Market Morning: China Makes a Move, May Fails Again, Bond Market Goes Mad, Walgreens Goes to Pot

Market Morning

China Makes ‘Unprecedented’ Trade Proposals, Says Reuters

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According to Reuters, China has suddenly made unprecedented proposals in trade talks. The topics include forced technology transfer and what the Trump Administration calls systematic theft of U.S. intellectual property. China probably doesn’t call it that. “If you looked at the texts a month ago compared to today, we have moved forward in all areas. We aren’t yet where we want to be,” in official said. “They’re talking about forced technology transfer in a way that they’ve never wanted to talk about before – both in terms of scope and specifics,” he said, referring to Chinese negotiators. Robert Lighthizer and Steve Mnuchin arrive in China on Thursday for the first face to face talks in weeks, and officials don’t know if the talks will extend into June or longer. They always need more time, but are happy to keep stringing markets along as long as they say progress on core issues is being made. Despite rumors of progress, Asian markets are down, led by Japan’s Nikkei (NYSEARCA:EWJ) and followed by China (NYSEARCA:FXI).

SEE: Canopy Rivers Secures Cannabis Growth License From Health Canada

May Offers To Quit If Brexit Deal Passes, Still Can’t Get Majority

British Prime Minister Theresa May offered to resign on condition that her Brexit deal gets passed, but she still can’t grab a majority in the House of Commons owing to a few hardcore Brexit holdouts in the European Research Group, who don’t believe her deal constitutes Brexit in the first place because it keeps basically all the agreements of the EU intact practically anyway. Meanwhile, the Democratic Unionist Party still refuses to support it because the Backstop that would separate Ireland, part of the EU, with Northern Ireland, Part of the UK but on the same island physically, would constitute a hard border on the island and disrupt trade between Ireland and the rest of the UK, which would be pretty bad for both Ireland and the UK. So she’s still short a majority, which means maybe she’ll stay on anyway and keep getting battered and we’ll be repeating these headlines for the next 5 years or so.

Final Throes of ‘Mad’ Bond Market Bubble Upon Us? It’s Crazy Out There

Fixed Income has gone mad,” says one Rishi Mishra, an analyst at Futures First, quoted by Bloomberg, who continues, “It really is a mad search for quality.” As bond prices explode and Germany goes deeper into negative interest rate territory, bond traders are actually starting to buy up “century bonds” which pay out, yes, a century into the future, which isn’t even on the time scale of a human life. Maybe a tortoise would earn some money buying that stuff, but would still lose out on inflation. Ireland, Belgium, and Austria for example have bonds maturing in 2116 and 2117, and that’s not a typo. We checked it. 2116. The 2117 bonds, meaning the year 2117, are up 15% this quarter. Bond investors know that something is wrong, but can’t keep themselves from following the herd. Ben Emons, the managing director of global macro strategy at Medley Global Advisors, writes, “Credit should not do well when the yield curve is inverted and recession fears heighten. Yet, inverted yield curves, recession and rate cut expectations has driven credit spreads tighter.” Just smile and nod. Or short century bonds.

Cannabis – Meet the Dow Jones Industrial Average, Dow – Meet Cannabis

Cannabis has become mainstream. We know this now because the most famous alliance on the Dow, the Walgreens Boots Alliance (NYSE:WBA), will be selling CBD products at its pharmacies. The company plans to start selling CBD products in nine states, but declined to say which brands it would be offering but said that creams, patches and sprays were planned for 1,500 stores. Rival CVS (NYSE:CVS) has already begun selling CBD products.

Bitcoin Volatility Collapses, Finally

The monthly trading range for Bitcoin (BTC-USD) has been only 7.8% for March, the lowest on record for the world’s leading cryptocurrency by market cap. After that, the lowest has been 21.2% counting from the beginning of 2017. Supporters believe that once volatility calms down for an extended period of time, it would allow merchants to begin accepting it as payment in and of itself rather than as a vehicle for transferring money at best. Other bulls believe that just like Bitcoin rallied from a base of comparatively volatility, that this is setting up for a new bull run. Skeptics believe that’s over and this is the calm before yet another capitulation in one of the strangest asset classes markets have seen yet.

 

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