of growth and inflated stock prices everywhere, even the slightest hiccup can cause a large decline.

Aramco Delays IPO, Again

Aramco, the Saudi state-owned, most profitable, and probably most corrupt and inefficient company in the world, is delaying its IPO once again, until December of January from expectations of two days from now on October 20, but it could be postponed once again. Aramco would be opening itself up to public scrutiny by offering shares to the public, which it probably won’t like too much as shareholders would demand that business by conducted in a way more palatable to Western tastes. But nevertheless, the Saudis need the money to accord with their libertine spending habits. The excuse is the recent attack on Saudi oil facilities by Yemen, though it is hard to tell what is planned and what is off the cuff, so to speak.

Coke To Report Earnings Off Caffeine Rush

Coca-Cola (NYSE:KO) will be reporting earnings today, amid excitement over its anticipated entrance into the energy drink market. The energy drink will be cherry flavored, and will contain 114mg of caffeine per 12 ounces. Coke Energy is sold in 25 countries in Europe. A cinnamon flavor is coming for the holidays, so that’s exciting. Cherry vanilla and orange vanilla are in the pipeline. “Some cannibalization of regular Coke expected based on early results in Europe,” wrote Evercore on the plans. “Net, it’s a positive given higher price points and profitability.” In Europe there has been “limited cannibalization of regular Coke, [and it’s] growing the category, primarily sourcing share from Red Bull.”

Hong Kong Preparing For More Illegal Rallies, Subway Block

Hong Kong protesters are planning to block the subway tomorrow, while police have denied a permit for a demonstration. Meanwhile, emergency laws are still in place on the island which forbid masks during protests, laws which are and have been completely ineffective. Let’s see what happens over the weekend in this currently boiling world.