London Stock Exchanges Rebuffs Hong Kong
Hong Kong is in the news again, but this time not for rioting. The London Stock Exchange (OTCMKTS:LNSTY), which trades over the counter in the US, has rejected the preliminary $37 billion takeover bid from Hong Kong Exchanges and Clearing (OTCMKTS:HKXCY), and has also said that it has no interest in engaging in talks with its Hong Kong counterpart. “The Board has fundamental concerns about the key aspects of the Conditional Proposal: strategy, deliverability, form of consideration and value. Accordingly, the Board unanimously rejects the Conditional Proposal and, given its fundamental flaws, sees no merit in further engagement,” the LSE said. It could have something to do with not wanting China to ultimately own the London Stock Exchange, which wouldn’t have such a nice ring to it, as Hong Kong could be about to be owned by China.
China Eases Up on Tariffs, For Now
Another break in the stratus clouds of the Chinese-American trade war. Is there a ray of sunlight? China will lift tariffs imposed on US soybeans and pork in what’s being called a goodwill gesture before more talks take place in October. This move comes after President Trump suspended the implementation of high tariffs on Chinese goods until the next round of negotiations. Trump may be getting desperate to find a way to get off his tariff high horse given that he is way down in the polls to all Democrats currently running. China’s ongoing pork shortage due to swine fever is also causing price problems and consumers can’t afford even more taxes on top of that. Chinese companies have in the meantime started purchasing from Argentina, which really needs the money, given that it is bankrupt, again.
Aurora Cannabis, Canopy Growth, Divine When Legalization Happens, Somehow
The big pot companies have a magic formula, or maybe a crystal ball, or something. Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB), now claim to have a secret formula to determining when the US government will allow marijuana sales. The problem is that both companies own other companies without technically owning them because they’re not allowed to, so they have to do some voodoo with their accounting in order to make it look they own them when they don’t, unless it’s the other way around and they have to make it look like they don’t own them when they do. So in order to figure out how much these pseudo-owned companies are actually worth, some sort of calculation based on some sort of formula has to be made so that investors have a basic idea of what the company they are buying actually owns and might be worth. They basically own warrants in these subsidiaries without owning them outright, and then they put a value on the warrants. The whole thing will confuse even the most veteran of Wall Street stoners.
ECB Still Thinks Printing More Money Helps
The European Central Bank once again cut interest rates on the euro, even though they are already negative, in an attempt to bring the Eurozone back from the brink of recession. Perhaps this is because they think that what the economy needs is -0.50% rates and that this will finally do the trick. So far the European banking system seems ok with it, the iShares MSCI Europe Financials ETF (NASDAQ:EUFN) up 1.7% this morning, though weak banks have warned the ECB that pushing interest rates even farther down into negative territory wouldn’t help them, and could actually hurt as it makes it impossible to make money lending anymore. In addition to that, the ECB has said it will buy $22 billion worth of debt every month until inflation shows up or until the euro completely caves whichever comes first. Though they didn’t quite put it that way. “We have headroom to keep going on for some time at this rhythm,” Draghi, said. “We still think the probability of recession for the euro area is small, but it’s gone up.”
WeWork Gets Pre IPO Jitters, Cuts CEO Voting Power
If your IPO prospects for the valuation you want ($47 billion in this case) are dwindling, then take a hack at hacking the CEO voting power. WeWork, the office space leaser that loses incredible amounts of money, has curbed the voting power of CEO Adam Neumann in an attempt to attract people to its increasingly desperate-looking IPO. The exact change will be the CEO’s voting shares going down to t10 votes per share as opposed to 20, but it is unclear if this will attract people to the perennially money-losing company, or if it’s rather the fact that it has been losing so heavily that makes them nervous to buy shares. Neumann will also be reinvesting any profits from real estate deals he receives, into the company. Plus, no family member of Neumann will be on the board and any successor will be selected by the boards. Previously, Neumann’s wife and co-founder of the company was going to help pick a successor. This made the company look and feel like a nepotism-run loss-making unicorn dream. The number that is being batted around as to an IPO valuation is now down to something between $15 billion and $18 billion, down from $47 billion that people at the top were initially seeking.