Market Morning: Europe Falters, Alibaba Postpones On Hong Kong,

Stock Market Roundup

Mohamed El-Erian Says Europe Headed Down

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Mohamed el Erian, chief economic adviser of Allianz, doesn’t have a greatly optimistic view of the European economy. He says there is a 70% chance of the continent plunging into a recession. The United Kingdom, Italy, and Germany are all paralyzed by domestic issues including Brexit, a broken government, and immigration backlash respectively. This could have serious consequences for the global economy, given that the European banking system may not be able to withstand another recession without nationalizations and massive bailouts. Negative interest rates have decimated European banks, particularly Deutsche Bank (NYSE:DB), which has been in nearly continuous freefall for 11 years with no good prospects for getting out of its doldrums. Germany’s GDP has already receded by 0.1% in the three months to June. El-Erian’s complain is that “Virtually nothing is getting done. No pro-growth policies are emerging from these countries.” He is probably referring to spending though, which there is plenty of in the Eurozone, what with all the sovereign debt held despite negative rates. It could get interesting in the next few months over there.

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Alibaba Postpones Hong Kong Listing

Hong Kong anger at the threat of Chinese incursion into its relative independent status continues to boil over and now big companies are pulling out of plans to invest in the island.  Alibaba (NYSE:BABA) has pulled plans to list about $15 billion worth of equity on the Hong Kong exchange. Speculation is that Alibaba could still list the share by October, though no new timetable has been announced. It all depends on how crazy Hong Kong gets in the meantime. Concerns are not just the instability itself, but what Beijing would think of one of its biggest and most profitable companies offering a colony in revolt over its authority at $15 billion investment gift.

Tesla has a Walmart Fire Problem

Walmart (NYSE:WMT) is suing Tesla (NASDAQ:TSLA) for setting its roofs on fire, as if the electric car company didn’t have other problems to deal with already without setting the roofs of the largest employer in the United States on fire. The complaint, filed by Walmart in court, stated, “To state the obvious, properly designed, installed, inspected, and maintained solar systems do not spontaneously combust, and the occurrence of multiple fires involving Tesla’s solar systems is but one unmistakable sign of negligence by Tesla.” Oops. Fires were started on the rooftops of stores in California, Maryland, and Ohio. Tesla bought the firm that makes the panels, SolarCity, back in 2016 amid some controversy that the $2.6B buyout was actually a bailout in disguise and a case of nepotism, the company being run by two of Tesla CEO Elon Musk’s cousins. Tesla defended its move on the logic that the technology could be used in tandem with its line of cars. Somehow. And it can also set roofs on fire, which could be useful for invasions if you’re employing a scorched earth policy, like Russia did when it was invaded by Napoleon and Hitler.

In the words of Walmart’s lawyers, “On information and belief, when Tesla purchased SolarCity to bail out the flailing company (whose executives included two of Tesla CEO Elon Musk’s first cousins), Tesla failed to correct SolarCity’s chaotic installation practices or to adopt adequate maintenance protocols, which would have been particularly important in light of the improper installation practices.”

JPMorgan Says Americans Will Pay For Tariffs

President Donald Trump has said that the Chinese pay for tariffs, even though he has suspended his additional 10% tariffs on the remainder of Chinese imported goods so as not to disturb the Christmas shopping season, even though it’s August. JPMorgan (NYSE:JPM) has now publicly come out to say that Americans will pay for the tariffs, as most people already are aware. Sometimes they have to be reminded by megabanks, though. JPMorgan now says that tariffs already imposed will cost each household about $600 a year on average, and this will rise to $1,000 if the additional 10% tariffs on the remainder of imports are imposed. The position was taken based on studies by the New York Federal Reserve. The study contradicts Peter Navarro, trade czar, who insists that “Consumers have not been hurt. China is bearing the whole burden.” This was during a CNN interview on Sunday.

Boeing on Hiring Spree For Relaunch of 737 MAX

Boeing (NYSE:BA) is going on a hiring spree in preparation for the relaunch of the 737 MAX series. Hopefully they’ll stop crashing now. The company is looking for hundreds of temporary workers to relaunch its fleet that has been grounded since the beginning of the year. Paid housing and meals are included. The positions looking to be filled include avionics technicians, aircraft mechanics, airframe and powerant (A&P) mechanics, and aircraft electricians.

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