Market Morning: Imploding Turkey, Harley Boycott, Tesla Privatization Hullabaloo

Market Morning

Banks, Global Stocks Fall as Turkey Implodes

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After Turkish President Recep Tayyip Erdogan published an op-ed in the New York Times about how Turkey may start looking for new friends to replace its alliance with the United States, holders of Turkish Lira decided they didn’t quite want to hold it anymore. The Lira/Dollar exchange rate fell another 25% to an all time low of 7.2 to the dollar, and is now around 6.8, still down 7.25% on the day. Other emerging market currencies like the South African Rand (ZAR=X) and Indian Rupee (INR=X) and Mexican Peso (MXN=X) are also down sharply. Japan’s Nikkei (NYSEARCA:EWJ) is down 2%, German stocks (NYSEARCA:EWG) are down 0.75%, and S&P 500 futures (NYSEARCA:SPY) are down over half a percent. Financials are down the strongest this morning as bank contagion fears always show up with financial stress.

SEE: World Bank To Use Commonwealth Bank Of Australia For Issuing Blockchain-Based Bonds

Trump: Make America Great By Boycotting Harley Davidson

Make America Great Again has seemed to turn against itself, as US President Donald Trump is now urging a boycott of the iconic American motorcycle company Harley Davidson (NYSE:HOG) because they are moving overseas because Trump’s protective tariffs on steel, meant to protect companies like Harley Davidson, except that they need imported steel, have spurred retaliatory tariffs that have also affected Harley Davidson, so they’re getting out’a dodge. But now, because they want to preserve their business that tariffs have endangered, Trump is calling on Americans to boycott them, since they don’t want to be protected anymore.

Saudi Arabia Interested, Not Interested, In Taking Tesla Private

There are conflicting reports as two whether the Saudi Royal Family is interested in helping take Tesla (NASDAQ:TSLA) private or not, so we’ll link to both stories and let you decide. Acccording to Bloomberg, the Saudi Public Investment Fund, which really means the Royal Family Investment Fund, is looking for ways to be involved in the $72 billion plan to take the electric car company private. According the Reuters, the Public Investment Fund wants nothing more to do with Tesla. Meanwhile, lawsuits initiated by Tesla short sellers are taking Tesla CEO Elon Musk to court for allegedly issuing false statements regarding Tesla planned privatization in order to boost the share price.

Russia To Jettison More US Debt To Firm Ruble

The emerging market currency rout taking hold has also affected the Russian Ruble (RUB=X) and in order to stabilize the currency, Russia has suggested that it will sell more of its US Treasury holdings. Russia officially says the sales are in response to sanctions. The immediate significance of this move for the treasury market is nil, but it could mean a lot if other emerging market currencies, particularly China’s yuan (CNY=X) also start falling hard against the dollar. China owns $1.2 trillion in Treasuries, and if they have to sell in order to defend their currency, interest rates in the US could head higher much faster than previously thought.

Chinese Tariffs Against US Exports Begin!

A US vessel laden with soybeans docked at the Chinese Port of Dalian on Saturday, lucky enough to be the very first US goods to be subject to new Chinese tariffs against American goods. The first soybean to incur those tariffs may even be framed, but probably not. The vessel is carrying 70,000 tons of soybeans, enough to make plenty of tofu. The buyer of the goods was state company Sinograin, which stockpiles grain for the country.


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