Futures Tank on China Trade, Gold Climbs
Stock futures are getting grumpy over China again, which showed trade data being lower than investors wanted. Dow futures are down over 200 points, the Nasdaq down 66, or about 1%. Gold (NYSEARCA:GLD) has jumped on the news, passing $1,294 and testing $1,300 again, though silver (NYSEARCA:SLV) isn’t following. Oil (NYSEARCA:USO) is down 1.6%, once again testing the $50 support zone. Europe is down across the board, led by Italy. US Treasuries are sharply higher with yield plummeting, the 10Y Treasury yield down over 7 basis points overnight, but the 2Y isn’t doing as well, yields down only 3.5 basis points, and the yield spread has narrowed to 15 basis points.
May’s Brexit Deal Unlikely To Pass Tomorrow
It’s now 24 hours until the British Parliament votes on Prime Minister Theresa May’s Brexit deal, and it doesn’t look like it will pass. The big question on everybody’s mind is, what happens next? And that, nobody knows. One option is a vote of no confidence, which will almost certainly be submitted by Labor’s Jeremy Corbyn, but even he admits that it is unlikely to pass. If it doesn’t, we’re back to square one. Option two is that the European Union bureaucrats could grant an extension to the Brexit deadline of March 29th, which would probably seriously anger Brexiteers in the United Kingdom and be seen as a cancellation of the whole process.
May has promised that the UK will exit the union by March 29th, with or without a deal, come what may, no pun intended. That leaves the third option, a no-deal Brexit, which would crash UK financials and probably global stocks as well, and could lead to a spiraling liquidity mess depending on how week the underpinnings of the global financial system are at this point. Nobody’s been allowed down there since 2008 though, so it could be messy with quite a bit of spider webs and other gunk. And mildew. Watch UK bank stocks. (NYSE:HSBC) (NYSE:BCS) (NYSE:RBS)
Speaking of Gold, Newmont Buys Goldcorp
Big deal in the gold sector. Two of the Big Three (the third being Barrick) are merging, with Newmont (NYSE:NEM) buying Goldcorp (NYSE:GG) for a deal valued at $10B, or .32 shares of Newmont plus $0.02 for each share of Goldcorp. Goldcorp is up about 13% in the premarket on the news. The merger will make the new company the largest in the world, and follows Barrick’s (NYSE:GOLD) acquisition of Randgold in an $18.3B deal back in September that was finalized this year, and until now made Barrick the largest in the world. “The strategic rationale for combining Goldcorp with Newmont is powerfully compelling on many levels.” Goldcorp Chief Executive Officer David Garofalo said in a statement. The power of gold compels you.
Ford CEO: No Job Cuts in the United States
Ford (NYSE:F) CEO Jim Hackett has confirmed with Fox Business that there will be no job cuts for Ford blue collar workers on the factory floor, this after announcing cuts in its European business, but it won’t spread back across the Atlantic. Meanwhile, Ford car sales in China were down 37% last year, while overall car sales in China were down 6%, so Ford took quite the brunt in that decline. Tariffs on steel and aluminum, meanwhile, have already hurt the automaker, given that they use this stuff in making cars and such. Nonetheless, Hackett praised Trade Ambassador Robert Lighthizer for his part in raising the tariffs for some reason. Some people call it Battered Woman Syndrome. Others call it diplomacy.
Memoirs of a Geisha at PG&E, Not Too Great
Geisha Williams, who has been CEO of PG&E (NYSE:PCG) for less than 2 years, is jumping ship and overseeing the company’s worst crisis since 2001. She did not provide a reason for her departure, but it probably has something to do with the company being on the verge of bankruptcy. She, however, wishes her colleagues well, so that’s nice. PG&E’s debt is now rated junk and that downgrade has triggered up to $800M in collateral liabilities for forward contracts given that it will be very hard for the utility to raise more debt. Shares are down over 20% in premarket trading, bringing them very close to all time lows.