New Front in Trade War Over Hong Kong?
The Trump Administration appears to be getting involved in the Hong Kong-China extradition crisis. Yesterday the U.S. expressed “grave concern” over legislation that would allow extradition from Hong Kong to China. Hong Kong’s Chief Executive Carrie Lam, whose leadership is stamped by Beijing, says the bill is necessary in order to keep Hong Kong from becoming a haven for Chinese criminals. Critics, which include most people in Hong Kong who don’t seem to be concerned about becoming a haven for Chinese criminals, appear more worried about the fact that an extradition agreement will be used by the People’s Government, AKA the Communist Party, to snatch up those seeking political asylum in Hong Kong, away from the Communists, who have been known to harbor political enemies from time to time. Protests against the extradition bill continue in Hong Kong, with vows for general strikes and a ring around Parliament that would literally prevent lawmakers from leaving, or eating food, and other things that they kind of need to do.
In the context of all this, President Trump has issued a personal threat against Chinese President Xi Jinping to “be there, or be tariffed” referring to the upcoming G20 meeting later this month, threatening to levy 25% tariffs on the remaining $300 billion Chinese goods that are still yet to be taxed.
SEE: Market Morning: Hong Kong Nerves, Airless Tires, Aerospace Mergers and Brexit Theats
Beyond Meat Goes Beyond Stratosphere, Squeezing The Meat Out of Shorts
It’s the short squeeze of a vegan’s paradise. Shares of Beyond Meat (NASDAQ:BYND) jumped another 21% yesterday on an earnings beat, or really a loss beat, the company losing only $6.6 million on total net revenues of just over $40 million. The company now has a market cap of over $9 billion, and short borrowing costs keep rising. 51% of the company’s float is still being held short, which means the short squeeze can continue if the positions can’t be maintained, which would be especially relevant if the broader market starts to fall while Beyond keeps rising. There is about $800 million left in short positions on the stock. The short side is down about $400 million since January, while the stock is up about 650% since its IPO at $25.
Tariffs Still Threatened Against Mexico
US President Donald Trump is still dangling the threat of tariffs against Mexico if he doesn’t think they’re doing enough to stop migrants from crossing the southern border. He is giving them a deadline of “four to six weeks” at least publicly, but nobody knows if the deadline is at 4 weeks, or 6 weeks, and how many migrants the country has to catch in exchange for no tariffs. The problem is a lot of people are coming north to Mexico from Guatemala, claiming asylum in the US, which wants the asylum seekers to spend their time in Mexico while they wait out an answer from the border bureaucrats, which the Guatemalans aren’t too keen on. 6,000 Mexican National Guardsman are supposed to patrol the Mexican Guatemalan border as part of the deal. The US wants Mexico to be considered a “safe country” so that Guatemalans can stay there instead, but Mexico doesn’t want to be considered safe. It is considering becoming safe though, if the flow of migrants cannot be stopped. Here’s to safety.
Companies that would have been affected by the tariffs, like General Motors (NYSE:GM) are responding well to the suspension, with GM up about 4.5% since he initial threat was announced last week. Ford (NYSE:F) shares though don’t seem to be buying the news as enthusiastically, as the initial jump after the reprieve was mostly retraced back down yesterday, the stock down 2% from intraday highs and up only 0.6% on the day yesterday.
Italy Again Says Sorry Over Budget, Promises to Stop Spending So Much
Italy’s big-spending Eurosceptic coalition government doesn’t want to be fined by the European Commission over spending too much money, even though a fine just means more spending, which they’re pretty good at. Prime Minister Giuseppe Conte said he wants “to draw up a strategy to be adopted in discussions with Europe so as to avoid an infringement procedure for the country, and to set up a shared budget package.” Whether the strategy will be spending cuts remains doubtful, as nobody in the coalition wants to actually spend less money, unless its fee money. Meanwhile, Italian interest rates have been trending down since mid 2018 while its debt to GDP ratio keeps rising. A potential fine would be worth about $3 billion, which Italy’s government would pay with all the money it got from the European Central Bank back when it was buying its bonds hand over fist, if it hadn’t spent it all already. (NYSEARCA:EWI)
New York Times Stops Publishing Cartoons
Following what was interpreted as an anti-Semitic cartoon of Israeli Prime Minister Benjamin Netanyahu leading around a blind Donald Trump as his seeing-eye dog, the New York Times (NYSE:NYT) has decided to stop publishing political cartoons altogether. Daily political cartoons that are published in the international edition of the New York Times will be stopped on July 1, so get your collector’s kits ready and filled with old newspapers, ready to reminisce about the time when the Times still had political cartoons in it. The Times won a Pulitzer for political cartoons last year, and they plan to continue with comic strip type journalism in the future, just not of the political type.