Market Morning: China Buys Oil, Aurora Buys Whistler, Shutdown Hurts Airlines, Brexit Disaster Unfolding
Stocks Mixed As Everyone Confused About China
With nothing compellingly good or bad out about China today, US stock market indexes are mixed. The Dow is down after being up earlier, the S&P is flat, and the Nasdaq is slightly higher as of the early morning. China is reportedly cutting taxes and increasing spending, which should be great for its exploding debt picture. After a “weak” GDP print of 6.5% growth last quarter, Chinese authorities decided this isn’t good enough. Along with ordering banks to lend more money and boosting spending on public works boondoggles, China is now saying that its monetary policy will be “flexible but stable”. All this means that Xi Jinping’s administration will fire on all Keynesian spending and money-printing cylinders even using the threat of force for as long as possible until all the fuel runs out and a bust becomes unstoppable. (NYSEARCA:FXI)
Aurora Cannabis Buying Whistler For C$175 Million
Aurora Cannabis (NYSE:ACB) is forking up $175 million good old Canadian dollars to acquire Whistler Medical Marijuana Corp. one of the original 8 companies licensed to produce marijuana legally. “I would call [Whistler] the crown jewel of organic cannabis production world-wide,” Aurora Chief Corporate Officer Cam Battley said in a phone interview. “It’s the first organic-certified company, and now we’ve essentially got the market to ourselves.” Aurora’s goal is to supply its own cannabis because it cannot secure it under current market circumstances at a low enough cost. Whistler produced and collected a large library of cannabis genetics as one of the first companies to be able to legally do so, giving it a huge advantage in a head start on the cannabis market.
US Oil Sales to China Restart
In a good sign for easing tensions in the trade war between the US and China, three ships laden with US crude oil for Texas are headed for China’s ports and are scheduled to arrive between late January and March. The move may signal thawing economic relations between the two largest economies in the world, which would certainly be a good thing for standards of living in both places. China has only been buying US crude oil since 2015 when a 40-year ban on exporting crude oil to China was reversed by the Obama administration. China has also resumed buying US soy beans, though still at an elevated tariff rate of 25%, which should make tofu quite expensive. China is the world’s biggest oil importer, so watch out for another oil plunge if China’s economy goes south. (NYSEARCA:USO)
Washington Monument Syndrome Hits Airlines, Airports
Washington Monument Syndrome is when the government shuts down the services that the public is actually reliant upon or notices, instead of shutting down services that the public doesn’t want, like the IRS. It’s hitting the airports, as TSA funding has been cut which is swelling lines at security all across the country. But it’s not just the airports themselves, but airplane makers and airlines as well, as the Federal Aviation Administration, is holding up approval of new aircraft from the Boeing (NYSE:BA) MAX and Southwest Airline’s (NYSE:LUV) new Hawaii route. The necessary employees who oversee this stuff are on furlough, which means they’re on paid vacation practically, and will receive all back pay once the shutdown is over, which could be any time from now to years from now, which is comforting for those who love uncertainty.
Brexit Amendment For Backstop Time Limit Rejected
An amendment to British Prime Minister Theresa May’s Brexit plan that would have set a hard limit on the Irish Backstop, which would keep the border between Ireland and North Ireland open by subjecting North Ireland to European Union regulations without any representation in the EU itself, has been rejected. This means that the Northern Ireland members of parliament won’t support May’s Brexit deal and it is almost certain to be rejected by a wide margin today. British stocks aren’t going to like this much, but trading them is going to be impossible because an extension to the Brexit deadline or a call for a second referendum could push them back up again unpredictably. Basically, nobody knows what to do now, least of all traders on the London Stock Exchange. (NYSEARCA:EWU)
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