Market Morning: Futures Tank on Tariff Hike, Google Eyes Human-Rights-Free Search in China

Market Morning: Futures Tank on Tariff Hike, Google Eyes Human-Rights-Free Search in China

Ross, Navarro, Lighthizer, All Seem Sure About a Tariff Hike

While the Fed has been busy keeping interest rates steady, Commerce Secretary Wilbur Ross, in charge of trade, Robert Lighthizer, U.S. Trade Representative, representing trade, and Peter Navarro, Director of trade, all seem to be on the same page on trade, specifically regarding raising tariff rates on $200 billion in imported Chinese goods to 25%. This is supposedly to end predatory trade practices, which consists according to these guys of Chinese taxpayers subsidizing Chinese companies in order to provide American consumers with the cheapest possible products. This predation has resulted in higher standards of living for American consumers and lower standards of living for Chinese consumers, so it’s a bit unclear here who is the predator and who the prey. Lighthizer called China’s moves to retaliate against American tariffs, “illegal,” probably because he thinks the United States is the only country allowed to institute tariffs in the first place, by virtue of the fact that it is the United States. Futures (NYSEARCA:SPY) (NYSEARCA:QQQ) are down now that investors understand this is probably going to happen.

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Chinese Stocks Head South, Same Reason

Chinese investors don’t like this news either, and have reacted by bringing the Shanghai Composite Index down 2% today. China A-Shares (NYSEARCA:ASHR) are down in the premarket by the same percentage. Japan’s Nikkei is down over 1% and Hong Kong’s Hang Seng is at a new 10-month low, down around 2.5% on the day. Japanese government bonds, whose rates more than doubled yesterday on news that the Bank of Japan would allow more wiggle room in yields, fell slightly to day as the BoJ didn’t allow any more wiggle room, stepped in, printed some more yen and bought a bunch.

Speaking of China, Alphabet Plans Human Rights-Free Chinese Search Dubbed Dragonfly

Alphabet Inc. (NASDAQ:GOOGL), which abandoned the Chinese market over censorship issues, is now planning a sensored version of Google called Dragonfly that will block results for terms including “human rights”, “democracy”, “religion” and “peaceful protests” because who wants any of that anyway? Baidu (NASDAQ:BIDU), a Chinese search giant which is also not too keen on human rights abuses, meaning searching for information on it, tanked over 7% yesterday on the news. Some Google employees are pretty upset about the whole thing and have even reportedly transferred out of the Dragonfly unit in order to avoid being involved in the whole thing. What would Mao do?

New Car Financing Costs Going Up as Interest Rates Break 3%

A higher interest rate environment is going to be very tough on the passenger car industry. Ford (NYSE:F), General Motors (NYSE:GM) and Fiat Chrysler (NYSE:FCAU) are going to have a hard time weathering this environment. Edmunds reports that 0% APR deals on new vehicles have dropped to their lowest levels in terms of total new car sales since July 2005. Less than 7% of all sales are 0% APR, much lower than the 12% at this time last year. What is a bit more alarming is that this bucks the seasonal trend, because most car dealership save their best deals for the summer to clear out old models and make way for the new. As rates rise, we will probably see car sales drop off.

Walmart, US Government in Deadlock over Bribery Probe

The United States Justice Department doesn’t want any US companies bribing any foreign government officials just to get business started a bit faster. Since the practice of bribing a government official to open a business is logically the same thing as paying a government official for a government-mandated license to open a business, then why not? But never mind that. The Justice Department wants justice, so it wants Walmart (NYSE:WMT) to admit what it did in paying foreign government officials to speed up store openings, and say that it was wrong to do that, but Walmart won’t do that even though it is willing to pay (AKA bribe) the US government the $300 million it demands as punishment for the crime of paying other governments. We remain in Walmart limbo in the meantime.