Market Morning: Fed Shuffle, Hong Kong Poll, Iraq Protests, Ghosn Flees

Federal Reserve

Fed Shuffle For the New Year

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Four voting members of the Federal Open Market Committee will lose their voting rights on the committee in favor of other central bankers who will get a chance to have their own personal say in the money supply of the United States come next year. Judging by the rotation, the Federal Reserve Board will become slightly more inflationist than it already is. Three members that voted against the previous three rate cuts will be off the voting list, replaced by one ultra-dove named Neel Kashkari, and two relative skeptics of the previous 2 rate cuts. Either way, the personal predilections of individual Fed members are not that important because if inflation does head significantly higher, they’ll have to hike, and if the economy tanks, they’ll have to print more money.

If inflation rises and the economy tanks simultaneously, none of them will know what to do. On that front, CNBC reports that Marc Chandler of Bannockburn Global Forex believes inflation is headed higher, finally.  “I think there are a couple of things that are going to happen that are going to be material changes to the economy,” said Chandler, who also does not believe that the actual makeup of the Fed board is all that significant, since they are data-dependent.

Reuters Releases Hong Kong Poll on Protests

A fascinating poll out of Reuters conducted by the Hong Kong Public Opinion Research Institutes, which, as you can guess, researches public opinion, reveals that 59% of Hong Kong residents support the demands of the protesters. A third of respondents said that they had even attended one of these protests. Supporters outnumber opponents by about 2:1. Slightly less at 57% support the resignation of chief executive Carrie Lam. When it comes to independence from China though, support was not as strong. Only 17% want to break from China, which isn’t really possible anyway. Only 20% were against the One Country Two Systems arrangement agreed on with the United Kingdom when it withdrew from the territory in 1996. “The figures are consistent with Carrie Lam’s low popularity rate, which shows her ability to lead the government is very low,” said Ma Ngok, a professor of government and public administration at Chinese University of Hong Kong. “Resistance and protests will continue next year.” Despite the turmoil, Hong Kong stocks (NYSEARCA:EWH) are still up about 6.7% for the year.

Iraqi Protesters Want US Army Out of Iraq

Iraq is getting tired of US soldiers hanging out in the country. Protesters began attacking the US Embassay in Baghdad Tuesday, setting fire to a security post and throwing rocks and security, who fired back with stun grenades and tear gas. Iraqi officials claim that US staff was evacuated, but no official confirmation from the US on that. President Trump pointed a finger at Iran and said they would be “held responsible”. What that means practically is a big question, since sanctions are already in place against Iran. The main compound of the embassy remained intact. The instigation for the attack was a US bombing of a base belonging to a supposedly Iranian-backed group of fighters. This itself was in response to the killing of an American contractor in a rocket attack. Trump decided to tweet about that. “Iran killed an American contractor, wounding many. We strongly responded, and always will,” Trump said in a tweet.

Carlos Ghosn Flees Japan to Economically Wrecked Lebanon

Lebanon, not doing too well these days what with all the bank runs and such, just got an interesting visitor, perhaps resident, in Carlos Ghosn, the disgraced former Chairman of Nissan (OTCQB:NSANY) who committed the crime of not telling the government of Japan how much money he was being paid. Ghosn was out on bail in Japan, which did not comment about the affair because nobody knows how he got out of the country and nobody wants to address that, though speculation is that bribery may have been involved somewhere along the line. Ghosn was under surveillance at the time. “I am now in Lebanon and will no longer be held hostage by a rigged Japanese justice system where guilt is presumed, discrimination is rampant, and basic human rights are denied, in flagrant disregard of Japan’s legal obligations under international law and treaties it is bound to uphold,” Ghosn said in a statement.

Boeing Makes Turkey of a Deal

Boeing (NYSE:BA) just settled with Turkish Airlines over the grounding of the Boeing 737 MAX. According to Turkish newspaper Hurriyet, the deal is worth $225M including $150M in compensation and $75M in coverage. This adds to the $9B price tag for the two crashes that caused the global grounding of the line of airplanes. Turkish Airlines was on the docket for receiving 12 more Boeing 737 MAXes before the crashes crashed the whole deal. Turkish Airlines is not the only group seeking compensation from Boeing, and is probably not the last to get something. Southwest (NYSE:LUV) also made a confidential agreement with Boeing for a $380M hit to its operating line in 2018.


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