ECB Policy Statement Today, Watch Italian Bond Markets
The European Central Bank is widely expected today to announce that it will indeed stop the Euro printing presses by the end of the year, which is the end of the month, which is a mere two weeks away, though the “end of QE” in the Eurozone is actually a misnomer. This is because the lending rate in the Eurozone is 0%, and the rate on deposits is -0.4%. These levels are expected to stay constant, which in effect means that the printing presses will keep chugging out liquidity because you can’t maintain negative interest rate on deposits otherwise. Nevertheless, the “end of QE” as the media is calling it in Europe could have an outsized effect on Italian debt, which actually had a great day yesterday, with yields on the BNP 10-year falling over 7 basis points in one day, now sitting at 2.93%. One could say that since the ECB move, or rather non-move, is expected, that nothing out of the ordinary should happen. Perhaps.
Trump Playing Good Cop In Huawei CFO Meng Arrest Case To Secure Trade Deal
In a fittingly obvious and transparent game of good-cop-bad-cop, US President Donald Trump is playing Good Cop and the Justice Department, which Trump is technically in charge of, is playing Bad Cop. Trump indicated yesterday that despite the charges against Huawei CFO Meng Wanzhou, which include doing business with Iran and carry up to 30 years in prison, he is willing to pardon her if it can secure a trade deal with China. Fox News analyst Judge Andrew Napolitano indicated that this is actually a legal and viable move, though it will of course anger the Chinese and make them feel like pawns, which could backfire later. Though in the short run, it may actually help push through a new trade deal with China, while American executives in Macau will still need to be careful of getting arrested themselves if the Chinese attempt some sort of exchange in that angle. (NYSEARCA:FXI)
Hemp On Its Way To Becoming Legal, CBD Drinks For All
With hemp, the non-psychoactive cousin to cannabis chock full of non-psychoactive cannabinoid CBD, about to become legal on the pending passage of the 2018 farm bill, New Age Beverages (NASDAQ:NBEV) could be a big winner. The company’s shares were up 10.5% yesterday and are up another 6% in premarket trading this morning. New Age is a health drinks firm headquartered in Denver, CO, the home of legal recreational cannabis, and has plans for CBD-infused beverages, which it would be able to get from hemp, which would be legalized federally if this bill passes. But then again, other companies like Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP) would probably enter the fray if they see it’s working for New Age, and could either attempt to compete with New Age or simply buy it out.
Apple Building New Campus in Texas
Apple (NASDAQ:AAPL) is trucking over to Texas with $11B in its pocket ready to be spread across the Lonestar State. $1B will be for a new campus in Austin, and another $10B for datacenters. Altogether the biggest company in the world estimates that this would produce 20,000 jobs. This could, partially at least, be move to relieve pressure coming from the Trump Administration, which is threatening to hurt an American company by setting tariffs on iPhones manufactured in China. By investing billions in the US, Apple may be hoping to calm down the Tariff Man, with additional promises to expand infrastructure in Seattle, San Diego, Culver City, Pittsburgh, New York, and Boulder.
May Confidently Survives No Confidence Vote
British Prime Minister Theresa May will stay put at 10 Downing Street for now, having fought off a no-confidence vote after pledging that she will not seek reelection. However the road to getting her Brexit deal passed is still a tough one, and her only viable move seems to be to run the clock out so by the time the House of Commons actually votes on the deal, it’ll be either her way or nothing. Stay tuned, as ever.