Market Rundown – Mixed Trade War Signals, Starbucks Clarifies, Comcast Going British, Italy Exasperates Brussels

Stock Market Roundup

Trade War Back On Already?

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Yesterday, futures were way up in the early morning and strength followed through for the whole day, with the S&P 500 (^GSPC) ending up 20 points and the Dow Jones (^DJI) up almost 300 on the back of news that the trade war between the United States and China was being “put on hold,” so sayeth Treasury Secretary Steve Mnuchin. However, today we have opposite news, namely that the US has slapped heavy duties on heavy duty steel shipped from China to Vietnam destined for the US in an attempt to circumvent anti-dumping laws and somehow get the steel over to the US in quantities over the allowed limit. This is how international politics deals with first world problems like too much steel. Futures are steady, but by the time you read this they may be down as the news settles in and traders realize that maybe the trade war isn’t on hold just yet. Watch for a jump in share prices among the domestic steel industry (NYSE:X), (NYSE:AKS) today.

Then again, China just announced that it would cut tariffs on some auto parts and vehicles, so maybe it’s on hold again.

More from Market Exclusive: Modern Finance Chain Launches Service To Rival Visa/Mastercard Payments

Free Bathrooms For All at Starbucks, On One Condition

Use them wisely and don’t do anything inappropriate. So says Starbucks (NASDAQ:SBUX) after it had an incident in a Philadelphia coffee shop where 2 black men were arrested for sitting down without buying any coffee after asking to use the bathroom and being denied access. Fearing backlash and public accusations of racism, Starbucks decided to nip the controversy in the bud and change its bathroom policy across the board. Now anyone can use the bathroom, paying customer or not, a policy change which is causing even more backlash as customers now fear that coffee shops may turn into public restrooms attracting an unsavory crowd. Employees are being instructed regarding how to handle any sticky situations, though shareholders fear that the new policy could harm business long term.

Big Food In Big Trouble

Could Big Food be feeling the pinch of inflation? A look at the share price of Campbell Soup (NYSE:CPB) suggests this may be the case. Campbell shares have been cut in half in the last two years and the situation is not improving. Price wars among big retailers spurred by the need to compete with Amazon, which just broke into the grocery business with its purchase of Whole Foods, are eating into Big Food’s ability to compete with more chic designer brands. This could be a wider instance of what has been happening with microbreweries versus Big Beer (NYSE:BUD), with the former siphoning off market share from the latter in recent years.

Comcast Going British

Comcast (NASDAQ:CMCSA) could be about to get approval for a $31 billion purchase of British broadcaster Sky. In another round of competition with Disney (NYSE:DIS), which last fought Comcast over Fox (NASDAQ:FOX), Comcast looks to have won the fight for Sky, which would give it a European presence and shore up. The deal would bring Comcast’s long term debt to about $90 billion.

Mr. Zuck Goes to Europe

The Face of Facebook (NASDAQ:FB) is going on a (possibly hostile) tour of Europe. Facebook CEO Mark Zuckerberg will testify today, May 22, in front of the European Parliament and it is expected that many of the questions will be biting and accusatory.  A big new regulation called the General Data Protection Regulation (GDPR) goes into effect across the European Union on Friday, and European authorities really want Facebook to comply with it. It is, however, hard to tell if the GDPR is actually a protection of privacy, or a pretext for European authorities to get first dibs on the personal data of Facebook users themselves through the supervision superstructure of the regulation. After all, governmental authorities are usually not too shy about looking into the financial data of users suspected of tax evasion and other similar crimes.

This also may be a prelude to a cash grab, as European authorities have levied enormous fines against US tech companies in the past, including $2.7 billion against Alphabet (NASDAQ:GOOGL), $122 million against Facebook itself, and $14.7 billion against Apple (NASDAQ:AAPL) because the EU says it owes Ireland a bunch of back taxes. Apple still has not paid, and it’s hard to tell if the EU can actually do anything about it. Blocking Apple services in the EU will not make people there very happy.

A No-Name Academic May Now Lead Italy, Italian Rates Soar

After being unable to name a Prime Minister with a political background, the two warring coalition partners in Italy, the 5 Star Movement and the Northern League, who disagree about almost everything, have compromised on a Prime Ministerial nominee that almost nobody outside of Italian academia has ever heard of. Guiseppe Conte will now be in charge of figuring out how, exactly, to solve Italy’s raging debt crisis when both of the parties that nominated him want to lower taxes and increased spending at the same time. Fighting accusations that Conte has no political background, 5-Star Movement Leader Luigi Di Maio made sure that he used the word “political” a lot in describing Conte, saying, “Giuseppe Conte will be a political prime minister of a political government, chosen by two political forces that include political figures within it. And especially with the support of two political forces that were voted.”

Meanwhile, on the back of the impossible math that makes up this equation, Italian interest rates on its 10-year bonds have soared to 2.42%, for a rise of 64 basis points in two weeks. Any higher and the Italian budget may enter a positive feedback loop where it sells more bonds to pay the interest on its current bonds and so on. Meanwhile, France’s finance minister Bruno Le Maire had threatened Rome earlier this week saying that Italy really needs to spend less money or it would be putting the Euro in jeopardy. France has the largest exposure to Italian debt of any other country in the Eurozone at €250 billion, which could be why France chose to chastise Italy first, being that the two have their masts tied together.

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