Market Morning: Hong Kong Nerves, Airless Tires, Aerospace Mergers and Brexit Theats

Market Morning

Hong Kong Unites Against Beijing

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The Million Man March in Hong Kong doesn’t look like it’s causing the country’s “Chief Executive”, Carrie Lam (that’s what they call their political leader over there), who is widely considered a Beijing plant, to budge on an extradition bill to China. As far as Lam is concerned, “This bill is not about the mainland alone. This bill is not initiated by the central people’s government. I have not received any instruction or mandate from Beijing to do this bill.” For some reason, this isn’t calming the people in Hong Kong. They have surrounded the Hong Kong Parliament over the weekend, fearing a loss of independence from a country that has instituted a social credit scheme and is generally trending back towards more totalitarianism by the day. Hong Kong was handed over to Beijing in 1997 with promises of autonomy and a separate legal system, which are gradually being eroded, to everyone’s (no one’s) complete shock and surprise. The gradual Chinese takeover won’t be very good for the island’s independent economy with Mao’s shadow now hanging over it. The Hang Seng doesn’t seem to mind the turmoil at all, with Hong Kong stocks up 2% on not so bad trade news and calls of friendship between Trump and Xi. (NYSEARCA:EWH).

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Michelin, General Motors, Work on Springy Airless Tire Thing

It’s a new wheel, called the Uptis, and it’s got some sort of squishy springy spongy network in the middle instead of air. The tire, a joint effort of Compagnie Générale des Établissements Michelin (OTCMKTS:MGDDY) and General Motors (NYSE:GM) has less material than a traditional air-filled tire, lasts longer, and doesn’t get punctured, obviously, which will put a lot of the tire guys out of business and they’re likely to protest, asking Congress to pass a law against these new-fangled things that they’ll probably argue are a safety hazard or something. Which raises the question, the concept of a spring-loaded tire isn’t really that complicated, so why did it take so long for a company to invent the thing? The new tires will begin testing this year and the two companies aim to bring them onto the road en masse by 2024, assuming they aren’t stopped by politicians concerned about public safety and the votes of old-school tire guys.

United Tech To Join Military Industrial Complex In Raytheon Merger

United Technologies (NYSE:UTX) goes to war. It’s had enough of escalators and air conditioners, and would rather join in on the bomb-making, fighter-jet building, killing-machine-engineering fun, because moving people up and down stairs without them having to move their legs is, well, just too boring these days. The company will be merging with Raytheon (NYSE:RTN), one of the darlings of the Military Industrial Complex. The combined company will be worth about $100 billion, and though a deal is not cemented yet, the two firms are close to signing one. In terms of antitrust issues, there probably won’t be any, the official explanation being that the two companies don’t compete against each other, but the real reason might be rather because the government will be a big customer and they don’t want to hamper their partners with bothersome regulations.

UK PM Candidate Johnson, Heading Off Farage, Threatens Non-Payment of Brexit Bill

By Brexit bill, we do not mean the legislative bill to leave the European Union, but rather the bill to pay the European Union $50 billion for the right to leave the bloc. Boris Johnson, front-runner for Prime Minister of the United Kingdom after Theresa May’s departure, is threatening not to pay if Brexit terms are not improved, which will probably warm up discussions between the two and not lead to any ill will. Johnson is trying to head off the encroaching Brexit Party, headed by Brexiter firebrand Nigel Farage, who wants a no-deal Brexit more than a lifetime supply of fish and chips. Johnson had earlier quit May’s cabinet as Foreign Secretary, supposedly in protest of May’s Brexit approach, though he ended up voting for May’s deal at one point, so he’ll have to move to the more extreme Brexiter side of things to try to dispel that among the Brexit crowd. We’ll see what happens by October 31st and whether Johnson has the courage and ability to break through a deadlock by simply leaving the bloc over the protests of the British parliament, which wants to prevent a no-deal Brexit about as much as Farage wants to see it.

Viacom, CBS, on Verge of Closing Deal

More in merger world, Viacom (NASDAQ:VIA) and CBS (NYSE:CBS) are on the verge of closing a merger deal, which was announced back in April. The deal could still fall through, though at this point it doesn’t look likely as discussions have been ongoing and details are reportedly being finalized at this week’s board meeting. Both companies were part of National Amusements until 2006, run by the Redstone family. Meanwhile, former CEO Les Moonves, the one who got #MeToo’ed, was against the deal because he thought Viacom would drag down the combined company, so he sued the Redstones in order to keep CBS independent, but so much for that move since he’s not too popular anymore, what with the sexual intimidation thing.

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