Market Morning: EM Rout Halts, Erdogan Threatens Apple, Bayer Gets Rounded Up

Market Morning: EM Rout Halts, Erdogan Threatens Apple, Bayer Gets Rounded Up

Futures Bounce, Emerging Market Collapse Subsides

Stock futures are up in the United States as the US dollar has declined slightly versus a basket of emerging market currencies that have finally found their footing overnight, for now. Emerging Market stocks (NYSEARCA:EEM) have stabilized as well, though the question is for how long. Is this a bottom, or merely a lull? In a sign of possible continued volatility over the horizon, the yield curve in the US has continued to flatten, flirting with 10Y-2Y spread lows of 24 basis points. We are now back down to 26 basis points, and lows could be broken imminently.

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Erdogan Threatens Boycott of Apple, Other US Electronics, Lira Rises

Turkish President Erdogan lashed out again against the United States, threatening to boycott American electronics, which technically would mean no visiting any websites with servers in the US. It’s doubtful that Turkey would go that far since it would isolate them from the global economy and turn them more into something resembling North Korea, but Erdogan does seem serious about boycotting tangible electronics like the iPhone. Apple (NASDAQ:AAPL) doesn’t seem too concerned about this. Erdogan did pick out the iPhone by name, saying that Samsung was an alternative, though it runs on Android, which is an American product out of Palo Alto, California, owned by Alphabet Inc. (NASDAQ:GOOGL) Don’t tell that tO Erdogan. Meanwhile, for some reason the Turkish Lira (TRY=X) has finally firmed this morning, though another leg down could come at any time, since boycotting American electronics won’t do much to support the domestic currency in a fundamental sense.

Will Saudi Arabia Lash Out at the UK as it has Canada?

Saudi Arabia recently got into a spat with Canada over the arrest of social activists, threatening boycotts of Canadian goods and expelling Canadian diplomats from the Kingdom. Will the United Kingdom be the Saudis’ next target? Could be, given that a London Judge has ordered that Saudi Prince Hussam bin Saud bin Abdulaziz al Saud be jailed for one year for contempt of court, for basically refusing to show up to a case over a $500 million loan dispute. The Prince won’t go to jail since he’s not actually in the UK, but the sentence over his head could sour relations between the OPEC giant and the UK.

Home Depot Beats Estimates, Indicating Housing Boom May Not Be Over

Home Depot (NYSE:HD) handily beat consensus earnings estimates of $2.84, clocking in at $3.05. Revenues beat by 1.6%, adding to hopes that the housing boom may yet have another few breaths to it. This is despite sales of single family homes falling to an 8-month low in June and data being revised lower for May. Climbing costs for shelter, not coincidentally, was the biggest factor in the rising Core Consumer Price Index inflation statistics recorded last week. Meaning, inflation is likely to continue climbing as Home Depot racks up the earnings.

Bayer to Pay $1.156 Trillion to Roundup Victims, by the Math, but Not Really

Bayer (OTCMKTS:BAYRY) lost a big case when a jury ordered the company to pay $289 million to Dewayne Johnson, who claims the company’s weed killer Roundup, made by Bayer subsidiary Monsanto, gave him cancer. Since there are about 4,000 other people who can now make the same claim, the total price tag for Bayer would theoretically be $1.156 trillion dollars if everyone gets the same amount, which it obviously cannot pay, as even Big Pharma is not yet galactic in size. Bayer lost about $10 billion in market capitalization on the news, falling 11% on the verdict. So they probably won’t pay the full trillion.