Market Morning: Swiss Threaten Banks, ECB Threatens Italy, UPS Workers Threaten Strike, EU Threatens US

Will The Swiss Turn Swiss Banks Into Swiss Cheese on Sunday?

On Sunday, Switzerland goes to the polls on a referendum that will decide if Swiss banks have the right to loan out more money than they actually have in deposits. The fractional reserve banking system, as it is often called, allows the creation of new money out of thin air by loaning out more money than actually exists, and then calling that new money existant. A “Yes” vote would mean the end of fractional reserve banking in Switzerland, with the only institution authorized to create new money being the Swiss National Bank (OTCMKTS:SWZNF). A “No” vote would mean status quo and the fractional reserve banking system lives on. Polls are about 54% No and 46% Yes. If this actually passes, the Swiss franc (CHF-USD) would skyrocket and the Swiss banking system would go through a severe withdrawal from prolonged liquidity addiction.

What to do: If this passes, go long Francs and go short banks like Credit Suisse and UBS. (NYSE:CS) (NYSE:UBS)

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ECB Set to Reveal End to Bond Buying Program, Italy Quakes in Boots

At the same time that the new big-spending Italian government has been sworn in, promising a universal basic income, higher minimum wage, and other measures that will cost a lot of money that Italy doesn’t have, the European Central Bank has signaled that next week, it will reveal when and how it will finally wind down its massive bond-buying program, which is still going on as we speak. That means the ECB is still handing out newly created money to the Italian government. Once this stops, and speculation is that it will stop come September, Italian rates will likely skyrocket as big spending plans kick off but ECB support is pulled. Things are just heating up in Italy. Wait for the fall. By that we mean the season. Maybe. (NYSEARCA:EWI) (OTCMKTS:UNCFF)

What to do: The euro (NYSEARCA:FXE) could get rough by the end of the summer. Stay tuned.

Facebook Accused of Selling Data to Chinese Firm Labeled Threat By US Intelligence

Facebook (NASDAQ:FB) is under fire again for allegedly selling data to Chinese phone maker Huawei, a company labeled a national security threat by US intelligence. Details are sparse but the story hasn’t seemed to cause the same outrage that the Cambridge Analytica scandal did, possibly because Facebook claims it did not upload user data to the Huawei server itself, and has since severed its partnership with the firm. Facebook stock was not affected much either yesterday, shares trading down 0.83% on the day. Lenovo (OTCMKTS:LNVGY) was also involved in the faux pas.

Is the US About to Take One for the Teamsters?

If you want to ship by UPS, do it now rather than later. By August there may be serious delays because United Parcel Service (NYSE:UPS) may have a united problem. 280,000 workers under the Teamsters Union have authorized a strike should negotiations with UPS over a new contract break down by the end of July. UPS employs 454,000 people in total. Union workers are worried about how the company will handle possible Sunday deliveries to keep up with eCommerce demands. UPS wants a two-tiered compensation system, but the Teamsters don’t think that’s necessary.

What to do: If the Teamsters strike, FedEx (NYSE:FDX) would get a major boost, if temporary. GDP could also take a hit, since UPS revenues account for 6% of US GDP.

European Union Fires The Next Shot in Ongoing Trade Wars

$3.3 billion ammo is accompanying the next volley in the ongoing trade wars between US President Donald Trump and Everybody Else In The World. The EU took the next shot, threatening tariffs on $3.3 bilion in US goods in retaliation for the removal of exemptions on tariffs that Trump on steel and aluminum that Trump has already authorized. The tariffs will go into effect by early July.  Denim, orange juice, bourbon, motorcycles, peanut butter, motor boats and cigarettes will be included in the tariffs.

What to do: Watch Harley Davidson (NYSE:HOG), Altria (NYSE:MO), and everyone’s favorite commodity that bankrupted the Duke brothers in the movie Trading Places, frozen concentrated orange juice.

 

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