Market Morning: Huawei Heckled, Alibaba Winning, Aurora On US Market

Market Morning

Trade War Intensifies, Huawei In Crosshairs

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Continuing to employ the excuse of national security, US President Donald Trump has upped the ante on his personal trade war with China by practically banning Chinese telecom carrier Huawei from doing business in the US. The Commerce Department will add Huawei to its “entity list” where it judiciously lists entities that policy dictates it’s not supposed to like. The practical implications of the move are that it cannot acquire components and technology from U.S. firms without government approval. All the commotion is putting a dent in bond yields, which seem to be pricing in a rate cut already. The odds of a rate cut at the next FOMC meeting are now about 13%. That was quick. The odds of a cut by September are 41%. Looks like Trump may have gotten what he wants from the Fed by exacerbating the trade war and forcing their hand.

SEE: Cannabis Stock News Daily Roundup May 15

Trade War? What Trade War? Says Alibaba

Alibaba (NYSE:BABA) is killing it. The Chinese retailer doesn’t seem to mind that the United States and China are in a trade war at all. Total revenue is up 51% from a year ago, EBITDA up 29% year-over-year, Mobile monthly active users up 22 million from December, full-year gross merchandise volume up 19%, and the company’s cloud unit reported a revenue increase of 76%. Which goes to show, all China has to do really is let its currency rise and have its own citizens pick up the slack left by American consumers. We wait to see if Trump will ban imports from Alibaba on national security grounds, if they’re bugged or something.

Aurora Cannabis Not Too Keen on US Market

Aurora Cannabis (NYSE:ACB) isn’t too excited about the US market for its products. Even if the substance were legalized on a federal level today, it would take years for the market to organize itself and ramp up supply to the point where selling cannabis would become profitable. The federal ban may be weak in that it doesn’t prevent individual states from legalizing or having their own markets, but it still makes banking, which is federally regulated, very difficult, and keeps cannabis from being transported across state lines. Aurora may change its mind if the federal ban is lifted, though that could take a while, given that American politicians don’t generally do anything productive. Aurora executives also downplayed the cannabis-infused beverages segment of the business, thinking that it won’t be too big, unlike rival Canopy Growth, (NYSE:CGC) which took $4B from Constellation Brands (NYSE:STZ), maker of Corona beer.

Berkshire Owns Nearly $1B of Amazon

Berkshire Hathaway (NYSE:BRKA) owns just over $900 million of Amazon (NASDAQ:AMZN) stock, which it bought at an average price of $1,871 a share. Nearly 500,000 shares belong to Buffett and Munger et. al. The disclosure was made yesterday. The stock is up about 124,633% since 1997. But who’s counting. Buffett can’t pick them all.

Iranians, Weary of Stagflation Economy, Roll Eyes at War

“War? What is it good for?” ask the Iranians. “What can America do that they haven’t done before? They’ve been doing this sort of thing for 40 years,” says Iranian shopkeeper Mohammed Mohammedzadeh, bemoaning the soaring cost of printer ink cartridges by 1,000% as Iran descends into an economic depression/hyperinflationary spiral. To his credit, sort of, Trump has suggested, a la Carly Rae Jepsen, that the Iranians, “[C]all me,” maybe, though Iran is a bit hesitant to do so, given the belligerence shown towards its government from the White House and  the sending of warships over to Persian Gulf in a show of force.

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