Market Morning: Cook v Warren, Bernie v Walmart, Gold Shines, Central Banks Ease, Tariffs Terrify

Market Morning

Tim Cook Says Warren Wrong, Don’t Break Up My Company

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“We are not a monopoly,” insists Tim Cook, Apple (NASDAQ:AAPL) CEO, and also he strongly disagrees with Senator and Presidential Candidate Elizabeth Warren, who wants to break up Apple, using the government’s monopoly on force, because she believes Apple is a monopoly. He has a point, as Apple may be the monopoly equivalent of a hotel on Boardwalk, but nobody forces anybody to stay in that hotel and pay $2,000 a night if you happen to land on Boardwalk. In real life you can sleep on the beach if you want to.

SEE: Scientus Pharma Obtains Approval to Sell Cannabis Oils and Capsules

On China, Cook said that, “The Chinese have not targeted Apple at all and I don’t anticipate that happening, to be honest,” reassuring everyone watching that he wasn’t just saying this because he is Apple’s CEO and he can’t just go out and broadcast to the markets that he thinks China will target Apple, since that would sink shares and he’d be worth many billion dollars less. Cook was also worried about people using Apple products too much, as you may be doing now, reading this market morning update.

Gold Gets Shinier, Oil Less So

Gold (NYSEARCA:GLD) prices have rocketed up from below $1,270 to just above $1,330 an ounce in the space of 8 trading days, while oil prices (NYSEARCA:USO) have fallen, amid higher volatility on Wall Street. Things are getting shaky and the mood appears to be changing. Treasury yields (NYSEARCA:TLT) are plummeting, the yield curve is inverting, and the Federal Reserve is finally signaling openness to rate cuts for the first time since the current rate hiking cycle began in December, 2015. Getting a bit bearish on the whole picture, here’s Crescat Capital’s Tavi Costa, “There is a speculative force typical of late-cycle markets that is willing to shrug off deteriorating economic data and a dashed trade deal with China. Too many want to drive that momentum train just a little bit longer. They are not deterred by arguments of excessive valuations…Only three other times in history precious metals surged while oil plunged! All of them happened during severe bear markets and recessions.” Sounds prescient, maybe.

Central Banks Around World Poised To Fire Up Printing Presses Again

It’s not just the Fed signaling a dovish turn in monetary policy. The European Central Bank, Australia’s central bank cutting rates yesterday, and the Reserve Bank of India about to do so on Thursday, it looks like the world is getting ready to flood the markets with liquidity once again. This, despite negative interest rates in Germany, Sweden, Switzerland, Japan, and some others.  “The mood regarding global growth is likely to be distinctly gloomier than at the last G-20 gathering,” said Matthew Goodman, a former White House official. “This could put pressure on finance ministries and central banks in major economies to inject new stimulus.” The World Bank is lowering its global trade forecasts as well, which makes sense in the context of the global trade war launched by US President Donald Trump, hoping to make America great again, assuming that higher government fees on trading goods are going to accomplish that.

Bernie Keeps Bugging Walmart

Presidential Candidate Bernie Sanders, known for praising the high functionality of the Soviet Union just prior to its final collapse in the late 1980’s, laments the unjustness of Walmart (NYSE:WMT) even though there are more goods at Walmart than there were in the entire Soviet Union, and they are all relatively cheap. Sanders has decided that he is going to troll the annual Walmart shareholder meeting, and insist that its workers get paid more, even though they all voluntarily took the jobs they now have, for the pay they now receive. He also wants workers represented on the Walmart board of directors. No word on whether Sanders actually owns any Walmart stock. He has lambasted the founding family of Wamart for owning a $226M car collection, forgetting to mention that the sellers of these cars are now richer, thereby spreading the wealth through cars, which is what Sanders says he likes. So paying a lot of money to people for cars is bad and shows greed, but paying a lot of money to floor workers who want more money for the same reasons that everyone does, is good. It’s all a bit amorphous.

Car Companies: 5% Tariffs For A Month OK, 25% Indefinitely, Not So Much

Consultancy LMC Automotive, a car industry spokesman, said on Tuesday that the industry could absorb a 5% tariff for about a month without much systemic damage, but a sustained 25% tariff level would be devastating and could cut new car sales by about 1.5M annually. This would be quite a dent in the side of domestic car companies General Motors (NYSE:GM) and Ford (NYSE:F), even though tariffs traditionally protect those companies, because both have a lot of their car parts come from Mexico. So the tariffs may not actually end up protecting anything. Trump in the meantime says that the tariffs are “likely” given that Mexico isn’t the United Star Ship Enterprise and can’t put up a force field on its border with the US to stop migrants from crossing, which is what President Trump demands, more or less.


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